Item
1.01 Entry into a Material Definitive Agreement.
On May 6, 2022, AST SpaceMobile,
Inc. (the “Company”) entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) and a Registration
Rights Agreement (the “Registration Rights Agreement”) with B. Riley Principal Capital, LLC (“B. Riley”). Pursuant
to the Purchase Agreement, subject to the satisfaction of the conditions set forth in the Purchase Agreement, the Company will
have the right to sell to B. Riley up to the lesser of (i) $75,000,000 of newly issued shares (the “Shares”) of
the Company’s Class A common stock, par value $0.0001 per share (the “Class A Common Stock”), and (ii) the Exchange
Cap (as defined below) (subject to certain conditions and limitations), from time to time during the term of the Purchase Agreement.
Sales of Class A Common Stock pursuant to the Purchase Agreement, and the timing of any sales, are solely at the option of the Company,
and the Company is under no obligation to sell any securities to B. Riley under the Purchase Agreement.
Upon the satisfaction of the
conditions to B. Riley’s purchase obligation set forth in the Purchase Agreement (the “Commencement”), including that
a registration statement registering under the Securities Act of 1933, as amended (the “Securities Act”), the resale
by B. Riley of shares of Class A Common Stock issued to it by the Company under the Purchase Agreement, which the Company agreed to file with the Securities and Exchange Commission (the “SEC”) pursuant to the
Registration Rights Agreement, is declared effective by the SEC and a final prospectus relating thereto is filed with the SEC, the Company
will have the right, but not the obligation, from time to time at its sole discretion over the 24-month period from and after the Commencement,
to direct B. Riley to purchase a specified maximum amount of shares of Class A Common Stock, not to exceed certain limitations
as set forth in the Purchase Agreement (each, a “VWAP Purchase”), by delivering written notice to B. Riley prior to
the commencement of trading of the Class A Common Stock on The Nasdaq Global Select Market (“Nasdaq”) on any trading
day (the “Purchase Date”), so long as (i) the closing sale price of the Class A Common Stock on the trading day
immediately prior to such Purchase Date is not less than as specified threshold price as set forth in the Purchase Agreement and
(ii) all shares of Class A Common Stock subject to all prior VWAP Purchases and all prior Intraday VWAP Purchases (as defined below)
by B. Riley under the Purchase Agreement have been received by B. Riley prior to the Company’s delivery of such applicable
purchase notice to B. Riley.
The purchase price of the shares of Class A Common Stock that the Company elects to sell to B. Riley
pursuant to the Purchase Agreement will be determined by reference to the volume weighted average price of the Class A Common Stock (“VWAP”),
during the full regular trading hour period on Nasdaq on the applicable Purchase Date, calculated in accordance with the Purchase
Agreement, or, if during such regular trading hour period, (i) the trading volume threshold calculated in accordance with the Purchase
Agreement is reached or (ii) the trading price of a share of Class A Common Stock on Nasdaq falls below a certain minimum price threshold
as chosen in accordance with the Purchase Agreement, then only during the portion of the regular trading hour period on the applicable
Purchase Date prior to the time such volume threshold is reached or the time such trading price of a share of Class A Common Stock falls
below the minimum price threshold, the precise commencement and ending times of such period determined in accordance with the Purchase
Agreement (the “Purchase Valuation Period”), less a fixed 3.0% discount to the VWAP for such Purchase Valuation Period.
In
addition to the regular VWAP Purchases described above, after the Commencement, we will also have the right, but not the obligation,
subject to the continued satisfaction of the conditions set forth in the Purchase Agreement, to direct B. Riley to purchase, on any trading
day, including the same Purchase Date on which a regular VWAP Purchase is effected (as applicable), a specified amount of shares of Class
A Common Stock, not to exceed certain limitations set forth in the Purchase Agreement that are similar to those that apply to a regular
VWAP Purchase (each, an “Intraday VWAP Purchase”), by the delivery to B. Riley of an irrevocable written purchase notice,
after 10:00 a.m., New York City time, and prior to 1:30 p.m., New York City time, on such Purchase Date.
The
per share purchase price for the shares of Class A Common Stock that we elect to sell to B. Riley in an Intraday VWAP Purchase pursuant
to the Purchase Agreement, if any, will be calculated in the same manner as in the case of a regular VWAP Purchase (including the same
fixed percentage discounts to the applicable VWAP as in the case of a regular VWAP Purchase, as described above), provided that the VWAP
for each Intraday VWAP Purchase effected on a Purchase Date will be calculated over different Purchase Valuation Periods on such Purchase
Date, each of which will commence and end at different times on such Purchase Date.
There
is no upper limit on the price per share that B. Riley could be obligated to pay for the Class A Common Stock the Company may elect to
sell to it in any VWAP Purchase or any Intraday VWAP Purchase under the Purchase Agreement. The purchase price per share of Class A Common
Stock that the Company may elect to sell to B. Riley in a VWAP Purchase and an Intraday VWAP Purchase under the Purchase Agreement will
be equitably adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar
transaction occurring during the applicable Purchase Valuation Period for such VWAP Purchase or during the applicable Intraday Purchase
Valuation Period for such Intraday VWAP Purchase.
From
and after Commencement, the Company will control the timing and amount of any sales of Class A Common Stock to B. Riley. Actual sales
of shares of Class A Common Stock to B. Riley under the Purchase Agreement will depend on a variety of factors to be determined by the
Company from time to time, including, among other things, market conditions, the trading price of the Class A Common Stock and determinations
by the Company as to the appropriate sources of funding for the Company and its operations.
Under the applicable rules of
Nasdaq, in no event may the Company issue to B. Riley under the Purchase Agreement more than 36,310,037 shares of Class A Common
Stock, which number of shares equal to 19.99% of the sum of (i) the shares of Class A Common Stock, (ii) the shares of the Company’s
Class B common stock, par value $0.0001 per share and (iii) the shares of the Company’s Class C common stock, par value $0.0001
per share, in each case, issued and outstanding immediately prior to the execution of the Purchase Agreement (the “Exchange Cap”),
unless the Company obtains stockholder approval to issue shares of Class A Common Stock in excess of the Exchange Cap in accordance with
applicable Nasdaq rules, or (ii) the average price per share paid by B. Riley for all of the shares of Class A Common Stock that we
direct B. Riley to purchase from us pursuant to the Purchase Agreement, if any, equals or exceeds the lower of the official closing price
of our Class A Common Stock on Nasdaq on May 5, 2022 and the average official closing price of our Class A Common Stock on Nasdaq for
the five consecutive trading days ending on May 5, 2022, as adjusted pursuant to applicable Nasdaq rules. Moreover, the Company may
not issue or sell any shares of Class A Common Stock to B. Riley under the Purchase Agreement which, when aggregated with all other shares
of Class A Common Stock then beneficially owned by B. Riley and its affiliates (as calculated pursuant to Section 13(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 13d-3 promulgated thereunder), would result in B.
Riley beneficially owning more than 4.99% of the outstanding shares of Class A Common Stock.
The
net proceeds from sales, if any, under the Purchase Agreement, will depend on the frequency and prices at which the Company sells shares
of Class A Common Stock. To the extent the Company sells shares under the Purchase Agreement, the Company currently plans to use any
proceeds for general corporate purposes.
There are no restrictions
on future financings, rights of first refusal, participation rights, penalties or liquidated damages in the Purchase Agreement or Registration
Rights Agreement, except the Company is prohibited (with certain specified exceptions) from effecting or entering into an agreement to
effect certain “Variable Rate Transactions” (as defined in the Purchase Agreement), which include issuances of Class A Common
Stock or securities exercisable, exchangeable or convertible into Class A Common Stock issued or issuable at a future-determined price
or a price that varies or floats based on the market price of the Class A Common Stock, including an “equity line” with a
third party, or any similar continuous offering of equity securities of the Company.
B.
Riley has agreed not to engage in or effect, directly or indirectly, for its own principal account or for the principal account of any
of its affiliates, any short sales of the Class A Common Stock or hedging transaction that establishes a net short position in the Class
A Common Stock during the term of the Purchase Agreement.
The
Purchase Agreement and the Registration Rights Agreement contain customary representations, warranties, conditions and indemnification
obligations of the parties. The representations, warranties and covenants contained in such agreements were made only for the purposes
of such agreements, were solely for the benefit of the parties to such agreements and may be subject to limitations agreed upon by the
contracting parties.
The
Purchase Agreement will automatically terminate on the earliest to occur of (i) the first day of the month next following the 24-month
anniversary after the Commencement, (ii) the date on which B. Riley shall have purchased $75,000,000 of shares of Class A Common Stock
from the Company under the Purchase Agreement, (iii) the date on which the Class A Common Stock shall have failed to be listed or quoted
on a U.S. national securities exchange for a period of one trading day, (iv) the thirtieth trading day following the date on which the
Company commences a voluntary bankruptcy proceeding or any person commences a proceeding against the Company, and (v) the date on which
a custodian is appointed for the Company or for all or substantially all of its property, or the Company makes a general assignment for
the benefit of its creditors. The Company has the right to terminate the Purchase Agreement at any time after Commencement, at no cost
or penalty, upon five trading days’ prior written notice to B. Riley. The Company and B. Riley may also agree to terminate the
Purchase Agreement by mutual written consent, provided that no termination of the Purchase Agreement will be effective during the pendency
of any VWAP Purchase that has not then fully settled in accordance with the Purchase Agreement. Neither the Company nor B. Riley may
assign or transfer its respective rights and obligations under the Purchase Agreement or the Registration Rights Agreement.
As consideration for its
irrevocable commitment to purchase our Class A Common Stock under the Purchase Agreement, we issued to B. Riley 21,969
shares of our Class A Common Stock as initial commitment shares upon execution of the Purchase Agreement and the Registration Rights
Agreement. In addition, (i) upon the first VWAP Purchase effected by us pursuant to the
Purchase Agreement (if any), we will issue 21,969 additional shares of our Class A Common
Stock to B. Riley as additional commitment shares, (ii) upon our receipt of total aggregate gross cash proceeds equal to $25,000,000
from B. Riley under the Purchase Agreement (if any), we will issue 21,969 additional
shares of our Class A Common Stock to B. Riley as additional commitment shares, and (iii)
upon our receipt of total aggregate gross cash proceeds equal to $50,000,000 from B. Riley under the Purchase Agreement (if any), we
will issue an additional 21,969 shares of our Class A Common Stock to B. Riley as
additional commitment shares, totaling 65,907 additional commitment shares (in addition
to the 21,969 initial commitment shares we issued to B. Riley upon execution of the
Purchase Agreement).
The
foregoing descriptions of the Purchase Agreement and the Registration Rights Agreement are qualified in their entirety by reference to
the full text of the Purchase Agreement and the Registration Rights Agreement, which are attached to this Current Report on Form 8-K
as Exhibit 10.1 and Exhibit 10.2, respectively, and each of which is incorporated herein by reference.
This
Current Report on Form 8-K shall not constitute an offer to sell or a solicitation of an offer to buy any of the Company’s common
stock nor shall there be any sale of the Company’s common stock in any state or jurisdiction in which such an offer,
solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or other jurisdiction.