Item 1.01 Entry into a Material Definitive Agreement.
Business Combination Agreement
On May 30, 2023, Redwoods Acquisition Corp., a Delaware
corporation (the “Company” or “Redwoods”), entered into a business combination agreement
(the “Business Combination Agreement”) by and among the Company, ANEW MEDICAL SUB, INC., a Wyoming corporation
(“Merger Sub”), and ANEW MEDICAL, INC., a Wyoming corporation (“ANEW”). The Business
Combination Agreement provides, among other things, that on the terms and subject to the conditions set forth therein, Merger Sub will
merge with and into ANEW, with ANEW surviving (the “Merger”). Upon the closing of the Merger (the “Closing”),
the Company will change its name to “ANEW MEDICAL, INC.” The date on which the Closing actually occurs is hereinafter referred
to as the “Closing Date.”
The Business Combination Agreement and the transactions
contemplated thereby were approved by the boards of directors of each of the Company and ANEW.
Consideration and Structure
Under the Business Combination Agreement, the Company
will acquire all of the outstanding equity interests of ANEW in exchange for shares of the Company’s common stock, par value $0.0001
per share (the “Common Stock”), based on an implied ANEW equity value of $60,000,000, to be paid to ANEW stockholders
at the effective time of the Merger. In addition, certain ANEW stockholders will be issued additional shares of the Company’s Common
Stock (the “Contingent Consideration Shares”), which will be issued as follows: (i) 2,000,000 Contingent Consideration
Shares upon the Company achieving a closing price equal to or exceeding $12.50 for 10 trading days within a 20-day trading period in the
first three years following the Closing; (ii) 2,000,000 Contingent Consideration Shares upon the Company achieving a closing price equal
to or exceeding $15.00 for 10 trading days within a 20-day trading period in the first three years following the Closing; and (iii) 1,000,000
Contingent Consideration Shares upon the Company achieving a closing price equal to or exceeding $20.00 for 10 trading days within a 20-day
trading period in the first five years following the Closing.
Representations, Warranties and Covenants
The parties to the Business Combination Agreement
have agreed to customary representations and warranties for transactions of this type. In addition, the parties to the Business Combination
Agreement agreed to be bound by certain customary covenants for transactions of this type, including, among others, covenants with respect
to the conduct of ANEW, the Company and their respective subsidiaries during the period between execution of the Business Combination
Agreement and the Closing. The representations, warranties, agreements and covenants of the parties set forth in the Business Combination
Agreement will terminate at the Closing, except for those covenants and agreements that, by their terms, contemplate performance after
the Closing. Each of the parties to the Business Combination Agreement has agreed to use its reasonable best efforts to take or cause
to be taken all actions and things reasonably necessary to consummate and make effective, as promptly as reasonably practicable, the Merger.
Transaction Financing Arrangements
As soon as practicable after the execution and delivery
of the Business Combination Agreement, ANEW plans to enter into definitive agreements on terms and conditions satisfactory to the Company
(the “PIPE Subscription Agreements”) with certain investors (the “PIPE Investors”) pursuant to which such investors,
upon the terms and subject to the conditions set forth therein, will purchase shares of the Company’s Common Stock at a purchase
price of ten dollars ($10.00) per share (the “PIPE Investment”); provided that the proceeds of the PIPE Investment will be
equal to an aggregate of at least five million dollars ($5,000,000) immediately prior to the Closing.
Conditions to Closing
Under the Business Combination Agreement, the obligations
of the parties to consummate the Merger are subject to the satisfaction or waiver of certain customary closing conditions of the respective
parties, including, without limitation: (i) the approval and adoption of the Business Combination Agreement and transactions contemplated
thereby by requisite vote of the Company’s stockholders (the “Company Stockholder Approval”), the
sole stockholder of Merger Sub (the “Merger Sub Stockholder Approval”) and ANEW’s stockholders (the “ANEW
Stockholder Approval”); (ii) the expiration or termination of the applicable waiting period (or any extensions thereof,
or any timing agreements, understandings or commitments obtained by request or other action of the United States Federal Trade Commission
or the Antitrust Division of the United States Department of Justice, as applicable) under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended; (iii) the absence of an ANEW Material Adverse Effect or Company Material Adverse Effect (each, as defined in
the Business Combination Agreement) since the date of the Business Combination Agreement that is continuing; (iv) the Company’s
initial listing application with Nasdaq in connection with the transactions contemplated by the Business Combination Agreement having
been approved and, immediately following the effective time of the Merger, the Company has satisfied any applicable initial and continuing
listing requirements of Nasdaq and the shares of the Company’s Common Stock have been approved for listing on Nasdaq, subject only
to official notice of the issuance thereof; (v) the S-4 Registration Statement (as defined below) having become effective, no stop order
has been issued by the Securities and Exchange Commission (the “SEC”) and remains in effect with respect to
the S-4 Registration Statement, and no proceeding seeking such a stop order has been threatened or initiated by the SEC and remains pending;
and (vi) no applicable governmental, regulatory or administrative authority having issued an order having the effect of permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated by the Business Combination Agreement (including the Closing).
Termination
The Business Combination Agreement may be terminated
under certain customary and limited circumstances at any time prior to the Closing, including, without limitation, (i) by mutual written
consent of the Company and ANEW; (ii) by the Company or ANEW, if ANEW or the Company or Merger Sub, as applicable, has breached any of
its respective representations, warranties, agreements or covenants contained in the Business Combination Agreement, such failure or breach
would render certain conditions precedent to the Closing incapable of being satisfied, and such breach or failure is not cured or cannot
be cured within the earlier of (a) 15 days of notice thereof, and (b) November 4, 2023 (the “Termination Date”);
provided, that a breach of the covenants or obligations of the other party (ANEW, on one hand, or the Company or Merger Sub, on the other
hand) seeking to terminate the Business Combination Agreement did not proximately cause the failure to consummate the Merger; (iii) by
the Company or ANEW, in the event an applicable governmental, regulatory or administrative authority has issued a final and non-appealable
order having the effect of permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by the Business Combination
Agreement; (iv) by the Company or ANEW if the Company’s stockholder meeting to vote on the Merger has concluded and the Company
Stockholder Approval was not obtained; or (v) by the Company giving notice to ANEW, within 14 days of May 30, 2023 in its sole discretion,
in the event that the Company is not satisfied with the results of ANEW’s due diligence review.
If the Business Combination Agreement is validly terminated,
none of the parties to the Business Combination Agreement will have any liability or any further obligation under the Business Combination
Agreement other than customary confidentiality obligations, except in the case of Willful Breach or Fraud (each, as defined in the Business
Combination Agreement).
A copy of the Business Combination Agreement is filed
with this Current Report on Form 8-K (this “Current Report”) as Exhibit 2.1 and is incorporated herein by reference,
and the foregoing descriptions of the Business Combination Agreement and the Merger do not purport to be complete and are qualified in
their entirety by references thereto. The Business Combination Agreement contains representations, warranties and covenants that the respective
parties made to each other as of the date of the Business Combination Agreement or other specific dates. The assertions embodied in those
representations, warranties and covenants were made for purposes of the contract among the respective parties and are subject to important
qualifications and limitations agreed to by the parties in connection with negotiating the Business Combination Agreement. The Business
Combination Agreement is being filed to provide investors with information regarding its terms. It is not intended to provide any other
factual information about the parties to the Business Combination Agreement. In particular, the representations, warranties, covenants
and agreements contained in the Business Combination Agreement, which were made only for purposes of the Business Combination Agreement
and as of specific dates, were solely for the benefit of the parties to the Business Combination Agreement, may be subject to limitations
agreed upon by the contracting parties (including being qualified by confidential disclosures made for the purposes of allocating contractual
risk between the parties to the Business Combination Agreement instead of establishing these matters as facts) and may be subject to standards
of materiality applicable to the contracting parties that differ from those applicable to investors, security holders and reports and
documents filed with the SEC. Investors and security holders are not third-party beneficiaries under the Business Combination Agreement
and should not rely on the representations, warranties, covenants and agreements, or any descriptions thereof, as characterizations of
the actual state of facts or condition of any party to the Business Combination Agreement. In addition, the representations, warranties,
covenants and agreements and other terms of the Business Combination Agreement may be subject to subsequent waiver or modification.
Other Agreements
The Business Combination Agreement contemplates the
execution of various additional agreements and instruments, on or before the Closing, including, among others, the following:
Sponsor Support Agreement
In connection with the execution of the Business Combination
Agreement, Redwoods Capital LLC, a Delaware limited liability company (the “Sponsor”) and other Persons party
thereto (“Other Company Insiders”, and together with the Sponsor, collectively, the “Company Insiders”),
entered into a support agreement with the Company and ANEW (the “Sponsor Support Agreement”). Under the Sponsor
Support Agreement, the Sponsor agreed to vote, at any meeting of the stockholders of the Company and in any action by written consent
of the stockholders of the Company, all of such Sponsor’s 2,875,000 shares of common stock (the “Founder Shares”)
and 530,000 private units, each consisting of one share of common stock (each such share, together with the Founder Shares, the “Supporter
Shares”), one warrant and one right, (the “Private Units”), (i) in favor of (a) the Business Combination
Agreement and each ancillary document to which the Company is a party and the transactions contemplated thereby and (b) the other proposals
that the Company and ANEW agreed in the Business Combination Agreement shall be submitted at such meeting for approval by the Company’s
stockholders together with the proposal to obtain the Company Stockholder Approval, (ii) approval of the Company’s Amended and Restated
Certificate of Incorporation and Bylaws (the “Required Transaction Proposals”) and (iii) against any other action
that would reasonably be expected to impede, interfere with or adversely affect the Merger. The Sponsor Support Agreement also prohibits
the Sponsor from, among other things and subject to certain exceptions, selling, assigning or transferring any Supporter Shares held by
the Sponsor or taking any action that would have the effect of preventing or materially delaying the Sponsor from performing his, her
or its obligations under the Sponsor Support Agreement. In addition, in the Sponsor Support Agreement, the Sponsor agreed to waive, and
not to assert or claim, to the fullest extent permitted by applicable law, any anti-dilution protection pursuant to the organizational
documents of the Company in connection with the Merger.
The Sponsor Support Agreement commits 1,375,000 Founder
Shares (the “Deferred Shares”) to a share escrow account which will be established on the Closing Date pursuant
to an escrow agreement to be entered into on such date by and among the Company, the Company Insiders and Continental Stock Transfer &
Trust Company, as escrow agent. The Deferred Shares will be released from the escrow account as follows: (i) 458,333 Deferred Shares upon
the Company achieving a closing price equal to or exceeding $12.50 for 10 trading days within a 20-day trading period in the first three
years following the Closing; (ii) 458,333 Deferred Shares upon the Company achieving a closing price equal to or exceeding $15.00 for
10 trading days within a 20-day trading period in the first three years following the Closing; and (iii) 458,333 Deferred Shares upon
the Company achieving a closing price equal to or exceeding $20.00 for 10 trading days within a 20-day trading period in the first five
years following the Closing.
The Sponsor Support Agreement also restricts the ability
of the Company Insiders to sell, transfer or dispose of, directly or indirectly, its shares of Common Stock converted into or received
by such Company Insider as a result of the Merger (the “Sponsor Lock-up”) in the same way as set forth in the
lock-up provisions of the Company’s final prospectus filed with the U.S. Securities and Exchange Commission on April 1, 2022 (the
“Final Prospectus”).
The foregoing description of the Sponsor Support Agreement
does not purport to be complete and is qualified in its entirety by the terms and conditions of the Sponsor Support Agreement, a copy
of which is attached as Exhibit 10.1 hereto, and the terms of which are incorporated herein by reference.
ANEW Stockholder Voting and Support Agreement
In connection with the execution of the Business Combination
Agreement, certain ANEW stockholders (the “ANEW Supporting Stockholders”) entered into a voting and support
agreement with the Company (the “ANEW Voting and Support Agreement”). Under the ANEW Voting and Support Agreement,
each ANEW Supporting Stockholder agreed that, at any meeting of ANEW’s stockholders related to the transactions contemplated by
the Business Combination Agreement, each such ANEW Supporting Stockholder will appear at the meeting or otherwise cause its shares to
be voted (i) in favor of the Business Combination Agreement and the transactions contemplated thereby, and authorize and approve any amendment
to ANEW’s governing documents that is deemed necessary or advisable by ANEW to effect the Merger; and (ii) against any other action
would reasonably be expected to impede, interfere with or adversely affect the Merger.
The ANEW Voting and Support Agreement also restricts
the ANEW Supporting Stockholders from, among other things, selling, assigning or otherwise transferring any of its shares unless the buyer,
assignee or transferee thereof executes a joinder agreement to the ANEW Voting and Support Agreement in a form reasonably acceptable to
the Company.
The foregoing description of the ANEW Voting and Support
Agreement does not purport to be complete and is qualified in its entirety by the terms and conditions of the ANEW Voting and Support
Agreement, a copy of which is attached as Exhibit 10.2 hereto, and the terms of which are incorporated herein by reference.
Registration Rights Agreement
In connection with the Closing, the Company,
certain stockholders of the Company (including the Sponsor) and certain stockholders of ANEW will enter into a Registration Rights
Agreement (the “Registration Rights Agreement”). Pursuant to the Registration Rights Agreement, each
signatory thereto (other than the Company) will be granted certain registration rights with respect to their respective shares of
Common Stock. The foregoing description of the Registration Rights Agreement does not purport to be complete and is qualified in its
entirety by the terms and conditions of the Registration Rights Agreement, a copy of which is attached as Exhibit 10.3 hereto, and
the terms of which are incorporated herein by reference.