Item
1.01
|
Entry
into a Material Definitive Agreement.
|
Exchange
Agreement and Exchange and Assignment Agreement
On
June 23, 2020, Surge Holdings, Inc. (the “Company”) entered into an Exchange Agreement (the “AltCorp Exchange
Agreement”) with AltCorp Trading LLC (“AltCorp”) with such AltCorp Exchange Agreement being consented and agreed
to by GBT Technologies, Inc. (“GBT”), the parent of AltCorp.
On
September 27, 2019, the Company issued a Convertible Promissory Note for the benefit of GBT in the principal amount of $4,000,000
(the “Note”). GBT subsequently assigned the Note to AltCorp on February 3, 2020.
Pursuant
to the AltCorp Exchange Agreement, the Company and AltCorp agreed to exchange $2,750,000 of principal (and related interest, fees,
and expenses) of the Note for 5,500,000 shares of the Company’s common stock, par value $0.001 per share (the “Common
Stock”). AltCorp agreed to a one-year lock-up on the 5,500,000 shares (the “AltCorp Shares”). At the expiration
of the lock-up period, in the event the VWAP for the Common Stock was, during the preceding twenty day trading period, at less
than $0.50 per share, AltCorp shall have the right to receive additional shares of Common Stock equal to the True-Up Value (as
defined in the AltCorp Exchange Agreement).
On
June 23, 2020, the Company entered into an Exchange and Assignment Agreement (the “Glen Eagles Exchange Agreement”)
with AltCorp and Glen Eagles Acquisition LP (“Glen Eagles”) with such Glen Eagles Exchange Agreement being consented
and agreed to by GBT. Pursuant to the Glen Eagles Exchange Agreement, the Company and AltCorp agreed to exchange $1,250,000 of
principal (and related interest, fees, and expenses) of the Note for 2,500,000 shares of Common Stock (the “Glen Eagles
Shares”) with the Glen Eagles Shares being immediately and irrevocably issued and assigned by AltCorp to Glen Eagles. Glen
Eagles agreed to a leak-out whereby it could sell up to 7,500 shares of Common Stock per trading day. On June 23, 2021, in the
event the VWAP for the common stock was, during the preceding twenty day trading period, at less than $0.50 per share, Glen Eagles
shall have the right to receive additional shares of Common Stock equal to the True-Up Value (as defined in the Glen Eagles Exchange
Agreement). The True-Up Value takes into account the amount (net of commissions, brokerage fees, and clearing costs) Glen Eagles
received from its previous sales of the Glen Eagles Shares. The right to receive further shares would be null and void if Glen
Eagles violates the leak-out provision.
Stock
Cancellation Agreement
On
June 23, 2020, the Company entered into a Stock Cancellation Agreement with Yossi Attia (the “Stock Cancellation Agreement”).
Prior to entering into the Stock Cancellation Agreement, Mr. Attia owned 3,333,333 shares of Common Stock (the “Attia Shares”)
without a restrictive legend. Pursuant to the Stock Cancellation Agreement, the Company agreed to pay $500,000 to Mr. Attia for
the return and cancellation of 2,380,952 of the Attia Shares. The Company has the option, on or prior to July 23, 2020, to pay
Mr. Attia $0.21 per share for the return and cancellation of any or all of the remaining 952,381 Attia Shares. An executed undated
share cancellation form for the remaining 952,381 Attia Shares is being held in escrow pending payment by the Company.
Item
1.01 of this Current Report on Form 8-K contains only a brief description of the material terms of and does not purport to be
a complete description of the rights and obligations of the parties to the AltCorp Exchange Agreement, the Glen Eagles Exchange
Agreement, and the Stock Cancellation Agreement and such descriptions are qualified in their entirety by reference to the full
text of the AltCorp Exchange Agreement, the Glen Eagles Exchange Agreement, and the Stock Cancellation Agreement, which are
attached as Exhibits 10.1, 10.2, and 10.3, respectively, to this Current Report on Form 8-K, and are incorporated herein by reference.