TOYO Co., Ltd 20-F, filed Jul 8, 2024
TOYO Co., Ltd (TOYO)
About this 20-F
TOYO Co., Ltd filed this 20-F on July 8, 2024, covering the fiscal year ended July 1, 2024.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
(Mark One)
☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☐ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended ____________
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☒ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report: July 1, 2024
Commission
File Number: 001-42153
TOYO Co., Ltd
(Exact name of Registrant as specified in its charter)
| Not applicable | Cayman Islands | |
| (Translation of Registrant’s name into English) | (Jurisdiction of incorporation or organization) |
Tennoz First Tower F5, 2-2-4
Higashi-shinagawa, Shinagawa-ku
Tokyo, Japan 140-0002
(Address of principal executive offices)
Junsei Ryu
Telephone: +81 3-6433-2789
Email: IR@toyosolar
At the address of the Company set forth above
(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of exchange on which registered | ||
| Ordinary shares, par value $0.0001 per share | TOYO | The Nasdaq Stock Market LLC |
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
(Title of Class)
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the shell company report: 46,095,743 ordinary shares and 4,970,012 warrants as of July 1, 2024.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ☐ No ☐
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | Non-accelerated filer | ☒ |
| Emerging growth company | ☒ |
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐
| † | The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. |
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting over Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes ☐ No ☒
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
| U.S. GAAP ☒ | International Financial Reporting Standards as issued by the International Accounting Standards Board ☐ | Other ☐ |
If “Other” has been checked in response to the previous question indicate by check mark which financial statement item the registrant has elected to follow. Item 17 ☐ Item 18 ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☐
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐
TABLE OF CONTENTS
i
On July 1, 2024 (the “Closing Date”), TOYO Co., Ltd, a Cayman Islands exempted company (“TOYO” or the “Company”), consummated the previously announced business combination pursuant to the Agreement and Plan of Merger, dated as of August 10, 2023 (as amended on December 6, 2023, February 6, 2024 and February 29, 2024, the “Business Combination Agreement”), by and among (i) the Company, (ii) Blue World Acquisition Corporation, a Cayman Islands exempted company (“BWAQ”), (iii) Vietnam Sunergy Cell Company Limited, a Vietnamese company and wholly-owned subsidiary of TOYO (“TOYO Solar”), (iv) TOYOone Limited, a Cayman Islands exempted company and wholly-owned subsidiary of TOYO (“Merger Sub”), (v) TOPTOYO INVESTMENT PTE. LTD., a Singapore private company limited by shares (“SinCo,” together with TOYO, Merger Sub and TOYO Solar, the “Group Companies,” or each individually, a “Group Company”), (vi) Vietnam Sunergy Joint Stock Company, a Vietnam joint stock company (“VSUN”), (vii) Fuji Solar Co., Ltd, a Japanese company (“Fuji Solar”), (viii) WA Global Corporation, a Cayman Islands exempted company (“WAG”), (ix) Belta Technology Company Limited, a Cayman Islands exempted company (“Belta”), and (x) BestToYo Technology Company Limited, a Cayman Islands exempted company (“BestToYo”).
Pursuant to the Business Combination Agreement, (a) the Group Companies, VSUN, Fuji Solar, WAG, Belta and BestToYo shall consummate a series of transactions involving the Group Companies, including (A) TOYO acquiring one hundred percent (100%) of the issued and paid-up share capital of SinCo from Fuji Solar at an aggregate consideration of SGD1.00 (such transaction, the “Share Exchange”), and (B) SinCo acquiring one hundred percent (100%) of the issued and outstanding shares of capital stock of TOYO Solar from VSUN at an aggregate consideration of no less than $50,000,000 (the “SinCo Acquisition,” and together with the Share Exchange, the “Pre-Merger Reorganization”), as a result of which (i) SinCo shall become a wholly-owned subsidiary of TOYO, (ii) TOYO Solar shall become a wholly-owned subsidiary of SinCo; and (iii) immediately prior to the closing of the SinCo Acquisition, WAG, Belta and BestToYo (collectively, the “Sellers”) shall hold an aggregate of 41,000,000 ordinary shares of TOYO, par value $0.0001 per share (such ordinary shares, “Ordinary Shares”), representing all issued and outstanding share capital of TOYO, and (b) following the consummation of the Pre-Merger Reorganization, BWAQ shall merge with and into Merger Sub, with Merger Sub continuing as the surviving company (the “Merger”), as a result of which, among other things, all of the issued and outstanding securities of BWAQ immediately prior to the filing of the plan of merger with respect to the Merger (the “Plan of Merger”) to the Registrar of Companies of the Cayman Islands, or such later time as may be specified in the Plan of Merger (the “Merger Effective Time”) shall no longer be outstanding and shall automatically be cancelled, in exchange for the right of the holders thereof to receive substantially equivalent securities of the Company, in each case, upon the terms and subject to the conditions set forth in the Business Combination Agreement and in accordance with the provisions of the Companies Act (Revised) of the Cayman Islands and other applicable laws. The Merger, the Pre-Merger Reorganization and each of the other transactions contemplated by the Business Combination Agreement or any of the other relevant Transaction Documents (as defined in the Business Combination Agreement) are collectively referred to as “Business Combination.”
On March 6, 2024, the Company entered into a share purchase agreement (as amended on June 26, 2024, the “PIPE Purchase Agreement”) with BWAQ and a certain investor, NOTAM Co., Ltd., a Japanese corporation (the “PIPE Investor” or “NOTAM”), in connection with the Business Combination. Pursuant to the PIPE Purchase Agreement, the PIPE Investor agrees to purchase a total of 600,000 BWAQ Class A Ordinary Shares (as defined below), at a purchase price of $10.00 per share, for an aggregate purchase price of $6,000,000, and that the Company agrees to, conditioned on the completion of the PIPE Closing (as defined in the PIPE Purchase Agreement) and the closing of the Business Combination (the “Merger Closing”), issue additional Ordinary Shares to the PIPE Investor subject to the conditions set forth therein.
At the Merger Effective Time, (a) each of BWAQ’s units, each consisting of (i) one Class A ordinary share of BWAQ, par value $0.0001 per share (“BWAQ Class A Ordinary Share”), (ii) one-half of one BWAQ warrant of which one whole warrant entitling the holder thereof to purchase one BWAQ Class A Ordinary Share at a purchase price of $11.50 per share (“BWAQ Warrant”), and (iii) one right of BWAQ, each convertible into one-tenth of one BWAQ Class A Ordinary Share (“BWAQ Right”) outstanding immediately prior to the Merger Effective Time (to the extent not already separated) was separated into one BWAQ Class A Ordinary Share and one-half of one BWAQ Warrant of which one whole warrant entitling the holder thereof to purchase one BWAQ Class A Ordinary Share at a purchase price of $11.50 per share, and one right of BWAQ (the “Unit Separation”); (b) immediately following the Unit Separation, (i) each issued and outstanding BWAQ Warrant was converted into one warrant of the Company (“Warrant”) to purchase one Ordinary Share, (ii) each outstanding BWAQ Right outstanding was cancelled in exchange for one-tenth of one BWAQ Class A Ordinary Share, (iii) each BWAQ Class B ordinary share, par value US$0.0001 per share (“BWAQ Class B Ordinary Share”) issued and outstanding immediately prior to the Merger Effective Time, automatically converted into one BWAQ Class A Ordinary Share, and (iv) each BWAQ Class A Ordinary Share issued and outstanding immediately prior to the Merger Effective Time, was cancelled in exchange for the right to receive one newly issued Ordinary Share.
The Business Combination was consummated on July 1, 2024. The Business Combination was approved at the extraordinary general meeting of BWAQ’s shareholders held on May 28, 2024 (the “Extraordinary General Meeting”). BWAQ’s shareholders also voted to approve all other proposals presented at the Extraordinary General Meeting. As a result of the Business Combination, TOYO Solar became a wholly-owned subsidiary of the Company, and BWAQ merged with and into Merger Sub with Merger Sub continuing as the surviving company and a wholly owned subsidiary of the Company. On July 2, 2024, Ordinary Shares commenced trading on the Nasdaq Stock Market (“Nasdaq”) under the symbol “TOYO.” and the Warrants commenced trading on the OTC Markets.
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This shell company report on Form 20-F (including information incorporated herein by reference, this “Report”) contains or may contain forward-looking statements as defined in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that involve significant risks and uncertainties. Forward-looking statements include all statements that are not historical statements of fact and statements regarding, but not limited to, the respective expectations, hopes, beliefs, intention or strategies of the Company, TOYO Solar or BWAQ regarding the future. You can identify these statements by forward-looking words such as “may,” “expect,” “predict,” “potential,” “anticipate,” “contemplate,” “believe,” “estimate,” “intends,” “will,” “would” and “continue” or similar words. The risk factors and cautionary language referred to or incorporated by reference in this Report provide examples of risks, uncertainties and events that may cause actual results to differ materially from the expectations described in our forward-looking statements, including among other things, the matters identified in the section titled “Risk Factors” of the Company’s Registration Statement on Form F-4 (Registration No. 333-277779) and the Registration Statement on Form F-4 filed pursuant to Rule 462(b) (Registration No. 333-279028) under the Securities Act (together, as amended by a post-effective amendment, the “Form F-4”) filed with the Securities and Exchange Commission (the “SEC”) on May 1, 2024, which are incorporated by reference into this Report.
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Report. Although we believe that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. These statements involve known and unknown risks and are based upon a number of assumptions and estimates which are inherently subject to significant uncertainties and contingencies, many of which are beyond our control. Actual results may differ materially from those expressed or implied by such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements contained in this Report, or the documents to which we refer readers in this Report, to reflect any change in our expectations with respect to such statements or any change in events, conditions or circumstances upon which any statement is based.
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ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
| A. | Directors and Senior Management |
The directors and executive officers of the Company upon the consummation of the Business Combination are set forth in the Form F-4, in the section titled “Management of PubCo Following the Transactions,” which is incorporated herein by reference. The business address for each of the Company’s directors and executive officers is 5F, Tennoz First Tower, 2-2-4, Higashi-Shinagawa, Shinagawa-ku, Tokyo, Japan 140-0002.
| B. | Adviser |
Robinson & Cole LLP will act as counsel to the Company upon and following the consummation of the Business Combination.
| C. | Auditors |
Marcum Asia CPAs LLP (formerly known as Marcum Bernstein & Pinchuk LLP) acted as the independent auditor of the Company as of December 31, 2023 and 2022 and for the year ended December 31, 2023 and for the period from November 8, 2022 (inception) to December 31, 2022 and will continue to act as the independent auditor of the Company upon the consummation of the Business Combination.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
| A. | [Reserved] |
| B. | Capitalization and Indebtedness |
The following table sets forth the capitalization of the Company on an unaudited pro forma combined basis as of December 31, 2023, after giving effect to the Business Combination and the PIPE Purchase Agreement.
| As of December 31, 2023 (pro forma) | ($ in thousands) | |||
| Cash and cash equivalents | 29,804 | |||
| Total equity | 63,855 | |||
| Debt: | ||||
| Non-current debt | 12,192 | |||
| Current debt | 142,648 | |||
| Total indebtedness | 154,840 | |||
| Total capitalization | 218,695 | |||
| C. | Reasons for the Offer and Use of Proceeds |
Not applicable.
| D. | Risk Factors |
The risk factors associated with the Company are described in the Form F-4 in the section titled “Risk Factors,” which is incorporated herein by reference.
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ITEM 4. INFORMATION ON THE COMPANY
| A. | History and Development of the Company |
The legal name of the Company is TOYO Co., Ltd. The Company was incorporated as an exempted company limited by shares under the laws of Cayman Islands on May 16, 2023, solely for the purpose of effectuating the Business Combination. The Company has been the consolidating entity for purposes of TOYO Solar’s financial statements since the consummation of the Pre-Merger Reorganization. The history and development of the Company and the material terms of the Business Combination are described in the Form F-4 in the sections titled “Summary of the Proxy Statement/Prospectus,” “Proposal No. 1 — The Business Combination Proposal,” “Information related to PubCo” and “Description of PubCo Securities,” which are incorporated herein by reference. See “Explanatory Note” in this Report for additional information regarding the Company and the Business Combination. Certain information about the Company is set forth in “Item 4.B — Business Overview” and is incorporated herein by reference.
The Company’s registered office is c/o Harneys Fiduciary (Cayman) Limited, 4th Floor, Harbour Place, 103 South Church Street, P.O. Box 10240, Grand Cayman KY1-1002, Cayman Islands, and the Company’s principal executive office is 5F, Tennoz First Tower, 2-2-4, Higashi-Shinagawa, Shinagawa-ku, Tokyo, Japan 140-0002. The Company’s principal website address is https://www.toyo-solar.com/#. We do not incorporate the information contained on, or accessible through, the Company’s websites into this Report, and you should not consider it a part of this Report. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The SEC’s website is www.sec.gov.
| B. | Business Overview |
Following and as a result of the Business Combination, all business of the Company is conducted through TOYO Solar and its subsidiaries. A description of the business is included in the Form F-4 in the sections titled “Information Related to PubCo” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of PubCo,” which are incorporated herein by reference.
| C. | Organizational Structure |
Upon the consummation of the Business Combination, TOYO Solar became a wholly-owned subsidiary of the Company, and BWAQ merged with and into Merger Sub with Merger Sub continuing as the surviving company and a wholly owned subsidiary of the Company. The following diagram depicts an organizational structure of the Company as of the date of this Report. All principal subsidiaries of the Company are set forth in Exhibit 8.1 to this Report.
| D. | Property, Plants and Equipment |
TOYO’s property, plants and equipment are held through TOYO Solar. Information regarding TOYO Solar’s property, plants and equipment is described in the Form F-4 in the section titled “Information related to PubCo — Property and equipment, net” which is incorporated herein by reference.
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ITEM 4A. UNRESOLVED STAFF COMMENTS
None.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The discussion and analysis of the financial condition and results of operation of the Company is included in the Form F-4 in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of PubCo,” which is incorporated herein by reference.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
| A. | Directors and Senior Management |
The directors and executive officers upon the consummation of the Business Combination are set forth in the Form F-4, in the section titled “Management of PubCo Following the Transactions,” which is incorporated herein by reference.
| B. | Compensation |
Information pertaining to the compensation of the directors and executive officers of the Company is set forth in the Form F-4, in the sections titled “Management of PubCo Following the Transactions — Compensation of Directors and Executive Officers,” “Management of PubCo Following the Transactions — Employment Agreements and Indemnification Agreements” and “Management of PubCo Following the Transactions — Share Incentive Plan,” which are incorporated herein by reference.
| C. | Board Practices |
Information pertaining to the Company’s board practices is set forth in the Form F-4, in the section titled “Management of PubCo Following the Transactions,” which is incorporated herein by reference.
| D. | Employees |
Information pertaining to the Company’s employees is set forth in the Form F-4, in the section titled “Information Related to PubCo— Employees,” which is incorporated herein by reference.
| E. | Share Ownership |
Ownership of the Ordinary Shares by its directors and executive officers upon the consummation of the Business Combination is set forth in Item 7.A of this Report.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
| A. | Major Shareholders |
The following table sets forth information regarding the beneficial ownership of Ordinary Shares as of July 1, 2024 by:
| ● | each person known by us to be the beneficial owner of more than 5% of Ordinary Shares; | |
| ● | each of our directors and executive officers; and | |
| ● | all our directors and executive officers as a group. |
Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if that person possesses sole or shared voting or investment power over that security. A person is also deemed to be a beneficial owner of securities that the person has a right to acquire within 60 days including, without limitation, through the exercise of any option, warrant or other right or the conversion of any other security. Such securities, however, are deemed to be outstanding only for the purpose of computing the percentage beneficial ownership of that person but are not deemed to be outstanding for the purpose of computing the percentage beneficial ownership of any other person. Under these rules, more than one person may be deemed to be a beneficial owner of the same securities.
The calculations of the percentage of beneficial ownership are based on 46,095,743 Ordinary Shares issued and outstanding, as of July 1, 2024.
Unless otherwise indicated, we believe that all persons named in the table below have sole voting and investment power with respect to all Ordinary Shares beneficially owned by them.
3
Name of Beneficial Owner
| Ordinary Shares | % of Total Ordinary Shares / Voting Power | |||||||
| Principal Shareholders | ||||||||
| WWB Corporation and Affiliated Entities(1) | 31,485,066 | (2) | 68.3 | % | ||||
| Belta(3) | 10,045,000 | 21.8 | % | |||||
| Directors and Executive Officers(4) | ||||||||
| Junsei Ryu(2) | 31,485,066 | 68.3 | % | |||||
| Taewoo Chung | — | — | ||||||
| Aihua Wang | — | — | ||||||
| Alfred “Trey” Hickey(5) | 30,000 | * | ||||||
| Anders Karlsson | — | — | ||||||
| Hiroyuki Tahara | — | — | ||||||
| June Han | — | — | ||||||
| All directors and executive officers as a group (7 individuals) | 31,515,066 | 68.4 | % | |||||
| * | Less than 1% of the total number of outstanding Ordinary Shares |
| (1) | WWB Corporation (“WWB”), a Japanese company and a wholly-owned subsidiary of Abalance Corporation (TYO: 3856) (“Abalance”). Abalance is a Japanese public company listed on Tokyo Stock Exchange. As of the date of this Report, WWB holds approximately 51% of the voting securities of Fuji Solar and approximately 82% of the voting securities of WAG. Mr. Junsei Ryu holds approximately 31.4% of the voting securities of Abalance and approximately 50.1% of the voting securities of BestToYo. Mr. Ryu also serves as a director of Abalance, representative of directors of WWB, representative of directors of Fuji Solar, and sole director of WAG. The business address for WWB is Tennozu First Tower F5, 2-2-4, Higashishinagawa, Shinagawa-ku, Tokyo 140-0002. The business address for Fuji Solar is Tennoz First Tower, 2-2-4, Higashi-Shinagawa, Shinagawa-ku, Tokyo, Japan 140-0002. The registered address for WAG is 4th Floor, Harbour Place, 103 South Church Street, P.O. Box 10240, Grand Cayman KY1-1002, George Town, Cayman Islands. The registered address for BestToYo is 4th Floor, Harbour Place, 103 South Church Street, P.O. Box 10240, Grand Cayman KY1-1002, George Town, Cayman Islands. |
| (2) | Represents (i) 25,420,000 Ordinary Shares directly held by WAG, (ii) 5,535,000 Ordinary Shares directly held by BestToYo, and (iii) 530,066 Ordinary Shares held by Fuji Solar. |
| (3) | Represents 10,045,000 Ordinary Shares directly held by Belta, which is controlled by Mr. Jianfeng Cai. The registered address for Belta is 4th Floor, Harbour Place, 103 South Church Street, P.O. Box 10240, Grand Cayman KY1-1002, George Town, Cayman Islands. |
| (4) | The business address of each of the directors and executive officers of the Company is 5F, Tennoz First Tower, 2-2-4, Higashi-Shinagawa, Shinagawa-ku, Tokyo, Japan 140-0002. |
| (5) | Represents 30,000 Ordinary Shares held by Alfred “Trey” Hickey, an independent director of BWAQ prior to consummation of the Business Combination, and the independent director of the Company, following the consummation of the Business Combination. |
| B. | Related Party Transactions |
Information pertaining to the Company’s related party transactions is set forth in the Form F-4 in the section titled “Certain Relationships and Related Person Transactions — PubCo Relationships and Related Party Transactions,” which is incorporated herein by reference.
| C. | Interests of Experts and Counsel |
None / Not applicable.
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| A. | Consolidated Statements and Other Financial Information |
Financial Statements
Consolidated financial statements have been filed as part of this Report. See Item 18 “Financial Statements.”
Legal Proceedings
Legal or arbitration proceedings are described in the Form F-4 in the section titled “Information Related to PubCo — Legal Proceedings,” which is incorporated herein by reference.
Dividend Policy
The Company’s policy on dividend distributions is described in the Form F-4 in the section titled “Description of PubCo Securities—Ordinary Shares—Dividends,” which is incorporated herein by reference.
| A. | Offer and Listing Details |
Ordinary Shares are listed on Nasdaq under the symbol “TOYO.” Warrants are traded on the OTC Markets. Holders of Ordinary Shares and Warrants should obtain current market quotations for their securities.
| B. | Plan of Distribution |
Not applicable.
| C. | Markets |
Ordinary Shares are listed on Nasdaq under the symbol “TOYO.” Warrants are traded on the OTC Markets.
| D. | Selling Shareholders |
Not applicable.
| E. | Dilution |
Not applicable.
| F. | Expenses of the Issue |
Not applicable.
ITEM 10. ADDITIONAL INFORMATION
| A. | Share Capital |
The Company’s authorized share capital is 500,000,000 ordinary shares of par value of US$0.0001 per share. As of July 1, 2024, subsequent to the Merger Closing, 46,095,743 Ordinary Shares were outstanding and issued.
There are also 4,970,012 Warrants outstanding, each whole Warrant exercisable at US$11.50 per one Ordinary Share, of which 4,252,988 are publicly tradable and registered, and the rest are registered with contractual lock-up held by (i) Fuji Solar and (ii) Blue World Holdings Limited, a Hong Kong private company limited by shares and the sponsor of BWAQ (“Sponsor”), or not registered held by (i) MWH (HONGKONG) CO., LIMITED, one of the members of the Sponsor, and (ii) Zenin Investments Limited, one of the members of the Sponsor.
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| B. | Memorandum and Articles of Association |
The amended and restated articles of association of the Company (“Company Charter”) effective as of July 1, 2024 are filed as part of this Report.
The description of the Company Charter contained in the Form F-4 in the section titled “Description of PubCo Securities” is incorporated herein by reference.
| C. | Material Contracts |
Material Contracts Relating to TOYO’s Operations
Information pertaining to the Company’s material contracts is set forth in the Form F-4, in the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of PubCo — Liquidity, Capital Resources and Going Concern –– Related Party Borrowing,” “Information related to PubCo — Land Lease Agreement for the 6GW Solar Cell Plant in Phu Tho Province, Vietnam,” “Risk Factors— Risks Related to TOYO Solar and PubCo’s Business and Industry,” and “Certain Relationships and Related Person Transactions — PubCo Relationships and Related Party Transactions,” each of which is incorporated herein by reference.
Material Contracts Relating to the Business Combination
Business Combination Agreement
The description of the Business Combination Agreement in the Form F-4 in the section titled “Proposal No. 1 — The Business Combination Proposal” is incorporated herein by reference.
Related Agreements
The description of the material provisions of certain additional agreements entered into pursuant to the Business Combination Agreement in the Form F-4 in the section titled “The Business Combination Agreement and Other Transaction Documents — Related Agreements and Documents” is incorporated herein by reference.
Amendment to PIPE Purchase Agreement
On March 6, 2024, the Company entered into the PIPE Purchase Agreement, as amended by an amendment on June 26, 2024 (such amendment, separately referred to as “PIPE Amendment”), with BWAQ and NOTAM.
Pursuant to the PIPE Purchase Agreement, NOTAM agrees to purchase a total of 600,000 BWAQ Class A Ordinary Shares (the “NOTAM PIPE Shares”), at a purchase price of $10.00 per share, for an aggregate purchase price of $6,000,000. The PIPE Amendment provides that the Company agrees to, conditioned on the completion of the PIPE Closing (as defined in the PIPE Purchase Agreement) and Merger Closing, issue additional Ordinary Shares to NOTAM, on the following terms and conditions:
(i) In the event that, the average closing price of each Ordinary Share (the “Closing Price”) with respect to all trading days in July 2024 is below $10.00 per share (such average Closing Price, the “First Tranche Average Closing Price”), NOTAM may, following the last trading day in July 2024 (the “First Tranche Cut-off Date”), elect to purchase from the Company at a total purchase price of $100 such number of Ordinary Shares (“First NOTAM Tranche Additional Shares”) calculated as below:
Number of First NOTAM Tranche Additional Shares = (6,000,000/First Tranche Average Closing Price - 600,000) x Share Held Ratio X.
Shares Held Ratio X = Number of Remaining Converted Shares held by NOTAM as of the First Tranche Cut-off Date /600,000.
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Notwithstanding the foregoing, the maximum number of NOTAM First Tranche Additional Shares that NOTAM is entitled to subscribe for under the PIPE Purchase Agreement shall not exceed 500,000.
“Remaining Converted Shares” means the remaining the Ordinary Share acquired by NOTAM upon the conversion of the NOTAM PIPE Shares upon the Merger Closing purchased pursuant to the PIPE Purchase Agreement, excluding any other Ordinary Shares acquired by NOTAM upon and following the Merger Closing, in the open market, from any other parties, or the Additional Shares, if any.
(ii) In the event that the average Closing Price with respect to all trading days in July 2024 and August 2024 is below $10.00 per share (the “Second Tranche Average Closing Price”), NOTAM may, following the last trading day in August 2024 (the “Second Tranche Cut-off Date”), purchase from the Company at a total purchase price of $100 such number of Ordinary Shares (“Second NOTAM Tranche Additional Shares”) calculated as below:
Number of Second NOTAM Tranche Additional Shares = (6,000,000/Second NOTAM Tranche Average Closing Price - 600,000 - First NOTAM Tranche Additional Shares) x Share Held Ratio Y.
Shares Held Ratio Y = Number of Remaining Converted Shares held by NOTAM as of the Second Tranche Cut-off Date/600,000.
Notwithstanding the foregoing, the maximum number of Second NOTAM Tranche Additional Shares that NOTAM is entitled to subscribe for under the PIPE Purchase Agreement shall equal to 500,000 minus the number of the First NOTAM Tranche Additional Shares.
(iii) In the event that the average Closing Price with respect to all trading days in July 2024 through September 2024 is below $10.00 per share (the “Third Tranche Average Closing Price”), NOTAM may, following the last trading day in September 2024 (the “Third Tranche Cut-off Date” and together with the Frist Tranche Cut-off Date and the Second Tranche Cut-off Date, each a “Cut-off Date”), purchase from the Company at a total purchase price of $100 such number of Ordinary Shares (“Third NOTAM Tranche Additional Shares” and together with the First NOTAM Tranche Additional Shares and the Second Tranche Additional Shares, collectively, the “Additional NOTAM Shares”) calculated as below
Number of Third NOTAM Tranche Additional Shares = (6,000,000/ Third Tranche Average Closing Price - 600,000 - First NOTAM Tranche Additional Shares – Second NOTAM Tranche Additional Shares) x Share Held Ratio Z
Shares Held Ratio Z = Number of Remaining Converted Shares held by NOTAM as of the Third Tranche Cut-off Date/600,000
Notwithstanding the foregoing, the maximum number of Third NOTAM Tranche Additional Shares that NOTAM is entitled to subscribe for under the PIPE Purchase Agreement shall equal to 500,000 minus the sum of number of the First NOTAM Tranche Additional Shares and the Second NOTAM Tranche Additional Shares.
Earnout Equities Vesting Agreement
On June 29, 2024, in consideration of the development and efforts by the relevant parties in completing the Business Combination, the Company, the Sellers, BWAQ, the Sponsor, TOYO Solar and other relevant parties entered into a certain Earnout Equities Vesting Agreement (the “Earnout Equities Vesting Agreement”) to, among the others, release all the founder shares of BWAQ (“Founder Shares”) held by the Sponsor from being subject to potential surrender or cancellation as provided under the Sponsor Support Agreement (as defined below).
On August 10, 2023, the Sponsor entered into a Sponsor Support Agreement (the “Sponsor Support Agreement”) with BWAQ and the Company, to agree to, among the others, provide certain support for the Business Combination. Pursuant to the Earnout Equities Vesting Agreement, the parties agree that 1,380,000 Founder Shares are deemed vested and released from the Sponsor Earnout Equities (as defined in the Sponsor Support Agreement) and the Sponsor will have the right to covert such 1,380,000 Founder Shares into the right to receive Ordinary Shares at the Merger Closing. Sponsor is also relieved of any of its obligations with respect to either the subscription of additional BWAQ Class A Ordinary Shares or the surrender of additional Sponsor Earnout Equities under the Sponsor Support Agreement.
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| D. | Exchange Controls |
There are no governmental laws, decrees, regulations or other legislation in the Cayman Islands that may affect the import or export of capital, including the availability of cash and cash equivalents for use by the Company, or that may affect the remittance of dividends, interest, or other payments by the Company to non-resident holders of its Ordinary Shares. There is no limitation imposed by the laws of the Cayman Islands or in the Company Charter on the right of non-residents to hold or vote shares.
| E. | Taxation |
Information pertaining to tax considerations is set forth in the Form F-4, in the section titled “Material Tax Considerations,” which is incorporated herein by reference.
| F. | Dividends and Paying Agents |
Information regarding Company’s policy on dividends is described in the Form F-4, in the section titled “Description of PubCo Securities — Ordinary Shares — Dividends,” which is incorporated herein by reference. The Company has not identified a paying agent.
| G. | Statement by Experts |
The consolidated financial statements of the Company and its subsidiaries incorporated by reference in this Report have been so incorporated by reference in reliance upon such report of Marcum Asia CPAs LLP, an independent registered public accounting firm, upon the authority of the said firm as expert in accounting and auditing.
The financial statements of BWAQ incorporated by reference in this Report have been so incorporated by reference in reliance upon such report of Marcum Asia CPAs LLP, an independent registered public accounting firm, upon the authority of the said firm as expert in accounting and auditing.
| H. | Documents on Display |
We are subject to certain of the informational filing requirements of the Exchange Act. Since we are a “foreign private issuer,” we are exempt from the rules and regulations under the Exchange Act prescribing the furnishing and content of proxy statements, and our officers, directors and principal shareholders are exempt from the reporting and “short-swing” profit recovery provisions contained in Section 16 of the Exchange Act, with respect to their purchase and sale of our shares. In addition, we are not required to file reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. However, we are required to file with the SEC an Annual Report on Form 20-F containing financial statements audited by an independent accounting firm. We may, but are not required, to furnish to the SEC, on Form 6-K, unaudited financial information after each of our first three fiscal quarters. The SEC also maintains a website at http://www.sec.gov that contains reports and other information that we file with or furnish electronically with the SEC.
| I. | Subsidiary Information |
Not applicable.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information set forth in the Form F-4, in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operation of PubCo — Quantitative and Qualitative Disclosures about Market Risk,” is incorporated herein by reference.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Warrants
Upon closing of the Business Combination, there were 4,970,012 Warrants outstanding, each whole Warrant exercisable at US$11.50 per one Ordinary Share, of which 4,252,988 are publicly tradable and registered, and the rest are registered with contractual lock-up held by (i) Fuji Solar, and (ii) the Sponsor, or not registered held by (i) MWH (HONGKONG) CO., LIMITED, one of the members of the Sponsor, and (ii) Zenin Investments Limited, one of the members of the Sponsor.
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Not applicable.
9
Not applicable.
The audited consolidated financial statements of the Company and its subsidiaries as of December 31, 2023 and 2022, for the year ended December 31, 2023 and for the period from November 8, 2022 (inception) to December 31, 2022 contained in the Form F-4 between pages F-2 and F-24 are incorporated herein by reference.
The unaudited condensed financial statements of BWAQ as of December 31, 2023 and for the three and six months ended December 31, 2023 and the audited financial statements of BWAQ as of June 30, 2023 and 2022, and for the year ended June 30, 2023 and for the period from July 19, 2021 (inception) through June 30, 2022 contained in the Form F-4 between pages F-25 and F-72 are incorporated herein by reference.
The unaudited pro forma condensed combined financial information of the Company and BWAQ are attached as Exhibit 15.1 to this Report.
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EXHIBIT INDEX
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| * | Filed herewith. |
| † | Indicates a management contract or any compensatory plan, contract or arrangement. |
| ^ | Portion of this exhibit has been omitted in accordance with Item 601(b)(10)(iv) of Regulation S-K |
| # | Schedules and annexes have been omitted |
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The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Report on its behalf.
| TOYO Co., Ltd | ||
| July 8, 2024 | By: | /s/ Junsei Ryu |
| Name: Junsei Ryu | ||
| Title: Director and Chief Executive Officer | ||
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Exhibit 4.5
TOYO CO., LTD
2024 SHARE INCENTIVE PLAN
ARTICLE 1
PURPOSE
The purpose of this 2024 SHARE INCENTIVE PLAN is to promote the success and enhance the value of TOYO Co., Ltd, a Cayman Islands exempted company (the “Company”), by linking the personal interests of the Directors, Employees, Consultants, and other Persons to those of the Company’s shareholders and by providing such individuals with an incentive for outstanding performance to generate superior returns to the Company’s shareholders. The Plan is further intended to provide flexibility to the Company in its ability to motivate, attract, and retain the services of the above individuals upon whose judgment, interest, and special effort the successful conduct of the Company’s operation is largely dependent.
ARTICLE 2
DEFINITIONS AND CONSTRUCTION
Wherever the following terms are used in the Plan they shall have the meanings specified below, unless the context clearly indicates otherwise. The singular pronoun shall include the plural where the context so indicates.
2.1 “Applicable Laws” means the legal requirements relating to the Plan and the Awards under applicable provisions of the corporate, securities, tax and other laws, rules, regulations and government orders, and the rules of any applicable stock exchange or national market system, of any jurisdiction applicable to Awards granted to residents therein.
2.2 “Award” means an Option, Restricted Share or Restricted Share Unit award(s) granted to a Participant pursuant to the Plan, and an Award may consist of one such security or benefit, or two or more of them in any combination or alternative.
2.3 “Board” means the board of directors of the Company.
2.4 “Cause” with respect to a Participant means (unless otherwise expressly provided in the applicable Notice of Grant, or another applicable contract with the Participant that defines such term for purposes of determining the effect that a “for cause” termination has on the Participant’s Awards) each of the following and the determination of the existence of Cause shall be determined by the Committee:
(a) the Participant has been negligent in the discharge of his or her duties to the Service Recipient, has refused to perform stated or assigned duties or is incompetent in or (other than by reason of a disability or analogous condition) incapable of performing those duties;
(b) the Participant has been dishonest or committed or engaged in an act of theft, embezzlement or fraud, a breach of confidentiality, an unauthorized disclosure or use of inside information, customer lists, trade secrets or other confidential information;
(c) the Participant has breached a fiduciary duty, or willfully and materially violated any other duty, law, rule, regulation, or policy of the Service Recipient; or has been convicted of, or plead guilty or nolo contendere to, a felony or misdemeanor (other than minor traffic violations or similar offenses);
(d) the Participant has materially breached any of the provisions of any agreement with the Service Recipient;
(e) the Participant has engaged in unfair competition with, or otherwise acted intentionally in a manner injurious to the reputation, business, or assets of, the Service Recipient; or
(f) the Participant has improperly induced a vendor or customer to break or terminate any contract with the Service Recipient or induced a principal for whom the Service Recipient acts as agent to terminate such agency relationship.
A termination for Cause shall be deemed to occur (subject to reinstatement upon a contrary final determination by the Committee) on the date on which the Service Recipient first delivers written notice to the Participant of a finding of termination for Cause.
2.5 “Code” means the Internal Revenue Code of 1986 of the United States, as amended.
2.6 “Committee” means a committee of the Board described in Article 10.
2.7 “Consultant” means any Person who renders services directly or indirectly to a Service Recipient and recognized by the Committee; provided that such services are not in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for the Company’s securities.
2.8 “Corporate Transaction”, unless otherwise defined in a Notice of Grant, means any of the following transactions, provided, however, that the Committee may determine, under (d) and (e) whether multiple transactions are related, and its determination shall be final, binding and conclusive:
(a) an amalgamation, arrangement or consolidation or scheme of arrangement (i) in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change the jurisdiction in which the Company is incorporated or (ii) following which the holders of the voting securities of the Company do not continue to hold more than 50% of the combined voting power of the voting securities of the surviving entity;
(b) the sale, transfer or other disposition of all or substantially all of the assets of the Company;
(c) the complete liquidation or dissolution of the Company;
(d) any reverse takeover or series of related transactions culminating in a reverse takeover (including, but not limited to, a tender offer followed by a reverse takeover) in which the Company is the surviving entity but (A) the Company’s equity securities outstanding immediately prior to such takeover are converted or exchanged by virtue of the takeover into other property, whether in the form of securities, cash or otherwise, or (B) in which securities possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities are transferred to a Person or Persons different from those who held or beneficially owned such securities immediately prior to such takeover or the initial transaction culminating in such takeover, but excluding any such transaction or series of related transactions that the Committee determines shall not be a Corporate Transaction; or
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(e) acquisition in a single or series of related transactions by any Person or related group of Persons (other than the Company, or a person that directly or indirectly controls, is controlled by or is under common control with the Company, or by a Company-sponsored employee benefit plan) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities but excluding any such transaction or series of related transactions that the Committee determines shall not be a Corporate Transaction.
2.9 “Director” means a member of the Board or a member of the board of directors of any Parent, Subsidiary or Related Entity of the Company.
2.10 “Disability”, unless otherwise defined in a Notice of Grant, means that the Participant qualifies to receive long-term disability payments under the Service Recipient’s long-term disability insurance program, as it may be amended from time to time, to which the Participant provides services regardless of whether the Participant is covered by such policy. If the Service Recipient to which the Participant provides service does not have a long-term disability plan in place, “Disability” means that a Participant is unable to carry out the responsibilities and functions of the position held by the Participant by reason of any medically determinable physical or mental impairment for a period of not less than ninety (90) consecutive days. A Participant will not be considered to have incurred a Disability unless he or she furnishes proof of such impairment sufficient to satisfy the Committee in its discretion.
2.11 “Effective Date” shall have the meaning set forth in Section 11.1.
2.12 “Employee” means any person, including an officer of the Company (if any) or any Parent, Subsidiary or Related Entity of the Company, who is in the employment of a Service Recipient, subject to the control and direction of the Service Recipient as to both the work to be performed and the manner and method of performance. The payment of a director’s fee by a Service Recipient shall not be sufficient to constitute “employment” by the Service Recipient.
2.13 “Exchange Act” means the Securities Exchange Act of 1934 of the United States, as amended.
2.14 “Fair Market Value” means, as of any date, the value of Shares determined as follows:
(a) If the Shares are listed on one or more established stock exchanges or national market systems, including without limitation, The New York Stock Exchange and The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such shares (or the closing bid, if no sales were reported) as quoted on the principal exchange or system on which the Shares are listed (as determined by the Committee) on the date of determination (or, if no closing sales price or closing bid was reported on that date, as applicable, on the last trading date such closing sales price or closing bid was reported), as reported in The Wall Street Journal or such other source as the Committee deems reliable;
(b) If the Shares are regularly quoted on an automated quotation system (including the OTC Bulletin Board) or by a recognized securities dealer, its Fair Market Value shall be the closing sales price for such shares as quoted on such system or by such securities dealer on the date of determination, but if selling prices are not reported, the Fair Market Value of a Share shall be the mean between the high bid and low asked prices for the Shares on the date of determination (or, if no such prices were reported on that date, on the last date such prices were reported), as reported in The Wall Street Journal or such other source as the Committee deems reliable; or
(c) In the absence of an established market for the Shares of the type described in (a) and (b) above, the Fair Market Value thereof shall be determined by the Committee in good faith and in its discretion by reference to one or more of the following and such Fair Market Value shall be binding on all participants: (i) the placing price of the latest private placement of the Shares and the development of the Company’s business operations and the general economic and market conditions since such latest private placement, (ii) other third party transactions involving the Shares and the development of the Company’s business operation and the general economic and market conditions since such sale, (iii) an independent valuation of the Shares, or (iv) such other methodologies or information as the Committee determines, to be indicative of Fair Market Value and relevant.
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2.15 “Incentive Share Option” means an Option that is intended to meet the requirements of Section 422 of the Code or any successor provision thereto.
2.16 “Independent Director” means (i) before the Shares or other securities representing the Shares are listed on a stock exchange, a member of the Board who is a Non-Employee Director; and (ii) after the Shares or other securities representing the Shares are listed on a stock exchange, a member of the Board who meets the independence standards under the applicable corporate governance rules of the stock exchange.
2.17 “Non-Employee Director” means a member of the Board who qualifies as a “Non-Employee Director” as defined in Rule 16b-3(b)(3) of the Exchange Act, or any successor definition adopted by the Board.
2.18 “Non-Qualified Share Option” means an Option that is not intended to be an Incentive Share Option.
2.19 “Notice of Grant” means the notice of grant to be sent from the Committee, on behalf of the Company, to the Participant evidencing an Award, including through electronic medium, which shall contain such terms and conditions with respect to an Award as the Committee may determine consistent with the Plan.
2.20 “Option” means a right granted to a Participant pursuant to Article 5 of the Plan to purchase a specified number of Shares at a specified price during specified time periods. An Option may be either an Incentive Share Option or a Non-Qualified Share Option.
2.21 “Participant” means a Person who has been granted an Award as determined by the Committee pursuant to the Plan, including but not limited to a Director, Employee, and Consultant, etc.
2.22 “Parent” means a parent corporation under Section 424(e) of the Code.
2.23 “Person” means any individual, general partnership, limited partnership, limited liability partnership, limited liability company, corporation, joint venture, trust, business trust, cooperative or association and the heirs, executors, administrators, legal representatives, successors and assigns of such Person where the context so permits.
2.24 “Plan” means this 2024 Share Incentive Plan, as it may be amended from time to time.
2.25 “Related Entity” means any business, corporation, partnership, limited liability company or other entity in which the Company, a Parent or Subsidiary of the Company holds a substantial ownership interest, directly or indirectly, but which is not a Subsidiary and which the Committee designates as a Related Entity for purposes of the Plan.
2.26 “Restricted Share” means a Share awarded to a Participant pursuant to Article 6 that is subject to certain restrictions on transfer, rights of first refusal, repurchase provisions, forfeiture provisions and other terms and conditions established by the Committee and may be subject to risk of forfeiture.
2.27 “Restricted Share Unit” means the right granted to a Participant pursuant to Article 7 to receive a Share at a future date.
2.28 “Securities Act” means the Securities Act of 1933 of the United States, as amended.
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2.29 “Service Recipient” means the Company, any Parent, Subsidiary or Related Entity of the Company, to which a Participant provides services as an Employee, a Consultant or a Director.
2.30 “Share” means ordinary shares of the Company, and such other securities of the Company that may be substituted for Shares pursuant to Article 9.
2.31 “Subsidiary” means any corporation or other entity of which a majority of the outstanding voting shares or voting power is beneficially owned directly or indirectly by the Company.
2.32 “Trading Date” means the closing of the first sale to the general public of the Shares pursuant to a registration statement filed with and declared effective by the U.S. Securities and Exchange Commission under the Securities Act.
ARTICLE 3
SHARES SUBJECT TO THE PLAN
3.1 Number of Shares.
(a) Subject to the provisions of Article 9 and Section 3.1(b), the maximum aggregate number of Shares which may be issued pursuant to all Awards (including Incentive Share Options) shall initially be 4,440,500 ordinary shares of the Company (the “Share Limit”). Subject to the authorized share capital as provided in the memorandum of association and articles of association of the Company then in effect, the Share Limit will be increased automatically on January 1st of each calendar year during the term of this Plan commencing on January 1st 2025 (each, an “Evergreen Date”), by an amount equal to one percent (1%) of the total number of outstanding shares of the Company on the end of the calendar year immediately preceding the applicable Evergreen Date.
(b) To the extent that an Award terminates, expires, or lapses for any reason, any Shares subject to the Award shall again be available for the grant of an Award pursuant to the Plan. To the extent permitted by Applicable Laws, Shares issued in assumption of, or in substitution for, any outstanding awards of any entity acquired in any form or combination by the Company or any Parent or Subsidiary of the Company shall not be counted against Shares available for grant pursuant to the Plan. Shares delivered by the Participant or withheld by the Company in payment of the exercise price thereof or tax withholding thereon (including Shares which have been issued upon the exercise of any Award under the Plan and then surrendered by the Participant or repurchased by the Company in the consideration of the exercise price thereof or withholding tax thereon), may again be optioned, granted or awarded hereunder, subject to the limitations of Section 3.1(a).If any Awards are forfeited by the Participant or repurchased by the Company, the Shares underlying such Awards may again be optioned, granted or awarded hereunder, subject to the limitations of Section 3.1(a). Notwithstanding the provisions of this Section 3.1(b), no Shares may again be optioned, granted, or awarded if such action would cause an Incentive Share Option to fail to qualify as an Incentive Share Option under Section 422 of the Code.
3.2 Shares Distributed. Any Shares distributed pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares, treasury shares (subject to Applicable Laws) or Shares purchased on the open market. Additionally, if applicable, in the discretion of the Committee, American depository shares (the “American Depository Shares”) in an amount equal to the number of Shares which otherwise would be distributed pursuant to an Award may be distributed in lieu of Shares in settlement of any Award. If the number of Shares represented by an American Depository Share is other than on a one-to-one basis, the Share Limit of Section 3.1 shall be adjusted to reflect the distribution of American Depository Shares in lieu of Shares.
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ARTICLE 4
ELIGIBILITY AND PARTICIPATION
4.1 Eligibility. Persons eligible to participate in this Plan include Persons recognized by the Committee, e.g., Directors, Employees and Consultants, as determined by the Committee.
4.2 Participation. Subject to the provisions of the Plan, the Committee may, from time to time, select from among all eligible individuals, those to whom Awards shall be granted and determine the nature and amount of each Award. No individual shall have any right to be granted an Award pursuant to this Plan, unless otherwise determined by the Committee in accordance with the Plan.
4.3 Jurisdictions. In order to assure the viability of Awards granted to Participants employed in various jurisdictions, the Committee may provide for such special terms as it may consider necessary or appropriate to accommodate differences in local law, tax policy, or custom applicable in the jurisdiction in which the Participant resides or is employed. Moreover, the Committee may approve such supplements to, or amendments, restatements, or alternative versions of, the Plan as it may consider necessary or appropriate for such purposes without thereby affecting the terms of the Plan as in effect for any other purpose; provided, however, that no such supplements, amendments, restatements, or alternative versions shall increase the Share Limit contained in Section 3.1 of the Plan. Notwithstanding the foregoing, the Committee may not take any actions hereunder, and no Awards shall be granted, that would violate any Applicable Laws.
ARTICLE 5
OPTIONS
5.1 General. The Committee is authorized to grant Options to Participants on the following terms and conditions:
(a) Exercise Price. The exercise price per Share subject to an Option shall be determined by the Committee and set forth in the Notice of Grant which may be a fixed or variable price related to the Fair Market Value of the Shares and no less than the par value of such Shares. The exercise price per Share subject to an Option may be amended or adjusted in the absolute discretion of the Committee, the determination of which shall be final, binding, and conclusive. For the avoidance of doubt, to the extent not prohibited by Applicable Laws or any exchange rule, a downward adjustment of the exercise prices of Options mentioned in the preceding sentence may be effective without the approval of the Company’s shareholders or the approval of the affected Participants.
(b) Time and Conditions of Exercise. The Committee may determine the time or times at which an Option may be exercised in whole or in part, including exercise prior to vesting; provided that the term of any Option granted under the Plan shall not exceed ten years, except as provided in Section 12.1. The Committee may also determine any conditions, if any, that must be satisfied before all or part of an Option may be exercised.
(c) Payment. The Committee may determine the methods by which the exercise price of an Option may be paid, the form of payment, including, without limitation (i) cash or check denominated in U.S. Dollars, (ii) to the extent permissible under the Applicable Laws, cash or check in Chinese Renminbi, (iii) cash or check denominated in any other local currency as approved by the Committee, (iv) Shares held for such period of time as may be required by the Committee in order to avoid adverse financial accounting consequences and having a Fair Market Value on the date of delivery equal to the aggregate exercise price of the Option or exercised portion thereof, (v) after the Trading Date the delivery of a notice that the Participant has placed a market sell order with a broker with respect to Shares then issuable upon exercise of the Option, and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the Option exercise price; provided that payment of such proceeds is then made to the Company upon settlement of such sale, (vi) other property acceptable to the Committee with a Fair Market Value equal to the exercise price, or (vii) any combination of the foregoing. Notwithstanding any other provision of the Plan to the contrary, no Participant who is a member of the Board or an “executive officer” of the Company within the meaning of Section 13(k) of the Exchange Act shall be permitted to pay the exercise price of an Option in any method which would violate Section 13(k) of the Exchange Act.
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(d) Evidence of Grant. All Options shall be evidenced by a Notice of Grant sent from the Committee on behalf of the Company to the Participant. The Notice of Grant shall include such additional provisions as may be specified by the Committee.
(e) Effects of Termination of Employment or Service on Options. Termination of employment or service shall have the following effects on Options granted to the Participants:
(i) Dismissal for Cause. Unless otherwise provided in the Notice of Grant, if a Participant’s employment by or service to the Service Recipient is terminated by the Service Recipient for Cause, the Participant’s Options will terminate upon such termination, whether or not the Option is then vested and/or exercisable;
(ii) Death or Disability. Unless otherwise provided in the Notice of Grant, if a Participant’s employment by or service to the Service Recipient terminates as a result of the Participant’s death or Disability:
(1) the Participant (or his or her legal representative or beneficiary, in the case of the Participant’s Disability or death, respectively), will have the right to exercise the Participant’s Options (or portion thereof) until the tenth anniversary of the grant date to the extent that such Options were vested and exercisable on the date of the Participant’s termination of employment on account of death or Disability;
(2) the Options, to the extent not vested and exercisable on the date of the Participant’s termination of employment or service, shall immediately terminate for nil consideration upon the Participant’s termination of employment or service on account of death or Disability; and
(3) the Options, to the extent exercisable on the date of the Participant’s termination of employment on account of death or Disability and not exercised prior to the tenth anniversary of the grant date, shall terminate at the close of business on the tenth anniversary of the grant date.
(iii) Other Terminations of Employment or Service. Unless otherwise provided in the Notice of Grant, if a Participant’s employment by or service to the Service Recipient terminates for any reason other than a termination by the Service Recipient for Cause or because of the Participant’s death or Disability:
(1) the Participant will have the right to exercise his or her Options (or portion thereof) until the tenth anniversary of the grant date to the extent that such Options were vested and exercisable on the date of the Participant’s termination of employment or service;
(2) the Options, to the extent not vested and exercisable on the date of the Participant’s termination of employment or service, shall terminate upon the Participant’s termination of employment or service; and
(3) the Options, to the extent exercisable on the date of the Participant’s termination of employment or service and not exercised prior to the tenth anniversary of the grant date, shall terminate at the close of business on the tenth anniversary of the grant date.
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5.2 Incentive Share Options. Incentive Share Options may be granted to Employees of the Company (if any), a Parent or Subsidiary of the Company. Incentive Share Options may not be granted to Employees of a Related Entity or to Independent Directors or Consultants. The terms of any Incentive Share Options granted pursuant to the Plan, in addition to the requirements of Section 5.1, must comply with the following additional provisions of this Section 5.2:
(a) Individual Dollar Limitation. The aggregate Fair Market Value (determined as of the time the Option is granted) of all Shares with respect to which Incentive Share Options are first exercisable by a Participant in any calendar year may not exceed $100,000 or such other limitation as imposed by Section 422(d) of the Code, or any successor provision. To the extent that Incentive Share Options are first exercisable by a Participant in excess of such limitation, the excess shall be considered Non-Qualified Share Options.
(b) Exercise Price. The exercise price of an Incentive Share Option shall be equal to the Fair Market Value on the date of grant. However, the exercise price of any Incentive Share Option granted to any individual who, at the date of grant, owns Shares possessing more than ten percent of the total combined voting power of all classes of shares of the Company may not be less than 110% of Fair Market Value on the date of grant and such Option may not be exercisable for more than five years from the date of grant.
(c) Transfer Restriction. The Participant shall give the Committee prompt notice of any disposition of Shares acquired by exercise of an Incentive Share Option within (i) two years from the date of grant of such Incentive Share Option or (ii) one year after the transfer of such Shares to the Participant.
(d) Expiration of Incentive Share Options. No Award of an Incentive Share Option may be made pursuant to this Plan after the tenth anniversary of the Effective Date.
(e) Right to Exercise. During a Participant’s lifetime, an Incentive Share Option may be exercised only by the Participant.
ARTICLE 6
RESTRICTED SHARES
6.1 Grant of Restricted Shares. The Committee, at any time and from time to time, may grant Restricted Shares to Participants as the Committee, in its sole discretion, shall determine. The Committee, in its sole discretion, may determine the number of Restricted Shares to be granted to each Participant.
6.2 Restricted Shares Notice of Grant. Each Award of Restricted Shares shall be evidenced by a Notice of Grant that shall specify the period of restriction, the number of Restricted Shares granted, the vesting schedule and such other terms and conditions as the Committee, in its sole discretion, may determine. Unless the Committee determines otherwise, Restricted Shares shall be held by the Company as escrow agent until the restrictions on such Restricted Shares have lapsed.
6.3 Issuance and Restrictions. Restricted Shares shall be subject to such restrictions on transferability and other restrictions as the Committee may impose (including, without limitation, limitations on transfer, right of first refusal, repurchase provisions, forfeiture provisions, the right to vote Restricted Shares or the right to receive dividends on the Restricted Share). These restrictions may lapse separately or in combination at such times, pursuant to such circumstances, in such installments, or otherwise, as the Committee determines at the time of the grant of the Award or thereafter.
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6.4 Forfeiture/Repurchase. Except as otherwise determined by the Committee at the time of the grant of the Award or thereafter, upon termination of employment or service during the applicable restriction period, the unvested Restricted Shares and the Restricted Shares that are at that time subject to restrictions shall be forfeited or repurchased in accordance with the Notice of Grant; provided, however, the Committee may (a) provide in any Restricted Share Notice of Grant that restrictions or forfeiture and repurchase conditions relating to Restricted Shares will be waived in whole or in part in the event of terminations resulting from specified causes, and (b) in other cases waive in whole or in part restrictions or forfeiture and repurchase conditions relating to Restricted Shares.
6.5 Certificates for Restricted Shares. Restricted Shares granted pursuant to the Plan may be evidenced in such manner as the Committee may determine. If certificates representing Restricted Shares are registered in the name of the Participant, certificates must bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Shares, and the Committee may, at its discretion, retain physical possession of the certificate until such time as all applicable restrictions lapse.
6.6 Removal of Restrictions. Except as otherwise provided in this Article 6, Restricted Shares granted under the Plan shall be released from escrow as soon as practicable after the last day of the period of restriction. The Committee, in its discretion, may accelerate the time at which any restrictions shall lapse or be removed. After the restrictions have lapsed, the Participant shall be entitled to have any legend or legends under Section 6.5 removed from his or her Share certificate, and the Shares shall be freely transferable by the Participant, subject to applicable legal restrictions. The Committee (in its discretion) may establish procedures regarding the release of Shares from escrow and the removal of legends, as necessary or appropriate to minimize administrative burdens on the Company.
ARTICLE 7
RESTRICTED SHARE UNITS
7.1 Grant of Restricted Share Units. The Committee, at any time and from time to time, may grant Restricted Share Units to Participants as the Committee, in its sole discretion, may determine. The Committee, in its sole discretion, may determine the number of Restricted Share Units to be granted to each Participant.
7.2 Restricted Share Units Notice of Grant. Each Award of Restricted Share Units shall be evidenced by a Notice of Grant that shall specify any vesting conditions, the number of Restricted Share Units granted, the vesting schedule and the delivery schedule (which may include deferred delivery later than the vesting date) and such other terms and conditions as the Committee, in its sole discretion, may determine.
7.3 Performance Objectives and Other Terms. The Committee, in its discretion, may set performance objectives or other vesting criteria which, depending on the extent to which they are met, will determine the number or value of Restricted Share Units that will be paid out to the Participants.
7.4 Form and Timing of Payment of Restricted Share Units. At the time of grant, the Committee may specify the date or dates on which the Restricted Share Units shall become fully vested and nonforfeitable. Upon vesting, the Committee, on behalf of the Company, may pay Restricted Share Units in the form of cash, in Shares, or other forms of payment or in any combination of the foregoing, as agreed in the Notice of Grant.
7.5 Forfeiture/Repurchase. Except as otherwise determined by the Committee at the time of the grant of the Award or thereafter, upon termination of employment or service during the applicable restriction period or for other reasons recognized by the Committee, Restricted Share Units that are at that time unvested shall be forfeited or repurchased by the Company in accordance with the Notice of Grant; provided, however, the Committee may (a) provide in any Restricted Share Notice of Grant that restrictions or forfeiture and repurchase conditions relating to Restricted Share Units will be waived in whole or in part in the event of terminations resulting from specified causes, and (b) in other cases waive in whole or in part restrictions or forfeiture and repurchase conditions relating to Restricted Share Units.
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ARTICLE 8
PROVISIONS APPLICABLE TO AWARDS
8.1 Notice of Grant. Awards under the Plan shall be evidenced by Notice of Grant that set forth the terms, conditions and limitations for each Award which may include the term of an Award, the provisions applicable in the event the Participant’s employment or service terminates, and the Company’s authority to unilaterally or bilaterally amend, modify, suspend, cancel, or rescind an Award.
8.2 No Transferability; Limited Exception to Transfer Restrictions.
8.2.1 Limits on Transfer. Unless otherwise expressly provided in (or pursuant to) this Section 8.2, by Applicable Law and by the Notice of Grant, as the same may be amended: all Awards are non-transferable and will not be subject in any manner to sale, transfer, anticipation, alienation, assignment, pledge, encumbrance, or charge;
(a) Awards will be exercised only by the Participant or the Participant’s legal representative or beneficiary in the case of the Participant’s Disability or death, respectively, as set forth under Section 5.1(e)(ii); and
(b) amounts payable or shares issuable pursuant to an Award will be delivered only to (or for the account of), and, in the case of Shares, registered in the name of, the Participant.
In addition, the Shares shall be subject to the restrictions set forth in the applicable Notice of Grant.
8.2.2 Further Exceptions to Limits on Transfer. The exercise and transfer restrictions in Section 8.2.1 will not apply to:
(a) transfers to the Company or a Subsidiary;
(b) transfers by gift to “immediate family” as that term is defined in SEC Rule 16a-1(e) promulgated under the Exchange Act;
(c) the designation of a beneficiary to receive benefits if the Participant dies or, if the Participant has died, transfers to or exercises by the Participant’s beneficiary, or, in the absence of a validly designated beneficiary, transfers by will or the laws of descent and distribution; or
(d) if the Participant has suffered a disability, permitted transfers or exercises on behalf of the Participant by the Participant’s duly authorized legal representative; or
(e) subject to the prior approval of the Committee or an executive officer or director of the Company authorized by the Committee, transfer to one or more natural persons who are the Participant’s family members or entities owned and controlled by the Participant and/or the Participant’s family members, including but not limited to trusts or other entities whose beneficiaries or beneficial owners are the Participant and/or the Participant’s family members, or to such other Persons as may be expressly approved by the Committee, pursuant to such conditions and procedures as the Committee or may establish. Any permitted transfer shall be subject to the condition that the Committee receives evidence satisfactory to it that the transfer is being made for estate and/or tax planning purposes and on a basis consistent with the Company’s lawful issue of securities.
Notwithstanding anything else in this Section 8.2.2 to the contrary, but subject to compliance with all Applicable Laws, Incentive Share Options, Restricted Shares and Restricted Share Units will be subject to any and all transfer restrictions under the Code applicable to such Awards or necessary to maintain the intended tax consequences of such Awards. Notwithstanding clause (b) above but subject to compliance with all Applicable Laws, any contemplated transfer by gift to “immediate family” as referenced in clause (b) above is subject to the condition precedent that the transfer be approved by the Committee in order for it to be effective.
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8.3 Beneficiaries. Notwithstanding Section 8.2, a Participant may, in the manner determined by the Committee, designate a beneficiary to exercise the rights of the Participant and to receive any distribution with respect to any Award upon the Participant’s death. A beneficiary, legal guardian, legal representative, or other Person claiming any rights pursuant to the Plan is subject to all terms and conditions of the Plan and any Notice of Grant applicable to the Participant, except to the extent the Plan and Notice of Grant otherwise provide, and to any additional restrictions deemed necessary or appropriate by the Committee. If the Participant is married and resides in a community property state, a designation of a Person other than the Participant’s spouse as his or her beneficiary with respect to more than 50% of the Participant’s interest in the Award shall not be effective without the prior written consent of the Participant’s spouse. If no beneficiary has been designated or survives the Participant, payment shall be made to the Person entitled thereto pursuant to the Participant’s will or the laws of descent and distribution. Subject to the foregoing, a beneficiary designation may be changed or revoked by a Participant at any time provided the change or revocation is filed with the Committee.
8.4 Share Certificates. Notwithstanding anything herein to the contrary, the Company shall not be required to issue or deliver any certificates evidencing the Shares pursuant to the exercise of any Award, unless and until the Committee has determined, with advice of counsel, that the issuance and delivery of such certificates is in compliance with all Applicable Laws, regulations of governmental authorities and, if applicable, the requirements of any exchange on which the Shares are listed or traded. All Share certificates delivered pursuant to the Plan are subject to any stop-transfer orders and other restrictions as the Committee deems necessary or advisable to comply with all Applicable Laws, and the rules of any national securities exchange or automated quotation system on which the Shares are listed, quoted, or traded. The Committee may place legends on any Share certificate to reference restrictions applicable to the Shares. In addition to the terms and conditions provided herein, the Committee may require that a Participant make such reasonable covenants, agreements, and representations as the Committee, in its discretion, deems advisable in order to comply with any such laws, regulations, or requirements. The Committee shall have the right to require any Participant to comply with any timing or other restrictions with respect to the settlement or exercise of any Award, including a window-period limitation, as may be imposed in the discretion of the Committee.
8.5 Paperless Administration. Subject to Applicable Laws, the Committee may make Awards, provide applicable disclosure and procedures for exercise of Awards by an internet website or interactive voice response system for the paperless administration of Awards.
8.6 Payment Method. In the event the exercise price for an Award is paid in a currency other than U.S. dollars or any other form of payment as permitted in the Notice of Grant, the amount payable will be determined by conversion from U.S. dollars at the exchange rates set forth in the Notice of Grant or as selected by the Committee on the date of exercise. A Participant (or his or her legal representative or beneficiary, in the case of the Participant’s Disability or death, respectively) may be required to provide evidence that any currency used to pay the exercise price of any Award was acquired and taken out of the jurisdiction in which the Participant resides in accordance with Applicable Laws, including foreign exchange control laws and regulations.
ARTICLE 9
CHANGES IN CAPITAL STRUCTURE
9.1 Adjustments. In the event of any dividend, share split, combination or exchange of Shares, amalgamation, arrangement or consolidation, spin-off, recapitalization or other distribution (other than normal cash dividends) of Company assets to its shareholders, or any other change affecting the shares of Shares or the share price of a Share, the Committee may, make such proportionate and equitable adjustments, if any, as the Committee in its discretion may deem appropriate to reflect such change with respect to (a) the aggregate number and type of shares that may be issued under the Plan (including, but not limited to, adjustments of the Share Limit in Section 3.1); (b) the terms and conditions of any issued and outstanding Awards (including, without limitation, any applicable performance targets or criteria with respect thereto); and (c) the grant or exercise price per share for any issued and outstanding Awards under the Plan.
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9.2 Corporate Transactions. Except as may otherwise be provided in any Notice of Grant or any other written agreement entered into by and between the Company and a Participant, if the Committee anticipates the occurrence, or upon the occurrence, of a Corporate Transaction, the Committee may, in its sole discretion, provide for (i) any and all Awards outstanding hereunder to terminate at a specific time in the future and shall give each Participant the right to exercise the vested portion of such Awards during a period of time as the Committee may determine, or (ii) the purchase of any Award for an amount of cash, as determined by the Committee in good faith, which may equal to the amount that could have been attained upon the exercise of such Award (and, for the avoidance of doubt, if as of such date the Committee determines in good faith that no amount would have been attained upon the exercise of such Award, then such Award may be terminated by the Company without payment), or (iii) the replacement of such Award with other rights or property selected by the Committee in its sole discretion or the assumption of or substitution of such Award by the successor or surviving corporation, or a Parent or Subsidiary thereof, with appropriate adjustments as to the number and kind of Shares and prices, which will preserve the rights under the affected Awards previously granted hereunder, or (iv) payment of Award in cash based on the value of Shares on the date of the Corporate Transaction plus reasonable interest on the Award through the date when such Award would otherwise be vested or have been paid in accordance with its original terms, if necessary to comply with Section 409A of the Code.
9.3 Outstanding Awards – Other Changes. In the event of any other change in the capitalization of the Company or corporate change other than those specifically referred to in this Article 9, the Committee may, in its absolute discretion, make such adjustments in the number and class of shares subject to Awards issued and outstanding on the date on which such change occurs and in the per share grant or exercise price of each Award as the Committee may consider appropriate to prevent dilution or enlargement of rights.
9.4 No Other Rights. Except as expressly provided in the Plan, no Participant shall have any rights by reason of any subdivision or consolidation of Shares of any class, the payment of any dividend, any increase or decrease in the number of shares of any class or any dissolution, liquidation, merger, or consolidation of the Company or any other corporation. Except as expressly provided in the Plan or pursuant to action of the Committee under the Plan, no issuance by the Company of shares of any class, or securities convertible into shares of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number of shares subject to an Award or the grant or exercise price of any Award.
ARTICLE 10
ADMINISTRATION
10.1 Committee. The Plan shall be administered by a committee of one or more members of the Board to whom the Board shall delegate the authority to grant or amend Awards to Participants other than any of the Committee members.
10.2 Action by the Committee. Each member of the Committee is entitled to, in good faith, rely or act upon any report or other information furnished to it by any officer or other employee (if any) of the Company or any Parent, Subsidiary or Related Entity of the Company, the Company’s independent certified public accountants, or any executive compensation consultant or other professional retained by the Company to assist in the administration of the Plan.
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10.3 Authority of the Committee. Subject to any specific designation in the Plan, the Committee has the exclusive power, authority and discretion to:
(a) designate Participants to receive Awards;
(b) determine the type or types of Awards to be granted to each Participant;
(c) determine the number of Awards to be granted and the number of Shares to which an Award will relate;
(d) determine the terms and conditions of any Award granted pursuant to the Plan, including, but not limited to, the exercise price, grant price, or purchase price, any restrictions or limitations on the Award, any schedule for lapse of forfeiture restrictions or restrictions on the exercisability of an Award, and accelerations or waivers thereof, any provisions related to non-competition and recapture of gain on an Award, based in each case on such considerations as the Committee in its sole discretion determines;
(e) determine whether, to what extent, and pursuant to what circumstances an Award may be settled in, or the exercise price of an Award may be paid in, cash, Shares, other Awards, or other property, or an Award may be canceled, forfeited, or surrendered;
(f) prescribe the form of each Notice of Grant, which need not be identical for each Participant;
(g) decide all other matters that must be determined in connection with an Award;
(h) correct any defect, supply any omission and reconcile any inconsistency in the Plan or any Award, in the manner and to the extent it shall deem desirable to carry the Plan into effect;
(i) establish, adopt, waive, or revise any rules and regulations as it may deem necessary or advisable to administer the Plan;
(j) interpret the terms of, and any matter arising pursuant to, the Plan or any Notice of Grant;
(k) reduce the exercise price per Share underlying an Option; and
(l) make all other decisions and determinations that may be required pursuant to the Plan or as the Committee deems necessary or advisable to administer the Plan.
10.4 Decisions Binding. The Committee’s interpretation of the Plan, any Awards granted pursuant to the Plan, any Notice of Grant and all decisions and determinations by the Committee with respect to the Plan are final, binding, and conclusive on all parties, including but not limited to the Company, its shareholders, Participants and any beneficiaries thereof.
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ARTICLE 11
EFFECTIVE AND EXPIRATION DATE
11.1 Effective Date. The Plan is effective upon the passing of the resolutions of the Board to adopt the Plan (the “Effective Date”).
11.2 Expiration Date. The Plan will expire on, and no Award may be granted pursuant to the Plan after, the tenth anniversary of the Effective Date, unless otherwise determined by the Committee. Any Awards that are outstanding on the tenth anniversary of the Effective Date shall remain in force according to the terms of the Plan and the applicable Notice of Grant.
ARTICLE 12
AMENDMENT, MODIFICATION, AND TERMINATION
12.1 Amendment, Modification, And Termination. With the approval of the Board, at any time and from time to time, the Committee may, terminate, amend, modify, alter, suspend or discontinue the Plan or any portion thereof.
12.2 Awards Previously Granted. Except with respect to amendments made pursuant to Section 12.1, no termination, amendment, or modification of the Plan shall adversely affect in any material way any Award previously granted pursuant to the Plan without the prior written consent of the Participant, except to the extent any such amendment, alteration, suspension, discontinuance or termination is made to cause the Plan to comply with applicable law, stock market or exchange rules and regulations or accounting or tax rules and regulations.
ARTICLE 13
GENERAL PROVISIONS
13.1 No Rights to Awards. No Participant, Employee, Director, Consultant or other Person shall have any claim to be granted any Award pursuant to the Plan, and neither the Company nor the Committee is obligated to treat Participants, Employees, Directors, Consultants and other Persons uniformly. The terms and conditions of Awards and the Committee’s determinations and interpretations with respect thereto need not be the same with respect to each Participant (whether or not such Participant is similarly situated).
13.2 No Shareholders Rights. No Award gives the Participant any of the rights of a shareholder of the Company unless and until Shares are in fact issued to such Person in connection with such Award.
13.3 Taxes. No Shares shall be delivered under the Plan to any Participant until such Participant has made arrangements acceptable to the Committee for the satisfaction of any income and employment tax withholding obligations under Applicable Laws. The Company or any Subsidiary shall have the authority and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy all applicable taxes (including the Participant’s payroll tax obligations) required or permitted by Applicable Laws to be withheld with respect to any taxable event concerning a Participant arising as a result of this Plan. The Committee may in its discretion and in satisfaction of the foregoing requirement allow a Participant to elect to have the Company withhold Shares otherwise issuable under an Award (or allow the return of Shares) having a Fair Market Value equal to the sums required to be withheld. Notwithstanding any other provision of the Plan, the number of Shares which may be withheld with respect to the issuance, vesting, exercise or payment of any Award (or which may be repurchased from the Participant of such Award after such Shares were acquired by the Participant from the Company) in order to satisfy any income and payroll tax liabilities applicable to the Participant with respect to the issuance, vesting, exercise or payment of the Award shall, unless specifically approved by the Committee, be limited to the number of Shares which have a Fair Market Value on the date of withholding or repurchase equal to the aggregate amount of such liabilities based on the minimum statutory withholding rates for the applicable income and payroll tax purposes that are applicable to such supplemental taxable income.
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13.4 No Right to Employment or Services. Nothing in the Plan or any Notice of Grant shall interfere with or limit in any way the right of the Service Recipient to terminate any Participant’s employment or services at any time, nor confer upon any Participant any right to continue in the employment or services of any Service Recipient.
13.5 Unfunded Status of Awards. The Plan is intended to be an “unfunded” plan for incentive compensation. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Notice of Grant shall give the Participant any rights that are greater than those of a general creditor of the Company or any Subsidiary.
13.6 Indemnification. To the extent allowable pursuant to Applicable Laws, each member of the Committee or of the Board shall be indemnified and held harmless by the Company from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by them in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action or failure to act pursuant to the Plan and against and from any and all amounts paid by him or her in satisfaction of judgment in such action, suit, or proceeding against him or her; provided he or she gives the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such Persons may be entitled pursuant to the Company’s Memorandum of Association and Articles of Association, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.
13.7 Relationship to other Benefits. No payment pursuant to the Plan shall be taken into account in determining any benefits pursuant to any pension, retirement, savings, profit sharing, group insurance, welfare or other benefit plan of the Company or any Subsidiary except to the extent otherwise expressly provided in writing in such other plan or an agreement thereunder.
13.8 Expenses. The expenses of administering the Plan shall be borne by the Company and its Subsidiaries.
13.9 Titles and Headings. The titles and headings of the Sections in the Plan are for convenience of reference only and, in the event of any conflict, the text of the Plan, rather than such titles or headings, shall control.
13.10 Fractional Shares. No fractional Shares shall be issued and the Committee may determine, in its discretion, whether cash shall be given in lieu of fractional Shares or whether such fractional Shares shall be eliminated by rounding up or down as appropriate.
13.11 Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan, the Plan, and any Award granted or awarded to any Participant who is then subject to Section 16 of the Exchange Act, shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the application of such exemptive rule. To the extent permitted by the Applicable Laws, the Plan and Awards granted or awarded hereunder shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.
13.12 Government and Other Regulations. The obligation of the Company to make payment of awards in Shares or otherwise shall be subject to all Applicable Laws, and to such approvals by government agencies as may be required. The Company shall be under no obligation to register any of the Shares paid pursuant to the Plan under the Securities Act or any other similar law in any applicable jurisdiction. If the Shares paid pursuant to the Plan may in certain circumstances be exempt from registration pursuant to the Securities Act or other Applicable Laws, the Company may restrict the transfer of such Shares in such manner as it deems advisable to ensure the availability of any such exemption.
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13.13 Governing Law. The Plan and all Notice of Grant shall be construed in accordance with and governed by the laws of the Cayman Islands.
13.14 Section 409A. To the extent that the Committee determines that any Award granted under the Plan is or may become subject to Section 409A of the Code, the Notice of Grant evidencing such Award shall incorporate the terms and conditions required by Section 409A of the Code. To the extent applicable, the Plan and the Notice of Grant shall be interpreted in accordance with Section 409A of the Code and the U.S. Department of Treasury regulations and other interpretative guidance issued thereunder, including without limitation any such regulation or other guidance that may be issued after the Effective Date. Notwithstanding any provision of the Plan to the contrary, in the event that following the Effective Date the Committee determines that any Award may be subject to Section 409A of the Code and related Department of Treasury guidance (including such Department of Treasury guidance as may be issued after the Effective Date), the Committee may adopt such amendments to the Plan and the applicable Notice of Grant or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Committee determines are necessary or appropriate to (a) exempt the Award from Section 409A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to the Award, or (b) comply with the requirements of Section 409A of the Code and related U.S. Department of Treasury guidance.
13.15 Appendices. The Committee may approve such supplements, amendments, or appendices to the Plan as it may consider necessary or appropriate for purposes of compliance with Applicable Laws or otherwise and such supplements, amendments or appendices shall be considered a part of the Plan; provided, however, that no such supplements shall increase the Share Limit contained in Section 3.1 of the Plan without the approval of the Board.
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Exhibit 8.1
List of Principal Subsidiaries
| Name of Subsidiaries | Jurisdiction of Incorporation | |
| TOPTOYO INVESTMENT PTE. LTD. | Singapore | |
| Vietnam Sunergy Cell Company Limited | Vietnam |
Exhibit 15.1
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Introduction
TOYO Co, Ltd (the “Company”) is providing the following selected unaudited pro forma condensed combined financial information to aid you in your analysis of the financial aspects of the transactions.
The unaudited pro forma combined balance sheet as of December 31, 2023 gives pro forma effect to the Business Combination (as defined below) as if they had been consummated as of that date. The unaudited pro forma combined statements of operations for the twelve months ended December 31, 2023 give pro forma effect to the Business Combination as if they had occurred as of the beginning of the earliest period presented. The unaudited pro forma combined balance sheet is presented as of December 31, 2023 and the unaudited pro forma combined statements of operations are presented for the year ended December 31, 2023.
This information should be read together with audited financial statements and related notes of the Company and Blue World Acquisition Corporation (“BWAQ”), “Management’s Discussion and Analysis of Financial Condition and Results of Operations of PubCo,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations of BWAQ” and other financial information included elsewhere in the Company’s Registration Statement on Form F-4 (Registration No. 333-277779) and the Registration Statement on Form F-4 filed pursuant to Rule 462(b) (Registration No. 333-279028) under the Securities Act (together, as amended by a post-effective amendment, the “POS AM”) filed with the SEC on May 1, 2024.
Unless the context otherwise indicated, capitalized terms used herein shall have the same meanings as those defined in this report on Form 20-F.
The unaudited pro forma combined balance sheet as of December 31, 2023 has been prepared using the following:
| ● | the Company’s historical audited consolidated balance sheet as of December 31, 2023, as included elsewhere in POS AM, |
| ● | BWAQ’s historical unaudited condensed balance sheet as of December 31, 2023, as included elsewhere in POS AM, and, |
The unaudited pro forma combined statements of operations for the twelve months ended December 31, 2023 have been prepared using the following:
| ● | the Company’s historical audited consolidated statements of operations for the year ended December 31, 2023, as included elsewhere in POS AM, |
| ● | BWAQ’s historical statements of operations for the year ended June 30, 2023, as included elsewhere in POS AM, and |
| ● | BWAQ’s historical statements of operations for the six months ended December 31, 2023 and 2022, as included elsewhere in POS AM. |
Description of the Business Combination
On August 10, 2023, BWAQ entered into the Agreement and Plan of Merger (as the same may be amended, restated or supplemented, the “Business Combination Agreement”) with the Company, TOYOone Limited, a Cayman Islands exempted company (“Merger Sub”), TOPTOYO INVESTMENT PTE. LTD., a Singapore private company limited by shares (“SinCo”), Vietnam Sunergy Cell Company Limited, a Vietnamese company (“TOYO Solar,” together with the Company, Merger Sub and SinCo, the “Group Companies,” or each individually, a “Group Company”), Vietnam Sunergy Joint Stock Company, a Vietnam joint stock company (“VSUN”), Fuji Solar Co., Ltd, a Japanese company (“Fuji Solar’’), WA Global Corporation, a Cayman Islands exempted company (“WAG”), Belta Technology Company Limited, a Cayman Islands exempted company (“Belta”), and BestToYo Technology Company Limited, a Cayman Islands exempted company (“BestToYo”).
Pursuant to the Business Combination Agreement, (a) the Group Companies, VSUN, Fuji Solar, WAG, Belta and BestToYo shall consummate a series of transactions involving the Group Companies, including (A) the Company acquiring one hundred percent (100%) of the issued and paid-up share capital of SinCo from Fuji Solar at an aggregate consideration of SGD1.00 (such transaction, the “Share Exchange”), and (B) SinCo acquiring one hundred percent (100%) of the issued and outstanding shares of capital stock of TOYO Solar from VSUN at an aggregate consideration of no less than $50,000,000 (the “SinCo Acquisition,” and together with the Share Exchange, the “Pre-Merger Reorganization”), as a result of which (i) SinCo shall become a wholly-owned subsidiary of the Company, (ii) TOYO Solar shall become a wholly-owned subsidiary of SinCo, and (iii) immediately prior to the closing of the SinCo Acquisition, WAG, Belta and BestToYo (collectively, the “Sellers”) shall hold an aggregate of 41,000,000 Ordinary Shares, representing all issued and outstanding share capital of the Company, and (b) following the consummation of the Pre-Merger Reorganization, BWAQ shall merge with and into Merger Sub, with Merger Sub continuing as the surviving company (the “Merger”), as a result of which, among other things, all of the issued and outstanding securities of BWAQ immediately prior to the filing of the plan of merger with respect to the Merger (the “Plan of Merger”) to the Registrar of Companies of the Cayman Islands, or such later time as may be specified in the Plan of Merger (the “Merger Effective Time”) shall no longer be outstanding and shall automatically be cancelled, in exchange for the right of the holders thereof to receive substantially equivalent securities of the Company, in each case, upon the terms and subject to the conditions set forth in the Business Combination Agreement and in accordance with the provisions of the Companies Act (Revised) of the Cayman Islands and other applicable laws. The Merger, the Pre-Merger Reorganization and each of the other transactions contemplated by the Business Combination Agreement or any of the other relevant Transaction Documents (as defined in the Business Combination Agreement) are collectively referred to as “Business Combination.”
The board of directors of BWAQ (the “BWAQ Board”), has unanimously approved (i) the Business Combination Agreement, (ii) each Transaction Document, and (iii) the Business Combination.
Consummation of the Business Combination (the “Merger Closing”) is subject to the satisfaction or waiver by the respective parties of a number of conditions, including, among other things: (i) the approval of the Business Combination Agreement and the Business Combination by BWAQ Shareholders, (ii) the Business Combination Agreement and the Business Combination having been approved by the shareholders of the Company, (iii) POS AM having become effective, (iv) the Company’s application as a foreign private issuer, the Company’s listing applications and listing applicable of the Company’s securities to be issued in connection with the Business Combination having been approved by the Nasdaq Stock Market LLC (“Nasdaq”), subject only to official notice of issuance thereof, (v) all relevant regulatory approvals necessary to consummate the Business Combination having been obtained, (vi) no order, judgment, injunction, decree, writ, stipulation, determination or award having been enacted or promulgated enjoining or prohibiting the Merger Closing, (vii) completion of the Pre-Merger Reorganization, (viii) no Group Company Material Adverse Effect (as defined in the Business Combination Agreement), (ix) the Company having net tangible assets of no less than $5,000,001 upon the Merger Closing, (x) adoption of an equity incentive plan by the Company, and (xi) full execution and delivery of the relevant documents related to the Business Combination Agreement and the Business Combination. Other conditions to BWAQ’s obligations include, among other things, delivery of the Audited Financial Statements (as defined in the Business Combination Agreement) by the Group Companies to BWAQ. Other conditions to the Group Companies’ and the Shareholders’ obligations include, among other things, (i) having Available Closing Cash (as defined in the Business Combination Agreement) at least $29,500,000 immediately prior to or upon the Merger Closing, and (ii) consummation of the conversions pursuant to the Underwriter’s Consent and the Working Capital Loans Conversion Consent (each as defined in the Business Combination Agreement). The Pre-Merger Reorganization has been completed as of the date of this report on Form 20-F.
Amendment to PIPE Purchase Agreement
On March 6, 2024, the Company entered into a share purchase agreement (“PIPE Purchase Agreement”) with BWAQ and a certain investor, NOTAM Co., Ltd., a Japanese corporation (the “PIPE Investor” or “NOTAM”), as amended by an amendment on June 26, 2024 (such amendment, separately referred to as “PIPE Amendment”).
2
Pursuant to the PIPE Purchase Agreement, NOTAM agrees to purchase a total of 600,000 BWAQ Class A Ordinary Shares (the “NOTAM PIPE Shares”), at a purchase price of $10.00 per share, for an aggregate purchase price of $6,000,000. The PIPE Amendment provides that the Company agrees to, conditioned on the PIPE Closing (as defined in the PIPE Purchase Agreement) and the Merger Closing, issue additional Ordinary Shares to NOTAM, on the following terms and conditions:
(i) In the event that, the average closing price of each Ordinary Share (the “Closing Price”) with respect to all trading days in July 2024 is below $10.00 per share (such average Closing Price, the “First Tranche Average Closing Price”), NOTAM may, following the last trading day in July 2024 (the “First Tranche Cut-off Date”), elect to purchase from the Company at a total purchase price of $100 such number of Ordinary Shares (“First NOTAM Tranche Additional Shares”) calculated as below:
Number of First NOTAM Tranche Additional Shares = (6,000,000/First Tranche Average Closing Price - 600,000) x Share Held Ratio X.
Shares Held Ratio X = Number of Remaining Converted Shares held by NOTAM as of the First Tranche Cut-off Date /600,000.
Notwithstanding the foregoing, the maximum number of NOTAM First Tranche Additional Shares that NOTAM is entitled to subscribe for under the PIPE Purchase Agreement shall not exceed 500,000.
“Remaining Converted Shares” means the remaining the Ordinary Share acquired by NOTAM upon the conversion of the NOTAM PIPE Shares upon the Merger Closing purchased pursuant to the PIPE Purchase Agreement, excluding any other Ordinary Shares acquired by NOTAM upon and following the Merger Closing, in the open market, from any other parties, or the Additional Shares, if any.
(ii) In the event that the average Closing Price with respect to all trading days in July 2024 and August 2024 is below $10.00 per share (the “Second Tranche Average Closing Price”), NOTAM may, following the last trading day in August 2024 (the “Second Tranche Cut-off Date”), purchase from the Company at a total purchase price of $100 such number of Ordinary Shares (“Second NOTAM Tranche Additional Shares”) calculated as below:
Number of Second NOTAM Tranche Additional Shares = (6,000,000/Second NOTAM Tranche Average Closing Price - 600,000 - First NOTAM Tranche Additional Shares) x Share Held Ratio Y.
Shares Held Ratio Y = Number of Remaining Converted Shares held by NOTAM as of the Second Tranche Cut-off Date/600,000.
Notwithstanding the foregoing, the maximum number of Second NOTAM Tranche Additional Shares that NOTAM is entitled to subscribe for under the PIPE Purchase Agreement shall equal to 500,000 minus the number of the First NOTAM Tranche Additional Shares.
(iii) In the event that the average Closing Price with respect to all trading days in July 2024 through September 2024 is below $10.00 per share (the “Third Tranche Average Closing Price”), NOTAM may, following the last trading day in September 2024 (the “Third Tranche Cut-off Date” and together with the Frist Tranche Cut-off Date and the Second Tranche Cut-off Date, each a “Cut-off Date”), purchase from the Company at a total purchase price of $100 such number of Ordinary Shares (“Third NOTAM Tranche Additional Shares” and together with the First NOTAM Tranche Additional Shares and the Second Tranche Additional Shares, collectively, the “Additional NOTAM Shares”) calculated as below
Number of Third NOTAM Tranche Additional Shares = (6,000,000/ Third Tranche Average Closing Price - 600,000 - First NOTAM Tranche Additional Shares – Second NOTAM Tranche Additional Shares) x Share Held Ratio Z
Shares Held Ratio Z = Number of Remaining Converted Shares held by NOTAM as of the Third Tranche Cut-off Date/600,000
Notwithstanding the foregoing, the maximum number of Third NOTAM Tranche Additional Shares that NOTAM is entitled to subscribe for under the PIPE Purchase Agreement shall equal to 500,000 minus the sum of number of the First NOTAM Tranche Additional Shares and the Second NOTAM Tranche Additional Shares.
Earnout Equities Vesting Agreement
On June 29, 2024, in consideration of the development and efforts by the relevant parties in completing the Business Combination, the Company, the Sellers, BWAQ and its Sponsor, TOYO Solar and other relevant parties entered into a certain Earnout Equities Vesting Agreement (the “Earnout Equities Vesting Agreement”) to, among the others, release all the founder shares of BWAQ (“Founder Shares”) held by the Sponsor from being subject to potential surrender or cancellation as provided under the Sponsor Support Agreement (as defined below).
3
On August 10, 2023, the Sponsor entered into a Sponsor Support Agreement (the “Sponsor Support Agreement”) with BWAQ and the Company, to agree to, among the others, provide certain support for the Business Combination. Pursuant to the Earnout Equities Vesting Agreement, the parties agree that 1,380,000 Founder Shares are deemed vested and released from the Sponsor Earnout Equities (as defined in the Sponsor Support Agreement) and the Sponsor will have the right to covert such 1,380,000 Founder Shares into the right to receive Ordinary Shares at the Merger Closing. Sponsor is also relieved of any of its obligations with respect to either the subscription of additional BWAQ Class A Ordinary Shares or the surrender of additional Sponsor Earnout Equities under the Sponsor Support Agreement.
Accounting for the Business Combination
The Business Combination will be accounted for as a reverse merger in accordance with U.S. GAAP. Under this method of accounting, BWAQ will be treated as the “acquired” company for financial reporting purposes. This determination was primarily based on the Company’s ultimate shareholders expecting to have a majority of the voting power of the combined company, the Company comprising the ongoing operations of the combined entity, the Company comprising a majority of the governing body of the combined company, and the Company’s senior management comprising the senior management of the combined company. Accordingly, for accounting purposes, the Business Combination will be treated as the equivalent of the Company issuing share for the net assets of BWAQ, accompanied by a recapitalization. The net assets of BWAQ will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination will be those of the Company.
Basis of Pro Forma Presentation
The historical financial information has been adjusted to give pro forma effect to events that are related and/or directly attributable to the Business Combination, are factually supportable and are expected to have a continuing impact on the results of the combined company. The adjustments presented on the unaudited pro forma combined financial statements have been identified and presented to provide relevant information necessary for an accurate understanding of the combined company upon the Merger Closing.
The unaudited pro forma combined financial information is for illustrative purposes only. The financial results may have been different had the companies always been combined. You should not rely on the unaudited pro forma combined financial information as being indicative of the historical results that would have been achieved had the companies always been combined or the future results that the combined company will experience. The Company and BWAQ have not had any historical relationship prior to the Business Combination. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.
There is no historical activity with respect to the Company or Merger Sub, accordingly, no adjustments were required with respect to these entities in the pro forma combined financial statements.
In April 2024 and July 2024, 1,059,186 and 2,748,865 BWAQ Class A Ordinary Shares were rendered for redemption, respectively. Upon the Merger Closing, 29,715 BWAQ Class A Ordinary Shares held by BWAQ’s Public Shareholders remained unredeemed.
Included in the shares outstanding and weighted average shares outstanding as presented in the pro forma combined financial statements are (i) approximately 41,000,000 Ordinary Shares to be issued to the Sellers, including 13,000,000 Earnout Shares, based on the price of $10.00 per share, (ii) 322,000 Ordinary Shares to be issued to the underwriter to settle the deferred underwriting fees, (iii) 70,000 Ordinary Shares to be issued to three independent directors of BWAQ, (iv) 600,000 Ordinary Shares to be issued to the PIPE Investor, and (v) 347,101 Ordinary Shares to be issued to Fuji Solar and Sponsor, in conversion of promissory notes.
Upon the Merger Closing, BWAQ Public Shareholders, the BWAQ Initial Shareholders including the Sponsor, the PIPE Investor and other BWAQ Initial Shareholders, and the Sellers and Fuji Solar will own approximately 2.1%, 7.8% and 90.1% of the outstanding Ordinary Shares, respectively.
4
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF DECEMBER 31, 2023
| (A) BWAQ | (B) the Company | Pro
Forma Adjustments | Pro
Forma Balance Sheet | |||||||||||||||
| ASSETS | ||||||||||||||||||
| Current Assets | ||||||||||||||||||
| Cash and cash equivalents | $ | 70,134 | $ | 18,035,405 | $ | 42,400,931 | (a) | $ | 29,804,153 | |||||||||
| — | — | 1,146,398 | (b) | — | ||||||||||||||
| — | — | (43,208,422 | ) | (c) | — | |||||||||||||
| — | — | (303,714 | ) | (e) | — | |||||||||||||
| — | — | 5,000,000 | (f) | — | ||||||||||||||
| — | — | 6,000,000 | (j) | — | ||||||||||||||
| — | — | 663,421 | (l) | — | ||||||||||||||
| Restricted cash | — | 82,195 | — | 82,195 | ||||||||||||||
| Prepayments | — | 149,304 | — | 149,304 | ||||||||||||||
| Prepayments – related parties | — | 24,400,798 | — | 24,400,798 | ||||||||||||||
| Inventories | — | 39,999,992 | — | 39,999,992 | ||||||||||||||
| Other current assets | 75,024 | 85,702 | — | 160,726 | ||||||||||||||
| Total Current Assets | 145,158 | 82,753,396 | 11,698,614 | 94,597,168 | ||||||||||||||
| Non-current Assets | ||||||||||||||||||
| Investment held in Trust Account | 42,400,931 | — | (42,400,931 | ) | (a) | — | ||||||||||||
| Restricted cash, noncurrent | — | 879,893 | — | 879,893 | ||||||||||||||
| Deferred offering cost | — | 1,864,389 | (1,864,389 | ) | (e) | — | ||||||||||||
| Long-term prepaid expenses | — | 7,757,193 | — | 7,757,193 | ||||||||||||||
| Deposits for property and equipment | — | 1,466,878 | — | 1,466,878 | ||||||||||||||
| Property and equipment, net | — | 142,781,558 | — | 142,781,558 | ||||||||||||||
| Right of use assets | — | 537,032 | — | 537,032 | ||||||||||||||
| Other noncurrent assets | — | 22,250 | — | 22,250 | ||||||||||||||
| Total assets | $ | 42,546,089 | $ | 238,062,589 | $ | (32,566,706 | ) | $ | 248,041,972 | |||||||||
| LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY | ||||||||||||||||||
| LIABILITIES | ||||||||||||||||||
| Accounts payable | $ | — | $ | 37,221,124 | $ | — | $ | 37,221,124 | ||||||||||
| Advance from customers | — | 530,817 | — | 530,817 | ||||||||||||||
| Advance from customers – a related party | — | 28,815,934 | — | 28,815,934 | ||||||||||||||
| Due to a related party | 63,558 | 96,867,739 | — | 96,931,297 | ||||||||||||||
| Promissory notes | 90,000 | — | 183,333 | (l) | — | |||||||||||||
| — | — | (273,333 | ) | (m) | — | |||||||||||||
| Promissory notes – related party | 2,402,085 | — | 480,088 | (l) | — | |||||||||||||
| — | — | (2,882,173 | ) | (m) | — | |||||||||||||
| Accrued expenses and other liabilities | 101,524 | 4,690,026 | 3,552,986 | (e) | 8,344,536 | |||||||||||||
| Lease liabilities | — | 151,260 | — | 151,260 | ||||||||||||||
| Total Current Liabilities | 2,657,167 | 168,276,900 | 1,060,901 | 171,994,968 | ||||||||||||||
| Lease liabilities, noncurrent | — | 372,725 | — | 372,725 | ||||||||||||||
| Long-term bank borrowings | — | 11,819,527 | — | 11,819,527 | ||||||||||||||
| Deferred underwriting discounts and commissions | 3,220,000 | — | (3,220,000 | ) | (d) | — | ||||||||||||
| Total Liabilities | 5,877,167 | 180,469,152 | (2,159,099 | ) | 184,187,220 | |||||||||||||
| Commitments and Contingencies | ||||||||||||||||||
| BWAQ Class A Ordinary Shares subject to possible redemption | 42,400,931 | — | 1,146,398 | (b) | — | |||||||||||||
| — | — | (43,208,422 | ) | (c) | — | |||||||||||||
| — | — | (338,907 | ) | (g) | — | |||||||||||||
5
UNAUDITED PRO FORMA COMBINED BALANCE SHEET —
(Continued)
AS OF DECEMBER 31, 2023
| (A) BWAC | (B) the Company | Pro Forma Adjustments | Pro Forma Balance Sheet | |||||||||||||||
| SHAREHOLDERS’ (DEFICIT) EQUITY | ||||||||||||||||||
| Preference shares, $0.0001 par value, 10,000,000 shares authorized, none issued and outstanding | — | — | — | — | ||||||||||||||
| Ordinary Shares | — | — | 4,100 | (h) | 4,609 | |||||||||||||
| — | — | 509 | (n) | — | ||||||||||||||
| BWAQ Class A Ordinary Shares | 46 | — | 32 | (d) | — | |||||||||||||
| — | — | 3 | (g) | — | ||||||||||||||
| — | — | 96 | (h) | — | ||||||||||||||
| — | — | 7 | (i) | — | ||||||||||||||
| — | — | 60 | (j) | — | ||||||||||||||
| — | — | 70 | (k) | — | ||||||||||||||
| — | — | 35 | (l) | — | ||||||||||||||
| — | — | (349 | ) | (n) | — | |||||||||||||
| BWAQ Class B Ordinary Shares | 230 | — | (42 | ) | (h) | — | ||||||||||||
| — | — | (70 | ) | (k) | — | |||||||||||||
| — | — | (160 | ) | (n) | — | |||||||||||||
| Additional paid-in capital | — | 50,000,000 | 3,219,968 | (d) | 57,030,206 | |||||||||||||
| (5,721,089 | ) | (e) | — | |||||||||||||||
| — | — | 5,000,000 | (f) | — | ||||||||||||||
| — | — | 338,904 | (g) | — | ||||||||||||||
| — | — | (5,736,481 | ) | (h) | — | |||||||||||||
| — | — | 773,493 | (i) | — | ||||||||||||||
| — | — | 5,999,940 | (j) | — | ||||||||||||||
| — | — | 3,155,471 | (m) | — | ||||||||||||||
| (Accumulated deficit) retained earnings | (5,732,285 | ) | 10,398,632 | 5,732,285 | (h) | 9,625,132 | ||||||||||||
| (773,500 | ) | (i) | — | |||||||||||||||
| Accumulated other comprehensive loss | — | (2,805,195 | ) | — | (2,805,195 | ) | ||||||||||||
| Total Shareholders’ (Deficit) Equity | (5,732,009 | ) | 57,593,437 | 11,993,324 | 63,854,752 | |||||||||||||
| Total Liabilities, Mezzanine Equity and Shareholders’ (Deficit) Equity | $ | 42,546,089 | $ | 238,062,589 | $ | (32,566,706 | ) | $ | 248,041,972 | |||||||||
6
Unaudited Pro Forma Combined Balance Sheet Adjustments
The pro forma adjustment to the unaudited combined pro forma balance sheet consists of the following:
| (A) | Derived from the unaudited condensed balance sheet of BWAQ as of December 31, 2023. |
| (B) | Derived from the audited balance sheet of the Company as of December 31, 2023. |
| a. | Reflects the release of cash from cash and investment held in the Trust Account. |
| b. | Reflects the release of cash from interest income earned on cash and investment held in the Trust Account. |
| c. | Reflects the redemption of an aggregate of 1,059,186 and 2,748,865 BWAQ Class A Ordinary Shares of BWAQ, respectively, in April 2024 and July 2024. |
| d. | Reflects the settlement of approximately $3.2 million of deferred underwriting commission incurred during the BWAQ IPO due upon the Merger Closing, by issuance of 322,000 ordinary shares of BWAQ at price of $10 per share. |
| e. | Reflects (i) payments of professional expenses of $303,714 related to the Business Combination, all of which were offering costs incurred by the Company and were deducted against additional paid-in capital, and (ii) accrual of professional expenses related to the Business Combination, among which $3,302,986 was offering costs incurred by the Company which were deducted against additional paid-in capital, and $550,000 was professional expenses incurred by BWAQ which were charged to statement of income as incurred and subsequently debited to additional paid-in capital upon the Merger Closing. |
| f. | Reflects capital injection of $5,000,000 from Fuji Solar in connection with Pre-Merger Reorganization, and founder transferred 500,000 ordinary shares to Fuji Solar. |
| g. | Reflects conversion of 29,715 BWAQ Class A Ordinary Shares held by the Public Shareholders into ordinary shares. |
| h. | Reflects recapitalization of the Company through issuance of BWAQ shares and eliminates BWAQ historical accumulated earnings. |
| i. | Reflects issuance of 70,000 BWAQ Class A Ordinary Shares to three independent directors at the Merger Closing. |
| j. | Reflects issuance of 600,000 BWAQ Class A Ordinary Shares to the PIPE Investor |
| k. | Reflects conversion of 700,000 BWAQ Class B Ordinary Shares held by Fuji Solar and another shareholder to BWAQ Class A Ordinary Shares in January 2024. |
| l. | Reflects the non-interest bearing working capital loans of $330,088 from the Sponsor and $33,333 from Fuji Solar to support operations of BWAQ, and non-interest bearing extension loans of $150,000 from Fuji Solar, $90,000 from the Sponsor and $60,000 from one shareholder of the Sponsor, deposited into the Trust Account in order to extend the available time to complete the Business Combination. |
| m. | Reflects the issuance of 27,333 Units and 288,214 Units to Fuji Solar and two shareholders of the Sponsor, which were assignees of the promissory notes issued to the Sponsor, to settle working capital loans payable and extension loans payable due Sponsor. Each Unit consists of one BWAQ Class A Ordinary Share, one-half of one redeemable warrant, each whole warrant entitling the holders to purchase one BWAQ Class A Ordinary Share at an exercise price of $11.50 per share, and one right, each one right entitling the holders to exchange for one-tenth of one BWAQ Class A Ordinary Share upon the completion of the Business Combination. Accordingly BWAQ issued 30,066 BWAQ Class A Ordinary Shares and 13,666 BWAQ warrants to Fuji Solar, respectively, and BWAQ issued 317,035 BWAQ Class A Ordinary Shares and 144,106 BWAQ warrants to the two shareholders of the Sponsor, respectively. |
| n. | Reflects conversion of 3,495,744 BWAQ Class A Ordinary Shares and 1,600,000 BWAQ Class B Ordinary Shares, respectively, to Ordinary Shares upon the Merger Closing. |
7
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2023
| (A) BWAC | (B) the Company | Pro Forma Adjustments | Pro Forma Balance Sheet | |||||||||||||||
| Account Name | ||||||||||||||||||
| Revenues | $ | — | $ | 62,377,390 | $ | — | $ | 62,377,390 | ||||||||||
| Cost of revenues | — | 45,740,860 | — | 45,740,860 | ||||||||||||||
| Gross profit | — | 16,636,530 | — | 16,636,530 | ||||||||||||||
| Operating expenses | ||||||||||||||||||
| Selling expenses | — | 17,573 | — | 17,573 | ||||||||||||||
| General and administrative expenses | 994,141 | 4,632,009 | 773,500 | (b) | 6,949,650 | |||||||||||||
| — | — | 550,000 | (c) | — | ||||||||||||||
| Total operating expenses | 994,141 | 4,649,582 | 1,323,500 | 6,967,223 | ||||||||||||||
| (Loss) income from operations | (994,141 | ) | 11,986,948 | (1,323,500 | ) | 9,669,307 | ||||||||||||
| Other Income | ||||||||||||||||||
| Interest income (expenses), net | 8 | (3,261,459 | ) | — | (3,261,451 | ) | ||||||||||||
| Other income, net | — | 1,163,666 | — | 1,163,666 | ||||||||||||||
| Dividend earned on investment held in Trust Account | 3,124,523 | — | (3,124,523 | ) | (a) | — | ||||||||||||
| Total other income, net | 3,124,531 | (2,097,793 | ) | (3,124,523 | ) | (2,097,785 | ) | |||||||||||
| Loss Before Income Taxes | 2,130,390 | 9,889,155 | (4,448,023 | ) | 7,571,522 | |||||||||||||
| Income tax expenses | — | — | — | — | ||||||||||||||
| Net loss | $ | 2,130,390 | $ | 9,889,155 | $ | (4,448,023 | ) | $ | 7,571,522 | |||||||||
| Weighted average shares outstanding of redeemable ordinary shares | 8,846,896 | 37,248,848 | (d) | 46,095,744 | ||||||||||||||
| Basic and diluted net income per ordinary share | 0.24 | (0.08 | ) | (d) | 0.16 | |||||||||||||
8
Notes and adjustment to Unaudited Pro Forma Condensed Combined Statement of Operations
The notes and pro forma adjustments to the unaudited condensed combined pro forma statements of operations consist of the following:
| A. | Unaudited Pro Forma Condensed Combined Statement of Operations for the twelve months ended December 31, 2023 was derived from BWAQ’s audited statement of operations for the year ended June 30, 2023, condensed unaudited statements of operations for the six months ended December 31, 2023 and 2022. |
| B | Unaudited Pro Forma Condensed Combined Statement of Operations for the twelve months ended December 31, 2023 was derived from the Company’s audited statements of operations for the year ended December 31, 2023 |
| (a) | Represents an adjustment to eliminate interest income related to cash and investment held in Trust Account. |
| (b) | Reflects conversion of 700,000 BWAQ Class B Ordinary Shares held by Fuji Solar and another shareholder to BWAQ Class A Ordinary Shares in January 2024. |
| (c) | Reflects estimated professional expenses of $550,000 incurred by BWAQ after December 31, 2023. |
| (d) | The calculation of weighted average shares outstanding for basic and diluted net loss per share assumes that the initial public offering occurred as of January 1, 2023. In addition, as the Business Combination are being reflected as if it had occurred on this date, the calculation of weighted average shares outstanding for basic and diluted net loss per share assumes that the shares have been outstanding for the entire period presented. This calculation is retroactively adjusted to eliminate the number of shares redeemed in the Business Combination for the entire period. There may be possible changes in shares related to the Sponsor Earnout Equities in connection with Sponsor Support Agreement dated August 10, 2023. |
The calculation of weighted average shares outstanding for the twelve months ended December 31, 2023 is set forth in below table:
| The Sellers | 41,000,000 | |||
| Fuji Solar | 530,066 | |||
| BWAQ’s Public Shareholders | 949,715 | |||
| The BWAQ Insiders | 2,603,363 | |||
| PIPE Investor | 600,000 | |||
| Maxim | 412,600 | |||
| Weighted average shares outstanding of ordinary shares | 46,095,744 | |||
| Less: BWAQ’s Weighted average shares outstanding of ordinary shares | (8,846,896 | ) | ||
| Adjustment (d) | 37,248,848 |
9
Exhibit 15.2
Independent Registered Public Accounting Firm’s Consent
We consent to the incorporation by reference in this Shell Company Report of TOYO Co., Ltd on Form 20-F (File No. 001-42153) of our report dated April 30, 2024, which includes an explanatory paragraph as to the Company’s ability to continue as a going concern, with respect to our audits of the consolidated financial statements of TOYO Co., Ltd as of December 31, 2023 and 2022 and for the year ended December 31, 2023 and for the period from November 8, 2022 (inception) through December 31, 2022 appearing in the Post-Effective Amendment No. 1 to Form F-4 Registration Statement (File No. 333-277779 and No. 333-279028) of TOYO Co., Ltd. We also consent to the reference to our firm under the heading “Statement by Experts”, which is part of this Shell Company Report on Form 20-F.
/s/ Marcum Asia CPAs llp
Marcum Asia CPAs llp
New York, NY
July 8, 2024
Exhibit 15.3
Independent Registered Public Accounting Firm’s Consent
We consent to the incorporation by reference in the Shell Company Report of TOYO Co., Ltd on Form 20-F (File No. 001-42153) of our report dated September 28, 2023, which includes an explanatory paragraph as to the Company’s ability to continue as a going concern, with respect to our audits of the consolidated financial statements of Blue World Acquisition Corporation as of June 30, 2023 and 2022 and for the year ended June 30, 2023 and for the period from July 19, 2021 (Inception) through June 30, 2022 appearing in the Annual Report on Form 10-K of Blue World Acquisition Corporation for the year ended June 30, 2023. We also consent to the reference to our firm under the heading “Statement by Experts”, which is part of this Shell Company Report on Form 20-F.
/s/ Marcum Asia CPAs LLP
Marcum Asia CPAs LLP
New York, NY
July 8, 2024