EXHIBIT 10.1
WARRANT AGREEMENT
AMONG
KUBRA DATA TRANSFER LTD.
AND
PAYMENT DATA SYSTEMS, INC.
Dated as of September 30, 2004
WARRANT AGREEMENT
THIS WARRANT AGREEMENT (this "Warrant Agreement") is made and entered into
as of September 30, 2004 (the "Effective Date") by and among Payment Data
Systems, Inc., a Nevada corporation ("Payment Data"), and Kubra Data Transfer
Ltd., a New York corporation ("Kubra"). Payment Data and Kubra are referred to
in this Warrant Agreement collectively as the "Parties" and singularly as a
"Party."
PREAMBLE
Payment Data and Kubra have entered into a Referral Agent Agreement, dated
as of July 30, 2004 (the "Referral Agreement"). As consideration between the
Parties for entering into the Referral Agreement, the Parties hereby enter into
this Warrant Agreement, providing, among other things, that Kubra shall be
entitled to receive warrants to acquire shares ("Shares") of common stock of
Payment Data, $0.001 par value (the "Common Stock"), pursuant to the terms and
conditions provided herein (all such warrants being referred to herein as the
"Warrants").
This Warrant Agreement sets forth the agreement of the Parties with respect
to the Warrants.
NOW, THEREFORE, in consideration of the above and the mutual warranties,
representations, covenants, and agreements set forth herein, the Parties agree
as follows:
ARTICLE 1
WARRANTS
1.1. Issuance of Initial Warrant.
(a) Initial Warrant. In consideration of Kubra entering into the
Referral Agreement, Payment Data will issue to Kubra on the Effective Date a
Warrant representing the right to acquire 250,000 Shares at a strike price
("Strike Price") of $0.24 per Share (the "Initial Warrant"), and will deliver to
Kubra a Warrant Certificate representing such Initial Warrant. The form of
certificate representing the Initial Warrant (the "Warrant Certificate") is
attached hereto as Exhibit A.
(b) The Initial Warrant will be fully vested on the Effective Date and
will be exercisable during the period commencing on the Effective Date and
ending five (5) years after the Effective Date; provided, however, that Payment
Data shall have the right to cause Kubra to purchase the Shares underlying the
Initial Warrant (the "Call") on the terms and conditions specified in Section
3.3 of this Warrant Agreement.
1.2. Incentive Warrants
(a) In consideration of future business activities that Kubra will
provide to Payment Data, as provided in the Referral Agreement, Payment Data
will also issue to Kubra, in accordance with the provisions in this Section 1.2
and in conjunction with Schedule "A" below, Warrants to purchase Shares of
Common Stock (the "Incentive Warrants") and will deliver to Kubra Warrant
Certificates representing such Incentive Warrants according to the following
terms and conditions:
(i) If, pursuant to the Referral Agreement, the dollar value (measured
in U.S. Dollars) (the "Dollar Value") of the "Kubra Referred and PDS Contracted
Monthly Gross Credit Card Sales (Visa/MasterCard)," which shall be referred to
as "Column 1," is equal to or greater than a Dollar Value in Column 1 (but less
than a Dollar Value in Column 1 in a row below such amount) (the "Column 1
Target Amount") and either (A) the "Kubra Referred Year PDS Revenue," which
column shall be referred to as "Trigger One," in the same row as the Column 1
Target Amount is achieved; (B) the Dollar Value of the "AVG Quarterly PDS
Revenue," which column shall be referred to as "Trigger Two," in the same row as
the Column 1 Target Amount is achieved on average for two (2) consecutive
quarters during the Term of the Referral Agreement; or (C) the Dollar Value of
the "AVG Quarterly Gross CC Sales," which column shall be referred to as
"Trigger Three," in the same row as the Column 1 Target Amount is achieved on
average for two (2) consecutive quarters during the Term of the Referral
Agreement, then Kubra shall earn a Warrant for Shares of Common Stock equal to
the number of shares specified in the same row as the Column 1 Target Amount of
the column titled "Warrant Grant."
(ii) The Strike Price for the Shares issuable pursuant to such
Warrants is the lesser of the Strike Price in the same row as the Warrant earned
or one hundred and twenty percent (120%) of the market price of the Common Stock
on the date the Warrant is earned.
(iii) The date of grant shall be five (5) days after the Column 1
Target amount is achieved and either the Trigger One amount in the same row is
achieved, the Trigger Two amount in the same row is achieved, or the Trigger
Three amount in the same row is achieved and Payment Data has issued its
financial reports via a Form 10-Q or 10-K for the corresponding quarter or year,
respectively.
(iv) Once a Warrant is issued pursuant to a Column 1 Target
Amount, any successive Warrants must be earned by achieving a Column 1 Target
Amount equal to or greater than the Dollar Value in Column 1 in the row below
such previously achieved Column 1 Target Amount, as well as achieving either a
Trigger One Dollar Value, a Trigger Two Dollar Value, or a Trigger Three Dollar
Amount in the same row as the applicable Column 1 Target Amount.
(v) Provided that a Warrant has not been previously granted with
respect to a Dollar Value in Column 1 that is less than a Column 1 Target Amount
in which a Warrant is granted, then if any of the Trigger One, Trigger Two, or
Trigger Three Dollar Values is achieved with respect to any Column 1 amount that
is less than the Column 1 Target Amount in which a Warrant is granted, Kubra
shall be entitled to the grants of Warrants specified in the rows of such Column
1 amounts. For example, if during the first month during the Term of the
Referral Agreement, Kubra achieves a Column 1 Target Amount of $150,000,000 and
meets the Trigger One Dollar Value associated with that Column 1 Target Amount,
then Kubra shall earn all of the Warrants available under the Warrant Agreement,
provided that the Trigger One amounts corresponding to all lesser Column 1
amounts are also achieved.
Schedule "A"
Trigger One Trigger Two Trigger Three
Kubra Referred and PDS. . Kubra Referred AVG AVG
Contracted Monthly. . . . Year Quarterly Quarterly Shares
Gross Credit Card Sales . PDS PDS Gross CC Warrant Strike
(Visa/MasterCard) . . . . Revenue Revenue Sales Xxxxx Xxxxx
5,000,000. . . . . . . . $ 1,500,000 $ 375,000 $ 15,000,000 150,000 $ 0.44
10,000,000 . . . . . . . $ 3,000,000 $ 750,000 $ 30,000,000 150,000 $ 0.63
15,000,000 . . . . . . . $ 4,500,000 $ 1,125,000 $ 45,000,000 150,000 $ 0.88
20,000,000 . . . . . . . $ 6,000,000 $ 1,500,000 $ 60,000,000 150,000 $ 1.12
25,000,000 . . . . . . . $ 7,500,000 $ 1,875,000 $ 75,000,000 125,000 $ 1.36
35,000,000 . . . . . . . $ 10,500,000 $ 2,625,000 $ 105,000,000 125,000 $ 1.59
45,000,000 . . . . . . . $ 13,500,000 $ 3,375,000 $ 135,000,000 100,000 $ 1.89
50,000,000 . . . . . . . $ 15,000,000 $ 3,750,000 $ 150,000,000 100,000 $ 2.18
60,000,000 . . . . . . . $ 18,000,000 $ 4,500,000 $ 180,000,000 100,000 $ 2.89
75,000,000 . . . . . . . $ 22,500,000 $ 5,625,000 $ 225,000,000 100,000 $ 3.60
90,000,000 . . . . . . . $ 27,000,000 $ 6,750,000 $ 270,000,000 100,000 $ 4.31
105,000,000. . . . . . . $ 31,500,000 $ 7,875,000 $ 315,000,000 100,000 $ 5.01
120,000,000. . . . . . . $ 36,000,000 $ 9,000,000 $ 360,000,000 100,000 $ 5.70
130,000,000. . . . . . . $ 39,000,000 $ 9,750,000 $ 390,000,000 100,000 $ 6.38
140,000,000. . . . . . . $ 42,000,000 $ 10,500,000 $ 420,000,000 100,000 $ 7.06
150,000,000. . . . . . . $ 45,000,000 $ 11,250,000 $ 450,000,000 100,000 $ 7.74
Definitions to Schedule "A":
"Kubra Referred and PDS Contracted Monthly Gross Credit Card Sales
(Visa/MasterCard)" shall mean the actual Visa and MasterCard transaction dollar
volume processed and settled by Payment Data within any given calendar month for
all accounts referred by Kubra to Payment Data, whether such referrals occur
prior to or during the term of this Warrant Agreement.
"Kubra Referred Year PDS Revenue" shall mean actual, reportable gross revenue
earned by Payment Data within any given calendar year from all accounts referred
by Kubra, whether such referrals occur prior to or during the term of this
Warrant Agreement, in each case determined under Generally Accepted Accounting
Principles, consistently applied.
"AVG Quarterly PDS Revenue" shall mean an average of the actual reportable gross
revenue earned by Payment Data from all accounts referred by Kubra, whether such
referrals occur prior to or during the term of this Warrant Agreement, for two
consecutive financial reporting quarters of Payment Data, in each case
determined under Generally Accepted Accounting Principles, consistently applied.
"AVG Quarterly Gross CC Sales" shall mean an average of two consecutive
financial reporting quarters of Visa and MasterCard transaction dollar volumes
processed and settled by Payment Data for such quarters for all accounts
referred by Kubra to Payment Data, whether such referrals occur prior to or
during the term of this Warrant Agreement.
Kubra shall be entitled to reasonable access to the books and accounting records
of Payment Data for purposes of verifying and reviewing the determination of the
calculation of the above defined terms.
1.3 Execution of Warrant Certificates. Warrant Certificates may
be signed on behalf of Payment Data by any person authorized by Payment Data.
1.4 Registration. Payment Data shall maintain, or cause to be
maintained, a registry setting forth the name and address of the record holder
of the Warrants, and absent evidence of sale or transfer reasonably acceptable
to it, may treat the record holder of the Warrants as reflected on the registry
as the owner of the Warrants for all purposes.
1.5 Exchanges. At the option of Kubra, (i) any Warrant Certificate
may be exchanged when surrendered at the principal office of Payment Data for
one or more Warrant Certificates representing in the aggregate the Warrants to
acquire a like number and kind of Shares by Kubra and (ii) any certificate
representing any Shares may be exchanged when surrendered at the principal
office of Payment Data's transfer agent for one or more certificates
representing the same aggregate number of Shares so surrendered for exchange.
Warrant Certificates and certificates representing Shares so surrendered for
exchange shall be canceled by Payment Data.
1.6 Mutilated or Missing Warrant Certificates. If any of the Warrant
Certificates or certificates representing Shares shall be mutilated, lost,
stolen, or destroyed, Payment Data shall issue, in exchange and substitution for
and upon cancellation of such Warrant Certificate or certificate representing
Shares, a new Warrant Certificate representing an equivalent number of Warrants
or a new certificate representing an equal number of Shares, respectively, but
only upon receipt of evidence of such loss, theft, or destruction reasonably
satisfactory to Payment Data or, if requested by Payment Data, upon receipt of a
duly executed indemnification agreement reasonably satisfactory to Payment Data.
1.7 Manner of Exercise of Warrants. Subject to the provisions of this
Warrant Agreement, Kubra shall have the right to purchase from Payment Data at
the applicable Strike Price, and Payment Data shall issue and sell to Kubra, the
number of Shares of Common Stock represented by each Warrant exercised, upon
surrender to Payment Data at its principal office of the Warrant Certificate
representing such Warrant, together with a Form of Warrant Subscription in
substantially the form of Exhibit B attached hereto, completed and signed, and
upon payment to Payment Data of the Strike Price in lawful money of the United
States of America.
1.8 Issuance of Shares Upon Exercise. Upon exercise of a Warrant,
Payment Data shall issue and cause to be delivered to Kubra, registered in the
name of Kubra, a certificate representing the Shares issuable upon the exercise
of such Warrant. Such certificate shall be deemed to have been issued and Kubra
shall be deemed to have become a holder of record of such Common Stock as of the
date of surrender of the Warrant Certificate and payment of the Strike Price.
The Warrants shall be exercisable, at the election of Kubra, either as an
entirety or for part of the number of Shares specified in the Warrant
Certificate representing such Warrants. If less than all of the Shares
evidenced by a Warrant Certificate are exercised at any time prior to the
Expiration Date, a new Warrant Certificate or Certificates shall be issued by
Payment Data, registered in the name of Kubra, representing the remaining
unexercised number of Shares evidenced by the Warrant Certificate so
surrendered. All Warrant Certificates surrendered upon the exercise of Warrants
shall be canceled by Payment Data.
1.9 Payment of Expenses and Taxes. Payment Data shall pay all
expenses and taxes imposed by law or any governmental agency, including any
documentary stamp taxes, attributable to the issuance of Shares upon the
exercise of Warrants; provided, however that Kubra shall be solely responsible
for any income taxes attributable to it in connection with the issuance or
exercise of the Warrants or ownership of any Shares issued upon the exercise of
the Warrants.
1.10 Reservation of Shares. Payment Data covenants and agrees that, so
long as any Warrants remain outstanding, Payment Data shall (i) at all times
have authorized and reserved a number of Shares sufficient to provide for the
exercise of the Warrants and (ii) assure that the Shares, when issued, will be
fully paid and non-assessable.
1.11 Legend. The Warrants shall bear such restrictive legends as
Payment Data, with the advice of counsel, shall deem reasonable to reflect the
restrictions on transfer of the Warrants and Shares applicable to this Warrant
Agreement.
1.12 Expiration; Call of Incentive Warrants. The Incentive Warrants
will be fully vested on receipt by Kubra and will be exercisable during the
period commencing on date of receipt by Kubra and ending five (5) years after
their respective issuance dates (the "Expiration Date"); provided, however, that
Payment Data shall have the right to Call the Incentive Warrants on the terms
and conditions specified in Section 3.3 of this Warrant Agreement.
ARTICLE 2
ADJUSTMENT PROVISIONS
2.1 Stock Splits; Combinations. If a stock dividend is declared and
paid on the Common Stock, or if the outstanding shares of Common Stock are
subdivided into a greater number of shares of Common Stock, the Strike Price
shall, simultaneously with the effectiveness of such subdivision or stock
dividend, be proportionately reduced, and conversely, if the outstanding shares
of Common Stock shall be combined into a smaller number of shares of Common
Stock, the Strike Price shall, simultaneously with the effectiveness of such
combination, be proportionately increased.
2.2 Adjustment of Shares Issuable Upon Exercise of Warrants. Upon each
adjustment of the Strike Price as a result of the calculations made pursuant to
this Article 2, each Warrant outstanding prior to the making of the adjustment
in the Strike Price shall thereafter be treated as that number of Warrants, and
shall evidence the right to purchase, at the adjusted Strike Price, that number
of Shares (calculated to the nearest hundredths), obtained by (i) multiplying
the number of Shares purchasable upon exercise of a Warrant prior to adjustment
by the Strike Price in effect prior to adjustment and (ii) dividing the product
so obtained by the Strike Price in effect after such adjustment of the Strike
Price.
2.4 Notice of Adjustment to Holders. Upon the occurrence of each
adjustment or readjustment of the Strike Price, Payment Data, at its expense,
shall compute such adjustment or readjustment in accordance with the terms
hereof. Promptly, and in no case more than twenty (20) days after the
occurrence of such adjustment or readjustment, Payment Data shall furnish Kubra
with a certificate signed by Payment Data's chief financial officer, or other
authorized officer, setting forth in reasonable detail (i) the Strike Price
after such adjustment or readjustment; (ii) the method of calculation and the
facts upon which such calculation was based; and (iii) the number of Shares
purchasable upon exercise of a Warrant after such adjustment or readjustment.
If, within fifteen (15) days after receipt of such certificate, Kubra so
requests in writing, Payment Data shall, at Kubra's expense, cause the
computation of an adjustment or readjustment to be recalculated by independent
certified public accountants selected by Payment Data.
2.6 Certain Other Actions Prohibited. Payment Data shall not by
amendment of its charter documents or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issuance or sale of securities, or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the provisions of this Warrant Agreement, but shall at all times in
good faith assist in the carrying out of all of the provisions of this Warrant
Agreement.
ARTICLE 3
TRANSFER OF WARRANTS; TERMINATION OF WARRANTS; CALL OF WARRANTS
3.1 Restriction on Transfer. Notwithstanding any other provision of
this Warrant Agreement, Shares of Common Stock held by Kubra pursuant to an
exercise of a Warrant must be held by Kubra for the lesser of (i) two (2) years
and (ii) such shorter period as may be required by applicable securities law, in
each case following such exercise before such Shares may be pledged, loaned,
sold, encumbered, or otherwise transferred.
3.2 Termination of Warrants. Upon the termination of the Referral
Agreement, this Warrant Agreement and all rights and responsibilities of either
party hereunder shall terminate immediately (and Kubra will automatically
forfeit any unearned Warrants under this Warrant Agreement); provided, however,
that (1) all Warrants earned by Kubra pursuant to this Warrant Agreement and
before the termination of the Referral Agreement may be exercised by Kubra under
this Warrant Agreement until the respective Expiration Dates of such Warrants;
and (2) if the Referral Agreement is terminated by Payment Data, Payment Data
receives at least one new merchant referral from Kubra under the Referral
Agreement in each of the three months preceding such termination, and Payment
Data terminates the Referral Agreement for a reason other than a breach of that
agreement by Kubra, then this Warrant Agreement shall terminate within six (6)
months of the date of the termination of the Referral Agreement.
3.3 Call Provisions. Payment Data has the right to Call the exercise of
the Warrants upon twenty (20) calendar days' notice and at any time after the
date of the issuance of the Warrants; provided, however, that Payment Data is
not permitted to Call the exercise of any Warrant the Strike Price of which is
lower than the average market price of the Common Stock for the three trading
days prior to the date the Call is made by Payment Data. For purposes of
Section 1.2(a)(ii) and this Section 3.3, market price on a given date shall be
determined by the closing bid price of the Common Stock on the NASD
Over-the-Counter Bulletin Board, or the exchange on which the Common Stock is
then trading, on the day preceding such date. When a Call is made, Shares will
be issued upon exercise of the Warrants pursuant to the terms and conditions of
this Warrant Agreement. If Kubra does not exercise the Warrants that are
subject to a Call, such Warrants will be forfeited by Kubra immediately.
Notwithstanding the foregoing, Payment Data shall not be entitled to call
Warrants which require payment of subscription funds by Kubra of more than
$100,000 in any 12 month period.
3.4 Registration Rights Granted. Upon Payment Data's issuance to Kubra of
at least fifty percent (50%) of the Warrants issuable under this Warrant
Agreement, Payment Data shall piggyback the registration of the Common Stock
underlying the Warrants issued under this Warrant Agreement for resale and
distribution under the Securities Act of 1933, as amended, and applicable state
securities laws to a later registration of Payment Data's $0.001 par value
common stock at such time as is convenient to Payment Data, in its discretion.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1 Securities Representations of Kubra.
(a) Kubra acknowledges that, based on its representations in this
Warrant Agreement, the Warrants and Shares have not been registered under the
Securities Act, in reliance on the non-public offering exemptions contained
therein, as well as under applicable state securities laws.
(b) Kubra is an Accredited Investor. Kubra hereby represents that it
has the capacity to protect its interests in connection with the transactions
contemplated hereby.
(c) Kubra is acquiring the Warrants and Shares for its own account, not
as a nominee or agent, and not with the view to, or for resale in connection
with, any distribution thereof in violation of the Securities Act. The Shares
and Warrants are being and will be acquired by Kubra for investment purposes
(meaning with a current intention to hold for an indefinite period).
(d) Kubra has been given full access to all material information
concerning the condition, proposed operations, and prospects of Payment Data.
Kubra and its advisors, if any, have had an opportunity to ask questions of, and
to receive information from Payment Data concerning the terms and conditions of
Kubra's investment in Payment Data, and to obtain any additional information
necessary to verify the accuracy of the information and data received by Kubra.
(e) Kubra has made either alone or together with its advisors, if any,
such independent investigation of Payment Data and related matters as Xxxxx
xxxxx to be, or Kubra's advisors, if any, have advised to be, necessary or
advisable in connection with the acquisition of the Warrants, and Kubra and its
advisors, if any, believe to be necessary in order to reach an informed decision
as to the advisability of acquiring of the Warrants.
ARTICLE 5
FUTHER REPRESENTATIONS AND WARRANTIES OF THE PARTIES
5.1. Organization. Each Party is a business entity duly organized, validly
existing, and in good standing under the laws of its state of organization. Each
Party has all requisite corporate power and authority to enter into and perform
this Warrant Agreement and to consummate the transactions contemplated hereby.
Each Party is duly qualified as a foreign corporation to do business, and is in
good standing, in each jurisdiction in which the character of its properties
owned or leased or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified would not have a material
adverse effect on this Warrant Agreement or the other Party.
5.2. Authority. Each Party has full power and authority to execute,
deliver, and perform this Warrant Agreement and to consummate the transactions
contemplated hereby. The execution, delivery, and performance by each Party of
this Warrant Agreement and the consummation of the transactions contemplated
hereby have been duly authorized and approved by all necessary actions by such
Party, and no other proceedings other than actions previously taken on the part
of the Parties is necessary to authorize this Warrant Agreement and the
consummation of the transactions contemplated hereby. This Warrant Agreement has
been duly authorized, executed, and delivered by each of the Parties and
constitutes the legal, valid, and binding obligations of the Parties enforceable
in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws
affecting the enforcement of creditors' rights generally and by the effect of
general principles of equity (regardless of whether enforcement is considered in
a proceeding in equity or at law).
ARTICLE 6
MISCELLANEOUS
6.1 Certain Definitions.
(a) Except as otherwise provided herein, the capitalized terms set
forth below shall have the following meanings:
"Accredited Investor" has the same meaning as in Section 501(a)(3) of
Regulation D promulgated under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended from time to
time, or any successor statute.
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts, and other organizations, whether or not legal entities, and governments
and agencies and political subdivisions thereof.
(b) Unless the context of this Warrant Agreement clearly requires
otherwise, references to the plural include the singular, to the singular
include the plural, and to the part include the whole. The term "including" is
not limiting and the term "or" has the inclusive meaning represented by the term
"and/or." The words "hereof," "herein," "hereunder," and similar terms in this
Warrant Agreement refer to this Warrant Agreement as a whole and not to any
particular provision of this Warrant Agreement. References to "Articles,"
"Sections," "Subsections," "Exhibits," and "Schedules" are to Articles,
Sections, Subsections, Exhibits, and Schedules, respectively, of this Warrant
Agreement, unless otherwise specifically provided.
6.2. Survival of Representations and Warranties. Unless otherwise
specified in this Warrant Agreement, the representations and warranties of the
Parties contained herein shall survive the Effective Date for a period expiring
at the close of business on the third anniversary of the Effective Date.
6.3. Reliance by Payment Data. Notwithstanding the right of each Party
to investigate the business and company assets and financial condition of the
other Party, and notwithstanding any knowledge determined or determinable by
such Party as a result of such investigation, each Party has the unqualified
right to rely upon, and has relied upon, each of the representations and
warranties made by the other Party in this Warrant Agreement.
6.4. Notice. All notices, consents, or other communications required or
permitted to be given under this Warrant Agreement shall be in writing and shall
be deemed to have been duly given (i) when delivered personally; (ii) three
Business Days, with a "Business Day" being any day other than a Saturday, a
Sunday, or a U.S. federal holiday, after being mailed by first class certified
mail, return receipt requested, postage prepaid; or (iii) one Business Day after
being sent by a reputable overnight delivery service, postage or delivery
charges prepaid, to the other Party at its address stated below. Notices may
also be given by facsimile and shall be effective on the date transmitted if
confirmed within 24 hours thereafter by a signed original sent in the manner
provided in the preceding sentence. Notices shall be directed as follows:
If to Kubra:
0000 Xxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxx
X0X 0X0
Facsimile: (000) 000-0000
Attn: Xxxx Xxxxxx, President & CEO
If to Payment Data:
00000 Xxx Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxx Xxxx
Any Party may change its address for notice and the address to which copies must
be sent by giving notice of the new addresses to the other Parties in accordance
with this Section 6.4, except that any such change of address notice shall not
be effective unless and until received.
6.5. Expenses. Except as expressly set forth herein, each of the Parties
will bear its own costs and expenses (including legal fees and expenses)
incurred in connection with this Warrant Agreement and the transactions
contemplated hereby.
6.6. Applicable Law. This Warrant Agreement shall be governed by and
construed in accordance with the law of the State of Texas without giving effect
to any choice or conflict of law provision or rule. Venue will be in San
Antonio, Texas for all purposes.
6.7. Headings. The article and section headings contained in this Warrant
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Warrant Agreement.
6.8. Successors and Assigns. This Warrant Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors. No Party may assign this Warrant Agreement or any of its rights,
interests, or obligations hereunder without the prior written approval of the
other Party. Any such attempted assignment will be void. Notwithstanding the
foregoing, Kubra may assign its rights and obligations hereunder in connection
with a sale of all or substantially all of its assets to a third party purchaser
in circumstances in which the Referral Agreement has also been assigned to such
purchaser.
6.9. Amendments and Waivers. No amendment or waiver of any provision of
this Warrant Agreement shall be valid unless the same shall be in writing and
signed by both Parties. No waiver by any party of any default,
misrepresentation, or breach of a warranty or a covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of a warranty or a covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
6.10. Parties in Interest. Nothing in this Warrant Agreement, whether
express or implied, is intended to confer any rights or remedies under or by
reason of this Warrant Agreement on any persons other than the Parties, nor is
anything in this Warrant Agreement intended to relieve or discharge the
obligation or liability of any third persons to any Party to this Warrant
Agreement, nor shall any provision give any third party any right of subrogation
over or action against any Party to this Warrant Agreement.
6.11. Interpretation. The Parties have participated jointly in the
negotiation and drafting of this Warrant Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Warrant Agreement shall be
construed as if drafted jointly by the Parties and no presumption or burden of
proof shall arise favoring or disfavoring any Party by virtue of the authorship
of any of the provisions of this Warrant Agreement. Any reference to any
federal, state, local, or foreign statute or law shall be deemed also to refer
to all rules and regulations promulgated thereunder, unless the context requires
otherwise. The Parties intend that each representation, warranty, and covenant
contained herein shall have independent significance. If any Party has breached
any representation, warranty, or covenant contained herein in any respect, the
fact that there exists another representation, warranty, or covenant relating to
the same subject matter (regardless of the relative levels of specificity) which
the Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
6.12. Severability. Any term or provision of this Warrant Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
6.13. Counterparts/Facsimile Execution. This Warrant Agreement may be
executed in one or more counterparts, each of which shall be considered one and
the same agreement, and shall become effective when one or more counterparts
have been signed by each of the Parties to this Warrant Agreement. Any signature
of a Party in this Warrant Agreement that is by facsimile shall be deemed an
original signature.
6.14. Incorporation of Exhibits and Schedules The Schedules and Exhibits
identified in this Warrant Agreement are incorporated herein by reference and
made a part hereof
..
6.15. Entire Agreement. This Warrant Agreement and the other documents,
agreements, and instruments executed and delivered pursuant to or in connection
with this Warrant Agreement or referred to herein, contain the entire agreement
among the parties hereto with respect to the transactions contemplated hereby
and superse des all prior arrangements or understandings with respect thereto.
6.16. Time is of the Essence. With respect to all time periods and dates
set forth in this Warrant Agreement, time is of the essence.
[Signature Page to Follow]
IN WITNESS WHEREOF, the Parties have executed this Warrant Agreement as of
the day and year first above written.
PAYMENT DATA SYSTEMS, INC.,
a Nevada corporation
By: /s/ Xxxxx Xxxx
Name: Xxxxx Xxxx
Title: President & COO
KUBRA DATA TRANSFER LTD.,
a New York corporation
By: /s/ Xxxx Xxxxxx
Name: Xxxx Xxxxxx
Title: CEO & President
Exhibit A
Form of Warrant Certificate
THE WARRANTS REPRESENTED BY THIS WARRANT CERTIFICATE AND THE SHARES PURCHASABLE
UPON EXERCISE OF THE WARRANTS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN
COMPLIANCE WITH THE ACT, THE RULES AND REGULATIONS PROMULGATED THEREUNDER, AND
ANY APPLICABLE STATE SECURITIES LAWS.
THE WARRANTS REPRESENTED BY THIS CERTIFICATE ARE ISSUED PURSUANT TO AND ARE
SUBJECT TO A WARRANT AGREEMENT THAT FIXES THE RIGHTS AND OBLIGATIONS OF THE
COMPANY AND THE HOLDER OF THESE WARRANTS AND PLACES CERTAIN RESTRICTIONS ON THE
TRANSFERABILITY OF THE WARRANTS. A COPY OF THE WARRANT AGREEMENT IS ON FILE AT
THE COMPANY'S PRINCIPAL OFFICE.
ARTICLE 1 COMMON STOCK WARRANT CERTIFICATE
VOID AFTER _________________ For the Purchase of __________ Shares
of Common Stock
Payment Data Systems, Inc., a Nevada corporation (the "Company"), hereby
certifies that, for value received, Kubra Data Transfer Ltd., a New York
corporation (the "Holder"), is the registered holder of ________________________
(___________) Warrants (the "Warrants") to purchase _______________________
(______) shares (the "Shares") of the $0.001 par value common stock of the
Company ("Common Stock"). Each Warrant entitles the Holder to purchase from the
Company that number of fully paid and non-assessable Shares of Common Stock
specified herein at an initial strike price of $_____________ per Share ("Strike
Price"), subject to adjustment of such number of Shares and such Strike Price as
provided in the Warrant Agreement by and between the Company and the Holder.
The Holder's right to purchase Shares hereunder shall be exercised by surrender
to the Company of this Warrant Certificate, together with an executed Form of
Warrant Subscription (attached hereto) and payment of the aggregate Strike Price
of the Shares exercised that underlie the Warrants, at the principal executive
office of the Company, upon the terms and subject to the conditions set forth in
this Warrant Certificate and in the Warrant Agreement referred to herein.
The Warrants represented by this Warrant Certificate are part of a duly
authorized issue of warrants to purchase (subject to the satisfaction of certain
conditions as set forth in the Warrant Agreement) up to an aggregate of
____________________ (__________) shares of Common Stock and have been issued
pursuant to the Warrant Agreement. The Warrant Agreement is incorporated in
this Warrant Certificate by this reference and must be referred to for a
description of the rights, obligations, and duties of the Company and the Holder
of the Warrants issued pursuant to the Warrant Agreement.
If, upon any exercise of Warrants represented by this Warrant Certificate, the
number of Shares exercised is less than the total number of Shares represented
by this Warrant Certificate, there shall be issued to the Holder a new Warrant
Certificate representing the number of Shares not exercised.
This Warrant Certificate, when surrendered to the Company in accordance with the
terms of the Warrant Agreement, may be exchanged without payment of any service
charge for another Warrant Certificate or Warrant Certificates representing in
the aggregate a like number of Warrants.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be signed
by the person named below thereunto duly authorized.
DATED: ____________ ___, _________
Payment Data Systems, Inc.,
a Nevada corporation
By: ____________________________
Name: ____________________________
Title: ____________________________
EXHIBIT B
ARTICLE 2 FORM OF WARRANT SUBSCRIPTION
(To be signed only upon exercise of Warrant)
TO: Payment Data Systems, Inc.
The undersigned, the holder of the Warrants represented by the attached Warrant
Certificate (the "Holder"), hereby irrevocably elects to exercise the purchase
right represented by such Warrants for, and to purchase thereunder,
____________* shares of the $0.001 par value common stock (the "Shares") of
Payment Data Systems, Inc. (the "Company") and herewith makes payment, as
provided in the Warrant Agreement and the Warrant Certificate, of US
$______________ therefor. The Holder hereby requests that the Company issue
____________ Shares and requests that the certificate(s) for such Shares be
issued in the name of, and delivered to, Kubra Data Transfer Ltd.
FROM: Kubra Data Transfer Ltd.
By: ______________________________
Name: ______________________________
Title: ______________________________
Date: ______________________________
(Signature must conform in all respects to name of Holder as specified on the
face of the Warrant Certificate)
* Insert here the number of Shares called for on the face of the Warrant
Certificate. (Or, in the case of a partial exercise, the portion thereof as to
which the Warrants are being exercised, in either case, without making any
adjustment for additional Shares that, pursuant to the adjustment provisions of
the Warrant Agreement, may be deliverable upon exercise.)
