Item 4 — Purpose of Transaction
Item 4 is hereby amended and supplemented by the addition of the following: As previously disclosed, on June 21, 2024, the Issuer entered into a credit and guaranty agreement by and among the Issuer, as borrower, the guarantors party thereto, the various lenders party thereto (the "Lenders"), and CCM Denali Debt Holdings, LP., as administrative agent and collateral agent, which was subsequently amended by that certain omnibus amendment entered into on November 26, 2024 (as amended, the "Credit Agreement"), pursuant to which the Lenders agreed to provide a secured multi-draw term loan facility in an aggregate amount of up to $210.5 million (the "Delayed Draw Term Loan") to be made in up to four installments, and a revolving credit facility in an aggregate amount of up to $105 million, to be made available at the Lenders' sole discretion and only if the Delayed Draw Term Loan is fully funded, on terms and subject to conditions set forth in the Credit Agreement. Pursuant to the previously disclosed Securities Purchase Agreement, upon each draw under the Delayed Draw Term Loan, the Issuer will issue and sell to CCM Denali Equity in private placement transactions Warrants and/or Preferred Stock in amounts representing predetermined, fully diluted, percentages (an "Applicable Percentage") of Common Stock. Upon any failure to achieve a milestone, in addition to not being able to receive a draw on the Delayed Draw Term Loan unless waived by the Lenders, the Applicable Percentage will be subject to up to a 4.0% increase for all milestone events as to each of the remaining milestone measurement dates. On January 23, 2025, the Issuer and Cerberus Capital Management II mutually confirmed that the Issuer satisfied all four applicable performance objectives comprising the third milestone required to draw an additional $40.5 million on the Delayed Draw Term Loan (the "Third Milestone") related to the Issuer's automated production line, materials costs, Z3 technology performance and backlog/cash conversion, pursuant to the terms of the Credit Agreement. On January 23, 2025, the Issuer submitted a borrowing request under the Credit Agreement, and on January 24, 2025, the Lenders funded the full amount of the scheduled $40.5 million draw under the Delayed Draw Term Loan, completing the scheduled fundings under the Delayed Draw Term Loan. In connection with the final scheduled draw and pursuant to the terms and conditions of the Credit Agreement and Securities Purchase Agreement, the Applicable Percentage increased by 2.1%, and as a result the Issuer issued to Cerberus Denali Equity 16.150528 shares of a newly designated Series B-4 Non-Voting Convertible Preferred Stock (the "Series B-4 Preferred Stock", and together with Series B-1 Preferred Stock, Series B-2 Preferred Stock, and Series B-3 Preferred Stock, "Series B Preferred Stock"), which are convertible into an aggregate of 16,150,528 shares of Common Stock. Collectively, the Warrant issued on June 21, 2024, the previously issued shares of Series B-1 Preferred Stock, the previously issued shares of Series B-2 Preferred Stock, the previously issued shares of Series B-3 Preferred Stock, and the shares of the Series B-4 Preferred Stock held by Cerberus Denali Equity are exercisable or convertible into, as applicable, an aggregate of 158,433,112 shares of Common Stock, or an Applicable Percentage of 33.0%. As a result of meeting the Third Milestone, if the Issuer fails to meet all of the remaining milestones as of the final milestone measurement date under the Delayed Draw Term Loan, Cerberus Denali Equity would be entitled to receive Preferred Stock or Warrants aggregating to a maximum Applicable Percentage of 37.0% (originally 49.0%), or assuming the number of the Issuer's outstanding shares of Common Stock on a fully diluted basis does not change after January 23, 2025, Preferred Stock and Warrants with respect to an aggregate of 188,915,674 shares of Common Stock, including the Warrant, Series B-1 Preferred Stock, Series B-2 Preferred Stock, Series B-3 Preferred Stock, and Series B-4 Preferred Stock already issued to Cerberus Denali Equity. Such shares of Preferred Stock and Warrant are directly or indirectly convertible into or exercisable for shares of Common Stock, subject only to a beneficial ownership cap of 49.9% of the issued and outstanding Common Stock of the Issuer. On January 24, 2025, the Issuer filed with the Secretary of State of the State of Delaware the Certificate of Designation of Series B-4 Non-Voting Convertible Preferred Stock (the "Series B-4 Certificate of Designation"). Under the terms of the Series B-4 Certificate of Designation, each share of Series B-4 Preferred Stock has an original issue price of $5,590,000 (the "B-4 Original Issue Price"). Each full share of Series B-4 Preferred Stock is initially convertible into 1.0 million shares of Common Stock and will be convertible at the option of the holder at any time through the Maturity Date (as