Item 1.01 Entry into a Material Definitive Agreement.
Second Supplemental Agreement to the Pre-Paid Purchase Agreement
On July 20, 2022, Canoo Inc. (the "Company") entered into a Pre-Paid Advance
Agreement ("the PPA") with YA II PN, Ltd. ("Yorkville"). In accordance with the
terms of the PPA, the Company may request advances of up to $50,000,000 in cash
from Yorkville (or such greater amount that the parties may mutually agree).
On November 9, 2022, the Company entered into a Supplemental Agreement (the
"First Supplemental Agreement") with Yorkville to the PPA, pursuant to which
Yorkville agreed to advance $21,300,00 (the "First Supplemental Advance") to the
Company and waive certain terms and conditions set forth in the PPA. The First
Supplemental Agreement remains in full force and effect with respect to the
First Supplemental Advance. As of December 31, 2022, $21,300,000 remained
outstanding under the First Supplemental Advance.
On December 31, 2022, the Company entered into a Second Supplemental Agreement
(the "Second Supplemental Agreement" and, together with the First Supplemental
Agreement, the "Supplemental Agreements") with Yorkville to the PPA. Pursuant to
the Second Supplemental Agreement, Yorkville agreed to advance $34,045,500 to
the Company (the "Second Supplemental Advance") and waive certain terms and
conditions set forth in the PPA with respect to such Supplemental Advance,
including the requirement that the Company shall have the capacity to issue
shares of the Company's common stock, par value $0.0001 per share ("Common
Stock") with a market value equal to at least 150% of the Supplemental Advance
without breaching the Exchange Cap (as defined in the PPA). The Second
Supplemental Advance amount may, at the sole option of Yorkville, be increased
by up to an additional $8,514,500 (the "Option"). Such Option may be exercised
by Yorkville through January 31, 2023, which if exercised shall be subject to
the same terms as the initial Second Supplemental Advance. After giving effect
to the commitment fee and the purchase price discount provided for in the PPA,
net proceeds of the Second Supplemental Advance to the Company will be
$32,000,000.
Both of the Supplemental Agreements require that the Company call and hold an
annual or special meeting of its stockholders on or before February 1, 2023 for
the purposes of: (i) obtaining the consent of the stockholders of the Company
pursuant to Nasdaq Listing Rule 5635(d) for the issuance of all shares of its
Common Stock that have been, and could be, issued pursuant to the PPA (including
pursuant to the Supplemental Agreements) and (ii) obtaining the consent of the
stockholders to amend the PPA to provide for a Floor Price (as defined in the
PPA) of $0.50 per share (for each of (i) and (ii), the "Stockholder Approval").
A meeting for the purpose of obtaining the Stockholder Approval has been
scheduled for January 24, 2023.
The Second Supplemental Agreement provides that solely with respect to the
Second Supplemental Advance, the Purchase Price (as such term is used in the
PPA) will be equal to the lower of (a) $1.35 per share (i.e., a price per share
equal to 110% of the volume-weighted average trading price ("VWAP") on the
Trading Day immediately prior to the Pre-Advance Date of the Second Supplemental
Advance) (the "Fixed Price"), or (b) 95% of the lowest daily VWAP during five
Trading Days immediately preceding each Purchase Notice Date, but not lower than
the Floor Price (as defined in the PPA). Further, the Company agreed to pay
Yorkville a commitment fee of $1,705,045 (or up to an additional $425,725 if the
Option is exercised in full by Yorkville) in connection with the Second
Supplemental Agreement, which shall be deducted from the proceeds of the Second
Supplemental Advance.
The Second Supplemental Agreement also terminates that certain letter agreement,
entered into between the Company and Yorkville on October 5, 2022 (the "Letter
Agreement") which had permitted the Company to continue conducting certain
"at-the-market" offerings while balances remained outstanding under the PPA and
First Supplemental Agreement.
Solely with respect to the Second Supplemental Advance upon (a) an Event of
Default (as defined in the PPA), (b) any failure by the Company to observe or
perform any material covenant, agreement or warranty contained in (i) the PPA,
(ii) the Letter Agreement, (iii) the First Supplemental Agreement, (iv) the
Second Supplemental Agreement, or (v) any other agreement between the parties or
(c) if, any time after February 1, 2023, and from time to time thereafter,
(i) the VWAP is less than the Floor Price for at least five (5) Trading Days
during a period of seven (7) consecutive Trading Days, or (ii) the Company has
issued substantially all of the Common Shares available under the Exchange Cap
(the last such day of each such occurrence, a "Triggering Date"), then the
Company shall repay the full unpaid principal amount outstanding under the
Second Supplemental Advance, plus the Redemption Premium in respect of such
amount, and all accrued and unpaid interest in respect of the Second
Supplemental Advance on the tenth (10th) calendar day after the Triggering Date.
The foregoing description of the Second Supplemental Agreement is qualified in
its entirety by reference to the Second Supplemental Agreement, which is filed
hereto as Exhibit 10.1 and which is incorporated herein by reference.
Warrant
In connection with the Second Supplemental Agreement, the Company issued to
Yorkville a warrant (the "Warrant") to purchase an aggregate of 29,604,783
shares of fully paid and non-assessable shares of the Company's Common Stock, at
an exercise price of $1.15 per share. The Warrant is immediately exercisable and
expires on December 31, 2023.
The Warrant includes anti-dilution protection pursuant to which the the exercise
price of the Warrant will be lowered in the event the Company issues Common
Stock or related securities at a price less than the Warrant's per share
exercise price then-in effect. The Warrant also includes customary adjustment
provisions for stock splits, combinations and similar events.
The foregoing description of the Warrant does not purport to be complete and is
qualified in its entirety by reference to the full text of the Warrant, which is
filed hereto as Exhibit 10.2 and which is incorporated herein by reference.
Item 3.02 Unregistered Sales of Equity Securities.
The information contained in Item 1.01 under the heading "Warrant" is
incorporated herein by reference. The issuance of the Warrant was exempt from
registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as
amended. Yorkville represented to the Company that it is an "accredited
investor" as defined in Rule 501 of the Securities Act and that the Warrant was
acquired for investment purposes and not with a view to, or for sale in
connection with, any distribution thereof.
Item 8.01 Other Events.
In connection with the Supplemental Agreements, on January 4, 2023, the Company
entered into voting agreements (collectively, the "Voting Agreements") with
certain Company stockholders, including Tony Aquila, the Company's Chief
Executive Officer, and certain entities affiliated with Mr. Aquila. Pursuant to
the Voting Agreements, each stockholder party thereto has agreed to vote their
shares of Common Stock in favor of all proposals set forth in the Company's
proxy statement filed December 7, 2022, which was filed for the purposes of
soliciting the Shareholder Approval. Each Voting Agreement will terminate upon
the earliest to occur of: (a) the date on which the PPA is terminated in
accordance with its terms; (b) the termination of such Voting Agreement by
mutual written agreement of the Company and the stockholder party thereto; and
(c) the date on which the Shareholder Approval is obtained.
The foregoing description of the Voting Agreements is qualified in its entirety
by reference to the Form of Voting Agreement, which is filed hereto as Exhibit
99.1 and which is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
The following exhibits are filed herewith:
Exhibit
Number Description
10.1 Supplemental Agreement, dated December 31, 2022, by and between Canoo
Inc. and YA II PN, Ltd.
10.2* Warrant to Purchase Common Stock of Canoo Inc., dated December 31,
2022
99.1 Form of Voting Agreement
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
* Certain portions of the exhibit have been redacted pursuant to Item 601(a)(6)
of Regulation S-K. The Company hereby undertakes to furnish supplementally an
unredacted copy of the exhibit upon request by the Securities and Exchange
Commission.
Forward-Looking Statements
This report contains forward-looking statements, and any statements other than
statements of historical fact could be deemed to be forward-looking statements.
These forward-looking statements include, among other things, statements
regarding the amount of shares of Common Stock the Company may issue to
Yorkville pursuant to the Second Supplemental Advance, the receipt of the
Stockholder Approval, the amount of proceeds to be received by the Company from
the sale of shares of Common Stock and the uses thereof and related matters.
These statements are subject to risks and uncertainties, including failure to
receive Stockholder Approval, and actual results may differ materially from
these statements. You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this report. The
Company undertakes no obligation to revise or update any forward-looking
statements to reflect events or circumstances after the date hereof.
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