-----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, KKQUfr6OTPMxTxSfSNFZalpMtDD+IMORpGHtaW2WyAm3TqvuzmRuFPiCxZ8iaAEh tqsGWbete4ncKdqgZ2yU8w== 0000927797-99-000063.txt : 19990512 0000927797-99-000063.hdr.sgml : 19990512 ACCESSION NUMBER: 0000927797-99-000063 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19990506 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990511 FILER: COMPANY DATA: COMPANY CONFORMED NAME: U S WIRELESS DATA INC CENTRAL INDEX KEY: 0000895716 STANDARD INDUSTRIAL CLASSIFICATION: CALCULATING & ACCOUNTING MACHINES (NO ELECTRONIC COMPUTERS) [3578] IRS NUMBER: 841178691 STATE OF INCORPORATION: CO FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-22848 FILM NUMBER: 99616878 BUSINESS ADDRESS: STREET 1: 2200 POWELL STREET STREET 2: SUITE 450 CITY: EMERYVILLE STATE: CA ZIP: 94608 BUSINESS PHONE: 5105962025 MAIL ADDRESS: STREET 1: 2200 POWELL STREET STREET 2: SUITE 450 CITY: EMERYVILLE STATE: CA ZIP: 94608 8-K 1 FORM 8-K FOR MAY 6, 1999 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 8-K Current Report Pursuant to Section 13 or 15(d) of The Securities Act of 1934 Date of Report (Date of earliest event reported) May 6, 1999 U.S. Wireless Data, Inc. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Colorado 0-22848 84-1178691 - -------------------------------------------------------------------------------- (State or other (Commission (I.R.S. Employer jurisdiction File Number) Identification No.) of incorporation) 2200 Powell Street, Suite 800, Emeryville, California 94608 ----------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (510) 596-2025 ---------------- (Former name or former address, if changed since last report.) Item 5. Other Events. INITIAL CLOSING OF PRIVATE OFFERING OF SERIES B CUMULATIVE CONVERTIBLE REDEEMABLE PREFERRED STOCK AND COMMON STOCK PURCHASE WARRANTS On May 6, 1999 (the "Closing Date"), U.S. Wireless Data, Inc. (the "Company") closed the minimum amount of a private offering of $1,500,000 minimum, $5,000,000 maximum, of Series B Cumulative Convertible Redeemable Preferred Stock (the "Series B Preferred"), selling 1,500,000 shares at $1.00 per share, with a stated value of $1.00 per share. In addition to the sale of 1,500,000 shares of Series B Preferred for cash, a total of 454,705 shares of Series B Preferred was issued to the holders of the Company's 6% Convertible Subordinated Debentures Due July 21, 2000 (the "6% Debentures"), to pay penalties and interest owing under the 6% Debentures through June 30, 1999. The holders of the 6% Debentures also agreed to waive certain prior defaults on the 6% Debentures and the related registration rights agreement in exchange for the issuance of the Series B Preferred to them, together with certain modifications to the 6% Debentures and the Company's registration obligations relating to the underlying Common Stock issuable upon conversion of the 6% Debentures. The Company also issued a Common Stock Purchase Warrant exercisable to purchase 300,000 shares of Common Stock at $1.50 per share for five years from April 30, 1999 (the "Series B Warrants") to the cash purchaser of the Series B Preferred. Holders of the 6% Debentures did not receive Series B Warrants Net proceeds to the Company from closing the minimum offering of the Series B Preferred will be approximately $1,279,000, after paying a finder's fee of $180,000 plus estimated offering expenses of $41,000 (including approximately $25,800 for the investor's legal fees). The Company immediately used $400,800 of the proceeds to repay $400,000 of short term loans from the purchaser of the Series B Preferred, which it made to the Company over the three-week period prior to closing of the minimum offering. The Company is obligated to utilize an additional $413,000 of the proceeds to pay past and future legal and accounting fees, while the estimated balance of $465,200 is to be used as working capital. RBB Bank Aktiengesselschaft, which is the agent for the holders of certain shares of the Company's Series A Preferred Stock, $1,000,000 of 6% Debentures and a promissory note in the principal amount of $250,000, agreed to waive the right to immediate repayment of the $250,000 note (which was originally payable upon completion of the next funding received by the Company of at least $1,000,000). RBB Bank agreed to forebear initiating an action against the Company to collect the obligation evidenced by the Note until the first to occur of: (a) receipt by the Company of funding in the aggregate of at least $2,500,000; or (b) December 1, 1999. Mr. John Liviakis, a significant shareholder of the Company, also agreed to transfer a total of 443,077 shares of Company Common Stock owned by him to the finder who located the cash purchaser of the Series B Preferred Stock. The shares will be transferred as "restricted securities" as defined in Rule 144 under the Securities Act of 1933 and will not have any registration rights. The offering is being made pursuant to the registration exemptions contained in Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act") and Rule 506 of Regulation D promulgated thereunder. Neither the Series B Preferred nor the Warrants nor the shares of Common Stock underlying those securities have been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. OTHER KEY TERMS OF THE OFFERING, THE SECURITIES AND APPLICABLE REGISTRATION RIGHTS The following is a summary of additional key terms and conditions of certain agreements entered into between the Company and the purchasers of the Series B Preferred (including the holders of the 6% Debentures). The summary descriptions contained herein are qualified in their entirety by reference to copies of the operative documents, including the Articles of Amendment to the Company's Articles of Incorporation (containing the Designation of Series B Cumulative Convertible Redeemable Preferred Stock) (hereafter the "Designation"), the Securities Purchase Agreement, the Supplement to Securities Purchase Agreement entered into with the holders of the Company's 6% Debentures, the Registration Rights Agreement, the Waiver of Rights and First Amendment to Debenture Agreement and the First Amendment to Note and Common Stock Purchase Agreement entered into April 22, 1999, which are filed as Exhibits to this Report. Dividends - --------- The Series B Preferred accrues a cumulative dividend at the annual rate of 6% per annum, payable semi-annually on March 31 and September 30 of each year. The dividend may be paid at the Company's option in cash or shares of Common Stock. If paid in Common Stock, the number of shares issuable as a dividend is determined based on the amount of the dividend being paid, divided by the "Average Quoted Price" of the Common Stock, which is defined in the Designation to be the five-day average closing bid price of the Common Stock as quoted on the OTC Electronic Bulletin Board or one of the NASDAQ markets (if so listed and quoted) or any other exchange where the Common Stock is listed and quoted. All dividends owing to the date of conversion are payable upon any conversion. Voting Rights - ------------- Generally, the Series B Preferred does not have voting rights, although it is entitled to one vote per share on those matters upon which all classes of a Colorado corporation's shares are entitled by law to vote upon by class. In that case, a majority of the Series B Preferred Stock, voting as a class, is required to approve any such matter. On any matter that the Series B Preferred would be entitled to vote upon in the same class as Common Stock, each share of the Series B Preferred is entitled to that number of votes equal to the number of shares of Common Stock into which it would be convertible as of the record date for the matter being voted upon. Conversion Terms - ---------------- 50% of the Series B Preferred Stock is convertible at the option of the holders into shares of the Company's Common Stock beginning on the earlier of 90 days after its issuance date or five days after notice by the Securities and Exchange Commission that the registration statement (to be filed pursuant to the terms of the Registration Rights Agreement) (the "Series B Registration Statement") may be declared effective. Thirty days thereafter, the remaining shares of the Series B Preferred becomes convertible into Common Stock. The rate at which the Series B Preferred is convertible (per share of Series B Preferred Stock) into Common Stock is equal to 80% of the average of the closing bid price of the Common Stock over the five trading days prior to conversion (the "Conversion Rate"). The Company may convert the Series B Preferred into Common Stock at its option at any time after the close of the business on the second anniversary of the effectiveness date of the Series B Registration Statement at the then-applicable Conversion Rate. Subject to certain exceptions applicable to mandatory conversions at the behest of the Company and automatic conversions upon the occurrence of certain "Fundamental Changes" (as defined in the Designation), to the extent that convertibility of Series B Preferred would result in beneficial ownership (as calculated pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended) by a holder in excess of 4.99% of the Company's Common Stock, the number of shares of Series B Preferred that result in such excess beneficial ownership is not then convertible, notwithstanding any other provision making them eligible for conversion. Registration Rights - ------------------- The Company also entered into an agreement (the "Registration Rights Agreement") with the purchasers of the Series B Preferred to file a registration statement with the SEC covering the Common Stock underlying the Series B Preferred and the Warrants within 30 days of the Closing Date (the "Series B Registration Statement"), to be effective within 90 days of the Closing Date. If the Company fails to file the Series B Registration Statement within 30 days of the Closing Date (the "Required Filing Date"), a late filing penalty becomes due and payable one day thereafter in the amount of 3% of the purchase price of the Series B Preferred Stock, with an additional 3% penalty due on each monthly anniversary following the Required Filing Date during which the Series B Registration Statement has not been filed. If the Series B Registration Statement is not effective with the SEC on or before the earlier of five days after notice from the SEC that it may be declared effective or 90 days of the Closing Date (the "Required Effective Date"), a penalty equal to 3% of the purchase price of the Series B Preferred will be due and owing by the Company to the holders, with an additional penalty equal to 2% of the purchase price due and owing on each monthly anniversary thereafter during which the Series B Registration Statement is not declared effective. In addition, if the Series B Registration Statement has not been filed within 60 days of the Closing Date or has not been declared effective within 150 days of the Closing Date, the holders of the Series B Preferred may require the Company to redeem the Series B Preferred for $1.25 per share, plus all accrued dividends. The filing by the Company of the Series B Registration Statement will activate certain prior registration rights granted by the Company to holders of certain of its securities. The Company estimates that in addition to the shares it will be required to register to cover conversions of the Series B Preferred, it will include up to an approximately 7,000,000 additional shares of Common Stock on the Series B Registration Statement to honor such registration rights (including 150% of the shares needed to cover conversions of the 6% Debentures). This estimated share number is based upon a last sale price of the Company's Common Stock of $.875 as of May 10, 1999. Amendment of 6% Debentures - -------------------------- Contemporaneously with the initial closing of the Series B Preferred placement the holders of all $2,000,000 face value of the 6% Debentures agreed to accept payment of all interest owing through June 30, 1999 (including past due interest) and penalties owing by the Company for failure to timely file a registration statement to register the shares of Common Stock underlying the 6% Debentures. In total the Company issued a total of 454,705 shares of Series B Preferred to the holders of the 6% Debentures to cover $454,705 of interest and penalties. The 6% Debenture holders also agreed to waive all past defaults on the 6% Debentures arising out of the failure to pay interest or timely register the underlying shares of Common Stock. The holders further agreed not to declare the 6% Debentures in default for failure to pay interest or register the underlying shares of Common Stock unless and until the holders of the Series B Preferred have the right to require the Company to redeem the Series B Preferred in the event the Company fails to either file the Series B Registration Statement within 60 days of the Closing Date or achieve effectiveness of the Series B Registration Statement within 150 days of the Closing Date. The Company also agreed to include the shares underlying the 6% Debentures in the Series B Registration Statement and that the same cash penalty provisions as apply to the Series B Preferred will apply to the 6% Debentures in the event the Company fails to file the Series B Registration Statement within 30 days of the Closing Date and to achieve effectiveness of it within 90 days of the Closing Date. Item 7. Financial Statement and Exhibits. The following Exhibits are filed as part of this report: Exhibit Number Description of Exhibit - ------ ---------------------- 3.1 Articles of Amendment to the Articles of Incorporation (including Designation of Series B Cumulative Convertible Redeemable Preferred Stock) filed by the Company on April 29, 1999 4.1 Form of Series B Preferred Stock Securities Purchase Agreement entered into with purchasers of Series B Preferred Stock as of April 30, 1999 4.2 Form of Series B Preferred Stock Registration Rights Agreement entered into with purchasers of Series B Preferred Stock as of April 30, 1999 4.3 Form of Common Stock Purchase Warrant issued to cash purchaser of Series B Preferred Stock as of April 30, 1999 4.4 Form of Waiver of Rights and First Amendment to Debenture Agreement (relating to 6% Convertible Subordinated Debentures Due July 21, 2000 entered into as of April 30, 1999 4.5 Form of Supplement to Series B Preferred Stock Securities Purchase Agreement entered into with holders of the Company's 6% Debentures as of April 30, 1999 4.6 First Amendment to Note and Common Stock Purchase Agreement entered into with RBB Bank Aktiengesellschaft AG as of April 22, 1999 99.1 Press Release issued by the Company dated May 7, 1999 Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. U.S. Wireless Data, Inc. (Registrant) May 10, 1999 By /s/ Robert E. Robichaud ------------ ----------------------- (Date) (Signature) Robert E. Robichaud Chief Financial Officer EX-3.1 2 ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION U.S. WIRELESS DATA, INC. ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION FIRST: That the name of the Corporation is U.S. Wireless Data, Inc. SECOND: That the text of the Amendment to the Articles of Incorporation of the Corporation determining the designations, preferences, limitations and relative rights of the Series B Preferred Stock is set forth on Exhibit A attached hereto and is incorporated herein by reference. THIRD: That the Amendment was adopted on April 22, 1999. FOURTH: That the Amendment was duly adopted by the Board of Directors of the Corporation. IN WITNESS WHEREOF, U.S. Wireless Data, Inc. has caused these Articles of Amendment to be duly executed this 28th day of April, 1999. U.S. Wireless Data, Inc. By: /s/ Rod Stambaugh ---------------------- Rod Stambaugh President ATTEST: /s/ Robert E. Robichaud ----------------------- Robert E. Robichaud, Secretary Exhibit A DESIGNATION OF SERIES B CUMULATIVE CONVERTIBLE REDEEMABLE PREFERRED STOCK U.S. Wireless Data, Inc., a Colorado corporation (the "Corporation"), hereby designates the preferences, limitations and relative rights of its Series B Cumulative Convertible Redeemable Preferred Stock as follows: A. Description and Designation of Series B Preferred ------------------------------------------------- 1. Designation and Definitions. ---------------------------- (a) Designation. Five Million (5,000,000) shares of the Corporation's 15,000,000 total authorized shares of no par value preferred stock are hereby designated as Series B Cumulative Convertible Redeemable Preferred Stock (hereinafter referred to as the "Series B Preferred"). The Series B Preferred shall have a stated value (original issue price) of one dollar ($1.00) per share (the "Original Issue Price"). (b) Certain Definitions. As used herein, the following terms, unless the context otherwise requires, have the following respective meanings: (i) "Average Quoted Price" means the average of the closing bid price of the Common Stock of the Corporation as reported by the Nasdaq Bulletin Board, Nasdaq SmallCap Market or Nasdaq National Market or, if the Corporation's Common Stock is no longer traded on a Nasdaq market, such other exchange on which the Corporation's Common Stock is then traded, for the five (5) trading days immediately preceding any holder's Conversion Date, the Mandatory Conversion Date (as defined in Section 5(c) below) or the date of the consummation or closing of a Fundamental Change, as the case may be. (ii) "Conversion Date" means each date on which the Corporation receives by telecopy written notice in accordance with Section 5(j) hereof from a holder of Series B Preferred that such holder elects to convert shares of its Series B Preferred. (iii) "Fundamental Change" means: (i) any sale, lease, exchange or other transfer of all or substantially all of the assets of the Corporation; or (ii) any merger or consolidation to which the Corporation is a party. Notwithstanding the foregoing, the following shall not be a Fundamental Change: A merger or consolidation (a) to which the Corporation is a party; (b) in which it is the surviving corporation and there is no resulting reclassification of the outstanding Common Stock; and (c) after giving effect to which, A-1 persons who were, immediately before the consummation or closing of such merger or consolidation, holders of outstanding Common Stock will be the direct or indirect owners of securities of the Corporation possessing, on a fully diluted basis, at least seventy-five percent (75%) of the voting power of all voting securities of the Corporation (excluding, for purposes of such computation, any such person who also is a party to such merger or consolidation). (iv) "Issue Date" means, with respect to each share of Series B Preferred held by any holder, the date on which the Corporation originally issued such share to such holder (irrespective of any subsequent transfer or other disposition of such share to any other holder). 2. Dividends. ---------- (a) Preferred Dividend - Cash and/or In-Kind. When and as declared by the Board of Directors and to the extent permitted by the Colorado Business Corporation Act, the Corporation shall pay preferential dividends to the holders of the Series B Preferred as provided in this Section 2(a). (i) Preferred Dividend. Except as otherwise provided herein, dividends on each share of Series B Preferred shall accrue, cumulatively on a daily basis, at the rate of six percent (6%) per annum of the Original Issue Price, from and including the Issue Date of such share to and including the date on which the Liquidation Value of such share is paid or such share is converted in accordance with the provisions hereof (the "Preferred Dividend"). Such Preferred Dividend will accrue whether or not it has been declared and whether or not there are profits, surplus or other funds of the Corporation legally available for its payment. (ii) Semi-Annual Payments. Commencing on September 30, 1999, the Preferred Dividend shall be payable in cash (subject to Section 2(a)(v) below) semi-annually, for the actual number of days elapsed, on each March 31 and September 30, to the holders of record of shares of Series B Preferred as of the tenth (10th) trading day preceding the applicable dividend payment date. (iii) No Interest. Accrued but unpaid Preferred Dividends shall not bear interest. Preferred Dividends paid in cash in an amount less than the total amount of such dividends at the time accrued and payable shall be allocated on a share-by-share basis among all shares of Series B Preferred at the time outstanding. (iv) Payment Upon Conversion. On the date on which any holder's shares of Series B Preferred are converted into Common Stock pursuant to Section 5 hereof, the accrued Preferred Dividend with respect to the shares so converted shall be paid to such holder. All accrued Preferred Dividends also shall be payable upon the liquidation, A-2 dissolution or winding up of the Corporation. (v) Payment in Common Stock. The Corporation, at its sole discretion, may pay the Preferred Dividends in cash or in shares of Common Stock at the then fair market value per share of Common Stock as of the date on which the Preferred Dividend is payable. For purposes of this Section 2(a)(v), fair market value shall be the average of the closing bid price of the Common Stock of the Corporation as reported by the Nasdaq SmallCap Market or Nasdaq National Market or, if the Corporation's Common Stock is no longer traded on a Nasdaq market, such other exchange on which the Corporation's Common Stock is then traded, for the five (5) trading days immediately preceding the date on which the Preferred Dividend is payable. (vi) Fractional Shares. Notwithstanding anything herein to the contrary, no fractional shares shall be issued pursuant to this Section 2, and the number of shares of Common Stock issued upon the payment of the Preferred Dividend shall be rounded up or down to the nearest whole share, with fractional shares of 0.5 or greater being rounded up. (b) Declared Dividends on Common Stock. If the Board of Directors shall declare a cash dividend payable upon the then outstanding shares of Common Stock (other than a stock dividend on the Common Stock distributed solely in the form of additional shares of Common Stock), the holders of the Series B Preferred Stock shall be entitled to the amount of dividends on the Series B Preferred as would be declared payable on the largest number of whole shares of Common Stock into which the shares of Series B Preferred held by each holder thereof could be converted pursuant to the provisions of Section 5 hereof, such number determined as of the record date for the determination of holders of Common Stock entitled to receive such dividend. Such determination of "whole shares" shall be based upon the aggregate number of shares of Series B Preferred held by each holder, and not upon each share of Series B Preferred so held by the holder. (c) Dividends on Other Securities. Subject to the foregoing provisions of this Section 2, the Board of Directors may declare and the Corporation may pay or set apart for payment, or cause the accrual of, stated or cumulative dividends and other distributions on the Series A Preferred Stock of the Corporation, or any other series of preferred stock hereafter designated, and may purchase or otherwise redeem any of the same (or any warrants, rights, options or other securities exercisable therefor or convertible or exchangeable there into), and the holders of Series B Preferred shall not be entitled to share therein. 3. Liquidation, Dissolution or Winding Up. --------------------------------------- (a) Treatment at Liquidation, Dissolution or Winding Up. In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, or in the event of its insolvency, before any distribution or payment is made to A-3 any holders of Common Stock or any other class or series of capital stock of the Corporation designated to be junior to the Series B Preferred, and subject to the liquidation rights and preferences of any class or series of Preferred Stock designated by the Board of Directors in the future to be senior to or on a parity with the Series B Preferred with respect to liquidation preferences, the holder of each share of Series B Preferred shall be entitled to be paid first out of the assets of the Corporation available for distribution to holders of the Corporation's capital stock of all classes, whether such assets are capital, surplus or earnings, an amount equal to the Original Issue Price per share of Series B Preferred held by any holder, plus the Preferred Dividend accruing to such share of Series B Preferred pursuant to Section 2 above (the "Liquidation Value"). For purposes hereof, the Series B Preferred shall rank on liquidation junior to the Series A Preferred Stock. If, upon liquidation, dissolution or winding up of the Corporation, the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of the Series B Preferred the full amount to which they otherwise would be entitled, the holders of Series B Preferred shall share ratably in any distribution of available assets pro rata in proportion to the respective liquidation preference amounts which would otherwise be payable upon liquidation with respect to the outstanding shares of the Series B Preferred if all liquidation preference amounts with respect to such shares were paid in full, based upon the aggregate Liquidation Value payable upon all shares of Series B Preferred then outstanding. After such payment shall have been made in full to the holders of the Series B Preferred, or funds necessary for such payment shall have been set aside by the Corporation in trust for the account of holders of the Series B Preferred so as to be available for such payment, the remaining assets available for distribution shall be distributed ratably among the holders of the Common Stock and any class or series of capital stock designated to be junior to the Series B Preferred (if any) in right of payment upon any liquidation, dissolution or winding up of the Corporation. The amounts set forth above shall be subject to equitable adjustment by the Board of Directors whenever there shall occur a stock dividend, stock split, combination, reorganization, recapitalization, reclassification or other similar event involving a change in the capital structure of the Series B Preferred. (b) Distributions Other than Cash. Whenever the distributions provided for in this Section shall be payable in property other than cash, the value of such distribution shall be the fair market value of such property as determined in good faith by the Board of Directors. All distributions (including distributions other than cash) made hereunder shall be made pro rata to the holders of Series B Preferred. (c) Events Not Deemed a Liquidation. Neither the merger or consolidation of the Corporation into or with any other corporation(s), nor the sale or transfer by the Corporation of all or any part of its assets, nor the reduction of the capital stock of the A-4 Corporation, will be deemed to be a liquidation, dissolution or winding up of the Corporation under this Section 3. 4. Voting Power. ------------- (a) General. The holders of Series B Preferred will not have any voting rights except as set forth below or as otherwise from time to time required by law. To the extent that under Colorado law the vote of the holders of Series B Preferred, voting separately as a class, is required to authorize a given action of the Corporation, the affirmative vote or consent of the holders of at least a majority of the outstanding shares of Series B Preferred shall constitute the approval of such action by the class. To the extent that under Colorado law the holders of Series B Preferred are entitled to vote on a matter with holders of Common Stock, voting together as one class, each share of Series B Preferred shall be entitled to a number of votes equal to the number of shares of Common Stock into which it is then convertible using the record date for the taking of such vote of stockholders as the date as of which the Conversion Price is calculated. Holders of Series B Preferred shall be entitled to notice of all shareholders meetings or written consents regardless of whether they would be entitled to vote with respect thereto, which notice would be provided pursuant to the Corporation's by-laws and applicable statutes. (b) Amendments to Charter. For so long as there are any shares of Series B Preferred outstanding, the Corporation shall not amend its Articles of Incorporation or this Certificate of Designation without the approval, by vote or written consent, of the holders of at least a majority of the then outstanding shares of Series B Preferred, voting together as a class, each share of Series B Preferred to be entitled to one vote in each instance, if such amendment would adversely affect the rights of the holders of Series B Preferred; provided, that the creation, or increase in the authorized number of shares, of any class or series of stock ranking prior to or on a parity with the Series B Preferred either as to dividends or upon liquidation shall not be deemed to adversely affect the rights of the holders of Series B Preferred for purposes of this Section 4(b). 5. Conversion Rights. ------------------ (a) Conversion at the Option of Holders. Beginning the earlier of ninety (90) days after the Issue Date to such holder, or five (5) days after notice by the Securities and Exchange Commission that the Registration Statement (filed with the SEC pursuant to the Registration Rights Agreement, dated the date hereof, between the Company and the holders of the Series B Preferred) may be declared effective, each such holder of Series B Preferred shall have the right, at such holder's option, to convert up to fifty percent (50%) of the shares of Series B Preferred held by such holder into such number of fully paid and nonassessable shares of Common Stock as shall be determined by multiplying the number of shares of Series B Preferred to be converted by a fraction, the numerator of which is the Original Issue Price, and the denominator of which is the applicable Conversion Price (as defined below). Beginning thirty (30) days thereafter, all of the Preferred Stock shall, at A-5 the option of the Holder, be convertible. (b) Conversion Price. The conversion price per share (the "Conversion Price") shall be equal to Eighty Percent (80%) of the Average Quoted Price. (c) Conversion at Option of Corporation. At any time after the close of business on the second (2nd) year anniversary of the date on which the Securities and Exchange Commission declares effective the registration statement registering the shares of Common Stock issuable upon conversion of the Series B Preferred, all of the shares of Series B Preferred shall be convertible, at the option of the Corporation, into such number of fully paid and nonassessable shares of Common Stock as shall be determined by multiplying the number of shares of Series B Preferred outstanding on the Mandatory Conversion Date (as defined below) by a fraction, the numerator of which is the Original Issue Price, and the denominator of which is the applicable Conversion Price. The Corporation shall give notice of its exercise of such conversion option to all holders of Series B Preferred no later than five (5) trading days before the date as of which the Corporation has elected to make such conversion effective (such effective date of the conversion, the "Mandatory Conversion Date"). Each holder of Series B Preferred as of the Mandatory Conversion Date shall, promptly after such date, surrender for conversion to the Corporation at its principal office or to any transfer agent for the Series B Preferred or the Common Stock all certificates representing all shares of Series B Preferred held by such holder, accompanied by a written notice specifying the name or names in which such holder wishes the certificate(s) for shares of Common Stock to be issued. Effective as of the close of business on the Mandatory Conversion Date, each share of Series B Preferred then outstanding shall be (and be deemed to have been) converted automatically, without any further action by the holders thereof, into shares of Common Stock. Such conversion shall be deemed to have occurred whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent. (d) Limitation on Number of Shares. Additionally, notwithstanding anything set forth in this Section 5 to the contrary: (i) in no event shall any holder of Series B Preferred, prior to the earlier to occur of the Mandatory Conversion Date or the date of the consummation or closing of a Fundamental Change, be entitled to convert Series B Preferred into shares of Common Stock to the extent that (x) the number of shares of the Corporation's Common Stock beneficially owned by such holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of the shares of Series B Preferred held by such holder) plus (y) the number of shares of Common Stock issuable upon such conversion would result in beneficial ownership by the holder and its affiliates of more than 4.99% of the shares of Common Stock then outstanding. For purposes of this Section 5(d), beneficial ownership shall be determined in A-6 accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation 13D and 13G promulgated thereunder, except as otherwise provided in clause (x) of this Section 5(d). Each holder shall, upon delivering to the Corporation a notice of election to convert shares of Series B Preferred in accordance with Section 5(j) hereof, be required to provide the Corporation with a certification in form and substance reasonably satisfactory to the Corporation, that the conversion of the Series B Preferred being converted will not result in such holder and its affiliates beneficially holding more than 4.99%, determined as heretofore provided, of the outstanding shares of Common Stock on such Conversion Date. If the holder cannot make such certification, the shares of Series B Preferred to be converted shall not be convertible. Notwithstanding the foregoing, upon the Mandatory Conversion Date or upon the consummation or closing of a Fundamental Change, all such shares of Series B Preferred then outstanding shall be converted into Common Stock in accordance with Section 5(c) or 5(h), as applicable. (ii) the maximum number of shares which will be issued on conversion of the Series B Preferred and exercise of the Warrants, if any, is 3,472,583 (20% of the outstanding shares) (the "Share Cap") unless and until the shareholders of the Corporation shall have approved the issuance of shares of Common Stock beyond the Cap, if such approval is required by the NASD or NASDAQ, subject to the redemption rights of the holders of the Series B Preferred set forth in Sections 4(i)(x) and (y) of the Securities Purchase Agreement. (e) Intentionally Deleted. (f) Dividends Other Than Common Stock Dividends. In the event the Corporation shall make or issue, or shall fix a record date for the determination of holders of Common Stock entitled to receive a dividend or other distribution (other than a distribution in liquidation or other distribution otherwise provided for herein) with respect to the Common Stock payable in (i) securities of the Corporation other than shares of Common Stock, or (ii) other assets (excluding cash dividends or distributions), then and in each such event provision shall be made so that the holders of the Series B Preferred shall receive upon conversion thereof in addition to the number of shares of Common Stock receivable thereupon, the number of securities or such other assets of the Corporation which they would have received had their Series B Preferred been converted into Common Stock on the date of such event and had they thereafter, during the period from the date of such event to and including the Conversion Date, retained such securities or such other assets receivable by them during such period, giving application to all other adjustments called for during such period under this Section 5 with respect to the rights of the holders of the Series B Preferred. (g) Capital Reorganization or Reclassification. If the Common Stock issuable upon the conversion of the Series B Preferred shall be changed into the same or different number of shares of any class or classes of capital stock, whether by capital reorganization, recapitalization, reclassification or otherwise (other than a subdivision or A-7 combination of shares or stock dividend provided for elsewhere in this Section 5, or the sale of all or substantially all of the Corporation's capital stock or assets to any other person), then and in each such event the holders of Series B Preferred shall have the right thereafter to convert such shares into the kind and amount of shares of capital stock and other securities and property receivable upon such reorganization, recapitalization, reclassification or other change by the holders of the number of shares of Common Stock into which such shares of Series B Preferred might have been converted immediately prior to such reorganization, recapitalization, reclassification or change, all subject to further adjustment as provided herein. (h) Mandatory Conversion - Fundamental Change. If any Fundamental Change shall occur, then each share of Series B Preferred outstanding as of the date of the consummation or closing thereof shall be (and be deemed to have been) converted automatically, without any further action by the holders thereof, into such number of fully paid and nonassessable shares of Common Stock as shall be determined by multiplying the number of shares of Series B Preferred outstanding on the date of such consummation or closing date by a fraction, the numerator of which is the Original Issue Price, and the denominator of which is the applicable Conversion Price. Such conversion shall be deemed to have occurred whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent. The Corporation shall give notice of a proposed or anticipated Fundamental Change to all holders of the Series B Preferred not later than ten (10) trading days before the expected closing or consummation of such Fundamental Change. The Corporation also shall give prompt notice of the closing or consummation of such Fundamental Change to all holders of record of the Series B Preferred as of the date of such closing or consummation. Each holder of Series B Preferred shall thereupon promptly surrender for conversion, to the Corporation at its principal office or to any transfer agent for the Series B Preferred or the Common Stock, all certificates representing all shares of Series B Preferred held by such holder, accompanied by a written notice specifying the name or names in which such holder wishes the certificate(s) for shares of Common Stock to be issued. (i) Certificate as to Adjustments; Notice by Corporation. In each case of an adjustment or readjustment of the Original Issue Price, the Corporation at its expense will furnish each holder of Series B Preferred so affected with a certificate prepared by an officer of the Corporation, showing such adjustment or readjustment, and stating in detail the facts upon which such adjustment or readjustment is based. (j) Exercise of Conversion Privilege. To exercise its conversion privilege, a holder of Series B Preferred shall give written notice by telecopy to the Corporation at its principal office that such holder elects to convert shares of its Series B Preferred and shall thereafter surrender the original certificate(s) representing the shares being converted to the Corporation at its principal office together with an originally executed copy of such notice. Such notice shall also state the name or names (with its address or A-8 addresses, as well as the address(es) for delivery) in which the certificate(s) for shares of Common Stock issuable upon such conversion shall be issued. The certificate(s) for the shares of Series B Preferred surrendered for conversion shall be accompanied by proper assignment thereof to the Corporation or in blank. As promptly as practicable after the Corporation receives the original certificate(s) for the shares of Series B Preferred surrendered for conversion, the proper assignment thereof to the Corporation or in blank and the original notice of conversion (collectively, the "Original Documentation"), but in no event more than three (3) trading days after the Corporation's receipt of the Original Documentation, the Corporation shall issue and deliver to the holder of the shares of Series B Preferred being converted, at the addresses set forth therefor by the holder, such certificate(s) as it may request for the number of whole shares of Common Stock issuable upon the conversion of such shares of Series B Preferred in accordance with the provisions of this Section 5. Such conversion shall be deemed to have been effected immediately prior to the close of business on the Conversion Date, and at such time the rights of the holder as holder of the converted shares of Series B Preferred shall cease and the person(s) in whose name(s) any certificate(s) for shares of Common Stock shall be issuable upon such conversion shall be deemed to have become the holder(s) of record of the shares of Common Stock represented thereby. If the Corporation fails to issue and deliver to such holder such certificate(s) for shares of Common Stock within three (3) trading days after the Corporation's receipt of the Original Documentation, the Corporation shall pay the liquidated damages set forth in Section 5 of the Stock Purchase Agreement between the Corporation and the purchasers of the Series B Preferred (the "Stock Purchase Agreement"). No issuance of shares in any name other than the original holder shall be effected unless such transfer is in compliance with the transfer restrictions contained in the Stock Purchase Agreement. (k) Fractional Shares. No fractional shares of Common Stock or scrip representing fractional shares shall be issued upon the conversion of shares of Series B Preferred. Instead of any fractional shares of Common Stock that would otherwise be issuable upon conversion of Series B Preferred, the number of shares issuable upon conversion shall be rounded up or down to the nearest whole share, with fractional shares of 0.5 or greater being rounded up. (l) Partial Conversion. In the event some but not all of the shares of Series B Preferred represented by a certificate(s) surrendered by a holder are converted, the Corporation shall execute and deliver to or on the order of the holder, at the expense of the Corporation, a new certificate representing the number of shares of Series B Preferred which were not converted. Such new certificate shall be so delivered on or prior to the date set forth in Section 5(j) for the delivery of certificates for shares of Common Stock. (m) Reservation of Common Stock. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Series B Preferred, 150% of such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Series B Preferred (including any shares of A-9 Series B Preferred represented by any warrants, options, subscription or purchase rights for the Series B Preferred), and if at any time the number of authorized but unissued shares of Common Stock shall not be 150% of the number of such shares sufficient to effect the conversion of all then outstanding shares of the Series B Preferred (including any shares of Series B Preferred represented by any warrants, options, subscriptions or purchase rights for the Series B Preferred), then the Corporation shall be deemed to be in breach and default of its obligations hereunder, and in addition to all charges, claims and rights at law or in equity that each holder shall be entitled to, the Corporation shall use all means reasonably available to it, and promptly take any and all actions as may be necessary, to increase its authorized but unissued shares of Common Stock to such number of shares as shall be 150% of the amount sufficient for such purpose. 6. Redemption and Repurchase Rights. -------------------------------- The Corporation shall have no right to redeem and holders of shares of Series B Preferred shall have no right to cause the Corporation to redeem, any or all of the outstanding shares of Series B Preferred, except as follows: (a) if a holder of shares of Series B Preferred submits Original Documentation relating to the conversion of shares of Series B Preferred in the manner provided for in Section 5(j) and the number of shares of Common Stock issuable upon such conversion is limited by reason of the Share Cap described in Section 5(d)(ii), the Corporation shall, on demand of any holder of Series B Preferred, redeem any portion of the Series B Preferred not exercisable as a result of such limitation at a redemption price equal to $1.25 per share plus accrued dividends (the "Share Cap Redemption Price"). The Share Cap Redemption Price shall be payable within five (5) business days after demand for such redemption is made. (b) if (i) the Registration Statement is not filed within sixty (60) days from the Closing Date (as defined in the Registration Rights Agreement) or (b) the Required Effective Date (as defined in the Registration Rights Agreement) is greater than one hundred fifty (150) days after the Closing Date, or (c) the effectiveness of the Registration Statement is not maintained during the Registration Period (as defined in the Registration Rights Agreement) each holder may, at its option, require the Company to redeem the Preferred Shares in full, within three (3) days, in cash, at the Share Cap Redemption Price. (c) in the event that the Company does not register the Preferred Stock within 150 days after the Closing Date (as defined in the Registration Rights Agreement), as more particularly described in Section 2 of the Registration Rights Agreement, the Company shall redeem the Preferred Shares at the Share Cap Redemption Price within three (3) business days after it has received demand for such redemption from the holders of the Series B Preferred. In exercising its rights hereunder or pursuant to Section 6(a) above the holders can individually exercise their respective redemption rights without the participation A-10 of the other holders. 7. Notices of Record Date. In the event of any: ----------------------------------------------- (a) taking by the Corporation of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of capital stock of any class or any other securities or property, or to receive any other right, or (b) capital reorganization of the Corporation, any reclassification or recapitalization of the capital stock of the Corporation, any merger or consolidation of the Corporation, or any transfer of all or substantially all of the assets of the Corporation to any other Corporation, or any other entity or person, or (c) voluntary or involuntary dissolution, liquidation or winding up of the Corporation, then and in each such event the Corporation shall telecopy and thereafter mail or cause to be mailed to each holder of Series B Preferred a notice specifying (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right and a description of such dividend, distribution or right, (ii) the date on which any such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding up is expected to become effective, and (iii) the time, if any, that is to be fixed, as to when the holders of record of Common Stock (or other securities) shall be entitled to exchange their shares of Common Stock (or other securities) for securities or other property deliverable upon such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding up. Such notice shall be telecopied and thereafter mailed by first class mail, postage prepaid, or by express overnight courier service, at least ten (10) days prior to the date specified in such notice on which such action is to be taken. 8. General. -------- (a) Replacement of Certificates. Upon the Corporation's receipt, from the holder of any certificate evidencing shares of Series B Preferred, of evidence reasonably satisfactory to the Corporation (an affidavit of such holder will be satisfactory) of the ownership and the loss, theft, destruction or mutilation of such certificate, and in the case of any such loss, theft or destruction, upon receipt of indemnity reasonably satisfactory to the Corporation, and in the case of any such mutilation, upon surrender of such certificate, the Corporation (at its expense) shall execute and deliver to such holder, in lieu of such certificate, a new certificate that represents the number of shares represented by, is dated the date of, is issued in the name of the holder of, and is substantially identical in form of, such A-11 lost, stolen, destroyed or mutilated certificate. (b) Payment of Taxes. The Corporation shall pay all taxes (other than taxes based upon income) and other governmental charges that may be imposed in connection with the issuance or delivery of any shares of Common Stock (or other of the Corporation's securities) that results from (i) the conversion of shares of Series B Preferred pursuant to this Certificate of Designations or (ii) the application of Section 2(a)(v) hereof. Notwithstanding the foregoing, if the Corporation, pursuant to a notice from a holder of any shares of Series B Preferred, effects the issuance or delivery of any shares of Common Stock (or other of the Corporation's securities) in any name(s) other than such holder's name, then such holder shall deliver to the Corporation with the aforesaid notice (A) all transfer taxes and other governmental charges payable upon the issuance or delivery of securities in such other name(s) or (B) evidence satisfactory to the Corporation that such taxes and charges have been or shall be paid in full. (c) Status of Redeemed or Converted Shares. Shares of Series B Preferred that are redeemed, converted or otherwise acquired by the Corporation in any manner (including by purchase or exchange) shall be canceled and upon cancellation (i) shall no longer be deemed to be outstanding, (ii) shall become authorized but unissued shares of preferred stock undesignated as to series and (iii) may be reissued as part of another series of preferred stock. [End of Certificate of Designation] A-12 EX-4.1 3 SERIES B PREFERRED SECURITIES PURCHASE AGREEMENT SECURITIES PURCHASE AGREEMENT THIS SECURITIES PURCHASE AGREEMENT, dated as of April 30, 1999, is entered into by and between U.S. Wireless Data, Inc., a Colorado corporation, with headquarters located at 2200 Powell Street, Suite 800, Emeryville, California 94608 (the "Company"), and the undersigned (referred to individually as the "Buyer" and collectively as the ("Buyers"). W I T N E S S E T H: WHEREAS, the Company and the Buyers are executing and delivering this Agreement in accordance with and in reliance upon the exemption from securities registration afforded, inter alia, by Rule 506 under Regulation D ("Regulation D") as promulgated by the United States Securities and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended (the "1933 Act"), and/or Section 4(2) of the 1933 Act; WHEREAS, in consideration of the foregoing, the Buyer wishes to purchase, upon the terms and subject to the conditions of this Agreement, 6% Cumulative Convertible Redeemable Preferred Stock, Series B, $1.00 stated value (the "Preferred Stock"), of the Company which will be convertible into shares of Common Stock, no par value per share of the Company (the "Common Stock"), together with the Common Stock Purchase Warrants described herein, upon the terms and subject to the conditions of such Preferred Stock, and subject to acceptance of this Agreement by the Company; NOW THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. AGREEMENT TO PURCHASE; PURCHASE PRICE. a. Purchase; Certain Definitions. (i) The undersigned hereby agrees to purchase from the Company shares of the Preferred Stock in the amount set forth on the signature page of this Agreement, out of a total offering of not less than $1,500,000 and not in excess of $5,000,000 of such Preferred Stock, and having the terms and conditions set forth in the Certificate of Designations, attached hereto as Annex I (the "Certificate of Designations"). The purchase price for the Preferred Stock shall be as set forth on the signature page hereto (the "Purchase Price") and shall be payable in United States Dollars. (ii) As used herein, the term "Preferred Stock" includes all preferred shares, if any, issued as dividends thereon, unless the context otherwise requires. (iii) As used herein, the term "Securities" means the Preferred Stock and the Common Stock issuable upon conversion of the Preferred Stock. b. Form of Payment. The Buyer shall pay the purchase price for the Preferred Stock by delivering immediately available good funds in United States Dollars to the escrow agent (the 1 "Escrow Agent") identified in the Joint Escrow Instructions attached hereto as Annex II (the "Joint Escrow Instructions"). No later than the Closing Date (as defined below), the Company shall deliver one or more certificates representing the Preferred Stock duly executed on behalf of the Company (collectively, the "Certificate") to the Escrow Agent. By signing this Agreement, the Buyer and the Company, and subject to acceptance by the Escrow Agent, each agrees to all of the terms and conditions of, and becomes a party to, the Joint Escrow Instructions, all of the provisions of which are incorporated herein by this reference as if set forth in full. c. Method of Payment. Payment into escrow of the Purchase Price for the Preferred Stock shall be made by wire transfer of funds to: City National Bank 1950 Avenue of the Stars Los Angeles, CA 90067 ABA# 122016066 For credit to the account of Law Offices of Michael S. Rosenblum Escrow for Bold Street, LLC Account No.: 009477772 Not later than 1:00 p.m., New York time, on the date which is one (1) New York Stock Exchange trading day after the Company shall have accepted this Agreement and returned a signed counterpart of this Agreement to the Escrow Agent by facsimile, the Buyer shall deposit with the Escrow Agent the aggregate purchase price for the Preferred Stock, in immediately available funds. Time is of the essence with respect to such payment, and failure by the Buyer to make such payment shall allow the Company to cancel this Agreement. d. Escrow Property. The Purchase Price and the Certificate delivered to the Escrow Agent as contemplated by Sections 1(b) and (c) hereof are referred to as the "Escrow Property." 2. BUYER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO INFORMATION; INDEPENDENT INVESTIGATION. Each Buyer represents and warrants to, and covenants and agrees with, the Company as follows: a. Without limiting Buyer's right to sell the Common Stock pursuant to the Registration Statement (as that term is defined in the Registration Rights Agreement defined below), the Buyer is purchasing the Preferred Stock and will be acquiring the shares of Common Stock issuable upon conversion of the Preferred Stock (the "Converted Shares") for its own account for investment, and not with a view towards the public sale or distribution thereof and not with a view to or for sale in connection with any distribution thereof. b. The Buyer is (i) an "accredited investor" as that term is defined in Rule 501 of the General Rules and Regulations under the 1933 Act by reason of Rule 501(a)(3), (ii) experienced in 2 making investments of the kind described in this Agreement and the related documents, (iii) able, by reason of the business and financial experience of its officers (if an entity) and professional advisors (who are not affiliated with or compensated in any way by the Company or any of its affiliates or selling agents), to protect its own interests in connection with the transactions described in this Agreement, and the related documents, and (iv) able to afford the entire loss of its investment in the Securities. c. All subsequent offers and sales of the Preferred Stock and the shares of Common Stock representing the Converted Shares (such Common Stock sometimes referred to as the "Shares") by the Buyer shall be made pursuant to registration of the Shares under the 1933 Act or pursuant to an exemption from registration. d. The Buyer understands that the Preferred Stock are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying upon the truth and accuracy of, and the Buyer's compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of the Buyer to acquire the Preferred Stock. e. The Buyer and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Preferred Stock and the offer of the Shares which have been requested by the Buyer, including Annex V hereto. The Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company and have received complete and satisfactory answers to any such inquiries. Without limiting the generality of the foregoing, the Buyer has also had the opportunity to obtain and to review (i) the Company's annual report on Form 10-KSB for the year ending June 30, 1998, (ii) the Company's reports on Form 10-QSB for the periods ending September 30, 1998 and December 31, 1998 (the "SEC Reports"); f. The Buyer understands that its investment in the Securities involves a high degree of risk. g. The Buyer understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities. h. This Agreement has been duly and validly authorized, executed and delivered on behalf of the Buyer and is a valid and binding agreement of the Buyer enforceable in accordance with its terms, subject as to enforceability to general principles of equity and to bankruptcy, insolvency, moratorium and other similar laws affecting the enforcement of creditors' rights generally. i. Notwithstanding the provisions hereof or of the Preferred Stock, in no event (except with respect to an automatic conversion of the Preferred Stock as provided in the Certificate of Designations) shall each Buyer be entitled to convert any Preferred Stock to the extent that, after such conversion, the sum of (1) the number of shares of Common Stock beneficially owned by such Buyer and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the 3 ownership of the unconverted portion of the Preferred Stock), and (2) the number of shares of Common Stock issuable upon the conversion of the Preferred Stock with respect to which the determination of this proviso is being made, would result in beneficial ownership by such Buyer and its affiliates of more than 4.99% of the outstanding shares of Common Stock. For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the "1934 Act"). Any issuance by the Company to the Buyer in excess of the limit contained in this Paragraph 3.i. shall be null and void, ab initio, and upon notice of such invalid issuance, the Company shall correct its books and cause its transfer agent's books to be corrected forthwith to reflect that the Buyer's ownership of Common Stock is within the limit set forth herein. Buyer shall immediately deliver any certificates for invalidly issued Common Stock to the Company's transfer agent. The Company further agrees to (i) immediately reissue certificates for Common Stock to the extent that a portion of the Common Stock represented by said certificates have been validly issued and (ii) immediately reissue all or a portion of those shares which were deemed invalidly issued (at a price set forth in the original conversion notices applicable to such shares) upon notice from the Buyer that the reissuance of such shares would not cause such Buyer to have a beneficial ownership interest in excess of 4.99%. With respect to the foregoing, the Company acknowledges and agrees that, it is aware that some of the Buyers of the Securities may have the same investment advisor or "sub-advisor" and that, based on such limited relationship alone, such entities are not a group for the purposes of determining beneficial ownership pursuant to Sections 13(d) and 16 of the 1934 Act. The Company hereby indemnifies and holds each Buyer free and harmless in connection with any and all liabilities, losses, costs and expenses, including, without limitation, attorneys' fees and costs arising from or relating to claims made by any third parties with respect to any and all purported violations by each Buyer under Sections 13(d) and 16 resulting from a conversion(s) of Preferred Stock, unless such claim arises from such Buyer's default of its obligations hereunder, or representations or warranties contained herein. j. Buyer represents that it neither is nor will be obligated for any finders' fee or commission nor is it aware of any such fee or commission payable in connection with this transaction other than as set forth on the Joint Escrow Instructions (attached hereto as Annex II). Buyer agrees to indemnify and to hold harmless the Company from any liability for any commission or compensation in the nature of a finders' fee (and the costs and expenses of defending against such liability or asserted liability) for which such Buyer or any of its officers, partners, employees, or representatives is responsible. 3. COMPANY REPRESENTATIONS, ETC. The Company represents and warrants and hereby covenants and agrees with each Buyer that: a. Concerning the Preferred Stock and the Shares. The Preferred Stock has been duly authorized and, when issued, will be duly and validly issued, fully paid and non-assessable and will not subject the holder thereof to personal liability by reason of being such holder. There are no preemptive rights of any stockholder of the Company, as such, to acquire the Preferred Stock or the Shares. 4 b. Reporting Company Status. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Colorado and has the requisite corporate power to own its properties and to carry on its business as now being conducted. The Company is duly qualified as a foreign corporation to do business and is in good standing in each jurisdiction where the nature of the business conducted or property owned by it makes such qualification necessary, other than those jurisdictions in which the failure to so qualify would not have a material adverse effect on the business, operations or prospects or condition (financial or otherwise) of the Company and its subsidiaries, taken as a whole. The Company has registered its Common Stock pursuant to Section 12 of the 1934 Act, and the Common Stock is listed and traded on the NASDAQ/Bulletin Board market. The Company has received no notice, either oral or written, with respect to the continued eligibility of the Common Stock for such listing, and the Company has maintained all requirements for the continuation of such listing. c. Authorized Shares. The Company has at March 31, 1999, 14,410,689 shares of Common Stock outstanding, and has sufficient authorized and unissued Shares as may be reasonably necessary to effect the conversion of the Preferred Stock (assuming all future conversions occurred are based upon an average 5-day closing bid of the Common Stock, as reported by Bloomberg, LP which was one-half (1/2) of the closing bid price of the Common Stock on the Closing Date [the "Closing Date Bid"]) and exercise of the Warrants (as defined in Section 4.j.) at the Closing Date Bid. The Common Stock has been duly authorized and, when issued upon conversion of the Preferred Stock in accordance with its terms, will be duly and validly issued, fully paid and non-assessable and will not subject the holder thereof to personal liability by reason of being such holder. d. Securities Purchase Agreement; Registration Rights Agreement and Stock. This Agreement and the Registration Rights Agreement, the form of which is attached hereto as Annex IV (the "Registration Rights Agreement"), and the transactions contemplated hereby and thereby, have been duly and validly authorized by the Company, this Agreement has been duly executed and delivered by the Company and this Agreement is, and the Preferred Stock, and the Registration Rights Agreement, when executed and delivered by or on behalf of the Company, will be, valid and binding agreements of the Company enforceable in accordance with their respective terms, subject, as to enforceability, to general principles of equity and to bankruptcy, insolvency, moratorium, and other similar laws affecting the enforcement of creditors' rights generally. e. Non-contravention. The execution and delivery of this Agreement and the Registration Rights Agreement by the Company, the issuance of the Securities, and the consummation by the Company of the other transactions contemplated by this Agreement, the Registration Rights Agreement, and the Preferred Stock do not and will not conflict with or result in a breach by the Company of any of the terms or provisions of, or constitute a default under (i) the articles of incorporation or by-laws of the Company, each as currently in effect, (ii) except as disclosed in Annex V, any indenture, mortgage, deed of trust, or other material agreement or instrument to which the Company is a party or by which it or any of its properties or assets are bound, including any listing agreement for the Common Stock (except as herein set forth), (iii) to its knowledge, any existing applicable law, rule, or regulation or any applicable decree, judgment, or order of any court, United States federal or state regulatory body, administrative agency, or other governmental body having jurisdiction over the Company or any of its properties or assets, or (iv) any listing agreement for its Common Stock, except such conflict, breach or default which 5 would not have a material adverse effect on the transactions contemplated herein. f. Approvals. No authorization, approval or consent of any court, governmental body, regulatory agency, self-regulatory organization, or stock exchange or market or the stockholders of the Company is required to be obtained by the Company for the issuance and sale of the Securities to the Buyer as contemplated by this Agreement, except such authorizations, approvals and consents that have been obtained. g. SEC Filings. None of the Company's SEC Reports contained, at the time they were filed, any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements made therein in light of the circumstances under which they were made, not misleading, except as corrected by an amended filing made prior to the date hereof. Except as set forth on Annex V hereto, the Company has since June 1997 timely filed all requisite forms, reports and exhibits thereto with the SEC., h. Absence of Certain Changes. Since December 31, 1998, there has been no material adverse change and no material adverse development in the business, properties, operations, condition (financial or otherwise), or results of operations of the Company and its subsidiaries, taken as a whole, except as disclosed in Annex V or in the Company's SEC Reports. Since December 31, 1998, the Company has not (i) incurred or become subject to any material liabilities (absolute or contingent) except liabilities incurred in the ordinary course of business consistent with past practices; (ii) discharged or satisfied any material lien or encumbrance or paid any material obligation or liability (absolute or contingent), other than current liabilities paid in the ordinary course of business consistent with past practices; (iii) declared or made any payment or distribution of cash or other property to stockholders with respect to its capital stock, or purchased or redeemed, or made any agreements to purchase or redeem, any shares of its capital stock; (iv) sold, assigned or transferred any other tangible assets, or canceled any debts or claims, except in the ordinary course of business consistent with past practices; (v) suffered any substantial losses or waived any rights of material value, whether or not in the ordinary course of business, or suffered the loss of any material amount of existing business; (vi) made any changes in employee compensation, except in the ordinary course of business consistent with past practices; or (vii) experienced any material problems with labor or management in connection with the terms and conditions of their employment. i. Full Disclosure. There is no fact known to the Company (other than general economic conditions known to the public generally or as disclosed in the Company's SEC Reports), that has not been disclosed in writing to the Buyer that (i) would reasonably be expected to have a material adverse effect on the business or financial condition of the Company or (ii) would reasonably be expected to materially and adversely affect the ability of the Company to perform its obligations pursuant to this Agreement or any of the agreements contemplated hereby (collectively, including this Agreement, the "Transaction Agreements"). j. Absence of Litigation. Except as set forth in Annex V hereto, and in the Company's SEC Reports, which the Buyer has reviewed, there is no action, suit, proceeding, inquiry or investigation before or by any court, public board or body pending or, to the knowledge of the Company, threatened against or affecting the Company, wherein an unfavorable decision, ruling or finding would 6 have a material adverse effect on the properties, business or financial condition. results of operation or prospects of the Company and its subsidiaries taken as a whole or the transactions contemplated by any of the Transaction Agreements or which would adversely affect the validity or enforceability of, or the authority or ability of the Company to perform its obligations under, any of the Transaction Agreements. k. Absence of Events of Default. Except as set forth in Annex V hereto, no Event of Default (or its equivalent term), as defined in the respective agreement to which the Company is a party, and no event which, with the giving of notice or the passage of time or both, would become an Event of Default (or its equivalent term) (as so defined in such agreement), has occurred and is continuing, which would have a material adverse effect on the Company's financial condition or results of operations. l. Prior Issues. Except as set forth in Annex V, during the twelve (12) months preceding the date hereof, the Company has not issued any Common Stock or convertible securities in capital transactions which have not been fully disclosed in the Company's filings with the SEC. Except as set forth in Annex V, all such issuances (except for issuances to Buyer) have been fully converted into shares of common stock and there are no outstanding unconverted debt or convertible securities from those transactions. m. No Undisclosed Liabilities or Events. Except as set forth in Annex V, the Company has no liabilities or obligations other than those disclosed in the Company's SEC Reports or those incurred in the ordinary course of the Company's business since December 31, 1998, and which, individually or in the aggregate, do not or would not have a material adverse effect on the properties, business, condition (financial or otherwise), results of operations or prospects of the Company and its subsidiaries, taken as a whole. No event or circumstances has occurred or exists with respect to the Company or its properties, business, condition (financial or otherwise), results of operations or prospects, which, under applicable law, rule or regulation, requires public disclosure or announcement prior to the date hereof by the Company but which has not been so publicly announced or disclosed. n. No Default. Except as disclosed in Annex V, hereto, the Company is not in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any indenture, mortgage, deed of trust or other material instrument or agreement to which it is a party or by which it or its property is bound. o. No Integrated Offering. Neither the Company nor any of its affiliates nor any person acting on its or their behalf has, directly or indirectly, made any offer or sales of any security or solicited any offers to buy any security under circumstances that would eliminate the availability of the exemption from registration under Regulation D in connection with the offer and sale of the Securities as contemplated hereby. 7 p. Dilution. The number of Shares issuable upon conversion of the Preferred Stock may increase substantially in certain circumstances, including, but not necessarily limited to, the circumstance wherein the trading price of the Common Stock declines prior to the conversion of the Preferred Stock. The Company's executive officers and directors have studied and fully understand the nature of the Securities being sold hereby and recognize that they have a potential dilutive effect. The board of directors of the Company has concluded that, in its good faith business judgment, such issuance is in the best interests of the Company. The Company specifically acknowledges that its obligation to issue the Shares upon conversion of the Preferred Stock is binding upon the Company and enforceable regardless of the dilution such issuance may have on the ownership interests of other shareholders of the Company. q. Acknowledgment by Company. Company represents and warrants that neither the Buyer, nor any persons or entities representing or purporting to represent the Buyer have made any representation or warranty which is not contained expressly in this Agreement or any other agreements referred to herein. Without limiting the foregoing, Company specifically acknowledges that the Buyer has made no representations that it is a "long term" investor in the Company, or that it intends to hold the Preferred Stock or shares of stock in the Company (obtained by conversions of the Preferred Stock) for any period beyond that which is required under the Securities Act. Company further acknowledges that the Buyer may hedge the shares of stock in the Company prior to or after the conversions of any of the Preferred Stock, provided that such hedging is done in compliance with the Securities Act, Securities Exchange Act, any rules applicable to securities traded on the "OTC Bulletin Board" and the express terms of this Agreement, the Certificate of Designation for the Preferred Stock and the Registration Rights Agreement. r. Brokers Fee. The Company represents that it neither is nor will be obligated for any finders' fee or commission nor is it aware of any such fee or commission payable in connection with this transaction other than as set forth on the Joint Escrow Instructions (attached hereto as Annex II). The Company agrees to indemnify and to hold harmless the Buyer from any liability for any commission or compensation in the nature of a finders' fee (and the costs and expenses of defending against such liability or asserted liability) for which the Company or any of its officers, partners, employees, or representatives is responsible. 4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS. a. Transfer Restrictions. The Buyer acknowledges that (1) the Preferred Stock has not been and is not being registered under the provisions of the 1933 Act and, except as provided in the Registration Rights Agreement, the Shares have not been and are not being registered under the 1933 Act, and may not be transferred unless (A) subsequently registered thereunder or (B) the Buyer shall have delivered to the Company an opinion of counsel, reasonably satisfactory in form, scope and substance to the Company, to the effect that the Securities to be sold or transferred may be sold or transferred pursuant to an exemption from such registration; (2) any sale of the Securities made in reliance on Rule 144 promulgated under the 1933 Act may be made only in accordance with the terms of said Rule and further, if said Rule is not applicable, any resale of such Securities under circumstances in which the seller, or the person through whom the sale is made, may be deemed to be an underwriter, as that term is used in the 1933 Act, may require compliance with some other exemption under the 1933 Act or the rules and 8 regulations of the SEC thereunder; and (3) neither the Company nor any other person is under any obligation to register the Securities (other than pursuant to the Registration Rights Agreement) under the 1933 Act or to comply with the terms and conditions of any exemption thereunder. b. Restrictive Legend. The Buyer acknowledges and agrees that the Preferred Stock and, until such time as the Common Stock has been registered under the 1933 Act as contemplated by the Registration Rights Agreement and sold pursuant to an effective Registration Statement, certificates and other instruments representing any of the Securities shall bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of any such Securities): THESE SECURITIES (THE "SECURITIES") HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED. c. Registration Rights Agreement. The parties hereto agree to enter into the Registration Rights Agreement on or before the Closing Date. d. Filings. The Company undertakes and agrees to make all necessary filings in connection with the sale of the Preferred Stock to the Buyer under any United States laws and regulations, or by any domestic securities exchange or trading market, and to provide a copy thereof to the Buyer promptly after such filing. e. Reporting Status. So long as the Buyer beneficially owns any of the Preferred Stock, the Company shall file all reports required to be filed with the SEC pursuant to Section 13 or 15(d) of the 1934 Act, and the Company shall not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would permit such termination. f. Use of Proceeds. The Company will use the proceeds from the sale of the Preferred Stock (excluding amounts paid by the Company for legal fees, finder's fees and escrow agent fees in connection with the sale of the Preferred Stock) for general capital purposes and, without limiting the foregoing, shall not, directly or indirectly, use any of such proceeds for investment in any other affiliate. g. Future Purchases. Intentionally deleted. h. Certain Agreements. (i) The Company covenants and agrees that it will not, without the prior written consent of the Buyer, enter into any subsequent or further offer or sale of Common Stock or securities convertible into Common Stock with any third party until one hundred eighty (180) days after the Effective Date (as defined below). 9 (ii) The provisions of subparagraph (h)(i) will not apply to (w) Common Stock issued as "restricted stock" as defined in SEC Rule 144, provided the holder thereof holds such Common Stock for at least one year from the date of issuance; (x) a secondary public offering of shares of Common Stock at market; (y) an offering of convertible debentures at market or above; or (z) the issuance of securities (other than for cash) in connection with a merger, consolidation, sale of assets, disposition or the exchange of the capital stock for assets, stock or other joint venture interests; provided, such securities would not be included in the Registration Statement relating to the Shares and a registration statement in respect of such stock shall not be filed prior to sixty (60) days after the Effective Date. (iii) The term "Effective Date" means the effective date of the Registration Statement covering the Registrable Securities (as defined in the Registration Rights Agreement). (iv) In the event the Company breaches the provisions of this Paragraph 4(h), the Conversion Price shall be amended to be the lesser of 75% of the lowest two (2) day average closing bid (not necessarily consecutive) for the fifteen (15) days prior to the Conversion Notice, but at no time in excess of 100% of the fifteen (15) day average bid price prior to Closing, and Buyer may, within thirty (30) days after it receives written notice of such breach from the Company, require the Company to immediately redeem all outstanding Preferred Stock in accordance with Section 4(k)(y). (v) Notwithstanding anything contained in this Section, it shall not be a violation of this Agreement for the Company to issue additional options pursuant to its 1992 Stock Option Plan, and to issue shares of its Common Stock upon exercise of any presently outstanding option or warrant or upon conversion of, or as dividends on, Series A Preferred Stock. The Company shall also be entitled to register any shares underlying presently outstanding stock options on Form S-8, to the extent not currently covered by an effective S-8 Registration Statement. i. Available Shares. The Company shall have at all times authorized and reserved for issuance, free from preemptive rights, shares of Common Stock equal to one hundred fifty percent (150%) of the number of shares of Common Stock issuable upon conversion of all of the outstanding Preferred Stock, and the exercise of the Warrants (as defined below). j. Warrants. The Company agrees to issue to Buyer at the Closing, transferable divisible warrants with cashless exercise provisions (the "Warrants") for 10,000 shares of Common Stock for each $50,000 of the Purchase Price. Such Warrants shall bear an exercise price of $1.50 per share of Common Stock, and shall be exercisable immediately upon issuance, and for a period of five (5) years thereafter, in the form annexed hereto as Annex VI, together with piggy-back registration rights, and demand registration rights under the Registration Rights Agreement. k. Limitation on Issuance of Shares. The Company may be limited in the number of shares of Common Stock it may issue by the "Cap Regulations". Without limiting the other provisions thereof, the Preferred Stock shall provide that (i) the Company will take all steps reasonably necessary to be in a position to issue shares of Common Stock on conversion of the Preferred Stock and/or exercise of the Warrants without violating the Cap Regulations and (ii) if, despite taking such steps, the Company still can not issue such shares of Common Stock due upon a Notice of Conversion without violating the Cap Regulations (each such share, an "Unconverted Preferred Stock"), the Company shall have the option, 10 in its discretion, by notice within five (5) business days, to elect either of the following remedies: (x) issue shares of Common Stock in accordance with such holder's notice of conversion at a conversion purchase price equal to the average of the closing bid price per share of Common Stock for the five (5) consecutive trading days (subject to certain equitable adjustments for certain events occurring during such period) preceding the date of notice of conversion; or (y) redeem each Unconverted Preferred Stock for an amount in cash (the "Redemption Amount") equal to: V x 125% where: "V" means the aggregate Purchase Price of such Unconverted Preferred Stock plus any accrued but unpaid dividend thereon; The Preferred Stock shall contain provisions substantially consistent with the above terms, with such additional provisions as may be consented to by the Buyer. The provisions of this paragraph are not intended to limit the scope of the provisions otherwise included in the Preferred Stock. 5. TRANSFER AGENT INSTRUCTIONS. a. Promptly following the delivery by the Buyer of the aggregate purchase price for the Preferred Stock in accordance with Section 1(c) hereof, the Company will irrevocably instruct its transfer agent to issue Common Stock from time to time upon conversion of the Preferred Stock in such amounts as specified from time to time by the Company to the transfer agent, bearing the restrictive legend specified in Section 4(b) of this Agreement prior to registration of the Shares under the 1933 Act, registered in the name of the Buyer or its nominee and in such denominations to be specified by the Buyer in connection with each conversion of the Preferred Stock. The Company warrants that no instruction other than such instructions referred to in this Section 5 and stop transfer instructions to give effect to Section 4(a) hereof prior to registration and sale of the Shares under the 1933 Act will be given by the Company to the transfer agent and that the Shares shall otherwise be freely transferable on the books and records of the Company as and to the extent provided in this Agreement, the Registration Rights Agreement, and applicable law. Nothing in this Section shall affect in any way the Buyer's obligations and agreement to comply with all applicable securities laws upon resale of the Securities. If the Buyer provides the Company with an opinion of counsel reasonably satisfactory to the Company that registration of a resale by the Buyer of any of the Securities in accordance with clause (1)(B) of Section 4(a) of this Agreement is not required under the 1933 Act, the Company shall (except as provided in clause (2) of Section 4(a) of this Agreement) permit the transfer of the Securities and, in the case of the Shares, promptly instruct the Company's transfer agent to issue one or more certificates for Common Stock without legend in such name and in such denominations as specified by the Buyer. b. (i) The Company will permit the Buyer to exercise its right to convert the 11 Preferred Stock by telecopying an executed and completed Notice of Conversion (as defined in the Certificate of Designation) to the Company and delivering within three (3) business days thereafter, the original Notice of Conversion, together with the original share certificate, by express courier. (ii) The term "Conversion Date" means, with respect to any conversion elected by the holder of the Preferred Stock after the Effective Date, the date specified in the Notice of Conversion, provided the copy of the Notice of Conversion is telecopied to or otherwise delivered to the Company in accordance with the provisions hereof so that is received by the Company on or before such specified date. The Conversion Date for any mandatory conversion at maturity shall be the Maturity Date of the Preferred Stock. (iii) The Company shall, at its expense, take all actions and use all means necessary and diligent to cause its transfer agent to transmit the certificates representing the Shares issuable upon conversion of any Preferred Stock (together with Preferred Stock not being so converted) to the Buyer via express courier, by electronic transfer or otherwise, within three (3) business days after receipt by the Company of the later of (i) receipt by the Company of the copy of the original Notice of Conversion and share certificate, and (ii) the Conversion Date (the "Delivery Date"). c. The Company understands that a delay in the issuance of the Shares of Common Stock beyond the Delivery Date could result in economic loss to the Buyer. As compensation to the Buyer for such loss, the Company agrees to pay late payments to the Buyer in the event that due entirely to the Corporation's failure to issue and deliver the Shares upon Conversion in accordance with the following schedule (where "No. Business Days Late" is defined as the number of business days beyond five (5) business days from Delivery Date): Late Payment For Each $10,000 of Preferred Stock Liquidation No. Business Days Late Amount Being Converted 1 $100 2 $200 3 $300 4 $400 5 $500 >5 $500 +$200 for each Business Day Late beyond 5 days from The Delivery Date The Company shall pay any payments incurred under this Section in immediately available funds upon demand. Nothing herein shall limit the Buyer's right to pursue actual damages or to cause the Company to redeem the Preferred Shares as provided below for the Company's actions or inactions resulting in the transfer agent's failure to issue and deliver the Common Stock to the Buyer. Furthermore, in addition to any other remedies which may be available to the Buyer, in the event that the Company fails to deliver such shares of Common Stock within five (5) business days after the Delivery Date, the Buyer will be entitled to revoke the relevant Notice of Conversion by delivering a notice to such 12 effect to the Company whereupon the Company and the Buyer shall each be restored to their respective positions immediately prior to delivery of such Notice of Conversion. In the event the Company's actions or inactions result in the transfer agent's failure to issue and deliver the Common Stock to the Buyer within ten (10) days after the Delivery Date, Buyer may, at its option, require the Company (without limiting its other remedies hereunder) to immediately redeem all outstanding Preferred Stock in accordance with Section 4(k)(y). d. If, by the relevant Delivery Date, the Company fails for any reason to deliver the Shares to be issued upon conversion of the Preferred Stock and after such Delivery Date, the holder of the Preferred Stock being converted (a "Converting Holder") purchases, in an open market transaction or otherwise, shares of Common Stock (the "Covering Shares") in order to make delivery in satisfaction of a sale of Common Stock by the Converting Holder made after a Conversion Date (the "Sold Shares"), which delivery such Converting Holder anticipated to make using the Shares to be issued upon such conversion (a "Buy-In"), the Company shall pay to the Converting Holder, in addition to all other amounts contemplated in other provisions of the Transaction Agreements, and not in lieu thereof, the Buy-In Adjustment Amount (as defined below). The "Buy-In Adjustment Amount" is the amount equal to the excess, if any, of (x) the Converting Holder's total purchase price (including brokerage commissions, if any) for the Covering Shares over (y) the net proceeds (after brokerage commissions, if any) received by the Converting Holder from the sale of the Sold Shares. The Company shall pay the Buy-In Adjustment Amount to the Buyer in immediately available funds immediately upon demand by the Converting Holder. By way of illustration and not in limitation of the foregoing, if the Converting Holder purchases shares of Common Stock having a total purchase price (including brokerage commissions) of $11,000 to cover a Buy-In with respect to shares of Common Stock it sold for net proceeds of $10,000, the Buy-In Adjustment Amount which Company will be required to pay to the Converting Holder will be $1,000. The remedies set forth in paragraphs 5(c) and (d) shall be cumulative. e. In lieu of delivering physical certificates representing the unlegended securities issuable upon conversion, provided the Company's transfer agent is participating in the Depository Trust Company ("DTC") Fast Automated Securities Transfer program, upon request of the Buyer and its compliance with the provisions contained in this paragraph, so long as the certificates therefor do not bear a legend and the Buyer thereof is not obligated to return such certificate for the placement of a legend thereon, the Company shall use its best efforts to cause its transfer agent to electronically transmit the Common Stock issuable upon conversion to the Buyer by crediting the account of Buyer's Prime Broker with DTC through its Deposit Withdrawal Agent Commission system. f. The original certificate representing the Preferred Stock shall be delivered by the Buyer to the Company simultaneous with the final Notice of Conversion. 6. DELIVERY INSTRUCTIONS. The Preferred Stock shall be delivered by the Company to the Escrow Agent pursuant to Section 1(b) hereof, on a delivery against payment basis, no later than on the Closing Date. 7. CLOSING DATE. 13 (i) The closing of the issuance and sale of the Preferred Stock shall occur on the date (the "Closing Date") which is the first NYSE trading day after the fulfillment or waiver of all closing conditions pursuant to Sections 8 and 9 hereof or such other date and time as is mutually agreed upon by the Company and the Buyer. (ii) The closing of the purchase and issuance of Preferred Stock shall occur on the Closing Date, at the offices of the Escrow Agent and shall take place no later than 12:00 Noon, PST, on such day or such other time as is mutually agreed upon by the Company and the Buyer. (iii) Notwithstanding anything to the contrary contained herein, the Escrow Agent will be authorized to release the Escrow Property (as defined in the Escrow Agreement) only upon satisfaction of the conditions set forth in Sections 8 and 9 hereof. 8. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL. The Buyer understands that the Company's obligation to sell the Preferred Stock on the Closing Date and to the Buyer pursuant to this Agreement is conditioned upon: a. The receipt and acceptance by the Buyer of this Agreement as evidenced by execution of this Agreement by the Buyer for at least One Million Five Hundred Thousand Dollars ($1,500,000) in principal amount of the Preferred Stock (or such lesser amount as the Company, in its sole discretion, shall determine on the Closing Date); b. Delivery by the Buyer to the Escrow Agent of good funds as payment in full of an amount equal to the Purchase Price for the Preferred Stock in accordance with Section 1(c) hereof; c. The accuracy on the Closing Date of the representations and warranties of the Buyer contained in this Agreement as if made on the Closing Date, and the performance by the Buyer on or before the Closing Date of all covenants and agreements of the Buyer required to be performed on or before the Closing Date; d. There shall not be in effect any law, rule or regulation prohibiting or restricting the transactions contemplated hereby, or requiring any consent or approval which shall not have been obtained. 9. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE. The Company understands that the Buyer's obligation to purchase the Preferred Stock on the Closing Date is conditioned upon: a. Acceptance by the Company of this Agreement for the sale of Preferred Stock, as indicated by execution of this Agreement; b. Delivery by the Company to the Escrow Agent of the appropriate Preferred Stock 14 in accordance with this Agreement; c. The accuracy in all material respects on the Closing Date of the representations and warranties of the Company contained in this Agreement as if made on the Closing Date and the performance by the Company on or before the Closing Date of all covenants and agreements of the Company required to be performed on or before the Closing Date and as to Preferred Stock, the conditions set forth in Paragraph 4g; and 15 d. On the Closing Date, Buyer having received (i) an opinion of counsel for the Company, dated the Closing Date, in form, scope and substance reasonably satisfactory to the Buyer, to the effect set forth in Annex III attached hereto, (ii) the Registration Rights Agreement annexed hereto as Annex IV and the Warrants. e. No statute, rule, regulation, executive order, decree, ruling or injunction shall be enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction which prohibits or adversely effects any of the transactions contemplated by this Agreement or the Transaction Documents, and no proceeding or investigation shall have been commenced or threatened which may have the effect of prohibiting or adversely effecting any of the transactions contemplated by this Agreement or the Transaction Documents. f. From and after the date hereof to and including the Closing Date, the trading of the Common Stock shall not have been suspended by the SEC, or the NASD and trading in securities generally on the New York Stock Exchange, NASDAQ/Small Cap, or Bulletin Board, as applicable, shall not have been suspended or limited, nor shall minimum prices been established for securities traded on NASDAQ/Small Cap or Bulletin Board, as applicable, nor shall there be any outbreak or escalation of hostilities involving the United States or any material adverse change in any financial market that in either case in the reasonable judgment of the Buyer makes it impracticable or inadvisable to purchase the Preferred Stock. 10. GOVERNING LAW; MISCELLANEOUS. a. This Agreement and all agreements entered into in connection herewith shall be governed by and interpreted in accordance with the laws of the State of California for contracts to be wholly performed in such state and without giving effect to the principles thereof regarding the conflict of laws. Any litigation based thereon, or arising out of, under, or in connection with, this agreement or any course of conduct, course of dealing, statements (whether oral or written) or actions of the Company or Buyer shall be brought and maintained exclusively in the state or Federal courts of the State of California, sitting in the City of Los Angeles. The Company hereby expressly and irrevocably submits to the jurisdiction of the state and federal Courts of the State of California for the purpose of any such litigation as set forth above and irrevocably agrees to be bound by any final judgment rendered thereby in connection with such litigation. The Company further irrevocably consents to the service of process by registered mail, postage prepaid, or by personal service within or without the State of California. The Company hereby expressly and irrevocably waives, to the fullest extent permitted by law, any objection which it may have or hereafter may have to the laying of venue of any such litigation brought in any such court referred to above and any claim that any such litigation has been brought in any inconvenient forum. To the extent that the Company has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution or otherwise) with respect to itself or its property, the Company hereby irrevocably waives such immunity in respect of its obligations under this Agreement and the related agreements entered into in connection herewith. b. A facsimile transmission of this signed Agreement shall be legal and binding on all parties hereto. 16 c. This Agreement may be signed in one or more counterparts, each of which shall be deemed an original. d. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement. e. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement or the validity or enforceability of this Agreement in any other jurisdiction. f. This Agreement may be amended only by an instrument in writing signed by the party to be charged with enforcement thereof. g. This Agreement supersedes all prior agreements and understandings among the parties hereto with respect to the subject matter hereof. h. Except as otherwise set forth herein, all costs and expenses, including reasonable attorneys' fees, incurred by the Buyer in the enforcement of this Agreement or any agreements related thereto, shall be paid by the Company upon demand. 11. NOTICES. Any notice or communication required or permitted by this Agreement shall be given in writing addressed as follows: COMPANY: U.S. Wireless Data, Inc. 2200 Powell Street, Suite 800 Emeryville, California 94608 ATTN: Robert Robichaud, Esq. Telecopier No.: (510) 596-2029 Telephone No.: (510) 596-2025 with a copy to: Jack Lewis, Esq. 1675 Broadway, Suite 2600 Denver, Colorado 80202 Telecopier No.: (303) 623-2062 Telephone No.: (303) 623-2700 BUYER: At the address set forth on the signature page of this Agreement. 17 ESCROW AGENT: Law Offices of Michael S. Rosenblum 1875 Century Park East, Suite 700 Los Angeles, CA 90067 Telecopier No. (310) 286-2100 All notices shall be served personally by telecopy, by telex, by overnight express mail service or other overnight courier, or by first class registered or certified mail, postage prepaid, return receipt requested. If served personally, or by telecopy, notice shall be deemed delivered upon receipt (provided that if served by telecopy, sender has written confirmation of delivery); if served by overnight express mail or overnight courier, notice shall be deemed delivered forty-eight (48) hours after deposit; and if served by first class mail, notice shall be deemed delivered seventy-two (72) hours after mailing. Any party may give written notification to the other parties of any change of address for the sending of notices, pursuant to any method provided for herein. 12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The Company's representations and warranties herein shall survive the execution and delivery of this Agreement and the delivery of the Preferred Stock and the Purchase Price, and shall inure to the benefit of the Buyer and its successors and assigns. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 18 NUMBER OF SHARES OF PREFERRED STOCK TO BE PURCHASED: _________* AGGREGATE PURCHASE PRICE OF SUCH PREFERRED STOCK: $_________* *As detailed below SIGNATURES FOR ENTITIES IN WITNESS WHEREOF, the undersigned represents that the foregoing statements are true and correct and that it has caused this Securities Purchase Agreement to be duly executed on its behalf as of this 30th day of April, 1999. Printed Names of Buyers By: See Annexed (Signature of Authorized Person) ------------------------------------- Printed Name and Title As of the date set forth below, the undersigned hereby accepts this Agreement and represents that the foregoing statements are true and correct and that it has caused this Securities Purchase Agreement to be duly executed on its behalf. U.S. Wireless Data, Inc., a Colorado corporation By: ____________________________ Title: ____________________________ Date: ____________________________ ANNEX TO SIGNATURE PAGE AMOUNT SHARES $1,500,000 1,500,000 BOLD STREET, LLC, a Cayman Islands limited liability company By: __________________________________ Manager ADDRESS: c/o Thomson Kernaghan & Co. 365 Bay Street, Suite 1000, 10th Fl. Toronto, Ontario M5H 2V2 Telephone No.: (416) 860-4160 Telecopier No.: (416) 860-8313 $--------- ----------------------------- By: __________________________________ President ANNEX I CERTIFICATE OF DESIGNATIONS [Filed herewith as Exhibit 3.1] ANNEX II JOINT ESCROW INSTRUCTIONS ANNEX III OPINION OF COUNSEL ANNEX IV REGISTRATION RIGHTS AGREEMENT [Filed herewith as Exhibit 4.2] ANNEX V COMPANY DISCLOSURE MATERIALS ANNEX VI COMMON STOCK PURCHASE WARRANT [Filed herewith as Exhibit 4.3] SECURITIES PURCHASE AGREEMENT ANNEX V As of April 27, 1999 SEC Filing Status: (Per Securities Purchase Agreement - Section 3.g.) Since June 1997, the following four SEC Reports were filed following the respective due dates: Form 10-KSB for year ended June 30, 1997 Form 10-QSB for quarter ended March 31, 1998 Form 10-KSB for year ended June 30, 1998 Form 10-QSB for quarter ended September 30, 1998 Certain Changes - from Dec. 31, 1998: (Per Securities Purchase Agreement - Section 3.h.) Capitalization: On March 15, 1999, the Company completed at $250,000 bridge financing from an existing investor. The investor received a $250,000 promissory note which bears interest at 10% per annum and is due at the earlier of June 12, 1999, or receipt by the Company of proceeds from a subsequent financing of at least $1 million. The investor received 50,000 shares of the Company's Common Stock and a fee equal to 12% of the proceeds of the investment. Effective March 19, 1999, the Company and the Burtzloff Family Trust entered into a Promissory Note Conversion and Stock Purchase Agreement whereby $500,000 of notes payable plus accrued interest were converted into 598,213 shares of the Company's Common Stock. Effective March 19, 1999, the Company and Liviakis Financial Communications, Inc. entered into a Promissory Note Conversion and Stock Purchase Agreement whereby $1,990,000 of notes payable plus accrued interest were converted into 2,363,040 shares of the Company's Common Stock. As of the end of March 1999, the Company has approximately 17,362,916 shares of Common Stock outstanding. The Company expects to receive requests for conversion of Series A Preferred Stock to Common Stock from existing investors. Currently there are approximately 790,000 shares of Series A Preferred Stock outstanding, which convert into Common Stock at 75% of market. In anticipation of the close of Financing from Bold Street LLC, the Company received an advance of $200,000 on the first funding via the execution of a 10% Promissory Note which will be paid back at the close of this Series B transaction. Management: On March 19, 1999, Roger Peirce, CEO and Chairman, resigned from the Company for personal reasons. The Board of Directors is finalizing an agreement with a new CEO candidate. The compensation package will include salary, bonus and a significant grant of performance based options or warrants. In February 1999, Charles Russell resigned from the Board of Directors for health reasons. Press Releases: Refer to attached releases Litigation: (Per Securities Purchase Agreement - Section 3.j.) As disclosed in the Company's Report on Form 10-QSB for the period ended September 30, 1998, in Part II, Item 1, the Company reached a settlement of claims of certain Noteholders in April 1998. The Company is considering an offer from a representative of several of the Noteholders, presently holding 83,500 shares of the Company's Common Stock, regarding the deferral or elimination of the guarantee and "put" provision. Event of Default: (Per Securities Purchase Agreement - Section 3.k.) As disclosed in the Company's Report on Form 10-QSB for the period ended September 30, 1998, in Part II, Item 3, the Company is in default of certain requirements relating to the 6% Convertible Debentures and Series A Preferred Stock (including Warrants issued to several Series A Preferred shareholders in conjunction with an agreement covering a partial redemption and conversion restrictions of Series A Preferred shares). As a condition of this financing, the Company has negotiated a "Waiver of Rights and First Amendment to Debenture Agreement" with the Holders of the 6% Convertible Debentures that has been reviewed by and is acceptable to Southridge Capital. Prior Issues: (Per Securities Purchase Agreement - Section 3.l.) See Certain Changes, above. Undisclosed Liabilities or Events: (Per Securities Purchase Agreement - Section 3.m.) See items listed above in Annex V On February 5, the Company signed a binding Term Sheet for a paid-in-full software license with respect to Maverick International Processing Services, Inc proprietary front-end processing system. Consideration from the Company will be in the form of 300,000 to 375,000 shares of Common Stock. The actual software licensing agreement has been drafted and is in the final stages of discussion. EX-4.2 4 SERIES B PREFERRED REGISTRATION RIGHTS AGREEMENT ANNEX IV TO SECURITIES PURCHASE AGREEMENT REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT, dated as of April 30, 1999 (this "Agreement"), is made by and between U.S. Wireless Data, Inc., a Colorado corporation (the "Company"), and the each entity named on the signature page hereto (individually referred to as the "Initial Investor" and collectively referred to as the "Initial Investors"). W I T N E S S E T H: WHEREAS, upon the terms and subject to the conditions of the Securities Purchase Agreement, dated as of April 30, 1999, between the Initial Investors and the Company (the "Securities Purchase Agreement"; capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Securities Purchase Agreement), the Company has agreed to issue and sell to the Initial Investors an aggregate of up to 5,000,000 shares of Series B Cumulative Convertible Redeemable Preferred Stock, no par value, $1.00 (plus accrued dividends) liquidation preference of the Company (the "Preferred Stock," which term, as used herein shall have the meaning ascribed to it in the Securities Purchase Agreement); and WHEREAS, the Company has agreed to issue the Warrants to the Initial Investors in connection with the issuance of the Preferred Stock; and WHEREAS, the Preferred Stock is convertible into shares of Common Stock (the "Conversion Shares") upon the terms and subject to the conditions contained in the Certificate of Designations; and WHEREAS, the Warrants to be issued to the Initial Investors may be exercised for the purchase of shares of Common Stock (the "Warrant Shares") upon the terms and conditions of the Warrants; and WHEREAS, to induce the Initial Investors to execute and deliver the Securities Purchase Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the "Securities Act"), with respect to the Conversion Shares and the Warrant Shares; NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Initial Investor hereby agree as follows: 1. Definitions. As used in this Agreement, the following terms shall have the following meanings: (a) "Investors" means the Initial Investors and any permitted transferee or assignee who agrees to become bound by the provisions of this Agreement in accordance with Section 9 hereof. (b) "Potential Material Event" means any of the following: (i) the possession by the Company of material information not ripe for disclosure in a registration statement, which shall be evidenced by determinations in good faith by the Board of Directors of the Company that disclosure of such information in the registration statement would be detrimental to the business and affairs of the Company; or (ii) any material engagement or activity by the Company which would, in the good faith determination of the Board of Directors of the Company, be adversely affected by disclosure in a registration statement at such time, which determination shall be accompanied by a good faith determination by the Board of Directors of the Company that the registration statement would be materially misleading absent the inclusion of such information. (c) "Register," "Registered," and "Registration" refer to a registration effected by preparing and filing a Registration Statement or Statements in compliance with the Securities Act and pursuant to Rule 415 under the Securities Act or any successor rule providing for offering securities on a continuous basis ("Rule 415"), and the declaration or ordering of effectiveness of such Registration Statement by the United States Securities and Exchange Commission (the "SEC"). (d) "Registrable Securities" means the Conversion Shares and the Warrant Shares. (e) "Registration Statement" means a registration statement of the Company under the Securities Act. 2. Registration. (a) Mandatory Registration. The Company shall prepare and file with the SEC, as soon as possible after the Closing Date, but no later than thirty (30) days following the Closing Date, a Registration Statement on Form SB-2, registering for resale by the Investors all of the Registrable Securities, but in no event less than two hundred percent (200%) of the aggregate number of shares into (i) which the Preferred Stock would be convertible at the time of filing of the Registration Statement (assuming for such purposes that all shares of Preferred Stock had been eligible to be converted, and had been converted, into Conversion Shares in accordance with their terms, whether or not such eligibility or conversion had in fact occurred as of such date), and (ii) which would be issued upon exercise of all of the Warrants at the time of filing of the Registration Statement (assuming for such purposes that all such Warrants had been eligible to be exercised and had been exercised in accordance with their terms, whether or not such eligibility or exercise had in fact occurred as of such date). The Registration Statement shall also state that, in accordance with Rule 416 and 457 under the Securities Act, it also covers such indeterminate number of additional shares of Common Stock as may become issuable upon conversion of the Preferred Stock and the exercise of the Warrants (and the Existing Warrants) to prevent dilution resulting from stock splits, or stock dividends. The Company will use its reasonable best efforts to cause the Registration Statement to be declared effective no later than ninety days (90) days after the Closing 2 Date. If at any time the number of shares of Common Stock into which the Preferred Stock may be converted and which would be issued upon exercise of the Warrants equals more than seventy percent (75%) of the aggregate number of shares of Common Stock then registered, the Company shall, within ten (10) business days after receipt of a written notice from any Investor, either (i) further amend the Registration Statement filed by the Company pursuant to the preceding sentence, if such Registration Statement has not been declared effective by the SEC at that time, to register 200% of the aggregate of all shares of Common Stock into which the Preferred Stock may then or in the future be converted and which would be issued currently or in the future upon exercise of the Warrants, or (ii) if such Registration Statement has been declared effective by the SEC at that time, file with the SEC an additional Registration Statement on Form SB-2, as may be appropriate, to register (A) 200% of the aggregate shares of Common Stock into which the unconverted Preferred Stock may then or in the future be converted and which would be issued currently or in the future upon exercise of the unexercised Warrants, less (B) the aggregate number of shares of Common Stock already registered which have not been issued upon conversions of Preferred Stock or the exercise of Warrants. The Registration Statement shall not include any shares other than the Registrable Securities, and certain other shares that the Company is obligated to Register as set forth in Schedule 5(b), without the consent of all of the Investors. The Investor acknowledges that after the closing hereof (but prior to the filing of the Registration Statement) up to five million Preferred Shares (less the amount purchased concurrently herewith by the current Investors) may be sold by the Company (and included on the Registration Statment) on the condition that the sale of such Preferred Shares is on the same terms which are contained in the Securities Purchase Agreement. (b) Payments by the Company. (i) If the Registration Statement covering the Registrable Securities is not filed in proper form with the SEC on or before thirty (30) days after the Closing Date (the "Required Filing Date"), then the Company shall pay each Investor a late filing penalty (collectively "Late Filing Penalties"), (i) on the first day after the Required Filing Date, an amount equal to three percent (3%) of the purchase price paid pursuant to the Securities Purchase Agreement (the "Purchase Price") for the Preferred Stock then held by each such Investor on such date, and (ii) on each subsequent monthly anniversary of the Required Filing Date, if the Registration Statement has not been filed in proper form on or before such date, an amount equal to three percent (3%) of the Purchase Price for the Preferred Stock held by each such Investor on each such subsequent monthly anniversary date. (ii) If the Registration Statement covering the Registrable Securities is not effective within the earlier of (a) five (5) days after notice by the SEC that it may be declared effective, or (b) ninety (90) days following the Closing Date (the "Required Effective Date"), then the Company shall pay each Investor a late effective date penalty (collectively "Late Effective Date Penalties")(sometimes Late Filing Penalties and Late Effective Penalties are collectively referred to as "Late Penalties"), (i) on the first day after the Required Effective Date, an amount equal to three percent (3%) of the Purchase Price for the Preferred Stock then held by each such Investor on such date and (ii) on each subsequent monthly anniversary of the Required Effective Date, if the Registration Statement has not been declared effective on or before such date, an amount equal to two percent (2%) of the Purchase Price for the Preferred Stock held by each such Investor on each such subsequent monthly anniversary date. (iii) By way of illustration and not in limitation of the foregoing, assuming a 3 Closing Date of February 3, 2000 (X) if the Registration Statement is timely filed but is not declared effective until July 15, 2000 (assuming for the purpose of this example that the SEC has not previously provided notice that it may be declared effective), the aggregate Late Effective Date Penalty will equal 9% percent of the Purchase Price (3% on May 4, the 90th day after the Closing Date, plus 3% on June 3 and July 2) or (Y) if the Registration is filed on April 9 and is not declared effective until May 15, 2000 (assuming for the purpose of this example that the SEC has not previously provided notice that it may be declared effective), the aggregate Late Filing Penalty will equal 6% of the Purchase Price (3% on March 5, the 30th day after the Closing Date, plus 3% on April 4) and the aggregate Late Effective Date Penalty will equal 3% percent of the Purchase Price (3% on May 4, the 90th day after the Closing Date). (iv) Additionally, if (a) the Registration Statement is not filed within sixty (60) days from the Closing Date or (b) the Required Effective Date is greater than one hundred fifty (150) days after the Closing Date, or (c) the effectiveness of the Registration Statement is not maintained during the Registration Period as hereinafter defined, each Investor may, at its option, require the Company to redeem the Preferred Shares in full, within three (3) days, in cash, in accordance with Section 6(b) of the Certificate of Designation. (v) Late Penalties will be payable to the Investor by the Company in cash or other immediately available funds on the date such Late Penalty is incurred. (vi) The parties acknowledge that the damages which may be incurred by the Investors if the Registration Statement is not filed by the Required Filing Date or if the Registration Statement has not been declared effective by the Required Registration Date may be difficult to ascertain. The parties agree that the Late Penalties represent a reasonable estimate on the part of the parties, as of the date of this Agreement, of the amount of such damages. The payment of the Late Penalties to the Investors shall not limit the Investors' other rights and remedies hereunder or under any other document entered into in connection herewith. (vii) Notwithstanding the foregoing, the amounts payable by the Company pursuant to this provision shall not be payable to the extent any delay in the effectiveness of the Registration Statement occurs because of an act of, or a failure to act or to act timely by the Investors or their counsel if the Company timely forwards to counsel any required documents or in the event all of the Registrable Securities may be sold pursuant to Rule 144 or another available exemption under the Act. 3. Obligations of the Company. In connection with the registration of the Registrable Securities, the Company shall do each of the following. (a) Prepare promptly, and file with the SEC by the Required Filing Date, the Registration Statement with respect to not less than the number of Registrable Securities provided in Section 2(a) above, and thereafter use its reasonable best efforts to cause each Registration Statement relating to Registrable Securities to become effective by the Required Effective Date and keep the Registration Statement effective at all times until the earliest (the "Registration Period") of (i) the date that is two (2) years after the Closing Date, (ii) the date when the Investors may sell all Registrable Securities under Rule 144 or (iii) the date the Investors no longer own any of the Registrable Securities, which Registration Statement (including any amendments or supplements thereto and prospectuses contained 4 therein) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading; (b) Prepare and file with the SEC such amendments (including post-effective amendments) and supplements to the Registration Statement and the prospectus used in connection with the Registration Statement as may be necessary to keep the Registration effective at all times during the Registration Period, and, during the Registration Period, comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities of the Company covered by the Registration Statement until such time as all of such Registrable Securities have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in the Registration Statement; (c) The Company shall permit a single firm or counsel designated by the Investors to review the Registration Statement and all amendments and supplements thereto a reasonable period of time (but not less than three (3) business days) prior to their filing with the SEC, and not file any document in a form to which such counsel reasonably objects. (d) Notify the Investors, their counsel and managing underwriters, if any, immediately (and, in the case of (i)(A) below, not less than five (5) days prior to such filing) and (if requested by any such Person) confirm such notice in writing no later than one (1) Business Day following the day (i)(A) when a Prospectus or any Prospectus supplement or post-effective amendment to the Registration Statement is proposed to be filed; (B) whenever the Commission notifies the Company whether there will be a "review" of such Registration Statement; (C) whenever the Company receives (or representatives of the Company receive on its behalf) any oral or written comments from the Commission in respect of a Registration Statement (copies or, in the case of oral comments, summaries of such comments shall be promptly furnished by the Company to the Investors); and (D) with respect to the Registration Statement or any post-effective amendment, when the same has become effective; (ii) of any request by the Commission or any other Federal or state governmental authority for amendments or supplements to the Registration Statement or Prospectus or for additional information; (iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose; (iv) if at any time any of the representations or warranties of the Company contained in any agreement (including any underwriting agreement) contemplated hereby ceases to be true and correct in all material respects; (v) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose; and (vi) of the occurrence of any event that to the best knowledge of the Company makes any statement made in the Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to the Registration Statement, Prospectus or other documents so that, in the case of the Registration Statement or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. In addition, the Company shall furnish the Investors with copies of all intended written responses to the comments contemplated in clause (C) of this Section 3(d) not later than one (1) Business Day in advance 5 of the filing of such responses with the Commission so that the Investors shall have the opportunity to comment thereon. (e) Furnish to each Investor whose Registrable Securities are included in the Registration Statement and its legal counsel identified to the Company, (i) promptly after the same is prepared and publicly distributed, filed with the SEC, or received by the Company, one (1) copy of the Registration Statement, each preliminary prospectus and prospectus, and each amendment or supplement thereto, and (ii) such number of copies of a prospectus, and all amendments and supplements thereto and such other documents, as such Investor may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Investor; (f) As promptly as practicable after becoming aware of such event, notify each Investor of the happening of any event of which the Company has knowledge, as a result of which the prospectus included in the Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and use its best efforts promptly to prepare a supplement or amendment to the Registration Statement or other appropriate filing with the SEC to correct such untrue statement or omission, and deliver a number of copies of such supplement or amendment to each Investor as such Investor may reasonably request; (g) As promptly as practicable after becoming aware of such event, notify each Investor who holds Registrable Securities being sold (or, in the event of an underwritten offering, the managing underwriters) of the issuance by the SEC of a Notice of Effectiveness or any notice of effectiveness or any stop order or other suspension of the effectiveness of the Registration Statement at the earliest possible time; (h) Notwithstanding the foregoing, if at any time or from time to time after the date of effectiveness of the Registration Statement, the Company notifies the Investors in writing of the existence of a Potential Material Event, the Investors shall not offer or sell any Registrable Securities, or engage in any other transaction involving or relating to the Registrable Securities, from the time of the giving of notice with respect to a Potential Material Event until such Investor receives written notice from the Company that such Potential Material Event either has been disclosed to the public or no longer constitutes a Potential Material Event; provided, however, that the Company may not so suspend the right to such holders of Registrable Securities for more than two twenty (20) day periods in the aggregate during any 12-month period ("Suspension Period") with at least a ten (10) business day interval between such periods, during the periods the Registration Statement is required to be in effect; (i) Use its reasonable efforts to secure or maintain, as applicable, NASDAQ/OTC Bulletin Board authorization and quotation for such Registrable Securities and, without limiting the generality of the foregoing, to arrange for at least two market makers to register with the National Association of Securities Dealers, Inc. ("NASD") as such with respect to such Registrable Securities; (j) Provide a transfer agent and registrar, which may be a single entity, for the Registrable Securities not later than the effective date of the Registration Statement; 6 (k) Cooperate with the Investors who hold Registrable Securities (or, subject to receipt by the Company of appropriate notice and documentation, as may be required by the Securities Purchase Agreement, the Certificate of Designations, the Warrants or this Agreement, securities convertible into Registrable Securities) being offered to facilitate the timely preparation and delivery of certificates for the Registrable Securities to be offered pursuant to the Registration Statement and enable such certificates for the Registrable Securities to be in such denominations or amounts as the case may be, as the Investors may reasonably request, and, within three (3) business days after a Registration Statement which includes Registrable Securities is ordered effective by the SEC, the Company shall deliver, and shall cause legal counsel selected by the Company to deliver, to the transfer agent for the Registrable Securities (with copies to the Investors whose Registrable Securities or securities convertible into Registrable Securities are included in such Registration Statement) an appropriate instruction and opinion of such counsel; provided, however, that nothing in this subparagraph (j) shall be deemed to waive any of the provisions regarding the conditions or method of conversion of Preferred Stock or exercise of Warrants into Registrable Securities; and (l) Take all other reasonable actions necessary to expedite and facilitate disposition by the Investor of the Registrable Securities pursuant to the Registration Statement. 4. Obligations of the Investors. In connection with the registration of the Registrable Securities, each Investor shall have the following obligations: (a) As a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registrable Securities of a particular Investor, such Investor shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of the Registrable Securities held by it, as shall be reasonably required to effect the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request. At least five (5) days prior to the first anticipated filing date of the Registration Statement, the Company shall notify each Investor of the information the Company requires from each such Investor (the "Requested Information") if such Investor elects to have any of such Investor's Registrable Securities included in the Registration Statement. If at least two (2) business days prior to the filing date the Company has not received the Requested Information from an Investor (a "Non-Responsive Investor"), then the Company may file the Registration Statement without including Registrable Securities of such Non-Responsive Investor; (b) To cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of the Registration Statement hereunder, unless such Investor has notified the Company in writing of such Investor's election to exclude all of such Investor's Registrable Securities from the Registration Statement; and (c) Upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(e) or 3(f), above, such Investor shall immediately discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until such Investor's receipt of the copies of the supplemented or amended prospectus contemplated by Section 3(e) or 3(f) and, if so directed by the Company, such Investor shall deliver to the Company (at the expense of the Company) or destroy (and deliver to the Company a certificate of destruction) all copies in such 7 Investor's possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice. 5. Expenses of Registration. (a) All reasonable expenses (other than underwriting discounts and commissions of each Investor and legal fees of counsel to each Investor) incurred in connection with registrations, filings or qualifications pursuant to Section 3, including, without limitation, all registration, listing, and qualifications fees, printers and accounting fees, the fees and disbursements of counsel for the Company, and a fee for a single counsel for the Investors not exceeding $3,500, shall be borne by the Company. (b) Except as and to the extent specifically set forth in Schedule 5(b) attached hereto, neither the Company nor any of its subsidiaries has, as of the date hereof, nor shall the Company nor any of its subsidiaries, on or after the date of this Agreement, enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Investors herein or otherwise conflicts with the provisions hereof. Except as and to the extent specifically set forth in Schedule 5(b) attached hereto, neither the Company nor any of its subsidiaries has previously entered into any agreement granting any registration rights with respect to any of its securities to any person or entity. Without limiting the generality of the foregoing, without the written consent of the Investors of a majority of the then outstanding Registrable Securities, the Company shall not grant to any person the right to request the Company to register any securities of the Company under the Securities Act unless the rights so granted are subject in all respects to the prior rights in full of the Investors set forth herein, and are not otherwise in conflict or inconsistent with the provisions of this Agreement. 6. Indemnification. In the event any Registrable Securities are included in a Registration Statement under this Agreement: (a) To the extent permitted by law, the Company will indemnify and hold harmless each Investor who holds such Registrable Securities, the directors, if any, of such Investor, the officers, if any, of such Investor, each person, if any, who controls any Investor within the meaning of the Securities Act or the Securities Exchange Act of 1934, as amended (the "Exchange Act") (each, an "Indemnified Person" or "Indemnified Party"), against any losses, claims, damages, liabilities or expenses (joint or several) incurred (collectively, "Claims") to which any of them may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any of the following statements, omissions or violations in the Registration Statement, or any post-effective amendment thereof, or any prospectus included therein: (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any post-effective amendment thereof or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities law or any rule or regulation under the Securities Act, the Exchange Act or any state securities law (the matters in the foregoing clauses (i) through (iii) 8 being, collectively, "Violations"). Subject to clause (b) of this Section 6, the Company shall reimburse the Investors, promptly as such expenses are incurred and are due and payable, for any legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a) shall not (I) apply to a Claim arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of any Indemnified Person expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto, if such prospectus was timely made available by the Company pursuant to Section 3(c) hereof; (II) be available to the extent such Claim is based on a failure of the Investor to deliver or cause to be delivered the prospectus made available by the Company; or (III) apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld. Each Investor will indemnify the Company and its officers, directors and agents against any claims arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company, by or on behalf of such Investor, expressly for use in connection with the preparation of the Registration Statement, subject to such limitations and conditions as are applicable to the Indemnification provided by the Company to this Section 6. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of the Registrable Securities by the Investors pursuant to Section 9. (b) Promptly after receipt by an Indemnified Person or Indemnified Party under this Section 6 of notice of the commencement of any action (including any governmental action), such Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be. In case any such action is brought against any Indemnified Person or Indemnified Party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, assume the defense thereof, subject to the provisions herein stated and after notice from the indemnifying party to such Indemnified Person or Indemnified Party of its election so to assume the defense thereof, the indemnifying party will not be liable to such Indemnified Person or Indemnified Party under this Section 6 for any reasonable legal or other reasonable out-of-pocket expenses subsequently incurred by such Indemnified Person or Indemnified Party in connection with the defense thereof other than reasonable costs of investigation, unless the indemnifying party shall not pursue the action of its final conclusion. The Indemnified Person or Indemnified Party shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and reasonable out-of-pocket expenses of such counsel shall not be at the expense of the indemnifying party if the indemnifying party has assumed the defense of the action with counsel reasonably satisfactory to the Indemnified Person or Indemnified Party. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Person or Indemnified Party under this Section 6, except to the extent that the indemnifying party is prejudiced in its ability to defend such action. The indemnification required by this Section 6 shall be made by periodic payments of the 9 amount thereof during the course of the investigation or defense, as such expense, loss, damage or liability is incurred and is due and payable. 7. Contribution. To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however, that (a) no contribution shall be made under circumstances where the maker would not have been liable for indemnification under the fault standards set forth in Section 6; (b) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of such fraudulent misrepresentation; and (c) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities. 8. Reports under Exchange Act. With a view to making available to the Investors the benefits of Rule 144 promulgated under the Securities Act or any other similar rule or regulation of the SEC that may at any time permit the Investors to sell securities of the Company to the public without registration ("Rule 144"), the Company agrees to: (a) make and keep public information available, as those terms are understood and defined in Rule 144; (b) use its best efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and (c) furnish to each Investor so long as such Investor owns Registrable Securities, promptly upon request, (i) a written statement by the Company that it has complied with the reporting requirements of Rule 144, the Securities Act and the Exchange Act, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company and (iii) such other information as may be reasonably requested to permit the Investors to sell such securities pursuant to Rule 144 without registration. 9. Assignment of the Registration Rights. The rights to have the Company register Registrable Securities pursuant to this Agreement shall be automatically assigned by an Investor to any transferee of the Registrable Securities (or all or any portion of any Preferred Stock of the Company which is convertible into such securities) permitted or allowable by the terms of the Securities Purchase Agreement only if: (a) such Investor agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such assignment, (b) the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of (i) the name and address of such transferee or assignee and (ii) the securities with respect to which such registration rights are being transferred or assigned, (c) immediately following such transfer or assignment the further disposition of such securities by the transferee or assignee is restricted under the Securities Act and applicable state securities laws, and (d) at or before the time the Company received the written notice contemplated by clause (b) of this sentence the transferee or assignee agrees in writing with or in favor of the Company to be bound by all of the provisions contained herein, a copy of which shall 10 be provided to the Company. The copies referred to in clauses (a) and (d) of the immediately preceding sentence may be redacted to delete certain financial and other details of the transaction between the Investor and its transferee if the same is included in the document to be provided to the Company. In the event of any delay in filing or effectiveness of the Registration Statement as a result of such assignment, the Company shall not be liable for any damages arising from such delay, or the payments set forth in Section 2(c) hereof. 10. Amendment of Registration Rights. Any provision of each such Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and Investors who hold collectively eighty (80%) percent of the Preferred Shares. Any amendment or waiver effected in accordance with this Section 10 shall be binding upon each Investor and the Company. 11. Miscellaneous. (a) A person or entity is deemed to be a holder of Registrable Securities whenever such person or entity owns of record such Registrable Securities. If the Company receives conflicting instructions, notices or elections from two or more persons or entities with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from the registered owner of such Registrable Securities. (b) Any notice or communication required or permitted by this Agreement shall be given in writing addressed as follows: If to Company: U.S. Wireless Data, Inc. 2200 Powell Street, Suite 800 Emeryville, California 94608 Attention: Robert Robichaud, CFO with a copy to: Jack Lewis, Esq. 1675 Broadway, Suite 2600 Denver, Colorado 80202 If to Investors: Bold Street, LLC c/o Thomson Kernaghan & Co. 365 Bay Street, Suite 1000, 10th Fl. Toronto, Ontario M5H 2V2 Telephone No.: (416) 860-4160 Telecopier No.: (416) 860-8313 with a copy to: Michael S. Rosenblum, Esq. Law Offices of Michael S. Rosenblum 1875 Century Park East, Suite 700 Los Angeles, California 90067 11 All notices shall be served personally by telecopy, by telex, by overnight express mail service or other overnight courier, or by first class registered or certified mail, postage prepaid, return receipt requested. If served personally, or by telecopy, notice shall be deemed delivered upon receipt (provided that if served by telecopy, sender has written confirmation of delivery); if served by overnight express mail or overnight courier, notice shall be deemed delivered forty-eight (48) hours after deposit; and if served by first class mail, notice shall be deemed delivered seventy-two (72) hours after mailing. Any party may give written notification to the other parties of any change of address for the sending of notices, pursuant to any method provided for herein. (c) Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof. (d) This Agreement shall be governed by and interpreted in accordance with the laws of the State of California for contracts to be wholly performed in such state and without giving effect to the principles thereof regarding the conflict of laws. Any litigation based thereon, or arising out of, under, or in connection with, this agreement or any course of conduct, course of dealing, statements (whether oral or written) or actions of the Company or Purchaser shall be brought and maintained exclusively in the state or Federal courts of the State of California, sitting in the City of Los Angeles. The Company hereby expressly and irrevocably submits to the jurisdiction of the state and federal Courts of the State of California for the purpose of any such litigation as set forth above and irrevocably agrees to be bound by any final judgment rendered thereby in connection with such litigation. The Company further irrevocably consents to the service of process by registered mail, postage prepaid, or by personal service within or without the State of California. The Company hereby expressly and irrevocably waives, to the fullest extent permitted by law, any objection which it may have or hereafter may have to the laying of venue of any such litigation brought in any such court referred to above and any claim that any such litigation has been brought in any inconvenient forum. To the extent that the Company has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution or otherwise) with respect to itself or its property, the Company hereby irrevocably waives such immunity in respect of its obligations under this Agreement and the related agreements entered into in connection herewith. (e) If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement or the validity or enforceability of this Agreement in any other jurisdiction. (f) Subject to the requirements of Section 9 hereof, this Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto. (g) All pronouns and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the context may require. (h) The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning thereof. 12 (i) This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement. This Agreement, once executed by a party, may be delivered to the other party hereto by telephone line facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement. (j) The Company acknowledges that any failure by the Company to perform its obligations under Section 3(a) hereof, or any delay in such performance could result in loss to the Investors, and the Company agrees that, in addition to any other liability the Company may have by reason of such failure or delay, the Company shall be liable for all direct damages caused by any such failure or delay, unless the same is the result of force majeure. Neither party shall be liable for consequential damages. (k) This Agreement, the Securities Purchase Agreement and the other documents referenced therein constitute the entire agreement among the parties hereto with respect to the subject matter hereof. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein. This Agreement supersedes all prior agreements and understandings among the parties hereto with respect to the subject matter hereof. This Agreement may be amended only by an instrument in writing signed by the party to be charged with enforcement thereof. (l) Any default by an individual Investor hereunder or any related agreement, including, without limitation, the Securities Purchase Agreement, shall not be deemed a default by any other Investor and shall not excuse the Company's performance hereunder or thereunder with respect to the non-defaulting Investors. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 13 IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written. U.S. Wireless Data, Inc., a Colorado corporation By: -------------------------------------------- Name: -------------------------------------------- Title: ------------------------------------------ BOLD STREET LLC, a Cayman Islands limited liability company By: -------------------------------------------- Manager ------------------------------------------------ By: -------------------------------------------- Authorized Signatory
REGISTRATION RIGHTS AGREEMENT EXHIBIT 5(b) --------------------------------------------------------- Assumed Stock Price for conversions: $ 1.00 --------------------------------------------------------- Estimated # Common Shares (000) Description of Outstanding Security Registration Rights - ---------------------------------------------------------------------------------------------------------------------- 1,053 Est. 790K 8% Preferred Series A shares 12/97 - Mandatory and Piggyback - 144 avail. (@ 75% of avg. closing bid price) 100 Estimate of Series A dividends through 12/99 (w/o conv.) Mandatory and Piggyback - 144 avail. 2,500 $2M 6% Convertible Debentures 7/98-7/00 Mandatory and Piggyback (@ 80% of avg. closing bid price) 50 JWG finder warrants @ $6.525 - 12/97-12/00 Piggyback - 144 avail. 8 entrenet consulting warrants @ $2.40 - 9/98-9/03 Piggyback 20 RBB Bank Bridge Loan warrants @ $4.375 - 6/98-9/01 Piggyback 100 6% Convertible Debenture holder warrants @$ 4.25 - 7/98-7/01 Mandatory and Piggyback 60 JWG finder warrants @ $4.50 - 7/98-7/01 Piggyback - unlimited 15 JWG finder warrants @ $2.70 - 9/98-9/01 Piggyback 212 Warrants on Series A Preferred Redemption @$2.40 - 3.69 Mandatory and Piggyback 10/98 to 12/98-10/01 to 12/01 100 EBI consulting warrants @ $1.00 - 3/99-3/02 Piggyback 50 RBB Bridge Loan - 3/99 Mandatory and Piggyback 375 Software Purchase - Maverick Piggyback 4,643 Note: John Liviakis, Bob Prag, and Liviakis Financial Communications, Inc. and entrenet and its affiliates have waived registration rights on all previously issued shares for this registration statement.
EX-4.3 5 COMMAN STOCK PURCHASE WARRANT THIS WARRANT AND THE STOCK ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND CAN BE TRANSFERRED ONLY IN COMPLIANCE WITH THE ACT AND APPLICABLE STATE SECURITIES LAWS. THIS WARRANT AND SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT, UNLESS, IN THE OPINION OF COUNSEL FOR THE COMPANY OR COUNSEL FOR THE REGISTERED HOLDER (WHICH SHALL BE IN FORM AND FROM SUCH COUNSEL AS SHALL BE REASONABLY SATISFACTORY TO THE COMPANY), SUCH REGISTRATION IS NOT THEN REQUIRED. U.S. WIRELESS DATA, INC. COMMON STOCK PURCHASE WARRANT 1. Issuance. In consideration of good and valuable consideration, the receipt of which is hereby acknowledged by U.S. Wireless Data, Inc., a Colorado corporation (the "Company"), Bold Street, LLC, a Cayman Islands limited liability company, or registered assigns (the "Holder") is hereby granted the right to purchase at any time until 5:00 P.M., Pacific Coast time, on April 30, 2004 (the "Expiration Date"), Three Hundred Thousand (300,000) fully paid and nonassessable shares of the Company's Common Stock, no par value per share (the "Common Stock") at an exercise price of $1.50 per share (the "Exercise Price") subject to further adjustment as set forth in Section 6 hereof. 2. Exercise of Warrants. This Warrant is exercisable in whole or in part for whole shares of the Company's Common Stock at the Exercise Price per share of Common Stock payable hereunder, payable in cash or by certified or official bank check. In lieu of paying cash to exercise this Warrant, the Holder may, by designating a "cashless" exercise on the Notice of Exercise Form, acquire a number of whole shares of the Company's Common Stock equal to (a) the difference between (i) the Market Value of the Company's Common Stock and (ii) the Exercise Price, multiplied by (b) the number of shares of Common Stock purchasable under the portion of the Warrant tendered to the Company, divided by (c) the Market Value of the Company's Common Stock. Upon surrender of this Warrant Certificate with the annexed Notice of Exercise Form duly executed, together with payment of the Exercise Price for the shares of Common Stock purchased, the Holder shall be entitled to receive a certificate or certificates for the shares of Common Stock so purchased. For the purposes of this Section 2, "Market Value" shall be an amount equal to the average closing bid price of a share of Common Stock for the five (5) business days immediately preceding the Company's receipt of the Notice of Exercise Form duly executed. 3. Reservation of Shares. The Company hereby agrees that at all times during the term of this Warrant there shall be reserved for issuance upon exercise of this Warrant such number of shares of its Common Stock as shall be required for issuance upon exercise of this Warrant (the "Warrant Shares"). 4. Mutilation or Loss of Warrant. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) receipt of reasonably satisfactory indemnification, and (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will execute and deliver a new Warrant of like tenor and date and any such lost, stolen, destroyed or mutilated Warrant shall thereupon become void. 5. Rights of the Holder. The Holder shall not, by virtue hereof, be entitled to any rights of a stockholder in the Company, either at law or equity, and the rights of the Holder are limited to those expressed in this Warrant and are not enforceable against the Company except to the extent set forth herein. 6. Adjustments to Exercise Terms. If the Company at any time prior to the full execution of this Warrant shall, by subdivision, combination, merger, spin-off, re-classification or like capital adjustment of the securities, change any of the securities to which purchase rights under this Warrant exist into 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 securities acquirable immediately prior to such transaction. If shares of the securities acquirable upon exercise of this Warrant are subdivided into a greater number of securities, including any stock dividend, or if such securities are combined into a lesser number of securities, then the purchase price for the securities acquirable upon exercise of this Warrant and the securities acquirable pursuant to this Warrant shall be proportionately and equitably adjusted. 7. Transfer to Comply with the Securities Act; Registration Rights. (a) This Warrant has not been registered under the Securities Act of 1933, as amended, (the "Act") and has been issued to the Holder for investment and not with a view to the distribution of either the Warrant or the Warrant Shares. Neither this Warrant nor any of the Warrant Shares or any other security issued or issuable upon exercise of this Warrant may be sold, transferred, pledged or hypothecated in the absence of an effective registration statement under the Act and applicable state securities laws relating to such security, unless in the opinion of counsel satisfactory to the Company, such registrations are not required under the Act. Each certificate for the Warrant, the Warrant Shares and any other security issued or issuable upon exercise of this Warrant shall contain a legend on the face thereof, in form and substance satisfactory to counsel for the Company, setting forth the restrictions on transfer contained in this Section. (b) The Company agrees to file a registration statement, which shall include the Warrant Shares, on Form SB-2 or another available form (the "Registration Statement"), pursuant to the Act, pursuant to a Registration Rights Agreement between the Company and Holder dated as of the date hereof (the "Registration Rights Agreement"). 8. Notices. Any notice or other communication required or permitted hereunder shall be in writing and shall be delivered personally, telegraphed, telexed, sent by facsimile transmission or sent by certified, registered or express mail, postage pre-paid. Any such notice shall be deemed given when so delivered personally, telegraphed, telexed or sent by facsimile transmission, or, if mailed, two days after the date of deposit in the United States mails, as follows: (i) if the to Company, to: U.S. Wireless Data, Inc. 2200 Powell Street, Suite 800 2 Emeryville, California 94608 ATTN: Robert Robichaud, Esq. Telecopier No.: (510) 596-2029 Telephone No.: (510) 596-2025 (ii) if to the Holder, to: c/o Thomson Kernaghan & Co. 365 Bay Street, Suite 1000, 10th Fl. Toronto, Ontario M5H 2V2 Telephone No.: (416) 860-4160 Telecopier No.: (416) 860-8313 Any party may be notice given in accordance with this Section to the other parties designate another address or person for receipt of notices hereunder. 9. Supplements and Amendments; Whole Agreement. This Warrant may be amended or supplemented only by an instrument in writing signed by the parties hereto. This Warrant contains the full understanding of the parties hereto with respect to the subject matter hereof and thereof and there are no representations, warranties, agreements or understandings other than expressly contained herein and therein. 10. Governing Law. This Warrant shall be deemed to be a contract made under the laws of the State of California and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts to be made and performed entirely within such State. 11. Descriptive Headings. Descriptive headings of the several Sections of this Warrant are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof. IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of the 3rd day of May, 1999. U.S. WIRELESS DATA, INC. By:/s/ Rod Stambaugh -------------------- Name: Rod Stambaugh Title: President Attest: /s/ Robert E. Robichaud - ----------------------- Name: Robert E. Robichaud Title: Secretary 3 EX-4.4 6 WAIVER AGREEMENT - 6% DEBENTURES WAIVER OF RIGHTS AND FIRST AMENDMENT TO DEBENTURE AGREEMENT This Waiver of Rights and First Amendment to Debenture Agreement is entered into effective as of the 30th day of April 1999, between U.S. Wireless Data, Inc., a Colorado corporation (the "Company") and the undersigned holders (the "Holders") of the Company's 6% Convertible Debentures Due July 21, 2000 (the "Debentures") to waive certain rights held by the Debenture holders and to modify and amend the Debenture Agreement relating to the Debentures. RECITALS WHEREAS, the Company has issued Debentures in the aggregate face amount of $2,000,000; WHEREAS, the Holders hold Debentures in the face amount set forth below its name on the execution page of this Agreement; WHEREAS, the Company owes the undersigned accrued but unpaid interest and damages on the Debentures through April 26, 1999 (the "Calculation Date") and has also agreed to prepay the balance of interest that will become payable through June 30, 1999, in the aggregate amount set forth below each Holder's name on the execution page of this Agreement; WHEREAS, each of the Holders is willing to waive all defaults related to the Debentures up to the date of this Agreement, if the Company pays such accrued but unpaid interest and penalties in the form of the Company's Series B Cumulative Convertible Redeemable Preferred Stock; WHEREAS, Section III of the Debenture Agreement gives the Holders the right to declare the principal and all accrued interest on such Debenture to be immediately due and payable upon the satisfaction of certain conditions; WHEREAS, Section IV.D. of the Debenture Agreement gives the Holders the right to require the Company to redeem the Debentures upon the satisfaction of certain conditions and to receive additional consideration in the event the shares of stock underlying the Debenture are not timely registered; WHEREAS, the Holders are willing to restrict such rights under Section III and Section IV.D. of the Debenture Agreement in consideration of the Company attempting to raise additional capital by selling the Company's 6% Series B Cumulative Convertible Redeemable Preferred Stock. NOW, THEREFORE, in consideration of the Company's attempts to raise additional capital, the opportunity being given to the Holders to participate in such offering, and other valuable consideration, the parties agrees as follows: Page 1 of 4 1. The Holders agree to exchange all accrued and unpaid interest and damages due on the Debentures and all interest that will become payable on such Debentures on or before June 30, 1999 (such aggregate amount set forth below the undersigned's name on the execution page of this Agreement) for the Company's Series B Cumulative Convertible Redeemable Preferred Stock, and to waive any and all previously occurring or currently existing defaults under the Debentures, the Debenture Agreement, or any related registration rights agreement. To accomplish the purchase of the Company's Series B Cumulative Convertible Redeemable Preferred Stock, the undersigned agrees to execute a Securities Purchase Agreement in substantially the same form as the agreement attached hereto as Exhibit A. 2. Notwithstanding anything to the contrary in any other agreement, the Debenture Agreement is hereby amended so that the Holders waive their right to declare the principal and all accrued interest on the Debentures immediately due and payable pursuant to Section III of the Debenture Agreement solely due to default in the payment of interest and the failure to register the underlying shares of Common Stock, prior to the date hereof. 3. The Holders agree not to declare the principal and accrued interest on the Debentures due and payable pursuant to Section III of the Debenture Agreement due to any of the reasons set forth in Section 2 above unless and until: a. the holders of the Company's Series B Cumulative Convertible Redeemable Preferred Stock have a then exercisable right of redemption regarding such stock under Section 2(b)(iv) of the Registration Rights Agreement annexed to the Securities Purchase Agreement attached hereto as Exhibit A (the "New Registration Rights Agreement"); or b. 180 days have elapsed following the "Closing Date" (as that term is defined in the New Registration Rights Agreement). 4. Notwithstanding anything to the contrary in any other agreement, Section IV.D of the Debenture Agreement is hereby amended such that: a. the Holders will not have any right to force the Company to redeem any Debenture unless and until the holders of the Company's Series B Cumulative Convertible Redeemable Preferred Stock have a then exercisable right of redemption regarding such stock under Section 2(b)(iv) of the New Registration Rights Agreement; and b. the Holders will have no future right to accrue any penalty for the Company's failure to file a registration statement regarding the securities underlying the Debentures (the "Registration Statement"), or the Company's failure to cause the Registration Statement to become effective, other than as set forth below: i. If the Registration Statement is not filed in proper form with the Securities and Exchange Commission on or before the Required Filing Date (as that term is Page 2 of 4 defined in the New Registration Rights Agreement), then the Company shall pay the undersigned a late filing penalty on the first day after such Required Filing Date in an amount equal to three percent (3%) of the face amount of the Debentures then held by the Holders. ii. If the Registration Statement is not filed in proper form with the Securities and Exchange Commission on or before each monthly anniversary of the Required Filing Date (as that term is defined in the New Registration Rights Agreement), then the Company shall pay the Holders a late filing penalty on each such date in an amount equal to three percent (3%) of the face amount of the Debentures then held by the Holders. iii. If the Registration Statement is not effective on or before the Required Effective Date (as that term is defined in the New Registration Rights Agreement), then the Company shall pay the Holders a late filing penalty on the first day after such Required Effective Date in an amount equal to three percent (3%) of the face amount of the Debentures then held by the Holders. iv. If the Registration Statement is not effective on or before each monthly anniversary of the Required Effective Date (as that term is defined in the New Registration Rights Agreement), then the Company shall pay the Holders a late filing penalty on each such date in an amount equal to two percent (2%) of the face amount of the Debentures then held by the Holders. 5. Except for the remedies granted to the Holders pursuant to Section III and Section IV of the Debenture Agreement, the Holders do not waive any and all other remedies available to them under the Debenture Agreement and any related New Registration Rights Agreement. 6. In all other respects the Debenture and the Debenture Agreement shall remain unchanged. 7. This Waiver and Amendment Agreement shall not be binding on any party until similar agreements are fully executed by all Holders and the Company. Notwithstanding the foregoing, this Waiver and Amendment Agreement may be executed in counterparts and by facsimile signature. 8. This Waiver and Amendment Agreement shall be construed under the laws of the State of Colorado for contracts executed and to be performed fully in such State. IN WITNESS WHEREOF, each of the undersigned have executed this Waiver and Amendment Agreement effective as of the date first above written. Page 3 of 4 U.S. Wireless Data, Inc. By: -------------------------------------------------- Print Name: ------------------------------------------- Title: ------------------------------------------------- Date: -------------------------------------------------- Debenture Holder Debenture Holder By: By: ------------------------------------- -------------------------------- Print Name: Print Name: ----------------------------- ------------------------ Title: Title: ---------------------------------- ---------------------------- Date: Date: ----------------------------------- ----------------------------- Face Amount of Face Amount of: Debentures Held: $ Debentures Held: $ -------------------- ------------ Aggregate Interest and Aggregate Interest and Penalties Owed as of Penalties Owed as of the calculation date: $ the calculation date: $ ----------------- --------- Debenture Holder By: -------------------------------------- Print Name: ------------------------------- Title: ------------------------------------ Date: ------------------------------------- Face Amount of Debentures Held: $ ----------------------- Aggregate Interest and Penalties Owed as of the Calculation Date: $ ------------------ Page 4 of 4 EXHIBIT A FORM OF SECURITIES PURCHASE AGREEMENT WITH REGISTRATION RIGHTS AGREEMENT ANNEXED [Filed herewith as Exhibit 4.1 and 4.2, respectively.] EX-4.5 7 SUPPLEMENT TO SECURITIES PURCHASE AGREEMENT SUPPLEMENT TO SERIES B PREFERRED SECURITIES PURCHASE AGREEMENT This Supplement to Series B Preferred Stock Purchase Agreement is made and entered into effective as of the date below, between U.S. Wireless Data, Inc., a Colorado corporation (the "Company") and The Cuttyhunk Fund Limited and Tonga Partners LP (the "Purchasers") in conjunction with the acquisition by Purchasers of shares of the Company's Series B Cumulative Convertible Redeemable Preferred Stock (the "Series B Preferred"), in exchange for certain accrued interest and damages owing to Purchasers on the Company's 6% Convertible Subordinated Debentures Due July 21, 2000 (the "6% Debentures") as more fully described in that certain Waiver of Rights and First Amendment to Debenture Agreement dated as of the date hereof (the "Debenture Amendment"). This Agreement is entered into to set forth certain additional agreements between the Company and the Purchasers. In consideration of the acquisition of the Series B Preferred by the Purchasers and the entry of the Debenture Amendment between the Company and the Purchasers, and other good and valuable consideration, the Company and the Purchasers hereby agree as follows: 1. Notwithstanding the acquisition of the Series B Preferred by the Purchasers in exchange for (a) interest owing on the 6% Debentures through June 30, 1999, and (b) damages owing to Purchasers on the 6% Debentures, all as described in the Debenture Amendment, the Company agrees and acknowledges that the 6% Debentures remain as obligations for money loaned to the Company and will not be treated as an equity instrument by the Company. 2. The Company hereby acknowledges and agrees that the representations and warranties of the Company being given to the Purchasers in conjunction with the acquisition of the Series B Preferred Stock set forth in the Securities Purchase Agreement relating thereto, shall be deemed representations and warranties of the Company applicable to the 6% Debentures, made as of the date hereof, as if the 6% Debentures were being purchased by Purchasers thereunder. Purchasers acknowledge and affirm the representation and warranties contained in the Securities Purchase Agreement as of the date hereof in connection with their decision to retain their 6% Debentures. 3. The Company agrees that at the time of filing a registration statement under the Securities Act of 1933 which includes the shares of Common Stock underlying the 6% Debentures and the Common Stock Purchase Warrants issued to Purchasers with the 6% Debentures (which shall be the same registration statement which includes the shares of Common Stock underlying the Series B Preferred Stock), such registration statement shall include for purposes of satisfying the conversion rights of the 6% Debentures, at least that number of shares of Common Stock equal to 150% of the number of shares issuable upon conversion of the 6% Debentures as of the last trading date immediately preceding the date of filing such registration statement together with the number of shares of Common Stock issuable upon exercise of such Warrants. Supplement to Series B Preferred Securities Purchase Agreement Page 2 of 3 4. The Company agrees that it will take no position inconsistent with an original acquisition date of the 6% Debentures by Purchasers of July 23, 1998 in calculating the commencement of Purchasers' holding periods for the 6% Debentures under Rule 144 of the SEC's Rules and Regulation under the Securities Act of 1933. 5. The Company acknowledges that Purchasers have advised it that they are not affiliated in any manner with the other initial Purchaser of the Series B Preferred, Bold Street LLC, a Cayman limited liability company, and the Company acknowledges that it is not aware of any facts contrary to this assertion. 6. Notwithstanding Section 4.j in the Securities Purchase Agreement, Purchasers acknowledge that they are not entitled to any warrants in conjunction with their acquisition of Series B Preferred in exchange for the interest and damages owing on the 6% Debentures. 7. The Company hereby agrees that the 6% Debentures currently held by Purchasers shall be amended such that Purchasers shall have the benefit of any terms contained in the Securities Purchase Agreement, the Registration Rights Agreement or Certificate of Designation for the Series B Preferred. Purchasers shall reasonably determine which terms they deem beneficial. Any such amendment shall be subject to the review of the Company's independent accountants, and should such accountants determine that any such amendment(s) determined by the Purchasers (or the right granted hereby to Purchasers to determine the applicability of such amendment(s)) would require a reclassification of the 6% Debentures into other than a debt instrument of the Company, then no such amendment shall be permitted and this clause shall be considered void ab-initio as to any such right to amend the 6% Debentures or the rights related thereto. 8. The Company agrees that it will pay the legal fees incurred by Purchasers in connection with the negotiation of the Debenture Amendment and the acquisition of the Series B Preferred, in an amount of $9,775, to be paid from the proceeds of the sale of the Series B Preferred, immediately following the initial closing of the sale of the Series B Preferred and presentation of an invoice from The Goldstein Law Group, P.C., which has represented Purchasers in these transactions. [THE REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK.] Supplement to Series B Preferred Securities Purchase Agreement Page 3 of 3 IN WITNESS WHEREOF, the undersigned have executed this Agreement effective as of this ________ day of April, 1999. U.S. Wireless Data, Inc. By: -------------------------------------------------------------- Print Name: -------------------------------------------------------- Title: ------------------------------------------------------------ Date: -------------------------------------------------------------- The Cuttyhunk Fund Limited By: -------------------------------------------------------------- Print Name: -------------------------------------------------------- Title: ------------------------------------------------------------- Date: -------------------------------------------------------------- Tonga Partners LP By: -------------------------------------------------------------- Print Name: -------------------------------------------------------- Title: ------------------------------------------------------------- Date: -------------------------------------------------------------- RBB Bank Aktiengesellschaft AG By: -------------------------------------------------------------- Print Name: -------------------------------------------------------- Title: ------------------------------------------------------------- Date: -------------------------------------------------------------- EX-4.6 8 FIRST AMENDMENT TO NOTE AND STOCK PURCHASE AGREE'T FIRST AMENDMENT TO NOTE AND COMMON STOCK PURCHASE AGREEMENT This First Amendment to Note and Common Stock Purchase Agreement is entered into effective as of the 22nd day of April 1999, to amend the Note and Common Stock Purchase Agreement (the "Agreement") between U.S. Wireless Data, Inc., a Colorado corporation (the "Company") and the undersigned ("Holder"), pursuant to which Holder holds the Company's $250,000 Note due June 12, 1999 (the "Note"). RECITALS WHEREAS, Section 4 of the Agreement requires that the Note be paid in full at the time the company sells any equity or debt securities of the Company, provided the Company has received gross proceeds in the minimum amount of U.S. one million dollars (US$1,000,000); WHEREAS, Holder is willing to amend Section 4 of the Agreement to allow the Company to delay prepayment of the Note; NOW, THEREFORE, in consideration of the Company's attempts to raise additional capital, and the opportunity being given to the undersigned to participate in that offering, Holder and Company agree as follows: 1. Section 4 of the Agreement is amended to read as follows: 4. Prepayment of the Note. Investor understands that the Company has been engaged in discussions with various parties, including Investor, regarding the possible issuance by the Company of additional debt or equity securities (apart from the Bridge Financing described above), including the possible issuance of a Preferred Stock to be authorized and issued by the Company upon final agreement as to the terms of such Preferred Stock. The Company and Investor agree that at any time prior to the Due Date of the Note, the Note shall be paid in full (as to all amounts of unpaid principal and interest then owing) from the proceeds of the sale of any equity or debt securities of the Company (including shares of Preferred Stock), provided the Company has received gross proceeds in the minimum amount of U.S. Two Million Five Hundred Thousand Dollars (US$2,500,000) from the sale of such equity or debt securities (but from which amount any proceeds from a Bridge Financing or conversion of previously existing debentures (including interest and penalties on such debentures) shall be excluded). 2. Holder will forebear from initiating an action against the Company to collect the obligation evidenced by the Note until (a) prepayment of the Note is required pursuant to Section 4 of the Agreement, or (b) December 1, 1999, whichever is first to occur. Notwithstanding the foregoing, Holder preserves its right to collect the obligation evidenced by the Note from any person guarantying the Note. 3. In all other respects the Agreement shall remain unchanged. First Amendment to Note and Stock Purchase Agreement Page 1 of 2 IN WITNESS WHEREOF, the undersigned have executed this First Amendment to Debenture Agreement effective as of the date first above written. U.S. Wireless Data, Inc. By: /s/ Roberty E. Robichaud ---------------------------------------------- Print Name: Roberty E. Robichaud -------------------------------------- Title: Chief Financial Officer -------------------------------------------- Date: April 22, 1999 --------------------------------------------- Holder: RBB Bank Aktiengesellschaft AG (as agent for clients) By: /s/ Herbert Strauss ----------------------------------------------------- Print Name: Herbert Strauss --------------------------------------- Title: Managing Director US Equity -------------------------------------------- Date: April 22, 1999 --------------------------------------------- First Amendment to Note and Stock Purchase Agreement page 2 of 2 EX-99.1 9 PRESS RELEASE DATED MAY 7, 1999 FOR IMMEDIATE RELEASE - --------------------- U.S. Wireless Data Announces Equity Financing EMERYVILLE, CA - (May 7, 1999) - U.S. WIRELESS DATA, INC. ("USWD") (OTCBB: USWDA) announced today it has completed the first phase of a $1.5 to $5.0 million private placement pursuant to Regulation D of the Securities Act of 1933. The financing was facilitated by an institutional investor, through which the Company raised gross proceeds of $1,500,000. The Company issued 6% Cumulative Convertible Redeemable Preferred Stock (Series B) for $1.00 per share. The instrument gives the holder the right to convert the Preferred Stock into shares of the Company's Common Stock in the future at 80% of then current market price. Concurrent with this transaction, the holders of the Company's 6% Convertible Debentures agreed to convert all accrued interest and penalties into shares of the Series B Preferred Stock. The Series B Preferred Stock and Common Stock to be issued upon conversion have not been registered under the Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The Company will file a Current Report on Form 8-K with the Securities and Exchange Commission setting forth further details with respect to the financing including conversion terms and registration rights. Forward-Looking Statements: Certain information above contains forward-looking statements that involve risk and uncertainties. While the management of the Company believes that current expectations reflect reasonable assumptions, no assurances can be given that the Company will achieve its goals. Factors that could cause actual results to differ materially include, but are not limited to: the Company's requirement for additional capital; failure of the Company to raise additional capital critical to continue ongoing operations, the failure to execute definitive agreements with potential strategic alliance partners; technological change; the ability of the Company to develop new distribution channels; or the intensification of competition. The reports filed by the Company pursuant to United States securities laws contain a detailed discussion of these factors and certain other risks to which the Company is subject. Management of the Company advises the reader to review these reports (which are available from the United States Securities and Exchange Commission's EDGAR database at http://www.sec.gov and at various other Commission reference facilities in the United States) before making an investment decision regarding the Company or its securities. Contacts: U.S. Wireless Data, Inc. Liviakis Financial Communications, Inc. Robert E. Robichaud, CFO Tony Altavilla, Senior Vice President (510) 596-2025 (916) 448-6084 www.uswirelessdata.com Email: talfc@aol.com SOURCE: U.S. Wireless Data, Inc. -----END PRIVACY-ENHANCED MESSAGE-----