Item 1.01. Entry into
a Material Definitive Agreement.
Promissory
Note
As
disclosed in the definitive proxy statement filed by Financial Strategies Acquisition Corp. (the “Company”) with the Securities
and Exchange Commission (the “SEC”) on November 14, 2022 (the “Extension Proxy Statement”), relating to a special
meeting of stockholders (the “Extension Meeting”), FSC Sponsor LLC and Celtic Sponsor VII LLC, the Company’s co-sponsors
(the “Co-Sponsors”), agreed that if the Extension Amendment Proposal and the Trust Amendment Proposal (each as defined below)
were approved at the Extension Meeting, one or both of the Co-Sponsors, or one or more of their respective affiliates, members or third-party
designees, would lend to the Company up to $600,000 to be deposited into the trust account (the “Trust Account”) established
in connection with the Company’s initial public offering (the “IPO”).
On
December 9, 2022, the stockholders of the Company approved the Extension Amendment Proposal and the Trust Amendment Proposal at the Extension
Meeting (as described in Item 5.07 of this Current Report on Form 8-K). Accordingly, on December 9, 2022, the Company issued an unsecured
promissory note in the principal amount of $600,000 (the “Promissory Note”) to an affiliate of the Co-Sponsors, Temmelig Investor
LLC, a Delaware limited liability company (the “Lender”), pursuant to which the Lender agreed to loan to the Company up to
$600,000 in connection with the extension of the date (the “Termination Date”) by which the Company must
consummate an initial business combination (“Business Combination”). The Promissory Note does not bear interest
and matures upon the earlier of (a) the closing of a Business Combination and (b) the Company’s liquidation. In the event that the
Company does not consummate a Business Combination, the Promissory Note will be repaid only from amounts remaining outside of the Trust
Account, if any. Upon the consummation of a Business Combination, the Lender may elect to convert any portion or all of the amount outstanding
under the Promissory Note into private units of the Company (each, a “Private Unit”), each Private Unit consisting of one
share of the Company’s Class A common stock, par value $0.0001 per share (“Common Stock”), one warrant to purchase one
share of Common Stock and one right to receive one-tenth of one share of Common Stock upon the consummation of a Business Combination,
at a conversion price of $10.00 per Private Unit. Such Private Units will be identical to the private placement units issued to the Co-Sponsors
at the time of the IPO.
The
Company has deposited $50,000 into the Trust Account in connection with the first drawdown under the Promissory Note in order to effect
the extension of the Termination Date to January 14, 2023 (the “Charter Extension Date”), and will deposit an additional $50,000
into the Trust Account for each subsequent Extension (as defined below) that is needed by the Company to complete a Business Combination.
Such amounts will be distributed either to: (i) all of the holders of shares of Common Stock issued as part of the units sold in the IPO
(the “Public Shares”) upon the Company’s liquidation or (ii) holders of Public Shares who elect to have their shares
redeemed in connection with the consummation of a Business Combination.
The
issuance of the Promissory Note was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act
of 1933, as amended.
The
foregoing description is qualified in its entirety by reference to the Promissory Note, a copy of which is attached as Exhibit 10.1 hereto
and is incorporated herein by reference.
Trust Agreement Amendment
At
the Extension Meeting, the Company’s stockholders approved a proposal (the “Trust Amendment Proposal”) to amend the
Investment Management Trust Agreement (the “Trust Agreement”), dated as of December 9, 2021, by and between the Company and
Continental Stock Transfer and Trust Company (“Continental”), to extend the date on which Continental must liquidate the Trust
Account (the “Liquidation Date”) from December 14, 2022 to January 14, 2023, and to allow the Company, without another stockholder
vote, to further extend the Liquidation Date up to eleven times, for an additional one month each time, from January 14, 2022 to December
14, 2023, by depositing into the Trust Account, for each one-month extension, the lesser of (a) $50,000 and (b) $0.05 for each Public
Share not redeemed in connection with the Special Meeting (the “Trust Agreement Amendment”). Prior to the Extension Meeting,
as disclosed in a Current Report on Form 8-K filed by the Company with the SEC on December 6, 2022, the Company committed that, notwithstanding
the requirement set forth in the Extension Amendment Proposal and the Trust Amendment Proposal to only pay $0.05 per share if the aggregate
amount of such payment would be less than $50,000, it (i) would only effect such amendment upon the deposit of $50,000 into the Trust
Account and (ii) would not elect any subsequent one-month extension of the Termination Date under such amendment unless $50,000 is deposited
into the Trust Account for each such extension. On December 9, 2022, the Company and Continental entered into the Trust Agreement Amendment.
The
foregoing description of the Trust Agreement Amendment is a summary only and is qualified in its entirety by reference to the full text
of the Trust Agreement Amendment, a copy of which is attached as Exhibit 10.2 hereto and is incorporated by reference herein.