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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 24, 2023
AppTech
Payments Corp.
(Exact
name of registrant as specified in its charter)
Delaware
(State
or other jurisdiction of incorporation)
| 000-27569 |
|
66-0847995 |
| (Commission
File Number) |
|
(IRS
Employer Identification No.) |
5876
Owens Ave, Suite
100
Carlsbad,
California 92008
(Address
of principal executive offices) (Zip Code)
Registrant’s
telephone number, including area code (760)
707-5959
(Former
name or former address, if changed since last report)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions:
| |
☐ |
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| |
|
|
| |
☐ |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| |
|
|
| |
☐ |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| |
|
|
| |
☐ |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities
registered pursuant to Section 12(b) of the Act:
| Title
of Each Class |
|
Trading
Symbol(s) |
|
Name
of Each Exchange on Which Registered |
| Common
stock, par value $0.001 per share |
|
APCX |
|
Nasdaq
Capital Market |
| Warrants,
each whole warrant exercisable for one share of common stock at an exercise price of $4.15 |
|
APCXW |
|
Nasdaq
Capital Market |
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company ☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 Entry into a Material Definitive
Agreement.
Registered Direct Offering
On
October 24, 2023, AppTech Payments Corp., a Delaware Corporation (the “Company”),
entered into a securities purchase agreement (the “Purchase Agreement”) with
a certain institutional investor (the “Purchaser”). The Purchase Agreement
provides for the sale and issuance by the Company of an aggregate of: (i) 1,666,667 shares (the “Shares”)
of the Company’s common stock, par value $0.001 per share (the “Common Stock”)
and (ii) warrants (the “Purchase Warrants” and, together with the Shares,
the “Securities”) to purchase up to 1,666,667 shares of Common Stock. The
offering price per Share and associated Purchase Warrants is $2.10.
Each
Purchase Warrant has an exercise price of $2.74 per share, will be immediately exercisable and will have a term of exercise equal to 5
years from the initial exercise date.
The
offering is expected to result in gross proceeds to the Company of approximately $3.5 million. The net proceeds to the Company from the
offering are expected to be approximately $3.2 million, after deducting placement agent fees and expenses and estimated offering expenses
payable by the Company. The Company intends to use the net proceeds from the offering for the acquisition of Alliance Partners, LLC pursuant
to the membership interest purchase agreement, dated October 13, 2023, by and among the Company, Alliance Partners, LLC and Chris Leyva
and the remainder of the proceeds for working capital and general corporate purposes.
The
Purchase Agreement contains customary representations, warranties and agreements by the Company, customary conditions to closing, indemnification
obligations of the Company, other obligations of the parties, and termination provisions.
The sale of the Shares and
Purchase Warrants is anticipated to close on or about October 26, 2023, subject to the satisfaction of the closing conditions by the parties
contained in the Purchase Agreement.
On
October 24, 2023, the Company also entered into a placement agent agreement (the “Placement Agent Agreement”) with
Titan Partners Group LLC, a division of American Capital Partners (the “Placement Agent”). Pursuant to the terms of
the Placement Agent Agreement, the Placement Agent agreed to use its reasonable best efforts to arrange for the sale of the Securities
(the “Placement”). The Company will pay the Placement Agent (i) a cash fee equal to 7.0% of the aggregate gross proceeds from
the Placement, (ii) a non-accountable expense allowance in the amount of 1% of the aggregate gross proceeds from the Placement and (iii)
will reimburse the Placement Agent for certain of its expenses in an aggregate amount up to $75,000.
The Placement Agent Agreement
contains customary representations, warranties and agreements by the Company, customary conditions to closing, indemnification obligations
of the Company and the Placement Agent, including for liabilities under the Securities Act of 1933, as amended, other obligations of the
parties, and termination provisions.
Pursuant
to the Purchase Agreement, the Company has agreed that, subject to certain exceptions, (i) it will not issue, or enter into any agreement
to issue or announce the issuance or proposed issuance of Common Stock for a period of thirty (30) days following the closing of the offering
and that (ii) it will not enter into a variable rate transaction for a period of one (1) year following the closing of the offering provided,
however, that after the expiration of the 30 day period following the closing of the offering,
the issuance of shares of Common Stock in an “at the market” offering pursuant to that certain At
The Market Offering Agreement, dated August 21, 2023, with StockBlock Securities LLC, as sales agent, shall not be deemed a Variable
Rate Transaction.
The
offering is being made pursuant to a registration statement on Form S-3 (File No. 333-265526), which was filed by the Company with the
Securities and Exchange Commission on June 10, 2022, and declared effective on July 15, 2022, as supplemented by a prospectus supplement
dated October 24, 2023.
In
connection with the Purchase Agreement, the Company entered into an amendment to common stock purchase warrant (the “Warrant
Amendment”) with the holder of 1,666,667 warrants issued to the purchaser pursuant to the securities purchase agreement,
dated January 30, 2023, by and between the Company and a certain institutional investor. Pursuant to the amendment, the exercise price
of the warrants was reset to $2.74.
The Placement Agent Agreement,
Purchase Agreement, form of Common Warrant and Warrant Amendment, are filed as Exhibits 1.1, 10.1, and 4.1, respectively, to this Current
Report on Form 8-K and are incorporated herein by reference. The above descriptions of the terms of the Placement Agent Agreement, Purchase
Agreement and Purchase Warrants are qualified in their entirety by reference to such exhibits.
Item 8.01. Other Events.
The
Company issued a press release announcing the offering of its securities on October 24, 2023. A copy of the press release is attached
hereto as Exhibit 99.1 and is incorporated herein by reference.
Item 9.01. Exhibits.
| + |
Pursuant to Item 601(a)(5) of Regulation S-K, schedules have been omitted and will be furnished on a supplemental basis to the Securities and Exchange Commission upon request. |
SIGNATURES
Pursuant to the requirements of
the Securities Exchange Act of 1934, as amended, the Company has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
| |
APPTECH
PAYMENTS CORP. |
| |
|
|
| Date:
October 24, 2023 |
By: |
/s/
Luke D’Angelo |
| |
|
Luke
D’Angelo |
| |
|
Chief
Executive Officer |
Exhibit 1.1
PLACEMENT AGENCY AGREEMENT
October 24, 2023
AppTech Payments Corp.
5876 Owens Ave., Suite 100
Carlsbad, CA 92008
Ladies and Gentlemen:
Introduction. Subject
to the terms and conditions herein (this “Agreement”), AppTech Payments Corp., a Delaware corporation (the “Company”),
hereby agrees to sell up to an aggregate of $3,500,000 of securities of the Company, including, but not limited to, shares (the “Shares”)
of the Company’s common stock, $0.001 par value per Share (the “Common Stock”) and warrants to purchase shares
of Common Stock (the “Warrants” and together the Shares, the “Securities”) directly to various investors
(each, an “Investor” and, collectively, the “Investors”) through Titan Partners Group LLC, a division
of American Capital Partners, LLC (together with its affiliates, “Titan Partners” or the “Placement Agent”)
as placement agent. The documents executed and delivered by the Company and the Investors in connection with the Offering (as defined
below), including, without limitation, securities purchase agreements (the “Purchase Agreements”), shall be collectively
referred to herein as the “Transaction Documents.” The purchase price to the Investors for each Share is $2.10. Each
Share shall be accompanied with one Warrant exercisable for one share of Common Stock for $2.74 per share (the “Warrant Shares”).
Capitalized but undefined terms have the respective meaning ascribed to them in the Purchase Agreements.
The Company hereby confirms
its agreement with the Placement Agent as follows:
Section 1. Agreement to Act as Placement Agent.
(a) On the basis
of the representations, warranties and agreements of the Company herein contained, and subject to all the terms and conditions of this
Agreement, the Placement Agent shall be the exclusive placement agent in connection with the offering and sale by the Company of the Securities
pursuant to the Company’s registration statement on Form S-3 (File No. 333-265526) (the “Registration Statement”),
with the terms of such offering (the “Offering”) to be subject to market conditions and negotiations between the Company,
the Placement Agent and the prospective Investors. The Placement Agent will act on a reasonable best efforts basis and the Company agrees
and acknowledges that there is no guarantee of the successful placement of the Securities, or any portion thereof, in the prospective
Offering. Under no circumstances will the Placement Agent or any of its “Affiliates” (as defined below) be obligated to underwrite
or purchase any of the Securities for its own account or otherwise provide any financing. The Placement Agent shall act solely as the
Company’s agent and not as principal. The Placement Agent shall have no authority to bind the Company with respect to any prospective
offer to purchase the Securities and the Company shall have the sole right to accept offers to purchase the Securities and may reject
any such offer, in whole or in part. Subject to the terms and conditions hereof, payment of the purchase price for, and delivery of, the
Securities shall be made at one or more closings (each a “Closing” and the date on which each Closing occurs, a “Closing
Date”). As compensation for services rendered, on each Closing Date, the Company shall pay to the Placement Agent the fees and
expenses set forth below:
| (i) | A cash fee equal to 7.0% of the gross proceeds received by the Company from the sale of the Securities at the Closing. |
| (ii) | A non-accountable expense allowance in the amount of one percent (1.0%) of the gross proceeds from the sale of the Securities at Closing; |
| | (iii) | The Company also agrees to reimburse up to $75,000 of Placement Agent’s out-of-pocket expenses of legal counsel payable immediately
upon the Closing of the Offering. |
(b) The term of
the Placement Agent’s exclusive engagement will be until the completion of the Offering or the Offering is abandoned (the “Exclusive
Term”); provided, however, that a party hereto may terminate the engagement with respect to itself at any time
upon five days written notice to the other parties. Notwithstanding anything to the contrary contained herein, the provisions concerning
confidentiality, indemnification and contribution contained herein and the Company’s obligations contained in the indemnification
provisions will survive any expiration or termination of this Agreement, and the Company’s obligation to pay fees actually earned
and payable and to reimburse expenses actually incurred and reimbursable pursuant to Section 1 hereof and which are permitted to be reimbursed
under FINRA Rule 5110(g), will survive any expiration or termination of this Agreement. Nothing in this Agreement shall be construed to
limit the ability of the Placement Agent or its Affiliates to pursue, investigate, analyze, invest in, or engage in investment banking,
financial advisory or any other business relationship with Persons (as defined below) other than the Company. As used herein (i) “Persons”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company,
joint stock company, government (or an agency or subdivision thereof) or other entity of any kind and (ii) “Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control
with a Person as such terms are used in and construed under Rule 405 under the Securities Act of 1933, as amended (the “Securities
Act”).
Section 2. Representations, Warranties and
Covenants of the Company. The Company hereby represents, warrants and covenants to the Placement Agent as of the date hereof, and
as of each Closing Date, as follows:
(a) Assurances.
The Registration Statement contains all exhibits and schedules as required by the Securities Act. Each of the Registration Statement and
any post-effective amendment thereto, at the time it became effective, complied in all material respects with the Securities Act and did
not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading. The Prospectus and the Prospectus Supplement, each as of its date, comply or will comply in all
material respects with the Securities Act. Each of the Prospectus and the Prospectus Supplement, as amended or supplemented, did not contain
as of their respective dates, and will not contain as of the Closing Date, any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading;
provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the Company by the Placement Agent expressly for use therein. No post-effective
amendment to the Registration Statement reflecting any facts or events arising after the date thereof which represent, individually or
in the aggregate, a fundamental change in the information set forth therein is required to be filed with the Commission. Except for the
Purchase Agreements, there are no documents required to be filed with the Commission in connection with the transaction contemplated hereby
that (x) have not been filed as required pursuant to the Securities Act or (y) will not be filed within the requisite time period. Except
for the Purchase Agreement, there are no contracts or other documents required to be described in the Prospectus or Prospectus Supplement,
or to be filed as exhibits or schedules to the Registration Statement, which have not been described or filed as required.
(b) Offering
Materials. Neither the Company nor any of its directors and officers has distributed and none of them will distribute, prior to each
Closing Date, any offering material in connection with the offering and sale of the Securities other than the Prospectus and any other
materials permitted by the Securities Act.
(c) Authorization;
Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated
by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of this Agreement by the Company and
the consummation by it of the transactions contemplated hereby and under the Final Prospectus have been duly authorized by all necessary
action on the part of the Company and no further action is required by the Company, the Company’s Board of Directors (the “Board
of Directors”) or the Company’s stockholders in connection therewith other than in connection with the Required Approvals
(as defined in the Purchase Agreement). This Agreement has been duly executed by the Company and, when delivered in accordance with the
terms hereof, assuming due authorization, execution and delivery by the Placement Agent, will constitute the valid and binding obligation
of the Company enforceable against the Company in accordance with its terms, except (i) as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’
rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies
and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.
(d) No Conflicts.
The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to which it is a party, the
issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby and in the Purchase Agreement do
not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of
incorporation, bylaws or other organizational or charter documents, (ii) conflict with, or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets
of the Company or any Subsidiary, or give to others any rights of termination, amendment, anti-dilution or similar adjustments, acceleration
or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing
a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property
or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in
a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority
to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property
or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as would not
reasonably be expected to result in a Material Adverse Effect.
(e) Certificates.
Any certificate signed by an officer of the Company and delivered to the Placement Agent or to counsel for the Placement Agent shall be
deemed to be a representation and warranty by the Company to the Placement Agent as to the matters set forth therein.
(f) Forward-Looking
Statements. No forward-looking statements (within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act) contained in the Prospectus and Prospectus Supplement has been made or reaffirmed without a reasonable basis or has been disclosed
other than in good faith.
(g) Statistical
or Market-Related Data. Any statistical, industry-related and market-related data included or incorporated by reference in the Prospectus
and Prospectus Supplement, are based on or derived from sources that the Company reasonably and in good faith believes to be reliable
and accurate, and such data agree with the sources from which they are derived.
(h) FINRA Affiliations.
To the knowledge of the Company, there are no affiliations with any FINRA member firm that is participating in the Offering among the
Company’s officers or directors.
(i) Representations
and Warranties Incorporated by Reference. Each of the representations and warranties (together with any related disclosure schedules
thereto) made by the Company to the Investors in the Purchase Agreements is hereby incorporated herein by reference (as though fully restated
herein) and is hereby made to, and in favor of, the Placement Agent.
Section 3. Representations of the Placement
Agent. The Placement Agent, represents and warrants that it (i) is a member in good standing of the Financial Industry Regulatory
Authority (“FINRA”), (ii) is registered as a broker/dealer under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), (iii) is licensed as a broker/dealer under the laws of the United States of America, applicable to the offers
and sales of the Securities by the Placement Agent, (iv) is and will be a corporate body validly existing under the laws of its place
of incorporation, (v) has full power and authority to enter into and perform its obligations under this Agreement and (vi) the Placement
Agent has not, in connection with the Offering, disclosed to any Investors information that is different from or inconsistent with the
information contained in the Prospectus and the Transaction Documents. The Placement Agent will immediately notify the Company in writing
of any change in its status with respect to subsections (i) through (vi) above. The Placement Agent covenants that it will use its reasonable
best efforts to conduct the Placement hereunder in compliance with the provisions of this Agreement and the requirements of applicable
law.
Section 4. Delivery and Payment. Each Closing
shall occur at such place as shall be agreed upon by the Placement Agent and the Company. Except as otherwise provided in the Purchase
Agreements, subject to the terms and conditions hereof, at each Closing payment of the purchase price for the Shares sold on such Closing
Date shall be made by Federal Funds wire transfer, against delivery of such Shares and Warrants, and such Shares and Warrants be registered
in such name or names and shall be in such denominations, as the Placement Agent may each request at least one business day before the
time of purchase.
Deliveries of the documents
with respect to the purchase of the Securities, if any, shall be made at such place as shall be agreed upon by the parties. All actions
taken at a Closing shall be deemed to have occurred simultaneously.
Section 5. Covenants and Agreements of the
Company. The Company further covenants and agrees with the Placement Agent as follows:
(a)
Registration Statement Matters. The Company will advise the Placement Agent promptly after it receives notice thereof
of the time when any amendment to the Registration Statement has been filed or becomes effective or any supplement to the Prospectus or
the Prospectus Supplement has been filed and will furnish the Placement Agent with copies thereof. The Company will advise the Placement
Agent, promptly after it receives notice of (i) any request by the Commission to amend the Registration Statement or to amend or supplement
any Prospectus or for additional information, and (ii) the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or any post-effective amendment thereto or any order directed at any Incorporated Document, if any, or any
amendment or supplement thereto or any order preventing or suspending the use of the Prospectus or the Prospectus or any amendment or
supplement thereto or any post-effective amendment to the Registration Statement, of the suspension of the qualification of the Securities
for offering or sale in any jurisdiction, of the institution, to the Company’s knowledge, or threatened institution of any proceeding
for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement or any Prospectus
or for additional information. The Company shall use its reasonable best efforts to prevent the issuance of any such stop order or prevention
or suspension of such use. If the Commission shall enter any such stop order or order or notice of prevention or suspension at any time,
the Company will use its commercially reasonable efforts to obtain the lifting of such order at the earliest possible moment, or will
file a new registration statement and use its commercially reasonable efforts to have such new registration statement declared effective
as soon as practicable. Additionally, the Company agrees, in connection with the Offering, that it shall comply with the provisions of
Rules 424(b), 430A, 430B and 430C, as applicable, under the Securities Act, including with respect to the timely filing of documents thereunder,
and will use its reasonable efforts to confirm that any filings made by the Company under such Rule 424(b) are received in a timely manner
by the Commission.
(b) Blue Sky
Compliance. If applicable, the Company will cooperate with the Placement Agent and the Investors in endeavoring to qualify the Securities
and Warrant Shares for sale under the securities laws of such jurisdictions (United States and foreign) as the Placement Agent and the
Investors may reasonably request and will make such applications, file such documents, and furnish such information as may be reasonably
required for that purpose, provided the Company shall not be required to qualify as a foreign corporation or to file a general consent
to service of process in any jurisdiction where it is not now so qualified or required to file such a consent, and provided further that
the Company shall not be required to produce any new disclosure document.
(c) Amendments
and Supplements to a Prospectus and Other Matters. The Company will comply with the Securities Act and the Exchange Act, and the rules
and regulations of the Commission thereunder, so as to permit the completion of the distribution of the Securities as contemplated in
the Purchase Agreements, the Prospectus and the Prospectus Supplement.
(d) Copies of
any Amendments and Supplements to a Prospectus. The Company will furnish the Placement Agent, without charge, during the period beginning
on the date hereof and ending on the later of the last Closing Date of the Offering, as many copies of any Prospectus or prospectus supplement
and any amendments and supplements thereto, as the Placement Agent may reasonably request.
(e) Free Writing
Prospectus. The Company covenants that it will not, unless it obtains the prior written consent of the Placement Agent, make any offer
relating to the Securities that would constitute an Issuer Free Writing Prospectus or that would otherwise constitute a “free
writing prospectus” (as defined in Rule 405 of the Securities Act) required to be filed by the Company with the Commission or
retained by the Company under Rule 433 of the Securities Act. In the event that the Placement Agent expressly consents in writing to any
such free writing prospectus (a “Permitted Free Writing Prospectus”), the Company covenants that it shall (i) treat
each Permitted Free Writing Prospectus as an Issuer Free Writing Prospectus, and (ii) comply with the requirements of Rule 164 and 433
of the Securities Act applicable to such Permitted Free Writing Prospectus, including in respect of timely filing with the Commission,
legending and record keeping.
(f) Transfer
Agent. The Company will maintain, at its expense, a registrar and transfer agent for the Common Stock.
(g) Acknowledgment.
The Company acknowledges that any advice given by the Placement Agent to the Company is solely for the benefit and use of the Board of
Directors of the Company and may not be used, reproduced, disseminated, quoted or referred to, without the Placement Agent’s prior
written consent.
(h) Announcement
of Offering. The Company acknowledges and agrees that the Placement Agent may, subsequent to the Closing, make public its involvement
with the Offering.
(i) Reliance
on Others. The Company confirms that it will rely on its own counsel and accountants for legal and accounting advice.
(j) Research
Matters. By entering into this Agreement, the Placement Agent does not provide any promise,
either explicitly or implicitly, of favorable or continued research coverage of the Company and the Company hereby acknowledges and agrees
that Titan Partners’ selection as the placement agent for the Offering was in no way conditioned, explicitly or implicitly, on the
Placement Agent providing favorable or any research coverage of the Company. In accordance with FINRA Rule 2711(e), the parties acknowledge
and agree that the Placement Agent has not directly or indirectly offered favorable research, a specific rating or a specific price target,
or threatened to change research, a rating or a price target, to the Company or inducement for the receipt of business or compensation.
(k) Subsequent
Equity Sales.
(i)
The Company, on behalf of itself and any successor entity, agrees that, without the prior written consent of the Placement Agent,
it will not, for a period commencing on the date of this Agreement and ending thirty (30) days after the final Closing of the offering
of the Shares pursuant to this Agreement (the “Restricted Period”) (i) offer, pledge, sell, contract to sell, sell
any option or contract to purchase, purchase any option or contract to sell, grant any option, right, or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any shares of capital stock of the Company or any securities convertible into
or exercisable or exchangeable for shares of capital stock of the Company; (ii) file or caused to be filed any registration statement
with the Commission relating to the offering of any shares of capital stock of the Company or any securities convertible into or exercisable
or exchangeable for shares of capital stock of the Company; (iii) complete any offering of debt securities of the Company, other than
entering into a line of credit with a traditional bank; or (iv) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of capital stock of the Company, whether any such transaction described
in clause (i), (ii), (iii) or (iv) above is to be settled by delivery of shares of capital stock of the Company or such other securities,
in cash or otherwise; provided, however, that so long as none of such equity securities shall be saleable in the public
market until the expiration of the Restricted Period, the following matters shall not be prohibited: (i) the adoption of an equity incentive
plan and the grant of awards pursuant to any equity incentive plan, and the filing of a registration statement on Form S-8 relating to
such a plan, (ii) the issuance of equity securities in connection with an acquisition or a strategic relationship, which may include the
sale of equity securities, and (iii) the issuance of equity securities upon the exercise or conversion of options, warrants, or other
convertible securities outstanding on the date of this Agreement.
(ii)
From the date hereof until one year following the Closing Date, the Company shall be prohibited from effecting or entering into
an agreement to effect any issuance by the Company or any of its Subsidiaries of Common Stock or Common Stock Equivalents (or a combination
of units thereof) involving a Variable Rate Transaction. “Variable Rate Transaction” means a transaction in which the
Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right
to receive additional shares of Common Stock either (A) at a conversion price, exercise price or exchange rate or other price that is
based upon and/or varies with the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance
of such debt or equity securities, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future
date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly
related to the business of the Company or the market for the Common Stock or (ii) enters into, or effects a transaction under, any agreement,
including, but not limited to, an equity line of credit whereby the Company may issue securities at a future determined price regardless
of whether shares pursuant to such agreement have actually been issued and regardless of whether such agreement is subsequently canceled;
provided, however, that the issuance of shares of Common Stock in an “at the market” offering pursuant to that
certain At The Market Offering Agreement, dated August 21, 2023, with StockBlock Securities LLC,
as sales agent, shall not be deemed a Variable Rate Transaction. Any Purchaser shall be entitled to obtain injunctive relief against
the Company to preclude any such issuance, which remedy shall be in addition to any right to collect damages.
Section 6. Conditions of the Obligations of
the Placement Agent. The obligations of the Placement Agent hereunder shall be subject to the accuracy of the representations and
warranties on the part of the Company set forth in Section 2 hereof, in each case as of the date hereof and as of each Closing Date as
though then made and each of the following conditions:
(a) Compliance
with Registration Requirements; No Stop Order; No Objection from the FINRA. Each Prospectus (in accordance with Rule 424(b)) and “free
writing prospectus” (as defined in Rule 405 of the Securities Act), if any, shall have been duly filed with the Commission,
as appropriate; no stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and
no proceeding for that purpose shall have been initiated or, to the Company’s knowledge, threatened by the Commission; no order
preventing or suspending the use of any Prospectus shall have been issued and no proceeding for that purpose shall have been initiated
or, to the Company’s knowledge, threatened by the Commission; no order having the effect of ceasing or suspending the distribution
of the Securities or Warrant Shares or any other securities of the Company shall have been issued by any securities commission, securities
regulatory authority or stock exchange and no proceedings for that purpose shall have been instituted or shall be pending or, to the knowledge
of the Company, contemplated by any securities commission, securities regulatory authority or stock exchange; all requests for additional
information on the part of the Commission shall have been complied with; and the FINRA shall have raised no objection to the fairness
and reasonableness of the placement terms and arrangements.
(b) Corporate
Proceedings. All corporate proceedings and other legal matters in connection with this Agreement, the Registration Statement and any
Prospectus, and the registration, sale and delivery of the Securities and Warrant Shares, shall have been completed or resolved in a manner
reasonably satisfactory to the Placement Agent’s counsel, and such counsel shall have been furnished with such papers and information
as it may reasonably have requested to enable such counsel to pass upon the matters referred to in this Section 6.
(c) Opinion of
Counsel for the Company. The Placement Agent shall have received on each Closing Date the legal opinion of legal counsel to the Company,
dated as of such Closing Date, addressed to the Placement Agent and in form and substance reasonably satisfactory to the Placement Agent.
(d) Comfort
Letter. The Placement Agent shall have received a cold comfort letter from the Company’s independent auditor addressed to the
Placement Agent, in a form and substance reasonably satisfactory in all respects to the Placement Agent;
(e) Officers’
Certificate. The Placement Agent shall have received on each Closing Date a certificate of the Company, dated as of such Closing
Date, signed by the Chief Executive Officer and the Chief Financial Officer of the Company, to the effect that, and the Placement Agent
shall be satisfied that, the signers of such certificate have reviewed the Registration Statement, any Prospectus, the Purchase Agreements
and this Agreement and to the further effect that:
(i) The representations
and warranties of the Company in the Purchase Agreements and this Agreement as set forth and otherwise qualified in such agreements are
true and correct, as if made on and as of such Closing Date, and the Company has complied with all the agreements and satisfied in all
material respects all the conditions on its part to be performed or satisfied at or prior to such Closing Date;
(ii) No stop order
suspending the effectiveness of the Registration Statement or the use of any Prospectus has been issued and no proceedings for that purpose
have been instituted or are pending or, to the Company’s knowledge, threatened under the Securities Act; no order having the effect
of ceasing or suspending the distribution of the Securities or any other securities of the Company has been issued by any securities commission,
securities regulatory authority or stock exchange in the United States and no proceedings for that purpose have been instituted or are
pending or, to the knowledge of the Company, contemplated by any securities commission, securities regulatory authority or stock exchange
in the United States; and
(iii) Since the date
of the latest audited or reviewed financial statements included within the Reports with the United States Securities and Exchange Commission
(the “Commission”), (i) there has not been a Material Adverse Effect, (ii) the Company has not incurred any material
liabilities (contingent or otherwise) other than liabilities not required to be reflected in the Company’s financial statements
pursuant to GAAP or disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the
Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or
made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity securities to
any officer, director or Affiliate, except pursuant to existing Company stock option plans.
(e) Stock Exchange
Listing. The Common Stock shall be registered under the Exchange Act and shall be listed on the Trading Market, and the Company shall
not have taken any action designed to terminate, or likely to have the effect of terminating, the registration of the Common Stock under
the Exchange Act or delisting or suspending from trading the Common Stock from the Trading Market, nor shall the Company have been notified
by the Commission or the Trading Market that either is taking action to terminate such registration or listing.
(f) IP Certificate.
The Placement Agent shall have received on each Closing Date a certificate of the Company, dated as of such Closing Date, signed by the
Chief Executive Officer of the Company, with respect to certain intellectual property matters in a form reasonably acceptable to the Placement
Agent and the Company;
(g) CFO Certificate.
The Placement Agent shall have received on each Closing Date a certificate of the Company, dated as of such Closing Date, signed by the
Chief Financial Officer of the Company, with respect to the Company’s financial statements and financial data included in the Registration
Statement and the Incorporated Documents in a form reasonably acceptable to the Placement Agent and the Company;
(h) No Material
Adverse Effect. Subsequent to the execution and delivery of this Agreement and prior to each Closing Date, in the Placement Agent’s
sole judgment after consultation with the Company, there shall not have occurred any Material Adverse Effect.
(i) Additional
Documents. On or before each Closing Date, the Placement Agent and counsel for the Placement Agent shall have received such information
and documents from the Company as they may reasonably require for the purposes of enabling them to pass upon the issuance and sale of
the Securities as contemplated herein, or in order to evidence the accuracy of any of the representations and warranties, or the satisfaction
of any of the conditions or agreements, herein contained.
If any condition specified
in this Section 6 is not satisfied when and as required to be satisfied, this Agreement may be terminated by the Placement Agent by notice
to the Company at any time on or prior to a Closing Date, which termination shall be without liability on the part of any party to any
other party, except that Section 7 (Payment of Expenses), Section 8 (Indemnification and Contribution) and Section 9 (Representations
and Indemnities to Survive Delivery) shall at all times be effective and shall survive such termination.
Section 7. Payment of Expenses. The Company agrees to pay all
costs, fees and expenses incurred by the Company in connection with the performance of its obligations hereunder and in connection with
the transactions contemplated hereby, including, without limitation: (i) all expenses incident to the issuance, delivery and qualification
of the Securities (including all printing and engraving costs); (ii) all fees and expenses of the registrar and transfer agent of the
Common Stock; (iii) all necessary issue, transfer and other stamp taxes in connection with the issuance and sale of the Securities; (iv)
all fees and expenses of the Company’s counsel, independent public or certified public accountants and other advisors; (v) all costs
and expenses incurred in connection with the preparation, printing, filing, shipping and distribution of the Registration Statement (including
financial statements, exhibits, schedules, consents and certificates of experts), the Prospectus and the Prospectus Supplement, and all
amendments and supplements thereto, and this Agreement; (vi) the expenses contemplated by Section 1(a)(ii) above, subject to the limitations
set forth in such section; (vii) if applicable, the filing fees incident to the review and approval by the FINRA of the Placement Agent’s
participation in the Offering; (viii) the fees and expenses associated with including the Shares and Warrant Shares on the Trading Market;
(ix) all costs and expenses incident to the travel and accommodation of the Company’s employees on the “roadshow,”
if any; (x) fees and expenses of Placement Agent’s counsel up to the amount of $75,000; and (xi) all other fees, costs and expenses
referred to in Part II of the Registration Statement.
Section 8. Indemnification and Contribution.
(a) The Company
agrees to indemnify and hold harmless the Placement Agent, its affiliates and each person controlling the Placement Agent (within the
meaning of Section 15 of the Securities Act), and the directors, officers, and employees of the Placement Agent, their affiliates and
each such controlling person (the Placement Agent, and each such entity or person. an “Indemnified Person”) from and
against any losses, claims, damages, judgments, assessments, costs and other liabilities (collectively, the “Liabilities”),
and shall reimburse each Indemnified Person for all reasonable and documented out-of-pocket fees and expenses (including the reasonable
and documented out-of-pocket fees and expenses of one counsel for all Indemnified Persons, except as otherwise expressly provided herein)
(collectively, the “Expenses”) as they are incurred by an Indemnified Person in investigating, preparing, pursuing
or defending any Actions, whether or not any Indemnified Person is a party thereto, (i) caused by, or arising out of or in connection
with, any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, any Incorporated Document,
or any Prospectus or by any omission or alleged omission to state therein a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading (other than untrue statements or alleged untrue statements in, or
omissions or alleged omissions from, information relating to an Indemnified Person furnished in writing by or on behalf of an Indemnified
Person expressly for use in the Incorporated Documents) or (ii) otherwise arising out of or in connection with advice or services rendered
or to be rendered by any Indemnified Person pursuant to this Agreement, the transactions contemplated thereby or any Indemnified Person’s
actions or inactions in connection with any such advice, services or transactions; provided, however, that, in the case
of clause (ii) only, the Company shall not be responsible for any Liabilities or Expenses of any Indemnified Person that are finally judicially
determined to have resulted primarily from an Indemnified Person’s (x) gross negligence, willful misconduct or bad faith in connection
with any of the advice, actions, inactions or services referred to above or (y) use of any offering materials or information concerning
the Company in connection with the offer or sale of the Securities in the Offering which were not authorized for such use by the Company
and which use constitutes gross negligence or willful misconduct. The Company also agrees to reimburse each Indemnified Person for all
Expenses as they are incurred in connection with enforcing such Indemnified Person’s rights under this Agreement.
(b) Upon receipt
by an Indemnified Person of actual notice of an Action against such Indemnified Person with respect to which indemnity may be sought under
this Agreement, such Indemnified Person shall promptly notify the Company in writing; provided that failure by any Indemnified Person
so to notify the Company shall not relieve the Company from any liability which the Company may have on account of this indemnity or otherwise
to such Indemnified Person, except to the extent the Company shall have been prejudiced by such failure. The Company shall, if requested
by the Placement Agent, assume the defense of any such Action including the employment of counsel reasonably satisfactory to the Placement
Agent, which counsel may also be counsel to the Company. Any Indemnified Person shall have the right to employ separate counsel in any
such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified
Person unless: (i) the Company has failed promptly to assume the defense and employ counsel or (ii) the named parties to any such Action
(including any impeded parties) include such Indemnified Person and the Company, and such Indemnified Person shall have been advised in
the reasonable opinion of counsel that there is an actual conflict of interest that prevents the counsel selected by the Company from
representing both the Company (or another client of such counsel) and any Indemnified Person; provided that the Company shall not in such
event be responsible hereunder for the fees and expenses of more than one firm of separate counsel for all Indemnified Persons in connection
with any Action or related Actions, in addition to any local counsel. The Company shall not be liable for any settlement of any Action
effected without its written consent. In addition, the Company shall not, without the prior written consent of the Placement Agent (which
shall not be unreasonably withheld), settle, compromise or consent to the entry of any judgment in or otherwise seek to terminate any
pending or threatened Action in respect of which indemnification or contribution may be sought hereunder (whether or not such Indemnified
Person is a party thereto) unless such settlement, compromise, consent or termination includes an unconditional release of each Indemnified
Person from all Liabilities arising out of such Action for which indemnification or contribution may be sought hereunder. The indemnification
required hereby shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as such expense,
loss, damage or liability is incurred and is due and payable.
(c) In the event
that the foregoing indemnity is unavailable to an Indemnified Person other than in accordance with this Agreement, the Company shall contribute
to the Liabilities and Expenses paid or payable by such Indemnified Person in such proportion as is appropriate to reflect (i) the relative
benefits to the Company, on the one hand, and to the Placement Agent and any other Indemnified Person, on the other hand, of the matters
contemplated by this Agreement or (ii) if the allocation provided by the immediately preceding clause is not permitted by applicable law,
not only such relative benefits but also the relative fault of the Company, on the one hand, and the Placement Agent and any other Indemnified
Person, on the other hand, in connection with the matters as to which such Liabilities or Expenses relate, as well as any other relevant
equitable considerations; provided that in no event shall the Company contribute less than the amount necessary to ensure that all Indemnified
Persons, in the aggregate, are not liable for any Liabilities and Expenses in excess of the amount of fees actually received by the Placement
Agent pursuant to this Agreement. For purposes of this paragraph, the relative benefits to the Company, on the one hand, and to the Placement
Agent on the other hand, of the matters contemplated by this Agreement shall be deemed to be in the same proportion as (a) the total value
paid or contemplated to be paid to or received or contemplated to be received by the Company in the transaction or transactions that are
within the scope of this Agreement, whether or not any such transaction is consummated, bears to (b) the fees to be received by the Placement
Agent under this Agreement. Notwithstanding the above, no person guilty of fraudulent misrepresentation within the meaning of Section
11(f) of the Securities Act, as amended, shall be entitled to contribution from a party who was not guilty of fraudulent misrepresentation.
(d) The Company
also agrees that no Indemnified Person shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the
Company for or in connection with advice or services rendered or to be rendered by any Indemnified Person pursuant to this Agreement,
the transactions contemplated thereby or any Indemnified Person’s actions or inactions in connection with any such advice, services
or transactions except for Liabilities (and related Expenses) of the Company that are finally judicially determined to have resulted primarily
from such Indemnified Person’s gross negligence, willful misconduct or bad faith in connection with any such advice, actions, inactions
or services.
(e) The reimbursement,
indemnity and contribution obligations of the Company set forth herein shall apply to any modification of this Agreement and shall remain
in full force and effect regardless of any termination of, or the completion of any Indemnified Person’s services under or in connection
with, this Agreement.
Section 9. Representations and Indemnities
to Survive Delivery. The respective indemnities, agreements, representations, warranties and other statements of the Company or any
person controlling the Company, of its officers, and of the Placement Agent set forth in or made pursuant to this Agreement will remain
in full force and effect for two years, regardless of any investigation made by or on behalf of the Placement Agent, the Company, or any
of its or their partners, officers or directors or any controlling person, as the case may be, and will survive delivery of and payment
for the Securities sold hereunder and any termination of this Agreement. A successor to the Placement Agent, or to the Company, its directors
or officers or any person controlling the Company, shall be entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Agreement.
Section 10. Notices. All communications
hereunder shall be in writing and shall be mailed, hand delivered or e-mailed and confirmed to the parties hereto as follows:
If to the Placement to the address set forth above,
attention: Michael Sands, email: msands@titanpartnersgrp.com
With a copy to (which copy shall not constitute
notice):
Sichenzia Ross Ference Carmel LLP
1185 Avenue of the Americas, 31st Floor
New York, NY 10036
Attn: Ross D. Carmel
Email: rcarmel@srfc.com
If to the Company:
AppTech Payments Corp.
5826 Owens Ave., Suite 100
Carlsbad, CA 92008
Attn: Luke D’Angelo, CEO
Email: ldangelo@apptechcorp.com
With a copy to (which copy shall not constitute
notice):
Nelson Mullins Riley & Scarborough LLP
101 Constitution Avenue, NW, Suite 900
Washington, D.C. 20001
Attn: Andy Tucker
Email: andy.tucker@nelsonmullins.com
Nelson Mullins Riley & Scarborough LLP
Any party hereto may change
the address for receipt of communications by giving written notice to the others.
Section 11. Successors. This Agreement
will inure to the benefit of and be binding upon the parties hereto, and to the benefit of the employees, officers and directors and controlling
persons referred to in Section 7 hereof, and to their respective successors, and personal representative, and no other person will have
any right or obligation hereunder.
Section 12. Partial Unenforceability. The
invalidity or unenforceability of any section, paragraph or provision of this Agreement shall not affect the validity or enforceability
of any other section, paragraph or provision hereof. If any Section, paragraph or provision of this Agreement is for any reason determined
to be invalid or unenforceable, there shall be deemed to be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.
Section 13. Governing Law Provisions. This
Agreement shall be deemed to have been made and delivered in New York City and both this Agreement and the transactions contemplated hereby
shall be governed as to validity, interpretation, construction, effect and in all other respects by the internal laws of the State of
New York, without regard to the conflict of laws principles thereof. The Placement Agent and the Company: (i) agrees that any legal suit,
action or proceeding arising out of or relating to this Agreement and/or the transactions contemplated hereby shall be instituted exclusively
in New York Supreme Court, County of New York, or in the United States District Court for the Southern District of New York, (ii) waives
any objection which it may have or hereafter to the venue of any such suit, action or proceeding, and (iii) irrevocably consents to the
jurisdiction of the New York Supreme Court, County of New York, and the United States District Court for the Southern District of New
York in any such suit, action or proceeding. The Placement Agent and the Company further agrees to accept and acknowledge service of any
and all process which may be served in any such suit, action or proceeding in the New York Supreme Court, County of New York, or in the
United States District Court for the Southern District of New York and agrees that service of process upon the Company mailed by certified
mail to the Company’s address shall be deemed in every respect effective service of process upon the Company, in any such suit,
action or proceeding, and service of process upon the Placement Agent mailed by certified mail to the Placement Agent’s address
shall be deemed in every respect effective service process upon the Placement Agent, in any such suit, action or proceeding. Notwithstanding
any provision of this Agreement to the contrary, the Company agrees that neither the Placement Agent nor their affiliates, and the respective
officers, directors, employees, agents and representatives of the Placement Agent, their affiliates and each other person, if any, controlling
the Placement Agent or any of their affiliates, shall have any liability (whether direct or indirect, in contract or tort or otherwise)
to the Company for or in connection with the engagement and transaction described herein except for any such liability for losses, claims,
damages or liabilities incurred by the Placement Agent that are finally judicially determined to have resulted from the fraud, willful
misconduct or gross negligence of any such individuals or entities.
Section 14. General Provisions.
(a) This Agreement
and the provisions of the Purchase Agreements referenced herein constitute the entire agreement of the parties to this Agreement and supersedes
all prior written or oral and all contemporaneous oral agreements, understandings and negotiations with respect to the subject matter
hereof, including the Engagement Agreement, dated September 13, 2023, between the Company and Titan Partners, which is hereby superseded
and replaced and is of no further effect. This Agreement may be executed in two or more counterparts, each one of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement may not be amended or modified
unless in writing by all of the parties hereto, and no condition herein (express or implied) may be waived unless waived in writing by
each party whom the condition is meant to benefit. Section headings herein are for the convenience of the parties only and shall not affect
the construction or interpretation of this Agreement.
(b) The Company
acknowledges that in connection with the Offering: (i) the Placement Agent has acted at arm’s length, is not agent of, and owe no
fiduciary duties to the Company or any other person, (ii) the Placement Agent owes the Company only those duties and obligations set forth
in this Agreement and (iii) the Placement Agent may have interests that differ from those of the Company. The Company waives to the full
extent permitted by applicable law any claims it may have against the Placement Agent arising from an alleged breach of fiduciary duty
in connection with the offering of the Shares.
[The remainder of this page has been intentionally
left blank.]
If the foregoing is in accordance
with your understanding of our agreement, please sign below whereupon this instrument, along with all counterparts hereof, shall become
a binding agreement in accordance with its terms.
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Very truly yours, |
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Titan Partners Group LLC, a division of American Capital Partners, LLC |
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a Delaware corporation |
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By: |
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Name: |
|
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Title: |
|
The foregoing Placement Agency
Agreement is hereby confirmed and accepted as of the date first above written.
| AppTech Payments Corp. |
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| By: |
/s/ Luke D’ Angelo |
|
| Name: |
Luke D’Angelo |
|
| Title: |
Chief Executive Officer |
|
Exhibit 4.1
COMMON STOCK PURCHASE
WARRANT
APPTECH PAYMENTS CORP.
Original Issuance Date:
October [*], 2023
THIS
COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, [_______] or its
assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter
set forth, at any time on or after October 24, 2023 (the “Initial Exercise Date”) and on or prior to 5:00 p.m. (New
York City time) on October 26, 20281 (the “Termination Date”) but not thereafter, to subscribe for
and purchase from AppTech Payments Corp., a Delaware corporation (the “Company”), up to 1,666,667 shares (as subject
to adjustment hereunder, the “Warrant Shares”) of the Company’s Common Stock. The purchase price of one share
of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).
Section
1. Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set
forth in that certain Securities Purchase Agreement (the “Purchase Agreement”), dated October 24, 2023, among the Company
and the purchaser signatory thereto.
Section
2. Exercise.
a)
Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any
time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed
facsimile copy or PDF copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the “Notice
of Exercise”). Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement
Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise
Price for the Warrant Shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United
States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. No
ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of
any Notice of Exercise be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically
surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has
been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading
Days of the date on which the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases
of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant
Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company
shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection
to any Notice of Exercise within one (1) Trading Day of receipt of such notice. The Holder and any assignee, by acceptance
of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the
Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount
stated on the face hereof.
b) Exercise
Price. The exercise price per share of Common Stock under this Warrant shall be $2.74, subject to adjustment hereunder
(the “Exercise Price”).
________________________
1
Insert the date that is the five (5) year anniversary of the Initial Exercise Date, provided that, if such date is not a Trading Day,
insert the immediately following Trading Day.
c) Cashless
Exercise. If at the time of exercise hereof there is no effective registration statement registering, or the prospectus
contained therein is not available for the issuance or resale of the Warrant Shares to or by the Holder, then this Warrant may also
be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled
to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
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(A) = |
as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b)(68) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Common Stock on the principal Trading Market as reported by Bloomberg L.P. as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading Day; |
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|
|
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(B) = |
the Exercise Price of this Warrant, as adjusted hereunder; and |
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|
|
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(X) = |
the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise. |
“Bid
Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock
is then listed or quoted on a Trading Market, the bid price of the Common Stock for the time in question (or the nearest preceding date)
on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30
a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted
average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock
is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on The Pink Open Market
(or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common
Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser
selected in good faith by the Holders of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company,
the fees and expenses of which shall be paid by the Company.
“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or
quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date)
on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30
a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted
average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock
is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on The Pink Open Market
(or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common
Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser
selected in good faith by the Holders of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company,
the fees and expenses of which shall be paid by the Company.
If
Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the
Securities Act, the Warrant Shares shall take on the registered characteristics of the Warrants being exercised. The Company agrees
not to take any position contrary to this Section 2(c).
d) Mechanics
of Exercise.
| (i) | Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased
hereunder to be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s
balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if
the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of
the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) this Warrant is being exercised via cashless exercise, and
otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee,
for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the
Notice of Exercise by the date that is the earlier of (A) the earlier of (i) two (2) Trading Days and (ii) the number of days comprising
the Standard Settlement Period, in each case after the delivery to the Company of the Notice of Exercise and (B) one (1) Trading Day after
delivery of the aggregate Exercise Price to the Company (such date, the “Warrant Share Delivery Date”). Upon delivery
of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares
with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment
of the aggregate Exercise Price (other than in the case of a cashless exercise) is received by the Warrant Share Delivery Date.
If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery
Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject
to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing
to $20 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Warrant
Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer
agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable. As used herein, “Standard
Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary
Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Exercise. |
| | | |
| (ii) | Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part,
the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares,
deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this
Warrant, which new Warrant shall in all other respects be identical with this Warrant. |
| | | |
| (iii) | Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available
to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions
of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required
by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares
of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such
exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s
total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained
by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise
at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the
Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in
which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been
issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases
Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock
with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence
the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable
to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall
limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation,
a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common
Stock upon exercise of the Warrant as required pursuant to the terms hereof. |
| (iv) | No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the
exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise,
the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction
multiplied by the Exercise Price or round up to the next whole share. |
| | | |
| (v) | Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer
tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the
Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however,
that in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition
thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer
Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established
clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares. |
e) Holder’s
Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the
right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such
issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates,
and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons,
“Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined
below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its
Affiliates and Attribution Parties shall include the number of shares of Common Stock issuable upon exercise of this Warrant with
respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable
upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates
or Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the
Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise
analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties.
Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in
accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the
Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange
Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent
that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to
other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is
exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the
Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together
with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the
Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such
determination. In addition, a determination as to any group status as contemplated above shall be determined in
accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this
Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares
of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case
may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer
Agent setting forth the number of shares of Common Stock outstanding. Upon the written request of a Holder, the Company shall
within one (1) Trading Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding.
In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise
of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of
which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation”
shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of
Common Stock issuable upon exercise of this Warrant. The Holder, upon written notice to the Company, may increase or decrease
the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event
exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of
Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply.
Any increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to the
Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity
with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with
the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly
give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.
Section
3. Certain Adjustments.
a)Stock
Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes
a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of
Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this
Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse
stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common
Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the
numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event
and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of
shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant
shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date
for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or re-classification.
b) Subsequent
Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues
or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record
holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if
the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any
limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on
which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of
which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights
(provided, however, that to the extent that the Holder’s right to participate in any such Purchase Right
would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in
such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to
such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right
thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
c) Pro
Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or
other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital
or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a
dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a
“Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be
entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had
held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on
exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is
taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are
to be determined for the participation in such Distribution (provided, however, that to the extent that the
Holder’s right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership
Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership
of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in
abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the
Beneficial Ownership Limitation).
d)
Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or
more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company (or any
Subsidiary), directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all
or substantially all of the Company’s assets in one or a series of related transactions, (iii) any, direct or indirect,
purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of
Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by
the holders of 50% or more of the voting power of the common equity of the Company, (iv) the Company, directly or indirectly, in one
or more related transactions effects any reclassification, reorganization or recapitalization of shares of Common Stock or any
compulsory share exchange pursuant to which the shares of Common Stock are effectively converted into or exchanged for other
securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or
share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off,
merger or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50%
of the voting power of the common equity of the Company (each a “Fundamental Transaction”), then, upon any
subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been
issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder
(without regard to any limitation in Section 2(e) on the exercise of this Warrant), the number of shares of Common Stock of the
successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the
“Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of
shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to
any limitation in Section 2(e) on the exercise of this Warrant). For purposes of any such exercise, the determination of the
Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate
Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the
Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of
the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received
in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any
exercise of this Warrant following such Fundamental Transaction. Notwithstanding anything to the contrary, in the event of a
Fundamental Transaction, the Company or any Successor Entity (as defined below) shall, at the Holder’s option, exercisable at
any time concurrently with, or within thirty (30) days after, the consummation of the Fundamental Transaction (or, if later, the
date of the public announcement of the applicable Fundamental Transaction), purchase this Warrant from the Holder by paying to the
Holder, as described below, an amount of consideration equal to the Black Scholes Value (as defined below) of the remaining
unexercised portion of this Warrant on the date of the consummation of such Fundamental Transaction, provided, however, that, if the
Fundamental Transaction is not within the Company’s control, including not approved by the Company’s Board of Directors,
Holder shall only be entitled to receive from the Company or any Successor Entity, as of the date of the consummation of such
Fundamental Transaction the same type or form of consideration (and in the same proportion), valued at the Black Scholes Value of
the unexercised portion of this Warrant, that is being offered and paid to the holders of Common Stock of the Company in connection
with the Fundamental Transaction, whether that consideration be in the form of cash, stock or any combination thereof, or whether
the holders of Common Stock are given the choice to receive from among alternative forms of consideration in connection with the
Fundamental Transaction; provided further, that if holders of Common Stock of the Company are not offered or paid any consideration
in such Fundamental Transaction, such holders of Common Stock will be deemed to have received shares of the Successor Entity (which
Successor Entity may be the Company following such Fundamental Transaction) in such Fundamental Transaction. “Black Scholes
Value” means the value of this Warrant based on the Black-Scholes Option Pricing Model obtained from the “OV”
function on Bloomberg determined as of the day of consummation of the applicable Fundamental Transaction for pricing purposes and
reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of
the public announcement of the applicable contemplated Fundamental Transaction and the Termination Date, (B) an expected volatility
equal to 100 day volatility obtained from the HVT function on Bloomberg (determined utilizing a 365-day annualization factor) as of
the Trading Day immediately following the public announcement of the applicable Fundamental Transaction, (C) the underlying price
per share used in such calculation shall be the greater of (i) the sum of the price per share being offered in cash, if any, plus
the value of any non-cash consideration, if any, being offered in such Fundamental Transaction and (ii) the highest VWAP during the
period beginning on the Trading Day immediately preceding the announcement of the applicable Fundamental Transaction (or the
consummation of the applicable Fundamental Transaction, if earlier) and ending on the Trading Day of the Holder’s request
pursuant to this Section 3(d) and (D) a remaining option time equal to the time between the date of the public announcement of the
applicable Fundamental Transaction and the Termination Date and (E) a zero cost of borrow. The payment of the Black Scholes Value
will be made by wire transfer of immediately available funds within five Business Days of the Holder’s election (or, if later,
on the effective date of the Fundamental Transaction). The Company shall cause any successor entity in a Fundamental Transaction in
which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the
Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(d) pursuant to
written agreements in form and substance reasonably satisfactory to the Holder prior to such Fundamental Transaction and shall, at
the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a
written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of
shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and
receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such
Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but
taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such
shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the
economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably
satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity
shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this
Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor
Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this
Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company
herein.
e)
Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a
share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding
as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and
outstanding.
f) Notice
to Holder.
| (i) | Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision
of this Section 3, the Company shall promptly deliver to the Holder by facsimile or email a notice setting forth the Exercise Price after
such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring
such adjustment. |
| | | |
| (ii) | Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution
in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common
Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection
with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all
or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities,
cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs
of the Company, then, in each case, the Company shall cause to be delivered by facsimile or email to the Holder at its last facsimile
number or email address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable
record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common
Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on
which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the
date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock
for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange;
provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the
corporate action required to be specified in such notice. To the extent that any notice provided in this Warrant constitutes, or
contains, material, non-public information regarding the Company or any of the Company’s subsidiaries, the Company shall simultaneously
file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this
Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may
otherwise be expressly set forth herein. |
Section 4.Transfer of Warrant.
a)
Transferability. This Warrant and all rights hereunder (including, without limitation, any registration rights) are
transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent,
together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its
agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or
assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to
the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be
cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this
Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant
to the Company within three (3) Trading Days of the date on which the Holder delivers an assignment form to the Company assigning
this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the
purchase of Warrant Shares without having a new Warrant issued.
b) New
Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the
Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the
Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to
be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Issue Date
of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
c)
Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the
“Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and
treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution
to the Holder, and for all other purposes, absent actual notice to the contrary.
Section 5.Miscellaneous.
a) No
Rights as Stockholder Until Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting
rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i),
except as expressly set forth in Section 3. Without limiting the rights of a Holder to receive Warrant Shares on a
“cashless exercise,” and to receive the cash payments contemplated pursuant to Sections 2(d)(i) and 2(d)(iv), in no
event will the Company be required to net cash settle an exercise of this Warrant.
b)
Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant
Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the
Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if
mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in
lieu of such Warrant or stock certificate.
c)
Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right
required or granted herein shall not be a Trading Day, then, such action may be taken or such right may be exercised on the next succeeding
Trading Day.
d)
Authorized Shares. The Company covenants that, at all times during the period the Warrant is outstanding, it will reserve
from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the
exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute
full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase
rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares
may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market
upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise
of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment
for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes,
liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously
with such issue).
Except
and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending
its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale
of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary
or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality
of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company
may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof,
as may be, necessary to enable the Company to perform its obligations under this Warrant.
Before
taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from
any public regulatory body or bodies having jurisdiction thereof.
e) Jurisdiction.
All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in
accordance with the provisions of the Purchase Agreement.
f)
Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered,
and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.
g) Nonwaiver
and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall
operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact
that the right to exercise this Warrant terminates on the Termination Date. Without limiting any other provision of this
Warrant or the Purchase Agreement, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which
results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any
costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings,
incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.
h) Notices.
Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered
in accordance with the notice provisions of the Purchase Agreement.
i) Limitation
of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to
purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of
the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.
j) Remedies.
The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not
to assert the defense in any action for specific performance that a remedy at law would be adequate.
k) Successors
and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall
inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted
assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this
Warrant and shall be enforceable by the Holder or holder of Warrant Shares.
l) Amendment.
This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company, on the one hand,
and the Holder of this Warrant, on the other hand.
m) Severability.
Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining
provisions of this Warrant.
n) Headings.
The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this
Warrant.
********************
(Signature Page Follows)
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above
indicated.
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APPTECH PAYMENTS CORP. |
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NOTICE OF EXERCISE
TO:
APPTECH PAYMENTS CORP.
(1)
The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if
exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2)
Payment shall take the form of (check applicable box):
[_] in lawful money
of the United States; or
[_] if permitted
the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise
this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in
subsection 2(c).
(3)
Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
The Warrant Shares shall
be delivered to the following DWAC Account Number:
[SIGNATURE OF HOLDER]
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EXHIBIT B
ASSIGNMENT FORM
(To
assign the foregoing Warrant, execute this form and supply required information. Do not use this form to exercise the Warrant to
purchase shares.)
FOR
VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to
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Exhibit 5.1
October 24, 2023
AppTech Payments Corp.
5876 Owens Avenue, Suite 100
Carlsbad, California 92008
Ladies and Gentlemen:
We have acted as counsel to
AppTech Payments Corp., a Delaware corporation (the “Company”), in connection with the issuance and sale of (i) up
to 1,666,667 shares (the “Shares”) of the Company’s common stock, $0.001 par value per share (the “Common Stock”),
and (ii) warrants (the “Warrants”) to purchase up to 1,666,667 shares of Common Stock (the “Warrant Shares” and,
together with the Shares and the Warrants, the “Securities”) pursuant to the Registration Statement on Form S-3 (File No.
333-265526), filed with the Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the
“Act”), on June 10, 2022 (the “Registration Statement”) and which became effective on July 15, 2022, the related
base prospectus, dated July 15, 2022 (the “Base Prospectus”), and the prospectus supplement, dated October 23, 2023 (the “Prospectus
Supplement” and together with the Base Prospectus, the “Prospectus”), filed with the SEC pursuant to Rule 424(b) under
the Act.
In connection with this opinion
letter, we have examined the Registration Statement, the Prospectus, the Purchase Agreement dated October 23, 2023 (the “Purchase
Agreement”) by and between the Company and the purchaser party thereto (the “Purchaser”), the form of the Warrant, and
originals, or copies certified or otherwise identified to our satisfaction, of the certificate of incorporation of the Company and the
bylaws of the Company, and such other documents, records and other instruments as we have deemed appropriate for purposes of the opinion
set forth herein.
For the purpose of rendering
this opinion, we assumed, without investigation, the genuineness of all signatures, the correctness of all certificates, the authenticity
of all documents submitted to us as originals, the conformity to original documents of all documents submitted as certified or photostatic
copies, and the authenticity of the originals of such copies, and the accuracy and completeness of all records made available to us by
the Company. In addition, in rendering this opinion, we assumed that the Shares will be offered in the manner and on the terms identified
or referred to in the Registration Statement, the Base Prospectus and the Prospectus Supplement, including all supplements and amendments
thereto.
Our opinion is limited solely
to matters set forth herein. The law covered by the opinions expressed herein is limited to the federal law of the United States and internal
laws of the State of Delaware and the State of New York.
Based upon and subject to
the foregoing, we are of the opinion that:
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The Securities have been duly authorized for issuance by the Company. |
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The Shares, when duly registered on the books of the transfer agent and registrar in the name and on behalf of the Purchaser and when issued and sold by the Company and delivered against payment therefor in accordance with the terms of the Purchase Agreement, will be validly issued, fully paid and non-assessable. |
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3. |
The Warrants, when issued and sold by the Company and delivered against payment therefor in accordance with the terms of the Purchase Agreement, will be valid and binding obligations of the Company, enforceable against the Company in accordance with their terms. |
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4. |
The Warrant Shares, when duly registered on the books of the transfer agent and registrar in the name and on behalf of the holders and when issued and delivered by the Company upon exercise and payment of the applicable exercise price of the Warrants, will be validly issued, fully paid and non-assessable. |
We hereby consent to the filing
of this opinion as an exhibit to the Registration Statement, and we further consent to the use of our name under the caption “Legal
Matters” in the Registration Statement, the Base Prospectus and the Prospectus Supplement. By giving these consents, we do not thereby
admit that we are within the category of persons where consent is required under Section 7 of the Securities Act or the rules and regulations
of the Commission.
Very truly yours,
/s/Nelson Mullins Riley &
Scarborough LLP
Nelson Mullins Riley & Scarborough
LLP
Exhibit 10.1
Securities
PURCHASE AGREEMENT
This Securities Purchase Agreement
(this “Agreement”) is dated as of October 24, 2023, between AppTech Payments Corp., a Delaware corporation (the “Company”),
and each purchaser identified on the signature pages hereto (each, including its successors and assigns, a “Purchaser”
and collectively the “Purchasers”).
WHEREAS, subject to the terms
and conditions set forth in this Agreement and pursuant to an effective registration statement under the Securities Act (as defined below),
the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company,
securities of the Company as more fully described in this Agreement.
NOW, THEREFORE, IN CONSIDERATION
of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are
hereby acknowledged, the Company and each Purchaser agree as follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions. In
addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings set
forth in this Section 1.1:
“Action”
shall have the meaning ascribed to such term in Section 3.1(j).
“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control
with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Auditor”
means dbbmckennon with offices 20321 SW Birch St., Suite 200, Newport
Beach, CA 92660.
“Board
of Directors” means the board of directors of the Company.
“Business
Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized
or required by law to remain closed due to “stay at home,” “shelter-in-place,” “non-essential employee”
or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority
so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York are generally
open for use by customers on such day.
“Closing”
means the closing of the purchase and sale of the Shares pursuant to Section 2.1.
“Closing
Date” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable parties
thereto, and all conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount and (ii) the Company’s
obligations to deliver the Shares, in each case, have been satisfied or waived, but in no event later than the second (2nd)
Trading Day following the date hereof.
“Commission”
means the United States Securities and Exchange Commission.
“Common
Stock” means the common stock of the Company, par value $0.001 per share, and any other class of securities into which such
securities may hereafter be reclassified or changed.
“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire
at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is
at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Company
Counsel” means Nelson Mullins Riley & Scarborough LLP with offices located at 101 Constitution Avenue, NW, Suite 900, Washington,
DC 20001.
“Disclosure
Schedules” means the Disclosure Schedules of the Company delivered concurrently herewith.
“Disclosure
Time” means, (i) if this Agreement is signed on a day that is not a Trading Day or after 9:00 a.m. (New York City time) and
before midnight (New York City time) on any Trading Day, 9:01 a.m. (New York City time) on the Trading Day immediately following the date
hereof, and (ii) if this Agreement is signed between midnight (New York City time) and 9:00 a.m. (New York City time) on any Trading Day,
no later than 9:01 a.m. (New York City time) on the date hereof.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“GAAP”
shall have the meaning ascribed to such term in Section 3.1(b).
“Liens”
means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.
“Material
Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).
“Per Share
Purchase Price” equals $2.10, subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations
and other similar transactions of the Common Stock that occur after the date of this Agreement.
“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company,
joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Placement
Agent” means Titan Partners Group LLC, a division of American Capital Partners, LLC.
“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such
as a deposition), whether commenced or, to the knowledge of the Company, threatened.
“Prospectus”
means the final base prospectus filed as part of the Registration Statement, including all information, documents and exhibits filed with
or incorporated by reference into such base prospectus.
“Prospectus
Supplement” means the supplement to the Prospectus complying with Rule 424(b) of the Securities Act, including all information,
documents and exhibits filed with or incorporated by reference into such Prospectus Supplement, that is filed with the Commission and
delivered by the Company to each Purchaser at the Closing.
“Registration
Statement” means the effective registration statement on Form S-3 with Commission (File No. 333-265526), including all information,
documents and exhibits filed with or incorporated by reference into such registration statement, which registers the sale of the Shares
to the Purchasers.
“Required
Approvals” shall have the meaning ascribed to such term in Section 3.1(e).
“Rule 424”
means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time,
or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.
“SEC Reports”
shall have the meaning ascribed to such term in Section 3.1(h).
“Securities”
means the Shares, Warrants and Warrant Shares.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Shares”
means the shares of Common Stock issued or issuable to each Purchaser pursuant to this Agreement.
“Short
Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be
deemed to include locating and/or borrowing shares of Common Stock).
“SRFC”
means Sichenzia Ross Ference Carmel LLP, counsel to the Placement Agent, with offices located at 1185 Avenue of the Americas, 31st
Floor, New York, NY 10036.
“Subscription
Amount” means, as to each Purchaser, the aggregate amount to be paid for Shares purchased hereunder as specified below such
Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription Amount,” in United States
dollars and in immediately available funds.
“Subsidiary”
means any subsidiary of the Company as set forth in the SEC Reports, where applicable, also include any direct or indirect subsidiary
of the Company formed or acquired after the date hereof.
“Trading
Day” means a day on which the principal Trading Market is open for trading.
“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock
Exchange (or any successors to any of the foregoing).
“Transaction
Documents” means this Agreement, all exhibits and schedules hereto, Warrants and any other documents or agreements executed
in connection with the transactions contemplated hereunder.
“Transfer
Agent” means Transfer Online, Inc., 512 SE Salmon Street, Portland, Oregon 97214 and their
phone number is (503) 227-2950 and any successor transfer agent of the Company.
“Warrant”
means the warrant to purchase one share of Common Stock of the Company in the form of Exhibit A attached hereto.
“Warrant
Shares” mean the shares of Common Stock issuable upon the exercise of the Common Warrants.
ARTICLE II.
PURCHASE AND SALE
2.1 Closing. On the
Closing Date, upon the terms and subject to the conditions set forth herein, the Company agrees to sell, and the Purchasers, severally
and not jointly, agree to purchase, up to an aggregate of $3,500,000 of Shares. Each Share shall be accompanied by one Warrant. Upon satisfaction
of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of SRFC or such other location
as the parties shall mutually agree take place remotely by electronic transfer of the Closing documentation. Unless otherwise directed
by the Placement Agent, settlement of the Shares shall occur via “Delivery Versus Payment” (“DVP”) (i.e.,
on the Closing Date, the Company shall issue the Shares registered in the Purchasers’ names and addresses and released by the Transfer
Agent directly to the account(s) at the Placement Agent identified by each Purchaser; upon receipt of such Shares, the Placement Agent
shall promptly electronically deliver such Shares to the applicable Purchaser, and payment therefor shall be made by the Placement Agent
(or its clearing firm) by wire transfer to the Company). Notwithstanding anything herein to the contrary, if at any time on or after the
time of execution of this Agreement by the Company and an applicable Purchaser, through and including the time immediately prior to the
Closing (the “Pre-Settlement Period”), such Purchaser sells to any Person all, or any portion, of the Shares to be
issued hereunder to such Purchaser at the Closing (collectively, the “Pre-Settlement Shares”), such Purchaser shall,
automatically hereunder (without any additional required actions by such Purchaser or the Company), be deemed to be unconditionally bound
to purchase, such Pre-Settlement Shares at the Closing; provided, that the Company shall not be required to deliver any Pre-Settlement
Shares to such Purchaser prior to the Company’s receipt of the purchase price of such Pre-Settlement Shares hereunder; and provided
further that the Company hereby acknowledges and agrees that the forgoing shall not constitute a representation or covenant by such Purchaser
as to whether or not during the Pre-Settlement Period such Purchaser shall sell any shares of Common Stock to any Person and that any
such decision to sell any shares of Common Stock by such Purchaser shall solely be made at the time such Purchaser elects to effect any
such sale, if any. Notwithstanding anything to the contrary herein and a Purchaser’s Subscription Amount set forth on the signature
pages attached hereto, the number of Shares purchased by a Purchaser (and its Affiliates) hereunder shall not, when aggregated with all
other shares of Common Stock owned by such Purchaser (and its Affiliates) at such time, result in such Purchaser beneficially owning (as
determined in accordance with Section 13(d) of the Exchange Act) in excess of 9.99% of the then issued and outstanding Common Stock outstanding
at the Closing (the “Beneficial Ownership Maximum”), and such Purchaser’s Subscription Amount, to the extent
it would otherwise exceed the Beneficial Ownership Maximum immediately prior to the Closing, shall be conditioned upon the issuance of
Shares at the Closing to the other Purchasers signatory hereto. To the extent that a Purchaser’s beneficial ownership of the Shares
would otherwise be deemed to exceed the Beneficial Ownership Maximum, such Purchaser’s Subscription Amount shall automatically be
reduced as necessary in order to comply with this paragraph. Notwithstanding the foregoing, with respect to any Notice(s) of Exercise
(as defined in the Warrants) delivered on or prior to 12:00 p.m. (New York City time) on the Closing Date, which may be delivered at any
time after the time of execution of this Agreement, the Company agrees to deliver the Warrant Shares subject to such notice(s) by 4:00
p.m. (New York City time) on the Closing Date and the Closing Date shall be the Warrant Share Delivery Date (as defined in the Warrants)
for purposes hereunder.
2.2 Deliverables.
(a) On or prior
to the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser the following:
(i) this
Agreement duly executed by the Company;
(ii)a
legal opinion of Company Counsel, substantially in the form of satisfactory to the Placement Agent, addressed to the Purchasers and the
Placement Agent;
(iii) subject
to the last sentence of Section 2.1, the Company shall have provided each Purchaser with the Company’s wire instructions, on Company
letterhead and executed by the Chief Executive Officer or Chief Financial Officer;
(iv) subject to the
last sentence of Section 2.1, a copy of the irrevocable instructions to the Transfer Agent
instructing the Transfer Agent to deliver on an expedited basis via The Depository Trust Company Deposit or Withdrawal at Custodian system
(“DWAC”) Shares equal to such Purchaser’s Subscription Amount divided by the Per Share Purchase Price, registered
in the name of such Purchaser;
(v)a
Warrant registered in the name of such Purchaser to purchase up to a number of shares of Common Stock equal to 100% of such Purchaser’s
Shares on the date hereof, with an exercise price equal to $2.74, subject to adjustment therein;
(vi)a
cold comfort letter from the Auditor addressed to the Placement Agent, in a form and substance reasonably satisfactory in all respects
to the Placement Agent;
(vii) the Prospectus
and Prospectus Supplement (which may be delivered in accordance with Rule 172 under the Securities Act).
(b) On or prior
to the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company the following:
(i) this Agreement
duly executed by such Purchaser; and
(ii) such Purchaser’s
Subscription Amount, which may be made available for “Delivery Versus Payment” settlement with the Company or its designee.
2.3 Closing Conditions.
(a) The obligations
of the Company hereunder in connection with the Closing are subject to the following conditions being met:
(i) the accuracy in
all material respects (or, to the extent representations or warranties are qualified by materiality, in all respects) on the Closing Date
of the representations and warranties of the Purchasers contained herein (except to the extent a representation or warranty speaks as
of a specific date, in which case they shall be accurate in all material respects (or, to the extent representations or warranties are
qualified by materiality, in all respects) as of such date);
(ii) all obligations,
covenants and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have been performed; and
(iii) the delivery
by each Purchaser of the items set forth in Section 2.2(b) of this Agreement.
(b) The respective
obligations of the Purchasers hereunder in connection with the Closing are subject to the following conditions being met:
(i) the accuracy in
all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse Effect, in all
respects) when made and on the Closing Date of the representations and warranties of the Company contained herein (except to the extent
a representation or warranty speaks as of a specific date, in which case they shall be accurate in all material respects (or, to the extent
representations or warranties are qualified by materiality or Material Adverse Effect, in all respects) as of such date);
(ii) all obligations,
covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed;
(iii) the delivery
by the Company of the items set forth in Section 2.2(a) of this Agreement;
(iv) from the date
hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the Company’s principal
Trading Market, and trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum
prices shall not have been established on securities whose trades are reported by such service, or on any Trading Market, nor shall a
banking moratorium have been declared either by the United States or New York State authorities nor shall there have occurred any material
outbreak or escalation of hostilities or other national or international calamity of such magnitude in its effect on, or any material
adverse change in, any financial market which, in each case, in the reasonable judgment of the Placement Agent, makes it impracticable
or inadvisable to purchase the Shares at the Closing.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations and
Warranties of the Company. Except as set forth in the SEC Reports (as defined below) and the Disclosure Schedules, which Disclosure
Schedules shall be deemed a part hereof and shall qualify any representation or otherwise made herein to the extent of the disclosure
contained in the corresponding section of the Disclosure Schedules, the Company hereby makes the following representations and warranties
to each Purchaser:
(a) Subsidiaries.
All of the direct and indirect significant subsidiaries (as such term is defined in Rule 1-02 of Regulation S-X promulgated by the Commission)
of the Company are set forth in the Company’s SEC Reports. The Company owns, directly or indirectly, all of the capital stock or
other equity interests of each Subsidiary free and clear of any Liens, and all of the issued and outstanding shares of capital stock of
each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase
securities. If the Company has no subsidiaries, all other references to the Subsidiaries or any of them in the Transaction Documents shall
be disregarded.
(b)
Organization
and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to
own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in
violation nor default of any of the provisions of its certificate or articles of incorporation, bylaws or other organizational or charter
documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation
or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary,
except where the failure to be so qualified or in good standing, as the case may be, would not reasonably be expected to result in a Material
Adverse Effect and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit
or curtail such power and authority or qualification. For the purposes of this Agreement, a “Material Adverse Effect”
means (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect
on the business, financial condition or results of operations of the Company and its Subsidiaries, taken as a whole or (iii) a material
adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction
Document, provided, however, that, in the case of clause (i), none of the following shall be deemed to constitute, alone or in combination,
or be taken into account in the determination of whether, there has been or will be a Material Adverse Effect: (a) any change or proposed
change in or change in the interpretation of any law or United States generally accepted accounting principles (“GAAP”)
after the date of this Agreement; (b) events or conditions generally affecting the industries or geographic areas in which the Company
and its subsidiaries operate; (c) any downturn in general economic conditions, including changes in the credit, debt, securities, financial
or capital markets (including changes in interest or exchange rates, prices of any security or market index or commodity or any disruption
of such markets); (d) acts of war, sabotage, civil unrest or terrorism, or any escalation or worsening of any such acts of war, sabotage,
civil unrest or terrorism, or changes in global, national, regional, state or local political or social conditions; (e) any hurricane,
tornado, flood, earthquake, natural disaster, or other acts of God; (f) any actions taken or not taken by the Company as required by this
Agreement or (g) a change in the market price or trading volume of Common Stock alone.
(c) Authorization;
Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated
by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The
execution and delivery of this Agreement and each of the other Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further
action is required by the Company, the Board of Directors or the Company’s stockholders in connection herewith or therewith other
than in connection with the Required Approvals. This Agreement and each other Transaction Document to which the Company is a party has
been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof,
will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i)
as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited
by applicable law.
(d) No Conflicts.
The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to which it is a party, the
issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby and thereby do not and will not
(i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation,
bylaws or other organizational or charter documents, (ii) conflict with, or constitute a default (or an event that with notice or lapse
of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company
or any Subsidiary, or give to others any rights of termination, amendment, anti-dilution or similar adjustments, acceleration or cancellation
(with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or
Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset
of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation
of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which
the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset
of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as would not reasonably
be expected to result in a Material Adverse Effect.
(e) Filings,
Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to,
or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection
with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i) the filings required pursuant
to Section 4.3 of this Agreement, (ii) the filing with the Commission of the Prospectus Supplement, (iii) application(s) to each applicable
Trading Market for the listing of the Securities for trading thereon in the time and manner required thereby, (iv) such filings as are
required to be made under applicable state securities laws and (v) any such consents, waivers, authorizations that have been, or prior
to the Closing Date will be, obtained by the Company or as would not have or reasonably be expected to result in a Material Adverse Effect
(collectively, the “Required Approvals”).
(f) Issuance
of the Securities; Registration. The Securities are duly authorized and, when issued and paid for in accordance with the applicable
Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company.
The Warrant Shares, when issued in accordance with the terms of the Warrants, will be duly and validly issued, fully paid and nonassessable,
free and clear of all Liens imposed by the Company. The Company has reserved from its duly authorized capital stock the maximum number
of shares of Common Stock issuable pursuant to this Agreement and the Warrants. The Company has prepared and filed the Registration Statement
in conformity with the requirements of the Securities Act, which became effective on July 15, 2023, including the Prospectus Supplement
filed on February 1, 2023, and the Prospectus Supplement filed on August 21, 2023, and such amendments and supplements thereto as may
have been required to the date of this Agreement. The Registration Statement is effective under the Securities Act and no stop order preventing
or suspending the effectiveness of the Registration Statement or suspending or preventing the use of the Prospectus has been issued by
the Commission and no proceedings for that purpose have been instituted or, to the knowledge of the Company, are threatened by the Commission.
The Company, if required by the rules and regulations of the Commission, shall file the Prospectus Supplement with the Commission pursuant
to Rule 424(b). At the time the Registration Statement and any amendments thereto became effective, at the date of this Agreement and
at the Closing Date, the Registration Statement and any amendments thereto conformed and will conform in all material respects to the
requirements of the Securities Act and did not as of the most recent effective date thereof contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; and
the Prospectus and any amendments or supplements thereto, at the time the Prospectus or any amendment or supplement thereto was issued
and at the Closing Date, conformed and will conform in all material respects to the requirements of the Securities Act and did not and
will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading. The Company was at the time of the filing of the Registration
Statement eligible to use Form S-3. The Company is eligible to use Form S-3 under the Securities Act and it meets the transaction requirements
as set forth in General Instruction I.B.6 of Form S-3.
(g) Capitalization.
The equity capitalization of the Company as of June 30, 2023 is as set forth in the SEC Reports. Except as set forth in Section 3.1(g),
the Company has not issued any capital stock since its most recently filed periodic report under the Exchange Act, other than pursuant
to the exercise of employee stock options under the Company’s stock option plans, the issuance of shares of Common Stock to employees
pursuant to the Company’s employee stock purchase plans and pursuant to the conversion and/or exercise of Common Stock Equivalents
outstanding as of the date of the most recently filed periodic report under the Exchange Act.
(h) SEC Reports;
Financial Statements. Since January 1, 2022, the Company has filed all reports, schedules, forms, statements and other documents required
to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof (the foregoing
materials, including the exhibits thereto and documents incorporated by reference therein, together with the Prospectus and the Prospectus
Supplement, being collectively referred to herein as the “SEC Reports”), and such SEC Reports have been filed on a
timely basis or the Company has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration
of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities
Act and the Exchange Act, as applicable, and the SEC Reports taken as a whole, as of the date hereof, do not contain any untrue statement
of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the
SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with GAAP, except as may
be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain
all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated
Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the
case of unaudited statements, to normal, immaterial, year-end audit adjustments.
(i) Material
Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited or reviewed financial statements included
within the SEC Reports, except as disclosed in a subsequent SEC Report filed prior to the date hereof or set forth on Schedule 3.1(i),
(i) there has not been a Material Adverse Effect, (ii) the Company has not incurred any material liabilities (contingent or otherwise)
other than liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings
made with the SEC, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend
or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any
shares of its capital stock and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant
to existing Company stock option plans.
(j) Litigation.
Except as set forth in Schedule 3.1(j), there is no action, suit, inquiry, notice of violation, proceeding or investigation pending
or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties
before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign)
(collectively, an “Action”). None of the Actions set forth on Schedule 3.1(j), (i) adversely affects or challenges
the legality, validity or enforceability of any of the Transaction Documents or the Shares or (ii) would, if there were an unfavorable
decision, have or reasonably be expected to result in a Material Adverse Effect.
(k) Compliance.
Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not been waived
that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or
any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement
or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default
or violation has been waived), (ii) is in violation of any judgment, decree or order of any court, arbitrator or other governmental authority
or (iii) is or has been in violation of any statute, rule, ordinance or regulation of any governmental authority, including without limitation
all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality
and safety and employment and labor matters, except in each case as would not have or reasonably be expected to result in a Material Adverse
Effect.
(l) Title to
Real and Personal Property. The Company and its Subsidiaries have good and marketable title in fee simple to all items of real property
owned by them, good and valid title to all personal property described in the Registration Statement or Prospectus as being owned by them,
in each case free and clear of all liens, encumbrances and claims, except those matters that (i) do not materially interfere with the
use made and proposed to be made of such property by the Company and any of its Subsidiaries or (ii) would not, individually or in the
aggregate, have a Material Adverse Effect. Any real or personal property described in the Registration Statement or Prospectus as being
leased by the Company and any of its Subsidiaries is held by them under valid, existing and enforceable leases, except those that (A)
do not materially interfere with the use made or proposed to be made of such property by the Company or any of its Subsidiaries or (B)
would not be reasonably expected, individually or in the aggregate, to have a Material Adverse Effect.
(m) Insurance.
The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such
amounts as the Company reasonably believes are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged.
(n)Transactions
With Affiliates and Employees. Except as disclosed in the SEC Reports, none of the officers or directors of the Company or any Subsidiary
and, to the knowledge of the Company, none of the employees of the Company or any Subsidiary is presently a party to any transaction with
the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, providing
for the borrowing of money from or lending of money to or otherwise requiring payments to or from any officer, director or such employee
or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is
an officer, director, trustee, stockholder, member or partner, in each case in excess of $120,000 other than for (i) payment of salary
or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company, (iii) and (iv) other employee
benefits, including stock option agreements under any stock option plan of the Company.
(o)Sarbanes-Oxley;
Internal Accounting Controls. There is and has been no failure on the part of the Company or any of the Company’s directors
or officers, in their capacities as such, to comply in all material respects with any applicable provisions of the Sarbanes-Oxley Act
and the rules and regulations promulgated thereunder. Each of the principal executive officer and the principal financial officer of the
Company (or each former principal executive officer of the Company and each former principal financial officer of the Company as applicable)
has made all certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act with respect to all reports, schedules, forms,
statements and other documents required to be filed by it or furnished by it to the Commission. For purposes of the preceding sentence,
“principal executive officer” and “principal financial officer” shall have the meanings given to such terms in
the Sarbanes-Oxley Act.
(p) Investment
Company. The Company is not and immediately after receipt of payment for the Securities, will not be, required to register as an “investment
company” within the meaning of the Investment Company Act of 1940, as amended.
(q) Listing and
Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has
taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock
under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating such registration.
Except as set forth on Schedule 3.1(q), the Company has not, in the 12 months preceding the date hereof, received notice from any
Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the
listing or maintenance requirements of such Trading Market. The Common Stock is currently eligible for electronic transfer through the
Depository Trust Company, or another established clearing corporation and the Company is current in payment of the fees to the Depository
Trust Company (or such other established clearing corporation) in connection with such electronic transfer.
(r) Foreign Corrupt
Practices. Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary, any agent or other person
acting on behalf of the Company or any Subsidiary, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment
or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government
officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully
any contribution made by the Company or any Subsidiary (or made by any person acting on its behalf of which the Company is aware) which
is in violation of law, or (iv) violated in any material respect any provision of FCPA.
(s) Office of
Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company's knowledge, any director, officer, agent or employee
of the Company or any Subsidiary is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the
U.S. Treasury Department (“OFAC”).
(t) Money Laundering.
The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with applicable financial record-keeping
and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, applicable money laundering statutes
and applicable rules and regulations thereunder (collectively, the “Money Laundering Laws”), except where the failure to be
in such compliance would not result in a Material Adverse Effect, and no Action or Proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any Subsidiary with respect to the Money Laundering Laws is pending or, to
the knowledge of the Company or any Subsidiary, threatened.
(u) Accountants.
The Company’s independent registered public accounting firm is dbbmckennon. To the
knowledge and belief of the Company, such accounting firm (i) is a registered public accounting firm as required by the Exchange Act and
(ii) shall express its opinion with respect to the financial statements to be included in the Company’s Annual Report for the fiscal
year ending December 31, 2023.
(v) Acknowledgment
Regarding Purchasers’ Purchase of Securities. The Company acknowledges and agrees that each of the Purchasers is acting solely
in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated thereby.
The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in any similar capacity)
with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by any Purchaser or any of their
respective representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby is merely
incidental to the Purchasers’ purchase of the Securities. The Company further represents to each Purchaser that the Company’s
decision to enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the transactions
contemplated hereby by the Company and its representatives.
(w)Acknowledgment
Regarding Purchaser’s Trading Activity. Anything in this Agreement or elsewhere herein to the contrary notwithstanding, it is
understood and acknowledged by the Company that: (i) none of the Purchasers has been asked by the Company to agree, nor has any Purchaser
agreed, to desist from purchasing or selling, long and/or short, securities of the Company, or “derivative” securities based
on securities issued by the Company or to hold the Securities for any specified term; (ii) past or future open market or other transactions
by any Purchaser, specifically including, without limitation, Short Sales or “derivative” transactions, before or after the
closing of this or future private placement transactions, may negatively impact the market price of the Company’s publicly-traded
securities; (iii) any Purchaser, and counter-parties in “derivative” transactions to which any such Purchaser is a party,
directly or indirectly, presently may have a “short” position in the Common Stock, and (iv) each Purchaser shall not be deemed
to have any affiliation with or control over any arm’s length counter-party in any “derivative” transaction. The Company
further understands and acknowledges that (y) one or more Purchasers may engage in hedging activities at various times during the period
that the Securities are outstanding, including, without limitation, during the periods that the value of the Warrant Shares deliverable
with respect to Securities are being determined, and (z) such hedging activities (if any) could reduce the value of the existing stockholders'
equity interests in the Company at and after the time that the hedging activities are being conducted. The Company acknowledges
that such aforementioned hedging activities do not constitute a breach of any of the Transaction Documents.
(x) Regulation
M Compliance. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly,
any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate
the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or, paid any compensation for soliciting purchases of, any
of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities
of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Placement Agent in connection with the placement
of the Securities.
(y)
Cybersecurity. (i)(x) There has been no security breach or other compromise of or relating to any of the
Company’s or any Subsidiary’s information technology and computer systems, networks, hardware, software, data (including
the data of its respective customers, employees, suppliers, vendors and any third party data maintained by or on behalf of it),
equipment or technology (collectively, “IT Systems and Data”) and (y) the Company and the Subsidiaries have not
been notified of, and has no knowledge of any event or condition that would reasonably be expected to result in, any security breach
or other compromise to its IT Systems and Data; (ii) the Company and the Subsidiaries are presently in compliance with all
applicable laws or statutes and all judgments, orders, rules and regulations of any court or arbitrator or governmental or
regulatory authority, internal policies and contractual obligations relating to the privacy and security of IT Systems and Data and
to the protection of such IT Systems and Data from unauthorized use, access, misappropriation or modification, except as would not,
individually or in the aggregate, have a Material Adverse Effect; (iii) the Company and the Subsidiaries have implemented and
maintained commercially reasonable safeguards to maintain and protect its material confidential information and the integrity,
continuous operation, redundancy and security of all IT Systems and Data; and (iv) the Company and the Subsidiaries have implemented
backup and disaster recovery technology consistent with industry standards and practices.
(z) Certain
Fees. Except for fees payable by the Company to the Placement Agent, no brokerage or finder’s fees or commissions are or will
be payable by the Company or any Subsidiary to any broker, financial advisor or consultant, finder, placement agent, investment banker,
bank or other Person with respect to the transactions contemplated by the Transaction Documents. The Purchasers shall have no obligation
with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section
that may be due in connection with the transactions contemplated by the Transaction Documents.
3.2 Representations and
Warranties of the Purchasers. Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants as of the date
hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein, in which case they shall be accurate
as of such date):
(a) Organization;
Authority. Such Purchaser is either an individual or an entity duly incorporated or formed, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability company
or similar power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise
to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and performance by such
Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary corporate, partnership,
limited liability company or similar action, as applicable, on the part of such Purchaser. Each Transaction Document to which it is a
party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms hereof, will constitute
the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms, except: (i) as limited
by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable
law.
(b) Understandings
or Arrangements. Such Purchaser is acquiring the Securities as principal for its own account and has no direct or indirect arrangement
or understandings with any other persons to distribute or regarding the distribution of such Securities (this representation and warranty
not limiting such Purchaser’s right to sell the Securities pursuant to the Registration Statement or otherwise in compliance with
applicable federal and state securities laws). Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business.
Such Purchaser is acquiring such Securities as principal for his, her or its own account and not with a view to or for distributing or
reselling such Securities or any part thereof in violation of the Securities Act or any applicable state securities law, has no present
intention of distributing any of such Securities in violation of the Securities Act or any applicable state securities law and has no
direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities
in violation of the Securities Act or any applicable state securities law (this representation and warranty not limiting such Purchaser’s
right to sell such Securities pursuant to a registration statement or otherwise in compliance with applicable federal and state securities
laws).
(c) Purchaser
Status. At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, and on the date on which it
exercised an Warrant, it will be either: an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or
(a)(8) under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities
Act.
(d) Experience
of Such Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience
in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities,
and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of an investment in the
Securities and, at the present time, is able to afford a complete loss of such investment.
(e) Access to
Information. Such Purchaser acknowledges that it has had the opportunity to review the Transaction Documents (including all exhibits
and schedules thereto) and the SEC Reports and has been afforded, (i) the opportunity to ask such questions as it has deemed necessary
of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Securities
and the merits and risks of investing in the Securities; (ii) access to information about the Company and its financial condition, results
of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity
to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary
to make an informed investment decision with respect to the investment. Such Purchaser acknowledges and agrees that neither the Placement
Agent nor any Affiliate of the Placement Agent has provided such Purchaser with any information or advice with respect to the Securities
nor is such information or advice necessary or desired. Neither the Placement Agent nor any Affiliate has made or makes any representation
as to the Company or the quality of the Securities and the Placement Agent and any Affiliate may have acquired non-public information
with respect to the Company which such Purchaser agrees need not be provided to it. In connection with the issuance of the Securities
to such Purchaser, neither the Placement Agent nor any of its Affiliates has acted as a financial advisor or fiduciary to such Purchaser.
(f) Certain Transactions
and Confidentiality. Other than consummating the transactions contemplated hereunder, such Purchaser has not, nor has any Person acting
on behalf of or pursuant to any understanding with such Purchaser, directly or indirectly executed any purchases or sales, including Short
Sales, of the securities of the Company during the period commencing as of the time that such Purchaser first received a term sheet (written
or oral) from the Placement Agent, the Company or any other Person representing the Company setting forth the material terms of the transactions
contemplated hereunder and ending immediately prior to the execution hereof. Notwithstanding the foregoing, in the case of a Purchaser
that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets
and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions
of such Purchaser’s assets, the representation set forth above shall only apply with respect to the portion of assets managed by
the portfolio manager that made the investment decision to purchase the Shares covered by this Agreement. Other than to other Persons
party to this Agreement or to such Purchaser’s representatives, including, without limitation, its officers, directors, partners,
legal and other advisors, employees, agents and Affiliates, such Purchaser has maintained the confidentiality of all disclosures made
to it in connection with this transaction (including the existence and terms of this transaction). Notwithstanding the foregoing, for
the avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or preclude any actions, with respect
to locating or borrowing shares in order to effect Short Sales or similar transactions in the future.
The Company acknowledges
and agrees that the representations contained in this Section 3.2 shall not modify, amend or affect such Purchaser’s right to rely
on the Company’s representations and warranties contained in this Agreement or any representations and warranties contained in any
other Transaction Document, or any other document or instrument executed and/or delivered in connection with this Agreement or the consummation
of the transactions contemplated hereby. Notwithstanding the foregoing, for the avoidance of doubt, nothing contained herein shall constitute
a representation or warranty, or preclude any actions, with respect to locating or borrowing shares in order to effect Short Sales or
similar transactions in the future.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 Warrant Shares.
If all or any portion of a Warrant is exercised at a time when there is an effective registration statement to cover the issuance or resale
of the Warrant Shares or if the Warrant is exercised via cashless exercise, the Warrant Shares issued pursuant to any such exercise shall
be issued free of all legends. If at any time following the date hereof the Registration Statement (or any subsequent registration statement
registering the sale or resale of the Warrant Shares) is not effective or is not otherwise available for the sale or resale of the Warrant
Shares, the Company shall immediately notify the holders of the Warrants in writing that such registration statement is not then effective
and thereafter shall promptly notify such holders when the registration statement is effective again and available for the sale or resale
of the Warrant Shares (it being understood and agreed that the foregoing shall not limit the ability of the Company to issue, or any Purchaser
to sell, any of the Warrant Shares in compliance with applicable federal and state securities laws). The Company shall use best efforts
to keep a registration statement (including the Registration Statement) registering the issuance or resale of the Warrant Shares effective
during the term of the Warrants.
4.2 Furnishing of Information.
Until the earliest of the time that (i) no Purchaser owns Securities or (ii) the Warrants have expired, the Company covenants to timely
file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company
after the date hereof pursuant to the Exchange Act even if the Company is not then subject to the reporting requirements of the Exchange
Act.
4.3 Integration. The
Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section
2 of the Securities Act) that would be integrated with the offer or sale of the Shares for purposes of the rules and regulations of any
Trading Market such that it would require stockholder approval prior to the closing of such other transaction unless stockholder approval
is obtained before the closing of such subsequent transaction.
4.4 Securities Laws Disclosure;
Publicity. The Company shall file with the Commission on or before the Closing Date a Current Report on Form 8-K, including the required
Transaction Documents as exhibits thereto. From and after the date of such filing, the Company represents to the Purchasers that it shall
have publicly disclosed all material, non-public information delivered to any of the Purchasers by the Company or any of its officers,
directors, employees or Affiliates in connection with the transactions contemplated by the Transaction Documents. In addition, effective
upon the date of such filing, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement,
whether written or oral, between the Company or any of its officers, directors, employees or Affiliates on the one hand, and any of the
Purchasers or any of their Affiliates on the other hand, shall terminate. The Company shall not publicly disclose the name of any Purchaser,
or include the name of any Purchaser in any filing with the Commission or any regulatory agency or Trading Market, without the prior written
consent of such Purchaser, except (a) as required by federal securities law in connection with the filing of final Transaction Documents
with the Commission and (b) to the extent such disclosure is required by law or Trading Market or FINRA regulations, in which case the
Company shall provide the Purchasers with prior notice of such disclosure permitted under this clause (b).
4.5 Reservation of Common
Stock. As of the date hereof, the Company has reserved and the Company shall continue to reserve and keep available at all times,
free of preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling the Company to issue Shares and Warrant
Shares pursuant to this Agreement and Warrants, respectively.
4.6 Certain Transactions
and Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, covenants that neither it nor any Affiliate
acting on its behalf or pursuant to any understanding with it will execute any purchases or sales, including Short Sales of any of the
Company’s securities during the period commencing with the execution of this Agreement and ending at such time that the transactions
contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.3. Each Purchaser,
severally and not jointly with the other Purchasers, covenants that until such time as the transactions contemplated by this Agreement
are publicly disclosed by the Company in accordance with Section 4.3, such Purchaser will maintain the confidentiality of the existence
and terms of this transaction (other than as disclosed to its legal and other representatives).
4.7 Use of Proceeds.
Except as set forth in the Prospectus Supplement, the Company shall use the net proceeds from the sale of the Securities hereunder for
working capital purposes and shall not use such proceeds: (a) for the satisfaction of any portion of the Company’s debt (other than
payment of trade payables in the ordinary course of the Company’s business and prior practices), or the debt of any officer, director,
or executive management of the Company, or any sponsor, general partner, manager, or advisor or any of the Company’s affiliates,
(b) for the redemption of any Common Stock or Common Stock Equivalents, (c) for the settlement of any outstanding litigation. or (d) in
violation of FCPA or OFAC regulation.
4.8 Indemnification of
Purchasers. Subject to the provisions of this Section 4.8, the Company will indemnify and hold each Purchaser and its directors, officers,
employees and Affiliates (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title), each Person who controls such Purchaser (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, or employees (and any other Persons with a functionally equivalent role
of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser
Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including
all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such
Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants
or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against the Purchaser
Parties in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of such
Purchaser Party, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based upon a
material breach of such Purchaser Party’s representations, warranties or covenants under the Transaction Documents or any agreements
or understandings such Purchaser Party may have with any such stockholder or any violations by such Purchaser Party of state or federal
securities laws or any conduct by such Purchaser Party which is finally judicially determined to constitute fraud, gross negligence, willful
misconduct or malfeasance). The Company will indemnify each Purchaser Party, to the fullest extent permitted by applicable law, from and
against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys’ fees) and
expenses, as incurred, arising out of or relating to (i) any untrue or alleged untrue statement of a material fact contained in such registration
statement, any prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising
out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements
therein (in the case of any prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading,
except to the extent, but only to the extent, that such untrue statements or omissions are based solely upon information regarding such
Purchaser Party furnished in writing to the Company by such Purchaser Party expressly for use therein, or (ii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act or any state securities law, or any rule or regulation thereunder in
connection therewith. If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant
to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the
defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party shall have the right
to employ one separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall
be at the expense of such Purchaser Party except to the extent that (x) the employment thereof has been specifically authorized by the
Company in writing, (y) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (z) in
such action there is, in the reasonable opinion of counsel, a material conflict on any material issue between the position of the Company
and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more
than one such separate counsel. The Company will not be liable to any Purchaser Party under this Agreement (1) for any settlement by a
Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (2)
to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of
any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction
Documents. The indemnification required by this Section 4.8 shall be made by periodic payments of the amount thereof during the course
of the investigation or defense, as and when bills are received or are incurred. The indemnity agreements contained herein shall be in
addition to any cause of action or similar right of any Purchaser Party against the Company or others and any liabilities the Company
may be subject to pursuant to law.
4.9 Subsequent Equity Sales.
(a)
The Company, on behalf of itself and any successor entity, agrees that, without the prior
written consent of the Placement Agent, it will not, for a period commencing on the date of this Agreement and ending thirty (30)
days after the final Closing of the offering of the Shares pursuant to this Agreement (the “Restricted Period”)
(i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant
any option, right, or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of capital
stock of the Company or any securities convertible into or exercisable or exchangeable for shares of capital stock of the Company;
(ii) file or caused to be filed any registration statement with the Commission relating to the offering of any shares of capital
stock of the Company or any securities convertible into or exercisable or exchangeable for shares of capital stock of the Company;
(iii) complete any offering of debt securities of the Company, other than entering into a line of credit with a traditional bank; or
(iv) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of
ownership of capital stock of the Company, whether any such transaction described in clause (i), (ii), (iii) or (iv) above is to be
settled by delivery of shares of capital stock of the Company or such other securities, in cash or otherwise; provided, however,
that so long as none of such equity securities shall be saleable in the public market until the expiration of the Restricted Period,
the following matters shall not be prohibited: (i) the adoption of an equity incentive plan and the grant of awards pursuant to any
equity incentive plan, and the filing of a registration statement on Form S-8 relating to such a plan, (ii) the issuance of equity
securities in connection with an acquisition or a strategic relationship, which may include the sale of equity securities, and (iii)
the issuance of equity securities upon the exercise or conversion of options, warrants, or other convertible securities outstanding
on the date of this Agreement.
(ii) From the date hereof
until one year following the Closing Date, the Company shall be prohibited from effecting or entering into an agreement to effect any
issuance by the Company or any of its Subsidiaries of Common Stock or Common Stock Equivalents (or a combination of units thereof) involving
a Variable Rate Transaction. “Variable Rate Transaction” means a transaction in which the Company (i) issues or sells
any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional shares
of Common Stock either (A) at a conversion price, exercise price or exchange rate or other price that is based upon and/or varies with
the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities,
or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of
such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of
the Company or the market for the Common Stock or (ii) enters into, or effects a transaction under, any agreement, including, but not
limited to, an equity line of credit whereby the Company may issue securities at a future determined price regardless of whether shares
pursuant to such agreement have actually been issued and regardless of whether such agreement is subsequently canceled; provided,
however, that after the expiration of the Restricted Period, the issuance of shares of Common Stock in an “at the market”
offering pursuant to that certain At The Market Offering Agreement, dated August 21, 2023, with
StockBlock Securities LLC, as sales agent, shall not be deemed a Variable Rate Transaction. Any Purchaser shall be entitled to
obtain injunctive relief against the Company to preclude any such issuance, which remedy shall be in addition to any right to collect
damages.
4.10 Listing of Common
Stock. The Company hereby agrees to use commercially reasonable efforts to maintain the listing or quotation of the Common Stock on
a Trading Market through the second anniversary of the Closing date so long as the Company is then subject to the reporting requirements
of the Exchange Act, and prior to the Closing, the Company shall have applied to list or quote all of the Shares on such Trading Market.
The Company further agrees, if the Company applies to have the Common Stock traded on any other Trading Market, it will then include in
such application all of the Shares and Warrant Shares and will take such other action as is necessary to cause all of the Shares and Warrant
Shares to be listed or quoted on such other Trading Market as promptly as possible. The Company will then take all action reasonably necessary
to continue the listing and trading of its Common Stock on a Trading Market and will comply in all respects with the Company’s reporting,
filing and other obligations under the bylaws or rules of the Trading Market. For so long as the Company maintains a listing or quotation
of the Common Stock on a Trading Market, the Company agrees to maintain the eligibility of the Common Stock for electronic transfer through
the Depository Trust Company or another established clearing corporation, including, without limitation, by timely payment of fees to
the Depository Trust Company or such other established clearing corporation in connection with such electronic transfer.
4.11 Equal Treatment of
Purchasers. No consideration (including any modification of this Agreement) shall be offered or paid to any Person to amend or consent
to a waiver or modification of any provision of this Agreement unless the same consideration is also offered to all of the parties to
this Agreement. For clarification purposes, this provision constitutes a separate right granted to each Purchaser by the Company and negotiated
separately by each Purchaser and is intended for the Company to treat the Purchasers as a class and shall not in any way be construed
as the Purchasers acting in concert or as a group with respect to the purchase, disposition or voting of Securities or otherwise.
4.12 Exercise Procedures.
The form of Notice of Exercise included in the Warrants set forth the totality of the procedures required of the Purchasers in order to
exercise the Warrants. No additional legal opinion, other information or instructions shall be required of the Purchasers to exercise
their Warrants. Without limiting the preceding sentences, no ink-original Notice of Exercise shall be required, nor shall any medallion
guarantee (or other type of guarantee or notarization) of any Notice of Exercise form be required in order to exercise the Warrants. No
additional legal opinion, other information or instructions shall be required from the Purchasers to exercise the Warrants. The Company
shall honor exercises of the Warrants and shall deliver Warrant Shares in accordance with the terms, conditions and time periods set forth
in the Transaction Documents.
ARTICLE V.
MISCELLANEOUS
5.1 Termination. This
Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect whatsoever
on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the Closing has not been consummated
on or before the fifth (5th) Trading Day following the date hereof; provided, however, that no such termination
will affect the right of any party to sue for any breach by any other party (or parties).
5.2 Fees and Expenses.
Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers,
counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees (including, without limitation, any
fees required for same-day processing of any instruction letter delivered by the Company), stamp taxes and other taxes and duties levied
in connection with the delivery of any Shares to the Purchasers.
5.3 Entire Agreement.
The Transaction Documents, together with the exhibits and schedules thereto, the Prospectus and the Prospectus Supplement, contain the
entire understanding of the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings,
oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.
5.4 Notices. Any and
all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed
given and effective on the earliest of: (a) the time of transmission, if such notice or communication is delivered via email attachment
at the email address as set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York City time) on a Trading Day,
(b) the next Trading Day after the time of transmission, if such notice or communication is delivered via email attachment at the email
address as set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City
time) on any Trading Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices
and communications shall be as set forth on the signature pages attached hereto.
5.5 Amendments; Waivers.
No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of
an amendment, by the Company and Purchasers which purchased at least 50.1% in interest of the Shares based on the initial Subscription
Amounts hereunder (or, prior to the Closing, the Company and each Purchaser) or, in the case of a waiver, by the party against whom enforcement
of any such waived provision is sought, provided that if any amendment, modification or waiver disproportionately and adversely impacts
a Purchaser (or group of Purchasers), the consent of such disproportionately impacted Purchaser (or group of Purchasers) shall also be
required. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall
any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right. Any proposed amendment
or waiver that disproportionately, materially and adversely affects the rights and obligations of any Purchaser relative to the comparable
rights and obligations of the other Purchasers shall require the prior written consent of such adversely affected Purchaser. Any amendment
effected in accordance with this Section 5.5 shall be binding upon each Purchaser and holder of Shares and the Company.
5.6 Headings. The headings
herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
5.7 Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may
not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Purchaser (other than by merger).
Any Purchaser may assign any or all of its rights under this Agreement to any Person to whom such Purchaser assigns or transfers any Shares,
provided that such transferee agrees in writing to be bound, with respect to the transferred Shares, by the provisions of the Transaction
Documents that apply to the “Purchasers.”
5.8 No Third-Party Beneficiaries.
The Placement Agent shall be the third party beneficiary of the representations and warranties of the Company in Section 3.1 and the representations
and warranties of the Purchasers in Section 3.2. This Agreement is intended for the benefit of the parties hereto and their respective
successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except
as otherwise set forth in this Section 5.8.
5.9 Governing Law.
All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts
of law thereof. Each party agrees that all legal Proceedings concerning the interpretations, enforcement and defense of the transactions
contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its affiliates, directors,
officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting
in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in
the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any Action or Proceeding, any claim that it is not personally subject to the jurisdiction of any such
court, that such Action or Proceeding is improper or is an inconvenient venue for such Proceeding. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such Action or Proceeding by mailing a copy thereof via registered
or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If any party shall commence an Action
or Proceeding to enforce any provisions of the Transaction Documents, then the prevailing party in such Action or Proceeding shall be
reimbursed by the non-prevailing party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such Action or Proceeding.
5.10 Survival. The
representations and warranties contained herein shall survive the Closing and the delivery of the Shares through the second anniversary
of the Closing Date.
5.11 Execution. This
Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and delivered to each other party, it being understood that
the parties need not sign the same counterpart. In the event that any signature is delivered by e-mail delivery of a “.pdf”
format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature
is executed) with the same force and effect as if such “.pdf” signature page was an original thereof.
5.12 Severability.
If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force
and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts
to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.
5.13 Rescission and Withdrawal
Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) any of the other Transaction
Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction Document and the Company does not
timely perform its related obligations within the periods therein provided, then such Purchaser may rescind or withdraw, in its sole discretion
from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to
its future actions and rights; provided, however, that, in the case of a rescission of an exercise of a Warrant, the applicable Purchaser
shall be required to return any shares of Common Stock subject to any such rescinded exercise notice concurrently with the return to such
Purchaser of the aggregate exercise price paid to the Company for such shares and the restoration of such Purchaser’s right to acquire
such shares pursuant to such Purchaser’s Warrant (including, issuance of a replacement Warrant certificate evidencing such restored
right).
5.14 Remedies. In addition
to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchasers and
the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not
be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby
agree to waive and not to assert in any Action for specific performance of any such obligation the defense that a remedy at law would
be adequate.
5.15 Independent Nature
of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance or non-performance
of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any other Transaction Document,
and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the Purchasers as a partnership, an association,
a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the Transaction Documents. Each Purchaser shall be entitled to independently
protect and enforce its rights including, without limitation, the rights arising out of this Agreement or out of the other Transaction
Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any Proceeding for such purpose.
Each Purchaser has been represented by its own separate legal counsel in its review and negotiation of the Transaction Documents or has
freely elected not to be represented by counsel after having been advised of the desirability to engage such counsel. For reasons of administrative
convenience only, a Purchaser and its counsel may have chosen to communicate with the Company through the legal counsel of the Placement
Agent. The legal counsel of the Placement Agent does not represent any of the Purchasers and only represents the Placement Agent. The
Company has elected to provide all Purchasers with the same terms and Transaction Documents for the convenience of the Company and not
because it was required or requested to do so by any of the Purchasers. It is expressly understood and agreed that each provision contained
in this Agreement and in each other Transaction Document is between the Company and a Purchaser, solely, and not between the Company and
the Purchasers collectively and not between and among the Purchasers.
5.16 Saturdays, Sundays,
Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein
shall not be a Business Day, then such action may be taken, or such right may be exercised on the next succeeding Business Day.
5.17 Construction.
The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction Documents
and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each and every reference to
share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse and forward stock splits,
stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.
5.18 WAIVER OF JURY
TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY
AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES
FOREVER TRIAL BY JURY.
(Signature Pages Follow)
IN WITNESS WHEREOF, the parties
hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first
indicated above.
| APPTECH PAYMENTS CORP. |
|
Address for Notice: |
| |
|
|
| By: |
/s/ Luke D’ Angelo |
|
5826 Owens Ave., Suite 100 |
| Name: |
Luke D’Angelo |
|
Carlsbad, CA 92008 |
|
Title:
|
Chief Executive Officer
|
|
|
| Email: |
ldangelo@apptechcorp.com |
|
|
With a copy to (which shall not constitute notice):
Nelson Mullins Riley & Scarborough LLP
101 Constitution Avenue, NW, Suite 900
Washington, D.C. 20001
Attn: Andy Tucker
Email: andy.tucker@nelsonmullins.com
[REMAINDER OF PAGE INTENTIONALLY
LEFT BLANK
SIGNATURE PAGE FOR PURCHASER
FOLLOWS]
[PURCHASER SIGNATURE PAES TO
SECURITIES PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the undersigned
have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated
above.
Name of Purchaser: ________________________________________________________
Signature of Authorized
Signatory of Purchaser: _________________________________
Name of Authorized Signatory:
_______________________________________________
Title of Authorized Signatory:
________________________________________________
Email Address of Authorized
Signatory: _________________________________________
Address for Notice to Purchaser:
Address for Delivery of Shares
to Purchaser (if not same as address for notice):
Subscription Amount: $_________________
Shares: _________________
Warrant Shares: ____________ Beneficial Ownership
Blocker o 4.99% or o 9.99%
EIN Number: _______________________
[SIGNATURE PAGE CONTINUES]
☐
Notwithstanding anything contained in this Agreement to the contrary, if this signature page is accepted and agreed to by the Company,
by checking this box (i) the obligations of the above-signed to purchase the securities set forth in this Agreement to be purchased from
the Company by the above-signed, and the obligations of the Company to sell such securities to the above-signed, shall be unconditional
and all conditions to Closing shall be disregarded, (ii) the Closing shall occur by the second (2nd) Trading Day following the date of
this Agreement and (iii) any condition to Closing contemplated by this Agreement (but prior to being disregarded by clause (i) above)
that required delivery by the Company or the above-signed of any agreement, instrument, certificate or the like or purchase price (as
applicable) shall no longer be a condition and shall instead be an unconditional obligation of the Company or the above-signed (as applicable)
to deliver such agreement, instrument, certificate or the like or purchase price (as applicable) to such other party on the Closing Date.
EXHIBIT A
Form of Warrant
[Included as Exhibit 4.1]
Exhibit 10.2
AMENDMENT TO
COMMON STOCK PURCHASE
WARRANT
This AMENDMENT TO COMMON STOCK PURCHASE WARRANT
(this “Amendment”) is entered into as of October 24, 2023, by and between AppTech Payments Corp., a Delaware corporation
(the “Company”), and [Purchaser] (the “Holder”).
WHEREAS,
the Holder is the holder of a Common Stock Purchase Warrant issued on February 2, 2023 (the “February 2023 Warrant”)
to purchase up to 1,666,667 shares of common stock of the Company, par value $0.001 per share (the “Common Stock”).
WHEREAS,
pursuant to Section 11 of the February 2023 Warrant, the February 2023 Warrant may be modified or amended or the provisions thereof waived
with the written consent of the Company, on the one hand, and the Holder, on the other hand; and
WHEREAS, the Company
and the Holder desire to amend the February 2023 Warrant as set forth in this Amendment.
NOW,
THEREFORE, in consideration of the mutual agreements contained herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and intending to be legally bound hereby, the Company and the Holder hereby agree as follows:
1.
Amendment to Exercise Price. Section 1(b) of the February 2023 Warrant is hereby amended and restated in its entirety as
follows:
“ b)
Exercise Price. For purposes of this Warrant, “Exercise Price” means $2.74 per share, subject to adjustment
as provided herein.”
2.
No Further Amendment. Except as amended by this Amendment, the February 2023 Warrant remains unaltered and shall remain in full
force and effect.
3. Jurisdiction.
All questions concerning the construction, validity, enforcement and interpretation of this Amendment shall be determined in accordance
with the provisions of the February 2023 Warrant.
4.
Counterparts. This Amendment may be executed in any number of counterparts, each of which will be deemed
an original and all of which together will constitute one and the same instrument. Signatures delivered by facsimile, electronic mail
(including as a PDF file) or other transmission method shall be deemed to be original signatures, shall be valid and binding, and, upon
delivery, shall constitute due execution of this Amendment.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have
caused this warrant amendment agreement to be duly executed by their respective authorized signatories as of the date first indicated
above.
APPTECH PAYMENTS CORP.
By: _____________________________
Name:
Title:
Name of Holder: [Purchaser]
Signature of Authorized Signatory of Holder: Name of
Authorized Signatory:
Title of Authorized Signatory:
Exhibit 99.1
AppTech
Payments Corp. Announces Pricing of $3.5 Million Registered Direct Offering
Carlsbad, CA, October 24, 2023 -
AppTech Payments Corp. (Nasdaq: APCX) (the “Company” or “AppTech”), a pioneering Fintech company powering
frictionless commerce between business to business and business to consumer, announced today that it has entered into a securities purchase
agreement with a single institutional investor to purchase approximately $3.5 million of its common stock and warrants in a registered
direct offering. The combined effective purchase price for each share of common stock and associated warrant to purchase one share of
common stock will be $2.10.
Under the terms of the securities purchase agreement,
AppTech has agreed to issue 1,666,667 shares of common stock and warrants to purchase up to 1,666,667 shares of the Company’s common
stock from the date of issuance until the fifth anniversary of the issuance date for $2.74 per share, subject to adjustment for stock
splits, reorganizations and recapitalization.
Titan Partners Group, a division of American Capital
Partners, is acting as sole placement agent for the offering. The offering is expected to close on or about October 26, 2023, subject
to the satisfaction of customary closing conditions.
The shares of common stock and warrants are being
offered pursuant to a shelf registration statement on Form S-3 (File No. 333-265526) previously filed and declared effective by the Securities
and Exchange Commission (SEC) on July 15, 2022. The offering of the shares of common stock and warrants will be made only by means of
a prospectus supplement that forms a part of the registration statement.
Copies of the prospectus supplement and the accompanying
prospectus relating to this offering may be obtained, when available, on the SEC’s website at http://www.sec.gov or by contacting
Titan Partners Group, a division of American Capital Partners, 4 World Trade Center, 29th Floor, New York, NY 10007, by telephone
at (929) 833-1246 or by email at info@titanpartnersgrp.com.
This press release shall not constitute an offer
to sell or the solicitation of an offer to buy any of the securities described herein, nor shall there be any sale of these securities
in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under
the securities laws of any such state or jurisdiction.
About AppTech Payments Corp.
AppTech Payments Corp. (Nasdaq: APCX) provides
digital financial services for corporations, small and midsized enterprises (“SMEs”) and consumers through the Company’s
scalable cloud-based platform architecture and infrastructure, coupled with our commerce experiences development and delivery model. AppTech
maintains exclusive licensing and partnership agreements in addition to a full suite of patented technology capabilities. For more information,
please visit apptechcorp.com.
Forward-Looking Statements
This press release includes “forward-looking
statements” within the meaning of U.S. federal securities laws. Words such as “expect,” “estimate,” “project,”
“budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,”
“could,” “should,” “believes,” “predicts,” “potential,” “continue”
and similar expressions are intended to identify such forward-looking statements. These forward-looking statements involve significant
risks and uncertainties that could cause the actual results to differ materially from the expected results and, consequently, you should
not rely on these forward-looking statements as predictions of future events. These forward-looking statements and factors that may cause
such differences include, without limitation, the risks disclosed in the Company’s Annual Report on Form 10-K filed with the SEC
on March 31, 2022, and in the Company’s other filings with the SEC. Readers are cautioned not to place undue reliance upon any forward-looking
statements, which speak only as of the date made. Except as required by law, the Company disclaims any obligation to update or publicly
announce any revisions to any of the forward-looking statements contained in this press release.
Investor Relations Contact
Michael Kim/Brooks Hamilton
737-289-0835
APCX@mzgroup.us
www.mzgroup.us
AppTech Payments Corp.
info@apptechcorp.com
760-707-5959
v3.23.3
Cover
|
Oct. 24, 2023 |
| Document Type |
8-K
|
| Amendment Flag |
false
|
| Document Period End Date |
Oct. 24, 2023
|
| Entity File Number |
000-27569
|
| Entity Registrant Name |
AppTech
Payments Corp.
|
| Entity Central Index Key |
0001070050
|
| Entity Tax Identification Number |
66-0847995
|
| Entity Incorporation, State or Country Code |
DE
|
| Entity Address, Address Line One |
5876
Owens Ave
|
| Entity Address, Address Line Two |
Suite
100
|
| Entity Address, City or Town |
Carlsbad
|
| Entity Address, State or Province |
CA
|
| Entity Address, Postal Zip Code |
92008
|
| City Area Code |
760
|
| Local Phone Number |
707-5959
|
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false
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false
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false
|
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false
|
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false
|
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|
| Title of 12(b) Security |
Common
stock, par value $0.001 per share
|
| Trading Symbol |
APCX
|
| Security Exchange Name |
NASDAQ
|
| Warrants, each whole warrant exercisable for one share of common stock at an exercise price of $5.19 |
|
| Title of 12(b) Security |
Warrants,
each whole warrant exercisable for one share of common stock at an exercise price of $4.15
|
| Trading Symbol |
APCXW
|
| Security Exchange Name |
NASDAQ
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