| Item 1.01. | Entry
into a Material Definitive Agreement. |
On
April 24, 2023 (the “Agreement Date”), Canoo Inc., a Delaware corporation (the “Company”), entered into a securities
purchase agreement (the “Purchase Agreement”) with YA II PN, Ltd. (“Yorkville”), in connection with the issuance
and sale by the Company of convertible debentures in an aggregate principal amount of $48,000,000 (the “Convertible Debentures”).
The
Convertible Debentures bear interest at a rate of 1.0% per annum, subject to increase to 15.0% per annum upon the occurrence of certain
events of default, and will mature on June 24, 2024, unless earlier converted or redeemed. The Convertible Debentures have an original
issue discount of 6.0% resulting in gross proceeds to the Company before expenses of $45,120,000.
The Convertible
Debentures are convertible at the option of the holder into a number of shares of the Company’s common stock, par value
$0.0001 per share (the “Common Stock”), equal to the applicable Conversion Amount (as defined below) divided by the
lower of (i) $1.00 per share (the “Fixed Conversion Price”) and (ii) 95% of the lowest daily volume-weighted average
price of the Common Stock during the five consecutive trading days immediately preceding the applicable conversion date (the
“Variable Conversion Price”), provided that in no event shall the Variable Conversion Price be less than 20% of the
closing price of the Common Stock on April 24, 2023. The Convertible Debentures may be converted in whole or in part, at any time
and from time to time, provided that Convertible Debentures may only be converted at the Fixed Conversion Price until June 24, 2023,
subject to certain exceptions. The Conversion Amount with respect to any requested conversion will equal the principal amount
requested to be converted plus all accrued and unpaid interest on the Convertible Debentures as of such conversion. In addition, no
conversion will be permitted to the extent that, after giving effect to such conversion, the holder together with the certain
related parties would beneficially own in excess of 9.99% of the Common Stock outstanding immediately after giving effect to such
conversion, subject to certain adjustments.
The
Company shall not issue any Common Stock upon conversion of the Convertible Debentures if the issuance of such shares of Common Stock
would exceed 95,448,226 (which number
of shares represents approximately 19.99% of the aggregate number of shares of Common Stock issued and outstanding as of the Agreement Date) (the “Exchange
Cap”). The Exchange Cap will not apply under certain circumstances, including if the Company obtains the approval of its stockholders
as required by the applicable rules of the Nasdaq Global Select Market for issuances of shares of Common Stock in excess of such amount.
The Convertible Debenture provides the Company, subject to certain conditions, with an optional redemption right pursuant to which the
Company, upon 10 business days’ prior written notice to Yorkville (the “Redemption Notice”), may redeem, in whole or
in part, all amounts outstanding under the Convertible Debenture; provided that the trading price of the Common Stock is less than the
Fixed Conversion Price at the time of the Redemption Notice. The redemption amount shall be equal to the outstanding principal balance
being redeemed by the Company, plus the redemption premium of 5% of the principal amount being redeemed, plus all accrued and unpaid interest
in respect of such redeemed principal amount.
Upon
the occurrence of certain trigger events, the Company will be required to make monthly cash payments of principal in the amount of $7,500,000
(or such lesser amount as may then be outstanding) plus a premium equal to 5% of such principal amount plus all accrued and unpaid interest
as of such payment. Such payments will commence 10 trading days following the occurrence of a trigger event and continue on a monthly
basis thereafter until the Convertible Debentures are repaid in full or until the conditions causing the trigger event are addressed in
the manner provided for in the Convertible Debentures.
In connection with the execution of the Purchase Agreement, the Company and Yorkville also agreed to an adjustment to the exercise price
of the warrants (“Warrants”) to acquire 34,230,870 shares of Common Stock issued pursuant to the supplemental agreement, dated
December 31, 2022, by and between the Company and Yorkville. Pursuant to the parties' agreement, the exercise price of the Warrants have
been adjusted to $0.62 per share.
The
offering of the Convertible Debentures and the underlying shares of Common Stock is being made pursuant to a registration statement on
Form S-3 (File No. 333-266666), which was filed by the Company with the Securities and Exchange Commission on August 8, 2022, and declared
effective on August 17, 2022, as supplemented by a prospectus supplement dated April 24, 2023
(the “Prospectus Supplement”).
The
foregoing descriptions of the Purchase Agreement and Convertible Debentures do not purport to be complete and are qualified in their entirety
by reference to the full text of such documents, which are filed herewith as Exhibits 10.1 and 4.1, respectively, and are incorporated
herein by reference.
Attached
to this Current Report on Form 8-K as Exhibit 5.1, and incorporated by reference into the Prospectus Supplement, is the opinion of Kirkland
& Ellis LLP relating to the legality of the Convertible Debentures and the underlying Common Stock.