424B3 1 f424b30124_power.htm PROSPECTUS

Filed Pursuant to Rule 424(b)(3)

Registration Statement No. 333-273821

POWER & DIGITAL INFRASTRUCTURE ACQUISITION II CORP.
321 North Clark Street, Suite 2440
Chicago, Illinois 60654

PROXY STATEMENT FOR THE SPECIAL MEETING OF POWER & DIGITAL INFRASTRUCTURE
ACQUISITION II CORP. (A DELAWARE CORPORATION)
AND
PROSPECTUS FOR 43,190,000 SHARES OF CLASS A COMMON STOCK
OF
POWER & DIGITAL INFRASTRUCTURE ACQUISITION II CORP.
(TO BE RENAMED “MONTANA TECHNOLOGIES CORPORATION” IN CONNECTION WITH THE BUSINESS COMBINATION DESCRIBED HEREIN)

The board of directors of Power & Digital Infrastructure Acquisition II Corp. (“we,” “us,” “our,” or “XPDB”) has unanimously approved that certain Agreement and Plan of Merger, dated as of June 5, 2023 (as it may be amended, supplemented or otherwise modified from time to time in accordance with its terms, the “Merger Agreement”), by and among XPDB, XPDB Merger Sub, LLC, a Delaware limited liability company and wholly owned subsidiary of XPDB (“Merger Sub”), and Montana Technologies LLC, a Delaware limited liability company (“Montana”), pursuant to which, and subject to the terms and conditions set forth in the Merger Agreement, Merger Sub will merge with and into Montana (the “Merger” and, together with the other transactions contemplated by the Merger Agreement, the “Business Combination”), with Montana surviving the Merger as a wholly owned subsidiary of XPDB. As described herein, at the special meeting of stockholders, our stockholders will be asked to consider and vote upon a proposal to approve the Business Combination and adopt the Merger Agreement. Our stockholders will also be asked to consider and vote on other proposals relating to the Business Combination, each of which is more fully described herein.

As part of the Business Combination, Montana Equityholders (as defined herein) will receive aggregate consideration of approximately $421.9 million (the “Purchase Price”), which amount will be adjusted as set forth in the Merger Agreement (including upon the receipt of proceeds from any financing transactions consummated by Montana prior to the closing of the Merger (the “Closing”), including, if consummated, the Subscription (as defined below) (the Purchase Price, as so adjusted, the “Merger Consideration”). After giving effect to the conversion of all outstanding Montana Preferred Units (as defined herein) into Montana Class B Common Units (as defined herein), which will occur prior to the effective time of the Merger, the Merger Consideration will be payable (i) in the case of holders of Montana Class B Common Units and Montana Class C Common Units (each as defined herein), in the form of newly issued shares of Class A common stock, par value $0.0001 per share, of the Post-Combination Company (as defined herein) (the “Class A Common Stock”), with a $10.00 value ascribed to each such share and which will entitle the holder thereof to one vote per share on all matters submitted to a vote of the holders of Class A Common Stock, whether voting separately as a class or otherwise, (ii) in the case of holders of Montana Class A Common Units (as defined herein), in the form of newly issued shares of Class B common stock, par value $0.0001 per share, of the Post-Combination Company (the “Class B Common Stock”), with a $10.00 value ascribed to each such share and which will entitle the holder thereof to a number of votes per share such that the Montana Equityholders as of immediately prior to the Closing will, immediately following the Closing, collectively own shares representing at least 80% of the voting power of all classes of capital stock of the Post-Combination Company entitled to vote on matters submitted to a vote of the stockholders of the Post-Combination Company, and (iii) in the case of holders of Montana Options and Montana Warrants (each as defined herein), in the form of options and warrants of the Post-Combination Company, respectively, which will have substantially similar terms to the corresponding Montana Options and Montana Warrants, including with respect to vesting and termination-related provisions.

On January 7, 2024, Montana entered into a common unit subscription agreement (the “Common Unit Subscription Agreement”) with Carrier Corporation (the “Carrier Subscriber”), an affiliate of Carrier Global Corporation (together with its subsidiaries and affiliates, “Carrier”), pursuant to which the Carrier Subscriber agreed to purchase from Montana, and Montana agreed to issue and sell to the Carrier Subscriber, a number of Montana Class B Common Units (the “Subscribed Units”) that will convert into 1,176,471 shares of Class A Common Stock

 

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(the “Private Placement Conversion Shares”) upon the Closing for an aggregate purchase price of approximately $10.0 million (the “Subscriber Purchase Price” and such transaction, the “Subscription”). Unless otherwise waived by the Carrier Subscriber, the Carrier Subscriber’s obligation to effect the Subscription is subject to the Aggregate Available Capital (as defined herein) being equal to or greater than $50.0 million prior to, or at, the closing of the Subscription.

Montana Equityholders (other than holders of Montana Warrants) (the “Eligible Equityholders”) will also have the opportunity to receive additional equity consideration (in each case, in accordance with their respective pro rata share) in the form of shares of Class A Common Stock, with a $10.00 value ascribed to each share (the “Earnout Shares”), only upon full completion of construction and operational viability (including all permitting, regulatory approvals and necessary or useful inspections) of new production capacity of Montana’s key components or assemblies based solely on demand from bona fide customer commitments evidenced by binding contracts (or in the discretion of a majority of the independent members of the board of directors of the Post-Combination Company (the “Post-Combination Company Board”), a non-binding letter of intent or indication of interest or similar writing that is substantially likely to become a binding contract) with a known price or pricing formula that exceeds a level of production capacity that is expected to generate Annualized EBITDA (as defined herein) of more than $150,000,000 (the “Threshold Annualized EBITDA”), which shall be determined by a majority of the independent members of the Post-Combination Company Board in their sole discretion, equal to (i) the ratio of (x) (1) the Annualized EBITDA that is expected from such new production capacity (the “Expected Annualized EBITDA”) less (2) (A) the Threshold Annualized EBITDA plus (B) all previously Expected Annualized EBITDA amounts associated with previous new production capacities for which previous earnouts were achieved, divided by (y) $150,000,000 multiplied by (ii) $200,000,000, provided that the aggregate Expected Annualized EBITDA shall not exceed $300,000,000.

The maximum value of the Earnout Shares will be capped at $200 million and the ability to receive Earnout Shares will expire on the fifth anniversary of the Closing. A majority of the independent members of the Post-Combination Company Board then serving will have sole discretion in determining, among other things, the achievement of the applicable milestones, the calculations of payments of Earnout Shares to the applicable 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 Montana Equityholder’s right to receive Earnout Shares. Earnout Shares issuable in respect of Montana Options outstanding as of immediately prior to the effective time of the Merger may be issued to the holder of such 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.

As of the date of the Merger Agreement, 100.0% of the total outstanding Montana Class A Common Units and 72.7% of the total outstanding Montana Class B Common Units (or an aggregate of approximately 76.6% of the total outstanding Montana Class A Units and Montana Class B Units in the aggregate) were held by unitholders that are expected to continue as directors, officers or employees of the Post-Combination Company. The retention of certain holders of Montana Options who will continue as directors, officers or employees of the Post-Combination Company (whose responsibilities are expected to include continued technology development and commercial execution) is integral to the achievement of the milestones that will determine whether Earnout Shares are payable. Montana does not believe that such targets are achievable absent the continued involvement of such persons. The Post-Closing Company is expected to provide competitive compensation, benefits and equity awards (pursuant to the terms of the Incentive Plan (as defined herein)) to these individuals following the Merger in order to incentivize these individuals to continue to provide services to the Post-Combination Company.

The XPDB Class A common stock, units and XPDB public warrants are currently listed on The Nasdaq Capital Market LLC (the “Nasdaq”) under the symbols “XPDB,” “XPDBU” and “XPDBW,” respectively. Upon consummation of the Business Combination, the Post-Combination Company will be renamed “Montana Technologies Corporation” and the Class A Common Stock and public Warrants of the Post-Combination Company are expected to be listed on the Nasdaq under the symbols “AIRJ” and “AIRJW,” respectively. The Post-Combination Company will not have units traded, and the XPDB units will be delisted and deregistered following the Closing.

 

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This proxy statement/prospectus provides you with detailed information about the Business Combination. It also contains or references information about XPDB and Montana and certain related matters. You are encouraged to read this proxy statement/prospectus carefully. In particular, you should read the “Risk Factors” section beginning on page 21 for a discussion of the risks you should consider in evaluating the Business Combination and how it will affect you.

If you have any questions regarding this proxy statement/prospectus, you may contact Morrow Sodali LLC, XPDB’s proxy solicitor, toll free at (800) 662-5200.

Neither the Securities and Exchange Commission (the “SEC”) nor any state securities commission has approved or disapproved of the Business Combination, the issuance of shares of the Post-Combination Company common stock in connection with the Business Combination or the other transactions described in this proxy statement/prospectus, or passed upon the adequacy or accuracy of the disclosure in this proxy statement/prospectus. Any representation to the contrary is a criminal offense.

This proxy statement/prospectus is dated January 17, 2024, and is first being mailed to stockholders of XPDB on or about January 17, 2024.

 

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Power & Digital Infrastructure Acquisition II Corp.
321 North Clark Street, Suite 2440
Chicago, IL 60654

Dear XPDB Stockholder:

On June 5, 2023, Power & Digital Infrastructure Acquisition II Corp., a Delaware corporation (“XPDB”), and XPDB Merger Sub, LLC, a Delaware limited liability company and wholly owned subsidiary of XPDB (“Merger Sub”), entered into an Agreement and Plan of Merger (as it may be amended, supplemented or otherwise modified from time to time in accordance with its terms, the “Merger Agreement”) with Montana Technologies LLC, a Delaware limited liability company (“Montana”), pursuant to which, and subject to the terms and conditions set forth in the Merger Agreement, Merger Sub will merge with and into Montana (the “Merger” and, together with the other transactions contemplated by the Merger Agreement, the “Business Combination”), with Montana surviving the Merger as a wholly owned subsidiary of XPDB. Consummation of the Business Combination is subject to the adoption of the Merger Agreement and approval of the Business Combination by XPDB’s stockholders.

As part of the Business Combination, Montana Equityholders (as defined in the accompanying proxy statement/prospectus) will receive aggregate consideration of approximately $421.9 million (the “Purchase Price”), which amount will be (i) adjusted down at the closing of the Business Combination (the “Closing”) by the Dilution Factor (as defined in the accompanying proxy statement/prospectus), if positive only, and (ii) adjusted up at Closing by the implied value of any equity interests (or securities convertible, exchangeable or exercisable therefor) issued by Montana in the Capital Raise (including, if consummated, the Subscription) (as defined in the accompanying proxy statement/prospectus) assuming a $10.00 per share value (the Purchase Price, as so adjusted, the “Merger Consideration”). The “Dilution Factor” is equal to (i) the implied value of the equity interests (or securities convertible, exchangeable or exercisable therefor) issued by Montana in the Capital Raise assuming a $10.00 per share value minus (ii) the amount of the gross cash proceeds actually received by Montana from the Capital Raise. After giving effect to the conversion of all outstanding Montana Preferred Units (as defined in the accompanying proxy statement/prospectus) into Montana Class B Common Units (as defined in the accompanying proxy statement/prospectus), which will occur prior to the effective time of the Merger, the Merger Consideration will be payable (i) in the case of holders of Montana Class B Common Units and Montana Class C Common Units (each as defined in the accompanying proxy statement/prospectus), in the form of newly issued shares of Class A common stock, par value $0.0001 per share, of the Post-Combination Company (as defined in the accompanying proxy statement/prospectus) (the “Class A Common Stock”), with a $10.00 value ascribed to each such share and which will entitle the holder thereof to one vote per share on all matters submitted to a vote of the holders of Class A Common Stock, whether voting separately as a class or otherwise, (ii) in the case of holders of Montana Class A Common Units (as defined in the accompanying proxy statement/prospectus), in the form of newly issued shares of Class B common stock, par value $0.0001 per share, of the Post-Combination Company (the “Class B Common Stock”), with a $10.00 value ascribed to each such share and which will entitle the holder thereof to a number of votes per share such that the Montana Equityholders as of immediately prior to the Closing will, immediately following the Closing, collectively own shares representing at least 80% of the voting power of all classes of capital stock of the Post-Combination Company entitled to vote on matters submitted to a vote of the stockholders of the Post-Combination Company, and (iii) in the case of holders of Montana Options and Montana Warrants (each as defined in the accompanying proxy statement/prospectus), in the form of options and warrants of the Post-Combination Company, respectively, having substantially similar terms to the corresponding Montana Options and Montana Warrants, in each case as described in the accompanying proxy statement/prospectus.

Montana Equityholders (other than holders of Montana Warrants) (the “Eligible Equityholders”) will also have the opportunity to receive additional equity consideration (in each case, in accordance with their respective pro rata share) in the form of shares of Class A Common Stock, with a $10.00 value ascribed to each share (the “Earnout Shares”), only upon full completion of construction and operational viability (including all permitting, regulatory approvals and necessary or useful inspections) of new production capacity of Montana’s key components or assemblies based solely on demand from bona fide customer commitments evidenced by binding contracts (or in the discretion of a majority of the independent members of the board of directors of the Post-Combination Company (the “Post-Combination Company Board”), a non-binding letter of intent or indication of interest or similar writing that is substantially likely to become a binding contract) with a known price or pricing formula that exceeds a level of production capacity that is expected to generate Annualized EBITDA (as defined in the accompanying proxy statement/prospectus) of more than $150,000,000 (the “Threshold Annualized EBITDA”), which shall be determined by a majority of the independent members of the Post-Combination Company Board in its sole discretion, equal to (i) the ratio of (x) (1) the Annualized EBITDA that is

 

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expected from such new production capacity (the “Expected Annualized EBITDA”) less (2) (A) the Threshold Annualized EBITDA plus (B) all previously Expected Annualized EBITDA amounts associated with previous new production capacities for which previous earnouts were achieved, divided by (y) $150,000,000 multiplied by (ii) $200,000,000, provided that the aggregate Expected Annualized EBITDA shall not exceed $300,000,000.

The maximum value of the Earnout Shares will be capped at $200 million and the ability to receive Earnout Shares will expire on the fifth anniversary of the Closing. A majority of the independent members of the Post-Combination Company Board then serving will have sole discretion in determining, among other things, the achievement of the applicable milestones, the calculations of payments of Earnout Shares to the applicable 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 Montana Equityholder’s right to receive Earnout Shares. Earnout Shares issuable in respect of Montana Options outstanding as of immediately prior to the effective time of the Merger may be issued to the holder of such Montana Option only if such holder continues to provide services (whether as an employee, direct 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.

As of the date of the Merger Agreement, 100.0% of the total outstanding Montana Class A Common Units and 72.7% of the total outstanding Montana Class B Common Units (or an aggregate of approximately 76.6% of the total outstanding Montana Class A Units and Montana Class B Units in the aggregate) were held by unitholders that are expected to continue as directors, officers or employees of the Post-Combination Company. The retention of certain holders of Montana Options who will continue as directors, officers or employees of the Post-Combination Company (whose responsibilities are expected to include continued technology development and commercial execution) is integral to the achievement of the milestones that will determine whether Earnout Shares are payable. Montana does not believe that such targets are achievable absent the continued involvement of such persons. The Post-Closing Company is expected to provide competitive compensation, benefits and equity awards (pursuant to the terms of the Incentive Plan (as defined in the accompanying proxy statement/prospectus)) to these individuals following the Merger in order to incentivize these individuals to continue to provide services to the Post-Combination Company.

Upon consummation of the Business Combination, certain shares of Class A Common Stock owned by the Sponsor (as defined in the accompanying proxy statement/prospectus) following the conversion of the Founder Shares (as defined in the accompanying proxy statement/prospectus) will be subject to (i) certain lock-up restrictions and (ii) certain time and performance-based vesting provisions, as described in the accompanying proxy statement/prospectus.

Prior to Closing, Montana will use its commercially reasonable efforts to enter into subscription agreements (each, a “Subscription Agreement” and collectively, the “Subscription Agreements”) with certain investors (the “Subscribers”) pursuant to which Montana will agree to issue equity interests (or securities convertible, exchangeable or exercisable therefor) in Montana (the “Capital Raise”), in exchange for an agreed upon purchase price.

On January 7, 2024, as part of the Capital Raise, Montana entered into a common unit subscription agreement (the “Common Unit Subscription Agreement”) with Carrier Corporation (the “Carrier Subscriber”), an affiliate of Carrier Global Corporation (together with its subsidiaries and affiliates, “Carrier”), pursuant to which the Carrier Subscriber agreed to purchase from Montana, and Montana agreed to issue and sell to the Carrier Subscriber, a number of Montana Class B Common Units (the “Subscribed Units”) that will convert into 1,176,471 shares of Class A Common Stock (the “Private Placement Conversion Shares”) upon the Closing for an aggregate purchase price of approximately $10.0 million (the “Subscriber Purchase Price” and such transaction, the “Subscription”). Unless otherwise waived by the Carrier Subscriber, the Carrier Subscriber’s obligation to effect the Subscription is subject to the Aggregate Available Capital (as defined in the accompanying proxy statement/prospectus) being equal to or greater than $50.0 million prior to, or at, the closing of the Subscription.

Based on the number of Montana Common Units and Montana Preferred Units outstanding and the number of Montana Common Units issuable upon the net exercise of Montana Options and Montana Warrants (each as defined in the accompanying proxy statement/prospectus) as of February 8, 2024 (the “Record Date”), and assuming that Montana does not issue any equity interests (or securities convertible, exchangeable or exercisable therefor) in the Capital Raise prior to Closing, (i) the estimated number of shares of Common Stock issuable for each Montana Common Unit is expected to be approximately 24.1, (ii) the total number of shares of Class A Common Stock expected to be issued to Montana Equityholders in connection with the Closing is expected to be approximately 33.1 million

 

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(approximately 37.4 million on a fully diluted basis under certain assumptions described in the accompanying proxy statement/prospectus), and (iii) the total number of shares of Class B Common Stock expected to be issued to certain Montana Equityholders in connection with the Closing is approximately 4.8 million. Based on the assumption that no shares of XPDB Class A Common Stock are validly redeemed and the other assumptions described in the accompanying proxy statement/prospectus, (i) holders of XPDB Class A Common Stock and XPDB Class B Common Stock (each as defined in the accompanying proxy statement/prospectus) as of immediately prior to the closing are expected to hold (excluding shares underlying XPDB public warrants, Private Placement Warrants, Montana Options and Montana Warrants) (x) approximately 19.0% and 12.9% of the total outstanding common stock of the Post-Combination Company, respectively, and (y) approximately 11.9% and 8.1% of the voting power of the Post-Combination Company, respectively, (ii) holders of Montana Common Units as of immediately prior to the Closing are expected to hold, in the aggregate, approximately 65.1% of the Class A Common Stock and 100% of the Class B Common Stock immediately following the Closing, representing 68.1% and 80.0% of the total outstanding common stock and voting power of the Post-Combination Company, respectively, and (iii) Montana Equityholders (including holders of outstanding Montana Options and Montana Warrants) are expected to hold, in the aggregate and on a fully diluted basis, approximately 67.7% of the Class A Common Stock and 100% of the Class B Common Stock. Based on the Assuming Maximum Contractual Redemptions Scenario (as defined in the accompanying proxy statement/prospectus) and the other assumptions described in the accompanying proxy statement/prospectus, (i) holders of XPDB Class A Common Stock and XPDB Class B Common Stock are expected to hold (excluding shares underlying XPDB public warrants, Private Placement Warrants, Montana Options and Montana Warrants) (x) approximately 14.9% and 13.6% of the total outstanding common stock of the Post-Combination Company, respectively, and (y) approximately 10.5% and 9.5% of the voting power of the Post-Combination Company, respectively, (ii) holders of Montana Common Units as of immediately prior to the Closing are expected to hold, in the aggregate, approximately 68.7% of the Class A Common Stock and 100% of the Class B Common Stock immediately following the Closing, representing 71.5% and 80.0% of the total outstanding common stock and voting power of the Post-Combination Company, respectively, and (iii) Montana Equityholders (including holders of outstanding Montana Options and Montana Warrants) are expected to hold, in the aggregate and on a fully diluted basis, approximately 71.2% of the Class A Common Stock and 100% of the Class B Common Stock.

XPDB units, XPDB Class A Common Stock and XPDB public warrants are currently publicly traded on The Nasdaq Capital Market LLC (the “Nasdaq”) under the symbols “XPDB,” “XPDBU” and “XPDBW,” respectively. Upon consummation of the Business Combination, the Post-Combination Company will be renamed “Montana Technologies Corporation” and the Class A Common Stock and public Warrants of the Post-Combination Company are expected to be listed on the Nasdaq under the symbols “AIRJ” and “AIRJW”, respectively, upon the Closing. The Post-Combination Company will not have units traded, and the XPDB units will be delisted and deregistered following the Closing.

See the section entitled “The Business Combination” of the accompanying proxy statement/prospectus for further information on the consideration being paid to the Montana Equityholders in the Business Combination.

XPDB will hold a special meeting of stockholders (the “Special Meeting”) to consider matters relating to the proposed Business Combination. XPDB and Montana cannot complete the Business Combination unless XPDB’s stockholders approve the Merger Agreement and the transactions contemplated thereby, including the issuance of Class A Common Stock and Class B Common Stock to be issued as the Merger Consideration and the Earnout Shares. XPDB is sending you the accompanying proxy statement/prospectus to ask you to vote in favor of these and the other matters described in such proxy statement/prospectus.

The Special Meeting will be held at 8:00 a.m., Central Time, on March 8, 2024, in virtual format.

YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF UNITS OR SHARES OF COMMON STOCK YOU OWN. To ensure your representation at the Special Meeting, please complete and return the enclosed proxy card or submit your proxy by following the instructions contained in the accompanying proxy statement/prospectus and on your proxy card. Please submit your proxy promptly whether or not you expect to attend the meeting. Submitting a proxy now will NOT prevent you from being able to vote in person (which would include presence at a virtual meeting) at the meeting. If you hold your shares in “street name”, you should instruct your broker, bank or other nominee how to vote in accordance with the voting instruction form you receive from your broker, bank or other nominee.

 

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The XPDB board of directors has unanimously approved the Merger Agreement and the transactions contemplated thereby and recommends that XPDB stockholders vote “FOR” the approval of the Merger Agreement, “FOR” the issuance of Class A Common Stock and Class B Common Stock to be issued as the Merger Consideration and the Earnout Shares and “FOR” the other matters to be considered at the Special Meeting.

The accompanying proxy statement/prospectus provides you with detailed information about the proposed Business Combination. It also contains or references information about XPDB and Montana and certain related matters. You are encouraged to read the accompanying proxy statement/prospectus carefully. In particular, you should read the “Risk Factors” section for a discussion of the risks you should consider in evaluating the proposed Business Combination and how it will affect you.

IF YOU RETURN YOUR SIGNED PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS. TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST DEMAND IN WRITING THAT YOUR PUBLIC SHARES BE REDEEMED FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST ACCOUNT AND TENDER YOUR SHARES TO XPDB’S TRANSFER AGENT AT LEAST TWO (2) BUSINESS DAYS PRIOR TO THE VOTE AT THE SPECIAL MEETING. IN ORDER TO EXERCISE YOUR REDEMPTION RIGHT, YOU NEED TO IDENTIFY YOURSELF AS A BENEFICIAL HOLDER AND PROVIDE YOUR LEGAL NAME, PHONE NUMBER AND ADDRESS IN YOUR WRITTEN DEMAND. YOU MAY TENDER YOUR SHARES FOR REDEMPTION BY EITHER DELIVERING YOUR SHARE CERTIFICATES (IF ANY) AND OTHER REDEMPTION FORMS TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DEPOSIT/WITHDRAWAL AT CUSTODIAN (DWAC) SYSTEM. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN ANY TENDERED SHARES WILL NOT BE REDEEMED FOR CASH AND WILL BE RETURNED TO THE APPLICABLE STOCKHOLDER. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS. SEE “XPDB’S SPECIAL MEETING OF STOCKHOLDERS — REDEMPTION RIGHTS” FOR MORE SPECIFIC INSTRUCTIONS.

If you have any questions regarding the accompanying proxy statement/prospectus, you may contact Morrow Sodali LLC, XPDB’s proxy solicitor, toll free at (800) 662-5200.

 

Sincerely,

   

/s/ Patrick C. Eilers

   

Patrick C. Eilers

   

Chief Executive Officer and Director

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the Business Combination, the issuance of shares of Class A Common Stock in connection with the Business Combination or the other transactions described in the accompanying proxy statement/prospectus, or passed upon the adequacy or accuracy of the disclosure in the accompanying proxy statement/prospectus. Any representation to the contrary is a criminal offense.

The accompanying proxy statement/prospectus is dated January 17, 2024 and is first being mailed to stockholders of XPDB on or about January 17, 2024.

 

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POWER & DIGITAL INFRASTRUCTURE ACQUISITION II CORP.
321 North Clark Street, Suite 2440
Chicago, Illinois 60654

NOTICE OF
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 8, 2024

TO THE STOCKHOLDERS OF POWER & DIGITAL INFRASTRUCTURE ACQUISITION II CORP.:

NOTICE IS HEREBY GIVEN that a special meeting of stockholders of Power & Digital Infrastructure Acquisition II Corp., a Delaware corporation (“XPDB”), will be held at 8:00 a.m. Central Time, on March 8, 2024, in virtual format (the “Special Meeting”). You are cordially invited to attend the Special Meeting, which will be held for the following purposes:

(1)    The Business Combination Proposal — To consider and vote upon a proposal to approve the Agreement and Plan of Merger, dated as of June 5, 2023 (as it may be amended, supplemented or otherwise modified from time to time in accordance with its terms, the “Merger Agreement”), by and among XPDB, XPDB Merger Sub, LLC, a Delaware limited liability company and wholly owned subsidiary of XPDB (“Merger Sub”), and Montana Technologies LLC, a Delaware limited liability company (“Montana”), and the transactions contemplated thereby, pursuant to which, among other things, Merger Sub will merge with and into Montana, with Montana surviving the Merger as a wholly owned subsidiary of XPDB (the “Merger” and, together with the other transactions contemplated by the Merger Agreement, the “Business Combination” and such proposal, the “Business Combination Proposal”). A copy of the Merger Agreement is attached to the accompanying proxy statement/prospectus as Annex A.

(2)    The Charter Proposal — To consider and vote upon a proposal to adopt the Second Amended and Restated Certificate of Incorporation of the Post-Combination Company (the “Proposed Charter”) in the form attached to the accompanying proxy statement/prospectus as Annex B (the “Charter Proposal”);

(3)    The Governance Proposal — To consider and act upon, on a non-binding advisory basis, a separate proposal with respect to certain governance provisions in the Proposed Charter in accordance with United States Securities and Exchange Commission requirements (the “Governance Proposal”);

(4)    The Director Election Proposal — To consider and vote upon a proposal to elect six directors to serve on the board of directors of the Post-Combination Company (the “Post-Combination Company Board”) until the 2024 annual meeting of stockholders, in the case of Class I directors, the 2025 annual meeting of stockholders, in the case of Class II directors, and the 2026 annual meeting of stockholders, in the case of Class III directors, and, in each case, until their respective successors are duly elected and qualified (the “Director Election Proposal”);

(5)    The Nasdaq Proposal — To consider and vote upon a proposal to approve, for purposes of complying with applicable listing rules of Nasdaq, the issuance of shares of Class A Common Stock and Class B Common Stock to Montana Equityholders pursuant to the Merger Agreement (the “Nasdaq Proposal”).

(6)    The Incentive Plan Proposal — To consider and vote upon a proposal to approve and adopt the Incentive Plan (as defined in the accompanying proxy statement/prospectus), in the form attached to the accompanying proxy statement/prospectus as Annex E (the “Incentive Plan Proposal”);

(7)     The Employee Stock Purchase Plan Proposal — To consider and vote upon a proposal to approve and adopt the ESPP (as defined in the accompanying proxy statement/prospectus), in the form attached to the accompanying proxy statement/prospectus as Annex F (the “Employee Stock Purchase Plan Proposal”); and

(8)    The Adjournment Proposal — To consider and vote upon a proposal (the “Adjournment Proposal” and, each of the Business Combination Proposal, the Charter Proposal, the Governance Proposal, the Nasdaq Proposal, the Director Election Proposal, the Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal and the Adjournment Proposal, a “Proposal” and collectively, the “Proposals”) to approve the adjournment of the Special Meeting to a later date or dates, if necessary, to permit further solicitation

 

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and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal, the Charter Proposal, the Director Election Proposal, the Nasdaq Proposal, the Incentive Plan Proposal or the Employee Stock Purchase Plan Proposal.

These items of business are described in the accompanying proxy statement/prospectus, which we encourage you to read in its entirety before voting. Only holders of record of XPDB Class A Common Stock and XPDB Class B Common Stock (collectively, “XPDB Common Stock”) at the close of business on February 8, 2024 (the “Record Date”) are entitled to notice of the Special Meeting and to vote and have their votes counted at the Special Meeting and any adjournments or postponements of the Special Meeting.

Pursuant to XPDB’s Amended and Restated Certificate of Incorporation (the “Existing Charter”), XPDB will provide holders of XPDB Class A Common Stock included as part of the units sold in the XPDB IPO (as defined in the accompanying proxy statement/prospectus) (such shares, the “Public Shares”) with the opportunity to redeem their Public Shares for cash equal to their pro rata share of the aggregate amount on deposit in the trust account established in connection with the XPDB IPO (the “Trust Account”), as of two business days prior to the consummation of the Business Combination (including interest earned on the funds held in the Trust Account and not previously released to XPDB to pay its taxes). For illustrative purposes, based on funds in the Trust Account of approximately $114,807,097 on January 12, 2024, the estimated per Public Share redemption price would have been approximately $10.82, excluding additional interest earned on the funds held in the Trust Account and not previously released to XPDB to pay taxes. Holders of Public Shares (the “XPDB Public Stockholders”) may elect to redeem their shares even if they vote for the Business Combination Proposal. An XPDB Public Stockholder, together with any affiliate of such holder or any other person with whom such holder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended), will be restricted from seeking redemption rights with respect to more than 15% of the Public Shares without the consent of XPDB. Accordingly, all Public Shares in excess of 15% held by an XPDB Public Stockholder, together with any affiliate of such holder or any other person with whom such holder is acting in concert or as a “group,” will not be redeemed for cash without the consent of XPDB. XPDI Sponsor II LLC, a Delaware limited liability company (the “Sponsor”), and XPDB’s directors and officers have agreed to waive their redemption rights in connection with the consummation of the Business Combination with respect to any shares of XPDB Common Stock they may hold (which waiver was provided in connection with the XPDB IPO and without any separate consideration paid in connection with providing such waiver). As of the Record Date, the Initial Stockholders (as defined in the accompanying proxy statement/prospectus) are expected to own approximately 40% of all outstanding XPDB Common Stock, consisting of the Founder Shares (as defined in the accompanying proxy statement/prospectus). Founder Shares will be excluded from the pro rata calculation used to determine the per-share redemption price. The Sponsor and certain of XPDB’s directors have agreed to vote any shares of XPDB Common Stock owned by them in favor of each of the Proposals presented at the Special Meeting.

After careful consideration, XPDB’s board of directors (the “XPDB Board”) has determined that the Business Combination Proposal, the Charter Proposal, the Governance Proposal, the Director Election Proposal, the Nasdaq Proposal, the Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal and the Adjournment Proposal are in the best interests of XPDB and its stockholders and unanimously recommends that you vote or give instruction to vote “FOR” the Business Combination Proposal, “FOR” the Charter Proposal, “FOR” the Governance Proposal, “FOR” the Director Election Proposal, “FOR” the Nasdaq Proposal, “FOR” the Incentive Plan Proposal, “FOR” the Employee Stock Purchase Plan Proposal and “FOR” the Adjournment Proposal, if presented.

The approval of each of the Business Combination Proposal, the Governance Proposal, the Nasdaq Proposal, the Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal and the Adjournment Proposal, if presented, requires the affirmative vote (in person or by proxy) of the holders of a majority of the shares of XPDB Common Stock entitled to vote and actually cast thereon at the Special Meeting, voting as a single class. The approval of the Charter Proposal requires the affirmative vote (in person or by proxy) of (i) the holders of a majority of the shares of XPDB Class B Common Stock then outstanding, voting separately as a single class, and (ii) the holders of a majority of the shares of XPDB Common Stock entitled to vote, voting as a single class. The approval of the Director Election Proposal requires the affirmative vote (in person or by proxy) of the holders of a plurality of the outstanding shares of XPDB Common Stock entitled to vote and actually cast thereon at the Special Meeting, voting as a single class.

 

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Consummation of the Business Combination is conditioned on the approval of the Business Combination Proposal, the Charter Proposal, the Director Election Proposal, the Nasdaq Proposal, the Incentive Plan Proposal and the Employee Stock Purchase Plan Proposal at the Special Meeting, subject to the terms of the Merger Agreement. The Business Combination is not conditioned on stockholders of XPDB approving the Governance Proposal or the Adjournment Proposal. If the Business Combination Proposal is not approved, the other proposals (except the Adjournment Proposal) will not be presented to the stockholders for a vote. The Adjournment Proposal is not conditioned upon the approval of any other proposal set forth in the accompanying proxy statement/prospectus. The proxy statement/prospectus accompanying this notice explains the Merger Agreement and the transactions contemplated thereby, as well as the Proposals to be considered at the Special Meeting. Please review the accompanying proxy statement/prospectus carefully.

All XPDB stockholders are cordially invited to attend the Special Meeting in virtual format. XPDB stockholders may attend, vote and examine the list of XPDB stockholders entitled to vote at the Special Meeting by visiting https://www.cstproxy.com/xpdispacii/2024 and entering the control number found on their proxy card, voting instruction form or notice included in their proxy materials. The Special Meeting will be held in virtual meeting format only. You will not be able to attend the Special Meeting physically. To ensure your representation at the Special Meeting, you are urged to complete, sign, date and return the enclosed proxy card as soon as possible. If your shares are held in an account at a brokerage firm or bank, you must instruct your broker or bank on how to vote your shares.

Your vote is important regardless of the number of shares you own. Whether you plan to attend the Special Meeting or not, please sign, date and return the enclosed proxy card as soon as possible in the envelope provided. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted.

If you have any questions or need assistance voting your shares, please call our proxy solicitor, Morrow Sodali LLC, XPDB’s proxy solicitor, toll free at (800) 662-5200.

Thank you for your participation. We look forward to your continued support.

 

By Order of the Board of Directors

   

/s/ Theodore J. Brombach

   

Theodore J. Brombach

   

Chairman of the Board of Directors

January 17, 2024

   

IF YOU RETURN YOUR SIGNED PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS. TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST DEMAND IN WRITING THAT YOUR PUBLIC SHARES BE REDEEMED FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST ACCOUNT AND TENDER YOUR SHARES TO XPDB’S TRANSFER AGENT AT LEAST TWO (2) BUSINESS DAYS PRIOR TO THE VOTE AT THE SPECIAL MEETING. IN ORDER TO EXERCISE YOUR REDEMPTION RIGHT, YOU NEED TO IDENTIFY YOURSELF AS A BENEFICIAL HOLDER AND PROVIDE YOUR LEGAL NAME, PHONE NUMBER AND ADDRESS IN YOUR WRITTEN DEMAND. YOU MAY TENDER YOUR SHARES FOR REDEMPTION BY EITHER DELIVERING YOUR SHARE CERTIFICATES (IF ANY) AND OTHER REDEMPTION FORMS TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DEPOSIT/WITHDRAWAL AT CUSTODIAN (DWAC) SYSTEM. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN ANY TENDERED SHARES WILL NOT BE REDEEMED FOR CASH AND WILL BE RETURNED TO THE APPLICABLE STOCKHOLDER. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS. SEE “XPDB’S SPECIAL MEETING OF STOCKHOLDERS — REDEMPTION RIGHTS” FOR MORE SPECIFIC INSTRUCTIONS.

 

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TABLE OF CONTENTS

 

Page

BASIS OF PRESENTATION AND GLOSSARY

 

iii

TRADEMARKS, TRADE NAMES AND SERVICE MARKS

 

x

QUESTIONS AND ANSWERS

 

xi

SUMMARY

 

1

SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

13

COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE FINANCIAL INFORMATION

 

15

MARKET PRICE AND DIVIDEND INFORMATION

 

17

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

18

RISK FACTORS

 

21

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

 

57

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

69

XPDB’S SPECIAL MEETING OF STOCKHOLDERS

 

72

PROPOSAL NO. 1 — THE BUSINESS COMBINATION PROPOSAL

 

80

PROPOSAL NO. 2 — THE CHARTER PROPOSAL

 

81

PROPOSAL NO. 3 — THE GOVERNANCE PROPOSAL

 

85

PROPOSAL NO. 4 — THE DIRECTOR ELECTION PROPOSAL

 

87

PROPOSAL NO. 5 — THE NASDAQ PROPOSAL

 

89

PROPOSAL NO. 6 — THE INCENTIVE PLAN PROPOSAL

 

91

PROPOSAL NO. 7 — THE EMPLOYEE STOCK PURCHASE PLAN PROPOSAL

 

96

PROPOSAL NO. 8 — THE ADJOURNMENT PROPOSAL

 

101

INFORMATION ABOUT XPDB

 

102

SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF XPDB

 

109

MANAGEMENT OF XPDB

 

110

XPDB MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

117

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF XPDB AND THE POST-COMBINATION COMPANY

 

125

INFORMATION ABOUT MONTANA

 

128

SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF MONTANA

 

141

MONTANA MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

142

MANAGEMENT OF THE POST-COMBINATION COMPANY FOLLOWING THE BUSINESS COMBINATION

 

150

EXECUTIVE AND DIRECTOR COMPENSATION

 

155

THE BUSINESS COMBINATION

 

158

REGULATORY APPROVALS REQUIRED FOR THE BUSINESS COMBINATION

 

174

ANTICIPATED ACCOUNTING TREATMENT

 

175

PUBLIC TRADING MARKETS

 

176

THE MERGER AGREEMENT

 

177

OTHER AGREEMENTS

 

187

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

 

189

COMPARISON OF STOCKHOLDERS’ RIGHTS

 

195

DESCRIPTION OF SECURITIES OF THE POST-COMBINATION COMPANY

 

203

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

 

211

EXPERTS

 

215

LEGAL MATTERS

 

215

OTHER MATTERS

 

215

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BASIS OF PRESENTATION AND GLOSSARY

As used in this proxy statement/prospectus, unless otherwise noted or the context otherwise requires, references to:

$12.00 Vesting Time” are to the time when the 690,368 Subject Vesting Shares beneficially owned by the Sponsor vest in full at such time that the volume weighted average price of Class A Common Stock on the Nasdaq as reported by Bloomberg L.P. equals or exceeds $12.00 per share (as adjusted for extraordinary transactions, stock splits, extraordinary stock dividends, reorganizations, recapitalizations and the like) for 20 trading days within any 30 consecutive trading day period during the Vesting Period.

Aggregate Available Capital” are to an amount equal to the sum of (without duplication): (i) the aggregate cash available to Montana, its subsidiaries and its controlled joint ventures (the “Controlled Joint Ventures”); plus (ii) the aggregate amount of all irrevocable and unconditional binding commitments (other than those conditions that by their terms will be satisfied concurrently with the closing of the Subscription) (1) by one or more persons (other than Montana or its subsidiaries) to provide funding or make capital contributions to any Controlled Joint Venture and (2) by one or more persons (other than Montana or any of its subsidiaries or Controlled Joint Ventures) for financing of facilities or equipment of Montana, its subsidiaries or Controlled Joint Ventures; plus (iii) the Subscriber Purchase Price; plus (iv) the aggregate cash actually received by Montana or XPDB following January 7, 2024 and concurrently with or prior to the closing of the Subscription, and the aggregate cash to be received by Montana or XPDB pursuant to irrevocable and unconditional binding commitments (other than those conditions that by their terms will be satisfied concurrently with the Closing, each of which is (as of the time of the closing of the Subscription) otherwise capable of being satisfied at the Closing in all other respects), after the date of the closing of the Subscription but concurrently with or prior to the Closing, in each case, in connection with the issuance and sale by Montana or XPDB of equity interests of Montana or XPDB (including, for the avoidance of doubt, any share, share capital, capital stock, partnership, membership, or similar interest in Montana and any option, warrant, right or security (including debt securities) convertible, exchangeable or exercisable therefor); provided that the aggregate cash received by XPDB described in this clause (iv) will only be included as Aggregate Available Capital (x) if such amount is subject to any redemption rights by XPDB stockholders, to the extent XPDB has provided the XPDB stockholders an opportunity to redeem their shares of Class A Common Stock in connection with the Merger and such stockholders are no longer legally entitled (pursuant to the terms of the organizational documents of XPDB and the applicable deadlines imposed by XPDB on the stockholders of XPDB for such redemption) to, and XPDB does not otherwise permit such stockholders to, redeem such shares but giving effect to such redemption and any and all reversals of elections to redeem shares of Class A Common Stock by XPDB stockholders and (y) if such amount is not subject to any redemption rights by XPDB stockholders, if the Closing occurs immediately prior to the closing of the Merger; plus (v) amounts available for borrowing under any indebtedness of Montana (including, for the avoidance of doubt, indebtedness that is evidenced by notes, bonds, debentures, credit agreements and/or similar instruments); plus (vi) the aggregate amount on deposit in the Trust Account, to the extent XPDB has provided the XPDB stockholders an opportunity to redeem their shares of Class A Common Stock in connection with the Merger and such stockholders are no longer legally entitled (pursuant to the terms of the organizational documents of XPDB and the applicable deadlines imposed by XPDB on the XPDB stockholders for such redemption) to, and XPDB does not otherwise permit such stockholders to, redeem such shares but giving effect to such redemption and any and all reversals of elections to redeem shares of Class A Common Stock by XPDB stockholders), but before release of any other funds, including in satisfaction of XPDB’s expenses in connection with the Merger. The Subscription, if consummated, will take place prior to the Closing and the Private Placement Conversion Shares, if and when issued upon the Closing, will be issued as part of the Merger Consideration.

Aggregate Transaction Proceeds” are to an amount equal to the aggregate cash proceeds available for release to XPDB or Montana, as applicable, from (a) the Trust Account (for the avoidance of doubt, after giving effect to any redemptions of shares of XPDB Class A Common Stock by stockholders of XPDB but before release of any other funds, including in satisfaction of XPDB’s and Montana’s expenses in connection with the Business Combination) plus (b) the aggregate proceeds, if any, actually received by Montana from the Capital Raise;

Aggregate Transaction Proceeds Condition” are to the condition in the Merger Agreement that, at the Closing, the Aggregate Transaction Proceeds shall be equal to or greater than $85 million; provided that, upon receiving proceeds in the Capital Raise equal to or in excess of such amount, such condition shall no longer apply;

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Anchor Investors” are to the certain funds and accounts managed by subsidiaries of BlackRock, Inc.;

Annualized EBITDA” are to earnings before interest, taxes, depreciation and amortization, as calculated in accordance with the Post-Combination Company’s accounting policies and any applicable securities laws, that the Post-Combination Company is expected to receive during the 12 months immediately following the applicable Commission Date to the extent primarily attributable to the new production capacity of the Post-Combination Company or its subsidiaries, as such forecast is calculated in the sole discretion of a majority of the independent members of the Post-Combination Company Board (which will be deemed final and binding absent manifest error);

Amended and Restated Bylaws” are to the amended and restated bylaws of XPDB to be adopted in connection with the consummation of the Business Combination, the form of which is attached to this proxy statement/prospectus as Annex C;

A&R Joint Venture Agreement” are to that certain Amended and Restated Joint Venture Agreement for CAMT, dated as of September 29, 2023, by and among Montana, CAMT and CATL US;

Barclays” are to Barclays Capital Inc., one of the underwriters in the XPDB IPO;

BASF” are to Badische Anilin und Sodafabrik.

BofA” are to BofA Securities, Inc., one of the underwriters in the XPDB IPO;

Business Combination” are to the Merger and the other transactions contemplated by the Merger Agreement;

CAMT” are to CAMT Climate Solutions, Ltd., a joint venture between Montana and an affiliate of CATL.

Capital Raise” are to the issuance by Montana of its equity interests (or securities convertible, exchangeable or exercisable therefor) pursuant to the Subscription Agreements;

Carrier” is to Carrier Global Corporation, together with its subsidiaries and affiliates.

CATL” are to Contemporary Amperex Technology Co., Limited.

CATL Parties” are to CATL, together with CATL US and CATL USA;

CATL US” are to CATL US Inc., an affiliate of CATL;

CATL USA” are to Contemporary Amperex Technology USA Inc. an affiliate of CATL;

Class A Common Stock are to the shares of the Post-Combination Company’s Class A common stock, par value $0.0001 per share, after the Business Combination;

Class B Common Stock” are to the shares of the Post-Combination Company’s Class B common stock, par value $0.0001 per share, after the Business Combination;

Closing” are to the closing of the Business Combination;

Code” are to the Internal Revenue Code of 1986, as amended;

Commission Date” are to the date of full completion and operational viability of new production capacity of the Post-Combination Company or its subsidiaries’ key components or assemblies based solely on demand from bona fide customer commitments evidenced by binding contracts with a known price or pricing formula (i.e., “cost plus” ) or, so long as a majority of the independent members of the Post-Combination Company Board believes a non-binding letter of intent or indication of interest or similar writing is substantially likely to become a binding contract, in the sole discretion of a majority of the independent members of the Post-Combination Company Board, evidenced by such non-binding writing(s);

Company” or “Montana” are to Montana Technologies LLC;

DGCL” are to the Delaware General Corporation Law, as it may be amended from time to time;

Dilution Factor” are to the difference of (i) the implied value of the equity interests (or securities convertible, exchangeable or exercisable therefor) issued by Montana in the Capital Raise assuming a $10.00 share value minus (ii) the amount of the gross cash proceeds actually received by Montana from the Capital Raise;

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Earnout Payment are to the issuance of Earnout Shares;

Earnout Shares” are to the equity consideration in the form of additional shares of Class A Common Stock at $10.00 per share that Montana Equityholders (other than holders of Montana Warrants) will receive upon achievement of certain milestones related to production capacity and anticipated Annualized EBITDA of the Post-Combination Company following the Closing, as described herein and in the Merger Agreement;

Earnout Stock Payment” are to distributions made to holders of Montana Common Units and Montana Options following the Closing (in each case, in accordance with their respective pro rata share), of an additional number of shares of Class A Common Stock equal to an earnout milestone amount divided by $10.00.

EBITDA” are to earnings before interest, taxes, depreciation and amortization;

Eligible Equityholders” are to the Montana Equityholders other than holders of Montana Warrants;

Exchange Act” are to the Securities Exchange Act of 1934, as amended;

Existing Charter” are to the Amended and Restated Certificate of Incorporation of XPDB, as filed with the Delaware Secretary of State on December 9, 2021, and as amended to date;

Expected Annualized EBITDA” are to the Annualized EBITDA that is expected from new production capacity of Montana’s key components or assemblies solely on demand from bona fide customer commitments evidenced by binding contracts (or in the discretion of the Post-Combination Company Board, a non-binding letter of intent or indication of interest or similar writing that is substantially likely to become a binding contract);

Extension” are to the extension of the time by which XPDB has to consummate an initial business combination as set forth in the Existing Charter;

Extension Amendment Proposal” are to the proposal approved at the Extension Special Meeting extending the date by which XPDB must consummate an initial business combination from June 14, 2023 to December 14, 2023, and allowing XPDB, without another stockholder vote, by resolution of the XPDB Board, to elect to further extend such date in one-month increments up to three additional times, until March 14, 2024, unless the closing of an initial business combination shall have occurred prior thereto, or such earlier date as determined by the XPDB Board to be in the best interests of XPDB;

Extension Special Meeting” are to the special meeting in lieu of annual meeting of stockholders of XPDB held on June 9, 2023;

Founder Shares” are to the shares of XPDB Class B Common Stock and XPDB Class A Common Stock issued upon the voluntary conversion thereof as provided in the Existing Charter and Class A Common Stock issued upon the automatic conversion thereof at the time of XPDB’s initial business combination as provided herein.

GAAP” are to generally accepted accounting principles in the United States, as applied on a consistent basis;

HVAC” are to heating, ventilation and air conditioning.

Incentive Plan” are to the Montana Technologies Corporation 2024 Incentive Award Plan;

Initial Stockholders” are to Sponsor and Paul Dabbar, Paul Gaynor and Scott Widham, each an independent director of XPDB;

Investment Agreement” are to the Investment Agreement, dated September 29, 2023, by and among Montana, XPDB and the CATL Parties.

Investment Company Act” are to the Investment Company Act of 1940, as amended;

IPO Underwriting Agreement” are to the Underwriting Agreement, dated December 9, 2021, between XPDB and Barclays and BofA, as representatives of the underwriters named therein;

Joint Development Agreement” are to that certain Joint Development Agreement, dated as of September 27, 2022, by and between Montana and BASF for the production of engineered super-porous MOF materials to Montana’s specifications that are applied as a coating to AirJoule contactors to perform the energy and water-harvesting function;

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Joint Inventions” are to any assignable intellectual property jointly generated under the Joint Development Agreement by employees of both parties;

June Redemptions” are to the redemption of 18,141,822 shares of XPDB Class A Common Stock in connection with the Extension;

Lock-Up Agreement” are to, as contemplated by the Merger Agreement, each agreement to be entered into at the Closing by XPDB, Sponsor, XPDB’s independent directors and certain Montana Equityholders, the form of which is attached to this proxy statement/prospectus as Annex G;

Maximum Earnout Milestone Amount” are to the aggregate sum of all earnout milestone amounts, which in no event shall exceed $200,000,000 assuming a $10.00 share value;

Merger Agreement” are to that certain Agreement and Plan of Merger, dated as of June 5, 2023, among XPDB, XPDB Merger Sub and Montana, a copy of which is attached to this proxy statement/prospectus as Annex A;

Merger Consideration” are to the aggregate consideration of $421.9 million that the Montana Equityholders will receive as adjusted at Closing by subtracting the Dilution Factor (if positive only) and adding the implied value of any equity interests (or securities convertible, exchangeable or exercisable therefor) issued by Montana in the Capital Raise (including, if consummated, the Subscription) assuming a $10.00 share value;

Merger Sub” are to XPDB Merger Sub, LLC, a Delaware limited liability company and wholly owned subsidiary of XPDB;

Montana Class A Common Units” are to the units designated in Montana’s organizational documents as “Class A Common Units”;

Montana Class B Common Units” are to the units designated in Montana’s organizational documents as “Class B Common Units”;

Montana Class C Common Units” are to the units designated in Montana’s organizational documents as “Class C Common Units”;

Montana Common Units” are to the Montana Class A Common Units, the Montana Class B Common Units and the Montana Class C Common Units, collectively;

Montana Equityholders” are to holders of Montana Common Units, holders of Montana Preferred Units, holders of Montana Options and holders of Montana Warrants;

Montana Options” are to an option to purchase Montana Common Units granted by Montana under Montana’s operating agreement or otherwise that is outstanding immediately prior to the Closing;

Montana Preferred Units” are to the Montana Series A Preferred Units and the Montana Series B Preferred Units, collectively;

Montana Series A Preferred Units” are to the units designated in Montana’s organizational documents as “Series A Preferred Units”;

Montana Series B Preferred Units” are to the units designated in Montana’s organizational documents as “Series B Preferred Units”;

Montana Warrants are to all warrants to purchase Montana Common Units;

Post-Combination Company” are to XPDB following the consummation of the Business Combination;

Post-Combination Company Board” are to the board of directors of the Post-Combination Company following the consummation of the Business Combination;

Private Placement” are to XPDB’s sale of Private Placement Warrants to the Sponsor and Anchor Investors concurrently with the XPDB IPO;

Private Placement Warrants” are to the warrants issued by XPDB to the Sponsor and the Anchor Investors in the Private Placement;

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Proposed Charter” are to the Second Amended and Restated Certificate of Incorporation of XPDB, a form of which is included as Annex B to this proxy statement/prospectus and which will be filed with the Delaware Secretary of State following approval according to this proxy statement/prospectus;

Public Shares” are to shares of XPDB Class A Common Stock sold as part of the units in the XPDB IPO (whether they were purchased in the XPDB IPO or thereafter in the open market);

Record Date” are to February 8, 2024;

Redemption Limitation Amendment Proposal” are to the proposal approved at the Extension Special Meeting to amend XPDB’s amended and restated certificate of incorporation to remove the limitation that XPDB may not redeem Public Shares to the extent that such redemption would result in XPDB having net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act, as amended) of less than $5,000,001;

SEC” are to the U.S. Securities and Exchange Commission;

Securities Act” are to the Securities Act of 1933, as amended;

SPAC Rule Proposals” are to the proposals issued by the SEC on March 30, 2022 relating, among other things, to circumstances in which SPACs could potentially be subject to the Investment Company Act and the regulations thereunder;

Special Meeting” are to a special meeting of stockholders held by XPDB to consider matters related to the proposed Business Combination;

Sponsor” are to XPDI Sponsor II LLC, a Delaware limited liability company;

Sponsor Support Agreement” are to the Sponsor Support Agreement entered into among the Sponsor, XPDB, Montana and other holders of XPDB Class B Common Stock, a copy of which is attached to this proxy statement/prospectus as Annex D;

Subject Shares” are to the 7,097,500 shares of Class A Common Stock that Sponsor will beneficially own, of which (i) 5,716,764 shares will automatically vest (and shall not be subject to forfeiture), and (ii) 1,380,736 Subject Vesting Shares will be unvested and shall only vest and no longer be subject to forfeiture under the achievement of certain milestone and stock price metrics;

Subject Vesting Shares” are to the 1,380,736 shares beneficially owned by the Sponsor that will vest upon the earliest to occur during the Vesting Period of the following: (i) from time to time, simultaneously with the Earnout Payments made to the Montana Equityholders in a proportionate amount to the payment achieved in relation to the maximum Earnout Payment of equity interests of $200 million, and (ii) up to 50% of the Subject Vesting Shares (including any vested Subject Vesting Shares from the Performance Vesting Trigger) will vest on any day following the Closing when the closing price of a share of Class A Common Stock on the Nasdaq equals or exceeds $12.00 (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) and all remaining Subject Vesting Shares will vest when the closing price of a share of Class A Common Stock on the Nasdaq equals or exceeds $14.00 (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like);

Subscribers” are to the certain investors with whom Montana intends to enter into Subscription Agreements;

Subscription Agreements” are to the subscription agreements to which Montana intends to become a party relating to the Capital Raise;

TAM” are to the total addressable market for the AirJoule technology;

TEP” are to Transition Equity Partners, LLC, a private equity fund focused on renewable and transition energy infrastructure in North America;

TEP Montana” are to TEP Montana, LLC, a Delaware limited liability company;

Threshold Annualized EBITDA” are to Annualized EBITDA of more than $150,000,000;

TRL” are to technology readiness level, a scale of 1 to 9, with 9 representing a proven technology;

Trust Account” are to the trust account established by XPDB at Bank of America, National Association for the benefit of XPDB’s stockholders;

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Vesting Period” are to the period beginning on the date of Closing and ending five (5) years following the date of Closing;

Warrants” are to the Post-Combination Company’s warrants after the Business Combination;

XMS” are to XMS XPDI Sponsor Holdings II LLC, an entity owned by professionals of XMS Capital Partners, LLC, a global independent financial services firm, primarily providing strategic and financial advisory services;

XMS Capital” are to XMS Capital Partners, LLC;

XPDB” are to Power & Digital Infrastructure Acquisition II Corp., a Delaware corporation;

XPDB Board” are to XPDB’s board of directors;

XPDB Class A Common Stock” are to the shares of XPDB’s Class A common stock, par value $0.0001 per share, prior to the Business Combination;

XPDB Class B Common Stock” are to the shares of XPDB’s Class B common stock, par value $0.0001 per share, prior to the Business Combination;

XPDB Common Stock” are to XPDB Class A Common Stock and XPDB Class B Common Stock, collectively;

XPDB IPO” are to the initial public offering by XPDB, which was consummated on December 14, 2021. Unless specified otherwise, amounts in this proxy statement/prospectus are presented in United States (“U.S.”) dollars;

XPDB Public Stockholders” are to the holders of the Public Shares, including the Sponsor and any of our directors and officers to the extent any of them purchase XPDB Class A Common Stock (provided that the Sponsor’s and such director’s or officer’s status as an “XPDB Public Stockholder” will only exist with respect to such XPDB Class A Common Stock); and

XPDB public warrants” are to warrants to purchase shares of XPDB Class A Common Stock sold as part of the units in the XPDB IPO (whether they were purchased in the XPDB IPO or thereafter in the open market).

Defined terms in the financial statements contained in this proxy statement/prospectus have the meanings ascribed to them in the financial statements.

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SHARE CALCULATIONS AND OWNERSHIP PERCENTAGES

Unless otherwise specified (including in the sections entitled “Unaudited Pro Forma Condensed Combined Financial Information” and “Beneficial Ownership of Securities”), the share calculations and ownership percentages set forth in this proxy statement/prospectus with respect to the XPDB Public Stockholders following the Business Combination are for illustrative purposes only and assume the following (certain capitalized terms below are defined elsewhere in this proxy statement/prospectus):

1.      There are no further XPDB Public Stockholders that exercise their redemption rights in connection with the Closing, and the balance of the Trust Account as of the Closing is the same as its balance on September 30, 2023 of approximately $113.0 million, plus the Extension deposit of $0.6 million into the Trust Account during October and November of 2023.

2.      No holders of XPDB public warrants exercise any of the outstanding XPDB public warrants prior to or in connection with the Closing.

3.      There are no other issuances of equity securities of XPDB prior to or in connection with the Closing.

4.      That for all purposes the number of outstanding shares and equity-linked securities of each of XPDB and Montana is the same as the number of outstanding shares and equity-linked securities of XPDB and Montana, respectively, as of September 30, 2023.

5.      There are no forfeitures of equity securities held by Sponsor in connection with the Closing.

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TRADEMARKS, TRADE NAMES AND SERVICE MARKS

XPDB and Montana own or have rights to trademarks, trade names and service marks that they use in connection with the operation of their business. In addition, their names, logos and website names and addresses are their trademarks or service marks. Other trademarks, trade names and service marks appearing in this proxy statement/prospectus are the property of their respective owners. Solely for convenience, in some cases, the trademarks, trade names and service marks referred to in this proxy statement/prospectus are listed without the applicable®, M and SM symbols, but they will assert, to the fullest extent under applicable law, their rights to these trademarks, trade names and service marks.

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QUESTIONS AND ANSWERS

The questions and answers below highlight only selected information from this proxy statement/prospectus and only briefly address some commonly asked questions about the Business Combination, the Special Meeting and the Proposals to be presented at the Special Meeting. The following questions and answers do not include all the information that may be important to XPDB stockholders. You are urged to read carefully this entire proxy statement/prospectus, including the Annexes and the other documents referred to herein, to fully understand the Business Combination and the voting procedures for the Special Meeting.

QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION

Q:     WHAT IS THE BUSINESS COMBINATION?

A:     XPDB, Merger Sub, a wholly owned subsidiary of XPDB, and Montana have entered into the Merger Agreement, pursuant to which, among other things, subject to the approval of the XPDB stockholders, Merger Sub will merge with and into Montana, with Montana surviving the Merger as a wholly owned subsidiary of XPDB. In connection with the Closing of the Merger, XPDB will be renamed Montana Technologies Corporation.

         XPDB will hold the Special Meeting to, among other things, obtain the approvals required for the Business Combination, and you are receiving this proxy statement/prospectus in connection with such meeting. See the section entitled “The Merger Agreement.” In addition, a copy of the Merger Agreement is attached to this proxy statement/prospectus as Annex A. We urge you to read carefully this proxy statement/prospectus, including the Annexes and the other documents referred to herein, in their entirety.

Q:     WHY AM I RECEIVING THIS DOCUMENT?

A:     XPDB is sending this proxy statement/prospectus to its stockholders to help them decide how to vote their shares of XPDB Common Stock with respect to the matters to be considered at the Special Meeting. The Business Combination cannot be completed unless XPDB’s stockholders approve the Business Combination Proposal, the Charter Proposal, the Nasdaq Proposal, the Incentive Plan Proposal and the Employee Stock Purchase Plan Proposal set forth in this proxy statement/prospectus for their approval. Information about the Special Meeting, the Business Combination and the other business to be considered by stockholders at the Special Meeting is contained in this proxy statement/prospectus. This document constitutes a proxy statement of XPDB and a prospectus of XPDB. It is a proxy statement because the XPDB Board is soliciting proxies using this proxy statement/prospectus from its stockholders. It is a prospectus because XPDB, in connection with the Business Combination, is offering shares of XPDB Class A Common Stock in exchange for the outstanding Montana Common Units and as additional consideration pursuant to the earnout provisions set forth in the Merger Agreement and as described herein. See the sections entitled “The Merger Agreement — Consideration to the Equityholders in the Business Combination” and “The Merger Agreement — Earnout Shares.

Q:     WHAT WILL MONTANA EQUITYHOLDERS RECEIVE IN THE BUSINESS COMBINATION?

A:     As part of the Business Combination, Montana Equityholders will receive the Merger Consideration. After giving effect to the conversion of all outstanding Montana Preferred Units into Montana Class B Common Units, which will occur prior to the effective time of the Merger, the Merger Consideration will be payable (i) in the case of holders of Montana Class B Common Units and Montana Class C Common Units, in the form of newly issued shares of Class A Common Stock of the Post-Combination Company, with a $10.00 value ascribed to each such share and which will entitle the holder thereof to one vote per share on all matters submitted to a vote of the holders of Class A Common Stock, whether voting separately as a class or otherwise, (ii) in the case of holders of Montana Class A Common Units, in the form of newly issued shares of Class B Common Stock of the Post-Combination Company, with a $10.00 value ascribed to each such share and which will entitle the holder thereof to a number of votes per share such that the Montana Equityholders as of immediately prior to the Closing will, immediately following the Closing, collectively own shares representing at least 80% of the voting power of all classes of capital stock of the Post-Combination Company entitled to vote on matters submitted to a vote of the stockholders of the Post-Combination Company, (iii) in the case of holders of Montana Options, each outstanding Montana Option, whether vested or unvested, will be converted into an option to purchase, upon the same terms and conditions as are in effect with respect to the corresponding Montana Option immediately prior to the Closing, including with respect to vesting and termination-related provisions, a number of shares of Class A Common Stock (rounded down to the nearest whole share) equal to the product of (x) the number of Montana Common Units underlying such option

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immediately prior to the Closing and (y) the number of shares of Class A Common Stock issuable in respect of each Montana Common Unit in the Business Combination pursuant to the Merger Agreement, at an exercise price per share (rounded up to the nearest whole cent) equal to (A) the exercise price per Montana Common Unit underlying such option immediately prior to the Closing divided by (B) the number of shares of Class A Common Stock issuable in respect of each Montana Common Unit in the Business Combination pursuant to the Merger Agreement, and (iv) in the case of holders of Montana Warrants, each outstanding Montana Warrant will be converted into a warrant to purchase, upon the same terms and conditions as are in effect with respect to the corresponding Montana Warrant immediately prior to the Closing, including with respect to vesting and termination-related provisions, a number of shares of Class A Common Stock equal to the product of (x) the number of Montana Common Units underlying such warrant immediately prior to the Closing and (y) the number of shares of Class A Common Stock issuable in respect of each Montana Common Unit in the Business Combination pursuant to the Merger Agreement, at an exercise price per share equal to (A) the exercise price per Montana Common Unit underlying such warrant immediately prior to the Closing divided by (B) the number of shares of Class A Common Stock issuable in respect of each Montana Common Unit in the Business Combination pursuant to the Merger Agreement. Montana Equityholders (other than holders of Montana Warrants) (the “Eligible Equityholders”) will also have the opportunity to receive additional equity consideration (in each case, in accordance with their respective pro rata share) in the form of shares of Class A Common Stock with a $10.00 value ascribed to each share (the “Earnout Shares”) only upon full completion of construction and operational viability (including all permitting, regulatory approvals and necessary or useful inspections) of new production capacity of Montana’s key components or assemblies based solely on demand from bona fide customer commitments evidenced by binding contracts (or in the sole discretion of a majority of the independent members of the Post-Combination Company Board, a non-binding letter of intent or indication of interest or similar writing that is substantially likely to become a binding contract) with a known price or pricing formula that exceeds a level of production capacity that is expected to generate Annualized EBITDA of more than $150,000,000 (the “Threshold Annualized EBITDA”), which shall be determined by a majority of the independent members of the Post-Combination Company Board in their sole discretion, equal to (i) the ratio of (x) (1) the Annualized EBITDA that is expected from such new production capacity (the “Expected Annualized EBITDA”) less (2) (A) the Threshold Annualized EBITDA plus (B) all previously Expected Annualized EBITDA amounts associated with previous new production capacities for which previous earnouts were achieved, divided by (y) $150,000,000 multiplied by (ii) $200,000,000, provided that the aggregate Expected Annualized EBITDA shall not exceed $300,000,000.

The maximum value of the Earnout Shares will be capped at $200 million and the ability to receive Earnout Shares will expire on the fifth anniversary of the Closing. A majority of the independent members of the Post-Combination Company Board then serving will have sole discretion in determining, among other things, the achievement of the applicable milestones, the calculations of payments of Earnout Shares to the applicable 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 Montana Equityholder’s right to receive Earnout Shares. Earnout Shares issuable in respect of Montana Options outstanding as of immediately prior to the effective time of the Merger may be issued to the holder of such 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 Post-Combination Company Board. See the section entitled “The Merger Agreement — Earnout Shares.

As of the date of the Merger Agreement, 100.0% of the total outstanding Montana Class A Common Units and 72.7% of the total outstanding Montana Class B Common Units (or an aggregate of approximately 76.6% of the total outstanding Montana Class A Units and Montana Class B Units in the aggregate) were held by unitholders that are expected to continue as directors, officers or employees of the Post-Combination Company. The retention of certain holders of Montana Options who will continue as directors, officers or employees of the Post-Combination Company (whose responsibilities are expected to include continued technology development and commercial execution) is integral to the achievement of the milestones that will determine whether Earnout Shares are payable. Montana does not believe that such targets are achievable absent the continued involvement of such persons. The Post-Closing Company is expected to provide competitive compensation, benefits and equity awards (pursuant to the terms of the Incentive Plan) to these individuals following the Merger in order to incentivize these individuals to continue to provide services to the Post-Combination Company.

Prior to Closing, Montana will use its commercially reasonable efforts to enter into Subscription Agreements with the Subscribers pursuant to the Capital Raise, in exchange for an agreed upon purchase price.

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On January 7, 2024, as part of the Capital Raise, Montana entered into the Common Unit Subscription Agreement with the Carrier Subscriber, pursuant to which the Carrier Subscriber agreed to purchase from Montana, and Montana agreed to issue and sell to the Carrier Subscriber, a number of Subscribed Units as will convert into 1,176,471 Private Placement Conversion Shares upon the Closing for an aggregate purchase price of approximately $10.0 million. Unless otherwise waived by the Carrier Subscriber, the Carrier Subscriber’s obligation to effect the Subscription is subject to the Aggregate Available Capital being equal to or greater than $50.0 million prior to, or at, the closing of the Subscription. The Subscription, if consummated, will take place prior to the Closing and the Private Placement Conversion Shares, if and when issued upon the Closing, will be issued as part of the Merger Consideration.

Based on the number of Montana Common Units and Montana Preferred Units outstanding as of the Record Date and the number of Montana Common Units issuable upon the net exercise of Montana Options and Montana Warrants as of the Record Date, and assuming that Montana does not issue any equity interests (or securities convertible therefor) in the Capital Raise prior to Closing, (i) the estimated number of shares of Common Stock issuable for each Montana Common Unit is expected to be approximately 24.1, (ii) the total number of shares of Class A Common Stock expected to be issued to Montana Equityholders in connection with the Closing is approximately 33.1 million (approximately 37.4 million on a fully diluted basis under certain assumptions described in this proxy statement/prospectus), and (iii) the total number of shares of Class B Common Stock expected to be issued to certain Montana Equityholders in connection with the Closing is approximately 4.8 million. Based on the assumption that no shares of XPDB Class A Common Stock are validly redeemed and the other assumptions described in this proxy statement/prospectus, (i) holders of XPDB Class A Common Stock and XPDB Class B Common Stock as of immediately prior to the closing are expected to hold (excluding shares underlying XPDB public warrants, Private Placement Warrants, Montana Options and Montana Warrants) (x) approximately 19.0% and 12.9% of the total outstanding common stock of the Post-Combination Company, respectively and (y) approximately 11.9% and 8.1% of the voting power of the Post-Combination Company, respectively, (ii) holders of Montana Common Units as of immediately prior to the Closing are expected to hold, in the aggregate, approximately 65.1% of the Class A Common Stock and 100% of the Class B Common Stock immediately following the Closing, representing 68.1% and 80.0% of the total outstanding common stock and voting power of the Post-Combination Company, respectively, and (iii) Montana Equityholders (including holders of outstanding Montana Options and Montana Warrants) are expected to hold, in the aggregate and on a fully diluted basis, approximately 67.7% of the Class A Common Stock and 100% of the Class B Common Stock. Based on the Assuming Maximum Contractual Redemptions Scenario and the other assumptions described in this proxy statement/prospectus, (i) holders of XPDB Class A Common Stock and XPDB Class B Common Stock are expected to hold (excluding shares underlying XPDB public warrants, Private Placement Warrants, Montana Options and Montana Warrants) (x) approximately 14.9% and 13.6% of the total outstanding common stock of the Post-Combination Company, respectively and (y) approximately 10.5% and 9.5% of the voting power of the Post-Combination Company, respectively, (ii) holders of Montana Common Units as of immediately prior to the Closing are expected to hold, in the aggregate, approximately 68.7% of the Class A Common Stock and 100% of the Class B Common Stock immediately following the Closing, representing 71.5% and 80.0% of the total outstanding common stock and voting power of the Post-Combination Company, respectively, and (iii) Montana Equityholders (including holders of outstanding Montana Options and Montana Warrants) are expected to hold, in the aggregate and on a fully diluted basis, approximately 71.2% of the Class A Common Stock and 100% of the Class B Common Stock.

Q:     WHAT IS THE CAPITAL RAISE?

A:     Prior to Closing, Montana will use its commercially reasonable efforts to enter into Subscription Agreements with certain Subscribers, pursuant to which Montana will agree to issue equity interests (or securities convertible, exchangeable and exercisable therefor) in Montana in exchange for an agreed upon purchase price. The Capital Raise is expected to be conditioned on customary closing conditions.

On January 7, 2024, as part of the Capital Raise, Montana entered into the Common Unit Subscription Agreement with the Carrier Subscriber, pursuant to which the Carrier Subscriber agreed to purchase from Montana, and Montana agreed to issue and sell to the Carrier Subscriber, a number of Subscribed Units as will convert into 1,176,471 Private Placement Conversion Shares upon the Closing for an aggregate purchase price of approximately $10.0 million. Unless otherwise waived by the Carrier Subscriber, the Carrier Subscriber’s obligation to effect the Subscription is subject to the Aggregate Available Capital being equal to or greater than $50.0 million prior to, or at, the closing of the Subscription. The Subscription, if consummated, will take place prior to the Closing and the Private Placement Conversion Shares, if and when issued upon the Closing, will be issued as part of the Merger Consideration.

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Q:     WHEN DO YOU EXPECT THE BUSINESS COMBINATION TO BE COMPLETED?

A:     It is currently anticipated that the Business Combination will be consummated promptly following the Special Meeting, which is set for March 8, 2024; however, such meeting could be adjourned, as described herein. Neither XPDB nor Montana can assure you of when or if the Business Combination will be completed and it is possible that factors outside of the control of both companies could result in the Business Combination being completed at a different time or not at all. XPDB must first obtain the approval of its stockholders for certain of the Proposals set forth in this proxy statement/prospectus for their approval and XPDB and Montana must also first satisfy certain closing conditions. See the section entitled “The Merger Agreement — Conditions to Closing of Business Combination.

Q:     WHAT HAPPENS IF THE BUSINESS COMBINATION IS NOT COMPLETED?

A:     If the Business Combination is not completed, Montana Equityholders will not receive any consideration for their Montana securities. Instead, Montana will remain an independent company. See the section entitled “The Merger Agreement — Termination” and “Risk Factors.”

Additionally, if XPDB does not complete the Business Combination with Montana for whatever reason, XPDB would search for another target business with which to complete a business combination. If XPDB does not complete the Business Combination with Montana or another target business by February 14, 2024 or such further extended date as determined by the XPDB Board in accordance with the Existing Charter (the “Completion Window”), XPDB must redeem 100% of the outstanding Public Shares, at a per-share price, payable in cash, equal to the amount then held in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to XPDB to pay taxes (less up to $100,000 of interest to pay dissolution expenses) divided by the number of outstanding Public Shares. The Initial Stockholders have no redemption rights in the event a business combination is not effected by the end of the Completion Window, and, accordingly, their Founder Shares will be worthless. Additionally, in the event of such liquidation, there will be no distribution with respect to XPDB’s outstanding warrants. Accordingly, the warrants will expire worthless.

Q:     HOW WILL THE POST-COMBINATION COMPANY BE MANAGED AND GOVERNED FOLLOWING THE BUSINESS COMBINATION?

A:     Concurrently with the consummation of the Business Combination, XPDB’s officers and directors, other than Patrick C. Eilers, will resign from their respective positions. Following the Closing, the Post-Combination Company’s executive officers are expected to be the current management team of Montana. See the section entitled “Management of the Post-Combination Company Following the Business Combination” for more information.

XPDB is, and after the Closing, the Post-Combination Company will continue to be, managed by a board of directors. Following the Closing, the size of the board of directors will be six directors and will consist of Matthew Jore, Maxwell Baucus, Paul Dabbar, Patrick C. Eilers, Stuart Porter and Dr. Marwa Zaatari.

Following the Closing, we expect that a majority of the directors will be independent under applicable Nasdaq listing rules. See the section entitled “Management of the Post-Combination Company Following the Business Combination” for more information.

Q:     WHAT EQUITY STAKE WILL CURRENT XPDB STOCKHOLDERS, THE INITIAL STOCKHOLDERS AND THE MONTANA EQUITYHOLDERS HOLD IN THE POST-COMBINATION COMPANY FOLLOWING THE CLOSING?

A:     Upon consummation of the Business Combination (assuming, among other things, that after the June Redemptions, no XPDB Public Stockholders exercise redemption rights in connection with the Closing and the other assumptions described under the section with the heading “Basis of Presentation and Glossary — Share Calculations and Ownership Percentages”), (i) the XPDB Public Stockholders are expected to own approximately 19.0% of the outstanding Post-Combination Company’s common stock, (ii) the Initial Stockholders are expected to own approximately 13.0% of the outstanding Post-Combination Company’s common stock, and (iii) the Montana Equityholders are expected to own approximately 68.0% of the Post-Combination Company’s common stock.

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         If any of the XPDB Public Stockholders exercise redemption rights in connection with the Closing, the percentage of the outstanding Post-Combination Company’s common stock held by the XPDB Public Stockholders will decrease, and the percentages of the outstanding Post-Combination Company’s common stock held by the Initial Stockholders and by the Montana Equityholders will increase, in each case, relative to the percentage held if none of the Public Shares are redeemed.

         The following table illustrates varying ownership levels of the Post-Combination Company immediately following the Business Combination(1):

 

Assuming
Minimum Redemptions
Scenario

 

Assuming
Mid-Point Redemptions
Scenario

 

Assuming Maximum
Contractual
 Redemptions
Scenario

Equity Capitalization Summary

 

Shares

 

%

 

Shares

 

%

 

Shares

 

%

Montana Class A Equityholders

 

4,818,203

 

8.6

%

 

4,818,203

 

8.9

%

 

4,818,203

 

9.1

%

Montana Class B Equityholders

 

33,134,278

 

59.4

%

 

33,134,278

 

60.9

%

 

33,134,278

 

62.4

%

XPDB Public Stockholders

 

10,608,178

 

19.0

%

 

9,265,030

 

17.0

%

 

7,921,881

 

14.9

%

Initial Stockholders

 

7,187,500

 

13.0

%

 

7,187,500

 

13.2

%

 

7,187,500

 

13.6

%

Total common stock

 

55,748,159

 

100.0

%

 

54,405,011

 

100.0

%

 

53,061,862

 

100.0

%

____________

(1)      The table does not include the 14,375,000 shares underlying XPDB public warrants, the 11,125,000 shares underlying Private Placement Warrants, the 3,856,639 shares underlying Montana Options, and the 380,880 shares underlying Montana Warrants.

         All of the relative percentages above are for illustrative purposes only and are based upon certain assumptions as described in the section entitled “Basis of Presentation and Glossary — Share Calculations and Ownership Percentages” and, with respect to the determination of the “Assuming Maximum Contractual Redemptions Scenario,” the section entitled “Unaudited Pro Forma Condensed Combined Financial Statements.” Should one or more of these assumptions prove incorrect, actual ownership percentages may vary materially from those described in this proxy statement/prospectus as anticipated, believed, estimated, expected or intended. See “Unaudited Pro Forma Condensed Combined Financial Information.”

Q:     FOLLOWING THE BUSINESS COMBINATION, WILL XPDB’S SECURITIES CONTINUE TO TRADE ON A STOCK EXCHANGE?

A:     Yes. Upon the Closing, we intend to change our name from “Power & Digital Infrastructure Acquisition II Corp.” to “Montana Technologies Corporation,” and our Class A Common Stock and public Warrants will continue to be listed on the Nasdaq following the Closing under the symbols “AIRJ” and “AIRJW,” respectively. The XPDBU units will be delisted and deregistered following the Closing.

QUESTIONS AND ANSWERS ABOUT XPDB’S SPECIAL STOCKHOLDER MEETING

Q:     WHEN AND WHERE IS THE SPECIAL MEETING?

A:     The Special Meeting will be held at 8:00 a.m. Central Time, on March 8, 2024, in virtual format. XPDB stockholders may attend, vote and examine the list of XPDB stockholders entitled to vote at the Special Meeting by visiting https://www.cstproxy.com/xpdispacii/2024 and entering the control number found on their proxy card, voting instruction form or notice included in their proxy materials. The Special Meeting will be held in virtual meeting format only. You will not be able to attend the Special Meeting physically.

Q:     WHAT AM I BEING ASKED TO VOTE ON AND WHY IS THIS APPROVAL NECESSARY?

A:     The stockholders of XPDB are being asked to vote on the following:

        A proposal to adopt the Merger Agreement and the transactions contemplated thereby. See the section entitled “Proposal No. 1 — The Business Combination Proposal.”

        A proposal to adopt the Proposed Charter in the form attached hereto as Annex B. See the section entitled “Proposal No. 2 — The Charter Proposal.”

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        A proposal with respect to certain governance provisions in the Proposed Charter, which are being separately presented in accordance with SEC requirements and which will be voted upon on a non-binding advisory basis. See the section entitled “Proposal No. 3 — The Governance Proposal.”

        A proposal to elect six directors to serve on the Post-Combination Company Board until the 2024 annual meeting of stockholders, in the case of Class I directors, the 2025 annual meeting of stockholders, in the case of Class II directors, and the 2026 annual meeting of stockholders, in the case of Class III directors, and, in each case, until their respective successors are duly elected and qualified. See the section entitled “Proposal No. 4 — The Director Election Proposal.”

        A proposal to approve, for purposes of complying with applicable listing rules of the Nasdaq, the issuance of shares of Class A Common Stock and Class B Common Stock to Montana Equityholders pursuant to the Merger Agreement. See the section entitled “Proposal No. 5 — The Nasdaq Proposal.”

        A proposal to approve and adopt the Incentive Plan in the form attached hereto as Annex E. See the section entitled “Proposal No. 6 — The Incentive Plan Proposal.”

        A proposal to approve and adopt the ESPP in the form attached hereto as Annex F. See the section entitled “Proposal No. 7 — The Employee Stock Purchase Plan Proposal.”

        A proposal to approve the adjournment of the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal, the Charter Proposal, the Director Election Proposal, the Nasdaq Proposal, the Incentive Plan Proposal or the Employee Stock Purchase Plan Proposal. See the section entitled “Proposal No. 8 — The Adjournment Proposal.”

XPDB will hold the Special Meeting to consider and vote upon these Proposals. This proxy statement/prospectus contains important information about the proposed Business Combination and the other matters to be acted upon at the Special Meeting.

Stockholders should read this proxy statement/prospectus carefully, including the Annexes and the other documents referred to herein.

Consummation of the Business Combination is conditioned on the approval of each of the Business Combination Proposal, the Charter Proposal, the Director Election Proposal, the Nasdaq Proposal, the Incentive Plan Proposal and the Employee Stock Purchase Plan Proposal, subject to the terms of the Merger Agreement. If the Business Combination Proposal is not approved, the other Proposals, except the Adjournment Proposal, will not be presented to stockholders for a vote.

The vote of stockholders is important. Stockholders are encouraged to vote as soon as possible after carefully reviewing this proxy statement/prospectus.

Q:     WHO IS MONTANA?

A:     Montana is an atmospheric renewable energy and water harvesting technology company that aims to provide efficient and sustainable evaporative cooling and atmospheric water generation, reduce energy consumption, eliminate harmful refrigerants and create cost efficiencies through its AirJoule technology. AirJoule is a climate solution technology that harvests the untapped supply of renewable thermal energy in water vapor in the atmosphere in an effort to provide significant energy efficiency gains in HVAC, as well as a potential source of potable water. Montana is focused on developing and deploying AirJoule units worldwide as a key part of the solution to address global warming and water scarcity. As the demand for HVAC has increased, the demand for space cooling and water generation technology has also increased, and we believe Montana is poised to meet this demand with its AirJoule unit, which provides HVAC technology designed to be relatively energy efficient compared to traditional air conditioning systems. Additionally, we see companies coming under increasing pressure from governments, customers and the general public to transition to using clean and sustainable energy, and we believe Montana is in a position to bridge the gap between the increasing demands for both HVAC and renewable energy. Montana strives to alleviate the need for comfort cooling and water stress by providing its future clients with an efficient solution to HVAC and space cooling demands that harness renewable energy through AirJoule. See the section entitled “Information About Montana.”

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Q:     WHY IS XPDB PROPOSING THE BUSINESS COMBINATION?

A:     XPDB was organized to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.

On December 14, 2021, XPDB completed its initial public offering of 28,750,000 units, with each unit consisting of XPDB Class A Common Stock and one-half of one XPDB public warrant (including 3,750,000 units issued pursuant to the full exercise of the underwriters’ over-allotment option), raising total gross proceeds of $287.5 million. On the same date, XPDB also completed a private placement of warrants to its Sponsor and the Anchor Investors (the “Private Placement”), raising total gross proceeds of approximately $11.1 million. Following the closing of the XPDB IPO and Private Placement, approximately $290.4 million was placed in the Trust Account.

In connection with the Extension Special Meeting, holders of 18,141,822 shares of XPDB Class A Common Stock elected to redeem their shares in connection with the proposal to extend the time by which the Company has to consummate an initial business combination, which resulted in 10,608,178 shares of XPDB Class A Common Stock remaining outstanding after giving effect to such redemptions.

Since the XPDB IPO, XPDB’s activity has been limited to the evaluation of business combination candidates. Based on its due diligence investigations of Montana and the industry in which it operates, including the financial and other information provided by Montana in the course of their negotiations in connection with the Merger Agreement, XPDB believes that the Business Combination with Montana is advisable and in the best interests of XPDB and its stockholders. See the section entitled “The Merger — Recommendation of the XPDB Board of Directors and Reasons for the Business Combination.

Q:     DID THE XPDB BOARD OBTAIN A THIRD-PARTY VALUATION OR FAIRNESS OPINION IN DETERMINING WHETHER OR NOT TO PROCEED WITH THE BUSINESS COMBINATION?

A:     The XPDB Board did not obtain a third-party valuation or fairness opinion in connection with their determination to approve the Business Combination. The directors and officers of XPDB and XPDB’s advisors have substantial experience in evaluating the operating and financial merits of companies from a wide range of industries and concluded that their experience and backgrounds, together with the experience and sector expertise of XPDB’s financial advisors and consultants, enabled them to make the necessary analyses and determinations regarding the Business Combination. In addition, XPDB’s directors and officers and XPDB’s advisors have substantial experience with mergers and acquisitions. Accordingly, investors will be relying solely on the judgment of the XPDB Board and management and XPDB’s advisors in valuing Montana’s business.

Q:     WHY IS XPDB PROVIDING STOCKHOLDERS WITH THE OPPORTUNITY TO VOTE ON THE BUSINESS COMBINATION?

A:     We are seeking approval of the Business Combination pursuant to the Existing Charter. In addition, in conjunction with such stockholder vote, we must provide all XPDB Public Stockholders with the opportunity to redeem all or a portion of their Public Shares upon the consummation of the Business Combination pursuant to the applicable SEC proxy solicitation rules. We also are seeking approval of the Business Combination for purposes of complying with applicable Nasdaq listing rules requiring stockholder approval of issuances of more than 20% of a listed company’s issued and outstanding common stock.

Q:     DO THE MONTANA EQUITYHOLDERS NEED TO APPROVE THE BUSINESS COMBINATION?

A:     No. Under the Montana organizational documents, no approval of the Business Combination by the Montana Equityholders is required.

Q:     DO I HAVE REDEMPTION RIGHTS?

A:     If you are a holder of Public Shares, you have the right to demand that XPDB redeem such shares for a pro rata portion of the cash held in the Trust Account, as of two business days prior to the consummation of the Business Combination (including interest earned on the funds held in the Trust Account and not previously released to XPDB to pay taxes) upon the Closing.

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Notwithstanding the foregoing, a holder of Public Shares, together with any affiliate of such holder or any other person with whom such holder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act) will be restricted from seeking redemption with respect to more than 15% of the Public Shares without the consent of XPDB. Accordingly, all Public Shares in excess of 15% held by an XPDB Public Stockholder, together with any affiliate of such holder or any other person with whom such holder is acting in concert or as a “group,” will not be redeemed without the consent of XPDB.

Q:     WILL HOW I VOTE AFFECT MY ABILITY TO EXERCISE REDEMPTION RIGHTS?

A:     No. You may exercise your redemption rights whether you vote your shares of Public Shares for or against, or whether you abstain from voting on, the Business Combination Proposal or any other Proposal described in this proxy statement/prospectus. As a result, the Business Combination Proposal can be approved by stockholders who will redeem their Public Shares and no longer remain stockholders and the Merger may be consummated even though the funds available from the Trust Account and the number of XPDB Public Stockholders are substantially reduced as a result of redemptions by XPDB Public Stockholders.

Q:     HOW DO I EXERCISE MY REDEMPTION RIGHTS?

A:     If you are a holder of Public Shares and wish to exercise your redemption rights, you must demand that XPDB redeem your shares for cash no later than the second business day preceding the vote on the Business Combination Proposal by delivering your stock to XPDB’s transfer agent physically or electronically using the Depository Trust Company’s DWAC (Deposit and Withdrawal at Custodian) system. In order to exercise your redemption rights, you need to identify yourself as a beneficial holder and provide your legal name, phone number and address in your written demand. Any holder of Public Shares will be entitled to demand that such holder’s Public Shares be redeemed for a pro rata portion of the amount then in the Trust Account (which, for illustrative purposes, was approximately $114,807,097, or approximately $10.82 per Public Share, as of January 12, 2024, the most recent practicable date prior to the date of this proxy statement/prospectus. Such amount, including interest earned on the funds held in the Trust Account and not previously released to XPDB to pay its taxes, will be paid promptly upon consummation of the Business Combination. However, under Delaware law, the proceeds held in the Trust Account could be subject to claims that could take priority over those of the XPDB Public Stockholders exercising redemption rights, regardless of whether such holders vote for or against the Business Combination Proposal. Therefore, the per-share distribution from the Trust Account in such a situation may be less than originally anticipated due to such claims. Your vote on any Proposal will have no impact on the amount you will receive upon exercise of your redemption rights.

Any request for redemption, once made by a holder of Public Shares, may be withdrawn, with XPDB’s consent, at any time up to the time the vote is taken with respect to the Business Combination Proposal at the Special Meeting. If you deliver your Public Shares for redemption to XPDB’s transfer agent and later decide prior to the Special Meeting not to elect redemption, you may request that XPDB’s transfer agent return the Public Shares (physically or electronically).

If a holder of Public Shares properly makes a request for redemption and the Public Shares are delivered as described to XPDB’s transfer agent as described herein, then, if the Business Combination is consummated, XPDB will redeem these shares for a pro rata portion of funds deposited in the Trust Account. If you exercise your redemption rights, then you will be exchanging your Public Shares for cash and you will cease to have any rights as an XPDB stockholder (other than the right to receive the redemption amount) upon consummation of the Business Combination.

If the Business Combination is not approved or consummated for any reason, XPDB Public Stockholders who elected to exercise their redemption rights will not be entitled to redeem their shares for the applicable pro rata share of the Trust Account. In such case, XPDB will promptly return any certificates delivered by XPDB Public Stockholders who elected to redeem their shares.

For a discussion of the material U.S. federal income tax considerations for holders of Public Shares with respect to the exercise of these redemption rights, see the section entitled “Material U.S. Federal Income Tax Consequences — Tax Consequences of a Redemption of Public Shares.” The consequences of a redemption to any particular holder of Public Shares will depend on that holder’s particular facts and circumstances. Accordingly, you are urged to consult your tax advisor to determine your tax consequences from the exercise of your redemption rights, including the applicability and effect of U.S. federal, state and local and non-U.S. income and other tax laws in light of your particular circumstances.

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Q:     DO I HAVE APPRAISAL RIGHTS IF I OBJECT TO THE PROPOSED BUSINESS COMBINATION?

A:      No. Neither XPDB stockholders nor its unit or warrant holders have appraisal rights in connection with the Business Combination under the DGCL. See the section entitled “XPDB’s Special Meeting of Stockholders — Appraisal Rights.

Q:     WHAT HAPPENS TO THE FUNDS DEPOSITED IN THE TRUST ACCOUNT AFTER CONSUMMATION OF THE BUSINESS COMBINATION?

A:     After consummation of the Business Combination, the funds in the Trust Account will be used to pay holders of the Public Shares who exercise redemption rights, to pay fees and expenses incurred in connection with the Business Combination (including aggregate fees of up to approximately $6 million in the form of a Deferred Discount (as defined in the IPO Underwriting Agreement)) and for the Post-Combination Company’s working capital and general corporate purposes. As of January 12, 2024, the most recent practicable date prior to the date of this proxy statement/prospectus, there was approximately $114,807,097 in the Trust Account.

Q:     HOW DO THE INITIAL STOCKHOLDERS INTEND TO VOTE ON THE PROPOSALS?

A:     As of the Record Date, the Initial Stockholders of record are expected to be entitled to vote an aggregate of approximately 40% of the outstanding shares of XPDB Common Stock. The Sponsor and certain of XPDB’s directors have agreed to vote any Founder Shares and any Public Shares held by them as of the Record Date in favor of each of the Proposals presented at the Special Meeting. As a result, in addition to our Initial Stockholders’ Founder Shares, we expect that we would need 1,710,340, or 16.1%, of the 10,608,178 Public Shares expected to be outstanding as of the Record Date to be voted in favor of each of the Proposals in order for them to be approved (assuming all issued and outstanding shares are voted).

Q:     WHAT CONSTITUTES A QUORUM AT THE SPECIAL MEETING?

A:     A majority of the voting power of the issued and outstanding XPDB Common Stock entitled to vote at the Special Meeting must be present, in person (which would include presence at a virtual meeting) or represented by proxy, at the Special Meeting to constitute a quorum and in order to conduct business at the Special Meeting. Abstentions will be counted as present for the purpose of determining a quorum, but broker non-votes will not. The holders of the Founder Shares, who as of the Record Date are expected to own approximately 40% of the issued and outstanding shares of XPDB Common Stock, will count towards this quorum. In the absence of a quorum, the chairman of the Special Meeting has power to adjourn the Special Meeting. As of the Record Date for the Special Meeting, 8,897,840 shares of XPDB Common Stock are expected to be required to achieve a quorum.

Q:     WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL AT THE SPECIAL MEETING?

A:     The Business Combination Proposal:    The affirmative vote (in person or by proxy) of the holders of a majority of the shares of XPDB Class A Common Stock and XPDB Class B Common Stock entitled to vote and actually cast thereon at the Special Meeting, voting as a single class, is required to approve the Business Combination Proposal. XPDB stockholders must approve the Business Combination Proposal in order for the Business Combination to occur.

The Charter Proposal:    The affirmative vote (in person or by proxy) of (i) the holders of a majority of the shares of XPDB Class B Common Stock then outstanding, voting separately as a single class, and (ii) the holders of a majority of the shares of XPDB Class A Common Stock and XPDB Class B Common Stock entitled to vote, voting as a single class, is required to approve the Charter Proposal. The Business Combination is conditioned on the approval of the Charter Proposal, subject to the terms of the Merger Agreement. If the Business Combination Proposal is not approved, the Charter Proposal will not be presented to the stockholders for a vote.

The Governance Proposal:    The affirmative vote (in person or by proxy) of the holders of a majority of the shares of XPDB Class A Common Stock and XPDB Class B Common Stock entitled to vote and actually cast thereon at the Special Meeting, voting as a single class, is required to approve the Governance Proposal. The Business Combination is not conditioned on the approval of the Governance Proposal. If the Business Combination Proposal is not approved, the Governance Proposal will not be presented to the stockholders for a vote.

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The Director Election Proposal:    The affirmative vote (in person or by proxy) of the holders of a plurality of the outstanding shares of XPDB Class B Common Stock entitled to vote and actually cast thereon at the Special Meeting, voting as a class, is required to approve the Director Election Proposal. The Business Combination is conditioned on the approval of the Director Election Proposal, subject to the terms of the Merger Agreement. If the Business Combination Proposal is not approved, the Director Election Proposal will not be presented to the stockholders for a vote.

The Nasdaq Proposal:    The affirmative vote (in person or by proxy) of the holders of a majority of the shares of XPDB Class A Common Stock and XPDB Class B Common Stock entitled to vote and actually cast thereon at the Special Meeting, voting as a single class, is required to approve the Nasdaq Proposal. The Business Combination is conditioned on the approval of the Nasdaq Proposal, subject to the terms of the Merger Agreement. If the Business Combination Proposal is not approved, the Nasdaq Proposal will not be presented to the stockholders for a vote.

The Incentive Plan Proposal:    The affirmative vote (in person or by proxy) of the holders of a majority of the shares of XPDB Class A Common Stock and XPDB Class B Common Stock entitled to vote and actually cast thereon at the Special Meeting, voting as a single class, is required to approve the Incentive Plan Proposal. The Business Combination is conditioned on the approval of the Incentive Plan Proposal, subject to the terms of the Merger Agreement. If the Business Combination Proposal is not approved, the Incentive Plan Proposal will not be presented to the stockholders for a vote.

The Employee Stock Purchase Plan Proposal.    The affirmative vote (in person or by proxy) of the holders of a majority of the shares of XPDB Class A Common Stock and XPDB Class B Common Stock entitled to vote and actually cast thereon at the Special Meeting, voting as a single class, is required to approve the Employee Stock Purchase Plan Proposal. The Business Combination is conditioned on the approval of the Employee Stock Purchase Plan Proposal, subject to the terms of the Merger Agreement. If the Business Combination Proposal is not approved, the Employee Stock Purchase Plan Proposal will not be presented to the stockholders for a vote.

The Adjournment Proposal:    The affirmative vote (in person or by proxy) of the holders of a majority of the shares of XPDB Class A Common Stock and XPDB Class B Common Stock entitled to vote and actually cast thereon at the Special Meeting, voting as a single class, is required to approve the Adjournment Proposal. The Business Combination is not conditioned on the approval of the Adjournment Proposal. The Adjournment Proposal is not conditioned upon the approval of any other proposal set forth in this proxy statement/prospectus.

The Sponsor and certain of XPDB’s directors have agreed to vote any shares of XPDB Common Stock owned by them in favor of each of the Proposals presented at the Special Meeting. As a result, in addition to our Initial Stockholders’ Founder Shares, we would need 1,710,340, or 16.1%, of the 10,608,178 Public Shares outstanding as of September 30, 2023 to be voted in favor of each of the Proposals in order for them to be approved (assuming all issued and outstanding shares are voted).

Q:     DO ANY OF XPDB’S DIRECTORS OR OFFICERS HAVE INTERESTS IN THE BUSINESS COMBINATION THAT MAY DIFFER FROM OR BE IN ADDITION TO THE INTERESTS OF XPDB STOCKHOLDERS?

A:     Certain of XPDB’s executive officers and certain directors may have interests in the Business Combination that may be different from, or in addition to, the interests of XPDB stockholders generally.

These interests include, among other things:

        If the Business Combination with Montana or another business combination is not consummated within the Completion Window, XPDB will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding Public Shares for cash and, subject to the approval of its remaining stockholders and the XPDB Board, dissolving and liquidating. In such event, the 7,187,500 Founder Shares purchased by the Sponsor for an aggregate purchase price of $25,000, or approximately $0.004 per share, and held by the Initial Stockholders would be worthless because the Initial Stockholders are not entitled to participate in

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any redemption or distribution with respect to such shares. Such Founder Shares had an aggregate market value of $77,696,875 based upon the closing price of $10.81 per share of XPDB Class A Common Stock on the Nasdaq on January 12, 2024, the most recent practicable date prior to the date of this proxy statement/prospectus.

        The Sponsor purchased an aggregate of 8,900,000 Private Placement Warrants from XPDB for an aggregate purchase price of approximately $8,900,000 (or $1.00 per warrant). Such Private Placement Warrants had an aggregate market value of $623,000 based upon the closing price of $0.07 per XPDB public warrant on the Nasdaq on January 12, 2024, the most recent practicable date prior to the date of this proxy statement/prospectus. The Private Placement Warrants would become worthless if XPDB does not consummate a business combination within the Completion Window.

        No compensation of any kind, including finder’s and consulting fees, is paid to our Sponsor, officers and directors, or any of their respective affiliates, for services rendered prior to or in connection with the completion of an initial business combination, except for reimbursement for out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations, advisory fees and consulting fees in an aggregate amount of up to $3,000,000 that will be paid to XMS Capital and TEP in connection with the Business Combination and $20,000 per month for office space, secretarial and administrative services. These amounts have not yet been paid but are accruing. Such arrangement will terminate upon the consummation of the Business Combination. From the date of the XPDB IPO until the date of the Merger Agreement, there have been no reimbursable out of pocket expenses incurred in connection with the Business Combination other than certain expenses in connection with conducting due diligence on Montana and negotiating the Merger Agreement.

        Due to the differential in the purchase price that our Sponsor and its affiliates paid for the Founder Shares and Private Placement Warrants as compared to the price of the Public Shares sold in the XPDB IPO and the substantial number of XPDB Class A Common Stock our Sponsor will receive upon conversion of the Founder Shares in connection with the Business Combination and exercise of the Private Placement Warrants, our Sponsor and its affiliates may earn a positive rate of return on their investment even if other XPDB Public Stockholders experience a negative rate of return in the Post-Combination Company, and they may therefore be incentivized to complete an acquisition of a less favorable target company or on terms less favorable to XPDB stockholders rather than liquidate.

        One of our directors, Patrick C. Eilers, is a majority investor in TEP Montana, which owns 77,095 Montana Class B Common Units, or 4.9% of Montana’s outstanding units. TEP Montana paid approximately $4,452,825 for such units. Assuming that there is no Capital Raise or further dilution to the Montana Common Units, TEP Montana will receive approximately 1,857,301 shares of Class A Common Stock at the Closing, which, at a price of $10.00 per share, will have an aggregate value of $18,573,010 (of these shares, 1,667,256 shares having an aggregate value of $16,672,560 would be indirectly owned by Mr. Eilers). Mr. Eilers is an advisor to the Montana board of directors. Additionally, Mr. Eilers is expected to be a member of the Post-Combination Company Board following the Closing.

        The continued indemnification of current directors and officers and the continuation of directors’ and officers’ liability insurance.

The XPDB Board was aware of and considered these interests to the extent such interests existed at the time, among other matters, in approving the Merger Agreement and in recommending that the Business Combination be approved by the stockholders of XPDB. See the section entitled “The Business Combination — Interests of the Sponsor and XPDB’s Directors and Officers in the Business Combination” in this proxy statement/prospectus.

Q:     WHAT DO I NEED TO DO NOW?

A:     XPDB urges you to read carefully and consider the information contained in this proxy statement/prospectus, including the Annexes and the other documents referred to herein, and to consider how the Business Combination will affect you as a stockholder of XPDB. Stockholders should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus and on the enclosed proxy card.

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Q:     WHAT HAPPENS IF I SELL MY SHARES OF XPDB CLASS A COMMON STOCK BEFORE THE SPECIAL MEETING?

A:     The Record Date for the Special Meeting is earlier than the date that the Business Combination is expected to be completed. If you transfer your shares of XPDB Class A Common Stock after the Record Date, but before the Special Meeting, unless the transferee obtains from you a proxy to vote those shares, you will retain your right to vote at the Special Meeting. However, you will not be able to seek redemption of your shares of XPDB Class A Common Stock because you will no longer be able to tender them prior to the Special Meeting in accordance with the provisions described herein. If you transferred your shares of XPDB Class A Common Stock prior to the Record Date, you have no right to vote those shares at the Special Meeting or seek redemption of those shares.

Q:     HOW DO I VOTE?

A:     If you are a stockholder of record of XPDB as of February 8, 2024, the Record Date for the Special Meeting, you may submit your proxy before the Special Meeting in any of the following ways, if available:

        use the toll-free number shown on your proxy card;

        visit the website shown on your proxy card to vote via the Internet; or

        complete, sign, date and return the enclosed proxy card in the enclosed postage-paid envelope.

Stockholders who choose to participate in the Special Meeting can vote their shares electronically during the meeting via live audio webcast by visiting https://www.cstproxy.com/xpdispacii/2024. You will need the control number that is printed on your proxy card to enter the Special Meeting. XPDB recommends that you log in at least 15 minutes before the meeting to ensure you are logged in when the Special Meeting starts.

If your shares are held in “street name” through a broker, bank or other nominee, your broker, bank or other nominee will send you separate instructions describing the procedure for voting your shares. “Street name” stockholders who wish to vote at the Special Meeting will need to obtain a proxy form from their broker, bank or other nominee.

Q:     IF MY SHARES ARE HELD IN “STREET NAME” BY A BROKER, BANK OR OTHER NOMINEE, WILL MY BROKER, BANK OR OTHER NOMINEE VOTE MY SHARES FOR ME?

A:     If your shares are held in “street name” in a stock brokerage account or by a broker, bank or other nominee, you must provide the record holder of your shares with instructions on how to vote your shares. Please follow the voting instructions provided by your broker, bank or other nominee. Please note that you may not vote shares held in “street name” by returning a proxy card directly to XPDB or by voting in person (which would include presence at a virtual meeting) at the Special Meeting unless you provide a “legal proxy”, which you must obtain from your broker, bank or other nominee.

Under the rules of the Nasdaq, brokers who hold shares in “street name” for a beneficial owner of those shares typically have the authority to vote in their discretion on “routine” proposals when they have not received instructions from beneficial owners. However, brokers are not permitted to exercise their voting discretion with respect to the approval of matters that the Nasdaq determines to be “non-routine” without specific instructions from the beneficial owner. It is expected that all Proposals to be voted on at the Special Meeting are “non-routine” matters. Broker non-votes occur when a broker or nominee is not instructed by the beneficial owner of shares to vote on a particular proposal for which the broker does not have discretionary voting power.

If you are an XPDB stockholder holding your shares in “street name” and you do not instruct your broker, bank or other nominee on how to vote your shares, your broker, bank or other nominee will not vote your shares on any of the Proposals. Such broker non-votes will be the equivalent of a vote “AGAINST” the Charter Proposal but will have no effect on the vote count for the other Proposals.

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Q:     WHAT IF I ATTEND THE SPECIAL MEETING AND ABSTAIN OR DO NOT VOTE?

A:     For purposes of the Special Meeting, an abstention occurs when a stockholder attends the meeting in person (which would include presence at a virtual meeting) and does not vote or returns a proxy with an “abstain” vote. Abstentions will be counted as present at the Special Meeting for the purpose of determining a quorum.

If you are an XPDB stockholder who attends the Special Meeting virtually and fails to vote on the Charter Proposal, your failure to vote will have the same effect as a vote “AGAINST” such proposal.

If you are an XPDB stockholder who attends the Special Meeting virtually and fails to vote on the Business Combination Proposal, the Governance Proposal, the Nasdaq Proposal, the Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal and the Adjournment Proposal, your failure to vote will have no effect on such Proposal.

Q:     WHAT WILL HAPPEN IF I RETURN MY PROXY CARD WITHOUT INDICATING HOW TO VOTE?

A:     If you sign and return your proxy card without indicating how to vote on any particular Proposal, the XPDB Common Stock represented by your proxy will be voted “FOR” each of the Proposals presented at the Special Meeting.

Q:     MAY I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY CARD?

A:     Yes. You may change your vote at any time before your proxy is exercised by doing any one of the following:

        send another proxy card with a later date;

        notify XPDB’s secretary in writing before the Special Meeting that you have revoked your proxy;

        submit a new proxy online before the meeting; or

        attend the Special Meeting and vote electronically by visiting https://www.cstproxy.com/xpdispacii/2024 and entering the control number found on your proxy card, instruction form or notice you previously received.

Any proxy that you submitted may also be revoked by submitting a new proxy by mail, or online or by telephone, not later than 11:59 p.m. Eastern Time on March 7, 2024, or by voting online at the Special Meeting. Simply attending the Special Meeting will not revoke your proxy. If you have instructed a broker, bank or other nominee to vote your shares of XPDB Common Stock, you must follow the directions you receive from your broker, bank or other nominee in order to change or revoke your vote.

Q:     WHAT HAPPENS IF I FAIL TO TAKE ANY ACTION WITH RESPECT TO THE SPECIAL MEETING?

A:     If you fail to take any action with respect to the Special Meeting and the Business Combination is approved by stockholders and consummated, you will become a stockholder of the Post-Combination Company. Failure to take any action with respect to the Special Meeting will not affect your ability to exercise your redemption rights. If you fail to take any action with respect to the Special Meeting and the Business Combination is not approved, you will continue to be a stockholder of XPDB while XPDB searches for another target business with which to complete a business combination.

Q:     WHAT SHOULD I DO IF I RECEIVE MORE THAN ONE SET OF VOTING MATERIALS?

A:     Stockholders may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please (a) complete, sign, date and return or (b) vote electronically by visiting https://www.cstproxy.com/xpdispacii/2024 and entering the control number found on each proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your XPDB shares.

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Q:     WHO CAN HELP ANSWER MY QUESTIONS?

A:     If you have questions about the Business Combination or if you need additional copies of the proxy statement/prospectus or the enclosed proxy card you should contact:

Morrow Sodali LLC
333 Ludlow Street, 5th Floor, South Tower
Stamford, Connecticut 06902
Stockholders may call toll free: (800) 662-5200
Banks and Brokers may call collect: (203) 658-9400
XPDB.info@investor.morrowsodali.com

You may also obtain additional information about XPDB from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information.” If you are a holder of Public Shares and you intend to seek redemption of your Public Shares, you will need to deliver your stock (either physically or electronically) to XPDB’s transfer agent at the address below prior to the vote at the Special Meeting. If you have questions regarding the certification of your position or delivery of your stock, please contact:

Continental Stock Transfer & Trust Company
1 State Street 30th Floor
New York, New York 10004

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SUMMARY

This summary highlights selected information included in this proxy statement/prospectus and does not contain all of the information that may be important to you. You should read this entire document and its annexes and the other documents to which we refer before you decide how to vote.

The Business Combination and the Merger Agreement

The terms and conditions of the Business Combination are contained in the Merger Agreement, dated as of June 5, 2023, which is attached as Annex A to this proxy statement/prospectus. We encourage you to read the Merger Agreement carefully, as it is the legal document that governs the Business Combination.

On June 5, 2023, XPDB entered into the Merger Agreement with Montana and Merger Sub, pursuant to which, among other things and subject to the terms and conditions contained in the Merger Agreement, Merger Sub will merge with and into Montana, with Montana surviving the Merger as a wholly owned subsidiary of XPDB. In connection with the Closing of the Merger, XPDB will be renamed “Montana Technologies Corporation.”

XPDB has agreed to provide its stockholders with the opportunity to redeem shares of XPDB Class A Common Stock upon completion of the Business Combination.

Merger Consideration; Conversion of Securities

As part of the Business Combination, Montana Equityholders will receive the Merger Consideration. After giving effect to the conversion of all outstanding Montana Preferred Units into Montana Class B Common Units, which will occur prior to the effective time of the Merger, the Merger Consideration will be payable (i) in the case of holders of Montana Class B Common Units and Montana Class C Common Units, in the form of newly issued shares of Class A Common Stock, with a $10.00 value ascribed to each such share and which will entitle the holder thereof to one vote per share on all matters submitted to a vote of the holders of Class A Common Stock, whether voting separately as a class or otherwise, (ii) in the case of holders of Montana Class A Common Units, in the form of newly issued shares of Class B Common Stock, with a $10.00 value ascribed to each such share and which will entitle the holder thereof to a number of votes per share such that the Montana Equityholders as of immediately prior to the Closing will, immediately following the Closing, collectively own shares representing at least 80% of the voting power of all classes of capital stock of the Post-Combination Company entitled to vote on matters submitted to a vote of the stockholders of the Post-Combination Company, (iii) in the case of holders of Montana Options, each outstanding Montana Option, whether vested or unvested, will be converted into an option to purchase, upon the same terms and conditions as are in effect with respect to the corresponding Montana Option immediately prior to the Closing, including with respect to vesting and termination-related provisions, a number of shares of Class A Common Stock (rounded down to the nearest whole share) equal to the product of (x) the number of Montana Common Units underlying such option immediately prior to the Closing and (y) the number of shares of Class A Common Stock issuable in respect of each Montana Common Unit in the Business Combination pursuant to the Merger Agreement, at an exercise price per share (rounded up to the nearest whole cent) equal to (A) the exercise price per Montana Common Unit underlying such option immediately prior to the Closing divided by (B) the number of shares of Class A Common Stock issuable in respect of each Montana Common Unit in the Business Combination pursuant to the Merger Agreement, and (iv) in the case of holders of Montana Warrants, each outstanding Montana Warrant will be converted into a warrant to purchase, upon the same terms and conditions as are in effect with respect to the corresponding Montana Warrant immediately prior to the Closing, including with respect to vesting and termination-related provisions, a number of shares of Class A Common Stock equal to the product of (x) the number of Montana Common Units underlying such warrant immediately prior to the Closing and (y) the number of shares of Class A Common Stock issuable in respect of each Montana Common Unit in the Business Combination pursuant to the Merger Agreement, at an exercise price per share equal to (A) the exercise price per Montana Common Unit underlying such warrant immediately prior to the Closing divided by (B) the number of shares of Class A Common Stock issuable in respect of each Montana Common Unit in the Business Combination pursuant to the Merger Agreement.

The Eligible Equityholders will also have the opportunity to receive additional equity consideration (in each case, in accordance with their respective pro rata share) in the form of Earnout Shares only upon full completion of construction and operational viability (including all permitting, regulatory approvals and necessary or useful inspections) of new production capacity of Montana’s key components or assemblies based solely on demand from bona fide customer commitments evidenced by binding contracts (or in the sole discretion of a majority of independent

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members of the Post-Combination Company Board, a non-binding letter of intent or indication of interest or similar writing that is substantially likely to become a binding contract) with a known pr ice or pricing formula that exceeds a level of production capacity that is expected to generate Annualized EBITDA of more than $150,000,000, which shall be determined by a majority of the independent members of the Post-Combination Company Board in their sole discretion, equal to (i) the ratio of (x) (1) the Expected Annualized EBITDA less (2) (A) the Threshold Annualized EBITDA plus (B) all previously Expected Annualized EBITDA amounts associated with previous new production capacities for which previous earnouts were achieved, divided by (y) $150,000,000 multiplied by (ii) $200,000,000, provided that the aggregate Expected Annualized EBITDA shall not exceed $300,000,000. The maximum value of the Earnout Shares will be capped at $200 million and the ability to receive Earnout Shares will expire on the fifth anniversary of the Closing. A majority of the independent members of the Post-Combination Company Board then serving will have sole discretion in determining, among other things, the achievement of the applicable milestones, the calculations of payments of Earnout Shares to the applicable 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 Montana Equityholder’s right to receive Earnout Shares. Earnout Shares issuable in respect of Montana Options outstanding as of immediately prior to the effective time of the Merger may be issued to the holder of such 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. See the section entitled “The Merger Agreement — Earnout Shares.

As of the date of the Merger Agreement, 100.0% of the total outstanding Montana Class A Common Units and 72.7% of the total outstanding Montana Class B Common Units (or an aggregate of approximately 76.6% of the total outstanding Montana Class A Units and Montana Class B Units in the aggregate) were held by unitholders that are expected to continue as directors, officers or employees of the Post-Combination Company. The retention of certain holders of Montana Options who will continue as directors, officers or employees of the Post-Combination Company (whose responsibilities are expected to include continued technology development and commercial execution) is integral to the achievement of the milestones that will determine whether Earnout Shares are payable. Montana does not believe that such targets are achievable absent the continued involvement of such persons. The Post-Closing Company is expected to provide competitive compensation, benefits and equity awards (pursuant to the terms of the Incentive Plan) to these individuals following the Merger in order to incentivize these individuals to continue to provide services to the Post-Combination Company.

Prior to Closing, Montana will use its commercially reasonable efforts to enter into Subscription Agreements with the Subscribers pursuant to the Capital Raise, in exchange for an agreed upon purchase price.

On January 7, 2024, as part of the Capital Raise, Montana entered into the Common Unit Subscription Agreement with the Carrier Subscriber, pursuant to which the Carrier Subscriber agreed to purchase from Montana, and Montana agreed to issue and sell to the Carrier Subscriber, a number of Subscribed Units as will convert into 1,176,471 Private Placement Conversion Shares upon the Closing for an aggregate purchase price of approximately $10.0 million. Unless otherwise waived by the Carrier Subscriber, the Carrier Subscriber’s obligation to effect the Subscription is subject to the Aggregate Available Capital being equal to or greater than $50.0 million prior to, or at, the closing of the Subscription. The Subscription, if consummated, will take place prior to the Closing and the Private Placement Conversion Shares, if and when issued upon the Closing, will be issued as part of the Merger Consideration.

Fractional Shares.    No fractional shares of Class A Common Stock will be issued by virtue of the Business Combination. Each person who would otherwise be entitled to a fraction of a share of Class A Common Stock (after aggregating all fractional shares of Class A Common Stock that otherwise would be received by such holder) will instead have the number of shares of Class A Common Stock issued to such person rounded up in the aggregate to the nearest whole share of Class A Common Stock.

Ownership of the Post-Combination Company

We anticipate that, upon completion of the Business Combination, in the Assuming Minimum Redemption Scenario, the XPDB Public Stockholders will retain an ownership interest of approximately 19.0% in the Post-Combination Company, the Montana Equityholders will own approximately 68.0% of the Post-Combination Company and the Initial Stockholders will own approximately 13.0% of the Post-Combination Company. In the Maximum Contractual Redemptions Scenario, the XPDB Public Stockholders will retain an ownership interest of

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approximately 14.9% in the Post-Combination Company, the Montana Equityholders will own approximately 71.5% of the Post-Combination Company and the Initial Stockholders will own approximately 13.6% of the Post-Combination Company. The ownership percentages with respect to the Post-Combination Company do not take into account the issuance of any additional shares of Common Stock underlying the public Warrants. If the actual facts are different from these assumptions (which they are likely to be), these ownership percentages will be different. See “Unaudited Pro Forma Condensed Combined Financial Information.”

The following summarizes the pro forma ownership of the Post-Combination Company’s common stock as of September 30, 2023, under different redemption scenarios(1):

 

Assuming
Minimum Redemptions

 

Assuming
Mid-Point Redemptions

 

Assuming Maximum
Contractual Redemptions

Equity Capitalization Summary

 

Shares

 

%

 

Shares

 

%

 

Shares

 

%

Montana Class A Equityholders

 

4,818,203

 

8.6

%

 

4,818,203

 

8.9

%

 

4,818,203

 

9.1

%

Montana Class B Equityholders

 

33,134,278

 

59.4

%

 

33,134,278

 

60.9

%

 

33,134,278

 

62.4

%

XPDB Public Stockholders

 

10,608,178

 

19.0

%

 

9,265,030

 

17.0

%

 

7,921,881

 

14.9

%

Initial Stockholders

 

7,187,500

 

13.0

%

 

7,187,500

 

13.2

%

 

7,187,500

 

13.6

%

Total common stock

 

55,748,159

 

100.0

%

 

54,405,011

 

100.0

%

 

53,061,862

 

100.0

%

____________

(1)      The table does not include the 14,375,000 shares underlying XPDB public warrants, the 11,125,000 shares underlying Private Placement Warrants, the 3,856,639 shares underlying Montana Options, and the 380,880 shares underlying Montana Warrants.

All of the relative percentages above are for illustrative purposes only and are based upon certain assumptions as described in the section entitled “Basis of Presentation and Glossary — Share Calculations and Ownership Percentages” and, with respect to the determination of the “Assuming Maximum Contractual Redemptions Scenario,” the section entitled “Unaudited Pro Forma Condensed Combined Financial Statements.” Should one or more of the assumptions prove incorrect, actual ownership percentages may vary materially from those described in this proxy statement/prospectus as anticipated, believed, estimated, expected or intended. See “Unaudited Pro Forma Condensed Combined Financial Information.”

Recommendation of the XPDB Board of Directors

The XPDB Board has unanimously determined that the Business Combination, on the terms and conditions set forth in the Merger Agreement, is advisable and in the best interests of XPDB and its stockholders and has directed that the Proposals set forth in this proxy statement/prospectus be submitted to its stockholders for approval at the Special Meeting on the date and at the time and place set forth in this proxy statement/prospectus. The XPDB Board unanimously recommends that XPDB’s stockholders vote “FOR” the Business Combination Proposal, “FOR” the Charter Proposal, “FOR” the Governance Proposal, “FOR” the Director Election Proposal, “FOR” the Nasdaq Proposal, “FOR” the Incentive Plan Proposal, “FOR” the Employee Stock Purchase Plan Proposal and “FOR” the Adjournment Proposal, if presented. See the section entitled “The Business Combination — Recommendation of the XPDB Board of Directors and Reasons for the Business Combination.”

XPDB’s Special Meeting of Stockholders

The Special Meeting will be held on March 8, 2024, at 8:00 a.m., Central Time, in virtual format. At the Special Meeting, XPDB stockholders will be asked to vote on the Business Combination Proposal, the Charter Proposal, the Governance Proposal, the Director Election Proposal, the Nasdaq Proposal, the Incentive Plan Proposal the Employee Stock Purchase Plan Proposal and, if necessary, the Adjournment Proposal to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal, the Charter Proposal, the Nasdaq Proposal, the Incentive Plan Proposal or the Employee Stock Purchase Plan Proposal.

Stockholders will be entitled to vote or direct votes to be cast at the Special Meeting if they owned shares of XPDB Common Stock at the close of business on February 8, 2024, which is the Record Date for the Special Meeting. Stockholders are entitled to one vote for each share of XPDB Common Stock owned at the close of business on the Record Date. If stockholders’ shares are held in “street name” or are in a margin or similar account, stockholders should contact their broker, bank or other nominee to ensure that votes related to the shares they beneficially own are properly counted. On the Record Date, there are expected to be 17,795,678 shares of XPDB Class A Common Stock outstanding, of which 10,608,178 are expected to be Public Shares and 7,187,500 are expected to be Founder Shares.

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A quorum of XPDB stockholders is necessary to hold a valid meeting. A quorum will be present at the Special Meeting if a majority of the voting power of all outstanding shares of capital stock of XPDB entitled to vote at the Special Meeting as of the Record Date is represented in person (which would include presence at a virtual meeting) or by proxy. Abstentions will be counted as present for the purpose of determining a quorum, but broker non-votes will not. The Initial Stockholders, who as of the Record Date are expected to own approximately 7,187,500 of the issued and outstanding shares of XPDB Common Stock, will count towards this quorum. As of the Record Date, 8,897,840 shares of XPDB Common Stock are expected to be required to achieve a quorum. XPDB has entered into an agreement with the Sponsor and certain of XPDB’s directors, pursuant to which each agreed to vote any shares of XPDB Common Stock owned by them in favor of each of the Proposals presented at the Special Meeting. As a result, in addition to our Initial Stockholders’ Founder Shares, we expect that we would need 1,710,340, or 16.1%, of the 10,608,178 Public Shares expected to be outstanding as of the Record Date to be voted in favor of each of the Proposals in order for them to be approved (assuming all issued and outstanding shares are voted). The Proposals presented at the Special Meeting will require the following votes:

The approval of each of the Business Combination Proposal, the Governance Proposal, the Nasdaq Proposal, the Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal and the Adjournment Proposal, if presented, requires the affirmative vote (in person or by proxy) of the holders of a majority of the shares of XPDB Class A Common Stock and XPDB Class B Common Stock entitled to vote and actually cast thereon at the Special Meeting, voting as a single class. Accordingly, a stockholder’s failure to vote by proxy or to vote in person (which would include presence at a virtual meeting) at the Special Meeting, as well as an abstention from voting and a broker non-vote with regard to each of the Business Combination Proposal, the Governance Proposal, the Nasdaq Proposal, the Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal or the Adjournment Proposal, if presented, will have no effect on the Business Combination Proposal, the Governance Proposal, the Nasdaq Proposal, the Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal or the Adjournment Proposal.

The approval of the Charter Proposal requires the affirmative vote of (i) the holders of a majority of the shares of XPDB Class B Common Stock then outstanding, voting separately as a single class, and (ii) the holders of a majority of the outstanding shares of XPDB Common Stock on the Record Date, voting together as a single class. Accordingly, a stockholder’s failure to vote by proxy or to vote in person (which would include presence at a virtual meeting) at the Special Meeting, as well as an abstention from voting and a broker non-vote with regard to the Charter Proposal, will have the same effect as a vote “AGAINST” such proposal.

Consummation of the Business Combination is conditioned on the approval of the Business Combination Proposal, the Charter Proposal, the Director Election Proposal, the Nasdaq Proposal, the Incentive Plan Proposal and the Employee Stock Purchase Plan Proposal at the Special Meeting, subject to the terms of the Merger Agreement. The Business Combination is not conditioned on the Governance Proposal or the Adjournment Proposal. If the Business Combination Proposal is not approved, the other Proposals (except the Adjournment Proposal) will not be presented to the stockholders for a vote.

XPDB’s Directors and Executive Officers Have Financial Interests in the Business Combination

Certain of XPDB’s executive officers and certain non-employee directors may have interests in the Business Combination that may be different from, or in addition to, the interests of XPDB stockholders generally. These interests include, among other things:

        If the Business Combination with Montana or another business combination is not consummated within the Completion Window, XPDB will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding Public Shares for cash and, subject to the approval of its remaining stockholders and the XPDB Board, dissolving and liquidating. In such event, the 7,187,500 Founder Shares purchased by the Sponsor for an aggregate purchase price of $25,000, or approximately $0.004 per share, and held by the Initial Stockholders would be worthless because the Initial Stockholders are not entitled to participate in any redemption or distribution with respect to such shares. Certain of XPDB’s directors also own interests in the Sponsor, and would therefore indirectly benefit from the Founder Shares held by the Sponsor. Such Founder Shares had an aggregate market value of $77,696,875 based upon the closing price of $10.81 per share of XPDB Class A Common Stock on the Nasdaq on January 12, 2024, the most recent practicable date prior to the date of this proxy statement/prospectus.

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        The Sponsor purchased an aggregate of 8,900,000 Private Placement Warrants from XPDB for an aggregate purchase price of approximately $8,900,000 (or $1.00 per warrant). Such Private Placement Warrants had an aggregate market value of $623,000 based upon the closing price of $0.07 per XPDB public warrant on the Nasdaq on January 12, 2024, the most recent practicable date prior to the date of this proxy statement/prospectus. Certain of XPDB’s directors also own interests in the Sponsor and would therefore indirectly benefit from the Private Placement Warrants held by the Sponsor. The Private Placement Warrants would become worthless if XPDB does not consummate a business combination within the Completion Window.

        No compensation of any kind, including finder’s and consulting fees, is paid to our Sponsor, officers and directors, or any of their respective affiliates, for services rendered prior to or in connection with the completion of an initial business combination, except for reimbursement for out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations, advisory fees and consulting fees in an aggregate amount of up to $3,000,000 that will be paid to XMS Capital and TEP in connection with the Business Combination and $20,000 per month for office space, secretarial and administrative services for each month since the XPDB IPO that will be paid at the consummation of the Business Combination. Such arrangement will terminate upon the consummation of the Business Combination. From the date of the XPDB IPO until the date of the Merger Agreement, there have been no reimbursable out-of-pocket expenses incurred by the Sponsor in connection with the Business Combination other than certain expenses in connection with conducting due diligence on Montana.

        One of our directors, Patrick C. Eilers, is a majority investor in TEP Montana, which owns 77,095 Montana Class B Common Units, or 4.9% of Montana’s outstanding units. TEP Montana paid approximately $4,452,825 for such units. Assuming that there is no Capital Raise or further dilution to the Montana Common Units, TEP Montana will receive approximately 1,857,301 shares of Class A Common Stock at the Closing, which, at a price of $10.00 per share, will have an aggregate value of $18,573,010 (of these shares, 1,667,256 shares, having an aggregate value of $16,672,560 would be indirectly owned by Mr. Eilers). Mr. Eilers is an advisor to the Montana board of directors. Additionally, Mr. Eilers is expected to be a member of the Post-Combination Company Board following the Closing.

Regulatory Approvals Required for the Business Combination

Completion of the Business Combination is subject to approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”). Each of Montana and XPDB have agreed to use their respective reasonable best efforts to take all actions to consummate and make effective the Business Combination as soon as reasonably practicable and to obtain as promptly as reasonably practicable all consents, registrations, approvals, clearances, permits and authorizations necessary or advisable to be obtained from any third party or any governmental entity in order to consummate the Business Combination. XPDB has further agreed to take any steps necessary to eliminate any impediments under the HSR Act or any other antitrust law that is asserted by any governmental entity so as to enable the parties to consummate the Business Combination as soon as possible.

XPDB and Montana filed Notification and Report Forms under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, with the Antitrust Division of the Department of Justice and the Federal Trade Commission on June 20, 2023, and the 30-day waiting period expired at 11:59 p.m., New York City time, on July 20, 2023. The regulatory approvals to which completion of the Business Combination are subject have been obtained and are described in more detail in the section of this proxy statement/prospectus entitled “Regulatory Approvals Required for the Business Combination.”

Appraisal Rights

Holders of XPDB Common Stock are not entitled to appraisal rights in connection with the Business Combination under Delaware law.

Material U.S. Federal Income Tax Consequences

For a discussion of the material U.S. federal income tax considerations for holders of Public Shares with respect to the exercise of redemption rights, see “Material U.S. Federal Income Tax Consequences — Tax Consequences of a Redemption of Public Shares.” The consequences of a redemption to any particular holder of Public Shares will

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depend on that holder’s particular facts and circumstances. Accordingly, you are urged to consult your tax advisor to determine your tax consequences from the exercise of your redemption rights, including the applicability and effect of U.S. federal, state and local and non-U.S. income and other tax laws in light of your particular circumstances.

Conditions to the Closing of Business Combination

Conditions to Each of Montana’s, XPDB’s and Merger Sub’s Obligations

The respective obligations of each of XPDB, Montana and Merger Sub to consummate the Business Combination are subject to the satisfaction or written waiver at or prior to the Closing of the following conditions:

        there must not be in effect any order of any nature prohibiting or preventing the consummation of the Business Combination and no law adopted, enacted or promulgated that makes consummation of the Business Combination illegal or otherwise prohibited;

        all waiting periods and any extensions thereof applicable to the Business Combination under the HSR Act, and any commitments or agreements (including timing agreements) with any governmental entity not to consummate the Business Combination before a certain date, must have expired or been terminated;

        the approval of each of the Proposals set forth in this proxy statement/prospectus must have been obtained in accordance with the DGCL, XPDB’s organizational documents and the rules and regulations of the Nasdaq;

        the approval of the holders of Montana Preferred Units, to the extent needed to complete the conversion of the Montana Preferred Units into Class B Common Units prior to Closing (if applicable), in accordance with the DLLCA and Montana’s organizational documents;

        the registration statement, of which this proxy statement/prospectus forms a part, must have become effective in accordance with the Securities Act and no stop order suspending the effectiveness of the registration statement be in effect and no proceedings for that purpose have commenced or be threatened by the SEC; and

        the XPDB Common Stock to be issued in the Business Combination must have been approved by the Nasdaq, subject only to official notice of issuance thereof.

Conditions to Obligations of XPDB and Merger Sub

The obligation of XPDB and Merger Sub to complete the Business Combination is also subject to the satisfaction, or written waiver by XPDB, at or prior to the Closing of the following conditions:

        the representations and warranties of Montana (other than fundamental representations), must be true and correct as of the date of Closing as if made at and as of such time (or, if given as of an earlier date, as of such earlier date), except that this condition will be satisfied unless any and all inaccuracies in such representations and warranties of Montana, in the aggregate, would or would reasonably be expected to result in a Material Adverse Effect with respect to Montana, and fundamental representations must be true and correct, other than de minimis inaccuracies as of the date of Closing (or, if given as of an earlier date, such earlier date);

        Montana must have performed in all material respects its obligations under the Merger Agreement required to be performed by it at or prior to the Closing;

        XPDB must have received a certificate executed and delivered by an authorized officer of Montana confirming that the conditions set forth in the immediately preceding bullet points have been satisfied; and

        since the date of the Merger Agreement, a Material Adverse Effect with respect to Montana must not have occurred.

Conditions to Obligations of Montana

The obligation of Montana to complete the Business Combination is also subject to the satisfaction or waiver by Montana of the following conditions:

        the representations and warranties of XPDB and Merger Sub (other than fundamental representations), must be true and correct as of the date of Closing as if made at and as of such time, except for representations and warranties that speak as of a specific date prior to the date of Closing, in which case

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such representations and warranties need only be true and correct as of such earlier date; provided, that this condition will be deemed satisfied unless any and all inaccuracies in such representations and warranties, in the aggregate, would result in a Material Adverse Effect with respect to XPDB and Merger Sub, and fundamental representations must be true and correct other than de minimis inaccuracies as of the date of Closing (or, if given as of an earlier date, such earlier date);

        each of XPDB and Merger Sub must have performed in all material respects its obligations under the Merger Agreement required to be performed by it at or prior to the Closing pursuant to the terms of the Merger Agreement;

        an authorized officer of XPDB and Merger Sub shall have executed and delivered to Montana a certificate as to compliance with the conditions set forth in the immediately preceding bullet points; and

        the Aggregate Transaction Proceeds must be equal to or in excess of $85 million; provided that, upon receiving proceeds from the Capital Raise equal to or in excess of such amount, this condition will no longer apply.

No Solicitation

Montana.    From the date of the Merger Agreement until the earlier of (x) Closing or (y) the date on which the Merger Agreement is terminated, other than in connection with the transaction contemplated by the Merger Agreement, Montana agreed that it will not, and will not authorize or (to the extent within its control) permit any Montana affiliates, directors, managers, officers, employees, agents or representatives (including investment bankers, attorneys and accountants) to, directly or indirectly, (i) knowingly encourage, initiate, solicit, or facilitate, offer, or make any offers, proposals or inquiries related to, an acquisition proposal, (ii) engage in any discussions or negotiations with respect to an acquisition proposal with, or provide any non-public information or data to, any person that has made, or informs Montana that it is considering making, an acquisition proposal, or (iii) enter into any agreement (whether or not binding) relating to an acquisition proposal. Montana must give notice of any acquisition proposal to XPDB as soon as practicable following its awareness of such proposal.

XPDB.    From the date of the Merger Agreement until the earlier of (x) Closing or (y) the date on which the Merger Agreement is terminated, other than in connection with the transaction contemplated by the Merger Agreement, XPDB agreed that it will not, and will not authorize or (to the extent within its control) permit any of its subsidiaries or any of its subsidiaries’ directors, managers, officers, employees, agents or representatives (including investment bankers, attorneys and accountants), in each case in such directors’, managers’, officers’, employees’, agents’ or representatives’ capacity in such role with XPDB or such subsidiary, to, directly or indirectly, (i) knowingly encourage, initiate, solicit, or facilitate, offer, or make any offers or proposals related to, an alternate business combination, (ii) enter into, engage in or continue any discussions or negotiations with respect to an alternate business combination with, or provide any non-public information, data or access to, employees to, any person that has made, or informs XPDB that it is considering making, an alternate business combination proposal, or (iii) enter into any agreement (whether or not binding) relating to an alternate business combination. XPDB must give notice of any alternate business combination to Montana as soon as practicable following its awareness of such proposal.

Termination

The Merger Agreement may be terminated at any time at or prior to Closing, whether before or after approval of the proposals required to effect the Business Combination by XPDB’s stockholders.

Mutual Termination Rights

The Merger Agreement may be terminated and the Business Combination abandoned at any time prior to the Closing, as follows:

        in writing, by mutual consent of Montana, XPDB and Merger Sub;

        by XPDB or Montana if any law or order permanently restraining, enjoining or otherwise prohibiting the consummation of the Merger has been enacted, issued, promulgated, enforced or entered and has become final and non-appealable, except that a party may not terminate the Merger Agreement for this reason if it has breached in any material respect its obligations set forth in the Merger Agreement in any manner than has proximately contributed to the enactment, issuance, promulgation, enforcement or entry into such law or order;

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        by Montana (if not in breach such that a closing condition cannot be satisfied) if any representation or warranty is not true and correct or if XPDB has failed to perform any covenant or agreement made by either XPDB or Merger Sub in the Merger Agreement (including an obligation to consummate the Closing), such that the conditions to the obligations of XPDB, as described in the section entitled “— Conditions to Closing of the Business Combination” above, could not be satisfied as of the date of Closing, and are or cannot be cured within the earlier of (i) thirty days after written notice thereof is delivered to XPDB and Merger Sub by Montana and (ii) the Outside Date;

        by XPDB (if not in breach such that a closing condition cannot be satisfied) if any representation or warranty is not true and correct or if Montana has failed to perform any covenant or agreement made by Montana in the Merger Agreement (including an obligation to consummate the Closing), such that the conditions to the obligations of Montana, as described in the section entitled “— Conditions to Closing of the Business Combination” above, could not be satisfied as of the date of Closing, and are or cannot be cured within the earlier of (i) thirty days after written notice thereof is delivered to Montana by XPDB and (ii) the Outside Date;

        by written notice by any of Montana, XPDB or Merger Sub if the Closing has not occurred on or prior to December 14, 2023 (the “Outside Date”) so long as such party is not then in breach of the Merger Agreement in a manner that contributed to the occurrence of the failure of a condition; provided that if the XPDB stockholders approve any amendment to the organizational documents of XPDB that extends the deadline by which XPDB may complete an initial business combination, the Outside Date will be automatically extended to such new deadline for completing an initial business combination, including any Extension (in one month increments, for up to a total of 3 additional months) of the deadline pursuant to the approval of the XPDB Board;

        by Montana at any time within three business days if the XPDB Board changes its recommendation to its stockholders to vote in favor of the Business Combination; or

        by XPDB or Montana if the approval of the Proposals is not obtained at the Special Meeting (including any adjournments of such meeting).

Other Agreements

Sponsor Support Agreement

In connection with the execution of the Merger Agreement and pursuant to the terms of a Sponsor Support Agreement (the “Sponsor Support Agreement”) entered into among the Sponsor, XPDB, Montana and other holders of XPDB Class B Common Stock, a copy of which is attached to this proxy statement/prospectus as Annex D, the Sponsor and the other holders of XPDB Class B Common Stock agreed to, among other things, (i) vote at the Special Meeting any XPDB Class A Common Stock or XPDB Class B Common Stock (collectively, the “Sponsor Securities”), held of record or thereafter acquired in favor of the Proposals presented by XPDB at such meeting, (ii) be bound by certain other covenants and agreements related to the Business Combination, (iii) be bound by certain transfer restrictions with respect to the Sponsor Securities and (iv) waive certain antidilution protections with respect to the Sponsor Securities, in each case, on the terms and subject to the conditions set forth in the Sponsor Support Agreement. The quorum and voting thresholds at the Special Meeting and the Sponsor Support Agreement may make it more likely that XPDB will consummate the Business Combination. In addition, pursuant to the terms of the Sponsor Support Agreement, the Sponsor has agreed to waive its redemption rights with respect to any Sponsor Securities in connection with the completion of a Business Combination (which waiver was provided in connection with the XPDB IPO and without any separate consideration paid in connection with providing such waiver), has agreed not to transfer any Public Shares and Founder Shares held by it during the time prior to (i) Closing or (ii) the termination of the Merger Agreement, has agreed to waive anti-dilution protections and has agreed to subject certain of the shares of Class A Common Stock held by Sponsor following the conversion of the Founder Shares as of the Closing to certain vesting provisions. Specifically, the Sponsor Support Agreement provides that as of immediately prior to (but subject to) the Closing, 1,380,736 shares of Class A Common Stock held by the Sponsor following the conversion of the Founder Shares as of the Closing (the “Subject Vesting Shares”) will be subject to an earnout, with the Subject Vesting Shares vesting during the Vesting Period (i) simultaneously with the Earnout Payments made to the Montana Equityholders in a proportionate amount to the payment achieved in relation to the maximum Earnout Payment of equity interests

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of $200 million (the “Performance Vesting Trigger”) and (ii) up to 50% of the Subject Vesting Shares (including any vested Subject Vesting Shares from the Performance Vesting Trigger) vesting on any day following the Closing when the closing price of a share of Class A Common Stock on the Nasdaq (the “Closing Share Price”) equals or exceeds $12.00 (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) and all remaining Subject Vesting Shares vesting when the Closing Share Price equals or exceeds $14.00 (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like).

The Sponsor Support Agreement will terminate on the earlier of (i) the date the Business Combination becomes effective and (ii) the termination of the Merger Agreement in accordance with its terms. See the section entitled “Other Agreements — Sponsor Support Agreement.”

Registration Rights Agreement

The Merger Agreement contemplates that, at the Closing, the Post-Combination Company, Sponsor, the Anchor Investors, and certain Montana Equityholders will enter into an Amended and Restated Registration Rights Agreement, a copy of which is attached to this proxy statement/prospectus as Annex H (the “Registration Rights Agreement”), pursuant to which the Post-Combination Company will agree to register for resale, pursuant to Rule 415 under the Securities Act, certain shares of Class A Common Stock and other equity securities of XPDB that are held by the parties thereto from time to time. See the section entitled “Other Agreements — Registration Rights Agreement.

Lock-Up Agreements

The Merger Agreement contemplates that, at the Closing, XPDB, Sponsor, XPDB’s independent directors and certain Montana Equityholders will each enter into Lock-Up Agreements, the form of which is attached to this proxy statement/prospectus as Annex G (each, a “Lock-Up Agreement”), pursuant to which the parties will be subject to certain restrictions on transfer with respect to the shares of common stock issued as part of the Merger Consideration beginning at Closing and ending on the date that is six months after the completion of the Business Combination. See the section entitled “Other Agreements — Lock-Up Agreements.

Amended and Restated Bylaws

Pursuant to the terms of the Merger Agreement, in connection with the consummation of the Business Combination, XPDB will amend and restate its bylaws to be in the form attached to this proxy statement/prospectus as Annex C (the “Amended and Restated Bylaws”).

Proposed Charter

Pursuant to the terms of the Merger Agreement, in connection with the consummation of the Business Combination, XPDB will amend the Existing Charter to (a) increase the number of authorized shares of XPDB’s capital stock, par value $0.0001 per share, from 551,000,000 shares, consisting of (i) 500,000,000 shares of XPDB Class A Common Stock, (ii) 50,000,000 shares of XPDB Class B Common Stock and (iii) 1,000,000 shares of preferred stock, to 675,000,000 shares, consisting of (i) 600,000,000 shares of Class A Common Stock, (ii) 50,000,000 shares of Class B Common Stock (iii) 25,000,000 shares of preferred stock; (b) provide for a dual class stock structure in which shares of Class A Common Stock will each have one vote per share and shares of Class B Common Stock will have a number of votes per share necessary such that the Montana Equityholders collectively would own at the Closing at least 80% of the voting power of all classes of capital stock of the Post-Combination Company entitled to vote; provided, however, that the number of votes per share shall be at least one vote per share; (c) eliminate certain provisions in our Existing Charter relating to the initial business combination and other matters relating to XPDB’s status as a blank-check company that will no longer be applicable to us following the Closing; and (c) approve and adopt any other changes contained in the Proposed Charter, a copy of which is attached as Annex B to this proxy statement/prospectus. In addition, we will amend our Existing Charter to change the name of the corporation to “Montana Technologies Corporation.”

For more information, see the section entitled “Proposal Number 2 — The Charter Proposal.”

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XPDB Nasdaq Listing

The XPDB Class A Common Stock, units and XPDB public warrants are listed on the Nasdaq under the symbols “XPDB,” “XPDBU” and “XPDBW,” respectively. Following the Business Combination, the Class A Common Stock of the Post-Combination Company (including the Class A Common Stock issuable in the Business Combination) and Warrants of the Post-Combination Company are expected to be listed on the Nasdaq under the symbols “AIRJ” and “AIRJW.” The Post-Combination Company will not have units traded, and the XPDBU units will be delisted and deregistered following the Closing.

Comparison of Stockholders’ Rights

Following the Business Combination, the rights of Montana Equityholders who become stockholders of the Post-Combination Company in the Business Combination will no longer be governed by Montana’s limited liability company agreement (“Montana’s LLC Agreement”) and instead will be governed by the Proposed Charter and the Amended and Restated Bylaws. See the section entitled “Comparison of Stockholders’ Rights”.

Summary Risk Factors

You should consider all the information contained in this proxy statement/prospectus in deciding how to vote for the Proposals presented in this proxy statement/prospectus. In particular, you should consider the risk factors described in the section entitled “Risk Factors”. Such risks include, but are not limited to:

Risks related to Montana’s business and industry, including that:

        We are a pre-revenue and development-stage company that has a limited operating history and has not yet commenced any operations, which could make it difficult to make any predictions about our future success or viability.

        We may be unable to successfully develop and commercialize our AirJoule technology.

        Our commercialization strategy relies heavily on our relationships with BASF, CATL and other third parties and partners who may not be easily replaced if our relationships terminate.

        Demand for our products may not grow or may grow at a slower rate than we anticipate.

        We are subject to risks associated with changing technology, product innovation, manufacturing techniques and operational flexibility, which may put us at a competitive disadvantage.

        We may face significant competition from established companies that have longer operating histories, customer incumbency advantages, access to and influence with governmental authorities and more capital resources than we do.

        The estimates and assumptions we use to determine the size of the total addressable market are based on a number of internal and third-party estimates, which may be incorrect and such inaccuracy could materially and adversely affect our business.

        We may need to defend ourselves against claims that we infringe, have misappropriated or otherwise violate the intellectual property rights of others, which may be time-consuming and would cause us to incur substantial costs related to potential litigation or expensive licenses.

        We may be subject to cyberattacks or a failure in our information technology and data security infrastructure that could adversely affect our business and operations.

        Increased scrutiny of environmental, social, and governance (“ESG”) matters, including our completion of certain ESG initiatives, could have an adverse effect on our business, financial condition and results of operations, result in reputational harm and negatively impact the assessments made by ESG-focused investors when evaluating us.

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        Our business may be affected by force majeure events outside of our control, including labor unrest, civil disorder, war, subversive activities or sabotage, climate change, including the increased frequency or severity of natural and catastrophic events, changes in climate change policies and COVID-19 and any future widespread public health crisis may negatively impact our business and operations.

        Our business is subject to liabilities and operating restrictions arising from environmental, health and safety laws, regulations and permits across multiple jurisdictions.

        We may incur higher costs, including costs to comply with new or more stringent environmental, health and safety laws and regulations, which may decrease our profitability.

        Our failure to protect our intellectual property rights may undermine our competitive position, and litigation associated with our intellectual property rights may be costly.

Risks related to the Business Combination, including that:

        Montana’s stockholders and XPDB’s stockholders will each have a reduced ownership and voting interest after the Business Combination and will exercise less influence over management.

        There can be no assurance that the Post-Combination Company’s common stock will be approved for listing on the Nasdaq or that the Post-Combination Company will be able to comply with the continued listing standards of the Nasdaq.

        The market price of shares of the Post-Combination Company’s common stock after the Business Combination may be affected by factors different from those currently affecting the prices of shares of XPDB Class A Common Stock.

        XPDB has not obtained an opinion from an independent investment banking firm, and consequently, there is no assurance from an independent source that the Merger Consideration is fair to its stockholders from a financial point of view.

        If the Business Combination’s benefits do not meet the expectations of financial analysts, the market price of our common stock may decline.

        The consummation of the Business Combination is subject to a number of conditions and if those conditions are not satisfied or waived, the Merger Agreement may be terminated in accordance with its terms and the Business Combination may not be completed.

        XPDB directors and officers may have interests in the Business Combination different from the interests of XPDB stockholders.

        Montana directors and officers may have interests in the Business Combination different from the interests of Montana Equityholders.

        Our Sponsor may have interests in the Business Combination different from the interests of XPDB stockholders.

        The unaudited pro forma condensed combined financial information included in this proxy statement/prospectus is preliminary and the actual financial condition and results of operations after the Business Combination may differ materially.

Risks related to redemption, including that:

        If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per share redemption amount received by XPDB Public Stockholders may be less than $10.10 per share.

        Our independent directors may decide not to enforce the indemnification obligations of our Sponsor, resulting in a reduction in the amount of funds in the Trust Account available for distribution to XPDB Public Stockholders.

        The ability of XPDB Public Stockholders to exercise redemption rights with respect to a large number of shares could increase the probability that the Business Combination would be unsuccessful and that stockholders would have to wait for liquidation in order to redeem their stock.

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Information about XPDB

Power & Digital Infrastructure Acquisition II Corp. is a blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses. The XPDB Class A Common Stock, units and XPDB public warrants are currently listed on the Nasdaq under the symbols “XPDB”, “XPDBU” and “XPDBW,” respectively. The mailing address of XPDB’s principal executive office is 321 North Clark Street, Suite 2440, Chicago, Illinois 60654 and the telephone number of XPDB’s principal executive office is (312) 262-5642.

Information about Montana

Montana is an atmospheric renewable energy and water harvesting technology company that aims to provide energy and cost-efficient and sustainable dehumidification, evaporative cooling and atmospheric water generation. As compared to currently existing HVAC systems, our AirJoule technology is designed to reduce energy consumption, minimize/eliminate harmful refrigerants, and generate material cost efficiencies. AirJoule is a climate solution technology that harvests the untapped supply of renewable thermal energy in water vapor in the atmosphere in an effort to provide significant energy efficiency gains in HVAC, as well as a potential source of potable water. Montana is focused on scaling manufacturing through global joint ventures and deploying AirJoule units worldwide as a key part of the solution to address global warming and water scarcity.

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SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following summary unaudited pro forma condensed combined financial information (the “Summary Pro Forma Information”) gives effect to the transactions contemplated by the Business Combination and related transactions. The Business Combination will be accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, although XPDB will acquire all of the outstanding equity interests of Montana in the Business Combination, XPDB will be treated as the “acquired” company for financial reporting purposes. Accordingly, the Business Combination will be reflected as the equivalent of Montana issuing shares for the net assets of XPDB, followed by a recapitalization whereby no goodwill or other intangible assets are recorded. Operations prior to the Business Combination will be those of Montana. The summary unaudited pro forma condensed combined balance sheet data as of September 30, 2023, gives effect to the Business Combination and related transactions as if they had occurred on September 30, 2023. The summary unaudited pro forma condensed combined statements of operations data for the nine months ended September 30, 2023, and for the year ended December 31, 2022, give effect to the Business Combination and related transactions as if they had occurred on January 1, 2022, the beginning of the earliest periods presented.

The Summary Pro Forma Information has been derived from, should be read in conjunction with, the more detailed unaudited pro forma condensed combined financial information included in the section entitled “Unaudited Pro Forma Condensed Combined Financial Statements” in this proxy statement/prospectus and the accompanying notes thereto. The unaudited pro forma condensed combined financial information is based upon, and should be read in conjunction with, the historical financial statements and related notes of XPDB and Montana for the applicable periods included in this proxy statement/prospectus. The Summary Pro Forma Information has been presented for informational purposes only and is not necessarily indicative of what the Post-Combination Company’s financial position or results of operations actually would have been had the Business Combination and related transactions been completed as of the dates indicated. In addition, the Summary Pro Forma Information does not purport to project the future financial position or operating results of the Post-Combination Company following the reverse recapitalization.

The unaudited pro forma condensed combined financial information has been prepared using the assumptions below with respect to the potential redemption for cash of Public Shares:

        Assuming Minimum Redemptions Scenario:    This presentation assumes that, after June Redemptions, no XPDB Public Stockholders will exercise redemption rights with respect to the Public Shares for a pro rata share of the funds in the Trust Account.

        Assuming Maximum Contractual Redemptions Scenario:    This presentation assumes that, after the June Redemptions, 2,686,297 Public Shares are redeemed for aggregate redemption payments of $28.6 million, assuming a $10.66 per share redemption price. The Merger Agreement contains a condition to the Closing that, at the Closing, the Aggregate Transaction Proceeds shall be equal to or greater than $85 million; provided that, upon receiving proceeds in the Capital Raise equal to or in excess of such amount, this condition shall no longer apply. As certain of XPDB’s directors and the Sponsor waived their redemption rights, only 25% of potential redemptions by XPDB Public Stockholders are reflected in this presentation. This scenario includes all adjustments contained in the “Assuming Minimum Redemptions Scenario” and presents additional adjustments to reflect the effect of the Assuming Maximum Contractual Redemptions Scenario. The “Assuming Maximum Contractual Redemptions Scenario” represents the maximum number of Public Shares that may be redeemed and still satisfy the Aggregate Transaction Proceeds Condition. In the event XPDB’s Aggregate Transaction Proceeds at Closing is insufficient to meet the Aggregate Transaction Proceeds Condition due to redemptions by XPDB Public Stockholders beyond what is represented in the “Assuming Maximum Contractual Redemptions Scenario,” a condition to the Closing would not be met and the Business Combination may not be consummated. However, the Aggregate Transaction Proceeds Condition is a contractual condition that may be waived by Montana or may be modified by the parties to the Merger Agreement and if the applicable parties agree to waive or modify such condition, up to an additional 7,921,881 Public Shares may be redeemed.

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Scenario 1
Assuming
Minimum
Redemptions

 

Scenario 2
Assuming
Maximum
Contractual
Redemptions

   

(in thousands, except share and per share data)

Summary Unaudited Pro Forma Condensed Combined Statement of Operations Data for the nine months ended September 30, 2023

 

 

 

 

 

 

 

 

Net loss

 

$

(14,763

)

 

$

(14,763

)

Weighted average shares outstanding – basic and diluted

 

 

55,748,159

 

 

 

53,061,862

 

Basic and diluted net loss per share

 

$

(0.26

)

 

$

(0.28

)

 

Scenario 1
Assuming
Minimum
Redemptions

 

Scenario 2
Assuming
Maximum
Contractual
Redemptions

   

(in thousands, except share and per share data)

Summary Unaudited Pro Forma Condensed Combined Statement of Operations Data for the year ended December 31, 2022

 

 

 

 

 

 

 

 

Net loss

 

$

(11,052

)

 

$

(11,052

)

Weighted average shares outstanding – basic and diluted

 

 

55,748,159

 

 

 

53,061,862

 

Basic and diluted net loss per share

 

$

(0.20

)

 

$

(0.21

)

 

Scenario 1
Assuming
Minimum
Redemptions

 

Scenario 2
Assuming
Maximum
Contractual
Redemptions

   

(in thousands)

Summary Unaudited Pro Forma Condensed Combined Balance Sheet Data as of September 30, 2023

 

 

   

 

 

 

Total assets

 

$

92,737

 

$

64,092

 

Total liabilities

 

 

75,801

 

 

76,087

 

Total stockholders’ equity (deficit)

 

$

16,936

 

$

(11,995

)

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COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE
FINA
NCIAL INFORMATION

The following table sets forth the historical comparative share information for XPDB and Montana on a stand-alone basis and the unaudited pro forma combined share information for the nine months ended September 30, 2023 and for the year ended December 31, 2022, after giving effect to the Business Combination, assuming (i) after the June Redemptions, no XPDB Public Stockholders exercise redemption rights with respect to their Public Shares upon the consummation of the Business Combination; and (ii) after the June Redemptions, the XPDB Public Stockholders exercise their redemption rights with respect to a maximum of 2,686,297 Public Shares, or approximately $10.66 per share or $28.6 million. The Assuming Maximum Contractual Redemptions Scenario amount reflects the maximum number of Public Shares that can be redeemed without violating the conditions of the Merger Agreement. This scenario includes all adjustments contained in the “Assuming Minimum Redemptions Scenario” and presents additional adjustments to reflect the effect of the Assuming Maximum Contractual Redemptions Scenario.

This information is only a summary and should be read together with the selected historical financial information summary of XPDB and Montana and the historical financial statements and related notes of each of XPDB and Montana, in each case, that are included elsewhere in this proxy statement. The unaudited pro forma combined per share information of XPDB and Montana is derived from, and should be read in conjunction with, the section entitled “Unaudited Pro Forma Condensed Combined Financial Statements” and related notes included elsewhere in this proxy statement.

The unaudited pro forma combined earnings per share information below does not purport to represent the earnings per share which would have occurred had XPDB and Montana consummated a business combination during the periods presented, nor earnings per share for any future date or period. The unaudited pro forma combined book value per share information below does not purport to represent what the value of XPDB and Montana would have been had XPDB and Montana consummated a business combination during the periods presented.

 

Montana
(Historical)

 

XPDB
(Historical)

 

Pro Forma
Combined
(Assuming
Minimum
Redemptions)

 

Pro Forma
Combined
(Assuming
Maximum
Contractual
Redemptions)

As of and for the Nine Months Ended September 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book (deficit) value per unit/share(1)

 

$

(2.10

)

 

$

(0.75

)

 

$

0.30

 

 

$

(0.23

)

Weighted average common units (Montana)/Class A Common stock (XPDB) outstanding – basic and diluted

 

 

1,402,634

 

 

 

21,440,108

 

 

 

55,748,159

 

 

 

53,061,862

 

Net (loss) income per unit (Montana)/Class A Common stock (XPDB) – basic and diluted

 

$

(5.35

)

 

$

0.04

 

 

$

(0.26

)

 

$

(0.28

)

Weighted average shares outstanding of Class B Common stock – basic and diluted

 

 

 

 

 

 

7,187,500

 

 

 

 

 

 

 

 

 

Net income per share, Class B Common Stock – basic and diluted

 

 

 

 

 

$

0.04

 

 

 

 

 

 

 

 

 

____________

(1)      The book (deficit) value per unit/share is equal to the total stockholders’ (deficit) equity divided by the total number of basic (or diluted) outstanding units/shares.

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Montana
(Historical)

 

XPDB
(Historical)

 

Pro Forma
Combined
(Assuming
Minimum
Redemptions)

 

Pro Forma
Combined
(Assuming
Maximum
Contractual
Redemptions)

For the Year Ended December 31, 2022

 

 

 

 

 

 

   

 

 

 

 

 

 

 

Weighted average common units (Montana)/Class A Common stock (XPDB) outstanding – basic and diluted

 

 

1,247,340

 

 

 

28,750,000

 

 

55,748,159

 

 

 

53,061,862

 

Net (loss) income per unit (Montana)/share of Class A Common Stock (XPDB) – basic and diluted

 

$

(2.00

)

 

$

0.06

 

$

(0.20

)

 

$

(0.21

)

Weighted average shares of Class B Common stock outstanding – basic and diluted

 

 

 

 

 

 

7,187,500

 

 

 

 

 

 

 

 

Net income per share, Class B Common Stock – basic and diluted

 

 

 

 

 

$

0.06

 

 

 

 

 

 

 

 

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MARKET PRICE AND DIVIDEND INFORMATION

XPDB

The XPDB Class A Common Stock, units and XPDB public warrants are listed on the Nasdaq under the symbols XPDB, XPDBU and XPDBW, respectively.

The closing price of the XPDB Class A Common Stock, units and XPDB public warrants on June 2, 2023, the last trading day before announcement of the execution of the Merger Agreement, was $10.35, $10.36 and $0.06, respectively. As of January 12, 2024, the most recent practicable date prior to the date of this proxy statement/prospectus, the closing price for each of the XPDB Class A Common Stock, units and XPDB public warrants was $10.81, $10.82 and $0.07, respectively.

Holders of the XPDB Class A Common Stock, units and XPDB public warrants should obtain current market quotations for their securities. The market price of XPDB’s securities could vary at any time before the Business Combination.

Holders

As of January 12, 2024, the most recent practicable date prior to the date of this proxy statement/prospectus, there was one holder(s) of record of the XPDB units, one holder(s) of record of XPDB Class A Common Stock, four holders of record of XPDB Class B Common Stock, one holder(s) of record of XPDB public warrants and one holder(s) of record of Private Placement Warrants. The number of holders of record does not include a substantially greater number of “street name” holders or beneficial holders whose units, Public Shares and XPDB public warrants are held of record by banks, brokers and other financial institutions.

Dividend Policy

XPDB has not paid any cash dividends on XPDB Common Stock to date and does not intend to pay cash dividends prior to the completion of the Business Combination. The payment of cash dividends in the future will be dependent upon the Post-Combination Company’s revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of the Business Combination. The payment of any cash dividends subsequent to the Business Combination will be within the discretion of the Post-Combination Company Board at such time. The Post-Combination Company’s ability to declare dividends may also be limited by restrictive covenants pursuant to any debt financing agreements.

Montana

The historical market price for Montana’s securities is not provided because there is no public market for Montana’s securities. See the section entitled “Montana’s Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement/prospectus includes forward-looking statements regarding, among other things, the plans, strategies and prospects, both business and financial, of XPDB and Montana. These statements are based on the beliefs and assumptions of the management of XPDB and Montana. Although XPDB and Montana believe that their respective plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, neither XPDB nor Montana can assure you that either will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Generally, statements that are not historical facts, including statements concerning possible or assumed future actions, business strategies, events or results of operations, and any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These statements may be preceded by, followed by or include the words “believes”, “estimates”, “expects”, “predicts”, “projects”, “potential”, “forecasts”, “target”, “future”, “opportunity,” “may”, “might”, “will”, “will be”, “will continue,” “will likely result”, “strategy”, “could”, “should”, “would”, “seeks”, “plans”, “scheduled”, “possible”, “anticipates” or “intends” or similar expressions (including the negative versions of such words or expressions). Forward-looking statements contained in this proxy statement/prospectus include, but are not limited to, statements about the ability or likelihood of XPDB and Montana prior to the Business Combination, and the Post-Combination Company following the Business Combination, to:

        execute their business strategies, including monetization of Montana’s product offerings;

        anticipate the uncertainties inherent in the development of new business lines and business strategies;

        meet the closing conditions to the Business Combination, including approval by stockholders of XPDB on the expected terms and schedule;

        realize the benefits expected from the proposed Business Combination;

        anticipate the amount of funds available in the Trust Account as a result of stockholder redemptions or otherwise;

        develop, design, and sell products that are differentiated from those of competitors;

        consummate the Business Combination due to the uncertainty resulting from the COVID-19 pandemic, the invasion of Ukraine by Russia and resulting sanctions, and other events (such as terrorist attacks, geopolitical unrest, natural disasters or a significant outbreak of other infectious diseases);

        retain and hire necessary employees;

        attract, train and retain effective officers, key employees or directors;

        achieve future operating and financial results;

        comply with or anticipate the effects of laws and regulations applicable to its business;

        stay abreast of modified or new laws and regulations applying to its business;

        anticipate the impact of, and response to, new accounting standards;

        anticipate the significance and timing of contractual obligations;

        maintain key strategic relationships with partners and form relationships with customers;

        respond to uncertainties associated with product development and market acceptance, including the impact, cost and performance of the AirJoule technology once commercialized;

        successfully defend against potential litigation;

        upgrade and maintain information technology systems;

        access, collect and use personal data about third parties;

        acquire and protect intellectual property;

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        anticipate rapid technological changes;

        meet potential future liquidity requirements and comply with restrictive covenants related to long-term indebtedness;

        maintain the listing on, or the delisting of XPDB’s or the Post-Combination Company’s securities from, the Nasdaq or an inability to have our securities listed on the Nasdaq or another national securities exchange following the Business Combination;

        effectively respond to general economic and business conditions;

        obtain additional capital or financing, as necessary, including use of the debt market; and

        successfully deploy the proceeds from the Business Combination.

Forward-looking statements are not guarantees of performance. You should not put undue reliance on these statements which speak only as of the date hereof. You should understand that the following important factors, in addition to those discussed under the heading “Risk Factors” and elsewhere in this proxy statement/prospectus, could affect the future results of XPDB and Montana prior to the Business Combination, and the Post-Combination Company following the Business Combination, and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements in this proxy statement/ prospectus:

        the risk that the Business Combination may not be completed in a timely manner or at all, which may adversely affect the price of XPDB securities;

        the risk that the Business Combination may not be completed by XPDB’s business combination deadline and the potential failure to obtain an Extension of the business combination deadline if sought by XPDB;

        the failure to satisfy the conditions to the consummation of the Business Combination, including the approval of the proposed transactions by XPDB’s stockholders, the satisfaction of the minimum Aggregate Transaction Proceeds amount following redemptions by XPDB Public Stockholders and the receipt of certain governmental and regulatory approvals;

        the failure to obtain financing to complete the Business Combination and to support the future working capital needs of Montana;

        the effect of the announcement or pendency of the Business Combination on Montana’s business relationships, performance, and business generally;

        risks that the Business Combination disrupts current plans of Montana and potential difficulties in Montana’s employee retention as a result of the Business Combination;

        risks related to disruption of management’s time and attention from ongoing business operations due to the proposed Business Combination;

        litigation, complaints, product liability claims and/or adverse publicity, including any legal proceedings that may be instituted against XPDB or Montana related to the Merger Agreement and the Business Combination;

        the ability to maintain the listing of the Post-Combination Company’s securities on the Nasdaq following the Business Combination;

        privacy and data protection laws, privacy or data breaches, or the loss of data;

        the enforceability of Montana’s intellectual property, including its patents, and the potential infringement on the intellectual property rights of others;

        the price of XPDB’s securities, including volatility resulting from changes in the competitive and highly regulated industries in which Montana plans to operate, variations in performance across competitors, and changes in laws and regulations, or changes in the implementation of regulations by regulatory bodies, affecting Montana’s business;

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        the impact of changes in consumer spending patterns, consumer preferences, local, regional and national economic conditions, crime, weather (including weather influenced by climate change), demographic trends and employee availability;

        the ability to implement business plans, forecasts, and other expectations after the completion of the Business Combination, including the possibility of cost overruns or unanticipated expenses in development programs, and the ability to identify and realize additional opportunities; and

        any defects in new products or enhancements to existing products.

These and other factors that could cause actual results to differ from those implied by the forward-looking statements in this proxy statement/prospectus are more fully described under the heading “Risk Factors” and elsewhere in this proxy statement/prospectus. The risks described under the heading “Risk Factors” are not exhaustive. Other sections of this proxy statement/prospectus describe additional factors that could adversely affect the business, financial condition or results of operations of XPDB and Montana prior to the Business Combination, and the Post-Combination Company following the Business Combination. New risk factors emerge from time to time and it is not possible to predict all such risk factors, nor can XPDB or Montana assess the impact of all such risk factors on the business of XPDB and Montana prior to the Business Combination, and the Post-Combination Company following the Business Combination, or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements attributable to XPDB or Montana or persons acting on their behalf are expressly qualified in their entirety by the foregoing cautionary statements. XPDB and Montana prior to the Business Combination, and the Post-Combination Company following the Business Combination, undertake no obligations 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 XPDB or Montana, as applicable, on the relevant subject. These statements are based upon information available to XPDB or Montana, as applicable, as of the date of this proxy statement/prospectus, and while such party 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 XPDB or Montana, as applicable, has conducted an exhaustive inquiry into, or review of, all potentially available relevant information. Neither XPDB nor Montana gives any assurance that either XPDB or Montana will achieve its expectations. These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.

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RISK FACTORS

In addition to the other information contained in this proxy statement/prospectus, including the matters addressed under the heading “Forward-Looking Statements”, you should carefully consider the following risk factors in deciding how to vote on the Proposals presented in this proxy statement/prospectus. In this section “we,” “us” and “our” refer to Montana prior to the Business Combination and to the Post-Combination Company following the Business Combination.

Risks Related to Our Business and Our Industry

We have not yet commenced planned business line activities and have a limited operating history, which may make it difficult to evaluate the prospects for our future viability. There is no assurance that we will successfully execute our proposed strategy.

We are a pre-revenue and development-stage company. We were established as Montana Technologies LLC in 2018 and have not commenced any operations and have no history of commercializing our AirJoule technology. Our limited operating history may make it difficult for you to evaluate our current business and future prospects as we continue to grow our business. Our ability to forecast future operating results is subject to a number of uncertainties, including our ability to plan for and model future growth. We have encountered risks and uncertainties frequently experienced by growing companies in rapidly evolving industries, and we will continue to encounter such risks and uncertainties as we grow our business. If our assumptions regarding these uncertainties are incorrect, or if we do not address these risks successfully, our operating and financial results could differ materially from our expectations, and our business could suffer. Consequently, any predictions we make about our future success and our viability may not be as accurate as they could be if we had an operating history.

We will initially depend on revenue generated from a single product and in the foreseeable future will be significantly dependent on a limited number of products.

After we have successfully developed and commercialized our AirJoule technology, we will initially depend on revenue generated from our AirJoule units for the foreseeable future and will be significantly dependent on a single or limited number of products. Given that, for the foreseeable future, our business will depend on a single or limited number of products, to the extent that a particular product is not well-received by the market, our sales volume, prospects, business, results of operations and financial condition could be materially and adversely affected.

We face significant barriers in our attempts to deploy our technology and may not be able to successfully develop our technology. If we cannot successfully overcome those barriers, it could adversely impact our business and operations.

The technology behind our AirJoule units is very complex, and, while we have successfully produced a prototype unit within our test facility, we are still in the process of producing a unit that delivers dehumidified air, cooling and volume of water at the energy efficiency that we are anticipating we can achieve. If we are unable to successfully develop our technology, our operating and financial results could materially differ from our expectations and our business could suffer.

Our commercialization strategy relies heavily on our relationships with BASF, CATL, Carrier and other third parties and partners who may have interests that diverge from ours and who may not be easily replaced if our relationships terminate, which could adversely impact our business and financial condition.

We anticipate that the growth of our business will depend on third-party relationships, including service providers, suppliers, sellers, distributors, consultants, referral sources and other partners. In particular, our commercialization strategy relies heavily on our relationships with BASF, CATL and Carrier, and may rely on strategic partnerships with other entities that we may form in the future. We have entered into a development agreement with BASF for the production of engineered super-porous materials that are applied as a coating to AirJoule contactors to perform the energy and water-harvesting function, and we are continuing to work with BASF to execute an ongoing development agreement to scale for mass production and global manufacturing and supply. Additionally, we have entered into a joint venture agreement with an affiliate of CATL to manufacture and commercialize our AirJoule technology in certain countries. We and CAMT have also entered into the Binding Term Sheets with Carrier, pursuant to which, among other things, the parties agreed to negotiate in good faith to finalize and enter into, as promptly as reasonably

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practicable, definitive agreements relating to the development of the Applicable Products and the viability of the commercialization of the Applicable Products. Subject to certain milestones to be set forth in the definitive agreements relating to the proposed collaboration, the Binding Term Sheets provide that Carrier will have (i) the exclusive right to commercialize the Applicable Products in North and South America (subject, in each case, to exclusively sourcing primary components of the AirJoule technology from Montana, its designated affiliates and joint venture entities of which Montana is a member) for a period of three years from the earlier of (a) the date of the definitive agreement relating thereto and (b) the first commercialization of the Applicable Products by Carrier and (ii) a non-exclusive right to commercialize the Applicable Products in Europe, India and the Middle East (subject, in each case, to exclusively sourcing primary components of the AirJoule technology from CAMT or its affiliates) for a period of three years from the first commercialization of the Applicable Products by Carrier. Despite entry into the Binding Term Sheets, we and CAMT ultimately may not enter into definitive agreements with Carrier on terms consistent with the Binding Term Sheets or at all.

Our heavy reliance on these business partners could adversely affect our business and financial condition if any of these partners chooses to terminate its relationship with us or make material changes to its businesses, products or services in a manner that is adverse to us. CATL has informed us that it intends to exit a portion of its equity investment in Montana, by selling some of its equity interests in Montana to third parties, in favor of focusing on the CAMT joint venture. This exit by CATL may have a material and adverse effect on our efforts to raise capital, which in turn could have a material adverse effect on our business and financial condition. Further, while we intend to pursue additional relationships with other third parties, including relationships providing exclusive commercialization rights for AirJoule technology in other parts of the world, identifying, negotiating and documenting relationships with third parties, as well as integrating third-party products and services requires significant time and resources, and we may not be successful in doing so.

The Binding Term Sheets we and CAMT have entered into with Carrier may not ultimately yield definitive agreements with Carrier consistent with the term sheets or at all.

On January 7, 2024, concurrently with the execution of the Common Unit Subscription Agreement, each of Montana and CAMT entered into the Binding Term Sheets with Carrier, pursuant to which, among other things, the parties agreed to negotiate in good faith to finalize and enter into, as promptly as reasonably practicable, definitive agreements relating to the development of the Applicable Products and the viability of the commercialization of the Applicable Products. Despite entry into the Binding Term Sheets, we and CAMT ultimately may not enter into definitive agreements with Carrier on terms consistent with the Binding Term Sheets or at all.

Carrier’s obligation to consummate the Subscription is conditioned upon the Aggregate Available Capital equaling or exceeding $50.0 million at or prior to the closing of the Subscription. This condition may make it more difficult for us to complete the Subscription as contemplated.

The Common Unit Subscription Agreement provides that Carrier’s obligation to consummate the Subscription is conditioned on the Aggregate Available Capital being equal to or greater than $50.0 million prior to or at the closing of the Subscription. There can be no assurance that XPDB and Montana will satisfy such condition. If such condition is not satisfied and is not waived by Carrier under the terms of the Common Unit Subscription Agreement, then the Common Unit Subscription Agreement could terminate and the proposed Subscription may not be consummated. There can be no assurance that Carrier will waive such condition if not satisfied in accordance with the terms of the Common Unit Subscription Agreement.

Demand for our products may not grow or may grow at a slower rate than we anticipate.

To date, we have not had any sales of our products, but we have engaged with partners like BASF and CATL and plan to engage with other tier-1 strategic partners, to assist us with the commercialization of our AirJoule units. Operating results are difficult to forecast as they generally depend on our assessment of the demand for our products. Our business may be affected by reductions in demand for our products and the price of competitors’ products as a result of a number of factors which may be difficult to predict. Similarly, our assumptions and expectations with respect to margins and the pricing of our AirJoule unit may not prove to be accurate. We may be unable to adopt measures in a timely manner to compensate for any unexpected shortfall in demand, which could ultimately cause our operating results to differ from expectations. If actual results differ from our estimates, analysts or investors may negatively react and our share price could be materially adversely affected.

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Our financial results depend on successful project execution and may be adversely affected by cost overruns, failure to meet customer schedules, failure of our suppliers or partners to fulfill their obligations to us or other execution issues.

Commercialization of our AirJoule units is subject to a number of significant risks, including project delays, cost overruns, changes in scope, unanticipated site conditions, design and engineering issues, incorrect cost assumptions, increases in the cost of materials and labor, health and safety hazards, third-party performance issues and changes in laws or permitting requirements. If a third party or other subcontractor that we have contracted fails to fulfill its contractual obligations to us, we could face significant delays, cost overruns and liabilities. Our continued growth will depend in part on executing a greater volume of large projects, which will require us to expand and retain our project management and execution personnel and resources. If we are unable to manage these risks, we may incur higher costs, liquidated damages and other liabilities, which may decrease our profitability and harm our reputation.

COVID-19 and any future widespread public health crisis could negatively affect various aspects of our business, make it more difficult for us to meet our obligations to our future customers and result in reduced demand for our products.

Examples of how COVID-19 and any future widespread public health crisis may impact our business, results of operations and the price of our securities in the future include, but are not limited to:

        such event may interfere with our ability, or the ability of our employees, contractors, suppliers and other business partners to perform our and their respective responsibilities and obligations relative to the conduct of our business;

        such event may cause disruptions from the temporary closure or suspension of activities related to the relocation of our facilities, third-party suppliers and manufacturers or restrictions on our employee’s and other service providers’ ability to travel; and

        such event and related government responses to address any such event may cause sudden and extreme changes in the price of our securities.

New variants of COVID-19 and other future public health crises and pandemics may affect our operating and financial results in a manner that is not presently known to us or not presently considered to be a significant risk to our operations. Furthermore, our limited operating history combined with the uncertainty created by the COVID-19 pandemic significantly increases the difficulty of forecasting operating results and of strategic planning. If we are unable to effectively predict and manage the impact of the COVID-19 pandemic and other future public health crises on our business, our results of operations and financial condition may be negatively impacted.

Any financial or economic crisis, or perceived threat of such a crisis, including a significant decrease in consumer confidence, may materially and adversely affect our business, financial condition and results of operations.

In recent years, global economies have suffered dramatic downturns as a result of the COVID-19 pandemic, a deterioration in the credit markets and related financial crisis, and a variety of other factors including, among other things, extreme volatility in security prices, severely diminished liquidity and credit availability, inflation, ratings downgrades of certain investments and declining valuations of others. The United States and certain other governments have taken unprecedented actions in an attempt to address and rectify these extreme market and economic conditions by providing liquidity and stability to the financial markets. The outcome of the actions taken by these governments is still ongoing and, consequently, the return of adverse economic conditions may negatively impact the demand for our technology and may negatively impact our ability to raise capital, if needed, on a timely basis and on acceptable terms or at all.

Manufacturing issues not identified prior to design finalization, long-lead procurement and/or fabrication could potentially be realized during production or fabrication and may impact our deployment cost and schedule, which could adversely impact our business.

It is possible that in the future we may experience delays and other complications from our partners and third-party suppliers in the development and manufacturing of the components and other implementing technology required for deploying our AirJoule units. Any disruption or delay in the development or supply of such components and

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technology could result in the delay or other complication in the design, manufacture, production and delivery of our technology that could prevent us from commercializing our AirJoule units according to our planned timeline and scale. If delays like this recur or if we experience issues with planned manufacturing activities, supply of components from third parties or design and safety, we could experience issues or delays in commencing or sustaining our commercial operations.

If we encounter difficulties in scaling our production and delivery capabilities, if we fail to develop such technologies before our competitors or if such technologies fail to perform as expected, are inferior to those of our competitors or are perceived as less safe than those of our competitors, our business, reputation and financial condition could be materially and adversely impacted.

Our sales and profitability may be impacted by, and we may incur liabilities as a result of, warranty claims, product defects, recalls, improper use of our products, or our failure to meet performance guarantees or customer safety standards.

We anticipate that our customers will require product warranties as to the proper operation and conformance to specifications of the products we manufacture or install. Failure of our products to operate properly or to meet specifications of our customers or our failure to meet our performance guarantees may increase costs by requiring additional engineering resources and services, replacement of parts and equipment or monetary reimbursement to a customer, or could otherwise result in liability to our customers. There are significant uncertainties and judgments involved in estimating warranty and performance guarantee obligations, including changing product designs, differences in customer installation processes and failure to identify or disclaim certain variables. To the extent that we incur substantial warranty or performance guarantee claims in any period, our reputation, earnings and ability to obtain future business could be materially adversely affected.

Increased scrutiny of ESG matters, including our completion of certain ESG initiatives, could have an adverse effect on our business, financial condition and results of operations, result in reputational harm and negatively impact the assessments made by ESG-focused investors when evaluating us.

We are increasingly facing more stringent ESG standards, policies and expectations, and expect to continue to do so as a listed company following the Closing with growing operations. Companies across all industries are facing increasing scrutiny from a variety of stakeholders, including investor advocacy groups, proxy advisory firms, certain institutional investors and lenders, investment funds and other influential investors and rating agencies, related to their ESG and sustainability practices. We generally experience a strong ESG emphasis among our customers, partners and competitors. Some of these stakeholders maintain standards, policies and expectations regarding environmental matters (e.g., climate change and sustainability), social matters (e.g., diversity and human rights) and corporate governance matters (e.g., taking into account employee relations when making business and investment decisions, ethical matters and the composition of the board of directors and various committees). There is no guarantee that we will be able to comply with applicable ESG standards, policies and expectations, or that we will, from the perspective of other stakeholders and the public, appear to be complying with such ESG standards, policies and expectations. If we do not adapt to or comply with investor or other stakeholder standards, policies, or expectations on ESG matters as they continue to evolve, or if we are perceived to have not responded appropriately or quickly enough to growing concern for ESG and sustainability issues, regardless of whether there is a regulatory or legal requirement to do so, we may suffer from reputational damage and our business, financial condition and/or stock price could be materially and adversely affected.

While we may at times engage in or prepare voluntary ESG initiatives and disclosures to respond to stakeholder expectations or to improve our ESG profile, such initiatives and disclosures may be costly and may not have the desired effect. Expectations regarding our management of ESG matters continues to evolve rapidly, in many instances due to factors that are beyond our control. For example, we may ultimately be unable to complete certain initiatives or targets, either on the timelines initially announced or at all, due to technological, cost, or other constraints, which may be within or outside of our control. Moreover, our ESG actions or statements may be based on expectations, assumptions, or third-party information that we currently believe to be reasonable, but which may subsequently be determined to be erroneous or be subject to misinterpretation. If we fail to, or are perceived to fail to, implement certain ESG initiatives or achieve certain ESG objectives, we may be subject to various adverse impacts, including reputational damage and potential stakeholder engagement and/or litigation, even if such initiatives are currently voluntary. Certain market participants, including major institutional investors and capital providers, use third-party benchmarks and scores to

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assess companies’ ESG profiles in making investment or voting decisions. Unfavorable ESG ratings could lead to increased negative investor sentiment towards us or our industry and to the diversion of investment to other industries, which could negatively impact our share price as well as our access to and cost of capital.

Moreover, because of the industry we are in, any of our operational or strategic efforts may be viewed as relating to our ESG initiatives and, even if those initiatives are undertaken voluntarily, they may still be viewed as relating to our operational and strategic efforts. This means that if we fail, or are perceived to fail, to implement certain ESG initiatives or achieve certain ESG objectives it could have a disproportionately negative impact on our business.

Actual or perceived failure to comply with ESG standards may detrimentally affect our business in a variety of ways. Among others, we could face challenges with procuring investments and financing, whether for general business purposes or for specific projects, and we could have difficulty attracting or retaining employees. Accordingly, failure to establish a sufficiently strong ESG profile relative to our peers could limit our ability to generate and successfully utilize business opportunities. We also note that divergent views regarding ESG principles are emerging in the U.S., and in particular, in U.S. state-level regulation and enforcement efforts. In the future, various U.S. regulators, state actors and other stakeholders may have views on ESG matters, the renewable energy industry, the energy transition or our business that are less favorable to our business or operations, or such stakeholders may seek to impose additional regulation and restrictions on us or our business. Any such events could have material adverse effects on our business, financial condition, results of operations, cash flow and prospects.

We also expect there will likely be increasing levels of regulation, disclosure-related and otherwise, with respect to ESG matters. We may be subject to ESG or sustainability-related regulation in multiple jurisdictions, including the U.S., and complying with these regulations in multiple jurisdictions may increase the complexity and cost of our compliance efforts. Moreover, increased regulation and increased stakeholder expectations will likely lead to increased costs as well as scrutiny that could heighten all of the risks identified in this risk factor. Additionally, many of our customers and suppliers may be subject to similar expectations, which may augment or create additional risks, including risks that may not be known to us.

Our ability to realize projects may be impaired should we fail to adhere to the common ESG standards in our industry. Moreover, such failure could result in reputational damage for us among both potential customers and investors. Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations, cash flow and prospects. For further information regarding ESG-related risk, see “There are risks associated with operating in foreign countries, including those related to economic, social and/or political instability, and changes of law affecting foreign companies operating in that country. In particular, we may suffer reputational harm due to our business dealings in certain countries that have previously been associated, or perceived to have been associated, with human rights issues. Increased scrutiny and changing expectations from investors regarding environmental, social and governance (“ESG”) considerations may result in the decrease of the trading price of our securities.

Physical and transition risks arising from climate change, including risks posed by the increased frequency or severity of natural and catastrophic events and regulations or policies related to climate change, may negatively impact our business and operations.

A natural disaster, or severe weather conditions, including in connection with climate change, or an accident that damages or otherwise adversely affects any of our current or future operations, assets, or third-party infrastructure could materially and adversely affect our business, financial condition and results of operations. Severe floods, droughts, lightning strikes, earthquakes, extreme wind conditions, severe storms, heatwaves, wildfires, monsoons and other unfavorable weather conditions or natural disasters (including those related to climate change) could damage our property and assets, or those of third parties on which we rely, or require us to shut down our current or future production facilities and/or related equipment and facilities, impeding our ability to operate and maintain our current or future production facilities and decreasing our revenues from operations. Climate change may also contribute to various chronic changes in the physical environment, such as sea-level rise or changes in ambient temperature or precipitation patterns, which may also adversely impact our or our suppliers’ operations or the operations of those who would install our products. While we may take various actions to mitigate our business risks associated with climate change and other natural and catastrophic events, this may require us to incur substantial costs and may not be successful, due to, among other things, the uncertainty associated with the longer-term projections associated with managing climate risk. For example, to the extent natural and catastrophic events or severe weather conditions

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become more frequent and intense, it may adversely impact the availability or cost of materials and increase the cost of insurance and other operating costs and therefore result in an increase in the costs of our products. Potential adverse impacts from climate change may also create health and safety issues for employees operating at our facilities and may lead to an inability to maintain standard operating hours.

Additionally, we expect to be subject to transition risks associated with societal efforts to mitigate or otherwise respond to climate change, including but not limited to increased laws and regulations, evolving stakeholder expectations, and changes in market demand. For example, at the international level, the United Nations-sponsored “Paris Agreement” requires member states to submit individually determined reduction goals known as “Nationally Determined Contributions” every five years after 2020. President Biden recommitted the United States to the Paris Agreement and, in April 2021, announced a goal of reducing the United States’ greenhouse emissions by 50-52% below 2005 levels by 2030. Various state and local governments have also publicly committed to furthering the goals of the Paris Agreement. In addition, the 26th Conference of the Parties concluded with the finalization of the Glasgow Climate Pact, which stated long-term global goals (including those in the Paris Agreement) to limit the increase in global average temperature and emphasized the need for reductions in greenhouse gas emissions. The full impact of these actions, and any legislation promulgated to fulfill national commitments thereunder, is uncertain at this time, and it is unclear what additional regulatory, policy, or other initiatives may be adopted or implemented in the future. New or amended international agreeme