Item 1.01. Entry Into A Material
Definitive Agreement.
Merger Agreement
On
June 21, 2023, TLGY Acquisition Corporation, a Cayman Islands exempted company (“TLGY”),
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 TLGY, Virgo Merger Sub Corp., a Delaware corporation and wholly-owned subsidiary of TLGY (“Merger
Sub”), Verde Bioresins, Inc., a Delaware corporation (“Verde”), and, solely for Sections 3.07, 3.10,
7.13 and Article XI thereof, TLGY Sponsors LLC, a Cayman Islands limited liability company (“Sponsor”). Capitalized
terms used in this Current Report on Form 8-K but not otherwise defined herein shall have the meanings given to them in the Merger
Agreement.
The Merger
Agreement and the transactions contemplated thereby were approved by the boards of directors of each of TLGY and Verde.
The transactions
set forth in the Merger Agreement, including the Merger (as defined below), will constitute a “business combination” as contemplated
by TLGY’s amended and restated memorandum and articles of association.
The Business Combination
Pursuant to
the Merger Agreement, after the satisfaction or waiver of the applicable closing conditions (including the required shareholder approvals),
the closing (the “Closing”) of the transactions contemplated by the Merger Agreement, including the Acquiror Share
Redemption Payment, the Redomicile and the Merger (collectively, the “Business Combination”) will begin. The date on
which the Closing actually begins is hereinafter referred to as the “First Closing Date.”
On the First
Closing Date, (i) TLGY will redeem the Class A ordinary shares that the holders thereof have elected to redeem in connection
with the Merger; (ii) TLGY will file a certificate of domestication (“Certificate of Domestication”) with the
Secretary of State of the State of Delaware in connection with the Redomicile (as defined below), which shall specify that the Redomicile
shall become effective on the next business day after the Certificate of Domestication has been filed or at such later time as the parties
may mutually agree to (the date on which the Redomicile becomes effective, the “Second Closing Date”); and (iii) Verde
will file a certificate of merger (the “Certificate of Merger”) with the Secretary of State of the State of Delaware,
which will specify that the Merger (as defined below) shall become effective on the second Business Day after the Certificate of Merger
has been filed or at such later time as the parties may mutually agree to (the “Effective Time” and the date on which
the Merger becomes effective, the “Third Closing Date”).
On
the Second Closing Date, through, among other things, the effectiveness of the Certificate of Domestication, TLGY will change its jurisdiction
of incorporation by deregistering as a Cayman Islands exempted company and continuing and domesticating as a corporation incorporated
under the laws of the State of Delaware (the “Redomicile”), pursuant to which,
among other things, (a) TLGY will adopt the certificate of incorporation in the form set forth as Exhibit D to the Merger Agreement
and (b) each Class B ordinary share, par value $0.0001 per share, of TLGY (the “Class B Ordinary Shares”)
shall convert into a share of common stock, par value $0.0001 per share, of the redomiciled TLGY (“Acquiror Common Stock”)
and each Class A ordinary share, par value $0.0001 per share, of TLGY shall convert into a share of Acquiror Common Stock, and, as
a result of which and pursuant to the Warrant Agreement, each Existing Acquiror Private Placement Warrant shall automatically convert,
on a one-for-one basis, into one Domesticated Acquiror Private Placement Warrant and each Existing Acquiror Private Placement Warrant
shall automatically convert, on a one-for-one basis, into one Domesticated Acquiror Public Warrant. In connection with the Redomicile,
TLGY will change its name to “Verde Bioresins, Corp.”, or such other name mutually agreed to by TLGY and Verde (“New
Verde”).
On the Third Closing Day, through,
among other things, the effectiveness of the Certificate of Merger, Merger Sub will merge with and into Verde (the “Merger”),
with Verde surviving the Merger as a wholly-owned subsidiary of New Verde. In the Merger, the issued and outstanding shares of capital
stock of Verde will be converted into the right to receive the Closing Merger Consideration (as defined below). Additionally, on the Third
Closing Date, Acquiror shall have been approved to trade publicly on the NASDAQ under the new ticker symbol “VRDE”.
Directors and Officers of the
Companies
Except as
otherwise agreed in writing by TLGY and Verde prior to the Closing, and conditioned upon the occurrence of the Closing, subject to any
limitation imposed under applicable laws and the listing requirements of The Nasdaq Stock Market LLC (“Nasdaq”), TLGY
shall take all actions necessary or appropriate such that (a) each director of TLGY in office prior to the Effective Time shall cease
to be a director immediately following the Effective Time and (b) Brian Gordon, Cuong Do, Jin-Goon Kim and certain other individuals
to be designated by Brian Gordon and Cuong Do as members of the nomination committee shall be appointed to the New Verde board of directors.
Closing Merger Consideration
In accordance
with the terms and subject to the conditions of the Merger Agreement, at the Effective Time, each share of common stock of Verde issued
and outstanding immediately prior to the Effective Time (excluding Cancelled Shares and Dissenting Shares), shall be converted into the
right to receive the number of shares of duly authorized, validly issued, fully paid and nonassessable shares of common stock of New Verde
(“New Verde Common Stock”) (deemed to have a value of ten dollars ($10) per share) equal to the quotient obtained by
dividing (a) the quotient obtained by dividing (i) $365,000,000 by (ii) ten dollars ($10.00) by (b) the aggregate
number of shares of Verde common stock that are issued and outstanding immediately prior to the Effective Time after giving effect to
the Company Conversion (as defined below) (the “Closing Merger Consideration”).
Pursuant to
the Merger Agreement, Verde shall procure that, prior to the Closing, (a) all convertible notes or warrants convertible into or exercisable
for common stock of Verde shall be converted or exercised in accordance with their terms, and (b) all existing compensatory equity
or equity-based or similar incentive plans, and all other rights, agreements, arrangements, convertible or exchangeable securities or
other commitments (other than the Merger Agreement) pursuant to which Verde is obligated to issue, transfer, sell, purchase, return or
redeem or cause to be issued, transferred, sold, purchased, returned or redeemed any equity securities of Verde (collectively, “Equity
Agreements”) shall be terminated (clauses (a) and (b), together, the “Company Conversion”), such that,
after the consummation of the Company Conversion and immediately prior to the Closing, except for the issued and outstanding common stock
of Verde, there shall be no other outstanding equity interests, or rights convertible or exercisable for equity interests, in Verde, including
any warrants, options, calls, pre-emptive rights, subscriptions, “phantom” stock rights or other Equity Agreements.
Company Stockholders’
Earn-Out
As additional
consideration for the Merger, promptly upon the occurrence of a Triggering Event (as defined below) during the Earnout Period (as defined
below), TLGY will issue to the holders of common stock of Verde immediately before the Effective Time (after giving effect to the Company
Conversion) (excluding the holders of Cancelled Shares and Dissenting Shares) (the “Eligible Company Stockholders”)
his or her pro rata portion of up to an aggregate of 36,500,000 shares of New Verde Common Stock (“Company Stockholder Earnout
Shares”) to be issued and delivered as follows: (a) upon the occurrence of Triggering Event I (as defined below) within
the Earnout Period, 18,250,000 shares of Company Stockholder Earnout Shares shall be issued to the Eligible Company Stockholders in accordance
with their respective pro rata portion, provided that the issuance of the Company Stockholder Earnout Shares pursuant to the occurrence
of Triggering Event I shall no longer be applicable upon and after the satisfaction of Triggering Event II (as defined below) and (b) upon
the occurrence of Triggering Event II within the Earnout Period, a number of Company Stockholder Earnout Shares shall be issued to the
Eligible Company Stockholders in accordance with their respective pro rata portion such that the cumulative total of all issued Company
Stockholder Earnout Shares reaches 36,500,000 shares (inclusive of Company Stockholder Earnout Shares issued upon the occurrence of Triggering
Event I, if any).
“Triggering
Event I” means the daily volume-weighted average trading sale price as reported by Bloomberg for any thirty (30) consecutive
Trading Days within the Earnout Period of one share of New Verde Common Stock quoted on Nasdaq (or such other exchange on which the shares
of New Verde Common Stock are then listed) (the “30-Day VWAP”) is greater than or equal to a value that equals or exceeds
the Minimum IRR Threshold (as defined below), provided that the first Trading Day of such thirty (30) consecutive Trading Day period shall
occur after the thirty (30) month anniversary of the Third Closing Date.
“Triggering
Event II” means (a) the thirty (30)-Day VWAP is greater than or equal to a value that equals or exceeds the Minimum IRR
Threshold, provided that the first Trading Day of the relevant thirty (30) Trading Day period shall occur after the forty-second (42)
month anniversary of the Third Closing Date, or (b) a Trade Sale that occurs after the forty-second (42) month anniversary of the
Third Closing Date but within the Earnout Period that reflects a valuation (in the case of any non-cash consideration, as provided in
the definitive transactions documents for such transaction, or if not so provided, determined by the board of directors of New Verde in
good faith) per share of New Verde Common Stock on a fully diluted basis that equals or exceeds the Minimum IRR Threshold.
“Triggering
Event” means either Triggering Event I or Triggering Event II.
“Earnout
Period” means the time period following the Third Closing Date and ending on the date that is the five (5) year anniversary
of the Third Closing Date.
“Minimum IRR Threshold”
means a value that provides a gross internal rate of return of 35%, calculated based on the Closing Per Share Price and from the Third
Closing Date until the first Trading Day of the applicable 30-day period for purposes of the thirty (30)-Day VWAP calculation or the closing
of the Trade Sale, as applicable, taking into account all declared and paid dividends.
“Closing Per Share
Price” means, with respect to shares of New Verde Common Stock, $10.00 per share.
Sponsor’s Earnout
If the amount
of the Net Proceeds (as defined below), after subtracting therefrom the amount of proceeds raised from any Non-TLGY Pre-Closing Financing
(as defined below), at the Closing is less than the Target Cash Requirement (as defined below), TLGY will issue to the Sponsor up to an
aggregate of 2,000,000 of New Verde Common Stock (any shares issued to the Sponsor pursuant this and the subsequent paragraphs under “Sponsor’s
Earnout”, the “Sponsor Earnout Shares”) as follows: (a) upon the occurrence of Triggering Event I within
the Earnout Period, a number of Sponsor Earnout Shares equal to the product of (i) 1,000,000 and (ii) the Target Cash Percentage
(as defined below) shall be issued to the Sponsor, provided that the issuance of the Sponsor Earnout Shares pursuant to the occurrence
of Triggering Event I shall no longer be applicable upon and after the satisfaction of Triggering Event II and (b) upon the occurrence
of Triggering Event II within the Earnout Period, a number of Sponsor Earnout Shares equal to the product of (i) 2,000,000 and (ii) the
Target Cash Percentage shall be issued to the Sponsor (inclusive of Sponsor Earnout Shares issued upon the occurrence of Triggering Event
I, if any).
Subject to
the following paragraph, if the amount of the Net Proceeds, after subtracting therefrom the amount of proceeds raised from any Non-TLGY
Pre-Closing Financing, at the Closing is equal to or in excess of the Target Cash Requirement, TLGY will issue to the Sponsor up to an
aggregate of 5,750,000 Sponsor Earnout Shares as follows: (a) 1,375,000 Sponsor Earnout Shares shall be issued to the Sponsor on
the two (2)-year anniversary of the Closing, (b) 1,375,000 Sponsor Earnout Shares shall be issued to the Sponsor on the four (4)-year
anniversary of the Closing, (c) upon the occurrence of Triggering Event I within the Earnout Period, 1,500,000 Sponsor Earnout Shares
shall be issued to the Sponsor, provided that the issuance of the Sponsor Earnout Shares pursuant to the occurrence of Triggering Event
I shall no longer be applicable upon and after the satisfaction of Triggering Event II and (d) upon the occurrence of Triggering
Event II within the Earnout Period, 3,000,000 Sponsor Earnout Shares shall be issued to the Sponsor such that the cumulative total of
all Sponsor Earnout Shares issued pursuant to subparagraphs (c) and (d) shall be equal to 3,000,000 Sponsor Earnout Shares.
Notwithstanding
anything to the contrary in the immediately preceding paragraph, if, within thirty (30) days after the date of the Merger Agreement, (a) Verde,
Humanitario (as defined below), and/or their Affiliates or Representatives secure binding, definitive agreements from investors to invest
$50,000,000 or more in Verde or TLGY at or prior to the Closing in connection with the Transactions (and such proceeds are actually received
by Verde or TLGY at or prior to the Closing), and (b) the aggregate amount of the binding, definitive agreements to invest in Verde
or TLGY at or prior to the Closing (not including any amounts held in the Trust Account) secured by the Sponsor, TLGY, and/or their respective
Affiliates or Representatives in connection with the Transactions (and such proceeds are actually received by Verde or TLGY at or prior
to the Closing) is less than $10,000,000, then the Sponsor shall only be entitled to receive the maximum number of Sponsor Earnout Shares
set forth in the first paragraph under “Sponsor’s Earnout” above (as if the Target Cash Percentage, for purposes
of subparagraphs (a) and (b) thereof was equal to 100%).
“Net
Proceeds” means Gross Proceeds, after deduction of all Transaction Expenses.
“Gross Proceeds”
means an amount equal to (a) the aggregate amount of cash contained in the Trust Account immediately prior to the Closing, after
taking into account the Acquiror Share Redemption; plus (b) the proceeds under the Founder PIPE Agreement; plus (c) all cash
or cash-equivalent instruments of Verde and its Subsidiaries (excluding any cash already taken into account in clause (b) above,
or any cash proceeds from the Company Notes); plus (d) the proceeds actually paid to TLGY at or prior to the Closing under any Pre-Closing
Financing, and the proceeds payable to TLGY after the Closing under any Pre-Closing Financing to the extent committed at or prior to the
Closing.
“Target Cash Requirement”
means a minimum of $25,000,000.
“Target
Cash Percentage” shall mean the quotient of (a) the dollar amount of the Net Proceeds at the Closing (after subtracting
therefrom the amount of proceeds raised from any Non-TLGY Pre-Closing Financing), and (b) the Target Cash Requirement, provided,
however, that the Target Cash Percentage shall not be greater than 100%.
“Pre-Closing Financing”
means (a) the issuance by TLGY of any shares of capital stock or equity-linked securities or rights exercisable for or convertible
into shares of capital stock or (b) equity financing facilities or non-redemption pools entered into by TLGY, in each case with respect
to clauses (a) and (b), the definitive agreements of which will be entered into on or after the date of the Merger Agreement and
prior to or simultaneously with the Closing.
“Non-TLGY Pre-Closing
Financing” means any Pre-Closing Financing that is originated or introduced by any of Verde, Humanitario, and/or any of their
Affiliates or Representatives (excluding, for the avoidance of doubt, the Sponsor, TLGY, and/or any of their respective Affiliates or
Representatives). For the avoidance of doubt, the proceeds under the Founder PIPE Agreement shall constitute a Non-TLGY Pre-Closing Financing.
Representations and Warranties;
Covenants
The Merger
Agreement contains representations, warranties and covenants of each of the parties thereto that are customary for transactions of this
type, including with respect to the operations of TLGY and Verde.
In
addition, TLGY has agreed to adopt an equity incentive plan and an employee stock purchase plan in
the form to be prepared by Verde in consultation with TLGY.
Conditions to Each Party’s
Obligations
The obligation
of TLGY and Verde to consummate the Business Combination is subject to certain closing conditions, including, but not limited to, (a) the
parties shall have received or have been deemed to have received all other necessary (or in the case of Foreign Investment Laws, proper
or advisable pursuant to applicable Law by mutual consent of TLGY and Verde) Regulatory Approvals; (b) no prohibition by a governmental
authority prohibiting or enjoining the transactions contemplated by the Merger Agreement; (c) the Offer shall have been completed
in accordance with the Merger Agreement’s terms, Acquiror’s Organizational Documents and the Proxy Statement, (d) the
Registration Statement becoming effective and no stop order suspending the effectiveness of the Registration Statement having been issued
and no proceedings for that purpose having been initiated or threatened by the SEC and not withdrawn, © the New Verde Common Stock
and Acquiror Warrants (other than the Acquiror Private Placement Warrants) shall have been approved for listing on Nasdaq, (f) TLGY
shall have at least $5,000,001 of net tangible assets immediately prior to (following the Acquiror Share Redemption), or upon consummation
of, the Merger, (g) the Directors and Officers of TLGY upon the Effective Time shall be in accordance with the Merger Agreement,
(h) the approval of the Merger Agreement and the Merger by TLGY’s shareholders and (i) the approval of the Merger Agreement
and the Merger by Verde’s stockholders.
The obligation
of TLGY to consummate the Business Combination is subject to the fulfillment of other closing conditions, including, but not limited to,
(a) the representations and warranties of Verde being true and correct to the standards applicable to such representations and warranties
and each of the covenants of Verde having been performed or complied with in all material respects, (b) delivery to TLGY by Verde
of a signed officer’s certificate, dated as of the First Closing Date, certifying that certain closing conditions have been fulfilled,
(c) delivery to TLGY by Verde of executed counterparts to all Ancillary Agreements to which Verde or a stockholder of Verde is party,
(d) the Company Conversion shall have been complete©(e) Verde’s Net Debt immediately before the Closing shall be
no more than $5,000,000, (f) no Material Adverse Effect shall have occurred and (g) the Voting Trust Transfer (as defined below)
shall have been completed in accordance with the Company Support Agreement.
The obligation
of Verde to consummate the Business Combination is also subject to the fulfillment of other closing conditions, including, but not limited
to, (a) the representations and warranties of TLGY and Merger Sub being true and correct to the standards applicable to such representations
and warranties and each of the covenants of TLGY having been performed or complied with in all material respects, (b) delivery to
Verde by TLGY of a signed officer’s certificate, dated as of the First Closing Date, certifying that certain closing conditions
have been fulfilled, (c) delivery to Verde by TLGY of executed counterparts to all Ancillary Agreements to which TLGY or TLGY Sponsors
LLC (“Sponsor”) is party and (d) certain directors and executive officers of TLGY specified in the Merger Agreement
having resigned, in each case effective as of the Effective Time.
Voting Trust Transfer
In connection
with the Transactions, Humanitario Capital LLC, the current controlling stockholder of Verde (“Humanitario”) will,
within ten (10) Business Days after the Registration Statement is declared effective under the Securities Act, enter into a voting
trust agreement (the “Voting Trust Agreement”) with an independent trustee (the “Voting Trustee”),
pursuant to which Humanitario will transfer and assign to the Voting Trustee all of the Closing Merger Consideration and the Earnout Shares
received or to be received by Humanitario upon the terms and subject to the conditions in the Voting Trust Agreement and the Company Support
Agreement (as defined below), effective as of the Effective Time (the “Voting Trust Transfer”).
Verde shall
cooperate and assist Humanitario with entering into the Voting Trust Agreement, and, after the Effective Time, New Verde shall cooperate
with Humanitario with completing the Voting Trust Transfer in the manner and on the terms and conditions described in the Company Support
Agreement.
Extension of Time to Consummate
a Business Combination
TLGY shall
use reasonable best efforts to procure one or more extensions after September 2, 2023 through the Termination Date (as defined below),
in accordance with the TLGY’s organizational documents and the Trust Agreement, of the deadline by which TLGY must complete its
Business Combination (each, an “Extension”), provided that, TLGY may not seek an Extension beyond the Termination Date
without Verde’s written consent.
First Extension
Period
Verde and
the Sponsor each agree that if any Extension(s) is required from September 2, 2023 (the “Extension Payment Determination
Date”) through December 2, 2023, Verde shall cause one or more Company Extension Loans, and the Sponsor shall cause one
or more Sponsor Extension Loans, to be made to TLGY on a monthly basis, in each case, on an interest-free basis in an amount equal to
fifty percent (50%) of the amount necessary for funding the applicable month of the Extension(s), provided that, each of Verde and the
Sponsor shall not be required to make any Company Extension Loans or Sponsor Extension Loans, as applicable, pursuant to this paragraph
in excess of $100,000.00 per month.
Notwithstanding
anything to the contrary above, no later than thirty (30) days prior to the Extension Payment Determination Date, the Sponsor may provide
written notice to Verde of its intent to terminate the Merger Agreement on the day immediately after the Extension Payment Determination
Date (the “First Extension Period Termination”). Within ten (10) Business Days of receiving such notice of intent
to terminate from the Sponsor, Verde shall, in its sole discretion, either agree to terminate the Merger Agreement on the day immediately
after the Extension Payment Determination Date, or cause a Company Extension Loan to be made to TLGY on an interest free-basis for funding
100% of the amount necessary for funding the Extension for the subsequent three (3)-month period following the Extension Payment Determination
Date (the “First Extension Period”).
Second
Extension Period and Extension through the Termination Date
Verde and
the Sponsor each agree that if any Extension(s) is required after December 2, 2023 through the Termination Date, (a) Verde
shall cause one or more Company Extension Loans to be made to TLGY on a monthly basis, in each case, on an interest-free basis and in
an amount equal to the lesser of fifty percent (50%) of the amount necessary for enabling the applicable month of the Extension(s), and
$150,000, and (b) the Sponsor shall cause one or more Sponsor Extension Loans to be made to TLGY on a monthly basis, in each case,
on an interest-free basis and in an amount necessary to fund the balance of the applicable month of the Extension(s).
Notwithstanding
anything to the contrary above, no later than thirty (30) days prior to the expiration of the First Extension Period, either of Verde
or the Sponsor may provide written notice to the other of its intent to terminate the Merger Agreement upon the expiration of the First
Extension Period (the “Second Extension Period Termination”). Within ten (10) Business Days of receiving such
notice of intent to terminate, Verde (if the terminating Party is the Sponsor) or the Sponsor (if the terminating Party is Verde), as
applicable, shall, in its sole discretion, either agree to terminate the Merger Agreement upon the expiration of the First Extension Period,
or cause a Company Extension Loan (if the terminating Party is the Sponsor) or a Sponsor Extension Loan (if the terminating Party is Verde)
to be made to TLGY on an interest free-basis for enabling 100% of the amount necessary for funding the Extension for the subsequent three
(3)-month period following the First Extension Period (the “Second Extension Period”).
Notwithstanding
anything to the contrary in the first paragraph under “Second Extension Period and Extension through the Termination Date”
above, no later than thirty (30) days prior to the expiration of the Second Extension Period, either of Verde or the Sponsor may provide
written notice to the other of its intent to terminate the Merger Agreement upon the expiration of the Second Extension Period (the “Final
Extension Period Termination”). Within ten (10) Business Days of receiving such notice of intent to terminate, Verde (if
the terminating Party is the Sponsor) or the Sponsor (if the terminating Party is Verde), as applicable, shall, in its sole discretion,
either agree to terminate the Merger Agreement upon the expiration of the Second Extension Period, or cause a Company Extension Loan (if
the terminating Party is the Sponsor) or a Sponsor Extension Loan (if the terminating Party is Verde) to be made to TLGY on an interest
free-basis for funding 100% of the amount necessary for enabling the Extension for the period from the Second Extension Period to the
Termination Date.
Conversion
of Company Extension Loans, Sponsor Extension Loans and Working Capital Loans
Each of Verde
and the Sponsor shall have the right, for a period of thirty (30) days after the Third Closing Date, to convert the Company Extension
Loans and the Sponsor Extension Loans, as applicable, into New Verde Common Stock at a price per share equal to seventy-five percent (75%)
of the dollar volume-weighted average price of the New Verde Common Stock for the five (5)-day trading period immediately following the
Third Closing Date, provided that, the aggregate amount of the Company Extension Loans and the Sponsor Extension Loans so converted shall
not exceed $3,000,000 (to be allocated on a pro rata basis based on their respective outstanding amount).
The Sponsor
shall have the right, for a period of thirty (30) days after the Third Closing Date, to convert the Working Capital Loans into New Verde
Common Stock at a price per share equal to seventy-five percent (75%) of the dollar volume-weighted average price of the New Verde Common
Stock for the five (5)-day trading period immediately following the Third Closing Date, provided that, the aggregate amount of the Working
Capital Loans so converted shall not exceed $1,000,000.
The Sponsor
agrees that it shall not convert the Working Capital Loans or the Sponsor Extension Loans, in whole or in part, into Acquiror Private
Placement Warrants.
Termination
The Merger
Agreement may be terminated under certain customary and limited circumstances prior to the Closing, including, but not limited to, (a) by
mutual written consent of TLGY and Verde, (b) by TLGY, subject to certain exceptions, if any of the representations and warranties
of Verde are not true and correct or if Verde fails to perform any of its respective covenants or agreements set forth in the Merger Agreement
such that certain conditions to the obligations of TLGY cannot be satisfied and the breach (or breaches) of such representations or warranties
or failure (or failures) to perform such covenants or agreements, as applicable, are not cured or cannot be cured within certain specified
time periods, (c) by Verde, subject to certain exceptions, if any of the representations and warranties made by TLGY are not true
and correct or if TLGY fails to perform any of its covenants or agreements set forth in the Merger Agreement such that the condition to
the obligations of Verde cannot be satisfied and the breach (or breaches) of such representations or warranties or failure (or failures)
to perform such covenants or agreements, as applicable, are not cured or cannot be cured within certain specified time periods, (d) by
either TLGY or Verde if the Closing has not occurred on or before March 31, 2024 (the “Termination Date”), (e) by
either Verde or TLGY if the consummation of the Merger is permanently enjoined or prohibited by the terms of a final, non-appealable governmental
order or other law; (f) by Verde, prior to TLGY obtaining the Acquiror Shareholder Approvals, if the TLGY board of directors changes
its recommendation that TLGY shareholders approve the proposals included in the proxy statement/prospectus or fails to include such recommendation
in the proxy statement/prospectus, (g) by Verde, if the Acquiror Shareholder Approvals are not obtained at the Extraordinary General
Meeting (subject to any adjournment or recess of the meeting in accordance with the applicable provisions of the Merger Agreement), (h) by
TLGY, if the Company Support Agreement has not been delivered within twenty-four (24) hours after the execution of the Merger Agreement,
(i) by TLGY, if the Company Stockholder Approvals have not been obtained within ten (10) Business Days following the date that
the Registration Statement is disseminated by Verde to the holders of common stock of Verde, (j) by the Sponsor, pursuant to and
subject to the terms in connection with the First Extension Period Termination, (k) by the Sponsor or Verde, pursuant to and subject
to the terms in connection with the Second Extension Period Termination or the Final Extension Period Termination; and (l) by Verde,
if the Minimum Cash Condition is not satisfied immediately before the time when Closing would otherwise occur. Each of TLGY and Verde’s
right to terminate under clause (d) above shall not be available if (i) it is the party that failed to fulfill any obligation
under the Merger Agreement that has been the primary cause of, or primarily resulted in, the failure of the Closing to occur on or before
such date or (ii) it is the party that is in breach of the Merger Agreement on such date, which breach could give rise to a right
of the other party to terminate the Merger Agreement. “Minimum Cash Condition” means the Net Proceeds (but excluding
any Humanitario Proceeds, to the extent accounted for as Net Proceeds) at the Closing shall be no less than $15,000,000 (after taking
into account any Cost Discount). “Humanitario Proceeds” means, without duplication, (a) the proceeds under the
Founder PIPE Agreement, (b) the cash proceeds from the Company Notes, (c) cash or cash-equivalent instruments of Verde and its
Subsidiaries, and (d) any proceeds received from Humanitario and/or any of its Affiliates under any other bona fide debt or equity
financing by Humanitario and/or any of its Affiliates. For the avoidance of doubt, proceeds from any Person (except for Humanitario and/or
its Affiliates) from any Pre-Closing Financing that is originated or introduced by any of Verde, Humanitario, and/or any of their Affiliates
or Representatives shall not constitute “Humanitario Proceeds”.
If the Merger
Agreement is validly terminated, none of the parties to the Merger Agreement, or their respective affiliates, officers, directors, employees
or securityholders, will have any liability or any further obligation under the Merger Agreement other than Sections 6.03 (No Claims Against
the Trust Account), 8.04 (Confidentiality; Publicity), 10.02 (Effect of Termination) and Article XI (Miscellaneous) of the Merger
Agreement and the Confidentiality Agreement dated May 30, 2022, between TLGY Holdings LLC and Verde, except in the case of Fraud
or Willful Breach of any covenant or agreement under the Merger Agreement occurring prior to such termination.
Expenses
Unless otherwise
specified in the Merger Agreement, each of TLGY, Merger Sub and Verde shall bear its own expenses incurred in connection with the Merger
Agreement and the Business Combination contemplated whether or not such transactions shall be consummated, including all fees of its legal
counsel, financial advisers and accountants, provided that, the parties agree that (a) Verde will reimburse the reasonable costs
and expenses of TLGY and the Sponsor incurred in connection with the Business Combination (including any costs related to any Extension
and the Tail Insurance) in the event of a failure to consummate the Business Combination for reasons primarily attributable to Verde,
including as a result of (i) Verde materially breaching the Merger Agreement or any Ancillary Agreement, including any failure to
comply with Verde’s obligations under the Merger Agreement to (A) deliver to TLGY counterparts to the Company Support Agreement
duly executed by Humanitario and Verde within twenty-four (24) hours after the execution of the Merger Agreement, (B) cooperate and
assist Humanitario with entering into the Voting Trust Agreement, and after the Effective Time, as New Verde, to cooperate with Humanitario
with completing the Voting Trust Transfer in the manner and on the terms and conditions described in the Company Support Agreement and
(C) if any Extension(s) is required beyond September 2, 2023, cause one or more Company Extension Loans to be made to TLGY
on an interest-free basis in such amount and pursuant to the terms and conditions of the Merger Agreement; (ii) the failure to enter
into the Voting Trust Agreement or complete the Voting Trust Transfer pursuant to the Company Support Agreement; or (iii) Fraud or
Willful Breach on the part of Verde; provided that, in the case of this part (a), Verde’s obligation to so reimburse TLGY and the
Merger Sub shall not exceed $2,000,000; (b) Verde will reimburse half of the reasonable costs and expenses of TLGY and the Sponsor
incurred in connection with the Business Combination (including without limitation any costs related to any Extension and the Tail Insurance)
in the event of a failure to consummate the Business Combination for reasons not primarily attributable to either Verde or TLGY (including
the failure to satisfy the Minimum Cash Condition), provided that, in the case of this part (b), Verde’s obligation to so reimburse
TLGY and the Sponsor shall not exceed $1,000,000; and (c) TLGY shall not be required to repay the Company Extension Loans if the
Effective Time does not occur. Notwithstanding the foregoing, in no event shall Verde be responsible for reimbursing TLGY or the Sponsor
for any costs and expenses in the event of a failure to consummate the Business Combination for reasons primarily attributable to TLGY
or the Sponsor, including, without limitation, as a result of (i) TLGY or the Sponsor breaching the binding provisions of the Merger
Agreement or any Ancillary Agreement, (ii) Fraud or Willful Breach on the part of TLGY or the Sponsor, or (iii) the termination
of the Merger Agreement (1) by mutual written consent of Verde and TLGY, (2) by Verde, subject to certain exceptions, if any
of the representations and warranties made by TLGY are not true and correct or if TLGY fails to perform any of its covenants or agreements
set forth in the Merger Agreement such that the condition to the obligations of Verde cannot be satisfied and the breach (or breaches)
of such representations or warranties or failure (or failures) to perform such covenants or agreements, as applicable, are not cured or
cannot be cured within certain specified time periods, (3) by Verde, if there has been any Acquiror Change in Recommendation, (4) by
Verde, prior to TLGY obtaining the Acquiror Shareholder Approvals, if the TLGY board of directors changes its recommendation that TLGY
shareholders approve the proposals included in the proxy statement/prospectus or fails to include such recommendation in the proxy statement/prospectus,
and (5) by Verde, if the Acquiror Shareholder Approvals are not obtained at the Extraordinary General Meeting (subject to any adjournment
or recess of the meeting in accordance with the applicable provisions of the Merger Agreement).
If Verde is
obligated to reimburse TLGY and/or the Sponsor, Verde shall make such payment to TLGY and/or the Sponsor within ten (10) Business
Days after receiving written notice of TLGY and/or the Sponsor requesting such reimbursement (the last day of such ten (10)-Business Day
period, the “Due Date”). If Verde fails to pay any amount payable by it by the Due Date, interest shall accrue on the
overdue amount from the Due Date up to the date of actual payment at a rate of 10% per annum, compounded monthly.
If the Closing
occurs, TLGY shall pay, or cause to be paid, (a) the Transaction Expenses, and (b) if applicable, any Stockholder Extension
Advances (as defined below), Working Capital Loans and Sponsor Extension Loans outstanding on the thirtieth (30th) day after the Third
Closing Date (together with all accrued but unpaid interest thereon), in each case, upon consummation of the Merger and release of proceeds
from the Trust Account in accordance with the terms of the Merger Agreement.
A copy of
the Merger Agreement is filed with this Current Report on Form 8-K as Exhibit 2.1 and is incorporated herein by reference, and
the foregoing description of the Merger Agreement is qualified in its entirety by reference thereto. The Merger Agreement is included
to provide investors and security holders with information regarding its terms and is not intended to provide any other factual information
about TLGY, Verde or the other parties thereto. The Merger Agreement contains representations, warranties and covenants that the respective
parties made to each other as of the date of the Merger Agreement or other specific dates. The assertions embodied in those representations,
warranties and covenants were made for purposes of the contract among the respective parties and are subject to important qualifications
and limitations agreed to by the parties in connection with negotiating such agreement. The representations, warranties and covenants
in the Merger Agreement are also modified in important part by the underlying disclosure schedules, which are not filed publicly and which
are subject to a contractual standard of materiality different from that generally applicable to shareholders and were used for the purpose
of allocating risk among the parties rather than establishing matters as facts. TLGY does not believe that these schedules contain information
that is material to an investment decision. Accordingly, investors and security holders should not rely on the representations, warranties
and covenants in the Merger Agreement as characterizations of the actual state of facts about TLGY, Verde and the other parties thereto.
Acquiror Support Agreement
Concurrently
with the execution of the Merger Agreement, TLGY entered into the Acquiror Support Agreement (the “Acquiror Support Agreement”)
with Verde and the Sponsor pursuant to which the Sponsor agreed to, among other things, (a) from the date of the Acquiror Support
Agreement to the Support Expiration Time (as defined below), vote at any meeting or pursuant to any action of written resolution of the
shareholders of TLGY all of their Class B Ordinary Shares, held of record or thereafter acquired: (i) in favor of the Business
Combination and the other Proposals and (ii) against any Competing Proposal; and (b) be bound by certain other covenants and
agreements related to the Business Combination, in each case, on the terms and subject to the conditions set forth in the Acquiror Support
Agreement. “Support Expiration Time” means the earlier of (a) the Effective Time and (b) such date and time
as the Merger Agreement shall be terminated in accordance with its terms.
Until the
Acquiror Expiration Time, the Sponsor (and its permitted transferees under the Insider Agreement (as defined below)) shall comply with
the restrictions on the transfer of the Sponsor Shares (as defined below) and Sponsor Warrants (as defined below) set forth in the letter
agreement, dated as of November 30, 2021, among Acquiror, the Sponsor and the Insiders (as such term is defined therein) (the “Insider
Agreement”).
The
foregoing description of the Acquiror Support Agreement is subject to and qualified in its entirety by reference to the full text of the
Acquiror Support Agreement, a copy of which is attached as Exhibit 10.1 hereto, and the terms
of which are incorporated herein by reference.
Company Support Agreement
On June
21, 2023, Humanitario, a stockholder of Verde representing the requisite votes necessary to approve the Business Combination, entered into a support agreement (the “Company Support Agreement”) with TLGY and Verde, pursuant to which
Humanitario agrees to (a) from the date of the Company Support Agreement to the Support Expiration Time, vote at any meeting or
pursuant to any action by written consent of the shareholders of Verde cause its Stockholder Shares (as defined in the Company
Support Agreement): (i) to approve and adopt the Merger Agreement and the transactions contemplated thereby, including the
Merger and (ii) against any merger agreement or merger, consolidation, combination, sale of substantial assets, reorganization,
recapitalization, dissolution, liquidation or winding up of or by Verde (other than the Merger Agreement and the transactions
contemplated thereby, including the Merger); and (b) be bound by certain other covenants and agreements related to the Business
Combination, in each case, on the terms and subject to the conditions set forth in the Company Support Agreement.
During the period commencing
on the date of the Company Support Agreement and ending on the earlier to occur of the Support Expiration Time and the liquidation of
TLGY, Humanitario shall not, except in each case pursuant to the Merger Agreement or to any Affiliate of Humanitario, transfer any Stockholder
Shares, Stockholder Warrants or the Stockholder Notes.
In the Company
Support Agreement, Humanitario further commits to purchase for a total purchase price equal to the Subscription Amount (as defined below),
a number of New Verde Common Stock at a purchase price of $10.00 per share on market terms (the “PIPE Investment”).
Humanitario’s obligation to make the PIPE Investment is subject to TLGY receiving commitments from one or more Financial Institutional
Investors (as defined in the Company Support Agreement) to purchase shares of the New Verde Common Stock at the Closing (such commitments,
collectively, the “Institutional PIPE Proceeds”) and Humanitario shall not have any obligation to make the PIPE Investment
if TLGY accepts a subscription to purchases shares of the New Verde Common Stock at the Closing from one or more Strategic Investors (as
defined the Company Support Agreement). The closing of the PIPE Investment is contingent upon the concurrent consummation of the Closing.
“Subscription Amount” means the lesser of (a) ten percent (10%) of the Institutional PIPE Proceeds at Closing
or (b) $25 million, provided that any proceeds invested by Humanitario in Verde in the form of equity or equity-linked securities
during the period between the execution of the Merger Agreement and the Closing (including any Stockholder Extension Advances), to the
extent not redeemed or otherwise repaid to Humanitario by Verde prior to or upon the Effective Time, shall be deducted from the Subscription
Amount.
Humanitario
agrees that if Verde is required to provide any Company Extension Loan(s) pursuant to the terms of the Merger Agreement, Humanitario
shall provide loan(s) to Verde in an equivalent amount to finance such Company Extension Loan(s) (each a “Stockholder
Extension Advance”), if requested by Verde in writing at least five (5) Business Days prior to the funding date of such
Company Extension Loan. For each Stockholder Extension Advance, interest shall (a) accrue at a fixed rate equal to ten percent (10)%
per annum through and including the day on which such Stockholder Extension Advance is repaid in full or converted as described below,
(b) be computed on the basis of a year of three hundred sixty-five (365) days for the actual number of days elapsed, and (c) be
compounded monthly. The other terms of the Stockholder Extension Advances shall be substantially the same as the Stockholder Notes, and
Verde will issue to Humanitario a convertible promissory note for each Stockholder Extension Advance.
Humanitario
shall have the right to direct Verde to convert all or any portion of the aggregate outstanding principal amount of the Company Extension
Loans (together with accrued and unpaid interest thereon) into New Verde Common Stock pursuant to the Merger Agreement. Any New Verde
Common Stock issued in respect of the Company Extension Loans so converted shall be transferred by Verde to Humanitario in exchange for
the cancellation (in whole or in part) of the corresponding Stockholder Extension Advances.
Humanitario
also agrees to enter into the Voting Trust Agreement with the Voting Trustee within ten (10) Business Days after the Registration
Statement is declared effective under the Securities Act, in accordance with the terms provided in the Company Support Agreement and otherwise
on terms and conditions to the reasonable satisfaction of Humanitario, Verde and TLGY. Pursuant to the Voting Trust Agreement, Humanitario
will transfer and assign to the Voting Trustee all of the Closing Merger Consideration and the Earnout Shares received or to be received
by Humanitario pursuant to the terms of the Merger Agreement, effective as of the Effective Time .
If the Merger
Agreement is terminated in accordance with its terms, promptly upon such termination, Verde will reimburse Humanitario for all Humanitario
Transaction Expenses. If the Closing occurs, TLGY shall pay, or cause to be paid, the Humanitario Transaction Expenses in accordance with
the Merger Agreement.
The
foregoing description of the Company Support Agreement is subject to and qualified in its entirety by reference to the full text of the
Company Support Agreement, a copy of which is attached as Exhibit 10.2 hereto, and the terms
of which are incorporated herein by reference.
Amended and Restated Registration
Rights Agreement
At the Closing,
New Verde, the Sponsor and certain stockholders of Verde will enter into an amended and restated registration rights agreement (the “Registration
Rights Agreement”), in the form attached to the Merger Agreement as Exhibit C thereto, pursuant to which, among other things,
the Sponsor and such other stockholders will be granted certain customary registration rights, on the terms and subject to the conditions
therein, with respect to securities of New Verde they will hold following the Merger.
The
foregoing description of the Registration Rights Agreement is subject to and qualified in its entirety by reference to the full text of
the form of Registration Rights Agreement, a copy of which is attached as Exhibit C to the Merger Agreement, included as Exhibit 2.1
hereto, and the terms of which are incorporated herein by reference.
Company Lock-Up Agreement
Prior to the
Closing, the Company shall use reasonable efforts to procure that each Company Stockholder, including Humanitario (or after the completion
of the Trust Transfer, the Trust), will enter into a Lock-Up Agreement (the “Company Lock-Up Agreement”), in the form
attached to the Merger Agreement as Exhibit F thereto, pursuant to which each Company Stockholder agrees that it shall not, and shall
cause any of its permitted transferees not to, transfer (a) any New Verde Common Stock received as part of the Closing Merger Consideration
prior to the date that is one-hundred (180) days after the Third Closing Date, or (b) any Earnout Shares prior to the date that is
three (3) months after the date of occurrence of the relevant Triggering Event (the “Transfer Restriction”), except
that, on the date on which New Verde completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction
that results in all of New Verde’s stockholders having the right to exchange their shares for cash, securities or other property,
the Transfer Restriction will terminate. The Company Lock-Up Agreement provides for certain permitted transfers, including but not limited
to, transfers to certain affiliates or family members.
The
foregoing description of the Company Lock-Up Agreement does not purport to be complete and is qualified in its entirety by reference to
the full text of the form of Company Lock-Up Agreement, a copy of which is attached as Exhibit F to the Merger Agreement, included
as Exhibit 2.1 to this Current Report on Form 8-K, and incorporated herein by reference.
Sponsor Share Restriction Agreement
Concurrently
with the execution of the Merger Agreement, the Sponsor, Verde and TLGY entered into an agreement (the “Sponsor Share Restriction
Agreement”), pursuant to which the Sponsor has agreed to the surrender and restriction, as applicable, of certain of (a) the
Class B Ordinary Shares held by the Sponsor (such shares, before and after the conversion in connection with the Redomicile, the
“Sponsor Shares”) and (b) the Existing Acquiror Private Placement Warrants held by the Sponsor (such warrants,
before and after the conversion in connection with the Redomicile, the “Sponsor Warrants”) following the Merger.
Sponsor Lock-Up
The
Sponsor agrees that it shall not transfer any Sponsor Shares or any Acquiror Warrants (or New Verde Common Stock issued or issuable
upon the exercise thereof) or New Verde Common Stock purchased or otherwise acquired by the Sponsor prior to or upon the Closing (except
for the Sponsor Earnout Shares) (such Sponsor Shares, Acquiror Warrants and New Verde Common Stock, collectively, the “Sponsor
Locked Up Equity”), until the earlier of (a) one (1) year after the Effective Time; and (b) subsequent to the
Closing, (i) if the stock price of New Verde Common Stock equals or exceeds $12.00 per share (as adjusted for share sub-divisions,
share capitalizations, reorganizations, recapitalizations and the like) for any twenty (20) Trading Days within any 30-Trading Day period
commencing at least one-hundred fifty (150) days after the Effective Time or (ii) the date on which TLGY completes a liquidation,
merger, share exchange, reorganization or other similar transaction that results in all of TLGY’s shareholders having the right
to exchange their New Verde Common Stock for cash, securities or other property.
The
Sponsor Share Restriction Agreement provides for certain permitted transfers, including but not limited to, transfers to certain affiliates
or family members.
Sponsor Warrant Forfeiture
In
exchange for the right to receive the Sponsor Earnout Shares under the Merger Agreement, the Sponsor agrees that it shall immediately
upon the Closing forfeit and surrender for cancellation all Sponsor Warrants, other than the Incentive Warrants (as defined below) Granted
(as defined below) by the Sponsor (the “Surrendered Warrants”).
Sponsor Incentive
Pool
Conditioned
upon the consummation of the Closing, the Sponsor will, concurrently with entering into the Sponsor Share Restriction Agreement, reserve
1,125,950 Sponsor Warrants as incentive warrants (“Incentive Warrants”). The Sponsor, after consultation with Verde
before the Closing, shall transfer for no additional consideration (“Grant”, “Granted” or “Granting”)
at the Closing the Incentive Warrants to such officers and employees of Verde providing services to Verde as of the date of the Merger
Agreement (“Incentive Grantees”) and employed by Verde at the time of Grant to be determined at the Sponsor’s
discretion primarily based on the work performed in facilitating the transactions contemplated by the Merger Agreement. Notwithstanding
the above, the Sponsor may forfeit and surrender, rather than Grant, up to 281,487 Sponsor Warrants so reserved as Incentive Warrants,
if the Sponsor determines, acting in good faith, that the Incentive Grantees have not used reasonable efforts to facilitate the transactions
contemplated by the Merger Agreement (including cooperating with the Sponsor and TLGY to raise Net Proceeds). The Sponsor Warrants that
are so forfeited and surrendered shall no longer constitute Incentive Warrants and shall be Surrendered Warrants.
Except
for Grants to Incentive Grantees, the Sponsor may not transfer the Incentive Warrants to any other Person. All Incentive Warrants shall
either be Granted to Incentive Grantees or surrendered and forfeited pursuant to the terms of the Sponsor Share Restriction Agreement.
The Sponsor may not retain any Incentive Warrants for its own account.
The
foregoing description of the Sponsor Share Restriction Agreement does not purport to be complete and is qualified in its entirety by the
by reference to the full text of the Sponsor Share Restriction Agreement, a copy of which is included as Exhibit 10.3 to this
Current Report on Form 8-K, and incorporated herein by reference.