Item
1.01 Entry into a Material definitive Agreement.
As
previously disclosed, on April 30, 2022, MCAF entered into that certain Agreement and Plan of Merger (as may be amended, supplemented
or otherwise modified from time to time, the “Merger Agreement”), by and among MCAF, CH AUTO Inc., a Cayman Islands
exempted company (“CH AUTO” or “Pubco”), Ch-Auto Merger Sub Corp., a Delaware corporation and wholly
owned subsidiary of Pubco (“Merger Sub”) and CH-AUTO TECHNOLOGY CORPORATION LTD., a company organized under the laws
of the People’s Republic of China (the “Company”), pursuant to which, among other things, MCAF, Pubco, Merger
Sub and the Company intend to effect a merger of Merger Sub with and into MCAF whereby MCAF will be the surviving corporation (the “Surviving
Corporation”) and a wholly owned subsidiary of Pubco (the “Merger”) in accordance with the Merger Agreement
and the General Corporation Law of the State of Delaware (the “DGCL”). In connection with the Merger, the name of
the Surviving Corporation shall be changed to CH Autotech USA, Inc. Following the Merger, Pubco expects its ordinary shares to be traded
on the Nasdaq Stock Market. On December 23, 2022, MCAF disclosed that the parties to the Merger Agreement amended the Merger Agreement
by executing an Amended and Restated Agreement and Plan of Merger, dated December 23, 2022 (the “A&R Merger Agreement”).
All capitalized terms used herein and not defined shall have the meanings ascribed to them in the A&R Merger Agreement.
On
March 1, 2023, MCAF, CH-AUTO, Pubco and Merger Sub entered into an amendment (the “Amendment”) to the A&R
Merger Agreement. The Amendment provides that (i) instead of acquiring at least 90% of the CH AUTO, MCAF would only need to acquire
at least 71.2184% of CH AUTO to consummate the Closing, (ii) immediately after the Closing, Pubco’s board of directors (the
“Post-Closing Pubco Board”) will consist of five (5) members, among which one (1) person shall be designated by Sponsor,
four (4) persons shall be designated by CH AUTO and at least two (2) persons of the Post-Closing Pubco Board shall qualify as
independent directors under the Securities Act and Nasdaq rules, (iii) modified the timing of CH AUTO’s delivery of the
Equityholder Allocation Schedule, (iv) simultaneously with and in exchange for the issuance of the CH AUTO Merger Consideration, but
before the Closing of the Merger, Pubco’s subsidiary, CH-Auto (Hong Kong) Limited (“CH-Auto HK”), or a
then-established wholly-owned PRC subsidiary of CH-Auto HK (together with CH-Auto HK, the “Holding Company”, as the
context may require), shall acquire all the shares of CH AUTO’s equity securities (the “Company Common Stock”)
held by each Company Reorganization Stockholder at par value or other value as agreed between the Holding Company and the Company
Reorganization Stockholders (the “HK Share Purchase”); provided however, certain Company Reorganization
Stockholders that are the directors, supervisors or senior executives of the Company (each a “DSO Stockholder” and
together, the “DSO Stockholders”) shall each transfer up to 25% of the stocks of CH AUTO held by him or her due
to restrictions under the PRC laws. Each DSO Stockholder shall further enter into a voting rights proxy agreement (the “Voting
Rights Proxy Agreement”) and an economic rights transfer agreement (the “Economic Rights Transfer Agreement”) with
the Holding Company (the “HK Voting Rights Entrustment”), pursuant to which each DSO Stockholder shall transfer and
assign to the Holding Company (i) all of their respective voting rights in connection with the remaining shares of Company Common
Stock held by them (the “DSO’s Remaining Shares”) pursuant to the Voting Rights Proxy Agreement and (ii)
all of their economic rights, including the right to receive dividends, in connection the DSO’s Remaining Shares, pursuant to
the Economic Rights Transfer Agreement. The Pubco Ordinary Shares issued to each DSO Shareholder in exchange for such DSO’s
Remaining Shares, shall be subject to restrictions on transfer, conveyance, assignment and further encumbrance until the DSO
Shareholder transfers and conveys the underlying shares of Company Common Stock to the Holding Company. Upon the completion of the
HK Share Purchase, and after giving effect to the HK Voting Right Entrustment (the “Reorganization Closing”), the
Holding Company shall (1) have the ability to direct, directly or indirectly, at least 71.2184% of the voting rights of all
outstanding equity securities of CH AUTO entitled to vote, (2) own, directly or indirectly, at least 71.2184% of the economic rights
of all the outstanding equity securities in CH AUTO, and (3) own, directly or indirectly own at least 37.8426% of the then-issued
and outstanding equity interests in CH AUTO; (v) revised the definitions of Company Employee Option and Company FA Option, (vi) CH
AUTO shall advance MCAF the aggregate amount of Seven Hundred and Fifty Thousand Dollars ($750,000) in two payments (the
“Loans”) to fund the payment of the expenses incurred, in connection with two (2) extensions of the period of
time for MCAF to consummate a business combination and for working capital for the Company; (vi) in the event CH AUTO funds the
initial payment of the Loan, the Outside Date shall be extended from May 15, 2023 to July 2, 2023, (viii) revised the timing, steps
and procedure for the Reorganization and (ix) permitted CH AUTO to convert outstanding debt from a lender in the amount of RMB 39
million into 15.6 million shares of CH AUTO, at a conversion price of RMB 2.5 per share. The transactions contemplated by the
A&R Agreement and the Amendment are collectively referred to as the “Business Combination.”
The
foregoing summary of the Amendment does not purport to be complete and is qualified in its entirety by reference to the actual Amendment
which is filed with this Current Report on Form 8-K as Exhibit 2.1 and is incorporated herein by reference.
IMPORTANT
NOTICES
Additional
Information and Where to Find It
In
connection with the Business Combination, Pubco and MCAF will file relevant materials with the Securities and Exchange Commission (the
“SEC”), including the registration statement and accompanying proxy statement on Form F-4 (the “Registration
Statement”). The Registration Statement will include a proxy statement to be distributed to holders of MCAF’s common
stock in connection with MCAF’s solicitation of proxies for the vote by MCAF shareholders with respect to the proposed transaction
and other matters as described in the Registration Statement, as well as the prospectus relating to the offer of securities to be issued
to the Company’s stockholders in connection with the proposed business combination. After the Registration Statement has been filed
and declared effective, MCAF will mail a definitive proxy statement, when available, to its stockholders. Investors and security holders
and other interested parties are urged to read the Registration Statement, any amendments thereto and any other documents filed with
the SEC carefully and in their entirety when they become available because they will contain important information about MCAF, the Company
and the proposed business combination. Additionally, MCAF will file other relevant materials with the SEC in connection with the business
combination. Copies of these documents may be obtained free of charge at the SEC’s web site at www.sec.gov. Securityholders of
MCAF are urged to read the Registration Statement and the other relevant materials when they become available before making any voting
decision with respect to the proposed business combination because they will contain important information. The Registration Statement
and proxy statement, once available, may also be obtained without charge at the SEC’s website at www.sec.gov or by writing to MCAF
at 311 West 43rd Street, 12th Floor, New York, NY 10036. INVESTORS AND SECURITY HOLDERS OF MCAF ARE URGED TO READ THESE MATERIALS (INCLUDING
ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS IN CONNECTION WITH THE TRANSACTIONS THAT MCAF WILL FILE WITH
THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT MCAF, THE COMPANY AND THE TRANSACTIONS.
Important
Notice Regarding Forward-Looking Statements
This
Current Report on Form 8-K contains certain “forward-looking statements” within the meaning of the Securities Act of 1933
and the Securities Exchange Act of 1934, both as amended. Statements that are not historical facts, including statements about the pending
transactions described above, and the parties’ perspectives and expectations, are forward-looking statements. Such statements include,
but are not limited to, statements regarding the proposed transaction, including the anticipated initial enterprise value and post-closing
equity value, the benefits of the proposed transaction, integration plans, expected synergies and revenue opportunities, anticipated
future financial and operating performance and results, including estimates for growth, the expected management and governance of the
combined company, and the expected timing of the transactions. The words “expect,” “believe,” “estimate,”
“intend,” “plan” and similar expressions indicate forward-looking statements. These forward-looking statements
are not guarantees of future performance and are subject to various risks and uncertainties, assumptions (including assumptions about
general economic, market, industry and operational factors), known or unknown, which could cause the actual results to vary materially
from those indicated or anticipated.
The
forward-looking statements are based on the current expectations of the management of MCAF and the Company, as applicable, and are inherently
subject to uncertainties and changes in circumstances and their potential effects and speak only as of the date of such statement. There
can be no assurance that future developments will be those that have been anticipated. These forward-looking statements involve a number
of risks, uncertainties or other assumptions that may cause actual results or performance to be materially different from those expressed
or implied by these forward-looking statements including: risks related to the Company’s businesses and strategies; the ability
to complete the proposed business combination due to the failure to obtain approval from MCAF’s stockholders or satisfy other closing
conditions in the definitive merger agreement; the amount of any redemptions by existing holders of MCAF’s common stock; the ability
to recognize the anticipated benefits of the business combination; in the final prospectus of Mountain Crest Acquisition Corp. IV for
its initial public offering dated June 29, 2021; and in Mountain Crest Acquisition Corp. IV’s other filings with the SEC. 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. Accordingly, you are cautioned not to place undue reliance on
these forward-looking statements. Forward-looking statements relate only to the date they were made, and MCAF, the Company and their
subsidiaries undertake no obligation to update forward-looking statements to reflect events or circumstances after the date they were
made except as required by law or applicable regulation.
Participants
in Solicitation
MCAF
the Company and their respective directors and executive officers may be deemed participants in the solicitation of proxies with respect
to the proposed business combination under the rules of the SEC. Securityholders may obtain more detailed information regarding the names,
affiliations, and interests of certain of MCAF’s executive officers and directors in the solicitation by reading MCAF’s Registration
Statement and other relevant materials filed with the SEC in connection with the proposed business combination when they become available.
Information about MCAF’s directors and executive officers and their ownership of MCAF common stock is set forth in MCAF’s
prospectus related to its initial public offering dated June 29, 2021, as modified or supplemented by any Form 3 or Form 4 filed with
the SEC since the date of that filing. Other information regarding the interests of MCAF’s participants in the proxy solicitation,
which in some cases, may be different than those of their stockholders generally, will be set forth in the Registration Statement relating
to the proposed business combination when it becomes available. These documents can be obtained free of charge at the SEC’s web
site at www.sec.gov.
The
Company and its directors and executive officers may also be deemed to be participants in the solicitation of proxies from the stockholders
of MCAF in connection with the proposed business combination. A list of the names of such directors and executive officers and information
regarding their interests in the proposed business combination will be included in the Registration Statement for the proposed business
combination.
No
Offer or Solicitation
This
Current Report on Form 8-K is not a proxy statement or solicitation of a proxy, consent or authorization with respect to any securities
or in respect of the transactions described above and shall not constitute an offer to sell or a solicitation of an offer to buy the
securities of MCAF or the Company, nor shall there be any sale of any such securities in any state or jurisdiction in which such offer,
solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of such state or 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, or an exemption therefrom.
