Item 1.01 Entry into a Material Definitive Agreement.
As previously reported on a Current Report on Form 8-K filed by Soluna Holdings,
Inc. (the "Company") with the U.S. Securities and Exchange Commission on October
25, 2021, on October 20, 2021, the Company entered into a Securities Purchase
Agreement (the "SPA") for an aggregate financing of $15 million (the "October
Financing") with certain institutional investors (the "Investors"), Under the
Notes and other Transaction Documents entered into in connection with the SPA,
the Company, undertook, among other things, notify holders of the Notes of the
occurrence of certain events such as changes in the names of, and jurisdictions
of organization of the Company and its subsidiaries and agreed, that the failure
to fulfill such undertaking, would constitute an Event of Default under the
Transaction Documents. Capitalized terms used, but not defined herein, have the
meanings ascribed to them in the SPA.
On December 30, 2021, Soluna MC Borrowing 2021-1 LLC ("Borrower"), an indirect
wholly-owned-subsidiary of the Company entered into a Master Equipment Finance
Agreement (the "Master Agreement") with NYDIG ABL LLC ("NYDIG") as lender,
servicer and collateral agent. The Master Agreement outlined the framework for a
financing up to approximately $14.4 million. Subsequently, the parties
negotiated the specific terms of each equipment financing transaction as well as
the terms upon which the Investors would consent to the transactions
contemplated by the Master Agreement.
On January 14, 2022, Borrower borrowed loans under the Master Agreement in the
aggregate principal amount of approximately $4.6 million that will bear interest
at 14% and will be repaid over 24 months. As part of the transactions
contemplated under the Master Agreement, (i) the Company's indirect wholly-owned
subsidiary, Soluna MC LLC, formerly EcoChain Block LLC ("Guarantor"), which is
the owner of 100% of the equity interests of Borrower, executed a Guaranty
Agreement in favor of NYDIG, as lender, dated as of December 30, 2021 (the
"Guaranty Agreement"), (ii) Borrower has granted a lien on, and security
interest, in all of its assets to NYDIG, as collateral agent, (iii) Guarantor
will sell to Borrow those assets described in certain Bills of Sale
("Transferred Assets"), (iv) Borrower will purchase from NYDIG those assets
described in certain Bills of Sale (the "Acquired Assets"), (v) Borrower will
borrow from NYDIG the loans as forth in certain loan schedules (the "Specified
Loans"), (vii) Borrower, with the Specified Loans and additional cash from the
Guarantor or one of the Company's other subsidiaries, will purchase the
Transferred Assets and the Acquired Assets, in the aggregate amount of
approximately $4.2 million, and (ix) Borrower has executed a Digital Asset
Account Control Agreement (the "ACA Wallet Agreement") with NYDIG, as collateral
agent and secured party, and NYDIG Trust Company LLC, as custodian, dated as of
December 30, 2021, as well as such other agreements related to the foregoing as
mutually agreed (collectively, the "NYDIG Transactions").
In connection with the NYDIG Transactions, on January 13, 2022, the Company
entered into a Consent and Waiver Agreement, dated as of January 13, 2022 (the
"Consent"), with the Investors, in connection with the SPA, pursuant to which
the Investors agreed to waive any lien on, and security interest in, the
Transferred Assets, provided various contingencies are fulfilled, and each
Investor who acquired on the Closing Date Notes having a principal amount of not
less than $3,000,000 agreed to waive its rights under Section 4.17 of the SPA to
participate in Subsequent Financings with respect to the NYDIG Transactions and
any additional loans under the MEFA that only finance the purchase of equipment
from NYDIG, in order to consent to the NYDIG Transactions. Pursuant to the
Consent, the Investors also waived the current requirement of the SPA and the
other Transaction Documents (collectively, the "SPA Documents") that the
Borrower become an Additional Debtor (as defined in the Security Agreement) and
execute an Additional Debtor Joinder (as defined in the Security Agreement) for
so long as the Specified Loans are outstanding, and NYDIG not entering into a
subordination or intercreditor agreement with respect to the Guaranty. Further,
pursuant to the Consent, the Purchasers waived the right to accelerate the
Maturity Date of the Notes and the right to charge a default rate of interest on
such Notes, in each case, with respect to certain changes in names of, and
jurisdiction of incorporation, of the Debtors (as defined in the SPA Documents),
which waiver does not waive any other Event of Default (as defined in any of the
SPA Documents), known or unknown, as of the date of Consent.
Promptly after the date of the Consent, the Company will issue 85,000 common
stock purchase warrants to the Investor holding the largest outstanding
principal amount of Notes as of the date of the Consent. Such warrants will be
substantially in form similar to the Warrants issued pursuant to the SPA. Such
warrants will be exercisable for three years from the date of the Consent at an
exercise price per share of the Company's common stock, par value $0.001 per
share ("Common Stock"), equal to 130% of the closing price per share of the
Common Stock as of the date of the Consent.
The foregoing description of the Master Agreement, ACA Wallet Agreement,
Guaranty Agreement and Consent does not purport to be complete and is qualified
in its entirety by reference to the full text of the Master Agreement, ACA
Wallet Agreement, Guaranty Agreement and Consent, copies of which are filed as
exhibits herewith as Exhibits 10.1, 10.2, 10.3 and 10.4 and incorporated herein
by reference.
Item 7.01 Regulation FD Disclosure
On January 18, 2022, the Company issued a press release announcing the Master
Agreement, ACA Wallet Agreement, Guaranty Agreement and Consent. A copy of
the press release is furnished herewith as Exhibit 99.1 and incorporated herein
by reference.
The information in this Item 7.01 of this Current Report on Form 8-K, including
Exhibit 99.1, is being "furnished" pursuant to General Instruction B.2 of Form
8-K and shall not be deemed to be "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, or otherwise subject to the
liabilities of that section, nor shall it be deemed incorporated by reference
into any filing under the Securities Act of 1933, as amended, except as shall be
expressly set forth in such filing.
This Current Report on Form 8-K and Exhibit 99.1 contain forward-looking
statements. Forward-looking statements include, but are not limited to,
statements that express the Company's intentions, beliefs, expectations,
strategies, predictions or any other statements related to the Company's future
activities, or future events or conditions. These statements are based on
current expectations, estimates and projections about the Company's business
based, in part, on assumptions made by its management. These statements are not
guarantees of future performance and involve risks, uncertainties and
assumptions that are difficult to predict. Therefore, actual outcomes and
results may differ materially from what is expressed or forecasted in the
forward-looking statements due to numerous factors, including those risks that
may be included in documents that the Company files from time to time with the
SEC. Any forward-looking statements speak only as of the date on which they are
made, and the Company undertakes no obligation to update any forward-looking
statement to reflect events or circumstances after the date of this Current
Report on Form 8-K, except as required by law.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
Exhibit No. Description
10.1 Master Equipment Finance Agreement, by and between Soluna MC
Borrowing 2021-1 LLC and NYDIG ABL LLC, dated as of December 30,
2021
10.2 Digital Asset Account Control Agreement, by and among Soluna MC
Borrowing 2021-1 LLC, NYDIG ABL LLC and NYDIG Trust Company LLC,
effective as of December 30, 2021
10.3 Guaranty Agreement, by Soluna MC LLC, in favor of NYDIG ABL LLC,
dated as of December 30, 2021
10.4 Consent and Waiver Agreement, dated January 13, 2022, by and among
the Company and the purchasers signatory to the Securities Purchase
Agreement, dated as of October 20, 2021
99.1 Press Release, dated January 18, 2022
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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