Item 1.01. Entry into a Material Definitive Agreement.
Rescission Agreement
As previously disclosed, pursuant to the Amended and Restated Merger Agreement
dated as of April 7, 2022 (the "Merger Agreement"), by and among S-CC Merger
Sub, Inc. ("S-CC Merger Sub"), a previously a wholly owned subsidiary of
Sollensys Corp ("Sollensys"); SSolutions Merger Sub, Inc., a previously a wholly
owned subsidiary of Sollensys ("S-Solutions Merger Sub"); SCARE Holdings, LLC, a
wholly owned subsidiary of Sollensys ("SCARE"); (iii) Celerit Corporation, a
wholly owned subsidiary of Sollensys ("Celerit"); (iv) Celerit Solutions
Corporation, a wholly owned subsidiary of Sollensys ("Celerit Solutions"); (v)
Terry Rothwell; and (vi) CRE Holdings, LLC ("CRE"), the parties to the Merger
Agreement undertook certain transactions, including the merger of Celerit with
and into S-CC Merger Sub, with Celerit surviving, and the merger of Celerit
Solutions with and into S-Solutions Merger Sub, with Celerit Solutions
surviving, in which transactions Ms. Rothwell received certain consideration as
set forth in the Merger Agreement, and in connection with which the parties
entered into certain other agreements and certain other transactions. Subsequent
to entry into the Merger Agreement, the parties determined that they would
unwind the transactions as set forth in the Merger Agreement and in the other
agreements entered into in connection therewith.
Accordingly, on August 22, 2022, the Company entered into the Rescission,
Termination and Release Agreement (the "Rescission Agreement") by and among (i)
the Company, (ii) SCARE; (iii) Celerit; (iv) Celerit Solutions; (v) Ms.
Rothwell; (vi) Ron Harmon; and (vii) CRE. Pursuant to the terms of the
Rescission Agreement, the parties agreed to unwind the transactions as set forth
in the Merger Agreement and in the other agreements entered into in connection
therewith, so as to place each of the parties to the Merger Agreement in the
position that they were as of immediately prior to the closing of the
transactions as set forth in and as contemplated by the Merger Agreement and the
related agreements.
Pursuant to the terms of the Rescission Agreement, among other things, the
parties agreed as follows:
(i) Sollensys agreed to transfer to Ms. Rothwell one share of Celerit common
stock;
(ii) Sollensys agreed to transfer to Ms. Rothwell one share of Celerit Solutions
common stock;
(iii) Ms. Rothwell agreed to transfer to Sollensys 4,000,000 shares of Sollensys
common stock;
(iv) Ms. Rothwell agreed to resign from any and all positions with Sollensys,
including as a member of Sollensys' board of directors;
(v) Donald Beavers agreed to resign as a director and officer of Celerit and
Celerit Solutions;
(vi) Anthony Nolte agreed to resign as a director and officer of Celerit and
Celerit Solutions; and
(vii) Sollensys agreed, in connection with its withdrawal from Celerit of an
aggregate of $605,000 following the closing of the Merger Agreement, to
issue to Celerit a promissory note in the principal amount of $605,000,
accruing interest at the rate of 7% per annum and due on September 30, 2022
(the "Celerit Note").
In addition, pursuant to the terms of the Rescission Agreement, the parties
agreed to terminate:
(i) The Executive Employment Agreement, dated as of April 7, 2022, by and between
Sollensys and Ms. Rothwell (the "Rothwell Employment Agreement"), except as
set forth in the Rescission Agreement;
(ii) The Executive Employment Agreement, dated as of April 7, 2022, by and
between Sollensys and Mr. Harmon (the "Harmon Employment Agreement"), except
as set forth in the Rescission Agreement;
(iii) The Rothwell Sollensys Blockchain Archive Server Distributive Data Center
Agreement (2 Units), dated as of April 7, 2022, by and among Sollensys, Ms.
Rothwell and George Benjamin Rothwell (the "Blockchain Archive Server
Agreement");
(iv) The Promissory Note issued by Sollensys to Ms. Rothwell on April 7, 2022
(the "Rothwell Note");
(v) The Banking and Credit Union Services Agreement, dated as of April 7, 2022,
by and between Sollensys and Celerit (the "Banking Agreement");
(vi) The Real Estate Purchase Agreement, dated as of March 24, 2022, by and among
Sollensys, SCARE, CRE, Ms. Rothwell and Mr. Rothwell (the "Real Estate
Purchase Agreement").
The Rescission Agreement contains certain mutual releases, and covenants,
representations and warranties customary for an agreement of this type.
The foregoing summary of the Rescission Agreement is qualified in its entirety
by the terms of the Rescission Agreement, which is filed as Exhibit 10.1 to this
Current Report on Form 8-K and is incorporated herein by reference.
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Promissory Note
On August 22, 2022, Sollensys issued the Celerit Note, in the principal amount
of $605,000, to Celerit. The Celerit Note bears simple interest at a rate of 7%
per annum to the maturity date, September 30, 2022, or such earlier date as the
Celerit Note may be paid pursuant to the terms of the Celerit Note. There is no
penalty or premium for prepayment. In the Event of Default (as defined in the
Celerit Note), Celerit may, at its option, declare the entire indebtedness under
the Celerit Note immediately due and payable.
The foregoing summary of the Celerit Note is qualified in its entirety by the
terms of the Celerit Note, which is filed as Exhibit 10.2 to this Current Report
on Form 8-K and is incorporated herein by reference.
Item 1.02. Termination of a Material Definitive Agreement.
On August 26, 2022, the following agreements were terminated, except as set
forth in the Rescission Agreement: (i) the Rothwell Employment Agreement, (ii)
the Harmon Employment Agreement, (iii) the Blockchain Archive Server Agreement,
(iv) the Rothwell Note, (v) the Banking Agreement, and (vi) the Real Estate
Purchase Agreement. The information set forth under Item 1.01 hereof, to the
extent applicable, is 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.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Pursuant to the terms of the Rescission Agreement, effective August 22, 2022,
Ms. Rothwell resigned as a member of Sollensys' board of Directors. Effective
August 23, 2022, Anthony Nolte resigned as a member of Sollensys' board of
directors. Ms. Rothwell's and Mr. Nolte's resignations are not because of a
disagreement with Sollensys on any matter relating to Sollensys' operations,
policies or practices.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
10.1 Rescission, Termination and Release Agreement, dated as of August 22,
2022, by and among the registrant, SCARE Holdings, LLC, Celerit
Corporation, Celerit Solutions Corporation, Terry Rothwell and Ron
Harmon.
10.2 Promissory Note issued August 22, 2022, by Sollensys Corp to Celerit
Corporation.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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