| | • | | Increase the amount of Common Stock required to be reserved by the Company prior to obtaining the stockholder approval described below to 782,000,000 shares of Common Stock; and |
| | • | | Require that the Company either obtain the prior written consent of requisite stockholders or seek and obtain stockholder approval at a special meeting (in each case no later than January 31, 2024), in order to (x) approve the issuance of such portion of securities issued or issuable solely with respect to an Additional Closing (as defined in the Securities Purchase Agreement) in compliance with the rules and regulations of the New York Stock Exchange and (y) increase the authorized shares of the Company from 1,250,000,000 to 2,000,000,000, and if the Company fails to obtain such approval, it will seek approval at an additional stockholder meeting on or prior to March 31, 2024 and, if necessary, semi-annually thereafter. |
On August 30, 2023, we held a Special Meeting of Stockholders (the “Special Meeting”) where our stockholders approved the potential issuance of more than 19.99% of the outstanding shares of Class A Common Stock pursuant to the conversion of (i) the $340,000,000 in aggregate principal amount of Series A-1 Notes and (ii) the $340,000,000 in aggregate principal amount of Additional Notes issuable pursuant to the Original Purchase Agreement.
Pursuant to the Purchase Agreement Amendment, the Company may offer an incremental $340,000,000 in aggregate principal amount of Investor AIR Notes and $113,333,334 in aggregate principal amount of Issuer AIR Notes. Given this increase in aggregate principal amount of Additional Notes that may be issued pursuant to the Securities Purchase Agreement, we have agreed to either obtain the prior written consent of requisite stockholders or seek and obtain stockholder approval at a special meeting (in each case no later than January 31, 2024), in order to (x) approve the issuance of such portion of securities issued or issuable solely with respect to an Additional Closing (as defined in the Securities Purchase Agreement) in compliance with the rules and regulations of the New York Stock Exchange and (y) increase the authorized shares of the Company from 1,250,000,000 to 2,000,000,000, and if the Company fails to obtain such approval, it will seek approval at an additional stockholder meeting on or prior to March 31, 2024 and, if necessary, semi-annually thereafter. Unless we obtain the approval of our stockholders in accordance with the rules and regulations of the New York Stock Exchange, a maximum of 42,156,083 shares of our Class A Common Stock (19.99% of the outstanding shares of our Class A Common Stock on September 27, 2023) shall be issuable upon conversion or otherwise pursuant to the terms of the incremental $453,333,334 of Additional Notes added pursuant to the Purchase Agreement Amendment.
The Offering
Pursuant to the terms of the Securities Purchase Agreement, the Company has agreed to sell, and the Investor has agreed to purchase, $170,000,000 of Additional Notes, as Series B-1 senior convertible notes due 2025 (the “Series B-1 Notes”) in a registered direct offering (the “Offering”). The Offering is expected to close on September 29, 2023 (the actual date of the Offering closing is referred to herein as the “Closing Date”), subject to satisfaction of customary closing conditions. We estimate the net amount of proceeds to us from the Offering after deducting offering expenses will be $148,372,154. The Company intends to use the net proceeds that it receives from the Offering for general corporate purposes, including working capital, accelerating vehicle deliveries, supporting growth, and expediting vehicle programs.
The Series B-1 Notes have an original issue discount of approximately twelve percent (12%) resulting in gross proceeds to the Company of $150,000,000. All amounts due under the Series B-1 Notes are convertible at any time, in whole or in part, at the Investor’s option, into our Class A Common Stock, at the initial conversion price of $7.5986, which conversion price is subject to certain limitations. Up to 146,551,724 shares of Class A Common Stock (the “Shares”) are issuable from time to time upon conversion or otherwise under the Series B-1 Notes, assuming conversion at a conversion price equal to the Floor Price (as defined in the Series B-1 Notes). The Series B-1 and Shares are being offered pursuant to a prospectus supplement to our effective shelf registration statement on Form S-3 (Registration No. 333-261875) (the “Registration Statement”).
The Series B-1 Notes will be issued as senior unsecured obligations of the Company under that certain Indenture (the “Base Indenture”), dated July 11, 2023, by and between the Company and Wilmington Savings Fund Society, FSB, as the trustee (the “Trustee”), as supplemented by that certain Second Supplemental Indenture (the “Second Supplemental Indenture” and, together with the Base Indenture, the “Indenture”), to be entered into on the Closing Date. The terms of the Series B-1 Notes include those provided in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act. The Series B-1 Notes will mature on the second anniversary of the Closing Date, subject to certain rights of the Investor to extend the maturity date. Unless and until an event of default has occurred and is continuing, the Series B-1 Notes shall not bear any interest. The additional terms of the Series B-1 Notes are identical in all material respects to the terms of the Series A-1 Notes (which are described in the Company’s Current Report on Form 8-K filed on July 10, 2023).
This summary is qualified in its entirety by reference to the full text of the agreements, each of which is attached as an exhibit to this Current Report on Form 8-K.
