Director Compensation
Certain current directors of Kalera are expected to be directors of Pubco after the closing of the Business Combination. As such, in the future each may receive compensation for serving as a director of Pubco, which may include cash fees and/or equity-based compensation, as determined by the Pubco board of directors. The non-employee director compensation program to be implemented after the closing of the Business Combination has not yet been finalized at this time, however, the compensation expected to be paid to Mr. McWilliams in connection with his role of Chairman of the Board is described above.
Recommendation to Kalera Shareholders
The board of directors of Kalera has unanimously determined that the transactions under the Resolutions are fair to and in the best interests of Kalera and its shareholders; has unanimously approved the Business Combination Proposal; and unanimously recommends that shareholders vote “FOR” the Resolutions.
Conditions to the Closing of the Business Combination
The obligations of each party to consummate the Transactions are subject to the satisfaction or written waiver (where permissible) by Kalera and Agrico of the following conditions as of the Closing Date:
The obligations of each party to consummate the Business Combination are subject to the satisfaction or written waiver (where permissible) by Kalera and Agrico of the following conditions as of the First Closing Date (as well as a subset of the following conditions as of the Second Closing Date):
•the approval of the Business Combination Agreement and the Incentive Plan Proposal and the transactions contemplated thereby and related matters by the requisite vote of Agrico’s shareholders;
•the approval of the Business Combination Agreement and the transactions contemplated thereby and related matters by the requisite vote of Kalera’s shareholders;
•the adoption of the 2022 Incentive Plan by Pubco;
•no law or order preventing or prohibiting the transactions contemplated by the Business Combination Agreement;
•no pending litigation to enjoin or restrict the consummation of the Business Combination;
•Upon the First Closing, after giving effect to the Redemption, Agrico having net tangible assets of at least $5,000,001;
•the effectiveness of the registration statement of which this joint proxy statement/prospectus forms a part;
•the approval of listing of Pubco Ordinary Shares and Pubco Warrants by Nasdaq;
•the representations and warranties of each of Kalera and Agrico set forth in the Business Combination Agreement pursuant thereto shall be true and correct in all material respects on and as of the date of the Business Combination Agreement and on and as of the Closing Date as if made on the Closing Date, except for (i) those that address matters only as of a particular date (which shall have been true and correct in all material respects as of such particular date) and (ii) any failures to be true and correct that (without giving effect to any qualifications or limitations as to materiality), individually or in the aggregate, would not have a material adverse effect on Kalera or Agrico, as applicable (provided that such limitation shall not apply with respect to representations and warranties provided by Kalera or Agrico, as applicable, regarding its capitalization and subsidiaries);
•Pubco having entered into a composition agreement with the Revenue Commissioners of Ireland and a Special Eligibility Agreement for Securities with the Depository Trust Company in respect of Pubco Ordinary Shares and Pubco Warrants, both of which are in full force and effect and enforceable in accordance with their terms;
•Each of Kalera and Agrico shall have performed in all material respects all of its obligations and complied in all material respects with all of its agreements and covenants under the Business Combination Agreement to be performed or complied with by it on or prior to the First and Second Closing Date; and
•Since the date of the Business Combination Agreement, no material adverse effect shall have occurred with respect to Kalera or Agrico, as applicable, and their respective subsidiaries, taken as a whole, and be continuing.
In addition, the obligations of Pubco to consummate the Business Combination are subject to the satisfaction or written waiver (where permissible) by Kalera and Agrico of the following conditions as of the First Closing Date (as well as a subset of the following conditions as of the Second Closing Date):
•All of the representations and warranties of Agrico and Pubco set forth in the Business Combination Agreement and in any certificate delivered by or on behalf of Agrico, Pubco and the Merger Subs pursuant thereto shall be true and correct in all material respects on and as of the date of the Business Combination Agreement and on and as of the First Closing Date as if made on the First Closing Date, except for (i) those that address matters only as of a particular date (which shall have been true and correct in all material respects as of such particular date) and (ii) any failures to be true and correct that (without giving effect to any qualifications or limitations as to materiality), individually or in the aggregate, would not have a material adverse effect on Agrico, Pubco or the Merger Subs;
•Agrico, Pubco and the Merger Subs shall have performed in all material respects all of its obligations and complied in all material respects with all of its agreements and covenants under the Business Combination Agreement to be performed or complied with by it on or prior to the First and Second Closing Date;
•The satisfaction of the Minimum Cash Condition; and
•The execution and delivery of certain closing deliverables, including the officers’ certificates and a copy of the amended and restated articles of association of Pubco.
Accounting Treatment
The Business Combination will be accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, Agrico will be treated as the “acquired” company for financial reporting purposes. This determination was primarily based on the following factors: (i) Kalera’s existing operations will comprise the
ongoing operations of the combined company, (ii) Kalera’s senior management will comprise the senior management of the combined company and (iii) no shareholder will have control of the board of directors or a majority voting interest in the combined company after the Business Combination.
Regulatory Matters
The Business Combination Agreement and the transactions contemplated by the Business Combination Agreement are not subject to any additional federal or state regulatory requirement or approval, except for filings with the Registrar of Companies of the Cayman Islands and RESA necessary to effectuate the transactions contemplated by the Business Combination Agreement.
Risk Factors
In evaluating the proposals to be presented at the Agrico Special Meeting and the Kalera Shareholder Meeting, as applicable, a shareholder should carefully read this joint proxy statement/prospectus and especially consider the factors discussed in the section titled “Risk Factors.”
SELECTED HISTORICAL FINANCIAL INFORMATION
Agrico
Agrico’s selected historical statements of operations and cash flows information for the year ended December 31, 2021 and for the period from July 31, 2020 (inception) through December 31, 2020, and its selected historical balance sheet information as of December 31, 2021 and 2020 are derived from Agrico’s audited financial statements included elsewhere in this joint proxy statement/prospectus. The financial statements of Agrico are stated in U.S. dollars ($).
The selected historical information in this section should be read in conjunction with each of Agrico’s financial statements and related notes and “Agrico’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained elsewhere herein. The historical results included below and elsewhere in this joint proxy statement/prospectus are not indicative of the future performance of Agrico following the Business Combination.
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| For the year ended December 31, 2021 | | For the period from July 31, 2020 (inception) to December 31, 2020 (Audited) |
General and administrative costs | $ | 392,649 | | | $ | 9,672 | |
Loss from operations | $ | (392,649) | | | $ | (9,672) | |
Other income | $ | — | | | $ | — | |
Interest earned on cash and marketable | $ | 19,675 | | | $ | — | |
Total other income | $ | 19,675 | | | $ | — | |
Net loss | $ | (372,974) | | | $ | (9,672) | |
Basic and diluted weighted average Class A ordinary shares | $ | 6,881,490 | | | $ | — | |
Basic and diluted net loss per share, Class A ordinary shares | $ | (0.04) | | | $ | — | |
Basic and diluted weighted average Class B ordinary shares outstanding | $ | 3,141,695 | | | $ | — | |
Basic and diluted net loss per share, Class B ordinary shares | $ | (0.04) | | | $ | — | |
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| For the year ended December 31, 2021 | | For the period from July 31, 2020 (inception) to December 31, 2020 (Audited) |
Cash flows from operating activities: | | | |
Net loss | $ | (372,974) | | | $ | (9,672) | |
Adjustments to reconcile net cash used in operating activities: | | | |
Formation costs paid by related party | $ | — | | | $ | 9,672 | |
Interest earned on cash and investments held in trust account | $ | (19,675) | | | $ | — | |
Changes in operating assets and liabilities: | | | |
Prepaid expenses | $ | (6,083) | | | $ | — | |
Due to related party | $ | 73,795 | | | $ | — | |
Accrued offering costs and expenses | $ | 79,068 | | | $ | — | |
Net cash used in operating activities | $ | (245,869) | | | $ | — | |
Cash flows from investing activities: | | | |
Cash invested in Trust Account | $ | (146,625,000) | | | $ | — | |
Net cash used in investing activities | $ | (146,625,000) | | | $ | — | |
Cash flows from financing activities: | | | |
Proceeds from initial public offering, net of underwriting discount | $ | 140,875,000 | | | $ | — | |
Proceeds from sale of private placement warrants | $ | 7,250,000 | | | $ | — | |
Proceeds from issuance of promissory note to related party | $ | 25,000 | | | $ | — | |
Payment of offering costs | $ | (443,347) | | | $ | — | |
Payment of promissory note to related party | $ | (171,356) | | | $ | — | |
Net cash provided by financing activities | $ | 147,535,297 | | | $ | — | |
Net change in cash | $ | 664,428 | | | $ | — | |
Cash, beginning of the period | $ | — | | | $ | — | |
Cash, end of the period | $ | 664,428 | | | $ | — | |
Supplemental disclosure of non-cash investing and financing activities: | | | |
Issuance of Class B ordinary shares to Sponsor in exchange for due to related party | $ | 25,000 | | | $ | — | |
Deferred offering costs paid by related party | $ | 146,356 | | | $ | 48,262 | |
Issuance of shares to underwriter representative | $ | 1,437,500 | | | $ | — | |
Initial Classification of Class A ordinary shares subject to possible redemption | $ | 146,625,000 | | | $ | — | |
Deferred underwriting commissions payable charged to accumulated deficit | $ | 5,031,250 | | | $ | — | |
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| | As of December 31, 2021 | As of December 31, 2020 |
Balance Sheet Information: | | | |
Total assets | | $ | 147,315,186 | | $ | 96,594 | |
Total liabilities | | $ | 5,234,113 | | $ | 106,266 | |
Kalera
Kalera’s selected historical consolidated statements of operations and cash flows information for the years ended December 31, 2021 and 2020, and its selected historical consolidated balance sheet information as of December 31, 2021 and 2020 are derived from Kalera’s audited financial statements included elsewhere in this joint proxy statement/prospectus. The financial statements of Kalera are stated in U.S. dollars ($).
The selected historical consolidated information in this section should be read in conjunction with each of Kalera’s financial statements and related notes and “Kalera’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained elsewhere herein. The historical results included below and elsewhere in this joint proxy statement/prospectus are not indicative of the future performance of Kalera following the Business Combination.
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(in thousands, except per share information) | | For the years ended December 31, |
| 2021 | | 2020 |
Statement of Operations Information: | | | | |
Total operating expenses | | $ | 43,315 | | | $ | 9,369 | |
Net loss | | $ | (40,057) | | | $ | (8,657) | |
Net loss per share attributable to shareholders, basic and diluted | | $ | (0.23) | | | $ | (0.08) | |
Statement of Cash Flows Information: | | | | |
Net cash used in operating activities | | $ | (24,831) | | | $ | (9,603) | |
Net cash used in investing activities | | $ | (132,518) | | | $ | (20,846) | |
Net cash provided by financing activities | | $ | 61,239 | | | $ | 140,440 | |
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| | As of December 31, |
(in thousands) | | 2021 | | 2020 |
Balance Sheet Information: | | | | |
Total assets | | $ | 349,996 | | | $ | 153,746 | |
Total liabilities | | $ | 83,073 | | | $ | 9,620 | |
Kalera GmbH (formerly &ever GmbH)
On October 1, 2021, Kalera closed the acquisition of &ever GmbH, Munich (“&ever”), a vertical farming company. &ever’s selected historical income statement and cash flows information for the nine months ended September 30, 2021 and 2020 and years ended December 31, 2021 and 2020, respectively, and its selected historical consolidated balance sheet information as of September 30, 2021 and December 31, 2020 are derived from &ever’s audited and unaudited financial statements, which have been prepared in accordance with accounting principles generally accepted in Germany (“German GAAP”) that differ in certain material respects from U.S. GAAP, which include a reconciliation between U.S. GAAP and German GAAP and which are included elsewhere in this joint proxy statement/prospectus. Amounts presented below for &ever are stated in thousands of Euros (€).
The selected historical consolidated information in this section should be read in conjunction with each of &ever’s financial statements and related notes and “&ever’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained elsewhere herein. The historical results included below and elsewhere in this joint proxy statement/prospectus are not indicative of the future performance of &ever following the Business Combination.
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(in thousands) | | For the nine months ended September 30, 2021 (unaudited) | | For the nine months ended September 30, 2020 | | For the year ended December 31, 2020 | | For the year ended December 31, 2019 |
Income Statement Information: | | | | | | | | |
Revenue and other income | | € | 787 | | | € | 134 | | | € | 249 | | | € | 249 | |
Total operating expenses | | 5,282 | | | 3,813 | | | 6,156 | | | 2,384 | |
Other expense | | 543 | | | 300 | | | 447 | | | 172 | |
Net loss | | (5,037) | | | (3,979) | | | (6,353) | | | (2,307) | |
Cash Flows Information: | | | | | | | | |
Net cash used in operating activities | | € | (5,465) | | | € | (3,133) | | | € | (6,180) | | | € | (266) | |
Net cash used in investing activities | | (7,063) | | | (909) | | | (1,207) | | (3,985) |
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(in thousands) | | As of September 30, 2021 | | As of December 31, 2020 |
Balance Sheet Information: | | | | |
Total assets | | € | 16,123 | | | € | 14,382 | |
Total liabilities | | 9,884 | | | 13,765 | |
SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following selected unaudited pro forma condensed combined financial information (the “selected pro forma information”) gives effect to the Business Combination and the &ever Acquisition described in the section titled “Unaudited Pro Forma Condensed Combined Financial Information.” The Business Combination will be accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, Agrico will be treated as the acquired company for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination will be treated as the equivalent of Pubco issuing ordinary shares for the net assets of Agrico, accompanied by a recapitalization. The net assets of Agrico will be stated at historical cost, with no goodwill or other intangible assets recorded. The selected pro forma balance sheet information as of December 31, 2021 gives effect to the Business Combination as if it had occurred on December 31, 2021. The selected pro forma statement of operations information for the year ended December 31, 2021 gives effect to the Business Combination as if it had occurred on January 1, 2021.
The selected pro forma information has been derived from, and should be read in conjunction with, the more detailed unaudited pro forma condensed combined financial statements of the post-combination business included elsewhere in this joint proxy statement/prospectus and the accompanying notes to the unaudited pro forma condensed combined financial statements. The unaudited pro forma condensed combined financial statements are based upon, and should be read in conjunction with, the audited financial statements and related notes of Agrico and Kalera for the applicable periods included elsewhere in this joint proxy statement/prospectus. The selected pro forma information has been presented for informational purposes only and is not necessarily indicative of what the post-combination business’ actual financial position or results of operations would have been had the Business Combination been completed as of the dates indicated. In addition, the selected pro forma information does not purport to project the future financial position or operating results of the post-combination business.
The selected pro forma information has been prepared assuming two redemption scenarios as follows:
•Assuming No Redemptions — this scenario assumes that no Agrico Shareholders exercise redemption rights with respect to their Agrico Shares; and
•Assuming Maximum Redemptions — this scenario assumes that shareholders holding 11,759,325 Agrico Shares will exercise their redemption rights for their pro rata share of $119,945,115 (based on the estimated per share Redemption Price of approximately $10.20 per share based on the fair value of marketable securities held in the Trust Account as of December 31, 2021 of approximately $146.6 million) of the funds in the Trust Account.
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(in thousands, except share and per share information) | | Assuming No Redemptions | | Assuming Maximum Redemptions |
Selected Unaudited Pro Forma Condensed Combined Statement of Operations Data for the Year Ended December 31, 2021 | | | | |
Operating expenses | | $ | 70,037 | | | $ | 70,037 | |
Net loss | | (55,184) | | | (55,184) | |
Net loss per share attributable to ordinary shareholders, basic | | $ | (1.47) | | | $ | (2.15) | |
Net loss per share attributable to ordinary shareholders, diluted | | $ | (1.47) | | | $ | (2.15) | |
Weighted average ordinary shares outstanding, basic | | $ | 37,457,319 | | | $ | 25,697,994 | |
Weighted average ordinary shares outstanding, diluted | | $ | 37,457,319 | | | $ | 25,697,994 | |
Selected Unaudited Pro Forma Condensed Combined Balance Sheet Data as of December 31, 2021 | | | | |
Total assets | | $ | 481,018 | | | $ | 363,425 | |
Total liabilities | | $ | 83,074 | | | $ | 83,074 | |
Total shareholders’ equity | | $ | 397,944 | | | $ | 280,351 | |
Comparative Share Information
The following table sets forth selected historical comparative share information for Agrico and Kalera and unaudited pro forma combined per share information of the post-combination business after giving effect to the Business Combination, assuming two redemption scenarios as follows:
•Assuming No Redemptions — This presentation assumes that no Agrico Shareholder exercises redemption rights with respect to its Agrico Shares for a pro rata portion of the funds in Agrico’s Trust Account.
•Assuming Maximum Redemptions — This presentation assumes that Agrico Shareholders (who are not Agrico Initial Shareholders or an officer or director of Agrico) holding 11,759,325 of Agrico’s Agrico Shares exercise their redemption rights and that such Agrico Shares are redeemed for their pro rata share (approximately $10.20 per share, plus any pro rata interest earned on the Trust Account not previously released to Agrico (net of taxes payable), as of two (2) business days prior to the consummation of the Business Combination) of the funds in Agrico’s Trust Account for aggregate redemption proceeds of $119,945,115.
The unaudited pro forma combined book value per share information reflects the Business Combination as if it had occurred on December 31, 2021. The weighted average shares outstanding and net loss per share information give pro forma effect to the Business Combination as if it had occurred on January 1, 2021.
This information is only a summary and should be read together with the selected historical financial information included elsewhere in this joint proxy statement/prospectus and the audited financial statements of Agrico and Kalera and related notes that are included elsewhere in this joint proxy statement/prospectus. The unaudited pro forma combined per share information of Agrico and Kalera is derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial information and related notes included elsewhere in this joint proxy statement/prospectus.
The unaudited pro forma combined earnings per share information below does not purport to represent the earnings per share which would have occurred had the companies been combined during the periods presented, nor the earnings per share for any future date or period. The unaudited pro forma combined book value per share information below does not purport to represent what the value of Agrico and Kalera would have been had the companies been combined during the periods presented.
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| | | Pro Forma Combined | | Kalera equivalent pro forma per share information(2) |
| Agrico (Historical) | | Kalera (Historical) | | (Assuming No Redemptions) | | (Assuming Maximum Redemptions) | | (Assuming No Redemption) | | (Assuming Maximum Redemption) |
As of and for the Year Ended December 31, 2021(3) | | | | | | | | | | | |
Book value per share(1) | $ | 10.20 | | | $ | 1.58 | | | $ | 10.00 | | | $ | 10.00 | | | $ | 0.91 | | | $ | 0.91 | |
Net loss per share attributable to ordinary shareholders, basic and diluted | $ | (0.02) | | | $ | (0.18) | | | $ | (1.47) | | | $ | (2.15) | | | $ | (0.13) | | | $ | (0.20) | |
Weighted average ordinary shares outstanding, basic and diluted | 14,375 | | | 175,796 | | | 37,457 | | | 37,457 | | | 3,409 | | | 3,409 | |
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(1)Book value per share = Total equity/shares outstanding.
(2)The equivalent pro forma basic and diluted per share data for Kalera is calculated by multiplying the pro forma combined per share data by the Exchange Ratio, adjusted for the 2 to 1 reverse stock split to be consummated in connection with the Norwegian Merger, which is expected to be the equivalent of 0.091 Pubco Ordinary Shares for each Kalera AS ordinary share.
(3)There were no cash dividends declared in the period presented.
COMPARISON ON SHAREHOLDER RIGHTS BETWEEN LUXEMBOURG COMPANY LAW, IRELAND LAW AND CAYMAN ISLANDS LAW
Agrico is a Cayman Islands exempted company. The rights of shareholders and the duties and responsibilities of directors of a Cayman Islands company are governed by the company’s memorandum of association and articles of association as supplemented by statute and the common law. Under Cayman Islands law, the “memorandum and articles of association” are the constitutional documents of a Cayman Islands company. The principal legislation governing companies registered in the Cayman Islands is the Cayman Companies Act. The memorandum and articles of association and the applicable laws of the Cayman Islands (principally, the Cayman Companies Act) are collectively referred to herein in this section as the “Cayman Law”. The Amended and Restated Memorandum and Articles of Association of Agrico adopted on July 7, 2021 are referred to herein as the “Agrico Articles.”
Kalera is a Luxembourg public limited liability company. The principal legislation governing companies registered in the Grand Duchy of Luxembourg is the Luxembourg Company Law. The Amended and Restated Articles of Association of Kalera are referred to herein in this section as Kalera Articles.
Pubco is a public limited company organized and existing under the laws of Ireland, and the Pubco Articles and the Irish Companies Act (the “Irish Companies Act”) govern the rights of Pubco’s shareholders. The Amended and Restated Memorandum and Articles of Association of Pubco are referred to herein in this section as the Pubco Articles.
Although the rights and privileges of shareholders under the Ireland Company Law, Luxembourg Company Law and Cayman Law are in certain instances comparable, there are a number of notable differences. The following is a summary of certain differences between Ireland Company Law, Luxembourg Company Law and Cayman Law. This summary is not an exhaustive review of Ireland Company Law, Luxembourg Company Law and Cayman Law. Reference should be made to the full text of the Ireland Company Law, Luxembourg Company Law and Cayman Law and the regulations thereunder for particulars of any differences between them, and to the Agrico Articles, the Kalera Articles and the Pubco Articles. Shareholders should consult their legal or other professional advisors with regard to the implications of the transactions which may be of importance to them.
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Board of Directors |
Luxembourg – Kalera | Cayman Islands | Ireland - Pubco |
Pursuant to the Luxembourg Company Law, the board of directors of société anonyme must be composed of at least three directors (unless such company has only one shareholder, in which case the company may have a sole director). They are appointed by the general meeting of shareholders (by proposal of the board, the shareholders or a spontaneous candidacy) by a simple majority of the votes validly cast. Directors may be re-elected but the term of their office may not exceed six years. The articles of incorporation of a company may provide for different classes of directors. The Kalera Articles foresee a minimum of three directors who may but do not need to be Shareholders of Kalera. The Kalera Articles also foresee that in the case where Kalera has been incorporated by a single shareholder or where it appears at a shareholders' meeting that all the shares issued by Kalera are held by a sole shareholder, Kalera may be managed by a sole director until the next general meeting of shareholders following the increase of the number of shareholders The Kalera Articles provide that the Shareholders of Kalera may decide to appoint directors of different classes, namely class A directors (the "Class A Directors") and class B directors (the “Class B Directors”). It results from Luxembourg Company Law and the Kalera Articles that in case of a vacancy, the remaining board members appointed by the general meeting may by majority vote elect a director to fill the vacancy. See “Filling Vacancies”. The Kalera Articles provide that the board of directors may deliberate or act validly only if at least half of the directors are present or represented at a meeting of the board of directors. In the event the general meeting of shareholders has appointed different classes of directors, the board of directors may deliberate or act validly only if at least half of the | The Cayman Companies Act does not contain specific restrictions or requirements with respect to the composition of the board of directors of a Cayman Islands company. Similarly, the Cayman Companies Act does not stipulate a procedure for the appointment of directors, which instead would be prescribed in the articles of association of the company. Typically, the articles of association will also make provision for matters such as directors’ qualifications, terms of office and retirement, removal and rotation of directors, regulation of directors’ meetings, proceedings of the board and notice requirements, and the manner of determining questions that arise at board meetings. Sole directors and corporate directorships are permissible, subject to the articles of association. The Agrico Articles specify there must be at least one director and do not place a limit on the maximum number of directors. The directors may increase or reduce the limits in the number of directors. The Agrico Articles specify that, subject to the terms of any preference shares, Agrico may by Ordinary Resolution appoint any person to be a director. The board of directors may also appoint a person to be a director, either to fill a vacancy or as an additional director, provided that the appointment does not cause the number of directors to exceed any limit placed on the maximum number of directors. The Agrico Articles provide that a quorum for the transaction of the business of the directors may be fixed by the directors, and unless so fixed shall be a majority of the directors then in office. The directors are free to regulate their meetings as they think fit. Each director has one vote and decisions are passed if approved by a simple majority. In the case of an equality of votes, the chairman has a second or casting vote. Unanimous written resolutions signed by all of the directors (or all | Pursuant to the Irish Companies Act, the board of directors of a public limited company must consist of at least two directors. Subject to the provisions of the Irish Companies Act, the maximum and minimum number of directors can be changed by an amendment to the Pubco Articles, with such amendment being passed by a special resolution of shareholders (75% of those attending and voting) but not a resolution of the directors. The directors shall be divided into three classes, designated Class I, Class II and Class III. The term of the initial Class I directors shall terminate at the conclusion of Pubco’s 2023 annual general meeting; the term of the initial Class II directors shall terminate on the conclusion of Pubco’s 2024 annual general meeting; and the term of the initial Class III directors shall terminate on the conclusion of Pubco’s 2025 annual general meeting. Directors are eligible to stand for re-election at the relevant annual general meeting. Directors shall be re-elected for a three-year term. Directors do not have to be independent under Pubco Articles. There are no share ownership qualifications for directors. Meetings of Pubco’s board of directors may be convened at such time and place as the directors determine. The quorum may be fixed by the directors and unless so fixed shall be a majority of the directors in office. The directors are not entitled to appoint alternates. Questions arising at a meeting of Pubco’s board of directors are required to be decided by a simple majority of the directors present, with each director entitled to one vote. In the case of a tie vote, the chairperson of the meeting shall not have a second or casting vote. Pubco’s board of directors may pass resolutions without a meeting where |
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directors are present or represented with at least one (1) Class A Director and one (1) Class B Director. If this quorum is not reached at a first meeting, the directors may be convened to a second meeting by electronic mail or any other similar means of communication with the same agenda and the board of directors may then deliberate or act validly if at least half of the directors are present or represented at such meeting, irrespective of their category. Decisions shall be adopted by a majority vote of the directors present or represented at such meeting, irrespective of their category. In the case of a tie, the chairman, if any shall not have a casting vote.
| the members of a committee of the directors) are permitted by the Agrico Articles and such resolutions are as valid and effectual as if passed at a meeting. The Agrico Articles permit directors to appoint a proxy to represent them at any board meetings. Unless and until the Agrico Shareholders fix a minimum shareholding requirement for directors, a director is not required to be a shareholder. | such resolution is signed by all the directors. |
Limitation on Personal Liability of Directors |
Luxembourg – Kalera | Cayman Islands | Ireland - Pubco |
Luxembourg Company Law provides that directors do not assume any personal obligations for commitments of the company. Directors are liable to the company for the execution of their duties as directors and for any misconduct in the management of the company’s affairs. Directors are further jointly and severally liable both to the company and, as the case may be, to any third parties, for damages resulting from violations of the Luxembourg Company Law or the articles of the company. Directors will only be discharged from such liability for violations to which they were not a party, provided no misconduct is attributable to them and they have reported such violations at the first general meeting after they had knowledge thereof. In addition, directors may under specific circumstances also be subject to criminal liability, such as in the case of an abuse of corporate assets. | Generally speaking, directors do not incur personal liability for the debts, obligations or liabilities of a company except for those specified by statute and which arise out of negligence, fraud or breach of fiduciary duty on the part of an individual director, or due to an action not within his authority and not ratified by the company. Cayman Law does not prohibit or restrict a company from indemnifying its directors and officers against personal liability for any loss they may incur arising out of the company’s business. A company’s articles of association may provide for the indemnification of a director or an officer for breach of duty, save in circumstances where there has been willful neglect, willful default, fraud or dishonesty in the carrying out of fiduciary duties. In addition to any indemnities contained in the articles of association, the company will commonly obtain directors’ and officers’ (D&O) insurance. The Agrico Articles provide that every director and officer (which for | Under Irish law, as a general rule, directors will not have any personal liability for a company’s debts and liabilities with the exception of certain limited circumstances such as fraudulent or reckless trading, failing to keep adequate accounting records or acting under directions of a disqualified person. Pubco Articles provide that, subject to certain limitations and so far as may be permitted by the Irish Companies Act, each director shall be entitled to be indemnified by Pubco against all costs and expenses incurred in the execution and discharge of his or her duties, including any liability incurred in defending any proceedings relating to his or her office where judgment is given in his or her favor or the proceedings disposed of without any finding against him or her. It is expected that Pubco will purchase and maintain directors and officers insurance on behalf of its directors, secretary and employees. A director shall not be indemnified in respect of any claim where he or she has been adjudged to be liable for fraud or dishonesty, unless otherwise directed by the court. |
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| the avoidance of doubt, shall not include auditors), together with every former director and former officer (each an “Indemnified Person”) shall be indemnified out of the assets of the company against any liability, action, proceeding, claim, demand, costs, damages or expenses, including legal expenses, whatsoever which they or any of them may incur as a result of any act or failure to act in carrying out their functions other than such liability (if any) that they may incur by reason of their own actual fraud, willful neglect or willful default. No Indemnified Person shall be liable to the company for any loss or damage incurred by the company as a result (whether direct or indirect) of the carrying out of their functions unless that liability arises through the actual fraud, willful neglect or willful default of such Indemnified Person. No person shall be found to have committed actual fraud, willful neglect or willful default unless or until a court of competent jurisdiction shall have made a finding to that effect. The Agrico Articles also provide that the company shall advance to each Indemnified Person reasonable attorneys’ fees and other costs and expenses incurred in connection with the defense of any action, suit, proceeding or investigation involving such Indemnified Person for which indemnity will or could be sought. In addition to the indemnification rights under the Agrico Articles, each of Agrico’s directors and officers have entered into an indemnity agreement with the company.
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Interested Shareholders |
Luxembourg- Kalera | Cayman Islands | Ireland - Pubco |
Under Luxembourg Company Law, no restriction exists as to the transactions that a shareholder may conclude with the company. The transaction must, however, be in the corporate interest of the company. The Kalera Articles do not provide for any specific rules in that respect. | The rights and duties of the shareholders as against the company, and as between the shareholders themselves, are set out in the articles of association, which constitute a contract between these parties. Subject to the articles of association, | The rights and duties of the shareholders as against the company, and as between the shareholders themselves, are set out in the memorandum and articles of association, which constitute a contract between these parties.
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| there are no general restrictions or prohibitions under Cayman Islands Law with a shareholder transacting or contracting with the company. Shareholders (in their capacity as such) do not owe fiduciary duties to the company or their fellow shareholders. The Agrico Articles do not alter this general position or contain restrictions on shareholders transacting or contracting with the company, save that where the company seeks to complete an initial business combination with a target that is affiliated with the Sponsor, executive officers or Directors, the company, or a committee of independent Directors, will obtain an opinion from an independent investment banking firm or another valuation or appraisal firm that regularly renders fairness opinions on the type of target business the Company is seeking to acquire that such an initial business combination is fair to the company from a financial point of view.
| Subject to the articles of association, there are no general restrictions or prohibitions under Irish law with a shareholder transacting or contracting with the company. Shareholders (in their capacity as such) do not owe fiduciary duties to the company or their fellow shareholders. Pursuant to the Pubco Articles, certain transactions such as mergers with, sale of Pubco assets or giving of guarantees to a person, who is the beneficial owner of Pubco shares representing 10% or more of the votes entitled to be cast by the holders of all the paid up share capital of Pubco, require approval by the affirmative vote of members of Pubco holding not less than two-thirds of the paid up ordinary share capital of Pubco, excluding the voting rights attached to any shares beneficially owned by such person. Such approval is in addition to any other affirmative vote or consent required by law or the Pubco Articles. |
Removal of Directors |
Luxembourg - Kalera | Cayman Islands | Ireland - Pubco |
Pursuant to Luxembourg Company Law and the Kalera Articles, directors may be removed at any time with or without cause (ad nutum) by the general meeting of shareholders by a simple majority of the votes validly cast. | The Agrico Articles specify that, subject to the terms of any preference shares, Agrico may by Ordinary Resolution remove any director. In addition, the Agrico Articles provide that the office of a director shall be vacated if: | Under Section 146 of the Irish Companies Act, a director may be removed before the expiration of his or her period of office by way of ordinary resolution of the shareholders (i.e. a simple majority of the members attending and voting). |
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| (a)the director resigns in writing; or (b)the director absents himself (without being represented by proxy) from three consecutive board meetings without special leave of absence from the directors, and the directors pass a resolution that he has by reason of such absence vacated office; or (c)the director dies, becomes bankrupt or makes any arrangement or composition with his creditors generally; or (d)the director is found to be or becomes of unsound mind; or (e)all of the other directors (being not less than two in number) determine that he should be removed as a director, either by a resolution passed by all of the other directors at a board meeting or by a resolution in writing signed by all of the other directors.
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Filling Vacancies |
Luxembourg - Kalera | Cayman Islands | Ireland - Pubco |
Luxembourg Company Law provides that, in the event of a vacancy of a director seat, the remaining directors appointed by the general meeting may, unless the articles of the company provide otherwise, provisionally fill such vacancy until the next general meeting at which the shareholders will be asked to confirm the appointment. The decision to fill a vacancy must be taken by the remaining directors appointed by the general meeting of shareholders by simple majority vote. The Kalera Articles provide that in the event of a vacancy in the office of a director because of death, legal incapacity, bankruptcy, resignation or otherwise, this vacancy may be filled on a temporary basis and for a period of time not exceeding the initial mandate of the replaced director by the remaining directors until the next meeting of shareholders which shall resolve on the permanent appointment in compliance with the applicable legal provisions.
| Please refer to the discussion under “Board of Directors” above. | Any vacancy on the board shall be deemed a casual vacancy, which shall be filled by the decision of a majority of the board then in office. Any director elected to fill a vacancy resulting from an increase in the number of directors of a particular class shall hold office for the remaining term of that class. Any director elected to fill a vacancy not resulting from an increase in the number of directors shall have the same remaining term as that of his predecessor or if there is no such remaining term, the director shall retire (and be eligible for re-election) at the annual general meeting immediately following his/her appointment. If reelected, the director shall hold office for the remaining term of that class. |
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Committees |
Luxembourg - Kalera | Cayman Islands | Ireland - Pubco |
The Kalera Articles provide that the board of directors may set up committees and determine their composition, purpose, powers and rules. In accordance with the Kalera Articles, the board of directors shall determine its own rules of procedure and may create one or several committees. The composition and the powers of such committee(s), the terms of the appointment, removal, remuneration and duration of the mandate of its/their members, as well as its/their rules of procedure are determined by the board of directors. The board of directors shall be in charge of the supervision of the activities of the committee(s). For the avoidance of doubt, such committees shall not constitute management committee in the sense of Article 441-11 of the Luxembourg Company Law.
| The Agrico Articles permit the directors to establish and delegate their powers, authorities and discretions to committees consisting of one or more directors. Subject to any conditions imposed by the directors, the proceedings of a committee will be governed by the same provisions in the Agrico Articles regulating the proceedings of directors, so far as they are capable of applying. Agrico’s directors have established three standing committees: an audit committee, a compensation committee and a nominating and corporate governance committee. | The Pubco Articles provide that the directors of Pubco may establish one or more committees consisting in whole or in part of members of Pubco’s board of directors. The composition, function, power and obligations of any such committee will be determined by the board of directors of Pubco. The directors of Pubco may also delegate any of their powers to any committee and any such committee shall, in the exercise of the powers so delegated, conform to any regulations that may be imposed on it by the Pubco directors |
Share Capital |
Luxembourg - Kalera | Cayman Islands | Ireland - Pubco |
Kalera's share capital is set at thirty thousand euro (EUR 30,000), represented by three million (3,000,000) shares with a nominal value of one euro cent (EUR 0.01) each. The authorised capital of Kalera, excluding the share capital, is set at nine hundred thousand euro (EUR 900,000), represented by ninety million (90,000,000) shares with a nominal value of one euro cent (EUR 0.01) each. The increase or reduction of the issued share capital requires an extraordinary general meeting of the shareholders of Kalera deliberating in the manner required to amend the articles of association. See “Amendment of Governing Documents.” | Agrico’s current authorized share capital is US$22,100 divided into (i) 200,000,000 Agrico Class A ordinary shares of a par value of US$0.0001 each, (ii) 20,000,000 Agrico Class B ordinary shares of a par value of US$0.0001 each and (iii) 1,000,000 preference shares of a par value of US$0.0001 each. Agrico’s issued share capital currently amounts to (i) 14,375,000 Agrico Class A ordinary shares and (ii) 3,593,750 Agrico Class B ordinary shares. No preference shares are currently in issue. The Agrico Articles provide the directors with general authority to allot and issue further shares up to | The authorized share capital of Pubco consists of US$100,000,000 divided into 800,000,000,000 ordinary shares with a nominal value of US$0.0001 each and 200,000,000,000 preferred shares with a nominal value of US$0.0001 each and €25,000 divided into 25,000 deferred ordinary shares with a nominal value of €1.00 each. As of March 8, 2022, Pubco had 25,000 euro shares in issue in order to satisfy statutory capitalization requirements for all Irish public limited companies. Pubco had no ordinary or preferred shares outstanding. Following completion of the Second Merger and immediately prior to the completion of this offering, Pubco expects that its issued share capital will consist of |
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The authorised capital, excluding the share capital, is set at nine hundred thousand euro (EUR 900,000), represented by ninety million (90,000,000) shares with a nominal value of one euro cent (EUR 0.01) each. During a period of five (5) years from the date of incorporation or any subsequent resolutions to create, renew or increase the authorised capital pursuant to this article, the board of directors is hereby authorised to issue shares, to grant options to subscribe for shares and to issue any other instruments giving access to shares within the limits of the authorised capital to such persons and on such terms as they shall see fit and specifically to proceed with such issue without reserving a preferential right to subscribe to the shares issued for the existing shareholders and it being understood, that any issuance of such instruments will reduce the available authorised capital accordingly.
| the authorized share capital stated above. The authorized share capital may only be increased or varied by shareholder ordinary resolution. | ordinary shares. Pubco may issue shares subject to the maximum authorized share capital contained in the Pubco Articles. The authorized share capital may be increased or reduced (but not below the number of issued ordinary shares, deferred shares or preferred shares, as applicable) by a resolution approved by a simple majority of the votes of Pubco shareholders cast at a general meeting (referred to under Irish law as an “ordinary resolution”) (unless otherwise determined by the directors). The directors authority to issue shares must be renewed by ordinary resolution at least every 5 years. |
The board of directors is authorised to allocate existing shares of Kalera without consideration or to issue new shares (the "Bonus Shares") paid-up out of available reserves (i) to employees of the Company or to certain classes of such employees, (ii) to employees of companies or economic interest groupings in which the Company holds directly or indirectly at least ten per cent (10%) of the share capital or of the voting rights, (iii) to employees of | |
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companies or economic interest groupings which hold directly or indirectly at least ten per cent (10%) of the share capital or of the voting rights of the Company, (iv) to employees of companies or economic interest groupings in which at least fifty per cent (50%) of the share capital or of the voting rights are held, directly or indirectly, by a company holding itself, directly or indirectly, at least fifty per cent (50%) of the share capital of the Company and/or (v) to members of the corporate bodies of the Company or any of the other companies or economic interest groupings referred to under items (ii) to (iv) above (the "Beneficiaries of Bonus Shares"). The board of directors sets the terms and conditions of the allocation of Bonus Shares to the Beneficiaries of Bonus Shares, including the period for the final allocation and any minimum period during which such Bonus Shares cannot be transferred by their holders. The preferential | |
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subscription right of existing shareholders is automatically cancelled in case of issuance of Bonus Shares.
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Preferred Shares |
Luxembourg – Kalera | Cayman Islands | Ireland - Pubco |
The Kalera Articles do currently not provide for the possibility to issue preferred shares. As a result, the issuance of any preferred shares requires an amendment to the Kalera Articles. See “Amendment of Governing Documents”. | Agrico is currently authorized to issue up to 1,000,000 preference shares of a par value of US$0.0001 each. No preference shares are currently in issue. | The board is empowered to cause preferred shares to be issued from time to time and may fix the rights attaching to such preferred shares. The board may change the rights of any series of preferred shares that has been created but not yet issued. Once issued, the rights attaching to a series of preferred shares may only be varied with the consent in writing of 75% of the holders of those shares or by a special resolution passed by that class. The creation, issue and allotment of preferred shares shall not constitute a variation of rights of the ordinary shares. Preferred shares may be preferred as to dividends, rights upon liquidation or voting in such manner as the Pubco board of directors may resolve. The preferred shares may also be redeemable at the option of the holder of the preferred shares or at Pubco’s option and may be convertible into or exchangeable for |
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Variation of Rights |
Luxembourg – Kalera | Cayman Islands | Ireland - Pubco |
The Kalera Articles do currently not provide for any classes of shares. The introduction of share classes would require an amendment of the Kalera Articles. See “Amendment of Governing Documents”. | The Agrico Articles provide that all or any of the rights attached to any class of the company’s shares (unless otherwise provided by the terms of issue of the shares of that class) may, whether or not the company is being wound up, be varied without the consent of the holders of the issued shares of that class where such variation is considered by the directors not to have a material adverse effect upon such rights. In all other cases any such variation shall be made only with the consent in writing of the holders of not less than two-thirds of the issued shares of the affected class (other than with respect to a waiver of the anti-dilution provisions in the Agrico Articles in respect of Agrico Class B ordinary share conversions, which shall only require the consent in writing of the holders of a majority of the issued Agrico Class B ordinary shares), or with the approval of a resolution passed by a majority of not less than two-thirds of the votes cast at a separate meeting of the holders of the shares of that affected class. The directors reserve the right, notwithstanding that any such variation may not have a material adverse effect, to obtain consent from the holders of Agrico shares of the relevant class. The Agrico Articles provide that all the provisions relating to general meetings will apply mutatis mutandis to any class meetings, except that the necessary quorum shall be one person holding or representing by proxy at least one third of the issued shares of the affected class and that any holder of shares of the affected class present in person or by proxy may demand a poll. For the purposes of a separate class meeting, the directors may treat two or more or all the classes of shares as forming one class of shares if the directors consider that such class of shares would be affected in the same way by the proposals under consideration, but in any other case shall treat them as separate classes of shares. | Where the rights attaching to shares are set out in the Pubco Articles, any changes to these rights will need to be effected by way of a special resolution (passed by 75% of the votes cast by shareholders attending and voting at the meeting) amending the Pubco Articles. Additionally, the rights attaching to a particular class of shares may only be varied if (a) the holders of 75% of the nominal value of the issued shares of that class consent in writing to the variation, or (b) a special resolution, passed at a separate general meeting of the holders of that class, sanctions the variation. |
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| The Agrico Articles specify that the following shall not be considered a variation of share rights (unless otherwise expressly provided by the terms of issue of the shares of that class): the creation or issue of further shares ranking pari passu therewith. If the variation of rights requires an amendment to the Agrico Articles themselves, then such amendment will require the approval from the shareholders by a special resolution which is a resolution passed by a majority of at least two-thirds of such members as, being entitled to do so, vote in person or by proxy at the Agrico Special Meeting and includes a unanimous written resolution. Please refer to the discussion under “Amendment of Governing Documents” below. The Agrico Articles provide that all the provisions relating to general meetings will apply mutatis mutandis to any class meetings, except that the necessary quorum shall be one person holding or representing by proxy at least one third of the issued shares of the affected class and that any holder of shares of the affected class present in person or by proxy may demand a poll. For the purposes of a separate class meeting, the directors may treat two or more or all the classes of shares as forming one class of shares if the directors consider that such class of shares would be affected in the same way by the proposals under consideration, but in any other case shall treat them as separate classes of shares. The Agrico Articles specify that the following shall not be considered a variation of share rights (unless otherwise expressly provided by the terms of issue of the shares of that class): the creation or issue of further shares ranking pari passu therewith. If the variation of rights requires an amendment to the Agrico Articles themselves, then such amendment will require the approval from the shareholders by a special resolution which is a resolution passed by a majority of at least two-thirds of such members as, being entitled to do so, vote in person or by proxy at the Agrico Special Meeting and includes a unanimous written resolution. | |
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| Please refer to the discussion under “Amendment of Governing Documents” below.
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Preemptive Rights and Advance Subscription Rights |
Luxembourg – Kalera | Cayman Islands | Ireland - Pubco |
Luxembourg Company Law provides for preferential subscription right of the existing shareholders in case of the issuance of new shares against a contribution in cash. The extraordinary general meeting of shareholders may, with a quorum of 50% of the share capital and a majority of 2/3 of the votes cast, limit, waive, or cancel such preemptive rights. However, the Kalera Articles, in accordance with Luxembourg Company Law, foresee that the authorised capital, excluding the share capital, is set at nine hundred thousand euro (EUR 900,000), represented by ninety million (90,000,000) shares with a nominal value of one euro cent (EUR 0.01) each. During a period of five (5) years from the date of incorporation or any subsequent resolutions to create, renew or increase the authorised capital pursuant to this article, the board of directors is authorised to issue shares, to grant options to subscribe for shares and to issue any other instruments giving access to shares within the limits of the authorised capital to such persons and on such terms as they shall see fit and specifically to proceed with such issue without reserving a preferential right to subscribe to the shares issued for the existing shareholders and it being understood, that any issuance of such instruments will reduce the available authorised capital accordingly. The authorised capital of the Company may be increased or reduced by a resolution of the general meeting of shareholders adopted in the manner required for an amendment of the articles of association. | There are no statutory preemptive rights under the Cayman Companies Act. The articles of association may include preemptive rights in favor of shareholders or one or more classes of shareholder. The Agrico Articles do not provide preemptive rights. However, pursuant to the anti-dilution provisions of the Agrico Class B ordinary shares, certain specified future issuances of shares will result in an adjustment to the conversion ratio at which the Agrico Class B ordinary shares convert into Agrico Class A ordinary shares such that the initial shareholders and their permitted transferees would retain their aggregate percentage ownership at 20% of the sum of the total number of all ordinary shares outstanding upon completion of the Agrico IPO plus all shares issued in the specified future issuance, unless the holders of a majority of the then-outstanding Agrico Class B ordinary shares agreed to waive such adjustment with respect to the future issuance at the time thereof. | While the Irish Companies Act generally provides shareholders with pre-emptive rights when new shares are issued for cash, it is possible for the Pubco Articles, or for the shareholders of Pubco in a general meeting (through the passing of a special resolution), to exclude such pre-emptive rights for a maximum period of five years. The Pubco Articles exclude pre-emptive rights for a period of five years from the date of adoption of such articles. This exclusion will need to be renewed by a special resolution of the shareholders of Pubco upon its expiration and at periodic intervals thereafter, in each case for a maximum period of five years. |
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The board of directors is authorised to allocate existing shares of the Kalera without consideration or to issue new shares (the "Bonus Shares") paid-up out of available reserves (i) to employees of the Company or to certain classes of such employees, (ii) to employees of companies or economic interest groupings in which the Company holds directly or indirectly at least ten per cent (10%) of the share capital or of the voting rights, (iii) to employees of companies or economic interest groupings which hold directly or indirectly at least ten per cent (10%) of the share capital or of the voting rights of the Company, (iv) to employees of companies or economic interest groupings in which at least fifty per cent (50%) of the share capital or of the voting rights are held, directly or indirectly, by a company holding itself, directly or indirectly, at least fifty per cent (50%) of the share capital of the Company and/or (v) to members of the corporate bodies of the Company or any of the other companies or economic interest groupings referred to under items (ii) to (iv) above (the "Beneficiaries of Bonus Shares"). The board of directors sets the terms and conditions of the allocation of Bonus Shares to the Beneficiaries of Bonus Shares, including the period for the final allocation and any minimum period during which such Bonus Shares cannot be transferred by their holders. The preferential subscription right of existing shareholders is automatically cancelled in case of issuance of Bonus Shares. The above authorisations may be renewed through a resolution of the general meeting of the shareholders adopted in the manner required for an amendment of the articles of association and subject to the provisions of the Law, each time for a period not exceeding five (5) years. The authorised capital of the Company may be increased or reduced by a resolution of the general meeting of shareholders adopted in the manner required for an amendment of the articles of association.
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Minority Rights |
Luxembourg – Kalera | Cayman Islands | Ireland - Pubco |
Shareholders holding together 10% of the issued share capital are inter alia entitled: •while a shareholders’ meeting is in session, to require a postponement of that meeting for up to four weeks. Any such postponement will annul any decision taken at the meeting; •to require the board of directors by written notice to convene a meeting of shareholders with the agenda indicated by them. Such meeting must be held within one month of the said request; and •to require the board of directors to add further items on the agenda of a meeting of shareholders. This request must be sent to the registered office by registered mail at least five (5) days prior to the holding of the meeting. Luxembourg Company Law provides that in the absence of stricter provisions in the articles of association, if as a result of a loss, the net assets are reduced to an amount less than half of the company’s capital, the board of directors or the management board, as the case may be, shall convene a general meeting to be held within a period not exceeding two months from the time at which the loss was or should have been recorded by them; such general meeting shall deliberate, as the case may be, in accordance with the conditions set forth in Article 450-3 on the possible dissolution of the company and possibly on other measures announced on the agenda. The board of directors or the management board, as the case may be, shall set out the causes of this situation and justify its proposals in a special report made available to shareholders at the registered office of the company eight (8) days before the general meeting. If it proposes the continuation of the activities, it shall set out in its report the measures which it intends to take to redress the financial situation of the company. | Cayman Islands companies operate on the principle of a majority rule. Pursuant to the Agrico Articles and the Cayman Companies Act decisions require approval by either (i) an ordinary resolution passed by a simple majority of the votes cast at a quorate meeting on the resolution or by written resolution unanimously adopted by all shareholders entitled to vote on the matter or (ii) a special resolution passed by at least two-thirds of the votes cast at a quorate meeting on the resolution or by written resolution unanimously adopted by all shareholders entitled to vote on the matter, depending on the matter being voted upon. Notwithstanding the foregoing, the following rights may be available to a minority shareholder under Cayman Law: (a)a shareholder who opposed a merger or consolidation and who exercised their right to dissent would, subject to certain exceptions and subject to following a prescribed procedure set out in the Cayman Companies Act, be entitled to payment of the fair value of their shares; (b)a shareholder who opposed a shareholder scheme of arrangement would have the right to express their dissent to the courts. However, if the scheme of arrangement is approved, any dissenting shareholder would be bound by the scheme and would have no rights comparable to appraisal rights. (c)Cayman Law provides that a shareholder has the right to petition the court to wind-up a company on the basis that it is “just and equitable” to do so. One of the established grounds for a just and equitable petition is oppression, and if established the court has the power, as an alternative to a winding up order, to make: •an order regulating the conduct of the company’s affairs in the future; | Shareholders holding not less than 10% of the paid up share capital in Pubco may require the directors to convene a shareholder meeting. Under the Irish Companies Act, if the rights to a particular share class are varied, one or more shareholders who hold not less than 10% of the issued shares of that class and who did not vote in favour of the resolution to vary the rights of that class, can apply to the court to have the variation cancelled. |
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This report shall be announced on the agenda. Shareholders shall have the right to obtain a copy of the report free of charge on request and on providing proof of their title eight (8) days before the meeting. A copy of the report shall be sent to registered shareholders at the same time as the convening notice. Failure to draw up the report referred to in the second subparagraph shall result in the nullity of the decision of the general meeting, unless all the shareholders of the company have waived this report. The same rules shall be observed if, as a result of the loss, the net assets are reduced to an amount lower than one quarter of the company’s capital, but in this case the dissolution will take place if it is approved by one quarter of the votes cast at the meeting. In the case of a breach of the above provisions, the directors or members of the management board, as the case may be, may be declared personally jointly and severally liable towards the company for all or part of the increase in the loss. If, as a result of losses, the net assets of a company fall below one-quarter of the share capital of the relevant company, the company may be dissolved if such dissolution is approved by 25% of the votes cast at the general meeting of shareholders convened to discuss this matter. Luxembourg Company Law also provides that one or more shareholders holding, in the aggregate, at least 10% of the securities having a right to vote at the general meeting that has granted discharge to the members of the board of directors for the execution of their mandate, may act on Kalera’s behalf to file a liability claim for damages against one or more directors for mismanagement and/or a violation of Luxembourg Company Law, or of the articles of association. One or more shareholders representing at least 10% of the share capital or 10% of the votes attached to the securities may ask the board of directors written questions on one or | •an order requiring the company to refrain from doing or continuing an act complained of by the petitioner or to do an act which the petitioner has complained it has omitted to do; •an order authorizing civil proceedings to be brought in the name and on behalf of the company by the petitioner on such terms as the court may direct; or •an order providing for the purchase of the shares of any shareholders of the company by other shareholders or by the company itself and, in the case of a purchase by the company itself, a reduction of the company’s capital accordingly. If the court does not make one of these alternative orders, and a winding up order is made on just and equitable grounds, a liquidator will be appointed who can then investigate the company’s affairs and pursue claims against those who have caused loss to the company (including directors and former directors). | |
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more management operations (opérations de gestion) of the company and, as the case may be, of subsidiaries it controls. In the latter case, the request must be assessed in view of the interest of the companies included within the consolidation. In the absence of answer within a period of one month, these shareholders may apply in court the appointment of experts instructed to submit a report on the management operations targeted in the question.
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Amendment of Governing Documents |
Luxembourg – Kalera | Cayman Islands | Ireland - Pubco |
Under Luxembourg Company Law, amendments to the articles of association require generally an extraordinary general meeting of shareholders held in front of a public notary at which at least one half of the share capital to which voting rights are attached pursuant to the Luxembourg Company Law is represented. The notice of the extraordinary general meeting of shareholders shall indicate the proposed amendments to the articles of association. If the aforementioned quorum is not reached, a second general meeting of shareholders may be convened. The second general meeting shall validly deliberate regardless of the proportion of the share capital represented. At both meetings, resolutions, in order to be adopted, must be carried by at least two-thirds of the votes cast by shareholders entitled to vote. Where classes of shares exist and the resolution to be adopted by the general meeting of shareholders changes the respective rights attaching to such shares, the resolution will be adopted only if the conditions as to quorum and majority set out above are fulfilled with respect to each class of shares. An increase of the commitments of its | Under Cayman Law, the directors have no power to make, amend or repeal the memorandum of association or articles of association of a Cayman Islands company. Instead any amendment or alteration to the memorandum of association or the articles of association requires approval from the shareholders by a special resolution passed by at least two-thirds (or such greater majority as may be specified by the articles of association) of the votes cast at a quorate meeting on the resolution or by written resolution unanimously adopted by all shareholders entitled to vote on the matter. Where a company’s share capital is divided into different classes of shares and the rights of the holders of a class or series of shares are affected by the alteration differently than those of the holders of other classes or series of shares, it is typical for the articles of association to specify that the alteration is also subject to approval by consent in writing or resolution passed by a certain number of the holders of shares of each class or series so affected, whether or not they are otherwise entitled to vote. Please refer to the discussion under “Variation of Rights” above. | Under the Irish Companies Act, amendments to the Pubco Articles require a special resolution to be passed by not less than 75% of those shareholders entitled, attending and voting at the general meeting. The Pubco Articles may not be amended by resolution of directors, but the directors when issuing preference shares may fix the rights attaching to such shares. |
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shareholders requires however the unanimous consent of the shareholders. The Kalera Articles provide that except as otherwise provided therein or by the Luxembourg Company Law, the articles of association may be amended by a majority of at least two-thirds of the votes validly cast at a general meeting at which a quorum of more than half of the Company’s share capital is present or represented. If no quorum is reached in a meeting, a second meeting may be convened in accordance with the provisions of article 9.3 of the Kalera Articles which may deliberate regardless of the quorum and at which resolutions are adopted at a majority of at least two-thirds of the votes validly cast. Abstentions and nil votes shall not be taken into account. In very limited circumstances, the board of directors is authorized by the shareholders to amend the Kalera Articles, albeit always within the limits set forth by the shareholders (such authorization must not be taken on a case by case basis but is included in the Kalera Articles). This is, among others, the case in the context of Kalera’s authorized unissued share capital, within which the board of directors is authorized to issue further shares. The board of directors is then authorized to appear in front of a public notary to record the capital increase and to amend the share capital set forth in the Kalera Articles. It also applies in case the registered office of Kalera will be transferred from one municipality of the Grand Duchy of Luxembourg to another. The board of directors has to the authority to take the relevant decision and to afterwards appear in front of a public notary to amend the Kalera Articles accordingly. | In addition, certain extraordinary corporate actions, such as winding up the company (voluntarily or by court order), changing the company’s name, or the merger or consolidation of the company with or into one or more other companies, require the approval of shareholders by a special resolution passed by at least two-thirds (or such greater majority as may be specified by the articles of association) of the votes cast at a quorate meeting on the resolution or by written resolution unanimously adopted by all shareholders entitled to vote on the matter. Other extraordinary actions, such as altering the company’s authorized share capital, require the approval of shareholders by an ordinary resolution passed by a simple majority (or such greater majority as may be specified by the articles of association) of the votes cast at a quorate meeting on the resolution or by written resolution unanimously adopted by all the shareholders entitled to vote on the matter. Cayman Law also provides for shareholder schemes of arrangements requiring the consent of at least a majority in number of the shareholders representing not less than 75% in value of the shares of each class affected by the scheme voting at the scheme meeting, and the sanction by the Grand Court of the Cayman Islands. The Agrico Articles provide that the memorandum of association or articles of association may be amended by a special resolution passed by at least two-thirds of the votes cast at a quorate meeting on the resolution or by written resolution unanimously adopted by all shareholders entitled to vote on the matter. | Under the Irish Companies Act, amendments to the Pubco Articles require a special resolution to be passed by not less than 75% of those shareholders entitled, attending and voting at the general meeting. The Pubco Articles may not be amended by resolution of directors, but the directors when issuing preference shares may fix the rights attaching to such shares. |
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| The Agrico Articles provide that if the shareholders approve an amendment to the Agrico Articles that would (i) modify the substance or timing of the company’s obligation to redeem 100% of the Agrico Shares if the company does not complete its initial business combination within 12 months from the closing of the Agrico IPO (or up to 21 months if the date is extended in accordance with Agrico’s constitutional documents) or such later time as the members may approve in accordance with the Agrico Articles or (ii) with respect to the other provisions relating to shareholders’ rights or pre-business combination activity, the Company will provide the public shareholders with the opportunity to redeem all or a portion of their Agrico Class A ordinary | |
| shares upon such approval at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable) divided by the number of then outstanding Agrico Shares
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Meeting of Shareholders |
Luxembourg – Kalera | Cayman Islands | Ireland - Pubco |
Pursuant to Luxembourg Company Law, at least one general meeting of shareholders must be held each year in Luxembourg. The purpose of such annual general meeting is in particular to approve the annual accounts, allocate the results, proceed to statutory appointments and grant discharge to the directors. The annual general meeting must be held within six months of the end of each financial year of the company. The board of directors may in | The procedure for convening and holding general meetings is usually set out in the articles of association. The articles of association will typically provide for the directors to convene a general meeting whenever they think fit upon written notice to all shareholders entitled to receive notice and attend the meeting, or upon the requisition in writing of shareholders holding the prescribed share capital of the company carrying the right to vote at a meeting. On receiving the requisition, the | Held at a time and place as determined by the directors subject to at least one shareholder meeting being held in each year, being the company’s annual general meeting. Shareholders holding not less than 10% of the paid up share capital in Pubco may also require the directors to convene a shareholder meeting. May be held within or outside Ireland. Notice: |
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accordance with the Kalera Articles determine a date preceding the relevant general meeting as the record date for admission to, and voting at, such general meeting. Pursuant to Luxembourg Company Law, the board of directors is obliged to convene a general meeting so that it is held within a period of one month after receipt of a written request of shareholders representing at least one-tenth of the issued capital. Such request must be in writing and indicate the agenda of the meeting. Luxembourg Company Law distinguishes between ordinary general meetings of shareholders and extraordinary general meetings of shareholders. Extraordinary resolutions relate to proposed amendments to the articles of association and certain other limited matters. All other resolutions are ordinary resolutions. Ordinary General Meetings. At an ordinary general meeting, there is no quorum requirement and resolutions are adopted by a simple majority of validly cast votes. Abstentions are not considered “votes.” | directors are required to call and hold a shareholder meeting for the purposes set out in the requisition. Where the articles of association are silent as to the persons who are entitled to summon general meetings, the Cayman Companies Act provides that three shareholders shall be competent to summon the general meeting. Agrico, as a Cayman Islands exempted company, is not required by the Cayman Companies Act to convene an annual general meeting. The directors, the chief executive officer or the chairman of the board of directors may convene an extraordinary general meeting. The Agrico Articles require that at least five (5) clear days’ notice is given of any general meeting. The required quorum for general meetings is holders of a majority of the shares (being individuals present in person or by proxy or if a corporation or other non-natural person by its duly authorized representative or proxy). All resolutions put to the vote of the meeting will be decided by poll vote. Agrico Class A ordinary | A copy of the notice of any meeting shall be given at least twenty-one (21) days before the date of the proposed meeting to the members, directors and auditors. In certain limited circumstances, a meeting may be called by fourteen (14) days’ notice, but this shorter notice period shall not apply to the annual general meeting. Every shareholder entitled to attend, speak, ask questions and vote at a general meeting may appoint a proxy or proxies to attend, speak, ask questions and vote on behalf of the shareholder. Quorum is fixed by Pubco Articles, to consist of at least two shareholders present in person or by proxy entitled to exercise more than fifty percent (50%) of the voting rights of the shares. Resolutions put to the vote of a meeting shall be decided on a poll, which shall be taken in such manner as the chairperson of the meeting directs. Subject to the provisions of the Pubco Articles and any rights or restrictions attached to any shares, every shareholder of record present |
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Extraordinary General Meeting. Extraordinary general meetings are required to be convened for among others any of the following matters: (i) the increase or decrease of the authorized or issued capital, (ii) the limitation or exclusion of preemptive rights or the authorization of the board of directors to limit or exclude such rights, (iii) the approval of a statutory merger or de-merger (scission), (iv) Kalera’s dissolution and liquidation, and (v) in general on amendments to the Kalera Articles. Except as otherwise required by the Luxembourg Companies Law or the Kalera Articles, resolutions at a general meeting of shareholders, duly convened shall not require any quorum and shall be adopted at a simple majority of the votes validly cast regardless of the portion of capital represented. Abstentions and nil votes shall not be taken into account. The Kalera Articles may be amended by a majority of at least two-thirds of the votes validly cast at a general meeting at which a quorum of more than half of the Kalera outstanding share capital. If such quorum is not present s present or represented, a second meeting may be convened, which does not need a quorum. The Kalera Articles do in generally provide for the rules set out by Luxembourg Company Law and do therefore not foresee any quorum in relation to ordinary shareholder decisions and such decisions may in consequence be approved by simple majority of the votes validly cast.
| shareholders and Agrico Class B ordinary shareholders of record are entitled to one vote for each share held on all matters to be voted on by shareholders and vote together as a single class, except as required by law or pursuant to the Agrico Articles. In the case of an equality of votes the chairman shall be entitled to a second or casting vote. A shareholder may attend and vote at the meeting personally or by proxy (or in the case of a corporation or other non-natural person by its duly authorized representative or proxy). Pursuant to the Agrico Articles and the Cayman Companies Act all decisions require approval by either (i) an ordinary resolution which is a resolution passed by a simple majority of the members, as being entitled to do so, vote in person or by proxy at a general meeting and includes a unanimous written resolution, or (ii) a special resolution which is a resolution passed by a majority of at least two-thirds of such members as, being entitled to do so, vote in person or by proxy at a general meeting and includes a unanimous written resolution. | in person or by proxy shall have one vote for each share registered in his or her name. Where the rights attaching to shares are set out in the Pubco Articles, any changes to these rights will need to be effected by way of a special resolution (passed by 75% of the votes cast by shareholders attending and voting at the meeting) amending the Pubco Articles. Additionally, the rights attaching to a particular class of shares may only be varied if (a) the holders of 75% of the nominal value of the issued shares of that class consent in writing to the variation, or (b) a special resolution, passed at a separate general meeting of the holders of that class, sanctions the variation. |
Shareholders’ Written Resolutions |
Luxembourg – Kalera | Cayman Islands | Ireland - Pubco |
Pursuant to Luxembourg Company Law, shareholders of a public limited liability company (société anonyme) may not take actions by written consent. All shareholder actions must be approved at an actual meeting of shareholders held before a notary public or under private seal, depending on the nature of the matter. Shareholders may also vote by proxy. | Shareholder written resolutions are permitted under Cayman Law and the Agrico Articles. Pursuant to the Agrico Articles any shareholder written resolutions must be unanimous. | Unanimous consent of all the holders of ordinary shares is required for the shareholders to act by way of written resolution in lieu of holding a meeting. Except in the case of the removal of statutory auditors or directors and subject to the Irish Companies Act, anything which may be done by resolution in general meeting of all or any class or resolution in writing, |
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| | signed by all of the holders or any class thereof or their proxies being all of the holders of Pubco or any class thereof, who at the date of the resolution in writing would be entitled to attend a meeting and vote on the resolution shall be valid and effective for all purposes as if the resolution had been passed at a general meeting of Pubco or any class thereof.
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Indemnification of Officers, Directors and Employees |
Luxembourg – Kalera | Cayman Islands | Ireland - Pubco |
Pursuant to Luxembourg Company Law on agency, agents may generally be entitled to be reimbursed any advances or expenses made or incurred in the course of their duties, except in cases of fault or negligence on their part. Luxembourg Company Law provisions on agency are generally applicable to the mandate of directors and officers of Kalera. The Kalera Articles do not provide for any specific indemnification provisions. Pursuant to Luxembourg Company Law, a company is generally liable for any violations committed by its employees in the performance of their functions except where such violations are not in any way linked to the duties of the employee.
| The Agrico Articles do not provide indemnification in favor of employees of the Company. Please refer to the discussion under “Limitation on Personal Liability of Directors” above in respect to the indemnification of directors and officers of Agrico. | The Pubco Articles provide that, subject to certain limitations and so far as may be permitted by the Irish Companies Act, each director, officer and employee shall be entitled to be indemnified by Pubco against all costs and expenses incurred in the execution and discharge of his or her duties, including any liability incurred in defending any proceedings relating to his or her office where judgment is given in his or her favor or the proceedings disposed of without any finding against him or her. It is expected that Pubco will purchase and maintain directors and officers insurance on behalf of its directors, secretary and employees. A director shall not be indemnified in respect of any claim where he or she has been adjudged to be liable for fraud or dishonesty, unless otherwise directed by the court. |
Shareholder Approval of Business Combinations |
Luxembourg - Kalera | Cayman Islands | Ireland - Pubco |
Under Luxembourg Company Law and the Kalera Articles, the board of directors is vested with the broadest power to take any action necessary or useful to achieve the corporate object. Corporate merger, and de-merger, as well as the dissolution and voluntary liquidation of a company, generally requires the approval of an extraordinary resolution of a general meeting of shareholders. Transactions such as a sale, lease or exchange of substantial company assets generally require only the approval of the board of directors. Neither Luxembourg Company Law nor the Kalera Articles contain any | The Agrico Articles provide that any Business Combination (defined as a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination involving Agrico, with one or more businesses or entities) must be approved by Ordinary Resolution of the shareholders at a quorate general meeting, provided that the company shall only consummate any Business Combination so long as the company has net tangible assets of at least US$5,000,001 either prior to or upon such consummation or any greater net tangible asset or cash requirement that may be contained in the agreement relating to a Business Combination. | A merger of Pubco with another Irish company under the Irish Companies Act must be approved by a special resolution and by the Irish High Court. A merger of Pubco with a company incorporated in the European Economic Area (which includes all member states of the European Union and Norway, Iceland and Liechtenstein (EEA)) under the European Communities (Cross-Border Mergers) Regulations 2008 (as amended) must be approved by a special resolution and by the Irish High Court. |
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| Under the Cayman Companies Act a merger or consolidation of a company with or into one or more other companies requires the approval of shareholders by a special resolution passed by at least two-thirds (or such greater majority as may be specified by the articles of association) of the votes cast at a quorate meeting on the resolution or by written resolution unanimously adopted by all shareholders entitled to vote on the matter.
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Shareholder Action without a Meeting |
Luxembourg - Kalera | Cayman Islands | Ireland - Pubco |
Please refer to the discussion under “Shareholders’ Written Resolutions” above. | Please refer to the discussion under “Shareholders’ Written Resolutions” above. | Please refer to the discussion under “Shareholders’ Written Resolutions” above.
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Shareholder Suits |
Luxembourg - Kalera | Cayman Islands | Ireland - Pubco |
Luxembourg Company Law generally does not require shareholder approval before legal action may be initiated on behalf of Kalera. The board of directors thus has sole authority to decide whether to initiate legal action to enforce Kalera’s rights (other than, in certain circumstances, in the case of an action against board members). Shareholders do not generally have authority to initiate legal action on Kalera’s behalf. However, the general meeting of shareholders may vote under certain circumstances to initiate legal action against directors on grounds that such directors have failed to perform their duties. If a director is responsible for a breach of the Luxembourg Company Law or of a provision of the Kalera Articles, an action can in addition be initiated by any third party, including a shareholder that has suffered a loss that is independent and separate from the damage suffered by Kalera. Luxembourg procedural law does not recognize the concept of class actions. In addition, an action may be brought against the directors on behalf of Kalera by minority shareholders. This minority action may be brought by one or more shareholders who, at the general meeting which decided upon discharge of such directors, | In the Cayman Islands, the decision to institute proceedings on behalf of a company is generally taken by the company's board of directors. A shareholder may be entitled to bring a derivative action on behalf of the company, but only in certain limited circumstances. | In Ireland, the decision to institute proceedings on behalf of a company is generally taken by the company’s board of directors. In certain limited circumstances, a shareholder may be entitled to bring a derivative action on behalf of Pubco if a wrong committed against Pubco would otherwise go unredressed. The principal case law in Ireland indicates that to bring a derivative action a person must first establish a prima facie case (1) that a company is entitled to the relief claimed and (2) that the action falls within one of the five exceptions derived from case law, as follows: •where an ultra vires or illegal act is perpetrated; • where more than a bare majority is required to ratify the “wrong” complained of; •where the shareholders’ personal rights are infringed; •where a fraud has been perpetrated upon a minority by those in control; and •where the justice of the case required a minority to be permitted to institute proceedings. |
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owned securities with the right to vote at such meeting representing at least ten per cent of the votes attaching to all such securities. | | Irish law also permits shareholders of a company to bring proceedings against that company where its affairs are being conducted, or the powers of the directors are being exercised, in a manner oppressive to the shareholders or in disregard of their interests. The court can grant any relief it sees fit and the usual remedy is the purchase or transfer of the shares of any shareholder.
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Advance Notification Requirements for Proposal of Shareholders |
Luxembourg – Kalera | Cayman Islands | Ireland - Pubco |
One or several shareholders holding at least 10% of the share capital may request that one or more additional items be put on the agenda of any general meeting. This request shall be sent to the registered office of Kalera by registered mail at least five (5) days prior to the holding of the relevant general meeting. If one or more shareholders representing at least 10% of the share capital request the convening of a general meeting of shareholders in writing, with an indication of the agenda, the board of directors or the internal auditor (if any) must convene such general meeting so that it can be held within a period of one month from receipt of such request. | The Agrico Articles specify that shareholders seeking to bring business before the annual general meeting or to nominate candidates for election as directors at the annual general meeting must deliver notice to the principal executive offices of the company not less than 120 calendar days before the date of Agrico's proxy statement released to members in connection with the previous year’s annual general meeting or, if Agrico did not hold an annual general meeting the previous year, or if the date of the current year's annual general meeting has been changed by more than 30 days from the date of the previous year’s annual general meeting, then the deadline shall be set by the board of directors with such deadline being a reasonable time before Agrico begins to print and send its related proxy materials. Whilst not specifically provided for in the Cayman Companies Act, as a matter of general practice any shareholder may request the directors of a Cayman Islands company to propose a resolution for consideration at a shareholders’ meeting. Unless the articles of association provide otherwise, the directors have the discretion to refuse any such request, but in doing so must be mindful of their fiduciary duties towards the company. The directors will also need to be mindful of any right set out in the articles of association permitting shareholders to requisition a shareholder meeting (please refer to the discussion under “Meeting of Shareholders” above). | Under Irish law, there is no general right for a shareholder to put items on the agenda of an annual general meeting of a U.S.-listed company, other than as set out in the articles of association of a company. Under the Pubco Articles, in addition to any other applicable requirements, for business or nominations to be properly brought before an annual general meeting by a shareholder, such shareholder must have given timely notice thereof in proper written form to the corporate secretary. To be timely for an annual general meeting, a shareholder’s notice to Pubco’s secretary as to the business or nominations to be brought before the meeting must be delivered to or mailed and received at Pubco’s registered office not less than sixty (60) days nor more than 90 days before the first anniversary of the annual general meeting for the prior year. In the event that the date of the annual general meeting is advanced by more than thirty (30) days or delayed by more than sixty (60) days from such anniversary date, notice by the member must be so delivered by close of business on the day that is not earlier than ninety (90) days prior to such annual general meeting and not later than the close of business on the later of (a) sixty (60) days prior to the day of the contemplated annual general meeting or (b) ten (10) days after the day on which public announcement of the date of the contemplated annual general meeting is first made by Pubco. In no event shall the public announcement of an |
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| adjournment or postponement of an annual general meeting commence a new time period (or extend any time period) for the giving of a shareholder’s notice. A shareholder may nominate one or more persons for election as directors at an annual general meeting only pursuant to Pubco’s notice of such meeting or if written notice of such shareholder’s intent to make such nomination or nominations has been received by Pubco’s company secretary not less than sixty (60) nor more than ninety (90) days prior to the first anniversary of the preceding year’s annual general meeting; provided that, if the date of the annual general meeting is advanced by more than thirty (30) days or delayed by more than sixty (60) days from such anniversary, notice by the shareholder must be received not earlier than the ninetieth (90th) day prior to such annual general meeting and not later than the close of business on the later of (i) the sixtieth (60th) day prior to such annual general meeting and (ii) the tenth (10th) day following the day on which notice of the date of the annual general meeting was mailed or public disclosure thereof was made by Pubco, whichever first occurs. For nominations to the board, the notice must include all information about the director nominee that is required to be disclosed in proxies for the election of directors under any applicable securities legislation. For other business that a shareholder proposes to bring before the meeting, the notice must include a brief description of the business, the reasons for proposing the business at the meeting and a discussion of any material interest of the shareholder in the business. Whether the notice relates to a nomination to the board of directors or to other business to be proposed at the meeting, the notice also must include information about the shareholder and the shareholder’s holdings of Pubco’s shares. The chair of the meeting shall have the power and duty to determine whether any business proposed to be brought before the meeting was made |
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| | or proposed in accordance with these procedures (as set out in the Pubco Articles), and if any proposed business is not in compliance with these provisions, to declare that such defective proposal shall be disregarded.
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Distributions and Dividends; Repurchases and Redemptions |
Luxembourg - Kalera | Cayman Islands | Ireland – Pubco |
Pursuant to Luxembourg Company Law, distributions may be made (A) by decision of the general meeting of shareholders in relation to the annual dividend and (B), provided that such possibility is foreseen in the articles of association, which is the case of the Kalera Articles, by the board of directors as interim dividends (acomptes sur dividendes) out of available profits and reserves (including premium and other available reserves). Of the annual net profits of Kalera, five per cent (5%) at least shall be allocated to the legal reserve. This allocation shall cease to be mandatory as soon and as long as the aggregate amount of such reserve amounts to ten per cent (10%) of the share capital of Kalera.
| The Agrico Articles provide that the directors may resolve to pay dividends and other distributions on shares in issue and authorize payment of the dividends or other distributions out of the realized or unrealized profits of the Company, out of the share premium account or as otherwise permitted by law. The directors may pay any dividend or other distribution in cash or in specie by the distribution of specific assets to the shareholder. No prior authorization of the shareholders is required for the company to declare and pay a dividend. A Cayman Islands company is not permitted to declare or pay a dividend or distribution out of share premium, redeem or repurchase its own shares out of capital or share | The directors may from time to time pay such dividends as appear justified by the profits of Pubco, provided that dividends may only be made out of Pubco’s distributable reserves and if the dividend will not cause Pubco’s net assets to fall below the aggregate of its called up share capital and undistributable reserves (as such terms are calculated in accordance with the Irish Companies Act). No dividend shall bear interest against Pubco. Shares may be redeemed by Pubco. Any share in Pubco shall be deemed to be a redeemable share as and from the time of existence of an agreement or transaction between Pubco and any person pursuant to which Pubco will acquire a share or shares. Any acquisition by Pubco of shares in |
In accordance with Luxembourg Company Law, except for certain cases of reductions of subscribed capital, no distribution to shareholders may be made when on the closing date of the last financial year, the net assets as set out in the company’s annual accounts are, or following such a distribution would become, lower than the amount of the subscribed capital plus those reserves which may not be distributed under the law or under the articles of association. A) Annual distribution | premium, or enter into a merger or consolidation unless the company is able to pay its debts as they fall due in the ordinary course of business (i.e. is able to satisfy a “cash flow” solvency test). There is no statutory requirement to evidence the solvency test in any form, although, if there is any doubt in respect of the company’s solvency, it would be prudent for the directors to seek auditor or other accounting verification. Similar rules apply in respect to redemptions. A Cayman Islands company may, if | Pubco other than a surrender for nil value shall constitute a redemption. Any redemption must be funded out of Pubco’s distributable reserves or from the proceeds of a fresh issue of shares. Redemptions are governed by the applicable provisions of the Irish Companies Act and Pubco Articles. Under Irish law, dividends and distributions may only be made from distributable reserves. Distributable reserves, broadly, means the accumulated realized profits of a company, so far as not previously utilized by distribution or |
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The amount of an annual distribution to shareholders may not exceed the amount of the profit and loss at the end of the last financial year plus any profits brought forward and sums drawn from reserves available for this purpose, less any losses brought forward and sums placed to reserve in accordance with the law or the articles of association. In accordance with Luxembourg Company Law, interim dividends may only be paid if the articles of association authorise the board of directors or the management board, as the case may be, to do so. This payment shall furthermore be subject to the following conditions: a)interim accounts shall be drawn | authorized by its articles of association, issue shares that are redeemable at the option of the company or the holder (redeemable shares) and purchase its own shares, whether redeemable or not. Although a share cannot be redeemed or repurchased if: •it is not fully paid up; •the result would be that there are no shares outstanding; or •the company has commenced liquidation. The Agrico Articles provide that the company will redeem the Agrico Shares in the following circumstances:
| capitalization, less accumulated realized losses of a company, so far as not previously written off in a reduction or reorganization of capital, and includes reserves created by way of capital reduction, on a standalone basis. In addition, no distribution or dividend may be made unless Pubco’s net assets are equal to, or in excess of, the aggregate of Pubco’s called up share capital plus undistributable reserves (as such terms are calculated in accordance with the Irish Companies Act) and the distribution does not reduce Pubco’s net assets below such aggregate. The determination as to whether or not Pubco has sufficient distributable reserves to fund a dividend must be |
up showing that the funds available for distribution are sufficient; b)the amount to be distributed may not exceed the total profit and loss made since the end of the last financial year for which the annual accounts have been approved, plus any profits brought forward and sums drawn from reserves available for this purpose, less losses brought forward and sums to be placed to reserve pursuant to the requirements of the law or the articles of association; c)the decision of the board of directors or the management board, as the case may be, to distribute an interim dividend may not be taken more than two months after the date at which the interim accounts as referred to under a° above have been drawn up; d)the independent auditor (réviseur d’entreprises) in his report addressed to the board of directors or the management board, as the case may be, shall verify whether the conditions provided for above have been fulfilled. | (a)the company will redeem any Agrico Shares properly tendered in connection with a shareholder vote held on the company’s Business Combination (but only if the Business Combination is approved); (b)the company will redeem any Agrico Shares properly tendered in connection with a shareholder vote to amend the company’s memorandum and articles of association to (A) modify the substance or timing of the company’s obligation to allow redemption in connection with its initial Business Combination or to redeem 100% of the Agrico Shares if the company does not complete its initial Business Combination within 12 months from the closing of the Agrico IPO (or up to 21 months if the date is extended in accordance with Agrico’s constitutional documents) or (B) with respect to any other provision relating to shareholders’ rights or pre-business combination activity (but only if the amendment is approved) (c)the company will redeem all Agrico Shares if the company is unable to complete its initial business combination within 21 months from the closing of the Agrico IPO or any further period | made by reference to the “relevant financial statements” of Pubco. The “relevant financial statements” are either the last set of unconsolidated annual audited financial statements or unaudited financial statements properly prepared in accordance with the Irish Companies Act, which give a “true and fair view” of Pubco’s unconsolidated financial position in accordance with accepted accounting practice in Ireland. The “relevant financial statements” must be filed in the Companies Registration Office (the official public registry for companies in Ireland) prior to the making of the distribution. Consistent with Irish law, the Pubco Articles authorize the directors to pay out dividends without shareholder approval, to the extent they appear justified by profits. The board of directors may also recommend a dividend to be approved and declared by Pubco’s shareholders at a general meeting. Any general meeting declaring a dividend and any resolution of the directors declaring an interim dividend may direct payment of such dividend or interim dividend wholly or partly by the distribution of specific assets including paid up shares, debentures or debenture |
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Where interim distribution payments exceed the amount of the distribution subsequently approved at the general meeting, any such overpayment shall be deemed to have been paid on account of the annual distribution of the subsequent financial year. B) Interim distribution In accordance with Luxembourg Company Law, Kalera (or any party acting on its behalf) may repurchase Kalera’s shares and hold them in treasury, provided that in principle: •the shareholders at a general meeting have previously authorized the board of directors to acquire company shares. The general meeting shall determine the terms and conditions of the proposed acquisition and in particular the maximum number of shares to be acquired, the period for which the authorization is given (which may not exceed five years) and, in the case of acquisition for value, the maximum and minimum consideration; •the acquisitions, including shares previously acquired by Kalera and held by it, and shares acquired by persons acting in their own name but on behalf of Kalera, may not have the effect of reducing the unconsolidated net assets of Kalera below the amount of the issued share capital plus the reserves, which may not be distributed by Luxembourg Company Law or under the Kalera Articles; •the repurchase offer must be made on the same terms and conditions to all the shareholders who are in the same position. In addition, as a listed company Kalera may repurchase its ordinary shares on the stock market without having to make or an offer to all of its shareholders; and •only fully paid-up shares may be repurchased. | approved in accordance with the articles of association, subject to applicable law. | stocks assets. Pubco directors may deduct from any dividend payable to any shareholder any amounts payable by such shareholder to us in relation to Pubco’s shares. Repurchased and redeemed shares may be cancelled or held as treasury shares. The nominal value of treasury shares held by Pubco at any time must not exceed 10% of the nominal value of Pubco’s issued share capital. Pubco may not exercise any voting rights in respect of any shares held as treasury shares. |
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No prior authorization by shareholders is required (i) if the acquisition is made to prevent serious and imminent harm to Kalera, provided the board of directors informs the next general meeting of shareholders of the reasons for and the purpose of the acquisitions made, the number and nominal values or the accounting value of the shares acquired, the proportion of the subscribed capital which they represent and the consideration paid for them; and (ii) in the case of shares acquired by either Kalera or by a person acting on behalf of Kalera with a view to redistribute the shares to the staff of Kalera or of its subsidiaries, provided that the distribution of such shares is made within 12 months from their acquisition.
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Luxembourg Company Law provides for certain further situations in which the above conditions do not apply, including among others the acquisition of shares pursuant to a decision to reduce the share capital of Kalera or the acquisition of shares issued as redeemable shares. Such acquisitions are subject to certain further conditions and may generally not have the effect of reducing the Company’s non-consolidated net assets below the aggregate of subscribed capital and those reserves which may not be distributed by Luxembourg Company Law. As long as shares are held in treasury, the voting rights attached thereto are suspended and such shares shall not be taken into account when calculating the quorum and majority required for general meetings. Further, to the extent treasury shares are reflected as assets on the balance sheet of Kalera, a non-distributable reserve of the same amount must be reflected on the liabilities side of the balance sheet. The Kalera Articles provide that shares may be acquired and redeemed in accordance with the Luxembourg Company Law.
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Transactions with Officers or Directors |
Luxembourg - Kalera | Cayman Islands | Ireland - Pubco |
There are no rules under Luxembourg Company Law preventing a director from entering into contracts or transactions with Kalera to the extent the contract or the transaction is in the corporate interest of Kalera. Luxembourg Company Law prohibits a director from participating in deliberations and voting on a transaction if such director has a direct or indirect financial interest therein conflicting with the interests of Kalera. The relevant director must disclose his or her interest to the board of directors and abstain from deliberating and voting. The transaction and the director’s interest therein shall be reported, by way of a special report, to the next succeeding general meeting of shareholders. Where, because of conflicts of interest, the number of directors required by the articles to decide and vote on the relevant matter is not reached, the board of directors may, unless otherwise provided for by the articles, decide to refer the decision on that matter to the general meeting of shareholders. | As a matter of Cayman Law, a director of a Cayman Islands company is in the position of a fiduciary with respect to the company. Like other fiduciaries, directors are required not to put themselves in a position where there is a conflict (actual or potential) between their personal interests and their duties to the company or between their duty to the company and the duty owed to another person. At common law, however, the company is at liberty to waive completely the rules protecting it as principal in dealings in which the directors have an interest. Typically, the articles of association of a Cayman Islands company will permit directors to attend, be counted in the quorum and usually also to vote on transactions in which they are interested as long as their interest is disclosed. Generally, however, directors should not use for their own profit the company’s assets, opportunities or information and the director will need to be comfortable that they can still discharge their fiduciary duties, including being able to act in best interests of the company on behalf of the | Under the Irish Companies Act and the Pubco Articles, a director who has an interest in a proposal, arrangement or contract is required to declare the nature of his or her interest at the first opportunity either (i) at a meeting of the board at which such proposal, arrangement or contract is first considered (provided such director knows this interest then exists, or in any other case, at the first meeting of the board after learning that he or she is or has become so interested) or (ii) by providing a general notice to the directors declaring that he or she is to be regarded as interested in any proposal, arrangement or contract with a particular person, and after giving such general notice will not be required to give special notice relating to any particular transaction. Subject to any applicable law or listing rules, a director may vote in respect of any contract, appointment or arrangement in which he or she is interested and will be counted in the quorum present at the meeting. Further, a director may vote on his or her own appointment or arrangement and the terms of it. |
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The preceding provisions do not apply where the decision of the board of directors relates to ordinary business entered into under normal conditions. | shareholders, and not be influenced by their own interests. The Agrico Articles provide that no person shall be disqualified from the office of director or prevented by such office from contracting with the company, either as vendor, purchaser or otherwise, and nor shall any such contract or any contract or transaction entered into by or on behalf of the company in which any director is in any way interested be or be liable to be avoided. The Agrico Articles further provide that any director contracting with the company or being interested in a transaction with the company will not be liable to account to the company for any profit realized by or arising in connection with any such contract or transaction by reason of such director holding office or of the fiduciary relationship thereby established. The Agrico Articles specify that a director is able to attend, count in the quorum and vote on any resolutions in respect of a contract or transaction in which he is interested provided that the nature of the director’s interest is be disclosed by him at or prior to its consideration and any vote thereon. | The directors may exercise the voting powers conferred by the shares of any other company owned by Pubco, including, those voting powers in favour of any resolution: (a) appointing any director as a director or officer of such other company; or (b) providing for the payment of remuneration or pensions to any director or officer of such other company. A Pubco director may hold any other office or place of profit under Pubco (other than auditor) in conjunction with his or her office of director for such period and on such terms as to remuneration and otherwise as the Pubco directors may determine. A Pubco director may act (by himself/herself or through a firm), in a professional capacity for Pubco; and in such a case, will be entitled to remuneration for such professional services as if he or she were not a Pubco director. A Pubco director may not act as an auditor to Pubco. No Pubco director or nominee for such office shall be disqualified by reason of his/her office from contracting with Pubco. No Pubco director shall be liable to account to Pubco for any profit realized by any contract in which he/she is interested nor shall such contract be liable to be avoided, by reason of such Pubco director holding such office or of the fiduciary duties established by such office.
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Enforceability of Civil Liabilities |
Luxembourg - Kalera | Cayman Islands | Ireland - Pubco |
A civil or commercial judgment rendered by a U.S. court would not be automatically enforceable in Luxembourg. This means that judgments for the payment of money rendered in the U.S. are not entitled to full credit and conclusive effect in Luxembourg, but are prima facie evidence only of the merits of the plaintiff’s claim. There is no treaty between Luxembourg and the U.S. providing for reciprocal recognition and enforcement of judgments rendered in civil and commercial matters. The judgment creditor who seeks to enforce such a judgment needs to initiate legal proceedings in Luxembourg to have the judgment declared enforceable. Enforcement proceedings in this particular case need to be instituted by way of writ of summons (assignation / procédure contradictoire – inter parte proceedings) submitted to the District Court, Civil Chamber (Tribunal d’arrondissement siégeant en matière civile). For the filing of such a request, the assistance of a Luxembourg attorney is compulsory. It is necessary to submit an authenticated, translated copy of the U.S. judgment in combination with a declaration from which it appears that the foreign judgment is enforceable in the country of origin (i.e. U.S.) This declaration has to be made by the U.S. court. Pursuant to articles 678 et al. of the Luxembourg New Code of Civil Procedure and to Luxembourg case law, the granting of an exequatur (judicial declaration of enforcement) by the Luxembourg District Court is subject to the following requirements: | The courts of the Cayman Islands are unlikely (i) to recognize or enforce against us judgments of courts of the United States predicated upon the civil liability provisions of the federal securities laws of the United States or any state; and (ii) in original actions brought in the Cayman Islands, to impose liabilities against us predicated upon the civil liability provisions of the federal securities laws of the United States or any state, so far as the liabilities imposed by those provisions are penal in nature. In those circumstances, although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met. For a foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, and or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy). A Cayman Islands Court may stay | A judgment for the payment of money rendered by a court in the United States based on civil liability would not be automatically enforceable in Ireland. There is no treaty between Ireland and the United States providing for the reciprocal enforcement of foreign judgments. The following requirements must be met before the U.S. judgment will be deemed to be enforceable in Ireland: •the U.S. judgment must be for a definite sum; •the U.S. judgment is not directly or indirectly for the payment of taxes or other charges of a like nature or a fine or other penalty, for example, punitive or exemplary damage; •the U.S. judgment must be final and conclusive; •the Irish proceedings were commenced within the relevant limitation period; •the U.S. judgment must be provided by a court of competent jurisdiction, as determined by Irish law; and •the U.S. judgment remains valid and enforceable in the U.S. court in which it was obtained. An Irish court will also exercise its right to refuse judgment if the U.S. judgment was obtained by fraud, violated Irish public policy, is in breach of natural justice or irreconcilable with an earlier foreign judgment. In certain limited circumstances, a shareholder may be entitled to bring a derivative action on behalf of Pubco if a wrong committed against Pubco would otherwise go unredressed. The principal case law in Ireland indicates that to bring a derivative action a person must first establish a prima facie case (1) that a |
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•the foreign court order must be enforceable in the country of origin; •the court of origin must have had jurisdiction both according to its own domestic laws and to the Luxembourg conflict of jurisdiction rules; in making this determination, the Luxembourg judge has to consider various elements such as the nationality of the parties, and the terms of the contract especially a jurisdiction clause; •regularity of the procedural rules in light of the laws of the country of origin; •the foreign procedure and decision must not have violated the rights of defense and due process norms; •the foreign court must have applied the law which is designated by the Luxembourg conflict of laws rules, or, at least, the order must not contravene the principles underlying these rules; | enforcement proceedings if concurrent proceedings are being brought elsewhere. | company is entitled to the relief claimed and (2) that the action falls within one of the five exceptions derived from case law, as follows: •where an ultra vires or illegal act is perpetrated; •where more than a bare majority is required to ratify the “wrong” complained of; •where the shareholders’ personal rights are infringed; •where a fraud has been perpetrated upon a minority by those in control; and •where the justice of the case required a minority to be permitted to institute proceedings. Irish law also permits shareholders of a company to bring proceedings against that company where its affairs are being conducted, or the powers of the directors are being exercised, in a manner oppressive to the shareholders or in disregard of their interests. The court can grant any relief it sees fit and the usual remedy is the purchase or transfer of |
•the considerations of the foreign order as well as the judgment as such must not contravene Luxembourg international public order; •the foreign order must not have been rendered subsequent to an evasion of Luxembourg law (fraude à la loi). During the exequatur proceedings, the Luxembourg courts’ review is limited to these specific criteria. In particular, the Luxembourg courts no longer review the merits of the foreign court judgment during exequatur proceedings. At the end of the proceedings, and if the above-mentioned criteria are satisfied, the foreign judgment is conferred the same status as a Luxembourg final and conclusive judgment rendered by a Luxembourg court.
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SUMMARY OF RISK FACTORS
The consummation of the Business Combination and the business and financial condition of Pubco subsequent to the closing are subject to numerous risks and uncertainties, including those highlighted in the section titled “Risk Factors.” The occurrence of one or more of the events or circumstances described below, alone or in combination with other events or circumstances, may adversely affect Agrico’s or Kalera’s ability to effect the Business Combination, and may have an adverse effect on the business, cash flows, financial condition and results of operations of Agrico and Kalera prior to the Business Combination and that of Pubco subsequent to the Business Combination. Such risks include, but are not limited to:
•substantial doubt regarding Kalera’s ability to continue as a going concern or maintain adequate liquidity to fund its operations;
•potential dilutive impact, restrictions or other terms in Kalera’s financing arrangements;
•limited ability to assess the management of Kalera’s business;
•risks inherent in listing Kalera in the U.S. through the Business Combination, rather than an underwritten public offering, such as the absence of due diligence conducted by underwriters that would be subject to potential liability for material misstatements or omissions in a registration statement;
•the parties may not be able to complete the Business Combination within the prescribed time frame;
•Pubco may be required to take write-downs or write-offs, restructuring and impairment or other charges;
•potential conflict of interest when determining whether the terms of the Business Combination or waivers of conditions are appropriate and in Agrico’s or Kalera’s shareholders’ best interest;
•the recent development of the coronavirus (COVID-19) pandemic and its multiple variants;
•redemption rights with respect to a large number of Agrico’s shares;
•the grant and future exercise of registration rights;
•sales of a substantial number of Pubco securities following the Business Combination could adversely affect the market price of its securities;
•the issuance of the CVR Shares could materially dilute Pubco Shareholders;
•Nasdaq may delist Pubco’s securities on its exchange;
•Pubco may be a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to U.S. investors;
•Pubco may be considered a U.S. corporation for U.S. federal income tax purposes, which could result in adverse U.S. federal tax consequences to Pubco and its investors;
•The First Merger may not qualify as a reorganization under Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), which could result in adverse U.S. federal tax consequences to U.S. investors who own Agrico securities;
•Kalera is in an early commercial phase, and is highly dependent on a successful roll-out and commercialization of its products;
•Kalera lacks useful financial information for the accurate estimation of its future capital expenditures and unit economics;
•Kalera is an early stage company with a history of losses and expects to continue to incur losses going forward;
•Kalera’s growth plans depend on deploying new production facilities, which will require significant expenditures;
•Kalera’s success, competitive position and future revenues will depend in part on its ability to further develop and protect its intellectual property and know-how;
•Kalera’s commercial success is dependent on its ability to enter into produce distribution agreements and other agreements with third parties;
•Kalera uses a limited number of distributors for the substantial majority of its sales;
•consolidation of customers or the loss of a significant customer could negatively impact Kalera’s sales and profitability;
•Kalera may face difficulties as it expands its operations into geographical locations in which it has no prior operating experience;
•Kalera may not be able to identify suitable acquisition candidates or consummate acquisitions on acceptable terms;
•the failure of suppliers to perform their obligations, or Kalera’s inability to replace or renew supply agreements;
•estimates of market opportunity and forecasts of market growth may prove to be inaccurate or not materialize;
•failure to retain and motivate Kalera’s senior management may adversely affect its operations and growth prospects;
•Kalera is reliant on key personnel and the ability to attract new, qualified personnel;
•Kalera may be unable to successfully integrate &ever in order to realize the anticipated benefits;
•Kalera’s management has limited experience in operating a U.S. public company
•each of Kalera and Agrico has identified a material weakness in its internal control over financial reporting and Pubco may be unable to establish and maintain effective internal control over financial reporting;
•the Business Combination’s benefits may not meet the expectations of investors or securities analysts;
•Kalera’s ability to utilize its federal net operating loss and tax credit carryforwards may be limited under applicable laws; and
•Kalera’s operations are subject to FDA, USDA, EPA and OSHA governmental regulation and state regulation and Kalera is exposed to risks related to regulatory processes and changes in regulatory environment.
RISK FACTORS
Shareholders should carefully consider the following risk factors, together with all of the other information included in this joint proxy statement/prospectus, before they decide whether to vote or instruct their vote to be cast to approve the proposals described in this joint proxy statement/prospectus. The value of your investment in Pubco following the consummation of the Business Combination will be subject to significant risks. If any of the events described below occur, the post-transaction business and financial results could be adversely affected in a material way. This could cause the trading price of Pubco’s securities to decline, perhaps significantly, and you therefore may lose all or part of your investment. Please see the section titled “Where You Can Find More Information” in this joint proxy statement/prospectus.
The risks set out below are not exhaustive and do not comprise all of the risks associated with an investment in Pubco. Additional risks and uncertainties not currently known to Agrico or Kalera or which Agrico or Kalera currently deem immaterial may also have a material adverse effect on Pubco’s business, financial condition, results of operations, prospects and/or its share price. Shareholders should consult a legal adviser, an independent financial adviser or a tax adviser for legal, financial or tax advice prior to deciding whether to vote or instruct their vote to be cast to approve the proposals described in this joint proxy statement/prospectus.
Risks related to Financing and Market Risk
There is substantial doubt about Kalera’s ability to continue as a going concern, and Kalera will need to raise additional capital in the future in order to execute its roll-out and commercialization strategy or for other purposes, which may not be available on favorable terms, or at all.
Kalera’s operating losses and accumulated deficits raise substantial doubt about its ability to continue as a going concern. Kalera will need to raise additional capital in order to execute and complete its roll-out and commercialization strategy, and to fund its operations.
There is a risk that adequate sources of funds may not be available at all, or not available at acceptable terms and conditions, when needed. Kalera may need to seek additional funds through public or private equity or debt financings or other sources, such as strategic collaborations. If Kalera raises additional funds by issuing additional equity securities, or through instruments convertible into equity securities, the existing shareholders may be significantly diluted. Further, equity or debt financings may result in issuance of securities with priority as to liquidation and dividend and other rights more favorable than shares, imposition of debt covenants and repayment obligations, or other restrictions that may adversely affect Kalera’s business. If funding is insufficient at any time in the future, Kalera may be unable to fund its current and ongoing roll-out and commercialization strategy and lose business opportunities and thereby risk to fail to respond to competitive pressures. Failure to obtain the necessary capital when needed could force Kalera to delay, limit, reduce or terminate its product development or commercialization efforts.
In addition, Kalera may seek additional capital due to favorable market conditions or strategic considerations even if Kalera believes that it has sufficient funds for current or future operating plans. There can be no assurance that financing will be available to Kalera on favorable terms, or at all. If Kalera for any reason does not obtain additional funding as needed in the future, this could have a material adverse effect on its revenues, profitability, liquidity, cash flow, financial position and/or prospects.
Fluctuations in currency exchange rates and changes to international trade agreements, tariffs, import and excise duties, taxes or other governmental rules and regulations may impact Kalera’s capital expenses and operational income.
Through the acquisition of &ever, Kalera has expanded its operations to beyond the United States to also include Germany, Kuwait and Singapore (large-scale facility under construction), and Kalera may also establish operations in additional countries. Hence, Kalera will earn revenues, pay expenses, own assets and incur liabilities in currencies other than the U.S. Dollar. Kalera’s consolidated financial statements are presented in U.S. Dollars, hence revenues, income and expenses, as well as assets and liabilities arising from any international operations must be converted into U.S. Dollars at exchange rates in effect during or at the end of each reporting period. Increases or
decreases in the value of the U.S. Dollar against other currencies and changes to international trade agreements, tariffs, import and excise duties, taxes or other governmental rules and regulations will accordingly affect Kalera’s operating revenues, operating income and the value of balance sheet items.
The Farm Credit Loan and Security Agreement imposes significant operating and financial restrictions, which may have a material adverse effect on Kalera’s business.
The loan and security agreement dated April 14, 2022, by and among Kalera, Inc., (a wholly owned subsidiary of Kalera AS), as borrower, the guarantors party thereto from time to time, and Farm Credit of Central Florida, ACA, as lender (the “Farm Credit Loan and Security Agreement”), imposes significant operating and financial restrictions, including, but not limited to:
•incurring additional debt;
•making investments;
•merging, dissolving, liquidating or consolidating, or selling, transferring, licensing, leasing or disposing of all or substantially all of our assets;
•making dividends and distributions;
•entering into transactions with affiliates;
•selling, transferring, licensing, leasing or disposing of certain assets;
•engaging in any material line of business substantially different from those lines of business conducted by us on the date of the Farm Credit Loan and Security Agreement;
•agreeing to certain restrictions on the ability of subsidiaries to make payments to our company, to transfer property to our company, to guarantee our indebtedness or to become a loan party under the Farm Credit Loan and Security Agreement;
•agreeing to certain restrictions on the ability to create liens; and
•creating liens or using assets as security in other transactions.
As a result of such agreement, Kalera is limited as to how it may conduct business and accordingly, such agreement may result in a material adverse effect on Kalera’s financial condition and results of operations. Kalera or its subsidiaries may enter into additional agreements which may include similar restrictions as those referenced above. The terms of any future indebtedness could include more restrictive covenants. There can be no assurance that Kalera will be able to maintain compliance with these covenants or the debt service obligations associated with its indebtedness, and, if it fails to do so, there can be no assurances that it will be able to obtain waivers from the applicable lenders or investors and/or amend any of these arrangements. Moreover, the obligations under the Farm Credit Loan and Security Agreement are secured and the lender thereunder will have a claim against the assets securing the related debt obligations of Kalera, Inc. that will have priority to claims of Kalera equity securityholders generally. Additionally, the Farm Credit Loan and Security Agreement is required to be guaranteed by certain subsidiaries of Kalera (excluding Kalera Real Estate Holdings, LLC), effectively providing for claims against such subsidiaries which are structurally senior to Kalera equity securityholders generally. Future financing arrangements will likely have similar guarantee, collateral and other restrictive terms that may have a material adverse impact on the value of Kalera’s securities.
For more information see “Kalera’s Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Farm Credit Loan and Security Agreement.”
The terms of the Secured Convertible Bridge Promissory Note may have a negative impact on Kalera’s business and the value of Kalera’s securities and may result in substantial dilution to Kalera’s equity securityholders.
On March 4, 2022, Kalera entered into the Secured Convertible Bridge Promissory Note. The agreement provides for certain terms which may have a negative impact on Kalera’s business. Obligations under such agreement mature within one year of the applicable drawdown date and carry a 10% pre-payment premium, if the pre-payment is effected prior to the consummation of the Business Combination.
The obligations under the Secured Convertible Bridge Promissory Note are secured and the creditors thereunder will have a claim against the assets securing the related debt obligations that will have priority to claims of Kalera equity securityholders generally. Additionally, the Secured Convertible Bridge Promissory Note is guaranteed by certain subsidiaries of Kalera, effectively providing for claims against such subsidiaries which are structurally senior to Kalera equity securityholders generally.
The Secured Convertible Bridge Promissory Note is convertible into Kalera ordinary shares, subject to certain terms and conditions, which may result in dilution to Kalera equity securityholders.
For more information, please see “Certain Relationships and Related Person Transactions—Kalera Related Person Transactions—Secured Convertible Bridge Promissory Note” for more information.
Risks Relating to the Business Combination
Risks Relating to Agrico’s Due Diligence and Evaluation of Kalera
Agrico has a limited ability to assess the management of Kalera’s business and, as a result, cannot assure you that Kalera’s management has all the skills, experience, qualifications or abilities to manage a public company whose shares are listed in the United States.
Agrico’s ability to assess Kalera’s business’ management may be limited due to a lack of time, resources or information. Agrico’s assessment of the capabilities of Kalera’s management team with respect to managing a public company whose shares are listed in the United States, therefore, may prove to be incomplete or incorrect, and Kalera management may lack the skills, qualifications or abilities that Agrico believed Kalera management had, and the operations and profitability of Pubco or Kalera post-Business Combination could be negatively impacted. Accordingly, any Agrico Shareholders who choose to remain shareholders following the Business Combination could suffer a reduction in the value of their shares. Such shareholders are unlikely to have a remedy for such reduction in value unless they are able to claim successfully that the reduction was due to the breach by Agrico’s or Kalera’s officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the disclosure documents relating to the Business Combination contained an actionable material misstatement or material omission.
Neither Agrico nor Kalera obtained an opinion from an independent investment banking or accounting firm, and consequently, you have no assurance from an independent source that the price each of Agrico and Kalera is paying for the business is fair to Agrico and Kalera from a financial point of view.
Neither Agrico nor Kalera is required to obtain an opinion from an independent investment banking or accounting firm that the price each of Agrico and Kalera is paying for the Business Combination is fair to Agrico and Kalera from a financial point of view. Each of Agrico’s and Kalera’s board of directors did not obtain a third-party valuation or fairness opinion in connection with its determination to approve the Business Combination. Accordingly, investors will be relying solely on the judgment of Agrico’s and Kalera’s board of directors, as applicable, in valuing Pubco’s business, and assuming the risk that the board of directors may not have properly valued such business. Investors are advised that each of Agrico’s and Kalera’s ability to assess Pubco’s management may have been limited due to a lack of time, resources or information and even though each of Agrico and Kalera deems such assessment to be appropriate, there is a risk that it may have been incomplete.
Subsequent to the completion of the Business Combination, Pubco may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on its financial condition, results of operations and stock price post-Business Combination, which could cause you to lose some or all of your investment.
Even though Agrico has conducted due diligence on Kalera, Agrico cannot assure you that this due diligence will surface all material issues that may be present, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of Agrico’s, Pubco’s or Kalera’s control will not later arise. As a result of these factors, Pubco may be forced to later write-down or write-off assets, restructure its operations, or incur impairment or other charges that could result in reporting losses. Even if Agrico’s due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with its preliminary risk analysis. The fact that Pubco reports charges of this nature could contribute to negative market perceptions about its securities post-Business Combination. Accordingly, any shareholders who choose to remain shareholders following the Business Combination could suffer a reduction in the value of their shares. Such shareholders are unlikely to have a remedy for such reduction in value unless they are able to claim successfully that the reduction was due to the breach by Agrico’s officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that this joint proxy statement/prospectus contained an actionable material misstatement or material omission.
Risks Relating to Closing the Business Combination
Agrico’s Sponsor has agreed to vote its shares in favor of the Business Combination, regardless of how Agrico’s public shareholders vote.
In connection with the Business Combination, Agrico’s Sponsor has agreed with Agrico to vote its Founder Shares (as applicable) and all ordinary shares acquired by the Sponsor during or after the Agrico IPO in favor of the Business Combination. Currently, Agrico’s Sponsor owns approximately 20% of the outstanding Agrico Ordinary Shares. Accordingly, it is more likely that the necessary shareholder approval will be received than would be the case if Agrico’s Sponsor agreed to vote its shares in accordance with the majority of the votes cast by Agrico’s public shareholders.
Kalera’s officers and directors and certain other shareholders have agreed to vote their shares in favor of the Business Combination, regardless of how Kalera’s public shareholders vote.
In connection with the Business Combination, Kalera’s officers and directors and certain other shareholders have each agreed with Kalera to vote their ordinary shares in favor of the Business Combination. Currently, Kalera’s officers and directors and such other shareholders collectively own approximately 45% of the outstanding Kalera Shares. Accordingly, the likelihood that the necessary shareholder approval will be received is greater than it would have been without such agreements.
The parties may not be able to complete the Business Combination within the prescribed time frame, in which case Agrico would cease all operations except for the purpose of winding down and it would redeem its public shares and liquidate, in which case Agrico’s public shareholders may only receive $10.20 per share, or less than such amount in certain circumstances, and Agrico’s warrants will expire worthless.
Agrico’s Amended and Restated Memorandum and Articles of Association provide that it must complete the Business Combination by July 12, 2022 (unless extended by Agrico to up to April 12, 2023).
If Agrico has not completed the Business Combination within such time period, Agrico will: (i) cease all operations except for the purpose of winding down, (ii) as promptly as reasonably possible but not more than ten (10) business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to Agrico to pay its franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then issued and outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such
redemption, subject to the approval of Agrico’s remaining shareholders and board of directors, liquidate and dissolve, subject in each case to its obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. In such case, Agrico’s public shareholders may only receive $10.20 per share, and Agrico’s warrants will expire worthless. In certain circumstances, Agrico’s public shareholders may receive less than $10.20 per share on the redemption of their shares. See “Risks Relating to Third Party Claims— If third parties bring claims against Agrico, the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by shareholders may be less than $10.20 per share”.
If the Adjournment Proposal is not approved, and an insufficient number of votes have been obtained to authorize the consummation of the Business Combination, Agrico’s board of directors will not have the ability to adjourn the Agrico Special Meeting to a later date in order to solicit further votes, and, therefore, the Business Combination will not be approved.
Agrico’s board of directors may seek approval to adjourn the Agrico Special Meeting to a later date or dates if, at the meeting, based upon the tabulated votes, there are not sufficient votes to approve one or more proposals presented to shareholders for a vote. If the Adjournment Proposal is not approved, Agrico’s board will not have the ability to adjourn the meeting to a later date and, therefore, will not have more time to solicit votes to approve the consummation of the Business Combination. In such event, the Business Combination would not be completed.
The exercise of Agrico’s or Kalera’s directors’ and officers’ discretion, as applicable, in agreeing to changes or waivers in the terms of the Business Combination may result in a conflict of interest when determining whether such changes to the terms of the Business Combination or waivers of conditions are appropriate and in Agrico’s or Kalera’s shareholders’ best interest, as applicable.
In the period leading up to the Closing, events may occur that, pursuant to the Business Combination Agreement, would require Agrico and/or Kalera, as applicable, to agree to amend the Business Combination Agreement, to consent to certain actions taken by Kalera or Agrico or to waive rights that each of Kalera or Agrico is entitled to under the Business Combination Agreement. Depending on such circumstances, it would be at either Kalera’s discretion or Agrico’s discretion, as applicable, acting through their respective boards of directors, to grant its consent or waive those rights.
The existence of the financial and personal interests of the Agrico or Kalera directors and officers may result in a conflict of interest on the part of one or more of such persons between what he, she or they may believe is best for Agrico and what he, she or they may believe is best for himself, herself or themselves in determining whether or not to take the requested action.
As of the date of this joint proxy statement/prospectus, neither Kalera nor Agrico believes there will be any changes or waivers that Kalera’s or Agrico’s directors and officers, as applicable, would be likely to make after shareholder approval of the Business Combination Proposal has been obtained. While certain changes could be made without further shareholder approval, both Kalera and Agrico will circulate a new or amended joint proxy statement/prospectus and resolicit Kalera’s shareholders and Agrico’s shareholders if changes to the terms of the transaction that would have a material impact on such shareholders are required prior to the vote on the Business Combination Proposal.
The listing of Pubco’s securities will not be completed through an underwritten public offering, so Pubco investors will not have certain benefits associated with such offerings.
Pubco will become a publicly listed company upon the completion of the Business Combination. The Business Combination and the transactions described in this joint proxy statement/prospectus are not an underwritten initial public offering of Pubco’s securities and differ from an underwritten initial public offering in several significant ways, which include, but are not limited to, the following:
Like other business combinations and spin-offs, in connection with the Business Combination, you will not receive the benefits of the due diligence that would be performed by the underwriters in an underwritten public offering. Investors in an underwritten public offering may benefit from the role of the underwriters in such an offering. In an underwritten public offering, an issuer initially sells its securities to the public market via one or more
underwriters, who distribute or resell such securities to the public. Underwriters have liability under the U.S. securities laws for material misstatements or omissions in a registration statement pursuant to which an issuer sells securities. Because the underwriters can establish a “due diligence” defense to such liability by, among other things, conducting a reasonable investigation, the underwriters and their counsel conduct a due diligence investigation of the issuer. Due diligence in part entails engaging legal, financial and/or other experts to perform an investigation as to the accuracy of an issuer’s disclosure regarding, among other things, its business and financial results.
In addition, because there are no underwriters engaged in connection with the Business Combination, prior to the opening of trading on the trading day immediately following the Closing, there will be no book building process and no price at which underwriters initially sold shares to the public to help inform efficient and sufficient price discovery with respect to the initial post-Closing trades on Nasdaq. Therefore, buy and sell orders submitted prior to and at the opening of initial post-Closing trading of Pubco securities on Nasdaq will not have the benefit of being informed by a published price range or a price at which the underwriters initially sold shares to the public, as would be the case in an underwritten initial public offering. There will be no underwriters assuming risk in connection with an initial resale of shares of Pubco securities or helping to stabilize, maintain or affect the public price of the Pubco securities following the Closing. These differences from an underwritten public offering of Pubco’s securities could result in a more volatile price for Pubco securities.
The Sponsor and Agrico’s directors and executive officers who hold founder shares and/or private warrants may receive a positive return on the founder shares and/or private warrants even if Agrico’s public shareholders experience a negative return on their investment after consummation of the Business Combination.
If Agrico is able to complete a business combination within the required time period, the Sponsor and Agrico’s directors and executive officers who hold founder shares and/or private warrants may receive a positive return on their investments which were acquired prior to the Agrico IPO, or concurrently with completion of the Agrico IPO, even if Agrico’s public shareholders experience a negative return on their investment in Agrico Ordinary Shares after consummation of the Business Combination.
The Sponsor and Agrico’s and Kalera’s executive officers and directors have potential conflicts of interest in recommending that shareholders vote in favor of approval of the Business Combination Proposal and other matters described herein.
When you consider the recommendation of Agrico and Kalera’s board of directors, as applicable, in favor of approval of the Business Combination Proposal and other matters to be considered at the Agrico Special Meeting or Kalera Shareholder Meeting, as applicable, you should keep in mind that Agrico’s and Kalera’s directors and executive officers, have interests in such proposal that are different from, or in addition to, your interests as a holder of Agrico shares or Kalera shares, as applicable. These interests include, among other things:
•The Sponsor and Agrico’s directors and executive officers agreed, as part of the Agrico IPO and without any separate consideration provided by Agrico for such agreement, not to redeem any Agrico Ordinary Shares held by them in connection with a shareholder vote to approve a proposed initial business combination.
•If the Business Combination with Kalera or another business combination is not consummated by July 12, 2022 (or by April 12, 2023 if extended by Agrico), Agrico will cease all operations except for the purpose of winding down, redeeming 100% of the outstanding Agrico Shares for cash and, subject to the approval of its remaining shareholders and its board of directors, dissolving and liquidating. The Agrico Initial Shareholders currently hold 3,593,750 Founder Shares. In the event of dissolution or liquidation, all 3,593,750 Founder Shares which were acquired for an aggregate purchase price of $25,000 prior to the Agrico IPO, would be worthless because the Agrico Initial Shareholders are not entitled to participate in any redemption or liquidation of the Trust Account with respect to Founder Shares. The aggregate market value of Agrico Ordinary Shares held by the Agrico Initial Shareholders was $36,440,625 based upon the closing price of $10.14 per share on Nasdaq on the Record Date.
•The Agrico Initial Shareholders purchased an aggregate of 6,171,875 private warrants from Agrico for an aggregate purchase price of $6,171,875 (or $1.00 per warrant) and Maxim purchased an aggregate of
1,078,125 private warrants from Agrico for an aggregate purchase price of $1,078,125 (or $1.00 per warrant). These purchases took place on a private placement basis simultaneously with the consummation of the Agrico IPO. Such warrants had an aggregate market value of $1,305,000 based upon the closing price of $0.18 per warrant on Nasdaq on the Record Date. These Agrico Warrants will become worthless if Agrico does not consummate a business combination by July 12, 2022 (or by April 12, 2023 if extended by the Agrico) (as will the Agrico Warrants held by Agrico Shareholders).
•The total market value of the current equity ownership of Agrico’s officers and directors in Agrico Ordinary Shares and warrants, based on the closing price of $10.14 per ordinary share and $0.18 per warrant on Nasdaq as of the Record Date is approximately $37,551,562.50.
•The Business Combination Agreement provides that one current director of Agrico will be a director of Pubco after the closing of the Business Combination. As such, in the future such individual will receive cash fees, share options or share awards that the Pubco board of directors determines to pay to its non-executive directors.
•If Agrico is unable to complete a business combination within the required time period, Agrico’s Sponsor will be liable to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by Agrico for services rendered or contracted for or products sold to Agrico, but only if such a vendor or target business has not executed a waiver of access to such funds.
•The Agrico Initial Shareholders, including Agrico’s officers and directors, and their affiliates, are entitled to reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on behalf of Agrico, such as identifying and investigating possible business targets and business combinations. As of March 31, 2022, an aggregate amount of approximately $208,046.14 had been incurred or accrued in respect of such expense reimbursement obligation. Agrico expects additional amounts not to exceed $75,000 to be incurred or accrued through the consummation of the Business Combination. However, if Agrico fails to consummate a business combination within the required period, they will not have any claim against the Trust Account for reimbursement. Accordingly, Agrico may not be able to reimburse these expenses if the Business Combination with Kalera or another business combination is not completed by July 12, 2022 (or by April 12, 2023 if extended by the Agrico Shareholders). As of the date of this joint proxy statement/prospectus, there are no unpaid reimbursable expenses.
•The Sponsor may make working capital loans to Agrico, up to $1,500,000 of which loans may be converted into warrants, at the price of $1.00 per warrant at the option of the Sponsor. Agrico may use a portion of working capital held outside the Trust Account to repay such loaned amounts to the Sponsor or its affiliates in relation to the Business Combination. As of March 31, 2021 and December 31, 2020, Agrico had no borrowings under the working capital loans.
•In connection with his role as interim Chief Executive Officer, Curtis McWilliams will receive a transition payment of $300,000 upon the appointment of a permanent chief executive officer and successful completion of such individual’s transition into such role, and that bonus will be payable upon the later of (i) the start date of the permanent chief executive officer, or (ii) Kalera’s listing and trading on Nasdaq.
In light of the foregoing, the Sponsor and Agrico’s directors and executive officers will receive material benefits from the completion of the Business Combination and may be incentivized to complete the Business Combination with Kalera rather than liquidate even if (i) Kalera is a less favorable target company or (ii) the terms of the Business Combination are less favorable to shareholders. As a result, our Sponsor and directors and officers may have interests in the completion of the Business Combination that are materially different than, and may conflict with, the interests of other shareholders. Further, the Sponsor and Agrico’s directors and executive officers who hold founder shares or private warrants may receive a positive return on their investment(s), even if Agrico’s public shareholders experience a negative return on their investment after consummation of the Business Combination. These interests may influence Agrico’s directors in making their recommendation that you vote in favor of the approval of the Business Combination and may also influence the actions of Agrico and Kalera’s directors or officers. You should
also read the sections entitled “Summary of the Joint Proxy Statement/Prospectus—Agrico Special Meeting—Interests of Agrico Directors and Officers in the Business Combination” and “Summary of the Joint Proxy Statement/Prospectus—Kalera Shareholder Meeting—Interests of Kalera Directors and Officers in the Business Combination.”
Agrico’s and Kalera’s ability to consummate the proposed transactions, and the operations of Pubco following the proposed transactions, may be materially adversely affected by the recent coronavirus (COVID-19) pandemic.
In December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China, which has and is continuing to spread throughout the world, including the United States. On January 30, 2020, the World Health Organization declared the outbreak of the coronavirus disease (COVID-19) a “Public Health Emergency of International Concern.” On January 31, 2020, the U.S. Department of Health and Human Services declared a public health emergency, and on March 11, 2020, the World Health Organization characterized the COVID-19 outbreak as a “pandemic.”
The COVID-19 pandemic has resulted, and other infectious diseases could result, in a widespread health crisis that has and could continue to adversely affect the economies and financial markets worldwide, which may delay or prevent the consummation of the proposed transactions, and the business of Pubco following the proposed transactions could be materially and adversely affected. The extent of such impact will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others.
The disruptions posed by COVID-19 and its variants, have continued, and other matters of global concern may continue, for an extensive period of time. The SARS-CoV-2 Delta variant, was first identified in India in December 2020. Within a matter of months, this particular variant spread to over 98 countries around the world, becoming the dominant variant in more than a dozen of those countries, including India, the U.K., Israel and the United States. On November 24, 2021, South Africa reported the identification of a new SARS-CoV-2 variant, Omicron, which was first detected in specimens collected on November 11, 2021 in Botswana and on November 14, 2021 in South Africa. On December 1, 2021, the first case attributed to Omicron was reported in the United States in a person who returned from travel to South Africa. The Omicron variant has also been detected in travel-related cases in several European countries, as well as Australia, Brazil, Canada, Hong Kong, Israel, Japan, Nigeria, Norway, Sweden, and the United Kingdom. A few countries, including the United States, have reported cases in individuals without travel history to southern Africa.
Agrico’s and Kalera’s ability to consummate the proposed transactions and Pubco’s financial condition and results of operations following the proposed transactions may be materially adversely affected by COVID-19 and its variants. Each of Agrico, Kalera and Pubco may also incur additional costs due to delays caused by COVID-19 and its variants or similar viruses, which could adversely affect Pubco’s financial condition and results of operations.
Risks Relating to Redemptions
The ability of Agrico’s public shareholders to redeem their shares for cash may make Agrico’s financial condition unattractive to Kalera, which may affect Kalera’s ability to close the Business Combination.
Pursuant to the Business Combination Agreement, Agrico would need to have net tangible assets of at least $5,000,001 in the Trust Account after giving effect to the Redemption as a closing condition to the Business Combination. Further, Kalera is not obligated to consummate the transaction if Pubco and Agrico do not have a minimum of $100 million in (i) cash proceeds received or available at or prior to the Closing in respect of debt or equity financing documents entered into by the Company during the Interim Period (excluding any funding relating to facilities that may be entered into with specified counterparties and provided that there shall not be double counting of cash proceeds that are received or available) and (ii) in the Trust Account as of the Closing after giving effect to the Redemptions and assuming that all expenses of Agrico, Pubco, Kalera and their respective Affiliates incurred prior to the applicable Closing have been paid (including, in each case, the Expenses). Agrico will need to reserve a portion of the cash in the Trust Account to meet such requirements, or, if such amounts are not available after taking into account all Redemptions, arrange for third party debt or equity financing if significant Redemptions were to be exercised. Raising additional third party financing may involve dilutive equity issuances or the incurrence
of indebtedness at higher than desirable levels. If too many Agrico Shareholders exercise their redemption rights, Agrico and Pubco would not be able to meet such closing condition and, as a result, would not be able to proceed with the Business Combination unless this condition is waived. If such closing condition is waived by Kalera, Pubco and Kalera would not have as much working capital as anticipated following the Business Combination which could have a material adverse effect on Kalera’s financial condition and results of operations.
If Agrico public shareholders fail to properly demand redemption rights, they will not be entitled to exchange their shares for cash.
An Agrico Shareholder may demand that its shares are redeemed if the Business Combination is consummated at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account as of two (2) business days prior to the consummation of the Business Combination.
Holders of Agrico Shares will be entitled to receive cash for their shares only if they affirmatively demand that their shares are redeemed no later than 5:00 p.m. Eastern Time on June 23, 2022 (two (2) business days prior to the vote at the Agrico Special Meeting) by delivering their shares to the Transfer Agent physically or electronically using The Depository Trust Company’s DWAC (Deposit Withdrawal at Custodian) System. See the section titled “Extraordinary General Meeting of Agrico Shareholders—Redemption Rights” for a detailed description of the procedures to be followed if you wish to redeem your shares for cash.
The shares of Agrico public shareholders who have properly demanded redemption rights will only be redeemed if the Business Combination is consummated.
If a holder of Agrico Shares properly makes a demand for Redemption as described in the section titled “Extraordinary General Meeting of Agrico Shareholders—Redemption Rights”, then, if the Business Combination is consummated, such holder’s shares will be redeemed for an amount equal to a pro rata portion of the aggregate amount then on deposit in the Trust Account calculated in accordance with the Agrico Articles. As of the Record Date, this would amount to approximately $10.20 per share. If a holder of Agrico Shares exercises its redemption rights, then it will be exchanging its shares for cash and will no longer own the shares.
If the Business Combination is not approved or completed for any reason, then Agrico Shareholders who elected to exercise their redemption rights will not be entitled to redeem their shares for an amount equal to the applicable pro rata share of the Trust Account. In such case, provided the First Merger has not been completed, the Transfer Agent will promptly return any Agrico Shares delivered by Agrico Shareholders and such holders may only share in the assets of the Trust Account upon the liquidation of Agrico. This may result in holders receiving less than they would have received if the Business Combination was completed and they had exercised their redemption rights in connection therewith due to potential claims of creditors.
Risks Relating to Share Ownership
The grant and future exercise of registration rights may adversely affect the market price of ordinary shares of Pubco upon consummation of the Business Combination.
Pursuant to the Amended and Restated Registration Rights Agreement, described elsewhere in this joint proxy statement/prospectus, Agrico’s Sponsor, certain Kalera shareholders and certain other shareholders party thereto can demand that Pubco register their registrable securities under certain circumstances and will also have piggyback registration rights for these securities in connection with certain registrations of securities that Pubco undertakes. Following the consummation of the Business Combination, Pubco intends to file and maintain an effective registration statement under the Securities Act covering such securities.
The registration of these securities will permit the public resale of such securities. The registration and availability of such a significant number of securities for trading in the public market may have an adverse effect on the market price of Pubco Ordinary Shares post-Business Combination.
For more information, please see “Description of Pubco Securities—Amended and Restated Registration Rights Agreement” and “Agrico’s Management’s Discussion and Analysis of Financial Condition and Results of Operations—Contractual Obligations—Registration Rights.”
Sales of a substantial number of Pubco’s securities following the Business Combination could adversely affect the market price of its securities.
3,593,750 Founder Shares and 6,171,875 warrants that Agrico’s Initial Shareholders currently hold will be exchangeable for ordinary shares and warrants of Pubco and continue to be held by Agrico’s Initial Shareholders following the Business Combination. Such Pubco Ordinary Shares exchanged for the Founder Shares will be subject to a lock up restriction beginning on the First Closing Date and ending on the date that is the earliest of (A) one year after the completion of the Second Closing Date and (B) the date on which (1) the closing price of the Pubco Ordinary Shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share capitalizations, share consolidations, reorganizations, recapitalizations and the like) for any twenty (20) trading days within a thirty (30)-trading day period commencing at least one-hundred and fifty (150) days after the Second Closing or (2) the per share price implied in a change of control transaction is greater than or equal to $12.00 per share (as adjusted for share sub-divisions, share capitalizations, share consolidations, reorganizations, recapitalizations and the like). After the lock-up period expires, these securities will become eligible for future sale in the public market. Sales of a significant number of these securities in the public market, or the perception that such sales could occur, could reduce the market price of securities.
The issuance of the CVR Shares could materially dilute Pubco Shareholders
As additional consideration for the Second Merger and the Company Capital Reduction, upon certain events described in the Business Combination Agreement, certain Kalera security holders shall be entitled to receive the CVRs. Each CVR represents a contingent right to receive additional Pubco Ordinary Shares, issuable upon the achievement of certain milestones, including: (i) Pubco Ordinary Shares trading at or over a market price of $12.50; and (ii) Pubco Ordinary Shares trading at or over a market price of $15.00, in each case, for 20 trading days within a 30 trading-day period, based on volume-weighted average trading prices. The amount of shares issuable to each CVR holder for the achievement of each milestone is, in each case, a pro rata portion of an amount of Pubco Ordinary Shares equivalent to approximately 5% of the amount of Kalera Shares outstanding as of immediately following the Kalera Capital Reduction on a fully diluted basis. If the CVR Shares are issued, the ownership of Pubco Shareholders will be diluted. The foregoing description of the CVRs is not complete and is qualified in its entirety by reference to the Business Combination Agreement and the form of CVR Agreement annexed thereto.
The price of Pubco’s securities in the public market may fluctuate significantly and could result in investors’ losing all or a part of their investment.
The trading volume and price of Pubco’s securities may fluctuate significantly in response to a number of factors beyond Pubco’s control, including but not limited to:
•actual or anticipated fluctuations in Pubco’s revenue, financial condition and operating results, including fluctuations in Pubco’s quarterly and annual results;
•announcements of innovations by Pubco or Pubco’s competitors;
•overall conditions in Pubco’s industry and the markets in which Pubco operates;
•market conditions or trends in the food sales industry or in the economy as a whole;
•addition or loss of significant customers or other developments with respect to significant customers;
•adverse developments concerning Pubco’s suppliers;
•changes in laws or regulations applicable to Pubco’s products and changes in the regulatory environment in which Pubco operates;
•Pubco’s ability to effectively manage its growth;
•announcements by Pubco or Pubco’s competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments;
•changes in management and additions or departures of key personnel;
•negative publicity or announcements, including those relating to any of Pubco’s substantial shareholders or key personnel, whether or not justifiable, including involvement in insolvency proceedings and failed attempts in takeovers or joint ventures;
•competition from existing products or new products that may emerge;
•fluctuations in the valuation of companies perceived by investors to be comparable to Pubco;
•litigation or regulatory matters;
•changes in tax laws;
•announcement or expectation of additional financing efforts;
•Pubco’s cash position;
•share price and volume fluctuations attributable to inconsistent trading volume levels of the shares;
•the expiration of contractual lock-up agreements with directors and certain members of management;
•changes in accounting practices;
•effectiveness of Pubco’s internal controls; and
•other events or factors, many of which are beyond Pubco’s control and other unforeseen events and liabilities.
Furthermore, stock markets experience price fluctuations that affect market prices of equity securities of many companies, including early stage growth companies. These fluctuations may or may not be related to the direct operating performance of those companies. These broad market and industry fluctuations, as well as general economic, political and market conditions such as recessions, interest rate changes, tariffs or international currency fluctuations, may negatively impact the market price of Pubco’s securities.
No assurance can be given that an active and liquid trading market for Pubco’s securities will develop or be maintained. The market value of Pubco’s securities could be substantially affected by the extent to which a strong secondary market develops for Pubco’s securities.
Agrico Shareholders will not have any rights or interests in funds from the Trust Account, except under certain limited circumstances. To liquidate your investment, therefore, you may be compelled to sell your public shares or public warrants, potentially at a loss.
Agrico Shareholders will be entitled to receive funds from the Trust Account only upon the earliest to occur of: (i) Agrico’s completion of the Business Combination, and then only in connection with those shares that such shareholder properly elected to redeem, subject to the limitations described herein, (ii) the redemption of any public shares properly submitted in connection with a shareholder vote to amend Agrico’s Amended and Restated Memorandum and Articles of Association to (A) modify the substance or timing of Agrico’s obligation to redeem 100% of its Agrico Shares if Agrico does not complete its initial business combination by July 12, 2022 (or by April 12, 2023 if extended by Agrico) or (B) with respect to any other provision relating to shareholders’ rights or pre-initial business combination activity and (iii) the redemption of Agrico’s public shares if Agrico is unable to complete its business combination by July 12, 2022 (or by April 12, 2023 if extended by Agrico), subject to applicable law and as further described herein. In addition, if Agrico plans to redeem its public shares if Agrico is
unable to complete a business combination by July 12, 2022 (or by April 12, 2023 if extended by Agrico), for any reason, compliance with Cayman Islands law may require that Agrico submits a plan of dissolution to Agrico’s then-existing shareholders for approval prior to the distribution of the proceeds held in the Trust Account. In that case, Agrico Shareholders may be forced to wait beyond July 12, 2022 (or by April 12, 2023 if extended by Agrico), before they receive funds from the Trust Account. In no other circumstances will an Agrico Shareholder have any right or interest of any kind in the Trust Account. Accordingly, to liquidate your investment, you may be forced to sell your public shares or public warrants, potentially at a loss.
Nasdaq may delist Pubco’s securities on its exchange once the Business Combination is consummated, which could limit investors’ ability to make transactions in Pubco’s securities and subject Pubco to additional trading restrictions.
Pubco intends to apply to have its securities listed on Nasdaq upon consummation of the Business Combination, and such listing is a closing condition to the Business Combination. Pubco will be required to meet the initial listing requirements to be listed. Even if Pubco’s securities are so listed, Pubco may be unable to maintain the listing of its securities in the future.
If Pubco fails to meet the initial listing requirements and Nasdaq does not list its securities on its exchange, or if Pubco is unable to maintain the listing of its securities on Nasdaq, Pubco could face significant material adverse consequences, including:
•a limited availability of market quotations for its securities;
•a less liquid market for its securities;
•a limited amount of news and analyst coverage for the company; and
•a decreased ability to issue additional securities or obtain additional financing in the future.
Additionally, if Pubco is unable to list its securities on Nasdaq, Agrico would not be able to proceed with the Business Combination unless this condition is waived.
If the listing is completed, Pubco will become subject to applicable regulations and requirements for companies listed on Nasdaq. The consequences for shareholders of such Nasdaq listing will depend on circumstances relating to each shareholder and will differ from those currently applicable to Kalera’s shareholders. Pubco’s shareholders and any investor investing in the shares are therefore encouraged to investigate the consequences of a Nasdaq listing may have for them, including owning and trading shares of a Nasdaq listed company.
Actions taken to increase the likelihood of approval of the Business Combination Proposal and other proposals could have a depressive effect on the Agrico Ordinary Shares.
At any time prior to the Agrico Special Meeting, during a period when they are not then aware of any material nonpublic information regarding Agrico or its securities, Agrico’s Initial Shareholders, officers, directors, Kalera or Kalera’s shareholders and/or their respective affiliates may purchase shares from institutional and other investors who vote, or indicate an intention to vote, against the Business Combination Proposal, or execute agreements to purchase such shares from such investors in the future, or they may enter into transactions with such investors and others to provide them with incentives to acquire Agrico Ordinary Shares or vote their shares in favor of the Business Combination Proposal. The purpose of such share purchases and other transactions would be to increase the likelihood of satisfaction of the requirements to consummate the Business Combination where it appears that such requirements would otherwise not be met. Entering into such arrangements may have a depressive effect on the Agrico Ordinary Shares. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase shares at a price lower than market and may therefore be more likely to sell the shares he, she or it owns, either prior to or immediately after the Agrico Special Meeting.
Pubco may be a passive foreign investment company, or “PFIC,” which could result in adverse U.S. federal income tax consequences to U.S. investors.
If Pubco is a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. Holder (as defined in the section of this registration statement captioned “Certain Material U.S. Tax Consequences”) of Pubco securities, the U.S. Holder may be subject to adverse U.S. federal income tax consequences and may be subject to additional reporting requirements. Although Agrico has generally met the tests to be treated as a PFIC in previous taxable years, it is uncertain whether, following the Business Combination, Pubco may still meet the tests to be a PFIC. Based on the current and anticipated composition of the income, assets and operations of Kalera and its subsidiaries, it is not expected that Pubco will be a PFIC for U.S. federal income tax purposes for the taxable year that includes the Business Combination or in foreseeable future taxable years. However, this is a factual determination that depends on, among other things, the composition of Pubco’s income and assets, and the market value of its shares and assets, including the composition of income and assets and the market value of shares and assets of its subsidiaries, from time to time. Pubco’s actual PFIC status for its current taxable year or any future taxable year will not be determinable until after the end of such taxable year. Accordingly, there can be no assurances with respect to Pubco’s status as a PFIC for its current taxable year or any subsequent taxable year. U.S. Holders are urged to consult their own tax advisors regarding the possible application of the PFIC rules to holders of Pubco securities. For a more detailed explanation of the tax consequences of PFIC classification to U.S. Holders, see “Certain Material U.S. Tax Consequences—U.S. Federal Income Tax Considerations of Owning Pubco Ordinary Shares and Warrants—Passive Foreign Investment Company Considerations.”
The IRS may not agree that Pubco should be treated as a non-U.S. corporation for U.S. federal income tax purposes.
Under current U.S. federal income tax law, a corporation generally will be considered to be a U.S. corporation for U.S. federal income tax purposes if it is created or organized in the United States or under the law of the United States or of any State. Accordingly, under generally applicable U.S. federal income tax rules, Pubco, which is incorporated and treated as a tax resident in Ireland, would generally be classified as a non-U.S. corporation for U.S. federal income tax purposes. Section 7874 of Code and the Treasury regulations promulgated thereunder, however, contain specific rules that may cause a non-U.S. corporation to be treated as a U.S. corporation for U.S. federal income tax purposes. If it were determined that Pubco is treated as a U.S. corporation for U.S. federal income tax purposes under Section 7874 of the Code and the Treasury regulations promulgated thereunder, Pubco would be liable for U.S. federal income tax on its income in the same manner as any other U.S. corporation and certain distributions made by Pubco to Non-U.S. Holders (as defined in “Certain Material U.S. Tax Consequences”) of Pubco may be subject to U.S. withholding tax.
As more fully described in the section titled “Certain Material U.S. Tax Consequences” based on the terms of the Business Combination and certain factual assumptions, Pubco does not currently expect to be treated as a U.S. corporation for U.S. federal income tax purposes under Section 7874 of the Code after the Business Combination. However, the application of Section 7874 of the Code is complex, subject to detailed regulations (the application of which is uncertain in various respects and would be impacted by changes in such U.S. Treasury regulations with possible retroactive effect) and subject to certain factual uncertainties, some of which must be finally determined after the completion of the Business Combination. Moreover, current legislative proposals to amend Section 7874 could affect this analysis and these may only be enacted, if at all, after the Business Combination has been agreed. Accordingly, there can be no assurance that the IRS will not challenge the status of Pubco as a non-U.S. corporation for U.S. federal income tax purposes under Section 7874 of the Code or that such challenge would not be sustained by a court.
If the IRS were to successfully challenge under Section 7874 of the Code Pubco’s status as a non U.S. corporation for U.S. federal income tax purposes, Pubco and certain Pubco shareholders may be subject to significant adverse tax consequences, including a higher effective corporate income tax rate on Pubco and the application of U.S. withholding taxes on dividends paid on Pubco shares to non-U.S. shareholders, subject to reduction under an applicable income tax treaty.
See “Certain Material U.S. Tax Consequences” for a more detailed discussion of the application of Section 7874 of the Code to Pubco. Investors should consult their own tax advisors regarding the application of Section 7874 of the Code to the Business Combination and the tax consequences to Pubco and its shareholders if the classification of Pubco as a non-U.S. corporation is not respected.
The IRS may not agree that the First Merger qualifies as a reorganization under Section 368(a) of the Code potentially causing U.S. investors who own Agrico securities to recognize gain or loss for U.S. federal income tax purposes.
It is intended that the First Merger qualify as a “reorganization” within the meaning of Section 368(a) of the Code and the parties intend to report the First Merger in a manner consistent with such treatment to the extent permitted by law. However, it is possible that the First Merger will not qualify as a “reorganization” within the meaning of Section 368(a) of the Code. See “Certain Material U.S. Tax Consequences” Moreover, the closing of the First Merger is not conditioned upon the receipt of an opinion of counsel that the First Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and neither Agrico nor Kalera intends to request a ruling from the IRS regarding the U.S. federal income tax treatment of the First Merger. Accordingly, no assurance can be given that the IRS will not challenge the treatment of the First Merger as a “reorganization” within the meaning of Section 368(a) of the Code or that a court will not sustain a challenge by the IRS. If the IRS were successfully to challenge the treatment of the First Merger as a reorganization, U.S. investors who own Agrico securities could be required to recognize gain or loss for U.S. federal income tax purposes.
Concentration of ownership among Pubco’s existing executive officers, directors and their affiliates may prevent new investors from influencing significant corporate decisions.
Upon completion of the Business Combination, Pubco’s directors and executive officers and their affiliates as a group will beneficially own approximately 24% of Pubco outstanding ordinary shares. As a result, these shareholders will be able to exercise a significant level of influence over all matters requiring shareholder approval, including the election of directors, any amendment of the amended and restated articles of association and approval of significant corporate transactions. This influence could have the effect of delaying or preventing a change of control or changes in management and will make the approval of certain transactions difficult or impossible without the support of these shareholders.
Pubco will qualify as an “emerging growth company” and will benefit from reduced disclosure requirements. Pubco cannot be certain if such reduced disclosure requirements will make its ordinary shares less attractive to investors and make it more difficult to compare Pubco’s performance with other public companies.
Pubco will qualify as an “emerging growth company,” as defined in the JOBS Act, and intends to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. Pubco may take advantage of these exemptions for so long as it is an “emerging growth company,” which is until the earliest of (i) the last day of the fiscal year in which the market value of Pubco Ordinary Shares that are held by non-affiliates equals or exceeds $700 million as of June 30 of that fiscal year, (ii) the last day of the fiscal year in which it has total annual gross revenue of $1.07 billion or more during such fiscal year (as indexed for inflation), (iii) the date on which it has issued more than $1 billion in non-convertible debt in the prior three-year period or (iv) the last day of the fiscal year following the fifth anniversary of the date of the first sale of Agrico’s Units in the Agrico IPO. Pubco cannot predict if investors will find its ordinary shares less attractive because it will rely on these exemptions. If some investors find Pubco Ordinary Shares less attractive as a result, there may be a less active trading market for Pubco Ordinary Shares and its stock price may be more volatile.
As an “emerging growth company”, Pubco will elect to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the JOBS Act, that allows Pubco to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies
until those standards apply to private companies. As a result of this election, Pubco’s financial statements may not be comparable to companies that comply with public company effective dates.
Pubco does not expect to declare any dividends in the foreseeable future.
Pubco does not anticipate declaring any cash dividends to holders of its common equity in the foreseeable future. Consequently, investors may need to rely on sales of their shares after price appreciation, which may never occur, as the only way to realize any future economic gains on their investment.
Pubco may redeem the unexpired warrants prior to their exercise at a time that is disadvantageous to warrant holders, thereby making their warrants worthless, and exercise of a significant number of the warrants could adversely affect the market price of Pubco Ordinary Shares.
Pubco will have the ability to redeem outstanding Pubco Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the last reported sales price of Pubco Ordinary Shares equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) on each of twenty (20) trading days within any thirty (30) trading day period commencing after the Pubco Warrants become exercisable and ending on the third (3rd) trading day prior to the date on which notice of redemption is given and provided that there is an effective registration statement covering Pubco Ordinary Shares issuable upon exercise of the Pubco Warrants. If and when the warrants become redeemable by Pubco, Pubco may not exercise the redemption right if the issuance of the Pubco Ordinary Shares upon exercise of the warrants is not exempt from registration or qualification under applicable state blue sky laws or Pubco is unable to effect such registration or qualification. Redemption of the outstanding Pubco Warrants could force you to: (i) exercise your Pubco Warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) sell your Pubco Warrants at the then-current market price when you might otherwise wish to hold your Pubco Warrants or (iii) accept the nominal Redemption Price which, at the time the outstanding Pubco Warrants are called for redemption, is likely to be substantially less than the market value of your Pubco Warrants. Additionally, if a significant number of Pubco Warrant holders exercise their Pubco Warrants instead of accepting the nominal Redemption Price, the issuance of these shares would dilute other equity holders, which could reduce the market price of the Pubco Ordinary Shares.
Because Agrico is incorporated under the laws of the Cayman Islands, holders of Agrico’s securities may face difficulties in protecting their interests, and their ability to protect their rights through the U.S. Federal courts may be limited.
Agrico is an exempted company incorporated under the laws of the Cayman Islands. As a result, it may be difficult for holders of Agrico’s securities to effect service of process within the United States upon Agrico’s directors or officers, or enforce judgments obtained in the United States courts against Agrico’s directors or officers.
Agrico’s corporate affairs are governed by the Agrico Articles, the Cayman Companies Act and the common law of the Cayman Islands. The rights of Agrico Shareholders to take action against Agrico’s directors, actions by minority shareholders and the fiduciary responsibilities of Agrico’s directors under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, the decisions of whose courts are of persuasive authority, but are not binding on a court in the Cayman Islands. The rights of Agrico Shareholders and the fiduciary responsibilities of Agrico’s directors under Cayman Islands law are different from what they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a different body of securities laws as compared to the United States and certain states such as Delaware, may have more fully developed and judicially interpreted bodies of corporate law. Additionally, Cayman Islands companies may not have standing to sue before the Federal courts of the United States.
The courts of the Cayman Islands are unlikely (i) to recognize or enforce against Agrico judgments of courts of the United States predicated upon the civil liability provisions of the federal securities laws of the United States or any state; and (ii) in original actions brought in the Cayman Islands, to impose liabilities against Agrico predicated upon the civil liability provisions of the federal securities laws of the United States or any state, so far as the
liabilities imposed by those provisions are penal in nature. Although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met. For a foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, and or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy). A Cayman Islands Court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.
Risks Relating to Irish Law
Pubco is incorporated in Ireland; Irish law differs from the laws in effect in the United States and may afford less protection to our shareholders.
Pubco is an Irish incorporated public limited company. There is some uncertainty as to whether the courts of Ireland would recognize or enforce judgments of U.S. courts obtained against us or our directors or officers based on the civil liabilities provisions of the U.S. federal or state securities laws or hear actions against us or those persons based on those laws. The U.S. and Ireland do not currently have a treaty providing for the reciprocal recognition and enforcement of judgments (other than arbitration awards) in civil and commercial matters, and, accordingly, common law rules apply in determining whether a judgment obtained in a U.S. court is enforceable in Ireland. Although there are processes under Irish law for enforcing a judgment of a U.S. court, including by seeking summary judgment in a new action in Ireland, those processes are subject to certain established principles and conditions, and there can be no assurance that an Irish court would enforce a judgment of a U.S. court in this way and thereby impose civil liberty on us or our directors or officers.
As an Irish company, we are governed by the Irish Companies Act and the common law of Ireland, which differs in some material respects from laws generally applicable to U.S. corporations and shareholders, including, among others, differences relating to interested director and officer transactions and shareholder lawsuits. Likewise, the duties of directors and officers of an Irish company generally are owed to the company only. Shareholders of Irish companies generally do not have a personal right of action against directors or officers of the company and may exercise such rights of action on behalf of the company only in limited circumstances. Accordingly, holders of our securities may have more difficulty protecting their interests than would holders of securities of a corporation incorporated in a jurisdiction of the U.S.
Following completion of the transactions, a transfer of Pubco Ordinary Shares or Pubco Warrants, other than one effected by means of the transfer of book-entry interests in the Depository Trust Company, may be subject to Irish stamp duty.
Submission will be made to the Irish Revenue Commissioners to confirm that transfers of Pubco Ordinary Shares and Pubco Warrants effected by means of the transfer of book entry interests in the Depository Trust Company (“DTC”) will not be subject to Irish stamp duty. It is expected that this confirmation should be granted. It is anticipated that the majority of Pubco Ordinary Shares and Pubco Warrants will be traded through DTC by brokers who hold such shares on behalf of customers.
However, if you hold your Pubco Ordinary Shares and/or Pubco Warrants directly rather than beneficially through DTC, any transfer of your Pubco Ordinary Shares and/or Pubco Warrants could be subject to Irish stamp duty (currently at the rate of 1% of the higher of the price paid or the market value of the Pubco Ordinary Shares or Pubco Warrants acquired). Payment of Irish stamp duty is generally a legal obligation of the transferee. The potential for stamp duty could adversely affect the price of your Pubco securities.
If the Pubco Ordinary Shares or Pubco Warrants are not eligible for deposit and clearing within the facilities of DTC, then transactions in the Pubco Ordinary Shares and/or Pubco Warrants may be disrupted.
The facilities of DTC are a widely used mechanism that allow for rapid electronic transfers of securities between the participants in the DTC system, which include many large banks and brokerage firms.
Upon the completion of the transactions, the Pubco Ordinary Shares and the Pubco Warrants will be eligible for deposit and clearing within the DTC system. Pubco expects to enter into arrangements with DTC whereby it will agree to indemnify DTC for any Irish stamp duty that may be assessed upon it as a result of its service as a depository and clearing agency for the Pubco Ordinary Shares and such Pubco Warrants. It is expected these actions, among others, will result in DTC agreeing to accept the Pubco Ordinary Shares and Pubco Warrants for deposit and clearing within its facilities upon the completion of the transactions.
DTC is not obligated to accept the Pubco Ordinary Shares or Pubco Warrants for deposit and clearing within its facilities upon the completion of the transactions and, even if DTC does initially accept the Pubco Ordinary Shares and/or Pubco Warrants, it generally will have discretion to cease to act as a depository and clearing agency for the Pubco Ordinary Shares and/or Pubco Warrants. If DTC determined prior to the completion of the transactions that the Pubco Ordinary Shares and/or Pubco Warrants are not eligible for clearance within its facilities, then it is not expected that the transactions would be completed in their current form. However, if DTC determined at any time after the completion of the transactions that the Pubco Ordinary Shares and/or Pubco Warrants were not eligible for continued deposit and clearance within its facilities, then the Pubco Ordinary Shares and/or Pubco Warrants would not be eligible for continued listing on a U.S. securities exchange and trading in the Pubco Ordinary Shares and/or Pubco Warrants would be disrupted. While Pubco would pursue alternative arrangements to preserve Pubco’s listing and maintain trading, any such disruption could have a material adverse effect on the trading price of the Pubco Ordinary Shares and/or Pubco Warrants.
In certain limited circumstances, dividends paid by Pubco may be subject to Irish dividend withholding tax.
Pubco does not intend to pay dividends on its capital stock in the foreseeable future. If Pubco were to declare and pay dividends, in certain limited circumstances, Irish dividend withholding tax (currently at a rate of 25%) may arise in respect of dividends paid on the Pubco Ordinary Shares. A number of exemptions from dividend withholding tax exist such that shareholders resident in the U.S. and other exempt countries may be entitled to exemptions from dividend withholding tax.
Submission will be made to the Irish Revenue Commissioners to confirm that shareholders resident in the U.S. that hold their Pubco Ordinary Shares through DTC will not be subject to dividend withholding tax, provided the addressees of the beneficial owners of such Pubco Ordinary Shares in the records of the brokers holding such Pubco Ordinary Shares are recorded as being in the U.S. (and such brokers have further transmitted the relevant information to a qualifying intermediary appointed by Pubco). It is expected that this confirmation should be granted. However, other holders of Pubco Ordinary Shares may be subject to dividend withholding tax, which could adversely affect the price of their Pubco Ordinary Shares.
After the transactions, dividends received by Irish residents and certain other shareholders may be subject to Irish income tax.
Shareholders entitled to an exemption from Irish dividend withholding tax on dividends received from Pubco will not be subject to Irish income tax in respect of those dividends unless they have some connection with Ireland other than their shareholding in Pubco (for example, they are resident in Ireland). Shareholders who receive dividends subject to Irish dividend withholding tax will generally have no further liability to Irish income tax on those dividends.
Pubco Ordinary Shares or Pubco Warrants received by means of a gift or inheritance could be subject to Irish capital acquisitions tax.
Irish capital acquisitions tax (“CAT”) could apply to a gift or inheritance of Pubco Ordinary Shares or Pubco Warrants irrespective of the place of residence, ordinary residence or domicile of the parties. This is because Pubco
Ordinary Shares and Pubco Warrants will be regarded as property situated in Ireland. The person who receives the gift or inheritance has primary liability for CAT. Gifts and inheritances passing between spouses are exempt from CAT. Children have a tax-free threshold of €335,000 in respect of taxable gifts or inheritances received from their parents.
It is recommended that each shareholder consult his or her own tax advisor as to the tax consequences of holding Pubco Ordinary Shares and Pubco Warrants in, and receiving distributions from, Pubco.
Provisions in the Pubco Articles and under Irish law could make an acquisition of Pubco more difficult, may limit attempts by Pubco shareholders to replace or remove Pubco’s management, may limit shareholders’ ability to obtain a favorable judicial forum for disputes with Pubco or Pubco’s directors, officers, or employees, and may limit the market price of the Pubco Ordinary Shares and/or Pubco Warrants.
Provisions in the Pubco Articles may have the effect of delaying or preventing a change of control or changes in Pubco’s management. The Pubco Articles include provisions that:
•require that Pubco’s board of directors is classified into three classes of directors with staggered three-year terms;
•permit the board of directors to establish the number of directors and fill any vacancies and newly created directorships; and
•prohibit shareholder action by written consent without unanimous approval of all holders of Pubco Ordinary Shares.
The Pubco Articles contain exclusive forum provisions for certain claims, which could limit Pubco’s shareholders’ ability to obtain a favorable judicial forum for disputes with Pubco or Pubco’s directors, officers or employees.
The Pubco Articles provide that unless Pubco consents in writing to the selection of an alternative forum, the federal district courts of the United States of America shall, to the fullest extent permitted by law, be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Exchange Act or the Securities Act (the “Federal Forum Provision”). Moreover, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all claims brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Pubco’s decision to adopt the Federal Forum Provision followed a decision by the Supreme Court of the State of Delaware holding that such provisions are facially valid under Delaware law. While there can be no assurance that federal or state courts will follow the holding of the Delaware Supreme Court or determine that the Federal Forum Provision should be enforced in a particular case, application of the Federal Forum Provision means that suits brought by Pubco’s shareholders to enforce any duty or liability created by the Securities Act must be brought in federal court and cannot be brought in state court.
Section 27 of the Exchange Act creates exclusive federal jurisdiction over all claims brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder and the Pubco Articles confirm that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Exchange Act. Accordingly, actions by Pubco’s shareholders to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder must be brought in federal court.
Any person or entity purchasing or otherwise acquiring or holding any interest in any of Pubco’s securities shall be deemed to have notice of and consented to Pubco’s exclusive forum provisions, including the Federal Forum Provision. Additionally, Pubco’s shareholders cannot waive compliance with the federal securities laws and the rules and regulations thereunder. These provisions may lead to Pubco’s shareholders incurring increased costs if they were to bring a claim against Pubco, and may limit Pubco’s shareholders’ ability to bring a claim in a judicial forum they find favorable for disputes with Pubco or Pubco’s directors, officers, or other employees, which may discourage lawsuits against Pubco and Pubco’s directors, officers, and other employees and agents. Alternatively, if a court were to find the choice of forum provision contained in the Pubco Articles to be inapplicable or
unenforceable in an action, Pubco may incur additional costs associated with resolving such action in other jurisdictions, which may have an adverse effect on Pubco’s business, financial condition and results of operations.
As a matter of Irish law, Pubco’s shareholders are bound by the provisions of the Pubco Articles. An Irish court would be expected to recognise the exclusive jurisdiction of the federal district courts of the United States of America in respect of causes of action arising under the Exchange Act or the Securities Act.
As an Irish public limited company, certain capital structure decisions regarding Pubco will require the approval of the shareholders of Pubco, which may limit Pubco’s flexibility to manage its capital structure.
Irish law generally provides that a board of directors may allot and issue shares (or rights to subscribe for or convert into shares) if authorized to do so by a company’s constitution or by an ordinary resolution. Such authorization may be granted for up to the maximum of a company’s authorized but unissued share capital and for a maximum period of five years, at which point it must be renewed by another ordinary resolution. The Pubco Articles authorizes the Board of Directors of Pubco to allot shares up to the maximum of Pubco’s authorized but unissued share capital for a period of five years from the date of adoption of such articles. This authorization will need to be renewed by ordinary resolution upon its expiration and at periodic intervals thereafter. Under Irish law, an allotment authority may be given for up to five years at each renewal, but governance considerations may result in renewals for shorter periods or for less than the maximum permitted number of shares being sought or approved.
While Irish law also generally provides shareholders with pre-emptive rights when new shares are issued for cash, it is possible for the Pubco Articles, or for shareholders of Pubco in a general meeting, to exclude such pre-emptive rights. The Pubco Articles exclude pre-emptive rights for a period of five years from the date of adoption of such articles. This exclusion will need to be renewed by special resolution upon its expiration and at periodic intervals thereafter. Under Irish law, a disapplication of pre-emption rights may be authorized for up to five years at each renewal, but governance considerations may result in renewals for shorter periods or for less than the maximum permitted number of unissued shares being sought or approved.
Irish law requires Pubco to have available “distributable profits” to pay dividends to shareholders and generally to make share repurchases and redemptions.
Under Irish law, Pubco may only pay dividends and make other distributions (and, generally, make share repurchases and redemptions) only out of distributable reserves. Distributable reserves, broadly means, the accumulated realized profits of Pubco, so far as not previously utilized in a distribution or capitalization less accumulated realized losses, so far as not previously written off in a reduction or reorganization of capital, and include reserves created by way of a reduction of capital. In addition, no dividend may be paid or other distribution, share repurchase or redemption made by Pubco unless the net assets of Pubco are equal to, or exceed, the aggregate of Pubco’s called up share capital plus its un-distributable reserves and the dividend or other distribution, share repurchase or redemption does not reduce Pubco’s net assets below such aggregate. Un-distributable reserves include the un-denominated capital, the capital redemption reserve fund and the amount by which Pubco accumulated unrealized profits, so far as not previously utilized by any capitalization exceed Pubco’s accumulated unrealized losses, so far as not previously written off in a reduction or reorganization of capital and any other reserve that Pubco is prohibited from distributing by applicable law.
The determination as to whether or not Pubco has sufficient distributable reserves to fund a dividend must be made by reference to the “relevant financial statements” of Pubco. The “relevant financial statements” are either the last set of unconsolidated annual audited financial statements or unaudited financial statements properly prepared in accordance with the Irish Companies Act, which give a “true and fair view” of Pubco’s unconsolidated financial position in accordance with accepted accounting practice in Ireland. The “relevant financial statements” must be filed in the Companies Registration Office (the official public registry for companies in Ireland) prior to the making of the distribution.
Following consummation of the Business Combination, Pubco, as a new parent company with no operational history, will have no distributable profits of its own. Accordingly, in order to pay dividends or make other distributions, share repurchases or redemptions, Pubco will need to generate distributable profits from its business activities or otherwise create distributable profits by alternative means, including a reduction of capital.
Creation of distributable reserves requires the approval of Pubco shareholders by special resolution passed at a general meeting of shareholders, together with the sanction of the High Court of Ireland. Although the creation of distributable reserves in this manner is an established mechanism, the sanction of the High Court of Ireland is discretionary and there is no guarantee it will be granted.
In the event that distributable reserves of Pubco are not, for whatever reason, generated from its business activities or created by alternative means, no dividends may be paid or other distributions, share repurchases or redemptions made by Pubco. Pubco does not anticipate paying any dividends for the foreseeable future. There can be no assurances that Pubco will ever pay any dividend or other distribution to shareholders, regardless of whether Pubco has sufficient distributable reserves.
Following consummation of the Business Combination, attempted takeovers of Pubco will be subject to the Irish Takeover Rules and will be under the supervisory jurisdiction of the Irish Takeover Panel.
Following consummation of the Business Combination, Pubco will be subject to the Irish Takeover Rules, which regulate the conduct of takeovers of, and certain other relevant transactions affecting, Irish incorporated public limited companies listed on certain stock exchanges, including Nasdaq. The Irish Takeover Rules are administered by the Irish Takeover Panel, which has supervisory jurisdiction over such transactions. Among other matters, the Irish Takeover Rules operate to ensure that no offer is frustrated or unfairly prejudiced and, in situations involving multiple bidders, that there is a level playing field. For example, pursuant to the Irish Takeover Rules, the Pubco board will not be permitted, without shareholder approval, to take certain actions which might frustrate an offer for Pubco shares once the Pubco board has received an approach that might lead to an offer or has reason to believe that an offer is, or may be, imminent.
Following consummation of the Business Combination, under the Irish Takeover Rules, a person, or persons acting in concert, who acquire(s), or consolidate(s), control of Pubco may be required to make a mandatory cash offer for the remaining shares of Pubco.
Under the Irish Takeover Rules, in certain circumstances, a person, or persons acting in concert, who acquire(s), or consolidate(s), control of Pubco may be required to make a mandatory cash offer for the remaining shares of Pubco at a price not less than the highest price paid for the shares by that person or its concert parties during the previous 12 months. Save with the consent of the Irish Takeover Panel, this mandatory offer requirement is triggered: (i) if an acquisition of shares would result in a person or persons acting in concert holding shares representing 30% or more of the voting rights of Pubco and (ii) where a person, or persons acting in concert, already hold(s) shares representing between 30% and 50% of the voting rights of Pubco, if an acquisition of shares would result in the percentage of the voting rights of Pubco held by such person, or persons acting in concert, increasing by more than 0.05% within a 12-month period. In the case of an issuance of new shares, the Irish Takeover Panel will typically waive the mandatory offer requirement in circumstances where the issuance has been approved in advance by simple majority vote given at a general meeting of independent Pubco shareholders convened in accordance with the requirements (including as to disclosure) of the Irish Takeover Rules. The mandatory offer requirements do not apply to a single holder, holding shares representing more than 50% of the voting rights of Pubco.
Anti-takeover provisions in the Pubco constitution could make an acquisition of Pubco ordinary shares more difficult.
The Pubco Articles contain provisions that may delay or prevent a change of control, discourage bids at a premium over the market price of Pubco ordinary shares, adversely affect the market price of Pubco ordinary shares, and adversely affect the voting and other rights of holders of Pubco ordinary shares. These provisions include: (i) permitting the Pubco board of directors to issue preference shares without the approval of holders of Pubco ordinary shares, with such rights, preferences and privileges as they may designate and (ii) allowing the Pubco board of directors to adopt a shareholder rights’ plan upon such terms and conditions as it deems expedient in the interests of Pubco.
Risks Relating to Third Party Claims
If third parties bring claims against Agrico, the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by shareholders may be less than $10.20 per share.
Agrico’s placing of funds in the Trust Account may not protect those funds from third-party claims against it. Although Agrico will seek to have all vendors, service providers, prospective target businesses and other entities execute agreements with it waiving any right, title, interest or claim of any kind in or to any monies held in the Trust Account for the benefit of Agrico’s public shareholders, such parties may not execute such agreements, or even if they execute such agreements they may not be prevented from bringing claims against the Trust Account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against Agrico’s assets, including the funds held in the Trust Account. If any third party refuses to execute an agreement waiving such claims to the monies held in the Trust Account, Agrico’s management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement would be significantly more beneficial to Agrico than any alternative.
Examples of possible instances where Agrico may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by Agrico’s management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with Agrico and will not seek recourse against the Trust Account for any reason. Upon redemption of Agrico’s public shares, if Agrico is unable to complete the Business Combination within the prescribed timeframe, or upon the exercise of a redemption right in connection with the Business Combination, Agrico will be required to provide for payment of claims of creditors that were not waived that may be brought against Agrico within the 10 years following redemption. Accordingly, the per-share redemption amount received by public shareholders could be less than the $10.20 per share initially held in the trust account, due to claims of such creditors. Agrico’s Sponsor has agreed that it will be liable to Agrico if and to the extent any claims by a third party for services rendered or products sold to Agrico, or a prospective target business with which Agrico has entered into a written letter of intent, confidentiality or similar agreement or business combination agreement, reduce the amount of funds in the trust account to below the lesser of (i) $10.20 per public share and (ii) the actual amount per public share held in the trust account as of the date of the liquidation of the trust account, if less than $10.20 per share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the trust account (whether or not such waiver is enforceable) nor will it apply to any claims under Agrico’s indemnity of the underwriter of its initial public offering against certain liabilities, including liabilities under the Securities Act. However, Agrico has not asked the Sponsor to reserve for such indemnification obligations, nor has it independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and believes that the Sponsor’s only assets are securities of Agrico. Therefore, Agrico cannot assure you that the Sponsor would be able to satisfy those obligations.
As a result, if any such claims were successfully made against the Trust Account, the funds available for the Business Combination and redemption could be reduced to less than $10.20 per public share. In such event, Agrico may not be able to complete the Business Combination, and shareholders would receive such lesser amount per share in connection with any redemption of their public shares. None of Agrico’s officers or directors will indemnify it for claims by third parties, including, without limitation, claims by vendors and prospective target businesses.
Risks Relating to Kalera’s Business and the Industry in Which it Operates
Kalera is in an early commercial phase, and is highly dependent on a successful roll-out and commercialization of its products.
Kalera is in an early commercial phase, and is highly dependent on succeeding with its roll-out and commercialization strategy in order to deliver future operating profits. In 2020, Kalera started to execute a strategy for rapid capacity expansion based on installing and operating large-scale production facilities allowing it to target and expand its customer base to large US regional and national accounts such as grocery chains, distributors and contract food service companies. Kalera has until recently solely been present in the US produce market, with a roll-out and commercialization plan for establishing its business throughout the US, by building new large-scale production facilities in US cities and areas that it currently is not present in and that provide attractive markets. Through the acquisition (the “&ever Acquisition”) of the vertical farming company &ever GmbH (“&ever”) in October 2021, and the purchase of NOX Culinary General Trading Company LLC’s 50% remaining interest in &ever Middle East Holding Ltd. (“&ever ME”) to own 100% of &ever ME, Kalera has also added operations in Germany, Kuwait and Singapore. Going forward, Kalera is seeking to further expand its US and international operations.
Kalera’s failure to execute its roll-out and commercialization strategy or to manage its growth effectively could adversely affect its business, financial condition, results of operations, cash flow and/or prospects. In addition, there can be no guarantee that even if Kalera successfully implements its strategy, it would result in Kalera achieving its business and financial objectives, taking advantage of market opportunities, satisfying customer requirements or securing additional customer commitments, any of which could adversely affect Kalera’s business, financial condition and results of operations. Indeed, as vertical farming itself is a relatively new concept, the industry and Kalera’s markets may fail to grow or grow more slowly than expected. Kalera’s management team will review and evaluate the business strategy with the board of directors on a regular basis, and Kalera may decide to alter or discontinue elements of its business strategy and may adopt alternative or additional strategies in response to the operating environment or competitive situation or other factors or events beyond its control.
Kalera lacks useful financial information for the accurate estimation of its future capital expenditures and unit economics.
As a result of Kalera being in an early commercial phase, there is a lack of useful financial information for the accurate estimation of future capital expenditures and unit economics. This applies in particular to Kalera’s Orlando, Atlanta, Houston, Denver, and Kuwait facilities, which commenced operations in February 2020, September 2021 (post electrical component upgrades), October 2021, April 2022 and March 2020 respectively, and on which its estimates of capital expenditure and unit economics for new facilities are based. Any failure by Kalera to estimate its capital expenditure and unit economics accurately could limit its ability to implement its roll-out and commercial strategy and to accurately forecast future cash flow needs. In addition, the economics for new facilities can also be subject to adverse changes or developments affecting any new facilities and that could impair Kalera’s ability to produce the business results and prospects as expected. Such adverse changes and developments include, but are not limited to, natural disasters, fire, power interruptions, disease outbreaks or pandemics (such as COVID-19), or changes in customer demand.
Kalera is an early stage company with a history of losses and expects to continue to incur losses going forward.
Kalera is an early stage company and has incurred significant operating losses since its incorporation. Historically, Kalera has financed its operations mainly through the sale of equity securities and in part through diverse financing arrangements. Going forward, Kalera expects to continue to incur operating losses for the foreseeable future and no assurances can be given on when, or if at all, Kalera will achieve profitability from its operations. The extent of Kalera’s losses going forward will depend, in part, on its future expenses and its ability to generate revenue. Achieving profitability is dependent on a number of factors, amongst others, Kalera succeeding with its roll-out and commercialization strategy, but also the operating environment, the competitive environment and other factors or events beyond its control.
Kalera expects the rate at which it will incur losses to be significantly higher in future periods as it:
•expands its commercial production capabilities and incurs construction costs associated with building its facilities;
•completes the buildout of its facilities in Honolulu, Columbus, Seattle, St Paul, and Singapore;
•identifies and invests in future growth opportunities, including new or expanded facilities and new product lines and potentially undertaking future acquisitions such as the &ever acquisition;
•integrates the business of &ever;
•increases its spending on research, innovation and development;
•increases its expenditures associated with its supply chain;
•increases its sales and marketing activities to increase brand awareness and the sales of its products and develops its distribution infrastructure; and
•incurs additional general and administrative expenses, including increased finance, legal and accounting expenses, to support its growing operations and infrastructure.
The abovementioned efforts may be more expensive than Kalera currently estimates or such investments may not result in additional or commensurately higher revenue, which would further increase its losses. In addition, its revenue growth may slow or decline for a number of other reasons, including reduced demand for its products, increased competition, a decrease in the growth or reduction in size of its overall market, the impacts to its business from the COVID-19 pandemic, or if Kalera cannot capitalize on growth opportunities. Kalera may never succeed in becoming profitable and, even if it does, it may never generate revenue or sustainable income that is significant enough to maintain profitability. Should any of these risks materialize, it could have a material and adverse effect on its business, financial condition, results of operations, cash flows, time to market and prospects.
Kalera’s business may suffer if it does not achieve the anticipated benefits of the &ever Acquisition.
Kalera expects to achieve certain benefits as a result of the &ever Acquisition. There can be no assurances that Kalera will realize the expected benefits currently anticipated from the &ever Acquisition or that &ever will perform according to Kalera’s projections following the &ever Acquisition. A failure to achieve any of the anticipated benefits of the &ever Acquisition or a failure of &ever to perform according to Kalera’s projections could adversely affect Kalera’s business, financial condition and results of operations.
Kalera may be unable to successfully integrate &ever in order to realize the anticipated benefits of the &ever Acquisition or do so within the intended time frame.
Kalera will be required to devote significant management attention and resources to integrating the business practices and operations of &ever with Kalera. This integration may prove to be more difficult, costly and time-consuming than expected, which could cause us not to realize some or all of the anticipated benefits from the &ever Acquisition. Potential difficulties we may encounter as part of the integration process include the following:
•any delay in the integration of management teams, strategies, operations, products and services;
•diversion of the attention of management of Kalera or &ever as a result of the &ever Acquisition;
•differences in business backgrounds, corporate cultures and management philosophies that may delay successful integration;
•the ability to retain key employees;
•potential unknown liabilities and unforeseen increased expenses or delays associated with the &ever Acquisition, including costs to integrate &ever beyond current estimates; and
•the disruption of, or the loss of momentum in, either Kalera’s or &ever’s ongoing operations or inconsistencies in standards, controls, procedures and policies.
Any of these factors could adversely affect &ever’s ability to maintain relationships with customers, suppliers, employees and other constituencies or Kalera’s ability to achieve the anticipated benefits of the &ever Acquisition or could reduce earnings or otherwise adversely affect Kalera’s business, financial condition and results of operations after the &ever Acquisition.
Kalera’s growth plans depend on deploying new production facilities, which will require significant expenditures and may be subject to delays in construction and unexpected costs due to governmental approvals and permitting requirements, reliance on third parties for construction, delays relating to material delivery and supply chains, and fluctuating material prices.
Kalera’s build-out of new production facilities will be dependent on a number of key inputs and their related costs including materials such as steel, aluminum, plastic materials, electronic components, horticultural lights, and other supplies, as well as access to electricity, internet, and other local utilities. Any significant interruption or negative change in the availability or economics of the supply chain for key inputs for new facility build-out could materially impact Kalera's business, financial condition and operating results. Kalera plans to rely on local contractors for the building of its production facilities. If Kalera or its contractors encounter unexpected costs, delays or other problems in building any production facility, Kalera’s financial position and ability to execute on its growth strategy could be negatively affected. Any inability to secure required materials and services to build out such facility, or to do so on appropriate terms, could have a materially adverse impact on Kalera's business, financial condition and operating results. Kalera may also face unexpected delays in obtaining the required governmental permits and approvals in connection with the build-out of its planned facilities which could require significant time and financial resources and delay its ability to operate these facilities.
The costs to procure such materials and services to build new facilities may fluctuate widely based on the impact of numerous factors beyond the Kalera's control including, international, economic and political trends, foreign currency fluctuations, expectations of inflation, global or regional consumptive patterns, speculative activities and increased or improved production and distribution methods.
COVID-19 continues to impact worldwide economic activity, and the governments of many countries, states, cities and other geographic regions have taken preventative or protective actions, which are creating disruption in global supply chains such as closures or other restrictions on the conduct of business operations of manufacturers, suppliers and vendors. The recovery from COVID-19 also may have risks in that increased economic activity globally or regionally may result in high demand for, and constrained access to, materials and services required for Kalera to construct and commission new facilities, which may lead to increased costs or delays that could materially and adversely affect Kalera’s business.
Global demand on shipping and transport services may cause delays in key input supply, which could impact Kalera’s ability to obtain materials or build its production facilities in a timely manner. These factors could otherwise disrupt the Group's operations and could negatively impact its business, financial condition and results of operations. Logistical problems, unexpected costs, and delays in production facility construction, whether or not caused by the COVID-19 pandemic, which cannot be directly controlled by Kalera, may cause prolonged disruption to or increased costs of third-party transportation services used to ship materials, which could negatively affect the Kalera’s facility building schedule, and more generally its business, financial condition, results of operations and prospects. If Kalera experiences significant unexpected delays in construction, it may have to delay or limit its growth depending on the timing and extent of the delays, which could harm Kalera’s business, financial condition and results of operation.
A delay in the completion of, or cost overruns in relation to, the construction of new facilities may affect Kalera’s ability to achieve its operational plan and full schedule of production, thereby adversely impacting Kalera’s business and results of operations.
As of the date of this joint proxy statement/prospectus, Kalera has five large-scale facilities under construction, four of which are expected to be completed during 2022. For the large-scale facilities, Kalera leases buildings but
bears the cost associated with customizing the buildings for its vertical farming operations. For customizing the buildings, Kalera relies on third party constructors and other service providers. Any delay by such third parties in the completion of construction may result in a decrease in revenues expected to be received by Kalera from operations as a result of the commencement of full-scale operations on a date later than originally expected, thereby adversely impacting Kalera’s business and results of operations, especially if completion of construction is delayed on several large-scale production facilities at the same time. The construction of new facilities is also subject to other risks that may cause delays or cost overruns, including issues tied to material delivery, supply chains, fluctuating material prices, transportation services, electricity and other local utilities. These risks may in turn cause disruptions to operations and the need to implement changes in production to adapt to such delays, including the commissioning of systems before final completion, all of which could have a material adverse effect on production and Kalera’s business, results of operations, cash flows, financial condition and/or prospects.
Production ramp-up time is dependent on a number of factors, all of which may affect full schedule of production and yields achieved
Kalera currently has five large-scale facilities in operation, all in production ramp-up phase. The estimated time it takes to ramp-up the production and the production yields achieved are subject to several factors, some of which are beyond Kalera’s control. For example, COVID-19, which significantly impacted the foodservice industry in Central Florida and beyond, resulted in lower production needs. As a consequence, Kalera may have to slow down the ramp-up of its production from a large-scale facility and Kalera may also need to alter the proportion or production that is planned for either the retail market or the food service industry.
Obtaining good production yields, is dependent on a number of factors, where the most important is achieving good environmental conditions at the facilities, hereunder temperature, humidity and sufficient airflow. Additional factors include supplying adequate light to the crops, water, and fertilizers. Climate control, air flow, lighting, water treatment, irrigation, and nutrient dosage equipment may break down due to several possible causes, some of which are beyond Kalera’s control. Returning down equipment back to operation after a breakdown event may be delayed due to slow response time by manufacturers, suppliers, dealers, or repair service providers and/or by delayed availability of replacement parts.
Ramping up and maintaining strong production yields is also dependent on availability and development of a trained work force. Lack of a trained work force may negatively affect production ramp-up plans and yields achieved.
Should the production ramp-up phase take longer than projected at one or several facilities or if Kalera does not succeed in obtaining strong production yields, this could have a material adverse effect on production and Kalera’s business, results of operations, cash flows, financial condition and/or prospects.
The industry in which Kalera operates is highly competitive and Kalera may not be able to compete successfully in such industry.
Kalera competes in an industry still under establishment that is increasingly competitive. The competition is comprised of both traditional farming and companies in CEA. Kalera expects to continue to experience competition from both existing and new competitors, some of which are more established and who may have (i) greater capital and/or commercial, marketing and technical resources, (ii) longer operating histories and/or (iii) superior brand recognition. Kalera’s competitors may be able to adapt more quickly to new or emerging technologies, changes in customer requirements and changes in the regulatory environment. In addition, current and potential competitors have established or may establish financial or strategic relationships among themselves or with existing or potential customers or other third parties. Accordingly, new competitors or alliances among competitors could emerge and rapidly acquire significant market share. Kalera’s competitors may also improve their relative competitive position by successfully introducing new products or products that can be substituted for Kalera’s products, improving their production processes, or expanding their capacity or production capabilities. This could put pressure on Kalera to reduce its prices, resulting in lower profitability or, in the alternative, cause Kalera to lose market share if Kalera fails to reduce prices. If Kalera is unable to keep pace with its competitors’ product and manufacturing process innovations or cost position, it could harm Kalera’s results of operations, financial condition and cash flows.
Further, Kalera believes that competitive pressure will likely increase as early entrants into the market start to show revenue growth and profitability. If Kalera is unable to remain competitive, this could have a material adverse effect on its revenues, profitability, liquidity, cash flow, financial positions and/or prospects.
If Kalera fails to develop and maintain its brand, its business could suffer.
Kalera’s continuing mission is to build an iconic vertical farming brand that is focused on sustainable and technology driven agriculture. Kalera’s success depends on its ability to maintain and grow the value of the Kalera brand. Maintaining, promoting and positioning Kalera’s brand and reputation will depend on, among other factors, the success of Kalera’s product offerings, food safety, quality assurance, marketing and merchandising efforts, Kalera’s continued focus on the environment and sustainability and Kalera’s ability to provide a consistent, high-quality consumer and customer experience. If Kalera is unable to promote its brand successfully or if its competitors’ marketing efforts are more effective, Kalera could fail to capture market share. In addition, any negative publicity, regardless of its accuracy, could impair Kalera’s business.
There can be no assurance that Kalera’s products will always comply with the standards set for its products. In addition, Kalera has no control over its products once purchased by consumers. Accordingly, consumers may use Kalera’s products in a manner that is inconsistent with Kalera’s directions or store Kalera’s products for long periods of time, which may adversely affect the quality and safety of Kalera’s products. If consumers do not perceive Kalera’s products to be safe or of high quality, then the value of Kalera’s brand would be diminished, and its business, results of operations and financial condition would be adversely affected. Real or perceived quality or food safety concerns or failures to comply with applicable food regulations and requirements, whether or not ultimately based on fact and whether or not involving Kalera (such as incidents involving Kalera’s competitors) may have a substantial and adverse effect on Kalera’s brand, reputation and operating results.
Further, the growing use of social and digital media by Kalera, Kalera’s customers and third parties increases the speed and extent that information or misinformation and opinions can be shared. Negative publicity about Kalera, Kalera’s partners, any person associated with Kalera, including board members and key employees and/or Kalera’s products on social or digital media, or in general, could seriously damage Kalera’s brand and reputation. Brand value is based on perceptions of subjective qualities, and any incident that erodes the trust and loyalty of Kalera’s consumers, customers or distributors, including adverse publicity or a governmental investigation, litigation or regulatory enforcement action, could significantly reduce the value of Kalera’s brand and significantly damage its business. If Kalera does not achieve and maintain a favorable perception of its brand, its business, financial condition and results of operations could be adversely affected.
Kalera’s success, competitive position and future revenues will depend in part on its ability to further develop and protect its intellectual property and know-how.
Kalera’s intellectual property mainly relates to production processes and methods, plant nutrient mixture formulas, custom hardware, software code, and its trademarks. Our intellectual property forms the foundation of Kalera and drives the key elements of the business strategy. Any failure by Kalera in protecting its intellectual property rights adequately could result in its competitors offering similar products, potentially resulting in the loss of some of its competitive advantage and a decrease in its revenue which would adversely affect its business, prospects, financial condition, operating results and/or prospects. Kalera’s success depends, at least in part, on its ability to further develop and protect its intellectual property. Kalera relies on a combination of patents, trade secrets, including know-how, limiting access to key information, confidentiality provisions in agreements, confidentiality procedures and IT security to protect its intellectual property rights. Kalera cannot give any assurance that the measures implemented to protect intellectual property rights will give satisfactory protection, that its intellectual property rights can be successfully defended and asserted in the future or that third parties will not infringe upon or misappropriate any such rights. Adequate remedies may not be available in the event of an unauthorized use or disclosure of its production expertise or proprietary plant science. Intellectual property disputes and proceedings and infringement claims could be burdensome and may result in a significant distraction for management and significant expense. Whether or not measures to secure the intellectual property and other confidential information are successful, such information may still become known to existing or new competitors or be independently developed.
Kalera’s failure to process, obtain or maintain adequate protection of its intellectual property rights for any reason, may have a material adverse effect on Kalera’s business, results of operations, financial condition and/or prospects.
Where Kalera believes patent protection is not appropriate or obtainable, Kalera relies on trade secrets to protect some of its technology and proprietary information. However, trade secrets can be difficult to protect. The misappropriation or other activities that may compromise Kalera’s trade secrets may lead to a reduction or loss of its competitive advantages resulting from such trade secrets. Further, litigating a claim that a third party had misappropriated Kalera’s trade secrets would be expensive and time consuming, and the outcome may be unpredictable. Moreover, if Kalera’s competitors independently develop similar knowledge, methods and know-how, it will be difficult for Kalera to enforce its rights and its business could be harmed.
Further, Kalera may be required to make significant capital investments into the research and development of production methods, plant nutrient mixture formulas, custom hardware and software codes and other intellectual property as Kalera develops, improves and scales its processes, technologies and products, and failure to fund and make these investments, or underperformance of the technology funded by these investments, could severely impact Kalera’s business, financial condition, results of operations and prospects.
Kalera currently relies on a limited number of facilities for all of its operations.
As of the date of this joint proxy statement/prospectus, Kalera has five large-scale facilities in operation. Adverse changes or developments affecting any of these facilities could impair its ability to produce its products and fulfill its contractual obligations. Any shutdown or period of reduced production at a single facility, which may be caused by regulatory noncompliance or other issues, as well as other factors beyond its control, such as severe weather conditions, natural disaster, fire, power interruption, work stoppage, disease outbreaks or pandemics (such as COVID-19), equipment failure or delay in supply delivery, would significantly disrupt its ability to grow and deliver its produce in a timely manner, meet its contractual obligations and operate its business. As an example, Kalera’s Atlanta facility experienced intermittent faults on electrical components that drive the grow lights. The intermittent outages forced delays in shipments to new customers, which negatively impacted revenues in May, June, and July 2021.
The equipment in Kalera’s facilities is costly to replace or repair, and its equipment supply chains may be disrupted in connection with pandemics, such as COVID-19, trade wars or other factors. If any material amount of its machinery were damaged, it would be unable to predict when, if at all, Kalera could replace or repair such machinery or find suitable alterative machinery, which could adversely affect its business, financial condition, results of operations and prospects. Any insurance coverage that Kalera has acquired may not be sufficient to cover all of its potential losses and may not continue to be available to it on acceptable terms, or at all.
Kalera’s commercial success is dependent on its ability to enter into produce distribution agreements and other agreements with third parties.
Kalera’s large-scale production facilities generally serve customers within a 300-mile radius of the relevant facility. As Kalera continues its roll-out plan by building new facilities, Kalera may be dependent on entering into new produce distribution agreements with new customers located within the target radius or renegotiating existing produce distribution agreements to also cover such new areas. Should Kalera be unsuccessful in entering into new produce distribution agreements, this could in turn have a material adverse effect on its business, results of operations, financial condition and/or prospects.
Kalera uses a limited number of distributors and large retailers for the substantial majority of its sales, and if it experiences the loss of one or more of its distributors or large retailers and cannot replace them in a timely manner, Kalera’s results of operations may be adversely affected.
Many customers purchase Kalera’s products through food distributors which purchase, store, sell, and deliver its products to food service providers or retailers. Alternatively, some large retail customers may purchase products directly from Kalera. For the financial year ended December 31, 2021, Kalera’s largest customers in terms of their respective percentage of sales included the following: Publix Lakeland (20%), Publix Orlando (19%), Harvill’s Produce (12%) and Gordon Food Service (12%). For the foreseeable future, Kalera expects that most of its sales will
be made through a core number of distributors or directly to a core number of large retailers. Kalera does not have short-term or long-term commitments or minimum purchase volumes in its contracts with the distributors or large retailers that ensure future sales of its products. If Kalera loses one or more of its significant distributors or large retailers and cannot replace the distributor or large retailer or do so in a timely manner, its business, results of operation and financial condition may be materially adversely affected.
Consolidation of customers or the loss of a significant customer could negatively impact Kalera’s sales and profitability.
Supermarkets in North America continue to consolidate. This consolidation has produced larger, more sophisticated organizations with increased negotiating and buying power that are able to resist price increases, as well as operate with lower inventories, decrease the number of brands that they carry and increase their emphasis on private label products, all of which could negatively impact Kalera’s business. The consolidation of retail customers also increases the risk that a significant adverse impact on their business could have a corresponding material adverse impact on Kalera’s business.
The loss of any large customer, the reduction of purchasing levels or the cancellation of any business from a large customer for an extended length of time could negatively impact Kalera’s sales and profitability. Furthermore, as retailers consolidate, they may reduce the number of branded products they offer in order to accommodate private label products and generate more competitive terms from branded suppliers. Consequently, Kalera’s financial results may fluctuate significantly from period to period based on the actions of one or more significant retailers. A retailer may take actions that affect Kalera for reasons that it cannot always anticipate or control, such as their financial condition, changes in their business strategy or operations, the introduction of competing products or the perceived quality of its products. Despite operating in different channels, Kalera’s retailers sometimes compete for the same consumers. Because of actual or perceived conflicts resulting from this competition, retailers may take actions that negatively affect Kalera.
Kalera may face difficulties as it expands its operations into geographical locations in which it has no prior operating experience.
Kalera’s growth strategy includes developing new vertical farming facilities and the expansion of its product lines.
Kalera’s newest facilities include those in Atlanta, Georgia, which began operations in March 2021, Houston, Texas, which began operations in October 2021, and Denver, which began operations in April 2022. Internationally, Kalera’s newest facility is in Kuwait, acquired through the &ever Acquisition, which began operations in March 2020 and continued ramp-up in October 2021 after Kuwait’s COVID-19 related international travel ban had been lifted. Any substantial delay in bringing these facilities up to full production on our current schedule may hinder Kalera’s ability to produce all of the estimated produce and/or achieve its expected financial performance. Even if Kalera’s new facilities are brought up to full production according to our current schedule, they may not provide all of the operational and financial benefits Kalera expects to receive.
Identifying, planning, developing, constructing and finishing new large-scale vertical farming facilities has required and will continue to require substantial time, efforts and resources. Kalera may be unsuccessful in identifying available sites that are conducive to its planned projects, and even if identified, Kalera may ultimately be unable to lease or purchase the land for any number of reasons. Additionally, if Kalera overestimates market demand and expands into new locations too quickly, Kalera may have significantly underutilized assets and may experience reduced profitability. If Kalera does not accurately align capacity at its facilities with demand, its business, financial condition and results of operations could be adversely affected. Kalera intends to further expand its footprint in order to enter into new markets, including new international locations. It may be difficult for Kalera to understand and accurately predict taste preferences and purchasing habits of consumers in these new geographic markets. It is costly to establish, develop and maintain wide ranging operations and develop and promote its brand in multiple markets. As Kalera expands its business into new locations, Kalera may encounter regulatory, legal, personnel, technological and other difficulties that increase its expenses and/or delay its ability to become profitable in such locations, which may have a material adverse effect on its business and brand.
A continued rollout of Kalera’s in-store grow towers and grow boxes is dependent on Kalera being able to reach agreements with new supermarket chains. Further, Kalera may spend time and resources developing facilities at the expense of other appropriate facilities, which may ultimately have been a better selection or more profitable location, or the project start date for new facilities may have to be postponed due to existing facilities and/or other operations and projects requiring more resources than originally estimated.
A key element of Kalera’s growth strategy depends on Kalera’s ability to develop, produce and market new products and improvements to its existing products that meet its standards for quality and appeal to consumer preferences. The success of Kalera’s innovation and product development efforts is affected by its ability to anticipate changes in consumer preferences, the technical capability of its innovation staff in developing and testing product prototypes, including complying with applicable governmental regulations, and the success of its management and sales and marketing teams in introducing and marketing new products. Failure to develop, produce and market new products that appeal to consumers may lead to a decrease in Kalera’s growth, sales and profitability. The development and introduction of new products requires substantial research, development and marketing expenditures, which Kalera may be unable to recoup if the new products do not gain widespread market acceptance. Kalera may invest in product opportunities that are not ultimately successful or profitable. If Kalera is unsuccessful in meeting its objectives with respect to new or improved products, its business could be harmed.
Kalera’s sales and operating results will be adversely affected if it fails to implement our growth strategy successfully or if it invests resources in a growth strategy that ultimately proves unsuccessful as Kalera expands its operations into new geographical locations.
Kalera may not be able to identify suitable acquisition candidates or consummate acquisitions on acceptable terms, and as Kalera acquires companies or technologies in the future, they could prove difficult to integrate, disrupt Kalera’s core business, dilute stockholder value and adversely impact Kalera’s business and operating results and the value of your investment.
As part of Kalera’s business strategy, it regularly evaluates investments in, or acquisitions of, complementary businesses, joint ventures, services, products and technologies. Kalera acquired Vindara, Inc. (“Vindara”) and &ever in 2021. Kalera intends to continue to pursue complementary acquisitions in the future, expand its customer base and provide access to new markets and increase benefits of scale. Acquisitions involve certain known and unknown risks that could cause actual growth or operating results to differ from expectations. For example:
•Kalera may not be able to identify suitable acquisition candidates or to consummate acquisitions on acceptable terms;
•Kalera may pursue additional international acquisitions, which could pose more risks than domestic acquisitions;
•Kalera competes with others to acquire complementary products, technologies and businesses, which may result in decreased availability of, or increased price for, suitable acquisition candidates;
•Kalera may not be able to obtain the necessary financing, on favorable terms or at all, to finance any or all of its potential acquisitions;
•Kalera may ultimately fail to consummate an acquisition even if Kalera announces that it plans to acquire a technology, product or business; and
•acquired technologies, products or businesses may not perform as Kalera expects and Kalera may fail to realize anticipated revenue and profits.
In addition, Kalera’s acquisition strategy may divert management’s attention away from Kalera’s existing business, resulting in the loss of key customers or employees, and expose Kalera to unanticipated problems or legal liabilities, including responsibility as a successor for undisclosed or contingent liabilities of acquired businesses or assets.
If Kalera fails to conduct due diligence on its potential targets effectively, Kalera may, for example, not identify problems at target companies or fail to recognize incompatibilities or other obstacles to successful integration. Kalera’s inability to successfully integrate future acquisitions could impede Kalera from realizing all of the benefits of those acquisitions and could severely weaken its business operations. The integration process may disrupt Kalera’s business and, if new technologies, products or businesses are not implemented effectively, may preclude the realization of the full benefits expected by Kalera, which could harm its results of operations. In addition, the overall integration of new technologies, products or businesses may result in unanticipated challenges, expenses, liabilities and competitive responses. The difficulties integrating an acquisition include, among other things:
•issues in integrating the target company’s technologies, products or businesses with ours;
•incompatibility of marketing and administration methods;
•maintaining employee morale and retaining key employees;
•integrating the cultures of both companies;
•preserving important strategic customer relationships;
•consolidating corporate and administrative infrastructures and eliminating duplicative operations; and
•coordinating and integrating geographically separate organizations.
In addition, even if the operations of an acquisition are integrated successfully, Kalera may not realize the full benefits of the acquisition, including the synergies, cost savings or growth opportunities that Kalera expects. These benefits may not be achieved within the anticipated time frame, or at all. Further, acquisitions may cause Kalera to:
•issue consideration shares or carry out share issues to fund the purchase price for the acquisition, both of which could dilute shareholders’ ownership percentages;
•use a substantial portion of available cash resources;
•increase its interest expense, leverage and debt service requirements if Kalera incurs additional debt to pay for an acquisition;
•assume liabilities for which it does not have indemnification from the former owners; further, indemnification obligations may be subject to dispute or concerns regarding the creditworthiness of the former owners;
•record goodwill and non-amortizable intangible assets that are subject to impairment testing and potential impairment charges;
•experience volatility in earnings due to changes in contingent consideration related to acquisition earn-out liability estimates;
•incur amortization expenses related to certain intangible assets;
•lose existing or potential contracts as a result of conflict of interest issues;
•become subject to adverse tax consequences or deferred compensation charges;
•incur large and immediate write-offs; or
•become subject to litigation.
Consumer satisfaction is important to Kalera’s success, and the lack thereof, may have a material effect on its financial performance.
The market in which Kalera operates is subject to changes in consumer preference, perception and spending habits. Kalera’s products are ultimately sold to consumers which may have different product criteria and expectations with regard to leafy greens, such as, but not limited to, cleanness, pesticide-free, non-GMO, locally grown, nutrient rich, quality in general and price. Failing to meet one or more of such criteria can reduce consumer satisfaction for Kalera’s products, and result in consumers not buying them. Unsatisfied consumers may further generate negative publicity and affect our reputation. Even if Kalera meets one or more of the aforementioned criteria, other factors could result in the consumers not buying our products, amongst others, consumer income and spending habits among consumers, concerns regarding vertical farming as opposed to traditional farming, consumers not being able to differentiate the quality of Kalera’s products from those of its competitors, competitors being able to market and advertise their products towards consumers better, Kalera not being successful in identifying trends in consumer preferences and growing or developing products that respond to such trends in a timely manner, shifts in the perceived value for Kalera products relative to alternatives or consumer confidence in and perception of the safety and quality of our products. Should consumers, for any reason, not buy Kalera’s products, this may impact the willingness of Kalera’s customers, which are predominantly distributors to the foodservice market segment and retailers, to continue to do business with Kalera, which in turn would have a material adverse effect on our business, results of operations, financial condition and/or prospects.
The failure of suppliers to perform their obligations, or Kalera’s inability to replace or renew supply agreements when they expire, could increase Kalera’s cost of goods sold, interrupt production or otherwise adversely affect Kalera’s results of operations.
Aside from the raw materials used in our production process, Kalera’s facilities require certain other materials, such as LED grow lights and racks to be supplied on time and in the correct quantities in order to function properly. If Kalera is unable to secure agreements for the necessary amount of such supplies, if the terms of such agreements are not honored or if a supplier terminates an agreement, Kalera will be required to obtain alternate sources for the relevant materials. Kalera may not be able to obtain these materials in sufficient quantities, on economic terms, or in a timely manner, and Kalera may not be able to enter into long-term supply agreements on terms as favorable to it, if at all. A lack of availability of any such materials could limit Kalera’s production capabilities and prevent Kalera from fulfilling customer orders, and therefore harm its reputation as well as our business, results of operations, financial condition and/or prospects.
For example, Kalera has an arrangement with Signify pursuant to which Signify is the exclusive supplier for LED grow lights for Kalera’s farms. Any inability to maintain or renew this relationship on favorable terms, or at all, could have a material adverse effect on Kalera’s financial condition and results of operations.
Estimates of market opportunity and forecasts of market growth may prove to be inaccurate or not materialize, and even if the market in which Kalera competes achieves the forecasted growth, its business could fail to grow at similar rates, if at all.
According to IndexBox, the global market for lettuce and chicory has seen stable growth with a CAGR of 1.2% from 2007 to 2017, and is projected to continue its stable development, resulting in an increased market volume in the years to come. Projections, market opportunity estimates and estimates on future market growth, including those included in this joint proxy statement/prospectus are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate, particularly in light of the ongoing COVID-19 pandemic and the related economic impact. The variables that go into the calculation of expected market opportunity are subject to change over time, and there is no guarantee that any particular number or percentage of customers covered by these market opportunity estimates will purchase our products at all or generate any particular level of revenue for us. Any expansion in Kalera’s market depends on a number of factors, including the cost and perceived value associated with our products and those of Kalera’s competitors. Even if the market in which Kalera competes meets the size estimates and growth forecast, Kalera’s business could fail to grow at the rate anticipated, if at all. Kalera’s growth is subject to many factors, including success in implementing its business strategy, which is subject to many risks and uncertainties.
Failure to retain and motivate Kalera’s senior management may adversely affect its operations and growth prospects.
Kalera’s success relies upon the continued service of certain members of its senior management, particularly those with specialist scientific knowledge such as Dr. Cristian Toma, our Chief Science Officer and Co-Founder, and Dr. Jade Stinson, President and Co-Founder of Vindara. Such executives have been primarily responsible for determining the strategic direction of Kalera’s business and for executing its growth strategy and are integral to its brand, culture and the reputation Kalera enjoys with suppliers, distributors, customers and consumers. The loss of the services of any executives could have a material adverse effect on its business and prospects, as Kalera may not be able to find suitable individuals to replace them on a timely basis, if at all. In addition, any such departure could be viewed in a negative light by investors and analysts, which may cause the price of Kalera’s common stock to decline.
Kalera is reliant on key personnel and the ability to attract new, qualified personnel.
Kalera is highly dependent upon having a highly qualified team and is therefore reliant on key personnel and the ability to retain and attract new, qualified personnel, particularly those with experience in plant science and genetics. The loss of a key person might impede the achievement of Kalera’s development and commercial objectives. Competition for key personnel with the required competences and experience is intense, and the competition for such personnel is expected to continue to increase. Many of the companies that Kalera competes with for experienced employees have greater resources than Kalera and may be able to offer more attractive terms of employment. There is no assurance that Kalera will be able to recruit the required new key personnel in the future. Any failure to retain or attract such personnel could result in Kalera not being able to successfully implement its strategy, which could have a material and adverse effect on Kalera’s business, financial condition, results of operations, cash flows and/or prospects.
Ingredient, packaging and energy costs are volatile and may rise significantly, which may negatively impact the profitability of Kalera’s business.
Kalera purchases large quantities of raw materials, including seeds, nutrients and growing media. In addition, Kalera purchases and uses significant quantities of cardboard, film and plastic to package its products. Costs of ingredients and packaging are volatile and can fluctuate due to conditions that are difficult to predict, including global competition for resources, weather conditions, consumer demand and changes in governmental trade and agricultural programs. Volatility in the prices of raw materials and other supplies that Kalera purchases could increase its cost of sales and reduce our profitability. In addition, energy costs are one of the most significant elements in Kalera’s cost of goods sold because of the LED grow lights are used in its facilities, making Kalera vulnerable to any spikes in price and also to power outages. Without an energy supply our facilities can keep plants alive for a maximum of four (4) days, meaning that a prolonged disruption in the supply of energy would be devastating for Kalera’s produce. Kalera may not be able to implement price increases for its products to cover any increased costs, and any price increases Kalera does implement may result in lower sales volumes. If Kalera is not successful in managing its ingredient, packaging and energy costs, if Kalera is unable to increase our prices to cover increased costs or if such price increases reduce its sales volumes, then such increases in costs will adversely affect its business, financial condition, results of operations, cash flow and/or prospects.
Kalera faces risks inherent in the agriculture business, including the risks of diseases and pests.
Kalera produces lettuce and leafy greens inside controlled environment growing facilities. As such, Kalera is subject to the risks inherent in an agricultural business, such as insects, plant and seed diseases and similar agricultural risks, which may include crop losses. Although its grocery is grown in climate-controlled circumstances, there can be no assurance that natural elements will not have an effect on production. In particular, plant diseases, such as root rot, virus, or pest infestations, can destroy all or a significant portion of its produce and could eliminate or significantly reduce production at a growing facility.
Although Kalera uses cleanroom technologies and procedures to reduce the risks of diseases and pests, such risks may not be totally eliminated. In addition, diseases and pests can make their way into facilities from outside sources over which Kalera has limited or no control. Diseases and pests can be inadvertently brought in by
employees, from seeds and vendors and from the trucks that transport supplies to the facilities. Once a disease or pest is introduced, Kalera will need to quickly identify the problem and take remedial action in order to preserve the growing season. Failure to identify and remediate any diseases or pests in a timely manner could cause the loss of all or a portion of Kalera’s crop and result in substantial time and resources to resume operations. Crop losses as a result of these agricultural risks could negatively impact Kalera’s business, prospects, financial condition, results of operations and cash flows.
The outbreak of COVID-19 may have significant negative effects on Kalera’s business.
Kalera’s performance is affected by the global economic conditions in the market in which it operates. The global economy has been experiencing a period of uncertainty since the outbreak of COVID-19, which was recognized as a pandemic by the World Health Organization in March 2020. The global outbreak of COVID-19, and the extraordinary health measures and restrictions on a local and global basis imposed by authorities across the world has, and may continue to cause, disruptions in Kalera’s value chain. Moreover, as a result of COVID-19, national authorities have adopted several laws and regulations with immediate effect and which provide a legal basis for the government to implement measures in order to limit the contagion and the consequences of COVID-19. Companies have also taken precautions, such as requiring employees to work remotely, imposing travel restrictions and temporarily closing businesses. To the extent that these restrictions remain in place, additional prevention and mitigation measures are implemented in the future, or there is uncertainty about the effectiveness of these or any other measures to contain or treat COVID-19, there is likely to be an adverse impact on global economic conditions and consumer confidence and spending, which could materially and adversely affect Kalera’s operations and demand for its products. There may also be significant reductions or volatility in consumer demand for Kalera’s products due to the temporary inability of consumers to purchase these products due to illness, quarantine or financial hardship, shifts in demand away from one or more of our products, decreased pantry-loading activity, any of which may negatively impact Kalera’s results, including as a result of an increased difficulty in planning for operations and future growing seasons.
Some of the consequences for Kalera, more specifically, have been:
•Some of Kalera’s key customers, such as US Foods, FreshPoint and Levy, are predominantly distributors to the foodservice industry customers, and sales through these channels have been negatively impacted by temporary shutdowns due to COVID-19. This reduced demand for Kalera’s products from these customers as the hospitality industry was forced to close for months and was not able to receive orders.
•COVID-19 has significantly impacted the foodservice industry in Central Florida and beyond resulting in lower production needs. As a consequence, Kalera had to slow down the ramp-up of its production from the large-scale facility in Orlando and reconfigure the facility to service the retail market. Since January 2021, sales from the Orlando facility have rapidly increased particularly driven by the recovery in Orlando’s food service market as the economy reopened after the COVID-19 shutdown.
•Kalera’s on-site HyCube installation supplying Marriott’s Orlando World Center resort has been affected due to a slow-down of hotel activities.
While Kalera is currently working on scaling up its operations, the COVID-19 crisis is continuously changing, and new laws and regulations that could directly, or indirectly, affect its operations may enter into force. The effects of the COVID-19 pandemic could in turn negatively affect its revenue and operations going forward, where the severity of the COVID-19 pandemic and the exact impacts for it are highly uncertain. The extent of COVID-19’s effect on Kalera’s operational and financial performance will depend on future developments, including the duration, spread and intensity of the pandemic, all of which are uncertain and difficult to predict considering the rapidly evolving landscape. As a result, it is not currently possible to ascertain the overall impact of COVID-19 on Kalera’s business. However, if the pandemic continues to persist as a severe worldwide health crisis, the disease could negatively impact Kalera’s business, financial condition results of operations and cash flows, and may also have the effect of heightening many of the other risks described in this “Risk Factors” section. In addition, similar risks to those described for COVID-19 may occur in case of a future outbreak of another pandemic or a similar global health threat.
Kalera relies on information technology systems and any inadequacy, failure, interruption or security breaches of those systems, including a cybersecurity incident or other technology disruptions, may harm its ability to effectively operate its business.
Kalera uses computers, software and technology in almost all critical parts of our business operations. Such use gives rise to cybersecurity risks, including security breaches, espionage, system disruption, theft and inadvertent release of information. Cybersecurity incidents are increasing in their frequency, sophistication and intensity, with third-party phishing and social engineering attacks in particular increasing in connection with the COVID-19 pandemic. Kalera’s business involves sensitive information and intellectual property, including technological know-how, private information about employees and financial and strategic information about it and its current and targeted business partners.
Kalera is dependent on various information technology systems, including, but not limited to, networks, applications and outsourced services in connection with the current and planned operation of its business. A failure of these information technology systems to perform as anticipated could cause Kalera’s business to suffer. For example, Kalera uses Cloud-based and IoT-based automation and “big data” analytics and AI for precise control of air and water quality, temperature and humidity, light, and nutrients in our operations. If this software does not perform as anticipated, Kalera’s equipment used in production may receive inadequate or erroneous information about the condition of the vegetables being grown, which may result in increased mitigation expenses, waste, additional labor expenses and partial or full loss of the produce.
While Kalera has implemented and updates its measures to prevent security breaches and cyber incidents, Kalera has experienced certain cyber incidents in the past and its preventative measures and incident response efforts are not a guarantee that cyber incidents or breaches will not occur in the future. The theft, destruction, loss, misappropriation or release of sensitive information or intellectual property, or interference with Kalera’s information technology systems or the technology systems of third parties on which Kalera relies, could result in business disruption, negative publicity, brand damage, violation of privacy laws, loss of customers and distributors, potential liability and competitive disadvantage all of which could negatively impact Kalera’s business, financial condition, results of operations and/or prospects.
In addition, Kalera’s information technology systems may be vulnerable to damage or interruption from circumstances beyond our control, including fire, natural disasters, systems failures, viruses and security breaches. Any such damage or interruption could negatively impact Kalera’s business, financial condition, results of operations, cash flows, and/or prospects.
Conducting business internationally, and international geopolitical events and economic factors, create operational, financial and tax risks for Kalera’s business.
Kalera’s business plan includes operations in international markets, including North America, Europe the Middle East and South-East Asia, and the eventual expansion into other international markets. Conducting and launching operations on an international scale requires close coordination of activities across multiple jurisdictions and time zones and consumes significant management resources. If Kalera fails to coordinate and manage these activities effectively, its business, financial condition, prospects or results of operations could be adversely affected. International sales entail a variety of risks, including currency exchange fluctuations, challenges in staffing and managing foreign operations, tariffs and other trade barriers, unexpected changes in legislative or regulatory requirements of foreign countries into which Kalera sells its products and services, difficulties in obtaining export licenses or in overcoming other trade barriers, laws and business practices favoring local companies, political and economic instability, difficulties protecting or procuring intellectual property rights, and restrictions resulting in delivery delays and significant taxes or other burdens of complying with a variety of foreign laws.
Further, global geopolitical events and international conflicts, including the ongoing military conflict between Russia and Ukraine, as well as the economic sanctions implemented by the United States and other countries against Russia in response thereto, may negatively impact markets, increase energy and transportation costs, and cause weaker macro-economic conditions. Although the length and impact of the ongoing military conflict is highly unpredictable, the conflict between Russia and Ukraine could lead to market disruptions, including significant
volatility in commodity prices, credit and capital markets, as well as supply chain interruptions, all of which could impact Kalera’s business, financial condition and results of operations.
In addition, the corporate structure of Pubco and its subsidiaries have entities in several jurisdictions such as Luxembourg, Ireland and the Cayman Islands. Conducting operations in international markets as described above, subject to tax risk. The expected tax treatment of Pubco and its subsidiaries relies on current tax laws and regulations, as well as certain tax treaties between the aforementioned different jurisdictions. As such, unexpected changes, interpretation, application or enforcement practice in respect of legislative or regulatory requirements of such tax laws in foreign countries in which Pubco or any of its subsidiaries is incorporated, tax resident and/or conducting operations and sales in, including but not limited to, changes in treatment of sales and results of operations earned in foreign and offshore jurisdictions, value added tax, cessation of tax treaties and recognition of tax law principles in other jurisdictions, as well as other changes in corporate tax law, may adversely affect Pubco’s business, financial conditions, prospects or result of operations.
Kalera’s management has limited experience in operating a public company and the requirements of being a public company may strain Kalera’s resources, divert management’s attention and affect the ability to attract and retain qualified board members and officers.
Kalera’s executive officers have limited experience in the management of a publicly traded company. Kalera’s management team may not successfully or effectively manage its transition to a U.S. public company that will be subject to significant regulatory oversight and reporting obligations under U.S. federal securities laws. Their limited experience in dealing with the increasingly complex laws pertaining to public companies could be a significant disadvantage in that it is likely that an increasing amount of their time may be devoted to these activities which will result in less time being devoted to the management and growth of the combined company, which could harm Kalera’s business, prospects and results of operations. Kalera may not have adequate personnel with the appropriate level of knowledge, experience, and training in the accounting policies, practices or internal controls over financial reporting required of public companies in the United States. The development and implementation of the standards and controls necessary for the combined company to achieve the level of accounting standards required of a public company in the United States may require costs greater than expected. It is possible that the combined company will be required to expand its employee base and hire additional employees to support its operations as a public company, which will increase its operating costs in future periods. Compliance with these rules and regulations will increase Kalera’s legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on Kalera’s systems and resources.
Risks Relating to Finance and Accounting
Agrico has identified a material weakness in its internal control over financial reporting. This material weakness could continue to adversely affect Agrico’s and/or Pubco’s ability to report results of operations and financial condition accurately and in a timely manner.
Agrico is responsible for establishing and maintaining adequate internal control over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Agrico’s management is likewise required to disclose any changes and material weaknesses identified through such evaluation in those internal controls. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis.
On November 15, 2021, the audit committee of the board of directors of Agrico concluded, after discussion with Agrico’s management, that Agrico’s audited balance sheet as of July 12, 2021 filed as Exhibit 99.1 to the Agrico’s Current Report on Form 8-K filed with the SEC on July 21, 2021, should no longer be relied upon due to the restatement of Agrico Class A ordinary shares as temporary equity.
Agrico’s Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of Agrico’s disclosure controls and procedures. Based upon their re-evaluation, Agrico’s Chief Executive Officer and Chief Financial Officer concluded that Agrico’s disclosure controls and procedures
were not effective during the period of time the error described above persisted, due to a material weakness in internal controls over financial reporting in analyzing complex financial instruments. In light of this material weakness, Agrico performed additional analysis as deemed necessary to ensure that Agrico’s unaudited interim financial statements were prepared in accordance with U.S. generally accepted accounting principles. Agrico reflected the restatements in Note 2 of the financial statements included in Agrico’s Quarterly Report on Form 10-Q for the period ended September 30, 2021, filed with the SEC on November 15, 2021.
Any failure to maintain internal controls could adversely impact Agrico’s and/or Pubco’s ability to report its financial position and results of operations on a timely and accurate basis. If Agrico’s and/or Pubco’s financial statements are not accurate, investors may not have a complete understanding of its operations. Likewise, if Agrico’s and/or Pubco’s financial statements are not filed on a timely basis, Agrico and/or Pubco could be subject to sanctions or investigations by the stock exchange on which its securities are listed, the SEC or other regulatory authorities. In either case, there could result a material adverse effect on Agrico’s and/or Pubco’s business. Ineffective internal controls could also cause investors to lose confidence in reported financial information, which could have a negative effect on the trading price of Agrico and/or Pubco’s securities.
There can be no assurance that the measures Agrico has taken and plans to take in the future will remediate the material weakness identified or that any additional material weaknesses or restatements of financial results will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting or circumvention of these controls. In addition, even if Agrico and/or Pubco is successful in strengthening its controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of financial statements.
Kalera has identified a material weakness in its internal control over financial reporting and may identify additional material weaknesses in the future or fail to maintain an effective system of internal control over financial reporting, which may result in material misstatements of the Pubco consolidated financial statements or cause Pubco to fail to meet its periodic reporting obligations.
As a private limited liability company incorporated in Norway, Kalera has not been required to document and test its internal controls over financial reporting, nor has management been required to certify the effectiveness of its internal controls, and its auditors have not been required to opine on the effectiveness of its internal control over financial reporting. Similarly, Kalera has not been subject to the SEC’s internal control reporting requirements. Following the Business Combination, Kalera will become subject to the requirement for management to certify the effectiveness of its internal controls and, in due course, the requirement with respect to auditor attestation on internal control effectiveness.
In connection with the audit of Kalera’s consolidated financial statements as of and for the year ended December 31, 2021, Kalera and its independent registered public accounting firm identified a material weakness in Kalera’s internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
The material weakness that Kalera and its independent registered public accounting firm identified, occurred because Kalera relied upon third party experts related to the annual calculation of its tax provisions due to global acquisitions with complex tax structures. Due to inadequate procedures resulting from the loss of key accounting personnel at year end, timely reviews were not completed to ensure an appropriate level of precision in such calculations and overall financial statement presentation disclosures.
Management, with oversight from the Audit Committee and Board of Directors is in the process of implementing a remediation plan for this material weakness, including, among other things, hiring additional tax accounting and financial reporting personnel and implementing process level and management review controls to ensure the income tax provision calculations and overall financial statement presentation disclosures are complete and accurate and to identify and address emerging risks.
There can be no assurance that Kalera’s efforts will remediate this deficiency in internal control over financial reporting or that additional material weaknesses in Kalera’s internal control over financial reporting will not be
identified in the future. Kalera’s failure to implement and maintain effective internal control over financial reporting could result in errors in its or Pubco’s consolidated financial statements that could result in a restatement of Kalera and/or Pubco’s financial statements, may subject Kalera and/or Pubco to litigation and investigations, and could cause Kalera and/or Pubco to fail to meet our reporting obligations, any of which could diminish investor confidence in Kalera and/or Pubco, cause a decline in the price of Pubco’s common stock and limit Pubco’s ability to access capital markets.
If Pubco discovers a material weakness in its internal control over financial reporting or otherwise fails to maintain effective internal control over financial reporting, Pubco’s ability to report its financial results on a timely and accurate basis and the market price of its ordinary shares may be adversely affected.
The Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) requires, among other things, upon the closing of the Business Combination, that Pubco evaluate the effectiveness of its internal control over financial reporting and disclosure controls and procedures. Prior to the completion of the Business Combination, Kalera was a company not subject to the Sarbanes-Oxley Act and did not have the necessary business processes and related internal controls formally designed and implemented, coupled with the appropriate resources with the appropriate level of experience and technical expertise, to oversee Kalera’s business processes and controls. To comply with the Sarbanes-Oxley Act, Pubco may incur substantial cost, expend significant management time on compliance-related issues and hire additional accounting, financial and internal audit staff with appropriate public company experience and technical accounting knowledge. Moreover, if Pubco is not able to comply with the requirements of the Sarbanes-Oxley Act in a timely manner or if Pubco or its independent registered public accounting firm identify deficiencies in Pubco’s internal control over financial reporting that are deemed to be material weaknesses, Pubco could be subject to sanctions or investigations by the stock exchange on which its securities are listed, the SEC or other regulatory authorities, which would require additional financial and management resources. Any failure to maintain effective disclosure controls and procedures or internal control over financial reporting could have a material adverse effect on Pubco’s business, prospects and operating results, and cause a decline in the price of Pubco’s securities.
If Pubco is unable to establish and maintain an effective internal control environment, and build its finance infrastructure, investors may lose confidence in the accuracy of Pubco’s financial reports.
As a U.S. public company, Pubco will operate in an increasingly demanding regulatory environment, which requires it to comply with the Sarbanes-Oxley Act, the regulations of Nasdaq, the rules and regulations of the SEC, expanded disclosure requirements, accelerated reporting requirements and more complex accounting rules. Company responsibilities required by the Sarbanes-Oxley Act include establishing corporate oversight and adequate internal control over financial reporting and disclosure controls and procedures. Effective internal controls are necessary for Pubco to produce reliable financial reports and are important to help prevent financial fraud. Commencing with its fiscal year ending the year in which the Business Combination is completed, Pubco must perform system and process evaluation and testing of its internal controls over financial reporting to allow management to report on the effectiveness of its internal controls over financial reporting in its Form 10-K filing for that year, as required by Section 404 of the Sarbanes-Oxley Act. Prior to Closing of the Business Combination, Kalera has never been required to test its internal controls within a specified period and, as a result, it may experience difficulty in meeting these reporting requirements in a timely manner.
Pubco anticipates that the process of building its accounting and financial functions and infrastructure will require significant additional professional fees, internal costs and management efforts. Pubco expects that it will need to implement a new internal system to combine and streamline the management of its financial, accounting, human resources and other functions. However, such a system would likely require Pubco to complete many processes and procedures for the effective use of the system or to run its business using the system, which may result in substantial costs. Any disruptions or difficulties in implementing or using such a system could adversely affect Pubco’s controls and harm its business. Moreover, such disruption or difficulties could result in unanticipated costs and diversion of management’s attention. In addition, Pubco may discover additional weaknesses in its system of internal financial and accounting controls and procedures that could result in a material misstatement of its financial statements. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Because of the inherent limitations in all control systems,
no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected.
Pubco may fail to establish and maintain effective internal control over financial reporting, in which case Pubco’s internal control over financial reporting may not prevent or detect all errors and all fraud. Pubco also may not be able to detect errors and fraud on a timely basis and its financial statements may be materially misstated. Although, the process of identifying the resources that Pubco will need to ensure the establishment and maintenance of effective internal controls for its current business has begun, there is no guarantee that such assessment will be accurate and post-Closing of the Business Combination, the complexity of Pubco’s business is likely to increase as it implements its business strategy and its business grows, and such increase in complexity will increase the difficulty of maintaining effective internal controls. If Pubco fails to establish and maintain effective internal control over financial reporting, its business and results of operations could be harmed, and investors may lose confidence in the accuracy and completeness of its financial reports, which could cause the price of its securities to decline. In addition, Pubco could become subject to investigations by Nasdaq, the SEC or other regulatory authorities, which could require additional management attention and which could adversely affect Pubco’s business.
If the Business Combination’s benefits do not meet the expectations of investors or securities analysts, the market price of Pubco’s securities may decline.
In addition, following the Business Combination, fluctuations in the price of Pubco’s securities could contribute to the loss of all or part of your investment. Prior to the Business Combination, there has been a limited, unregulated public market for Kalera’s ordinary shares in Norway and no public market in the United States. Accordingly, the valuation Agrico has ascribed to Kalera in the Business Combination may not be indicative of the price that will be implied in the trading market for Pubco’s securities following the Business Combination. If an active market for Pubco’s securities develops and continues after the Business Combination, the trading price of such securities could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond Pubco’s control. Any of the factors listed below could have a material adverse effect on your investment in Pubco’s securities and Pubco’s securities may trade at prices significantly below the price you paid for them or that were implied by the conversion of Kalera Shares you owned into Pubco’s securities as a result of the Business Combination. In such circumstances, the trading price of Pubco’s securities may not recover and may experience a further decline.
In addition to the other risks described in this “Risk Factors” section, the following factors could also cause Kalera’s financial condition and results of operations to fluctuate on a quarterly basis:
•actual or anticipated fluctuations in Pubco’s quarterly financial results or the quarterly financial results of companies perceived to be similar to it;
•changes in the market’s expectations about Pubco’s operating results;
•success of competitors;
•Pubco’s operating results failing to meet the expectation of securities analysts or investors in a particular period;
•changes in financial estimates and recommendations by securities analysts concerning Pubco or the vertical farming or agriculture industry in general;
•operating and share price performance of other companies that investors deem comparable to Pubco;
•Pubco’s ability to bring its products and technologies to market on a timely basis, or at all;
•changes in laws and regulations affecting Pubco’s business;
•Pubco’s ability to meet compliance requirements;
•commencement of, or involvement in, litigation involving Pubco;
•changes in Pubco’s capital structure, such as future issuances of securities or the incurrence of additional debt;
•the volume of Pubco’s shares available for public sale;
•any major change in the Pubco board of directors or management;
•amounts of Pubco’s shares by Pubco’s directors, executive officers or significant shareholders or the perception that such sales could occur; and
•general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations, pandemic such as COVID-19 and acts of war or terrorism.
Fluctuations in Pubco’s operating results and cash flow could, among other things, give rise to short-term liquidity issues. In addition, its revenue, key operating metrics and other operating results in future quarters may fall short of the expectations of investors and financial analysts, which could have an adverse effect on the price of Pubco’s securities.
Kalera’s ability to utilize its U.S. federal net operating loss and tax credit carryforwards may be limited under Sections 382 and 383 of the Code
The limitations apply if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50 percentage point change (by value) in its equity ownership by certain stockholders over a three-year period. If Kalera has experienced an ownership change at any time since its incorporation, it may already be subject to limitations on its ability to utilize its existing U.S. federal income tax net operating losses and other tax attributes to offset taxable income. In addition, future changes in Kalera’s stock ownership, which may be outside of its control, may trigger an ownership change and, consequently, Section 382 and 383 limitations. Similar provisions of state tax law may also apply to limit Kalera’s use of accumulated state tax attributes. As a result, if we earn net taxable income, Kalera’s ability to use its pre-change net operating loss carryforwards and other tax attributes to offset such taxable income may be subject to limitations, which could potentially result in increased future income tax liability to Kalera.
Risks Relating to Legal and Regulatory Compliance
Kalera’s operations are subject to FDA, FTC, USDA, EPA and OSHA governmental regulation and state regulation and Kalera is exposed to risks related to regulatory processes and changes in regulatory environment, including, but not limited to the Produce Safety Rule, GMPs and the Preventative Controls Rule.
The manufacture and marketing of food products is highly regulated in the United States, and Kalera is subject to a variety of laws and regulations. These laws and regulations apply to many aspects of its business, including the manufacture, packaging, labeling, distribution, advertising, sale, quality, and safety of its products, as well as the health and safety of its employees and the protection of the environment. Following the acquisition of &ever, Kalera is also subject to laws and regulations in international jurisdictions, including, but not necessarily limited to, Germany, Kuwait and Singapore.
In the United States, Kalera is subject to regulation by various government agencies, including the U.S. Food and Drug Administration (“FDA”), the Federal Trade Commission (“FTC”), the Occupational Safety and Health Administration (“OSHA”), the Environmental Protection Agency (“EPA”), and U.S. Department of Agriculture (“USDA”), as well as various state and local agencies. Further, regulations outside the United States, Germany, Kuwait and Singapore by various international regulatory bodies could also apply in the future as Kalera, under its current roll-out plan, is seeking to establish its business internationally. In addition, Kalera could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act, or FCPA, and similar worldwide anti-bribery laws, which generally prohibit companies and their intermediaries from making improper payments to non-U.S. officials or other third parties for the purpose of obtaining or retaining business. While Kalera has policies that mandate compliance with these anti-bribery laws, its internal control policies and procedures may not protect it from reckless or criminal acts committed by its employees or agents. Violations of these laws, or allegations of such violations,
could disrupt its business and result in a material adverse effect on our results of operations, cash flows and financial condition.
In addition, depending on customer specification, Kalera may be subject to certain voluntary, third-party standards, such as Global Food Safety Initiative, or GFSI, standards and review by voluntary organizations, such as the Council of Better Business Bureaus’ National Advertising Division. Kalera could incur costs, including fines, penalties and third-party claims, because of any violations of, or liabilities under, such requirements, including any competitor or consumer challenges relating to compliance with such requirements. The loss of third-party accreditation could result in lost sales and customers, and may adversely affect Kalera’s business, results of operation, and financial condition. In connection with the marketing and advertisement of our products, Kalera could be the target of claims relating to false or deceptive advertising, including under the auspices of the FTC and the consumer protection statutes of some states.
The regulatory environment in which we operate could change significantly and adversely in the future. Any change in manufacturing, labeling or packaging requirements for our products may lead to an increase in costs or interruptions in production, either of which could adversely affect our operations and financial condition. New or revised government laws and regulations could result in additional compliance costs, mandate significant and costly changes to the way Kalera implements its products, and threaten its ability to serve certain markets, and, in the event of non-compliance, civil remedies, including fines, injunctions, withdrawals, recalls, or seizures and confiscations, warning letters, restrictions on the marketing or manufacturing of products, or refusals to permit the import or export of products, as well as potential criminal sanctions, any of which may adversely affect its business, results of operations, cash flows, financial condition, operating revenue, profitability and/or prospects.
Food safety and foodborne illness incidents or advertising or product mislabeling may materially adversely affect Kalera’s business by exposing it to lawsuits, product recalls, or regulatory enforcement actions, increasing its operating costs and reducing demand for Kalera’s product offerings.
Selling food for human consumption involves inherent legal and other risks, and there is increasing governmental scrutiny of and public awareness regarding food safety. Unexpected side effects, illness, injury or death related to allergens, foodborne illnesses or other food safety incidents caused by products that Kalera sells could result in the discontinuance of sales of these products, or otherwise result in increased operating costs, regulatory enforcement actions, or harm to its reputation. Shipment of adulterated or misbranded products, even if inadvertent, can result in criminal or civil liability. Such incidents could also expose Kalera to product liability, negligence, or other lawsuits, including consumer class action lawsuits. Any claims brought against Kalera may exceed or be outside the scope of our existing or future insurance policy coverage or limits. Any judgment against Kalera that is more than its policy limits or not covered by its policies or not subject to insurance would have to be paid from its cash reserves, which would reduce its capital resources.
The occurrence of foodborne illnesses or other food safety incidents could also adversely affect the price and availability of affected raw materials, resulting in higher costs, disruptions in supply and a reduction in sales. Furthermore, any instances of food contamination or regulatory noncompliance, whether or not caused by its actions, could compel Kalera or its customers, depending on the circumstances, to conduct a recall in accordance with FDA regulations, and comparable state laws. Food recalls could result in significant losses due to their costs, the destruction of product inventory, lost sales due to the unavailability of the product for a period of time and potential loss of existing distributors or customers and a potential negative impact on our ability to attract new customers due to negative consumer experiences or because of an adverse impact on our brand and reputation. The costs of a recall could be outside the scope of its existing or future insurance policy coverage or limits.
In addition, food companies have been subject to targeted, large-scale tampering as well as to opportunistic, individual product tampering, and we, like any food company, could be a target for product tampering. Forms of tampering could include the introduction of foreign material, chemical contaminants, and pathogenic organisms into consumer products as well as product substitution. FDA regulations require businesses like ours to analyze, prepare, and implement mitigation strategies specifically to address tampering designed to inflict widespread public health harm. If Kalera does not adequately address the possibility, or any actual instance, of product tampering, Kalera could face possible seizure or recall of its products, suspension of its facilities’ registrations, and/or the imposition of
civil or criminal sanctions, which could materially adversely affect its business, financial condition, cash flows, operating results and/or prospects.
Litigation or legal proceedings could expose Kalera to significant liabilities and have a negative impact on its reputation or business.
Kalera may become subject to claims, litigation, disputes and other legal proceedings from time to time. Kalera evaluates these claims, litigation, disputes and other legal proceedings to assess the likelihood of unfavorable outcomes and to estimate, if possible, the amount of potential losses. Based on these assessments and estimates, Kalera may establish reserves, as appropriate. These assessments and estimates are based on the information available to management at the time and involve a significant amount of management judgment. Actual outcomes or losses may differ materially from our assessments and estimates.
Under the terms of the engagement letter executed between BofA Securities and Kalera, Kalera agreed to indemnify and hold harmless BofA Securities and its officers, directors, employees and agents from and against any losses and claims arising in any manner out of or in connection with the services that BofA Securities provided to Kalera thereunder. Accordingly, if any claims, litigation, disputes or other legal proceedings are brought by third parties against BofA Securities in relation to the services it provided to Kalera, Kalera will be liable to pay for or reimburse BofA Securities for the losses and costs it incurs unless the losses and costs are finally judicially determined to have resulted from the gross negligence or willful misconduct of BofA or its officers, directors, employees and agents.
Even when not merited or whether or not Kalera ultimately prevails, the defense of these lawsuits may divert management’s attention, and Kalera may incur significant expenses in defending these lawsuits. The results of litigation and other legal proceedings are inherently uncertain, and adverse judgments or settlements in some of these legal disputes may result in adverse monetary damages, penalties or injunctive relief against Kalera, which could negatively impact its financial position, cash flows or results of operations. An unfavorable outcome of any legal dispute could imply that Kalera becomes liable for damages or will have to modify its business model. Further, any product liability or negligence claim against Kalera in US courts may, if successful, result in damages being awarded that contain punitive elements and therefore may significantly exceed the loss or damage suffered by the successful claimant. Any claims or litigation, even if fully indemnified or insured, could damage our reputation and make it more difficult to compete effectively or to obtain adequate insurance in the future. A settlement or an unfavorable outcome in a legal dispute could have an adverse effect on Kalera’s business, financial condition, results of operations, cash flows, time to market and/or prospects.
Furthermore, while Kalera maintains insurance for certain potential liabilities, such insurance does not cover all types and amounts of potential liabilities and is subject to various exclusions as well as caps on amounts recoverable. Even if Kalera believes a claim is covered by insurance, insurers may dispute its entitlement to recovery for a variety of potential reasons, which may affect the timing and, if the insurers prevail, the amount of our recovery.
Kalera is subject to stringent environmental regulation and could therefore become subject to environmental litigation, proceedings, and investigations.
Kalera’s past and present business operations and ownership/leasing and operation of real property are subject to stringent federal, state, and local environmental laws and regulations pertaining to the discharge of materials into the environment, and the handling and disposition of wastes (including solid and hazardous wastes) or otherwise relating to protection of the environment. Compliance with these laws and regulations, and the ability to comply with any modifications to these laws and regulations, is material to Kalera’s business. New matters or sites may be identified in the future that will require additional investigation, assessment, or expenditures. Future discovery of contamination of property underlying or in the vicinity of our present properties or facilities could require us to incur additional expenses. The occurrence of any of these events, the implementation of new laws and regulations, or stricter interpretation of existing laws or regulations, could adversely affect its business, financial condition, results of operations, cash flows, time to market and/or prospects.
Changes in tax laws may materially adversely affect Pubco’s or any of its subsidiaries’ business, prospects, financial condition and operating results.
New income, sales, use or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time, which could adversely affect our business, prospects, financial condition and operating results. Further, existing tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to Pubco or any of its subsidiaries. For example, U.S. federal tax legislation enacted in 2017, informally titled the Tax Cuts and Jobs Act, enacted many significant changes to the U.S. tax laws. Additional tax legislation is currently pending in the United States Congress. We are unable to predict what tax proposals may be proposed or enacted in the future or what effect such changes would have on Pubco’s business, but such changes, to tax legislation, regulations, policies or practices, could affect Pubco’s financial position and overall or effective tax rates in the future in countries where we have operations and where Pubco is organized or a resident of for tax purposes, and increase the complexity, burden and cost of tax compliance. We urge investors to consult with their legal and tax advisers regarding the implication of potential changes in tax laws on an investment in Pubco’s securities.
EXTRAORDINARY GENERAL MEETING OF AGRICO SHAREHOLDERS
General
Agrico is furnishing this joint proxy statement/prospectus to its shareholders as part of the solicitation of proxies by its board of directors for use at the Agrico Special Meeting and at any adjournment or postponement thereof. This joint proxy statement/prospectus provides Agrico’s shareholders with information they need to know in order to be able to vote or instruct their vote to be cast at the Agrico Special Meeting.
Date, Time and Place
The Agrico Special Meeting will be held on June 27, 2022 at 10:00 a.m., Eastern Time at the offices of Maples and Calder (Cayman) LLP at 121 South Church Street, Ugland House, Grand Cayman, Cayman Islands and virtually, via live audio cast, at https://www.cstproxy.com/agricoacquisition/2022.
Purpose of the Agrico Special Meeting
At the Agrico Special Meeting, Agrico is asking holders of Agrico Ordinary Shares to:
•consider and vote upon a proposal to adopt the Business Combination Agreement and approve the Business Combination and the other transactions contemplated by the Business Combination Agreement (the “Business Combination Proposal”);
•consider and vote upon a proposal to approve the adoption by Pubco of the 2022 Plan (the “Incentive Plan Proposal”);
•consider and vote upon a proposal to approve the First Merger (the “First Merger Proposal”); and
•consider and vote upon a proposal to adjourn the Agrico Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that, based upon the tabulated votes at the time of the Agrico Special Meeting, there are not sufficient votes to authorize Agrico to consummate the Business Combination and each other matter to be considered at the Agrico Special Meeting or if holders of the Agrico Shares have elected to redeem an amount of Agrico Shares such that the Minimum Cash Condition would not be satisfied (the “Adjournment Proposal”).
Recommendation of the Agrico Board of Directors
The board of directors of Agrico has unanimously determined that the Business Combination Proposal is fair to and in the best interests of Agrico and its shareholders; has unanimously approved the Business Combination Proposal; and unanimously recommends that shareholders vote “FOR” the Business Combination Proposal; “FOR” the Incentive Plan Proposal; “FOR” the First Merger Proposal; and “FOR” the Adjournment Proposal, if presented to the meeting.
Record Date; Outstanding Shares; Shareholders Entitled to Vote
Agrico has fixed the close of business on May 12, 2022 as the “Agrico Record Date” for determining Agrico Shareholders entitled to notice of and to attend and vote at the Agrico Special Meeting. As of the close of business on the Agrico Record Date, there were 14,518,750 Class A ordinary shares and 3,593,750 Class B ordinary shares outstanding and entitled to vote. Each Agrico Ordinary Share is entitled to one vote per share at the Agrico Special Meeting.
Pursuant to agreements with Agrico and Kalera, the 3,593,750 Founder Shares held by the Agrico Initial Shareholders, and any Agrico Ordinary Shares acquired in the aftermarket by such shareholders, will be voted in favor of the Business Combination Proposal and the other proposals presented at the Agrico Special Meeting.
Quorum and Vote of Agrico Shareholders
A quorum of Agrico Shareholders is necessary to hold a valid meeting. A quorum will be present at the Agrico Special Meeting if a majority of the outstanding shares entitled to vote at the meeting are represented in person or by proxy. Abstentions and Broker Non-Votes will be counted towards determining the presence of a quorum for the transaction of business at the Agrico Special Meeting but will not be treated as votes cast and will, therefore, not affect the outcome of the vote on the Business Combination Proposal, the Incentive Plan Proposal, First Merger Proposal and the Adjournment Proposal (if presented). As at the Agrico Record Date, DJCAAC LLC held approximately 20% of the outstanding Agrico Ordinary Shares. Such shares, as well as any Agrico Shares acquired in the aftermarket by DJCAAC LLC, will be voted in favor of the proposals presented at the Agrico Special Meeting. The proposals presented at the Agrico Special Meeting will require the following votes:
•The approval of the Business Combination Proposal will require an “Ordinary Resolution” as a matter of Cayman Islands law and pursuant to the Agrico Articles.
•The approval of the Incentive Plan Proposal will require an “Ordinary Resolution” as a matter of Cayman Islands law and pursuant to the Agrico Articles.
•The approval of the First Merger Proposal will require a “Special Resolution” as a matter of Cayman Islands law and pursuant to the Agrico Articles.
•The approval of the Adjournment Proposal will require an “Ordinary Resolution” as a matter of Cayman Islands law and pursuant to the Agrico Articles.
The approval of each of the Business Combination Proposal, the Incentive Plan Proposal and the Adjournment Proposal requires an “Ordinary Resolution” under Cayman Islands law and the Agrico Articles, which is a resolution passed by a simple majority of the members as, being entitled to do so, vote in person or by proxy at the Agrico Special Meeting and includes a unanimous written resolution. The approval of the First Merger Proposal requires a “Special Resolution” under Cayman Islands law and the Agrico Articles, which is a resolution passed by a majority of at least two-thirds of such members as, being entitled to do so, vote in person or by proxy at the Agrico Special Meeting and includes a unanimous written resolution. Assuming a quorum is established, a shareholder’s failure to vote by proxy or to vote at the Agrico Special Meeting will have no effect on any of the proposals.
Under the Business Combination Agreement, approval of each of the Business Combination Proposal, the Incentive Plan Proposal, the First Merger Proposal, and the Merger Proposal by Kalera’s and Agrico’s shareholders are conditions to the consummation of the Business Combination. The Business Combination Proposal, the Incentive Plan Proposal, the First Merger Proposal, and the Merger Proposal are conditioned on the approval of each other. As such, in the event that any of the Business Combination Proposal and the Merger Proposal do not receive the requisite vote for approval, then Kalera and Agrico will not consummate the Business Combination. The Adjournment Proposal is not conditioned on the approval of any other proposal set forth in this joint proxy statement/prospectus.
Voting Your Shares
Each Agrico Ordinary Share that you own in your name entitles you to one vote. Your proxy card shows the number of Agrico Ordinary Shares that you own. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted.
There are two ways to vote your Agrico Ordinary Shares at the Agrico Special Meeting:
You Can Vote by Signing and Returning the Enclosed Proxy Card. If you vote by proxy card, your “proxy,” whose name is listed on the proxy card, will vote your shares as you instruct on the proxy card. If you sign and return the proxy card but do not give instructions on how to vote your shares, your shares will be voted as recommended by the Agrico board “FOR” the Business Combination Proposal, “FOR” the Incentive Plan Proposal,
“FOR” the First Merger Proposal, and “FOR” the Adjournment Proposal, if presented. Votes received after a matter has been voted upon at the Agrico Special Meeting will not be counted.
You Can Attend the Agrico Special Meeting and Vote. You will receive a ballot when you arrive at the Agrico Special Meeting. However, if your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. If you wish to attend the meeting and vote and your shares are held in “street name,” you must obtain a legal proxy from your broker, bank or nominee. That is the only way Agrico can be sure that the broker, bank or nominee has not already voted your shares.
INDEX TO FINANCIAL STATEMENTS
KALERA AS AND SUBSIDIARIES
AGRICO ACQUISITION CORP.
&EVER GMBH
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Shareholders
Kalera AS and Subsidiaries
Opinion on the financial statements
We have audited the accompanying consolidated balance sheets of Kalera AS (a Norway private limited liability company) and Subsidiaries (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations and comprehensive loss, changes in shareholders’ equity, and cash flow for the years ending December 31, 2021 and 2020, and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years ended December 31, 2021 and 2020, in conformity with accounting principles generally accepted in the United States of America.
Going concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company incurred a net loss of $40.1 million during the year ended December 31, 2021, and as of that date, the Company has an accumulated deficit of $62.6 million. These conditions, along with other matters as set forth in Note 2, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ GRANT THORNTON LLP
We have served as the Company’s auditor since 2021.
Orlando, Florida
April 21, 2022
Kalera AS and Subsidiaries
Consolidated Balance Sheets
December 31, 2021 and 2020
| | | | | | | | | | | |
| December 31, 2021 | | December 31, 2020 |
Assets | | | |
Current assets: | | | |
Cash and cash equivalents | $ | 16,146 | | | $ | 113,353 | |
Trade receivables, net | 795 | | | 157 | |
Inventory | 1,190 | | | 104 | |
Prepaid expenses and other current assets | 2,960 | | | 330 | |
Total current assets | 21,091 | | | 113,944 | |
Property, plant, and equipment, net | 128,162 | | | 28,506 | |
Operating lease right-of-use assets | 55,276 | | | 7,462 | |
Goodwill | 68,421 | | | 156 | |
Intangible assets, net | 72,371 | | | 530 | |
Equity method investment | 1,322 | | | — | |
Other non-current assets | 3,353 | | | 3,148 | |
Total assets | $ | 349,996 | | | $ | 153,746 | |
Liabilities and shareholders' equity | | | |
Current liabilities: | | | |
Accounts payable | $ | 10,421 | | | $ | 178 | |
Operating lease liabilities | 1,618 | | | 131 | |
Accrued salaries and wages | 717 | | | 243 | |
Accrued expenses | 1,964 | | | 793 | |
Total current liabilities | 14,720 | | | 1,345 | |
Other non-current liabilities | 662 | | | 62 | |
Non-current operating lease liabilities | 57,717 | | | 7,625 | |
Deferred tax liability | 8,447 | | | — | |
Asset retirement obligations | 1,527 | | | 588 | |
Total liabilities | 83,073 | | | 9,620 | |
Commitments and contingencies (Note 2) | | | |
Shareholders' equity | | | |
Common stock, $.001 par, 209,354,819 and 161,024,239 authorized, issued and outstanding, respectively | 206 | | | 194 | |
Additional paid in capital | 330,870 | | | 166,859 | |
Accumulated other comprehensive loss | (1,547) | | | (22,549) | |
Accumulated deficit | (62,606) | | | (378) | |
Total shareholders' equity | 266,923 | | | 144,126 | |
Total liabilities and shareholders' equity | $ | 349,996 | | | $ | 153,746 | |
The accompanying notes are an integral part of these consolidated financial statements.
Kalera AS and Subsidiaries
Consolidated Statement of Operations and Comprehensive Loss
(In thousands and USD, except per share data)
| | | | | | | | | | | |
| Year ended December 31, 2021 | | Year ended December 31, 2020 |
Net sales | $ | 2,855 | | | $ | 887 | |
Cost of goods sold (exclusive of depreciation and amortization shown separately below) | (9,634) | | | (1,935) | |
Selling, general, and administrative expenses | (28,621) | | | (6,467) | |
Depreciation and amortization | (4,009) | | | (967) | |
Impairment loss | (1,051) | | | — | |
Operating loss | (40,460) | | | (8,482) | |
Interest expense, net | (1,634) | | | (503) | |
Other income | 780 | | | 328 | |
Loss from operations before income tax | (41,314) | | | (8,657) | |
Income tax benefit | 1,331 | | | — | |
Loss before equity in net earnings loss of affiliate | (39,983) | | | (8,657) | |
Equity in net loss of affiliate | 74 | | | — | |
Net loss | $ | (40,057) | | | $ | (8,657) | |
Currency translation adjustments | $ | (1,169) | | | $ | (378) | |
Total comprehensive loss for the year | (41,226) | | | (9,035) | |
Net loss per share - basic and diluted | $ | (0.23) | | | $ | (0.08) | |
Weighted average common shares outstanding – basic and diluted | 175,796 | | | 114,160 | |
The accompanying notes are an integral part of these consolidated financial statements.
Kalera AS and Subsidiaries
Consolidated Statement of Changes in Shareholders’ Equity
(In thousands and USD, except share data)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common Stock | | | | | | | | |
| Shares | | Amount | | Additional Paid-In Capital | | Accumulated Deficit | | Accumulated Other Comprehensive Loss | | Total |
Balance at January 1, 2020 | 68,433,478 | | | $ | 98 | | | $ | 22,043 | | | $ | (13,892) | | | $ | — | | | $ | 8,249 | |
Issuance of shares | 86,324,999 | | | 95 | | | 140,524 | | | | | | | 140,619 | |
Conversion of loan to common stock | 6,265,762 | | | 1 | | | 3,296 | | | | | | | 3,297 | |
Share-based compensation expense | | | | | 996 | | | | | | | 996 | |
Net loss | | | | | | | (8,657) | | | | | (8,657) | |
Currency translation adjustments | | | | | | | | | (378) | | | (9,035) | |
Balance at December 31, 2020 | 161,024,239 | | | $ | 194 | | | $ | 166,859 | | | $ | (22,549) | | | $ | (378) | | | $ | 144,126 | |
Issuance of shares | 48,330,580 | | | 12 | | | 161,446 | | | | | | 161,458 | |
Share-based compensation expense | | | | | 2,565 | | | | | | 2,565 | |
Net loss | | | | | | | (40,057) | | | | (40,057) | |
Currency translation adjustments | | | | | | | | | (1,169) | | (1,169) | |
Balance at December 31, 2021 | 209,354,819 | | | $ | 206 | | | $ | 330,870 | | | $ | (62,606) | | | $ | (1,547) | | | $ | 266,923 | |
The accompanying notes are an integral part of these consolidated financial statements.
Kalera AS and Subsidiaries
Consolidated Statement of Cash Flow
(In thousands and USD)
| | | | | | | | | | | |
| December 31, 2021 | | December 31, 2020 |
Cash flows - operating activities | | | |
Net loss | $ | (40,057) | | | $ | (8,657) | |
Adjustments to reconcile net loss to net cash used in operating activities: | | | |
Depreciation and amortization | 4,009 | | | 560 | |
Non-cash lease expense | 3,435 | | | 407 | |
Share-based compensation | 2,565 | | | 996 | |
Impairment loss | 1,051 | | | — | |
Deferred income tax benefit | (1,331) | | | — | |
Equity in net loss of affiliate | 74 | | | — | |
Gain from insurance recovery | (650) | | | — | |
Gain on forgiveness of debt | — | | | (328) | |
Inventory write down | 6,475 | | | 1,828 | |
Changes in assets and liabilities: | | | |
Inventory | (7,551) | | | (1,932) | |
Prepaid expenses and other current assets | (2,056) | | | (250) | |
Trade receivables | 422 | | | (150) | |
Other non-current assets | (205) | | | (2,838) | |
Account payables and accrued expenses | 8,988 | | | 734 | |
Net cash used in operating activities | (24,831) | | | (9,630) | |
Cash flows - investing activities | | | |
Insurance proceeds | 650 | | | — | |
Purchases of property, plant, and equipment | (82,863) | | | (20,846) | |
Purchases of licenses and software for developed technology | (583) | | | — | |
Acquisitions of businesses, net of cash acquired | (49,722) | | | — | |
Net cash used in investing activities | (132,518) | | | (20,846) | |
Cash flows - financing activities | | | |
Net proceeds from issuance of common stock | 61,696 | | | 140,619 | |
Proceeds from loan facility | 34,000 | | | — | |
Payment on loan facility | (34,000) | | | — | |
Proceeds from forgivable loan | — | | | 328 | |
Repayment on operating lease liabilities | (457) | | | (507) | |
Net cash provided by financings activities | 61,239 | | | 140,440 | |
Net (decrease) increase in cash and cash equivalents | (96,110) | | | 109,964 | |
Cash and cash equivalents at beginning of period | 113,353 | | | 3,395 | |
Effect of exchange rate changes on cash | (1,097) | | | (6) | |
Cash and cash equivalents at end of period | $ | 16,146 | | | $ | 113,353 | |
| | | |
Supplemental disclosures of cash flow information: | | | |
Increase in property and equipment resulting from capitalizing asset retirement obligations | 889 | | | 334 | |
Shares issued in exchange for businesses acquired | 99,762 | | | — | |
| | | | | | | | | | | |
| 100,651 | | | 606 | |
| | | |
Supplemental disclosures of non-cash financing activities: | | | |
Conversion of convertible loan to common stock | — | | | 3,297 | |
| | | |
Supplemental disclosures of cash flow information: | | | |
Cash paid for interest | 1,800 | | | 272 | |
| | | |
| | | |
The accompanying notes are an integral part of these consolidated financial statements.
KALERA AS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
NOTE 1: DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Kalera AS (“the Company”) and its subsidiaries is a hydroponic vertical farming company. The Company operates vertical hydroponic farms and related technology development facilities that produce various lettuce and micro–greens for the retail and food service markets. The Company is a private limited liability company incorporated under the laws of Norway, and its shares are listed on the Euronext Growth Oslo Exchange, a multilateral trading facility operated by the Oslo Stock Exchange. At December 31, 2021 the Company had four (4) large scale operating hydroponic farms (“farms” or “production facilities”) within Florida, Georgia, Texas and Kuwait and was building new farms in several locations, including Ohio, Colorado, Washington, Hawaii, Minnesota and Singapore. At the end of December 31, 2020, the Company had one (1) large scale production facility within Florida and was building new farms in Georgia and Texas.
In March 2020, the World Health Organization declared the spread of the coronavirus (“COVID–19”) a global pandemic. As a result of the pandemic, the vast majority of the Company’s customers in the foodservice and hospitality industries had to close their operations temporarily. These closures resulted in the loss of sales during the year ended December 31, 2020. During 2021, the industry recovered and the Company was able to increase its sales to its foodservice and hospitality customers.
Currently, all of the Company’s operations are operating normally, however, the extent to which COVID–19 and the related global economic crisis affect the Company’s business, results of operations and financial condition, will depend on future developments that are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and any recovery period, future actions taken by governmental authorities, central banks and other third parties (including new financial regulation and other regulatory reform) in response to the pandemic, and the effects on our products, clients, vendors and employees. The Company continues to service its customers amid uncertainty and disruption linked to COVID–19 and is actively managing its business to respond to the impact.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying audited consolidated financial statements for the years ended December 31, 2021 and 2020 for the Company and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).
Principles of Consolidation
The Company’s consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions, balances and unrealized gains and losses have been eliminated in consolidation. The Company includes the following wholly owned subsidiaries as of December 31, 2021:
Kalera AS
•Kalera Inc.
•Iveron Materials, Inc.
•Vindara, Inc.
•Kalera GmbH (formerly known as &ever GmbH)
•Kalera S.A.
•Kalera Real Estate Holdings, LLC
•Kalera Singapore PTE. LTD. (formerly known as &ever Singapore)
•WAFRA Agriculture for Agriculture Contracting Company - SPC
•Kalera Middle East Holding Ltd (formerly &ever Middle East Holdings Ltd)
KALERA AS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
Segment Reporting
The Company’s chief operating decision maker, or the CODM, is considered to be the Chief Operating Officer along with and supported by the Company’s Chief Executive Officer and Chief Financial Officer, together comprising the CODM. The CODM measures performance based on overall return to shareholders based on consolidated return to shareholders. The Company had one operating segment for the years ended December 31, 2021 and 2020 that is engaged in the sale and production of hydroponic lettuce and micro-greens.
Use of Estimates
The preparation of the financial statements in accordance with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may or may not differ from those estimates.
Revenue Recognition
The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. To achieve this core principle, the Company applies the following five-step model: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when or the company satisfies a performance obligation.
The Company recognizes revenue through the sale of various varieties of lettuce and micro–greens, which are sold to food retail and distribution customers, generally with standard shipping terms. The Company’s revenue results from the delivery of products as the single performance obligation transferred at an agreed upon price per unit. The Company recognizes revenue for the sale of products at the point in time the performance obligation has been satisfied, which is when control of the product has transferred to the customer. Control of the product generally occurs upon shipment or delivery to the customer based on terms of the sale.
Revenue is measured as the amount of consideration the Company expects to receive in exchange for delivering products. The amount of revenue recognized is reduced for estimated returns, discounts and other customer credits. No significant element of financing is deemed present as the sales are made with a credit term of thirty (30) days, which is consistent with market practice. A trade receivable is recognized when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.
Leases
The Company identifies leases by evaluating its contracts to determine if the contract conveys the right to use an identified asset for a stated period of time in exchange for consideration. The Company considers whether it can control the underlying asset and has the right to obtain substantially all of the economic benefits or outputs from the asset. Leases with terms greater than twelve (12) months are classified as either operating or finance leases at the commencement date based on guidance in ASC 842, Leases. For these leases, the Company capitalizes the present value of the minimum lease payments including property taxes and other common area maintenance costs over the lease terms as a right–of–use asset with an offsetting lease liability. The discount rate used to calculate the present value of the minimum lease payments is based on an incremental borrowing rate, which approximates the rate of interest the Company would have to pay to borrow on a collateralized basis over a similar term. The lease term includes any non-cancelable period for which the Company has the right to use the asset. Currently, all capitalized leases are classified as operating leases and the Company records lease expense on a straight–line basis over the term of the lease.
KALERA AS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
Cash and Cash Equivalents
The Company considers short–term investment securities with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents at December 31, 2021 and 2020 were $16,146 thousand and $113,353 thousand, respectively, of which $1,824 thousand and $6,097 thousand, respectively, was held at U.S. banks of which approximately $1,305 thousand and $4,072 thousand, respectively, was in excess of the Federal Deposit Insurance Corporation insured limit of $250 thousand per bank. The remaining balance of $14,322 thousand and $107,256 thousand, respectively was held in foreign bank accounts and was not fully insured.
Trade Receivables
Trade receivables are recognized initially at fair value less provision for expected credit losses. The Company records an allowance for doubtful accounts to allow for any amounts that may not be recoverable, which is based on an analysis of the Company’s prior collection experience, customer creditworthiness, and current economic trends. Based on management’s review of accounts receivable, an allowance for credit losses of $23 thousand was considered adequate at December 31, 2021. There was no allowance for doubtful accounts at December 31, 2020. Interest is typically not charged on past due invoices. Account balances are written-off after collection efforts have been made and the potential recovery is considered remote.
Inventory and Cost of Goods Sold
Inventory is stated at the lower of cost or net realizable value and is accounted for using the first–in, first–out (“FIFO”) method. Inventory costs include the costs of producing products which include direct material costs such as seeds and nutrients, salaries and wages of the employees directly involved in farming production, farming facility costs including utility costs, insurance, maintenance, and other costs directly attributed to the vertical farming process and facilities. The inventory balance at December 31, 2021 and 2020 include direct materials not yet utilized in the farming process, cost of leafy greens currently growing, and fully grown leafy greens ready for sale.
Inventory costs including shipping and handling are reflected in the cost of goods sold at the time the product is sold and recognized in sales. For any inventory that is produced but is unsold prior to spoil date or is unfit for sale, the Company writes–off that inventory in accordance with the lower of cost or net realizable value principle.
During 2021 and 2020, the Company’s facilities operated at higher capacity than was required to meet demand in order to test and condition the systems in the Company’s recently opened production facilities. As a result, cost of goods sold was in excess of net sales and included costs of leafy greens produced but not sold totaling $6,475 thousand and $1,828 thousand for the years ended December 31, 2021 and 2020, respectively.
Property, Plant and Equipment, net
Property, plant and equipment, net is stated at cost less accumulated depreciation. Depreciation is computed beginning on the date the asset is placed into service using the straight–line method over the lesser of the estimated useful lives. Leasehold improvements are amortized on a straight-line basis over the lesser of the useful life of the lease or the relevant lease term.
The estimated useful lives are as follows:
•Production facilities: 15 years
•Furniture, fittings & equipment: 5 years
•Industrial property: 20 years
•Vehicles: 6–10 years
Farming production facilities under construction are not depreciated until completed and ready for their intended use, at which point they are transferred to their own asset category. The Company reclassifies assets under construction, which include primarily farming production facilities, to property, plant, and equipment when the
KALERA AS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
farming production facility is put into service and production begin. The Company capitalizes interest during construction of assets until construction is complete and the asset is placed in service.
Business Combinations
Business combination accounting requires the acquirer to recognize, separately from goodwill, the identifiable assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree, and to measure these items generally at their acquisition date fair values. Goodwill is recorded as the residual amount by which the purchase price exceeds the fair value of the net assets acquired. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Company is required to report provisional amounts in the financial statements for the items for which the accounting is incomplete.
Adjustments to provisional amounts initially recorded that are identified during the measurement period are recognized in the reporting period in which the adjustment amounts are determined. During the measurement period, the Company is also required to recognize additional assets or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in the recognition of those assets and liabilities as of that date.
The measurement period ends the sooner of one year from the acquisition date or when the Company receives the information about facts and circumstances that existed as of the acquisition date or learn that more information is not obtainable.
When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets. Critical estimates in valuing intangible assets include, but are not limited to, expected future cash flows, which include consideration of future growth rates and margins, future changes in technology and brand awareness, loyalty and position, and discount rates. Fair value estimates are based on the assumptions management believes a market participant would use in pricing the asset or liability.
Carrying Value of Long–Lived Assets
The Company follows the provisions of ASC 350, Intangibles - Goodwill and Other, which establishes accounting standards for the impairment of long-lived assets such as intangible assets subject to amortization. Long–lived assets are reviewed annually for impairment or as events or changes in business circumstances occur, indicating that the carrying value of the asset may not be recoverable. The estimated cash flows produced by assets or asset groups, are compared to the asset carrying value to determine whether impairment exists. Such estimates involve considerable management judgment and are based upon assumptions about expected future operating performance. As a result, actual cash flows could differ from management’s estimates due to changes in business conditions, operating performance, and economic and competitive conditions.
Maintenance and Repairs of Property and Equipment.
Expenditures for maintenance and repairs are charged to expenses in the period incurred and recorded in cost of goods sold for property and equipment involved in farming operations and selling, general, and administrative for any property and equipment not used in farming operations.
Goodwill and Intangible Assets
Goodwill – Goodwill represents the excess of costs over the fair value of identifiable assets acquired and liabilities assumed in business combinations. Goodwill is not amortized but is assessed for impairment annually or more frequently if circumstances indicate potential impairment. An impairment charge is recognized when and to the extent the carrying amount of goodwill is determined to exceed its fair value.
The Company has the option to first assess qualitatively whether it is more likely than not that a reporting unit’s carrying amount exceeds its fair value. Events and circumstances that are considered in performing the qualitative assessment include macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, events affecting the reporting unit or Company as a whole.
KALERA AS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
When performing the qualitative assessment, the Company examines those factors most likely to affect each reporting unit’s fair value. If the Company concludes that it is more likely than not that the reporting unit’s fair value is less than its carrying amount (that is, a likelihood of more than 50 percent) as a result of the qualitative assessment, or, if the qualitative assessment is not elected, then a quantitative assessment is performed in its place, to determine any impairment. There was no impairment of goodwill for the years ending December 31, 2021 or 2020.
Intangible Assets – Other intangible assets are comprised of technology related to vertical farming acquired from Kalera GmbH and Kalera Middle East Holding Ltd and intellectual property related to indoor seed acquired from Vindara Inc during business acquisitions (see Note 6 for additional information on business acquisitions), and licenses and related costs incurred for exclusive access and development of patents owned by Iveron Materials, Inc. Intangible assets are recorded at historical cost and amortized on a straight-line basis beginning on the date the intangible asset is placed into service over the estimated useful lives. Impairment reviews are undertaken annually, or more frequently if events or circumstances indicate potential impairment.
Intangible assets are amortized using following useful lives:
•Intellectual property: 10 years
•Technology: 15 years
•Patents, licenses and software development: 10 years
Other Non–Current Assets
Other non–current assets primarily consist of security deposits required for long–term operating lease agreements.
Asset Retirement Obligations
The fair value of a liability for an asset retirement obligation is recorded in the period in which it is incurred if a reasonable estimate of fair value can be made. The Company’s asset retirement obligations are generally a result of operating lease agreements for locations which the Company has built–out farming production facilities. The lease agreements often include provisions requiring the Company to return the leased space to its original state prior to the build out of the Company’s farming production facility. These provisions result in costs to remove farming production equipment and repair the leased space prior to vacating the space. In periods subsequent to initial measurement, the Company recognizes period–to–period changes in the asset retirement obligation liability resulting from the passage of time and revisions to either the timing or the amount of the original estimate. The increase in the carrying value of the associated long–lived asset is depreciated over its corresponding estimated economic life.
Share Based Compensation
The Company recognizes share based compensation expense associated with stock option awards based on an estimate of the grant date fair value of each stock option award. The Company estimates the grant date fair value of stock options granted based on the Black–Scholes model.
In valuing stock options, significant judgment is required in determining the expected life that individuals will hold their stock options prior to exercising. The expected term of stock options is derived using the simplified method to provide a reasonable basis of option grants and an estimate of future exercises during the remaining contractual period of the option. Expected volatility for stock options is based on the historical and implied volatility of the Company’s common stock. While volatility and estimated life are assumptions that do not bear the risk of change subsequent to the grant date of stock options, these assumptions may be difficult to measure as they represent future expectations based on historical experience. Further, the expected volatility and expected life may change in the future, which could substantially change the grant-date fair value of future awards of stock options and, ultimately, the expense recorded. See Note 8 for additional information on the Company’s share based compensation plans. The Company accounts for forfeitures as incurred.
KALERA AS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
The Company expenses share-based compensation for stock options using the straight-line method over the requisite service period for the entire award.
Foreign currency
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Assets and liabilities of consolidated subsidiaries whose functional currency is other than the U.S. dollar are translated into U.S. dollars using currency exchange rates at the balance sheet date. Revenues and expenses are translated using the average currency exchange rates during the period. Monetary balance sheet items in foreign currency are translated into the functional currency using the exchange rate at the balance sheet date. Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the statement of operations as foreign exchange (losses) gains. Where the foreign local currency is used as the functional currency, translation adjustments are recorded as a separate component of accumulated other comprehensive loss.
Selling, General, and Administrative Expenses
Selling, general, and administrative expenses primarily consist of costs for corporate functions, including payroll, employee benefits for corporate employees, corporate office expenses, professional fees, marketing and selling costs, and other expenses not attributed to production of products.
Income taxes
The Company follows the asset and liability method of accounting for income taxes under ASC 740, Income Taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income taxes are recorded and recognized for future tax effects of temporary differences between financial and income tax reporting. The Company records valuation allowances in situations where the realization of deferred tax assets is not more–likely–than–not.
The Company periodically reviews assumptions and estimates of the Company’s probable tax obligations and effects on its liability for any uncertain tax positions, using informed judgment which may include the use of third–party consultants, advisors and legal counsel, as well as historical experience. If a tax position does not meet the minimum statutory threshold to avoid payment of penalties and interest, the Company recognizes an expense for the amount of the interest and penalty in the period in which the Company claims or expects to claim the position on its tax return.
For financial statement purposes, the Company is allowed to elect whether to classify such charges as either income tax expense or another expense classification. Should such expense be incurred in the future, the Company will classify such interest as a component of interest expense and penalties as a component of income tax expense.
There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, 2021 and 2020, respectively. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.
On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security “CARES” Act into law. The CARES Act includes several significant business tax provisions that, among other things, would eliminate the taxable income limit for certain net operating losses (“NOL”) and allow businesses to carry back NOLs arising in 2018, 2019 and 2020 to the five prior years, suspend the excess business loss rules, accelerate refunds of previously generated corporate alternative minimum tax credits, generally loosen the business interest limitation under IRC section 163(j) from 30 percent to 50 percent among other technical corrections included in the Tax Cuts and Jobs Act tax provisions.
The Company recorded an income tax benefit during the year ended December 31, 2021 due to the recognition of deferred tax benefits for intangible asset amortization associated with its acquired businesses. The Company
KALERA AS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
recorded no income tax benefit or expense for the year ended December 31, 2020. The Company recorded a valuation allowance as of December 31, 2021 and 2020 on substantially all of its domestic and foreign deferred tax assets, as management does not consider it more than likely than not that the benefits from these deferred tax assets will be realized in the near term.
(Loss) Earnings Per Share
Basic earnings or loss per common share amounts are calculated using the weighted average number of common shares outstanding for the period. Diluted earnings per common share amounts are calculated using the weighted average number of common shares outstanding plus the additional dilution for all potentially dilutive securities. During loss periods, diluted loss per share amounts are based on the weighted average number of common shares outstanding, because the inclusion of common stock equivalents would be antidilutive.
Fair Value of Financial Instruments
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:
Level 1 - Valuations based on quoted prices for identical assets and liabilities in active markets.
Level 2 - Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.
Level 3 - Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.
Amounts classified as cash and cash equivalents, trade receivables, accounts payable and accrued expenses are considered level 1 and are measured based on quoted prices in active markets for identical assets.
Commitments and Contingencies
The Company, from time to time, is involved in various legal proceedings incidental to the conduct of its business, including claims by customers, employees or former employees. Once it becomes probable that the Company will incur costs in connection with a legal proceeding and such costs can be reasonably estimated, it establishes appropriate reserves. While legal proceedings are subject to uncertainties and the outcome of any such matter is not predictable, the Company is not aware of any legal proceedings pending or threatened against it that it expects to have a material adverse effect on its financial condition, results of operations or liquidity.
Concentration of Credit Risk
The Company’s financial instruments that are exposed to concentration of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company maintains its cash and cash equivalents at financial institutions. The Company has not experienced any realized losses in such accounts and believes it is not exposed to any significant credit risk.
The Company’s top five customers that individually represented over ten percent of its total sales accounted for 68% and 43% of sales for year ended December 31, 2021 and 2020, respectively. The loss of any of these top five customers could have a significant impact on the Company’s sales and results of operations.
Advertising Costs
The Company expenses advertising costs as incurred, which are included as a component of Selling, general, and administrative expenses on the accompanying consolidated statements of operations and comprehensive loss.
KALERA AS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
Advertising expense was approximately $510 thousand and $181 thousand for the years ended December 31, 2021 and 2020, respectively.
Liquidity and Going Concern Considerations
Since inception, the Company has financed its operations primarily through the sale of shares of common stock and debt financing. The Company incurred losses during the years ended December 31, 2021 and 2020 of $40,057 thousand and $8,657 thousand, respectively, and has an accumulated deficit of $62,606 thousand at December 31, 2021. The Company expects to continue to generate operating losses and consume significant cash resources for the foreseeable future. These operating losses and accumulated deficits raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the date these consolidated financial statements are issued, meaning that the Company may be unable to continue operations for the foreseeable future or realize assets and discharge liabilities in the ordinary course of operations.
The Company’s continuation as a going concern is dependent upon its ability to obtain additional operating capital, complete development of new seeds and produce, and attain profitability. The Company has implemented and continues to implement plans to fund its operations and finance its future development activities and its working capital needs.
In the first quarter of 2022, the Company executed a sale-leaseback transaction that raised approximately $8,100 thousand.). In addition, during the first quarter of 2022 the Company entered into a convertible bridge financing facility for up to $20,000 thousand with $10,000 thousand currently committed (see Note 18).
The Company also anticipates completing a merger with a special purpose acquisition company (see Note 18) by the second quarter of 2022, which would provide additional liquidity to support the Company’s ongoing operations. The Company is also in negotiations for a second sale-leaseback transaction along with raising additional debt financing with a third party lender.
If the Company continues to seek additional financing to fund its business activities in the future and there remains doubt about its ability to continue as a going concern, investors or other financing sources may be unwilling to provide additional funding on commercially reasonable terms, or at all. If the Company is unable to raise the necessary funds when needed or other strategic objectives are not achieved, it may not be able to continue its operations, or it could be required to modify its operations, which could slow future growth.
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and payments of liabilities in the ordinary course of business. Accordingly, the consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount of and classification of liabilities that may result should the Company be unable to continue as a going concern.
Recently Issued Accounting Pronouncements
Recent accounting pronouncements, other than below, issued by the Financial Accounting Standards Board (“FASB”) .the AICPA and the SEC did not or are not believed by management to have a material effect on the Company’s present or future Consolidated Financial Statements.
In December 2019, the FASB issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 is part of the FASB’s overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. ASU 2019-12 removes certain exceptions to the general principles of ASC 740, Income Taxes, (“ASU 740”) in order to reduce the cost and complexity of its application in the areas of intra-period tax allocation, deferred tax liabilities related to outside basis differences, year-to-date losses in interim periods and other areas within ASC 740. The Company adopted ASU 2019-12 on January 1, 2021 and the adoption of ASU 2019-12 did not have a material impact on the Company’s consolidated financial statements.
KALERA AS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
NOTE 3: INVENTORY
The Company’s inventory consists of finished goods from farming production, raw materials used in the farming production, and work–in process farming production. Raw materials are comprised of seeds, nutrients, and packaging for finished goods. Work–in–process and finished goods include in–process and ready–to–eat lettuce varieties and micro–greens, including the packaging for the finished product.
| | | | | | | | | | | |
| December 31, 2021 | | December 31, 2020 |
| In thousands |
Raw materials and supplies | $ | 456 | | | $ | 38 | |
Work in process | 76 | | | 11 | |
Finished goods | 658 | | | 55 | |
Total inventories | $ | 1,190 | | | $ | 104 | |
NOTE 4: PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, net, consists of the following:
| | | | | | | | | | | |
In thousands | December 31, 2021 | | December 31, 2020 |
Production facilities | $ | 53,590 | | | $ | 9,046 | |
Furniture, fittings & equipment | 5,223 | | | 957 | |
Industrial property | 3,659 | | | — | |
Vehicles | 244 | | | 55 | |
Assets under construction | 68,207 | | | 19,340 | |
Less: accumulated depreciation | (2,761) | | | (891) | |
Total property, plant and equipment, net | $ | 128,162 | | | $ | 28,506 | |
Depreciation expense for the years ended December 31, 2021 and 2020 amounted to $2,238 thousand and $523 thousand, respectively.
The Company recorded an impairment on certain assets at a facility under construction during 2021 that were damaged. The total loss incurred was $1,051 thousand prior to any insurance reimbursements. During 2021, the Company received approximately $650 thousand in proceeds from its insurance carrier. The Company expects to recover the remaining amount of the loss from its insurance carrier during the year ended December 31, 2022
NOTE 5: LEASES
The Company has operating leases for its corporate offices, farming production facilities space, delivery vehicles, and production equipment. The majority of the operating leases obligations are a result of the lease agreements for the Company’s large vertical farming facilities as of December 31, 2021 and 2020, respectively. Operating lease right–of–use (“ROU”) assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligations to make lease payment arising from the lease. ROU assets and liabilities are based on the estimated present value of the lease payments over the lease term and are recognized at the lease commencement date. The Company uses the practical expedient to not separate lease and non–lease components. The Company’s total lease cost which was solely from operating leases was approximately $5,458 thousand and $796 thousand for the years ended December 31, 2021 and 2020, respectively.
Most space leased for vertical farming production have initial lease terms of up to ten years with two optional renewal periods each of five years. The lease agreements do not contain residual value guarantees. The Company anticipates renewing these leases for both renewal option periods. The Company’s leases do not provide an implicit borrowing rate, thus the Company uses an estimated incremental borrowing rate in determining the present value of lease liabilities. The estimated incremental borrowing rate is derived from information available at the lease
KALERA AS AND SUBSIDIARIES
NOTES TO CONSOLDIATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
commencement date. For the years ended December 31, 2021 and 2020, the weighted average incremental borrowing rate for the leases is 7.67% and 9.14%, respectively and the weighted average lease term is 18.69 years and 17.7 years, respectively. Future minimum lease payments as of December 31, 2021 are as follows:
| | | | | | | | |
December 31, | | In thousands |
2022 | | $ | 4,972 | |
2023 | | 5,103 | |
2024 | | 5,196 | |
2025 | | 5,284 | |
2026 | | 5,363 | |
Thereafter | | 86,213 | |
Total undiscounted operating lease payments | | 112,131 | |
Less: Imputed interest | | (52,796) | |
Present value of total operating leases | | $ | 59,335 | |
The following table represents the Company’s ROU assets commitments as of and for the year–ended December 31, 2021 and 2020 including renewal options that management believes are reasonably certain to be exercised:
| | | | | | | | | | | |
In thousands | December 31, 2021 | | December 31, 2020 |
Operating lease right-of-use assets at the beginning of the year | $ | 7,462 | | | $ | 3,333 | |
Additions | 49,357 | | | 4,536 | |
Amortization | (1,543) | | | (407) | |
Operating lease right-of-use assets at the end of the year | $ | 55,276 | | | $ | 7,462 | |
Supplemental cash flow and other information related to operating leases are as follows:
| | | | | | | | | | | |
In thousands | December 31, 2021 | | December 31, 2020 |
Cash paid for operating leases | $ | 2,371 | | | $ | 507 | |
Right of use assets obtained in exchange for new operating leases | 49,357 | | | 4,536 | |
NOTE 6: GOODWILL AND BUSINESS ACQUISITIONS
Vindara Acquisition
The Company purchased 100% of the outstanding equity of Vindara Inc. (“Vindara”) on March 10, 2021 for a purchase price of $22,629 thousand, net of cash acquired. Vindara is a leader in seed development for indoor farming facilities. This vertical integration acquisition is expected to generate both significant operational synergies and product expansion capabilities for the Company. The results of Vindara’s operations as of and after the date of the acquisition are included with the Company’s results in the accompanying consolidated financial statements. The acquisition method of accounting was used by the Company for the business combination utilizing a discounted cash flow method utilizing estimates and assumptions made by the Company at the time of the acquisition.
The Company incurred acquisition related costs of $300 thousand in connection with this acquisition recorded within selling, general and administrative expenses in the consolidated statements of operations. This goodwill is
KALERA AS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
assigned to the whole Company and is not deductible for tax purposes. The expected economic life of the acquired identifiable assets is ten years.
Since being acquired, total expenses of $950 thousand from Vindara have been included in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2021. Vindara did not generate any revenues for the year ended December 31, 2021.
The purchase price of $22,592 thousand, net of cash of $37 thousand was paid in cash for $14,213 thousand and $8,379 thousand in shares were issued as consideration. The fair value of the shares of common stock issued reflects a discount for lack of marketability (“DLOM”) given the restriction on sale of the shares by the sellers for a minimum period of time following the close of the acquisition.
Based on the Company’s analysis of Vindara’s assets and liabilities, the allocation of the purchase price to the identifiable assets and liabilities is set out below:
| | | | | |
ASSETS ACQUIRED | |
Prepaid expenses, deposits and fixed assets | $ | 59 | |
Licenses | 1,700 | |
Intellectual property | 9,250 | |
| 11,009 | |
| |
LIABILITIES ASSUMED | |
Accounts payable and other liabilities | 50 | |
Accrued salary and benefits | 22 | |
Deferred tax liability | 2,775 | |
| 2,847 | |
| |
FAIR VALUE OF NET ASSETS ACQUIRED | 8,162 | |
| |
PURCHASE PRICE | 22,592 | |
| |
EXCESS ATTRIBUTABLE TO GOODWILL | $ | 14,430 | |
Supplemental Unaudited Pro-forma Information
Assuming a transaction closing on January 1, 2020, pro-forma unaudited consolidated revenues for the twelve-month period ended December 31, 2021 and 2020 including Vindara, would have been $2,885 thousand and 887 thousand, respectively. Pro-forma unaudited consolidated net loss for the Company for the twelve-month period ended December 31, 2021 and 2020 including Vindara, would have been approximately $40,122 thousand and $9,717 thousand, respectively.
&ever GmbH Acquisition
The Company acquired 100% of the outstanding equity of &ever GmbH (“&ever”) on October 1, 2021 (“&ever Acquisition”). &ever focuses on the highly automated production of baby leaf products including spinach, arugula and cilantro using proprietary technology and operations, enabling output of various scale from in-store grow-towers to mega-farms. This transaction represents the first instance of consolidation between vertical farmers and combines a leader in plant science and unit economics for full head leafy greens with a leader in baby leaf production and technology to create a global vertical farming leader.
After October 1, 2021, &ever’s results are included with the Company’s results in the accompanying consolidated financial statements. The acquisition method of accounting was used by the Company for the business combination utilizing a discounted cash flow method utilizing estimates and assumptions made by the Company at the time of the acquisition.
KALERA AS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
The Company incurred transaction costs of $421 thousand in connection with this acquisition. Goodwill from this acquisition represents the portion of purchase prices in excess of the fair value of tangible assets, know-how, licenses, and technology to develop vertical farming that are attributable to the expected synergies to be achieved including increased revenues, combined talent, technology, production/yield improvements and cost reductions. This goodwill is assigned to the whole Company and is not deductible for tax purposes.
Since being acquired, total revenue of $128 thousand and net losses of $2,479 thousand have been included in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2021.
The purchase price of $118,663 thousand consisted of a cash payment of $33,610 thousand and the issuance of 27,856,081 shares of common stock with a fair value of $85,023 thousand. The fair value of the shares of common stock issued reflects a DLOM given the restriction on sale of the shares by the sellers for a minimum period of time following the close of the acquisition. As part of the acquisition of &ever, the Company also acquired a 50% ownership interest in &ever Middle East Holding Ltd as well as a 25% interest in Smart Soll Technologies GmbH (“Smart Soil”). The Company determined the fair value of its equity method investments by utilizing a discounted cash flow method utilizing estimates and assumptions made by the Company as of the acquisition date.
Based on the Company’s analysis of &ever’s assets and liabilities, the allocation of the purchase price to the identifiable assets and liabilities is set out below.
| | | | | |
ASSETS ACQUIRED | In thousands |
Right-of-use assets, net | $ | 5,552 | |
Other assets | 1,448 | |
Equity investment-Smart Soil | 1,394 | |
Equity investments-&ever Middle East Holding Ltd. | 8,364 | |
Fixed assets | 8,711 | |
Intangible asset - technology | 61,100 | |
| 86,569 | |
| |
LIABILITIES ASSUMED | |
Accounts payable and accruals | 3,140 | |
Lease liabilities | 5,941 | |
Deferred tax liability | 6,837 | |
| 15,918 | |
| |
FAIR VALUE OF NET ASSETS ACQUIRED | 70,651 | |
| |
PURCHASE PRICE | 118,633 | |
| |
EXCESS ATTRIBUTABLE TO GOODWILL | $ | 47,982 | |
Supplemental Unaudited Pro-forma Information
Assuming a transaction closing on January 1, 2020, pro-forma unaudited consolidated revenues for the twelve-month period ended December 31, 2021 and 2020 including &ever, would have been $2,885 thousand and 887 thousand, respectively, Pro-forma unaudited consolidated net loss for the Company for the twelve-month period ended December 31, 2021 and 2020 including &ever, would have been approximately $55,267 thousand, and $15,882 thousand, respectively.
&ever Middle East Holding Ltd Acquisition
On October 13, 2021, the Company, through its wholly owned subsidiary &ever GmbH, acquired the remaining 50% equity interest in a step acquisition in &ever Middle East Holding Ltd. (“Middle East Acquisition”) of which an initial 50% ownership was previously acquired on October 1, 2021 as part of the &ever Acquisition. &ever
KALERA AS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
Middle East Holding Ltd. operations are comprised primarily of a vertical farm in Kuwait. This entity became a wholly owned subsidiary of the Company as of October 13, 2021. No gain or loss was recognized on the remeasurement of the previously held interest in &ever Middle East Holding Ltd. due to the short time period from when the remaining controlling interest was acquired. The acquisition method of accounting using the discounted cash flow valuation model was used by the Company for the Middle East acquisition using estimates and assumptions made by the Company as of the acquisition date.
After October 13, 2021, &ever Middle East Holding Ltd.’s was fully consolidated into the Company’s financial statements as a wholly owned subsidiary and &ever Middle East Holding Ltd.’s results are included within the Company consolidated financial statements. Goodwill from this acquisition represents the portion of purchase prices in excess of the fair value of tangible assets, know-how, and intellectual property to develop vertical farming that are attributable to the expected synergies to be achieved including increased revenues, combined talent, technology, production/yield improvements and cost reductions. This goodwill is assigned to the whole Company and is not deductible for tax purposes.
Since being acquired, revenue of $125 thousand and net losses of $465 thousand have been included in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2021.
The purchase price of $8,258 thousand was paid in cash $1,899 thousand and $6,359 thousand in shares were issued as consideration. The fair value of the shares of common stock issued reflects a DLOM given the restriction on sale of the shares by the sellers for a minimum period of time following the close of the acquisition.
Supplemental Unaudited Pro-forma Information
Pro-forma information had the transaction been consumed as of January 1, 2021 and 2020 is not material for disclosure for the year ended December 31, 2021 or 2020.
Based on the Company’s analysis of &ever Middle East Holding Ltd.’s assets and liabilities, the allocation of the purchase price to the identifiable assets and liabilities is set out below:
| | | | | |
ASSETS ACQUIRED | |
Accounts receivable, prepaids, and inventory | $ | 359 | |
Fixed assets | 9,810 | |
Intangible asset - technology | 1,050 | |
| 11,219 | |
| |
LIABILITIES ASSUMED | |
Accounts payable and accrued liabilities | 284 | |
Deferred tax liability | 166 | |
| 450 | |
| |
LESS: PREVIOUS NON-CONTROLLING INTEREST IN CONSOLIDATED SUBSIDIARY | (8,364) | |
| |
FAIR VALUE OF NET ASSETS ACQUIRED | 2,405 | |
| |
PURCHASE PRICE | 8,258 | |
| |
EXCESS ATTRIBUTABLE TO GOODWILL | $ | 5,853 | |
KALERA AS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
NOTE 7: INTANGIBLE ASSETS
| | | | | | | | | | | |
| December 31, 2021 | | December 31, 2020 |
| In thousands |
Technology | $ | 62,150 | | | $ | — | |
Less: accumulated amortization | (1,018) | | | |
Net book value - Technology | 61,132 | | | |
| | | |
Intellectual property | $ | 9,250 | | | $ | — | |
Less: accumulated amortization | (694) | | | |
Net book value - Intellectual Property | 8,556 | | | |
| | | |
Patents, licenses and software development | $ | 2,822 | | | $ | 530 | |
Less: accumulated amortization | (139) | | | |
Net book value - Patents, licenses and software development | 2,683 | | | 530 | |
| | | |
Total intangible assets, net | $ | 72,371 | | | $ | 530 | |
Amortization expense for the years ended December 31, 2021 amounted to $1,851 thousand. There was no amortization expense on intangible assets at December 31, 2020. Estimated amortization expense for each of the five succeeding years is as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
December 31, | | Technology | | Intellectual Property | | Patents, licenses and software development | | Total |
| | In thousands |
2022 | | $ | 4,143 | | | $ | 925 | | | $ | 564 | | | $ | 5,632 | |
2023 | | 4,143 | | | 925 | | | 564 | | | 5,632 | |
2024 | | 4,143 | | | 925 | | | 564 | | | 5,632 | |
2025 | | 4,143 | | | 925 | | | 564 | | | 5,632 | |
2026 | | 4,143 | | | 925 | | | 564 | | | 5,632 | |
Thereafter | | 40,433 | | | 3,778 | | | — | | | 44,211 | |
| | | | | | | | $ | 72,371 | |
NOTE 8: SHARE-BASED COMPENSATION
On October 21, 2013, the Company’s stockholders approved the 2013 Equity Incentive Plan (the “2013 Plan”), and subsequently amended the 2013 Plan. The amended 2013 Plan was approved on June 18, 2018 (the “2018 Plan”). The 2018 Plan is administered by the Board of Directors (the “Board”). The Board determines which eligible persons receive awards and the terms and conditions applicable to awards within the confines of the 2018 Plan’s terms. The 2018 Plan may be amended or terminated by the Board at any time, subject to certain limitations requiring stockholder consent or the consent of the applicable participant. The 2018 Plan provides for the grant of stock options (including incentive stock options and non–qualified stock options) to eligible participants. Eligible participants are defined as employees, directors, and eligible consultants of the Company. The 2018 Plan contains provisions with respect to payment of exercise or purchase prices, vesting and expiration of awards, adjustments and treatment of awards upon certain corporate transactions, including recapitalizations and mergers, transferability of awards and tax withholding requirements.
KALERA AS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
The exercise price per share for which an option may be exercised shall be established by the Board and stated in the award agreement evidencing the grant of the option; provided, that (i) the exercise price shall be no less than 100% of the fair market value per share as determined on the date the option is granted (or 110% of the fair market value with respect to incentive options granted to an employee who owns stock possessing more than 10% of the total voting power of all classes of stock of the Company or a parent or subsidiary; and (ii) in no event shall the exercise price per share of any option be less than the par value per share. The Board may, in its discretion, grant options with an option price greater than the fair market value per share. Notwithstanding the foregoing, the Board also may, in its discretion authorize the grant of substitute or assumed options of an acquired entity with an exercise price not equal to at least 100% of the fair market value of the shares on the date of grant if the terms of such substitution or assumption otherwise comply, to the extent deemed applicable, with Internal Revenue Service Code Section 409A and Code Section 424(a) or other applicable law.
The 2018 Plan may be amended, altered, suspended and/or terminated at any time by the Board; provided, that approval of an amendment to the 2018 Plan by the shareholders of the Company shall be required to the extent, if any, that shareholder approval of such amendment is required by applicable law. The Board may amend, alter, suspend and/or terminate any award granted under the 2018 Plan, prospectively or retroactively, but such amendment, alteration, suspension or termination of an award shall not, without the consent of the recipient of an outstanding award, materially adversely affect the rights of the recipient with respect to the award.
As of December 31, 2021 and 2020, the Board authorized the issuance of 13,500 thousand and 10,970 thousand stock options under the 2018 Plan, which generally vest in equal installments over a four year requisite service period from the date of the grant. The Company accounts for forfeitures as they occur. The following table represents stock option activity for the years ended December 31, 2021 and 2020, respectively:
| | | | | | | | | | | |
Employee share based option program | Weighted average share price | | Number of shares (In thousands) |
Options outstanding, January 1, 2020 | $ | 0.75 | | | 5,000 | |
Granted | $ | 0.75 | | | 5,930 | |
Exercised | — | | | — | |
Forfeited, expired and cancelled | — | | | — | |
Options outstanding, December 31, 2020 | $ | 0.75 | | | 10,930 | |
Granted | 3.34 | | | 4,165 | |
Exercised | — | | | — | |
Forfeited, expired and cancelled | (1.01) | | | (1,985) | |
Options outstanding, December 31, 2021 | $ | 1.98 | | | 13,110 | |
Options exercisable, December 31, 2021 | | | 5,115 | |
KALERA AS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
| | | | | | | | | | | |
Employee share based option program | Weighted average Grant Date Fair Value | | Number of shares (In thousands) |
Non-vested, January 1, 2020 | $ | 0.93 | | | 5,000 | |
Granted | $ | 0.93 | | | 5,930 | |
Exercised | — | | | — | |
Forfeited, expired and cancelled | — | | | — | |
Non-vested, December 31, 2020 | $ | 0.93 | | | 10,930 | |
Granted | 1.52 | | | 4,165 | |
Forfeited, expired and cancelled | 0.35 | | | (1,985) | |
Vested | 0.62 | | | (5,115) | |
Options outstanding, December 31, 2021 | $ | 1.25 | | | 7,995 | |
During the year ended December 31, 2021, the Company granted stock options, covering a total of 4,165 shares of common stock to employees, with exercise prices ranging between $1.64 and $5.00 per share. These stock option awards vest annually over four years, with an eight-year term and grant date fair values ranging between $0.80 and $3.35 per share.
During the year ended December 31, 2020, the Company granted stock options, covering a total of 5,930 thousand shares of common stock to executives and key personnel, with exercise prices ranging between $1.00 and $2.75 per share. These stock option awards vest annually over four years, with an eight-year term and grant date fair values ranging between $0.20 and $2.09 per share.
Share-based compensation is measured based on the grant date fair value of the 2018 Plan awards and subsequently recognized as expense ratably over their vesting periods. Share-based compensation for awards with service or performance-based vesting requirements is adjusted to reflect actual vested awards, with forfeitures recorded as a reduction of expense at the time they occur.
The computation of the expenses associated with share-based compensation requires for the use of certain valuation models. The Company currently uses a Black-Scholes option pricing model to calculate the fair value of its stock options. The Black-Scholes model requires the use of assumptions regarding the volatility of the Company’s common stock, the expected life of the stock award, and the dividend ratio. The volatility assumptions are based on the Company’s life-to-date historical volatility since inception. The risk-free rates are based on similar term U.S. Treasury rates in effect at the time of the stock grant. The expected stock option life represents the period of time that the stock options granted are expected to be outstanding and is based on historical experience. Share-based compensation is recognized only for those stock-based awards expected to vest.
The assumptions used in the Black-Scholes option pricing model, along with the certain other information regarding share-based compensation awards is as follows:
KALERA AS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
| | | | | | | | | | | |
| December 31, 2021 | | December 31, 2020 |
Expected volatility (%) | 66.00 | % | | 45.40 | % |
Expected dividend growth rate (%) | 0.00 | % | | 0.00 | % |
Risk-free interest rate (%) | 0.87 | % | | 0.90 | % |
Expected term (years) | 3.51 | | | 3.51 | |
Weighted average contractual life (years) | 3.76 | | | 3.50 | |
Weighted average fair value of options granted | $ | 1.52 | | | $ | 1.45 | |
Weighted average exercise price - minimum | $ | 1.64 | | | $ | 1.00 | |
Weighted average exercise price - maximum | $ | 5.00 | | | $ | 2.75 | |
Aggregate intrinsic value of stock options outstanding | $ | 3,047 | | | $ | 27,682 | |
Compensation cost to be recognized for unvested options | $ | 8,505 | | | $ | 5,564 | |
Shareholder compensation expense | $ | 2,565 | | | $ | 996 | |
NOTE 9: ASSET RETIREMENT OBLIGATIONS
The Company has asset retirement obligations as a result of its farming production facilities which are often located in leased spaces. The Company builds vertical farming production facilities within leased space including growing racks, electrical systems, water systems, storage areas, and production lines. The lease agreements often require the Company to return the leased space to its original state upon vacating the space at the end of the lease term.
The Company estimates asset retirement obligations which includes the total cost of disposing of the farming production facility and equipment from the leased space at the end of the lease term. The Company records the asset retirement obligations at fair value in accordance with ASC 410–20, Asset Retirement Obligations. The asset retirement obligation is valued using the Company’s incremental borrowing rate and is accreted over the expected lease term. The Company capitalizes the future cost of the retirement activities as part of the carrying amount of the farming production facilities at the in–service date. The asset is then depreciated on a straight–line basis over the expected lease term of the space.
The following table provides all changes to the company’s asset retirement obligations.
| | | | | | | | | | | |
In thousands | December 31, 2021 | | December 31, 2020 |
Asset retirement obligations at the beginning of the year | $ | 588 | | | $ | 204 | |
Liabilities incurred | 889 | | | 334 | |
Accretion expenses | 50 | | | 50 | |
Total asset retirement obligations at year end | $ | 1,527 | | | $ | 588 | |
Accretion expense for the years ended December 31, 2021 and 2020 amounted to $50 thousand and $50 thousand, respectively
NOTE 10: INCOME TAXES
Loss before income tax (benefit), expense consists of the following:
| | | | | | | | | | | |
In thousands | December 31, 2021 | | December 31, 2020 |
Domestic | $ | (36,781) | | | $ | (8,657) | |
Foreign | (4,533) | | | — | |
Loss before income taxes | $ | (41,314) | | | $ | (8,657) | |
KALERA AS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
The components of the income tax benefit are as follows:
| | | | | | | | | | | |
In thousands | December 31, 2021 | | December 31, 2020 |
Deferred: | | | |
Domestic - Federal | 569 | | | — | |
Foreign | 762 | | | — | |
Deferred income tax benefit | $ | 1,331 | | | $ | — | |
The Company operates in the U.S. and foreign jurisdictions, with the majority of operations primarily occurring within the U.S., Norway, and Germany. At December 31, 2021 and 2020 the Company had a net deferred tax liability of $8,447 thousand and net deferred tax asset of $0, respectively. The net deferred tax liability at December 31, 2021 was attributed to the intangible assets recorded in the Company’s foreign subsidiary at &ever GmbH within the German taxing jurisdiction. Accumulated tax NOL’s carry forwards as of December 31, 2021 and 2020 totaled approximately $102,970 thousand and $50,000 thousand, respectively. The net operating federal and state loss carryforwards generated in the U.S. jurisdiction will begin expiring in 2029 for those generated in 2018 or earlier, and will be carried forward indefinitely for those generated thereafter. The net operating losses generated in Norway and Germany may be carried forward indefinitely. Deferred tax assets and liabilities are recognized in the consolidated balance sheet based on expected utilization of tax losses carried forward and temporary book to tax differences.
The realization of deferred tax assets is contingent upon the generation of future taxable income and other restrictions that may exist under the tax laws of the jurisdiction in which a deferred tax asset exists. The Company assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit the use of existing deferred tax assets. Management's evaluation begins with a jurisdictional review of cumulative gains or losses incurred over recent years. A significant piece of objective negative evidence exists when a jurisdiction has incurred cumulative losses over recent years. Such objective evidence limits the ability to consider other subjective evidence, such as the Company’s projections for future growth. Based on the positive and negative evidence for recoverability, the Company establishes a valuation allowance against the net deferred tax assets of a taxing jurisdiction in which they operate unless it is “more likely than not” that the Company will recover such assets through the above means.
The Company has valuation allowances of $20,508 thousand and $10,761 thousand for the years December 31, 2021 and 2020, respectively. The increase in the valuation allowance for the year ended December 31, 2021 primarily relates to the generation of additional net operating loss carryforwards that are not expected to be utilized in the near term.
KALERA AS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
As of December 31, 2021 and 2020, the Company’s deferred tax assets and liabilities are as follows:
| | | | | | | | | | | |
In thousands | December 31, 2021 | | December 31, 2020 |
Deferred Tax Assets | | | |
Accrued expenses | $ | 430 | | | $ | 63 | |
Right-of-use asset | 14,484 | | 2,357 | |
Federal NOL | 21,050 | | 10,338 | |
State NOL | 2,222 | | 697 | |
Research and development credits | 266 | | 354 | |
Valuation allowances | (20,508) | | | (10,761) | |
Total deferred tax assets | $ | 17,944 | | | $ | 3,048 | |
Deferred Tax Liabilities | | | |
Property, plant and equipment | $ | 522 | | | $ | 648 | |
Intangibles | 12,241 | | — | |
Prepaid expenses | 133 | | 6 | |
Lease liability | 13,495 | | | 2,394 | |
Total deferred tax liability | $ | 26,391 | | | $ | 3,048 | |
Net deferred tax assets | $ | (8,447) | | | $ | — | |
The effective income tax rate differs from the statutory rate as follows:
| | | | | | | | | | | |
| 2021 | | 2020 |
Statutory rate | 22.00 | % | | 22.00 | % |
Foreign rate difference | -1.60 | % | | -1.00 | % |
Permanent differences | -1.30 | % | | 0.70 | % |
Research and development credits | 0.00 | % | | -0.90 | % |
State income tax, net | 3.50 | % | | -1.90 | % |
Valuation allowance | -23.90 | % | | -18.90 | % |
Other | 4.20 | % | | 0.00 | % |
Effective tax rate | 2.90 | % | | 0.00 | % |
As of December 31, 2021 and 2020 the Company has no uncertain tax positions. The Company generally remains subject to examination by U.S. federal and state tax authorities for the years 2018 through 2021. The Company is no longer subject to examinations by tax authorities for the years 2017 and prior.
NOTE 11: CONVERTIBLE LOAN
For the year ended December 31, 2019, the Company obtained a loan in the amount of $3,000 thousand which included a mandatory conversion feature upon a qualifying equity raise by the Company. The conversion feature specified a conversion rate for the balance of the loan into common shares of the Company’s stock less a specified discount. In the year ended December 31, 2020, the Company had a qualifying equity raise, which triggered a conversion of the loan into 6,266 thousand shares of the Company’s common stock. There was no convertible loan at December 31, 2021 or 2020.
NOTE 12: GAIN ON FORGIVENESS OF DEBT
During the year ended December 31, 2020, the Company received a forgivable loan of $328 thousand under the Payment Protection Program stimulus package from the United States government following the COVID–19
KALERA AS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
outbreak. The loan had a term of two years with an interest rate of 1%. For the year ended December 31, 2020, the Company recorded a gain on forgiveness of debt when the loan was forgiven of $328 thousand. The Company did not receive any additional loans under the Payment Protection Program during the year ended December 31, 2021.
NOTE 13: DEBT
On August 9, 2021, the Company entered into a debt facility agreement with DNB Bank ASA. The agreement allowed the Company to borrow up to $35,000 thousand to fund the acquisition of &ever had a term of three months and expiration on December 31, 2021. The Company borrowed $34,000 thousand under this agreement on September 30, 2021 in anticipation of closing the &ever acquisition. The Company repaid the principal amount of $34,000 thousand and fees and interest in the amount of $1,800 thousand in October 2021 and had no additional borrowings under this debt facility thereafter. The contractual and effective interest rate was 0.9% per annum under this agreement.
NOTE 14: EQUITY METHOD INVESTMENT
As part of the acquisition of &ever GmbH, the Company now holds an investment in Smart Soil, a German start-up entity that develops high-yielding, organic, and long lasting soil. In exchange for voting interests, &ever had invested a total of $1,322 thousand in Smart Soil. &ever acquired a 25% voting interest in Smart Soil and has the ability to exercise significant influence, but not control, as it does not have the ability to direct the decisions that most significantly impact its economic performance. The Company accounts for this investment using the equity method and records its share of net earnings or losses on the investment in “Equity in net loss of affiliate” on the accompanying consolidated statements of operations and comprehensive loss.
The balance of the equity method investment was $1,322 thousand at December 31, 2021. There were no equity method investments at December 31, 2020. During the year ended December 31, 2021, the Company incurred a net loss of $74 thousand in this investment.
NOTE 15: RETIREMENT PLAN
The Company has a 401(k) savings plan covering all employees who have six months of service and who are at least 21 years of age. Employees may contribute up to a maximum amount allowable per the Internal Revenue Code. Employer contributions are determined at the discretion of the Company's Board of Directors. The Company's contributions with respect to the plan were approximately $68 thousand for the year ended December 31, 2021. There were no contributions by the Company to the plan for the year ended December 31, 2020.
NOTE 16: DISAGGREGATED REVENUES BY CUSTOMER TYPE
The Company recognized revenues of $2,855 thousand and $887 thousand for the years ended December 31, 2021 and 2020, respectively. Substantially all of the Company’s revenues are generated from the sale of lettuce and micro-greens sold to retail and distribution customers globally.
| | | | | | | | | | | | | | | | | | | | | | | |
In thousands | | | | | | | | | | | | | December 31, 2021 | | December 31, 2020 |
Food Service Revenue | | | | | | | | | | | | | $ | 1,575 | | | $ | 169 | |
Retail Revenue | | | | | | | | | | | | | 1,280 | | | 718 | |
Net sales | | | | | | | | | | | | | $ | 2,855 | | | $ | 887 | |
KALERA AS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
NOTE 17: SUBSEQUENT EVENTS
Subsequent events for recognition or disclosure have been evaluated through April 21, 2022, the date the financial statements were available to be issued.
Sale Leaseback of St. Paul Farming Facility
On January 25, 2022, the Company entered into a purchase and sale agreement for a sale-leaseback transaction with a third party related to its industrial property in St. Paul, Minnesota. The Company sold the property to this third party and then entered into a new lease with them. Per the agreement, the initial term of the lease will be for 20 years with an option to extend for two 5 year terms. The based annual rent is $566 thousand. The Company received approximately $8,100 thousand in proceeds related to the sale of this property in connection with the sale-leaseback.
Agrico Merger
On January 31, 2022, the Company announced it will merge with a special acquisition company, Agrico Acquisition Corp. (“Agrico”). The transaction will result in the Company becoming a publicly listed company on NASDAQ and delisting from the Euronext Growth Oslo exchange during the second quarter of 2022.
Key highlights of the merger include:
•The all-stock transaction creates a combined company with an equity value of approximately $375,000 thousand on a fully diluted pro forma basis, assuming no redemptions from Agrico’s shareholders.
•Based on the common stock of Agrico at $10 per share, the transaction implies an exchange ratio of 0.091 for existing Company shareholders.
•In addition to shares of Agrico common stock, the Company’s shareholders will receive one contractual Contingent Value Right per share of common stock that will entitle them to receive up to two stock payments upon the achievement of certain milestones. Each stock payment will consist of shares representing 5% of the fully diluted equity of the Company at the date of completion of the transaction.
New capital is expected to provide the Company the flexibility to fuel the next generation of farms in the US and International locations.
Bridge Financing Facility
On March 7, 2022, the company announced it entered a secured convertible bridge financing facility for up to $20,000 thousand. The facility, which matures one year from the drawdown date, will bear paid in kind interest at 8%, is secured by certain assets of the Company and, subject to required corporate approvals, will be convertible by the lenders into shares at any time following the consummation of the announced merger with Agrico. and the NASDAQ listing at a conversion price of US$10.00 / share in the merged entity.
Secured Credit Facility
On April 19, 2022, the Company secured a $30,000 thousand, Senior Secured Credit Facility with Farm Credit of Central Florida. $20,000 thousand of the facility is available under a term loan to support capital expenditures, whereas the remaining $10,000 thousand is available under a revolving loan for working capital needs of the Company in the United States. The credit agreement has a term of 120 months which includes standard terms and conditions customary in secured financing transactions of this nature. The principal under the term loan will bear interest at a rate of prime plus 0.750%, the principal under the revolving loan will bear interest at a rate of prime plus 0.625%.
AGRICO ACQUISITION CORP.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of
Agrico Acquisition Corp.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Agrico Acquisition Corp. (the “Company”) as of December 31, 2021 and 2020, the related statements of operations, changes in shareholders’ deficit and cash flows for the year ended December 31, 2021 and for the period from July 31, 2020 (inception) through December 31, 2020, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the year ended December 31, 2021 and for the period from July 31, 2020 (inception) through December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph - Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1 to the financial statements, the Company has until July 12, 2022 to complete a business combination or the Company will cease all operations except for the purpose of liquidating. This condition raises substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
| | |
/s/ Marcum LLP |
Marcum LLP |
|
We have served as the Company’s auditor since 2020. |
|
Hartford, CT |
April 1, 2022 |
AGRICO ACQUISITION CORP.
BALANCE SHEETS
| | | | | | | | | | | |
| December 31, 2021 | | December 31, 2020 |
Assets: | | | |
Cash | $ | 664,428 | | | $ | — | |
Prepaid expenses | 6,083 | | | |
Total current assets | 670,511 | | | — | |
Cash and marketable securities held in Trust Account | 146,644,675 | | | — | |
Deferred offering costs | — | | | 96,594 | |
Total assets | $ | 147,315,186 | | | $ | 96,594 | |
| | | |
Liabilities, Redeemable Ordinary Shares and Shareholders’ Deficit | | | |
Accrued offering costs and expenses | $ | 129,068 | | | $ | 50,000 | |
Due to related party | 73,795 | | | 56,266 | |
Total current liabilities | 202,863 | | | 106,266 | |
Deferred underwriters’ fee | 5,031,250 | | | — | |
Total liabilities | 5,234,113 | | | 106,266 | |
| | | |
Commitments and Contingencies (Note 6) | | | |
Redeemable Ordinary Shares | | | |
Class A ordinary shares subject to possible redemption, 14,375,000 Class A ordinary shares at redemption value of $10.20 per share | 146,625,000 | | | — | |
| | | |
Shareholders’ Deficit: | | | |
Preference shares, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding | — | | | — | |
Class A ordinary shares, $0.0001 par value; 200,000,000 shares authorized; 143,750 and no shares issued and outstanding as of December 31, 2021 and 2020, respectively (excluding 14,375,000 and no shares subject to redemption as of December 31, 2021 and 2020, respectively) | 14 | | | — | |
Class B ordinary shares, $0.0001 par value; 20,000,000 shares authorized; 3,593,750 and no shares issued and outstanding as of December 31, 2021 and 2020, respectively (Note 5) | 359 | | | — | |
Accumulated deficit | (4,544,300) | | | (9,672) | |
Total shareholders’ deficit | (4,543,927) | | | (9,672) | |
Total Liabilities, Redeemable Ordinary Shares and Shareholders’ Deficit | $ | 147,315,186 | | | $ | 96,594 | |
The accompanying notes are an integral part of these financial statements.
AGRICO ACQUISITION CORP.
STATEMENTS OF OPERATIONS
| | | | | | | | | | | |
| For the year ended December 31, 2021 | | For the period from July 31, 2020 (inception) through December 31, 2020 |
General and administrative costs | $ | 392,649 | | | $ | 9,672 | |
Loss from operations | (392,649) | | | (9,672) | |
| | | |
Other income: | | | |
Interest earned on cash and marketable securities held in Trust Account | 19,675 | | | — | |
Total other income | 19,675 | | | — | |
| | | |
Net loss | $ | (372,974) | | | $ | (9,672) | |
| | | |
Weighted average shares outstanding of Class A ordinary shares | 6,881,490 | | | — | |
Basic and diluted net loss per share, Class A ordinary shares | $ | (0.04) | | | $ | — | |
Weighted average shares outstanding of Class B ordinary shares | 3,141,695 | | | — | |
Basic and diluted net loss per share, Class B ordinary shares | $ | (0.04) | | | $ | — | |
The accompanying notes are an integral part of these financial statements.
AGRICO ACQUISITION CORP.
STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
FOR THE YEAR ENDED DECEMBER 31, 2021 AND
FOR THE PERIOD FROM JULY 31, 2020 (INCEPTION) THROUGH DECEMBER 31, 2020
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Class A Ordinary shares | | Class B Ordinary shares | | Additional Paid-in Capital | | Accumulated Deficit | | Total Shareholders’ (Deficit) |
| Shares | | Amount | | Shares | | Amount | | | |
Balance as of July 31, 2020 | — | | | $ | — | | | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
Net loss | — | | | — | | | — | | | — | | | — | | | (9,672) | | | (9,672) | |
Balance as of December 31, 2020 | — | | | $ | — | | | — | | | $ | — | | | $ | — | | | $ | (9,672) | | | $ | (9,672) | |
Issuance of Class B ordinary shares to Sponsor (Note 5) | — | | | — | | | 3,593,750 | | | 359 | | | 24,641 | | | — | | | 25,000 | |
Issuance of Private Placement warrants, net of offering costs | — | | | — | | | — | | | — | | | 7,226,565 | | | — | | | 7,226,565 | |
Fair value of public warrants, net of offering costs | — | | | — | | | — | | | — | | | 4,973,703 | | | — | | | 4,973,703 | |
Issuance of non-redeemable representative shares | 143,750 | | | 14 | | | — | | | — | | | 1,437,486 | | | — | | | 1,437,500 | |
Re-measurement of Class A ordinary shares carrying value to redemption value | — | | | — | | | — | | | — | | | (13,662,395) | | | (4,161,654) | | | (17,824,049) | |
Net loss | — | | | — | | | — | | | — | | | — | | | (372,974) | | | (372,974) | |
Balance as of December 31, 2021 | 143,750 | | | $ | 14 | | | 3,593,750 | | | $ | 359 | | | $ | — | | | $ | (4,544,300) | | | $ | (4,543,927) | |
The accompanying notes are an integral part of these financial statements.
AGRICO ACQUISITION CORP.
STATEMENTS OF CASH FLOWS
| | | | | | | | | | | |
| For the year ended December 31, 2021 | | For the period from July 31, 2020 (inception) through December 31, 2020 |
Cash flows from operating activities: | | | |
Net loss | $ | (372,974) | | | $ | (9,672) | |
Adjustments to reconcile net loss to net cash used in operating activities: | | | |
Formation costs paid by related party | — | | | 9,672 | |
Interest earned on cash and investments held in trust account | (19,675) | | | — | |
Changes in operating assets and liabilities: | | | |
Prepaid expenses | (6,083) | | | — | |
Due to related party | 73,795 | | | — | |
Accrued offering costs and expenses | 79,068 | | | — | |
Net cash used in operating activities | (245,869) | | | — | |
| | | |
Cash Flows from Investing Activities: | | | |
Cash invested in Trust Account | (146,625,000) | | | — | |
Net cash used in investing activities | (146,625,000) | | | — | |
| | | |
Cash Flows from Financing Activities: | | | |
Proceeds from initial public offering, net of underwriting discount | 140,875,000 | | | — | |
Proceeds from sale of private placement warrants | 7,250,000 | | | — | |
Proceeds from issuance of promissory note to related party | 25,000 | | | — | |
Payment of offering costs | (443,347) | | | — | |
Payment of promissory note to related party | (171,356) | | | |
Net cash provided by financing activities | 147,535,297 | | | — | |
| | | |
Net change in cash | 664,428 | | | — | |
Cash, beginning of period | — | | | — | |
Cash, end of the period | $ | 664,428 | | | $ | — | |
| | | |
Supplemental disclosure of cash flow information: | | | |
Issuance of Class B ordinary shares in exchange for due to related party | $ | 25,000 | | | $ | — | |
Deferred offering costs paid by related party | $ | 146,356 | | | $ | 48,262 | |
Issuance of shares to underwriter representative | $ | 1,437,500 | | | $ | — | |
Initial Classification of Class A ordinary shares subject to possible redemption | $ | 146,625,000 | | | $ | — | |
Deferred underwriting commissions payable charged to accumulated deficit | $ | 5,031,250 | | | $ | — | |
The accompanying notes are an integral part of these financial statements.
AGRICO ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2021
Note 1 — Organization and Business Operations
Agrico Acquisition Corp. (the “Company”) was incorporated as a Cayman Islands exempted company on July 31, 2020. The Company was incorporated for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”).
As of December 31, 2021, the Company had not commenced any operations. All activity from inception through December 31, 2021 relates to the Company’s formation and preparation for the Initial Public Offering (the “Public Offering” or “IPO”) as described below, and subsequent to the IPO, identifying a target company for a Business Combination. The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company generates non-operating income in the form of interest income and unrealized gains from the cash and marketable securities held in the Trust Account. The Company has selected December 31 as its fiscal year end.
The Company’s sponsor is DJCAAC, LLC, a Delaware limited partnership (the “Sponsor”). The registration statement for the Company’s IPO was declared effective on July 7, 2021 (the “Effective Date”). On July 12, 2021, the Company consummated the initial public offering (the “Public Offering” or “IPO”) of 14,375,000 units (the “Units”), which includes the full exercise by the underwriters of the over-allotment option to purchase an additional 1,875,000 Units, at $10.00 per unit, generating gross proceeds of $143,750,000, which is discussed in Note 3. Simultaneously with the closing of the IPO, the Company consummated the sale of 7,250,000 warrants to the Sponsor and Maxim Group LLC (“Maxim”), the underwriter in the IPO (the “Private Placement Warrants”), at a price of $1.00 per Private Placement Warrant, generating gross proceeds of $7,250,000, which is discussed in Note 4. Each Private Placement Warrant is exercisable to purchase one Class A ordinary share at $11.50 per share.
Transaction costs of the IPO amounted to $9,998,781, comprised of $2,875,000 of underwriting fees paid at the time of the IPO, $5,031,250 of deferred underwriting fees, $655,031 of other offering costs, and $1,437,500 of the fair value of the representative shares, and was all charged to shareholders’ equity.
Following the closing of the IPO on July 12, 2021, $146,625,000 ($10.20 per Unit) from the net proceeds of the sale of the Units in the IPO, including a portion of the proceeds from the sale of the Private Placement Warrants, was deposited in a trust account (“Trust Account”), located in the United States with Continental Stock Transfer & Trust Company acting as trustee, and may only be invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations. Except with respect to interest earned on the funds held in the Trust Account that may be released to the Company to pay taxes, if any, the proceeds from the IPO and the sale of the Private Placement Warrants will not be released from the Trust Account (1) to the Company, until the completion of the initial Business Combination, or (2) to the public shareholders, until the earliest of (a) the completion of the initial Business Combination, and then only in connection with those Class A ordinary shares that such shareholders properly elected to redeem, subject to the limitations, (b) the redemption of any public shares properly tendered in connection with a (A) shareholder vote to amend the amended and restated memorandum and articles of association to modify the substance or timing of the Company’s obligation to provide holders of the Class A ordinary shares the right to have their shares redeemed in connection with the initial Business Combination or to redeem 100% of the public shares if the Company does not complete the initial Business Combination within 21 months from the closing of the Initial public offering (the “Combination Period”), or (B) with respect to any other provision relating to the rights of holders of the Class A ordinary shares or pre-initial business combination activity, and (c) the redemption of the public shares if the Company has not consummated the initial Business Combination within 21 months from the closing of the Initial public offering. Public shareholders who redeem their Class A ordinary shares in connection with a shareholder vote described in clause (b) in the preceding sentence shall not be
entitled to funds from the Trust Account upon the subsequent completion of an initial Business Combination or liquidation if the Company has not consummated an initial Business Combination within the Combination Period, with respect to such Class A ordinary shares so redeemed. The proceeds deposited in the Trust Account could become subject to the claims of the Company’s creditors, if any, which could have priority over the claims of the public shareholders.
The Company will provide its public shareholders with the opportunity to redeem all or a portion of their public shares upon the completion of the initial Business Combination either (i) in connection with a general meeting called to approve the initial Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a proposed initial Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The shareholders will be entitled to redeem their shares for a pro rata portion of the amount then on deposit in the Trust Account (initially approximately $10.20 per share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations).
If the Company is unable to complete a Business Combination within 12 months (or up to 21 months if the Company extends the period of time to consummate a business combination by the full amount of time) from the closing of the Public Offering (the “Combination Period”) or during any Extension Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account and not previously released to us to pay the Company’s franchise and income taxes (less up to $50,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining shareholders and board of directors, liquidate and dissolve, subject in each case to the Company’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.
The Sponsor, officers and directors have agreed to (i) waive their redemption rights with respect to their Founder Shares and Public Shares in connection with the completion of the initial Business Combination, (ii) waive their redemption rights with respect to their Founder Shares and Public Shares in connection with a shareholder vote to approve an amendment to the Company’s amended and restated certificate memorandum and articles of association (A) that would modify the substance or timing of the Company’s obligation to redeem 100% of the its Public Shares if the Company does not complete its initial Business Combination within the Combination Period or (B) with respect to any other provision relating to shareholders’ rights or pre-initial Business Combination activity, (iii) waive their rights to liquidating distributions from the Trust Account with respect to their Founder Shares if the Company fails to complete an initial Business Combination within the Combination Period, although they will be entitled to liquidating distributions from the Trust Account with respect to any Public Shares they hold if the Company fails to complete the initial Business Combination within the prescribed timeframe, and (iv) vote their Founder Shares and Public Shares in favor of the Company’s initial Business Combination.
The Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has entered into a written letter of intent, confidentiality or similar agreement or business combination agreement, reduce the amount of funds in the trust account to below the lesser of (i) $10.00 per public share and (ii) the actual amount per public share held in the trust account as of the date of the liquidation of the trust account, if less than $10.00 per share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the trust account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of the underwriter of the Public Offering against certain liabilities, including liabilities under the Securities Act. However, the Company has not asked its Sponsor to reserve for such indemnification obligations, nor has the Company independently verified whether its Sponsor has sufficient funds to satisfy its indemnity obligations and believes that the Company’s Sponsor’s only assets are securities of the Company. Therefore, the Company cannot assure that its Sponsor would be able to satisfy those obligations.
Liquidity, Capital Resources and Going Concern Consideration
As of December 31, 2021 the Company had $664,428 in cash and a working capital of $467,648. The Company’s liquidity needs up to December 31, 2021 had been satisfied through a capital contribution from the Sponsor of $25,000 (see Note 5) for the founder shares and the loan under an unsecured promissory note from the Sponsor of up to $200,000 (see Note 5), of which $171,356 was borrowed and repaid in 2021. In addition, in order to finance transaction costs in connection with a Business Combination, the Company’s Sponsor or an affiliate of the Sponsor or certain of the Company’s officers and directors may, but are not obligated to, provide the Company Working Capital Loans (see Note 5). As of December 31, 2021 and 2020, there were no amounts outstanding under any Working Capital Loans.
Based on the foregoing, management believes that the Company will have sufficient working capital to meet its needs through the earlier of the consummation of a Business Combination or one year from this filing. Over this time period, the Company will be using these funds for paying existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the Business Combination.
However, the Company is within 12 months of its mandatory liquidation as of the time of filing this 10K. In connection with the Company’s assessment of going concern considerations in accordance with Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” the liquidity condition and mandatory liquidation raise substantial doubt about the Company’s ability to continue as a going concern until the earlier of the consummation of the Business Combination or the date the Company is required to liquidate, July 12, 2022.
These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
Risks and Uncertainties
Management continues to evaluate the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations, and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Note 2 — Significant Accounting Policies
Basis of Presentation
The accompanying financial statements of the Company are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments (consisting of normal recurring adjustments) have been made that are necessary to present fairly the financial position, and the results of its operations and its cash flows.
Emerging Growth Company Status
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of the financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement and the reported amounts of expenses during the reporting period. Making estimates requires management to exercise significant judgement. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents as of December 31, 2021 and 2020.
Marketable Securities Held in Trust Account
At December 31, 2021, the assets held in the Trust Account were held in U.S. Treasury Bills with a maturity of 185 days or less and in money market funds which invest in U.S. Treasury securities.
The Company classifies its United States Treasury securities as held-to-maturity in accordance with FASB ASC Topic 320 “Investments - Debt and Equity Securities.” Held-to-maturity securities are those securities which the Company has the ability and intent to hold until maturity. Held-to-maturity treasury securities are recorded at amortized cost and adjusted for the amortization or accretion of premiums or discounts.
A decline in the market value of held-to-maturity securities below cost that is deemed to be other than temporary, results in an impairment that reduces the carrying costs to such securities’ fair value. The impairment is charged to earnings and a new cost basis for the security is established. To determine whether an impairment is other than temporary, the Company considers whether it has the ability and intent to hold the investment until a market price recovery and considers whether evidence indicating the cost of the investment is recoverable outweighs evidence to the contrary. Evidence considered in this assessment includes the reasons for the impairment, the severity and the duration of the impairment, changes in value subsequent to year-end, forecasted performance of the investee, and the general market condition in the geographic area or industry in which the investee operates.
Premiums and discounts are amortized or accreted over the life of the related held-to-maturity security as an adjustment to yield using the effective-interest method. Such amortization and accretion are included in the “interest income” line item in the statements of operations. Interest income is recognized when earned.
The carrying value, excluding gross unrealized holding loss and fair value of held to maturity securities on December 31, 2021 are as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Carrying Value as of December 31, 2021 | | Gross Unrealized Gains | | Gross Unrealized Losses | | Fair Value as of December 31, 2021 |
U.S. Treasury Securities | 146,644,279 | | | 897 | | | — | | | 146,645,176 | |
Cash | 396 | | | — | | | — | | | 396 | |
| $ | 146,644,675 | | | $ | 897 | | | $ | — | | | $ | 146,645,572 | |
Offering Costs
Offering costs consisted of legal, accounting, underwriting fees and other costs incurred through the Initial Public Offering that were directly related to the Initial Public Offering. Offering costs were allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received. Offering costs associated with issuance of the Class A ordinary shares were charged against the carrying value of the Class A ordinary shares subject to possible redemption upon the completion of the Initial Public Offering. The Company classifies deferred underwriting commissions as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities.
Net Income (loss) Per Ordinary Share
The Company has two classes of shares, which are referred to as Class A ordinary shares and Class B ordinary shares. Earnings and losses are shared pro rata between the two classes of shares. Net income (loss) per ordinary share is computed by dividing net income (loss) by the weighted-average number of ordinary shares outstanding during the periods. We have not considered the effect of the warrants sold in the Initial Public Offering and the Private Placement to purchase an aggregate of 14,437,500 of our Class A ordinary shares in the calculation of diluted income (loss) per share, since their inclusion would be anti-dilutive under the treasury stock method. As a result, diluted net income (loss) per ordinary share is the same as basic net loss per ordinary share for the periods. Re-measurement associated with the Class A ordinary shares subject to possible redemption is excluded from earnings per share as the redemption value approximates fair value.
| | | | | | | | | | | | | | | | | | | | | | | |
| For the Year ended December 31, 2021 | | For the period from July 31, 2020 (inception)through December 31, 2020 |
| Class A | | Class B | | Class A | | Class B |
Basic and diluted net income (loss) per share: | | | | | | | |
Numerator: | | | | | | | |
Allocation of net income (loss) | $ | (256,068) | | | $ | (116,096) | | | $ | — | | | $ | 9,672 | |
Denominator: | | | | | | | |
Weighted-average shares outstanding including ordinary shares subject to redemption | 6,881,490 | | | 3,141,695 | | | — | | | — | |
Basic and diluted net income (loss) per share | $ | (0.04) | | | $ | (0.04) | | | $ | — | | | $ | — | |
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet, primarily due to their short-term nature.
Class A Ordinary Shares Subject to Possible Redemption
The Company accounts for our Class A ordinary share subject to possible redemption in accordance with ASC 480.Class A ordinary shares subject to mandatory redemption (if any) are classified as liability instruments and are
measured at fair value. Conditionally redeemable Class A ordinary shares (including Class A ordinary share that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) are classified as temporary equity. At all other times, Class A ordinary shares are classified as shareholders’ equity. Our Class A ordinary shares feature certain redemption rights that are considered to be outside of our control and subject to the occurrence of uncertain future events. Accordingly, at December 31, 2021, 14,375,000 Class A ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders’ equity section of our balance sheet. There were no Class A ordinary shares outstanding as of December 31, 2020.
Immediately upon the closing of the Initial Public Offering, the Company recognized the re-measurement from initial book value to redemption amount, which approximates fair value. The change in the carrying value of Class A ordinary shares subject to possible redemption resulted in charges against additional paid-in capital (to the extent available), accumulated deficit, and Class A ordinary shares.
As of December 31, 2021, the ordinary shares reflected on the balance sheet are reconciled in the following table:
| | | | | |
Gross proceeds from IPO | $ | 143,750,000 | |
| |
Less: | |
Proceeds allocated to Public Warrants | (5,287,763) | |
Offering costs related to Class A ordinary shares subject to possible redemption | (8,223,786) | |
| |
Plus: | |
Offering costs allocated to public warrants | 314,060 | |
Re-Measurement of Class A ordinary shares to redemption amount | 16,072,489 | |
| |
Class A ordinary shares subject to possible redemption | $ | 146,625,000 | |
Income Taxes
The Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company’s management determined that the Cayman Islands is the Company’s major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. As of December 31, 2021 and 2020, there were no unrecognized tax benefits and no amounts accrued for interest and penalties. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
The Company is considered to be an exempted Cayman Islands company with no connection to any other taxable jurisdiction and is presently not subject to income taxes or income tax filing requirements in the Cayman Islands or the United States. As such, the Company’s tax provision was zero for the periods presented.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal Depository Insurance Company coverage of $250,000. The Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
Recent Accounting Pronouncements
In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective January 1, 2024 for the Company and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company is currently assessing the impact, if any, that ASU 2020-06 would have on its financial position, results of operations or cash flows.
Management does not believe that any other recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.
Note 3 — Initial Public Offering
On July 12, 2021, the Company initially sold 14,375,000 Units, which includes the full exercise by the underwriters of the over-allotment option to purchase an additional 1,875,000 Units, at a purchase price of $10.00 per Unit. Each Unit consists of one share of Class A ordinary share, and one-half of one redeemable warrant. Each whole Public Warrant entitles the holder to purchase one Class A ordinary share at a price of $11.50 per share, subject to adjustment (See Note 7).
In connection with the closing of the IPO, the Company issued to Maxim 143,750 Class A ordinary shares (the “representative shares”). Maxim has agreed not to transfer, assign or sell any such shares until the completion of the Company’s initial Business Combination. In addition, Maxim has agreed (i) to waive its redemption rights with respect to such shares in connection with the completion of the Company’s initial business combination and (ii) to waive its rights to liquidating distributions from the trust account with respect to such shares if the Company fails to complete its initial business combination within 12 months (or up to 21 months if we extend the period of time to consummate a business combination by the full amount of time) from the closing of the IPO.
Note 4 — Private Placement
Simultaneously with the closing of the IPO, the Sponsor purchased an aggregate of 7,250,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant, for an aggregate purchase price of $7,250,000, in a private placement. A portion of the proceeds from the private placement was added to the proceeds from the IPO held in the Trust Account.
The Private Placement Warrants are identical to the Public Warrants, except that the Private Warrants (i) will not be transferable, assignable or salable until the completion of the initial Business Combination and (ii) will be entitled to registration rights (see Note 7).
Note 5 — Related Party Transactions
Founder Shares
On January 25, 2021, the Sponsor was issued 5,000,000 Class B ordinary shares, par value $0.0001 per share (the “Founder Shares”) for $25,000, or approximately $0.005 per share, which proceeds were used to reduce the amount due to a related party. On April 9, 2021, the sponsor forfeited to the Company for no consideration an aggregate of 1,406,250 Founder Shares, which the Company cancelled, resulting in a decrease in the total number of Founder Shares outstanding from 5,000,000 shares to 3,593,750 shares, which included up to 468,750 founder shares subject to forfeiture to the extent that the underwriter’s over-allotment option was not exercised in full or in part. Due to the underwriters’ exercise of their full over-allotment on July 12, 2021, these 468,750 Founders Shares are no longer subject to forfeiture.
The Sponsor, officers and directors have agreed not to transfer, assign or sell any of their Founder Shares until the earliest of (A) one year after the completion of the initial Business Combination and (B) subsequent to the initial Business Combination, (x) if the closing price of the Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial Business Combination, or (y) the date on which the Company completes a liquidation, merger, share exchange or other similar transaction that results in all of the Public Shareholders having the right to exchange their ordinary shares for cash, securities or other property (the “Lock-up”). Any permitted transferees would be subject to the same restrictions and other agreements of our Sponsor, officers and directors with respect to any Founder Shares.
Promissory Note — Related Party
On January 22, 2021, the Sponsor agreed to loan the Company up to $200,000 to be used for a portion of the expenses of the IPO. This loan was non-interest bearing and payable after the date of the consummation of the Public Offering. In 2021, the Company borrowed and repaid $171,356. As of December 31, 2021, the Company had no outstanding borrowings under the promissory note.
Due to Related Party
The Sponsor paid certain formation costs and deferred offering costs on behalf of the Company which were recorded as due to related party in the amount $56,266 as of December 31, 2020, which were due upon demand. On January 25, 2021, the liability was reduced by $25,000 in exchange for the issuance of Founder Shares to the Sponsor. As of December 31, 2021, there is $73,795 due to related party for certain costs paid by the Sponsor on behalf of the Company which was repaid in March 2022.
Working Capital Loans
In addition, in order to finance transaction costs in connection with an intended Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors, may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to it. Otherwise, the Working Capital Loans may be repaid only out of funds held outside the Trust Account. In the event that the initial Business Combination does not close, the Company may use a portion of the working capital held outside the Trust Account to repay Working Capital Loans but no proceeds from the Trust Account would be used to repay the Working Capital Loans. Up to $1,500,000 of the Working Capital Loans may be convertible into warrants of the post Business Combination entity at a price of $1.00 per warrant at the option of the lender. Such warrants would be identical to the Private Placement Warrants. Except as set forth above, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. Prior to the completion of the initial Business Combination, the Company does not expect to seek loans from parties other than the Sponsor, its affiliates or any members of the management team as the Company does not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in the Company’s Trust Account. As of December 31, 2021 and 2020, the Company had no borrowings under the working capital loans.
Administrative Support Agreement
Commencing on the date that the Company’s securities are first listed, the Company agreed to reimburse an affiliate of the Sponsor for office space, secretarial and administrative services provided to members of the management team, in the amount of $10,000 per month. Upon completion of the initial Business Combination or the Company’s liquidation, it will cease paying these monthly fees. For the year ended December 31, 2021, $57,742 had been paid and charged to operating expenses. There were no amounts paid or charged for the period from July 31 (inception) through December 31, 2020.
Note 6 — Commitments and Contingencies
Registration Rights
The holders of the Founder Shares, Private Placement Warrants, Class A ordinary shares underlying the Private Placement Warrants and securities that may be issued upon conversion of Working Capital Loans will have registration rights pursuant to a registration rights agreement to be signed prior to or on the effective date of the Public Offering. The holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company register such securities under the Securities Act. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of the Company’s initial Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lock-up period. Notwithstanding the foregoing, the underwriter may not exercise its demand and “piggyback” registration rights after five (5) and seven (7) years after the effective date of the registration statement for the initial public offering and may not exercise its demand rights on more than one occasion. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The underwriter had a 45-day option from the date of the IPO to purchase up to an aggregate of 1,875,000 additional Units at the public offering price less the underwriting commissions to cover over-allotments, if any. On July 12, 2021, the underwriter fully exercised its over-allotment option.
The underwriters are entitled to a deferred underwriting fee of 3.5% of the gross proceeds of the Public Offering, or $5,031,250 in the aggregate. The deferred fee will be payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes an initial Business Combination, subject to the terms of the underwriting agreement.
Note 7 — Shareholders’ Equity
Preference Shares — The Company is authorized to issue 1,000,000 preference shares with a par value of $0.0001 and with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. At December 31, 2021 and 2020, there were no preference shares issued or outstanding.
Class A Ordinary Shares — The Company is authorized to issue 200,000,000 Class A ordinary shares with a par value of$0.0001 per share. At December 31, 2021 and 2020, there were 143,750 and no Class A ordinary shares issued and shares outstanding, excluding 14,375,000 and no Class A ordinary shares subject to redemption, respectively.
Class B Ordinary Shares — The Company is authorized to issue 20,000,000 Class B ordinary shares with a par value of $0.0001 per share. At December 31, 2020, there were no Class B ordinary shares issued or outstanding. On January 25, 2021, the Company issued 5,000,000 Class B ordinary shares to its Sponsor. On April 9, 2021, the Sponsor forfeited to the Company for no consideration an aggregate of 1,406,250 Class B ordinary shares, which the
Company cancelled, resulting in a decrease in the total number of Class B ordinary shares outstanding from 5,000,000 shares to 3,593,750 shares.
As a result of the underwriters’ election to fully exercise of their over-allotment option on July 12, 2021, the 468,750 shares were no longer subject to forfeiture. As of December 31, 2021 and 2020, there were 3,593,750 and no Class B ordinary shares issued or outstanding, respectively.
Holders are entitled to one vote for each Class B ordinary share. Holders of the Class A ordinary shares and holders of the Class B ordinary shares will vote together as a single class on all matters submitted to a vote of the Company’s shareholders, except as required by law. Unless specified in the Company’s amended and restated memorandum and articles of association, or as required by applicable provisions of Cayman Islands law or applicable stock exchange rules, the affirmative vote of a majority of the ordinary shares that are voted is required to approve any such matter voted on by the Company’s shareholders.
The Class B ordinary shares will automatically convert into Class A ordinary shares at the time of the initial Business Combination on a one-for-one basis (subject to adjustment for share sub-divisions, share dividends, reorganizations, recapitalizations and the like). In the case that additional Class A ordinary shares, or equity-linked securities, are issued or deemed issued in excess of the amounts offered in our initial public offering and related to the closing of the initial Business Combination, the ratio at which Class B ordinary shares shall convert into Class A ordinary shares will be adjusted (unless the holders of a majority of the outstanding Class B ordinary shares agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number of Class A ordinary shares issuable upon conversion of all Class B ordinary shares will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number of all ordinary shares outstanding upon completion of the Public Offering (not including Class A ordinary shares issuable to Maxim) plus all Class A ordinary shares and equity-linked securities issued or deemed issued in connection with the initial Business Combination (excluding any shares or equity-linked securities issued, or to be issued, to any seller in the initial Business Combination, any private placement-equivalent securities issued to our sponsor or its affiliates upon conversion of Working Capital loans).
Warrants — As of December 31, 2021, there were 7,187,500 public warrants and 7,250,000 private placement warrants outstanding. At December 31, 2020, there were no warrants outstanding. Each whole Public Warrant entitles the holder to purchase one Class A ordinary share at a price of $11.50 per share, subject to adjustment. The Public Warrants will become exercisable on the later of twelve months from the closing of the Public Offering and 30 days after the completion of the initial Business Combination. Only a whole warrant may be exercised at a given time by a warrant holder. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. The warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.
The Company has agreed that as soon as practicable, but in no event later than 30 calendar days after the closing of the initial Business Combination, it will use commercially reasonable best efforts to file, and within 90 calendar days following the initial Business Combination to have declared effective, a registration statement with the SEC covering the ordinary shares issuable upon exercise of the warrants, to maintain a current prospectus relating to those ordinary shares until the warrants expire or are redeemed. If a registration statement covering the ordinary shares issuable upon exercise of the warrants is not effective within the period specified above following the consummation of the initial Business Combination, public holders of warrants may, until such time as there is an effective registration statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act of 1933, as amended, or the Securities Act, provided that such exemption is available. If the Company’s ordinary shares are at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of public warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, it will not be required to file or maintain in effect a registration statement, but will be required to use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. If that exemption, or another exemption, is not available, holders will not be able to exercise their warrants on a cashless basis.
In no event will the Company be required to net cash settle any warrant. In the event that a registration statement is not effective for the exercised warrants, the purchaser of a unit containing such warrant will have paid the full purchase price for the unit solely for the Class A ordinary share underlying such unit.
Redemption of Warrants for Cash When the Price per Class A Ordinary Share Equals or Exceeds $18.00.
Once the warrants become exercisable, the Company may call the warrants for redemption (excluding the Private Placement Warrants):
•in whole and not in part:
•at a price of $0.01 per warrant;
•upon a minimum of 30 days’ prior written notice of redemption to each warrant holder; and
•if, and only if, the closing price of the Class A ordinary shares equals or exceeds $18.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which notice of the redemption is given to the warrant holders (the “Reference Value”).
In addition, if (x) the Company issues additional ordinary shares or equity-linked securities for capital raising purposes in connection with the closing of the initial Business Combination at an issue price or effective issue price of less than $9.20 per share (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of the initial Business Combination on the date of the consummation of the initial Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Company’s ordinary shares during the 20 trading day period starting on the trading day prior to the day on which the Company consummates its initial Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price described below under “Redemption” will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price.
The Private Placement Warrants are identical to the Public Warrants, except that the Private Warrants (i) will not be transferable, assignable or salable until the completion of the initial Business Combination and (ii) will be entitled to registration rights.
Note 8 — Subsequent Events
On January 30, 2022, Agrico Acquisition Corp., a Cayman Islands exempted company entered into a Business Combination Agreement with (i) a private limited company incorporated in Ireland (ii) a Caymans Islands exempted company (iii) a limited liability company incorporated under the laws of the Grand Duchy of Luxembourg and, together with Cayman Merger Sub and (iv) a Norwegian private limited liability company.
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued. Based upon this review, the Company did not identify any subsequent events (other than the one disclosed above) that would have required adjustment or disclosure in the financial statements.
Report of Independent Auditors
To the Management Board of &ever GmbH, Munich:
We have audited the accompanying financial statements of &ever GmbH, Munich (formerly Farmers Cut GmbH, Hamburg), which comprise the balance sheets as of December 31, 2020 and 2019, the related income statements for the years then ended, and the related notes to the financial statements.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in conformity with accounting principles generally accepted in Germany; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of &ever GmbH, Munich (formerly Farmers Cut GmbH, Hamburg) at December 31, 2020 and 2019, and the results of its operations for the years then ended in conformity with principles generally accepted in Germany.
The Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note F1 to the financial statements, the Company has recurring losses from operations, has a net capital deficit, and has stated that substantial doubt exists about the Company’s ability to continue as a going concern. Management's evaluation of the events and conditions and management’s plans regarding these matters are also described in Note F1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter.
Emphasis of matter
As discussed in Note A to the financial statements, the Company prepares its financial statements in accordance with generally accepted accounting principles in Germany, which differ from accounting principles generally
accepted in the United States of America. Information relating to the nature and effect of such differences is presented in Note G to the financial statements. Our opinion is not modified with respect to this matter.
| | |
/s/ Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft |
Hamburg, Germany |
November 26, 2021, except as to Note F1, as to which the date is April 20, 2022 |
&ever GmbH, Munich (formerly Farmers Cut GmbH, Hamburg)
Balance Sheets as of 31 December 2020 and 2019
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Assets | 31 Dec 2020 | | 31 Dec 2019 | | Equity and liabilities | 31 Dec 2020 | | 31 Dec 2019 |
| | EUR | | EUR | | | | EUR | | EUR |
A. | Fixed assets | | | | | A. | Equity | | | |
| | | | | | | | | | |
I. | Intangible assets | | | | | I. | Subscribed capital | 46,508 | | | 46,508 | |
| | | | | | | | | | |
| Internally generated industrial and similar rights and asset | 576,509 | | | 656,381 | | | II. | Capital reserves | 7,717,849 | | | 7,717,849 | |
| | | | | | | | | | |
II. | Property, plant and equipment | | | | | III. | Loss carryforward | -6,218,217 | | | -3,911,253 | |
| | | | | | | | | | |
1. | Other equipment, furniture and fixtures | 503,892 | | | 446,620 | | | IV. | Net loss for the year | -6,353,124 | | | -2,306,964 | |
2. | Prepayments and assets under construction | 495,778 | | | 3,792,622 | | | V. | Capital deficit | 4,806,984 | | | 0 | |
| | 999,670 | | | 4,239,242 | | | | | 0 | | | 1,546,140 | |
| | | | | | | | | | |
III. | Financial assets | | | | | | | | | |
| | | | | | | | | | |
1. | Loans to affiliates | 4,932,128 | | | 0 | | | B. | Provisions | | | |
2. | Cooperative shares | 550 | | | 550 | | | | Other provisions | 616,769 | | | 63,213 | |
3. | Equity investments | 501,067 | | | 0 | | | | | | | |
| | 5,433,745 | | | 550 | | | C. | Liabilities | | | |
| | 7,009,924 | | | 4,896,173 | | | 1. | Liabilities to banks | 15,228 | | | 0 | |
| | | | | | 2. | Liabilities from convertible loans | 9,824,001 | | | 1,003,276 | |
| | | | | | 3. | Trade payables | 664,916 | | | 274,409 | |
| | | | | | 4. | Other liabilities | 3,249,116 | | | 3,493,933 | |
B. | Current assets | | | | | | thereof for taxes: EUR 77,749 (prior year: EUR 464,028) | | | |
| | | | | | | thereof for social security: EUR 0.00 (prior year: EUR 833) | | | |
I. | Receivables and other assets | | | | | | | 13,753,260 | | | 4,771,618 | |
1. | Trade receivables | 2,216 | | | 0 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2. | Other assets | 483,449 | | | 610,919 | | | D. | Deferred income | 11,849 | | | 13,031 | |
| | 485,665 | | | 610,919 | | | | | | | |
II. | Cash on hand and bank balances | 2,034,448 | | | 868,347 | | | | | | | |
| | 2,520,113 | | | 1,479,265 | | | | | | | |
C. | Prepaid expenses | 44,857 | | | 18,563 | | | | | | | |
D. | Capital deficit | 4,806,984 | | | 0 | | | | | | | |
| | 14,381,878 | | | 6,394,001 | | | | | 14,381,878 | | | 6,394,001 | |
&ever GmbH, Munich (formerly Farmers Cut GmbH, Hamburg)
Income Statements for fiscal year 2020 and 2019
| | | | | | | | | | | | | | |
| | 2020 | | 2019 |
| | EUR | | EUR |
1. | Revenue | 147,632 | | | 112,040 | |
2. | Other own work capitalized | 0 | | | 121,275 | |
3. | Other operating income thereof income from currency translation: EUR 46 (prior year: EUR 940) | 101,073 | | | 15,725 | |
| | 248,705 | | | 249,040 | |
4. | Cost of materials | | | |
| a) Cost of raw materials, consumables and supplies and of purchased merchandise | 0 | | | 13,573 | |
| b) Cost of purchased services | 0 | | | 0 | |
5. | Personnel expenses | | | |
| a) Wages and salaries | 1,873,811 | | | 1,018,147 | |
| b) Social security, pension and other benefit costs | 338,936 | | | 190,394 | |
6. | Amortization, depreciation and impairment of intangible assets and property, plant and equipment | 234,771 | | | 72,790 | |
7. | Other operating expenses thereof expenses from currency translation: EUR 263 (prior year: EUR 851) | 3,708,235 | | | 1,089,196 | |
| | 6,155,753 | | | 2,384,101 | |
8. | Income from loans classified as fixed financial assets | 2,932 | | | 961 | |
9. | Interest and similar expenses | 450,116 | | | 172,863 | |
| | -447,184 | | | -171,902 | |
10. | Income taxes | -1 | | | 1 | |
11. | Earnings after taxes | -6,354,231 | | | -2,306,964 | |
12. | Other taxes | -1,108 | | | -1 | |
13. | Net loss for the year | -6,353,124 | | | -2306963 |
&ever GmbH, Munich (formerly Farmers Cut GmbH, Hamburg)
Notes to the financial statements
A. General
The financial statements of &ever GmbH, having its registered office in Munich (HRB no. 261515 at Munich Local Court), formerly Farmers Cut GmbH, Hamburg (Hamburg Local Court, HRB no. 136738) were prepared in accordance with the provisions of Sec. 242 et seq. HGB ["Handelsgesetzbuch": German Commercial Code] and the supplementary provisions for corporations (Sec. 264 et seq. HGB) as amended by the BilRUG ["Bilanzrichtlinie–Umsetzungsgesetz": German German Act to Implement the EU Accounting Directive] and the provisions of the GmbHG ["Gesetz betreffend die Gesellschaften mit beschraenkter Haftung": German Limited Liability Companies Act].
&ever GmbH is a small corporation within the meaning of Sec. 267 (1) HGB. The Company made partial use of the applicable simplifications for small corporations for the preparation of the notes to the financial statements. In order to improve the clarity of presentation, we have in some cases indicated in these notes to the financial statements whether individual items are related to other items and "thereof' items.
Pursuant to Sec. 264 (1) Sentence 4 HGB, the Company elected not to prepare a management report.
The income statement was prepared using the nature of expense method.
B. Notes on accounting policies
The financial statements were prepared on a going concern basis. Please refer to the F1. Liquidity and Going Concern Considerations section for information about the Company's ability to continue as a going concern.
The following accounting policies, which remained unchanged in comparison to the prior year, were used to prepare the financial statements.
Internally generated intangible assets are recognized at production cost and are written down over a useful life of five years from the date of completion.
Property, plant and equipment are recognized at acquisition or production cost less depreciation. Depreciation is charged on a straight–line basis over the assets' estimated useful lives. Low–value assets with individual acquisition costs of up to EUR 800 are fully expensed in the year of acquisition.
Receivables and other assets are stated at their nominal value. Appropriate specific bad debt allowances provide for all foreseeable valuation risks.
Bank balances are stated at nominal value.
Expenses recorded before the reporting date which relate to a certain period after this date are posted as prepaid expenses.
Other provisions are recognized at the settlement value deemed necessary according to prudent business judgment. Provisions with a residual term of more than one year are discounted pursuant to Sec. 253 (2) HGB.
Liabilities are recorded at the settlement value.
Payments received before the reporting date which constitute income for a certain period after this date are posted as deferred income.
Transactions in foreign currencies were recognized at the current rate.
C. Notes to the balance sheet
1. Fixed assets
Loans to affiliates relate to the joint venture subsidiary Wafra Agricultural for Agricultural Contracting SPC, Kuwait. The receivable will be settled by way of a contribution in kind to the joint venture &ever Middle East Holding Ltd, Dubai. In fiscal year 2020, &ever GmbH acquired a 25% equity investment in Smart Soil Technologies GmbH, Oranienburg.
2. Receivables and other assets
Receivables and other assets include receivables from shareholders of EUR 94,157 (prior year: EUR 4,158). As in the prior year, all receivables and other assets are due in up to one year.
3. Liabilities
To improve clarity and transparency, the disclosures concerning the liabilities are summarized in the schedule of liabilities shown below:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | As of 31 December 2020 EUR | | Due in up to one year EUR | | Due in between one and five years EUR | | Due in more than five years EUR |
1. | Liabilities to banks (prior year) | 15,228 | | | 15,228 | | | 0.00 | | | 0.00 | |
| (0.00) | | (0.00) | | (0.00) | | (0.00) |
2. | Liabilities from convertible loans (prior year) | 9,824,001 | | | 9,824,001 | | | 0.00 | | | 0.00 | |
| (1,003,276) | | | (0.00) | | (1,003,276) | | | (0.00) |
3. | Trade payables (prior year) | 664,916 | | | 664,916 | | | 0.00 | | | 0.00 | |
| (274,409) | | | (274,409) | | | (0.00) | | (0.00) |
4. | Other liabilities (prior year) | 3,249,116 | | | 3,249,116 | | | 0.00 | | | 0.00 | |
| (3,493,933) | | | (3,493,933) | | | (0.00) | | (0.00) |
| • thereof for taxes (prior year) | 77,749 | | | 77,749 | | | 0.00 | | | 0.00 | |
| (464,028) | | | (464,028) | | | (0.00) | | (0.00) |
| • thereof for social security (prior year) | 0.00 | | | 0.00 | | | 0.00 | | | 0.00 | |
| (833) | | | (833) | | | (0.00) | | (0.00) |
Liabilities to shareholders amount to EUR 12,995,567 (prior year: EUR 3,992,500) and relate to loans (EUR 3,171,567; prior year: EUR 2,989,224) and convertible loans (EUR 9,824,000; prior year: EUR 1,003,276). The shareholder loans are secured by items of property, plant and equipment (farm house).
D. Notes to the income statement
Earnings in fiscal year 2020 were mainly attributable to the sublease of premises in Hamburg (EUR 147,631; prior year: EUR 81,608) and to other income from insurance indemnification payments or the reversal of provisions (EUR 80,056).
E. Other notes
Number of employees
The average number of persons employed by the Company in the fiscal year was 28 (prior year: 19).
Other financial obligations
Other financial obligations of EUR 1,431,961 arise from leases with a term until 31 December 2025.
F. Subsequent events
The impact of the coronavirus crisis on business operations, including nearly all employees in Germany working from home, was countered by a series of measures. These include the introduction of the MS Teams online collaboration system. As a food production company, the Company's joint venture in Kuwait is exempted from working restrictions. On the basis of the letters of comfort issued to the Company, management does not expect any insurmountable negative effects on the Company's financing.
In July and August 2021, to fund ongoing operations and CAPEX for building the farm in Singapore, some of &ever (now) former GmbH's shareholders granted the Company a bridge loan with the principal amount of EUR 3,500,000.
Subsequently, in August 2021, &ever GmbH and Kalera AS, Oslo/Norway entered into a share purchase agreement for the acquisition of all shares in &ever GmbH. The consideration consists of a total of $25,000,000 (US dollars) in cash and 27,856,081 Kalera AS shares. The acquisition closed on 1 October 2021. As part of the overall acquisition of &ever GmbH by Kalera AS, the following took place:
•shareholders' meeting of 20 May 2021 approved the increase of the share capital by EUR 1,871 to EUR 48,379,
•shareholders' meeting of 11 August 2021 approved the increase of the share capital by EUR 9,703 to EUR 58,082,
•Kalera AS in September 2021 granted &ever GmbH a bridge loan with the principal amount of EUR 2,500,000,
•all convertible loans from (now) former shareholders were converted to capital stock at closing date,
•all loans from (now) former shareholders were transferred to Kalera AS at closing date and
•acquisition of the remaining stake of 50% in &ever Middle East Holding Ltd., Dubai, from NOX Culinary General Trading Company LLC.
F1. Liquidity and Going Concern Considerations
The Company has suffered recurring losses from operations, has a net capital deficit and is experiencing a period of tight liquidity; based on its budget and business plans, and in order to continue as a going concern in the forecast period, the Company is dependent on the financial support of its parent company, Kalera AS. Additionally, Kalera AS, the Company’s new parent company as of 1 October 2021, issued a letter of comfort, valid until 31 May 2023, limited to the amount of EUR 30,000,000, which outlines the obligation of Kalera AS to provide the Company with sufficient funding at all times such that the Company is always in a position to meet its payment obligations in a timely manner in order to prevent insolvency or overindebtedness within the meaning of Sec. 17 and Sec. 19 German Insolvency Code (InsO).
Kalera AS has incurred losses in each fiscal year since its inception and has an accumulated deficit. In March 2022, Kalera AS management informed &ever management that it expects Kalera AS to continue to generate operating losses and consume significant cash resources for the foreseeable future and that these operating losses and accumulated deficits raise substantial doubt about Kalera AS’s ability to continue as a going concern for a period of twelve months from April 2022, meaning that Kalera AS may be unable to continue operations for the foreseeable future or realize assets and discharge liabilities in the ordinary course of operations, including financing the letter of comfort which it has issued the Company. As such, Company management concluded there is substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from April 2022.
Kalera AS management has informed &ever management that continuation of Kalera AS as a going concern is dependent upon its ability to obtain additional operating capital, complete development of new seeds and produce and attain profitability and that Kalera AS has implemented and continues to implement plans to fund its operations and finance its future development activities and its working capital needs; however, there can be no assurance that Kalera AS will be successful in any of these endeavors. If Kalera AS continues to seek additional financing to fund its business activities in the future and, nonetheless, there remains doubt about its ability to continue as a going concern, investors or other financing sources may be unwilling to provide additional funding on commercially reasonable terms, or at all. If Kalera AS is unable to raise the necessary funds when needed or other strategic objectives are not achieved, it may not be able to continue its operations, or it could be required to modify its operations, which could slow future growth.
The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and payments of liabilities in the ordinary course of business. Accordingly, the financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount of and classification of liabilities that may result should the Company be unable to continue as a going concern.
G. Reconciliation to Generally Accepted Accounting Principles in the United States of America
The Company's financial statements have been prepared in accordance with generally accepted accounting principles in Germany ("German GAAP"), which differ in certain material respects from generally accepted accounting principles in the United States of America ("US GAAP"). Such differences involve methods for measuring the amounts in the financial statements. The principal differences between German GAAP and US GAAP, which affect the net loss and equity of the Company, are quantified and described below:
Reconciliation of equity (German GAAP to US GAAP)
(all amounts in Euros)
| | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| Note | | 2020 | | 2019 |
Equity reported under German GAAP | | | (4,806,984) | | | 1,546,140 | |
Software development costs | 1 | | (525,105) | | | (656,381) | |
Leases | 2 | | (26,568) | | | (16,281) | |
Equity method accounting | 3 | | (350,055) | | | (7,534) | |
Equity reported under US GAAP | | | (5,708,712) | | | (865,944) | |
Reconciliation of net loss (German GAAP to US GAAP)
(all amounts in Euros)
| | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| Note | | 2020 | | 2019 |
Net loss for the year under German GAAP | | | (6,353,124) | | | (2,306,963) | |
Software development costs | 1 | | 131,276 | | | (422,820) | |
Leases | 2 | | (10,286) | | | (16,281) | |
Equity method accounting | 3 | | (342,521) | | | (7,534) | |
Net loss for the year under US GAAP | | | (6,574,655) | | | (2,753,598) | |
Reconciliation of cash flows (German GAAP to US GAAP)
(all amounts in Euros)
As it is legally not required in Germany for a small corporation (within the meaning of Sec. 267 (1) HGB) to prepare and present a statement of cash flows, one is not included in the Company's German GAAP financial
statements. However, in addition to the differences between German GAAP and US GAAP related to the recognition and measurement of transactions by the Company, there are differences in the manner in which items would be classified in a statement of cash flows. These classification differences between operating, investing and financing activities are illustrated in the reconciliation below.
| | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| Note | | 2020 | | 2019 |
Net cash used in operating activities under German GAAP | | | (6,179,884) | | | 156,900 | |
Software development costs | 1 | | 0 | | | (422,820) | |
Net cash flow used in operating activities under US GAAP | | | (6,179,884) | | | (265,920) | |
| | | | | | | | | | | | | | | | | |
Net cash used in investing activities under German GAAP | | | (1,207,002) | | | (4,408,204) | |
Software development costs | 1 | | 0 | | | 422,820 | |
Net cash used in investing activities under US GAAP | | | (1,207,002) | | | (3,985,384) | |
Notes to reconciliation of German GAAP to US GAAP
1. Software development costs
Under German GAAP, internally generated non–current intangible assets may be recognized, at the Company's option, if certain criteria are met (for example, if it is highly probable that an intangible asset will result and function as intended and development costs can be reliably attributed to the asset). The development costs for a farm operation software are capitalized under German GAAP as they fulfill the relevant criteria and the Company exercises the option to recognize internally–generated internal–use intangible assets. Under US GAAP, development costs of internally–developed internal–use software are capitalized when management, with the relevant authority, authorizes and commits to funding a software project and it is probable that the project will be completed and the software will be used to perform the function intended. Although the farm operation software meets the capitalization criteria under German GAAP, the criteria under US GAAP are not met as documentation of management's authorization and commitment to funding the software project is non–existent. Therefore, the related development costs are recognized as expense as incurred under US GAAP. Cash expended to pay these costs constitute an operating cash flow under US GAAP as opposed to an investing cash flow under German GAAP.
2. Leases
Under German GAAP, the Company's leases are accounted for as operating leases (i.e., no associated asset or liability is recognized). The Company is a lessee in several contracts for the rent of buildings and supporting infrastructure (e.g., parking spaces and warehouses). The lease payments are recognized as rental expense in other operating expenses. Under US GAAP, the lessee recognizes a right–of–use asset (ROU Asset) and a lease liability for each contract that is considered as a lease, taking into account the applicable exceptions. In applying the new leasing standard ASC 842 as of January 1, 2019, the Company recognizes a ROU Asset and a lease liability on its leases, which are classified as operating leases. The ROU Asset is amortized over the associated useful life and interest expense is recognized on the lease liability.
3. Equity method accounting
Under US GAAP, losses of an equity method investee are reported up to the carrying amount of the investment, including any additional committed financial support, such as capital contributions, loans, advances, and additional investments. If previous losses have reduced the carrying amount of the investment to zero, the investor continues to report its share of equity method losses to the extent of any additional financial support made or committed to by the investor. Under German GAAP, the Company's investments in their investees are stated at cost. Impairments are recognized in the financial statements to the extent of any losses.
Munich, 26 November 2021, except as to Note F1, as to which the date is 20 April 2022
| | |
/s/ Dr. Sebastian Henner Schwarz |
Dr. Sebastian Henner Schwarz |
Kalera GmbH (formerly: &ever GmbH), Munich
Balance Sheets
As of 30 September 2021 and 31 December 2020
| | | | | | | | | | | |
| 30 Sept 2021 | | |
| EUR | | 31 Dec 2020 |
| (unaudited) | | EUR |
ASSETS | | | |
A. Fixed assets | | | |
I. Intangible assets | | | |
1. Internally generated industrial and similar rights and assets | 509,577 | | | 576,509 | |
II. Tangible assets | | | |
1. Other equipment, furniture and fixtures | 1,087,167 | | | 503,892 | |
2. Prepayments on assets under construction | 5,732,255 | | | 495,778 | |
| 6,819,422 | | | 999,670 | |
III. Financial assets | | | |
1. Loans to affiliates | 4,932,128 | | | 4,932,128 | |
2. Cooperative shares | 550 | | | 550 | |
3. Equity investments | 1,479,067 | | | 501,067 | |
| 6,411,745 | | | 5,433,745 | |
| 13,740,744 | | | 7,009,924 | |
B. Current assets | | | |
I. Receivables and other assets | | | |
1. Trade receivables | — | | | 2,216 | |
2. Other assets | 916,946 | | | 483,449 | |
| 916,946 | | | 485,665 | |
II. Cash on hand and bank balances | 1,445,081 | | | 2,034,448 | |
| 2,362,027 | | | 2,520,113 | |
C. Prepaid expenses | 20,153 | | | 44,857 | |
D. Capital deficit | — | | | 4,806,984 | |
| 16,122,924 | | | 14,381,878 | |
Kalera GmbH (formerly: &ever GmbH), Munich
Balance Sheets
As of 30 September 2021 and 31 December 2020
| | | | | | | | | | | |
| 30 Sept 2021 EUR | | 31 Dec 2020 |
| (unaudited) | | EUR |
EQUITY AND LIABILITIES | | | |
| | | |
A.Equity | | | |
I. Subscribed capital | 58,082 | | | 46,508 | |
II. Capital reserves | 23,346,905 | | | 7,717,849 | |
III. Loss carryforward | (12,571,341) | | | (6,218,217) | |
IV. Net loss for the period | (5,037,064) | | | (6,353,124) | |
V. Capital Deficit | — | | | 4,806,984 | |
| 5,796,582 | | | — | |
B. Provisions | 442,195 | | | 616,769 | |
C. Liabilities | | | |
1. Liabilities from convertible loans | — | | | 9,824,001 | |
2. Trade payables | 275,393 | | | 664,916 | |
3. Liabilities to shareholders | 9,355,965 | | | — | |
4. Liabilities to banks | — | | | 15,228 | |
5. Other liabilities | 252,789 | | | 3,249,116 | |
| 9,884,148 | | | 13,753,260 | |
D. Deferred Income | — | | | 11,849 | |
| 16,122,924 | | | 14,381,878 | |
Kalera GmbH (formerly: &ever GmbH), Munich
Income Statements
For the nine months ended 30 September 2021 and 30 September 2020
(unaudited)
| | | | | | | | | | | |
| 30 Sept 2021 | | 30 Sept 2020 |
| EUR | | EUR |
| | | |
1. Revenues | 137,804 | | | 107,099 | |
2. Other income thereof income from reversal of provisions EUR 432,255 (prior year EUR 0) | 649,305 | | | 26,637 | |
| 787,108 | | | 133,736 | |
3. Material | 64,806 | | | — | |
4. Personal expenses | | | |
a) Wages and salaries | 2,196,541 | | | 1,335,157 | |
b) Social security, other employee benefit costs | 355,927 | | | 222,570 | |
5. Amortization and depreciation of intangible assets and property, plant and equipment | 209,236 | | | 174,505 | |
6. Other operating expenses | | | |
a) Office expenses | 325,073 | | | 178,286 | |
b) Travel expenses | 218,385 | | | 131,942 | |
c) Consulting fees | 828,338 | | | 703,231 | |
d) Other expenses | 1,083,271 | | | 1,066,812 | |
| 5,281,577 | | | 3,812,503 | |
7. Interest expenses | 542,595 | | | 300,158 | |
8. Income taxes | — | | | — | |
9. Net Loss For The Period | (5,037,064) | | | (3,978,925) | |
Kalera GmbH (formerly: &ever GmbH), Munich
Notes to the interim financial statements
(unaudited)
A.General
The interim financial statements of Kalera GmbH (formerly: &ever GmbH), having its registered office in Munich (HRB no. 261515 at Munich Local Court) were prepared in accordance with the provisions of Sec. 242 et seq. HGB [“Handelsgesetzbuch”: German Commercial Code] and the supplementary provisions for corporations (Sec. 264 et seq. HGB) as amended by the BilRUG [“Bilanzrichtlinie-Umsetzungsgesetz”: German German Act to Implement the EU Accounting Directive] and the provisions of the GmbHG [“Gesetz betreffend die Gesellschaften mit beschränkter Haftung”: German Limited Liability Companies Act].
Kalera GmbH is a small corporation within the meaning of Sec. 267 (1) HGB. The Company made partial use of the applicable simplifications for small corporations for the preparation of the notes to the interim financial statements. In order to improve the clarity of presentation, we have in some cases indicated in these notes to the interim financial statements whether individual items are related to other items and “thereof” items.
Pursuant to Sec. 264 (1) Sentence 4 HGB, the Company elected not to prepare a management report.
The income statement was prepared using the nature of expense method.
B.Notes on accounting policies
The interim financial statements were prepared on a going concern basis. Please refer to Note F. Liquidity and Going Concern Considerations for information about the Company’s ability to continue as a going concern.
The following accounting policies, which remained unchanged in comparison to the prior year, were used to prepare the interim financial statements.
Internally generated intangible assets are recognized at production cost and are written down over a useful life of five years from the date of completion.
Property, plant and equipment are recognized at acquisition or production cost less depreciation. Depreciation is charged on a straight-line basis over the assets’ estimated useful lives. Low-value assets with individual acquisition costs of up to EUR 800 are fully expensed in the year of acquisition.
Receivables and other assets are stated at their nominal value. Appropriate specific bad debt allowances provide for all foreseeable valuation risks.
Bank balances are stated at nominal value.
Expenses recorded before the reporting date which relate to a certain period after this date are posted as prepaid expenses.
Other provisions are recognized at the settlement value deemed necessary according to prudent business judgment. Provisions with a residual term of more than one year are discounted pursuant to Sec. 253 (2) HGB.
Liabilities are recorded at the settlement value.
Payments received before the reporting date which constitute income for a certain period after this date are posted as deferred income.
Transactions in foreign currencies were recognized at the current rate.
C.Notes to the balance sheet
1.Fixed assets
Loans to affiliates relate to the joint venture subsidiary Wafra Agricultural for Agricultural Contracting SPC, Kuwait; following the reporting period, in December 2021, the receivable was settled by way of contribution in kind to the joint venture &ever Middle East Holding Ltd., Dubai.
2.Receivables and other assets
Receivables and other assets include no receivables from shareholders (31 December 2020: EUR 94,157). As of 30 September 2021 and 31 December 2020, all receivables and other assets are due in up to one year from the balance sheet date.
3.Liabilities
To improve clarity and transparency, the disclosures concerning the liabilities are summarized in the schedule of liabilities shown below:
| | | | | | | | | | | | | | | | | |
| | As of 30 September 2021 EUR | Due in up to one year EUR | Due in between one and five years EUR | Due in more than five years EUR |
1. | Liabilities from convertible loans | 0.00 | | 0.00 | | 0.00 | | 0.00 | |
| (prior year 31 Dec 2020) | (9,824,001) | | (9,824,001) | | (0.00) | | (0.00) | |
2. | Trade payables | 275,393 | | 275,393 | | 0.00 | | 0.00 | |
| (prior year 31 Dec 2020) | (664,916) | | (664,916) | | (0.00) | | (0.00) | |
3. | Liabilities to shareholders | 9,355,965 | | 9,355,965 | | 0.00 | | 0.00 | |
| (prior year 31 Dec 2020) | (0.00) | | (0.00) | | (0.00) | | (0.00) | |
4. | Liabilities from bank loans | 0.00 | | 0.00 | | 0.00 | | 0.00 | |
| (prior year 31 Dec 2020) | (15,228) | | (15,228) | | (0.00) | | (0.00) | |
5. | Other liabilities | 252,789 | | 252,789 | | 0.00 | | 0.00 | |
| (prior year 31 Dec 2020) | (3,249,116) | | (3,249,116) | | (0.00) | | (0.00) | |
| • thereof for taxes | 109,318 | | 109,318 | | 0.00 | | 0.00 | |
| (prior year 31 Dec 2020) | (77,749) | | (77,749) | | (0.00) | | (0.00) | |
| • thereof for social security | 0.00 | | 0.00 | | 0.00 | | 0.00 | |
| (prior year 31 Dec 2020) | (0.00) | | (0.00) | | (0.00) | | (0.00) | |
During the nine months ended 30 September 2021, the convertible loans, which were outstanding at 31 December 2020, as well as accrued interest converted to equity. Additionally, during this period, the Company drew down EUR 2,505,340 on a loan from Kalera AS. As of 31 December 2020, other liabilities contained additional shareholder loans in the amount of EUR 3,171,567. The shareholder loans increased during the nine months ended 30 September 2021 to EUR 6,850,625 and were transferred as part of the acquisition from the former shareholders to Kalera AS.
D.Notes to the income statement
Earnings in the nine months ended 30 September 2021 were mainly attributable to the sublease of premises in Hamburg (EUR 126,558; prior year: EUR 107,099) and to other income mainly from the reversal of provisions (EUR 431,256; prior year: EUR 0.00).
E.Other notes
Number of employees
The average number of persons employed by the Company in the nine months ended 30 Sept 2021 was 42 (prior period: 21).
Other financial obligations
Other financial obligations of EUR 2,013,482 arise from leases with a term until 31 December 2030.
COVID-19 pandemic
The impact of the coronavirus crisis on business operations, including nearly all employees in Germany working from home, was countered by a series of measures. These include the introduction of the MS Teams online collaboration system. As a food production company, the Company’s joint venture in Kuwait is exempted from working restrictions. Despite the continuance of the ongoing pandemic, management does not expect the effects of the pandemic to significantly affect the Company’s operations in the foreseeable future.
Key events during and following the reporting period
In August 2021, Kalera GmbH and Kalera AS, Oslo/Norway entered into a share purchase agreement for the acquisition of all shares in &ever GmbH. The consideration consists of a total of $25,000,000 (US dollars) in cash and 27,856,081 Kalera AS shares. The acquisition closed on 1 October 2021. As part of the overall acquisition of &ever GmbH by Kalera AS, the following took place:
•shareholders' meeting of 20 May 2021 approved the increase of the share capital by EUR 1,871 to EUR 48,379,
•shareholders' meeting of 11 August 2021 approved the increase of the share capital by EUR 9,703 to EUR 58,082,
•Kalera AS in September 2021 granted Kalera GmbH a bridge loan with the principal amount of EUR 2,500,000,
•all convertible loans from (now) former shareholders were converted to capital stock of Kalera AS at closing date,
•all loans from (now) former shareholders were transferred to Kalera AS at closing date and
•acquisition of the remaining stake of 50% in &ever Middle East Holding Ltd., Dubai, from NOX Culinary General Trading Company LLC
•the Company changed its legal name from &ever GmbH to Kalera GmbH
F.Liquidity and Going Concern Considerations
The Company has suffered recurring losses from operations, has a net capital deficit and is experiencing a period of tight liquidity; based on its budget and business plans, and in order to continue as a going concern in the forecast period, the Company is dependent on the financial support of its parent company, Kalera AS. Additionally, Kalera AS, the Company’s new parent company as of 1 October 2021, issued a letter of comfort, valid until 31 May 2023, limited to the amount of EUR 30,000,000, which outlines the obligation of Kalera AS to provide the Company with sufficient funding at all times such that the Company is always in a position to meet its payment obligations in a timely manner in order to prevent insolvency or overindebtedness within the meaning of Sec. 17 and Sec. 19 German Insolvency Code (InsO).
Kalera AS has incurred losses in each fiscal year since its inception and has an accumulated deficit. In March 2022, Kalera AS management informed &ever management that it expects Kalera AS to continue to generate
operating losses and consume significant cash resources for the foreseeable future and that these operating losses and accumulated deficits raise substantial doubt about Kalera AS’s ability to continue as a going concern for a period of twelve months from April 2022, meaning that Kalera AS may be unable to continue operations for the foreseeable future or realize assets and discharge liabilities in the ordinary course of operations, including financing the letter of comfort which it has issued the Company. As such, Company management concluded there is substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from April 2022.
Kalera AS management has informed &ever management that continuation of Kalera AS as a going concern is dependent upon its ability to obtain additional operating capital, complete development of new seeds and produce and attain profitability and that Kalera AS has implemented and continues to implement plans to fund its operations and finance its future development activities and its working capital needs; however, there can be no assurance that Kalera AS will be successful in any of these endeavors. If Kalera AS continues to seek additional financing to fund its business activities in the future and, nonetheless, there remains doubt about its ability to continue as a going concern, investors or other financing sources may be unwilling to provide additional funding on commercially reasonable terms, or at all. If Kalera AS is unable to raise the necessary funds when needed or other strategic objectives are not achieved, it may not be able to continue its operations, or it could be required to modify its operations, which could slow future growth.
The accompanying interim financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and payments of liabilities in the ordinary course of business. Accordingly, the interim financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount of and classification of liabilities that may result should the Company be unable to continue as a going concern.
G.Reconciliation to Generally Accepted Accounting Principles in the United States of America
The Company’s interim financial statements have been prepared in accordance with generally accepted accounting principles in Germany (“German GAAP”), which differ in certain material respects from generally accepted accounting principles in the United States of America (“US GAAP”). Such differences involve methods for measuring the amounts in the interim financial statements. The principal differences between German GAAP and US GAAP, which affect the net loss and equity of the Company, are quantified and described below:
Reconciliation of equity (German GAAP to US GAAP)
(all amounts in Euros)
| | | | | | | | | | | | | | | | | |
| Note | | 30 Sept 2021 | | 31 Dec 2020 |
Equity reported under German GAAP | | | 5,796,581 | | | (4,806,984) | |
Software development costs | 1 | | (426,648) | | | (525,105) | |
Leases | 2 | | (53,352) | | | (26,568) | |
Equity method accounting | 3 | | (1,111,716) | | | (350,055) | |
Consolidation accounting (&ever Singapore) | 5 | | (452,520) | | | 0 | |
Equity reported under US GAAP | | | 3,752,345 | | | (5,708,712) | |
Reconciliation of net loss (German GAAP to US GAAP)
(all amounts in Euros)
| | | | | | | | | | | | | | | | | |
| | | Nine Months Ended September 30, |
| Note | | 2021 | | 2020 |
Net loss for the period under German GAAP | | | (5,037,064) | | | (3,978,925) | |
Software development costs | 1 | | 98,457 | | | 98,457 | |
Leases | 2 | | (26,784) | | | (8,329) | |
Equity method accounting | 3 | | (761,661) | | | (194,213) | |
Share-base payments / transaction bonus | 4 | | (7,290,445) | | | 0 | |
Consolidation accounting (&ever Singapore) | 5 | | (411,703) | | | 0 | |
Net loss for the period under US GAAP | | | (13,429,200) | | | (4,083,010) | |
Reconciliation of cash flows (German GAAP to US GAAP) (all amounts in Euros)
As it is legally not required in Germany for a small corporation (within the meaning of Sec. 267 (1) HGB) to prepare and present a statement of cash flows, one is not included in the Company's German GAAP financial statements. However, in addition to the differences between German GAAP and US GAAP related to the recognition and measurement of transactions by the Company, there are differences in the manner in which items would be classified in a statement of cash flows. These classification differences between operating, investing and financing activities are illustrated in the reconciliation below.
| | | | | | | | | | | | | | | | | |
| | | Nine Months Ended September 30, |
| Note | | 2021 | | 2020 |
Net cash used in operating activities under German GAAP | | | (5,635,109) | | | (3,132,591) | |
Other non-cash operating gains/losses | 1 | | 63 | | | 0 | |
Consolidation accounting (&ever Singapore) | 5 | | 170,234 | | | 0 | |
Net cash flow used in operating activities under US GAAP | | | (5,464,812) | | | (3,132,591) | |
| | | | | |
Net cash used in investing activities under German GAAP | | | (1,675,558) | | | (908,795) | |
Other non-cash operating gains/losses | 1 | | (63) | | | 0 | |
Consolidation accounting (&ever Singapore) | 5 | | (5,387,660) | | | 0 | |
Net cash used in investing activities under US GAAP | | | (7,063,281) | | | (908,795) | |
| | | | | |
Cash, cash equivalents and restricted cash under German GAAP | | | 1,445,081 | | | 1,163,054 | |
Consolidation accounting (&ever Singapore) | 5 | | 529,708 | | | 0 | |
Cash, cash equivalents and restricted cash under US GAAP | | | 1,974,789 | | | 1,163,054 | |
Notes to reconciliation of German GAAP to US GAAP
1. Software development costs
Under German GAAP, internally generated non-current intangible assets may be recognized, at the Company’s option, if certain criteria are met (for example, if it is highly probable that an intangible asset will result and function
as intended and development costs can be reliably attributed to the asset). The development costs for a farm operation software are capitalized under German GAAP as they fulfill the relevant criteria and the Company exercises the option to recognize internally generated internal-use intangible assets. Under US GAAP, development costs of internally developed internal-use software are capitalized when management, with the relevant authority, authorizes and commits to funding a software project and it is probable that the project will be completed and the software will be used to perform the function intended. Although the farm operation software meets the capitalization criteria under German GAAP, the criteria under US GAAP are not met as documentation of management’s authorization and commitment to funding the software project is non-existent. Therefore, the related development costs are recognized as expense as incurred under US GAAP.
2. Leases
Under German GAAP, the Company’s leases are accounted for as operating leases (i.e., no associated asset or liability is recognized). The Company is a lessee in several contracts for the rent of buildings and supporting infrastructure (e.g., parking spaces and warehouses). The lease payments are recognized as rental expense in other operating expenses. Under US GAAP, the lessee recognizes a right-of-use asset (“ROU Asset”) and a lease liability for each contract that is considered as a lease, taking into account the applicable exceptions. In applying the new leasing standard ASC 842 as of January 1, 2019, the Company recognizes a ROU Asset and a lease liability on its leases, which are classified as operating leases. The ROU Asset is amortized over the associated useful life and interest expense is recognized on the lease liability.
3. Equity method accounting
Under US GAAP, losses of an equity method investee are reported up to the carrying amount of the investment, including any additional committed financial support, such as capital contributions, loans, advances, and additional investments. If previous losses have reduced the carrying amount of the investment to zero, the investor continues to report its share of equity method losses to the extent of any additional financial support made or committed to by the investor. Under German GAAP, the Company's investments in their investees are stated at cost. Impairments are recognized in the financial statements to the extent of any losses.
4. Share-base payments / transaction bonus
The Company established a virtual equity incentive program ("VESOP”) for certain employees and non-employees. Furthermore, the Company promised certain employees bonus payments in connection with the successful completion of a transaction whereby substantially all shares or assets of the Company were sold. In connection with the Kalera acquisition, the obligations to compensate the beneficiaries of the VESOP and bonus were transferred from the Company to the selling shareholders. VESOP obligations were to be satisfied with shares in Kalera AS and the bonus obligations were to be satisfied with cash, both of which were transferred to the selling shareholders as part of the purchase price for the Company. Under German GAAP the related share-based payments and transaction bonus are not recognized in the financial statements of the Company. However, under US GAAP, compensation to a beneficiary by a related party or other holder of an economic interest in the reporting entity for services provided to the reporting entity are recognized as a capital contribution to the Company. Therefore, the costs of satisfying the VESOP and the transaction bonus obligations are recognized as expenses in the financial statements of the Company under US GAAP. As the resulting increase to capital reserves for the capital contribution is offset by the increase to net loss), there is no net effect to equity from this GAAP difference.
5. Consolidation
Under US GAAP, the financial position and operating results of the Company’s wholly owned &ever Singapore Pte. Ltd (“&ever Singapore”) entity must be consolidated. Under German GAAP, only separate financial statements of the &ever GmbH entity have been prepared. To enable a further understanding of the effect &ever Singapore has on the consolidated entity, a balance sheet and income statement of &ever Singapore, prepared in accordance with
US GAAP, is presented below. There was no intercompany expense/income to eliminate in the income statement and the equity of &ever Singapore would eliminate with &ever GmbH’s investment in it.
| | | | | |
&ever Singapore Balance Sheet under US GAAP (in EUR) | 30 September 2021 |
ASSETS | |
Non-current assets | |
Property, plant and equipment, net | 5,385,569 | |
Right-of-use assets | 3,259,043 | |
| 8,644,612 | |
Current Assets | |
Other current assets | 210,588 | |
Cash and cash equivalents | 529,708 | |
| 740,296 | |
Total Assets | 9,384,908 | |
| |
TOTAL LIABILITIES AND STOCKHOLDER`S EQUITY | |
| |
Stockholders' equity | |
Common stock | 63 | |
Accumulated deficit | (40,880) | |
Net loss for the period | (411,703) | |
| (452,520) | |
Current liabilities: | |
Accounts payable - third parties | 1,131,700 | |
Accounts payable - intercompany | 4,656,313 | |
Short-term lease liabilities | 475,556 | |
Accrued liabilities | 507,614 | |
| 6,771,183 | |
Non-current liabilities | |
Long-term lease liabilities | 3,066,245 | |
Total liabilities | 9.837.428 |
Total liabilities and stockholders' equity | 9,384,908 | |
| | | | | |
&ever Singapore Income Statement under US GAAP (in EUR) | Nine months ended September 30, 2021 |
Selling, general and administrative expenses | (414,194) | |
Depreciation and amortization | (2,154) | |
Operating loss | (416,347) | |
Other income | 4,644 | |
Loss from operations before income tax | (411,703) | |
Income tax expense | 0 | |
Total comprehensive loss / net loss for the period | (411,703) | |
| | |
Munich, 20 April 2022 |
/s/ Dr. Sebastian Henner Schwarz |
Dr. Sebastian Henner Schwarz |
EXECUTION VERSION
BUSINESS COMBINATION AGREEMENT
by and among
AGRICO ACQUISITION CORP.
as Purchaser,
KALERA AS,
as the Company,
FIGGREEN LIMITED,
as Holdco,
KALERA CAYMAN MERGER SUB
as Cayman Merger Sub,
AND
KALERA LUXEMBOURG MERGER SUB SARL,
in process of incorporation and represented by its sole founder, as Lux Merger Sub
Dated as of January 30, 2022
| | | | | | | | | | | |
| | | Page |
| | | |
ARTICLE I MERGERS | A-I-3 |
| | | |
| 1.1 | Mergers; Company Capital Reduction | A-I-3 |
| | | |
| 1.2 | Effective Times | A-I-4 |
| | | |
| 1.3 | Effect of the Mergers | A-I-5 |
| | | |
| 1.4 | Organizational Documents of the Company and Holdco | A-I-5 |
| | | |
| 1.5 | Directors and Officers of the Company and Holdco | A-I-5 |
| | | |
| 1.6 | Effect of Mergers on Issued Securities of Purchaser, Holdco, the Merger Subs and the Company | A-I-6 |
| | | |
| 1.7 | Exchange Procedures | A-I-7 |
| | | |
| 1.8 | Treatment of Company Options | A-I-9 |
| | | |
| 1.9 | Fractional Holdco Ordinary Shares | A-I-10 |
| | | |
| 1.10 | Tax Consequences | A-I-10 |
| | | |
| 1.11 | Liquidation of Purchaser | A-I-10 |
| | | |
ARTICLE II CLOSINGS | A-I-11 |
| | | |
| 2.1 | First Closing | A-I-11 |
| | | |
| 2.2 | Second Closing | A-I-11 |
| | | |
| 2.3 | Signatures for the Closings | A-I-11 |
| | | |
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER | A-I-11 |
| | | |
| 3.1 | Organization and Standing | A-I-11 |
| | | |
| 3.2 | Authorization; Binding Agreement | A-I-12 |
| | | |
| 3.3 | Governmental Approvals | A-I-12 |
| | | |
| 3.4 | Non-Contravention | A-I-12 |
| | | |
| 3.5 | Capitalization | A-I-13 |
| | | |
| 3.6 | SEC Filings and Purchaser Financials | A-I-14 |
| | | |
| 3.7 | Absence of Certain Changes | A-I-15 |
| | | |
| 3.8 | Compliance with Laws | A-I-16 |
| | | |
TABLE OF CONTENTS CONTINUED
| | | | | | | | | | | |
| | | Page |
| | | |
| 3.9 | Actions; Orders; Permits | A-I-16 |
| | | |
| 3.10 | Taxes and Returns | A-I-16 |
| | | |
| 3.11 | Employees | A-I-17 |
| | | |
| 3.12 | Investment Company Act | A-I-17 |
| | | |
| 3.13 | Finders and Brokers | A-I-17 |
| | | |
| 3.14 | Certain Business Practices | A-I-17 |
| | | |
| 3.15 | Trust Account | A-I-18 |
| | | |
| 3.16 | Exclusivity of Representations and Warranties | A-I-18 |
| | | |
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF HOLDCO AND MERGER SUBS | A-I-18 |
| | | |
| 4.1 | Organization and Standing | A-I-19 |
| | | |
| 4.2 | Authorization; Binding Agreement | A-I-19 |
| | | |
| 4.3 | Governmental Approvals | A-I-20 |
| | | |
| 4.4 | Non-Contravention | A-I-20 |
| | | |
| 4.5 | Capitalization | A-I-20 |
| | | |
| 4.6 | Ownership of Exchange Shares | A-I-22 |
| | | |
| 4.7 | Compliance with Laws | A-I-22 |
| | | |
| 4.8 | Holdco Activities | A-I-22 |
| | | |
| 4.9 | Finders and Brokers | A-I-22 |
| | | |
| 4.10 | Investment Company Act | A-I-23 |
| | | |
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY | A-I-23 |
| | | |
| 5.1 | Organization and Standing | A-I-23 |
| | | |
| 5.2 | Authorization; Binding Agreement; No Violation | A-I-23 |
| | | |
| 5.3 | Capitalization | A-I-24 |
| | | |
| 5.4 | Subsidiaries | A-I-25 |
| | | |
TABLE OF CONTENTS CONTINUED
| | | | | | | | | | | |
| | | Page |
| | | |
| 5.5 | Governmental Approvals | A-I-25 |
| | | |
TABLE OF CONTENTS CONTINUED
| | | | | | | | | | | |
| | | Page |
| | | |
| 5.6 | Non-Contravention | A-I-25 |
| | | |
| 5.7 | Financial Statements | A-I-26 |
| | | |
| 5.8 | Absence of Certain Changes | A-I-27 |
| | | |
| 5.9 | Compliance with Laws | A-I-27 |
| | | |
| 5.10 | Company Permits | A-I-27 |
| | | |
| 5.11 | Litigation | A-I-27 |
| | | |
| 5.12 | Material Contracts | A-I-28 |
| | | |
| 5.13 | Intellectual Property | A-I-30 |
| | | |
| 5.14 | Taxes and Returns | A-I-31 |
| | | |
| 5.15 | Real Property | A-I-32 |
| | | |
| 5.16 | Employee Matters | A-I-33 |
| | | |
| 5.17 | Benefit Plans | A-I-34 |
| | | |
| 5.18 | Environmental Matters | A-I-36 |
| | | |
| 5.19 | Transactions with Related Persons | A-I-36 |
| | | |
| 5.20 | Business Insurance | A-I-37 |
| | | |
| 5.21 | Customers and Vendors | A-I-37 |
| | | |
| 5.22 | Certain Business Practices | A-I-37 |
| | | |
| 5.23 | Data Protection and Cybersecurity | A-I-38 |
| | | |
| 5.24 | Information Technology | A-I-39 |
| | | |
| 5.25 | Investment Company Act | A-I-39 |
| | | |
| 5.26 | Finders and Brokers | A-I-39 |
| | | |
| 5.27 | Information Supplied | A-I-40 |
| | | |
| 5.28 | Exclusivity of Representations and Warranties | A-I-40 |
| | | |
ARTICLE VI COVENANTS | A-I-40 |
| | | |
| 6.1 | Access and Information | A-I-40 |
TABLE OF CONTENTS CONTINUED
TABLE OF CONTENTS CONTINUED
| | | | | | | | | | | |
| | | Page |
| | | |
| 6.2 | Conduct of Business of the Company | A-I-41 |
| | | |
| 6.3 | Conduct of Business of Purchaser, Holdco and Merger Subs | A-I-44 |
| | | |
| 6.4 | Purchaser Public Filings | A-I-46 |
| | | |
| 6.5 | No Solicitation | A-I-46 |
| | | |
| 6.6 | No Solicitation by Purchaser | A-I-49 |
| | | |
| 6.7 | Securities Law Matters | A-I-49 |
| | | |
| 6.8 | Notification of Certain Matters | A-I-49 |
| | | |
| 6.9 | Efforts | A-I-50 |
| | | |
| 6.10 | Further Assurances | A-I-51 |
| | | |
| 6.11 | The Registration Statement | A-I-51 |
| | | |
| 6.12 | Public Announcements | A-I-53 |
| | | |
| 6.13 | Post-Closing Board of Directors | A-I-54 |
| | | |
| 6.14 | Indemnification of Directors and Officers; Tail Insurance | A-I-54 |
| | | |
| 6.15 | Registration Rights Agreement | A-I-56 |
| | | |
| 6.16 | Net Tangible Assets | A-I-56 |
| | | |
| 6.17 | Delisting and Deregistration | A-I-56 |
| | | |
| 6.18 | Holdco Nasdaq Listing | A-I-56 |
| | | |
| 6.19 | Equity Plans | A-I-57 |
| | | |
| 6.20 | Employment Agreements; Other Compensation Matters | A-I-57 |
| | | |
| 6.21 | Company Shareholder Approval | A-I-57 |
| | | |
| 6.22 | Merger Sub and Holdco Shareholder Approvals | A-I-57 |
| | | |
| 6.23 | Section 16 of the Exchange Act | A-I-58 |
| | | |
| 6.24 | Transfer Taxes | A-I-58 |
| | | |
| 6.25 | Resignations | A-I-58 |
| | | |
| 6.26 | Amended Warrant Agreement | A-I-58 |
TABLE OF CONTENTS CONTINUED
TABLE OF CONTENTS CONTINUED
| | | | | | | | | | | |
| | | Page |
| | | |
| 6.27 | Amended Holdco Memorandum and Articles of Association | A-I-58 |
| | | |
| 6.28 | Norwegian Merger | A-I-58 |
| | | |
| 6.29 | No Claim Against Purchaser Trust Account | A-I-58 |
| | | |
| 6.30 | CVR Agreement | A-I-59 |
| | | |
| 6.31 | Nonregistrable CVRs | A-I-59 |
| | | |
ARTICLE VII CLOSING CONDITIONS | A-I-59 |
| | | |
| 7.1 | Conditions to Each Party’s Obligations | A-I-59 |
| | | |
| 7.2 | Conditions to Obligations of the Company | A-I-60 |
| | | |
| 7.3 | Conditions to Obligations of Purchaser | A-I-61 |
| | | |
| 7.4 | Frustration of Conditions | A-I-62 |
| | | |
ARTICLE VIII TERMINATION AND EXPENSES | A-I-62 |
| | | |
| 8.1 | Termination | A-I-62 |
| | | |
| 8.2 | Manner and Effect of Termination | A-I-64 |
| | | |
| 8.3 | Termination Fees | A-I-64 |
| | | |
ARTICLE IX MISCELLANEOUS | A-I-65 |
| | | |
| 9.1 | Nonsurvival of Representations, Warranties and Covenants | A-I-65 |
| | | |
| 9.2 | Notices | A-I-65 |
| | | |
| 9.3 | Binding Effect; Assignment | A-I-66 |
| | | |
| 9.4 | Third Parties | A-I-66 |
| | | |
| 9.5 | Arbitration | A-I-66 |
| | | |
| 9.6 | Governing Law; Jurisdiction | A-I-67 |
| | | |
| 9.7 | Specific Performance | A-I-67 |
| | | |
| 9.8 | Severability | A-I-67 |
| | | |
| 9.9 | Amendment | A-I-68 |
| | | |
| 9.10 | Waiver | A-I-68 |
TABLE OF CONTENTS CONTINUED
| | | | | | | | | | | |
| | | Page |
| | | |
| | | |
| 9.11 | Schedules and Exhibits | A-I-68 |
| | | |
| 9.12 | Entire Agreement | A-I-68 |
| | | |
| 9.13 | Interpretation | A-I-68 |
| | | |
| 9.14 | Counterparts | A-I-69 |
| | | |
| 9.15 | Legal Representation | A-I-69 |
| | | |
ARTICLE X DEFINITIONS | A-I-71 |
| | | |
| 10.1 | Certain Definitions | A-I-71 |
INDEX OF EXHIBITS
| | | | | |
Exhibit | Description |
| |
Exhibit A | Form of CVR Agreement |
| |
Exhibit B | Form of First Merger Plan of Merger |
| |
Exhibit C | Form of Second Merger Plan of Merger (Common Draft Terms of Merger) |
| |
Exhibit D | Holdco Equity Plan |
| |
Exhibit E | Form of Amended Holdco Memorandum and Articles of Association |
BUSINESS COMBINATION AGREEMENT
This Business Combination Agreement (this “Agreement”) is made and entered into as of January 30, 2022, by and among (i) Agrico Acquisition Corp., a Cayman Islands exempted company (together with its successors, “Purchaser”), (ii) Figgreen Limited, a private limited company incorporated in Ireland with registered number 606356 (“Holdco”), (iii) Kalera Cayman Merger Sub, a Caymans Islands exempted company (“Cayman Merger Sub”), (iv) Kalera Luxembourg Merger Sub SARL a limited liability company (société à responsabilité limitée), to be incorporated under the laws of the Grand Duchy of Luxembourg, to have its registered office at 12E Rue Guillaume Kroll, L-1882 Luxembourg, Grand Duchy of Luxembourg and to registered with the Luxembourg Trade and Companies Register (Registre de Commerce et des Sociétés, Luxembourg) hereby represented by Holdco as sole founding shareholder acting in the name and on behalf of Kalera Luxembourg Merger Sub SARL (“Lux Merger Sub” and, together with Cayman Merger Sub, the “Merger Subs”) and (v) Kalera AS, a Norwegian private limited liability company (together with its successors and, following the Norwegian Merger, Lux Holdco, the “Company”). Purchaser, Holdco, the Merger Subs and the Company are sometimes referred to herein individually as a “Party” and, collectively, as the “Parties”.
RECITALS:
WHEREAS, the Company, indirectly through its subsidiaries, engages in the business of controlled environment agriculture, seeds production and research and development of plant and seed science;
WHEREAS, Purchaser is a Cayman Islands exempted company structured as a blank check company incorporated for the sole purpose of effecting a share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses;
WHEREAS, Holdco is a private limited company incorporated in Ireland and, after the date hereof and before the First Closing, will re-register as an Irish public company limited by shares and change its name to “Kalera plc”;
WHEREAS, Cayman Merger Sub is a newly incorporated Cayman Islands exempted company that is a wholly owned direct subsidiary of Holdco;
WHEREAS, Lux Merger Sub will be a newly incorporated Luxembourg limited liability company (société à responsabilité limitée) that will be a wholly owned direct subsidiary of Holdco;
WHEREAS, prior to the First Merger Effective Time, the Company will have merged with and into Kalera S.A., a Luxembourg public limited company (société anonyme) (“Lux Holdco”) with Lux Holdco as the surviving entity;
WHEREAS, all actions required to be taken by the Company following the Norwegian Merger shall be taken by Lux Holdco;
WHEREAS, the Parties desire and intend to effect a business combination transaction whereby (a) at least one (1) Business Day prior to the Second Merger, Cayman Merger Sub will
merge with and into Purchaser, with Purchaser continuing as the surviving entity and as a wholly owned subsidiary of Holdco (the “First Merger”), the Purchaser will elect to be treated as a “disregarded entity” for U.S. federal income Tax purposes effective immediately after the First Merger (the “DRE Election”), Purchaser will issue Purchaser Ordinary Shares to Holdco (the “Purchaser Share Issuance”) and the Purchaser Shareholders will receive shares in the capital of Holdco and holders of Purchaser Warrants will have their Purchaser Warrants assumed by Holdco and adjusted to become exercisable for shares in the capital of Holdco, in each case as consideration for the First Merger and the Purchaser Share Issuance, (b) at least one (1) Business Day following the First Merger and subject thereto, Lux Merger Sub will merge with and into the Company with the Company as the surviving entity of the Second Merger and in this context the Company will issue shares to Holdco (the “Company Share Issuance”) (the “Second Merger” and together with the First Merger, the “Mergers”), and (c) immediately following and in connection with the Second Merger, the Company Shareholders (except Holdco) will receive shares in the capital of Holdco and the holders of the Company Options will receive the consideration set forth in Section 1.8, in each case as consideration for (i) the Company Shares being cancelled and ceasing to exist by way of a capital reduction of the Company pursuant to the Luxembourg Companies Act (the “Company Capital Reduction”) and (ii) the Company Options being assumed by Holdco or cancelled, as applicable, upon completion of the Second Merger and the Company Capital Reduction, and as a result of the Second Merger and the Company Capital Reduction, the Company will be a wholly owned subsidiary of Holdco;
WHEREAS, as soon as is reasonably practicable following the First Merger, Purchaser will be entered into liquidation (the “Purchaser Liquidation”) pursuant to which Purchaser shall be liquidated and all assets of Purchaser (if any) shall be distributed to Holdco;
WHEREAS, for U.S. federal income tax purposes (and for purposes of any applicable state or local income Tax that follows the U.S. federal income tax treatment of the Transactions), each of the Parties intends that (i) (A) the First Merger and the DRE Election, taken together, will qualify as a single integrated transaction that is treated as a “reorganization” within the meaning of Section 368(a)(1)(F) of the Code and the Treasury Regulations thereunder as to which Holdco and Purchaser are parties under Section 368(b) of the Code, and (B) this Agreement be, and hereby is, adopted as a “plan of reorganization” for the purposes of Section 368 of the Code and Treasury Regulations Sections 1.368-2(g) and 1.368-3(a), and (ii) (A) the Second Merger and the Company Capital Reduction, taken together, will qualify as a single integrated transaction that is treated as a “reorganization” within the meaning of Section 368(a)(2)(E) of the Code and the Treasury Regulations thereunder as to which Holdco and the Company are parties under Section 368(b) of the Code, and (B) this Agreement be, and hereby is, adopted as a “plan of reorganization” for the purposes of Section 368 of the Code and Treasury Regulations Sections 1.368-2(g) and 1.368-3(a);
WHEREAS, as a condition and inducement to Purchaser’s willingness to enter into this Agreement, contemporaneously with the execution and delivery of this Agreement, in connection with the Transactions, certain shareholders of the Company have entered into a Company Holders Support Agreement, dated as of the date hereof (the “Company Support Agreement”);
WHEREAS, as a condition and inducement to the Company’s willingness to enter into this Agreement, contemporaneously with the execution and delivery of this Agreement, certain
shareholders of Purchaser, the Company and Purchaser have entered into that certain Sponsor Support Agreement (the “Sponsor Support Agreement”), concurrently with the execution and delivery of this Agreement;
WHEREAS, at or immediately prior to the Effective Time, Holdco and a rights agent selected by the Company and reasonably acceptable to the Purchaser (the “Rights Agent”) will enter into a Contingent Value Rights Agreement (the “CVR Agreement”), in substantially the form attached hereto as Exhibit A (subject to modifications contemplated by Section 6.30);
WHEREAS, the sole director or boards of directors (as applicable) of Purchaser, the Company, Holdco, and Cayman Merger Sub have each (a) determined that the Transactions (to the extent such Transactions are applicable to such Person) are fair, advisable and in the best interests of their respective companies and security holders, and (b) approved this Agreement and the Transactions (to the extent such Transactions are applicable to such Person), upon the terms and subject to the conditions set forth herein; and
WHEREAS, certain capitalized terms used herein are defined in Article X hereof.
NOW, THEREFORE, in consideration of the premises set forth above, and the representations, warranties, covenants and agreements contained in this Agreement, and intending to be legally bound hereby, the Parties hereto agree as follows:
ARTICLE I
MERGERS
1.1 Mergers; Company Capital Reduction.
(a) At the First Closing, in accordance with the applicable provisions of the Cayman Companies Act, Purchaser and Cayman Merger Sub shall consummate the First Merger by taking those steps in accordance with Section 1.2(a), pursuant to which Cayman Merger Sub shall be merged with and into the Purchaser, the separate legal existence of Cayman Merger Sub shall cease, and Purchaser shall continue as the surviving company and a wholly owned subsidiary of Holdco (the “First Merger Surviving Corporation”) (provided that references in this Agreement to Cayman Merger Sub for periods after the First Merger Effective Time shall include the First Merger Surviving Corporation) in accordance with a plan of merger for the First Merger (the “First Merger Plan of Merger”) substantially in the form set forth in Exhibit B attached hereto, and Purchaser shall elect to be treated as a “disregarded entity” for U.S. federal income Tax purposes effective immediately after the First Merger.
(b) At the Second Closing, in accordance with the applicable provisions of the Luxembourg Companies Act, the Company, Lux Merger Sub and Holdco shall consummate the Second Merger, the Company Share Issuance, and the Company Capital Reduction by taking those steps in accordance with Section 1.2(b), pursuant to which Lux Merger Sub shall be merged with and into the Company with the Company being the surviving entity, following which the separate corporate existence of Lux Merger Sub shall cease and the Company shall continue as the surviving entity and the Company will become a wholly owned subsidiary of Holdco (the “Second Merger Surviving Corporation” and, together with the First Merger Surviving Corporation, the “Surviving Corporations”) (provided that references in this Agreement to the Lux Merger Sub
for periods after the Second Merger Effective Time shall include the Second Merger Surviving Corporation) in accordance with the common draft terms of merger (the “Second Merger Plan of Merger”) substantially in the form set forth in Exhibit C attached hereto. Immediately thereafter and in connection therewith, (i) the Company Capital Reduction will occur and (ii) the Company Shareholders (except Holdco) will receive shares in the capital of Holdco as consideration for the Company Capital Reduction and the holders of In-the-Money Company Options will have their In-the-Money Company Options assumed by Holdco and adjusted to become exercisable for shares in the capital of Holdco.
1.2 Effective Times.
(a) On the First Closing Date, Purchaser and Cayman Merger Sub shall cause the First Merger to be consummated in accordance with the First Merger Plan of Merger and with the relevant provisions of the Cayman Companies Act at the time when filings of the First Merger Plan of Merger with the Registrar of Companies of the Cayman Islands (the “Cayman Registrar”) is completed or at such other time as may be agreed by Purchaser and the Company in writing and specified in such filings (the “First Merger Effective Time”).
(b) On the Second Closing Date:
(i) Holdco, the Company and Lux Merger Sub shall cause the Second Merger to be consummated in accordance with the Second Merger Plan of Merger and with the relevant provisions of the Luxembourg Companies Act subject to and on the same date as the First Merger Effective Time or as otherwise specified in the Second Merger Plan of Merger it being noted that, in accordance with the provisions of the Luxembourg Companies Act, the Second Merger shall be subject to:
(A) the preparation by the administrative and management bodies of Lux Merger Sub and the Company of a detailed written report explaining the Second Merger Plan and setting out the legal and economic grounds for the Second Merger (the “Board Report”);
(B) the issue by independent experts (Luxembourg independent statutory auditors – réviseurs d’entreprise agréés) appointed by the administrative and management bodies of each of Lux Merger Sub and the Company of written reports on the Second Merger Plan (the “Expert Reports”); and
(C) the approval of the general meetings of each of Lux Merger Sub and the Company to be held before a Luxembourg notary in the Grand Duchy of Luxembourg after examination of (i) the Board Report and (ii) the Expert Reports, such decisions requiring that the conditions as to the quorum and majority as laid down for amendments of the articles are fulfilled.
(ii) the subsequent Company Capital Reduction shall occur immediately thereafter(the “Second Merger Effective Time” and together with the First Merger Effective Time, the “Effective Times”, and each an “Effective Time”); it being noted that, in accordance with the provisions of the Luxembourg Companies Act and the Irish Companies Act, as applicable:
(A) the Company Capital Reduction shall be subject to the approval of the general meeting of the Company to be held before a Luxembourg notary in the Grand Duchy of Luxembourg, such decision requiring that the conditions as to the quorum and majority as laid down for amendments of the articles are fulfilled; and
(B) further to the Company Capital Reduction, the Company Shareholders (except Holdco) shall cease to be the holder of respectively the Company Shares and Holdco shall be recorded as the registered holder of all the Company Shares and shall be the legal and beneficial owner thereof.
1.3 Effect of the Mergers. At the relevant Effective Time, the effect of the Mergers shall be as provided in this Agreement, the CVR Agreement, the Certificates of Merger, the Second Merger Plan of Merger, the First Merger Plan of Merger and the applicable provisions of the Cayman Companies Act and the Luxembourg Companies Act, as applicable (the “Transactions”). Without limiting the generality of the foregoing, and subject thereto, at each applicable Effective Time by virtue of the relevant Mergers and the applicable provisions of the Cayman Companies Act and Luxembourg Companies Act (as applicable) and without any action on the part of any Party or the holders of securities of Purchaser or the Company, all the property, rights, privileges, agreements, powers and franchises, debts, Liabilities, duties and obligations of:
(a) Cayman Merger Sub shall become the property, rights, privileges, agreements, powers and franchises, debts, Liabilities, duties and obligations of Purchaser as the surviving company, which shall include the assumption by Purchaser of any and all agreements, covenants, duties and obligations of Cayman Merger Sub set forth in this Agreement to be performed after the First Merger Effective Time and Purchaser shall become a wholly-owned subsidiary of Holdco; and
(b) all property, rights, privileges, agreements, powers and franchises, debts, Liabilities, duties and obligations of Lux Merger Sub shall be transferred, by operation of Law, to the Company as the surviving corporation, which shall include the assumption by the Company of any and all agreements, covenants, duties and obligations of Lux Merger Sub set forth in this Agreement to be performed after the Second Merger Effective Time, and on consummation of the Company Capital Reduction, the Company shall become a wholly-owned Subsidiary of Holdco.
1.4 Organizational Documents of the Company and Holdco.
(a) Immediately prior to the First Merger Effective Time, the Memorandum and Articles of Association of Holdco will be the Amended Holdco Memorandum and Articles of Association.
(b) In the context of the Second Merger Effective Time, the Articles of Association of the Company will be the Amended Company Articles.
1.5 Directors and Officers of the Company and Holdco.
(a) At the First Merger Effective Time, the board of directors of Holdco shall resign and the board of directors of Holdco shall be appointed in accordance with Section 6.13.
(b) At the Second Merger Effective Time, the Company Board shall resign or be revoked and the Company Board shall be appointed in accordance with Section 6.13.
1.6 Effect of Mergers on Issued Securities of Purchaser, Holdco, the Merger Subs and the Company. At the relevant Effective Time, by virtue of the Mergers, the applicable provisions of the Cayman Companies Act and the Luxembourg Companies Act (as applicable) and without any action on the part of any Party or the holders of securities of Purchaser, the Company, Holdco or the Merger Subs:
(a) Purchaser Class A Ordinary Shares. At the First Merger Effective Time, each Purchaser Class A Ordinary Share issued and outstanding immediately prior to the First Merger Effective Time will be automatically converted into one (1) Holdco Ordinary Share by the automatic surrender and cancellation of each Purchaser Class A Ordinary Share in exchange for one (1) validly issued, fully paid and non-assessable Holdco Ordinary Share. From and after the First Merger Effective Time, each certificate or book entry position that evidenced Purchaser Class A Ordinary Shares immediately prior to the First Merger shall entitle the holder to the applicable number of Holdco Ordinary Shares into which such certificate or book entry position is converted according to this Section 1.6(a) and all the issued Purchaser Class A Ordinary Shares shall no longer be outstanding and shall automatically cease to exist.
(b) Purchaser Class B Ordinary Shares. At the First Merger Effective Time, each Purchaser Class B Ordinary Share issued and outstanding immediately prior to the First Merger Effective Time will be automatically converted into one (1) Holdco Ordinary Share by the automatic surrender and cancellation of each Purchaser Class B Ordinary Share in exchange for one (1) validly issued, fully paid and non-assessable Holdco Ordinary Share. From and after the First Merger Effective Time, each certificate or book entry position that evidenced Purchaser Class B Ordinary Shares immediately prior to the First Merger shall entitle the holder to the applicable number of Holdco Ordinary Shares into which such certificate or book entry position is converted according to this Section 1.6(b) and all issued Purchaser Class B Ordinary Shares shall no longer be outstanding and shall automatically cease to exist.
(c) Cancellation of Capital Stock Owned by Purchaser. Each share of Purchaser owned by Purchaser as treasury shares immediately prior to the First Merger Effective Time, if any, shall be cancelled and extinguished without any conversion thereof or payment therefor.
(d) Purchaser Warrants. Each (i) Purchaser Public Warrant outstanding immediately prior to the First Merger Effective Time shall remain outstanding but shall be assumed by Holdco and automatically adjusted to become one (1) Holdco Warrant and (ii) each Purchaser Private Warrant outstanding immediately prior to the First Merger Effective Time shall remain outstanding but shall be assumed by Holdco and automatically adjusted to become one (1) Holdco Warrant. Each of the Holdco Warrants shall be subject to substantially the same terms and conditions set forth in the Purchaser Public Warrant immediately prior to the First Merger Effective Time, except that they shall be exercisable (or will become exercisable in accordance with their terms) for Holdco Ordinary Shares in lieu of Purchaser Ordinary Shares (subject to any amendment required by the Cayman Companies Act or as reasonably agreed among Purchaser and Holdco to provide for fair and equitable treatment of the holders of Purchaser Public Warrants). At or prior to the First Merger Effective Time, Holdco shall take all corporate action necessary to
reserve for future issuance, and shall maintain such reservation for so long as any of the Holdco Warrants remain outstanding, a sufficient number of Holdco Ordinary Shares for delivery or issuance upon the exercise of such Holdco Warrants.
(e) Conversion of Cayman Merger Sub Shares. Each share of Cayman Merger Sub issued and outstanding immediately prior to the First Merger Effective Time shall be cancelled and converted into and become one newly issued, fully paid, and non-assessable share of First Merger Surviving Corporation with the same rights, powers, and privileges as the shares so cancelled and converted and shall constitute the only outstanding shares of the First Merger Surviving Corporation. From and after the First Merger Effective Time, all certificates representing Cayman Merger Sub shares, if any, shall be deemed for all purposes to represent the number of shares of the First Merger Surviving Corporation into which they were converted in accordance with the immediately preceding sentence.
(f) Surrender of Holdco Ordinary Shares. At the First Merger Effective Time, the Ordinary Shares held by Enceladus shall be surrendered by Enceladus to Holdco for nil consideration and such Holdco Ordinary Shares shall thereafter be held as treasury shares by Holdco.
(g) Company Shares. Pursuant to the Second Merger, each share of Lux Merger Sub (all held by Holdco) issued and outstanding immediately prior to the Second Merger Effective Time will be automatically cancelled and cease to exist in the context of the Company Share Issuance. At the Second Merger Effective Time and subject thereto, in the context of the Company Capital Reduction, each Company Share issued and outstanding immediately prior to the Second Merger Effective Time will be cancelled and cease to exist against the issuance of (i) the number of Holdco Ordinary Shares equal to the Exchange Ratio (the aggregate number of Holdco Ordinary Shares so issued, the “Exchange Shares”) and (ii) one contractual contingent value right per Company Share (each a “CVR”) which shall represent the right to receive up to two contingent payments of Holdco Ordinary Shares (the aggregate amount of Holdco Ordinary Shares that may be so issued, the “CVR Shares”), if any, upon the achievement of certain milestones at the times and subject to the conditions of the CVR Agreement. From and after the Second Merger Effective Time, and the Company Capital Reduction, Holdco shall hold all the Company Shares.
(h) Cancellation of Capital Stock Owned by the Company. Each share of the Company owned by the Company as treasury shares immediately prior to the Second Merger Effective Time, if any, shall be cancelled and extinguished without any conversion thereof or payment therefor.
1.7 Exchange Procedures.
(a) Appointment of Transfer Agent. Prior to the First Closing, Holdco shall appoint a registrar and a transfer agent, in each case, reasonably acceptable to the Company (the “Transfer Agent”), as its agent, for the purpose of exchanging (i) Holdco Ordinary Shares for Purchaser Ordinary Shares and (ii) Holdco Ordinary Shares for Company Shares. Holdco agrees to issue Holdco Ordinary Shares as and to the extent required by this Agreement, the First Merger Plan of Merger and the Second Merger Plan of Merger to the holders of Purchaser Ordinary Shares and Company Shares. Holdco shall cause the Transfer Agent to effect the exchange of Purchaser
Ordinary Shares for a number of Holdco Ordinary Shares, and Company Shares for a number of Holdco Ordinary Shares, each in accordance with the terms of this Agreement, the First Merger Plan of Merger or the Second Merger Plan of Merger (as applicable), and, to the extent applicable, customary transfer agent procedures and the rules and regulations of the Depository Trust Company.
(b) Transfers of Ownership. Outstanding Purchaser Securities and Company Shares automatically converted or adjusted (as applicable) into the right to receive the consideration provided in Section 1.6 will be deemed, from and after the applicable Effective Time, to evidence only the right to secure the consideration to which the holder thereof is entitled hereunder. In the case of (i) certificated shares, each certificate previously evidencing shares, or (ii) non-certificated shares represented by book entry, each document as may be required to be provided to the Transfer Agent pursuant to the applicable letter of transmittal as evidence, of (A) Purchaser Ordinary Shares (other than those described in Section 1.6(c)) shall be exchanged for a book entry representing a number of Holdco Ordinary Shares determined in accordance with Section 1.6(a) and Section 1.6(b) and (B) Company Shares (other than those described in Section 1.6(h)) shall be exchanged for a book entry representing a number of Holdco Ordinary Shares determined in accordance with Section 1.6(g) to the extent applicable, upon the surrender of such certificate (in the case of certificated shares) or applicable document (in the case of non-certificated shares) in accordance with this Section 1.7(b). Until surrendered in accordance with this Section 1.7(b), each Purchaser Ordinary Share and Company Share (other than those described in Section 1.6(c) and Section 1.6(h)) shall thereafter represent only the right to receive a number of Holdco Ordinary Shares, as applicable, determined in accordance with this Agreement and, in the case of the Company Shares, the Second Merger Plan of Merger, and in the case of the Purchaser Ordinary Shares, the First Merger Plan of Merger.
(c) No Liability. Notwithstanding anything to the contrary in this Section 1.7 and applicable Law, none of the Surviving Corporations, Holdco, or any other Party hereto shall be liable to any Person for any amount properly paid to a public official pursuant to any applicable abandoned property, escheat or similar law.
(d) Surrender of Purchaser Ordinary Shares and Company Ordinary Shares. All Holdco Ordinary Shares issued upon the surrender (to the extent applicable) of Purchaser Ordinary Shares and Company Shares in accordance with the terms hereof shall be deemed to have been issued in full satisfaction of all rights pertaining to such ordinary shares, provided that any restrictions on the sale and transfer of Purchaser Ordinary Shares or Company Shares shall also apply to the Holdco Ordinary Shares, as applicable, so issued in exchange.
(e) Lost, Stolen or Destroyed Certificates. In the event any certificates shall have been lost, stolen or destroyed, Holdco shall issue in exchange for such lost, stolen or destroyed certificates, as the case may be, upon the making of an affidavit of that fact by the holder thereof, such securities, as may be required pursuant to Section 1.6; provided, however, that Holdco may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificates to agree to indemnify the Surviving Corporations, or deliver a bond in such sum as it may reasonably direct as indemnity against any claim that may be made against the Surviving Corporations with respect to the certificates alleged to have been lost, stolen or destroyed.
1.8 Treatment of Company Options.
(a) In connection with the Second Merger Effective Time and without any action on the part of the holders thereof, each In-the-Money Company Option that is outstanding as of such time shall remain outstanding and be assumed by Holdco and adjusted to become an option relating to Holdco Ordinary Shares upon the same terms and conditions as are in effect with respect to such In-the-Money Company Options immediately prior to the Second Merger Effective Time (subject to any amendments required by the Luxembourg Companies Act), including with respect to vesting and termination-related provisions (each, a “Holdco Option”) except that (i) such Holdco Options shall relate to that whole number of Holdco Ordinary Shares (rounded down to the nearest whole share) equal to the number of Company Shares subject to such In-the-Money Company Option, multiplied by the Exchange Ratio, and (ii) the exercise price per share for each such Holdco Option shall be equal to the exercise price per share of such In-the-Money Company Option in effect immediately prior to the Second Merger Effective Time, divided by the Exchange Ratio (and, to the extent necessary to effectuate an equitable adjustment, as converted into US dollars based on the applicable foreign exchange ratio (the exercise price per share, as so determined, being rounded up to the nearest full øre (1/100 of one NOK, euro cent or cent, as may be applicable)); provided, however, that the conversion of the In-the-Money Company Options will be made in a manner consistent with Treasury Regulation Section 1.424-1, such that such conversion will not constitute a “modification” of such In-the-Money Company Options for purposes of Section 409A or Section 424 of the Code. In addition to receiving Holdco Options, each holder of an In-the-Money Company Option outstanding and unexercised immediately before the Second Merger Effective Time shall also receive (A) with respect each In-the-Money Company Option that is vested immediately prior to the Second Merger Effective Time (each, a “Vested In-the-Money Company Option”), one fully vested CVR for each Company Share underlying such Vested In-the Money Company Option, which will be eligible for contingent payment(s) under the terms, including timing of payment, of the CVR Agreement (each, a “Vested CVR”) and/or (B) with respect to any In-the-Money Company Option that is not vested immediately prior to the Second Merger Effective Time (each, an “Unvested In-the-Money Company Option”), one unvested CVR for each Company Share underlying such Unvested In-the-Money Company Option that will be subject to vesting upon the same time-vesting schedule that applied to the corresponding In-the-Money Company Option that, once vested, will be eligible for contingent payment(s) under the terms, including timing of payment, of the CVR Agreement (each, an “Unvested CVR”), provided that if the holder of an Unvested CVR is employed or in the service of Holdco or one of its Subsidiaries on the date a payment is due under the applicable CVR Agreement, then such Unvested CVR will be deemed vested on such date with respect to such payment. In the event that the employment or other service with Holdco or one of its Subsidiaries of a holder of an Unvested CVR is terminated prior to the vesting of the Unvested CVR for any reason that would trigger the forfeiture of the corresponding Unvested In-the-Money Company Option, such Unvested CVR will be forfeited without payment.
(b) In connection with the Second Merger Effective Time, by virtue of the Second Closing and without any action on the part of the holders thereof, each Out-of-the-Money Company Option that is outstanding at such time shall be cancelled for no consideration, other than the right to receive new options relating to Holdco Ordinary Shares under the Holdco Equity Plan specified in the option communication letter(s) to be provided to the holders of such Out-of-the-Money Company Options prior to the Closings.
(c) Holdco and the Company shall take all necessary actions to effect the treatment of the Company Options pursuant to Section 1.8 in accordance with, as applicable, the Company Equity Plan and the applicable award agreements.
(d) Holdco shall take all necessary action to ensure that no Holdco Option may be exercised prior to the effective date of an applicable Form S-8 (or other applicable registration form (including an S-4) or exemption therefrom) of Holdco.
(e) Holdco shall take all necessary actions to ensure that each Holdco Ordinary Share underlying each Holdco Option issued by Holdco pursuant to this Section 1.8 shall promptly, and in any event no later than the sixtieth (60th) calendar day following the date on which Holdco files the Form 8-K relating to the Closings, be registered on an applicable Form S-8 (or other applicable registration form) of Holdco.
1.9 Fractional Holdco Ordinary Shares. Notwithstanding anything to the contrary contained herein, no fraction of a Holdco Ordinary Share will be issued by Holdco by virtue of this Agreement or the transactions contemplated hereby, and each Person who would otherwise be entitled to a fraction of a Holdco Ordinary Share (after aggregating all fractional Holdco Ordinary Shares that would otherwise be received by such Person) shall instead have the number of Holdco Ordinary Shares issued to such Person rounded down in the aggregate to the nearest whole Holdco Ordinary Share.
1.10 Tax Consequences. The Parties hereby agree and acknowledge that, for U.S. federal income tax purposes (and for purposes of any applicable state or local income Tax that follows the U.S. federal income tax treatment of the Transactions), (a) the First Merger and the DRE Election, taken together, are intended to qualify as a single integrated transaction that is treated as a reorganization within the meaning of Section 368(a)(1)(F) of the Code, (b) the Second Merger and the Company Capital Reduction, taken together, are intended to be treated as a single integrated transaction that qualifies as a reorganization within the meaning of Section 368(a)(2)(E) of the Code, and (iii) this Agreement is intended to constitute and the Parties hereby adopt this Agreement as a “plan of reorganization” within the meaning of Treasury Regulation sections 1.368-2(g) and 1.368-3(a). The Parties hereby agree to file all Tax and other returns on a basis consistent with such characterization. Each of the Parties acknowledges and agrees that each (x) has had the opportunity to obtain independent legal and tax advice with respect to the transactions contemplated by this Agreement, and (y) is responsible for paying its own Taxes, including any Taxes that may arise if the First Merger and the DRE Election, taken together, do not qualify as a reorganization within the meaning of Section 368(a)(1)(F) of the Code or the Second Merger and the Company Capital Reduction, taken together, do not qualify as a reorganization within the meaning of Section 368(a)(2)(E) of the Code.
1.11 Liquidation of Purchaser. As soon as is reasonably practicable after the First Merger Effective Time, and subject to and upon the terms and conditions of this Agreement and the applicable provisions of the Cayman Companies Act and the Purchaser’s Organizational Documents, the Purchaser Liquidation shall be consummated and all assets of Purchaser shall be transferred to Holdco and all Liabilities of Purchaser shall be assumed by Holdco. In connection with the Purchaser Liquidation, all of the property, rights, privileges, powers, franchises, debts, liabilities, and duties of Purchaser shall be assumed by Holdco.
ARTICLE II
CLOSINGS
2.1 First Closing. Subject to the satisfaction or waiver of the conditions set forth in Article XII, the consummation of the transactions contemplated by Section 1.1(a) (the “First Closing”) shall take place by means of telecommunication on the fifth (5th) Business Day after all the Closings conditions to this Agreement set forth in Article VII have been satisfied or waived at 10 a.m. Central European Time (other than the Closings conditions that by their terms are to be satisfied at the First Closing, but subject to the satisfaction or waiver of such conditions), or at such other date, time or place as Purchaser and the Company may agree in writing (the date and time at which the First Closing is actually held being the “First Closing Date”).
2.2 Second Closing. The consummation of the transactions contemplated by this Agreement (other than those which occur on the First Closing) (the “Second Closing” and together with the First Closing, the “Closings” and each, a “Closing”) shall take place by means of telecommunication on the first (1st) Business Day after the First Closing at 10 a.m. Central European Time, or at such other date, time or place as Purchaser and the Company may agree in writing (the date and time at which the Second Closing is actually held being the “Second Closing Date”, and together with the First Closing Date, the “Closing Dates” and each, a “Closing Date”).
2.3 Signatures for the Closings. Signatures for the Closings may be transmitted by emailed PDF files or by facsimile.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Except as set forth in (i) the disclosure schedules delivered by Purchaser to the Company on the date hereof (the “Purchaser Disclosure Schedules”), the Section numbers of which are numbered to correspond to the Section numbers of this Agreement to which they refer, or (ii) the SEC Reports that are available on the SEC’s website through EDGAR (other than disclosures in the “Risk Factors” or “Special Notes Regarding Forward-Looking Statements” sections), Purchaser represents and warrants to the Company as follows:
3.1 Organization and Standing. Purchaser is an exempted company duly incorporated, validly existing and in good standing under the Laws of the Cayman Islands. Purchaser has all requisite corporate power and authority to own, lease and operate its assets and properties and to carry on its business as now being conducted. Purchaser is duly qualified or licensed and in good standing to do business in each jurisdiction in which the character of the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except where the failure to be so qualified or licensed or in good standing has not had and would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the ability of Purchaser to enter into this Agreement or to consummate the Transactions. Purchaser has heretofore made available to the Company accurate and complete copies of the Organizational Documents of Purchaser as currently in effect. Purchaser is not in violation of any provision of its Organizational Documents in any material respect.
3.2 Authorization; Binding Agreement. Purchaser has all requisite corporate power and authority to execute and deliver this Agreement and each Ancillary Document to which it is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby, subject to obtaining the Required Purchaser Shareholder Approval. The execution and delivery of this Agreement and each Ancillary Document to which it is a party and the consummation of the transactions contemplated hereby and thereby (a) have been duly and validly authorized by the board of directors of Purchaser (the “Purchaser Board”) and (b) other than the Required Purchaser Shareholder Approval, no other corporate proceedings on the part of the Purchaser are necessary to authorize the execution and delivery of this Agreement and each Ancillary Document to which it is a party or to consummate the transactions contemplated hereby and thereby. This Agreement has been, and each Ancillary Document to which Purchaser is a party shall be when delivered, duly and validly executed and delivered by Purchaser and, assuming the due authorization, execution and delivery of this Agreement and such Ancillary Documents by the other parties hereto and thereto, constitutes, or when delivered shall constitute, the valid and binding obligation of such Party, enforceable against such Party in accordance with its terms, except to the extent that enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization and moratorium laws and other laws of general application affecting the enforcement of creditors’ rights generally or by any applicable statute of limitation or by any valid defense of set-off or counterclaim, and the fact that equitable remedies or relief (including the remedy of specific performance) are subject to the discretion of the court from which such relief may be sought (collectively, the “Enforceability Exceptions”).
3.3 Governmental Approvals. No Consent of or with any Governmental Authority, on the part of Purchaser is required to be obtained or made in connection with the execution, delivery or performance by such Party of this Agreement and each Ancillary Document to which it is a party or the consummation by Purchaser of the transactions contemplated hereby and thereby, other than (a) such filings and Consents as are contemplated by this Agreement, (b) any filings required with Nasdaq, the SEC or the XOSL with respect to the Transactions, (c) applicable requirements, if any, of the Securities Act, the Exchange Act, and/or any state “blue sky” securities Laws, and the rules and regulations thereunder, and (d) where the failure to obtain or make such Consents or to make such filings or notifications, would not, individually or in the aggregate, reasonably be expected to have a material impact on the ability of Purchaser to enter into this Agreement and to consummate the Transactions.
3.4 Non-Contravention. The execution and delivery by Purchaser of this Agreement and each Ancillary Document to which it is a party, the consummation by such Party of the transactions contemplated hereby and thereby, and compliance by such Party with any of the provisions hereof and thereof, will not (a) subject to receiving the Required Purchaser Shareholder Approval, conflict with or violate any provision of such Party’s Organizational Documents, (b) subject to obtaining the Consents from Governmental Authorities referred to in Section 3.3 hereof, and any applicable waiting periods referred to therein having expired, and any condition precedent to such Consent or waiver having been satisfied, conflict with or violate any Law, Order or Consent applicable to such Party or any of its properties or assets, or (c) (i) violate, conflict with or result in a breach of, (ii) constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, (iii) result in the termination, withdrawal, suspension, cancellation or modification of, (iv) accelerate the performance required by such Party under, (v) result in a right of termination or acceleration under, (vi) give rise to any obligation to make
payments or provide compensation under, (vii) result in the creation of any Lien (other than a Permitted Lien) upon any of the properties or assets of such Party under, (viii) give rise to any obligation to obtain any Consent from or provide any notice to any Person who is not a Party or (ix) give any Person the right to declare a default, exercise any remedy, claim a rebate, chargeback, penalty or change in delivery schedule, accelerate the maturity or performance, cancel, terminate or modify any right, benefit, obligation or other term under, any of the terms, conditions or provisions of, any material Contract to which such Party is a party, except as would not reasonably be expected to adversely affect the ability of Purchaser to enter into this Agreement and to consummate the Transactions.
3.5 Capitalization.
(a) The authorized share capital of Purchaser is $22,100 divided into (i) 200,000,000 Class A ordinary shares of a par value of $0.0001 each, (ii) 20,000,000 Class B ordinary shares of a par value of $0.0001 each and (iii) 1,000,000 preference shares of a par value of $0.0001 each (such preference shares, the “Purchaser Preferred Shares”). As of the date of this Agreement, there are no issued or outstanding Purchaser Preferred Shares. All outstanding Purchaser Ordinary Shares are duly authorized, validly issued, fully paid and non-assessable and are not subject to or issued in violation of any purchase option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the Cayman Companies Act or Purchaser’s Organizational Documents. None of the outstanding Purchaser Securities have been issued in violation of any applicable securities Laws. Prior to giving effect to the transactions contemplated by this Agreement, Purchaser does not have any Subsidiaries, or own any equity, profits or voting interests in any other Person or have any agreement or commitment to purchase any such interest, and Purchaser has not agreed, is not obligated to make, and is not bound by any written, oral or other agreement, contract, binding understanding, instrument, note, option, warrant, purchase order, license, commitment or undertaking of any nature (other than this Agreement and the Ancillary Documents) under which it is or may upon the occurrence of certain events specified therein become obligated to make, any investment in or capital contribution to any other entity.
(b) Except as set forth in Schedule 3.5(b) of the Purchaser Disclosure Schedules, there are no (i) outstanding options, warrants, puts, calls, convertible securities, preemptive or similar rights, (ii) bonds, debentures, notes or other Indebtedness having general voting rights or that are convertible or exchangeable into securities having such rights or (iii) subscriptions or other rights, agreements, arrangements, Contracts or commitments of any character (other than this Agreement and the Ancillary Documents), (A) relating to the issued or unissued shares of Purchaser or (B) obligating Purchaser to issue, transfer, deliver or sell or cause to be issued, transferred, delivered or sold any options or shares or securities convertible into or exchangeable for such shares, or (C) obligating Purchaser to grant, extend or enter into any such option, warrant, call, subscription or other right, agreement, arrangement or commitment for such capital shares. Other than the Redemption or as expressly set forth in this Agreement or Purchaser’s Organizational Documents, there are no outstanding obligations of Purchaser to repurchase, redeem or otherwise acquire any shares or other securities of Purchaser or to provide funds to make any investment (in the form of a loan, capital contribution or otherwise) in any Person. Except as set forth in Schedule 3.5(b) of the Purchaser Disclosure Schedules, Purchaser is not party to any agreement which contains registration rights other than the Existing Registration Rights
Agreement, there are no shareholders agreements, voting trusts or other agreements or understandings to which Purchaser is a party with respect to the voting of any shares of Purchaser. As a result of the consummation of the transactions contemplated hereby, except as set forth on Schedule 3.5(b) of the Purchaser Disclosure Schedules, no warrants, options or other securities of Purchaser are issuable and no rights in connection with any shares, warrants, options or other securities of Purchaser accelerate or otherwise become triggered (whether as to voting, exercisability, convertibility or otherwise).
(c) All Indebtedness of Purchaser as of the date of this Agreement is disclosed on Schedule 3.5(c) of the Purchaser Disclosure Schedules. No Indebtedness of Purchaser contains any restriction upon (i) the prepayment of any of such Indebtedness, (ii) the incurrence of Indebtedness by Purchaser or (iii) the ability of Purchaser to grant any Lien on its properties or assets.
(d) As of the date hereof, Purchaser has Purchaser Warrants comprised of 7,250,000 Purchaser Private Warrants and 7,187,500 Purchaser Public Warrants. The Purchaser Public Warrants are exercisable for one (1) Purchaser Class A Ordinary Share per warrant at a purchase price of $11.50 per share. The Purchaser Private Warrants are exercisable for one-half (½) of a Purchaser Class A Ordinary Share per warrant at a purchase price of $11.50 per share. All outstanding Purchaser Warrants (i) have been duly authorized and validly issued and are fully paid and non-assessable; (ii) have been offered, sold and issued in compliance with applicable Law, and all requirements set forth in (1) the Purchaser Organizational Documents and (2) any other applicable contracts governing the issuance of such securities; and (iii) are not subject to, and have not been issued in violation of, any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of any applicable Law, Purchaser’s Organizational Documents or any Contract to which Purchaser is a party or is otherwise bound.
3.6 SEC Filings and Purchaser Financials.
(a)Since the IPO, Purchaser has filed all forms, reports, schedules, statements, registration statements, prospectuses and other documents required to be filed or furnished by Purchaser with the SEC under the Securities Act and/or the Exchange Act, together with any amendments, restatements or supplements thereto, and will file all such forms, reports, schedules, statements and other documents required to be filed subsequent to the date of this Agreement. Except to the extent available on the SEC’s web site through EDGAR, Purchaser has delivered to the Company copies in the form filed with the SEC of all of the following: (i) Purchaser’s annual reports on Form 10-K for each fiscal year of Purchaser beginning with the first (1st) year Purchaser was required to file such a form, (ii) Purchaser’s quarterly reports on Form 10-Q for each fiscal quarter that Purchaser filed such reports to disclose its quarterly financial results since the beginning of the first (1st) fiscal year of Purchaser referred to in clause (i), (iii) all other forms, reports, registration statements, prospectuses and other documents (other than preliminary materials) filed by Purchaser with the SEC since the beginning of the first fiscal year referred to in clause (i) (the forms, reports, registration statements, prospectuses and other documents referred to in clauses (i), (ii) and (iii), whether or not available through EDGAR are, collectively, the “SEC Reports”) and (iv) all certifications and statements required by (A) Rules 13a-14 or 15d-14 under the Exchange Act, and (B) 18 U.S.C. §1350 (Section 906 of SOX) with respect to any report
referred to in clauses (i) or (ii) (collectively, the “Public Certifications”). The SEC Reports (x) were prepared in accordance with the requirements of the Securities Act and the Exchange Act, as the case may be, and the rules and regulations thereunder and (y) did not, as of their respective effective dates (in the case of SEC Reports that are registration statements filed pursuant to the requirements of the Securities Act) and at the time they were filed with the SEC (in the case of all other SEC Reports) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. The Public Certifications are each true as of their respective dates of filing. As used in this Section 3.6, the term “file” shall be broadly construed to include any manner permitted by SEC rules and regulations in which a document or information is filed, furnished, supplied or otherwise made available to the SEC. As of the date of this Agreement, the SEC Reports are not currently subject to any SEC review and there are no open SEC comments to any SEC Reports which have not been responded to. As of the date of this Agreement, (A) the Purchaser Class A Ordinary Shares and the Purchaser Public Warrants are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading on Nasdaq under the symbols “RICO” and “RICOW”, respectively, (B) Purchaser has not received any notice from Nasdaq or the SEC relating to the continued listing requirements of such Purchaser Securities, (C) there are no Actions pending or, to the Knowledge of Purchaser, threatened against Purchaser by Nasdaq or the Financial Industry Regulatory Authority or the SEC with respect to any intention by such entity to suspend, prohibit or terminate the quoting of such Purchaser Securities on Nasdaq and (D) Purchaser is in compliance with all of the applicable corporate governance rules of Nasdaq.
(b) Except as disclosed in the SEC Reports, the financial statements and notes of Purchaser contained or incorporated by reference in the SEC Reports (the “Purchaser Financials”), complied as to form with the published rules and regulations of the SEC with respect thereto, were prepared in accordance with GAAP applied on a consistent basis throughout the periods involved and fairly present in all respects the financial position and the results of operations, changes in shareholders’ equity, and cash flows of Purchaser at the respective dates of and for the periods referred to in such financial statements (except as may be indicated in the notes thereto and for the omission of notes and audit adjustments in the case of unaudited quarterly financial statements to the extent permitted by Regulation S-X or Regulation S-K, as applicable).
(c) Purchaser maintains disclosure controls and procedures that satisfy the requirements of Rule 13a-15 under the Exchange Act, and such disclosure controls and procedures are designed to ensure that all material information concerning Purchaser is made known on a timely basis to the individuals responsible for the preparation of Purchaser’s filings with the SEC and other public disclosure documents.
(d) Except as and to the extent reflected or reserved against in the Purchaser Financials, Purchaser has not incurred any Liabilities or obligations of the type required to be reflected on a balance sheet in accordance with GAAP that are not adequately reflected or reserved on or provided for in the Purchaser Financials, other than Liabilities that have been incurred in the ordinary course of business consistent with past practice since the date of the last balance sheet.
3.7 Absence of Certain Changes. As of the date of this Agreement, except as set forth in Schedule 3.7 of the Purchaser Disclosure Schedules, Purchaser has, (a) since its incorporation,
conducted no business other than its incorporation, the public offering of its securities (and the related private offerings), public reporting and its search for an initial Business Combination as described in the IPO Prospectus (including the investigation of the Target Companies and the negotiation and execution of this Agreement) and related activities and (b) there has not been any event or occurrence that has had, or would reasonably be expected to have, individually or in the aggregate, an adverse effect on Purchaser’s ability to on a timely basis consummate the Transactions.
3.8 Compliance with Laws. Purchaser is, and has since its incorporation been, in compliance with all Laws applicable to it and the conduct of its business except for such noncompliance which would not reasonably be expected to have an adverse effect on Purchaser in any material respect or Purchaser’s ability to on a timely basis consummate the Transactions. Purchaser has not received written notice from any Governmental Authority alleging any violation of applicable Law by Purchaser.
3.9 Actions; Orders; Permits. There is no pending or, to the Knowledge of Purchaser, threatened Action to which Purchaser is subject which would reasonably be expected to have an adverse effect on Purchaser, in any material respect, or Purchaser’s ability to on a timely basis consummate the Transactions. There is no material Action that Purchaser has pending against any other Person. Neither Purchaser, nor, to the Knowledge of Purchaser, any of its directors or officers are subject to any Orders of any Governmental Authority, nor are any such Orders pending except as would not reasonably be expected to have an adverse effect on Purchaser’s ability to on a timely basis consummate the Transactions. None of Purchaser’s directors or officers have in the past five (5) years been charged with, indicted for, arrested for, or convicted of any felony or any crime involving fraud. Purchaser holds all material Permits necessary to lawfully conduct its business as presently conducted, and to own, lease and operate its assets and properties, all of which are in full force and effect, except where the failure to hold such Permit or for such Permit to be in full force and effect would not reasonably be expected to have an adverse effect on Purchaser’s ability to on a timely basis consummate the Transactions.
3.10 Taxes and Returns. Purchaser has timely filed, or caused to be timely filed, all material Tax Returns required to be filed by it (taking into account all available extensions), and all such Tax Returns are true, accurate, correct and complete in all material respects, and has paid, collected or withheld, or caused to be paid, collected or withheld, all material Taxes required to be paid, collected or withheld, other than such Taxes for which adequate reserves in the Purchaser Financials have been established in accordance with GAAP. There are no material audits, examinations, investigations or other proceedings pending against Purchaser in respect of any material Tax, and Purchaser has not been notified in writing of any material proposed Tax claims or assessments against Purchaser (other than, in each case, claims or assessments for which adequate reserves in the Purchaser Financials have been established in accordance with GAAP or are immaterial in amount). There are no material Liens with respect to Taxes upon any of Purchaser’s assets, other than Permitted Liens. Purchaser has no outstanding waivers or extensions of any applicable statute of limitations to assess any material amount of Taxes. There are no outstanding requests by Purchaser for any extension of time within which to file any Tax Return or within which to pay any Taxes shown to be due on any Tax Return.
3.11 Employees. Other than reimbursement of any out-of-pocket expenses incurred by Purchaser’s officers and directors in connection with activities on Purchaser’s behalf in an aggregate amount not in excess of the amount of cash held by Purchaser outside of the Trust Account, Purchaser has no unsatisfied material liability with respect to any employee, officer or director. Purchaser has never, and does not currently maintain, sponsor, contribute to or have any direct liability under any employee benefit plan nonqualified deferred compensation plan, bonus, stock option, stock purchase, restricted stock, incentive, deferred compensation, retiree medical or life insurance, supplemental retirement, severance, change in control, fringe benefit, sick pay and vacation plans or arrangements or other employee benefit plans, programs or arrangements.
3.12 Investment Company Act. Purchaser is not an “investment company” or a Person directly or indirectly “controlled” by or acting on behalf of an “investment company”, or required to register as an “investment company”, in each case within the meaning of the Investment Company Act.
3.13 Finders and Brokers. Except as set forth on Schedule 3.13 of the Purchaser Disclosure Schedules, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission from Purchaser or any of its Affiliates in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of Purchaser.
3.14 Certain Business Practices.
(a) Since the formation of Purchaser, neither Purchaser, nor any of its Representatives acting on its behalf, has (i) used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees, to foreign or domestic political parties or campaigns or violated any provision of Anti-Bribery Laws or (iii) directly or indirectly, given or agreed to give any unlawful gift or similar benefit in any material amount to any customer, supplier, governmental employee or other Person who is or may be in a position to help or hinder Purchaser or assist it in connection with the Transactions.
(b) The operations of Purchaser are and have been conducted at all times in compliance in all material respects with money laundering statutes in all applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Authority, and no Action involving Purchaser with respect to any of the foregoing is pending or, to the Knowledge of Purchaser, threatened.
(c) None of Purchaser or any of its directors or officers, or, to the Knowledge of Purchaser, any other Representative acting on behalf of Purchaser is currently identified on the specially designated nationals or other blocked person list or otherwise currently the subject of any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”), and Purchaser has not directly or indirectly, used any funds, or loaned, contributed or otherwise made available such funds to any Subsidiary, joint venture partner or other Person, in connection with any sales or operations in any other country targeted under comprehensive sanctions by OFAC (such countries, as of the date hereof, being the Crimea region of Ukraine, Cuba, Iran, North Korea, and Syria) or for the purpose of financing the activities of
any Person the subject of, or otherwise in violation of, any U.S. sanctions administered by OFAC, in each case in violation of applicable sanctions.
3.15 Trust Account. As of the date hereof, there is at least $146,634,542 million invested in the Trust Account, maintained by the Trustee pursuant to the Trust Agreement. Prior to the Second Closing, none of the funds held in the Trust Account may be released except in accordance with the Trust Agreement. Amounts in the Trust Account are invested in United States government securities or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act. Purchaser has performed all material obligations required to be performed by it to date under, and is not in material default, breach or delinquent in performance or any other respect (claimed or actual) in connection with, the Trust Agreement, and no event has occurred which, with due notice in lapse of time or both, would constitute a material breach thereunder. As of the date hereof, there are no claims or proceedings pending with respect to the Trust Account. The Trust Agreement is in full force and effect and is a legal, valid and binding obligation of Purchaser and, to the Knowledge of Purchaser, the Trustee, enforceable in accordance with its terms subject to the Enforceability Exceptions. The Trust Agreement has not been terminated, repudiated, rescinded, amended or supplemented or modified, in any respect, and, to the Knowledge of Purchaser, no such termination, repudiation, rescission, amendment, supplement or modification is contemplated. There are no side letters and there are no Contracts, arrangements or understandings, whether written or oral, with the Trustee or any other Person that would (a) cause the description of the Trust Agreement in the SEC Reports to be inaccurate or (b) entitle any Person to any portion of the proceeds in the Trust Account. As of the date hereof, assuming the accuracy of the representations and warranties of the Company contained herein and the compliance by the Company with its respective obligations hereunder, Purchaser has no reason to believe that any of the conditions to the use of the funds in the Trust Account will not be satisfied or funds available in the Trust Account will not be available to Holdco on the Second Closing Date.
3.16 Exclusivity of Representations and Warranties. Except as otherwise expressly provided in this Article III (as modified by the Purchaser Disclosure Schedules), the Ancillary Documents and any certificates delivered pursuant to this Agreement, Purchaser hereby expressly disclaims and negates, any other express or implied representation or warranty whatsoever (whether at Law or in equity) with respect to Purchaser, its Affiliates, and any matter relating to any of them, including their affairs, the condition, value or quality of the assets, liabilities, financial condition or results of operations, or with respect to the accuracy or completeness of any other information made available to the Company, its Affiliates or any of their respective Representatives by, or on behalf of, Purchaser, and any such representations or warranties are expressly disclaimed; provided, that the foregoing provisions of this Section 3.16 shall not excuse any fraud or willful misconduct of Purchaser.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF HOLDCO AND MERGER SUBS
Except as set forth in (i) the disclosure schedules delivered by Purchaser to the Company on the date hereof (the “Holdco Disclosure Schedules”), the Section numbers of which are numbered to correspond to the Section numbers of this Agreement to which they refer, Holdco represents and warrants to the Company as follows:
4.1 Organization and Standing. . As of the date of this Agreement, Holdco is a private limited company duly incorporated and validly existing under the laws of Ireland. After the date of this Agreement and prior to the First Closing, Holdco will re-register as a public company limited by shares and will be validly existing under the laws of Ireland. Cayman Merger Sub is a Cayman Islands exempted company. Once duly incorporated, Lux Merger Sub will be a société à reponsabilité limitée (limited liability company validly existing under the laws of the Grand Duchy of Luxembourg. Each of Holdco and Cayman Merger Sub has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Once duly incorporated, Lux Merger Sub will have all requisite power and authority to own, lease and operate its properties and to carry on its business. Each of Holdco and Cayman Merger Sub is duly qualified or licensed and is in good standing to do business in each jurisdiction in which the character of the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary. Once duly incorporated, Lux Merger Sub will be duly qualified or licensed and will be in good standing to do business in each jurisdiction in which the character of the property to be owned, leased or operated by it or the nature of the business to be conducted by it will make such qualification or licensing necessary. Holdco has heretofore made available to Purchaser accurate and complete copies of the Organizational Documents of Holdco and the Cayman Merger Sub. The Holdco and Cayman Merger Sub Organizational Documents are in full force and effect and neither Holdco nor Cayman Merger Sub is in violation of any provision of its Organizational Documents in any material respect. Once Lux Merger Sub has been duly incorporated, the Lux Merger Sub Organization Documents will be in full force and effect and Lux Merger Sub will not be in violation of any provision of its Organizational Documents in any material respect.
4.2 Authorization; Binding Agreement. Subject to obtaining the Required Holdco Shareholder Approval, the Required Cayman Merger Sub Shareholder Approval and the Required Lux Merger Sub Shareholder Approval, each of Holdco and the Merger Subs has or upon incorporation will have all requisite corporate power and authority to execute and deliver this Agreement and each Ancillary Document to which it is or upon incorporation will be a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and each Ancillary Document to which it is or upon incorporation will be a party and the consummation of the transactions contemplated hereby and thereby have been or upon incorporation will be duly and validly authorized by the board of directors and shareholders of Holdco or the Merger Subs, as applicable, and no other corporate proceedings, other than as expressly set forth elsewhere in this Agreement, on the part of Holdco or the Merger Subs, as applicable, is or upon incorporation will be necessary to authorize the execution and delivery of this Agreement and each Ancillary Document to which it is or upon incorporation will be a party or to consummate the transactions contemplated hereby and thereby. This Agreement has been, and each Ancillary Document to which Holdco or any of the Merger Subs is or upon incorporation will be a party has been or shall be when delivered, duly and validly executed and delivered by such Party and, assuming the due authorization, execution and delivery of this Agreement and such Ancillary Documents by the other parties hereto and thereto, constitutes, or when delivered shall constitute, the valid and binding obligation of such Party, enforceable against such Party in accordance with its terms, subject to the Enforceability Exceptions.
4.3 Governmental Approvals. Except as otherwise described on Schedule 4.3 of the Holdco Disclosure Schedules, no Consent of or with any Governmental Authority on the part of Holdco or any of the Merger Subs is or, upon incorporation, will be required to be obtained or made in connection with the execution, delivery or performance by such Party of this Agreement and each Ancillary Document to which it is or upon incorporation will be a party or the consummation by such Party of the transactions contemplated hereby and thereby, other than (a) such filings or Consents as contemplated by this Agreement, (b) any filings required with Nasdaq, the SEC or the XOSL with respect to the transactions contemplated by this Agreement, (c) applicable requirements, if any, of the Securities Act, the Exchange Act, and/or any state “blue sky” securities Laws, and the rules and regulations thereunder, and (e) where the failure to obtain or make such Consents or to make such filings or notifications, would not, individually or in the aggregate, reasonably be expected to have a material impact on the ability of Holdco or the Merger Subs on a timely basis to consummate the Transactions.
4.4 Non-Contravention. The execution and delivery by each of Holdco and the Merger Subs of this Agreement and each Ancillary Document to which it is or upon incorporation will be a party, the consummation by such Party of the transactions contemplated hereby and thereby, and compliance by such Party with any of the provisions hereof and thereof, will not (a) conflict with or violate any provision of such Party’s Organizational Documents, (b) subject to obtaining the Consents from Governmental Authorities referred to in Section 4.3 hereof, and any condition precedent to such Consent or waiver having been satisfied, conflict with or violate any Law, Order or Consent applicable to such Party or any of its properties or assets, or (c) (i) violate, conflict with or result in a breach of, (ii) constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, (iii) result in the termination, withdrawal, suspension, cancellation or modification of, (iv) accelerate the performance required by such Party under, (v) result in a right of termination or acceleration under, (vi) give rise to any obligation to make payments or provide compensation under, (vii) result in the creation of any Lien upon any of the properties or assets of such Party under, (viii) give rise to any obligation to obtain any Consent from or provide any notice to any Person who is not a Party or (ix) give any Person the right to declare a default, exercise any remedy, claim a rebate, chargeback, penalty or change in delivery schedule, accelerate the maturity or performance, cancel, terminate or modify any right, benefit, obligation or other term under, any of the terms, conditions or provisions of, any material Contract of such Party, except for any deviations from any of the foregoing clauses (a), (b) or (c) that would not, individually or in the aggregate, reasonably be expected to have a material impact on the ability of Holdco or the Merger Subs on a timely basis to consummate the Transactions.
4.5 Capitalization.
(a) As of the date hereof, Holdco’s outstanding share capital consists of 100 ordinary shares of nominal value of one (1) Euro, each, and after the Holdco Re-registration, Holdco’s outstanding share capital will consist of 25,000 ordinary shares of nominal value of one (1) Euro, each. As of the date hereof, Cayman Merger Sub’s outstanding share capital consists of 50,000 shares with a par value of one (1) dollar. Prior to giving effect to the transactions contemplated by this Agreement, Holdco does not have any Subsidiaries or own any equity interests in any Person other than the Cayman Merger Sub. Cayman Merger Sub does not have any Subsidiaries or own any equity interests in any Person. Once duly incorporated, Lux Merger
Sub will not have any Subsidiary or will not own any equity interests in any Person and will be a wholly owned Subsidiary of Holdco.
(b) There are no (i) outstanding options, warrants, puts, calls, convertible securities, preemptive or similar rights, (ii) bonds, debentures, notes or other Indebtedness having general voting rights or that are convertible or exchangeable into securities having such rights or (iii) subscriptions or other rights, agreements, arrangements, Contracts or commitments of any character (other than this Agreement and the Ancillary Documents), (A) relating to the issued or unissued shares of Holdco or Cayman Merger Sub or (B) obligating Holdco or Cayman Merger Sub to issue, transfer, deliver or sell or cause to be issued, transferred, delivered, sold or repurchased any options or shares or securities convertible into or exchangeable for such shares, or (C) obligating Holdco or Cayman Merger Sub to grant, extend or enter into any such option, warrant, call, subscription or other right, agreement, arrangement or commitment for such capital shares. Neither Holdco nor Cayman Merger Sub is a party to any agreement which contains registration rights, there are no shareholders agreements, voting trusts or other agreements or understandings to which Holdco or Cayman Merger Sub is a party with respect to the voting of any shares of Holdco or Cayman Merger Sub, as applicable (other than this Agreement and the Ancillary Documents). As a result of the consummation of the transactions contemplated hereby, no warrants, options or other securities of Holdco or Cayman Merger Sub are issuable and no rights in connection with any shares, warrants, options or other securities of Holdco or Cayman Merger Sub accelerate or otherwise become triggered (whether as to voting, exercisability, convertibility or otherwise). Once duly incorporated, there will be no (i) outstanding options, warrants, puts, calls, convertible securities, preemptive or similar rights, (ii) bonds, debentures, notes or other Indebtedness having general voting rights or that will be convertible or exchangeable into securities having such rights or (iii) subscriptions or other rights, agreements, arrangements, Contracts or commitments of any character (other than this Agreement and the Ancillary Documents), (A) relating to the issued or unissued shares of Lux Merger Sub or (B) obligating Lux Merger Sub to issue, transfer, deliver or sell or cause to be issued, transferred, delivered, sold or repurchased any options or shares or securities convertible into or exchangeable for such shares, or (C) obligating Lux Merger Sub to grant, extend or enter into any such option, warrant, call, subscription or other right, agreement, arrangement or commitment for such capital shares. Once duly incorporated, Lux Merger Sub will not be a party to any agreement which contains registration rights, there will be no shareholders agreements, voting trusts or other agreements or understandings to which Lux Merger Sub will be a party with respect to the voting of any shares of Lux Merger Sub (other than this Agreement and the Ancillary Documents). As a result of the consummation of the transactions contemplated hereby, no warrants, options or other securities of Lux Merger Sub will be issuable and no rights in connection with any shares, warrants, options or other securities of Lux Merger Sub will accelerate or otherwise become triggered (whether as to voting, exercisability, convertibility or otherwise).
(c) Neither Holdco nor Cayman Merger Sub has any Indebtedness. Once duly incorporated, Lux Merger Sub will not have any Indebtedness.
(d) Since the respective date of formation of Holdco and Cayman Merger Sub, and except as contemplated by this Agreement, neither Holdco nor Cayman Merger Sub has declared or paid any distribution or dividend in respect of its shares and has not repurchased, redeemed or otherwise acquired any of its shares, and neither Holdco’s nor Cayman Merger Sub’s
board of directors has authorized any of the foregoing. Upon incorporation and except as contemplated by this Agreement, Lux Merger Sub has not declared or paid any distribution or dividend in respect of its shares and has not repurchased, redeemed or otherwise acquired any of its shares, and Lux Merger Sub’s board of managers has not authorized any of the foregoing.
4.6 Ownership of Exchange Shares. (a) All Exchange Shares and the CVR Shares to be issued and delivered in accordance with Article I shall be, upon issuance and delivery of such Exchange Shares or the CVR Shares, as applicable, duly authorized, validly issued, fully paid, non-assessable and free and clear of all Liens, and (b) upon issuance and delivery of such Exchange Shares the CVR Shares, as applicable, each holder of such Exchange Shares or CVR Shares, as applicable, shall have good and valid title to its portion of such Exchange Shares or CVR Shares, as applicable, in each case of clauses (a) and (b), other than restrictions arising from applicable securities Laws, the Registration Rights Agreement, the Holdco Articles, the provisions of this Agreement and any Liens incurred by such holder and (c) the issuance of such Exchange Shares or CVR Shares, as applicable pursuant hereto will not be subject to or give rise to any preemptive rights or rights of first refusal.
4.7 Compliance with Laws. Each of Holdco and the Cayman Merger Sub is, and has since its formation been, in compliance with all Laws applicable to it and the conduct of its business except for such noncompliance which would not reasonably be expected to have an adverse effect on Holdco or Cayman Merger Sub, as applicable, in any material respect, and neither Holdco nor Cayman Merger Sub has received written notice alleging any violation of applicable Law in any material respect by Holdco or Cayman Merger Sub, as applicable. Once duly incorporated, Lux Merger Sub will be in compliance with all Laws applicable to it and the conduct of its business except for such noncompliance which would not reasonably be expected to have an adverse effect on Lux Merger Sub in any material respect.
4.8 Holdco Activities. Since its respective date of formation, neither Holdco nor Cayman Merger Sub (a) has engaged in any business activities other than as contemplated by this Agreement, (b) owns directly or indirectly any ownership, equity, profits or voting interest in any Person (other than, in the case of Holdco, its direct sole ownership of the Merger Subs) and (c) has assets or Liabilities except those incurred in connection with this Agreement and the Ancillary Documents to which it is a party and the Transactions, and, other than this Agreement and the Ancillary Documents to which it is a party, neither Holdco nor any Cayman Merger Sub is party to or bound by any Contract. Once duly incorporated, Lux Merger Sub will not (i) be engaged in any business activities other than as contemplated by this Agreement, (b) own directly or indirectly any ownership, equity, profits or voting interest in any Person and (c) have assets or Liabilities except those incurred in connection with this Agreement and the Ancillary Documents to which it will be a party and the Transactions, and, other than this Agreement and the Ancillary Documents to which it will be a party, Lux Merger Sub will not be party to or bound by any Contract.
4.9 Finders and Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission from Purchaser, Holdco, the Target Companies or any of their respective Affiliates in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of Holdco.
4.10 Investment Company Act. Holdco is not an “investment company”, a Person directly or indirectly controlled by or acting on behalf of an “investment company”, or required to register as an “investment company”, in each case within the meanings of the Investment Company Act.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in (i) the disclosure schedules delivered by the Company to Purchaser concurrently with the effectiveness of this Agreement (the “Company Disclosure Schedules”) (each section of which qualifies (a) the correspondingly numbered representation, warranty or covenant if specified therein and (b) such other representations, warranties or covenants where its relevance as an exception to (or disclosure for purposes of) such other representation, warranty or covenant is reasonably apparent on its face), (ii) the quarterly or annual reports that are available on the “Investor Relations” section of the Company’s website, or (iii) information that is publicly available about the Company at newsweb.no, the Company hereby represents and warrants to Purchaser and Holdco as follows:
5.1 Organization and Standing. The Company is a company duly organized and validly existing under the Laws of its jurisdiction of organization. The Company has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted or as presently proposed to be conducted. Each other Target Company is a corporation or other entity duly formed, validly existing and, to the extent applicable under the Laws of its jurisdiction of organization, in good standing under the Laws of its jurisdiction of organization, except as would not be material to such Target Company. Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, each Subsidiary of the Company has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted or as presently proposed to be conducted. Each Target Company is duly qualified or licensed and in good standing in the jurisdiction in which it is incorporated or registered and in each other jurisdiction where it does business or operates to the extent that the character of the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except where the failure to be so qualified or licensed or in good standing would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Target Companies, taken as a whole.
5.2 Authorization; Binding Agreement; No Violation. Other than with respect to the Required Company Shareholder Approval, the Company has all requisite corporate power and authority to execute and deliver this Agreement and each Ancillary Document to which it is or is required to be a party, to perform the Company’s obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and each Ancillary Document to which the Company is or is required to be a party and the consummation of the transactions contemplated hereby and thereby, have been, subject to receipt of the Required Company Shareholder Approval, duly and validly authorized by the board of directors of the Company (the “Company Board”) and the Company and no other corporate proceedings on the part of the Company are necessary to authorize the execution and delivery of this Agreement and each Ancillary Document to which it is a party or to consummate the
transactions contemplated hereby and thereby (other than the Required Company Shareholder Approval and the filing and recordation of appropriate documents, in connection with the Agreement and each Ancillary Document to which the Company is or is required to be a party, as required by applicable Law). This Agreement has been, and each Ancillary Document to which the Company is or is required to be a party at the applicable Closing shall be when delivered, duly and validly executed and delivered by the Company and assuming the due authorization, execution and delivery of this Agreement and any such Ancillary Document by the other parties hereto and thereto, constitutes, or when delivered shall constitute, the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to the Enforceability Exceptions. The Company Board at a duly held meeting has unanimously (a) determined that this Agreement, the other Ancillary Documents and the transactions contemplated by this Agreement and the Ancillary Documents are advisable, fair to and in the best interests of the Company and its shareholders, (b) approved the execution, delivery and performance of, and adopted and declared this Agreement advisable, and (c) resolved to recommend that the shareholders of the Company approve the adoption of this Agreement (the “Company Recommendation”).
5.3 Capitalization.
(a) As of the date hereof, the share capital of the Company is NOK 2,093,548.19 divided into 209,354,819 shares, each with a par value of NOK 0.01, and there are no other outstanding equity interests of the Company other than the Company Equity Plan. After giving effect to the transactions contemplated by this Agreement, Holdco shall own all of the issued and outstanding equity interests of the Company free and clear of any Liens other than the restrictions under applicable securities Laws, transfer restrictions existing under the terms of the Organizational Documents, and Permitted Liens. Except as set forth on Schedule 5.3(a) of the Company Disclosure Schedules, all of the outstanding shares and other equity interests of the Company have been duly authorized, are fully paid and non-assessable and were not issued in violation of any purchase option, right of first refusal, preemptive right, subscription right or any similar right under any provision of any applicable Law, the Company’s Organizational Documents or any Contract to which the Company is a party or by which the Company or its securities are bound. With effect from completion of the Norwegian Merger, the Company will have an authorized capital of EUR 900,000 represented by 90,000,000 shares with a nominal value of EUR 0.01 each, which may be issued by the Company Board for a period of five (5) years following September 21, 2021, without reserving to the Company Shareholders any preferential subscription right.
(b) Schedule 5.3(b)(i) of the Company Disclosure Schedules sets forth a true and complete list, as of the date hereof, of each Company Equity Plan. Schedule 1.8(b) of the Company Disclosure Schedules sets forth the beneficial and record owners (or applicable employee identification numbers) of all outstanding Company Options as of the date hereof, the number of shares of Company Common Stock issuable thereunder or otherwise subject thereto, the grant date thereof and the exercise price and expiration date thereof. Except as set forth on Schedule 5.3(b) of the Company Disclosure Schedules, as of the date hereof there are no Company Convertible Securities or preemptive rights or rights of first refusal or first offer, nor are there any Contracts, commitments, arrangements or restrictions to which the Company or, to the Knowledge of the Company, any of its shareholders are a party or bound relating to any equity securities of
the Company, whether or not outstanding. Other than the Company Options outstanding under the Company Equity Plan and other than as set forth on Schedule 5.3(b)(ii), there are no outstanding or authorized equity appreciation, phantom equity or similar rights with respect to the Company. Other than the Company Holders Support Agreement, there are no voting trusts, proxies, shareholder agreements or any other agreements or understandings with respect to the voting of the Company’s equity interests. Except as set forth in the Company’s Organizational Documents, there are no outstanding contractual obligations of the Company to repurchase, redeem or otherwise acquire any of its equity interests or securities, nor has the Company granted any registration rights to any Person with respect to its equity securities. All of the issued and outstanding securities of the Company have been granted, offered, sold and issued in compliance with all applicable Laws. As a result of the consummation of the transactions contemplated by this Agreement, no equity interests of the Company are issuable and, other than in connection with the Company Equity Plan, in each case consistent with Section 1.8(a), Section 1.8(b) and Section 1.8(c), no rights in connection with any interests, warrants, rights, options or other securities of the Company accelerate or otherwise become triggered (whether as to vesting, exercisability, convertibility or otherwise).
5.4 Subsidiaries. All of the outstanding equity securities of each Subsidiary of the Company owned by one (1) or more of the Target Companies are duly authorized and validly issued, fully paid and non-assessable (if applicable), and were offered, sold and delivered in compliance with all applicable securities Laws, and free and clear of all Liens (other than the restrictions under applicable securities Laws, transfer restrictions existing under the terms of the Organizational Documents of such Subsidiary, and Permitted Liens). Except as set forth on Schedule 5.4 of the Company Disclosure Schedules, all of the outstanding equity securities of each Subsidiary of the Company are owned, directly or indirectly, by the Company.
5.5 Governmental Approvals. Except as otherwise described in Schedule 5.5 of the Company Disclosure Schedules and assuming the truth and completeness of the representations and warranties of Purchaser and Holdco contained in this Agreement, no Consent of or with any Governmental Authority on the part of any Target Company is required to be obtained or made in connection with the execution, delivery or performance by the Company of this Agreement or any Ancillary Documents or the consummation by the Company of the transactions contemplated hereby or thereby other than (a) such Consents as are expressly contemplated by this Agreement or any Ancillary Document, (b) any filings required with Nasdaq, the SEC or the XOSL with respect to the Transactions, (c) applicable requirements, if any, of the Securities Act, the Exchange Act, and/or any state “blue sky” securities Laws, and the rules and regulations thereunder, and (d) those Consents, the failure of which to obtain prior to the respective Closing, would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the ability of the Company to perform or comply with on a timely basis any material obligation of the Company under this Agreement or the Ancillary Documents to which it is a party or to consummate the Transactions in accordance with the terms hereof.
5.6 Non-Contravention. Except as otherwise described in Schedule 5.6 of the Company Disclosure Schedules, the execution and delivery by the Company (or any other Target Company, as applicable) of this Agreement and each Ancillary Document to which any Target Company is or is required to be a party or otherwise bound, and the consummation by any Target Company of the transactions contemplated hereby and thereby and compliance by any Target Company with
any of the provisions hereof and thereof, will not (a) conflict with or violate any provision of any Target Company’s Organizational Documents, (b) subject to obtaining the Consents from Governmental Authorities referred to in Section 5.5 hereof, and any condition precedent to such Consent or waiver having been satisfied, conflict with or violate any Law, Order or Consent applicable to any Target Company, or (c) (i) violate, conflict with or result in a breach of, (ii) constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, (iii) result in the termination, withdrawal, suspension, cancellation or modification of, (iv) accelerate the performance required by any Target Company under, (v) result in a right of termination or acceleration under, (vi) give rise to any obligation to make payments or provide compensation under, (vii) result in the creation of any Lien (other than a Permitted Lien) upon any of the properties or assets of any Target Company under, or (viii) give any Person the right to declare a default, exercise any remedy, claim a rebate, chargeback, penalty or change in delivery schedule, accelerate the maturity or performance, cancel, terminate or modify any right, benefit, obligation or other term under, any of the terms, conditions or provisions of any Company Material Contract, except in the case of clauses (b) and (c), as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
5.7 Financial Statements.
(a) As used herein, the term “Company Financials” means (i) the audited consolidated balance sheets of the Target Companies as of December 31, 2020, and December 31, 2019, and the related audited income statements, changes in shareholder equity and statements of cash flows for the years then ended, and (ii) the Company prepared unaudited financial statements, consisting of the unaudited consolidated balance sheets of the Target Companies as of September 30, 2021 (the “Interim Balance Sheet Date”) and the related unaudited consolidated income statement, changes in shareholder equity and statement of cash flows for the nine (9) months then ended. True and correct copies of the Company Financials have been provided to Purchaser. The Company Financials (x) (A) in the case of the Company Financials as of and for the year ended December 31, 2020 were prepared in accordance with GAAP, consistently applied throughout and among the periods involved and in accordance with requirements of the PCAOB for public companies, (b) in the case of the Company Financials as of and for the period ended on the Interim Balance Sheet Date, were prepared in accordance with GAAP, consistently applied throughout and among the periods involved, and (C) in the case of the Company Financials as of and for the year ended December 31, 2019, were prepared in accordance with IFRS, consistently applied, and (y) were prepared from, and in accordance in all material respects, with the books and records of the Target Companies. The Company Financials fairly present in all material respects the consolidated financial position of the Company as of the respective dates thereof. No Target Company has ever been subject to the reporting requirements of Section 13(g) and 15(d) of the Exchange Act.
(b) The financial books and records of the Target Companies have been kept and maintained in the ordinary course consistent with past practice and in accordance with applicable Laws in all material respects. The Target Companies have established and maintained systems of internal controls sufficient to (i) provide reasonable assurance regarding the reliability of the Target Companies’ financial reporting and (ii) permit the preparation of financial statements in accordance with GAAP or IFRS, as applicable.
5.8 Absence of Certain Changes. Except as set forth on Schedule 5.8 of the Company Disclosure Schedules, since December 31, 2020, (a) no Material Adverse Effect has occurred and (b) except as expressly contemplated by this Agreement, any Ancillary Document or in connection with the transactions contemplated hereby and thereby, no action has occurred that would require the consent of Purchaser if such action is taken during the period from the date of this Agreement until the Second Closing Date pursuant to Section 6.2(c)(i), Section 6.2(c)(ii), Section 6.2(c)(iii), Section 6.2(c)(iv) (solely with respect to Indebtedness that remains outstanding as of the date of this Agreement), Section 6.2(c)(v) (solely with respect to the Company’s directors and executive officers), Section 6.2(c)(ix), Section 6.2(c)(x), Section 6.2(c)(xii), Section 6.2(c)(xiv), Section 6.2(c)(xv), Section 6.2(c)(xvi), Section 6.2(c)(xvii) and Section 6.2(c)(xix), in each case, solely to the extent related to any of the foregoing.
5.9 Compliance with Laws.
(a) The Target Companies are and for the past five (5) years have been in compliance in all material respects with, and have not received any written or, to the Knowledge of the Company, oral notice of any material non-compliance with, or material violation of, any applicable Laws by which a Target Company or any of its properties, assets, employees, business or operations are or were bound or affected.
(b) Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, the Company and the Target Companies maintain a program of policies, procedures, and internal controls reasonably designed and implemented to (i) prevent the use of the products and services of the Company and the Target Companies in a manner that violates applicable Law (including money laundering or fraud), and (ii) otherwise provide reasonable assurance that violations of applicable Law by any of the Company’s or the Target Companies’ directors, officers, employees or its or their respective agents, representatives or other Persons, acting on behalf of the Company or any of the Company’s Subsidiaries, will be prevented, detected and deterred.
5.10 Company Permits. All of the material Company Permits are in full force and effect, and no suspension or cancellation of any of the material Company Permits is pending or, to the Knowledge of the Company, threatened. No Target Company is in violation in any material respects of the terms of any Company Permit, and no Target Company has received any written or, to the Knowledge of the Company, oral notice of any Actions relating to the revocation, suspension or modification of any Company Permit, and no Target Company has received any notice that any Governmental Authority that has issued any Company Permit intends to cancel, suspend, terminate or not renew any such Company Permit.
5.11 Litigation. Except as set forth in Schedule 5.11, as of the date hereof, there is no (a) Action of any nature currently pending or, to the Knowledge of the Company, threatened; or (b) Order now pending or outstanding or that was rendered by a Governmental Authority, in either case of clauses (a) or (b), by or against any Target Company or their respective business, equity securities or assets other than immaterial Actions or Orders.
5.12 Material Contracts.
(a) Schedule 5.12(a) of the Company Disclosure Schedules sets forth, as of the date of this Agreement, a complete and accurate list of all of the following Contracts to which any Target Company is a party or bound, excluding any Company Benefit Plan set forth on Schedule 5.17(a) of the Company Disclosure Schedule (each Contract set forth on Schedule 5.12(a) of the Company Disclosure Schedules, a “Company Material Contract”):
(i) Contracts that contain covenants that limit the ability of any Target Company (A) to compete in any line of business or with any Person or in any geographic area or to sell, or provide any service or product or solicit any Person, including any non-competition covenants, employee and customer non-solicit covenants, exclusivity restrictions, rights of first refusal or most-favored pricing clauses or (B) to purchase or acquire an interest in any other Person;
(ii) Contracts establishing any joint venture, profit-sharing, partnership, limited liability company or other similar agreement or arrangement relating to the formation, creation, operation, management or control of any partnership or joint venture, in each case, that are material to the Target Companies, taken as a whole;
(iii) Contracts involving any exchange traded, over the counter or other swap, cap, floor, collar, futures contract, forward contract, option or other derivative financial instrument, based on any commodity, security, instrument, asset, rate or index of any kind or nature whatsoever, whether tangible or intangible, including currencies, interest rates, foreign currency and indices;
(iv) Contracts for Indebtedness of any Target Company that are greater than $5,000,000 (other than (x) obligations of, or payments to, the Target Companies, arising from purchase or sale agreements entered into in the ordinary course of business or (y) between or among the Target Companies);
(v) Contracts (x) involving the acquisition or disposition, directly or indirectly (by merger or otherwise), of assets with an aggregate value in excess of $250,000 or shares or other equity interests of the Target Companies or another Person or (y) in which the Target Companies have any ongoing material obligations or liabilities, including deferred purchase price payments, earn-out payments or indemnification obligations;
(vi) Contracts entered into during the one (1)-year period prior to the date hereof relating to any merger, amalgamation, consolidation or other business combination with any other Person or the acquisition or disposition of any other entity or its business or material assets or the sale of any Target Company, its business or material assets;
(vii) Contracts with Company Customers or Company Vendors;
(viii) Contracts that grant to any Person (other than the Target Companies) a right of first refusal, first offer or similar preferential right to purchase or acquire equity interests in any of the Target Companies;
(ix) Contracts (A) that relate to a material settlement entered into within one (1) year prior to the date of this Agreement, or (B) under which any Target Company or counterparty thereto has outstanding material obligations (other than customary confidentiality obligations), in each case, in excess of $500,000;
(x) Contracts that require the Company or any Target Company to assign to a third Person any Intellectual Property developed by the Company or any Target Company under such Contract;
(xi) each Contract that is a collective bargaining (or similar) agreement or Contract between any of the Target Companies, on one hand, and any labor union, works council or other body representing employees of any of the Target Companies, on the other hand;
(xii) each Contract that (A) grants to a third Person the right to use any Intellectual Property owned by any Target Company or (B) grants the right to use any Intellectual Property owned by a third Person that is material to the business of the Company other than, in each case, (w) Contracts granting nonexclusive rights to use commercially available off-the-shelf software, (x) licenses granted to customers in the ordinary course of business, (y) licenses granted to service providers who access or use Intellectual Property owned by the Company on behalf of the Company in connection with their provision of services to the Company, or (z) nondisclosure or invention assignment agreements entered into in the ordinary course of business;
(xiii) Contracts that will be required to be filed as an exhibit to the Registration Statement under applicable SEC requirements;
(xiv) each Contract that grants to any third Person (A) any “most favored nation rights” or (B) price guarantees for a period greater than one (1) year from the date of this Agreement and requires aggregate future payments to the Target Companies in excess of $500,000 in any calendar year;
(xv) Contracts with a Governmental Authority other than any Company Permits that are material to the business of the Target Companies, taken as a whole; and
(xvi) agreements to enter into any of the foregoing of this Section 5.12(a).
(b) Except as disclosed in Schedule 5.12(b) of the Company Disclosure Schedules, none of the Target Companies nor, to the Knowledge of the Company, any other party thereto, is in default or violation of any Company Material Contract in any material respect. There is no event or condition that exists that constitutes or, with or without notice or the passage of time or both, would constitute any such default or violation by any Target Company or, to the Knowledge of the Company, any other party thereto, or give rise to any acceleration of any obligation or loss of rights or any right of termination of a Company Material Contract. Since the Interim Balance Sheet Date, no Target Company has received any notice or request, in each case, in writing, on behalf of any other party to a Company Material Contract to terminate, cancel or not renew such Company Material Contract, or to renegotiate any material term thereof that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, or alleging or disputing any material breach or default under such Company Material Contract.
5.13 Intellectual Property.
(a) Schedule 5.13(a) of the Company Disclosure Schedules sets forth, as of the date hereof, all issued patents and patent applications, trademark and service mark registrations and applications, copyright registrations and applications and registered Internet Assets and applications in which a Target Company is the owner, applicant or assignee, specifying as to each item, if applicable: (i) the nature of the item, including the title, (ii) the owner of the item, (iii) the jurisdictions in which the item is issued or registered or in which an application for issuance or registration has been filed, and (iv) the issuance, registration or application numbers and dates and any Liens or security agreements on the item other than Permitted Liens (the foregoing, “Material Company IP”). Except as has not and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, each Target Company owns, free and clear of all Liens (other than Permitted Liens), all Material Company IP. The consummation of the transactions contemplated by this Agreement will not adversely affect in any manner the nature or usefulness of any item of Material Company IP.
(b) All trademarks, service marks, patents, copyrights and other state and federal registrations are in full force and effect, and, to the Knowledge of the Company, all such registrations are valid, and all applications therefor listed in the Company Disclosure Schedule are pending.
(c) All of the material Software owned by the Company performs in material compliance with the specifications therefor (including, without limitation, functional specifications) set forth in user manuals or promotional materials.
(d) Except as, individually or in the aggregate, has not and would not reasonably be expected to have a Material Adverse Effect, each Target Company has a valid license to use all Intellectual Property that is used in the business of such Target Company as currently conducted and such use did not and will not conflict with, infringe upon, or violate any patent or other proprietary right of any other Person, and the Company has not infringed and is not now infringing any proprietary right belonging to any other Person.
(e) With respect to each Trade Secret comprising a part of the Intellectual Property of the Target Companies, the Target Companies have taken reasonable security measures to protect the secrecy, confidentiality and value of such Trade Secret, and, to the Knowledge of the Company, such Trade Secret is not part of the public knowledge or literature and has not been used, divulged or appropriated for the benefit of any Person other than the Target Companies, except as expressly permitted by the Company.
(f) To the Knowledge of the Company, no employee or consultant of the Company is in violation of any term of any employment Contract, patent disclosure agreement, non-competition agreement, invention assignment agreement or restrictive covenant relating to the right of such Person to be employed or engaged by the Company or to use the Intellectual Property rights of others.
(g) All registrations for Copyrights, Patents, Trademarks and Internet Assets that are owned by any Target Company are subsisting and in force, and all applications to register any Copyrights, Patents and Trademarks are pending.
(h) Except as, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect: (i) no Action is pending or threatened against a Target Company that challenges the validity, enforceability, ownership, or right to use any Intellectual Property currently owned by the Target Companies; (ii) no Target Company has received any written notice, or to the Knowledge of the Company, oral notice or claim asserting that any infringement, misappropriation, violation, dilution or unauthorized use of the Intellectual Property of any other Person is occurring or has occurred by any Target Company; (iii) there are no Orders to which any Target Company is a party (or is bound and of which the Target Company has actual written notice) that restrict the rights of a Target Company to use any Intellectual Property owned by a Target Company; (iv) no Target Company is infringing, misappropriating or otherwise violating or has, in the past, infringed, misappropriated or violated any Intellectual Property of any other Person in connection with the conduct of the respective businesses of the Target Companies as currently or previously conducted; and (v) to the Knowledge of the Company, no Person is infringing upon, has misappropriated or is otherwise violating any Intellectual Property owned, or exclusively licensed to any Target Company.
(i) Except as has not and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, all current and former officers, employees and independent contractors of a Target Company who are or were materially involved in or have materially contributed to the invention, creation or development of any Intellectual Property used in connection with the conduct of the respective businesses of the Target Companies have assigned to the Target Companies all Intellectual Property arising from the services performed for a Target Company by such Persons. To the Knowledge of the Company, no current or former officers, employees or independent contractors of a Target Company have claimed, orally or in writing, any ownership interest in any Intellectual Property owned by a Target Company. Each Target Company has taken commercially reasonable measures to protect the secrecy and confidentiality of Trade Secrets owned by such Target Company.
5.14 Taxes and Returns.
(a) Each Target Company has timely filed, or caused to be timely filed, all material Tax Returns required to be filed by it (taking into account all available extensions), and all such Tax Returns are true, accurate, correct and complete in all material respects, and has paid, collected or withheld, or caused to be paid, collected or withheld, all material Taxes required to be paid, collected or withheld, other than such Taxes for which adequate reserves in the Company Financials have been established in accordance with GAAP or IFRS, as applicable.
(b) In the past three (3) years, no jurisdiction in which a Target Company does not file Tax Returns or pay Taxes has claimed to such Target Company in writing that such Target Company is or may be subject to taxation by that jurisdiction.
(c) There are no material audits, examinations, investigations or other proceedings pending against any Target Company in respect of any material Tax, and no Target
Company has been notified in writing of any material proposed Tax claims or assessments against any Target Company (other than, in each case, claims or assessments for which adequate reserves in the Company Financials have been established in accordance with GAAP or IFRS (as applicable) or are immaterial in amount).
(d) There are no material Liens with respect to any Taxes upon any Target Company’s assets, other than Permitted Liens.
(e) No Target Company has any outstanding waivers or extensions of any applicable statute of limitations to assess any material amount of Taxes. There are no outstanding requests by a Target Company for any extension of time within which to file any Tax Return or within which to pay any Taxes shown to be due on any Tax Return.
(f) No Target Company that is treated as a domestic corporation (as such term is defined in Section 7701 of the Code) has participated in, or sold, distributed or otherwise promoted, any “listed transaction,” as defined in U.S. Treasury Regulation section 1.6011-4(b)(2).
(g) No Target Company has any Liability for the Taxes of another Person (other than another Target Company) as a result of having been a member of an affiliated, combined, consolidated, unitary or similar group of corporations other than any such group the common parent of which was a Target Company.
(h) No Target Company has requested, or is it the subject of or bound by any private letter ruling, technical advice memorandum, closing agreement or similar ruling, memorandum or agreement with any Governmental Authority with respect to any Taxes, nor is any such request outstanding.
(i) The unpaid Taxes of the Company did not, as of the most recent fiscal month end, materially exceed the reserve for Tax liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the unaudited financial statements and is not expected to materially exceed that reserve as adjusted for the passage of time through the Second Closing Date in accordance with the past custom and practice of the Company in filing its Tax Return.
5.15 Real Property.
(a) Schedule 5.15(a) of the Company Disclosure Schedules contains a complete and accurate list as of the date hereof of all real property and interests in real property owned in fee by a Target Company as of the date hereof (collectively, the “Company Owned Properties”). With respect to each parcel of the Company Owned Property: (i) the Target Companies have good and marketable fee title to all Company Owned Properties, free and clear of all Liens other than Permitted Liens (ii) the Target Companies have not leased or otherwise granted to any Person the right to use or occupy such Company Owned Property or any material portion thereof, and (iii) there are no options, rights of first refusal or rights of first offer to purchase such Company Owned Properties or any portion thereof or interest therein.
(b) Schedule 5.15(b) of the Company Disclosure Schedules contains a complete and accurate list as of the date hereof of all premises currently leased or subleased or otherwise
used or occupied by a Target Company for the operation of the business of a Target Company (the “Company Leased Properties” and together with the Company Owned Properties, the “Company Real Properties”), and each Contract pursuant to which a Target Company leases such Company Real Properties, except for any Contract for which the aggregate rental payments in the most recent annual period did not exceed $250,000 (such leases, collectively, the “Company Real Property Leases”). The Company has provided to Purchaser a true and complete copy of each of the Company Real Property Leases. With respect to each Company Real Property Lease, except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (i) each Company Real Property Lease is valid, binding and enforceable in accordance with its terms and are in full force and effect, subject to the Enforceability Exceptions, and (ii) there is not any existing material default on the part of a Target Company of the Company Real Property Leases, and no Target Company has received written notice of any such condition.
5.16 Employee Matters.
(a) The Company has made available to Purchaser in the Data Room a recent list of all individuals who are employees of each Target Company, including any employee who is on a leave of absence of any nature, and any employee who has accepted an offer of employment from any Target Company but whose employment has not yet commenced, and sets forth for each such employee the following; (i) name, (ii) title or position, (iii) principle location of employment, (iv) hire date, (v) whether such employee is employed full time or part time and on a regular or temporary basis, (vi) current annualized base salary, (vii) whether such employee is eligible for commission or bonus, as applicable, (viii) the amount of any commission, bonus or other incentive opportunity paid to such Person for the most recent year; and (ix) at-will status.
(b) No Target Company is, or in the past three (3) years has been, a party to, or otherwise subject to, any collective bargaining agreement or other Contract covering any group of employees, labor or trade union, employee association, labor organization or other representative of any of the employees of any Target Company. To the Knowledge of the Company, since January 1, 2018, there has been no activity or proceeding by a labor or trade union, employee association or other employee representative to organize any employees of any Target Company. Since January 1, 2018, (i) there has been no material labor dispute, grievance, labor strike, slowdown or work stoppage, lockout, arbitration, discrimination complaint or litigation relating to labor matters involving any Target Company, including violation of any federal, state or local labor, safety or employment Laws, charges of unfair labor practices or discrimination complaints, (ii) any material unfair labor practices within the meaning of the National Labor Relations Act, or (iii) any material claim with respect to payment of wages, salary or overtime pay with respect to any current or former employees of any Target Company.
(c) Except as would not reasonably be expected to materially adversely affect the Target Companies, each Target Company is and, since January 1, 2018, has been, in compliance in all respects with all applicable Laws relating to employment and employment practices, including without limitation, terms and conditions of employment, health and safety and wages and hours, and all other applicable Laws relating to equal employment opportunity, harassment (including but not limited to sexual harassment), discrimination, anti-retaliation, hiring (including background checks, credit reports and “Ban the Box” Laws), disability rights or benefits, labor relations (including collective bargaining), child labor, hours of work (including
meal and rest breaks), payment of wages and overtime wages, compensation (including equal pay and pay equity), whistleblower rights, classification of employees and independent contractors, verification of identity and employment authorization of individuals employed in the United States and immigration, workers compensation, working conditions, employee scheduling, paid time off/vacation, unemployment insurance, occupational safety and health, workers’ compensation, family and medical and other leaves of absence, employment and reemployment rights of members and veterans of the uniformed services, restrictive covenants, business expenses, the collection and payment of withholding or social security Taxes, and employee terminations. No Target Company has any current outstanding liability for any material payment to any Governmental Authority with respect to unemployment compensation benefits, social security or other benefits or obligations for employees, independent contractors or consultants (other than routine payments to be made in the ordinary course of business and consistent with past practice). Since January 1, 2018, there have been no material Actions pending or, to the Knowledge of the Company, threatened against a Target Company brought by or on behalf of any applicant for employment, any current or former employee, consultant, volunteer, intern or independent contractor of any Target Company, or any Person alleging to be a current or former employee of any Target Company, or any Governmental Authority, relating to any such Law or regulation, or alleging breach of any express or implied contract of employment, wrongful termination of employment, or alleging any other discriminatory, wrongful or tortious conduct, or any other employment-related matter arising under applicable Laws.
(d) Since January 1, 2018, no Target Company has engaged in, or is currently contemplating, any location closing, employee layoff, or relocation activities that would trigger the Worker Adjustment Retraining and Notification Act of 1988, 29 U.S.C. §§ 2101 et seq., as amended, or any similar state, local or foreign Law, rule or regulation (collectively, the “WARN Act”).
(e) Except as set forth on Schedule 5.16(d) of the Company Disclosure Schedules, the Target Companies have paid in full to all their employees all wages, salaries, commissions, bonuses and other compensation due to their employees, including overtime compensation.
(f) There are no material liabilities, whether contingent or absolute, of any Target Company relating to workers’ compensation benefits that are not fully insured against by a bona fide third-party insurance carrier.
(g) No executive officer of a Target Company with an annual base salary of $100,000 or more has provided written notice of his or her plan to terminate his or her employment.
5.17 Benefit Plans.
(a) Set forth on Schedule 5.17(a) of the Company Disclosure Schedules is a true and complete list as of the date hereof of each Company Benefit Plan.
(b) With respect to each Company Benefit Plan, the Company has made available to Purchaser accurate and complete copies, if applicable, of: (i) all plan documents and related trust agreements or annuity Contracts (including any material amendments, modifications
or supplements thereto), and written descriptions or summaries of any Company Benefit Plans which are not in writing; (ii) the most current summary plan description; (iii) the most recent annual and periodic accounting of plan assets; (iii) the most recent actuarial valuation; (iv) all written communications with any Governmental Authority concerning any matter that is still pending or for which a Target Company has any outstanding Liability or obligation; (v) the most recent determination or opinion letter received from the IRS regarding the tax-qualified status of such Company Benefit Plan, and (vi) the most recent written results of any required compliance testing.
(c) With respect to each Company Benefit Plan: (i) such Company Benefit Plan has been established, funded, administered and enforced in accordance with its terms, and in compliance in all material respects with the requirements of all applicable Laws, including ERISA and the Code, and has in all material respects been maintained, where required, in good standing with applicable regulatory authorities and Governmental Authorities; (ii) no material Action is pending, or to the Knowledge of the Company, threatened (other than routine claims for benefits arising in the ordinary course of administration); (iii) no Company Benefit Plan is presently under audit or examination (nor has written notice been received of a potential audit or examination) by any Governmental Authority; (iv) all material contributions, premiums and other payments (including any special contribution, interest or penalty) required to be made with respect to a Company Benefit Plan have been timely made; and (v) all benefits accrued under any unfunded Company Benefit Plan have been paid, accrued, or otherwise adequately reserved in accordance with GAAP or IFRS (as applicable) and are reflected on the Company Financials.
(d) Except as disclosed in Schedule 5.17(d) of the Company Disclosure Schedules, the consummation of the transactions contemplated by this Agreement and the Ancillary Documents will not, either alone or in combination with another event: (i) entitle any individual to severance pay, unemployment compensation or other benefits or compensation under any Company Benefit Plan or under any applicable Law; or (ii) accelerate the time of payment or vesting, or materially increase the amount of any compensation due, or in respect of, any director, employee or independent contractor of a Target Company. No Company Benefit Plan provides for a Tax gross-up, make whole or similar payment with respect to the Taxes imposed under Sections 409A or 4999 of the Code.
(e) Except as disclosed in Schedule 5.17(e) of the Company Disclosure Schedules, neither the execution and delivery of this Agreement and the Ancillary Documents, nor the consummation of the transactions contemplated hereby will (either alone or in combination with another event) result in the payment of any amount that would, individually or in combination with any other such payment, be an “excess parachute payment” within the meaning of Section 280G of the Code.
(f) With respect to each Company Benefit Plan that is intended to qualify under Section 401(a) of the Code, such plan, and its related trust, has received a determination letter (or opinion letter in the case of any prototype plan) from the IRS that it is so qualified and that its trust is exempt from tax under Section 501(a) of the Code, and to the Knowledge of the Company, nothing has occurred with respect to the operation of any such plan which could cause the loss of such qualification or exemption or the imposition of any material liability, penalty or tax under ERISA or the Code.
(g) No Company Benefit Plan is (i) subject to Title IV or Section 302 of ERISA or Section 412 or 4971 of the Code, (ii) a Multiemployer Plan, or (iii) a plan that has two or more contributing sponsors at least two of whom are not under common control, within the meaning of Section 4063 of ERISA, and no Target Company has withdrawn at any time within the preceding six years from any Multiemployer Plan, or incurred any withdrawal liability which remains unsatisfied, and no events have occurred and no circumstances exist that could reasonably be expected to result in any material liability to any Target Company.
(h) Each Company Benefit Plan that is subject to the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (the “Affordable Care Act”) has been maintained and administered in compliance with the requirements of the Affordable Care Act in all material respects.
(i) All Company Options have been granted in accordance with the terms of the Company Equity Plan. The treatment of Company Options under this Agreement does not violate the terms of the Company Equity Plan or any Contract governing the terms of such awards. Each Company Benefit Plan that constitutes in any part a “nonqualified deferred compensation plan” (as defined under Section 409A(d)(1) of the Code) subject to Section 409A of the Code has been maintained, in form and operation, in all material respects in compliance with Section 409A of the Code.
(j) Except as disclosed in Schedule 5.12(j) of the Company Disclosure Schedules, or required by Section 4980B of the Code, Section 601 of ERISA, or other applicable Law, no Target Company provides post-termination health or welfare benefits to any former or retired employee or is obligated to provide such benefits to any active employee following such employee’s retirement or other termination of employment or service.
5.18 Environmental Matters. Except as, individually or in the aggregate, has not had and would not reasonably be expected to adversely affect the Target Companies, taken as a whole, in any material respect, or as set forth in Schedule 5.18 of the Company Disclosure Schedules:
(a) Each Target Company is in compliance with all applicable Environmental Laws.
(b) No Action is pending, or, to the Knowledge of the Company, threatened against any Target Company alleging that a Target Company may be in material violation of any Environmental Law or subject to any material Liability under any Environmental Law.
(c) No Target Company has manufactured, treated, stored, disposed of, arranged for or permitted the disposal of, generated, handled or Released any Hazardous Material in a manner that has given or would reasonably be expected to require any Target Company to conduct any cleanup or remedial action pursuant to any applicable Environmental Laws.
5.19 Transactions with Related Persons. Except (a) for payment of salary for services rendered in the ordinary course of business consistent with past practice, (b) for reimbursement for reasonable expenses incurred on behalf of the Company or any of the Target Companies in the ordinary course of business consistent with past practice, (c) for other employee benefits made in the ordinary course of business consistent with past practice, (d) as described in the Company
Financials delivered on or prior to the date of this Agreement or (e) as set forth on Schedule 5.19 of the Company Disclosure Schedules, no Target Company nor any of its Affiliates, nor any officer, director or manager of a Target Company or any of its Affiliates (each of the foregoing, a “Related Person”) is a party to any transaction with a Target Company. Except as set forth on Schedule 5.19 of the Company Disclosure Schedules, no Related Person owns any real property or Personal Property, or right, tangible or intangible (excluding Intellectual Property) which is used in and material to the business of any Target Company taken as a whole, except in its capacity as a security holder of any Target Company.
5.20 Business Insurance. Except as would not, individually or in the aggregate, reasonably be expected to adversely affect the Target Companies: (i) all premiums due and payable under all material insurance policies have been duly paid and the Target Companies are otherwise in compliance with the terms of such insurance policies, (ii) each such insurance policy with respect to policy periods that include the date of this Agreement (x) is in full force and effect and (y) will continue in full force and effect on identical terms as of the Closings, (iii) to the Knowledge of the Company, there is no threatened termination of, or material premium increase with respect to, any of such insurance policies, and (iv) no Target Company has received any written notice from, or on behalf of, any insurance carrier relating to any refusal to issue an insurance policy or non-renewal of such insurance policies. Except as set forth in Schedule 5.20 of the Company Disclosure Schedules, there are no material claims related to the business of the Target Companies pending under any such insurance policies as to which coverage has been questioned, denied or disputed or in respect of which there is an outstanding reservation of rights.
5.21 Customers and Vendors. Schedule 5.21 of the Company Disclosure Schedules lists, by dollar volume received or paid, as applicable, for the twelve (12) months ended on December 31, 2021, the top ten (10) customers of the Target Companies (the “Company Customers”) and the top seven (7) recurring vendors of goods or services to the Target Companies (the “Company Vendors”), along with the amounts of such dollar volumes. No Company Vendor or Company Customer within the last twelve (12) months has cancelled or otherwise terminated, or has notified the Company in writing that it intends to cancel or otherwise terminate, or materially alter the business dealings of such Person with a Target Company. No Company Vendor or Company Customer has during the last twelve (12) months decreased materially or, to the Knowledge of the Company, threatened to stop or materially decrease, limit, or adversely modify its business dealings with a Target Company in a manner that would reasonably be expected to materially adversely affect the Target Companies.
5.22 Certain Business Practices.
(a) Since December 31, 2019, none of the Target Companies, nor, to the Knowledge of the Company, any of the Target Companies’ directors or officers, agents or employees acting on its behalf, has (i) used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees, to foreign or domestic political parties or campaigns or violated any provision of any Anti-Bribery Laws or (iii) directly or indirectly, given or agreed to give any unlawful gift or similar benefit in any material amount to any customer, supplier, governmental employee or other Person who is or may be in a position to help or hinder any Target Company or assist any Target Company in connection with any actual
or proposed transaction, except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(b) Except as would not reasonably be expected to, individually or in the aggregate, adversely affect the Target Companies, since December 31, 2019, the Target Companies have instituted and maintained policies and procedures reasonably designed to ensure compliance in all material respects with any local or foreign and money laundering statutes and Anti-Bribery Laws.
(c) Except as would not reasonably be expected to, individually or in the aggregate, adversely affect the Target Companies, since December 31, 2019, the operations of each Target Company are and have been conducted in compliance in all material respects with money laundering statutes in all applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Authority, and no Action involving a Target Company with respect to any of the foregoing is pending or, to the Knowledge of the Company, threatened.
(d) Except as would not reasonably be expected to, individually or in the aggregate, adversely affect the Target Companies, since December 31, 2019, no Target Company or any of their respective directors or officers, or, to the Knowledge of the Company, any other Representative acting on behalf of a Target Company, is currently identified on the specially designated nationals or other blocked person list or otherwise currently the subject of any U.S. sanctions administered by OFAC, and no Target Company has directly or indirectly, used any funds, or loaned, contributed or otherwise made available such funds to any Subsidiary, joint venture partner or other Person, in connection with any sales or operations in any country targeted under comprehensive sanctions by OFAC (such countries, as of the date hereof, being the Crimea region of Ukraine, Cuba, Iran, North Korea and Syria) or for the purpose of financing the activities of any Person the subject of, or otherwise in violation of, any U.S. sanctions administered by OFAC, in each case in violation of applicable sanctions.
5.23 Data Protection and Cybersecurity.
(a) For the purposes of this Section 5.23, the terms “personal data”, “personal data breach”, “process” (and its cognates) and “supervisory authority” shall have the meanings given to them in applicable Data Protection Laws.
(b) Except as has not had and would not reasonably be expected to adversely affect the Target Companies in any material respect, the Target Companies (i) comply in all material respects with applicable Data Protection Laws and (ii) have obtained from their customers any required consents to receive, access, or process Personal Information the Target Companies process.
(c) The Target Companies have, where required by applicable Law, entered into contracts with their suppliers, customers, service providers, and other vendors that are designed to comply with the requirements of Data Protection Laws in all material respects.
(d) Except as has not had and would not reasonably be expected to adversely affect the Target Companies in any material respect, the Target Companies are and, since
December 31, 2019, have been in material compliance with applicable Data Security Requirements.
(e) The Target Companies have, where required by applicable Law, implemented commercially reasonable technical and organizational measures to protect against personal data breaches (including unauthorized access to Personal Information) and cybersecurity incidents.
(f) To the Knowledge of the Company, since December 31, 2019, no Target Company has: (i) suffered any material personal data breach or cybersecurity incident; (ii) been subject to investigations, notices or requests from any supervisory authority or other regulatory authority in relation to their data processing activities and compliance with Data Protection Laws; (iii) provided or been required to provide any notices to individuals related to actual or suspected unauthorized access to their Personal Information; or (iv) received written notice from any Governmental Authority alleging non-compliance with applicable Data Protection Laws.
(g) To the extent required by applicable Law, the Target Companies have provided and maintained Privacy Policies, including notices governing the collection, use, and transfer of Personal Information on websites and mobile applications, if any, made available by the Target Companies.
5.24 Information Technology.
(a) The IT Systems are in satisfactory working order in all material respects and have functioned materially in accordance with all applicable specifications.
(b) The Target Companies have implemented commercially reasonable security, maintenance, backup and virus protection measures with respect to the IT Systems.
(c) Except as set forth in Schedule 5.24(c) of the Company Disclosure Schedules, to the Knowledge of the Company, since December 31, 2019, the IT Systems have not (i) experienced a defect, bug or virus that caused a material disruption to the operations of any Target Company; or (ii) suffered any unauthorized access by any Person who is not a Party. Commercially reasonable business continuity and disaster recovery procedures for the IT Systems have been implemented in order to ensure the continuation of the business of each Target Company in the event of any failure of the IT Systems.
(d) Except as has not and would not reasonably be expected to have a Material Adverse Effect, individually or in the aggregate, all use and distribution of software and open source materials by the Target Companies is in material compliance with all open source licenses applicable thereto.
5.25 Investment Company Act. No Target Company is an “investment company” within the meaning of the Investment Company Act.
5.26 Finders and Brokers. Except as set forth in Schedule 5.26 of the Company Disclosure Schedules, no broker, finder or investment banker is entitled to any brokerage, finder’s
or other fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of the Company.
5.27 Information Supplied. None of the information supplied or to be supplied by the Company specifically in writing for inclusion in the Proxy Statement and/or the Registration Statement, will, when filed, made available, mailed or distributed, as the case may be, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading.
5.28 Exclusivity of Representations and Warranties. Except as otherwise expressly provided in this Article V (as modified by the Company Disclosure Schedules), the Ancillary Documents and any certificates delivered pursuant to this Agreement, the Company hereby expressly disclaims and negates, any other express or implied representation or warranty whatsoever (whether at Law or in equity) with respect to the Company, its Affiliates, and any matter relating to any of them, including their affairs, the condition, value or quality of the assets, liabilities, financial condition or results of operations, or with respect to the accuracy or completeness of any other information made available to Purchaser, its Affiliates or any of their respective Representatives by, or on behalf of, the Company, and any such representations or warranties are expressly disclaimed. Without limiting the generality of the foregoing, except as expressly set forth in this Agreement, neither the Company nor any other Person on behalf of the Company has made or makes, any representation or warranty, whether express or implied, with respect to any projections, forecasts, estimates or budgets made available to Purchaser, its Affiliates or any of their respective Representatives of future revenues, future results of operations (or any component thereof), future cash flows or future financial condition (or any component thereof) of the Company (including the reasonableness of the assumptions underlying any of the foregoing), whether or not included in any management presentation or in any other information made available to Purchaser, its Affiliates or any of their respective Representatives or any other Person, and that any such representations or warranties are expressly disclaimed; provided, that the foregoing provisions of this Section 5.28 shall not excuse any fraud or willful misconduct of the Company.
ARTICLE VI
COVENANTS
6.1 Access and Information.
(a) During the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement in accordance with Section 8.1 or the Second Closing (the “Interim Period”), upon reasonable advance written notice from Purchaser, the Company will provide, and use its commercially reasonable efforts to cause its Representatives to provide, Purchaser and its Representatives with reasonable access, at Purchaser’s sole expense, during normal business hours, under the supervision of personnel of the Company or its Representatives, and in such a manner as not to unreasonably interfere with the normal operations of the business of the Target Companies, to (i) such materials and information about the Target Companies as Purchaser may reasonably request, and (ii) specified members of management of the Target Companies as Purchaser may reasonably request, in each case solely for purposes of
consummating the Transactions. Notwithstanding the foregoing, the Company will not be required to disclose any information to Purchaser or its Representatives if such disclosure would (x) in the judgment of legal counsel of the Company, be reasonably likely to jeopardize any attorney-client or other legal privilege, or (y) contravene any applicable Law, it being agreed that the Parties shall use reasonable efforts to make alternative arrangements for such disclosure in a manner that would not result in such jeopardy or contravention. For the avoidance of doubt, nothing herein shall authorize any party or its Representative to undertake any testing involving invasive techniques, including testing involving sampling of soil, sediment, groundwater, surface water, air or building materials, at any Target Company property, without the prior written consent of the Company.
(b) During the Interim Period, upon reasonable advance written notice from the Company, Purchaser, Holdco and the Merger Subs will provide, and use their commercially reasonable efforts to cause their respective Representatives to provide to the Company and its Representatives reasonable access, at the Company’s expense, during normal business hours, under the supervision of personnel of Purchaser or its Representatives, and in such a manner as not to unreasonably interfere with the normal operations of the business of Purchaser, to (i) such materials and information about Purchaser, Holdco and the Merger Subs as the Company may reasonably request, and (ii) specified members of management of Purchaser, Holdco and the Merger Subs as the Company may reasonably request, in each case for purposes of consummating the Transactions. Notwithstanding the foregoing, Purchaser will not be required to disclose any information to the Company or its Representatives if such disclosure would (x) in the judgment of legal counsel of Purchaser, be reasonably likely to jeopardize any attorney-client or other legal privilege, or (y) contravene any applicable Law or Contract, it being agreed that the Parties shall use reasonable efforts to make alternative arrangements for such disclosure in a manner that would not result in such jeopardy or contravention.
6.2 Conduct of Business of the Company.
(a) Unless Purchaser shall otherwise consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), during the Interim Period, except as expressly contemplated by this Agreement or the Ancillary Documents, in connection with the Norwegian Merger, as set forth on Schedule 6.2 of the Company Disclosure Schedules, or as may be required by Law (including COVID-19 Measures), the Company shall, and shall cause its Subsidiaries to, use its commercially reasonable efforts to (i) conduct their respective businesses, in all material respects, in the ordinary course of business consistent with past practice (including, for the avoidance of doubt, recent past practice in light of COVID-19 Measures, and (ii) comply in all material respects with all Laws applicable to such Person and its business, assets and employees; provided, that any action taken, or omitted to be taken, that relates to, or arises out of, COVID-19 Measures shall be deemed to be in the ordinary course of business); provided, that during any period of full or partial suspension of operations related to COVID-19, each Target Company may, in connection with COVID-19, take such actions in good faith as are reasonably necessary (A) to protect the health and safety of the Target Company’s employees and other individuals having business dealings with the Target Company or (B) to respond to third-party supply or service disruptions caused by COVID-19, including, but not limited to COVID-19 Measures, and any such actions taken (or not taken) as a result of, in response to, or otherwise related to COVID-19 shall be deemed to be taken in the “ordinary course of business” for all purposes of this Section 6.2 and not be considered a breach of this Section 6.2.
(b) During the Interim Period, the Company shall duly and timely file all material Tax Returns required to be filed (or obtain a permitted extension with respect thereto) with the applicable Tax authorities and pay all material Taxes due and payable during such time period.
(c) Without limiting the generality of Section 6.2(a) and except as expressly contemplated by this Agreement or the Ancillary Documents, the Norwegian Merger, as set forth on Schedule 6.2 of the Company Disclosure Schedules or as may be required by Law (including COVID-19 Measures), during the Interim Period, without the prior written consent of Purchaser (such consent not to be unreasonably withheld, conditioned or delayed), the Company shall not, and each shall cause its Subsidiaries not to:
(i) amend, waive or otherwise change its or any of the Target Companies’ Organizational Documents;
(ii) authorize for issuance, issue, grant, sell, pledge, redeem, repurchase, dispose of any of its equity securities or any options, warrants, commitments, subscriptions or rights of any kind to acquire or sell any of its equity securities, or other securities, including any securities convertible into or exchangeable for any of its shares or other equity securities or securities of any class and any other equity-based awards, or engage in any hedging transaction with a third Person with respect to such securities, or permit the cashless conversion or exercise of any of its securities and any other equity-based awards; provided that the Company shall be permitted to commit to grant awards under the Company Equity Plan, subject to receipt of any approvals required under applicable Law;
(iii) split, combine, recapitalize or reclassify any of its shares or other equity interests or issue any other securities in respect thereof or pay, declare or otherwise set aside any dividend or other distribution (whether in cash, equity or property or any combination thereof) in respect of its equity interests, or directly or indirectly redeem, purchase or otherwise acquire or offer to acquire any of its securities other than as expressly contemplated by this Agreement to effect the Mergers or consummate the Transactions;
(iv) (A) incur, create, assume, prepay or otherwise become liable for any Indebtedness (directly, contingently or otherwise) in excess of $5,000,000 in the aggregate, (B) make a loan or advance to or investment in any Person in excess of $1,000,000 in the aggregate (other than advancement of expenses to employees in the ordinary course of business consistent with past practice), or (C) guarantee or endorse any Indebtedness or obligation of any Person, in any such case in excess of $5,000,000 in the aggregate;
(v) (A) increase the wages, salaries or compensation of its employees and other service providers other than in the ordinary course of business and consistent with past practice, (B) grant any retention, change in control or similar pay, other than as provided for in any written agreements, (C) provide any severance or termination pay, other than as provided for in any written agreements or in the ordinary course of business consistent with past practice, (D) establish any trust or take any other action to secure the payment of any compensation payable by the Company, (E) enter into, amend or terminate any collective bargaining, works council or similar agreement with a labor union or labor organization, or (F) materially increase other
employee benefits of employees generally, or enter into, establish, materially amend or terminate any Company Benefit Plan with, for or in respect of any current consultant, officer, manager director or employee, in each case of the foregoing clauses (A) through (F), other than as required by applicable Law, or pursuant to the terms of any Company Benefit Plan;
(vi) transfer, pledge or exclusively license to any Person or permit to lapse or fail to preserve any Material Company IP;
(vii) modify, terminate or waive or assign any material right under, any Company Material Contract, or enter into any Contract that would be a Company Material Contract;
(viii) limit the right of the Company or any of the Target Companies to engage in any line of business or in any geographic area, to develop, market or sell products or services, or to compete with any Person or grant any exclusive or similar rights to any Person, except where such limit does not, and would not be reasonably likely to, individually or in the aggregate, materially and adversely affect, or materially disrupt, the ordinary course operation of the businesses of the Target Companies;
(ix) amend in a manner materially detrimental to the Target Companies (taken as a whole), terminate, cancel, surrender, permit to lapse or fail to renew or use commercially reasonable efforts to maintain any authorization from a Governmental Authority or material Permit required for the conduct of the business of any of the Target Companies or otherwise fail to use commercially reasonable efforts to maintain and preserve its relationships with any Governmental Authority, customers, suppliers, contractors and other Persons with which it has material business relations;
(x) acquire, including by merger, amalgamation, consolidation, acquisition of equity interests or assets, or any other form of business combination, any corporation, partnership, limited liability company, other business organization or any division thereof, or any material amount of assets, in each case outside the ordinary course of business consistent with past practice;
(xi) make capital expenditures in excess of $5,000,000 individually or $25,000,000 in the aggregate;
(xii) adopt a plan of complete or partial liquidation, dissolution, merger, amalgamation, consolidation, restructuring, recapitalization or other reorganization;
(xiii) enter into any agreement, understanding or arrangement with respect to the voting of equity securities of the Company or any of its Subsidiaries;
(xiv) enter into, amend, waive or terminate (other than terminations in accordance with their terms) any transaction with any Related Person (other than compensation and benefits and advancement of expenses, in each case, in the ordinary course of business consistent with past practice, as reasonably necessary to conduct the business and on arms-length terms);
(xv) waive, release, settle, compromise or otherwise resolve any investigation, claim, Action, litigation or other legal proceedings, other than such actions which result in any Target Company being obligated to pay monetary damages in an amount less than $500,000;
(xvi) make or rescind any material election relating to Taxes (other than elections made in the ordinary course of business), settle any material claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to Taxes, file any material amended Tax Return or claim for refund in a manner inconsistent with past practice (including surrendering any right to a refund), or make any material change in its accounting or Tax policies or procedures;
(xvii) other than the sale of inventory in the ordinary course of business, sell, lease, license or otherwise dispose of any material assets of the Target Companies, taken as a whole, or material assets covered by any Material Contract except (A) pursuant to existing Contracts or commitments, (B) the sale or other disposition of such material assets deemed by the Company in its good-faith reasonable business judgment to be obsolete or no longer be material to the business of the Target Companies, taken as a whole, or (C) transactions between the Company and any wholly owned Subsidiary of the Company or between wholly owned Subsidiaries of the Company;
(xviii) suffer or incur any Lien on the material asset of the Target Companies, other than Permitted Liens;
(xix) make any change in its accounting principles or methods of accounting materially affecting the reported consolidated assets, liabilities or results of operations of the Target Companies, other than as may be required by applicable Law, regulatory guidelines, or GAAP or IFRS (as applicable); or
(xx) authorize or agree to do any of the foregoing actions.
(d) Each of Purchaser, Holdco and the Merger Subs acknowledges and agrees that (i) nothing contained in this Agreement shall give any such Person, directly or indirectly, the right to control or direct the Target Companies’ operations during the Interim Period, and (ii) during the Interim Period, the Company shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its and its Subsidiaries’ operations.
6.3 Conduct of Business of Purchaser, Holdco and Merger Subs.
(a) Unless the Company shall otherwise consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), during the Interim Period, except as expressly contemplated by this Agreement or the Ancillary Documents, including effectuating the First Merger, the Second Merger and the Purchaser Liquidation or as set forth on Schedule 6.3 of the Purchaser Disclosure Schedules and/or the Holdco Disclosure Schedules, as applicable, or as may be required by Law (including COVID-19 Measures), Purchaser, Holdco and the Merger Subs shall each use reasonable best efforts to (i) conduct its respective business, in all material respects, in the ordinary course of business consistent with past practice, and (ii) comply in all material respects with all Laws applicable to such Person and its business, assets and employees.
(b) Without limiting the generality of Section 6.3(a) and except as contemplated by the terms of this Agreement or the Ancillary Documents, as set forth on Schedule 6.3 of the Purchaser Disclosure Schedules and/or the Holdco Disclosure Schedules, as applicable, or as may be required by Law (including COVID-19 Measures), during the Interim Period, without the prior written consent of the Company (such consent not to be unreasonably withheld, conditioned or delayed), none of Purchaser, Holdco or the Merger Subs shall:
(i) amend, waive or otherwise change, in any respect, its Organizational Documents;
(ii) authorize for issuance, issue, grant, sell, pledge, dispose of or propose to issue, grant, sell, pledge or dispose of any of its equity securities or any options, warrants, commitments, subscriptions or rights of any kind to acquire or sell any of its equity securities, or other securities, including any securities convertible into or exchangeable for any of its equity securities or other security interests of any class and any other equity-based awards, or engage in any hedging transaction with a third Person with respect to such securities, other than (A) in connection with the exercise of any Holdco Warrants outstanding on the date hereof or (B) the Amended Warrant Agreement;
(iii) split, combine, recapitalize or reclassify any of its shares or other equity interests or issue any other securities in respect thereof or pay or set aside any dividend or other distribution (whether in cash, equity or property or any combination thereof) in respect of its shares or other equity interests, or directly or indirectly redeem, purchase or otherwise acquire or offer to acquire any of its securities other than redemptions from the Trust Account that are required pursuant to the Purchaser’s Organizational Documents;
(iv) incur, create, assume, prepay or otherwise become liable for any Indebtedness (directly, contingently or otherwise), make a loan or advance to or investment in any Person, or guarantee or endorse any Indebtedness, Liability or obligation of any Person (provided, that this Section 6.3(b)(iv) shall not prevent Purchaser from borrowing funds necessary to finance (A) Purchaser’s ordinary course administrative costs and expenses or (B) reasonable and documented out-of-pocket fees and expenses for professional services incurred in connection with the transactions contemplated by this Agreement and the Ancillary Documents);
(v) amend, waive, terminate or otherwise change the Trust Agreement;
(vi) adopt a plan of complete or partial liquidation, dissolution, winding up, merger, amalgamation, consolidation, restructuring, recapitalization or other reorganization (other than with respect to the Mergers and the Purchaser Liquidation);
(vii) adopt any employee benefit plan;
(viii) acquire, including by merger, amalgamation, consolidation, acquisition of equity interests or assets, or any other form of business combination, any corporation, partnership, limited liability company, other business organization or any division thereof, or any material amount of assets outside the ordinary course of business;
(ix) enter into any new Contracts or commitments (other than Contracts entered into in connection with the consummation of the Transactions) that could reasonably be expected to delay or impair the consummation of the Transactions in any respect; or
(x) authorize or agree to do any of the foregoing actions.
(c) After the date of this Agreement and before the First Closing, Holdco shall re-register as an Irish public company limited by shares and change its name to “Kalera plc” (the “Holdco Re-registration”).
6.4 Purchaser Public Filings. During the Interim Period, Purchaser will keep current and timely file all of the forms, reports, schedules, statements and other documents required to be filed by Purchaser with the SEC, including all necessary amendments and supplements thereto, and otherwise comply in all material respects with applicable securities Laws (the “Additional SEC Reports”). All such Additional SEC Reports (including any financial statements or schedules included therein) shall be prepared in accordance and comply in all material respects with the requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations of the SEC thereunder applicable to such Additional SEC Reports. The Additional SEC Reports (including any financial statements or schedules included therein) will not, at the time they are filed or subsequently amended, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. As used in this Section 6.4, the term “file” shall be broadly construed to include any manner in which a document or information is filed, furnished, supplied or otherwise made available to the SEC. During the Interim Period, Purchaser shall use its commercially reasonable efforts prior to the Mergers to maintain the listing of the Purchaser Class A Ordinary Shares and Purchaser Public Warrants on Nasdaq; provided, that the Parties acknowledge and agree that from and after the First Closing, the Parties intend to list on Nasdaq only the Holdco Ordinary Shares and the Holdco Warrants.
6.5 No Solicitation.
(a) Except as expressly permitted by this Section 6.5, during the Interim Period, the Company shall not, and shall cause the Company Subsidiaries not to, and the Company shall instruct its Representatives not to, directly or indirectly (i) initiate, solicit, or knowingly encourage (whether public or otherwise) any inquiry, proposal or offer with respect to, or the making, submission or announcement of, any Company Alternative Proposal, (ii) engage, enter into or continue any discussions or negotiations with any Persons or (iii) provide access to its properties, books and records or any confidential information, in each case, with respect to the Target Companies in connection with a Company Alternative Proposal. The Company has terminated and ceased to engage or will terminate and cease to engage in any and all existing discussions or negotiations with any Persons related to a Company Alternative Proposal or that could reasonably be expected to result in a Company Alternative Proposal. Without limiting the foregoing, the Company shall not, and shall cause the Company Subsidiaries not to, waive compliance by any Person with the “standstill” or similar provisions of any Contract between such Person and the Company.
(b) Notwithstanding anything to the contrary in this Section 6.5, if the Company receives an unsolicited written Company Alternative Proposal from any Person at any time following the date of this Agreement that did not result from a material breach of Section 6.5(a) and prior to the time the Required Company Shareholder Approval is obtained, (i) the Company and its Representatives may contact such Person to clarify the terms and conditions thereof and the Company and its Representatives may provide information (including non-public information and data) regarding, and afford access to the business, properties, assets, books, records and personnel of, the Company and its Subsidiaries to such Person if the Company receives from such Person (or has received from such Person) an executed Acceptable Confidentiality Agreement (a copy of such Acceptable Confidentiality Agreement shall be promptly provided to Purchaser or, if such Acceptable Confidentiality Agreement restricts the ability of the Company to disclose any information required to be shared with Purchaser pursuant to this Section 6.5, the Company shall be required to inform any Person who makes a Company Alternative Proposal that the Company is required to communicate the terms of such Company Alternative Proposal to Purchaser in accordance with the terms hereof); provided that, subject to applicable Law, the Company shall not later than substantially concurrently therewith, make available to Purchaser any non-public information concerning the Company or its Subsidiaries that is provided to any Person that was not previously made available to Purchaser, and (ii) the Company and its Representatives may engage in, enter into, continue or otherwise participate in any discussions or negotiations with such Person with respect to such Company Alternative Proposal, if and only to the extent that, prior to taking any action described in the foregoing clauses (i) or (ii), the Company Board or relevant committee thereof determines reasonably and in good faith (after consultation with its outside counsel and financial advisor) that such Company Alternative Proposal either constitutes a Company Superior Proposal or could reasonably be expected to result in a Company Superior Proposal and provides Purchaser with written notice of such determination.
(c) The Company shall promptly (and, in any event, within forty eight (48) hours of any such event) notify Purchaser of the receipt of any Company Alternative Proposal or any material amendment thereto, and with respect to any Company Alternative Proposal or material amendment thereto, a written summary of the material terms and conditions of each such Company Alternative Proposal or any material amendment or proposed material amendment thereto and prompt status updates with respect thereto.
(d) Except as set forth in this Section 6.5(d), the Company Board shall not (i) (A) amend, change, withhold, withdraw, qualify or modify, in a manner adverse to Purchaser, the Company Recommendation with respect to the Mergers, (B) fail to include the Company Recommendation in the Registration Statement, (C) make any public statement inconsistent with the Company Recommendation, (D) approve, adopt, endorse or recommend a Company Alternative Proposal or publicly propose to approve, adopt, endorse or recommend a Company Alternative Proposal, (E) if a tender offer or exchange offer for shares of capital stock of the Company that constitutes a Company Alternative Proposal is commenced, recommend the acceptance of such tender offer or exchange offer by Company stockholders, or (F) resolve or agree to take any of the foregoing actions (any of the foregoing, a “Company Change of Recommendation”) or (ii) authorize, adopt or approve a Company Alternative Proposal, or cause or permit the Company or any of its Subsidiaries to enter into any letter of intent, agreement in principle, memorandum of understanding, business combination agreement or any other similar agreement providing for any Company Alternative Proposal (a “Company Alternative
Acquisition Agreement”). Notwithstanding anything to the contrary set forth in this Agreement, prior to the time the Required Company Shareholder Approval is obtained, if the Company receives a Company Alternative Proposal that the Company Board determines in good faith (after consultation with outside counsel and its financial advisors) constitutes a Company Superior Proposal (taking into account any adjustments to the terms and conditions of the Mergers proposed by the Company in response to such Company Alternative Proposal), the Company may (1) effect a Company Change of Recommendation and authorize, adopt, or approve such Company Superior Proposal, which may include granting a waiver, amendment or release under any Takeover Law with respect to such Company Superior Proposal and/or (2) enter into a Company Alternative Acquisition Agreement with respect to such Company Superior Proposal in accordance with Section 8.1; provided, however, the Company Board may take the actions described in the foregoing clauses (1) and (2) if, and only if:
(i) the Company shall have provided prior written notice to Purchaser of the Company Board’s intention to take such actions at least five (5) Business Days in advance of taking such action (the “Notice Period”), which notice (A) shall specify, as applicable, a reasonably detailed description of the material terms of the Company Alternative Proposal received by the Company and an express statement by the Company that such Company Alternative Proposal constitutes a Company Superior Proposal and (B) include a copy of the most current version of the proposed agreement relating to such Company Superior Proposal (which version shall be updated on a prompt basis to the extent there are material changes thereto) and a description of any financing commitments relating thereto;
(ii) after providing such notice and prior to taking such actions, the Company shall have negotiated, and shall have caused its Representatives to negotiate, with Purchaser in good faith (to the extent Purchaser desires to negotiate) during the Notice Period to make such adjustments in the terms and conditions of this Agreement as would permit the Company Board not to take such actions (it being agreed that in the event that, after commencement of the Notice Period, there is any material revision to the terms of a Company Alternative Proposal, including any revision in price, the Notice Period shall be extended to ensure that at least 48 hours remains in the Notice Period subsequent to the time the Company notifies Purchaser of any such material revision (it being understood that there may be multiple extensions)); and
(iii) the Company Board shall have considered in good faith any changes to this Agreement that may be offered in writing by Purchaser by 11:59 p.m. Eastern Time on the last day of the Notice Period (as extended pursuant to the preceding clause (ii)) and shall have determined in good faith after consultation with outside counsel and its financial advisor, that the Company Alternative Proposal received by the Company would continue to constitute a Company Superior Proposal if such changes offered in writing by Purchaser were given effect.
(e) Nothing contained in this Section 6.5 shall be deemed to prohibit the Company or the Company Board from (i) making any “stop, look and listen” communication to the stockholders of the Company (or any similar communications to the stockholders of the Company) or (ii) making disclosure that the Company Board determines in good faith after consultation with the Company’s outside legal counsel, that the failure of the Company Board to make disclosure of a position contemplated by Rule 14d-9, Rule 14e-2(a) or Item 1012(a) of
Regulation M-A promulgated under the Exchange Act would be required pursuant to the directors’ duties under applicable Law; provided, however, that any disclosure does not contain an express Company Change of Recommendation.
6.6 No Solicitation by Purchaser. Purchaser shall not, and shall instruct its Representatives not to, directly or indirectly (i) initiate, solicit, encourage or respond to any inquiry, proposal, offer or indication of interest with respect to, or the making, submission or announcement of, any Business Combination (a “Business Combination Proposal”) (other than the Transactions), or (ii) enter into, continue or engage in any discussions, negotiations or due diligence, with any Person (other than the Company and its Affiliates and Representatives) in connection with any Business Combination Proposal. In addition, except as expressly permitted under this Section 6.6, during the Interim Period, neither the Company Board nor any committee thereof shall (A) grant any waiver, amendment or release under any Takeover Law, (B) effect a Purchaser Change of Recommendation or (C) authorize, cause or permit Purchaser or any of its Subsidiaries to enter into any letter of intent, agreement in principle, memorandum of understanding, business combination agreement or any other similar agreement providing for any Business Combination Proposal. Purchaser shall, and shall direct its Representatives to, immediately cease any and all existing discussions or negotiations with any Person conducted prior to the date hereof with respect to, or which is reasonably likely to give rise to or result in, a Business Combination Proposal.
6.7 Securities Law Matters. The Company acknowledges and agrees that it is aware, and that its Affiliates are aware (and each of their respective Representatives is aware or, upon receipt of any material nonpublic information of Purchaser, will be advised) of the restrictions imposed by U.S. federal securities Laws and the rules and regulations of the SEC and Nasdaq promulgated thereunder or otherwise (the “Federal Securities Laws”) and other applicable foreign and domestic Laws on a Person possessing material nonpublic information about a publicly traded company. The Company hereby agrees that it shall not purchase or sell any securities of Purchaser, communicate such information to any Person who is not a Party, take any other action with respect to Purchaser in violation of such Laws, or cause or encourage any Person to do any of the foregoing and shall direct its Affiliates and Representatives to do the same. Purchaser agrees that it shall not purchase or sell any Company Shares in violation of Law or cause or encourage any Person to do any of the foregoing and shall direct its Affiliates and Representatives to do the same.
6.8 Notification of Certain Matters. During the Interim Period, each Party shall give notice to the other Parties as promptly as practicable if such Party or its Affiliates: (a) fails to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it or its Affiliates hereunder in a manner as would reasonably be expected to cause or result in any of the conditions set forth in Article VII not being satisfied or the satisfaction of those conditions being materially delayed; (b) receives any notice or other communication in writing from any Person who is not a Party (including any Governmental Authority) alleging (i) that the Consent of such Person is or may be required in connection with the transactions contemplated by this Agreement or (ii) that the consummation of the Transactions by such Party or its Affiliates would violate applicable Law; (c) receives any notice or other communication from any Governmental Authority in connection with the transactions contemplated by this Agreement; (d) discovers any fact or circumstance that, or becomes aware of the occurrence or non-occurrence of any event the
occurrence or non-occurrence of which, would reasonably be expected to cause or result in any of the conditions set forth in Article VII not being satisfied or the satisfaction of those conditions being materially delayed or (e) becomes aware of the commencement or threat, in writing, of any Action against such Party or any of its Affiliates, or any of their respective properties or assets, or, to the Knowledge of such Party, any officer, director, partner, member or manager, in his, her or its capacity as such, of such Party or of its Affiliates with respect to the consummation of the transactions contemplated by this Agreement. No such notice shall constitute an acknowledgement or admission by the Party providing the notice regarding whether or not any of the conditions to the Closings have been satisfied or in determining whether or not any of the representations, warranties or covenants contained in this Agreement have been breached.
6.9 Efforts.
(a) Subject to the terms and conditions of this Agreement, each Party shall use its commercially reasonable efforts, and shall cooperate fully with the other Parties, to take, or cause to be taken, all actions and to do, or cause to be done, all things reasonably necessary, proper or advisable under applicable Laws and regulations to consummate the transactions contemplated by this Agreement (including the receipt of all applicable Consents of Governmental Authorities or other third persons) and to comply as promptly as practicable with all requirements of Governmental Authorities applicable to the transactions contemplated by this Agreement.
(b) As soon as reasonably practicable following the date of this Agreement, and in any event within ten (10) Business Days thereafter, the Parties shall reasonably cooperate with each other and use (and shall cause their respective Affiliates to use) their respective reasonable efforts to prepare and file with Governmental Authorities requests for approval of the transactions contemplated by this Agreement, and shall use reasonable efforts to have such Governmental Authorities approve the transactions contemplated by this Agreement. Each Party shall give prompt written notice to the other Parties if such Party or any of its Representatives receives any notice from such Governmental Authorities in connection with the transactions contemplated by this Agreement, and shall promptly furnish to the other Parties a copy of such Governmental Authority notice. If any Governmental Authority requires that a hearing or meeting be held in connection with its approval of the transactions contemplated hereby prior to the First Closing or the Second Closing, as applicable, each Party shall, if permitted by such Governmental Authority and requested by another Party, arrange for such other Party and/or its Representatives to be present for such hearing or meeting. If any objections are asserted with respect to the transactions contemplated by this Agreement under any applicable Law or if any Action is instituted (or threatened to be instituted) by any applicable Governmental Authority or any Person challenging any of the transactions contemplated by this Agreement or any Ancillary Document as violative of any applicable Law or which would or could reasonably be expected to prevent, materially impede or materially delay the consummation of the transactions contemplated hereby or thereby, the Parties shall use their commercially reasonable efforts to resolve any such objections or Actions so as to timely permit consummation of the transactions contemplated by this Agreement and the Ancillary Documents. In the event any Action is instituted (or threatened to be instituted) by a Governmental Authority or Person challenging the transactions contemplated by this Agreement or any Ancillary Document, the Parties shall, and shall cause their respective Representatives to, reasonably cooperate with each other and use their respective commercially reasonable efforts to contest and resist any such Action and to have vacated, lifted, reversed or
overturned any Order, whether temporary, preliminary or permanent, that is threatened or in effect and that does or could prohibit, prevent or restrict consummation of the transactions contemplated by this Agreement or the Ancillary Documents.
(c) Prior to the First Closing or the Second Closing, as applicable, each Party shall use its reasonable efforts to obtain any Consents of Governmental Authorities or other third persons as may be necessary for the consummation by such Party of the transactions contemplated by this Agreement or required as a result of the execution or performance of, or consummation of the transactions contemplated by, this Agreement by such Party, and the other Parties shall provide reasonable cooperation in connection with such efforts. Notwithstanding the foregoing, other than as explicitly set forth in this Agreement, the Parties shall consult with one another and make a mutual determination before paying any material fees, rents or make similar material payments to any third persons in order to comply with the terms of this Section 6.9.
6.10 Further Assurances. The Parties hereto shall further cooperate with each other and use their respective commercially reasonable efforts to take or cause to be taken all actions, and do or cause to be done all things, necessary, proper or advisable on their part under this Agreement and applicable Laws to consummate the transactions contemplated by this Agreement as soon as reasonably practicable, including preparing and filing as soon as practicable all documentation to effect all necessary notices, reports and other filings.
6.11 The Registration Statement.
(a) As promptly as practicable after the date hereof, Purchaser and Holdco shall prepare with the reasonable assistance of the Company, and file with the SEC, a registration statement on Form S-4 (as amended or supplemented from time to time, and including the Proxy Statement contained therein, the “Registration Statement”) in connection with the registration under the Securities Act of (i) the Holdco Ordinary Shares to be issued under this Agreement to the holders of Purchaser Securities and the Holdco Warrants to be assumed by Holdco and automatically adjusted in favor of the holders of Purchaser Warrants and (ii) the Holdco Ordinary Shares to be issued under this Agreement to the holders of Company Shares prior to the First Merger Effective Time, which Registration Statement will also contain a proxy statement of Purchaser (as amended, the “Proxy Statement”) for the purpose of soliciting proxies from Purchaser Shareholders for the matters to be acted upon at the Purchaser Special Meeting and providing the Purchaser Shareholders an opportunity in accordance with Purchaser’s Organizational Documents and the IPO Prospectus to have their Purchaser Class A Ordinary Shares redeemed (the “Redemption”) in conjunction with the Purchaser Shareholder vote on the Purchaser Shareholder Approval Matters. The Proxy Statement shall include proxy materials for the purpose of soliciting proxies from Purchaser Shareholders to vote, at an extraordinary general meeting of the Purchaser Shareholders to be called and held for such purpose (such meeting, together with an adjourned meeting, the “Purchaser Special Meeting”), in favor of resolutions approving the Purchaser Shareholder Approval Matters, and the adjournment of the Purchaser Special Meeting, if necessary or desirable in the reasonable determination of Purchaser.
(b) In connection with the Registration Statement, Purchaser and Holdco will file with the SEC financial and other information about the transactions contemplated by this Agreement in accordance with applicable Law and applicable proxy solicitation and registration
statement rules set forth in Purchaser’s Organizational Documents and the rules and regulations of the SEC and Nasdaq. The Company shall provide Purchaser and Holdco with such information concerning the Target Companies and their equity holders, officers, directors, employees, assets, Liabilities, condition (financial or otherwise), business and operations that may be required or appropriate for inclusion in the Registration Statement, or in any amendments or supplements thereto, which information provided by the Company shall be true and correct and not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not materially misleading.
(c) Purchaser and Holdco shall take any and all reasonable and necessary actions required to satisfy the requirements of the Securities Act, the Exchange Act and other applicable Laws in connection with the Registration Statement, the Purchaser Special Meeting and the Redemption. Each of Purchaser, Holdco and the Company shall, and shall cause each of its Subsidiaries to, make their respective officers and employees, upon reasonable advance notice, available to the Company, Holdco, Purchaser and their respective Representatives in connection with the drafting of the public filings with respect to the transactions contemplated by this Agreement, including the Registration Statement, and responding in a timely manner to comments from the SEC. Each Party shall promptly correct any information provided by it for use in the Registration Statement (and other related materials) if and to the extent that such information is determined to have become false or misleading in any material respect or as otherwise required by applicable Laws. Purchaser and Holdco shall amend or supplement the Registration Statement and cause the Registration Statement, as so amended or supplemented, to be filed with the SEC and to be disseminated to the Purchaser Shareholders, in each case as and to the extent required by applicable Laws and subject to the terms and conditions of this Agreement and Purchaser’s Organizational Documents.
(d) Purchaser and Holdco, with the assistance of the other Parties, shall promptly respond to any SEC comments on the Registration Statement and shall otherwise use their commercially reasonable efforts to (i) “clear” comments from the SEC, (ii) cause the Registration Statement to become effective and (iii) keep the Registration Statement effective for as long as necessary to consummate the transactions contemplated hereby.
(e) As soon as practicable after the SEC declares the Registration Statement effective, Purchaser shall distribute the Proxy Statement contained in the Registration Statement to the Purchaser Shareholders and, pursuant thereto, shall duly call, give notice of, convene and hold (subject to the last sentence of this Section 6.11(e)) the Purchaser Special Meeting in accordance with the Cayman Companies Act, Purchaser’s Organizational Documents and the rules and regulations applicable to the SEC and Nasdaq for a date as soon as practicable following the date on which the SEC declared the Registration Statement effective and shall solicit proxies from the holders of Purchaser Ordinary Shares to vote in favor of the Purchaser Shareholder Approval Matters. Purchaser, acting through the Purchaser Board, shall include in the Proxy Statement the recommendation of the Purchaser Board that the holders of Purchaser Ordinary Shares vote in favor of the Purchaser Shareholder Approval Matters, and shall otherwise use its reasonable best efforts to obtain the Required Purchaser Shareholder Approval. Purchaser shall provide the Company with (1) updates with respect to the tabulated vote counts received by Purchaser, (2) the right to review and comment on all communication sent to Purchaser Shareholders, holders of
Purchaser Warrants and/or proxy solicitation firms, which comments Purchaser shall consider in good faith, and (3) updates with respect to any elections to redeem Purchaser Ordinary Shares. Neither the Purchaser Board nor any committee or agent or representative thereof shall (i) withdraw (or modify in any manner adverse to the Company), or propose publicly to withdraw (or modify in any manner adverse to the Company), the Purchaser Board’s recommendation that Purchaser Shareholders vote in favor of the Purchaser Shareholder Approval Matters, (ii) approve, recommend or declare advisable, or propose publicly to approve, recommend or declare advisable, any Purchaser Alternative Proposal, (iii) approve, recommend or declare advisable, or propose publicly to approve, recommend or declare advisable, or allow Purchaser to execute or enter into, any agreement related to a Purchaser Alternative Proposal, or (iv) resolve or agree in writing to do any of the foregoing (any of the actions listed in clauses (i) through (iv) of this sentence, a “Purchaser Change of Recommendation”). If on the date for which the Purchaser Special Meeting is scheduled, Purchaser has not received proxies representing a sufficient number of shares to obtain the Required Purchaser Shareholder Approval, whether or not a quorum is present, then Purchaser may make one or more successive postponements or adjournments of the Purchaser Special Meeting, and shall hold the Purchaser Special Meeting as soon as reasonably practicable upon Purchaser’s determination that it has received proxies representing a sufficient number of shares to obtain the Required Purchaser Shareholder Approval.
(f) Purchaser and Holdco shall comply with all applicable Laws, any applicable rules and regulations of the SEC, Nasdaq, Purchaser’s and Holdco’s Organizational Documents, respectively, the Cayman Companies Act, the Luxembourg Companies Act, the Irish Companies Act, and this Agreement in the preparation, filing and distribution of the Registration Statement, any solicitation of proxies thereunder, the calling and holding of the Purchaser Special Meeting and the Redemption.
(g) Notwithstanding anything else to the contrary in this Agreement or any Ancillary Document, Purchaser may make any public filing with respect to the Merger to the extent required by applicable Law, provided that prior to making any filing that includes information regarding the Company, Purchaser shall provide a copy of the filing to the Company and permit the Company to make revisions to protect confidential or proprietary information of the Company.
6.12 Public Announcements.
(a) The Parties agree that, during the Interim Period, no public release, filing or announcement concerning this Agreement or the Ancillary Documents or the transactions contemplated hereby or thereby shall be issued by any Party or any of their Affiliates without the prior written consent (not be unreasonably withheld, conditioned or delayed) of Purchaser, Holdco and the Company, except as such release or announcement may be required by applicable Law or the rules or regulations of any securities exchange (including, for the avoidance of doubt, Euronext Growth Oslo), in which case the applicable Party shall, to the extent permitted by applicable Law, use commercially reasonable efforts to allow the other Parties reasonable time to comment on, and arrange for any required filing with respect to, such release or announcement in advance of such issuance.
(b) Purchaser and the Company shall issue a press release announcing the execution of this Agreement (the “Signing Press Release”) in the form agreed by Purchaser and
the Company as promptly as practicable after the execution of this Agreement, which Signing Press Release shall be published by the Company, including through the XOSL's publication platform NewsWeb. Promptly after the issuance of the Signing Press Release, Purchaser shall file a current report on Form 8-K (the “Signing Filing”) with the Signing Press Release and a description of this Agreement as required by Federal Securities Laws. Purchaser shall provide the Company with reasonable opportunity to review and comment on the Signing Filing prior to filing and shall consider in good faith and use reasonable efforts to incorporate any comments timely made by the Company. Purchaser, Holdco and the Company shall mutually agree upon and, on the date of the Second Closing, issue a press release announcing the consummation of the transactions contemplated by this Agreement (the “Closing Press Release”), including through the XOSL's publication platform NewsWeb. Promptly after the issuance of the Closing Press Release, Holdco shall file a current report on Form 8-K (the “Closing Filing”) with the Closing Press Release and a description of the Closings as required by Federal Securities Laws. Holdco shall provide each of the Company and Purchaser reasonable opportunity to review and comment upon the Closing Filing prior to filing, and Holdco shall consider in good faith and use reasonable efforts to incorporate any comments that are timely made by each of the Company and Purchaser. In connection with the preparation of the Signing Press Release, the Signing Filing, the Closing Filing, the Closing Press Release, or any other report, statement, filing, notice, stock exchange announcement or application made by or on behalf of a Party to any Governmental Authority or other Person in connection with the transactions contemplated hereby, each Party shall, upon request by any other Party, furnish the Parties with all information concerning themselves, their respective directors, officers and equity holders, and such other matters as may be required by applicable Law, including Federal Securities Laws and the rules and regulations applicable to companies listed on Euronext Growth Oslo, and shall exercise commercially reasonable efforts to provide such other information as may be reasonably necessary or advisable in connection with the transactions contemplated hereby or any other report, statement, filing, notice, stock exchange announcement or application made by or on behalf of a Party to any Person who is not a Party and/or any Governmental Authority in connection with the transactions contemplated hereby. To the extent that a Party is required to furnish information concerning itself in accordance with the foregoing sentence, such Party shall be provided a reasonable opportunity to review and comment on the disclosure containing such information regarding such Party, and Purchaser and the Company shall use reasonable efforts to incorporate any such comments from such Party.
6.13 Post-Closing Board of Directors. The Parties shall take all necessary action, including causing the directors of Holdco to resign, so that effective as of the First Closing, Holdco’s board of directors (the “Post-Closing Holdco Board”) will consist of nine (9) natural Persons. The Parties shall take all necessary action to designate and appoint to the Post-Closing Holdco Board (a) one (1) Person who is designated in writing by Purchaser prior to the First Closing, who shall initially be Brent de Jong, and (b) eight (8) Persons who are designated in writing by the Company prior to the First Closing, at least one (1) of such Persons described in clauses (a) and (b) (collectively) whom shall be required to qualify as an independent director under Nasdaq rules.
6.14 Indemnification of Directors and Officers; Tail Insurance.
(a) From and after the First Merger Effective Time, Holdco agrees that it shall indemnify and hold harmless each present and former director, manager and officer of Purchaser
and the Company and each of their respective Subsidiaries against any costs or expenses (including reasonable attorneys’ fees), judgments, fines, losses, claims, damages or liabilities incurred in connection with any Action, whether civil, criminal, administrative or investigative, arising out of or pertaining to matters existing or occurring at or prior to the First Merger Effective Time, whether asserted or claimed prior to, at or after the First Merger Effective Time, to the fullest extent that the Company, Purchaser or their respective Subsidiaries, as the case may be, would have been permitted under applicable Law and their respective Governing Documents in effect on the date of this Agreement to indemnify such Person (including the advancing of expenses as incurred to the fullest extent permitted under applicable Law).
(b) The Parties agree that all rights to exculpation, indemnification and advancement of expenses existing in favor of the current or former directors and officers of Purchaser and each Person who served as a director, officer, member, trustee or fiduciary of another corporation, partnership, joint venture, trust, pension or other employee benefit plan or enterprise at the request of Purchaser (the “Purchaser D&O Indemnified Persons”) as provided in Purchaser’s Organizational Documents or under any indemnification, employment or other similar agreements between any Purchaser D&O Indemnified Person and Purchaser, in each case as in effect on the date of this Agreement, shall survive the Closings and continue in full force and effect in accordance with their respective terms to the extent permitted by applicable Law. For a period of six (6) years after the Second Closing, Holdco shall cause the Organizational Documents of Holdco and its Subsidiaries to contain provisions no less favorable with respect to exculpation and indemnification of and advancement of expenses to Purchaser D&O Indemnified Persons than are set forth as of the date of this Agreement in the Organizational Documents of Purchaser to the extent permitted by applicable Law. The provisions of this Section 6.14 shall survive the Closings and are intended to be for the benefit of, and shall be enforceable by, each of the Purchaser D&O Indemnified Persons and their respective heirs and representatives.
(c) For the benefit of Purchaser’s directors and officers, Purchaser, in coordination with Holdco and the Company, shall be permitted prior to the First Closing Date to obtain and fully pay the premium for a “tail” insurance policy that provides coverage for up to a six (6)-year period from and after the Second Closing Date for events occurring prior to the Second Closing Date (the “D&O Tail Insurance”) that is substantially equivalent to and in any event not less favorable in the aggregate than Purchaser’s existing policy or, if substantially equivalent insurance coverage is unavailable, the best available coverage. If obtained, Holdco and Purchaser shall maintain the D&O Tail Insurance in full force and effect, and continue to honor the obligations thereunder, and Holdco and Purchaser shall timely pay or cause to be paid all premiums with respect to the D&O Tail Insurance. Notwithstanding the foregoing, in no event shall Purchaser expend an annual premium for such D&O Tail Insurance in excess of three-hundred percent (300%)] of the last annual payment made by Purchaser or any of their respective Affiliates for such directors’ and officers’ liability insurance policies currently in effect as of the date hereof.
(d) The Parties agree that all rights to exculpation, indemnification and advancement of expenses existing in favor of the current or former directors and officers of the Company and each Person who served as a director, officer, member, trustee or fiduciary of another corporation, partnership, joint venture, trust, pension or other employee benefit plan or enterprise at the request of the Company (the “Company D&O Indemnified Persons”) as provided in the Company’s Organizational Documents or under any indemnification, employment
or other similar agreements between any Company D&O Indemnified Person and the Company, in each case as in effect on the date of this Agreement, shall survive the Closings and continue in full force and effect in accordance with their respective terms to the extent permitted by applicable Law. For a period of six (6) years after the Second Closing, Holdco shall cause the Organizational Documents of Holdco and its Subsidiaries to contain provisions no less favorable with respect to exculpation and indemnification of and advancement of expenses to Company D&O Indemnified Persons than are set forth as of the date of this Agreement in the Organizational Documents of the Company to the extent permitted by applicable Law. The provisions of this Section 6.14 shall survive the Closings and are intended to be for the benefit of, and shall be enforceable by, each of the Company D&O Indemnified Persons and their respective heirs and representatives.
(e) For the benefit of the Company’s directors and officers, the Company, in coordination with Holdco and Purchaser, shall be permitted prior to the First Closing Date to obtain and fully pay the premium for a “tail” insurance policy that provides coverage for up to a six (6)-year period from and after the Second Closing Date for events occurring prior to the Second Closing Date (the “Company D&O Tail Insurance”) that is substantially equivalent to and in any event not less favorable in the aggregate than the Company’s existing policy or, if substantially equivalent insurance coverage is unavailable, the best available coverage. If obtained, Holdco and the Company shall maintain the Company D&O Tail Insurance in full force and effect, and continue to honor the obligations thereunder, and Holdco and the Company shall timely pay or cause to be paid all premiums with respect to the Company D&O Tail Insurance. Notwithstanding the foregoing, in no event shall the Company expend an annual premium for such Company D&O Tail Insurance in excess of three-hundred percent (300%) of the last annual payment made by Purchaser or any of their respective Affiliates for such directors’ and officers’ liability insurance policies currently in effect as of the date hereof.
6.15 Registration Rights Agreement. At the Closing, Holdco and the Company will enter into a registration rights agreement in form and substance reasonably satisfactory to Holdco, the Company, and Purchaser providing for certain registration rights for certain Holdco investors (the “Registration Rights Agreement”).
6.16 Net Tangible Assets. During the Interim Period, Purchaser shall use reasonable best efforts to maintain net tangible assets of at least $5,000,001 (including after giving effect to any Redemption).
6.17 Delisting and Deregistration. The Parties shall take all actions necessary or reasonably requested by another Party to cause (i) the Purchaser Class A Ordinary Shares and Purchaser Warrants to be delisted from Nasdaq (or be succeeded by the Holdco Securities) and to terminate its registration with the SEC pursuant to Sections 12(b), 12(g) and 15(d) of the Exchange Act (or be succeeded by Holdco) as of the First Closing Date and (ii) the Company's shares to be delisted from Euronext Growth Oslo at such point in time as required by XOSL, or mutually agreed between the Parties.
6.18 Holdco Nasdaq Listing. Purchaser and Holdco shall use commercially reasonable efforts to cause the Holdco Ordinary Shares and Holdco Warrants to be approved for listing on Nasdaq by no later than the First Closing Date, and to remain listed as a public company on Nasdaq through the Second Closing Date.
6.19 Equity Plans. In connection with the Transactions, Holdco shall adopt, prior to or effective upon the Second Closing, a new equity incentive plan substantially in the form attached as Exhibit D attached hereto (the “Holdco Equity Plan”), which shall reserve for issuance a number of Holdco Ordinary Shares equal to seven-point-five percent (7.5%) of the aggregate number of Holdco Ordinary Shares issued and outstanding immediately after the Company Capital Reduction (calculated on a fully-diluted basis), subject to the share evergreen provisions set forth in the Holdco Equity Plan.
6.20 Employment Agreements; Other Compensation Matters. Prior to the Second Closing, the parties shall work in good faith to evaluate the reports and recommendations of the Company’s independent compensation consultant and implement new compensation arrangements (to be effective upon the Second Closing) taking into account such reports and recommendations, including terms, conditions and allocations relating to initial awards to be made under the Holdco Equity Plan and/or new employment or severance arrangements for key employees.
6.21 Company Shareholder Approval. The Company shall take all action necessary under applicable Law, the rules and regulations applicable to companies listed on Euronext Growth Oslo, and its Organizational Documents to, as soon as practicable after the date of effectiveness of the Registration Statement and in any event within three (3) Business Days thereof, call, give notice of, convene and hold an extraordinary meeting of the Company Shareholders to pass resolutions (the “Company Special Meeting”) approving (A) the adoption and approval of First Plan of Merger and the Second Plan of Merger and, for the avoidance of doubt, the Company Capital Reduction, in accordance with the Company’s Organizational Documents and the Luxembourg Companies Act and the Irish Companies Act and (B) such other matters as the Company and Purchaser shall hereafter mutually determine to be necessary or appropriate in order to effect the Transactions and the delisting of the Company's shares from Euronext Growth Oslo (the approvals described in foregoing clauses (A) and (B), collectively, the “Company Shareholder Approval Matters”). The Company, acting through the Company Board, shall include in the materials distributed to the Company Shareholders in connection with the Company Shareholder Approval Matters a recommendation of the Company Board that the Company Shareholders vote in favor of the adoption of Company Shareholder Approval Matters.
6.22 Merger Sub and Holdco Shareholder Approvals.
(a) Each of the Merger Subs and Holdco shall take all action necessary under applicable Law and their respective Organizational Documents to, as soon as practicable after the date hereof, (i) call, give notice of, convene and hold special or extraordinary meetings of its shareholders and/or boards of directors, as applicable, to pass resolutions or (ii) request its shareholders and/or boards of directors, as applicable, to pass written resolutions, in each case approving (A) the adoption and approval of this Agreement, the Mergers and other transactions contemplated hereby (as applicable) by their shareholders in accordance with their respective Organizational Documents and the Norwegian Companies Act, the Irish Companies Act, the Luxembourg Companies Act or the Cayman Companies Act (as applicable) and (B) such other matters as the Company and Purchaser shall hereafter mutually determine to be necessary or appropriate in order to effect the Transactions (the approvals described in foregoing clause (A) in respect of Cayman Merger Sub, the “Cayman Merger Sub Shareholder Approval Matters”, in
respect of Lux Merger Sub, “Lux Merger Sub Shareholder Approval Matters” and, in respect of Holdco, the “Holdco Shareholder Approval Matters”).
(b) Holdco shall vote in favor of the Cayman Merger Sub Shareholder Approval Matters and the Lux Merger Sub Shareholder Approval Matters.
6.23 Section 16 of the Exchange Act. Prior to the First Closing, the board of directors of Holdco, or an appropriate committee of nonemployee directors thereof, shall adopt a resolution consistent with the interpretative guidance of the SEC so that the acquisition of Holdco Securities pursuant to this Agreement by any officer or director of Purchaser or the Company who is expected to become a “covered person” of Holdco for purposes of Section 16 of the Exchange Act and the rules and regulations thereunder (“Section 16”) shall be an exempt transaction for purposes of Section 16.
6.24 Transfer Taxes. Any and all transfer, documentary, sales, use, stamp, registration and other similar Taxes and fees (including any associated penalties and interest) (“Transfer Taxes”) incurred in connection with or arising out of the transactions contemplated by this Agreement shall be borne by Holdco. The parties shall cooperate in the execution and delivery of any and all instruments and certificates with respect to such Transfer Taxes and the applicable party shall file all necessary Tax Returns and other documentation with respect to any such Transfer Taxes.
6.25 Resignations. All of the officers and directors of Purchaser shall resign from all of their officer and director positions at Purchaser prior to or effective upon the Second Closing.
6.26 Amended Warrant Agreement. At the First Closing, each of Holdco and the Purchaser shall deliver a copy of the Amended Warrant Agreement duly executed by such Party.
6.27 Amended Holdco Memorandum and Articles of Association. Prior to the First Merger Effective Time, the Parties will take, or cause to be taken, all actions necessary in order for the Memorandum and Articles of Association of Holdco to be the Amended Holdco Memorandum and Articles of Association.
6.28 Norwegian Merger. The Parties acknowledge that the Company intends to complete the Norwegian Merger during the Interim Period. Notwithstanding anything to the contrary herein, no actions taken in furtherance of the consummation of the Norwegian Merger shall be deemed to breach this Agreement or the Ancillary Documents.
6.29 No Claim Against Purchaser Trust Account. The Company acknowledges that Purchaser has established the Trust Account for the benefit of Purchaser’s public stockholders and that disbursements from the Trust Account are available only in the limited circumstances set forth in the Purchaser’s Organizational Documents and the Trust Agreement. The Company further acknowledges that Purchaser’s sole assets consist of the cash proceeds of Purchaser’s IPO and private placements of its securities, and that substantially all of these proceeds have been deposited in the Trust Account for the benefit of its public stockholders. The Company further acknowledges that, if the transactions contemplated by this Agreement, or in the event of termination of this Agreement, another Business Combination, are not consummated by July 12, 2022, or such later date as approved by its stockholders to complete a Business Combination, Purchaser will be
obligated to return to its stockholders the amounts being held in the Trust Account. Accordingly, the Company (on behalf of itself and its controlled Affiliates) hereby waives any past, present or future claim of any kind against, and any right to access, the Trust Account or to collect from the Trust Account any monies that may be owed to them by Purchaser or any of Purchaser’s Affiliates for any reason whatsoever, and will not seek recourse against the Trust Account at any time for any reason whatsoever. Notwithstanding the foregoing, this Section 6.29 shall not serve to limit or prohibit the Company’s or its controlled Affiliates’ rights to pursue a claim against Purchaser or any of Purchaser’s Affiliates for legal relief against assets held outside the Trust Account (including from and after the consummation of a Business Combination other than as contemplated by this Agreement) or pursuant to Section 9.7 for specific performance or other injunctive relief and that does not in any way involve the Trust Account or the funds or assets therein. This Section 6.29 shall survive the termination of this Agreement for any reason.
6.30 CVR Agreement. At or immediately prior to the Second Merger Effective Time, Holdco shall execute and deliver, and the Company and Purchaser will use reasonable best efforts to cause the Rights Agent to execute and deliver the CVR Agreement, subject to any changes to the CVR Agreement that are requested by the Rights Agent and approved prior to the Effective Time by Purchaser and the Company (which approval, in the case of each of Purchaser and the Company, shall not be unreasonably withheld, conditioned or delayed), unless otherwise mutually agreed to by Purchaser and the Company.
6.31 Nonregistrable CVRs. To the extent requested by the Company, Purchaser and the Company shall exercise reasonable best efforts as necessary to ensure that the CVRs are not subject to registration under the Securities Act, the Exchange Act or any applicable state securities or “blue sky” laws, including by making changes to the form of CVR Agreement.
ARTICLE VII
CLOSING CONDITIONS
7.1 Conditions to Each Party’s Obligations. The obligations of each Party to consummate the Transactions shall be subject to the satisfaction or written waiver (where permissible) by the Company and Purchaser of (x) the following conditions as of the First Closing Date and (y) the conditions set forth in Section 7.01(e), (f), (g), (h), (i) and (j) as of the Second Closing Date.
(a) Required Purchaser Shareholder Approval. The Purchaser Shareholder Approval Matters shall have been approved by the requisite vote of the Purchaser Shareholders entitled to vote thereon at the Purchaser Special Meeting in accordance with Purchaser’s Organizational Documents, applicable Law and the rules and regulations of Nasdaq (the “Required Purchaser Shareholder Approval”).
(b) Required Company Shareholder Approval. The Company Shareholder Approval Matters shall have been approved by the requisite vote of the Company Shareholders entitled to vote thereon at the Company Special Meeting in accordance with the Company’s Organizational Documents, applicable Law and the rules and regulations of Euronext Growth Oslo (the “Required Company Shareholder Approval”).
(c) Required Holdco Shareholder Approval. The Holdco Shareholder Approval Matters shall have been approved by the shareholder(s) of Holdco in accordance with Holdco’s Organizational Documents and applicable Law (the “Required Holdco Shareholder Approval”).
(d) Holdco Equity Plan. Holdco shall have adopted the Holdco Equity Plan consistent with the requirements of Section 6.19.
(e) No Law or Order. No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Law (whether temporary, preliminary or permanent) or Order that is then in effect and which has the effect of making the transactions or agreements contemplated by this Agreement illegal or which otherwise prevents or prohibits consummation of the transactions contemplated by this Agreement.
(f) No Litigation. There shall not be any pending Action brought by a Governmental Authority seeking to enjoin the consummation of the Transactions.
(g) Net Tangible Assets Test. Upon the First Closing, after giving effect to the Redemption, Purchaser shall have net tangible assets of at least $5,000,001.
(h) Registration Statement. The Registration Statement shall have been declared effective by the SEC and shall remain effective as of the First Closing.
(i) Nasdaq Listing. The Holdco Ordinary Shares and Holdco Warrants to be issued or assumed by Holdco (as applicable) in connection with the Mergers shall be approved for listing on Nasdaq, subject only to notice of issuance.
(j) Composition Agreement/SEAS. Holdco shall have entered into a composition agreement with the Revenue Commissioners of Ireland and a Special Eligibility Agreement for Securities with the Depository Trust Company in respect of Holdco Ordinary Shares and Holdco Warrants, both of which are in full force and effect and enforceable in accordance with their terms.
7.2 Conditions to Obligations of the Company. In addition to the conditions specified in Section 7.1, the obligations of the Company to consummate the Transactions are subject to the satisfaction or written waiver (by the Company) of (x) the following conditions as of the First Closing Date and (y) the conditions set forth in Section 7.02(a) (solely as it relates to the Purchaser Fundamental Representations), (c), and (d) as of the Second Closing Date.
(a) Representations and Warranties. All of the representations and warranties of Purchaser, Holdco and the Merger Subs set forth in this Agreement and in any certificate delivered by or on behalf of Purchaser, Holdco and the Merger Subs pursuant hereto (without giving effect to any qualifications or limitations as to materiality) shall be true and correct in all material respects on and as of the date of this Agreement and on and as of the applicable Closing Date as if made on the applicable Closing Date, except for (i) those representations and warranties that address matters only as of a particular date, which representations and warranties (without giving effect to any qualifications or limitations as to materiality) shall have been true and correct in all material respects as of such date, and (ii) any failures to be true and correct that, individually or in the aggregate, have not had and would not reasonably be expected to have a materially
adverse effect on the ability of each of Purchaser, Holdco or the Merger Subs to consummate the transactions contemplated by this Agreement; provided that this Section 7.2(a) shall not apply to the representations and warranties of Purchaser contained in Section 3.5(a) and Holdco and the Merger Subs contained in Section 4.5(a) (collectively, the “Purchaser Fundamental Representations”), which representations and warranties shall have been true and correct in all respects other than de minimis inaccuracies.
(b) Agreements and Covenants. Each of Purchaser, Holdco and the Merger Subs shall have performed in all material respects all of its obligations and complied in all material respects with all of its agreements and covenants under this Agreement to be performed or complied with by it on or prior to the applicable Closing Date.
(c) Minimum Cash. As of the applicable Closing, after giving effect to the completion of the Redemption, the aggregate amount of (i) cash proceeds received or available at or prior to the applicable Closing in respect of debt or equity financing agreements entered into by the Company during the Interim Period (excluding the matters set forth on Schedule 7.2(c) and provided that there shall not be double counting of cash proceeds that are received or available) and (ii) in the Trust Account shall equal at least (x) 100 million U.S. Dollars ($100,000,000) plus (y) the aggregate amount expenses of Purchaser, Holdco, the Company and their respective Affiliates incurred prior to the applicable Closing (including, in each case, the Expenses) (the condition set forth in this Section 7.2(c), the “Minimum Cash Condition”).
(d) Officer Certificate. Purchaser shall have delivered to the Company a certificate, dated the applicable Closing Date, signed by a director of Purchaser in such capacity, certifying as to the satisfaction of the conditions specified in Sections 7.2(a) and 7.2(b) (in respect of Purchaser and the Merger Subs). Holdco shall have delivered to the Company a certificate, dated the applicable Closing Date, signed by an executive officer or director of Holdco in such capacity, certifying as to the satisfaction of the conditions specified in Sections 7.2(a) and 7.2(b) (in respect of Holdco); provided, that, the certificate delivered on the Second Closing Date shall certify only the satisfaction of the condition specified in Section 7.2(a) (solely with respect to the Purchaser Fundamental Representations).
7.3 Conditions to Obligations of Purchaser. In addition to the conditions specified in Section 7.1, the obligations of Purchaser to consummate the Transactions are subject to the satisfaction or written waiver (by Purchaser) of (x) the following conditions as of the First Closing Date and (y) the conditions set forth in Section 7.03(a) (solely as it relates to the Company Fundamental Representations) and (d) as of the Second Closing Date:
(a) Representations and Warranties. All of the representations and warranties of the Company set forth in this Agreement and in any certificate delivered by or on behalf of the Company pursuant hereto shall be true and correct on and as of the applicable Closing Date as if made on the applicable Closing Date, except for (i) those representations and warranties that address matters only as of a particular date (which representations and warranties shall have been true and correct as of such date), and (ii) any failures to be true and correct that (without giving effect to any qualifications or limitations as to materiality or Material Adverse Effect), individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect (provided that this Section 7.3(a) shall not apply to the representations and warranties of the
Company contained in Sections 5.1, 5.2, 5.3, and 5.4 (collectively, the “Company Fundamental Representations”) which representations and warranties shall have been true and correct in all respects other than de minimis inaccuracies).
(b) Agreements and Covenants. The Company shall have performed in all material respects all of its obligations and complied in all material respects with all of its agreements and covenants under this Agreement to be performed or complied with by it on or prior to the applicable Closing Date.
(c) No Material Adverse Effect. Since the date of this Agreement, no Material Adverse Effect shall have occurred and be continuing.
(d) Officer Certificate. Purchaser shall have received a certificate from the Company, dated the applicable Closing Date, signed by an officer of the Company in such capacity, certifying as to the satisfaction of the conditions specified in Sections 7.3(a), 7.3(b) and 7.3(c) (in respect of the Company); provided, that the certificate delivered on the Second Closing Date shall certify only the satisfaction of the condition specified in Section 7.3(a) (solely with respect to the Company Fundamental Representations).
(e) Norwegian Merger. The Norwegian Merger shall have been consummated.
7.4 Frustration of Conditions. Notwithstanding anything contained herein to the contrary, no Party may rely on the failure of any condition set forth in this Article VII to be satisfied if such failure was primarily caused by the failure of such Party or its Affiliates (including, with respect to Purchaser, Holdco or the Merger Subs, or with respect to the Company, any Target Company) to comply with or perform any of its covenants or obligations set forth in this Agreement.
ARTICLE VIII
TERMINATION AND EXPENSES
8.1 Termination. This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing as follows:
(a) by mutual written consent of Purchaser and the Company;
(b) by written notice by Purchaser or the Company if the Closing shall not have occurred by the six (6)-month anniversary of the date of this Agreement (as may be extended as provided in the immediately following proviso, the “Outside Date”) (provided that, if the SEC has not declared the Proxy Statement/Form S-4 effective on or prior to the six (6)-month anniversary of the date of this Agreement, the Outside Closing Date shall be automatically extended by one (1) month); provided, however, that the right to terminate this Agreement under this Section 8.1(b) shall not be available to a Party if the breach or violation by such Party or its Affiliates (including, with respect to Purchaser, Holdco or the Merger Subs) of any representation, warranty, covenant or obligation under this Agreement was the primary cause of the failure of the Closing to occur on or before the Outside Date;
(c) by written notice by either Purchaser or the Company if a Governmental Authority of competent jurisdiction shall have issued an Order or taken any other action permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement, and such Order or other action has become final and non-appealable; provided, however, that the right to terminate this Agreement pursuant to this Section 8.1(c) shall not be available to a Party if the failure by such Party or its Affiliates (including, with respect to Purchaser, Holdco, or the Merger Subs) to comply with any provision of this Agreement has been the primary cause of such action by such Governmental Authority;
(d) by written notice by the Company to Purchaser, if (i) there has been a breach by Purchaser, Holdco or any of the Merger Subs of any of its representations, warranties, covenants or agreements contained in this Agreement, or if any representation or warranty of Purchaser, Holdco or any of the Merger Subs shall have become untrue or inaccurate, in any case, which would result in a failure of a condition set forth in Section 7.2(a) or Section 7.2(b) to be satisfied, and (ii) the breach or inaccuracy is incapable of being cured or is not cured within the earlier of (A) twenty (20) days after written notice of such breach or inaccuracy is provided to Purchaser by the Company or (B) the Outside Date; provided, that the Company shall not have the right to terminate this Agreement pursuant to this Section 8.1(d) if at such time the Company is in material uncured breach of this Agreement in a manner that would result in the failure of a condition set forth in Section 7.3(a) or Section 7.3(b);
(e) by written notice by Purchaser to the Company, if (i) there has been a breach by the Company of any of its representations or warranties or its covenants or agreements contained in this Agreement, or if any representation or warranty the Company shall have become untrue or inaccurate, in any case, which would result in a failure of a condition set forth in Section 7.3(a) or Section 7.3(b) to be satisfied (ii) the breach or inaccuracy is incapable of being cured or is not cured within the earlier of (A) twenty (20) days after written notice of such breach or inaccuracy is provided to the Company by Purchaser or (B) the Outside Date; provided, that Purchaser shall not have the right to terminate this Agreement pursuant to this Section 8.1(e) if at such time Purchaser, Holdco or any of the Merger Subs are in material uncured breach of this Agreement in a manner that would result in the failure of a condition set forth in Section 7.2(a) or Section 7.2(b);
(f) by written notice by either the Company or Purchaser if the Purchaser Special Meeting is held (including any adjournment or postponement thereof) and has concluded, Purchaser Shareholders have duly voted, and the Required Purchaser Shareholder Approval was not obtained;
(g) by written notice by either the Company or Purchaser if the Company Special Meeting is held (including any adjournment or postponement thereof) and has concluded, the Company Shareholders have duly voted, and the Required Company Shareholder Approval was not obtained;
(h) by the Company if Purchaser makes any Purchaser Change of Recommendation;
(i) by Purchaser if the Company makes any Company Change of Recommendation; or
(j) by the Company in accordance with Section 6.5(d), at any time prior to the receipt of the Required Company Shareholder Approval, if (A) the Company Board has authorized the Company to enter into a Company Alternative Acquisition Agreement with respect to a Company Superior Proposal, (B) prior to or substantially concurrently with such termination, the Company shall have paid the Company Termination Fee to the Purchaser pursuant to Section 8.3 and (C) substantially concurrently with the termination of this Agreement, the Company enters into a Company Alternative Acquisition Agreement with respect to the Company Superior Proposal referred to in clause (A).
8.2 Manner and Effect of Termination. Any party terminating this Agreement pursuant to Section 8.1 shall give written notice of such termination to the other Parties in accordance with this Agreement specifying the provision or provisions of this Agreement pursuant to which such termination is being effected and the basis therefor described in reasonable detail. In the event of termination of this Agreement pursuant to Section 8.1, this Agreement shall forthwith become null and void and there shall be no liability or obligation on the part of the parties or their respective Subsidiaries or Affiliates. Notwithstanding the foregoing: (a) no such termination shall relieve the Company of its obligation to pay the Company Termination Fee, if, as and when required pursuant to Section 8.3; (b) no such termination shall relieve any party for liability for fraud or willful breach prior to the termination of this Agreement; and (c) Section 6.11, Section 8.3, Article IX and this Section 8.2 shall survive the termination of this Agreement.
8.3 Termination Fees.
(a) If (i) this Agreement shall have been terminated by Purchaser pursuant to Section 8.1(e) due to a breach by the Company of Section 6.5, (ii) the Company or any other Person shall have publicly disclosed or announced a Company Alternative Proposal made after the date of this Agreement but prior to the date of the Company Special Meeting, and such Company Alternative Proposal has not been withdrawn, and such withdrawal has not been publicly disclosed and withdrawn or announced, at least five (5) days prior to the date of the Company Special Meeting (or prior to the termination of this Agreement if there has been no Company Special Meeting) and (iii) within nine (9) months of such termination, a definitive agreement with respect to a Company Alternative Proposal has been entered into, and such Company Alternative Proposal is ultimately consummated; provided that, for purposes of this clause (iii), the references to “20%” in the definition of “Company Alternative Proposal” shall be deemed to be references to “more than 80%”;
(b) if the Company shall have terminated this Agreement pursuant to Section 8.1(j); or
(c) if Purchaser shall have terminated this Agreement pursuant to Section 8.1(i);
then, the Company shall, (x) in the case of the foregoing clause (a), upon the consummation of a Company Alternative Proposal, pay to Purchaser the Company Termination Fee; (y) in the case of
the foregoing clause (b), prior to or substantially concurrently with such termination, pay to Purchaser the Company Termination Fee; and (z) in the case of the foregoing clause (c), within two (2) Business Days of such termination, pay to Purchaser the Company Termination Fee; it being understood that in no event shall the Company be required to pay the Company Termination Fee on more than one occasion. The Company shall pay to Purchaser the Company Termination Fee pursuant to this Section 8.3 by wire transfer in immediately available funds to one or more accounts designated by Purchaser. Following receipt by Purchaser of the Company Termination Fee, the Company shall have no further liability with respect to this Agreement or the transactions contemplated herein to Purchaser, Holdco or any of their Subsidiaries or Affiliates or any other Person, other than in respect of willful breach of this Agreement or fraud. If the Company fails to timely pay the Company Termination Fee when due, then it shall pay Purchaser the interest on such amount at the prime rate as published in The Wall Street Journal in effect on the date such payment was required to be made plus three percent (3%) per annum through the date such payment is actually received.
(d) The Parties acknowledge that the agreements contained in this Section 8.3 are an integral part of the transactions contemplated by this Agreement and that, without these agreements, the Parties would not enter into this Agreement.
ARTICLE IX
MISCELLANEOUS
9.1 Nonsurvival of Representations, Warranties and Covenants. None of the representations, warranties, covenants, obligations or other agreements in this Agreement or in any certificate, statement or instrument delivered pursuant to this Agreement, including any rights arising out of any breach of such representations, warranties, covenants, obligations, agreements and other provisions, shall survive the Closings and each shall terminate and expire upon the occurrence of the Closings (and there shall be no liability after the Closings in respect thereof), except for (a) those covenants and agreements contained herein that by their terms expressly apply in whole or in part at or after the Closings and then only with respect to any breaches occurring at or after the Closings and (b) this Article IX. Nothing herein is intended to limit any Party’s liability for such Party’s fraud.
9.2 Notices. All notices, consents, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered (a) in person, (b) by e-mail when sent (except where the sender receives a failed delivery message), (c) by facsimile, with affirmative confirmation of receipt, (d) one Business Day after being sent, if sent by reputable, nationally recognized overnight courier service or (e) three (3) Business Days after being mailed, if sent by registered or certified mail, pre-paid and return receipt requested, in each case to the applicable Party at the following addresses (or at such other address for a Party as shall be specified by like notice):
If to Purchaser, Holdco or the Merger Subs at or prior to the Second Closing, to:
Agrico Acquisition Corp.
Boundary Hall, Cricket Square
Grand Cayman, KY1-1102, Cayman Islands
Attention: Brent de Jong
Email: brent@dejongcapital.com
with a copy (which will not constitute notice) to:
Loeb & Loeb LLP
345 Park Ave
New York, NY 10154
Attention: Mitchell S. Nussbaum
E-mail: mnussbaum@loeb.com
If to the Company at or prior to the Second Closing, to:
Kalera AS
8440 Tradeport Dr Suite 102
Orlando, FL 32827
Attention: Curtis McWilliams
Email: Curtis.McWilliams@kalera.com
with a copy (which will not constitute notice) to:
Milbank LLP
55 Hudson Yards
New York, NY 10001
Attention: David Dixter; Iliana Ongun
Email: ddixter@milbank.com; iongun@milbank.com
9.3 Binding Effect; Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns. This Agreement shall not be assigned by operation of Law or otherwise without the prior written consent of Purchaser, Holdco and the Company and any assignment without such consent shall be null and void. Notwithstanding the foregoing, the Norwegian Merger shall not be deemed to be an assignment of this Agreement.
9.4 Third Parties. Except for the rights of Milbank and Loeb set forth in this Article IX, and the rights of Purchaser D&O Indemnified Parties and the Company D&O Indemnified Parties set forth in Section 6.14, which the Parties acknowledge and agree are express third-party beneficiaries of this Agreement, nothing contained in this Agreement or in any instrument or document executed by any party in connection with the transactions contemplated hereby shall create any rights in, or be deemed to have been executed for the benefit of, any Person that is not a Party hereto or thereto or a successor or permitted assign of such a Party.
9.5 Arbitration. Any and all disputes, controversies or claims arising out of, relating to, or in connection with this Agreement or the breach, termination or validity hereof, or the transactions contemplated hereby (a “Dispute”) shall be finally resolved by arbitration under the Rules of Arbitration of the ICC (the “ICC Rules”). To the extent that the ICC Rules and this Agreement are in conflict, the terms of this Agreement shall control. The seat of arbitration shall be in New York County, State of New York. The language of the arbitration shall be English. The
tribunal shall consist of three arbitrators. The parties to the Dispute shall each be entitled to nominate one arbitrator, provided that where there are multiple claimants or multiple respondents, the multiple claimants jointly and the multiple respondents jointly shall nominate an arbitrator. The third arbitrator, who shall be the presiding arbitrator on the tribunal, shall be nominated by the agreement of the two party-nominated arbitrators or, if they fail to agree on a nomination within fifteen (15) days of the nomination date of the second arbitrator, the third arbitrator shall be promptly selected and appointed by the ICC. The arbitrators shall decide the Dispute in accordance with the substantive law of the state of New York. The proceedings shall be streamlined and efficient. An arbitration award rendered by the tribunal shall be final and binding on the parties to the Dispute. Judgment on the award may be entered in any court having jurisdiction thereof.
9.6 Governing Law; Jurisdiction. This Agreement shall be governed by, construed and enforced in accordance with the Laws of the State of New York (save to the extent necessary to give effect to the Mergers, the Company Capital Reduction and the Purchaser Liquidation, which shall be governed by the laws of the Cayman Islands or the Grand Duchy of Luxembourg (as applicable)) without regard to the conflict of laws principles thereof.
9.7 Specific Performance. Each Party acknowledges that the rights of each Party to consummate the transactions contemplated hereby are unique, recognizes and affirms that in the event of a breach of this Agreement by any Party, money damages would be inadequate and the non-breaching Parties would have no adequate remedy at law, and agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed by an applicable Party in accordance with their specific terms or were otherwise breached. Accordingly, each Party shall be entitled to an injunction, restraining order or other equitable relief to prevent breaches or threatened breaches of this Agreement and to enforce specifically the terms and provisions hereof, including the obligation to effect the Closings, without the requirement to post any bond or other security or to prove that money damages or another remedy at Law would be inadequate, this being in addition to any other right or remedy to which such Party may be entitled under this Agreement, at law or in equity. In the event that a Party seeks equitable remedies in any Action (including to enforce the provisions of this Agreement or prevent breaches or threatened breaches of this Agreement), each Party agrees that it will not oppose the granting of specific performance and other equitable relief on the basis that the other Parties have an adequate remedy at Law. The Parties will not be required to provide any bond or other security in connection with any such injunction. The Parties acknowledge and agree that any Party seeking an injunction to prevent breaches or threatened breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in accordance with this Section 9.7 shall not be required to provide any bond or other security in connection with any such injunction. Notwithstanding the foregoing, under no circumstances shall the Company or Holdco be permitted or entitled to receive both a grant of specific performance that results in a Closing and the Company Termination Fee.
9.8 Severability. In case any provision in this Agreement shall be held invalid, illegal or unenforceable in a jurisdiction, such provision shall be modified or deleted, as to the jurisdiction involved, only to the extent necessary to render the same valid, legal and enforceable, and the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby nor shall the validity, legality or enforceability of such provision be affected thereby in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties, each acting reasonably and in good
faith, will substitute for any invalid, illegal or unenforceable provision a suitable and equitable provision that carries out, so far as may be valid, legal and enforceable, the intent and purpose of such invalid, illegal or unenforceable provision.
9.9 Amendment. This Agreement may be amended, supplemented or modified only by execution of a written instrument signed by the Company, Holdco, the Merger Subs and Purchaser.
9.10 Waiver. Each Party may, in its sole discretion, (a) extend the time for the performance of any obligation or other act of any other non-Affiliate hereto, (b) waive any inaccuracy in the representations and warranties by such other non-Affiliate contained herein or in any document delivered pursuant hereto and (c) waive compliance by such other non-Affiliate with any covenant or condition contained herein. No provision hereof may be waived, except by a writing signed by the party against whom such waiver is to be enforced, and any such waiver shall apply only in the particular instance in which such waiver shall have been given. Any such waiver shall be valid only if set forth in an instrument in writing signed by the Party or Parties to be bound thereby. Notwithstanding the foregoing, no failure or delay by a Party in exercising any right hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise of any other right hereunder.
9.11 Schedules and Exhibits. The Company Disclosure Schedules and Exhibits referenced herein are a part of this Agreement as if fully set forth herein. All references herein to the Company Disclosure Schedules and Exhibits shall be deemed references to such parts of this Agreement, unless the context shall otherwise require. Any disclosure made by the Company in the Company Disclosure Schedules with reference to any section or schedule of this Agreement shall be deemed to be a disclosure with respect to all other sections or schedules to which such disclosure may apply to the extent the relevance of such disclosure is reasonably apparent on the face of the disclosure in the Company Disclosure Schedules. Certain information set forth in the Company Disclosure Schedules is included solely for informational purposes.
9.12 Entire Agreement. This Agreement and the documents or instruments referred to herein, including any exhibits, annexes and schedules attached hereto, which exhibits, annexes and schedules are incorporated herein by reference, together with the Ancillary Documents, embody the entire agreement and understanding of the Parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to herein or the documents or instruments referred to herein, which collectively supersede all prior agreements and the understandings among the Parties with respect to the subject matter contained herein (it being understood that the Letter of Intent between Purchaser and the Company is hereby terminated in its entirety and shall be of no further force and effect).
9.13 Interpretation. The table of contents and the Article and Section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the Parties and shall not in any way affect the meaning or interpretation of this Agreement. In this Agreement, unless the context otherwise requires: (a) any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and words in the singular form, including any defined terms, include the plural and vice versa; (b) reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are
permitted by this Agreement, and reference to a Person in a particular capacity excludes such Person in any other capacity; (c) any accounting term used and not otherwise defined in this Agreement or any Ancillary Document has the meaning assigned to such term in accordance with GAAP or IFRS (as applicable), based on the Accounting Principles used by the applicable Person; (d) “including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding or succeeding such term and shall be deemed in each case to be followed by the words “without limitation”; (e) the words “herein”, “hereto”, and “hereby” and other words of similar import in this Agreement shall be deemed in each case to refer to this Agreement as a whole and not to any particular Section or other subdivision of this Agreement; (f) the word “if” and other words of similar import when used herein shall be deemed in each case to be followed by the phrase “and only if”; (g) the term “or” means “and/or”; (h) any agreement, instrument, insurance policy, Law or Order defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument, insurance policy, Law or Order as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes, regulations, rules or orders) by succession of comparable successor statutes, regulations, rules or orders and references to all attachments thereto and instruments incorporated therein; (i) except as otherwise indicated, all references in this Agreement to the words “Section”, “Article”, “Schedule”, “Annex” and “Exhibit” are intended to refer to Sections, Articles, Schedules, Annexes and Exhibits to this Agreement; and (j) the term “Dollars” or “$” means United States dollars. Any reference in this Agreement or any Ancillary Document to a Person’s (i) directors shall include any member of such Person’s governing body, (ii) officers shall include any Person filling a substantially similar position for such Person or (iii) shareholders or stockholders shall include any applicable owners of the equity interests of such Person, in whatever form. The Parties have participated jointly in the negotiation and drafting of this Agreement. Consequently, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provision of this Agreement. When reference is made to “the business of” an entity, such reference shall be deemed to include the business of all direct and indirect Subsidiaries of such entity. Reference to the Subsidiaries of an entity shall be deemed to include all direct and indirect Subsidiaries of such entity. For the avoidance of doubt, references to the Company before the Norwegian Merger shall refer to Kalera AS, a Norwegian private limited liability company and after the Norwegian Merger shall refer to Kalera S.A., a Luxembourg public limited company (société anonyme).
9.14 Counterparts. This Agreement and each other document executed in connection with the transactions contemplated hereby may be executed and delivered (including by facsimile or other electronic transmission) in one or more counterparts, and by the different Parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Delivery by email or facsimile to counsel for the other Party of a counterpart executed by a Party shall be deemed to meet the aforementioned requirements.
9.15 Legal Representation.
(a) Each of the Parties hereby agrees, on its own behalf and on behalf of its directors, managers, members, partners, officers, employees, stockholders and Affiliates, that
Milbank LLP (“Milbank”) may serve as counsel to the Target Companies and their respective directors, officers and employees (individually and collectively, the “Seller Group”) in connection with the negotiation, preparation, execution, delivery and performance of this Agreement, and the consummation of the Transactions, and that, following consummation of the Transactions, Milbank (or any of its respective successors) may serve as counsel to the Seller Group or any director, manager, member, partner, stockholder, officer, employee or Affiliate of any member of Seller Group, in connection with any Action or obligation arising out of or relating to this Agreement or the Transactions notwithstanding such representation or any continued representations, and each of the Parties (on its own behalf and on behalf of its Affiliates) hereby consents thereto and irrevocably waives any conflict of interest arising therefrom, and each of such parties shall cause any Affiliate thereof to consent to irrevocably waive any conflict of interest arising from such representation. The Parties agree to take the steps necessary to ensure that any privilege attaching as a result of Milbank representing the Company or any of its Subsidiaries in connection with the Transactions shall survive the Closings and shall remain in effect. As to any privileged attorney client communications between Milbank and the Company or Milbank and any of the Company’s Subsidiaries in connection with the Transactions prior to the Second Closing Date (collectively, the “Milbank Privileged Communications”), Purchaser, Holdco, the Company and each of its Subsidiaries, together with any of their respective Affiliates, Subsidiaries, successors or assigns, agree that if the Mergers and the other Transactions are consummated, all Milbank Privileged Communications related to such Transactions will become the property of (and be controlled by) the Seller Group, and none of Purchaser, Holdco, the Company or any of its Subsidiaries or any of their respective Affiliates, Subsidiaries, successors or assigns shall retain any copies of such records or have any access to them. In the event that Purchaser or Holdco is legally required or requested by any Governmental Authority to access or obtain a copy of all or a portion of the Milbank Privileged Communications, Purchaser and Holdco shall be entitled to access or obtain a copy of and disclose the Milbank Privileged Communications to the extent necessary to comply with any such legal requirement or request.
(b) Each of the Parties hereby agrees, on its own behalf and on behalf of its directors, managers, members, partners, officers, employees, stockholders and Affiliates that Loeb & Loeb LLP (“Loeb”) may serve as counsel to Purchaser, Holdco, the Merger Subs and their respective directors, officers and employees (individually and collectively, the “Purchaser Group”) in connection with the negotiation, preparation, execution, delivery and performance of this Agreement, and the consummation of the Transactions, and that, following consummation of the Transactions, Loeb (or any of its respective successors) may serve as counsel to the Purchaser Group or any director, manager, member, partner, stockholder, officer, employee or Affiliate of any member of the Purchaser Group, in connection with any Action or obligation arising out of or relating to this Agreement or the Transactions notwithstanding such representation or any continued representations, and each of the Parties (on its own behalf and on behalf of its Affiliates) hereby consents thereto and irrevocably waives any conflict of interest arising therefrom, and each of such parties shall cause any Affiliate thereof to consent to irrevocably waive any conflict of interest arising from such representation. The Parties agree to take the steps necessary to ensure that any privilege attaching as a result of Loeb representing Purchaser, Holdco or the Merger Subs in connection with the Transactions shall survive the Closings and shall remain in effect. As to any privileged attorney client communications between Loeb and Holdco, Loeb and Purchaser, or Loeb and any of Holdco’s Subsidiaries in connection with the Transactions prior to the Second Closing Date (collectively, the “Loeb Privileged Communications”), the Company and its
Subsidiaries, together with any of their respective Affiliates, Subsidiaries, successors or assigns, agree that if the Mergers and the other Transactions are consummated, all Loeb Privileged Communications related to such Transactions will remain the property of (and be controlled by) the Purchaser Group, and the attorney/client privilege and the expectation of client confidence shall not pass to the Company or any of its Subsidiaries or any of their respective Affiliates, Subsidiaries, successors or assigns. In the event that the Company or any of its Subsidiaries is legally required or requested by any Governmental Authority to access or obtain a copy of all or a portion of the Loeb Privileged Communications, the Company and its Subsidiaries shall be entitled to access or obtain a copy of and disclose the Loeb Privileged Communications to the extent necessary to comply with any such legal requirement or request.
ARTICLE X
DEFINITIONS
10.1 Certain Definitions. For purpose of this Agreement, the following capitalized terms have the following meanings:
“Acceptable Confidentiality Agreement” means a confidentiality agreement having provisions as to confidential treatment of information that are substantially the same as those contained in the confidentiality provisions of the Confidentiality Agreement.
“Accounting Principles” means in accordance with GAAP or IFRS (as applicable) as in effect at the date of the financial statement to which it refers or if there is no such financial statement, then as of the First Closing Date, using and applying the same accounting principles, practices, procedures, policies and methods (with consistent classifications, judgments, elections, inclusions, exclusions and valuation and estimation methodologies) used and applied by the Target Companies in the preparation of the latest audited Company Financials.
“Action” means any notice of noncompliance or violation, or any claim, demand, charge, action, suit, litigation, audit, settlement, complaint, stipulation, assessment or arbitration, or any request (including any request for information), inquiry, hearing, proceeding or investigation, by or before any Governmental Authority.
“Additional SEC Reports” has the meaning set forth in Section 6.4.
“Affiliate” means, with respect to any Person, any other Person directly or indirectly Controlling, Controlled by, or under common Control with such Person, through one or more intermediaries or otherwise.
“Agreement” has the meaning set forth in the preamble.
“Amended Company Articles” means the articles of association of the Company to be adopted in the context of the Second Merger Effective Time in form and substance reasonably acceptable to the Company, Holdco, and Purchaser.
“Amended Holdco Memorandum and Articles of Association” means the amended Memorandum and Articles of Association of Holdco to be adopted by Holdco immediately prior to the First Merger Effective Time, substantially in the form attached hereto as Exhibit E, with
such revisions thereto as the Company, Purchaser and Holdco may mutually agree to be necessary or advisable for compliance with applicable law or stock exchange listing standards or the settlement of the transactions contemplated by this Agreement.
“Amended Warrant Agreement” means an amended warrant agreement between Holdco, Purchaser and other parties thereto, in form and substance reasonably satisfactory to Holdco and the Purchaser.
“Ancillary Documents” means each agreement, instrument or document attached hereto as an Exhibit, including the Holdco Equity Plan, the Registration Rights Agreement, the CVR Agreement, the Company Support Agreement, the Sponsor Support Agreement, the Amended Warrant Agreement, that certain Mutual Nondisclosure and Non Circumvention Agreement, dated as of September 14, 2021, by and between Purchaser and Kalera, Inc., a Delaware corporation (the “Confidentiality Agreement”), and the other agreements, certificates and instruments to be executed or delivered by any of the Parties hereto in connection with or pursuant to this Agreement.
“Anti-Bribery Laws” means the anti-bribery provisions of the Foreign Corrupt Practices Act of 1977, as amended, and all other applicable anti-corruption and bribery Laws (including the U.K. Bribery Act 2010, and any rules or regulations promulgated thereunder or other Laws of other countries implementing the OECD Convention on Combating Bribery of Foreign Officials).
“Board Report” has the meaning set forth in Section 1.2(b)(i)(A).
“Business Combination” has the meaning ascribed to such term in the Memorandum of Association.
“Business Combination Proposal” has the meaning set forth in Section 6.6.
“Business Day” means any day other than a Saturday, Sunday or a legal holiday on which commercial banking institutions in New York, New York, Luxembourg, Ireland or the Cayman Islands are authorized or required by Law to remain closed for business.
“Cayman Companies Act” means the Companies Act (as revised) of the Cayman Islands.
“Cayman Merger Sub” has the meaning set forth in the preamble.
“Cayman Merger Sub Shareholder Approval Matters” has the meaning set forth in Section 6.22(a).
“Cayman Registrar” has the meaning set forth in Section 1.2(a).
“Certificates of Merger” means the First Merger Certificate of Merger and the Second Merger Certificate of Merger.
“Closing Dates” and “Closing Date” have the meanings set forth in Section 2.1.
“Closing Filing” has the meaning set forth in Section 6.12(b).
“Closing Press Release” has the meaning set forth in Section 6.12(b).
“Closings” and “Closing” have the meanings set forth in Section 2.2.
“Code” means the Internal Revenue Code of 1986, as amended, and any successor statute thereto, as amended. Reference to a specific section of the Code shall include such section and any valid treasury regulation promulgated thereunder.
“Company” has the meaning set forth in the preamble.
“Company Alternative Acquisition Agreement” has the meaning set forth in Section 6.5(d).
“Company Alternative Proposal” means any bona fide written proposal or offer made by any Person other than Purchaser, Holdco and their Affiliates for (a) a merger, reorganization, share exchange, consolidation, business combination, recapitalization, dissolution, liquidation or similar transaction involving the Company, (b) the direct or indirect acquisition by any Person (including by any asset acquisition, joint venture or similar transaction) of at least twenty percent (20%) of the assets of the Company and its Subsidiaries, on a consolidated basis, (c) the direct or indirect acquisition by any Person of at least twenty percent (20%) of the Company’s equity securities or of the voting power of the outstanding Company Shares, including any tender offer or exchange offer that, if consummated, would result in any Person beneficially owning twenty percent (20%) or more of the Company’s equity securities or shares with twenty percent (20%) or more of the voting power of the outstanding Company Shares, or (d) any combination of the foregoing, in each case of clauses (a) through (c) whether in a single transaction or a series of related transactions.
“Company Benefit Plan” means each “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) and each deferred compensation, compensation, incentive compensation, equity purchase or other equity-based compensation plan, employment or consulting, severance or termination pay, holiday, vacation or other bonus plan or practice, hospitalization or other medical, life or other insurance, supplemental unemployment benefits, profit sharing, pension, or retirement plan, program, agreement or arrangement maintained or contributed to or required to be contributed to by any Target Company for the benefit of any current or former employee of a Target Company, but excluding (a) any Multiemployer Plan or (b) any benefit plan that is contributed to by any Target Company for the benefit of employees outside of the U.S. pursuant to local Law or statute but sponsored or maintained by a Governmental Authority).
“Company Board” has the meaning set forth in Section 5.2.
“Company Capital Reduction” has the meaning set forth in the recitals.
“Company Change of Recommendation” has the meaning set forth in Section 6.5(d).
“Company Convertible Securities” means, collectively, any options, warrants or rights to subscribe for or purchase any capital shares of the Company or securities convertible into or exchangeable for, or that otherwise confer on the holder any right to acquire any capital shares of the Company.
“Company Customers” has the meaning set forth in Section 5.21.
“Company D&O Indemnified Persons” has the meaning set forth in Section 6.14(d).
“Company D&O Tail Insurance” has the meaning set forth in Section 6.14(e).
“Company Disclosure Schedules” has the meaning set forth in Article V.
“Company Equity Plan” means the Kalera AS 2018 Incentive Stock Option Plan, as amended from time to time.
“Company Financials” has the meaning set forth in Section 5.7(a).
“Company Leased Properties” has the meaning set forth in Section 5.15(b).
“Company Material Contract” has the meaning set forth in Section 5.12(a).
“Company Option” means an option to purchase Company Shares that was granted pursuant to the Company Equity Plan.
“Company Owned Properties” has the meaning set forth in Section 5.15(a).
“Company Permits” means the permits necessary to lawfully conduct in all material respects the Company’s business as presently conducted or as contemplated to be conducted and to own, lease and operate the Company’s assets and properties.
“Company Real Properties” has the meaning set forth in Section 5.15(b).
“Company Real Property Leases” has the meaning set forth in Section 5.15(b).
“Company Recommendation” has the meaning set forth in Section 5.2.
“Company Shareholder Approval Matters” has the meaning set forth in Section 6.21.
“Company Shareholders” means the holders of Company Shares.
“Company Share Issuance” has the meaning set forth in the recitals.
“Company Shares” means the ordinary shares of the Company, along with any equity securities paid as dividends or distributions after the Closings with respect to such shares or into which such shares are exchanged or converted after the Closings.
“Company Special Meeting” has the meaning set forth in Section 6.21.
“Company Stock Price” means the average of the dollar volume-weighted closing price of a share of the Company’s common stock on the Oslo EuroNext Exchange for the five consecutive trading days immediately prior to the Second Merger, as reported by Bloomberg.
“Company Superior Proposal” means a written Company Alternative Proposal (with all references to “twenty percent (20%)” in the definition of Company Alternative Proposal being treated as references to “fifty percent (50%)” for these purposes) that the Company Board determines in good faith, after consultation with the Company’s financial advisors and outside legal counsel, and taking into account all of the terms and conditions the Company Board considers to be appropriate (but including any conditions to and expected timing of consummation of such Company Alternative Proposal, and all legal, financial and regulatory aspects of such Company Alternative Proposal and this Agreement), and after taking into account any revisions to the terms and conditions to this Agreement made or proposed and committed to in writing by Purchaser in response to such Company Alternative Proposal, to be more favorable to holders of Company Shares than the transactions contemplated by this Agreement.
“Company Support Agreement” has the meaning set forth in the recitals.
“Company Termination Fee” means an amount equal to $11,241,709.
“Company Vendors” has the meaning set forth in Section 5.21.
“Confidentiality Agreement” has the meaning set forth in the definition of “Ancillary Documents”.
“Consent” means any consent, approval, notice of no objection, expiration of applicable waiting period, waiver, authorization or Permit of, or notice to or declaration or filing with any Governmental Authority or any other Person.
“Contracts” means all contracts, agreements, binding arrangements, bonds, notes, indentures, mortgages, debt instruments, purchase order, licenses, franchises, leases and other agreements of any kind, written or oral (including any amendments and other modifications thereto and excluding purchase orders and customary terms and conditions).
“Control” of a Person means the ownership of a majority of the voting securities of such Person or the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by Contract, or otherwise. “Controlled”, “Controlling” and “under common Control with” have correlative meanings.
“Copyrights” means any works of authorship, mask works and all copyrights therein, including all renewals and extensions, copyright registrations and applications for registration and renewal, and non-registered copyrights.
“COVID-19 Measures” means any quarantine, “shelter in place”, “stay at home”, workforce reduction, social distancing, shut down, closure, sequester or any other Law, Order, Action, directive, pronouncement, guidelines or recommendations by any Governmental Authority (including the Centers for Disease Control and Prevention and the World Health Organization) in connection with, related to or in response to COVID-19, including, but not limited to, the Coronavirus Aid, Relief, and Economic Security Act and the Families First Coronavirus Response Act, or any changes thereto.
“D&O Tail Insurance” has the meaning set forth in Section 6.14(c).
“Data Protection Laws” means all applicable Laws in any jurisdiction relating to privacy or the processing, receipt, collection, compilation, use, storage, sharing, data security, disclosure, transfer (including cross-border transfer) or protection of Personal Information, including (without limitation) the GDPR.
“Data Room” means the online data room as of the date of this Agreement that was established by the Company and its Representatives.
“Data Security Requirements” means all of the following to the extent related to the treatment of Personal Information (including the access collection, storage, transfer and use of Personal Information): the Target Companies’ own rules, policies, and procedures (including the Privacy Policies); Data Protection Laws; and covenants, duties and obligations of the Target Companies expressly stated in contracts the Target Companies have entered into or by which they are otherwise bound.
“Dispute” has the meaning set forth in Section 9.5.
“DRE Election” has the meaning set forth in the recitals.
“Effect” has the meaning set forth in the definition of “Material Adverse Effect”.
“Effective Time” has the meaning set forth in Section 1.2(b).
“Enforceability Exceptions” has the meaning set forth in Section 3.2.
“Environmental Law” means any applicable Law relating to (a) the protection of the environment and natural resources (including air, water vapor, surface water, groundwater, drinking water supply, surface land, subsurface land, plant and animal life or any other natural resource), or (b) the exposure to, or the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production, Release or disposal of Hazardous Materials.
“ERISA” means the U.S. Employee Retirement Income Security Act of 1974, as amended.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.
“Exchange Ratio” means 0.091.
“Existing Registration Rights Agreement” means the Registration Rights Agreement, dated as of July 7, 2021, by and among Purchaser and the Purchaser investors party thereto.
“Expenses” means all out-of-pocket expenses (including all fees and expenses of counsel, accountants, investment bankers, financial advisors, financing sources, experts and consultants to a Party hereto or any of its Affiliates) incurred by a Party or on its behalf in connection with or related to the authorization, preparation, negotiation, execution or performance of this Agreement or any Ancillary Document related hereto and all other matters related to the consummation of this
Agreement. With respect to Purchaser, Expenses shall include any and all deferred expenses (including fees or commissions payable to the underwriters and any legal fees) of the IPO upon consummation of a Business Combination.
“Expert Reports” has the meaning set forth in Section 1.2(b)(i)(B).
“Federal Securities Laws” has the meaning set forth in Section 6.7.
“First Closing” has the meaning set forth in Section 2.1.
“First Closing Date” has the meaning set forth in Section 2.1.
“First Merger” has the meaning set forth in the recitals.
“First Merger Certificate of Merger” means the certificate of merger issued by the Cayman Registar, as prima facie evidence of compliance with all requirements of the Cayman Companies Act in respect of the First Merger.
“First Merger Effective Time” has the meaning set forth in Section 1.2(a).
“First Merger Plan of Merger” has the meaning set forth in Section 1.1(a).
“First Merger Surviving Corporation” has the meaning set forth in Section 1.1(a).
“GAAP” means generally accepted accounting principles as in effect in the United States of America.
“GDPR” means the General Data Protection Regulation (EU) 2016/679, including any predecessor, successor or implementing legislation in respect of the foregoing, and any amendments or re-enactments of the foregoing.
“Governmental Authority” means any federal, state, local, foreign or other governmental, quasi-governmental or administrative body, instrumentality, department or agency or any court, tribunal, administrative hearing body, arbitration panel, commission, regulatory body or other similar regulatory or dispute-resolving panel or body.
“Hazardous Material” means any waste substance or material that is defined, listed or designated as a “hazardous substance”, “pollutant”, “contaminant”, “hazardous waste”, “hazardous material”, or “toxic waste” (or by any similar term) under any Environmental Law, including petroleum and its by-products, asbestos, per- and polyfluoroalkyl substances, and polychlorinated biphenyls.
“Holdco” has the meaning set forth in the preamble.
“Holdco Articles” means the current articles of association of Holdco, as amended and in effect under the Irish Companies Act.
“Holdco Disclosure Schedules” has the meaning set forth in Article IV.
“Holdco Equity Plan” has the meaning set forth in Section 6.19.
“Holdco Ordinary Shares” means all of the issued and outstanding euro ordinary shares of Holdco, par value €1.00 per share.
“Holdco Option” has the meaning set forth in Section 1.8(a).
“Holdco Reregistration” has the meaning set forth in Section 6.3(c).
“Holdco Securities” means the Holdco Ordinary Shares and the Holdco Warrants, collectively.
“Holdco Shareholder Approval Matters” has the meaning set forth in Section 6.22(a).
“Holdco Warrant” means each one whole warrant entitling the holder thereof to subscribe for one (1) Holdco Ordinary Share at a purchase price of $11.50 per share.
“ICC” means the International Chamber of Commerce or any successor organization conducting arbitrations.
“ICC Rules” has the meaning set forth in Section 9.5.
“IFRS” means International Financial Reporting Standards, as adopted by the European Union pursuant to EU Regulation No. 1606/2002 of the European Parliament and the Council concerning the use of International Accounting Standards Board.
“Indebtedness” of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money (including the outstanding principal and accrued but unpaid interest), (b) all obligations for the deferred purchase price of property or services (other than trade payables incurred in the ordinary course of business), (c) any other indebtedness of such Person that is evidenced by a note, bond, debenture, credit agreement or similar instrument, (d) all obligations of such Person under leases that should be classified as capital leases in accordance with GAAP or IFRS (as applicable to such Person), (e) all obligations of such Person for the reimbursement of any obligor on any line or letter of credit, banker’s acceptance, guarantee or similar credit transaction, in each case, that has been drawn or claimed against, (f) all obligations of such Person in respect of banker’s acceptances issued or created, (g) net obligations under interest rate and currency swaps, caps, collars and similar agreements or hedging devices under which payments are obligated to be made by such Person, whether periodically or upon the happening of a contingency, (h) any premiums, prepayment fees or other penalties, fees, costs or expenses associated with payment of any Indebtedness of such Person, (i) all obligations secured by a Lien on any property of such Person, and (j) all obligations described in clauses (a) through (i) of any other Person which are directly or indirectly guaranteed by such Person or which such Person has agreed (contingently or otherwise) to purchase or otherwise acquire or in respect of which it has otherwise assured a creditor against loss.
“Intellectual Property” means all of the following as they exist in any jurisdiction throughout the world: Patents, Trademarks, Copyrights, Trade Secrets, Internet Assets and Software.
“Interim Balance Sheet Date” has the meaning set forth in Section 5.7(a).
“Interim Period” has the meaning set forth in Section 6.1(a).
“Internet Assets” means any and all domain name registrations, websites, web addresses and applications for registration therefor.
“In-the-Money Company Option” means a Company Stock Option that is not an Out-of-the-Money Company Option.
“Investment Company Act” means the U.S. Investment Company Act of 1940, as amended.
“IPO” means the initial public offering of Purchaser Ordinary Shares pursuant to the IPO Prospectus.
“IPO Prospectus” means the final prospectus of Purchaser, dated as of July 7, 2021, and filed with the SEC (Registration No. 333-255426).
“Irish Companies Act” means the Companies Act 2014 (as amended) of Ireland.
“IT Systems” means any information technology and information technology equipment, including any system, network, hardware, computer, software (including in source code and object code and including any system software, operational software, application software, interface or firmware), router, hub, server and database used by each Target Company.
“Knowledge” means, with respect to (i) the Company, the actual knowledge of Curtis McWilliams, Fernando Cornejo, Cristian Toma, Austin Martin, and Jade Stinson after due inquiry, or (ii) any other Party, if an entity, the actual knowledge of its directors and executive officers.
“Law” means any federal, state, local, municipal, foreign or other law, statute, legislation, principle of common law, ordinance, code, edict, decree, proclamation, treaty, convention, rule, regulation, directive, requirement, writ, injunction, settlement, Order or Consent that is or has been issued, enacted, adopted, passed, approved, promulgated, made, implemented or otherwise put into effect by or under the authority of any Governmental Authority.
“Letter of Intent” means that certain letter of intent, dated as of October 24, 2021, by and between Purchaser, the Company and Kalera S.A.
“Liabilities” means any and all liabilities, Indebtedness, Actions or obligations of any nature (whether absolute, accrued, contingent or otherwise, whether known or unknown, whether direct or indirect, whether matured or unmatured, whether due or to become due and whether or not required to be recorded or reflected on a balance sheet under GAAP or IFRS (as applicable) or other applicable accounting standards), including Tax liabilities due or to become due.
“Lien” means any claim, mortgage, pledge, security interest, attachment, right of first refusal, option, proxy, voting trust, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof), restriction
(whether on voting, sale, transfer, disposition or otherwise), any subordination arrangement in favor of another Person, or any filing or agreement to file a financing statement as debtor under the Uniform Commercial Code or any similar Law.
“Loeb” has the meaning set forth in Section 9.15(a).
“Loeb Privileged Communications” has the meaning set forth in Section 9.15(a).
“Lux Holdco” has the meaning set forth in the recitals.
“Lux Merger Sub” has the meaning set forth in the preamble.
“Lux Merger Sub Shareholder Approval Matters” has the meaning set forth in Section 6.22(a).
“Luxembourg Companies Act” means the Law of August 10, 1915 on commercial companies, as amended.
“Material Adverse Effect” means any effect, occurrence, development, fact, condition or change (“Effect”) that has had, or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on the business, results of operations or financial condition of the Company and the Target Companies, taken as a whole; provided, however, that any facts, events, occurrences, changes or effects directly or indirectly attributable to, resulting from, relating to or arising out of the following (by themselves or when aggregated with any other such facts, events, occurrences, changes or effects) shall not be deemed to be, constitute, or be taken into account when determining whether there has occurred or could reasonably be expected to occur a Material Adverse Effect: (i) changes in interest rates, or economic, business, financial, commodity, currency, market or political conditions; (ii) any Effect generally affecting the industries or markets in which the Target Companies operate; (iii) any proposal, enactment or change in interpretation of, or other change in, applicable Law, GAAP or IFRS (as applicable), or other applicable Accounting Principles or mandatory changes in the regulatory accounting requirements applicable to any industry or market in which the Target Companies operate; (iv) any outbreak or any development, change, worsening or escalation of hostilities (whether or not armed), acts of war (whether or not declared), sabotage or terrorism; (v) any Act of God, pandemic, hurricane, tornado, flood, volcano, earthquake or other natural or manmade disaster or force majeure event, including any effects of the COVID-19 epidemic, any COVID-19 Measures, or the Target Companies’ compliance therewith; (vi) any cyberattack on or involving any of the Target Companies; (vii) the announcement or the execution of this Agreement, the pendency or consummation of the Mergers or the performance of this Agreement, including the impact thereof on relationships, contractual or otherwise, with customers, suppliers, landlords, licensors, distributors, partners, providers and employees; (viii) any failure in and of itself to meet any projections, forecasts, guidance, estimates, milestones, budgets or financial or operating predictions of revenue, earnings, cash flow or cash position, provided that this clause (viii) shall not prevent a determination that any Effect not otherwise excluded from this definition of Material Adverse Effect underlying such failure has resulted or could reasonably be expected to result in a Material Adverse Effect and shall not apply in the event of fraud by the Company; (ix) any matters set forth on the Company Disclosure Schedules; and (x) any action required by the terms of this
Agreement or the transactions contemplated hereby or otherwise consented to in writing by Purchaser; provided, further, however, that such changes referred to in clauses (i) through (v) may be taken into account to the extent (but only to the extent) that such change has a disproportionate and adverse impact on the Target Companies, taken as a whole, as compared to other similarly situated competitors or comparable entities operating in the industries, markets and geographic locations in which the Target Companies operate.
“Material Company IP” has the meaning set forth in Section 5.13(a).
“Memorandum of Association” means the Amended and Restated Memorandum of Association of Purchaser as in effect on the date hereof.
“Mergers” has the meaning set forth in the recitals.
“Merger Subs” has the meaning set forth in the preamble.
“Milbank” has the meaning set forth in Section 9.15(a).
“Milbank Privileged Communications” has the meaning set forth in Section 9.15(a).
“Multiemployer Plan” shall have the meaning set forth in Section 3(37) of ERISA.
“Nasdaq” means the Nasdaq Stock Market.
“Norwegian Business Register” means the Norwegian Register of Business Enterprises (Norwegian: “Foretaksregisteret”).
“Norwegian Companies Act” means the Norwegian Private Limited Companies Act of 13 June 1997 no. 44.
“Norwegian Merger” means the merger of the Company and Lux Holdco pursuant to a cross-border merger by absorption between the Company and Lux Holdco, with Lux Holdco as the surviving entity, and the listing of the Company’s securities on Euronext Growth Oslo, and actions taken in connection therewith.
“OFAC” has the meaning set forth in Section 3.14(c).
“Order” means any order, decree, ruling, judgment, injunction, writ, determination, binding decision, verdict, judicial award or other action that is or has been made, entered, rendered, or otherwise put into effect by or under the authority of any Governmental Authority.
“Organizational Documents” means, with respect to any Person, its certificate of incorporation and bylaws, memorandum and articles of association or similar organizational documents, in each case, as amended.
“Out-of-the-Money Company Option” means each Company Stock Option for which the per share exercise price is equal to or greater than the Company Stock Price.
“Outside Date” has the meaning set forth in Section 8.1(b).
“Party” and “Parties” have the meanings set forth in the preamble.
“Patents” means any patents, patent applications and the inventions, designs and improvements described and claimed therein, patentable inventions, and other patent rights (including any divisionals, provisionals, continuations, continuations-in-part, substitutions, or reissues thereof, whether or not patents are issued on any such applications and whether or not any such applications are amended, modified, withdrawn, or refiled).
“PCAOB” means the U.S. Public Company Accounting Oversight Board (or any successor thereto).
“Permits” means all federal, state, local or foreign or other third-party permits, grants, easements, consents, approvals, authorizations, exemptions, licenses, franchises, concessions, ratifications, permissions, clearances, confirmations, endorsements, waivers, certifications, designations, ratings, registrations, qualifications or orders of any Governmental Authority or any other Person.
“Permitted Liens” means (a) Liens which result from all statutory or other liens for Taxes or assessments that are not yet due and payable or delinquent or the validity of which is being contested in good faith by appropriate proceedings along with the posting of any security or bond required under applicable Law in connection with such contest, (b) Liens imposed by applicable Law, (c) Liens arising in connection with any cashiers’, landlords’, workers’, mechanics’, carriers’, repairers’ or other similar liens imposed by law and arising out of obligations incurred in the ordinary course of business consistent with past practice, (d) Liens, encumbrances and restrictions on real property (including easements, covenants, rights of way and similar restrictions of record) or zoning, building, entitlement and other land use and environmental regulations that (i) are matters of record, (ii) would be disclosed by a current, accurate survey or physical inspection of such real property, or (iii) do not materially interfere with the present uses of such real property, (e) with respect to any Company Leased Property (i) the interests and rights of the respective lessors with respect thereto, including any statutory landlord liens and any Lien thereon, (ii) any Lien permitted under a Company Real Property Lease, and (iii) any Liens encumbering the underlying fee title of the real property of which the Company Leased Property is a part, (f) Liens that that do not, individually or in the aggregate, materially and adversely affect, or materially disrupt, the ordinary course operation of the businesses of the Company and the Target Companies, taken as a whole, (g) non-exclusive licenses of Intellectual Property entered into in the ordinary course of business, (h) Liens securing any Indebtedness of the Company and the Target Companies, (i) any right, interest, Lien or title of a licensor, sublicensor, licensee, sublicensee, lessor or sublessor under any license, lease or other similar agreement or other property being leased or licensed including licenses of Intellectual Property, (j) Liens arising under original purchase price conditional sales contracts and equipment leases with third parties entered into in the ordinary course of business, and (k) Liens disclosed in the Company Disclosure Schedules.
“Person” means a natural person, corporation, partnership (including a general partnership, limited partnership or limited liability partnership), company, limited liability company, association, trust or other entity or organization, including a government, domestic or foreign, or political subdivision thereof, or an agency or instrumentality thereof.
“Personal Information” means, in addition to the definition for any similar term (e.g., “personal data” or “personally identifiable information”) provided by applicable Laws, any information that identifies, could be used to identify (directly or indirectly), or is otherwise associated with an individual person.
“Personal Property” means any machinery, equipment, tools, vehicles, furniture, leasehold improvements, office equipment, plant, parts and other tangible personal property.
“Post-Closing Holdco Board” has the meaning set forth in Section 6.13.
“Privacy Policies” means commercially reasonable privacy policies regarding the handling and security of Personal Information in connection with the operation of the business of the Target Companies.
“Proxy Statement” has the meaning set forth in Section 6.11(a).
“Public Certifications” has the meaning set forth in Section 3.6(a).
“Purchaser” has the meaning set forth in the preamble.
“Purchaser Alternative Proposal” means any bona fide written proposal or offer made by any Person other than the Company and its Affiliates for (a) a merger, reorganization, share exchange, consolidation, business combination, recapitalization, dissolution, liquidation or similar transaction involving Purchaser, (b) the direct or indirect acquisition by any such Person or its Affiliates (including by any asset acquisition, joint venture or similar transaction) of at least twenty percent (20%) of the assets of Purchaser and its Subsidiaries, on a consolidated basis, (c) the direct or indirect acquisition by any Person or its Affiliates of at least twenty percent (20%) of Purchaser’s equity securities or of the voting power of the outstanding equity securities of Purchaser, including any tender offer or exchange offer that, if consummated, would result in any such Person or its Affiliates beneficially owning twenty percent (20%) or more of Purchaser’s equity securities or shares with twenty percent (20%) or more of the voting power of the outstanding equity securities of Purchaser, or (d) any combination of the foregoing, in each case of clauses (a) through (c) whether in a single transaction or a series of related transactions.
“Purchaser Board” has the meaning set forth in Section 3.2.
“Purchaser Change of Recommendation” has the meaning set forth in Section 6.11(e).
“Purchaser Class A Ordinary Shares” means the Class A ordinary shares of a par value of $0.0001 each of Purchaser.
“Purchaser Class B Ordinary Shares” means the Class B ordinary shares of a par value of $0.0001 each of Purchaser.
“Purchaser D&O Indemnified Persons” has the meaning set forth in Section 6.14(b).
“Purchaser Disclosure Schedules” has the meaning set forth in Article III.
“Purchaser Financials” has the meaning set forth in Section 3.6(b).
“Purchaser Liquidation” has the meaning set forth in the recitals.
“Purchaser Ordinary Shares” means the Purchaser Class A Ordinary Shares and Purchaser Class B Ordinary Shares.
“Purchaser Preferred Shares” has the meaning set forth in Section 3.5(a).
“Purchaser Private Warrants” means the warrants issued in a private placement to DJCAAC LLC and Maxim Group LLC by Purchaser at the time of the consummation of the IPO, entitling the holder thereof to purchase one (1) Purchaser Class A Ordinary Share per warrant at a purchase price of $11.50 per share. For the avoidance of doubt, Purchaser Public Warrants shall include any additional whole warrants issued after the date of this Agreement.
“Purchaser Public Warrant” means each whole warrant (other than the Purchaser Private Warrants), entitling the holder thereof to purchase one (1) Purchaser Class A Ordinary Share at a purchase price of $11.50 per share.
“Purchaser Securities” means the Purchaser Ordinary Shares and the Purchaser Warrants, collectively.
“Purchaser Shareholder” means, from time to time, each holder of Purchaser Ordinary Shares.
“Purchaser Shareholder Approval Matters” means together: (i) the approval of the Transactions by a simple majority of the votes of those Purchaser Shareholders entitled to vote and voting (in person or by proxy) at a duly convened and quorate meeting of the Purchaser Shareholders, (ii) the approval of the First Merger by a majority of at least two-thirds of the votes of those Purchaser Shareholders entitled to vote and voting (in person or by proxy) at a duly convened and quorate meeting of the Purchaser Shareholders and (iii) the approval of such other matters as the Company, Holdco and Purchaser shall hereafter mutually determine to be necessary or appropriate in order to effect the Transactions.
“Purchaser Share Issuance” has the meaning set forth in the recitals.
“Purchaser Special Meeting” has the meaning set forth in Section 6.11(a).
“Purchaser Warrants” means Purchaser Private Warrants and Purchaser Public Warrants, collectively.
“Redemption” has the meaning set forth in Section 6.11(a).
“Redemption Price” means an amount equal to the price at which each Purchaser Ordinary Share is redeemed pursuant to the Redemption (as equitably adjusted for share splits, share dividends, combinations, recapitalizations and the like).
“Registration Statement” has the meaning set forth in Section 6.11(a).
“Related Person” has the meaning set forth in Section 5.19.
“Release” means any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, or leaching into the indoor or outdoor environment. “Released” shall have a correlative meaning hereto.
“Representatives” means, as to any Person, such Person’s Affiliates and the respective managers, directors, officers, employees, independent contractors, consultants, advisors (including financial advisors, counsel and accountants), agents and other legal representatives of such Person or its Affiliates.
“Required Cayman Merger Sub Shareholder Approval” means the Cayman Merger Sub Shareholder Approval Matters shall have been approved by Holdco, as the sole shareholder of Cayman Merger Sub, in accordance with Cayman Merger Sub’s Organizational Documents and applicable Law.
“Required Lux Merger Sub Shareholder Approval” means the Lux Merger Sub Shareholder Approval Matters shall have been approved by Holdco, as the sole shareholder of Lux Merger Sub, in accordance with Cayman Merger Sub’s Organizational Documents and applicable Law.
“Required Company Shareholder Approval” has the meaning set forth in Section 7.1(a).
“Required Holdco Shareholder Approval” has the meaning set forth in Section 7.1(a).
“Required Purchaser Shareholder Approval” has the meaning set forth in Section 7.1(a).
“SEC” means the U.S. Securities and Exchange Commission.
“SEC Reports” has the meaning set forth in Section 3.6(a).
“Second Merger” has the meaning set forth in the recitals.
“Second Merger Certificate of Merger” means the confirmation from a Luxembourg notary as prima facie evidence of compliance with all corporate requirements of the Luxembourg Companies Act in respect of the Second Merger.
“Second Merger Effective Time” has the meaning set forth in Section 1.2(b).
“Second Merger Plan of Merger” has the meaning set forth in Section 1.1(b).
“Second Merger Surviving Corporation” has the meaning set forth in Section 1.1(b).
“Section 16” has the meaning set forth in Section 6.23.
“Second Closing” has the meaning set forth in Section 2.2.
“Second Closing Date” has the meaning set forth in Section 2.2.
“Securities Act” means the U.S. Securities Act of 1933, as amended.
“Seller Group” has the meaning set forth in Section 9.14.
“Signing Filing” has the meaning set forth in Section 6.12(b).
“Signing Press Release” has the meaning set forth in Section 6.12(b).
“Software” means any computer software programs, including all source code, object code, and documentation related thereto and all software modules, tools and databases.
“SOX” means the U.S. Sarbanes-Oxley Act of 2002, as amended.
“Sponsor Support Agreement” has the meaning set forth in the recitals.
“Subsidiary” means, with respect to any Person, any corporation, partnership, association or other business entity of which (a) if a corporation, a majority of the total voting power of capital shares entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (b) if a partnership, association or other business entity, a majority of the partnership or other similar ownership interests thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons will be deemed to have a majority ownership interest in a partnership, association or other business entity if such Person or Persons will be allocated a majority of partnership, association or other business entity gains or losses or will be or control the managing director, managing member, general partner or other managing Person of such partnership, association or other business entity. A Subsidiary of a Person will also include any variable interest entity which is consolidated with such Person under applicable accounting rules.
“Takeover Law” means any “fair price”, “supermajority”, “moratorium”, “business combination statute or regulation”, “control share acquisition” or other form of antitakeover Law.
“Target Company” means each of the Company and its direct and indirect Subsidiaries.
“Tax Return” means any return, declaration, report, claim for refund, information return or other documents (including any related or supporting schedules, statements or information) filed or required to be filed in connection with the determination, assessment or collection of any Taxes or the administration of any Laws or administrative requirements relating to any Taxes.
“Taxes” means (a) all direct or indirect federal, state, local, foreign and other net income, gross income, gross receipts, sales, use, value-added, ad valorem, transfer, franchise, profits, license, lease, service, service use, withholding, payroll, employment, social security and related contributions due in relation to the payment of compensation to employees, excise, severance, stamp, occupation, premium, property, windfall profits, alternative minimum, estimated, customs, duties or other taxes, assessments or charges in the nature of a tax, together with any interest and any penalties, additions to tax or additional amounts with respect thereto, (b) any Liability for payment of amounts described in clause (a) whether as a result of being a member of an affiliated,
consolidated, combined or unitary group for any period or otherwise through operation of law and (c) any Liability for the payment of amounts described in clauses (a) or (b) as a result of any tax sharing, tax group, tax indemnity or tax allocation agreement with, or any other express or implied agreement to indemnify, any other Person (other than any commercial agreements the primary purpose of which does not relate to taxes).
“Trade Secrets” means any confidential business information, concepts, ideas, designs, research or development information, processes, procedures, techniques, technical information, specifications, operating and maintenance manuals, engineering drawings, methods, know-how, data, mask works, discoveries, inventions, modifications, extensions and improvements, in each case, to the extent that such information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information.
“Trademarks” means any trademarks, service marks, trade dress, trade names, brand names, designs, logos, or corporate names (including, in each case, the goodwill associated therewith), whether registered or unregistered, and all registrations and applications for registration and renewal thereof.
“Transactions” has the meaning set forth in Section 1.3.
“Transfer Agent” has the meaning set forth in Section 1.7(a).
“Transfer Taxes” has the meaning set forth in Section 6.24.
“Trust Account” means the trust account established by Purchaser with the proceeds from the IPO pursuant to the Trust Agreement in accordance with the IPO Prospectus.
“Trust Agreement” means that certain Investment Management Trust Agreement, dated as of July 7, 2021, as it may be amended, by and between Purchaser and the Trustee.
“Trustee” means Continental Stock Transfer & Trust Company, a New York limited purpose trust company, in its capacity as trustee under the Trust Agreement.
“WARN Act” has the meaning set forth in Section 5.16(d).
“XOSL” means the Oslo Stock Exchange.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, each Party hereto has caused this Agreement to be signed and delivered by its respective duly authorized officer as of the date first written above.
| | | | | | | | |
| PURCHASER: |
| | |
| AGRICO ACQUISITION CORP. |
| | |
| | |
| By: | |
| Name: | Brent de Jong |
| Title: | Chief Executive Officer |
[Signature Page to Business Combination Agreement]
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| HOLDCO: |
| | |
| FIGGREEN LIMITED |
| | |
| | |
| By: | |
| Name: | [●] |
| Title: | [●] |
| | |
| | |
| LUX MERGER SUB: |
| | |
| Represented by FIGGREEN LIMITED, acting as sole founding shareholder and in the name and on behalf of Lux Merger Sub, in process of incorporation |
| | |
| By: | |
| Name: | |
| Title: | |
[Signature Page to Business Combination Agreement]
| | | | | | | | |
| CAYMAN MERGER SUB: |
| | |
| KALERA CAYMAN MERGER SUB |
| | |
| | |
| By: | |
| Name: | Brent de Jong |
| Title: | Director |
[Signature Page to Business Combination Agreement]
| | | | | | | | |
| THE COMPANY: |
| | |
| KALERA AS |
| | |
| | |
| By: | |
| Name: | [●] |
| Title: | [●] |
[Signature Page to Business Combination Agreement]
Form of Contingent Value Rights Agreement
between
Kalera plc
and
[●]
as Rights Agent
Dated as of [●], 2022
Table of Contents
Page
| | | | | |
ARTICLE I DEFINITIONS; INTERPRETATION | 1 |
Section 1.01 Definitions | 1 |
Section 1.02 Interpretation | 3 |
| |
ARTICLE II CONTINGENT VALUE RIGHTS | 3 |
Section 2.01 Holders of CVRs; Appointment of Rights Agent | 3 |
Section 2.02 Nontransferable | 4 |
Section 2.03 No Certificate; Registration; Registration of Transfer; Change of Address | 4 |
Section 2.04 Payment Procedures | 4 |
Section 2.05 No Voting, Dividends or Interest; No Equity or Ownership Interest | 6 |
Section 2.06 Ability to Abandon CVRs | 6 |
| |
ARTICLE III THE RIGHTS AGENT | 7 |
Section 3.01 Certain Duties and Responsibilities of the Rights Agent | 7 |
Section 3.02 Certain Rights of the Rights Agent | 7 |
Section 3.03 Resignation and Removal; Appointment of Successor | 8 |
Section 3.04 Acceptance of Appointment by Successor | 8 |
| |
ARTICLE IV COVENANTS | 8 |
Section 4.01 List of Holders | 9 |
| |
ARTICLE V AMENDMENTS | 9 |
Section 5.01 Amendments Without Consent of Holders or Rights Agent | 9 |
Section 5.02 Amendments With Consent of Holders | 9 |
Section 5.03 Amendments Affecting Rights Agent | 10 |
Section 5.04 Effect of Amendments | 10 |
| |
ARTICLE VI MISCELLANEOUS | 10 |
Section 6.01 Notices to Rights Agent and Kalera | 10 |
Section 6.02 Notice to Holders | 11 |
Section 6.03 Entire Agreement | 11 |
Section 6.04 Successors and Assigns | 12 |
Section 6.05 Benefits of Agreement | 12 |
Section 6.06 Governing Law | 12 |
Section 6.07 Further Assurances | 12 |
Section 6.08 Severability | 12 |
Section 6.09 Headings | 12 |
Section 6.10 Counterparts | 12 |
Section 6.11 Termination | 13 |
THIS CONTINGENT VALUE RIGHTS AGREEMENT, dated as of [l], 2022 (this “Agreement”), is entered into by and between Kalera plc, an Irish public company limited by shares (“Kalera”), and [l], a [l] (the “Rights Agent”).
W I T N E S E T H :
WHEREAS, Agrico Acquisition Corp., Kalera (f/k/a Figgreen Limited), Kalera Luxembourg Merger Sub SARL, Kalera Cayman Merger Sub and Kalera SA (f/k/a Kalera AS) (the “Company”), have entered into a Business Combination Agreement (as amended or modified from time to time, the “Business Combination Agreement”), dated as of [l], pursuant to which, among other transactions, following completion of the Mergers, the Company will become a wholly owned subsidiary of Kalera, on the terms and conditions set forth therein;
WHEREAS, pursuant to the Business Combination Agreement, and in accordance with the terms and conditions thereof, Kalera has agreed to provide Holders (as defined below), one contractual contingent value right per share of Company Common Stock (the “CVR”) that will entitle such Holders to receive up to two contingent stock payments upon the achievement of certain milestones as hereinafter described in accordance with the terms hereof and of the Business Combination Agreement;
WHEREAS, CVRs provided to Holders in respect of In-the-Money Company Options are being provided in consideration for services performed as employees of the Company;
WHEREAS, both Parties acknowledge that Kalera Inc. will pay, on the behalf of the relevant Holder(s), the par value for any Kalera Ordinary Share(s) issued pursuant to the terms of this Agreement;
NOW, THEREFORE, in consideration of the premises and the consummation of the transactions referred to above, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, it is mutually covenanted and agreed, for the proportionate benefit of all Holders (as defined below), as follows:
ARTICLE I
DEFINITIONS; INTERPRETATION
Section 1.01Definitions. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed thereto in the Business Combination Agreement. The following terms shall have the following meanings:
“Acting Holder(s)” means any Holder or Holders of at least thirty percent (30%) of the outstanding CVRs as set forth on the CVR Register.
“CVR” has the meaning set forth in the Recitals.
“First Milestone Event” means the Kalera Ordinary Shares trading on Nasdaq with a VWAP greater than or equal to $12.50 for any twenty (20) trading days within any consecutive thirty (30)-day trading period during the Milestone Period.
“First Milestone Payment” means the Milestone Payment payable as a result of the occurrence of the First Milestone Event.
“Holder” means, at the relevant time, a Person in whose name a CVR is registered in the CVR Register.
“In-the-Money Company Option” shall be as defined in the Business Combination Agreement.
“Law” shall be as defined in the Business Combination Agreement.
“Milestone Event” means each of the First Milestone Event and the Second Milestone Event.
“Milestone Payment” means, with respect to each Milestone Event, [•]1 (as may be adjusted for any stock splits, stock dividends, combinations, subdivisions, recapitalizations and the like).
“Milestone Payment Date” means the date on which a Milestone Payment is paid to the Rights Agent.
“Milestone Period” means the period beginning on the Second Closing Date and ending at 11:59 p.m. New York City time, on the second anniversary of the Second Closing Date.
“Person” shall be as defined in the Business Combination Agreement.
“Rights Agent” means the Rights Agent named in the first paragraph of this Agreement, until a successor Rights Agent shall have become such pursuant to the applicable provisions of this Agreement, and thereafter “Rights Agent” shall mean such successor Rights Agent.
“Second Milestone Event” means the Kalera Ordinary Shares trading on Nasdaq with a VWAP greater than or equal to $15.00 for any twenty (20) trading days within any consecutive thirty (30)-day trading period during the Milestone Period.
“Second Milestone Payment” means the Milestone Payment payable as a result of the occurrence of the Second Milestone Event.
“United States” means the United States of America, including its territories and possessions.
“Unvested In-the-Money Company Option” shall be as defined in the Business Combination Agreement.
“Vested In-the-Money Company Option” shall be as defined in the Business Combination Agreement.
1 Note to Draft: To equal five percent (5%) of the amount of Kalera Ordinary Shares outstanding as of immediately following the Company Capital Reduction on a fully-diluted basis (including all Kalera Ordinary Shares issuable upon exercise of the Holdco Warrants and Holdco Options).
“VWAP” means, for any security as of any date(s), the dollar volume-weighted average price for such security on the principal securities exchange or securities market on which such security is then traded during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg through its “HP” function (set to weighted average) or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported by OTC Markets Group Inc.
Section 1.02Interpretation. When a reference is made in this Agreement to an Article or Section, such reference shall be to an Article or Section of this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”. The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms. The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement. The words “hereby,” “herein,” “hereof,” “hereunder” and words of similar import refer to this Agreement as a whole (including any Exhibits hereto and Schedules delivered herewith) and not merely to the specific section, paragraph or clause in which such word appears. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. Except as otherwise expressly provided herein, all references to “Dollars” or “$” shall be deemed references to the lawful money of the United States of America. Any reference in this Agreement to a date or time shall be deemed to be such date or time in the City of New York, New York, U.S.A., unless otherwise specified. Any reference to a number of days shall refer to calendar days unless Business Days are specified. References to any statute, rule or regulation are to the statute, rule or regulation as amended, modified, supplemented or replaced from time to time (and, in the case of statutes, include any rules and regulations promulgated under said statutes) and to any section of any statute, rule or regulation including any successor to said section. All terms defined in this Agreement have the defined meanings when used in any certificate or other document made or delivered pursuant hereto, unless otherwise defined therein. When reference is made herein to a Person, such reference shall be deemed to include all direct and indirect Subsidiaries of such Person unless otherwise indicated or the context otherwise requires. The terms “or”, “any” and “either” are not exclusive. The word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if”. The word “will” shall be construed to have the same meaning and effect as the word “shall”.
ARTICLE II
CONTINGENT VALUE RIGHTS
Section 2.01Holders of CVRs; Appointment of Rights Agent.
(a)Pursuant to the terms of the Business Combination Agreement, at the Second Closing, each holder of Company Shares outstanding immediately prior to the Second Merger Effective Time shall be entitled to one fully vested CVR for each such share.
(b)Pursuant to the terms of the Business Combination Agreement, at the Second Closing, each holder of a Vested In-the-Money Company Option that is outstanding and unexercised immediately prior to the Second Merger Effective Time shall be entitled to one fully vested CVR for each Company Share underlying such option.
(c)Pursuant to the terms of the Business Combination Agreement, at the Second Closing, each holder of an Unvested In-the-Money Company Option that is outstanding immediately prior to the Second Merger Effective Time shall be entitled to one unvested CVR for each Company Share underlying such option, provided that such unvested CVR will be subject to vesting upon the same time-vesting schedule that applied to the corresponding Unvested In-the-Money Company Option, provided, further, that if the holder of such unvested CVR is employed or in the service of Kalera or one of its Subsidiaries on the date a payment is due under this Agreement, then such unvested CVR will be deemed vested on such date with respect to such payment. In the event that the employment or other service with Kalera or one of its Subsidiaries of a holder of an unvested CVR is terminated prior to the vesting of the unvested CVR for any reason that would trigger the forfeiture of the corresponding Unvested In-the-Money Company Option, such unvested CVR will be forfeited without payment.
(d)Kalera hereby appoints the Rights Agent to act as rights agent for Kalera in accordance with the express terms and conditions set forth in this Agreement, and the Rights Agent hereby accepts such appointment.
Section 2.03Nontransferable. CVRs may not be sold, assigned, transferred, pledged, encumbered or disposed of in any other manner, in whole or in part. Any attempted sale, assignment, transfer, pledge, encumbrance or disposition of CVRs, in whole or in part, in violation of this Section 2.02 shall be void ab initio and of no effect. It is agreed and confirmed that the CVRs, being contingent in nature and non-transferable, have no value on the open market on their date of issue.
Section 2.03No Certificate; Registration; Registration of Transfer; Change of Address.
(a)CVRs shall not be evidenced by a certificate or other instrument.
(b)The Rights Agent shall keep a register (the “CVR Register”) for the purposes of (i) identifying the Holders of vested CVRs, (ii) identifying the Holders of unvested CVRs, and (iii) registering CVRs.
(c)A Holder may make a written request to the Rights Agent to change such Holder’s address of record in the CVR Register. Such written request must be duly executed by such Holder. Upon receipt of such written request, the Rights Agent shall promptly record the change of address in the CVR Register.
Section 2.04Payment Procedures.
(a)Payments to Rights Agent. Within ten Business Days following Kalera’s determination that one or more Milestone Events has occurred, Kalera shall deliver to the Rights Agent, (i) a written notice (a "Milestone Notice") indicating the applicable Milestone Event(s) achieved and (ii) the Milestone Payment(s) payable in respect of such Milestone Event(s). No later than ten Business Days after receiving a Milestone Notice and Milestone Payment(s), the Rights Agent will then distribute the Milestone Payment(s) to the Holders of vested CVRs, pro rata, based on the number of vested CVRs held by each Holder as of such date, by distributing the applicable amount to each Holder in accordance with Section 2.04(b), in accordance with instructions solicited by the Rights Agent from, and provided by, the respective Holders. Except as set forth in Section 4.03 of this Agreement, following delivery of any Milestone Payment to the Rights Agent, Kalera will have no further liability or obligation to any Person with respect thereto.
(b)Payments to Holders. With respect to any Milestone Payment that is payable pursuant to this Agreement, the Rights Agent shall, within ten Business Days of receipt of a Milestone Notice deliver the Kalera Ordinary Shares comprising such Milestone Payment to each of the Holders, pro rata based on the number of vested CVRs held by each Holder as of the date of the applicable Milestone Notice. The Kalera Ordinary Shares to be issued to Holders pursuant to the foregoing shall be evidenced by properly authorized share certificates registered with Kalera's stock transfer agent, or at Kalera's discretion, by book entry registration with Kalera’s stock transfer agent.
(c)Withholdings. Kalera and the Rights Agent (and any of their respective representatives) shall be entitled to deduct and withhold, or cause to be deducted or withheld, from any amounts otherwise payable pursuant to this Agreement, such amounts as it is required to deduct and withhold with respect to the making of such payment by applicable law (including under the Internal Revenue Code of 1986, as amended (the “Code”), Treasury Regulations promulgated thereunder, or any provision of United States state, local or foreign Tax law). To the extent that such amounts are so withheld and paid over to or deposited with the relevant governmental entity, such amounts shall be treated for all purposes of this Agreement as having been paid to the Holder in respect of which such deduction, withholding and payment was made.
(d)Treatment of Undistributed Shares. Any shares that remain undistributed to the Holders of CVRs twelve (12) months after such payment is due in accordance with the terms of this Agreement shall be delivered to the Rights Agent within two (2) Business Days following expiration of such twelve (12) month period, and shall be held in trust by the Rights Agent for the benefit of the Holders. Any Holders of CVRs who have not theretofore received payment with respect to such CVRs shall thereafter look only to the Rights Agent for payment of their claim therefor (subject to abandoned property, escheat or similar Laws). Neither Kalera nor the Rights Agent will be liable to any person in respect of any Milestone Payment or portion
thereof delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law. If, despite Kalera’s and/or the Rights Agent’s commercially reasonable efforts to deliver the applicable portion of the Milestone Payment to a Holder, any portion of the Milestone Payment provided by Kalera to the Rights Agent remains unclaimed prior to such time as such amounts would otherwise escheat to, or become property of, any governmental entity, such amount shall, immediately prior to such time, to the extent permitted by Law, become the property of Kalera free and clear of any claims or interest of any Person previously entitled thereto.
(e)Sale of the Company. If, at any time prior to the expiration of the Milestone Period, a sale, exchange or other transfer, directly or indirectly, in one transaction or a series of related transactions, of all or substantially all of the assets of Kalera and/or its Subsidiaries or a merger, consolidation, recapitalization or other transaction in which any Person other than Kalera or any Affiliate of Kalera becomes the beneficial owner, directly or indirectly, of fifty percent (50%) or more of the combined voting power of all interests in Kalera or the Company (a “Sale of the Company”) is entered into and the corresponding per share valuation of Kalera Ordinary Shares is greater than or equal to (x) $12.50 or (y) $15.00 (subject to adjustments for stock splits, reverse stock splits, stock dividends, recapitalizations, exchange of shares or other like change), then in the case of clause (x), the First Milestone Event shall be deemed to have occurred and, in the case of clause (y) the First Milestone Event and the Second Milestone Event shall be deemed to have occurred, and in either case, the applicable Milestone Payment(s) shall be issued to the Holders immediately prior to the consummation of such Sale of the Company.
(f)Fractional Shares. Notwithstanding anything to the contrary contained herein, no fraction of a Kalera Ordinary Share will be issued by Holdco upon payment of CVRs, and no certificates or scrip for any such fractional shares shall be issued. Each Holder who would otherwise be entitled to a fraction of a Kalera Ordinary Share (after aggregating all fractional Kalera Ordinary Shares that would otherwise be received by such Holder) shall instead have the number of Kalera Ordinary Shares issued to such Holder rounded down in the aggregate to the nearest whole Kalera Ordinary Share.
Section 2.05No Voting, Dividends or Interest; No Equity or Ownership Interest.
(a)CVRs shall not have any voting or dividend rights, and interest shall not accrue on any amounts payable in respect of CVRs. To the extent any Kalera Ordinary Shares are issued to Holders pursuant to Section 2.4(b), there shall be paid to such Holders the amount of dividends or other distributions, without interest, declared with a record date after the applicable Milestone Payment Date.
(b)CVRs shall not represent any equity or ownership interest in Kalera, any constituent company to the Mergers or any of their respective Affiliates.
Section 2Ability to Abandon CVRs. A Holder may at any time, at such Holder’s option, abandon all of such Holder’s remaining rights in a CVR by transferring such CVR to Kalera without consideration therefor. Nothing in this Agreement shall prohibit Kalera or any of its Affiliates from offering to acquire or acquiring any CVRs for consideration from the Holders,
in private transactions or otherwise, in Kalera’s or any of its Affiliates’ sole discretion. Any CVRs acquired by Kalera or any of its Affiliates shall be automatically deemed extinguished and no longer outstanding for purposes of the definition of Acting Holders, Article V and Section 6.04.
ARTICLE III
THE RIGHTS AGENT
Section 3.01Certain Duties and Responsibilities of the Rights Agent.
(a)The Rights Agent shall not have any liability for any actions taken or not taken in connection with this Agreement, except to the extent such liability arises as a result of the willful misconduct, bad faith or gross negligence of the Rights Agent.
(b)The Acting Holders may direct the Rights Agent to act on behalf of the Holders in enforcing any of their rights hereunder. All rights of action of any or all Holders under this Agreement may be enforced by the Rights Agent, and any action, suit or proceeding instituted by the Rights Agent shall be brought in its name as the Rights Agent and any recovery in connection therewith shall be for the proportionate benefit of all the Holders, as their respective rights or interests may appear.
Section 3.02Certain Rights of the Rights Agent.
(a)The Rights Agent undertakes to perform such duties and only such duties as are specifically set forth in this Agreement, and no implied covenants or obligations shall be read into this Agreement against the Rights Agent.
(b)The Rights Agent may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order or other paper or document believed by it in good faith to be genuine and to have been signed or presented by the proper party or parties.
(c)Any permissive rights of the Rights Agent hereunder shall not be construed as a duty.
(d)The Rights Agent shall not be required to give any note or surety in respect of the execution of such powers or otherwise in respect of such powers.
(e)Kalera agrees to indemnify the Rights Agent for, and to hold the Rights Agent harmless from and against, any loss, liability, damage or expense (“Loss”) suffered or incurred by the Rights Agent and arising out of or in connection with the Rights Agent’s performance of its obligations under this Agreement, including the reasonable costs and expenses of defending the Rights Agent against any third party claims, charges, demands, actions or suits arising out of or in connection with such performance, except to the extent such Loss shall have been determined by a court of competent jurisdiction to have resulted from the Rights Agent’s gross negligence, bad faith or willful misconduct. Kalera’s obligations under this Section 3.02(e) to indemnify the Rights Agent shall survive the resignation or removal of any Rights Agent and the termination of this Agreement.
(f)In addition to the indemnification provided under Section 3.02(e), but without duplication, Kalera agrees (i) to pay the fees of the Rights Agent in connection with the Rights Agent’s performance of its obligations hereunder, as agreed upon in writing by the Rights Agent and Kalera on or prior to the date of this Agreement, and (ii) to reimburse the Rights Agent promptly upon demand for all reasonable and documented out-of-pocket expenses, incurred by the Rights Agent in the performance of its obligations under this Agreement.
Section 3.03Resignation and Removal; Appointment of Successor.
(a)The Rights Agent may resign at any time by giving written notice thereof to Kalera and the Holders specifying a date when such resignation shall take effect, which notice shall be sent at least sixty (60) days prior to the date so specified.
(b)Kalera, with the consent of Holders of not less than forty percent (40%) of the outstanding CVRs (such consent not to be unreasonably withheld, conditioned or delayed), shall have the right to remove the Rights Agent at any time by specifying a date when such removal shall take effect. Notice of such removal shall be given by Kalera to the Rights Agent, which notice shall be sent at least sixty (60) days prior to the date so specified.
(c)If the Rights Agent shall resign, be removed or become incapable of acting, Kalera shall promptly appoint a qualified successor Rights Agent that is a member of The Securities Transfer Association, Inc., which appointment shall require the consent of the Holders of not less than a simple majority of the outstanding CVRs (such consent not to be unreasonably withheld, conditioned or delayed). The successor Rights Agent so appointed shall, forthwith upon its acceptance of such appointment in accordance with this Section 3.03(c) and Section 3.04, become the Rights Agent for all purposes hereunder.
(d)Kalera shall give notice of each resignation or removal of the Rights Agent and each appointment of a successor Rights Agent by mailing written notice of such event by first-class mail, postage prepaid, to the Holders as their names and addresses appear in the CVR Register. Each notice shall include the name and address of the successor Rights Agent. If Kalera fails to send such notice within ten (10) Business Days after acceptance of appointment by a successor Rights Agent, the successor Rights Agent shall cause the notice to be mailed at the expense of Kalera.
Section 3.04Acceptance of Appointment by Successor. Every successor Rights Agent appointed hereunder shall, at or prior to such appointment, execute, acknowledge and deliver to Kalera and to the retiring Rights Agent an instrument accepting such appointment and a counterpart of this Agreement, and thereupon such successor Rights Agent, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the Rights Agent; provided that upon the request of Kalera or the successor Rights Agent, such resigning or removed Rights Agent shall execute and deliver an instrument transferring to such successor Rights Agent all the rights, powers and trusts of such resigning or removed Rights Agent.
ARTICLE IV
COVENANTS
Section 4.01List of Holders. Kalera shall furnish or cause to be furnished to the Rights Agent the names and addresses of the Holders within thirty (30) Business Days following the date of this Agreement. The CVRs shall, in the case of the holders of Company Shares immediately prior to the Second Merger Effective Time, be registered in the names and addresses of the holder as set forth in the applicable letter of transmittal or other applicable documentation accompanying the Company Shares surrendered by the holder thereof in connection with the Second Merger pursuant to the Business Combination Agreement.
ARTICLE V
AMENDMENTS
Section 5.01Amendments Without Consent of Holders or Rights Agent.
(a)Kalera, at any time or from time to time, may unilaterally enter into one or more amendments hereto for any of the following purposes, without the consent of any of the Holders or the Rights Agent, so long as such amendments do not, individually or in the aggregate, adversely affect the interests of the Holders:
(i)to evidence the appointment of another Person as a successor Rights Agent and the assumption by any successor Rights Agent of the covenants and obligations of the Rights Agent herein in accordance with the provisions hereof;
(ii)to add to the covenants of Kalera such further covenants, restrictions, conditions or provisions as Kalera shall determine to be for the protection of the Holders;
(iii)to cure any ambiguity, to correct or supplement any provision herein that may be defective or inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Agreement;
(iv)as Kalera determines in its sole discretion may be necessary or appropriate to ensure that CVRs are not subject to registration under the Securities Act or the Exchange Act; or
(v)any other amendment hereto which would provide any additional rights or benefits to the Holders or that does not adversely affect the legal rights under this Agreement of any such Holder.
(b)Promptly after the execution by Kalera of any amendment pursuant to the provisions of this Section 5.01, Kalera shall mail (or cause the Rights Agent to mail) a notice thereof by first class mail to the Holders at their addresses as set forth on the CVR Register, setting forth in general terms the substance of such amendment.
Section 5.02Amendments With Consent of Holders.
(a)In addition to any amendments to this Agreement that may be made by Kalera without the consent of any Holder or the Rights Agent pursuant to Section 5.01, with the consent of the Holders of not less than a simple majority of the outstanding CVRs, whether evidenced in writing or taken at a meeting of the Holders, Kalera and the Rights Agent may enter into one or more amendments hereto for the purpose of adding, eliminating or changing any provisions of this Agreement, even if such addition, elimination or change is in any way adverse to the interests of the Holders; provided, however, that no amendment shall, without the unanimous consent of the Holders of all outstanding CVRs:
(i)modify in a manner adverse to the Holders (A) any provision contained herein with respect to the termination of this Agreement or the CVRs, (B) the time for, and amount of, any payment to be made to the Holders pursuant to this Agreement, or (C) otherwise modify any provision (including definitions) related to the Milestone Payments;
(ii)reduce the number of CVRs, unless such reduction is made in connection with the rights exercised under Section 2.06 (Ability to Abandon CVRs); or
(iii)modify any provisions of this Section 5.02, except to increase the percentage of Holders from whom consent is required or to provide that certain provisions of this Agreement cannot be modified or waived without the consent of the Holder of each outstanding CVR affected thereby.
(b)Promptly after the execution by Kalera and the Rights Agent of any amendment pursuant to the provisions of this Section 5.02 (but prior to the effectiveness of such amendment), Kalera shall mail (or cause the Rights Agent to mail) a notice thereof by first class mail to the Holders at their addresses as set forth on the CVR Register, setting forth in general terms the substance of such amendment. Any amendment to this Agreement made pursuant to this Section 5.02 shall become effective fifteen (15) Business Days following the mailing of such notice.
Section 5.03Amendments Affecting Rights Agent. The Rights Agent may, but is not obligated to, enter into any such amendment that affects the Rights Agent’s own rights, powers, trusts, privileges, covenants or duties under this Agreement or otherwise.
Section 5.04Effect of Amendments. Upon the execution of any amendment to this Agreement under this Article V, this Agreement shall be modified in accordance therewith, such amendment shall form a part of this Agreement for all purposes and every Holder shall be bound thereby.
ARTICLE VI
MISCELLANEOUS
Section 6.01Notices to Rights Agent and Kalera. All notices and other communications hereunder shall be in writing and shall be deemed given on the date of delivery
if delivered personally, by email (which is confirmed by delivery receipt), or sent by a nationally recognized overnight courier service (providing proof of delivery). All notices hereunder shall be delivered as set forth below or pursuant to such other instructions as may be designated in writing by the party to receive such notice:
(a)if to the Rights Agent to:
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[l] | |
[l] | |
Attention: | [l] |
Email: | [l] |
with a copy (which shall not constitute notice) to:
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Attention: | [l] |
Email: | [l] |
(b)if to Kalera to:
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Kalera AS |
8440 Tradeport Dr. Suite 102 |
Orlando, FL |
Attention: Curtis McWilliams |
Email: Curtis.McWilliams@kalera.com |
with a copy (which shall not constitute notice) to:
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Milbank LLP |
55 Hudson Yards |
New York, NY 10001 |
Attention: David Dixter, Iliana Ongun |
Email: ddixter@milbank.com; iongun@milbank.com |
Section 6.02Notice to Holders. All notices, requests and communications required to be given to the Holders shall be given (unless otherwise herein expressly provided) in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at his, her or its address set forth in the CVR Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to the Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders.
Section 6.03Entire Agreement. This Agreement, together with the Business Combination Agreement, constitutes the entire agreement, and supersedes all prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof and thereof.
Section 6.04Successors and Assigns. The Rights Agent may not assign this Agreement without Kalera’s consent. Except as otherwise permitted herein, Kalera may not assign this Agreement without the prior written consent of the Holders of not less than a simple majority of the outstanding CVRs. Any attempted assignment of this Agreement or any of such rights in violation of this Section 6.04 shall be void ab initio and of no effect.
Section 6.05Benefits of Agreement. Nothing in this Agreement, express or implied, shall give to any Person (other than the parties hereto, the Holders and their permitted successors and assigns hereunder) any benefit or any legal or equitable right, remedy or claim under this Agreement or under any covenant or provision herein contained, all such covenants and provisions being for the sole benefit of the parties hereto, the Holders and their permitted successors and assigns. The Holders shall have no rights hereunder except as are expressly set forth herein.
Section 6.06Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO ITS RULES OF CONFLICTS OF LAW THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY STATE OTHER THAN THE STATE OF NEW YORK.
Section 6.07Further Assurances. Subject to the provisions of this Agreement, the parties hereto will, from time to time, do all acts and things and execute and deliver all such further documents and instruments, as the other parties hereto may reasonably require to effectively carry out or better evidence or perfect the full intent and meaning of this Agreement.
Section 6.08Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect, insofar as the foregoing can be accomplished without materially affecting the economic benefits anticipated by the parties to this Agreement. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible to the fullest extent permitted by applicable Law in an acceptable manner to the end that the Transactions are fulfilled to the extent possible.
Section 6.09Headings. The headings and table of contents contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
Section 6.10Counterparts. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each of the parties and delivered to the other parties.
Section 6.11Termination. This Agreement shall be terminated and of no force or effect, and the parties hereto shall have no liability hereunder (other than to the extent of any obligations which expressly survive or provide for performance following termination and, with respect to clause (ii), any obligation with respect to the notification of any Milestone Event or the payment of any Milestone Payments), upon the earlier of (i) payment of each of the First Milestone Payment and the Second Milestone Payment in accordance with Section 2.04 hereof and (ii) the end of the Milestone Period.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, Kalera and the Rights Agent have each caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.
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KALERA PLC |
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Title: | |
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[RIGHT AGENT] |
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By: | |
Name: | |
Title: | |
[Signature Page to Contingent Value Rights Agreement]
FIRST AMENDMENT TO THE
BUSINESS COMBINATION AGREEMENT
THIS FIRST AMENDMENT to the Business Combination Agreement (this “Amendment”) is entered into on April 12, 2022 and made effective as of the date of the consummation of the Norwegian Merger by and among (i) Agrico Acquisition Corp., a Cayman Islands exempted company (together with its successors, “Purchaser”), (ii) Kalera plc, a public limited company incorporated in Ireland with registered number 606356 (“Holdco”), (iii) Kalera Cayman Merger Sub, a Cayman Islands exempted company (“Cayman Merger Sub”), (iv) Kalera Luxembourg Merger Sub SARL a limited liability company (société à responsabilité limitée), to be incorporated under the laws of the Grand Duchy of Luxembourg, to have its registered office at 12E Rue Guillaume Kroll, L-1882 Luxembourg, Grand Duchy of Luxembourg and to be registered with the Luxembourg Trade and Companies Register (Registre de Commerce et des Sociétés, Luxembourg) hereby represented by Holdco as sole founding shareholder acting in the name and on behalf of Kalera Luxembourg Merger Sub SARL (“Lux Merger Sub” and, together with Cayman Merger Sub, the “Merger Subs”) and (v) Kalera AS, a Norwegian private limited liability company (together with its successors and, following the Norwegian Merger, Lux Holdco, the “Company”). Purchaser, Holdco, the Merger Subs and the Company are sometimes referred to herein individually as a “Party” and, collectively, as the “Parties”.
RECITALS
WHEREAS, the Parties entered into that certain Business Combination Agreement, dated as of January 30, 2022 (the "BCA"); and
WHEREAS, the Parties desire to amend the BCA as more specifically set forth below.
NOW THEREFORE, in consideration of the premises and the mutual covenants contained in the BCA and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows, effective as of the date of the consummation of the Norwegian Merger:
1.Capitalized terms used and not otherwise defined in this Amendment have the respective meanings ascribed to them in the BCA.
2.The definition of "Exchange Ratio" set forth in Section 10.1 of the BCA shall be deleted in its entirety and replaced with the follow:
"Exchange Ratio" means 0.181.
3.Except as expressly set forth in this Amendment, the BCA remains in full force and effect with no further modifications.
4.This Amendment shall be governed by and construed in accordance with the laws of the State of New York without regard to the conflict of laws principles thereof. Any disputes arising out of or relating to this Amendment shall be resolved pursuant to Section 9.5 of the BCA.
5.The rules of construction in Section 9 .13 of the BCA are hereby incorporated by reference and shall apply to the interpretation of this Amendment.
6.This Amendment shall form a part of the BCA for all purposes, and each Party shall be bound hereby. From and after the execution of this Amendment by the Parties, any reference to the BCA shall be deemed a reference to the BCA as amended hereby.
7.This Amendment may be executed in counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Amendment by facsimile or e-mail shall be as effective as delivery of a manually executed
counterpart of the Amendment. This Amendment and its terms shall be subject to the terms of the Confidentiality Agreement.
[Signature Page Follows]
IN WITNESS WHEREOF, each of the Parties has caused this Amendment to be signed and delivered by its respective duly authorized officer as of the date first written above.
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PURCHASER: |
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AGRICO ACQUISITION CORP. |
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By: | /s/ Brent de Jong |
Name: | Brent de Jong |
Title: | Chief Executive Officer |
[Signature Page to First Amendment to the Business Combination Agreement]
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HOLDCO: |
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KALERA PLC |
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By: | /s/ Fernando Cornejo |
Name: | Fernando Cornejo |
Title: | Director |
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LUX MERGER SUB: |
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Represented by KALERA PLC, acting as sole founding shareholder and in the name and on behalf of Lux Merger Sub, in process of incorporation |
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By: | /s/ Fernando Cornejo |
Name: | Fernando Cornejo |
Title: | Director |
[Signature Page to First Amendment to the Business Combination Agreement]
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CAYMAN MERGER SUB: |
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KALERA CAYMAN MERGER SUB |
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By: | /s/ Brent de Jong |
Name: | Brent de Jong |
Title: | Director |
[Signature Page to First Amendment to the Business Combination Agreement]
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THE COMPANY: |
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KALERA AS |
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By: | /s/ Curtis McWilliams |
Name: | Curtis McWilliams |
Title: | Interim Chief Executive Officer |
[Signature Page to First Amendment to the Business Combination Agreement]
Companies Act 2014
PUBLIC LIMITED COMPANY
CONSTITUTION
OF
KALERA PUBLIC LIMITED COMPANY
MEMORANDUM OF ASSOCIATION
1. The name of the Company is KALERA PUBLIC LIMITED COMPANY.
2. The Company is a public limited company, registered under Part 17 of the Companies Act 2014.
3. The objects for which the Company is established are:
3.1 To carry on the business of a holding company and to co-ordinate the administration, finances and activities of any subsidiary companies or associated companies, to do all lawful acts and things whatever that are necessary or convenient in carrying on the business of such a holding company and in particular to carry on in all its branches the business of a management services company, to act as managers and to direct or coordinate the management of other companies or of the business, property and estates of any company or person and to undertake and carry out all such services in connection therewith as may be deemed expedient by the Company’s board of directors and to exercise its powers as a shareholder of other companies.
3.2 To carry on the businesses of manufacturer, distributor, wholesaler, retailer, service provider, investor, designer, trader and any other business (except the issuing of policies of insurance) which may seem to the Company’s board of directors capable of being conveniently carried on in connection with these objects or calculated directly or indirectly to enhance the value of or render more profitable any of the Company’s property.
3.3 To carry on all or any of the businesses as aforesaid either as a separate business or as the principal business of the Company.
3.4 To invest and deal with the property of the Company in such manner as may from time to time be determined by the Company’s board of directors and to dispose of or vary such investments and dealings.
3.5 To borrow or raise money or capital in any manner and on such terms and subject to such conditions and for such purposes as the Company’s board of directors shall think fit or expedient, whether alone or jointly and/or severally with any other person or company, including, without prejudice to the generality of the foregoing, whether by the issue of debentures or debenture stock (perpetual or otherwise) or otherwise, and to secure, with or without consideration, the payment or repayment of any money borrowed, raised or owing or any debt, obligation or liability of the Company or of any other person or company whatsoever in such manner and on such terms and conditions as the Company’s board of directors shall think fit or expedient and, in particular by mortgage, charge, lien, pledge or debenture or any other security of whatsoever nature or howsoever described, perpetual or otherwise, charged upon all or any of the Company’s property, both present and future, and to purchase, redeem or pay off any such securities or borrowings and also to accept capital contributions
from any person or company in any manner and on such terms and conditions and for such purposes as the Company’s board of directors shall think fit or expedient.
3.6 To lend and advance money or other property or give credit or financial accommodation to any company or person in any manner either with or without security and whether with or without the payment of interest and upon such terms and conditions as the Company’s board of directors shall think fit or expedient.
3.7 To guarantee, indemnify, grant indemnities in respect of, enter into any suretyship or joint obligation, or otherwise support or secure, whether by personal covenant, indemnity or undertaking or by mortgaging, charging, pledging or granting a lien or other security over all or any part of the Company’s property (both present and future) or by any one or more of such methods or any other method and whether in support of such guarantee or indemnity or suretyship or joint obligation or otherwise, on such terms and conditions as the Company’s board of directors shall think fit, the payment of any debts or the performance or discharge of any contract, obligation or liability of any person or company (including, without prejudice to the generality of the foregoing, the payment of any capital, principal, dividends or interest on any stocks, shares, debentures, debenture stock, notes, bonds or other securities of any person, authority or company) including, without prejudice to the generality of the foregoing, any company which is for the time being the Company’s holding company or another subsidiary (as defined by the Act) of the Company’s holding company or a subsidiary of the Company or otherwise associated with the Company (including any arrangements of the Company or any of its subsidiaries), in each case notwithstanding the fact that the Company may not receive any consideration, advantage or benefit, direct or indirect, from entering into any such guarantee or indemnity or suretyship or joint obligation or other arrangement or transaction contemplated herein.
3.8 To grant, convey, assign, transfer, exchange or otherwise alienate or dispose of any property of the Company of whatever nature or tenure for such price, consideration, sum or other return whether equal to or less than the market value thereof or for shares, debentures or securities and whether by way of gift or otherwise as the Company’s board of directors shall deem fit or expedient and where the property consists of real property to grant any fee farm grant or lease or to enter into any agreement for letting or hire of any such property for a rent or return equal to or less than the market or rack rent therefor or at no rent and subject to or free from covenants and restrictions as the Company’s board of directors shall deem appropriate.
3.9 To purchase, take on, lease, exchange, rent, hire or otherwise acquire any property and to acquire and undertake the whole or any part of the business and property of any company or person.
3.10 To develop and turn to account any land acquired by the Company or in which it is interested and in particular by laying out and preparing the same for building purposes, constructing, altering, pulling down, decorating, maintaining, fitting out and improving buildings and conveniences and by planting, paving, draining, farming, cultivating, letting and by entering into building leases or building agreements and by advancing money to and entering into contracts and arrangements of all kinds with builders, contractors, architects, surveyors, purchasers, vendors, tenants and any other person.
3.11 To construct, improve, maintain, develop, work, manage, carry out or control any property which may seem calculated directly or indirectly to advance the Company’s interest and to contribute to, subsidise or otherwise assist or take part in the
construction, improvement, maintenance, working, management, carrying out or control thereof.
3.12 To draw, make, accept, endorse, discount, execute and issue promissory notes, bills of exchange, bills of lading, warrants, debentures and other negotiable or transferable instruments.
3.13 To engage in currency exchange, interest rate and commodity transactions including, but not limited to, dealings in foreign currency, spot and forward rate exchange contracts, futures, options, forward rate agreements, swaps, caps, floors, collars and any other foreign exchange, interest rate or commodity hedging arrangements and such other instruments as are similar to, or derived from, any of the foregoing whether for the purpose of making a profit or avoiding a loss or managing a currency, interest rate or commodity exposure or any other exposure or for any other purpose.
3.14 As a pursuit in itself or otherwise and whether for the purpose of making a profit or avoiding a loss or managing a currency, interest rate or commodity exposure or any other exposure or for any other purpose whatsoever, to engage in any currency exchange transactions, interest rate transactions and commodity transactions, derivative and/or treasury transactions and any other financial or other transactions, including (without prejudice to the generality of the foregoing) securitisation, treasury and/or structured finance transactions, of whatever nature in any manner and on any terms and for any purposes whatsoever, including, without prejudice to the generality of the foregoing, any transaction entered into in connection with or for the purpose of, or capable of being for the purposes of, avoiding, reducing, minimising, hedging against or otherwise managing the risk of any loss, cost, expense, or liability arising, or which may arise, directly or indirectly, from a change or changes in any interest rate or currency exchange rate or in the price or value of any property, asset, commodity, index or liability or from any other risk or factor affecting the Company’s business, including but not limited to dealings whether involving purchases, sales or otherwise in foreign currency, spot and/or forward rate exchange contracts, futures, options, forward rate agreements, swaps, caps, floors, collars and/or any such other currency or interest rate or commodity or other hedging, treasury or structured finance arrangements and such other instruments as are similar to, or derived from any of the foregoing.
3.15 To apply for, establish, create, purchase or otherwise acquire, sell or otherwise dispose of and hold any patents, trade marks, copyrights, brevets d’invention, registered designs, licences, concessions and the like conferring any exclusive or non-exclusive or limited rights to use or any secret or other information and any invention and to use, exercise, develop or grant licences in respect of or otherwise turn to account or exploit the property, rights or information so held.
3.16 To enter into any arrangements with any governments or authorities, national, local or otherwise and to obtain from any such government or authority any rights, privileges and concessions and to carry out, exercise and comply with any such arrangements, rights, privileges and concessions.
3.17 To establish, form, register, incorporate or promote any company or companies or person, whether inside or outside of Ireland.
3.18 To procure that the Company be registered or recognised whether as a branch or otherwise in any country or place.
3.19 To enter into partnership or into any arrangement for sharing profits, union of interests, co-operation, joint venture, reciprocal concession or otherwise with any person or company carrying on or engaged in or about to carry on or engage in any business or transaction and to engage in any transaction in connection with the foregoing.
3.20 To acquire or amalgamate with any other company or person.
3.21 To acquire and undertake the whole or any part of the business, good-will and assets of any person, firm or company carrying on or proposing to carry on any of the businesses which this Company is authorised to carry on, and as part of the consideration for such acquisition to undertake all or any of the liabilities of such person, firm or company, or to acquire an interest in, amalgamate with, or enter into any arrangement for sharing profits, or for co-operation, or for mutual assistance with any such person, firm or company and to give or accept by way of consideration for any of the acts or things aforesaid or property acquired, any shares, debentures, debenture stock or securities that may be agreed upon, and to hold and retain or sell, mortgage or deal with any shares, debentures, debenture stock or securities so received.
3.22 To promote freedom of contract, and to resist, insure against, counteract and discourage interference therewith, to join any lawful federation, union or association, or do any other lawful act or thing with a view to preventing or resisting directly or indirectly any interruption of or interference with the Company’s or any other trade or business or providing or safeguarding against the same, or resisting or opposing any strike, movement or organisation which may be thought detrimental to the interests of the Company or its employees and to subscribe to any association or fund for any such purposes.
3.23 To make gifts to any person or company including, without prejudice to the generality of the foregoing, capital contributions and to grant bonuses to the directors or any other persons or companies who are or have been in the employment of the Company including substitute directors and any other officer or employee.
3.24 To establish and support or aid in the establishment and support of associations, institutions, funds, trusts and conveniences calculated to benefit directors, ex-directors, employees or ex-employees of the Company or any subsidiary of the Company or the dependants or connections of such persons, and to grant pensions and allowances upon such terms and in such manner as the Company’s board of directors think fit, and to make payments towards insurance and to subscribe or guarantee money for charitable or benevolent objects or for any exhibition or for any public, general or useful object, or any other object whatsoever which the Company’s board of directors may think advisable.
3.25 To establish and contribute to any scheme for the purchase of shares or subscription for shares in the Company, its holding company or any of its or their respective subsidiaries, to be held for the benefit of the employees or former employees of the Company or any subsidiary of the Company including any person who is or was a director holding a salaried employment or office in the Company or any subsidiary of the Company and to lend or otherwise provide money to the trustees of such schemes or the employees or former employees of the Company or any subsidiary of the Company to enable them to purchase shares of the Company, its holding company or any of its or their respective subsidiaries and to formulate and carry into effect any scheme for sharing the profits of the Company, its holding company or any of its or
their respective subsidiaries with its employees and/or the employees of any of its subsidiaries.
3.26 To remunerate any person or company for services rendered or to be rendered in placing or assisting to place or guaranteeing the placing of any of the shares of the Company’s capital or any debentures, debenture stock or other securities of the Company or in or about the formation or promotion of the Company or the conduct of its business.
3.27 To obtain any Act of the Oireachtas or provisional order for enabling the Company to carry any of its objects into effect or for effecting any modification of the Company’s constitution or for any other purpose which may seem expedient and to oppose any proceedings or applications which may seem calculated directly or indirectly to prejudice the Company’s interests.
3.28 To adopt such means of making known the products of the Company as may seem expedient and in particular by advertising in the press, by circulars, by purchase and exhibition of works of art or interest, by publication of books and periodicals and by granting prizes, rewards and donations.
3.29 To undertake and execute the office of trustee and nominee for the purpose of holding and dealing with any property of any kind for or on behalf of any person or company; to act as trustee, nominee, agent, executor, administrator, registrar, secretary, committee or attorney generally for any purpose and either solely or with others for any person or company; to vest any property in any person or company with or without any declared trust in favour of the Company.
3.30 To pay all costs, charges, fees and expenses incurred or sustained in or about the promotion, establishment, formation and registration of the Company.
3.31 To do all or any of the above things in any part of the world, and as principals, agents, contractors, trustees or otherwise and by or through trustees, agents or otherwise and either alone or in conjunction with any person or company.
3.32 To distribute the property of the Company in specie among the members or, if there is only one, to the sole member of the Company.
3.33 To do all such other things as the Company’s board of directors may think incidental or conducive to the attainment of the above objects or any of them.
NOTE: it is hereby declared that in this memorandum of association:
a) the word “company”, except where used in reference to this Company, shall be deemed to include a body corporate, whether a company (wherever formed, registered or incorporated), a corporation aggregate, a corporation sole and a national or local government or other legal entity; and
b) the word “person”, shall be deemed to include any individual, firm, body corporate, association or partnership, government or state or agency of a state, local authority or government body or any joint venture association or partnership (whether or not having a separate legal personality) and that person’s personal representatives, successors or permitted assigns; and
c) the word “property”, shall be deemed to include, where the context permits, real property, personal property including choses or things in action and all other intangible property and money and all estates, rights, titles and interests therein and
includes the Company’s uncalled capital and future calls and all and every other undertaking and asset; and
d) a word or expression used in this memorandum of association which is not otherwise defined and which is also used in the Companies Act 2014 shall have the same meaning here, as it has in the Companies Act 2014; and
e) any phrase introduced by the terms “including”, “include” and “in particular” or any similar expression shall be construed as illustrative and shall not limit the sense of the words preceding those terms, whether or not followed by the phrases “but not limited to”, “without prejudice to the generality of the foregoing” or any similar expression; and
f) words denoting the singular number only shall include the plural number and vice versa and references to one gender includes all genders; and
g) it is intended that the objects specified in each paragraph in this clause shall, except where otherwise expressed in such paragraph, be separate and distinct objects of the Company and shall not be in any way limited or restricted by reference to or inference from the terms of any other paragraph or the order in which the paragraphs of this clause occur or the name of the Company.
4. The liability of the members is limited.
5. The authorised share capital of the Company is US$100,000,000 divided into 800,000,000,000 Ordinary Shares with a nominal value of US$0.0001 each and 200,000,000,000 Preferred Shares with a nominal value of US$0.0001 each and €25,000 divided into 25,000 Deferred Ordinary Shares with a nominal value of €1.00 each.
6. The shares forming the capital, may be increased or reduced and be divided into such classes and issued with any special rights, privileges and conditions or with such qualifications as regards preference, dividend, capital, voting or other special incidents, and be held upon such terms as may be attached thereto or as may from time to time be provided by the original or any substituted or amended articles of association and regulations of the Company for the time being, but so that where shares are issued with any preferential or special rights attached thereto such rights shall not be alterable otherwise than pursuant to the provisions of the Company’s articles of association for the time being.
KALERA PUBLIC LIMITED COMPANY
ARTICLES OF ASSOCIATION
(as amended by Special Resolution dated l 2022)
Interpretation and general
1. Sections 83, 84 and 117(9) of the Act shall apply to the Company but, subject to that, the provisions set out in these Articles shall constitute the whole of the regulations applicable to the Company and no other “optional provisions” as defined by section 1007(2) of the Act shall apply to the Company.
2. In these Articles:
2.1 “Act” means the Companies Act 2014 and every statutory modification and re-enactment thereof for the time being in force;
2.2 “Acting in Concert” has the meaning given to it in Rule 2.1(a) and Rule 3.3 of Part A of the Takeover Rules;
2.3 “Adoption Date” means the effective date of adoption of these Articles;
2.4 “Adjourned Meeting” has the meaning given in Article 115.1;
2.5 “Agent” has the meaning given in Article 12.3;
2.6 “Approved Nominee” means a person appointed under contractual arrangements with the Company to hold shares or rights or interests in shares of the Company on a nominee basis;
2.7 “Article” means an article of these Articles;
2.8 “Articles” means these articles of association as from time to time and for the time being in force;
2.9 “Auditors” means the auditors for the time being of the Company;
2.10 “Board” means the board of Directors of the Company;
2.11 “Chairperson” means the person occupying the position of Chairperson of the Board from time to time;
2.12 “Chief Executive Officer” shall include any equivalent office;
2.13 “Clear Days” means, in relation to a period of notice, that period excluding the day when the notice is given or deemed to be given and excluding the day for which notice is being given or on which an action or event for which notice is being given is to occur or take effect;
2.14 “committee” has the meaning given in Article 187;
2.15 “Company” means the company whose name appears in the heading to these Articles;
2.16 “Company Secretary” means the person or persons appointed as company secretary or joint company secretary of the Company from time to time and shall include any assistant or deputy secretary;
2.17 “Concert Party” means, in relation to any person, a party who is deemed or presumed to be Acting in Concert with that person for the purposes of the Takeover Rules;
2.18 “contested election” has the meaning given in Article 159;
2.19 “Deferred Shares” means the Deferred Ordinary Shares with a nominal value of €1.00 each in the capital of the Company;
2.20 “Directors” means the directors for the time being of the Company or any of them acting as the Board;
2.21 “Director’s Certified Email Address” has the meaning given in Article 190.3;
2.22 “disponee” has the meaning given in Article 46.1;
2.23 “elected by a plurality” has the meaning given in Article 159;
2.24 “electronic communication” has the meaning given to that word in the Electronic Commerce Act 2000 and in addition includes in the case of notices or documents issued on behalf of the Company, such documents being made available or displayed on a website of the Company (or a website designated by the Board);
2.25 “Exchange” means any securities exchange or other system on which the shares of the Company may be listed or otherwise authorised for trading from time to time in circumstances where the Company has approved such listing or trading;
2.26 “Exchange Act” means the Securities Exchange Act of 1934 of the United States, as amended;
2.27 “Group” means the Company and its subsidiaries from time to time and for the time being;
2.28 “Independent Directors” has the meaning given in Article 238.4;
2.29 “Institutional Investor” has the meaning given in Article 238.5
2.30 “Interest in a Security” has the meaning given to such term in section 1 of the Irish Takeover Panel Act 1997;
2.31 “Interested Person” has the meaning given in Article 238.6;
2.32 “member” means, in relation to any share, the member whose name is entered in the Register as the holder of the share or, where the context permits, the members whose names are entered in the Register as the joint holders of shares and shall include a member’s personal representatives in consequence of his or her death or bankruptcy;
2.33 “Memorandum” means the memorandum of association of the Company;
2.34 “Office” means the registered office for the time being of the Company;
2.35 “Ordinary Shares” means the Ordinary Shares with a nominal value of US$0.0001 each in the capital of the Company;
2.36 “Preferred Shares” means the Preferred Shares with a nominal value of US$0.0001 each in the capital of the Company;
2.37 “Proceedings” has the meaning given in Article 253;
2.38 “Redeemable Shares” means redeemable shares as defined by section 64 of the Act;
2.39 “Re-designation Event” means;
(a) the transfer of Restricted Voting Ordinary Shares from a Restricted Shareholder to a shareholder or other person who is not a Restricted Shareholder;
(b) an event whereby a Restricted Shareholder ceases to be restricted from holding an Interest in Securities, by virtue of Rule 9 of the Takeover Rules, except in these circumstances the number of Restricted Voting Ordinary Shares which shall be re-designated as Ordinary Shares shall be the maximum number of Ordinary Shares that can be re-designated without the former Restricted Shareholder becoming a Restricted Shareholder on the Re-designation Event; or
(c) a Restricted Shareholder of the Company undertaking a Takeover Rules Event and the Takeover Panel consenting to some or all of the Restricted Voting Ordinary Shares being re-designated, in which case only those Restricted Voting Ordinary Shares the re-designation of which has been consented to by the Takeover Panel shall be re-designated as Ordinary Shares;
2.40 “Register” means the register of members of the Company to be kept as required by the Act;
2.41 “Restricted Shareholder” means a member of the Company or other person who is restricted from holding an Interest in Securities without a Takeover Rules Event occurring by virtue of Rule 9 of the Takeover Rules or a member or person who would be so restricted but for the limitations on voting rights set out under Article 7, provided that where two or more persons are deemed or presumed (and such presumption has not been rebutted) to be Acting in Concert for the purpose of Rule 9 of the Takeover Rules, only the person who acquired the Interest in Securities which, but for the application of Article 7, would trigger the Takeover Rules Event shall be deemed to be a Restricted Shareholder in respect only of such number of the person’s Interest in Securities which, but for the application of Article 7, would trigger the Takeover Rules Event.
2.42 “Restricted Voting Ordinary Shares” means
(a) an Interest in Securities acquired by a Restricted Shareholder where the Restricted Shareholder has not elected for a Takeover Rules Event to occur; or
(a) Ordinary Shares the subject of a notification by a Shareholder by at least 10 Business Days’ notice in writing to the Company that such Shareholder wishes for such Ordinary Shares to be designated as Restricted Voting Ordinary Shares;
2.43 “Rights” has the meaning given in Article 242;
2.44 “Rights Plan” has the meaning given in Article 241;
2.45 “SEC” means the U.S. Securities and Exchange Commission;
2.46 “Shareholder” means a holder of shares in the capital of the Company;
2.47 “Takeover Panel” means the Irish Takeover Panel established under the Irish Takeover Panel Act 1997;
2.48 “Takeover Rules” means the Takeover Panel Act 1997 Takeover Rules 2013; and
2.49 “Takeover Rules Event” means either of the following events:
(a) a Restricted Shareholder and/or its Concert Parties (if any) extending an offer to the holders of each class of shares of the Company in accordance with Rule 9 of the Takeover Rules; or
(b) the Company obtaining approval of the Takeover Panel for a waiver of Rule 9 of the Takeover Rules in respect of a Restricted Shareholder or any of its Concert Parties (as applicable).
NOTE: it is hereby declared that in these Articles:
a) the word “company”, except where used in reference to this Company, shall be deemed to include a body corporate, whether a company (wherever formed, registered or incorporated), a corporation aggregate, a corporation sole and a national or local government or other legal entity; and
b) the word “person”, shall be deemed to include any individual, firm, body corporate, association or partnership, government or state or agency of a state, local authority or government body or any joint venture association or partnership (whether or not having a separate legal personality) and that person’s personal representatives, successors or permitted assigns; and
c) the word “property”, shall be deemed to include, where the context permits, real property, personal property including choses or things in action and all other intangible property and money and all estates, rights, titles and interests therein and includes the Company’s uncalled capital and future calls and all and every other undertaking and asset; and
d) a word or expression used in the Articles which is not otherwise defined and which is also used in the Act shall have the same meaning here, as it has in the Act; and
e) any phrase introduced by the terms “including”, “include” and “in particular” or any similar expression shall be construed as illustrative and shall not limit the sense of the words preceding those terms, whether or not followed by the phrases “but not limited to”, “without prejudice to the generality of the foregoing” or any similar expression; and
f) words denoting the singular number only shall include the plural number and vice versa and references to one gender includes all genders.
AUTHORISED SHARE CAPITAL
3. The authorised share capital of the Company is US$100,000,000 divided into 800,000,000,000 Ordinary Shares with a nominal value of US$0.0001 each and 200,000,000,000 Preferred Shares with a nominal value of US$0.0001 each and €25,000 divided into 25,000 Deferred Ordinary Shares with a nominal value of €1.00 each
RIGHTS ATTACHING TO THE ORDINARY SHARES
4. The Ordinary Shares shall rank pari passu in all respects and shall:
4.1 subject to the right of the Company to set record dates for the purposes of determining the identity of members entitled to notice of and/or to vote at a general meeting and the authority of the Board and chairperson of the meeting to maintain order and security, include the right to attend any general meeting of the Company and to exercise one vote per Ordinary Share held at any general meeting of the Company;
4.2 include the right to participate pro rata in all dividends declared by the Company; and
4.3 include the right, in the event of the Company’s winding up, to participate pro rata in the total assets of the Company.
5. The rights attaching to the Ordinary Shares may be subject to the terms of issue of any series or class of Preferred Shares allotted by the Directors from time to time in accordance with Article 9.
RESTRICTED VOTING ORDINARY SHARES
6. If a Restricted Shareholder acquires an Interest in Securities, unless the Restricted Shareholder elects to acquire such Interest in Securities with a Takeover Rules Event occurring, any share certificates to be issued in respect of the Ordinary Shares shall bear a legend making reference to the shares as Restricted Voting Ordinary Shares. A Shareholder may also, by at least 10 Clear Days’ notice in writing to the Company or such shorter time as the Company may elect, request that the Company redesignate some or all of its Ordinary Shares as Restricted Voting Ordinary Shares.
7. The following restrictions shall attach to Restricted Voting Ordinary Shares:
7.1 from the time of issue until a Re-designation Event occurs, the Restricted Voting Ordinary Shares in issue will be designated as Restricted Voting Ordinary Shares and the rights attaching to such shares shall be restricted as set out in this Article 7;
7.2 the Restricted Voting Ordinary Shares shall carry no rights to receive notice of or to attend or vote at any general meeting of the Company;
7.3 save as provided herein, the Restricted Voting Ordinary Shares shall rank pari passu at all times and in all respects with all other Ordinary Shares;
7.4 forthwith upon a Re-designation Event, each holder of Restricted Voting Ordinary Shares that are to be re-designated shall send to the Company the certificates, if any, in respect of the Restricted Voting Ordinary Shares held by him or it immediately prior to the Re-designation Event and thereupon, but subject to receipt of such certificates, the Company shall issue to such holders respectively replacement certificates for the Ordinary Shares without a legend making reference to the shares as Restricted Voting Ordinary Shares; and
7.5 re-designation of the Restricted Voting Ordinary Shares shall be effected by way of a deemed automatic re-designation of such shares immediately upon and subject to a Re-designation Event, without the requirement of any approval by the Board or any shareholders of the Company.
8. Any Restricted Voting Ordinary Shares in issue shall comprise a single class with any other Ordinary Shares in issue.
RIGHTS ATTACHING TO PREFERRED SHARES
9. The Board is empowered to cause the Preferred Shares to be issued from time to time as shares of one or more series of Preferred Shares, and in the resolution or resolutions providing for the issue of Preferred Shares of each particular series, before issuance, the Board is expressly authorised to fix:
9.1 the distinctive designation of such series and the number of shares which shall constitute such series, which number may be increased (except as otherwise provided by the Board in creating such series) or decreased (but not below the number of shares thereof then in issue) from time to time by resolution of the Board;
9.2 the rate of dividends payable on shares of such series, if any, whether or not and upon what conditions dividends on shares of such series shall be cumulative and, if cumulative, the date or dates from which dividends shall accumulate and the preference or relation which such dividends shall bear to the dividends payable on any other class or classes or on any other series of share capital;
9.3 the procedures for, and the terms, if any, on which shares of such series may be redeemed, including without limitation, the redemption price or prices for such series, which may consist of a redemption price or scale of redemption prices applicable only to redemption in connection with a sinking fund (which term as used herein shall include any fund or requirement for the periodic purchase or redemption of shares), and the same or a different redemption price or scale of redemption prices applicable to any other redemption;
9.4 the terms and amount of any sinking fund provided for the purchase or redemption of shares of such series;
9.5 the amount or amounts which shall be paid to the holders of shares of such series in case of liquidation, dissolution or winding up of the Company, whether voluntary or involuntary;
9.6 the terms, if any, upon which the holders of shares of such series may convert shares thereof into shares of any other class or classes or of any one or more series of the same class or of another class or classes;
9.7 the voting rights, full or limited, if any, of the shares of such series; and whether or not and under what conditions the shares of such series (alone or together with the shares of one or more other series having similar provisions) shall be entitled to vote separately as a single class, for the election of one or more additional Directors in case of dividend arrears or other specified events, or upon other matters;
9.8 whether or not the holders of shares of such series, as such, shall have any pre-emptive or preferential rights to subscribe for or purchase shares of any class or series of shares of the Company, now or hereafter authorised, or any securities convertible into, or warrants or other evidences of optional rights to purchase or subscribe for, shares of any class or series of the Company, now or hereafter authorised;
9.9 the limitations and restrictions, if any, to be effective while any shares of such series are outstanding upon the payment of dividends, or the making of other distributions on, and upon the purchase, redemption or other acquisition by the Company of, any other class or classes of shares ranking junior to the shares of such series either as to dividends or upon liquidation, dissolution or winding up;
9.10 the conditions or restrictions, if any, upon the creation of indebtedness of the Company or upon the issuance of any additional shares (including additional shares of such series or of any other class) ranking on a parity with or prior to the shares of such series as to dividends or distribution of assets upon liquidation; and
9.11 such other rights, preferences and limitations as may be permitted to be fixed by the Board of the Company under the laws of Ireland as in effect at the time of the creation of such series.
10. The Board is authorised to change the designations, rights, preferences and limitations of any series of Preferred Shares theretofore established, no shares of which have been issued.
11. The rights conferred upon the member of any pre-existing shares in the share capital of the Company shall be deemed not to be varied by the creation, issue and allotment of any series of Preferred Shares in accordance with these Articles.
RIGHTS ATTACHING TO DEFERRED SHARES
12. The Deferred Shares shall have the rights and privileges and be subject to the restrictions set out in this Article 12:
12.1 the Deferred Shares are non-voting shares and do not convey upon the holder the right to be paid a dividend or to receive notice of or to attend, vote or speak at a general meeting;
12.2 the Deferred Shares confer the right on a return of capital, on a winding-up or otherwise, only to the repayment of the nominal value paid up on the Deferred Shares after repayment of the nominal value of the Ordinary Shares; and
12.3 any Director (the “Agent”) is appointed the attorney of the holder of a Deferred Share, with an irrevocable instruction to the Agent to execute all or any forms of transfer and/or renunciation and/or surrender and/or other documents in the Agent’s discretion in relation to the Deferred Shares in favour of the Company or as it may direct and to deliver such forms of transfer and/or renunciation and/or surrender and/or other documents together with any certificate(s) and/or other documents for registration and to do all such other acts and things as may in the reasonable opinion of the Agent be necessary or expedient for the purpose of, or in connection with, the surrender of the Deferred Shares, the purchase by the Company of the Deferred Shares for nil consideration or such other consideration as the Board may determine and to vest the said Deferred Shares in the Company.
13. Without prejudice to any special rights conferred on the members of any existing shares or class of shares and subject to the provisions of the Act, any share may be issued with such rights or restrictions as the Company may by ordinary resolution determine.
ALLOTMENT AND ACQUISITION OF SHARES
14. The following provisions shall apply:
14.1 Subject to the provisions of these Articles relating to new shares, the shares shall be at the disposal of the Directors, and they may (subject to the provisions of the Act) allot, grant options over or otherwise dispose of them to such persons, on such terms and conditions and at such times as they may consider to be in the best interests of the Company and its members, but so that no share shall be issued at a discount and so that, in the case of shares offered to the public for subscription, the amount payable
on application on each share shall not be less than one-quarter of the nominal amount of the share and the whole of any premium thereon.
14.2 Without prejudice to the generality of the powers conferred on the Directors by other paragraphs of these Articles, and subject to any requirement to obtain the approval of the members under any laws, regulations or the rules of any Exchange, the Directors may grant from time to time options to subscribe for the unallotted shares in the capital of the Company to Directors and other persons in the service or employment of the Company or any subsidiary or associate company of the Company on such terms and subject to such conditions as may be approved from time to time by the Directors or by any committee thereof appointed by the Directors for the purpose of such approval and on the terms and conditions required to obtain the approval of any statutory authority in any jurisdiction.
14.3 Subject to the provisions of these Articles including but not limited to Article 6, the Directors are hereby generally and unconditionally authorised to exercise all the powers of the Company to allot relevant securities within the meaning of section 1021 of the Act. The maximum amount of relevant securities which may be allotted under the authority hereby conferred shall be the amount of the authorised but unissued share capital of the Company at the Adoption Date. The authority hereby conferred shall expire on the date which is five (5) years after the Adoption Date unless and to the extent that such authority is renewed, revoked or extended prior to such date. The Company may before such expiry make an offer or agreement which would or might require relevant securities to be allotted after such expiry and the Directors may allot relevant securities in pursuance of such offer or agreement, notwithstanding that the authority hereby conferred has expired.
14.4 The Directors are hereby empowered pursuant to sections 1022 and 1023 of the Act to allot equity securities (within the meaning of the said section 1023) for cash pursuant to the authority conferred by Article 14.3 as if section 1022(1) of the Act did not apply to any such allotment. The authority conferred by this Article 14.4 shall expire on the date which is five (5) years after the Adoption Date, unless previously renewed, varied or revoked; provided that the Company may before the expiry of such authority make an offer or agreement which would or might require equity securities to be allotted after such expiry and the Directors may allot equity securities in pursuance of such an offer or agreement as if the power conferred by this Article 14.4 had not expired.
14.5 The Company may issue permissible letters of allotment (as defined by section 1019 of the Act) to the extent permitted by the Act.
14.6 Unless otherwise determined by the Directors or the rights attaching to or by the terms of issue of any particular shares, or to the extent required by the Act, any Exchange, depository or any operator of any clearance or settlement system, no person whose name is entered as a member in the Register shall be entitled to receive a share certificate for any shares of any class held by him or her in the capital of the Company (nor on transferring part of a holding, to a certificate for the balance).
14.7 Any share certificate, if issued, shall specify the number of shares in respect of which it is issued and the amount paid thereon or the fact that they are fully paid, as the case may be, and may otherwise be in such form as shall be determined by the Directors. Such certificates may be under seal. All certificates for shares in the capital of the Company shall be consecutively numbered or otherwise identified and shall specify the shares in the capital of the Company to which they relate. The name and address of the person to whom the shares represented thereby are issued, with the number of
shares and date of issue, shall be entered in the Register. All certificates surrendered to the Company for transfer shall be cancelled and no new certificate shall be issued until the former certificate for a like number of shares in the capital of the Company shall have been surrendered and cancelled. The Directors may authorise certificates to be issued with the seal and authorised signature(s) affixed by some method or system of mechanical process. In respect of a share or shares in the capital of the Company held jointly by several persons, the Company shall not be bound to issue a certificate or certificates to each such person, and the issue and delivery of a certificate or certificates to one of several joint holders shall be sufficient delivery to all such holders. If a share certificate is defaced, worn out, lost or destroyed, it may be renewed on such terms (if any) as to evidence and indemnity and on the payment of such expenses reasonably incurred by the Company in investigating such evidence, as the Directors may prescribe, and, in the case of defacement or wearing out, upon delivery of the old certificate.
15. The Company:
15.1 may give financial assistance for the purpose of an acquisition of its shares or, where the Company is a subsidiary, its holding company where permitted by sections 82 and 1043 of the Act, and
15.2 is authorised, for the purposes of section 105(4)(a) of the Act, but subject to section 1073 of the Act, to acquire its own shares.
16. The Directors (and any committee established under Article 186 and so authorised by the Directors and any person so authorised by the Directors or such committee) may without prejudice to Article 168:
16.1 allot, issue, grant options over and otherwise dispose of shares in the Company; and
16.2 exercise the Company's powers under Article 14,
on such terms and subject to such conditions as they think fit, subject only to the provisions of the Act and these Articles.
17. Unless the Board determines otherwise, any share in the capital of the Company shall be deemed to be a Redeemable Share on, and from the time of, the existence or creation of an agreement, transaction or trade between the Company and any person (who may or may not be a member) pursuant to which the Company acquires or will acquire a share in the capital of the Company, or an interest in shares in the capital of the Company, from the relevant person, save for an acquisition for nil consideration pursuant to section 102(1)(a) of the Act. In these circumstances, the acquisition of such shares by the Company, save where acquired for nil consideration in accordance with the Act, shall constitute the redemption of a Redeemable Share in accordance with Chapter 6 of Part 3 of the Act. No resolution, whether special or otherwise, shall be required to be passed to deem any share in the capital of the Company a Redeemable Share.
VARIATION OF CLASS RIGHTS
18. Without prejudice to the authority conferred on the Directors pursuant to Article 9 to issue Preferred Shares in the capital of the Company, where the shares in the Company are divided into different classes, the rights attaching to a class of shares may only be varied or abrogated if (a) the holders of 75% in nominal value of the issued shares of that class consent in writing to the variation, or (b) a special resolution, passed at a separate general meeting of the holders of that class, sanctions the variation. The quorum at any such separate general meeting, other than an Adjourned Meeting, shall be two persons holding or representing by proxy at least
one-third in nominal value of the issued shares of the class in question and the quorum at an Adjourned Meeting shall be one person holding or representing by proxy shares of the class in question or that person’s proxy. The rights conferred upon the holders of any class of shares issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied by a purchase or redemption by the Company of its own shares or by the creation or issue of further shares ranking pari passu therewith or subordinate thereto.
19. The redemption or purchase of Preferred Shares or any class or series of Preferred Shares shall not constitute a variation of rights of the holders of Preferred Shares.
20. The issue, redemption or purchase of any of the Preferred Shares shall not constitute a variation of the rights of the holders of Ordinary Shares.
21. The issue of Preferred Shares or any class or series of Preferred Shares which rank pari passu with, or junior to, any existing Preferred Shares or class of Preferred Shares shall not constitute a variation of the existing Preferred Shares or class of Preferred Shares.
22. The rights conferred upon the holders of the shares of any class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied by the creation or issue of further shares ranking pari passu therewith.
TRUSTS NOT RECOGNISED
23. Except as required by law, no person shall be recognised by the Company as holding any share upon any trust, and the Company shall not be bound by or be compelled in any way to recognise (even when having notice thereof) any equitable, contingent, future or partial interest in any share or any interest in any fractional part of a share or (except only as by these Articles or by law otherwise provided) any other rights in respect of any share except an absolute right to the entirety thereof in the member. This shall not preclude (i) the Company from requiring the members or a transferee of shares to furnish the Company with information as to the beneficial ownership of any share when such information is reasonably required by the Company, or (ii) the Directors, where they consider it appropriate, providing the information given to the members of shares to the holders of depositary instruments in such shares.
CALLS ON SHARES
24. The Directors may from time to time make calls upon the members in respect of any consideration unpaid on their shares in the Company (whether on account of the nominal value of the shares or by way of premium), provided that in the case where the conditions of allotment or issuance of shares provide for the payment of consideration in respect of such shares at fixed times, the Directors shall only make calls in accordance with such conditions.
25. Each member shall (subject to receiving at least thirty days’ notice specifying the time or times and place of payment, or such lesser or greater period of notice provided in the conditions of allotment or issuance of the shares) pay to the Company, at the time or times and place so specified, the amount called on the shares.
26. A call may be revoked or postponed, as the Directors may determine.
27. Subject to the conditions of allotment or issuance of the shares, a call shall be deemed to have been made at the time when the resolution of the Directors authorising the call was passed and may be required to be paid by instalments if specified in the call.
28. The joint holders of a share shall be jointly and severally liable to pay all calls in respect of it.
29. If the consideration called in respect of a share or in respect of a particular instalment is not paid in full before or on the day appointed for payment of it, the person from whom the sum is due shall pay interest in cash on the unpaid value from the day appointed for payment of it to the time of actual payment of such rate, not exceeding five per cent per annum or such other rate as may be specified by an order under section 2(7) of the Act, as the Directors may determine, but the Directors may waive payment of such interest wholly or in part.
30. Any consideration which, by the terms of issue of a share, becomes payable on allotment or issuance or at any fixed date (whether on account of the nominal value of the share or by way of premium) shall, for the purposes of these Articles, be deemed to be a call duly made and payable on the date on which, by the terms of issue, that consideration becomes payable, and in the case of non-payment of such a consideration, all the relevant provisions of these Articles as to payment of interest and expenses, forfeiture or otherwise, shall apply as if such consideration had become payable by virtue of a call duly made and notified.
31. The Directors may, on the issue of shares, differentiate between the holders of different classes as to the amount of calls to be paid and the times of payment.
32. The Directors may, if they think fit:
(a) receive from any member willing to advance such consideration, all or any part of the consideration uncalled and unpaid upon any shares held by him or her; and/or
(b) pay, upon all or any of the consideration so advanced (until the amount concerned would, but for such advance, become payable) interest at such rate (not exceeding, unless the Company in a general meeting otherwise directs, five per cent per annum or such other rate as may be specified by an order under section 2(7) of the Act) as may be agreed upon between the Directors and the member paying such consideration in advance.
33. The Company may:
(a) acting by its Directors, make arrangements on the issue of shares for a difference between the members in the amounts and times of payment of calls on their shares;
(b) acting by its Directors, accept from any member the whole or a part of the amount remaining unpaid on any shares held by him or her, although no part of that amount has been called up;
(c) acting by its Directors and subject to the Act, pay a dividend in proportion to the amount paid up on each share where a larger amount is paid up on some shares than on others; and
(d) by special resolution determine that any portion of its share capital which has not been already called up shall not be capable of being called up except in the event and for the purposes of the Company being wound up; upon the Company doing so, that portion of its share capital shall not be capable of being called up except in that event and for those purposes.
LIEN
34. The Company shall have a first and paramount lien on every share (not being a fully paid share) for all consideration (whether immediately payable or not) called, or payable at a fixed time, in respect of that share.
35. The Directors may at any time declare any share in the Company to be wholly or in part exempt from Article 34.
36. The Company’s lien on a share shall extend to all dividends payable on it.
37. The Company may sell, in such manner as the Directors think fit, any shares on which the Company has a lien, but no sale shall be made unless (i) a sum in respect of which the lien exists is immediately payable; and (ii) the following conditions are satisfied:
37.1 a notice in writing, stating and demanding payment of such part of the amount in respect of which the lien exists as is immediately payable, has been given to the registered holder of the share for the time being, or the person entitled thereto by reason of his or her death or bankruptcy; and
37.2 a period of 14 days after the date of giving of that notice has expired.
38. The following provisions apply in relation to a sale referred to in Article 37:
38.1 to give effect to any such sale, the Directors may authorise some person to transfer the shares sold to the purchaser of them;
38.2 the purchaser shall be registered as the holder of the shares comprised in any such transfer;
38.3 the purchaser shall not be bound to see to the application of the purchase consideration, nor shall his or her title to the shares be affected by any irregularity or invalidity in the proceedings in reference to the sale; and
38.4 the proceeds of the sale shall be received by the Company and applied in payment of such part of the amount in respect of which the lien exists as is immediately payable, and the residue, if any, shall (subject to a like lien for sums not immediately payable as existed upon the shares before the sale) be paid to the person entitled to the shares at the date of the sale.
FORFEITURE
39. If a member of the Company fails to pay any call or instalment of a call on the day appointed for payment of it, the Directors may, at any time thereafter during such time as any part of the call or instalment remains unpaid, serve a notice on the member requiring payment of so much of the call or instalment as is unpaid, together with any interest which may have accrued.
40. The notice referred to in Article 39 shall:
40.1 specify a further day (not earlier than the expiration of 14 days after the date of service of the notice) on or before which the payment required by the notice is to be made; and
40.2 state that, if the amount concerned is not paid by the day so specified, the shares in respect of which the call was made will be liable to be forfeited.
41. If the requirements of the notice referred to in Article 40 are not complied with, any share in respect of which the notice has been served may at any time after the day so specified (but before, should it occur, the payment required by the notice has been made) be forfeited by a resolution of the Directors to that effect.
42. On the trial or hearing of any action for the recovery of any money due for any call, it shall be sufficient to prove that the name of the member sued is entered in the Register as the holder,
or one of the holders, of the shares in the capital of the Company in respect of which such debt accrued, that the resolution making the call is duly recorded in the minute book and that notice of such call was duly given to the member sued, in pursuance of these Articles, and it shall not be necessary to prove the appointment of the Directors who made such call nor any other matters whatsoever, but the proof of the matters aforesaid shall be conclusive evidence of the debt.
43. A forfeited share may be sold or otherwise disposed of on such terms and in such manner as the Directors think fit, and at any time before a sale or disposition the forfeiture may be cancelled on such terms as the Directors think fit.
44. A person whose shares have been forfeited shall cease to be a member of the Company in respect of the forfeited shares, but shall, notwithstanding, remain liable to pay to the Company all consideration which, at the date of forfeiture, were payable by him or her to the Company in respect of the shares, but his or her liability shall cease if and when the Company shall have received payment in full of all such consideration in respect of the shares.
45. A statement in writing that the maker of the statement is a Director or the Company Secretary, and that a share in the Company has been duly forfeited on a date stated in the statement, shall be conclusive evidence of the facts stated in it as against all persons claiming to be entitled to the share.
46. The following provisions apply in relation to a sale or other disposition of a share referred to in Article 43:
46.1 the Company may receive the consideration, if any, given for the share on the sale or other disposition of it and may execute a transfer of the share in favour of the person to whom the share is sold or otherwise disposed of (the “disponee”);
46.2 upon such execution, the disponee shall be registered as the holder of the share; and
46.3 the disponee shall not be bound to see to the application of the purchase consideration, if any, nor shall his or her title to the share be affected by any irregularity or invalidity in the proceedings in reference to the forfeiture, sale or disposal of the share.
47. The provisions of these Articles as to forfeiture shall apply in the case of non-payment of any sum which, by the terms of issue of a share in the capital of the Company, becomes payable at a fixed time, whether on account of the nominal value of the share in the capital of the Company or by way of premium, as if the same had been payable by virtue of a call duly made and notified.
48. The Directors may accept the surrender of any share in the capital of the Company which the Directors have resolved to have been forfeited upon such terms and conditions as may be agreed and, subject to any such terms and conditions, a surrendered share in the capital of the Company shall be treated as if it has been forfeited.
VARIATION OF COMPANY CAPITAL
49. Subject to the provisions of these Articles, the Company may, by ordinary resolution and in accordance with section 83 of the Act, do any one or more of the following, from time to time:
49.1 consolidate and divide all or any of its classes of shares into shares of a larger nominal value than its existing shares;
49.2 subdivide its classes of shares, or any of them, into shares of a smaller nominal value, so however, that in the subdivision the proportion between the amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived;
49.3 increase the nominal value of any of its shares by the addition to them of any undenominated capital;
49.4 reduce the nominal value of any of its shares by the deduction from them of any part of that value, subject to the crediting of the amount of the deduction to undenominated capital, other than the share premium account;
49.5 without prejudice or limitation to Articles 89 to 94 and the powers conferred on the Directors thereby, convert any undenominated capital into shares for allotment as bonus shares to holders of existing shares;
49.6 increase its share capital by new shares of such amount as it thinks expedient; or
49.7 cancel shares of its share capital which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person, and diminish the amount of its share capital by the amount of the shares so cancelled.
50. Subject to the provisions of these Articles, the Company may:
50.1 Without prejudice to Article 17, by special resolution, and subject to the provisions of the Act governing the variation of rights attached to classes of shares and the amendment of these Articles, convert any of its shares into Redeemable Shares; or
50.2 by special resolution, and subject to the provisions of the Act (or as otherwise required or permitted by applicable law) alter or add to the Memorandum with respect to any objects, powers or other matters specified therein or alter or add to these Articles.
REDUCTION OF COMPANY CAPITAL
51. The Company may, in accordance with the provisions of sections 84 to 87 of the Act, reduce its company capital in any way it thinks expedient and, without prejudice to the generality of the foregoing, may thereby:
51.1 extinguish or reduce the liability on any of its shares in respect of share capital not paid up;
51.2 either with or without extinguishing or reducing liability on any of its shares, cancel any paid up company capital which is lost or unrepresented by available assets; or
51.3 either with or without extinguishing or reducing liability on any of its shares, pay off any paid up company capital which is in excess of the wants of the Company.
Unless the special resolution provides otherwise, a reserve arising from the reduction of company capital is to be treated for all purposes as a realised profit in accordance with section 117(9) of the Act. Nothing in this Article 51 shall, however, prejudice or limit the Company’s ability to perform or engage in any of the actions described in section 83(1) of the Act by way of ordinary resolution only.
TRANSFER OF SHARES
52. Subject to the Act and to the provisions of these Articles as may be applicable, any member may transfer all or any of his shares (of any class) by an instrument of transfer in the usual
common form or in any other form which the Board may from time to time approve. The instrument of transfer may be endorsed on the certificate.
53. The instrument of transfer of a share shall be signed by or on behalf of the transferor and, if the share is not fully paid, by or on behalf of the transferee. The transferor shall be deemed to remain the holder of the share until the name of the transferee is entered in the Register in respect of it. All instruments of transfer may be retained by the Company.
54. The instrument of transfer of any share may be executed for and on behalf of the transferor by the Company Secretary or any other party designated by the Board for such purpose, and the Company Secretary or any other party designated by the Board for such purpose shall be deemed to have been irrevocably appointed agent for the transferor of such share or shares with full power to execute, complete and deliver in the name of and on behalf of the transferor of such share or shares all such transfers of shares held by the members in the share capital of the Company. Any document which records the name of the transferor, the name of the transferee, the class and number of shares agreed to be transferred, the date of the agreement to transfer shares and the price per share, shall, once executed by the transferor or the Company Secretary or any other party designated by the Board for such purpose as agent for the transferor, be deemed to be a proper instrument of transfer for the purposes of the Act. The transferor shall be deemed to remain the member holding the share until the name of the transferee is entered on the Register in respect thereof, and neither the title of the transferee nor the title of the transferor shall be affected by any irregularity or invalidity in the proceedings in reference to the sale should the Directors so determine.
55. Subject to the Act, the Company, at its absolute discretion, may, or may procure that a subsidiary of the Company shall, pay Irish stamp duty arising on a transfer of shares on behalf of the transferee of such shares of the Company. If stamp duty resulting from the transfer of shares in the Company which would otherwise be payable by the transferee is paid by the Company or any subsidiary of the Company on behalf of the transferee, then in those circumstances, the Company shall, on its behalf or on behalf of its subsidiary (as the case may be), be entitled to (i) reimbursement of the stamp duty from the transferee, (ii) set-off the stamp duty against any dividends payable to the transferee of those shares and (iii) to the extent permitted by section 1042 of the Act, claim a first and paramount lien on the shares on which stamp duty has been paid by the Company or its subsidiary for the amount of stamp duty paid. The Company’s lien shall extend to all dividends paid on those shares.
56. The Directors shall have power to permit any class of shares to be held in uncertificated form and to implement any arrangements they think fit for such evidencing and transfer which accord with such regulations and in particular shall, where appropriate, be entitled to disapply or modify all or part of the provisions in these Articles with respect to the requirement for written instruments of transfer and share certificates (if any), in order to give effect to such regulations.
57. The Board may, in its absolute discretion and without assigning any reason for its decision, decline to register any transfer of any share which is not a fully-paid share. The Board may also decline to register any transfer if:
57.1 the instrument of transfer is not duly stamped, if required, and lodged at the Office or any other place as the Board may from time to time specify for the purpose, accompanied by the certificate (if any) for the shares to which it relates and such other evidence as the Board may reasonably require to show the right of the transferor to make the transfer;
57.2 the instrument of transfer is in respect of more than one class of share;
57.3 the instrument of transfer is in favour of more than four persons jointly;
57.4 it is not satisfied that all applicable consents, authorisations, permissions or approvals of any governmental body or agency in Ireland or any other applicable jurisdiction required to be obtained under relevant law prior to such transfer have been obtained; or
57.5 it is not satisfied that the transfer would not violate the terms of any agreement to which the Company (or any of its subsidiaries) and the transferor are party or subject.
58. Subject to any directions of the Board from time to time in force, the Company Secretary or any other party designated by the Board for such purpose may exercise the powers and discretions of the Board under Article 57, Article 81, Article 88 and Article 90.
59. If the Board declines to register a transfer it shall, within one month after the date on which the instrument of transfer was lodged, send to the transferee notice of such refusal.
60. No fee shall be charged by the Company for registering any transfer or for making any entry in the Register concerning any other document relating to or affecting the title to any share (except that the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed on it in connection with such transfer or entry).
TRANSMISSION OF SHARES
61. In the case of the death of a member, the survivor or survivors, where the deceased was a joint holder, and the personal representatives of the deceased where he or she was a sole holder, shall be the only persons recognised by the Company as having any title to his or her interest in the shares.
62. Nothing in Article 61 shall release the estate of a deceased joint holder from any liability in respect of any share which had been jointly held by him or her with other persons.
63. Any person becoming entitled to a share in consequence of the death or bankruptcy of a member may, upon such evidence being produced as may from time to time properly be required by the Directors and subject to Article 64, elect either: (a) to be registered himself or herself as holder of the share; or (b) to have some person nominated by him or her (being a person who consents to being so registered) registered as the transferee thereof.
64. The Directors shall, in either of those cases, have the same right to decline or suspend registration as they would have had in the case of a transfer of the share by that member before his or her death or bankruptcy, as the case may be.
65. If the person becoming entitled as mentioned in Article 63: (a) elects to be registered himself or herself, the person shall furnish to the Company a notice in writing signed by him or her stating that he or she so elects; or (b) elects to have another person registered, the person shall testify his or her election by executing to that other person a transfer of the share.
66. All the limitations, restrictions and provisions of Articles 61 to 65 shall be applicable to a notice or transfer referred to in Article 65 as if the death or bankruptcy of the member concerned had not occurred and the notice or transfer were a transfer signed by that member.
67. Subject to Article 68 and Article 69, a person becoming entitled to a share by reason of the death or bankruptcy of the holder shall be entitled to the same dividends and other advantages to which he or she would be entitled if he or she were the registered holder of the share.
68. A person referred to in Article 67 shall not, before being registered as a member in respect of the share, be entitled in respect of it to exercise any right conferred by membership in relation to meetings of the Company.
69. The Directors may at any time serve a notice on any such person requiring the person to make the election provided for by Article 63 and, if the person does not make that election (and proceed to do, consequent on that election, whichever of the things mentioned in Article 65 is appropriate) within ninety days after the date of service of the notice, the Directors may thereupon withhold payment of all dividends, bonuses or other moneys payable in respect of the share until the requirements of the notice have been complied with.
70. The Company may charge a fee not exceeding €10 on the registration of every probate, letters of administration, certificate of death, power of attorney, notice as to stock or other instrument or order.
71. The Directors may determine such procedures as they shall think fit regarding the transmission of shares in the Company held by a body corporate that are transmitted by operation of law in consequence of a merger or division.
CLOSING REGISTER OR FIXING RECORD DATE
72. For the purpose of determining members entitled to notice of or to vote at any meeting of members or any adjournment thereof, or members entitled to receive payment of any dividend, or in order to make a determination of members for any other proper purpose, the Board may provide, subject to the requirements of section 174 of the Act, that the Register shall be closed for transfers at such times and for such periods, not exceeding in the whole thirty days in each year. If the Register shall be so closed for the purpose of determining members entitled to notice of, or to vote at, a meeting of members, such Register shall, subject to applicable law and Exchange rules, be so closed for at least five days immediately preceding such meeting and the record date for such determination shall be the date of the closure of the Register.
73. In lieu of, or apart from, closing the Register, the Board may fix in advance a date as the record date (a) for any such determination of members entitled to notice of or to vote at a meeting of the members, which record date shall not, subject to applicable law and Exchange rules, be more than sixty days before the date of such meeting, and (b) for the purpose of determining the members entitled to receive payment of any dividend or other distribution, or in order to make a determination of members for any other proper purpose, which record date shall not, subject to applicable law and Exchange rules, be more than sixty days prior to the date of payment of such dividend or other distribution or the taking of any action to which such determination of members is relevant.
74. If the Register is not so closed and no record date is fixed for the determination of members entitled to notice of or to vote at a meeting of members, the date immediately preceding the date on which notice of the meeting is deemed given under these Articles shall be the record date for such determination of members. Where a determination of members entitled to vote at any meeting of members has been made as provided in these Articles, such determination shall apply to any adjournment thereof; provided, however, that the Directors may fix a new record date of the Adjourned Meeting, if they think fit.
DIVIDENDS
75. The Company in a general meeting may declare dividends, but no dividends shall exceed the amount recommended by the Directors. Any general meeting declaring a dividend and any resolution of the Directors declaring an interim dividend may direct payment of such dividend
or interim dividend wholly or partly by the distribution of specific assets including paid up shares, debentures or debenture stocks of any other company or in any one or more of such ways, and the Directors shall give effect to such resolution.
76. The Directors may from time to time:
76.1 pay to the members such dividends (whether as either interim dividends or final dividends) as appear to the Directors to be justified by the profits of the Company, subject to section 117 and Chapter 6 of Part 17 of the Act;
76.2 before declaring any dividend, set aside out of the profits of the Company such sums as they think proper as a reserve or reserves which shall, at the discretion of the Directors, be applicable for any purpose to which the profits of the Company may be properly applied, and pending such application may, at the like discretion either be employed in the business of the Company or be held as cash or cash equivalents or invested in such investments as the Directors may lawfully determine; and
76.3 without placing the profits of the Company to reserve, carry forward any profits which they may think prudent not to distribute.
77. Unless otherwise specified by the Directors at the time of declaring a dividend, the dividend shall be a final dividend.
78. Where the Directors specify that a dividend is an interim dividend at the time it is declared, such interim dividend shall not constitute a debt recoverable against the Company and the declaration may be revoked by the Directors at any time prior to its payment provided that the holders of the same class of share are treated equally on any revocation.
79. Subject to the rights of persons, if any, entitled to shares with special rights as to dividend (and to the rights of the Company under Articles 34 to 38 and Article 81) all dividends shall be declared and paid such that shares of the same class shall rank equally irrespective of the premium credited as paid up on such shares.
80. If any share is issued on terms providing that it shall rank for a dividend as from a particular date, such share shall rank for dividend accordingly.
81. The Directors may deduct from any dividend payable to any member, all sums of money (if any) immediately payable by him or her to the Company on account of calls or otherwise in relation to the shares of the Company.
82. The Directors when declaring a dividend or bonus may direct payment of such dividend or bonus wholly or partly by the distribution of specific assets and, in particular, paid up shares, debentures or debenture stock of any other company or in any one or more of such ways.
83. Where any difficulty arises in regard to a distribution, the Directors may settle the matter as they think expedient and, in particular, may:
83.1 issue fractional certificates (subject always to the restriction on the issue of fractional shares) and fix the value for distribution of such specific assets or any part of them;
83.2 determine that cash payments shall be made to any members upon the footing of the value so fixed, in order to adjust the rights of all the parties; and
83.3 vest any such specific assets in trustees as may seem expedient to the Directors.
84. Any dividend, interest or other moneys payable in cash in respect of any shares may be paid:
84.1 by cheque or negotiable instrument sent by post directed to or otherwise delivered to the registered address of the holder, or where there are joint holders, to the registered address of that one of the joint holders who is first named on the register or to such person and to such address as the holder or the joint holders may in writing direct; or
84.2 by transfer to a bank account nominated by the payee or where such an account has not been so nominated, to the account of a trustee nominated by the Company to hold such moneys,
provided that the debiting of the Company’s account in respect of the relevant amount shall be evidence of good discharge of the Company’s obligations in respect of any payment made by any such methods.
85. Any such cheque or negotiable instrument referred to in Article 84 shall be made payable to the order of the person to whom it is sent.
86. Any one of two or more joint holders may give valid receipts for any dividends, bonuses or other moneys payable in respect of the shares held by them as joint holders, whether paid by cheque or negotiable instrument or direct transfer.
87. No dividend shall bear interest against the Company.
88. If the Directors so resolve, any dividend or distribution which has remained unclaimed for twelve years from the date of its declaration shall be forfeited and cease to remain owing by the Company. The payment by the Directors of any unclaimed dividend, distribution or other moneys payable in respect of a share into a separate account shall not constitute the Company a trustee in respect thereof.
BONUS ISSUE OF SHARES
89. Any capitalisation provided for in Articles 90 to 94 inclusive will not require approval or ratification by the members.
90. The Directors may resolve to capitalise any part of a relevant sum (within the meaning of Article 91) by applying such sum in paying up in full unissued shares of a nominal value or nominal value and premium, equal to the sum capitalised, to be allotted and issued as fully paid bonus shares, to those members of the Company who would have been entitled to that sum if it were distributed by way of dividend (and in the same proportions).
91. For the purposes of Article 90, “relevant sum” means: (a) any sum for the time being standing to the credit of the Company’s undenominated capital; (b) any of the Company’s profits available for distribution; (c) any sum representing unrealised revaluation reserves; or (d) a merger reserve or any other capital reserve of the Company.
92. The Directors may in giving effect to any resolution under Article 90 make: (a) all appropriations and applications of the undivided profits resolved to be capitalised by the resolution; and (b) all allotments and issues of fully paid shares, if any, and generally shall do all acts and things required to give effect to the resolution.
93. Without limiting Article 92, the Directors may:
93.1 make such provision as they think fit for the case of shares becoming distributable in fractions (and, again, without limiting the foregoing, may sell the shares represented by such fractions and distribute the net proceeds of such sale amongst the members otherwise entitled to such fractions in due proportions);
93.2 authorise any person to enter, on behalf of all the members concerned, into an agreement with the Company providing for the allotment to them, respectively credited as fully paid up, of any further shares to which they may become entitled on the capitalisation concerned or, as the case may require, for the payment by the application thereto of their respective proportions of the profits resolved to be capitalised of the amounts remaining unpaid on their existing shares,
and any agreement made under such authority shall be effective and binding on all the members concerned.
94. Where the Directors have resolved to approve a bona fide revaluation of all the fixed assets of the Company, the net capital surplus in excess of the previous book value of the assets arising from such revaluation may be: (a) credited by the Directors to undenominated capital, other than the share premium account; or (b) used in paying up unissued shares of the Company to be issued to members as fully paid bonus shares.
GENERAL MEETINGS – GENERAL
95. Subject to Article 96, the Company shall in each year hold a general meeting as its annual general meeting in addition to any other meeting in that year, and shall specify the meeting as such in the notices calling it; and not more than 15 months shall elapse between the date of one annual general meeting of the Company and that of the next.
96. The Company will hold its first annual general meeting within eighteen months of its incorporation.
97. The annual general meeting shall be held in such place and at such time as the Directors shall determine.
98. All general meetings of the Company other than annual general meetings shall be called extraordinary general meetings.
99. The Directors may, whenever they think fit, convene an extraordinary general meeting. An extraordinary general meeting shall also be convened by the Directors on the requisition of members, or if the Directors fail to so convene an extraordinary general meeting, such extraordinary general meeting may be convened by the requisitioning members, in each case in accordance with section 178(3) to (7) of the Act.
100. If at any time the number of Directors is less than two, any Director or any member that satisfies the criteria thereunder, may convene an extraordinary general meeting in the same manner as nearly as possible as that in which meetings may be convened by the Directors.
101. An annual general meeting or extraordinary general meeting of the Company may be held outside of Ireland. The Company shall make, at its expense, all necessary arrangements to ensure that members can by technological means participate in any such meeting without leaving Ireland.
102. A general meeting of the Company may be held in two or more venues (whether inside or outside of Ireland) at the same time using any technology that provides members, as a whole, with a reasonable opportunity to participate, and such participation shall be deemed to constitute presence in person at the meeting.
NOTICE OF GENERAL MEETINGS
103. The only persons entitled to notice of general meetings of the Company are:
103.1 the members;
103.2 the personal representatives of a deceased member, which member would but for his death be entitled to vote;
103.3 the assignee in bankruptcy of a bankrupt member of the Company (being a bankrupt member who is entitled to vote at the meeting);
103.4 the Directors and Company Secretary; and
103.5 unless the Company is entitled to and has availed itself of the audit exemption under the Act, the Auditors (who shall also be entitled to receive other communications relating to any general meeting which a member is entitled to receive).
104. Subject to the provisions of the Act allowing a general meeting to be called by shorter notice, an annual general meeting and an extraordinary general meeting called for the passing of a special resolution shall be called by at least twenty-one days’ notice. Any other extraordinary general meeting shall also be called by at least twenty-one days’ notice, except that it may be called by fourteen days’ notice where:
104.1 all members, who hold shares that carry rights to vote at the meeting, are permitted to vote by electronic means at the meeting; and
104.2 a special resolution reducing the period of notice to fourteen days has been passed at the immediately preceding annual general meeting, or at a general meeting held since that meeting.
105. Any notice convening a general meeting shall specify the time and place of the meeting and, in the case of special business, the general nature of that business and, in reasonable prominence, that a member entitled to attend, speak, ask questions and vote is entitled to appoint a proxy to attend, speak, ask questions and vote in his place and that a proxy need not be a member of the Company. Every notice shall specify such other details as are required by applicable law or the relevant code, rules and regulations applicable to the listing of the shares on any Exchange. Subject to any restrictions imposed on any shares, the notice shall be given to all the members and to the Directors and Auditors.
106. The accidental omission to give notice of a meeting to, or the non-receipt of notice of a meeting by, any person entitled to receive notice shall not invalidate the proceedings at the meeting.
107. In cases where instruments of proxy are sent out with notices, the accidental omission to send such instrument of proxy to, or the non-receipt of such instrument of proxy by, any person entitled to receive such notice shall not invalidate any resolution passed or any proceeding at any such meeting. A member present, either in person or by proxy, at any general meeting of the Company or of the holders of any class of shares in the Company will be deemed, subject to Article 110, to have received notice of that meeting and, where required, of the purpose for which it was called.
108. Where, by any provision contained in the Act, extended notice is required of a resolution, the resolution shall not be effective (except where the Directors have resolved to submit it) unless notice of the intention to move it has been given to the Company not less than twenty-eight days (or such shorter period as the Act permits) before the meeting at which it is moved, and the Company shall give to the members notice of any such resolution as required by and in accordance with the provisions of the Act.
109. In determining the correct period of notice for a general meeting, only Clear Days shall be counted.
110. Whenever any notice is required to be given by law or by these Articles to any person or persons, a waiver thereof in writing, signed by the person or persons entitled to the notice whether before or after the time stated therein, shall be deemed equivalent thereto. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened.
WRITTEN RESOLUTIONS OF THE MEMBERS
111. For so long as the Company has more than one shareholder, unanimous consent of the holders of the Ordinary Shares shall be required before the shareholders may act by way of written resolution in lieu of holding a meeting.
112. 112.1 Except in the case of the removal of statutory auditors or Directors and subject to the Act and the provisions of Article 111, anything which may be done by resolution in general meeting of all or any class or resolution in writing, signed by all of the holders or any class thereof or their proxies (or in the case of a holder that is a corporation (whether or not a company within the meaning of the Acts) on behalf of such holder) being all of the holders of the Company or any class thereof, who at the date of the resolution in writing would be entitled to attend a meeting and vote on the resolution shall be valid and effective for all purposes as if the resolution had been passed at a general meeting of the Company or any class thereof duly convened and held, and if described as a Special Resolution shall be deemed to be a Special Resolution within the meaning of the Acts. Any such resolution in writing may be signed in as many counterparts as may be necessary.
112.2 For the purposes of any written resolution under Article 112, the date of the resolution in writing is the date when the resolution is signed by, or on behalf of, the last holder to sign and any reference in any enactment to the date of passing of a resolution is, in relation to a resolution in writing made in accordance with this section, a reference to such date.
112.3 A resolution in writing made in accordance with Article 112 is valid as if it had been passed by the Company in general meeting or, if applicable, by a meeting of the relevant class of holders of the Company, as the case may be. A resolution in writing made in accordance with this section shall constitute minutes for the purposes of the Act and these Articles.
113. At any time that the Company is a single-member company, its sole member may pass any resolution as a written decision in accordance with section 196 of the Act.
QUORUM FOR GENERAL MEETINGS
114. Two members present in person or by proxy and having the right to attend and vote at the meeting and together holding shares representing more than 50% of the votes that may be cast by all members at the relevant time shall be a quorum at a general meeting; provided, however, that at any time when the Company is a single-member company, one member of the Company present in person or by proxy at a general meeting of it shall be a quorum.
115. If within 15 minutes (or such greater time determined by the chairperson) after the time appointed for a general meeting a quorum is not present, then:
115.1 the meeting shall stand adjourned to the same day in the next week, at the same time and place or to such other day and at such other time and place as the Directors may determine (the “Adjourned Meeting”); and
115.2 if at the Adjourned Meeting a quorum is not present within half an hour (or such greater time determined by the chairperson) after the time appointed for the meeting, the members present shall be a quorum.
PROXIES
116. Every member entitled to attend, speak, ask questions and vote at a general meeting may appoint a proxy or proxies to attend, speak, ask questions relating to items on the agenda and vote on his behalf and may appoint more than one proxy to attend, speak, ask questions and vote at the same general meeting provided that, where a member appoints more than one proxy in relation to a general meeting, each proxy must be appointed to exercise the rights attached to different shares held by that member.
117. The appointment of a proxy shall be in writing in any usual form or in any other form which the Directors may approve and shall be signed by or on behalf of the appointor. The signature on such appointment need not be witnessed. A body corporate may sign a form of proxy under its common seal or under the hand of a duly authorised officer thereof or in such other manner as the Directors may approve. A proxy need not be a member of the Company. A member shall be entitled to appoint a proxy by electronic means, to an address specified by the Company. The proxy form must make provision for three-way voting (i.e., to allow votes to be cast for or against a resolution or to be withheld) on all resolutions intended to be proposed, other than resolutions which are merely procedural. An instrument or other form of communication appointing or evidencing the appointment of a proxy or a corporate representative (other than a standing proxy or representative) together with such evidence as to its due execution as the Board may from time to time require, may be returned to the address or addresses stated in the notice of meeting or Adjourned Meeting or any other information or communication by such time or times as may be specified in the notice of meeting or Adjourned Meeting or in any other such information or communication (which times may differ when more than one place is so specified) or, if no such time is specified, at any time prior to the holding of the relevant meeting or Adjourned Meeting at which the appointee proposes to vote, and, subject to the Act, if not so delivered the appointment shall not be treated as valid.
BODIES CORPORATE ACTING BY REPRESENTATIVES AT MEETINGS
118. Any body corporate which is a member, or a proxy for a member, of the Company may by resolution of its directors or other governing body authorise such person or persons as it thinks fit to act as its representative or representatives at any meeting of the Company or of any class of members of the Company and, subject to evidence being furnished to the Company of such authority as the Directors may reasonably require, any person(s) so authorised shall be entitled to exercise the same powers on behalf of the body corporate which he represents as that body corporate could exercise if it were an individual member of the Company or, where more than one such representative is so authorized, all or any of the rights attached to the shares in respect of which he is so authorised. Where a body corporate appoints more than one representative in relation to a general meeting, each representative must be appointed to exercise the rights attached to different shares held by that body corporate.
RECEIPT OF PROXY APPOINTMENTS
119. Where the appointment of a proxy and any authority under which it is signed or a copy certified notarially or in some other way approved by the Directors is to be received by the Company:
119.1 in physical form, it shall be deposited at the Office or (at the option of the member) at such other place or places (if any) as may be specified for that purpose in or by way of note to the notice convening the meeting;
119.2 in electronic form, it may be so received where an address has been specified by the Company for the purpose of receiving electronic communications:
(a) in the notice convening the meeting; or
(b) in any appointment of proxy sent out by the Company in relation to the meeting; or
(c) in any invitation contained in an electronic communication to appoint a proxy issued by the Company in relation to the meeting;
provided that it is so received by the Company no later than 3 hours, or such other time as may be communicated to the members, before the time for holding the meeting or Adjourned Meeting or (in the case of a poll taken otherwise than at or on the same day as the meeting or Adjourned Meeting) for the taking of the poll at which it is to be used, at which the person named in the proxy proposes to vote and in default shall not be treated as valid or, in the case of a meeting which is adjourned to, or a poll which is to be taken on, a date not later than the record date applicable to the meeting which was adjourned or the poll, it shall be sufficient if the appointment of a proxy and any such authority and certification thereof as aforesaid is so received by the Company at the commencement of the Adjourned Meeting or the taking of the poll. An appointment of a proxy relating to more than one meeting (including any adjournment thereof) having once been so received for the purposes of any meeting shall not be required to be delivered, deposited or received again for the purposes of any subsequent meeting to which it relates.
EFFECT OF PROXY APPOINTMENTS
120.
120.1 Receipt by the Company of an appointment of a proxy in respect of a meeting shall not preclude a member from attending and voting at the meeting or at any adjournment thereof. However, if that member votes at the meeting or at any adjournment thereof, then as regards to the resolution(s) any proxy notice delivered to the Company by or on behalf of that same member shall on a poll, be invalid to the extent that such member votes in respect of the shares to which the proxy notice relates.
120.2 An appointment of a proxy shall be valid, unless the contrary is stated therein, as well for any adjournment of the meeting as for the meeting to which it relates and shall be deemed to confer authority to speak at a general meeting and to demand or join in demanding a poll.
121. A proxy shall have the right to exercise all or any of the rights of his appointor, or (where more than one proxy is appointed) all or any of the rights attached to the shares in respect of which he is appointed as the proxy to attend, and to speak and vote, at a general meeting of
the Company. Unless his appointment provides otherwise, a proxy may vote or abstain at his discretion on any resolution put to the vote.
EFFECT OF REVOCATION OF PROXY OR OF AUTHORISATION
122. A vote given or poll demanded in accordance with the terms of an appointment of a proxy or a resolution authorising a representative to act on behalf of a body corporate shall be valid notwithstanding the previous death, insanity or winding up of the principal, or the revocation of the appointment of a proxy or of the authority under which the proxy was appointed or of the resolution authorising the representative to act or the transfer of the share in respect of which the proxy was appointed or the authorisation of the representative to act was given, provided that no notice in writing (whether in electronic form or otherwise) of such death, insanity, winding up, revocation or transfer is received by the Company at the Office before the commencement of the meeting.
123. The Directors may send to the members, at the expense of the Company, by post, electronic mail or otherwise, forms for the appointment of a proxy (with or without reply paid envelopes for their return) for use at any general meeting or at any class meeting, either in blank or nominating any one or more of the Directors or any other persons in the alternative. If, for the purpose of any meeting, invitations to appoint as proxy a person or one of a number of persons specified in the invitations are issued at the expense of the Company, such invitations shall be issued to all (and not to some only) of the members entitled to be sent a notice of the meeting and to vote thereat by proxy, but the accidental omission to issue such invitations to, or the non-receipt of such invitations by, any member shall not invalidate the proceedings at any such meeting.
THE BUSINESS OF GENERAL MEETINGS
124. All business shall be deemed to be special business that is transacted at an extraordinary general meeting or that is transacted at an annual general meeting other than, in the case of an annual general meeting, the business specified in Article 128 which shall be ordinary business.
125. At any meeting of the members, only such business shall be conducted as shall have been properly brought before such meeting. To be properly brought before an annual general meeting, business must be:
125.1 specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board;
125.2 otherwise properly brought before the meeting by or at the direction of the Board; or
125.3 otherwise properly brought before the meeting by a member.
126. Without prejudice to any procedure which may be permitted under the Act, for business to be properly brought before an annual general meeting by a member, the member must have given timely notice thereof in writing to the Company Secretary. To be timely, a member’s notice must be received not less than 60 days nor more than 90 days prior to the first anniversary of the preceding year’s annual general meeting; provided, however, that in the event that the date of the annual general meeting is advanced by more than 30 days or delayed by more than 60 days from such anniversary, notice by the member to be timely must be so received not earlier than the 90th day prior to such annual general meeting and not later than the close of business on the later of (i) the 60th day prior to such annual general meeting or (ii) the tenth day following the date on which notice of the date of the annual general meeting was mailed or public disclosure thereof was made by the Company, whichever event in this clause (ii) first occurs. For the avoidance of doubt, in no event shall the adjournment or
postponement of any general meeting, or the public announcement of such an adjournment or postponement, commence a new time period (or extend any time period) for the giving of a member’s notice to the Company Secretary pursuant to this Article 126. Each such notice shall set forth as to each matter the member proposes to bring before the annual general meeting:
126.1 a brief description of the business desired to be brought before the annual general meeting and the reasons for conducting such business at the meeting;
126.2 the name and address, as they appear on the Register, of the member proposing such business;
126.3 the class, series and number of shares of the Company which are beneficially owned by the member;
126.4 whether and the extent to which any hedging, derivative or other transaction is in place or has been entered into within the prior six months preceding the date of delivery of the notice by or for the benefit of the member with respect to the Company or its subsidiaries or any of their respective securities, debt instruments or credit ratings, the effect or intent of which transaction is to give rise to gain or loss as a result of changes in the trading price of such securities or debt instruments or changes in the credit ratings for the Company, its subsidiaries or any of their respective securities or debt instruments (or, more generally, changes in the perceived creditworthiness of the Company or its subsidiaries), or to increase or decrease the voting power of the member, and if so, a summary of the material terms thereof; and
126.5 any material interest of the member in such business.
To be properly brought before an extraordinary general meeting, other than pursuant to Article 125, business must be (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board or by the Company Secretary pursuant to the applicable provisions of these Articles or (ii) otherwise properly brought before the meeting by or at the direction of the Board.
127. The chairperson of the meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting and in accordance with the provisions of these Articles, and if he or she should so determine, any such business not properly brought before the meeting shall not be transacted. Nothing herein shall be deemed to affect any rights of members to request inclusion of proposals in the Company’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.
128. The business of the annual general meeting shall include:
128.1 the consideration of the Company’s statutory financial statements and the report of the Directors and the report of the Auditors on those statements and that report;
128.2 the review by the members of the Company’s affairs;
128.3 the authorisation of the Directors to approve the remuneration of the Auditors (if any); and
128.4 the appointment or re-appointment of Auditors.
PROCEEDINGS AT GENERAL MEETINGS
129. The Chairperson, if any, shall preside as chairperson at every general meeting of the Company, or if there is no such Chairperson, or if he or she is not present at the time
appointed for the holding of the meeting or is unwilling to act, the Directors present shall elect one of their number to be chairperson of the meeting.
130. If at any meeting no Director is willing to act as chairperson or if no Director is present at the time appointed for holding the meeting, the members present shall choose one of their number to be chairperson of the meeting.
131. At each meeting of members, the chairperson of the meeting shall fix and announce the date and time of the opening and the closing of the polls for each matter upon which the members will vote at the meeting and shall determine the order of business and all other matters of procedure.
132. The Directors may adopt such rules, regulations and procedures for the conduct of any meeting of the members as they deem appropriate. Except to the extent inconsistent with any applicable rules, regulations and procedures adopted by the Board, the chairperson of any meeting may adopt such rules, regulations and procedures for the meeting, which need not be in writing, and take such actions with respect to the conduct of the meeting, as the chairperson of the meeting deems appropriate, to maintain order and safety and for the conduct of the meeting.
133. The chairperson of the meeting may, with the consent of any meeting at which a quorum is present, and shall if so directed by the meeting, adjourn the meeting from time to time and from place to place.
134. No business shall be transacted at any Adjourned Meeting other than the business left unfinished at the meeting from which the adjournment took place.
135. When a meeting is adjourned for thirty days or more, notice of the Adjourned Meeting shall be given as in the case of an original meeting but, subject to that, it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an Adjourned Meeting.
136. Each Director and the Auditors shall be entitled to attend and speak at any general meeting of the Company.
137. For business to be properly requested by a member to be brought before a general meeting, the member must comply with the requirements of the Act or:
137.1 be a member at the time of the giving of the notice for such general meeting;
137.2 be entitled to vote at such meeting; and
137.3 have given timely and proper notice in writing to the Company Secretary in accordance with Article 126.
138. Except where a greater majority is required by the Act or these Articles, any question proposed for a decision of the members at any general meeting of the Company or a decision of any class of members at a separate meeting of any class of shares shall be decided by an ordinary resolution.
VOTING
139. At any general meeting, a resolution put to the vote of the meeting shall be decided on a poll.
140. Save as provided in Article 141 of these Articles, a poll shall be taken in such manner as the chairperson of the meeting directs and he or she may appoint scrutineers (who need not be
members) and fix a time and place for declaring the result of the poll. The result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded.
141. A poll demanded on the election of a chairperson of the meeting or on a question of adjournment shall be taken forthwith. A poll demanded on any other question shall be taken either forthwith or at such time and place as the chairperson of the meeting may direct. The demand for a poll shall not prevent the continuance of a meeting for the transaction of any business other than the question on which the poll was demanded.
142. No notice need be given of a poll not taken forthwith if the time and place at which it is to be taken are announced at the meeting at which it is demanded. In any other case at least seven Clear Days’ notice shall be given specifying the time and place at which the poll is to be taken.
143. If authorised by the Directors, any vote taken by written ballot may be satisfied by a ballot submitted by electronic and/or telephonic transmission, provided that any such electronic or telephonic submission must either set forth or be submitted with information from which it can be determined that the electronic or telephonic submission has been authorised by the member or proxy.
VOTES OF MEMBERS
144. Subject to the provisions of these Articles and any rights or restrictions for the time being attached to any class or classes of shares in the capital of the Company, every member of record present in person or by proxy shall have one vote for each share registered in his or her name in the Register.
145. Where there are joint holders of a share, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holder or holders; and for this purpose, seniority shall be determined by the order in which the names of the joint holders stand in the Register.
146. A member who has made an enduring power of attorney, or a member in respect of whom an order has been made by any court having jurisdiction in cases of unsound mind, may vote by his or her committee, donee of an enduring power of attorney, receiver, guardian or other person appointed by the foregoing court, and any such committee, donee of an enduring power of attorney, receiver, guardian or other persons appointed by the foregoing court may speak or vote by proxy.
147. No objection shall be raised to the qualification of any voter except at the general meeting or adjourned general meeting at which the vote objected to is given or tendered and every vote not disallowed at such general meeting shall be valid for all purposes. Any such objection made in due time shall be referred to the chairperson of the general meeting whose decision shall be final and conclusive.
148. A person shall be entered on the Register by the record date specified in respect of a general meeting in order to exercise the right of a member to participate and vote at the general meeting and any change to an entry on the Register after the record date shall be disregarded in determining the right of any person to attend and vote at the meeting.
149. Votes may be given either personally (including by a duly authorised representative of a corporate member) or by proxy. On a poll taken at a meeting of the members of the Company or a meeting of any class of members of the Company, a member, whether present in person or by proxy, entitled to more than one vote need not, if he votes, use all his votes or cast all the votes he uses in the same way.
150. Subject to such requirements and restrictions as the Directors may specify, the Company may permit members to vote by correspondence in advance of a general meeting in respect of one or more of the resolutions proposed at a meeting. Where the Company permits members to vote by correspondence, it shall only count votes cast in advance by correspondence, where such votes are received at the address and before the date and time specified by the Company, provided the date and time is no more than 24 hours before the time at which the vote is to be concluded.
151. Subject to such requirements and restrictions as the Directors may specify, the Company may permit members who are not physically present at a meeting to vote by electronic means at the general meeting in respect of one or more of the resolutions proposed at a meeting.
152. Where there is an equality of votes, the chairperson of the meeting shall not have a second or casting vote.
153. No member shall be entitled to vote at any general meeting of the Company unless all calls or other sums immediately payable by him or her in respect of shares in the Company have been paid.
CLASS MEETINGS
154. The provisions of these Articles relating to general meetings shall, as far as applicable, apply in relation to any meeting of any class of member of the Company.
APPOINTMENT OF DIRECTORS
155. The number of Directors from time to time shall be not less than two nor more than thirteen.
156. The Board, upon recommendations of the nomination and governance committee (or equivalent committee established by the Board), shall propose nominees for election to the office of Director at each annual general meeting.
157. The Directors may be appointed by the members in general meeting, provided that no person other than a Director retiring at the meeting shall, save where recommended by the Board, be eligible for election to the office of Director at any general meeting unless the requirements of Article 164 as to his or her eligibility for that purpose have been complied with.
158. The Directors shall be divided into three classes, designated Class I, Class II and Class III. The initial division of the Board into classes shall be made by the decision of the affirmative vote of a majority of the Directors in office and each class need not be of equal size or number.
158.1 The term of the initial Class I directors shall terminate at the conclusion of the Company’s 2023 annual general meeting; the term of the initial Class II directors shall terminate on the conclusion of the Company’s 2024 annual general meeting; and the term of the initial Class III directors shall terminate on the conclusion of the Company’s 2025 annual general meeting.
158.2 At each annual general meeting of the Company beginning with the Company’s 2023 annual general meeting, all of the Directors of the class of directors whose term expires on the conclusion of that annual general meeting shall retire from office, unless re-elected, and successors to that class of directors shall be elected for a three-year term.
158.3 The resolution appointing any Director must designate the Director as a Class I, Class II or Class III Director.
158.4 Every Director of the class retiring shall be eligible to stand for re-election at an annual general meeting.
158.5 If the number of Directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of Directors in each class as nearly equal as possible or as the Chairperson may otherwise direct. In no case will a decrease in the number of Directors shorten the term of any incumbent Director.
158.6 A Director shall hold office until the conclusion of the annual general meeting for the year in which his term expires and until his successor shall be elected and shall qualify, subject however, to prior death, resignation, retirement, disqualification or removal from office.
158.7 Any vacancy on the Board, including a vacancy that results from an increase in the number of directors or from the death, resignation, retirement, disqualification or removal of a Director, shall be deemed a casual vacancy. Subject to the terms of any one or more classes or series of Preferred Shares, any casual vacancy shall only be filled by the decision of a majority of the Board then in office, provided that a quorum is present and provided that the appointment does not cause the number of Directors to exceed any number fixed by or in accordance with these articles as the maximum number of Directors.
158.8 Any Director of such class elected to fill a vacancy resulting from an increase in the number of Directors of such class shall hold office for a term that shall coincide with the remaining term of that class. Any Director elected to fill a vacancy not resulting from an increase in the number of Directors shall have the same remaining term as that of his predecessor or if there is no such remaining term, the Director shall retire, and be eligible to stand for re-election, at the annual general meeting immediately following their appointment at which time, if reelected, the Director shall hold office for a term that shall coincide with the remaining term of that class. A Director retiring at a meeting shall retain office until the close or adjournment of the meeting.
159. Each Director shall be elected by an ordinary resolution at such meeting, provided that if, as of, or at any time prior to, fourteen days before the filing of the Company’s definitive proxy statement with the SEC relating to such general meeting, the number of Director nominees exceeds the number of Directors to be elected (a “contested election”), each of those nominees shall be voted upon as a separate resolution and the Directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at any such meeting and entitled to vote on the election of Directors.
For the purposes of this Article, “elected by a plurality” means the election of those director nominees, equalling in number to the number of positions to be filled at the relevant general meeting, that received the highest number of votes.
160. Any nominee for election to the Board who is then serving as a Director and, in an uncontested election (where the number of Director nominees does not exceed the number of Directors to be elected), receives a greater number of “against” votes than “for” votes shall promptly tender his or her resignation following certification of the vote. The nomination and governance committee of the Board shall then consider the resignation offer and recommend to the Board whether to accept or reject the resignation, or whether other action should be taken; provided that any Director whose resignation is under consideration shall not participate in the nomination and governance committee’s recommendation regarding whether to accept, reject or take other action with respect to his/her resignation. The Board shall take action on the nomination and governance committee’s recommendation within 90
days following certification of the vote, and promptly thereafter publicly disclose its decision and the reasons therefor.
161. The Directors are not entitled to appoint alternate directors.
162. The Company may from time to time, by ordinary resolution, increase or reduce the number of Directors provided that any resolution to appoint a director approved by the members that would result in the maximum number of Directors being exceeded shall be deemed to constitute an ordinary resolution increasing the maximum number of Directors to the number that would be in office following such a resolution of appointment.
163. The Company may by ordinary resolution, appoint another person in place of a Director removed from office under section 146 of the Act and, without prejudice to the powers of the Directors under Article 158.7, the Company in a general meeting may appoint any person to be a Director either to fill a casual vacancy or as an additional Director.
DIRECTORS - MEMBER NOMINATIONS
164. The following are the requirements mentioned in Article 157 for the eligibility of a person (the “person concerned”) for election as a Director at a general meeting, namely, any member entitled to vote in the election of Directors generally may nominate one or more persons for election as Directors at an annual general meeting only pursuant to the Company’s notice of such meeting or if written notice of such member’s intent to make such nomination or nominations has been received by the Company Secretary at the Company’s Office not less than 60 nor more than 90 days prior to the first anniversary of the preceding year’s annual general meeting; provided, however, that in the event that the date of the annual general meeting is advanced by more than 30 days or delayed by more than 60 days from such anniversary, notice by the member to be timely must be so received not earlier than the 90th day prior to such annual general meeting and not later than the close of business on the later of (i) the 60th day prior to such annual general meeting and (ii) the 10th day following the day on which notice of the date of the annual general meeting was mailed or public disclosure thereof was made by the Company, whichever event in this clause (ii) first occurs. Each such member’s notice shall set forth:
164.1 the name and address of the member who intends to make the nomination and of the person or persons to be nominated;
164.2 a representation that the member is a holder of record of shares of the Company entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice;
164.3 a description of all arrangements or understandings between the member and each nominee and any other person or persons (naming such person or persons) relating to the nomination or nominations;
164.4 the class and number of shares of the Company which are beneficially owned by such member and by any other members known by such member to be supporting such nominees as of the date of such member’s notice;
164.5 whether and the extent to which any hedging, derivative or other transaction is in place or has been entered into within the prior six months preceding the date of delivery of the notice by or for the benefit of the member with respect to the Company or its subsidiaries or any of their respective securities, debt instruments or credit ratings, the effect or intent of which transaction is to give rise to gain or loss as a result of changes in the trading price of such securities or debt instruments or changes in the credit ratings for the Company, its subsidiaries or any of their
respective securities or debt instruments (or, more generally, changes in the perceived creditworthiness of the Company or its subsidiaries), or to increase or decrease the voting power of the member, and if so, a summary of the material terms thereof;
164.6 such other information regarding each nominee proposed by such member as would be required to be included in a proxy statement filed pursuant to the proxy rules of the SEC;
164.7 the consent of each nominee to serve as a Director if so elected; and
164.8 for each nominee who is not an incumbent Director:
(a) their name, age, business address and residential address;
(b) their principal occupation or employment;
(c) the class, series and number of securities of the Company that are owned of record or beneficially by such person;
(d) the date or dates the securities were acquired and the investment intent of each acquisition;
(e) any other information relating to such person that is required to be disclosed in proxies for the election of Directors under any applicable securities legislation; and
(f) any information the Company may require any proposed director nominee to furnish such as it may reasonably require to comply with applicable law and to determine the eligibility of such proposed nominee to serve as a Director and whether such proposed nominee would be considered independent as a Director or as a member of the audit or any other committee of the Board under the various rules and standards applicable to the Company.
VACATION OF OFFICE BY DIRECTORS
165. Subject to the provisions of these Articles and in addition to the circumstances described in sections 146, 148(1) and 196(2) of the Act, the office of Director shall be vacated ipso facto, if that Director:
165.1 is restricted or disqualified to act as a Director under the Act; or
165.2 resigns his or her office by notice in writing to the Company or in writing offers to resign and the Directors resolve to accept such offer; or
165.3 is requested to resign in writing by not less than three quarters of the other Directors.
DIRECTORS’ REMUNERATION AND EXPENSES
166. The remuneration of the Directors shall be such as is determined, from time to time, by the Board and such remuneration shall be deemed to accrue from day to day. The Board may from time to time determine that, subject to the requirements of the Act, all or part of any fees or other remuneration payable to any Director shall be provided in the form of shares or other securities of the Company or any subsidiary of the Company, or options or rights to acquire such shares or other securities, on such terms as the Board may decide.
167. The Directors may also be paid all travelling, hotel and other expenses properly incurred by them: (a) in attending and returning from: (i) meetings of the Directors or any committee; or
(ii) general meetings of the Company, or (b) otherwise in connection with the business of the Company.
GENERAL POWER OF MANAGEMENT AND DELEGATION
168. The business of the Company shall be managed by its Directors who may pay all expenses incurred in promoting and registering the Company and may exercise all such powers of the Company as are not, by the Act or by the Memorandum of these Articles, required to be exercised by the Company in a general meeting, but subject to:
168.1 any regulations contained in these Articles;
168.2 the provisions of the Act; and
168.3 such directions, not being inconsistent with the foregoing regulations or provisions, as the Company in a general meeting may (by special resolution) give.
169. No direction given by the Company in a general meeting under Article 168.3 shall invalidate any prior act of the Directors which would have been valid if that direction had not been given.
170. Without prejudice to the generality of Article 168, Article 168 operates to enable, subject to a limitation (if any) arising under any of paragraphs 168.1 to 168.3 of it, the Directors exercise all powers of the Company to borrow money and to mortgage or charge its undertaking, property and uncalled capital, or any part thereof.
171. Without prejudice to section 40 of the Act, the Directors may delegate any of their powers (including any power referred to in these Articles) to such person or persons as they think fit, including committees; any such person or committee shall, in the exercise of the powers so delegated, conform to any regulations that may be imposed on it by the Directors.
172. Any reference to a power of the Company required to be exercised by the Company in a general meeting includes a reference to a power of the Company that, but for the power of the members to pass a written resolution to effect the first-mentioned power’s exercise, would be required to be exercised by the Company in a general meeting.
173. The acts of the Board or of any committee established by the Board or any delegee of the Board or any such committee shall be valid notwithstanding any defect which may afterwards be discovered in the appointment or qualification of any Director, committee member or delegee.
174. The Directors may appoint a sole or joint company secretary, an assistant company secretary and a deputy company secretary for such term, at such remuneration and upon such conditions as they may think fit; and any such person so appointed may be removed by them.
OFFICERS AND EXECUTIVES
175. The Directors may from time to time appoint one or more of themselves to the office of Chief Executive Officer (by whatever name called including managing director) or such other office or position with the Company and for such period and on such terms as to remuneration, if any (whether by way of salary, commission, participation in profits or otherwise) as the Board may determine, and, subject to the terms of any agreement entered into in any particular case, may revoke such appointment.
176. Without prejudice to any claim the person so appointed under Article 175 may have for damages for breach of any contract of service between the person and the Company, the person’s appointment shall cease upon his or her ceasing, for any reason, to be a Director.
177. The Board may appoint any person whether or not he or she is a Director, to hold such executive or official position (except that of Auditor) as the Board may from time to time determine. The same person may hold more than one office of executive or official position.
178. The Board shall determine from time to time, the powers and duties of any such office holder or official appointed under Articles 175 and/or Article 177, and subject to the provisions of the Act and these Articles, the Directors may confer upon an office holder or official any of the powers exercisable by them upon such terms and conditions and with such restrictions as they may think fit and in conferring any such powers, the Directors may specify that the conferral is to operate either: (a) so that the powers concerned may be exercised concurrently by them and the relevant office holder; or (b) to the exclusion of their own such powers.
179. The Directors may (a) revoke any conferral of powers under Article 178 or (b) amend any such conferral (whether as to the powers conferred or the terms, conditions or restrictions subject to which the conferral is made). The use or inclusion of the word “officer” (or similar words) in the title of any executive or other position shall not be deemed to imply that the person holding such executive or other position is an “officer” of the Company within the meaning of the Act.
MEETINGS OF DIRECTORS AND COMMITTEES
180. 180.1 The Directors may meet together for the dispatch of business, adjourn and otherwise regulate their meetings as they think fit.
180.2 The Directors may establish attendance and procedural guidelines from time to time about how their meetings are to be conducted consistent with good corporate governance and applicable tax requirements.
180.3 Such meetings shall take place at such time and place as the Directors may determine.
180.4 Questions arising at any such meeting shall be decided by a majority of votes and where there is an equality of votes, the chairperson of the meeting shall not have a second or casting vote.
180.5 A Director may, and the Company Secretary on the requisition of a Director shall, at any time summon a meeting of the Directors.
181. All Directors shall be entitled to reasonable notice of any meeting of the Directors.
182. Nothing in Article 181 or any other provision of the Act enables a person, other than a Director, to object to the notice given for any meeting of the Directors.
183. The quorum necessary for the transaction of the business of the Directors may be fixed by the Directors, and unless so fixed shall be a majority of the Directors in office at the time when the meeting is convened.
184. The continuing Directors may act notwithstanding any vacancy in their number, provided that if the number of the Directors is reduced below the prescribed minimum the remaining Director or Directors shall appoint forthwith an additional Director or additional Directors to make up such minimum or shall convene a general meeting of the Company for the purpose of making such appointment and apportion the Directors among the classes so as to maintain the number of Directors in each class as equal as possible.
CHAIRPERSON
185. The Directors may elect a Chairperson and determine the period for which he or she is to hold office, but if no such Chairperson is elected, or, if at any meeting the Chairperson is not present after
the time appointed for holding it, the Directors present may choose one of their members to be chairperson of a Board meeting. The Chairperson shall vacate office if he or she vacates his or her office as a Director (otherwise than by the expiration of his or her term of office at a general meeting of the Company at which he or she is re-appointed).
COMMITTEES
186. The Directors may establish one or more committees consisting in whole or in part of members of the Board. The composition, function, power and obligations of any such committee will be determined by the Board from time to time.
187. A committee established under Article 186 (a “committee”) may elect a chairperson of its meetings; if no such chairperson is elected, or if at any meeting the chairperson is not present after the time appointed for holding it, the members of the committee present may choose one of their number to be chairperson of the meeting.
188. A committee may meet and adjourn as it thinks proper. Committee meetings shall take place at such time and place as the relevant committee may determine. Questions arising at any meeting of a committee shall be determined (subject to Article 186) by a majority of votes of the members of the committee present, and where there is an equality of votes, the chairperson of the committee shall not have a second or casting vote.
189. Where any committee is established by the Directors :
189.1 the meetings and proceedings of such committee shall be governed by the provisions of these Articles regulating the meetings and proceedings of the Directors so far as the same are applicable and are not superseded by any regulations imposed upon such committee by the Directors; and
189.2 the Directors may authorise, or may authorise such committee to authorise, any person who is not a Director to attend all or any meetings of any such committee on such terms as the Directors or the committee think fit, provided that any such person shall not be entitled to vote at meetings of the committee.
WRITTEN RESOLUTIONS AND TELEPHONIC MEETINGS OF THE DIRECTORS
190. The following provision shall apply:
190.1 A resolution in writing signed by all the Directors, or by all the Directors being members of a committee referred to in Article 186, and who are for the time being entitled to receive notice of a meeting of the Directors or, as the case may be, of such a committee, shall be as valid as if it had been passed at a meeting of the Directors or such a committee duly convened and held.
190.2 A resolution in writing shall be deemed to have been signed by a Director where the Chairperson, Company Secretary or other person designated by the Board has received an email from that Director’s Certified Email Address which identifies the resolution and states, unconditionally, “I hereby sign the resolution”.
190.3 A Director’s Certified Email Address is such email address as the Director has, from time to time, notified to such person and in such manner as may from time to time be prescribed by the Board.
190.4 The Company shall cause a copy of every email referred to in Article 190.2 to be entered in the books kept pursuant to section 166 of the Act.
191. Subject to Article 192, where one or more of the Directors (other than a majority of them) would not, by reason of:
191.1 the Act or any other enactment;
191.2 these Articles; or
191.3 an applicable rule of law or an Exchange,
be permitted to vote on a resolution such as is referred to in Article 190, if it were sought to pass the resolution at a meeting of the Directors duly convened and held, then such a resolution, notwithstanding anything in Article 190.1, shall be valid for the purposes of that subsection if the resolution is signed by those of the Directors who would have been permitted to vote on it had it been sought to pass it at such a meeting.
192. In a case falling within Article 191, the resolution shall state the name of each Director who did not sign it and the basis on which he or she did not sign it.
193. For the avoidance of doubt, nothing in Articles 190 to 192 dealing with a resolution that is signed by other than all of the Directors shall be read as making available, in the case of an equality of votes, a second or casting vote to the one of their number who would, or might have been, if a meeting had been held to transact the business concerned, chairperson of that meeting.
194. The resolution referred to in Article 190 may consist of several documents in like form each signed by one or more Directors and for all purposes shall take effect from the time that it is signed by the last Director.
195. A meeting of the Directors or of a committee referred to in Article 186 may consist of a conference between some or all of the Directors or, as the case may be, members of the committee who are not all in one place, but each of whom is able (directly or by means of telephonic, video or other electronic communication) to speak to each of the others and to be heard by each of the others and:
195.1 a Director or as the case may be a member of the committee taking part in such a conference shall be deemed to be present in person at the meeting and shall be entitled to vote (subject to Article 191) and be counted in a quorum accordingly; and
195.2 such a meeting shall be deemed to take place:
(a) where the largest group of those Directors participating in the conference is assembled;
(b) if there is no such group, where the chairperson of the meeting then is; or
(c) if neither subparagraph (a) or (b) applies, in such location as the meeting itself decides.
DIRECTORS’ DUTIES, CONFLICTS OF INTEREST, ETC.
196. A Director may have regard to the interests of any other companies in a group of which the Company is a member to the full extent permitted by the Act.
197. A Director is expressly permitted (for the purposes of section 228(1)(d) of the Act) to use vehicles, telephones, computers, aircraft, accommodation and any other Company property where such use is approved by the Board or by a person so authorised by the Board or where such use is in accordance with a Director’s terms of employment, letter of appointment or
other contract or in the course of the discharge of the Director’s duties or responsibilities or in the course of the discharge of a Director’s employment.
198. Nothing in section 228(1)(e) of the Act shall restrict a Director from entering into any commitment which has been approved by the Board or has been approved pursuant to such authority as may be delegated by the Board in accordance with these Articles. It shall be the duty of each Director to obtain the prior approval of the Board, before entering into any commitment permitted by sections 228(1)(e)(ii) and 228(2) of the Act.
199. It shall be the duty of a Director who is in any way, whether directly or indirectly, interested (within the meaning of section 231 of the Act) in a contract or proposed contract with the Company, to declare the nature of his or her interest at a meeting of the Directors.
200. Subject to any applicable law or the relevant code, rules and regulations applicable to the listing of the shares on any Exchange, a Director may vote in respect of any contract, appointment or arrangement in which he or she is interested and shall be counted in the quorum present at the meeting and is hereby released from his or her duty set out in section 228(1)(f) of the Act and a Director may vote on his or her own appointment or arrangement and the terms of it.
201. The Directors may exercise the voting powers conferred by the shares of any other company held or owned by the Company in such manner in all respects as they think fit and, in particular, they may exercise the voting powers in favour of any resolution: (a) appointing the Directors or any of them as directors or officers of such other company; or (b) providing for the payment of remuneration or pensions to the directors or officers of such other company.
202. Subject to any applicable law or the relevant code, rules and regulations applicable to the listing of the shares on any Exchange, any Director may vote in favour of the exercise of such voting rights notwithstanding that he or she may be or may be about to become a Director or officer of the other company referred to in Article 201 and as such or in any other way is or may be interested in the exercise of such voting rights in the foregoing manner.
203. A Director may hold any other office or place of profit under the Company (other than Auditor) in conjunction with his or her office of Director for such period and on such terms as to remuneration and otherwise as the Directors may determine.
204. Without prejudice to the provisions of section 228 of the Act, a Director may be or become a director or other officer of, or otherwise interested in, any company promoted by the Company or in which the Company may be interested as member or otherwise.
205. A Director may act by himself or herself, or his or her firm, in a professional capacity for the Company; and any Director, in such a case, or his or her firm, shall be entitled to remuneration for professional services as if he or she were not a Director, but nothing in this Article authorises a Director, or his or her firm, to act as Auditor.
206. No Director or nominee for Director shall be disqualified by his or her office from contracting with the Company either with regard to his or her tenure of any such other office or place of profit or as vendor, purchaser or otherwise.
207. In particular, neither shall:
207.1 any contract with respect to any of the matters referred to in Article 200 nor any contract or arrangement entered into by or on behalf of the Company in which a Director is in any way interested, be liable to be avoided; nor
207.2 a Director so contracting or being so interested be liable to account to the Company for any profit realised by any such contract or arrangement,
by reason of such Director holding that office or of the fiduciary relation thereby established.
208. A Director, notwithstanding his or her interest, may be counted in the quorum present at any meeting at which:
208.1 that Director or any other Director is appointed to hold any such office or place of profit under the Company as is mentioned in Article 203; or
208.2 the terms of any such appointment are arranged,
and he or she may vote on any such appointment or arrangement, subject to any applicable law or the relevant code, rules and regulations applicable to the listing of the shares on any Exchange.
THE COMMON SEAL, OFFICIAL SEAL AND SECURITIES SEAL
209. Any seal of the Company shall be used only by the authority of the Directors, a committee authorised by the Directors to exercise such authority or by any one or more persons severally or jointly so authorised by the Directors or such a committee, and the use of the seal shall be deemed to be authorised for these purposes where the matter or transaction pursuant to which the seal is to be used has been so authorised.
210. Any instrument to which a Company’s seal shall be affixed shall be signed by any one of the following:
210.1 a Director;
210.2 the Company Secretary; or
210.3 any other person authorised to sign by (i) the Directors or (ii) a committee,
and the countersignature of a second such person shall not be required.
211. The Company may have one or more duplicate common seals or official seals for use in different locations including for use abroad.
SERVICE OF NOTICES ON MEMBERS
212. A notice required or authorised to be served on or given to a member of the Company pursuant to a provision of the Act or these Articles shall, save where the means of serving or giving it specified in Article 212.4 is used, be in writing and may be served on or given to the member in one of the following ways:
212.1 by delivering it to the member;
212.2 by leaving it at the registered address of the member;
212.3 by sending it by post in a prepaid letter to the registered address of the member; or
212.4 subject to Article 217, by electronic mail or other means of electronic communication approved by the Directors to the contact details notified to the Company by any such member for such purpose (or if not so notified, then to the contact details of the member last known to the Company). A notice or document may be sent by electronic means to the fullest extent permitted by the Act.
213. Without prejudice or limitation to the foregoing provisions of Article 212.1 to 212.4, for the purposes of these Articles and the Act, a document shall be deemed to have been sent to a member if a notice is given, served, sent or delivered to the member and the notice specifies the website or hotlink or other electronic link at or through which the member may obtain a copy of the relevant document.
214. Any notice served or given in accordance with Article 212 shall be deemed, in the absence of any agreement to the contrary between the Company (or, as the case may be, the officer of it) and the member, to have been served or given:
214.1 in the case of its being delivered, at the time of delivery (or, if delivery is refused, when tendered);
214.2 in the case of its being left, at the time that it is left;
214.3 in the case of its being posted on any day other than a Friday, Saturday or Sunday, 24 hours after despatch and in the case of its being posted:
(a) on a Friday — 72 hours after despatch; or
(b) on a Saturday or Sunday — 48 hours after despatch;
214.4 in the case of electronic means being used in relation to it, twelve hours after despatch,
but this Article is without prejudice to section 181(3) of the Act.
215. Every legal personal representative, committee, receiver, curator bonis or other legal curator, assignee in bankruptcy, examiner or liquidator of a member shall be bound by a notice given as aforesaid if sent to the last registered address of such member, or, in the event of notice given or delivered pursuant to Article 212.4, if sent to the address notified to the Company by the member for such purpose notwithstanding that the Company may have notice of the death, his or her being of unsound mind, bankruptcy, liquidation or disability of such member.
216. Notwithstanding anything contained in these Articles to the contrary, the Company shall not be obliged to take account of or make any investigations as to the existence of any suspension or curtailment of postal services within or in relation to all or any part of any jurisdiction.
217. Any requirement in these Articles for the consent of a member in regard to the receipt by such member of electronic mail or other means of electronic communications approved by the Directors, including the receipt of the Company’s annual report, statutory financial statements and the Directors’ and Auditor’s reports thereon, shall be deemed to have been satisfied where the Company has written to the member informing him or her of its intention to use electronic communications for such purposes and the member has not, within four weeks of the issue of such notice, served an objection in writing on the Company to such member. Where a member has given, or is deemed to have given, his/her consent to the receipt by such member of electronic mail or other means of electronic communications approved by the Directors, she/he may revoke such consent at any time by requesting the Company to communicate with him or her in documented form; provided, however, that such revocation shall not take effect until five days after written notice of the revocation is received by the Company. Notwithstanding anything to the contrary in this Article 217, no such consent shall be necessary, and to the extent it is necessary, such consent shall be deemed to have been given, if electronic communications are permitted to be used under the rules and regulations of any Exchange on which the shares in the capital of the Company or other securities of the Company are listed or under the rules of the SEC.
218. If at any time by reason of the suspension or curtailment of postal services in any territory, the Company is unable effectively to convene a general meeting by notices sent through the post, a general meeting may be convened by a public announcement (as defined below) and such notice shall be deemed to have been duly served on all members entitled thereto at noon (Ireland time) on the day on which the said public announcement is made. In any such case the Company shall put a full copy of the notice of the general meeting on its website.
219. Notice shall be given by the Company to the joint holders of a share in the capital of the Company by giving the notice to both such holders whose names stand in the Register in respect of the share.
220. 220.1 Every person who becomes entitled to a share in the capital of the Company shall, before his or her name is entered in the Register in respect of the share, be bound by any notice in respect of that share which has been duly given to a person from whom he or she derives his or her title.
220.2 A notice may be given by the Company to the persons entitled to a share in the capital of the Company in consequence of the death or bankruptcy of a member by sending or delivering it, in any manner authorised by these Articles for the giving of notice to a member, addressed to them at the address, if any, supplied by them for that purpose. Until such an address has been supplied, a notice may be given in any manner in which it might have been given if the death or bankruptcy had not occurred.
221. The signature (whether electronic signature, an advanced electronic signature or otherwise) to any notice to be given by the Company may be written (in electronic form or otherwise) or printed.
SERVICE OF NOTICES ON THE COMPANY
222. In addition to the means of service of documents set out in section 51 of the Act, a notice or other document may be served on the Company by an officer of the Company by email provided, however, that the Directors have designated an email address for that purpose and notified that email address to its officers for the express purpose of serving notices on the Company.
SENDING STATUTORY FINANCIAL STATEMENTS TO MEMBERS
223. The Company may send by post, electronic mail or any other means of electronic communication:
223.1 the Company’s statutory financial statements;
223.2 the directors’ report; and
223.3 the statutory auditors’ report,
and copies of those documents shall also be treated, for the purposes of the Act, as sent to a person where:
(a) the Company and that person have agreed to his or her having access to the documents on a website (instead of their being sent to him or her);
(b) the documents are documents to which that agreement applies; and
(c) that person is notified, in a manner for the time being agreed for the purpose between him or her and the Company, of:
(i) the publication of the documents on a website;
(ii) the address of that website; and
(iii) the place on that website where the documents may be accessed, and how they may be accessed.
223.4 Documents treated in accordance with Article 223 as sent to any person are to be treated as sent to him or her not less than 21 days before the date of a meeting if, and only if:
(a) the documents are published on the website throughout a period beginning at least 21 days before the date of the meeting and ending with the conclusion of the meeting; and
(b) the notification given for the purposes of Article 223.3(c) is given not less than 21 days before the date of the meeting.
224. Any obligation by virtue of section 339(1) or (2) of the Act to furnish a person with a document may, unless these Articles provide otherwise, be complied with by using electronic communications for sending that document to such address as may for the time being be notified to the Company by that person for that purpose.
ACCOUNTING RECORDS
225. The Directors shall, in accordance with Chapter 2 of Part 6 of the Act, cause to be kept adequate accounting records, whether in the form of documents, electronic form or otherwise, that:
225.1 correctly record and explain the transactions of the Company;
225.2 will at any time enable the assets, liabilities, financial position and profit or loss of the Company to be determined with reasonable accuracy;
225.3 will enable the Directors to ensure that any financial statements of the Company, required to be prepared under sections 290 or 293 of the Act, comply with the requirements of the Act; and
225.4 will enable those financial statements of the Company to be readily and properly audited.
226. The accounting records shall be kept on a continuous and consistent basis and entries therein shall be made in a timely manner and be consistent from year to year. Adequate accounting records shall be deemed to have been maintained if they comply with the provisions of Chapter 2 of Part 6 of the Act and explain the Company's transactions and facilitate the preparation of financial statements that give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and, if relevant, the Group and include any information and returns referred to in section 283(2) of the Act.
227. The accounting records shall be kept at the Office or, subject to the provisions of the Act, at such other place as the Directors think fit and shall be open at all reasonable times to the inspection of the Directors.
228. The Directors shall determine from time to time whether and to what extent and at what times and places and under what conditions or regulations the accounting records of the Company shall be open to the inspection of members, not being Directors. No member (not being a Director) shall have any right of inspecting any financial statement or accounting record of the Company except as conferred by the Act or authorised by the Directors or by the Company in a general meeting.
229. In accordance with the provisions of the Act, the Directors shall cause to be prepared and to be laid before the annual general meeting of the Company from time to time such statutory financial statements of the Company and reports as are required by the Act to be prepared and laid before such meeting.
230. A copy of every statutory financial statement of the Company (including every document required by law to be annexed thereto) which is to be laid before the annual general meeting of the Company together with a copy of the Directors’ report and Auditors’ report, or summary financial statements prepared in accordance with section 1119 of the Act, shall be sent, by post, electronic mail or any other means of electronic communications, not less than twenty-one Clear Days before the date of the annual general meeting, to every person entitled under the provisions of the Act to receive them; provided that where the Directors elect to send summary financial statements to the members, any member may request that he be sent a copy of the statutory financial statements of the Company. The Company may, in addition to sending one or more copies of its statutory financial statements, summary financial statements or other communications to its members, send one or more copies to any Approved Nominee. For the purposes of this Article, sending by electronic communications includes the making available or displaying on the Company’s website (or a website designated by the Board) or the website of the SEC, and each member is deemed to have irrevocably consented to receipt of every statutory financial statement of the Company (including every document required by law to be annexed thereto) and every copy of the Directors’ report and the Auditors’ report and every copy of any summary financial statements prepared in accordance with section 1119 of the Act, by any such document being made so available or displayed.
231. Auditors shall be appointed and their duties regulated in accordance with the Act.
WINDING UP
232. Subject to the provisions of the Act as to preferential payments, the property of the Company on its winding up shall be distributed among the members according to their rights and interests in the Company.
233. Unless the conditions of issue of the shares in question provide otherwise, dividends declared by the Company more than six years preceding the commencement date of a winding up of the Company, being dividends which have not been claimed within that period of six years, shall not be a claim admissible to proof against the Company for the purposes of the winding up.
234. If the Company shall be wound up and the assets available for distribution among the members as such shall be insufficient to repay the whole of the paid up or credited as paid up share capital, such assets shall be distributed so that, as nearly as may be, the losses shall be borne by the members in proportion to the capital paid up or credited as paid up at the commencement of the winding up on the shares in the capital of the Company held by them respectively. If in a winding up the assets available for distribution among the members shall be more than sufficient to repay the whole of the share capital paid up or credited as paid up at the commencement of the winding up, the excess shall be distributed among the members in proportion to the capital at the commencement of the winding up paid up or credited as paid up on the said shares held by them respectively; provided that this Article shall be subject to any specific rights attaching to any class of share capital.
234.1 In case of a sale by the liquidator under section 601 of the Act, the liquidator may by the contract of sale agree so as to bind all the members, for the allotment to the members directly, of the proceeds of sale in proportion to their respective interests in the Company and may further, by the contract, limit a time at the expiration of which obligations or shares in the capital of the Company not accepted or required to be sold
shall be deemed to have been irrevocably refused and be at the disposal of the Company, but so that nothing herein contained shall be taken to diminish, prejudice or affect the rights of dissenting members conferred by the said section.
234.2 The power of sale of the liquidator shall include a power to sell wholly or partially for debentures, debenture stock, or other obligations of another company, either then already constituted or about to be constituted for the purpose of carrying out the sale.
235. If the Company is wound up, the liquidator, with the sanction of a special resolution and any other sanction required by the Act, may divide amongst the members in specie or kind the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not), and, for such purpose, may value any assets and determine how the division shall be carried out as between the members or different classes of members. The liquidator, with the like sanction, may vest the whole or any part of such assets in trustees upon such trusts for the benefit of the contributories as, with the like sanction, he or she determines, but so that no member shall be compelled to accept any assets upon which there is a liability.
BUSINESS TRANSACTIONS
236. In addition to any affirmative vote or consent required by law or these Articles, and except as otherwise expressly provided in Article 237, a Business Transaction (as defined in Article 238.3) with, or proposed by or on behalf of, any Interested Person (as defined in Article 238.6) or any Affiliate (as defined in Article 238.1) of any Interested Person or any person who thereafter would be an Affiliate of such Interested Person shall require approval by the affirmative vote of members of the Company holding not less than two-thirds (2/3) of the paid up ordinary share capital of the Company, excluding the voting rights attached to any shares beneficially owned by such Interested Person. Such affirmative vote shall be required notwithstanding the fact that no vote may be required, or that a lesser percentage may be specified, by law or in any agreement with any Exchange or otherwise.
237. The provisions of Article 236 shall not be applicable to any particular Business Transaction, and such Business Transaction shall require only such affirmative vote, if any, as is required by law or by any other provision of these Articles, or any agreement with any Exchange, if either (i) the Business Transaction shall have been approved by a majority of the Board prior to such Interested Person first becoming an Interested Person or (ii) prior to such Interested Person first becoming an Interested Person, a majority of the Board shall have approved such Interested Person becoming an Interested Person and, subsequently, a majority of the Independent Directors (as hereinafter defined) shall have approved the Business Transaction.
238. The following definitions shall apply with respect to Articles 236 to 240:
238.1 The term “Affiliate” shall mean a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, a specified person.
238.2 A person shall be a “beneficial owner” of any shares of the Company (a) which such person or any of its Affiliates beneficially owns, directly or indirectly; (b) which such person or any of its Affiliates has, directly or indirectly, (i) the right to acquire (whether such right is exercisable immediately or subject only to the passage of time or the occurrence of one or more events), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise, or (ii) the right to vote pursuant to any agreement, arrangement or understanding; provided, however, that a person shall not be deemed the beneficial owner of any security if the agreement, arrangement or understanding to vote such
security arises solely from a revocable proxy or consent solicitation made pursuant to and in accordance with the Act; or (c) which is beneficially owned, directly or indirectly, by any other person with which such person or any of its Affiliates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of the Company (except to the extent permitted by the proviso of clause (b)(ii) above). For the purposes of determining whether a person is an Interested Person pursuant to Article 238.6, the number of shares of the Company deemed to be outstanding shall include shares deemed beneficially owned by such person through application of this Article 238.2, but shall not include any other shares of the Company that may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise.
238.3 The term “Business Transaction” shall mean any of the following transactions when entered into by the Company or a subsidiary of the Company with, or upon a proposal by or on behalf of, any Interested Person or any Affiliate of any Interested Person:
(a) any merger or consolidation of the Company or any subsidiary with (i) any Interested Person, or (ii) any other body corporate which is, or after such merger or consolidation would be, an Affiliate of an Interested Person;
(b) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), except proportionately as a member of the Company, to or with the Interested Person of assets of the Company (other than shares of the Company or of any subsidiary of the Company which assets have an aggregate market value equal to ten percent (10%) or more of the aggregate market value of all the issued share capital of the Company);
(c) any transaction that results in the issuance of shares or the transfer of treasury shares by the Company or by any subsidiary of the Company of any shares of the Company or any shares of such subsidiary to the Interested Person, except (i) pursuant to the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into stock of the Company or any such subsidiary which securities were outstanding prior to the time that the Interested Person became such, (ii) pursuant to a dividend or distribution paid or made, or the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into shares of the Company or any such subsidiary which security is distributed, pro rata to all holders of a class or series of shares of the Company subsequent to the time the Interested Person became such, (iii) pursuant to an exchange offer by the Company to purchase shares made on the same terms to all holders of said shares, (iv) any issuance of shares or transfer of treasury shares of the Company by the Company, provided, however, that in the case of each of the clauses (ii) through (iv) above there shall be no increase of more than one percent (1%) in the Interested Person’s proportionate share in the shares of the Company of any class or series or (v) pursuant to a public offering or private placement by the Company to an Institutional Investor;
(d) any reclassification of securities, recapitalization or other transaction involving the Company or any subsidiary of the Company which has the effect, directly or indirectly, of (i) increasing the proportionate amount of the shares of any class or series, or securities convertible into the shares of any class or series, of the Company or of any such subsidiary which is owned by
the Interested Person, except as a result of immaterial changes due to fractional share adjustments or as a result of any purchase or redemption of any shares not caused, directly or indirectly, by the Interested Person or (ii) increasing the voting power, whether or not then exercisable, of an Interested Person in any class or series of shares of the Company or any subsidiary of the Company;
(e) the adoption of any plan or proposal by or on behalf of an Interested Person for the liquidation, dissolution or winding-up of the Company; or
(f) any receipt by the Interested Person of the benefit, directly or indirectly (except proportionately as a member of the Company), of any loans, advances, guarantees, pledges, tax benefits or other financial benefits (other than those expressly permitted in subparagraphs (a) through (e) above) provided by or through the Company or any subsidiary thereof.
238.4 The term “Independent Directors” shall mean the members of the Board who are not Affiliates or representatives of, or associated with, an Interested Person and who were either Directors prior to any person becoming an Interested Person or were recommended for election or elected to succeed such directors by a vote which includes the affirmative vote of a majority of the Independent Directors.
238.5 The term “Institutional Investor” shall mean a person that (a) has acquired, or will acquire, all of its shares in the Company in the ordinary course of its business and not with the purpose nor with the effect of changing or influencing the control of the Company, nor in connection with or as a participant in any transaction having such purpose or effect, including any transaction subject to rule 13d-3(b) under the Exchange Act, and (b) is a registered broker dealer; a bank as defined in section 3(a)(6) of the Exchange Act; an insurance company as defined in, or an investment company registered under, the Investment Company Act of 1940 of the United States; an investment advisor registered under the Investment Advisors Act of 1940 of the United States; an employee benefit plan or pension fund subject to the Employee Retirement Income Security Act of 1974 of the United States or an endowment fund; a parent holding company, provided that the aggregate amount held directly by the parent and directly and indirectly by its subsidiaries which are not persons specified in the foregoing subclauses of this clause (b) does not exceed one percent (1%) of the securities of the subject class; or a group, provided that all the members are persons specified in the foregoing subclauses of this clause (b).
238.6 The term “Interested Person” shall mean any person (other than the Company, any subsidiary, any profit-sharing, employee share ownership or other employee benefit plan of the Company or any subsidiary or any trustee of or fiduciary with respect to any such plan when acting in such capacity) who (a) is the beneficial owner of shares of the Company representing ten percent (10%) or more of the votes entitled to be cast by the holders of all the paid up share capital of the Company; (b) has stated in a filing with any governmental agency or press release or otherwise publicly disclosed a plan or intention to become or consider becoming the beneficial owner of shares of the Company representing ten percent (10%) or more of the votes entitled to be cast by the holders of all paid up share capital of the Company and has not expressly abandoned such plan, intention or consideration more than two years prior to the date in question; or (c) is an Affiliate of the Company and at any time within the two-year period immediately prior to the date in question was the beneficial owner of shares representing ten percent (10%) or more of the votes entitled to be cast by holders of all the paid up share capital of the Company.
238.7 The term “person” shall mean any individual, body corporate, partnership, unincorporated association, trust or other entity.
238.8 The term “subsidiary” has the meaning ascribed to it in section 7 of the Act.
239. A majority of the Independent Directors shall have the power and duty to determine, on the basis of information known to them after reasonable inquiry, for the purposes of (i) Articles 236 and 237, all questions arising under Articles 236 and 237 including, without limitation (a) whether a person is an Interested Person, (b) the number of shares of the Company or other securities beneficially owned by any person; and (c) whether a person is an Affiliate of another; and (ii) these Articles, the question of whether a person is an Interested Person. Any such determination made in good faith shall be binding and conclusive on all parties.
240. Nothing contained in Articles 236 to 239 shall be construed to relieve any Interested Person from any fiduciary obligation imposed by law.
SHAREHOLDER RIGHTS PLAN
241. Subject to applicable law, the Directors are hereby expressly authorised to adopt any shareholder rights plan (a “Rights Plan”), upon such terms and conditions as the Directors deem expedient and in the best interests of the Company, including, without limitation, where the Directors are of the opinion that a Rights Plan could grant them additional time to gather relevant information or pursue strategies in response to or anticipation of, or could prevent, a potential change of control of the Company or accumulation of shares in the Company or interests therein.
242. The Directors may exercise any power of the Company to grant rights (including approving the execution of any documents relating to the grant of such rights) to subscribe for ordinary shares or preferred shares in the share capital of the Company (“Rights”) in accordance with the terms of a Rights Plan.
243. For the purposes of effecting an exchange of Rights for ordinary shares or preferred shares in the share capital of the Company (an “Exchange”), the Directors may:
243.1 resolve to capitalise an amount standing to the credit of the reserves of the Company (including, but not limited to, the share premium account, capital redemption reserve, any undenominated capital and profit and loss account), whether or not available for distribution, being an amount equal to the nominal value of the ordinary shares or preferred shares which are to be exchanged for the Rights; and
243.2 apply that sum in paying up in full ordinary shares or preferred shares and allot such shares, credited as fully paid, to those holders of Rights who are entitled to them under an Exchange effected pursuant to the terms of a Rights Plan.
244. The duties of the Directors to the Company under applicable law, including, but not limited to, the Act and common law, are hereby deemed amended and modified such that the adoption of a Rights Plan and any actions taken thereunder by the Directors (if so approved by the Directors) shall be deemed to constitute an action in the best interests of the Company in all circumstances, and any such action shall be deemed to be immediately confirmed, approved and ratified.
UNTRACED MEMBERS
245. The Company shall be entitled to sell at the best price reasonably obtainable any share of a member or any share to which a person is entitled by transmission if and provided that:
245.1 for a period of twelve years no cheque or warrant sent by the Company through the post in a pre-paid letter addressed to the member or to the person entitled by transmission to the share at his address on the Register or at the last known address given by the member or the person entitled by transmission to which cheques and warrants are to be sent has been cashed and no communication has been received by the Company from the member or the person entitled by transmission (provided that during such twelve year period at least three dividends shall have become payable in respect of such share);
245.2 at the expiration of the said period of twelve years by advertisement in a national daily newspaper published in Ireland and in a newspaper circulating in the area in which the address referred to in Article 245.1 is located the Company has given notice of its intention to sell such share;
245.3 during the further period of three months after the date of the advertisement and prior to the exercise of the power of sale the Company has not received any communication from the member or person entitled by transmission; and
245.4 the Company has first given notice in writing to the appropriate sections of the Exchanges of its intention to sell such shares.
246. Where a share, which is to be sold as provided in Article 245, is held in uncertificated form, the Directors may authorise any person to do all that is necessary to change such share into certificated form prior to its sale.
247. To give effect to any such sale the Company may appoint any person to execute as transferor an instrument of transfer of such share and such instrument of transfer shall be as effective as if it had been executed by the member or the person entitled by the transmission to such share. The transferee shall be entered in the Register as the member of the shares comprised in any such transfer and he shall not be bound to see to the application of the purchase moneys nor shall his title to the shares be affected by any irregularity in or invalidity of the proceedings in reference to the sale.
248. The Company shall account to the member or other person entitled to such share for the net proceeds of such sale by carrying all moneys in respect thereof to a separate account which shall be a permanent debt of the Company and the Company shall be deemed to be a debtor and not a trustee in respect thereof for such member or other person. Moneys carried to such separate account may be either employed in the business of the Company or held as cash or cash equivalents, or invested in such investments as the Directors may think fit, from time to time.
DESTRUCTION OF RECORDS
249. The Company shall be entitled to destroy all instruments of transfer which have been registered at any time after the expiration of six years from the date of registration thereof, all notifications of change of name or change of address however received at any time after the expiration of two years from the date of recording thereof and all share certificates and dividend mandates which have been cancelled or ceased to have effect at any time after the expiration of one year from the date of such cancellation or cessation. It shall be presumed conclusively in favour of the Company that every entry in the Register purporting to have been made on the basis of an instrument of transfer or other document so destroyed was duly
and properly made and every instrument duly and properly registered and every share certificate so destroyed was a valid and effective document duly and properly cancelled and every other document hereinbefore mentioned so destroyed was a valid and effective document in accordance with the recorded particulars thereof in the books or records of the Company. Provided always that:
249.1 the provision aforesaid shall apply only to the destruction of a document in good faith and without notice of any claim (regardless of the parties thereto) to which the document might be relevant;
249.2 nothing herein contained shall be construed as imposing upon the Company any liability in respect of the destruction of any document earlier than as aforesaid or in any other circumstances which would not attach to the Company in the absence of this Article; and
249.3 references herein to the destruction of any document include references to the disposal thereof in any manner.
INDEMNIFICATION
250. 250.1 Subject to the provisions of and so far as may be permitted by the Act, each person who is or was a Director, officer or employee of the Company, and each person who is or was serving at the request of the Company as a director, officer or employee of another company, or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans maintained or sponsored by the Company (including the heirs, executors, administrators and estate of such person) shall be entitled to be indemnified by the Company against all costs, charges, losses, expenses and liabilities incurred by him or her in the execution and discharge of his or her duties or in relation thereto, including any liability incurred by him or her in defending any proceedings, civil or criminal, which relate to anything done or omitted or alleged to have been done or omitted by him or her as a director, officer or employee of the Company or such other company, partnership, joint venture, trust or other enterprise, and in which judgment is given in his or her favour (or the proceedings are otherwise disposed of without any finding or admission of any material breach of duty on his or her part) or in which he or she is acquitted or in connection with any application under any statute for relief from liability in respect of any such act or omission in which relief is granted to him or her by the court.
250.2 In the case of any threatened, pending or completed action, suit or proceeding by or in the right of the Company, the Company shall indemnify, to the fullest extent permitted by the Act, each person indicated in Article 250.1 against expenses, including attorneys’ fees actually and reasonably incurred in connection with the defence or the settlement thereof, except no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for fraud or dishonesty in the performance of his or her duty to the Company unless and only to the extent that the courts of Ireland or the court in which such action or suit was brought shall determine upon application that despite the adjudication of liability, but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses as the Court shall deem proper.
250.3 As far as permissible under the Act, expenses, including attorneys' fees, incurred in defending any action, suit or proceeding referred to in this Article shall be paid by the Company in advance of the final disposition of such action, suit or proceeding upon receipt of a written affirmation by or on behalf of the Director, officer, employee or
other indemnitee of a good faith belief that the criteria for indemnification have been satisfied and a written undertaking to repay such amount if it shall ultimately be determined that such Director, officer or employee or other indemnitee is not entitled to be indemnified by the Company as authorised by these Articles.
250.4 It being the policy of the Company that indemnification of the persons specified in this Article shall be made to the fullest extent permitted by law, the indemnification provided by this Article shall not be deemed exclusive of: (a) any other rights to which those seeking indemnification or advancement of expenses may be entitled under the Memorandum, these Articles, any agreement, any insurance purchased by the Company, any vote of members or disinterested Directors, or pursuant to the direction (however embodied) of any court of competent jurisdiction, or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such office, or (b) any amendments or replacements of the Act which permit for greater indemnification of the persons specified in this Article and any such amendment or replacement of the Act shall hereby be incorporated into these Articles. As used in this Article 250.4, references to the “Company” include all constituent companies in a consolidation or merger in which the Company or any predecessor to the Company by consolidation or merger was involved. The indemnification provided by this Article shall continue as to a person who has ceased to be a Director, officer or employee and shall inure to the benefit of the heirs, executors, and administrators of such Directors, officers, employees or other indemnitees.
250.5 The Directors shall have power to purchase and maintain for any Director, the Company Secretary or other officers or employees of the Company insurance against any such liability as referred to in section 235 of the Act.
250.6 The Company may additionally indemnify any agent of the Company or any director, officer, employee or agent of any of its subsidiaries to the fullest extent provided by law, and purchase and maintain insurance for any such person as appropriate.
251. No person shall be personally liable to the Company or its members for monetary damages for breach of fiduciary duty as a Director, provided, however, that the foregoing shall not eliminate or limit the liability of a Director:
251.1 for any breach of the Director’s duty of loyalty or duty of care to the Company or its members;
251.2 for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; or
251.3 for any transaction from which the Director derived an improper personal benefit.
If any applicable law or the relevant code, rules and regulations applicable to the listing of the Company’s shares on any Exchange is amended hereafter to authorise corporate action further eliminating or limiting the personal liability of Directors, then the liability of a Director shall be eliminated or limited to the fullest extent permitted by the relevant law, as so amended. Any amendment, repeal or modification of this Article 251 shall not adversely affect any right or protection of a Director existing hereunder with respect to any act or omission occurring prior to such amendment, repeal or modification.
GOVERNING LAW AND JURISDICTION
252. This constitution and any dispute or claim arising out of or in connection with it or its subject matter, formation, existence, negotiation, validity, termination or enforceability (including
non-contractual obligations, disputes or claims) will be governed by and construed in accordance with the laws of Ireland.
253. Subject to Article 254, the courts of Ireland are to have exclusive jurisdiction to settle any dispute arising out of or in connection with this constitution and, for such purposes, the Company and each shareholder irrevocably submit to the exclusive jurisdiction of such courts. Any proceeding, suit or action arising out of or in connection with this Constitution (the “Proceedings”) will therefore be brought in the courts of Ireland. Each shareholder irrevocably waives any objection to Proceedings in the courts referred to in this Article on the grounds of venue or on the grounds of forum non conveniens.
254. Unless the Company consents in writing to the selection of an alternative forum, the federal district courts of the United States of America shall, to the fullest extent permitted by law, be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Exchange Act or the Securities Act of 1933 of the United States. Any person or entity purchasing or otherwise acquiring any interest in any security of the Company shall be deemed to have notice of and consented to this provision.
The Companies Act (As Revised) of the Cayman Islands
Plan of Merger
This plan of merger (the "Plan of Merger") is made on [insert date] between Agrico Acquisition Corp. (the "Surviving Company") and Kalera Cayman Merger Sub (the "Merging Company").
Whereas the Merging Company is a Cayman Islands exempted company and is entering into this Plan of Merger pursuant to the provisions of Part XVI of the Companies Act (As Revised) (the "Statute").
Whereas the Surviving Company is a Cayman Islands exempted company and is entering into this Plan of Merger pursuant to the provisions of Part XVI of the Statute.
Whereas the directors of the Merging Company and the directors of the Surviving Company deem it desirable and in the commercial interests of the Merging Company and the Surviving Company, respectively, that the Merging Company be merged with and into the Surviving Company upon the terms and subject to the conditions of the Business Combination Agreement dated January 30, 2022 and made between, amongst others, the Surviving Company and the Merging Company (the "Merger Agreement") a copy of which is annexed at Annexure 1 hereto, and that the undertaking, property and liabilities of the Merging Company vest in the Surviving Company (the "Merger").
Terms not otherwise defined in this Plan of Merger shall have the meanings given to them under the Merger Agreement.
Now therefore this Plan of Merger provides as follows:
1 The constituent companies (as defined in the Statute) to this Merger are the Surviving Company and the Merging Company.
2 The surviving company (as defined in the Statute) is the Surviving Company.
3 The registered office of the Surviving Company and the Merging Company is c/o Maples Corporate Services Limited of PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.
4 Immediately prior to the Effective Date (as defined below), the share capital of the Surviving Company will be US$22,100 divided into 200,000,000 Class A ordinary shares of a par value of US$0.0001 each, into 20,000,000 Class B ordinary shares of a par value of US$0.0001 each and into 1,000,000 preference shares of a par value of US$0.0001 each.
5 Immediately prior to the Effective Date (as defined below), the share capital of the Merging Company will beUS$50,000 divided into 50,000 shares of a par value of US$1.00 each.
6 The date on which it is intended that the Merger is to take effect is the date that this Plan of Merger is registered by the Registrar in accordance with section 233(13) of the Statute (the "Effective Date").
7 The terms and conditions of the Merger, including the manner and basis of converting shares in each constituent company into shares in the Surviving Company, are set out in the Merger Agreement in the form annexed at Annexure 1 hereto.
8 The rights and restrictions attaching to the shares in the Surviving Company are set out in the Amended and Restated Memorandum and Articles of Association of the Surviving Company in the form annexed at Annexure 2 hereto.
9 The Memorandum and Articles of Association of the Surviving Company shall be amended and restated by the deletion in their entirety and the substitution in their place of the Amended and Restated Memorandum and Articles of Association in the form annexed at Annexure 2 hereto on the Effective Date.
10 There are no amounts or benefits which are or shall be paid or payable to any director of either constituent company or the Surviving Company consequent upon the Merger.
11 The Merging Company has granted no fixed or floating security interests that are outstanding as at the date of this Plan of Merger.
12 The Surviving Company has granted no fixed or floating security interests that are outstanding as at the date of this Plan of Merger.
13 The names and addresses of each director of the surviving company (as defined in the Statute) are
13.1 [Insert name of Director] of [Insert personal address of Director];
13.2 [Insert name of Director] of [Insert personal address of Director]; and
13.3 [repeat for all Directors of the surviving company (i.e. the merged entity)].
14 This Plan of Merger has been approved by the board of directors of each of the Surviving Company and the sole director of the Merging Company pursuant to section 233(3) of the Statute.
15 This Plan of Merger has been authorised by the shareholders of the Surviving Company pursuant to section 233(6) of the Statute by way of resolutions passed at an extraordinary general meeting of the Surviving Company. This Plan of Merger has been authorised by the sole shareholder of the Merging Company pursuant to section 233(6) of the Statute.
16 At any time prior to the Effective Date, this Plan of Merger may be:
16.1 terminated by the directors of either the Surviving Company or the Merging Company;
16.2 amended by the directors of both the Surviving Company and the Merging Company to:
(a) change the Effective Date provided that such changed date shall not be a date later than the ninetieth day after the date of registration of this Plan of Merger with the Registrar of Companies; and
(b) effect any other changes to this Plan of Merger which the directors of both the Surviving Company and the Merging Company deem advisable, provided that such changes do not materially adversely affect any rights of the shareholders of the Surviving Company or the Merging Company, as determined by the directors of both the Surviving Company and the Merging Company, respectively.
17 This Plan of Merger may be executed in counterparts.
18 This Plan of Merger shall be governed by and construed in accordance with the laws of the Cayman Islands.
In witness whereof the parties hereto have caused this Plan of Merger to be executed on the day and year first above written.
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SIGNED by | | | ) | | |
Duly authorised for | | ) | | |
and on behalf of | | ) | | Director |
Agrico Acquisition Corp. | | ) | | |
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SIGNED by | | | ) | | |
Duly authorised for | | ) | | |
and on behalf of | | ) | | Director |
Kalera Cayman Merger Sub | | ) | | |
Annexure 1
Merger Agreement
Annexure 2
Amended and Restated Memorandum and Articles of Association of the Surviving Company
Kalera S.A.
Société anonyme
RCS Luxembourg : B256011
Siège social: 15, boulevard Roosevelt, L-2450 Luxembourg, Grand-Duché de Luxembourg
Kalera Luxembourg Merger Sub
Société à responsabilité limitée
RCS Luxembourg : B267475
Siège social : 15, boulevard Roosevelt, L-2450 Luxembourg, Grand-Duché de Luxembourg
COMMON DRAFT TERMS OF MERGER / PROJET COMMUN DE FUSION
13 May 2022
THESE COMMON DRAFT TERMS OF CROSS-BORDER MERGERS (the “Draft Terms of Merger”) are drawn up on 13 May 2022,
BY
(1)the board of directors of Kalera S.A., a société anonyme, incorporated and existing under the laws of the Grand Duchy of Luxembourg, having its registered office at 15, boulevard Roosevelt, L-2450 Luxembourg, Grand Duchy of Luxembourg, registered with the Registre de Commerce et des Sociétés, Luxembourg (Luxembourg Trade and Companies Register) under number B 256011 (the “Absorbing Company”),
here represented by Mr. Fernando Cornejo, class A director, as duly authorised by the board of directors of the Absorbing Company pursuant to the resolutions taken on 11 May 2022;
AND
(2)the sole manager of Kalera Luxembourg Merger Sub, a société à responsabilité limitée, incorporated and existing under the laws of the Grand Duchy of Luxembourg, having its registered office at 15, boulevard Roosevelt, L-2450 Luxembourg, Grand Duchy of Luxembourg, registered with the Registre de Commerce et des Sociétés, Luxembourg (Luxembourg Trade and Companies Register) under number B 267475 (the “Absorbed Company” and together with the Absorbing Company, the “Merging Companies”),
here represented by Mr. Brent de Jong, as sole manager and authorized signatory of the Absorbed Company.
The Merging Companies have agreed to achieve the contemplated merger by way of absorption of the Absorbed Company by the Absorbing Company (the "Merger") under the terms of these Draft Terms of Merger and pursuant to the provisions of Articles 1020-1 to 1021-19 of Chapter 2 on Mergers of the law dated 10 August 1915 on commercial companies, as amended (the “Law”).
As a result, the board of directors of the Absorbing Company, and the sole manager of the Absorbed Company have drawn-up these Draft Terms of Mergers, which shall read as follows:
1.The companies involved in the Merger
1.1Presentation of the Absorbing Company
The Absorbing Company, Kalera S.A., is a société anonyme, incorporated and existing under the laws of the Grand Duchy of Luxembourg, having its registered office at 15, boulevard Roosevelt, L-2450 Luxembourg, Grand Duchy of Luxembourg, registered with the Registre de Commerce et des Sociétés, Luxembourg (Luxembourg Trade and Companies Register) under number B 256011, incorporated pursuant to a deed of Maître Marc ELVINGER, notary residing in Ettelbruck, Grand Duchy of Luxembourg on 11 June 2021, published on the Recueil électronique des sociétés et associations (Luxembourg’s Official Gazette) (the “RESA”) under number RESA_2021_134.440 on 22 June 2021. The articles of association were amended for the last time pursuant to a deed of the undersigned notary, dated 21 September 2021, published on the RESA under number RESA_2021_205.258 on 27 September 2021.
The Absorbing Company is wholly owned by Kalera AS, a private limited liability company (aksjeselskap), existing under the laws of Norway, having its registered office at c/o Tyveholmen AS Tjuvholmen allé 19, 0252 Oslo Norway and registered with the Norwegian Register of Business Enterprises P.O. Box 900 8910 Brønnøysund, Norway under number 911 703 130 (the “Kalera Sole Shareholder”).
The Absorbing Company’s financial year begins on 1 January of each year and ends on 31 December of each year.
On the date hereof, the share capital of the Absorbing Company is thirty thousand euro (EUR 30,000) and is divided into three million (3,000,000) shares, with a nominal value of one euro cent (EUR 0.01) each, all fully paid up. Prior to the Effective Date (as defined below), the share capital of the
Absorbing Company will be increased in the context of the Cross-Border Merger as per the terms of the Cross-Border Merger Plan (as defined below).
As of the date hereof, the Absorbing Company has no employees.
1.2Presentation of the Absorbed Company
The Absorbed Company, Kalera Luxembourg Merger Sub, is a société à responsabilité limitée, incorporated and existing under the laws of the Grand Duchy of Luxembourg, having its registered office at 15, boulevard Roosevelt, L-2450 Luxembourg, Grand Duchy of Luxembourg, registered with the Registre de Commerce et des Sociétés, Luxembourg (Luxembourg Trade and Companies Register) under number B 267475, incorporated pursuant to a deed of incorporation of Maître Danielle KOLBACH, notary residing in Junglinster Grand Duchy of Luxembourg, on 29 April 2022, published on the RESA under number RESA_2022_102.500 on 12 May 2022. The articles of association have not been amended since.
The Absorbed Company is wholly owned by Kalera plc., a public limited company validly existing under the laws of Ireland, having its registered office at the 10 Earlsfort Terrace, Dublin 2, Dublin, D02 T380, Ireland and registered with the Ireland Companies Registration Office under number 606356 (the “Merger Sub Sole Shareholder”).
The Absorbed Company’s financial year begins on 1 January of each year and ends on 31 December of each year. The first financial year of the Absorbed Company started on the date of its incorporation, i.e. 29 April 2022 and ends on 31 December 2022.
On the date hereof, the share capital of the Absorbed Company is twelve thousand euro (EUR 12,000) and is divided into twelve thousand (12,000) shares, with a nominal value of one euro (EUR 1) each, all fully paid up. The shares of the Absorbed Company are in registered form only.
As of the date hereof, the shares of the Absorbed Company have not been pledged, assigned, charged or used as a security to or by a third party and are free and clear of any other third party rights.
As of the date hereof, the Absorbed Company has no employees.
2.The Cross-Border Merger
Prior to the Effective Date, the Absorbing Company and the Kalera Sole Shareholder shall merge by way of absorption of the Kalera Sole Shareholder by the Absorbing Company pursuant to the provisions of Articles 1020-1 to 1021-19 of Chapter 2 on Mergers of the Law and the Norwegian Private Limited Liability Companies Act of 13 June 1997 no.45 sections 13-25 to 13-36 (the "Cross-Border Merger"), in accordance with the common draft terms which have been drawn up by the boards of directors of each of the Absorbing Company and the Kalera Sole Shareholder in front of a Luxembourg notary on 22 September 2021 as published on 24 September 2021 on the RESA under number RESA_2021_204.537 (the “Cross-Border Merger Plan”). The Cross-Border Merger will become effective as from the date of publication of the minutes of the extraordinary general meeting of shareholders of the Absorbing Company approving the Cross-Border Merger on the RESA (the “Cross-Border Merger Effective Date”).
As a result of the Cross-Border Merger, the shareholders of the Kalera Sole Shareholder shall become the shareholders of the Absorbing Company.
The exchange ratio being applied in the Cross-Border Merger is set out in the Cross-Border Merger Plan.
3.The Absorbing Company pursuant to the Merger
As a result of the Merger, the Absorbing Company will continue to exist under the name “Kalera S.A.”, a société anonyme, incorporated and existing under the laws of the Grand Duchy of Luxembourg, having its registered office at 15, boulevard Roosevelt, L-2450 Luxembourg, Grand Duchy of Luxembourg.
4.Background and effects of the Merger
4.1Background
The main drivers for, and objectives of, the Merger are to allow for a business combination at the level of Kalera Group followed by a listing of a parent company of the Absorbing Company at Nasdaq.
4.2Legal effects
The Absorbing Company will acquire, as a result of the Merger, all assets and liabilities of the Absorbed Company by way of universal transfer of assets and liabilities of the Absorbed Company to the Absorbing Company.
As of the Effective Date , the Absorbing Company shall be subrogated to all rights and obligations of the Absorbed Company towards third parties. The rights and claims comprised in the assets of the Absorbed Company shall be transferred to the Absorbing Company with all securities, either in rem or personal, attached thereto.
The Absorbing Company will continue as of the Effective Date to perform the obligations of the Absorbed Company under any agreements to which the latter is a party.
Any claims and debts existing as at the Effective Date between the Merging Companies are cancelled upon the completion of the Merger.
The Absorbing Company shall be in charge of: (i) the filing or registration of any tax returns or other tax documents relating to the Absorbed Company with the Luxembourg tax administration as well as (ii) the payment (as the case may be) of any corporate income tax or municipal tax or local tax, any income, value-added, sales, property or transfer tax, trade tax, real estate transfer tax, withholding tax on dividends, salary withholding tax/wage tax, any registration tax or stamp duty or public social security payments or any similar taxes or duties relating to the Absorbed Company.
The Merger will entail the transfer by the Absorbed Company of all its assets and liabilities, without exception, to the Absorbing Company, so that the Absorbed Company shall be dissolved without liquidation after the completion of the Merger.
No industrial and intellectual property rights or rights in rem will be transferred as a result of the Merger.
The Merger Sub Sole Shareholder will become a shareholder of the Absorbing Company as of the Effective Date.
The mandate of the current sole manager of the Absorbed Company will be automatically terminated as of the Effective Date.
The books and records of the Absorbed Company will be kept at the registered office of the Absorbing Company in accordance with applicable laws.
As a result of the Merger, the Absorbed Company shall cease to exist and all its shares shall be cancelled.
4.3Effective Date
Subject to the Cross-Border Merger Effective Date and the determination of the final number of shares to be issued in the context of the Cross-Border Merger, the Merger shall become effective (i) between the Merging Companies upon the extraordinary general meetings of each of the Merging Companies approving the Merger (the “Effective Date”) and (ii) towards third parties as from the date of the latest publication of the minutes of the extraordinary general meetings of the Merging Companies approving the Merger on the RESA in accordance with Chapter Vbis of Title I of the amended law of 19 December 2002 on the register of commerce and companies and accounting and annual accounts of undertakings (the “Publication Date”).
4.4Date as of which the operations of the Absorbed Company shall be treated from an accounting point of view as being carried out on behalf of the Absorbing Company
As from the incorporation date of the Absorbed Company (i.e. 29 April 2022), all operations and transactions of the Absorbed Company shall be treated from an accounting point of view as being carried out on behalf of the Absorbing Company.
5.Share exchange ratio and independent expert
5.1Exchange ratio
Based on the valuations performed by the sole manager of the Absorbed Company and the board of directors of the Absorbing Company, the exchange ratio at the Merger will be one (1) share in the share capital of the Absorbing Company, in exchange for one (1) share in the share capital of the Absorbed Company (the “Exchange Ratio”). Given that the nominal value of the shares of the Absorbed Company is set at one euro (EUR 1) and the nominal value of the shares of the Absorbing Company is set at one euro cent (EUR 0.01), the Merger Sub Sole Shareholder shall receive one (1) share with a nominal value of one euro cent (EUR 0.01) in the Absorbing Company as consideration for each share held in the Absorbed Company with a nominal value of one euro (EUR 1), the difference of ninety-nine euro cent (EUR 0.99) per exchanged share being booked in the share premium account of the Absorbing Company.
5.2Independent expert
The Exchange Ratio so established by the board of directors of the Absorbing Company and the sole manager of the Absorbed Company, has been submitted for evaluation purposes to:
Grant Thornton Lux Audit & Assurance, a société anonyme (public limited company), existing under the laws of the Grand Duchy of Luxembourg, having its registered office at 13, rue de Bitbourg, L-1273 Luxembourg, Grand Duchy of Luxembourg and registered with the Registre de Commerce et des Sociétés, Luxembourg (Luxembourg Trade and Companies Register) under number B 183652 for the Absorbing Company and to HACA Partners S.à r.l., a société à responsabilité limitée (private limited company), existing under the laws of the Grand Duchy of Luxembourg, having its registered office at 6, route d’Esch, L-1470 Luxembourg, Grand Duchy of Luxembourg and registered with the Registre de Commerce et des Sociétés, Luxembourg (Luxembourg Trade and Companies Register) under number B 204968 for the Absorbed Company (the “Merger Experts”), independent experts appointed in accordance with Article 1021-6 of the Law.
6.Issuance and subsequent cancellation of shares following the Merger
In the context of the Merger, new shares in the share capital of the Absorbing Company shall be issued to the Merger Sub Sole Shareholder by application of the Exchange Ratio.
The new shares will be registered in the share register of the Absorbing Company in the name of the Merger Sub Sole Shareholder (of which evidence may be obtained at the registered office of the Absorbing Company).
The new shares issued by the Absorbing Company further to the Merger shall carry the right to participate in the profits and/or losses of the Absorbing Company as from the Effective Date.
Immediately following the approval of the Merger, all the shares issued in the context of the Cross-Border Merger, (i.e. all the shares of the Absorbing Company except for the shares attributed to the Merger Sub Sole Shareholder as a result of the Merger) shall be cancelled as per a decision of the extraordinary general meeting of shareholders of the Absorbing Company (the “Cancellation”). Concomitantly to the Cancellation, all the shareholders of the Absorbing Company, save for the Merger Sub Sole Shareholder whose shares shall not be cancelled, will be allocated with shares in the Merger Sub Sole Shareholder.
7.Special rights for the shareholders and for the holders of other securities
No special rights shall be conferred by the Absorbing Company to the shareholders or holders of other securities in the Absorbed Company in the context of the Merger.
8.Special advantages to the merger experts (the “Merger Experts”) and/or any members of the management, supervisory or controlling bodies of the Merging Companies
No special advantages have been/will be granted to the Merger Experts and/or any members of the management, supervisory or controlling bodies of the Merging Companies in the context of the Merger.
9.Information regarding the Merger
The Draft Terms of Merger shall be published on the RESA at least one (1) month prior to the date set for the extraordinary general meetings of shareholders of the Merging Companies due to approve the Merger.
The following documents, to the extent applicable, shall be held available for inspection by the shareholders of the Kalera Sole Shareholder and the Merger Sub Sole Shareholder at the registered offices of the Merging Companies, at least one (1) month prior to the date set for the extraordinary general meetings of shareholders of the Merging Companies due to approve the Merger:
a)the Draft Terms of Merger;
b)the annual accounts and the management reports for the last three (3) financial years of each of the Merging Companies, if applicable;
c)interim accounts of the Absorbed Company dated 10 May 2022 (attached as Schedule 1);
d)annual accounts of the Absorbing Company dated 31st December 2021 (attached as Schedule 2);
e)the reports from the board of directors of the Absorbing Company and the sole manager of the Absorbed Company explaining the Draft Terms of Merger from a legal and economical point of view, in accordance with Article 1021-5 of the Law. and
f)the report(s) from one or several independent experts in accordance with Article 1021-6 of the Law.
10.Creditor rights
Creditors of the Merging Companies, whose claims predate the Publication Date, notwithstanding any agreement to the contrary, may apply, within two (2) months of such Publication Date, to the judge presiding the chamber of the Tribunal d’Arrondissement dealing with commercial matters in the district in which the registered office of the debtor company is located and sitting as in commercial and urgent matters, to obtain adequate safeguards of collateral for any matured or unmatured debts, where they can credibly demonstrate that due to the Merger, the satisfaction of their claims is at stake and that no adequate safeguards have been obtained from the company. The president of such chamber shall reject the application if the creditor is already in possession of adequate safeguards or if such safeguards are unnecessary, having regard to the financial situation of the company after the Merger. The debtor company may cause the application to be turned down by paying the creditor, even if it is a term debt.
If the safeguards are not provided within the time limit prescribed, the debt shall immediately fall due.
11.Conditions
11.1Change in the composition of the board of directors of the Absorbing Company
As of the Effective Date, the board of directors of the Absorbing Company will consist of the following members unless otherwise agreed by the extraordinary general meetings of the shareholder(s) of the Merging Companies prior to the Effective Date:
–Sakip-Umur Hürsever, class A director;
–Maria Sastre, class A director;
–Sonny Perdue, class A director;
–Curtis McWilliams, class A director;
–Andrea Weiss, class A director;
–Faisal AlMeshal, class A director;
–Christian Toma, class A director; and
–Felix Faber, class B director.
11.2Change to articles of association of the Absorbing Company
As of the Effective Date, the articles of association of the Absorbing Company will be amended in order to read as attached hereto as Schedule 3, unless otherwise agreed by the extraordinary general meetings of the shareholder(s) of the Merging Companies prior to the Effective Date.
11.3Approval of the Merger
The Merger is subject to the approval of the present Draft Terms of Merger and the Merger by the extraordinary general meeting of the shareholder(s) of each of the Merging Companies, provided that (i) the Cross-Border Merger Effective Date has occurred and that the final number of shares to be issued has been determined in the context of the Cross-Border Merger, (ii) all the documents listed in Article 9 of the present Draft Terms of Merger have been made available for inspection by the Kalera Sole Shareholder and the Merger Sub Sole Shareholder at its registered office, and the present Draft Terms of Merger have been published on the RESA, at least one (1) month prior to the date set for the extraordinary general meetings of shareholder(s) of the Merging Companies due to approve the Merger and the present Draft Terms of Merger.
12.Miscellaneous
12.1Powers
Full powers are granted to the members of the board of directors of the Absorbing Company respectively the sole manager of the Absorbed Company as well as to Arendt & Medernach S.A., admitted to practice in Luxembourg and registered on the list V of lawyers of the Luxembourg bar association, itself represented by Me Bob Calmes and any lawyer of the law firm Maples and Calder (Luxembourg) SARL, Société d’avocats inscrite au barreau de Luxembourg, having its registered office at 12E, rue Guillaume Kroll, L-1882 Luxembourg, Grand Duchy of Luxembourg and registered with the Registre de Commerce et des Sociétés, Luxembourg (Luxembourg Trade and Companies Register) under number B 227.216 (the “Attorney”) each individually and with full power of substitution, in the name of and on behalf of the Merging Companies, in order to:
(a)lodge, certify and file, or cause to be lodged, certified and filed the joint request to the judge presiding the Tribunal d’Arrondissement dealing with commercial matters in the district of Luxembourg / Diekirch, sitting as in commercial matters and as in summary proceedings in such form and with such additions and changes thereto as the Attorney shall deem necessary, appropriate or desirable, such determination to be conclusively evidenced by such Attorney’s execution or delivery thereof; and
(b)carry out all filings, notifications and publications necessary for the Merger.
12.2Election of domicile
For the purpose of the execution hereof and of the deeds or minutes that shall follow or result herefrom, the Merging Companies elect domicile at their respective registered offices.
12.3Applicable law and jurisdiction
The present Draft Terms of Merger shall be governed by and construed in accordance with the laws of the Grand Duchy of Luxembourg.
Any dispute arising out of or in connection with these Draft Terms of Merger shall be submitted exclusively to the courts of the City of Luxembourg, Grand Duchy of Luxembourg.
12.4Language
The board of directors of the Absorbing Company and the sole manager of the Absorbed Company state herewith that these Draft Terms of Merger are worded in English followed by a French translation. In case of any discrepancy between the English and the text, the English version shall prevail.
12.5Costs
The expenses, costs, fees and charges resulting from the Merger shall be borne by the Absorbing Company.
12.6Counterparts
These Draft Terms of Merger have been executed in counterparts, each of the board of directors of the Absorbing Company and the sole manager of the Absorbed Company acknowledging receipt of one copy on the date first above written.
Suit la traduction française du texte qui précède.
LE PRESENT PROJET COMMUN DE FUSION TRANSFRONTALIERE (le « Projet de Fusion ») est établi en date du 13 mai 2022,
PAR
(1)le conseil d’administration de Kalera S.A., une société anonyme, constituée et existant selon les lois du Grand-Duché de Luxembourg, ayant son siège social au 15, boulevard Roosevelt, L-2450 Luxembourg, Grand-Duché de Luxembourg, immatriculée auprès du Registre de Commerce et des Sociétés de Luxembourg sous le numéro B 256011 (la « Société Absorbante »),
représenté aux présentes par M. Fernando Cornejo, administrateur de catégorie A, dûment autorisé par le conseil d’administration de la Société Absorbante conformément aux résolutions prises le 11 mai 2022 ;
ET
(2)le gérant unique de Kalera Luxembourg Merger Sub, une société à responsabilité limitée, constituée et existant selon les lois du Grand-Duché de Luxembourg, ayant son siège social au 15, boulevard Roosevelt, L-2450 Luxembourg, Grand-Duché de Luxembourg, immatriculée auprès du Registre de Commerce et des Sociétés de Luxembourg sous le numéro B 267475 (la « Société Absorbée » et ensemble avec la Société Absorbante, les « Sociétés Fusionnantes »),
représenté aux présentes par M. Brent de Jong, en sa qualité de gérant unique et signataire autorisé de la Société Absorbée.
Les Sociétés Fusionnantes ont consenti à réaliser la fusion envisagée par l’absorption de la Société Absorbée par la Société Absorbante (la « Fusion ») conformément aux dispositions de ce Projet de Fusion et des articles 1020-1 à 1021-19 du chapitre 2 concernant les Fusions de la loi du 10 août 1915 sur les sociétés commerciales, telle que modifiée (la « Loi »).
En conséquence, le conseil d'administration de la Société Absorbante et le gérant unique de la Société Absorbée ont établi le présent Projet de Fusion, lequel a la teneur suivante :
1.Les sociétés impliquées dans la Fusion
1.1Présentation de la Société Absorbante
La Société Absorbante, Kalera S.A., est une société anonyme, constituée et existant selon les lois du Grand-Duché de Luxembourg, ayant son siège social au 15, boulevard Roosevelt, L-2450 Luxembourg, Grand-Duché de Luxembourg, immatriculée au Registre de Commerce et des Sociétés de Luxembourg sous le numéro B 256011, constituée selon acte reçu par Marc ELVINGER, notaire de résidence à Ettelbruck, Grand-Duché de Luxembourg, en date du 11 juin 2021, publié au Recueil électronique des sociétés et associations (« RESA ») sous le numéro RESA_2021_134.440 en date du 22 juin 2021. Les statuts ont été modifiés la dernière fois suivant acte reçu par le notaire soussigné, en date du 21 septembre 2021 publié au RESA sous le numéro RESA_2021_205.258 en date du 27 septembre 2021.
La Société Absorbante est détenue à 100% par Kalera AS, une société privée à responsabilité limitée (aksjeselskap), existant selon le droit norvégien, ayant son siège social à c/o Tyveholmen AS Tjuvholmen allé 19, 0252 Oslo, Norvège, et immatriculée auprès du Registre norvégien des Entreprises Commerciales (Norwegian Register of Business Enterprises) (boîte postale 900 8910 Brønnøysund, Norvège) sous le numéro 911 703 130 (l'« Actionnaire Unique Kalera »).
L’exercice social de la Société Absorbante commence le 1er janvier de chaque année et se termine le 31 décembre de chaque année.
A la date des présentes, le capital social de la Société Absorbante est de trente mille euros (EUR 30.000) et est divisé en trois millions (3.000.000) d'actions, d'une valeur nominale d'un centime d'euro (EUR 0,01) chacune, toutes entièrement libérées. Avant la Date d’Effet (telle que définie ci-dessous), le capital social de la Société Absorbante sera augmenté dans le cadre de la Fusion Transfrontalière selon les termes du Plan de Fusion Transfrontalière (tel que défini ci-après).
A la date des présentes, la Société Absorbante n'a pas d’employés.
1.2Présentation de la Société Absorbée
La Société Absorbée, Kalera Luxembourg Merger Sub, est une société à responsabilité limitée, constituée et existant selon les lois du Grand-Duché de Luxembourg, ayant son siège social au 15, boulevard Roosevelt, L-2450 Luxembourg, Grand-Duché de Luxembourg, immatriculée auprès du Registre de Commerce et des Sociétés de Luxembourg sous le numéro B 267475, constituée selon acte reçu par Maître Danielle KOLBACH, notaire de résidence à Junglinster, Grand-Duché de Luxembourg, en date du 29 avril 2022, publié au RESA sous le numéro RESA_2022_102.500 le 12 mai 2022. Les statuts n’ont pas été modifiés depuis lors.
La Société Absorbée est détenue à 100% par Kalera plc., une société anonyme de droit irlandais, ayant son siège social au 10 Earlsfort Terrace, Dublin 2, Dublin, D02 T380, Irlande, immatriculée auprès de l'Ireland Companies Registration Office sous le numéro 606356 (le « Associé Unique de Merger Sub »).
L’exercice social de la Société Absorbée commence le 1er janvier de chaque année et se termine le 31 décembre de chaque année. Le premier exercice de la Société Absorbée a commencé à la date de sa constitution, le 29 avril 2022 et se termine le 31 décembre 2022.
A la date des présentes, le capital social de la Société Absorbée est de douze mille euros (EUR 12.000) représenté par douze mille (12.000) parts sociales, ayant une valeur nominale d’un euro (EUR 1) chacune, entièrement libérées. Les parts sociales de la Société Absorbante sont nominatives.
A la date des présentes, les parts sociales de la Société Absorbée n'ont été ni nanties, ni cédées, ni grevées ou utilisées à titre de garantie par ou pour un tiers et sont libres de tout autre droit de tiers.
A la date des présentes, la Société Absorbée n’a pas d’employés.
2.La Fusion Transfrontalière
Avant la Date d’Effet, la Société Absorbante et l'Actionnaire Unique Kalera fusionneront par absorption de l'Actionnaire Unique Kalera par la Société Absorbante conformément aux dispositions des articles 1020-1 à 1021-19 du chapitre 2 sur les fusions de la Loi et de la loi norvégienne sur les sociétés à responsabilité limitée (Norwegian Private Limited Liability Companies Act) du 13 juin 1997, n° 45, sections 13-25 à 13-36 (la « Fusion Transfrontalière »), conformément au projet commun qui a été établi par les conseils d'administration de chacune de la Société Absorbante et de l'Actionnaire Unique Kalera par devant un notaire luxembourgeois le 22 septembre 2021, tel que publié le 24 septembre 2021 au RESA sous le numéro RESA_2021_204.537 (le « Projet de Fusion Transfrontalière »). La Fusion Transfrontalière sera effective à compter de la date de publication au RESA du procès-verbal de l'assemblée générale extraordinaire des actionnaires de la Société Absorbante approuvant la Fusion Transfrontalière (la « Date d’Effet de la Fusion Transfrontalière »).
En conséquence de la Fusion Transfrontalière, les actionnaires de l'Actionnaire Unique Kalera deviendront les actionnaires de la Société Absorbante.
Le rapport d'échange appliqué dans le cadre de la Fusion Transfrontalière est défini dans le Projet de Fusion Transfrontalière.
3.La Société Absorbante suite à la Fusion
Suite à la Fusion, la Société Absorbante continuera d’exister sous la dénomination « Kalera S.A. », une société anonyme, constituée et existant selon les lois du Grand-Duché de Luxembourg, ayant son siège social au 15, boulevard Roosevelt, L-2450 Luxembourg, Grand-Duché de Luxembourg.
4.Contexte et effets de la Fusion
4.1Contexte
Les principaux motifs et objectifs de la Fusion sont de permettre un regroupement d'entreprises au niveau du groupe Kalera, suivi de la cotation d'une société mère de la Société Absorbante sur le Nasdaq.
4.2Effets juridiques
La Société Absorbante acquerra, sous l’effet de la Fusion, tous les éléments d’actif et de passif de la Société Absorbée par voie de transmission universelle de patrimoine de la Société Absorbée à la Société Absorbante.
À partir de la Date d’Effet , la Société Absorbante se subrogera dans l’intégralité des droits et obligations de la Société Absorbée à l’égard des tiers. Les droits et créances compris dans les éléments d’actif de la Société Absorbée seront transférés à la Société Absorbante avec la totalité des sûretés, qu’elles soient réelles (in rem) ou personnelles, qui leur sont attachées.
La Société Absorbante poursuivra, à compter de la Date d’Effet, l’exécution des obligations de la Société Absorbée en vertu de toutes conventions auxquelles cette dernière est partie.
Toutes créances et dettes existant à la Date d’Effet entre les Sociétés Fusionnantes seront annulées lors de la réalisation de la Fusion.
La Société Absorbante prendra en charge : (i) le dépôt ou l'enregistrement de toutes déclarations fiscales ou autres documents fiscaux relatifs à la Société Absorbée auprès de l'administration fiscale luxembourgeoise ainsi que (ii) le paiement (le cas échéant) de tout impôt sur le revenu des sociétés ou impôt communal ou local, de tout impôt sur le revenu, taxe sur la valeur ajoutée, taxe sur les ventes, taxe foncière ou de transfert, taxe professionnelle, taxe immobilière, retenue d’impôt sur les dividendes, taxe salariale, tout impôt d'enregistrement ou droit de timbre ou des contributions à la sécurité sociale ou toutes taxes similaires concernant la Société Absorbée.
La Fusion entraînera le transfert par la Société Absorbée de tous ses éléments d’actif et de passif, sans exception, à la Société Absorbante, de sorte que la Société Absorbée soit dissoute sans liquidation après la réalisation de la Fusion.
Aucun droit de propriété industrielle et intellectuelle ou droit réel (in rem) ne sera transféré à la suite de la Fusion.
L’Associé Unique de Merger Sub deviendra actionnaire de la Société Absorbante à compter de la Date d’Effet.
Le mandat du gérant unique actuel de la Société Absorbée prendra automatiquement fin à la Date d’Effet.
Les livres et registres de la Société Absorbée seront conservés au siège social de la Société Absorbante conformément aux lois applicables.
Suite à la Fusion, la Société Absorbée cessera d’exister et toutes ses parts sociales seront annulées.
4.3Date d’Effet
Sous réserve de la Date d’Effet de la Fusion Transfrontalière et de la détermination du nombre définitif d'actions à émettre dans le cadre de la Fusion Transfrontalière, la Fusion prendra effet (i) entre les Sociétés Fusionnantes à compter des assemblées générales extraordinaires de chacune des Sociétés Fusionnantes approuvant la Fusion (la « Date d’Effet ») et (ii) à l’égard des tiers à partir de la date de dernière publication des procès-verbaux des assemblées générales extraordinaires des Sociétés Fusionnantes approuvant la Fusion au RESA conformément au Chapitre Vbis du titre I de la loi modifiée du 19 décembre 2002 concernant le registre de commerce et des sociétés ainsi que la comptabilité et les comptes annuels des entreprises (la « Date de Publication »).
4.4Date à laquelle les affaires de la Société Absorbée seront considérées du point de vue comptable comme accomplies pour le compte de la Société Absorbante
À compter de la date de constitution de la Société Absorbée (le 29 avril 2022), toutes les opérations et transactions de la Société Absorbée seront considérées du point de vue comptable comme accomplies pour le compte de la Société Absorbante.
5.Rapport d’échange des actions et expert indépendant
5.1Rapport d’échange
Sur le fondement des valorisations faites par le gérant unique de la Société Absorbée et le conseil d’administration de la Société Absorbante, le rapport d’échange de la Fusion sera une (1) action du capital social de la Société Absorbante en échange d’une (1) part sociale du capital social de la Société Absorbée (le « Rapport d’Échange »). La valeur nominale des parts sociales du capital social de la Société Absorbée étant fixée à un euro (EUR 1) et la valeur nominale des actions du capital social de la Société Absorbante étant fixée à un centime d'euro (EUR 0,01), l’Associé Unique de Merger Sub recevra une (1) action d'une valeur nominale d'un centime d'euro (EUR 0,01) dans la Société Absorbante en contrepartie de chaque part sociale détenue dans la Société Absorbée d'une valeur nominale d'un euro (EUR 1), la différence de quatre-vingt-dix-neuf centimes d'euro (EUR 0,99) par part sociale/action échangée étant comptabilisée dans le compte de prime d'émission de la Société Absorbante.
5.2Expert indépendant
Le Rapport d’Échange ainsi établi par le conseil d’administration de la Société Absorbante et le gérant unique de la Société Absorbée a été soumis à l’évaluation de :
Grant Thornton Lux Audit & Assurance, une société anonyme, existant selon les lois du Grand-Duché de Luxembourg, ayant son siège social au 13, rue de Bitbourg, L-1273 Luxembourg, Grand-Duché de Luxembourg et immatriculée auprès du Registre de Commerce et des Sociétés, Luxembourg sous le numéro B 183652 pour la Société Absorbante, et de HACA Partners S.à r.l., une société à responsabilité limitée existant selon les lois du Grand-Duché de Luxembourg, ayant son
siège social au 6, route d’Esch, L-1470 Luxembourg, Grand-Duché de Luxembourg et immatriculée auprès du Registre de Commerce et des Sociétés, Luxembourg sous le numéro B 204968 pour la Société Absorbée (les « Experts de la Fusion »), experts indépendants nommés conformément à l’article 1021-6 de la Loi.
6.Emission et annulation ultérieure d'actions suite à la Fusion
Dans le cadre de la Fusion, de nouvelles actions du capital social de la Société Absorbante seront émises au profit de l’Associé Unique de Merger Sub par application du Rapport d'Echange.
Les nouvelles actions seront inscrites au registre des actions de la Société Absorbante au nom de l’Associé Unique de Merger Sub (dont preuve peut être obtenue au siège social de la Société Absorbante).
Les nouvelles actions émises par la Société Absorbante suite à la Fusion confèreront le droit de participation aux bénéfices et/ou pertes de la Société Absorbante à compter de la Date d’Effet.
Immédiatement après l'approbation de la Fusion, toutes les actions émises dans le cadre de la Fusion Transfrontalière (c'est-à-dire toutes les actions de la Société Absorbante à l'exception des actions attribuées à l’Associé Unique de Merger Sub à la suite de la Fusion) seront annulées conformément à une décision de l'assemblée générale extraordinaire des actionnaires de la Société Absorbante (l'« Annulation »). Concomitamment à l'Annulation, tous les actionnaires de la Société Absorbante, à l'exception de l’Associé Unique de Merger Sub dont les actions ne seront pas annulées, se verront attribuer des actions de l’Associé Unique de Merger Sub.
7.Droits spéciaux pour les actionnaires et pour les détenteurs d’autres titres
Aucun droit spécial ne sera conféré par la Société Absorbante aux actionnaires ou détenteurs d’autres titres de la Société Absorbée dans le cadre de la Fusion.
8.Avantages particuliers en faveur des experts de la fusion (les « Experts de la Fusion ») et/ou tout membre des organes d’administration, de direction, de surveillance ou de contrôle des Sociétés Fusionnantes
Aucun avantage particulier n’a été/ne sera accordé aux Experts de la Fusion et/ou à quelque membre des organes d’administration, de direction, de surveillance ou de contrôle des Sociétés Fusionnantes.
9.Informations concernant la Fusion
Le Projet de Fusion sera publié au RESA au moins un (1) mois avant la date prévue pour la tenue des assemblées générales extraordinaires des actionnaires/associés des Sociétés Fusionnantes appelées à approuver la Fusion.
Les documents suivants, le cas échéant, seront tenus à disposition de l’Actionnaire Unique Kalera et de l’Associé Unique de Merger Sub aux fins de consultation aux sièges sociaux des Sociétés Fusionnantes au moins un (1) mois avant la tenue des assemblées générales extraordinaires des actionnaires/associés des Sociétés Fusionnantes appelées à approuver la Fusion :
a)le Projet de Fusion ;
b)les comptes annuels et les rapports de gestion des trois (3) derniers exercices sociaux de chacune des Sociétés Fusionnantes, le cas échéant ;
c)les comptes intérimaires de la Société Absorbée en date du 10 mai 2022 (joints en Annexe 1) ;
d)les comptes intérimaires de la Société Absorbante en date du 31 décembre 2021 (joints en Annexe 2) ;
e)les rapports du conseil d’administration de la Société Absorbante et du gérant unique de la Société Absorbée expliquant le Projet de Fusion du point de vue juridique et économique, conformément à l’article 1021-5 de la Loi ; et
f)le(s) rapport(s) d’un ou plusieurs experts conformément à l’article 1021-6 de la Loi.
10.Droits des créanciers
Les créanciers des Sociétés Fusionnantes, dont la créance est antérieure à la Date de Publication, peuvent, nonobstant toute convention contraire, dans les deux (2) mois suivant la Date de Publication, demander au magistrat présidant la chambre du tribunal d’arrondissement, dans le ressort duquel la société débitrice a son siège social, siégeant en matière commerciale et comme en matière de référé, la constitution de sûretés pour toutes créances échues ou non échues, dans le cas où ils peuvent démontrer, de manière crédible, que la Fusion constitue un risque pour l’exercice de leurs droits et que la société ne leur a pas fourni de garanties adéquates. Le président rejette la demande si le créancier dispose de garanties adéquates ou si celles-ci ne sont pas nécessaires, compte tenu de la situation financière de la société après la Fusion. La société débitrice peut écarter la demande en payant le créancier même si la créance est à terme.
Si les sûretés ne sont pas fournies dans le délai fixé, la créance devient immédiatement exigible.
11.Conditions
11.1Modification de la composition du conseil d'administration de la Société Absorbante
A compter de la Date d’Effet, le conseil d'administration de la Société Absorbante sera composé des membres suivants, sauf accord contraire des assemblées générales extraordinaires du ou des actionnaires/associés des Sociétés Fusionnantes avant la Date d’Effet :
–Sakip-Umur Hürsever, administrateur de catégorie A ;
–Maria Sastre, administrateur de catégorie A ;
–Sonny Perdue, administrateur de catégorie A ;
–Curtis McWilliams, administrateur de catégorie A ;
–Andrea Weiss, administrateur de catégorie A ;
–Faisal AlMeshal, administrateur de catégorie A ;
–Christian Toma, administrateur de catégorie A ; et
–Felix Faber, administrateur de catégorie B.
11.2Modification des statuts de la Société Absorbante
A compter de la Date d’Effet, les statuts de la Société Absorbante seront modifiés afin d’avoir la teneur reprise à l’Annexe 3 ci-jointe, sauf accord contraire des assemblées générales extraordinaires du ou des actionnaires/associés des Sociétés Fusionnantes avant la Date d’Effet.
10.3 Approbation de la Fusion
La Fusion est soumise à l'approbation du présent Projet de Fusion et de la Fusion par l'assemblée générale extraordinaire du ou des actionnaires/associés de chacune des Sociétés Fusionnantes, à condition que (i) la Date d’Effet de la Fusion Transfrontalière ait eu lieu et que le nombre final d'actions à émettre ait été déterminé dans le cadre de la Fusion Transfrontalière, (ii) tous les documents énumérés à l'article 9 du présent Projet de Fusion aient été mis à la disposition de l'Actionnaire Unique Kalera et de l'Associé Unique de Merger Sub, à son siège social, et que le présent Projet de Fusion ait été publié au RESA, au moins un (1) mois avant la date fixée pour les assemblées générales extraordinaires du ou des actionnaires/associés des Sociétés Fusionnantes appelées à approuver la Fusion et le présent Projet de Fusion.
12.Divers
12.1Pouvoirs
Tous les pouvoirs sont donnés aux membres du conseil d’administration de la Société Absorbante, respectivement au gérant unique de la Société Absorbée, ainsi qu'à Arendt & Medernach S.A., admise à exercer au Luxembourg et inscrite sur la liste V des avocats du Barreau de Luxembourg, elle-même représentée par Me Bob Calmes et à tout avocat de l’étude Maples and Calder (Luxembourg) SARL, Société d’avocats inscrite au barreau de Luxembourg, ayant son siège social au 12E, rue Guillaume Kroll, L-1882 Luxembourg, Grand-Duché de Luxembourg et immatriculée auprès du Registre de Commerce et des Sociétés, Luxembourg sous le numéro B 227.216 (le
« Mandataire ») chacun individuellement et avec un plein pouvoir de substitution, au nom et pour le compte des Sociétés Fusionnantes, afin de :
(a)consigner, certifier et déposer, ou faire déposer, certifier et déposer la requête conjointe au juge présidant le Tribunal d'Arrondissement siégeant en matière commerciale dans le ressort de Luxembourg / Diekirch, siégeant en matière commerciale et comme en matière de référé, dans la forme et avec les ajouts et modifications s’y rapportant que le Mandataire jugera nécessaires, appropriés et souhaitables, une telle détermination devant être attestée de façon concluante par l’exécution ou la livraison de la présente par ce Mandataire ; et
(b)effectuer tous dépôts, notifications et publications nécessaires à la Fusion.
12.2Élection de domicile
Aux fins de la signature des présentes et des actes ou procès-verbaux qui en découlent, les Sociétés Fusionnantes élisent domicile à leur siège social respectif.
12.3Droit applicable et tribunaux compétents
Le présent Projet de Fusion est régi et sera interprété conformément au droit luxembourgeois.
Tout litige relatif à l'interprétation ou à l'exécution du présent Projet de Fusion sera soumis à la compétence exclusive des cours et tribunaux de la ville de Luxembourg.
12.4Langue
Le conseil d'administration de la Société Absorbante et le gérant unique de la Société Absorbée déclarent par la présente que le présent Projet de Fusion est rédigé en anglais suivi d'une traduction française. En cas de divergence entre l'anglais et le texte, la version anglaise fait foi.
12.5Coûts
Les dépenses, coûts, frais et charges résultant de la Fusion seront supportés par la Société Absorbante.
12.6Exemplaires
Le présent Projet de Fusion a été signé en plusieurs exemplaires, le conseil d'administration de la Société Absorbante et le gérant unique de la Société Absorbée accusant réception d'un exemplaire à la date indiquée en tête des présentes.
[Remainder of page remains intentionally blank and signature page follows – le reste de la page reste intentionnellement blanc et la page de signature suit.]
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[Signature page to the Common Draft Terms of Merger – page de signature du Projet Commun de Fusion] |
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THE ABSORBING COMPANY |
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/s/ Fernando Cornejo | |
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Kalera S.A. By – Par: Fernando Cornejo Title – Titre: Class A manager and authorized signatory – Gérant de catégorie A et signataire autorisé |
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THE ABSORBED COMPANY | |
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/s/ Brent de Jong | |
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Kalera Luxembourg Merger Sub By – Par: Brent de Jong Title – Titre: Sole manager – Gérant unique |
Schedules – Annexes:
1.Interim accounts of the Absorbed Company as at 10 May 2022 – Comptes intérimaires de la Société Absorbée au 10 mai 2022
2.Annual accounts of the Absorbing Company as at 31 December 2021 – Comptes annuels de la Société Absorbante au 31 décembre 2021
3.Articles of articles of association of the Absorbing Company – Statuts de la Société Absorbante
SCHEDULE 1
INTERIM ACCOUNTS OF THE ABSORBED COMPANY AS AT 10 MAY 2022
ANNEXE 1
COMPTES INTÉRIMAIRES DE LA SOCIÉTÉ ABSORBÉE AU 10 MAI 2022
SCHEDULE 2
ANNUAL ACCOUNTS OF THE ABSORBING COMPANY AS AT 31 DECEMBER 2021
ANNEXE 2
COMPTES ANNUELS DE LA SOCIÉTÉ ABSORBANTE AU 31 DÉCEMBRE 2021
SCHEDULE 3
ARTICLES OF ASSOCIATION OF THE ABSORBING COMPANY
ANNEXE 3
STATUTS DE LA SOCIÉTÉ ABSORBANTE
Form – Subject to Finalization prior to Closing
[HOLDCO]
2022 LONG-TERM STOCK INCENTIVE PLAN
Section 1. Purpose. The purposes of this [HOLDCO] 2022 Long-Term Stock Incentive Plan are to promote the interests of the Company and its stockholders by (i) attracting and retaining employees and directors of, and consultants to, the Company and its Subsidiaries, as defined below; (ii) motivating such individuals by means of performance-related incentives to achieve longer-range performance goals; and (iii) enabling such individuals to participate in the long-term growth and financial success of the Company.
Section 2. Definitions. As used in the Plan, the following terms shall have the meanings set forth below:
“Affiliate” means any entity other than the Subsidiaries in which the Company has a substantial direct or indirect equity interest, as determined by the Board.
“Award” shall mean any Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award, Performance Award, or Other Stock-Based Award made or granted from time to time hereunder.
“Award Agreement” shall mean any written agreement, contract, or other instrument or document evidencing any Award, which may, but need not, be executed or acknowledged by a Participant. An Award Agreement may be in an electronic medium and may be limited to notation on the books and records of the Company.
“Base Salary” means the base salary or wages of the Participant excluding overtime, bonuses, contributions to or benefits under benefit plans, fringe benefits, perquisites, and other such forms of compensation. Base Salary shall include any elective contributions that are paid through a reduction in a Participant’s basic salary and which are not includible in the Participant’s gross income under Sections 125 or 402(e)(3) of the Code.
“Board” shall mean the Board of Directors of the Company.
“Cause” as a reason for a Participant’s termination of employment or service shall, unless otherwise agreed to in writing between the Participant and the Company or a Subsidiary or Affiliate of the Company, have the meaning assigned such term in the employment, severance or similar agreement, if any, between the Participant and the Company or a Subsidiary or Affiliate of the Company. If the Participant is not a party to an employment, severance or similar agreement with the Company or a Subsidiary or Affiliate of the Company in which such term is defined, then unless otherwise defined in the applicable Award Agreement “Cause” shall mean the Participant’s: (A) indictment for, conviction of, or plea of guilty or nolo contendere to, a felony or indictment for a crime involving dishonesty, fraud or moral turpitude; (B) willful breach of the Participant’s obligations to the Company or a Subsidiary or Affiliate of the Company; (C) willful misconduct, or any dishonest or fraudulent act or omission; (D) violation of any securities or financial reporting laws, rules or regulations or any policy of the Company or a Subsidiary or Affiliate of the Company relating to the foregoing; (E) violation of the policies of the Company or a Subsidiary or Affiliate of the Company on harassment, discrimination or substance abuse; or (F) gross negligence, gross neglect of duties or gross insubordination in the Participant’s performance of duties with the Company or a Subsidiary or Affiliate of the Company.
“Change in Control” shall mean the consummation of any one of the following events:
i. the acquisition by any “person” (as defined in Section 3(a)(9) of the Exchange Act) or any two or more persons deemed to be one “person” (as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act), in one or a series of transactions (other than the Company, any of its Affiliates or any trustee or other fiduciary holding securities under any employee benefit plan of the Company, or any underwriter temporarily holding securities pursuant to an offering of such securities, directly or indirectly), of “beneficial ownership” (within the meaning of Rule 13d-3 under the Exchange Act) of securities of the Company possessing more than 50% of the outstanding
voting power of the Company eligible to vote in the election of the Board (“Company Voting Securities”), other than pursuant to a transaction described under subclause (iii) below that does not constitute Change in Control under subclause (iii);
ii. a merger, combination, amalgamation, consolidation, or any other similar form of corporate transaction (a “Reorganization”) in which the holders of the Company’s common stock immediately prior to such Reorganization do not hold in respect of their holdings of such stock 50% or more of the voting power of the merged, combined, amalgamated, consolidated, or other resulting entity;
iii. a sale or other disposition, in one or a series of related transactions, of all or substantially all of the assets of the Company and its Subsidiaries (on a consolidated basis) to any “person” as defined in Section 3(a)(9) of the Exchange Act) or to any two (2) or more persons deemed to be one “person” (as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act), other than (A) to an Affiliate of the Company or (B) in connection with a spinoff involving an Affiliate of the Company or the then-current shareholders; or
iv. during any period of two consecutive years commencing on or after the Effective Date, Incumbent Directors cease for any reason to constitute at least a majority of the board. “Incumbent Directors” shall mean: (1) the directors who were serving at the beginning of such two-year period, or (2) any directors whose election or nomination was approved by at least a majority of the directors referred to in clause (1) or by at least a majority of the director approved under this clause (2).
Notwithstanding the foregoing, to the extent necessary to comply with Section 409A of the Code with respect to the payment of “nonqualified deferred compensation,” “Change in Control” shall be limited to a “change in control event” as defined under Section 409A of the code. For the avoidance of doubt, the consummation of the transactions contemplated by the Business Combination Agreement dated as January 30, 2022 shall not constitute a Change in Control under the Plan.
“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.
“Committee” shall mean the Compensation Committee of the Board (or its successor(s)), or any other committee of the Board designated by the Board to administer the Plan and composed of not less than two directors, each of whom is required to be a “Non-Employee Director” (within the meaning of Rule 16b-3) if and to the extent Rule 16b-3 is applicable to the Company and the Plan and an “outside director” (within the meaning of Section 162(m) of the Code) if and to the extent the Board determines it is necessary or appropriate to satisfy the conditions of any available exemption from the deduction limit under Section 162(m) of the Code. If at any time such a committee has not been so designated or is not so composed, the Board shall constitute the Committee.
“Company” shall mean [HOLDCO] together with any successor thereto.
“Continuous Service” shall mean the absence of any interruption or termination of service as an employee, director or consultant. Continuous Service shall not be considered interrupted in the case of (i) sick leave; (ii) military leave; (iii) any other leave of absence approved by the Committee, in each case, provided that such leave is for a period of not more than 90 days, unless reemployment upon the expiration of such leave is guaranteed by contract or applicable law, or unless provided otherwise pursuant to Company policy, as adopted from time to time; or (iv) in the case of transfer between locations of the Company or between the Company, its Subsidiaries or Affiliates or their respective successors. Changes in status between service as an employee, a director and a consultant will not constitute an interruption of Continuous Service; provided, however, that, unless otherwise determined by the Committee, consultants providing services to the Company or a Subsidiary or Affiliate of the Company for less than 32 hours per month shall incur an interruption of Continuous Service.
“Disqualifying Disposition” means any disposition (including any sale) of Shares acquired upon the exercise of an Incentive Stock Option made within the period that ends either (1) two years after the date on which the Participant was granted the Incentive Stock Option or (2) one year after the date upon which the Participant acquired the Share.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
“Fair Market Value” shall mean, unless otherwise defined in the applicable Award Agreement (i) with respect to any property other than Shares, the fair market value of such property determined by such methods or procedures as shall be established from time to time by the Committee and (ii) with respect to the Shares, as of any date, (1) the closing sale price (excluding any “after hours” trading) of the Shares as reported on the applicable nationally recognized exchange for such date (or if not then trading on the applicable nationally recognized exchange, the closing sale price of the Shares on the stock exchange or over-the-counter market on which the Shares are principally trading on such date), or, (x) if there were no sales on such date or (y) for the purpose of establishing Fair Market Value in connection with the vesting of an Award or the release of Shares, on the closest preceding date on which there were sales of Shares or (2) in the event there shall be no public market for the Shares on such date, the fair market value of the Shares as determined in good faith by the Committee.
“GAAP” shall mean United States Generally Accepted Accounting Principles.
“Good Reason” as a reason for a Participant’s termination of employment or service shall have the meaning assigned such term in the employment, severance or similar agreement, if any, between the Participant and the Company or a Subsidiary or Affiliate of the Company.
“Incentive Stock Option” shall mean a right to purchase Shares from the Company that is granted under Section 6 of the Plan and that is intended to meet the requirements of Section 422 of the Code or any successor provision thereto. Incentive Stock Options may be granted only to Participants who meet the definition of “employees” under Section 3401(c) of the Code.
“Non-Qualified Stock Option” shall mean a right to purchase Shares from the Company that is granted under Section 6 of the Plan and that is not intended to be an Incentive Stock Option.
“Option” shall mean an Incentive Stock Option or a Non-Qualified Stock Option.
“Other Stock-Based Award” shall mean any right granted under Section 10 of the Plan.
“Participant” shall mean any (i) employee of, or consultant to, the Company or its Subsidiaries, or non-employee director who is a member of the Board or the board of directors of a Subsidiary of the Company, eligible for an Award under Section 5 and selected by the Committee to receive an Award under the Plan or (ii) any employee of, or consultant to, an Affiliate, eligible for a cash-settled Performance Award or cash-settled Restricted Stock Unit under Section 5 and selected by the Committee to receive a cash-settled Performance Award or a cash-settled Restricted Stock Unit under the Plan.
“Performance Award” shall mean any right granted under Section 9 of the Plan.
“Performance Criteria” shall mean the measurable criterion or criteria that the Committee selects for purposes of establishing the Performance Goal(s) for a Performance Period with respect to any performance-based award under the Plan. The Performance Criteria used to establish the Performance Goal(s) may be based on the attainment of specific levels of performance of the Company (or a Subsidiary, Affiliate, division or operational unit of the Company) in respect of any of the following metrics, in addition to any other factors or metrics determined by the Committee, whether determined on a GAAP or non-GAAP basis: revenue, operating income, contribution, day sales outstanding, return on net assets, return on stockholders’ equity, return on assets, return on capital, stockholder returns (on an absolute or relative basis), profit margin, operating margin, contribution margin, earnings per Share, net earnings, operating earnings, free cash flow, cash flow from operations, earnings before interest, taxes, depreciation and amortization (EBITDA), including adjusted EBITDA, number of customers, operating expenses, capital expenses, customer acquisition costs, Share price, sales, bookings, or market share.
“Performance Goals” shall mean, for a Performance Period, one or more goals established by the Committee for the Performance Period based upon the Performance Criteria. The Committee is authorized, in its sole discretion, to adjust or modify the calculation of a Performance Goal for such Performance Period in order to prevent the dilution or enlargement of the rights of Participants, including, without limitation (a) in the event of, or in anticipation of, any unusual or extraordinary corporate item, transaction, event or development affecting the Company; or (b) in recognition of, or in anticipation of, any other unusual or nonrecurring events affecting the
Company, or the financial statements of the Company, or in response to, or in anticipation of, changes in applicable laws, regulations, accounting principles, or business conditions.
“Performance Period” shall mean the one or more periods of time, as the Committee may select, over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant’s right to and the payment of a performance-based award.
“Person” has the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company and its Subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the shareowners of the Company in substantially the same proportions as their ownership of stock of the Company.
“Plan” shall mean this [HOLDCO] 2022 Long-Term Stock Incentive Plan.
“Restricted Stock” shall mean any Share granted under Section 8 of the Plan.
“Restricted Stock Unit” shall mean any unit granted under Section 8 of the Plan.
“Rule 16b-3” shall mean Rule 16b-3 as promulgated and interpreted by the SEC under the Exchange Act, or any successor rule or regulation thereto as in effect from time to time.
“SEC” shall mean the Securities and Exchange Commission or any successor thereto and shall include the staff thereof.
“Shares” shall mean the common stock of the Company, $[___] par value, or such other securities of the Company (i) into which such common stock shall be changed by reason of a recapitalization, merger, consolidation, split-up, combination, exchange of shares or other similar transaction or (ii) as may be determined by the Committee pursuant to Section 4(b) of the Plan.
“Stock Appreciation Right” shall mean any right granted under Section 7 of the Plan.
“Subsidiary” of any Person means another Person (other than a natural Person), an aggregate amount of the voting securities, other voting ownership or voting partnership interests, of which is sufficient to elect at least a majority of the Board or other governing body (or, if there are no such voting interests, 50% or more of the equity interests of which is owned directly or indirectly by such first Person).
“Substitute Awards” shall mean any Awards granted under Section 4(a)(iii) of the Plan.
Section 3. Administration. (a) The Plan shall be administered by the Committee. Subject to the terms of the Plan and applicable law, and in addition to other express powers and authorizations conferred on the Committee by the Plan, the Committee shall have full power and authority to: (i) designate Participants; (ii) determine the type or types of Awards to be granted to a Participant; (iii) determine the number of Shares to be covered by, or with respect to which payments, rights, or other matters are to be calculated in connection with, Awards; (iv) determine the terms and conditions of any Award; (v) determine whether, to what extent, and under what circumstances Awards may be settled or exercised in cash, Shares, other securities, other Awards or other property, or cancelled, forfeited, or suspended and the method or methods by which Awards may be settled, exercised, cancelled, forfeited, or suspended; (vi) determine whether, to what extent, and under what circumstances cash, Shares, other securities, other Awards, other property, and other amounts payable with respect to an Award shall be deferred either automatically or at the election of the holder thereof or of the Committee (in each case consistent with Section 409A of the Code); (vii) interpret, administer or reconcile any inconsistency, correct any defect, resolve ambiguities and/or supply any omission in the Plan, any Award Agreement, and any other instrument or agreement relating to, or Award made under, the Plan; (viii) establish, amend, suspend, or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; (ix) establish and administer Performance Goals and certify or determine whether, and to what extent, they have been attained; (x) adopt and approve any supplements to or amendments, restatements or alternative versions of the Plan
(including, without limitation, sub-plans) in accordance with Section 11 and Section 13(n) of the Plan; and (xi) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan.
(a) Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Plan or any Award shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive, and binding upon all Persons, including the Company, any Subsidiary or Affiliate of the Company, any Participant, any holder or beneficiary of any Award, and any stockholder.
(b) The mere fact that a Committee member shall fail to qualify as a “Non-Employee Director”, if applicable, or, if applicable, an “outside director” within the meaning of Rule 16b-3 shall not invalidate any Award made by the Committee which Award is otherwise validly made under the Plan.
(c) No member of the Committee shall be liable to any Person for any action or determination made in good faith with respect to the Plan or any Award hereunder.
(d) The Committee may delegate to one or more officers of the Company (or, in the case of awards of Shares, the Board may delegate to a committee made up of one or more directors) the authority to grant Awards to Participants who are not executive officers or directors of the Company subject to Section 16 of the Exchange Act.
Section 4. Shares Available for Awards.
(a) Shares Available.
(i) Subject to adjustment as provided in Section 4(b), the aggregate number of Shares with respect to which Awards may be granted from time to time under the Plan shall in the aggregate not exceed the sum of (i) [_______], plus (ii) the number of Shares that become available for issuance under Section 4(a)(ii) of this Plan; provided, that, subject to adjustment as provided for in Section 4(b), the aggregate number of Shares with respect to which Incentive Stock Options may be granted under the Plan shall be [_______]. Unless the Committee acts, prior to the first day of a given fiscal year, to provide otherwise, the total number of Shares reserved and available for delivery in connection with Awards under the Plan will be increased on the first day of the first nine (9) fiscal years following the Company’s fiscal year in which the Effective Date occurs, in an amount equal to the lesser of (x) [__]% of the outstanding Shares on the last day of the immediately preceding fiscal year and (y) such fewer number of Shares as is determined by the Committee. Subject to adjustment as provided in Section 4(b), and notwithstanding the foregoing limitation, or any plan or program of the Company or any Subsidiary to the contrary, the maximum amount of compensation that may be paid to any single non-employee member of the Board in respect of any single fiscal year (including Awards under the Plan, determined based on the Fair Market Value of such Award as of the grant date, as well as any retainer fees, but excluding any amounts paid in respect of a director’s first year of service with the Company, and excluding any special committee fees) shall not exceed $[____] (the “Non-Employee Director Compensation Limit”).
(ii) If any Shares subject to an Award are forfeited, cancelled, or exchanged or if an Award terminates or expires without a distribution of Shares to the Participant, the Shares with respect to such Award shall, to the extent of any such forfeiture, cancellation, exchange, termination or expiration, again be available for Awards under the Plan. For the avoidance of doubt, if two Awards are granted together in tandem, the Shares underlying any portion of the tandem Award which is not exercised or not otherwise settled in Shares will again be available for Awards under the Plan. Upon payment in cash of the benefit provided by any Award granted under this Plan, any Shares that were covered by that Award will again be available for Awards under the Plan. If, under this Plan, a Participant has elected to give up the right to receive cash compensation in exchange for Shares based on fair market value, such Shares will not count against the aggregate limit described in Section 4(a)(i). Notwithstanding the foregoing, any Shares which (1) are tendered to or withheld by the Company to satisfy payment or applicable tax withholding requirements in connection with the vesting or delivery of an Award, (2) are withheld by the Company upon exercise of an Option pursuant to a “net exercise” arrangement, or (3) underlie a Stock Appreciation Right that is settled in Shares, shall not again be available for Awards under the Plan. In addition, Shares that are purchased by the Company in the open market pursuant to any repurchase plan or program, whether using Option proceeds or
otherwise, shall not be made available for grants of Awards under the Plan, nor shall such number of purchased shares be added to the limit described in Section 4(a)(i).
(iii) Awards may, in the discretion of the Committee, be made under the Plan in assumption of, or in substitution for, outstanding awards previously granted by a company acquired by the Company or with which the Company combines (“Substitute Awards”). The number of Shares underlying any Substitute Awards shall not be counted against the aggregate number of Shares available for Awards under the Plan.
(iv) In the event that an entity acquired by the Company or with which it combines has shares available under a pre-existing plan (“Target Company Plan”) previously approved by stockholders and not adopted in contemplation of such acquisition, merger or other combination, the shares available for grant pursuant to the terms of such plan (as adjusted, to the extent appropriate, to reflect such acquisition or merger) (“Assumed Available Shares”) may be used for Awards under this Plan made after such acquisition or merger; provided, however, that Awards using such Assumed Available Shares may not be made after the deadline for new awards or grants under the terms of the Target Company Plan, and may only be made to individuals who were not employees or directors of the Company or any subsidiary prior to such acquisition, merger or other combination. The Awards so granted may reflect the original terms of the awards being assumed or substituted or converted for and need not comply with other specific terms of this Plan if such Awards comply with the terms of the Target Company Plan, and may account for Shares substituted for the securities covered by the original awards and the number of shares subject to the original awards, as well as any exercise or purchase prices applicable to the original awards, adjusted to account for differences in stock prices in connection with the transaction.
(b) Adjustments. Notwithstanding any provisions of the Plan to the contrary, in the event that the Committee determines that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company, or other corporate transaction or event affects the Shares such that an adjustment is appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Committee shall equitably adjust any or all of (i) the number of Shares or other securities of the Company (or number and kind of other securities or property) with respect to which Awards may be granted, including any appropriate adjustments to the individual limitations applicable to Awards set forth in Section 4(a)(i); provided, however, that any adjustment to such individual limitations will be made only if and to the extent that such adjustment would not cause any Option intended to qualify as an Incentive Stock Option to fail to so qualify, (ii) the number of Shares or other securities of the Company (or number and kind of other securities or property) subject to outstanding Awards, and (iii) the grant or exercise price with respect to any Award or, if deemed appropriate, make provision for a cash payment to the holder of an outstanding Award in consideration for the cancellation of such Award, which, in the case of Options and Stock Appreciation Rights shall equal the excess, if any, of the Fair Market Value of the Share subject to each such Option or Stock Appreciation Right over the per Share exercise price or grant price of such Option or Stock Appreciation Right.
(c) Sources of Shares Deliverable Under Awards. Any Shares delivered pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares or of treasury Shares.
Section 5. Eligibility. Any employee of, or consultant to, the Company or any of its Subsidiaries (including any prospective employee), or non-employee director who is a member of the Board or the board of directors of a Subsidiary of the Company, shall be eligible to be selected as a Participant and receive any Award as determined by the Committee.
Section 6. Stock Options.
(a) Grant. Subject to the terms of the Plan, the Committee shall have sole authority to determine the Participants to whom Options shall be granted, the number of Shares to be covered by each Option, the exercise price thereof and the conditions and limitations applicable to the exercise of the Option. The Committee shall have the authority to grant Incentive Stock Options, or to grant Non-Qualified Stock Options, or to grant both types of
Options. In the case of Incentive Stock Options, the terms and conditions of such grants shall be subject to and comply with such rules as may be prescribed by Section 422 of the Code, as from time to time amended, and any regulations implementing such statute. All Options when granted under the Plan are intended to be Non-Qualified Stock Options, unless the applicable Award Agreement expressly states that the Option is intended to be an Incentive Stock Option. If an Option is intended to be an Incentive Stock Option, and if for any reason such Option (or any portion thereof) shall not qualify as an Incentive Stock Option, then, to the extent of such nonqualification, such Option (or portion thereof) shall be regarded as a Non-Qualified Stock Option appropriately granted under the Plan; provided that such Option (or portion thereof) otherwise complies with the Plan’s requirements relating to Non-Qualified Stock Options. No Option shall be exercisable more than ten years from the date of grant.
(b) Exercise Price. The Committee shall establish the exercise price at the time each Option is granted, which exercise price shall be set forth in the applicable Award Agreement and which exercise price (except with respect to Substitute Awards) shall not be less than the Fair Market Value per Share on the date of grant.
(c) Exercise. Each Option shall be exercisable at such times and subject to such terms and conditions as the Committee may, in its sole discretion, specify in the applicable Award Agreement. The applicable Award Agreement shall specify the period or periods of Continuous Service by the Participant that is necessary before the Option or installments thereof will become exercisable. The Committee may impose such conditions with respect to the exercise of Options, including without limitation, any relating to the application of federal or state securities laws, as it may deem necessary or advisable.
(d) Payment. (i) No Shares shall be delivered pursuant to any exercise of an Option until payment in full of the aggregate exercise price therefor is received by the Company. Such payment may be made (A) in cash, or its equivalent, or (B) subject to the Company’s consent, by exchanging Shares owned by the optionee (which are not the subject of any pledge or other security interest and which have been owned by such optionee for at least six months), or (C) subject to such rules as may be established by the Committee and applicable law, through delivery of irrevocable instructions to a broker to sell the Shares otherwise deliverable upon the exercise of the Option and to deliver promptly to the Company an amount equal to the aggregate exercise price, or (D) subject to any conditions or limitations established by the Committee, the Company’s withholding of Shares otherwise issuable upon exercise of an Option pursuant to a “net exercise” arrangement (it being understood that, solely for purposes of determining the number of treasury shares held by the Company, the Shares so withheld will not be treated as issued and acquired by the Company upon such exercise), or (E) by a combination of the foregoing, or (F) by such other methods as may be approved by the Committee, provided that the combined value of all cash and cash equivalents and the Fair Market Value of any such Shares so tendered to the Company or withheld as of the date of such tender or withholding is at least equal to such aggregate exercise price.
(i) Wherever in this Plan or any Award Agreement a Participant is permitted to pay the exercise price of an Option or taxes relating to the exercise of an Option by delivering Shares, the Participant may, subject to procedures satisfactory to the Committee, satisfy such delivery requirement by presenting proof of beneficial ownership of such Shares, in which case the Company shall treat the Option as exercised without further payment and shall withhold such number of Shares from the Shares acquired by the exercise of the Option.
(e) Special Provisions Applicable to Incentive Stock Options.
(i) No Incentive Stock Option may be granted to any Participant who, at the time the Option is granted, owns directly, or indirectly within the meaning of Section 424(d) of the Code, Shares possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any parent or subsidiary thereof, unless such Incentive Stock Option (1) has an exercise price at of least 110% of the Fair Market Value on the date of grant of such Option, and (ii) cannot be exercised more than five years after the date it is granted.
(ii) To the extent that the aggregate Fair Market Value (determined as of the date of grant) of Shares for which Incentive Stock Options are exercisable for the first time by any Participant during any calendar year (under all plans of the Company and its Affiliates) exceeds $100,000, such excess Incentive Stock Options shall be treated as Non-Qualified Stock Options.
(iii) Each Participant who receives an Incentive Stock Option must agree to notify the Company in writing immediately after the Participant makes a Disqualifying Disposition of any Shares acquired pursuant to the exercise of an Incentive Stock Option.
Section 7. Stock Appreciation Rights.
(a) Grant. Subject to the provisions of the Plan, the Committee shall have sole authority to determine the Participants to whom Stock Appreciation Rights shall be granted, the number of Shares to be covered by each Stock Appreciation Right Award, the grant price thereof and the conditions and limitations applicable to the exercise thereof. Stock Appreciation Rights may be granted in tandem with another Award, in addition to another Award, or freestanding and unrelated to another Award. Stock Appreciation Rights granted in tandem with or in addition to an Award may be granted either before, at the same time as the Award or at a later time. No Stock Appreciation Right shall be exercisable more than ten years from the date of grant.
(b) Exercise and Payment. A Stock Appreciation Right shall entitle the Participant to receive an amount equal to the excess of the Fair Market Value of a Share on the date of exercise of the Stock Appreciation Right over the grant price thereof (which grant price (except with respect to Substitute Awards) shall not be less than the Fair Market Value on the date of grant). The Committee shall determine in its sole discretion whether a Stock Appreciation Right shall be settled in cash, Shares or a combination of cash and Shares.
(c) Other Terms and Conditions. Subject to the terms of the Plan and any applicable Award Agreement, the Committee shall determine, at the grant of a Stock Appreciation Right, the term, methods of exercise, methods and form of settlement, and any other terms and conditions of any Stock Appreciation Right. The Committee may impose such conditions or restrictions on the exercise of any Stock Appreciation Right as it shall deem appropriate.
Section 8. Restricted Stock and Restricted Stock Units.
(a) Grant. Subject to the provisions of the Plan, the Committee shall have sole authority to determine the Participants to whom Shares of Restricted Stock and Restricted Stock Units shall be granted, the number of Shares of Restricted Stock and/or the number of Restricted Stock Units to be granted to each Participant, the duration of the period during which, and the conditions, if any, under which, the Restricted Stock and Restricted Stock Units may be forfeited to the Company, and the other terms and conditions of such Awards.
(b) Transfer Restrictions. Shares of Restricted Stock and Restricted Stock Units may not be sold, assigned, transferred, pledged or otherwise encumbered, except, in the case of Restricted Stock, as provided in the Plan or the applicable Award Agreements. Unless otherwise directed by the Committee, (i) certificates issued in respect of Shares of Restricted Stock shall be registered in the name of the Participant and deposited by such Participant, together with a stock power endorsed in blank, with the Company, or (ii) Shares of Restricted Stock shall be held at the Company’s transfer agent in book entry form with appropriate restrictions relating to the transfer of such Shares of Restricted Stock. Upon the lapse of the restrictions applicable to such Shares of Restricted Stock, the Company shall, as applicable, either deliver such certificates to the Participant or the Participant’s legal representative or the transfer agent shall remove the restrictions relating to the transfer of such Shares.
(c) Payment. Each Restricted Stock Unit shall have a value equal to the Fair Market Value of a Share. Restricted Stock Units shall be paid in cash, Shares, other securities or other property, as determined in the sole discretion of the Committee, upon or after the lapse of the restrictions applicable thereto, or otherwise in accordance with the applicable Award Agreement. No dividends shall be paid on any Shares of Restricted Stock and no dividend equivalents shall be paid on any Restricted Stock Units prior to the vesting of the Restricted Stock or Restricted Stock Units, as applicable.
Section 9. Performance Awards.
(a) Grant. The Committee shall have sole authority to determine the Participants who shall receive a “Performance Award”, which shall consist of a right which is (i) denominated in cash or Shares, (ii) valued, as determined by the Committee, in accordance with the achievement of such Performance Goals during such
Performance Periods as the Committee shall establish, and (iii) payable at such time and in such form as the Committee shall determine.
(b) Terms and Conditions. Subject to the terms of the Plan and any applicable Award Agreement, the Committee shall determine the Performance Goals to be achieved during any Performance Period, the length of any Performance Period, the amount of any Performance Award and the amount and kind of any payment or transfer to be made pursuant to any Performance Award.
(c) Payment of Performance Awards. Performance Awards may be paid in a lump sum or in installments following the close of the Performance Period as set forth in the Award Agreement on the date of grant.
Section 10. Other Stock-Based Awards.
The Committee shall have authority to grant to Participants an “Other Stock-Based Award”, which shall consist of any right which is (i) not an Award described in Sections 6 through 9 above and (ii) an Award of Shares or an Award denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Shares (including, without limitation, securities convertible into Shares), as deemed by the Committee to be consistent with the purposes of the Plan; provided that any such rights must comply, to the extent deemed desirable by the Committee, with Rule 16b-3 and applicable law. Subject to the terms of the Plan and any applicable Award Agreement, the Committee shall determine the terms and conditions of any such Other Stock-Based Award, including the price, if any, at which securities may be purchased pursuant to any Other Stock-Based Award granted under this Plan.
Section 11. Amendment and Termination.
(a) Amendments to the Plan. The Board may amend, alter, suspend, discontinue, or terminate the Plan or any portion thereof at any time; provided that if an amendment to the Plan (i) would materially increase the benefits accruing to Participants under the Plan, (ii) would materially increase the number of securities which may be issued under the Plan, (iii) would materially modify the requirements for participation in the Plan, (iv) would increase the Non-Employee Director Compensation Limit, or (v) must otherwise be approved by the stockholders of the Company in order to comply with applicable law or the rules of the applicable nationally recognized exchange, or, if the Shares are not traded on the applicable nationally recognized exchange, the principal national securities exchange upon which the Shares are traded or quoted, such amendment will be subject to stockholder approval and will not be effective unless and until such approval has been obtained; and provided, further, that any such amendment, alteration, suspension, discontinuance or termination that would impair the rights of any Participant or any holder or beneficiary of any Award previously granted shall not be effective as to such Participant without the written consent of the affected Participant, holder or beneficiary.
(b) Amendments to Awards. The Committee may amend any terms of, or alter, suspend, discontinue, cancel, or terminate, any Award theretofore granted; provided that any such amendment, alteration, suspension, discontinuance, cancellation, or termination that would impair the rights of any Participant or any holder or beneficiary of any Award previously granted shall not be effective as to such Participant without the written consent of the affected Participant, holder or beneficiary.
(c) Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events. The Committee is hereby authorized to make equitable adjustments in the terms and conditions of, and the criteria included in, all outstanding Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 4(b) hereof) affecting the Company, any Subsidiary of the Company, or the financial statements of the Company or any Subsidiary of the Company, or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan.
(d) Repricing. Except in connection with a corporate transaction or event described in Section 4(b) hereof, the terms of outstanding Awards may not be amended to reduce the exercise price of Options or the grant price of Stock Appreciation Rights, or cancel Options or Stock Appreciation Rights in exchange for cash, other Awards or Options or Stock Appreciation Rights with an exercise price or grant price, as applicable, that is less than
the exercise price of the original Options or grant price of the original Stock Appreciation Rights, as applicable, without stockholder approval. This Section 11(d) is intended to prohibit the repricing of “underwater” Options and Stock Appreciation Rights and will not be construed to prohibit the adjustments provided for in Section 4(b) of this Plan.
Section 12. Change in Control. In the event of a Change in Control, and except as otherwise provided by the Committee in an Award Agreement, a Participant’s Awards will be treated as follows:
(a) If an Award is continued, assumed, replaced, converted or has new rights substituted therefor by the resulting or continuing entity, as determined by the Committee, and in a manner consistent with the requirements of Section 409A of the Code, then any restrictions to which such Award is subject shall not lapse upon a Change in Control and such Awards, as continued, assumed, replaced, converted or substituted, shall continue to be subject to the terms and conditions as in effect immediately prior to the Change in Control; provided, that with respect to any outstanding Award that is subject to Performance Goals, the Committee may provide that such Award will be converted, assumed or replaced by the resulting or continuing entity as if target performance had been achieved as of the date of the Change in Control and such Awards would continue to remain subject to the time-based service requirements, if any. Except as otherwise provided in an Award Agreement, to the extent outstanding Awards granted under this Plan are continued, assumed, replaced, converted or substituted in accordance with this Section 12(a), if a Participant’s employment or service is terminated without Cause by the Company or a Subsidiary or Affiliate of the Company or a Participant terminates his or her employment or service with the Company or a Subsidiary or Affiliate of the Company for Good Reason, in either case, during the two year period immediately following a Change in Control, all outstanding Awards held by the Participant that may be exercised shall become fully exercisable and all restrictions with respect to outstanding Awards shall lapse and become vested and non-forfeitable.
(b) If Awards are not continued, assumed, replaced, converted or substituted in accordance with Section 12(a), then a Participant’s Awards may be treated in accordance with one or more of the following methods, as determined by the Committee in its sole discretion:
(i) The Committee may accelerate the exercisability of, or lapse of restrictions on, Awards or provide for a period of time for exercise prior to the occurrence of the Change in Control (with such exercise being contingent on the occurrence of the Change in Control, and, provided that, if the Change in Control does not take place within a specified period after giving such notice to exercise for any reason whatsoever, the notice and exercise pursuant thereto shall be null and void);
(ii) Any one or more outstanding Awards may be cancelled and the Committee may cause to be paid to the holders thereof, in cash, shares of common stock, other securities or other property, or any combination thereof, the value of such Awards, if any, as determined by the Committee (which, if applicable, may be based upon the price per Share received or to be received by other stockholders of the Company in such event), including without limitation, in the case of an outstanding Option or Stock Appreciation Right, a cash payment in an amount equal to the excess, if any, of the fair market value (as determined by the Committee) of the Shares subject to such Option or Stock Appreciation Right over the aggregate exercise price of such Option or Stock Appreciation Right, respectively (it being understood that, in such event, any Option or Stock Appreciation Right having a per share exercise price equal to, or in excess of, the fair market value of a Share subject thereto may be canceled and terminated without any payment or consideration therefor); and/or
(iii) The Committee may, in its sole discretion, make any other determination as to the treatment of Awards in connection with such Change in Control as the Committee may determine.
(c) Notwithstanding anything in this Plan or any Award Agreement to the contrary, to the extent any provision of this Plan or an Award Agreement would cause a payment of deferred compensation that is subject to Section 409A of the Code to be made upon the occurrence of (i) a Change in Control, then such payment shall not be made unless such Change in Control also constitutes a “change in ownership”, “change in effective control” or “change in ownership of a substantial portion of the Company’s assets” within the meaning of Section 409A of the Code or (ii) a termination of employment or service, then such payment shall not be made unless such termination of
employment or service also constitutes a “separation from service” within the meaning of Section 409A of the Code. Any payment that would have been made except for the application of the preceding sentence shall be made in accordance with the payment schedule that would have applied in the absence of a Change in Control or termination of employment or service but disregarding any future service or performance requirements. Notwithstanding anything to the contrary herein, for purposes of Incentive Stock Options, any assumed or substituted Option shall comply with the requirements of Treasury Regulation Section 1.424-1 (and any amendment thereto).
Section 13. General Provisions.
(a) Nontransferability.
(i) Each Award, and each right under any Award, shall be exercisable only by the Participant during the Participant’s lifetime, or, if permissible under applicable law, by the Participant’s legal guardian or representative.
(ii) No Award may be sold, assigned, alienated, pledged, attached or otherwise transferred or encumbered by a Participant otherwise than by will or by the laws of descent and distribution, and any such purported sale, assignment, alienation, pledge, attachment, transfer or encumbrance shall be void and unenforceable against the Company or any Subsidiary or Affiliate of the Company; provided that the designation of a beneficiary shall not constitute a sale, assignment, alienation, pledge, attachment, transfer or encumbrance.
(iii) Notwithstanding the foregoing, the Committee may, in the applicable Award Agreement evidencing an Option granted under the Plan or at any time thereafter in an amendment to an Award Agreement, provide that Options which are not intended to qualify as Incentive Options may be transferred by the Participant to whom such Option was granted (the “Grantee”) without consideration, after such time as all vesting conditions with respect to such Option have been satisfied, and subject to such rules as the Committee may adopt to preserve the purposes of the Plan, to: (1) the Grantee’s spouse, children or grandchildren (including adopted and stepchildren and grandchildren) (collectively, the “Immediate Family”); (2) a trust solely for the benefit of the Grantee and his or her Immediate Family; or (3) a partnership, corporation or limited liability company whose only partners, members or stockholders are the Grantee and his or her Immediate Family; (each transferee described in clauses (1), (2) and (3) above is hereinafter referred to as a “Permitted Transferee”); provided that the Grantee gives the Committee advance written notice describing the terms and conditions of the proposed transfer and the Committee notifies the Grantee in writing that such a transfer would comply with the requirements of the Plan and any applicable Award Agreement evidencing the Option.
The terms of any Option transferred in accordance with the immediately preceding sentence shall apply to the Permitted Transferee and any reference in the Plan or in an Award Agreement to an optionee, Grantee or Participant shall be deemed to refer to the Permitted Transferee, except that (a) Permitted Transferees shall not be entitled to transfer any Options, other than by will or the laws of descent and distribution; (b) Permitted Transferees shall not be entitled to exercise any transferred Options unless there shall be in effect a registration statement on an appropriate form covering the Shares to be acquired pursuant to the exercise of such Option if the Committee determines that such a registration statement is necessary or appropriate, (c) the Committee or the Company shall not be required to provide any notice to a Permitted Transferee, whether or not such notice is or would otherwise have been required to be given to the Grantee under the Plan or otherwise and (d) the consequences of termination of the Grantee’s employment by, or services to, the Company under the terms of the Plan and the applicable Award Agreement shall continue to be applied with respect to the Grantee, following which the Options shall be exercisable by the Permitted Transferee only to the extent, and for the periods, specified in the Plan and the applicable Award Agreement.
(iv) Notwithstanding anything to the contrary herein, only gratuitous transfers of Awards shall be permitted. In no event may any Award granted under this Plan be transferred for value.
(b) Dividend Equivalents. No dividends or dividend equivalents shall be paid on any Award prior to vesting. In the sole discretion of the Committee, an Award (other than Options or Stock Appreciation Rights), whether made as an Other Stock-Based Award described in Section 10 or as an Award granted pursuant to Sections 6 through 9 hereof, may provide the Participant with dividends or dividend equivalents, payable in cash, Shares,
other securities or other property on a deferred basis; provided, that such dividends or dividend equivalents shall be subject to the same vesting conditions as the Award to which such dividends or dividend equivalents relate. Except as otherwise determined by the Committee, no interest will accrue or be paid on the amount of any cash dividends withheld.
(c) No Rights to Awards. No Participant or other Person shall have any claim to be granted any Award, and there is no obligation for uniformity of treatment of Participants, or holders or beneficiaries of Awards. 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 Participants are similarly situated).
(d) Share Certificates. Shares or other securities of the Company or any Subsidiary of the Company delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations, and other requirements of the SEC, any stock exchange upon which such Shares or other securities are then listed, and any applicable Federal or state laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.
(e) Withholding. (i) A Participant may be required to pay to the Company or any Subsidiary or Affiliate of the Company, and the Company or any Subsidiary or Affiliate of the Company shall have the right and is hereby authorized to withhold from any Award, from any payment due or transfer made under any Award or under the Plan, or from any compensation or other amount owing to a Participant the amount (in cash, Shares, other securities, other Awards or other property) of any applicable withholding taxes in respect of an Award, its exercise, or any payment or transfer under an Award or under the Plan, and to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for the payment of such taxes.
(ii) Without limiting the generality of clause (i) above, subject to the Company’s consent, a Participant may satisfy, in whole or in part, the foregoing withholding liability by delivery of Shares owned by the Participant (which are not subject to any pledge or other security interest and which have been owned by the Participant for at least six months) with a Fair Market Value equal to such withholding liability or by having the Company withhold from the number of Shares otherwise deliverable to the Participant with respect to an Award a number of Shares with a Fair Market Value equal to such withholding liability as determined by the Company, or by such other methods as may be approved by the Committee, including, but not limited to, through a “broker-assisted” cashless exercise.
(iii) Notwithstanding any provision of this Plan to the contrary, in connection with the transfer of an Option to a Permitted Transferee pursuant to Section 13(a), the Grantee shall remain liable for any withholding taxes required to be withheld upon the exercise of such Option by the Permitted Transferee.
(f) Detrimental Activity and Recapture. Awards hereunder shall be subject to cancellation or forfeiture of an Award or the forfeiture and repayment to the Company of any gain related to an Award, or other provisions intended to have a similar effect, upon such terms and conditions as may be determined by the Committee from time to time, if a Participant during employment or other service with the Company or a subsidiary, shall engage in activity detrimental to the Company, whether discovered before or after the employment or service period. In addition, notwithstanding anything in this Plan to the contrary, any Award Agreement may also provide for the cancellation or forfeiture of an Award or the forfeiture and repayment to the Company of any gain related to an Award, or other provision intended to have a similar effect, upon such terms and conditions as may be required by the Committee under Section 10D of the Exchange Act and any applicable rules or regulations promulgated by the SEC or any national securities exchange or national securities association on which the Shares may be traded, or pursuant to any policy implemented or adopted by the Company.
(g) Award Agreements. Each Award hereunder that is not immediately vested and delivered as of its date of grant shall be evidenced by an Award Agreement which shall be delivered to the Participant and shall specify the terms and conditions of the Award and any rules applicable thereto, including but not limited to, the effect on such Award of the death, disability or termination of employment or service of a Participant and the effect, if any, of such other events as may be determined by the Committee.
(h) No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent the Company or any Subsidiary or Affiliate of the Company from adopting or continuing in effect other compensation arrangements, which may, but need not, provide for the grant of options, restricted stock, Shares and other types of Awards provided for hereunder (subject to stockholder approval if such approval is required), and such arrangements may be either generally applicable or applicable only in specific cases.
(i) No Right to Employment. The grant of an Award shall not be construed as giving a Participant the right to be retained in the employ of, or in any consulting relationship to, or as a director on the Board or board of directors, as applicable, of, the Company or any Subsidiary or Affiliate of the Company. Further, the Company or a Subsidiary or Affiliate of the Company may at any time dismiss a Participant from employment or discontinue any consulting relationship, free from any liability or any claim under the Plan, unless otherwise expressly provided in the Plan, any Award Agreement or any applicable employment contract or agreement.
(j) No Rights as Stockholder. Subject to the provisions of the applicable Award, no Participant or holder or beneficiary of any Award shall have any rights as a stockholder with respect to any Shares to be distributed under the Plan until he or she has become the holder of such Shares. Notwithstanding the foregoing, in connection with each grant of Restricted Stock hereunder, the applicable Award shall specify if and to what extent the Participant shall be entitled to the rights of a stockholder in respect of such Restricted Stock.
(k) Governing Law. Unless otherwise provided for in an applicable Award Agreement, the validity, construction, and effect of the Plan and any rules and regulations relating to the Plan and any Award Agreement shall be determined in accordance with the laws of the State of Delaware, applied without giving effect to its conflict of laws principles.
(l) Severability. If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person or Award and the remainder of the Plan and any such Award shall remain in full force and effect.
(m) Other Laws. The Committee may refuse to issue or transfer any Shares or other consideration under an Award if, acting in its sole discretion, it determines that the issuance or transfer of such Shares or such other consideration might violate any applicable law or regulation or result in any liability under Section 16(b) of the Exchange Act, and any payment tendered to the Company by a Participant, other holder or beneficiary in connection with the exercise of such Award shall be promptly refunded to the relevant Participant, holder or beneficiary. Without limiting the generality of the foregoing, no Award granted hereunder shall be construed as an offer to sell securities of the Company, and no such offer shall be outstanding, unless and until the Committee in its sole discretion has determined that any such offer, if made, would be in compliance with all applicable requirements of the U.S. federal securities laws.
(n) Foreign Employees. In order to facilitate the making of any Award or combination of Awards under this Plan, the Committee may provide for such special terms for awards to Participants who are foreign nationals or who are employed by the Company or any Subsidiary or Affiliate of the Company outside of the United States of America as the Committee may consider necessary or appropriate to accommodate differences in local law, tax policy or custom. Moreover, the Committee may approve such supplements to or amendments, restatements or alternative versions of this Plan (including, without limitation, sub-plans) as it may consider necessary or appropriate for such purposes, without thereby affecting the terms of this Plan as in effect for any other purpose, and the Secretary or other appropriate officer of the Company may certify any such document as having been approved and adopted in the same manner as this Plan. No such special terms, supplements, amendments or restatements, however, shall include any provisions that are inconsistent with the terms of this Plan as then in effect unless this Plan could have been amended to eliminate such inconsistency without further approval by the stockholders of the Company.
(o) No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Subsidiary or Affiliate of the Company and a Participant or any other Person. To the extent that any Person acquires a right to receive payments from the Company or any Subsidiary or Affiliate of the Company pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company or any Subsidiary or Affiliate of the Company.
(p) No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash, other securities, or other property shall be paid or transferred in lieu of any fractional Shares or whether such fractional Shares or any rights thereto shall be cancelled, terminated, or otherwise eliminated.
(q) Deferrals. In the event the Committee permits a Participant to defer any Award payable in the form of cash, all such elective deferrals shall be accomplished by the delivery of a written, irrevocable election by the Participant on a form provided by the Company. All deferrals shall be made in accordance with administrative guidelines established by the Committee to ensure that such deferrals comply with all applicable requirements of Section 409A of the Code.
(r) Headings. Headings are given to the Sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof.
Section 14. Compliance with Section 409A of the Code.
(a) To the extent applicable, it is intended that this Plan and any grants made hereunder comply with, or be exempt from, the provisions of Section 409A of the Code, so that the income inclusion provisions of Section 409A(a)(1) of the Code do not apply to the Participants. This Plan and any grants made hereunder shall be administered in a manner consistent with this intent. Any reference in this Plan to Section 409A of the Code will also include any regulations or any other formal guidance promulgated with respect to such Section by the U.S. Department of Treasury or the Internal Revenue Service. In any case, a Participant shall be solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on a Participant or for a Participant’s account in connection with this Plan and grants hereunder (including any taxes and penalties under Section 409A of the Code), and neither the Company nor any of its Subsidiaries shall have any obligation to indemnify or otherwise hold a Participant harmless from any or all of such taxes or penalties.
(b) Neither a Participant nor any of a Participant’s creditors or beneficiaries shall have the right to subject any deferred compensation (within the meaning of Section 409A of Code) payable under this Plan and grants hereunder to any anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment. Except as permitted under Section 409A of the Code, any deferred compensation (within the meaning of Section 409A of the Code) payable to a Participant or for a Participant’s benefit under this Plan and grants hereunder may not be reduced by, or offset against, any amount owing by a Participant to the Company or any of its Subsidiaries.
(c) Notwithstanding anything to the contrary in the Plan or any award agreement, to the extent that the Plan and/or Awards granted hereunder are subject to Section 409A of the Code, the Committee may, in its sole discretion and without a Participant’s prior consent, amend the Plan and/or Award, adopt policies and procedures, or take any other actions (including, without limitation, amendments, policies, procedures and actions with retroactive effect) as the Committee determines are necessary or appropriate to (i) exempt the Plan and/or any Award from the application of Section 409A of the Code, (ii) preserve the intended tax treatment of any such Award, or (iii) comply with the requirements of Section 409A of the Code, including, without limitation, any regulations or other guidance that may be issued after the date of the grant.
(d) If, at the time of a Participant’s separation from service (within the meaning of Section 409A of the Code), (i) the Participant shall be a specified employee (within the meaning of Section 409A of the Code and using the identification methodology selected by the Company from time to time) and (ii) the Company shall make a determination that an amount payable hereunder constitutes deferred compensation (within the meaning of
Section 409A of the Code) the payment of which is required to be delayed pursuant to the six-month delay rule set forth in Section 409A of the Code in order to avoid taxes or penalties under Section 409A of the Code, then the Company shall not pay such amount on the otherwise scheduled payment date but shall instead pay it, without interest, on the earlier of the first business day of the seventh month following separation from service or death.
Section 15. Term of the Plan.
(a) Effective Date. This Plan shall become effective as of [_______] (the “Effective Date”).
(b) Expiration Date. No grant will be made under this Plan more than ten years after the Effective Date, but all grants made on or prior to such date will continue in effect thereafter subject to the terms thereof and of this Plan.
EXECUTION VERSION
SPONSOR SUPPORT AGREEMENT
This Sponsor Support Agreement (this “Sponsor Agreement”) is dated as of January 30, 2022 by and among DJCAAC LLC, a Delaware limited liability company (“Sponsor”), Agrico Acquisition Corp., a Cayman Islands exempted company (“Purchaser”), Kalera AS, a Norwegian private limited liability company (together with its successors, the “Company”). Capitalized terms used but not defined herein shall have the respective meanings ascribed to such terms in the Business Combination Agreement.
RECITALS
WHEREAS, as of the date hereof, Sponsor is the holder of record and the “beneficial owner” (within the meaning of Rule 13d-3 under the Exchange Act) of the number of shares of Purchaser Class B Ordinary Shares and the number of Purchaser Warrants set forth across from Sponsor’s name on Schedule I attached hereto (all such shares and any additional shares of Purchaser of which ownership of record or the power to vote is hereafter acquired by Sponsor prior to the Termination Date being referred to herein as the “Covered Securities”);
WHEREAS, contemporaneously with the execution and delivery of this Sponsor Agreement, Purchaser, Holdco, the Merger Subs and the Company have entered into a Business Combination Agreement (as amended or modified from time to time, the “Business Combination Agreement”), dated as of the date hereof, pursuant to which, among other transactions, following completion of the Mergers, the Company will become a wholly owned subsidiary of Holdco, on the terms and conditions set forth therein; and
WHEREAS, as an inducement to Purchaser and the Company to enter into the Business Combination Agreement and to consummate the transactions contemplated therein, the parties hereto desire to agree to certain matters as set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, and intending to be legally bound hereby, the parties hereto hereby agree as follows:
ARTICLE I
SPONSOR SUPPORT AGREEMENT; COVENANTS
Section 1.1 No Transfer. During the period commencing on the date hereof and ending on the earlier of (a) the First Closing and (b) the liquidation of Purchaser, Sponsor shall not (i) sell, assign, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, file (or participate in the filing of) a registration statement with the SEC (other than the Registration Statement) or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act, with respect to any Covered Securities owned by Sponsor, (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any Covered Securities owned by Sponsor or (iii) publicly announce any intention to effect any transaction specified in clause (i) or (ii) (the
actions specified in clauses (i) to (iii), “Transfer”).
Section 1.2 New Shares. In the event that (a) any Purchaser Ordinary Shares, Purchaser Warrants or other equity securities of Purchaser are issued to Sponsor after the date of this Sponsor Agreement pursuant to any stock dividend, stock split, recapitalization, reclassification, combination or exchange, (b) Sponsor purchases or otherwise acquires beneficial ownership of any Purchaser Ordinary Shares, Purchaser Warrants or other equity securities of Purchaser after the date of this Sponsor Agreement, or (c) Sponsor acquires the right to vote or share in the voting of any Purchaser Ordinary Shares or other equity securities of Purchaser after the date of this Sponsor Agreement, such Purchaser Ordinary Shares, Purchaser Warrants or other equity securities of Purchaser shall constitute “Covered Securities” and shall be subject to the terms of this Sponsor Agreement.
Section 1.3 Sponsor Agreements.
(a) During the period commencing on the date hereof and ending on the Termination Date, at any duly called meeting of the shareholders of Purchaser or at any adjournment thereof, or in any other circumstance in which the vote, consent or other approval of the shareholders of Purchaser is sought, in each case, in connection with and as contemplated by the Business Combination Agreement, Sponsor shall (x) appear at each such meeting or otherwise cause all of its Purchaser Ordinary Shares to be counted as present thereat for purposes of calculating a quorum and (y) vote (or cause to be voted or execute and return an action by written consent) all of its Covered Securities:
(i) in favor of the transactions contemplated by the Business Combination Agreement (the “Transactions”);
(ii) against any Business Combination Proposal or any proposal relating to a Business Combination Proposal (in each case, other than the Transactions);
(iii) against any business combination agreement or merger (other than the Business Combination Agreement and the Mergers), consolidation, combination, sale of substantial assets, reorganization, recapitalization, dissolution, liquidation or winding up of or by Purchaser; and
(iv) against any proposal, action or agreement that would (A) impede, frustrate, prevent or nullify any provision of this Agreement, the Business Combination Agreement or any Merger, (B) result in a breach in any respect of any covenant, representation, warranty or any other obligation or agreement of Purchaser, Holdco or the Merger Subs under the Business Combination Agreement, (C) result in any of the conditions set forth in Article VII of the Business Combination Agreement not being fulfilled or (D) change in any manner the dividend policy or capitalization of, including the voting rights of any class of capital stock of, Purchaser.
Sponsor hereby agrees that it shall not commit or agree to take any action inconsistent with the foregoing.
(b) During the period commencing on the date hereof and ending on the Termination Date, Sponsor shall comply with, and fully perform all of its obligations, covenants and agreements set forth in the Insider Letter, including the obligations of Sponsor pursuant to Section 1 therein to not redeem any Purchaser Ordinary Shares owned by Sponsor in connection with the transactions contemplated by the Business Combination Agreement.
(c) During the period commencing on the date hereof and ending on the earlier of the consummation of the Closings and the termination of the Business Combination Agreement in accordance with its terms, Sponsor shall not modify or amend any Contract between or among Sponsor, anyone related by blood, marriage or adoption to Sponsor or any Affiliate of Sponsor (other than Purchaser or any of its Subsidiaries), on the one hand, and Purchaser or any of Purchaser’s Subsidiaries, on the other hand.
Section 1.4 Further Assurances. Sponsor shall exercise commercially reasonable efforts to take, or cause to be taken, all actions and do, or cause to be done, all things reasonably necessary under applicable Laws to consummate the Mergers and the other Transactions.
Section 1.5 No Inconsistent Agreement. Sponsor hereby represents and covenants that Sponsor is not party to, and prior to the Termination Date shall not enter into, any agreement that would restrict, limit or interfere with the performance of Sponsor’s obligations hereunder.
Section 1.6 Lock-Up.
(a) Subject to Section 1.6(b), Sponsor hereby agrees that Sponsor shall not Transfer any Lock-up Shares until the end of the Lock-up Period (the “Lock-up”).
(b) Notwithstanding the provisions set forth in Section 1.7(a), Sponsor or its Permitted Transferees may Transfer the Lock-up Shares during the Lock-up Period (i) to (A) the Company’s or Purchaser’s current or former officers or directors, (B) any affiliates or family members of the Company’s or Purchaser’s current or former officers or directors, or (C) any members or partners of the Company, Purchaser, Sponsor, Maxim Group LLC, or their respective affiliates, any affiliates of the Company, Purchaser, Sponsor, or Maxim Group LLC or any employees of such affiliates; (ii) in the case of an individual, by gift to a member of such individual’s immediate family or to a trust, the beneficiary of which is a member of such individual’s immediate family, an affiliate of such individual or to a charitable organization; (iii) in the case of an individual, by virtue of laws of descent and distribution upon death of such individual; (iv) in the case of an individual, pursuant to a qualified domestic relations order; (v) by private sales or transfers made in connection with the consummation of the Transactions at prices no greater than the price at which such Lock-up Shares were originally purchased; (vi) by virtue of applicable law or Sponsor’s organizational documents upon liquidation or dissolution of Sponsor; or(vii) in the event of Holdco’s liquidation, merger, capital stock exchange or other similar transaction which results in all of Holdco’s shareholders having the right to exchange their ordinary shares of Holdco (“Holdco Ordinary Shares”) for cash, securities or other property subsequent to the Second Closing; provided, however, that in the case of clauses (i) through (vi) these Permitted Transferees must enter into a written agreement agreeing to be bound by these transfer restrictions and the other restrictions contained in this Sponsor Agreement.
(c) The Lock-up in this Section 1.7 shall supersede the lock-up provisions contained in Section 5 of the Insider Letter, which provision in Section 5 of the Insider Letter shall be of no further force or effect with respect to Sponsor.
(d) For purposes of this Section 1.7:
(i) the term “Lock-up Period” means the period beginning on the First Closing Date and ending on the date that is the earliest of (A) one year after the completion of the Second Closing Date and (B) the date on which (1) the closing price of the Holdco Ordinary Shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share capitalizations, share consolidations, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period commencing at least 150 days after the Second Closing or (2) the per share price implied in a change of control transaction is greater than or equal to $12.00 per share (as adjusted for share sub-divisions, share capitalizations, share consolidations, reorganizations, recapitalizations and the like);
(ii) the term “Lock-up Shares” means the shares of Holdco Ordinary Shares held by Sponsor immediately following the First Closing (other than shares of Holdco Ordinary Shares acquired in the public market or pursuant to a transaction exempt from registration under the Securities Act of 1933, as amended, pursuant to a subscription agreement where the issuance of Holdco Ordinary Shares occurs on or after the Second Closing); and
(iii) the term “Permitted Transferees” means, prior to the expiration of the Lock-up Period, any person or entity to whom Sponsor is permitted to transfer such Lock-up Shares prior to the expiration of the Lock-up Period pursuant to Section 1.7(b); and
(iv) the term “Insider Letter” means that certain Letter Agreement, dated July 7, 2021, by and among Purchaser, Sponsor, and the other parties thereto, as amended.
Section 1.7 Forfeiture of Sponsor Shares. Sponsor hereby agrees that, in the event that the Minimum Cash Condition is not satisfied and the Company waives such condition, Sponsor shall, immediately prior to the First Merger Effective Time, automatically be deemed to irrevocably transfer to Purchaser, surrender and forfeit (and Sponsor shall take all actions necessary to effect such transfer, surrender and forfeiture) for no consideration an amount of Purchaser Class B Ordinary Shares equal to (a) 50% of the amount of Sponsor’s Purchaser Class B Ordinary Shares as of immediately prior to the First Merger Effective Time multiplied by (b) (i) (A) the amount of cash required to satisfy the Minimum Cash Condition (the “Minimum Cash Amount”) less (B) the aggregate amount of (1) the cash in the Trust Account at the First Closing after giving effect to the Redemption, plus (2) cash proceeds received or available at or prior to the applicable Closing in respect of debt or equity financing agreements entered into by the Company during the Interim Period (excluding the matters set forth on Schedule 7.2(c) of the Business Combination Agreement and provided that there shall not be double counting of cash
proceeds that are received or available) and (3) the aggregate amount expenses of Purchaser, Holdco, the Company and their respective Affiliates incurred prior to the applicable Closing (including, in each case, the Expenses) divided by (ii) the Minimum Cash Amount; provided, that, such amount of Purchaser Class B Ordinary Shares shall be rounded up to the nearest whole Purchaser Class B Ordinary Share.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 Representations and Warranties of Sponsor. Sponsor represents and warrants as of the date hereof to Purchaser and the Company as follows:
(a) Organization; Due Authorization. Sponsor is duly organized, validly existing and in good standing under the Laws of the jurisdiction in which it is incorporated, formed, organized or constituted, and the execution, delivery and performance of this Sponsor Agreement and the consummation of the transactions contemplated hereby are within Sponsor’s corporate, limited liability company or organizational powers and have been duly authorized by all necessary corporate, limited liability company or organizational actions on the part of Sponsor. This Sponsor Agreement has been duly executed and delivered by Sponsor and, assuming due authorization, execution and delivery by the other parties to this Sponsor Agreement, this Sponsor Agreement constitutes a legally valid and binding obligation of Sponsor, enforceable against Sponsor in accordance with the terms hereof (except as enforceability may be limited by bankruptcy Laws, other similar Laws affecting creditors’ rights and general principles of equity affecting the availability of specific performance and other equitable remedies).
(b) Ownership. Sponsor is the record and beneficial owner (as defined in the Securities Act) of, and has good title to, all of the Purchaser Class B Ordinary Shares and Purchaser Warrants reflected across Sponsor’s name on Schedule I hereto, and there exist no Liens or any other limitation or restriction (including any restriction on the right to vote, sell or otherwise dispose of such Purchaser Class B Ordinary Shares or Purchaser Warrants (other than transfer restrictions under the Securities Act)) affecting any such Purchaser Class B Ordinary Shares or Purchaser Warrants, other than Liens pursuant to (i) this Sponsor Agreement, (ii) the Purchaser Organizational Documents, (iii) the Business Combination Agreement or (iv) any applicable securities Laws. The Purchaser Class B Ordinary Shares and Purchaser Warrants reflected across from Sponsor’s name on Schedule I hereto are the only equity securities in Purchaser owned of record or beneficially by Sponsor on the date of this Sponsor Agreement, and none of Sponsor’s Purchaser Class B Ordinary Shares or Purchaser Warrants are subject to any proxy, voting trust or other agreement or arrangement with respect to the voting of such Purchaser Class B Ordinary Shares or Purchaser Warrants, except as provided hereunder. Other than the Purchaser Warrants, Sponsor does not hold or own any rights to acquire (directly or indirectly) any equity securities of Purchaser or any equity securities convertible into, or which can be exchanged for, equity securities of Purchaser.
(c) No Conflicts. The execution and delivery of this Sponsor Agreement by Sponsor does not, and the performance by Sponsor of its obligations hereunder will not, (i) conflict with or result in a violation of the Organizational Documents of Sponsor or (ii) require any consent or approval that has not been given or other action that has not been taken by any Person (including
under any Contract binding upon Sponsor or Sponsor’s Covered Securities), in each case, to the extent such consent, approval or other action would prevent, enjoin or materially delay the performance by Sponsor of its obligations under this Sponsor Agreement.
(d) Litigation. There are no Actions pending against Sponsor, or to the knowledge of Sponsor threatened against Sponsor, before (or, in the case of threatened Actions, that would be before) any arbitrator or any Governmental Authority, which in any manner challenges or seeks to prevent, enjoin or materially delay the performance by Sponsor of its obligations under this Sponsor Agreement.
(e) Brokerage Fees. No broker, finder, investment banker or other Person is entitled to any brokerage fee, finders’ fee or other commission in connection with the transactions contemplated by the Business Combination Agreement based upon arrangements made by Sponsor, for which Purchaser or any of its Affiliates may become liable.
(f) Affiliate Arrangements. Except as set forth on Schedule II attached hereto, neither Sponsor nor any anyone related by blood, marriage or adoption to Sponsor or, to the knowledge of Sponsor, any Person in which Sponsor has a direct or indirect legal, contractual or beneficial ownership of 5% or greater is party to, or has any rights with respect to or arising from, any Contract with Purchaser or its Subsidiaries.
(g) Acknowledgment. Sponsor understands and acknowledges that each of Purchaser and the Company is entering into the Business Combination Agreement in reliance upon Sponsor’s execution and delivery of this Sponsor Agreement.
ARTICLE III
MISCELLANEOUS
Section 3.1 Termination. This Sponsor Agreement and all of its provisions shall terminate and be of no further force or effect upon the earliest of (a) the Second Closing, (b) the liquidation of Purchaser and (c) the written agreement of the Sponsor, Purchaser, and the Company (such date, the “Termination Date”). Upon the Termination Date, all obligations of the Parties will terminate, without any liability or other obligation on the part of any party hereto to any Person in respect hereof or the transactions contemplated hereby, and no party hereto shall have any claim against another (and no person shall have any rights against such party), whether under contract, tort or otherwise, with respect to the subject matter hereof; provided, however, that the termination of this Sponsor Agreement shall not relieve any party hereto from liability arising in respect of any breach of this Sponsor Agreement prior to the Termination Date. Notwithstanding the foregoing, Section 1.6 and this ARTICLE III shall survive the termination of this Agreement.
Section 3.2 Governing Law; Waiver of Jury Trial.
(a) This Sponsor Agreement shall be governed by, construed and enforced in accordance with the Laws of the State of New York without regard to the conflict of laws principles thereof.
(b) EACH OF THE PARTIES HEREBY KNOWINGLY, INTENTIONALLY, VOLUNTARILY AND IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION BASED UPON, ARISING OUT OF OR RELATED TO THIS SPONSOR AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 3.3 Assignment. This Sponsor Agreement and all of the provisions hereof will be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and permitted assigns. Neither this Sponsor Agreement nor any of the rights, interests or obligations hereunder will be assigned (including by operation of law) without the prior written consent of the parties hereto.
Section 3.4 Arbitration. Any and all disputes, controversies or claims arising out of, relating to, or in connection with this Sponsor Agreement or the breach, termination or validity hereof, or the transactions contemplated hereby (a “Dispute”) shall be finally resolved by arbitration under the Rules of Arbitration of the ICC (the “ICC Rules”). To the extent that the ICC Rules and this Sponsor Agreement are in conflict, the terms of this Agreement shall control. The seat of arbitration shall be in New York County, State of New York. The language of the arbitration shall be English. The tribunal shall consist of three arbitrators. The parties to the Dispute shall each be entitled to nominate one arbitrator, provided that where there are multiple claimants or multiple respondents, the multiple claimants jointly and the multiple respondents jointly shall nominate an arbitrator. The third arbitrator, who shall be the presiding arbitrator on the tribunal, shall be nominated by the agreement of the two party-nominated arbitrators or, if they fail to agree on a nomination within fifteen (15) days of the nomination date of the second arbitrator, the third arbitrator shall be promptly selected and appointed by the ICC. The arbitrators shall decide the Dispute in accordance with the substantive law of the state of New York. The proceedings shall be streamlined and efficient. An arbitration award rendered by the tribunal shall be final and binding on the parties to the Dispute. Judgment on the award may be entered in any court having jurisdiction thereof.
Section 3.5 Amendment. This Sponsor Agreement may not be amended, changed, supplemented, waived or otherwise modified or terminated, except upon the execution and delivery of a written agreement executed by Purchaser, the Company and Sponsor.
Section 3.6 Severability. If any provision of this Sponsor Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Sponsor Agreement will remain in full force and effect. Any provision of this Sponsor Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.
Section 3.7 Notices. All notices and other communications among the parties hereto shall be in writing and shall be deemed to have been duly given (a) when delivered in person, (b) when delivered after posting in the United States mail having been sent registered or certified mail return receipt requested, postage prepaid, (c) when delivered by FedEx or other nationally recognized overnight delivery service or (d) when e-mailed during normal business hours (and otherwise as of the immediately following Business Day), addressed as follows:
If to Purchaser:
Agrico Acquisition Corp.
Boundary Hall, Cricket Square
Grand Cayman, KY1-1102, Cayman Islands
Attention: Brent de Jong
Email: brent@dejongcapital.com
with a copy (which will not constitute notice) to:
Loeb & Loeb LLP
345 Park Ave
New York, NY 10154
Attention: Mitchell S. Nussbaum
E-mail: mnussbaum@loeb.com
If to the Company:
Kalera AS
8440 Tradeport Dr. Suite 102
Orlando, FL 32827
Attention: Curtis McWilliams
Email: Curtis.McWilliams@kalera.com
with a copy (which shall not constitute notice) to:
Milbank LLP
55 Hudson Yards
New York, NY 10001
Attn: David Dixter
Iliana Ongun
Email: ddixter@milbank.com
iongun@milbank.com
If to Sponsor:
To Sponsor’s address set forth in Schedule I
Section 3.8 Counterparts. This Sponsor Agreement may be executed in two or more counterparts (any of which may be delivered by electronic transmission), each of which shall constitute an original, and all of which taken together shall constitute one and the same instrument.
Section 3.9 Entire Agreement. This Sponsor Agreement and the agreements referenced herein constitute the entire agreement and understanding of the parties hereto in respect of the subject matter hereof and supersede all prior understandings, agreements or representations by or among the parties hereto to the extent they relate in any way to the subject matter hereof.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]
IN WITNESS WHEREOF, Sponsor, Purchaser, and the Company have each caused this Sponsor Support Agreement to be duly executed as of the date first written above.
| | | | | | | | | | | |
| SPONSOR: |
| | | |
| DJCAAC LLC |
| | | |
| | | |
| By: | | |
| | Name: | Brent de Jong |
| | Title: | Managing Member |
[Signature Page to Sponsor Support Agreement]
| | | | | | | | | | | |
| PURCHASER: |
| | | |
| AGRICO ACQUISITION CORP. |
| | | |
| | | |
| By: | | |
| | Name: | Brent de Jong |
| | Title: | Chief Executive Officer |
[Signature Page to Sponsor Support Agreement]
| | | | | | | | | | | |
| COMPANY: |
| | | |
| KALERA AS |
| | | |
| | | |
| By: | | |
| | Name: | |
| | Title: | |
[Signature Page to Sponsor Support Agreement]
Schedule I
Sponsor Purchaser Class B Ordinary Shares and Purchaser Warrants
| | | | | | | | |
Sponsor | Purchaser Class B Common Stock | Purchaser Warrants |
DJCAAC, LLC | 3,593,750 | 6,171,875 |
[Schedule I to Sponsor Support Agreement]
Schedule II
Affiliate Agreements
1. Insider Letter
2. Registration Rights Agreement of Purchaser, dated July 7, 2021
3. Indemnification Agreement, dated July 7, 2021, by and among Purchaser and the parties signatory thereto
4. Private Placement Warrants Purchase Agreement, dated July 7, 2021, by and between Purchaser and Sponsor
5. Share Escrow Agreement, dated July 7, 2021, by and among Purchaser, Sponsor, and Continental Stock Transfer & Trust Company, LLC
6. Administrative Support Agreement, dated July 7, 2021, by and between Purchaser and De Jong Capital LLC
[Schedule II to Sponsor Support Agreement]
Execution Version
COMPANY HOLDERS SUPPORT AGREEMENT
This Company Holders Support Agreement (this “Agreement”), dated as of January 30, 2022, is entered into by and among Agrico Acquisition Corp., a Cayman Islands corporation (“Acquiror”), Kalera AS, a Norwegian private limited liability company (the “Company”) and certain of the shareholders of the Company, whose names appear on the signature pages of this Agreement (such shareholders, the “Shareholders”, and Acquiror, the Company and the Shareholders, each a “Party”, and collectively, the “Parties”). Capitalized terms used but not defined herein shall have the respective meanings ascribed to such terms in the Business Combination Agreement.
RECITALS
WHEREAS, contemporaneously with the execution and delivery of this Agreement, Acquiror, Holdco, the Merger Subs and the Company, have entered into a Business Combination Agreement (as amended or modified from time to time, the “Business Combination Agreement”), dated as of the date hereof, pursuant to which, among other transactions, following completion of the Mergers, the Company will become a wholly owned subsidiary of Holdco, on the terms and conditions set forth therein;
WHEREAS, as of the date hereof, each Shareholder is the sole “beneficial owner” (as such term is used herein, within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended (together with the rules and regulations promulgated thereunder, the “Exchange Act”)) of, and has the sole power to dispose of and vote (or direct the voting of), the number of shares of Company Shares set forth opposite such Shareholder’s name on Schedule 1 attached hereto (collectively, with respect to each Shareholder, such Shareholder’s “Owned Shares”, and such Owned Shares, together with (1) any additional shares of Company Shares (or any securities convertible into or exercisable or exchangeable for Company Shares) in which such Shareholder acquires beneficial ownership after the date hereof, including by purchase, as a result of a stock dividend, stock split, recapitalization, combination, reclassification, exchange or change of such shares, or upon exercise or conversion of any securities and (2) any additional shares of Company Shares with respect to which such Shareholder has the right to vote through a proxy, the “Covered Shares”); and
WHEREAS, as a condition and inducement to the willingness of Acquiror to enter into the Business Combination Agreement, the Company and the Shareholders are entering into this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, Acquiror, the Company and each Shareholder hereby agree as follows:
1. Agreement to Vote. Subject to the Registration Statement being declared effective and until the termination of this Agreement in accordance with Section 3 or the earlier termination of voting obligations pursuant to the last paragraph of this Section 1, the Shareholder, solely in his, her or its capacity as a shareholder or proxy holder of the Company, irrevocably and
unconditionally agrees that, at any meeting of the shareholders of the Company (whether annual or special and whether or not an adjourned or postponed meeting, however called and including any adjournment or postponement thereof) and in connection with any written consent, resolution, or other action of shareholders of the Company, such Shareholder shall, and shall cause any other holder of any of such Shareholder’s Covered Shares to:
(a) when such meeting is held, appear at such meeting or otherwise cause the Shareholder’s Covered Shares to be counted as present thereat for the purpose of establishing a quorum;
(b) vote (or execute and return an action by written consent, resolution, or other action), or cause to be voted at such meeting (or validly execute and return and cause such consent, resolution or other action to be granted with respect to), all of such Shareholder’s Covered Shares owned as of the record date for such meeting (or the date that any written consent, resolution or other action is executed by such Shareholder) in favor of approving the Business Combination Agreement and the transactions contemplated by the Business Combination Agreement (the “Transactions”) and the adoption of the Business Combination Agreement and any other matters necessary or reasonably requested by the Company for consummation of the Transactions;
(c) in any other circumstances upon which a consent, resolution or other approval is required under the Company’s Organizational Documents or otherwise sought with respect to the Business Combination Agreement or the Transactions, vote, consent, resolve or approve (or cause to be voted, consented, resolved or approved) all of such Shareholder’s Covered Shares held at such time in favor thereof;
(d) vote (or execute and return an action by written consent, resolution or other action), or cause to be voted at such meeting (or validly execute and return and cause such consent, resolution or other action to be granted with respect to), all of such Shareholder’s Covered Shares against (i) any Company Alternative Proposal or any proposal relating to a Company Alternative Proposal (in each case, other than the Transactions); (ii) any merger agreement or merger (other than the Business Combination Agreement and the Mergers), consolidation, combination, sale of substantial assets, reorganization, recapitalization, dissolution, liquidation or winding up of or by the Company; and (iii) against any proposal, action or agreement that would (A) impede, frustrate, prevent or nullify any provision of this Agreement, the Business Combination Agreement or the Mergers, (B) result in a breach in any respect of any covenant, representation, warranty or any other obligation or agreement of the Company under the Business Combination Agreement, (C) result in a breach of any covenant, representation or warranty or other obligation or agreement of the Shareholder contained in this Agreement, or (D) result or reasonably be expected to result in any of the conditions set forth in Article VII of the Business Combination Agreement not being fulfilled.
The obligations of each Shareholder pursuant to this Section 1 shall terminate upon the earliest to occur of (a) the date the Business Combination Agreement shall have been validly terminated pursuant to its terms, (b) a Company Change of Recommendation, and (c) the Second Merger Effective Time.
2. No Inconsistent Agreements. Each Shareholder hereby covenants and agrees that such Shareholder shall not (i) enter into any voting agreement or voting trust with respect to any of such Shareholder’s Covered Shares that is inconsistent with such Shareholder’s obligations pursuant to this Agreement, (ii) grant a proxy or power of attorney with respect to any of such Shareholder’s Covered Shares that is inconsistent with such Shareholder’s obligations pursuant to this Agreement, or (iii) enter into any agreement or undertaking that is otherwise inconsistent with, or would interfere with, or prohibit or prevent it from satisfying, its obligations pursuant to this Agreement.
3. Termination. This Agreement shall terminate upon the earliest of (i) the Second Merger Effective Time, (ii) the termination of the Business Combination Agreement in accordance with its terms, and (iii) the time this Agreement is terminated upon the mutual written agreement of the Company, Acquiror and the Shareholder (the earliest such date under clause (i), (ii) and (iii) being referred to herein as the “Termination Date”) and the representations, warranties, covenants and agreements contained in this Agreement and in any certificate or other writing delivered pursuant hereto shall not survive the Closing or the termination of this Agreement; provided, that, (x) the provisions set forth in Sections 9 through 21 shall survive the termination of this Agreement and (y) if the Second Merger is consummated in accordance with the Business Combination Agreement, Sections 6 through 8 shall also survive the termination of this Agreement.
4. Representations and Warranties of the Shareholders. Each Shareholder hereby represents and warrants (severally and not jointly as to itself only) to the Acquiror as follows:
(a) Such Shareholder is the sole beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of, and has good, valid and marketable title to or has a valid proxy to vote, such Shareholder’s Covered Shares, free and clear of any Liens (other than as created by this Agreement or the Organizational Documents of the Company). As of the date hereof, other than the Owned Shares set forth opposite such Shareholder’s name on Schedule 1, such Shareholder does not own beneficially any shares of Company Share or other equity securities of the Company (or any securities convertible, exchangeable for or convertible into shares of Company Share or other equity securities of the Company) or any interest therein.
(b) Such Shareholder in each case except as provided in this Agreement or the Organizational Documents of the Company, (i) has full voting power, full power of disposition and full power to issue instructions with respect to the matters set forth herein whether by ownership or by proxy, in each case, with respect to such Shareholder’s Covered Shares, (ii) has not entered into any voting agreement or voting trust, and has no knowledge and is not aware of any such voting agreement or voting trust in effect with respect to any of such Shareholder’s Covered Shares that is inconsistent with such Shareholder’s obligations pursuant to this Agreement, (iii) has not granted a proxy or power of attorney with respect to any of such Shareholder’s Covered Shares that is inconsistent with such Shareholder’s obligations pursuant to this Agreement, and has no knowledge and is not aware of any such proxy or power of attorney in effect, and (iv) has not entered into any agreement or undertaking that is otherwise inconsistent with, or would interfere with, or prohibit or prevent it from satisfying, its obligations pursuant to this Agreement, and has no knowledge and is not aware of any such agreement or undertaking.
(c) Such Shareholder affirms that (i) if the Shareholder is a natural person, he or she has all the requisite power and authority and has taken all action necessary in order to execute and deliver this Agreement, to perform his or her obligations hereunder and to consummate the transactions contemplated hereby, and (ii) if the Shareholder is not a natural person, (A) is a legal entity duly organized, validly existing and, to the extent such concept is applicable, in good standing under the Laws of the jurisdiction of its organization, and (B) has all requisite corporate or other power and authority and has taken all corporate or other action necessary in order to, execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by such Shareholder and, subject to the due execution and delivery of this Agreement by each other Party, constitutes a legally valid and binding agreement of such Shareholder enforceable against the Shareholder in accordance with the terms hereof (except as enforceability may be limited by bankruptcy Laws or other similar Laws affecting creditors’ rights and general principles of equity affecting the availability of specific performance and other equitable remedies).
(d) Other than the filings, notices and reports pursuant to, in compliance with or required to be made under the Exchange Act, no filings, notices, reports, consents, registrations, approvals, permits, waivers, expirations of waiting periods or authorizations are required to be obtained by such Shareholder from, or to be given by such Shareholder to, or be made by such Shareholder with, any Governmental Authority in connection with the execution, delivery and performance by such Shareholder of this Agreement, the consummation of the transactions contemplated hereby or the Transactions.
(e) The execution, delivery and performance of this Agreement by such Shareholder does not, and the consummation of the transactions contemplated hereby and the Transactions will not, constitute or result in (i) a breach or violation of, or a default under, the Organizational Documents of such Shareholder (if such Shareholder is not a natural person), (ii) with or without notice, lapse of time or both, a breach or violation of, a termination (or right of termination) of or a default under, the loss of any benefit under, the creation, modification or acceleration of any obligations under or the creation of a Lien on any of the properties, rights or assets of such Shareholder pursuant to any Contract binding upon such Shareholder or, assuming (solely with respect to performance of this Agreement and the transactions contemplated hereby), compliance with the matters referred to in Section 4(d), under any applicable Law to which such Shareholder is subject or (iii) any change in the rights or obligations of any party under any Contract legally binding upon such Shareholder, except, in the case of clause (ii) or (iii) directly above, for any such breach, violation, termination, default, creation, acceleration or change that would not, individually or in the aggregate, reasonably be expected to prevent or materially delay or impair such Shareholder’s ability to perform its obligations hereunder or to consummate the transactions contemplated hereby or the Transactions.
(f) As of the date of this Agreement, there is no Action pending against such Shareholder or, to the knowledge of such Shareholder, threatened against such Shareholder that, in any manner, questions the beneficial ownership of the Shareholder’s Covered Shares or the validity of this Agreement, or challenges or seeks to prevent, enjoin or materially delay the performance by such Shareholder of its obligations under this Agreement.
(g) The Shareholder is a sophisticated shareholder and has adequate information concerning the business and financial condition of Acquiror and the Company to make an informed decision regarding this Agreement and the Transactions and has independently and based on such information as the Shareholder has deemed appropriate, made its own analysis and decision to enter into this Agreement. The Shareholder acknowledges that Acquiror and the Company have not made and do not make any representation or warranty, whether express or implied, of any kind or character except as expressly set forth in this Agreement. The Shareholder acknowledges that the agreements contained herein with respect to the Covered Shares held by the Shareholder are irrevocable.
(h) Such Shareholder understands and acknowledges that Acquiror is entering into the Business Combination Agreement in reliance upon such Shareholder’s execution and delivery of this Agreement and the representations, warranties, covenants and other agreements of such Shareholder contained herein.
(i) No investment banker, broker, finder or other intermediary is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission for which Acquiror or the Company is or could be liable in connection with the Business Combination Agreement or this Agreement or any of the respective transactions contemplated hereby or thereby, in each case based upon arrangements made by such Shareholder in his, her or its capacity as a shareholder or, to the knowledge of such Shareholder, on behalf of such Shareholder in his, her or its capacity as a shareholder.
5. Certain Covenants of the Shareholders. Except in accordance with the terms of this Agreement, each Shareholder hereby covenants and agrees as follows:
(a) Each Shareholder hereby agrees, prior to the Second Closing Date, not to (except in each case pursuant to the Business Combination Agreement), (i) directly or indirectly, (a) sell, transfer, pledge, encumber, assign, hedge, swap, convert or otherwise dispose of (including by merger (including by conversion into securities or other consideration), by tendering into any tender or exchange offer, by testamentary disposition, by operation of Law or otherwise), either voluntarily or involuntarily (collectively, “Transfer”), or (b) enter into any Contract or option with respect to the Transfer of, any of such Shareholder’s Covered Shares, or (ii) publicly announce any intention to effect any transaction specified in clauses (a) or (b), or (iii) take any action that would make any representation or warranty of such Shareholder contained herein untrue or incorrect or have the effect of preventing or disabling such Shareholder from performing its obligations under this Agreement; provided, however, that nothing herein shall prohibit a Transfer to an Affiliate of the Shareholder or to another Shareholder of the Company that is a party to this Agreement and bound by the terms and obligations hereof (a “Permitted Transfer”); provided, further, that any Permitted Transfer shall be permitted only if, as a precondition to such Transfer, the transferee agrees in a writing, reasonably satisfactory in form and substance to Acquiror, to assume all of the obligations of the Shareholder under, and be bound by all of the terms of, this Agreement.
(b) Each Shareholder hereby authorizes the Company to maintain a copy of this Agreement at either the executive office or the registered office of the Company.
(c) Binding Effect of Business Combination Agreement. Each Shareholder hereby acknowledges that it has read the Business Combination Agreement and this Agreement and has had the opportunity to consult with its tax and legal advisors.
(d) No Challenges. Each Shareholder agrees not to commence, join in, facilitate, assist or encourage, and agrees to take all actions necessary to opt out of any class in any class action with respect to, any claim, derivative or otherwise, against any of Acquiror, Holdco, Merger Subs, the Company or any of their respective successors or directors, challenging the validity of, or seeking to enjoin the operation of, any provision of this Agreement or alleging a breach of any fiduciary duty of any Person in connection with the evaluation, negotiation or entry into the Business Combination Agreement. Each Shareholder hereby irrevocably and unconditionally waives, and agrees not to assert, exercise or perfect (or attempt to exercise, assert or perfect) any rights of appraisal or rights to dissent from the Mergers or quasi-appraisal rights that it may at any time have under applicable Laws.
6. Further Assurances. From time to time, at Acquiror’s request and without further consideration, each Shareholder shall execute and deliver such additional documents and take all such further action as may be reasonably necessary or reasonably requested to effect the actions and consummate the Transactions and the transactions contemplated hereby. Each Shareholder further agrees not to commence or participate in, and to take all actions necessary to opt out of any class in any class action with respect to, any action or claim, derivative or otherwise, against Acquiror, Acquiror’s Affiliates, the Sponsor, the Company or any of their respective successors and assigns relating to the negotiation, execution or delivery of this Agreement, the Business Combination Agreement or the consummation of the transactions contemplated hereby and thereby.
7. Disclosure. Such Shareholder hereby authorizes the Company and Acquiror to publish and disclose in any announcement or disclosure required by the Securities and Exchange Commission (or as otherwise required by any applicable Securities Laws or any other securities authorities) such Shareholder’s identity and ownership of the Covered Shares and the nature of such Shareholder’s obligations under this Agreement and, if deemed appropriate by Acquiror or the Company, a copy of this Agreement. Each Shareholder will promptly provide any information reasonably requested by Acquiror or the Company for any regulatory application or filing made or approval sought in connection with the transactions contemplated by the Business Combination Agreement (including filings with the Securities and Exchange Commission).
8. Changes in Share Capital. In the event (i) of a share split, share dividend or distribution, or any change in Company Share by reason of any split-up, reverse share split, recapitalization, combination, reclassification, exchange of shares or the like, (ii) the Shareholder purchases or otherwise acquires beneficial ownership of any Company Share or (iii) the Shareholder acquires the right to vote or share in the voting of any Company Share, the terms “Owned Shares” and “Covered Shares” shall be deemed to refer to and include such shares as well as all such share dividends and distributions and any securities into which or for which any or all of such shares may be changed or exchanged or which are received in such transaction.
9. Amendment and Modification. This Agreement may not be amended, modified or supplemented in any manner, whether by course of conduct or otherwise, except by an instrument in writing signed by Acquiror, the Company and the applicable Shareholder.
10. Waiver. No failure or delay by any Party exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies of the Parties hereunder are cumulative and are not exclusive of any rights or remedies which they would otherwise have hereunder. Any agreement on the part of a Party to any such waiver shall be valid only if set forth in a written instrument executed and delivered by such Party.
11. Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally, by email (with confirmation of receipt) or sent by a nationally recognized overnight courier service, such as Federal Express, to the Parties at the following addresses (or at such other address for a Party as shall be specified by like notice made pursuant to this Section 11):
If to Acquiror:
Agrico Acquisition Corp.
Boundary Hall, Cricket Square
Grand Cayman, KY1-1102, Cayman Islands
Attention: Brent de Jong
Email: brent@dejongcapital.com
with a copy (which will not constitute notice) to:
Loeb & Loeb LLP
345 Park Ave
New York, NY 10154
Attention: Mitchell S. Nussbaum
E-mail: mnussbaum@loeb.com
If to the Company:
Kalera AS
8440 Tradeport Dr. Suite 102
Orlando, FL 32827
Attention: Curtis McWilliams
Email: Curtis.McWilliams@kalera.com
with a copy (which shall not constitute notice) to:
Milbank LLP
55 Hudson Yards
New York, NY 10001
Attn: David Dixter
Iliana Ongun
Email: ddixter@milbank.com
iongun@milbank.com
12. No Ownership Interest. Nothing contained in this Agreement shall be deemed to vest in Acquiror any direct or indirect ownership or incidence of ownership of or with respect to the Covered Shares of the Shareholder. All rights, ownership and economic benefits of and relating to the Covered Shares of the Shareholder shall remain vested in and belong to the Shareholder, and Acquiror shall have no authority to direct the Shareholder in the voting or disposition of any of the Shareholder’s Covered Shares, except as otherwise provided herein.
13. Entire Agreement; Time of Effectiveness. This Agreement and the Business Combination Agreement constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, between the Parties with respect to the subject matter hereof and thereof. This Agreement shall not be effective or binding upon the Shareholder until after such time as the Business Combination Agreement is executed and delivered by the Company, Acquiror, Holdco and Merger Sub.
14. No Third-Party Beneficiaries. The Shareholder hereby agrees that its representations, warranties and covenants set forth herein are solely for the benefit of Acquiror in accordance with and subject to the terms of this Agreement, and this Agreement is not intended to, and does not, confer upon any Person other than the Parties any rights or remedies hereunder, including the right to rely upon the representations and warranties set forth herein, and the Parties hereby further agree that this Agreement may only be enforced against, and any Action that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement may only be made against, the Persons expressly named as Parties.
15. Governing Law and Venue; Service of Process; Waiver of Jury Trial.
(a) This Agreement shall be governed by, construed and enforced in accordance with the Laws of the State of New York without regard to the conflict of laws principles thereof.
(b) EACH OF THE PARTIES HEREBY KNOWINGLY, INTENTIONALLY, VOLUNTARILY AND IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION BASED UPON, ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
16. Assignment; Successors. Neither this Agreement nor any of the rights, interests or obligations hereunder shall (a) be assigned by any of the Shareholders in whole or in part (whether by operation of Law or otherwise) without the prior written consent of Acquiror and the Company or (b) be assigned by Acquiror or the Company in whole or in part (whether by operation of law or otherwise) without the prior written consent of (i) the Company or Acquiror, respectively, and (ii) the applicable Shareholder. Any such assignment without such consent shall be null and void.
This Agreement shall be binding upon, inure to the benefit of and be enforceable by the Parties and their respective successors and permitted assigns.
17. Arbitration. Any and all disputes, controversies or claims arising out of, relating to, or in connection with this Agreement or the breach, termination or validity hereof, or the transactions contemplated hereby (a “Dispute”) shall be finally resolved by arbitration under the Rules of Arbitration of the ICC (the “ICC Rules”). To the extent that the ICC Rules and this Agreement are in conflict, the terms of this Agreement shall control. The seat of arbitration shall be in New York County, State of New York. The language of the arbitration shall be English. The tribunal shall consist of three arbitrators. The parties to the Dispute shall each be entitled to nominate one arbitrator, provided that where there are multiple claimants or multiple respondents, the multiple claimants jointly and the multiple respondents jointly shall nominate an arbitrator. The third arbitrator, who shall be the presiding arbitrator on the tribunal, shall be nominated by the agreement of the two party-nominated arbitrators or, if they fail to agree on a nomination within fifteen (15) days of the nomination date of the second arbitrator, the third arbitrator shall be promptly selected and appointed by the ICC. The arbitrators shall decide the Dispute in accordance with the substantive law of the state of New York. The proceedings shall be streamlined and efficient. An arbitration award rendered by the tribunal shall be final and binding on the parties to the Dispute. Judgment on the award may be entered in any court having jurisdiction thereof.
18. Severability. If any term or other provision of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void, unenforceable or against its regulatory policy, the remainder of the terms and provisions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated, so long as the economic and legal substance of the transactions contemplated hereby, taken as a whole, are not affected in a manner materially adverse to any Party. Upon such a determination, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.
19. Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, it being understood that each Party need not sign the same counterpart. This Agreement shall become effective when each Party shall have received a counterpart hereof signed by all of the other Parties. Signatures delivered electronically or by facsimile shall be deemed to be original signatures.
20. Interpretation and Construction. The words “hereof,” “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The descriptive headings used herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. References to Sections are to Sections of this Agreement unless otherwise specified. Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular. The definitions contained in this Agreement are applicable to the masculine as well as to the feminine and neuter genders of such term. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation,” whether or not they are in fact followed by those words or words of like import. “Writing,” “written” and comparable terms refer to printing, typing
and other means of reproducing words (including electronic media) in a visible form. References to any statute shall be deemed to refer to such statute and to any rules or regulations promulgated thereunder. References to any person include the successors and permitted assigns of that person. References from or through any date mean, unless otherwise specified, from and including such date or through and including such date, respectively. In the event an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the Parties, and no presumption or burden of proof will arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.
21. Capacity as a Shareholder or Proxy Holder. Notwithstanding anything herein to the contrary, the Shareholder or proxy holder signs this Agreement solely in the Shareholder’s or proxy holder’s capacity as a shareholder or proxy holder of the Company, and not in any other capacity and this Agreement shall not limit, prevent or otherwise affect the actions of the Shareholder, proxy holder or any Affiliate or Representative of the Shareholder or proxyholder, or any of their respective Affiliates in his or her capacity, if applicable, as an officer or director of the Company (or any Subsidiary of the Company) or any other Person, including in the exercise of his or her fiduciary duties as a director or officer of the Company or any Subsidiary of the Company. No Shareholder shall be liable or responsible for any breach, default, or violation of any representation, warranty, covenant or agreement hereunder by any other Shareholder that is also a Party and each Shareholder shall solely be required to perform its obligations hereunder in its individual capacity.
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed (where applicable, by their respective officers or other authorized Persons thereunto duly authorized) as of the date first written above.
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| AGRICO ACQUISITION CORP. |
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| Name: | [●] |
| Title: | [●] |
[Signature Page to Company Holders Support Agreement]
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| KALERA AS |
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| By: | |
| Name: | [●] |
| Title: | [●] |
[Signature Page to Company Holders Support Agreement]
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| [SHAREHOLDER] |
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| By: | |
| Name: | [●] |
| Title: | [●] |
[Signature Page to Company Holders Support Agreement]
Schedule 1
Owned Shares
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Shareholder Name | Number of Company Shares |
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Execution Version
COMPANY HOLDERS SUPPORT AGREEMENT
This Company Holders Support Agreement (this “Agreement”), dated as of January 30, 2022, is entered into by and among Agrico Acquisition Corp., a Cayman Islands corporation (“Acquiror”), Kalera AS, a Norwegian private limited liability company (the “Company”) and certain of the shareholders of the Company, whose names appear on the signature pages of this Agreement (such shareholders, the “Shareholders”, and Acquiror, the Company and the Shareholders, each a “Party”, and collectively, the “Parties”). Capitalized terms used but not defined herein shall have the respective meanings ascribed to such terms in the Business Combination Agreement.
RECITALS
WHEREAS, contemporaneously with the execution and delivery of this Agreement, Acquiror, Holdco, the Merger Subs and the Company, have entered into a Business Combination Agreement (as amended or modified from time to time, the “Business Combination Agreement”), dated as of the date hereof, pursuant to which, among other transactions, following completion of the Mergers, the Company will become a wholly owned subsidiary of Holdco, on the terms and conditions set forth therein;
WHEREAS, as of the date hereof, each Shareholder is the sole “beneficial owner” (as such term is used herein, within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended (together with the rules and regulations promulgated thereunder, the “Exchange Act”)) of, and has the sole power to dispose of and vote (or direct the voting of), the number of shares of Company Shares set forth opposite such Shareholder’s name on Schedule 1 attached hereto (collectively, with respect to each Shareholder, such Shareholder’s “Owned Shares”, and such Owned Shares, together with (1) any additional shares of Company Shares (or any securities convertible into or exercisable or exchangeable for Company Shares) in which such Shareholder acquires beneficial ownership after the date hereof, including by purchase, as a result of a stock dividend, stock split, recapitalization, combination, reclassification, exchange or change of such shares, or upon exercise or conversion of any securities and (2) any additional shares of Company Shares with respect to which such Shareholder has the right to vote through a proxy, the “Covered Shares”); and
WHEREAS, as a condition and inducement to the willingness of Acquiror to enter into the Business Combination Agreement, the Company and the Shareholders are entering into this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, Acquiror, the Company and each Shareholder hereby agree as follows:
1. Agreement to Vote. Subject to the Registration Statement being declared effective and until the termination of this Agreement in accordance with Section 3 or the earlier termination of voting obligations pursuant to the last paragraph of this Section 1, the Shareholder, solely in his, her or its capacity as a shareholder or proxy holder of the Company, irrevocably and
unconditionally agrees that, at any meeting of the shareholders of the Company (whether annual or special and whether or not an adjourned or postponed meeting, however called and including any adjournment or postponement thereof) and in connection with any written consent, resolution, or other action of shareholders of the Company, such Shareholder shall, and shall cause any other holder of any of such Shareholder’s Covered Shares to:
(a) when such meeting is held, appear at such meeting or otherwise cause the Shareholder’s Covered Shares to be counted as present thereat for the purpose of establishing a quorum;
(b) vote (or execute and return an action by written consent, resolution, or other action), or cause to be voted at such meeting (or validly execute and return and cause such consent, resolution or other action to be granted with respect to), all of such Shareholder’s Covered Shares owned as of the record date for such meeting (or the date that any written consent, resolution or other action is executed by such Shareholder) in favor of approving the Business Combination Agreement and the transactions contemplated by the Business Combination Agreement (the “Transactions”) and the adoption of the Business Combination Agreement and any other matters necessary or reasonably requested by the Company for consummation of the Transactions;
(c) in any other circumstances upon which a consent, resolution or other approval is required under the Company’s Organizational Documents or otherwise sought with respect to the Business Combination Agreement or the Transactions, vote, consent, resolve or approve (or cause to be voted, consented, resolved or approved) all of such Shareholder’s Covered Shares held at such time in favor thereof;
(d) vote (or execute and return an action by written consent, resolution or other action), or cause to be voted at such meeting (or validly execute and return and cause such consent, resolution or other action to be granted with respect to), all of such Shareholder’s Covered Shares against (i) any Company Alternative Proposal or any proposal relating to a Company Alternative Proposal (in each case, other than the Transactions); (ii) any merger agreement or merger (other than the Business Combination Agreement and the Mergers), consolidation, combination, sale of substantial assets, reorganization, recapitalization, dissolution, liquidation or winding up of or by the Company; and (iii) against any proposal, action or agreement that would (A) impede, frustrate, prevent or nullify any provision of this Agreement, the Business Combination Agreement or the Mergers, (B) result in a breach in any respect of any covenant, representation, warranty or any other obligation or agreement of the Company under the Business Combination Agreement, (C) result in a breach of any covenant, representation or warranty or other obligation or agreement of the Shareholder contained in this Agreement, or (D) result or reasonably be expected to result in any of the conditions set forth in Article VII of the Business Combination Agreement not being fulfilled.
The obligations of each Shareholder pursuant to this Section 1 shall terminate upon the earliest to occur of (a) the date the Business Combination Agreement shall have been validly terminated pursuant to its terms, (b) a Company Change of Recommendation, and (c) the Second Merger Effective Time.
2. No Inconsistent Agreements. Each Shareholder hereby covenants and agrees that such Shareholder shall not (i) enter into any voting agreement or voting trust with respect to any of such Shareholder’s Covered Shares that is inconsistent with such Shareholder’s obligations pursuant to this Agreement, (ii) grant a proxy or power of attorney with respect to any of such Shareholder’s Covered Shares that is inconsistent with such Shareholder’s obligations pursuant to this Agreement, or (iii) enter into any agreement or undertaking that is otherwise inconsistent with, or would interfere with, or prohibit or prevent it from satisfying, its obligations pursuant to this Agreement.
3. Termination. This Agreement shall terminate upon the earliest of (i) the Second Merger Effective Time, (ii) the termination of the Business Combination Agreement in accordance with its terms, and (iii) the time this Agreement is terminated upon the mutual written agreement of the Company, Acquiror and the Shareholder (the earliest such date under clause (i), (ii) and (iii) being referred to herein as the “Termination Date”) and the representations, warranties, covenants and agreements contained in this Agreement and in any certificate or other writing delivered pursuant hereto shall not survive the Closing or the termination of this Agreement; provided, that, (x) the provisions set forth in Sections 9 through 21 shall survive the termination of this Agreement and (y) if the Second Merger is consummated in accordance with the Business Combination Agreement, Section 5(b) and Sections 6 through 8 shall also survive the termination of this Agreement.
4. Representations and Warranties of the Shareholders. Each Shareholder hereby represents and warrants (severally and not jointly as to itself only) to the Acquiror as follows:
(a) Such Shareholder is the sole beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of, and has good, valid and marketable title to or has a valid proxy to vote, such Shareholder’s Covered Shares, free and clear of any Liens (other than as created by this Agreement or the Organizational Documents of the Company). As of the date hereof, other than the Owned Shares set forth opposite such Shareholder’s name on Schedule 1, such Shareholder does not own beneficially any shares of Company Share or other equity securities of the Company (or any securities convertible, exchangeable for or convertible into shares of Company Share or other equity securities of the Company) or any interest therein.
(b) Such Shareholder in each case except as provided in this Agreement or the Organizational Documents of the Company, (i) has full voting power, full power of disposition and full power to issue instructions with respect to the matters set forth herein whether by ownership or by proxy, in each case, with respect to such Shareholder’s Covered Shares, (ii) has not entered into any voting agreement or voting trust, and has no knowledge and is not aware of any such voting agreement or voting trust in effect with respect to any of such Shareholder’s Covered Shares that is inconsistent with such Shareholder’s obligations pursuant to this Agreement, (iii) has not granted a proxy or power of attorney with respect to any of such Shareholder’s Covered Shares that is inconsistent with such Shareholder’s obligations pursuant to this Agreement, and has no knowledge and is not aware of any such proxy or power of attorney in effect, and (iv) has not entered into any agreement or undertaking that is otherwise inconsistent with, or would interfere with, or prohibit or prevent it from satisfying, its obligations pursuant to this Agreement, and has no knowledge and is not aware of any such agreement or undertaking.
(c) Such Shareholder affirms that (i) if the Shareholder is a natural person, he or she has all the requisite power and authority and has taken all action necessary in order to execute and deliver this Agreement, to perform his or her obligations hereunder and to consummate the transactions contemplated hereby, and (ii) if the Shareholder is not a natural person, (A) is a legal entity duly organized, validly existing and, to the extent such concept is applicable, in good standing under the Laws of the jurisdiction of its organization, and (B) has all requisite corporate or other power and authority and has taken all corporate or other action necessary in order to, execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by such Shareholder and, subject to the due execution and delivery of this Agreement by each other Party, constitutes a legally valid and binding agreement of such Shareholder enforceable against the Shareholder in accordance with the terms hereof (except as enforceability may be limited by bankruptcy Laws or other similar Laws affecting creditors’ rights and general principles of equity affecting the availability of specific performance and other equitable remedies).
(d) Other than the filings, notices and reports pursuant to, in compliance with or required to be made under the Exchange Act, no filings, notices, reports, consents, registrations, approvals, permits, waivers, expirations of waiting periods or authorizations are required to be obtained by such Shareholder from, or to be given by such Shareholder to, or be made by such Shareholder with, any Governmental Authority in connection with the execution, delivery and performance by such Shareholder of this Agreement, the consummation of the transactions contemplated hereby or the Transactions.
(e) The execution, delivery and performance of this Agreement by such Shareholder does not, and the consummation of the transactions contemplated hereby and the Transactions will not, constitute or result in (i) a breach or violation of, or a default under, the Organizational Documents of such Shareholder (if such Shareholder is not a natural person), (ii) with or without notice, lapse of time or both, a breach or violation of, a termination (or right of termination) of or a default under, the loss of any benefit under, the creation, modification or acceleration of any obligations under or the creation of a Lien on any of the properties, rights or assets of such Shareholder pursuant to any Contract binding upon such Shareholder or, assuming (solely with respect to performance of this Agreement and the transactions contemplated hereby), compliance with the matters referred to in Section 4(d), under any applicable Law to which such Shareholder is subject or (iii) any change in the rights or obligations of any party under any Contract legally binding upon such Shareholder, except, in the case of clause (ii) or (iii) directly above, for any such breach, violation, termination, default, creation, acceleration or change that would not, individually or in the aggregate, reasonably be expected to prevent or materially delay or impair such Shareholder’s ability to perform its obligations hereunder or to consummate the transactions contemplated hereby or the Transactions.
(f) As of the date of this Agreement, there is no Action pending against such Shareholder or, to the knowledge of such Shareholder, threatened against such Shareholder that, in any manner, questions the beneficial ownership of the Shareholder’s Covered Shares or the validity of this Agreement, or challenges or seeks to prevent, enjoin or materially delay the performance by such Shareholder of its obligations under this Agreement.
(g) The Shareholder is a sophisticated shareholder and has adequate information concerning the business and financial condition of Acquiror and the Company to make an informed decision regarding this Agreement and the Transactions and has independently and based on such information as the Shareholder has deemed appropriate, made its own analysis and decision to enter into this Agreement. The Shareholder acknowledges that Acquiror and the Company have not made and do not make any representation or warranty, whether express or implied, of any kind or character except as expressly set forth in this Agreement. The Shareholder acknowledges that the agreements contained herein with respect to the Covered Shares held by the Shareholder are irrevocable.
(h) Such Shareholder understands and acknowledges that Acquiror is entering into the Business Combination Agreement in reliance upon such Shareholder’s execution and delivery of this Agreement and the representations, warranties, covenants and other agreements of such Shareholder contained herein.
(i) No investment banker, broker, finder or other intermediary is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission for which Acquiror or the Company is or could be liable in connection with the Business Combination Agreement or this Agreement or any of the respective transactions contemplated hereby or thereby, in each case based upon arrangements made by such Shareholder in his, her or its capacity as a shareholder or, to the knowledge of such Shareholder, on behalf of such Shareholder in his, her or its capacity as a shareholder.
5. Certain Covenants of the Shareholders. Except in accordance with the terms of this Agreement, each Shareholder hereby covenants and agrees as follows:
(a) Each Shareholder hereby agrees, prior to the Second Closing Date, not to (except in each case pursuant to the Business Combination Agreement), (i) directly or indirectly, (a) sell, transfer, pledge, encumber, assign, hedge, swap, convert or otherwise dispose of (including by merger (including by conversion into securities or other consideration), by tendering into any tender or exchange offer, by testamentary disposition, by operation of Law or otherwise), either voluntarily or involuntarily (collectively, “Transfer”), or (b) enter into any Contract or option with respect to the Transfer of, any of such Shareholder’s Covered Shares, or (ii) publicly announce any intention to effect any transaction specified in clauses (a) or (b), or (iii) take any action that would make any representation or warranty of such Shareholder contained herein untrue or incorrect or have the effect of preventing or disabling such Shareholder from performing its obligations under this Agreement; provided, however, that nothing herein shall prohibit a Transfer to an Affiliate of the Shareholder or to another Shareholder of the Company that is a party to this Agreement and bound by the terms and obligations hereof (a “Permitted Transfer”); provided, further, that any Permitted Transfer shall be permitted only if, as a precondition to such Transfer, the transferee agrees in a writing, reasonably satisfactory in form and substance to Acquiror, to assume all of the obligations of the Shareholder under, and be bound by all of the terms of, this Agreement; provided, further, that any Transfer permitted under this Section 5(b) shall not relieve the Shareholder of its obligations under this Agreement. Any Transfer in violation of this Section 5(b) with respect to the Shareholder’s Covered Shares shall be null and void.
(b) Lock-Up. (i) Subject to Section 5(b)(ii), each Shareholder hereby agrees that such Shareholder shall not Transfer any Lock-up Shares until the end of the Lock-up Period.
(ii) Notwithstanding the provisions set forth in Section 5(b)(i), each Shareholder or its Permitted Transferees may Transfer the Lock-up Shares during the Lock-up Period (i) to (A) the Company’s officers or directors, (B) any affiliates or family members of the Company’s officers or directors, or (C) any members or partners of the Company or their affiliates, any affiliates of the Company, or any employees of such affiliates; (ii) in the case of an individual, by gift to a member of such individual’s immediate family or to a trust, the beneficiary of which is a member of such individual’s immediate family, an affiliate of such individual or to a charitable organization; (iii) in the case of an individual, by virtue of laws of descent and distribution upon death of such individual; (iv) in the case of an individual, pursuant to a qualified domestic relations order; (v) by virtue of applicable law or such Shareholder’s organizational documents upon dissolution of such Shareholder; or (vi) in the event of Holdco’s liquidation, merger, capital stock exchange or other similar transaction which results in all of the Holdco’s shareholders having the right to exchange their shares of ordinary shares of the Holdco (“Holdco Ordinary Shares”) for cash, securities or other property subsequent to the Closing Date.
(iii) For purposes of this Section 5(b):
(1) the term “Lock-up Period” means the period beginning on the Closing Date and ending on the date that is the earliest of (A) one year after the Second Closing Date and (B) the date on which (1) the closing price of the Holdco Ordinary Shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share capitalizations, share consolidations, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period commencing at least 150 days after the Second Closing Date or (2) the per share price implied in a Sale of the Company is greater than or equal to $12.00 per share (as adjusted for share sub-divisions, share capitalizations, share consolidations, reorganizations, recapitalizations and the like);
(2) the term “Lock-up Shares” means the shares of Holdco Ordinary Shares held by each Shareholder immediately following the Closing and any shares of Holdco Ordinary Shares underlying any CVR held by each Shareholder (other than shares of Holdco Ordinary Shares acquired in the public market or pursuant to a transaction exempt from registration under the Securities Act of 1933, as amended, pursuant to a subscription agreement where the issuance of Holdco Ordinary Shares occurs on or after the Second Closing); and
(3) the term “Permitted Transferees” means, prior to the expiration of the Lock-up Period, any person or entity to whom such Shareholder is permitted to transfer such Lock-up Shares prior to the expiration of the Lock-up Period pursuant to Section 5(b)(ii).
(c) Each Shareholder hereby authorizes the Company to maintain a copy of this Agreement at either the executive office or the registered office of the Company.
(d) Binding Effect of Business Combination Agreement. Each Shareholder hereby acknowledges that it has read the Business Combination Agreement and this Agreement and has had the opportunity to consult with its tax and legal advisors.
(e) No Challenges. Each Shareholder agrees not to commence, join in, facilitate, assist or encourage, and agrees to take all actions necessary to opt out of any class in any class action with respect to, any claim, derivative or otherwise, against any of Acquiror, Holdco, Merger Subs, the Company or any of their respective successors or directors, challenging the validity of, or seeking to enjoin the operation of, any provision of this Agreement or alleging a breach of any fiduciary duty of any Person in connection with the evaluation, negotiation or entry into the Business Combination Agreement. Each Shareholder hereby irrevocably and unconditionally waives, and agrees not to assert, exercise or perfect (or attempt to exercise, assert or perfect) any rights of appraisal or rights to dissent from the Mergers or quasi-appraisal rights that it may at any time have under applicable Laws.
6. Further Assurances. From time to time, at Acquiror’s request and without further consideration, each Shareholder shall execute and deliver such additional documents and take all such further action as may be reasonably necessary or reasonably requested to effect the actions and consummate the Transactions and the transactions contemplated hereby. Each Shareholder further agrees not to commence or participate in, and to take all actions necessary to opt out of any class in any class action with respect to, any action or claim, derivative or otherwise, against Acquiror, Acquiror’s Affiliates, the Sponsor, the Company or any of their respective successors and assigns relating to the negotiation, execution or delivery of this Agreement, the Business Combination Agreement or the consummation of the transactions contemplated hereby and thereby.
7. Disclosure. Such Shareholder hereby authorizes the Company and Acquiror to publish and disclose in any announcement or disclosure required by the Securities and Exchange Commission (or as otherwise required by any applicable Securities Laws or any other securities authorities) such Shareholder’s identity and ownership of the Covered Shares and the nature of such Shareholder’s obligations under this Agreement and, if deemed appropriate by Acquiror or the Company, a copy of this Agreement. Each Shareholder will promptly provide any information reasonably requested by Acquiror or the Company for any regulatory application or filing made or approval sought in connection with the transactions contemplated by the Business Combination Agreement (including filings with the Securities and Exchange Commission).
8. Changes in Share Capital. In the event (i) of a share split, share dividend or distribution, or any change in Company Share by reason of any split-up, reverse share split,
recapitalization, combination, reclassification, exchange of shares or the like, (ii) the Shareholder purchases or otherwise acquires beneficial ownership of any Company Share or (iii) the Shareholder acquires the right to vote or share in the voting of any Company Share, the terms “Owned Shares” and “Covered Shares” shall be deemed to refer to and include such shares as well as all such share dividends and distributions and any securities into which or for which any or all of such shares may be changed or exchanged or which are received in such transaction.
9. Amendment and Modification. This Agreement may not be amended, modified or supplemented in any manner, whether by course of conduct or otherwise, except by an instrument in writing signed by Acquiror, the Company and the applicable Shareholder.
10. Waiver. No failure or delay by any Party exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies of the Parties hereunder are cumulative and are not exclusive of any rights or remedies which they would otherwise have hereunder. Any agreement on the part of a Party to any such waiver shall be valid only if set forth in a written instrument executed and delivered by such Party.
11. Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally, by email (with confirmation of receipt) or sent by a nationally recognized overnight courier service, such as Federal Express, to the Parties at the following addresses (or at such other address for a Party as shall be specified by like notice made pursuant to this Section 11):
If to Acquiror:
Agrico Acquisition Corp.
boundary Hall, Cricket Square
Grand Cayman, KY1-1102, Cayman Islands
Attention: Brent de Jong
Email: brent@dejongcapital.com
with a copy (which will not constitute notice) to:
Loeb & Loeb LLP
345 Park Ave
New York, NY 10154
Attention: Mitchell S. Nussbaum
E-mail: mnussbaum@loeb.com
If to the Company:
Kalera AS
8440 Tradeport Dr. Suite 102
Orlando, FL 32827
Attention: Curtis McWilliams
Email: Curtis.McWilliams@kalera.com
with a copy (which shall not constitute notice) to:
Milbank LLP
55 Hudson Yards
New York, NY 10001
Attn: David Dixter
Iliana Ongun
Email: ddixter@milbank.com
iongun@milbank.com
12. No Ownership Interest. Nothing contained in this Agreement shall be deemed to vest in Acquiror any direct or indirect ownership or incidence of ownership of or with respect to the Covered Shares of the Shareholder. All rights, ownership and economic benefits of and relating to the Covered Shares of the Shareholder shall remain vested in and belong to the Shareholder, and Acquiror shall have no authority to direct the Shareholder in the voting or disposition of any of the Shareholder’s Covered Shares, except as otherwise provided herein.
13. Entire Agreement; Time of Effectiveness. This Agreement and the Business Combination Agreement constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, between the Parties with respect to the subject matter hereof and thereof. This Agreement shall not be effective or binding upon the Shareholder until after such time as the Business Combination Agreement is executed and delivered by the Company, Acquiror, Holdco and Merger Sub.
14. No Third-Party Beneficiaries. The Shareholder hereby agrees that its representations, warranties and covenants set forth herein are solely for the benefit of Acquiror in accordance with and subject to the terms of this Agreement, and this Agreement is not intended to, and does not, confer upon any Person other than the Parties any rights or remedies hereunder, including the right to rely upon the representations and warranties set forth herein, and the Parties hereby further agree that this Agreement may only be enforced against, and any Action that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement may only be made against, the Persons expressly named as Parties.
15. Governing Law and Venue; Service of Process; Waiver of Jury Trial.
(a) This Agreement shall be governed by, construed and enforced in accordance with the Laws of the State of New York without regard to the conflict of laws principles thereof.
(b) EACH OF THE PARTIES HEREBY KNOWINGLY, INTENTIONALLY, VOLUNTARILY AND IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION BASED UPON, ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
16. Assignment; Successors. Neither this Agreement nor any of the rights, interests or obligations hereunder shall (a) be assigned by any of the Shareholders in whole or in part (whether by operation of Law or otherwise) without the prior written consent of Acquiror and the Company or (b) be assigned by Acquiror or the Company in whole or in part (whether by operation of law or otherwise) without the prior written consent of (i) the Company or Acquiror, respectively, and (ii) the applicable Shareholder. Any such assignment without such consent shall be null and void. This Agreement shall be binding upon, inure to the benefit of and be enforceable by the Parties and their respective successors and permitted assigns.
17. Arbitration. Any and all disputes, controversies or claims arising out of, relating to, or in connection with this Agreement or the breach, termination or validity hereof, or the transactions contemplated hereby (a “Dispute”) shall be finally resolved by arbitration under the Rules of Arbitration of the ICC (the “ICC Rules”). To the extent that the ICC Rules and this Agreement are in conflict, the terms of this Agreement shall control. The seat of arbitration shall be in New York County, State of New York. The language of the arbitration shall be English. The tribunal shall consist of three arbitrators. The parties to the Dispute shall each be entitled to nominate one arbitrator, provided that where there are multiple claimants or multiple respondents, the multiple claimants jointly and the multiple respondents jointly shall nominate an arbitrator. The third arbitrator, who shall be the presiding arbitrator on the tribunal, shall be nominated by the agreement of the two party-nominated arbitrators or, if they fail to agree on a nomination within fifteen (15) days of the nomination date of the second arbitrator, the third arbitrator shall be promptly selected and appointed by the ICC. The arbitrators shall decide the Dispute in accordance with the substantive law of the state of New York. The proceedings shall be streamlined and efficient. An arbitration award rendered by the tribunal shall be final and binding on the parties to the Dispute. Judgment on the award may be entered in any court having jurisdiction thereof.
18. Severability. If any term or other provision of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void, unenforceable or against its regulatory policy, the remainder of the terms and provisions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated, so long as the economic and legal substance of the transactions contemplated hereby, taken as a whole, are not affected in a manner materially adverse to any Party. Upon such a determination, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.
19. Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, it being understood that each Party need not sign the same counterpart. This Agreement shall become effective when each Party shall have received a counterpart hereof signed by all of the other Parties. Signatures delivered electronically or by facsimile shall be deemed to be original signatures.
20. Interpretation and Construction. The words “hereof,” “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The descriptive headings used herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. References to Sections are to Sections of this Agreement unless
otherwise specified. Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular. The definitions contained in this Agreement are applicable to the masculine as well as to the feminine and neuter genders of such term. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation,” whether or not they are in fact followed by those words or words of like import. “Writing,” “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. References to any statute shall be deemed to refer to such statute and to any rules or regulations promulgated thereunder. References to any person include the successors and permitted assigns of that person. References from or through any date mean, unless otherwise specified, from and including such date or through and including such date, respectively. In the event an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the Parties, and no presumption or burden of proof will arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.
21. Capacity as a Shareholder or Proxy Holder. Notwithstanding anything herein to the contrary, the Shareholder or proxy holder signs this Agreement solely in the Shareholder’s or proxy holder’s capacity as a shareholder or proxy holder of the Company, and not in any other capacity and this Agreement shall not limit, prevent or otherwise affect the actions of the Shareholder, proxy holder or any Affiliate or Representative of the Shareholder or proxyholder, or any of their respective Affiliates in his or her capacity, if applicable, as an officer or director of the Company (or any Subsidiary of the Company) or any other Person, including in the exercise of his or her fiduciary duties as a director or officer of the Company or any Subsidiary of the Company. No Shareholder shall be liable or responsible for any breach, default, or violation of any representation, warranty, covenant or agreement hereunder by any other Shareholder that is also a Party and each Shareholder shall solely be required to perform its obligations hereunder in its individual capacity.
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed (where applicable, by their respective officers or other authorized Persons thereunto duly authorized) as of the date first written above.
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| AGRICO ACQUISITION CORP. |
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| By: | |
| Name: | [●] |
| Title: | [●] |
[Signature Page to Company Holders Support Agreement]
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| KALERA AS |
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| By: | |
| Name: | [●] |
| Title: | [●] |
[Signature Page to Company Holders Support Agreement]
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| [SHAREHOLDER] |
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| By: | |
| Name: | [●] |
| Title: | [●] |
[Signature Page to Company Holders Support Agreement]
Schedule 1
Owned Shares
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Shareholder Name | Number of Company Shares |
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Extraordinary General Meeting of Shareholders of
Kalera S.A.
a public limited liability company (société anonyme) under the laws of Luxembourg
(the "Company")
Due to the exceptional COVID-19 situation, the Extraordinary General Meeting will be held without any physical meeting, as permitted by Luxembourg law.
Voting at the Extraordinary General Meeting will be permitted exclusively via proxy card mailing[, online and by phone]. Your voting rights may be exercised through a broker.
Attendance via video conference will be possible solely for informative purposes. Shareholders will not be able to express their votes directly during the /video conference.