Item
1.01 Entry into a Material Definitive Agreement
On
November 3, 2021, Gaucho Group Holdings, Inc. (the “Company,” “we,” “us” or “our”) entered
into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors, pursuant to which on
or about November 9, 2021, the Company will sell to the investors a series of senior secured convertible notes of
the Company, in the aggregate original principal amount of $6,480,000 (the “Notes”), which Notes shall be convertible into
shares of common stock of the Company at a conversion price of $3.50 (subject to adjustment). The Notes are due and payable on the first
anniversary of the Issuance Date and bear interest at a rate of 7% per annum, which shall be payable in cash quarterly in arrears on
each Amortization Date (as defined in the Notes) or otherwise in accordance with the terms of the Notes. The investors are entitled to
convert any portion of the outstanding and unpaid Conversion Amount (as defined in the Notes) at any time or times on or after the Issuance
Date, but we may not effect the conversion of any portion of the Notes if it would result in either of the investors beneficially owning
more than 4.99% of the common stock.
Under
the applicable rules of The Nasdaq Stock Market LLC (“Nasdaq”), in no event may we issue any shares of common stock upon
conversion of the Notes or otherwise pursuant to the terms of this Notes if the issuance of such shares of common stock would exceed
19.99% of the shares of the common stock outstanding immediately prior to the execution of the Purchase Agreement and Notes (the “Exchange
Cap”), unless we (i) obtain stockholder approval to issue shares of common stock in excess of the Exchange Cap or (ii) obtain a
written opinion from our counsel that such approval is not required. In any event, we may not issue any shares of our common under the
Purchase Agreement or Notes if such issuance or sale would breach any applicable rules or regulations of the Nasdaq.
The
Notes will rank senior to all outstanding and future indebtedness of the Company and its subsidiaries, and will be secured by
all existing and future assets of the Company, as evidenced by the Security and Pledge Agreement to be entered into between the
Company and the investors on or about November 9, 2021 (the “Security Agreement”). Additionally, Scott L. Mathis,
President and CEO of the Company, will pledge certain of his shares of common stock and certain options to purchase common stock
of the Company as additional collateral under the Notes, as evidenced by the Stockholder Pledge Agreement between the Company, Mr. Mathis
and the investors, dated on or about November 9, 2021 (the “Pledge Agreement”).
In
connection with the foregoing, the Company will enter into a Registration Rights Agreement with the investors on or about
November 9, 2021 (the “Registration Rights Agreement”), pursuant to which the Company has agreed to provide certain
registration rights with respect to the Registrable Securities (as defined in the Registration Rights Agreement) under the Securities
Act of 1933 (the “1933 Act”) and the rules and regulation promulgated thereunder, and applicable state securities laws. 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 purposes of
such agreements and as of specific dates, were solely for the benefit of the parties to such agreements and may be subject to limitations
agreed upon by the contracting parties.
EF
Hutton, division of Benchmark Investments, Inc. (“EF Hutton”) acted as the exclusive placement agent in connection with the
transactions contemplated by the Purchase Agreement, for which the Company will pay to EF Hutton a cash placement fee equal to 6.0% of
the amount of capital raised, invested or committed under the Purchase Agreement and Notes.
The
foregoing description of the Purchase Agreement, Notes, Security Agreement, Pledge Agreement, and Registration Rights Agreement, do not
purport to be complete and is qualified in its entirety by reference to the complete text of the Purchase Agreement, Notes, Security
Agreement, Pledge Agreement, and Registration Rights Agreement, copies of which are filed as Exhibit 10.1, Exhibit 10.2, Exhibit 10.3,
Exhibit 10.4, and Exhibit 10.5 to this Current Report on Form 8-K, respectively, and incorporated by reference into this Item 1.01.