NILE Bitnile Holdings Inc

On December 16, 2022 (the “Closing Date”), the Company entered into a Securities Purchase Agreement (the “SPA”) with an accredited investor (the “Initial Investor”) providing for the issuance of secured promissory notes (the “Notes”) with an aggregate principal face amount of $14,700,000 (the “Financing”). On December 29, 2022, the Company and the Initial Investor entered into an amended and restated amendment to the SPA (the “Amendment”), pursuant to which the total amount of the Financing was increased to $17,511,370.10 and the Company sold an additional Note to a second accredited investor (the “Subsequent Investor” and together with the Initial Investor, the “Investors”).

Under the SPA, the Company shall repay, while the Notes remain outstanding, (i) eighty percent (80%) of the proceeds it may receive from any financing conducted, other than at-the-market offerings and (ii) one hundred percent (100%) of the proceeds it may receive from the sale of marketable securities by Ault Lending, LLC (“Ault Lending”), the Company’s wholly owned subsidiary. In addition, if Third Avenue Apartments, LLC (“Third Avenue”), the Company’s wholly owned subsidiary, sells the property it owns in St. Peterburg, Florida, the Company shall use the net proceeds from the sale of such property in excess of $10 million, to repay the Notes.

In addition, the Company agreed to issue 11,605,913 shares of the Company’s common stock (the “Registrable Shares”) to the Initial Investor in exchange for the cancellation of all outstanding warrants previously issued to the Initial Investor, which warrants were exercisable for 11,605,913 shares of the Company’s common stock. The Company agreed to file a registration statement on Form S-3 to register the Registrable Shares and certain other shares owned by the Initial Investor within ten (10) days of the Closing Date. The Company agreed to pay the Initial Investor liquidated damages of approximately $120,000 per month that the Registrable Shares have not been registered.

Pursuant to the SPA, the Company, Ault Lending, BitNile, Inc. (“BitNile”) and Esousa Group Holdings, LLC, as the collateral agent on behalf of the Investors (the “Agent”) entered into a security agreement (the “Security Agreement”), pursuant to which (i) BitNile granted to the Investors a security interest in 12,000 Bitcoin miners and (ii) Ault Lending granted to the Investors a security interest in, among other items, substantially all of the Ault Lending’s deposit accounts, securities accounts, chattel paper, documents, equipment, general intangibles, instruments and inventory, and all proceeds therefrom (the “Assets”), as set forth in the Security Agreement, except for assets previously granted security interests to other parties.

The Notes are further secured by a guaranty (the “Guaranty”) provided by Ault Lending, BitNile, Ault & Company, Inc. (“A&C”), an affiliate of the Company, as well as by Milton C. Ault, the Company’s Executive Chairman and the Chief Executive Officer of A&C.

Description of the Secured Promissory Notes

The Notes have a principal face amount of $17,511,370.10 and bear interest at 16% per annum. The maturity date of the Notes is March 16, 2023, although if the Company repays at least $14,294,996 of principal payment on or before the maturity date, the Company may extend the maturity date by forty-five (45) days by paying a fee of 10% of the outstanding balance owed on the Notes as of the original maturity date. The Notes contain standard and customary events of default including, but not limited to, failure to make payments when due under the Notes, failure to comply with certain covenants contained in the Notes, or bankruptcy or insolvency of the Company. The Company may prepay any or all outstanding principal and accrued and unpaid interest at any time without penalty. The purchase price for the Notes was $16,081,870.50, of which $13,322,940 was paid in cash, $1,786,874.50 was a non-accountable expense allowance and $972,056 was the forgiveness of cash owed to the Subsequent Investor for cashless exercise of warrants previously issued to the Subsequent Investor.

The foregoing descriptions of the Note, the SPA, the Security Agreement, the Guaranty and the Amendment do not purport to be complete and are qualified in their entirety by reference to their respective forms which are annexed hereto as Exhibits 4.1, 10.1, 10.2, 10.3 and 10.4, 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 exhibits.