PBAXU Phoenix Biotech Aquisition Corporation

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or Section 15(d)

of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): February 13, 2024

 

PHOENIX BIOTECH ACQUISITION CORP.

(Exact name of registrant as specified in its charter)

 

Delaware		001-40877		87-1088814
(State or other jurisdiction of incorporation or organization)		(Commission File Number)		(I.R.S. Employer Identification Number)

 

2201 Broadway, Suite 705, Oakland, CA		94612
(Address of principal executive offices)		(Zip Code)

 

(215) 731-9450

Registrant’s telephone number, including area code

 

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☒	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Units, each consisting of one share of Class A common stock and one-half of one redeemable warrant		PBAXU		NASDAQ Global Market
Class A common stock, par value $0.0001 per share		PBAX		NASDAQ Global Market
Warrants, each whole warrant exercisable for one share of Class A common stock		PBAXW		NASDAQ Global Market

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

 

Emerging growth company ☒

 

If an emerging growth company, 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. ☐

 

 

 

Item 1.01. Entry into a Material Definitive Agreement 

 

Amendment to the Business Combination

 

As previously disclosed, on June 4, 2023, Phoenix Biotech Acquisition Corp., a Delaware corporation (the “Company”), entered into a business combination agreement and plan of reorganization, as amended by Amendment No. 1, dated as of February 5, 2024 (as may be amended or supplemented from time to time, the “Business Combination Agreement”), with PBCE Merger Sub, Inc., a Delaware corporation (“Merger Sub”) and CERo Therapeutics, Inc., a Delaware corporation (“CERo”), pursuant to which Merger Sub will merge with and into CERo, with CERo surviving as a wholly-owned subsidiary of the Company (the “Business Combination”).

 

On February 13, 2024, the parties to the Business Combination Agreement entered into Amendment No. 2 to the Business Combination Agreement (the “Second BCA Amendment”) to create two additional pools of earnout shares of common stock, par value $0.0001 per share (“Common Stock”), one pool of which will contain 875,000 shares, which will be fully vested at closing of the Business Combination and which are being issued as an offset to the agreement by Phoenix Biotech Sponsor, LLC to forfeit an offsetting number of shares, and one pool of which will contain 1,000,000 shares, which will be fully vested upon the achievement of certain regulatory milestone-based earnout targets and make certain other technical changes to the timing and process for issuance of the 1,200,000 shares of Common Stock subject to the other earn-out conditions set forth in the Business Combination Agreement.

 

The foregoing description of the Second BCA Amendment does not purport to be complete and is subject to, and qualified in its entirety by reference to the Second BCA Amendment, a copy of which is attached as Exhibit 2.1 hereto and is incorporated herein by reference.

 

Item 9.01. Financial Statements and Exhibits

 

(d) Exhibits.

 

Exhibit No.		Description
2.1		Amendment No. 2 to the Business Combination Agreement, dated as of February 13, 2024, by and among Phoenix Biotech Acquisition Corp., PBCE Merger Sub, Inc. and CERo Therapeutics, Inc.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

*	Filed herewith.
+	Indicates management contract or compensatory plan.

 

 

Additional Information about the Business Combination and Where to Find It

 

In connection with the proposed business combination by and between the Company, CERo Therapeutics, Inc. CERo and Merger Sub, the Company has filed with the SEC a Registration Statement on Form S-4 (the “Registration Statement”), which includes a definitive proxy statement and a final prospectus relating to the shares of Company common stock to be issued in connection with the proposed business combination. This communication is not a substitute for the definitive proxy statement/final prospectus, the prospectus supplement or any other document that the Company has filed or will file with the SEC or send to its stockholders in connection with the proposed business combination. This document does not contain all the information that should be considered concerning the proposed business combination and is not intended to form the basis for any investment decision or any other decision in respect of the proposed business combination.

 

BEFORE MAKING ANY VOTING OR INVESTMENT DECISION, THE COMPANY’S STOCKHOLDERS AND OTHER INTERESTED PARTIES ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND ANY AMENDMENTS OR SUPPLEMENTS THERETO AND ANY OTHER DOCUMENTS FILED BY THE COMPANY WITH THE SEC IN CONNECTION WITH THE PROPOSED BUSINESS COMBINATION OR INCORPORATED BY REFERENCE THEREIN IN THEIR ENTIRETY BEFORE MAKING ANY VOTING OR INVESTMENT DECISION WITH RESPECT TO THE PROPOSED BUSINESS COMBINATION BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED BUSINESS COMBINATION AND THE PARTIES TO THE PROPOSED BUSINESS COMBINATION.

 

The definitive proxy statement/final prospectus was mailed to stockholders of the Company as of January 22, 2024. Additionally, the Company will file other relevant materials with the SEC in connection with the proposed business combination. Copies of the Registration Statement, the definitive proxy statement/final prospectus and all other relevant materials for the proposed business combination filed or that will be filed with the SEC may be obtained free of charge at the SEC’s website at www.sec.gov. In addition, the documents filed by the Company may be obtained free of charge from the Company at www.phoenixbiotechacquisitioncorp.com. The Company stockholders may also obtain copies of the definitive proxy statement/final prospectus without charge, by directing a request to the Company’s Secretary at Phoenix Biotech Acquisition Corp., 2201 Broadway, Suite 705, Oakland, CA 94612, Attention: Secretary.

 

No Offer or Solicitation

 

This communication is for information purposes only and is not intended to and does not constitute, or form part of, an offer, invitation or the solicitation of an offer or invitation to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities, or the solicitation of any vote or approval in any jurisdiction, pursuant to the proposed business combination or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. The proposed business combination will be implemented solely pursuant to the Business Combination Agreement previously filed with the SEC, which contains the full terms and conditions of the proposed business combination. No offer of securities shall be made except by means of a prospectus meeting the requirements of the Securities Act of 1933, as amended.

 

 

Participants in Solicitation

 

This communication may be deemed solicitation material in respect of the proposed business combination. The Company and CERo and their respective directors and executive officers, under SEC rules, may be deemed to be participants in the solicitation of proxies from the Company’s stockholders in connection with the proposed business combination. Investors and security holders may obtain more detailed information regarding the names and interests in the proposed business combination of the Company’s directors and officers in the Company’s filings with the SEC, including the Company’s initial public offering prospectus, which was filed with the SEC on October 8, 2021, and the Company’s subsequent annual reports on Form 10-K and quarterly reports on Form 10-Q. To the extent that holdings of the Company’s securities by insiders have changed from the amounts reported therein, any such changes have been or will be reflected on Statements of Change in Ownership on Form 4 filed with the SEC. Information regarding the persons who may, under SEC rules, be deemed participants in the solicitation of proxies to the Company’s stockholders in connection with the business combination is included in the preliminary proxy statement/prospectus and will be included in the definitive proxy statement/prospectus relating to the proposed business combination when it becomes available. You may obtain free copies of these documents, when available, as described in the preceding paragraphs.

 

Forward-Looking Statements

 

All statements other than statements of historical facts contained in this communication are forward-looking statements. Forward-looking statements may generally be identified by the use of words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “plan,” “project,” “forecast,” “predict,” “potential,” “seem,” “seek,” “future,” “outlook,” “target” or other similar expressions (or the negative versions of such words or expressions) that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding the financial position, business strategy and the plans and objectives of management for future operations including as they relate to the proposed business combination and related transactions, pricing and market opportunity, the satisfaction of closing conditions to the proposed business combination and related transactions, the level of redemptions by the Company’s public stockholders and the timing of the completion of the proposed business combination, including the anticipated closing date of the proposed business combination and the use of the cash proceeds therefrom. These statements are based on various assumptions, whether or not identified in this communication, and on the current expectations of CERo’s and the Company’s management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on by any investor as a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and may differ from such assumptions, and such differences may be material. Many actual events and circumstances are beyond the control of CERo and the Company.

 

These forward-looking statements are subject to a number of risks and uncertainties, including (i) changes in domestic and foreign business, market, financial, political and legal conditions; (ii) the inability of the parties to successfully or timely consummate the proposed business combination, including the risk that any required regulatory approvals are not obtained, are delayed or are subject to unanticipated conditions that could adversely affect the combined company or the expected benefits of the proposed business combination, or that the approval of the stockholders of the Company is not obtained; (iii) the ability to maintain the listing of the combined company’s securities on the stock exchange; (iv) the inability to complete any private placement financing, the amount of any private placement financing or the completion of any private placement financing with terms unfavorable to you; (v) the risk that the proposed business combination disrupts current plans and operations of the Company or CERo as a result of the announcement and consummation of the proposed business combination and related transactions; (vi) the risk that any of the conditions to closing of the business combination are not satisfied in the anticipated manner or on the anticipated timeline or are waived by any of the parties thereto; (vii) the failure to realize the anticipated benefits of the proposed business combination and related transactions; (viii) risks relating to the uncertainty of the costs related to the proposed business combination; (ix) risks related to the rollout of CERo’s business strategy and the timing of expected business milestones; (x) the effects of competition on CERo’s future business and the ability of the combined company to grow and manage growth, establish and maintain relationships with customers and healthcare professionals and retain its management and key employees; (xi) risks related to domestic and international political and macroeconomic uncertainty, including the Russia-Ukraine conflict and the Israel-Palestine conflict; (xii) the outcome of any legal proceedings that may be instituted against the Company, CERo or any of their respective directors or officers, following the announcement of the proposed business combination; (xiii) the amount of redemption requests made by the Company’s public stockholders; (xiv) the ability of the Company to issue equity, if any, in connection with the proposed business combination or to otherwise obtain financing in the future; (xv) the impact of the global COVID-19 pandemic and governmental responses on any of the foregoing risks; (xvi) risks related to biotechnology, industry and regulations; (xvii) changes in laws and regulations; and (xviii) those factors discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 and the Quarterly Reports on Form 10-Q for each of the quarters ended March 31, 2023, June 30, 2023 and September 30, 2023, in each case, under the heading “Risk Factors,” and other documents of the Company filed or to be filed with the SEC, including the proxy statement/prospectus. If any of these risks materialize or the Company’s or CERo’s assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that neither the Company nor CERo presently know or that the Company and CERo currently believe are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect the Company’s and CERo’s expectations, plans or forecasts of future events and views as of the date of this communication. The Company, and CERo anticipate that subsequent events and developments will cause the Company’s and CERo’s assessments to change. However, while the Company and CERo may elect to update these forward-looking statements at some point in the future, each of the Company and CERo specifically disclaim any obligation to do so, unless required by applicable law. These forward-looking statements should not be relied upon as representing the Company’s and CERo’s assessments as of any date subsequent to the date of this communication. Accordingly, undue reliance should not be placed upon the forward-looking statements.

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	PHOENIX BIOTECH ACQUISITION CORP.
	By:	/s/ Chris Ehrlich
	Name:	Chris Ehrlich
	Title:	Chief Executive Officer

 

Dated: February 14, 2024

 

 

 

Exhibit 2.1

 

SECOND AMENDMENT TO BUSINESS COMBINATION AGREEMENT AND PLAN OF REORGANIZATION

 

This SECOND AMENDMENT TO BUSINESS COMBINATION AGREEMENT AND PLAN OF REORGANIZATION (this “Amendment”) is made and entered into as of February 13, 2024 by and among Phoenix Biotech Acquisition Corp., a Delaware corporation (“SPAC”), PBCE Merger Sub, Inc., a Delaware corporation and wholly-owned direct subsidiary of SPAC (“Merger Sub”), and CERo Therapeutics, Inc., a Delaware corporation (the “Company”). Unless otherwise specifically defined herein, all capitalized terms used but not defined herein shall have the meanings ascribed to them in the Agreement (as defined below).

 

WHEREAS, the parties hereto entered into that certain Business Combination Agreement and Plan of Reorganization, dated as of June 4, 2023, as previously amended (the “Agreement”);

 

WHEREAS, the parties desire to, amongst other things, modify the Equity Value for the Company;

 

WHEREAS, the parties desire to, amongst other things, modify the terms set forth in Section 2.1(a)(ix) of the Agreement with respect to the Company Stockholders Earn-Out Consideration;

 

WHEREAS, in accordance with Section 8.3 of the Agreement, the parties desire to amend the Agreement upon the terms and subject to the conditions set forth in this Amendment.

 

NOW, THEREFORE, in consideration of the foregoing and the respective agreements set forth herein, and intending to be legally bound hereby, SPAC, Merger Sub and the Company agree as follows:

 

1.

Amendments to Agreement.

 

a.

A new definition of “Earn-Out Allocation Schedule” set forth in Section 1.1 is as follows:

 

“Earn-Out Allocation Schedule” means the schedule set forth on Schedule 2.1(a)(ix).

 

b.

The definition of “Earn-Out Participant” set forth in Section 1.1 is hereby amended and restated in its entirety as follows:

 

“Earn-Out Participant” means each of the parties set forth on the Earn-Out Allocation Schedule.

 

c.

The definition of “Earn-Out Pro Rata Portion” is hereby deleted.

 

 

d.

Section 2.1(a)(ix) of the Agreement is hereby amended and restated in its entirety as follows:

 

“On the Closing Date, SPAC shall issue an additional 3,075,000 shares of Class A Common Stock (the “Company Stockholders Earn-Out Consideration”) in accordance with Earn-Out Allocation Schedule. The Company Stockholders Earn-Out Consideration shall be subject to the following vesting requirements and subject to forfeiture in the event such vesting requirements are not satisfied during the Earn-Out Period (as defined below). Prior to vesting, all shares of Common Stock constituting the Company Stockholders Earn-Out Consideration shall bear a restrictive legend, noting they are subject to forfeiture to SPAC in the event that vesting requirements are not satisfied.”

 

Following the Closing, in addition to the consideration to be received pursuant to the terms of this Agreement, if, at any time during the period following the Closing and expiring on the fourth anniversary of the Closing Date (the “Earn-Out Period”),

 

(i) the VWAP of the shares of the Class A Common Stock equals or exceeds the lesser of (x) $12.50 or (y) 125% of the then applicable New CERo Series A Conversion Price, for any twenty (20) Trading Days within a period of thirty (30) consecutive Trading Days (the “First Level Earn-Out Target”), then as soon as possible and in any event within ten (10) Business Days following the achievement of the First Level Earn-Out Target, 500,000 shares of Class A Common Stock constituting the Company Stockholders Earn-Out Consideration shall vest, in an amount of shares set forth on the Earn-Out Allocation Schedule;

 

(ii) the VWAP of the shares of the Class A Common Stock equals or exceeds the lesser of (x) $15.00 or (y) 150% of the then applicable New CERo Series A Conversion Price, for any twenty (20) Trading Days within a period of thirty (30) consecutive Trading Days (the “Second Level Earn-Out Target”), then as soon as possible and in any event within ten (10) Business Days following the achievement of the Second Level Earn-Out Target, 500,000 shares of the Company Stockholders Earn-Out Consideration shall vest, in an amount of shares set forth on the Earn-Out Allocation Schedule,

 

(iii) a definitive agreement with respect to a Change of Control is entered into (the “Third Level Earn-Out Target”), then as soon as possible and in any event within ten (10) Business Days following the achievement of the Third Level Earn-Out Target, 200,000 shares of the Company Stockholders Earn-Out Consideration shall vest, in an amount of shares set forth on the Earn-Out Allocation Schedule,

(iv) the Company submits an Investigational New Drug (IND) application to the FDA (the “IND Earn-Out Target”), then as soon as possible and in any event within ten (10) Business Days following the achievement of the IND Earn-Out Target, 1,000,000 shares of the Company Stockholders Earn-Out Consideration shall vest, in an amount of shares set forth on the Earn-Out Allocation Schedule, and

 

 

(v) upon the Closing (the “Closing Earnout Target” and, together with the First Level Earn-Out Target, Second Level Earn-Out Target and Third Level Earn-Out Target, collectively, the “Earn-Out Targets”), 875,000 of the Company Stockholders Earn-Out Consideration shall vest, in an amount of shares set forth on the Earn-Out Allocation Schedule.

 

Notwithstanding the foregoing, none of the Company Stockholders Earn-Out Consideration issued pursuant to this Section 2.1(a)(ix) shall be released to any Earn-Out Participant who is required to file a notification pursuant to the HSR Act or under any applicable Antitrust Laws until any applicable waiting period pursuant to the HSR Act or applicable Antitrust Laws has expired or been terminated. Prior to the release of any Company Stockholders Earn-Out Consideration to the Earn-Out Participants, if applicable, SPAC will determine (a) any such Earn-Out Participant that is required to make a filing pursuant to the HSR Act or applicable Antitrust Laws and (b) the expiration or termination of the applicable waiting period pursuant to the HSR Act or applicable Antitrust Laws and, as soon as possible and in any event within ten (10) Business Days of such expiration or termination, the applicable Company Stockholders Earn-Out Consideration shall be released to such Earn-Out Participant. In the event that any mandatory consent, clearance, approval or expiration or termination of any mandatory waiting period under Antitrust Laws is not received or satisfied in respect of an applicable Earn-Out Participant (who was required to submit an antitrust filing in accordance with this Section 2.1(a)(ix)), SPAC and the Company Stockholder shall use their reasonable best efforts to agree on a structure (or other solution) (such as the implication of “voting cutbacks” or other similar solutions) so as to mitigate the requirement for such Earn-Out Participant to make a filing pursuant to the HSR or applicable Antitrust Laws (but which shall not, for the avoidance of doubt, require any such party to divest of any asset or accept any other conditions of approval or consent of a Governmental Entity other than in their absolute discretion). In lieu of such parties being able to agree on any such solution, SPAC shall, subject always to (x) any covenants or restrictions placed on SPAC (and its Subsidiaries at such time) by any of SPAC’s (or its Subsidiaries’) financing agreements, (y) SPAC having available cash on hand to satisfy such payment, and (z) the sole and absolute discretion of SPAC’s board of directors, pay an amount to such Earn-Out Participant in lieu of the release to such Earn-Out Participant that Earn-Out Participant’s portion of the Company Stockholders Earn-Out Consideration equal to the Earn-Out Participant’s portion of the Company Stockholders Earn-Out Consideration that such Earn-Out Participant would otherwise have been entitled. For the avoidance of doubt, the First Level Earn-Out Target, the Second Level Earn-Out Target and the Third Level Earn-Out Target may all be satisfied over the same period of Trading Days or any other periods that have overlapping Trading Days, and if each Earn-Out Target is separately met (i) the Company Stockholders Earn-Out Consideration in connection with each such Earn-Out Target shall be earned and no longer subject to the restrictions set forth in this Section 2.1(a)(ix). If any Earn-Out Target shall not be satisfied during the Earn-Out Period, the obligations in this Section 2.1(a)(ix) with respect to such Earn-Out Target shall terminate and no longer apply. The Company Stockholders Earn-Out Consideration and the Earn-Out Targets shall be adjusted to reflect appropriately the effect of any stock split, reverse stock split, stock dividend (including any dividend or distribution of securities convertible into shares of Class A Common Stock), reorganization, recapitalization, reclassification, combination, exchange of shares or other like change with respect to shares of Class A Common Stock, occurring on or after the date hereof and prior to the time any such Company Stockholders Earn-Out Consideration is delivered to the Earn-Out Participants, if any. The Parties agree that, for U.S. federal income and applicable state and local Tax purposes, (1) the Company Stockholders Earn-Out Consideration shall be treated as owned by the Earn-Out Participants to whom such Company Stockholders Earn-Out Consideration would be released had each Earn-Out Target been achieved, (2) no portion of the Company Stockholders Earn-Out Consideration shall be treated as imputed interest, and (3) the escrow of the Company Stockholders Earn-Out Consideration is intended to comply with, and shall be effected in accordance with, Rev. Proc. 84-42, § 2.02, 1984-1 C.B. 521 (collectively, the “Earn-Out Consideration Tax Treatment”), and the Parties shall file all Tax Returns consistent with, and take no position inconsistent with (whether in audits, Tax Returns or otherwise), the Earn-Out Consideration Tax Treatment unless otherwise required by a final “determination” within the meaning of Section 1313(a) of the Code. Without limiting the foregoing, the Company Stockholders Earn-Out Consideration shall be shown as issued and outstanding on SPAC’s financial statements, shall be legally outstanding under applicable state law as of the Effective Time, and subject to the limitations contemplated herein the Earn-Out Participants shall have all of the rights of a stockholder with respect to the Company Stockholders Earn-Out Consideration, including the right to receive dividends currently and to vote such shares.

 

e.

Schedule 2.1(a)(ix) (the “Earn-Out Allocation Schedule”) shall be as attached to this Amendment.

 

2.

Miscellaneous

 

a.

No Further Amendment. The parties hereto agree that all other provisions of the Agreement shall, subject to the amendment set forth in Section 1 of this Amendment, continue unmodified, in full force and effect and constitute legal and binding obligations of the parties in accordance with their terms. This Amendment is limited precisely as written and shall not be deemed to be an amendment to any other term or condition of the Agreement or any of the documents referred to therein. This Amendment shall form an integral and inseparable part of the Agreement. From and after the date of this Amendment, each reference in the Agreement to “this Agreement,” “hereof,” “hereunder” or words of like import, and all references to the Agreement in any and all agreements, instruments, documents, notes, certificates and other writings of every kind of nature (other than as otherwise expressly provided) will be deemed to mean the Agreement, as amended by this Amendment, whether or not this Amendment is expressly referenced.

 

b.

Other Terms. The provisions of Section 8 of the Agreement are incorporated herein by reference and shall apply to the terms and provisions of this Amendment and the parties hereto, mutatis mutandis.

 

[Signature Pages Follow]

 

 

IN WITNESS WHEREOF, this Second Amendment to Business Combination Agreement and Plan of Reorganization has been executed on behalf of the parties as of the date first stated above.

 

	PHOENIX BIOTECH ACQUISITION CORP.
	By:	/s/ Chris Ehrlich
	Name:	Chris Ehrlich
	Title:	Chief Executive Officer
	PBCE MERGER SUB, INC.
	By:	/s/ Chris Ehrlich
	Name:	Chris Ehrlich
	Title:	President
	CERO THERAPEUTICS, INC.
	By:	/s/ Daniel Corey
	Name:	Dr. Daniel Corey
	Title:	Chief Executive Officer

 

 

Schedule 2.1(a)(ix)

 

 

5

 

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