SETTLEMENT AND MUTUAL RELEASE AGREEMENT
PARTIES
This Settlement and Mutual Release Agreement ("the Agreement") is
entered into on April 9, 1998, by and among the following parties:
1. U.S. WIRELESS DATA, INC., a Colorado corporation (the
"Company"); and
2. XXXXXXX DELLE DONNE (hereafter referred to as
"Investor")
3. XXXXXXXX DELLE DONNE;
4. XXXXX DELLE DONNE;
5. XXXXX DELLE DONNE, (parties 2,3,4 and 5 are referred to
collectively as "the Delle Donnes")
RECITALS
A. The Investor received in exchange for full consideration a
convertible promissory note with the Company in the form as set
forth in Exhibit A, attached hereto and incorporated herein (the
"Note")
B. The Investor, on May 10, 1997 transferred title in the Note and
the shares and other benefits due upon exercise of the right to
convert the Note, to the following in the following percentages;
Xxxxxxx Delle Donne and Xxxxxxxx Delle Donne husband and wife, as
community property, 53-1/3%, Xxxxx Delle Donne 23-1/3% and Xxxxx
Delle Donne 23-1/3%.
C. There arose a dispute between the Company and the Delle Donnes
regarding the nature of the securities to be issued to the
Investors upon the exercise of their conversion rights.
D. Without admitting liability, each of the parties desires to
resolve the disputes as among the Company and the Delle Donnes
pursuant to the terms and conditions set forth in this Agreement.
NOW THEREFORE, in accordance with and subject to the terms
and conditions and in consideration of the promises and covenants contained
herein and the recitals set forth above, the parties agree as follows:
TERMS OF SETTLEMENT AND RELEASE
1. PAYMENT
a. Issuance of Restricted Stock. Subject to the terms
herein, the Company shall issue to the Delle Donnes,
upon surrender of the original Note, the following
shares of restricted common stock of the Company (the
"Restricted Stock"): Xxxxxxx and Xxxxxxxx Delle Donne
husband and wife, as community property -88,000
shares, Xxxxx Delle Donne- 38,500 shares, Xxxxx Delle
Donne-38,500 shares
b. Date of Issuance and Delivery of Restricted Stock.
The Company shall issue and deliver the Restricted
Stock to the Delle Donnes within five (5) business
days of the execution of this Agreement.
2. ISSUANCE AND TRANSFERABILITY OF THE RESTRICTED STOCK. The
Restricted Stock so issued in conversion of each Note shall
be resalable, pursuant to Rule 144, on and after May 7,
1998.
In connection with the issuance of the Restricted Stock to the
Delle Donnes there shall become effective and filed with
American Security & Transfer & Trust of Lakewood Colorado
(Transfer Agent) within one (1) business day of the date this
Agreement is signed, the
following documents:
a. For Issuance:
(i) Board of Directors resolution authorizing the
execution of this Agreement and authorizing the
issuance of the Restricted Stock in the form attached
hereto as Exhibit B.
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(ii) Instructions to the Transfer Agent from the
Company ordering the issuance of the Restricted Stock
to each of the Delle Donnes in the amount set forth
above.
(iii) Such other directions, instructions,
authorizations or opinions as may be required for the
immediate issuance of the Restricted Stock pursuant
to this Agreement.
In connection with the resale of the restricted shares by the
Delle Donnes there shall become effective and filed with the
transfer agent upon the request of the transfer agent, the
following documents:
b. For Resale:
Such directions, instructions, authorizations or
opinions as may be required for the resale of the
Restricted Stock per this Agreement.
3. GUARANTEE AND PUT.
(a) Guarantee. In addition to the issuance of the
Restricted Stock, in the event that any of the
Delle Donnes sells its or his respective shares of
the Restricted Stock during the one year period
from and including May 7, 1998 to May 7, 1999 for
a price of less than $4.29 a share, the Company
shall within thirty (30) days of receipt of
written notice by a selling Delle Donne and a copy
of the confirmation of sale concerning such sale,
transfer to the Delle Donne who has sold its or
his Restricted Stock during said one year period,
an amount equal to the difference between $4.29 a
share and the gross sales price for each such
sale.
(b) Put. If, on May 3, 1999, or, if the market on
which the Restricted Stock is traded is closed on
that date, on the next trading day, the opening
price for the stock of the Company is below $4.29
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a share, each of the Delle Donnes shall have the
option, for a five day period thereafter, ending
at midnight, Pacific Time, on the fifth day to put
their remaining Restricted Stock back to the
Company for a price of $4.29 a share. If one or
more of the Delle Donnes exercises the put, the
Company shall have the option, to be exercised
within three days of receipt of the put, to
require by written notice from the Company to the
selling Delle Donne(s) such selling Delle Donne(s)
to sell the Restricted Stock on the open market
and shall then be obligated to pay the selling
Delle Donne(s) the difference between $4.29 a
share and the sales price, in cash delivered to
the selling Delle Donne(s) no later than fifteen
(15) days after the respective sale. If one or more
of the Delle Donnes exercises the put, and the
Company does not exercise its option to the selling
Delle Donne(s) to sell the Restricted Stock into the
open market, the Company shall pay such selling Delle
Donne(s) $4.29 per share in cash within fifteen (15)
days from the date of the put.
4. REPRESENTATIONS AND WARRANTIES.
As a condition to the settlement, the Company represents and warrants
as follows:
a. The Company has all requisite corporate power and
authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate
action on behalf of the Company. The Company has
applied for registration and qualification as a foreign
corporation with the California Secretary of State,
qualified to do business in California.
b. This Agreement when executed and delivered by the Company will
constitute a legal, valid and binding obligation of the
Company enforceable against the
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Company in accordance with its terms, except as may be
limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws effecting
the enforcement of creditors' rights.
c. The undersigned individuals signing this Agreement on behalf
of the Company represent and warrant that they are duly
authorized to execute and deliver this instrument on its
behalf and have the right to execute this Agreement.
d. The Company is authorized to issue the Restricted Stock as set
forth in this Agreement.
e. The Company shall comply with the requests of the Transfer
Agent or any other transfer agent of the Company, to
effectuate the transfer and sale of the Restricted Stock.
f. The Restricted Stock issued pursuant to this Agreement
shall be saleable under Rule 144 one year from the date of the
Notes which made up the underlying consideration for the
investment; that is May 7, 1998.
g. The Company is currently in compliance with and shall remain
in compliance with all rules and conditions of federal and
State securities, corporate or other laws, including but not
limited to Rule 144, which are required to or are a
prerequisite for the issuance of the opinion letter by the
Company's legal counsel, to allow for the sale of the
Restricted Stock.
h. The securities issued to Xxxx X. Xxxxxxxx and Xxxxxx X. Xxxx
and Liviakis Financial Communications, Inc., as set forth in
Exhibit C are subject to a Lock-up Agreement and may not be
sold prior to August 1, 1998
even if registered.
i. The Restricted Shares when issued and delivered will be
validly authorized and issued and will be fully paid and
non-assessable and no shareholder of the Company will have any
preemptive right of subscription or purchase thereof.
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j. It shall be a condition of any merger, consolidation,
sale of all or substantially all of the Company (either
by way of stock transaction or of all or substantially
all assets of the Company other than in the ordinary
course of business), acquisition or other
reorganization or recapitalization of the Company
occurring prior to the date the Restricted Stock is
actually issued to the Delle Donnes hereunder, that any
agreements or other consummating documents entered or
to be entered into or filed or to be filed by the
Company with the Colorado Secretary of State in
connection with or to effect any such transaction shall
include provisions that provide for treatment of the
Delle Donnes in any such transaction as if the
Restricted Stock had been issued to such Parties as of
the time immediately preceding the consummation or
effective time of any such transaction.
k. To the best of the Company's knowledge, it has filed all
reports required to be filed by it pursuant to the Securities
Exchange Act of 1934, as amended, through the date of this
Agreement.
l. If and whenever, prior to the full performance of the
guarantee and put granted in Section 3 above, the Company
shall effect a subdivision or consolidation of shares or other
capital reorganization or readjustment, (other than those
described in subsection 4(m), below) the payment of a stock
dividend (except for dividends payable on the shares of the
Company's Series A Preferred Stock outstanding on the date of
this Agreement), or other increase or reduction of the number
of shares of the Company's stock outstanding without receiving
compensation thereof in money, services, or property, the
number of shares of Restricted Stock then remaining to be sold
by the Delle Donnes shall (a) in the event of an increase in
the number of outstanding shares, be proportionately
increased, and the $4.29 amount of the said guarantee and put
shall be proportionally reduced; and (b)in the event of a
reduction in the number of outstanding shares, be
proportionally reduced, and the amount of
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the said guarantee and put shall be proportionately increased.
m. It shall be a condition of any merger, consolidation,
sale of all or substantially all the Company (either by
way of a stock transaction or of all or substantially
all assets of the Company other than in the ordinary
course), acquisition or other reorganization prior to
the full performance of said guarantee and put, that
the surviving Company shall provide to the Delle
Donnes, a guarantee and put sufficient to provide them
with the same minimum cash return for sales of the
Delle Donnes interest in the surviving entity as they
would have received if they had sold the Restricted
Stock prior to the said merger, sale, acquisition or
other reorganization, if such right is requested by the
Delle Donnes.
n. The Company covenants that it will not, by voluntary
action, avoid or seek to avoid the observance or
performance of any of the terms of this Agreement, but
it will at all times in good faith assist in carrying
out all those terms and take all action necessary or
appropriate to protect the rights of the Delle Donnes
against dilution or other impairment and take all
necessary action to effect the resale of the Restricted
Stock by the Delle Donnes at such time or times as the
Delle Donnes desire to sell such Restricted Stock,
whether or not any such sale may occur in or out of the
period of the said guarantee and put.
Investor, where appropriate and the Delle Donnes, individually, where
appropriate represent and warrant to the Company that (both at the time of
execution of this agreement and as of the date upon which Investor first
purchased the Notes being converted into shares of the Company's no par value
Common Stock (the "Shares") pursuant to the terms of this agreement):
a. Investor or the Delle Donnes either: (1) had or have a
pre-existing personal or business relationship with the
Company; and/or (2) either alone or through a purchaser
representative of the Delle Donnes choosing (who is not
affiliated in any way with the Company) are
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sophisticated in business and financial matters and by
reason of either such pre-existing relationship and/or
their knowledge and experience in such matters, they
have the capacity to evaluate the merits and risks of
the prospective investment in the Shares.
b. To the extent Investor or the Delle Donnes deemed necessary,
they have consulted with their attorney, accountant or other
business and/or financial advisors regarding all aspects of
the proposed investment in the Company.
c. Investor was and the Delle Donnes are the sole parties in
interest as to the Shares being acquired by them and are
acquiring the Shares for their own account, for investment
only and not with view toward the resale or distribution
thereof, except as permitted by law or rule.
d. The Delle Donnes understand that the Shares are not
registered under the Securities Act of 1933, (the "1933
Act") and the Shares will be "restricted Securities" as
defined under Rule 144 promulgated under the 0000 Xxx.
The Shares may not be resold unless registered under
the 1933 Act or an exemption from such registration is
available. The Delle Donnes agree that they will not
attempt to dispose of the Shares except in compliance
with the 1933 Act.
e. The Delle Donnes understand that the Shares will be imprinted
with a legend in substantially the following form:
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR ANY
STATE OR FOREIGN LAW. THE SHARES MAY NOT BE SOLD,
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS (i) THEY SHALL
HAVE BEEN REGISTERED UNDER THE ACT AND ANY APPLICABLE STATE
AND FOREIGN SECURITIES ACT OR OTHER LAW OR (ii) AN EXEMPTION
FROM SUCH REGISTRATION IS AVAILABLE AND THE CORPORATION
SHALL HAVE BEEN FURNISHED
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WITH AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION,
THAT REGISTRATION OR OTHER COMPLIANCE IS NOT REQUIRED UNDER
ANY OF SUCH ACTS OR LAWS.
f. At the time of any resale of Shares, the selling Delle Donnes
will return the appropriate number of Shares sold to the
Transfer Agent.
g. The Delle Donnes understand and agree that the Company will
lodge stop-transfer instructions with its transfer agent to
prohibit transfer of the Shares except in strict compliance
with the provisions of this agreement.
h. The Delle Donnes understand and agree that the Shares
do not have any "registration" or other rights
entitling them to have the Shares registered under the
1933 Act and that absent registration, the most likely
method by which the Shares may be resold in the public
market absent registration is under Rule 144
promulgated by the SEC under the 1933 Act, which will
become available at the earliest, one year from the
date the Company received consideration, which was May
7, 1997, for the Note. The Delle Donnes understand and
agree that there is no guarantee that Rule 144 will be
available for resales of the Shares and that if Rule
144 is not available to them for any reason, they may
not be able to resell the Shares in the public market
at all.
The Delle Donnes understand that the Company files reports
and other information concerning the Company, its business
and financial affairs with the United States Securities and
Exchange Commission (the "SEC") that are publicly available.
To the extent the Delle Donnes deemed necessary, they have
examined such reports and information as are available
through the SEC, including, without limitation: the
Company's Annual Report on Form 10-KSB for te fiscal year
ended June 30, 1997, as amended to date, the Company's
Quarterly Reports on Form 10-QSB for the fiscal quarters
ended September 30, 1997 and December 31,
1997, as amended to date; the Company's Definitive Proxy
Statement for its Annual Meeting of Shareholders held
February 6 ,1998 and its Current Report on Form 8- K
Reporting an Event of November 14, 1997, as filed with the
SEC on or about December 17, 1997.
j. The Delle Donnes fully understand that an investment in
the Company's securities (including the Shares)
involves a high degree of risk and could result in the
entire loss of the investment. The Delle Donnes have
adequate means of providing for their current needs and
possible financial contingencies, and have no need, and
anticipate no need in the foreseeable future, to sell
the Shares for an indefinite period of time and have a
sufficient net worth to sustain a loss of the entire
investment in the Shares in the event such loss should
occur.
5. FUTURE CONDUCT.
(a) The Company shall comply with all federal and state
securities, corporate and other laws which are required to allow for the sale of
the Restricted Stock under Rule 144.
(b) The Company shall use its best efforts to secure, within
two(2) business days of any request from the Delle Donnes or any of them, their
brokers or the transfer agent, the necessary opinion from the Company's Counsel
that the Restricted Stock is eligible for sale under Rule 144, should there be
no current opinion in existence to that effect.
(c) The Company acknowledges and agrees that any violation of
Section 1,2,3,4, and of this Section 5 hereof or the inability of the Investors
to resell the Restricted Stock pursuant to Rule 144 will cause damage to the
Investors and agree that in the event of such violation, breach or inability,
whether or not caused by the Company or its officers, directors, employees,
agents, attorney, affiliates or transfer agents, this Agreement shall be null
and void, at the option of the Delle Donnes, except for the provisions of 7,8 or
10 below.
6. MUTUAL RELEASE. The Company for itself and its partners,
shareholders, directors, officers, employees, assigns,
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predecessors, successors, representatives, affiliates, attorneys, heirs,
legatees and agents on the one hand, and the Delle Donnes, individually for
themselves and their employees, assigns, predecessors, successors,
representatives affiliates, attorneys, heirs, legatees and agents on the other
hand, except as provided in Sections 1,2,3,4,5 and 7 of this Agreement, each
irrevocably and unconditionally releases the other from any and all claims,
demands, and causes of action of any kind whatsoever (collectively referred to
as "Claims"), whether known or unknown, which it/he/she now has or ever has had,
from the beginning of time to the date of this Agreement and Release, which
arise out of the offer and sale of the said Note to the Investor.
Each party understands that it/he/she may have Claims of which the
party has no knowledge or suspicion; nevertheless, the party agrees that the
release contained in this Section 6 extends to all Claims whether or not known,
claimed or suspected by the party except the obligations of Sections 1,2,3,4,5
and 7 hereof. As to such matter, except as provided in Section 1,2,3,4,5 and 7
of this Agreement, each party expressly waives the benefits of Section 1542 of
the California Civil Code, which provides:
"A general release does not extend to claims which
the creditor does not know or suspect to exist in his favor at
the time of executing the release, which if known by him must
have materially affected his settlement with the debtor."
Each party acknowledges that the party knows and understands the
contents of this Agreement and Release, that the party has executed it
voluntarily and without coercion of any kind, and that the party understands
that after signing this Agreement and Release except as provided in paragraph 7
of this Agreement the party cannot proceed against any person or entity
mentioned in it with respect to or on account of any of the matters referred to
in it.
7. LIMITATION ON RELEASE. The Parties agree that the release set forth
in Section 6 of this Agreement shall not apply to claims that the Delle Donnes
may have against the Company and their partners, shareholders, directors,
officers, employees, assigns, predecessors, successors, representatives
affiliates, attorneys, heirs, legatees and agents arising from or related to
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fraud on the marketplace or market manipulation with regard to the Note or their
investment in the Company or for any claims against the Company and its
partners, shareholders, directors, officers, employees, assigns, predecessors,
successors, representatives, affiliates, attorneys, heirs, legatees and agents
if the Company fails to perform its obligations under this Agreement or breaches
the representations or warranties set forth in this Agreement.
8. TOLLING. The Parties agree to toll and suspend the running or accrual of
time by which is determined any defense which they may have individually or
collectively against the other(s) by virtue of any statute of limitations,
laches or any similar defense, to and including June 7, 1999.
Nothing in this Agreement shall toll or suspend any statute of
limitations beyond the permissible periods set forth in California Code of Civil
Procedure Section 360.5 or any other applicable law or rule; provided, however,
that should the period of tolling or suspension of statutes of limitations
described in this Agreement be effective for a period or periods exceeding those
permitted by any said Section 360.5 or other applicable law or rule, such period
or periods shall be reduced to the period or periods permitted by said Section
or applicable law or rule.
9. NO CLAIMS. Each party affirms that the party has not initiated any
claim, charge, action, or legal proceeding of any kind against any party
he/she/it released with respect to the Claims released in this Agreement.
10. ATTORNEYS FEES. The parties agree that the prevailing party in any
action or proceeding henceforth between the parties, in regard to any action to
enforce or interpret this Agreement, shall be entitled to reasonable attorneys'
fees and costs in addition to all other relief to which they may be entitled.
11. TAX LIABILITY. Except as otherwise required by applicable law, the
Investors agree that they alone will be responsible for all taxes applicable to
the securities issued under this Agreement.
12. NO ADMISSION OF LIABILITY. Each party acknowledges that this Agreement
is not an admission of guilt or liability.
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13. WARRANTIES. Each party warrants and represents to each of the other
parties that the party has full power, legal capacity and authority to enter
into, perform and comply with the terms of this Agreement. Each party further
warrants and represents to each of the other parties that such party has not by
agreement, operation of law or otherwise, heretofore assigned, transferred,
hypothecated, or purposed to assign, transfer or hypothecate to any person or
party, the whole or any part of portion of such party's clams which constitute
matters released pursuant to this Agreement. Each party warrants and represents
to each of the other parties that such party is the sole party who has the
right, title and interest in or to the matters such party is releasing. Each
party agrees to indemnify, defend and hold harmless, including for attorneys'
fees and costs, the other party from and against any claim threatened or
instituted against any other party for breach by such party of the
representations and warranties set forth in this paragraph.
14. CONFIDENTIALITY. Each party agrees that the terms of this Agreement are
confidential and further agrees, except as required by law or to perform the
obligations hereunder, not to disclose its terms or the fact of its execution to
any other person or entity. This non-disclosure provision does not apply to the
party's immediate family, employer, stockbroker, attorney, officers, directors,
transfer agents or tax advisor.
15. VALIDITY. If any portion of this Agreement shall be held invalid by a
court of competent jurisdiction, the validity of the remainder of this Agreement
shall not be affected.
16. INTEGRATION. This Agreement supersedes any previous understandings,
agreements or correspondence of the parties on this subject and is binding on
the parties, their heirs, executors, administrators, and successors in interest.
17. CHOICE OF LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
20. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall
inure to the benefit of the parties to this Agreement and their respective
heirs, executors, administrators, legal representatives, successors, assigns,
employees, partners, agents and attorneys.
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21. COUNTERPARTS. This Agreement may be executed in multiple originals or
counterparts, in which event each multiple original or counterpart shall be
deemed to constitute an original of this Agreement as to any persons or entities
whose original signatures or that of their representatives, appear thereon.
22. MUTUALLY NEGOTIATED AGREEMENT. The terms of this Agreement were freely
negotiated by the parties and neither this Agreement nor any of its provisions
shall be interpreted for or against any party on the basis of the party that
drafted the Agreement or the provision at issue. Each party has received the
advice of their counsel about this Agreement.
This Space Intentionally
Left Blank
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In witness whereof, the undersigned, and each of them, state that they
have read and understand the terms of the foregoing Agreement, that they enter
into the Agreement freely and without coercion or under duress, and have
executed this Agreement on the date and year first above written.
U.S. WIRELESS DATA, INC.
a Colorado Corporation
Dated:4/9/98 By: /s/ Xxxx Xxxxx
------------------
XXXX XXXXX, Chief Executive Officer
Dated:4/9/98 By: /s/ Xxxxxx X. Xxxxxxxxx
---------------------------
XXXXXX XXXXXXXXX, Chief
Financial Officer and Secretary
Date: 4/9/98 /s/ Xxxxxxx Delle Donne
-----------------------
XXXXXXX DELLE DONNE
Dated: 4/9/98 /s/ Xxxxxxxx Delle Donne
------------------------
XXXXXXXX DELLE DONNE
Dated: 4/9/98 /s/ Xxxxx Delle Donne
---------------------
XXXXX DELLE DONNE
Dated:4/9/98 /s/ Xxxxx Delle Donne
---------------------
XXXXX DELLE DONNE
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Reviewed and Approved
XXXXXXX, XXXXXXX & XXXXXX LLP
By: /s/ Xxxx X. Xxxxxx
------------------
Counsel for the Delle Donnes
IRELAND, XXXXXXXXX, XXXXX & XXXXXX, P.C.
BY: /s/ Xxxxxxx X. Xxxxxxx
----------------------
Counsel for the Company
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