| Item
1.01. |
Entry
into a Material Definitive Agreement |
Bid
Implementation and Business Combination Agreement
The
following summary and description of the Agreement does not purport to be complete, describes the material provisions of the Agreement
(as defined below), and is qualified in its entirety by reference to the full text of the Agreement filed as Exhibit 1.1 to this Current
Report on Form 8-K and incorporated by reference. Unless otherwise defined herein, the capitalized terms used in this Current Report
on Form 8-K are defined in the Agreement.
General
Terms and Effects; Closing
On
June 15, 2023, Canna-Global Acquisition Corp, a Delaware corporation (“Canna-Global”), entered into a definitive
Bid Implementation and Business Combination Agreement (the “Agreement”) with New Quantum Holdings Pty Ltd. (“New
Quantum” or the “Company”), along with J. Gerald Combs, solely in his capacity as the representative from
and after the Effective Time (as defined below) for the stockholders of Canna-Global, and Hyun Jong Chung, solely in his capacity as
the representative from and after the Effective Time for New Quantum in accordance with the terms and conditions of the Agreement (collectively,
the “Parties”). The transactions contemplated in the Agreement are in
connection with Canna-Global’s initial business combination and are hereinafter referred to as the “Business Combination”
and the underlying transactions contemplated therein as the “Transactions.”
New
Quantum is an Australian fintech B2B company that
provides, along with its subsidiaries, global unified fintech as a service (FaaS),
delivering a fully integrated digital platform for wealth managers, family offices, governments, asset managers, fintech businesses,
and financial advisors. New Quantum’s operating system for financial services firms, combined with the financial infrastructure
of the newly acquired Morrison Securities from the ASX-listed, Sequoia Financial Group (ASX:SEQ)
in June 2023, represents a vertically integrated business model to financial services firms.
The
Agreement provides that, among other things, and upon the terms and subject to the conditions thereof, at closing of the Business Combination
(the “Closing”), Canna Global will acquire all of the ordinary shares of New Quantum and New Quantum will become
a wholly-owned subsidiary of Canna-Global, and Canna-Global’s Class A Common Stock will be listed on the Nasdaq Global Market
under the ticker symbol “NQ.”
As
part of the Transactions, Canna-Global will amend and restate its Second Amended and Restated Certificate of Incorporation (the “Charter”)
to, among other matters: (a) change its name to “New Quantum Corporation” or such other name as mutually agreed to by the
Parties; (b) reduce Canna-Global’s board of directors (the “Board”) to five individuals divided
into three classes; and (c) remove and change certain provisions in the Charter related to Canna-Global’s status as a blank check
company. Additionally, each then-outstanding share of Class B Common Stock of Canna-Global will be converted into one share of
Class A Common Stock.
The
Business Combination is expected to close in the second half of 2023, following the receipt of the required approval by Canna-Global’s
stockholders and the fulfillment of each Party’s closing conditions.
Exchange
Consideration
In
accordance with the terms and subject to the conditions of the Agreement, and contingent upon the Closing, as consideration
for the Business Combination, New Quantum shareholders collectively shall be entitled to receive from Canna-Global, in full
payment for their ordinary shares in New Quantum, Canna-Global shall issue and deliver to the New Quantum shareholders that number
of Canna-Global Class A Common Stock (the “Consideration Shares”)
determined as follows: Eight Hundred Million U.S. Dollars ($800,000,000), plus (or minus if negative) (ii) (A) the Net Working
Capital (as defined in the Agreement) less (B) the Company Net Working Capital Amount (as defined in the Agreement) minus (iii) the
Closing Net Debt (as defined in the Agreement), minus (iv) the amount of any unpaid Transaction Expenses (as defined in the
Agreement), and plus (v) the SPAC Closing Net Debt (as defined in the Agreement), and plus (vi) the Escrow Amount (as defined in the Agreement), with the
aggregate of items (i) to (vi) being divided by $10.00 being the value of each share of Canna-Global Class A Common Stock (as
equitably adjusted for share splits, share dividends, combinations, recapitalizations and the like after the Closing).
Each New
Quantum shareholder shall receive that number of Consideration Shares based on the number of the ordinary shares of New Quantum owned
by such New Quantum shareholder, divided by the total number of the ordinary shares of the New Quantum owned by all New Quantum shareholders
(such percentage being each such New Quantum shareholder’s “Pro Rata Share”) as set forth opposite the name
of each New Quantum shareholder on Annex I of the Agreement. For the avoidance of doubt, no cash consideration is payable by Canna-Global
(the “Exchange”). Following the Exchange, the New Quantum shareholders will become shareholders of Canna-Global
and New Quantum will continue as a wholly-owned subsidiary of Canna-Global. Each New Quantum shareholder, upon receiving the Canna-Global
Class A Common Stock, will cease to have any other rights in and to the ordinary shares of New Quantum.
Representations
and Warranties
The
Agreement contains customary representations and warranties made by each of Canna-Global and New Quantum as of the date of the Agreement
or other specified dates, in each case relating to, among other things, organization and qualification, governing documents, capitalization,
authority, no conflicts and absence of litigation. Many of the representations and warranties are qualified by materiality or Material
Adverse Effect. As used in the 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, 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
on a timely basis to consummate the transactions contemplated by the Agreement or the ancillary documents to which it is a party or bound
or to perform its obligations thereunder, in each case, subject to certain customary exceptions. The Agreement also contains thresholds
for claims arise from a breach of representations and warranties of New Quantum, subject to certain limitations. For a single claim,
the threshold is USD$250,000, and for the aggregate of all claims, the threshold is USD$3,000,000.
No
Survival
The
representations and warranties of the Parties contained in the Agreement terminate 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 Agreement
do not survive the Closing, except those covenants and agreements to be performed after the Closing, which covenants and agreements will
survive until fully performed in accordance with their terms.
Covenants
of the Parties
Each
party agreed in the Agreement to use its commercially reasonable efforts to effect the Closing and to comply as promptly as practicable
with all requirements of governmental authorities applicable to the transactions contemplated by the Agreement. The Agreement also contains,
subject to certain exceptions, certain customary covenants by each of the parties during the period from the date of the Agreement and
continuing until the earlier of the termination of the Agreement in accordance with its terms or the Closing (the “Interim Period”),
including (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 certain specified financial statements by New Quantum to Canna-Global; (iv) Canna-Global’s
public filings; (v) no insider trading; (vi) notifications of certain breaches, consent requirements or other matters; (vii) efforts
to consummate the Business Combination; (viii) tax matters; (ix) further assurances; (x) public announcements; and (xi) confidentiality.
Canna-Global will use commercially reasonable efforts to obtain financing that is reasonably acceptable to New Quantum (a “Transaction
Financing”) in order to cause the Minimum Cash Requirement to be satisfied and New Quantum and its representatives will reasonably
cooperate with Canna-Global in connection with such efforts. The Agreement also contains certain customary post-Closing covenants regarding
indemnification of directors and officers and the purchase of tail directors’ and officers’ liability insurance and use of
Trust Account proceeds. In addition, New Quantum agreed to obtain its required shareholder approvals in the manner required under
its organizational documents and applicable law for, among other things, the adoption and approval of the Agreement and each of the ancillary
documents to which New Quantum is or is required to be a party or bound, and the consummation of the Business Combination.
Registration
Statement on Form S-4
The
parties made customary covenants regarding the Registration Statement, in connection with the registration under the Securities Act of
1933, as amended (the “Securities Act”) of the shares of Canna-Global Class A Common Stock to be issued under the
Agreement as the Consideration Shares. The Registration Statement also will contain the Canna-Global proxy statement to solicit
proxies from Canna-Global’s stockholders to approve, among other things, unless otherwise agreed to between Canna-Global and New
Quantum (i) the Agreement and the Transactions, including the issuance of Canna-Global’s securities in connection with the Business
Combination; (ii) the adoption and approval of the amended and restated Canna-Global Charter, among other matters, (a) provide that the
name of Canna-Global shall be changed to “New Quantum Corporation” or such other name as mutually agreed to by Canna-Global
and New Quantum before Closing of the Agreement, (b) provide for size and structure of the board of directors of Canna-Global
in accordance with the Agreement, and (c) remove and revise certain provisions in the certificate of incorporation related to Canna-Global’s
status as a blank check company; (iii) the adoption and approval of a new equity incentive plan (the “Incentive Plan”);
and (iv) the appointment of the members of the board of directors of Canna-Global in accordance with the Agreement.
Conditions
to Each Party’s Obligations to Close
Pursuant
to the Agreement, the obligations of the Parties to consummate the Business Combination are subject to the satisfaction or waiver of
certain customary closing conditions of the respective Parties, including, without limitation (i) the representations and warranties
of the respective Parties being true and correct subject to the materiality standards contained in the Agreement; (ii) material compliance
by the Parties of their respective pre-closing covenants and agreements, subject to the standards contained in the Agreement; (iii) the
approval by Canna-Global’s stockholders of the Business Combination; (iv) no governmental authority shall have enacted any
law or order which has the effect of prohibiting the consummation of the Business Combination; (v) a Registration Statement on Form S-4
containing a prospectus and proxy statement (as amended or supplemented, the “Prospectus and Proxy Statement”) shall
have been declared effective by the Securities and Exchange Commission (the “SEC”) and shall remain effective as of
the Closing, and no stop order or similar order shall be in effect with respect to the Prospectus and Proxy Statement; and (vi) the members
of the post-Closing board of directors of the combined company shall have been elected or appointed as of the Closing in accordance with
the requirements set forth in the Agreement.
Termination
The
Agreement may be terminated under certain customary and limited circumstances at any time prior to the Closing. If
the Agreement is terminated, all further obligations of the parties related to public announcements, confidentiality, document
retention, fees and expenses, trust account waiver, termination and general provisions under the
Agreement will terminate and will be of no further force and effect, and no party to the Agreement will have any further liability
to any other party thereto except for liability for certain fraud claims or for willful breach of the Agreement prior to the termination.
The
Agreement may be terminated at any time prior to the Closing by either Canna-Global or New Quantum if the Closing has not occurred on
or prior to December 2, 2023 (the “Business Combination Deadline”) unless Canna-Global, at its election, receives
shareholder approval for a Charter amendment to extend the term it has to consummate a business combination (“Extension Option”),
for Canna-Global to consummate a business combination pursuant to the Charter amendment. A party is not entitled to terminate the Agreement
if the failure of the Closing to occur by such date was caused by or the result of a breach of the Agreement by such Party.
The
Agreement may also be terminated under certain other customary and limited circumstances prior the Closing, including, among other reasons
by mutual written consent of Canna-Global and New Quantum; by New Quantum for Canna-Global’s material uncured breach of the Agreement,
if the breach would result in the failure of the related Closing condition; by Canna-Global for the material uncured breach of the Agreement
by New Quantum, if the breach would result in the failure of the related Closing condition; by Canna-Global if there has been a Material Adverse Effect with respect to New Quantum since the date of the Agreement, which is uncured; by either Canna-Global or New
Quantum if Canna-Global holds an extraordinary general meeting of its shareholders to approve the Agreement and the Business Combination
and such approval is not obtained, among other reasons set forth in the Agreement.
Governing
Law
The
Agreement and all claims related to the Business Combination shall be governed by the laws of the State of Delaware.
The
foregoing description of the Agreement does not purport to be complete and is qualified in its entirety by reference to the Agreement’s
full text filed as Exhibit 1.1 to this Current Report on Form 8-K and incorporated by reference. The Agreement has been filed to provide
investors with information regarding its terms and is not intended to provide any factual or other information about Canna-Global, New
Quantum or any other Party to the Agreement. In particular, the assertions embodied in the
representations and warranties contained in the Agreement were made as of the execution date of the Agreement only and are qualified
by information in confidential disclosure schedules provided by the parties in connection with the signing of the Agreement. Moreover,
certain representations and warranties in the Agreement may have been used for the purpose of allocating risk between the parties rather
than establishing matters of fact and may be subject to standards of materiality applicable to
the contracting parties that differ from those applicable to investors and reports and documents filed with the SEC. Accordingly,
you should not rely on the representations and warranties in the Agreement as characterizations of the actual statements of fact about
the parties. In addition, the representations, warranties, covenants and agreements and other terms
of the Agreement may be subject to subsequent waiver or modification. Moreover, information concerning the subject matter of the representations
and warranties and other terms may change after the date of the Agreement, which subsequent information may or may not be fully reflected
in Canna-Global’s public disclosures. Shareholders of Canna-Global and other interested parties are urged to read the Agreement
in its entirety.
Sponsor
Support Agreement
At
or prior to the Effective Time (as defined in the Agreement),
Canna-Global, New Quantum, and Canna-Global LLC, a Delaware limited liability company (the “Sponsor”), will
enter into a sponsor support agreement (the “Sponsor Support Agreement”)
pursuant to which the Sponsor will agree to, among other things, (i) appear at the
Canna-Global shareholders’ meeting for purposes of constituting a quorum, and (ii) vote to adopt and approve the Agreement and
the other documents and transactions contemplated under the Agreement, including the Business Combination. The foregoing
description of the Sponsor Support Agreement is subject to and qualified in its
entirety by reference to the full text of the form of the Sponsor Support Agreement, a
copy of which is included as Exhibit 2.1 hereto, and the terms of which are incorporated by reference.
Lock-Up
Agreement
At
or prior to the Effective Time, the Significant
Company Holders (as defined in the Agreement), the Key Sponsor (each as defined in the Agreement) of New Quantum, and each
one percent (1%) or greater shareholders of New Quantum (the “One-Percent Shareholders”) will be asked
to sign the Lock-Up Agreement, pursuant to which each of the Significant Company Holders, the Key Sponsor of New Quantum and the One-Percent
Shareholders agree that their shares of Canna-Global Class A Common Stock will be locked up during the period commencing from the Closing
and ending (i) 12 months from the Closing, at which time 75% of the shares will be released from lock-up; and (ii) 18 months from the
Closing, at which time the remaining 25% will be released from lock-up (the “Restricted Securities”). The
foregoing description of the Lock-Up Agreement is subject to and qualified in its entirety by reference to the full text of the Lock-Up
Agreement, a copy of which is included as Exhibit 2.2 hereto, and the terms of which are incorporated by reference.
Non-Competition
and Non-Solicitation Agreement
Simultaneously
with the execution and delivery of the Agreement, each
Key Executive of New Quantum (as defined in the Agreement) will execute a Non-Competition and Non-Solicitation Agreement (collectively,
the “Non-Competition Agreements”) in favor of Canna-Global. The foregoing description of the Non-Competition Agreements
is subject to and qualified in its entirety by reference to the full text of the Non-Competition Agreements, a form of which is included
as Exhibit 2.3 hereto, and the terms of which are incorporated by reference.
PIPE
Investment
In
connection with entry into the Agreement, Canna-Global may use commercially reasonable efforts as practicable, after the date of the
Agreement and at or prior to the End Date, to enter into and consummate subscription agreements with investors relating to a private
equity investment in Canna-Global to purchase shares of Canna-Global in connection with a private placement, and/or enter into backstop
arrangements with potential investors, in either case on terms mutually agreeable to New Quantum and Canna-Global, acting
reasonably (a “PIPE Investment”). Likewise, New Quantum may enter into one or private equity investments before the
Closing, as provided in the Agreement. The foregoing description of the PIPE Investment does not purport to be complete and is qualified
in its entirety by the terms and conditions of the subscription agreements related to the PIPE Investment entered into from time-to-time.
Registration
Rights Agreement
At
or prior to the Effective Time,
the Sponsor, certain New Quantum shareholders and their respective affiliates, will enter into a registration rights agreement (the “Registration
Rights Agreement”), pursuant to which, among other things, Canna Global will be obligated to file a registration statement
after Closing to register the resale of certain securities of New Quantum held by the Sponsor, certain New Quantum shareholders and their
respective affiliates. The Registration Rights Agreement will also provide the respective parties with “piggy-back” registration
rights, subject to certain requirements and customary conditions. The foregoing description of
the Registration Rights Agreement is subject to and qualified in its entirety by reference to the full text of the form of Registration
Rights Agreement, a copy of which is included as Exhibit 2.4 hereto, and the terms of which are incorporated by reference.
Bidder’s
Statement
As
promptly as practicable after the effective date of the Agreement, Canna-Global will lodge a Bidder’s Statement with the Australian
Securities and Investments Commission (“ASIC”) in respect of its Takeover Bid for New Quantum in accordance with Chapter
6 of the Australian Act and the terms of the Agreement. The foregoing description of the Bidder’s Statement does not purport to
be complete.
Joinder
Agreement
At
or prior to Effective Time, Canna-Global, J. Gerald Combs, solely in his capacity as the representative for the stockholders of
Canna-Global, New Quantum, Hyun Jong Chung, solely in his capacity as the representative of New Quantum, will execute a joinder
agreement to the Agreement (the “Joinder Agreement”) with Significant
Company Holders of New Quantum. The foregoing description of the Joinder Agreement is
subject to and qualified in its entirety by reference to the full text of the Joinder Agreement,
a form of which is included as Exhibit 2.6 hereto, and the terms of which are incorporated by reference.
Prospectus
and Proxy Statement
As
promptly as practicable after the effective date of the Agreement, Canna-Global will file with the SEC the Prospectus and Proxy Statement
and certain related documents in connection with a meeting of Canna-Global’s shareholders to consider approval and adoption of
(i) the Agreement and the Business Combination; (ii) any other proposals as either the SEC or the Nasdaq Global Market (or the respective
staff members thereof) may indicate are necessary in comments to the Prospectus and Proxy Statement or in correspondence related thereto;
(iii) any other proposals as reasonably agreed by Canna-Global and New Quantum to be necessary or appropriate in connection with the
Business Combination; and (4) the adjournment of the special meeting, if necessary, to permit further solicitation of proxies because
there are not sufficient votes to approve and adopt one or more of the foregoing.