SOLLENSYS CORP. Item 1.01. Entry into a Material Definitive Agreement.
Securities Purchase Agreement
On
Pursuant to the terms of the SPA, the Company agreed to pay to AJB as a
commitment fee
The Company agreed to include the Commitment
The SPA provides AJB with a right of first refusal with respect to future equity financings by the Company for a period of 12 months following the closing date.
The SPA contains customary representations, warranties, conditions and indemnification obligations of the parties.
10% Convertible Promissory Note
On
The Note is convertible, subject to a 4.99% equity blocker, in the event of a default, as provided in the Note, into Common Stock at a conversion price (the "Conversion Price") equal to the VWAP (i) during the previous 10 trading day period ending on the date of issuance of the Note, or (ii) during the previous 10 trading day period ending on the conversion date, whichever is lower. If the Common Stock is not deliverable by DWAC, an additional 10% discount will apply for all future conversions until DWAC delivery becomes available. If the Common Stock is "chilled" for deposit into the DTC system and only eligible for clearing deposit, an additional 15% discount will apply for all future conversions until such chill is lifted. Additionally, if the Company ceases to be a reporting company pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or if the Note cannot be converted into free trading shares after 181 days from the issue date (other than as a result of AJB's status as an affiliate of the Company), an additional 15% discount will be attributed to the conversion price.
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While the Note is outstanding, each time any third party has the right to convert monies owed to that third party into Common Stock (or receive shares pursuant to a settlement or otherwise), at a discount to market greater than the Conversion Price in effect at that time (prior to all other applicable adjustments in the Note), then AJB, in its sole discretion, may utilize such greater discount percentage (prior to all applicable adjustments in this Note) until the Note is no longer outstanding. While the Note is outstanding, each time any third party has a look back period greater than the look back period in effect under the Note at that time, then AJB, in its sole discretion, may utilize such greater number of look back days until the Note is no longer outstanding.
Upon the occurrence of certain events of default specified in the Note,
including, but not limited to, a failure to honor a conversion request, failure
to maintain the Company's quotation, or the Company's failure to comply with its
obligations under Exchange Act, all amounts owed to AJB under the Note,
including default interest if any, shall then become due and payable. Further,
if the Company fail to maintain its quotation, fails to comply with its
obligations under the Exchange Act, or loses the "bid" price for its common
stock for a period of five days after written notice thereof to the Company,
after the nine-month anniversary of the Note, then the principal amount of the
Note will increase by
Common Stock Purchase Warrant
Pursuant to the terms of the Warrant, AJB may purchase up to 1,000,000 shares of
Common Stock at an exercise price per share of
The Company also agreed to include the shares exercisable upon exercise of the
Warrant in a registration statement filed by the Company with respect to a
public offering of the Company's securities. If no such registration statement
is filed or if the Company fails to include such shares in the registration
statement, then no later than the date that is 90 days after
The shares of Common Stock to be issued under the SPA, the Note and the Warrant have been, and will be, sold pursuant to an exemption from the registration requirements under Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506 of Regulation D promulgated thereunder. AJB is an accredited investor who has purchased the securities as an investment in a private placement that did not involve a general solicitation.
Security Agreement
In connection with entry into the SPA and issuance of the Note, on
The Security Agreement contains customary representations, warranties, covenants and indemnification obligations of the Company.
The foregoing summary of the SPA, the Note, the Warrant, and the Security Agreement is qualified in its entirety by the terms of the SPA, the Note, the Warrant, and the Security Agreement, copies of which are filed as Exhibits 10.1, 10.2, 10.3 and 10.4 to this Current Report on Form 8-K and are incorporated herein by reference.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information regarding the Note contained in Item 1.01 is hereby incorporated by reference in this Item 2.03.
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Item 9.01. Financial Statements and Exhibits.
(d) Exhibits. Exhibit No. Description 10.1 Securities Purchase Agreement, dated as ofOctober 13, 2022 , by and between the registrant andAJB Capital Investments, LLC . 10.2 Promissory Note issued onOctober 13, 2022 by the registrant to AJBCapital Investments, LLC . 10.3 Common Stock Purchase Warrant datedOctober 13, 2022 . 10.4 Security Agreement, dated as ofOctober 13, 2022 , by and between the registrant andAJB Capital Investments, LLC . 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) 4
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