Company: AIRJW
Filing Date: 2025-03-25
Form Type: 10-K
Source: 0001013762-25-002263
Chunk: 1505

Company: AirJoule Technologies Corp.
Filing Date: 2025-03-25
Form: 10-K
Item: Item 9B
Chunk 1505
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34,532,000 

Earnout
Shares

The
Legacy Montana Equityholders have the opportunity to receive additional equity consideration (in each case, in accordance with their
respective pro rata share) through the Earnout Shares. The maximum value of the Earnout Shares is capped at $200.0 million (“Maximum
Earnout Milestone Amount”) and the ability to receive Earnout Shares expires on the fifth anniversary of the Closing. A majority
of the independent members of the Post-Combination Company Board then serving has sole discretion in determining, among other things,
the achievement of the applicable milestones, the calculations of payments of Earnout Shares to the applicable Legacy Montana Equityholders,
the dates on which construction and operational viability of new production capacity is deemed completed and whether to consent to a
transfer of the applicable Legacy Montana Equityholder’s right to receive Earnout Shares. Earnout Shares issuable in respect of
Legacy Montana options outstanding as of immediately prior to the effective time of the Merger may be issued to the holder of such Legacy
Montana option only if such holder continues to provide services (whether as an employee, director or individual independent contractor)
to the Post-Combination Company or one of its subsidiaries through the date on which such Earnout Shares are issued, as determined by
a majority of the independent members of the Post-Combination Company Board.

If
the conditions for payment of the Earnout Shares are satisfied and assuming all originally designated employees are then still providing
services to the Post-Combination Company on the date such condition is met, approximately 21% of the aggregate Earnout Shares will be
payable to the employees and 79% of the aggregate Earnout Shares will be payable to the holders of Legacy Montana common units, in accordance
with their respective pro rata share immediately following the Closing.

The
settlement of the Earnout Shares to the holders of Legacy Montana common units contains variations in something other than the fair value
of the issuer’s equity shares. As such, management determined that they should be classified as a liability and recognized at fair
value at each reporting period with changes in fair value included in earnings. The Earnout Shares are subject to ASC 718 and are accounted
for as post-combination compensation cost.

F-27

The
estimated fair value of the Earnout Shares was determined with a Monte Carlo simulation using a distribution of potential outcomes for
expected EBITDA and stock price at expected commission dates, utilizing a correlation coefficient for E