Exhibit 10.5
THIS WARRANT AND THE STOCK ISSUABLE UPON THE EXERCISE HEREOF CAN BE TRANSFERRED
ONLY IN COMPLIANCE WITH THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE
STATE SECURITIES LAWS. THIS WARRANT AND SUCH SECURITIES MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT,
UNLESS, IN THE OPINION OF COUNSEL FOR THE COMPANY OR COUNSEL FOR THE REGISTERED
HOLDER (WHICH SHALL BE IN FORM AND FROM SUCH COUNSEL AS SHALL BE REASONABLY
SATISFACTORY TO THE COMPANY), SUCH REGISTRATION IS NOT THEN REQUIRED.
U.S. Wireless Data, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxx 00000
COMMON STOCK PURCHASE WARRANT
Warrant No. JWC-001
Right to Purchase 50,000 shares of No Par Value
Common Stock (subject to adjustment)
Date of Issuance:
As of December 10, 1997
Expiration Date:
As of December 09, 2000
THIS CERTIFIES THAT, for value received,
the party named immediately below
XX XXXXXXX SECURITIES, INC.
("JWC"), or permitted transferee in accordance with Section 12 hereof, or its
registered assigns (the "Registered Holder" or "Registered Holders"), is
entitled to purchase from U.S. Wireless Data, Inc., a Colorado corporation (the
"Company"), the number of shares of common stock, no par value per share (the
"Common Stock"), of the Company set forth above, subject to adjustment pursuant
to Section 4 hereof, at the price of Six and 525/1000 Dollars ($6.525) per share
of Common Stock, subject to adjustment pursuant to Section 3 hereof (the
"Exercise Price"). These purchase rights are granted as contemplated by
Paragraph 2 of that certain Finder's Agreement dated as of October 14, 1997,
among the Company and JWC, subject to the following provisions:
SECTION 1.
CERTAIN DEFINITIONS
As used in this Warrant, the following terms have the meanings set
forth below:
"Agreement" is the Finder's Agreement dated as of October 14, 1997,
among the Company and JWC.
"Agreement Date" means the date of the Agreement.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Company's Common Stock, no par value per share.
"Common Stock Deemed Outstanding" means the number of shares of Common
Stock actually outstanding at such time, plus the number of shares of Common
Stock deemed to be outstanding at any given time pursuant to Section 3 of this
Warrant.
"Date of Issuance" is the date set forth on the front page of this
Warrant, and the terms "date hereof," "date of this Warrant," and similar
expressions shall be deemed to refer to the Date of Issuance.
"Debentures" means the 8% Convertible Subordinated Debentures of the
Company Due December 31, 1999, being issued by the Company in the private
offering described in the Agreement.
"Exercise Period" means the period of time commencing at 12:01 A.M.,
Eastern Time, on the Date of Issuance and ending at 5:00 P.M., Eastern Time, on
the third anniversary date of the Date of Issuance.
"Fair Value" means a value determined in good faith by the Board of
Directors of the Company. Anytime a Fair Value is required to be determined for
purposes of this Warrant, a certificate executed by an appropriate officer of
the Company shall be prepared and delivered to the Registered Holder to reflect
the action taken by the Board of Directors to determine such Fair Value.
"Market Price" means, as to any security immediately transferable
without restriction, the average of the closing prices of such security's sales
on the principal domestic securities exchange on which such security may at the
time be listed, or, if there have been no sales on any such exchange on any day,
the average of the highest bid and lowest asked prices on all such exchanges at
the end of such day, or, if on any day such security is not so listed, the
average of the bid and asked prices quoted on Nasdaq as of the close of trading
in New York City on such day, in each such case averaged over a period of five
(5) consecutive days consisting of the business day immediately preceding the
day as of which Market Price is
-2-
being determined and the four (4) consecutive business days prior to such day;
provided that if such security is listed on any principal domestic securities
exchange or quoted on Nasdaq, the terms "business day" and "business days" means
a day or days, as applicable, on which such exchange or Nasdaq is open for
trading or quotation, as the case may be, notwithstanding whether any quotation
is available on any particular business day and, if not, then the Market Price
shall be determined based upon those remaining days during the aforesaid 5-day
period for which quotations are available. If any security is not immediately
transferable without restriction, or is not listed on any principal domestic
securities exchange or quoted on Nasdaq, the Market Price shall be the Fair
Value thereof.
"Nasdaq" means the National Market System or the Small Cap Market of
the Nasdaq Stock Market, including the Nasdaq Bulletin Board, or successor
interdealer quotation systems having substantially the same listing criteria
that may in the future be used generally by members of the National Association
of Securities Dealers, Inc. for over-the-counter transactions in securities.
"Person" means an individual, a partnership, a corporation, a trust, a
joint venture, an unincorporated organization, a government and any department
and agency thereof.
"Stock" means shares of the Company's Common Stock authorized but
unissued as of the Date of Issuance, issued or issuable upon exercise of this
Warrant, provided that if there is a change such that the securities issued or
issuable upon exercise of this Warrant are issued by an entity other than the
Company, or there is a change in the class of securities so issuable, then the
term "Stock" shall mean shares of any security issued or issuable upon exercise
of the Warrant if such security is issuable in shares, or shall mean units of
any such security issued or issuable, if such security is not issuable in
shares.
"Warrant" and "Warrants" means this Warrant and all other warrants
issued as contemplated by the Agreement, and all warrants issued or issuable in
exchange or substitution for this Warrant or any such other warrant pursuant to
the terms hereof or thereof, as the case may be.
SECTION 2.
EXERCISE OF WARRANT
2.1. Exercise Period. The Registered Holder may exercise this Warrant,
in whole or in part, at any time and from time to time, during the Exercise
Period, and the exercise hereof may be for such whole number of Stock as the
Registered Holder may, in its sole discretion, decide.
-3-
2.2. Exercise Procedure.
(a). This Warrant shall be deemed to have been exercised at such time
as the Company has received all of the following items (the "Exercise
Date"):
i. A completed Exercise Agreement, as described below, executed
by the Person exercising all or part of the purchase rights
represented by this Warrant (the "Purchaser");
ii. This Warrant (subject to delivery by the Company of a new
Warrant with respect to any unexercised portion, as provided in
Paragraph (b) of Subsection 2.2);
iii. If this Warrant is not registered in the name of the
Purchaser, an Assignment or Assignments substantially in the form set
forth as Exhibit II hereto, evidencing the assignment of this Warrant
to the Purchaser; and
iiii. If the Purchaser has elected not to make a Cashless
Exercise as provided in Paragraph (b) of this Subsection 2.2, a
certified or bank check or other certified funds payable to the
Company in an amount equal to the product of the Exercise Price
multiplied by the number of Stock being purchased upon such exercise.
(b) Certificates for Stock purchased upon exercise of this Warrant
shall be delivered by the Company to the Purchaser within five (5) business
days after the Exercise Date. However, if the Purchaser has elected to make
a "Cashless Exercise" as herein described, the Company shall deliver
certificates for the number of shares that results from subtracting, from
the total number of Stock otherwise deliverable upon exercise, the number
of Stock whose value, calculated using the Market Price, is equal to the
value of the payment otherwise required for exercise by Paragraph (a)(iv)
of this Subsection 2.2. Unless this Warrant has expired or all of the
purchase rights represented hereby have been exercised, the Company shall,
in addition to certificates for Stock, prepare upon exercise of this
Warrant, a new Warrant representing the rights formerly represented by this
Warrant that have not expired or been exercised. The Company shall, within
five (5) business days after the Exercise Date, deliver such new Warrant to
the Persons designated for delivery in the Exercise Agreement.
(c) Except as otherwise required by Paragraph (b) of this Subsection
2.2, the Stock issuable upon the exercise of this Warrant shall be deemed
to have been issued to the Purchaser on the Exercise Date, and the
Purchaser shall be deemed for all purposes to have become the record holder
of such Stock on the Exercise Date.
(d) The issuance of certificates for Stock upon exercise of this
Warrant shall be made without charge to the Registered Holder or the
Purchaser for any issuance tax
-4-
in respect thereof or any other cost incurred by the Company in connection
with such exercise and the related issuance of Stock.
(e) The Company shall not close its books for the transfer of this
Warrant or of any Stock in any manner that interferes with the timely
exercise of this Warrant. The Company shall from time to time take all such
action as may be necessary to assure that the par value per share of the
unissued Stock is at all times equal to or less than the Exercise Price
then in effect.
2.3. Exercise Agreement. The Exercise Agreement shall be substantially
in the form set forth as Exhibit I hereto, except that if Stock is not to be
issued in the name of the Registered Holder of this Warrant, the Exercise
Agreement shall also state the name of the Persons to whom Stock is to be
issued, and if the number of Stock purchased does not include all of such Stock
purchasable hereunder, it shall also state the name of the Persons to whom new
Warrants for the unexercised portion of the rights hereunder are to be
delivered. Any transfer of Stock to a person other than a prior Registered
Holder shall occur only in compliance with the provisions regarding transfer
contained in Section 12 of this Warrant.
2.4. Fractional Portions of Stock. If a fractional portion of Stock
would be issuable upon exercise of the rights represented by this Warrant, the
Company shall, within three (3) business days after the Exercise Date, deliver
to the Purchaser a check payable to the Purchaser, in lieu of such fractional
portion of Stock, in an amount equal to the Market Price of such fractional
portion of Stock as of the close of business on the Exercise Date.
SECTION 3.
EXERCISE PRICE
3.1. General.
(a) The initial Exercise Price of this Warrant is set forth on the
front page of this Warrant. In order to prevent dilution of the rights
granted under this Warrant, the Exercise Price shall be subject to
adjustment from time to time pursuant to this Section 3.
(b) If and whenever the Company issues or sells, or in accordance with
Subsection 3.3 is deemed to have issued or sold, any shares of its Common
Stock for a consideration per share less than the Market Price in effect
immediately prior to the time of such issuance or sale (except as otherwise
provided by Subsection 3.2), then immediately upon each such issuance or
sale, the Exercise Price shall be reduced to a price determined by
multiplying the Exercise Price in effect immediately prior to the issuance
or sale by a fraction, the numerator of which shall be the sum of (i) the
number of shares of Common Stock actually outstanding prior to the issuance
or sale, and (ii) the number of shares of Common Stock that the minimum
aggregate amount receivable by the Company upon such issuance or sale on
that occasion would purchase at the initial Exercise Price, and the
-5-
denominator of which shall be the number of shares of Common Stock actually
outstanding and Common Stock Deemed Outstanding under Subsection 3.3
immediately after such issuance or sale.
3.2. No Adjustments in Certain Cases. No adjustment to the Exercise
Price under Paragraph (b) of Subsection 3.1 or under Subsection 3.3, or to the
number of shares issuable upon exercise of this Warrant under Section 4 shall be
made:
(a) for the existence of, and any exercise, conversion or issuance of,
any Common Stock or other security of the Company under (a) the Warrants;
(b) any option, warrant, or other right to purchase Common Stock that is
outstanding on the Agreement Date, (c) any option issued under the
Company's 1992 Stock Option Plan, as in effect on the Agreement Date, (d)
the Debentures (including the issuance of preferred stock upon conversion
of the Debentures and the issuance of Common Stock as interest, dividends
or upon conversion of the Debentures and/or such preferred stock); or
(b) upon the issuance of Common Stock upon exercise or conversion of
any option, warrant or other right or Convertible Securities for which
adjustments have previously been made upon issuance of such option,
warrant, right or Convertible Securities.
3.3. Effect on Exercise Price of Certain Events. For purposes of
determining the adjusted Exercise Price under Subsection 3.1 above, the
following provisions shall be applicable:
(a) Issuance of Rights and Options. If the Company in any manner
grants any rights or options to subscribe for or to purchase Common Stock
or any stock or other securities convertible into or exchangeable for
Common Stock (such rights or options being herein called "Options" and such
convertible or exchangeable stock or securities being herein called
"Convertible Securities") and the price per share for which Common Stock is
issuable upon the exercise of such Options or upon conversion or exchange
of such Convertible Securities is less than the Market Price in effect
immediately prior to the time of the granting of such Options, then the
total maximum number of shares of Common Stock issuable upon the exercise
of such Options or upon conversion or exchange of the total maximum amount
of such Convertible Securities shall be deemed to be outstanding and to
have been issued and sold by the Company for such price per share. For
purposes of this paragraph, the "price per share for which Common Stock is
issuable upon exercise of such Options or upon conversion or exchange of
such Convertible Securities" shall be determined by dividing (i) the total
amount, if any, received by the Company as consideration for the granting
of such Options plus the minimum aggregate amount of additional
consideration payable to the Company upon exercise of all such Options
plus, in the case of Options that relate to the Convertible Securities, the
minimum aggregate amount of additional consideration, if any, payable to
the Company upon the conversion or exchange of such Convertible Securities,
by (ii) the total maximum number of shares of Common Stock
-6-
issuable upon the exercise of such Options and upon the conversion or
exchange of all Convertible Securities issuable upon the exercise of such
Options.
(b) Issuance of Convertible Securities. If the Company in any manner
issues or sells any Convertible Securities, and the price per share for
which Common Stock is issuable upon conversion or exchange or such
Convertible Securities is less than the Market Price in effect immediately
prior to the time of such issuance or sale, then the maximum number of
shares of Common Stock issuable upon conversion or exchange of all such
Convertible Securities shall be deemed to be outstanding and to have been
issued and sold by the Company for such price per share. For purposes of
this paragraph, the "price per share for which Common Stock is issuable
upon such conversion or exchange" shall be determined by dividing (i) the
total amount received by the Company as consideration for the issuance or
sale of such Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the
conversion or exchange thereof, by (ii) the total maximum number of shares
of Common Stock issuable upon the conversion or exchange of all such
Convertible Securities.
(c) Change in Option Price and Conversion Rate. If any change shall
occur in the price per share provided for in any of the options, rights or
warrants referred to in Paragraph (a) of this Subsection 3.3, or in the
price per share at which the Convertible Securities referred to in
Paragraph (b) of this Subsection 3.3 are convertible or exchangeable, such
options, rights or warrants or conversion or exchange rights, as the case
may be, shall be deemed to have expired or terminated on the date when such
price change became effective in respect of shares not theretofore issued
pursuant to the exercise or conversion or exchange thereof, and the Company
shall be deemed to have issued upon such date new options, rights or
warrants or Convertible Securities at the new price in respect of the
number of shares issuable upon the exercise of such options, rights or
warrants or the conversion or exchange of such Convertible Securities.
(d) Calculation of Consideration Received. If any Common Stock,
Options, or Convertible Securities are issued or sold or deemed to have
been issued or sold or consideration that includes unrestricted cash, then
the amount of cash consideration actually received by the Company shall be
deemed to be the full monetary value of the unrestricted cash portion
thereof. If any Common Stock, Options or Convertible Securities are issued
or sold or deemed to have been issued or sold for a consideration part or
all of which is other than unrestricted cash, then the amount of the
consideration other than unrestricted cash received by the Company shall be
deemed to be the Fair Value of such consideration.
(e) Integrated Transactions. If any Option is issued in connection
with the issuance or sale of other securities of the Company, together
compromising one integrated transaction in which no specific consideration
is allocated to such Option by the parties thereto, the Option shall be
deemed to have been issued without consideration.
-7-
(f) Treasury Shares. The number of shares of Common Stock Deemed
Outstanding at any given time shall not include shares owned or held by or
for the account of the Company, and the disposition of any shares so owned
or held shall be considered an issuance or sale of Common Stock.
(g) Readjustment Upon Expiration of Options or Convertible Securities.
Upon the expiration of any of the options, warrants or rights referred to
in Paragraph (a) of this Subsection 3.3, or the Convertible Securities
referred to in Paragraph (b) of this Subsection 3.3, if such options,
warrants, rights or Convertible Securities shall not have been exercised,
converted or exchanged, as the case may be, the Exercise Price, to the
extent that Warrants have not been exercised, shall, upon such expiration,
be readjusted and shall thereafter be set (A) if any of such options,
warrants or rights have been exercised or such Convertible Securities have
been converted or exchanged, as the case may be, at a level at which the
Exercise Price would have been if originally adjusted on the basis of (i)
the fact that the only shares of Common Stock so issued were the shares of
Common Stock, if any, actually issued or sold upon the exercise of such
options, warrants or rights or the conversion or exchange of such
Convertible Securities and (ii) such shares of Common Stock, if any, were
issued or sold for the consideration actually received by the Company for
the issuance, sale or grant of all such options, warrants, rights or
Convertible Securities, whether or not exercised, plus the consideration
actually received by the Company upon the exercise, conversion or exchange
of such options, warrants, rights or Convertible Securities, or (B) if none
of such options, warrants or rights have been exercised or such Convertible
Securities have been converted or exchanged, as the case may be, at a level
at which the Exercise Price would have been if such original adjustment had
not been required; provided, however, that no such readjustment shall have
the effect of increasing the Exercise Price in effect immediately prior to
such readjustment by a proportion greater than the aggregate proportional
adjustment originally made upon the issue, sale or grant of such options,
warrants, rights, or Convertible Securities.
3.4. Subdivision and Combination of Common Stock; Stock Dividends. If
the Company shall at any time after the date hereof (a) issue any shares of
Common Stock or Convertible Securities, or any rights to purchase Common Stock
or Convertible Securities as a dividend upon Common Stock, (b) issue any shares
of Common Stock in subdivision of outstanding shares of Common Stock by
reclassification, stock split or otherwise, or (c) combine outstanding shares of
Common Stock by reclassification, reverse stock split or otherwise, then the
Exercise Price that would apply if purchase rights hereunder were being
exercised immediately prior to such action by the Company shall be adjusted by
multiplying it by a fraction, the numerator of which shall be the number of
shares of Common Stock Deemed Outstanding immediately prior to such dividend,
subdivision or combination and the denominator of which shall be the number of
shares of Common Stock Deemed Outstanding immediately after such dividend,
subdivision or combination.
3.5. Certain Dividends and Distributions. If the Company shall declare a
dividend or distribution upon the Common Stock payable otherwise than out of
earnings or
-8-
earned surplus and otherwise than in Common Stock, Options or Convertible
Securities, the Exercise Price shall be reduced by an amount equal, in the case
of a dividend or distribution in cash, to the amount thereof payable per share
of the Common Stock or, in the case of any other dividend or distribution, to
the Fair Value of such dividend or distribution per share of Common Stock. For
purposes of the foregoing, a dividend or distribution other than in cash shall
be considered payable out of earnings or earned surplus only to the extent that
such earnings or earned surplus are charged an amount equal to the Fair Value of
such dividend or distribution. Such reductions shall take effect as of the date
on which a record is taken for the purpose of such divided or distribution, or,
if a record is not taken, the date as of which the holders of Common Stock of
record entitled to such dividend or distribution are to be determined. The
adjustment called for by this Subsection 3.5 shall not apply to dividends
payable on the preferred stock issuable upon conversion of the Debentures.
3.6. Manner of Calculating Adjustments; No De Minimis Adjustments. The
calculation of each adjustment of the Exercise Price shall be made accurate to
the nearest ten- thousandth. No adjustment of the Exercise Price shall be made
if the amount of such adjustment would be less than one cent per share. In such
case any adjustment that otherwise would be required to be made shall be carried
forward and shall be made at the time and together with the next subsequent
adjustment that, together with any adjustment or adjustments so carried forward,
shall amount to not less than one cent per share.
SECTION 4.
ADJUSTMENT OF NUMBER OF STOCK ISSUABLE UPON EXERCISE
Upon each reduction of the Exercise Price pursuant to Section 3 hereof,
the Registered Holder shall thereafter (until another such reduction) be
entitled to purchase, at the Exercise Price in effect on the date purchase
rights under this Warrant are exercised, the number of Stock, calculated to the
nearest whole number of Stock, determined by (a) multiplying the number of Stock
purchasable hereunder immediately prior to the reduction of the Exercise Price
by the Exercise Price in effect immediately prior to such reduction, and (b)
dividing the product so obtained by the Exercise Price in effect on the date of
such exercise.
SECTION 5.
EFFECT OF REORGANIZATION, RECLASSIFICATION,
CONSOLIDATION, MERGER, SALE OR OTHER DISPOSITION
If at any time while this Warrant is outstanding there shall be any
reorganization or reclassification of the capital stock of the Company (other
than a subdivision or combination of shares provided for in Subsection 3.4
hereof), any consideration or merger of the Company with another corporation
(other than a consolidation or merger in which the Company is the surviving
entity and which does not result in any change in the Common
-9-
Stock), or any sale or other disposition by the Company of all or substantially
all of its assets to any other corporation, then the Registered Holder shall
thereafter upon exercise of this Warrant be entitled to receive the Stock and
other securities and property of the Company, or of the successor corporation
resulting from consolidation or merger, as the case may be, to which Purchasers
of Stock would have been entitled upon such reorganization, reclas- sification
of capital stock, consolidation, merger, sale or other disposition if this
Warrant has been exercised immediately prior to such reorganization,
reclassification, consolidation, merger, sale or other disposition. In any such
case, appropriate adjustment (as determined in good faith by the Board of
Directors of the Company) shall be made in the application of the provisions set
forth in this Warrant with respect to the rights and interests thereafter of the
Registered Holder to the end that the provisions set forth in this Warrant shall
thereafter be applicable, as near as reasonably may be, in relation to any Stock
or other securities or property thereafter deliverable upon the exercise hereof
as if this Warrant had been exercised immediately prior to such reorganization,
reclassification of capital stock, consolidation, merger, sale or other
disposition and the Registered Holder hereof had carried out the terms of the
exchange as provided for by such reorganization, reclassification of capital
stock, consolidation, merger, sale or other disposition. If in any such
reorganization, reclassification of capital stock, consolidation, merger, sale
or other disposition, additional shares of Common Stock shall be issued in
exchange, conversion, substitution or payment, in whole or in part, for or of a
security of the Company other than Common Stock deliverable from exercise of
this Warrant, any such issue shall be treated as an issue of Common Stock
covered by the provisions of Section 3, with the amount of the consideration
received upon the issue thereof being determined under Paragraph (e) of
Subsection 3.3. The Company shall not effect any such reorganization,
reclassification of capital stock, consolidation, merger, sale or other
disposition unless, upon or prior to the consummation thereof, the successor
corporation shall assume by written instrument the obligation to deliver to the
Registered Holder such shares of stock or other securities, cash or property as
such Registered Holder shall be entitled to purchase in accordance with this
Warrant's provisions.
SECTION 6.
NOTICE OF ADJUSTMENT
Immediately upon any adjustment of the Exercise Price, the Company
shall send written notice thereof to all Registered Holders, stating the
adjusted Exercise Price and the number of Stock purchasable upon exercise of
this Warrant and setting forth in reasonable detail the method of calculation
for such adjustment. When possible, such notice shall be given in advance and
included as part of any notice required to be given pursuant to Section 7 below.
-10-
SECTION 7.
PRIOR NOTICE OF CERTAIN EVENTS
If at any time:
(a) The Company shall pay any dividend payable in stock upon its
Common Stock or make any distribution (other than cash dividends) to the
holders of its Common Stock of record;
(b) The Company shall offer for subscription pro rata to the holders
of its Common Stock of record any additional shares of stock of any class
or any other rights;
(c) There shall be any reorganization or reclassification of the
capital stock of the Company, any consolidation or merger of the Company
with another corporation, or a sale or other disposition of all or
substantially all its assets;
(d) There shall be a voluntary or involuntary dissolution, liquidation
or winding up of the Company; or
(e) The Company shall file any registration statement pursuant to the
Securities Act of 1933, as amended (the "Act"),
then, in each such case, the Company shall give prior written notice of the date
on which (i) the books of the Company shall close or a record shall be taken for
such stock dividend, distribution, subscription or other rights or (ii) such
reorganization, reclassification, consolidation, merger, sale or other
disposition, dissolution, liquidation, winding up or filing of a registration
statement shall take place, as the case may be. A copy of each such notice shall
be sent simultaneously to each transfer agent of the Company's Common Stock.
Such notice shall also specify the date as of which the holders of Common Stock
of record shall participate in said dividend, distribution, subscription,
registration or other rights or shall be entitled to exchange their Common Stock
for securities or other property deliverable upon such reclassification,
consolidation, merger, sale or other disposition, dissolution, liquidation,
winding up or filing, as the case may be, and in any case contemplated by
Paragraph (d) of Subsection 3.3, shall include the Company's calculation of the
Fair Value of the consideration whose Fair Value requires determination. Such
written notice shall be given at least thirty (30) days prior to the record date
or the effective or filing date, whichever is earlier, of the subject action or
other event. The failure by the Company to give any such notice shall not serve
to invalidate any action otherwise validly taken by the Company.
-11-
SECTION 8.
RESERVATION OF COMMON STOCK
The Registered Holder understands that as of the Date of Issuance, the
Company does not have an adequate number of shares of authorized Common Stock
available to satisfy the outstanding rights of all securityholders who hold
options, warrants or other rights which are exercisable for or convertible into
shares of the Company's Common Stock. The Company has implemented steps to hold
a meeting of shareholders to authorize an increase in authorized Common Stock to
no less than 40,000,000 shares (the "Capital Increase"). The Company agrees that
it shall use its best efforts to hold such shareholder meeting no later than
April 30, 1998. Assuming adoption of the Capital Increase at such meeting, the
Company shall at all times thereafter reserve and keep available for issuance
upon the exercise of the Warrants such number of its authorized but unissued
shares of Common Stock as will be sufficient to permit the exercise in full of
all outstanding Warrants, and upon such issuance such shares of Common Stock
will be validly issued, fully paid and nonassessable. In the event the Company
does not hold a meeting of its shareholders by April 30, 1998 at which it
presents the Capital Increase, or in the event the Capital Increase is not
approved by the Company's shareholders at such meeting, then at any time after
April 30, 1998, any registered Holder exercising Warrants for which the Company
is unable to issue shares of Common Stock shall be entitled to have their
Warrants repurchased by the Company for a price equal to the number of shares
not issuable by the Company as a result of such deficiency times the difference
between the Market Price on the Exercise Date and the Exercise Price.
SECTION 9.
NO SHAREHOLDER RIGHTS OR OBLIGATION
This Warrant shall not entitle the Registered Holder to any voting
rights or other rights as a shareholder of the Company. No provision of this
Warrant, in the absence of affirmative action by the Registered Holder to
purchase Stock, and no enumeration in this Warrant of the rights or privileges
of the Registered Holder, shall give rise to any obligation of such Registered
Holder for the payment of the Exercise Price of Stock acquirable by exercise
hereof (in absence of such actual exercise) or as a shareholder of the Company.
SECTION 10.
EXCHANGEABLE FOR DIFFERENT DENOMINATIONS
This Warrant is exchangeable, upon the surrender hereof by the
Registered Holder at the principal office of the Company, for new Warrants of
like tenor representing in the aggregate the purchase rights hereunder, as set
forth on the front page hereof, and each of such new Warrants will represent
such portion of such rights as is designated by the Registered Holder at the
time of such surrender. The date the Company initially issued this Warrant,
which is set forth on the front page hereof, shall be deemed to be the "Date of
Issuance" of this Warrant and any Warrant exchanged or substituted therefore,
regardless of
-12-
the dates on which new Warrants representing the unexpired and unexercised
rights formerly represented by this Warrant are issued.
SECTION 11.
TRANSFERABILITY
Subject only to the transfer conditions referred to in this Section 11,
this Warrant and all rights hereunder are transferable, in whole or in part,
without restriction and without charge to the Registered Holder, upon surrender
of this Warrant with a properly executed Assignment (substantially in the form
of Exhibit II hereto) at the principal office of the Company. This Warrant and
the Stock issued upon exercise hereof may not be offered, sold or transferred
except in compliance with the Act and any applicable state securities laws, and
then only against receipt of an agreement of the Person to whom such offer or
sale is made to comply with the provisions of this Section 11 with respect to
any resale or other disposition of such securities; provided, that no such
agreement shall be required from any Person purchasing this Warrant or any Stock
pursuant to a registration statement effective under the Act. The Registered
Holder agrees that, prior to the disposition of any Stock purchased on the
exercise hereof under circumstances that might require registration of such
Stock under the Act, or any similar statute then in effect, the Registered
Holder shall give written notice to the Company, expressing its intention as to
such disposition. Within three (3) business days after receiving such notice,
the Company shall present a copy thereof to its securities counsel. If, in the
opinion of such counsel, which shall be rendered within five (5) business days
after receiving such notice, or in the opinion of the Registered Holder's own
counsel (which shall be in form and from such counsel as shall be reasonably
satisfactory to the Company), the proposed disposition does not require
registration of such Stock under the Act, or any similar statute then in effect,
the Company shall, within two (2) business days of the rendering of such
opinion, notify the Registered Holder of such opinion, whereupon the Registered
Holder shall be entitled to dispose of such Stock in accordance with the terms
of the notice delivered by the Registered Holder to the Company. The above
agreement by the Registered Holder shall not be deemed to limit or restrict in
any respect the exercise of rights set forth in Section 12 hereof.
SECTION 12.
REGISTRATION RIGHTS
12.1. Demand Rights.
(a) Right to Demand Registration. On one (1) occasion, at any time
during the Exercise Period, the Registered Holders of Warrants or Stock
whose holdings thereof comprise a majority of Stock purchasable upon the
exercise of outstanding Warrants and of outstanding Stock not previously
covered by a registration statement as contemplated by this Section 12
(collectively, the "Warrant Securities") shall have the right to require
the Company to prepare and file with the Commission, within 60 days of the
date of a written
-13-
demand, a filing on a registration form other than Form S-8 or Form S-3 (or an
equivalent short-form registration procedure that the Commission may hereafter
prescribe), and to use its best efforts to obtain promptly and maintain the
effectiveness thereof for at least one hundred twenty (120) days and (b)
register or qualify the subject Stock for sale in up to ten (10) states
identified by such Registered Holders. On two (2) additional occasions, the
Registered Holders of a majority of the Warrant Securities shall have the right
to require the Company to prepare and file with the Commission, within thirty
(30) days of the date of a written demand, up to two (2) additional registration
statements under the Act (or, in lieu of either, a post-effective amendment or
amendments to a registration statement, if then permitted under the Act), on
Form S-8 or Form S-3 (or an equivalent short-form registration procedure that
the Commission may hereafter prescribe), if such forms are available to register
the Stock at the time, covering all or any portion of the Stock underlying the
Warrants, and to use its best efforts to obtain promptly and maintain the
effectiveness thereof for at least one hundred twenty (120) days and (b)
register or qualify the subject Stock for sale in up to ten (10) states
identified by such Registered Holders. The Company shall bear all expenses
incurred in the preparation and filing of the registration statement or
post-effective amendment (and related state registrations, to the extent
permitted by applicable law) and the furnishing a reasonable number of copies of
the preliminary and final prospectus thereof to such Registered Holders,
provided that such registration can be done by including therein financial
statements that are prepared in the normal course of the Company's reporting
obligations under the federal securities laws. The Registered Holders shall bear
all expenses incurred in the preparation and filing of the registration
statement or post-effective amendment (and related state registrations, to the
extent permitted by applicable law) including the costs of furnishing a
reasonable number of copies of the preliminary and final prospectus thereof to
such Registered Holders, if, after notice is given to the Registered Holders to
the effect that the Company would be required to include therein financial
statements that would be required to be prepared otherwise than in the normal
course of the Company's reporting obligations under the federal securities laws,
the Registered Holders continue in their demand for registration and the Company
is required to include in such registration financial statements required to be
prepared other than in the ordinary course of the Company's reporting
requirements under federal securities laws.
(b) Termination of Demand Rights. The demand rights granted hereunder
shall terminate at such time as all of the Stock may be sold without
restriction under the Act and applicable state securities laws and
regulations, and the Registered Holders have received an opinion from
counsel for the Company (in such form and from counsel reasonably
satisfactory to the Registered Holders) that all of the Stock is so
saleable under SEC Rule 144 or otherwise within the immediate 90-day period
commencing on the date a sale is requested.
12.2. "Piggyback" Rights. In addition, if at any time during the Exercise
Period, the Company shall prepare and file one or more post-effective amendments
to a registration statement or a new registration statement under the Act, with
respect to a public offering of equity or debt securities of the Company,
whether by the company or by other Persons, then
-14-
the Company shall include in any such post-effective amendment or registration
statement such information as may be required to permit a public offering of
Stock held by any Registered Holders requesting inclusion of their Stock;
provided that where such offering is to be an underwritten offering, and in the
opinion of the Company's managing underwriter the inclusion of the Stock
requested to be registered, when added to the other securities being registered,
would exceed the maximum amount of the company's securities that can be marketed
without otherwise materially and adversely affecting the entire offering, then
the Company may exclude from such offering a portion of the Stock requested to
be so registered, so that the total number of securities to be registered is
within the maximum number of shares that, in the opinion of the managing
underwriter, may be marketed without otherwise materially and adversely
affecting the entire offering. In the event there are previously issued
securities other than the Stock that are proposed to be registered in the
registration pursuant to registration rights that were granted prior to the
rights granted hereunder (the "Prior Rights"), then, the rights granted under
this Subsection 12.2 shall be subject to all such Prior Rights, and the Stock
may be excluded from such registration to the extent that the Prior Rights
require; provided, however, that the entire amount of any other securities
without Prior Rights shall be excluded from such registration before the
exclusion of any portion of the Stock for which registration was requested by a
Registered Holder. Each Registered Holder of Warrant Securities for whose
account any Stock may be included in a post-effective amendment or registration
statement shall have the unrestricted right to withhold Stock from inclusion in
the underwritten offering, without regard to whether registration was requested.
The Company shall bear all fees and expenses incurred by it in connection with
the preparation and filing of such post-effective amendment or new registration
statement. In the event of such a proposed registration, the Company shall
furnish the then Registered Holders of Warrant Securities with not less than
thirty (30) days' written notice prior to the proposed date of filing of such
post-effective amendment or new registration statement. Such notice shall
continue to be given by the Company to Registered Holders of Warrant Securities,
with respect to subsequent registration statements or post-effective amendments
filed by the Company, until such time as all of the Stock may be sold without
restriction under the Act and applicable state securities laws and regulations,
and the Registered Holders have received an opinion from counsel for the Company
(in such form and from counsel reasonably satisfactory to the Registered
Holders) that all of the Stock is so saleable under SEC Rule 144 or otherwise
within the immediate 90-day period commencing on the date a sale is requested.
The Registered Holders of Warrant Securities shall exercise the rights provided
for in this Subsection 12.2 by giving written notice to the Company, within
twenty (20) days of receipt of the Company's notice of its intention to file a
post-effective amendment or new registration statement.
12.3. Use of Prospectus. The Registered Holder, upon receipt of notice
from the Company of the occurrence of an event which requires a post-effective
amendment to a registration statement or an amendment or a supplement to the
prospectus included therein, shall promptly discontinue the sale of his Stock
until it has received copies of a supplemented or amended prospectus from the
Company, and until such receipt, the running of any minimum period of
effectiveness required by Subsection 12.1 shall be tolled.
-15-
12.4. Failure to Supply Information. Registered Holders requesting
inclusion of Stock in any registration statement filed by the Company shall, at
such Holder's cost and expense, cooperate fully and promptly with the Company
and its counsel in supplying such information concerning the Registered Holder
and such Holder's plan of distribution as may reasonably be required to effect
such registration. Any Registered Holder who fails to so cooperate and to supply
information to the Company that is required to obtain effectiveness of a
registration statement shall have such Registered Holder's Stock excluded from
the registration statement, and such registration shall count as a completed
registration with respect to such Registered Holder.
12.5. Withdrawal of Stock from Registration. Any Registered Holder who
withdraws such Holder's Stock from any registration statement commenced pursuant
to Subsection 12.1 hereof, at such Holder's request, shall be deemed to have
received full benefit of a completed registration under Subsection 12.1 hereof.
SECTION 13.
INDEMNIFICATION
(a) By the Company. The Company shall indemnify, to the full extent
permitted by law, the Registered Holder, its directors and officers (if
applicable) and each person, if any, who controls the Registered Holder
within the meaning of Section 15 of the Act, against any losses, claims,
damages, liabilities and expenses resulting from any untrue or alleged
untrue statement of a material fact contained in any registration
statement, prospectus or preliminary prospectus or any omission or alleged
omission to state therein a material fact necessary to make the statements
therein (in the case of the prospectus or any preliminary prospectus, in
light of the circumstances under which they were made) not misleading,
except insofar as the same are caused by or contained in any information
with respect to the Registered Holder furnished in writing to the Company
by the Registered Holder expressly for use therein.
(b) By the Registered Holder. In connection with any registration
statement in which the Registered Holder is participating, the Registered
Holder shall indemnify, to the full extent permitted by law, the Company,
its directors and officers and each person who controls the Company (within
the meaning of Section 15 of the Act) against any losses, claims, damages,
liabilities and expenses resulting from any untrue or alleged untrue
statement of a material fact contained in any registration statement,
prospectus or preliminary prospectus or any omission or alleged omission to
state therein a material fact necessary to make the statements therein (in
the case of the prospectus or any preliminary prospectus, in light of the
circumstances under which they were made) not misleading, but only insofar
as the same are caused by or contained in any information with respect to
the Registered Holder furnished in writing to the Company by the Registered
Holder expressly for use therein.
-16-
(c)Indemnification Procedures. Any person who is entitled to
indemnification under this Section 13 shall (i) give prompt written notice
to the indemnifying party of any claim with respect to which it seeks
indemnification and (ii) permit such indemnifying party to assume the
defense of such claim with counsel reasonably satisfactory to the
indemnified party. Whether or not such defense is assumed by the
indemnifying party, the indemnifying party shall not be subject to any
liability for any settlement made without its consent. No indemnifying
party shall consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from all
liability in respect of such claim or litigation. An indemnifying party who
is not entitled to, or elects not to, assume the defense of a claim shall
not be obligated to pay the fees and expenses of more than one counsel for
all parties indemnified by such indemnifying party with respect to such
claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and other
indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels.
(d) Contribution. If for any reason an indemnification provision of
this Section 13 is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any loss, claim,
damage, liability or expense referred to therein, then the indemnifying
party, in lieu of indemnifying each indemnified party thereunder, shall
contribute to the amount paid or payable by the indemnified party as a
result of any such loss, claim, damage, liability or expense in such
proportion as is applicable to reflect not only the relative benefits
received by the indemnified party and the indemnifying party, but also the
relative fault of the indemnified party and indemnifying party, as well as
any other relevant equitable considerations. The relative fault of the
indemnifying party and of the indemnified party shall be determined by
reference to, among other things, whether any untrue or alleged untrue
statement of a material fact or omission to state 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.
(e) Actions by Registered Holder. The Registered Holder shall, at his
cost and expense, complete, execute and deliver all questionnaires, powers
of attorney, undertakings and other documents and instruments, and take all
such other actions, as are from time to time reasonably requested by the
Company.
(f) Survival. The rights and obligations set forth in this Section 13
shall survive the exercise and surrender of this Warrant.
-17-
SECTION 14.
MISCELLANEOUS
14.1. Original Issue Taxes. The Company shall pay all United States,
state and local (but not foreign) original issue taxes, if any, upon the
issuance of this Warrant or the Stock deliverable upon exercise hereof.
14.2. Amendment and Waiver. Except as otherwise provided herein, the
provisions of the Warrants may be amended, and the Company make take any action
herein prohibited or omit to perform any act herein required to be performed by
it, only if the Company has obtained the written consent of the Registered
Holders of Warrants representing at least fifty percent (50%) of the Stock
obtainable upon the exercise of the Warrants outstanding at the time of such
consent.
14.3. Notices. Any notices required to be sent to a Registered Holder
shall be delivered to the address of such Registered Holder shown on the books
of the Company. All notices referred to herein shall be delivered in person or
sent by registered or certified mail, postage prepaid, and shall be deemed to
have been given when so delivered in person, or on the third business day
following the date so sent by mail. Whether or not JWC or an affiliate thereof
shall then be a Registered Holder, a copy of any notice sent to any Registered
Holder shall be sent to JWC in the manner provided above, at the following
addresses:
XX Xxxxxxx Financial Services, Inc.
000 Xxxxx Xxxxxxx Xxxxxxx
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxxx, Vice Chairman
In each case with a copy to:
Xxxxxxxxxx Xxxxxxxx
0000 Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: W. Xxxxx Xxxxx
Any notices required to be sent to the Company shall be sent by the
same means as notices to be sent to the Registered Holders, at the following
address:
U.S. Wireless Data, Inc.
0000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxx, President
-18-
[The remainder of this page left intentionally blank]
14.4. Attorney's Fees; Costs. In any litigation between the Company and
Registered Holders or former Registered Holders, including actions for
enforcement or interpretation, arising out of this Warrant, the prevailing party
shall be entitled to recover reasonable attorney's fees, costs and expenses.
14.5. Descriptive Headings; Governing Law. The descriptive headings of
the sections, subsections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. The construction,
validity and interpretation of this Warrant shall be governed by the laws of the
State of Colorado, without giving effect to choice of law or conflict of laws
principals, and the venue shall be Denver, Colorado.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
and attested by its duly authorized officers under its corporate seal.
U.S. WIRELESS DATA, INC., a Colorado corporation
By: __________________________________
Xxxx Xxxxx
Chief Executive Officer
[Corporate Seal]
Attest:
_______________________________
Xxxxxx X. Xxxxxxxxx
Corporate Assistant Secretary
-20-
EXHIBIT I
EXERCISE AGREEMENT
To: Dated: _________________
THE UNDERSIGNED Registered Holder, pursuant to the provisions set forth
by the within Warrant, hereby subscribes for and purchases _________________
shares of Stock covered by such Warrant and herewith elects to make:
( ) a Cashless Exercise at the Exercise Price provided by such Warrant.
( ) full cash payment of $ --------------------- for such shares at
the Exercise Price provided by such Warrant.
____________________________________
(Signature)
____________________________________
(Print or type name)
____________________________________
____________________________________
(Address)
NOTICE: The signature on this Exercise Agreement must correspond with
the name as written upon the face of the within Warrant, or upon the Assignment
thereof if applicable, in every particular, without alteration, enlargement, or
any change whatsoever, and must be Medallion guaranteed by a bank, other than a
savings bank, having an office or correspondent in New York, New York, Boca
Raton or Miami, Florida, or Atlanta, Georgia, or by a firm having membership on
a registered national securities exchange and an office in New York, New York,
Boca Raton or Miami, Florida, or Atlanta, Georgia.
SIGNATURE GUARANTEE
Authorized Signature: ________________________________
Name of Bank or Firm: ________________________________
Dated: ___________________________
-21-
EXHIBIT II
ASSIGNMENT
FOR VALUE RECEIVED,____________________ , the undersigned Registered Holder
hereby sells, assigns, and transfers all the rights of the undersigned under the
within Warrant No. ___________ with respect to the number of Securities covered
thereby set forth below, unto the Assignee identified below, and does hereby
irrevocably constitute and appoint to effect such transfer of rights on the
books of the Company, with full power of substitution:
No. of Shares
Name of Assignee Address of Assignee of Stock No. of Warrants
---------------- ---------------------------- ---------------
Dated: _____________________________________
(Signature of Registered Holder)
_____________________________________
(Print or type name)
NOTICE: The signature on this Assignment must correspond with the name
as written upon the face of the within Warrant, in every particular, without
alteration, enlargement, or any change whatsoever, and must be Medallion
guaranteed by a bank, other than a savings bank, having an office or
correspondent in New York, New York, Boca Raton or Miami, Florida, or Atlanta,
Georgia, or by a firm having membership on a registered national securities and
an office in New York, New York, Boca Raton or Miami, Florida, or Atlanta,
Georgia.
SIGNATURE GUARANTEE
Authorized Signature: ________________________________
Name of Bank or Firm: ________________________________
Dated: ___________________________
-22-
