Item 2.01 Completion of Acquisition or Disposition
of Assets.
The disclosure set forth in the “Introductory
Note” above, including with respect to the Merger, is incorporated into this Item 2.01 by reference.
Each of the proposals
included in the Proxy Statement/Prospectus was approved by CLAQ’s shareholders at the special meeting of stockholders held on
September 6, 2022 (the “Special Meeting”).
As of the Closing Date, and immediately following
the consummation of the transactions contemplated by the Merger Agreement (the “Business Combination”), Nauticus had the following
issued and outstanding securities:
|
● |
47,250,773 shares of Common Stock; |
|
|
|
|
● |
8,625,000 Public Warrants, each exercisable for one share of Common Stock at a price of $11.50 per share; and |
|
|
|
|
● |
7,175,000 Private Warrants, each exercisable for one share of Common Stock at a price of $11.50 per share. |
|
|
|
|
● |
2,922,425 SPA Warrants, each exercisable
for one share of Common Stock at a price of $20.00 per share. |
FORM 10 INFORMATION
Prior to the Closing, CLAQ was a shell company
(as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) with no operations, formed
as a vehicle to effect a business combination with one or more operating businesses. After the Closing, Nauticus Robotics, Inc. (formerly
CleanTech Acquisition Corp.) became a holding company whose only material assets consist of equity interests in Nauticus Robotics Holdings,
Inc.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Current Report on Form
8-K contains forward-looking statements, including statements regarding the anticipated benefits of the Business Combination, and
the financial condition, results of operations, earnings outlook and prospects of Nauticus and may include statements for the period following
the consummation of the Business Combination. Forward-looking statements appear in a number of places in this Form 8-K including,
without limitation, in the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations
of Nauticus” and “Business of Nauticus.” In addition, any statements that refer to projections, forecasts or other characterizations
of future events or circumstances, including any underlying assumptions, are forward-looking statements. Forward-looking statements
are typically identified by words such as “plan,” “believe,” “expect,” “anticipate,” “intend,”
“outlook,” “estimate,” “forecast,” “project,” “continue,” “could,”
“may,” “might,” “possible,” “potential,” “predict,” “should,”
“would” and other similar words and expressions, but the absence of these words does not mean that a statement is not forward-looking.
The
forward-looking statements are based on the current expectations of the management of Nauticus and are inherently subject to
uncertainties and changes in circumstances and their potential effects and speak only as of the date of such statement. There can be
no assurance that future developments will be those that have been anticipated. These forward-looking statements involve a
number of risks, uncertainties or other assumptions that may cause actual results or performance to be materially different from
those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to,
those factors described in “Risk Factors,” those discussed and identified in public filings made with the SEC by
Nauticus and the following:
| ● | Nauticus is an early-stage company with a history of
losses, and it expects to incur significant expenses for the foreseeable future. |
| ● | Almost all of Nauticus’ revenues in 2020, 2021, and
the second quarter of 2022 were derived from three customers. A substantial portion of Nauticus’ current revenue is generated by
sales to government entities, which are subject to a number of uncertainties, challenges, and risks. |
| ● | If Nauticus fails to effectively manage its growth, Nauticus
may not be able to design, develop, manufacture, market, and launch new generations of its robotic systems successfully. |
| ● | Nauticus’ operating and financial projections rely
on management assumptions and analyses. If these assumptions or analyses prove to be incorrect, Nauticus’ actual operating results
may be materially different from its forecasted results. |
| ● | Nauticus’ business plans require a significant amount
of capital. Nauticus’ future capital needs may require Nauticus to sell additional equity or debt securities that may dilute its
stockholders or introduce covenants that may restrict its operations or its ability to pay dividends. |
| ● | Nauticus will incur significant increased expenses and administrative
burdens as a public company, which could have a material adverse effect on its business, prospects, financial condition and operating
results. |
| ● | Nauticus operates in a competitive industry that is subject
to rapid technological change, and Nauticus expects competition to increase. |
| ● | Nauticus’ financial results may vary significantly
from period to period due to fluctuations in its operating costs, product demand and other factors. |
| ● | Nauticus has yet to achieve positive operating cash flow
and, given its projected funding needs, its ability to generate positive cash flow is uncertain. |
| ● | Because Nauticus will become a public reporting company by
means other than a traditional underwritten initial public offering, the Nauticus’ stockholders may face additional risks and uncertainties. |
|
● |
The market price of the Common Stock is likely to be highly volatile, and you may lose some or all of your investment. |
| ● | Volatility in the Nauticus’ share price could subject
Nauticus to securities class action litigation. |
| ● | Our management team has limited skills and experience related
to managing a public company. |
| ● | We will incur increased costs as a result of operating as
a public company, and our management will be required to devote substantial time to new compliance initiatives and corporate governance
practices. |
| ● | Our stock price has fluctuated historically and may continue
to fluctuate. |
These and other factors that could cause actual
results to differ from those implied by the forward-looking statements in this Current Report on Form 8-K are more fully described under
the heading “Risk Factors” and elsewhere in this Current Report on Form 8-K. Forward-looking statements are not guarantees
of performance and speak only as of the date hereof. The forward-looking statements are based on the current and reasonable expectations
of Nauticus’ management but are inherently subject to uncertainties and changes in circumstances and their potential effects and
speak only as of the date of such statements. There can be no assurance that future developments will be those that have been anticipated
or that Nauticus will achieve or realize these plans, intentions or expectations.
All forward-looking statements attributable to
Nauticus or persons acting on its behalf are expressly qualified in their entirety by the foregoing cautionary statements. Nauticus undertakes
no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise,
except as required by law.
In addition, statements of belief and similar
statements reflect the beliefs and opinions of Nauticus on the relevant subject. These statements are based upon information available
to Nauticus as of the date of this Current Report on Form 8-K, and while Nauticus believes such information forms a reasonable basis for
such statements, such information may be limited or incomplete, and statements should not be read to indicate that Nauticus has conducted
an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and
you are cautioned not to unduly rely upon these statements.
Business and Facilities
The information set forth in the section of the
Proxy Statement/Prospectus entitled “Information About Nauticus Robotics, Inc.”, including the information regarding
the properties used in Nauticus’ business included in the subsection thereof entitled “Information About Nauticus-Facilities”,
and in the section of the Proxy Statement/Prospectus entitled “Information About CLAQ” is incorporated herein by reference.
Risk Factors
The information set forth
in the section of the Proxy Statement/Prospectus entitled “Risk Factors” is incorporated herein by reference.
Financial Information
Unaudited Condensed Consolidated
Financial Statements
The unaudited condensed financial
statements as of and for the quarterly ended June 30, 2022, and the related notes thereto on CLAQ’s Quarterly Report on Form 10-Q,
filed with the SEC on August 15, 2022 (the “Form 10-Q”), are incorporated herein by reference. These unaudited financial statements
should be read in conjunction with the historical audited financial statements of CLAQ from June 18, 2020 (inception) through December
31, 2020 and the related notes included in the Proxy Statement/Prospectus beginning on page F-2, which are incorporated herein by reference.
The unaudited financial statements
of Nauticus as of and for the three and six months ended June 30, 2022, and 2021, are set forth in Exhibit 99.2 hereto and are incorporated
by reference herein. These unaudited financial statements should be read in conjunction with the historical audited financial statements
of Nauticus for the years ended December 31, 2021, and 2020, and the related notes included in the Proxy Statement/Prospectus beginning
on page F-53, which are incorporated herein by reference.
Unaudited Pro Forma Condensed
Combined Financial Information
The information set forth
in Exhibit 99.4 to this Current Report on Form 8-K is incorporated by reference herein.
Management’s Discussion
and Analysis of Financial Condition and Results of Operations
Managements’
discussion and analysis of the financial condition and results of operations prior to the Merger is set for in Exhibit 99.3 and
included in (a) Nauticus’ Management’s Discussion and Analysis of Financial Condition and Results of Operations
beginning on page 183 of the Proxy Statement/Prospectus and incorporated herein by reference and (b) CLAQ’s Management’s
Discussion and Analysis of Financial Condition and Results of Operations beginning on page 27 of the Form 10-Q and incorporated
herein by reference.
Security Ownership of Certain Beneficial Owners
and Management
The following table sets
forth information regarding the beneficial ownership of shares of our Common Stock as of July 20, 2022 pre-Business Combination and immediately
after the consummation of the Business Combination by:
|
● |
each person or “group” (as such term is used in Section 13(d)(3) of the Exchange Act) known by CLAQ to be the beneficial owner of more than 5% of shares of our Common Stock as of July 20, 2022 (pre-Business Combination) or of shares of our Common Stock upon the closing of the Business Combination; |
| ● | each of CLAQ’s executive officers and directors; |
| ● | each person who will become an executive officer or director
of Nauticus upon the closing of the Business Combination; |
| ● | all of our current executive officers and directors as a
group; and |
| ● | all executive officers and directors of Nauticus as a group
upon the closing of the Business Combination. |
As of the Record Date, CLAQ
had 6,095,789 shares of Common Stock issued and outstanding.
Beneficial ownership is determined
in accordance with SEC rules and includes voting or investment power with respect to securities. Except as indicated by the footnotes
below, CLAQ believes, based on the information furnished to it, that the persons and entities named in the table below have, or will have
immediately after the consummation of the Business Combination, sole voting and investment power with respect to all shares of our Common
Stock that they beneficially own, subject to applicable community property laws. Any shares of our Common Stock subject to options or
Warrants exercisable within 60 days of the consummation of the Business Combination are deemed to be outstanding and beneficially
owned by the persons holding those options or Warrants for the purpose of computing the number of shares beneficially owned and the percentage
ownership of that person. They are not, however, deemed to be outstanding and beneficially owned for the purpose of computing the percentage
ownership of any other person.
Subject to the paragraph
above, percentage ownership of outstanding shares is based on 55,875,773 shares of our Common Stock to be outstanding upon consummation
of the Business Combination, inclusive of the Earnout Shares, the 3,530,000 shares to be issued in connection with the Equity Financing,
the 7,175,000 shares underlying the Private Warrants and the 862,500 shares to be issued upon conversion of the CLAQ Rights at the closing
of the Business Combination. If the actual facts are different than these assumptions (which they are likely to be), the percentage ownership
retained by CLAQ’s existing stockholders in CLAQ will be different.
The beneficial ownership
of Common Stock post-Business Combination under the header “Post-Business Combination” reflects the 338,799 shares of Common
Stock redeemed by the public stockholders of CLAQ (the “Public Stockholders”) after July 20, 2022, in connection with the
Special Meeting of CLAQ stockholders on September 6, and 1,444,490 shares of Common Stock currently outstanding.
| |
Pre-Business Combination | | |
Post-Business Combination | |
| |
Number of Shares | | |
Post- Redemptions | |
Name and Address of Beneficial Owner(1) | |
Number of Shares Beneficially Owned | | |
% of Class | | |
Number of Shares | | |
% of Class(2) | |
Five Percent Holders of Nauticus | |
| | |
| | |
| | |
| |
CleanTech Sponsor I LLC(3) | |
| 2,595,000 | | |
| 42.6 | % | |
| 7,307,333 | | |
| 11.6 | % |
CleanTech Investments(4) | |
| 1,437,500 | | |
| 23.6 | % | |
| 3,829,167 | | |
| 6.1 | % |
Transocean Inc.(5) | |
| — | | |
| — | | |
| 11,159,695 | | |
| 20.0 | % |
Schlumberger Technology Corporation(6) | |
| — | | |
| — | | |
| 10,664,084 | | |
| 19.1 | % |
Angela Berka(7) | |
| — | | |
| — | | |
| 4,824,013 | | |
| 8.6 | % |
Material Impact Fund II, L.P.(8) | |
| — | | |
| — | | |
| 3,565,592 | | |
| 5.8 | % |
ATW Special Situations I LLC(9) | |
| — | | |
| — | | |
| 4,734,656 | | |
| 7.7 | % |
Directors and Named Executive Officers of Nauticus | |
| | | |
| | | |
| | | |
| | |
Nicolaus Radford(10) | |
| — | | |
| | | |
| 4,824,012 | | |
| 8.6 | % |
Rangan Padmanabhan | |
| — | | |
| | | |
| — | | |
| | |
Donnelly A. Bohan | |
| — | | |
| | | |
| — | | |
| | |
John Yamokoski(11) | |
| — | | |
| | | |
| 887,746 | | |
| 1.6 | % |
M. Dilshad Kasmani | |
| — | | |
| | | |
| — | | |
| | |
Jim Bellingham | |
| — | | |
| | | |
| — | | |
| | |
Joseph W. Dyer | |
| — | | |
| | | |
| — | | |
| | |
John W. Gibson Jr. | |
| — | | |
| | | |
| — | | |
| | |
Mark Mey(12) | |
| — | | |
| | | |
| 11,159,695 | | |
| 20.0 | % |
Lisa Porter | |
| — | | |
| | | |
| — | | |
| | |
Adam Sharkawy(13) | |
| — | | |
| | | |
| 3,565,592 | | |
| 5.8 | % |
Eli Spiro(14) | |
| — | | |
| | | |
| 7,307,333 | | |
| 11.6 | % |
All Directors and Executive Officers post-Business Combination as a group (11 individuals) | |
| | | |
| | | |
| 27,744,378 | | |
| 49.7 | % |
(1) | The business address
of each of the individuals is c/o Nauticus Robotics, Inc., 17146 Feathercraft Lane, Suite 450 Webster,
TX 77598. |
(2) | Percentage is calculated assuming the conversion and exercise of 8,625,000
Public Warrants issued in the IPO and including 7,499,993 issued Earnout Shares. |
(3) | Consists of shares of Common Stock owned by CleanTech Sponsor I LLC, for which Eli Spiro is the
managing member. Assuming the conversion and exercise of 7,175,000 Private Warrants (of which 4,783,333 Private Warrants sold to the
CleanTech Sponsor I LLC). The business address of Cleantech Sponsor I LLC is 207 West 25th Street,
9th Floor, New York, NY 10001. |
(4) | Consists of shares of Common Stock owned by CleanTech Investments, for which Jonas Grossman is the
managing member. Assuming the conversion and exercise of 7,175,000 Private Warrants (of which 2,391,667 Private Warrants sold to the
CleanTech Investments). The business address of Cleantech Investments is 207 West 25th Street,
9th Floor, New York, NY 10001. CleanTech Investments is an affiliate of Chardan Capital Markets,
LLC. |
(5) | Consists of (i) 8,329,492 shares issued as merger consideration, (ii)
2,080,203 Earnout Shares, and (iii) 750,000 shares purchased during the PIPE Investment. Our director, Mark Mey, is the Chief Financial
Officer at Transocean Inc. The business address of Transocean Inc. is 1414 Enclave Parkway,
Houston, Texas 77077. |
(6) | Consists of (i) 7,932,920 shares issued as merger consideration, (ii)
1,981,164 Earnout Shares, and (iii) 750,000 shares purchased during the PIPE Investment. The business address of Schlumberger Technology Corporation
is 5599 San Felipe Street, Houston, Texas 77056. |
(7) | Consists of 3,860,015 shares issued as merger consideration and 963,998
Earnout Shares. The business address of Angela Berka is 11522 Orchard Mountain
Drive, Houston, Texas 77059. |
(8) | Consists of (i) 1,999,835 shares issued as merger consideration, (ii)
499,437 Earnout Shares, (iii) 250,000 shares purchased during the PIPE Investment, (iv) 408,160 shares issuable upon the conversion of
Debentures purchased by Material Impact Fund II, L.P. and (v) 408,160 shares issuable upon exercise of SPA Warrants (defined below) issued
pursuant to the Securities Purchase Agreement. Our director, Adam Sharkawy is a founder and managing partner at Material Impact Fund II,
L.P. The business address of Material Impact Fund II, L.P. is 131
Dartmouth Street, Boston, Massachusetts 02116. |
(9) | Consists of 2,367,328 shares issuable upon the conversion of Debentures
purchased by ATW and 2,367,328 shares issuable upon exercise of SPA Warrants (defined below) issued pursuant to the Securities Purchase
Agreement. |
(10) | Consists of 2,956,456 shares issued as merger consideration, (ii) 738,344 Earnout Shares, (iii)
1,065,295 shares of Common Stock transferred to Inna Radford and (iv) 63,916 shares of Common Stock transferred to Dennis Radford
and Karen Radford. |
(11) | Consists of 710,345 shares issued as merger consideration and 177,401 Earnout Shares. |
(12) | Consists of the following, directly held by Transocean Inc.: 8,329,492 shares issued as merger consideration,
(ii) 2,080,203 Earnout Shares, and (iii) 750,000 shares purchased during the PIPE Investment. |
(13) | Consists of the following, directly held by Material Impact Fund II, L.P.: (i) 1,999,835 shares issued
as merger consideration, (ii) 499,437 Earnout Shares, (iii) 250,000 shares purchased during the PIPE Investment, (iv) 408,160 shares issuable
upon the conversion of Debentures purchased by Material Impact Fund II, L.P. and (v) 408,160 shares issuable upon exercise of SPA Warrants
(defined below) issued pursuant to the Securities Purchase Agreement. |
(14) | Consists of shares of Common Stock owned by CleanTech Sponsor I LLC, for which Eli Spiro is the managing
member. Assuming the conversion and exercise of 8,625,000 Public Warrants issued in the IPO, and 7,175,000 Private Warrants (of which
4,783,333 Private Warrants sold to the CleanTech Sponsor I LLC). |
Information about Directors and Executive Officers
Nauticus’ directors and executive officers
are as follows:
Name |
|
Age |
|
Position |
Nicolaus Radford |
|
44 |
|
President, Chief Executive Officer and Director |
Rangan Padmanabhan |
|
47 |
|
Chief Financial Officer |
Donnelly A. Bohan |
|
49 |
|
Chief Operating Officer |
John Yamokoski |
|
44 |
|
Chief Technology Officer |
M. Dilshad Kasmani |
|
45 |
|
Chief Legal and Administrative Officer, and Secretary |
Jim Bellingham |
|
60 |
|
Director |
Joseph W. Dyer |
|
75 |
|
Director |
John W. Gibson, Jr. |
|
64 |
|
Director |
Mark Mey |
|
58 |
|
Director |
Lisa Porter |
|
54 |
|
Chairman of the Board |
Adam Sharkawy |
|
57 |
|
Director |
Eli Spiro |
|
50 |
|
Director |
Information with respect to Nauticus’ directors
and executive officers immediately after the Closing, including biographical information regarding these individuals, is set forth in
the Proxy Statement/Prospectus in the sections entitled “Proposal 5-The Directors Proposal”, and “Directors
and Executive Officers of Nauticus After the Business Combination”, which information is incorporated herein by reference.
Resignations and Appointments
Each of CLAQ’s directors, Brendan Riley,
Britt E. Ide, Jonas Grossman, Douglas Cole, Jon Najarian and Bill Richardson, prior to the Closing resigned from their respective position
as a director of CLAQ, in each case effective as of the effective time on the Closing Date.
Effective as of the Closing, Nicolaus Radford,
Mark Mey, Lisa Porter, Jim Bellingham, Adam Sharkawy, John W. Gibson, Jr., Joseph W. Dyer and Eli Spiro were elected to serve on the Board
until their respective successors are duly elected and qualified.
Following the Closing, the size of the Board increased
to eight (8) directors. Additionally, the Board is divided into three classes designated as Class I, Class II and Class III. Class I directors,
consisting of Jim Bellingham and Adam Sharkawy, will initially serve for a term expiring at the first annual meeting of stockholders following
the Closing Date, which is expected to be held in 2023. Class II directors, consisting of Lisa Porter, John W. Gibson, Jr., Joseph Dyer,
and Eli Spiro, will initially serve for a term expiring at the second annual meeting of stockholders following the Closing Date, which
is expected to be held in 2024. Class III directors, consisting of Nicolaus Radford and Mark Mey, will initially serve for a term expiring
at the third annual meeting of stockholders following the Closing Date, which is expected to be held in 2025. At each annual meeting of
stockholders, directors will be elected for a full term of three years to succeed the directors of the class whose terms expire at such
annual meeting of the stockholders. There is no limit on the number of terms a director may serve on the Board.
The officers of CLAQ and/or its subsidiaries,
Eli Spiro, Richard Fitzgerald, Louis Buffalino, and Ankur Dhanuja, resigned from all positions held as an officer of CLAQ or its subsidiaries,
in each case effective as of the effective time on the Closing Date.
Effective as of the Closing, Nicolaus Radford
was appointed to serve as Nauticus’ President and Chief Executive Officer, Rangan Padmanabhan was appointed to serve as Nauticus’
Chief Financial Officer, Donnelly A. Bohan was appointed to serve as Nauticus’ Chief Operating Officer, M. Dilshad Kasmani was appointed
as Nauticus’ Chief Legal and Administrative Officer, General Counsel and Secretary, John Yamokoski was appointed as Nauticus’
Chief Technology Officer and Tom Matura was appointed as Nauticus’ Vice President of Accounting.
Board of Directors
Director Independence
Nasdaq listing rules require
that a majority of the board of directors of a company listed on Nasdaq be composed of “independent directors,” which is defined
generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship,
which, in the opinion of the company’s board of directors, would interfere with the director’s exercise of independent judgment
in carrying out the responsibilities of a director. Nauticus’ Board of Directors has determined that, upon Closing, each of Lisa
Porter, Jim Bellingham, Adam Sharkawy, John W. Gibson, Jr., Joseph W. Dyer, and Eli Spiro will be an independent director under the Nasdaq
listing rules and Rule 10A-3 of the Exchange Act. In making these determinations, Nauticus’ Board of Directors considered
the current and prior relationships that each non-employee director has with Nauticus and will have with Nauticus and all other facts
and circumstances Nauticus’ Board of Directors deemed relevant in determining independence, including the beneficial ownership of
our Common Stock by each non-employee director, and the transactions involving them described in the section entitled “Certain
Relationships and Related Transactions.”
Committees of the Board of Directors
The standing committees of
Nauticus’ Board of Directors will consist of an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance
Committee. The composition of each committee is set forth below.
Audit Committee
Our Audit Committee has been
established in accordance with Section 3(a)(58)(A) of the Exchange Act and consists of John W. Gibson, Jr., Joseph W. Dyer,
and Eli Spiro, each of whom are independent directors and are “financially literate” as defined under the Nasdaq listing standards.
John W. Gibson, Jr. serves as chairman of the Audit Committee. Our Board has determined that John W. Gibson Jr. qualifies as an “audit
committee financial expert,” as defined under rules and regulations of the SEC.
The audit committee’s
duties are specified in our Audit Committee Charter.
Compensation Committee
Our Compensation Committee
consists of Eli Spiro, Jim Bellingham, and Adam Sharkawy, each of whom is an independent director. Eli Spiro serves as chairman of the
Compensation Committee. The functions of the Compensation Committee will be set forth in a Compensation Committee Charter.
Nominating and Corporate Governance Committee
Our Nominating and Corporate
Governance Committee consists of John W. Gibson, Jr., Joseph W. Dyer, and Adam Sharkawy, each of whom is an independent director under
Nasdaq’s listing standards. Joseph W. Dyer serves as the chair of the Nominating and Corporate Governance Committee. The Nominating
and Corporate Governance Committee is responsible for overseeing the selection of persons to be nominated to serve on our board of directors.
The Nominating and Corporate Governance Committee considers persons identified by its members, management, shareholders, investment bankers
and others.
The guidelines for selecting
nominees, will be specified in the Nominating and Corporate Governance Committee Charter.
Code of Business Ethics and Conduct Policy
We have adopted a Code of
Business Ethics and Conduct Policy for our directors, officers, employees and certain affiliates in accordance with applicable federal
securities laws, a copy of which will be available on Nauticus’ website at www.NauticusRobotics.com. Nauticus will
make a printed copy of the Code of Business Ethics and Conduct Policy available to any stockholder who so requests. Requests for a printed
copy may be directed to: legal@nautic.us, Attention: Legal Department.
If we amend or grant a waiver
of one or more of the provisions of our Code of Business Ethics and Conduct Policy, we intend to satisfy the requirements under Item 5.05
of Form 8-K regarding the disclosure of amendments to or waivers from provisions of our Code of Business Ethics and Conduct
Policy that apply to our principal executive officer, principal financial officer and principal accounting officer by posting the required
information on Nauticus’ website at www.NauticusRobotics.com. The information on this website is not part of this Form
8-K.
Director Compensation
Information relating to director compensation
following Closing is described in the Proxy Statement/Prospectus in the section entitled “Directors and Executive Officers of
Nauticus After the Business Combination- Officer and Director Compensation Following the Business Combination”, which information
is incorporated herein by reference.
Omnibus Incentive Plan
The Omnibus Incentive Plan
was approved by CLAQ’s shareholders at the Special Meeting. A description of the Omnibus Incentive Plan is set forth in the section
of the Proxy Statement/Prospectus entitled “Proposal 6-The Stock Plan Proposal” and is incorporated herein by reference.
A copy of the complete text of the Omnibus Incentive Plan is filed as Exhibit 10.9 to this Current Report on Form 8-K and is incorporated
herein by reference.
Executive and Director Compensation of CLAQ
None of CLAQ’s executive officers or directors
have received any cash compensation for services rendered to CLAQ. The Sponsor and CLAQ’s executive officers and directors, or their
respective affiliates were reimbursed for any out-of-pocket expenses incurred in connection with activities on CLAQ’s behalf such
as identifying potential target businesses and performing due diligence on suitable business combinations. Prior to the Closing, CLAQ’s
audit committee reviewed on a quarterly basis all payments that were made by CLAQ to the Sponsor and CLAQ’s executive officers or
directors, or their affiliates. Any such payments prior to the Closing were made using funds held outside CLAQ’s trust account.
Other than quarterly audit committee review of such reimbursements, CLAQ did not have any additional controls in place governing CLAQ’s
reimbursement payments to its directors and executive officers for their out-of-pocket expenses incurred in connection with activities
on CLAQ’s behalf in connection with identifying and consummating an initial business combination. Other than these payments and
reimbursements, no compensation of any kind, including finder’s and consulting fees, was paid by CLAQ to the Sponsor or CLAQ officers,
or their respective affiliates, prior to the Closing. CLAQ was not party to any agreements with its executive officers and directors that
provide for benefits upon termination of employment.
Executive and Director Compensation
Executive Compensation
The policies of Nauticus with respect to the compensation
of its executive officers and following the Business Combination will be administered by Nauticus’ Board and specifically through
the compensation committee that the Nauticus Board will establish.
Director Compensation
Nauticus’ Board will determine the annual
compensation to be paid to the members of the Board. In connection with the consummation of the Business Combination, the Nauticus’
Board intends to adopt a non-employee director compensation policy that will be applicable to each of its non-employee directors
and that will be consistent with industry standards and practice.
Summary Compensation Table and Narrative
The following table shows information concerning
the annual compensation for services provided to the Company by our NEOs for the year ended December 31, 2021.
Name and Position | |
Year | |
Salary ($) | | |
Bonus ($) | | |
Option Awards ($)(1) | | |
All Other Compensation ($)(2) | | |
Total ($) | |
Nicolaus Radford | |
2021 | |
| 250,000 | | |
| — | | |
| 688,412 | | |
| 18,075.56 | | |
| 956,487.56 | |
Chief Executive Officer and Chairman | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Reginald B. Berka | |
2021 | |
| 250,000 | | |
| — | | |
| 91,065 | | |
| 18,075.56 | | |
| 359,140.56 | |
(Former) Chief Operations Officer and Director | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Todd Newell | |
2021 | |
| 225,000 | | |
| 10,000 | | |
| 278,802 | | |
| 6,750.04 | | |
| 520,552.04 | |
Senior Vice President of Business Development | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
| (1) | The amounts in this column represent the aggregate grant date
fair value of option awards granted to each NEO, computed in accordance with FASB ASC Topic 718. See the section entitled “Management’s
Discussion and Analysis of Financial Condition and Results of Operations of Nauticus — Critical Accounting Policies and
Estimates — Stock-Based Compensation” for a discussion of assumptions made by us in determining the grant date
fair value of our equity awards. |
| (2) | The amounts in this column for Messrs. Radford and Berka represent
401(k) plan safe harbor contributions and automobile and cellphone allowance. The amounts in this column for Mr. Newell represent
401(k) safe harbor contributions. |
Narrative Disclosure to Summary Compensation
Table
Employee Benefits
Our NEOs are generally eligible
to participate in our health and welfare, retirement and other employee benefit programs on the same basis as other employees, subject
to applicable law. We maintain a 401(k) plan for eligible employees. Under the 401(k) plan, eligible employees may elect to
contribute a portion of their eligible compensation as pre-tax or Roth deferrals in accordance with the limitations imposed under the
Internal Revenue Code of 1986, as amended (the “Code”). We provide a safe harbor contribution in an amount not less than 3%
of each participant’s eligible compensation, subject to limitations imposed under the Code. We may also make discretionary matching
and profit-sharing contributions.
Employment Agreements
Existing Employment Agreements
Nicolaus Radford is a
party to an employment agreement with the Company, dated August 28, 2015 (the “Existing Radford Employment Agreement”),
pursuant to which he is employed on an at-will basis and which provides that he is to be compensated with an annual base salary. Under
the Existing Radford Employment Agreement, Mr. Radford is not eligible to receive any severance payments in the event of termination
of Mr. Radford’s employment.
Todd Newell is party to
an employment agreement with the Company, dated June 22, 2020 (the “Existing Newell Employment Agreement”), pursuant
to which he is employed on an at-will basis and which provides that he is to be compensated with an annual base salary. Under the Existing
Newell Employment Agreement, Mr. Newell is not eligible to receive any severance payments in the event of termination of Mr. Newell’s
employment. In addition to the stock option grants outlined above in the section titled “Stock Option Awards” of this Directors
and Executive Officers of Nauticus section, Newell’s Offer Letter provides for a discretionary bonus.
New Employment Agreement
The Company entered into an
employment agreement with Mr. Radford, dated December 16, 2021, which will become effective upon the closing of the Business
Combination (the “New Radford Employment Agreement”). Under the New Radford Employment Agreement, Mr. Radford will serve
as Nauticus’ Chief Executive Officer. The New Radford Employment Agreement provides for an annual base salary of $375,000 and target
annual bonus opportunity equal to 75% of Mr. Radford’s then-current annual base salary, subject to the achievement of certain
performance goals set by the board of directors, the board of directors’ assessment of achievement of those goals and the terms
and conditions of the bonus plan to be approved by the board of directors. The New Radford Employment Agreement also provides that Mr. Radford
is entitled to receive an annual grant of incentive equity awards pursuant to any plans or arrangements Nauticus may have in effect from
time to time subject to the discretion of the board of directors. Additionally, pursuant to the terms of the New Radford Employment Agreement,
Mr. Radford is entitled to receive a one-time cash bonus equal to $1,000,000 following the closing of the Business Combination.
In the event that Mr. Radford’s
employment is terminated without cause or Mr. Radford resigns for good reason following the closing of the Business Combination other
than in connection with a change in control, he is eligible to receive (i) continued salary payments and COBRA premiums for twelve months
following his termination of employment or resignation; and (ii) payment of his annual bonus for the fiscal year immediately preceding
the year in which he is terminated or resigns to the extent such annual bonus is unpaid. In the event that Mr. Radford’s employment
is terminated without cause or Mr. Radford resigns for good reason following the closing of the Business Combination and within three months
prior to a change in control or within twelve months following a change in control, he is eligible to receive (i) continued
salary payments and COBRA premiums for eighteen months following his termination of employment or resignation; (ii) payment
of his annual bonus for the fiscal year immediately preceding the year in which he is terminated or resigns, to the extent such annual
bonus is unpaid; (iii) a lump-sum payment equal to 100% of the higher of (1) his annual bonus as in effect for the fiscal year
in which the change in control occurs or (2) his bonus as in effect for the fiscal year in which his termination of employment occurs;
and (iv) acceleration of 100% of his outstanding unvested equity awards on the date of his termination (if however, an outstanding
equity award is to vest and/or the amount of the equity award to vest is to be determined based on the achievement of performance criteria,
then the equity award will vest as to one hundred percent (100%) of the amount of the equity award assuming the performance criteria had
been achieved at target levels for the relevant performance period(s), unless otherwise provided in the applicable award agreement).
Outstanding Equity Awards at 2021 Fiscal Year-End
The following table shows information
regarding outstanding equity awards held by the NEOs as of December 31, 2021.
| |
Option Awards |
Name | |
Number of Securities Underlying Unexercised Options Exercisable (#) | | |
Number of Securities Underlying Unexercised Options Unexercisable (#) | | |
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | | |
Option Exercise Price ($) | | |
Option Expiration Date |
Nicolaus Radford(2) | |
| — | | |
| 37,798 | | |
| — | | |
| 35.52 | | |
December 16, 2031 |
Reginald B. Berka(3) | |
| — | | |
| 5,000 | | |
| — | | |
| 35.52 | | |
December 16, 2031 |
Todd Newell(4) | |
| — | | |
| 20,000 | | |
| — | | |
| 27.57 | | |
September 1, 2031 |
| (1) | 25% of these stock options vest on the first anniversary of
the applicable grant date and the remaining 75% of these stock options vest in thirty-six (36) successive equal monthly installments
measured from the first anniversary of the grant date, subject to continued service with the Company through each such vesting date.
No stock option is exercisable more than 10 years after the grant date. |
| (2) | Granted on December 16, 2021. |
| (3) | Granted on December 16, 2021. |
| (4) | Granted on September 1, 2021. |
Certain Relationships and Related Party Transactions
Stock Options
Pursuant to Nauticus’
2015 Equity Incentive Stock Option Agreement (the “Nauticus Equity Incentive Plan”), Nauticus awards stock options to its
employees, officers, and directors. All options issued by the Company vest on the following schedule: 25% of the shares vest one year
after the vesting commencement date. The balance of the shares vest in a series of thirty-six (36) successive equal monthly
installments measuring from the first anniversary of the vesting commencement date.
Convertible Notes
On July 28, 2020, Nauticus
entered into a $1,500,000 convertible promissory note with Schlumberger Technology Corporation (“Schlumberger,” and such note,
the “Schlumberger Convertible Note”). The Schlumberger Convertible Note is unsecured, payable upon the earliest to occur of
(a) the closing of Nauticus’ next sale of Nauticus Series C Preferred Stock (the “Next Equity Financing”),
(b) the date on which the Schlumberger Convertible Note would be due and payable upon an event of default, or (c) December 31,
2021, and bears interest at a rate of 4.25% per annum. The Schlumberger Convertible Note is convertible into shares of Nauticus Series C
Preferred Stock upon the closing of a Next Equity Financing.
On December 7, 2020, Nauticus
entered into a $1,500,000 convertible promissory note with Transocean Inc. (“Transocean,” and such note, the “Transocean
Convertible Note”). The Transocean Convertible Note is unsecured, payable upon the earliest to occur of (a) the closing of
the Next Equity Financing, (b) the date on which the Schlumberger Convertible Note would be due and payable upon an event of default,
or (c) December 31, 2021, and bears interest at a rate of 10% per annum. The Transocean Convertible Note is convertible into
shares of Nauticus Series C Preferred Stock upon the closing of a Next Equity Financing.
On June 19, 2021, Nauticus
entered into a $5,000,000 convertible promissory note with Goradia Capital, LLC (“Goradia,” and such note, the “Goradia
Convertible Note”). The Goradia Convertible Note is unsecured, payable upon the earliest to occur of (a) the closing of a Nauticus
Series C Preferred Stock equity financing (a “Qualified Financing”), (b) the closing of a transaction where any
person or group of persons becomes a beneficial owner, directly or indirectly, of 51% or more of the outstanding equity interests of Nauticus
(a “Change of Control Transaction”), and (c) December 31, 2022, unless earlier accelerated following an event of
default, and bears interest at a rate of 10% per annum. The Goradia Convertible Note is convertible into shares of Series C Preferred
Stock upon a Qualified Financing or Series B Preferred Stock upon a Change of Control Transaction.
On August 3, 2021, Nauticus
entered into a $5,000,000 convertible promissory note with Material Impact Fund II, L.P. (“Material Impact,” and such
note, the “Material Impact Convertible Note.”) The Material Impact Convertible Note is unsecured, payable upon the earliest
to occur of (a) a Qualified Financing, (b) a Change of Control Transaction, and (c) December 31, 2022, and bears interest
at a rate of 5% per annum. The Material Impact Convertible Note is convertible into shares of Series C Preferred Stock upon a Qualified
Financing or Series B Preferred Stock upon a Change of Control Transaction.
On October 22, 2021, Nauticus
entered into a $250,000 convertible promissory note with In-Q-Tel, Inc. (“In-Q-Tel,” and such note, the “In-Q-Tel Convertible
Note”). The In-Q-Tel Convertible Note is unsecured, payable upon the earliest to occur of (a) a Qualified Financing, (b) a
Change of Control Transaction, and (c) December 31, 2022, and bears interest at a rate of 5% per annum. The In-Q-Tel Convertible
Note is convertible into shares of Series C Preferred Stock upon a Qualified Financing or Series B Preferred Stock upon a Change
of Control Transaction.
On December 16, 2021
and in connection with the signing of the Merger Agreement, Nauticus entered into (i) the First Amendment to Convertible Promissory
Note with Schlumberger (the “Amended Schlumberger Convertible Note”), (ii) the First Amendment to Convertible Promissory Note
with Transocean (the “Amended Transocean Convertible Note”), (iii) the First Amendment to Unsecured Convertible Promissory
Note with Goradia (the “Amended Goradia Convertible Note”), (iv) the First Amendment to Unsecured Convertible Promissory Note
with Material Impact (the “Amended Material Impact Convertible Note”), and (v) the First Amendment to Unsecured Convertible
Promissory Note with In-Q-Tel (the “Amended In-Q-Tel Convertible Note,” and, together with the Amended Schlumberger
Convertible Note, Amended Transocean Convertible Note, Amended Goradia Convertible Note, and Amended Material Impact Convertible Note,
the “Amended Convertible Notes”). The Amended Convertible Notes provide for, among other things, the automatic conversion
of such Amended Convertible Notes immediately prior to the Effective Time into shares of Nauticus Common Stock at a specific conversion
price, which shares will then be exchanged for common stock in connection with the Business Combination. The Amended Convertible Notes
established fixed outstanding balances for each not, which will remain unchanged until their conversion.
As a result of the Merger,
an aggregate of 5,299,543 shares of Common Stock will be issued to the holders of Nauticus Convertible Notes.
Transocean
Transocean, Inc. (“Transocean”)
is an investor in Nauticus Robotics, Inc. since March 2018, holding 31% equity in the form of preferred stock in the company. As a preferred
investor, Transocean, Inc. is represented on the Nauticus Board of Directors by Roddie Mackenzie. Transocean also provided a note of $1.5MM
of convertible stock on maturity of the note.
Transocean, Inc. has contracted
with Nauticus in two (2) technology projects since their initial investment in 2018 — “Spiral” and “HaloGuard”.
The Spiral project involved methods for automating the handling of drilling pipe on a drilling rig. The Spiral contract resulted in $734K
in revenue in 2019. The project was discontinued by Transocean due to a number of factors within the oil & gas market. HaloGuard involved
the development of a zone monitoring safety system to detect personnel in hazardous areas of the drilling rig. This project began as a
project code named THEIA, later renamed to HaloGuard, with initial funding provided by Transocean. Nauticus assumed all funding of the
project in 2020. Nauticus has sold 7 HaloGuard safety systems to Transocean and is in the process of installing the remaining systems
on Transocean’s drilling ships. Nauticus’ revenue from the sales of the HaloGuard system, including installation service fees,
are approximately $2,429,861. As of June 22, 2022, Nauticus and Transocean negotiated an end to Nauticus’ support on the product
line in order to focus more on the mainline revenue generating items for Nauticus.
Stock Repurchase Agreements
On May 12, 2021, Nauticus
entered into Amended and Restated CLAQ’s Stock Repurchase Agreements with certain key employees, officers and directors of Nauticus
(each, a “Stock Repurchase Agreement” and, together, the “Stock Repurchase Agreements”). Pursuant to the Stock
Repurchase Agreements, among other things, upon the termination of employment with Nauticus, Nauticus has the right (but not the obligation)
to purchase and each such signatory has the obligation to sell, all of their Nauticus Common Stock to Nauticus. Additionally, the key
employees, officers and directors signatory to the Stock Repurchase Agreements are subject to repurchase if the owners of more than fifty
percent (50%) of the outstanding Nauticus Common Stock receive an offer to purchase their shares of Nauticus Common Stock and which offer
is contingent on the offeror’s ability to purchase 100% of the Nauticus Common Stock outstanding.
Series A Financing
On August 28, 2015, pursuant
to a Series A Preferred Stock Purchase Agreement by and between Nauticus and Schlumberger (the “Series A Stock Purchase
Agreement”), Nauticus issued and sold an aggregate of 3,348 shares of Nauticus Series A Preferred Stock at a purchase
price of $896.00 per share for aggregate consideration of approximately $3,000,000 (the “Series A Financing”).
The participant in the Series A
Financing was a holder of more than 5% of Nauticus’ capital stock. The following table sets forth the aggregate number of Nauticus
Series A Preferred Stock issued to Schlumberger in the Series A Financing:
Stockholder | |
Shares of Series B Preferred Stock | | |
Total Purchase Price | |
Schlumberger Technology Corporation | |
| 3,348 | | |
$ | 2,999,808.00 | |
Series B Financing
On March 20, 2018, pursuant
to a Series B Stock Purchase Agreement, by and among Nauticus, Schlumberger, and Transocean (the “Series B Stock Purchase
Agreement”), Nauticus issued and sold an aggregate of 725,426 shares of Nauticus Series B Preferred Stock at a purchase
price of $27.57 per share for aggregate consideration of approximately $20,000,000 (the “Series B Financing”).
The participants in the Series B
Financing included certain holder of more than 5% of Nauticus’ capital stock. The following table sets forth the aggregate number
of Nauticus Series B Preferred Stock issued to these related parties in the Series B Financing:
Stockholder | |
Shares of Series B Preferred Stock | | |
Total Purchase Price | |
Schlumberger Technology Corporation | |
| 181,356 | | |
$ | 4,999,984.92 | |
Transocean, Inc. | |
| 544,070 | | |
$ | 15,000,009.90 | |
Following the Series B
Financing, Nauticus filed a Second Amended and Restated Certificate of Formation (the “Amended and Restated Nauticus Charter”)
with the Texas Secretary of State, pursuant to which the Nauticus Series A Preferred Stock underwent a 100-for-1 stock split.
Related Person Transaction Policy
Nauticus adopted a related
person transaction policy that sets forth its procedures for the identification, review, consideration and approval or ratification of
related person transactions. The policy became effective on Closing. A related person transaction is a transaction, arrangement or relationship,
or any series of similar transactions, arrangements or relationships, in which Nauticus and any related person are, were or will be participants
in which the amount involved exceeds $120,000. Transactions involving compensation for services provided to Nauticus as an employee or
director are not covered by this policy. A related person is any executive officer, director or beneficial owner of more than 5% of any
class of Nauticus’ voting securities and any of their respective immediate family members and any entity owned or controlled by
such persons.
Under the policy, if a transaction
has been identified as a related person transaction, including any transaction that was not a related person transaction when originally
consummated or any transaction that was not initially identified as a related person transaction prior to consummation, Nauticus’
management must present information regarding the related person transaction to Nauticus’ audit committee, or, if audit committee
approval would be inappropriate, to another independent body of Nauticus’ Board of Directors, for review, consideration and approval
or ratification. The presentation must include a description of, among other things, the material facts, the interests, direct and indirect,
of the related persons, the benefits to Nauticus of the transaction and whether the transaction is on terms that are comparable to the
terms available to or from, as the case may be, an unrelated third party or to or from employees generally. Under the policy, Nauticus
will collect information that Nauticus deems reasonably necessary from each director, executive officer and, to the extent feasible, significant
stockholder to enable Nauticus to identify any existing or potential related-person transactions and to effectuate the terms of the
policy. In addition, under Nauticus’ Code of Conduct that Nauticus expects to adopt prior to the closing of this Business Combination,
Nauticus’ employees and directors will have an affirmative responsibility to disclose any transaction or relationship that reasonably
could be expected to give rise to a conflict of interest. In considering related person transactions, Nauticus’ audit committee,
or other independent body of Nauticus’ Board of Directors, will take into account the relevant available facts and circumstances
including, but not limited to:
| ● | the risks, costs and benefits to Nauticus; |
| ● | the impact on a director’s independence in the event
that the related person is a director, immediate family member of a director or an entity with which a director is affiliated; |
| ● | the availability of other sources for comparable services
or products; and |
| ● | the terms available to or from, as the case may be, unrelated
third parties or to or from employees generally. |
The policy requires that, in
determining whether to approve, ratify or reject a related person transaction, Nauticus’ audit committee, or other independent body
of Nauticus’ Board of Directors, must consider, in light of known circumstances, whether the transaction is in, or is not inconsistent
with, Nauticus’ best interests and those of Nauticus’ stockholders, as Nauticus’ audit committee, or other independent
body of Nauticus’ Board of Directors, determines in the good faith exercise of its discretion.
Legal Proceedings
In the ordinary course of business, Nauticus is
or may be involved in various legal or regulatory proceedings, claims or purported class actions related to alleged infringement of third-party
patents and other intellectual property rights, commercial, corporate and securities, labor and employment, wage and hour and other claims.
In management’s opinion, resolution of all current matters is not expected to have a material adverse impact on Nauticus’
consolidated results of operations, cash flows or financial position.
Description of Capital Stock
The
following summary sets forth the material terms of our securities following the consummation of the Business Combination. The following
summary is not intended to be a complete summary of the rights and preferences of such securities, and is qualified by reference to the
Charter, a copy of which is filed as an exhibit to this Form 8-K, and Nauticus’ amended and restated bylaws, a copy of which is
filed as an exhibit to this Form 8-K. We urge you to read the Charter and Nauticus’ amended and restated bylaws in their entirety
for a complete description of the rights and preferences of our securities following the consummation of the Business Combination.
Authorized and Outstanding Stock
The Nauticus’ Charter (the “Charter”) authorizes
the issuance of 635,000,000 total shares, consisting of (a) 625,000,000 shares of Common Stock, and (b) 10,000,000 shares of
preferred stock. 47,250,773 shares of Common Stock were issued and outstanding immediately following the consummation of the Business
Combination, after giving effect to redemptions and excluding shares issuable upon exercise of outstanding warrants. No shares of preferred
stock are outstanding as of the date of this report on Form 8-K.
Voting Power
Except as otherwise required
by law or as otherwise provided in any certificate of designation for any series of preferred stock, the holders of Common Stock possess
all voting power for the election of Nauticus’ directors and all other matters requiring stockholder action. Holders of the Common
Stock are entitled to one vote per share on matters to be voted on by stockholders.
Dividends
Subject to applicable law
and the rights and preferences of any holders of any outstanding series of Nauticus’ preferred stock, the holders of the Common
Stock, as such, shall be entitled to the payment of dividends on the Common Stock when, as and if declared by the board of directors of
Nauticus in accordance with applicable law. The payment of cash dividends in the future will be dependent upon Nauticus’ revenues
and earnings, if any, capital requirements and general financial condition subsequent to completion of the Business Combination. It is
the present intention of the board of directors to retain all earnings, if any, for use in Nauticus’ business operations and, accordingly,
our board of directors does not anticipate declaring any dividends in the foreseeable future.
Liquidation
Subject to the rights and
preferences of any holders of any shares of any outstanding series of Nauticus’ preferred stock, in the event of any liquidation,
dissolution or winding up of Nauticus, whether voluntary or involuntary, the funds and assets of Nauticus that may be legally distributed
to Nauticus’ stockholders shall be distributed among the holders of the then outstanding the Common Stock pro rata in accordance
with the number of shares of the Common Stock held by each such holder.
Preemptive or Other Rights
There are no sinking fund
provisions applicable to the Common Stock.
Limitations on Liability and Indemnification
of Officers and Directors
The Charter and the amended
and restated bylaws of Nauticus (the “Bylaws”) limit the liability of our directors, and provide for the indemnification of
our current and former officers and directors, in each case, to the fullest extent permitted by Delaware law.
We have entered into agreements
with our officers and directors to provide contractual indemnification in addition to the indemnification provided for in our Charter
and Bylaws. The Charter and Bylaws also permit us to secure insurance on behalf of any officer, director or employee for any liability
arising out of his or her actions.
In connection with the Closing,
CLAQ purchased a tail policy with respect to liability coverage for the benefit of former CLAQ officers and directors. We will maintain
such tail policy for a period of no less than six (6) years following the Closing.
These provisions may discourage
stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty. These provisions also may have the effect
of reducing the likelihood of derivative litigation against officers and directors, even though such an action, if successful, might otherwise
benefit us and our stockholders. Furthermore, a stockholder’s investment may be adversely affected to the extent we pay the costs
of settlement and damage awards against officers and directors pursuant to these indemnification provisions.
We believe that these provisions,
the directors’ and officers’ liability insurance and the indemnity agreements are necessary to attract and retain talented
and experienced officers and directors.
Certain Anti-Takeover Provisions of Delaware
Law; Nauticus’ Charter and Bylaws
The Charter and Bylaws contain,
and the DGCL contains, provisions, as summarized in the following paragraphs, that are intended to enhance the likelihood of continuity
and stability in the composition of the Board. These provisions are intended to avoid costly takeover battles, reduce our vulnerability
to a hostile change of control and enhance the Board’s ability to maximize stockholder value in connection with any unsolicited
offer to acquire Nauticus. However, these provisions may have an anti-takeover effect and may delay, deter or prevent a merger or acquisition
of Nauticus by means of a tender offer, a proxy contest or other takeover attempt that a stockholder might consider in its best interest,
including those attempts that might result in a premium over the prevailing market price for the shares of Common Stock held by stockholders.
Delaware Law
Nauticus is governed by the
provisions of Section 203 of the DGCL. Section 203 generally prohibits a publicly held Delaware corporation from engaging
in a “business combination” with any “interested stockholder” for a period of three years after the date
of the transaction in which the person became an interested stockholder, unless (with certain exceptions) the business combination or
the transaction in which the person became an interested stockholder is approved in a prescribed manner. Generally, a “business
combination” includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder.
Generally, an “interested stockholder” is a person who, together with affiliates and associates, owns (or within three years
prior to the determination of interested stockholder status, did own) 15% or more of a corporation’s voting stock. These provisions
may have the effect of delaying, deferring or preventing changes in control of Nauticus not approved in advance by the Board.
Special Meetings
The Charter provides that special
meetings of the stockholders may be called only by or at the direction of the Board, the Chairman of the Board or the Chief Executive
Officer. The Bylaws prohibit the conduct of any business at a special meeting other than as specified in the notice for such meeting.
These provisions may have the effect of deferring, delaying or discouraging hostile takeovers or changes in control or management of our
company.
Advance Notice of Director Nominations and
New Business
The Bylaws state that in order
for a stockholder to propose nominations of candidates to be elected as directors or any other proper business to be considered by stockholders
at the annual meeting, such stockholder must, among other things, provide notice thereof in writing to the secretary at the principal
executive offices of Nauticus within the time periods set forth in the Bylaws. Such notice must contain, among other things, certain information
about the stockholder giving the notice (and the beneficial owner, if any, on whose behalf the nomination or proposal is made) and certain
information about any nominee or other proposed business. Stockholder proposals of business other than director nominations cannot be
submitted in connection with special meetings of stockholders.
The Bylaws allow the presiding
officer at a meeting of stockholders to adopt rules and regulations for the conduct of meetings which may have the effect of precluding
the conduct of certain business at a meeting if such rules and regulations are not followed. These provisions may also defer, delay or
discourage a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise
attempting to influence or obtain control of our company.
Supermajority Voting for Amendments to Our
Governing Documents
Certain amendments to the
Charter require the affirmative vote of at least 66⅔% of the voting power of all shares of our Common Stock then outstanding. The
Charter provides that the Board is expressly authorized to adopt, amend or repeal the Bylaws and that our stockholders may amend certain
provision of the Bylaws only with the approval of at least 66⅔% of the voting power of all shares of our Common Stock then outstanding.
These provisions make it more difficult for stockholders to change the Charter or Bylaws and may, therefore, defer, delay or discourage
a potential acquirer from conducting a solicitation of proxies to amend the Charter or Bylaws or otherwise attempting to influence or
obtain control of Nauticus.
No Cumulative Voting
The DGCL provides that a stockholder’s
right to vote cumulatively in the election of directors does not exist unless the certificate of incorporation specifically provides otherwise.
The Charter does not provide for cumulative voting. The prohibition on cumulative voting has the effect of making it more difficult for
stockholders to change the composition of the Board.
Classified Board of Directors
The Charter provides that the
Board is divided into three classes of directors, with the classes to be as nearly equal in number as possible, designated Class I,
Class II and Class III. The terms of Class I, Class II and Class III directors end at our 2023, 2024 and
2025 annual meetings of stockholders, respectively. Directors of each class the term of which shall then expire shall be elected to hold
office for a three-year term. The classification of directors has the effect of making it more difficult for stockholders to change the
composition of our Board and require a longer time period to do so. The Charter provides that the number of directors will be fixed from
time to time exclusively pursuant to a resolution adopted by the Board. The classification of directors has the effect of making it more
difficult for stockholders to change the composition of our Board. As a result, in most circumstances, a person can gain control of the
Board only by successfully engaging in a proxy contest at two or more meetings of stockholders at which directors are elected.
Removal of Directors; Vacancies
The Charter and Bylaws provide
that, so long as the Board is classified, directors may be removed only for cause and only upon the affirmative vote of holders of at
least 66⅔% of the voting power of all the then outstanding shares of stock entitled to vote generally in the election of directors,
voting together as a single class. Therefore, because stockholders cannot call a special meeting of stockholders, as discussed above,
stockholders may only submit a stockholder proposal for the purpose of removing a director at an annual meeting. The Charter and Bylaws
provide that vacancies and newly created directorships resulting from any increase in the authorized number of directors shall be filled
only by a majority of the directors then in office or by a sole remaining director. Therefore, while stockholders may remove a director,
stockholders are not able to elect new directors to fill any resulting vacancies that may be created as a result of such removal.
Stockholder Action by Written Consent
The DGCL permits any action
required to be taken at any annual or special meeting of the stockholders to be taken without a meeting, without prior notice and without
a vote if a consent in writing, setting forth the action so taken, is signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares of stock entitled
to vote thereon were present and voted, unless the certificate of incorporation provides otherwise. The Charter and Bylaws preclude stockholder
action by written consent. This prohibition, combined with the fact stockholders cannot call a special meeting, as discussed above, means
that stockholders are limited in the manner in which they can bring proposals and nominations for stockholder consideration, making it
more difficult to effect change in our governing documents and the Board.
Warrants
As of the date of this report
on Form 8-K, 8,625,000 Public Warrants are outstanding. Each whole Public Warrant entitles the registered holder to purchase one share
of Common Stock at a price of $11.50 per share, subject to adjustment as discussed below, at any time commencing on the completion of
the Business Combination. However, no Public Warrants will be exercisable for cash unless we have an effective and current registration
statement covering the shares of Common Stock issuable upon exercise of the Public Warrants and a current prospectus relating to such
shares of Common Stock. Notwithstanding the foregoing, if a registration statement covering the shares of Common Stock issuable upon exercise
of the Public Warrants is not effective within 120 days following the consummation of the Business Combination, warrant holders may,
until such time as there is an effective registration statement and during any period when we shall have failed to maintain an effective
registration statement, exercise Public Warrants on a cashless basis pursuant to an available exemption from exemption under the Securities
Act. The Public Warrants will expire on the fifth anniversary of our completion of the Business Combination, at 5:00 p.m., New York
City time, or earlier upon redemption or liquidation.
The Private Warrants, as
well as any warrants underlying the additional Units we issued to officers, directors or their affiliates in payment of working capital
loans made to us, are identical in all material respects to the Public Warrants underlying the public Units except that (i) each
Private Warrant is exercisable for one share of Common Stock at an exercise price of $11.50 per share, and (ii) such Private Warrants
will be exercisable for cash (even if a registration statement covering the shares of Common Stock issuable upon exercise of such warrants
is not effective) or on a cashless basis, at the holder’s option, and will not be redeemable by us, in each case so long as they
are still held by the initial purchasers or their affiliates. The Private Warrants purchased by CleanTech Investments will not be exercisable
more than five years from July 14, 2021, in accordance with FINRA Rule 5110(g)(8), as long as Chardan Capital Markets,
LLC or any of its related persons beneficially own these private warrants.
Concurrent with the Closing
and pursuant to the Securities Purchase Agreement, Nauticus issued 2,922,425 warrants to certain investors (the “SPA Warrants”).
The SPA Warrants are immediately exercisable upon issuance and entitle the registered holder to purchase one share of Common Stock at
a price of $20.00. If a registration statement covering the shares of Common Stock issuable upon exercise of the SPA Warrants is not effective
upon the registered holder’s election to exercise their SPA Warrants, the registered holder may, until such time as there is an
effective registration statement and during any period when we shall have failed to maintain an effective registration statement, exercise
their SPA Warrants on a cashless basis pursuant to an available exemption from exemption under the Securities Act. The SPA Warrants will
expire ten years after their initial issuance date, or earlier upon redemption or liquidation.
Redemption
We may call the outstanding
Public Warrants for redemption (excluding the Private Warrants and SPA Warrants but including any warrants already issued upon exercise
of the unit purchase option), in whole and not in part, at a price of $0.01 per warrant:
| ● | at any time after the Public Warrants become exercisable, |
| ● | upon not less than 30 days’ prior written notice
of redemption to each warrant holder, |
|
● |
if, and only if, the reported last sale price of the shares of Common Stock equals or exceeds $16.50 per share (subject to adjustment for splits, dividends, recapitalizations and other similar events), for any 20 trading days within a 30-day trading period ending on the third business day prior to the notice of redemption to warrant holders, and |
|
● |
if, and only if, there is a current registration statement in effect with respect to the shares of Common Stock underlying such warrants at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the date of redemption. |
The right to exercise will
be forfeited unless the warrants are exercised prior to the date specified in the notice of redemption. On and after the redemption date,
a record holder of a Warrant will have no further rights except to receive the redemption price for such holder’s Warrant upon surrender
of such Warrant.
The redemption criteria for
our Warrants have been established at a price which is intended to provide warrant holders a reasonable premium to the initial exercise
price and provide a sufficient differential between the then-prevailing share price and the warrant exercise price so that if the
share price declines as a result of our redemption call, the redemption will not cause the share price to drop below the exercise price
of the Warrants, however, such redemption may occur at a time when the redeemable warrants are “out-of-the-money,” in which
case you would lose any potential embedded value from a subsequent increase in the value of our Common Stock had your Warrants remained
outstanding. Historical trading prices for our Common Stock have not exceeded the $16.50 per share threshold at which the Public Warrants
would become redeemable. However, this could occur in connection with or after the closing of the Business Combination.
In the event we determined
to redeem our Public Warrants, holders of redeemable Public Warrants will be notified of such redemption as described in our warrant agreement
between Continental Stock Transfer & Trust Company, as warrant agent, and us, dated July 14, 2021 (the “Warrant Agreement”).
Specifically, in the event that we elect to redeem all of the redeemable Warrants as described above, we will fix a date for the redemption
(the “Redemption Date”). Notice of redemption will be mailed by first class mail, postage prepaid, by us not less than 30 days
prior to the Redemption Date to the registered holders of the redeemable Warrants to be redeemed at their last addresses as they appear
on the Warrant Register. Any notice mailed in the manner provided in the Warrant Agreement will be conclusively presumed to have been
duly given whether or not the registered holder received such notice. In addition, beneficial owners of the redeemable Warrants will be
notified of such redemption via posting of the redemption notice to DTC.
If we call the Warrants for
redemption as described above, our management will have the option to require all holders that wish to exercise warrants to do so on a
“cashless basis.” In such event, each holder would pay the exercise price by surrendering the Warrants for that number of
shares of Common Stock equal to the quotient obtained by dividing (x) the product of the number of shares of Common Stock underlying
the Warrants, multiplied by the difference between the exercise price of the Warrants and the “fair market value” by (y) the
fair market value. The “fair market value” shall mean the average reported last sale price of our Common Stock for the 10 trading days
ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of Warrants. Whether
we will exercise our option to require all holders to exercise their warrants on a “cashless basis” will depend on a variety
of factors including the price of our common shares at the time the Warrants are called for redemption, our cash needs at such time and
concerns regarding dilutive share issuances.
If our management takes advantage
of this option, the notice of redemption will contain the information necessary to calculate the number of Common Stock to be received
upon exercise of the warrants, including the “fair market value” in such case. Requiring a cashless exercise in this manner
will reduce the number of Common Stock to be issued and thereby lessen the dilutive effect of a warrant redemption.
We believe this feature is
an attractive option to us if we do not need the cash from the exercise of the Warrants after the Business Combination. If we call our
warrants for redemption and our management does not take advantage of this option, the holders of the Private Warrants and their permitted
transferees would still be entitled to exercise their Private Warrants for cash or on a cashless basis using the same formula described
above that other warrant holders would have been required to use had all warrant holders been required to exercise their warrants on a
cashless basis.
The Warrants were issued in
registered form under the Warrant Agreement which provides that the terms of the Warrants may be amended without the consent of any holder
to cure any ambiguity or correct any defective provision, but requires the approval, by written consent or vote, of the holders of the
holders of a majority of the then outstanding warrants in order to make any change that adversely affects the interests of the registered
holders.
The exercise price and number
of shares of Common Stock issuable on exercise of the Warrants may be adjusted in certain circumstances including in the event of a share
dividend, extraordinary dividend or our recapitalization, reorganization, merger or consolidation. In addition, if we issue additional
shares of Common Stock or equity-linked securities for capital raising purposes in connection with the closing of the Business Combination
at a newly issued price of less than $9.20 per share of Common Stock (with such issue price or effective issue price to be determined
in good faith by our Board and, in the case of any such issuance to our initial stockholders or their affiliates, without taking into
account any founder shares or private warrants held by them, as applicable, prior to such issuance), the exercise price of the Warrants
will be adjusted (to the nearest cent) to be equal to 115% of the newly issued price and the $16.50 per share redemption trigger price
described below under will be adjusted (to the nearest cent) to be equal to 165% of the market value (the volume weighted average trading
price of the Common Stock during the 20 trading day period starting on the trading day prior to the consummation of
the Business Combination).
The Warrants may be exercised
upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form
on the reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price,
by certified or official bank check payable to us, for the number of warrants being exercised. The warrant holders do not have the rights
or privileges of holders of shares of Common Stock and any voting rights until they exercise their warrants and receive shares of Common
Stock. After the issuance of shares of Common Stock upon exercise of the Warrants, each holder will be entitled to one vote for each share
held of record on all matters to be voted on by stockholders.
Except as described above,
no Public Warrants will be exercisable for cash, and we will not be obligated to issue shares of Common Stock unless at the time a holder
seeks to exercise such warrant, a prospectus relating to the shares of Common Stock issuable upon exercise of the Warrants is current
and the shares of Common Stock have been registered or qualified or deemed to be exempt under the securities laws of the state of residence
of the holder of the Warrants. Under the terms of the Warrant Agreement, we have agreed to use our best efforts to meet these conditions
and to maintain a current prospectus relating to the shares of Common Stock issuable upon exercise of the Warrants until the expiration
of the Warrants. However, we cannot assure you that we will be able to do so and, if we do not maintain a current prospectus relating
to the shares of Common Stock issuable upon exercise of the Warrants, holders will be unable to exercise their Warrants, and we will not
be required to settle any such warrant exercise. If the prospectus relating to the shares of Common Stock issuable upon the exercise of
the warrants is not current or if the Common Stock is not qualified or exempt from qualification in the jurisdictions in which the holders
of the Warrants reside, we will not be required to net cash settle or cash settle the warrant exercise, the Warrants may have no value,
the market for the Warrants may be limited, and the Warrants may expire worthless.
A holder of a Warrant may
notify us in writing in the event it elects to be subject to a requirement that such holder will not have the right to exercise such Warrant,
to the extent that after giving effect to such exercise, such person (together with such person’s affiliates), to the warrant agent’s
actual knowledge, would beneficially own in excess of 4.99% or 9.99% (or such other amount as a holder may specify) of Common Stock outstanding.
No fractional shares will
be issued upon exercise of the Warrants. If, upon exercise of the Warrants, a holder would be entitled to receive a fractional interest
in a share, we will, upon exercise, round down to the nearest whole number the number of shares of Common Stock to be issued to the warrant
holder.
We have agreed that, subject
to applicable law, any action, proceeding or claim against us arising out of or relating in any way to the Warrant Agreement will be brought
and enforced in the courts of the State of New York or the United States District Court for the Southern District of New York,
and we irrevocably submit to such jurisdiction, which jurisdiction will be the exclusive forum for any such action, proceeding or claim.
This provision applies to claims under the Securities Act but does not apply to claims under the Exchange Act or any claim for which
the federal district courts of the United States of America are the sole and exclusive forum.
Contractual Arrangements with respect to
the Certain Warrants
We have agreed that so long
as the Private Warrants are still held by the initial purchasers or their affiliates, we will not redeem such warrants, and we will allow
the holders to exercise such warrants on a cashless basis. However, once any of the foregoing warrants are transferred from the initial
purchasers or their affiliates, these arrangements will no longer apply. Furthermore, because the private warrants were issued in a private
transaction, the holders and their transferees are allowed to exercise the private warrants for cash even if a registration statement
covering the shares of Common Stock issuable upon exercise of such Warrants is not effective and receive unregistered shares of Common
Stock.
Our Transfer Agent and Warrant Agent
The transfer agent for our
Common Stock and warrant agent for our Warrants is Continental Stock Transfer & Trust Company, 1 State Street, New York,
New York 10004.
Listing of Securities
Our Common Stock and Warrants
are listed on Nasdaq under the symbols “KITT” and “KITTW”.
Indemnification of Directors and Officers
The disclosure set forth above in Item 1.01 of
this Current Report on Form 8-K under the section entitled “Indemnification Agreements” is incorporated herein by reference.
Further information about
the indemnification of Nauticus’ directors and officers is included in the Proxy Statement/Prospectus in the section entitled “Comparison
of Stockholders Rights”, which is incorporated herein by reference.