Exhibit 10.4
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Warrant to Purchase
WA-1 **24,753**
Shares of Common Stock
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND NEITHER THIS WARRANT NOR SUCH SHARES MAY BE SOLD, ENCUMBERED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENT, AND, IF AN EXEMPTION
SHALL BE APPLICABLE, THE HOLDER SHALL HAVE DELIVERED AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
Void after 5:00 P.M. New York City time on December 21, 2001
COMMON STOCK PURCHASE WARRANT
OF
CHEQUEMATE INTERNATIONAL, INC.
This is to certify that, FOR VALUE RECEIVED, Augustine Fund L.P. or its
registered assigns ("Holder"), is entitled to purchase, on the terms and subject
to the provisions of this Warrant, from Chequemate International, Inc. a Utah
corporation (the "Company"), at an exercise price per share of three and 64/100
dollars ($3.64), twenty-four thousand, seven hundred fifty-three (24,753) shares
of $0.0001 par value common stock ("Common Stock"), of the Company at any time
during the period (the "Exercise Period"), commencing on the date of issuance of
this Warrant and ending at 5:00 P.M. New York City time, on December 21, 2001;
provided, however, that if such date is a day on which banking institutions in
the State of New York are authorized by law to close, then on the next
succeeding day which shall not be such a day. The number of shares of Common
Stock to be issued upon the exercise of this Warrant and the price to be paid
for a share of Common Stock may be adjusted from time to time in the manner set
forth in this Warrant. The shares of Common Stock deliverable upon such
exercise, and as adjusted from time to time, are hereinafter sometimes referred
to as "Warrant Shares," and the exercise price for the purchase of a share of
Common Stock pursuant to this Warrant, as the same may be adjusted from time to
time is hereinafter sometimes referred to as the "Exercise Price." Reference in
the Warrant to the "Warrants" shall mean any or all of the warrants designated
as Common Stock Purchase Warrants by the Company. The Warrants were issued
pursuant to a subscription agreement dated December 21, 1998 (the "Subscription
Agreement"), between the Company and the initial holder of the Warrant.
h. EXERCISE OF WARRANT. This Warrant may be
exercised in whole at any time or in part from time
to time during the Exercise Period by presentation
and surrender of this Warrant to the Company at its
principal office, or at the office of its stock
transfer agent, if any, with the Purchase Form
annexed hereto duly executed and accompanied by
payment of the Exercise Price for the number of
shares of Common Stock specified in such form.
Payment of the Exercise Price may be made either by
check (subject to collection) in the amount of the
Exercise Price or by delivery of such number of
shares of Common Stock as has a current value,
determined in the manner provided for in Paragraph
(a)(2) of this Warrant (with the current value being
based on the market price of the Common Stock on the
date the Warrant, accompanied by the shares of Common
Stock delivered in respect of such exercise, is
received by the Company or its transfer agent), equal
to the Exercise Price. If this Warrant should be
exercised in part only, whether pursuant to this
Paragraph (a)(1) or pursuant to Paragraph (a)(2) of
this Warrant, the Company shall, upon surrender of
this Warrant for cancellation, execute and deliver a
new Warrant evidencing the rights of the Holder
hereof to purchase the balance of the shares of
Common Stock purchasable hereunder. Upon receipt by
the Company of this Warrant at its office, or by the
stock transfer agent of the Company at its office, in
proper form for exercise, the Holder shall be deemed
to be the holder of record of the shares of Common
Stock issuable upon such exercise, notwithstanding
that the stock transfer books of the Company shall
then be closed or that certificates representing such
shares of Common Stock shall not then be actually
delivered to the Holder.
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i. RESERVATION OF SHARES. The Company hereby
agrees that at all times there shall be reserved for
issuance and/or delivery upon exercise of this
Warrant such number of shares of Common Stock as
shall be required for issuance and delivery upon
exercise of this Warrant and that it shall not,
without the prior approval of the holders of a
majority of the Warrants then outstanding, increase
the par value of the Common Stock.
j. FRACTIONAL SHARES. No fractional shares or
script representing fractional shares shall be issued
upon the exercise of this Warrant. With respect to
any fraction of a share called for upon any exercise
of this Warrant, the Company shall pay to the Holder
an amount in cash equal to such fraction multiplied
by the current market value of such fractional share.
k. EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF
WARRANT. This Warrant is exchangeable, without
expense, at the option of the Holder, upon
presentation and surrender hereof to the Company or
at the office of its stock transfer agent, if any,
for other Warrants of different denominations
entitling the holder thereof to purchase in the
aggregate the same number of shares of Common Stock
purchasable hereunder. Subject to the provisions of
Paragraph (k) of this Warrant, upon surrender of this
Warrant to the Company or at the office of its stock
transfer agent, if any, with the Assignment Form
annexed hereto duly executed and funds sufficient to
pay any transfer tax, the Company shall, without
charge, execute and deliver a new Warrant in the name
of the assignee named in such instrument of
assignment and this Warrant shall promptly be
canceled. This Warrant may be divided or combined
with other Warrants which carry the same rights upon
presentation hereof at the office of the Company or
at the office of its stock transfer agent, if any,
together with a written notice specifying the names
and denominations in which new Warrants are to be
issued and signed by the Holder hereof. The term
"Warrant" as used herein includes any Warrants into
which this Warrant may be divided or exchanged. Upon
receipt by the Company of evidence satisfactory to it
of the loss, theft, destruction or mutilation of this
Warrant, and (in the case of loss, theft or
destruction) of reasonably satisfactory
indemnification, and upon surrender and cancellation
of this Warrant, if mutilated, the Company will
execute and deliver a new Warrant of like tenor. Any
such new Warrant executed and delivered shall
constitute an additional contractual obligation on
the part of the Company, whether or not this Warrant
so lost, stolen, destroyed, or mutilated shall be at
any time enforceable by anyone.
l. RIGHTS OF THE HOLDER. The Holder shall not,
by virtue of this Warrant, be entitled to any rights
of a stockholder in the Company, either at law or
equity, and the rights of the Holder are limited to
those expressed in the Warrant and are not
enforceable against the Company except to the extent
set forth in this Warrant.
m. ANTI-DILUTION PROVISIONS. The Exercise Price
in effect at any time and the number and kind of
securities purchasable upon exercise of each Warrant
shall be subject to adjustment as follows:
i. In case the Company shall, subsequent to
December 21, 1998, (A) pay a dividend or make a
distribution on its shares of Common Stock in shares
of Common Stock (B) subdivide or reclassify its
outstanding Common Stock into a greater number of
shares, or (C) combine or reclassify its outstanding
Common Stock into a smaller number of shares or
otherwise effect a reverse split, the Exercise Price
in effect at the time of the record date for such
dividend or distribution or of the effective date of
such subdivision, combination or reclassification
shall be proportionately adjusted so that the Holder
of this Warrant exercised after such date shall be
entitled to receive the aggregate number and kind of
shares which, if this Warrant had been exercised
immediately prior to such time, he would have owned
upon such exercise and been entitled to receive upon
such dividend, subdivision, combination or
reclassification. Such adjustment shall be made
successively whenever any event listed in this
Paragraph (f)(1) shall occur.
ii. In case the Company shall, subsequent to December 21,
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1998, issue rights or warrants to all holders of its
Common Stock entitling them to subscribe for or
purchase shares of Common Stock (or securities
convertible into Common Stock) at a price (or having
a conversion price per share) less than the current
market price of the Common Stock (as defined in
Paragraph (f)(5) of this Warrant) on the record date
mentioned below, the Exercise Price shall be adjusted
so that the same shall equal the price determined by
multiplying the Exercise Price in effect immediately
prior to the date of such issuance by a fraction, of
which the numerator shall be the number of shares of
Common Stock outstanding on the record date mentioned
below plus the number of shares determined by
multiplying the price or the conversion price at
which additional shares of Common Stock are offered
by the number of shares of Common Stock being offered
by the number of shares being issued, including
shares being issued upon conversion of any
convertible securities, and dividing the result so
obtained by the current market price of the Common
Stock, and of which the denominator shall be the
number of shares of Common Stock outstanding on such
record date plus the number of additional shares of
Common Stock offered for subscription or purchased
(or into which the convertible securities so offered
are convertible). Such adjustment shall be made
successively whenever such rights or warrants are
issued and shall become effective immediately after
the record date for the determination of stockholders
entitled to receive such rights or warrants; and to
the extent that shares of Common Stock or securities
convertible into Common Stock are not delivered after
the expiration of such rights or warrants, the
Exercise Price shall be readjusted to the Exercise
Price which would then be in effect had the
adjustments made upon the issuance of such rights or
warrants been made upon the basis of delivery of only
the number of shares of Common Stock (or securities
convertible into Common Stock) actually delivered.
iii. In case the Company shall, subsequent to
December 21, 1998, distribute to all holders of
Common Stock evidences of its indebtedness or assets
(excluding cash dividends or distributions paid out
of current earnings and dividends or distributions
referred to in Paragraph (f)(1) of this Warrant) or
subscription rights or warrants (excluding those
referred to in Paragraph (f)(2) of this Warrant),
then in each such case the Exercise Price in effect
thereafter shall be determined by multiplying the
Exercise Price in effect immediately prior thereto by
a fraction, of which the numerator shall be the total
number of shares of Common Stock outstanding
multiplied by the current market price per share of
Common Stock (as defined in Paragraph (f)(5) of this
Warrant), less the fair market value (as determined
by the Company's Board of Directors) of said assets
or evidences of indebtedness so distributed or of
such rights or warrants, and of which the denominator
shall be the total number of shares of Common Stock
outstanding multiplied by such current market price
per share of Common Stock. Such adjustment shall be
made successively whenever such a record date is
fixed. Such adjustment shall be made whenever any
such distribution is made and shall become effective
immediately after the record date for the
determination of stockholders entitled to receive
such distribution.
iv. Whenever the Exercise Price payable upon
exercise of each Warrant is adjusted pursuant to
Paragraphs (f)(1), (2) or (3) of this Warrant, the
number of shares of Common Stock purchasable upon
exercise of each Warrant shall simultaneously be
adjusted by multiplying the number of shares of
Common Stock issuable upon exercise of each Warrant
in effect on the date thereof by the Exercise Price
in effect on the date thereof and dividing the
product so obtained by the Exercise Price, as
adjusted. In no event shall the Exercise Price per
share be less than the par value per share, and, if
any adjustment made pursuant to Paragraph (f)(1), (2)
or (3) would result in an exercise price of less than
the par value per share, then, in such event, the
Exercise Price per share shall be the par value per
share. The Company agrees not to increase the par
value of the Common Stock other than in connection
with a reverse split or combination or shares or
other recapitalization, in which event any such
increase shall not be greater than that which would
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result from the application of the adjustments
provided in Paragraph (f)(1) of this Warrant to the
par value.
v. For the purpose of any computation under
Paragraphs (f)(2) and (3) of this Warrant, the
current market price per share of Common Stock at any
date shall be deemed to be the average of the daily
closing prices for thirty (30) consecutive trading
days commencing forty five (45) trading days before
such date. The closing price for each day shall be
the reported last sale price regular way or, in case
no such reported sale takes place on such day, the
average of the reported last bid and asked prices
regular way, in either case on the principal national
securities exchange on which the Common Stock is
admitted to trading or listed or on Nasdaq, or if not
listed or admitted to trading on such exchange or
such market, the average of the reported highest bid
and reported lowest asked prices as reported by
Nasdaq, the National Quotation Bureau, Inc. or other
similar organization if Nasdaq is no longer reporting
such information, or if not so available, the fair
market price as determined by the Board of Directors.
vi. No adjustment in the Exercise Price shall be
required unless such adjustment would require an
increase or decrease of at least one cent ($0.01) in
such price; provided, however, that any adjustments
which by reason of this Paragraph (f)(6) are not
required to be made shall be carried forward and
taken into account in any subsequent adjustment. All
calculations under this Paragraph (f) shall be made
to the nearest cent or to the nearest one-hundredth
of a share, as the case may be. Anything in this
Paragraph (f) to the contrary notwithstanding, the
Company shall be entitled, but shall not be required,
to make such changes in the Exercise Price, in
addition to those required by this Paragraph (f), as
it in its discretion shall determine to be advisable
in order that any dividend or distribution in shares
of Common Stock, subdivision, reclassification or
combination of Common Stock, issuance of warrants to
purchase Common Stock or distribution of evidences of
indebtedness or other assets (excluding cash
dividends) referred to hereinabove in this Paragraph
(f) hereafter made by the Company to the holders of
its Common Stock shall not result in any tax to the
holders of its Common Stock or securities convertible
into Common Stock.
vii. The Company may retain a firm of independent
public accountants of recognized standing selected by
the Board of Directors (who may be the regular
accountants engaged by the Company) to make any
computation required by this Paragraph (f), and a
certificate signed by such firm shall be conclusive
evidence of the correctness of such adjustment.
viii. In the event that at any time, as a result
of an adjustment made pursuant to Paragraph (f)(1) of
this Warrant, the Holder of any Warrant thereafter
shall become entitled to receive any shares of the
Company, other than Common Stock, thereafter the
number of such other shares so receivable upon
exercise of any Warrant shall be subject to
adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions
with respect to the Common Stock contained in
Paragraphs (f)(1) to (6), inclusive, of this Warrant.
ix. Irrespective of any adjustments in the
Exercise Price or the number or kind of shares
purchasable upon exercise of Warrants, Warrants
theretofore or thereafter issued may continue to
express the same price and number and kind of shares
as are stated in this and similar Warrants initially
issued by the Company.
n. OFFICER'S CERTIFICATE. Whenever the Exercise Price
shall be adjusted as required by the provisions of Paragraph
(f) of this Warrant, the Company shall forthwith file in the
custody of its Secretary or an Assistant Secretary at its
principal office and with its stock transfer agent, if any, an
officer's certificate showing the adjusted Exercise Price and
the adjusted number of shares of Common Stock issuable upon
exercise of each Warrant, determined as herein provided,
setting forth in reasonable detail the facts requiring such
adjustment, including a statement of the number of additional
shares of Common Stock, if any, and such other facts as shall
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be necessary to show the reason for and the manner of
computing such adjustment. Each such officer's certificate
shall be made available at all reasonable times for inspection
by the Holder, and the Company shall, forthwith after each
such adjustment, mail, by first class mail, a copy of such
certificate to the Holder at the Holder's address set forth in
the Company's Warrant Register.
o. NOTICES TO WARRANT HOLDERS. So long as this Warrant
shall be outstanding, (1) if the Company shall pay any
dividend or make any distribution upon Common Stock (other
than a regular cash dividend payable out of retained earnings)
or (2) if the Company shall offer to all holders of Common
Stock for subscription or purchase by them any share of any
class or any other rights or (3) if any capital reorganization
of the Company, reclassification of the capital stock of the
Company, consolidation or merger of the Company with or into
another corporation, sale, lease or transfer of all or
substantially all of the property and assets of the Company to
another corporation, or voluntary or involuntary dissolution,
liquidation or winding up of the Company shall be effected,
then in any such case, the Company shall cause to be mailed by
certified mail, return receipt requested, to the Holder, at
least fifteen days prior to the date specified in clauses (i)
and (ii), as the case may be, of this Paragraph (h) a notice
containing a brief description of the proposed action and
stating the date on which (i) a record is to be taken for the
purpose of such dividend, distribution or rights, or (ii) such
reclassification, reorganization, consolidation, merger,
conveyance, lease, dissolution, liquidation or winding up is
to take place and the date, if any is to be fixed, as of which
the holders of Common Stock or other securities shall receive
cash or other property deliverable upon such reclassification,
reorganization, consolidation, merger, conveyance,
dissolution, liquidation or winding up.
p. RECLASSIFICATION, REORGANIZATION OR MERGER. In case
of any reclassification, capital reorganization or other
change of outstanding shares of Common Stock of the Company,
or in case of any consolidation or merger of the Company with
or into another corporation (other than a merger in which the
Company is the continuing corporation and which does not
result in any reclassification, capital reorganization or
other change of outstanding shares of Common Stock of the
class issuable upon exercise of this Warrant) or in case of
any sale, lease or conveyance to another corporation of the
property of the Company as an entirety, the Company shall, as
a condition precedent to such transaction, cause effective
provisions to be made so that the Holder shall have the right
thereafter by exercising this Warrant, to purchase the kind
and amount of shares of stock and other securities and
property receivable upon such reclassification, capital
reorganization and other change, consolidation, merger, sale
or conveyance by a holder of the number of shares of Common
Stock which might have been purchased upon exercise of this
Warrant immediately prior to such reclassification, change,
consolidation, merger, sale or conveyance. Any such provision
shall include provision for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments
provided for in this Warrant. The foregoing provisions of this
Paragraph (i) shall similarly apply to successive
reclassifications, capital reorganizations and changes of
shares of Common Stock and to successive consolidations,
mergers, sales or conveyances.
q. REGISTRATION UNDER THE SECURITIES ACT OF 1933.
i. The holder of this Warrant and/or the
Warrant Shares shall be entitled to the benefits of
the registration provisions of the Subscription
Agreement with the same effect as if such rights were
set forth verbatim in this Warrant.
ii. In the event that, for any reason and for
any period, the Warrant Shares shall not be
registered pursuant to a current and effective
registration statement or such registration statement
shall cease to be current, the last day of the
exercise period shall be extended by two (2) days for
each day that the registration statement shall not be
available to the holder of this Warrant or the
Warrant Shares.
r. TRANSFER TO COMPLY WITH THE SECURITIES ACT. This
Warrant or the Warrant Shares or any other security issued or
issuable upon exercise of this Warrant may not be sold or
otherwise disposed of except as follows:
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i. To a person who, in the opinion of counsel
for the Company, is a person to whom this Warrant or
Warrant Shares may legally be transferred without
registration and without the delivery of a current
prospectus under the Securities Act with respect
thereto and then only against receipt of an agreement
of such person to comply with the provisions of this
Paragraph (k) with respect to any resale or other
disposition of such securities which agreement shall
be satisfactory in form and substance to the Company
and its counsel; or
ii. to any person upon delivery of a prospectus
then meeting the requirements of the Securities Act
relating to such securities and the offering thereof
for such sale or disposition.
Dated as of December 21, 1998
CHEQUEMATE INTERNATIONAL, INC.
By: /s/ Xxxxxxx Xxxx
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Name: Xxxxxxx Xxxx
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Its: Chief Executive Officer
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PURCHASE FORM
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Dated:
The undersigned hereby irrevocably exercises this Warrant to the
extent of purchasing shares of Common Stock and hereby makes
payment of $ in payment of the Exercise Price therefor.
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INSTRUCTIONS FOR REGISTRATION OF STOCK
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Name
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(Please typewrite or print in block letters)
Signature
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Social Security or Employer Identification No.
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ASSIGNMENT FORM
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FOR VALUE RECEIVED, hereby sells, assigns and transfer unto
Name
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(Please typewrite or print in block letters)
Address
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Social Security or Employer Identification No.
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The right to purchase Common Stock represented by this Warrant to the extent of
shares as to which such right is exercisable and does hereby irrevocably
constitute and appoint attorney to transfer the same on the books of the Company
with full power of substitution.
Signature
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Signature Medallion Guaranteed:
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