UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
March 8, 2024
Keyarch Acquisition Corporation
(Exact name of registrant as specified in its charter)
| Cayman Islands |
|
001-41243 |
|
98-1600074 |
(State or other jurisdiction
of incorporation) |
|
(Commission File Number) |
|
(IRS Employer
Identification No.) |
275 Madison Avenue, 39th Floor
New York, NY 10016
(Address of principal executive offices, including
zip code)
Registrant’s telephone number, including
area code: 914-434-2030
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K
filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☒ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| |
|
| ☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| |
|
| ☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| |
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| ☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b)
of the Act:
| Title of each class |
|
Trading Symbol(s) |
|
Name of each exchange on which registered |
| Units, each consisting of one Class A Ordinary Share, $0.0001 par value, one-half of one redeemable warrant and one right |
|
KYCHU |
|
The Nasdaq Stock Market LLC |
| Class A Ordinary Shares included as part of the units |
|
KYCH |
|
The Nasdaq Stock Market LLC |
| Redeemable warrants included as part of the units, each whole warrant exercisable for one Class A Ordinary Share at an exercise price of $11.50 |
|
KYCHW |
|
The Nasdaq Stock Market LLC |
| Rights to receive one-tenth of one Class A Ordinary Share included as part of the units |
|
KYCHWR |
|
The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant
is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the
Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01. Entry into a Material Definitive Agreement.
On March 8, 2024, Keyarch
Acquisition Corporation, a Cayman Islands exempted company (“Keyarch”), Zooz Power Ltd., an Israeli company
listed for trading on the Tel-Aviv Stock Exchange (“Zooz”), and Keyarch Global Sponsor Limited, a Cayman Islands
exempted company (the “Sponsor”), in the capacity as the SPAC Representative, entered into that certain Amendment
No. 2 to Business Combination Agreement (the “BCA Amendment”). The BCA Amendment amends certain provisions of
that certain Business Combination Agreement, dated as of July 30, 2023 (as amended by Amendment No. 1 to the Business Combination Agreement
and the BCA Amendment and as may be further amended, restated and/or supplemented in accordance with its terms, the “Business
Combination Agreement”), by and among Keyarch, Zooz, the Sponsor, in the capacity as the SPAC Representative, and Zooz Power
Cayman, a Cayman Islands exempted company and a wholly owned subsidiary of Zooz. The transactions contemplated by the Business Combination
are collectively referred to herein as the “Business Combination”.
Under the BCA Amendment, the
parties agreed, for purposes of determining the Conversion Ratio (as defined in the Business Combination Agreement), to use a fixed date
of January 31, 2024 for Zooz’s capitalization and for the Israeli New Shekel (ISL) to U.S. Dollar exchange rate for purposes of
applying the exercise price of certain outstanding Zooz convertible securities denominated in ISL on a net exercise basis. The BCA Amendment
also restricts Zooz’s ability to issue certain additional securities prior to the closing of the Business Combination (the “Closing”).
The Business Combination Agreement
provides that, following the Closing, up to an additional 4,000,000 ordinary shares of Zooz, par value NIS 0.00025 per share (“Zooz
Ordinary Shares”), will be issuable to the Zooz shareholders who were Zooz shareholders as of immediately prior to the Closing
at a record date to be determined by Zooz (“Pre-Closing Zooz Shareholders”) as earnout consideration, contingent
on the achievement of certain earnout milestones based on the price of the Zooz Ordinary Shares or Zooz’s gross revenue during the
five-year period following the Closing. The BCA Amendment revises the earnout provisions to provide that the rights entitling the Pre-Closing
Zooz Shareholders to receive the earnout will be exercised automatically unless Zooz determines that it is advisable and in the best interests
of Zooz for tax withholding purposes that the election to exercise should be at the option of the Pre-Closing Zooz Shareholder holding
such right.
In addition, the BCA Amendment
removes the closing condition contained in the Business Combination Agreement that would have required that either immediately prior to
or upon the Closing, after giving effect to the redemption in connection with the Closing and any receipt of proceeds from any transaction
financing, Keyarch would have net tangible assets of at least $5,000,001 (as determined in accordance with Rule 3a51-1(g)(1) under the
Securities Exchange Act of 1934, as amended). The BCA Amendment also revises the timing to finalize the forms of the SPAC Registration
Rights Agreement Amendment and the Registration Rights Agreement which will be effective at the Closing.
Other than as expressly
modified pursuant to the BCA Amendment, the Business Combination Agreement, a copy of which was previously filed as Exhibit 2.1 to the
Current Report on Form 8-K filed by Keyarch with the Securities and Exchange Commission (the “SEC”) on August
3, 2023, remains in full force and effect. The foregoing description of the BCA Amendment does not purport to be complete and is subject
to, and qualified in its entirety by, the full text of the BCA Amendment, a copy of which is filed as Exhibit 2.1 to this Current Report
on Form 8-K and which is incorporated herein by reference.
Important Information and Where to Find
It
Zooz has filed with the SEC
a Registration Statement on Form F-4, which includes a proxy statement of Keyarch that constitutes a prospectus for Zooz securities and
a proxy statement for Keyarch’s shareholders (the “Registration Statement”). The Registration Statement
has not been declared effective by the SEC. Promptly after the Registration Statement is declared effective by the SEC, Keyarch will distribute
the definitive proxy statement and a proxy card contained therein to its shareholders. Investors and securityholders of Keyarch and other
interested persons are advised to read, when available, the Registration Statement, including preliminary proxy statement to be filed
with the SEC, and amendments thereto, and the definitive proxy statement in connection with Keyarch’s solicitation of proxies for
the extraordinary general meeting to be held to approve the Business Combination Agreement and the Business Combination (collectively,
the “Transactions”) and other documents filed in connection with the proposed Transactions because these documents
will contain important information about Zooz, Keyarch, the Business Combination Agreement and the Transactions. The definitive proxy
statement will be distributed to shareholders of Keyarch as of a record date to be established in the future for voting on the Business
Combination Agreement and the Transactions. The Registration Statement, including the definitive proxy statement, the preliminary proxy
statement and other relevant materials in connection with the Transactions (when they become available), and any other documents filed
by Keyarch with the SEC, may be obtained free of charge at the SEC’s website (www.sec.gov) or by writing to Keyarch at: 275 Madison
Avenue, 39th Floor, New York, New York 10016. This Current Report on Form 8-K does not contain all the information that should be considered
concerning the proposed Transactions and is not intended to form the basis of any investment decision or any other decision in respect
of the proposed Transactions. This Current Report on Form 8-K is not a substitute for any registration statement or for any other document
that Zooz or Keyarch may file with the SEC in connection with the proposed Transactions.
INVESTORS AND SECURITY HOLDERS
ARE URGED TO READ THE DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION REGARDING, AMONG OTHER THINGS, THE BUSINESS COMBINATION AGREEMENT, THE PARTIES THERETO AND THE TRANSACTIONS.
INVESTMENT IN ANY SECURITIES
DESCRIBED HEREIN HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SEC, THE ISRAELI SECURITIES AUTHORITY (“ISA”),
OR ANY OTHER REGULATORY AUTHORITY, NOR HAS ANY SECURITIES AUTHORITY PASSED UPON OR ENDORSED THE MERITS OF THE PROPOSED TRANSACTIONS PURSUANT
TO WHICH ANY SECURITIES ARE TO BE OFFERED OR THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED HEREIN. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
Participants in the Solicitation
Zooz, Keyarch, and their respective
directors and executive officers, under SEC rules, may be deemed to be participants in the solicitation of proxies from the holders of
Keyarch securities in respect of the proposed Transactions. Information regarding Keyarch’s directors and executive officers and
their ownership of Keyarch’s securities is set forth in Keyarch’s filings with the SEC. Additional information regarding the
interests of the participants in the proxy solicitation will be included in the Registration Statement when it becomes available. These
documents can be obtained free of charge from the sources indicated above.
No Solicitation or Offer
This communication and this Current
Report on Form 8-K shall not constitute an offer to sell or exchange or the solicitation of an offer to buy or exchange any securities
pursuant to the proposed Transactions or otherwise, nor shall there be any sale of securities in any jurisdiction in which the offer,
solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction.
No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of
1933, as amended.
Forward-Looking Statements
This Current Report on Form 8-K
contains, and certain oral statements made by representatives of Keyarch and Zooz and their respective affiliates, from time to time may
contain, “forward-looking statements” within the meaning of federal securities laws. Keyarch’s and Zooz’s actual
results may differ from their expectations, estimates and projections and consequently, you should not rely on these forward-looking statements
as predictions of future events. Words such as “expect,” “estimate,” “project,” “budget,”
“forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,”
“should,” “believes,” “predicts,” “potential,” “might” and “continues,”
and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include, without limitation,
Keyarch’s and Zooz’s expectations with respect to future performance and anticipated financial impacts of the Transactions,
the satisfaction of the closing conditions to the Transactions and the timing of the completion of the Transactions. These forward-looking
statements involve significant risks and uncertainties that could cause actual results to differ materially from expected results. Most
of these factors are outside of the control of Keyarch or Zooz and are difficult to predict. Factors that may cause such differences include,
but are not limited to: (i) the inability of the parties to successfully or timely consummate the Transactions, including the risk that
any required regulatory or other approvals are not obtained, are delayed or are subject to unanticipated conditions that could adversely
affect the combined company following the Transactions (the “Company”) or the expected benefits of the Transactions,
if not obtained; (ii) the failure to realize the anticipated benefits of the Transactions; (iii) the ability of Keyarch prior to the Transactions,
and the Company following the Transactions, to maintain or list, as applicable, the Company’s shares on Nasdaq and the Tel-Aviv
Stock Exchange (“TASE”), including the ability to meet stock exchange listing standards following the consummation
of the proposed Transactions; (iv) costs related to the Transactions; (v) the failure to satisfy the conditions to the consummation of
the Transactions, including the approval of the Business Combination Agreement by the shareholders of Keyarch and Zooz, and the satisfaction
of the minimum cash requirement of the Business Combination Agreement following any redemptions by Keyarch’s public shareholders;
(vi) the risk that the Transactions may not be completed by the stated deadline and the potential failure to obtain an extension of the
stated deadline; (vii) the outcome of any legal proceedings that may be instituted against Keyarch or Zooz related to the Transactions;
(viii) the attraction and retention of qualified directors, officers, employees and key personnel of Keyarch and Zooz prior to the Transactions,
and the Company following the Transactions; (ix) the ability of Zooz prior to the Transactions, and the Company following the Transactions,
to maintain relationships with its suppliers and customers and the effect of the Transactions on its operating results and businesses
in general; (x) the ability of the Company to compete effectively in a highly competitive market; (xi) the ability to protect and enhance
Zooz’s corporate reputation and brand; (xii) the impact from future regulatory, judicial, and legislative changes to Zooz’s
or the Company’s industry; (xiii) competition from larger technology companies that have greater resources, technology, relationships
and/or expertise; (xiv) future financial performance of the Company following the Transactions, including the ability of future revenues
to meet projected annual revenues; (xv) the ability of the Company to forecast and maintain an adequate rate of revenue growth and appropriately
plan its expenses; (xvi) the ability of the Company to generate sufficient revenue from each of its revenue streams; (xvii) the ability
of the Company’s patents and patent applications to protect the Company’s core technologies from competitors; (xviii) the
Company’s ability to manage its marketing relationships and realize projected revenues from customers; (xix) the Company’s
ability to meet its product and/or service sales targets; (xx) the Company’s ability to execute its business plans and strategy;
(xxi) the occurrence of a material adverse change with respect to the financial position, performance, operations or prospects of Keyarch
or Zooz; (xxii) the disruption of Zooz’s management’s time from ongoing business operations due to the announcement and consummation
of the proposed Transactions; (xxiii) announcements relating to the Transactions having an adverse effect on the market price of Keyarch’s
securities and/or Zooz’s securities; (xxiv) risks associated with Zooz being an Israeli company located in Israel and the effect
of any judicial reforms, security and terrorist activity in or affecting Israel; (xxv) the lack of a third party valuation in determining
whether or not to pursue the proposed Transactions; (xxvi) limited liquidity and trading of Keyarch’s and/or Zooz’s securities;
(xxvii) inaccuracies for any reason in the estimates of expenses and profitability and projected financial information for Zooz and/or
Keyarch; and (xxviii) other risks and uncertainties described herein, as well as those risks and uncertainties discussed from time to
time in other reports and other public filings with the SEC, the TASE or the ISA by Keyarch or Zooz. Keyarch and Zooz caution that the
foregoing list of factors is not exclusive. Should one or more of these risks or uncertainties materialize, or should underlying assumptions
prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Forward-looking
statements relate only to the date they are made, and readers are cautioned not to place undue reliance upon any forward-looking statements,
which speak only as of the date they are made. Keyarch and Zooz undertake no obligation to update forward-looking statements to reflect
events or circumstances after the date they were made whether as a result of new information, future events or otherwise, subject to applicable
law.
Readers are referred to the
most recent reports filed with the SEC by Keyarch and, as applicable, Zooz. Readers are cautioned not to place undue reliance upon any
forward-looking statements, which speak only as of the date made, and neither Keyarch nor Zooz undertakes any obligation to update or
revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by
law.
Nothing in this Current Report
on Form 8-K should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved
or that any of the contemplated results of such forward-looking statements will be achieved.
Item 9.01 Exhibits.
The following exhibits are being filed herewith:
| * | Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation
S-K, Item 601(b)(2). The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the Securities and Exchange Commission
upon its request. |
SIGNATURE
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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KEYARCH ACQUISITION CORPORATION |
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By: |
/s/ Kai Xiong |
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Name: |
Kai Xiong |
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|
Title: |
Chief Executive Officer |
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| Dated: March 11, 2024 |
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5
Exhibit
2.1
AMENDMENT
NO. 2 TO BUSINESS COMBINATION AGREEMENT
This
AMENDMENT NO. 2 TO BUSINESS COMBINATION AGREEMENT (this “Amendment”) is made and entered into as of March 8,
2024, by and among (i) Keyarch Acquisition Corporation, a Cayman Islands exempted company (“SPAC”),
(ii) Zooz Power Ltd., an Israeli company (the “Company”), and (iii) Keyarch Global Sponsor Limited,
a Cayman Islands exempted company, in the capacity as the SPAC Representative under the BCA (as defined herein). Capitalized terms used
but not otherwise defined herein shall have the respective meanings assigned to such terms in the BCA.
WHEREAS,
the parties hereto entered into that certain Business Combination Agreement, dated as of July 30, 2023, as amended on February 9, 2024
(the “Original Agreement”);
WHEREAS,
the parties hereto entered into that certain Amendment No. 1 to Business Combination Agreement, dated as of February 9, 2024 (the “First
Amendment”, and the Original Agreement as amended by the First Amendment, the “First Amended Agreement”);
and
WHEREAS,
in connection with the transactions contemplated by the First Amended Agreement, the parties hereto desire to further amend the First
Amended Agreement upon the terms and subject to the conditions set forth herein (the First Amended Agreement, as amended pursuant to
this Amendment and as may be further amended, supplemented, modified and/or restated from time to time, the “BCA”).
NOW,
THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, do hereby
agree as follows:
1. Amendments
to the BCA.
1.1 Amendment
to Timing to Finalize Forms of SPAC Registration Rights Agreement Amendment and Registration Rights Agreement. The Tenth and Eleventh
Recitals to the BCA are each hereby amended to delete the phrase “prior to the effectiveness of the Registration Statement”
each time it is used and replace it with the phrase “prior to the Closing”.
1.2 Amendment
to Use Conversion Ratio as of Fixed Date. Section 1.1(h)(i) of the BCA is hereby amended to add the following new subclause (C):
“(C) Notwithstanding
anything to the contrary contained in this Agreement, including the foregoing provisions of this Section 1.1(h), for purposes
of calculating the Conversion Ratio, (1) the number of Company Ordinary Shares outstanding and the number of Company Ordinary Shares
issuable upon the exercise of all outstanding Continuing Warrants and Outstanding ITM Company Options (such number collectively, the
“Diluted Company Ordinary Shares”) shall be fixed based on the number of Diluted Company Ordinary Shares as
of January 31, 2024 (provided, that any New Company Financing Securities issued after January 31, 2024 and at or prior to the Closing
shall be added to the number of Diluted Company Ordinary Shares), and (2) the Israeli New Shekel (“ISL”) to
U.S. Dollar exchange rate for purposes of applying the exercise price of all outstanding Continuing Warrants and Outstanding ITM Company
Options denominated in ISL on a net exercise basis for determining the number of Company Ordinary Shares issuable upon the exercise of
all outstanding Continuing Warrants and Outstanding ITM Company Options shall be fixed based on the ISL to U.S. Dollar exchange rate
as of January 31, 2024.”
1.3 Amendments
to Earnout. Section 1.2 of the BCA is hereby deleted and replaced with the following:”
“1.2 Earnout.
(a) Earnout
Generally. At the Closing or as soon as reasonably practicable thereafter, and, in any case, by no later than seven (7) Business
Days after the Closing and after receipt of all required approvals from any applicable Governmental Authority for the Israeli Prospectus
(as defined in Section 5.15(a)), subject to the terms and conditions set forth herein, the Company shall issue to the Company
Shareholders who were Company Shareholders as of immediately prior to the Closing at a record date to be determined by the Company in
coordination with the TASE (the “Pre-Closing Company Shareholders”) an aggregate of Four Million (4,000,000)
non-tradeable, non-assignable rights (the “Earnout Rights”), to be allocated among the Pre-Closing Company
Shareholders according to their respective Pro Rata Shares. The Earnout Rights shall be automatically converted (subject to Section
1.2(i) below) into Company Ordinary Shares (by the Company issuing one Company Ordinary Share in lieu of each converted Earnout Right
which shall be automatically cancelled and extinguished upon such conversion), in an amount not to exceed Four Million (4,000,000) Company
Ordinary Shares in the aggregate (subject to adjustment after the Closing for share splits, combinations or exchange or readjustment
of shares, reorganizations, recapitalizations, share sub-divisions (including share consolidations), split-up and the like, including
to account for any equity securities into which such shares are exchanged or converted) (the “Earnout Shares”),
upon and subject to the occurrence of Earnout Milestone(s) (as defined below) during a five-year period (which shall commence as of the
first day of the full fiscal quarter immediately following the Closing) (the “Earnout Period”), subject to
the other terms set forth below, in accordance with the terms set forth in Section 1.2(h) below, and without the payment of any
consideration by the Pre-Closing Company Shareholders (other than, to the extent applicable, the transfer of the applicable Withholding
Amount (as defined below) by each respective Pre-Closing Company Shareholder in accordance with the terms set forth in Section 1.2(h)
below). The Earnout Rights shall be issued through the “Nesher system” of the TASE. The Earnout Rights shall convert
automatically (subject to Section 1.2(i) below) into Earnout Shares in accordance with the terms set forth in Section 1.2
below. All conversions of Earnout Rights by Pre-Closing Company Shareholders shall be in accordance with the rules and regulations of
the TASE and the “Nesher System” (to the extent that the Company is listed for trading on the TASE at such time) and otherwise
in accordance with the rules of any stock exchange on which the Company’s shares are then traded (to the extent applicable).
(i) In
the event that, at any time during the Earnout Period, (A) the gross revenue of the Company on a consolidated basis (including gross
revenue of any type and nature (including but not limited to gross revenue derived, generated or attributable to (i) any acquisition(s)
made by the Company or its Subsidiary(ies), (ii) any financing revenue (net of any placement agent, finders’ or similar fees and
related transaction fees and expenses of such financing) and any other gross revenue, either recurring or derived, generated or attributable
and recognized one-time) as recorded in the Company’s quarterly financial statements reviewed by the Company’s independent
accountants and included in the quarterly report of the Company filed with the SEC for such period) (if relevant, the results of the
fourth quarter shall be extracted from the financial statements filed by the Company with the SEC with respect to the full fiscal year)
(the “Gross Revenue”) is in the aggregate greater than or equal to ten million dollars ($10,000,000.00) for
any four fiscal quarters within a consecutive five fiscal quarter period (the “First Revenue Earnout Milestone”),
or (B) the VWAP of the Company Ordinary Shares equals or exceeds $12.00 (as adjusted for share splits, share dividends, combinations
or exchange or readjustment of shares, reorganizations and recapitalizations, share sub-division (including share consolidation), split-up
and the like) (the “Tier I Share Price Target,” and with the First Revenue Earnout Milestone, each a “First
Earnout Milestone”; the date, if any, on which the First Earnout Milestone has been achieved is referred to herein as the
“First Earnout Milestone Achievement Date”) for any twenty (20) Trading Days within any thirty (30) consecutive
Trading Day period during the Earnout Period, then, subject to the terms and conditions of this Agreement, twenty-five percent (25%)
of the Earnout Rights shall automatically convert (subject to Section 1.2(i) below) into twenty-five percent (25%) of the Earnout
Shares (“First Level Contingent Share Consideration”) as soon as practicable following the settlement of the
applicable Earnout Milestone as detailed in Section 1.2(b) and/or 1.2(c) below, as applicable. The allocation of the
First Level Contingent Share Consideration among the Pre-Closing Company Shareholders shall be made in accordance with each Pre-Closing
Company Shareholder’s Pro Rata Share of the First Level Contingent Share Consideration;
(ii) In
the event that (A) for any two consecutive fiscal quarters commencing with the first full fiscal quarter following the First Earnout
Milestone Achievement Date, the Gross Revenue is in the aggregate greater than or equal to ten million dollars ($10,000,000.00) (the
“Second Revenue Earnout Milestone”), or (B) the VWAP of the Company Ordinary Shares equals or exceeds $16.00
(as adjusted for share splits, share dividends, combinations or exchange or readjustment of shares, reorganizations and recapitalizations,
share sub-division (including share consolidation), split-up and the like) (the “Tier II Share Price Target,”
and with the Second Revenue Earnout Milestone, each a “Second Earnout Milestone”; the date, if any, on which
the Second Earnout Milestone has been achieved is referred to herein as the “Second Earnout Milestone Achievement Date”)
for any twenty (20) Trading Days within any thirty (30) consecutive Trading Day period during the Earnout Period, then, subject to the
terms and conditions of this Agreement, thirty-five percent (35%) of the Earnout Rights shall automatically convert (subject to Section
1.2(i) below) into thirty-five percent (35%) of the Earnout Shares (“Second Level Contingent Share Consideration”)
as soon as practicable following the settlement of the applicable Earnout Milestone as detailed in Section 1.2(b) and/or 1.2(c)
below, as applicable. The allocation of the Second Level Contingent Share Consideration among the Pre-Closing Company Shareholders
shall be made in accordance with each Pre-Closing Company Shareholder’s Pro Rata Share of the Second Level Contingent Share Consideration;
and
(iii) In
the event that (A) for any two consecutive fiscal quarters commencing with the first full fiscal quarter following the Second Earnout
Milestone Achievement Date, the Gross Revenue is in the aggregate greater than or equal to fifteen million dollars ($15,000,000.00) (the
“Third Revenue Earnout Milestone,” and with the First Revenue Earnout Milestone and Second Revenue Earnout
Milestone, each a “Revenue Earnout Milestone”), or (B) the VWAP equals or exceeds $23.00 per Company Share
(as adjusted for share splits, share dividends, combinations or exchange or readjustment of shares, reorganizations and recapitalizations,
share sub-division (including share consolidation), split-up and the like) (the “Tier III Share Price Target,” (i) and with
the Tier I Share Price Target and the Tier II Share Price Target, each a “Price Earnout Milestone” and (ii)
and with the Third Revenue Earnout Milestone, each a “Third Earnout Milestone”) for any twenty (20) Trading
Days within any thirty (30) consecutive Trading Day period during the Earnout Period, then, subject to the terms and conditions of this
Agreement, forty percent (40%) of the Earnout Rights shall automatically convert (subject to Section 1.2(i) below) into forty
percent (40%) of the Earnout Shares (“Third Level Contingent Share Consideration”) as soon as practicable following
the settlement of the applicable Earnout Milestone as detailed in Section 1.2(b) and/or 1.2(c) below, as applicable.
The allocation of the Third Level Contingent Share Consideration among the Pre-Closing Company Shareholders shall be made in accordance
with each Pre-Closing Company Shareholder’s Pro Rata Share of the Third Level Contingent Share Consideration.
Subject
to the preceding paragraphs, in the event that the applicable Earnout Milestones are not met by the end of the Earnout Period, the respective
Earnout Rights applicable to such Earnout Milestones shall expire and the Pre-Closing Company Shareholders shall not be entitled to receive
the applicable portion of the Earnout Shares. For the avoidance of doubt, in the event the Company meets at the same measurement period
the Price Earnout Milestones for the Second Level Contingent Share Consideration and the First Level Contingent Share Consideration,
then the conversion of the Earnout Rights will also include the First Level Contingent Share Consideration. In the event the Company
meets at the same measurement period the Price Earnout Milestones for the Third Level Contingent Share Consideration and Second Level
Contingent Share Consideration and the First Level Contingent Share Consideration, then the conversion of the Earnout Rights will also
include the entitlement for the First Level Contingent Share Consideration and the Second Level Contingent Share Consideration. Additionally,
if during the Earnout Period any Earnout Milestone is achieved once and then thereafter the same Earnout Milestone is achieved again,
then, for the avoidance of doubt, the portion of the Earnout Rights corresponding to the applicable Earnout Milestone shall only be converted
once.
The
issuance of the Earnout Rights will be subject to the prior receipt of the TASE’s approval for the listing of the Earnout Shares
for trading. The Earnout Shares will be listed for trading on the stock exchange or exchanges where the Company Ordinary Shares will
be listed for trading on the date of the conversion of the applicable Earnout Rights.
(b) Determination
of Earnout.
(i) With
respect to the achievement of the Price Earnout Milestones, during the Earnout Period the Company’s Chief Financial Officer (the
“CFO”) shall monitor on an ongoing basis the VWAP of the Company Ordinary Shares on the principal securities
exchange or securities market on which the Company Ordinary Shares are then traded on each Trading Day during the Earnout Period, and
as soon as practicable (and in any event within five (5) Business Days) after the applicable Price Earnout Milestone has been achieved,
the CFO shall prepare and deliver to each of the Representative Parties a written statement of that fact accompanied by the relevant
VWAP calculation (each, a “Price Earnout Statement”). Each Representative Party shall have five (5) Business
Days after its receipt of a Price Earnout Statement to review it, and each Representative Party and its Representatives on its behalf
may make inquiries to the CFO and related Company personnel and advisors regarding questions concerning or disagreements with the Price
Earnout Statement arising in the course of their review thereof, and the Company shall cooperate in good faith in connection therewith.
If either Representative Party has any objections to a Price Earnout Statement, such Representative Party shall deliver to the Company
(to the attention of the CFO) and the other Representative Party a statement setting forth its objections thereto (in reasonable detail).
If such written statement is not delivered by a Representative Party within five (5) Business Days following the date of delivery of
each Price Earnout Statement, then such Representative Party shall have waived its right to contest such Price Earnout Statement and
the calculation of the VWAP of the Company Ordinary Shares during the applicable portion of the Earnout Period (and whether a Price Earnout
Milestone has been achieved) as set forth therein. If such written statement is delivered by a Representative Party within such five
(5) Business Day period, then the Representative Parties shall negotiate in good faith to resolve any such objections for a period of
five (5) Business Day thereafter. If the Representative Parties do not reach a final resolution within such five (5) Business Day period,
then upon the written request of either Representative Party the Representative Parties will refer the dispute to the Independent Expert
for final resolution of the dispute in accordance with Section 1.2(c). The Company shall issue a press release once the Price
Earnout Milestone has been settled in accordance with the mechanism above, or earlier immediately following the reaching of a written
agreement (or no objections) between the Company and the Representative Parties. The actual conversion of the Earnout Rights into Earnout
Shares shall be made as soon as practicable in accordance with the then applicable rules of the TASE (to the extent that the Company
is listed for trading on the TASE at such time) and in accordance with the terms set forth in Section 1.2(h) below.
(ii) As
soon as practicable (but in any event within two (2) Business Days) after each date of filing with the SEC of the Company’s quarterly
financial statements during the Earnout Period (if relevant, the results of the fourth quarter shall be extracted from the financial
statements filed by the Company with the SEC with respect to the full fiscal year), the CFO will prepare and deliver to the Representative
Parties, a written statement (each, a “Revenue Earnout Statement” and any of a Price Earnout Statement or a
Revenue Earnout Statement, an “Earnout Statement”) that sets forth the CFO’s determination in accordance
with the terms of this Section 1.2 of the Gross Revenue for the applicable measurement period and whether any applicable Revenue
Earnout Milestone has been satisfied for the applicable fiscal quarter(s) specified in Section 1.2(a). Each Representative Party
will have ten (10) calendar days after its receipt of a Revenue Earnout Statement to review it, and each Representative Party may make
inquiries to the CFO and related personnel and advisors of the Company and its Subsidiaries regarding questions concerning or disagreements
with the Revenue Earnout Statement arising in the course of their review thereof, and the Company and its Subsidiaries shall cooperate
in good faith in connection therewith. If either Representative Party has any objections to a Revenue Earnout Statement, such Representative
Party shall deliver to the CFO and the other Representative Party a statement setting forth its objections thereto (in reasonable detail).
If such written statement is not delivered by a Representative Party within ten (10) calendar days following the date of delivery of
such Revenue Earnout Statement, then such Representative Party will have waived its right to contest such Revenue Earnout Statement and
the determination of the Gross Revenue and for such four quarter (out of five consecutive quarters) period (and whether the Revenue Earnout
Milestone has been satisfied for such consecutive five quarter period) as set forth therein. If such written statement is delivered by
a Representative Party within such ten (10) calendar day period, then the Representative Parties shall negotiate in good faith to resolve
any such objections for a period of ten (10) calendar days thereafter. If the Representative Parties do not reach a final resolution
within such ten (10) calendar day period, then, upon the written request of either Representative Party, the Representative Parties will
refer the dispute to the Independent Expert for final resolution of the dispute in accordance with Section 1.2(c) below. The Company
shall issue a press release once the applicable Revenue Earnout Milestone has been settled in accordance with the mechanism above, or
earlier immediately following the reaching of a written agreement (or no objections) between the Company and the Representative Parties.
The actual conversion of the applicable Earnout Rights into Earnout Shares shall be made as soon as practicable following issuance by
the Company of the press release with respect to the settlement of the applicable Revenue Earnout Milestone. All conversions of Earnout
Rights by Pre-Closing Company Shareholders shall be made in accordance with the then-applicable rules of the TASE and the “Nesher
System” (to the extent that the Company is listed for trading on the TASE at such time) and otherwise in accordance with the rules
of any stock exchange on which the Company’s shares are then traded (to the extent applicable) and in accordance with the terms
set forth in this Section 1.2.
(iii) To
the extent that at any time during the Earnout Period the Company Ordinary Shares shall only be listed for trading on TASE, then, for
the purpose of making the above determinations with respect to the occurrence of any Earnout Milestone, the VWAP USD prices referenced
in Section 1.2(a) shall be deemed replaced with NIS equivalents based on the average USD:NIS exchange rate published by the Bank of Israel
over the last fiscal quarter during which the Company Ordinary Shares had been trading on NASDAQ.
(iv) For
the avoidance of doubt, and notwithstanding anything to the contrary herein, in the event that there is a dispute with respect to an
Earnout Statement on the date on which the Earnout Period ends, then the end of the Earnout Period shall not affect the right of the
Pre-Closing Company Shareholders to receive such Earnout Shares relating to the Earnout Statement in dispute, and if it is resolved in
such dispute resolution in accordance with the terms of this Section 1.2 that the applicable Earnout Milestone has been achieved
as set forth in the applicable Earnout Statement, the Pre-Closing Company Shareholders shall be entitled to receive the applicable Earnout
Shares irrespective of the lapse of the Earnout Period.
(c) Dispute
Resolution. If a dispute with respect to an Earnout Statement is submitted in accordance with this Section 1.2 to the Independent
Expert for final resolution, the Parties will follow the procedures set forth in this Section 1.2(c). Each of the Holder Representative
and the SPAC Representative agrees to execute, if requested by the Independent Expert, a reasonable engagement letter with respect to
the determination to be made by the Independent Expert. All fees and expenses of the Independent Expert, and all other out-of-pocket
costs and expenses incurred by a Representative Party in connection with resolving any dispute hereunder before the Independent Expert,
shall be borne by the Company. The Independent Expert shall determine only those issues still in dispute as of the Independent Expert
Notice Date and the Independent Expert’s determination shall be based solely upon and consistent with the terms and conditions
of this Agreement. The determination by the Independent Expert shall be based solely on presentations with respect to such disputed items
by the SPAC Representative and the Holder Representative to the Independent Expert and not on the Independent Expert’s independent
review; provided, that such presentations will be deemed to include any work papers, records, accounts or similar materials delivered
to the Independent Expert by a Representative Party in connection with such presentations and any materials delivered to the Independent
Expert in response to requests by the Independent Expert. Each of the Holder Representative and the SPAC Representative shall use their
reasonable efforts to make their respective presentations as promptly as practicable following submission to the Independent Expert of
the disputed items, and each such Representative Party shall be entitled, as part of its presentation, to respond to the presentation
of the other Representative Party and any questions and requests of the Independent Expert. In deciding any matter, the Independent Expert
shall be bound by the provisions of this Agreement, including this Section 1.2. It is the intent of the parties hereto that the
activities of the Independent Expert in connection herewith are not (and should not be considered to be or treated as) an arbitration
proceeding or similar arbitral process and that no formal arbitration rules should be followed (including rules with respect to procedures
and discovery). The Representative Parties shall request that the Independent Expert’s determination be made within fifteen (15)
days after its engagement, or as soon thereafter as possible, will be set forth in a written statement delivered to the Representative
Parties and shall be final, conclusive, non-appealable and binding for all purposes hereunder (other than for fraud or manifest error).
(d) Covenants
Regarding Financial Reporting. The Company hereby agrees that, commencing as of the Merger Effective Date, for each of its 2023,
2024 and 2025 fiscal years, it (i) shall not change its fiscal year end from December 31 of such year, (ii) shall report its revenues
and other financial information in U.S. dollars (or in NIS, if the Company shall be required pursuant to any applicable Law or the rules
and regulations of the ISA and/or the TASE to report the same) and (iii) shall keep such financial books and records as reasonably necessary
to permit the Company to determine its Gross Revenue and other financial information in accordance with the terms of this Agreement.
(e) Changes
in Business. Subject to the requirements of this Section 1.2, each of the Company and its Subsidiaries, including the Surviving
Company, shall be permitted, following the Closing, to make changes at its sole discretion to its operations, organization, personnel,
accounting practices and other aspects of its business, including actions that may have an impact on Gross Revenue, the share price of
the Company Ordinary Shares and/or Company Continuing Warrants or otherwise the ability of the Company Shareholders to earn the Earnout
Shares in accordance with this Section 1.2, and the Company Shareholders shall not have any right to claim the loss of all or any
portion of any Earnout Shares or other damages as a result of such decisions. Notwithstanding the foregoing, Company shall not, and shall
cause its Subsidiaries not to, take or omit to take any action that is in bad faith and has the primary purpose of avoiding, reducing
or preventing the achievement or attainment of the Earnout Milestones.
(f) At
all times prior to the issuance of all of the Earnout Shares, Company shall keep available for issuance a sufficient number of unissued
Company Ordinary Shares to permit Company to satisfy its issuance obligations set forth in this Section, shall take all actions
required to increase the authorized number of Company Ordinary Shares if at any time there shall be insufficient unissued shares of Company
Ordinary Shares to permit such reservation and shall not enter into any contract or agreement that is in conflict with or would cause
Company to violate its obligations under this sentence.
(g) Notwithstanding
anything to the contrary herein, to the extent required following the Closing by the TASE and/or ISA and/or NASDAQ and/or SEC and/or
ITA, the Company shall be authorized to make any adjustments or amendments regarding the terms of the then-outstanding Earnout Rights
for share splits, share dividends, combinations or exchange or readjustment of shares, reorganizations,
recapitalizations, reclassifications, share sub-divisions (including share consolidations), split-up and the like.
(h) The
conversion of the Earnout Rights into Earnout Shares and the issuance of the Earnout Shares will be subject to withholding tax according
to the relevant provisions of applicable Law. Such withholding tax from the Earnout Shares will be conducted by any TASE member.
(i) Notwithstanding
anything to the contrary herein, in the event that the Company, after reasonably consulting with its tax and legal advisors and with
the SPAC Representative, believes that it is advisable and in the best interests of the Company for tax withholding purposes to amend
the method by which the Earnout Rights are converted into Earnout Shares from an automatic conversion mechanism to instead having such
Earnout Rights exercisable solely at the election of the Pre-Closing Company Shareholders (the “Exercise Amendment”),
then the Company shall have the right to make such Exercise Amendment. In the event that the Company makes an Exercise Amendment, the
applicable Earnout Rights shall be exercisable by Pre-Closing Company Shareholder(s) by providing the Company with an exercise notice,
in such form and substance to be published by the Company in advance (the “Exercise Notice”), with respect
to the exercise of their respective portion of the Earnout Rights by no later than twenty (20) days following the issuance by the Company
of the press release with respect to the settlement of the applicable Earnout Milestone, subject to the terms detailed in the Exercise
Notice.”
1.4 Amendment
to Withholding Provisions.
(a) Section
1.3(f) of the BCA is hereby deleted and replaced with the following:
“(f) Notwithstanding
the foregoing or anything to the contrary in this Agreement, if the WHT Ruling has not been obtained prior to the applicable withholding
date or if the WHT Ruling does not provide a tax deferral with respect to all consideration payable to the SPAC securityholders pursuant
to this Agreement, the SPAC will provide the Company with a declaration in the form attached hereto as Schedule 1.3(f) (the “SPAC
Declaration”).”
(b) Schedule
1.3(f) to the BCA is hereby deleted and replaced with Schedule 1.3(f) attached hereto.
1.5 Amendment
to Conduct of Business of the Company and Merger Sub. Clause (ii) of Section 5.2(b) of the BCA is hereby amended to delete the following
phrase: “or the grant of options or warrants to employees or consultants in the ordinary course of business consistent with past
practice (any such options or warrants, collectively, “Interim Options”)”
1.6 Amendment
to Remove Net Tangible Asset Closing Condition. Section 7.1(e) of the BCA is hereby deleted in its entirety and replaced with the
following: “[RESERVED]”.
2. Miscellaneous.
2.1 No
Further Amendment. The parties hereto agree that all other provisions of the BCA shall, subject to the amendments set forth in Section
1 of this Amendment, continue unmodified, in full force and effect and constitute legal and binding obligations of the Parties in
accordance with their terms. This Amendment is limited precisely as written and shall not be deemed to be an amendment to any other term
or condition of the BCA or any of the documents referred to therein. This Amendment shall form an integral and inseparable part of the
BCA. From and after the date of this Amendment, each reference in the BCA to “this Agreement,” “hereof,” “hereunder”
or words of like import, and all references to the BCA in any and all agreements, instruments, documents, notes, certificates and other
writings of every kind of nature (other than in this Amendment or as otherwise expressly provided) will be deemed to mean the BCA, as
amended by this Amendment, whether or not this Amendment is expressly referenced.
2.2 Other
Terms. This Amendment shall be interpreted, construed, governed and enforced in a manner consistent with the Agreement. Without limiting
the foregoing, the provisions of Article X of the BCA are incorporated herein by reference and shall apply to the terms and provisions
of this Amendment and the Parties, mutatis mutandis.
{Remainder
of page intentionally left blank. Signature page follows.}
IN
WITNESS WHEREOF, the parties hereto have executed this Amendment No. 2 to Business Combination Agreement as of the date first written
above.
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SPAC: |
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KEYARCH ACQUISITION CORPORATION |
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By: |
/s/ Dr. Kai Xiong |
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Name: |
Dr. Kai Xiong |
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Title: |
Authorized Signatory |
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The SPAC Representative: |
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|
|
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KEYARCH GLOBAL SPONSOR LIMITED, solely in the capacity as the SPAC Representative hereunder |
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|
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By: |
/s/ Dr. Kai Xiong |
| |
|
Name: |
Dr. Kai Xiong |
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Title: |
Authorized Signatory |
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The Company: |
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ZOOZ POWER LTD. |
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By: |
/s/ Avi Cohen |
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Name: |
Avi Cohen |
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Title: |
Executive Chairman |
{Signature
Page to Amendment No. 2 to Business Combination Agreement}
Keyarch Acquisition (NASDAQ:KYCHU)
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Keyarch Acquisition (NASDAQ:KYCHU)
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From May 2023 to May 2024
