Item 1.01 Entry into a Material Definitive Agreement.
As previously announced on June 21, 2021, on June 28, 2021 and on November 15, 2021, CITIC Capital Acquisition Corp., a Cayman Islands exempted company limited by shares (“CCAC”, and, after the consummation of Business Combination, “Quanergy PubCo”), entered into an Agreement and Plan of Merger (as amended from time to time, the “Merger Agreement” ”), by and among CCAC, CITIC Capital Merger Sub Inc., a Delaware corporation and a direct wholly owned subsidiary of CCAC (“Merger Sub”), and Quanergy Systems, Inc., a Delaware corporation (“Quanergy”). The transaction contemplated in the Merger Agreement is hereby referred to as the “Business Combination”.
GEM Agreement
On December 12, 2021, CCAC entered into a Share Purchase Agreement with GEM Global Yield LLC SCS (“GEM”) and GEM Yield Bahamas Limited (“GYBL”) (the “GEM Agreement”). Pursuant to the GEM Agreement, GEM has agreed to purchase up to $125,000,000 (the “Aggregate Limit”) of Quanergy PubCo’s common stock (the “Common Stock”) over a three-year period commencing on the date of the consummation of the Business Combination (the “Investment Period”). Under the GEM Agreement, CCAC may, by delivering a Draw Down Notice (as defined in the GEM Agreement) direct GEM to purchase shares of Common Stock in an amount up to 400% of the average daily trading volume for the thirty (30) trading days immediately preceding the date the Draw Down Notice is delivered. GEM is not obligated to purchase any shares of Common Stock which would result in GEM beneficially owning, directly or indirectly, at the time of the proposed issuance, more than 9.99% of the shares of Common Stock issued and outstanding. GEM will pay a purchase price per share equal to 90% of the average market closing price of the Common Stock during the thirty (30) consecutive trading days commencing with the first trading day on which a Draw Down Notice is delivered (the “Draw Down Pricing Period”).
Additionally, CCAC will issue a warrant with a 36-month term to GYBL on the date of the consummation of the Business Combination granting GYBL the right to purchase shares of Common Stock in an amount equal to 2.5% of the total number of shares of Common Stock outstanding as of the closing of the Business Combination (subject to adjustments described below), calculated on a fully diluted basis, at an exercise price per share equal to $10.00 per share. The warrant can be exercised on a cashless basis in part or in whole at any time during the term. Any failure by us to timely transfer the shares under the warrant pursuant to GYBL’s exercise will entitle GYBL to compensation in addition to other remedies. The number of shares underlying the warrant as well as the strike price is subject to adjustments for recapitalizations, reorganizations, change of control, stock split, stock dividend and reverse stock splits.
The GEM Agreement provides that Quanergy PubCo is required to, as soon as practicable but no later than 30 calendar days following the closing of the Business Combination (the “Filing Deadline”), submit to or file with the SEC a registration statement registering the resale of the shares of Common Stock that GEM and GYBL are entitled to receive pursuant to the GEM Agreement or the warrant as described above, respectively, including any securities issued or issuable upon any share split, dividend or other distribution, recapitalization or similar event with respect to the foregoing, and to use its commercially reasonable efforts to have such registration statement declared effective as soon as practicable after the filing thereof but no later than the earlier of (i) the 45th calendar day following the earlier of (A) the filing of the registration statement and (B) the Filing Deadline and (ii) the 10th business day after the date Quanergy PubCo is notified (orally or in writing, whichever is earlier) by the SEC that such registration statement will not be “reviewed” or will not be subject to further review. Concurrently with the execution of the GEM Agreement, CCAC entered into a Registration Rights Agreement with CEM and GYBL (the “GEM RRA”) on the same terms.
Each of GEM and GYBL represented to CCAC, among other things, that it was an “accredited investor” (as such term is defined in Regulation D under the Securities Act), and CCAC will rely upon an exemption from registration contained in Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder when issuing shares of Common Stock under the GEM Agreement. The GEM Agreement contains customary representations, warranties, agreements and conditions to completing future sale transactions, indemnification rights and obligations of the parties. CCAC has the right to terminate the GEM Agreement with 90 day advance written notice to GYBL, provided that all of Commitment Fee (as defined in the GEM Agreement), in an amount equal to 2% of the Aggregate Limit, has been paid to GYBL.
The foregoing descriptions of the GEM Agreement and GEM RRA do not purport to be complete and are qualified in its entirety by reference to the complete text of the GEM Agreement and GEM RRA, which are filed herewith as Exhibits 99.1 and 99.2, respectively, and incorporated herein by reference.
