Item
1.01 Entry into a Material definitive Agreement.
On September 9, 2022, Lakeshore Acquisition
II Corp., a Cayman Islands exempted company (together with its successors, including after the Reincorporation (as defined below), the
“Purchaser”), LBBB Merger Sub Inc., a Delaware corporation and wholly-owned subsidiary of Purchaser (the “Merger
Sub”), Nature’s Miracle, Inc., a Delaware corporation (“Nature’s Miracle” or the “Company”),
Tie (James) Li, as the representative of the stockholders of Nature’s Miracle, and RedOne Investment Limited, a British Virgin Islands
company, the Purchaser’s sponsor (the “Sponsor”), acting as the representative of the stockholders of Purchaser,
entered into a Merger Agreement (the “Merger Agreement”).
The Merger and Merger Consideration
Pursuant to the Merger Agreement, Nature’s
Miracle will merge with Merger Sub (the “Merger”), with Nature’s Miracle surviving and the Purchaser acquiring
100% of the equity securities of Nature’s Miracle. In exchange for their equity securities, the stockholders of Nature’s Miracle
(the “Company Stockholders”) will receive an aggregate number of shares of common stock (the “Purchaser Common
Stock”) of the Purchaser (the “Merger Consideration”) with an aggregate value equal to: (a) two hundred
thirty million U.S. dollars ($230,000,000), minus (b) any Closing Net Indebtedness (as defined in the Merger Agreement).
At the effective time, each share of the Company’s
Common Stock issued and outstanding immediately prior to the effective time (other than the dissenting shares to be canceled) will be
canceled and automatically converted into the right to receive, without interest, the applicable pro rata portion of the Closing Payment
Shares (as defined below) for such number of shares of Company Common Stock. Under the Merger Agreement, “Closing Payment Shares”
means such number of Purchaser Common Stock equal to $230,000,000, divided by $10.00.
The Merger Consideration otherwise payable to
Company Stockholders is subject to the withholding of a number of shares of Purchaser Common Stock equal to three percent (3.0%) of the
Merger Consideration to be placed in escrow for post-closing adjustments (if any) to the Merger Consideration, in accordance with the
terms of the Merger Agreement following the Closing.
The parties agreed that immediately following
the Closing, Purchaser’s board of directors will consist of seven (7) individuals, with the identity of six of those individuals
and allocation of all individuals among the staggered tiers of the post-business combination company’s board of directors (and the
appointment of such persons to committees of the board) to be determined by Nature’s Miracle’s current board of directors,
and the remaining individual to be appointed by the Sponsor, subject to Nature’s Miracle’s approval (which approval will not
be unreasonably withheld).
Reincorporation of the Purchaser
Immediately prior to the Merger, the Purchaser
will reincorporate into the State of Delaware so as to re-domicile as and become a Delaware corporation by means of a merger of Purchaser
with and into a newly formed Delaware corporation (the “Reincorporation”), and subject to the receipt of the approval
of the shareholders of the Purchaser to the Reincorporation terms, the Purchaser will adopt Delaware organizational documents, which will
provide, among other things, that the name of the Purchaser will be amended to be “Nature’s Miracle Holding Inc.”
Immediately prior to the effective time of the
Reincorporation, every issued and outstanding unit of the Purchaser (“Purchaser Unit”) will separate into their individual
components of one ordinary share of the Purchaser (the “Purchaser Ordinary Share”), one-half of one warrant of the
Purchaser entitling the holder thereof to purchase one Purchaser Ordinary Share at a purchase price of $11.50 per share (the “Purchaser
Warrants”) and one right of the Purchaser entitling the holder thereof to receive one-tenth of one Purchaser Ordinary Share
(the “Purchaser Rights”), and all Purchaser Units will cease to be outstanding and will automatically be canceled and
retired and cease to exist. At the Reincorporation effective time, each Purchaser Ordinary Share will be converted into one share of Purchaser
Common Stock and each Purchaser Warrant will remain outstanding but will be automatically adjusted to become one Purchaser Warrant under
Delaware law. At the Closing, all Purchaser Rights will cease to be outstanding and will automatically be canceled and retired and will
cease to exist. The holders of Purchaser Rights instead will receive one-tenth of one share of Purchaser Common Stock in exchange for
the cancellation of each Purchaser Right; provided that no fractional shares will be issued and all fractional shares will be rounded
down to the nearest whole share.
Representations and Warranties
In the Merger Agreement, Nature’s Miracle
makes certain representations and warranties (with certain exceptions set forth in the disclosure schedules to the Merger Agreement) relating
to, among other things: (a) proper corporate organization of Nature’s Miracle and its subsidiaries and similar corporate matters;
(b) authorization, execution, delivery and enforceability of the Merger Agreement and other transaction documents; (c) absence
of conflicts; (d) capital structure; (e) accuracy of charter documents and corporate records; (f) required consents and
approvals; (g) financial information; (h) absence of certain changes or events; (i) title to assets and properties; (j) material
contracts; (k) ownership of real property; (l) licenses and permits; (m) compliance with laws, including those relating
to foreign corrupt practices and money laundering; (n) ownership of intellectual property; (o) customers and suppliers; (p) employment
and labor matters; (q) taxes and audits; (r) brokers and finders; (s) that Nature’s Miracle is not an investment
company; (t) absence of litigation; and (u) other customary representations and warranties.
In the Merger Agreement, Purchaser and Merger
Sub make certain representations and warranties relating to, among other things: (a) proper corporate organization and similar corporate
matters; (b) authorization, execution, delivery and enforceability of the Merger Agreement and other transaction documents; (c) litigation;
(d) brokers and finders; (e) capital structure; (f) validity of share issuance; (g) validity of Nasdaq listing; (h) SEC
filing requirements and financial statements; (i) that Purchaser is not an investment company; and (j) compliance with laws,
including those relating to money laundering.
Conduct Prior to Closing; Covenants
Each of Nature’s Miracle and Purchaser has
agreed to, and cause its subsidiaries to, operate the business in the ordinary course, consistent with past practices, prior to the Closing
(with certain exceptions) and not to take certain specified actions without the prior written consent of the other party.
The Merger Agreement also contains, among other
things, covenants providing for:
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Each party providing access to their books and records and providing information relating to their respective business to the other party, its legal counsel and other representatives; |
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Nature’s Miracle delivering the financial statements required by Purchaser to make applicable filings with the SEC; |
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Purchaser timely filing all of its public filings with the SEC and otherwise complying with applicable securities laws and using its reasonable best efforts prior to the Closing to maintain the listing of Purchaser Units, Purchaser Ordinary Shares, Purchaser Rights and Purchaser Warrants on The Nasdaq Global Market (“Nasdaq”); |
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The parties will not solicit, initiate, encourage or continue discussions with any third party with respect to any transaction other than the transactions contemplated or permitted by the Merger Agreement; and |
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The Purchaser, with the reasonable assistance of Nature’s Miracle, will file and cause to become effective a registration statement on S-4 (the “Form S-4”) registering the Purchaser Common Stock, which will also contain a proxy statement of Purchaser for the purpose of soliciting proxies from Purchaser’s shareholders for approval of certain matters related to the transactions contemplated by the Merger Agreement. |
Conditions to Closing
General Conditions
Consummation of the transactions contemplated
by the Merger Agreement is conditioned on, among other things, (i) the absence of any order or provisions of any applicable law prohibiting
the transactions or preventing the transactions; (ii) Purchaser and Nature’s Miracle receiving approval from their respective
stockholders to the transactions; (iii) the Purchaser Common Stock having been approved for listing on Nasdaq, and (iv) the
SEC having declared the Form S-4 effective.
Nature’s Miracle’s Conditions to
Closing
The obligations of Nature’s Miracle to consummate
the transactions contemplated by the Merger Agreement, in addition to the conditions described above, are conditioned upon each of the
following, among other things:
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The Purchaser complying with all of its obligations under the Merger Agreement in all material respects; |
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the representations and warranties of the Purchaser being true on and as of the Closing, other than as would not reasonably be expected to have a Material Adverse Effect (as defined in the Merger Agreement); and |
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there having been no Material Adverse Effect to Purchaser. |
Purchaser’s Conditions to Closing
The obligations of Purchaser and Merger Sub to
consummate the transactions contemplated by the Merger Agreement, in addition to the conditions described above in the first paragraph
of this section, are conditioned upon each of the following, among other things:
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the representations and warranties of Nature’s Miracle being true on and as of the Closing, other than as would not reasonably be expected to have a Material Adverse Effect; |
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Nature’s Miracle complying with all of the obligations under the Merger Agreement in all material respects; and |
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there having been no Material Adverse Effect to Nature’s Miracle’s business. |
Termination
The Merger Agreement may be terminated and/or
abandoned at any time prior to the Closing, whether before or after approval of the proposals being presented to Purchaser’s stockholders,
upon mutual agreement of the parties or by:
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either Purchaser or Nature’s Miracle, if the Closing has not occurred by June 11, 2023 (the “Outside Date”), provided that no material breach of the Merger Agreement by the party seeking to terminate the Merger Agreement will have occurred or have been made; |
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either Purchaser or Nature’s Miracle, if a Governmental Authority (as defined in the Merger Agreement) of competent jurisdiction will have issued an order or taken any other action permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by the Merger Agreement, and such order or other action has become final and non-appealable; |
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Purchaser, if Nature’s Miracle has breached any representation, warranty, agreement or covenant contained in the Merger Agreement, such that the conditions to Purchaser’s obligations to close would not be met, and such breach has not been cured within the earlier of (A) twenty (20) days following the receipt by Nature’s Miracle of a notice describing such breach and (B) the Outside Date; |
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Nature’s Miracle, if Purchaser has breached any representation, warranty, agreement or covenant contained in the Merger Agreement, such that the conditions to Nature’s Miracle’s obligations to close would not be met, and such breach has not been cured within the earlier of (A) twenty (20) days following the receipt by Purchaser a notice describing such breach and (B) the Outside Date; |
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Purchaser, if there will have been a Material Adverse Effect on Nature’s Miracle’s business taken as a whole following the date of the Merger Agreement which is uncured for at least ten (10) business days after written notice of such Material Adverse Effect is provided by Purchaser to Nature’s Miracle; |
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either Nature’s Miracle or Purchaser, if the Merger Agreement, the plan of merger or the transactions fail to be authorized or approved by Purchaser shareholders; or |
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Purchaser, if the stockholders of Nature’s Miracle do not approve the Merger Agreement and the transactions contemplated thereunder; or |
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Purchaser, if the closing conditions under the Merger Agreement have been satisfied or waived and the Purchaser has confirmed by written notice that it is willing and able to consummate the Closing, and Nature’s Miracle will have failed to consummate such transactions within ten (10) business days after such notice. |
Indemnification
The Merger Agreement does not provide for indemnification
obligations for any party. All representations and warranties contained in the Merger Agreement will terminate as of the closing date.
The foregoing description of the Merger Agreement
does not purport to be complete and is qualified in its entirety by the terms and conditions of the actual agreement, which is filed as
Exhibit 2.1 hereto and incorporated by reference herein.
Stock Exchange Listing
Purchaser will take commercially reasonable actions
to cause the Purchaser Common Stock issued in connection with the Merger Agreement to be approved for listing on The Nasdaq Global Market
at Closing. During the period from the date of the Merger Agreement until the Closing, Purchaser will use reasonable best efforts to maintain
the listing of its units, ordinary shares, and warrants for trading on Nasdaq.
ADDITIONAL AGREEMENTS
This section describes the material provisions
of certain additional agreements entered into or to be entered into pursuant to the Merger Agreement (the “Ancillary Documents”)
but does not purport to describe all of the terms thereof. The following summary is qualified in its entirety by reference to the complete
text of each of the Ancillary Documents, copies or forms of each of which are attached hereto as exhibits. Shareholders and other interested
parties are urged to read such Ancillary Documents in their entirety.
Purchaser Support Agreement
In connection with their entry into the Merger
Agreement, Purchaser and Nature’s Miracle entered into the Purchaser Support Agreement, dated as of September 9, 2022 (the
“Purchaser Support Agreement”), with the initial shareholders of the Purchaser (the “Supporters”),
pursuant to which the Supporters agreed (i) to vote the Purchaser ordinary shares held by them in favor of the approval and adoption
of the Merger Agreement and the transactions contemplated thereunder, (ii) to not transfer, during the term of the Purchaser Support
Agreement, any Purchaser Common Stock owned by them, and (iii) to not transfer any Purchaser Common Stock held by them in accordance
with the lock-up provisions set forth in the Purchaser’s final prospectus filed with the U.S. Securities and Exchange Commission
on March 8, 2022.
The foregoing description of the Purchaser Support
Agreement does not purport to be complete and is qualified in its entirety by the terms and conditions of the actual agreement, a copy
of which is filed as Exhibit 10.1 to this Current Report on Form 8-K, and incorporated herein by reference.
Voting and Support Agreement
In connection with their entry into the Merger
Agreement, Purchaser and Nature’s Miracle entered into a Voting and Support Agreement, dated as of September 9, 2022 (the “Voting
and Support Agreement”), with certain Company Stockholders, pursuant to which such Company Stockholders agreed, among other
things, (i) to vote the Company Stock (as defined in the Merger Agreement) held by them in favor of the approval and adoption of
the Merger Agreement and the transactions contemplated thereunder, (ii) authorize and approve any amendment to the Company’s
Organizational Documents (as defined in the Merger Agreement) that is deemed necessary or advisable by Nature’s Miracle for purposes
of effecting the transactions contemplated under the Merger Agreement, and (iii) to not transfer, during the term of the Voting and
Support Agreement, any Company Stock owned by them, except as permitted under the terms of the Voting and Support Agreement.
The foregoing description of the Voting and Support
Agreement does not purport to be complete and is qualified in its entirety by the terms and conditions of the actual agreement, a copy
of which is filed as Exhibit 10.2 to this Current Report on Form 8-K, and incorporated herein by reference.
Lock-up Agreement
In connection with their entry into the Merger
Agreement, Purchaser and Nature’s Miracle entered into a Lock-Up Agreement (the “Lock-up Agreement”) with certain
Company Stockholders whose names appear on the signature pages thereto (such stockholders, the “Company Holders”),
pursuant to which each Company Holder agreed that each such holder will not, during the Lock-up Period (as defined below), offer, sell,
contract to sell, pledge or otherwise dispose of, directly or indirectly, any of the shares issued in connection with the Merger (the
“Lock-up Shares”), enter into a transaction that would have the same effect, or enter into any swap, hedge or other
arrangement that transfers, in whole or in part, any of the economic consequences of ownership of such shares, whether any of these transactions
are to be settled by delivery of any such shares, in cash, or otherwise. As used herein, “Lock-Up Period” means the
period commencing on the closing date of the Merger and ending on the earlier of: (i) six months after the Closing; and (ii) with
respect to Lock-up Shares not held by a Significant Company Stockholder (as defined in the Merger Agreement) only, if the volume weighted
average price of the Purchaser Common Stock equals or exceeds $12.50 per share for any 20 trading days within any 30 consecutive trading
days beginning 90 days after the Closing.
The foregoing description of the Lock-Up Agreement
is subject to and qualified in its entirety by reference to the full text of the form of the Lock-Up Agreement, a copy of which is included
as Exhibit 10.3 hereto, and the terms of which are incorporated by reference.
Non-Competition and Non-Solicitation Agreement
At Closing, the Purchaser, Nature’s Miracle
and each of Tie (James) Li, Zhiyi “Johnathan” Zhang and Wei Yang (the “Key Management Members”) will enter
into non-competition and non-solicitation agreements (the “Non-Competition and Non-Solicitation Agreements”),
pursuant to which the Key Management Members and their affiliates will agree not to compete with Purchaser during the two-year period
following the Closing and, during such two-year restricted period, not to solicit employees or customers or clients of such entities.
The agreements also contains customary non-disparagement and confidentiality provisions.
The foregoing description of the Non-Competition
and Non-Solicitation Agreements is subject to and qualified in its entirety by reference to the full text of the form of the Non-Competition
and Non-Solicitation Agreement, a copy of which is included as Exhibit 10.4 hereto, and the terms of which are incorporated by reference.
Voting Agreement
At Closing, Purchaser and certain Company Stockholders
will enter into a voting agreement (the “Voting Agreement”), pursuant to which, among other things, the Sponsor will
be granted a right to nominate a director to the post-business combination board of directors.
The foregoing description of the Voting Agreement
is subject to and qualified in its entirety by reference to the full text of the form of Voting Agreement, a copy of which is included
as Exhibit 10.5 hereto, and the terms of which are incorporated by reference.
Nature’s Miracle, Inc. 2022 Equity
Incentive Plan
At the Closing, the Nature’s Miracle, Inc.
2022 Equity Incentive Plan (the “2022 Equity Incentive Plan”) will provide for the grant of equity incentives up to
a maximum of 10% of the shares of the Purchaser Common Stock outstanding immediately after the Closing to the directors, employees, and
consultants of Nature’s Miracle Holding, Inc.
The foregoing description of the 2022 Equity Incentive
Plan does not purport to be complete and is qualified in its entirety by the terms and conditions of the form of the 2022 Equity Incentive
Plan, a copy of which is filed as Exhibit 10.6 hereto and incorporated by reference herein.
Employment Agreement with Tie “James”
Li
In connection with entry into the Merger Agreement,
Purchaser and Tie “James” Li entered into an Employment Agreement, dated as of September 9, 2022 (the “Employment
Agreement”), subject to and effective upon closing of the business combination. Pursuant to the Employment Agreement, the Purchaser
agreed to employ Mr. Li as Chief Executive Officer of the post-business combination company. The term of employment is a period of
five years, with automatic one-year extensions unless either party gives the other party one-month prior written notice. The Employment
Agreement provides for payment of $300,000 per annum in cash compensation and Mr. Li will be eligible to participate in the 2022
Equity Incentive Plan or any other future incentive plan of the post-business combination company, as well as any standard employee benefit
plan of the post-business combination company, including, any retirement plan, life insurance plan, health insurance plan and travel/holiday
plan. Purchaser may terminate the employment for cause, at any time, without notice or remuneration, for certain acts of the executive
officer, including but not limited to the commitments of any serious or persistent breach or non-observance of the terms and conditions
of the employment, conviction of a criminal offense, willful disobedience of a lawful and reasonable order, fraud or dishonesty, or engages
or in any manner participates in any activity which is competitive with or intentionally injurious to the post-business combination company,
or any of its affiliates or subsidiaries. Mr. Li may resign at any time with one-month prior written notice. Mr. Li has agreed
to hold, both during and after the Employment Agreement expires, in strict confidence and not to use or disclose to any person, corporation
or other entity without written consent, any confidential information.
The foregoing description of the Employment Agreement
does not purport to be complete and is qualified in its entirety by the terms and conditions of the Employment Agreement, a copy of which
is filed as Exhibit 10.7 hereto and incorporated by reference herein.
Registration Rights Agreement
At the Closing, Purchaser, the Supporters and
certain Company Stockholders (collectively, the “Subject Parties”) will enter into a registration rights agreement
(the “Registration Rights Agreement”), pursuant to which, among other things, Purchaser will be obligated to file a
registration statement to register the resale of certain securities of Purchaser held by the Subject Parties. The Registration Rights
Agreement will also provide the Subject Parties with “piggy-back” registration rights, subject to certain requirements and
customary conditions.
Escrow Agreement
Pursuant to the Merger Agreement, the Purchaser,
Tie (James) Li, as the representative of the Company Stockholders, and an escrow agent will enter into an Escrow Agreement pursuant to
which Purchaser will deposit a number of shares of Purchaser Common Stock equal to three percent (3.0%) of the Merger Consideration in
escrow for post-closing adjustments (if any) to the Merger Consideration as contemplated under the Merger Agreement.
