SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(Amendment No. __)(1)
U.S. WIRELESS DATA, INC.
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(Name of Issuer)
Common Stock, no par value
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(Title of Class of Securities)
912 899 101
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(CUSIP Number)
Carl G. Kleidman, Esq.
Commonwealth Associates, L.P.
830 Third Avenue
New York, New York 10022
(212) 829-5839
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
March 16, 2000
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(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box |_|.
Note. Schedules filed in paper format shall include a signed
original and five copies of the schedule, including all exhibits. See Rule
13d-7(b) for other parties to whom copies are to be sent.
(Continued on following pages)
(Page 1 of _ Pages)
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(1) The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE>
CUSIP No. 912 899 101 SCHEDULE 13D Page 2 of _ Pages
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1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
ComVest Capital Partners LLC (13-4068973)
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) |_|
(b) |_|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
NONE
--------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 7,920,000
OWNED BY --------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON NONE
WITH --------------------------------------------------------
10 SHARED DISPOSITIVE POWER
7,920,000
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,920,000
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* |_|
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
35.8%
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14 TYPE OF REPORTING PERSON*
00
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
CUSIP No. 912 899 101 SCHEDULE 13D Page 3 of _ Pages
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1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Michael S. Falk ###-##-####
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) |_|
(b) |_|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
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7 SOLE VOTING POWER
None
--------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 7,920,000
OWNED BY --------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON None
WITH --------------------------------------------------------
10 SHARED DISPOSITIVE POWER
7,920,000
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,920,000
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* |_|
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
35.8%
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14 TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
CUSIP No. 912 899 101 SCHEDULE 13D Page 4 of _ Pages
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1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Robert Priddy ###-##-####
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) |_|
(b) |_|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
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7 SOLE VOTING POWER
None
--------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 7,920,000
OWNED BY --------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON None
WITH --------------------------------------------------------
10 SHARED DISPOSITIVE POWER
7,920,000
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,920,000
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* |_|
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
35.8%
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14 TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
CUSIP No. 912 899 101 SCHEDULE 13D Page 5 of _ Pages
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1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Keith Rosenbloom ###-##-####
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) |_|
(b) |_|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
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7 SOLE VOTING POWER
None
--------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 7,920,000
OWNED BY --------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON None
WITH --------------------------------------------------------
10 SHARED DISPOSITIVE POWER
7,920,000
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,920,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
35.8%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
Item 1. Security and Issuer.
The class of equity securities to which this statement on Schedule 13D
relates is the common stock, no par value (the "Issuer Common Stock"), of U.S.
Wireless Data, Inc., a Colorado corporation (the "Issuer"). The principal
executive offices of the Issuer are located at 2200 Powell Street, Suite 800,
Emeryville, California 94608.
Item 2. Identity and Background.
This statement is filed jointly by ComVest Capital Partners LLC
("ComVest"), a limited liability company organized under the laws of Delaware,
whose principal business is investing in and administrating ownership of
securities. Michael S. Falk, Robert Priddy and Keith Rosenbloom are the Managers
and principal members of ComVest. ComVest, Mr. Falk, Mr. Priddy and Mr.
Rosenbloom are the "Reporting Persons."
The business address for all of the Reporting Persons other than Mr.
Priddy is 830 Third Avenue, New York, New York 10022. Mr. Priddy is a principal
of RMC Capital, 1640 Powers Ferry, Suite 125, Marietta, Georgia 30067, an
investment firm.
During the last five years, none of the Reporting Persons has been
convicted in a criminal proceeding or been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding, was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws of finding any violation with respect to
such laws.
Item 3. Source and Amount of Funds or Other Consideration.
The securities covered by this statement were acquired by ComVest using
funds from its working capital.
Item 4. Purpose of Transaction.
ComVest made a loan to the Issuer in the aggregate amount of $1,325,000.
As consideration for the loan from ComVest, the Issuer issued to ComVest a
warrant (the "Warrant") to purchase 13,636,363 shares of Issuer Common Stock.
ComVest has received 7,920,000 shares pursuant to a partial exercise of the
Warrant. The remaining portion of the Warrant is not currently exercisable.
Mr. Falk, Mr. Priddy and Mr. Rosenbloom are directors and principal
stockholders of Commonwealth Associates Management Corp., the General Partner of
Commonwealth Associates, L.P., an entity which has been engaged by the Issuer to
act as placement agent and financial advisor in connection with a private
placement of the Issuer's securities. As part of the private placement of the
Issuer's securities, Commonwealth or its affiliates (i) may participate in the
placement by purchasing securities of the Issuer; (ii) will receive securities
of the Issuer as fees for its services; and (iii) will have the ability to
appoint members of the Issuer's Board of Directors. In addition, the Issuer has
amended its Articles of Incorporation to designate the securities being sold in
the placement.
Other than as set forth above, the Reporting Persons have no present plans
or proposals which relate to, or could result in, any of the matters referred to
in paragraphs (a) through (j) of Item 4 of Schedule 13D. The Reporting Persons
may, at any time and from time to time, renew or reconsider their position and
formulate plans or proposals with respect thereto, but have no present intention
of doing so.
Page 6 of
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Item 5. Interest in Securities of the Issuer.
(a)(1) ComVest is the owner of an aggregate of 7,920,000 shares of Issuer
Common Stock, representing approximately 35.8% of the total class.
(a)(2) In his capacity as a manager and principal member of ComVest, Mr.
Falk shares indirect voting and dispositive power with respect to
ComVest's 7,920,000 shares and may be deemed to be the beneficial
owner of such securities, although Mr. Falk disclaims beneficial
interest in such shares other than that portion which corresponds
with his membership interest in ComVest.
(a)(3) In his capacity as a manager and principal member of ComVest, Mr.
Priddy shares indirect voting and dispositive power with respect to
ComVest's 7,920,000 shares and may be deemed to be the beneficial
owner of such securities, although Mr. Priddy disclaims beneficial
interest in such shares other than that portion which corresponds
with his membership interest in ComVest.
(a)(4) In his capacity as a manager and principal member of ComVest, Mr.
Rosenbloom shares indirect voting and dispositive power with
respect to ComVest's 7,920,000 shares and may be deemed to be the
beneficial owner of such securities, although Mr. Rosenbloom
disclaims beneficial interest in such shares other than that
portion which corresponds with his membership interest in ComVest.
(b) ComVest, Mr. Falk, Mr. Priddy and Mr. Rosenbloom share the power to
vote or to direct the vote and dispose or to direct the disposition
of ComVest's 7,920,000 shares.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer.
Under the terms of the Warrant filed as an exhibit hereto, the Issuer is
required to prepare and file a registration statement with the Securities and
Exchange Commission with respect to the shares issuable upon exercise of the
Warrant.
Item 7. Material to be Filed as Exhibits.
(i) Warrant dated as of December 30, 1999.
(ii) Joint Statement on Schedule 13D, as required by Rule 13d-1(K) under
the Exchange Act.
Page 7 of
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated:March _______, 2000 ComVest Capital Partners LLC
By:
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Keith Rosenbloom, Manager
Dated: March ________, 2000 --------------------------------------
Michael S. Falk
Dated: March ________, 2000 --------------------------------------
Robert Priddy
Dated: March ________, 2000 --------------------------------------
Keith Rosenbloom
Page 8 of
<PAGE>
EXHIBIT INDEX
(i) Warrant dated as of December 30, 1999.
(ii) Joint Filing of Schedule 13D
Page 9 of
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. 1
THIS CERTIFIES that, for value received, ComVest Capital Management LLC,
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, 13,636,363 shares (the
"Shares") of fully paid and nonassessable shares of common stock of the Company
(the "Common Stock"). The purchase price for each Share (the "Share Price") is
one cent ($0.01) per Share. 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. 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 December 30, 2006 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
<PAGE>
Company of an amount equal to the Share Price multiplied by the number of Shares
as to which this Warrant is then being exercised; provided, however, the Holder
may not exercise this Warrant to the extent such exercise would exceed the
number of shares of Common Stock reserved for issuance under this Warrant it
being agreed that on the date of this Warrant no shares of Common Stock have
been duly reserved for issuance. If the Holder has exercised all or any portion
of this Warrant within six months of the date of this Warrant the Holder may not
during such period sell, assign, transfer, pledge or encumber any such shares to
the extent any such shares exceeds a number (the "Excess Shares") equal to the
product of(1) 13,636,363 and (2) a fraction the numerator of which is the sum of
all loans made by ComVest Capital Management LLC ("ComVest") to the Company
pursuant to the Commitment Letter dated December 30, 1999 and the denominator of
which is $1,000,000. In the event that within six months of the date of this
Warrant, the Company shall have requested funds under the Commitment Letter and
ComVest shall not have honored any such request for financing that it is
required to honor by the terms of the Commitment Letter and the promissory note
relating to such borrowing request, then in respect of such failure to honor
such request the Holder shall forfeit to the Company (either in shares of Excess
Shares, warrants to purchase shares of Common Stock that have not yet been
exercised but that if purchased by the Holder would constitute Excess Shares, or
a combination of both, in each case at the option of the Holder) that number of
shares of Common Stock as is equal to the product of(1) 13,636,363 and (2) a
fraction the numerator of which is the sum of (x) the amount of funds
represented by the borrowing request that ComVest failed to honor but was
required to do so and (y) the amount of borrowing at that time that the Company
may still request under the Commitment Letter and the denominator of which is
$1,000,000. If the Holder forfeits any Excess Shares, then within five (5)
business days of the date of forfeiture the Company will pay to the Holder the
exercise price paid to the Company by the Holder to purchase such Excess Shares.
Any transfer of Shares obtained by Holder in exercise of this Warrant is subject
to the requirement that such securities are registered under the Securities Act
of 1933, as amended (the "1933 Act") and applicable state securities laws or are
exempt from registration under such laws. The Holder of this Warrant shall be
deemed to be a shareholder of the 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 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
Shares determined as of the date of delivery. 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 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 Shares. Upon any exercise and
surrender of this Warrant, the Company (a) will issue and deliver to the Holder
a certificate or certificates in the name of the Holder for the largest whole
number of Shares to which the Holder shall be entitled and, if this Warrant is
exercised in whole, in lieu of any fractional Share to which the Holder
otherwise might be entitled, cash in an amount equal to the fair value of such
fractional share (determined in such reasonable and equitable manner as the
Board of Directors of the Company shall in good faith determine), and (b) will
deliver
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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 Share
Price shall be subject to adjustment from time to time as follows:
2.1 Reorganization, Reclassification, Consolidation, Merger or Sale;
Distributions.
(a) 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 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 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 such Holder such
securities or assets as, in accordance with the foregoing provisions, such
Holder may be entitled to purchase, and (ii) all other obligations of the
Company under this Warrant. The provisions of this Section 2.1(a) shall
similarly apply to successive consolidations, mergers, exchanges, sales,
transfers or leases.
(b) 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 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
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<PAGE>
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.
(c) In addition to those adjustments set forth in Sections 2.1(a)
and (b), 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 of 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 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 Shares or other securities of the Company (such
other securities thereafter enjoying the rights of Shares under this Warrant)
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 2.1(c) 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 2.1(c), 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 this Warrant promptly after such adjustment) shall determine the
allocation of the adjusted Share 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 purchasable upon the exercise
of this Warrant described in this Section 2.1(c) shall be made each time any
event listed in paragraphs (i) through (v) of this Section 2.1(c) occurs.
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<PAGE>
(d) 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 Share Price will also be appropriately adjusted so that at all
times the Holder and all subsequent holders of this Warrant (whether in whole or
in part) would not pay more than the aggregate purchase price to exercise this
Warrant in full immediately after such adjustment as the Holder and all such
subsequent holders had to pay immediately prior to such adjustment.
2.2 Other Action Affecting Shares. If the Company takes any action
affecting its shares of Common Stock after the date hereof, that would be
covered by Section 2.1 but for the manner in which such action is taken or
structured, other than an action described in any of Section 2.1, which would in
any way diminish the value of this Warrant hereunder, then this Warrant shall be
adjusted as to the Shares purchasable hereunder and the Share Price payable
hereunder in such manner as the Board of Directors of the Company shall in good
faith determine to be equitable under the circumstances.
2.3 Notice of Adjustments. Upon each adjustment or readjustment of the
Share Price or in the nature of the securities or other property receivable upon
the exercise of this Warrant, 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 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 addressed to the Holder of this Warrant at the address of
such Holder as shown on the books of the Company.
2.4 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, addressed 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,
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<PAGE>
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.
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 or the Shares under the 1933 Act or subsequent to one year from
the date hereof an exemption 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 Shares which may be
subscribed for and purchased hereunder, each such new Warrant to represent the
right to subscribe for and purchase such Shares (not to exceed the maximum
aggregate 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 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:
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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. Registration.
7.1 Definitions. The following additional definitions shall apply for
purposes of this Section 7:
(a) The term "Abbreviated Registration Statement" means a
registration statement on Form S-3 or any similar or successor form in which
financial statements and other detailed information about the issuer are
incorporated by reference from the issuer's periodic reports filed under
Securities Exchange Act of 1934, as amended (the "1934 Act").
(b) The term "1933 Act" means the Securities Act of 1933, as
amended, or any successor legislation thereto.
(c) The terms "register," "registered," and "registration" refer to
a registration effected by preparing and filing a registration statement or
similar document in compliance with the 1933 Act, and the declaration or
ordering of effectiveness of such registration statement or document.
(d) The term "Registrable Securities" means (1) the Shares issuable
or issued upon exercise of this Warrant, and (2) any securities of the Company
issued as (or issuable upon the conversion or exercise of any Warrant, right or
other security which is issued as) a dividend or other distribution with respect
to, or in exchange for or in replacement of, such Shares, excluding in all
cases, however, any Registrable Securities sold by a person in a transaction in
which his rights under this Section 7 are not assigned and any such securities
as to which restrictive legends restricting transfer under the 1933 Act are
lifted pursuant to Rule 144(k) under the 1933 Act (or any successor rule) or any
other exemption from registration under the 1933 Act in which the subsequent
disposition of such securities by the Holder does not require registration under
the 1933 Act.
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7.2 Right to Include Registrable Stock. After six months after the date
hereof, if the Company proposes to register any of its securities under the 1933
Act for its own account for sale for cash (other than a registration on Form S-4
or Form S-8, or any successor or similar forms) (the "Offering"), it will each
such time promptly give written notice to the Holder. Upon the written request
of the Holder made within 15 days after the receipt of any such notice (which
request shall specify the Registrable Securities intended to be disposed of by
such Holder and the intended method of distribution thereof), the Company will
use its reasonable efforts to effect the registration under the 1933 Act of all
Registrable Securities which the Company has been requested to register by the
Holder in accordance with the intended methods of distribution specified in such
request; provided that (i) if, at any time after giving written notice of its
intention to register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the Company
determines for any reason not to register such securities, the Company may, at
its election, give written notice of such determination to the Holder and,
thereupon, will be relieved of its obligation to register any Registrable
Securities in connection with such registration, (ii) in case of a determination
by the Company to delay registration of its securities, the Company will be
permitted to delay the registration of Registrable Securities for the same
period as the delay in registering such other securities, and (iii) the amount
of Registrable Securities of the Holder which will be registered shall not
exceed a pro rata portion of all shares of Common Stock owned by persons other
than the Company then being registered in accordance with Section 7.4 unless
mutually agreed upon by the Holder and the Company; provided, however, that the
provisions of this Section 7.2 will not be deemed to limit or otherwise restrict
the rights of Holder under Section 7.3 hereof.
7.3 Demand Registration. At any time commencing after six months from the
date hereof, unless Commonwealth Associates, L.P. has been unwilling or unable
to assist the Company in successfully completing a private placement as
contemplated in Schedule 1 of that certain engagement letter dated December 23,
1999 between Commonwealth and the Company, the Holder shall have the right on
three occasions to demand on each such occasion the registration of up to 50% of
all Registrable Securities originally held by the Holder, provided that if at
the time of such request the aggregate value of all Registrable Securities held
by the Holder (based on the low end of the expected range of the offering price
of such securities) is equal to or less than $10,000,000, the Holder may demand
the registration of all of the Registrable Securities then held by the Holder.
If the Holder makes such request, the Company shall, in accordance with Section
7.5, register for sale such Registrable Securities under the 1933 Act, provided
that the Company shall be able to delay the filing (but not the preparation) of
any such registration statement for a period of not more than sixty days from
the date it would otherwise be required to be filed (but in any event not later
than the next filing of the Company's Form 10-KSB). Notwithstanding the
limitations on the Holder's right to demand registration pursuant to this
Section 7.3, if the registration statement that is required to be filed
hereunder is withdrawn for any reason (which shall not in any way diminish the
obligations of the Company under Section 7.5) before, at or after effectiveness,
if the Company shall fail to keep such registration statement current as
required by Section 7.5 or if the Company shall fail to register all Registrable
Securities requested to be registered, then in addition to any remaining
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demand registration right held by the Holder under this Section 7.3, the Holder
shall have one additional demand registration right so long as the conditions
herein above set forth are satisfied.
7.4 Priority. If the managing underwriter for a registration involving an
underwritten offering advises the Company in writing that, in its opinion, the
number of securities of the Company (including Registrable Securities) requested
to be included in such registration by the holders thereof exceeds the number of
securities of the Company (the "Sale Number") which can be sold in an orderly
manner in such offering within a price range acceptable to the Company, the
Company will, subject to the registration rights agreements relating to the
Series B Preferred Stock, and the warrants issued in conjunction with the 6%
convertible debentures and the 6% convertible debentures, include (i) first, all
securities of the Company that the Company proposes to register for its own
account and (ii) second, to the extent that the number of securities of the
Company to be included by the Company is less than the Sale Number, a number of
the Registrable Securities equal to the number derived by multiplying (a) the
difference between the Sale Number and the securities proposed to be sold by the
Company, and (b) a fraction the numerator of which is the number of Registrable
Securities originally requested to be registered by the Holder and the
denominator of which shall be the aggregate number of all securities requested
to be registered by all holders of the Company's securities (other than
securities being registered by the Company itself). By way of example, if the
Holder requests registration of 500 shares and only one other holder of shares
of Common Stock requests registration and seeks to register 1000 shares and the
Company seeks to register 3000 shares and the Sale Number is 4200, then the
Holder will be entitled to register 400 shares of Common Stock. The restrictions
set forth in this Section 7.4 will no longer be applicable to the extent that
the Company grants registration rights to any other holder that are more
favorable to such holder than the registration rights granted hereunder and in
such event the Holder shall automatically receive rights no less favorable than
those granted to such other holder.
7.5 Obligations of the Company. Whenever required under this Agreement to
effect the registration of any Registrable Securities, the Company will, as
expeditiously as reasonably possible:
(a) In the case of a registration statement under Section 7.3,
prepare and file with the SEC such registration statement with respect to such
of the Registrable Securities as are set forth in the request as promptly as
practicable following the date such obligation arises (but in any event not
later than 90 days following such date), use its reasonable best efforts to
cause such registration statement to become effective and use its reasonable
best efforts to keep such registration statement effective for up to one year
(nine months in the case of a registration statement that is not an Abbreviated
Registration Statement) but not after such securities cease being Registrable
Securities.
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
1933 Act with respect to the disposition of all Registrable Securities covered
by such registration statement.
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(c) Furnish to the Holder such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
1933 Act, and such other documents as it may reasonably request in order to
facilitate the disposition of Registrable Securities owned by such Holder.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions as shall be reasonably requested by the Holder,
provided that the Company shall not be required to qualify to do business,
subject itself to taxation or to file a general consent to service of process in
any such states or jurisdictions.
(e) Notify the Holder, at any time when a prospectus relating
thereto is required to be delivered under the 1933 Act, of the happening of any
event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing.
(f) Cause the securities of the Holder to be listed or designated
for trading on such securities exchange or automated quotation system as any
securities of the same class of the Company are then listed or quoted or, if no
such listing or quotation then exists, as reasonably determined by the Company.
(g) Make documents, files, books, records, officers, directors and
employees of the Company available to the Holder and provided the Holder's
underwriters, if any, shall have agreed to be bound by the provisions of this
Section 7.5(g), to such underwriters, and make such other accommodations as are
reasonably necessary for the Holder and the Holder's underwriters, if any, to
perform a due diligence review of the Company; provided, however, that all such
information ("Confidential Information") will be kept confidential and not
utilized by Holder except as contemplated herein and except as required by law
or court order. The term "Confidential Information" does not include information
which (i) is already in possession of such other party (other than that which is
subject to another confidentiality agreement), (ii) becomes generally available
to the public, or (iii) becomes available on a non-confidential basis from a
source other than the Company.
(h) Provide such opinions, certifications, indemnifications, and
take such other actions, including, without limitation, entering into such
agreements (including underwriting agreements), as are reasonably required and
appropriate, to permit the Holder to make a public offering of the Registrable
Securities requested to be registered.
7.6 Furnish Information. The Company's obligation to cause any
registration statement to become effective in connection with distribution of
any Registrable Securities pursuant to this Agreement is contingent upon the
Holder, with reasonable promptness, furnishing to the Company
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such information regarding itself, the Registrable Securities held by it, and
the intended method of disposition of such securities, as is required to effect
the registration of the Registrable Securities.
7.7 Indemnification. In the event of any registration under this
Agreement:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless the Holder and its officers, directors and affiliates (and their
officers and directors), any underwriter (as defined in the 1933 Act) for the
Holder and each person (and its officers and directors), if any, who controls
the Holder or underwriter within the meaning of the 1933 Act or the 1934 Act,
against any losses, claims, damages, or liabilities (joint or several) to which
they may become subject under the 1933 Act, or the 1934 Act or other federal or
state law, insofar as such losses, claims, damages, or liabilities (or actions
in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation"): (i) any untrue
statement or alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, or (iii) any violation
or alleged violation by the Company of the 1933 Act, the 1934 Act, any state
securities law or any rule or regulation promulgated under the 1933 Act, or the
1934 Act or any state securities law, and the Company will pay to the Holder,
underwriter or controlling person, as incurred, any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this subsection (a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor will the Company be liable in any such case
for any such loss, claim, damage, liability, or action to the extent that it
arises out of or is based upon (1) a Violation which occurs solely as the result
of the written information furnished expressly for use in connection with such
registration by the Holder, underwriter or controlling person or (2) with
respect to the Underwriter and controlling person of such Underwriter (and their
respective officers and directors), a Violation which results from the fact that
there was not sent or given to a person who bought Registrable Securities, at or
prior to the written confirmation of the sale, a copy of the final prospectus,
as then amended or supplemented, if the Company had previously furnished copies
of such prospectus hereunder and such prospectus corrected the misstatement or
omission forming the basis of the Violation.
(b) To the extent permitted by law, the Holder will indemnify and
hold harmless the Company, each of its directors, each of its officers who has
signed the registration statement, each person, if any, who controls the Company
within the meaning of the 1933 Act, any underwriter and any controlling person
of any such underwriter or other holder, against any losses, claims, damages, or
liabilities (joint or several) to which any of the foregoing persons may become
subject, under the 1933 Act, or the 1934 Act or other federal or state law,
insofar as such losses, claims,
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damages, or liabilities (or action in respect thereto) arise out of or are based
upon any Violation, in each case to the extent (and only to the extent) that
such Violation occurs solely as a result of the written information furnished by
the Holder expressly for use in connection with such registration; and such
Holder will pay, as incurred, any legal or other expenses reasonably incurred by
any person intended to be indemnified pursuant to this subsection (b), in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the Holder's liability pursuant to
this Section 7.7(b) shall be limited to the amount of the net proceeds received
by the Holder from the sale of the Registrable Securities sold by it, and
further provided that the indemnity agreement contained in this subsection (b)
does not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Holder, which consent shall not be unreasonably withheld.
(c) Promptly after receipt by an indemnified party under this
Section 7.7 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 7.7, deliver to
the indemnifying party a written notice of the commencement of such action and
the indemnifying party will have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) will have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of the indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between the indemnified party and any other party represented by such
counsel in the same proceeding. If the indemnifying party shall fail to defend
the action, or conducts a defense which is not reasonably adequate in light of
the circumstances, the indemnified party may conduct its own defense and shall
be entitled to reimbursement for the costs of such defense. The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the indemnified party under this Section 7, except to the extent
that the indemnifying party is materially prejudiced by such failure. The
omission so to deliver written notice to the indemnifying party does not relieve
it of any liability that it may have to any indemnified party otherwise than
under this Section 7. No indemnifying party under this Agreement will enter into
any settlement or consent to any entry of judgment which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to the
indemnified party of a release from all liability in respect of such claim or
litigation.
(d) If the indemnification provided for in this Section 7 is held by
a court of competent jurisdiction to be unavailable to an indemnified party or
is insufficient to indemnify an indemnified party with respect to any loss,
liability, claim, damage, or expense referred to therein, then the indemnifying
party, in lieu of or in addition to, as appropriate, indemnifying such
indemnified party hereunder, will contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage, or
expense in such proportion as is appropriate to
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reflect the relative fault of the indemnifying party on the one hand and of the
indemnified party on the other in connection with the statements or omissions
that resulted in such loss, liability, claim, damage, or expense as well as any
other relevant equitable considerations. The relative fault of the indemnifying
party and of the indemnified party will be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission. The obligation of the Holder to make a contribution
pursuant to this Section 7.7(d) shall be limited to the net proceeds received by
the Holder from the sale of the Registrable Securities sold by it, less any
amounts paid pursuant to Section 7.7(b).
(e) The obligations of the Company and the Holder under this Section
7 will survive the completion of any offering of Registrable Securities in a
registration statement under this Agreement, and otherwise.
7.8 Expenses of Registration. All expenses incurred in connection with any
registration, qualification or compliance pursuant to Section 7 of this
Agreement, including, without limitation, all registration, filing and
qualification fees, printing expenses, fees and disbursements of counsel for the
Company and expenses of any special audits incidental to or required by such
registration, qualification or compliance will be borne by the Company, except
that the Company will not be required to pay underwriters' discounts,
commissions, or stock transfer taxes relating to the Registrable Securities or
the fees and disbursements of counsel to the Holder, other than as set forth in
this Section 7.
7.9 Amendments. Any term of this Section 7 may be amended only with the
written consent of the Company and the holders of a majority of the Registrable
Securities then outstanding. Any amendment effected in accordance with this
paragraph will be binding upon each holder of any Registrable Securities then
outstanding, each future holder of all such Registrable Securities, and the
Company.
80 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 8. 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 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.
90 Reservation of Shares. The Company will use its best efforts to amend its
Articles of Incorporation to increase the number of authorized Common Stock so
that the Company will be able
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to reserve all shares that may be exercisable under this Warrant. As soon as any
shares of Common Stock become available to be reserved for issuance under this
Warrant (the Company agreeing to use all shares of Common Stock that are no
longer subject to the Series B Preferred Stock or 6% Convertible Debentures upon
any repurchase, termination, cancellation, amendment or modification thereof)
and in any event upon approval and filing of such amendment to its Articles of
Incorporation, the Company will immediately 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 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 and notify the
Holder in writing of such reservation. Except for the issuance of 450,000 shares
to John Liviakis, the Company will not reserve for issuance or issue any shares
of Common Stock to any person (other than under outstanding options, warrants or
convertible securities for which shares have already been reserved) until such
time that it has reserved all shares of Common Stock that may be exercised under
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 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 2.5 hereof.
The Company covenants that all 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.
100 Obtaining Stock Exchange Listings. The Company will, from time to time, take
all actions which may be necessary so that the Shares, immediately upon their
issuance upon the exercise of this Warrant, will be listed on the principal
securities exchanges and markets within the United States of America, if any, on
which other shares of Common Stock are then listed; provided however, that this
provision will not be construed to require registration of such Shares except as
otherwise provided in this Agreement and no listing will be required to the
extent such listing would violate applicable laws, regulations and exchange
regulations.
110 Adjustment of Number of Shares Issuable and Exercise Price. The number of
Shares issuable upon the exercise of this Warrant and the Share Price are
subject to adjustment from time to time upon the occurrence of the events
enumerated in Section 2. For purposes of this Warrant, "Common Stock" means
shares now or hereafter authorized of any class of common stock of the Company
and any other stock of the Company, however designated, that has the right
(subject to any prior rights
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of any class or series of preferred stock) to participate in any distribution of
the assets or earnings of the Company without limit as to per share amount.
120 Claw-Back Provisions.
In the event that Commonwealth Associates, L.P. is unable or unwilling to
proceed, or is not proceeding in good faith, with the private placement
contemplated in the letter of intent dated December 23, 1999 (the "Term Sheet")
substantially on the terms set forth therein for a minimum amount of gross
proceeds of $15 million other than as a result of (i) a material breach by the
Company of its representations, warranties, or covenants made to ComVest in the
Commitment Letter dated December 30, 1999 and otherwise complying with the Term
Sheet, (ii) the failure of the Company to otherwise proceed in good faith with
such financing, including without limitation promptly preparing a private
placement memorandum, having its officers and directors meet with prospective
investors, making its facilities and books and records available for due
diligence, and agreeing to issue securities having terms as set forth in the
Term Sheet, (iii) a bankruptcy proceeding is initiated by or commenced against
the Company, (iv) Dean Leavitt is no longer an officer or director of the
Company, (v) the Company does not increase its authorized preferred and common
stock within four months of the date hereof as contemplated hereby and by the
Term Sheet or (vi) the Company being unable to enter into agreements to redeem,
convert, modify, amend or retire within 60 days of the date hereof its Series B
Preferred Stock and 6% Convertible Debentures upon terms satisfactory to
Commonwealth Associates, L.P., in its sole discretion, (a "Forfeiture Event"),
then the Holder shall pay a break-up fee to the Company of $4,545,454, which may
be paid at the option of the Holder by forfeiture of the right to purchase half
the maximum number of shares of Common Stock that the Holder may acquire and has
already acquired upon exercise of all of its rights under this Warrant (the
Holder having the Option of forfeiting any combination of shares of Common Stock
already purchased upon exercise of a portion of this Warrant or rights to
acquire shares of Common Stock under this Warrant), provided that subsequent to
a Forfeiture Event the maximum amount of shares of Common Stock that may be
purchased upon exercise of this Warrant together with all shares of Common Stock
already purchased under this Warrant shall not exceed 6,818,182 (as
proportionately adjusted to reflect any changes to the Shares under Section 2 of
this Warrant).
130 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.
14. Subsequent Holders. If this Warrant is subsequently held by more than one
Holder, then each holder shall be responsible for their proportionate share of
the obligations of the Holder hereunder and the terms of this Warrant shall
apply proportionately to each such holder.
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IN WITNESS WHEREOF, this Warrant Agreement has been executed as of
the 30th day of December, 1999.
U.S. WIRELESS DATA, INC.
By:__________________________________
Its:_________________________________
COMVEST CAPITAL MANAGEMENT LLC
By:__________________________________
Its:_________________________________
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PURCHASE FORM
Dated:________, _____
The undersigned hereby irrevocably elects to exercise the within Warrant
to the extent of purchasing ____ Shares and hereby makes payment of $________ in
payment of the exercise price thereof.
___________________________________
JOINT FILING OF SCHEDULE 13D
The undersigned hereby agree to jointly prepare and file with regulatory
authorities a Schedule 13D and any future amendments thereto reporting each of
the undersigned's ownership of securities of U.S. Wireless Data, Inc. and hereby
affirm that such Schedule 13D is being filed on behalf of each of the
undersigned.
Dated:March _______, 2000 ComVest Capital Partners LLC
New York, New York
By:
----------------------------------
Keith Rosenbloom, Manager
Dated: March ________, 2000 --------------------------------------
New York, New York Michael S. Falk
Dated: March ________, 2000 --------------------------------------
Marietta, Georgia Robert Priddy
Dated: March _________, 2000 --------------------------------------
New York, New York Keith Rosenbloom
