ENGAGEMENT AGREEMENT
This Agreement is effective as of the date of execution, by and between U.S.
Wireless Data, Inc., 0000 Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, XX 00000
(referred to as "Company"), and entrenet Group, LLC, 0000 Xxxxxxxxxx Xxxxxxxxx,
Xxxxx 000, Xxxxxxxx, Xxxxxxxxxx 00000 (referred to as "entrenet").
In this Agreement, the party who is contracting to receive services shall be
referred to as "Company," and the party who will be providing the services shall
be referred to as "entrenet".
Company desires to have services provided by entrenet.
Therefore, the parties agree as follows:
1. DESCRIPTION OF SERVICES. Beginning on the Effective Date, entrenet will
provide the services, (collectively, the "Services") as described in
Exhibit A attached hereto and incorporated herein by reference.
2. PERFORMANCE OF SERVICES. The manner in which the Services are to be
performed and the specific hours to be worked by entrenet shall be
determined by entrenet. entrenet shall, and the Company will rely on
entrenet's promise to work as many hours as may be reasonably necessary to
fulfill entrenet's obligations under this Agreement.
3. PAYMENT. Company will pay a fee to entrenet for the Services in an amount
and under terms and conditions as described in Exhibit A.
4. TRANSACTION. For purposes of this agreement, the term "Transaction" shall
mean (except as set forth in Exhibit B), whether in one or a series of
transactions entered into subsequent to this agreement: Any capital
financing, including without limitation, any financing for debt, equity,
capital stock (common or preferred), convertible instruments, lines of
credit and secured and/or unsecured debt; Any merger/acquisition activity
including without limitation, (i) the acquisition, directly or indirectly,
through purchases, sales, or otherwise, of any or all portions of the
securities of the Company by an investor or (ii) any merger, consolidation,
reorganization, recapitalization, restructuring or other business
combination involving the Company and an investor.
5. CONSIDERATION. For purposes of this agreement, the term "Consideration"
means the total proceeds and other consideration paid and to be paid or
contributed directly or indirectly, in connection with a Transaction (which
consideration shall be deemed to include amounts paid or to be paid into
escrow) to the Company and its shareholders, including, without limitation:
(i) cash; (ii) notes, securities, and other property (including all
options, warrants or other instruments or arrangements convertible into or
exercisable for any of the foregoing) at the fair market value thereof;
(iii) liabilities assumed; (iv) payments to be made in installments; (v)
amounts paid or payable under management, consulting, supply, service,
distribution, technology transfer or licensing agreements, and real
property or equipment lease agreements, and agreements not to compete, and
other similar arrangements (including such payments to management), entered
into other than in the ordinary course of business; and (vi) contingent
payments (whether or not related to future earnings or operations). The
fair market value of non-cash consideration consisting of securities shall
be determined based upon (A) the closing sale price for such securities on
the
registered national securities exchange providing the primary market
therein on the last trading day prior to the date of receipt thereof by the
Company or its shareholders, (B) if such securities are not so traded, the
average of the closing bid and asked prices, as reported by the National
Association of Securities Dealers Automated Quotation System on the last
trading day prior to the date of receipt thereof by the Company or its
shareholders, or (C) if such securities are not so traded or reported,
agreement between the Company and entrenet. The fair market value of any
non-cash Consideration other than securities shall be determined by
agreement of the Company and entrenet. If all or any portion of the
Consideration is to be paid over time, then that portion of the Transaction
Fee attributable thereto shall be payable, in the sole discretion of
entrenet, either (i) as and when such payments are made or (ii) upon
consummation of a Transaction, calculated based on the present value of
such Consideration utilizing a discount rate of 7% per annum.
6. ACCOUNTING AND INSPECTION RIGHTS. For all compensation referred to in
Exhibit A, it is further agreed that Company shall maintain written records
in sufficient detail for purposes of determining the amount of Fees due
entrenet. Company shall provide to entrenet a written accounting that sets
forth the manner in which Fee payments were calculated. Upon 15 days
notice, entrenet or entrenet's agent shall have the right to inspect
Company's records for the limited purpose of verifying the calculation of
Fee payments, subject to such restrictions as Company may reasonably impose
to protect the confidentiality of the records. Such inspections shall be
made at the company's principal place of business during regular business
hours as may be set by the Company.
7. EXPENSE REIMBURSEMENT. entrenet shall be entitled to reimbursement from
Company as described in Exhibit A.
8. TERM/TERMINATION. This Agreement shall be effective upon signing and shall
have an initial term and such renewal terms as shall be described in
Exhibit A. The termination of this engagement is also defined in Exhibit A.
9. RELATIONSHIP OF PARTIES. It is understood by the parties that entrenet is
an independent contractor with respect to Company, and not an employee of
Company. Company will not provide fringe benefits, such as health insurance
benefits, paid vacation, or any other employee benefit, for the benefit of
entrenet.
10. INDEMNIFICATION AND CONTRIBUTION. (a) If, in connection with the services
or matters that are the subject of this agreement, entrenet becomes
involved in any capacity in any action or legal proceeding, the Company
agrees to reimburse entrenet, its affiliates and their respective
directors, officers, employees, representatives and controlling persons
(each an "Indemnified Person") promptly upon request for all expenses
(including without limitation, fees and disbursements of legal counsel and
the cost of investigation and preparation) as they are incurred. In the
event a determination is made to the effect set forth below holding that
entrenet is not entitled to indemnification hereunder, entrenet shall
promptly refund to the Company all amounts advanced under this Section in
respect of reimbursement of expenses. The Company also agrees to indemnify
and hold each Indemnified Person harmless against all losses, claims
damages or liabilities, joint or severable (collectively, "Damages"), to
which such Indemnified Person may become subject (i) arising out of or
based upon any untrue statement or alleged untrue statement of a material
fact contained in any offering materials or any other written or oral
communication provided to any investor of securities of the Company or
arising out of or based upon the omission or alleged omission to state in
any such document or communication a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading; or (ii) in
connection with the services or matters which are the subject of this
agreement, provided that the Company shall not be liable under the
foregoing indemnity in respect of any Damages to the extent that a court
having jurisdiction shall have determined by a final judgment (not subject
to further appeal) that such damages resulted directly
and primarily from the gross negligence or willful misconduct of entrenet
or any other Indemnified Person. The Company also agrees that no
Indemnified Person shall have any liability to the Company for or in
connection with this engagement, except for any liability that results
directly and primarily from the gross negligence or willful misconduct of
the Indemnified Person. (b) The Company and entrenet agree that if, for any
reason, any indemnification sought pursuant to this Section is unavailable
or is insufficient to hold any Indemnified Person harmless, then, whether
or not entrenet is the person entitled to indemnification, the Company and
entrenet shall each contribute to amounts paid or payable in respect of the
Damages for which such indemnification is unavailable or insufficient in
such proportion as if appropriate to reflect (i) the relative benefits to
the Company, on the one hand, and entrenet, on the other and (ii) their
relative fault, in connection with the matters as to which such Damages
relate, as well as any relevant equitable considerations; provided that in
no event shall the amount to be contributed by entrenet exceed the amount
of fees actually received by entrenet hereunder (excluding any amounts
received by entrenet as a reimbursement of expenses). The Company and
entrenet agree to consult in advance with one another with respect to the
terms of any proposed waiver, release or settlement of any claim, action or
proceeding to which entrenet or an Indemnified Person may be subject as a
result of the matters contemplated by this agreement and further agree not
to enter into any such waiver, release or settlement without the prior
written consent of one another (which consent shall not be unreasonably
withheld), unless such waiver, release or settlement includes an
unconditional release of entrenet or such indemnified Person, as the case
may be, from all liability arising out of such claim, action or proceeding.
(c) The agreements of the Company under this Section shall be in addition
to any liabilities the Company may otherwise have and shall apply whether
or not entrenet or any other Indemnified Person is a formal party to any
claim, action or legal proceedings. ANY RIGHT TO A TRIAL BY JURY WITH
RESPECT TO ANY CLAIM FOR INDEMNIFICATION OR CONTRIBUTION HEREUNDER OR IN
RESPECT OF ANY CLAIM, ACTION OR LEGAL PROCEEDING ARISING OUT OF OR RELATED
TO THE SERVICES OF entrenet HEREUNDER OR IN ANY OTHER MANNER IS HEREBY
WAIVED BY EACH INDEMNIFIED PARTY AND BY THE COMPANY.
11. COOPERATION, CONFIDENTIALITY, ETC. (a) The Company shall furnish entrenet
with all information and data which entrenet shall reasonably deem
appropriate in connection with its activities on the Company's behalf, and
shall provide entrenet full access to the Company's officers, directors,
employees and professional advisors. Further, the Company shall involve
entrenet in all discussions between the Company and potential investors and
shall make available to entrenet all information regarding potential
investors which the Company receives from any source whatsoever. The
Company recognizes and confirms that entrenet in acting pursuant to this
engagement will be using information in public reports and other
information provided by others, including information provided by the
Company, and that entrenet does not assume responsibility for, and may rely
without independent verification upon, the accuracy or completeness of any
such information. (b) the Company agrees that entrenet's advice is for the
use and information of the Company's management and Board of Directors only
and the Company will not disclose such advice to others (except the
Company's professional advisors and except as required by law) or summarize
or refer to such advice without, in each case, entrenet's prior written
consent. Notwithstanding anything to the contrary contained in the
foregoing, in the event the Company is required by law to make any filings
with any governmental authority (including without limitation the
Securities and Exchange Commission) which mention entrenet or any
disclosure to the holder of its securities concerning entrenet, the Company
shall if practible make an effort to afford entrenet the opportunity to
review such disclosure in advance and to approve the form thereof, such
approval not to be unreasonably withheld or delayed. entrenet agrees that
it will not, without the prior written consent of the Company, disclose, to
any third party any confidential information provided by the Company to
entrenet in connection with this engagement, except to the extent (i) such
disclosure is required by applicable law, regulation or legal process, (ii)
such information becomes publicly known other than as a result of the
breach by entrenet of its obligations set forth in this sentence, and (iii)
such disclosure is requested or required by any bank regulatory authority
having jurisdiction over entrenet.
12. OTHER TRANSACTIONS. The Company acknowledges that entrenet and its
affiliates may have and may in the future have investment and commercial
banking, trust and other relationships with parties other than the Company,
which parties may have interests with respect to a Transaction. Although
entrenet in the course of such other relationships may acquire information
about the Transaction, potential investors or such other parties, entrenet
shall have no obligation to disclose such information to the Company or to
use such information on the Company's behalf. Furthermore, the Company
acknowledges that entrenet may have fiduciary or other relationships
whereby entrenet may exercise voting power over securities of various
persons, which securities may from time to time include securities of the
Company, potential investors or to others with interests with respect to a
Transaction. The Company acknowledges that entrenet may exercise such
powers and otherwise perform its functions in connection with such
fiduciary or other relationships without regard to its relationship to the
Company hereunder.
13. ACKNOWLEDGMENT OF SERVICES PROVIDED. entrenet may include descriptions of
services provided by entrenet to the Company in entrenet's promotional
materials. entrenet shall also have the right to place notices
("Tombstones") in financial and other newspapers and journals at entrenet's
own expense describing its services to Company under this Agreement.
entrenet may not otherwise publicly refer to the Company without the
Company's prior consent.
14. NOTICES. All notices required or permitted under this Agreement shall be in
writing and shall be deemed delivered when delivered in person or deposited
in the United States mail, first class postage prepaid, addressed as
follows:
IF for Company:
U.S. Wireless Data, Inc.
Xxxx Xxxxx
Chief Executive Officer
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Fax - 000-000-0000
IF for entrenet:
entrenet Group, LLC
Xxxx Xxxxxxxxxx
Chief Legal and Tax Officer
0000 Xxxxxxxxxx Xxxxxxxxx, Xxxxx 000 Xxxxxxxx, XX 00000 Fax -
000-000-0000 Email - xxxx@xxxxx.xxx
Engagement Agreement
Such addresses may be changed from time to time by either party by
providing written notice to the other in the manner set forth above.
15. ARBITRATION AND CONSENT TO JURISDICTION. Any dispute and/or controversy
relating to or arising from the interpretation and/or application of this
Agreement shall be submitted at the request of the Company or entrenet to a
neutral arbitrator selected by the parties from the J.A.M.S/Endispute panel
of arbitrators for a determination which shall be final and binding as to
the parties thereto. Arbitration shall take place in Petaluma, located in
the county of Sonoma, state of California for a determination that shall be
final and binding as to the parties thereto. The decision and award of the
arbitrator may include the cost of the arbitration proceedings and may
include reasonable attorney fees for the successful party. The arbitration
shall be conducted in accordance with California Arbitration Act (CCP
Section 1280 et seq.) and not by court action except as provided by
California law for the judicial review of arbitration proceedings. Nothing
herein contained shall be deemed to affect the rights of any Party to serve
process in any manner other than as permitted by law.
16. ENTIRE AGREEMENT. This Agreement, along with any Exhibits attached hereto,
contains the entire agreement of the parties with respect to the subject
matter and supersedes any other agreement whether oral or written which are
not fully expressed herein, except for carryover provisions of any previous
executed agreements between entrenet and Company.
17. AMENDMENT. This Agreement may be modified or amended if the amendment is
made in writing and is signed by both parties.
18. SEVERABILITY. If any provision of this Agreement shall be held to be
invalid or unenforceable for any reason, the remaining provisions shall
continue to be valid and enforceable. If a court finds that any provision
of this Agreement is invalid or unenforceable, but that by limiting such
provision it would become valid and enforceable, then such provision shall
be deemed to be written, construed, and enforced as so limited.
19. WAIVER OF CONTRACTUAL RIGHT. The failure of either party to enforce any
provision of this Agreement shall not be construed as a waiver or
limitation of that party's right to subsequently enforce and compel strict
compliance with every provision of this Agreement.
20. APPLICABLE LAW. This Agreement shall be governed by the laws of the State
of California, excluding that body of law known as conflict of laws.
"Company"
By: /s/ Xxxxxx X. Xxxxxxxxx
---------------------------
Xxxxxx X. Xxxxxxxxx
Chief Financial Officer
Date Executed: March 12, 1998
entrenet Group, LLC
By: /s/ Xxxx Xxxxxxxxxx
-----------------------
Xxxx Xxxxxxxxxx
Chief Legal & Tax Officer
Date Executed: March 12, 1998
EXHIBIT A
ADVISORY SERVICES PROVIDED BY entrenet
As a corporate advisor, entrenet will use its best efforts to assist Company in
achieving a successful Transaction. Such Transaction, as defined in paragraph
four (4) of this agreement, includes without limitation: any capital financing,
debt financing, and/or merger/acquisition transactions.
entrenet will act as corporate advisor in providing services to the management
of the Company. Services may include advice and counsel in the following areas
(all final decisions to be solely determined by the Company):
Strategic planning, corporate positioning, and business plan
development.
Selection, negotiations, and management of investment bankers,
placement agents, brokers and finders as may be required.
Financing and Merger & Acquisition strategies
Financial forecasts, private placement documentation, public
offering documents, financial meeting presentation materials
("Road Show"), and similar documentation.
Identification and selection of market makers to support the
Company's stock. Identification and selection of lenders and
other debt financing parties.
Identification and selection of equity investors.
Identification and selection of strategic partnerships,
acquisition and merger candidates.
Organizational strategy
Executive search, recruitment & placement.
entrenet will not act as a broker, but will assist in locating brokerage
services if required. entrenet will not participate in general advertising or
solicitation of the Company. Investors brought to the Company will be accredited
investors to the best of entrenet's knowledge.
entrenet may provide additional direct consulting services to the Company beyond
its role as corporate advisor (egs. business plan preparation, corporate
presentation development, financial pro-forma preparation, private-placement or
public offering administrative/contractual/financial services, interim senior
management, etc.) at the Company's request. Such additional direct consulting
services would be charged at entrenet's prevailing consulting rates at the time
of the assignment(s) or as agreed to separately in the future.
entrenet COMPENSATION.
TRANSACTIONS.
Debt. Upon the successful completion of a Debt Transaction, as defined in
paragraph 4 of this agreement, initiated at any time prior to the
termination of the contract, except for sources whose terms are modified on
Exhibit B, the fees paid to entrenet shall be two percent (2%) (payable in
cash) of the total facility. At the Company's Option in lieu of cash,
payment may be in the form of a 10% Note as described below. The Company
shall grant to entrenet a five-year warrant to purchase shares of Company's
common stock on terms and conditions as defined below, the value of the
purchasable shares shall be equal to the value of all compensation paid to
entrenet under this paragraph.
Equity. Upon the successful completion of an Equity or Convertible Debt
Transaction, as defined in paragraph 4 of this agreement, initiated at any
time prior to the termination of the contract, except for the financing
sources whose terms are modified on Exhibit B, the fees paid to entrenet
shall be seven percent (7%) (payable in cash) of gross Consideration as
defined in paragraph 5 of this agreement. However, should there be a
Licensed Investment Banker who receives compensation from the Company for
the placement of the Company equity, the fees paid to entrenet shall be two
and one half percent (2 1/2%) (payable in cash) of gross Consideration as
defined in paragraph 5 of this agreement. The Company shall grant to
entrenet a five-year warrant to purchase shares of Company's common stock
on terms and conditions as defined below, the value of the purchasable
shares shall be equal to the value of all compensation paid to entrenet
under this paragraph.
Mergers & Acquisitions. Upon the successful completion of a Merger,
Acquisition or other business combination Transaction, as defined in
paragraph 4 of this agreement, initiated at any time prior to the
termination of the contract, except for the acquisition of Maverick
International Processing Services, Inc., the fees paid to entrenet shall be
five percent (5%) (payable in cash) of gross Consideration as defined in
paragraph 5 of this agreement. However, should there be a Licensed
Investment Banker who receives compensation from the Company for
facilitating the transaction, the fees paid to entrenet shall be three
percent (3%) (payable in cash) of gross Consideration as defined in
paragraph 5 of this agreement.
For the acquisition of Maverick International Processing Services, Inc.,
the fees paid to entrenet shall be two percent (2%) (payable in cash) of
gross Consideration as defined in paragraph 5 of this agreement. For this
transaction only, payment shall be in the form of a 10% Note as described
below.
For all transactions under this Mergers & Acquisition Section, the Company
shall grant to entrenet a five-year warrant to purchase shares of Company's
common stock on terms and conditions as defined below, the value of the
purchasable shares shall be equal to the value of all compensation paid to
entrenet under this paragraph.
ADVISORY SEVICES.
At signing of this engagement agreement, entrenet shall earn compensation
of $60,000 for the six-month term. Payment shall be in the form of a 10%
Note as described below. The Company shall grant to entrenet a five-year
warrant to purchase shares of Company's stock on terms and conditions as
defined below, equal to the value of all compensation paid to entrenet
under this paragraph.
EXECUTIVE PLACEMENT.
In addition to other applicable fees, if entrenet introduces an
executive-level candidate for management, who is subsequently hired by
Company during the term of this Agreement (or within two years from
introduction), then entrenet's fee shall be thirty percent (30%) (payable
in cash) of the candidate's total first year Consideration.
FORN OF WARRANTS.
The warrants shall be a five-year warrant to purchase shares of Company's
Common Stock and shall contain all standard provisions, as well as stock
split adjustments and piggyback registration provisions. The exercise price
shall be equal to the lower of market or: (i) for fees earned in
conjunction with a transaction -- the purchase price of the stock issued in
conjunction with any such
transaction; (ii) for fees earned in conjunction with advisory services and
executive placement services -- $5.75 per share. Warrants related to
advisory services are due and payable immediately upon execution of this
Agreement. All other warrants are due and payable upon completion of the
corresponding event. The form of the Warrant is attached as Exhibit A-1
FORM OF NOTES PAYABLE.
Notes shall take the form of non-transferable Note with 10% simple interest
rate, with interest and principal due at maturity. Maturity shall be the
earlier of one-year (1) or upon the receipt of "Cumulative Proceeds" of
$2,000,000 from equity or convertible debt financing transactions from any
source. For this purpose of determining Cumulative Proceeds transactions on
Exhibit B are excluded from proceeds. The form of the Note is attached as
Exhibit A-2
ESCROW.
All Fees, Common Stock Warrants, or other consideration earned in
conjunction with a transaction are to be paid through the escrow account at
time of closing of the transaction.
EXPENSE REIMBURSEMENT
NON-ACCOUNTABLE EXPENSE ADVANCE.
To offset local auto travel, long-distance telephone calls, postage,
delivery, copying, faxing and other office costs, entrenet shall be
advanced a non-accountable $1500 for the six-month term. Form of payment
shall be $750 payable in cash upon signing of this agreement. The balance
of $750 is payable in cash upon completion of a Transaction, or quarterly
thereafter, whichever comes first.
PRE-APPROVED EXPENSES.
Additionally, entrenet shall be entitled to reimbursement from Company for
the following pre-approved "out-of-pocket" expenses: travel expenses,
airfare, hotel, meals, printing & binding or other expenses as shall be
mutually agreed upon.
TERM
The term of the Agreement shall be six (6) months from date of signing. The
Agreement shall automatically renew for successive six (6) month terms, unless
either party provides 60 days written notice to the other party prior to either
the termination of the applicable initial term or any renewal terms.
Upon termination of this Agreement, payments under this paragraph shall cease;
provided, however, that entrenet shall be entitled to payments for periods or
partial periods that occurred prior to the date of termination and for which
entrenet has not yet been paid. For any sources introduced to the company prior
to termination, the above entrenet compensation schedule will remain in effect
for two (2) years following the termination date of this agreement.
For any sources introduced to the company prior to termination, the above
entrenet compensation schedule will remain in effect for two (2) years following
the termination date of this agreement.
EXHIBIT A-1
WARRANT
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER APPLICABLE STATE
SECURITIES LAWS AND HAVE BEEN TAKEN FOR INVESTMENT PURPOSES ONLY AND NOT WITH A
VIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION THEREOF. THE SECURITIES
MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION AND
QUALIFICATION WITHOUT, EXCEPT UNDER CERTAIN SPECIFIC LIMITED CIRCUMSTANCES, AN
OPINION OF COUNSEL FOR THE HOLDER, CONCURRED IN BY COUNSEL FOR THE COMPANY THAT
SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED.
Number:_____ _________ Shares
WARRANT TO PURCHASE COMMON STOCK
U.S. Wireless Data, Inc, a Colorado corporation (the "Corporation"), hereby
grants to entr[THETA]net Group LLC (the "Holder") the right to purchase from the
Corporation 10,435 shares of the common stock of the Corporation (the "Warrant
Shares"), subject to the terms and conditions set forth below. This Warrant is
issued in connection with and subject to certain rights, privileges and
restrictions set forth in the Engagement Agreement entered into between the
Holder and the Corporation (the "Engagement Agreement") as of March 12, 1998.
1) Term. This Warrant may be exercised into fully paid and nonassessable shares
of the Corporation's Common Stock, at the option of the Holder, at any time and
from time to time in whole or in part during the five years ending March 11,
2003 (the "Exercise Period"), subject to certain stand-off limitations and
extensions as set forth in Section 9 (below).
2) Purchase Price. This Warrant shall be exercisable into the Corporation's
Common Stock at a price equal to the lower of _________________________ per
share, as adjusted pursuant to Section 9 below.
3) Exercise of Warrant. This Warrant may be exercised in whole or in part, but
not for less than one hundred (100) Warrant Shares (or such lesser number of
Warrant Shares as may at the time of exercise constitute the maximum number
exercisable) and in excess of 100 Warrant Shares in increments of 100 Warrant
Shares. It is exercisable at any time during the Exercise Period by the
surrender of the Warrant to the Corporation at its principal office together
with the Notice of Exercise annexed hereto duly completed and executed on behalf
of the Holder, accompanied by the amount, in full, of the aggregate purchase
price of the Warrant Shares in immediately available funds. The Corporation
agrees that the Warrant Shares so purchased shall be issued as soon as
practicable thereafter, and that the Holder shall be deemed the record owner of
such Warrant Shares as of and from the close of business on the date on which
this Warrant shall be surrendered together with payment in fill as required
above.
4) Cashless Exercise Option. Notwithstanding the foregoing, in lieu of
exercising this Warrant for cash, the Holder may elect to receive Warrant Shares
equal to the value of this Warrant (or equal to the value of the portion of the
Warrant Shares thereof being cancelled) which shall be that number of Warrant
Shares equal to the excess, if any, by which the Fair Market Value of the
aggregate Warrant Shares exceeds the aggregate Exercise Price (determined by
subtracting the Warrant Exercise Price for one Warrant Share on the exercise
date from the Fair Market Value of one Warrant Share on the exercise date
multiplied by the number of Warrant Shares exercised) on the exercise date. Fair
Market Value of one share of a Warrant Share shall mean the fair market value as
determined by the parties in good faith, taking into account publicly quoted
prices for the Corporation's Common Stock if such are available. In the event of
a cashless exercise, the underlying Warrant must be surrendered, and no new
Warrant shall be issued. 5) Fractional Interest. The Corporation shall not be
required to issue any fractional shares on the exercise of this Warrant.
6) Warrant Confers No Rights of Shareholder. The Holder shall not have any
rights as a shareholder of the Corporation with regard to the Warrant Shares
prior to actual exercise resulting in the purchase of the Warrant Shares.
7) Investment Representation. Neither this Warrant nor the Warrant Shares
issuable upon the exercise of this Warrant have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or any state
securities laws. The Holder acknowledges by acceptance of the Warrant that (a)
he has acquired this Warrant for investment and not with a view to distribution;
and either (b) he has a pre-existing personal or business relationship with the
Corporation, or its executive officers, or by reason of his business or
financial experience be has the capacity to protect his own interests in
connection with the transaction; and (c) he is an accredited investor as that
term is defined in Regulation D promulgated under the Securities Act. The Holder
agrees that any Warrant Shares issuable upon exercise of this Warrant will be
acquired for investment and not with a view to distribution and such Warrant
Shares will not be registered under the Securities Act and applicable state
securities laws and that such Warrant Shares may have to be held indefinitely
unless they are subsequently registered or qualified under the Securities Act
and applicable state securities laws or, based on an opinion of counsel
reasonably satisfactory to the Corporation, an exemption from such registration
and qualification is available. The Holder by acceptance hereof, consents to the
placement of the following restrictive legends or similar legends, on each
certificate to be issued to the Holder by the Corporation in connection with the
issuance of such Warrant Shares:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER ANY STATE SECURITIES
LAW, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS (A) There
IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR LAWS COVERING SUCH
SECURITIES, OR (B) THE HOLDER RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF
THE SECURITIES SATISFACTORY TO THE CORPORATION, STATING THAT SUCH SALE,
TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND
THE QUALIFICATION REQUIREMENTS UNDER APPLICABLE STATE LAW.
8) Reservation of Shares. The Corporation agrees at all times during the
Exercise Period to have authorized and reserved, for the exclusive purpose of
issuance and delivery upon exercise of this Warrant, a sufficient number of
shares of its common stock to provide for the exercise of the rights represented
hereby.
9) Adjustment for Re-Classification of Capital Stock. If the Corporation at any
time during the Exercise Period shall, by subdivision, combination or
re-classification of securities, change any of the securities to which purchase
rights under this Warrant exist under the same or different number of securities
of any class or classes, this Warrant shall thereafter entitle the Holder to
acquire such number and kind of securities as would have been issuable as a
result of such change with respect to the Warrant Shares immediately prior to
such subdivision, combination, or reclassification. If shares of the
Corporation's common stock are subdivided into a greater number of shares of
common stock, the purchase price for the Warrant Shares upon exercise of this
Warrant shall be proportionately reduced and the Warrant Shares shall be
proportionately increased; and conversely, if shares of the Corporation's common
stock are combined into a smaller number of common stock shares, the price shall
he proportionately increased, and the Warrant Shares shall be proportionately
decreased.
10) The Corporation's Obligation to Register. If the Corporation at any time
proposes to initiate a registration of its securities under the Securities Act
of 1933, as amended (the "Securities Act") and thereafter to register any of its
securities under the Securities Act (other than a registration effected solely
to implement an employee benefit plan, a transaction to which Rule 145 of the
Commission is applicable or any other form or type of registration in which
Registrable Securities cannot be included pursuant to Commission rule or
practice), it will give written notice to Holder of this Warrant of its
intention to do so. If such registration is proposed to be on a form which
permits inclusion of the Stock underlying the exercise of this Warrant, upon the
written request from any Holder within 20 days after transmittal by the
Corporation to the Holder of such notice, the Corporation will, subject to the
limits contained in this Section, use its best efforts to cause all such Stock
underlying the exercise of this Warrant to be registered under the Securities
Act and qualified for sale under any relevant state blue sky law, all to the
extent requisite to permit such sale or other disposition by Holder of the Stock
so registered. Notwithstanding any other provision of this Section, if the
underwriter managing such registration notifies the Holder in writing that
market or economic conditions limit the amount of securities which may
reasonably be expected to be sold, Holder will at a minimum be allowed to
register their Stock pro rata based on the ratio of the total number of shares
of Stock to be offered for sale by the Corporation to the total shares
outstanding just prior to the offering.
11) Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the
Corporation of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of any Warrant or stock certificate, and in case of
loss, theft or destruction, of indemnity or security reasonably satisfactory to
it, and upon reimbursement to the Corporation of all reasonable expenses
incidental thereto, and upon surrender and cancellation of such Warrant or stock
certificate, if mutilated, the Corporation will make and deliver a new Warrant
or stock certificate of like tenor and dated as of such cancellation, in lieu of
this Warrant or stock certificate.
12) Assignment. The Holder of this Warrant shall not assign or transfer this
Warrant without the consent of the Corporation; provided however, that the
Holder, if a limited liability company, may assign this Warrant to its Members
without the consent of the Corporation. The Holder of this Warrant shall not
assign his Warrant unless such assignment is in compliance with applicable state
and federal securities laws. In giving its consent to an assignment, the
Corporation may request an opinion of counsel reasonably acceptable to it that
such transfer is in compliance with all applicable state and federal securities
laws.
13) Governing Law. This Warrant shall be governed by and construed in accordance
with the laws of the State of California applicable to contracts between
California residents entered into and to be performed entirely within the State
of California.
14) Amendments. Any term of this Warrant may be amended with the written consent
of the Company and the holders of warrants representing not less than a majority
in interest (50% +) of the shares of Common Stock issuable and issued upon
exercise of all Series A Warrants.
15) Notices. Unless otherwise provided, any notice required or permitted under
this Warrant shall be given in writing and shall be deemed effectively given
upon personal delivery to the party to be notified by hand or professional
courier service or five (5) days after deposit with the United States Post
Office, by registered or certified mail, postage prepaid and addressed to the
party to be notified at the address indicated for such party in the Subscription
Agreement, or at such other address as such party may designate by ten (10)
days' advance written notice to the other parties.
16) Attorneys' Fees. If any action at law or in equity is necessary to enforce
or interpret the terms of this Warrant, the prevailing party shall be entitled
to reasonable attorneys' fees, costs and disbursements in addition to any other
relief to which such party may be entitled.
Executed as of _________________, 199___.
By: __________________________
Xxxx Xxxxx
Chief Executive Officer
The name and address of the registered Holder of this Note is:
entrenet Group LLC
0000 Xxxxxxxxxx Xxxx., Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Fax 000-000-0000
Email xxxx@xxxxx.xxx
NOTICE OF EXERCISE
To: ______________________
1. The undersigned hereby elects to purchase ______ shares of Common Stock of
____________________________, pursuant to the terms of the attached Warrant and
tenders herewith payment of the purchase price for such shares in full.
2. In exercising this Warrant, the undersigned hereby confirms and acknowledges
that the shares of Common Stock are being acquired solely for the account of the
undersigned and not as a nominee for any other party, or for investment, and
that the undersigned will not offer, sell or otherwise dispose of any such
shares of Common Stock except under circumstances that will not result in a
violation of the Securities Act of 1933, as amended, or any state securities
laws.
3. Please issue a certificate representing said shares of Common Stock in the
name of the undersigned:
4. Please issue a new Warrant for the unexercised portion of the attached
Warrant in the name of the undersigned:
Dated: ___________________________ HOLDER
By: _____________________________
_________________________________
(Print Name & Title)
Exhibit A-2
THIS NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER ANY
STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED ASSIGNED OR HYPOTHECATED
UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING THIS
NOTE AND/OR SUCH SECURITIES, OR THE HOLDER RECEIVES AN OPINION OF COUNSEL FOR
THE HOLDER OF THE NOTE AND/OR SUCH SECURITIES SATISFACTORY TO THE CORPORATION
STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND THE
QUALIFICATION REQUIREMENTS UNDER STATE LAW.
U.S. WIRELESS DATA, INC.
10%, UNSECURED and NONASSIGNABLE,
PROMISSORY NOTE
DUE ______________
$-------------- ---------------
1) Obligation. FOR VALUE RECEIVED, U.S. Wireless Data, Inc., a Colorado
corporation (hereinafter called the "Corporation"), hereby promises to pay
entr[THETA]net Group LLC (hereinafter called the "Holder") on the earlier of
________________ or upon a "Financing Event", (the "Payment Date") the principal
sum of _________________ Dollars ($_________) and interest on such principal sum
from the date hereof at the annual rate of ten percent (10%) per annum (based on
a 360-day year, 30-day month) until payment in full of principal. A Financing
Event shall have been considered to have occurred upon the Corporation having
received a gross proceeds of $2,000,000, cumulative from the date of this note,
from the sale of the Corporations Equity Securities, instruments convertible
into Equity and the sale of the Stock Repurchase Rights.
2) Medium of Payment. The principal and interest on this promissory note (this
"Note") are payable in lawful money of the United States of America at the
Holder's address set forth below, or at such other address as the Holder hereof
may from time to time designate to the Corporation in writing.
3) Prepayment. The Corporation may prepay this Note in whole or in part at any
time prior to due date of this Note.
4) Default.
a. Events of Default. Without notice, except as expressly provided
herein, the following will be deemed to be events of default:
i. Covenants. Failure on the part of the Corporation to observe or
perform any of
the covenants or agreements on the part of the Corporation contained in this
Note after (A) written notice of such failure, requiring the Corporation to
remedy the same, has been given to the Corporation by the Holder, and (B) such
failure has continued without remedy for a period of thirty days; or
ii. Receivership. The entry of a decree or order of a court having
jurisdiction in the matter for the appointment of a receiver and such
decree or order has continued in force undischarged or unstayed for a
period of one hundred twenty days; or
iii. Bankruptcy. The Corporation institutes proceedings to be adjudged
a voluntary bankrupt, or consents to the filing of bankruptcy proceedings
against it, or files a petition or answer or consent seeking reorganization
under the National Bankruptcy Act or any other similar or applicable
federal or state law, or consents to the filing of any such petition, or
consents to the appointment of a receiver, liquidator, or trustee in
bankruptcy, or makes a general assignment for the benefit of creditors, or
admits in writing its inability to pay its debts generally as they become
due; or
iv. Attachment. Any judgment, writ, or warrant of attachment or of any
similar process in an amount in excess of $100,000 is entered or filed
against the Corporation or against any of its property or assets and
remains unpaid, unvacated, unbonded or unstayed for a period of 120 days.
b. Acceleration of Maturity. If any one or more of the foregoing events of
default occurs, the Holder, by notice in writing to the Corporation, may declare
the principal of and all accrued interest on this Note then outstanding
immediately due and payable without further notice or demand; provided, however,
that at any time after such declaration the same may be rescinded and such event
of default may be waived by the Holder by written notice to the Corporation.
c. Payment on Acceleration. Upon any such acceleration of the maturity of
this Note, the Corporation will within 90 days pay to the Holder the entire
principal balance unpaid on this Note, together with accrued interest thereon to
the date of such payment.
d. Failure to Pay. If the Corporation fails to make payment to the Holder
as provided in the preceding Subsection (Payment on Acceleration), the Holder
will be entitled and empowered to take such measures as may be appropriate to
enforce the Corporation's obligations under this Note, by judicial proceedings
or otherwise. If suit is brought to enforce payment of this Note, the
Corporation promises to pay reasonable attorneys' fees to be fixed by the Court.
5) No Assignment. This Note is unsecured, nontransferable and nonassignable.
Holder may not sell, assign, pledge, hypothecate or otherwise transfer this Note
6) Notices. Any communication or notices may be delivered or mailed to the
offices of the Corporation at its principal place of business and to the Holder
at the Holder's address set forth below, or to such other addresses as the
Corporation, or Holder, may designate in writing from time to time.
7) Applicable Law. This Note shall be governed by and construed in accordance
with the laws of the State of California applicable to contracts between
California residents entered into and so be performed entirely within the State
of California.
Executed as of ______________________
By: _______________________________
Xxxx Xxxxx
Chief Executive Officer
The name and address of the registered Holder of this Note is:
entrenet Group LLC
0000 Xxxxxxxxxx Xxxx., Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Fax 000-000-0000
Email xxxx@xxxxx.xxx
EXHIBIT B
EXCLUSION OF FINANCING SOURCES
Transactions from the following sources shall be excluded from the entrenet
Compensation section of Exhibit A.
Sale of options on common stock owned of record by Tillicombe International LDC.
Any investments by Officers or Directors and proceeds from the exercise of the
Company's Stock Option Plan.
GTE Finance for equipment financing.
Any short term Bridge Loans from Liviakis Financial Communications,Inc, Xxxx
Xxxxxxxx or Xxxxxx Xxxx.
Compensation to entrenet for Transactions from the following sources shall be
modified from the entrenet Compensation section of Exhibit A as follows:
entrenet's compensation for equity or convertible loan
Investments by Liviakis Financial Communications,Inc, Xxxx
Xxxxxxxx or Xxxxxx Xxxx, will be reduced from fee of seven percent
(7%) to a fee of two and one half percent (2.5%).
