| Item 1.01. | Entry into a Material Definitive Agreement |
Business Combination Agreement
The following summary and description
of the Business Combination Agreement (the “Agreement) does not purport to be complete, describes the material provisions of the
Agreement (as defined below), and is qualified in its entirety by reference to the full text of the Agreement filed as Exhibit 1.1 to
this Current Report on Form 8-K and incorporated by reference. Unless otherwise defined herein, the capitalized terms used in this Current
Report on Form 8-K are defined in the Agreement.
On May 7, 2023, Aura FAT Projects Acquisition
Corp, a Cayman Islands exempted company limited by shares, with company registration number 384483 (“AFAR”), entered
into a definitive Business Combination Agreement (the “Agreement”) with Allrites Holdings Pte Ltd., a Singapore private
company limited by shares, with company registration number 201703484C (“Allrites”), and Meta Gold Pte. Ltd., a Singapore
exempt private company limited by shares, with company registration number 202001973W, in its capacity as the representative for the shareholders
of Allrites. The transactions contemplated by the Agreement are hereinafter referred to as the “Business Combination.”
Allrites Share Recapitalization
Immediately prior to the closing of the
Business Combination (the “Closing”), but contingent upon the Closing, Allrites
will effect a capital restructuring whereby (i) each then outstanding (A) Allrites restricted ordinary share, (B) Allrites non-voting
share, (C) Allrites preference share, and (D) Allrites option, will become vested and exercisable and will convert into Allrites Ordinary
Shares, and (ii) any retained shares (including the shares received from the exercise of all Allrites options) will be converted into
Company Ordinary Shares, and (iii) each of the Allrites option holders will (a) exercise each of their options for Allrites Ordinary
Shares and (b) retain such Allrites Ordinary Shares received upon exercise of the Options, as well as the remaining Allrites Ordinary
Shares.
Business Combination
The Agreement provides that, among other
things and upon the terms and subject to the conditions thereof, at Closing, Allrites will become a wholly owned subsidiary of AFAR and
AFAR’s Class A Ordinary Shares are expected to be listed on the Nasdaq Global Market.
Exchange Consideration
As consideration for the Business Combination,
subject to the terms and conditions set forth in the Agreement, and contingent upon the Closing, Allrites shareholders collectively shall
be entitled to receive from AFAR, in the aggregate, 9,200,000 AFAR Class A Ordinary Shares, valued at $10.00 per share, for an aggregate
value equal to ninety-two million and no/100s dollars ($92,000,000). Each Allrites shareholder shall be entitled to receive the amount
of AFAR Class A Ordinary Shares in accordance with the Agreement (the “Exchange”). Following the Exchange, the Allrites
shareholders will become shareholders of AFAR and Allrites will continue as a wholly owned subsidiary of AFAR. Each Allrites shareholder,
upon receiving the AFAR Class A Ordinary Shares, will cease to have any other rights in and to shares of Allrites.
As additional consideration for the Business
Combination, subject to certain conditions, if Allrites’ recurring revenue recognized solely from the sale of products and services
to its contracted subscription customer base in accordance with GAAP measured for each of the first two fiscal years following Closing
(each, an “Earnout Period”) exceeds the thresholds of $12,000,000 for the
first Earnout Period and $20,000,000 for the second Earnout Period, AFAR will issue to the Allrites shareholders: (i) in connection with
the first Earnout Period, if earned and payable, 800,000 AFAR Class A Ordinary Shares, valued at $10.00 per share, for an aggregate value
of $8,000,000; and (ii) in connection with the second Earnout Period, if earned and payable, 1,000,000 AFAR Class A Ordinary Shares,
valued at $10.00 per share, for an aggregate value of $10,000,000. If the recurring revenue for the first Earnout Period fails to meet
or exceed the Earnout Threshold but the recurring revenue for the second Earnout Period meets or exceeds the Earnout Threshold for the
second Earnout Period, AFAR shall issue to the Company Shareholders both the First Earnout and the Second Earnout.
Representations and Warranties; Covenants
Pursuant to the Agreement, the parties
made customary representations and warranties for transactions of this type as of the date of the Agreement. The representations and warranties
made by AFAR and Allrites will not survive the Closing. Many of the representations and warranties
are qualified by materiality including “material adverse effect” or Company Material Adverse Effect. “Company Material
Adverse Effect” as used in the Agreement means, with respect to Allrites and its subsidiaries, any event, state of facts,
development, circumstance, occurrence or effect that (i) has had or would reasonably be expected to have, individually or in the aggregate,
a material adverse effect on the business, assets and liabilities, results of operations or financial condition of Allrites and its subsidiaries,
taken as a whole or (ii) does or would in all likelihood be expected to, individually or in the aggregate, prevent or materially adversely
affect the ability of Allrites to consummate the Business Combination. Certain of the representations
are subject to specified exceptions and qualifications contained in the Agreement or in information provided pursuant to certain disclosure
schedules to the Agreement.
In addition, the parties agreed to be
bound by certain covenants that are customary for transactions of this type, including obligations of the parties to use reasonable best
efforts to operate their respective businesses in the ordinary course consistent with past practice, to refrain from taking certain specified
actions without the prior written consent of the applicable party, and not to engage in trading on material nonpublic information and
to maintain confidentiality, in each case, subject to certain exceptions and qualifications. AFAR has also covenanted to hold a meeting
of its shareholders for the purpose of approving the Business Combination and the Agreement. The covenants of the parties generally will
not survive the Closing, subject to certain exceptions, including certain covenants and agreements that by their terms are to be performed
in whole or in part after the Closing.
Conditions to Each Party’s Obligations
to Close
Pursuant to the Agreement, the obligations
of the parties to consummate the Business Combination are subject to the satisfaction or waiver of certain customary closing conditions
of the respective parties, including, without limitation: (i) the representations and warranties of the respective parties being true
and correct subject to the materiality standards contained in the Agreement; (ii) material compliance by the parties of their respective
pre-closing covenants and agreements, subject to the standards contained in the Agreement; (iii) the approval by AFAR’s shareholders
of the Business Combination; (iv) no governmental authority shall have enacted any law or order which has the effect of prohibiting the
consummation of the Business Combination; (v) a Registration Statement on Form F-4 containing a prospectus and proxy statement (as amended
or supplemented, the “Prospectus and Proxy Statement”) shall have been declared effective by the Securities and Exchange
Commission (the “SEC”) and shall remain effective as of the Closing, and no stop order or similar order shall be in
effect with respect to the Prospectus and Proxy Statement; and (vi) the members of the post-Closing board of directors of the combined
company shall have been elected or appointed as of the Closing in accordance with the requirements set forth in the Agreement.
Termination and Break-Up Fee
The Agreement may be terminated under
certain customary and limited circumstances at any time prior to the Closing. If the Agreement is
terminated, all further obligations of the parties related to public announcements, confidentiality, fees and expenses, trust account
waiver, termination and general provisions under the Agreement will terminate and will be of no
further force and effect, and no party to the Agreement will have any further liability to any other party thereto except for liability
for certain fraud claims or for willful breach of the Agreement prior to the termination.
The Agreement may be terminated at any
time prior to the Closing by either AFAR or Allrites if the Closing has not occurred on or prior to July 12, 2023 (the “Business
Combination Deadline”) unless AFAR, at its election, receives shareholder approval for a charter amendment to extend the term
it has to consummate a business combination (“Extension Option”), for an additional six months for AFAR to consummate
a business combination pursuant to the charter amendment. A party is not entitled to terminate the Agreement if the failure of the Closing
to occur by such date was caused by or the result of a breach of the Agreement by such party.
The Agreement may also
be terminated under certain other customary and limited circumstances prior the Closing, including, among other reasons: (i) by mutual
written consent of AFAR and Allrites; (ii) by either AFAR or Allrites if a governmental authority of competent jurisdiction has issued
an order or taken any other action permanently restraining, enjoining or otherwise prohibiting the Business Combination, and such order
or other action has become final and non-appealable; (iii) by Allrites for AFAR’s material uncured breach of the Agreement, if the
breach would result in the failure of the related Closing condition; (iv) by AFAR for the material uncured breach of the Agreement by
Allrites, if the breach would result in the failure of the related Closing condition; (v) by AFAR if there has been a Company Material
Adverse Effect with respect to Allrites since the date of the Agreement, which is uncured and continuing; or (vi) by either AFAR or Allrites
if AFAR holds an extraordinary general meeting of its shareholders to approve the Agreement and the Business Combination and such approval
is not obtained.
In the event the Agreement
is terminated pursuant to Section 10.1 of the Agreement, the terminating party shall pay $5,000,000 to the non-terminating party, within
three business days, by wire transfer of immediately available funds to an account specified by the non-terminating party, as liquidated
damages.
Governing
Law and Arbitration
The Agreement and all claims related to
the Business Combination shall be governed by the laws of the State of New York.
The foregoing description of the Agreement
does not purport to be complete and is qualified in its entirety by reference to the full text of the Agreement filed as Exhibit 1.1
to this Current Report on Form 8-K and incorporated by reference. The Agreement has been filed to provide investors with information
regarding its terms and is not intended to provide any factual or other information about AFAR, Allrites or any other party
to the Agreement. In particular, the assertions embodied in the representations and warranties contained in the Agreement were
made as of the execution date of the Agreement only and are qualified by information in confidential disclosure schedules provided by
the parties in connection with the signing of the Agreement. Moreover, certain representations and warranties in the Agreement may have
been used for the purpose of allocating risk between the parties rather than establishing matters of fact and
may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors and reports
and documents filed with the SEC. Accordingly, you should not rely on the representations and warranties in the Agreement as characterizations
of the actual statements of fact about the parties. In addition, the representations, warranties,
covenants and agreements and other terms of the Agreement may be subject to subsequent waiver or modification. Moreover, information
concerning the subject matter of the representations and warranties and other terms may change after the date of the Agreement, which
subsequent information may or may not be fully reflected in AFAR’s public disclosures. Shareholders of AFAR and other interested
parties are urged to read the Agreement in its entirety.
Sponsor Support Agreement
In connection with entry into the Agreement,
AFAR, Allrites, and Aura FAT Projects Capital LLC, a Cayman Islands limited liability company (the “Sponsor”),
entered into a sponsor support agreement (the “Sponsor Support Agreement”)
pursuant to which the Sponsor has agreed to, among other things, (i) appear at the AFAR shareholders’ meeting for purposes of constituting
a quorum, and (ii) vote to adopt and approve the Agreement and the Business Combination.
The foregoing description of the Sponsor
Support Agreement does not purport to be complete and is qualified in its entirety by the terms and conditions of the Sponsor Support
Agreement attached as Exhibit 2.2.
Company Holders Support Agreement
In connection with entry into the Agreement,
the attainment of a sufficient number of Allrites’ shares voted for the Agreement (the “Requisite Company Shareholders”)
have each executed and delivered to Allrites and AFAR, the company holders support agreement (the “Company Holders Support Agreement”),
pursuant to which the Requisite Company Shareholders have agreed, among other things, to (i) to vote against any proposals at any meeting
of Allrites’ shareholders and withhold any written consent to any proposal that would impede in any material respect the Business
Combination, and (ii) not to transfer any Allrites shares held by such Requisite Company Shareholders. The Requisite Company Shareholders
have agreed to a lock-up for a period of twelve (12) months following the Closing of the AFAR shares the Requisite Company Shareholders
will receive pursuant to the Exchange (subject to certain exceptions). The foregoing description of the Company Holders Support Agreement
does not purport to be complete and is qualified in its entirety by the terms and conditions of the Company Holders Support Agreement
attached as Exhibit 2.1.
Amendment to Letter Agreement
Similarly, in connection with the Agreement,
the Sponsor and officers and directors of AFAR, as holders of AFAR’s founder shares, have entered into an amendment to the original
Letter Agreement, dated April 12, 2022 (the “Amendment to Letter Agreement”),
which extends the lock-up period from six months to 12 months. The foregoing description of the Amendment to Letter Agreement does not
purport to be complete and is qualified in its entirety by the terms and conditions of the Amendment to Letter Agreement attached as
Exhibit 2.3.
Subscription Agreements
In
connection with entry into the Agreement, AFAR may enter into subscription agreements with certain accredited investors (the “Subscription
Agreements”), pursuant to which such investors would subscribe for AFAR Class A Ordinary Shares and/or any combination
of Allrites; Preference Shares that are convertible into AFAR Class A Ordinary Shares, or warrants, options or rights that are exercisable
for AFAR Class A Ordinary Shares at the Closing of the Business Combination, all in an aggregate amount equal on a fully-diluted basis
to one million (1,000,000) Class A Ordinary Shares (the “Pool Shares”). The Pool Shares would be issued for purposes
that are mutually reasonably acceptable to AFAR and Allrites and pursuant to Subscription Agreements and other related private placement
documents.
The
foregoing description of the Subscription Agreements does not purport to be complete and is qualified in its entirety by the terms and
conditions of the Subscription Agreements entered into from time-to-time.
Registration Rights Agreement
The Sponsor, certain Allrites shareholders and
their respective affiliates, will enter into a registration rights agreement (the “Registration Rights Agreement”),
pursuant to which, among other things, Allrites will be obligated to file a registration statement to register the resale of certain securities
of Allrites held by the Sponsor, certain Allrites shareholders and their respective affiliates. The Registration Rights Agreement will
also provide the respective parties with “piggy-back” registration rights, subject to certain requirements and customary conditions.
The foregoing description of the Registration
Rights Agreement does not purport to be complete and is qualified in its entirety by the terms and conditions of the Registration Rights
Agreement.
Restrictive Covenants Agreement
At the Closing, each Key Executive of
Allrites (as defined in the Agreement) will enter into a restrictive covenant agreement (collectively, the “Restrictive Covenant
Agreements”) with AFAR, which will be effective upon the Closing.
The foregoing description of the Restrictive
Covenants Agreements does not purport to be complete and is qualified in its entirety by the terms and conditions of the Restrictive Covenant
Agreements.
Share Exchange Agreement
At the Closing, each Allrites shareholder and
AFAR, will enter into a Share Exchange Agreement for the purpose of issuing the Exchange Consideration to each of the Allrites shareholders
that transfer the Allrites ordinary shares, providing for the exchange of that Allrites shareholder’s Allrites shares for AFAR Class
A Ordinary Shares.
The foregoing description of the Share
Exchange Agreement does not purport to be complete and is qualified in its entirety by the terms and conditions of the form of Share
Exchange Agreement.
Prospectus and Proxy Statement
As promptly as practicable after the
effective date of the Agreement, AFAR will file with the SEC the Prospectus and Proxy Statement and certain related documents in connection
with a meeting of AFAR’s shareholders to consider approval and adoption of (i) the Agreement and the Business Combination; (ii)
any other proposals as either the SEC or the Nasdaq Global Market (or the respective staff members thereof) may indicate are necessary
in comments to the Prospectus and Proxy Statement or in correspondence related thereto; (iii) any other proposals as reasonably agreed
by AFAR and Allrites to be necessary or appropriate in connection with the Business Combination; and (4) the adjournment of the special
meeting, if necessary, to permit further solicitation of proxies because there are not sufficient votes to approve and adopt one or more
of the foregoing.