UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 Entry Into a Material Definitive Agreement.
As previously disclosed, on February 17, 2026, Algorhythm Holdings, Inc. (the “Company”) entered into Secured Pre-Paid Purchase #4 in the principal amount of $10,355,000 (“Secured Pre-Paid Purchase #4”) with Streeterville Capital, LLC, a Utah limited liability company (“Streeterville”), under that certain securities purchase agreement (the “Securities Purchase Agreement”), dated August 21, 2025, between the Company and Streeterville. Under the Securities Purchase Agreement, the Company agreed to issue and sell shares of its common stock to Streeterville in one or more pre-paid purchases (each, a “Pre-Paid Purchase” and collectively, the “Pre-Paid Purchases”) for an aggregate purchase price of up to $20,000,000.
On June 29, 2026, the Company entered into an exchange agreement (the “Exchange Agreement”) with Streeterville. Pursuant to the Exchange Agreement, the Company and Streeterville agreed to partition a new Pre-Paid Purchase (the “Partitioned Pre-Paid Purchase”) in the original principal amount of $3,500,000 (the “Partitioned Amount”) from Secured Pre-Paid Purchase #4 and reduce the outstanding balance of Secured Pre-Paid Purchase #4 by an amount equal to the Partitioned Amount. The parties then exchanged the resulting Partitioned Pre-Paid Purchase for 3,500 shares (the “Exchange Shares”) of the Company’s newly created Series A Preferred Stock, par value $1.00 per share (the “Series A Preferred Stock”). The parties agreed that, immediately following cancellation of the Partitioned Amount, the outstanding balance of Secured Pre-Paid Purchase #4 was $7,202,371.69.
On June 29, 2026, in connection with the issuance of the Exchange Shares, the Company filed the Certificate of Designation of Preferences and Rights of Series A Preferred Stock (the “Certificate of Designation”) with the Secretary of State of the State of Delaware. The Certificate of Designation designates 15,000 shares of the Company’s preferred stock, par value $1.00 per share, as Series A Preferred Stock and provides that each share of Series A Preferred Stock has a stated value of $1,150 (the “Stated Value”). Each share of Series A Preferred Stock accrues a preferred return on the Stated Value at a rate of 9% per annum (the “Preferred Return”) which compounds daily and is payable quarterly in cash or additional shares of Series A Preferred Stock at the Company’s election. Upon the occurrence of an event of default under the Certificate of Designation, the Stated Value will automatically increase to 15%, which increase may be applied up to three times for three separate events of default.
The Series A Preferred Stock is non-convertible and has no voting rights except in certain limited circumstances. It is not entitled to participate in dividends, distributions or payments to holders of the Company’s common stock and may be redeemed by the Company, at the sole discretion of its board of directors, for a cash redemption price equal to 110% of the applicable liquidation amount. The Series A Preferred Stock ranks senior to all shares of the Company’s capital stock, including the Company’s common stock, with respect to dividends, distributions and payments upon liquidation, dissolution and winding up. The Certificate of Designation also contains covenants restricting certain issuances of securities, changes to authorized shares, asset pledges, asset dispositions, reverse stock splits and fundamental transactions.
The foregoing descriptions of the Exchange Agreement and Certificate of Designation do not purport to be complete and are qualified in their entirety by reference to the full text of the Exchange Agreement and Certificate of Designation, copies of which are filed as Exhibits 10.1 and 3.1, respectively, to this Current Report on Form 8-K and are incorporated by reference herein.
Item 3.02 Unregistered Sales of Equity Securities.
The information contained in Item 1.01 above is incorporated by reference herein. The Exchange Shares were issued in exchange for the Partitioned Pre-Paid Purchase pursuant to Section 3(a)(9) of the Securities Act of 1933, as amended. The Company did not receive any cash proceeds from the issuance of the Exchange Shares and did not receive any consideration for entering into the Exchange Agreement other than cancellation of the Partitioned Amount. The Exchange Shares have not been registered under the Securities Act or any state securities laws and may not be offered or sold absent registration with the Securities and Exchange Commission or an applicable exemption from registration requirements.
Item 3.03 Material Modification to Rights of Security Holders.
The information contained in Item 1.01 above is incorporated by reference herein. The rights of holders of Common Stock are qualified by the rights, powers, preferences and privileges of the Series A Preferred Stock, including the Series A Preferred Stock’s senior ranking as to dividends, distributions and liquidation payments, the consent rights of holders of at least a majority of the outstanding Series A Preferred Stock over the authorization or issuance of senior or parity stock, and the covenants restricting certain issuances of securities, changes to authorized shares, asset pledges, asset dispositions, reverse stock splits and fundamental transactions.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
The information contained in Item 1.01 above is incorporated by reference herein. Effective upon filing with the Secretary of State of the State of Delaware on June 29, 2026, the Certificate of Designation established the designation, number of shares, powers, preferences and relative rights, and the qualifications, limitations and restrictions, of the Series A Preferred Stock.
Item 9.01 Financial Statement and Exhibits.
| Exhibit No. | Description | |
| 3.1 | Certificate of Designation of Preferences and Rights of Series A Preferred Stock filed with the Secretary of State of the States of Delaware on June 29, 2026. | |
| 10.1* | Exchange Agreement, dated June 29, 2026, by and between Algorhythm Holdings, Inc. and Streeterville Capital, LLC. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* The schedules and exhibits to this agreement have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the SEC upon request.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: July 2, 2026 | ALGORHYTHM HOLDINGS, INC. | |
| By: | /s/ Alex Andre | |
| Name: | Alex Andre | |
| Title: | Chief Financial Officer and General Counsel | |
Exhibit 3.1
CERTIFICATE OF DESIGNATION OF PREFERENCES AND RIGHTS OF
SERIES A PREFERRED STOCK
of
Algorhythm Holdings, Inc.,
a Delaware corporation
Pursuant to Section 151 of the Delaware General Corporation Law
The undersigned, Gary Atkinson, hereby certifies that:
| 1. | He is the Chief Executive Officer of Algorhythm Holdings, Inc., a Delaware corporation (“Corporation”). |
| 2. | A resolution was adopted and approved by the Board of Directors of the Corporation at a meeting duly held on June 26, 2026 authorizing and approving the Certificate of Designation of Preferences and Rights of Series A Preferred Stock (this “Certificate”) of the Corporation set forth below. |
| 3. | No shares of Series A Preferred Stock have been issued as of the date hereof. |
IN WITNESS WHEREOF, the undersigned does hereby execute this Certificate and does hereby acknowledge that this instrument constitutes his act and deed and that the facts stated herein are true.
Algorhythm Holdings, Inc.
| By: | /s/ Gary Atkinson | |
| Name: | Gary Atkinson | |
| Title: | Chief Executive Officer | |
| Dated: | June 29, 2026 |
CERTIFICATE OF DESIGNATION OF PREFERENCES AND RIGHTS OF
SERIES A PREFERRED STOCK
of
Algorhythm Holdings, Inc.,
a Delaware corporation
The Chief Executive Officer of Algorhythm Holdings, Inc. (“Corporation”), a corporation organized and existing under the laws of the State of Delaware, does hereby certify that, pursuant to the authority contained in the Corporation’s Certificate of Incorporation (“Certificate”) and pursuant to Section 151 of the Delaware General Corporation Law, and in accordance with the provisions of the resolution creating a series of the class of the Corporation’s authorized preferred stock designated as the Series A Preferred Stock as follows:
FIRST: The Certificate authorizes the issuance by the Corporation of 800,000,000 shares of common stock, par value of $0.01 per share the “Common Stock”), and 1,000,000 shares of preferred stock, par value of $1.00 per share (“Preferred Stock”), and further, authorizes the Board of Directors (“Board”) of the Corporation, by resolution or resolutions, at any time and from time to time, to divide and establish any or all of the unissued shares of Preferred Stock not then allocated to any series into one or more series and to designate the rights, preferences and limitations of each series.
SECOND: At a duly held meeting of the Board on June 26, 2026, the Board designated fifteen thousand (15,000) shares of the Preferred Stock as Series A Preferred Stock pursuant to a resolution providing that a series of preferred stock of the Corporation be and hereby is created and that the designation and number of shares thereof and the voting and other powers, preferences and relative, participating, optional or other rights of the shares of such Series A Preferred Stock, and the qualifications, limitations and restrictions thereof, are as follows:
SERIES A PREFERRED STOCK
Section 1. Definitions. Capitalized terms used but not otherwise defined herein shall have meanings set forth in Section 12 below.
Section 2. Powers and Rights of Series A Preferred Stock. There is hereby designated a class of Preferred Stock of the Corporation as Series A Preferred Stock, par value $1.00 per share (the “Series A Stock”). The number of shares, powers, terms, conditions, designations, preferences and privileges, relative, participating, optional and other special rights, and qualifications, limitations and restrictions of the Series A Stock shall be as set forth in this Certificate of Designation of Preferences and Rights of Series A Preferred Stock (this “Certificate of Designation”). For purposes hereof, a holder of a share or shares of Series A Stock, with respect to their rights as related to the Series A Stock, shall be referred to as a “Series A Holder.”
Section 3. Number and Stated Value. The number of authorized shares of the Series A Stock is fifteen thousand (15,000) shares. Each share of Series A Stock shall have a stated value of $1,150.00 (the “Stated Value”).
Section 4. Ranking. Except to the extent that the holders of at least a majority of the outstanding Series A Stock (the “Required Holders”) expressly consent to the creation of Parity Stock (as defined below), all shares of capital stock of the Corporation shall be junior in rank to all Series A Stock with respect to the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Corporation (such junior stock is referred to herein collectively as “Junior Stock”). The rights of all such shares of capital stock of the Corporation shall be qualified by the rights, powers, preferences and privileges of the Series A Stock. Without limiting any other provision of this Certificate of Designation, without the prior express written consent of the Required Holders, voting separately as a single class, the Corporation shall not hereafter authorize or issue any additional or other shares of capital stock that is (i) of senior rank to the Series A Stock in respect of the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Corporation (collectively, the “Senior Preferred Stock”), or (ii) of pari passu rank to the Series A Stock in respect of the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Corporation (collectively, the “Parity Stock”). In the event of the merger or consolidation of the Corporation with or into another corporation wherein the Corporation is the surviving entity, the shares of Series A Stock shall maintain their relative rights, powers, designations, privileges and preferences provided for herein and no such merger or consolidation shall provide for a result inconsistent therewith, subject to the other terms and conditions herein.
Section 5. Preferred Return.
| (a) | Each share of Series A Stock shall accrue a rate of return on the Stated Value at the rate of nine percent (9%) per annum, to be determined pro rata for any fractional year periods (the “Preferred Return”). The Preferred Return shall accrue on each share of Series A Stock from its Issuance Date and shall be payable or otherwise settled as set forth herein. Following the occurrence of an Event of Default (as defined below), the Preferred Return will increase to 15% per annum. | |
| (b) | The Preferred Return shall compound daily and be payable on a quarterly basis, within five (5) Trading Days following the end of each calendar quarter, either in cash or via the issuance to the applicable Series A Holder of an additional number of shares of Series A Stock equal to (i) the Preferred Return then accrued and unpaid, divided by (ii) $1,150.00, with the election as to payment in cash or via the issuance of additional shares of Series A Stock to be determined in the discretion of the Corporation. | |
| (c) | In the event that the Corporation elects to pay any Preferred Return via the issuance of shares of Series A Stock, no fractional shares of Series A Stock shall be issued, and the Corporation shall pay in cash the Preferred Return that would otherwise be payable via the issuance of a fractional share of Series A Stock. |
Section 6. Liquidation, Dissolution or Winding Up. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, each share of Series A Stock shall be entitled to be paid out of the assets of the Corporation available for distribution to its shareholders before any payment shall be made to the holders of Common Stock by reason of their ownership thereof, an amount per share of Series A Stock equal to the Stated Value at such time plus any accrued and unpaid Preferred Return (as applicable, the “Series A Preferred Liquidation Amount”). If upon any such liquidation, dissolution or winding up of the Corporation, the assets of the Corporation available for distribution to its shareholders shall be insufficient to pay the Series A Preferred Liquidation Amount, the Series A Holders with respect to their shares of Series A Stock shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full. Following the payment of the Series A Preferred Liquidation Amount, if there are any remaining assets of the Corporation available for distribution to its shareholders, the Series A Stock shall not participate in such distributions.
Section 7. Corporation Optional Redemption.
| (a) | Subject to the terms and conditions herein, the Corporation may elect, in the sole discretion of the Board, to redeem all or any portion of the Series A Stock then issued and outstanding from all of the Series A Holders (a “Corporation Optional Redemption”) by paying to the applicable Series A Holders an amount in cash equal to the Series A Preferred Liquidation Amount then applicable to such shares of Series A Stock being redeemed in the Corporation Optional Redemption multiplied by 110% (the “Redemption Price”). For the avoidance of doubt, any redemptions made in connection with a Fundamental Transaction will be paid at the Redemption Price. | |
| (b) | The Corporation shall provide written notice of any Corporation Optional Redemption to the Series A Holders within ten (10) Trading Days following the determination of the Board to consummate the applicable Corporation Optional Redemption, and thereafter such Corporation Optional Redemption shall be completed on the third (3rd) Trading Day following the delivery of such notice, and at such time the Corporation shall deliver to the Series A Holders the Redemption Price in valid funds. Each Series A Holder agrees to execute and deliver to the Corporation such instruments and documents, and to take such actions, as reasonably required to consummate the Corporation Optional Redemption. |
Section 8. Dividends and Distributions. The Series A Stock shall not participate in any dividends, distributions or payments to the holders of the Common Stock.
Section 9. Vote; Amendment.
| (a) | Other than as set forth in Section 9(b), the Series A Stock shall not have any voting rights and shall not vote on any matter submitted to the holders of the Common Stock, or any class thereof, for a vote. |
| (b) | The Corporation may not, and shall not, amend or repeal this Certificate of Designation without the prior written consent of Series A Holders holding a majority of the Series A Stock then issued and outstanding, in which vote each share of Series A Stock then issued and outstanding shall have one vote, voting separately as a single class, in person or by proxy, either in writing without a meeting or at an annual or a special meeting of such Series A Holders, and any such act or transaction entered into without such vote or consent shall be null and void ab initio, and of no force or effect. |
Section 10. Covenants. Until such time as no shares of Series A Stock remain outstanding, the Corporation and any subsidiary (to the extent applicable) will at all times comply with the following covenants:
| (a) | The Corporation will timely file on the applicable deadline (inclusive of any timely filed extensions) all reports required to be filed with the SEC pursuant to Sections 13 or 15(d) of the Exchange Act, and will take all reasonable action under its control to ensure that adequate current public information with respect to the Corporation, as required in accordance with Rule 144 of the Securities Act, is publicly available, and will not terminate its status as an issuer required to file reports under the Exchange Act even if the Exchange Act or the rules and regulations thereunder would permit such termination. | |
| (b) | The Common Stock will be listed or quoted for trading on any of NYSE, NYSE American or Nasdaq. | |
| (c) | After the initial issuance of Series A Stock, the Corporation will not issue any new shares of Series A Stock to anyone other than the initial holder of Series A Stock. | |
| (d) | The Corporation will not increase or decrease the authorized shares of Common Stock or Preferred Stock. | |
| (e) | The Corporation will not make any Restricted Issuance. | |
| (f) | The Corporation shall not enter into or extend any agreement or otherwise agree to any covenant, condition, or obligation that locks up, restricts in any way or otherwise prohibits the Corporation (i) from entering into a variable rate transaction with any Series A Holder or any Affiliate of any Series A Holder, or (ii) from issuing Common Stock, Preferred Stock, warrants, convertible notes, other debt securities, or any other of the Corporation’s securities to any Series A Holder or any Affiliate of any Series A Holder. | |
| (g) | The Corporation will not pledge or grant a security interest in any of its assets. | |
| (h) | The Corporation will not, and will not enter into any agreement or commitment to, dispose of any assets or operations outside the ordinary course of business that are material to the Corporation’s operations. | |
| (i) | Except in connection with satisfaction of a Nasdaq deficiency notice, the Corporation will not, and will not enter into any agreement or commitment to, undertake or complete any reverse split of any class of Common Stock or Preferred Stock. | |
| (j) | The Corporation will not consummate a Fundamental Transaction or enter into an agreement to consummate a Fundamental Transaction without the consent of the Required Holders. |
Section 11. Covenant Default.
| (a) | Event of Default. The Required Holders may elect to declare an “Event of Default” if any of the following conditions or events shall occur and be continuing: |
| (i) | The Corporation fails to fully comply with any covenant, obligation or agreement of the Corporation in this Certificate of Designation (other than payment or issuance defaults which are addressed in subparagraph (ii) below) or a breach of any covenant owed to any Series A Holder in any other agreement between the Corporation and such Series A Holder, and such failure is not cured within five (5) Trading Days of the occurrence of such event; | |
| (ii) | The Corporation fails to pay any amount due and payable to the Series A Holders pursuant to and as required by this Certificate of Designation, or fails to issue any additional shares of Series A Stock to the Series A Holders pursuant to and as required by this Certificate of Designation, and such failure, if known to the Series A Holders and reasonably possible of cure, is not cured within five (5) Trading Days of the occurrence of such event; or | |
| (iii) | The Corporation shall (1) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator; (2) make a general assignment for the benefit of the Corporation’s creditors; or (3) commence a voluntary case under the U.S. Bankruptcy Code as now and hereafter in effect, or any successor statute. |
| (b) | Consequences of Events of Default. Upon the occurrence of an Event of Default the Stated Value will automatically increase by fifteen percent (15%) (the “Default Effect”). The Default Effect may be applied up to three (3) times for three (3) separate Events of Default. If an Event of Default has occurred (i) the Series A Holders shall have the right to pursue any remedies that the Required Holders may have under applicable law and/or in equity; and (ii) the Series A Holders shall have the right to seek and receive injunctive relief from a court or an arbitrator prohibiting the Corporation from issuing any of its Common Stock or Preferred Stock to any party unless all the shares of Series A Stock owned by the Series A Holders are redeemed in full simultaneously with such issuance. | |
| (c) | Expenses. In the event that any Series A Holder incurs expenses in the enforcement of its rights hereunder, including but not limited to reasonable attorneys’ fees, then the Corporation shall immediately reimburse such Series A Holder the reasonable costs thereof. |
Section 12. No Redemption at the Option of Series A Holder. Notwithstanding anything in this Certificate of Designation to the contrary, the Series A Stock shall not be redeemable at the option of any Series A Holder, and no Series A Holder shall have any right, under any circumstance or upon the occurrence of any event (including any Event of Default or any Fundamental Transaction), to require, demand or compel the Corporation to redeem, repurchase or otherwise acquire any shares of Series A Stock, or to otherwise require the Corporation to transfer cash or other assets in respect of the Series A Stock. Every redemption of the Series A Stock shall be effected solely at the option and in the sole discretion of the Corporation.
Section 13. Definitions. In addition to the terms defined elsewhere in this Certificate of Designation, the following terms, as used herein, have the following meanings:
| (a) | “Affiliate” means, with respect to a specified Person, any other Person that directly or indirectly Controls, is Controlled by or is under common Control with, the specified Person. | |
| (b) | “Control” means (i) the possession, directly or indirectly, of the power to vote 10% or more of the securities or other equity interests of a Person having ordinary voting power, (ii) the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, by contractor otherwise, or (iii) being a director, officer, executor, trustee or fiduciary (or their equivalents) of a Person or a Person that controls such Person. | |
| (c) | “Equity Securities” means Common Stock of the Corporation, Preferred Stock of the Corporation, and any option, warrant, or right to subscribe for, acquire or purchase Common Stock or Preferred Stock. | |
| (d) | “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. | |
| (e) | “Exempt Issuance” means: (i) the issuance of shares of Common Stock or securities exercisable or convertible into shares of Common Stock to employees, officers, directors, consultants or advisors of the Company pursuant to any equity compensation plan of the Company, (ii) the issuance of shares of Common Stock upon the conversion, exercise or vesting of any securities of the Company outstanding on the date of this Agreement or issued in the future under Section 12(e)(i), (iii) the issuance of any securities issued pursuant to transactions approved by a majority of the disinterested directors of the Company, provided that such securities are issued as “restricted securities” (as defined in Rule 144 of the Securities Act) and carry no registration rights that require or permit the filing of any registration statement in connection therewith (other than a registration , or (iv) the issuance of any securities in a capital-raising transaction in an aggregate amount not to exceed $5,000,000. |
| (f) | “Fundamental Transaction” means: that (i) (A) the Corporation or any of its subsidiaries shall, directly or indirectly, in one or more related transactions, consolidate or merge with or into (whether or not the Corporation or any of its subsidiaries is the surviving corporation) any other person or entity, (B) the Corporation or any of its subsidiaries shall, directly or indirectly, in one or more related transactions, sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially all of its respective properties or assets to any other person or entity, (C) the Corporation or any of its subsidiaries shall, directly or indirectly, in one or more related transactions, allow any other person or entity to make a purchase, tender or exchange offer that is accepted by the holders of more than fifty (50%) of the outstanding shares of voting stock of the Corporation (not including any shares of voting stock of the Corporation held by the person or persons making or party to, or associated or affiliated with the persons or entities making or party to, such purchase, tender or exchange offer), (D) the Corporation or any of its subsidiaries shall, directly or indirectly, in one or more related transactions, consummate a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with any other person or entity whereby such other person or entity acquires more than fifty percent (50%) of the outstanding shares of voting stock of the Corporation (not including any shares of voting stock of the Corporation held by the other persons or entities making or party to, or associated or affiliated with the other persons or entities making or party to, such stock or share purchase agreement or other business combination), (E) the Corporation or any of its subsidiaries shall, directly or indirectly, in one or more related transactions, reorganize, recapitalize or reclassify the Common Stock or Preferred Stock, other than an increase in the number of authorized shares of the Common Stock or Preferred Stock, (F) the Corporation transfers any material asset to any subsidiary, affiliate, person or entity under common ownership or control with the Corporation (other than in the ordinary course of business), or (G) the Corporation pays or makes any monetary or non-monetary dividend or distribution to its stockholders (other than in the ordinary course of business); or (ii) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act and the rules and regulations promulgated thereunder) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of more than fifty (50%) of the aggregate ordinary voting power represented by issued and outstanding voting stock of the Corporation. For the avoidance of doubt, “Fundamental Transaction” will not be deemed to include a reincorporation by the Corporation into another State. | |
| (g) | “Issuance Date” means the date that the applicable shares of Series A Stock are issued to a Series A Holder. | |
| (h) | “Liabilities” means liabilities, obligations or responsibilities of any nature whatsoever, whether direct or indirect, matured or un-matured, fixed or unfixed, known or unknown, asserted or unasserted, choate or inchoate, liquidated or unliquidated, secured or unsecured, absolute, contingent or otherwise, including any direct or indirect indebtedness, guaranty, endorsement, claim, loss, damage, deficiency, cost or expense. | |
| (i) | “Nasdaq” means the Nasdaq Stock Market. | |
| (j) | “Person” means a natural person, a corporation, a limited liability company, a partnership, an association, a trust or any other entity or organization, including a government or political subdivision or any agency or instrumentality thereof. |
| (k) | “Restricted Issuance” means: (i) the issuance, incurrence or guaranty of any debt obligations other than Liabilities or trade payables incurred in the ordinary course of business, (ii) the issuance of (a) any Equity Securities; or (b) any securities that are convertible into or exchangeable for Equity Securities, other than in each of the foregoing clauses (i) and (ii): (x) for any such issuances or sales to a Series A Holder as contemplated in this Certificate of Designation or otherwise to a Series A Holder or any of its Affiliates, or (y) for any Exempt Issuances. | |
| (l) | “SEC” means the United States Securities and Exchange Commission. | |
| (m) | “Securities Act” means the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. | |
| (n) | “Trading Day” means any day on which Nasdaq is open for trading. |
Section 14. Miscellaneous.
| (a) | Legend. Any certificates representing the Series A Stock shall bear a restrictive legend in substantially the following form (and a stop transfer order may be placed against transfer of such stock certificates): |
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR REGISTERED NOR QUALIFIED UNDER ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE, TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS QUALIFIED AND REGISTERED UNDER APPLICABLE STATE AND FEDERAL SECURITIES LAWS OR UNLESS, IN THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY, SUCH QUALIFICATION AND REGISTRATION IS NOT REQUIRED. ANY TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS FURTHER SUBJECT TO OTHER RESTRICTIONS, TERMS AND CONDITIONS WHICH ARE SET FORTH HEREIN.
| (b) | Uncertificated Shares Lost or Mutilated Series A Stock Certificate. The Series A Stock shall be issued to each Series A Holder in uncertificated (book entry) form by the stock transfer agent of the Corporation unless a Series A Holder requests such Series A Stock be issued to such Series A Holder in certificated form. If any certificate for the Series A Stock held by the Series A Holder thereof shall be mutilated, lost, stolen or destroyed, the Corporation shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated certificate, or in lieu of or in substitution for a lost, stolen or destroyed certificate, a new certificate for the share of Series A Stock so mutilated, lost, stolen or destroyed but only upon receipt of evidence of such loss, theft or destruction of such certificate, and of the ownership hereof, and indemnity, if requested, all reasonably satisfactory to the Corporation. |
| (c) | Interpretation. If the Corporation or any Series A Holder shall commence an action or proceeding to enforce any provisions of this Certificate of Designation, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its reasonable attorney’s fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. | |
| (d) | Waiver. Any waiver by the Corporation or the Series A Holder of a breach of any provision of this Certificate of Designation shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Certificate of Designation. The failure of the Corporation or the Series A Holder to insist upon strict adherence to any term of this Certificate of Designation on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Certificate of Designation. Any waiver must be in writing. | |
| (e) | Severability. If any provision of this Certificate of Designation is invalid, illegal or unenforceable, the balance of this Certificate of Designation shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances. |
Exhibit 10.1
THE EXCHANGE CONTEMPLATED HEREIN IS INTENDED TO COMPORT WITH THE REQUIREMENTS OF SECTION 3(a)(9) OF THE SECURITIES ACT OF 1933, AS AMENDED.
Exchange Agreement
This Exchange Agreement (this “Agreement”) is entered into as of June 29, 2026 by and between Algorhythm Holdings, Inc., a Delaware corporation (“Company”), and Streeterville Capital, LLC, a Utah limited liability company (“Investor”).
A. Pursuant to that certain Securities Purchase Agreement dated August 21, 2025 between Company and Investor (the “Purchase Agreement”), Company issued to Investor that certain Secured Pre-Paid Purchase #4 in the original principal amount of $10,355,000.00 dated February 17, 2026 (“PPP #4”).
B. Subject to the terms of this Agreement, Company and Investor desire to partition a new Secured Pre-Paid Purchase in the original principal amount of $3,500,000.00 (the “Partitioned Amount”) from PPP #4 (the “Partitioned PPP”) and then cause the outstanding balance of PPP #4 to be reduced by an amount equal to the Partitioned Amount.
C. Company and Investor further desire to exchange (the “Exchange”) the Partitioned PPP for 3,500 shares of newly created Series A Preferred Stock (the “Exchange Shares”).
D. This Agreement, the Certificate of Designation (as defined below), the Officer’s Certificate (as defined below), and any other documents, agreements, or instruments entered into or delivered in connection with this Agreement, or any amendments to any of the foregoing, are collectively referred to as the “Exchange Documents”.
E. Pursuant to the terms and conditions hereof, Investor and Company agree to exchange the Partitioned PPP for the Exchange Shares.
NOW, THEREFORE, in consideration of the premises and the mutual promises herein made, and in consideration of the representations, warranties and covenants herein contained, the parties hereto agree as follows:
1. Issuance of Exchange Shares. Upon execution of this Agreement, Company will issue the Exchange Shares to Investor in accordance with the terms of Section 2.2 hereof and, upon completion thereof, the Partitioned Amount shall be cancelled. In conjunction therewith, Company hereby confirms that the Partitioned PPP represents Company’s unconditional obligation to pay the remaining outstanding balance thereof pursuant to the terms of the Partitioned PPP. The parties agree that the Outstanding Balance (as defined in PPP #4) of PPP #4 on the date hereof immediately following the cancellation of the Partitioned Amount is $7,202,371.69.
2. Closing Date; Deliveries. The closing of the transaction contemplated hereby (the “Closing”) along with the Exchange Documents shall occur on the date that is mutually agreed to by Company and Investor (the “Closing Date”) by means of the exchange of electronic signatures, but shall be deemed to have occurred at the offices of Capital Law Partners PLLC in Lehi, Utah. On the Closing Date, prior to or contemporaneously with the execution and delivery of this Agreement, the following events shall occur:
2.1. Company shall file the Certificate of Designation of Preferences and Rights of Series A Preferred Stock in the form attached hereto as Exhibit A (the “Certificate of Designation”) with the State of Delaware and receive confirmation from the State of Delaware that such Certificate of Designation has been accepted and approved.
2.2. Company shall issue the Exchange Shares to Investor, which issuance will not be evidenced by the physical delivery of certificated shares, but instead will be properly reflected on the books and records of Company.
2.3. Company shall deliver to Investor a fully executed Officer’s Certificate substantially in the form attached hereto as Exhibit B (the “Officer’s Certificate”) evidencing the Company’s approval of the Exchange and the Exchange Documents.
2.4. Mutual delivery of all other Exchange Documents, including without limitation this Agreement.
3. Holding Period, Tacking and Legal Opinion. Company represents, warrants and agrees that for the purposes of Rule 144 (“Rule 144”) of the Securities Act of 1933, as amended (the “Securities Act”), the holding period of the Exchange Shares will include the holding period of the Partitioned PPP and PPP #4 from February 17, 2026, which date is the date that PPP #4 was fully paid for. Company agrees not to take a position contrary to this Section 3 in any document, statement, setting, or situation. The Exchange Shares are being issued in substitution of and exchange for and not in satisfaction of the Partitioned PPP. The Exchange Shares shall not constitute a novation or satisfaction and accord of the Partitioned PPP. Company acknowledges and understands that the representations and agreements of Company in this Section 3 are a material inducement to Investor’s decision to consummate the transactions contemplated herein.
4. Investor’s Representations, Warranties and Agreements. In order to induce Company to enter into this Agreement, Investor, for itself, and for its affiliates, successors and assigns, hereby acknowledges, represents, warrants and agrees as follows: (a) Investor has full power and authority to enter into this Agreement and to incur and perform all obligations and covenants contained herein, all of which have been duly authorized by all proper and necessary action, (b) no consent, approval, filing or registration with or notice to any governmental authority is required as a condition to the validity of this Agreement or the performance of any of the obligations of Investor hereunder, (c) no commission or other remuneration has been paid or given directly or indirectly by Investor to Company for soliciting the Exchange, and (d) Investor has taken no action which would give rise to any claim by any person for a brokerage commission, placement agent or finder’s fee or other similar payment by Company related to this Agreement.
5. Company’s Representations, Warranties and Agreements. In order to induce Investor to enter into this Agreement, Company, for itself, and for its affiliates, successors and assigns, hereby acknowledges, represents, warrants and agrees as follows: (a) Company has full power and authority to enter into this Agreement and to incur and perform all obligations and covenants contained herein, all of which have been duly authorized by all proper and necessary action, (b) no consent, approval, filing or registration with or notice to any governmental authority is required as a condition to the validity of this Agreement or the performance of any of the obligations of Company hereunder, (c) no Event of Default (as defined in PPP #4) has occurred under the Partitioned PPP or PPP #4; provided, however, that notwithstanding anything to the contrary in this Agreement, to the extent any Events of Default have occurred or may hereafter occur, such Events of Default have not been, and are not hereby, waived by Investor, (d) except as specifically set forth herein, nothing herein shall in any manner release, lessen, modify or otherwise affect Company’s obligations under the Exchange Shares, (e) the issuance of the Exchange Shares is duly authorized by all necessary corporate action, (f) Company has not received any consideration in any form whatsoever for entering into this Agreement, other than the cancellation of the Partitioned Amount, (g) Company has taken no action which would give rise to any claim by any person for a brokerage commission, placement agent or finder’s fee or other similar payment by Company related to this Agreement, and (h) the Company’s Board of Directors has duly adopted a resolution authorizing this Agreement and the other Exchange Documents and ratifying their terms, as indicated by the Officer’s Certificate.
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6. Governing Law; Venue. This Agreement shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Agreement shall be governed by, the internal laws of the State of Utah, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Utah or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Utah. The provisions set forth in the Purchase Agreement to determine the proper venue for any disputes are incorporated herein by this reference. COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
7. Arbitration of Claims. This Agreement shall be subject to the Arbitration Provisions (as defined in the Purchase Agreement).
8. Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via electronic signature (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
9. Attorneys’ Fees. In the event of any arbitration or action at law or in equity to enforce or interpret the terms of this Agreement, the parties agree that the prevailing party shall be entitled to an additional award of the full amount of the attorneys’ fees and expenses paid by such prevailing party in connection with the arbitration, litigation and/or dispute without reduction or apportionment based upon the individual claims or defenses giving rise to the fees and expenses. The “prevailing party” shall be the party in whose favor a judgment is entered, regardless of whether judgment is entered on all claims asserted by such party and regardless of the amount of the judgment; or where, due to the assertion of counterclaims, judgments are entered in favor of and against both parties, then the arbitrator shall determine the “prevailing party” by taking into account the relative dollar amounts of the judgments or, if the judgments involve nonmonetary relief, the relative importance and value of such relief. Nothing herein shall restrict or impair an arbitrator’s or a court’s power to award reasonable fees and expenses for frivolous or bad faith pleading.
10. No Reliance. Company acknowledges and agrees that neither Investor nor any of its officers, directors, members, managers, equity holders, representatives or agents has made any representations or warranties to Company or any of its agents, representatives, officers, directors, or employees except as expressly set forth in this Agreement and the Exchange Documents and, in making its decision to enter into the transactions contemplated by this Agreement, Company is not relying on any representation, warranty, covenant or promise of Investor or its officers, directors, members, managers, equity holders, agents or representatives other than as set forth in this Agreement.
11. Severability. If any part of this Agreement is construed to be in violation of any law, such part shall be modified to achieve the objective of the parties to the fullest extent permitted and the balance of this Agreement shall remain in full force and effect.
12. Entire Agreement. This Agreement, together with the Exchange Documents and the Transaction Documents (as defined in the Purchase Agreement), and all other documents referred to herein, supersedes all other prior oral or written agreements among Company, Investor, its affiliates and persons acting on its behalf with respect to the matters discussed herein, and this Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither Investor nor Company makes any representation, warranty, covenant or undertaking with respect to such matters.
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13. Amendments. This Agreement may be amended, modified, or supplemented only by written agreement of the parties. No provision of this Agreement may be waived except in writing signed by the party against whom such waiver is sought to be enforced.
14. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. This Agreement or any of the severable rights and obligations inuring to the benefit of or to be performed by Investor hereunder may be assigned by Investor to a third party, including its financing sources, in whole or in part. Company may not assign this Agreement or any of its obligations herein without the prior written consent of Investor.
15. Continuing Enforceability; Conflict Between Documents. Except as otherwise modified by this Agreement, each of the Exchange Documents and Transaction Documents shall remain in full force and effect, enforceable in accordance with all of its original terms and provisions, and the Exchange Shares shall be in full force and effect from its date of issuance in accordance with its terms. This Agreement shall not be effective or binding unless and until it is fully executed and delivered by Investor and Company. If there is any conflict between the terms of this Agreement, on the one hand, and the Exchange Shares or any other Exchange Document or Transaction Document, on the other hand, the terms of this Agreement shall prevail.
16. Time of Essence. Time is of the essence with respect to each and every provision of this Agreement.
17. Notices. Unless otherwise specifically provided for herein, all notices, demands or requests required or permitted under this Agreement to be given to Company or Investor shall be given as set forth in the “Notices” section of the Purchase Agreement.
18. Further Assurances. Each party shall do and perform or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first set forth above.
| INVESTOR: | ||
| Streeterville Capital, LLC | ||
| By: | /s/ John Fife | |
| John Fife, President | ||
| COMPANY: | ||
| Algorhythm Holdings, Inc. | ||
| By: | /s/ Gary Atkinson | |
| Gary Atkinson, Chief Executive Officer | ||
ATTACHMENTS:
| Exhibit A | Certificate of Designation |
| Exhibit B | Officer’s Certificate |
[Signature Page to Exchange Agreement]