-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Mtal73JQDkECP9B3JWoh+qM/B7YNn6Ir/86IV19LgxLFk1Y1PQ50rLErI4xJgIyT UIDmJ5P/8zEcwSPKnE918w== 0000941814-05-000014.txt : 20050516 0000941814-05-000014.hdr.sgml : 20050516 20050516171853 ACCESSION NUMBER: 0000941814-05-000014 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20050516 DATE AS OF CHANGE: 20050516 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: DATAWAVE SYSTEMS INC CENTRAL INDEX KEY: 0001000157 STANDARD INDUSTRIAL CLASSIFICATION: RADIO TELEPHONE COMMUNICATIONS [4812] IRS NUMBER: 980186455 STATE OF INCORPORATION: B0 FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-62097 FILM NUMBER: 05836031 BUSINESS ADDRESS: STREET 1: 13575 COMMERCE PARKWAY STREET 2: SUITE 110 CITY: RICHMOND STATE: A1 ZIP: V6V 2L1 BUSINESS PHONE: 6042951800 MAIL ADDRESS: STREET 1: 13575 COMMERCE PARKWAY STREET 2: SUITE 110 CITY: RICHMOND STATE: A1 ZIP: V6V 2L1 FORMER COMPANY: FORMER CONFORMED NAME: DATAWAVE VENDING INC DATE OF NAME CHANGE: 19950905 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: INTEGRATED DATA CORP CENTRAL INDEX KEY: 0000941814 STANDARD INDUSTRIAL CLASSIFICATION: RADIO TELEPHONE COMMUNICATIONS [4812] IRS NUMBER: 232498715 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 625 W. RIDGE PIKE STREET 2: SUITE C-106 CITY: CONSHOHOCKEN STATE: PA ZIP: 19428-1192 BUSINESS PHONE: 610-825-6224 MAIL ADDRESS: STREET 1: 625 W. RIDGE PIKE STREET 2: SUITE C-106 CITY: CONSHOHOCKEN STATE: PA ZIP: 19428-1192 FORMER COMPANY: FORMER CONFORMED NAME: CLARITI TELECOMMUNICATIONS INTERNATIONAL LTD DATE OF NAME CHANGE: 19980519 FORMER COMPANY: FORMER CONFORMED NAME: SIGMA ALPHA GROUP LTD DATE OF NAME CHANGE: 19951213 FORMER COMPANY: FORMER CONFORMED NAME: SIGMA ALPHA ENTERTAINMENT GROUP LTD /DE/ DATE OF NAME CHANGE: 19951213 SC 13D 1 itdd13d_11may05.txt DATAWAVE SCHEDULE 13D AMENDMENT 2 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 2)* - ----------------------------------------------------------------------------- (Name of Issuer) DataWave Systems, Inc. - ----------------------------------------------------------------------------- (Title of Class of Securities) Common Shares - ----------------------------------------------------------------------------- (CUSIP Number) 237921-20-0 - ----------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) Mr. David C. Bryan, President & CEO Integrated Data Corp. 625 W. Ridge Pike, Suite C-106 Conshohocken, Pennsylvania 19428-1192 Tel. (610) 825-6224 Ext 1701 - ----------------------------------------------------------------------------- (Date of Event Which Requires Filing of this Statement) May 11, 2005 If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Subsection 240.13d-1(e), 240.13d-1(f), or 240.13d-1(g), check the following box. [ ] Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Section 240.13d-7 for other parties to whom copies are to be sent. * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of the section of the Act, but shall be subject to all other provisions of the Act (however, see the Notes). CUSIP No. 237921-20-0 - ----------------------------------------------------------------------------- 1. Name(s) of Reporting Person(s). I.R.S. Identification Numbers of above person(s): Integrated Data Corp. ("IDC"), Federal Tax I.D. No. 23-2498715 - ----------------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (See Instructions): (a) (b) X - ----------------------------------------------------------------------------- 3. SEC Use Only - ----------------------------------------------------------------------------- 4. Sources of Funds (See Instructions): OO. No funds were required. As reported in a Current Report Form 8-K filed by IDC, IDC and DataWave Systems Inc ("DataWave") executed a Merger Break-up and Mutual Release Agreement (the "Break-up Agreement") on March 3, 2005. In accordance with the terms of this Agreement, DataWave agreed to pay IDC compensation of $470,000 in the form of $235,000 cash in immediately available funds and 2,937,500 shares of its common stock at the issue price of $0.08 per share (the "Compensation Shares") as a Merger Break-up fee in full and final settlement of any and all issues between them resulting from the decision of the Parties to abort the Merger. The DataWave Compensation Shares are subject to the restrictions on trading imposed by Rule 144 under the Securities Act of 1933. - ----------------------------------------------------------------------------- 5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Item 2(d) or 2(e): Not applicable. - ----------------------------------------------------------------------------- 6. Citizenship or Place of Organization: IDC is a Delaware corporation. - ----------------------------------------------------------------------------- Number of 7. Sole Voting Power: 24,909,530 Shares --------------------------------------------------------------- Beneficially 8. Shared Voting Power: 0 Owned by --------------------------------------------------------------- Each 9. Sole Dispositive Power: 24,909,530 Reporting --------------------------------------------------------------- Person 10. Shared Dispositive Power: 0 With - ----------------------------------------------------------------------------- 11. Aggregate Amount Beneficially Owned by Each Reporting Person: 24,909,530 - ----------------------------------------------------------------------------- 12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares: Not applicable. - ----------------------------------------------------------------------------- 13. Percent of Class Represented by Amount in Row (11): 53.2% - ----------------------------------------------------------------------------- 14. Type of Reporting Person: HC, CO. - ----------------------------------------------------------------------------- -2- ITEM 1. SECURITY AND ISSUER This statement relates to the common stock of the Issuer, DataWave Systems Inc. ("DataWave"), a Delaware corporation, having its principal executive offices at: Suite 110, 13575 Commerce Parkway Richmond, British Columbia V6V 2L1 CANADA ITEM 2. IDENTITY AND BACKGROUND This statement is filed by: (a) Integrated Data Corp. ("IDC") (b) 625 W. Ridge Pike, Suite C-106 Conshohocken, Pennsylvania 19428-1192 (c) IDC is a public company; its shares trade on the OTCBB under the trading Symbol "ITDD." Until November 2002, IDC was known as "Clariti Telecommunications International, Ltd." Under that name it filed for protection under provisions of Chapter 11 of the U.S. Bankruptcy Code on April 18, 2002, and emerged from Chapter 11 on November 12, 2002. (In re: Clariti Telecommunications International, Ltd., United State Bankruptcy Court, E.D.Pa. at Philadelphia, No. BKY 02-157817.) IDC is a non-operating U.S. holding company with interests in the U.S., Canada, the U.K., and Italy. IDC and its subsidiaries, including DataWave, offer a wide range of telecommunications wireless, point-of-sale activation, financial transaction, and other services. (d) IDC was organized in 1991, and since that time has not been subject to any criminal or administrative proceedings, with the exception of the Chapter 11 bankruptcy proceeding referred to in sub paragraph (c) above (the "Clariti Bankruptcy"). (e) Prior to the Clariti Bankruptcy, IDC (as Clariti) was involved in several civil litigation proceedings in the United States and also in the Republic of France. All of those matters have been resolved as part of the bankruptcy process. The French litigation proceeded to a judgment in favor of Clariti. At the present time IDC is not a party to any pending, or (to the knowledge of management) threatened litigation or administrative proceedings. (f) U.S., Delaware. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION The transaction reported herein did not require any funds on the part of IDC. No funds or other consideration were borrowed or otherwise obtained. As described in line 4 of the cover page, the reported shares are being issued to IDC by DataWave per the terms of the Break-up Agreement executed on March 3, 2005. The Break-up Agreement is attached as Exhibit A. -3- ITEM 4. PURPOSE OF TRANSACTION Prior to the transaction reported herein, IDC owned 50.1% of the issued and outstanding shares of DataWave. In January 2004, IDC and DataWave entered into exploratory discussions on merging the two companies with IDC being the surviving entity. An Agreement and Plan of Merger was executed on June 2, 2004. Due to the circumstances described in the Recitals of the Break-up Agreement (Exhibit A) and as reported in a Current Report Form 8-K dated November 9, 2004, IDC and DataWave mutually agreed to terminate the Agreement and Plan of Merger. As a result, the Merger Break-up and Mutual Release Agreement was executed on March 3, 2005 whereby DataWave agreed to reimburse IDC for its merger-related fees and expenses in the form of $235,000 cash and 2,937,500 newly issued shares of DataWave common stock. (a) This block of 2,937,500 shares of DataWave common stock brings IDC's ownership position to 24,909,530 shares, or a controlling interest of 53.2% of DataWave's issued and outstanding common shares. (b) In a related but independent transaction, IDC acquired a convertible Promissory Note from DataWave in the amount of $600,000 on February 1, 2005. The Promissory Note was issued as partial compensation for the termination (or "selling back") of the exclusive world-wide license, excluding the Americas, to make, sell, and use the DataWave trade name, technology, know- how, trade secrets and patents (the "DataWave International License") acquired by IDC in December 2002. (See the License Termination Agreement attached as Exhibit B.) In accordance with the terms of the Promissory Note, IDC, at its sole discretion, has the right to convert the $600,000 owed any time within the next two (2) years to shares of newly issued common stock of DataWave at a conversion price of $0.08 per share. If and when converted, this would increase IDC's ownership in DataWave by an additional 7,500,000 common shares bringing IDC's potential ownership position in DataWave to 32,409,530 shares, or a controlling interest of 59.7% of DataWave's issued and outstanding common shares (potentially 54,326,834). (c) Not applicable. (d) Not applicable. (e) As a result of this reported transaction, the Issuer's common shares outstanding increases by 2,937,500 to a total of 46,826,834 shares. If and when IDC decides to convert its Promissory Note from DataWave, DataWave outstanding shares will increase by an additional 7,500,000 bringing the total number of outstanding shares to potentially 54,326,834. (f) Not applicable (g) Not applicable (h) Not applicable (i) Not applicable (j) Only to the extent as set forth in (a) and (b) above. -4- ITEM 5. INTEREST IN SECURITIES OF THE ISSUER (a) 24,909,530 shares of common stock, which represents 53.2% of the issued and outstanding securities of the Issuer. (b) See Lines 7-10 of the Cover Page of this statement. (c) Not applicable. (d) Not applicable. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER With the exception of the agreements described in Item 4 above and attached as Exhibits A and B, there are no contracts, arrangements, understandings or relationships (legal or otherwise) in effect as of the date of this statement. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS Exhibit A: Merger Break-up and Mutual Release Agreement Exhibit B: License Termination Agreement Signature - --------- After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Conshohocken, Pennsylvania Integrated Data Corp. Dated: May 16, 2005 By: /s/David C. Bryan ----------------- David C. Bryan President & CEO -5- EX-99 2 itdd13d_11may05exhibit-a.txt EXHIBIT A EXHIBIT A To Integrated Data Corp's Schedule 13D filing dated May 16, 2005 MERGER BREAK-UP AND MUTUAL RELEASE AGREEMENT -------------------------------------------- THIS MERGER BREAK-UP AND MUTUAL RELEASE AGREEMENT ("Agreement") is entered into as of the 1st day of February, 2005 (the "Effective Date"), by and between Integrated Data Corp. ("IDC"), and DataWave Systems, Inc. ("DataWave"), both Delaware corporations (collectively, the "Parties"). Recitals A. IDC has owned 50.062% of DataWave's issued and outstanding shares, since January 2003, and accordingly, has accounted for its DataWave ownership in consolidated financial statements beginning with its fiscal year 2003 audited financial statements. B. In January 2004, the Parties entered into exploratory discussions with the goal of investigating the feasibility of merging the two companies into a single Delaware corporation whose shares would be listed on the NASD's Over-the-Counter Bulletin Board system ("OTCBB"). C. IDC and DataWave each employed Evans & Evans of Vancouver, BC, Canada, a firm of independent business appraisers, to separately value the two companies. Based upon these appraisal values, the concept of a merger was agreed in principle, and a merger price was determined in April 2004, whereby each approximately 11 shares of DataWave (not already owned by IDC) would be exchanged for 1 share of IDC (the "Merger Price"). D. The Parties each engaged separate corporate and securities counsel and independent auditors to effect the coordination, management, and consummation of the series of transactions that would provide for the (i) solicitation of proxies from the shareholders of both companies and providing each set of shareholders with disclosure documents in the form of a prospectus that had been reviewed and declared effective by the U.S. Securities and Exchange Commission (the "Commission"), (ii) moving of DataWave's domicile from the Territory of the Yukon, Canada, to the State of Delaware, United States, (iii) de-listing DataWave's shares from the Toronto Venture Exchange ("TVX"), where the shares had traded, (iv) holding of the requisite shareholders' meetings of each company, (v) merging DataWave with and into Integrated Data Corp. Acquisition, Inc., a wholly owned Delaware subsidiary corporation of IDC, formed for that purpose ("DataWave Acquisition"), (vi) paying the Merger Price in shares of IDC's common stock listed on the OTCBB, (vii) filing of registration statements and proxy solicitation materials with the Commission, the TVX, the NASD, and requisite U.S. state and Canadian provincial securities commissions, and (viii) filing of all required post-merger documents (all such above requirements hereby collectively referred to as the "Merger"). -1- E. The Parties' respective counsel jointly prepared a detailed agenda (the "Plan of Merger"), and set forth therein a proposed schedule that listed the several responsibilities of the Parties and their respective advisors in order to consummate the Merger. The Parties agreed that DataWave's Vancouver-based counsel would deal with issues relating to Canadian national and provincial law, and rules and regulations relating to the TVX, while IDC's Washington, DC-based counsel would attend to issues involving the Commission, Delaware state corporate issues, NASD and OTCBB listing requirements, rules, regulations, and issues relating to various United States state securities or "blue sky" laws. F. The Plan of Merger, inter alia, called for the holding in November 2004 of an Annual and Special General Meeting of the shareholders of DataWave in Vancouver (the "A&SGM"), where the shareholders would initially vote to de-list DataWave's shares from the TVX and continue DataWave as a corporation under the laws of the State of Delaware. The A&SGM would then temporarily adjourn. Assuming these proposals were approved by the requisite percentage of shareholders, immediately after the filing of its continuation documents with the Secretary of State of the State of Delaware the A&SGM would reconvene later in the same day, and under Delaware law voting procedures would vote on the proposition to merge DataWave with and into DataWave Acquisition and to accept the Merger Price in an exchange of DataWave for IDC shares. G. The Parties were given to understand that at the A&SGM all shareholders of DataWave would be able to vote their respective shares in determining the requisite greater than 2/3ds Yukon requirement to effect the continuation of DataWave as a Delaware corporation and its de-listing from the TVX. H. When counsel submitted the draft Merger documents to officials of the TVX for review, however, they learned that the TVX would impose a requirement that only "disinterested" shareholders would be permitted to have their shares counted in determining the requisite greater than 2/3ds requirement. Shares held by IDC, those of DataWave management, and other "friends of the company" would specifically be excluded in determining these percentages. I. Faced with the prospect of having to proceed with a proxy solicitation that would require a greater than 2/3ds majority of only the minority of "disinterested" shares, the Parties reluctantly determined to abort the Merger. J. The Parties believe that each of them has acted in utmost good faith and fair dealings in their business relationships with the other, and that both have used their respective best efforts to consummate the Merger, but that because of counsel's inability to foresee that the TVX would view both separate parts of the A&SGM as a single plan and thus impose its "disinterested" shareholder rule for voting, the Merger was incapable of being carried forth to a successful conclusion. K. For the reasons stated above the Parties for good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, do agree to proceed as set forth in the Agreement Provisions below. -2- Agreement Provisions 1. IDC's Merger-related Fees and Expenses. In reviewing materials provided by IDC DataWave accepts a minimum of $470,000 as the sum that IDC has expended on fees and costs of its counsel, independent auditors, appraisers, governmental and administrative agencies in its attempt to consummate the Merger. 2. Break-up Compensation. DataWave agrees to pay IDC compensation of $470,000 in the form of $235,000 cash in immediately available funds and 2,937,500 shares of its common stock at the issue price of $0.08 per share (the "Compensation Shares") as a Merger Break-up fee in full and final settlement of any and all issues between them resulting from the decision of the Parties to abort the Merger. 3. IDC and DataWave to Operate Separately. The Parties agree that having used their respective best efforts to bring about the Merger, and those efforts having failed, it now behooves each of them to operate their respective businesses separate and apart. Accordingly, IDC as the majority shareholder of DataWave, upon receipt of payment of $235,000 in cash and issuance to it of the Compensation Shares agrees not to insist on its right to appoint a director or directors to the board of directors of DataWave until such time as the board of directors of DataWave and IDC shall mutually agree otherwise. 4. Removal of IDC Related Parties from the Board of Directors of DataWave. DataWave shall be solely responsible for insuring that the current and future members of its board of directors have neither past nor present affiliations, connections or any form of relationship to IDC or related parties. At DataWave's request, IDC shall withhold voting for any person whom DataWave, acting reasonably, identifies as having past or present affiliation, connection or other form of relationship to IDC or related parties. 5. Provisions Relating to Issuance of the Compensation Shares. The Parties understand and agree that the Compensation Shares will not be registered under the provisions of the 1933 Securities Act or the securities laws of any state and will be subject to the restrictions imposed under Rule 144 of the Rules and Regulations of the 1933 Securities Act. 6. Status of IDC as a Controlling Person of DataWave. IDC represents, warrants and acknowledges that it understands the restrictions imposed upon it as a controlling person of DataWave, that it is acquiring the Compensation Shares with a view towards further investment in DataWave and not with a view towards distribution, and that so long as IDC continues to be a controlling person of DataWave it shall remain subject to and be bound by the transfer restrictions imposed upon it by Rule 144. 7. Reservation and Status of the Compensation Shares. DataWave represents to IDC that the Compensation Shares have been validly authorized, and upon issuance to IDC will be fully paid and non-assessable. -3- 8. Cooperation by IDC. IDC recognizes that DataWave may wish to pursue remedies against third parties for its own losses and expenses flowing out of the aborted Merger, and agrees that if requested by DataWave it will instruct its officers, directors, employees, agents and servants to cooperate fully with DataWave in providing any documentary or parole evidence requested by DataWave in support of DataWave's loss claim or claims. 9. Mutual Release and Hold Harmless Provisions. With the payment of the Break-up compensation specified in paragraph 2 above, the Parties agree that the provisions of this Agreement shall operate as a full, complete and mutual release of each by the other for any and all claims that have arisen or that may in future arise out of the aborted Merger, and each agrees to hold harmless and indemnify the other from any such claims or future claims, as the case may be. 10. Notices. Any notices permitted or required under this Agreement shall be deemed given upon the date of personal delivery or 48 hours after deposit in the United States mail, postage fully prepaid, return receipt requested, addressed to IDC at: Integrated Data Corp. 625 W. Ridge Pike, Suite C-106 Conshohocken, PA 19428-1192 Addressed to DataWave at: DataWave Systems, Inc. Wayne Plaza 1 145 Route 46 West Wayne, NJ 07470 or at any other address as any party may, from time to time, designate by notice given in compliance with this section. 11. Governing Law, Jurisdiction and Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, the domicile of both IDC and DataWave. Any action at law or suit for equitable performance initiated hereunder shall be commenced in the Delaware Chancery Court. 12. Arbitration. If at any time during the term of this Agreement any dispute, difference or disagreement shall arise upon or in respect of the Agreement, and the meaning and construction hereof, every such dispute, difference and disagreement shall be referred to a single arbiter agreed upon by the parties, or if no single arbiter can be agreed upon, an arbiter or arbiters shall be selected in accordance with the rules of the American Arbitration Association and such dispute, difference or disagreement shall be settled by arbitration in accordance with the then prevailing commercial rules of the American Arbitration Association, and judgment upon the award rendered by the arbiter may be entered in any court having jurisdiction thereof. -4- 13. Attorney Fees. In the event an arbitration, suit or action is brought by any party under this Agreement to enforce any of its terms, or in any appeal there from, it is agreed that the prevailing party shall be entitled to reasonable attorneys' fees to be fixed by the arbitrator, trial court and/or appellate court. 14. Presumption. This Agreement or any section thereof shall not be construed against any party due to the fact that the Agreement or any section thereof was drafted by that party. 15. Titles and Captions. All article, section and paragraph titles or captions contained in this Agreement are for convenience only and shall not be deemed part of the context nor affect the interpretation of this Agreement. 16. Entire Agreement. This Agreement contains the entire understanding between and among the parties and supersedes any prior understandings, terms sheets, letters and agreements among them respecting the subject matter of this Agreement. 17. Modifications Must Be in Writing. This Agreement may not be changed orally. All modifications of this Agreement must be in writing and must have been signed by each party. 18. Agreement Binding. This Agreement shall be binding upon the successors and assigns of the parties hereto. 19. Further Action. The parties shall execute and deliver all documents, provide all information and take or forbear from all such action as may be necessary or appropriate to achieve the purposes of this Agreement. 20. Counterparts. This Agreement may be executed in several counterparts and all so executed shall constitute one Agreement, binding on both the parties even though both parties may not be signatories to the original or the same counterpart. 21. Facsimile Signatures. Facsimile or electronic mail attachment transmission of any signed original document, and the retransmission of any signed facsimile transmission, shall be the same as delivery of the original signed document. At the request of any party, a party shall confirm documents with a facsimile transmitted signature by signing an original document. IN WITNESS WHEREOF, this Agreement has been executed on March 3, 2005 on behalf of IDC and DataWave by their duly authorized officers pursuant to authority vested in them by their respective boards of directors, to be effective as of the Effective Date. Integrated Data Corp. DataWave Systems Inc. By: /s/ David C. Bryan By: /s/ Joshus Emanuel ------------------ ------------------ David C. Bryan Joshua Emanuel, President & CEO President & CEO -5- EX-99 3 itdd13d_11may05exhibit-b.txt EXHIBIT B EXHIBIT B To Integrated Data Corp's Schedule 13D filing dated May 16, 2005 LICENSE TERMINATION AGREEMENT ----------------------------- THIS LICENSE TERMINATION AGREEMENT ("Agreement") is entered into as of the 1st day of February, 2005 (the "Effective Date"), by and between Integrated Data Corp. ("IDC"), and DataWave Systems, Inc. ("DataWave"), both Delaware corporations. Recitals A. On March 17, 2000, DataWave granted to DataWave International Limited, a British limited company ("DataWave International"), an exclusive license to make, sell, and use the DataWave trade name, technology, know-how, trade secrets and patents then existing and to be developed in future, to enable DataWave International to operate in a territory consisting of world-wide with the exception of North America, the Caribbean, and South America (the "DataWave License," the "DataWave Technology," and the "Territory," respectively). B. The initial term of the DataWave License was ten years from and after March 17, 2000, with a single ten-year renewal, exercisable upon initial expiration. The DataWave License contains no restriction that would prohibit its assignment. C. Through a series of wind-ups and corporate consolidations in the period 2000 to 2002, the DataWave License passed into the hands of IDC for valid consideration in December 2002. D. IDC had intended to exercise its rights under the DataWave License and exploit the DataWave Technology throughout the Territory, but in recent months has determined instead not to pursue these plans. E. Both DataWave and IDC (as a shareholder of DataWave), believe that it is in their mutual best interests that the DataWave Technology be introduced and exploited throughout the Territory, but that in view of changed circumstances, the DataWave License should now be terminated and revoked so that DataWave can expand its own operations into the Territory. F. In an independent valuation conducted by Evans & Evans, Inc. for IDC on March 24, 2004, the DataWave License was valued between US$1,990,000 and US$2,030,000. G. For the reasons stated above the parties for good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, do agree to proceed as set forth in the Agreement Provisions below. -1- Agreement Provisions 1. License Termination and Revocation. Effective immediately with the signing and delivery of this Agreement the parties are mutually agreed that the DataWave License be and the same shall be terminated and revoked, and all of the rights, title and interest in and to the DataWave Technology granted to IDC pursuant to the terms and conditions of the DataWave License shall cease and revert to and become the sole and exclusive property of DataWave. 2. Consideration. As consideration to IDC for the termination and revocation of the DataWave License, DataWave agrees to pay total consideration of US$865,000 to IDC as follows: 2.1 US$265,000 in cash in immediately available funds as of the date of this Agreement; and 2.2 Issuance to IDC as holder a note of DataWave in the principal amount of US$600,000, having a term of two years, bearing no interest, and convertible into shares of DataWave common stock as provided in paragraph 3. below (the "Note"). 3. Note Convertibility Provisions. 3.1 At any time within two (2) years from and after the date of this Agreement, IDC at its sole discretion, shall have the right to convert the Note by making demand upon DataWave for the issuance of 7,500,000 shares of the common stock of DataWave at a price of US$0.08 per share (the "Conversion Shares"). 3.2 If IDC shall fail to exercise its right to convert as provided in paragraph 3.1 above, upon expiration of the term of the Note then DataWave shall have the option to pay down the principal balance of the Note for US$600,000 in cash, or to issue and tender the Conversion Shares to IDC. 4. Provisions Relating to Issuance of the Conversion Shares. The parties understand and agree that the Conversion Shares, if issued, will not be registered under the provisions of the 1933 Securities Act or the securities laws of any US state or Canadian province, and will be subject to the restrictions imposed under Rule 144 of the Rules and Regulations of the 1933 Securities Act. 5. Status of IDC as a Controlling Person of DataWave. IDC represents, warrants and acknowledges that it understands the restrictions imposed upon it as a controlling person of DataWave, and that should it acquire the Conversion Shares it will take them with a view towards further investment in DataWave and not with a view towards distribution, and that so long as IDC continues to be a controlling person of DataWave it shall remain subject to and be bound by the transfer restrictions imposed upon it by Rule 144. -2- 6. Reservation and Status of the Conversion Shares. DataWave represents and warrants to IDC that until such time, if any, that it shall issue the Conversion Shares to IDC in full payment of the principal of the Note, it shall continue to reserve 7,500,000 shares of its authorized but unissued common stock for the express purpose of Note redemption, and that the Conversion Shares, if and when issued to IDC, shall be validly authorized, fully paid and non-assessable. 7. Current Status of License. IDC represents to DataWave that as of the date of this Agreement IDC (including any of its predecessors in interest as holder of the rights to the DataWave Technology granted under the DataWave License), has not taken any action to make use of the DataWave Technology nor has it entered into any sub-licensing agreement with any sub-licensee except for an assignment of the DataWave License for a portion of the Territory consisting of the Kingdom of Great Britain and Northern Ireland and the Republic of Ireland (the "Assigned Rights") to IDC Integrated Data Technologies Ltd., a wholly-owned subsidiary of IDC ("Integrated Ltd."). IDC further represents to DataWave that as of the date of this Agreement Integrated Ltd. Has not taken any action to make use of the DataWave Technology under the Assigned Rights, nor has it entered into and sub- licensing agreement with any sub-licensee with respect to the Assigned Rights except for an existing license granted to DataWave, and the Assigned Rights and the license to DataWave will expire upon the signing and delivery of this Agreement, as IDC's rights, title and interests under the DataWave License revert to DataWave. 8. Notices. Any notices permitted or required under this Agreement shall be deemed given upon the date of personal delivery or 48 hours after deposit in the United States mail, postage fully prepaid, return receipt requested, addressed to IDC at: Integrated Data Corp. 625 W. Ridge Pike, Suite C-106 Conshohocken, PA 19428-1192 Addressed to DataWave at: DataWave Systems, Inc. Wayne Plaza 1 145 Route 46 West Wayne, NJ 07470 or at any other address as any party may, from time to time, designate by notice given in compliance with this section. 9. Governing Law, Jurisdiction and Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, the domicile of both IDC and DataWave. Any action at law or suit for equitable performance initiated hereunder shall be commenced in the Delaware Chancery Court. -3- 10. Arbitration. If at any time during the term of this Agreement any dispute, difference or disagreement shall arise upon or in respect of the Agreement, and the meaning and construction hereof, every such dispute, difference and disagreement shall be referred to a single arbiter agreed upon by the parties, or if no single arbiter can be agreed upon, an arbiter or arbiters shall be selected in accordance with the rules of the American Arbitration Association and such dispute, difference or disagreement shall be settled by arbitration in accordance with the then prevailing commercial rules of the American Arbitration Association, and judgment upon the award rendered by the arbiter may be entered in any court having jurisdiction thereof. 11. Attorney Fees. In the event an arbitration, suit or action is brought by any party under this Agreement to enforce any of its terms, or in any appeal there from, it is agreed that the prevailing party shall be entitled to reasonable attorneys' fees to be fixed by the arbitrator, trial court and/or appellate court. 12. Presumption. This Agreement or any section thereof shall not be construed against any party due to the fact that the Agreement or any section thereof was drafted by that party. 13. Titles and Captions. All article, section and paragraph titles or captions contained in this Agreement are for convenience only and shall not be deemed part of the context nor affect the interpretation of this Agreement. 14. Entire Agreement. This Agreement contains the entire understanding between and among the parties and supersedes any prior understandings, terms sheets, letters and agreements among them respecting the subject matter of this Agreement. 15. Modifications Must Be in Writing. This Agreement may not be changed orally. All modifications of this Agreement must be in writing and must have been signed by each party. 16. Agreement Binding. This Agreement shall be binding upon the successors and assigns of the parties hereto. 17. Further Action. The parties shall execute and deliver all documents, provide all information and take or forbear from all such action as may be necessary or appropriate to achieve the purposes of this Agreement. 18. Counterparts. This Agreement may be executed in several counterparts and all so executed shall constitute one Agreement, binding on both the parties even though both parties may not be signatories to the original or the same counterpart. 19. Facsimile Signatures. Facsimile or electronic mail attachment transmission of any signed original document, and the retransmission of any signed facsimile transmission, shall be the same as delivery of the original signed document. At the request of any party, a party shall confirm documents with a facsimile transmitted signature by signing an original document. -4- IN WITNESS WHEREOF, this Agreement has been executed on March 3, 2005 on behalf of IDC and DataWave by their duly authorized officers pursuant to authority vested in them by their respective boards of directors, to be effective as of the Effective Date. Integrated Data Corp. DataWave Systems Inc. By: /s/David C. Bryan By: /s/Joshua Emanuel ----------------- ----------------- David C. Bryan Joshua Emanuel, President & CEO President & CEO -5- -----END PRIVACY-ENHANCED MESSAGE-----