Filed Pursuant to Rule 424(b)(2)
Registration Nos. 333-263298
Prospectus Supplement
(to Prospectus dated April 25, 2022 and
Prospectus Supplement dated April 28, 2022)

Eos Energy Enterprises, Inc.
3,967,939 Shares of Common Stock
Pursuant to this prospectus supplement, the accompanying prospectus
supplement and the accompanying base prospectus, we are offering
3,967,939 shares of our common stock to YA II PN, Ltd., a Cayman
Islands exempt limited partnership (“Yorkville”) at a price of
approximately $1.26 per share, pursuant to our previously announced
Standby Equity Purchase
Agreement with Yorkville dated April 28, 2022 (the “SEPA”).
The total purchase price and proceeds we will receive from the sale
of the shares is $5,000,000. These shares are being issued as part
of the commitment by Yorkville to purchase from time to time, at
our option, up to $200,000,000 of shares of our common stock
pursuant to the SEPA, as described in Prospectus Supplement dated
April 28, 2022. We expect to issue the shares to Yorkville on or
about May 23, 2022.
In addition to our issuance of our shares to Yorkville pursuant to
the SEPA, this prospectus supplement, the accompanying prospectus
supplement and the accompanying prospectus also cover the resale of
these shares by Yorkville to the public. Though we have been
advised by Yorkville, and Yorkville represents in the SEPA, that
Yorkville is purchasing the shares for its own account, for
investment purposes in which it takes investment risk (including,
without limitation, the risk of loss), and without any view or
intention to distribute such shares in violation of
the Securities Act of 1933, as amended (the “Securities
Act”) or any other applicable securities laws, the Securities and
Exchange Commission (the “SEC”) may take the position that
Yorkville may be deemed an “underwriter” within the meaning of
Section 2(a)(11) of the Securities Act and any profits on the sales
of shares of our common stock by Yorkville and any discounts,
commissions or concessions received by Yorkville are deemed to be
underwriting discounts and commissions under the Securities
Act. For additional information on the methods of sale that may be
used by Yorkville, see the section entitled “Plan of Distribution”
on page S- 5 of the accompanying prospectus supplement.
Our common stock trades on the Nasdaq Capital Market (“Nasdaq”)
under the symbols “EOSE.” On May 20, 2022, the last sale price of
our common stock as reported on Nasdaq was $1.12 per share.
Investing in our common stock
involves risks. Please read “Risk Factors” beginning on page S-3 of
the accompanying prospectus supplement.
Neither the Securities and Exchange Commission (the “SEC”) nor
any other regulatory body has approved or disapproved of these
securities or passed upon the accuracy or adequacy of this
prospectus supplement or the accompanying prospectus. Any
representation to the contrary is a criminal offense.
The date of this prospectus supplement is May 23, 2022.
Neither we nor Yorkville have authorized anyone to provide you
with any information other than the information contained in or
incorporated by reference in this prospectus supplement, the
accompanying prospectus supplement and accompanying prospectus, and
in the documents incorporated by reference herein. We and Yorkville
take no responsibility for, and can provide no assurance as to the
reliability of, any other information that others may give you. We
are not making an offer of these securities in any state or
jurisdiction where the offer is not permitted. You should assume
that the information contained in or incorporated by reference in
this prospectus supplement, or the accompanying prospectus
supplement and accompanying prospectus is accurate only as of their
respective dates.
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PROSPECTUS SUPPLEMENT DATED APRIL 28, 2022
PROSPECTUS
THE OFFERING
Securities Offered |
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3,967,939 shares of common stock of Eos
Energy Enterprises, Inc. |
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Purchaser |
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YA II PN, Ltd. pursuant to the Standby Equity Purchase
Agreement dated April 28,
2022 |
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Purchase price |
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Approximately $1.26 per share |
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Proceeds |
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$5,000,000 |
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Use of Proceeds |
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We intend to use the net proceeds, if any, from this offering
for working capital, to fund our capital funding commitments and
for general corporate purposes, which may include, among other
things, capital expenditures, acquisitions, investments, other
business opportunities and repayment or refinancing of outstanding
debt. Our management will have broad discretion in the application
of net proceeds, if any. See “Use of Proceeds” in the accompanying
prospectus supplement. |
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Symbol for our common stock on Nasdaq |
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“EOSE” |
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Resale |
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This prospectus supplement, the accompanying prospectus
supplement and the accompanying prospectus also cover the resale of
shares by YA II PN, Ltd. to the public. See “Plan of Distribution”
in the accompanying prospectus supplement. |
Filed Pursuant to Rule 424(b)(2)
Registration No. 333-263298
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED APRIL 25, 2022
Up to $200,000,000

EOS Energy Enterprises, Inc.
Common Stock
Eos Energy Enterprises, Inc. (the “Company”) entered into a Standby
Equity Purchase Agreement with YA II PN, Ltd. (“Yorkville”) on
April 28, 2022 (the “SEPA”). Pursuant to the SEPA, the Company
shall have the right, but not the obligation, to sell to Yorkville
up to $200,000,000 of its shares of common stock, par value $0.0001
per share, offered by this prospectus supplement and the
accompanying prospectus at the Company’s request any time during
the commitment period commencing on April 28, 2022 and terminating
on the earliest of (i) the first day of the month following the
24-month anniversary of the SEPA and (ii) the date on which
Yorkville shall have made payment of any advances requested
pursuant to the SEPA for shares of the Company’s common stock equal
to the commitment amount of $200,000,000 (the “Commitment Period”).
Each sale the Company requests under the SEPA (an “Advance Notice”)
may be for a number of shares of common stock with an aggregate
value of up to $20,000,000. The shares would be purchased at 97.0%
of the Market Price (as defined below) and would be subject to
certain limitations, including that Yorkville could not purchase
any shares that would result in it owning more than 9.99% of our
common stock. “Market Price” is defined in the SEPA as the average
of the VWAPs (as defined below) during each of the three
consecutive trading days commencing on the trading day following
the Company’s submission of an Advance Notice to Yorkville. “VWAP”
is defined in the SEPA to mean, for any trading day, the daily
volume weighted average price of the Company’s common stock for
such date on the Nasdaq Capital Market as reported by Bloomberg
L.P. during regular trading hours.
This prospectus supplement and the accompanying prospectus also
cover the sale of these shares by Yorkville to the public. Though
we have been advised by Yorkville, and Yorkville represents in the
SEPA, that Yorkville is purchasing the shares for its own account,
for investment purposes in which it takes investment risk
(including, without limitation, the risk of loss), and without any
view or intention to distribute such shares in violation of the
Securities Act of 1933, as amended (the “Securities Act”) or any
other applicable securities laws, the Securities and Exchange
Commission (the “SEC”) may take the position that Yorkville may be
deemed an “underwriter” within the meaning of Section 2(a)(11) of
the Securities Act and any profits on the sales of shares of our
common stock by Yorkville and any discounts, commissions or
concessions received by Yorkville are deemed to be underwriting
discounts and commissions under the Securities Act. For additional
information on the methods of sale that may be used by Yorkville,
see the section entitled “Plan of Distribution” on page S- 5.
Our common stock trade on Nasdaq Capital Market (“Nasdaq”) under
the symbols “EOSE.” On April 27, 2022, the last sale price of our
common stock as reported on Nasdaq was $2.15 per share.
Investing in our common stock involves risks. Please read “Risk
Factors” beginning on page S-3 of this prospectus supplement.
Neither the Securities and Exchange Commission (the “SEC”) nor
any other regulatory body has approved or disapproved of these
securities or passed upon the accuracy or adequacy of this
prospectus supplement or the accompanying prospectus. Any
representation to the contrary is a criminal offense.
The date of this prospectus supplement is April 28, 2022
Neither we nor Yorkville have authorized anyone to provide you
with any information other than the information contained in or
incorporated by reference in this prospectus supplement, the
accompanying prospectus, and in the documents incorporated by
reference herein. We and Yorkville take no responsibility for, and
can provide no assurance as to the reliability of, any other
information that others may give you. We are not making an offer of
these securities in any state or jurisdiction where the offer is
not permitted. You should assume that the information contained in
or incorporated by reference in this prospectus supplement, or the
accompanying prospectus is accurate only as of their respective
dates.
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PROSPECTUS
About This Prospectus
Supplement
This prospectus supplement and the accompanying prospectus are part
of a “shelf” registration statement on Form S-3 (File No.
333-263298) that we initially filed with the SEC on March 4, 2022,
and which was declared effective on April 25, 2022. Under this
shelf registration process, we may, from time to time, sell any
combination of the securities described in the accompanying
prospectus in one or more offerings up to a total dollar amount of
$300,000,000.
This document contains two parts. The first part consists of this
prospectus supplement, which describes the specific terms of this
offering and the securities offered. The second part, the
accompanying prospectus which is dated April 25, 2022, provides
more general information, some of which may not apply to this
offering. If the description of the offering varies between this
prospectus supplement and the accompanying prospectus, you should
rely on the information in this prospectus supplement.
Before purchasing any shares of common stock, you should carefully
read both this prospectus supplement and the accompanying
prospectus, together with the additional information described
under the heading “Where You Can Find More Information.”
Market and Industry
Data
This prospectus supplement and the accompanying prospectus contains
or incorporates by reference industry, market and competitive
position data and forecasts that are based on industry publications
and studies conducted by third parties. Although the industry
publications and third-party studies generally state that the
information that they contain has been obtained from sources
believed to be reliable, they do not guarantee the accuracy or
completeness of such information, and we have not independently
verified any of the data from third-party sources or ascertained
the underlying economic assumptions relied upon therein. While we
believe that the market position, market opportunity and market
size information included or incorporated by reference in this
prospectus supplement and the accompanying prospectus is generally
reliable, such information is inherently imprecise. The industry
forward-looking statements included or incorporated by reference in
this prospectus supplement and the accompanying prospectus may be
materially different than actual results.
Where You Can Find More
Information
We maintain a website at www.eose.com. Information contained on, or
accessible through, our website is not incorporated by reference
into and does not constitute a part of this prospectus supplement
or any other report or documents we file with or furnish to the
SEC.
We are subject to the information and reporting requirements of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”),
and, in accordance with the Exchange Act, we will file periodic
reports, proxy statements and other information with the SEC, which
will be available on the Internet website maintained by the SEC at
www.sec.gov and at the SEC’s public reference facilities referred
to below. See “Incorporation by Reference.”
Incorporation by
Reference
We are “incorporating by reference” into this prospectus supplement
the information in documents we file with the SEC, which means that
we are disclosing important information to you by referring you to
those documents. The information incorporated by reference is an
important part of this prospectus supplement, and information that
we file later with the SEC will automatically update and supersede
this information to the extent that the later filed information
modifies or replaces such earlier information. We incorporate by
reference in this prospectus supplement the following documents,
which we have filed or will file with the SEC:
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our Annual Report on
Form 10-K for the fiscal year ended December 31, 2021, filed
with the SEC on February 25, 2022 |
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information specifically
incorporated by reference in our Annual Report on Form 10-K for the
fiscal year ended December 31, 2021 from our Definitive Proxy
Statement on
Schedule 14A filed with the SEC on March 31, 2022; |
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the description of our securities
contained in our Registration Statement on
Form 8-A (File No. 001-39291), filed with the SEC on November
16, 2020, including any amendments or reports filed for the purpose
of updating such description; and |
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all documents and reports
subsequently filed by us with the SEC (other than, in each case,
any information or documents furnished, rather than filed, with the
SEC pursuant to certain items of Form 8-K) after the date hereof
and prior to the closing of this offering. |
You may obtain any of the documents incorporated by reference in
this prospectus supplement from the SEC at the SEC’s website at
http://www.sec.gov.
SPECIAL NOTE REGARDING
FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference into
this prospectus contain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
The words “anticipate,” “believe,” “estimate,” “project,” “expect,”
“intend,” “plan,” “should,” and similar expressions, as they relate
to us, are intended to identify forward-looking statements. These
statements appear in a number of places in this prospectus and the
documents incorporated by reference herein, and include statements
regarding the intent, belief or current expectations of Eos Energy
Enterprises, Inc. Forward-looking statements are based on our
management’s beliefs, as well as assumptions made by, and
information currently available to, them. Because such statements
are based on expectations as to future financial and operating
results and are not statements of fact, actual results may differ
materially from those projected. Factors which may cause actual
results to differ materially from current expectations include, but
are not limited to:
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changes adversely affecting the
business in which we are engaged; |
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our ability to forecast trends
accurately; our ability to generate cash, service indebtedness and
incur additional indebtedness; |
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our ability to raise financing in
the future; |
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our ability to develop efficient
manufacturing processes to scale and to forecast related costs and
efficiencies accurately; |
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fluctuations in our revenue and
operating results; |
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competition from existing or new
competitors; |
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the failure to convert firm order
backlog to revenue; |
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risks associated with security
breaches in our information technology systems; |
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risks related to legal proceedings
or claims; |
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risks associated with evolving
energy policies in the United States and other countries and the
potential costs of regulatory compliance; |
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risks associated with changes to
U.S. trade environment; |
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risks resulting from the impact of
global pandemics, including the novel coronavirus, Covid-19; |
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risks related to adverse changes in
general economic conditions; |
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other factors detailed under the
section entitled “Risk Factors” herein; and |
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other risks and uncertainties
described in our Annual Report on Form 10-K for the year ended
December 31, 2021 and our subsequent filings with the SEC, that we
incorporate by reference herein. |
Should one or more of these risks or uncertainties materialize,
they could cause our actual results to differ materially from the
forward-looking statements. Forward-looking statements speak only
as of the date they are made. Readers are cautioned not to put
undue reliance on forward-looking statements, and, except as
required by law, the Company assumes no obligation and does not
intend to update or revise these forward-looking statements,
whether as a result of new information, future events, or
otherwise.
Prospectus Supplement
Summary
This summary highlights certain information contained elsewhere,
or incorporated by reference, in this prospectus supplement and the
accompanying prospectus. As a result, this summary is not complete
and does not contain all of the information that you should
consider before investing in our common stock. You should read the
following summary in conjunction with the more detailed information
contained in this prospectus supplement, the accompanying
prospectus and the documents incorporated by reference, which are
described under “Where You Can Find More Information” in this
prospectus supplement. This prospectus supplement and the
accompanying prospectus contain or incorporate forward-looking
statements. Forward-looking statements should be read with the
cautionary statements and important factors included under “Risk
Factors” and “Forward-Looking Statements” in this prospectus
supplement as well as the “Risk Factors” sections in our Annual
Report on Form 10-K for the year ended December 31, 2019 and in
other reports that we file with the SEC from time to time.
Overview
We design, manufacture, and deploy safe, scalable, and sustainable,
low total cost of ownership battery storage solutions for the
electricity industry. Our flagship technology is the proprietary
Eos Znyth aqueous zinc battery, the core of the Eos DC energy
storage system (the “Eos ZnythTM system”), with
both front-of-the-meter and behind-the-meter applications,
particularly applications with three to twelve- hour use cases. The
flexibility of the ZnythTM battery allows the
battery to support use cases such as frequency regulation’s one
second response time. The Eos ZnythTM system is the
first non lithium-ion (“Li-ion”) stationary battery energy storage
system (“BESS”) that is competitive in price and performance with
Li-ion and is more flexible, safe and sustainable. The
ZnythTM battery is fully recyclable, does not
require any rare earth or conflict materials, is manufactured in
the United States with a primarily domestic supply chain, and is
scalable to multi-GWh sites or can be sized for small commercial
sites. Stationary BESS are used to store energy for many purposes,
including stabilizing and reducing congestion of the power grid,
reducing peak energy usage, and time-shifting of renewable energy
sources. When coupled with renewable energy sources such as solar
photovoltaic (“PV”) and wind generation, the Eos
ZnythTM system can store energy that the renewable
source produces and discharge energy when the source is not
producing energy, thus reducing the intermittency and increasing
the value and reliability of the renewable energy source.
Additionally, storage is used by commercial and industrial
(“C&I”) customers to save energy costs by reducing their peak
usage, thus reducing demand charges and avoiding peak energy
pricing from utilities. We believe that scalable energy storage
serves as a central catalyst for modernizing and creating a more
reliable and resilient, efficient, sustainable, and affordable
grid. The significant market demand for battery storage is driven
by independent power producers (“IPP”), renewable developers,
utilities and C&I customers who are especially eager for a
reliable, sustainable, safe, low-cost and scalable battery storage
solution to complement their other energy resources.
Eos Energy Storage LLC, our wholly-owned subsidiary, was founded in
2008 under the name Grid Storage Technologies, initially focusing
on developing the chemistry of its proprietary electrolyte-based
battery technology and improving mechanical design and system
performance. Our products, which are developed and manufactured in
the United States, have the ability to play a pivotal role in the
transition to a more sustainable, resilient and low carbon energy
future. We have transformed from an organization that focused
primarily on research and development to one focused on
commercialization of our energy storage solution and, more
recently, to scaling our manufacturing platform. We produced our
first proof of concept with generation 1 of the Eos
ZnythTM system in 2015 (“Gen 1”) and began
commercial shipments of our generation 2 Eos
ZnythTM system in 2018 (“Gen 2”). During 2020, we
completed the development of our Generation 2.3 Eos
ZnythTM systems (“Gen 2.3”) and shipped our first
Gen 2.3 system in December 2020. As of December 31, 2021, we have
delivered 22 Eos ZnythTM systems comprised of over
9,300 ZnythTM batteries or approximately 28
megawatt hours (“MWh”). Each Gen 2.3 20 foot battery container
(“Eos Cube”) is comprised of 144 batteries, which are connected to,
and monitored through, our proprietary battery management system.
Each system is individually designed with the appropriate number of
Eos Cube to achieve the end user’s desired energy needs. We also
offer a larger battery systems in the form of our prefabricated
building system (“Eos Hangar”) which provides 40MWh of storage per
Eos Hangar and an indoor racking solution (“Eos Stack”) that
leverages the safe and modular characteristics of the
ZnythTM battery in providing indoor energy
solutions for C&I buildings.
Corporate Information
BMRG was incorporated in Delaware in June 2019 as a blank check
company under the name B. Riley Principal Merger Corp. II. On
November 16, 2020 (the “Closing Date”), BMRG, EES LLC, BMRG Merger
Sub, LLC (“Merger Sub I”), BMRG Merger Sub II, LLC (“Merger Sub
II”), New Eos Energy LLC (“Newco”) and AltEnergy Storage VI, LLC
consummated the transactions contemplated under the Merger
Agreement entered into on September 7, 2020 between the parties,
following the approval at the special meeting of the stockholders
of BMRG held on October 15, 2020. On the Closing Date, (1) Merger
Sub I merged with and into Newco, with Newco continuing as the
surviving company and a wholly-owned subsidiary of the Company, and
(2) Newco then merged with and into Merger Sub II, with Merger Sub
II continuing as the surviving company and a wholly-owned
subsidiary of the Company (together, the “Business Combination”).
In connection with the Business Combination, the registrant changed
its name from B. Riley Merger Corp. II to Eos Energy Enterprises,
Inc., and Merger Sub II changed its name from BMRG Merger Sub II,
LLC to Eos Energy Enterprises Intermediate Holdings, LLC.
Additional Information
The mailing address of our principal executive office is 3920 Park
Avenue, Edison, NJ 08820, and our phone number is (732) 225-8400.
Our corporate website address
is www.eosenergystorage.com. Information contained on
or accessible through our website is not a part of this prospectus,
and the inclusion of our website address in this prospectus is an
inactive textual reference only.
The Offering
Issuer |
Eos Energy Enterprises, Inc., a Delaware
corporation |
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Common stock offered by us |
Shares of common stock having an aggregate offering price of up
to $200,000,000. |
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Common stock outstanding prior to this offering |
53,980,608 shares
of common stock as of April 28, 2022. |
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Manner of offering |
See “Plan of Distribution” beginning on page S-5. |
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Use of proceeds |
We intend to use the net proceeds, if any, from this offering
for working capital, to fund our capital funding commitments and
for general corporate purposes, which may include, among other
things, capital expenditures, acquisitions, investments, other
business opportunities and repayment or refinancing of outstanding
debt. Our management will have broad discretion in the application
of net proceeds, if any. See “Use of Proceeds” on page S-4. |
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Listing |
Our common stock and warrants are listed on NASDAQ under the
symbols “EOSE” and “EOSEW,” respectively. |
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Risk factors |
An investment in our common stock involves various risks.
Prospective investors should carefully consider the matters
described in the section entitled “Risk Factors” and other
information included or incorporated by reference in this
prospectus supplement and the accompanying prospectus. |
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Transfer agent and registrar |
Continental Stock Transfer & Trust Company |
Unless we specifically state otherwise, all share information in
this prospectus supplement (i) is based on the number of common
shares outstanding as of April 28, 2022 and (ii) does not take into
account:
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1,968,797 shares of common stock
issuable upon the vesting of restricted stock and restricted stock
units outstanding as of April 28, 2022; and |
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1,990,995 shares of common stock
available for future issuance under our equity incentive plans as
of April 28, 2022. |
Risk Factors
Investing in our common stock involves risk. Before you invest in
our common stock, you should carefully consider all of the risk
factors incorporated by reference in this prospectus supplement,
including the risk factors set forth in our most recent Annual
Report on Form 10-K, any subsequent Quarterly Reports on Form 10-Q
or Current Reports on Form 8-K. You should also carefully consider
all of the other information included or incorporated by reference
in this prospectus supplement. The occurrence of any of these risks
could materially and adversely affect our business, financial
condition, liquidity, cash flows, results of operations, prospects,
and our ability to implement our investment strategy and to make or
sustain distributions to our stockholders, which could result in a
partial or complete loss of your investment in our common stock.
Some statements in this prospectus supplement constitute
forward-looking statements. See “Cautionary Statement Regarding
Forward-Looking Statements.”
Risks Related to this Offering
The issuance and sale of our common stock under the SEPA will
result in dilution to our stockholders and any future sales of our
common stock may depress our stock price.
If we elect to draw down amounts under the SEPA, which will result
in the sale of shares of our common stock to Yorkville, any such
draw-downs may have a dilutive impact on our existing shareholders.
Though we have been advised by Yorkville, and Yorkville represents
in the SEPA, that Yorkville is purchasing the shares for its own
account, for investment purposes, and without any view or intention
to distribute such shares in violation of the Securities Act or any
other applicable securities laws, Yorkville may resell some or all
of the shares we issue to it pursuant to draw-downs under the SEPA
and such sales could cause the market price of our common stock to
decline.
Use of Proceeds
The amount of proceeds from this offering will depend upon the
number of shares of our common stock sold and the price at which
they are sold. There can be no assurance that we will be able to
sell any shares under or fully utilize the SEPA as a source of
financing. We intend to use the net proceeds, if any, from this
offering for working capital, to fund our capital funding
commitments and for general corporate purposes, which may include,
among other things, capital expenditures, acquisitions,
investments, other business opportunities and repayment or
refinancing of outstanding debt.
As of the date of this prospectus supplement, we cannot specify
with certainty all of the particular uses for the net proceeds we
will have upon completion of this offering. Accordingly, our
management will have broad discretion in the application of net
proceeds, if any.
This prospectus also relates to shares of our common stock that may
be offered and sold from time to time by Yorkville. All of the
common stock offered by Yorkville pursuant to this prospectus will
be sold by Yorkville for its own account. We will not receive any
of the proceeds from these sales.
Pending the uses described above, we plan to invest the net
proceeds from this offering in cash or cash equivalents.
Plan of Distribution
On April 25, 2022, the Company entered into the SEPA with
Yorkville. Pursuant to the SEPA, the Company shall have the right,
but not the obligation, to sell to Yorkville up to $200,000,000 of
its shares of common stock upon the Company’s written request
during the twenty-four months following execution of the SEPA (the
“Commitment Period”). At any time during the Commitment Period, the
Company may require Yorkville to purchase shares of its common
stock by delivering an Advance Notice that the Company desires to
issue and sell to Yorkville a number of shares of common stock with
an aggregate value of up to $20,000,000. The shares would be
purchased pursuant to the SEPA at 97.0% of the Market Price and
would be subject to certain limitations, including that Yorkville
could not purchase any shares that would result in it owning more
than 9.99% of our common stock.
Delivery of the shares against payment therefor in respect of each
Advance Notice shall be settled promptly following each sale
pursuant to the SEPA. In connection with any Advance Notice, if any
portion of an advance would cause Yorkville’s beneficial ownership
of our then outstanding common stock to exceed 9.99%, then such
portion shall automatically be deemed to be withdrawn by us (with
no further action required by us) and modified to reduce the amount
of the advance requested by an amount equal to such withdrawn
portion. We may terminate the SEPA upon five trading days of prior
notice to Yorkville, provided that there are no Advance Notices
outstanding and we have paid to Yorkville all amounts then due.
In addition to the issuance of our common stock to Yorkville
pursuant to the SEPA, this prospectus supplement also covers the
resale of those shares from time to time by Yorkville to the
public. Though we have been advised by Yorkville, and Yorkville
represents in the SEPA, that Yorkville is purchasing the shares for
its own account, for investment purposes in which it takes
investment risk (including, without limitation, the risk of loss),
and without any view or intention to distribute such shares in
violation of the Securities Act or any other applicable securities
laws, the SEC may take the position that Yorkville may be deemed an
“underwriter” within the meaning of Section 2(a)(11) of the
Securities Act. We have agreed in the SEPA to provide customary
indemnification to Yorkville. It is possible that our shares may be
sold by Yorkville in one or more of the following manners:
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ordinary brokerage transactions and transactions in which the
broker solicits purchasers; |
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a block trade in which the broker or dealer so engaged will
attempt to sell the shares as agent, but may position and resell a
portion of the block as principal to facilitate the
transaction; |
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to a broker-dealer as principal and resale by the broker-dealer
for its account; or |
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a combination of any such methods of sale. |
Yorkville has agreed that, during the term of the SEPA, neither
Yorkville nor its affiliates will engage in any short sales or
hedging transactions with respect to our common stock, provided
that upon receipt of an advance notice, Yorkville may sell shares
that it is obligated to purchase under such advance notice prior to
taking possession of such shares.
Yorkville will be subject to liability under the federal securities
laws and must comply with the requirements of the Exchange Act,
including without limitation, Rule 10b-5 and Regulation M under the
Exchange Act. These rules and regulations may limit the timing of
purchases and sales of our common stock by Yorkville. Under these
rules and regulations, Yorkville:
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may not engage in any stabilization
activity in connection with our securities; |
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must furnish each broker which
offers shares of our common stock covered by the prospectus
supplement and accompanying prospectus that are a part of our
registration statement with the number of copies of such prospectus
supplement and accompanying prospectus which are required by each
broker; and |
|
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may not bid for or purchase any of
our securities or attempt to induce any person to purchase any of
our securities other than as permitted under the Exchange Act. |
These restrictions may affect the marketability of the shares by
Yorkville.
Experts
The financial statements of the Company as of December 31, 2021 and
2020, and for each of the three years in the period ended December
31, 2021, incorporated by reference in this prospectus, and the
effectiveness of the Company’s internal control over financial
reporting have been audited by Deloitte & Touche LLP, an
independent registered public accounting firm, as stated in their
reports which express an unqualified opinion on the financial
statements and an adverse opinion on the effectiveness of the
Company’s internal control over financial reporting. Such financial
statements are incorporated by reference in reliance upon the
reports of such firm given their authority as experts in accounting
and auditing.
Legal Matters
The validity of the common stock and certain other legal matters
will be passed upon by Davis Polk & Wardwell LLP.
Prospectus

$300,000,000
Common Stock
Preferred Stock
Senior Debt Securities
Offered by EOS Energy Enterprises,
Inc.
7,001,751 Shares of Common Stock
Offered by EOS Energy Enterprises, Inc. Upon Exercise of
Warrants
39,145,143 Shares of Common Stock
325,000 Warrants to Purchase Shares of Common Stock
$130,350,642 5%/6% Convertible Senior PIK Toggle Notes Due
2026
Offered by the Selling Securityholders Named Herein
Eos Energy Enterprises, Inc. may from time to time offer and sell
common stock, preferred stock or senior debt securities. Specific
terms of the preferred stock or senior debt securities will be
provided in supplements to this prospectus. In addition, this
prospectus relates to the issuance by us of up to 7,001,751 shares
of common stock that are issuable by us upon the exercise of public
warrants (the “public warrants”) assumed by us, which were
previously registered in connection with the Business Combination
(as defined below).
This prospectus also relates to the offer and resale from time to
time by the selling securityholders named in this prospectus of up
to 39,145,143 shares of common stock, up to 325,000 warrants and up
to $130,350,642 principal amount of 5%/6% Convertible Senior PIK
Toggle Notes due 2026 (the “notes”), including up to (i) 4,950,000
shares of common stock and 325,000 warrants to purchase shares of
common stock originally issued in connection with the initial
public offering of B. Riley Principal Merger Corp. II, (ii) 325,000
shares of common stock issuable upon exercise of warrants
originally issued in connection with the initial public offering of
B. Riley Principal Merger Corp. II, (iii) 27,175,613 shares of
common stock issued in connection with the consummation of our
business combination with Eos Energy Storage LLC and the related
private placement, (iv) 80,294 shares of common stock issuable upon
satisfaction of certain vesting terms set forth in previously
issued restricted stock units, (v) 97,877 shares of common stock
that have been or may be issued to certain of the selling
securityholders upon exercise of options granted under the Eos
Energy Enterprises, Inc. Amended and Restated 2012 Equity Incentive
Plan, (vi) $102,900,000 principal amount of notes originally issued
to Spring Creek Capital, LLC (“Spring Creek”), a wholly-owned,
indirect subsidiary of Koch Industries, Inc. pursuant to the
Indenture, dated April 7, 2022, between Eos Energy Enterprises,
Inc. and Wilmington Trust, National Association, as trustee, and
the Investment Agreement dated July 6, 2021 with Spring Creek,
(vii) a maximum of $27,450,642 principal amount of notes issuable
as future PIK interest payments on the notes and (viii) a maximum
of 6,516,359 shares of common stock underlying the notes and
issuable upon conversion of the notes, which may be sold by Spring
Creek from time to time.
We and the selling securityholders may sell the securities covered
by this prospectus in a number of different ways and at varying
prices. The securities may be sold directly to you, through agents,
or through underwriters and dealers. If agents, underwriters or
dealers are used to sell the securities, we will name them and
describe their compensation in a prospectus supplement.
We will receive proceeds from the issuance and sale of our common
stock, preferred stock or senior debt securities and from the
exercise of public warrants. We will not receive any of the
proceeds from the sale of securities by the selling
securityholders. We will pay certain expenses associated with the
registration of the securities covered by this prospectus, as
described in the section titled “Plan of Distribution.”
Our common stock and warrants to purchase common stock are listed
on the Nasdaq Capital Market (“Nasdaq”) under the symbols “EOSE”
and “EOSEW,” respectively. The closing price of our common stock on
April 6, 2022 was $3.91 per share. The closing price of our
warrants on April 6, 2022 was $1.16 per warrant.
Investing in these securities involves certain risks. You should
review carefully the risks and uncertainties described under the
heading “Risk Factors” beginning on page 18 of our annual report on
Form 10-K for the year ended December 31, 2021, which is
incorporated herein by reference, as amended or supplemented from
time to time by any risk factors we include in subsequent annual or
quarterly reports on Form 10-K or 10-Q, respectively, and
incorporated herein by reference.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved these securities,
or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
The date of this prospectus is April 25, 2022
Neither we nor the selling securityholders have authorized
anyone to provide you with information that differs from the
information provided in this prospectus, as well as the information
incorporated by reference into this prospectus and any applicable
prospectus supplement. Neither we nor the selling securityholders
are making an offer of these securities in any jurisdiction where
the offer is not permitted. You should not assume that the
information in this prospectus, any applicable prospectus
supplement or any documents incorporated by reference is accurate
as of any date other than the date of the applicable document.
Since the respective dates of this prospectus and the documents
incorporated by reference into this prospectus, our business,
financial condition, results of operations and prospects may have
changed.
table of
contents
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed
with the SEC utilizing a “shelf” registration process. Under this
shelf process, we may sell any combination of the securities
described in this prospectus in one or more offerings. This
prospectus provides you with a general description of the
securities we may offer. Each time we sell securities, we will
provide a prospectus supplement that will contain specific
information about the terms of that offering. The prospectus
supplement may also add, update or change information contained in
this prospectus. You should read both this prospectus and any
prospectus supplement together with additional information
described under the heading “Where You Can Find More
Information.”
In this prospectus, unless the context otherwise requires, the
terms “Company,” “we,” “us,” “our,” and “Eos” refer to Eos Energy
Enterprises, Inc., a Delaware corporation. Prior to the
consummation of the Business Combination (as defined below), the
Company was known as B. Riley Principal Merger Corp. II, or
“BMRG”.
Where You Can Find More
Information
The SEC allows us to incorporate by reference information in this
document. This means that we can disclose important information to
you by referring you to another document filed separately with the
SEC. The information incorporated by reference is considered to be
part of this document, except for any information that is
superseded by information that is included directly in this
document.
We are incorporating by reference the filings listed below and any
additional documents that we may file with the SEC pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act on or after
the date hereof and prior to the termination of any offering (other
than documents or information deemed to have been furnished and not
filed in accordance with SEC rules):
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our Annual Report on
Form 10-K for the fiscal year ended December 31, 2021, filed
with the SEC on February 25, 2022 |
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information specifically incorporated by reference in our
Annual Report on Form 10-K for the fiscal year ended December 31,
2021 from our Definitive Proxy Statement on Schedule 14A filed with the SEC
on March 31, 2022; |
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our Current Report on
Form 8-K filed with the SEC on February 14, 2022; and |
|
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the description of our securities contained in our Registration
Statement on
Form 8-A (File No. 001-39291), filed with the SEC on November
16, 2020, including any amendments or reports filed for the purpose
of updating such description. |
Any statement contained in this prospectus, or in a document
incorporated or deemed to be incorporated by reference herein,
shall be deemed to be modified or superseded to the extent that a
statement contained herein, or in any subsequently filed document
that also is incorporated or deemed to be incorporated by reference
herein, modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this prospectus.
The SEC maintains a website at www.sec.gov, from which you can
inspect these documents and other information we have filed
electronically with the SEC. You may also request copies of these
documents, at no cost to you, from our website (https://eosenergystorage.com),
or by writing or telephoning us at the following address:
Eos Energy Enterprises, Inc.
3920 Park Avenue
Edison, New Jersey 08820
Attn: General Counsel
(732) 225-8400
Exhibits to these documents will not be sent, however, unless those
exhibits have been specifically incorporated by reference into this
prospectus.
Special Note Regarding
Forward-Looking Statements
This prospectus and the documents incorporated by reference into
this prospectus contain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
The words “anticipate,” “believe,” “estimate,” “project,” “expect,”
“intend,” “plan,” “should,” and similar expressions, as they relate
to us, are intended to identify forward-looking statements. These
statements appear in a number of places in this prospectus and the
documents incorporated by reference herein, and include statements
regarding the intent, belief or current expectations of Eos Energy
Enterprises, Inc. Forward-looking statements are based on our
management’s beliefs, as well as assumptions made by, and
information currently available to, them. Because such statements
are based on expectations as to future financial and operating
results and are not statements of fact, actual results may differ
materially from those projected. Factors which may cause actual
results to differ materially from current expectations include, but
are not limited to:
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changes adversely affecting the business in which we are
engaged; |
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our ability to forecast trends accurately; our ability to
generate cash, service indebtedness and incur additional
indebtedness; |
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our ability to raise financing in the future; |
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our ability to develop efficient manufacturing processes to
scale and to forecast related costs and efficiencies
accurately; |
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fluctuations in our revenue and operating results; |
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competition from existing or new competitors; |
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the failure to convert firm order backlog to revenue; |
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risks associated with security breaches in our information
technology systems; |
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risks related to legal proceedings or claims; |
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risks associated with evolving energy policies in the United
States and other countries and the potential costs of regulatory
compliance; |
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risks associated with changes to U.S. trade environment; |
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risks resulting from the impact of global pandemics, including
the novel coronavirus, Covid-19; |
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risks related to adverse changes in general economic
conditions; |
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other factors detailed under the section entitled “Risk
Factors” herein; and |
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other risks and uncertainties
described in our Annual Report on Form 10-K for the year ended
December 31, 2021 and our subsequent filings with the SEC, that we
incorporate by reference herein. |
Should one or more of these risks or uncertainties materialize,
they could cause our actual results to differ materially from the
forward-looking statements. Forward-looking statements speak only
as of the date they are made. Readers are cautioned not to put
undue reliance on forward-looking statements, and, except as
required by law, the Company assumes no obligation and does not
intend to update or revise these forward-looking statements,
whether as a result of new information, future events, or
otherwise.
Summary
This summary highlights selected information and does not
contain all of the information that is important to you. This
summary is qualified in its entirety by the more detailed
information included in or incorporated by reference into this
prospectus. Before making your investment decision with respect to
our securities, you should carefully read this entire prospectus,
any applicable prospectus supplement and the documents referred to
in “Where You Can Find More Information.”
Overview
We design, manufacture, and deploy safe, scalable, and sustainable,
low total cost of ownership battery storage solutions for the
electricity industry. Our flagship technology is the proprietary
Eos Znyth aqueous zinc battery, the core of the Eos DC energy
storage system (the “Eos ZnythTM system”), with both
front-of-the-meter and behind-the-meter applications, particularly
applications with three to twelve- hour use cases. The flexibility
of the ZnythTM battery allows the battery to support use
cases such as frequency regulation’s one second response time. The
Eos ZnythTM system is the first non lithium-ion
(“Li-ion”) stationary battery energy storage system (“BESS”) that
is competitive in price and performance with Li-ion and is more
flexible, safe and sustainable. The ZnythTM battery is
fully recyclable, does not require any rare earth or conflict
materials, is manufactured in the United States with a primarily
domestic supply chain, and is scalable to multi-GWh sites or can be
sized for small commercial sites. Stationary BESS are used to store
energy for many purposes, including stabilizing and reducing
congestion of the power grid, reducing peak energy usage, and
time-shifting of renewable energy sources. When coupled with
renewable energy sources such as solar photovoltaic (“PV”) and wind
generation, the Eos ZnythTM system can store energy that
the renewable source produces and discharge energy when the source
is not producing energy, thus reducing the intermittency and
increasing the value and reliability of the renewable energy
source. Additionally, storage is used by commercial and industrial
(“C&I”) customers to save energy costs by reducing their peak
usage, thus reducing demand charges and avoiding peak energy
pricing from utilities. We believe that scalable energy storage
serves as a central catalyst for modernizing and creating a more
reliable and resilient, efficient, sustainable, and affordable
grid. The significant market demand for battery storage is driven
by independent power producers (“IPP”), renewable developers,
utilities and C&I customers who are especially eager for a
reliable, sustainable, safe, low-cost and scalable battery storage
solution to complement their other energy resources.
Eos Energy Storage LLC, our wholly-owned subsidiary, was founded in
2008 under the name Grid Storage Technologies, initially focusing
on developing the chemistry of its proprietary electrolyte-based
battery technology and improving mechanical design and system
performance. Our products, which are developed and manufactured in
the United States, have the ability to play a pivotal role in the
transition to a more sustainable, resilient and low carbon energy
future. We have transformed from an organization that focused
primarily on research and development to one focused on
commercialization of our energy storage solution and, more
recently, to scaling our manufacturing platform. We produced our
first proof of concept with generation 1 of the Eos
ZnythTM system in 2015 (“Gen 1”) and began commercial
shipments of our generation 2 Eos ZnythTM system in 2018
(“Gen 2”). During 2020, we completed the development of our
Generation 2.3 Eos ZnythTM systems (“Gen 2.3”) and
shipped our first Gen 2.3 system in December 2020. As of December
31, 2021, we have delivered 22 Eos ZnythTM systems
comprised of over 9,300 ZnythTM batteries or
approximately 28 megawatt hours (“MWh”). Each Gen 2.3 20 foot
battery container (“Eos Cube”) is comprised of 144 batteries, which
are connected to, and monitored through, our proprietary battery
management system. Each system is individually designed with the
appropriate number of Eos Cube to achieve the end user’s desired
energy needs. We also offer a larger battery systems in the form of
our prefabricated building system (“Eos Hangar”) which provides
40MWh of storage per Eos Hangar and an indoor racking solution
(“Eos Stack”) that leverages the safe and modular characteristics
of the ZnythTM battery in providing indoor energy
solutions for C&I buildings.
Corporate Information
BMRG was incorporated in Delaware in June 2019 as a blank
check company under the name B. Riley Principal Merger Corp. II. On
November 16, 2020 (the “Closing Date”), BMRG, EES LLC, BMRG Merger
Sub, LLC (“Merger Sub I”), BMRG Merger Sub II, LLC (“Merger Sub
II”), New Eos Energy LLC (“Newco”) and AltEnergy Storage VI, LLC
consummated the transactions contemplated under the Merger
Agreement entered into on September 7, 2020 between the parties,
following the approval at the special meeting of the stockholders
of BMRG held on October 15, 2020. On the Closing Date,
(1) Merger Sub I merged with and into Newco, with Newco
continuing as the surviving company and a wholly-owned subsidiary
of the Company, and (2) Newco then merged with and into Merger
Sub II, with Merger Sub II continuing as the surviving company and
a wholly-owned subsidiary of the Company (together, the “Business
Combination”). In connection with the Business Combination, the
registrant changed its name from B. Riley Merger Corp. II to Eos
Energy Enterprises, Inc., and Merger Sub II changed its name from
BMRG Merger Sub II, LLC to Eos Energy Enterprises Intermediate
Holdings, LLC.
Additional Information
The mailing address of our principal executive office is 3920 Park
Avenue, Edison, NJ 08820, and our phone number is (732) 225-8400.
Our corporate website address is www.eosenergystorage.com.
Information contained on or accessible through our website is not a
part of this prospectus, and the inclusion of our website address
in this prospectus is an inactive textual reference only.
Risk Factors Summary
The following is a summary of the principal risks that could
adversely affect our business, operations and financial
results.
Risk Related to Our Common Stock and Warrants
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To the extent that any shares of common stock are issued upon
exercise of any of the warrants, the number of shares eligible for
resale in the public market would increase. |
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Provisions in our Charter may inhibit a takeover of us, which
could limit the price investors might be willing to pay in the
future for our common stock and could entrench management. |
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Future resales of common stock may cause the market price of
our securities to drop significantly, even if our business is doing
well. |
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We may redeem the public warrants prior to their exercise at a
time that is disadvantageous to such warrant holders, thereby
making your public warrants worthless. |
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Our stock price may be volatile and may decline regardless of
our operating performance. |
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There can be no assurance that the warrants will be in the
money at the time they become exercisable, and they may expire
worthless. |
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There can be no assurance that our common stock will be able to
comply with the continued listing standards of Nasdaq. |
Risks Related to the Notes
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The notes are effectively subordinated to our secured debt and
any liabilities of our subsidiaries. |
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The notes are our obligations only and our operations are
conducted through, and substantially all of our consolidated assets
are held by, our subsidiaries. |
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Servicing our debt requires a significant amount of cash, and
we may not have sufficient cash flow from our business to pay our
substantial debt. |
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The notes do not include any make-whole conversion feature and
therefore will not adequately compensate you for any lost value of
your notes as a result of a fundamental change transaction or
redemption. |
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The notes may not pay any cash interest. |
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Regulatory actions and other events may adversely affect the
trading price and liquidity of the notes. |
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Volatility in the market price and trading volume of our common
stock could adversely impact the trading price of the notes. |
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Despite our current debt levels, we may still incur
substantially more debt or take other actions which would intensify
the risks discussed above. |
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Redemption may adversely affect your return on the notes. |
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We may not have the ability to raise the funds necessary to
settle conversions of the notes or to repurchase the notes upon a
fundamental change, and our future debt may contain limitations on
our ability to pay cash upon conversion or repurchase of the
notes. |
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The conversion feature of the notes may adversely affect our
financial condition and operating results. |
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Future sales of our common stock or equity-linked securities in
the public market could lower the market price for our common stock
and adversely impact the trading price of the notes. |
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Holders of notes will not be entitled to any rights with
respect to our common stock, but they will be subject to all
changes made with respect to them to the extent our conversion
obligation includes shares of our common stock. |
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The governmental approval requirement with respect to
conversions of the notes could result in your receiving less than
the value of our common stock into which the notes would otherwise
be convertible, and could delay your receipt of any shares of our
common stock upon conversion. |
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Upon conversion of the notes, you may receive less valuable
consideration than expected because the value of our common stock
may decline after you exercise your conversion right but before we
settle our conversion obligation. |
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The notes are not protected by restrictive covenants. |
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The conversion rate of the notes may not be adjusted for all
dilutive events. |
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Some significant restructuring transactions may not constitute
a fundamental change, in which case we would not be obligated to
offer to repurchase the notes. |
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We cannot assure you that an active trading market will develop
for the notes. |
|
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Any adverse rating of the notes may cause their trading price
to fall. |
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You may be subject to tax if we make or fail to make certain
adjustments to the conversion rate of the notes even though you do
not receive a corresponding cash distribution. |
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The notes will be issued with original issue discount for U.S.
federal income tax purposes. |
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Certain provisions in the notes and the indenture could delay
or prevent an otherwise beneficial takeover or takeover attempt of
us and, therefore, the ability of holders to exercise their rights
associated with a potential fundamental change. |
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If the notes are issued in book-entry form, holders must rely
on DTC’s procedures to receive communications relating to the notes
and exercise their rights and remedies. |
THE OFFERING
The summary below describes the principal terms of the securities.
Certain of the terms and conditions described below are subject to
important limitations and exceptions. The “Description of Capital
Stock” and “Description of Notes” sections of this prospectus
contains a more detailed description of the terms and conditions of
the securities. As used in this section, “we,” “our,” and “us”
refer to Eos Energy Enterprises, Inc. and not to its consolidated
subsidiaries.
Common Stock and Warrants
|
Issuer |
|
Eos Energy Enterprises, Inc., a Delaware corporation. |
|
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|
Shares of
Common Stock Outstanding |
|
53,958,013 shares of common stock as of March 2, 2022. |
|
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Shares of
Common Stock Offered by the Company |
|
Up to 7,001,751 shares of our common stock issuable upon
exercise of outstanding public warrants. |
|
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Shares of
Common Stock Offered by the Selling Securityholders |
|
Up to 39,145,143 shares of our common stock, consisting of (i)
4,950,000 shares of common stock originally issued in connection
with the initial public offering of B. Riley Principal Merger Corp.
II, (ii) 325,000 shares of common stock issuable upon exercise of
warrants originally issued in connection with the initial public
offering of B. Riley Principal Merger Corp. II, (iii) 27,175,613
shares of common stock issued in connection with the consummation
of our business combination with Eos Energy Storage LLC and the
related private placement, (iv) 80,294 shares of common stock
issuable upon satisfaction of certain vesting terms set forth in
previously issued restricted stock units, (v) 97,877 shares of
common stock that have been or may be issued to certain of the
selling securityholders upon exercise of options granted under the
Eos Energy Enterprises, Inc. Amended and Restated 2012 Equity
Incentive Plan, and (vi) a maximum of 6,516,359 shares of common
stock issuable upon conversion of the notes.
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Warrants
Offered by the Selling Securityholders |
|
Up to 325,000 warrants to purchase shares of common stock
originally issued in connection with the initial public offering of
B. Riley Principal Merger Corp. II. |
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Redemption
at Our Option |
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The public warrants are redeemable in certain circumstances.
See the section entitled “Description of Capital Stock—Warrants”
for further discussion. |
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Use of
Proceeds |
|
The applicable selling securityholder will receive all of the
proceeds from the sale under this prospectus of the shares of
common stock and the warrants to purchase common stock. We will not
receive any proceeds from these sales. |
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Nasdaq
Capital Market Symbol for Our Common Stock and Warrants |
|
Our common stock and warrants to purchase common stock are
currently traded on Nasdaq under the symbols “EOSE” and “EOSEW,”
respectively.
|
Resale of the Notes by Spring Creek
|
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Issuer |
|
Eos Energy Enterprises, Inc., a Delaware corporation. |
|
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The Notes |
|
Up to $130,350,642 principal amount of 5%/6% Convertible Senior
PIK Toggle Notes due 2026. |
|
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Maturity |
|
June 30, 2026, unless earlier repurchased, redeemed or
converted. |
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Interest |
|
We may, at our option, elect to pay any or all interest on the
notes with respect to any interest payment date (i) in cash (such
method referred as the “cash method”) or (ii) in the form of an
increase to the principal amount of the outstanding notes (such
method referred to as the “capitalization method”) or in the form
of additional notes in integral multiples of $1.00. We refer to
interest paid by the cash method as “cash interest” and to interest
paid as set forth in the foregoing clause (ii) as “PIK interest”.
The principal amount of any note at any time, as increased to such
time by any PIK interest, is referred to herein as the “capitalized
principal amount” of such note.
Interest will accrue from the date of issuance or from the most
recent date to which interest has been paid or duly provided for,
and will be payable semiannually in arrears on June 30 and December
30 of each year.
|
Interest Rate |
|
5.00% per year with respect to cash interest. 6.00% per year
with respect to PIK interest.
Unless the context otherwise requires, any reference to accrued
interest on, or in respect of, any note that has not been paid or
capitalized shall be deemed to refer to the amount of such interest
that would have accrued as of the relevant time at the applicable
cash interest rate as if we had elected the cash method in respect
of all of the relevant interest.
|
Conversion Rights |
|
Holders may convert all or any portion of their notes, if the
portion to be converted is $1,000 capitalized principal amount or
any integral multiple of $1.00 in excess thereof, at their option
at any time prior to the close of business on the business day
immediately preceding the maturity date: |
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|
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The conversion rate for the notes is initially 49.9910 shares of
common stock per $1,000 capitalized principal amount of notes
(equivalent to an initial conversion price of approximately $20.00
per share of common stock), subject to adjustment as described in
this prospectus.
Upon conversion, we will pay or deliver, as the case may be,
cash, shares of our common stock or a combination of cash and
shares of our common stock, at our election. If we satisfy our
conversion obligation solely in cash or through payment and
delivery, as the case may be, of a combination of cash and shares
of our common stock, the amount of cash and shares of common stock,
if any, due upon conversion will be based on a daily conversion
value (as described herein) calculated on a proportionate basis for
each trading day in a 40 trading day observation period (as
described herein). See “Description of Notes—Conversion
Rights—Settlement upon Conversion.”
You will not receive any additional cash payment or additional
shares representing accrued and unpaid interest that has not been
capitalized, if any, upon conversion of a note, except in limited
circumstances. Instead, interest will be deemed to be paid by the
cash, shares of our common stock or a combination of cash and
shares of our common stock paid or delivered, as the case may be,
to you upon conversion of a note.
|
Redemption
at Our Option |
|
We
may not redeem the notes prior to June 30, 2024. We may redeem for
cash all or part of the notes, at our option, on or after June 30,
2024 if the last reported sale price of our common stock has been
at least 130% of the conversion price then in effect for at least
20 trading days (whether or not consecutive) during any 30
consecutive trading day period ending on, and including, the
trading day immediately preceding the date on which we provide
notice of redemption at a redemption price equal to 100% of the
capitalized principal amount of the notes to be redeemed,
plus any accrued interest that has not been paid or
capitalized to, but excluding, the redemption date. No “sinking
fund” is provided for the notes, which means that we are not
required to redeem or retire the notes periodically. See
“Description of Notes—Optional Redemption.” |
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Fundamental
Change |
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If we
undergo a “fundamental change” (as defined in this prospectus under
“Description of Notes—Fundamental Change Permits Holders to Require
Us to Repurchase Notes”), subject to certain conditions, holders
may require us to repurchase for cash all or part of their notes in
principal amounts of $1,000 or an integral multiple of $1.00 in
excess thereof. The fundamental change repurchase price will be
equal to 100% of the capitalized principal amount of the notes to
be repurchased, plus any accrued interest thereon that has
not been paid or capitalized to, but excluding, the fundamental
change repurchase date. See “Description of
Notes—Fundamental Change Permits Holders to Require Us to
Repurchase Notes.” |
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Ranking |
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The
notes are our senior unsecured obligations and rank: |
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senior
in right of payment to any of our indebtedness that is expressly
subordinated in right of payment to the notes; |
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equal
in right of payment to any of our unsecured indebtedness that is
not so subordinated; |
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effectively
junior in right of payment to any of our secured indebtedness to
the extent of the value of the assets securing such indebtedness;
and |
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structurally
junior to all indebtedness and other liabilities (including trade
payables) of our subsidiaries. |
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As of
December 31, 2021, our total consolidated indebtedness was $129.3
million, of which an aggregate of $102.9 million was senior
indebtedness and an aggregate of $26.4 million was secured
indebtedness. As of December 31, 2021, our subsidiaries had $52.9
million of indebtedness and other liabilities (including trade
payables, but excluding intercompany obligations and liabilities of
a type not required to be reflected on a balance sheet of such
subsidiaries in accordance with GAAP) to which the notes would have
been structurally subordinated. |
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The
indenture governing the notes will not limit the amount of debt
that we or our subsidiaries may incur. |
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Registration
Rights |
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We prepared this prospectus in connection with our obligations
under an investment agreement that provides the applicable selling
securityholder with certain registration rights with respect to the
resale of the notes originally issued in a transaction exemption
from the registration requirements of the Securities Act and the
shares of common stock issuable upon conversion of the notes, if
any. Pursuant to such investment agreement, we will use our
reasonable efforts to keep the shelf registration statement of
which this prospectus is a part effective until the earlier of (i)
such time as all registrable securities have been sold in
accordance with the plan of distribution disclosed in this
prospectus and (ii) such time as there otherwise ceases to be any
registrable securities.
As of the date of this prospectus, and until July 7, 2022, the
applicable selling securityholder remains subject to certain
transfer restrictions with respect to the notes and any shares of
common stock issued upon conversion of the notes.
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Use
of Proceeds |
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The
applicable selling securityholder will receive all of the proceeds
from the sale under this prospectus of the notes and the shares of
common stock issuable upon conversion of the notes, if any. We will
not receive any proceeds from these sales. |
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Form |
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The
notes will initially be issued in physical, certificated form.
However, subject to certain conditions, the notes may be issued in
book-entry form and be represented by permanent global certificates
deposited with, or on behalf of, The Depository Trust Company
(“DTC”) and registered in the name of a nominee of DTC. Beneficial
interests in any of such notes would be shown on, and transfers
will be effected only through, records maintained by DTC or its
nominee and any such interest may not be exchanged for certificated
securities, except in limited circumstances. |
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Absence
of a Public
Market for the Notes |
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The notes will be issued to a single investor in a transaction
exempt from the registration requirements of the Securities Act.
There is currently no established market for the notes.
Accordingly, we cannot assure you as to the development or
liquidity of any market for the notes. We do not intend to apply
for a listing of the notes on any securities exchange or any
automated dealer quotation system. |
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U.S.
Federal Income Tax Consequences |
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For the U.S. federal income tax consequences of the holding,
disposition and conversion of the notes, and the holding and
disposition of shares of our common stock, see “Certain U.S.
Federal Income Tax Considerations.”
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Nasdaq
Capital Market Symbol for Our Common Stock |
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Our common stock is listed on The Nasdaq Capital Market under the
symbol “EOSE.” |
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Trustee,
Paying Agent
and Conversion Agent |
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Wilmington Trust, National Association |
Risk Factors
An investment in any securities offered pursuant to this prospectus
involves risk and uncertainties. You should consider carefully the
risk factors described in our most recent Annual Report on Form
10-K filed with the SEC and any subsequent Annual Report on Form
10-K, Quarterly Reports on Form 10-Q and Current Reports on Form
8-K that we file with the SEC after the date of this prospectus, as
well as the other information contained or incorporated by
reference in this prospectus, and any applicable prospectus
supplement, in light of your particular investment objectives and
financial circumstances.
Risk
Related to Our Common Stock and Warrants
To the extent that any shares of common stock are issued upon
exercise of any of the warrants, the number of shares eligible for
resale in the public market would increase.
We have 7,326,751 outstanding warrants exercisable to purchase
7,326,751 shares of common stock at an exercise price of $11.50 per
share. To the extent that any shares of common stock are issued
upon exercise of any of the warrants to purchase shares of common
stock, there will be an increase in the number of shares of common
stock eligible for resale in the public market. Sales of a
substantial number of such shares in the public market could
adversely affect the market price of our common stock.
Provisions in our Charter and Delaware law may have the effect of
discouraging lawsuits against our directors and officers.
Our Charter requires, unless we consent in writing to the selection
of an alternative forum, that (i) any derivative action or
proceeding brought on our behalf, (ii) any action asserting a claim
of breach of a fiduciary duty owed by any director, officer or
other employee to us or our stockholders, (iii) any action
asserting a claim against us, our directors, officers or employees
arising pursuant to any provision of the DGCL or our Charter or our
bylaws, or (iv) any action asserting a claim against us or our
directors, officers or employees governed by the internal affairs
doctrine may be brought only in the Court of Chancery in the State
of Delaware, except any claim (A) as to which the Court of Chancery
of the State of Delaware determines that there is an indispensable
party not subject to the jurisdiction of the Court of Chancery (and
the indispensable party does not consent to the personal
jurisdiction of the Court of Chancery within 10 days following such
determination), (B) which is vested in the exclusive jurisdiction
of a court or forum other than the Court of Chancery, (C) for which
the Court of Chancery does not have subject matter jurisdiction, or
(D) any action arising under the Securities Act, as to which the
Court of Chancery and the federal district court for the District
of Delaware shall have concurrent jurisdiction. If an action is
brought outside of Delaware, the stockholder bringing the suit will
be deemed to have consented to service of process on such
stockholder’s counsel. Although we believe that this provision
benefits us by providing increased consistency in the application
of Delaware law in the types of lawsuits to which it applies, a
court may determine that this provision is unenforceable, and to
the extent it is enforceable, the provision may have the effect of
discouraging lawsuits against our directors and officers, although
our stockholders will not be deemed to have waived our compliance
with federal securities laws and the rules and regulations
thereunder.
Notwithstanding the foregoing, our Charter provides that the
exclusive forum provision will not apply to suits brought to
enforce a duty or liability created by the Exchange Act or any
other claim for which the federal courts have exclusive
jurisdiction. Section 27 of the Exchange Act creates exclusive
federal jurisdiction over all suits brought to enforce any duty or
liability created by the Exchange Act or the rules and regulations
thereunder. Although we believe that this provision benefits us by
providing increased consistency in the application of Delaware law
in the types of lawsuits to which it applies, the provision may
have the effect of discouraging lawsuits against our directors and
officers.
Provisions in our Charter may inhibit a takeover of us, which could
limit the price investors might be willing to pay in the future for
our common stock and could entrench management.
Our Charter contains provisions that may hinder unsolicited
takeover proposals that stockholders may consider to be in their
best interests. We are also subject to anti-takeover provisions
under Delaware law, which could delay or prevent a change of
control. Together these provisions may make more difficult the
removal of management and may discourage transactions that
otherwise could involve payment of a premium over prevailing market
prices for our securities. These provisions include:
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no cumulative voting in the election
of directors, which limits the ability of minority stockholders to
elect director candidates; |
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a classified board of directors with
three-year staggered terms, which could delay the ability of
stockholders to change the membership of a majority of the
Board; |
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the right of our Board to elect a
director to fill a vacancy created by the expansion of our Board or
the resignation, death or removal of a director in certain
circumstances, which prevents stockholders from being able to fill
vacancies on our Board; |
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a prohibition on stockholder action by
written consent, which forces stockholder action to be taken at an
annual or special meeting of our stockholders; |
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advance notice procedures that
stockholders must comply with in order to nominate candidates to
our Board or to propose matters to be acted upon at a meeting of
stockholders, which may discourage or deter a potential acquirer
from conducting a solicitation of proxies to elect the acquirer’s
own slate of directors or otherwise attempting to obtain control of
the Company; and |
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the requirement that a meeting of
stockholders may only be called by members of our Board or the
stockholders holding a majority of our shares, which may delay the
ability of our stockholders to force consideration of a proposal or
to take action, including the removal of directors. |
Future resales of common stock may cause the market price of our
securities to drop significantly, even if our business is doing
well.
The Sponsor’s founder shares, Private Placement Units, Private
Placement Shares, Private Placement Warrants, and any shares of
common stock issued upon conversion or exercise thereof were each
subject to transfer restrictions pursuant to lock-up provisions in
a letter agreement, dated May 19, 2020, between us and the Sponsor.
Likewise, the shareholders who have received common stock in
connection with the business combination were contractually
restricted from selling or transferring any shares of our common
stock they received pursuant to the lock-up provisions contained
therein. However, following the expiration of these lock-up periods
on August 1, 2021, neither such shareholders nor the Sponsor are
restricted from selling their shares of our common stock, other
than by applicable securities laws. Additionally, the investors are
not restricted from selling any of their shares of our common stock
following the Closing, other than by applicable securities laws. A
resale prospectus covering 43,744,680 shares and 325,000 warrants
held by the shareholders and warrant holders and the Sponsor was
declared effective by the SEC on January 21, 2021, which may be
utilized to sell such securities for so long as it remains
effective. A resale prospectus covering 4,000,000 shares held by
the PIPE investors was declared effective by the SEC on November
16, 2020, which may be utilized to sell such securities for so long
as it remains effective.
Sales of a substantial number of shares of our common stock in the
public market could occur at any time irrespective of the Company’s
performance. These sales, or the perception in the market that the
holders of a large number of shares intend to sell shares, could
reduce the market price of our common stock. Such sales may occur
based upon individual investor liquidity requirements or other
factors outside of our control. The investors, who own Sponsor’s
founder shares, Private Placement Units, Private Placement Shares,
or received common stock in connection with the business
combination, collectively owned approximately 62% of the
outstanding shares of our common stock as of December 31,
2021.
As restrictions on resale end and registration statements are
available for use, the sale or possibility of sale of shares by the
shareholders who received common stock in connection with the
business combination, and the investors, could have the effect of
increasing the volatility in our share price or the market price of
our common stock could decline if the holders of currently
restricted shares sell them or are perceived by the market as
intending to sell them.
We may redeem the Public Warrants prior to their exercise at a time
that is disadvantageous to such warrant holders, thereby making
your Public Warrants worthless.
We will have the ability to redeem outstanding public warrants at
any time after they become exercisable and prior to their
expiration, at a price of $0.01 per warrant, provided that the
closing price of our common stock equals or exceeds $18.00 per
share (as adjusted for stock splits, share dividends,
reorganizations, recapitalizations and the like) for any twenty
(20) trading days within a thirty (30) trading-day period ending on
the third (3rd) trading day prior to proper notice of
such redemption. When the warrants become redeemable by us, we may
exercise our redemption right even if we are unable to register or
qualify the underlying securities for sale under all applicable
state securities laws. Redemption of the outstanding warrants could
force holders (i) to exercise the warrants and pay the exercise
price therefor at a time when it may be disadvantageous to do so,
(ii) to sell the warrants at the then-current market price when the
holder might otherwise wish to hold their warrants or (iii) to
accept the nominal redemption price which, at the time the
outstanding warrants are called for redemption, is likely to be
substantially less than the market value of the warrants. The
Private Placement warrants are not redeemable by us so long as they
are held by the Sponsor or its permitted transferees.
Our stock price may be volatile and may decline regardless of our
operating performance.
Fluctuations in the price of our securities could contribute to the
loss of part or all of your investment. The trading price of our
securities could be volatile and subject to wide fluctuations in
response to various factors, some of which are beyond our control.
Any of the factors listed below could have a material adverse
effect on your investment in our securities and our securities may
trade at prices significantly below the price you paid for them. In
such circumstances, the trading price of our securities may not
recover and may experience a further decline.
Factors affecting the trading price of our securities may
include:
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actual or anticipated fluctuations
in our quarterly financial results or the quarterly financial
results of companies perceived to be similar to us; |
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changes in the market’s
expectations about our operating results; |
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success of competitors; |
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our operating results failing to meet the expectation of
securities analysts or investors in a particular period; |
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changes in financial estimates and recommendations by
securities analysts concerning us or the industries in which we
operate in general; |
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operating and stock price performance of other companies that
investors deem comparable to us; |
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our ability to market new and enhanced products on a timely
basis; |
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changes in laws and regulations affecting our business; |
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commencement of, or involvement in, litigation involving
us; |
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changes in our capital structure, such as future issuances of
securities or the incurrence of additional debt; |
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the volume of shares of our common stock available for public
sale; |
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any major change in our board of directors or management; |
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sales of substantial amounts of our common stock by our
directors, executive officers or significant stockholders or the
perception that such sales could occur; and |
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general economic and political conditions such as recessions,
interest rates, fuel prices, international currency fluctuations
and acts of war or terrorism. |
Broad market and industry factors may materially harm the market
price of our securities irrespective of our operating performance.
The stock market in general, and Nasdaq, have experienced price and
volume fluctuations that have often been unrelated or
disproportionate to the operating performance of the particular
companies affected. The trading prices and valuations of these
stocks, and of our securities, may not be predictable. A loss of
investor confidence in the market for the stocks of other companies
that investors perceive to be similar to us could depress our stock
price regardless of our business, prospects, financial conditions
or results of operations. A decline in the market price of our
securities also could adversely affect our ability to issue
additional securities and our ability to obtain additional
financing in the future.
There can be no assurance that the Warrants will be in the money at
the time they become exercisable, and they may expire
worthless.
The exercise price for the outstanding warrants is $11.50 per share
of common stock. There can be no assurance that the warrants will
be in the money following the time they become exercisable and
prior to their expiration, and as such, the Warrants may expire
worthless.
There can be no assurance that our common stock will be able to
comply with the continued listing standards of Nasdaq.
The shares of our common stock and warrants are listed on Nasdaq.
If Nasdaq delists the common stock from trading on its exchange for
failure to meet the listing standards, we and our stockholders
could face significant material adverse consequences,
including:
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a limited availability of market quotations for our
securities; |
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a determination that our common stock is a “penny stock,” which
will require brokers trading in our common stock to adhere to more
stringent rules, possibly resulting in a reduced level of trading
activity in the secondary trading market for our common stock; |
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a limited amount of analyst coverage; and |
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a decreased ability to issue additional securities or obtain
additional financing in the future. |
We do not intend to pay dividends on our common stock in the
foreseeable future and, consequently, your ability to achieve a
return on your investment will depend on appreciation in the price
of our common stock.
We have never declared or paid cash dividends on our common stock.
We currently do not anticipate paying any cash dividends in the
foreseeable future. Any future determination to declare cash
dividends will be made at the discretion of our board of directors,
subject to applicable laws, and will depend on our financial
condition, results of operations, capital requirements, general
business conditions and other factors that our board of directors
may deem relevant.
Risks Related to the Notes
The notes will be effectively subordinated to our secured
debt and any liabilities of our subsidiaries.
The notes rank senior in right of payment to any of our
indebtedness that is expressly subordinated in right of payment to
the notes; equal in right of payment to any of our liabilities that
are not so subordinated; effectively junior in right of payment to
any of our secured indebtedness to the extent of the value of the
assets securing such indebtedness; and structurally junior to all
indebtedness and other liabilities (including trade payables) of
our subsidiaries. In the event of our bankruptcy, liquidation,
reorganization or other winding up, our assets that secure debt
ranking senior or equal in right of payment to the notes will be
available to pay obligations on the notes only after the secured
debt has been repaid in full from these assets. There may not be
sufficient assets remaining to pay amounts due on any or all of the
notes then outstanding. The indenture governing the notes will not
prohibit us from incurring additional senior debt or secured debt,
nor will it prohibit any of our subsidiaries from incurring
additional liabilities.
As of December 31, 2021, our total consolidated indebtedness was
$129.3 million, of which an aggregate of $102.9 million was senior
indebtedness and an aggregate of $26.4 million was secured
indebtedness. As of December 31, 2021, our subsidiaries had $52.9
million of indebtedness and other liabilities (including trade
payables, but excluding intercompany obligations and liabilities of
a type not required to be reflected on a balance sheet of such
subsidiaries in accordance with GAAP) to which the notes would have
been structurally subordinated.
The notes will be our obligations only and our operations are
conducted through, and substantially all of our consolidated assets
are held by, our subsidiaries.
The notes will be our obligations exclusively and will not
guaranteed by any of our operating subsidiaries. A substantial
portion of our consolidated assets is held by our subsidiaries.
Accordingly, our ability to service our debt, including the notes,
depends on the results of operations of our subsidiaries and upon
the ability of such subsidiaries to provide us with cash, whether
in the form of dividends, loans or otherwise, to pay amounts due on
our obligations, including the notes. Our subsidiaries are separate
and distinct legal entities and have no obligation, contingent or
otherwise, to make payments on the notes or to make any funds
available for that purpose. In addition, dividends, loans or other
distributions to us from such subsidiaries may be subject to
contractual and other restrictions and are subject to other
business considerations.
Servicing our debt requires a significant amount of cash, and
we may not have sufficient cash flow from our business to pay our
substantial debt.
Our ability to make scheduled payments of the principal of, to pay
interest on or to refinance our indebtedness, including the notes,
depends on our future performance, which is subject to economic,
financial, competitive and other factors beyond our control. Our
business may not continue to generate cash flow from operations in
the future sufficient to service our debt and make necessary
capital expenditures. If we are unable to generate such cash flow,
we may be required to adopt one or more alternatives, such as
selling assets, restructuring debt or obtaining additional equity
capital on terms that may be onerous or highly dilutive. Our
ability to refinance our indebtedness will depend on the capital
markets and our financial condition at such time. We may not be
able to engage in any of these activities or engage in these
activities on desirable terms, which could result in a default on
our debt obligations.
The notes will not include any make-whole conversion feature
and therefore will not adequately compensate you for any lost value
of your notes as a result of a fundamental change transaction or
redemption.
The notes will not include any feature that increases the
conversion rate for notes converted in connection with a
fundamental change or notice of redemption or any other transaction
or event. As a result, if you convert your notes early as a result
of a corporate event or our delivery of a notice of redemption, you
will not receive any compensation for any lost value of your notes
as a result of such event or redemption, as the case may be.
The notes may not pay any cash interest.
We may, at our option, elect to pay any or all interest on the
notes with respect to any interest payment date (i) in cash (such
method referred as the “cash method”) or (ii) in the form of an
increase to the principal amount of the outstanding notes (such
method referred to as the “capitalization method”) or in the form
of additional notes in integral multiples of $1.00. As a result,
you may not receive any ongoing cash payments in respect of your
investment in the notes. See “Description of Notes—Interest.”
Regulatory actions and other events may adversely affect the
trading price and liquidity of the notes.
We expect that many investors in, and potential purchasers of, the
notes will employ, or seek to employ, a convertible arbitrage
strategy with respect to the notes. Investors would typically
implement such a strategy by selling short the common stock
underlying the notes and dynamically adjusting their short position
while continuing to hold the notes. Investors may also implement
this type of strategy by entering into swaps on our common stock in
lieu of or in addition to short selling the common stock. We cannot
assure you that market conditions will permit investors to
implement this type of strategy, whether on favorable pricing and
other terms or at all. If market conditions do not permit investors
to implement this type of strategy, whether on favorable pricing
and other terms or at all, at any time while the notes are
outstanding, the trading price and liquidity of the notes may be
adversely affected.
The SEC and other regulatory and self-regulatory authorities have
implemented various rules and taken certain actions, and may in the
future adopt additional rules and take other actions, that may
impact those engaging in short selling activity involving equity
securities (including our common stock). Such rules and actions
include Rule 201 of SEC Regulation SHO, the adoption by the
Financial Industry Regulatory Authority, Inc. and the national
securities exchanges of a “Limit Up-Limit Down” program, the
imposition of market-wide circuit breakers that halt trading of
securities for certain periods following specific market declines,
and the implementation of certain regulatory reforms required by
the Dodd-Frank Wall Street Reform and Consumer Protection Act of
2010. Any governmental or regulatory action that restricts the
ability of investors in, or potential purchasers of, the notes to
effect short sales of our common stock, borrow our common stock or
enter into swaps on our common stock could adversely affect the
trading price and the liquidity of the notes.
In addition, the number of shares of our common stock available for
lending in connection with short sale transactions and the number
of counterparties willing to enter into an equity swap on our
common stock with a note investor may not be sufficient for the
implementation of a convertible arbitrage strategy. These and other
market events could make implementing a convertible arbitrage
strategy prohibitively expensive or infeasible. We cannot assure
you that a sufficient number of shares of our common stock will be
available to borrow on commercial terms, or at all, to potential
purchasers or holders of the notes. If potential purchasers of the
notes that seek to employ a convertible arbitrage strategy are
unable to do so on commercial terms, or at all, then the trading
price of, and the liquidity of the market for, the notes may
significantly decline.
Volatility in the market price and trading volume of our
common stock could adversely impact the trading price of the
notes.
The stock market in recent years has experienced significant price
and volume fluctuations that have often been unrelated to the
operating performance of companies. The market price of our common
stock could fluctuate significantly for many reasons, including in
response to the risks described in this section, elsewhere in this
prospectus or the documents we have incorporated by reference in
this prospectus or for reasons unrelated to our operations, such as
reports by industry analysts, investor perceptions or negative
announcements by our customers, competitors or suppliers regarding
their own performance, as well as industry conditions and general
financial, economic and political instability. A decrease in the
market price of our common stock would likely adversely impact the
trading price of the notes. The market price of our common stock
could also be affected by possible sales of our common stock by
investors who view the notes as a more attractive means of equity
participation in us and by hedging or arbitrage trading activity
that we expect to develop involving our common stock. This trading
activity could, in turn, affect the trading price of the notes.
Despite our current debt levels, we may still incur
substantially more debt or take other actions that would intensify
the risks discussed above.
Despite our current consolidated debt levels, we and our
subsidiaries may be able to incur substantial additional debt in
the future, subject to the restrictions contained in our future
debt instruments, some of which may be secured debt. We will not be
restricted under the terms of the indenture governing the notes
from incurring additional debt, securing existing or future debt,
recapitalizing our debt or taking a number of other actions that
are not limited by the terms of the indenture governing the notes
that could have the effect of diminishing our ability to make
payments on the notes when due.
Redemption may adversely affect your return on the
notes.
We may not redeem the notes prior to June 30, 2024. We may redeem
for cash all or part of the notes, at our option, on or after June
30, 2024 if the last reported price of our common stock has been at
least 130% of the conversion price then in effect for at least 20
trading days (whether or not consecutive) during any 30 consecutive
trading day period ending on, and including, the trading day
immediately preceding the date on which we provide notice of
redemption at a redemption price equal to 100% of the capitalized
principal amount of the notes to be redeemed, plus any accrued
interest that has not been paid or capitalized to, but excluding,
the redemption date. As a result, we may choose to redeem some or
all of the notes, including at times when prevailing interest rates
are relatively low. As a result, you may not be able to reinvest
the proceeds you receive from the redemption in a comparable
security at an effective interest rate as high as the interest rate
on your notes being redeemed. In addition, the foregoing stock
price condition only needs to be met for any 20 trading days in the
30 trading day period ending on, and including, the trading day
immediately preceding the date of the redemption notice. As a
result, the price of our common stock may decrease dramatically,
including below the conversion price, between the 20th such trading
day that the stock price condition is satisfied and the day we
actually deliver the redemption notice. See “Description of
Notes—Optional Redemption.”
We may not have the ability to raise the funds necessary to
settle conversions of the notes or to repurchase the notes upon a
fundamental change, and our future debt may contain limitations on
our ability to pay cash upon conversion or repurchase of the
notes.
Holders of the notes will have the right to require us to
repurchase their notes upon the occurrence of a fundamental change
at a fundamental change repurchase price equal to 100% of the
capitalized principal amount of the notes to be repurchased,
plus any accrued interest that has not been paid or
capitalized, as described under “Description of Notes—Fundamental
Change Permits Holders to Require Us to Repurchase Notes.” In
addition, upon conversion of the notes, unless we elect (or are
deemed to have elected) to deliver solely shares of our common
stock to settle such conversion (other than paying cash in lieu of
delivering any fractional share), we will be required to make cash
payments in respect of the notes being converted as described under
“Description of Notes—Conversion Rights—Settlement upon
Conversion.” However, we may not have enough available cash or be
able to obtain financing at the time we are required to make
repurchases of notes surrendered therefor or notes being converted.
In addition, our ability to repurchase the notes or to pay cash
upon conversions of the notes may be limited by law, by regulatory
authority or by agreements governing our future indebtedness. Our
failure to repurchase notes at a time when the repurchase is
required by the indenture or to pay any cash payable on future
conversions of the notes as required by the indenture would
constitute a default under the indenture. A default under the
indenture or the fundamental change itself could also lead to a
default under agreements governing our future indebtedness. If the
repayment of the related indebtedness were to be accelerated after
any applicable notice or grace periods, we may not have sufficient
funds to repay the indebtedness and repurchase the notes or make
cash payments upon conversions thereof.
The conversion feature of the notes may adversely affect our
financial condition and operating results.
Holders of notes are entitled to convert the notes at any time at
their option. See “Description of Notes—Conversion Rights.” If one
or more holders elect to convert their notes, unless we elect (or
are deemed to have elected) to satisfy our conversion obligation by
delivering solely shares of our common stock (other than paying
cash in lieu of delivering any fractional share), we would be
required to settle a portion or all of our conversion obligation
through the payment of cash, which could adversely affect our
liquidity.
Future sales of our common stock or equity-linked securities
in the public market could lower the market price for our common
stock and adversely impact the trading price of the
notes.
In the future, we may sell additional shares of our common stock or
equity-linked securities to raise capital. In addition, a
substantial number of shares of our common stock is reserved for
issuance upon the exercise of stock options, upon exercise of our
outstanding warrants, and upon conversion of the notes. We cannot
predict the size of future issuances or the effect, if any, that
they may have on the market price for our common stock. The
issuance and sale of substantial amounts of common stock or
equity-linked securities, or the perception that such issuances and
sales may occur, could adversely affect the trading price of the
notes and the market price of our common stock and impair our
ability to raise capital through the sale of additional equity or
equity-linked securities.
Holders of notes will not be entitled to any rights with
respect to our common stock, but they will be subject to all
changes made with respect to them to the extent our conversion
obligation includes shares of our common stock.
Holders of notes will not be entitled to any rights with respect to
our common stock (including, without limitation, voting rights and
rights to receive any dividends or other distributions on our
common stock) prior to the conversion date relating to such notes
(if we have elected to settle the relevant conversion by delivering
solely shares of our common stock (other than paying cash in lieu
of delivering any fractional share)) or the last trading day of the
relevant observation period (if we elect to pay and deliver, as the
case may be, a combination of cash and shares of our common stock
in respect of the relevant conversion) (and, in each case, assuming
all relevant governmental approvals as described under “Description
of Notes—Conversion Rights—Governmental Approvals” have been
obtained), but holders of notes will be subject to all changes
affecting our common stock. For example, if an amendment is
proposed to our certificate of incorporation or bylaws requiring
stockholder approval and the record date for determining the
stockholders of record entitled to vote on the amendment occurs
prior to the conversion date related to a holder’s conversion of
its notes (if we have elected to settle the relevant conversion by
delivering solely shares of our common stock (other than paying
cash in lieu of delivering any fractional share)) or the last
trading day of the relevant observation period (if we elect to pay
and deliver, as the case may be, a combination of cash and shares
of our common stock in respect of the relevant conversion), such
holder will not be entitled to vote on the amendment, although such
holder will nevertheless be subject to any changes affecting our
common stock.
The governmental approval requirement with respect to
conversions of the notes could result in your receiving less than
the value of our common stock into which the notes would otherwise
be convertible, and could delay your receipt of any shares of our
common stock upon conversion.
To the extent that physical settlement or combination settlement in
respect of any conversion of notes would require us or any holder
to obtain any regulatory approvals or consents from, or make any
filing with, any governmental entity, the right to convert the
relevant notes and our obligation to deliver (or cause to be
delivered) any related shares of common stock upon such conversion
will be contingent upon, and subject to, the receipt of any
required governmental approval (as determined by the holder or us,
as applicable), and any such delivery will be delayed until such
governmental approval is received. If you attempt to convert your
notes and such a governmental approval is required but not obtained
in time, you will not be able to convert your notes, and you may
not be able to receive the shares of common stock into which the
notes would otherwise be convertible. Receipt of any such
governmental approval could take a significant amount of time,
delaying your ability to receive any shares of common stock into
which the notes would otherwise be convertible. The trading price
of our common stock at the time of the ultimate delivery of such
shares (if any) may be less than, and possibly significantly less
than, the trading price at the time of the attempted conversion.
See “Description of Notes—Conversion Rights—Governmental
Approvals.”
Upon conversion of the notes, you may receive less valuable
consideration than expected because the value of our common stock
may decline after you exercise your conversion right but before we
settle our conversion obligation.
Under the notes, a converting holder will be exposed to
fluctuations in the value of our common stock during the period
from the date such holder surrenders notes for conversion until the
date we settle our conversion obligation.
Upon conversion of the notes, we have the option to pay or deliver,
as the case may be, cash, shares of our common stock, or a
combination of cash and shares of our common stock. If we elect to
satisfy our conversion obligation in cash or a combination of cash
and shares of our common stock, the amount of consideration that
you will receive upon conversion of your notes will be determined
by reference to the volume-weighted average price of our common
stock for each trading day in a 40 trading day observation period.
As described under “Description of Notes—Conversion
Rights—Settlement upon Conversion,” this period would be (i)
subject to clause (ii), if the relevant conversion date occurs
prior to the 45th scheduled trading day immediately preceding the
maturity date, the 40 consecutive trading day period beginning on,
and including, the third trading day immediately succeeding such
conversion date; (ii) if the relevant conversion date occurs on or
after the date of our issuance of a notice of redemption with
respect to the notes as described under “Description of
Notes—Optional Redemption” and prior to the relevant redemption
date, the 40 consecutive trading days beginning on, and including,
the 42nd scheduled trading day immediately preceding such
redemption date; and (iii) subject to clause (ii), if the relevant
conversion date occurs on or after the 45th scheduled trading day
immediately preceding the maturity date, the 40 consecutive trading
days beginning on, and including, the 42nd scheduled trading day
immediately preceding the maturity date. Accordingly, if the price
of our common stock decreases during this period, the amount and/or
value of consideration you receive will be adversely affected. In
addition, if the market price of our common stock at the end of
such period is below the average volume-weighted average price of
our common stock during such period, the value of any shares of our
common stock that you will receive in satisfaction of our
conversion obligation will be less than the value used to determine
the number of shares that you will receive.
If we elect to satisfy our conversion obligation solely in shares
of our common stock upon conversion of the notes, we will be
required to deliver the shares of our common stock, together with
cash for any fractional share, on the third business day following
the relevant conversion date. Accordingly, if the price of our
common stock decreases during this period, the value of the shares
that you receive will be adversely affected and would be less than
the conversion value of the notes on the conversion date.
In addition, there may be a delay in our delivery of any conversion
consideration as a result of the requirement for us and the
applicable holder to obtain any necessary governmental approvals in
advance of any such delivery, as described above under “—The
governmental approval requirement with respect to conversions of
the notes could result in your receiving less than the value of our
common stock into which the notes would otherwise be convertible,
and could delay your receipt of any shares of our common stock upon
conversion.”
The notes will not be protected by restrictive
covenants.
The indenture governing the notes will not contain any financial or
operating covenants or restrictions on the payments of dividends,
the incurrence of indebtedness or the issuance or repurchase of
securities by us or any of our subsidiaries. The indenture will not
contain any covenants or other provisions to afford protection to
holders of the notes in the event of a fundamental change or other
corporate transaction involving us except to the extent described
under “Description of Notes—Fundamental Change Permits Holders to
Require Us to Repurchase Notes” and “Description of
Notes—Consolidation, Merger and Sale of Assets.”
The conversion rate of the notes may not be adjusted for all
dilutive events.
The conversion rate of the notes is subject to adjustment for
certain events, including, but not limited to, the issuance of
certain stock dividends on our common stock, the issuance of
certain rights or warrants, subdivisions, combinations,
distributions of capital stock, indebtedness, or assets, cash
dividends and certain issuer tender or exchange offers as described
under “Description of Notes—Conversion Rights—Conversion Rate
Adjustments.” However, the conversion rate will not be adjusted for
other events, such as a third-party tender or exchange offer or an
issuance of common stock for cash, that may adversely affect the
trading price of the notes or our common stock. An event that
adversely affects the value of the notes may occur, and that event
may not result in an adjustment to the conversion rate.
Some significant restructuring transactions may not
constitute a fundamental change, in which case we would not be
obligated to offer to repurchase the notes.
Upon the occurrence of a fundamental change, you have the right to
require us to repurchase your notes. However, the fundamental
change provisions will not afford protection to holders of notes in
the event of other transactions that could adversely affect the
notes. For example, transactions such as leveraged
recapitalizations, refinancings, restructurings, or acquisitions
initiated by us may not constitute a fundamental change requiring
us to repurchase the notes. In the event of any such transaction,
the holders would not have the right to require us to repurchase
the notes, even though each of these transactions could increase
the amount of our indebtedness, or otherwise adversely affect our
capital structure or any credit ratings, thereby adversely
affecting the holders of notes.
We cannot assure you that an active trading market will
develop for the notes.
The notes were originally issued to a single investor in a
transaction exempt from the registration requirements of the
Securities Act. There has been no trading market for the notes, and
the notes may continue to be held by a small group of investors
indefinitely. We do not intend to apply to list the notes on any
securities exchange or to arrange for quotation on any automated
dealer quotation system. In addition, the liquidity of the trading
market in the notes (if any), and the market price quoted for the
notes (if any), may be adversely affected by changes in the overall
market for this type of security and by changes in our financial
performance or prospects or in the prospects for companies in our
industry generally. As a result, we cannot assure you that an
active trading market will develop for the notes. If an active
trading market for the notes does not develop or is not maintained,
the market price and liquidity of the notes may be adversely
affected. In that case, you may not be able to sell your notes at a
particular time or you may not be able to sell your notes at a
favorable price.
Any adverse rating of the notes may cause their trading price
to fall.
We do not intend to seek a rating on the notes. However, if a
rating service were to rate the notes and if such rating service
were to lower its rating on the notes below the rating initially
assigned to the notes or otherwise announce its intention to put
the notes on credit watch, the trading price of the notes could
decline.
You may be subject to tax if we make or fail to make certain
adjustments to the conversion rate of the notes even though you do
not receive a corresponding cash distribution.
The conversion rate of the notes is subject to adjustment in
certain circumstances. If the conversion rate is adjusted as a
result of a distribution that is taxable to our common
stockholders, such as a cash dividend, you will be deemed to have
received a distribution, which may be treated as a dividend subject
to U.S. federal income tax, without the receipt of any cash. In
addition, a failure to adjust (or to adjust adequately) the
conversion rate after an event that increases your proportionate
interest in us could be treated as a deemed taxable dividend to
you. If a fundamental change occurs prior to the maturity date or
we issue a notice of redemption, under some circumstances, we will
increase the conversion rate for notes converted in connection with
the fundamental change or during the related redemption conversion
period. Such increase may also be treated as a distribution subject
to U.S. federal income tax as a dividend. See “Certain U.S. Federal
Income Tax Considerations.” If you are a non-U.S. holder (as
defined in “Certain U.S. Federal Income Tax Considerations”), any
deemed dividend would generally be subject to U.S. federal
withholding tax at a 30% rate, or such lower rate as may be
specified by an applicable treaty. Any U.S. federal withholding tax
or backup withholding may be withheld from or set off against
subsequent payments on the notes (including upon conversion,
repayment or maturity), or in some circumstances from any payments
on our common stock, or from sales proceeds subsequently paid or
credited to you, or from your other funds or assets.
The notes will be issued with original issue discount for
U.S. federal income tax purposes.
For each interest period, we have the option, in lieu of cash
interest, to pay stated interest on the notes in (i) PIK interest
or (ii) a combination of cash interest and PIK interest. As a
result, for U.S. federal income tax purposes, none of the stated
interest payments on the notes will constitute “qualified stated
interest,” even if we never exercise the option to pay any PIK
interest. Therefore, the notes will be treated as having been
issued with original issue discount for U.S. federal income tax
purposes (“OID”). Holders subject to U.S. federal income taxation
will be required to include any amounts representing OID in gross
income (as ordinary income) as it accrues (on a constant yield to
maturity basis) in advance of the receipt of the cash payments to
which such OID is attributable and regardless of the holder’s
regular method of accounting for U.S. federal income tax purposes.
See “Certain U.S. Federal Income Tax Considerations.”
Certain provisions in the notes and the indenture could delay
or prevent an otherwise beneficial takeover or takeover attempt of
us and, therefore, the ability of holders to exercise their rights
associated with a potential fundamental change.
Certain provisions in the notes and the indenture could make it
more difficult or more expensive for a third party to acquire us.
For example, if an acquisition event constitutes a fundamental
change, holders of the notes will have the right to require us to
purchase their notes in cash. In this case, our obligations under
the notes and the indenture as well as provisions of our
organizational documents and other agreements could increase the
cost of acquiring us or otherwise discourage a third party from
acquiring us or removing incumbent management. There is no
exception from the definition of fundamental change for
transactions in which the consideration received by holders of our
common stock consists of other listed stock. As a result, such a
transaction could constitute a fundamental change and require us to
offer to repurchase the notes, which could discourage a potential
acquirer in such a transaction.
If the notes are issued in book-entry form, holders must rely
on DTC’s procedures to receive communications relating to the notes
and exercise their rights and remedies.
Although the notes were initially issued in certificated form,
subject to certain conditions, we may issue the notes in the form
of one or more global notes registered in the name of Cede &
Co., as nominee of DTC. Beneficial interests in global notes will
be shown on, and transfers of global notes will be effected only
through, the records maintained by DTC. Except in limited
circumstances, after the issuance of global notes we will not issue
certificated notes. See “Description of Notes—Book-Entry,
Settlement and Clearance.” Accordingly, if you own a beneficial
interest in a global note, then you will not be considered an owner
or holder of the notes. Instead, DTC or its nominee will be the
sole holder of global notes. Unlike persons who have certificated
notes registered in their names, owners of beneficial interests in
global notes will not have the direct right to act on our
solicitations for consents or requests for waivers or other actions
from holders. Instead, those beneficial owners will be permitted to
act only to the extent that they have received appropriate proxies
to do so from DTC or, if applicable, a DTC participant. The
applicable procedures for the granting of these proxies may not be
sufficient to enable owners of beneficial interests in global notes
to vote on any requested actions on a timely basis. In addition,
notices and other communications relating to any global notes will
be sent to DTC. We expect DTC to forward any such communications to
DTC participants, which in turn would forward such communications
to indirect DTC participants. But we can make no assurances that
you timely receive any such communications.
Use of Proceeds
We will receive proceeds from the issuance and sale of our common
stock, preferred stock or senior debt securities and from the
exercise of public warrants. Unless otherwise indicated in a
prospectus supplement, the net proceeds from our sale of securities
will be used for general corporate purposes, including working
capital, acquisitions, retirement of debt and other business
opportunities.
We will not receive any proceeds from the sale of common stock,
warrants to purchase common stock or notes by any selling
securityholder hereunder.
Description of Capital
Stock
The following is a description of the material terms of, and is
qualified in its entirety by, our amended and restated certificate
of incorporation and amended and restated by-laws. These documents
are also incorporated by reference into the registration statement
of which this prospectus forms a part.
The Charter authorizes the issuance of 201,000,000 shares of
capital stock, consisting of (x) 200,000,000 authorized shares of
common stock and (y) 1,000,000 authorized shares of preferred
stock, par value $0.0001 per share. As of March 2, 2022, there were
53,958,013 shares of common stock outstanding, and no shares of
preferred stock outstanding. There is no cumulative voting with
respect to the election of directors.
Common Stock
Voting Power
Except as otherwise required by law or as otherwise provided in any
certificate of designation for any series of preferred stock, the
holders of common stock possess all voting power for the election
of our directors and all other matters requiring stockholder action
and will at all times vote together as one class on all matters
submitted to a vote of the stockholders. Holders of common stock
are entitled to one vote per share on matters to be voted on by
stockholders.
Dividends
Holders of common stock are entitled to receive such dividends and
other distributions, if any, as may be declared from time to time
by our board of directors in its discretion out of funds legally
available therefor and shall share equally on a per share basis in
such dividends and distributions.
Liquidation, Dissolution and Winding Up
In the event of our voluntary or involuntary liquidation,
dissolution, distribution of assets or winding-up, the holders of
common stock will be entitled to receive an equal amount per share
of all of our assets of whatever kind available for distribution to
stockholders, after the rights of the holders of the preferred
stock have been satisfied and after payment or provision for
payment of our debts and other liabilities.
Preemptive or Other Rights
Our stockholders have no preemptive or other subscription rights
and there is no sinking fund or redemption provisions applicable to
common stock.
Election of Directors
The Company’s board of directors are classified into three (3)
classes, designated as Class I, Class II and Class III. The
directors first elected to Class I hold office for a term expiring
at the first annual meeting of stockholders following the Closing;
the directors first elected to Class II will hold office for a term
expiring at the second annual meeting of stockholders following the
Closing; and the directors first elected to Class III will hold
office for a term expiring at the third annual meeting of
stockholders following the Closing. At each succeeding annual
meeting of the stockholders of the Company, the successors to the
class of directors whose term expires at that meeting will be
elected by plurality vote of all votes cast at such meeting to hold
office for a term expiring at the annual meeting of stockholders
held in the second year following the year of their election.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is
Continental Stock Transfer & Trust Company.
Preferred Stock
Our Charter provides that shares of preferred stock may be issued
from time to time in one or more series. Our board of directors is
authorized to fix the voting rights, if any, designations, powers,
preferences, the relative, participating, optional or other special
rights and any qualifications, limitations and restrictions
thereof, applicable to the shares of each series. Our board of
directors may, without stockholder approval, issue preferred stock
with voting and other rights that could adversely affect the voting
power and other rights of the holders of the common stock and could
have anti-takeover effects. The ability of our board of directors
to issue preferred stock without stockholder approval could have
the effect of delaying, deferring or preventing a change of control
of the Company or the removal of existing management. We have no
preferred stock outstanding at the date hereof. Although we do not
currently intend to issue any shares of preferred stock, we cannot
assure you that we will not do so in the future. Specific terms of
any preferred stock will be provided in one or more supplements to
this prospectus.
Warrants
Public Warrants
Each whole public warrant entitles the registered holder to
purchase one share of our common stock at a price of $11.50 per
share, subject to adjustment as discussed below, at any time
following May 22, 2021. Pursuant to the warrant agreement, a
warrant holder may exercise its warrants only for a whole number of
shares of common stock. The warrants will expire November 16, 2025,
at 5:00 PM, Eastern Time, or earlier upon redemption or
liquidation. We will not be obligated to deliver any shares of
common stock pursuant to the exercise of a warrant and will have no
obligation to settle such warrant exercise unless a registration
statement under the Securities Act with respect to the shares of
common stock underlying the warrants is then effective and a
prospectus relating thereto is current, subject to our satisfying
our obligations described below with respect to registration. No
warrant will be exercisable and we will not be obligated to issue
shares of common stock upon exercise of a warrant unless common
stock issuable upon such warrant exercise has been registered,
qualified or deemed to be exempt under the securities laws of the
state of residence of the registered holder of the warrants. In the
event that the conditions in the two (2) immediately preceding
sentences are not satisfied with respect to a warrant, the holder
of such warrant will not be entitled to exercise such warrant and
such warrant may have no value and expire worthless. In no event
will we be required to net cash settle any warrant. In the event
that a registration statement is not effective for the exercised
warrants, the purchaser of a unit containing such warrant will have
paid the full purchase price for the unit solely for the share of
common stock underlying such unit.
Under the warrant agreement, we agreed that as soon as practicable,
but in no event later than fifteen (15) business days after the
Closing, we will use our best efforts to file with the SEC this
registration statement covering the shares of common stock issuable
upon exercise of the warrants, to cause such registration statement
to become effective within sixty (60) business days following the
business combination and to maintain a current prospectus relating
to those shares of common stock until the warrants expire or are
redeemed, as specified in the warrant agreement. We filed a
registration statement on Form S-1 covering such shares on December
10, 2020, and it was declared effective as of January 21, 2021.
Notwithstanding the above, if our common stock is at the time of
any exercise of a warrant not listed on a national securities
exchange such that it satisfies the definition of a “covered
security” under Section 18(b)(1) of the Securities Act, we may, at
our option, require holders of public warrants who exercise their
warrants to do so on a “cashless basis” in accordance with Section
3(a)(9) of the Securities Act and, in the event we so elect, we
will not be required to file or maintain in effect a registration
statement, and in the event we do not so elect, we will use our
best efforts to register or qualify the shares under applicable
blue sky laws to the extent an exemption is not available.
Once the warrants become exercisable, the Company may call the
warrants for redemption:
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in whole and not in part; |
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at a price of $0.01 per warrant; |
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upon not less than thirty (30) days’ prior written notice of
redemption (the “30-day redemption period”) to each warrant holder;
and |
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if, and only if, the reported last sale price of the common
stock equals or exceeds $18.00 per share (as adjusted for stock
splits, stock dividends, reorganizations, recapitalizations and the
like) for any twenty (20) trading days within a thirty (30) trading
day period ending three (3) business days before we send the notice
of redemption to the warrant holders. |
If and when the warrants become redeemable by us, we may not
exercise our redemption right if the issuance of shares of common
stock upon exercise of the warrants is not exempt from registration
or qualification under applicable state blue sky laws or we are
unable to effect such registration or qualification. We will use
our best efforts to register or qualify such shares of common stock
under the blue sky laws of the state of residence in those states
in which the warrants were offered by us in the IPO.
We established the last of the redemption criterion discussed above
to prevent a redemption call unless there is at the time of the
call a significant premium to the warrant exercise price. If the
foregoing conditions are satisfied and we issue a notice of
redemption of the warrants, each warrant holder will be entitled to
exercise its warrant prior to the scheduled redemption date.
However, the price of the common stock may fall below the $18.00
redemption trigger price (as adjusted for stock splits, stock
dividends, reorganizations, recapitalizations and the like) as well
as the $11.50 warrant exercise price after the redemption notice is
issued.
If we call the warrants for redemption as described above, our
management will have the option to require any holder that wishes
to exercise its warrant to do so on a “cashless basis.” In
determining whether to require all holders to exercise their
warrants on a “cashless basis,” our management will consider, among
other factors, our cash position, the number of warrants that are
outstanding and the dilutive effect on our stockholders of issuing
the maximum number of shares of common stock issuable upon the
exercise of our warrants. If our management takes advantage of this
option, all holders of warrants would pay the exercise price by
surrendering their warrants for that number of shares of common
stock equal to the quotient obtained by dividing (x) the product of
the number of shares of common stock underlying the warrants,
multiplied by the excess of the “fair market value” (defined below)
of the common stock over the exercise price of the warrants by (y)
the fair market value. The “fair market value” shall mean the
average reported last sale price of the common stock for the ten
(10) trading days ending on the third (3rd) trading day prior to
the date on which the notice of redemption is sent to the holders
of warrants. If the Company’s management takes advantage of this
option, the notice of redemption will contain the information
necessary to calculate the number of shares of common stock to be
received upon exercise of the warrants, including the “fair market
value” in such case. Requiring a cashless exercise in this manner
will reduce the number of shares to be issued and thereby lessen
the dilutive effect of a warrant redemption. The Company believes
this feature is an attractive option to it if it does not need the
cash from the exercise of the warrants after the business
combination. If we call our warrants for redemption and our
management does not take advantage of this option, the Sponsor and
its permitted transferees would still be entitled to exercise their
private placement warrants for cash or on a cashless basis using
the same formula described above that other warrant holders would
have been required to use had all warrant holders been required to
exercise their warrants on a cashless basis, as described in more
detail below.
A holder of a warrant may notify us in writing in the event it
elects to be subject to a requirement that such holder will not
have the right to exercise such warrant, to the extent that after
giving effect to such exercise, such person (together with such
person’s affiliates), to the warrant agent’s actual knowledge,
would beneficially own in excess of 4.9% or 9.8% (or such other
amount as a holder may specify) of the shares of common stock
outstanding immediately after giving effect to such exercise.
If the number of outstanding shares of common stock is increased by
a stock dividend payable in shares of common stock, or by a
split-up of shares of common stock or other similar event, then, on
the effective date of such stock dividend, split-up or similar
event, the number of shares of common stock issuable on exercise of
each warrant will be increased in proportion to such increase in
the outstanding shares of common stock. A rights offering to
holders of common stock entitling holders to purchase shares of
common stock at a price less than the fair market value will be
deemed a stock dividend of a number of shares of common stock equal
to the product of (i) the number of shares of common stock actually
sold in such rights offering (or issuable under any other equity
securities sold in such rights offering that are convertible into
or exercisable for common stock) and (ii) one (1) minus the
quotient of (x) the price per share of common stock paid in such
rights offering divided by (y) the fair market value. For these
purposes (i) if the rights offering is for securities convertible
into or exercisable for common stock, in determining the price
payable for common stock, there will be taken into account any
consideration received for such rights, as well as any additional
amount payable upon exercise or conversion and (ii) fair market
value means the volume weighted average price of common stock as
reported during the ten (10) trading day period ending on the
trading day prior to the first date on which the shares of common
stock trade on the applicable exchange or in the applicable market,
regular way, without the right to receive such rights.
In addition, if the Company, at any time while the warrants are
outstanding and unexpired, pay a dividend or make a distribution in
cash, securities or other assets to the holders of common stock on
account of such shares of common stock (or other shares of the
Company’s capital stock into which the warrants are convertible),
other than (a) as described above, or (b) certain ordinary cash
dividends, then the warrant exercise price will be decreased,
effective immediately after the effective date of such event, by
the amount of cash and/or the fair market value of any securities
or other assets paid on each share of common stock in respect of
such event.
If the number of outstanding shares of common stock is decreased by
a consolidation, combination, reverse stock split or
reclassification of shares of common stock or other similar event,
then, on the effective date of such consolidation, combination,
reverse stock split, reclassification or similar event, the number
of shares of common stock issuable on exercise of each warrant will
be decreased in proportion to such decrease in outstanding shares
of common stock.
Whenever the number of shares of common stock purchasable upon the
exercise of the warrants is adjusted, as described above, the
warrant exercise price will be adjusted by multiplying the warrant
exercise price immediately prior to such adjustment by a fraction
(x) the numerator of which will be the number of shares of common
stock purchasable upon the exercise of the warrants immediately
prior to such adjustment, and (y) the denominator of which will be
the number of shares of common stock so purchasable immediately
thereafter.
In case of any reclassification or reorganization of the
outstanding shares of common stock (other than those described
above or that solely affects the par value of such shares of common
stock), or in the case of any merger or consolidation of us with or
into another corporation (other than a consolidation or merger in
which we are the continuing corporation and that does not result in
any reclassification or reorganization of our outstanding shares of
common stock), or in the case of any sale or conveyance to another
corporation or entity of the assets or other property of us as an
entirety or substantially as an entirety in connection with which
we are dissolved, the holders of the warrants will thereafter have
the right to purchase and receive, upon the basis and upon the
terms and conditions specified in the warrants and in lieu of the
shares of our common stock immediately theretofore purchasable and
receivable upon the exercise of the rights represented thereby, the
kind and amount of shares of stock or other securities or property
(including cash) receivable upon such reclassification,
reorganization, merger or consolidation, or upon a dissolution
following any such sale or transfer, that the holder of the
warrants would have received if such holder had exercised their
warrants immediately prior to such event. If less than 70% of the
consideration receivable by the holders of common stock in such a
transaction is payable in the form of common stock in the successor
entity that is listed for trading on a national securities exchange
or is quoted in an established over-the-counter market, or is to be
so listed for trading or quoted immediately following such event,
and if the registered holder of the warrant properly exercises the
warrant within thirty (30) days following public disclosure of such
transaction, the warrant exercise price will be reduced as
specified in the warrant agreement based on the Black-Scholes value
(as defined in the warrant agreement) of the warrant. The purpose
of such exercise price reduction is to provide additional value to
holders of the warrants when an extraordinary transaction occurs
during the exercise period of the warrants pursuant to which the
holders of the warrants otherwise do not receive the full potential
value of the warrants in order to determine and realize the option
value component of the warrant. This formula is to compensate the
warrant holder for the loss of the option value portion of the
warrant due to the requirement that the warrant holder exercise the
warrant within thirty (30) days of the event. The Black-Scholes
model is an accepted pricing model for estimating fair market value
where no quoted market price for an instrument is available.
The warrants have been issued in registered form under the warrant
agreement (which was filed as Exhibit 4.1 to our Current Report on
Form 8-K filed on May 22, 2020 with the SEC File No. 001-39291),
which includes a complete description of the terms and conditions
applicable to the warrants.
The warrant agreement provides that the terms of the warrants may
be amended without the consent of any holder to cure any ambiguity
or correct any defective provision, and that all other
modifications or amendments will require the vote or written
consent of the holders of at least 50% of the then outstanding
public warrants and, solely with respect to any amendment to the
terms of the private placement warrants, a majority of the then
outstanding private placement warrants.
The warrants may be exercised upon surrender of the warrant
certificate on or prior to the expiration date at the offices of
the warrant agent, with the exercise form on the reverse side of
the warrant certificate completed and executed as indicated,
accompanied by full payment of the exercise price (or on a cashless
basis, if applicable), by certified or official bank check payable
to us, for the number of warrants being exercised. The warrant
holders do not have the rights or privileges of holders of common
stock and any voting rights until they exercise their warrants and
receive shares of common stock. After the issuance of shares of
common stock upon exercise of the warrants, each holder will be
entitled to one (1) vote for each share held of record on all
matters to be voted on by stockholders.
No fractional shares will be issued upon exercise of the warrants.
If, upon exercise of the warrants, a holder would be entitled to
receive a fractional interest in a share, we will, upon exercise,
round down to the nearest whole number of shares of common stock to
be issued to the warrant holder.
Private Placement Warrants
The private placement warrants (including the shares issuable upon
exercise of such warrants) may not be redeemable by the Company so
long as they are held by members of the Sponsor or its permitted
transferees. Otherwise, the private placement warrants are
identical to the warrants sold in the IPO except that the private
placement warrants, so long as they are held by the Sponsor or its
permitted transferees, (i) are redeemable by us, (ii) may be
exercised by the holders on a cashless basis, (iii) are entitled to
registration rights and (iv) for so long as they are held by the
Sponsor, are not exercisable more than five (5) years from the
effective date of the IPO registration statement in accordance with
FINRA Rule 5110(f)(2)(G)(i).
If holders of the private placement warrants elect to exercise them
on a cashless basis, they would pay the exercise price by
surrendering their warrants for that number of shares of common
stock equal to the quotient obtained by dividing (x) the product of
the number of shares of common stock underlying the warrants,
multiplied by the excess of the “fair market value” (defined below)
of the common stock over the exercise price of the warrants by (y)
the fair market value. The “fair market value” shall mean the
average reported last sale price of the common stock for the ten
(10) trading days ending on the third (3rd) trading day prior to
the date on which the notice of warrant exercise is sent to the
warrant agent.
Certain Anti-Takeover Provisions of Delaware Law, the Company’s
Charter and Bylaws
The Charter, bylaws and the Delaware General Corporation Law, or
DGCL contain provisions that could have the effect of rendering
more difficult, delaying, or preventing an acquisition deemed
undesirable by our board of directors. These provisions could also
make it difficult for stockholders to take certain actions,
including electing directors who are not nominated by the members
of our board of directors or taking other corporate actions,
including effecting changes in our management. For instance, our
board of directors will be empowered to elect a director to fill a
vacancy created by the expansion of the board of directors or the
resignation, death, or removal of a director in certain
circumstances; and our advance notice provisions in our bylaws will
require that stockholders must comply with certain procedures in
order to nominate candidates to our board of directors or to
propose matters to be acted upon at a stockholders’ meeting.
Our authorized but unissued common stock and preferred stock will
be available for future issuances without stockholder approval and
could be utilized for a variety of corporate purposes, including
future offerings to raise additional capital, acquisitions and
employee benefit plans. The existence of authorized but unissued
and unreserved common stock and preferred stock could render more
difficult or discourage an attempt to obtain control of us by means
of a proxy contest, tender offer, merger or otherwise.
Directors’ Liability; Indemnification of Directors and Officers
Our amended and restated certificate of incorporation limits the
liability of our directors to the fullest extent permitted by the
DGCL and provides that we will provide them with customary
indemnification. We entered into customary indemnification
agreements with each of our executive officers and directors that
provide them, in general, with customary indemnification in
connection with their service to us or on our behalf.
Securities Exchange
Our common stock and warrants to purchase common stock are listed
on Nasdaq under the symbols “EOSE” and “EOSEW,” respectively.
DESCRIPTION OF DEBT
SECURITIES
We may issue senior debt securities, in one or more series, as debt
or convertible debt. In this prospectus, we have summarized certain
general features of the senior debt securities. We urge you,
however, to read the applicable prospectus supplement and any free
writing prospectus that we may authorize to be provided to you
related to the particular series of senior debt securities being
offered, as well as the complete indenture that contains the terms
of the senior debt securities. We have filed, or will file, as
exhibits to the registration statement of which this prospectus is
a part, the form of indenture and any supplemental agreements that
describe the terms of the series of senior debt securities we are
offering before the issuance of the related series of senior debt
securities.
We may evidence each series of senior debt securities we will issue
by an indenture that we enter into with a trustee. We will indicate
the name and address of the trustee, if applicable, in the
prospectus supplement relating to the particular series of senior
debt securities being offered.
Form of Debt Securities
Each senior debt security will be represented either by a
certificate issued in definitive form to a particular investor or
by one or more global securities representing the entire issuance
of securities. Certificated securities in definitive form and
global securities will be issued in registered form. Definitive
securities name you or your nominee as the owner of the security,
and in order to transfer or exchange these securities or to receive
payments other than interest or other interim payments, you or your
nominee must physically deliver the securities to the trustee,
registrar, paying agent or other agent, as applicable. Global
securities name a depositary or its nominee as the owner of the
senior debt securities represented by these global securities. The
depositary maintains a computerized system that will reflect each
investor’s beneficial ownership of the securities through an
account maintained by the investor with its broker/dealer, bank,
trust company or other representative, as we explain more fully
below.
Registered Global Securities
We may issue the registered senior debt securities in the form of
one or more fully registered global securities that will be
deposited with a depositary or its nominee identified in the
applicable prospectus supplement and registered in the name of that
depositary or nominee. In those cases, one or more registered
global securities will be issued in a denomination or aggregate
denominations equal to the portion of the aggregate principal or
face amount of the securities to be represented by registered
global securities. Unless and until it is exchanged in whole for
securities in definitive registered form, a registered global
security may not be transferred except as a whole by and among the
depositary for the registered global security, the nominees of the
depositary or any successors of the depositary or those
nominees.
If not described below, any specific terms of the depositary
arrangement with respect to any securities to be represented by a
registered global security will be described in the prospectus
supplement relating to those securities. We anticipate that the
following provisions will apply to all depositary arrangements.
Ownership of beneficial interests in a registered global security
will be limited to persons, called participants, that have accounts
with the depositary or persons that may hold interests through
participants. Upon the issuance of a registered global security,
the depositary will credit, on its book-entry registration and
transfer system, the participants’ accounts with the respective
principal or face amounts of the securities beneficially owned by
the participants. Any dealers, underwriters or agents participating
in the distribution of the securities will designate the accounts
to be credited. Ownership of beneficial interests in a registered
global security will be shown on, and the transfer of ownership
interests will be effected only through, records maintained by the
depositary, with respect to interests of participants, and on the
records of participants, with respect to interests of persons
holding through participants. The laws of some states may require
that some purchasers of securities take physical delivery of these
securities in definitive form. These laws may impair your ability
to own, transfer or pledge beneficial interests in registered
global securities.
So long as the depositary, or its nominee, is the registered owner
of a registered global security, that depositary or its nominee, as
the case may be, will be considered the sole owner or holder of the
securities represented by the registered global security for all
purposes under the applicable indenture or unit agreement. Except
as described below, owners of beneficial interests in a registered
global security will not be entitled to have the securities
represented by the registered global security registered in their
names, will not receive or be entitled to receive physical delivery
of the securities in definitive form and will not be considered the
owners or holders of the securities under the applicable indenture
or unit agreement. Accordingly, each person owning a beneficial
interest in a registered global security must rely on the
procedures of the depositary for that registered global security
and, if that person is not a participant, on the procedures of the
participant through which the person owns its interest, to exercise
any rights of a holder under the applicable indenture or unit
agreement. We understand that under existing industry practices, if
we request any action of holders or if an owner of a beneficial
interest in a registered global security desires to give or take
any action that a holder is entitled to give or take under the
applicable indenture or unit agreement, the depositary for the
registered global security would authorize the participants holding
the relevant beneficial interests to give or take that action, and
the participants would authorize beneficial owners owning through
them to give or take that action or would otherwise act upon the
instructions of beneficial owners holding through them.
Principal, premium, if any, and interest payments on senior debt
securities represented by a registered global security registered
in the name of a depositary or its nominee will be made to the
depositary or its nominee, as the case may be, as the registered
owner of the registered global security. None of the Company, the
trustees, the warrant agents or any other agent of the Company,
agent of the trustees or agent of the warrant agents will have any
responsibility or liability for any aspect of the records relating
to payments made on account of beneficial ownership interests in
the registered global security or for maintaining, supervising or
reviewing any records relating to those beneficial ownership
interests.
We expect that the depositary for any of the securities represented
by a registered global security, upon receipt of any payment of
principal, premium, interest or other distribution of underlying
securities or other property to holders on that registered global
security, will immediately credit participants’ accounts in amounts
proportionate to their respective beneficial interests in that
registered global security as shown on the records of the
depositary. We also expect that payments by participants to owners
of beneficial interests in a registered global security held
through participants will be governed by standing customer
instructions and customary practices, as is now the case with the
securities held for the accounts of customers in bearer form or
registered in “street name,” and will be the responsibility of
those participants.
If the depositary for any of these securities represented by a
registered global security is at any time unwilling or unable to
continue as depositary or ceases to be a clearing agency registered
under the Exchange Act, and a successor depositary registered as a
clearing agency under the Exchange Act is not appointed by us
within 90 days, we will issue securities in definitive form in
exchange for the registered global security that had been held by
the depositary. Any securities issued in definitive form in
exchange for a registered global security will be registered in the
name or names that the depositary gives to the relevant trustee,
warrant agent or other relevant agent of ours or theirs. It is
expected that the depositary’s instructions will be based upon
directions received by the depositary from participants with
respect to ownership of beneficial interests in the registered
global security that had been held by the depositary.
Description of Notes
The notes were issued under an indenture (the “indenture”), dated
April 7, 2022, between us and Wilmington Trust, National
Association, as trustee (the “trustee”). A copy of the indenture is
filed as an exhibit to the registration statement of which this
prospectus forms a part. The terms of the notes include those
expressly set forth in the indenture and those made part of the
indenture by reference to the Trust Indenture Act of 1939, as
amended (the “Trust Indenture Act”).
You may request a copy of the indenture from us as described under
“Where You Can Find More Information.”
The following description is a summary of the material provisions
of the notes and the indenture and does not purport to be complete.
This summary is subject to and is qualified by reference to all the
provisions of the notes and the indenture, including the
definitions of certain terms used in the indenture. We urge you to
read these documents because they, and not this description, define
your rights as a holder of the notes.
For purposes of this description, references to “we,” “our” and
“us” refer only to Eos Energy Enterprises, Inc. and not to its
subsidiaries.
General
The notes:
|
● |
are our general unsecured, senior
obligations; |
|
● |
were initially issued in an aggregate
principal amount of $100,000,000; |
|
● |
accrue interest from the date of
issuance (or the most recent interest payment date, whichever is
later), payable in cash at the rate of 5.00% per year or in kind at
the rate of 6.00% per year, at our election, on June 30 and
December 30 of each year, as described below under
“—Interest;” |
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● |
are subject to redemption at our
option, in whole or in part, on or after June 30, 2024 if the last
reported sale price of our common stock has been at least 130% of
the conversion price then in effect for at least 20 trading days
(whether or not consecutive) during any 30 consecutive trading day
period ending on, and including, the trading day immediately
preceding the date on which we provide notice of redemption at a
redemption price equal to 100% of the capitalized principal amount
of the notes to be redeemed, plus any accrued interest that
has not been paid or capitalized to, but excluding, the redemption
date; |
|
● |
are subject to repurchase by us at the
option of the holders following a fundamental change (as defined
below under “—Fundamental Change Permits Holders to Require Us to
Repurchase Notes”), at a fundamental change repurchase price equal
to 100% of the capitalized principal amount of the notes to be
repurchased, plus any accrued interest that has not been
paid or capitalized to, but excluding, the fundamental change
repurchase date; |
|
● |
mature on June 30, 2026, unless
earlier converted, redeemed or repurchased; |
|
● |
are issued in minimum denominations of
$1.00 principal amount and integral multiples thereof; and |
|
● |
are initially represented in
certificated form but may, subject to certain conditions, be
represented by one or more registered notes in global form. See
“Book-Entry, Settlement and Clearance.” |
Subject to satisfaction of certain conditions, the notes may be
converted at an initial conversion rate of 49.9910 shares of common
stock per $1,000 capitalized principal amount of notes (equivalent
to an initial conversion price of approximately $20.00 per share of
common stock). The conversion rate is subject to adjustment if
certain events occur.
We will settle conversions of notes by paying or delivering, as the
case may be, cash, shares of our common stock or a combination of
cash and shares of our common stock, at our election, as described
under “—Conversion Rights—Settlement upon Conversion.” You will not
receive any separate cash payment for interest, if any, accrued and
unpaid to the conversion date except under the limited
circumstances described below.
The indenture does not limit the amount of debt that may be issued
by us or our subsidiaries under the indenture or otherwise. The
indenture does not contain any financial covenants and will not
restrict us from paying dividends or issuing or repurchasing our
other securities. Other than restrictions described under
“—Fundamental Change Permits Holders to Require Us to Repurchase
Notes” and “—Consolidation, Merger and Sale of Assets” below, the
indenture does not contain any covenants or other provisions
designed to afford holders of the notes protection in the event of
a highly leveraged transaction involving us or in the event of a
decline in our credit rating as the result of a takeover,
recapitalization, highly leveraged transaction or similar
restructuring involving us that could adversely affect such
holders.
We may, without the consent of the holders, reopen the indenture
for the notes and issue additional notes under the indenture with
the same terms as the notes offered hereby (other than differences
in the issue date, the issue price and interest accrued prior to
the issue date of such additional notes) in an unlimited aggregate
principal amount; provided that if any such additional notes
are not fungible with the notes initially offered hereby for U.S.
federal income tax purposes, such additional notes will have a
separate CUSIP number (if any).
We do not intend to list the notes on any securities exchange or
any automated dealer quotation system.
Except to the extent the context otherwise requires, we use the
term “notes” in this prospectus to refer to each $1,000 capitalized
principal amount of notes. We use the term “common stock” in this
prospectus to refer to our common stock, par value $0.0001 per
share. References in this prospectus to a “holder” or “holders” of
notes that are held through The Depository Trust Company (“DTC”)
are references to owners of beneficial interests in such notes,
unless the context otherwise requires. However, we and the trustee
will treat the person in whose name the notes are registered (Cede
& Co., in the case of notes held through DTC) as the owner of
such notes for all purposes. References herein to the “close of
business” refer to 5:00 p.m., New York City time, and to the “open
of business” refer to 9:00 a.m., New York City time. Unless the
context otherwise requires, any reference to accrued interest on,
or in respect of, any note that has not been paid or capitalized
shall be deemed to refer to the amount of such interest that would
have accrued as of the relevant time at the applicable cash
interest rate as if we had elected the cash method in respect of
all of the relevant interest. Unless the context otherwise
requires, any reference to the principal amount of any notes shall
be deemed to refer to the capitalized principal amount of such
notes at the relevant time.
Purchase and Cancellation
We will cause all notes surrendered for payment at maturity,
repurchase upon a fundamental change, redemption, registration of
transfer or exchange or conversion, if surrendered to us or any of
our agents, subsidiaries or affiliates that we control, to be
delivered to the trustee for cancellation. All notes delivered to
the trustee shall be cancelled promptly by the trustee. Except for
notes surrendered for transfer or exchange, no notes shall be
authenticated in exchange for any notes cancelled as provided in
the indenture.
We may, to the extent permitted by law, and directly or indirectly
(regardless of whether such notes are surrendered to us),
repurchase notes in the open market or otherwise, whether by us or
our subsidiaries or through a private or public tender or exchange
offer or through counterparties to private agreements, including by
cash-settled swaps or other derivatives. We will cause any notes so
repurchased (other than notes repurchased pursuant to cash-settled
swaps or other derivatives) to be surrendered to the trustee for
cancellation, and they will no longer be considered “outstanding”
under the indenture upon their cancellation.
Payments on the Notes; Paying Agent and Registrar; Transfer and
Exchange
We will pay the principal of, and interest on, notes in global form
registered in the name of or held by DTC or its nominee in
immediately available funds to DTC or its nominee, as the case may
be, as the registered holder of such global note.
We will pay the principal of any certificated notes at the office
or agency designated by us for that purpose. We have initially
designated the trustee as our paying agent and registrar and its
agency in the continental United States of America as a place where
notes may be presented for payment or for registration of transfer.
We may, however, change the paying agent or registrar without prior
notice to the holders of the notes, and we may act as paying agent
or registrar. Any cash interest on certificated notes will be
payable (i) to holders having an aggregate principal amount of
$5,000,000 or less, by check mailed to the holders of these notes
and (ii) to holders having an aggregate principal amount of more
than $5,000,000 (or such other amount as we determine in our
discretion), either by check mailed to each holder or, upon
application by such a holder to the registrar not later than the
relevant regular record date, by wire transfer in immediately
available funds to that holder’s account within the United States
if such holder has provided us, the trustee or the paying agent
with the requisite information necessary to make such wire transfer
prior to the relevant regular record date, which application shall
remain in effect until the holder notifies, in writing, the
registrar to the contrary.
A holder of notes may transfer or exchange notes at the office of
the registrar in accordance with the indenture. The registrar and
the trustee may require a holder, among other things, to furnish
appropriate endorsements and transfer documents. No service charge
will be imposed by us, the trustee or the registrar for any
registration of transfer or exchange of notes, but we may require a
holder to pay a sum sufficient to cover any transfer tax or other
similar governmental charge required by law or permitted by the
indenture. We are not required to transfer or exchange any note
selected for redemption or surrendered for conversion or required
repurchase.
The registered holder of a note will be treated as its owner for
all purposes.
Interest
We may, at our option, elect to pay interest on the notes on any
interest payment date (i) by paying an amount in cash on such
interest payment date equal to all or a portion of interest accrued
from, and including, the immediately preceding interest payment
date (or if there is no immediately preceding interest payment
date, from, and including, the issue date of the relevant note) on
the capitalized principal amount of the notes as of the immediately
preceding interest payment date (or if there is no immediately
preceding interest payment date, on the initial principal amount of
such note), calculated at the rate of 5.00% per year (the “cash
interest rate” and, such method of paying interest, the “cash
method”) and (ii) to the extent not paid by the cash method, by
paying interest in kind (a “PIK payment”) by either increasing the
principal amount of the notes or issuing paid-in-kind notes in an
amount equal to the interest accrued on such capitalized principal
amount as described in the foregoing clause (i) and not paid in
cash, calculated at the rate of 6.00% per year (the “PIK interest
rate” and, such method of paying interest, “capitalization” or the
“capitalization method”); provided that for any notes (1)
surrendered for conversion after a regular record date and on or
prior to the corresponding interest payment date; (2) redeemed in
connection with a redemption date that is after a regular record
date and on or prior to the corresponding interest payment date; or
(3) repurchased on a fundamental change repurchase date that is
after a regular record date and on or prior to the corresponding
interest payment date, any amount by which the capitalized
principal amount for such notes would have been increased pursuant
to the capitalization method on such corresponding interest payment
date will instead be paid in cash at the cash interest rate to the
relevant holder(s) of such notes as of such regular record date,
and no such increase shall be made to the capitalized principal
amount of such notes (notwithstanding any prior election (or deemed
election) by us to pay such interest pursuant to the capitalization
method for such notes).
We will elect the method of paying interest on an interest payment
date by delivering a written notice to the trustee and the holders
on or prior to the 10th calendar day immediately preceding the
relevant interest payment date identifying the method selected and
(a) the amount of cash interest to be paid and/or (b) the
capitalization amount and new capitalized principal amount, as
applicable. In the absence of such an election with respect to an
interest payment date, we will be deemed to have elected the
capitalization method. All interest payable in respect of the
interest payment date scheduled to occur on the maturity date shall
be paid entirely by the cash method.
Any PIK payment may be made by either increasing the principal
amount of notes, in the case of global notes, or issuing additional
notes, in each case, in integral multiples of $1.00 and in
accordance with the procedures set forth in the indenture and, in
the case of global notes held by DTC, as required by DTC’s
procedures. We refer to any interest made in a PIK payment as “PIK
interest.” The principal amount of any note at any time, as
increased to such time by any PIK interest, is referred to herein
as the “capitalized principal amount” of such note.
Interest will accrue from the date of issuance or from the most
recent date to which interest has been paid or duly provided for,
and will be payable semiannually in arrears on June 30 and December
30 of each year. Interest will be paid to the person in whose name
a note is registered at the close of business on June 15 or
December 15, as the case may be, immediately preceding the relevant
interest payment date (each, a “regular record date”). Interest on
the notes will be computed on the basis of a 360-day year composed
of twelve 30-day months and, for partial months, on the basis of
the number of days actually elapsed in a 30-day month.
If any interest payment date, the maturity date, any redemption
date or any earlier required repurchase date upon a fundamental
change of a note falls on a day that is not a business day, the
required payment will be made on the next succeeding business day
and no interest on such payment will accrue in respect of the
delay. The term “business day” means, with respect to any note, any
day other than a Saturday, a Sunday or a day on which the Federal
Reserve Bank of New York is authorized or required by law or
executive order to close or be closed.
Ranking
The notes are our general unsecured obligations that rank senior in
right of payment to all of our indebtedness that is expressly
subordinated in right of payment to the notes. The notes rank equal
in right of payment with all of our liabilities that are not so
subordinated. The notes effectively rank junior to any of our
secured indebtedness to the extent of the value of the assets
securing such indebtedness. In the event of our bankruptcy,
liquidation, reorganization or other winding up, our assets that
secure secured debt will be available to pay obligations on the
notes only after all indebtedness under such secured debt has been
repaid in full from such assets. The notes rank structurally junior
to all indebtedness and other liabilities of our subsidiaries
(including trade payables but excluding intercompany obligations
and liabilities of a type not required to be reflected on a balance
sheet of such subsidiaries in accordance with GAAP). We advise you
that there may not be sufficient assets remaining to pay amounts
due on any or all the notes then outstanding.
As of December 31, 2021, our total consolidated indebtedness was
$129.3 million, of which an aggregate of $102.9 million was senior
indebtedness and an aggregate of $26.4 million was secured
indebtedness. As of December 31, 2021, our subsidiaries had $52.9
million of indebtedness and other liabilities (including trade
payables, but excluding intercompany obligations and liabilities of
a type not required to be reflected on a balance sheet of such
subsidiaries in accordance with GAAP) to which the notes would have
been structurally subordinated.
The ability of our subsidiaries to pay dividends and make other
payments to us is restricted by, among other things, applicable
corporate and other laws and regulations as well as agreements to
which our subsidiaries may become a party. We may not be able to
pay the cash portions of any settlement amount upon conversion of
the notes, or to pay cash for the fundamental change repurchase
price upon a fundamental change if a holder requires us to
repurchase notes as described below. See “Risk Factors—Risks
Related to the Notes—We may not have the ability to raise the funds
necessary to settle conversions of the notes or to repurchase the
notes upon a fundamental change, and our future debt may contain
limitations on our ability to pay cash upon conversion or
repurchase of the notes.”
Optional Redemption
No “sinking fund” is provided for the notes, which means that we
are not required to redeem or retire the notes periodically. Prior
to June 30, 2024, the notes will not be redeemable. On or after
June 30, 2024, we may redeem for cash all or part of the notes, at
our option, if the last reported sale price of our common stock has
been at least 130% of the conversion price then in effect for at
least 20 trading days (whether or not consecutive) during any 30
consecutive trading day period ending on, and including, the
trading day immediately preceding the date on which we provide
notice of redemption. In the case of any optional redemption, we
will provide not less than 50 nor more than 70 scheduled trading
days’ notice before the redemption date to the trustee, the paying
agent and each holder of notes; provided that if, in
accordance with the provisions described under “—Conversion
Rights—Settlement upon Conversion” we elect to settle all
conversions of notes with a conversion date that occurs on or after
the date of our issuance of a notice of redemption and prior to the
related redemption date by physical settlement, then we may instead
elect to choose a redemption date that is a business day not less
than 15 nor more than 60 calendar days after the date we send such
notice of redemption. The redemption price will be equal to 100% of
the capitalized principal amount of the notes to be redeemed,
plus any accrued interest that has not been paid or
capitalized to, but excluding, the redemption date (unless the
redemption date falls after a regular record date but on or prior
to the immediately succeeding interest payment date, in which case
we will pay the full amount of accrued and unpaid interest in cash
at the cash interest rate to the holder of record as of the close
of business on such regular record date, and the redemption price
will be equal to 100% of the capitalized principal amount of the
notes to be redeemed). The redemption date must be a business
day.
If we decide to redeem fewer than all of the outstanding notes and
the notes to be redeemed are global notes, the notes to be redeemed
will be selected by the depositary in accordance with its
procedures. If we decide to redeem fewer than all of the
outstanding notes and the notes to be redeemed are not global
notes, then the trustee will select the notes to be redeemed (in
principal amounts of $1,000 or integral multiples of $1.00 in
excess thereof) by lot, on a pro rata basis or by another
method the trustee considers to be fair and appropriate.
If the trustee selects a portion of your note for partial
redemption and you convert a portion of the same note, the
converted portion will be deemed to be from the portion selected
for redemption.
In the event of any redemption in part, we will not be required to
register the transfer of or exchange any note so selected for
redemption, in whole or in part, except the unredeemed portion of
any note being redeemed in part.
No notes may be redeemed if the principal amount of the notes has
been accelerated, and such acceleration has not been rescinded, on
or prior to the redemption date (except in the case of an
acceleration resulting from a default by us in the payment of the
redemption price with respect to such notes).
The “last reported sale price” of our common stock on any date
means the closing sale price per share (or if no closing sale price
is reported, the average of the bid and ask prices or, if more than
one in either case, the average of the average bid and the average
ask prices) on that date as reported in composite transactions for
the principal U.S. national or regional securities exchange on
which our common stock is traded. If our common stock is not listed
for trading on a U.S. national or regional securities exchange on
the relevant date, the “last reported sale price” will be the last
quoted bid price for our common stock in the over-the-counter
market on the relevant date as reported by OTC Markets Group Inc.
or a similar organization. If our common stock is not so quoted,
the “last reported sale price” will be the average of the mid-point
of the last bid and ask prices for our common stock on the relevant
date from a nationally recognized independent investment banking
firm selected by us for this purpose.
“Trading day” means a day on which (i) trading in our common stock
(or other security for which a closing sale price must be
determined) generally occurs on The Nasdaq Capital Market or, if
our common stock (or such other security) is not then listed on The
Nasdaq Capital Market, on the principal other U.S. national or
regional securities exchange on which our common stock (or such
other security) is then listed or, if our common stock (or such
other security) is not then listed on a U.S. national or regional
securities exchange, on the principal other market on which our
common stock (or such other security) is then traded, and (ii) a
last reported sale price for our common stock (or closing sale
price for such other security) is available on such securities
exchange or market. If our common stock (or such other security) is
not so listed or traded, “trading day” means a “business day.”
Conversion Rights
General
Holders may convert all or any portion (if the portion to be
converted is $1,000 capitalized principal amount or any integral
multiple of $1.00 in excess thereof) of their notes at their option
at any time prior to the close of business on the business day
immediately preceding the maturity date.
The conversion rate will initially be 49.9910 shares of common
stock per $1,000 principal amount of notes (equivalent to an
initial conversion price of approximately $20.00 per share of
common stock). Upon conversion of a note, we will satisfy our
conversion obligation by paying or delivering, as the case may be,
cash, shares of our common stock or a combination of cash and
shares of our common stock, at our election, all as set forth below
under “—Settlement upon Conversion.” If we satisfy our conversion
obligation solely in cash or through payment and delivery, as the
case may be, of a combination of cash and shares of our common
stock, the amount of cash and shares of common stock, if any, due
upon conversion will be based on a daily conversion value (as
defined below) calculated on a proportionate basis for each trading
day in a 40 trading day observation period (as defined below under
“—Settlement upon Conversion”). The trustee will initially act as
the conversion agent.
If we call notes for redemption, a holder of notes may convert all
or any portion of its notes only until the close of business on the
scheduled trading day immediately preceding the redemption
date.
Upon conversion, you will not receive any separate cash payment for
any accrued interest that has not been paid or capitalized, except
as described below. We will not issue fractional shares of our
common stock upon conversion of notes. Instead, we will pay cash in
lieu of delivering any fractional share as described under
“—Settlement upon Conversion.” Our payment and delivery, as the
case may be, to you of the cash, shares of our common stock or a
combination thereof, as the case may be, into which a note is
convertible will be deemed to satisfy in full our obligation to
pay:
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the principal amount of the note;
and |
|
● |
any accrued interest that has not
been paid or capitalized, to, but not including, the relevant
conversion date. |
As a result, any accrued interest that has not been paid or
capitalized, to, but not including, the relevant conversion date
will be deemed to be paid in full rather than cancelled,
extinguished or forfeited. Upon a conversion of notes into a
combination of cash and shares of our common stock, accrued
interest that has not been paid or capitalized will be deemed to be
paid first out of the cash paid upon such conversion.
Notwithstanding the immediately preceding paragraph, if notes are
converted after the close of business on a regular record date for
the payment of interest, holders of such notes at the close of
business on such regular record date will receive the full amount
of interest payable on such notes in cash at the cash interest rate
as if we had elected the cash method for all such interest (whether
or not we actually elected the cash method) on the corresponding
interest payment date notwithstanding the conversion. Notes
surrendered for conversion during the period from the close of
business on any regular record date to the open of business on the
immediately following interest payment date must be accompanied by
funds equal to the amount of such interest payable on the notes so
converted; provided that no such payment need be made:
|
● |
for conversions following the
regular record date immediately preceding the maturity date; |
|
● |
if we have specified a redemption
date that is after a regular record date and on or prior to the
business day immediately following the corresponding interest
payment date; |
|
● |
if we have specified a fundamental
change repurchase date that is after a regular record date and on
or prior to the business day immediately following the
corresponding interest payment date; or |
|
● |
to the extent of any overdue
interest, if any overdue interest exists at the time of conversion
with respect to such note. |
Therefore, for the avoidance of doubt, all record holders on the
regular record date immediately preceding the maturity date will
receive the full interest payment due on the maturity date in cash
at the cash interest rate as if we had elected the cash method for
all such interest (whether or not we actually elected the cash
method) regardless of whether their notes have been converted
following such regular record date.
In addition, notwithstanding anything to the contrary in this
prospectus, in respect of any conversion of notes with a conversion
date occurring from and after our delivery of a redemption notice
with respect to the notes and on or prior to the scheduled trading
day prior to the related redemption date, simultaneously with
delivery of the related consideration in satisfaction of our
conversion obligation in respect of such conversion, we will also
make a cash payment to the converting holder equal to the present
value, calculated using a discount rate equal to the treasury rate
in respect of such conversion date plus 50 basis points (and
discounted on a semi-annual basis (assuming a 360 day year
consisting of twelve 30 day months)), of all interest payments on
the capitalized principal amount of the notes being converted that
the holder of such notes would have been entitled to receive had
such notes remained outstanding to the maturity date assuming we
had elected entirely the cash method on each interest payment date
and without duplication of any interest such Holder is entitled to
receive pursuant to the indenture.
The “treasury rate” means, with respect to any conversion date, the
yield to maturity of United States Treasury securities with a
constant maturity (as compiled and published in the most recent
Federal Reserve Statistical Release H.15 (519) that has become
publicly available at least two business days prior to the date we
settle our conversion obligation in respect of such conversion date
(or, if such Statistical Release is no longer published, any
publicly available source of similar market data)) most nearly
equal to the period from such conversion cate to June 30, 2026;
provided that if the period from such conversion date to
June 30, 2026 is less than one year, the “treasury rate” will be
the weekly average yield on actually traded United States Treasury
securities adjusted to a constant maturity of one year.
If a holder converts notes, we will pay any documentary, stamp or
similar issue or transfer tax due on any issuance of any shares of
our common stock upon the conversion, unless the tax is due because
the holder requests such shares to be issued in a name other than
the holder’s name, in which case the holder will pay that tax.
Conversion Procedures
If you hold a beneficial interest in a global note, to convert you
must comply with DTC’s procedures for converting a beneficial
interest in a global note and, if required, pay funds equal to
interest payable on the next interest payment date to which you are
not entitled. As such, if you are a beneficial owner of the notes,
you must allow for sufficient time to comply with DTC’s procedures
if you wish to exercise your conversion rights.
If you hold a certificated note, to convert you must:
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complete and manually sign the
conversion notice on the back of the note, or a facsimile, PDF or
other electronic transmission of the conversion notice; |
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● |
deliver the conversion notice,
which is irrevocable, and the note to the conversion agent; |
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● |
if required, furnish appropriate
endorsements and transfer documents; and |
|
● |
if required, pay funds equal to any
accrued interest that has not been capitalized and is payable on
the next interest payment date to which you are not entitled. |
We will pay any documentary, stamp or similar issue or transfer tax
on the issuance of any shares of our common stock upon conversion
of the notes, unless the tax is due because the holder requests
such shares to be issued in a name other than the holder’s name, in
which case the holder will pay the tax.
We refer to the date you comply with the relevant procedures for
conversion described above as the “conversion date.”
If a holder has already delivered a repurchase notice as described
under “—Fundamental Change Permits Holders to Require Us to
Repurchase Notes” with respect to a note, the holder may not
surrender that note for conversion until the holder has withdrawn
the repurchase notice in accordance with the relevant provisions of
the indenture. If a holder submits its notes for required
repurchase, the holder’s right to withdraw the repurchase notice
and convert the notes that are subject to repurchase will terminate
at the close of business on the business day immediately preceding
the relevant fundamental change repurchase date.
Settlement upon Conversion
Upon conversion, we may choose to pay or deliver, as the case may
be, either cash (“cash settlement”), shares of our common stock
(“physical settlement”) or a combination of cash and shares of our
common stock (“combination settlement”), as described below. We
refer to each of these settlement methods as a “settlement
method.”
All conversions for which the relevant conversion date occurs after
our issuance of a notice of redemption with respect to the notes
and prior to the related redemption date, and all conversions for
which the relevant conversion date occurs on or after the 45th
scheduled trading day immediately preceding the maturity date (the
“cut-off date”) will be settled using the same settlement method.
Except for any conversions for which the relevant conversion date
occurs after our issuance of a notice of redemption but prior to
the related redemption date, and any conversions for which the
relevant conversion date occurs on or after the cut-off date, we
will use the same settlement method for all conversions with the
same conversion date, but we will not have any obligation to use
the same settlement method with respect to conversions with
different conversion dates. That is, we may choose for notes
converted on one conversion date to settle conversions in physical
settlement, and choose for notes converted on another conversion
date cash settlement or combination settlement.
If we elect a settlement method, we will inform holders so
converting, the trustee and the conversion agent of the settlement
method we have selected no later than the close of business on the
second trading day immediately following the related conversion
date (or in the case of any conversions for which the relevant
conversion date occurs (i) after the date of issuance of a notice
of redemption as described under “—Optional Redemption” and prior
to the related redemption date, in such notice of redemption or
(ii) on or after the cut-off date, no later than the cut-off date). If we
do not timely elect a settlement method, we will no longer have the
right to elect a settlement method with respect to any conversion
on the relevant conversion date or during the relevant period, and
we will be deemed to have elected the default settlement method (as
defined below) with respect to such conversion. If we elect
combination settlement, but we do not timely notify converting
holders of the specified dollar amount per $1,000 capitalized
principal amount of notes, such specified dollar amount will be
deemed to be $1,000. For the avoidance of doubt, our failure to
timely elect a settlement method or specify as applicable a
specified dollar amount will not constitute a default under the
indenture.
The “default settlement method” will initially be physical
settlement. By notice to holders of the notes, the trustee and the
conversion agent (if other than the trustee), we may, from time to
time, change the default settlement method. In addition, by notice
to holders of the notes, we may, at our option, elect to
irrevocably fix the settlement method to any settlement method that
we are then permitted to elect, including combination settlement
with a specified dollar amount per $1,000 capitalized principal
amount of notes of $1,000 or with an ability to continue to set the
specified dollar amount per $1,000 capitalized principal amount of
notes at or above a specific amount set forth in such election
notice. If we change the default settlement method or we
irrevocably elect to fix the settlement method, in either case, to
combination settlement with an ability to continue to set the
specified dollar amount per $1,000 capitalized principal amount of
notes at or above a specific amount, we will, after the date of
such change or election, as the case may be, inform holders
converting their notes, the trustee and the conversion agent of
such specified dollar amount no later than the relevant deadline
for election of a settlement method as described in the immediately
preceding paragraph, or, if we do not timely notify holders, such
specified dollar amount will be the specific amount set forth in
the election notice or, if no specific amount was set forth in the
election notice, such specified dollar amount will be $1,000 per
$1,000 capitalized principal amount of notes. A change in the
default settlement method or an irrevocable election will apply to
all note conversions on conversion dates occurring subsequent to
delivery of such notice; provided that no such change or
election will affect any settlement method theretofore elected (or
deemed to be elected) with respect to any note. For the avoidance
of doubt, such an irrevocable election, if made, will be effective
without the need to amend the indenture or the notes, including
pursuant to the provisions described in clause (11) of the second
paragraph under the caption “—Modification and Amendment” below.
However, we may nonetheless choose to execute such an amendment
without the consent of holders at our option.
Settlement amounts will be computed as follows:
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● |
if we elect (or are deemed to have elected) physical
settlement, we will deliver to the converting holder in respect of
each $1,000 capitalized principal amount of notes being converted a
number of shares of common stock equal to the conversion rate; |
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● |
if we elect (or are deemed to have elected) cash settlement, we
will pay to the converting holder in respect of each $1,000
capitalized principal amount of notes being converted cash in an
amount equal to the sum of the daily conversion values for each of
the 40 consecutive trading days during the related observation
period; and |
|
● |
if we elect (or are deemed to have elected) combination
settlement, we will pay or deliver, as the case may be, to the
converting holder in respect of each $1,000 capitalized principal
amount of notes being converted a “settlement amount” equal to the
sum of the daily settlement amounts for each of the 40 consecutive
trading days during the related observation period. |
The “daily settlement amount,” for each of the 40 consecutive
trading days during the observation period, shall consist of:
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● |
cash equal to the lesser of (i) the maximum cash amount per
$1,000 principal amount of notes to be received upon conversion as
specified in the notice specifying our chosen settlement method
(the “specified dollar amount”), if any, divided by 40 (such
quotient, the “daily measurement value”) and (ii) the daily
conversion value; and |
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● |
if the daily conversion value exceeds the daily measurement
value, a number of shares equal to (i) the difference between the
daily conversion value and the daily measurement value, divided
by (ii) the daily VWAP for such trading day. |
The “daily conversion value” means, for each of the 40 consecutive
trading days during the observation period, 2.5% of the product of
(1) the conversion rate on such trading day and (2) the daily VWAP
for such trading day.
The “daily VWAP” means, for each of the 40 consecutive trading days
during the relevant observation period, the per share
volume-weighted average price as displayed under the heading
“Bloomberg VWAP” on Bloomberg page “EOSE <equity> AQR” (or
its equivalent successor if such page is not available) in respect
of the period from the scheduled open of trading until the
scheduled close of trading of the primary trading session on such
trading day (or if such volume-weighted average price is
unavailable, the market value of one share of our common stock on
such trading day determined, using a volume-weighted average
method, by a nationally recognized independent investment banking
firm retained for this purpose by us). The “daily VWAP” will be
determined without regard to after-hours trading or any other
trading outside of the regular trading session trading hours.
The “observation period” with respect to any note surrendered for
conversion means:
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● |
subject to the immediately succeeding bullet, if the relevant
conversion date occurs prior to the cut-off date, the 40
consecutive trading days beginning on, and including, the third
trading day immediately succeeding such conversion date; |
|
● |
if the relevant conversion date occurs on or after the date of
our issuance of a notice of redemption with respect to the notes as
described under “—Optional Redemption” and prior to the relevant
redemption date, the 40 consecutive trading days beginning on, and
including, the 42nd scheduled trading day immediately preceding
such redemption date; and |
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● |
subject to the immediately preceding bullet, if the relevant
conversion date occurs on or after the cut-off date, the 40
consecutive trading days beginning on, and including, the 42nd
scheduled trading day immediately preceding the maturity date. |
For the purposes of determining amounts due upon conversion only,
“trading day” means a day on which (i) there is no “market
disruption event” (as defined below) and (ii) trading in our common
stock generally occurs on The Nasdaq Capital Market or, if our
common stock is not then listed on The Nasdaq Capital Market, on
the principal other U.S. national or regional securities exchange
on which our common stock is then listed or, if our common stock is
not then listed on a U.S. national or regional securities exchange,
on the principal other market on which our common stock is then
listed or admitted for trading. If our common stock is not so
listed or admitted for trading, “trading day” means a “business
day.”
“Scheduled trading day” means a day that is scheduled to be a
trading day on the principal U.S. national or regional securities
exchange or market on which our common stock is listed or admitted
for trading. If our common stock is not so listed or admitted for
trading, “scheduled trading day” means a “business day.”
For the purposes of determining amounts due upon conversion,
“market disruption event” means (i) a failure by the primary U.S.
national or regional securities exchange or market on which our
common stock is listed or admitted for trading to open for trading
during its regular trading session or (ii) the occurrence or
existence prior to 1:00 p.m., New York City time, on any scheduled
trading day for our common stock for more than one half-hour period
in the aggregate during regular trading hours of any suspension or
limitation imposed on trading (by reason of movements in price
exceeding limits permitted by the relevant stock exchange or
otherwise) in our common stock or in any options contracts or
futures contracts relating to our common stock.
Except as described under “—Governmental Approvals” and
“—Recapitalizations, Reclassifications and Changes of our Common
Stock,” we will deliver the consideration due in respect of
conversion on the third business day immediately following the
relevant conversion date, if we elect physical settlement, or on
the third business day immediately following the last trading day
of the relevant observation period, in the case of any other
settlement method. Any shares of common stock deliverable upon
conversion may be delivered in book-entry or certificated form.
We will pay cash in lieu of delivering any fractional share of
common stock issuable upon conversion based on the daily VWAP for
the relevant conversion date (in the case of physical settlement)
or based on the daily VWAP for the last trading day of the relevant
observation period (in the case of combination settlement).
Subject in all respects to “—Governmental Approvals” below, each
conversion will be deemed to have been effected as to any notes
surrendered for conversion on the conversion date; provided,
however, that, subject to “—Governmental Approvals” below,
the person in whose name any shares of our common stock shall be
issuable upon such conversion will become the holder of record of
such shares as of the close of business on the conversion date (in
the case of physical settlement) or the last trading day of the
relevant observation period (in the case of combination
settlement).
Governmental Approvals
Notwithstanding anything to the contrary in this prospectus, to the
extent that physical settlement or combination settlement would
require us or any holder to obtain any regulatory approvals or
consents from, or make any filing with, any governmental entity,
then we, on the one hand, and the applicable holder, on the other
hand, will, at our request or at the request of the holder, as
applicable, (a) as promptly as practicable, make, or cause to be
made, all filings and submissions required under applicable law,
and (b) use their commercially reasonable efforts to obtain, or
cause to be obtained, approval of the transaction or relevant
consent associated with the filing or the termination or expiration
of the applicable waiting period (“governmental approval”), and
notwithstanding anything to the contrary in this prospectus, the
right to convert the relevant notes and our obligation to deliver
(or cause to be delivered) any related shares of common stock upon
such conversion will be contingent upon, and subject to, the
receipt of any required governmental approval (as determined by the
holder or us, as applicable, and notified in writing to the trustee
and conversion agent) and any such delivery shall be delayed until
such governmental approval is received; provided that, for
the avoidance of doubt, any filing or submission fees required
under applicable laws shall be paid by such holder.
Exchange in Lieu of Conversion
When a holder surrenders its notes for conversion, we may, at our
election (an “exchange election”), direct the conversion agent to
deliver, on or prior to the second trading day immediately
following the conversion date, such notes to one or more financial
institutions designated by us for exchange in lieu of conversion.
In order to accept any notes surrendered for conversion, the
designated financial institution(s) must agree to timely pay or
deliver, as the case may be, in exchange for such notes, cash,
shares of our common stock, or a combination of cash and shares of
our common stock, at our election, that would otherwise be due upon
conversion as described above under “—Settlement upon Conversion”
or such other amount agreed to by the holder and the designated
financial institution(s) (the “conversion consideration”). If we
make an exchange election, we will, by the close of business on the
second trading day following the relevant conversion date, notify
in writing the trustee, the conversion agent (if other than the
trustee) and the holder surrendering its notes for conversion that
we have made the exchange election, and we will notify the
designated financial institution(s) of the relevant deadline for
delivery of the consideration due upon conversion and the type of
conversion consideration to be paid and/or delivered, as the case
may be.
Any notes delivered to the designated financial institution(s) will
remain outstanding, subject to applicable DTC procedures in the
case of global notes. If the financial institution(s) agree(s) to
accept any notes for exchange but does not timely pay and/or
deliver, as the case may be, the related conversion consideration,
or if such designated financial institution does not accept the
notes for exchange, we will pay and/or deliver, as the case may be,
the relevant conversion consideration, as, and at the time,
required pursuant to the indenture as if we had not made the
exchange election.
Our designation of any financial institution(s) to which the notes
may be submitted for exchange does not require such financial
institution(s) to accept any notes.
Conversion Rate Adjustments
The conversion rate will be adjusted as described below, except
that we will not make any adjustments to the conversion rate if
holders of the notes participate (other than in the case of (x) a
share split or share combination or (y) a tender or exchange
offer), at the same time and upon the same terms as holders of our
common stock and solely as a result of holding the notes, in any of
the transactions described below without having to convert their
notes as if they held a number of shares of common stock equal to
the conversion rate for each $1,000 capitalized principal amount of
notes held by such holder.
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(1) |
If we exclusively issue shares of our common stock as a
dividend or distribution on shares of our common stock, or if we
effect a share split or share combination, the conversion rate will
be adjusted based on the following formula: |
where,
CR0 = |
the conversion rate in effect immediately prior to the open of
business on the ex-dividend date of such dividend or distribution,
or immediately prior to the open of business on the effective date
of such share split or share combination, as applicable; |
|
|
CR1 = |
the conversion rate in effect immediately after the open of
business on such ex-dividend date or effective date; |
|
|
OS0 = |
the number of shares of our common stock outstanding
immediately prior to the open of business on such ex-dividend date
or effective date (before giving effect to any such dividend,
distribution, split or combination); and |
|
|
OS1 = |
the number of shares of our common stock outstanding
immediately after giving effect to such dividend, distribution,
share split or share combination. |
Any adjustment made under this clause (1) shall become effective
immediately after the open of business on the ex-dividend date for
such dividend or distribution, or immediately after the open of
business on the effective date for such share split or share
combination, as applicable. If any dividend or distribution of the
type described in this clause (1) is declared but not so paid or
made, the conversion rate shall be immediately readjusted,
effective as of the date our board of directors or a committee
thereof determines not to pay such dividend or distribution, to the
conversion rate that would then be in effect if such dividend or
distribution had not been declared.
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(2) |
If we issue to all or substantially all holders of our common
stock any rights, options or warrants (other than in connection
with a stockholder rights plan) entitling them, for a period of not
more than 60 calendar days after the announcement date of such
issuance, to subscribe for or purchase shares of our common stock
at a price per share that is less than the average of the last
reported sale prices of our common stock for the 10 consecutive
trading day period ending on, and including, the trading day
immediately preceding the date of announcement of such issuance,
the conversion rate will be increased based on the following
formula: |

where,
CR0 = |
the conversion rate in effect immediately prior to the open of
business on the ex-dividend date for such issuance; |
|
|
CR1 = |
the conversion rate in effect immediately after the open of
business on such ex-dividend date; |
|
|
OS0 = |
the number of shares of our common stock outstanding
immediately prior to the open of business on such ex-dividend
date; |
|
|
X = |
the total number of shares of our common stock issuable
pursuant to such rights, options or warrants; and |
|
|
Y = |
the number of shares of our common stock equal to the aggregate
price payable to exercise such rights, options or warrants,
divided by the average of the last reported sale prices of
our common stock over the 10 consecutive trading day period ending
on, and including, the trading day immediately preceding the date
of announcement of the issuance of such rights, options or
warrants. |
Any increase made under this clause (2) will be made successively
whenever any such rights, options or warrants are issued and shall
become effective immediately after the open of business on the
ex-dividend date for such issuance. To the extent that shares of
common stock are not delivered after the expiration of such rights,
options or warrants, the conversion rate shall be decreased to the
conversion rate that would then be in effect had the increase with
respect to the issuance of such rights, options or warrants been
made on the basis of delivery of only the number of shares of
common stock actually delivered. If such rights, options or
warrants are not so issued, the conversion rate shall be decreased
to the conversion rate that would then be in effect if such
ex-dividend date for such issuance had not occurred.
For the purpose of this clause (2), in determining whether any
rights, options or warrants entitle the holders to subscribe for or
purchase shares of the common stock at less than such average of
the last reported sale prices for the 10 consecutive trading day
period ending on, and including, the trading day immediately
preceding the date of announcement of such issuance, and in
determining the aggregate offering price of such shares of common
stock, there shall be taken into account any consideration received
by us for such rights, options or warrants and any amount payable
on exercise or conversion thereof, the value of such consideration,
if other than cash, to be determined by us.
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(3) |
If we distribute shares of our capital stock, evidences of our
indebtedness, other assets or property of ours or rights, options
or warrants to acquire our capital stock or other securities, to
all or substantially all holders of our common stock,
excluding: |
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● |
dividends, distributions or issuances as to which an adjustment
was effected pursuant to clause (1) or (2) above; |
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except as otherwise described below, rights issued pursuant to
any stockholder rights plan of ours then in effect; |
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|
● |
distributions of reference property issued in exchange for, or
upon conversion of, our common stock as described under
“—Recapitalizations, Reclassifications and Changes of Our Common
Stock”; |
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dividends or distributions paid exclusively in cash as to which
the provisions set forth in clause (4) below shall apply; and |
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● |
spin-offs as to which the provisions set forth below in this
clause (3) shall apply; |
then the conversion rate will be increased based on the following
formula:

where,
CR0 = |
the conversion rate in effect immediately prior to the open of
business on the ex-dividend date for such distribution; |
|
|
CR1 = |
the conversion rate in effect immediately after the open of
business on such ex-dividend date; |
|
|
SP0 = |
the average of the last reported sale prices of our common
stock over the 10 consecutive trading day period ending on, and
including, the trading day immediately preceding the ex-dividend
date for such distribution; and |
|
|
FMV = |
the fair market value (as determined by us) of the shares of
capital stock, evidences of indebtedness, assets, property, rights,
options or warrants distributed with respect to each outstanding
share of our common stock on the ex-dividend date for such
distribution. |
Any increase made under the portion of this clause (3) above will
become effective immediately after the open of business on the
ex-dividend date for such distribution. If such distribution is not
so paid or made, the conversion rate shall be decreased to be the
conversion rate that would then be in effect if such distribution
had not been declared. Notwithstanding the foregoing, if “FMV” (as
defined above) is equal to or greater than “SP0” (as
defined above), in lieu of the foregoing increase, each holder of a
note shall receive, in respect of each $1,000 capitalized principal
amount thereof, at the same time and upon the same terms as holders
of our common stock, the amount and kind of our capital stock,
evidences of our indebtedness, other assets or property of ours or
rights, options or warrants to acquire our capital stock or other
securities that such holder would have received if such holder
owned a number of shares of common stock equal to the conversion
rate in effect on the ex-dividend date for the distribution.
With respect to an adjustment pursuant to this clause (3) where
there has been a payment of a dividend or other distribution on our
common stock of shares of capital stock of any class or series, or
similar equity interest, of or relating to a subsidiary or other
business unit, that are, or, when issued, will be, listed or
admitted for trading on a U.S. national securities exchange, which
we refer to as a “spin-off,” the conversion rate will be increased
based on the following formula:
 |
CR0 = |
the conversion rate in effect immediately prior to the end of
the valuation period (as defined below); |
|
|
CR1 = |
the conversion rate in effect immediately after the end of the
valuation period; |
|
|
FMV0 = |
the average of the last reported sale prices of the capital
stock or similar equity interest distributed to holders of our
common stock applicable to one share of our common stock
(determined by reference to the definition of last reported sale
price set forth under “—Optional Redemption” as if references
therein to our common stock were to such capital stock or similar
equity interest) over the first 10 consecutive trading day period
after, and including, the ex-dividend date of the spin-off (the
“valuation period”); and |
|
|
MP0 = |
the average of the last reported sale prices of our common
stock over the valuation period. |
The increase to the conversion rate under the preceding paragraph
will occur at the close of business on the last trading day of the
valuation period; provided that (x) in respect of any
conversion of notes for which physical settlement is applicable, if
the relevant conversion date occurs during the valuation period,
the reference to “10” in the preceding paragraph shall be deemed
replaced with such lesser number of trading days as have elapsed
from, and including, the ex-dividend date for such spin-off to, and
including, such conversion date in determining the conversion rate
and (y) in respect of any conversion of notes for which cash
settlement or combination settlement is applicable, for any trading
day that falls within the relevant observation period for such
conversion and within the valuation period, the reference to “10”
in the preceding paragraph shall be deemed replaced with such
lesser number of trading days as have elapsed from, and including,
the ex-dividend date for such spin-off to, and including, such
trading day in determining the conversion rate as of such trading
day.
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(4) |
If any cash dividend or distribution is made to all or
substantially all holders of our common stock, the conversion rate
will be adjusted based on the following formula: |
where,
CR0 = |
the conversion rate in effect immediately prior to the open of
business on the ex-dividend date for such dividend or
distribution; |
|
|
CR1 = |
the conversion rate in effect immediately after the open of
business on the ex-dividend date for such dividend or
distribution; |
|
|
SP0 = |
the last reported sale price of our common stock on the trading
day immediately preceding the ex-dividend date for such dividend or
distribution; and |
|
|
C = |
the amount in cash per share we distribute to all or
substantially all holders of our common stock. |
Any increase made under this clause (4) shall become effective
immediately after the open of business on the ex-dividend date for
such dividend or distribution. If such dividend or distribution is
not so paid, the conversion rate shall be decreased, effective as
of the date our board of directors or a committee thereof
determines not to make or pay such dividend or distribution, to be
the conversion rate that would then be in effect if such dividend
or distribution had not been declared. Notwithstanding the
foregoing, if “C” (as defined above) is equal to or greater than
“SP0” (as defined above), in lieu of the foregoing
increase, each holder of a note shall receive, for each $1,000
capitalized principal amount of notes, at the same time and upon
the same terms as holders of shares of our common stock, the amount
of cash that such holder would have received if such holder owned a
number of shares of our common stock equal to the conversion rate
on the ex-dividend date for such cash dividend or distribution.
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(5) |
If we or any of our subsidiaries make a payment in respect of a
tender or exchange offer for our common stock that is subject to
the then applicable tender offer rules under the Exchange Act
(other than any odd-lot tender offer), to the extent that the cash
and value of any other consideration included in the payment per
share of common stock exceeds the average of the last reported sale
prices of our common stock over the 10 consecutive trading day
period commencing on, and including, the trading day next
succeeding the last date on which tenders or exchanges may be made
pursuant to such tender or exchange offer, the conversion rate will
be increased based on the following formula: |
|
CR0 = |
the conversion rate in effect immediately prior to the close of
business on the 10th trading day immediately following, and
including, the trading day next succeeding the date such tender or
exchange offer expires; |
|
|
CR1 = |
the conversion rate in effect immediately after the close of
business on the 10th trading day immediately following, and
including, the trading day next succeeding the date such tender or
exchange offer expires; |
|
|
AC = |
the aggregate value of all cash and any other consideration (as
determined by us) paid or payable for shares purchased in such
tender or exchange offer; |
|
|
OS0 = |
the number of shares of our common stock outstanding
immediately prior to the date such tender or exchange offer expires
(prior to giving effect to the purchase of all shares accepted for
purchase or exchange in such tender or exchange offer); |
|
|
OS1 = |
the number of shares of our common stock outstanding
immediately after the date such tender or exchange offer expires
(after giving effect to the purchase of all shares accepted for
purchase or exchange in such tender or exchange offer); and |
|
|
SP1 = |
the average of the last reported sale prices of our common
stock over the 10 consecutive trading day period commencing on, and
including, the trading day next succeeding the date such tender or
exchange offer expires. |
The increase to the conversion rate under the preceding paragraph
will occur at the close of business on the 10th trading day
immediately following, and including, the trading day next
succeeding the date such tender or exchange offer expires;
provided that (x) in respect of any conversion of notes for
which physical settlement is applicable, if the relevant conversion
date occurs during the 10 trading days immediately following, and
including, the trading day next succeeding the expiration date of
any tender or exchange offer, references to “10” or “10th” in the
preceding paragraph shall be deemed replaced with such lesser
number of trading days as have elapsed from, and including, the
trading day next succeeding the expiration date of such tender or
exchange offer to, and including, such conversion date in
determining the conversion rate and (y) in respect of any
conversion of notes for which cash settlement or combination
settlement is applicable, for any trading day that falls within the
relevant observation period for such conversion and within the 10
trading days immediately following, and including, the trading day
next succeeding the expiration date of any tender or exchange
offer, references to “10” or “10th” in the preceding paragraph
shall be deemed replaced with such lesser number of trading days as
have elapsed from, and including, the trading day next succeeding
the expiration date of such tender or exchange offer to, and
including, such trading day in determining the conversion rate as
of such trading day.
If we are or one of our subsidiaries is obligated to purchase
shares of our common stock pursuant to any such tender or exchange
offer described in clause (5) but we are, or such subsidiary is,
permanently prevented by applicable law from effecting any such
purchase or all such purchases are rescinded, the conversion rate
will be readjusted to be the conversion rate that would then be in
effect if such tender or exchange offer had not been made or had
been made only in respect of the purchases that have been made.
Notwithstanding the foregoing, if a conversion rate adjustment
becomes effective on any ex-dividend date as described above, and a
holder that has converted its notes on or after such ex-dividend
date and on or prior to the related record date would be treated as
the record holder of shares of our common stock as of the related
conversion date as described under “—Settlement upon Conversion”
based on an adjusted conversion rate for such ex-dividend date,
then, notwithstanding the foregoing conversion rate adjustment
provisions, the conversion rate adjustment relating to such
ex-dividend date will not be made for such converting holder.
Instead, such holder will be treated as if such holder were the
record owner of the shares of our common stock on an unadjusted
basis and participate in the related dividend, distribution or
other event giving rise to such adjustment.
Except as stated herein, we will not adjust the conversion rate for
the issuance of shares of our common stock or any securities
convertible into or exchangeable for shares of our common stock or
the right to purchase shares of our common stock or such
convertible or exchangeable securities.
As used in this section, “ex-dividend date” means the first date on
which the shares of our common stock trade on the applicable
exchange or in the applicable market, regular way, without the
right to receive the issuance, dividend or distribution in
question, from us or, if applicable, from the seller of our common
stock on such exchange or market (in the form of due bills or
otherwise) as determined by such exchange or market, and “effective
date” means the first date on which the shares of our common stock
trade on the applicable exchange or in the applicable market,
regular way, reflecting the relevant share split or share
combination, as applicable.
As used in this section, “record date” means, with respect to any
dividend, distribution or other transaction or event in which the
holders of our common stock (or other applicable security) have the
right to receive any cash, securities or other property or in which
our common stock (or such other security) is exchanged for or
converted into any combination of cash, securities or other
property, the date fixed for determination of holders of our common
stock (or such other security) entitled to receive such cash,
securities or other property (whether such date is fixed by our
board of directors or a duly authorized committee thereof, statute,
contract or otherwise).
We are permitted to increase the conversion rate of the notes by
any amount for a period of at least 20 business days if we
determine that such increase would be in our best interest. We may
also (but are not required to) increase the conversion rate to
avoid or diminish income tax to holders of our common stock or
rights to purchase shares of our common stock in connection with a
dividend or distribution of shares (or rights to acquire shares) or
similar event.
A holder may, in some circumstances, including a distribution of
cash dividends to holders of our shares of common stock, be deemed
to have received a distribution subject to U.S. federal income tax
as a result of an adjustment or the nonoccurrence of an adjustment
to the conversion rate. For a discussion of the U.S. federal income
tax treatment of an adjustment to the conversion rate, see “Certain
U.S. Federal Income Tax Considerations.”
If we have a rights plan in effect upon conversion of the notes
into common stock, you will receive, in addition to any shares of
common stock received in connection with such conversion, the
rights under the rights plan. However, if, prior to any conversion,
the rights have separated from the shares of common stock in
accordance with the provisions of the applicable rights plan, the
conversion rate will be adjusted at the time of separation as if we
distributed to all or substantially all holders of our common
stock, shares of our capital stock, evidences of indebtedness,
assets, property, rights, options or warrants as described in
clause (3) above, subject to readjustment in the event of the
expiration, termination or redemption of such rights.
Notwithstanding any of the foregoing, the conversion rate will not
be adjusted:
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● |
upon the issuance of any shares of our
common stock pursuant to any present or future plan providing for
the reinvestment of dividends or interest payable on our securities
and the investment of additional optional amounts in shares of our
common stock under any plan; |
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● |
upon the issuance of any shares of our
common stock or options or rights to purchase those shares pursuant
to any present or future employee, director or consultant benefit
or incentive plan or program of or assumed by us or any of our
subsidiaries; |
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● |
upon the issuance of any shares of our
common stock pursuant to any option, warrant, right or exercisable,
exchangeable or convertible security not described in the preceding
bullet and outstanding as of the date the notes were first
issued; |
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● |
for a third-party tender offer by any
party other than a tender offer by one or more of our subsidiaries
as described in clause (5) above; |
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● |
upon the repurchase of any shares of
our common stock pursuant to an open market share purchase program
or other buy-back transaction, including structured or derivative
transactions such as accelerated share repurchase transactions or
similar forward derivatives, or other buy-back transaction, that is
not a tender offer or exchange offer of the kind described under
clause (5) above; |
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● |
solely for a change in the par value
of the common stock; or |
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● |
for accrued and unpaid interest, if
any. |
Adjustments to the conversion rate will be calculated to the
nearest 1/10,000th of a share.
If an adjustment to the conversion rate otherwise required by the
provisions described above would result in a change of less than 1%
to the conversion rate, then, notwithstanding the foregoing, we
may, at our election, defer and carry forward such adjustment,
except that all such deferred adjustments must be given effect
immediately upon the earliest to occur of the following: (i) when
all such deferred adjustments would result in an aggregate change
of at least 1% to the conversion rate; (ii) on the conversion date
for any notes (in the case of physical settlement); (iii) on each
trading day of any observation period related to any conversion of
notes (in the case of cash settlement or combination settlement);
(iv) the cut-off date; (v) on any date on which we deliver a notice
of redemption; and (vi) on the effective date of any fundamental
change, in each case, unless the adjustment has already been
made.
Recapitalizations, Reclassifications and Changes of Our
Common Stock
In the case of:
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any recapitalization, reclassification
or change of our common stock (other than changes resulting from a
subdivision or combination), |
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any consolidation, merger or
combination involving us, |
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any sale, lease or other transfer to a
third party of the consolidated assets of ours and our subsidiaries
substantially as an entirety, or |
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any statutory share exchange, |
in each case, as a result of which our common stock would be
converted into, or exchanged for, stock, other securities, other
property or assets (including cash or any combination thereof),
then, at and after the effective time of the transaction, the right
to convert each $1,000 capitalized principal amount of notes will
be changed into a right to convert such capitalized principal
amount of notes into the kind and amount of shares of stock, other
securities or other property or assets (including cash or any
combination thereof) that a holder of a number of shares of common
stock equal to the conversion rate immediately prior to such
transaction would have owned or been entitled to receive (the
“reference property”) upon such transaction. However, at and after
the effective time of the transaction, (i) we will continue to have
the right to determine the form of consideration to be paid or
delivered, as the case may be, upon conversion of notes, as set
forth under “—Settlement upon Conversion” and (ii)(x) any amount
payable in cash upon conversion of the notes as set forth under
“—Settlement upon Conversion” will continue to be payable in cash,
(y) any shares of our common stock that we would have been required
to deliver upon conversion of the notes as set forth under
“—Settlement upon Conversion” will instead be deliverable in the
amount and type of reference property that a holder of that number
of shares of our common stock would have received in such
transaction and (z) the daily VWAP will be calculated based on the
value of a unit of reference property that a holder of one share of
our common stock would have received in such transaction. If the
transaction causes our common stock to be converted into, or
exchanged for, the right to receive more than a single type of
consideration (determined based in part upon any form of
stockholder election), the reference property into which the notes
will be convertible will be deemed to be the weighted average of
the types and amounts of consideration actually received by the
holders of our common stock. If the holders of our common stock
receive only cash in such transaction, then for all conversions
that occur after the effective date of such transaction (i) the
consideration due upon conversion of each $1,000 capitalized
principal amount of notes shall be solely cash in an amount equal
to the conversion rate in effect on the conversion date,
multiplied by the price paid per share of common stock in
such transaction and (ii) we will satisfy our conversion obligation
by paying cash to converting holders on or prior to the tenth
business day immediately following the conversion date. We will
notify holders, the trustee and the conversion agent (if other than
the trustee) of the weighted average as soon as practicable after
such determination is made.
We will not become a party to any such transaction unless its terms
are consistent with the foregoing.
Adjustments of Prices
Whenever any provision of the indenture requires us to calculate
the last reported sale prices, the daily VWAPs, the daily
conversion values or the daily settlement amounts over a span of
multiple days (including, without limitation, an observation
period), we will make any adjustments to each that we reasonably
determine to be appropriate to account for any adjustment to the
conversion rate that becomes effective, or any event requiring an
adjustment to the conversion rate where the record date,
ex-dividend date, effective date or expiration date of the event
occurs, at any time during the period when the last reported sale
prices, the daily VWAPs, the daily conversion values or the daily
settlement amounts are to be calculated.
Fundamental Change Permits Holders to Require Us to Repurchase
Notes
If a “fundamental change” (as defined below in this section) occurs
at any time, holders will have the right, at their option, to
require us to repurchase for cash all of their notes, or any
portion of the principal thereof that is equal to $1,000 or a
multiple of $1.00 in excess thereof. The fundamental change
repurchase date will be a date specified by us that is not less
than 20 calendar days or more than 35 business days following the
date of our fundamental change notice as described below.
The fundamental change repurchase price we are required to pay will
be equal to 100% of the capitalized principal amount of the notes
to be repurchased, plus any accrued interest thereon that
has not been paid or capitalized to, but excluding, the fundamental
change repurchase date (unless the fundamental change repurchase
date falls after a regular record date but on or prior to the
interest payment date to which such regular record date relates, in
which case we will instead pay in cash at the cash interest rate
the full amount of accrued and unpaid interest to the holder of
record on such regular record date (notwithstanding any prior
election (or deemed election) by us to pay such interest as PIK
interest), and the fundamental change repurchase price will be
equal to 100% of the capitalized principal amount of the notes to
be repurchased).
A “fundamental change” will be deemed to have occurred at the time
after the notes are originally issued if any of the following
occurs:
(1) other than as set forth in clause (2) below, a “person” or
“group” within the meaning of Section 13(d) of the Exchange Act,
other than us, our direct or indirect wholly owned subsidiaries,
our and their employee benefit plans and any holder or an affiliate
thereof, files a Schedule TO (or any successor schedule, form or
report) or any schedule, form or report under the Exchange Act that
discloses that such person or group has become the direct or
indirect “beneficial owner,” as defined in Rule 13d-3 under the
Exchange Act, of our common stock representing more than 50% of the
voting power of our common stock;
(2) the consummation of (A) any recapitalization, reclassification
or change of our common stock (other than a change to par value or
changes resulting from a subdivision or combination) as a result of
which our common stock would be converted into, or exchanged for,
stock, other securities, other property or assets; (B) any share
exchange, consolidation or merger of us pursuant to which our
common stock will be converted into cash, securities or other
property or assets; or (C) any sale, lease or other transfer in one
transaction or a series of transactions of all or substantially all
of the consolidated assets of us and our subsidiaries, taken as a
whole, to any person other than one or more of our direct or
indirect wholly owned subsidiaries; provided,
however, that a transaction described in clause (A) or (B)
in which the holders of all classes of our common equity
immediately prior to such transaction own, directly or indirectly,
more than 50% of all classes of common equity of the continuing or
surviving person or transferee or the parent thereof immediately
after such transaction in substantially the same proportions as
such ownership immediately prior to such transaction shall not be a
fundamental change pursuant to this clause (2);
(3) our stockholders approve any plan or proposal for the
liquidation or dissolution of us; or
(4) our common stock ceases to be listed or quoted on any of The
New York Stock Exchange, The Nasdaq Global Market, The Nasdaq
Global Select Market or The Nasdaq Capital Market (or any of their
respective successors).
If any transaction in which our common stock is replaced by the
common stock or other common equity of another entity occurs,
following any related fundamental change repurchase date (or, in
the case of a transaction that would have been a fundamental change
but for the proviso in clause (2) above, following the
effective date of such transaction), references to us in the
definition of “fundamental change” above shall instead be
references to such other entity.
On or before the 20th business day after the occurrence
of a fundamental change, we will provide to all holders of the
notes and the trustee and paying agent a notice of the occurrence
of the fundamental change and of the resulting repurchase right.
Such notice shall state, among other things:
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the events causing a fundamental
change; |
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the effective date of the fundamental
change; |
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the last date on which a holder may
exercise the repurchase right; |
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the fundamental change repurchase
price; |
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the fundamental change repurchase
date; |
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the name and address of the paying
agent and the conversion agent, if applicable; |
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if applicable, the conversion rate and
any adjustments to the conversion rate; |
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● |
that the notes with respect to which a
fundamental change repurchase notice has been delivered by a holder
may be converted only if the holder withdraws the fundamental
change repurchase notice in accordance with the terms of the
indenture; and |
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the procedures that holders must
follow to require us to repurchase their notes. |
Notwithstanding the foregoing, we will not be required to
repurchase, or to make an offer to repurchase, the notes upon a
fundamental change if a third party makes such an offer in the same
manner, at the same time and otherwise in compliance with the
requirements for an offer made by us as set forth above and such
third party purchases all notes properly surrendered and not
validly withdrawn under its offer in the same manner, at the same
time and otherwise in compliance with the requirements for an offer
made by us as set forth above.
To exercise the fundamental change repurchase right, you must
deliver, on or before the business day immediately preceding the
fundamental change repurchase date, the notes to be repurchased,
duly endorsed for transfer, together with a written repurchase
notice, to the paying agent. Each repurchase notice must state:
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if certificated, the certificate
numbers of your notes to be delivered for repurchase; |
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● |
the portion of the principal amount of
notes to be repurchased, which must be $1,000 or any integral
multiple of $1.00 in excess thereof; and |
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● |
that the notes are to be repurchased
by us pursuant to the applicable provisions of the notes and the
indenture. |
If the notes are not in certificated form, such repurchase notice
must comply with appropriate DTC procedures.
Holders may withdraw any repurchase notice (in whole or in part) by
a written notice of withdrawal delivered to the paying agent prior
to the close of business on the business day immediately preceding
the fundamental change repurchase date. The notice of withdrawal
shall state:
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● |
the principal amount of the
withdrawn notes; |
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● |
if certificated notes have been
issued, the certificate numbers of the withdrawn notes; and |
|
● |
the principal amount, if any, which
remains subject to the repurchase notice. |
If the notes are not in certificated form, such notice of
withdrawal must comply with appropriate DTC procedures.
We will be required to repurchase the notes on the fundamental
change repurchase date. Holders who have exercised the repurchase
right will receive payment of the fundamental change repurchase
price on the later of (i) the fundamental change repurchase date
and (ii) the time of book-entry transfer or the delivery of the
notes. If the paying agent holds money sufficient to pay the
fundamental change repurchase price of the notes on the fundamental
change repurchase date, then, with respect to the notes that have
been properly surrendered for repurchase and have not been validly
withdrawn:
|
● |
the notes will cease to be outstanding
and interest will cease to accrue (whether or not book-entry
transfer of the notes is made or whether or not the notes are
delivered to the paying agent); and |
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● |
all other rights of the holder will
terminate (other than the right to receive the fundamental change
repurchase price). |
Notwithstanding anything to the contrary in this prospectus, to the
extent that compliance with our obligations to repurchase the notes
upon a fundamental change would result in a violation of any
federal or state securities laws or other applicable laws or
regulations, we will comply with the applicable securities laws and
regulations and will not be deemed to have breached our obligations
with respect to such repurchase by virtue of such conflict. Without
limiting the generality of the foregoing, the fundamental change
repurchase date will be subject to postponement in order to allow
us to comply with applicable law.
No notes may be repurchased on any date at the option of holders
upon a fundamental change if the principal amount of the notes has
been accelerated, and such acceleration has not been rescinded, on
or prior to such date (except in the case of an acceleration
resulting from a default by us in the payment of the fundamental
change repurchase price with respect to such notes).
The repurchase rights of the holders could discourage a potential
acquirer of us. The fundamental change repurchase feature, however,
is not the result of management’s knowledge of any specific effort
to obtain control of us by any means or part of a plan by
management to adopt a series of anti-takeover provisions.
The term fundamental change is limited to specified transactions
and may not include other events that might adversely affect our
financial condition. In addition, the requirement that we offer to
repurchase the notes upon a fundamental change may not protect
holders in the event of a highly leveraged transaction,
reorganization, merger or similar transaction involving us.
The definition of fundamental change includes a phrase relating to
the sale, lease or other transfer of “all or substantially all” of
our consolidated assets. There is no precise, established
definition of the phrase “substantially all” under applicable law.
Accordingly, the ability of a holder of the notes to require us to
repurchase its notes as a result of the sale, lease or other
transfer of less than all of our assets may be uncertain.
If a fundamental change were to occur, we may not have enough funds
to pay the fundamental change repurchase price. Our ability to
repurchase the notes for cash may be limited by restrictions on our
ability to obtain funds for such repurchase through dividends from
our subsidiaries, the terms of our then existing borrowing
arrangements or otherwise. See “Risk Factors—Risks Related to the
Notes—We may not have the ability to raise the funds necessary to
settle conversions of the notes or to repurchase the notes upon a
fundamental change, and our future debt may contain limitations on
our ability to pay cash upon conversion or repurchase of the
notes.” If we fail to repurchase the notes when required following
a fundamental change, we will be in default under the indenture. In
addition, we have, and may in the future incur, other indebtedness
with similar change in control provisions permitting our holders to
accelerate or to require us to repurchase our indebtedness upon the
occurrence of similar events or on some specific dates.
Consolidation, Merger and Sale of Assets
The indenture will provide that we shall not consolidate with or
merge with or into, or sell, convey, transfer or lease all or
substantially all of the properties and assets of us and our
subsidiaries, taken as a whole, to, another person, unless (i) the
resulting, surviving or transferee person either (x) is us or (y)
if not us, is a corporation duly organized and existing under the
laws of the United States of America, any State thereof or the
District of Columbia, and such corporation (if not us) expressly
assumes by supplemental indenture all of our obligations under the
notes and the indenture; and (ii) immediately after giving effect
to such transaction, no default or event of default has occurred
and is continuing under the indenture. Upon any such consolidation,
merger or sale, conveyance, transfer or lease, the resulting,
surviving or transferee person (if not us) shall succeed to, and
may exercise every right and power of, ours under the indenture,
and we shall be discharged from our obligations under the notes and
the indenture except in the case of any such lease.
Although these types of transactions will be permitted under the
indenture, certain of the foregoing transactions could constitute a
fundamental change permitting each holder to require us to
repurchase the notes of such holder as described above.
Events of Default
Each of the following is an event of default with respect to the
notes:
(1) default in any payment of interest on any note when due and
payable and the default continues for a period of 30 days;
(2) default in the payment of principal of any note when due and
payable at its stated maturity, upon optional redemption, upon any
required repurchase, upon declaration of acceleration or
otherwise;
(3) our failure to comply with our obligation to convert the notes
in accordance with the indenture upon exercise of a holder’s
conversion right and such failure continues for a period of five
business days;
(4) our failure to give a fundamental change notice as described
under “—Fundamental Change Permits Holders to Require Us to
Repurchase Notes” when due, and such failure continues for a period
of five business days;
(5) our failure to comply with our obligations under
“—Consolidation, merger and sale of assets”;
(6) our failure for 60 days after written notice from the trustee
or the holders of at least 25% in principal amount of the notes
then outstanding has been received to comply with any of our other
agreements contained in the notes or indenture;
(7) default by us or any of our significant subsidiaries with
respect to any mortgage, agreement or other instrument under which
there may be outstanding, or by which there may be secured or
evidenced, any indebtedness for money borrowed in excess of
$100,000,000 (or its foreign currency equivalent) in the aggregate
of us and/or any such significant subsidiary, whether such
indebtedness now exists or shall hereafter be created
(i) resulting in such indebtedness becoming or being declared
due and payable prior to its stated maturity date or
(ii) constituting a failure to pay the principal of any such
debt when due and payable (after the expiration of all applicable
grace periods) at its stated maturity, upon required repurchase,
upon declaration of acceleration or otherwise, and in the cases of
clauses (i) and (ii), such acceleration shall not have been
rescinded or annulled or such failure to pay or default shall not
have been cured or waived, or such indebtedness is not paid or
discharged, as the case may be, within 30 days after written notice
to us by the trustee or to us and the trustee by holders of at
least 25% in aggregate principal amount of notes then outstanding
in accordance with the terms of the indenture;
(8) certain events of bankruptcy, insolvency, or reorganization of
us; or
(9) one or more final, non-appealable judgments or orders is
rendered against us or any of our significant subsidiaries, which
requires the payment in money by us or any of our significant
subsidiaries, individually or in the aggregate, of an amount (net
of amounts covered by insurance or bonded) in excess of
$50,000,000, and such judgment or judgments have not been
satisfied, stayed, paid, discharged, vacated, bonded, annulled or
rescinded within 60 days after (i) the date on which the right to
appeal thereof has expired if no such appeal has commenced, or (ii)
the date on which all rights to appeal have been extinguished.
“Significant subsidiary” means a subsidiary of ours that meets the
definition of “significant subsidiary” in Article 1, Rule 1-02 of
Regulation S-X under the Exchange Act.
If an event of default occurs and is continuing, the trustee by
notice to us, or the holders of at least 25% in principal amount of
the outstanding notes by notice to us and the trustee, may declare
100% of the capitalized principal amount of and accrued and unpaid
interest, if any, on all the notes to be due and payable. In case
of certain events of bankruptcy, insolvency or reorganization,
involving us, 100% of the capitalized principal amount of and
accrued and unpaid interest on the notes will automatically become
due and payable. Upon such a declaration of acceleration, such
capitalized principal amount and accrued and unpaid interest, if
any, will be due and payable immediately.
If any portion of the amount payable on the notes upon acceleration
is considered by a court to be unearned interest (through the
allocation of the value of the instrument to the embedded warrant
or otherwise), the court could disallow recovery of any such
portion.
The holders of a majority in principal amount of the outstanding
notes may waive all past defaults (except with respect to
nonpayment of principal or interest or with respect to the failure
to deliver the consideration due upon conversion) and rescind any
such acceleration with respect to the notes and its consequences if
(i) rescission would not conflict with any judgment or decree of a
court of competent jurisdiction and (ii) all existing events of
default, other than the nonpayment of the principal of and interest
on the notes that have become due solely by such declaration of
acceleration, have been cured or waived.
Each holder shall have the right to receive payment or delivery, as
the case may be, of:
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the principal (including the redemption price, the repurchase
price on any repurchase date and the fundamental change repurchase
price, if applicable) of; |
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accrued and unpaid interest, if any, on; and |
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the consideration due upon conversion of, |
its notes, on or after the respective due dates expressed or
provided for in the indenture, or to institute suit for the
enforcement of any such payment or delivery, as the case may
be.
If an event of default occurs and is continuing, the trustee will
be under no obligation to exercise any of the rights or powers
under the indenture at the request or direction of any of the
holders unless such holders have offered, and if requested,
provided to the trustee indemnity or security satisfactory to the
trustee against any loss, liability or expense. Except to enforce
the right to receive payment of principal or interest when due, or
the right to receive payment or delivery of the consideration due
upon conversion, no holder may pursue any remedy with respect to
the indenture or the notes unless:
(1) such holder has previously given the trustee notice that an
event of default is continuing;
(2) holders of at least 25% in principal amount of the outstanding
notes have requested the trustee to pursue the remedy;
(3) such holders have offered, and if requested, provided the
trustee security or indemnity satisfactory to the trustee against
any loss, liability or expense;
(4) the trustee has not complied with such request within 60 days
after the receipt of the request and the offer of such security or
indemnity; and
(5) the holders of a majority in principal amount of the
outstanding notes have not given the trustee a direction that, in
the opinion of the trustee, is inconsistent with such request
within such 60-day period.
Subject to certain restrictions, the holders of a majority in
principal amount of the outstanding notes are given the right to
direct the time, method and place of conducting any proceeding for
any remedy available to the trustee or of exercising any trust or
power conferred on the trustee.
The indenture will provide that in the event an event of default
has occurred and is continuing, the trustee will be required in the
exercise of its powers to use the degree of care that a prudent
person would use in the conduct of its own affairs. The trustee,
however, may refuse to follow any direction that conflicts with law
or the indenture or that the trustee determines is unduly
prejudicial to the rights of any other holder or that would involve
the trustee in personal liability (it being understood that the
trustee has no duty to determine whether any such action is
prejudicial to any holder). Prior to taking any action under the
indenture, the trustee will be entitled to indemnification
satisfactory to it against any loss, liability or expense caused by
taking or not taking such action.
The indenture will provide that if a default occurs and is
continuing and is known to the trustee, the trustee must deliver to
each holder notice of the default within the later of 90 days after
it occurs or is known to the trustee. Except in the case of a
default in the payment of principal of or interest on any note or a
default in the payment or delivery of the consideration due upon
conversion, the trustee may withhold notice if and so long as a
committee of trust officers of the trustee in good faith determines
that withholding notice is in the interests of the holders. In
addition, we are required to deliver to the trustee, within 150
days after the end of each fiscal year, a certificate indicating
whether the signers thereof know of any event of default that
occurred during the previous year. We are also required to deliver
to the trustee, within 30 days after the occurrence thereof,
written notice of any events which would constitute certain
defaults, their status and what action we are taking or proposing
to take in respect thereof.
Payments of the redemption price, the fundamental change repurchase
price, principal and interest that are not made when due will
accrue interest per annum at the then-applicable cash interest rate
from the required payment date.
Modification and Amendment
Subject to certain exceptions, the indenture or the notes may be
amended with the consent of the holders of at least a majority in
principal amount of the notes then outstanding (including without
limitation, consents obtained in connection with a repurchase of,
or tender or exchange offer for, notes) and, subject to certain
exceptions, any past default or compliance with any provisions may
be waived with the consent of the holders of a majority in
principal amount of the notes then outstanding (including, without
limitation, consents obtained in connection with a repurchase of,
or tender or exchange offer for, notes). However, without the
consent of each holder of an outstanding note affected, no
amendment may, among other things:
(1) reduce the amount of notes whose holders must consent to any
amendment, supplement, waiver or other modification;
(2) reduce the rate of or extend the stated time for payment of
interest on any note;
(3) reduce the principal of or extend the stated maturity of any
note;
(4) except as expressly required by the indenture, make any change
that adversely affects the conversion rights of any notes;
(5) reduce the redemption price or the fundamental change
repurchase price of any note or change the times at which, or the
circumstances under which, we will redeem the notes or repurchase
the notes upon a fundamental change;
(6) make any note payable in money, or at a place of payment, other
than that stated in the note;
(7) change the ranking of the notes; or
(8) make any direct or indirect change in the amendment provisions
that require each holder’s consent or in the waiver provisions.
Without the consent of any holder, we and the trustee may amend the
indenture to:
(1) cure any mistake, ambiguity, omission, defect or
inconsistency;
(2) provide for the assumption by a successor corporation of our
obligations under the notes and the indenture;
(3) add guarantees with respect to the notes;
(4) secure the notes;
(5) add to our covenants or events of default for the benefit of
the holders or surrender any right or power conferred upon us;
(6) make any change that does not, individually or in the aggregate
with all other such changes, materially adversely affect the rights
of any holder;
(7) in connection with any transaction described under “—Conversion
Rights—Recapitalizations, Reclassifications and Changes of Our
Common Stock” above, provide that the notes are convertible into
reference property, subject to the provisions described under
“—Conversion Rights—Settlement upon Conversion” above, and make
certain related changes to the terms of the notes to the extent
expressly required by the indenture;
(8) comply with the rules of any applicable securities depositary,
including DTC, so long as such amendment does not adversely affect
the rights of any holder in any material respect;
(9) increase the conversion rate as provided in the indenture;
(10) provide for the acceptance of appointment by a trustee or
successor trustee, security registrar, paying agent or conversion
agent, or to facilitate the administration of the trusts under the
indenture by more than one trustee;
(11) irrevocably elect a settlement method or a specified dollar
amount, or eliminate our right to elect a settlement method;
provided that no such election or elimination will affect
any settlement method theretofore elected (or deemed to be elected)
with respect to any note pursuant to the provisions described above
under the caption “—Conversion Rights”; or
(12) make payments of PIK interest (including to issue additional
notes) or facilitate the same.
Holders do not need to approve the particular form of any proposed
amendment. It will be sufficient if such holders approve the
substance of the proposed amendment. After an amendment under the
indenture becomes effective, we are required to deliver to the
holders a notice briefly describing such amendment. However, the
failure to give such notice to all the holders, or any defect in
the notice, will not impair or affect the validity of the
amendment.
Withholding Taxes
Each holder of a note agrees that, notwithstanding anything herein
to the contrary, we, the paying agent, the conversion agent or the
trustee (an “applicable withholding agent”) shall have the right to
deduct and withhold from any payment or distribution made with
respect to the notes (or the issuance of shares of common stock
upon conversion of the notes) such amounts as are required to be
deducted or withheld with respect to the making of such payment or
distribution (or issuance) under any applicable tax law. In the
case of any withholding obligation that is not accompanied by a
corresponding payment, distribution or issuance, including deemed
dividends or amounts treated as original issue discount for tax
purposes, any such withholding tax may be withheld from subsequent
payments on the notes (or the issuance of shares of common stock
upon conversion of the notes, or dividends or any other amounts
payable with respect to such shares). If an applicable withholding
agent is required to remit any withholding tax payments to the
applicable governmental entity in respect of such an item of income
prior to any such subsequent payment or issuance, the holder shall
promptly upon notice reimburse the applicable withholding agent for
the required withholding tax payment. To the extent that any
amounts are deducted or withheld as described in this “—Withholding
Taxes” Section, such deducted or withheld amounts shall be treated
for all purposes of the indenture as having been paid to the person
in respect of which such deduction or withholding was made. Each
holder, by its acceptance of the notes, agrees to provide to us,
with a copy to the trustee, a fully completed Internal Revenue
Service Form W-9 or W-8 (or applicable successor form), with any
required attachments, as well as any other information determined
by us or the trustee to be reasonably necessary for an applicable
withholding agent to determine its withholding responsibilities
with respect to such holder, (i) prior to, and as a condition to,
becoming a holder under the indenture, (ii) upon reasonable demand
by us or the trustee and (iii) promptly upon learning that any such
tax form previously provided by it has become obsolete or
incorrect.
Discharge
We may satisfy and discharge our obligations under the indenture by
delivering to the securities registrar for cancellation all
outstanding notes or by depositing with the trustee or delivering
to the holders, as applicable, after the notes have become due and
payable, whether at maturity, at any redemption date, at any
fundamental change repurchase date, upon conversion or otherwise,
cash or cash and/or shares of common stock, solely to satisfy
outstanding conversions, as applicable, sufficient to pay all of
the outstanding notes and paying all other sums payable under the
indenture by us. Such discharge is subject to terms contained in
the indenture.
Calculations in Respect of Notes
Except as otherwise provided above, we will be responsible for
making all calculations called for under the notes. These
calculations include, but are not limited to, determinations of the
capitalization amounts with respect to PIK interest, the last
reported sale prices of our common stock, the daily VWAPs, the
daily conversion values, the daily settlement amounts, accrued
interest payable on the notes and the conversion rate of the notes.
We will make all these calculations in good faith and, absent
manifest error, our calculations will be final and binding on
holders of notes. We will provide a schedule of our calculations to
each of the trustee and the conversion agent, and each of the
trustee and the conversion agent is entitled to rely conclusively
upon the accuracy of our calculations without independent
verification. We will forward our calculations to any holder of
notes upon the request of that holder.
Reports
The indenture will provide that any documents or reports that we
are required to file with the SEC pursuant to Section 13 or 15(d)
of the Exchange Act must be filed by us with the trustee within 15
days after the same are required to be filed with the SEC (giving
effect to any grace period provided by Rule 12b-25 under the
Exchange Act, and excluding any such information, documents or
reports, or portions thereof, subject to confidential treatment and
any correspondence with the SEC). Documents filed by us with the
SEC via the EDGAR system will be deemed to be filed with the
trustee as of the time such documents are filed via EDGAR.
Rule 144A Information
At any time we are not subject to Section 13 or 15(d) of the
Exchange Act, we will, so long as any of the notes or any shares of
our common stock issuable upon conversion thereof will, at such
time, constitute “restricted securities” within the meaning of Rule
144(a)(3) under the Securities Act, promptly provide to the trustee
and will, upon written request, provide to any holder, beneficial
owner or prospective purchaser of such notes or any shares of our
common stock issuable upon conversion of such notes the information
required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act to facilitate the resale of such notes or shares of
our common stock pursuant to Rule 144A under the Securities
Act.
Trustee
Wilmington Trust, National Association is the trustee, security
registrar, paying agent and conversion agent. Wilmington Trust,
National Association, in each of its capacities, including without
limitation as trustee, security registrar, paying agent and
conversion agent, assumes no responsibility for the accuracy or
completeness of the information concerning us or our affiliates or
any other party contained in this document or the related documents
or for any failure by us or any other party to disclose events that
may have occurred and may affect the significance or accuracy of
such information.
Governing Law
The indenture provides that it and the notes, and any claim,
controversy or dispute arising under or related to the indenture or
the notes, will be governed by and construed in accordance with the
laws of the State of New York.
Waiver of Jury Trial
The indenture provides that each of us, each holder of the notes by
its acceptance thereof, and the trustee irrevocably waives, to the
fullest extent permitted by applicable law, any and all right to
trial by jury in any legal proceeding arising out of or relating to
the indenture, the notes or the transactions contemplated
thereby.
Book-Entry, Settlement and Clearance
Certificated Notes
The notes were initially issued in physical certificated form.
However, once issued in the form of global notes, notes in
physical, certificated form will be issued and delivered to each
person that DTC identifies as a beneficial owner of the related
notes only if:
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DTC notifies us at any time that it is unwilling or unable to
continue as depositary for the global notes and a successor
depositary is not appointed within 90 days; |
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DTC ceases to be registered as a clearing agency under the
Exchange Act and a successor depositary is not appointed within
90 days; or |
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an event of default with respect to
the notes has occurred and is continuing and such beneficial owner
requests that its notes be issued in physical, certificated
form. |
The Global Notes
The notes may be issued in the form of one or more registered notes
in global form, without interest coupons (the “global notes”). Upon
such issuance, each of the global notes will be deposited with the
trustee as custodian for DTC and registered in the name of Cede
& Co., as nominee of DTC.
Ownership of beneficial interests in a global note will be limited
to persons who have accounts with DTC (“DTC participants”) or
persons who hold interests through DTC participants. We expect that
under procedures established by DTC:
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upon deposit of a global note with
DTC’s custodian, DTC will credit portions of the principal amount
of the global note to the accounts of the DTC participants
designated by the relevant holder(s); and |
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ownership of beneficial interests in a
global note will be shown on, and transfer of ownership of those
interests will be effected only through, records maintained by DTC
(with respect to interests of DTC participants) and the records of
DTC participants (with respect to other owners of beneficial
interests in the global note). |
Beneficial interests in global notes may not be exchanged for notes
in physical, certificated form except in the limited circumstances
described above.
Book-Entry Procedures for the Global Notes
All interests in the global notes will be subject to the operations
and procedures of DTC and, therefore, you must allow for sufficient
time in order to comply with these procedures if you wish to
exercise any of your rights with respect to any global notes. We
provide the following summary of those operations and procedures
solely for the convenience of investors. The operations and
procedures of DTC are controlled by that settlement system and may
be changed at any time. None of we, the trustee or our or its
agents are responsible for those operations or procedures.
DTC has advised us that it is:
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a limited purpose trust company organized under the laws of the
State of New York; |
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a “banking organization” within the meaning of the New York
State Banking Law; |
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a member of the Federal Reserve System; |
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a “clearing corporation” within the meaning of the Uniform
Commercial Code; and |
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a “clearing agency” registered under Section 17A of the
Exchange Act. |
DTC was created to hold securities for its participants and to
facilitate the clearance and settlement of securities transactions
between its participants through electronic book-entry changes to
the accounts of its participants. DTC’s participants include
securities brokers and dealers; banks and trust companies; clearing
corporations and other organizations. Indirect access to DTC’s
system is also available to others such as banks, brokers, dealers
and trust companies; these indirect participants clear through or
maintain a custodial relationship with a DTC participant, either
directly or indirectly. Investors who are not DTC participants may
beneficially own securities held by or on behalf of DTC only
through DTC participants or indirect participants in DTC.
So long as DTC’s nominee is the registered owner of a global note,
that nominee will be considered the sole owner or holder of the
notes represented by that global note for all purposes under the
indenture. Except as provided below, owners of beneficial interests
in a global note:
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will not be entitled to have notes represented by the global
note registered in their names; |
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will not receive or be entitled to receive physical,
certificated notes; and |
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will not be considered the owners or holders of the notes under
the indenture for any purpose, including with respect to the giving
of any direction, instruction or approval to the trustee under the
indenture. |
As a result, each investor who owns a beneficial interest in a
global note must rely on the procedures of DTC to exercise any
rights of a holder of notes under the indenture (and, if the
investor is not a participant or an indirect participant in DTC, on
the procedures of the DTC participant through which the investor
owns its interest).
Payments of principal and interest with respect to the notes
represented by a global note will be made by the trustee to DTC’s
nominee as the registered holder of the global note. Neither we nor
the trustee will have any responsibility or liability for the
payment of amounts to owners of beneficial interests in a global
note, for any aspect of the records relating to or payments made on
account of those interests by DTC, or for maintaining, supervising
or reviewing any records of DTC relating to those interests.
Payments by participants and indirect participants in DTC to the
owners of beneficial interests in a global note will be governed by
standing instructions and customary industry practice and will be
the responsibility of those participants or indirect participants
and DTC.
Transfers between participants in DTC will be effected under DTC’s
procedures and will be settled in same-day funds.
Plan of
Distribution
We are registering (A) the offer and sale from time to time by us
of our common stock, preferred stock and senior debt securities in
one or more offerings of up to $300,000,000 in aggregate offering
price, (B) 7,001,751 shares of common stock issuable by us upon
exercise of outstanding public warrants and (C) the resale from
time to time by certain selling securityholders of up to 39,145,143
shares of common stock, including (i) 4,950,000 shares of common
stock originally issued in connection with the initial public
offering of B. Riley Principal Merger Corp. II, (ii) 325,000 shares
of common stock issuable upon exercise of warrants originally
issued in connection with the initial public offering of B. Riley
Principal Merger Corp. II, (iii) 27,175,613 shares of common stock
issued in connection with the consummation of our business
combination with Eos Energy Storage LLC and the related private
placement, (iv) 80,294 shares of common stock issuable upon
satisfaction of certain vesting terms set forth in previously
issued restricted stock units, (v) 97,877 shares of common stock
that have been or may be issued to certain of the selling
securityholders upon exercise of options granted under the Eos
Energy Enterprises, Inc. Amended and Restated 2012 Equity Incentive
Plan, and a maximum of (vi) 6,516,359 shares of common stock
issuable upon conversion of the notes, (D) the resale from time to
time by certain selling securityholders of up to 325,000 warrants
to purchase shares of common stock and (E) the resale from time to
time by certain selling securityholders of $130,350,642 principal
amount of notes, including $27,450,642 principal amount of notes
issuable as future PIK interest payments on the notes.
We will receive proceeds from the issuance and sale of our common
stock, preferred stock or senior debt securities and from the
exercise of public warrants. We will pay any underwriting discounts
and commissions and expenses incurred by us in connection with the
sale of securities by us.
We
will not receive any of the proceeds from the sale of the
securities by the selling securityholders. The aggregate proceeds
to the selling securityholders will be the purchase price of the
securities less any discounts and commissions borne by the selling
securityholders.
We
will bear all other costs, fees and expenses incurred in effecting
the registration of the securities covered by this prospectus,
including, without limitation, all registration and filing fees,
Nasdaq listing fees and fees and expenses of our counsel and our
independent registered public accountants.
The
securities to be offered and sold by us covered by this prospectus
may be offered and sold from time to time. The securities
beneficially owned by the selling securityholders covered by this
prospectus may be offered and sold from time to time by the selling
securityholders. The term “selling securityholders” includes
donees, pledgees, transferees or other successors in interest
selling securities received after the date of this prospectus from
a selling securityholder as a gift, pledge, partnership
distribution or other transfer. The selling securityholders will
act independently of us in making decisions with respect to the
timing, manner and size of each sale.
Such
sales may be made on one or more exchanges or in the
over-the-counter market or otherwise, at prices and under terms
then prevailing or at prices related to the then current market
price or in negotiated transactions. We and each selling
securityholder reserves the right to accept and, together with its
respective agents, to reject, any proposed purchase of securities
to be made directly or through agents. We, the selling
securityholders and any of their permitted transferees may sell
their securities offered by this prospectus on any stock exchange,
market or trading facility on which the securities are traded or in
private transactions. If underwriters are used in the sale, such
underwriters will acquire the shares for their own account. These
sales may be at a fixed price or varying prices, which may be
changed, or at market prices prevailing at the time of sale, at
prices relating to prevailing market prices or at negotiated
prices. The securities may be offered to the public through
underwriting syndicates represented by managing underwriters or by
underwriters without a syndicate. The obligations of the
underwriters to purchase the securities will be subject to certain
conditions. The underwriters will be obligated to purchase all the
securities offered if any of the securities are
purchased.
We
or, subject to the limitations set forth in any applicable
registration rights agreement, the selling securityholders may use
any one or more of the following methods when selling the
securities offered by this prospectus:
|
● |
purchases
by a broker-dealer as principal and resale by such broker-dealer
for its own account pursuant to this prospectus; |
|
● |
ordinary
brokerage transactions and transactions in which the broker
solicits purchasers; |
|
● |
block
trades in which the broker-dealer so engaged will attempt to sell
the securities as agent but may position and resell a portion of
the block as principal to facilitate the transaction; |
|
● |
an
over-the-counter distribution in accordance with the rules of the
Nasdaq; |
|
● |
through
trading plans entered into by a selling securityholder pursuant to
Rule 10b5-1 under the Exchange Act that are in place at the time of
an offering pursuant to this prospectus and any applicable
prospectus supplement hereto that provide for periodic sales of
their securities on the basis of parameters described in such
trading plans; |
|
● |
to or
through underwriters or broker-dealers; |
|
● |
in
“at the market” offerings, as defined in Rule 415 under the
Securities Act, at negotiated prices; |
|
● |
at
prices prevailing at the time of sale or at prices related to such
prevailing market prices, including sales made directly on a
national securities exchange or sales made through a market maker
other than on an exchange or other similar offerings through sales
agents; |
|
● |
directly
to purchasers, including through a specific bidding, auction or
other process or in privately negotiated transactions; |
|
● |
in
options transactions; |
|
● |
through
a combination of any of the above methods of sale; or |
|
● |
any
other method permitted pursuant to applicable law. |
There
can be no assurance that we or the selling securityholders will
sell all or any of the securities offered by this prospectus. In
addition, we and the selling securityholders may also sell
securities under Rule 144 under the Securities Act, if available,
or in other transactions exempt from registration, rather than
under this prospectus. We and the selling securityholders, as
applicable, have the sole and absolute discretion not to accept any
purchase offer or make any sale of securities if we or they deem
the purchase price to be unsatisfactory at any particular
time.
The
selling securityholders also may transfer the securities in other
circumstances, in which case the transferees, pledgees or other
successors-in-interest will be the selling beneficial owners for
purposes of this prospectus. Upon being notified by a selling
securityholder that a donee, pledgee, transferee, other
successor-in-interest intends to sell our securities, we will, to
the extent required, promptly file a supplement to this prospectus
to name specifically such person as a selling
securityholder.
With
respect to a particular offering of the securities by us or of
securities held by the selling securityholders, to the extent
required, an accompanying prospectus supplement or, if appropriate,
a post-effective amendment to the registration statement of which
this prospectus is part, will be prepared and will set forth the
following information:
|
● |
the
specific securities to be offered and sold; |
|
● |
the
names of the selling securityholders; |
|
● |
the
respective purchase prices and public offering prices, the proceeds
to be received from the sale, if any, and other material terms of
the offering; |
|
● |
settlement
of short sales entered into after the date of this
prospectus; |
|
● |
the
names of any participating agents, broker-dealers or underwriters;
and |
|
● |
any
applicable commissions, discounts, concessions and other items
constituting compensation from us. |
In
connection with distributions of the securities or otherwise, the
selling securityholders may enter into hedging transactions with
broker-dealers or other financial institutions. In connection with
such transactions, broker-dealers or other financial institutions
may engage in short sales of the securities in the course of
hedging the positions they assume with selling securityholders. The
selling securityholders may also sell the securities short and
redeliver the securities to close out such short positions. The
selling securityholders may also enter into option or other
transactions with broker-dealers or other financial institutions
which require the delivery to such broker-dealer or other financial
institution of securities offered by this prospectus, which
securities such broker-dealer or other financial institution may
resell pursuant to this prospectus (as supplemented or amended to
reflect such transaction). The selling securityholders may also
pledge securities to a broker-dealer or other financial
institution, and, upon a default, such broker-dealer or other
financial institution, may effect sales of the pledged securities
pursuant to this prospectus (as supplemented or amended to reflect
such transaction).
In
order to facilitate the offering of the securities, any
underwriters or agents, as the case may be, involved in the
offering of such securities may engage in transactions that
stabilize, maintain or otherwise affect the price of our
securities. Specifically, the underwriters or agents, as the case
may be, may overallot in connection with the offering, creating a
short position in our securities for their own account. In
addition, to cover overallotments or to stabilize the price of our
securities, the underwriters or agents, as the case may be, may bid
for, and purchase, such securities in the open market. Finally, in
any offering of securities through a syndicate of underwriters, the
underwriting syndicate may reclaim selling concessions allotted to
an underwriter or a broker-dealer for distributing such securities
in the offering if the syndicate repurchases previously distributed
securities in transactions to cover syndicate short positions, in
stabilization transactions or otherwise. Any of these activities
may stabilize or maintain the market price of the securities above
independent market levels. The underwriters or agents, as the case
may be, are not required to engage in these activities, and may end
any of these activities at any time.
We
and the selling securityholders may solicit offers to purchase the
securities directly from, and may sell such securities directly to,
institutional investors or others. In this case, no underwriters or
agents would be involved. The terms of any of those sales,
including the terms of any bidding or auction process, if utilized,
will be described in the applicable prospectus
supplement.
It is
possible that one or more underwriters may make a market in our
securities, but such underwriters will not be obligated to do so
and may discontinue any market making at any time without notice.
We cannot give any assurance as to the liquidity of the trading
market for our securities. Our common stock and warrants to
purchase common stock are listed on the Nasdaq under the symbols
“EOSE” and “EOSEW,” respectively.
We
and the selling securityholders may authorize underwriters,
broker-dealers or agents to solicit offers by certain purchasers to
purchase the securities at the public offering price set forth in
the prospectus supplement pursuant to delayed delivery contracts
providing for payment and delivery on a specified date in the
future. The contracts will be subject only to those conditions set
forth in the prospectus supplement, and the prospectus supplement
will set forth any commissions we or the selling securityholders
pay for solicitation of these contracts.
A
selling securityholder may enter into derivative transactions with
third parties, or sell securities not covered by this prospectus to
third parties in privately negotiated transactions. If the
applicable prospectus supplement indicates, in connection with
those derivatives, the third parties may sell securities covered by
this prospectus and the applicable prospectus supplement, including
in short sale transactions. If so, the third party may use
securities pledged by any selling securityholder or borrowed from
any selling securityholder or others to settle those sales or to
close out any related open borrowings of stock, and may use
securities received from any selling securityholder in settlement
of those derivatives to close out any related open borrowings of
stock. The third party in such sale transactions will be an
underwriter and will be identified in the applicable prospectus
supplement (or a post-effective amendment). In addition, any
selling securityholder may otherwise loan or pledge securities to a
financial institution or other third party that in turn may sell
the securities short using this prospectus. Such financial
institution or other third party may transfer its economic short
position to investors in our securities or in connection with a
concurrent offering of other securities.
In
effecting sales, broker-dealers or agents engaged by us or the
selling securityholders may arrange for other broker-dealers to
participate. Broker-dealers or agents may receive commissions,
discounts or concessions from us or the selling securityholders in
amounts to be negotiated immediately prior to the sale.
If at
the time of any offering made under this prospectus a member of
FINRA participating in the offering has a “conflict of interest” as
defined in FINRA Rule 5121 (“Rule 5121”), that offering will be
conducted in accordance with the relevant provisions of Rule
5121.
Underwriters,
broker-dealers or agents may facilitate the marketing of an
offering online directly or through one of their affiliates. In
those cases, prospective investors may view offering terms and a
prospectus online and, depending upon the particular underwriter,
broker-dealer or agent, place orders online or through their
financial advisors.
In
offering the securities covered by this prospectus, we, the selling
securityholders and any underwriters, broker-dealers or agents who
execute sales for the selling securityholders may be deemed to be
“underwriters” within the meaning of the Securities Act in
connection with such sales. Any discounts, commissions, concessions
or profit they earn on any resale of those securities may be
underwriting discounts and commissions under the Securities
Act.
The
underwriters, broker-dealers and agents may engage in transactions
with us, or perform services for us, in the ordinary course of
business.
In
order to comply with the securities laws of certain states, if
applicable, the securities must be sold in such jurisdictions only
through registered or licensed brokers or dealers. In addition, in
certain states the securities may not be sold unless they have been
registered or qualified for sale in the applicable state or an
exemption from the registration or qualification requirement is
available and is complied with.
We
have agreed to indemnify the selling securityholders against
certain liabilities, including certain liabilities under the
Securities Act, the Exchange Act or other federal or state law.
Agents, broker-dealers and underwriters may be entitled to
indemnification by us and the selling securityholders against
certain civil liabilities, including liabilities under the
Securities Act, or to contribution with respect to payments which
the agents, broker-dealers or underwriters may be required to make
in respect thereof.
Selling
Securityholders
This prospectus also relates to the offer and resale from time to
time by the selling securityholders named in this prospectus of up
to 39,145,143 shares of common stock, up to 325,000 warrants and up
to $130,350,642 principal amount of the notes, including up to (i)
4,950,000 shares of common stock and 325,000 warrants to purchase
shares of common stock originally issued in connection with the
initial public offering of B. Riley Principal Merger Corp. II, (ii)
325,000 shares of common stock issuable upon exercise of warrants
originally issued in connection with the initial public offering of
B. Riley Principal Merger Corp. II, (iii) 27,175,613 shares of
common stock issued in connection with the consummation of our
business combination with Eos Energy Storage LLC and the related
private placement, (iv) 80,294 shares of common stock issuable upon
satisfaction of certain vesting terms set forth in previously
issued restricted stock units, and (v) 97,877 shares of common
stock that have been or may be issued to certain of the selling
securityholders upon exercise of options granted under the Eos
Energy Enterprises, Inc. Amended and Restated 2012 Equity Incentive
Plan, (vi) $102,900,000 principal amount of notes originally issued
to Spring Creek pursuant to the Indenture, dated April 7, 2022,
between Eos Energy Enterprises, Inc. and Wilmington Trust, National
Association, as trustee, and the Investment Agreement dated July 6,
2021 with Spring Creek, (vii) a maximum of $27,450,642 principal
amount of notes issuable to Spring Creek as future PIK interest
payments on the notes and (viii) a maximum of 6,516,359 shares of
common stock underlying the notes and issuable upon conversion of
the notes, which may be sold by Spring Creek from time to time.
The
term “selling securityholders” includes the securityholders listed
in the tables in this section and their permitted
transferees.
Beneficial
Ownership of Common Stock and Warrants
The table below provides, as of the date of this prospectus,
information regarding the beneficial ownership of our common stock
of each selling securityholder, the number of shares of common
stock that may be sold by each selling securityholder under this
prospectus and that each selling securityholder will beneficially
own after this offering. We have determined beneficial ownership in
accordance with the rules of the SEC and the information is not
necessarily indicative of beneficial ownership for any other
purpose. Unless otherwise indicated below, to our knowledge, the
persons and entities named in the table have sole voting and sole
investment power with respect to all securities that they
beneficially own, subject to community property laws where
applicable. We have based percentage ownership on 53,958,013 shares
of common stock outstanding as of March 2, 2022.
Because
each selling securityholder may dispose of all, none or some
portion of their securities, no estimate can be given as to the
number of securities that will be beneficially owned by a selling
securityholder upon termination of this offering. For purposes of
the table below, however, we have assumed that after termination of
this offering none of the securities covered by this prospectus
will be beneficially owned by the selling securityholder and
further assumed that the selling securityholders will not acquire
beneficial ownership of any additional securities during the
offering. In addition, the selling securityholders may have sold,
transferred or otherwise disposed of, or may sell, transfer or
otherwise dispose of, at any time and from time to time, our
securities in transactions exempt from the registration
requirements of the Securities Act after the date on which the
information in the table is presented.
Selling
securityholder information for each additional selling
securityholder, if any, will be set forth by prospectus supplement
to the extent required prior to the time of any offer or sale of
such selling securityholder’s securities pursuant to this
prospectus. Any prospectus supplement may add, update, substitute,
or change the information contained in this prospectus, including
the identity of each selling securityholder and the number of
shares registered on its behalf. A selling securityholder may sell
all, some or none of such securities in this offering. See “Plan of
Distribution.”
|
|
Shares of Common Stock |
|
|
Warrants to Purchase Common Stock |
|
Name
|
|
Number Beneficially Owned Prior to Offering |
|
|
Number Registered for Sale Hereby |
|
|
Number Beneficially Owned
After Offering |
|
|
Percent Owned After Offering |
|
|
Number Beneficially Owned Prior to Offering |
|
|
Number Registered for Sale Hereby |
|
|
Number Beneficially Owned
After Offering |
|
|
Percent Owned After Offering |
|
ACE Energy Efficiency SPC |
|
|
339,100 |
|
|
|
339,100 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Acme Engineering, Inc.(1) |
|
|
29,446 |
|
|
|
29,446 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Acme Operating Company(1) |
|
|
21,577 |
|
|
|
21,577 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Adelaro US Limited(2) |
|
|
42,710 |
|
|
|
42,710 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Agile
Energy Limited(3) |
|
|
917 |
|
|
|
917 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Alessandro
Lagi |
|
|
72,620 |
|
|
|
72,620 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Alina
LLC(4) |
|
|
105,218 |
|
|
|
105,218 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
AltEnergy,
LLC(5) |
|
|
2,408,585 |
|
|
|
2,408,585 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
AME
Cloud Ventures(6) |
|
|
92,005 |
|
|
|
92,005 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Andrew
Kelleher |
|
|
152,148 |
|
|
|
152,148 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Arthur
Kressner |
|
|
3,976 |
|
|
|
3,976 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Ashley Lalonde Trust under
The Lalonde Children
2013 Trust (7) |
|
|
3,892 |
|
|
|
3,892 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Asterra Holdings LLC(8) |
|
|
3,061 |
|
|
|
3,061 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
B.
Riley Financial, Inc.(9) |
|
|
5,694,778 |
|
|
|
5,694,778 |
|
|
|
– |
|
|
|
* |
|
|
|
325,000 |
|
|
|
325,000 |
|
|
|
– |
|
|
|
* |
|
Trust accounts associated with Bryant Riley(10) |
|
|
45,000 |
|
|
|
45,000 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Brian Hardwick(11)
|
|
|
2,882 |
|
|
|
2,882 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Beau Capital LLC(12) |
|
|
178,455 |
|
|
|
178,455 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
|
|
Shares of Common Stock |
|
|
Warrants to Purchase Common Stock |
|
Name
|
|
Number Beneficially Owned Prior to Offering |
|
|
Number Registered for Sale Hereby |
|
|
Number Beneficially Owned After Offering |
|
|
Percent Owned After Offering |
|
|
Number Beneficially Owned Prior to Offering |
|
|
Number Registered for Sale Hereby |
|
|
Number Beneficially Owned After Offering |
|
|
Percent Owned After Offering |
|
Beckett Austin Lenhart |
|
|
1,527 |
|
|
|
1,527 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Ben Barclay |
|
|
917 |
|
|
|
917 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Beusa Investment Tec LLC |
|
|
35,019 |
|
|
|
35,019 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Brent Van Rastetter Revocable
Trust
|
|
|
14,091 |
|
|
|
14,091 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Bruce Langone |
|
|
41,020 |
|
|
|
41,020 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Cannonbury Invest Limited(13) |
|
|
122,260 |
|
|
|
122,260 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Carl Ferenbach |
|
|
743,279 |
|
|
|
743,279 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
CAT3
LLC |
|
|
244,695 |
|
|
|
244,695 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Chandler Kate Lenhart |
|
|
1,527 |
|
|
|
1,527 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Charles DeCasteja |
|
|
2,388 |
|
|
|
2,388 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Christopher Darnell |
|
|
85,454 |
|
|
|
85,454 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Christopher Streeter |
|
|
11,433 |
|
|
|
11,433 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Corinthian Investors LLC(14) |
|
|
32,809 |
|
|
|
32,809 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Cova Funding LLC(15) |
|
|
34,098 |
|
|
|
34,098 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Craig S. Tamchin SEP IRA |
|
|
2,786 |
|
|
|
2,786 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
David Cohen |
|
|
66,373 |
|
|
|
66,373 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Daniel Eastman |
|
|
111,186 |
|
|
|
111,186 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
David
Henry(16) |
|
|
20,178 |
|
|
|
20,178 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
David Schiff |
|
|
36,092 |
|
|
|
36,092 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Daniel Shribman |
|
|
993,750 |
|
|
|
993,750 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
David T. Shipp |
|
|
2,599 |
|
|
|
2,599 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Denman Street LLC(17) |
|
|
452,984 |
|
|
|
452,984 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Douglas H. Phelps |
|
|
28,066 |
|
|
|
28,066 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Douglas Kenneth Kennedy |
|
|
6,810 |
|
|
|
6,810 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
EES Management Holding(18) |
|
|
52,391 |
|
|
|
52,391 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
FGRK Lux Partners GP(19) |
|
|
18,499 |
|
|
|
18,499 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Financiera Siacapital |
|
|
18,351 |
|
|
|
18,351 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Fisher EOS LLC(20) |
|
|
394,607 |
|
|
|
394,607 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Frank Genova |
|
|
11,433 |
|
|
|
11,433 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Franziska Fortlouis |
|
|
7,035 |
|
|
|
7,035 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
George Adamson |
|
|
68,109 |
|
|
|
68,109 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
George Brokaw |
|
|
4,092 |
|
|
|
4,092 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
George Fina |
|
|
55,309 |
|
|
|
55,309 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Gerard J. Berding |
|
|
19,952 |
|
|
|
19,952 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Glenn Oztemel |
|
|
361,979 |
|
|
|
361,979 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Global Equity Partners(21) |
|
|
11,760 |
|
|
|
11,760 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Graham Sharp |
|
|
781,534 |
|
|
|
781,534 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Great
American Insurance Company(22) |
|
|
600,310 |
|
|
|
600,310 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Great
American Life Insurance Company(22) |
|
|
1,199,018 |
|
|
|
1,199,018 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Greer
Family Partners, LP(23) |
|
|
111,401 |
|
|
|
111,401 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Halpern
Family Trust(24) |
|
|
56,566 |
|
|
|
56,566 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Harper
Frances Lenhart |
|
|
1,527 |
|
|
|
1,527 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Hawthorne II Investment LP(25) |
|
|
145,654 |
|
|
|
145,654 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Hi-Med
LLC(26) |
|
|
307,581 |
|
|
|
307,581 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Hisham Al-Razzuqi
|
|
|
23,055
|
|
|
|
23,055
|
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Holtec
International(27) |
|
|
478,556 |
|
|
|
478,556 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Howard Weitmann |
|
|
20,000 |
|
|
|
20,000 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Igor Heifetz |
|
|
9,574 |
|
|
|
9,574 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
James Hughes |
|
|
4,370 |
|
|
|
4,370 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
James Zweng(28)
|
|
|
518
|
|
|
|
518
|
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
|
|
Shares of Common Stock |
|
|
Warrants to Purchase Common
Stock |
|
Name
|
|
Number Beneficially Owned Prior to
Offering |
|
|
Number Registered for Sale
Hereby |
|
|
Number Beneficially Owned After
Offering |
|
|
Percent Owned After
Offering |
|
|
Number Beneficially Owned Prior to
Offering |
|
|
Number Registered for Sale
Hereby |
|
|
Number Beneficially Owned After
Offering |
|
|
Percent Owned After
Offering |
|
Jason J. Maney |
|
|
3,900 |
|
|
|
3,900 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Jason Koy & Gabrielle
Sitomer |
|
|
48,163 |
|
|
|
48,163 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Jason S Kahan |
|
|
15,919 |
|
|
|
15,919 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Jeremy Asher |
|
|
461 |
|
|
|
461 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Jerry H. Labowitz |
|
|
288,655 |
|
|
|
288,655 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Jerry Labowitz |
|
|
3,268 |
|
|
|
3,268 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Joe Mastrangelo(29) |
|
|
79,546 |
|
|
|
79,546 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Johannes Rittershausen |
|
|
22,867 |
|
|
|
22,867 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
John B. Berding
Irrevocable Children’s Trust(30) |
|
|
313,640 |
|
|
|
313,640 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
|
|
John Bernard Berding |
|
|
75,914 |
|
|
|
75,914 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
John Desmarais |
|
|
1,698,619 |
|
|
|
1,698,619 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
John T. Raymond 2012 Delaware Trust
(31) |
|
|
22,906 |
|
|
|
22,906 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
John T. Raymond |
|
|
433,295 |
|
|
|
433,295 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Jon S & Bettina E Reynertson,
JTWROS |
|
|
144,094 |
|
|
|
144,094 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Jonathan R. Darnell |
|
|
83,654 |
|
|
|
83,654 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Joseph Berding |
|
|
24,368 |
|
|
|
24,368 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Joshua Cole |
|
|
34,962 |
|
|
|
34,962 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Joshua Fink |
|
|
16,767 |
|
|
|
16,767 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Julie Sue Jones Revocable
Trust |
|
|
14,092 |
|
|
|
14,092 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Karl J. Grafe |
|
|
14,634 |
|
|
|
14,634 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Ken Flechler |
|
|
11,273 |
|
|
|
11,273 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Kenneth Langone |
|
|
55,322 |
|
|
|
55,322 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Laurie M. Shahon |
|
|
15,206 |
|
|
|
15,206 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Lawrence Summers |
|
|
3,057 |
|
|
|
3,057 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Lisa Eng |
|
|
80,659 |
|
|
|
80,659 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Mack Treece(32) |
|
|
748 |
|
|
|
748 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Margaret Wood
|
|
|
5,691
|
|
|
|
5,691
|
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Matt Cribbins |
|
|
57,059 |
|
|
|
57,059 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Matt Lenhart |
|
|
802 |
|
|
|
802 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Matthew Feinberg |
|
|
50,000 |
|
|
|
50,000 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Matthew G Cribbins |
|
|
4,071 |
|
|
|
4,071 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Matthew Lenhart |
|
|
117,592 |
|
|
|
117,592 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Michael Abbot |
|
|
152 |
|
|
|
152 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Michael Jacob Kennedy |
|
|
10,768 |
|
|
|
10,768 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Michael K. Barlow |
|
|
108,423 |
|
|
|
108,423 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Michael Murray Gamson |
|
|
197,009 |
|
|
|
197,009 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Michael Oster |
|
|
427,414 |
|
|
|
427,414 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Milk Town Partners LLC(33) |
|
|
28,183 |
|
|
|
28,183 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Milton Lewin |
|
|
1,025 |
|
|
|
1,025 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Nicholas Donahue |
|
|
19,354 |
|
|
|
19,354 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Nina Kennedy |
|
|
25,902 |
|
|
|
25,902 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
OCI Company Ltd.(34) |
|
|
45,425 |
|
|
|
45,425 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Ospraie Partners LLC(35) |
|
|
337,854 |
|
|
|
337,854 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Paradigm Partners, LP(36) |
|
|
111,061 |
|
|
|
111,061 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Parker Lalonde Trust under The Lalonde
Children 2013 Trust(7) |
|
|
3,892 |
|
|
|
3,892 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Patrick J. Bartels, Jr. |
|
|
20,000 |
|
|
|
20,000 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
PAW Associates LLC(37) |
|
|
210,656 |
|
|
|
210,656 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Pelican Capital Management
LLC(38) |
|
|
28,183 |
|
|
|
28,183 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Peter Fox-Penner |
|
|
1,527 |
|
|
|
1,527 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Peter Greenleaf |
|
|
4,051 |
|
|
|
4,051 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Peter Warner Davidson |
|
|
9,205 |
|
|
|
9,205 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
PGF Family Corp(39) |
|
|
1,232,609 |
|
|
|
1,232,609 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Philip Lobkowicz |
|
|
3,410 |
|
|
|
3,410 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Phillippe Bouchard |
|
|
22,867 |
|
|
|
22,867 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
|
|
Shares of Common Stock |
|
|
Warrants to Purchase Common Stock |
|
Name
|
|
Number Beneficially Owned Prior to Offering |
|
|
Number Registered for Sale Hereby |
|
|
Number Beneficially Owned After Offering |
|
|
Percent Owned After Offering |
|
|
Number Beneficially Owned Prior to Offering |
|
|
Number Registered for Sale Hereby |
|
|
Number Beneficially Owned After Offering |
|
|
Percent Owned After Offering |
|
Pickwick Capital Partners, LLC |
|
|
578 |
|
|
|
578 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Posner
Foundation of Pittsburgh(40) |
|
|
648,198 |
|
|
|
648,198 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Prisma Energy LLC |
|
|
387,612 |
|
|
|
387,612 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Projector Holding LLC(41) |
|
|
27,682 |
|
|
|
27,682 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Punjab Partners, LLC |
|
|
90,394 |
|
|
|
90,394 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
QIP Glidepath Series A LLC |
|
|
305,868 |
|
|
|
305,868 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Randall A. Hack |
|
|
193,842 |
|
|
|
193,842 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Randall A. Hack 2008 Long Term Trust |
|
|
55,724 |
|
|
|
55,724 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Randy Brown |
|
|
10,485 |
|
|
|
10,485 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Funds and accounts managed by Reservoir Capital(42) |
|
|
1,635,447 |
|
|
|
1,635,447 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Richard T. Weiss 2006 Living Trust(43) |
|
|
85,660 |
|
|
|
85,660 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Richard Wood |
|
|
5,691
|
|
|
|
5,691
|
|
|
|
–
|
|
|
|
* |
|
|
|
– |
|
|
|
–
|
|
|
|
–
|
|
|
|
* |
|
Robert Logan |
|
|
8,517 |
|
|
|
8,517 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Robert Suss |
|
|
20,000 |
|
|
|
20,000 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Ross Pirasteh |
|
|
65,747 |
|
|
|
65,747 |
|
|
|
–
|
|
|
|
* |
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
* |
|
Sarathi Roy |
|
|
78,235 |
|
|
|
78,235 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Sidamon-Eristoff Brothers, LLC(44) |
|
|
33,835 |
|
|
|
33,835 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Sigmund Heller |
|
|
28,370 |
|
|
|
28,370 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Singh Real Estate Enterprises Inc.(45) |
|
|
1,025,538 |
|
|
|
1,025,538 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
SKNS Advisory, LLC(46) |
|
|
27,861 |
|
|
|
27,861 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Steven Chu |
|
|
1,441
|
|
|
|
1,441
|
|
|
|
–
|
|
|
|
* |
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
* |
|
Stephen E. Solms Family Trust U/A 1/30/2008(47) |
|
|
106,230 |
|
|
|
106,230 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Stephen Hannan |
|
|
322,767 |
|
|
|
322,767 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Tequesta Properties Inc(48) |
|
|
307,581 |
|
|
|
307,581 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Tim Hoefer(49) |
|
|
692
|
|
|
|
692
|
|
|
|
–
|
|
|
|
* |
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
* |
|
The 2008 Stidolph Family Trust |
|
|
244,683 |
|
|
|
244,683 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
The Antonia Theodora Hellman 2021 Trust |
|
|
300,000
|
|
|
|
300,000
|
|
|
|
–
|
|
|
|
* |
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
* |
|
The Arianna Elena He-An Hellman 2021 Trust |
|
|
300,000
|
|
|
|
300,000
|
|
|
|
–
|
|
|
|
* |
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
* |
|
The Ethan Duncan He-Li Hellman 2021 Trust |
|
|
300,000
|
|
|
|
300,000
|
|
|
|
–
|
|
|
|
* |
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
* |
|
The Hsu-Hellman Family 2000 Trust(50) |
|
|
880,434
|
|
|
|
880,434
|
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
The Zissis Family Trust |
|
|
69,153 |
|
|
|
69,153 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Thomas J. Keitel |
|
|
500 |
|
|
|
500 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Thomas J. Keitel, J.R. |
|
|
7,342 |
|
|
|
7,342 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Thomas Malcolm McAvity |
|
|
183,580 |
|
|
|
183,580 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Thundering Elk, LLC(51) |
|
|
3,057 |
|
|
|
3,057 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Timothy G. Lalonde |
|
|
402,055 |
|
|
|
402,055 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
TJC3
LLC(52) |
|
|
549,817 |
|
|
|
549,817 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Trustees of Deerfield Academy |
|
|
10,000 |
|
|
|
10,000 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Whipstick Ventures LLC(53) |
|
|
123,019 |
|
|
|
123,019 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
William P. Hogan |
|
|
17,471 |
|
|
|
17,471 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
William P. Miller Trust |
|
|
55,573 |
|
|
|
55,573 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Yong Hak Huh |
|
|
28,903 |
|
|
|
28,903 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
Yorktown Partners(54) |
|
|
3,293
|
|
|
|
3,293
|
|
|
|
–
|
|
|
|
* |
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
* |
|
YX
Capital LLC(55) |
|
|
34,843 |
|
|
|
34,843 |
|
|
|
– |
|
|
|
* |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
* |
|
|
(1) |
Mike
Munoz has sole voting and investment power over the shares held by
the stockholder. |
|
(2) |
Jonathan
Kollek has sole voting and investment power over the shares held by
the stockholder. |
|
(3) |
Jeremy
Asher has sole voting and investment power over the shares held by
the stockholder. |
|
(4) |
Alastair
Hunter-Henderson is the Managing Member and CEO of Alina LLC, and
has sole voting and investment power over the shares held by the
stockholder. |
|
(5) |
Represents
securities held directly by AltEnergy LLC, or AltEnergy, AltEnergy
Storage V LLC, or AltEnergy V, AltEnergy Storage Bridge LLC, or
Bridge, AltEnergy Transmission LLC, or Transmission, AltEnergy
Storage Bridge Phase II, or Bridge II. Mr. Stidolph is the managing
director of AltEnergy, the managing member of each of AltEnergy V,
Bridge, Transmission and Bridge II, and has voting and dispositive
power with respect to the AltEnergy Shares. Russell Stidolph, a
director of the Company, is the managing director of AltEnergy, the
managing member of each of AltEnergy V, Bridge, Transmission and
Bridge II, and has voting and dispositive power with respect to the
AltEnergy Shares. Mr. Stidolph disclaims beneficial ownership of
these shares, except to the extent of his pecuniary interest
therein. |
|
(6) |
Jerry
Yang has sole voting and investment power over the shares held by
the stockholder. |
|
(7) |
Lisa LaLonde
is trustee of Timothy Lalonde Ashley Lalonde Trust and Timothy
Lalonde Parker Lalonde Trust, and has sole voting and investment
power of the shares held by such stockholders. |
|
(8) |
Gennady
Gazin is the 100% owner of Asterra Holdings LLC and has sole voting
and investment power over the shares held by the
stockholder. |
|
(9) |
The
amount includes (i) 5,369,778 shares of common stock held by BRF
Investments, LLC (“BRFI”), (ii) 325,000 private placement warrants
held by BRFI and (iii) 325,000 shares of common stock underlying
private placement warrants held by BRFI. B. Riley Financial, Inc.
(“B. Riley Financial”) is the parent company of BRFI. B. Riley
Financial has voting and dispositive power over the securities held
by BRFI. Bryant Riley is the Co-Chief Executive Officer and
Chairman of the Board of Directors of B. Riley Financial and has
voting and dispositive power over the securities held by B. Riley
Financial. Both B. Riley Financials and Mr. Riley disclaims
beneficial ownership over any securities directly held by BRFI
other than to the extent of any pecuniary interest he or it may
have therein, directly or indirectly. |
|
(10) |
The
number of shares beneficially owned before this offering includes
(i) 20,000 shares held by Bryant and Carleen Riley JTWROS, (ii)
5,000 shares held by Bryant Riley C/F Charlie Riley UMTA CA, (iii)
5,000 shares held by Bryant Riley C/F Eloise Riley UMTA CA, (iv)
5,000 shares held by Bryant Riley C/F Susan Riley UMTA CA, and (v)
10,000 shares held by Robert Antin Children Irrevocable Trust U/A
1/1/2001 (collectively, the “Trusts”). Bryant Riley is custodian of
each of the Trusts and has voting and dispositive power with
respect to the securities held by the Trusts. |
|
(11) |
Includes 2,882 shares
of common stock issuable upon exercise of options. |
|
(12) |
Robert
M. Williams Jr. has sole voting and investment power over the
shares held by the stockholder. |
|
(13) |
W.
Geoffrey Beattie is the President of Cannonbury Invest Limited and
has sole voting and investment power over the shares held by the
stockholder. |
|
(14) |
Joseph
DellaRosa; Victor Wright, and James Yacobucci are all members of
Corinthian Investors LLC, and share equal voting and investment
authority over the shares held by the stockholder. |
|
(15) |
Andrew
Intrater is the Chief Executive Officer of Cova Funding LLC and has
sole voting and investment power over the shares held by the
stockholder. |
|
(16) |
Includes
fully vested options to purchase 4,035 shares of common
stock. |
|
(17) |
John
B. Berding is the Manager of Denman Street LLC and has sole voting
and investment power over the shares held by the
stockholder. |
|
(18) |
Marc
Warren has sole voting and investment power over the shares held by
the stockholder. |
|
(19) |
Robert
Kantor and Francis Greenburger have sole voting and investment
power over the shares held by the stockholder. |
|
(20) |
Arnold
Fisher, Kenneth Fisher, and Steven Fisher share voting and
investment authority over the shares held by the
stockholder |
|
(21) |
Michael
A. Shternfeld is the Manager of Global Equity Partners and has sole
voting and investment power over the shares held by the
stockholder. |
|
(22) |
Each
of Great American Insurance Company and Great American Life
Insurance Company is a direct or indirect wholly-owned subsidiary
of American Financial Group, Inc., which is a publicly traded
entity (NYSE: AFG). |
|
(23) |
Philip
Greer has sole voting and investment power over the shares held by
the stockholder. |
|
(24) |
Martin
I. Halpern is the Grantor/Trustee of Halpern Family Trust and has
sole voting and investment power over the shares held by the
stockholder. |
|
(25) |
Richard
Weiss is the General Partner of Hawthorne II Investment LP and has
sole voting and investment power over the shares held by the
stockholder. |
|
(26) |
Dr.
Krishna Singh holds direct and/or indirect ownership of HI-MED, LLC
and holds the full voting and dispositive power with respect to the
shares held thereby. |
|
(27) |
Dr.
Krishna Singh holds direct and/or indirect ownership of Holtec
International and holds the full voting and dispositive power with
respect to the shares held thereby. |
(28) |
Includes
518 shares of common stock issuable upon exercise of
options. |
|
(29) |
Mr.
Mastrangelo is the Chief Executive Officer and a director of the
Company. |
|
(30) |
Susan
M. Berding is the Trustee of John B. Berding Irrevocable Childrens
Trust and has sole voting and investment power over the shares held
by the stockholder. |
|
(31) |
John
T. Raymond has sole voting and investment power over the shares
held by the stockholder. |
|
(32) |
Mr.
Treece is our Chief Strategic Alliances Officer. |
|
(33) |
Thomas
J. Coleman has sole voting and investment power over the shares
held by the stockholder. |
|
(34) |
DaeWon
Choi and ByeongSeon Jang are Team Managers of OCI, JeongHan Ryu is
a Manager of OCI, and Saejin Kim is an associate of OCI. Each such
individual shares voting and investment power over the shares held
by the stockholder. |
|
(35) |
Dwright
Anderson has sole voting and investment power over the shares held
by the stockholder. |
|
(36) |
Ed
Hoey has sole voting and investment power over the shares held by
the stockholder. |
|
(37) |
Paul
Weismann is the Manager of Paw Associates LLC, and has sole voting
and investment power over the shares held by the
stockholder. |
|
(38) |
Robert
Logan, Jr. has sole voting and investment power over the shares
held by the stockholder. |
|
(39) |
P.
Gaye Farncombe is the President of PGF Family Corp and has sole
voting and investment power over the shares held by the
stockholder. |
|
(40) |
Henry
Posner III, Anne M. Molloy, Paul M. Posner, and John F. Hensler are
the trustees of the Posner Foundation of Pittsburgh and share
voting and investment power over the shares held by the
stockholder. |
|
(41) |
Steve
Hellman has sole voting and investment power over the shares held
by the stockholder. |
|
(42) |
Includes
(i) 156,399 shares held by Reservoir Capital Partners, L.P., (ii)
183,866 shares held by Reservoir Capital Investment Partners, L.P.,
(iii) 181,318 shares held by Reservoir Capital Master Fund II, L.P.
and (iv) 1,113,864 shares held by Reservoir Resource Partners, L.P.
Cyrus Borzooyeh is the chief financial officer of the foregoing
entities and has voting and dispositive power with respect to the
securities held by each such entity. |
|
(43) |
Richard
Weiss is the trustee of Richard T. Weiss 2006 Living Trust and has
sole voting and investment power over the shares held by the
stockholder. |
|
(44) |
Simon-Sidamon
Eristoff has sole voting and investment power over the shares held
by the stockholder. |
|
(45) |
Dr.
Krishna Singh holds direct and/or indirect ownership of Singh Real
Estate Enterprises Inc. and holds the full voting and dispositive
power with respect to the shares held thereby. |
|
(46) |
Narinder
Singh has sole voting and investment power over the shares held by
the stockholder. |
|
(47) |
Ellen
B. Solms and Joesph Sedlack are Trustees of the Stephen E. Solms
Family Trust U/A 1/30/2008 and share voting and investment power
over the shares held by the stockholder. |
|
(48) |
Dr.
Krishna Singh holds direct and/or indirect ownership of Tequesta
Properties Inc. and holds the full voting and dispositive power
with respect to the shares held thereby. |
|
(49) |
Includes 692 shares of
common stock issuable upon exercise of options. |
|
(50) |
Marc
Warren is the Trustee of The Hsu-Hellman Family 2000 Trust and has
sole voting and investment power over the shares held by the
stockholder. |
|
(51) |
David
R. M. Drescher has sole voting and investment power over the shares
held by the stockholder. |
|
(52) |
Thomas
J. Coleman is the Trustee of the Thomas J. Coleman Revocable Trust,
the sole member of TJC3 LLC, and has sole voting and investment
power over the shares held by such stockholder. |
|
(53) |
Each
of Jeffrey S. Bornstein and Ronald C. Hynes shares voting and
dispositive power over the securities held by this
stockholder. |
|
(54) |
Includes 3,293 shares
of common stock issuable upon exercise of options. |
|
(55) |
Jesse
Johnson and Asa Johnson share voting and investment power over the
shares held by the stockholder. |
Beneficial
Ownership of the Notes
On July 7, 2021, we issued $100 million aggregate principal
amount of the notes to Spring Creek pursuant to an investment
agreement, dated July 6, 2021 (the “Investment Agreement”), by and
among Eos Energy Enterprises, Inc., a Delaware corporation, and
Spring Creek Capital, LLC, a Delaware limited liability company.
The Investment Agreement provides Spring Creek with certain
registration rights with respect to the resale of the notes and the
shares of common stock issuable upon conversion of the notes.
Our
registration of the notes and the shares of common stock issuable
upon conversion of the notes does not necessarily mean that the
selling securityholder will sell all or any of such notes or common
stock. The following table sets forth certain information as of
February 9, 2022 concerning the notes and shares of common stock
that may be offered from time to time by the selling securityholder
with this prospectus. The information is based on information
provided by or on behalf of the selling securityholder. In the
table below, the number of shares of common stock that may be
offered pursuant to this prospectus is calculated based on the
conversion rate, as of the date of this prospectus, of 49.9910
shares of common stock per $1,000 capitalized principal amount of
notes. The number of shares of common stock issuable upon
conversion of the notes is subject to adjustment under certain
circumstances described in the indenture governing the notes.
Accordingly, the number of shares of common stock issuable upon
conversion of the notes and the number of shares of common stock
beneficially owned and offered by the selling securityholder
pursuant to this prospectus may increase or decrease from that set
forth in the table below. Information about the selling
securityholder may change over time. In particular, the selling
securityholder identified below may have sold, transferred or
otherwise disposed of all or a portion of its notes since the date
on which the selling securityholder provided us with information
regarding its notes. Any changed or new information given to us by
the selling securityholder will be set forth in supplements to this
prospectus or amendments to the registration statement of which
this prospectus is a part, if and when necessary.
Name |
|
Maximum
Principal
Amount of
Notes
Beneficially
Owned and
Offered
Hereby (1) |
|
|
Maximum
Number of
Shares of
Common
Stock
Beneficially
Owned and
Offered
Hereby (2) |
|
|
Maximum
Percentage
of Shares of
Common
Stock
Beneficially
Owned and
Offered
Hereby (3) |
|
Spring Creek Capital,
LLC(4) |
|
$ |
130,350,642 |
|
|
|
6,516,359 |
|
|
|
12.1 |
% |
|
(1) |
Reflects $102,900,000 principal amount of
notes originally issued pursuant to the Investment Agreement dated
July 6, 2021 with Spring Creek and a maximum of $27,450,642
principal amount of notes issuable as future PIK interest payments
on the notes. |
|
(2) |
Assumes
for each $1,000 in principal amount of the notes a conversion rate,
as of the date of this prospectus, of 49.9910 shares of common
stock upon conversion. This conversion rate is subject to
adjustment, however, as described in this prospectus under
“Description of Notes—Conversion Rights—Conversion Rate
Adjustments.” As a result, the number of shares of common stock
issuable upon conversion of the notes may increase or decrease in
the future. |
|
(3) |
The
percentage reflects the 53,958,013 shares of common stock
outstanding as of March 2, 2022 and gives effect to the total
number of shares of common stock beneficially owned and offered
hereby by Spring Creek Capital, LLC. |
|
(4) |
Spring
Creek is beneficially owned by SCC Holdings, LLC (“SCC”), SCC is
beneficially owned by KIM, LLC (“KIM”), KIM is beneficially owned
by Koch Investments Group, LLC (“KIG”), KIG is beneficially owned
by Koch Investments Group Holdings, LLC (“KIGH”), and KIGH is
beneficially owned by Koch Industries, in each case by means of
ownership of all voting equity instruments. Koch Industries, SCC,
KIM, KIG, and KIGH may be deemed to beneficially own the Public
Shares held by Spring Creek by virtue of (i) Koch Industries’
beneficial ownership of KIGH, (ii) KIGH’s beneficial ownership of
KIG, (iii) KIG’s beneficial ownership of KIM, (iv) KIM’s beneficial
ownership of SCC and (v) SCC’s beneficial ownership of Spring
Creek. |
Material
Relationships with Selling Securityholders
The
description of our relationships with the selling securityholders
and their affiliates set forth in “Certain Relationships and
Related Party Transactions” in our Definitive Proxy Statement on
Schedule 14A filed on March 31, 2022 is incorporated by reference
herein.
Certain
U.S. Federal Income Tax Considerations
The
following discussion describes certain U.S. federal income tax
consequences of the ownership and disposition of our notes, our
common stock and warrants, which we refer to collectively as our
securities. This discussion applies only to securities that are
purchased from us or the selling securityholder pursuant to this
prospectus, and to securities (including any shares of common stock
into which the notes are convertible) that are held as capital
assets.
This
discussion does not describe all of the U.S. federal tax
consequences that may be relevant to you in light of your
particular circumstances, such as consequences arising under the
federal estate and gift tax, the alternative minimum tax or the
Medicare tax on net investment income or the consequences to you if
you are an accrual-method taxpayer that is required to conform the
timing of recognition of items of income to an “applicable
financial statement” under Section 451(b) of the Internal Revenue
Code of 1986, as amended (the “Code”), or differing tax
consequences applicable to you if you are a beneficial owner of
notes or common stock subject to special rules, such as:
|
● |
certain
financial institutions; |
|
● |
dealers
or traders in securities subject to a mark-to-market method of tax
accounting with respect to the notes or our common
stock; |
|
● |
persons
holding notes as part of a “straddle,” integrated transaction or
similar transaction; |
|
● |
U.S.
Holders (as defined below) whose functional currency is not the
U.S. dollar; |
|
● |
entities
or arrangements classified as a partnership for U.S. federal income
tax purposes; or |
If
you are an entity or arrangement that is classified as a
partnership for U.S. federal income tax purposes that holds notes
or common stock, the U.S. federal income tax treatment of a partner
will generally depend on the status of the partner and upon the
activities of the partnership. Partnerships holding notes or common
stock and partners in those partnerships should consult their tax
advisors as to their particular U.S. federal income tax
consequences of holding and disposing of the notes or the common
stock.
This
summary is based on the Code, administrative pronouncements,
judicial decisions and final, temporary and proposed U.S. Treasury
regulations, changes to any of which subsequent to the date of this
offering memorandum may affect the tax consequences described
herein. If you are considering the purchase of notes, you are urged
to consult your tax advisors with regard to the application of the
U.S. federal income tax laws to your particular situation as well
as any tax consequences arising under the laws of any state, local
or non-U.S. taxing jurisdiction.
Characterization
of the Notes
Based
on applicable U.S. Treasury regulations, we believe and intend to
take the position that we and each investor are entitled to account
for the notes using a payment schedule in which interest on the
notes is initially assumed to be paid in cash (and not PIK) and
that the notes are not subject to the specific rules relating to
contingent payment debt instruments (“CPDI”). This position is
solely for U.S. federal income tax purposes and does not constitute
a representation by us that interest on the notes will be paid in
cash.
Our
position that the notes should not be treated as CPDI is binding on
you, unless you disclose a contrary position in the proper manner
to the Internal Revenue Service (“IRS”), but is not binding on the
IRS. If the IRS takes a position contrary to that described above,
you may be required to accrue interest income based upon a
“comparable yield,” regardless of your method of tax accounting.
That yield would be higher than the stated interest rate on the
notes. In addition, any gain on the sale, exchange, retirement or
other taxable disposition of the notes (including any gain realized
on the conversion of a note) would be treated as ordinary income.
You should consult your tax advisor regarding the tax consequences
of the notes being treated as CPDI. The remainder of this
discussion assumes that the notes are not treated as
CPDI.
Tax
Consequences to U.S. Holders
This
section applies to you if you are a U.S. Holder. You are a U.S.
Holder if for U.S. federal income tax purposes you are a beneficial
owner of a note or common stock that is:
|
● |
an
individual who is a citizen or resident of the United
States; |
|
● |
a
corporation created or organized in or under the laws of the United
States, any state thereof or the District of Columbia;
or |
|
● |
an
estate or trust the income of which is subject to U.S. federal
income taxation regardless of its source. |
The Notes
Interest
and OID
For
each interest period, we have the option, in lieu of cash interest,
to pay interest on the notes (i) with PIK interest or (ii) with a
combination of cash interest and PIK interest. The existence of
this option means that no stated interest payments on the notes
will be treated as qualified stated interest for U.S. federal
income tax purposes (even if we never exercise the option to pay
any PIK interest). Therefore, (i) the notes will be treated as
having been issued with “original issue discount” (“OID”) for U.S.
federal income tax purposes in an aggregate amount equal to the
excess of the “stated redemption price at maturity” of the notes
(the sum of all payments of principal and state interest to be made
on the notes) over their “issue price” (generally, the first price
at which a substantial amount of the notes is sold for money to
investors, not including bond houses, brokers or similar persons or
organizations acting in the capacity of underwriters, placement
agents or wholesalers), and (ii) as discussed below, you will be
required to include the OID in gross income as ordinary interest
income as it accrues (on a constant yield to maturity basis), in
advance of the receipt of cash payments to which the OID is
attributable and regardless of your regular method of accounting
for U.S. federal income tax purposes.
A
U.S. Holder is generally required to include in income the sum of
the daily accruals of the OID for the debt security for each day
during the taxable year (or portion of the taxable year) in which
the U.S. Holder held the notes, regardless of such holder’s regular
method of accounting. Thus, you may be required to include OID in
income in advance of the receipt of some or all of the related cash
payments. The daily portion is determined by allocating to each day
in an “accrual period” a pro rata portion of the OID
allocable to that accrual period. The OID allocable to any accrual
period other than the final accrual period will equal the product
of (a) the “adjusted issue price” of the note as of the beginning
of such period and (b) the note’s “yield to maturity.” The OID
allocable to the final accrual period will equal the difference
between the amount payable at maturity and the adjusted issue price
at the beginning of the final accrual period. The “accrual period”
for a note may be of any length and may vary in length over the
term of a note, provided that each accrual period is no longer than
one year and that each scheduled payment of interest or principal
occurs on the first or final day of an accrual period. The
“adjusted issue price” of a note as of the beginning of any accrual
period will equal its issue price, increased by previously accrued
OID on the note and decreased by any cash payments previously made
on the note. The “yield to maturity” of a note generally is the
discount rate that causes the present value, as of the original
issue date or deemed reissuance date, of all payments to be made
under the note to equal the issue price of the note.
In
determining the “yield to maturity” of a note and the amount of OID
attributable to each accrual period, we will assume (as described
above) that all payments of stated interest on the note will be
made in cash (and, as described below, adjustments will be made
later if we pay any interest in the form of PIK interest). This
assumption is for U.S. federal income tax purposes only and is not
a representation that we will in fact pay any stated interest in
cash. If, contrary to this assumption, we pay PIK interest for any
accrual period, then the notes would be deemed, solely for purposes
of recomputing the OID accruals going forward, to be retired and
reissued for an amount equal to its then adjusted issue price, and
the yield to maturity of the notes would be redetermined taking
into account the change in circumstances.
If we
in fact pay interest in cash on the notes, you will not be required
to adjust your OID inclusions. Each payment made in cash under a
note pursuant to the note’s payment schedule (determined in
accordance with the OID rules) will be treated first as payment of
any accrued OID on the notes to the extent such accrued OID has not
been allocated to prior cash payments and second as a payment of
principal on the notes. You generally will not be required to
include separately in income cash payments received on the notes to
the extent such payments constitute payments of previously accrued
OID or payments of principal.
Any
additional note (“PIK Note”) or additional principal amount
received as PIK interest by you generally will not be treated as a
payment of interest. Instead, such PIK Note or additional principal
amount will be aggregated with the note on which it was paid and
treated as a single debt instrument for U.S. federal income tax
purposes.
The
rules regarding OID and PIK interest are complex and the rules
described above may not apply in all cases. You should consult your
own tax advisor regarding the application of these complex
rules.
Market
Discount
If
you purchase a note from the selling securityholder pursuant to
this prospectus for an amount that is less than its “adjusted issue
price” (as defined above in “—Interest and OID”), the amount
of the difference will be treated as “market discount” for U.S.
federal income tax purposes unless this difference satisfies a
de minimis test, described below. You will generally be
required to treat any payment on, or any gain on the sale,
exchange, retirement or other disposition of the note as ordinary
income to the extent of the market discount not previously included
in income that accrued on the notes during your holding period. In
general, market discount is treated as accruing on a straight-line
basis over the term of the debt security unless an election is made
to accrue the market discount under a constant yield method. In
addition, you may be required to defer, until the maturity of the
note or its earlier disposition in a taxable transaction, the
deduction of a portion of the interest paid on any indebtedness
incurred or maintained to purchase or carry the note in an amount
not exceeding the accrued market discount on the note.
You
may elect to include market discount in income currently as it
accrues (on either a straight-line or constant yield basis), in
lieu of treating a portion of any gain realized on a sale,
exchange, retirement, or other disposition of the debt security as
ordinary income. If an election is made to include market discount
on a current basis, the interest deduction deferral rule described
above will not apply. If you make such an election, it will apply
to all market discount obligations acquired by you on or after the
first day of the first taxable year to which the election applies.
The election may not be revoked without the consent of the IRS. You
should consult with your own tax advisor before making this
election.
If
the difference between the adjusted issue price of a note and the
amount paid for the notes is less than 1/4 of 1% of the note’s
adjusted issue price, multiplied by the number of remaining
complete years to the note’s maturity (“de minimis market
discount”), the note is not treated as purchased with market
discount.
Generally,
you may make an election to include in income the entire return on
a note (i.e., the excess of all remaining payments to be
received on the note over the amount paid for the note by you) in
accordance with a constant yield method based on the compounding of
interest, as discussed below under “—Election to Treat All
Interest as Original Issue Discount.” If you make such an
election for a note with market discount, you will be required to
include market discount in income currently as it accrues on a
constant yield basis for all market discount notes acquired by you
on or after the first day of the first taxable year to which the
election applies, and such election may be revoked only with the
permission of the IRS.
Generally,
upon conversion of a note acquired at a market discount into shares
of common stock, any market discount not previously included in
income (including as a result of the conversion) will carry over to
the shares of common stock received in exchange for the note. Any
such market discount that is carried over to shares of common stock
received upon conversion will be taxable as ordinary income upon
the sale or other disposition of such shares of common stock
(including a deemed sale or disposition of a fractional share of
common stock pursuant to a conversion). If you hold notes acquired
with a market discount, you should consult your own tax advisor as
to the particular tax consequences to you of conversion of a note
for shares of common stock.
Amortizable
Bond Premium
If
you purchase a note for an amount in excess of the sum of all
amounts payable on the note after the purchase date, other than
qualified stated interest, you will be considered to have purchased
the note with “amortizable bond premium” equal in amount to such
excess. For purposes of determining the amount of any amortizable
bond premium on a note, the purchase price for the note is reduced
by the amount of the portion of the purchase price attributable to
the note’s conversion feature.
You
may elect to amortize such premium as an offset to interest income
using a constant yield method over the remaining term of the note
based on your yield to maturity with respect to the note. You
generally may use the amortizable bond premium allocable to an
accrual period to offset interest required to be included in the
your income under your regular method of accounting with respect to
the note in that accrual period. If the amortizable bond premium
allocable to an accrual period exceeds the amount of interest
allocable to such accrual period, such excess would be allowed as a
deduction for such accrual period, but only to the extent of your
prior interest inclusions on the note that have not been offset
previously by bond premium. Any excess is generally carried forward
and allocable to the next accrual period.
Because
we may redeem the notes prior to maturity, special rules apply that
may reduce or eliminate the amount of premium that a U.S. Holder
may amortize with respect to a note. U.S. Holders should consult
their tax advisors about these special rules, including whether it
would be advisable to elect to treat all interest on the notes as
OID, which would result in a U.S. Holder not being subject to these
special rules.
An
election to amortize bond premium applies to all taxable debt
obligations held by you at the beginning of the first taxable year
to which the election applies and thereafter acquired by you and
may be revoked only with the consent of the IRS. Generally, you may
make an election to include in income the entire return on a note
(i.e., the excess of all remaining payments to be received
on the note over the amount paid for the note by you) in accordance
with a constant yield method based on the compounding of interest,
as discussed below under “—Election to Treat All Interest as
Original Issue Discount.” If you make such an election for a
note with amortizable bond premium, such election will result in a
deemed election to amortize bond premium for all of your notes with
amortizable bond premium and may be revoked only with the
permission of the IRS.
Election
to Treat All Interest as Original Issue Discount
A
U.S. Holder may elect to include in income all interest that
accrues on a debt security using the constant-yield method
applicable to OID described above, subject to certain limitations
and exceptions. For purposes of this election, interest includes
stated interest, acquisition discount, OID, market discount, de
minimis market discount, and unstated interest, as adjusted by
any amortizable bond premium, each as described herein. If this
election is made for a note, then, to apply the constant-yield
method: (i) the issue price of the note will equal its cost, (ii)
the issue date of the note will be the date it was acquired, and
(iii) no payment on the note will be treated as a payment of
qualified stated interest. A U.S. Holder must make this election
for the taxable year in which the note was acquired, and may not
revoke the election without the consent of the IRS. U.S. Holders
should consult with their own tax advisors before making this
election.
Sale,
Exchange, Redemption, Repurchase or Other Taxable Disposition of
Notes
Except
as provided below under “—Conversion of Notes,” you
generally will recognize capital gain or loss upon the sale,
exchange, redemption, repurchase or other taxable disposition of a
note, equal to the difference between (i) the amount realized on
the disposition and (ii) your tax basis in the note. Your tax basis
in a note generally will be equal to the cost of the note to you,
increased by any OID, market discount or de minimis market
discount included in income by you, and decreased by the amount of
any premium previously amortized and the amount of any payment
(other than a payment of qualified stated interest) received in
respect of the note. Although not free from doubt, your adjusted
tax basis in a note should be allocated between the original note
and any PIK Note or additional principal amount received in respect
of PIK interest thereon in proportion to their relative principal
amounts, and your holding period in any such PIK Note or additional
principal amount would likely be identical to its holding period
for the original note with respect to which such PIK Note or
additional principal amount was received.
Subject
to the market discount rules discussed above under “—Market
Discount,” any such gain or loss generally will be capital gain
or loss and will be long-term capital gain or loss if, at the time
of such disposition, the note was held by you for more than one
year. Long-term capital gains of individuals and certain other
non-corporate U.S. Holders are, under certain circumstances,
subject to a reduced tax rate. The deductibility of capital losses
is subject to limitations. You should consult your own tax advisor
as to the deductibility of capital losses in its particular
circumstances.
Conversion
of Notes
Conversion
into Common Stock. A U.S. Holder’s conversion of a note solely
into our common stock and cash in lieu of a fractional share of
common stock will not be a taxable event, except that (i) the
receipt of cash in lieu of a fractional share of common stock will
result in capital gain or loss (measured by the difference between
the cash received in lieu of the fractional share and the U.S.
Holder’s tax basis in the fractional share) and (ii) the fair
market value of common stock received with respect to accrued
interest will be taxed as a payment of interest (as described above
under “—Interest and OID”).
A
U.S. Holder’s tax basis in the common stock received upon a
conversion of a note (other than common stock received with respect
to accrued interest, but including any basis allocable to a
fractional share) will equal the tax basis of the note that was
converted. A U.S. Holder’s tax basis in the common stock received
with respect to accrued interest will equal the fair market value
of the stock received. A U.S. Holder’s tax basis in a fractional
share will be determined by allocating the U.S. Holder’s tax basis
in the common stock between the common stock received upon
conversion and the fractional share, in accordance with their
respective fair market values.
The
U.S. Holder’s holding period for the common stock received will
include the U.S. Holder’s holding period for the note converted,
except that the holding period of any common stock received with
respect to accrued interest will commence on the day after the date
of receipt.
Conversion
into Cash. If you convert a note and receive from the Company
solely cash, you will recognize gain or loss in the same manner as
if you had disposed of the note in a taxable disposition as
described under “—Sale, Exchange, Redemption or Other Taxable
Disposition of the Notes” above.