Item 1.01 Entry into a Material Definitive Agreement.
On January 3, 2023, 1847 Holdings LLC (the "Company") entered into a Warrant
Agent Agreement (the "Warrant Agreement") with VStock Transfer, LLC (the
"Warrant Agent") which governs the terms of warrants (the "Warrants") to
purchase the Company's common shares that were issued as a dividend on January
3, 2023 to common shareholders of record on December 23, 2022. The Warrant Agent
has agreed to act as the warrant agent in accordance with the terms of the
Warrant Agreement.
Each holder of common shares received a Warrant to purchase one (1) common share
for every ten (10) common shares owned as of the record date (with the number of
shares underlying the Warrant received rounded down to the nearest whole
number). Each Warrant represents the right to purchase common shares at an
initial exercise price of $4.20 per share (subject to certain adjustments as set
forth in the Warrants). At any time the Company may, at its option, voluntarily
reduce the then-current Exercise Price to such amount and for such period or
periods of time which may be through the Expiration Date (as defined below) as
may be deemed appropriate by the board of directors of the Company. Cashless
exercises of the Warrants are not permitted. No fractional share or cash in lieu
thereof is required to be issued or paid upon the exercise of a Warrant.
The Warrants will generally be exercisable in whole or in part beginning on the
later of (i) January 3, 2024 or (ii) the date that a registration statement on
Form S-3 (the "Registration Statement") has been filed with and declared
effective by the Securities and Exchange Commission (the "SEC") with respect to
the issuance of the common shares underlying the Warrants, and thereafter until
January 3, 2026 (the "Expiration Date").
The Company will use commercially reasonable efforts to file the Registration
Statement with the SEC and to have the Registration Statement declared effective
by the SEC? however, such obligation will be suspended during any period in
which, in the Company's determination, the Company is not eligible to file a
registration statement on Form S-3. No issuance of common shares upon exercise
of Warrants shall be made unless there is a current prospectus covering such
shares under an effective registration statement under the Securities Act of
1933, as amended (the "Securities Act"), and registration or qualification of
such shares (or an exemption therefrom) has been obtained from the state or
other regulatory authorities in the jurisdiction in which such shares are sold.
The Company will use commercially reasonable efforts to keep the Registration
Statement continuously effective from the date the Registration Statement is
first declared effective by the SEC through the Expiration Date and to keep the
Registration Statement and prospectus included therein current while any of the
Warrants remain outstanding. The Company is not required to keep the
Registration Statement effective or current or any related prospectus current
(i) if in the reasonable judgment of the Company the discrepancy between the
market price of the common shares and the exercise price of the Warrants makes
it unlikely that the Warrants will be exercised or (ii) following the close of
business on the Expiration Date or such earlier date upon which all Warrants
have been exercised or redeemed in full.
The Warrants have not been registered under the Securities Act and will not have
an active trading market and may not be transferred except upon receipt of: (i)
a written opinion of counsel for the transferring holder, which opinion and
counsel are acceptable to the Company, that the transferee is a person to whom
the Warrants may be transferred without registration and without the delivery of
a current prospectus under the Securities Act? (ii) a letter acceptable to the
Company from the transferee in which the transferee represents that the
transferee is acquiring the Warrants for the transferee's own account for
investment purposes and not with a view to distribution, provides any other
information and representations required by the Company, and agrees to comply
with the requirements of the Warrant Agreement with respect to any disposition
of the Warrants? (iii) the duly endorsed Warrants? and (iii) payment of any
applicable taxes.
The Company may redeem the Warrants at any time in whole or in part at $0.001
per Warrant (subject to equitable adjustment to reflect stock splits, stock
dividends, stock combinations, recapitalizations and like occurrences) upon not
less than 30 days' prior written notice to the registered holders of the
Warrants. If the Company elects to redeem only a portion of the outstanding
Warrants, the Company will make any such partial redemption on a pro rata basis
to all holders of the Warrants based on the Warrants they respectively own. In
the event the Company exercises its right to redeem the Warrants, the Warrants
may be exercised until the close of business on the redemption date to the
extent the exercise of the Warrants is otherwise permitted by the terms of the
Warrant Agreement.
A holder of unexercised Warrants, in his or her capacity as such, is not
entitled to any rights of a as a shareholder of the Company, including, without
limitation, the right to vote or to receive dividends or other distributions.
The foregoing summary of the terms and conditions of the Warrant Agreement and
the Warrants does not purport to be complete and is qualified in its entirety by
reference to the full text of the Warrant Agreement and the form of Warrant
attached hereto as Exhibit 4.1, which is incorporated herein by reference.
Item 3.02 Unregistered Sales of Equity Securities.
The information set forth under Item 1.01 regarding the issuance of the Warrants
is incorporated by reference into this Item 3.02. The issuance of these
securities is being made in reliance upon an exemption from the registration
requirements of Section 5 of the Securities Act.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. Description of Exhibit
4.1 Warrant Agent Agreement, dated January 3, 2023, between 1847 Holdings
LLC and VStock Transfer, LLC and form of Warrant
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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