NOTE 6. COMMITMENTS AND CONTINGENCIES

Registration rights

Pursuant to a registration rights agreement, dated April 27, 2022, the holders of the Founder Shares and the Private Placement Warrants (and their underlying securities) are entitled to registration rights. The holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the consummation of a Business Combination. The Company will bear the expenses incurred in connection with the filing of any registration statements pursuant to such registration rights agreement.

Underwriting agreement

On October 21, 2021, the Company engaged Maxim Group LLC (“Maxim”) as the representative of the underwriters of the Initial Public Offering. The Company granted the underwriters a 45-day option until June 11, 2022 to purchase up to 1,125,000 Option Units to cover over-allotments, if any, at the Initial Public Offering price less the underwriting discounts and commissions. On May 2, 2022, the underwriters partially exercised the Over-Allotment Option in respect of 375,000 Option Units and, as agreed with the Company, the underwriters waived their right to further exercise the option on May 5, 2022.

The underwriters were entitled to an underwriting discount of $0.45 per unit, or $3,543,750 in the aggregate, of which $0.15 per Unit, or $1,181,250 was paid upon the closing of the Initial Public Offering. Of the $0.45 discount, the underwriters were entitled to a deferred underwriting commission of $0.30 per Unit, or $2,362,500 in the aggregate (the “Deferred Fee”). The Deferred Fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement, dated April 27, 2022 the Company entered into with Maxim in connection with the Initial Public Offering (the “Underwriting Agreement”).

In addition to the underwriting discount, the Company agreed to pay or reimburse the underwriters for travel, lodging and other “road show” expenses, expenses of the underwriters’ legal counsel and certain diligence and other fees, including the preparation, binding and delivery of bound volumes in form and style reasonably satisfactory to the representative, transaction Lucite cubes or similar commemorative items in a style as reasonably requested by the representative, and reimbursement for background checks on the Company’s directors, director nominees and executive officers, which such fees and expenses are capped at an aggregate of $125,000 (less amounts previously paid). The $125,000 was paid out of the proceeds of the Initial Public Offering on May 2, 2022.

Representative Shares

The Company issued to Maxim and/or its designees, 118,125 Class A Ordinary Shares upon the consummation of the Initial Public Offering (the “Representative Shares”). The Company accounted for the Representative Shares as an offering cost associated with the Initial Public Offering, with a corresponding credit to shareholder’s equity. The Company estimated the fair value of Representative Shares to be $946,181. Maxim has agreed not to transfer, assign, or sell any of the Representative Shares until the completion of the Business Combination. In addition, Maxim has agreed: (i) to waive its redemption rights with respect to the Representative Shares in connection with the completion of the Business Combination; and (ii) to waive its rights to liquidating distributions from the Trust Account with respect to the Representative Shares if the Company fails to complete its Business Combination within the Combination Period.

The Representative Shares have been deemed compensation by the Financial Industry Regulatory Authority (“FINRA”) and were therefore subject to a lock-up for a period of 180 days immediately following the date of the effectiveness of the IPO Registration Statement pursuant to Rule 5110(e)(1) of FINRA’s NASD Conduct Rules. Pursuant to FINRA Rule 5110(e)(1), the Representative Shares could not be the subject of any hedging, short sale, derivative, put, or call transaction that would result in the economic disposition of the securities by any person for a period of 180 days immediately following April 27, 2022, nor could they be sold, transferred, assigned, pledged, or hypothecated for a period of 180 days immediately following April 27, 2022 except to any underwriter and selected dealer participating in the Initial Public Offering and their bona fide officers or partners.

Subject to certain conditions, the Company granted Maxim, for a period beginning on May 2, 2022 and ending 12 months after the date of the consummation of the Business Combination, a right of first refusal to act as book-running managing underwriter or placement agent for any and all future public and private equity, equity-linked, convertible and debt offerings for the Company or any of its successors or subsidiaries. In accordance with FINRA Rule 5110(g)(6), such right of first refusal shall not have a duration of more than three years from April 27, 2022.

Transaction Expenses

On May 31, 2022, the Company entered into an agreement (the “EGS Agreement”) with Ellenoff, Grossman & Schole LLP (“EGS”) to (x) act as U.S. securities counsel to us in connection with pending acquisition targets for the Company to acquire consistent with its Initial Public Offering and (y) assist in U.S. securities work related to the initial Business Combination. The fee structure for this agreement is as follows: (i) an upfront retainer of $37,500, (ii) billing on an hourly basis for time, (iii) each month fifty percent (50%) of the amount billed shall be due and owing, (iv) the remaining fifty percent (50%) not paid, on a monthly basis, will be deferred until the closing of the initial Business Combination and will be paid with a twenty percent (20%) premium. As of June 30, 2026, and December 31, 2025, the total outstanding billed amount for services provided by EGS is $1,063,242 and $1,066,144 of which $531,621 and $533,072 (50% of the outstanding balance), respectively, is considered outstanding per the terms of the EGS Agreement and is included in accrued liabilities on the accompanying unaudited consolidated balance sheets. As the initial Business Combination cannot be deemed probable as of June 30, 2026 and December 31, 2025, respectively, and payment of the deferred portion of the outstanding balance is contingent upon a successful initial Business Combination, no amount was accrued for the deferred portion of the outstanding amount or the premium.

We also incur costs from our Cayman counsel, Ogier. Costs related to the transaction are split equally between the Company and the target, GreenRock.

On August 17, 2022, the Company entered into an agreement (as amended, the “Maxim Letter Agreement”) with Maxim to pay a fee (the “Maxim Success Fee”) upon completion of one or more successful transactions. On October 3, 2022, the Company amended the Maxim Letter Agreement to state that the Company will pay to Maxim, upon closing of such successful transaction(s), a fee based upon the amount of cash we have in the Trust Account immediately prior to consummation of the transaction and/or contributed to the transaction. If the amount of such cash is less than $50 million, Maxim’s fee will be equal to $200,000 in cash and an additional $150,000 of common stock of the post-transaction company (the “New Common Stock”). If the amount of such cash is equal to or greater than $40 million, the Maxim Success Fee will be $500,000 cash. If the amount of such cash is equal to or greater than $75 million, the Maxim Success Fee will be $500,000 cash and an additional $500,000 payable in either cash or New Common Stock, at the Company’s option. The New Common Stock will be issued to Maxim Partners LLC, will be valued at the same price per share/exchange ratio as in the definitive transaction documentation, and it will have unlimited piggyback registration rights. The Maxim Success Fee will be paid upon the consummation of the transaction.

On July 11, 2022, the Company entered into a letter agreement with ALANTRA Corporate Finance, S.A.U. (“ALANTRA”) and U.N. SDG Support Holdings LLC (“Sponsor Entity”), under which we engaged ALANTRA to act as the Company’s financial advisor for the design, negotiation, and execution of potential Business Combinations between us and one or more energy transition companies. On October 3, 2022, the Company amended such letter agreement (the “ALANTRA Letter Agreement”).

Under the ALANTRA Letter Agreement, the Company agreed to pay ALANTRA a retainer of $15,000 at the signing of the ALANTRA Letter Agreement plus a retainer fee of $20,000 per month that is due and payable on the last day of each month for a maximum period of five months. Should the aggregated value of the transaction be above $400,000,000, the retainer fee will increase up to $40,000 per month with the same maximum five-month period for the payment of any retainer fee.

If a transaction that is introduced by ALANTRA or by another institution to which no fees are due by the Company (e.g. an institution acting on behalf of a target) is completed the following remuneration will be due to ALANTRA as a remuneration for its services (“ALANTRA Success Fee”).

If a transaction is completed in North America, Asia, or Africa that is not introduced by ALANTRA and such transaction requires an introductory, advisory, or similar fee due by the Company, the Company shall pay ALANTRA an ALANTRA Success Fee in the form of:

Notwithstanding the above, it is agreed that the ALANTRA Success Fee will be subject to a minimum of EUR 1,000,000.

Each ALANTRA Success Fee shall be payable upon consummation of the applicable transaction (i.e. when the transaction is closed, following fulfillment, if applicable, of conditions precedent) regardless of (i) the calendar for the payment of the price, (ii) how the purchase price is funded, (iii) and any deferred payment subsequent to consummation of the transaction, or (iv) any adjustment to the price of the transaction subsequent to consummation.

On January 4, 2024, the Company entered into an agreement (the “MZHCI Agreement”) with MZHCI, LLC (“MZHCI”), pursuant to which MZHCI acts as consultant and adviser, to counsel, and inform its designated officers and employees as it relates to pre & post IPO, Business Combination readiness assessment, post transaction close preparation advisory, overall capital markets climate related to global macroeconomic conditions, world-leading exchanges, its competitors, related Business Combinations in the relevant market segments, and other aspects of/or concerning our business about which MZHCI has knowledge or expertise. The MZHCI Agreement became effective upon execution and was active for a period of six months. It was cancelled later in 2024 with a payable of $26,000 remaining.

Business Combination Agreement

GreenRock

On December 30, 2023, the Company entered into an Agreement and Plan of Merger (the “GreenRock Business Combination Agreement”) with Pubco, SPAC Merger Sub, GreenRock Merger Sub Corp. (“Company Merger Sub”) and GreenRock Corp., a Cayman Islands exempted company (“GreenRock”). Pursuant to the GreenRock Business Combination Agreement, (a) Merger Sub will merge with and into the Company, with the Company continuing as the surviving entity, as a result of which, (i) the Company shall become a wholly-owned subsidiary of Pubco, and (ii) each of the Company’s issued and outstanding securities immediately prior to the Effective Time (as defined in the GreenRock Business Combination) shall no longer be outstanding and shall automatically be cancelled, in exchange for the right of the holder thereof to receive a substantially equivalent security of Pubco, and (b)(i) Pubco will make an offer to acquire each issued and outstanding GreenRock ordinary share in exchange for Ordinary Shares of Pubco (“Pubco Ordinary Shares”) and (ii) Pubco shall also offer each holder of GreenRock’s outstanding vested options replacement options to purchase Pubco Ordinary Shares, all upon the terms and subject to the conditions set forth in the GreenRock Business Combination Agreement and in accordance with the applicable provisions of the Companies Act (As Revised) of the Cayman Islands, as may be amended from time to time (the “Companies Act”).

On November 6, 2024, the Company, GreenRock, Pubco, SPAC Merger Sub, and Company Merger Sub entered into that certain Amendment to the GreenRock Business Combination Agreement, pursuant to which the GreenRock Business Combination Agreement was amended to, among other things: (i) remove the $15,000,000 minimum cash closing condition; (ii) extend the outside date under the GreenRock Business Combination Agreement from March 31, 2024 to May 2, 2025; (iii) reduce the escrow share portion of the consideration from 16,885,000 Pubco Ordinary Shares to 4,000,000 Pubco Ordinary Shares and as a result reduce the overall merger consideration payable to the GreenRock shareholders from 44,658,000 Pubco Ordinary Shares to 32,000,000 Pubco Ordinary Shares; (iv) revise the escrow share release provisions to provide for the full release of the escrowed shares to the GreenRock shareholders in the event that the adjusted EBITDA for GreenRock for fiscal year 2025 equals or exceeds $25,000,000 (otherwise the escrowed shares will be forfeited); and (v) add a covenant for GreenRock to complete the acquisition of certain operating subsidiaries prior to the closing of the GreenRock Business Combination.

On March 21, 2025, ClimateRock, GreenRock, Pubco, SPAC Merger Sub, and Company Merger Sub entered into an Amended and Restated Agreement and Plan of Merger, pursuant to which the original GreenRock Business Combination Agreement was amended and restated in its entirety to, among other things, reflect the fact that the founding shareholders of GreenRock will receive an aggregate of 2,100,000 Class B ordinary shares, par value $0.0001 per share, of Pubco (“Holdings Class B Ordinary Shares”) as part of their merger consideration (in lieu of 2,100,000 Class A ordinary shares, par value $0.0001 per share, of Pubco). Such Holdings Class B Ordinary Shares represent 10% of the merger consideration received by such founding GreenRock shareholders. Each Holdings Class B Ordinary Share shall entitle the holder to 10 votes per share in addition to certain additional rights specified in the amended and restated memorandum and articles of Pubco that will be adopted prior to the closing of the Business Combination, subject to receipt of shareholder approval. Pursuant to the terms of the GreenRock Business Combination Agreement, the Merger Consideration to be delivered to the GreenRock Shareholders in connection with the Business Combination will be 32,000,000 newly-issued Pubco ordinary shares, consisting of (i) 29,900,000 Holdings Class A Ordinary Shares, of which 4,000,000 will be held in a segregated account pursuant to an escrow agreement, and (ii) 2,100,000 Holdings Class B Ordinary Shares, allocated between the founding shareholders of GreenRock.

On October 19, 2026, ClimateRock, GreenRock, Holdings, SPAC Merger Sub, and Company Merger Sub amended the GreenRock Business Combination Agreement, pursuant to which the GreenRock Business Combination Agreement was amended to, among other things (i) remove the contemplated acquisition of TEP Renewables Limited as a closing condition, (ii) remove the earnout escrow, and (iii) extend the Outside Date under the GreenRock Business Combination Agreement from May 2, 2025, to March 31, 2027.