SOLUNA HOLDINGS, INC: Entering into a Material Definitive Agreement, Creation of a Direct Financial Obligation or Obligation Under an Off-Balance Sheet Arrangement of a Registrant, Other Events, Financial Statements and Exhibits (Form 8- K)

Item 1.01. Conclusion of a significant definitive agreement.

On April 13, 2022, Soluna Holdings, Inc. (the “Company”) has issued to certain institutional lenders (the “Lenders”) promissory notes in an aggregate principal amount of $10.0 million for a total purchase price of $10.0 million (the Notes”). As previously noted, we have also issued Class D common stock purchase warrants (the “Warrants”) to purchase up to an aggregate of 1,000,000 common shares of the Company at an exercise price of $11.50 per share. These notes were the third and final tranche of a global financing of $20.0 millionas previously disclosed and more particularly described in the company’s current report on Form 8-K filed with the Security and Exchange Commission on March 1, 2022.

The Notes have a maturity date of five years from the date of issue (each a “Maturity Date”), at which dates the Notes will be payable in full and will bear interest at a rate of two percent ( 2%) per year. The Notes may be redeemed, at the Lender’s sole option, either (a) on the applicable Maturity Date or (b) on the first Business Day of each month in which the Company makes an offering of its Series A Shares cumulative at 9.0% of the company. Perpetual Preferred Shares, Par Value $0.001 per share (the “Series A Preferred Shares”) tendering its rating in whole or in part as legal tender to purchase such Series A Preferred Shares at the price per Series A Preferred Share on the date immediately preceding the closing of such subscription , it being understood that if the Notes are not redeemed by May 2, 2022, the Notes will be automatically subscribed for Series A Preferred Shares. If an Event of Default occurs, the unpaid principal amount of the Securities, damages and other amounts owing thereon up to the acceleration date will become, at the choice of the Lender, immediately due and payable in cash. The Notes may be redeemed early or redeemed upon written notice to the other party.

The warrants will be immediately exercisable for two years from their issuance. The exercise of the Warrants will be subject to beneficial ownership limits such that the Lenders may not exercise the Warrants to the extent that such exercise would result in each of the Lenders being the beneficial owner of more than 4 .99% (or, at such lender’s option, 9.99%) of the number of Common Shares outstanding immediately after giving effect to the issue of Common Shares issuable in such fiscal year, which ownership limitation effective may be increased or decreased up to 9.99% upon notice to the Company, provided that any increase in this limitation will not be effective until 61 days after notice to the Company.

The Notes and Warrants each contain customary events of default, representations, warranties, covenants of the Company and the lenders, and indemnification rights and obligations of the parties, as applicable to the preceding tranches. The Warrants will be issued under an exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”), based on the exemption from registration granted by Section 4(a) (2) of the Securities Act and/or Regulation S promulgated thereunder.

The aforementioned transaction was part of the previously disclosed intercreditors’ agreement dated February 22, 2022 (the “Inter-Creditors Agreement”) between the Lenders and certain investors (the “October Investors“) in connection with the offering of notes and warrants by the Company pursuant to a purchase and securities agreement dated October 20, 2021 (the “October Offer”). Pursuant to the Inter-Creditors Agreement, the Investors have agreed that, as long as the October Investors
hold secured convertible debt issued by the Company, the Lenders may not, without the consent of the October Investorsaccelerate the payment of the Securities, contest or oppose the October Investors enforce their rights under the October Offer or accept any prepayment of indebtedness under the Notes.

Section 2.03. Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant

The applicable information set forth in Section 1.01 of this Form 8-K regarding the Notes is incorporated by reference into this Section 2.03.

Item 8.01 Other Events

On April 19, 2022, the Company has issued a press release announcing the financial transactions described in this Form 8-K. A copy of the press release is attached hereto as Exhibit 99.1.

Item 9.01 Financial statements and supporting documents

(d) Exhibits



Exhibit No.       Description



  99.1       Press release, dated April 19, 2022
104        Cover Page Interactive Data File (embedded within the Inline XBRL document).

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