AVCT American Virtual Cloud Technologies Inc

Item 1.01 Entry into a Material Definitive Agreement.

On September 11, 2022, American Virtual Cloud Technologies, Inc. (the “Company”) and the holders (collectively, the “Holders”) of the Company’s Series B Convertible Preferred Stock (the “Series B Preferred Stock”) and senior secured convertible notes issued in April 2022 (the “Convertible Notes”) entered into an Exchange Agreement (the “Exchange Agreement”). Pursuant to the Exchange Agreement, the parties thereto agreed, among other things, to (i) exchange the remaining outstanding Series B Preferred Stock, consisting of $3,942,447.94 in stated value, into rights (the “Rights”) to acquire an aggregate of 25,806,428 shares (the “Rights Shares”) of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), and (ii) to convert $1,600,000 in original principal amount of the Convertible Notes into 10,473,260 shares of Common Stock (the “Installment Shares”), at a conversion price of $0.15277 per share (calculated as 88% of the volume weighted average closing price of the Common Stock on September 8, 2022, consistent with the formula for determining installment conversions set forth in the Convertible Notes), in each case to be effective on September 12, 2022. The Rights Shares and the Installment Shares are being issued in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”).

Pursuant to the Exchange Agreement, the Holder of the Series B Preferred Stock agreed that it would not, directly or indirectly, sell or otherwise dispose of any Rights Shares on any calendar day through and including September 16, 2022, to the extent that any such sale or other disposition of shares would exceed 8.5% of the daily composite trading volume of the Common Stock through the time of sale on any such date. In addition, the Holder of the Convertible Notes agreed to waive the right to payment of any cash portion of any installment conversion amount of the Convertible Notes during the period from September 15, 2022 through September 30, 2022, to the extent such right would otherwise arise from the conversion price during such period being below the $0.10 floor price set forth in the Convertible Notes.

The foregoing summary provides only a brief description of the Exchange Agreement. The summary does not purport to be complete and is qualified in its entirety by the full text of the Exchange Agreement, a copy of which is attached hereto as Exhibit 10.1 and incorporated herein by reference.