DEBT CONVERSION AND SETTLEMENT AGREEMENT
Exhibit 10.3
DEBT CONVERSION AND SETTLEMENT AGREEMENT
This Debt Conversion and Settlement Agreement (the “Agreement”) is made as of April 8, 2024 (the “Effective Date”) by and between AppYea, Inc., a Nevada corporation (the “Company”), and ▇▇▇▇ ▇▇▇▇▇ (the “Debt Holder”).
WHEREAS, Debt ▇▇▇▇▇▇ has been continuously employed by the Company since July 1, 2021 (the “Services”) at an average agreed upon fee of $6,820 per month, for a total amount owing through December 31, 2023 of $204,589 (“the Fee”);
WHEREAS, due to cash flow constraints, the Company has not paid to the Debt Holder the Fee as and when due;
WHEREAS, the Company and the Debt Holder have reached agreement to convert a portion of Fee in the amount of $154,589 (the “Converted Fee”) into shares of the Company’s common stock par value $0.0001 (the “Common Stock”) at a per share conversion rate of $0.04 (the “Conversion Rate”);
WHEREAS, the Company and the Debt Holder have agreed to address the future payment of $50,000, which represents the portion of the Fee not being converted hereunder (the “Non-Converted Fee”).
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Debt ▇▇▇▇▇▇ and the Company agree as follows:
1. Conversion to Common Stock. Effective as of the Effective Date, the Fee shall be converted into Equity Interests of Company in an amount representing 3,864,727 shares of Common Stock. As used herein, the term “Equity Interests” of the Company shall mean and refer to option or shares under a compensation plan under Section 102 of the Israeli Tax Code as approved by the Israeli Tax Authorities. The conversion of the Fee into Equity Interests shall be given retroactive effect to January 1, 2024.
By its signature below the Debt Holder acknowledges the repayment of Fee upon the issuance of such Equity Interests.
2. Settlement of the Non-Converted Fee. The Non-Converted Fee shall become payable in 20 equal monthly instalments of $2,500, subject to payment of payroll, social security and other taxes, (the “Monthly Instalment Payment”), commencing on the 30th day following the earlier to occur of the following: (i) the closing of an equity raise by the Company with proceeds to the Company of at least $1.5 million, (ii) the completion of seven consecutive (7) months positive cash flow for the Company in such amount as will allow the Company to cover its operating expenses and (iii) termination of employment by the Company of for any reason other than cause and (iii) termination of Debt Holder’s employment by the Company of for any reason other than cause.
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2. Debt Holder Representations. The Company is issuing the Common Stock to Debt Holder in reliance upon the following representations made by Debt Holder:
(a) Debt ▇▇▇▇▇▇ acknowledges and agrees that the shares of Common Stock are characterized as “restricted securities” under the Securities Act of 1933 (as amended and together with the rules and regulations promulgated thereunder, the “Securities Act”) and that, under the Securities Act and applicable regulations thereunder, such securities may not be resold, pledged or otherwise transferred without registration under the Securities Act or an exemption therefrom. Debt Holder acknowledges and agrees that (i) the shares of Common Stock are being offered in a transaction not involving any public offering in the United States within the meaning of the Securities Act, and the shares of Common Stock have not yet been registered under the Securities Act, and (ii) such shares of Common Stock may be offered, resold, pledged or otherwise transferred only in a transaction registered under the Securities Act, or meeting the requirements of Rule 144, or in accordance with another exemption from the registration requirements of the Securities Act (and based upon an opinion of counsel if the Company so requests) and in accordance with any applicable securities laws of any State of the United States or any other applicable jurisdiction.
(b) Debt ▇▇▇▇▇▇ acknowledges and agrees that (i) the registrar or transfer agent for the shares of Common Stock will not be required to accept for registration of transfer any shares except upon presentation of evidence satisfactory to the Company that the restrictions on transfer under the Securities Act have been complied with and (ii) any shares of Common Stock in the form of definitive physical certificates will bear a restrictive legend.
(c) Debt Holder acknowledges and agrees that: (a) the shares of Common Stock have not been registered under the Securities Act, or under any state securities laws, and are being offered and sold in reliance upon federal and state exemptions for transactions not involving any public offering; (b) Debt Holder is acquiring the shares of Common Stock solely for its own account for investment purposes, and not with a view to the distribution thereof in a transaction that would violate the Securities Act or the securities laws of any State of the United States or any other applicable jurisdiction; (c) Debt Holder is a sophisticated purchaser with such knowledge and experience in business and financial matters that it is capable of evaluating the merits and risks of purchasing the shares of Common Stock; (d) Debt Holder has had the opportunity to obtain from the Company such information as desired in order to evaluate the merits and the risks inherent in holding the shares of Common Stock; (e) Debt Holder is able to bear the economic risk and lack of liquidity inherent in holding the shares of Common Stock; (f) Debt Holder is an “accredited investor” within the meaning of Rule 501(a) under the Securities Act; and (g) Debt Holder either has a pre-existing personal or business relationship with the Company or its officers, directors or controlling persons, or by reason of Debt Holder’s business or financial experience, or the business or financial experience of their professional advisors who are unaffiliated with and who are not compensated by the Company, directly or indirectly, have the capacity to protect their own interests in connection with the purchase of the Common Stock.
(d) Debt ▇▇▇▇▇▇’s investment in the Company pursuant to this Common Stock is consistent, in both nature and amount, with Debt Holder’s overall investment program and financial condition.
(e) Debt ▇▇▇▇▇▇’s principal residence is in the State of Israel.
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3. Miscellaneous.
(a) This Agreement shall be construed and enforced in accordance with the laws of the State of Nevada.
(b) This Agreement constitutes the entire agreement between the parties and supersedes all prior oral or written negotiations and agreements between the parties with respect to the subject matter hereof. No modification, variation or amendment of this Agreement (including any exhibit hereto) shall be effective unless made in writing and signed by both parties.
(c) Each party to this Agreement hereby represents and warrants to the other party that it has had an opportunity to seek the advice of its own independent legal counsel with respect to the provisions of this Agreement and that its decision to execute this Agreement is not based on any reliance upon the advice of any other party or its legal counsel. Each party represents and warrants to the other party that in executing this Agreement such party has completely read this Agreement and that such party understands the terms of this Agreement and its significance. This Agreement shall be construed neutrally, without regard to the party responsible for its preparation.
(d) Each party to this Agreement hereby represents and warrants to the other party that (i) the execution, performance and delivery of this Agreement has been authorized by all necessary action by such party; (ii) the representative executing this Agreement on behalf of such party has been granted all necessary power and authority to act on behalf of such party with respect to the execution, performance and delivery of this Agreement; and (iii) the representative executing this Agreement on behalf of such party is of legal age and capacity to enter into agreements which are fully binding and enforceable against such party.
(e) This Agreement may be executed in any number of counterparts and may be delivered by email, all of which taken together shall constitute a single instrument.
This Agreement is entered into and effective as of the date first written above.
| COMPANY: |
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| AppYea, Inc. | /s/ ▇▇▇▇ ▇▇▇▇▇ | |
| ▇▇▇▇ ▇▇▇▇▇ | ||
| By: | /s/ ▇▇▇▇ ▇▇▇▇▇ | |
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