Material Agreement (Form 8-K)

Item 1.01 Entry into a Definitive Material Agreement.

Exchange Agreement

As previously disclosed, Dragonfly Energy Holdings Corp. (the "Company") entered into an amendment to its Term Loan, Guarantee and Security Agreement with the lenders (the "Lenders") with respect to the Company's senior secured term loan facility (the "Term Loan"), whereby the Company and the Lenders agreed to restructure the Company's outstanding indebtedness. As the final part of the restructuring, on November 4, 2025, the Company and the Lenders entered into an exchange agreement (the "Exchange Agreement") pursuant to which the Company issued $25 million of shares of newly created Series B Convertible Preferred Stock of the Company (the "Series B Preferred Stock") in exchange for $25 million outstanding principal amount of the Term Loan. The Series B Preferred Stock is convertible into shares of the Company's common stock, par value $0.0001 (the "Common Stock") at the option of the Lenders at a conversion price of $3.15 per share, or an aggregate of 7,936,508 shares of Common Stock, and has such other terms as set forth below under "Series B Preferred Stock".

The summary of the terms of the Exchange Agreement herein is subject to and qualified in its entirety by the full text of the Exchange Agreement, which is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.

Series B Preferred Stock

On November 4, 2025, the Company filed a Certificate of Designation of the Powers, Preferences and Relative, Participating, Optional and Other Restrictions of Series B Convertible Preferred Stock of the Company (the "Certificate of Designation") with the Secretary of State of the State of Nevada to establish the rights, privileges, preferences, and restrictions of the Series B Preferred Stock. As set forth in the Certificate of Designation, the Company designated 25,000 shares of preferred stock as Series B Preferred Stock. The following is a summary of the principal terms of the Series B Preferred Stock:

General. Each share of Series B Preferred Stock has a stated value of $1,000 per share.

Ranking. The Series B Preferred Stock, with respect to the payment of dividends, distributions and payments upon the liquidation, dissolution and winding up of the Company, ranks senior to all of the Company's capital stock, unless the Requisite Holders (as defined in the Certificate of Designation) consents to the Company's creation of other capital stock that is senior or equal in rank to the Series B Preferred Stock.

Dividends. The holders of Series B Preferred Stock will be entitled to receive dividends, which will accrue at 10% per annum, commencing from the date of issuance of the Series B Preferred Stock (the "Initial Issuance Date"), payable (i) 80% in cash (the "Cash Dividends") and (i) 20% "in kind" and added the Liquidation Preference (as defined below) of such holder's Series B Preferred Stock ("PIK Dividends"). Such dividends are payable quarterly in arrears on the first trading day of each fiscal quarter commencing on the first trading day of the initial fiscal quarter after the date of issuance. Upon the occurrence of certain events, the dividend rate may automatically increase, as described in the Certificate of Designation.

Conversion at Option of Holder. At any time from and after six months following the first date of issuance of any shares of Series B Preferred Stock, subject to the Beneficial Ownership Limitation (as defined below), each holder of Series B Preferred Stock may convert all or a portion of the outstanding Series B Preferred Stock, at such holder's option, into shares of Common Stock at a conversion rate equal to the quotient of (i) the Liquidation Preference (as defined below) divided by (ii) $3.15.

Liquidation Preference. Each share of Series B Preferred Stock carries a liquidation preference equal to (1) one thousand dollars ($1,000), plus (2) the aggregate amount of all PIK Dividends paid since the Initial Issuance Date, plus (3) the aggregate amount of all cash and PIK dividends that have accrued and remain unpaid since the Initial Issuance Date (the "Liquidation Preference").