Item
1.01 Entry into a Material Definitive Agreement.
Issuance
and Sale of 26.5% Convertible Senior PIK Notes due 2026
On January 18, 2023, Eos Energy
Enterprises, Inc. (the “Company”) entered into an investment agreement (the “Investment Agreement”) with Great
American Insurance Company, Ardsley Partners Renewable Energy, LP, CCI SPV III, LP, Denman Street LLC, John B. Berding Irrevocable Children’s
Trust, John B. Berding, and AE Convert, LLC, a Delaware limited liability company managed by Russell Stidolph, a director of the Company
(together, the “Purchasers”) relating to the issuance and sale to the Purchasers of $13,750,000 in aggregate principal amount
of the Company’s 26.5% Convertible Senior PIK Notes due 2026 (the “Notes”). The transactions contemplated by the Investment
Agreement (the “Transaction”) closed on January 18, 2023 (the date on which the closing occurred, the “Closing”).
Issuance
of Convertible Notes
The
Notes are governed by a form of indenture (the “Indenture”) incorporated by reference into the Notes. The Notes will bear
interest at a rate of 26.5% per annum, which interest shall be entirely paid-in-kind. All interest payments on the Notes shall be made
through an increase in the principal amount of the outstanding Notes or through the issuance of additional Notes (such interest is referred
to herein as “PIK Interest”). Interest on the Notes is payable semi-annually in arrears on June 30 and December 30, commencing
on June 30, 2023. It is expected that the Notes will mature on June 30, 2026, subject to earlier conversion, redemption or repurchase.
The
Notes are convertible at the option of the holder at any time until the business day prior to the maturity date, including in connection
with a redemption by the Company. The Notes will be convertible into shares of the Company’s common stock, par value $0.0001 per
share, based on an initial conversion rate of 598.824 shares of the Company’s common stock per $1,000 principal amount of the Notes
(which is equal to an initial conversion price of approximately $1.67 per share), in each case subject to customary anti-dilution and
other adjustments (as described in the Indenture).
On
or after June 30, 2024, provided that the Company has obtained stockholder approval pursuant to Nasdaq Marketplace Rule 5635(d), the
Notes will be redeemable by the Company in the event that the closing sale price of the Company’s 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 the Company provides the redemption notice
at a redemption price equal to the then current principal amount of such Notes (inclusive of all PIK Interest), plus the aggregate amount
of all interest payments on such Notes that the holders of the Notes to be redeemed would have been entitled to receive had the Notes
remained outstanding to the maturity date.
With
certain exceptions, upon the occurrence of certain fundamental changes described in the Indenture (each, a “Fundamental Change”),
the holders of the Notes may require that the Company repurchase all or part of the principal amount of the Notes at a purchase price
of 100% of the principal amount of such Notes, plus accrued and unpaid interest to, but excluding, the Fundamental Change repurchase
date.
The
Indenture includes customary “events of default,” which may result in the acceleration of the maturity of the Notes under
the Indenture. The Indenture will also include customary covenants for convertible notes of this type.
The
Notes are senior unsecured obligations of the Company and rank equal in right of payment to all senior unsecured indebtedness of the
Company, and will rank senior in right of payment to any indebtedness that is contractually subordinated to the Notes.
Standstill
Obligations
Pursuant
to the Investment Agreement, the Purchasers have agreed, subject to certain exceptions, that during the period commencing on the Closing
and ending on the six (6) month anniversary of the Closing (the “Standstill Period”), each individual Purchaser will not,
among other things: (i) acquire any securities of the Company if, immediately after such acquisition, such Purchaser would collectively
own in the aggregate more than 20.0% of the then outstanding voting securities of the Company, (ii) propose or seek to effect any tender
or exchange offer, merger or other business combination involving the Company or its securities, or make any public statement with respect
to such transaction, (iii) make, or in any way participate in any “proxy contest” or other solicitation of proxies, (iv)
seek the appointment of any director or (v) call or seek to call any meeting of stockholders or other referendum or consent solicitation.
Transfer
and Conversion Restrictions; Registration Rights; Participation Rights
The
Investment Agreement restricts the Purchasers’ ability to transfer or hedge the Notes or the Company’s common stock, subject
to certain exceptions specified in the Investment Agreement. In particular, prior to the six-month anniversary of the Closing, the Purchasers
will be restricted from transferring or entering into an agreement that transfers the economic consequences of ownership of the Notes
or shares. These restrictions do not apply to, among others, transfers to affiliates.
Subject
to certain limitations, the Investment Agreement provides the Purchasers with certain registration rights for the Notes and shares of
the Company’s common stock issuable upon conversion of the Notes.
The
foregoing summaries of the Indenture, the Notes and the Investment Agreement do not purport to be complete and are subject to, and qualified
in their entirety by the full text of the forms of Note and Indenture, which are attached hereto as Exhibit 4.1 and incorporated herein
by reference, and the Investment Agreement, which is attached hereto as Exhibit 10.1 and incorporated herein by reference.
Limited
Consent Agreement
On January 18, 2023, the
Company entered into a limited consent agreement dated as of January 17, 2023 (the “Limited Consent”) with ACP Post Oak Credit
I LLC, as administrative agent and acting on behalf of itself and the other Lenders under the Senior Secured Term Loan Credit Agreement
dated as of July 29, 2022 (the “Credit Agreement”). Pursuant to the Limited Consent, the Lenders have consented to (i) the
Company incurring indebtedness consisting of unsecured convertible promissory notes (“New Convertible Notes”) that (A) are
on terms and conditions acceptable to the administrative agent, (B) are convertible solely for certain preferred or common stock (subject
to certain exceptions) of the Company (“Eos Equity Interests”), (C) have an aggregate principal amount not to exceed $75,000,000
plus any increase thereof constituting the addition of interest “paid in kind,” and (D) do not provide for the cash payment
of interest, fees, premiums or other similar amounts to or for the benefit of the holders thereof, (ii) the New Convertible Notes constituting
“Convertible Notes” under the Credit Agreement and related documents, (iii) the waiver of the requirement under the Credit
Agreement to prepay the loans under the Credit Agreement with the proceeds of the New Convertible Notes or any proceeds received in respect
of any issuance or sale of Eos Equity Interests pursuant to the New Convertible Notes and (iv) the waiver of the requirement under the
Credit Agreement to prepay the loans under the Credit Agreement with the proceeds of the next issuance of warrants in respect of Eos
Equity Interests after the date of this the Limited Consent, including any proceeds received in respect of any issuance or sale of Eos
Equity Interests upon the exercise of such warrants, which warrants shall be on terms and conditions acceptable to the administrative
agent.
The
foregoing summary of the Limited Consent does not purport to be complete and is subject to, and qualified in its entirety by the full
text of the Limited Consent which is attached hereto as Exhibit 10.2 and incorporated herein by reference.