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Item
2.03.
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Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement of a Registrant.
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Advance
of $800,000 under Loan and Security Agreement with Energy Capital, LLC
On
March 28, 2019, Ondas Holdings Inc. (the "Company") drew down an advance of $800,000 available (the "Fifth Advance")
under the Loan and Security Agreement with Energy Capital, LLC ("Energy Capital") entered into on October 1, 2018 (the
"Loan Agreement") by Ondas Holdings and Energy Capital (the "Loan"). The Fifth Advance proceeds will be utilized
primarily for inventory and operating capital.
The
principal amount outstanding under the Loan bears interest at
a
per annum rate equal to the greater of (a) 11.25% or (b) 11.25% plus the Prime Rate (as published by the Wall Street Journal (National
Edition)), less 3.25%. All amounts outstanding under the Loan are secured by a lien on the Company’s assets, subject to
terms of outstanding debt obligations, and, as a result of the Amendment (described below), become due and payable on September
30, 2020.
The
Loan Agreement contains customary events of default and affirmative and negative covenants for transactions of this nature. Upon
an event of default, Energy Capital has the right to require the Company to prepay the outstanding principal amount of the Loan
plus all accrued and unpaid interest.
The
Loan was completed through a private placement and is exempt from registration pursuant to Section 4(2) of the Securities
Act of 1933, as amended. In claiming the exemption under Section 4(2), the Company relied in part on the following facts:
(1) the offer and sale involved one purchaser (Energy Capital); (2) the purchaser had access to information regarding the Company;
(3) the purchaser represented that it (a) had the requisite knowledge and experience in financial and business matters to evaluate
the merits and risk of an investment in the Company; (b) was able to bear the economic risk of an investment in the Company; (c)
will acquire the Loan for its own account in a transaction not involving any general solicitation or general advertising, and
not with a view to the distribution thereof; and (4) a restrictive legend was placed on the instrument evidencing the Loan.
A
copy of the Loan is filed herewith as Exhibit 10.2 and incorporated herein by reference.
First
Amendment to Loan and Security Agreement with Energy Capital
On
April 2, 2019, the Company and Energy Capital entered into a First Amendment to Loan and Security Agreement (the "First Amendment")
to (i) amend the notice provisions of an Advance Request under the Loan Agreement from at least five (5) business days to at least
one (1) business day before the Advance Date, (ii) increase the amount of the Advance from up to $1,000,000 a month to up to $1,500,000
a month, and (iii) change the definition of the term
Maturity Date
from "the earlier of September 30, 2019 or 10 business
days following the date of an Underwritten Public Offering as defined in Section 2.3" to "September 30, 2020."
A copy of the First Amendment is filed herewith as Exhibit 10.3 and incorporated herein by reference.
Amendment
to Secured Promissory Notes
In
addition to the Loan described above, the Company has four outstanding secured promissory notes pursuant to the Loan Agreement
for an aggregate principal amount of $3,300,000. Such secured promissory notes are dated January 29, 2019, February 11, 2019,
February 27, 2019 and March 14, 2019 (collectively with the Loan, the “Secured Promissory Notes”). In connection with
the First Amendment, on April 2, 2019, the Company and Energy Capital entered into an Amendment to Secured Promissory Notes to
amend the term
Maturity Date
in the Secured Promissory Notes from September 30, 2019 to September 30, 2020 (the “Amendment”).
A copy of the Amendment is filed herewith as Exhibit 10.4 and incorporated herein by reference.