Item
1.01. Entry into Material Definitive Agreement.
Merger
Agreement
As
previously disclosed in a Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on October
29, 2021 by Sollensys Corp (the “Company”), on October 26, 2021, the Company entered into a Merger Agreement (“Merger
Agreement”) by and among (i) the Company; (ii) S-CC Merger Sub, Inc., a wholly owned subsidiary of the Company (“S-CC Merger
Sub”); (iii) S-Solutions Merger Sub, Inc., a wholly owned subsidiary of the Company (“S-Solutions Merger Sub”); (iv)
Celerit Corporation (“Celerit”); (v) Celerit Solutions Corporation (“Celerit Solutions”); and (vi) Terry Rothwell
(collectively, (i)-(v), the “Merger Parties”).
Pursuant
to the terms of the Merger Agreement, if the Merger did not close by January 31, 2022, the Merger Agreement would terminate.
As
previously disclosed in a Current Report on Form 8-K filed with the SEC on February 3, 2022, by the Company, on January 28, 2022, the
Merger Parties entered into an Amendment to Merger Agreement, dated as of January 28, 2022, pursuant to which the Merger Parties agreed
to extend the closing deadline to March 31, 2022.
On
March 31, 2022, the Merger Parties entered into the Second Amendment to Merger Agreement, dated as of March 31, 2022 (the “Second
Amendment”), pursuant to which the Merger Parties agreed to extend the closing deadline to April 7, 2022. The Merger Parties agreed
in principle to several changes and agreed to reasonably cooperate to amend the Merger Agreement to reflect their mutual intent.
On
April 7, 2022 (the “Closing Date”), the Merger Parties executed an Amended and Restated Merger Agreement (the “AR Merger
Agreement”). On the terms and subject to the conditions set forth in the AR Merger Agreement, and subject further to acceptance
of Articles of Merger filed on the Closing Date with the Secretary of State of Arkansas (“SOS AR”): (i) Celerit merged with
and into S-CC Merger Sub (the “Celerit Merger”), and the separate corporate existence of S-CC Merger Sub ceased, with Celerit
as the surviving corporation (the “Celerit Surviving Corporation”). (ii) Celerit Solutions merged with and into S-Solutions
Merger Sub (the “Celerit Solutions Merger”), and the separate corporate existence of S-Solutions Merger Sub ceased, with
Celerit Solutions as the surviving corporation (the “Celerit Solutions Surviving Corporation”) (the Celerit Merger and Celerit
Solutions Merger together, the “Mergers”). The Mergers shall have the effects set forth in the AR Merger Agreement and in
the Arkansas Business Corporation Act of 1987 (the “ABCA”). On the Closing Date, SS-Merger Sub and S-Solutions Merger Sub
filed Articles of Merger with the SOS AR, which are currently pending.
By
virtue of, and simultaneously with, the Celerit Merger and without any further action (other than the acceptance by the SOS AR of the
applicable Articles of Merger or as otherwise required pursuant to applicable law) on the part of the Merger Parties, at the effective
time of the Mergers (the “Effective Time”): (a) the Celerit Merger was completed, (b) all the properties, rights, privileges,
powers and franchises of Celerit and S-CC Merger Sub vested in the Celerit Surviving Corporation, (c) all debts, liabilities and duties
of Celerit and S-CC Merger Sub became the debts, liabilities and duties of Celerit Surviving Corporation, and (d) all the rights, privileges,
immunities, powers and franchises of Celerit (as the Celerit Surviving Corporation) continue unaffected by the Celerit Merger. The Articles
of Incorporation of Celerit as in effect immediately prior to the Effective Time shall be the articles of incorporation of the Celerit
Surviving Corporation until duly amended and restated in accordance with their terms and as provided by applicable law; and the Bylaws
of Celerit as in effect immediately prior to the Effective Time shall be the bylaws of Celerit Surviving Corporation until duly amended
and restated in accordance with their terms and as provided by applicable law.
By
virtue of, and simultaneously with, the Celerit Solutions Merger and without any further action (other than the acceptance by the SOS
AR of the applicable Articles of Merger or as otherwise required pursuant to applicable law) on the part of the Merger Parties, at the
Effective Time: (a) the Celerit Solutions Merger was completed, (b) all the properties, rights, privileges, powers and franchises of
Celerit Solutions and S-Solutions Merger Sub vested in the Celerit Solutions Surviving Corporation, (c) all debts, liabilities and duties
of Celerit Solutions and S-Solutions Merger Sub became the debts, liabilities and duties of Celerit Solutions Surviving Corporation,
and (d) all the rights, privileges, immunities, powers and franchises of the Celerit Solutions (as the Celerit Solutions Surviving Corporation)
continue unaffected by the Celerit Solutions Merger. The Articles of Incorporation of Celerit Solutions as in effect immediately prior
to the Effective Time shall be the articles of incorporation of the Celerit Solutions Surviving Corporation until duly amended and restated
in accordance with their terms and as provided by applicable law; and the Bylaws of Celerit Solutions as in effect immediately prior
to the Effective Time shall be the bylaws of Celerit Solutions Surviving Corporation until duly amended and restated in accordance with
their terms and as provided by applicable law.
Consideration
Aggregate
consideration for the Mergers consists of (i) the sum of $2,695,000, subject to certain adjustments set forth in the AR Merger Agreement
(the “Cash Consideration”), and (ii) four million (4,000,000) shares of Sollensys Common Stock (the “Sollensys Shares”).
The Cash Consideration was paid to the Terry Rothwell via the issuance to the Terry Rothwell at the Closing of a promissory note of Sollensys
(the “Note”). Additional consideration of $10,000 was paid to Terry Rothwell.
The
foregoing summary is qualified in its entirety by reference to the full AR Merger Agreement, which is attached hereto as Exhibit 10.4
to this Current Report on Form 8-K and hereby incorporated by reference.
Promissory
Note
Sollensys
Corp issued a promissory note to Terry Rothwell with a principal amount of $2,695,000, bearing simple interest at a rate of 0.0001% to
the maturity date, June 30, 2022, and, if not paid at maturity, the note accrues simple interest at 6% per year until paid. There is
no penalty or premium for prepayment. In the event of a default, Sollensys Corp has agreed to pay Terry Rothwell’s reasonable legal
fees and costs of collection.
The
foregoing summary of the Note is qualified in its entirety by the full Note, which is Exhibit 10.5 to this Current Report on Form 8-K
and is hereby incorporated by reference.
Audited
Financial Statements
The
AR Merger Agreement requires that the Parties cooperate with a Public Company Accounting Oversight Board-registered auditor to audit
financial statements for years 2019, 2020 and 2021, in addition to completing a review of 2022 financials. The 2019 and 2020 audits have
been completed. The AR Merger Agreement requires the filing of a Form 8-K with the SEC containing detailed results from the audit, in
accordance with Securities Exchange Act of 1934, as amended, no later than 75 days of April 7, 2022.
Capital
Stock
Each
share of Celerit Common Stock held in the treasury of Celerit or owned by any direct or indirect wholly owned subsidiary of Celerit immediately
prior to the Effective Time of the Merger, if any, were canceled and retired without any conversion or consideration paid in respect
thereof and cease to exist. The shares of Celerit Common Stock issued and outstanding immediately prior to the Effective Time, other
than with respect to shares owned by Celerit or any subsidiary of Celerit, were canceled and extinguished and automatically converted
into the right to receive (i) the Note, and (ii) collectively, 3,880,000 of the Sollensys Shares, to be apportioned pro rata between
the shares of Celerit Common Stock issued and outstanding immediately prior to the Effective Time.
Upon
the terms and subject to the conditions set forth in the AR Merger Agreement, at the Effective Time, by virtue of the Celerit Merger
and without any action on the part of any Party, each outstanding share of common stock of S-CC Merger Sub, par value $0.01 per share,
shall be automatically and without further action converted into one validly issued, fully paid and non-assessable share of common stock
of Celerit Surviving Corporation and such shares of common stock shall constitute the only outstanding capital stock of Celerit Surviving
Corporation. Any certificate evidencing ownership of such shares of S-CC Merger Sub immediately prior to the Effective Time shall, as
of the Effective Time, evidence ownership of such shares of Celerit Surviving Corporation.
Each
share of Celerit Solutions Common Stock held in the treasury of Celerit Solutions or owned by any direct or indirect wholly owned subsidiary
of Celerit Solutions immediately prior to the Effective Time of the Merger, if any, were canceled and retired without any conversion
or consideration paid in respect thereof and cease to exist. The shares of Celerit Solutions Common Stock issued and outstanding immediately
prior to the Effective Time, other than with respect to shares owned by Celerit Solutions or any subsidiary of Celerit Solutions shall
be canceled and extinguished and automatically converted into the right to receive, collectively, 120,000 of the Sollensys Shares, to
be apportioned pro rata between the shares of Celerit Solutions common stock issued and outstanding immediately prior to the Effective
Time.
Upon
the terms and subject to the conditions set forth in this Agreement, at the Effective Time, by virtue of the Celerit Solutions Merger
and without any action on the part of any Party other than as set forth herein, each outstanding share of common stock of S-Solutions
Merger Sub, par value $0.01 per share, shall be automatically and without further action converted into one validly issued, fully paid
and non-assessable share of common stock of Celerit Solutions Surviving Corporation and such shares of common stock shall constitute
the only outstanding capital stock of Celerit Solutions Surviving Corporation. Any certificate evidencing ownership of such shares of
S-Solutions Merger Sub immediately prior to the Effective Time shall, as of the Effective Time, evidence ownership of such shares of
Celerit Solutions Surviving Corporation.
Real
Estate Agreement
Terry
Rothwell and George Rothwell are the members of CRE Holdings, LLC, an Arkansas limited liability company (“CRE”), owning
two office buildings, a vacant commercial lot and a condominium. The office buildings are currently leased by Celerit. The Parties expect
that, shortly after the Effective Date, Sollensys, CRE, Terry Rothwell and George Rothwell shall enter into an agreement (the “CRE
Agreement”) related to the purchase by Sollensys of the two office buildings, a vacant commercial lot and a condominium, as well
as other assets owned by CRE, Terry Rothwell and George Rothwell (the “CRE Transactions”). The purchase price for the CRE
properties is $3,295,000. The closing of the CRE Transactions shall occur on a mutually agreement date and time in accordance with the
terms and conditions of the CRE Agreement. If the closing does not occur on or before June 30, 2022, Sollensys will be obligated to pay
an monthly rent of $50,000 in addition to the then-existing lease obligations. The CRE Agreement and the CRE real estate transactions
operate independently of the AR Merger Agreement and the other transactions contemplated therein.
The
foregoing summary is qualified in its entirety by reference to the full draft CRE Agreement, which is attached hereto as Exhibit 10.6
to this Current Report on Form 8-K, which is hereby incorporated by reference.
Director
Appointments
At
Closing, (i) the Sollensys Board took such actions as required to expand the size of the Sollensys Board of Directors by one person,
and to named Terry Rothwell as a director on the Sollensys Board; (ii) the Celerit Board took such actions as required to expand the
size of the Celerit Board of Directors by two persons, and to add Anthony Nolte and Donald Beavers as directors on the Celerit Board,
while retaining Terry Rothwell as a director on the Celerit Board; (iii) the Celerit Solutions Board took such actions as required to
expand the size of the Celerit Solutions Board by two persons, and to add Anthony Nolte and Donald Beavers as determined by Sollensys
as directors on the Celerit Solutions Board, to be effective as of the Closing.
Executive
Employment Agreements
At
Closing, Sollensys entered into (i) an employment agreement with Terry Rothwell pursuant to which Ms. Rothwell was appointed as the Chief
Executive Officer of each of the Celerit Corporation and Celerit Solutions Corporation (the “Rothwell Employment Agreement”)
and (ii) an employment agreement with Ron Harmon pursuant to which he was appointed as the Chief Operating Officer of each of the Celerit
Corporation and Celerit Solutions Corporation (the “Harmon Employment Agreement” and, together with the Rothwell Employment
Agreement, the “Employment Agreements”).
Pursuant
to the Rothwell Employment Agreement, Terry Rothwell will be paid a base salary of $135,000 and an annual bonus of $210,000. Ms. Rothwell
may be eligible for other bonuses. She will be an “at will” employee and the term of the Rothwell Employment Agreement is
one year and subject to annual renewals.
Pursuant
to the Harmon Employment Agreement, Ron Harmon will be paid a base salary of $240,000 and an annual bonus of $70,000. Mr. Harmon may
be eligible for other bonuses. He will be an “at will” employee and the term of the Harmon Employment Agreement is one year
and subject to annual renewals.
The
foregoing summaries are qualified in their entirety by reference to the full Rothwell Employment Agreement and full Harmon Employment
Agreement, which are attached hereto as Exhibits 10.7 and 10.8, respectively, and are hereby incorporated by reference.
Banking
and Credit Union Services Agreement
On
April 7, 2022, Sollensys and Celerit entered into the Banking and Credit Union Services Agreement (the “Banking Agreement”),
pursuant to which Sollensys assigned to Celerit exclusive rights and responsibility for sales, support and service of all Sollensys products
and services offered to banks and financial institutions and assign to Celerit, or any agreements related thereto and execute all future
similar agreements as Celerit.
The
foregoing summary of the Banking Agreement is qualified in its entirety by reference to the full Banking Agreement, which is attached
hereto as Exhibit 10.9 and incorporated by reference herein.
Server
Agreement
The
Rothwell Sollensys Blockchain Archive Server Distribution Data Center Agreement (2 Units) was entered into April 7, 2022, by and among
Terry Rothwell, George Benjamin Rothwell and Sollensys Corp. (the “Server Agreement”). The Rothwells collectively own two
(2) Units of Sollensys Blockchain Archive Server Distributive Data Center, each loaded with Sollensys Application Software (R4 Enterprise)(the
“Equipment”). Pursuant to the terms and conditions of the Server Agreement, Sollensys may use the Equipment in exchange for
level monthly payments of $100,000 ($50,000 per server) from the servers’ revenue to Terry Rothwell and George Benjamin Rothwell,
a married couple, as a joint and survivor annuity, payable until both Rothwells are deceased.
The
foregoing summary of the Server Agreement is qualified in its entirety by reference to the full Server Agreement, which is attached hereto
as Exhibit 10.10 and incorporated by reference herein.