Agrify Corporation (NASDAQ: AGFY)

Nature’s Miracle Holding Inc. (NASDAQ: NMHI; NMHIW)

NMHI will acquire AGFY in a reverse triangular merger transaction in which a merger subsidiary of NMHI shall merge with and into AGFY, with AGFY as the surviving entity, of which results in NMHI wholly owning AGFY (the “Merger”). NMHI, the Merger Sub, and AGFY will enter into an Agreement and Plan of Merger (the “Merger Agreement”) which, among other things, provides that NMHI will issue a certain number of shares of its common stock to the shareholders of AGFY in exchange for 100% of the outstanding shares of common stock of AGFY. The structure of the acquisition of AGFY may change subject to due diligence and tax analysis.

Each AGFY shareholder shall receive 0.45 share of NMHI stock post-merger. Based on the fully diluted shares outstanding of 15,174,501 (including warrants) and NMHI closing price of $0.93 as of April 16, 2024, AGFY equity is valued at $6,350,529 or $0.4185 per share.

Merger Consideration Shares

Upon closing of the Merger, the AGFY shares issued and outstanding shall be canceled and each shareholder of AGFY is expected to receive approximately 0.45 NMHI shares in exchange for one share of AGFY (the “Merger Consideration Shares”), subject to completion of due diligence and customary adjustments.

Merger Agreement

The Merger Agreement is expected to be executed on or before May 15, 2024, subject to the approval of the board of directors of NMHI and AGFY and satisfactory completion of mutual due diligence.

Upon closing of the Merger, Raymond Chang shall be the President of the Agrify division of NMHI.

The key management (the “Key Management”) of Acquiree consists of the following individuals:

David Kessler;

Kelly Gibbs;

Brian Towns;

Alex Cergnul; and

Raymond Chang.

The compensation to be paid to the Key Management shall be approved by NMHI.

Board of Directors

Following the Merger, the board of directors of NMHI shall consist of seven (7) individuals, two (2) of whom shall be former AGFY board members, of which one shall qualify as an independent director under the rules of The Nasdaq Stock Market LLC (“Nasdaq”).

Closing of the Transaction

Subject to the Closing Conditions, the closing of the transaction is expected to occur no later than six (6) months following the execution of the Merger Agreement, subject to any agreed upon extension by the parties hereto.

Registration & Lock-up

All of the Merger Consideration Shares shall be registered in the registration statement on Form S-4. Each Key Management’s Merger Consideration Shares shall be subject to a three (3)-month lock-up.

Covenants

The Definitive Documentation will include standard negative and affirmative pre-closing and post-closing covenants and conditions.

Each party hereto shall pay for its own fees and expenses in relation to the transactions proposed in this Term Sheet and the negotiation and preparation hereof, including without limitation the due diligence fees, accounting and legal fees, and any other fees or expenses associated thereof.

Purchase

Transaction

Within 10 days of the Effective Date, the Acquirer and the Acquiree will enter into a purchase order for the purchase of horticultural LED lighting goods from the Acquiree with a total purchase price of $500,000 subject to the payment terms agreed to by the parties. Before close of the merger, the Acquirer agrees to purchase a minimum of $750,000 LED lights from Acquiree including the $500,000 purchase order aforementioned.

Except as required by applicable securities law, and without prejudice to any non-disclosure or confidentiality agreement between the Acquiree and the Acquirer, each of the Acquiree and the Acquirer agrees to keep confidential and not to disclose to any person or entity the contents of this Term Sheet and/or the fact that discussions or negotiations are taking place or have taken place between the Acquiree and the Acquirer in connection with the proposed transactions described herein provided that the Acquiree and the Acquirer may disclose such confidential information to their respective attorneys, accountants, advisors and consultants for the sole purpose of evaluation the transactions contemplated by this Term Sheet, and such other parties shall agree to keep such information confidential to the same degree as the receiving party. Notwithstanding anything to the contrary herein, it is agreed that AGFY and NMHI can each release a press release disclosing the execution of this Term Sheet and the terms of this Term Sheet. Furthermore, each of NMHI and AGFY may file an 8-K with the Securities and Exchange Commission describing the terms of this Term Sheet and including this Term Sheet as an exhibit to the 8-K.

The parties hereto acknowledge that following the execution of this Term Sheet, each party anticipates the incurrence of substantial costs and the expenditure of substantial efforts in the conduct of its due diligence investigation of the other party and its business, and the preparation and negotiation of the Definitive Documentation. In consideration of the parties’ incurrence of costs and expenditure of such efforts, each of NMHI and AGFY agrees that, from the date of this Term Sheet until the earlier of (i) the Expiration Date, and (ii) the termination of this Term Sheet (the “Exclusivity Period”), such party will not, and will cause its officers, directors, employees, other affiliates, agents, and others not to, initiate, encourage (including by way of furnishing any non-public information concerning the other party), solicit, conduct, or continue any negotiations or discussions with or enter into any agreement with any third party (other than the other party to this Term Sheet) relating to the acquisition of all or any portion of such party or any of its assets (whether by merger, share purchase, asset purchase, lease, exclusive license, or otherwise).

Access

During the Exclusivity Period, each of AGFY and NMHI will operate only in the ordinary course, consistent with past practices, and will provide the other party and its advisors and representatives, at reasonable times and upon reasonable notice, with access to its (i) properties, books, records, accounts, and documents, (ii) employees, agents, and advisors, and (iii) customers, vendors, sales representatives, and others having significant relationships with AGFY or NMHI, as applicable. Each party agrees to honor all requests of the other party and its advisors and representatives for other information and materials that relate to such party and its business.

So long as this Term Sheet is in effect, neither parties hereto will, and shall cause their respective subsidiaries not to, disseminate any press release or other public announcement or disclosure concerning this Term Sheet or the transactions contemplated by this Term Sheet, except as may be required by applicable law or the rules of a recognized securities exchange, including Nasdaq, without the prior written consent of the other, which consent shall not be unreasonably withheld, conditioned, or delayed. Notwithstanding the foregoing, without the prior written consent of the other party, each party may disseminate information substantially consistent with information included in a press release or other document previously approved for external distribution by the other party.

This Term Sheet shall become effective upon the Effective Date and will remain in effect until May 15, 2024 (the “Expiration Date”) or earlier terminated as set forth below.

This Term Sheet shall be terminated upon the earlier of (i) the Expiration Date, (ii) at any time by mutual written agreement or notice of the parties hereto, or (iii) the execution of the Merger Agreement.

This Term Sheet shall be governed by and construed in accordance with the internal laws of the State of Delaware, without regard to any applicable conflicts of law.

No legal suit, action, or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby (each, a “Related Proceeding”) may be commenced, prosecuted, or continued in any court other than the courts of the State of New York or the courts of the United States located in the Borough of Manhattan, New York City, New York, which courts (collectively, the “Specified Courts”) shall have jurisdiction over the adjudication of any Related Proceeding, and the parties to this Term Sheet hereby irrevocably consent to the exclusive jurisdiction the Specified Courts and personal service of process with respect thereto. The parties to this Term Sheet hereby irrevocably waive any objection to the laying of the venue of any Related Proceeding in the Specified Courts and irrevocably waive and agree not to plead or claim in any Specified Court that any Related Proceeding brought in any Specified Court has been brought in an inconvenient forum.

Each of the parties hereto agrees to act in good faith and on an exclusive basis to prepare and negotiate the Definitive Documentation with respect to matters referred to herein, based upon this Term Sheet. It is understood that this Term Sheet does not contain all matters upon which agreement must be reached in order for the proposed transaction to be consummated.

This Term Sheet constitutes a binding agreement subject to the completion of mutually satisfactory due diligence, board and shareholder approval, and negotiation and execution of definitive agreements that will detail all terms and conditions of the transaction, including, without limitation, a customary fairness opinion that the transaction is fair.

This Term Sheet may only be modified by mutual consent of the parties hereto.

Counterparts

This Term Sheet may be executed in counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one document. A signed copy of this Term Sheet delivered by facsimile, e-mail, or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Term Sheet.

●

Purchaser will purchase the remaining post-conversion Junior Note from GIC for a purchase price payable in cash at the Closing equal to the outstanding principal balance thereof (app. $1.0M) (the “Junior Note Sale”). (For the avoidance of doubt as of the date of this Term Sheet, GIC holds a $1,000,000 Junior Secured Note but it is anticipated that GIC will loan Agrify an additional $1,000,000 prior to the Closing.)

Purchaser will purchase the remaining post-conversion Senior Note from CP in two separate tranches:

1.

$3.0M of the Senior Note principal amount will be purchased at the Closing for $3.0M in cash due at the Closing; and

Covenants

The Definitive Documentation will include standard negative and affirmative pre-closing and representations and warranties.

Board & Officer Roles; Acceleration

However, the parties agree that should Mr. Chang (i) be terminated from his roles as an officer and director as described above after the Closing but before the twelve (12) month anniversary of the Closing or (ii) fail to be appointed to such roles within two (2) business days of the Closing, then the second tranche of the Senior Note Sale described above will be accelerated and the payment by Purchaser of $7.0M in cash to CP will become immediately due.

Each party hereto shall pay for its own fees and expenses in relation to the transactions proposed in this Term Sheet and the negotiation and preparation hereof, including without limitation the due diligence fees, accounting and legal fees, and any other fees or expenses associated thereof.

the completion of business, legal, and financial due diligence by both parties prior to signing the Definitive Documentation;

approval of the Board of Directors of the Purchaser;

approval of the Boards of Directors of the Purchaser and Agrify of Merger and Merger Agreement;

if required pursuant to the rules and regulations of Nasdaq, the approval of the requisite number of shares of the outstanding shares of NMHI.

receipt by the Board of Directors of the Purchaser of a customary fairness opinion that the Note Transactions are fair, from a financial point of view, to the shareholders of the Purchaser;

approval of the stockholders of the Purchaser of the Merger, if required;

any consents required under the Notes, if required;

the filing of all reports of the Sellers that are required to be filed with the Securities and Exchange Commission (“SEC”);

compliance by the Purchaser with all applicable Nasdaq rules; and

Without prejudice to any non-disclosure or confidentiality agreement between the Sellers and the Purchaser, each of the Sellers and the Purchaser agrees to keep confidential and not to disclose to any person or entity the contents of this Term Sheet and/or the fact that discussions or negotiations are taking place or have taken place between the Sellers and the Purchaser in connection with the proposed transactions described herein, provided that the Sellers and the Purchaser may disclose such confidential information to their respective attorneys, accountants, advisors and consultants for the sole purpose of evaluating the transactions contemplated by this Term Sheet, and such other parties shall agree to keep such information confidential to the same degree as the receiving party. The parties hereto acknowledge that the confidential information of each party may constitute material non-public financial information (of the Purchaser, Agrify or otherwise) and no party hereto may trade in any applicable securities while aware of any such material non-public financial information or use such information, either directly or indirectly, in violation of the US securities laws.

The parties hereto acknowledge that following the execution of this Term Sheet, Purchaser anticipates the incurrence of substantial costs and the expenditure of substantial efforts in the conduct of its due diligence, and the preparation and negotiation of the Definitive Documentation. In consideration of Purchaser’s incurrence of costs and expenditure of such efforts, Sellers agree that, from the date of this Term Sheet until the earlier of (i) the Expiration Date, and (ii) the termination of the Term Sheet (the “Exclusivity Period”), Sellers will not, and will cause their respective managers, officers, directors, employees, other affiliates, agents, and others not to, initiate, encourage (including by way of furnishing any non-public information concerning the Notes), solicit, conduct, or continue any negotiations or discussions with or enter into any agreement with any third party (other than Purchaser) relating to the acquisition of all or any portion of the Notes (whether by merger, share purchase, asset purchase, lease, exclusive license, or otherwise). Each party hereto hereby irrevocably agrees not to circumvent, avoid, bypass, or obviate, directly or indirectly, the intent of this Term Sheet while effective through any transaction, transfer, pledge, agreement, recapitalization, loan, lease, assignment, or otherwise.

Access

During the Exclusivity Period, each of Sellers and Purchaser will operate only in the ordinary course, consistent with past practices, and will provide the other party and its advisors and representatives, at reasonable times and upon reasonable notice, with access to its (i) properties, books, records, accounts, and documents, (ii) employees, agents, and advisors, and (iii) customers, vendors, sales representatives, and others having significant relationships with Sellers. Each party agrees to honor all reasonable requests of the other party and its advisors and representatives for other information and materials that relate to such party and its business.

So long as this Term Sheet is in effect, none of the parties hereto will, and shall cause their respective subsidiaries not to, disseminate any press release or other public announcement or disclosure concerning this Term Sheet or the transactions contemplated by this Term Sheet, except as may be required by applicable law or the rules of a recognized securities exchange, including Nasdaq, without the prior written consent of the other, which consent shall not be unreasonably withheld, conditioned, or delayed. Notwithstanding the foregoing, without the prior written consent of the other party or parties, each party may disseminate information substantially consistent with information included in a press release or other document previously approved for external distribution by the other party or parties.

This Term Sheet shall become effective upon the Effective Date and will remain in effect until June 30, 2024 (the “Expiration Date”) or earlier terminated as set forth below.

This Term Sheet shall be terminated upon the earlier of (i) the Expiration Date, or (ii) at any time by mutual written agreement or notice of the parties hereto.

This Term Sheet shall be governed by and construed in accordance with the internal laws of the State of New York, without regard to any applicable conflicts of law.

No legal suit, action, or proceeding arising out of or relating to this Term Sheet or the transactions contemplated hereby (each, a “Related Proceeding”) may be commenced, prosecuted, or continued in any court other than the courts of the State of New York or the courts of the United States located in the Borough of Manhattan, New York City, New York, which courts (collectively, the “Specified Courts”) shall have jurisdiction over the adjudication of any Related Proceeding, and the parties to this Term Sheet hereby irrevocably consent to the exclusive jurisdiction the Specified Courts and personal service of process with respect thereto. The parties to this Term Sheet hereby irrevocably waive any objection to the laying of the venue of any Related Proceeding in the Specified Courts and irrevocably waive and agree not to plead or claim in any Specified Court that any Related Proceeding brought in any Specified Court has been brought in an inconvenient forum.

For clarity, entering into the Definitive Documentation and the performance of each party’s obligations contemplated hereunder is conditioned by and subject to compliance with all applicable laws, rules and regulations, including but not limited to the U.S. federal and relevant state securities laws, the Nasdaq rules and U.S. federal and relevant state cannabis laws.

Amendment;

Assignment

This Term Sheet may only be modified by mutual consent of all of the parties hereto. Neither this Term Sheet, nor any rights or obligations hereunder, may be assigned, delegated or conveyed by any party without the prior written consent of the other parties hereto.

Entire Agreement; Counterparts

This Term Sheet constitutes the entire understanding and agreement between the parties with respect to the transactions contemplated herein and supersedes all oral or written prior or contemporaneous agreements, statements or negotiations regarding the same. This Term Sheet may be executed in counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one agreement. A signed copy of this Term Sheet delivered by facsimile, e-mail, or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Term Sheet.