Company: SLNH
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-010886
Chunk: 27

Company: Soluna Holdings, Inc
Filing Date: 2025-05-15
Form: 10-Q
Item: Part I, Item 1
Chunk 27
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 (iii) an issuance or incurrence of Indebtedness (as defined therein), or (iv) an Extraordinary Receipt (as defined
therein), each subject to certain exceptions. In addition, certain principal payments are subject to the payment of a premium amount equal
to 50% of the remaining amount of interest payable on such principal amount through the scheduled maturity date, if paid on or prior to
the 30-month anniversary of the closing date, and 25% of the remaining amount of interest payable on such principal amount through the
scheduled maturity date, if paid after the 30-month anniversary of the closing date.

The Galaxy Loan Agreement
includes certain restrictions (subject to certain exceptions outlined in the Galaxy Loan Agreement) on the ability of the SW Loan Parties
and their subsidiaries to undertake certain activities, including to incur indebtedness and liens, enter into sale or lease-back transactions,
merge or consolidate with other entities, dispose or transfer their assets, pay dividends or make distributions, make investments, make
Restricted Payments (as defined therein), enter into burdensome agreements or transact with affiliates. In addition, the SW Loan Parties
are subject to three financial covenants – a minimum debt service coverage ratio, a minimum current ratio, and cash in customer
deposit account must equal or be greater than related customer liabilities. The Company also received an extension on its non-financial
covenants through May 15, 2025, in which the Company expects to be in compliance.

    17

Proceeds of the Term Loan
Facility will be used to issue a distribution to SW Holdings, the proceeds of which may be used to make a distribution to SDI.

In connection with the Galaxy
Loan Agreement, on March 12, 2025, the SW Loan Parties and the Lender entered into a security agreement to secure the obligations under
the Term Loan Facility by a lien on substantially all the assets and properties of SW Borrower and SW Holdings, subject to certain exceptions.
The SW Borrower is the owner and operator of the Company’s Project Sophie data center.

In connection with the Galaxy
Loan Agreement, on March 12, 2025, SDI and the Lender entered into a Limited Guarantee Agreement pursuant to which SDI guarantees the
Loss Liabilities (as defined therein) and, after the occurrence of a Recourse Trigger Event (as defined therein), the obligations under
the Loan Agreement.

Equipment Loan Agreement

On May 16, 2024,
SDI SL