Item 1.01 Entry Into A Material Definitive Agreement.
Merger Agreement
This section describes certain material provisions of the Merger Agreement (as
defined below), but does not purport to describe all of the terms thereof. The
following summary is qualified in its entirety by reference to the complete text
of the Merger Agreement, a copy of which is attached hereto as Exhibit 2.1.
Shareholders of Malacca Straits Acquisition Company Limited and other interested
parties are urged to read the Merger Agreement in its entirety. Unless otherwise
defined herein, the capitalized terms used below have the meanings given to them
in the Merger Agreement.
General Terms and Effects; Merger Consideration
On September 26, 2022, Malacca Straits Acquisition Company Limited, a Cayman
Islands exempted company (together with its successors, including after the
Domestication (as defined below), "Malacca"), entered into an Agreement and Plan
of Merger (the "Merger Agreement") with Indiev, Inc, a California corporation
(together with its successors, including after the Conversion (as defined
below), ("Indiev"), MLAC Merger Sub, Inc., a Delaware corporation and a
wholly-owned subsidiary of Malacca ("Merger Sub"), Malacca Straits Management
Company Limited, a British Virgin Islands business company with limited
liability (the "Sponsor"), in the capacity as the representative thereunder of
the stockholders of Malacca (other than the stockholders of Indiev immediately
prior to the Closing (as defined below) (the "Earnout Participants") and their
respective successors and assignees) from and after the closing (the "Closing")
of the transactions contemplated by the Merger Agreement (collectively, the
"Transaction") (in such capacity, the "Purchaser Representative"), and Mr. Hai
Shi, in the capacity as the representative thereunder for the Earnout
Participants and their respective successors and assignees from and after the
Closing (in such capacity, the "Seller Representative").
Pursuant to the Merger Agreement, subject to the terms and conditions set forth
therein, (i) prior to the Closing, Indiev shall convert from a corporation
incorporated under the laws of the State of California into a Delaware
corporation (the "Conversion"), and Malacca will continue out of the Cayman
Islands and into the State of Delaware to re-domicile and become a Delaware
corporation (the "Domestication"), and (ii) at the Closing , Merger Sub will
merge with and into Indiev (the "Merger"), with Indiev continuing as the
surviving entity and wholly-owned subsidiary of Malacca, and with each Indiev
stockholder receiving shares of Malacca common stock at the Closing, as further
described below. Simultaneously with entering into the Merger Agreement, Malacca
entered into a Subscription Agreement with Mr. Hai Shi ("PIPE Investor") to
purchase a total of 1.5 million shares of Malacca's Class A common stock (after
giving effect to the Domestication) in a private investment in public equity
("PIPE") in Malacca at $10.00 per share with aggregate gross proceeds to of
$15,000,000, to be consummated immediately prior the Closing, but after the
Domestication.
The Merger Agreement provides that the total consideration received by Indiev
security holders from Malacca at the Closing will be a number of shares of
Malacca common stock that have an aggregate value equal to $600,000,000 (the
"Merger Consideration") subject to adjustments at the Closing to be decreased
for the amount of the consolidated Indebtedness of Indiev and its Subsidiaries,
net of their consolidated cash and cash equivalents, as of the Closing and the
amount of unpaid transaction expenses and transaction bonuses of Indiev and its
subsidiaries as of the Closing, and to the extent applicable and elected by the
Sponsor in accordance with the Sponsor Letter Agreement (as defined below),
increased by the amount by which Malacca's transaction expenses exceed $5
million ("Excess Purchaser Expenses"), with each share of Malacca in the Merger
Consideration being valued at an amount equal to the price at which Malacca will
pay to redeem its common stock from its public stockholders in the redemption
for its initial business combination as required by its organizational documents
(the "Closing Redemption"), and with each Earnout Participant receiving its pro
rata share of the Merger Consideration. Additionally, after the Closing, the
Earnout Participants shall have the contingent right to receive up to an
additional 20,000,000 shares of Malacca common stock (subject to equitable
adjustment for stock splits, stock dividends, combinations, recapitalizations
and the like after the Closing) (the "Earnout Shares") from Malacca based on the
post-merger entity achieving certain sales milestones or stock trading price
milestones after the Closing. The Earnout Participants will receive 5,000,000 of
the Earnout Shares if Malacca's consolidated net sales of electronic automobile
vehicles for the 12 month period beginning with the start of the first calendar
quarter starting after the Closing (the "First Sales Earnout Year") is at least
400, at an average effective pre-tax sales price of $55,000 per vehicle, and
will receive another 10,000,000 of the Earnout Shares if Malacca's consolidated
net sales of electronic automobile vehicles for next 12 month period after the
First Sales Earnout Year is at least 2,000, at an average effective pre-tax
sales price of $55,000 per vehicle. The Earnout Participants will receive
another 5,000,000 of the Earnout Shares if the volume weighted average stock
price of Malacca's common stock is at least $12.50 per share for any 20 trading
day period within any 30 trading day period beginning 150 days after the Closing
until December 31, 2024. The determinations with respect to whether the Earnout
Shares will be managed by the Purchaser Representative and the Seller
Representative.
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Representations and Warranties
The Merger Agreement contains customary representations and warranties made by
each of Malacca and Indiev. Certain of the representations and warranties are
qualified by materiality or Material Adverse Effect, as well as information
provided in the disclosure schedules to the Merger Agreement. As used in the
Merger Agreement, "Material Adverse Effect" means, with respect to any specified
person or entity, any fact, event, occurrence, change or effect that has had, or
would reasonably be expected to have, individually or in the aggregate, a
material adverse effect upon (i) the business, assets, liabilities, operations,
results of operations, or condition (financial or otherwise) of such person or
entity and its subsidiaries, taken as a whole, or (ii) the ability of such
person or entity or any of its subsidiaries to consummate the transactions
contemplated by the Merger Agreement or the ancillary documents relating to the
Merger Agreement to which it is or is required to be a party or bound or to
perform its obligations thereunder prior to the Outside Date, subject to certain
customary exceptions with respect to clause (i) above.
No Survival
The representations and warranties of the parties contained in the Merger
Agreement terminate and expire as of, and do not survive, the Closing, and there
are no indemnification rights for another party's breach. The covenants and
agreements of the parties contained in the Merger Agreement terminate and expire
as of, and do not survive, the Closing, except (ii) those covenants and
agreements that by their terms expressly contemplate performance in whole or in
part after the Closing, which covenants and agreements will survive the Closing
until fully performed in accordance with their terms, and then only with respect
to any breaches occurring after the Closing, and (ii) the trust waiver and
miscellaneous provisions of the Merger Agreement.
Covenants of the Parties
Each party agreed in the Merger Agreement to use its commercially reasonable
efforts to effect the Closing. The Merger Agreement also contains certain
customary covenants by each of the parties during the period between the signing
of the Merger Agreement and the earlier of the Closing or the termination of the
Merger Agreement in accordance with its terms (the "Interim Period"), including
those relating to: (i) the provision of access to their properties, books and
personnel; (ii) the operation of their respective businesses in the ordinary
course of business; (iii) the provision of financial statements by Indiev to
Malacca; (iv) Malacca's public filings; (v) no insider trading; (vi)
notifications of certain breaches, consent requirements or other matters; (vii)
efforts to consummate the Closing; (viii) tax matters; (ix) further assurances;
(x) public announcements; and (xi) confidentiality. Each party also agreed
during the Interim Period not to solicit or enter into any inquiry, proposal or
offer, or any indication of interest in making an offer or proposal for an
alternative competing transactions, to notify the others as promptly as
practicable in writing of the receipt of any inquiries, proposals or offers,
requests for information or requests relating to an alternative competing
transaction or any requests for non-public information relating to such
transaction, and to keep the other party informed of the status of any such
inquiries, proposals, offers or requests for information.
During the Interim Period, Indiev and its subsidiaries are permitted to take up
to $40 million in loans from Mr. Hai Shi or any of his affiliates under terms
and conditions that are reasonably agreed by Malacca and Indiev, except that as
a condition to any such loans and any other existing loans between Mr. Shi or
his affiliates and Indiev or its subsidiaries (collectively, the "Shi Company
Loans"), Mr. Hai Shi will agree that all outstanding Shi Company Loans will be
converted, exchanged for or otherwise satisfied as of immediately prior to the
Closing by the issuance of PIPE shares under the same terms as the Subscription
Agreement with Mr. Hai Shi. Indiev will use commercially reasonable efforts to
cause Mr. Shi or his applicable affiliates to enter into additional subscription
agreements with respect to Shi Company Loans on the same terms as his
Subscription Agreement. Indiev will also use its commercially reasonable efforts
to cause any Indebtedness owed by Indiev to Mr. Hai Shi's spouse or her
applicable affiliates (that are not otherwise covered by Shi Company Loans) (the
"Shi Spouse Loans") to be either (i) converted from demand loans to term loans
maturing in not less than three (3) years after the Closing and otherwise on
terms and conditions reasonably acceptable to Malacca or (ii) converted into,
exchanged for, or otherwise satisfied by the issuance of, PIPE Shares in
connection with the Closing under the same terms as Mr. Hai Shi's Subscription
Agreement. During the Interim Period, Malacca may, but is not required to, enter
into additional subscription agreements on substantially the same terms as the
Subscription Agreement, and Indiev will cooperate with such efforts.
The Merger Agreement also contains certain customary post-Closing covenants
regarding (a) maintenance of books and records; (b) indemnification of directors
and officers and the purchase of tail directors' and officers' liability
insurance; and (c) use of trust account and PIPE Investment (as defined below)
proceeds.
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In addition, Indiev agreed to use its commercially reasonable efforts to as
promptly as practicable after the Registration Statement has become effective to
obtain its required stockholder approvals in the manner required under its
organizational documents and applicable law for, among other things, the
adoption and approval of the Merger Agreement, ancillary documents relating
thereto and the Transaction, including enforcing the Voting Agreements (as
defined and described below) in connection therewith.
The parties made customary covenants regarding the registration statement on
Form S-4 to be filed by Malacca (the "Registration Statement") with the U.S.
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "Securities Act"), to register the common stock of Malacca
deemed reissued in the Domestication and the shares of Malacca common stock to
be issued as Merger Consideration under the Merger Agreement. The Registration
Statement also will contain the Malacca proxy statement to solicit proxies from
Malacca's shareholders to approve (the "Purchaser Board Recommendation"), among
other things, (i) the Merger Agreement and the Transaction, including the Merger
and the Domestication; (ii) the issuance of any shares in connection with the
PIPE investment, including the adoption and approval of the issuance of more
than 20% of the outstanding Malacca's common stock; (iii) the effecting of the
Domestication, including adoption of the new organizational documents of Malacca
after the Domestication; (iv) the adoption and approval of the new amended and
restated organizational documents of Malacca to be adopted upon the Closing; (v)
the adoption and approval of a new equity incentive plan providing for awards
for a number of shares equal to 10% of the aggregate number of shares of Malacca
common stock issued and outstanding immediately after Closing (after giving
effect to the Closing Redemption); and (vi) the appointment of the post-Closing
board of directors. Malacca also made certain covenants with respect to its
efforts during the Interim Period to effect an amendment to its organizational
documents to extend its deadline to consummate its initial business combination
from October 17, 2022 to July 17, 2023 (or such earlier period as determined by
its board of directors). Malacca agreed not to change, withdraw, withhold,
qualify, amend or modify, in a manner adverse to Indiev, the Purchaser Board
Recommendation, except as required by the board's fiduciary duties.
The parties agreed that the post-Closing board of directors will consist of five
directors, at least a majority of which will qualify as "independent directors"
under the listing rules of Nasdaq and meet any applicable diversity requirements
under applicable law and the listing rules of Nasdaq. All five directors on
Malacca's board of directors immediately after the Closing shall be designated
by Indiev. The post-Closing board will be a classified board with two classes of
directors serving staggered two year terms, with the class of directors serving
. . .
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. Description
2.1* Agreement and Plan of Merger, dated as of September 26, 2022, by and
among Malacca Straits Acquisition Company Limited, Indiev, Inc, MLAC
Merger Sub, Inc., Malacca Straits Management Company Limited, in the
capacity as the Purchaser Representative thereunder, and Mr. Hai Shi, in
the capacity as the Seller Representative thereunder.
10.1 Voting Agreement, dated as of September 26, 2022, by and among Malacca
Straits Acquisition Company Limited, Indiev, Inc, and the stockholder of
Indiev party thereto.
10.2 Form of Lock-Up Agreement, by and between Malacca Straits Acquisition
Company Limited and the stockholder of Indiev party thereto.
10.3 Non-Competition Agreement, dated as of September 26, 2022, by and
among Malacca Straits Acquisition Company Limited, Indiev, Inc and Mr.
Hai Shi.
10.4 Form of Registration Rights Agreement, by and among Malacca Straits
Acquisition Company Limited, Malacca Straits Management Company Limited
and Investors party thereto.
10.5 Sponsor Letter Agreement, dated as of September 26, 2022 by and
between Malacca Straits Acquisition Company Limited and Malacca Straits
Management Company Limited.
10.6 Form of Subscription Agreement, by and among Malacca Straits
Acquisition Company Limited and the subscriber party thereto.
10.7 Amendment to the Underwriting Agreement, dated as of September 26,
2022, by and between Malacca Straits Acquisition Company Limited and
BTIG, LLC.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
* The exhibits and schedules to this Exhibit have been omitted in accordance
with Item 601(b)(2) of Regulation S-K. The Registrant agrees to furnish
supplementally to the SEC a copy of all omitted exhibits and schedules upon its
request.
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