Canoo Inc. (GOEV) Enters Preferred Shares Purchase Agreement

April 11, 2024 6:10 AM EDT

On April 9, 2024 Canoo Inc. (NASDAQ: GOEV) entered into a securities purchase agreement (the “Purchase Agreement”) with certain special purpose vehicles managed by entities affiliated with Mr. Tony Aquila, the Company’s Chief Executive Officer and Executive Chair (collectively, the “Purchasers”), in connection with the issuance, sale and delivery by the Company of an aggregate of 10,000 of shares (the “Preferred Shares”) of the Company’s Series C Cumulative Perpetual Redeemable Preferred Stock, par value $0.0001 per share (the “Preferred Stock”), which is convertible into shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), and pursuant to which the Company issued warrants (the “Warrants”) to purchase in the aggregate 4,473,272 shares of Common Stock, for a total aggregate purchase price of $10,000,000. The closing and sale to the Purchasers of the Preferred Shares and Warrants is expected to occur promptly but no later than 20 business days following the Agreement Date, subject to customary closing conditions.

Pursuant to the Purchase Agreement, on or prior to the date that is 20 business days after the Agreement Date, Purchasers or entities affiliated with Purchasers will have the right, but not obligation, to purchase up to an additional $15,000,000 of Preferred Shares and Warrants on substantially identical terms to the transactions contemplated in the Purchase Agreement.

Pursuant to the Purchase Agreement, the Company agreed that if it reasonably determines that the issuance of (i) any shares of Common Stock underlying the Preferred Shares or the Warrants (the “Underlying Reserved Shares”) and (ii) any shares of Common Stock that may be issued, at the option of the Purchasers, for the payment of dividends on the Preferred Stock pursuant to the certificate of designation (the “Certificate of Designation”) for the Preferred Stock (the “Dividend Shares,” and together with the Underlying Reserved Shares, the “Underlying Shares”) would exceed 19.99% of the aggregate number of shares of the Common Stock issued and outstanding as of April 9, 2024 (the “Exchange Cap”), then, following recommendation of the Company’s Board of Directors (the “Board of Directors”), the Company will hold as promptly as reasonably possible a special meeting of its stockholders to approve the issuance of the shares of Common Stock to the Purchasers in excess of the Exchange Cap.

Under the Purchase Agreement, if the Company sells any shares of a series of Preferred Stock and/or rights, options, or warrants to purchase shares of Common Stock or of a series of Preferred Stock, or similar securities (“Qualifying New Securities”), subject to certain exclusions, the Company shall give notice to the Purchasers within 30 days after the issuance of Qualifying New Securities and provide each Purchaser the option to elect to purchase up to the number of Qualifying New Securities on the same terms which equals the greater of (i) that number of Qualifying New Securities having an aggregate purchase price equal to 400% of the aggregate Purchase Price paid by such Purchaser for Preferred Stock and Warrants pursuant to the Purchase Agreement and (ii) the proportion that the Common Stock then held by such Purchaser (including all shares of Common Stock issuable upon conversion or exercise of any Preferred Stock or other derivative securities) bears to the total Common Stock outstanding (assuming the conversion and/or exercise of all Preferred Stock and other derivative securities). Purchasers' participation right will expire and be of no further force and effect upon the redemption or conversion in full of the Preferred Shares. The Purchasers cannot elect to participate if such participation would result in an issuance of Common Stock above the Exchange Cap.

Under the Purchase Agreement, the Company is required to file a shelf registration statement registering the resale by the Purchasers of the Underlying Reserved Shares and an aggregate number of 500,000 Dividend Shares. Additionally, if the number of shares of Common Stock registered on such registration statement is insufficient for the number of Underlying Shares to be issued upon the conversion of Preferred Shares, the payment of the Preferred Stock dividend in Dividend Shares and/or the exercise of the Warrants (a “Subsequent Issuance”), the Company is required to file a separate registration statement within 30 days of such Subsequent Issuance. Except as required by the Purchase Agreement, the Preferred Shares, Warrants and Underlying Shares (collectively, the “Securities”) have not been, and will not be, registered and cannot be sold absent registration of the Securities, under an exemption from registration under the Securities Act of 1933, as amended.

The Purchase Agreement contains customary representations, warranties and covenants of the Company and the Purchasers.

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