Exhibit
10.4


 


NEITHER
THIS WARRANT NOR ANY OF THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OR
UNDER THE SECURITIES LAWS OF ANY OTHER JURISDICTION. BY ACQUIRING THIS WARRANT, HOLDER REPRESENTS THAT HOLDER WILL NOT SELL OR
OTHERWISE DISPOSE OF THIS WARRANT OR THE SECURITIES FOR WHICH IT MAY BE EXERCISED WITHOUT REGISTRATION OR COMPLIANCE WITH AN EXEMPTION
FROM REGISTRATION UNDER THE AFORESAID ACTS AND THE RULES AND REGULATIONS THEREUNDER.


 


WARRANT
TO PURCHASE COMMON STOCK


 


Warrant
No.: W2017-01-25-1


Number
of Shares of Common Stock: 43,055


Date
of Issuance: January 25, 2017 (“Issuance Date”)


 


This
Certifies That, for value received, James L.
Davis (including any permitted and registered assigns, the “Holder”), is entitled to purchase from Cachet Financial
Solutions, Inc., a Delaware corporation (the “Company”), up to 43,055 shares of Common Stock (the “Warrant
Shares”) at the Exercise Price then in effect.


 


Capitalized
terms used in this Warrant to Purchase Common Stock (this “Warrant”) shall have the meanings set forth in the
body of this Warrant or in Section 13 below. For purposes of this Warrant, the term “Exercise Price” shall
mean a price per share equal to the lower of $5.55 and 80% of the per share price of the Company’s common stock in the Company’s
next underwritten public offering, subject to adjustments, subject to adjustment as provided herein, and the term “Exercise
Period” shall mean the period commencing on the Issuance Date and ending on 5:00 p.m. New York time on the five-year
anniversary thereof.


 


1. EXERCISE
OF WARRANT.


 


(a) Mechanics
of Exercise. Subject to the terms and conditions hereof, the rights represented by this Warrant may be exercised in
whole or in part at any time or times during the Exercise Period by delivery of a written notice, in the form attached hereto
as Exhibit A (the “Exercise Notice”), of the Holder’s election to exercise this Warrant. The
Holder shall not be required to deliver the original Warrant in order to effect an exercise hereunder. Execution and delivery
of the Exercise Notice with respect to less than all of the Warrant Shares shall have the same effect as cancellation of the
original Warrant and issuance of a new Warrant evidencing the right to purchase the remaining number of Warrant Shares. On or
before the third Trading Day (the “Warrant Share Delivery Date”) following the date on which the Company
shall have received the Exercise Notice, and upon receipt by the Company of (i) payment to the Company of an amount equal to
the applicable Exercise Price multiplied by the number of Warrant Shares as to which this Warrant is being exercised (the
“Aggregate Exercise Price” and together with the Exercise Notice, the “Exercise Delivery
Documents”) in cash or by wire transfer of immediately available funds or (ii) notification from the Holder that
this Warrant is being exercised pursuant to a Cashless Exercise, as defined below, the Company shall (or direct its transfer
agent to) issue and dispatch by overnight courier to the address as specified in the Exercise Notice, a certificate,
registered in the Company’s share register in the name of the Holder or its designee, for the number of shares of
Common Stock to which the Holder is entitled pursuant to such exercise. Upon delivery of the Exercise Delivery Documents, 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 certificates evidencing such Warrant
Shares. If this Warrant is submitted in connection with any exercise pursuant to Section 1(c) and the number of
Warrant Shares represented by this Warrant submitted for exercise is greater than the number of Warrant Shares being acquired
upon an exercise, then the Company shall as soon as practicable and in no event later than three Business Days after any
exercise and at its own expense, issue a new Warrant (in accordance with Section 6) representing the right to purchase the
number of Warrant Shares purchasable immediately prior to such exercise under this Warrant, less the number of Warrant Shares
with respect to which this Warrant is exercised.


 




    	 



    	 



    

 





(b) No
Fractional Shares. No fractional shares shall be issued upon the exercise of this Warrant as a consequence of any
adjustment pursuant hereto. All Warrant Shares (including fractions) issuable upon exercise of this Warrant may be aggregated
for purposes of determining whether the exercise would result in the issuance of any fractional share. If, after aggregation,
the exercise would result in the issuance of a fractional share, the Company shall, in lieu of issuance of any fractional
share, pay the Holder otherwise entitled to such fraction a sum in cash equal to the product resulting from multiplying the
then-current fair market value of a Warrant Share by such fraction.


 


(c) Cashless
Exercise. The Holder may, in its sole discretion, at any time prior to the effective date of a registration statement
filed by the Company or any Subsidiary under the Securities Act covering the Warrant Shares, exercise this Warrant in whole
or in part and, in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise in
payment of the Aggregate Exercise Price, elect instead to receive upon such exercise the “Net Number” of
shares of Common Stock determined according to the following formula (a “Cashless Exercise”):


 


Net
Number = (A x B) – (A x C)


 B


 


For
purposes of the foregoing formula:


 


		A
                                         =	the
                                         total number of shares with respect to which this Warrant is then being exercised.



 


		B
                                         =	the
                                         Weighted Average Price of the shares of Common Stock for the five consecutive Trading
                                         Days ending on the date immediately preceding the date of the Exercise Notice.



 


		C
                                         =	the
                                         Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise.






 




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2. ADJUSTMENTS.
The Exercise Price and the number of Warrant Shares shall be adjusted from time to time as follows:


 


(a) Subdivision
or Combination of Common Stock. If the Company at any time on or after the Issuance Date subdivides (by any stock split,
stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater
number of shares, the Exercise Price in effect immediately prior to such subdivision will be proportionately reduced and the
number of Warrant Shares will be proportionately increased. If the Company at any time on or after the Issuance Date combines
(by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a
smaller number of shares, the Exercise Price in effect immediately prior to such combination will be proportionately
increased and the number of Warrant Shares will be proportionately decreased. Any adjustment under this Section shall become
effective at the close of business on the date the subdivision or combination becomes effective.


 


(b) Distribution
of Assets. 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 or other similar transaction) (a “Distribution”), at any time after the issuance
of this Warrant, then, in each such case:


 


(i)
any Exercise Price in effect immediately prior to the close of business on the record date fixed for the determination of
holders of shares of Common Stock entitled to receive the Distribution shall be reduced, effective as of the close of
business on such record date, to a price determined by multiplying such Exercise Price by a fraction (i) the numerator of
which shall be the Closing Sale Price of the shares of Common Stock on the Trading Day immediately preceding such record date
minus the value of the Distribution (as determined in good faith by the Company’s Board of Directors) applicable to one
share of Common Stock, and (ii) the denominator of which shall be the Closing Sale Price of the shares of Common Stock on the
Trading Day immediately preceding such record date; and


 


(ii)
the number of Warrant Shares shall be increased to a number of shares equal to the number of shares of Common Stock
obtainable immediately prior to the close of business on the record date fixed for the determination of holders of shares of
Common Stock entitled to receive the Distribution multiplied by the reciprocal of the fraction set forth in the immediately
preceding clause (i); provided, however, that in the event that the Distribution is of shares of common stock of a company
(other than the Company) whose common stock is traded on a national securities exchange or a national automated quotation
system (“Other Shares of Common Stock”), then the Holder may elect to receive a warrant to purchase Other
Shares of Common Stock in lieu of an increase in the number of Warrant Shares, the terms of which shall be identical to those
of this Warrant, except that such warrant shall be exercisable into the number of shares of Other Shares of Common Stock that
would have been payable to the Holder pursuant to the Distribution had the Holder exercised this Warrant immediately prior to
such record date and with an aggregate exercise price equal to the product of the amount by which the exercise price of this
Warrant was decreased with respect to the Distribution pursuant to the terms of the immediately preceding clause (i) and the
number of Warrant Shares calculated in accordance with the first part of this clause (ii).


 




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3. FUNDAMENTAL
TRANSACTIONS. If, at any time while this Warrant is outstanding, (i) the Company effects any merger of the Company with
or into another entity and the Company is not the surviving entity (such surviving entity, the “Successor
Entity”), (ii) the Company effects any sale of all or substantially all of its assets in one or a series of related
transactions, (iii) any tender offer or exchange offer (whether by the Company or by another individual or entity, and
approved by the Company) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their
shares of Common Stock for other securities, cash or property and the holders of at least 50% of the Common Stock accept such
offer, or (iv) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to
which the Common Stock is effectively converted into or exchanged for other securities, cash or property (other than as a
result of a subdivision or combination of shares of Common Stock covered by Section 2(a) above) (in any such case, a
“Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the
right to receive the number of shares of Common Stock of the Successor Entity or of the Company and any additional
consideration (the “Alternate Consideration”) receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a holder of the number of shares of Common Stock for
which this Warrant is exercisable immediately prior to such event (disregarding any limitation on exercise contained herein
solely for the purpose of such determination). 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. To the extent necessary
to effectuate the foregoing provisions, any Successor Entity in such Fundamental Transaction shall issue to the Holder a new
warrant consistent with the foregoing provisions and evidencing the Holder’s right to exercise such warrant into
Alternate Consideration.


 


4. NON-CIRCUMVENTION.
The Company covenants and agrees that it will not, by amendment of its certificate of incorporation, bylaws or through any
reorganization, transfer of assets, consolidation, merger, scheme of arrangement, 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, and
will at all times in good faith carry out all the provisions of this Warrant and take all action as may be required to
protect the rights of the Holder. Without limiting the generality of the foregoing, the Company (i) shall not increase the
par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect,
(ii) shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue
fully paid and non-assessable shares of Common Stock upon the exercise of this Warrant, and (iii) shall, for so long as this
Warrant is outstanding, have authorized and reserved, free from preemptive rights, a sufficient number of shares of Common
Stock to provide for the exercise of the rights represented by this Warrant (without regard to any limitations on
exercise).


 




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5. WARRANT
HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically provided herein, this Warrant, in and of itself, shall
not entitle the Holder to any voting rights or other rights as a stockholder of the Company. In addition, nothing contained
in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of
this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by
creditors of the Company.


 


6. REISSUANCE.


 


(a) Lost,
Stolen or Mutilated Warrant. If this Warrant is lost, stolen, mutilated or destroyed, the Company will, on such terms as
to indemnity or otherwise as it may reasonably impose (which shall, in the case of a mutilated Warrant, include the surrender
thereof), issue a new Warrant of like denomination and tenor as this Warrant so lost, stolen, mutilated or
destroyed.


 


(b) Issuance
of New Warrants. Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such new
Warrant shall be of like tenor with this Warrant, and shall have an issuance date, as indicated on the face of such new
Warrant which is the same as the Issuance Date.


 


7. TRANSFER.


 


(a) Notice
of Transfer. The Holder agrees to give written notice to the Company before transferring this Warrant or transferring
any Warrant Shares of such Holder’s intention to do so, describing briefly the manner of any proposed transfer.
Promptly upon receiving such written notice, the Company shall present copies thereof to the Company’s counsel. If the
proposed transfer may be effected without registration or qualification (under any federal or state securities laws), the
Company, as promptly as practicable, shall notify the Holder thereof, whereupon the Holder shall be entitled to transfer this
Warrant or to dispose of Warrant Shares received upon the previous exercise of this Warrant, all in accordance with the terms
of the notice delivered by the Holder to the Company; provided, however, that an appropriate legend may be endorsed on this
Warrant or the certificates for such Warrant Shares respecting restrictions upon transfer thereof necessary or advisable in
the opinion of counsel and satisfactory to the Company to prevent further transfers which would be in violation of Section 5
of the Securities Act and applicable state securities laws; and provided further that the prospective transferee or purchaser
shall execute the Assignment of Warrant attached hereto as Exhibit B and such other documents and make such
representations, warranties, and agreements as may be required solely to comply with the exemptions relied upon by the
Company for the transfer or disposition of the Warrant or Warrant Shares.


 


(b)
If the proposed transfer or disposition of this Warrant or such Warrant Shares described in the written notice given pursuant
to this Section 7 may not be effected without registration or qualification of this Warrant or such Warrant Shares, the
Holder will limit its activities in respect to such transfer or disposition as are permitted by law.


 




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8. 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 date of transmission, if such notice or communication is
delivered via facsimile at or prior to 5:30 p.m. (Minneapolis time) on a Trading Day, (b) the next Trading Day after the date
of transmission, if such notice or communication is delivered via facsimile on a day that is not a Trading Day or later than
5:30 p.m. (Minneapolis time) on any Trading Day, (c) the third 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 in the Exercise Notice. The Company shall
provide the Holder with prompt written notice (i) immediately upon any adjustment of the Exercise Price, setting forth in
reasonable detail, the calculation of such adjustment and (ii) at least 20 days prior to the date on which the Company closes
its books or takes a record (A) with respect to any dividend or distribution upon the shares of Common Stock, (B) with
respect to any grants, issuances or sales of any stock or other securities directly or indirectly convertible into or
exercisable or exchangeable for shares of Common Stock or other property, pro rata to the holders of shares of Common Stock
or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in
each case that such information shall be made known to the public prior to or in conjunction with such notice being provided
to the Holder.


 


9. AMENDMENT
AND WAIVER. The terms of this Warrant may be amended or waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the Company and the Holder. In addition, the restrictions
set forth in Section 1(d) can be waived, as to a particular original purchaser of Preferred Stock and its affiliates,
pursuant to a writing signed and delivered by the Company and such original Purchaser prior to the execution and delivery of
this Warrant.


 


10. GOVERNING
LAW. This Warrant and all rights, obligations and liabilities hereunder shall be governed by, and construed in
accordance with, the internal laws of the State of Minnesota, without giving effect to the conflicts-of-law principles
thereof.


 


11. DISPUTE
RESOLUTION. A dispute as to the determination of the Exercise Price, the Closing Sale Price, or the arithmetic
calculation of the Warrant Shares, the Company or the Holder (as the case may be) shall submit the disputed determinations or
arithmetic calculations via facsimile (a) within two Business Days after receipt of the applicable notice giving rise to such
dispute to the Company or the Holder, as the case may be, or (b) if no notice gave rise to such dispute, at any time after
the Holder learned of the circumstances giving rise to such dispute. If the Holder and the Company are unable to agree upon
such determination or calculation of the Exercise Price, Closing Sale Price or the Warrant Shares within three Business Days
of such disputed determination or arithmetic calculation being submitted to the Company or the Holder, as the case may be,
then the Company shall, within two Business Days thereafter submit via facsimile (x) the disputed determination of the
Exercise Price or Closing Sale Price to an independent, reputable investment bank selected by the Company and approved by the
Holder or (y) the disputed arithmetic calculation of the Warrant Shares to the Company’s independent, outside
accountant. The Company shall cause at its expense the investment bank or the accountant, as the case may be, to perform the
determinations or calculations and notify the Company and the Holder of the results no later than ten Business Days from the
time it receives the disputed determinations or calculations. Such investment bank’s or accountant’s
determination or calculation, as the case may be, shall be binding upon all parties absent manifest error.


 




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12. ACCEPTANCE.
Receipt of this Warrant by the Holder shall constitute acceptance of and agreement to all of the terms and conditions
contained herein.


 


13. CERTAIN
DEFINITIONS. For purposes of this Warrant, the following terms shall have the following meanings:


 


(a)
“Bloomberg” means Bloomberg Financial Markets.


 


(b)
“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday
in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other
governmental action to close.


 


(c)
“Closing Sale Price” means, for any security as of any date, (i) the last closing trade price for such
security on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended
hours basis and does not designate the closing trade price, then the last trade price of such security prior to 4:00 p.m.,
New York time, as reported by Bloomberg, or (ii) if the foregoing does not apply, the last trade price of such security in
the over-the-counter market for such security as reported by Bloomberg, or (iii) if no last trade price is reported for such
security by Bloomberg, the average of the bid and ask prices of any market makers for such security as reported by the OTC
Markets. If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases,
the Closing Sale Price of such security on such date shall be the fair market value as mutually determined by the Company and
the Holder. All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination or
other similar transaction during the applicable calculation period.


 


(d)“Commission”
means the United States Securities and Exchange Commission.


 


(e)
“Common Stock” means the Company common stock, par value $0.0001 per share, and any other class of
securities into which such securities may hereafter be reclassified or changed.


 


(f)
“Common Stock Equivalents” means any securities of the Company that would entitle the holder thereof
to acquire at any time Common Stock, including without limitation any debt, preferred stock, rights, options, warrants 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.


 


(g)“Exchange Act” means the Securities Exchange Act of 1934, and the rules and regulations thereunder.


 


(h)
“Exempt Issuance” means the issuance of (i) shares of Common Stock or options to employees, officers, directors
or consultants of the Company pursuant to any stock or option plan duly adopted by a majority of the non-employee members of the
Board of Directors of the Company or a majority of the members of a committee of non-employee directors established for such purpose
(for the avoidance of doubt, including the Company’s 2014 Associate Stock Purchase Plan intended to qualify under Section
422 of the Internal Revenue Code of 1986), (ii) any Common Stock upon the exercise or conversion of securities that are issued
and outstanding as of the date hereof, (iii) securities issued pursuant to acquisitions or strategic transactions approved by
a majority of the disinterested directors of the Company, (iv) shares of Common Stock issued in connection with regularly scheduled
dividend payments on the Series C Preferred Stock, and (v) shares of Common Stock issued pursuant to any loan or leasing arrangement,
real property leasing arrangement, or debt financing from a bank approved by the Board of Directors of the Company.


 




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(i)
“Principal Market” means the primary national securities exchange on which the Common Stock is then
traded.


 


(j)“Securities
Act” means the Securities Act of 1933, and the rules and regulations thereunder.


 


(k)
“Trading Day” means (i) any day on which the Common Stock is listed or quoted and traded on its Principal
Market, (ii) if the Common Stock is not then listed or quoted and traded on any national securities exchange, then a day on
which trading occurs on any over-the-counter markets, or (iii) if trading does not occur on the over-the-counter markets, any
Business Day.





 


*
 *  *  *  *  *  *


 




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In
Witness Whereof, the Company has caused this
Warrant to be duly executed as of the Issuance Date.


 


	 	CACHET
    FINANCIAL SOLUTIONS, INC.
	 	 
	 	/s/
    Bryan Meier
	 	Bryan
    Meier
	 	Executive
    Vice President, Chief Financial Officer


 




    	 



    	 



    

 


EXHIBIT
A


 


EXERCISE
NOTICE


 


(To
be executed by the registered holder to exercise this Warrant to Purchase Common Stock)


 


The
Undersigned holder hereby exercises the right
to purchase _________________ of the shares of Common Stock (“Warrant Shares”) of Cachet Financial Solutions, Inc.,
a Delaware corporation (the “Company”), evidenced by the attached copy of the Warrant to Purchase Common Stock (the
“Warrant”). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in
the Warrant.


 


	1.	Form
                                         of Exercise Price. The Holder intends that payment of the Exercise Price shall be
                                         made as (check one):



 


[  ]
a cash exercise with respect to _________________ Warrant Shares; and/or


 


[  ]
a “Cashless Exercise” with respect to _______________ Warrant Shares.


 


	2.	Payment
                                         of Exercise Price. In the event that the holder has elected a cash exercise with
                                         respect to some or all of the Warrant Shares to be issued pursuant hereto, the holder
                                         shall pay the Aggregate Exercise Price in the sum of $___________________ to the Company
                                         in accordance with the terms of the Warrant.



 


	3.	Delivery
                                         of Warrant Shares. The Company shall deliver to the holder __________________ Warrant
                                         Shares in accordance with the terms of the Warrant.



 


Date:  _______________________




 


	 	 	 
	 	 	(Print
Name of Registered Holder) 
	 	 	 	 
	 	 	By:	 
	 	 	Name:	 
	 	 	Title:
    	 
	 	 	Address:	 
	 	 	 


 




    	 



    	 



    

 


EXHIBIT
B


 


ASSIGNMENT
OF WARRANT


 


(To
be signed only upon authorized transfer of the Warrant)


 


 


For
Value Received, the undersigned hereby sells,
assigns, and transfers unto ____________________ the right to purchase _______________ shares of common stock of Cachet Financial
Solutions, Inc., to which the within Warrant to Purchase Common Stock relates and appoints ____________________, as attorney-in-fact,
to transfer said right on the books of Cachet Financial Solutions, Inc. with full power of substitution and re-substitution in
the premises. By accepting such transfer, the transferee has agreed to be bound in all respects by the terms and conditions of
the within Warrant.


 


Dated:
__________________


 


	 	 
	 	(Signature)
*
	 	 
	 	(Name)

	 	 
	 	(Address)
	 	 
	 	(Social
    Security or Tax Identification No.) 


 


*
The signature on this Assignment of Warrant must correspond to the name as written upon the face of the Warrant to Purchase Common
Stock in every particular without alteration or enlargement or any change whatsoever. When signing on behalf of a corporation,
partnership, trust or other entity, please indicate your position(s) and title(s) with such entity.