Item 1.01 Entry into a Material Definitive Agreement
Merger Agreement
On April 5, 2022, Pacifico Acquisition Corp., a
Delaware corporation (“SPAC”), entered into an Agreement and Plan of Merger (as it may be amended, supplemented or otherwise
modified from time to time, the “Merger Agreement”) by and among (i) Caravelle International Group, a Cayman Islands exempted
company and a direct wholly owned subsidiary of the Company (“PubCo”), (ii) Pacifico International Group, a Cayman Islands
exempted company and a direct wholly owned subsidiary of PubCo (“Merger Sub 1”), (iii) Pacifico Merger Sub 2 Inc., a Delaware
corporation and a direct wholly owned subsidiary of PubCo (“Merger Sub 2” and, together with PubCo and Merger Sub 1, each,
individually, an “Acquisition Entity” and, collectively, the “Acquisition Entities”), and (iv) Caravelle Group
Co., Ltd., a Cayman Islands exempted company (the “Company”).
Capitalized terms used in this Current Report on
Form 8-K but not otherwise defined herein have the meanings given to them in the Merger Agreement.
Pursuant to the Merger Agreement, subject to the
terms and conditions set forth therein, (i) Merger Sub 1 will merge with and into the Company (the “Initial Merger”) whereby
the separate existence of Merger Sub 1 will cease and the Company will be the surviving corporation of the Initial Merger and become a
wholly owned subsidiary of PubCo, and (ii) following confirmation of the effective filing of the Initial Merger, Merger Sub 2 will merge
with and into SPAC (the “SPAC Merger” and together with the Initial Merger, the “Mergers”), the separate existence
of Merger Sub 2 will cease and SPAC will be the surviving corporation of the SPAC Merger and a direct wholly owned subsidiary of PubCo.
As a result of the Mergers, among other things,
(i) all outstanding Company Ordinary Shares will be cancelled in exchange for 50,000,000 PubCo ordinary shares, (ii) each outstanding
SPAC Unit will be automatically detached, (iii) each unredeemed outstanding share of SPAC Common Stock will be cancelled in exchange for
the right to receive one (1) PubCo Ordinary Share, (iv) every ten (10) outstanding SPAC Rights will be cancelled and cease to exist in
exchange for one (1) PubCo Ordinary Share, and (v) each SPAC UPO will automatically be cancelled and cease to exist in exchange for one
(1) PubCo UPO.
Earnout
Following the Closing, and as additional contingent
consideration for the Mergers and the other Transactions, within ten (10) Business Days after the occurrence of an Earnout Event, PubCo
shall issue or cause to be issued to certain shareholders of the Company (the “Earnout Participants”) the following additional
PubCo Ordinary Shares (which shall be equitably adjusted for share subdivisions, share consolidations, share dividends, reorganizations,
recapitalizations, reclassifications, combination, exchange of shares or other like change or transaction): (i) upon the occurrence of
Earnout Event I, a one-time issuance of 15,000,000 Earnout Shares; and (ii) upon the occurrence of Earnout Event II, a one-time issuance
of 20,000,000 Earnout Shares.
For purposes hereof:
| ● | “Earnout
Event I” means PubCo reporting consolidated revenue of no less than $200,000,000 for the six months ending June 30, 2023, provided
that such financial statements have been reviewed by PubCo’s independent auditors. |
| ● | “Earnout
Event II” means PubCo reporting audited consolidated revenue of no less than $450,000,000
for the year ending December 31, 2023. |
Representations, Warranties and Covenants
The Merger Agreement contains customary representations
and warranties of the parties, which will not survive the Closing. Many of the representations and warranties are qualified by materiality
or Company Material Adverse Effect (with respect to the Company) or SPAC Material Adverse Effect (with respect to SPAC). “Material
Adverse Effect” as used in the Merger Agreement means with respect to the Company or SPAC, as applicable, any event, state of facts,
development, change, circumstance, occurrence or effect that has had, or would reasonably be expected to have, individually or in the
aggregate, a material adverse effect on (i) the business, assets and liabilities, results of operations or financial condition of the
applicable party and its subsidiaries, taken as a whole or (ii) the ability of such party or any of its subsidiaries to consummate the
Transactions, in each case subject to certain customary exceptions. Certain of the representations are subject to specified exceptions
and qualifications contained in the Merger Agreement or in information provided pursuant to certain disclosure schedules to the Merger
Agreement.
The Merger Agreement also contains pre-closing
covenants of the parties, including obligations of the parties to operate their respective businesses in the ordinary course consistent
with past practice, and to refrain from taking certain specified actions without the prior written consent of the other applicable parties,
in each case, subject to certain exceptions and qualifications. Additionally, the parties have agreed not to solicit, negotiate or enter
into competing transactions, as further provided in the Merger Agreement. The covenants do not survive the Closing (other than those that
are to be performed after the Closing).
SPAC and the Company agreed, as promptly as practicable
after the execution of the Merger Agreement, to prepare, and SPAC and PubCo have agreed to file with the SEC, a registration statement
on Form F-4 (as amended, the “F-4 Registration Statement”) in connection with the registration under the Securities Act of
1933, as amended (the “Securities Act”) of the PubCo Ordinary Shares pursuant to the Merger Agreement, and containing a proxy
statement/prospectus for the purpose of SPAC soliciting proxies from the stockholders of SPAC to approve the Merger Agreement, the Transactions
and related matters (the “SPAC Stockholder Approval”) at a special meeting of SPAC stockholders (the “Stockholder Meeting”)
and providing such stockholders an opportunity, in accordance with SPAC’s organizational documents and initial public offering prospectus,
to have their shares of SPAC Common Stock redeemed (the “Redemptions”).
PubCo agreed to take all action within its power so that effective
at the Closing, the entire board of directors of PubCo will consist of no less than seven (7) individuals, of whom (i) one (1) will be
designated by SPAC, and (ii) six (6) will be designated by the Company, of which four (4) must qualify as an “independent director”
under stock exchange regulations applicable to PubCo, and which shall comply with all diversity requirements under applicable Law, each
such director to hold office in accordance with the PubCo Governing Documents.
In addition, PubCo agreed to amend and restate
its Memorandum of Association and Articles of Association (the “PubCo Governing Documents”) at or before the Closing by the
passing of a shareholder special resolution. The PubCo Governing Documents will include customary provisions for a memorandum of association
and articles of association of a Cayman Islands publicly traded company that is traded on Nasdaq or NYSE.
Conditions to the Parties’ Obligations
to Consummate the Mergers
Under the Merger Agreement, the obligations of
the parties to consummate (or cause to be consummated) the Transactions are subject to a number of customary conditions for special purpose
acquisition companies, including, among others, the following: (i) the approval of the Mergers and the other stockholder proposals required
to approve the Transactions by SPAC’s stockholders and the Company’s shareholders, (ii) all specified approvals or consents
(including governmental and regulatory approvals) and all waiting or other periods have been obtained or have expired or been terminated,
as applicable, (iii) the effectiveness of the F-4 Registration Statement, (iv) PubCo’s initial listing application with Nasdaq or
NYSE shall have been conditionally approved and, immediately following the Closing, PubCo shall satisfy any applicable initial and continuing
listing requirements of Nasdaq or NYSE and PubCo shall not have received any notice of non-compliance therewith, (v) the PubCo Ordinary
Shares having been approved for listing on Nasdaq or NYSE, subject to round lot holder requirements, and (vi) SPAC having a minimum of
$5,000,001 of net tangible assets on its pro forma consolidated balance sheet after giving effect to the Closing (after giving effect
to any Redemptions and any PIPE Investment).
The obligations of SPAC to consummate (or cause
to be consummated) the Transactions are also subject to, among other things (i) the representations and warranties of the Company and
of each Acquisition Entity being true and correct, subject to the materiality standards contained in the Merger Agreement, (ii) material
compliance by the Company and each Acquisition Entity with its pre-closing covenants, and (iii) no Company Material Adverse Effect, (iv)
obtaining all approvals, waivers or consents from any third parties set forth and described on Section 9.2(d) of the Company Disclosure
Letter, (v) receiving PIPE Subscription Agreements within two months after the date of the Merger Agreement, pursuant to which PIPE Investors
have committed to provide equity financing to PubCo with the total PIPE Investment Amount of $60,000,000 solely for purposes of consummating
the Transactions, (vi) Company obtaining executed counterparts to the Shareholder Support Agreement from all the Key Company Shareholders,
(vii) the termination of voting agreements listed on Section 3.17 of the Company Disclosure Letter, and (viii) PubCo obtaining executed
counterparts to the Lock-Up Agreement from the Company Shareholders holding at least 3.5% of the outstanding shares of the Fully-Diluted
Company Ordinary Shares and directors, officers and Affiliates of the Company who own any Company Shares.
The obligations of the Company to consummate (and cause to be consummated)
the Transactions are also subject to, among other things (i) the representations and warranties of SPAC being true and correct, subject
to the materiality standards contained in the Merger Agreement, (ii) material compliance by SPAC with its pre-closing covenants, subject
to the materiality standards contained in the Merger Agreement, (iii) no SPAC Material Adverse Effect, (iv) the available Minimum Cash
Amount being at least $4 million, (v) SPAC obtaining executed counterparts to the Sponsor Support Agreement from all the Sponsors.
Termination Rights
The Merger Agreement contains certain termination
rights, including, among others, the following: (i) upon the mutual written consent of SPAC and the Company, (ii) if the consummation
of the Transactions is prohibited by law, (iii) if the Closing has not occurred on or before August 31, 2022, (iv) in connection with
a breach of a representation, warranty, covenant or other agreement by a party which is not capable of being cured within 15 days after
receipt of such breach, subject to the materiality standards contained in the Merger Agreement, (v) by either SPAC or the Company if the
board of directors of the other party publicly changes its recommendation with respect to the Merger Agreement and Transactions and related
stockholder or shareholder approvals under certain circumstances detailed in the Merger Agreement, (vi) by either SPAC or the Company
if the Stockholder Meeting is held and SPAC Stockholder Approval is not received, (vii) by SPAC if the PIPE Subscription Agreements have
not been entered into within two months after the date of the Merger Agreement, or (viii) by SPAC if the Company does not receive the
written consent of its shareholders to the Merger Agreement and related approvals within ten business days after the F-4 Registration
Statement has become effective.
If there is any Terminating Company Breach or Terminating
SPAC Breach, SPAC or the Company, respectively, has the right to terminate the Merger Agreement after the cure period of 15 days and charge
the $500,000 break-up fee. If the Company has not deposited the extension fee pursuant to the Merger Agreement, SPAC has the right to
terminate the Merger Agreement and the Company is obligated to pay SPAC $1,000,000 break-up fee. The Merger Agreement is filed as Exhibit
2.1 to this Current Report on Form 8-K and the foregoing description thereof is qualified in its entirety by reference to the full text
of the Merger Agreement. The Merger Agreement provides investors with information regarding its terms and is not intended to provide any
other factual information about the parties. In particular, the assertions embodied in the representations and warranties contained in
the Merger Agreement were made as of the execution date of the Merger Agreement only and are qualified by information in confidential
disclosure schedules provided by the parties to each other in connection with the signing of the Merger Agreement. These disclosure schedules
contain information that modifies, qualifies, and creates exceptions to the representations and warranties set forth in the Merger Agreement.
Moreover, certain representations and warranties in the Merger Agreement may have been used for the purpose of allocating risk between
the parties rather than establishing matters of fact. Accordingly, you should not rely on the representations and warranties in the Merger
Agreement as characterizations of the actual statements of fact about the parties.
Shareholder Support Agreement
Contemporaneously with the execution of the Merger
Agreement, SPAC, PubCo, the Company and Key Company Shareholders entered into a voting and support agreement (the “Shareholder Support
Agreement”), pursuant to which, among other things, (a) Key Company Shareholders agreed (i) not to transfer and will vote their
Company Ordinary Shares in favor of the Merger Agreement (including by execution of written resolutions), the Mergers and the other Transactions,
(ii) to consent to the termination of any Side Letters (if any), effective at Closing. The Company shareholders party to the Shareholder
Support Agreement collectively have a sufficient number of votes to approve the Merger.
The Shareholder Support Agreement and all of its
provisions will terminate and be of no further force or effect upon the earlier of the unanimous written agreement of all the parties
to the Shareholder Support Agreement and termination of the Merger Agreement pursuant to its terms. Upon such termination of the Shareholder
Support Agreement, no party shall have any liability hereunder other than for its willful and material breach of the Shareholder Support
Agreement prior to such termination; provided, however, that no party to the Shareholder Support Agreement shall be relieved from any
liability to the other party hereto resulting from a willful breach of the Merger Agreement.
The Shareholder Support Agreement is filed as
Exhibit 10.1 to this Current Report on Form 8-K, and the foregoing description thereof is qualified in its entirety by reference to the
full text of the Shareholder Support Agreement.
Sponsor Support Agreement
Contemporaneously with the execution of the Merger
Agreement, SPAC, Sponsor, PubCo, and the Company entered into a Sponsor Support Agreement , pursuant to which, among other things, Sponsor
(i) will not transfer and will vote its shares of SPAC Common Stock or any additional shares of SPAC Common Stock it acquires prior to
the SPAC Stockholder Meeting in favor of the Merger Agreement, the Mergers and the other Transactions and each of the Transaction Proposals,
(ii) will not redeem any shares of SPAC Common Stock in connection with the SPAC Merger, and (iii) waives its anti-dilution rights under
the SPAC Charter.
The Sponsor Support Agreement and all of its provisions
will terminate and be of no further force or effect upon the earlier of the unanimous written agreement of all the parties to the Sponsor
Support Agreement and termination of the Merger Agreement pursuant to its terms. Upon such termination, no party shall have any liability
hereunder other than for its willful and material breach of the Sponsor Support Agreement prior to such termination; provided, however,
that no party to the Sponsor Support Agreement shall be relieved from any liability to the other party hereto resulting from a willful
breach of the Sponsor Support Agreement.
The Sponsor Support Agreement is filed as Exhibit
10.2 to this Current Report on Form 8-K, and the foregoing description thereof is qualified in its entirety by reference to the full text
of the Sponsor Support Agreement.
Lock-Up Agreement
Concurrently with the execution
of the Merger Agreement, SPAC, PubCo and the shareholders of Company Ordinary Shares entered into separate Lock-Up Agreements (each a
“Lock-Up Agreement”), pursuant to which the securities of PubCo held by such shareholders will be locked-up and subject to
transfer restrictions for a period of time following the Closing, as described below, subject to certain exceptions. The securities held
by such shareholders will be locked-up until the earliest of: (i) six-month anniversary of the date of the Closing; and (ii) subsequent
to the Closing, the date on which PubCo consummates a liquidation, merger, capital stock exchange, reorganization, or other similar transaction
that results in all of PubCo’s shareholders having the right to exchange their PubCo Ordinary Shares for cash, securities or other
property.
A form of the Lock-Up Agreement
is filed as Exhibit 10.3 to this Current Report on Form 8-K, and the foregoing description thereof is qualified in its entirety by reference
to the full text of the Lock-Up Agreement.
Amended and Restated Registration Rights Agreement
Concurrently with the execution
of the Merger Agreement, SPAC, PubCo, the Company, certain holders of Company Ordinary Shares, certain shareholders of SPAC Common Stock,
and the holders of the private SPAC Units entered into an Amended and Restated Registration Rights Agreement pursuant to which, among
other things, PubCo agreed to provide the above holders with certain rights relating to the registration for resale of the PubCo Ordinary
Shares that they will receive by Closing.
A form of the Amended
and Restated Registration Rights Agreement is filed as Exhibit 10.4 to this Current Report on Form 8-K, and the foregoing description
thereof is qualified in its entirety by reference to the full text of the form of the Amended and Restated Registration Rights Agreement.