Lavoro Ltd 20-F, filed Mar 6, 2023
Lavoro Ltd (LVROF)
About this 20-F
Lavoro Ltd filed this 20-F on March 6, 2023, covering the fiscal year ended February 28, 2023.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
(Mark One)
| ¨ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
| ☐ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended _______
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
| x | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Date of event requiring this shell company report: February 28, 2023
Commission File Number: 001-41635
Lavoro Limited
(Exact name of Registrant as specified in its charter)
| Not Applicable (Translation of Registrant’s name into English) |
Cayman Islands (Jurisdiction of incorporation or organization) |
Av. Dr. Cardoso de Melo, 1450, 4th floor, office 401
São Paulo—SP, Brazil, 04548-005
(Address of principal executive offices)
Laurence Beltrão Gomes, Chief Financial
Officer
Av. Dr. Cardoso de Melo, 1450, 4th floor, office 401
São Paulo—SP, Brazil, 04548-005
Tel: +55 (11) 4280-0709
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
|
Title of each class |
Trading Symbols |
Name of each exchange on which registered | |
| Class A ordinary shares, par value $0.001 per share | LVRO | The Nasdaq Stock Market LLC | |
| Warrants to purchase Class A ordinary shares, each whole warrant exercisable for one Class A ordinary share at an exercise price of $11.50 per share | LVROW | The Nasdaq Stock Market LLC | |
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the shell company report: As of February 28, 2023, the issuer had 116,608,329 Class A ordinary shares and 10,083,606 warrants to purchase Class A ordinary shares outstanding.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ¨ No ¨
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ¨ No x
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ¨ | Accelerated filer | ¨ | |||
| Non-accelerated filer | x | Emerging growth company | ¨ |
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ¨
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ¨
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ¨
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
¨ U.S. GAAP
x International Financial Reporting Standards as issued by the International Accounting Standards Board
¨ Other
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 ¨ Item 18 ¨
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨ No ¨
table of contents
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On February 28, 2023 (the “Closing Date”), Lavoro Limited, an exempted company incorporated with limited liability in the Cayman Islands (“New Lavoro” or the “Company”), consummated the previously announced Business Combination pursuant to the Business Combination Agreement, dated as of September 14, 2022, as amended, supplemented, or otherwise modified from time to time (the “Business Combination Agreement”), by and among the Company, Lavoro Merger Sub I Limited, an exempted company incorporated with limited liability in the Cayman Islands (“First Merger Sub”), Lavoro Merger Sub II Limited, an exempted company incorporated with limited liability in the Cayman Islands (“Second Merger Sub”), Lavoro Merger Sub III Limited, an exempted company incorporated with limited liability in the Cayman Islands (“Third Merger Sub” and, together with First Merger Sub and Second Merger Sub, the “Merger Subs”), Lavoro Agro Limited, an exempted company incorporated with limited liability in the Cayman Islands (“Lavoro Agro Limited”), and TPB Acquisition Corporation I, an exempted company incorporated with limited liability in the Cayman Islands (“TPB SPAC”).
Pursuant to the Business Combination Agreement, on the terms and subject to the conditions set forth in the Business Combination Agreement, on the business day immediately prior to the date on which the Third Merger (as defined below) took place, substantially concurrently with and immediately after the closing of the PIPE Investment (as defined below), (i) First Merger Sub merged with and into TPB SPAC (the “First Merger” and the effective time of the First Merger, the “First Effective Time”), with TPB SPAC surviving as a direct wholly owned subsidiary of New Lavoro, (ii) immediately following the First Merger, TPB SPAC, as successor in the First Merger, merged with and into Second Merger Sub (the “Second Merger” and, together with the First Merger, the “SPAC Mergers”), with Second Merger Sub surviving as a direct wholly owned subsidiary of New Lavoro, and (iii) on the Closing Date (as defined in the Business Combination Agreement), Third Merger Sub merged with and into Lavoro Agro Limited (the “Third Merger” and, together with the SPAC Mergers, the “Mergers”), with Lavoro Agro Limited surviving as a direct wholly owned subsidiary of New Lavoro.
At the First Effective Time, (i) each issued and outstanding TPB SPAC Class A ordinary share, par value $0.0001 per share (the “SPAC Class A Ordinary Shares”) and TPB SPAC Class B ordinary share, par value $0.0001 per share (the “SPAC Class B Ordinary Shares” and, together with the SPAC Class A Ordinary Shares, the “SPAC Ordinary Shares”), were canceled and converted into one Class A ordinary share, par value US$0.001 per share, of New Lavoro (the “New Lavoro Class A Ordinary Share”) and one Class B ordinary share, par value US$0.001 per share, of New Lavoro (the “New Lavoro Class B Ordinary Share” and, together with the New Lavoro Class A Ordinary Shares, the “New Lavoro Ordinary Shares”) and (ii) each issued and outstanding whole warrant to acquire SPAC Class A Ordinary Shares became a warrant to purchase one New Lavoro Class A Ordinary Share, subject to the same terms and conditions existing prior to such conversion.
As a result of the Third Merger, among other things, (i) each common share, par value US$ 0.00005 per share, of Lavoro Agro Limited (the “Lavoro Agro Limited Shares”) owned by Lavoro Agro Limited, Third Merger Sub or any wholly owned subsidiary of Lavoro Agro Limited immediately prior to the Third Merger was automatically cancelled, and (ii) each Lavoro Agro Limited Share that was issued and outstanding immediately prior to the Third Effective Time (as defined in the Business Combination Agreement) was converted into and for all purposes represented only the right to receive a number of validly issued, fully paid and nonassessable New Lavoro Ordinary Shares equal to the Per Share Stock Consideration (as defined in the Business Combination Agreement).
Concurrently with the execution and delivery of the Business Combination Agreement, The Production Board, LLC, a Delaware limited liability company (“The Production Board”), entered into a subscription agreement pursuant to which The Production Board subscribed for and purchased 10,000,000 SPAC Class A Ordinary Shares at $10.00 per share, for an aggregate purchase price of $100,000,000 (the “PIPE Investment”).
Moreover, certain other related agreements were entered into in connection with the Business Combination, including the Voting and Support Agreement, the Lock-up Agreement, the Amendment to the Sponsor Letter Agreement and the Amended and Restated Registration Rights Agreement, each as defined in the Company’s Registration Statement on Form F-4 (333-267653), as amended, initially filed with the Securities and Exchange Commission (the “SEC”) on September 29, 2022 and declared effective on February 3, 2023 (the “Form F-4”), under the headings “Summary of the Proxy Statement/Prospectus” and “Certain Agreements Related to the Business Combination,” which are incorporated herein by reference. See also “Item 10. Additional Information— Material Contracts,” elsewhere in this Report (as defined below).
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The transaction was unanimously approved by TPB SPAC’s Board of Directors and was approved at the extraordinary general meeting of TPB SPAC’s shareholders held on February 22, 2023 (the “Extraordinary General Meeting”). TPB SPAC’s shareholders also voted to approve all other proposals presented at the Extraordinary General Meeting. As a result of the Business Combination, Lavoro Agro Limited became a wholly-owned direct subsidiary of the Company. On March 1, 2023, New Lavoro Ordinary Shares and certain public warrants, each exercisable at $11.50 for one New Lavoro Ordinary Share (the “New Lavoro Public Warrants”), commenced trading on the Nasdaq Stock Market, or “Nasdaq,” under the symbols “LVRO” and “LVROW,” respectively.
Except as otherwise indicated or required by context, references in this Shell Company Report on Form 20-F (including information incorporated by reference herein, the “Report”) to (i) “we,” “us,” “our,” “Company” or “New Lavoro” refer to Lavoro Limited, an exempted company incorporated with limited liability in the Cayman Islands, and its consolidated subsidiaries, (ii) “TPB SPAC” refers to TPB Acquisition Corporation I, a Cayman Island exempted company, (iii) “Lavoro” or “Lavoro Group” refer to: (A) the combined group of Lavoro Agro Holding S.A. (“Lavoro Brazil”) and its subsidiaries, Crop Care Holding S.A. (“Crop Care”) and its subsidiaries, and Lavoro Colombia S.A.S. (“Lavoro Colombia”) and its subsidiaries, prior to the contribution of the shares of Lavoro Brazil, Crop Care and Lavoro Colombia to an entity controlled by Lavoro Agro Limited, which was completed in mid-2022; and (B) Lavoro Agro Limited, together with its consolidated subsidiaries, following the contribution of the shares of Lavoro Brazil, Crop Care and Lavoro Colombia to an entity controlled by Lavoro Agro Limited and the completion of our corporate reorganization in December 2022, and (iv) “R$” refers the Brazilian real, the official currency of Brazil.
Certain amounts that appear in this Report may not sum due to rounding.
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Cautionary Note Regarding Forward-Looking Statements
This Report contains or may contain forward-looking statements as defined in Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that involve significant risks and uncertainties. All statements other than statements of historical facts are forward-looking statements. These forward-looking statements include information about our possible or assumed future results of operations or our performance. Words such as “expects,” “intends,” “plans,” “believes,” “anticipates,” “estimates,” and variations of such words and similar expressions are intended to identify the forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. The risk factors and cautionary language referred to or incorporated by reference in this Report provide examples of risks, uncertainties and events that may cause actual results to differ materially from the expectations described in our forward-looking statements, including among other things, the matters identified in the section titled “Risk Factors” of the Form F-4, which section is incorporated by reference into this Report.
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Report. Although we believe that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. These statements involve known and unknown risks and are based upon a number of assumptions and estimates which are inherently subject to significant uncertainties and contingencies, many of which are beyond our control. Actual results may differ materially from those expressed or implied by such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements contained in this Report, or the documents to which we refer readers in this Report, to reflect any change in our expectations with respect to such statements or any change in events, conditions or circumstances upon which any statement is based.
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Item 1. Identity of Directors, Senior Management and Advisers
A. Directors and Senior Management
The directors and executive officers of the Company upon the consummation of the Business Combination are set forth in the Form F-4 under the heading “New Lavoro Management Following the Business Combination,” which information is incorporated herein by reference. The business address for each of the Company’s directors and executive officers is Av. Dr. Cardoso de Melo, 1450, 4th floor, office 401, São Paulo, SP, 04548-005, Brazil.
B. Advisers
Davis Polk & Wardwell LLP has acted as counsel for Lavoro and the Company with respect to New York and U.S. Federal law and continues to act as counsel for the Company with respect to New York and U.S. Federal law following the completion of the Business Combination.
Maples and Calder (Cayman) LLP has acted as counsel for the Company with respect to Cayman Islands law and continues to act as counsel for the Company with respect to Cayman Islands law following the completion of the Business Combination.
C. Auditors
Frank, Rimerman + Co. LLP has acted as TPB SPAC’s independent registered public accounting firm as of December 31, 2021, and for the period from February 8, 2021 (inception) through December 31, 2021.
Ernst & Young Auditores Independentes S/S Ltda. has acted as Lavoro’s independent registered public accounting firm as of June 30, 2022 and 2021, and for each of the three years in the period ended June 30, 2022.
Following the Business Combination, we intend to retain Ernst & Young Auditores Independentes S/S Ltda. as the Company’s independent registered public accounting firm.
Item 2. Offer Statistics and Expected Timetable
Not applicable.
B. Capitalization and Indebtedness
The following table sets forth the capitalization of the Company on an unaudited pro forma combined basis as of June 30, 2022, after giving effect to the Business Combination and the PIPE Investment:
| As of June 30, 2022 (pro forma)(1) | (R$ thousands) | |||
| Equity: | ||||
| Share capital (Lavoro Limited) | 583 | |||
| Additional paid-in capital (“APIC”) | 2,347,338 | |||
| Retained earnings (deficit) | (304,486 | ) | ||
| Accumulated other comprehensive loss | (23,112 | ) | ||
| Equity attributable to owners of the company | 2,020,323 | |||
| Debt: | ||||
| Borrowings (current and non-current) | 710,552 | |||
| Lease liabilities (current and non-current) | 155,253 | |||
| Total debt | 865,805 | |||
| Total capitalization | 2,886,128 | |||
| (1) | The Company’s capitalization on an unaudited pro forma combined basis as of June 30, 2022 does not give effect to the transactions described in this Report under the heading “Item 4. Information on the Company—Recent Developments.” |
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C. Reasons for the Offer and Use of Proceeds
Not applicable.
D. Risk Factors
The risk factors associated with the Company are described in the Form F-4 under the heading “Risk Factors,” which information is incorporated herein by reference.
Item 4. Information on the Company
A. History and Development of the Company
New Lavoro is an exempted company incorporated with limited liability in the Cayman Islands on August 25, 2022. For further information on the Business Combination, see “Explanatory Note” above. The history and development of New Lavoro and the material terms of the Business Combination are described in the Form F-4 under the headings “Summary of the Proxy Statement/Prospectus,” “Proposals to be Considered by TPB SPAC’s Shareholders—Business Combination Proposal,” “The Business Combination Agreement” and “Description of New Lavoro Share Capital,” which are incorporated herein by reference.
New Lavoro owns no material assets other than its direct equity interests in its wholly-owned subsidiaries, Second Merger Sub and Lavoro Agro Limited. In addition, New Lavoro does not operate any business other than through the Lavoro Group.
New Lavoro’s registered office is c/o Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands, and New Lavoro’s principal executive office is Av. Dr. Cardoso de Melo, 1450, 4th floor, office 401, São Paulo, SP, 04548-005, Brazil. New Lavoro’s principal website address is www.lavoroagro.com/en/. We do not incorporate the information contained on, or accessible through, New Lavoro’s websites into this Report, and you should not consider it a part of this Report. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The SEC’s website is http://www.sec.gov.
Recent Developments
New Financing Transactions
Subsequent to June 30, 2022, through the date of this Report, certain of our Brazilian and Colombian subsidiaries entered into a number of financing agreements totaling an aggregate principal amount of R$890.5 million, with interest rates ranging from CDI Rate plus 1.60% to 5.85% and up to 13.40% at a fixed rate and maturities ranging from January 2023 to July 2025 and COP$64,104.4 million, with interest rates ranging from IBR Rate plus 1.50% to 6.35% and up to 19.60% at a fixed rate and maturities ranging from July 2023 to November 2027. These new financing transactions are in line with our business plan and reflect the seasonality of our business as the last quarter usually demands additional working capital. Our principal new financing agreements are described below:
New Bank Credit Notes (CCB) and Related Term Loan Facilities
On December 8, 2022, our subsidiary Lavoro Agro Holding S.A. issued a Bank Credit Note (Cédula de Crédito Bancário, or “CCB”) to Banco Alfa de Investimento S.A. in an aggregate principal amount of R$125.0 million, with interest accruing at a rate per annum equal to the CDI Rate plus 1.60% p.a. and maturing on April 10, 2023. This CCB is guaranteed by our subsidiaries Distribuidora Pitangueiras de Produtos Agropecuários S.A., or Pitangueiras, Agrovenci – Comércio, Importação, Exportação e Agropecuária Ltda., or Agrovenci, and Lavoro Agrocomercial S.A., or Lavoro Agrocomercial.
On December 8, 2022, our subsidiary Lavoro Agro Holding S.A. issued a CCB to Banco do Brasil S.A. in an aggregate principal amount of R$125.0 million, with interest accruing at a rate per annum equal to the CDI Rate plus 1.70% p.a. and maturing on March 28, 2023. This CCB is guaranteed by our subsidiaries Pitangueiras, Agrovenci and Lavoro Agrocomercial.
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New Export Credit Notes (NCE) and Related Term Loan Facilities
On October 27, 2022, our subsidiary Lavoro Agrocomercial issued Export Credit Notes (Nota de Crédito à Exportação, or “NCE”) to Banco ABC S.A. in an aggregate principal amount of R$50.0 million, with interest accruing at a rate per annum equal to the CDI Rate plus 3.00% p.a. and maturing on October 27, 2023. This NCE is guaranteed by our subsidiary Lavoro Agro Holding S.A.
On September 12, 2022, our subsidiary Lavoro Agrocomercial issued an NCE to Banco do Brasil S.A. in an aggregate principal amount of R$50.0 million, with interest accruing at a rate per annum equal to the CDI Rate plus 2.86% p.a. and maturing on August 25, 2023. This NCE is guaranteed by our subsidiary Lavoro Agro Holding S.A.
On September 19, 2022, our subsidiary Distribuidora Pitangueiras de Produtos Agropecuários S.A., or Pitangueiras, issued an NCE to Banco do Brasil S.A. in an aggregate principal amount of R$50.0 million, with interest accruing at a rate per annum equal to the CDI Rate plus 2.86% p.a. and maturing on August 25, 2023. This NCE is guaranteed by our subsidiary Lavoro Agro Holding S.A.
On September 20, 2022, our subsidiary Lavoro Agrocomercial issued an NCE to Banco Citibank S.A. in an aggregate principal amount of R$84.0 million, with interest accruing at a rate per annum equal to the CDI Rate plus 2.98% p.a. and maturing on September 20, 2023. This NCE is guaranteed by our subsidiary Lavoro Agro Holding S.A.
On September 22, 2022, our subsidiary Pitangueiras issued an NCE to Banco Safra S.A. in an aggregate principal amount of R$100.0 million, with interest accruing at a rate per annum equal to the CDI Rate plus 2.80% p.a. and maturing on September 18, 2023. This NCE is guaranteed by our subsidiary Lavoro Agro Holding S.A., Lavoro Agrocomercial and Produtec.
New Acquisition
On January 13, 2023, our subsidiary Crop Care entered into an agreement for the acquisition of a 70% interest in Cromo Indústria Química Ltda., or “Cromo.” The purchase price of the acquisition totaled R$21.7 million, and is expected to be paid in cash in three installments: R$10.8 million on the closing date, R$5.4 million a year after the closing date and R$5.4 million two years after the closing date, all as adjusted by the IPCA. The completion of this acquisition is subject to the fulfilment of conditions precedent customary for this type of transaction, which include obtaining the requisite approvals from the relevant regulatory authorities in Brazil.
Lavoro Agro Limited Capital Increase
On February 27, 2023, the board of directors of Lavoro Agro Limited approved, by unanimous written resolution, the issuance of an aggregate of 2.78 Lavoro Agro Limited Shares for a total subscription price of US$11,716,689. These Lavoro Agro Limited Shares were divided among, subscribed and paid for by the Investment Funds and Patria Finance Limited, an exempted company incorporated with limited liability under the laws of the Cayman Islands.
B. Business Overview
Prior to the closing of the Business Combination, New Lavoro did not conduct any material activities other than those incidental to its formation and the matters contemplated by the Business Combination Agreement, such as the making of certain required securities law filings. Following and as a result of the Business Combination, all of New Lavoro’s business is conducted through the Lavoro Group. A description of Lavoro Group’s business is included in the Form F-4 under the headings “Business of Lavoro” and “Management’s Discussion and Analysis of Financial Condition and Results of Operation of Lavoro,” which are incorporated herein by reference.
C. Organizational Structure
Upon consummation of the Business Combination, each of Lavoro Agro Limited and Second Merger Sub became wholly-owned direct subsidiaries of New Lavoro. The organizational chart of New Lavoro is included in the Form F-4 under the heading “The Business Combination Agreement—Structure—Post-Business Combination Structure” and is incorporated herein by reference.
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D. Property, Plants and Equipment
New Lavoro’s property, plants and equipment are held through the Lavoro Group. Information regarding Lavoro Group’s property, plants and equipment is described in the Form F-4 under the heading “Business of Lavoro—Properties,” which information is incorporated herein by reference.
Item 4A. Unresolved Staff Comments
None / Not applicable.
Item 5. Operating and Financial Review and Prospects
Following and as a result of the Business Combination, all of New Lavoro’s business is conducted through the Lavoro Group. The discussion and analysis of the financial condition and results of operation of the Lavoro Group is included in the Form F-4 under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operation of Lavoro,” which information is incorporated herein by reference.
Item 6. Directors, Senior Management and Employees
A. Directors and Senior Management
The directors and executive officers of New Lavoro upon the consummation of the Business Combination are set forth in the Form F-4 under the heading “New Lavoro Management Following the Business Combination,” which information is incorporated herein by reference.
B. Compensation
Information pertaining to the compensation of the directors and executive officers of New Lavoro is set forth in the Form F-4 under the heading “Executive Compensation,” which information is incorporated herein by reference.
C. Board Practices
Information pertaining to the Company’s board practices is set forth in the Form F-4 under the heading “New Lavoro Management Following the Business Combination,” which information is incorporated herein by reference.
D. Employees
Following and as a result of the Business Combination, all of New Lavoro’s business is conducted through the Lavoro Group.
Information pertaining to Lavoro Group’s employees is set forth in the Form F-4 under the heading “Business of Lavoro—Employees,” which information is incorporated herein by reference.
E. Share Ownership
Ownership of the Company’s shares by its directors and executive officers upon consummation of the Business Combination is set forth in Item 7.A of this Report.
Item 7. Major Shareholders and Related Party Transactions
A. Major Shareholders
The following table sets forth information regarding the beneficial ownership of New Lavoro Ordinary Shares as of the date hereof by:
| · | each person known by us to be the beneficial owner of more than 5% of New Lavoro Ordinary Shares; |
| · | each of our directors and executive officers; and |
| · | all our directors and executive officers as a group. |
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Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if that person possesses sole or shared voting or investment power over that security. A person is also deemed to be a beneficial owner of securities that person has a right to acquire within 60 days including, without limitation, through the exercise of any option, warrant or other right or the conversion of any other security. Such securities, however, are deemed to be outstanding only for the purpose of computing the percentage beneficial ownership of that person but are not deemed to be outstanding for the purpose of computing the percentage beneficial ownership of any other person. Under these rules, more than one person may be deemed to be a beneficial owner of the same securities.
As of the date hereof, there are 116,608,329 New Lavoro Ordinary Shares issued and outstanding. This amount includes 3,006,050 New Lavoro Ordinary Shares outstanding as of the date hereof that constitute “Vesting Founder Shares” (as defined in the Form F-4). Vesting Founder Shares are subject to certain vesting, lock-up and beneficial ownership limitations upon the Sponsor under the terms of Sponsor Letter Agreement, as amended. See “Item 10. Additional Information—C. Material Contracts—Material Contracts Relating to the Business Combination—Amendment No. 2 to Sponsor Letter Agreement” of this Report.
Unless otherwise indicated, we believe that all persons named in the table below have sole voting and investment power with respect to all New Lavoro Ordinary Shares beneficially owned by them.
| Beneficial Owners | New Lavoro Ordinary Shares | % of Total New Lavoro Ordinary Shares | ||||||
| Directors and Executive Officers(1) | ||||||||
| Ruy Cunha | — | — | ||||||
| Laurence Beltrão Gomes | — | — | ||||||
| Marcelo Pessanha | — | — | ||||||
| Gustavo Modenesi | — | — | ||||||
| Karen Christiane Ramirez Chaves de Mello | — | — | ||||||
| Gustavo Ocampo Duran | — | — | ||||||
| Marcos Strobel | — | — | ||||||
| Rafael Ughini Villarroel | — | — | ||||||
| Ricardo Leonel Scavazza | — | — | ||||||
| Marcos de Mello Mattos Haaland | — | — | ||||||
| Daniel Fisberg | — | — | ||||||
| David Friedberg(2) | — | — | ||||||
| Michael Stern | — | — | ||||||
| Lauren StClair | — | — | ||||||
| Eduardo Daher | — | — | ||||||
| All directors and executive officers as a group (15 individuals) | — | — | ||||||
| Principal Shareholders | ||||||||
| Investment Funds(3) | 96,359,488 | 84.9 | % | |||||
| Patria Finance Limited(3) | 2,366,913 | 2.1 | % | |||||
| Patria Investments Limited(4) | 98,726,401 | 86.9 | % | |||||
| Sponsor(5) | 1,649,172 | 1.4 | % | |||||
| The Production Board(6) | 11,649,172 | 9.9 | % | |||||
| (1) | Unless otherwise noted, the business address of the directors and executive officers of New Lavoro is Av. Dr. Cardoso de Melo, 1450, 4th floor, office 401, São Paulo—SP, 04548-005, Brazil. |
| (2) | As noted in footnotes (5) and (6) below, Mr. Friedberg is a manager on the board of managers of both TPB Acquisition Sponsor I, LLC (the “Sponsor”) and The Production Board. There are three or more managers or directors on the board of managers or board of directors, as applicable, of each of the Sponsor and The Production Board. Each manager on each such board has one vote, and the approval of a majority is required to approve an action. Under the so-called “rule of three,” if voting and dispositive decisions regarding an entity’s securities are made by three or more individuals, and voting or dispositive decisions require the approval of a majority of those individuals, then none of the individuals is deemed a beneficial owner of the entity’s securities. Based on the foregoing, no individual manager of either the Sponsor or The Production Board exercises voting or dispositive control over any of the securities held by the applicable entity, even those in which he holds a pecuniary interest. Accordingly, Mr. Friedberg will not be deemed to have or share beneficial ownership of such shares. |
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| (3) | The Investment Funds, a group of Cayman Islands, Delaware and Ontario entities, are the record holders of such shares, and PBPE General Partner V, Ltd., is the general partner of the Investment Funds; Patria Finance Limited is the sole shareholder of PBPE General Partner V, Ltd.; Patria Finance Limited is wholly owned by Patria Investments Cayman Limited; Patria Investments Cayman Limited is wholly owned by Patria Investments Latam S.A.; Patria Investments Latam S.A. is wholly owned by Patria Investments Limited; Patria Investments Limited is controlled by Patria Holdings Limited. Each of the entities described in this footnote (other than to the extent it directly holds securities as described herein) may be deemed to beneficially own the shares directly or indirectly controlled by such entities, but each disclaims any beneficial ownership of the reported shares other than to the extent of any pecuniary interest they may have therein, directly or indirectly. The business address of each of the Cayman, Delaware and Ontario Investment Funds is c/o Maples Corporate Services, PO Box 309, Ugland House, South Church Street, KY1-1104, George Town, Grand Cayman, Cayman Islands, c/o Maples Fiduciary Services (Delaware) Inc., 4001 Kennet Pike, Suite 302, Wilmington, DE 19807, United States, 199 Bay St, Commerce Court West, Suite 5300 (c/o 152928 Canada Inc.), Toronto, ON M5L 189, Canada; respectively. The business address of PBPE General Partner V, Ltd. is c/o Maples Corporate Services, PO Box 309, Ugland House, South Church Street, KY1-1104, George Town, Grand Cayman, Cayman Islands. The business address of each of the other entities described in this footnote is c/o Patria Investments Limited, at 18 Forum Lane, 3rd floor, Camana Bay, PO Box 757, KY1-9006, Grand Cayman, Cayman Islands. |
| (4) | While Patria Investments Limited does not own such shares directly, as described in the foregoing footnote, Patria Investments Limited may be deemed to beneficially own the shares directly or indirectly held by the entities controlled (directly or indirectly) by it, whenever those entities are acting in the capacity of general partner and to the extent and subject to the limitations set forth in the limited partnership agreements of the Investment Funds. Patria Investments Limited disclaims any beneficial ownership of the reported shares other than to the extent of any pecuniary interest it may have therein, directly or indirectly. The business address of Patria Investments Limited is c/o Patria Investments Limited, at 18 Forum Lane, 3rd floor, Camana Bay, PO Box 757, KY1-9006, Grand Cayman, Cayman Islands. |
| (5) | Consists of (1) 1,343,412 New Lavoro Ordinary Shares acquired by the Sponsor in connection with the Business Combination and (2) 305,760 Vesting Founder Shares (as defined in the Form F-4). The Vesting Founder Shares will vest if at any time during the 3-year period following the Closing Date the closing share price of the New Lavoro Ordinary Shares is greater than or equal to certain market values over any 20 trading days within any consecutive 30 trading day period, provided that, per the terms of the Sponsor Letter Agreement, as amended, no Vesting Founder Shares shall vest to the extent that after giving effect to such vesting, the Sponsor would beneficially own a number of New Lavoro Ordinary Shares in excess of 9.99% of the number of New Lavoro Ordinary Shares outstanding immediately after giving effect to the vesting. The Production Board is the sole member of the Sponsor. David Friedberg, Bharat Vasan and William Hauser are managers on the board of managers of the Sponsor, and each disclaims beneficial ownership of the securities held by the Sponsor and its subsidiaries except to the extent of his pecuniary interest therein. The business address of the Sponsor is 1 Letterman Drive, Suite A3-1, San Francisco, CA 94129. |
| (6) | Consists of (1) 10,000,000 New Lavoro Ordinary Shares acquired by The Production Board in connection with the PIPE Investment, (2) 1,343,412 New Lavoro Ordinary Shares acquired by the Sponsor in connection with the Business Combination and (3) 305,760 Vesting Founder Shares. While The Production Board does not own the New Lavoro Ordinary Shares beneficially owned by the Sponsor directly, as described in the foregoing footnote, The Production Board may be deemed to beneficially own the shares directly or indirectly held by the entities controlled (directly or indirectly) by it. The Production Board disclaims any beneficial ownership of the reported shares other than to the extent of any pecuniary interest it may have therein, directly or indirectly. David Friedberg, Anil Patel, Sen. Bob Kerrey and Barney Schauble are directors on the board of directors of The Production Board, and each disclaims beneficial ownership of the securities held by The Production Board and its subsidiaries except to the extent of his pecuniary interest therein. The business address of The Production Board, LLC is 1 Letterman Drive, Suite A3-1, San Francisco, CA 94129. |
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A&R Registration Rights Agreement
On February 28, 2023, in connection with the consummation of the Business Combination, New Lavoro, the Sponsor and certain persons named therein entered into that certain Amended and Restated Registration Rights Agreement (the “A&R Registration Rights Agreement”), pursuant to which that certain Registration Rights Agreement dated as of August 13, 2021 by and among the TPB SPAC, the Sponsor and certain other parties thereto was amended and restated in its entirety. As a result, the holders of Registrable Securities (as defined in the A&R Registration Rights Agreement) will be able to make a written demand for registration under the Securities Act of all or a portion of their Registrable Securities, subject to certain limitations so long as such demand includes a number of Registrable Securities with a total offering price in excess of US$30.0 million. Any such demand may be in the form of an underwritten offering, it being understood that, subject to certain exceptions, New Lavoro shall not be required to conduct more than two underwritten offerings in any 12-month period. In addition, the holders of registrable securities will have “piggy-back” registration rights to include their securities in other registration statements to be filed by New Lavoro subsequent to the Closing. New Lavoro has also agreed to file with the SEC a resale shelf registration statement covering the resale of all registrable securities within 30 days of the date of the A&R Registration Rights Agreement, to be declared effective within 90 days thereof.
B. Related Party Transactions
Information pertaining to New Lavoro’s related party transactions is set forth in the Form F-4 under the headings “Certain Lavoro Relationships and Related Party Transactions” and “Certain TPB SPAC Relationships and Related Party Transactions,” which are incorporated herein by reference.
C. Interests of Experts and Counsel
None / Not applicable.
A. Consolidated Statements and Other Financial Information
Financial Statements
See Item 18 of this Report for financial statements and other financial information.
Legal Proceedings
Legal or arbitration proceedings are described in the Form F-4 under the heading “Business of Lavoro—Legal Proceedings,” which is incorporated herein by reference.
Dividend Policy
New Lavoro’s policy on dividend distributions is described in the Form F-4 under the heading “Price Range of Securities and Dividend Information—Dividend Policy,” which information is incorporated herein by reference.
B. Significant Changes
None.
A. Offer and Listing Details
New Lavoro Ordinary Shares and New Lavoro Public Warrants are listed on Nasdaq under the symbols “LVRO” and “LVROW,” respectively.
Holders of New Lavoro Ordinary Shares and New Lavoro Public Warrants should obtain current market quotations for their securities.
10
Information regarding the lock-up restrictions applicable to the New Lavoro Ordinary Shares and New Lavoro Public Warrants held by the Lavoro shareholders is included in the Form F-4 under the heading “Shares Eligible for Future Sale—Lock-Up Agreements” and is incorporated herein by reference.
B. Plan of Distribution
Not applicable.
C. Markets
New Lavoro Ordinary Shares and New Lavoro Public Warrants are listed on Nasdaq under the symbols “LVRO” and “LVROW,” respectively.
D. Selling Shareholders
Not applicable.
E. Dilution
Not applicable.
F. Expenses of the Issue
Not applicable.
Item 10. Additional Information
A. Share Capital
As of the date hereof, subsequent to the closing of the Business Combination, there are 116,608,329 New Lavoro Ordinary Shares outstanding and issued. There are also 6,012,099 New Lavoro Public Warrants listed on Nasdaq and 4,071,507 private placement warrants held by the Sponsor, each exercisable at $11.50 per one New Lavoro Ordinary Share (the “New Lavoro Private Placement Warrants”) issued and outstanding.
B. Memorandum and Articles of Association
The Amended and Restated Memorandum and Articles of Association (“Articles”) of the Company effective as of February 28, 2023 are filed as Exhibit 1.1 to this Report. The description of the Articles of the Company is included in the Form F-4 under the heading “Description of New Lavoro Share Capital,” which information is incorporated herein by reference.
C. Material Contracts
Material Contracts Relating to New Lavoro’s Operations
Following and as a result of the Business Combination, all of New Lavoro’s business is conducted through the Lavoro Group. Information pertaining to Lavoro Group’s material contracts is set forth in the Form F-4 under the headings “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Lavoro—Liquidity and Capital Resources—Indebtedness,” “Business of Lavoro,” “Risk Factors—Risks Related to Lavoro’s Business and Industry” and “Certain Lavoro Relationships and Related Person Transactions,” each of which is incorporated herein by reference.
Material Contracts Relating to the Business Combination
Business Combination Agreement
The description of the Business Combination Agreement is set forth in the Form F-4 under the heading “The Business Combination Agreement,” which information is incorporated herein by reference.
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Related Agreements
The description of the material provisions of certain additional agreements entered into pursuant to the Business Combination Agreement is set forth in the Form F-4 under the heading “Certain Agreements Related To The Business Combination,” which information is incorporated herein by reference.
Forward Purchase Agreements
On February 21, 2023, TPB SPAC entered into separate Forward Share Purchase Agreements (each, a “Purchase Agreement” and together, the “Purchase Agreements”) with certain equity holders of TPB SPAC (together, the “FPA Investors”), pursuant to which TPB SPAC (or Second Merger Sub, as successor-in-interest to TPB SPAC following the Closing) agreed to purchase in the aggregate, on the date that is 24 months after the Closing Date (the “Maturity Date”), up to 2,830,750 New Lavoro Ordinary Shares then held by the FPA Investors (subject to certain conditions and purchase limits set forth in the Purchase Agreements). Pursuant to the terms of the Purchase Agreements, each FPA Investor, acting separately and solely for its own account, further agreed not to request redemption, in connection with the Extraordinary General Meeting, of any of the SPAC Class A Ordinary Shares owned by it at such time.
On the Closing Date, and pursuant to an escrow agreement (the “Escrow Agreement”) entered into with Citibank, N.A., a national banking association organized and existing under the laws of the United States of America (the “Escrow Agent”), we placed into an escrow account (the “Escrow Account”) an amount equal to the Escrowed Property (as defined below) to secure our purchase obligation to the FPA Investors. “Escrowed Property” refers to (i) (a) the price per share that SPAC Class A Ordinary Shares are redeemed for in connection with TPB SPAC’s shareholder’s approval of the Business Combination (the “Shares Purchase Price”) multiplied by the number of SPAC Class A Ordinary Shares held by the FPA Investors as of the Closing Date less (b) any amounts previously disbursed from the Escrow Account in accordance with the Purchase Agreements and the Escrow Agreement, plus (ii) the interest, investment income, or proceeds accrued from the deposit or investment from the Escrow Account.
Following the Third Effective Time, we agreed to use our best efforts to cause the filing of a registration statement, at our cost and expense, with the SEC registering the resale of the New Lavoro Ordinary Shares subject to the Purchase Agreements (the “FPA Registration Statement”) under the Securities Act within 30 days following the Closing Date, and have the FPA Registration Statement declared effective as soon as practicable after the filing thereof, but no later than the earliest of (i) the 45th calendar day (or 90th calendar day if the SEC notifies us that it will review the FPA Registration Statement) following such closing and (ii) the 5th business day after the date we are notified (orally or in writing, whichever is earlier) by the SEC that such FPA Registration Statement will not be reviewed or will not be subject to further review. Pursuant to the Purchase Agreements, the FPA Investors will use commercially best efforts to sell any or all of their New Lavoro Ordinary Shares in the open market if the per share sale price exceeds the Shares Purchase Price prior to the payment of any commissions due by the FPA Investors for such sale, with such sales commencing after the date on which the New Lavoro Ordinary Shares are registered on the FPA Registration Statement after the Closing Date.
If and when any FPA Investor sells New Lavoro Ordinary Shares to any third party, upon receipt by the Escrow Agent and us of written notice of such sale of New Lavoro Ordinary Shares (such date, the “Instruction Date”), the Escrow Agent shall release to us an amount equal to (i) the Escrowed Property divided by the number of New Lavoro Ordinary Shares held by such FPA Investor as of the Instruction Date, multiplied by (ii) the number of New Lavoro Ordinary Shares sold by such FPA Investor pursuant to the Purchase Agreements.
The per New Lavoro Ordinary Share price at which the FPA Investors have the right to sell the New Lavoro Ordinary Shares to us on the Maturity Date is (i) the total amount of the Escrowed Property in the Escrow Account, divided by (ii) the total number of New Lavoro Ordinary Shares held by the FPA Investors as of the Maturity Date (subject to the Share Purchase Limit (as defined in the Purchase Agreements)). The FPA Investors will notify us in writing not less than five business days prior to the Maturity Date, specifying the number of New Lavoro Ordinary Shares that we will be required to purchase (the “Shares Sale Notice”). In exchange for our commitment to purchase New Lavoro Ordinary Shares on the Maturity Date, the FPA Investors agreed to continue to hold, and not to redeem, SPAC Class A Ordinary Shares prior to the Closing. Any FPA Investor that fails to timely deliver a Shares Sale Notice shall be deemed to have forfeited its right to sell any New Lavoro Ordinary Shares to us pursuant to the Purchase Agreements.
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The Purchase Agreements contain customary representations, warranties and covenants from the parties thereto. The foregoing descriptions are only a summary of the Purchase Agreements and Escrow Agreement and are qualified in their entirety by reference to the full text of the Purchase Agreements, including the Escrow Agreement, the form of which is included as Exhibit A thereto, which is filed as Exhibit 4.9 hereto and is incorporated by reference herein.
Amendment No. 2 to Sponsor Letter Agreement
On February 28, 2023, concurrently with the closing of the Business Combination, we, Lavoro Agro Limited, TPB SPAC, the Sponsor and TPB SPAC’s directors and officers entered into Amendment No. 2 to that certain Sponsor Letter Agreement, dated August 13, 2021 (the “Sponsor Letter Agreement”), by and among Sponsor, TPB SPAC and TPB SPAC’s directors and officers (as amended on September 14, 2022 and February 28, 2023 by and among the Sponsor, TPB SPAC, TPB SPAC’s directors and officers, Lavoro Agro Limited and New Lavoro) (“Amendment No. 2”). The purpose of Amendment No. 2 was to set out and amend certain vesting, lock-up and beneficial ownership limitations upon the Sponsor in respect of the New Lavoro Ordinary Shares held by the Sponsor. The full text of Amendment No. 2 is filed as Exhibit 4.7 hereto and is incorporated by reference herein.
D. Exchange Controls
There are no governmental laws, decrees, regulations or other legislation in the Cayman Islands that may affect the import or export of capital, including the availability of cash and cash equivalents for use by New Lavoro, or that may affect the remittance of dividends, interest, or other payments by New Lavoro to non-resident holders of New Lavoro Ordinary Shares. There is no limitation imposed by laws of Cayman Islands or in New Lavoro’s Articles on the right of non-residents to hold or vote New Lavoro Ordinary Shares.
E. Taxation
Information pertaining to tax considerations is set forth in the Form F-4 under the headings “Material U.S. Federal Income Tax Considerations” and “Cayman Islands Tax Considerations,” which are incorporated herein by reference.
F. Dividends and Paying Agents
Information regarding New Lavoro’s policy on dividends is described in the Form F-4 under the heading “Price Range of Securities and Dividend Information—Dividend Policy,” which information is incorporated herein by reference. New Lavoro has not paid any cash dividends on New Lavoro Ordinary Shares since the Business Combination and currently has no plan to pay cash dividends on such securities in the foreseeable future. New Lavoro has not identified a paying agent.
G. Statement by Experts
The combined financial statements of the Lavoro Group as of June 30, 2022 and 2021, and for each of the three years in the period ended June 30, 2022, appearing in the Lavoro Limited Registration Statement on Form F-4 (File No. 333- 267653), as amended, initially filed with the SEC on September 29, 2022, have been audited by Ernst & Young Auditores Independentes S/S Ltda., independent registered public accounting firm, as set forth in their report thereon, included therein, and incorporated herein by reference. Such combined financial statements are incorporated herein by reference in reliance upon such report given on the authority of such firm as experts in accounting and auditing.
The financial statements of TPB Acquisition Corporation I as of December 31, 2021 and for the period from February 8, 2021 (inception) through December 31, 2021, have been audited by Frank, Rimerman + Co. LLP, an independent registered public accounting firm, as set forth in their report thereon, and are incorporated by reference herein in reliance on such report given upon such firm as experts in auditing and accounting.
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H. Documents on Display
We are subject to certain of the informational filing requirements of the Exchange Act. Since we are a “foreign private issuer,” we are exempt from the rules and regulations under the Exchange Act prescribing the furnishing and content of proxy statements, and our officers, directors and principal shareholders are exempt from the reporting and “short-swing” profit recovery provisions contained in Section 16 of the Exchange Act, with respect to their purchase and sale of our shares. In addition, we are not required to file reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. However, we are required to file with the SEC an Annual Report on Form 20-F containing financial statements audited by an independent accounting firm. We may, but are not required, to furnish to the SEC, on Form 6-K, unaudited financial information after each of our first three fiscal quarters. The SEC also maintains a website at http://www.sec.gov that contains reports and other information that we file with or furnish electronically with the SEC. You may read and copy any report or document we file, including the exhibits, at the SEC’s public reference room located at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room.
I. Subsidiary Information
Not applicable.
Item 11. Quantitative and Qualitative Disclosures About Market Risk
The information set forth in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operation of Lavoro—Quantitative and Qualitative Disclosure About Market Risks” in the Form F-4 is incorporated herein by reference.
Item 12. Description of Securities Other Than Equity Securities
Warrants
Upon the completion of the Business Combination, there were 6,012,099 New Lavoro Public Warrants outstanding. The New Lavoro Public Warrants, which entitle the holder to purchase one New Lavoro Ordinary Share at an exercise price of $11.50 per share, will become exercisable on March 30, 2023, which is 30 days after the completion of the Business Combination. The New Lavoro Public Warrants will expire on February 28, 2028 (i.e., five years after the completion of the Business Combination) or earlier upon redemption or liquidation in accordance with their terms. Upon the completion of the Business Combination, there were also 4,071,507 New Lavoro Private Placement Warrants held by the Sponsor. The New Lavoro Private Placement Warrants are identical to the New Lavoro Public Warrants in all material respects, except that the New Lavoro Private Placement Warrants, so long as they are held by the Sponsor or its permitted transferees, (i) will not be redeemable by the Company, (ii) may not, subject to certain limited exceptions, be transferred, assigned or sold by the holders until March 30, 2023, which is 30 days after the completion of the Business Combination, (iii) may be exercised by the holders on a cashless basis and (iv) are entitled to registration rights.
14
Not applicable.
See Item 18.
The financial statements of TPB SPAC as of December 31, 2021, and for the period from February 8, 2021 (inception) through December 31, 2021 and as of and for the nine months ended September 30, 2022, in the Form F-4 between pages F-2 and F-43 are incorporated herein by reference.
The combined financial statements of the Lavoro Group as of June 30, 2022 and 2021, and for each of the three years in the period ended June 30, 2022, in the Form F-4 between pages F-44 and F-103 are incorporated herein by reference.
The unaudited pro forma condensed combined financial information of Lavoro and TPB SPAC is attached as Exhibit 15.1 to this Report.
15
| * | Filed herewith. |
| † | Indicates a management contract or any compensatory plan, contract or arrangement. |
| # | Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The Company agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request. |
16
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this report on its behalf.
| LAVORO LIMITED | |||||
| Date: | March 6, 2023 | By: | /s/ Ruy Cunha | ||
| Name: | Ruy Cunha | ||||
| Title: | Chief Executive Officer | ||||
17
Exhibit 1.1
COMPANIES ACT (AS REVISED)
COMPANY LIMITED BY SHARES
AMENDED AND RESTATED MEMORANDUM AND ARTICLES OF ASSOCIATION
OF
LAVORO LIMITED
(AMENDED BY SPECIAL RESOLUTION DATED 28 FEBRUARY 2023 AND EFFECTIVE 28 FEBRUARY 2023)
COMPANIES ACT (AS REVISED)
COMPANY LIMITED BY SHARES
AMENDED AND RESTATED MEMORANDUM OF ASSOCIATION
OF
LAVORO LIMITED
(AMENDED BY SPECIAL RESOLUTION DATED 28 FEBRUARY 2023 AND EFFECTIVE 28 FEBRUARY 2023)
| 1 | The name of the Company is Lavoro Limited. |
| 2 | The registered office of the Company will be at the offices of Maples Corporate Services Limited located at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands or at such other place as the Directors may from time to time decide. |
| 3 | The objects for which the Company is established are unrestricted and the Company shall have full power and authority to carry out any object not prohibited by law as provided by Section 7(4) of the Companies Act. |
| 4 | The Company shall have and be capable of exercising all the functions of a natural person of full capacity irrespective of any question of corporate benefit as provided by Section 27(2) of the Companies Act. |
| 5 | Nothing in the preceding paragraphs shall be deemed to permit the Company to carry on the business of a bank or trust company without being licensed in that behalf under the provisions of the Banks and Trust Companies Act ((As Revised)) or to carry on insurance business from within the Cayman Islands or the business of an insurance manager, agent, sub-agent or broker without being licensed in that behalf under the provisions of the Insurance Act ((As Revised)), or to carry on the business of company management without being licensed in that behalf under the provisions of the Companies Management Act ((As Revised)). |
| 6 | The Company will not trade in the Cayman Islands with any person, firm or corporation except in furtherance of the business of the Company carried on outside the Cayman Islands, provided that nothing in this Amended and Restated Memorandum of Association shall be construed as to prevent the Company from effecting and concluding contracts in the Cayman Islands, and exercising in the Cayman Islands all of its powers necessary for the carrying on of business outside the Cayman Islands. |
| 7 | The liability of each member is limited to the amount from time to time unpaid on such member's shares. |
| 8 | The authorised share capital of the Company is US$1,500,000 divided into 1,400,000,000 Class A ordinary shares each of a par value of US$0.001 each and 100,000,000 preference shares each of a par value of US$0.001 each, with the power for the Company, insofar as is permitted by law and the Articles, to redeem, purchase or redesignate any of its shares and to increase or reduce the said share capital subject to the Companies Act and the Articles and to issue any part of its capital, whether original, redeemed or increased with or without any preference, priority or special privilege or subject to any postponement of rights or to any conditions or restrictions and so that unless the conditions of issue shall otherwise expressly declare every issue of shares whether declared to be preference or otherwise shall be subject to the powers hereinbefore contained. |
| 9 | The Company may exercise the power contained in Section 206 of the Companies Act to deregister in the Cayman Islands and be registered by way of continuation in another jurisdiction. |
| 10 | Capitalised terms that are not defined in this Memorandum bear the meanings given to those terms in the Articles. |
COMPANIES ACT (AS REVISED)
COMPANY LIMITED BY SHARES
AMENDED AND RESTATED ARTICLES OF ASSOCIATION
OF
LAVORO LIMITED
(AMENDED BY SPECIAL RESOLUTION DATED 28 FEBRUARY 2023 AND EFFECTIVE 28 FEBRUARY 2023)
COMPANIES ACT ((AS REVISED))
COMPANY LIMITED BY SHARES
AMENDED AND RESTATED ARTICLES OF ASSOCIATION
OF
LAVORO LIMITED
(AMENDED BY SPECIAL RESOLUTION DATED 28 FEBRUARY 2023 AND EFFECTIVE 28 FEBRUARY 2023)
| 1 | Table A |
| 1.1 | In these Articles, the regulations contained in Table A in the First Schedule to the Companies Act (as defined below) do not apply except insofar as they are repeated or contained in these Articles. |
| 2 | Definitions and Interpretation |
| 2.1 | In these Articles, the following words and expressions shall have the meanings set out below save where the context otherwise requires: |
| Articles | these Amended and Restated Articles of Association of the Company, as further amended from time to time by Special Resolution; |
| Auditors | the auditor or auditors for the time being of the Company; |
| Board of Directors | the Directors assembled as a board or assembled as a committee appointed by that board; |
| Companies Act | the Companies Act ((As Revised)); |
| Company | the above-named company; |
| Designated Stock Exchange | any U.S. national securities exchange on which the securities of the Company are listed for trading; |
| Directors | the directors of the Company for the time being; |
| Electronic Record | has the same meaning as in the Electronic Transactions Act; |
| Electronic Transactions Act | the Electronic Transactions Act ((As Revised)); |
| Effective Date | means 28 February, 2023. |
| Exchange Act | the United States Securities Exchange Act of 1934, (As Revised), and any successor thereto, as the same shall be in effect from time to time; |
| Governmental Authority | any federal, state, provincial, municipal, local or foreign government, governmental authority, regulatory or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, court or tribunal; |
| Governmental Order | any order, judgment, injunction, decree, writ, stipulation, determination or award, in each case, entered by or with any Governmental Authority; |
| Law | any statute, law, ordinance, rule, regulation or Governmental Order, in each case, of any Governmental Authority; |
| Memorandum | the Amended and Restated Memorandum of Association of the Company, as further amended and restated from time to time by Special Resolution; |
| Ordinary Resolution | a resolution passed by a simple majority of the votes of such Shareholders as, being entitled to do so, vote in person or, where proxies are allowed, by proxy, at a general meeting, and includes a unanimous written resolution; |
| paid up | paid up as to the par value and any premium payable in respect of the issue of any Shares and includes credited as paid up; |
2
| person | any individual, firm, corporation, company, partnership, limited liability company, incorporated or unincorporated association, joint venture, joint stock company, Governmental Authority or instrumentality or other entity of any kind; |
| Register of Members | the register of Shareholders to be kept pursuant to these Articles; |
| Registered Office | the registered office of the Company for the time being; |
| Seal | the common seal of the Company including any duplicate seal; |
| Secretary | any person appointed by the Directors to perform any of the duties of the secretary of the Company, including a joint, assistant or deputy secretary; |
| Securities and Exchange Commission | the United States Securities and Exchange Commission; |
| Share | a share in the capital of the Company of any class including a fraction of such share; |
| Shareholder | any person registered in the Register of Members as the holder of Shares of the Company and, where two or more persons are so registered as the joint holders of such Shares, the person whose name stands first in the Register of Members as one of such joint holders; |
| Share Premium Account | the share premium account established in accordance with these Articles and the Companies Act; |
| signed | includes an electronic signature and a signature or representation of a signature affixed by mechanical means; |
| Special Resolution | has the same meaning as in the Companies Act, and includes a unanimous written resolution; |
| Subsidiary | with respect to a person, a corporation or other entity of which more than 50% of the voting power of the equity securities or equity interests is owned, directly or indirectly, by such person; and |
3
| Treasury Shares | Shares that were previously issued but were purchased, redeemed, surrendered or otherwise acquired by the Company and not cancelled. |
| 2.2 | In these Articles, unless there be something in the subject or context inconsistent with such construction: |
| (a) | words importing the singular number shall include the plural number and vice versa; |
| (b) | words importing a gender shall include other genders; |
| (c) | words importing persons only shall include companies, partnerships, trusts or associations or bodies of persons, whether corporate or not; |
| (d) | the word "may" shall be construed as permissive and the word "shall" shall be construed as imperative; |
| (e) | the word "year" shall mean calendar year, the word "quarter" shall mean calendar quarter and the word "month" shall mean calendar month; |
| (f) | a reference to a "dollar" or "$" is a reference to the legal currency of the United States of America; |
| (g) | a reference to any enactment includes a reference to any modification or re-enactment thereof for the time being in force; |
| (h) | a reference to any meeting (whether of the Directors, a committee appointed by the Board of Directors or the Shareholders or any class of Shareholders) includes any adjournment of that meeting; |
| (i) | Sections 8 and 19 of the Electronic Transactions Act shall not apply; and |
| (j) | a reference to "written" or "in writing" includes a reference to all modes of representing or reproducing words in visible form, including in the form of an Electronic Record. |
| 2.3 | Subject to the two preceding Articles, any words defined in the Companies Act shall, if not inconsistent with the subject or context, bear the same meaning in these Articles. |
| 2.4 | The table of contents to, and the headings in, these Articles are for convenience of reference only and are to be ignored in construing these Articles. |
| 3 | Situation of Registered Office |
| 3.1 | The Registered Office shall be at such address in the Cayman Islands as the Directors shall from time to time determine. The Company, in addition to the Registered Office, may establish and maintain such other offices and places of business and agencies in such places as the Directors may from time to time determine. |
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| 4 | Shares |
| 4.1 | Subject to these Articles and, where applicable, the rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or otherwise under applicable Law, all Shares for the time being unissued shall be under the control of the Directors who may issue, allot and dispose of or grant options over the same and issue warrants or similar instruments with respect thereto to such persons, on such terms, and with or without preferred, deferred or other rights and restrictions, whether in regard to dividend, voting, return of capital or otherwise, and otherwise in such manner as they may think fit. For such purposes, the Directors may reserve an appropriate number of Shares for the time being unissued. |
| 4.2 | Subject to the Companies Act and, where applicable, the rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or otherwise under applicable Law, and without prejudice to any rights previously conferred on the holders of existing Shares, any share or fraction of a share in the Company's share capital may be issued either at a premium or at par, and with such preferred, deferred, other special rights, or restrictions, whether in regard to dividend, voting, return of share capital or otherwise, as the Board of Directors may from time to time by resolution determine, and any share may be issued by the Directors on the terms that it is, or at the option of the Directors is liable, to be redeemed or purchased by the Company whether out of capital in whole or in part or otherwise. No Share may be issued at a discount except in accordance with the Companies Act. |
| 4.3 | The Company may on any issue of Shares deduct any sales charge or subscription fee from the amount subscribed for the Shares. |
| 4.4 | No person shall be recognised by the Company as holding any Share upon any trust, and the Company shall not be bound by or recognise (even when having notice thereof) any equitable, contingent, future or partial interest in any Share, or (except as otherwise provided by these Articles or as required by law) any other right in respect of any Share except an absolute right thereto in the registered holder, provided that, notwithstanding the foregoing, the Company shall be entitled to recognise any such interests as shall be determined by the Directors. |
| 4.5 | The Directors shall keep or cause to be kept a Register of Members as required by the Companies Act at such place or places as the Directors may from time to time determine. In the absence of any such determination, the Register of Members shall be kept at the Registered Office. |
| 4.6 | The Directors in each year shall prepare or cause to be prepared an annual return and declaration setting forth the particulars required by the Companies Act in respect of exempted companies and deliver a copy thereof to the Registrar of Companies in the Cayman Islands. |
| 4.7 | The Company shall not issue Shares to bearer. |
| 4.8 | The Directors may issue fractions of a Share and, if so issued, a fraction of a Share shall be subject to and carry the corresponding fraction of liabilities (whether with respect to nominal or par value, premium, calls or otherwise howsoever), limitations, preferences, privileges, qualifications, restrictions, rights (including, without prejudice to the foregoing generality, voting and participation rights) and other attributes of a Share. If more than one fraction of a Share is issued to or acquired by the same Shareholder, such fractions shall be accumulated. |
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| 4.9 | The premium arising on all issues of Shares shall be held in the Share Premium Account established in accordance with these Articles. |
| 4.10 | Payment for Shares shall be made at such time and place and to such person on behalf of the Company as the Directors may from time to time determine. Payment for any Shares shall be made in such currency as the Directors may determine from time to time, provided that the Directors shall have the discretion to accept payment in any other currency or in kind or a combination of cash and in kind. |
| 5 | Redemption, Purchase and Surrender of Shares |
| 5.1 | Subject to the Companies Act and these Articles, the Company may: |
| (a) | issue Shares on terms that they are to be redeemed or are liable to be redeemed at the option of the Company and/or the Shareholder on such terms and in such manner as the Directors may, before the issue of such Shares, determine; |
| (b) | purchase its own Shares (including any redeemable Shares) on such terms and in such manner as the Directors may determine and agree with the Shareholder; and |
| (c) | make a payment in respect of the redemption or purchase of Shares in any manner authorised by the Companies Act, including out of its capital, profits or the proceeds of a fresh issue of Shares. |
| 5.2 | Unless the Directors determine otherwise, any Share in respect of which notice of redemption has been given shall not be entitled to participate in the profits of the Company in respect of the period after the date specified as the date of redemption in the notice of redemption. |
| 5.3 | The redemption or purchase of any Share shall not be deemed to give rise to the redemption or purchase of any other Share. |
| 5.4 | The Directors may when making payments in respect of a redemption or purchase of Shares, if authorised by the terms of issue of the Shares being redeemed or purchased or with the agreement of the holder of such Shares, make such payment either in cash or in specie. |
| 5.5 | Subject to the Companies Act, the Company may accept the surrender for no consideration of any fully paid Share (including any redeemable Share) on such terms and in such manner as the Directors may determine. |
| 6 | Treasury Shares |
| 6.1 | Shares that the Company purchases, redeems or acquires (by way of surrender or otherwise) may, at the option of the Company, be cancelled immediately or held as Treasury Shares in accordance with the Companies Act. In the event that the Directors do not specify that the relevant Shares are to be held as Treasury Shares, such Shares shall be cancelled. |
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| 6.2 | No dividend may be declared or paid, and no other distribution (whether in cash or otherwise) of the Company's assets (including any distribution of assets to Shareholders on a winding up) may be declared or paid in respect of a Treasury Share. |
| 6.3 | The Company shall be entered in the Register of Members as the holder of the Treasury Shares, provided that: |
| (a) | the Company shall not be treated as a Shareholder for any purpose and shall not exercise any right in respect of the Treasury Shares, and any purported exercise of such a right shall be void; and |
| (b) | a Treasury Share shall not be voted, directly or indirectly, at any meeting of the Company and shall not be counted in determining the total number of issued shares at any given time, whether for the purposes of these Articles or the Companies Act, save that an allotment of Shares as fully paid bonus shares in respect of Treasury Shares is permitted and Shares allotted as fully paid bonus shares in respect of Treasury Shares shall be treated as Treasury Shares. |
| 6.4 | Treasury Shares may be disposed of by the Company on any terms and conditions determined by the Directors. |
| 7 | Modification of Rights |
| 7.1 | Subject to these Articles, if at any time the share capital of the Company is divided into different classes of Shares, the rights attached to any class (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 or abrogated: |
| (a) | by, or with the approval of, the Directors without the consent of the holders of the Shares of that class if the Directors determine that the variation or abrogation is not materially adverse to the interests of those Shareholders; or |
| (b) | otherwise only with the consent in writing of the holders of at least two-thirds of the issued Shares of that class or with the sanction of a resolution passed by a majority of at least two-thirds of the votes cast at a separate meeting of the holders of the Shares of that class (subject to any rights or restrictions attached to those Shares). |
| 7.2 | The provisions of these Articles relating to general meetings shall apply, mutatis mutandis, to every class meeting of the holders of one class of Shares, except that the necessary quorum shall be one or more Shareholders holding or representing by proxy at least twenty (20) per cent in par value of the issued Shares of that class and that any holder of Shares of that class present in person or by proxy may demand a poll. |
| 7.3 | For the purposes of Articles 7.1 and 7.2, the Directors may treat all classes of Shares, or any two classes of Shares, as forming a single class if they consider that each class would be affected in the same way by the proposal or proposals under consideration. In any other case, the Directors shall treat all classes of Shares, or any two classes of Shares, as separate classes. |
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| 7.4 | The rights of the holders of the Shares of any class shall not, where those Shares were issued with preferred or other rights, be deemed to be materially adversely varied or abrogated by the creation or issue of further Shares ranking equally with those Shares or the redemption or purchase of Shares of any other class by the Company (subject to any rights or restrictions attached to those Shares). |
| 8 | Share Certificates |
| 8.1 | The Shares will be issued in fully registered, book-entry form. Certificates will not be issued unless the Directors determine otherwise. |
| 8.2 | If a share certificate is defaced, lost or destroyed it may be renewed on payment of such fee, if any, and on such terms if any, as to evidence and obligations to indemnify the Company as the Board of Directors may determine. |
| 9 | Transfer and Transmission of Shares |
| 9.1 | All instruments of transfer which are registered shall be retained by the Company, but any instrument of transfer which the Directors may decline to register shall (except in any case of fraud) be returned to the person depositing the same. |
| 9.2 | In case of the death of a Shareholder, the survivors or survivor (where the deceased was a joint holder) and the executors or administrators of the deceased where the deceased was the sole or only surviving holder, shall be the only persons recognised by the Company as having title to the deceased's interest in the Shares, but nothing in this Article shall release the estate of the deceased holder whether sole or joint from any liability in respect of any Share solely or jointly held by the deceased. |
| 9.3 | Any guardian of an infant Shareholder and any curator or other legal representative of a Shareholder under legal disability and any person entitled to a share in consequence of the death or bankruptcy of a Shareholder shall, upon producing such evidence of title as the Directors may require, have the right either to be registered as the holder of the Share or to make such transfer thereof as the deceased or bankrupt Shareholder could have made, but the Directors shall in either case have the same right to refuse or suspend registration as they would have had in the case of a transfer of the Shares by the infant or by the deceased or bankrupt Shareholder before the death or bankruptcy or by the Shareholder under legal disability before such disability. |
| 9.4 | A person so becoming entitled to a Share in consequence of the death or bankruptcy of a Shareholder shall have the right to receive and may give a discharge for all dividends and other money payable or other advantages due on or in respect of the Share, but such person shall not be entitled to receive notice of or to attend or vote at meetings of the Company, or save as aforesaid, to any of the rights or privileges of a Shareholder unless and until such person shall be registered as a Shareholder in respect of the Share, provided always that the Directors may at any time give notice requiring any such person to elect either to be registered or to transfer the Share and if the notice is not complied with within ninety (90) days the Directors may thereafter withhold all dividends or other monies payable or other advantages due in respect of the Share until the requirements of the notice have been complied with. |
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| 10 | Lien |
| 10.1 | The Company shall have a first and paramount lien on all Shares (whether fully paid-up or not) registered in the name of a Shareholder (whether solely or jointly with others) for all debts, liabilities or engagements to or with the Company (whether presently payable or not) by such Shareholder or the Shareholder's estate, either alone or jointly with any other person, whether a Shareholder or not, but the Directors may at any time declare any Share to be wholly or in part exempt from the provisions of this Article. The registration of a transfer of any such Share shall operate as a waiver of the Company's lien thereon. The Company's lien on a Share shall also extend to any amount payable in respect of that Share. |
| 10.2 | The Company may sell, in such manner as the Directors think fit, any Shares on which the Company has a lien, if a sum in respect of which the lien exists is presently payable, and is not paid within fourteen (14) clear days after notice has been given to the holder of the Shares, or to the person entitled to it in consequence of the death or bankruptcy of the holder, demanding payment and stating that if the notice is not complied with the Shares may be sold. |
| 10.3 | To give effect to any such sale the Directors may authorise any person to execute an instrument of transfer of the Shares sold to, or in accordance with the directions of, the purchaser. The purchaser or the purchaser's nominee shall be registered as the holder of the Shares comprised in any such transfer, and the purchaser shall not be bound to see to the application of the purchase money, nor shall the purchaser's title to the Shares be affected by any irregularity or invalidity in the sale or the exercise of the Company's power of sale under these Articles. |
| 10.4 | The net proceeds of such sale, after payment of costs, shall be applied in payment of such part of the amount in respect of which the lien exists as is presently payable and any residue shall (subject to a like lien for sums not presently payable as existed upon the Shares before the sale) be paid to the person entitled to the Shares at the date of the sale. |
| 11 | Alteration of Share Capital |
| 11.1 | Subject to these Articles, the Company may from time to time by Ordinary Resolution increase its share capital by such sum to be divided into Shares of such amounts as the resolution shall prescribe. |
| 11.2 | All new Shares shall be subject to the provisions of these Articles with reference to transfer, transmission and otherwise. |
| 11.3 | Subject to the Companies Act, the Company may by Special Resolution from time to time reduce its share capital in any way, and in particular, without prejudice to the generality of the foregoing power, may: |
| (a) | cancel any paid-up share capital which is lost, or which is not represented by available assets; or |
| (b) | pay off any paid-up share capital which is in excess of the requirements of the Company, |
and may, if and so far as is necessary, alter the Memorandum by reducing the amounts of its share capital and of its Shares accordingly.
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| 11.4 | Subject to these Articles, the Company may from time to time by Ordinary Resolution alter (without reducing) its share capital by: |
| (a) | consolidating and dividing all or any of its share capital into Shares of larger amount than its existing Shares; |
| (b) | sub-dividing its Shares, or any of them, into Shares of smaller amount than that fixed by the Memorandum so, however, that in the sub-division 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; or |
| (c) | cancelling any Shares which, at the date of the passing of the Ordinary Resolution, have not been taken, or agreed to be taken by any person, and diminishing the amount of its authorised share capital by the amount of the Shares so cancelled. |
| 12 | General Meetings |
| 12.1 | All general meetings other than annual general meetings shall be called extraordinary general meetings. The Company may, but shall not (unless required by the Statute) be obliged to, in each year hold a general meeting as its annual general meeting, and shall specify the meeting as such in the notices calling it. Any annual general meeting shall be held at such time and place as the Directors shall appoint. At these meetings the report of the Directors (if any) shall be presented. |
| 12.2 | Subject to these Articles, the Directors may proceed to convene a general meeting whenever they think fit, including, without limitation, for the purposes of considering a liquidation of the Company, and they shall convene a general meeting on the requisition of the Shareholders holding at the date of the deposit of the requisition not less than ten percent (10%) of such of the paid-up capital of the Company as at the date of the deposit carries the right of voting at general meetings. |
| 12.3 | The requisition: |
| (a) | must be in writing and state the objects of the meeting; |
| (b) | must be signed by each requisitionist and deposited at the Registered Office; and |
| (c) | may consist of several documents in like form each signed by one or more requisitionists. |
| 12.4 | If the Directors do not within ten (10) days from the date of the deposit of the requisition duly proceed to convene a general meeting, the requisitionists, or any of them representing more than one-half of the total voting rights of all of them, may themselves convene a general meeting, but any meeting so convened shall not be held after the expiration of three months after the expiration of the said ten (10) days. |
| 12.5 | A general meeting convened as aforesaid by requisitionists shall be convened in the same manner as nearly as possible as that in which general meetings are convened by the Directors. A general meeting may be convened in the Cayman Islands or at such other location, as the Directors think fit. |
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| 13 | Notice of General Meetings |
| 13.1 | Five (5) calendar days' notice at least specifying the place, the day and the hour of any general meeting and the general nature of the business to be conducted at the general meeting, shall be given in the manner hereinafter mentioned to such persons as are under these Articles or the conditions of issue of the Shares held by them entitled to receive notices from the Company. If the Directors determine that prompt Shareholder action is advisable, they may shorten the notice period for any general meeting to such period as the Directors consider reasonable. |
| 13.2 | A general meeting shall, notwithstanding that it is called by shorter notice than that specified in the preceding Article, be deemed to have been duly called with regard to the length of notice if it is so agreed by all the Shareholders entitled to attend and vote thereat. |
| 13.3 | In every notice calling a general meeting, there shall appear with reasonable prominence a statement that a Shareholder entitled to attend and vote either (i) is entitled to appoint one or more proxies to attend such meeting and vote instead of such Shareholder and that a proxy need not also be a Shareholder or (ii) has appointed a proxy who, unless such appointment is revoked, will attend such meeting and vote on behalf of such Shareholder. |
| 13.4 | The accidental omission to give notice to, or the non-receipt of notice by, any person entitled to receive notice shall not invalidate the proceedings at any general meeting. |
| 14 | Proceedings at General Meetings |
| 14.1 | No business shall be transacted at any general meeting unless a quorum is present. Save as otherwise provided in these Articles a quorum shall be the presence, in person or by proxy, of one or more persons holding at least twenty (20) per cent in par value of the issued Shares which confer the right to attend and vote thereat. |
| 14.2 | Save as otherwise provided for in these Articles, if within half an hour from the time appointed for the meeting a quorum is not present, the meeting, if convened on the requisition of or by Shareholders, shall be dissolved. In any other case it 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 and if at such adjourned meeting a quorum is not present within fifteen (15) minutes from the time appointed for holding the meeting, the Shareholders present shall be a quorum. |
| 14.3 | A person may, with the consent of the Directors, participate at a general meeting by means of telephone, video or similar communication equipment by way of which all persons participating in such meeting can hear each other and such participation shall be deemed to constitute presence in person at such meeting. |
| 14.4 | The Chairperson (if any) or, if absent, the Deputy Chairperson (if any) of the Board of Directors, or, failing them, some other Director nominated by the Directors shall preside as Chairperson at every general meeting, but if at any meeting neither the Chairperson nor the Deputy Chairperson nor such other Director be present within fifteen (15) minutes after the time appointed for holding the meeting, or if neither of them be willing to act as Chairperson, the Directors present shall choose some Director present to be Chairperson or if no Directors be present, or if all the Directors present decline to take the chair, the Shareholders present shall choose some Shareholder present to be Chairperson. |
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| 14.5 | The Chairperson 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 but no business shall be transacted at any adjourned meeting except business which might lawfully have been transacted at the meeting from which the adjournment took place. When a meeting is adjourned for fourteen (14) days or more, five (5) calendar days' notice at the least specifying the place, the day and the hour of the adjourned meeting shall be given as in the case of the original meeting but it shall not be necessary to specify in such notice the nature of the business to be transacted at the adjourned meeting. Save as aforesaid, it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned meeting. |
| 14.6 | The Directors may cancel or postpone any duly convened general meeting at any time prior to such meeting, except for general meetings requisitioned by the Shareholders in accordance with these Articles, for any reason or for no reason, upon notice in writing to Shareholders. A postponement may be for a stated period of any length or indefinitely as the Directors may determine. |
| 14.7 | At any general meeting, a resolution put to the vote of the meeting shall be decided on a show of hands unless a poll is, before or on the declaration of the result of the show of hands, demanded by the Chairperson or any Shareholder or Shareholders present in person or by proxy. |
| 14.8 | Unless a poll be so demanded, a declaration by the Chairperson that a resolution has on a show of hands been carried, or carried unanimously, or by a particular majority, or lost, and an entry to that effect made in the Company's minute book containing the minutes of the proceedings of the meeting, shall be conclusive evidence of the fact without proof of the number or the proportion of the votes recorded in favour of or against such resolution. |
| 14.9 | If a poll is duly demanded it shall be taken in such manner and at such place as the Chairperson may direct (including the use of a ballot or voting papers, or tickets) and the result of a poll shall be deemed to be the resolution of the meeting at which the poll was demanded. The Chairperson may, in the event of a poll, appoint scrutineers and may adjourn the meeting to some place and time fixed by the Chairperson for the purpose of declaring the result of the poll. |
| 14.10 | In the case of an equality of votes, whether on a show of hands or on a poll, the Chairperson of the meeting at which the show of hands or at which the poll is taken, shall not be entitled to a second or casting vote. |
| 14.11 | A poll demanded on the election of a Chairperson and a poll demanded on a question of adjournment shall be taken forthwith. A poll demanded on any other question shall be taken at such time and place as the Chairperson directs not being more than ten (10) days from the date of the meeting or adjourned meeting at which the poll was demanded. |
| 14.12 | 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 has been demanded. |
| 14.13 | A demand for a poll may be withdrawn and no notice need be given of a poll not taken immediately. |
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| 15 | Votes of Shareholders |
| 15.1 | Every holder of Shares, present in person or by proxy and entitled to vote thereon, shall be entitled to one vote in respect of each Share held by them. |
| 15.2 | In the case of joint holders of a Share, the vote of the senior holder who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the Register of Members in respect of the Shares. |
| 15.3 | A Shareholder who has appointed special or general attorneys or a Shareholder who is subject to a disability may vote on a poll, by such Shareholder's attorney, committee, receiver, curator bonis or other person in the nature of a committee, receiver, or curator bonis appointed by a court and such attorney, committee, receiver, curator bonis or other person may on a poll vote by proxy; provided that such evidence as the Directors may require of the authority of the person claiming to vote shall, unless otherwise waived by the Directors, have been deposited at the Registered Office not less than forty-eight (48) hours before the time for holding the meeting or adjourned meeting at which such person claims to vote. |
| 15.4 | No objection shall be raised to the qualification of any voter except at the meeting or adjourned meeting at which the vote objected to is given or tendered, and every vote not disallowed at such meeting shall be valid for all purposes. Any such objection made in due time shall be referred to the Chairperson of the meeting, whose decision shall be final and conclusive. |
| 15.5 | On a poll votes may be given either personally or by proxy and a Shareholder entitled to more than one vote need not, if the Shareholder votes, use all their votes or cast all the votes the Shareholder uses in the same way. |
| 15.6 | The instrument appointing a proxy shall be in writing under the hand of the appointor or of the appointor's attorney duly authorised in writing, or if the appointor is a corporation, either under its common seal or under the hand of an officer or attorney so authorised. |
| 15.7 | Any person (whether a Shareholder or not) may be appointed to act as a proxy. A Shareholder may appoint more than one proxy to attend on the same occasion. |
| 15.8 | The instrument appointing a proxy and the power of attorney or other authority (if any) under which it is signed, or a certified copy of such power or authority, must be deposited at the Registered Office, or at such other place as is specified for that purpose in the notice of meeting or in the instrument of proxy issued by the Company, no later than the time appointed for holding the meeting or adjourned meeting; provided that the Chairperson of the meeting may in the Chairperson's discretion accept an instrument of proxy sent by fax, email or other electronic means. |
| 15.9 | An instrument of proxy shall: |
| (a) | be in any common form or in such other form as the Directors may approve; |
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| (b) | be deemed to confer authority to demand or join in demanding a poll and to vote on any amendment of a resolution put to the general meeting for which it is given as the proxy thinks fit; and |
| (c) | subject to its terms, be valid for any adjournment of the general meeting for which it is given. |
| 15.10 | The Directors may at the expense of the Company send to the Shareholders instruments of proxy (with or without prepaid postage for their return) for use at any general meeting, either in blank or nominating in the alternative any one or more of the Directors or any other persons. 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 Shareholders entitled to be sent a notice of the meeting and to vote thereat by proxy. |
| 15.11 | A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the death or insanity of the principal or the revocation of the instrument of proxy, or of the authority under which the instrument of proxy was executed, provided that no intimation in writing of such death, insanity, revocation or transfer shall have been received by the Company at the Registered Office before commencement of the meeting or adjourned meeting at which the instrument of proxy is used. |
| 15.12 | Anything which under these Articles a Shareholder may do by proxy that Shareholder may also do by a duly appointed attorney. The provisions of these Articles relating to proxies and instruments appointing proxies apply, mutatis mutandis, to any such attorney and the instrument appointing that attorney. |
| 15.13 | Any Shareholder which is a corporation or partnership may, by a resolution of its directors or other governing body, authorise such person as it thinks fit to act as its representative at any meeting or meetings of the Company. The person so authorised shall be entitled to exercise the same powers on behalf of such corporation or partnership as the corporation or partnership could exercise if it were a Shareholder who was an individual and such corporation or partnership shall for the purposes of these Articles be deemed to be present in person at any such meeting if a person so authorised is present. |
| 16 | Written Resolutions of Shareholders |
A resolution in writing signed by all the Shareholders for the time being entitled to receive notice of, attend and vote at a general meeting shall be as valid and effective as a resolution passed at a general meeting duly convened and held and may consist of several documents in the like form each signed by one or more of the Shareholders.
| 17 | Directors |
| 17.1 | Unless otherwise determined by the Company by Ordinary Resolution and subject to these Articles, the minimum number of Directors shall be one and the maximum number of Directors shall be unlimited. |
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| 17.2 | The initial number of Directors shall be seven (7). |
| 17.3 | The board of directors of the Company shall consist of three classes, each holding three-year terms, with the term of the first class of Directors expiring at the first annual general meeting following the Effective Date, the term of the second class of Directors expiring at the second annual general meeting following the Effective Date and the term of the third class of Directors expiring at the third annual general meeting following the Effective Date, and the class into which a Director is to be appointed shall be set out in the resolutions appointing such Director. |
| 17.4 | The Company shall pay all reasonable and documented out-of-pocket costs and expenses (including travel and lodging) incurred by each Director nominated pursuant to these Articles in the course of, and in connection with, his or her service as a Director, including in connection with attending general and special meetings of the Board of Directors, any board of directors or board of managers of any of the Company's Subsidiaries or any of their respective committees. |
| 17.5 | A Director need not be a Shareholder but shall be entitled to receive notice of and attend all general meetings. |
| 17.6 | Subject to and as otherwise set out in the Articles, including Articles 17.1 and 17.3: |
| (a) | the Company may by Ordinary Resolution appoint any person to be a Director; and |
| (b) | a Director shall hold office until such time as they vacate their office pursuant to Article 17.12. |
| 17.7 | The Directors may appoint any 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 number fixed by or in accordance with the Articles as the maximum number of Directors. Furthermore, such person appointed to fill a vacancy on the Board of Directors shall (i) assume the same class as the Director that they are replacing and (ii) serve the same term as the Director would have served prior to their departure. |
| 17.8 | Each Director shall be entitled to such remuneration as approved by the Board of Directors and this may be in addition to such remuneration as may be payable under any other Article. Such remuneration shall be deemed to accrue from day to day. The Directors and the Secretary may also be paid all travelling, hotel and other expenses properly incurred by them in attending and returning from meetings of the Directors or any committee of the Directors or general meetings or in connection with the business of the Company. The Directors may, in addition to such remuneration as aforesaid, grant special remuneration to any Director who, being called upon, shall perform any special or extra services to or at the request of the Company. |
| 17.9 | Each Director shall have the power to nominate another Director to act as alternate Director in the Director's place at any meeting of the Directors at which the Director is unable to be present and at the Director's discretion to remove such alternate Director. On such appointment being made the alternate Director shall (except as regards the power to appoint an alternate Director) be subject in all respects to the terms and conditions existing with reference to the other Directors and each alternate Director, whilst acting in the place of an absent Director, shall exercise and discharge all the functions, powers and duties of the Director being represented. Any Director who is appointed as alternate Director shall be entitled at a meeting of the Directors to cast a vote on behalf of their appointor in addition to the vote to which such Director is entitled in their own capacity as a Director, and shall also be considered as two Directors for the purpose of making a quorum of Directors. Any person appointed as an alternate Director shall automatically vacate such office as an alternate Director if and when the Director by whom the alternate Director has been appointed vacates their office of Director. The remuneration of an alternate Director shall be payable out of the remuneration of the Director appointing such alternate Director and shall be agreed between them. |
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| 17.10 | Every instrument appointing an alternate Director shall be in such common form as the Directors may approve. |
| 17.11 | The appointment and removal of an alternate Director shall take effect when lodged at the Registered Office or delivered at a meeting of the Directors. |
| 17.12 | The office of a Director shall be vacated as set out in any of the following events: |
| (a) | if the Director resigns their office by notice in writing signed by such Director and left at the Registered Office; |
| (b) | if the Director becomes bankrupt or makes any arrangement or composition with such Director's creditors generally; |
| (c) | if the Director dies or is found to be or becomes of unsound mind; |
| (d) | if the Director ceases to be a Director by virtue of, or becomes prohibited from being a Director by reason of, an order made under any provisions of any law or enactment; or |
| (e) | if a majority of the other Directors (being not less than two in number) determine that the Director should be removed, either by a resolution passed by a majority of the other Directors at a meeting of the Directors duly convened and held in accordance with the Articles or by a resolution in writing signed by a majority of the other Directors. |
| 18 | Transactions with Directors |
| 18.1 | A Director may hold any other office or place of profit under the Company (other than the office of Auditor) in conjunction with their office of Director on such terms as to tenure of office and otherwise as the Directors may determine. |
| 18.2 | No Director or intending Director shall be disqualified by their office from contracting with the Company either as vendor, purchaser or otherwise, nor shall any such contract or any contract or arrangement entered into by or on behalf of the Company in which any Director is in any way interested be liable to be avoided, nor shall any 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 relationship thereby established, but the nature of the Director's interest must be declared by such Director at the meeting of the Directors at which the question of entering into the contract or arrangement is first taken into consideration, or if the Director was not at the date of that meeting interested in the proposed contract or arrangement, then at the next meeting of the Directors held after such Director becomes so interested, and in a case where the Director becomes interested in a contract or arrangement after it is made, then at the first meeting of the Directors held after such Director becomes so interested. |
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| 18.3 | In the absence of some other material interest than is indicated below, provided a Director who is in any way, whether directly or indirectly, interested in a contract or proposed contract with the Company declares (whether by specific or general notice) the nature of their interest at a meeting of the Directors that Director may vote in respect of any contract or proposed contract or arrangement notwithstanding that such Director may be interested therein and if such Director does so their vote shall be counted and such Director may be counted in the quorum at any meeting of the Directors at which any such contract or proposed contract or arrangement shall come before the meeting for consideration. |
| 18.4 | Where proposals are under consideration concerning the appointment (including fixing or varying the terms of appointment) of two or more Directors to offices or employments with the Company or any company in which the Company is interested, such proposals may be divided and considered in relation to each Director separately and in such cases each of the Directors concerned shall be entitled to vote (and be counted in the quorum) in respect of each resolution except that concerning the Director's own appointment. |
| 18.5 | Any Director may act independently or through the Director's firm in a professional capacity for the Company, and the Director or the firm shall be entitled to remuneration for professional services as if the Director were not a Director, provided that nothing herein contained shall authorise a Director or the Director's firm to act as Auditor to the Company. |
| 18.6 | Any Director may continue to be or become a director, managing director, manager or other officer or shareholder of any company promoted by the Company or in which the Company may be interested, and no such Director shall be accountable for any remuneration or other benefits received by the Director as a director, managing director, manager or other officer or shareholder of any such other company. The Directors may exercise the voting power conferred by the shares in any other company held or owned by the Company or exercisable by them as directors of such other company, in such manner in all respects as they think fit (including the exercise thereof in favour of any resolution appointing themselves or any of them directors, managing directors or other officers of such company, or voting or providing for the payment of remuneration to the directors, managing directors or other officers of such company). |
| 19 | Powers of Directors |
| 19.1 | The business of the Company shall be managed by the Directors, who may exercise all such powers of the Company as are not by the Companies Act or by these Articles required to be exercised by the Company in general meeting, subject nevertheless to any regulations of these Articles, to the Companies Act, and to such regulations being not inconsistent with the aforesaid regulations or provisions as may be prescribed by the Company in general meeting, but no regulations made by the Company in general meeting shall invalidate any prior act of the Directors which would have been valid if such regulations had not been made. The general powers given by this Article shall not be limited or restricted by any special authority or power given to the Directors by any other Article. |
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| 19.2 | The Directors may from time to time and at any time by power of attorney appoint any company, firm or person or any fluctuating body of persons, whether nominated directly or indirectly by the Directors, to be the attorney or attorneys of the Company for such purposes and with such powers authorities and discretions (not exceeding those vested in or exercisable by the Directors under these Articles) and for such period and subject to such conditions as they may think fit, and any such appointment may contain such provisions for the protection and convenience of persons dealing with any such attorneys as the Directors may think fit, and may also authorise any such attorney to sub-delegate all or any of the powers, authorities and discretions vested in such attorney. The Directors may also appoint any person to be the agent of the Company for such purposes and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the Directors under these Articles) and for such period and on such conditions as they determine, including authority for the agent to delegate all or any of their powers. |
| 19.3 | All cheques, promissory notes, drafts, bills of exchange and other negotiable or transferable instruments drawn by the Company, and all receipts for monies paid to the Company shall be signed, drawn, accepted, endorsed or otherwise executed, as the case may be, in such manner as the Directors shall from time to time by resolution determine. |
| 20 | Proceedings of Directors |
| 20.1 | The Directors may meet together for the dispatch of business, adjourn and otherwise regulate their meetings, as they think fit. Questions and matters arising at any meeting shall be determined by a majority of votes. In the case of an equality of votes, the Chairperson shall not have a second or casting vote. A Director may, and the Secretary on the requisition of a Director shall, at any time summon a meeting of the Directors. |
| 20.2 | A Director or Directors may participate in any meeting of the Board of Directors, or of any committee appointed by the Board of Directors of which such Director or Directors are members, by means of telephone, video or similar communication equipment by way of which all persons participating in such meeting can hear each other and such participation shall be deemed to constitute presence in person at the meeting. |
| 20.3 | The quorum necessary for the transaction of the business of the Directors may be fixed by the Directors and, if not so fixed, shall be a majority of Directors or, if the number of Directors is fixed at one, shall be one Director. |
| 20.4 | The continuing Directors or a sole continuing Director may act notwithstanding any vacancies in their number, but if and so long as the number of Directors is reduced below the minimum number fixed by or in accordance with these Articles the continuing Directors or Director may act for the purpose of filling up vacancies in their number, or of summoning general meetings, but not for any other purpose. If there be no Directors or Director able or willing to act, then any two Shareholders may summon a general meeting for the purpose of appointing Directors. |
| 20.5 | The Directors may from time to time elect and remove a Chairperson and, if they think fit, a Deputy Chairperson and determine the period for which they respectively are to hold office. The Chairperson or, failing them, the Deputy Chairperson shall preside at all meetings of the Directors, but if there be no Chairperson or Deputy Chairperson, or if at any meeting the Chairperson or Deputy Chairperson be not present within five (5) minutes after the time appointed for holding the same, the Directors present may choose one of their number to be Chairperson of the meeting. |
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| 20.6 | A meeting of the Directors for the time being at which a quorum is present shall be competent to exercise all powers and discretions for the time being exercisable by the Directors. |
| 20.7 | Without prejudice to the powers conferred by these Articles, the Directors may delegate any of their powers to committees consisting of such member or members of their body as they think fit. Any committee so formed shall, in the exercise of the powers so delegated, conform to any regulations that may be imposed on them by the Directors. The Directors may, by power of attorney or otherwise, appoint any person to be an agent of the Company on such condition as the Directors may determine, provided that the delegation is not to the exclusion of their own powers. |
| 20.8 | The meetings and proceedings of any such committee consisting of two or more Directors 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 made by the Directors under the preceding Article. |
| 20.9 | The Directors may appoint such officers as they consider necessary on such terms, at such remuneration and to perform such duties, and subject to such provisions as to disqualification and removal as the Directors may think fit. Unless otherwise specified in the terms of the officer's appointment an officer may be removed by resolution of the Directors or Shareholders. |
| 20.10 | All acts done by any meeting of Directors, or of a committee of Directors or by any person acting as a Director, shall, notwithstanding it be afterwards discovered that there was some defect in the appointment of any such Director or person acting as aforesaid, or that they or any of them were disqualified, or had vacated office, or were not entitled to vote, be as valid as if every such person had been duly appointed, and was qualified and had continued to be a Director and had been entitled to vote. |
| 20.11 | The Directors shall cause minutes to be made of: |
| (a) | all appointments of officers made by the Directors; |
| (b) | the names of the Directors present at each meeting of the Directors and of any committee of Directors; and |
| (c) | all resolutions and proceedings of all meetings of the Company and of the Directors and of any committee of Directors. |
Any such minutes, if purporting to be signed by the Chairperson of the meeting at which the proceedings took place, or by the Chairperson of the next succeeding meeting, shall, until the contrary be proved, be conclusive evidence of the proceedings.
| 21 | Written Resolutions of Directors |
A resolution in writing signed by all the Directors for the time being entitled to attend and vote at a meeting of the Directors (an alternate Director being entitled to sign such a resolution on behalf of their appointor) shall be as valid and effective as a resolution passed at a meeting of the Directors duly convened and held and may consist of several documents in the like form each signed by one or more of the Directors (or their alternates).
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| 22 | Presumption of Assent |
A Director who is present at a meeting of the Board of Directors at which action on any Company matter is taken shall be presumed to have assented to the action taken unless the Director's dissent shall be entered in the minutes of the meeting or unless the Director shall file their written dissent from such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to such person immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favour of such action.
| 23 | Borrowing Powers |
The Directors may exercise all the powers of the Company to borrow money and hypothecate, mortgage, charge or pledge its undertaking, property, and assets or any part thereof, and to issue debentures, debenture stock or other securities, whether outright or as collateral security for any debt liability or obligation of the Company or of any third party.
| 24 | Secretary |
| 24.1 | The Directors may appoint any person to be a Secretary who shall hold office for such term, at such remuneration and upon such conditions and with such powers as they think fit. Any Secretary so appointed by the Directors may be removed by the Directors or by the Company by Ordinary Resolution. Anything required or authorised to be done by or to the Secretary may, if the office is vacant or there is for any other reason no Secretary capable of acting, be done by or to any assistant or deputy Secretary or if there is no assistant or deputy Secretary capable of acting, by or to any officer of the Company authorised generally or specially in that behalf by the Directors, provided that any provisions of these Articles requiring or authorising a thing to be done by or to a Director and the Secretary shall not be satisfied by its being done by or to the same person acting both as Director and as, or in the place of, the Secretary. |
| 24.2 | No person shall be appointed or hold office as Secretary who is: |
| (a) | the sole Director; |
| (b) | a corporation the sole director of which is the sole Director; or |
| (c) | the sole director of a corporation which is the sole Director. |
| 25 | The Seal |
The Directors shall provide for the safe custody of the Seal and the Seal shall never be used except by the authority of a resolution of the Directors or of a committee of the Directors authorised by the Directors in that behalf. The Directors may keep for use outside the Cayman Islands a duplicate Seal. The Directors may from time to time as they see fit (subject to the provisions of these Articles relating to share certificates) determine the persons and the number of such persons in whose presence the Seal or the facsimile thereof shall be used, and until otherwise so determined the Seal or the duplicate thereof shall be affixed in the presence of any one Director or the Secretary, or of some other person duly authorised by the Directors.
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| 26 | Dividends, Distributions and Reserves |
| 26.1 | Subject to the Companies Act, these Articles, and the special rights attaching to Shares of any class, the Directors may, in their absolute discretion, declare dividends and distributions on Shares in issue and authorise payment of the dividends or distributions out of the funds of the Company lawfully available therefor. No dividend or distribution shall be paid except out of the realised or unrealised profits of the Company, or out of the Share Premium Account, or as otherwise permitted by the Companies Act. |
| 26.2 | Except as otherwise provided by the rights attached to Shares, or as otherwise determined by the Directors, all dividends and distributions in respect of Shares shall be declared and paid according to the par value of the Shares that a Shareholder holds. If any Share is issued on terms providing that it shall rank for dividend or distribution as from a particular date, that Share shall rank for dividend or distribution accordingly. |
| 26.3 | The Directors may deduct and withhold from any dividend or distribution otherwise payable to any Shareholder all sums of money (if any) then payable by the Shareholder to the Company on account of calls or otherwise or any monies which the Company is obliged by law to pay to any taxing or other authority. |
| 26.4 | The Directors may declare that any dividend or distribution be paid wholly or partly by the distribution of specific assets and in particular of shares, debentures or securities of any other company or in any one or more of such ways and, where any difficulty arises in regard to such distribution, the Directors may settle the same as they think expedient and in particular may issue fractional Shares and fix the value for distribution of such specific assets or any part thereof and may determine that cash payments shall be made to any Shareholder upon the basis of the value so fixed in order to adjust the rights of all Shareholders and may vest any such specific assets in trustees as may seem expedient to the Directors. |
| 26.5 | Any dividend, distribution, interest or other monies payable in cash in respect of Shares may be paid by wire transfer to the holder or by cheque or warrant sent through the post directed to the registered address of the holder or, in the case of joint holders, to the registered address of the holder who is first named on the Register of Members or to such person and to such address as such holder or joint holders may in writing direct. Every such cheque or warrant shall (unless the Directors in their sole discretion otherwise determine) be made payable to the order of the person to whom it is sent. Any one of two or more joint holders may give effectual receipts for any dividends, bonuses, or other monies payable in respect of the Share held by them as joint holders. |
| 26.6 | Any dividend or distribution which cannot be paid to a Shareholder and/or which remains unclaimed after six (6) months from the date of declaration of such dividend or distribution may, in the discretion of the Directors, be paid into a separate account in the Company's name, provided that the Company shall not be constituted as a trustee in respect of that account and the dividend or distribution shall remain as a debt due to the Shareholder. Any dividend or distribution which remains unclaimed after a period of six years from the date of declaration of such dividend or distribution shall be forfeited and shall revert to the Company. |
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| 26.7 | No dividend or distribution shall bear interest against the Company. |
| 27 | Share Premium Account |
The Directors shall establish an account on the books and records of the Company to be called the Share Premium Account and shall carry to the credit of such account from time to time a sum equal to the amount or value of the premium paid on the issue of any Share.
| 28 | Accounts |
| 28.1 | The Directors shall cause proper books of account to be kept with respect to all sums of money received and expended by the Company and the matters in respect of which the receipt or expenditure takes place, all sales and purchases of goods by the Company and the assets and liabilities of the Company. Proper books shall not be deemed to be kept if there are not kept such books of account as are necessary to give a true and fair view of the state of the Company's affairs and to explain its transactions. |
| 28.2 | The books of account shall be kept at the Registered Office or at such other place as the Directors think fit, and shall always be open to inspection by the Directors. |
| 28.3 | The Board of Directors shall from time to time determine whether and to what extent and at what time and places and under what conditions or articles the accounts and books of the Company or any of them shall be open to the inspection of Shareholders not being Directors, and no Shareholder (not being a Director) shall have any right of inspection of any account or book or document of the Company except as conferred by law or authorised by the Board of Directors or by resolution of the Shareholders. |
| 29 | Audit |
The accounts relating to the Company's affairs shall be audited in such manner as may be determined from time to time by resolution of the Shareholders or failing any such determination, by the Board of Directors, or failing any determination as aforesaid, shall not be audited.
| 30 | Notices |
| 30.1 | Any notice or document may be served by the Company on any Shareholder: |
| (a) | personally; |
| (b) | by registered post or courier to that Shareholder's address as appearing in the Register of Members; or |
| (c) | by cable, telex, facsimile, e-mail or any other electronic means should the Directors deem it appropriate. |
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| 30.2 | In the case of joint holders of a Share, all notices shall be given to that one of the joint holders whose name stands first in the Register of Members in respect of the joint holding, and notice so given shall be sufficient notice to all the joint holders. |
| 30.3 | Any Shareholder present, either personally or by proxy, at any meeting of the Company shall for all purposes be deemed to have received due notice of such meeting and, where requisite, of the purposes for which such meeting was convened. |
| 30.4 | Any summons, notice, order or other document required to be sent to or served upon the Company, or upon any officer of the Company may be sent or served by leaving the same or sending it through the post in a prepaid letter envelope or wrapper, addressed to the Company or to such officer at the Registered Office. |
| 30.5 | Where a notice or other document is sent by registered post, service of that notice or other document shall be deemed to be effected by properly addressing, pre-paying and posting an envelope containing it, and that notice or other document shall be deemed to have been received on the third day (not including Saturdays or Sundays or public holidays) following the day on which it was posted. Where a notice or other document is sent by courier, service of that notice or other document shall be deemed to be effected by delivery of the notice or other document to a courier company, and that notice or other document shall be deemed to have been received on the fifth day (not including Saturdays or Sundays or public holidays in the Cayman Islands) following the day on which it was delivered to the courier company. Where a notice or other document is sent by cable, telex or facsimile, service of that notice or other document shall be deemed to be effected by properly addressing and sending it, and that notice or other document shall be deemed to have been received on the same day that it was transmitted. Where a notice or other document is sent by email, service of that notice or other document shall be deemed to be effected by transmitting the email to the email address provided by the intended recipient and that notice or other document shall be deemed to have been received on the same day that it was sent, and it shall not be necessary for the receipt of the email to be acknowledged by the recipient. |
| 30.6 | Any notice or document delivered or sent by post to or left at the registered address of any Shareholder in pursuance of these Articles shall notwithstanding that such Shareholder be then dead, insane, bankrupt or dissolved, and whether or not the Company has notice of such death, insanity, bankruptcy or dissolution, be deemed to have been duly served in respect of any Share registered in the name of such Shareholder as sole or joint holder, unless the Shareholder's name shall at the time of the service of the notice or document, have been removed from the Register of Members as the holder of the Share, and such service shall for all purposes be deemed a sufficient service of such notice or document on all persons interested (whether jointly with or as claiming through or under such Shareholder) in the Share. |
| 31 | Winding Up and Final Distribution of Assets |
| 31.1 | The Directors may present a winding up petition on behalf of the Company without the sanction of a resolution of the Shareholders passed at a general meeting. |
| 31.2 | If the Company shall be wound up the liquidator shall apply the assets of the Company in satisfaction of creditors' claims in such manner and order as such liquidator thinks fit. |
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| 31.3 | If the Company shall be wound up, and the assets available for distribution amongst the Shareholders shall be insufficient to repay the whole of the share capital, such assets shall be distributed so that, as nearly as may be, the losses shall be borne by the Shareholders in proportion to the par value of the Shares held by them. If in a winding up the assets available for distribution amongst the Shareholders shall be more than sufficient to repay the whole of the share capital at the commencement of the winding up, the surplus shall be distributed amongst the Shareholders in proportion to the par value of the Shares held by them at the commencement of the winding up subject to a deduction from those Shares in respect of which there are monies due of all monies payable to the Company for unpaid calls or otherwise. This Article is without prejudice to the rights of the holders of Shares issued upon special terms and conditions. |
| 31.4 | If the Company shall be wound up (whether the liquidation is voluntary, under supervision or by the Court) the liquidator may, with the authority of a Special Resolution, divide among the Shareholders in specie the whole or any part of the assets of the Company, and whether or not the assets shall consist of property of a single kind, and may for such purposes set such value as the liquidator deems fair upon any one or more class or classes of property, and may determine how such division shall be carried out as between the Shareholders. The liquidator may, with the like authority, vest any part of the assets in trustees upon such trusts for the benefit of Shareholders as the liquidator, with the like authority, shall think fit, and the liquidation of the Company may be closed and the Company dissolved, but so that no Shareholder shall be compelled to accept any Shares in respect of which there is liability. |
| 32 | Indemnity |
| 32.1 | Every Director or officer of the Company shall be indemnified out of the assets of the Company against any liability incurred by that Director or officer as a result of any act or failure to act in carrying out their functions other than such liability (if any) that the Director or officer may incur by their own actual fraud or wilful default. No such Director or officer shall be liable to the Company for any loss or damage in carrying out their functions unless that liability arises through the actual fraud or wilful default of such Director or officer. References in this Article to actual fraud or wilful default mean a finding to such effect by a competent court in relation to the conduct of the relevant party. |
| 32.2 | The Company shall (a) purchase directors' and officers' liability insurance from time to time in an amount determined by the Board of Directors to be reasonable and customary and (b) for so long as a Director nominated pursuant to these Articles serves as a Director of the Company, maintain such coverage with respect to such Director and shall use commercially reasonable efforts to extend such coverage for a period of not less than six (6) years from any removal or resignation of such Director, in respect of any act or omission occurring at or prior to such event. |
| 33 | Lock-up |
| 33.1 | The following terms shall have the meanings as defined below for all purposes of this Article 33. |
| (a) | “affiliate” shall have the meaning set forth in Rule 405 under the U.S. Securities Act of 1933, as amended. |
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| (b) | “Business Combination” means the transactions contemplated by the Business Combination Agreement. |
| (c) | “Business Combination Agreement” means the Business Combination Agreement, dated as of 14 September 2022, by and among the Company, Lavoro Merger Sub I Limited, a Cayman Islands exempted company and a wholly owned subsidiary of the Company, Lavoro Merger Sub II Limited, a Cayman Islands exempted company and a wholly owned subsidiary of the Company, Lavoro Merger Sub III Limited, a Cayman Islands exempted company and a wholly owned subsidiary of the Company, Lavoro Agro Limited, a Cayman Islands exempted company, and TPB Acquisition Corporation I, a Cayman Islands exempted company. |
| (d) | “Company Share Plan” shall mean the Lavoro Agro Holding S.A. Long-Term Incentive Policy (Política de Incentivo de Longo Prazo da Lavoro Agro Holding S.A.). |
| (e) | "Equity Holder" shall have the meaning given in Article 33.3. |
| (f) | "Lock-up" shall have the meaning given in Article 33.2. |
| (g) | “Lock-up Period” means the period beginning on the date of the closing (the “Closing”) of the Business Combination (the “Closing Date”) and ending on (i) for 25% of the Lock-up Shares held by each Lock-up Shareholder and its respective Lock-Up Permitted Transferees, the date that is one hundred and eighty (180) days following the Closing Date, (ii) for an additional 25% of the Lock-up Shares (i.e., totalling an aggregate of 50% of the Lock-up Shares) held by Lock-up Shareholder and its respective Lock-Up Permitted Transferees, the date that is one (1) year following the Closing Date, (iii) for an additional 25% of the Lock-up Shares (i.e., totalling an aggregate of 75% of the Lock-up Shares) held by Lock-up Shareholder and its respective Lock-Up Permitted Transferees, the date that is eighteen (18) months following the Closing Date, and (iv) for an additional 25% of the Lock-up Shares (i.e., totalling an aggregate of 100% of the Lock-up Shares) held by Lock-up Shareholder and its respective Lock-Up Permitted Transferees, the date that is two (2) years following the Closing Date. |
| (h) | "Lock-up Permitted Transferee" shall have the meaning given in Article 33.3. |
| (i) | “Lock-up Shareholders” shall mean any shareholders that hold Lock-up Shares. |
| (j) | “Lock-up Shares” shall mean: (i) with respect to the shareholders who are shareholders of Lavoro Agro Limited (“Lavoro”) immediately prior to the Closing Date and their respective Lock-up Permitted Transferees, all Shares received by such shareholders immediately prior to the Closing Date and any Shares issuable upon conversion or exercise of warrants, options or any other instrument received by such shareholders in connection with the Third Merger (as defined in the Business Combination Agreement) in respect of Equity Interests (as defined in the Business Combination Agreement) of Lavoro held by such shareholders as of immediately prior to the Closing Date (excluding any PIPE Shares); (ii) with respect to persons who receive Shares pursuant to the Company Share Plan, any Shares received by any such person during the Lock-up Period. |
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| (k) | “PIPE Shares” shall mean any Shares purchased in a PIPE Investment (as defined in the Business Combination Agreement). |
| (l) | “Transfer” shall mean, directly or indirectly, the (x) sale or assignment of, offer to sell, contract or agreement to sell, hypothecate, pledge, grant of any option to purchase or otherwise dispose of or agreement to dispose of or establishment or increase of a put equivalent position or liquidation with respect to or decrease of a call equivalent position within the meaning of Section 16 of the Exchange Act with respect to, any security, (y) entry into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of, or any other derivative transaction with respect to, any security, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise, or (z) public announcement of any intention to effect any transaction specified in clause (x) or (y). |
| 33.2 | Subject to Article 33.3, all Lock-up Shareholders agree that they shall not Transfer any Lock-up Shares or any instruments exercisable or exchangeable for, or convertible into, such Lock-up Shares until the end of the Lock-up Period (the “Lock-up”). For the further avoidance of doubt, securities acquired by a shareholder in open market transactions subsequent to the Closing shall not be subject to the Lock-up. |
| 33.3 | Notwithstanding the provisions set forth in Article 33.2, each Lock-up Shareholder and its Permitted Transferees (each an "Equity Holder" and together, the "Equity Holders") may Transfer the Lock-up Shares during the Lock-up Period: (i) if such Equity Holder is not an individual or a trust, to any of its officers or directors, affiliates and its employees or any family member of any of its officers or directors, any affiliate or family member of any of its officers or directors, or to any of such Equity Holder’s members, investors, partners or equityholders or any of their affiliates, or any related investment funds or vehicles controlled or managed by such Persons or their respective affiliates; (ii) if such Equity Holder is an individual or a trust, (A) by virtue of laws of descent and distribution upon death of the individual, (B) pursuant to a qualified domestic relations order, (C) to any member of such Equity Holder’s immediate family or any trust for the direct or indirect benefit of such Equity Holder or the immediate family of such Equity Holder, an affiliate of such individual or to a charitable organization or (D) by private sales or Transfers made in connection with any forward purchase agreement or similar arrangement; (iii) in either event, in connection with a pledge of Shares, or any other securities convertible into or exercisable or exchangeable for Shares, to a financial institution, including the enforcement of any such pledge by a financial institution; and (iv) with the written consent of the Board (collectively, the “Lock-up Permitted Transferees”); provided, however, that in the case of clauses (i) through (iii) such Lock-up Permitted Transferee must execute an agreement to be bound in writing by the restrictions set forth in this Article 33. |
| 34 | Disclosure |
Any Director, officer or authorised agent of the Company shall, if lawfully required to do so under the laws of any jurisdiction to which the Company is subject or in compliance with the rules of any stock exchange upon which the Company's shares are listed or in accordance with any contract entered into by the Company, be entitled to release or disclose any information in their possession regarding the affairs of the Company including, without limitation, any information contained in the Register of Members.
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| 35 | Closing Register of Members or Fixing Record Date |
| 35.1 | The Directors may fix in advance a date as the record date for any determination of Shareholders entitled to notice of or to vote at a meeting of the Shareholders and for the purpose of determining the Shareholders entitled to receive payment of any dividend the Directors may either before or on the date of declaration of such dividend fix a date as the record date for such determination. |
| 35.2 | If no record date is fixed for the determination of Shareholders entitled to notice of or to vote at a meeting of Shareholders or Shareholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of Shareholders. When a determination of Shareholders entitled to vote at any meeting has been made in the manner provided in the preceding Article, such determination shall apply to any adjournment thereof. |
| 36 | Registration by Way of Continuation |
The Company may by Special Resolution resolve to be registered by way of continuation in a jurisdiction outside the Cayman Islands or such other jurisdiction in which it is for the time being incorporated, registered or existing. The Directors may cause an application to be made to the Registrar of Companies to deregister the Company in the Cayman Islands or such other jurisdiction in which it is for the time being incorporated, registered or existing and may cause all such further steps as they consider appropriate to be taken to effect the transfer by way of continuation of the Company.
| 37 | Financial Year |
The Directors shall determine the financial year of the Company and may change the same from time to time. Unless they determine otherwise, the financial year shall end on 31 December in each year.
| 38 | Amendments to Memorandum and Articles of Association |
The Company may from time to time alter or add to these Articles or alter or add to the Memorandum with respect to any objects, powers or other matters specified therein by passing a Special Resolution in the manner prescribed by the Companies Act.
| 39 | Cayman Islands Data Protection |
| 39.1 | The Company is a "data controller" for the purposes of the Data Protection Act, 2017 ((As Revised), the DPA). By virtue of subscribing for and holding Shares in the Company, Shareholders provide the Company with certain information (Personal Data) that constitutes "personal data" under the DPA. Personal Data includes, without limitation, the following information relating to a Shareholder and/or any natural person(s) connected with a Shareholder (such as a Shareholder's individual directors, members and/or beneficial owner(s)): name, residential address, email address, corporate contact information, other contact information, date of birth, place of birth, passport or other national identifier details, national insurance or social security number, tax identification, bank account details and information regarding assets, income, employment and source of funds. |
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| 39.2 | The Company processes such Personal Data for the purposes of: |
| (a) | performing contractual rights and obligations (including under the Memorandum and these Articles); |
| (b) | complying with legal or regulatory obligations (including those relating to anti-money laundering and counter-terrorist financing, preventing and detecting fraud, sanctions, automatic exchange of tax information, requests from governmental, regulatory, tax and law enforcement authorities, beneficial ownership and the maintenance of statutory registers); and |
| (c) | the legitimate interests pursued by the Company or third parties to whom Personal Data may be transferred, including to manage and administer the Company, to send updates, information and notices to Shareholders or otherwise correspond with Shareholders regarding the Company, to seek professional advice (including legal advice), to meet accounting, tax reporting and audit obligations, to manage risk and operations and to maintain internal records. |
| 39.3 | The Company transfers Personal Data to certain third parties who process the Personal Data on the Company's behalf, including third party service providers that it appoints or engages to assist with its management, operation, administration and legal, governance and regulatory compliance. In certain circumstances, the Company may be required by law or regulation to transfer Personal Data and other information with respect to one or more Shareholders to a governmental, regulatory, tax or law enforcement authority. That authority may, in turn, exchange this information with another governmental, regulatory, tax or law enforcement authority established in or outside the Cayman Islands. |
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Exhibit 4.7
February 28, 2023
TPB Acquisition Corporation I
1 Letterman Drive, Suite A3-1
San Francisco, CA 94129
Lavoro Limited
Av. Dr. Cardoso de Melo, 1450, 5th floor, office 501
São Paulo—SP, 04548-005, Brazil
Lavoro Agro Limited
Av. Dr. Cardoso de Melo, 1450, 5th floor, office 501
São Paulo—SP, 04548-005, Brazil
| Re: | Amendment No. 2 to Sponsor Letter Agreement (the “Letter Agreement”), dated August 13, 2021, as amended on September 14, 2022, among TPB Acquisition Corporation I, TPB Acquisition Sponsor I, LLC and the Company’s officers and directors |
Ladies and Gentlemen:
This Amendment No. 2 to the Letter Agreement (this “Amendment No. 2”) is being delivered, in connection with the closing of the transactions contemplated by that certain Business Combination Agreement, dated as September 15, 2022, by and among Lavoro Limited, an exempted company incorporated with limited liability in the Cayman Islands (“New PubCo”), Lavoro Merger Sub I Limited, an exempted company incorporated with limited liability in the Cayman Islands and a direct, wholly owned subsidiary of New PubCo (“First Merger Sub”), Lavoro Merger Sub II Limited, an exempted company incorporated with limited liability in the Cayman Islands and a direct, wholly owned subsidiary of New PubCo (“Second Merger Sub”), Lavoro Merger Sub III Limited, an exempted company incorporated with limited liability in the Cayman Islands and a direct, wholly owned subsidiary of New PubCo (“Third Merger Sub” and, together with First Merger Sub and Second Merger Sub, the “Merger Subs”), Lavoro Agro Limited, an exempted company incorporated with limited liability in the Cayman Islands (“Lavoro”), and TPB Acquisition Corporation I, an exempted company incorporated with limited liability in the Cayman Islands (the “Company”) (as it may be amended, restated or otherwise modified from time to time in accordance with its terms, the “Business Combination Agreement”). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Letter Agreement.
Now 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:
| 1. | Section 5 of the Letter Agreement, as amended, is hereby deleted and replaced in its entirety with the following: |
| (a) | Vesting Founder Shares. Subject to, and conditioned upon the Third Effective Time (as defined in the Business Combination Agreement), Sponsor agrees that two-thirds (3,006,049) of the Founder Shares shall be deemed to be “Vesting Founder Shares,” subject to the vesting schedule detailed in Sections 5(a)(i)-(ii) below, and the remaining one-third (1,503,025) of the Founder Shares, shall be fully vested at the Third Effective Time (as defined in the Business Combination Agreement) and shall be deemed to be “Retained Founder Shares,” provided however that the vesting of both the Vesting Founder Shares and the Retained Founder Shares shall be subject to the Ownership Limitation (as defined below). Subject to, and conditioned upon the occurrence of and effective immediately after the Third Effective Time, the Vesting Founder Shares shall be unvested and subject to the restrictions set forth in this Sponsor Letter Agreement. The Vesting Founder Shares shall vest and, except as otherwise provided in this Section 5, shall become free of the provisions set forth in this Section 5 as follows: |
| (i) | with respect to one-half of the Vesting Founder Shares (i.e., 1,503,025 Founder Shares) (the “12.50 Vesting Founder Shares”), if at any time during the 3-year period following the Closing Date (the end of such period, the “Vesting Release Date”), the closing share price of the New PubCo Ordinary Shares is greater than or equal to $12.50 over any 20 trading days within any consecutive 30 trading day period, then the 12.50 Vesting Founder Shares shall vest, subject to the Ownership Limitation, and become free of the provisions set forth in this Section 5(a). |
| (ii) | with respect to one-half of the Vesting Founder Shares (i.e., 1,503,024 Founder Shares) (the “15.00 Vesting Founder Shares”), if at any time prior to the Vesting Release Date, the closing share price of the New PubCo Ordinary Shares is greater than or equal to $15.00 over any 20 trading days within any consecutive 30 trading day period, then the 15.00 Vesting Founder Shares shall vest, subject to the Ownership Limitation, and become free of the provisions set forth in this Section 5(a). |
| (iii) | If the Vesting Release Date occurs on a day that is not a trading day, then the “Vesting Release Date” shall for all purposes of this Sponsor Letter Agreement be deemed to occur on the next following Trading Day. Any Vesting Founder Shares that have not vested in accordance with Sections 5(a)(i)-(ii) on or before the Vesting Release Date will be immediately forfeited at 11:59 p.m., New York, New York time on the Vesting Release Date. Notwithstanding the foregoing, any Vesting Founder Shares that would have vested in accordance with Sections 5(a)(i)-(ii) but for the Ownership Limitation, shall not be subject to forfeiture on the Vesting Release Date. |
| (iv) | The New PubCo Ordinary Share price targets in Sections 5(a)(i)-(ii) shall be equitably adjusted for stock splits, stock dividends, cash dividends, reorganizations, combinations, recapitalizations and similar transactions affecting the New PubCo Ordinary Shares after the Third Effective Time. |
| (v) | If, prior to the Vesting Release Date, there is a Liquidation Event (as defined below), then the Vesting Founder Shares shall vest and become free of the provisions set forth in this Section 5 effective as of immediately prior to the consummation of such Liquidation Event, or otherwise treated as so issued in connection therewith, so as to ensure that the Sponsor shall receive such Vesting Founder Shares, and all proceeds thereof, in connection with such Liquidation Event. |
| (vi) | At any time prior to the Vesting Release Date, the Sponsor agrees that it shall not Transfer any Vesting Founder Shares except as otherwise permitted pursuant to Section 5(c) below, and the Vesting Founder Shares shall include customary transfer legends on any certificates for the Vesting Founder Shares reflecting such restriction. At the time that any Vesting Founder Shares become vested pursuant to this Section 5(a), New PubCo shall remove any legends, stock transfer restrictions, stop transfer orders or similar restrictions with respect to the Vesting Founder Shares related to such vesting (other than, for the avoidance of doubt, those that relate to any applicable and then-existing transfer restrictions applicable during the Lock-Up Period with respect to such Vesting Founder Shares pursuant this Sponsor Letter Agreement, the Business Combination Agreement or any other Transaction Agreements). |
| (vii) | The Sponsor shall not, and hereby waives any right to, vote (whether at any meeting of the holders of New PubCo Ordinary Shares, by written resolution or otherwise) the Vesting Founder Shares owned by it during any period of time that such Vesting Founder Shares are subject to vesting pursuant to the terms of this Section 5. |
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| (viii) | Any dividends or other distributions paid with respect to the Vesting Founder Shares during any period of time that such Vesting Founding Shares are subject to vesting pursuant to the terms of this Section 5 shall be deposited by New PubCo for the benefit of the Sponsor in a separate account held and maintained solely for the benefit of Sponsor (the “Escrow Account”), subject to the terms and conditions of that certain Escrow Agreement to be entered into by and between the parties hereto in form and substance attached as Exhibit A (the “Escrow Agreement”). The parties agree that for U.S. federal, state and local tax purposes, Sponsor is the owner of the Vesting Founder Shares and the Escrow Account, and in furtherance of the foregoing, Sponsor will be treated as the recipient of (A) any dividends or other distributions paid with respect to the Vesting Founder Shares (“Dividends”) and (B) any interest or other income or gains earned with respect to amounts held in the Escrow Account (“Escrow Income”), whether or not ultimately distributed from the Escrow Account to Sponsor. Upon the vesting of any Vesting Founder Shares pursuant to this Section 5, New PubCo shall instruct the escrow agent to release any amounts held in the Escrow Account (including Dividends and Escrow Income) in respect of such Vesting Founder Shares to Sponsor. In the event that any Vesting Founder Shares are forfeited pursuant to the terms of this Section 5, then any amounts held in the Escrow Account (including Dividends and Escrow Income) in respect of such Vesting Founder Shares forfeited pursuant to this Section 5 shall be distributed from the Escrow Account to the Company, such payment to be made in the manner set forth in the Escrow Agreement. For the avoidance of doubt, no tax reporting shall be required in respect of the release of all or a portion of any amounts from the Escrow Account to Sponsor, and Sponsor shall be responsible for paying taxes (including any penalties and interest thereon) on all taxable Dividends and any Escrow Income, and for filing all necessary tax returns with respect to such income. |
| (ix) | Except as otherwise provided in this Sponsor Letter Agreement, the Sponsor shall retain all of its rights as a shareholder of New PubCo with respect to the Vesting Founder Shares owned by it during any period of time that such shares are subject to vesting pursuant to the terms of this Section 5(a). |
| (x) | Notwithstanding anything to the contrary herein, all or a portion of each of the Retained Founder Shares and Vesting Founder Shares shall not vest to the extent that after giving effect to the vesting of such Founder Shares, the Sponsor would beneficially own a number of New PubCo Ordinary Shares in excess of 9.99% of the number of New PubCo Ordinary shares outstanding immediately after giving effect to the vesting of Retained Founder Shares or Vesting Founder Shares, as applicable (the “Ownership Limitation”). For purposes of the foregoing sentence, the number of New PubCo Ordinary Shares beneficially owned by the Sponsor shall include the number of New PubCo Ordinary Shares held by the Sponsor, plus (i) the number of Vesting Founder Shares or Retained Founder Shares, as the case may be, with respect to which such determination is being made and (ii) the number of New PubCo Ordinary Shares issuable upon exercise or conversion of the unexercised or unconverted portion of any other securities of New PubCo beneficially owned by the Sponsor, but shall exclude (i) the number of unvested Founder Shares and (ii) the number of New PubCo Ordinary Shares issuable upon exercise or conversion of the unexercised or unconverted portion of any other securities of New PubCo beneficially owned by the Sponsor subject to a limitation on conversion or exercise analogous to the ownership limitation contained in this Section 5(x). Any Founder Shares that would otherwise vest pursuant to Sections 5(a) but remain unvested subject to the Ownership Limitation shall vest at the earlier of such time as (a) when the Ownership Limitation would not be exceeded or (b) when the Sponsor may elect, in its sole discretion, to waive the Ownership Limitation by written notice to New PubCo. For purposes of this Section 5(a)(x), beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended. In determining the number of outstanding New PubCo Ordinary Shares which may vest without exceeding the Ownership Limitation, New PubCo shall confirm orally and in writing by electronic mail to the Sponsor the number of New PubCo Ordinary Shares then outstanding. The Sponsor may elect in its sole discretion, at any time and by written notice to New PubCo, to increase or decrease the Ownership Limitation. |
| (xi) | Notwithstanding the expiration of any Lock-Up Period with respect to any Vesting Founder Shares, such Vesting Founder Shares shall remain subject to any applicable restrictions set forth in Section 5 until vested or forfeited in accordance with the terms of this Section 5. |
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| (b) | The Sponsor agrees that it shall not Transfer: (i) 3,006,049 of the Vesting Founder Shares (“Founder Lock-Up Shares”) and 1,398,025 of the New PubCo Ordinary Shares (“PIPE Lock-Up Shares”, and together with the Founder Lock-Up Shares and Insider Lock-Up Shares, the “Lock-Up Shares”) acquired by the Sponsor pursuant to that certain Subscription Agreement, dated September 15, 2022, by and between the Sponsor and the Company until 24 months after the completion of the Closing; and (ii) any Private Placement Warrants (or any New PubCo Ordinary Shares underlying the Private Placement Warrants) until 30 days after the completion of the Closing (the “Private Placement Warrants Lock-Up”, together with the Lock-Up Shares, the “Lock-Up”). Notwithstanding the foregoing, (i) 50% of the Lock-Up Shares shall be released from the Lock-Up 12 months subsequent to the Closing Date, (ii) an additional 25% of the Lock-Up Shares (i.e. totaling an aggregate of 75% of the Lock-Up Shares) shall be released from the Lock-Up 18 months subsequent to the Closing Date, and (iii) the remaining 25% of the Lock-Up Shares (i.e. totaling an aggregate of 100% of the Lock-Up Shares) shall be released from the Lock-Up 24 months subsequent to the Closing Date. The Lock-Up shall terminate and be of no further force or effect upon the date of a liquidation, merger, capital stock exchange, reorganization, sale of all or substantially all assets or other similar transaction involving New PubCo upon the consummation of which holders of New PubCo Ordinary Shares would be entitled to exchange their New PubCo Ordinary Shares for cash, securities or other property following the Closing (a “Liquidation Event”). |
| (c) | Notwithstanding the provisions set forth in paragraphs 5(a)-(b), Transfers of Lock-Up Shares or Private Placement Warrants (or any New PubCo Ordinary Shares underlying the Private Placement Warrants) subject to the Lock-Up (the “Lock-Up Securities”) are permitted (i) to the Company’s officers or directors, any affiliate or family member of any of the Company’s officers or directors, any members or partners of the Sponsor or their affiliates, any affiliates of the Sponsor, or any employees of such affiliates; (ii) in the case of an individual, by gift to a member of one of the individual’s immediate family or to a trust, the beneficiary of which is a member of the individual’s immediate family, an affiliate of such person or to a charitable organization; (iii) in the case of an individual, by virtue of laws of descent and distribution upon death of the 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 any forward purchase agreement or similar arrangement or in connection with the consummation of a Business Combination at prices no greater than the price at which the Lock-Up Securities, or Ordinary Shares, as applicable, were originally purchased; (vi) by virtue of the Sponsor’s organizational documents upon liquidation or dissolution of the Sponsor; (vii) to the Company for no value for cancellation in connection with the consummation of an initial Business Combination, (viii) in the event of the Company’s liquidation prior to the completion of a Business Combination; (ix) in connection with a pledge of Lock-Up Securities to a financial institution, including the enforcement of any such pledge by a financial institution; and 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. |
[Signature Pages Follow]
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| Sincerely, | ||
| TPB ACQUISITION SPONSOR I, LLC | ||
| By: | /s/ David Friedberg | |
| Name: | David Friedberg | |
| Title: | Chief Executive Officer | |
[Signature Page to Amendment to Letter Agreement]
Acknowledged and Agreed:
| TPB ACQUISITION CORPORATION I | ||
| By: | /s/ David Friedberg | |
| Name: | David Friedberg | |
| Title: | Chief Executive Officer | |
[Signature Page to Amendment to Letter Agreement]
Acknowledged and Agreed:
DIRECTORS AND OFFICERS OF TPB ACQUISITION CORPORATION I
| /s/ David Friedberg | |
| David Friedberg | |
| /s/ William Hauser | |
| William Hauser | |
| /s/ Bharat Vasan | |
| Bharat Vasan | |
| /s/ Kerry Cooper | |
| Kerry Whorton Cooper | |
| /s/ Neil Renninger | |
| Neil Renninger | |
| /s/ April Underwood | |
| April Underwood |
[Signature Page to Amendment to Letter Agreement]
Acknowledged and Agreed:
| LAVORO AGRO LIMITED | ||
| By: | /s/ Laurence Beltrão Gomes | |
| Name: | Laurence Beltrão Gomes | |
| Title: | Director | |
[Signature Page to Amendment to Letter Agreement]
Acknowledged and Agreed:
| LAVORO LIMITED | ||
| By: | /s/ Daniel Fisberg | |
| Name: | Daniel Fisberg | |
| Title: | Director | |
| By: | /s/ Marcos Haaland | |
| Name: | Marcos de Mello Mattos Haaland | |
| Title: | Director | |
[Signature Page to Amendment to Letter Agreement]
Exhibit 4.9
FORM OF FORWARD SHARE PURCHASE AGREEMENT
This Forward Share Purchase Agreement (this “Agreement”) is entered into as of February 20, 2023, by and among (i) TPB Acquisition Corporation I, an exempted company incorporated with limited liability in the Cayman Islands (“SPAC”), and (ii) [●] (each individually an “Investor” and collectively, the “Investors”; provided, however, that each representation, warranty or covenant set forth herein shall be made severally by each Investor and not jointly and severally with any other Investor). The term “Counterparty” refers to (x) SPAC until the closing of the Business Combination (as defined below), and (y) following the closing of the Business Combination, as successor to SPAC’s rights and obligations under this Agreement by operation of law as a result of the Business Combination, to Lavoro Merger Sub II, an exempted company incorporated with limited liability in the Cayman Islands (the “Company”). The Counterparty and each of the Investors is individually referred to herein as a “Party” and collectively as the “Parties”.
Recitals
WHEREAS, SPAC is a special purpose acquisition company, also known as a blank check company, formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses;
WHEREAS, SPAC has entered into a Business Combination Agreement, dated as of September 14, 2022 (the “Business Combination Agreement”), by and among SPAC, the Company, Lavoro Limited, an exempted company incorporated with limited liability in the Cayman Islands (“Parent”), Lavoro Merger Sub I Limited (“First Merger Sub”), an exempted company incorporated with limited liability in the Cayman Islands, Lavoro Merger Sub III Limited, an exempted company incorporated with limited liability in the Cayman Islands, and Lavoro Agro Limited, an exempted company incorporated with limited liability in the Cayman Islands, pursuant to which First Merger Sub will merge with and into SPAC, with SPAC surviving, following which SPAC will merge with and into the Company, with the Company surviving (such transactions, the “SPAC Mergers”, and together with the other transactions contemplated by the Business Combination Agreement, the “Business Combination”), and SPAC has filed a definitive proxy statement with the U.S. Securities and Exchange Commission (the “Commission”) that will seek, among other things, stockholder approval of the Business Combination at an extraordinary general meeting of shareholders;
WHEREAS, on the closing date of the Business Combination (the “Business Combination Closing Date”), and pursuant and subject to the terms of the Business Combination Agreement, each Class A ordinary share, par value $0.0001 per share, of SPAC (the “SPAC Ordinary Shares”) shall be exchanged, on a one-to-one basis, for one Class A ordinary share, par value $0.001 per share, of Parent (the “Parent Ordinary Shares”);
WHEREAS, this Agreement may make reference to certain “Shares”, which shall refer to SPAC Ordinary Shares prior to the closing of the Business Combination and any Parent Ordinary Shares received with respect thereto following the Business Combination; and
WHEREAS, the Parties wish to enter into this Agreement, pursuant to which the Counterparty shall purchase from the Investors, and the Investors may sell and transfer to the Counterparty, in each case, subject to the conditions set forth herein, certain Shares;
NOW, THEREFORE, in consideration of the premises, representations, warranties and the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, the Parties agree as follows:
Agreement
1. Sale of Shares; Shares Purchase and Sale; Closing.
(a) Forward Share Purchase. Subject to the conditions set forth in Section 5 of this Agreement, on the Maturity Date (as defined below), the Investors may elect to sell and transfer to the Counterparty, and the Counterparty shall purchase from the Investors, up to that number of Shares (including any Additional Shares (as defined below)) that are then held by the Investors, but not to exceed the number of Shares that would result in the Investors beneficially owning (as determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the regulations promulgated thereunder) more than 9.9% of the total number of outstanding Parent Ordinary Shares immediately following the closing of the Business Combination, unless otherwise agreed in writing by all Parties (the “Share Purchase Limit”), at a price equal to (i) the total amount of the Escrowed Property (as defined below) in the Escrow Account (as defined below), divided by (ii) the total number of Shares held by the Investors as of the Maturity Date (subject to the Share Purchase Limit) (the “Maturity Date Purchase Price”). Each Investor shall notify the Counterparty and the Escrow Agent in writing five (5) Business Days (as defined below) prior to the Maturity Date whether or not such Investor is exercising such Investor’s right to sell any of the Shares (including any Additional Shares) held by such Investor to the Counterparty pursuant to this Agreement (each, a “Shares Sale Notice”). Provided the Counterparty has provided the Investors with notice of the occurrence of the Maturity Date not less than 5 Business Days prior thereto, any Investor that fails to timely deliver a Shares Sales Notice in accordance with the immediately preceding sentence shall be deemed to have forfeited its right to sell any Shares (including any Additional Shares) to the Counterparty pursuant to this Agreement.
(b) Shares Closing. If a Shares Sale Notice is timely delivered by any Investor to the Counterparty and Escrow Agent, the closing of the sale of the Shares contemplated in each such timely delivered Share Sales Notice (the “Shares Closing”) shall occur no later than the date that is ten calendar days after the Maturity Date (the “Shares Closing Date”). On the Shares Closing Date, each selling Investor shall deliver, or cause to be delivered, the Shares (including any Additional Shares) subject to the applicable Shares Sale Notice free and clear of all liens and encumbrances to the Counterparty and, in exchange therefor, the Escrow Agent shall deliver to each such selling Investor(s), for such selling Investor’s use without restriction, an amount equal to (i) the Maturity Date Purchase Price multiplied by (ii) the number of Shares being sold by such selling Investor (subject to the Share Purchase Limit), which shall be paid by wire transfer of immediately available funds from the Escrow Account.
(c) Maturity Date. For purposes of this Agreement, “Maturity Date” shall mean the date that is 24 months after the Business Combination Closing Date.
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2. Representations and Warranties of the Investors. Each Investor represents and warrants to the Counterparty, severally and not jointly, as of the date hereof:
(a) Organization and Power. Such Investor is duly organized, validly existing, and in good standing under the laws of the jurisdiction of its formation and has all requisite power and authority to carry on its business as presently conducted and as proposed to be conducted.
(b) Authorization. Such Investor has full power and authority to enter into this Agreement. This Agreement, when executed and delivered by such Investor will constitute the valid and legally binding obligation of such Investor enforceable against it in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and any other laws of general application affecting enforcement of creditors’ rights generally, or (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies ((i) and (ii) collectively, the “Enforceability Exceptions”).
(c) Governmental Consents and Filings. No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority is required on the part of such Investor in connection with the consummation of the transactions contemplated by this Agreement (collectively, the “Transactions”) other than disclosure reports regarding such transactions that such Investor is required to file in accordance with the terms of the Exchange Act.
(d) Compliance with Other Instruments. The execution, delivery and performance by such Investor of this Agreement and the consummation by such Investor and the other Investors of the Transactions will not result in any violation or default (i) of any provisions of its organizational documents, (ii) of any instrument, judgment, order, writ or decree to which it is a party or by which it is bound, (iii) under any note, indenture or mortgage to which it is a party or by which it is bound, (iv) under any lease, agreement, contract or purchase order to which it is a party or by which it is bound, or (v) of any provision of federal or state statute, rule or regulation applicable to it, in each case (other than clause (i)), which would have a material adverse effect on such Investor or any of the other Investors or its or their ability to consummate the Transactions.
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(e) Shareholdings. As of the date of this Agreement, the Investors collectively hold [●] SPAC Ordinary Shares, with each Investor’s holdings of SPAC Ordinary Shares set forth on Appendix A hereto. The Investors represent and warrant to the Counterparty that the Investors have held the SPAC Ordinary Shares set forth on Appendix A hereto prior to entering into any discussions or negotiations with the SPAC regarding the transactions contemplated by this Agreement and that SPAC has made no solicitation of the Investors in respect of the transactions contemplated by this Agreement to purchase or otherwise acquire any SPAC Ordinary Shares for the purposes of entering into this Agreement.
(f) Disclosure of Information. Such Investor has had an opportunity to discuss the business, management and financial affairs of the Company, and the terms and conditions of this Agreement, as well as the terms of the Business Combination, with the Company’s management.
(g) No Other Representations and Warranties; Non-Reliance. Except for the specific representations and warranties contained in this Section 2 and in any certificate or written agreement delivered pursuant hereto, neither any Investor nor any person acting on behalf of such Investor nor any of such Investor’s affiliates (collectively, the “Investor Parties”) has made, makes or shall be deemed to make any other express or implied representation or warranty with respect to such Investor or the other Investors, and the Investor Parties disclaim any such representation or warranty. Except for the specific representations and warranties expressly made by the Counterparty in Section 4 of this Agreement, in any certificate or written agreement delivered pursuant hereto and in any public filings, the Investor Parties specifically disclaim that they are relying upon any other representations or warranties that may have been made by the Counterparty Parties (as defined below).
3. Representations and Warranties of SPAC. The SPAC represents and warrants to each Investor as follows:
(a) Organization and Corporate Power. SPAC is a corporation duly incorporated, validly existing and in good standing as a corporation under the laws of the Cayman Islands and has all requisite corporate power and authority to carry on its business as presently conducted and as proposed to be conducted.
(b) Authorization. All corporate action required to be taken by the Counterparty’s board of directors in order to authorize SPAC to enter into this Agreement has been taken. This Agreement, when executed and delivered by SPAC, shall constitute the valid and legally binding obligation of SPAC, enforceable against SPAC in accordance with its terms, subject to the effect of the Enforceability Exceptions. Following the Business Combination, this Agreement shall constitute the valid and legally binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to the effect of the Enforceability Exceptions.
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(c) Disclosure. SPAC has not disclosed to the Investors material non-public information with respect to SPAC or the Business Combination, other than any such information that shall be publicly disclosed by SPAC or Parent either by the issuance of a press release or the filing with the Commission a Current Report on Form 8-K, in each case, by 9:00 a.m., Eastern Time on the second (2nd) Business Day immediately following the date that the Parties enter into this Agreement. Such public disclosure shall disclose the name of the Investors as having entered into the Agreement, subject to compliance with all applicable federal and state securities laws.
(d) Commission Filings. The Company is not deficient in the filing of any reports with the Commission required to be filed prior to the date hereof. None of the Counterparty’s reports and other filings with the Commission, as of their respective dates, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
(e) No Other Representations and Warranties; Non-Reliance. Except for the specific representations and warranties contained in this Section 3 and in any certificate or written agreement delivered pursuant hereto or in any public filings, neither SPAC nor any person on behalf of SPAC nor any of SPAC’s affiliates, including but not limited to the Company, First Merger Sub, or Parent, (collectively, the “the SPAC Parties”) has made, makes or shall be deemed to make any other express or implied representation or warranty with respect to SPAC, the Company, the Transactions or the Business Combination, and the SPAC Parties disclaim any such representation or warranty. Except for the specific representations and warranties expressly made by the Investor Parties in Section 2 of this Agreement, and in any certificate or agreement delivered pursuant hereto, the SPAC Parties specifically disclaim that they are relying upon any other representations or warranties that may have been made by the Investor Parties.
4. Representations and Warranties of Counterparty. The Counterparty represents and warrants to each Investor as follows
(a) Governmental Consents and Filings. No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority is required on the part of the Counterparty in connection with the consummation of the Transactions, other than disclosure reports regarding such transactions the Counterparty is required to file in accordance with the terms of the Exchange Act.
(b) Compliance with Other Instruments. The execution, delivery and performance by the Counterparty of this Agreement and the consummation by the Counterparty of the Transactions will not result in any violation or default (i) of any provisions of its organizational documents, (ii) of any instrument, judgment, order, writ or decree to which it is a party or by which it is bound, (iii) under any note, indenture or mortgage to which it is a party or by which it is bound, (iv) under any lease, agreement, contract or purchase order to which it is a party or by which it is bound, or (v) of any provision of federal or state statute, rule or regulation applicable to it, in each case (other than clause (i)), which would have a material adverse effect on SPAC or its ability to consummate the Transactions.
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5. Additional Agreements.
(a) Net Long Position. During the term of this Agreement, each Investor agrees to maintain a net long position of the Parent’s securities; provided, nothing herein shall prevent Investor from selling all securities affected by this Agreement.
(b) No Redemptions; No Tenders. Each Investor further agrees not to, (i) request redemption of any of the SPAC Ordinary Shares (including any Additional Shares) in conjunction with SPAC’s shareholders’ approval of the Business Combination, or (ii) tender the SPAC Ordinary Shares (including any Additional Shares) to SPAC in response to any redemption or tender offer that SPAC may commence for SPAC Ordinary Shares.
(c) Option to Purchase Additional Shares and Certain Derivatives. SPAC hereby acknowledges that nothing in this Agreement shall prohibit the Investors from purchasing from third parties prior to the Business Combination Closing Date additional SPAC Ordinary Shares, including SPAC Ordinary Shares that have previously been tendered by third parties for redemption at their original redemption value in conjunction with SPAC’s stockholders’ approval of the Business Combination, to the extent such third parties unwind such tenders for redemption (the “Additional Shares”), or any warrants, convertible notes or options (including puts or calls) of SPAC; provided, the aggregate number of SPAC Ordinary Shares or Shares (including any Additional Shares) owned by the Investors and subject to Sections 1, 5(b) and 5(c) of this Agreement shall not exceed the Share Purchase Limit, unless otherwise agreed in writing by all Parties. For the avoidance of doubt, all Additional Shares shall be deemed Shares for all purposes hereunder and shall be purchased by the Counterparty in accordance with Section 1 of this Agreement.
(d) Share Registration. Following the Third Effective Time (as defined in the Business Combination Agreement), and within thirty (30) calendar days after the closing of the Business Combination, the Company shall use its best efforts to cause the filing (at the Company’s sole cost and expense) with the Commission of a registration statement registering the resale of all Shares held by Investors, including any Additional Shares (the “Registration Statement”), and have the Registration Statement declared effective (the date on which the Registration Statement is declared effective, the “Registration Statement Effective Date”) as soon as practicable after the filing thereof, but no later than the earliest of (i) the 45th calendar day (or 90th calendar day if the Commission notifies the Company (or any affiliate of the Company) that it will “review” the Registration Statement) following such closing and (ii) the 5th Business Day after the date the Company (or any of its affiliates) is notified (orally or in writing, whichever is earlier) by the Commission that such Registration Statement will not be “reviewed” or will not be subject to further review. Upon notification by the Commission that the Registration Statement has been declared effective by the Commission, within two (2) Business Days thereafter, the Company shall cause the filing of a final prospectus under Rule 424 of the Securities Act of 1933, as amended (the “Securities Act”). In no event shall Investors be identified as statutory underwriters in the Registration Statement unless requested by the Commission. The Company (or any of its affiliates) will use its best efforts to keep the Registration Statement covering the resale of the shares as described above continuously effective (except for customary blackout periods, up to twice per year and for a total of up to 30 calendar days (and not more than 15 calendar days in an occurrence), if and when the Company (or any of its affiliates) is in possession of material non-public information the disclosure of which, in the good faith judgment of the Company’s board of directors, would be prejudicial, and the Company agrees to promptly notify each Investor of any such blackout determination) until the earlier of (a) the Maturity Date or (b) the date on which all such Shares have been sold or may be sold without any restrictions including volume limitations under Rule 144 under the Securities Act; provided that the Company covenants and agrees to cause all necessary filings and submissions to be made in furtherance of the foregoing. To the extent applicable, if requested by any Investor, the Company shall cause the removal or instruction instruct its transfer agent to remove any restrictive legend with respect to transfers under the Securities Act from any and all Shares held by such Investor upon compliance with the relevant resale provisions of Rule 144; provided that each Investor shall have timely provided customary representations and other customary documentation reasonably acceptable to the Company, its counsel and/or its transfer agent in connection therewith. Any fees (with respect to the transfer agent, the Company’s counsel or otherwise) associated with the issuance of any legal opinion required by the Company or its affiliate’s transfer agent or the removal of such legend shall be borne by the Company. If a legend is no longer required pursuant to the foregoing, the Company will, no later than five (5) Business Days following the delivery by such Investor to the Company or the transfer agent (with notice to the Company) of customary representations and other documentation reasonably acceptable to the Company, its counsel and/or its transfer agent, cause the removal of the restrictive legend related to the book entry account holding the Shares and make a new, unlegended book entry for the Shares. For the avoidance of doubt, the Company shall be under no obligation to effect any registration of Shares prior to the Third Effective Time.
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(e) Open Market Sale. Notwithstanding anything to the contrary herein, the Investors: (i) agree not to, prior to the Registration Statement Effective Date, Transfer (as defined below) any Shares (including any Additional Shares); and (ii) shall, commencing on the Registration Statement Effective Date, use commercially best efforts to sell any or all of the Shares (including any Additional Shares) in the open market if the sale price exceeds the price per share SPAC Ordinary Shares are redeemed for in connection with the SPAC's shareholder's approval of the Business Combination (the “Shares Purchase Price”) prior to payment of any commissions due by the Investors for such sale. Upon the sale of any Shares (including any Additional Shares) pursuant to this Section 5(e), the Investors shall provide written notice of such sale to the Escrow Agent and to the Counterparty in the manner contemplated by Section 5(f)(ii) of this Agreement. For purposes hereof, “Transfer” means the (a) direct or indirect transfer, sale or assignment of, offer to sell, contract or any agreement to sell, hypothecate, pledge, encumber grant of any option to purchase or otherwise dispose of, either voluntarily or involuntarily, or any agreement to dispose of, directly or indirectly, or establishment or increase of a put equivalent position or liquidation with respect to or decrease of a call equivalent position within the meaning of Section 16 of the Exchange Act and the rules and regulations of the Commission promulgated thereunder with respect to, any security (except in any case that each Investor may hold any security in a prime brokerage account subject to a lien over property in such account generally), (b) entry into any hedging, swap or other arrangement that directly or indirectly transfers to another, in whole or in part, any of the economic consequences of ownership of any security, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise, or (c) public announcement of any intention to effect any transaction specified in clause (a) or (b); and “Contract” means any contract, subcontract, agreement, indenture, note, bond, loan or credit agreement, instrument, installment obligation, lease, mortgage, deed of trust, license, sublicense, commitment, power of attorney, guaranty or other legally binding commitment, arrangement, understanding or obligation, whether written or oral, in each case, as amended and supplemented from time to time and including all schedules, annexes and exhibits thereto, and shall exclude, for the avoidance of doubt, purchase orders, statements of work and similar forms.
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(f) Escrow.
(i) Immediately following the closing of the Business Combination, the Counterparty shall deposit, for good and valuable consideration, the receipt, sufficiency and adequacy of which the Counterparty hereby acknowledges, into an escrow account (the “Escrow Account”) with Citibank, N.A. (the “Escrow Agent”), subject to the terms of a written escrow agreement (the “Escrow Agreement”) substantially in the form attached as Exhibit A hereto and to be entered into on or prior to the Business Combination Closing Date, an amount equal to the Escrowed Property. “Escrowed Property” shall mean (i) (a) the Shares Purchase Price multiplied by the number of Shares and Additional Shares held by the Investors as of the closing of the Business Combination less (b) any amounts previously disbursed from the Escrow Account in accordance with this Agreement and the Escrow Agreement, plus (ii) the interest, investment income, or proceeds accrued from the deposit or investment from the Escrowed Account. The Escrow Agreement shall irrevocably cause the Escrow Agent to release from the Escrow Account the aggregate Escrow Property in accordance with Sections 1 and 5 hereof. The payments to be made by the Escrow Agent to the Investors in accordance with Section 1(a) of this Agreement or to the Investors and the Counterparty in accordance with Section 5(f) of this Agreement, if applicable, will be made solely with the Escrowed Property. For U.S. federal income tax purposes, the Parties agree that all Escrowed Property in the Escrow Account will be treated as owned by the Counterparty.
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(ii) Upon receipt by the Escrow Agent and the Counterparty of written notice that any Investor has sold Shares (including any Additional Shares) as provided in Section 5(e) of this Agreement (the date thereof, the “Instruction Date”), the Escrow Agent shall release to the Counterparty, in accordance with the payment instructions provided by the Counterparty, an amount equal to (a) the Escrowed Property divided by the number of Shares held by Investors as of the Instruction Date, multiplied by (b) the number of Shares sold by such Investor pursuant to Section 5(e) hereof in accordance with the payment instructions provided by the Counterparty. Such notice shall be effected using the Form of Notice in Exhibit B attached hereto, and delivered to the Counterparty no later than five (5) Business Days following any sale.
(iii) If, on or before the Maturity Date, this Agreement is terminated pursuant to Section 7(f) hereof, then the Escrow Agent shall promptly release to the Counterparty any Escrowed Property that remains in the Escrow Account in accordance with the payment instructions provided by the Counterparty.
(iv) If any Investor (a) fails to timely deliver a Shares Sale Notice to the Counterparty and the Escrow Agent five Business Days prior to the Maturity Date in accordance with Section 1(a) hereof, or (b) notifies the Escrow Agent that such Investor does not intend to exercise such Investor’s right to sell any of its Shares to the Counterparty pursuant to Section 1(a) hereof, then, on the Maturity Date, the Escrow Agent shall release to the Counterparty any Escrowed Property that remains in the Escrow Account in accordance with the payment instructions provided by the Counterparty.
(g) Notifications. The Counterparty shall promptly notify the Investors of the occurrence of any event that would make any of the representations and warranties of the Counterparty set forth in Section 4 of this Agreement untrue or incorrect at any time between the date of this Agreement and the Shares Closing Date.
(h) Security Agreement in Escrow Account. To secure the obligations of the Counterparty under this Agreement, the Counterparty grants to the Investors a security interest in, and lien on, all right, title, and interest of the Counterparty in and to the Escrow Account in respect of all funds required to satisfy the Counterparty’s obligations hereunder, the Escrow Agreement, all rights related thereto, and all proceeds, products, and profits of the foregoing. In the event of a default by the Counterparty under this Agreement or the Escrow Agreement, then, in addition to any other rights the Investors may have under this Agreement, the Escrow Agreement, and applicable law, the Investors shall also have the rights and remedies of a secured party under the Uniform Commercial Code (“UCC”) as enacted in the State of New York. The Counterparty shall use commercially reasonable efforts to prepare and file such UCC financing statements or other documents as reasonably directed by the Investors with respect to their security interests.
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(i) Indemnification. The Counterparty agrees to indemnify, severally and not jointly, the Investors and their respective officers, directors, employees, agents and shareholders (collectively referred to as the “Indemnitees”) against, and hold them harmless of and from, any and all loss, liability, cost, damage and expense, including without limitation, reasonable and documented out-of-pocket outside counsel fees, which the Indemnitees may suffer or incur by reason of any action, claim or proceeding, in each case, brought by a third party creditor of the Counterparty or any of their respective subsidiaries asserting that the Investors are not entitled to receive the aggregate Share Purchase Price or such portion thereof as they are entitled to receive pursuant to Section 1(a) of this Agreement, in each case unless such action, claim or proceeding is the result of the fraud, bad faith, knowing or willful misconduct or gross negligence of such Indemnitee.
6. Closing Conditions. The obligation of the Counterparty to purchase the Shares at the Shares Closing under this Agreement shall be subject in all respects to the consummation of the Business Combination and such Shares being free and clear of all liens and other encumbrances as of the Shares Closing. For the avoidance of doubt, this Agreement shall be of no force or effect if the Business Combination is not consummated.
7. Termination. This Agreement may be terminated as follows:
(a) at any time by mutual written consent of all Parties;
(b) at any time at which all Investors under common management (but for the elimination of doubt, excluding any unrelated party identified as an Investor pursuant to an agreement substantially similar to this Agreement) no longer hold any Shares (including any Additional Shares);
(c) at the election of the Investors if the shareholders of SPAC fail to approve the Business Combination before March 31, 2023, subject to extension by mutual agreement including the consent in writing of each Investor;
(d) prior to the closing of the Business Combination by mutual agreement of the Investors if there occurs a Company Material Adverse Effect (as defined in the Business Combination Agreement);
(e) by the Investors, if prior to the Business Combination Closing Date, all Parties and the Escrow Agent have not executed the Escrow Agreement;
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(f) on the date on which the VWAP Price of the Shares exceeds $12.50 (the “$12.50 Price Target”) on any 20 trading days within any consecutive 30 trading day period occurring following the Registration Statement Effective Date; provided that the cumulative number of Shares that have been traded on the principal trading market of the Shares since the Registration Statement Effective Date, as reported by Bloomberg, exceeds 25,000,000 Shares. The $12.50 Price Target shall be equitably adjusted for stock splits, stock dividends, cash dividends, reorganizations, combinations, recapitalizations and similar transactions affecting the Shares after the Business Combination Closing Date. For the purposes of this Agreement, “VWAP Price” shall mean, for any trading day, the Rule 10b-18 volume weighted average price per Share for such day as reported on Bloomberg Screen “LVRO <Equity> AQR SEC” (or any successor thereto), or if such price is not so reported on such trading day for any reason or is erroneous, the VWAP Price shall be as reasonably determined by the Counterparty;
(g) on or after the VWAP Price of the Shares is less than $5.00 (the “$5.00 Price Target”) on any 20 trading days within any consecutive 30 trading day period occurring following the six month anniversary of the Registration Statement Effective Date; provided that the cumulative number of Shares that have been traded on the principal trading market of the Shares since the Registration Statement Effective Date, as reported by Bloomberg, exceeds 25,000,000 Shares (“$5.00 Notice Trigger”), and within 5 business days of the $5.00 Notice Trigger, the Investors delivers written notice to the Counterparty and to the Escrow Agent expressing their intention to terminate this Agreement pursuant to this Section 7(g); provided, further, that in the event this Agreement terminates pursuant to this Section 7(g), the Investors shall deliver, or cause to be delivered, all of their Shares (including any Additional Shares) free and clear of all liens and encumbrances to the Counterparty and, in exchange therefor, the Escrow Agent shall deliver to such Investor, for such Investor’s use without restriction, an amount equal to (i) the Escrowed Property, divided by (ii) the total number of Shares held by the Investors as of the date of the $5.00 Notice Trigger, multiplied by (iii) the number of Shares then held by the Investors. The $5.00 Price Target shall be equitably adjusted for stock splits, stock dividends, cash dividends, reorganizations, combinations, recapitalizations and similar transactions affecting the Shares after the Business Combination Closing Date; and
(h) on the date that the Counterparty files in any court or agency pursuant to any statute or regulation of any state or country a petition in bankruptcy or insolvency or for reorganization or for an arrangement or for the appointment of a receiver or trustee of the Party or of substantially all of its assets (each, an “Insolvency Event”); provided, further, that in the event this Agreement terminates pursuant to this Section 7(h), the Investors shall deliver, or cause to be delivered, all of their Shares (including any Additional Shares) free and clear of all liens and encumbrances to the Counterparty and, in exchange therefor, the Escrow Agent shall deliver to such Investor, for such Investor’s use without restriction, an amount equal to (i) the Escrowed Property, divided by (ii) the total number of Shares held by the Investors as of the date of the Insolvency Event, multiplied by (iii) the number of Shares then held by the Investors.
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Without prejudice to Sections 7(g) and 7(h) of this Agreement, in the event of termination in accordance with this Section 7, this Agreement shall forthwith become null and void and have no effect, without any liability on the part of each Investor or the Counterparty and their respective directors, officers, employees, partners, managers, members, or stockholders and, except as otherwise provided in this Agreement, all rights and obligations of each Party shall immediately cease; provided, however, that nothing contained in this Section 7 shall relieve any Party from liabilities or damages arising out of any actual fraud or willful breach by such party of any of its representations, warranties, covenants or agreements contained in this Agreement prior to termination of this Agreement.
8. General Provisions.
(a) Notices. All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given upon the earlier of actual receipt, or (i) personal delivery to the Party to be notified, (ii) when sent, if sent by electronic mail during normal business hours of the recipient, and if not sent during normal business hours, then on the recipient’s next Business Day, (iii) five (5) Business Days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (iv) one (1) Business Day after deposit with a nationally recognized overnight courier, freight prepaid, specifying next Business Day delivery, with written verification of receipt. All notices and other communications sent to a Party shall be sent to the e-mail address or address as set forth on the signature page of such Party hereto, or to such e-mail address or address as subsequently modified by written notice given by such Party in accordance with this Section 8(a). Such communications, to be valid, must be addressed as follows:
if to SPAC to:
TPB Acquisition Corporation I
1 Letterman Drive, Suite A3-1
San Francisco, CA 94129
Attention: David Friedberg, Chief Executive Officer
Email: [***]
with a copy to (which shall not constitute notice):
Cooley LLP
3 Embarcadero Center
San Francisco, CA 94111-4004
Attention: Garth Osterman
Email: [***]
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if to the Company, to:
Lavoro Merger Sub II
Av. Dr. Cardoso de Melo, 1450, 5th floor, office 501
São Paulo — SP, 04548-005, Brazil
Attention: Laurence Beltrão Gomes
Email: [***]
with a copy to (which shall not constitute notice):
Davis Polk & Wardwell LLP
450 Lexington Avenue
New York, NY 10017
Attention: Manuel Garciadiaz
Email: [***]
If to the Escrow Agent:
Citibank, N.A.
Agency & Trust
388 Greenwich Street
New York, NY 10013
Attn.: Peter Traina
Telephone:[***]
E-mail: [***]
(b) No Finder’s Fees. Each Party represents that it neither is nor will be obligated for any finder’s fee or commission in connection with the Transactions. Each Investor agrees to indemnify and to hold harmless the Counterparty from any liability for any commission or compensation in the nature of a finder’s or broker’s fee arising out of the Transactions (and the costs and expenses of defending against such liability or asserted liability) for which the Investors, or any of their respective officers, employees or representatives is responsible or arising out of any agreement entered into by any such person or entity. The Counterparty agrees to indemnify and hold harmless, severally and not jointly, the Investors from any liability for any commission or compensation in the nature of a finder’s or broker’s fee arising out of the Transactions (and the costs and expenses of defending against such liability or asserted liability) for which the Counterparty or any of their officers, employees or representatives is responsible or arising out of any agreement entered into by any such person or entity.
(c) Survival of Representations and Warranties. All of the representations and warranties contained herein shall survive the Shares Closing.
(d) Entire Agreement. This Agreement, together with any documents, instruments and writings that are delivered pursuant hereto or referenced herein, constitute the entire agreement and understanding of the Parties in respect of its subject matter and supersedes all prior understandings, agreements, or representations by or among the Parties, written or oral, to the extent they relate in any way to the subject matter hereof or to the Transactions.
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(e) Successors. All of the terms, agreements, covenants, representations, warranties, and conditions of this Agreement are binding upon, and inure to the benefit of and are enforceable by, the Parties and their respective successors. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the Parties or their respective successors and assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.
(f) Assignments. Except as otherwise specifically provided herein, no Party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the each of the other Parties.
(g) Counterparts. This Agreement may be executed in two or more counterparts, each of which will be deemed an original but all of which together will constitute one and the same instrument. Signatures sent by facsimile transmission or in PDF format shall be deemed to be originals for all purposes of this Agreement.
(h) Headings. The section headings contained in this Agreement are inserted for convenience only and will not affect in any way the meaning or interpretation of this Agreement.
(i) Governing Law; Jurisdiction. This Agreement, the entire relationship of the Parties, and any litigation among the Parties (whether grounded in contract, tort, statute, law or equity) shall be governed by, construed in accordance with, and interpreted pursuant to the laws of the State of New York, without giving effect to its choice of laws or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York. Any dispute arising from or relating to the relative rights of the parties hereto and all other questions concerning the construction, validity and interpretation of this Agreement, shall be brought exclusively in the federal courts of the United States of America or the courts of the State of New York, in each case located in the City of New York and the County of New York, and (i) irrevocably submits to the exclusive jurisdiction of such courts, (ii) waives any objection to laying venue in any such action in such courts, and (iii) waives any objection that such courts are an inconvenient forum or do not have jurisdiction over any party hereto.
(j) MUTUAL WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT HEREBY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE BETWEEN OR AMONG ANY OF THE PARTIES HERETO, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THIS AGREEMENT AND/OR THE TRANSACTIONS CONTEMPLATED HEREBY.
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(k) Amendments. This Agreement may not be amended, modified or waived as to any particular provision, except with the prior written consent of all Parties.
(l) Severability. The provisions of this Agreement will be deemed severable and the invalidity or unenforceability of any provision will not affect the validity or enforceability of the other provisions hereof; provided that if any provision of this Agreement, as applied to any Party or to any circumstance, is adjudged by a governmental authority, arbitrator, or mediator not to be enforceable in accordance with its terms, the Parties agree that the governmental authority, arbitrator, or mediator making such determination will have the power to modify the provision in a manner consistent with its objectives such that it is enforceable, and/or to delete specific words or phrases, and in its reduced form, such provision will then be enforceable and will be enforced.
(m) Construction. The Parties have participated jointly in the negotiation and drafting of this Agreement. If 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 because of the authorship of any provision of this Agreement. For purposes of this Agreement, “Business Day” means any day other than Saturday, Sunday, or a day on which commercial banks in the Cayman Islands, in New York or in São Paulo, Brazil are obligated by any applicable law to close. Any reference to any federal, state, local, or foreign law will be deemed also to refer to law as amended and all rules and regulations promulgated thereunder, unless the context requires otherwise. The words “include,” “includes,” and “including” will be deemed to be followed by “without limitation.” Pronouns in masculine, feminine, and neuter genders will be construed to include any other gender, and words in the singular form will be construed to include the plural and vice versa, unless the context otherwise requires. The words “this Agreement,” “herein,” “hereof,” “hereby,” “hereunder,” and words of similar import refer to this Agreement as a whole and not to any particular subdivision unless expressly so limited. The Parties intend that each representation, warranty, and covenant contained herein will have independent significance. If a Party has breached any representation, warranty, or covenant contained herein in any respect, the fact that there exists another representation, warranty or covenant relating to the same subject matter (regardless of the relative levels of specificity) which such party has not breached will not detract from or mitigate the fact that such party is in breach of the first representation, warranty, or covenant.
(n) Waiver. No waiver by a Party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, may be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising because of any prior or subsequent occurrence.
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(o) Specific Performance. Each Party agrees that irreparable damage may occur in the event any provision of this Agreement was not performed by any other Party in accordance with the terms hereof and that the other Parties shall be entitled to seek specific performance of the terms hereof, in addition to any other remedy at law or equity.
(p) Rule 10b5-1.
A. The Counterparty represents and warrants to the Investors that Counterparty is not entering into this Agreement to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for the Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for the Shares) for the purpose of inducing the purchase or sale of such securities or otherwise in violation of the Exchange Act, and the Counterparty represents and warrants to the Investors that the Counterparty has not entered into or altered, and agrees that the Counterparty will not enter into or alter, any corresponding or hedging transaction or position with respect to the Shares. The Counterparty acknowledges that it is the intent of the parties that this Agreement comply with the requirements of paragraphs (c)(1)(i)(A) and (B) of Rule 10b5-1 under the Exchange Act (“Rule 10b5-1”) and this Agreement shall be interpreted to comply with the requirements of Rule 10b5-1(c).
B. The Counterparty agrees that it will not seek to control or influence the Investors’ decision to make any “purchases or sales” (within the meaning of Rule 10b5- 1(c)(1)(i)(B)(3)) under this Agreement, including, without limitation, the Investors’ decision to enter into any hedging transactions. The Investors represent and warrant that they have consulted with their own advisors as to the legal aspects of its adoption and implementation of this Agreement under Rule 10b5-1.
C. The Counterparty acknowledges and agrees that any amendment, modification, waiver or termination of this Agreement must be effected in accordance with the requirements for the amendment or termination of a “plan” as defined in Rule 10b5-1(c). Without limiting the generality of the foregoing, the Counterparty acknowledges and agrees that any such amendment, modification, waiver or termination shall be made in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b-5, and no such amendment, modification or waiver shall be made at any time at which the Counterparty or any officer, director, manager or similar person of the Counterparty is aware of any material non- public information regarding the Counterparty or the Shares.
[Signature page follows]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement to be effective as of the date first set forth above.
| TPB ACQUISITION CORPORATION I | ||
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By: |
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| Name: | ||
| Title: |
| |
| [●] | ||
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By: |
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| Name: |
| |
| Title: | ||
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Appendix A
|
Investor |
Number of
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| [●] | [●] |
| [●] | [●] |
18
Exhibit A
Escrow Agreement
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FORM OF ESCROW AGREEMENT
among
LAVORO MERGER SUB II LIMITED,
and
CITIBANK, N.A., as Escrow Agent
Dated as of [●], 2023
This ESCROW AGREEMENT (this “Agreement”), dated as of [●], 2023, is entered into by and among Lavoro Merger Sub II Limited, an exempted company incorporated with limited liability in the Cayman Islands (the “Company”), and Citibank, N.A., a national banking association organized and existing under the laws of the United States of America (“Citibank”) and acting through its Agency and Trust Division and solely in its capacity as escrow agent under this Agreement, and any successors appointed pursuant to the terms hereof (Citibank in such capacity, the “Escrow Agent”).
WHEREAS, TPB Acquisition Corporation I, an exempted company incorporated with limited liability in the Cayman Islands (“SPAC”), has entered into a Business Combination Agreement, dated as of September 14, 2022 (the “Business Combination Agreement”), by and among SPAC, the Company, Lavoro Limited, an exempted company incorporated with limited liability in the Cayman Islands (“Parent”), Lavoro Merger Sub I Limited (“First Merger Sub”), an exempted company incorporated with limited liability in the Cayman Islands, Lavoro Merger Sub III Limited, an exempted company incorporated with limited liability in the Cayman Islands, and Lavoro Agro Limited, an exempted company incorporated with limited liability in the Cayman Islands, pursuant to which First Merger Sub will merge with and into SPAC, with SPAC surviving, following which SPAC will merge with and into the Company, with the Company surviving (such transactions, the “SPAC Mergers”, and together with the other transactions contemplated by the Business Combination Agreement, the “Business Combination”);
WHEREAS, SPAC has entered into separate Forward Share Purchase Agreements, each dated as of February 20, 2023 (each as amended from time to time, a “Purchase Agreement” and collectively, the “Purchase Agreements”), with the respective Investor named therein (each, an “Investor” and collectively, the “Investors”), pursuant to which each Investor may elect to sell and transfer to the Company certain Class A ordinary shares, par value $0.001 per share, of Parent (the “Shares”) that are held by such Investor on the date that is 24 months after the closing date of the Business Combination (the “Maturity Date”), at a price per Share equal to (i) the total amount of the Escrowed Property (as defined below) in the Escrow Account (as defined below), divided by (ii) the total number of Shares held by the Investors as of the Maturity Date (the “Maturity Date Purchase Price”);
WHEREAS, the Company and the Investors desire to establish an escrow account (the “Escrow Account”), into which, on the closing date of the Business Combination (the “Business Combination Closing Date”), the Company shall deposit, for good and valuable consideration, the receipt, sufficiency and adequacy of which the Company hereby acknowledges, an amount equal to $10.055 (the “Shares Purchase Price”) multiplied by the number of Shares and Additional Shares (as defined in the Purchase Agreements) held by the Investors as of the Business Combination Closing Date, and the Escrow Agent is willing to establish the Escrow Account on the terms and subject to the conditions hereinafter set forth;
NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which is hereby irrevocably acknowledged, the parties hereto agree as follows:
1. Appointment; Establishment of Escrow Account; Investment of Funds.
(a) The Company hereby appoints the Escrow Agent as escrow agent for the purposes set forth herein, and the Escrow Agent hereby accepts such appointment and agrees to act as escrow agent hereunder, to hold and release the Escrowed Property (as defined below) in accordance with the terms and conditions set forth herein.
(b) Immediately following the closing of the Business Combination, the Company shall deposit with the Escrow Agent in immediately available funds an amount equal to the Shares Purchase Price multiplied by the number of Shares and Additional Shares (as defined in the Purchase Agreements) held by the Investors as of the Business Combination Closing Date. “Escrowed Property” shall mean (i) (a) the Shares Purchase Price multiplied by the number of Shares and Additional Shares held by the Investors as of the closing of the Business Combination less (b) any amounts previously disbursed from the Escrow Account (as defined below) in accordance with this Agreement and the Purchase Agreements, plus (ii) the interest, investment income, or proceeds accrued from the deposit or investment from the Escrow Account. The Escrowed Property shall be deposited in an interest-bearing account insured by the Federal Deposit Insurance Corporation to the applicable limits. The Company acknowledges that the initial interest rate is subject to change from time to time and shall be reflected in the monthly statement provided to the Company.
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2. Claims and Payment; Release from Escrow. The Company shall act in accordance with, and the Escrow Agent shall hold and release the Escrowed Property as provided in, this Section 2 as follows:
(a) On the Shares Closing Date (as defined in the Purchase Agreements), and concurrently with the Escrow Agent’s receipt of an instruction from the Company confirming the electronic delivery of any Investor’s Shares to the Company pursuant to Section 1(b) of the relevant Purchase Agreement, the Escrow Agent shall deliver to each such selling Investor(s), for such selling Investor’s use without restriction, an amount equal to (x) the Maturity Date Purchase Price multiplied by (y) the number of Shares being sold by such selling Investor (subject to the Share Purchase Limit (as defined in the Purchase Agreements)), which shall be paid by wire transfer of immediately available funds from the Escrow Account in accordance with the payment instructions provided in Schedule B hereto.
(b) On the date on which the Escrow Agent is notified in writing by the Company that an Investor’s Purchase Agreement is being terminated pursuant to Sections 7(g) or 7(h) thereof, concurrently with the Escrow Agent’s receipt of an instruction from the Company confirming the electronic delivery of all of such Investor’s Shares (including any Additional Shares) to the Company, the Escrow Agent shall deliver to each such Investor, for such Investor’s use without restriction, an amount equal to (i) the Escrowed Property, divided by (ii) the total number of Shares held by the Investors as of the date of the $5.00 Notice Trigger (as defined in the Purchase Agreements) or the Insolvency Event (as defined in the Purchase Agreements), as applicable, multiplied by the number of Shares then held by such Investor, which shall be paid by wire transfer of immediately available funds from the Escrow Account in accordance with the payment instructions provided in Schedule B hereto.
(c) Upon receipt by the Escrow Agent of a written notice from the Company that an Investor has sold Shares (including any Additional Shares) as provided in Section 5(e) of the relevant Purchase Agreement (any such date, an “Instruction Date”), the Escrow Agent shall release to the Company, in accordance with the payment instructions provided by the Company, an amount equal to (i) the Escrowed Property divided by the number of Shares held by Investors as of such Instruction Date, multiplied by (ii) the number of Shares sold by such Investor pursuant to Section 5(e) of the relevant Purchase Agreement in accordance with the payment instructions provided in Schedule B hereto.
(d) If, on or before the Maturity Date, the Purchase Agreements are terminated pursuant to Section 7(f) of the Purchase Agreement, then the Escrow Agent shall promptly release to the Company any Escrowed Property that remains in the Escrow Account in accordance with the payment instructions provided in Schedule B hereto.
(e) If any Investor (i) fails to timely deliver a Shares Sale Notice (as defined in the Purchase Agreements) to the Company and the Escrow Agent five Business Days (as defined in the Purchase Agreements) prior to the Maturity Date in accordance with Section 1(a) of the relevant Purchase Agreement, or (ii) notifies the Escrow Agent that such Investor does not intend to exercise such Investor’s right to sell any of its Shares to the Company pursuant to Section 1(a) of the relevant Purchase Agreement, then, on the Maturity Date and upon written instruction of the Company, the Escrow Agent shall release to the Company any Escrowed Property that remains in the Escrow Account (after giving effect to all Investors’ timely delivered Shares Sale Notices) in accordance with the payment instructions provided in Schedule B hereto.
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(f) Upon receipt by the Escrow Agent of a copy of a court order, together with (i) a certificate of the Company to the effect that such order is final and non-appealable and from a court of competent jurisdiction having proper authority and (ii) written payment instructions of the Company to effectuate such order (a “Final Determination”), the Escrow Agent shall on the fifth (5th) Business Day following receipt of such Final Determination, disburse as directed, part or all, as the case may be, of the Escrowed Property (but only to the extent funds are available in the Escrow Account) in accordance with such Final Determination. The Escrow Agent shall be entitled to act on such Final Determination without further inquiry.
3. Tax Matters.
(a) The parties hereto agree that the Escrowed Property shall be treated as owned by the Counterparty, any earnings or proceeds received on or distributions of earnings or proceeds from the Escrowed Property during a calendar year period shall be treated as the income of the Counterparty, and the Escrow Agent shall report such earnings or proceeds on an annual basis on United States Internal Revenue Service (“IRS”) Form 1042-S, as required pursuant to the Internal Revenue Code of 1986, as amended (the “Code”) and the regulations thereunder, withhold applicable taxes from such earnings or proceeds, to the extent required under applicable law, and remit such withheld amounts to the appropriate taxing authorities. The Counterparty and the Escrow Agent agree that the Escrow Agent will not be responsible for providing tax reporting and withholding for payments that are for compensation for services performed by an employee or independent contractor.
(b) The Counterparty shall upon the execution of this Agreement provide the Escrow Agent with a duly completed and properly executed applicable IRS Form W-8, together with any other documentation and information reasonably requested by the Escrow Agent in connection with the Escrow Agent’s tax reporting obligations under the Code and the regulations thereunder. With respect to the Escrow Agent’s tax reporting obligations under the Code, the Foreign Account Tax Compliance Act and the Foreign Investment in Real Property Tax Act and any other applicable law or regulation, the Counterparty understands that, in the event valid U.S. tax forms or other required supporting documentation are not provided to the Escrow Agent, the Escrow Agent may be required to withhold tax from the Escrowed Property and report account information on any earnings, proceeds or distributions from the Escrowed Property.
(c) Should the Escrow Agent become liable for the payment of taxes, including withholding taxes but excluding taxes on income earned by the Escrow Agent in connection with the performance of its obligations pursuant to this Agreement, relating to the Escrowed Property, including interest and penalties thereon, the Escrow Agent shall satisfy such liability to the extent possible from the Escrowed Property; provided that, before such satisfaction, the Escrow Agent shall provide written notice and evidence reasonably detailing such liability to the Counterparty.
4. Concerning the Escrow Agent.
(a) Escrow Agent Duties. The Company acknowledges and agrees that (i) the Escrow Agent shall provide to the Company, by written notice and on a weekly basis, the amount deposited in the Escrow Account and the investments made in respect to the Escrow Account pursuant to Section 1(b) of this Agreement, (ii) the duties, responsibilities and obligations of the Escrow Agent shall be limited to those expressly set forth in this Agreement, each of which is administrative or ministerial (and shall not be construed to be fiduciary) in nature, and no duties, responsibilities or obligations shall be inferred or implied, (iii) the Escrow Agent shall not be responsible for any of the agreements referred to or described herein (including without limitation the Purchase Agreements and any defined term therein not otherwise defined in this Agreement), or for determining or compelling compliance therewith, and shall not otherwise be bound thereby, and (iv) the Escrow Agent shall not be required to expend or risk any of its own funds to satisfy payments from the Escrowed Property hereunder.
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(b) Liability of Escrow Agent. The Escrow Agent shall not be liable for any damage, loss or injury resulting from any action taken or omitted in the absence of gross negligence or willful misconduct (as finally adjudicated by a court of competent jurisdiction). In no event shall the Escrow Agent be liable for indirect, incidental, consequential, punitive or special losses or damages (including but not limited to lost profits), regardless of the form of action and whether or not any such losses or damages were foreseeable or contemplated. The Escrow Agent shall be entitled to rely upon any instruction, notice, request or other instrument delivered to it without being required to determine the authenticity or validity thereof, or the truth or accuracy of any information stated therein. The Escrow Agent may act in reliance upon any signature believed by it to be genuine (including any signature affixed by DocuSign) and may assume that any person purporting to make any statement, execute any document, or send any instruction in connection with the provisions hereof has been duly authorized to do so. The Escrow Agent may consult with counsel satisfactory to it, and the opinion or advice of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it in good faith and in accordance with the opinion and advice of such counsel. The Escrow Agent may perform any and all of its duties through its agents, representatives, attorneys, custodians and/or nominees. The Escrow Agent shall not incur any liability for not performing any act or fulfilling any obligation hereunder by reason of any occurrence beyond its control (including, without limitation, any provision of any present or future law or regulation or any act of any governmental authority, any act of God or war or terrorism, or the unavailability of the Federal Reserve Bank wire services or any electronic communication facility).
(c) Reliance on Orders. The Escrow Agent is authorized to comply with final orders issued or process entered by any court with respect to the Escrowed Property, without determination by the Escrow Agent of such court’s jurisdiction in the matter. If any portion of the Escrowed Property is at any time attached, garnished or levied upon under any court order, or in case the payment, assignment, transfer, conveyance or delivery of any such property shall be stayed or enjoined by any court order, or in case any order, judgment or decree shall be made or entered by any court affecting such property or any part thereof, then and in any such event, the Escrow Agent is authorized to rely upon and comply with any such order, writ, judgment or decree which it is advised is binding upon it without the need for appeal or other action; and if the Escrow Agent complies with any such order, writ, judgment or decree, it shall not be liable to the Company or to any other person or entity by reason of such compliance even though such order, writ, judgment or decree may be subsequently reversed, modified, annulled, set aside or vacated.
(d) Erroneous Payments. If the Escrow Agent releases any funds (including but not limited to the Escrowed Property or any portion of it) to the Company or to the Investors and subsequently determines (in its absolute discretion) that the payment (or any portion of it) was made in error, that the Company shall upon notice promptly refund the erroneous payment, and none of the obligations of the Company or the remedies of the Escrow Agent will be affected by any act, omission, matter or thing (including, without limitation, any obligation pursuant to which an erroneous payment is made) which, but for this provision, would reduce, release, preclude or prejudice any such obligation or remedy (whether or not known by the Escrow Agent or the Company). The Company agrees not to assert discharge for value, bona fide payee, or any similar doctrine as a defense to recovery of any erroneous payment by the Escrow Agent.
5. Compensation, Expense Reimbursement and Indemnification.
(a) Compensation. The Company covenants and agrees to pay the Escrow Agent’s compensation specified in Schedule A. The Company covenants and agrees to pay to the Escrow Agent all out-of-pocket expenses incurred by the Escrow Agent in the performance of its role under this Agreement (including, but not limited to, any attorney’s fees incurred in connection with the preparation and negotiation of this Agreement, which shall be due and payable upon the execution of this Agreement).
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(b) Security and Offset. The Company hereby grants to the Escrow Agent a first lien upon, and right of offset against, the Escrowed Property with respect to any fees or expenses due to the Escrow Agent hereunder (including any claim for indemnification hereunder). In the event that any fees or expenses, or any other obligations owed to the Escrow Agent (or its counsel) are not paid to the Escrow Agent within 30 calendar days following the presentment of an invoice for the payment of such fees and expenses or the demand for such payment, then the Escrow Agent may, without further action or notice, pay such fees and expenses from the Escrowed Property and may sell, convey or otherwise dispose of any Escrowed Property for such purpose. The Escrow Agent may in its sole discretion withhold from any distribution of the Escrowed Property an amount of such distribution it reasonably believes would, upon sale or liquidation, produce proceeds equal to any unpaid amounts to which the Escrow Agent is entitled to hereunder.
(c) Indemnification. The Company covenants and agrees to indemnify the Escrow Agent and its employees, officers, directors, affiliates, and agents (each, an “Indemnified Party”) for, hold each Indemnified Party harmless from, and defend each Indemnified Party against, any and all claims, losses, actions, liabilities, taxes, costs, damages and expenses of any nature incurred by any Indemnified Party, arising out of or in connection with this Agreement or with the administration of its duties hereunder, including but not limited to attorney’s fees, costs and expenses, except to the extent such loss, liability, damage, cost or expense shall have been finally adjudicated by a court of competent jurisdiction to have resulted from (i) the Indemnified Party’s own gross negligence or willful misconduct or (ii) income earned by the Escrow Agent in connection with the performance of its obligations pursuant to this Agreement. The foregoing indemnification and agreement to hold harmless shall survive the termination of this Agreement and the resignation or removal of the Escrow Agent.
6. Dispute Resolution. In the event of any disagreement between the Company and any other person resulting in adverse claims or demands being made with respect to the subject matter of this Agreement, or in the event that the Escrow Agent, in good faith, is in doubt as to any action it should take hereunder, the Escrow Agent may, at its option, refuse to comply with any claims or demands and refuse to take any other action hereunder, so long as such disagreement continues or such doubt exists, and in any such event, the Escrow Agent shall not be liable in any way or to any person for its failure or refusal to act, and the Escrow Agent shall be entitled to continue to so refuse to act and refrain from acting until the Escrow Agent shall have received a Final Determination, in which case the Escrow Agent shall be authorized to disburse the Escrowed Property in accordance with such Final Determination. The Escrow Agent shall have the option, after 30 calendar days’ notice to the Company of its intention to do so, to petition (by means of filing an action in interpleader or any other appropriate method) any court of competent jurisdiction, for instructions with respect to any dispute or uncertainty, and to the extent required or permitted by law, pay into such court the Escrowed Property for holding and disposition in accordance with the instructions of such court. The costs and expenses (including reasonable attorneys’ fees and expenses) incurred by the Escrow Agent in connection with such proceeding shall be paid by the Company.
7. Entire Agreement; Exclusive Benefit. This Agreement constitutes the entire agreement between the parties and sets forth in its entirety the obligations and duties of the Escrow Agent with respect to the Escrowed Property. This Agreement is for the exclusive benefit of the parties to this Agreement and their respective permitted successors, and shall not be deemed to give, either expressly or implicitly, any legal or equitable right, remedy, or claim to any other entity or person whatsoever. No party may assign any of its rights or obligations under this Agreement without the prior written consent of the other parties.
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8. Resignation and Removal.
(a) The Company may remove the Escrow Agent at any time by giving to the Escrow Agent thirty (30) calendar days’ prior written notice of removal signed by an Authorized Person of the Company. The Escrow Agent may resign at any time by giving to the Company thirty (30) calendar days’ prior written notice of resignation.
(b) Within thirty (30) calendar days after giving the foregoing notice of removal to the Escrow Agent or within thirty (30) calendar days after receiving the foregoing notice of resignation from the Escrow Agent, the Company shall appoint a successor escrow agent and give notice of such successor escrow agent to the Escrow Agent. If a successor escrow agent has not accepted such appointment by the end of such 30-day period, the Escrow Agent may either (A) safe keep the Escrowed Property until a successor escrow agent is appointed, without any obligation to invest the same or continue to perform under this Agreement, or (B) apply to a court of competent jurisdiction for the appointment of a successor escrow agent or for other appropriate relief.
(c) Upon receipt of notice of the identity of the successor escrow agent, the Escrow Agent shall either deliver the Escrowed Property then held hereunder to the successor escrow agent, less the Escrow Agent’s fees, costs and expenses, or hold such Escrowed Property (or any portion thereof) pending distribution, until all such fees, costs and expenses are paid to it. Upon delivery of the Escrowed Property to the successor escrow agent, the Escrow Agent shall have no further duties, responsibilities or obligations hereunder.
9. Governing Law; Jurisdiction; Waivers. This Agreement is governed by and shall be construed and interpreted in accordance with the laws of the State of New York without giving effect to the conflict of laws principles thereof. The parties irrevocably and unconditionally submit to the exclusive jurisdiction of the federal and state courts located in the Borough of Manhattan, City, County and State of New York, for any proceedings commenced regarding this Agreement. The parties irrevocably submit to the jurisdiction of such courts for the determination of all issues in such proceedings and irrevocably waive any objection to venue or inconvenient forum for any proceeding brought in any such court. The parties irrevocably and unconditionally waive any right to trial by jury with respect to any proceeding relating to this Agreement.
10. Representations and Warranties.
(a) The Company represents and warrants that it has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder; and this Agreement has been duly approved by all necessary action and constitutes its valid and binding agreement enforceable in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting the enforcement of creditors’ rights and subject to general equity principles.
(b) None of the Company or any of its parents or subsidiaries, or any of its respective directors, officers, or employees, or to the knowledge of the Company, the affiliates of the Company or any of its subsidiaries, will, directly or indirectly, use any part of any proceeds or lend, contribute, or otherwise make available such Escrowed Property in any manner that would result in a violation by any person of economic, trade, or financial sanctions, requirements, or embargoes imposed, administered, or enforced from time to time by the United States (including, without limitation, the Office of Foreign Assets Control of the U.S. Department of the Treasury and the U.S. Department of State), the United Kingdom (including, without limitation, Her Majesty’s Treasury), the European Union and any EU member state, the United Nations Security Council, and any other relevant sanctions authority.
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11. Notices; Instructions.
(a) Any notice or instruction hereunder shall be in writing in English, and may be sent by electronic mail with a scanned attachment thereto of an executed notice or instruction, and shall be effective upon actual receipt by the Escrow Agent in accordance with the terms hereof. Any notice or instruction must be executed (which execution may be manual or affixed by DocuSign) by an authorized person of the Company (the person(s) so designated from time to time, the “Authorized Persons”). Each of the applicable persons designated on Schedule C attached hereto have been duly appointed to act as Authorized Persons hereunder and individually have full power and authority to execute any notices or instructions, to amend, modify or waive any provisions of this Agreement, and to take any and all other actions permitted under this Agreement, all without further consent or direction from, or notice to, it or any other party. Any notice or instruction must be originated from a corporate domain. Any change in designation of Authorized Persons shall be provided by written notice, signed by an Authorized Person, and actually received and acknowledged by the Escrow Agent. Any communication from the Escrow Agent that the Escrow Agent deems to contain confidential, proprietary, and/or sensitive information shall be encrypted in accordance with the Escrow Agent’s internal procedures.
(b) The Company understands and agrees that the Escrow Agent cannot determine the identity of the actual sender of any notice or instruction and that the Escrow Agent shall be entitled to conclusively presume that notices or instructions that purport to have been sent by an Authorized Person have been sent by such Authorized Person. The Company agrees: (i) to assume all risks arising out of the use of electronic means (including electronic mail, secure file transfer or such other method or system specified by the Escrow Agent as available for use in connection with its services hereunder) to submit instructions to the Escrow Agent, including without limitation the risk of the Escrow Agent acting on unauthorized instructions, and the risk of interception or misuse by third parties; (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting instructions to the Escrow Agent and that there may be more secure methods of transmitting instructions than the method(s) selected by the Company; (iii) that the security procedures (if any) to be followed in connection with its transmission of instructions provide to it a commercially reasonable degree of protection in light of its particular needs and circumstances; and (iv) to notify the Escrow Agent immediately upon learning of any compromise or unauthorized use of the security procedures. The Company agrees that the security procedures set forth in Section 11(a) and this Section 11(b) are commercially reasonable.
If to the Company:
Lavoro Merger Sub II Limited
Av. Dr. Cardoso de Melo, 1450, 5th floor, office 501
São Paulo—SP, 04548-005, Brazil
Attention: Laurence Beltrão Gomes
Email: [***]
with a copy to (which shall not constitute notice):
Davis Polk & Wardwell LLP
450 Lexington Avenue
New York, NY 10017
Attention: Manuel Garciadiaz
Email: [***]
If to the Escrow Agent:
Citibank, N.A.
Agency & Trust
388 Greenwich Street
-7-
New York, NY 10013
Attn.: Peter Traina
Telephone: [***]
E-mail: [***]
(c) Any funds to be paid by the Escrow Agent hereunder shall be sent by wire transfer pursuant to the instructions set forth on Schedule B, or pursuant to such other wire payment instructions as may be instructed by the Company.
(d) Payments to the Escrow Agent shall be sent by wire transfer pursuant to the following instructions: CITIBANK, N.A., ABA: [***]; Account Name: [***]; A/C#.: [***]
12. Amendment; Waiver. Any amendment of this Agreement shall be binding only if evidenced by a writing signed by each of the parties to this Agreement. No waiver of any provision hereof shall be effective unless expressed in writing and signed by the party to be charged.
13. Severability. The invalidity, illegality or unenforceability of any provision of this Agreement shall in no way affect the validity, legality or enforceability of any other provision. If any provision of this Agreement is held to be unenforceable as a matter of law, the other provisions shall not be affected thereby and shall remain in full force and effect.
14. Mergers and Conversions. Any corporation or entity into which the Escrow Agent may be merged or converted or with which it may be consolidated, or any corporation or entity resulting from any merger, conversion or consolidation to which the Escrow Agent will be a party, or any corporation or entity succeeding to the business of the Escrow Agent will be the successor of the Escrow Agent hereunder without the execution or filing of any paper with any party hereto or any further act on the part of any of the parties hereto except where an instrument of transfer or assignment is required by law to effect such succession, anything herein to the contrary notwithstanding.
15. Termination. This Agreement shall terminate and the Escrow Account shall be closed upon the distribution of all Escrowed Property from the Escrow Account established hereunder in accordance with the terms of this Agreement, subject, however, to the survival of obligations specifically contemplated in this Agreement to so survive.
16. Counterparts. This Agreement may be executed simultaneously in two or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together shall constitute one and the same agreement. Signatures on counterparts of this Agreement executed and delivered in electronic format (i.e. “pdf”) or by other electronic means (including DocuSign) shall be deemed original signatures with all rights accruing thereto except in respect to any non-US entity, whereby originals may be required.
[Remainder of Page Left Intentionally Blank]
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed by a duly authorized representative as of the day and year first written above.
| CITIBANK, N.A., | ||
| as Escrow Agent | ||
| By: | ||
| Name: | ||
| Title: | ||
| LAVORO MERGER SUB II LIMITED | ||
| By: | ||
| Name: | ||
| Title: | ||
SCHEDULE A
ESCROW AGENT FEE SCHEDULE
A-1
SCHEDULE B
WIRE INSTRUCTIONS
Bank:
ABA#:
Account Name:
A/C#:
Ref:
B-1
SCHEDULE C
AUTHORIZED LIST OF SIGNERS
Each of the following person(s) is authorized to execute documents and to direct the Escrow Agent as to all matters on the Company’s behalf. The Escrow Agent may confirm the instructions received by return call to any one of the telephone numbers listed below.
COMPANY
NAME: ___________________
TITLE: ____________________
PHONE: __________________
CORPORATE EMAIL: __________________
| Manual Specimen Signature | DocuSign Specimen Signature |
NAME: ___________________
TITLE: ____________________
PHONE: __________________
CORPORATE EMAIL: __________________
| Manual Specimen Signature | DocuSign Specimen Signature |
View-Only Reporting Access via Citidirect for Securities:
¨ Check here for same as above.
Please indicate those persons other than above requiring view access for statement reporting:
| First Name | Last Name | Telephone | Corporate Email | |
| 1 | ||||
| 2 | ||||
| 3 |
C-1
Exhibit B
Form of Notice
| Date: | [ ], 2023 | |
| To: | [___] (the “Counterparty”) | |
| Address: | ||
| Phone: | ||
| From: | [Investor] (the “Investor”) | |
| Re: | Sale under Forward Share Purchase Agreement | |
The purpose of this notice is to confirm certain terms of the sale of Class A ordinary shares, par value $0.001 per share, of Lavoro Limited (the “Shares”) relating to the transaction described in that certain Forward Share Purchase Agreement dated February 20, 2023.
| Sale Price | $[__] | |
| Number of Shares: | [__] | |
Exhibit 15.1
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Introduction
The following unaudited pro forma condensed combined statement of financial position as of June 30, 2022, combines the historical balance sheet of TPB SPAC as of June 30, 2022, with the historical combined statement of financial position of the Lavoro Group as of June 30, 2022, giving pro forma effect to the Business Combination, as if it had occurred on June 30, 2022.
The following unaudited pro forma condensed combined statement of profit or loss for the year ended June 30, 2022 combines the historical statement of operations data of TPB SPAC for the year ended June 30, 2022 and the historical combined statement of profit or loss of the Lavoro Group for the year ended June 30, 2022, giving pro forma effect to the Business Combination and the acquisitions completed by the Lavoro Group of Cenagro, Cenagral, Produttiva, Union Agro, AgroZap and Nova Geração (collectively referred to as the “Lavoro Acquisitions”), as discussed further in Note 20 to the combined financial statements as of and for the year ended June 30, 2022, which are below the threshold of significant acquisitions on an individual and aggregated basis, as if they had occurred on July 1, 2021.
The unaudited pro forma condensed combined statement of financial position as of June 30, 2022, has been derived from:
| · | the historical unaudited financial statements of TPB SPAC as of and for the six months ended June 30, 2022, and the related notes thereto included in the Form 10-Q previously filed by TPB SPAC with the SEC; and |
| · | the historical audited combined financial statements of the Lavoro Group as of and for the year ended June 30, 2022, and the related notes thereto included elsewhere in the proxy statement/prospectus which was filed on February 3, 2023 by New Lavoro. |
The unaudited pro forma condensed combined statement of profit or loss for the year ended June 30, 2022 has been derived from:
| · | the historical audited financial statements of TPB SPAC as of and for the period from February 8, 2021 (inception) to December 31, 2021 and the related notes thereto, included in the Form 10-K previously filed by TPB SPAC with the SEC, and the historical unaudited financial statements of TPB SPAC as of and for the six months ended June 30, 2022 and for the period from February 8, 2021 (inception) to June 30, 2021 and the related notes thereto, included in the Form 10-Qs previously filed by TPB SPAC with the SEC. Refer to 3. Basis of Presentation for more detail; |
| · | the historical audited combined financial statements of the Lavoro Group as of and for the year ended June 30, 2022 and the related notes thereto, included elsewhere in the proxy statement/prospectus filed on February 3, 2023 by New Lavoro; and |
| · | the unaudited financial data of the Lavoro Acquisitions. |
The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X as in effect on the date of this filing which incorporates requirements to depict the accounting for the transaction (“Transaction Accounting Adjustments”). The Lavoro Group has elected not to present any estimates related to potential synergies and other transaction effects that are reasonably expected to occur or have already occurred and will only be presenting Transaction Accounting Adjustments in the unaudited pro forma condensed combined financial information.
| 1 |
The unaudited pro forma condensed combined financial information has been presented for informational purposes only. The unaudited pro forma condensed combined financial information does not purport to represent what the actual consolidated results of operations of the Lavoro Group would have been if the Business Combination and the Lavoro Acquisitions had occurred on the date assumed, nor is it necessarily indicative of future consolidated results of operations. The unaudited pro forma condensed combined financial information does not purport to represent what the actual consolidated financial position of the Lavoro Group would have been if the Business Combination had occurred on the date assumed.
This information should be read together with the combined financial statements of the Lavoro Group and its related notes, TPB SPAC’s financial statements and related notes, the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Lavoro,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of TPB SPAC” and other financial information included in the proxy statement/prospectus filed on February 3, 2023 by New Lavoro.
| 2 |
UNAUDITED
PRO FORMA CONDENSED COMBINED STATEMENT OF FINANCIAL POSITION
AS OF JUNE 30, 2022
(In thousands of Brazilian Reais)
| Lavoro Group Historical | TPB SPAC (Historical) (After IFRS | Transaction Accounting Adjustments | Footnote reference | Pro Forma Combined | ||||||||||||||
| ASSETS | ||||||||||||||||||
| Current Assets | ||||||||||||||||||
| Cash equivalents | 254,413 | 5,890 | 695,321 | B | 841,154 | |||||||||||||
| (114,470 | ) | D | ||||||||||||||||
| Trade receivables | 1,794,602 | — | — | 1,794,602 | ||||||||||||||
| Inventories | 1,749,041 | — | — | 1,749,041 | ||||||||||||||
| Taxes recoverable | 93,725 | — | — | 93,725 | ||||||||||||||
| Derivative financial instruments | 7,677 | — | — | 7,677 | ||||||||||||||
| Commodity forward contracts | 32,800 | — | — | 32,800 | ||||||||||||||
| Advances to suppliers | 383,257 | — | — | 383,257 | ||||||||||||||
| Prepaid expenses | — | 2,269 | (2,269 | ) | D | — | ||||||||||||
| Other assets | 60,165 | — | (7,477 | ) | D | 52,688 | ||||||||||||
| Total current assets | 4,375,680 | 8,159 | 571,105 | 4,954,944 | ||||||||||||||
| Non-current assets | ||||||||||||||||||
| Financial investments | 1,344 | — | — | 1,344 | ||||||||||||||
| Trade receivables | 39,751 | — | — | 39,751 | ||||||||||||||
| Other assets | 2,473 | — | — | 2,473 | ||||||||||||||
| Right of use assets | 140,179 | — | — | 140,179 | ||||||||||||||
| Judicial deposits | 3,887 | — | — | 3,887 | ||||||||||||||
| Tax recoverable | 50,937 | — | — | 50,937 | ||||||||||||||
| Deferred tax assets | 200,986 | — | — | 200,986 | ||||||||||||||
| Property, plant and equipment | 146,205 | — | — | 146,205 | ||||||||||||||
| Intangible assets | 724,321 | — | — | 724,321 | ||||||||||||||
| Investments held in Trust Account | — | 945,220 | (244,661 | ) | A | — | ||||||||||||
| (700,559 | ) | B | ||||||||||||||||
Total non-current assets | 1,310,083 | 945,220 | (945,220 | ) | 1,310,083 | |||||||||||||
Total assets | 5,685,763 | 953,379 | (374,115 | ) | 6,265,027 | |||||||||||||
| Liabilities | ||||||||||||||||||
| Current liabilities | ||||||||||||||||||
| Trade payables | 2,301,700 | 5,318 | (5,318 | ) | D | 2,301,700 | ||||||||||||
| Lease liabilities | 69,226 | — | — | 69,226 | ||||||||||||||
| Borrowings | 681,217 | — | — | 681,217 | ||||||||||||||
| Payables for the acquisition of subsidiaries | 111,684 | — | — | 111,684 | ||||||||||||||
| Derivative financial instruments | 7,121 | — | — | 7,121 | ||||||||||||||
| Commodity forward contracts | 27,038 | — | — | 27,038 | ||||||||||||||
| Salaries and social charges | 187,285 | — | — | 187,285 | ||||||||||||||
| Taxes payable | 34,216 | — | — | 34,216 | ||||||||||||||
| Dividends payable | 411 | — | — | 411 | ||||||||||||||
| Advances from customers | 320,560 | — | — | 320,560 | ||||||||||||||
| Accrued expenses | — | 4,911 | (4,911 | ) | D | — | ||||||||||||
| Note Payable - Related Party | — | 5,238 | (5,238 | ) | B | — | ||||||||||||
| Other liabilities | 95,893 | — | — | 95,893 | ||||||||||||||
| Total current liabilities | 3,836,351 | 15,467 | (15,467 | ) | 3,836,351 | |||||||||||||
| Non-current liabilities | ||||||||||||||||||
| Leases liabilities | 86,027 | — | — | 86,027 | ||||||||||||||
| Borrowings | 29,335 | — | — | 29,335 | ||||||||||||||
| Payables for the acquisition of subsidiaries | 52,747 | — | — | 52,747 | ||||||||||||||
| Provision for contingencies | 2,966 | — | — | 2,966 | ||||||||||||||
| Deferred underwriting commissions in connection with the Initial Public Offering | — | 33,066 | (33,066 | ) | D | — | ||||||||||||
| Derivative warrant liabilities | — | 10,588 | — | 10,588 | ||||||||||||||
| Other liabilities | 1,119 | 944,741 | (244,661 | ) | A | 1,119 | ||||||||||||
| (700,080 | ) | C | ||||||||||||||||
| Deferred tax liabilities | 7,491 | — | — | 7,491 | ||||||||||||||
| Total non-current liabilities | 179,685 | 988,395 | (977,807 | ) | 190,273 | |||||||||||||
| Total liabilities | 4,016,036 | 1,003,862 | (993,274 | ) | 4,026,624 | |||||||||||||
| Net investment | ||||||||||||||||||
| Net investment from the Parent | 1,451,647 | — | (1,451,647 | ) | E(ii) | — | ||||||||||||
| Class B ordinary shares | — | 2 | (2 | ) | E(i) | — | ||||||||||||
| Share capital (Lavoro Limited) | — | — | 70 | C | 583 | |||||||||||||
| 8 | E(i) | |||||||||||||||||
| 505 | E(ii) | |||||||||||||||||
| Additional paid-in capital ("APIC") | — | — | 700,010 | C | 2,347,338 | |||||||||||||
| (80,921 | ) | D | ||||||||||||||||
| (50,491 | ) | E(i) | ||||||||||||||||
| 1,474,254 | E(ii) | |||||||||||||||||
| 304,486 | E(iii) | |||||||||||||||||
| Retained earnings (deficit) | — | (50,485 | ) | 50,485 | E(i) | (304,486 | ) | |||||||||||
| (304,486 | ) | E(iii) | ||||||||||||||||
| Accumulated other comprehensive loss | — | — | (23,112 | ) | E(ii) | (23,112 | ) | |||||||||||
| Equity attributable to owners of the company | 1,451,647 | (50,483 | ) | 619,159 | 2,020,323 | |||||||||||||
| Non-controlling interest | 218,080 | — | — | 218,080 | ||||||||||||||
| Total net investment | 1,669,727 | (50,483 | ) | 619,159 | 2,238,403 | |||||||||||||
| Total liabilities and net investment | 5,685,763 | 953,379 | (374,115 | ) | 6,265,027 | |||||||||||||
| (1) | Refer to 4. TPB SPAC IFRS Conversion and Presentation Adjustments where the TPB SPAC historical unaudited financial statements as of June 30, 2022, are adjusted to give effect to conversion from US GAAP to IFRS. |
| 3 |
UNAUDITED
PRO FORMA CONDENSED COMBINED STATEMENT OF PROFIT OR LOSS
FOR THE YEAR ENDED JUNE 30, 2022
(in thousands of Brazilian Reais, except share and per share amounts)
| Pro forma Lavoro Group (1) | TPB SPAC Historical (2) | Transaction Accounting Adjustments | Footnote reference | Pro Forma Combined | ||||||||||||||
| Revenue | 8,163,196 | — | — | 8,163,196 | ||||||||||||||
| Cost of goods sold | (6,745,048 | ) | — | — | (6,745,048 | ) | ||||||||||||
| Gross profit | 1,418,148 | — | — | 1,418,148 | ||||||||||||||
| Operating expenses | ||||||||||||||||||
| Sales, general and administrative expenses | (1,069,207 | ) | (15,107 | ) | 12,965 | DD | (1,071,349 | ) | ||||||||||
| Other operating income (loss), net | 61,092 | — | (304,486 | ) | CC | (243,394 | ) | |||||||||||
| Operating profit (loss) | 410,033 | (15,107 | ) | (291,521 | ) | 103,405 | ||||||||||||
| Finance Income (costs) | ||||||||||||||||||
| Finance income | 427,492 | — | — | 427,492 | ||||||||||||||
| Finance costs | (650,985 | ) | — | — | (650,985 | ) | ||||||||||||
| Change in fair value of derivative warrant liabilities | — | 72,869 | — | 72,869 | ||||||||||||||
| Income from investments in Trust Account | — | 479 | (479 | ) | AA | — | ||||||||||||
| Loss upon issuance of private placement warrants | — | (3,429 | ) | — | (3,429 | ) | ||||||||||||
| Offering costs associated with derivative warrant liabilities | — | (3,028 | ) | — | (3,028 | ) | ||||||||||||
| Profit (loss) before income taxes | 186,540 | 51,784 | (292,000 | ) | (53,676 | ) | ||||||||||||
| Income taxes | ||||||||||||||||||
| Current | (114,646 | ) | — | — | (114,646 | ) | ||||||||||||
| Deferred | 79,341 | — | — | 79,341 | ||||||||||||||
| Profit (loss) for the year | 151,235 | 51,784 | (292,000 | ) | (88,981 | ) | ||||||||||||
| Attributable to: | ||||||||||||||||||
| Net investment of the Parent | 112,274 | 51,784 | (292,000 | ) | (127,942 | ) | ||||||||||||
| Non-controlling interests | 38,961 | — | — | 38,961 | ||||||||||||||
| Total comprehensive income (loss) for the period | 151,235 | 51,784 | (292,000 | ) | (88,981 | ) | ||||||||||||
| Attributable to: | ||||||||||||||||||
| Net investment of the Parent | 112,274 | 51,784 | (292,000 | ) | (127,942 | ) | ||||||||||||
| Non-controlling interests | 38,961 | — | — | 38,961 | ||||||||||||||
| Weighted average Class A common shares outstanding - basic and diluted (3) | 18,036,299 | 93,199,068 | BB | 111,235,367 | ||||||||||||||
| Basic and diluted EPS per Class A common stock | 2.29 | (1.15 | ) | |||||||||||||||
| Weighted average Class B common shares outstanding - basic and diluted | 4,549,939 | (4,549,939 | ) | BB | — | |||||||||||||
| Basic and diluted EPS per Class B common stock | 2.29 | N/A | ||||||||||||||||
(1) Refer to The Lavoro Acquisitions for the year ended June 30, 2022, adjusted to give effect to the Lavoro Acquisitions. See Note 2 below.
(2) Refer to 3. Basis of Presentation where the TPB SPAC historical operating results adjustments are described in order to align with Lavoro's period ended.
(3) Refer to 5. Transaction accounting adjustments of the Business Combination between the TPB SPAC and Lavoro for more details on the Company's determination of basic and diluted EPS.
| 4 |
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
1. Description of the Business Combination
On September 14, 2022, the Lavoro Group and TPB SPAC entered into the Business Combination Agreement. As a result of the transactions contemplated by the Business Combination Agreement, TPB SPAC and the Lavoro Group became direct wholly owned subsidiaries of New Lavoro and each of the shareholders of the Lavoro Group and the shareholders of TPB SPAC became shareholders of New Lavoro and received Ordinary Shares. At the closing of the Business Combination, New Lavoro’s shares and warrants were started to trade on the NASDAQ under the ticker symbol LVRO and LVROW, respectively, and New Lavoro became a publicly listed entity.
The TPB SPAC also entered into separate Subscription Agreements, each dated September 14, 2022, with the PIPE Investors, pursuant to which, and subject to the terms and conditions thereto, the PIPE Investors collectively subscribed for an aggregate of 10 million TPB SPAC Class A Ordinary Shares for an aggregate purchase price of R$523.8 million. The PIPE Investment was consummated immediately prior to the closing of the Business Combination and each TPB SPAC Class A Ordinary Share subscribed for by the PIPE Investors was exchanged for one New Lavoro Class A Ordinary Share, substantially concurrently with the closing of the Business Combination. As of the closing of the Business Combination, 14,663,445 shares were redeemed in aggregate by certain TPB SPAC shareholders.
Ultimately, (i) all TPB SPAC Class A Ordinary Shares, with a par value of R$0.0005, outstanding were exchanged with New Lavoro for the right to receive New Lavoro Class A Ordinary Shares, with a par value of R$0.005 in an exchange ratio of 1.00, (ii) each TPB SPAC Warrant is exercisable for New Lavoro Class A Ordinary Shares on an exchange ratio of 1.00 and with the same terms, and (iii) each Company Share that is not a ‘Cashout’ share outstanding will be exchanged with New Lavoro for the right to receive New Lavoro Class A Ordinary Shares in accordance with the Exchange Ratio, as agreed upon by the parties.
Note that the right to purchase Forward Purchase Units in connection with the Business Combination has been waived by the Sponsor and the Sponsor Forward Purchase Agreement shall be terminated upon the consummation of the Business Combination. The right to purchase Forward Purchase Shares in connection with the Business Combination has been waived by each entity party to the Third Party Forward Purchase Agreements.
Last, the pre-existing employee benefit plan was assumed by New Lavoro at the close of the Business Combination. New Lavoro will issue the number of New Lavoro ordinary shares necessary to rollover the existing company compensation plan.
Unvested Founder Shares and Vesting Founder Shares
The Sponsor was issued a certain number of New Lavoro Class A Ordinary Shares to replace the TPB SPAC Class B Ordinary Shares (i.e., Founder Shares) that they hold, of which (i) Two-thirds (3,006,050) of such New Lavoro Class A Ordinary Shares were deemed to be Vesting Founder Shares, and (ii) 54,613 Founder Shares were not vested and will only be vested upon the registration of certain shares of New Lavoro that will be registered through the filing of a form F-1 registration statement with the SEC.
| 5 |
Vesting Founder Shares will be subject to certain vesting conditions. If at any time during the 3-year period following the close of the Business Combination, for over any 20 trading days within any consecutive 30 trading day period, the closing share price of New Lavoro Class A Ordinary Shares is greater than or equal to:
| 1. | $12.50, one-half of the Vesting Founder shares shall vest; and |
| 2. | $15.00, an additional one-half of the Vesting Founder shares shall vest. |
New Lavoro Class A Ordinary Share price targets shall be equitably adjusted for stock splits, stock dividends, cash dividends, reorganizations, combinations, recapitalizations and similar transactions affecting New Lavoro Class A Ordinary Shares. Any Vesting Founder Shares that have not vested during the 3-year period following the closing of the Business Combination will be forfeited.
Lock-Up Period Restriction
New Lavoro, Lavoro, the TPB SPAC, and each of the parties listed as Equity Holders1 entered into a Lock-Up Agreement (the “Lock-Up Agreement”) which subjects certain New Lavoro Class A Ordinary Shares to certain transfer restrictions, including lock-up restrictions. Accordingly, except with the prior written consent of the TPB SPAC, during the Lock-up Period2, each Equity Holder agrees not to take any actions in furtherance of any of the matters described in below clauses.
(i) Transfer any of its Lock-up Shares3,
(ii) enter into any option, warrant, purchase right or other contract that could require the Equity Holder to transfer any of its Lock-up Shares, or
The Sponsor agreed that they shall not transfer any private placement warrants (or any New Lavoro ordinary shares underlying the warrants) until 30 days after the completion of the Business Combination.
TPB SPAC does not meet the definition of a “business” pursuant to IFRS 3 as it is an empty listed shell holding only cash raised as part of its original equity issuance. As a result, the Business Combination does not qualify as a “business combination” within the meaning of IFRS 3, rather the Business Combination will be accounted for as a capital reorganization in accordance with IFRS 2.
For a description of the Business Combination and certain agreements executed in connection therewith, see “Summary of the Proxy Statement/Prospectus—The Business Combination” and “Certain Agreements Related to the Business Combination” within the prospectus filed on February 3, 2023 by New Lavoro.
1 Equity Holders include Private Equity Investments V, L.P., Brazilian Private Equity Opportunities V, L.P., PE Fund V, L.P. and PBPE Fund V (Cayman 2), L.P.
2 Lock-Up Period means the period beginning on the closing date and ending on
| · | for 25% of the Lock-Up Shares, the date that is 180 days following the closing date, |
| · | for an additional 25% of the Lock-Up Shares, the date that is 1 year following the Closing Date, |
| · | for an additional 25% of the Lock-Up Shares, the date that is 18 months following the Closing Date, and |
| · | for an additional 25% of the Lock-Up Shares, the date that is 2 years following the Closing Date. |
3 Lock-Up Shares means New Lavoro ordinary shares (except any PIPE Shares) held by the Equity Holders in the aggregate on the Closing Date immediately following the consummation of the Mergers.
| 6 |
2. Lavoro’s acquisitions
From the period July 1, 2021, through June 30, 2022, Lavoro acquired multiple businesses throughout Latin America, collectively referred to as the Lavoro Acquisitions. See Note 20 to the combined financial statements as of and for the year ended June 30, 2022 included elsewhere in the proxy statement/prospectus filed on February 3 by New Lavoro, 2023.
Set forth below are the pro forma effects of the Lavoro Acquisitions on the unaudited pro forma condensed combined statement of profit or loss for the fiscal year ended June 30, 2022, as follows:
| · | increase in amortization expense on the fair value of intangibles assets recognized (customer relationship, purchase contract and brands); |
| · | increase in depreciation expense on the fair value adjustment of property, plant and equipment; |
| · | tax effect on pro forma adjustments; and |
| · | non-controlling interests. |
The Lavoro Acquisitions are accounted for using the acquisition method of accounting under IFRS 3. The pro forma effects of the Lavoro Acquisitions, including the amortization of the fair value of intangible assets and property, plant and equipment and the allocation of the consideration transferred, are based on our estimates of the fair value of the assets acquired and liabilities assumed. The effects of cost savings and operating synergies or revenue enhancements that we may achieve as a result of the acquisitions or the costs to integrate them to our operations or the costs necessary to achieve these cost savings and operating synergies, such as procurement, distribution and administrative structure efficiencies and revenue enhancements, have not been reflected in the unaudited pro forma condensed combined statement of profit or loss.
For further details on the allocation of the consideration transferred for the acquisitions listed above, see Note 20 to our audited combined financial statements as of and for the year ended June 30, 2022 included elsewhere in the proxy statement/prospectus filed on February 3, 2023 by New Lavoro.
| 7 |
Pro forma adjustments to Lavoro’s unaudited interim statements of operation for the year ended June 30, 2022
| Lavoro (Historical) | Produttiva Historical (i) | Cenagro Historical (ii) | Cenagral Historical (iii) | Union
Agro Historical (iv) | AgroZap Historical (v) | Nova Geração (vi) | Pro
forma adjustments | Note | Pro
forma Lavoro Group | |||||||||||||||||||||||||||||||
| (in thousands of BRL) | ||||||||||||||||||||||||||||||||||||||||
| Revenue | 7,746,534 | 17,967 | 27,874 | 5,286 | 95,846 | 201,103 | 68,586 | — | 8,163,196 | |||||||||||||||||||||||||||||||
| Cost of goods sold | (6,421,037 | ) | (15,306 | ) | (23,705 | ) | (3,211 | ) | (61,899 | ) | (167,853 | ) | (52,037 | ) | — | (6,745,048 | ) | |||||||||||||||||||||||
| Gross profit | 1,325,497 | 2,661 | 4,169 | 2,075 | 33,947 | 33,250 | 16,549 | — | 1,418,148 | |||||||||||||||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||||||||||||||||||
| Sales, general and administrative expenses | (1,022,388 | ) | (2,160 | ) | (3,103 | ) | (616 | ) | (14,006 | ) | (15,477 | ) | (9,708 | ) | (1,314 | ) | b(i) | (1,069,207 | ) | |||||||||||||||||||||
| (435 | ) | b(ii) | ||||||||||||||||||||||||||||||||||||||
| Other operating income (expenses), net | 56,759 | 232 | (84 | ) | (13 | ) | 34 | 3,873 | 291 | — | 61,092 | |||||||||||||||||||||||||||||
| Operating profit (loss) | 359,868 | 733 | 982 | 1,446 | 19,975 | 21,646 | 7,132 | (1,749 | ) | 410,033 | ||||||||||||||||||||||||||||||
| Finance Income (Costs) | ||||||||||||||||||||||||||||||||||||||||
| Finance income | 426,933 | 197 | 7 | — | 149 | 137 | 69 | — | 427,492 | |||||||||||||||||||||||||||||||
| Finance costs | (646,377 | ) | (53 | ) | (97 | ) | (12 | ) | (362 | ) | (3,641 | ) | (443 | ) | — | (650,985 | ) | |||||||||||||||||||||||
| Loss before income tax and social contribution | 140,424 | 877 | 892 | 1,434 | 19,762 | 18,142 | 6,758 | (1,749 | ) | 186,540 | ||||||||||||||||||||||||||||||
| Income tax and social contribution | ||||||||||||||||||||||||||||||||||||||||
| Current | (111,409 | ) | — | (265 | ) | (283 | ) | (2,689 | ) | — | — | — | (114,646 | ) | ||||||||||||||||||||||||||
| Deferred | 78,747 | — | — | — | — | — | — | 594 | b(iii) | 79,341 | ||||||||||||||||||||||||||||||
| Profit (loss) for the period | 107,762 | 877 | 627 | 1,151 | 17,073 | 18,142 | 6,758 | (1,155 | ) | 151,235 | ||||||||||||||||||||||||||||||
| Attributable to: | ||||||||||||||||||||||||||||||||||||||||
| Net investment of the parent | 78,170 | 877 | 502 | 921 | 12,412 | 13,606 | 6,758 | (972 | ) | b(iv) | 112,274 | |||||||||||||||||||||||||||||
| Non-controlling interest | 29,592 | — | 125 | 230 | 4,661 | 4,536 | — | (183 | ) | b(iv) | 38,961 | |||||||||||||||||||||||||||||
| Total comprehensive income (loss) for the year | 107,762 | 877 | 627 | 1,151 | 17,073 | 18,142 | 6,758 | (1,155 | ) | 151,235 | ||||||||||||||||||||||||||||||
8
| (i) | Historical unaudited profit or loss data of Produttiva for the pre-acquisition period for the period from July 1, 2021 to September 2, 2021. |
| (ii) | Historical unaudited profit or loss data of Cenagro for the pre-acquisition period from July 1, 2021 to August, 31, 2021. |
| (iii) | Historical unaudited profit or loss data of Cenagral for the pre-acquisition period from July 1, 2021 to August, 31, 2021. |
| (iv) | Historical unaudited profit or loss data of Union Agro for the pre-acquisition period from July 1, 2021 to October, 28, 2021. |
| (v) | Historical unaudited profit or loss data of AgroZap for the pre-acquisition period from July 1, 2021 to January 7, 2022. |
| (vi) | Historical unaudited profit or loss data of Nova Geração for the pre-acquisition period from July 1, 2021 to April 7, 2022. |
The adjustments with respect to the Lavoro Acquisitions are as follows:
| (a) | Below is a summary of the fair value adjustments recorded on each acquisition date (except for inventories which is described in Note 3), see Note 20 to our audited combined financial statements included elsewhere in the proxy statement/prospectus filed on February 3, 2023 by New Lavoro: |
| Produttiva | Cenagro | Cenagral (*) | Union Agro | Agrozap | Nova Geração | Note | ||||||||||||||||||||||
| Customer relationship | 26,070 | 2,609 | — | 6,970 | 6,015 | 4,258 | (a) | |||||||||||||||||||||
| Brand | 4 | — | 7,437 | 1,323 | — | — | (b) | |||||||||||||||||||||
(*) Intangible asset with an indefinite useful life due to the continued use of the brand.
| (b) | Transaction accounting adjustments |
| (i) | Pro forma amortization adjustment on the fair value of customer relationship |
Below is the calculation of the pro forma amortization adjustment on the fair value of customer relationship for each acquisition. The amortization is calculated using the straight-line method.
| For the year ended June 30, 2022 | ||||||||||||||||||||||||
| Produttiva | Cenagro | Union Agro | AgroZap | Nova Geração | Total adjustments | |||||||||||||||||||
| Estimated useful life (years) | 9.2 | 11.0 | 7.2 | 11.0 | 13.0 | — | ||||||||||||||||||
| Pre-acquisition period (years) | 0.162 | 0.177 | 0.329 | 0.466 | 0.737 | — | ||||||||||||||||||
| Pro forma adjustments | 458 | 42 | 318 | 255 | 241 | 1,314 | ||||||||||||||||||
9
| (ii) | Pro forma amortization adjustment on the fair value of brand |
Below is the calculation of the pro forma amortization adjustment on the fair value adjustment. The amortization is calculated using the straight-line method.
| For the year ended June 30, 2022 | ||||
| Union Agro | ||||
| Estimated useful life (years) | 1.0 | |||
| Pre-acquisition period (years) | 0.329 | |||
| Pro forma adjustments | 435 | |||
| (iii) | Tax Effect on pro forma adjustments |
Represents the tax impact on the pro forma adjustments, using a statutory income tax rate of 34% applicable to all acquisitions located in Brazil.
| (iv) | Effect of pro forma adjustments on profit for the year attributable to the net investment of the parent and non-controlling interests |
Below is the effect of the pro form adjustments on profit for the year attributable to the net investment from the parent and non-controlling interests.
| For the year ended June 30, 2022 | ||||||||||||||||
| Cenagro | Union Agro | AgroZap | Total adjustments | |||||||||||||
| Pro forma adjustments | ||||||||||||||||
| Depreciation and amortization | (42 | ) | (753 | ) | (255 | ) | — | |||||||||
| Income taxes effect (34% Brazil and 32% Colombia) | 14 | 256 | 87 | — | ||||||||||||
| Non-controlling interest (%) | 20 | % | 27 | % | 25 | % | — | |||||||||
| Pro forma adjustments | (6 | ) | (136 | ) | (42 | ) | (183 | ) | ||||||||
| (c) | Fair value adjustment on inventory |
The estimated fair value adjustment on inventory amounted to R$0.6 million for the year ended June 30, 2022, which has not been reflected in the pro forma statement of income as it is not expected to have a continuing impact.
10
3. Basis of Presentation
The included unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses.” Release No. 33-10786 replaces the existing pro forma adjustment criteria with simplified requirements to depict the accounting for the transaction (“Transaction Accounting Adjustments”) and present the reasonably estimable synergies and other transaction effects that have occurred or are reasonably expected to occur (“Management’s Adjustments”) the Lavoro Group has elected not to present Management’s Adjustments and will only be presenting adjustments as follows:
| (i) | Transaction Accounting Adjustments that have been identified and adjusted to reflect the pro forma adjustments that are directly attributable to the Business Combination (refer to 5. Transaction accounting adjustments of the Business Combination between the TPB SPAC and Lavoro for more detail); and |
| (ii) | The pro forma adjustments to reflect the effect of the Lavoro Group Acquisitions on the condensed combined statement of profit or loss had they been completed as of July 1, 2021 includes the increase in amortization expense on fair value of intangibles assets recognized (customer relationship and brand), the tax effect on pro forma adjustments, and the allocation of adjustments to non-controlling interest (See Note 2 above, The Lavoro Acquisitions, for more detail). |
The pro forma condensed combined financial information is presented for illustrative purposes only. The financial results may have been different had the companies always been combined. You should not rely on the unaudited pro forma condensed combined financial information as being indicative of the historical results that would have been achieved had the companies always been combined or the future results that the Combined Company will experience. Future results may vary significantly from the results reflected due to various factors, including those discussed in the section entitled “Risk Factors.” The Lavoro Group, TPB SPAC, and the Lavoro Group Acquisitions have not had any historical relationship prior to the Business Combination. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.
The historical financial statements of the Lavoro Group have been prepared in accordance with IFRS as issued by the IASB and in its presentation currency of the Brazilian Real (“BRL”). The historical financial statements of TPB SPAC have been prepared in accordance with US GAAP in its presentation currency of the U.S. dollar. The condensed combined pro forma financial information reflects IFRS, the basis of accounting used by the registrant, New Lavoro. TPB SPAC’s historical financial statements have been converted from US GAAP to IFRS to align with the basis of accounting used by New Lavoro. For more information on the US GAAP to IFRS conversion of TPB SPAC’s balance sheet, please see 4. TPB SPAC IFRS Conversion and Presentation Adjustments.
The historical financial statements of TPB SPAC have been translated into and are presented in Brazilian Reais for the purposes of presentation in the unaudited pro forma condensed combined financial information using the following exchange rates:
| · | at the period end exchange rate as of June 30, 2022, of US$1.00 to R$5.2380 for the balance sheet; |
| · | the average exchange rate for the period from July 1, 2021, through June 30, 2022, of US$1.00 to R$5.2440 for the statement of operations for the period ending on that date. |
11
As the Lavoro Group and TPB SPAC have different fiscal year ends, in order to meet the SEC’s pro forma requirements of combining operating results for an annual period that ends within 93 days of the end of the Lavoro Group’s latest annual fiscal year ended June 30, 2022, the TPB SPAC's financial results for the year ended June 30, 2022, have been calculated by taking (i) TPB SPAC's results for the year ended December 31, 2021, minus the TPB SPAC’s results for the period from February 8, 2021 (inception) to June 30, 2021, plus (ii) the TPB SPAC’s results for the six months ended June 30, 2022.
Included in the shares outstanding and weighted average shares outstanding as presented in the unaudited pro forma condensed combined financial statements are an aggregate of 3.4 million New Lavoro Class A Ordinary Shares to be issued to the TPB SPAC public shareholders, 10.0 million New Lavoro Class A Ordinary Shares to be issued to the PIPE Investors, 1.4 million New Lavoro Class A Ordinary Shares to be issued to the Sponsors and 96.3 million New Lavoro Class A Ordinary Shares to be issued to the Lavoro Group shareholders.
Immediately following the consummation of the Business Combination, TPB SPAC’s former public shareholders, the Sponsor and the current beneficial owners of the Sponsor, the PIPE Investors, investors exercising certain forward purchase agreements and former Lavoro Group shareholders own approximately the following percentages of New Lavoro:
| Shares (in millions) | % | |||||||
| Lavoro shareholders (1) | 96.4 | 86.67 | ||||||
| TPB SPAC public shareholders | 3.4 | 3.03 | ||||||
| PIPE Investors | 10.0 | 9.00 | ||||||
| Sponsors (2) | 1.4 | 1.30 | ||||||
| Total shares (3) | 111.2 | 100.00 | ||||||
| (1) | Excludes equity awards to be issued under the New Lavoro Equity Plan and an aggregate of up to approximately 2 million Class A Ordinary Shares reserved for issuance under the Lavoro Share Plan. To the extent equity awards are issued after Closing under the New Lavoro Equity Plan, shareholders will experience dilution resulting from the impact of new equity to be reserved pursuant to the rollover of the existing company compensation plan, which is expected to total approximately 2 million shares. |
| (2) | Excludes 3,006,050 Founder Shares subject to vesting pursuant to the terms of the Amendment to the Sponsor Letter Agreement following the consummation of the Business Combination (Vesting Founder Shares) and 54,613 Founder Shares that were not vested and will only be vested upon the registration of certain shares of New Lavoro. Refer to Note 1 Vesting Founder Shares for discussion of the vesting conditions. |
| (3) | As noted in Note 5 adjustment BB the Private Placement Warrants, Public Warrants, and Vesting Founder Shares of New Lavoro are out of the money and therefore, not included based on an assumed share price of $10 of New Lavoro for the purposes of this pro forma financial information. |
The pro forma adjustments related to the Business Combination and the PIPE Investment do not have an income tax effect as they are either (i) incurred by legal entities that are not subject to a corporate income tax, or (ii) permanently nondeductible or nontaxable based on the laws of the relevant jurisdiction.
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Accounting for the Business Combination
The Business Combination will be accounted for as a capital reorganization in accordance with IFRS. Under this method of accounting, TPB SPAC will be treated as the “acquired” company for financial reporting purposes, and the Lavoro Group will be the accounting “acquirer”. This determination was primarily based on the assumption that:
| · | Lavoro’s current shareholders will hold a majority of the voting power of New Lavoro post Business combination; |
| · | Lavoro's operations will substantially comprise the ongoing operations of New Lavoro; |
| · | Pursuant to the Business Combination Agreement, Lavoro's current shareholders will have the ability to nominate the majority of the members of the governing body of New Lavoro; and |
| · | Lavoro's senior management will comprise the senior management of the New Lavoro, including the CEO and CFO. |
Another determining factor was that TPB SPAC does not meet the definition of a “business” pursuant to IFRS 3, and thus, for accounting purposes, the Business Combination will be accounted for as a capital reorganization, within the scope of IFRS 2. The net assets of TPB SPAC will be stated at historical cost, with no goodwill or other intangible assets recorded. Any excess of the fair value of the deemed equity interest issued by the Lavoro Group over the fair value of TPB SPAC’s identifiable net assets acquired represents compensation for the service of a stock exchange listing for its shares and is expensed as incurred. The unaudited pro forma condensed combined financial information assumes that TPB SPAC Warrants would be expected to be accounted for as liabilities in accordance with IAS 32 following consummation of the Business Combination and, accordingly, would be subject to ongoing mark-to-market adjustments through the statement of profit or loss.
In connection to the Business Combination, the Sponsor was issued a certain number of Vesting Founder Shares and Unvested Founder Shares which are entitled to receive a certain number of New Lavoro Class A Ordinary Shares if certain conditions are met (See note 1 above). Such shares are deemed to have been issued in exchange for listing services provided by the Sponsor (i.e., facilitating the Company being listed on the NASDAQ) and are therefore equity-classified as per IFRS 2 Share-based payment.
4. TPB SPAC IFRS Conversion and Presentation Adjustments
The historical financial information of TPB SPAC has been adjusted to give effect to the differences between U.S. GAAP and IFRS as issued by the IASB for the purposes of the unaudited pro forma condensed combined financial information. The only adjustment required to convert TPB SPAC’s financial statements from U.S. GAAP to IFRS for purposes of the unaudited pro forma condensed combined financial information was to reclassify TPB SPAC’s Ordinary Shares subject to redemption from temporary equity under US GAAP to non-current financial liabilities under IFRS.
Further, as part of the preparation of the unaudited pro forma condensed combined financial information, TPB SPAC’s historical financial information was converted from U.S. dollars to Brazilian Reais in accordance with the presentation of the Lavoro Group’s historical financial information, as discussed in “3. Basis of Presentation.”
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US GAAP to IFRS conversion of TPB SPAC’s Balance Sheets as of June 30, 2022
TPB SPAC’s financial statements have been prepared in accordance with US GAAP and are converted to IFRS as follows:
| As of June 30, 2022 | ||||||||||||||
| Historical US GAAP | IFRS Policy and Presentation Alignment | Footnote reference | Historical IFRS | |||||||||||
| (in Brazilian Reais) | ||||||||||||||
| ASSETS | ||||||||||||||
| Current assets: | ||||||||||||||
| Cash | 5,890 | — | 5,890 | |||||||||||
| Prepaid expenses | 2,269 | — | 2,269 | |||||||||||
| Total current assets | 8,159 | — | 8,159 | |||||||||||
| Investments held in Trust Account | 945,220 | — | 945,220 | |||||||||||
| Total assets | 953,379 | — | 953,379 | |||||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||
| Current liabilities: | ||||||||||||||
| Accounts payable | 5,318 | — | 5,318 | |||||||||||
| Accrued expenses | 4,911 | — | 4,911 | |||||||||||
| Note Payable - Related Party | 5,238 | — | 5,238 | |||||||||||
| Total current liabilities | 15,467 | — | 15,467 | |||||||||||
| Deferred underwriting commissions in connection with the Initial Public Offering | 33,066 | — | 33,066 | |||||||||||
| Derivative warrant liabilities | 10,588 | — | 10,588 | |||||||||||
| Class A ordinary shares, $0.0001 par value; 18,036,299 shares subject to possible redemption at $10.00 per share redemption value | — | 944,741 | (a) | 944,741 | ||||||||||
| Total Liabilities | 59,121 | 944,741 | 1,003,862 | |||||||||||
| Commitments and contingencies | ||||||||||||||
| Class A ordinary shares, $0.0001 par value; 18,036,299 shares subject to possible redemption at $10.00 per share redemption value | 944,741 | (944,741 | ) | (a) | — | |||||||||
| Shareholders’ Equity | ||||||||||||||
| Preference shares | — | — | — | |||||||||||
| Class A ordinary shares | — | — | — | |||||||||||
| Class B ordinary shares, $0.0001 par value; 50,000,000 shares authorized; 4,509,074 shares issued and outstanding | 2 | — | 2 | |||||||||||
| Additional paid-in capital | — | — | — | |||||||||||
| Accumulated deficit | (50,485 | ) | — | (50,485 | ) | |||||||||
| Total Shareholders' Equity | (50,483 | ) | — | (50,483 | ) | |||||||||
| Total liabilities and stockholders' equity | 953,379 | — | 953,379 | |||||||||||
(a) To reclassify and present redeemable ordinary shares of TPB SPAC as other liabilities under IFRS, as shareholders have the right to require TPB SPAC to redeem the ordinary shares and TPB SPAC has an irrevocable obligation to deliver cash or another financial instrument for such redemption.
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5. Transaction accounting adjustments of the Business Combination between the TPB SPAC and Lavoro
Adjustments to Unaudited Pro Forma Condensed Combined Statement of Financial Position as of June 30, 2022
The pro forma notes and adjustments, based on preliminary estimates that could change materially as additional information is obtained, are as follows:
| A. | To reflect (i) the proceeds received from the PIPE Investment with the corresponding issuance of 10.0 million SPAC Ordinary Shares, with a nominal value of R$0.0005, at R$52.4 per share, or R$523.5 million, and (ii) the actual redemption of 14.7 million SPAC Ordinary Shares, at approximately R$52.7 per share. |
| B. | To reflect the release of cash and investments held in the trust account, including settling a Working Capital Loan totaling R$5.2 million. |
| C. | To reclassify other liabilities related to TPB SPAC Ordinary Shares subject to redemption against permanent equity at the closing of the Business Combination. |
| D. | To reflect the estimated payment in aggregate that consists of (i) TPB SPAC’s deferred underwriting fees of R$33.1 million and (ii) transaction costs expected to be settled at the Close of the Business Combination. Expenses incurred by the TPB SPAC are reflected as an adjustment to APIC as the Business Combination is accounted for as a capital reorganization. Therefore, both the Retained Earnings (Deficits) and APIC of the TPB SPAC will be accounted for as the APIC of Lavoro Limited. Expenses incurred are considered direct and incremental costs related to the Business Combination. Such costs are capitalizable and are recorded to APIC. |
| E. | To reflect the capital reorganization of Lavoro Limited, as per the Business Combination Agreement, consisting of (i) the elimination of the equity of TPB SPAC and the conversion of certain Sponsor Shares into Ordinary shares of the New Lavoro, (ii) the derecognition of the Net investment from the Parent of Lavoro, the recognition of New Lavoro Ordinary Shares issued to existing Lavoro shareholders, and to separately disclose the accumulated other comprehensive income of Lavoro, and (iii) in accordance with IFRS 2, the deemed cost of the shares issued by Lavoro in excess of the net assets of the TPB SPAC, which primarily consists of cash and marketable securities held in the trust account and certain public and private warrants liabilities, is accounted for as stock-based compensation and reflected as an adjustment to APIC. |
| (in thousands of Reais) | ||||
| Estimated deemed cost of shares issued to the TPB SPAC(1) | 921,390 | |||
| Net assets of the TPB SPAC as of June 30, 2022(2) | 1,464,322 | |||
| Less: Redemption of TPB SPAC ordinary shares | 768,460 | |||
| Less: TPB SPAC transaction costs | 78,958 | |||
| Adjusted net assets of the TPB SPAC as of June 30, 2022 | 616,904 | |||
| IFRS 2 charge for listing services | 304,486 | |||
15
| (1) | The estimated deemed cost of shares is comprised of (i) 14,821,266 Lavoro Limited Class A Ordinary Shares, including 1,448,412 Retained Founder Shares, at a quoted market price of R$52.38 per share as of June 30, 2022 and foreign exchange rate of US$1.00 to R$5.238, and (ii) estimated fair value of 3,006,050 Vesting Founder Shares and 54,613 Unvested Founder Shares of R$145.1 million. |
| (2) | This balance includes the PIPE Investment and is calculated based on exchange rate as of June 30, 2022, of $1.00 to R$5.238 (see Note 3). |
Adjustments to Unaudited Pro Forma Condensed Combined Statement of Profit or Loss for the year ended June 30, 2022
The pro forma notes and adjustments with respect to the Business Combination, based on preliminary estimates that could change materially as additional information is obtained, are as follows:
| AA. | To reflect the elimination of interest income on marketable securities held in the trust account. |
| BB. | New Lavoro calculates the pro forma earnings (loss) per share in accordance with IAS 33, Earnings Per Share, which requires a dual presentation of basic and diluted earnings (loss) per share. Pro forma basic earnings (loss) per share is computed using the weighted average number of shares outstanding during the reporting period. Pro forma diluted earnings (loss) per share represents the pro forma basic earnings (loss) per share adjusted to include the potentially dilutive effect of the outstanding warrants assumed by New Lavoro (using the treasury stock method). The average market price of TPB SPAC common stock is assumed to be US$10 for the purposes of this Article 11 Pro Forma and all public and private warrants are out of the money; therefore, the approximately 6,012,099 and 4,071,507 public and private warrants, respectively, are excluded from both the calculation of the pro forma basic and diluted earnings (loss) per share. Similarly, the Vesting Founder Shares are not considered vested for both the basic and diluted earnings (loss) per share due to the assumed TPB SPAC's share price of US$10.00. |
| CC. | To reflect the IFRS 2 stock-based compensation expenses for the deemed listing services received by the Lavoro Group and New Lavoro from TPB SPAC, which is the difference between the costs of the shares issued by the Lavoro Group in excess of the net assets of TPB SPAC. |
| DD. | To reflect the elimination of transaction costs incurred by TPB SPAC which qualify for capitalization as of the closing date of the Business Combination, and therefore would not be reported in the post-Business Combination statement of profit or loss of New Lavoro. |
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Exhibit 15.2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in Registration Statement on Amendment No. 4 of Form F-4 (No. 333-267653) of our report dated March 30, 2022, relating to the balance sheet of TPB Acquisition Corporation I as of December 31, 2021, and the related statements of operations, changes in shareholders’ deficit and cash flows for the period from February 8, 2021 (inception) through December 31, 2021, incorporated by reference in this Shell Company Report on Form 20-F, and to the reference to our Firm under the caption "Statement by Experts" included herein.
/s/ Frank, Rimerman + Co. LLP
San Francisco, California
March 6, 2023
Exhibit 15.3
Consent of Independent Registered Public Accounting Firm
We consent to the reference to our firm under the caption "Statement by Experts" in this Shell Company Report on Form 20-F of Lavoro Limited and to the incorporation by reference therein of our report dated December 5, 2022, with respect to the combined financial statements of the Lavoro Group, included in the Registration Statement (Form F-4 No. 333-267653) of Lavoro Limited, filed with the Securities and Exchange Commission on January 31, 2023.
/s/ ERNST & YOUNG
Auditores Independentes S/S Ltda.
São Paulo, Brazil
March 6, 2023