Item 1.01 Entry into a Material Definitive Agreement.
reported in the Current Report on Form 8-K filed on March 26, 2018, by DPW Holdings, Inc. (the “
Company entered into a securities purchase agreement dated March 23, 2018, with an institutional investor (the “
providing for the issuance of (i) a 12% Note in the principal amount of $1,000,000 at a 10% original issue discount (the “
”) and (ii) a five-year warrant to purchase up to 15,000 shares of the Company’s common stock, par value $0.001
per share (“
”) at an exercise price of $23.00, as adjusted to give effect to the Company’s
reverse stock split on March 14, 2019.
On July 3, 2019
”), the Company and the Investor entered into an Exchange Agreement (the “
pursuant to which, in exchange for the Original Note, the Company shall issue a Convertible Promissory Note in the principal face
amount of $1,292,000 plus a default premium of $200,000, for an aggregate of $1,492,000, subject to adjustments (the “
”), and (ii) a five-year warrant (the “
”) to purchase of 1,000,000 shares of Common Stock,
subject to adjustments, at an exercise price of $0.22 per share (the “
”), subject to the approval
thereof by the NYSE American.
Description of Convertible Promissory
The New Note is in the aggregate principal
amount of $1,492,000 and bears interest at 12% per annum, which principal and all accrued and unpaid interest are due on January
22, 2020 (the “
”), or upon acceleration, prepayment or otherwise in accordance with the terms of
the New Note, and which interest shall be payable in cash, in arrears, on the first business day of each month, with the first
payment of interest due on August 1, 2019. Commencing on July 15, 2019, subject to certain beneficial ownership limitations, the
Investor may convert the principal amount of the New Note and accrued interest earned thereon at any time into shares of the Company’s
common stock at $0.22 per share (the “
” and with the Warrant Shares, the “
subject to adjustment for customary stock splits, stock dividends, combinations or similar events.
The New Note contains standard and customary
events of default including, but not limited to, failure to make payments when due under the New Note, failure to comply with certain
covenants contained in the New Note, or bankruptcy or insolvency of the Company. Any principal or interest on the New Note which
is not paid when due shall bear interest at the rate of the lesser of (i) eighteen percent (18%) per annum and (ii) the maximum
amount permitted by law from the due date thereof until the same is paid.
So long as no
event of default exists, the Company may prepay, in part or in full, the outstanding principal and accrued and unpaid interest
upon ten (10) days written notice to the Investor (the “
”). If the Company exercises its right to prepay
the New Note, the Company shall make payment to the Investor of an amount in cash equal to either of (i) 105% if the Notice is
delivered within three (3) months of the date of issuance or (ii) 110% if the Notice is delivered at any time thereafter, multiplied
by the sum of: (a) the then outstanding principal of the New Note plus any accrued and unpaid interest thereon, and (b) if applicable,
the Default Interest and other amounts due, if any, on the New Note.
During the term
of the New Note, in the event that the Company grants, issues or sells any Options, Convertible Securities or rights to purchase
stock, warrants, securities or other property pro rata to all or substantially all of the record holders of any class of Common
Stock (the “
”), the Investor will be entitled to acquire, upon the terms applicable to such Purchase
Rights, the aggregate Purchase Rights which the Investor could have acquired if the Investor had held the number of shares of Common
Stock acquirable upon complete conversion of the New Note immediately prior to the date on which a record is taken for the grant,
issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of
Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.
Description of Warrants
The Warrant entitles the Investor to purchase,
in the aggregate, up to 1,000,000 Warrant Shares at an exercise price of $0.22 per share for a period of five years subject to
certain beneficial ownership limitations. The Warrant is immediately exercisable once the Company obtains approval thereof by the
NYSE American. The exercise price of $0.22 is subject to adjustment for customary stock splits, stock dividends, combinations or
similar events. The Warrant may be exercised for cash or on a cashless basis.
The foregoing descriptions of the Agreement,
the New Note and the Warrant do not purport to be complete and are qualified in their entirety by reference to their respective
forms which are annexed hereto as
, respectively, to this Current
Report on Form 8-K and are incorporated herein by reference. The foregoing does not purport to be a complete description
of the rights and obligations of the parties thereunder and such descriptions are qualified in their entirety by reference to such