SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A
Pursuant to Section 13 or 15(d) of
the Securities and Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):
March 28, 2000
U.S. Wireless Data, Inc.
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(Exact Name of Registrant as Specified in its Charter)
Colorado 0-22848 84-1178691
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(State or other (Commission (IRS Employer
jurisdiction File Number) Identification No.)
of incorporation)
805 Third Avenue, 8th Floor
New York, NY 10022
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(Address of principal executive offices)
Registrant's Telephone Number, including
area code (212) 750-7766
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(Former Address, if changed since last report)
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Item 1: Change of Control
All references to "we" or "us" contained in this Form 8-K refer to U.S.
Wireless Data, Inc. The following descriptions of agreements we have entered
into are summaries and are qualified by reference to the agreements we are
filing as exhibits to this report.
We have entered into a series of transactions which may be deemed to
constitute a change of control. The transactions are outlined below:
1. As previously reported, we issued warrants, exercisable at $.01 per
share, to purchase an aggregate of 15,000,000 shares of our Common Stock
(13,636,364 shares to ComVest Capital Management, LLC, an affiliate of
Commonwealth Associates, L.P., and 1,363,636 shares to Dean M. Leavitt, our
Chairman and Chief Executive Officer). ComVest exercised its warrant with
respect to 7,920,000 shares, representing 25% of our outstanding Common Stock,
and Mr. Leavitt exercised his warrant with respect to 792,000 shares in March
2000. The remaining warrants owned by ComVest (which are not fully exercisable
until our shareholders approve an amendment to our Articles of Incorporation to
increase the number of authorized shares of our Common Stock) would represent an
additional 18% of our Common Stock if they are exercised.
2. Commonwealth acted as placement agent in a private placement pursuant to
which 506.16 Units have been sold at $100,000 per Unit for aggregate proceeds of
$50,616,000 as of March 28, 2000. Each Unit consists of 10,000 shares of our
Series C Convertible Preferred Stock (which is initially convertible into 66,667
shares of our Common Stock) and warrants to purchase Common Stock equal to 25%
of the number of shares into which the Series C Convertible Preferred is
convertible.
Description of Series C Convertible Preferred Stock
The Series C Convertible Preferred has a liquidation preference of $10
per share, plus accrued and unpaid dividends. The holders of Series C
Convertible Preferred are entitled to vote their shares of Series C Convertible
Preferred on an as-converted basis with the holders of Common Stock as a single
class on all matters submitted to a vote of the shareholders, except as
otherwise required by applicable law and except that the holders of Series C
Convertible Preferred voting separately as a class have the right to elect two
directors to our Board of Directors.
Each share of Series C Convertible Preferred is convertible at any
time, subject to the approval by our shareholders of an amendment to our
Articles of Incorporation to increase our number of authorized shares of Common
Stock, at the option of the holder, into a number of shares of Common Stock
determined by dividing the liquidation value by the conversion price, initially
$1.50 per share, which is subject to adjustment for stock splits,
recapitalizations and other similar events. If we issue shares of Common Stock
at a price per share less than the then current conversion price, then, subject
to certain exceptions, the conversion price will be automatically reduced to
such lower price and the number of shares issuable upon conversion of the Series
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C Convertible Preferred shall be increased proportionately. The Series C
Convertible Preferred automatically converts into Common Stock (a) if, at any
time commencing three months after June 17, 2000, the average closing bid price
of our Common Stock exceeds 300% of the conversion price for 20 consecutive
trading days or (b) upon a public offering of our securities that raises gross
proceeds in excess of $30,000,000, provided the shareholders have approved an
increase in our authorized capital to allow for the conversion of the Series C
Convertible Preferred.
The terms of the Series C Convertible Preferred may be amended,
modified or waived by an agreement among us, Commonwealth and a committee to be
designated by Commonwealth whose members hold in the aggregate not less than 20%
of the outstanding Series C Convertible Preferred. Currently, on an as converted
basis, the Series C Convertible Preferred represents approximately 51% of our
outstanding voting capital stock, assuming the shareholders have approved an
increase in our authorized capital to allow for the conversion of the Series C
Convertible Preferred.
Description of Warrants
Each warrant sold with a Series C Preferred Unit is exercisable for a
period of seven years for an aggregate number of shares of Common Stock equal to
25% of the number of shares into which the Series C Convertible Preferred are
convertible at an exercise price equal to the then conversion price. The initial
exercise price is $1.50 per share, subject to adjustment under the same
circumstances as the Series C Convertible Preferred. The warrants are callable
for a nominal price at our option on 30 days' notice to the holders of the
warrants if (a) the average closing bid price of our Common Stock for 20
consecutive trading days exceeds 300% of the exercise price, as adjusted, (b)
our Common Stock is trading on a national securities exchange or Nasdaq SmallCap
or National Market Systems, or (c) a registration statement covering the warrant
shares has been declared effective and the warrant shares are not otherwise
subject to any lock-up restrictions.
The terms of the warrants may be amended, modified or waived by an
agreement among us, Commonwealth and a committee to be designated by
Commonwealth whose members hold in the aggregate not less than 20% of the
outstanding warrants. Currently, on an as exercised basis, the warrants
represent approximately 11% of our outstanding voting capital stock, assuming
the shareholders have approved an increase in our authorized capital to allow
for the exercise of the Series C Convertible Preferred.
Registration Rights and Lock-Up Agreement
We have agreed to file a registration statement with respect to the
shares of Common Stock issuable upon conversion of the Series C Convertible
Preferred and exercise of the warrants under the Securities Act of 1933, as
amended, within nine months of the closing of the private placement transaction.
We have also agreed to certain "piggyback" registration rights with respect to
the shares of Common Stock issuable upon conversion of the Series C Convertible
Preferred and the exercise of the warrants.
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Each investor who purchased Units in the private placement agreed that
it will not sell, transfer or otherwise dispose of any of our securities sold in
the private placement for a period of one year following the closing of the
transaction. Thereafter, investors may not sell, transfer or dispose of more
than 25% of such securities during each of the following four 90-day periods.
The lock-up period may be extended by Commonwealth for up to an additional six
months from the closing of any public offering that is consummated prior to the
end of the initial lock-up period, in which event there shall be no further
lock-up at the end of such period. Our officers, directors and certain other
existing shareholders agreed to substantially the same lock-up provisions on
shares of Common Stock owned or acquired by them.
Affiliated Purchases
Several of our officers and directors purchased Units in the private
placement. Dean M. Leavitt, our Chief Executive Officer and Chairman purchased
2.5 Units, Charles I. Leone, our Chief Financial Officer and Chief Operating
Officer purchased 1 Unit and Robert E. Robichaud, our former Chief Financial and
Accounting Officer, Treasurer and Secretary purchased .75 of a Unit. Edwin
Cooperman, one of our directors, purchased 1 Unit and each of Michael S. Falk
and Amy Newmark, both also directors, purchased 2.5 Units. Barry Kaplan, also
one of our directors, purchased 25 Units. Mr. Kaplan also received from
Commonwealth at no charge a warrant to purchase 1.5 Units exercisable at
$100,000 per Unit.
3. As part of its compensation, Commonwealth received warrants to
purchase 126.5 Units, exercisable at $100,000 per Unit , a commission of 7% of
the gross proceeds raised in the Private Placement, which is equal to
$3,543,120, and a structuring fee of 3% of the gross proceeds raised in the
Private Placement, which is equal to $1,518,480. Pursuant to a prior agreement
with Peter J. Solomon Securities Company Limited relating to financing
transactions entered into by us, we issued to Peter J. Solomon Securities
Company warrants to purchase 25.3 Units exercisable at $100,000 per Unit and
paid a fee equal to $400,000.
4. Commonwealth has the right under an Agency Agreement to designate
two directors of our Board of Directors and the following individuals gave
proxies to Commonwealth to vote for the election of such designees: Dean M.
Leavitt, our Chairman, Chief Executive Officer and a member of our Board of
Directors, Charles I. Leone, our Chief Financial Officer and Chief Operating
Officer, John H. Perveiler, our Vice President/National Sales Manager, Marc R.
Shultz, our Vice President of Business Development, and Barry Kaplan, Alvin Rice
and Chester Winter, each members of our Board of Directors, and John M.
Liviakis.
5. As previously disclosed, four new directors joined our Board of
Directors on March 29, 2000, including Michael S. Falk, a designee of
Commonwealth and the co-founder and Chief Executive Officer of Commonwealth.
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As a result of the foregoing, Commonwealth Associates may be deemed to
control us.
Item 5. Other Items.
A portion of the proceeds from the private placement described above were
used as follows:
We redeemed 1,500,000 shares of our Series B Convertible Preferred Stock
from Bold Street, LLC, for a price equal to 125% of the liquidation value of the
Series B Convertible Preferred, plus accrued dividends, and a warrant, expiring
April 30, 2004, to purchase 150,000 shares of Common Stock at $2.28 per share.
In connection with such redemption, Bold Street waived certain accrued
penalties. Bold Street received certain "piggyback" registration rights as to
the shares of Common Stock underlying the warrant.
We redeemed 227,353 shares of our Series B Convertible Preferred and
$1,000,000 of our outstanding 6% Convertible Debentures from RBB Bank
Aktiengesellschaft for a price equal to 125% of the liquidation value or
principal amount, as applicable, of the Series B Convertible Preferred and
Debentures. In connection with such redemption, RBB Bank also waived certain
accrued penalties.
The balance of the 6% Convertible Debentures have been converted into
Common Stock and 227,352 shares of Series B Convertible Preferred remain
outstanding.
In addition, as a result of the financing transactions described above,
anti-dilution provisions of certain outstanding warrants were triggered and we
were required to adjust the exercise prices and the number of shares of our
Common Stock issuable upon the exercise of such warrants. Upon the exercise of
these warrants, we will be required to issue an additional 823,801 shares of our
Common Stock.
Item 7: Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits
3. Certificate of Amendment to Articles of Incorporation filed March
10, 2000 (including Certificate of Correction filed March 16,
2000).
4.1 Form of Unit Warrant
4.2 Form of Subscription Agreement
4.3 Form of Placement Agent Warrant
4.4 Form of Peter J. Solomon Securities Company Limited Warrant
4.5 Form of Bold Street, LLC Warrant
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: April 12, 2000
U.S. WIRELESS DATA, INC.
By: /s/ Dean M. Leavitt
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Dean M. Leavitt
Chief Executive Officer
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U.S. WIRELESS DATA, INC.
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
FIRST: That the name of the Corporation is U.S. Wireless Data, Inc.
SECOND: That the text of the Articles of Amendment to the Articles of
Incorporation of the Corporation determining the designations, preferences,
limitations and relative rights of the Series C Preferred Stock is set forth on
Exhibit 1 attached hereto and incorporate herein by reference.
THIRD: That the Amendment was adopted on March 9, 2000.
FOURTH: That the Amendment was duly adopted by the Board of Directors of
the Corporation.
IN WITNESS WHEREOF, U.S. Wireless Data, Inc. has caused these Articles of
Amendment to be duly executed this 9th day of March, 2000.
U.S. Wireless Data, Inc.
By: /s/ Charesls I. Leone
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Name: Charles I. Leone
Title: Chief Financial Officer, Chief
Operating Officer and Secretary
ATTEST:
/s/ Dean M. Leavitt
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Name: Dean M. Leavitt
Title: Chief Executive Officer
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EXHIBIT 1
DESIGNATION OF
SERIES C CONVERTIBLE PREFERRED STOCK
OF U.S. WIRELESS DATA, INC.
U.S. Wireless Data, Inc., a Colorado corporation (the "Corporation"),
hereby designates the preferences, limitations and relative rights of its Series
C Convertible Preferred Stock.
1. Designation.
Six Million Five Hundred Thousand (6,500,000) shares of the Corporation's
15,000,000 total authorized shares of no par value preferred stock are hereby
designated as Series C Convertible Preferred Stock (hereinafter referred to as
the "Series C Preferred Stock").
2. Stated Value.
The Series C Preferred Stock shall have a stated value of one cent ($0.01)
per share.
3. Voting Rights.
3.1 Except as otherwise provided below or as required by law, the holders
of Series C Preferred Stock will be entitled to notice of any meeting of
shareholders of the Corporation or any action to be taken by shareholders
without a meeting, and shall be entitled to one vote per share of Common Stock
issuable upon conversion of the Series C Preferred Stock as of the record date
for any such vote on all matters submitted to a vote of stockholders of the
Company, and the holders of Series C Preferred Stock will vote as a single class
with the holders of Common Stock on all matters, except as otherwise required
under applicable law.
3.2 Except as otherwise required by law or provided by the Articles of
Incorporation, a majority of the shares entitled to vote, represented in person
or by proxy, will constitute a quorum at a meeting of shareholders; provided,
that, for action upon any matter as to which holders of shares are entitled to
vote as a class, a majority of the shares of such class, represented in person
or by proxy, will constitute a quorum.
3.3 The holders of the Series C Preferred Stock will be entitled, voting as
a separate class, to elect two directors and the holders of Common Stock will be
entitled to elect the balance of the directors.
3.4 Any director elected solely by the holders of the Series C Preferred
Stock or of the Common Stock, as the case may be, may be removed, either with or
without cause, by, and only by, the affirmative vote of the holders of a
majority of a quorum of the shares of the Series C Preferred Stock or a majority
of a quorum of the shares of the Common Stock, as the case may be, either at a
special meeting of such shareholders duly called for that purpose or pursuant to
a written consent of shareholders, and any vacancy thereby created or otherwise
resulting may be filled by, and only by, the holders of the Series C Preferred
Stock or the Common Stock, as the case may be.
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4. Dividends. If any dividend is declared on the Common Stock, the holders of
the Series C Preferred Stock will be entitled to receive dividends pari passu
out of legally available funds as if each such share of Series C Preferred Stock
had been converted to Common Stock. No dividend shall be paid on the Common
Stock at a rate greater than the rate at which dividends are paid on the Series
C Preferred Stock (based on the number of shares of Common Stock into which the
Series C Preferred Stock is convertible on the date the dividend is declared).
Dividends on the Series C Preferred Stock will be noncumulative.
5. Liquidation Preference.
5.1 In the event of the liquidation, dissolution or winding up of the
Corporation, either voluntary or involuntary, the holders of the Series C
Preferred Stock will be entitled to receive out of the assets of the
Corporation, for each share of Series C Preferred Stock then held by them,
first, prior and in preference to any distribution to the holders of the Common
Stock or any subsequently issued series of preferred stock, an amount equal to
$10.00 per share plus any accrued and unpaid dividends ("Liquidation Value," as
appropriately adjusted for stock splits and combinations). If upon the
occurrence of such event, the assets and funds available for distribution among
the holders of the Preferred Stock are insufficient to permit the payment to
such holders of the full preferential amount provided above, then the entire
assets and funds of the Corporation legally available for distribution to the
holders of Series C Preferred Stock will be distributed ratably among the
holders of Series C Preferred Stock in proportion to the shares of the Series C
Preferred Stock held by each such holder weighted by the respective Liquidation
Value. After payment has been made to the holders of the Series C Preferred
Stock of the full amounts to which they will be entitled as aforesaid, any
remaining assets will be distributed to the holders of the Corporation's other
equity securities.
5.2 A liquidation, dissolution or winding up for the purposes of this
Section 5 includes a (i) merger or consolidation of the Corporation with or into
any other corporation or corporations where the shareholders of the Corporation
immediately prior to such event do not retain more than a 50% voting power and
interest in the successor entity and (ii) sale of all or substantially all of
the assets of the Corporation (collectively, a "Merger or Sale").
5.3 No later than 20 days before the consummation of any Merger or Sale,
the Corporation shall deliver a notice to each holder of Series C Preferred
Stock setting forth the principal terms of such Merger or Sale. Such notice
shall include a description of the amounts that would be paid to holders of
Series C Preferred Stock under this Section 5 and of the consideration that such
holders would receive if they exercised their rights under Section 6 to have
shares of Series C Preferred Stock converted into Common Stock.
5.4 No later than ten days after delivery of the notice, each holder of
Series C Preferred Stock may deliver an election to the Corporation notifying
the Corporation that the holder desires that such holder's shares of Series C
Preferred Stock be converted into shares of Common Stock and, if no such notice
is delivered, such holder shall receive such amounts as are provided for under
this Section 5.
5.5 Each holder of an outstanding share of Series C Preferred Stock shall
be deemed to have consented to distributions made by the Corporation in
connection with the repurchase at cost (or such other price as may be agreed to
by the Corporation's Board of Directors) of shares of Common Stock issued to or
held by officers, directors or employees of, or consultants to, the Corporation
or its subsidiaries upon termination of their employment or services pursuant to
agreements (whether now existing or hereafter entered into) providing for the
right of said repurchase between the Corporation and such persons.
6. Conversion Rights.
6.1 Right to Convert. Notwithstanding any other term or provision contained
herein, no shares of Series C Preferred Stock shall become convertible into
Common Stock under any circumstances until the shareholders of the Corporation
shall have approved an amendment to the Corporation's Articles of Incorporation
increasing the number of authorized shares of Common Stock to a number that is
sufficient (given all other Common Stock share reservations) to allow for due
and proper reservation of a sufficient number of shares of Common Stock to allow
for the conversion of the Series C Preferred Stock.
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(a) Optional Conversion. Each share of Series C Preferred Stock will
be convertible, at the option of the holder thereof, at the office of the
Corporation or any transfer agent for the Series C Preferred Stock, into a
number of shares of Common Stock as determined in accordance with Section 6.3
hereof.
(b) Automatic Conversion of Series C Preferred Stock. Each share of
Series C Preferred Stock will automatically convert into a number of shares of
Common Stock as determined in accordance with Section 6.3 hereof:
(i) immediately upon the closing of the sale pursuant to a
registration statement under the Securities Act of 1933, as amended, for a
public offering (other than a registration on Form S-8, Form S-4 or comparable
forms) of the Corporation's securities which results in gross proceeds to the
Corporation of not less than $30,000,000; or
(ii) commencing three months after the Initial Closing of the
Series C Preferred Stock, if the average closing bid price of the Common Stock
exceeds 300% of the Conversion Price for 20 consecutive trading days.
6.2 Mechanics of Conversion. Upon conversion, the holder of Series C
Preferred Stock will surrender the certificate or certificates therefor, duly
endorsed, at the office of the Corporation or of any transfer agent for the
Series C Preferred Stock, and such holder will give written notice to the
Corporation stating the name or names in which such holder wishes the
certificate or certificates for shares of Common Stock to be issued; provided,
however, that the Corporation shall not be required to issue the shares of
Common Stock in a name other than that of the holder of the Series C Preferred
Stock being converted unless it can do so in conformance with applicable laws.
The Corporation, as soon as practicable thereafter, will issue and deliver at
such office to such holder of Series C Preferred Stock or to such holder's
nominee or nominees, a certificate or certificates for the number of shares of
Common Stock to which such holder will be entitled as aforesaid. Any conversion
will be deemed to have been made immediately prior to the close of business on
the date of the event of conversion, in the event of automatic conversion
hereunder, or, in the event of voluntary conversion, immediately prior to the
close of business on the date when the Corporation receives a holder's
certificate or certificates for Series C Preferred Stock and any other documents
or instruments required hereunder or by applicable law, and the person or
persons entitled to receive the shares of Common Stock issuable upon conversion
will be treated for all purposes as the record holder or holders of such shares
of Common Stock on such date.
6.3 Conversion Rate. Each share of Series C Preferred Stock will be
convertible into the number of shares of Common Stock determined by dividing (i)
the Liquidation Value of the Series C Preferred Stock by (ii) $1.00 (as such
conversion price may be adjusted, the "Conversion Price").
6.4 Adjustment for Reorganization, Reclassification, Consolidation, Merger
or Sale. If any capital reorganization or reclassification of the Corporation,
or any consolidation or merger of the Corporation with another person, or the
sale, transfer or lease of all or substantially all of its assets to another
person shall be effected in such a way that holders of shares of Common Stock
shall be entitled to receive stock, securities or assets with respect to or in
exchange for their shares, then provision shall be made, in accordance with this
Section 6.4, whereby the holder of Series C Preferred Stock shall thereafter
have the right to purchase and receive such securities or assets as would have
been issued and payable with respect to or in exchange for the aggregate shares
of Common Stock immediately theretofore purchasable and receivable upon the
exercise of the rights represented hereby if conversion of the Series C
Preferred Stock had occurred immediately prior to such reorganization,
reclassification, consolidation, merger or sale. The Corporation will not effect
any such consolidation, merger, sale, transfer or lease unless prior to the
consummation thereof the successor entity (if other than the Corporation)
resulting from such consolidation or merger or the entity purchasing or leasing
such assets shall assume by written instrument the obligation to deliver to such
holder of Series C Preferred Stock such securities or assets as, in accordance
with the foregoing provisions, such holder of Series C Preferred Stock may be
entitled to purchase. The provisions of this Section 6.4 shall similarly apply
to successive consolidations, mergers, exchanges, sales, transfers or leases.
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6.5 Adjustment for Stock Dividends and Securities Distributions. If, at any
time or from time to time after March 10, 2000, the Corporation shall distribute
to the holders of shares of Common Stock (i) securities, (ii) property, other
than cash, or (iii) cash, without fair payment therefor, then, and in each such
case, the holder of Series C Preferred Stock, upon the conversion of Series C
Preferred Stock, shall be entitled to receive such securities, property and cash
which the holder of Series C Preferred Stock would hold on the date of such
conversion if, on the date thereof, the holder of Series C Preferred Stock had
been the holder of record of the shares of Common Stock issued upon such
conversion and, during the period from March 10, 2000 to and including the date
of such conversion, had retained such shares of Common Stock and the securities,
property and cash receivable by the holder of Series C Preferred Stock during
such period, subject, however, to the holder of Series C Preferred Stock
agreeing to any conditions to such distribution as were required of all other
holders of shares of Common Stock in connection with such distribution. If the
securities to be distributed by the Corporation involve rights, warrants,
options or any other form of convertible securities and the right to exercise or
convert such securities would expire in accordance with its terms prior to the
conversion of the Series C Preferred Stock, then the terms of such securities
shall provide that such exercise or convertibility right shall remain in effect
until thirty (30) days after the date the holder of Series C Preferred Stock
receives such securities pursuant to the exercise hereof.
6.6 Other Adjustments. In addition to those adjustments set forth in
Sections 6.4 and 6.5, but without duplication of the adjustments to be made
under such Sections, if the Company:
(a) pays a dividend or makes a distribution on its Common Stock in
shares of its Common Stock;
(b) subdivides its outstanding shares of Common Stock into a greater
number of shares;
(c) combines its outstanding shares of Common Stock into a smaller
number of shares;
(d) makes a distribution on its Common Stock in shares of its capital
stock other than Common Stock; and/or
(e) issues, by reclassification of its Common Stock, any shares of
its capital stock;
then the number and kind of shares of Common Stock issued upon conversion of the
Series C Preferred Stock shall be adjusted so that the holder of Series C
Preferred Stock upon conversion shall be entitled to receive the kind and number
of shares of Common Stock or other securities of the Corporation that the holder
of Series C Preferred Stock would have owned or have been entitled to receive
after the happening of any of the events described above had the Series C
Preferred Stock been converted immediately prior to the happening of such event
or any record date with respect thereto. An adjustment made pursuant to this
Section 6.6 shall become effective immediately after the record date in the case
of a dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or issuance. If, as a
result of an adjustment made pursuant to this Section 6.6, the holder of Series
C Preferred Stock thereafter surrendered for conversion shall become entitled to
receive shares of two or more classes of capital stock or shares of Common Stock
and any other class of capital stock of the Corporation, the Board of Directors
(whose determination shall be conclusive and shall be described in a written
notice to all holders of Series C Preferred Stock promptly after such
adjustment) shall determine the allocation of the adjusted Conversion Price
between or among shares of such classes of capital stock or shares of Common
Stock and such other class of capital stock. The adjustment to the number of
shares of Common Stock issuable upon the conversion of Series C Preferred Stock
described in this Section 6.6 shall be made each time any event listed in
paragraphs (a) through (e) of this Section 6.6 occurs.
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Simultaneously with all adjustments to the number and/or kind of
securities, property and cash to be issued in connection with the conversion of
the Series C Preferred Stock, the Conversion Price will also be appropriately
and proportionately adjusted.
6.7 Adjustment for Sale of Shares. In the event the Corporation at any time
issues additional Common Stock, preferred stock, options, warrants or
convertible securities after the Original Issue Date, other than securities
currently outstanding as of March 10, 2000 or issued upon the conversion or
exercise of any securities outstanding as of March 10, 2000, at a purchase price
less than the then applicable Conversion Price for the Series C Preferred Stock,
then and in each such case, the Conversion Price for the Series C Preferred
Stock will be automatically reduced to such lower purchase price and the number
of shares issuable upon conversion of the Preferred Shares shall be increased
proportionately ; provided, however, that no adjustment to the Conversion Price
or the number of shares shall be made pursuant to this Section 6.7 in the event
(i) the Company grants options to employees, consultants, officers or directors
of the Company pursuant to contracts or plans approved by the Board of Directors
of the Company, (ii) of the issuance of securities to a "strategic partner" as
determined by the Board of Directors of the Company, (iii) of the issuance of
securities pursuant to a strategic acquisition as determined by the Board of
Directors or (iv) of the issuance of up to an aggregate of 100,000 shares (as
appropriately adjusted for stock splits, stock dividends and similar adjustments
after the date hereof) of Common Stock (or convertible preferred stock, options,
warrants or other securities convertible into or exercisable for Common Stock)
at a purchase price less than the Conversion Price and not otherwise excepted
pursuant to (i), (ii) or (iii) above.
(a) For the purpose of making any adjustment in the Conversion Price
as provided in this Section 6.7, the consideration received by the Corporation
for any issue or sale of Common Stock will be computed:
(i) to the extent it consists of cash, as the amount of cash
received by the Corporation before deduction of any offering expenses payable by
the Corporation and any underwriting or similar commissions, compensation, or
concessions paid or allowed by the Corporation in connection with such issue or
sale;
(ii) to the extent it consists of property other than cash, at
the fair market value of that property as determined in good faith by the
Corporation's Board of Directors; and
(iii) if Common Stock is issued or sold together with other stock
or securities or other assets of the Corporation for a consideration which
covers both, as the portion of the consideration so received that may be
reasonably determined in good faith by the Corporation's Board of Directors to
be allocable to such Common Stock.
(b) If the Corporation (i) grants or sells any rights or options to
subscribe for, purchase, or otherwise acquire shares of Common Stock, or (ii)
issues or sells any security convertible into shares of Common Stock, then, in
each case, the price per share of Common Stock issuable on the exercise of the
rights or options or the conversion of the securities will be determined by
dividing (x) the total amount, if any, received or receivable by the Corporation
as consideration for the granting or sale of the rights or options or the issue
or sale of the convertible securities, plus the minimum aggregate amount of
additional consideration payable to the Corporation on exercise or conversion of
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the securities, by (y) the maximum number of shares of Common Stock issuable on
the exercise of conversion. Such granting or issue or sale will be considered to
be an issue or sale for cash of the maximum number of shares of Common Stock
issuable on exercise or conversion at the price per share determined under this
Section 6.7, and the Conversion Price for the Series C Preferred Stock will be
adjusted as above provided to reflect (on the basis of that determination) the
issue or sale. No further adjustment of the Conversion Price for the Series C
Preferred Stock will be made as a result of the actual issuance of shares of
Common Stock on the exercise of any such rights or options or the conversion of
any such convertible securities.
(c) Upon the redemption or repurchase of any such securities or the
expiration or termination of the right to convert into, exchange for, or
exercise with respect to, Common Stock, the Conversion Price for the Series C
Preferred Stock will be readjusted to such price as would have been obtained had
the adjustment made upon their issuance been made upon the basis of the issuance
of only the number of such securities as were actually converted into, exchanged
for, or exercised with respect to, Common Stock. If the purchase price or
conversion or exchange rate provided for in any such security changes at any
time, then, upon such change becoming effective, the Conversion Price for the
Series C Preferred Stock then in effect will be readjusted to such price as
would have been obtained had the adjustment made upon the issuance of such
securities been made upon the basis of (i) the issuance of only the number of
shares of Common Stock theretofore actually delivered upon the conversion,
exchange or exercise of such securities, and the total consideration received
therefor, and (ii) the granting or issuance, at the time of such change, of any
such securities then still outstanding for the consideration, if any, received
by the Company therefor and to be received on the basis of such changed price or
rate.
6.8 Other Action Affecting Shares. If the Corporation takes any action
affecting its share of Common Stock after March 10, 2000, that would be covered
in Sections 6.4, 6.5 or 6.6 but for the manner in which such action is taken or
structured, other than an action described in Sections 6.4, 6.5 or 6.6, which
would in any way diminish the value of the Series C Preferred Stock, then the
Conversion Price shall be adjusted in such manner as the Board of Directors of
the Corporation shall in good faith determine to be equitable under the
circumstances.
6.9 Certificate as to Adjustments. Upon the occurrence of each adjustment
or readjustment of the Conversion Rate pursuant to this Section 6, the
Corporation at its expense promptly will compute such adjustment or readjustment
in accordance with the terms hereof and prepare and furnish to each holder of
Series C Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation, upon the written request at any time of
any holder of Series C Preferred Stock, will furnish or cause to be furnished to
such holder a like certificate setting forth (i) such adjustments and
readjustments, (ii) the Conversion Rate for the Series C Preferred Stock at the
time in effect, and (iii) the number of shares of Common Stock and the amount,
if any, of other property which at the time would be received upon the
conversion of the Series C Preferred Stock held by such holder.
6.10 Fractional Shares Upon Conversion. No fractional shares of Common
Stock will be issued upon conversion of Series C Preferred Stock. If the
conversion would result in any fractional share, the Corporation shall, in lieu
of issuing any fractional share, pay the holder an amount in cash equal to such
fraction of the then effective Conversion Price as promptly as funds legally are
available therefor.
7. Modifications and Waivers. The terms of the Series C Preferred Stock may be
amended, modified or waived by agreement of the Corporation, Commonwealth
Associates, L.P. ("Commonwealth") and a committee to be designated by
Commonwealth whose members hold in the aggregate not less than 20% of the
outstanding Series C Preferred Stock (the "Committee"); provided, however, that
6
<PAGE>
no such amendment, modification or waiver which would decrease the number of
shares of Common Stock issuable upon the Conversion of the Series C Preferred
Stock, or increase the Conversion Price therefor (other than as a result of the
waiver or modification of any anti-dilution provisions) may be made without the
approval of the holders of at least 50% of the outstanding Series C Preferred
Stock.
8. Notices of Record Date. In the event of any taking by the Corporation of a
record of the holders of any class of securities for the purpose of determining
the holders thereof who are entitled to receive any dividend (other than a cash
dividend) or other distribution, any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities or
property, or to receive any other right, the Corporation will mail to each
holder of Series C Preferred Stock at least ten days prior to the date specified
therein, a notice specifying the date on which any such record is to be taken
for the purpose of such dividend, distribution or rights, and the amount and
character of such dividend, distribution or right, but failure to give such
notice shall not affect the validity of the action taken as to which the notice
should have been given.
9. Reservation of Stock Issuable Upon Conversion. From and after the date the
Company's shareholders approve the amendment to its Articles of Incorporation
increasing the number of authorized shares of Common Stock, the Corporation at
all times will reserve and keep available out of its authorized but unissued
shares of Common Stock solely for the purpose of effecting the conversion of the
shares of Series C Preferred Stock such number of its shares of Common Stock as
from time to time will be sufficient to effect the conversion of all then
outstanding shares of Series C Preferred Stock; and if at any time the number of
authorized but unissued shares of Common Stock is not sufficient to effect the
conversion of all then outstanding shares of Series C Preferred Stock, in
addition to such other remedies as may be available to the holders of Series C
Preferred Stock for such failure, the Corporation will take such corporate
action as, in the opinion of its counsel, may be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as will
be sufficient for such purpose.
10. Notices. Any notices required by this Certificate to be given to the holders
of shareholders or the Corporation must be in writing and will be deemed given
upon personal delivery, one day after deposit with a reputable overnight courier
service for overnight delivery or after transmission by facsimile telecopier
with confirmation of successful transmission, or five days after deposit in the
United States mail, by registered or certified mail postage prepaid, or upon
actual receipt if given by any other method, addressed to each holder of such
record at his address appearing on the books of the Corporation.
11. Covenants. In addition to any other rights provided by law, so long as any
shares of Series C Preferred Stock are outstanding, the Corporation, without
first obtaining the written consent of Commonwealth and the Committee as set
forth in Section 7 above, will not:
(a) increase the authorized number of shares of Preferred Stock; or
(b) authorize or issue shares of any class or series of stock having any
preference or priority senior to the Series C Preferred Stock as to dividends,
rights on liquidation or redemption.
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For office use only 006
Mail to: Secretary of State
Corporations Section
1560 Broadway, Suite 200
Denver, CO 80202
(303) 894-2251
Fax (303) 894-2242
Please include a typed
self-addressed envelope
MUST BE TYPED
FILING FEE: $5.00
MUST SUBMIT TWO COPIES
CERTIFICATE OF CORRECTION
Pursuant to the Colorado Business Corporation Act, the undersigned hereby
executes the following certificate of correction:
FIRST: The exact name of the corporation is U.S. WIRELESS DATA, INC.
----------------------------------
organized under the laws of COLORADO
-------------------------------------------
SECOND: Description of the documents being corrected (i.e. Articles of
Incorporation, Amendment, Merger or other) or an attached copy of the
document:
ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION - Recpt. # 20001050706
THIRD: Date document was filed March 10, 2000.
--------------
FOURTH: Statement of incorrect information: Exhibit 1 - Designation of Series C
Convertible Preferred Stock of U.S. Wireless Data, Inc.
1. Designation. Six Million Five Hundred Thousand (6,500,000) shares of the
Corporation's 15,000,000 total authorized shares of no par value preferred stock
are hereby designated as Series C Convertible Preferred Stock (hereinafter
referred to as the "Series C Preferred Stock").
FIFTH: Statement of corrected information: Exhibit 1 - Designation of Series C
Convertible Preferred Stock of U.S. Wireless Data, Inc.
1. Designation. Eight Million Four Hundred Fifty Thousand (8,450,000) shares of
the Corporation's 15,000,000 total authorized shares of no par value preferred
stock are hereby designated as Series C Convertible Preferred Stock (hereinafter
referred to as the "Series C Preferred Stock").
U. S. WIRELESS DATA, INC.
Signature: By: /s/ Charles I. Leone
-------------------------------------
Title: Charles I. Leone, Chief Financial
Officer, Chief Operating Officer
and Secretary
THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES ISSUABLE UPON
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). NEITHER THIS WARRANT NOR SUCH SECURITIES MAY BE TRANSFERRED
EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND ANY
APPLICABLE STATE SECURITIES LAWS OR (B) UPON RECEIPT BY THE ISSUER OF AN OPINION
OF COUNSEL, WHICH OPINION OF COUNSEL SHALL BE REASONABLY SATISFACTORY TO THE
ISSUER, TO THE EFFECT THAT SUCH TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE
ACT AND SUCH STATE SECURITIES LAWS.
WARRANT AGREEMENT
FOR COMMON STOCK OF
U.S. WIRELESS DATA, INC.
Warrant No. ___
THIS CERTIFIES that, for value received, [______________], or its permitted
assigns registered on the books of the Company (collectively, the "Holder"), is
entitled to purchase from U.S. Wireless Data, Inc., a Colorado corporation (the
"Company"), at any time, and from time to time, during the exercise period
referred to in Section 1 hereof [___________] shares (the "Warrant Shares") of
common stock of the Company, no par value (the "Common Stock"). The purchase
price for each Warrant Share is one dollar and fifty cents ($1.50) (as may be
adjusted, the "Warrant Share Price"). Securities issuable upon exercise of this
Warrant and the price payable therefor are subject to adjustment from time to
time as hereinafter set forth. As used herein, the term "Warrant" shall include
any warrant or warrants hereafter issued in consequence of the exercise of this
Warrant in part or transfer of this Warrant in whole or in part.
1. Exercise; Payment for Ownership Interest. Notwithstanding any other term or
provision contained herein, no Warrants shall become convertible into Common
Stock under any circumstances until the shareholders of the Company shall have
approved an amendment to the Company's Articles of Incorporation increasing the
number of authorized shares of Common Stock to a number that is sufficient
(given all other Common Stock share reservations) to allow for due and proper
reservation of a sufficient number of shares of Common Stock to allow for the
exercise of the Warrants.
(a) Upon the terms and subject to the conditions set forth herein,
this Warrant may be exercised in whole or in part by the Holder hereof at any
time, or from time to time, on or after the date hereof and prior to 5 p.m. New
York time on ___________, 2007, by presentation and surrender of this Warrant to
the principal offices of the Company, together with the Purchase Form annexed
hereto, duly executed, and accompanied by payment to the Company of an amount
equal to the Warrant Share Price multiplied by the number of Warrant Shares as
to which this Warrant is then being exercised. Moreover, any transfer of Warrant
<PAGE>
Shares obtained by the Holder in exercise of this Warrant is subject to the
requirement that such securities be registered under the Securities Act of 1933,
as amended (the "1933 Act"), and applicable state securities laws or exempt from
registration under such laws. The Holder of this Warrant shall be deemed to be a
shareholder of the Warrant Shares as to which this Warrant is exercised in
accordance herewith effective immediately after the close of business on the
date on which the Holder shall have delivered to the Company this Warrant in
proper form for exercise and payment by certified or official bank check or wire
transfer of the cash purchase price for the number of Warrant Shares as to which
the exercise is being made, or by delivery to the Company of securities of the
Company having a value equal to the cash purchase price for such number of
Warrant Shares determined as of the date of delivery.
(b) All or any portion of the Warrant Share Price may be paid by
surrendering Warrants effected by presentation and surrender of this Warrant to
the Company with a Cashless Exercise Form annexed hereto duly executed (a
"Cashless Exercise"). Such presentation and surrender shall be deemed a waiver
of the Holder's obligation to pay all or any portion of the aggregate Warrant
Share Price. In the event of a Cashless Exercise, the Holder shall exchange its
Warrant for that number of shares of Common Stock determined by multiplying the
number of Warrant Shares for which the Holder desires to exercise this Warrant
by a fraction, the numerator of which shall be the difference between the then
current market price per share of the Common Stock and the Warrant Share Price,
and the denominator of which shall be the then current market price per share of
Common Stock. For purposes of any computation under this Section 1(b), the then
current market price per share of Common Stock at any date shall be deemed to be
the average for the ten consecutive business days immediately prior to the
Cashless Exercise of the daily closing prices of the Common Stock on the
principal national securities exchange on which the Common Stock is admitted to
trading or listed, or if not listed or admitted to trading on any such exchange,
the closing prices as reported by the Nadaq National Market, or if not then
listed on the Nasdaq National Market, the average of the highest reported bid
and lowest reported asked prices as reported by the National Association of
Securities Dealers, Inc. Automated Quotations System ("Nasdaq") or if not then
publicly traded, the fair market price of the Common Stock as determined by the
Board of Directors of the Company.
(c) If this Warrant shall be exercised in part only, the Company
shall, upon surrender of this Warrant for cancellation, execute and deliver a
new Warrant evidencing the rights of the Holder thereof to purchase the balance
of the Warrant Shares purchasable hereunder as to which the Warrant has not been
exercised. If this Warrant is exercised in part, such exercise shall be for a
whole number of Warrant Shares. Upon any exercise and surrender of this Warrant,
the Company (i) will issue and deliver to the Holder a certificate or
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<PAGE>
certificates in the name of the Holder for the largest whole number of Warrant
Shares to which the Holder shall be entitled and, if this Warrant is exercised
in whole, in lieu of any fractional Warrant Share to which the Holder otherwise
might be entitled, cash in an amount equal to the fair value of such fractional
Warrant Share (determined in such reasonable and equitable manner as the Board
of Directors of the Company shall in good faith determine), and (ii) will
deliver to the Holder such other securities, properties and cash which the
Holder may be entitled to receive upon such exercise, or the proportionate part
thereof if this Warrant is exercised in part, pursuant to the provisions of this
Warrant.
2. Adjustments. Securities issuable upon exercise of this Warrant and the
Warrant Share Price shall be subject to adjustment from time to time as follows:
2.1 Reorganization, Reclassification, Consolidation, Merger or Sale.
If any capital reorganization or reclassification of the Company, or any
consolidation or merger of the Company with another person, or the sale,
transfer or lease of all or substantially all of its assets to another person
shall be effected in such a way that holders of shares of Common Stock shall be
entitled to receive stock, securities or assets with respect to or in exchange
for their shares, then provision shall be made, in accordance with this Section
2.1, whereby the Holder hereof shall thereafter have the right to purchase and
receive, upon the basis and upon the terms and conditions specified in this
Warrant Agreement and in addition to or in exchange for, as applicable, the
Warrant Shares subject to this Warrant immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby, such securities
or assets as would have been issued or payable with respect to or in exchange
for the aggregate Warrant Shares immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby if exercise of the
Warrant had occurred immediately prior to such reorganization, reclassification,
consolidation, merger or sale. The Company will not effect any such
consolidation, merger, sale, transfer or lease unless prior to the consummation
thereof the successor entity (if other than the Company) resulting from such
consolidation or merger or the entity purchasing or leasing such assets shall
assume by written instrument (i) the obligation to deliver to the Holder such
securities or assets as, in accordance with the foregoing provisions, the Holder
may be entitled to purchase, and (ii) all other obligations of the Company under
this Warrant. The provisions of this Section 2.1 shall similarly apply to
successive consolidations, mergers, exchanges, sales, transfers or leases.
2.2 Stock Dividends and Securities Distributions. If, at any time or
from time to time after the date of this Warrant, the Company shall distribute
to the holders of shares of Common Stock (i) securities, (ii) property, other
than cash, or (iii) cash, without fair payment therefor, then, and in each such
case, the Holder, upon the exercise of this Warrant, shall be entitled to
receive such securities, property and cash which the Holder would hold on the
date of such exercise if, on the date of this Warrant, the Holder had been the
holder of record of the shares of Common Stock subscribed for upon such exercise
and, during the period from the date of this Warrant to and including the date
3
<PAGE>
of such exercise, had retained such shares of Common Stock and the securities,
property and cash receivable by the Holder during such period, subject, however,
to the Holder agreeing to any conditions to such distribution as were required
of all other holders of shares of Common Stock in connection with such
distribution. If the securities to be distributed by the Company involve rights,
warrants, options or any other form of convertible securities and the right to
exercise or convert such securities would expire in accordance with its terms
prior to the exercise of this Warrant, then the terms of such securities shall
provide that such exercise or convertibility right shall remain in effect until
thirty (30) days after the date the Holder of this Warrant receives such
securities pursuant to the exercise hereof.
2.3 Other Adjustments. In addition to those adjustments set forth in
Sections 2.1 and 2.2, but without duplication of the adjustments to be made
under such Sections, if the Company:
(i) pays a dividend or makes a distribution on its Common Stock
in shares of its Common Stock;
(ii) subdivides its outstanding shares of Common Stock into a
greater number of shares;
(iii) combines its outstanding shares of Common Stock into a
smaller number of shares;
(iv) makes a distribution on its Common Stock in shares of its
capital stock other than Common Stock; and/or
(v) issues, by reclassification of its Common Stock, any shares
of its capital stock; then the number and kind of Warrant Shares purchasable
upon exercise of this Warrant shall be adjusted so that the Holder upon exercise
hereof shall be entitled to receive the kind and number of Warrant Shares or
other securities of the Company that the Holder would have owned or have been
entitled to receive after the happening of any of the events described above had
this Warrant been exercised immediately prior to the happening of such event or
any record date with respect thereto. An adjustment made pursuant to this
Section 2.3 shall become effective immediately after the record date in the case
of a dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or issuance. If, as a
result of an adjustment made pursuant to this Section 2.3, the Holder of this
Warrant thereafter surrendered for exercise shall become entitled to receive
shares of two or more classes of capital stock or shares of Common Stock and any
other class of capital stock of the Company, the Board of Directors (whose
determination shall be conclusive and shall be described in a written notice to
all holders of Warrants promptly after such adjustment) shall determine the
allocation of the adjusted Warrant Share Price between or among shares of such
classes of capital stock or shares of Common Stock and such other class of
capital stock.
4
<PAGE>
The adjustment to the number of Warrant Shares purchasable upon
the exercise of this Warrant described in this Section 2.3 shall be made each
time any event listed in paragraphs (i) through (v) of this Section 2.3 occurs.
Simultaneously with all adjustments to the number and/or kind of
securities, property and cash to be issued in connection with the exercise of
this Warrant, the Warrant Share Price will also be appropriately and
proportionately adjusted.
2.4 Sale of Securities. In the event the Company, at any time after
the date of this Warrant issues additional Common Stock, preferred stock,
options, warrants, or convertible securities other than securities currently
outstanding as of the date hereof or issued upon the conversion or exercise of
any securities outstanding as of the date hereof, at a purchase price less than
the Warrant Share Price in effect immediately prior to such issuance or sale,
then the Warrant Share Price shall be automatically reduced to such lower
purchase price and the number of Warrant Shares shall be increased
proportionately; provided, however, that no adjustment to the Warrant Share
Price or the number of Warrant Shares shall be made pursuant to this Section 2.4
in the event (i) of issuances by the Company of less then 100,000 shares of
Common Stock, or securities convertible into less than 100,000 shares of Common
Stock, in a single transaction, (ii) the Company grants options to employees,
consultants, officers or directors of the Company pursuant to plans approved by
the Board of Directors of the Company, (iii) upon the issuance of securities to
a "strategic partner" as determined by the Board of Directors of the Company or
(iv) upon the issuance of securities pursuant to a strategic acquisition as
determined by the Board of Directors.
(a) For the purpose of making any adjustment in the Warrant Share
Price as provided in this Section 2.4, the consideration received by the Company
for any issue or sale of Common Stock will be computed:
(i) to the extent it consists of cash, as the amount of cash
received by the Company before deduction of any offering expenses payable by the
Company and any underwriting or similar commissions, compensation, or
concessions paid or allowed by the Company in connection with such issue or
sale;
(ii) to the extent it consists of property other than cash,
at the fair market value of that property as determined in good faith by the
Company's Board of Directors; and
(iii) if Common Stock is issued or sold together with other
stock or securities or other assets of the Company for a consideration which
covers both, as the portion of the consideration so received that may be
reasonably determined in good faith by the Company's Board of Directors to be
allocable to such Common Stock.
5
<PAGE>
(b) If the Company (i) grants or sells any rights or options to
subscribe for, purchase, or otherwise acquire shares of Common Stock, or (ii)
issues or sells any security convertible into shares of Common Stock, then, in
each case, the price per share of Common Stock issuable on the exercise of the
rights or options or the conversion of the securities will be determined by
dividing (x) the total amount, if any, received or receivable by the Company as
consideration for the granting or sale of the rights or options or the issue or
sale of the convertible securities, plus the minimum aggregate amount of
additional consideration payable to the Company on exercise or conversion of the
securities, by (y) the maximum number of shares of Common Stock issuable on the
exercise of conversion. Such granting or issue or sale will be considered to be
an issue or sale for cash of the maximum number of shares of Common Stock
issuable on exercise or conversion at the price per share determined under this
Section 2.4, and the Warrant Share Price will be adjusted as above provided to
reflect (on the basis of that determination) the issue or sale. No further
adjustment of the Warrant Share Price will be made as a result of the actual
issuance of shares of Common Stock on the exercise of any such rights or options
or the conversion of any such convertible securities.
Upon the redemption or repurchase of any such securities or the
expiration or termination of the right to convert into, exchange for, or
exercise with respect to, Common Stock, the Warrant Share Price will be
readjusted to such price as would have been obtained had the adjustment made
upon their issuance been made upon the basis of the issuance of only the number
of such securities as were actually converted into, exchanged for, or exercised
with respect to, Common Stock. If the purchase price or conversion or exchange
rate provided for in any such security changes at any time, then, upon such
change becoming effective, the Warrant Share Price then in effect will be
readjusted to such price as would have been obtained had the adjustment made
upon the issuance of such securities been made upon the basis of (i) the
issuance of only the number of shares of Common Stock theretofore actually
delivered upon the conversion, exchange or exercise of such securities, and the
total consideration received therefor, and (ii) the granting or issuance, at the
time of such change, of any such securities then still outstanding for the
consideration, if any, received by the Company therefor and to be received on
the basis of such changed price or rate.
2.5 Other Action Affecting Warrant Shares. If the Company takes any
action affecting its shares of Common Stock after the date hereof, that would be
covered by Sections 2.1, 2.2 or 2.3 but for the manner in which such action is
taken or structured, other than an action described in Sections 2.1, 2.2 or 2.3
which would in any way diminish the value of this Warrant, then the Warrant
Share Price shall be adjusted in such manner as the Board of Directors of the
Company shall in good faith determine to be equitable under the circumstances.
2.6 Notice of Adjustments. Upon the occurrence of each adjustment or
readjustment of the Warrant Share Price pursuant to this Section 2, the Company
at its expense will promptly compute such adjustment or readjustment in
accordance with the terms of this Warrant and prepare a certificate setting
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<PAGE>
forth such adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based. The Company will forthwith mail, by
first class mail, postage prepaid, a copy of each such certificate to the Holder
of this Warrant at the address of such Holder as shown on the books of the
Company.
2.7 Other Notices. If at any time:
(a) the Company shall (i) offer for subscription pro rata to the
holders of shares of the Common Stock any additional equity in the Company or
other rights; (ii) pay a dividend in additional shares of the Common Stock or
distribute securities or other property to the holders of shares of the Common
Stock (including, without limitation, evidences of indebtedness and equity and
debt securities); or (iii) issue securities convertible into, or rights or
Warrants to purchase, securities of the Company;
(b) there shall be any capital reorganization or reclassification
or consolidation or merger of the Company with, or sale, transfer or lease of
all or substantially all of its assets to, another entity; or
(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company; then, in any one or more of said
cases, the Company shall give, by first class mail, postage prepaid, to the
Holder of this Warrant at the address of such Holder as shown on the books of
the Company, (a) at least 15 days' prior written notice of the date on which the
books of the Company shall close or a record shall be taken for such
subscription rights, dividend, distribution or issuance, and (b) in the case of
any such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, at least 15 days' prior written notice
of the date when the same shall take place if no stockholder vote is required
and at least 15 days' prior written notice of the record date for stockholders
entitled to vote upon such matter if a stockholder vote is required. Such notice
in accordance with the foregoing clause (a) shall also specify, in the case of
any such subscription rights, the date on which the holders of shares of Common
Stock shall be entitled to exercise their rights with respect thereto, and such
notice in accordance with the foregoing clause (b) shall also specify the date
on which the holders of shares of Common Stock shall be entitled to exchange
their shares of Common Stock for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, as the case may be. Failure to give the notice
referred to herein shall not affect the validity or legality of the action which
should have been the subject of the notice.
3. No Voting Rights. Except as otherwise provided herein, this Warrant shall not
be deemed to confer upon the Holder any right to vote or to consent to or
receive notice as a stockholder of the Company, as such, in respect of any
matters whatsoever, or any other rights or liabilities as a stockholder, prior
to the exercise hereof.
7
<PAGE>
4. Warrants Transferable.
This Warrant and all rights hereunder are transferable, in whole or in
part, at the principal offices of the Company by the Holder hereof, upon
surrender of this Warrant properly endorsed; provided, however, that without the
prior written consent of the Company, this Warrant and all rights hereunder may
be transferred only (i) to an affiliate of the initial Holder hereof or
successor in interest to any such person in a transaction exempt from
registration under the 1933 Act; or (ii) pursuant to the registration of this
Warrant or the Warrant Shares under the 1933 Act or subsequent to one year from
the date hereof under Rule 144 or other exemption from such registration.
5. Warrants Exchangeable; Loss, Theft, Destruction, Etc. This Warrant is
exchangeable, upon surrender hereof by the Holder hereof at the principal
offices of the Company, for new Warrants of like tenor representing in the
aggregate the right to subscribe for and purchase the Warrant Shares which may
be subscribed for and purchased hereunder, each such new Warrant to represent
the right to subscribe for and purchase such Warrant Shares (not to exceed the
maximum aggregate Warrant Shares which may be purchased hereunder) as shall be
designated by such Holder hereof at the time of such surrender. Upon receipt of
evidence satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant and, in the case of any such loss, theft or
destruction, upon delivery of a bond or indemnity satisfactory to the Company,
or, in the case of any such mutilation, upon surrender or cancellation of this
Warrant, the Company will issue to the Holder hereof a new Warrant of like
tenor, in lieu of this Warrant, representing the right to subscribe for and
purchase the Warrant Shares which may be subscribed for and purchased hereunder.
6. Legends; Investment Representations. Any certificate evidencing the
securities issued upon exercise of this Warrant shall bear a legend in
substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). SUCH
SECURITIES MAY NOT BE TRANSFERRED EXCEPT (A) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR
(B) UPON RECEIPT BY THE ISSUER OF AN OPINION OF COUNSEL, WHICH OPINION OF
COUNSEL SHALL BE REASONABLY SATISFACTORY TO THE ISSUER, TO THE EFFECT THAT SUCH
TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE ACT AND SUCH STATE SECURITIES
LAWS.
7. Redemption. This Warrant is callable for a nominal price at the option of the
Company on thirty days' notice to the Holder if:
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(a) the average closing bid price of the Company's Common Stock for
twenty consecutive trading days exceeds 300% of the Warrant Share Price, as
adjusted; and
(b) the Common Stock of the Company is trading on a national
securities exchange or the Nasdaq SmallCap or National Market Systems; and
(c) a registration statement covering the Warrant Shares has been
declared effective by the Securities and Exchange Commission and the Warrant
Shares are not otherwise subject to any lock-up restrictions.
8. Modifications and Waivers. The terms of the Warrants may be amended, modified
or waived by agreement of the Company, Commonwealth Associates, L.P. and a
committee to be designated by Commonwealth Associates, L.P. whose members hold
in aggregate not less than 20% of the outstanding Warrants (the "Committee");
provided, however, that no such amendment, modification or waiver which would
decrease the number of Warrant Shares purchasable upon the exercise of any
Warrant, or increase the Warrant Share Price therefor (other than as a result of
the waiver or modification of any anti-dilution provisions) may be made without
the approval of the holders of at least 50% of the outstanding Warrants.
9. Miscellaneous. The Company shall pay all expenses and other charges payable
in connection with the preparation, issuance and delivery of this Warrant and
all substitute Warrants other than as set forth in this Section 9. The Holder
shall pay all taxes (other than any issuance taxes, including, without
limitation, documentary stamp taxes, transfer taxes and other governmental
charges, which shall be paid by the Company) in connection with such issuance
and delivery of the Warrants and the Warrant Shares.
The Company shall maintain, at the office or agency of the Company
maintained by the Company, books for the registration and transfer of the
Warrant.
10. Reservation of Warrant Shares. From and after the date the Company's
shareholders approve the amendment to its Articles of Incorporation increasing
the number of authorized shares of Common Stock, the Company will at all times
reserve and keep available, free from preemptive rights, out of the aggregate of
its authorized but unissued Common Stock or its authorized and issued Common
Stock held in its treasury, solely for the purpose of enabling it to satisfy any
obligation to issue Warrant Shares upon exercise of this Warrant, the maximum
number of shares of Common Stock which may then be deliverable upon the exercise
of this Warrant.
The Company or, if appointed, the transfer agent for the Common Stock
(the "Transfer Agent") and every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of any of the rights of
purchase aforesaid will be irrevocably authorized and directed at all times to
reserve such number of authorized shares as shall be required for such purpose.
The Company will keep a copy of this Warrant on file with the Transfer Agent and
with every subsequent transfer agent for any shares of the Company's capital
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stock issuable upon the exercise of the rights of purchase represented by this
Warrant. The Company will furnish such Transfer Agent a copy of all notices of
adjustments and certificates related thereto transmitted to the Holder pursuant
to Section 2.6 hereof.
The Company covenants that all Warrant Shares which may be issued upon
exercise of this Warrant will, upon issue, be fully paid, nonassessable, free of
preemptive rights and free from all taxes, liens, charges and security interests
with respect to the issue thereof.
11. Registration; Obtaining Stock Exchange Listings. The Company agrees to file
a registration statement under the 1933 Act, which shall include the Warrant
Shares, on Form SB-2 or another available form, within nine months of the final
closing of the offering of the Units consisting of Series C Convertible
Preferred Stock and Warrants, of which this Warrant was originally a part, and
shall use its reasonable best efforts to have such registration statement
declared effective as soon as practicable thereafter, pursuant to a Subscription
Agreement between the Company and the Holder dated as of the date hereof.
12. Adjustment of Number of Warrant Shares Issuable and Exercise Price. The
number of Warrant Shares issuable upon the exercise of this Warrant and the
Warrant Share Price are subject to adjustment from time to time upon the
occurrence of the events enumerated in Section 2.
13. Descriptive Headings and Governing Law. The descriptive headings of the
several paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant. This Warrant shall be construed and enforced
in accordance with the laws of the State of New York, and the rights of the
parties shall be governed by, the law of such State.
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IN WITNESS WHEREOF, this Warrant Agreement has been executed as of the
_____ day of March, 2000.
U.S. WIRELESS DATA, INC.
By:
---------------------------------
Its:
--------------------------------
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PURCHASE FORM
Dated:__________, ____
The undersigned hereby irrevocably elects to exercise the within Warrant to
the extent of purchasing _____ Warrant Shares and hereby makes payment of
$_____________ in payment of the exercise price thereof.
-----------------------------------------
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CASHLESS EXERCISE
Dated:__________, ____
The undersigned irrevocably elects to exercise the within Warrant for
Warrant Shares and hereby makes payment pursuant to the Cashless Exercise
provision of the within Warrant, and directs that the payment of the Warrant
Share Price be made by cancellation as of the date of exercise of a portion of
the within Warrant in accordance with the terms and provisions of Section 1(b)
of the within Warrant.
-----------------------------------------
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U.S. WIRELESS DATA, INC.
SUBSCRIPTION AGREEMENT made as of this ____ day of _____________, 2000
between U.S. Wireless Data, Inc., a corporation organized under the laws of the
State of Colorado with offices at 2200 Powell Street, Suite 800, Emeryville,
California 94608 (the "Company"), and the undersigned (the "Subscriber").
WHEREAS, the Company desires to issue a maximum of 250 units ("Units") in a
private placement (the "Offering"), each Unit consisting of: (i) 10,000 shares
of Series C Convertible Preferred Stock (the "Preferred Shares"), each Preferred
Share convertible into shares of the Company's common stock, no par value (the
"Common Stock") as described in the Confidential Private Placement Memorandum
(the "Memorandum") and the Articles of Amendment to the Articles of
Incorporation including the Designation of Series C Convertible Preferred Stock;
and (ii) seven-year warrants (the "Warrants") to purchase a minimum of 100,000
shares of Common Stock, pursuant to the form of a Warrant Agreement, on the
terms and conditions hereinafter set forth; and
WHEREAS, the Subscriber desires to acquire the number of Units set forth on
the signature page hereof.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto agree as follows:
I. SUBSCRIPTION FOR UNITS AND REPRESENTATIONS BY AND COVENANTS OF
SUBSCRIBER
1.1 Subject to the terms and conditions hereinafter set forth, the
Subscriber hereby subscribes for and agrees to purchase from the Company such
number of Units as is set forth upon the signature page hereof at a price equal
to $100,000 per Unit and the Company agrees to sell such Units to the Subscriber
for said purchase price, subject to the Company's right to sell to the
Subscriber such lesser number of Units as the Company may, in its sole
discretion, deem necessary or desirable. The purchase price is payable by
certified or bank check made payable to "American Stock Transfer & Trust
Company, as escrow agent for U.S. Wireless Data, Inc." or by wire transfer of
funds, contemporaneously with the execution and delivery of this Subscription
Agreement. This Agreement shall not be binding on the Company until it is
accepted by the Subscriber's offer in writing. The Preferred Shares and Warrants
will be delivered by the Company within 10 days following the consummation of
this offering as set forth in Article III hereof.
1.2 The Subscriber recognizes that the purchase of Units involves a
high degree of risk in that (i) the Company has incurred substantial losses from
operations; (ii) an investment in the Company is highly speculative and only
investors who can afford the loss of their entire investment should consider
investing in the Company and the Units; (iii) an investment in the Units is
illiquid; and (iv) transferability of the securities comprising the Units is
extremely limited, as well as other risk factors as more fully set forth in the
Memorandum.
<PAGE>
1.3 The Subscriber represents and warrants that it is an "accredited
investor" as such term in defined in Rule 501 of Regulation D promulgated under
the Securities Act of 1933, as amended (the "Act"), as indicated by its
responses to the confidential investor questionnaire (the "Questionnaire"), and
that it is able to bear the economic risk of an investment in the Units. The
Subscriber further represents and warrants that the information furnished in the
Investor Questionnaire is accurate and complete in all material respects.
1.4 The Subscriber represents and warrants that the Subscriber did not
learn of the Offering directly or indirectly through any general solicitation or
advertising, including, but not limited to, learning of the Company or the
Offering as a result of viewing any press releases or similar types of publicly
available information which directly or indirectly resulted in the subscriber
subscribing for Units in the Offering. The Subscriber further understands that
the Company is relying, in part, on this representation to ensure compliance
with the federal securities laws.
1.5 The Subscriber acknowledges that it has prior investment
experience, including investment in non-listed and non-registered securities and
that it recognizes the highly speculative nature of this investment.
1.6 The Subscriber acknowledges receipt and careful review of the
Memorandum and all other documents furnished in connection with this transaction
(collectively, the "Offering Documents") and hereby represents that it has been
furnished by the Company during the course of this transaction with all
information regarding the Company which it has requested or desires to know; and
that such information and documents have, in its opinion, afforded the
Subscriber all of the same information that would be provided him in a
registration statement filed under the Act; that it has been afforded the
opportunity to ask questions of and receive answers from duly authorized
officers or other representatives of the Company concerning the terms and
conditions of the Offering, and any additional information which it had
requested. The Subscriber represents and warrants that it is relying solely on
the information contained in the Memorandum and obtained through its own due
diligence.
1.7 The Subscriber acknowledges that this offering of Units may
involve tax consequences and that the contents of the Memorandum do not contain
tax advice or information. The Subscriber acknowledges that it must retain its
own professional advisors to evaluate the tax and other consequences of an
investment in the Units.
1.8 The Subscriber acknowledges that the Units are being offered and
sold in reliance upon the exemption from registration provided by Section 4(2)
of the Act and provisions of Regulation D of the Act, and the Offering has not
been reviewed by the United States Securities and Exchange Commission ("SEC").
The Subscriber represents that the Preferred Shares and Warrants comprising its
Units are being purchased for its own account, for investment and not for
distribution or resale to others. The Subscriber agrees that it will not sell or
otherwise transfer the Preferred Shares or the Warrants unless they are
registered under the Act or unless an exemption from such registration is
available.
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<PAGE>
1.9 The Subscriber understands that, except for the Common Stock,
there is no public market for the Company's securities. The Subscriber
understands that Rule 144 (the "Rule") promulgated under the Act requires, among
other conditions, a one year holding period prior to the resale (in limited
amounts) of securities acquired in a non-public offering without having to
satisfy the registration requirements under the Act. The Subscriber understands
that the Company makes no representation or warranty regarding its fulfillment
in the future of any reporting requirements under the Securities Exchange Act of
1934, as amended, or its dissemination to the public of any current financial or
other information concerning the Company, as is required by the Rule as one of
the conditions of its availability. The Subscriber understands and hereby
acknowledges that the Company is under no obligation to register the securities
comprising the Units under the Act, with the exception of certain registration
rights set forth in Article IV herein. The Subscriber agrees that the Company
may, if it desires, permit the transfer of the Preferred Shares, the shares of
Common Stock issuable upon conversion of the Preferred Shares (the "Conversion
Shares"), the Warrants or the shares of Common Stock issuable upon exercise of
the Warrants (the "Warrant Shares") (collectively, the "Securities") out of its
name only when its request for transfer is accompanied by an opinion of counsel
reasonably satisfactory to the Company that neither the sale nor the proposed
transfer results in a violation of the Act or any applicable state "blue sky"
laws (collectively "Securities Laws").
1.10 The Subscriber hereby agrees that, without the prior written
consent of Commonwealth Associates, L.P. (the "Placement Agent"), it will not
sell, transfer or otherwise dispose of the Securities for one year after the
final closing of the Offering and thereafter will not dispose of more than 25%
of the Securities on a cumulative basis during each subsequent 90 day period
thereafter (the "Lock-Up Period"); provided, however, that if the Company
undertakes any public offering within the first 12 months of the Lock-Up Period,
the Subscriber will not sell, transfer or otherwise dispose of the Securities
for such period of time after the closing of such offering (not to exceed six
months) as the managing underwriter or placement agent may request in writing
and the Placement Agent may agree to. This restriction on transfer will apply to
any securities issued in exchange for the Securities in any merger.
1.11 The Subscriber consents to the placement of a legend on any
certificate or other document evidencing the Securities stating that they have
not been registered under the Act and setting forth or referring to the
restrictions on transferability and sale thereof, and to the issuance of stop
transfer instructions with respect thereto.
1.12 The Subscriber acknowledges that if it is a Registered
Representative of an NASD member firm, it must give such firm the notice
required by the NASD's Rules of Fair Practice, receipt of which must be
acknowledged by such firm on the signature page hereof.
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<PAGE>
1.13 If the undersigned Subscriber is a partnership, corporation,
trust or other entity, such partnership, corporation, trust or other entity
further represents and warrants that: (i) it was not formed for the purpose of
investing in the Company; (ii) it is authorized and otherwise duly qualified to
purchase and hold the Units; and (iii) that this Subscription Agreement has been
duly and validly authorized, executed and delivered and constitutes the legal,
binding and enforceable obligation of the undersigned.
1.14 The Subscriber hereby represents that the address of Subscriber
furnished by him at the end of this Subscription Agreement is the undersigned's
principal residence if it is an individual or its principal business address if
it is a corporation or other entity.
1.15 The Subscriber hereby represents that, except as set forth in the
Offering Documents, no representations or warranties have been made to the
Subscriber by the Company or any agent, employee or affiliate of the Company,
including the Placement Agent, and in entering into this transaction, the
Subscriber is not relying on any information, other than that contained in the
Offering Documents and the results of independent investigation by the
Subscriber.
1.16 The Subscriber acknowledges that at such time as the Reserved
Shares (as defined below) are registered, sales of such securities will be
subject to state securities laws, including those of states which may require
any securities sold therein to be sold through a registered broker-dealer or in
reliance upon an exemption from registration.
1.17 The Subscriber acknowledges that there is no minimum number of
Units that must be sold in the Offering and that the Maximum Offering may be
increased by up to 250 Units ($25,000,000) without notice to Subscribers.
1.18 The Subscriber acknowledges that the Placement Agent and a
committee to be designated by the Placement Agent whose members hold in the
aggregate not less than 20% of the outstanding Preferred Shares or Warrants (the
"Committee") may consent to any amendments, modifications or waivers with
respect to the Preferred Shares or Warrants, thereby binding the Subscriber to
any such amendment, modification or waiver; provided, however, that no such
amendment, modification or waiver which would decrease the number of Conversion
Shares issuable upon the conversion of the Preferred Shares, or increase the
Conversion Price therefor (other than as a result of the waiver or modification
of any anti-dilution provisions) may be made without the approval of the holders
of at least 50% of the outstanding Preferred Shares. The Subscriber hereby
authorizes the Placement Agent and the Committee to act on the Subscriber's
behalf and grants the Placement Agent and the Committee an irrevocable proxy to
vote for any amendment or waiver to the Articles of Amendment to the Company's
Articles of Incorporation to effect the foregoing. The Subscriber agrees that
neither the Placement Agent nor any of its directors, officers, employees or
agents nor the Committee or any of its members shall be liable to any Subscriber
for any action taken or omitted to be taken by it in connection therewith,
except for willful misconduct or gross negligence. The Subscriber acknowledges
that one or more members of the Committee may be affiliated with the Placement
Agent. Any transferee of the Preferred Shares or Warrants shall agree to be
bound by this Section 1.18.
4
<PAGE>
1.19 The Subscriber agrees that unless written instructions from a
majority of the holders of the Preferred Shares is received instructing
otherwise, the Placement Agent will act on behalf of the holders of the
Preferred Shares in appointing and removing directors representing the Preferred
Shares.
1.20 The Subscriber acknowledges that the Company does not have
sufficient authorized shares of Common Stock to permit conversion of the
Preferred Shares or exercise of the Warrants. As a result, the Subscriber agrees
that it may not convert the Preferred Shares or exercise the Warrants until such
time the Company has sufficient authorized shares of Common Stock to permit
conversion or exercise of all the Preferred Shares and Warrants and that the
inability to convert the Preferred Shares or exercise the Warrants will deprive
the Subscriber of the value of the Preferred Shares or Warrants.
II. REPRESENTATIONS BY THE COMPANY
2.1 The Company represents and warrants to the Subscriber that prior
to the consummation of this Offering and at the Termination Date:
(a) The Company is a corporation duly organized, existing and in
good standing under the laws of the State of Colorado and has the corporate
power to conduct the business which it conducts and proposes to conduct.
(b) The execution, delivery and performance of this Subscription
Agreement by the Company will have been duly approved by the Board of Directors
of the Company and all other actions required to authorize and effect the offer
and sale of the Units and the securities contained therein will have been duly
taken and approved.
(c) The Preferred Shares and Warrants have been duly and validly
authorized and when issued and paid for in accordance with the terms hereof,
will be duly and validly issued and fully paid and non-assessable.
(d) The Company has, to the best of its knowledge, obtained, or
is in the process of obtaining, all licenses, permits and other governmental
authorizations necessary to the conduct of its business; such licenses, permits
and other governmental authorizations obtained are in full force and effect; and
the Company is in all material respects complying therewith; except where such
failure to obtain such licenses, permits and other governmental authorizations
necessary to the conduct of its business would not have a material adverse
effect on the Company's business or financial condition.
(e) The Company knows of no pending or threatened legal or
governmental proceedings to which the Company is a party which could materially
adversely affect the business, property, financial condition or operations of
the Company.
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(f) The financial information contained in the Memorandum
presents fairly the financial condition of the Company as of the dates and for
the periods indicated.
III. TERMS OF SUBSCRIPTION
3.1 The subscription period will begin as of February 14, 2000 and
will terminate at 11:59 PM Eastern time on March 31, 2000, unless extended by
the Company and the Placement Agent for up to an additional 30 days (the
"Termination Date"). Such extension may be effected without notice to the
Subscribers. All of the Units will be offered on a "best efforts" basis.
3.2 As compensation for its services, the Placement Agent will
receive: (i) a commission equal to 7% of the aggregate purchase price of the
Units sold; (ii) a structuring fee equal to 3% of the aggregate purchase price
of the Units sold; (iii) reimbursement of up to $150,000 of accountable expenses
(including expenses incurred in connection with the Bridge Financing); and (iv)
seven-year warrants (the "Agent's Warrants") to purchase 25% of the Units to be
issued to investors, at the same price as paid by such investors. The Company
shall also pay all expenses in connection with the qualification of the Units
under the Securities Laws of the states which the Placement Agent shall
designate, including legal fees and filing fees.
3.3 Pending the sale of the Units, all funds paid hereunder shall be
deposited by the Company in escrow with American Stock Transfer & Trust Company.
3.4 The Subscriber hereby authorizes and directs the Company to
deliver certificates representing the securities to be issued to such Subscriber
pursuant to this Subscription Agreement either (a) to the residential or
business address indicated in the Questionnaire or (b) directly to the
Subscriber's account maintained with the Placement Agent, if any.
3.5 The Subscriber hereby authorizes and directs the Company to return
any funds for unaccepted subscriptions to the same account from which the funds
were drawn, including any customer account maintained with the Placement Agent.
3.6 If the Subscriber is not a United States person, such Subscriber
hereby represents that it has satisfied itself as to the full observance of the
laws of its jurisdiction in connection with any invitation to subscribe for the
Securities or any use of this Subscription Agreement, including (i) the legal
requirements within its jurisdiction for the purchase of the Units, (ii) any
foreign exchange restrictions applicable to such purchase, (iii) any
governmental or other consents that may need to be obtained, and (iv) the income
tax and other tax consequences, if any, that may be relevant to the purchase,
holding, redemption, sale or transfer of the securities comprising the Units.
Such Subscriber's subscription and payment for, and its continued beneficial
ownership of the Units, will not violate any applicable securities or other laws
of the Subscriber's jurisdiction.
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IV. REGISTRATION
4.1 Registration. The Company agrees to file a registration statement
under the 1933 Act, which shall include the Conversion Shares and the Warrant
Shares (collectively, the "Reserved Shares") on Form SB-2 or another available
form within nine months of the final closing of the Offering and shall use its
reasonable best efforts to have such registration statement declared effective
as soon as practicable thereafter.
4.2 Registration Procedures. The Company will:
(a) prepare and file with the SEC a registration statement with
respect to such securities, and use its best efforts to cause such registration
statement to become and remain effective;
(b) prepare and file with the SEC such amendments to such
registration statement and supplements to the prospectus contained therein as
may be necessary to keep such registration statement effective;
(c) furnish to the holders (the "Holders") participating in such
registration and to the underwriters of the securities being registered such
reasonable number of copies of the registration statement, preliminary
prospectus, final prospectus and such other documents as such underwriters may
reasonably request in order to facilitate the public offering of such
securities;
(d) use its best efforts to register or qualify the securities
covered by such registration statement under such state securities or blue sky
laws of such jurisdictions as the Holders may reasonably request in writing
within 20 days following the original filing of such registration statement,
except that the Company shall not for any purpose be required to execute a
general consent to service of process or to qualify to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified;
(e) notify the Holders, promptly after it shall receive notice
thereof, of the time when such registration statement has become effective or a
supplement to any prospectus forming a part of such registration statement has
been filed;
(f) notify the Holders promptly of any request by the SEC for the
amending or supplementing of such registration statement or prospectus or for
additional information;
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(g) prepare and file with the SEC, promptly upon the request of
any Holders, any amendments or supplements to such registration statement or
prospectus which, in the opinion of counsel for such Holders (and concurred in
by counsel for the Company), is required under the Act or the rules and
regulations thereunder in connection with the distribution of Common Stock by
such Holders;
(h) prepare and promptly file with the SEC and promptly notify
such Holders of the filing of such amendment or supplement to such registration
statement or prospectus as may be necessary to correct any statements or
omissions if, at the time when a prospectus relating to such securities is
required to be delivered under the Act, any event shall have occurred as the
result of which any such prospectus or any other prospectus as then in effect
would include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading; and
(i) advise the Holders, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by the SEC
suspending the effectiveness of such registration statement or the initiation or
threatening of any proceeding for that purpose and promptly use its best efforts
to prevent the issuance of any stop order or to obtain its withdrawal if such
stop order should be issued.
The Holders shall cooperate with the Company in providing the information
necessary to effect the registration of their Reserved Shares, including
completion of customary questionnaires. Failure by any Holder to cooperate in
providing information necessary to effect such registration shall result in such
Holder's securities being ineligible for inclusion in such registration
statement.
4.3 Expenses.
(a) With respect to the registration required pursuant to Section
4.1 hereof, all fees, costs and expenses of and incidental to such registration,
inclusion and public offering (as specified in paragraph (b) below) in
connection therewith shall be borne by the Company, provided, however, that the
Holders shall bear their pro rata share of the underwriting discount and
commissions and transfer taxes and the cost of their own counsel.
(b) The fees, costs and expenses of registration to be borne by
the Company as provided in paragraph (a) above shall include, without
limitation, all registration, filing, and NASD fees, printing expenses, fees and
disbursements of counsel and accountants for the Company, and all legal fees and
disbursements and other expenses of complying with state securities or blue sky
laws of any jurisdictions in which the securities to be offered are to be
registered and qualified (except as provided in 4.3(a) above). Fees and
disbursements of counsel and accountants for the Holders and any other expenses
incurred by the Holders not expressly included above shall be borne by the
Holders.
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4.4 Indemnification.
(a) The Company will indemnify and hold harmless each Holder of
Reserved Shares which are included in a registration statement pursuant to the
provisions of Section 4.1 hereof, its directors and officers, and any
underwriter (as defined in the Act) for such Holder and each person, if any, who
controls such Holder or such underwriter within the meaning of the Act, from and
against, and will reimburse such Holder and each such underwriter and
controlling person with respect to, any and all loss, damage, liability, cost
and expense to which such Holder or any such underwriter or controlling person
may become subject under the Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses are caused by any untrue statement or alleged
untrue statement of any material fact contained in such registration statement,
any prospectus contained therein or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading; provided, however, that the Company will not be liable in any such
case to the extent that any such loss, damage, liability, cost or expenses
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission so made in conformity with information furnished
by or on behalf of such Holder, such underwriter or such controlling person in
writing specifically for use in the preparation thereof.
(b) Each Holder of Reserved Shares included in a registration
pursuant to the provisions of Section 4.1 hereof will indemnify and hold
harmless the Company, its directors and officers, any controlling person and any
underwriter from and against, and will reimburse the Company, its directors and
officers, any controlling person and any underwriter with respect to, any and
all loss, damage, liability, cost or expense to which the Company or any
controlling person and/or any underwriter may become subject under the Act or
otherwise, insofar as such losses, damages, liabilities, costs or expenses are
caused by any untrue statement or alleged untrue statement of any material fact
contained in such registration statement, any prospectus contained therein or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was so made in reliance upon and in
strict conformity with written information furnished by or on behalf of such
Holder specifically for use in the preparation thereof, or if the Holder sells
after receiving a notice as contemplated by Section 4.1(h) or (i) hereof.
(c) Promptly after receipt by an indemnified party pursuant to
the provisions of paragraph (a) or (b) of this Section 4.4 of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions such indemnified party will, if a claim thereof is to be
made against the indemnifying party pursuant to the provisions of said paragraph
(a) or (b), promptly notify the indemnifying party of the commencement thereof;
but the omission to so notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than
hereunder. In case such action is brought against any indemnified party and it
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<PAGE>
notifies the indemnifying party of the commencement thereof, the indemnifying
party shall have the right to participate in, and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party,
provided, however, if counsel for the indemnifying party concludes that a single
counsel cannot under applicable legal and ethical considerations, represent both
the indemnifying party and the indemnified party, the indemnified party or
parties have the right to select separate counsel to participate in the defense
of such action on behalf of such indemnified party or parties. After notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party pursuant to the provisions of said paragraph (a) or (b) for
any legal or other expense subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation, unless (i) the indemnified party shall have employed counsel in
accordance with the provisions of the preceding sentence, (ii) the indemnifying
party shall not have employed counsel reasonably satisfactory to the indemnified
party to represent the indemnified party within a reasonable time after the
notice of the commencement of the action or (iii) the indemnifying party has, in
its sole discretion, authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party.
V. MISCELLANEOUS
5.1 Any notice or other communication given hereunder shall be deemed
sufficient if in writing and sent by registered or certified mail, return
receipt requested, addressed to the Company, at its registered office 2200
Powell Street, Suite 800, Emeryville, California 94608, Attention: Chief
Executive Officer and to the Subscriber at its address indicated on the last
page of this Subscription Agreement. Notices shall be deemed to have been given
on the date of mailing, except notices of change of address and notices sent
from outside the continental United States, which shall be deemed to have been
given when received.
5.2 This Subscription Agreement shall not be changed, modified or
amended except by a writing signed by the parties to be charged, and this
Subscription Agreement may not be discharged except by performance in accordance
with its terms or by a writing signed by the party to be charged.
5.3 This Subscription Agreement shall be binding upon and inure to the
benefit of the parties hereto and to their respective heirs, legal
representatives, successors and assigns. This Subscription Agreement sets forth
the entire agreement and understanding between the parties as to the subject
matter thereof and merges and supersedes all prior discussions, agreements and
understandings of any and every nature among them.
5.4 Notwithstanding the place where this Subscription Agreement may be
executed by any of the parties hereto, the parties expressly agree that all the
terms and provisions hereof shall be construed in accordance with and governed
by the laws of the State of New York without regard to such states laws
regarding conflicts of laws. The parties hereby agree that any dispute which may
arise between them arising out of or in connection with this Subscription
10
<PAGE>
Agreement shall be adjudicated before a court located in New York City and they
hereby submit to the exclusive jurisdiction of the courts of the State of New
York located in New York, New York and of the federal courts in the Southern
District of New York with respect to any action or legal proceeding commenced by
any party, and irrevocably waive any objection they now or hereafter may have
respecting the venue of any such action or proceeding brought in such a court or
respecting the fact that such court is an inconvenient forum, relating to or
arising out of this Subscription Agreement or any acts or omissions relating to
the sale of the securities hereunder, and consent to the service of process in
any such action or legal proceeding by means of registered or certified mail,
return receipt requested, in care of the address set forth below or such other
address as the undersigned shall furnish in writing to the other.
5.5 This Subscription Agreement may be executed in counterparts. Upon
the execution and delivery of this Subscription Agreement by the Subscriber,
this Subscription Agreement shall become a binding obligation of the Subscriber
with respect to the purchase of Units as herein provided; subject, however, to
the right hereby reserved to the Company to enter into the same agreements with
other subscribers and to add and/or to delete other persons as subscribers.
5.6 The holding of any provision of this Subscription Agreement to be
invalid or unenforceable by a court of competent jurisdiction shall not affect
any other provision of this Subscription Agreement, which shall remain in full
force and effect.
5.7 It is agreed that a waiver by either party of a breach of any
provision of this Subscription Agreement shall not operate, or be construed, as
a waiver of any subsequent breach by that same party.
5.8 The parties agree to execute and deliver all such further
documents, agreements and instruments and take such other and further action as
may be necessary or appropriate to carry out the purposes and intent of this
Subscription Agreement.
5.9 Words that denote any gender are deemed to include the other
gender and words that denote a natural person are deemed to include an
artificial person. The singular is deemed to include plural and vice versa.
VI. BLUE SKY LEGENDS
California. The sale of securities which are the subject of this
agreement has not been qualified with the Commissioner of Corporations of the
State of California and the issuance of such securities or the payment or
receipt of any part of the consideration for such securities prior to such
qualification is unlawful, unless the sale of securities is exempt from
qualification by Section 25100, 25102 or 25105 of the California Corporations
Code. The rights of all parties to this agreement are expressly conditioned upon
such qualification being obtained, unless the sale is so exempt.
11
<PAGE>
Connecticut. The undersigned acknowledges that the Securities have not
been registered under the Connecticut Uniform Securities Act, as amended (the
"Connecticut Act") and are subject to restrictions on transferability and sale
of securities as set forth herein. The undersigned hereby agrees that such
Securities will not be transferred or sold without registration under the
Connecticut Act or exemption therefrom.
Pennsylvania. The undersigned hereby acknowledges that the Issuer is
relying upon the exemption from registration of securities set forth in Section
203(d) of the Pennsylvania Securities Act of 1972, as amended (the "Pennsylvania
Act") in connection with the sale of the Securities to the undersigned.
In accordance with the requirements of Section 203(d) of the
Pennsylvania Act, the undersigned hereby agrees not to sell its Securities
within twelve (12) months from the date of purchase except pursuant to Section
204.01 of the Blue Sky Regulations of the Pennsylvania Securities Act of 1972.
Additionally, the undersigned is aware of the right of withdrawal under Section
207(m) of the Act described in the cover pages of the Memorandum.
Texas. The undersigned hereby acknowledges that the Securities cannot
be sold unless they are subsequently registered under the Act, and the Texas
Securities Act, or an exemption from registration is available. The undersigned
further acknowledges that because the Securities are not readily transferable,
it must bear the economic risk of its investment for an indefinite period of
time.
12
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Subscription Agreement
as of the day and year first written above.
- ------------------------------ -----------------------------------
Signature of Subscriber Signature of Co-Subscriber
- ------------------------------ -----------------------------------
Name of Subscriber Name of Subscriber
(please print) (please print)
- ------------------------------ -----------------------------------
Address of Subscriber Address of Co-Subscriber
- ------------------------------ -----------------------------------
Social Security or Taxpayer Social Security or Taxpayer
Identification Number of Subscriber Identification Number of Subscriber
- ------------------------------
Subscriber's Account Number
at Commonwealth Associates, L.P.
- --------------------------------
Dollar Amount of Units Subscribed For
*If Subscriber is a Registered Representative
with an NASD member firm, have the
following acknowledgment signed by the
appropriate party:
The undersigned NASD member firm Subscription Accepted:
acknowledges receipt of the notice required
by Rule 3050 of the NASD Conduct Rules. U.S. WIRELESS DATA, INC.
By:
- -------------------------------------- ------------------------------
Name of NASD Member Firm Name:
----------------------------
Title:
By: --------------------------------- ----------------------------
Authorized Officer
----------------------------------
Dollar Amount of Unit Subscription
Accepted
13
THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES ISSUABLE UPON
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). NEITHER THIS WARRANT NOR SUCH SECURITIES MAY BE TRANSFERRED
EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND ANY
APPLICABLE STATE SECURITIES LAWS OR (B) UPON RECEIPT BY THE ISSUER OF AN OPINION
OF COUNSEL, WHICH OPINION OF COUNSEL SHALL BE REASONABLY SATISFACTORY TO THE
ISSUER, TO THE EFFECT THAT SUCH TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE
ACT AND SUCH STATE SECURITIES LAWS.
WARRANT AGREEMENT
FOR UNITS OF
U.S. WIRELESS DATA, INC.
Warrant No. ___
THIS CERTIFIES that, for value received, Commonwealth Associates, L.P., or
its permitted assigns registered on the books of the Company (collectively, the
"Holder"), is entitled to purchase from U.S. Wireless Data, Inc., a Colorado
corporation (the "Company"), at any time, and from time to time, during the
exercise period referred to in Section 1 hereof, 32 Units of the Company. Each
Unit initially consists of (i) 10,000 shares of the Company's Series C
Convertible Preferred Stock (the "Shares"), each Share convertible into shares
of the Company's common stock, no par value (the "Common Stock"), and (ii)
seven-year warrants (the "Unit Warrants") to purchase a number of shares of
Common Stock equal to 25% of the number of shares of Common Stock into which the
Shares are convertible. The Shares and Unit Warrants underlying this Warrant are
identical to the shares and unit warrants (the "Investor Shares" and the
"Investor Warrants," respectively) included in the Units sold pursuant to the
Company's Confidential Private Placement Memorandum, dated February 14, 2000, as
amended. The Investor Shares and the Investor Warrants are subject to call as
provided therein and, if this Warrant is exercised after the date that such call
is given (the "Call Date"), it shall only be exercisable for Common Stock. The
purchase price for each Unit is one hundred thousand dollars ($100,000) (the
"Exercise Price"), provided that if the Holder elects, after the Call Date, to
receive the Common Stock which would have been issuable upon exercise of the
Unit Warrants, the Exercise Price shall be increased by an amount equal to the
exercise price of such Unit Warrants (the "Underlying Warrant Exercise Price").
Securities issuable upon exercise of this Warrant are subject to adjustment from
time to time as hereinafter set forth. As used herein, the term "Warrant" shall
include any warrant or warrants hereafter issued in consequence of the exercise
of this Warrant in part or transfer of this Warrant in whole or in part.
<PAGE>
1. Exercise; Payment for Ownership Interest.
(b) Upon the terms and subject to the conditions set forth herein, this Warrant
may be exercised in whole or in part by the Holder hereof at any time, or from
time to time, on or after the date hereof and prior to 5 p.m. San Francisco time
on ___________, 2007, by presentation and surrender of this Warrant to the
principal offices of the Company, together with the Purchase Form annexed
hereto, duly executed, and accompanied by payment to the Company of an amount
equal to the Exercise Price multiplied by the number of Units as to which this
Warrant is then being exercised or, if this Warrant is exercised after the Call
Date, by payment of an amount equal to the number of shares of Common Stock as
to which this Warrant is being issued multiplied by the Post-Call Exercise Price
(as defined below). Any transfer of Units obtained by the Holder in exercise of
this Warrant is subject to the requirement that such securities be registered
under the Securities Act of 1933, as amended (the "1933 Act"), and applicable
state securities laws or exempt from registration under such laws. The Holder of
this Warrant shall be deemed to be the holder of the Units, or, if exercised
after the Call Date, Common Stock, as to which this Warrant is exercised in
accordance herewith effective immediately after the close of business on the
date on which the Holder shall have delivered to the Company this Warrant in
proper form for exercise and payment by certified or official bank check or wire
transfer of the cash purchase price for the number of Units or shares of Common
Stock as to which the exercise is being made, or by delivery to the Company of
securities of the Company having a value equal to the cash purchase price for
such number of Units or Common Stock determined as of the date of delivery.
(c) All or any portion of the Exercise Price may be paid by surrendering
Warrants effected by presentation and surrender of this Warrant to the Company
with a Cashless Exercise Form annexed hereto duly executed (a "Cashless
Exercise"). Such presentation and surrender shall be deemed a waiver of the
Holder's obligation to pay all or any portion of the aggregate Exercise Price.
In the event of a Cashless Exercise, the Holder shall exchange its Warrant for
that number of shares of Common Stock determined by multiplying the number of
Shares for which the Holder desires to exercise this Warrant by a fraction, the
numerator of which shall be the difference between the then current market price
per share of the Common Stock and the Exercise Price, and the denominator of
which shall be the then current market price per share of Common Stock. For
purposes of any computation under this Section 1(b), the then current market
price per share of Common Stock at any date shall be deemed to be the average
for the ten consecutive business days immediately prior to the Cashless Exercise
of the daily closing prices of the Common Stock on the principal national
securities exchange on which the Common Stock is admitted to trading or listed,
or if not listed or admitted to trading on any such exchange, the closing prices
as reported by the Nadaq National Market, or if not then listed on the Nasdaq
National Market, the average of the highest reported bid and lowest reported
asked prices as reported by the National Association of Securities Dealers, Inc.
Automated Quotations System ("Nasdaq") or if not then publicly traded, the fair
market price of the Common Stock as determined by the Board of Directors of the
Company.
2
<PAGE>
(d) If this Warrant shall be exercised in part only, the Company shall, upon
surrender of this Warrant for cancellation, execute and deliver a new Warrant
evidencing the rights of the Holder thereof to purchase the balance of the Units
purchasable hereunder as to which the Warrant has not been exercised. If this
Warrant is exercised in part, such exercise shall be for a whole number of
Units. Upon any exercise and surrender of this Warrant, the Company will issue
and deliver to the Holder a certificate or certificates in the name of the
Holder for the number of Shares to which the Holder shall be entitled and a
certificate representing the Unit Warrants, or, if exercised after the Call
Date, the shares of Common Stock, to which the Holder shall be entitled or the
proportionate part thereof if this Warrant is exercised in part, pursuant to the
provisions of this Warrant.
2. Adjustments.
2.1 The Holder of the Warrant shall receive upon exercise hereof prior to
the Call Date Shares and Unit Warrants that will reflect all adjustments to such
securities as would have occurred from the date of this Warrant through the date
of exercise of the Warrant and which shall be identical to Investor Shares and
Investor Warrants. For purposes of clarity, the Holder of the Warrant, whenever
exercised prior to the Call Date, shall have the right to receive that amount of
securities of the Company had the Holder exercised this Warrant on the date
hereof and received the benefit of all adjustments (for anti-dilution, or
changes in capitalization, or a merger or other transaction effecting the
capitalization of the Company) to such securities as if the Holder had held such
securities from the date hereof until the date of exercise of this Warrant.
After the Call Date, the Holder of this Warrant shall be entitled to receive the
number of shares of Common Stock which such Holder would have received had such
Holder exercised this Warrant and the Unit Warrants in full immediately prior to
the Call Date, as adjusted equitably for any stock splits, stock dividends,
mergers or recapitalization occurring after the Call Date at an exercise price
equal to the conversion or exercise price, as the case may be, of the Shares and
Unit Warrants as of the Call Date, as appropriately adjusted for any stock
dividends, mergers or recapitalization occurring after the Call Date. By way of
illustration, if this Warrant was initially exercisable for one Unit and if on
the Call Date one unit consisted of 10,000 Shares convertible into 66,666 shares
of Common Stock at $1.50 per share and Warrants exercisable for 25% of 66,666 at
$1.50 per share and subsequent to the Call Date the Company declared a 2-for-1
stock split, the Holder would be entitle to exercise this Warrant for 166,665
shares of Common Stock at $.75 per share (representing 133,332 shares in respect
of the Shares included in the Unit originally underlying the Warrant and 33,333
shares of Common Stock in respect of the Unit Warrants included in the Unit
originally underlying the Warrant).
3
<PAGE>
2.2 Notice of Adjustments. Upon the occurrence of each adjustment or
readjustment of the Units pursuant to Section 2.1, the Company at its expense
will promptly compute such adjustment or readjustment and prepare a certificate
setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based. The Company will forthwith
mail, by first class mail, postage prepaid, a copy of each such certificate to
the Holder of this Warrant at the address of such Holder as shown on the books
of the Company.
2.3 Other Notices. If at any time:
(a) the Company shall (i) offer for subscription pro rata to the
holders of shares of the Common Stock any additional equity in the Company or
other rights; (ii) pay a dividend in additional shares of the Common Stock or
distribute securities or other property to the holders of shares of the Common
Stock (including, without limitation, evidences of indebtedness and equity and
debt securities); or (iii) issue securities convertible into, or rights or
Warrants to purchase, securities of the Company;
(b) there shall be any capital reorganization or reclassification or
consolidation or merger of the Company with, or sale, transfer or lease of all
or substantially all of its assets to, another entity; or
(c) there shall be a voluntary or involuntary dissolution, liquidation
or winding up of the Company; then, in any one or more of said cases, the
Company shall give, by first class mail, postage prepaid, to the Holder of this
Warrant at the address of such Holder as shown on the books of the Company, (a)
at least 15 days' prior written notice of the date on which the books of the
Company shall close or a record shall be taken for such subscription rights,
dividend, distribution or issuance, and (b) in the case of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, at least 15 days' prior written notice of the date
when the same shall take place if no stockholder vote is required and at least
15 days' prior written notice of the record date for stockholders entitled to
vote upon such matter if a stockholder vote is required. Such notice in
accordance with the foregoing clause (a) shall also specify, in the case of any
such subscription rights, the date on which the holders of shares of Common
Stock shall be entitled to exercise their rights with respect thereto, and such
notice in accordance with the foregoing clause (b) shall also specify the date
on which the holders of shares of Common Stock shall be entitled to exchange
their shares of Common Stock for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, as the case may be. Failure to give the notice
referred to herein shall not affect the validity or legality of the action which
should have been the subject of the notice.
3. No Voting Rights. Except as otherwise provided herein, this Warrant shall not
be deemed to confer upon the Holder any right to vote or to consent to or
receive notice as a stockholder of the Company, as such, in respect of any
matters whatsoever, or any other rights or liabilities as a stockholder, prior
to the exercise hereof.
4
<PAGE>
4. Warrants Transferable. This Warrant and all rights hereunder are
transferable, in whole or in part, at the principal offices of the Company by
the Holder hereof, upon surrender of this Warrant properly endorsed; provided,
however, that without the prior written consent of the Company, this Warrant and
all rights hereunder may be transferred only (i) to an affiliate of the initial
Holder hereof or successor in interest to any such person; or (ii) pursuant to
the registration of this Warrant under the 1933 Act or subsequent to one year
from the date hereof under Rule 144 or other exemption from such registration.
5. Warrants Exchangeable; Loss, Theft, Destruction, Etc. This Warrant is
exchangeable, upon surrender hereof by the Holder hereof at the principal
offices of the Company, for new Warrants of like tenor representing in the
aggregate the right to subscribe for and purchase the Units or Common Stock
which may be subscribed for and purchased hereunder, each such new Warrant to
represent the right to subscribe for and purchase such Units or Common Stock
(not to exceed the maximum aggregate Units or shares of Common Stock which may
be purchased hereunder) as shall be designated by such Holder hereof at the time
of such surrender. Upon receipt of evidence satisfactory to the Company of the
loss, theft, destruction or mutilation of this Warrant and, in the case of any
such loss, theft or destruction, upon delivery of a bond or indemnity
satisfactory to the Company, or, in the case of any such mutilation, upon
surrender or cancellation of this Warrant, the Company will issue to the Holder
hereof a new Warrant of like tenor, in lieu of this Warrant, representing the
right to subscribe for and purchase the Units or Common Stock which may be
subscribed for and purchased hereunder.
6. Legends; Investment Representations. Any certificate evidencing the
securities issued upon exercise of this Warrant shall bear a legend in
substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). SUCH
SECURITIES MAY NOT BE TRANSFERRED EXCEPT (A) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR
(B) UPON RECEIPT BY THE ISSUER OF AN OPINION OF COUNSEL, WHICH OPINION OF
COUNSEL SHALL BE REASONABLY SATISFACTORY TO THE ISSUER, TO THE EFFECT THAT SUCH
TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE ACT AND SUCH STATE SECURITIES
LAWS.
7. Miscellaneous. The Company shall pay all expenses and other charges payable
in connection with the preparation, issuance and delivery of this Warrant and
all substitute Warrants other than as set forth in this Section 7. The Holder
shall pay all taxes (other than any issuance taxes, including, without
limitation, documentary stamp taxes, transfer taxes and other governmental
charges, which shall be paid by the Company) in connection with such issuance
and delivery of the Warrants and the Units.
5
<PAGE>
The Company shall maintain, at the office or agency of the Company
maintained by the Company, books for the registration and transfer of the
Warrant.
8. Descriptive Headings and Governing Law. The descriptive headings of the
several paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant. This Warrant shall be construed and enforced
in accordance with the laws of the State of New York, and the rights of the
parties shall be governed by, the law of such State.
6
<PAGE>
IN WITNESS WHEREOF, this Warrant Agreement has been executed as of the
_____ day of March, 2000.
U.S. WIRELESS DATA, INC.
By:
----------------------------------------
Its:
---------------------------------------
7
<PAGE>
PURCHASE FORM
Dated:__________, ____
Prior to Call Date
The undersigned hereby irrevocably elects to exercise the within
Warrant to the extent of purchasing _____ Units and hereby makes payment of
$_____________ in payment of the exercise price thereof.
After the Call Date
The undersigned hereby irrevocably elects to exercise the within
Warrant to the extent of purchasing _____ shares of Common Stock (including
_____ shares which would have been issuable pursuant to the Unit Warrants) and
hereby makes payment of $_____ in payment of the exercise price thereof.
-----------------------------------------
8
<PAGE>
CASHLESS EXERCISE FORM
Dated:__________, ____
Prior to Call Date
The undersigned irrevocably elects to exercise the within Warrant for
Units and hereby makes payment pursuant to the Cashless Exercise provision of
the within Warrant, and directs that the payment of the Exercise Price be made
by cancellation as of the date of exercise of a portion of the within Warrant in
accordance with the terms and provisions of Section 1(b) of the within Warrant.
After the Call Date
The undersigned irrevocably elects to exercise the within Warrant to
the extent of purchasing shares of Common Stock (including shares which would
have been issuable pursuant to the Unit Warrants) and hereby makes payment
pursuant to the Cashless Exercise provision of the within Warrant, and directs
that the payment of the Exercise Price be made by cancellation as of the date of
exercise of a portion of the within Warrant in accordance with the terms and
provisions of Section 1(b) of the within Warrant.
-----------------------------------------
9
THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES ISSUABLE UPON
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). NEITHER THIS WARRANT NOR SUCH SECURITIES MAY BE TRANSFERRED
EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND ANY
APPLICABLE STATE SECURITIES LAWS OR (B) UPON RECEIPT BY THE ISSUER OF AN OPINION
OF COUNSEL, WHICH OPINION OF COUNSEL SHALL BE REASONABLY SATISFACTORY TO THE
ISSUER, TO THE EFFECT THAT SUCH TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE
ACT AND SUCH STATE SECURITIES LAWS.
WARRANT AGREEMENT
FOR UNITS OF
U.S. WIRELESS DATA, INC.
Warrant No. ___
THIS CERTIFIES that, for value received, Peter J. Solomon Securities
Company Limited, or its permitted assigns registered on the books of the Company
(collectively, the "Holder"), is entitled to purchase from U.S. Wireless Data,
Inc., a Colorado corporation (the "Company"), at any time, and from time to
time, during the exercise period referred to in Section 1 hereof, 6.4 Units of
the Company. Each Unit initially consists of (i) 10,000 shares of the Company's
Series C Convertible Preferred Stock (the "Shares"), each Share convertible into
shares of the Company's common stock, no par value (the "Common Stock"), and
(ii) seven-year warrants (the "Unit Warrants") to purchase a number of shares of
Common Stock equal to 25% of the number of shares of Common Stock into which the
Shares are convertible. The Shares and Unit Warrants underlying this Warrant are
identical to the shares and unit warrants (the "Investor Shares" and the
"Investor Warrants," respectively) included in the Units sold pursuant to the
Company's Confidential Private Placement Memorandum, dated February 14, 2000, as
amended. The Investor Shares and the Investor Warrants are subject to call as
provided therein and, if this Warrant is exercised after the date that such call
is given (the "Call Date"), it shall only be exercisable for Common Stock. The
purchase price for each Unit is one hundred thousand dollars ($100,000) (the
"Exercise Price"), provided that if the Holder elects, after the Call Date, to
receive the Common Stock which would have been issuable upon exercise of the
Unit Warrants, the Exercise Price shall be increased by an amount equal to the
exercise price of such Unit Warrants (the "Underlying Warrant Exercise Price").
Securities issuable upon exercise of this Warrant are subject to adjustment from
time to time as hereinafter set forth. As used herein, the term "Warrant" shall
include any warrant or warrants hereafter issued in consequence of the exercise
of this Warrant in part or transfer of this Warrant in whole or in part.
<PAGE>
1. Exercise; Payment for Ownership Interest.
(b) Upon the terms and subject to the conditions set forth herein, this Warrant
may be exercised in whole or in part by the Holder hereof at any time, or from
time to time, on or after the date hereof and prior to 5 p.m. San Francisco time
on ___________, 2007, by presentation and surrender of this Warrant to the
principal offices of the Company, together with the Purchase Form annexed
hereto, duly executed, and accompanied by payment to the Company of an amount
equal to the Exercise Price multiplied by the number of Units as to which this
Warrant is then being exercised or, if this Warrant is exercised after the Call
Date, by payment of an amount equal to the number of shares of Common Stock as
to which this Warrant is being issued multiplied by the Post-Call Exercise Price
(as defined below). Any transfer of Units obtained by the Holder in exercise of
this Warrant is subject to the requirement that such securities be registered
under the Securities Act of 1933, as amended (the "1933 Act"), and applicable
state securities laws or exempt from registration under such laws. The Holder of
this Warrant shall be deemed to be the holder of the Units, or, if exercised
after the Call Date, Common Stock, as to which this Warrant is exercised in
accordance herewith effective immediately after the close of business on the
date on which the Holder shall have delivered to the Company this Warrant in
proper form for exercise and payment by certified or official bank check or wire
transfer of the cash purchase price for the number of Units or shares of Common
Stock as to which the exercise is being made, or by delivery to the Company of
securities of the Company having a value equal to the cash purchase price for
such number of Units or Common Stock determined as of the date of delivery.
(c) All or any portion of the Exercise Price may be paid by surrendering
Warrants effected by presentation and surrender of this Warrant to the Company
with a Cashless Exercise Form annexed hereto duly executed (a "Cashless
Exercise"). Such presentation and surrender shall be deemed a waiver of the
Holder's obligation to pay all or any portion of the aggregate Exercise Price.
In the event of a Cashless Exercise, the Holder shall exchange its Warrant for
that number of shares of Common Stock determined by multiplying the number of
Shares for which the Holder desires to exercise this Warrant by a fraction, the
numerator of which shall be the difference between the then current market price
per share of the Common Stock and the Exercise Price, and the denominator of
which shall be the then current market price per share of Common Stock. For
purposes of any computation under this Section 1(b), the then current market
price per share of Common Stock at any date shall be deemed to be the average
for the ten consecutive business days immediately prior to the Cashless Exercise
of the daily closing prices of the Common Stock on the principal national
2
<PAGE>
securities exchange on which the Common Stock is admitted to trading or listed,
or if not listed or admitted to trading on any such exchange, the closing prices
as reported by the Nadaq National Market, or if not then listed on the Nasdaq
National Market, the average of the highest reported bid and lowest reported
asked prices as reported by the National Association of Securities Dealers, Inc.
Automated Quotations System ("Nasdaq") or if not then publicly traded, the fair
market price of the Common Stock as determined by the Board of Directors of the
Company.
(d) If this Warrant shall be exercised in part only, the Company shall, upon
surrender of this Warrant for cancellation, execute and deliver a new Warrant
evidencing the rights of the Holder thereof to purchase the balance of the Units
purchasable hereunder as to which the Warrant has not been exercised. If this
Warrant is exercised in part, such exercise shall be for a whole number of
Units. Upon any exercise and surrender of this Warrant, the Company will issue
and deliver to the Holder a certificate or certificates in the name of the
Holder for the number of Shares to which the Holder shall be entitled and a
certificate representing the Unit Warrants, or, if exercised after the Call
Date, the shares of Common Stock, to which the Holder shall be entitled or the
proportionate part thereof if this Warrant is exercised in part, pursuant to the
provisions of this Warrant.
2. Adjustments.
2.1 The Holder of the Warrant shall receive upon exercise hereof prior to
the Call Date Shares and Unit Warrants that will reflect all adjustments to such
securities as would have occurred from the date of this Warrant through the date
of exercise of the Warrant and which shall be identical to Investor Shares and
Investor Warrants. For purposes of clarity, the Holder of the Warrant, whenever
exercised prior to the Call Date, shall have the right to receive that amount of
securities of the Company had the Holder exercised this Warrant on the date
hereof and received the benefit of all adjustments (for anti-dilution, or
changes in capitalization, or a merger or other transaction effecting the
capitalization of the Company) to such securities as if the Holder had held such
securities from the date hereof until the date of exercise of this Warrant.
After the Call Date, the Holder of this Warrant shall be entitled to receive the
number of shares of Common Stock which such Holder would have received had such
Holder exercised this Warrant and the Unit Warrants in full immediately prior to
the Call Date, as adjusted equitably for any stock splits, stock dividends,
mergers or recapitalization occurring after the Call Date at an exercise price
equal to the conversion or exercise price, as the case may be, of the Shares and
Unit Warrants as of the Call Date, as appropriately adjusted for any stock
dividends, mergers or recapitalization occurring after the Call Date. By way of
illustration, if this Warrant was initially exercisable for one Unit and if on
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<PAGE>
the Call Date one unit consisted of 10,000 Shares convertible into 66,666 shares
of Common Stock at $1.50 per share and Warrants exercisable for 25% of 66,666 at
$1.50 per share and subsequent to the Call Date the Company declared a 2-for-1
stock split, the Holder would be entitle to exercise this Warrant for 166,665
shares of Common Stock at $.75 per share (representing 133,332 shares in respect
of the Shares included in the Unit originally underlying the Warrant and 33,333
shares of Common Stock in respect of the Unit Warrants included in the Unit
originally underlying the Warrant).
2.2 Notice of Adjustments. Upon the occurrence of each adjustment or
readjustment of the Units pursuant to Section 2.1, the Company at its expense
will promptly compute such adjustment or readjustment and prepare a certificate
setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based. The Company will forthwith
mail, by first class mail, postage prepaid, a copy of each such certificate to
the Holder of this Warrant at the address of such Holder as shown on the books
of the Company.
2.3 Other Notices. If at any time:
(a) the Company shall (i) offer for subscription pro rata to the
holders of shares of the Common Stock any additional equity in the Company or
other rights; (ii) pay a dividend in additional shares of the Common Stock or
distribute securities or other property to the holders of shares of the Common
Stock (including, without limitation, evidences of indebtedness and equity and
debt securities); or (iii) issue securities convertible into, or rights or
Warrants to purchase, securities of the Company;
(b) there shall be any capital reorganization or reclassification or
consolidation or merger of the Company with, or sale, transfer or lease of all
or substantially all of its assets to, another entity; or
(c) there shall be a voluntary or involuntary dissolution, liquidation
or winding up of the Company;
then, in any one or more of said cases, the Company shall give, by first class
mail, postage prepaid, to the Holder of this Warrant at the address of such
Holder as shown on the books of the Company, (a) at least 15 days' prior written
notice of the date on which the books of the Company shall close or a record
shall be taken for such subscription rights, dividend, distribution or issuance,
and (b) in the case of any such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding up, at least 15 days' prior
written notice of the date when the same shall take place if no stockholder vote
is required and at least 15 days' prior written notice of the record date for
stockholders entitled to vote upon such matter if a stockholder vote is
required. Such notice in accordance with the foregoing clause (a) shall also
specify, in the case of any such subscription rights, the date on which the
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<PAGE>
holders of shares of Common Stock shall be entitled to exercise their rights
with respect thereto, and such notice in accordance with the foregoing clause
(b) shall also specify the date on which the holders of shares of Common Stock
shall be entitled to exchange their shares of Common Stock for securities or
other property deliverable upon such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, as the case
may be. Failure to give the notice referred to herein shall not affect the
validity or legality of the action which should have been the subject of the
notice.
3. No Voting Rights. Except as otherwise provided herein, this Warrant shall not
be deemed to confer upon the Holder any right to vote or to consent to or
receive notice as a stockholder of the Company, as such, in respect of any
matters whatsoever, or any other rights or liabilities as a stockholder, prior
to the exercise hereof.
4. Warrants Transferable. This Warrant and all rights hereunder are
transferable, in whole or in part, at the principal offices of the Company by
the Holder hereof, upon surrender of this Warrant properly endorsed; provided,
however, that without the prior written consent of the Company, this Warrant and
all rights hereunder may be transferred only (i) to an affiliate of the initial
Holder hereof or successor in interest to any such person; or (ii) pursuant to
the registration of this Warrant under the 1933 Act or subsequent to one year
from the date hereof under Rule 144 or other exemption from such registration.
5. Warrants Exchangeable; Loss, Theft, Destruction, Etc. This Warrant is
exchangeable, upon surrender hereof by the Holder hereof at the principal
offices of the Company, for new Warrants of like tenor representing in the
aggregate the right to subscribe for and purchase the Units or Common Stock
which may be subscribed for and purchased hereunder, each such new Warrant to
represent the right to subscribe for and purchase such Units or Common Stock
(not to exceed the maximum aggregate Units or shares of Common Stock which may
be purchased hereunder) as shall be designated by such Holder hereof at the time
of such surrender. Upon receipt of evidence satisfactory to the Company of the
loss, theft, destruction or mutilation of this Warrant and, in the case of any
such loss, theft or destruction, upon delivery of a bond or indemnity
satisfactory to the Company, or, in the case of any such mutilation, upon
surrender or cancellation of this Warrant, the Company will issue to the Holder
hereof a new Warrant of like tenor, in lieu of this Warrant, representing the
right to subscribe for and purchase the Units or Common Stock which may be
subscribed for and purchased hereunder.
6. Legends; Investment Representations. Any certificate evidencing the
securities issued upon exercise of this Warrant shall bear a legend in
substantially the following form:
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<PAGE>
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). SUCH SECURITIES MAY
NOT BE TRANSFERRED EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR (B) UPON RECEIPT BY
THE ISSUER OF AN OPINION OF COUNSEL, WHICH OPINION OF COUNSEL SHALL BE
REASONABLY SATISFACTORY TO THE ISSUER, TO THE EFFECT THAT SUCH TRANSFER IS
EXEMPT FROM REGISTRATION UNDER THE ACT AND SUCH STATE SECURITIES LAWS.
7. Miscellaneous. The Company shall pay all expenses and other charges payable
in connection with the preparation, issuance and delivery of this Warrant and
all substitute Warrants other than as set forth in this Section 7. The Holder
shall pay all taxes (other than any issuance taxes, including, without
limitation, documentary stamp taxes, transfer taxes and other governmental
charges, which shall be paid by the Company) in connection with such issuance
and delivery of the Warrants and the Units.
The Company shall maintain, at the office or agency of the Company
maintained by the Company, books for the registration and transfer of the
Warrant.
8. Descriptive Headings and Governing Law. The descriptive headings of the
several paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant. This Warrant shall be construed and enforced
in accordance with the laws of the State of New York, and the rights of the
parties shall be governed by, the law of such State.
6
<PAGE>
IN WITNESS WHEREOF, this Warrant Agreement has been executed as of the
_____ day of March, 2000.
U.S. WIRELESS DATA, INC.
By:
-------------------------------------
Its:
------------------------------------
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PURCHASE FORM
Dated:__________, ____
Prior to Call Date
The undersigned hereby irrevocably elects to exercise the within Warrant to
the extent of purchasing _____ Units and hereby makes payment of $_____________
in payment of the exercise price thereof.
After the Call Date
The undersigned hereby irrevocably elects to exercise the within Warrant to
the extent of purchasing _____ shares of Common Stock (including _____ shares
which would have been issuable pursuant to the Unit Warrants) and hereby makes
payment of $_____ in payment of the exercise price thereof.
-----------------------------------------
8
<PAGE>
CASHLESS EXERCISE FORM
Dated:__________, ____
Prior to Call Date
The undersigned irrevocably elects to exercise the within Warrant for Units
and hereby makes payment pursuant to the Cashless Exercise provision of the
within Warrant, and directs that the payment of the Exercise Price be made by
cancellation as of the date of exercise of a portion of the within Warrant in
accordance with the terms and provisions of Section 1(b) of the within Warrant.
After the Call Date The undersigned irrevocably elects to exercise the within
Warrant to the extent of purchasing shares of Common Stock (including shares
which would have been issuable pursuant to the Unit Warrants) and hereby makes
payment pursuant to the Cashless Exercise provision of the within Warrant, and
directs that the payment of the Exercise Price be made by cancellation as of the
date of exercise of a portion of the within Warrant in accordance with the terms
and provisions of Section 1(b) of the within Warrant.
-----------------------------------------
9
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY
STATE SECURITIES LAWS OF ANY STATE (THE "ACTS") AND MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN
EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACTS OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
No. ____ March 31, 2000
WARRANT TO PURCHASE COMMON STOCK
OF
U.S. WIRELESS DATA, INC.
This certifies that, for value received, Bold Street, LLC ("Holder"), with
an address c/o Thomson Kernaghan & Co., 365 Bay Street, Suite 1000, 10th Floor,
Toronto, Ontario M5H 2V2, is entitled, subject to the terms set forth below, to
purchase from U.S. WIRELESS DATA, INC. (the "Company"), a Colorado corporation,
150,000 fully paid and non-assessable shares (the "Shares") of the Common Stock
of the Company ("Common Stock"), as constituted on the date hereof (the "Warrant
Issue Date"), with the Notice of Exercise attached hereto duly executed, and
simultaneous payment therefor in lawful money of the United States, or, as
provided in Section 3, Common Stock, at the Exercise Price as set forth in
Section 2 below. The number, character and Exercise Price of such shares of
Common Stock are subject to adjustment as provided below.
1. Term of Warrant. This Warrant shall be exercisable, in whole or in
part, during the term commencing the date hereof and ending at 5:00 p.m. (New
York City time) on April 30, 2004.
2. Exercise Price and Number of Shares.
2.1 Exercise Price. The exercise price at which this Warrant may
be exercised shall be $2.28 per share of Common Stock, as adjusted from time to
time pursuant to Section 10 hereof (the "Exercise Price").
2.2 Number of Shares. The number of shares of Common Stock which
may be purchased pursuant to this Warrant shall be 150,000 shares, as adjusted
from time to time pursuant to Section 10 hereof.
3. Exercise of Warrant.
(a) The purchase rights represented by this Warrant are
exercisable by the Holder in whole or in part at any time during the term of
this Warrant, or from time to time, by the surrender of this Warrant and the
Exercise Form, annexed hereto duly completed and executed on behalf of the
Holder, at the office of the Company (or such other office or agency of the
Company as it may designate by notice in writing to the Holder at the address of
the Holder appearing on the books of the Company) upon payment in cash or by
check acceptable to the Company. In lieu of the payment of the Exercise Price,
the Holder shall have the right (but not the obligation), during the exercise
period, to require the Company to convert this Warrant, in whole or in part,
into the Warrant Shares as provided for in this Section (the "Conversion
Right"). Upon exercise of the Conversion Right, the Company shall deliver to the
Holder (without payment by the Holder of the Exercise Price) that number of
shares of Common Stock equal to (i) the number of Shares issuable upon exercise
of the portion of the Warrant being converted, multiplied by (ii) the quotient
obtained by dividing (x) the value of the Warrant on a per Share basis) at the
time the Conversion Right is exercised (determined by subtracting the Exercise
Price from the Current Market Price (as determined pursuant to Section 3(d)
below), for the shares of Common Stock issuable upon exercise of the Warrant
immediately prior to the exercise of the Conversion Right) by (y) the Current
Market Price of one share of Common Stock immediately prior to the exercise of
the Conversion Right. The Conversion Rights provided under this Section may be
exercised in whole or in part and at any time and from time to time while any
Warrants remain outstanding. In order to exercise the Conversion Right, the
Holder shall surrender to the Company, at its offices, this Warrant accompanied
<PAGE>
by the Cashless Exercise Form duly filled in and signed. The presentation and
surrender shall be deemed a waiver of the Holder's obligation to pay all or any
portion of the aggregate purchase price payable for the Shares being issued upon
such exercise of this Warrant. This Warrant (or so much thereof as shall have
been surrendered for conversion) shall be deemed to have been converted
immediately prior to the close of business on the day of surrender of this
Warrant for conversion in accordance with the foregoing provisions. As promptly
as practicable on or after the conversion date, the Company shall issue and
shall deliver to the Holder (i) a certificate or certificates representing the
largest number of Shares which the Holder shall be entitled as a result of the
conversion, and (ii) if such Warrant is being converted in part only, a new
Warrant exercisable for the number of Shares equal to the unconverted portion of
the Warrant.
(b) This Warrant shall be deemed to have been exercised
immediately prior to the close of business on the date of its surrender for
exercise and the person entitled to receive the shares of Common Stock issuable
upon such exercise shall be treated for all purposes as the holder of record of
such shares as of the close of business on such date. As promptly as practicable
on or after such date, the Company at its expense shall issue and deliver to the
person or persons entitled to receive the same a certificate or certificates for
the number of shares issuable upon such exercise. In the event that this Warrant
is exercised in part, the Company at its expense will execute and deliver a new
Warrant of like tenor exercisable for the number of shares for which this
Warrant may then be exercised.
(c) If this Warrant is exercised in part this Warrant must be
exercised or converted, as the case may be, for a number of whole shares of the
Common Stock.
(d) The Current Market Price per Share on any date shall be
deemed to be the average of the daily closing bid prices for the five (5)
consecutive trading days immediately preceding the date in question. The closing
price for each day shall be the last reported sales price regular way or, in
case no such reported sale takes place on such day, the closing bid price
regular way, in either case on the principal national securities exchange on
which the Common Stock is listed or admitted to trading or, if the Common Stock
is not listed or admitted to trading on any national securities exchange, the
highest reported bid price for the Common Stock as furnished by the National
Association of Securities Dealers, Inc. through NASDAQ or a similar organization
if NASDAQ is no longer reporting such information. If on any such date the
Common Stock is not listed or admitted to trading on any national securities
exchange and is not quoted by NASDAQ or any similar organization, the fair value
of a share of Common Stock on such date, as determined in good faith by the
Board of Directors of the Company, whose determination shall be conclusive
absent manifest error, shall be used.
4. Replacement of Warrant. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft destruction or mutilation of this
Warrant and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement reasonably satisfactory in form and substance to the Company
or, in the case of mutilation, on surrender and cancellation of this Warrant,
the Company at its expense shall execute and deliver, in lieu of this Warrant, a
new warrant of like tenor and amount.
5. Rights of Stockholders. The Holder shall not be entitled to vote or
receive dividends or be deemed the holder of Common Stock, nor shall anything
contained herein be construed to confer upon the Holder, as such, any of the
rights of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issuance of stock, reclassification of stock, change of par
value, or change of stock to no par value, consolidation, merger, conveyance or
otherwise) or to receive notice of meetings, or to receive dividends or
subscription rights or otherwise until the Warrant shall have been exercised as
provided herein.
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<PAGE>
6. Transfer of Warrant.
6.1 Exchange of Warrant Upon a Transfer. Upon delivery by the
transferee of a written agreement to be bound by the terms of this Warrant and
surrender of this Warrant for exchange, properly endorsed and transferred in
accordance with this Section 6, the Company at its expense shall issue to or on
the order of the Holder a new warrant or warrants of like tenor, in the name of
the Holder or as the Holder (on payment by the Holder of any applicable transfer
taxes) may direct, of the number of shares issuable upon exercise hereof.
6.2 Restrictions on Transfer; Compliance with Securities Laws.
(a) The Holder of this Warrant, by acceptance hereof,
acknowledges that this Warrant and the shares of Common Stock to be issued upon
exercise hereof are being acquired solely for the Holder's own account and not
as a nominee for any other party, and for investment and agrees to comply with
the transfer restrictions contained in this Section 6.2. The Holder will not
offer, sell or otherwise dispose of this Warrant or any shares of Common Stock
to be issued upon exercise hereof ("Shares"), except under circumstances that
will not result in a violation of applicable federal and state securities laws.
Prior to offering, selling or otherwise disposing of the Warrants or Shares, the
holder hereof or thereof will give the Company a written notice describing the
manner and circumstances of the transfer accompanied by, if requested by the
Company, a written opinion of legal counsel satisfactory to the Company to the
effect, as amended, that the proposed transfer may be effected without
registration under the Securities Act of 1933 or any state blue sky law. Any
Warrant or Shares transferred in violation of applicable federal and state
securities laws shall be void and not recognized by the Company. Any transferee
of this Warrant or Shares shall execute an agreement agreeing to be bound by the
terms of this Section 6.
(b) All shares of Common Stock issued upon exercise hereof shall
be stamped or imprinted with a legend in substantially the following form (in
addition to any legend required by state securities laws):
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER UNITED
STATES FEDERAL OR STATE SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE,
SOLD OR OTHERWISE TRANSFERRED OR ASSIGNED FOR VALUE, DIRECTLY OR
INDIRECTLY, NOR MAY THE SECURITIES BE TRANSFERRED ON THE BOOKS OF THE
COMPANY, WITHOUT REGISTRATION OF SUCH SECURITIES UNDER ALL APPLICABLE
UNITED STATES FEDERAL SECURITIES LAWS OR COMPLIANCE WITH AN APPLICABLE
EXEMPTION THEREFROM, SUCH COMPLIANCE AT THE OPTION OF THE COMPANY, TO BE
EVIDENCED BY AN OPINION OF SHAREHOLDER'S COUNSEL, IN FORM ACCEPTABLE TO THE
COMPANY, THAT NO VIOLATION OF SUCH REGISTRATION PROVISIONS WOULD RESULT
FROM ANY PROPOSED TRANSFER OR ASSIGNMENT."
7. Reservation of Stock. The Company covenants that during the term
that this Warrant is exercisable, the Company will reserve from its authorized
and unissued Common Stock a sufficient number of shares to provide for the
issuance of Common Stock upon the exercise of this Warrant and, from time to
time, will take all steps necessary to amend its Certificate of Incorporation
(the "Certificate") to provide sufficient reserves of shares of Common Stock
issuable upon the exercise of the Warrant. The Company further covenants that
all shares that may be issued upon the exercise of rights represented by this
Warrant, upon exercise of the rights represented by this Warrant and payment of
the Exercise Price, all as set forth herein, will be free from all taxes, liens
and charges in respect of the issue thereof (other than taxes in respect of any
transfer occurring contemporaneously or otherwise specified herein), and will be
validly issued, fully paid and nonassessable.
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<PAGE>
8. Notices. Whenever the Exercise Price or number of shares
purchasable hereunder shall be adjusted pursuant to Section 10 hereof, the
Company shall issue a certificate signed by its Chief Financial Officer setting
forth, in reasonable detail, the event requiring the adjustment, the amount of
the adjustment, the method by which such adjustment was calculated, and the
Exercise Price and number of shares purchasable hereunder after giving effect to
such adjustment, and shall cause a copy of such certificate to be mailed (by
first-class mail, postage prepaid) to the Holder of this Warrant.
9. Amendments.
(a) Any term of this Warrant may be amended with the written
consent of the Company and the Holder. Any amendment effected in accordance with
this Section 9 shall be binding upon the Holder, each future Holder and the
Company.
(b) No waivers of, or exceptions to, any term, condition or
provision of this Warrant, in any one or more instances, shall be deemed to be,
or construed as, a further or continuing waiver of any such term, condition or
provision.
10. Adjustments. The number of shares purchasable hereunder is subject
to adjustment from time to time as follows:
10.1 Reorganization, Merger or Sale of Assets. If at any time
while this Warrant, or any portion thereof, is outstanding and unexpired there
shall be (i) a reorganization (other than a combination, reclassification,
exchange or subdivision of shares otherwise provided for herein), (ii) a merger
or consolidation of the Company with or into another corporation in which the
Company is not the surviving entity, or a reverse triangular merger in which the
Company is the surviving entity but the shares of the Company's capital stock
outstanding immediately prior to the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash or
otherwise, or (iii) a sale or transfer of the Company's properties and assets
as, or substantially as, an entirety to any other person, then, as a part of
such reorganization, merger, consolidation, sale or transfer, lawful provision
shall be made so that the holder of this Warrant shall thereafter be entitled to
receive upon payment of the Exercise Price then in effect, the number of shares
of stock or other securities or property of the successor corporation resulting
from such reorganization, merger, consolidation, sale or transfer that a holder
of the shares deliverable upon exercise of this Warrant would have been entitled
to receive in such reorganization, consolidation, merger, sale or transfer if
this Warrant had been exercised immediately before such reorganization, merger,
consolidation, sale or transfer, all subject to further adjustment as provided
in this Section 10. The foregoing provisions of this Section 10.1 shall
similarly apply to successive reorganizations, consolidations, mergers, sales
and transfers and to the stock or securities of any other corporation that are
at the time receivable upon the exercise of this Warrant. If the per-share
consideration payable to the Holder hereof for shares in connection with any
such transaction is in a form other than cash or marketable securities, then the
value of such consideration shall be determined in good faith by the Company's
Board of Directors. In all events, appropriate adjustment (as determined in good
faith by the Company's Board of Directors) shall be made in the application of
the provisions of this Warrant with respect to the rights and interests of the
Holder after the transaction, to the end that the provisions of this Warrant
shall be applicable after that event, as near as reasonably may be, in relation
to any shares or other property deliverable after that event upon exercise of
this Warrant.
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<PAGE>
10.2 Reclassification. If the Company, at any time while this
Warrant, or any portion thereof, remains outstanding and unexpired, by
reclassification of securities or otherwise, shall change any of the securities
as to which purchase rights under this Warrant exist into the same or a
different number of securities of any other class or classes, this Warrant shall
thereafter represent the right to acquire such number and kind of securities as
would have been issuable as the result of such change with respect to the
securities that were subject to the purchase rights under this Warrant
immediately prior to such reclassification or other change and the Exercise
Price therefor shall be appropriately adjusted, all subject to further
adjustment as provided in this Section 10.
10.3 Dividend, Split, Subdivision or Combination of Shares. If
the Company at any time while this Warrant, or any portion thereof, remains
outstanding and unexpired shall (i) declare a dividend or make a distribution on
the securities as to which purchase rights under this Warrant exist payable in
shares of its capital stock or securities convertible into or exchangeable for
capital stock or (ii) split, subdivide or combine the securities as to which
purchase rights under this Warrant exist, then, in each case, the Exercise Price
in effect, and the number of shares issuable upon exercise of the Warrant, at
the time of the record date for such dividend or at the effective date of such
split, subdivision or combination, shall be proportionately adjusted so that the
holders of the Warrant after such time shall be entitled to receive upon
exercise of the Warrant the aggregate number and kind of shares which, if such
Warrant had been exercised immediately prior to such time, such holders would
have owned upon such exercise and immediately thereafter been entitled to
receive by virtue of such dividend, split, subdivision or combination. Such
adjustment shall be made successively whenever any event listed above shall
occur, subject to further adjustment as provided in this Section 10.
11. Registration Rights. Holder shall have unlimited "piggyback"
registration rights as to the Shares, provided that Holder shall not be entitled
to "piggyback" on a registration statement with respect to an underwritten
public offering if (a) the underwriter advises the Company that the inclusion of
the Shares would adversely affect the contemplated public offering and (b) no
affiliates of the Company are selling stockholders in such offering. The Company
shall bear the expenses related to any such registration, except for commissions
or discounts payable to broker-dealers in respect of the sale of the Shares. The
registration rights referred to herein shall terminate if the Shares are
saleable without restriction under Rule 144(k) promulgated under the Securities
Act of 1933.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its officers thereunto duly authorized.
Dated March 31, 2000
U.S. WIRELESS DATA, INC.
By: /s/
---------------------------------
Charles I. Leone
Chief Financial Officer
5
<PAGE>
CASH EXERCISE FORM
TO: U.S. WIRELESS DATA, INC.
805 Third Avenue, 8th Floor
New York, New York 10022
Attention: Chief Executive Officer
(1) The undersigned hereby elects to purchase _______ shares of Common
Stock of U.S. WIRELESS DATA, INC. pursuant to the terms of the attached Warrant
and tenders herewith payment of the purchase price for such shares in full.
(2) In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the shares of Common Stock are being acquired solely for the
account of the undersigned and not as a nominee for any other party, and for
investment, and that the undersigned will not offer, sell or otherwise dispose
of any such shares of Common Stock except under circumstances that will not
result in a violation of the Securities Act of 1933, as amended, or any state
securities laws.
(3) Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
------------------------------------
(Name)
------------------------------------
(Signature)
(4) Please issue a new Warrant for the unexercised portion of the attached
Warrant in the name of the undersigned or in such other name as is specified
below:
------------------------------------
(Name)
- ----------------------- ------------------------------------
(Date) (Signature)
6
<PAGE>
To:
CASHLESS EXERCISE FORM
(To be executed upon conversion of the attached Warrant)
The undersigned hereby irrevocably elects to surrender its Warrant for the
number of Shares as shall be issuable pursuant to the cashless exercise
provisions of Section 1 of the within Warrant, in respect of ________ Shares
underlying the within Warrant, and requests that certificates for such Shares be
issued in the name of and delivered to:
(Print Name, Address and Social Security
or Tax Identification Number)
and, if such number of Shares shall not be all the shares exchangeable or
purchasable under the within Warrant, that a new Warrant for the balance of the
Shares covered by the within Warrant be registered in the name of, and delivered
to, the undersigned at the address stated below.
Date:
------------------------------
Name: (Print)
------------------------------
Address:
-----------------------------------------------------------------
- ---------------------------------- (Signature)
Signature
7
