Item
1.01. Entry into a Material Definitive Agreement.
On
May 23, 2022, Nauticus Robotics Brazil Ltda., a Brazilian limited liability company (the “Company”) and a wholly owned subsidiary
of Nauticus Robotics, Inc., a Delaware corporation, entered into an agreement (the “Agreement”) by and between the Company
and Petróleo Brasileiro S.A., a Brazilian limited liability corporation (“Petrobras”), pursuant to which, among other
things and upon the terms and subject to the conditions set forth therein, the Company will provide Petrobras with underwater inspection
services through the use of Aquanaut, the Company’s autonomous subsea robotic system.
Unless
otherwise terminated or suspended under the terms of the Agreement, the term of the Agreement is 1,080 days, and Petrobras agrees to
pay the Company a fixed fee of approximately BRL 21.6 million (approximately USD 4.3 million), subject to the payment conditions and
schedules set forth in the Agreement.
The
Agreement contains customary representations and warranties and various customary covenants made by each party. Among other terms, the
Company agrees to: comply with local labor laws, provide a health assurance plan to certain employees, repair any defects or faults with
its equipment, comply with Petrobras’ information security standards and communicate any violations of such standards, and procure
and maintain, throughout the entire term of the Agreement, insurance coverage for risks associated with the execution of the services.
Among other terms, Petrobras agrees to make timely payments to the Company, adopt information security measures to protect personal data
in compliance with applicable laws, provide the Company with adequate instructions and specifications, and issue requisite authorizations
for the Company to execute the services under the Agreement.
Each
of the Company and Petrobras has agreed to indemnify the other for certain damages and losses arising out of services provided under
the Agreement, including damages and losses to equipment, facilities, and materials, subject to customary limitations. The services provided
by the Company under the Agreement are subject to regular inspection by Petrobras. Petrobras reserves the right to reject or accept any
work performed under the Agreement that does not comply with the requirements set forth therein and the technical specifications provided
pursuant to the Agreement.
The
Agreement contains termination rights for each of the Company and Petrobras, including, among other things, terms in which Nauticus may
terminate the Agreement in the event of a delay in payment or release of equipment by Petrobras and in which Petrobras may terminate
the Agreement without compensation or retention of the Company’s services in the event of certain breaches or non-compliance under
the Agreement. Under certain conditions, the Company may be liable for damages up to 100% of the readjusted Agreement value, and the
Company may be obligated to reimburse Petrobras if it is unable to provide a feasible technological solution. Further, Nauticus may be
subject to monetary non-compliance penalties pursuant to compliance thresholds specified by the Agreement.
The
foregoing description of the Agreement does not purport to be complete and is qualified in its entirety by reference to the Agreement,
which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference. It is not intended to provide
any other factual information about the Company or Petrobras. In particular, the assertions embodied in the representations, warranties,
covenants, and agreements contained in the Agreement were made only for purposes of the Agreement, were solely for the benefit of the
parties to the Agreement, and are qualified by information in confidential disclosure schedules provided by the parties to the Agreement
in connection with the signing of the Agreement. These confidential disclosure schedules contain information that modifies, qualifies,
and creates exceptions to the representations, warranties, covenants, and agreements set forth in the Agreement. Moreover, certain representations,
warranties, covenants, and agreements in the Agreement were used for the purpose of allocating risk between the Company and Petrobras
rather than establishing matters as facts and were made only as of the date of the Agreement (or such other date or dates as may be specified
in the Agreement). In addition, the parties may apply standards of materiality in a way that is different from what may be viewed as
material by investors. Accordingly, the representations, warranties, covenants, and agreements in the Agreement may not describe the
actual state of affairs at the date they were made or at any other time and should not be relied upon as characterizations of the actual
state of facts about the Company or Petrobras. Moreover, information concerning the subject matter of the representations, warranties,
covenants, and agreements may change after the date of the Agreement, and, unless required by applicable law, the Company undertakes
no obligation to update such information.