{"url_path":"/sec/usar/8-k/2026-06-03/item-1-01","section_key":"item-1-01","section_title":"Item 1.01 Entry into a Material Definitive","topic":"sec","document":{"doc_type":"8-K","doc_date":"2026-06-03","source_url":"https://www.sec.gov/Archives/edgar/data/1970622/0001213900-26-064453-index.html","accession_number":"0001213900-26-064453","cik":"0001970622","ticker":"USAR","issuer_name":"USA Rare Earth, Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1970622/0001213900-26-064453-index.html","primary_entity_key":"0001970622","primary_entity_name":"USA Rare Earth, Inc."},"word_count":2100,"has_tables":true,"body_markdown":"** **\n\n \n\n \n\n \n\n \n\nItem 1.01. Entry into a Material Definitive\nAgreement.\n\n \n\nDirect Funding Agreement & Loan Guarantee\nAgreement\n\n \n\nOn January 26, 2026, USA Rare\nEarth, Inc. (“USAR”) previously announced its entry into a non-binding letter of intent by and between USAR and the\nUnited States Department of Commerce (the “DOC”) with respect to funding in an aggregate amount equal to $1.6 billion,\nincluding $277.0 million in direct funding awards and $1.3 billion in senior secured debt with a 15-year term and an expected rate of\nTreasury + 150 bps, under the CHIPS Incentives Program—Facilities for Semiconductor Materials and Manufacturing Equipment under\nthe CHIPS Act of 2022. In furtherance thereof, on June 3, 2026, USAR entered into (x) a Direct Funding Agreement (the “Direct\nFunding Agreement”), by and among USAR, as the recipient, certain subsidiaries of USAR, as guarantors, and the DOC and (y) a\nLoan Guarantee Agreement (the “Loan Guarantee Agreement” and, together with the Direct Funding Agreement, the “Funding\nAgreements”), by and among USAR, as the borrower, certain subsidiaries of USAR, as guarantors, and the DOC.\n\n \n\nUnder the Direct Funding Agreement,\nthe DOC has agreed to provide direct funding awards (the “Direct Funding”) with a maximum award amount of $277.0 million\nin the aggregate, comprised of (a) $132.0 million for the construction of a rare earth mining and processing facility in Sierra Blanca,\nTexas (the “Round Top Mine Project”), (b) $50.0 million for the expansion and modernization of the existing magnet\nmaking facility located in Stillwater, Oklahoma (the “Stillwater Magnet Project”), (c) $20.0 million for the expansion\nand modernization of the existing strip casting and metal making facility located in Stillwater, Oklahoma (the “Stillwater Metal\nProject”), (d) $60.0 million for the construction of a new magnet making facility (the “Magnet Project 2”)\nand (e) $15.0 million for the construction of a new strip casting and metal making facility (the “Metal Project 2”).\nWith respect to each Project, Direct Funding under the Direct Funding Agreement is available from the date of the Direct Funding Agreement\nuntil the Milestone Completion Longstop Date (as defined in the Direct Funding Agreement) for the last disbursement milestone for such\nProject. The obligations of USAR under the Direct Funding Agreement are guaranteed by each of the subsidiary guarantors party thereto.\n\n \n\nUnder the Loan Guarantee Agreement,\nthe DOC has agreed to guarantee the repayment by USAR and its affiliates of advances in an aggregate principal amount of $1.3 billion\n(“FFB Advances” and, together with the Direct Funding, the “Awards”) made by the Federal Financing\nBank (“FFB”), an instrumentality of the United States, to USAR. The FFB Advances are comprised of (a) $550.0 million\nfor the Round Top Mine Project, (b) $250.0 million for the Stillwater Magnet Project, (c) $100.0 million for the Stillwater\nMetal Project, (d) $325.0 million for the Magnet Project 2 and (e) $75.0 million for the Metal Project 2. With respect to each\nProject, FFB Advances under the Loan Guarantee Agreement are available from the date of the Loan Guarantee Agreement until the Project\nCompletion Longstop Date (as defined in the Loan Guarantee Agreement) for such Project. If USAR or its affiliates default on any payment\nwith respect to FFB Advances due to FFB, then the DOC becomes obligated to make payments to FFB, and USAR and its affiliates become immediately\nobligated to reimburse the DOC for such payments. The obligations of USAR under the Loan Guarantee Agreement are guaranteed by each of\nthe subsidiary guarantors party thereto and secured by first-priority liens on substantially all of the assets of USAR and the subsidiary\nguarantors.\n\n \n\nInterest accrues on the FFB\nAdvances under the Loan Guarantee Agreement at rates specified in the applicable notes to be entered into with respect to each FFB Advance\n(each, an “FFB Note”). Each FFB Advance matures fifteen (15) years after the first FFB Advance made under the applicable\nFFB Note. Under the Loan Guarantee Agreement, USAR is required to pay to the DOC (i) a one-time commitment fee equal to 2.0% of the\nFFB commitment amount, (ii) a ticking fee equal to 2.0% per annum on the unutilized FFB commitment, and (iii) an annual maintenance\nfee equal to the lesser of 0.1% of the outstanding guaranteed loan balance and $200,000.\n\n \n\nThe Round Top Mine Project,\nStillwater Magnet Project, Stillwater Metal Project, Magnet Project 2 and Metal Project 2 are collectively referred to herein as the “Projects.”\n\n \n\n1\n\n \n\n \n\nConditions to the Awards\n\n \n\nUnder the Funding Agreements,\nUSAR may request disbursements of the Awards based on the achievement of various milestones to reimburse USAR and its applicable subsidiaries\nfor certain eligible uses of funds with respect to the Projects. Milestones for the Awards are Project-specific, such as the achievement\nof feasibility studies, site design, facility completion, equipment installation, technology transfer, production capacity qualification\nat various thresholds, securing customer purchase agreements, and attainment of target production volumes. Disbursements of the Awards\nfor each milestone are subject to various conditions precedent, including: (i) completion of the applicable disbursement milestone; (ii)\nevidence that USAR has made equity contributions to its subsidiaries in cash to fund Project costs; (iii) compliance with representations,\nwarranties and covenants; and (iv) the absence of defaults under the applicable Funding Agreement and related documents. Under the Loan\nGuarantee Agreement, additional conditions precedent to each FFB Advance include: (i) evidence that certain financial ratio thresholds\nhave been satisfied; (ii) evidence that the proceeds will be applied to eligible uses of funds; (iii) payment of all fees and expenses\ndue to the DOC; (iv) certification that budget amounts have not been exceeded; and (v) delivery of required permits and approvals.\n\n \n\nRepresentations, Warranties and Covenants\n\n \n\nThe Funding Agreements contain\nrepresentations, warranties and covenants applicable to USAR and the subsidiary guarantors party thereto, including, but not limited to:\n(i) reporting, maintenance, and the operation of the Projects; (ii) compliance with applicable laws, taxes, environmental requirements,\nDavis-Bacon Act requirements and various regulations; (iii) restrictions on the eligible uses of the Awards; (iv) restrictions\non joint research and transactions with foreign countries and entities of concern; (v) the issuance of indebtedness other than permitted\nindebtedness; (vi) restrictions on dividends, share repurchases and equity redemptions; (vii) restrictions on liens other than\npermitted liens; (viii) maintenance of first priority security interests in the collateral for the benefit of the secured parties;\n(ix) requirements for equity contributions to satisfy funding plans and project completion requirements; (x) insurance requirements\nand loss proceeds application; (xi) restrictions on mergers, dispositions, and change of control transactions without consent of\nthe DOC; (xii) restrictions on affiliate transactions; (xiii) limitations on capital expenditures other than permitted capital\nexpenditures; (xiv) intellectual property maintenance and protection; (xv) maintenance of required approvals, permits, and licenses;\nand (xvi) liquidity requirements and financial covenants, including fixed charge coverage ratios and book value to debt ratios.\n\n \n\nEquity Raise Requirements\n\n \n\nUnder the Funding Agreements,\nUSAR is required to raise equity (which could include, at USAR’s option, up to $300.0 million of convertible loan notes) in the\nfollowing amounts by the corresponding dates (with equity raised on or after January 1, 2026 credited against the required amounts):\n\n \n\n●On or prior to December 31, 2026, USAR is required to raise an aggregate\namount of equity equal to $1.45 billion. As previously announced, on January 28, 2026, USAR closed a private placement of 69,767,442 shares\nof common stock at $21.50 per share, for aggregate gross proceeds of approximately $1.5 billion, which satisfied the equity raise requirement\nfor 2026.\n\n \n\n●On or prior to March 31, 2027, USAR is required to raise an additional\naggregate amount of equity equal to $375.0 million *plus*the total cash acquisition costs for the announced proposed acquisition\nof Serra Verde Group (“SVRE”).\n\n \n\n●On or prior to December 31, 2027, USAR is required to raise an additional\naggregate amount of equity equal to $875.0 million.\n\n \n\nUSAR’s obligation to\nraise the equity described above is reduced by an amount equal to (x) 100% of any dividends received from SVRE up to an aggregate\namount equal to the total cash acquisition costs for the acquisition of SVRE and (y) thereafter, 50% of any dividends received from\nSVRE.\n\n \n\nUnder the Funding Agreements,\nUSAR is required to establish a revolving credit facility in an aggregate principal amount not to exceed $250.0 million by June 30, 2027.\nIn addition to the equity raise requirements described above, USAR is required to raise an aggregate amount of equity that is sufficient\nto satisfy the cash collateral required under such working capital facility. * *\n\n \n\n2\n\n \n\n \n\nEvents of Default; Acceleration; Termination\n\n \n\nThe Funding Agreements contain\nevents of default, including (i) clawback events, including failure to achieve project completion by applicable deadlines, engagement\nin certain joint research or transaction activities involving any foreign country or entity of concern in violation of the guardrail provisions,\nthe impermissible use or disposition of a Project and, under the Direct Funding Agreement, property disposition and cumulative disbursement\nratio clawback events; (ii) payment defaults; (iii) cross defaults for indebtedness in excess of certain thresholds; (iv) certain\nsignificant events of default such as the violation of specified covenants, abandonment of a Project, change of control without consent,\nand the bankruptcy or insolvency of USAR or the subsidiary guarantors; and (v) other events of default, including breaches of certain\nrepresentations, warranties and covenants, major project document breaches, failure of security documents to provide first priority liens,\nand violations of sanctions, export control laws, anti-money laundering laws or anti-corruption laws.\n\n \n\nRights and remedies in connection\nwith events of default include: (i) termination of the Funding Agreements or any awards thereunder; (ii) imposition of additional\nconditions pending corrective actions; (iii) suspension or termination of the FFB commitment or the maximum award amount, or withholding\nof disbursements; (iv) acceleration of all outstanding amounts due under the financing documents (automatic upon bankruptcy, insolvency\nor dissolution); (v) foreclosure upon the collateral; (vi) recovery of awards or disbursements for clawback events; (vii) set-off\nrights; (viii) specific performance; and (ix) initiation of debarment proceedings.\n\n \n\nThe Direct Funding Agreement\nshall remain in effect until the later of (a) the second anniversary of the completion date of the last Project to be completed and\n(b) the tenth anniversary of the execution of the Direct Funding Agreement. The Loan Guarantee Agreement shall remain in effect until\nthe indefeasible payment in full of all secured obligations and expiration or termination of the FFB commitment. Certain provisions, including\nthose relating to expansion transactions with any foreign country of concern, dispute resolution, and indemnification, shall survive termination.\n\n \n\nSecurities Issuance Agreement\n\n \n\nConcurrently with the execution\nand delivery of, and as inducement to enter into, the Direct Funding Agreement, USAR has entered into a Securities Issuance Agreement\n(the “Securities Issuance Agreement”) with the DOC pursuant to which USAR will issue to the DOC 16,132,790 shares of\nUSAR Common Stock (the “SIA Shares”) and a warrant (the “Warrant”) to purchase 17,600,584 shares\nof USAR Common Stock (the “Warrant Shares”) at an exercise price of $17.17 per share. Among other things, the Securities\nIssuance Agreement provides for (i) a transfer restriction on the SIA Shares and the Warrant, including the Warrant Shares, received as\nconsideration pursuant to the Securities Issuance Agreement for 12 months following the issuance of such securities, (ii) customary resale\nshelf registration rights on Form S-3 (or Form S-1 if USAR is not then eligible for Form S-3) and piggyback registration rights in favor\nof the DOC, and (iii) a covenant that the DOC will not vote any SIA Shares or Warrant Shares, except with respect to certain matters required\nby law and any merger, consolidation or similar business combination involving USAR.\n\n \n\nWarrant\n\n \n\nConcurrently with the execution\nand delivery of, and as provided for under, the Securities Issuance Agreement, USAR has issued a Warrant (the “Warrant”)\nfor the Warrant and the underlying Warrant Shares. Among other things, the Warrant provides for (i) customary anti-dilution protections\nfor stock splits, subdivisions, reclassifications, or combinations, extraordinary dividends and share purchases with respect to the USAR\nCommon Stock, (ii) redemption rights pursuant to which the warrantholder may, in connection with any Business Combination (as defined\nin the Warrant), require the acquiror to repurchase all or a portion of the Warrant at the Redemption Price (as defined in the Warrant)\nand (iii) exchange rights pursuant to which the warrantholder may require, as a condition precedent to any Business Combination, that\nthe successor party assume all covenants, agreements and conditions of USAR under the Warrant.\n\n \n\nThe foregoing summaries of\nthe Funding Agreements, the Securities Issuance Agreement and Warrant do not purport to be a complete description of all the parties’\nrights and obligations under such agreements, as applicable, and are qualified in their entirety by reference to the full text of such\nagreements."}