Exhibit 10.3

 

THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT
AND THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THIS WARRANT OR ANY SHARES ISSUABLE THEREUNDER
UNDER SUCH ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO MYECHECK, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED.

 

MYECHECK, INC.

 

WARRANT #1 TO PURCHASE SHARES OF COMMON STOCK

 

1.                  Issuance. For good and valuable consideration as set forth
in the Purchase Agreement (as defined below), including without limitation the
Initial Cash Purchase Price (as defined in the Purchase Agreement), the receipt
and sufficiency of which are hereby acknowledged by My ECheck, Inc., a Wyoming
corporation (“Company”); Typenex Co-Investment, LLC, a Utah limited liability
company, its successors and/or registered assigns (“Investor”), is hereby
granted the right to purchase at any time on or after the Issue Date (as defined
below) until the date which is the last calendar day of the month in which the
fifth anniversary of the Issue Date occurs (the “Expiration Date”), a number of
fully paid and non-assessable shares (the “Warrant Shares”) of Company’s common
stock, par value $0.00001 per share (the “Common Stock”), equal to $140,000.00
divided by the Market Price (as of the Issue Date), as such number may be
adjusted from time to time pursuant to the terms and conditions of this Warrant
#1 to Purchase Shares of Common Stock (this “Warrant”).

 

This Warrant is being issued pursuant to the terms of that certain Securities
Purchase Agreement dated October 29, 2015, to which Company and Investor are
parties (as the same may be amended from time to time, the “Purchase
Agreement”). Certain capitalized terms used herein are defined in Attachment 1
attached hereto and incorporated herein by this reference. Moreover, to the
extent any defined terms herein are defined in any other Transaction Document
(as so noted herein), such defined term shall remain applicable in this Warrant
even if the other Transaction Document has been released, satisfied, or is
otherwise cancelled. This Warrant was issued to Investor on October 29, 2015
(the “Issue Date”). For the avoidance of doubt, the Initial Cash Purchase Price
constitutes payment in full for this Warrant.

 

2.                  Exercise of Warrant.

 

2.1.            General.

 

(a)                This Warrant is exercisable in whole or in part at any time
and from time to time commencing on the Issue Date and ending on the Expiration
Date. Such exercise shall be effectuated by submitting to Company (either by
delivery to Company or by email or facsimile transmission) a completed and
signed Notice of Exercise substantially in the form attached to this Warrant as
Exhibit A (the “Notice of Exercise”). The date a Notice of Exercise is either
faxed, emailed or delivered to Company shall be the “Exercise Date,” provided
that, if such exercise represents the full exercise of the outstanding balance
of this Warrant, Investor shall tender this Warrant to Company within five (5)
Trading Days thereafter, but only if the Delivery Shares to be delivered
pursuant to the Notice of Exercise have been delivered to Investor as of such
date. The Notice of Exercise shall be executed by Investor and shall indicate
(i) the number of Delivery Shares to be issued pursuant to such exercise, and
(ii) if applicable (as provided below), whether the exercise is a cashless
exercise.

 

 1 

 

 

(b)               Notwithstanding any other provision contained herein or in any
other Transaction Document to the contrary, at any time prior to the Expiration
Date, Investor may elect a “cashless” exercise of this Warrant for any Warrant
Shares whereby Investor shall be entitled to receive a number of shares of
Common Stock equal to (i) the excess of the Current Market Value over the
aggregate Exercise Price of the Exercise Shares, divided by (ii) the Adjusted
Price.

 

(c)                If the Notice of Exercise form elects a “cash” exercise, the
Exercise Price per share of Common Stock for the Delivery Shares shall be
payable, at the election of Investor, in cash or by certified or official bank
check or by wire transfer in accordance with instructions provided by Company at
the request of Investor.

 

(d)               Upon the appropriate payment to Company, if any, of the
Exercise Price for the Delivery Shares, Company shall promptly, but in no case
later than the date that is three (3) Trading Days following the date the
Exercise Price is paid to Company (or with respect to a “cashless exercise,” the
date that is three (3) Trading Days following the Exercise Date) (the “Delivery
Date”), deliver or cause Company’s Transfer Agent to deliver the applicable
Delivery Shares electronically via the DWAC system to the account designated by
Investor on the Notice of Exercise. If for any reason Company is not able to so
deliver the Delivery Shares via the DWAC system, notwithstanding its best
efforts to do so, such shall constitute a breach of this Warrant, and Company
shall instead, on or before the applicable date set forth above in this
subsection, issue and deliver to Investor or its broker (as designated in the
Notice of Exercise), via reputable overnight courier, a certificate, registered
in the name of Investor or its designee, representing the applicable number of
Delivery Shares. For the avoidance of doubt, Company has not met its obligation
to deliver Delivery Shares within the required timeframe set forth above unless
Investor or its broker, as applicable, has actually received the Delivery Shares
(whether electronically or in certificated form) no later than the close of
business on the latest possible delivery date pursuant to the terms set forth
above.

 

(e)                If Delivery Shares are delivered later than as required under
subsection (d) immediately above, Company agrees to pay, in addition to all
other remedies available to Investor in the Transaction Documents, a late charge
equal to the greater of (i) $500.00 and (ii) 2% of the product of (1) the sum of
the number of shares of Common Stock not issued to Investor on a timely basis
and to which Investor is entitled multiplied by (2) the Closing Trade Price of
the Common Stock on the Trading Day immediately preceding the last possible date
which Company could have issued such shares of Common Stock to Investor without
violating this Warrant, rounded to the nearest multiple of $100.00 (such
resulting amount, the “Warrant Share Value”) (but in any event the cumulative
amount of such late fees for each exercise shall not exceed 200% of the Warrant
Share Value), per Trading Day until such Warrant Shares are delivered (the “Late
Fees”). Company acknowledges and agrees that the failure to timely deliver
Delivery Shares hereunder is a material breach of this Warrant and that the Late
Fees are properly charged as liquidated damages to compensate Investor for such
breach. Company shall pay any Late Fees incurred under this subsection in
immediately available funds upon demand; provided, however, that, so long as the
Note is outstanding, at the option of Investor, such amount owed may be added to
the principal amount of the Note. Furthermore, in the event that Company fails
for any reason to effect delivery of the Delivery Shares as required under
subsection (d) immediately above, Investor may revoke all or part of the
relevant Warrant exercise by delivery of a notice to such effect to Company,
whereupon Company and Investor shall each be restored to their respective
positions immediately prior to the exercise of the relevant portion of this
Warrant, except that the Late Fees described above shall be payable through the
date notice of revocation or rescission is given to Company. Finally, in the
event Company fails to deliver any Delivery Shares to Investor for a period of
ninety (90) days from the Delivery Date, Investor may elect, in its sole
discretion, to stop the accumulation of the Late Fees as of such date and
require Company to pay to Investor a cash amount equal to (i) the total amount
of all Late Fees that have accumulated prior to the date of Investor’s election,
plus (ii) the product of the number of Delivery Shares deliverable to Investor
on such date if it were to exercise this Warrant with respect to the remaining
number of Exercise Shares as of such date multiplied by the Closing Trade Price
of the Common Stock on the Delivery Date (the “Cash Settlement Amount”). At such
time as Investor makes an election to require Company to pay to it the Cash
Settlement Amount, such obligation of Company shall be a valid and binding
obligation of Company and shall for all purposes be deemed to be a debt
obligation of Company owed to Investor as of the date it makes such election.
Upon Company’s payment of the Cash Settlement Amount to Investor, this Warrant
shall be deemed to have been satisfied. In addition, and for the avoidance of
doubt, even if Company could not deliver the number of Delivery Shares
deliverable to Investor if it were to exercise this Warrant with respect to the
remaining number of Exercise Shares on the date of repayment due to the
provisions of Section 2.2, the provisions of Section 2.2 will not apply with
respect to Company’s payment of the Cash Settlement Amount.

 

 2 

 

 

(f)                Investor shall be deemed to be the holder of the Delivery
Shares (not including any Ownership Limitation Shares (defined below)) issuable
to it in accordance with the provisions of this Section 2.1 on the Exercise
Date.

 

2.2.            Ownership Limitation. Notwithstanding anything to the contrary
contained in this Warrant or the other Transaction Documents, if at any time
Investor shall or would be issued shares of Common Stock, but such issuance
would cause Investor (together with its affiliates) to own a number of shares
exceeding 4.99% of the number of shares of Common Stock outstanding on such date
(the “Maximum Percentage”), Company must not issue to Investor shares of Common
Stock which would exceed the Maximum Percentage. The shares of Common Stock
issuable to Investor that would cause the Maximum Percentage to be exceeded are
referred to herein as the “Ownership Limitation Shares”. In such event, Company
shall reserve the Ownership Limitation Shares for the exclusive benefit of
Investor. From time to time, Investor may notify Company in writing of the
number of the Ownership Limitation Shares that may be issued to Investor without
causing Investor to exceed the Maximum Percentage. Upon receipt of such notice,
Company shall be unconditionally obligated to immediately issue such designated
shares to Investor, with a corresponding reduction in the number of the
Ownership Limitation Shares. Notwithstanding the foregoing, the term “4.99%”
above shall be replaced with “9.99%” at such time as the Market Capitalization
is less than $10,000,000.00. Notwithstanding any other provision contained
herein, if the term “4.99%” is replaced with “9.99%” pursuant to the preceding
sentence, such change to “9.99%” shall be permanent. By written notice to
Company, Investor may increase, decrease or waive the Maximum Percentage as to
itself but any such waiver will not be effective until the 61st day after
delivery thereof. The foregoing 61-day notice requirement is enforceable,
unconditional and non-waivable and shall apply to all affiliates and assigns of
Investor.

 

3.                  Mutilation or Loss of Warrant. Upon receipt by 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) receipt of
reasonably satisfactory indemnification, and (in the case of mutilation) upon
surrender and cancellation of this Warrant, Company will execute and deliver to
Investor a new Warrant of like tenor and date and any such lost, stolen,
destroyed or mutilated Warrant shall thereupon become void.

 

4.                  Rights of Investor. Investor shall not, by virtue of this
Warrant alone, be entitled to any rights of a stockholder in Company, either at
law or in equity, and the rights of Investor with respect to or arising under
this Warrant are limited to those expressed in this Warrant and are not
enforceable against Company except to the extent set forth herein.

 

5.                  Protection Against Dilution and Other Adjustments.

 

 3 

 

 

5.1.            Capital Adjustments. If Company shall at any time prior to the
expiration of this Warrant subdivide the Common Stock, by split-up or stock
split, or otherwise, or combine its Common Stock, or issue additional shares of
its Common Stock as a dividend, the number of Warrant Shares issuable upon the
exercise of this Warrant shall forthwith be automatically increased
proportionately in the case of a subdivision, split or stock dividend, or
proportionately decreased in the case of a combination. Appropriate adjustments
shall also be made to the Exercise Price and other applicable amounts, but the
aggregate purchase price payable for the total number of Warrant Shares
purchasable under this Warrant (as adjusted) shall remain the same. Any
adjustment under this Section 5.1 shall become effective automatically at the
close of business on the date the subdivision or combination becomes effective,
or as of the record date of such dividend, or in the event that no record date
is fixed, upon the making of such dividend.

 

5.2.            Reclassification, Reorganization and Consolidation. In case of
any reclassification, capital reorganization, or change in the capital stock of
Company (other than as a result of a subdivision, combination, or stock dividend
provided for in Section 5.1 above), then Company shall make appropriate
provision so that Investor shall have the right at any time prior to the
expiration of this Warrant to purchase, at a total price equal to that payable
upon the exercise of this Warrant, the kind and amount of shares of stock and
other securities and property receivable in connection with such
reclassification, reorganization, or change by a holder of the same number of
shares of Common Stock as were purchasable by Investor immediately prior to such
reclassification, reorganization, or change. In any such case appropriate
provisions shall be made with respect to the rights and interest of Investor so
that the provisions hereof shall thereafter be applicable with respect to any
shares of stock or other securities and property deliverable upon exercise
hereof, and appropriate adjustments shall be made to the purchase price per
Warrant Share payable hereunder, provided the aggregate purchase price shall
remain the same.

 

5.3.            Subsequent Equity Sales. If Company or any subsidiary thereof,
as applicable, at any time and from time to time while this Warrant is
outstanding, shall sell or grant any option to purchase, or sell or grant any
right to reprice, or otherwise dispose of, sell or issue (or announce any offer,
sale, grant or any option to purchase or other disposition of) any Common Stock
(including any Common Stock issued under the Note, whether upon any type of
conversion or any Deemed Issuance), preferred shares convertible into Common
Stock, or debt, warrants, options or other instruments or securities which are
convertible into or exercisable for shares of Common Stock (together herein
referred to as “Equity Securities”), at an effective price per share less than
the Exercise Price (such lower price, the “Base Share Price”, and any such
issuance, a “Dilutive Issuance”) (if the holder of the Common Stock or Equity
Securities so issued shall at any time, whether by operation of purchase price
adjustments, reset provisions, floating conversion, exercise or exchange prices
or otherwise, or due to warrants, options, or rights per share which are issued
in connection with such issuance, be entitled to receive shares of Common Stock
at an effective price per share that is less than the Exercise Price, such
issuance shall be deemed to have occurred for less than the Exercise Price on
such date of the Dilutive Issuance), then (a) the Exercise Price shall be
reduced and only reduced to equal the Base Share Price, and (b) the number of
Warrant Shares issuable upon the exercise of this Warrant shall be increased to
an amount equal to the number of Warrant Shares Investor could purchase
hereunder for an aggregate Exercise Price, as reduced pursuant to subsection (a)
above, equal to the aggregate Exercise Price payable immediately prior to such
reduction in Exercise Price, provided that the increase in the number of
Exercise Shares issuable under this Warrant made pursuant to this Section 5.3
shall not at any time exceed a number equal to three (3) times the number of
Exercise Shares issuable under this Warrant as of the Issue Date (for the
avoidance of doubt, the foregoing cap on the number of Exercise Shares issuable
hereunder shall only apply to adjustments made pursuant to this Section 5.3 and
shall not apply to adjustments made pursuant to Sections 5.1, 5.2 or any other
section of this Warrant). Such adjustments shall be made whenever such Common
Stock or Equity Securities are issued. Company shall notify Investor, in
writing, no later than the Trading Day following the issuance of any Common
Stock or Equity Securities subject to this Section 5.3, indicating therein the
applicable issuance price, or applicable reset price, exchange price, conversion
price, or other pricing terms (such notice, the “Dilutive Issuance Notice”).
Dilutive Issuance Notices shall be in the form set forth in Section 6 below. For
purposes of clarification, whether or not Company provides a Dilutive Issuance
Notice pursuant to this Section 5.3, upon the occurrence of any Dilutive
Issuance, after the date of such Dilutive Issuance, Investor is entitled to
receive the increased number of Warrant Shares provided for in subsection (b)
above at an Exercise Price equal to the Base Share Price regardless of whether
Investor accurately refers to the Base Share Price in the Notice of Exercise.
Additionally, following the occurrence of a Dilutive Issuance, all references in
this Warrant to “Warrant Shares” shall be a reference to the Warrant Shares as
increased pursuant to subsection (b) above, and all references in this Warrant
to “Exercise Price” shall be a reference to the Exercise Price as reduced
pursuant to subsection (a) above, as the same may occur from time to time
hereunder.

 

 4 

 

 

5.4.            Exceptions to Adjustment. Notwithstanding the provisions of
Sections 5.3, no adjustment to the Exercise Price shall be effected as a result
of an Excepted Issuance.

 

6.                  Certificate as to Adjustments. In each case of any
adjustment or readjustment in the number or kind of shares issuable on the
exercise of this Warrant, or in the Exercise Price, pursuant to the terms
hereof, Company at its expense will promptly cause its Chief Financial Officer
or other appropriate designee to compute such adjustment or readjustment in
accordance with the terms of this Warrant and prepare a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based, including a statement of (a) the
consideration received or receivable by Company for any additional shares of
Common Stock issued or sold or deemed to have been issued or sold, (b) the
number of shares of Common Stock outstanding or deemed to be outstanding, and
(c) the Exercise Price and the number of shares of Common Stock to be received
upon exercise of this Warrant, in effect immediately prior to such adjustment or
readjustment and as adjusted or readjusted as provided in this Warrant. Nothing
in this Section 6 shall be deemed to limit any other provision contained herein.

 

7.                  Transfer to Comply with the Securities Act. This Warrant and
the Warrant Shares have not been registered under the Securities Act of 1933, as
amended (the “1933 Act”). Neither this Warrant nor the Warrant Shares may be
sold, transferred, pledged or hypothecated without (a) an effective registration
statement under the 1933 Act relating to such security or (b) an opinion of
counsel reasonably satisfactory to Company that registration is not required
under the 1933 Act; provided, however, that the foregoing restrictions on
transfer shall not apply to the transfer of the Warrant to an affiliate of
Investor. Until such time as registration has occurred under the 1933 Act, each
certificate for this Warrant and any Warrant Shares shall contain a legend, in
form and substance satisfactory to counsel for Company, setting forth the
restrictions on transfer contained in this Section 7; provided, however, that
Company acknowledges and agrees that any such legend shall be removed from all
certificates for DTC Eligible Common Stock delivered hereunder as such Common
Stock is cleared and converted into electronic shares by the DTC, and nothing
contained herein shall be interpreted to the contrary. Upon receipt of a duly
executed assignment of this Warrant, Company shall register the transferee
thereon as the new holder on the books and records of Company and such
transferee shall be deemed a “registered holder” or “registered assign” for all
purposes hereunder, and shall have all the rights of Investor under this
Warrant. Until this Warrant is transferred on the books of Company, Company may
treat Investor as the absolute owner hereof for all purposes, notwithstanding
any notice to the contrary.

 

 5 

 

 

8.                  Notices. Any notice required or permitted hereunder shall be
given in the manner provided in the subsection titled “Notices” in the Purchase
Agreement, the terms of which are incorporated herein by reference.

 

9.                  Supplements and Amendments; Whole Agreement. This Warrant
may be amended or supplemented only by an instrument in writing signed by the
parties hereto. This Warrant, together with the Purchase Agreement, contains the
full understanding of the parties hereto with respect to the subject matter
hereof and thereof and there are no representations, warranties, agreements or
understandings with respect to the subject matter hereof and thereof other than
as expressly contained herein and therein.

 

10.              Purchase Agreement; Arbitration of Disputes; Calculation
Disputes. This Warrant is subject to the terms, conditions and general
provisions of the Purchase Agreement, including without limitation the
Arbitration Provisions (as defined in the Purchase Agreement) set forth as an
exhibit to the Purchase Agreement. In addition, notwithstanding the Arbitration
Provisions, in the case of a dispute as to any Calculation (as defined in the
Purchase Agreement), such dispute will be resolved in the manner set forth in
the Purchase Agreement.

 

11.              Governing Law; Venue. This Warrant shall be construed and
enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Warrant shall be governed by,
the internal laws of the State of Utah, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of Utah or any
other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of Utah. The provisions set forth in the
Purchase Agreement to determine the proper venue for any disputes are
incorporated herein by this reference.

 

12.              Waiver of Jury Trial. COMPANY IRREVOCABLY WAIVES ANY AND ALL
RIGHTS IT MAY HAVE TO DEMAND THAT ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING
OUT OF OR IN ANY WAY RELATED TO THIS WARRANT OR THE RELATIONSHIPS OF THE PARTIES
HERETO BE TRIED BY JURY. THIS WAIVER EXTENDS TO ANY AND ALL RIGHTS TO DEMAND A
TRIAL BY JURY ARISING UNDER COMMON LAW OR ANY APPLICABLE STATUTE, LAW, RULE OR
REGULATION. FURTHER, COMPANY ACKNOWLEDGES THAT IT IS KNOWINGLY AND VOLUNTARILY
WAIVING ITS RIGHT TO DEMAND TRIAL BY JURY.

 

13.              Remedies. The remedies at law of Investor under this Warrant in
the event of any default or threatened default by Company in the performance of
or compliance with any of the terms of this Warrant are not and will not be
adequate and, without limiting any other remedies available to Investor in the
Transaction Documents, at law or equity, to the fullest extent permitted by law,
such terms may be specifically enforced by a decree for the specific performance
of any agreement contained herein or by an injunction against a violation of any
of the terms hereof or otherwise without the obligation to post a bond.

 

14.              Liquidated Damages. Company and Investor agree that in the
event Company fails to comply with any of the terms or provisions of this
Warrant, Investor’s damages would be uncertain and difficult (if not impossible)
to accurately estimate because of the parties’ inability to predict future
interest rates, future share prices, future trading volumes and other relevant
factors. Accordingly, Investor and Company agree that any fees or other charges
assessed under this Warrant are not penalties but instead are intended by the
parties to be, and shall be deemed, liquidated damages (under Investor’s and
Company’s expectations that any such liquidated damages will tack back to the
Purchase Price Date for purposes of determining the holding period under Rule
144 (as defined in the Purchase Agreement)).

 

 6 

 

 

15.              Counterparts. This Warrant may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument. Signatures delivered via facsimile or email shall be
considered original signatures for all purposes hereof.

 

16.              Attorneys’ Fees. In the event of any arbitration, litigation or
dispute arising from this Warrant, the parties agree that the party who is
awarded the most money (which, for the avoidance of doubt, shall be determined
without regard to any statutory fines, penalties, fees, or other charges awarded
to any party) shall be deemed the prevailing party for all purposes and shall
therefore be entitled to an additional award of the full amount of the
attorneys’ fees and expenses paid by said prevailing party in connection with
arbitration or litigation without reduction or apportionment based upon the
individual claims or defenses giving rise to the fees and expenses. Nothing
herein shall restrict or impair an arbitrator’s or a court’s power to award fees
and expenses for frivolous or bad faith pleading.

 

17.              Severability. Whenever possible, each provision of this Warrant
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be invalid or
unenforceable in any jurisdiction, such provision shall be modified to achieve
the objective of the parties to the fullest extent permitted and such invalidity
or unenforceability shall not affect the validity or enforceability of the
remainder of this Warrant or the validity or enforceability of this Warrant in
any other jurisdiction.

 

18.              Time is of the Essence. Time is expressly made of the essence
with respect to each and every provision of this Warrant.

 

19.              Descriptive Headings. Descriptive headings of the sections of
this Warrant are inserted for convenience only and shall not control or affect
the meaning or construction of any of the provisions hereof.

 

[Remainder of page intentionally left blank; signature page follows]

 

 7 

 

 

IN WITNESS WHEREOF, Company has caused this Warrant to be duly executed by an
officer thereunto duly authorized as of the Issue Date.

 

  COMPANY:         MyECheck, Inc.               By: /s/ Edward R. Starrs  
Printed Name:   Edward R. Starrs   Title: President

 

 

[Signature Page to Warrant #1]

 

 

 

 

ATTACHMENT 1

DEFINITIONS

 

For purposes of this Warrant, the following terms shall have the following
meanings:

 

A1.               “Adjusted Price” means the lower of (i) the Exercise Price (as
such Exercise Price may be adjusted from time to time pursuant to the terms of
this Warrant), and (ii) the Market Price.

 

A2.               “Approved Stock Plan” means any stock option plan which has
been approved by the board of directors of Company and is in effect as of the
Issue Date, pursuant to which Company’s securities may be issued to any
employee, officer or director for services provided to Company.

 

A3.               “Bloomberg” means Bloomberg L.P. (or if that service is not
then reporting the relevant information regarding the Common Stock, a comparable
reporting service of national reputation selected by Investor and reasonably
satisfactory to Company).

 

A4.               “Closing Bid Price” and “Closing Trade Price” means the last
closing bid price and last closing trade price, respectively, for the Common
Stock on its principal market, as reported by Bloomberg, or, if its principal
market begins to operate on an extended hours basis and does not designate the
closing bid price or the closing trade price (as the case may be) then the last
bid price or last trade price, respectively, of the Common Stock prior to
4:00:00 p.m., New York time, as reported by Bloomberg, or, if its principal
market is not the principal securities exchange or trading market for the Common
Stock, the last closing bid price or last trade price, respectively, of the
Common Stock on the principal securities exchange or trading market where the
Common Stock is listed or traded as reported by Bloomberg, or if the foregoing
do not apply, the last closing bid price or last trade price, respectively, of
the Common Stock in the over-the-counter market on the electronic bulletin board
for the Common Stock as reported by Bloomberg, or, if no closing bid price or
last trade price, respectively, is reported for the Common Stock by Bloomberg,
the average of the bid prices, or the ask prices, respectively, of any market
makers for the Common Stock as reported by OTC Markets Group, Inc., and any
successor thereto. If the Closing Bid Price or the Closing Trade Price cannot be
calculated for the Common Stock on a particular date on any of the foregoing
bases, the Closing Bid Price or the Closing Trade Price (as the case may be) of
the Common Stock on such date shall be the fair market value as mutually
determined by Investor and Company. If Investor and Company are unable to agree
upon the fair market value of the Common Stock, then such dispute shall be
resolved in accordance with the procedures in the Purchase Agreement governing
Calculations. All such determinations shall be appropriately adjusted for any
stock dividend, stock split, stock combination or other similar transaction
during such period.

 

A5.               “Conversion Factor” means 70%, subject to the following
adjustments. If at any time the average of the three (3) lowest Closing Bid
Prices in the twenty (20) Trading Days immediately preceding any date of
measurement is below $0.01, then in such event the then-current Conversion
Factor shall be permanently reduced by 10% (subject to other reductions set
forth in this section). Additionally, if at any time after the Issue Date, the
Delivery Shares are not DWAC Eligible, then the then-current Conversion Factor
will automatically be permanently reduced by 5%. If at any time after the Issue
Date, the Delivery Shares are not DTC Eligible, then the then-current Conversion
Factor will automatically be permanently reduced by 5%. For example, the first
time the Delivery Shares are not DWAC Eligible, the Conversion Factor for future
exercises thereafter will be reduced from 70% to 65% for purposes of this
example. If, thereafter, the Delivery Shares are not DTC Eligible, the
Conversion Factor for all future exercises will automatically be permanently
reduced from 65% to 60% for purposes of this example.

 

A6.               “Current Market Value” means an amount equal to the Trade
Price multiplied by the number of Exercise Shares specified in the applicable
Notice of Exercise.

 

A7.               “Deemed Issuance” means an issuance of Common Stock that shall
be deemed to have occurred on the latest possible permitted date pursuant to the
terms of this Warrant or the Note in the event Company fails to deliver shares
of Common Stock as and when required.

 

A8.               “Delivery Shares” means those shares of Common Stock issuable
and deliverable upon the exercise or partial exercise, as the case may be, of
this Warrant.

 

A9.               “DTC” means the Depository Trust Company or any successor
thereto.

 

 

 

 

A10.           “DTC Eligible” means, with respect to the Common Stock, that such
Common Stock is eligible to be deposited in certificate form at the DTC, cleared
and converted into electronic shares by the DTC and held in the name of the
clearing firm servicing Investor’s brokerage firm for the benefit of Investor.

 

A11.           “DTC/FAST Program” means the DTC’s Fast Automated Securities
Transfer program.

 

A12.           “DWAC” means the DTC’s Deposit/Withdrawal at Custodian System.

 

A13.           “DWAC Eligible” means that (a) Company’s Common Stock is eligible
at DTC for full services pursuant to DTC’s operational arrangements, including
without limitation transfer through DTC’s DWAC system, (b) Company has been
approved (without revocation) by the DTC’s underwriting department, (c)
Company’s transfer agent is approved as an agent in the DTC/FAST Program, (d)
the Conversion Shares are otherwise eligible for delivery via DWAC; (e) Company
has previously delivered all Conversion Shares to Lender via DWAC; and (f)
Company’s transfer agent does not have a policy prohibiting or limiting delivery
of the Conversion Shares via DWAC.

 

A14.           “Excepted Issuances” means any shares of Common Stock, options,
or convertible securities issued or issuable in connection with any Approved
Stock Plan; provided that the option term, exercise price or similar provisions
of any issuance pursuant to such Approved Stock Plan are not amended, modified
or changed on or after the Purchase Price Date.

 

A15.           “Exercise Price” means $0.03 per share of Common Stock, as the
same may be adjusted from time to time pursuant to the terms and conditions of
this Warrant.

 

A16.           “Exercise Shares” means those Warrant Shares subject to an
exercise of this Warrant by Investor. By way of illustration only and without
limiting the foregoing, if (i) this Warrant is initially exercisable for
4,180,000 Warrant Shares and Investor has not previously exercised this Warrant,
and (ii) Investor were to make a cashless exercise with respect to 5,000 Warrant
Shares pursuant to which 6,000 Delivery Shares would be issuable to Investor,
then (1) this Warrant shall be deemed to have been exercised with respect to
5,000 Exercise Shares, (2) this Warrant would remain exercisable for 4,175,000
Warrant Shares, and (3) this Warrant shall be deemed to have been exercised with
respect to 6,000 Delivery Shares.

 

A17.           “Market Capitalization” means the product equal to (a) the
average VWAP of the Common Stock for the immediately preceding fifteen (15)
Trading Days, multiplied by (b) the aggregate number of outstanding shares of
Common Stock as reported on Company’s most recently filed Form 10-Q or Form
10-K.

 

A18.           “Market Price” means the Conversion Factor multiplied by the
average of the three (3) lowest Closing Bid Prices in the twenty (20) Trading
Days immediately preceding the applicable date of determination. By way of
example only, if the Conversion Factor were 75% and the average of the three
lowest Closing Bid Prices in the twenty (20) Trading Days immediately preceding
the applicable date of conversion were $1.00 then the Market Price would be
$0.75 (75% * $1.00).

 

A19.           “Note” means that certain Convertible Promissory Note issued by
Company to Investor pursuant to the Purchase Agreement, as the same may be
amended from time to time, and including any promissory note(s) that replace or
are exchanged for such referenced promissory note.

 

A20.           “Trade Price” means mean the higher of: (i) the Closing Trade
Price of the Common Stock on the Issue Date; and (ii) the VWAP of the Common
Stock for the Trading Day that is two (2) Trading Days prior to the Exercise
Date.

 

A21.           “Trading Day” means any day on the New York Stock Exchange is
open for trading.

 

A22.           “Transaction Documents” means the Purchase Agreement, the Note,
this Warrant, and all other documents, certificates, instruments and agreements
entered into or delivered in conjunction therewith, as the same may be amended
from time to time.

 

A23.           “VWAP” means the volume weighted average price of the Common
stock on the principal market for a particular Trading Day or set of Trading
Days, as the case may be, as reported by Bloomberg.

 

 

 

 

EXHIBIT A

 

NOTICE OF EXERCISE OF WARRANT

 

TO:MYECHECK, INC.

ATTN: _______________

VIA FAX TO: (     )______________ EMAIL: ______________

 

The undersigned hereby irrevocably elects to exercise the right, represented by
the Warrant to Purchase Shares of Common Stock dated as of October 29, 2015 (the
“Warrant”), to purchase shares of the common stock, $0.00001 par value (“Common
Stock”), of MyECheck, Inc., and tenders herewith payment in accordance with
Section 2 of the Warrant, as follows:

 

_______CASH: $__________________________ = (Exercise Price x Delivery Shares)

 

_______Payment is being made by:

_____enclosed check

_____wire transfer

_____other

 

_______CASHLESS EXERCISE:

 

Net number of Delivery Shares to be issued to Investor: ______*

 

* based on:   Current Market Value - (Exercise Price x Exercise Shares)      
Adjusted Price  

 

Where:       Trade Price [“TP”]  = $____________   Exercise Shares  =
_____________   Current Market Value [TP x Exercise Shares]  = $____________  
Exercise Price  = $____________   Adjusted Price  = $____________  

 

Capitalized terms used but not otherwise defined herein shall have the meanings
ascribed to them in the Warrant.

 

It is the intention of Investor to comply with the provisions of Section 2.2 of
the Warrant regarding certain limits on Investor’s right to receive shares
thereunder. Investor believes this exercise complies with the provisions of such
Section 2.2. Nonetheless, to the extent that, pursuant to the exercise effected
hereby, Investor would receive more shares of Common Stock than permitted under
Section 2.2, Company shall not be obligated and shall not issue to Investor such
excess shares until such time, if ever, that Investor could receive such excess
shares without violating, and in full compliance with, Section 2.2 of the
Warrant.

 

As contemplated by the Warrant, this Notice of Exercise is being sent by email
or by facsimile to the fax number and officer indicated above.

 

If this Notice of Exercise represents the full exercise of the outstanding
balance of the Warrant, Investor will surrender (or cause to be surrendered) the
Warrant to Company at the address indicated above by express courier within five
(5) Trading Days after the Warrant Shares to be delivered pursuant to this
Notice of Exercise have been delivered to Investor.

 

 

Exhibit A to Warrant #1, Page 1

 

 

 

 

To the extent the Delivery Shares are not able to be delivered to Investor via
the DWAC system, please deliver certificates representing the Delivery Shares to
Investor via reputable overnight courier after receipt of this Notice of
Exercise (by facsimile transmission or otherwise) to:

 

_____________________________________

_____________________________________

_____________________________________

 

Dated: _____________________

 

___________________________

[Name of Investor]

 

By:________________________

 

 

Exhibit A to Warrant #1, Page 2