EXHIBIT 4.4
MODIFICATION AGREEMENT
THIS MODIFICATION AGREEMENT made as of the 28th day of August, 2000 by
and among CHEQUEMATE INTERNATIONAL, INC., d/b/a C-3D DIGITAL, INC., a Utah
corporation (the "COMPANY"), and CROOKS HOLLOW ROAD, LLC, a Cayman Islands
limited liability company ("Purchaser").
W I T N E S S E T H:
WHEREAS, the parties hereto have previously executed and delivered the
Transaction Documents, as more particularly defined in the Securities Purchase
Agreement dated May 10, 2000 (a copy of which has been filed with the Securities
and Exchange Commission as an Exhibit to the Company's Form 8-K dated May 26,
2000; and
WHEREAS, the Purchaser desires to modify certain terms and provisions
of the Securities Purchase Agreement; and
WHEREAS, the Company has determined that certain of the representations
made by the Company and set forth in the transaction documents were
inadvertently in error and did not fully set forth, and/or incorrectly set forth
certain facts about the Company and its outstanding contractual obligations,
including specifically, but not by way of limitation, representations as to the
number of options or warrants to acquire shares outstanding, the nature and
extent of contractual obligations to register shares of stock in the Company
either outstanding or which the Company is contractually obligated to issue,
under the Securities Act of 1933 (hereinafter collectively referred to as the
"inaccuracies"); and
WHEREAS, the Purchaser is willing to waive its rights with respect to
and as a result of the inaccuracies, in exchange for the Company's agreement to
the modifications to the transaction documents as set forth in this modification
agreement;
NOW , THEREFORE, it is agreed by and between the parties as follows:
1. Section 1 of the Securities Purchase Agreement is hereby
amended to read as follows:
"1. PURCHASE OF COMMON STOCK. Subject to the terms and
conditions of this Agreement, the Company agrees to
issue and sell, and Purchaser agrees to acquire,
seven hundred eighty-eight thousand seven hundred
thirty-two (788,732) fully paid and non-assessable
shares (the "INITIAL SHARES") at $3.55 per share, in
exchange for Purchaser's payment to
the Company of aggregate consideration of Two
Million Eight Hundred Thousand Dollars
($2,800,000) (the "PURCHASE PRICE")."
2. Section 2.2(c) of the Securities Purchase Agreement is hereby
amended to read as follows:
"(c) "INITIAL CLOSING PRICE" shall mean 80% of the
average Closing Bid Price for the ten (10)
consecutive Business Days immediately prior to the
date of the Initial Closing (i.e. $3.55).
3. Section 2.3 of the Securities Purchase Agreement is hereby
amended to read as follows:
"2.3 FIRST REPRICING PERIOD. The "FIRST REPRICING
PERIOD" shall commence on the later of (a) the day
that is sixty (60) days after the Closing Date, or
(b) the Effective Date, and end twenty (20) trading
days after such date. If the lowest average Closing
Bid Price for any five (5) Business Days (not
necessarily consecutive) during the First Repricing
Period (the "FIRST REPRICING PRICE"), is not equal to
or greater than 120% of the Initial Closing Price,
then one-third (1/3) of the Initial Shares shall be
repriced (the "FIRST REPRICED SHARES"). The Company
shall issue to Purchaser the number of additional
Shares as determined according to the following
formula:
((1.20 x Initial Closing Price) - First Repricing Price) x (# of the First
Repriced Shares) / First Repricing Price.
4. The number of Warrants to be issued pursuant to the Securities
Purchase Agreement, as modified by this Modification Agreement is 157,746, and
the Warrants initially issued and the additional Warrants issuable pursuant to
this Modification Agreement, shall be deemed to be an exercise price of $5.32.
5. Paragraph 5(b) of the Registration Rights Agreement is hereby
amended to read as follows:
"(b) The Company shall not on or after the date
of this Agreement, enter into any agreement
with respect to its securities that is
inconsistent with the rights granted to
Investor in this Agreement or otherwise
conflicts with the provisions hereof. Except
as otherwise provided for in SCHEDULE 5(b),
the Company has not previously entered into
any agreement granting any registration
rights with respect to any of its securities
to any person. Except as otherwise provided
for in this SECTION 5, and without limiting
the generality of the foregoing, without the
written consent of Investor, the Company
shall not grant to any person the right to
request the Company to
Register any securities of the Company
under the Securities Act unless the
rights so granted are subject in all
respects to the prior rights in full of
Investor set forth herein, and are not
otherwise in conflict or inconsistent
with the provisions of this Agreement and
the other Transaction Documents. It shall
be a condition of the inclusion of each
of the existing registration rights set
forth in items numbered 1 and 2 on
Schedule 5(b) in the Registration
Statement, that the Company use its best
efforts to cause the holder of such
securities to execute an agreement in
form acceptable to counsel for the
Investor, agreeing not to publicly sell
or otherwise transfer any of their
registrable securities until thirty (30)
days after the conclusion of the Final
Repricing Period pursuant to the
Securities Purchase Agreement."
6. Notwithstanding PARA 8.3 and 8.4 of the Securities Purchase
Agreement, the Company is granted the right to sell to one accredited
investor up to $15,000,000 of Common Stock during the next eighteen (18)
months at a price equal to or greater than 85% of the Market Price of the
Common Stock.
7. In consideration for the Company's execution of the Modification
Agreement, Purchaser hereby waives its rights with respect to, and as a result
of, the inaccuracies.
8. Except as specifically set forth herein, nothing contained herein
shall in any way be deemed to effect or modify the warranties, rights and
obligations of the respective parties as set forth in the Transaction Documents.
9. As hereby modified and amended, the Transaction Documents remain in
full force and effect.
10. The Company undertakes, within ten (10) Business Days, to file any
necessary amendment to the Registration Statement currently filed with the
Securities and Exchange Commission in respect of the resale of the Shares.
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IN WITNESS WHEREOF, the parties have executed this agreement as of the
date first above written.
CHEQUEMATE INTERNATIONAL, INC.,
d/b/a C-3D DIGITAL, INC.
By: ________________________________
Name: ________________________
Title: _________________________
CROOKS HOLLOW ROAD, LLC
By: _________________________________
Name: _________________________
Title: _________________________
SCHEDULE 5(b)
These are all the agreements which existed as of the execution of the
transaction documents in May, and all the agreement which exist today, whereby
the Company is contractually obligated to register shares of its stock.
Crooks Hollow Road, LLC, by the modification agreement to which this is
attached, consents only to the registrations described in the sections below
numbered 1, 2, and 3.
1. Issuance to United Business Systems (for purchase of hotel
pay-per-view manufacturer & patents) of $940,000 worth of stock, at the market,
to be registered. Recently renegotiated to 200,000 shares to be registered, and
440,000 restricted shares.
2. Xxxxx Xxxxxxxxx / CapitalPlus and Cinemaworks - $122,300 worth of
stock, recently agreed to be 61,150 shares, to be registered, for Xxxxx
Xxxxxxxxx, and $236,000 worth of stock, recently agreed to be 55,000 registered
shares, and up to 40,000 restricted shares, for Cinema Internet Networks, Inc.,
issued as part of a transaction to acquire service rights over 2650
free-to-guest rooms (less those rooms in hotels in Canada) in various hotels.
3. Duchess Capital Partners - 83,333 shares to be registered, for
investment banking services.
4. Convertible line of credit promissory notes. $3,000,000 in debt is
to be converted into 1,300,000 shares of common stock at $1.00 per share, and
the other $1,700,000 to be converted to preferred stock, not convertible, after
shareholder approval of amendment to Articles to allow issuance of preferred
stock. The common stock has piggyback registration rights.
5. Coast Communications (hotel movie business). Agreement to issue up
to 230,500 shares, with registration rights, in satisfaction of $461,000 in
debt.
6. Trimark Pictures - 100,000 shares, to be issued as registered
shares, as part of a contract for motion picture digitization and conversion
from 2D to 3D.
7. Xxxxxxxx, Xxxxx - 62,500 shares to be issued in settlement of claim
for breach of contract, with shares to be registered.
8. i-O Display Systems, LLC - 105,263 shares (contract for $500,000
worth of viewing systems and 3D movies; shares to be issued and registered on an
S-3, and valued at $4.75) This is the company that makes the preferred wireless
shutter glasses, and also owns rights to a few low budget 3D movies.
9. Full Moon Universe - 80,000 worth of common stock to be issued at
the market. (balance owed under last Summer's license fee for "Creeps", a 3D
movie.)
10. Xxxxx X'Xxxxx / Optimum Source - 2,728 shares with registration
rights. (fee due
from marketing / promotional services).
11. Xxxxxx Consulting Group - 25,000 shares with registration rights.
(amended fee due for consulting services).
12. Academy Entertainment - $250,000 worth of restricted stock
w/piggyback registration rights. (contract for provision of public domain motion
pictures, for conversion to 3D).
13. Hotel Movie Express (King Farms) - 31,250 (post-split) shares with
registration rights.
14. Issuance of S-8 stock under the Company's current Consultant Stock
Compensation Plan, as per past issuances and future issuances under the plan.
15. Stock options outstanding to ten key employees, plus directors and
former employees, for 1,534,334 shares, of which options for 910,000 shares will
require shareholder approval, together with registration rights.
