Item
1.01. Entry into a Material Definitive Agreement
Spring
Lane Contribution Agreement
On
August 5, 2022, Soluna Holdings, Inc., a Nevada corporation (the “Company”), entered into a Contribution Agreement (the “Agreement”)
with Soluna SLC Fund I Projects Holdco, LLC (“Spring Lane”), an unaffiliated third-party, Soluna DV Devco, LLC (“Devco”),
an indirect wholly-owned subsidiary of Soluna Computing, Inc. (“SCI”), a wholly-owned subsidiary of the Company, and Soluna
DVSL ComputeCo, LLC (“DVSL”) an entity formed in order to further the Company’s development project in Texas, (each,
a “Party” and, together, the “Parties”). The Agreement was entered into in connection with that certain Bilateral
Master Contribution Agreement by and between SCI and Spring Lane dated May 3, 2022, pursuant to which Spring Lane agreed to
provide up to $35.0 million in project financing to SCI subject to various milestones and conditions precedent and represents an initial
funding of up to $12.5 million.
Pursuant
to the Agreement, the Company committed to a capital contribution of up to approximately $26.3 million to DVSL (the “Company Commitment”),
and on August 5, 2022, the Company was deemed to have contributed approximately $8.1 million, through payment of capital expenditures
and development costs made on behalf of DVSL by the Company prior to August 5, 2022. Further under the Agreement, Spring Lane committed
to a capital contribution of up to $12.5 million to DVSL (the “Spring Lane Commitment”), and on August 5, 2022, Spring Lane
contributed approximately $3.9 million. Under the Agreement, the Company and Spring Lane have committed to make subsequent contributions,
up to their respective Company Commitment and Spring Lane Commitment amounts, on a pro rata basis, upon receipt of a contribution request
from DVSL, as set forth in the Agreement and subject to the satisfaction of certain conditions described therein. The proceeds of any
subsequent commitments will be applied to pay project costs in accordance with the project budget.
In
exchange for their contributions, the Company and Spring Lane were issued 67.8% and 32.2% of the Class B Membership Interests in DVSL,
respectively, and were admitted as Class B members of DVSL. Further pursuant to the Agreement, DVSL issued 100% of its Class A Membership
Interests to Devco. The Agreement contains customary indemnification provisions, liquidation provisions and governance provisions with
respect to DVSL. The Parties also entered into an Amended and Restated Limited Liability Company Agreement of DVSL providing for the
governance of DVSL.
The
representations, warranties and covenants contained in the Agreement were made solely for the purposes of such agreement and as of specific
dates and were qualified and subject to certain limitations and exceptions agreed to by the Parties in connection with negotiating the
terms of the Agreement. In particular, in your review of the representations and warranties contained in the Agreement, it is important
to bear in mind that the representations and warranties were made solely for the benefit of the parties to the Agreement and were negotiated
for the purpose of allocating contractual risk among them rather than to establish matters as facts. The representations and warranties
may also be subject to a contractual standard of materiality or material adverse effect different from those generally applicable to
stockholders and reports and documents filed with the Securities and Exchange Commission, and, in some cases, they may be qualified by
disclosures made by one party to the other, which are not necessarily reflected in the Agreement or other public disclosures made the
Company.
The
foregoing summary description of the Agreement is subject to and qualified in its entirety by reference to the Agreement, which is filed
as Exhibit 10.1 hereto and incorporated by reference herein.