Item 1.01 Entry Into A Material Definitive Agreement.
Share Exchange Agreement
General Terms, Effects, and Consideration
On May 14, 2021, Yunhong International, a Cayman Islands exempted company
("Yunhong "), entered into a Share Exchange Agreement (the "Share Exchange
Agreement") with Giga Energy Inc., a corporation formed under the laws of the
Province of British Columbia, Canada ("Giga Energy"), each of Giga Energy's
shareholders named therein (collectively, the "Sellers"), LF International Pte.
Ltd., a Republic of Singapore company, in the capacity as the representative
from and after the closing of the Transactions (as defined below) (the
"Closing") for Yunhong's shareholders other than the Sellers (the "Purchaser
Representative"), and Yang Lan, in the capacity as the representative for the
Sellers thereunder (the "Seller Representative"). Pursuant to the Share Exchange
Agreement, among other things and subject to the terms and conditions contained
therein, Yunhong will effect an acquisition of Giga Energy, by acquiring from
the Sellers all of the issued and outstanding equity interests of Giga Energy
(together with the other transactions contemplated by the Share Exchange
Agreement, the "Transactions").
Pursuant to the Share Exchange Agreement, in exchange for all of the outstanding
shares of Giga Energy, Yunhong will issue to the Sellers a number of Yunhong
ordinary shares (the "Exchange Shares") equal in value to US$7,354,615,385, with
the Yunhong ordinary shares valued at US$10.00 per share, with fifteen percent
(15%) of such Exchange Shares ("Escrow Shares") being deposited into a
segregated escrow at the Closing (along with dividends and other earnings
otherwise payable with respect to such Escrow Shares). The Escrow Shares and
other escrow property shall serve as a source of security for the Sellers'
indemnification obligations and any purchase price adjustments. The Exchange
Shares, including the Escrow Shares, will be allocated among the Sellers
pro-rata based on each Seller's ownership of Giga Energy immediately prior to
the Closing. Certain Sellers will have their portion of the Exchange Shares
subject to a lock-up as set forth in the Lock-Up Agreements as described below
under the heading "Lock-Up Agreement."
The Escrow Shares will be held in an escrow account to be maintained by
Continental Stock Transfer & Trust Company, in its capacity as the escrow agent,
or such other escrow agent as agreed by Yunhong and Giga Energy prior to the
Closing (the "Escrow Agent"). While the Escrow Shares are held in escrow, the
Sellers will be entitled to vote their portion of the Escrow Shares.
Representations and Warranties
The Share Exchange Agreement contains a number of representations and warranties
made by Yunhong, on the one hand, and Giga Energy and the Sellers on the other
hand, made solely for the benefit of the other, which in certain cases are
subject to specified exceptions and qualifications contained in the Share
Exchange Agreement or in information provided pursuant to certain disclosure
schedules to the Share Exchange Agreement. The representations and warranties
are customary for transactions similar to the Transactions.
In the Share Exchange Agreement, Giga Energy made certain customary
representations and warranties to Yunhong, including, among others,
representations and warranties related to the following: (1) corporate matters,
including due organization, existence and good standing; (2) authority and
binding effect relative to execution and delivery of the Share Exchange
Agreement and other ancillary agreements; (3) capitalization; (4) subsidiaries;
(5) governmental approvals; (6) non-contravention; (7) financial statements; (8)
absence of certain changes; (9) compliance with laws; (10) permits and licenses;
(11) litigation; (12) material contracts; (13) intellectual property; (14) taxes
and tax returns; (15) real property; (16) personal property; (17) employee
matters; (18) benefit plans; (19) environmental matters; (20) transactions with
related persons; (21) insurance; (22) top customers and vendors; (23) books and
records; (24) accounts receivable; (25) business practices; (26) PRC compliance;
(27) Investment Company Act of 1940; (28) finders and brokers; (29) independent
investigation; (30) information supplied; and (31) disclosure. The Sellers also
jointly and severally made certain customary representations and warranties to
Yunhong, including representations and warranties related to the following: (1)
corporate matters, including due organization, existence and good standing; (2)
authority and binding effect relative to execution and delivery of the Share
Exchange Agreement and other ancillary agreements; (3) ownership of the Giga
Energy shares to be purchased by Yunhong; (4) non-contravention; (5) litigation;
(6) investment representations; (7) finders and investment bankers; (8)
independent investigation; and (9) information supplied.
In the Share Exchange Agreement, Yunhong made certain customary representations
and warranties to Giga Energy, including among others, representations and
warranties related to the following: (1) corporate matters, including due
organization, existence and good standing; (2) authority and binding effect
relative to execution and delivery of the Share Exchange Agreement and other
ancillary agreements; (3) governmental approvals; (4) non-contravention; (5)
capitalization; (6) SEC filings and financial statements; (7) absence of certain
changes; (8) compliance with laws; (9) litigation, orders and permits and
licenses; (10) Nasdaq listing; (11) reporting company status; (12) taxes and
returns; (13) employees and employee benefit plans; (14) properties; (15)
material contracts; (16) transactions with related persons; (17) information
supplied; (18) Investment Company Act of 1940; (19) finders and brokers; (20)
ownership of the Exchange Shares; (21) business practices; (22) insurance; and
(20) independent investigation.
Covenants
Each party agreed in the Share Exchange Agreement to use its commercially
reasonable efforts to effect the Closing. The Share Exchange Agreement also
contains certain customary covenants by each of the parties during the period
between the signing of the Share Exchange Agreement and the earlier of the
Closing or the termination of the Share Exchange Agreement in accordance with
its terms (the "Interim Period"), including covenants regarding: (1) the
provision of access to their properties, books and personnel; (2) the operation
of their respective businesses in the ordinary course of business; (3) Giga
Energy's interim financial statements; (4) Yunhong's public filings and
requirement to use commercially reasonable efforts to maintain the listing of
its securities on the Nasdaq Capital Market ("Nasdaq"); (5) no solicitation of,
or entering into, any alternative competing transactions; (6) no insider
trading; (7) notifications of certain breaches, consent requirements or other
matters; (8) efforts to consummate the Closing and obtain third party and
regulatory approvals; (9) further assurances; (10) public announcements; (11)
confidentiality; (12) indemnification of directors and officers; (13) adoption
of new corporate and operational policies; (14) tax matters; and (15) efforts to
support a private placement or backstop arrangements, if sought. The Share
Exchange Agreement also contains certain post-closing covenants by the parties,
including covenants regarding (1) litigation support; (2) retention of
documents; (3) indemnification of directors and officers; and (4) use of trust
account proceeds after the Closing.
The parties also agreed to take all necessary actions to cause Yunhong's board
of directors immediately after the Closing to consist of seven directors, three
persons designated by Yunhong prior to the Closing, at least two of whom qualify
as independent directors under Nasdaq rules and four persons designated by Giga
Energy prior to the Closing, at least three of whom qualify as independent
directors under Nasdaq rules. The board will be classified into three classes,
with each class serving three year terms.
Yunhong also agreed to prepare, with the assistance of Giga Energy and the
Sellers, and use their commercially reasonable efforts to file with the
Securities and Exchange Commission (the "SEC") a proxy statement and/or tender
offer statement as promptly as practicable after the signing of the Share
Exchange Agreement to seek, if required, (1) approval of the Share Exchange
Agreement and the transactions contemplated by the Share Exchange Agreement, (2)
approval of a Third Amended and Restated Memorandum of Association and a Fourth
Amended and Restated Articles of Association of Yunhong, and (3) approval of the
adoption of a new omnibus equity incentive plan providing for the grant to
employees and other representatives of a total number of shares equal to twenty
percent (20%) of the number of shares issued and outstanding immediately after
the Closing, and providing Yunhong's public shareholders an opportunity to
participate in the redemption by Yunhong of its public shareholders as required
by its amended and restated memorandum and articles of association (the
"Redemption"). In connection with the Closing, Yunhong will change its name to
"Giga Energy Ltd."
Conditions to Closing
The obligations of the parties to consummate the Transactions are subject to
various conditions, including the following mutual conditions of the parties
unless waived: (i) the approval of the Share Exchange Agreement and the
transactions contemplated thereby and related matters by the requisite vote of
Yunhong's shareholders, if required; (ii) expiration of any waiting period under
applicable antitrust laws; (iii) receipt of requisite consents from governmental
authorities and other third parties to consummate the Transactions; (iv) no law
or order preventing or prohibiting the Transactions; (v) no pending litigation
to enjoin or restrict the consummation of the Closing; (vi) the election or
appointment of members to Yunhong's board of directors as described above; (vii)
Yunhong (together with the Giga and its subsidiaries (collectively, the "Target
Companies") having at least $5,000,001 in net tangible assets as of the Closing,
after giving effect to the completion of the Redemption; and (viii) that
Yunhong's ordinary shares continue to be listed on Nasdaq immediately following
the Closing, and Yunhong shall have at least 300 round-lot shareholders.
In addition, unless waived by Giga Energy, the obligations of Giga Energy and
the Sellers to consummate the Transactions are subject to the satisfaction of
the following Closing conditions, in addition to customary certificates and
other closing deliveries: (i) the representations and warranties of Yunhong
being true and correct as of the date of the Share Exchange Agreement and as of
the Closing (subject to Material Adverse Effect); (ii) Yunhong having performed
in all material respects its obligations and complied in all material respects
with its covenants and agreements under the Share Exchange Agreement required to
be performed or complied with by it on or prior to the date of the Closing;
(iii) absence of any Material Adverse Effect with respect to Yunhong since the
date of the Share Exchange Agreement which is continuing and uncured; (iv)
receipt by Giga Energy of the Escrow Agreement, duly executed by Yunhong , the
Purchaser Representative and the Escrow Agent; and (v) a supplemental listing
shall have been filed with Nasdaq as of the Closing Date to list the shares
constituting the Closing Exchange Shares.
Unless waived by Yunhong, the obligations of Yunhong, to consummate the
Transactions are subject to the satisfaction of the following Closing
conditions, in addition to customary certificates and other closing deliveries:
(i) the representations and warranties of Giga Energy and the Sellers being true
and correct as of the date of the Share Exchange Agreement and as of the Closing
(subject to Material Adverse Effect); (ii) Giga Energy and the Sellers having
performed in all material respects their respective obligations and complied in
all material respects with their respective covenants and agreements under the
Share Exchange Agreement required to be performed or complied with on or prior
to the date of the Closing; (iii) absence of any Material Adverse Effect with
respect to any Target Company since the date of the Share Exchange Agreement
which is continuing and uncured; (iv) receipt by Yunhong of employment
agreements, effective as of the Closing, in form and substance reasonably
acceptable to Yunhong and Giga Energy between certain individuals and either
Yunhong or Giga Energy, executed by the parties thereto; (v) receipt by Yunhong
of the Escrow Agreement; (vi) receipt by Yunhong of evidence that certain
contracts involving Target Companies and/or any of the Sellers or other related
persons have been terminated with no further liability of any Target Company
thereunder; and (viii) each of the Non-Competition Agreement (as defined below),
the Lock-Up Agreement (as defined below) and the Registration Rights Agreement
being in full force and effect in accordance with its terms as of the Closing,
Termination
The Share Exchange Agreement may be terminated under certain customary and
limited circumstances at any time prior the Closing, including, among other
reasons: (i) by mutual written consent of Yunhong and Giga Energy; (ii) by
either Yunhong or Giga Energy if the Closing has not occurred on or prior to
July 30, 2021 (the "Outside Date") and the failure of the Closing to occur by
such date was not caused by or the result of a breach of the Share Exchange
Agreement by such terminating party or its affiliate (or with respect to Giga
Energy, any other Target Company or the Sellers), (iii) by either Yunhong or
Giga Energy if a governmental authority of competent jurisdiction shall have
issued an order or taken any other action permanently restraining, enjoining or
otherwise prohibiting the Transactions, and such order or other action has
become final and non-appealable; (iv) by Giga Energy for Yunhong's uncured
breach of the Share Exchange Agreement, such that the related Closing condition
would not be met; (v) by Yunhong for the uncured breach of the Share Exchange
Agreement by any Target Company or any Seller, such that the related Closing
condition would not be met; (vi) by Yunhong if there has been a Material Adverse
Effect with respect to any Target Company since the date of the Share Exchange
. . .
Item 9.01. Financial Statements and Exhibits
(d) Exhibits.
Exhibit
Number Exhibit
10.1 † Share Exchange Agreement, dated as of May 14, 2021, by and among
Yunhong International, Giga Energy Inc., each of Giga Energy Inc.'s
shareholders, LF International Pte. Ltd., in the capacity as the
Purchaser Representative, and Yang Lan, in the capacity as the Seller
Representative.
10.2 Registration Rights Agreement, by and among Yunhong International,
LF International Pte. Ltd., in the capacity as the Purchaser
Representative, and the Investors listed therein.
10.3 Form of Lock-Up Agreement, by and among Yunhong International, LF
International Pte. Ltd., in the capacity as the Purchaser
Representative, and the Holder.
10.4 Form of Non-Competition and Non-Solicitation Agreement, by and among
Yunhong International, LF International Pte. Ltd., in the capacity as
the Purchaser Representative, Giga Energy Inc., and the Subject
Party.
† Certain of the exhibits and schedules to this Exhibit have been omitted in
accordance with Regulation S-K Item 601(b)(10). The Registrant agrees to furnish
a copy of all omitted exhibits and schedules to the Securities and Exchange
Commission upon its request.
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