| Item 1.01 | Entry into a Material Definitive Agreement. |
On August 12, 2022,
concurrently with the execution of the business combination agreement (as amended, the “Business
Combination Agreement” and the transactions contemplated therein, the “Business Combination”) among CENAQ Energy Corp.
(“CENAQ”), Verde Clean Fuels OpCo, LLC, a Delaware limited liability company and wholly-owned subsidiary of CENAQ (“OpCo”),
Bluescape Clean Fuels Holdings, LLC, a Delaware limited liability company, Bluescape Clean Fuels Intermediate Holdings, LLC, a Delaware
limited liability company, and, for a limited purpose, CENAQ Sponsor LLC, a Delaware limited
liability company (“Sponsor”), certain investors (the “Original PIPE Investors”) entered into separate
subscription agreements (the “Original Subscription Agreements”) with CENAQ, pursuant to which the Original PIPE Investors
agreed to purchase, and CENAQ agreed to sell to the Original PIPE Investors, an aggregate of 8,000,000
shares of CENAQ’s Class A common stock, par value $0.0001 per share (the “Class A Common Stock”), for
a purchase price of $10.00 per share, or an aggregate purchase price of $80,000,000, in a private placement (the “Original PIPE”).
Amendment to Subscription Agreement
Of
the 8,000,000 shares subscribed for in the Original PIPE, Arb Clean Fuels Management LLC (“Arb Clean Fuels”), an entity affiliated
with a member of Sponsor, agreed to purchase, and CENAQ agreed to sell to Arb Clean Fuels, 7,000,000 shares (the “Committed Amount”)
for an aggregate purchase price of $70,000,000 (the “Committed Purchase Price”); provided, that, under its subscription agreement
(the “Arb Subscription Agreement”), to the extent the funds in CENAQ’s trust account (the “Trust Account”)
immediately prior to the closing of the Business Combination (the “Closing”), after giving effect to the exercise of stockholder’s
redemption rights, exceed $17,420,000, the Committed Amount will be reduced by one share for every $10.00 in excess of $17,420,000 in
the Trust Account; provided, further, that in no event will the Committed Amount be reduced by more than 2,000,000 shares or the Committed
Purchase Price be reduced by more than $20,000,000 (the “Reduction Option”).
On
February 13, 2023, Arb Clean Fuels and CENAQ entered into an amendment to the Arb Subscription Agreement (the “Arb Amendment”),
pursuant to which, among other things, (i) the Committed Amount was lowered to 1,500,000 shares for an aggregate purchase price of $15,000,000
and the Reduction Option was removed, (ii) certain investors associated with Arb Clean Fuels (the “Arb Investors”) agreed
to purchase shares at the per share redemption price of approximately $10.31 per share (the “Per Share Redemption Price”)
in an aggregate amount equal to or greater than $14,250,000 from CENAQ’s redeeming stockholders and (iii) if the Arb Investors purchased
shares in an amount equal to or greater than $14,250,000, CENAQ will terminate the Arb Subscription Agreement on or prior to the Closing.
The
foregoing description of the Arb Amendment is qualified in its entirety by reference to the full text of the Arb Amendment, a copy of
which is included as Exhibit 10.1 to this Current Report on Form 8-K, and incorporated herein by reference.
Termination of Subscription Agreement
On
February 14, 2023, CENAQ and Arb Clean Fuels agreed to terminate the Arb Subscription Agreement due to the Arb Investors purchasing shares
of Class A Common Stock in an amount equal to or greater than $14,250,000 (the “Arb Termination”).
On
February 14, 2023, CENAQ and an Original PIPE Investor who agreed to purchase 200,000 shares (the “Terminating PIPE Investor”)
for an aggregate purchase price of $2,000,000 in the Original PIPE agreed to terminate such investor’s subscription agreement (together
with the Arb Termination, the “Terminations”) due to the Terminating PIPE Investor purchasing 387,973 shares at the Per Share
Redemption Price and for an aggregate amount of approximately $4,000,000 from CENAQ’s redeeming stockholders.
The foregoing description of the Terminations
is qualified in its entirety by reference to the form of subscription termination agreement, a copy of which is filed as Exhibit
10.2 to this Current Report on Form 8-K, and incorporated herein by reference.
Subscription Agreements
On February 10, 2023 and February 13, 2023, CENAQ
entered into separate subscription agreements (collectively, the “New Subscription Agreements”) with a number of investors
(collectively, the “New PIPE Investors”), pursuant to which the New PIPE Investors have agreed to purchase, and CENAQ agreed
to sell to the New PIPE Investors, an aggregate of 2,400,000 shares of Class A Common Stock (the “New PIPE Shares”) for a
purchase price of $10.00 per share, or an aggregate purchase price of $24,000,000, in a private placement (the “New PIPE”).
The New PIPE Investors include Cottonmouth Ventures LLC, a wholly-owned subsidiary of Diamondback Energy, Inc. (“Cottonmouth”),
and a European-based clean technology fund.
The
closing of the New PIPE pursuant to the New Subscription Agreements is contingent upon, among other customary closing conditions, the
concurrent consummation of the Business Combination. The combined company following the Business Combination (the “Combined
Company”) is expected to receive $32,000,000 in proceeds from the Original PIPE (after taking into account the Terminations) and
the New PIPE.
The terms of the New
Subscription Agreements are substantially similar to those of the Original Subscription Agreements, including with respect to certain
registration rights. In particular, the Combined Company is required to use commercially reasonable efforts to submit or file a registration
statement to register the resale of such shares within thirty (30) calendar days after the Closing.
The
foregoing description of the New Subscription Agreements is qualified in its entirety by reference to the full text of the form of Original
Subscription Agreement, a copy of which is filed as Exhibit 10.3 to this Current Report on Form 8-K, and incorporated herein by reference.
Equity Participation Right Agreement
In connection with CENAQ entering into a New Subscription Agreement with
Cottonmouth on February 13, 2023, CENAQ and OpCo entered into an Equity Participation Right Agreement (the “Participation Right
Agreement”) with Cottonmouth, pursuant to which, among other things, the Combined Company and OpCo will grant Cottonmouth the right
to participate between 50% to 65% in the ownership of certain future project facilities of the Combined Company on the terms and conditions
described therein through December 31, 2043. In addition, the Participation Right Agreement allows the Combined Company and OpCo to participate
in certain future project facilities brought forth by Cottonmouth on the terms and conditions described therein. Additionally, the Combined
Company has granted certain contractual preemptive rights to Cottonmouth relating to the sale of equity securities in the Combined Company
for a period of five years.
The foregoing description of the Participation Right Agreement is qualified in its entirety by reference to the full text of the Participation Right Agreement, a copy of which is included
as Exhibit 10.4 to this Current Report on Form 8-K, and incorporated herein by reference.
