-----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, LFqOzBnVwpCrNhfahYwlN/i7LzF6uMa2GC13m78JqYxvcnDcttcQMOLbwYhhdpOP B7RrxCeUoAdqzUctdqclJg== 0001021890-00-000202.txt : 20000517 0001021890-00-000202.hdr.sgml : 20000517 ACCESSION NUMBER: 0001021890-00-000202 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 15 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 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: 10QSB SEC ACT: SEC FILE NUMBER: 000-22848 FILM NUMBER: 636262 BUSINESS ADDRESS: STREET 1: 805 THIRD AVE. STREET 2: 8TH FLR CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2127507766 MAIL ADDRESS: STREET 1: 2200 POWELL STREET STREET 2: SUITE 800 CITY: EMERYVILLE STATE: CA ZIP: 94608 10QSB 1 QUARTERLY REPORT ON FORM 10-QSB-SEPTEMBER 30, 1999 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 ------------------ FORM 10-QSB [X] Quarterly Report under Section 13 or Section 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended March 31, 2000. [ ] Transition Report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to . ------ ------ Commission File No.: 0-22848 U.S. Wireless Data, Inc. ---------------------------------------------------- (Exact name of registrant as specified in its charter) Colorado 84-1178691 ---------------------- ------------------------------- (State of incorporation) (IRS Employer Identification No.) 805 Third Ave, 8th Floor New York, NY 10022 ---------------------------------------------------------- (Address of principal executive offices, including zip code) (212) 750-7766 -------------------------------------------------- (Registrant's Telephone Number, including area code) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past ninety days. Yes [X] No [ ] As of May 10, 2000 there were outstanding 32,328,020 shares of the Registrant's Common Stock (no par value per share). Transitional Small Business Disclosure Format Yes [ ] No [X] 1 U.S. WIRELESS DATA, INC. TABLE OF CONTENTS PART I FINANCIAL INFORMATION Page ---- Item 1. Financial Statements (Unaudited) Balance Sheets - March 31, 2000, and June 30, 1999 ........................... 3 Statements of Operations - Three Months and Nine Months Ended March 31, 2000 and 1999 .. 4 Statements of Cash Flows - Nine Months Ended March 31, 2000 and 1999 ................... 5 Notes to Financial Statements .................................. 6-15 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations .......................................... 15-22 PART II OTHER INFORMATION Item 1. Legal Proceedings .............................................. 22 Item 2. Changes in Securities .......................................... 23 Item 3. Defaults on Senior Securities .................................. 24 Item 5. Other Information .............................................. 24 Item 6. Exhibits and Reports on Form 8-K .............................. 25 2
U.S. WIRELESS DATA, INC. BALANCE SHEET March 31, 2000 June 30, 1999 -------------- ------------- ASSETS Current Assets: Cash and cash equivalents ................................................... $ 38,514,000 $ 425,000 Accounts receivable, net of allowance for doubtful accounts of $51,000 at March 31, 2000; $43,000 at June 30, 1999 ...................... 157,000 178,000 Inventory, net .............................................................. 147,000 215,000 Other current assets ........................................................ 195,000 14,000 Escrow held for payment of professional fees ................................ -- 112,000 ----------- ----------- Total current assets ..................................................... 39,013,000 944,000 Processing units - deployed ................................................... 45,000 408,000 Fixed assets, net ............................................................. 670,000 405,000 Other assets .................................................................. 53,000 14,000 ----------- ----------- Total assets .................................................................. $ 39,781,000 $ 1,771,000 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable ............................................................ $ 1,547,000 $ 1,198,000 Accrued liabilities ......................................................... 388,000 413,000 Borrowings, current portion ................................................. 55,000 2,272,000 Other current liabilities ................................................... -- 450,000 ----------- ----------- Total current liabilities ................................................. 1,990,000 4,333,000 Borrowings, long-term portion ................................................. -- 25,000 ----------- ----------- Total liabilities ............................................................. 1,990,000 4,358,000 ----------- ----------- Redeemable preferred stock: Series B 6% cumulative convertible redeemable preferred stock, no par value, $1.00 stated value, 1,954,705 and 5,000,000 shares authorized, 227,352 and 1,954,705 shares issued and outstanding at March 31, 2000 and June 30, 1999, respectively. Redeemable at approximately $350,000 at March 31, 2000 ............................... 350,000 1,587,000 ----------- ----------- Commitments and contingencies Stockholders' equity (deficit): Preferred stock, no par value, 15,000,000 shares authorized: Series A, at $1.00 stated value, 0 and 4,000,000 shares authorized, and 0 and 752,000 issued and outstanding at March 31, 2000 and June 30, 1999, respectively ..................... -- 752,000 Series C convertible, stated value $0.01 per share, liquidation value $10.00 per share aggregating $50,616,000, 8,450,000 shares authorized, 5,061,600 issued and outstanding at March 31, 2000 ........ 51,000 Common stock, at $1.00 stated value, 40,000,000 shares authorized; 32,328,020 and 17,816,075 shares issued and outstanding at March 31, 2000 and June 30, 1999, respectively ......................... 32,328,000 17,816,000 Common stock to be distributed .............................................. -- 243,000 Additional paid-in capital .................................................. 89,535,000 12,082,000 Accumulated deficit ......................................................... (84,473,000) (35,067,000) ----------- ----------- Total stockholders' equity (deficit) ...................................... 37,441,000 (4,174,000) ----------- ----------- Total liabilities and stockholders' equity ................................ $ 39,781,000 $ 1,771,000 =========== ===========
Accompanying notes are an integral part of the financial statements 3
U.S. WIRELESS DATA, INC. STATEMENTS OF OPERATIONS For the three months ended For the nine months ended March 31, March 31, ----------------------- ----------------------- 2000 1999 2000 1999 ---- ---- ---- ---- As Restated As Restated ----------- ----------- Net revenues: Product sales ..................................... $ 111,000 $ 124,000 $ 271,000 $ 633,000 Services .......................................... 88,000 137,000 196,000 509,000 ------------ ------------ ------------ ------------ 199,000 261,000 467,000 1,142,000 ------------ ------------ ------------ ------------ Cost of revenues: Product sales ..................................... 214,000 89,000 349,000 499,000 Services .......................................... 52,000 151,000 196,000 482,000 Settlement with supplier .......................... -- -- -- (240,000) ------------ ------------ ------------ ------------ 266,000 240,000 545,000 741,000 ------------ ------------ ------------ ------------ Gross (loss) profit .................................... (67,000) 21,000 (78,000) 401,000 ------------ ------------ ------------ ------------ Operating expenses: Selling, general and administrative ................ 1,953,000 431,000 4,016,000 3,857,000 Research and development ........................... 391,000 105,000 859,000 363,000 ------------ ------------ ------------ ------------ Total operating expenses ........................ 2,344,000 536,000 4,875,000 4,220,000 ------------ ------------ ------------ ------------ Loss from operations ................................... (2,411,000) (515,000) (4,953,000) (3,819,000) Interest expense ....................................... (462,000) (1,118,000) (1,394,000) (1,757,000) Interest credit ........................................ 597,000 -- 597,000 -- Interest income ........................................ 65,000 -- 65,000 -- Other income ........................................... -- -- 128,000 8,000 ------------ ------------ ------------ ------------ Net loss ............................................... (2,211,000) (1,633,000) (5,557,000) (5,568,000) ------------ ------------ ------------ ------------ Preferred stock dividends .............................. (42,864,000) (25,000) (43,849,000) (571,000) ------------ ------------ ------------ ------------ Net loss available to common stockholders .............. $(45,075,000) $ (1,658,000) $(49,406,000) $ (6,139,000) ============ ============ ============ ============ Basic and diluted net loss per share, (after provision for preferred stock dividends) ............... $ (1.89) $ (0.12) $ (2.34) $ (0.46) ============ ============ ============ ============ Weighted average common shares outstanding - basic/diluted ............................ 23,900,000 13,669,000 21,197,000 13,247,000 ============ ============ ============ ============
Accompanying notes are an integral part of the financial statements 4
U.S. WIRELESS DATA, INC. STATEMENTS OF CASH FLOWS For the nine months ended March 31, ---------------------------------- 2000 1999 ---- ---- As Restated ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss ............................................................. $ (5,557,000) $ (5,568,000) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization .................................... 127,000 175,000 Bad debt expense ................................................. 25,000 -- Write down of inventory .......................................... 112,000 Gain on sale of merchant portfolio ............................... (124,000) Non-cash consulting services and other ........................... 511,000 1,499,000 Non-cash compensation expense-variable stock option .............. -- (1,302,000) Non-cash interest expense ........................................ 451,000 966,000 Non-cash reduction of payment due supplier ....................... -- (240,000) Loss on sale of fixed assets ..................................... 16,000 -- Changes in current assets and liabilities: Accounts receivable ........................................... (4,000) (60,000) Inventory ..................................................... (44,000) 457,000 Escrow for professional fees .................................. 112,000 -- Other current assets .......................................... (181,000) (29,000) Accounts payable .............................................. 349,000 (261,000) Accrued liabilities ........................................... 74,000 1,019,000 ------------ ------------ Net cash used in operating activities ......................... (4,133,000) (3,344,000) ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of fixed assets ......................................... (395,000) (46,000) Proceeds from sale of merchant portfolio ......................... 450,000 -- Proceeds from sale of fixed assets ............................... 24,000 -- Processing units - deployed ...................................... -- (81,000) (Increase) decrease in other assets .............................. (39,000) 9,000 ------------ ------------ Net cash provided by (used in) investing activities ........... 40,000 (118,000) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock ........................... 939,000 27,000 Principal payment on borrowings .................................. (1,827,000) (366,000) Net proceeds from issuance of debt ............................... 1,585,000 2,310,000 Net proceeds from issuance of convertible debenture .............. -- 2,490,000 Proceeds from issuance of Series C preferred stock ............... 50,616,000 -- Payments of offering costs for Series C preferred stock .......... (6,102,000) -- Proceeds from exercises of options and warrants .................. 169,000 -- Redemption of Series A preferred stock ........................... -- (1,000,000) Redemption of Series B preferred stock ........................... (2,198,000) -- Redemption of convertible debenture .............................. (1,000,000) -- ------------ ------------ Net cash provided by financing activities ..................... 42,182,000 3,461,000 ------------ ------------ Net increase (decrease) in cash and cash equivalents ..................... 38,089,000 (1,000) Cash and cash equivalents, beginning of period ........................... 425,000 4,000 ------------ ------------ Cash and cash equivalents, end of period ................................. $ 38,514,000 $ 3,000 ============ ============
Accompanying notes are an integral part of the financial statements 5 U.S. WIRELESS DATA, INC. NOTES TO FINANCIAL STATEMENTS Note 1 - BASIS OF PRESENTATION The accompanying financial statements included herein have been prepared by U.S. Wireless Data, Inc. (the "Company" or "USWD"), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. The financial statements for the three and nine month period ended March 31, 1999 have been restated from the originally reported Form 10-QSB. A Form 8-K was filed on July 2, 1999, incorporating this restatement. The financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Rule 310 of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The results of operations of any interim period are not necessarily indicative of the results of operations to be expected for the fiscal year. For further information, refer to the financial statements and accompanying footnotes included in the Company's Form 10-KSB for the year ended June 30, 1999. The year ended June 30, 1999 condensed balance sheet data was derived from audited financial statements but does not include all disclosures required by Generally Accepted Accounting Principles. Note 2 - THE COMPANY The Company was incorporated in the State of Colorado on July 30, 1991. The Company relocated its principal executive office from California to New York City in February 2000. The Company is in the business of providing products and services to enable the use of wireless technology for electronic payment and other transactions. The Company's Wireless Express Payment ServiceSM ("WEPS") gateway serves as a link joining all parties involved in a wireless point-of-sale ("POS") transaction. This enables businesses requiring mobility and/or faster transaction speed to accept non-cash payments utilizing wireless technology. By providing a seamless interface between a merchant's POS terminal(s), wireless carriers and front-end processors, credit, debit and other card transactions can be processed as fast as cash, without the cost and inconvenience of being tethered to a telephone line. In addition, WEPS' Internet-based tools offer on-line terminal activation and online/real-time transaction monitoring, reporting and remote terminal diagnostics. Note 3 - BRIDGE FINANCING AND PRIVATE PLACEMENT Bridge Financing On December 23, 1999, the Company entered into an agreement with Commonwealth Associates, L.P. ("Commonwealth") in connection with the private placement (the "Private Placement") of the Company's Series C Convertible Preferred Stock (the "Series C Preferred Stock"). The securities issued in the Private Placement and in the bridge financing described below have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. In connection with the engagement of Commonwealth, the Company entered into an agreement with ComVest Capital Management, LLC ("ComVest"), an affiliate of Commonwealth, pursuant to which ComVest initially lent the Company $1,000,000 and Dean M. Leavitt, the Company's Chairman and Chief Executive Officer lent the Company $100,000 (the "Bridge Financing"). ComVest and Mr. Leavitt subsequently lent the Company an additional $250,000 and $25,000, respectively. The loans were collateralized by substantially all of the Company's assets pursuant to general security agreements and bore interest at a rate of 8% per annum. 6 The notes were due on the earlier of (x) the date a change of control (as defined in the note) occurs, (y) the date the Company concludes a debt or equity financing in which the Company receives at least $5,000,000 of gross proceeds, or (z) December 30, 2000. The notes included certain negative covenants, including prohibitions on the payment of certain dividends, redemptions and asset sales and limitations on the incurrence of indebtedness, liens and the issuance, prior to March 31, 2000, of securities not specifically exempted. The lenders had the option to convert the outstanding principal amount of the notes into securities issued in connection with any private placement transaction on the same terms as investors in such placement. In addition, the Company agreed to appoint a designee of the bank affiliate lender to the Board and to have an observer present at all meetings of the Board. In addition to the Bridge Financing, the Company also borrowed $125,000 from ComVest and $75,000 from Mr. Leavitt (the "Additional Notes"). The Additional Notes were due on demand interest free. The Company repaid the full outstanding amount of the Bridge Financing and Additional Notes on March 18, 2000, from the Private Placement described below. The rights under the Bridge Financing expired on March 18, 2000, when the loans were repaid. In connection with the Bridge Financing, the Company also issued ComVest and Mr. Leavitt warrants to purchase 13,636,363 shares and 1,363,637 shares, respectively, of Common Stock at an exercise price of $.01 per share. These warrants are fully exercisable at any time, subject to certain conditions, including the availability of a sufficient number of shares of Common Stock for issuance upon exercise thereof. On March 10, 2000, Commonwealth and Mr. Leavitt exercised their warrants with respect to 7,920,000 shares and 792,000 shares, respectively. The remaining warrants expire on December 30, 2006. ComVest and Mr. Leavitt have certain demand and "piggyback" registration rights, commencing in June 2000, as to the shares of Common Stock underlying the warrants. Currently, the Company does not have enough authorized Common Stock for the remaining warrants to be fully exercised. As a result, the Company entered into Economic Participation Agreements with the bridge lenders which are intended to provide the bridge lenders with the economic equivalent of ownership of the shares of Common Stock underlying the warrants in the event that the Company is unable to amend its Articles of Incorporation to increase the number of authorized shares of Common Stock. The Economic Participation Agreements terminate at such time as a sufficient number of shares of Common Stock are authorized and reserved for issuance upon the exercise of the warrants, unless the Company failed to amend its Articles of Incorporation by April 28, 2000, in which case the bridge lenders are entitled to liquidated damages which are calculated in accordance with the agreement. The Economic Participation Agreements were subsequently amended to extend the period in which the Company must amend its Articles of Incorporation to July 11, 2000. If the agreements are not automatically terminated as contemplated by the agreements within 195 days of the date of the agreements, then the Company shall pay to the bridge lenders on such 195th day a nonconversion fee of $550,000 and, in addition, until such time as the agreements are terminated as provided for, the bridge lenders may elect to receive in cash in consideration of canceling the agreements the greater of (A) $2.5 million or (B) the product of (1) the number of shares as adjusted per the agreement and (2) the remainder of (x) the closing asking price of the common stock on the last trading date prior to the exercise by the bridge lenders of their liquidation right and (y) $0.01. The Company established the value of the Bridge Warrants based upon an assessment of the market rate of interest for debt securities with similar attributes but without the stock purchase warrants feature. In December 1999, the Company recorded a discount on the notes from the Bridge Financing via a charge of $34,000 against the face value of the notes for a proportionate amount of the warrant valuation. For the quarter ended March 31, 2000, the Company recorded an additional charge of $417,000 against the face value of the notes for the balance of the warrant valuation. The Company accreted the carrying value of the notes to their full face value by the time of repayment on March 17, 2000. Private Placement Commonwealth acted as placement agent in the Private Placement pursuant to which, as of March 31, 2000, 506.16 Units have been sold at $100,000 per Unit for aggregate proceeds of $50,616,000. Each Unit consists of 10,000 shares of the Company's Series C Preferred Stock 7 (which is initially convertible into 66,667 shares of Common Stock) and warrants to purchase Common Stock equal to 25% of the number of shares into which the Series C Preferred Stock is convertible. Under the terms of the Private Placement, an additional 143.84 Units for aggregate proceeds of $14,384,000 may be sold. The Series C Preferred Stock has a liquidation preference of $10 per share, plus accrued and unpaid dividends. The holders of Series C Preferred Stock are entitled to vote their shares of Series C Preferred Stock on an as converted basis with the holders of Common Stock as a single class on all matters submitted to a vote of the shareholders, except as otherwise required by applicable law and except that the holders of Series C Preferred Stock voting separately as a class have the right to elect two directors to the Board of Directors. Each share of Series C Preferred Stock is convertible at any time, subject to the approval by the shareholders of an amendment to the Company's Articles of Incorporation to increase the number of authorized shares of Common Stock, at the option of the holder, into a number of shares of Common Stock determined by dividing the liquidation value by the conversion price, initially $1.50 per share, which is subject to adjustment for stock splits, recapitalizations and other similar events. If the Company issues shares of Common Stock at a price per share less than the then current conversion price, then, subject to certain exceptions, the conversion price will be automatically reduced to such lower price and the number of shares issuable upon conversion of the Series C Preferred Stock shall be increased proportionately. The Series C Preferred Stock automatically converts into Common Stock (a) if, at any time commencing three months after June 17, 2000, the average closing bid price of the Company's Common Stock exceeds 300% of the conversion price for 20 consecutive trading days or (b) upon a public offering of the Company's securities that raises gross proceeds in excess of $30,000,000, provided the shareholders have approved an increase in authorized capital to allow for the conversion of the Series C Preferred Stock. The warrants issued in connection with the Private Placement (the "Unit Warrants") are exercisable for a period of seven years for an aggregate number of shares of Common Stock equal to 25% of the number of shares into which the Series C Preferred Stock are convertible, at an exercise price equal to the then applicable conversion price. The initial exercise price is $1.50 per share, subject to adjustment under the same circumstances as the conversion price of the Series C Preferred Stock. The Unit Warrants are callable for a nominal price at the Company's option on 30 days' notice to the holders of the Unit Warrants if (a) the average closing bid price of the Company's Common Stock for 20 consecutive trading days exceeds 300% of the exercise price, as adjusted, (b) the Company's Common Stock is trading on a national securities exchange or Nasdaq SmallCap or National Market Systems, and (c) a registration statement covering the shares issuable upon exercise of the Unit Warrants has been declared effective and the shares issuable upon exercise of the Unit Warrants are not otherwise subject to any lock-up restrictions. The terms of the Series C Preferred Stock and the Unit Warrants may be amended, modified or waived by an agreement among the Company, Commonwealth and a committee to be designated by Commonwealth whose members hold in the aggregate not less than 20% of the outstanding Series C Preferred Stock and not less than 20% of the outstanding Unit Warrants. The Company has agreed to file a registration statement with respect to the shares of Common Stock issuable upon conversion of the Series C Preferred Stock and exercise of the Unit Warrants under the Securities Act within nine months of the closing of the Private Placement. The investors also have certain "piggyback" registration rights with respect to the shares of Common Stock issuable upon conversion of the Series C Preferred Stock and the exercise of the Unit Warrants. Each investor who purchased Units in the Private Placement agreed not to sell, transfer or otherwise dispose of any of the securities sold in the Private Placement for a period of one year following the closing of the transaction. Thereafter, investors may not sell, transfer or dispose of more than 25% of such securities during each of the following four 90-day periods. The lock-up period may be extended by Commonwealth for up to an additional six months from the closing of any public offering that is consummated prior to the end of the initial lock-up period, in which 8 event there shall be no further lock-up at the end of such period. The Company's officers, directors and certain other existing shareholders agreed to substantially the same lock-up provisions as to shares owned or acquired by them. Several of the Company's officers and directors purchased Units in the Private Placement. Dean M. Leavitt, the Company's Chief Executive Officer and Chairman purchased 2.5 Units, Charles I. Leone, the Company's Chief Financial Officer, Chief Operating Officer and Secretary purchased 1 Unit and Robert E. Robichaud, the Company's former Chief Financial and Accounting Officer, Treasurer and Secretary purchased .75 of a Unit. Edwin Cooperman, a member of the Board, purchased 1 Unit and each of Michael S. Falk and Amy Newmark, both also members of the Board, purchased 2.5 Units. Barry Kaplan, also a member of the Board, purchased 25 Units. Mr. Kaplan also received from Commonwealth at no charge a warrant to purchase 1.5 Units exercisable at $100,000 per Unit (from the warrants Commonwealth received as compensation in the Private Placement). As part of its compensation, Commonwealth received warrants to purchase 126.5 Units, exercisable at $100,000 per Unit, a commission equal to $3,543,000, which is 7% of the gross proceeds raised in the Private Placement, and a structuring fee equal to $1,518,000, which is 3% of the gross proceeds raised in the Private Placement. Pursuant to a prior agreement with Peter J. Solomon Securities Company Limited ("PJSC") relating to financing transactions entered into by the Company, the Company issued to PJSC a warrant to purchase 25.3 Units at $100,000 per Unit and a fee equal to $400,000. The warrants are exercisable commencing on the date of issuance and for seven years thereafter. The Company valued the unit warrants at $5.57 million. Commonwealth has the right under an Agency Agreement to designate two directors to the Board and the following individuals gave proxies to Commonwealth to vote for the election of such designees: Messrs. Leavitt and Leone, John H. Perveiler, the Company's Vice President/National Sales Manager, Marc R. Shultz, the Company's Vice President of Business Development, and Barry Kaplan, Alvin Rice and Chester Winter, each members of the Board. On March 29, 2000, four new directors joined the Board, including Michael S. Falk, the Chairman of Commonwealth, and Amy L. Newmark, both of whom were designated by Commonwealth. As a condition to the completion of the Private Placement, the Company agreed that the exercise price of a warrant owned by Dean M. Leavitt, the Company's Chairman and Chief Executive Officer, to purchase 2,687,500 shares of Common Stock should be reduced from $3.00 per share to the market price of the Common Stock on January 4, 2000. No amount has been charged to operations for compensation in connection with the repricing because the exercise price equaled the market price on the date of repricing. In March 2000, the FASB issued Interpretation No. 44 "Accounting for Certain Transactions Involving Stock Compensation". The interpretation is not effective until July 1, 2000. Had the interpretation been in effect on the date of the repricing, the warrant would have been considered a variable warrant. On March 31, 2000, the variable warrant would have resulted in $9.75 million in compensation expense, which would have increased the current quarter's net loss and net loss per share to $54.9 million and $2.30 per share, respectively. On July 1, 2000, in accordance with Interpretation No. 44, the warrant will be recorded as a variable warrant. As a result of the Bridge Financing and Private Placement, Commonwealth may be deemed to control the Company. Note 4 - FINANCIAL CONDITION AND LIQUIDITY The Company has incurred recurring losses from operations and has an accumulated deficit of approximately $42 million. During the implementation of its new business plan as described in Item 2 - Management Discussion and Analysis, the Company expects expenses to continue to exceed revenues during the initial phases of the business plan. 9 The Company's cash position of $38.5 million provides the Company, in management's opinion, with the financial resources to pursue it's business plan and fund monthly deficits. As of May 10, the Company is debt free and has no current financing needs. Note 5 - NET LOSS PER SHARE Earnings (loss) per common share (EPS) is computed using Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per Share." SFAS No. 128 establishes standards for the computation, presentation, and disclosure of earnings per share. Basic per share amounts are computed by dividing the net loss available to common stockholders by the weighted average number of common shares outstanding during the year. Diluted per share amounts incorporate the incremental shares issuable upon the assumed exercise of the Company's stock options and warrants and assumed conversion of convertible securities. During fiscal 1999 and 2000 such incremental amounts have been excluded from the calculation since their effect would be anti-dilutive. Such stock options, warrants and conversions could potentially dilute earnings per share in the future. Note 6 - FINANCINGS, BORROWINGS AND STOCKHOLDERS' EQUITY For the nine months ended March 31, 2000, the Company raised $930,000 in a private offering of common stock and common stock purchase warrants. The Company issued approximately 1,500,000 shares of common stock and warrants to purchase approximately 301,000 shares of common stock. The warrants are exercisable at $1.50 per share through July 6, 2004. An additional 727,273 shares of common stock were issued on the conversion of $450,000 notes payable. In addition, as a result of the private offering, Bridge Financing and Private Placement described above, anti-dilution provisions of certain outstanding warrants were triggered and the Company is required to adjust the exercise prices and the number of shares of common stock issuable upon the exercise of such warrants. During the none months ended March 31, 2000, approximately 752,000 shares of Series A Preferred Stock and accrued dividends of approximately $23,000 were converted into approximately 1,177,000 shares of common stock at various price levels. In the fourth quarter of fiscal 1999, USWD entered into an agreement with the purchasers of the Series B Preferred Stock and holders of the 6% Debentures to file a registration statement with the SEC covering the common stock underlying the Series B Preferred Stock, a common stock purchase warrant issued at the same time as the Series B Preferred Stock, the 6% Debentures, and the common stock purchase warrants issued to the 6% Debenture holders in July, 1998, within 30 days of May 11, 1999, to be effective within 90 days of May 11, 1999. Failure to file the registration statement by June 10, 1999 and/or obtain effectiveness of it by August 9, 1999, resulted in the accrual of penalties against the Company. The Company did not file the required registration statement until June 30, 1999, and the registration statement has never been declared effective. The Series B Preferred Stock and 6% Debentures ultimately became subject to redemption at the option of the holders for failure to obtain effectiveness of the registration statement. The Company became subject to a late filing penalty of $74,000 and accrued "late effectiveness" penalties of $188,000, $225,000 and $0 for the quarters ended September 30, 1999, December 31, 1999 and March 31, 2000, respectively. Upon redemption of these securities, approximately $372,000 of the penalties were waived by the holders and recorded as an interest credit in the current fiscal quarter. Offering costs, and valuation of related warrants and incentive shares were recorded against the aggregate preference value of the preferred stock and will be accreted up to the full redemption value by the date of mandatory redemption. Accretion and accrued dividends for the first, second and third fiscal quarters was $807,000, $126,000 and $49,000, respectively. As described below in this Footnote and in Footnote 14 (Subsequent Events), the Company redeemed or converted all outstanding shares of Series B Preferred Stock and 6% Debentures on or before May 3, 2000. The previously accrued dividends include $87,000 which was waived in conjunction with the Series B Preferred Stock redemptions. This waived amount reduced preferred stock dividends and accumulated deficit in the current fiscal quarter. In the first quarter of fiscal year 2000, holders of the 6% Debentures converted $200,000 of the debt into approximately 313,000 shares of common stock per the specified conversion formula. 10 In the first quarter of fiscal year 2000, a Colorado based management recruiting firm successfully completed a search for a key product development engineer. The Company agreed to pay half the $17,000 fee in the form of 13,600 shares of common stock, which was issued on February 23, 2000. On January 20, 2000, the Company issued a 22,500 share common stock purchase warrant to RBB Bank as an inducement to redeem shares of Series B Preferred Stock and 6% Debentures held by RBB Bank, exercisable at $1.50 per share. The warrant vests immediately, was issued with an exercise price equal to the market price of the underlying stock on the date of grant, and expires on July 6, 2004. The Company valued the warrant at $32,000, which was charged as a deemed dividend to accumulated deficit. On February 11, 2000, holders of the 6% Debentures converted $800,000 of the debt into approximately 405,000 shares of common stock per the specified conversion formula. Upon conversion of the 6% Debentures, approximately $225,000 of interest previously accrued was waived by the holders and recorded as an interest credit in the current fiscal quarter. On March 15, 2000, the Company retained Lippert/Heilshorn and Associates, Inc. to provide investor relations services. In addition to monthly fees and expenses, the Company agreed to issue Lippert/Heilshorn a 15,000 share common stock purchase warrant each year for the next 3 years. The warrants vest one year after date of grant, are issued with an exercise price equal to the market price of the underlying stock on the date of grant, and expire 5 years from the vesting date. The first year grant was issued on March 28, 2000, exercisable at $5.344 per share, which the Company valued at $52,000. The Company charged the valuation as investor relations expense. On March 17, 2000, the Company redeemed 227,353 shares of Series B Preferred Stock and $1,000,000 of 6% Debentures from RBB Bank for a price equal to 125% of the liquidation value or principal amount, as applicable, of the Series B Preferred Stock and 6% Debentures and repaid a loan in the amount of $250,000. In connection with the redemption, RBB Bank also waived certain accrued penalties and dividends. On March 28, 2000, the Company issued a 50,000 share common stock purchase warrant to Cornell Consulting International, Inc. for executive search services, exercisable at $5.344 per share. The warrant vests immediately, was issued with an exercise price equal to the market price of the underlying stock on the date of grant, and expires March 27, 2005. The Company valued the warrant at $95,000 (based on the market value of the services received less cash paid), which was charged as executive search expenses. On March 31, 2000, the Company redeemed 1,500,000 shares of the Company's Series B Preferred Stock from Bold Street, LLC, for a price equal to 125% of the liquidation value of the Series B Preferred Stock, plus accrued dividends. As an inducement for the redemptions, the Company also issued a common stock purchase warrant, expiring April 30, 2004, to purchase 150,000 shares of Common Stock, exercisable at $2.28 per share. In connection with such redemption, Bold Street waived certain accrued penalties. Bold Street received certain "piggyback" registration rights as to the shares of Common Stock underlying the warrant. The Company valued the warrant at $536,000, which was charged as a deemed dividend to accumulated deficit. For the third fiscal quarter ended March 31, 2000: (i) 109,600 common stock shares were issued on exercise of employee options for aggregate proceeds of $81,452, (ii) 8,712,000 common stock shares were issued on exercise of the Bridge Warrants for aggregate proceeds of $87,120, and (iii) 218,235 common stock shares were issued on cashless exercises of warrants aggregating 394,632 shares. 11 Note 7 - SALE OF CREDIT CARD PORTFOLIO On July 7, 1999, USWD sold a portion of its merchant credit card portfolio to PMT Services Inc., a wholly owned subsidiary of Nova Corporation. The transaction resulted in a cash payment to USWD of $450,000. The sale included approximately 450 installed USWD owned TRANZ Enabler point-of-sale devices deployed with a portion of the respective merchants. A gain of $124,000 was recorded on the sale as other income. Note 8 - RELATED PARTY TRANSACTIONS On July 1, 1999, USWD entered into an agreement with Liviakis Financial Communications, Inc. (LFC), to provide the Company with public relations and investor relations services through March 15, 2000. The Company issued 690,000 restricted shares of common stock to LFC for its services under this agreement. LFC is entitled to receive a 2.5% cash finder's fee for financing located by LFC and a 2% finder's fee based on the "total consideration provided" through any acquisition located by LFC. The Company recorded a charge to consulting expense of $352,000 for the valuation of the shares. LFC agreed not to sell any USWD common stock during the term of the consulting services agreement. In December 1999, the Company issued 443,077 restricted shares of common stock to John M. Liviakis, the principal owner of LFC, and a significant Company shareholder, to replace shares transferred to a finder in conjunction with the May 1999 Series B Preferred Stock financing. In order to induce Commonwealth to consummate the Private Placement, Mr. Liviakis and LFC agreed that for a period beginning on March 15, 2000 and ending on the first anniversary of the final closing of the Private Placement (the "Lock-up Period"), they will not sell, transfer or otherwise dispose of any securities of the Company that were owned by either of them as of March 14, 2000 or acquired during the Lock-up Period, except for an aggregate of 1,139,000 shares which may be transferred or sold under certain conditions. On March 29, 2000, the Company issued each of the four new members of the Board a nonqualified stock option for 250,000 shares of the Company's common stock. The options are exercisable at $1.50 per share, vest one third per yearly anniversary date following grant date and expire on the earlier of ten years from the grant date or one year after cessation of the Optionee's relationship with the Company. Since the exercise price for the options was less than the market price of the common stock ($6.00) on the date of issue, the Company valued the options under APB 25 at an aggregate of $4.5 million. The value will be charged to compensation expense over the vesting period of the options. For the quarter ended March 31, 2000, the Company charged $12,000 to compensation expense. See additional disclosures of related party transactions in Note 3 - Bridge Financing and Private Placement and in Note 14 - Subsequent Events. Note 9 - BENEFICIAL CONVERSION FEATURE - SERIES C PREFERRED STOCK The value of the "in the money" conversion feature for the Series C Preferred Stock from the closings of the Private Placement approximated $42.4 million. The value was charged to increase accumulated deficit as deemed dividends during the quarter ended March 31, 2000. 12 Note 10 - SUPPLEMENTAL CASH FLOW INFORMATION Supplemental disclosure of non-cash financing and investing activities: 1. Conversion of $450,000 notes payable to 727,273 shares of common stock. 2. Conversion of $1,000,000 6% convertible debenture into 718,018 shares of common stock. 3. Accretion on mandatory redeemable preferred stock of $982,000, including accrued dividends of $84,000. 4. Conversion of 751,610 shares of Series A preferred stock and accrued dividends to 1,134,113 shares of common stock. 5. Issuance of 690,000 and 443,077 shares of common stock to Liviakis Financial Communications. 6. Recording of "in the money conversion feature" on Series C preferred stock for $42.4 million. 7. Issuance of 243,000 shares of common stock classified as "to be distributed" on June 30, 1999. Note 11 - INVENTORY March 31, 2000 June 30, 1999 -------------- ------------- Inventory consists of: Raw material $ 139,000 $ 144,000 Work-in-process 133,000 -- Finished goods 230,000 331,000 Lower of cost or market reserve (355,000) (260,000) --------- --------- $ 147,000 $ 215,000 ========= ========= The Company has established a reserve to reflect the estimated net realizable value of the inventory as of March 31, 2000 and June 30, 1999. Note 12 - COMMITMENTS AND CONTINGENCIES The Company leases office facilities in Colorado and New York expiring January 16, 2003 and September 29, 2001, respectively. Future minimum annual lease commitments for the years subsequent to March 31, 2000 are $300,000, $190,000 and 64,000. The Company has employment agreements with two of its executive officers. The agreements are for initial terms of two years, with automatic one-year extensions after the initial term. Effective May 4, 2000, the employment agreements commit the Company to annual salary compensation of $425,000 and annual discretionary bonuses. See additional disclosure regarding the Economic Participation Agreements in Note 3 - Bridge Financing and Private Placement and Leases in Note 14 - Subsequent Events. Note 13 - LITIGATION In April 1998, USWD entered into an agreement with certain former noteholders of its Demand Notes under which USWD issued 525,800 shares of common stock in settlement of the dispute regarding conversion terms of their notes. Terms of the settlement entitled the noteholders to certain guarantee and/or "put" provisions related to the shares issued in conversion of the notes. The shares originally issued upon conversion of the notes and the additional shares resulting from the settlement were reflected as redeemable common stock on the balance sheet. The guarantee expired as to all shares on June 19, 1999. The "put" expired as to all shares on June 24, 1999. As of June 30, 1999, the "put" provisions related to the shares had expired or been relinquished in return for the Company's agreement to issue up to 200,000 shares of common stock to 13 certain holders who had exercised their "put" rights. In the fourth fiscal quarter of 1999, $49,000 was accrued to reflect the settlement. The agreement has been executed and 200,000 shares of common stock were issued on February 22, 2000. Note 14 - SUBSEQUENT EVENTS The Board of Directors approved an amendment to the Company's Articles of Incorporation to increase authorized capital from 55,000,000 shares to 225,000,000 shares. Of that number, 200,000,000 shares would be designated as no par value Common Stock and 25,000,000 shares would be designated as preferred stock, with the rights, designations and preferences of any series of preferred stock to be fixed and determined by the Board of Directors at the time of issuance, without further action by shareholders. The amendment to the Articles of Incorporation is to be submitted to the Company's shareholders as soon as practicable. The Board of Directors approved a new stock option plan, subject to approval by the Company's shareholders at the next shareholder meeting. Once approved by shareholders (and assuming an increase in authorized common stock is also approved by shareholders) the option plan would reserve 15,000,000 shares of Common Stock for issuance pursuant to options that may be granted under the plan. To date, Dean Leavitt, the Company's Chief Executive Officer, has been granted 2,500,000 options, and other employees have been granted 678,000 options, to be issued with the exercise price to be set as of the date of shareholder approval of the plan. The plan is to be submitted to the Company's shareholders as soon as practicable. On April 28, 2000, the Company repaid $55,000 of principal plus accrued interest to date on all outstanding notes classified under current liabilities in the Balance Sheet at March 31, 2000. On May 3, 2000, pursuant to purchase agreements reached with the holders, the Company redeemed the remaining 227,352 outstanding shares of Series B Preferred Stock for an aggregate price of $350,000 and, as an inducement for the redemptions, common stock purchase warrants to purchase an aggregate of 25,000 shares of the Company's Common Stock at an exercise price of $1.50 per share. The warrants are exercisable through April 30, 2004, and the Company valued the warrants at $60,000 on the date of grant, which will be charged as a deemed dividend to accumulated deficit. The Company intends to enter into a new lease for office space in New York City for a term of ten years. Assuming the Company signs the new lease in mid May 2000, minimum annual lease commitments for the five years subsequent to March 31, 2000 are $456,300, $608,400, $608,400, $608,400, $608,400 and thereafter in the aggregate are $3,334,500. At the same time, the Company is also negotiating with its current landlord and a prospective tenant for the termination of its existing New York City lease. Assuming the Company is released from it's existing New York City lease effective July 1, 2000 with no loss or penalty, the Company would be relieved of future minimum lease commitments of $164,000 and $110,000 for the years ending March 31, 2001 and 2002, respectively. 14 On May 4, 2000, the Board approved an increase in Mr. Leavitt's annual salary to $250,000. The Board also approved a bonus of $200,000 to Mr. Leavitt for the year ending May 3, 2000, the first anniversary of Mr. Leavitt's position as Chairman and Chief Executive Officer. Compensation expense in the third fiscal quarter was charged $182,000 for the proration of the bonus. May 4, 2000, the Company issued a 25,000 share common stock purchase warrant to Cornell Consulting International, Inc. for executive search services, exercisable at $3.1875 per share. The warrant vests immediately, is exercisable at a price equal to the market price of the underlying stock on the date of grant, and expires 5 years from the date of grant. The Company valued the warrant at $25,000 (based on the market value of the services received less cash paid), which will be charged to operations as executive search expenses in the fourth fiscal quarter. ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FORWARD-LOOKING STATEMENTS The Company may, in discussions of its future plans, objectives and expected performance in periodic reports filed by the Company with the Securities and Exchange Commission (or documents incorporated by reference therein) and in written and oral presentations made by the Company, include projections or other forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 or Section 21E of the Securities Exchange Act of 1934, as amended. Such projections and forward-looking statements are based on assumptions, which the Company believes are reasonable but are, by their nature, inherently uncertain. In all cases, results could differ materially from those projected. Some of the important factors that could cause actual results to differ from any such projections or forward-looking statements 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; system capacity constraints or system failures; the ability of the Company to develop new distribution channels; or the intensification of competition. Additional factors may be described in other reports filed by the Company under the Securities Exchange Act of 1934. A detailed statement of risks and uncertainties relating to forward-looking statements is set forth in the Company's Annual Report on Form 10-KSB for the fiscal year ended June 30, 1999 filed on October 14, 1999, under the caption "Risk Factors" in Item 6 of that Report, and is hereby incorporated by reference. OVERVIEW The Company was incorporated in the State of Colorado in July 1991 for the purposes of designing, manufacturing and marketing wireless and portable credit card and check authorization terminals for use in the transaction processing business. The Company completed an initial public offering in December 1993. The Company relocated its principal executive office to New York City from California in February 2000. In late March 2000, the Company raised $50.6 million in gross proceeds from the Private Placement. 15 The Company has now repositioned itself as a facilitator of wireless transaction and data services. It is a device- neutral, wireless carrier-neutral, merchant acquirer and front-end processor neutral enabler of wireless transaction processing services through the creation of its Wireless Express Payment ServiceSM or WEPSSM ("WEPS"). WEPS provides a gateway between all of the parties within a wireless point-of-sale ("POS") transaction. By providing a seamless interface between a merchant's POS terminals, wireless carriers and transaction processors, credit, debit and other card transactions can be processed almost as fast as cash, without the cost and inconvenience of being tethered to a telephone line. In addition, WEPS' Internet-based tools offer online, real-time transaction monitoring and reporting, remote diagnostics and automated terminal activation. USWD provides merchant acquirers, Independent Sales Organizations ("ISOs") and payment processors with a wireless transaction management service that can be utilized at both conventional and emerging merchant segments, permits the retrieval of on-line/real-time transactional reports and diagnostics via the Internet and simplifies the customer service and application development effort. Revision of Business Plan In fiscal year 1998, USWD entered into agreements with large telecommunications carriers for direct distribution of USWD's products and services to merchants. USWD signed joint marketing and operating agreements with Bell Atlantic Mobile, Ameritech Mobile Communications, Inc., and GTE Wireless. Commencing in the second quarter of fiscal 1998 and continuing into the first quarter of fiscal 1999, USWD made significant investments to support a nationwide deployment of TRANZ Enablers (a device developed by USWD that provides the ability for a traditional dial-up terminal to communicate wirelessly) to merchants through GTE's and other telecommunications carriers' national sales forces. Under these deployment programs, the carrier's sales representative introduced USWD's credit card processing solution and TRANZ Enabler to the end user merchant. Upon execution of a credit card processing agreement, a TRANZ Enabler unit(s) was provided to the merchant by USWD at USWD's cost. Under this program, USWD retained a portion of the monthly credit card fees based on the dollar volume and number of transactions processed through the TRANZ Enabler. Placements of TRANZ Enabler units pursuant to USWD's agreements with telecommunications carriers did not develop as rapidly as anticipated and did not reach anticipated (and necessary) levels to pay for the infrastructure to support the programs. Costs to USWD of implementing the joint marketing and distribution agreements with GTE Wireless, Bell Atlantic Mobile and Ameritech exceeded revenue generated by the programs throughout the entire program. USWD has phased-out this program. USWD's continued focus on direct sales to the merchant community had inadvertently positioned it in direct competition with the industry's largest acquirers, a competitive stance that resulted in disappointing sales. As the Company entered fiscal 1999, it was clear that the Company did not have the requisite expertise as a merchant acquirer and that it should not be in direct competition with firms that were its prospective customers. USWD hired Roger Pierce, former President of First Data Corporation and Chief Operating Officer of Visa International, as Chief Executive Officer in August 1998. It was during this period that the Company began the development of WEPS. Mr. Pierce retired in March 1999. 16 In May 1999, Dean M. Leavitt, former President and Chief Executive Officer of U.S. Data Capture, a credit card processing company serving a broad spectrum of conventional card acceptors and emerging markets, was hired as Chairman and Chief Executive Officer of USWD. Mr. Leavitt has refined the Company's mission to become a device neutral, wireless carrier-neutral and merchant acquirer-neutral provider of wireless processing services. The Company also developed a complimentary suite of Internet browser-based tools to simplify the activation, troubleshooting and deployment of wireless terminal devices. As part of USWD's new strategy, the Company has focused its resources on the continued development of the WEPS platform and its suite of services and has phased out the sale of products and services directly to merchants, thereby positioning itself as a neutral enabler to the acquirer marketplace. The Company now has significant efforts underway to broaden the use of WEPS through the expansion of its sales channels via contracts with merchant acquirers, ISO's and payment processors. The Company is also in the process of expanding its WEPS offerings by certifying additional WEPS-enabled POS devices and implementing connectivity to additional processors. WEPS The Company's business plan is now focused on establishing WEPS as the global standard for wireless POS transaction processing. WEPS provides for a seamless interface between wireless POS terminals and front-end processors (companies with established connections to the credit and debit card issuers). The speed and mobility offered by WEPS has the potential to open up vast new markets that have historically not accepted card payments. Central to the Company's strategy is its position as a "neutral" provider of wireless transaction services to the industry, specifically neutral with respect to terminal manufacturers, wireless carriers and card processors. The transaction processing industry in the United States is large and growing. In 1998, Americans used their credit and debit cards nearly 14 billion times, generating over $1 trillion in purchases. However, there are two weaknesses in the electronic transaction processing industry - slow transaction speed and lack of mobility. Until the mid-1980's, all credit card processing was essentially paper-based. As improvements in electronic terminal technologies evolved landline transmission became the prevailing means for processing credit card transactions. Electronic Draft Capture ("EDC"), the electronic authorization and settlement of credit card transactions has since become the standard for processing POS transactions. Merchant acquirers, transaction processors and credit card issuers all require merchants to utilize EDC to conduct secure credit and debit card transactions. However, this tethered methodology excludes significant under-served markets that require mobility and/or speed, such as quick service restaurants, transportation services, delivery-based businesses, stadium concessions and others. As the electronic transaction processing industry has evolved, providers have devoted substantial resources to developing proprietary solutions to gain competitive advantages, including the development of wireless POS systems. However, with the increasing variety of terminal manufacturers, wireless carriers and front-end processors needing to communicate, and with each having proprietary systems and communication protocols, the cost and complexity of connectivity has become a barrier to deployment of wireless POS systems. WEPS is designed to provide a solution to this connectivity problem. WEPS provides a scalable, client-server architecture that serves as a neutral gateway between all parties in a wireless POS transaction. This architecture enables any WEPS-compliant POS terminals to communicate over most major U.S. wireless carriers to any transaction processors that have established WEPS connectivity. 17 Typically, terminal manufacturers program a specific terminal to communicate with a specific processor. With WEPS, terminal manufacturers can now develop a single application to communicate to WEPS. The WEPS server then performs the formatting necessary to communicate the transaction to any front-end processor which has agreed to accept WEPS facilitated transactions and with which WEPS connectivity has been established. This process saves the terminal manufacturers significant development expenses, reduces the time to bring new terminals to market, and enables the development of "thin-client" terminals whose characteristics are largely determined by the server. Transaction processors benefit from WEPS by not having to negotiate with each wireless carrier to build and support connections to each. Instead, they simply connect to the WEPS server as a single point of contact. As new terminals and transaction types become available, each transaction processor will be able to use their existing WEPS connection to gain wireless access with minimal development expense or effort on their end. As WEPS enables new markets to accept wireless payment processing, wireless carriers benefit from an increase in traffic and simplified connectivity to the processors. By providing a single point of contact, WEPS significantly minimizes the time and development cost for terminal manufacturers and transaction processors. USWD is targeting large merchant acquirers, front-end processors and ISO's for the WEPS service. The initial response for WEPS from the targeted prospects has been positive. The Company has entered into more than fifty WEPS agreements with various targeted prospects, including Card Service International (CSI), Paymentech Network Services, and Certified Merchant Services (CMS), and anticipates adding additional agreements in the near future. The WEPS agreement allows the client to offer WEPS as a wireless transaction processing solution to a merchant. The WEPS agreement defines the services and billing terms between the Company and client if and when the merchant acquirer utilizes WEPS. A WEPS agreement is not a firm commitment by the client to purchase any goods or service from USWD. The benefits of WEPS to a merchant include: o Mobility - with today's wireless terminals and the WEPS service, a terminal no longer needs to be stationary. Eliminating the need for a phone line opens up an array of new markets. o Speed - transaction speed of approximately 3-5 seconds in most cases vs. 15-20 seconds for a traditional landline transaction. o Installation speed and reduced costs - elimination of phone lines enhance the installation process and reduce the costs associated with phone lines. o On-line, real-time Internet reporting - WEPS online merchant site offers merchants a look at their transactions as they occur as well as detailed statistics and reports. WEPS enables a business that requires mobility and/or transaction speed to accept POS transactions. WEPS target markets include: o Fast-food restaurants. o Delivery services. o Transportation services such as taxicabs, limos and buses. o Stadiums, arenas and amusement parks. o Public parking lots such as at airports. o Movie theatres. o Golf tournaments and racetracks. 18 WEPS Internet-based tools provide the merchant, merchant acquirer and front-end processor with a new level of control and management over their wireless POS systems: o Internet-based on-line activation, deactivation, and terminal diagnostic tools - WEPS automates the terminal activation and deactivation process, significantly decreasing the installation time for new terminals. USWD can perform real-time, remote diagnostic services for immediate problem solving. o Internet-based on-line access to real-time transaction reports - WEPS provides real-time transaction reporting, which allows for previously unavailable levels of tracking and accountability. USWD continues to establish connectivity between the wireless networks, WEPS server and various front-end processors. Commercial transactions running through the WEPS platform began in the second quarter of fiscal 2000. The Company is also working with several POS terminal manufacturers and front-end processors as part of the ongoing process of adding additional devices to the WEPS menu of offerings. The Company is exploring opportunities for the WEPS platform to transport data to provide solutions for various non-payment applications or applications with a combination of payment and non-payment data. Over the long term, the Company intends to further its service offerings by: o Expanding into selected international markets. o Enabling wireless processing of ATM transactions. o Transporting non-payment oriented transactions such as health care related transactions, vending machine inventory reports, EBT transactions and telemetric data. o Becoming a vehicle for the transport of frequency and loyalty program information. o Recognizing and storing signatures in the WEPS network, and accommodating nonconventional payment and debit transactions. Year 2000 Issues While the Company believes the greatest risks associated with the Year 2000 issue have passed, the Company cannot be certain that Year 2000 issues with respect to the electronic payments infrastructure utilized by credit card processors, banks and financial institutions within the United States and on which USWD is reliant will not emerge over the coming months. USWD could be adversely, materially affected, both operationally and financially, to the extent third parties with whom it interfaces, either directly or indirectly, have not properly addressed their Year 2000 issues. The Company does not have an available contingency plan that would alleviate a disruption of service in the electronic transaction sector. RESULTS OF OPERATION - FISCAL 2000 COMPARED TO FISCAL 1999 Revenue Revenue from services of $88,000 for the third quarter of fiscal 2000 decreased 36% from revenue of $137,000 generated during the third quarter of fiscal 1999 as the Company continued the implementation of its new business model. As noted in the overview section above, the Company is now marketing WEPS to merchant acquirers, ISO's and front-end processors. The Company currently has over 50 "Clients" (merchant acquirers, payment processors or independent service organizations) under contract for WEPS. Billing for the new WEPS service accounted for $72,000 of the services revenue during the third quarter of fiscal 2000. This 19 represents an increase of 57% from the second quarter of fiscal 2000, and should continue increasing as the number of active terminals increase from the growth in Clients and merchants. The Company is also working to increase the number of WEPS certified devices and obtaining communications connectivity and integration to additional front-end processors. In addition, the Company sold one of its two existing merchant credit card portfolios at the beginning of July 1999 (see Other Income, below). The lost revenue from this portfolio accounted for a decrease of approximately $108,000 in services revenue between the current quarter and the same quarter of the prior year. Revenues from product sales decreased to $111,000 in the current quarter from $124,000 in the prior period as the Company completes the transition from one-time product sales to a recurring revenue model based on WEPS service. For the nine months ended March 31, 2000, total revenues decreased to $467,000 from $1,142,000 in the prior year, again due to transition from the old to the new business model. Gross Profit The Company recorded a gross loss of $67,000 in the third fiscal quarter of 2000 compared to a gross profit of $21,000 in the third quarter of fiscal 1999. The third quarter negative product margin versus 28% for the same quarter of the previous year reflects markdowns on product sales and a $112,000 write down in the value of inventory. The prior year nine-month product cost included a $240,000 one- time gain resulting from the successful restructuring of a note payable to a former terminal equipment supplier. The services costs include the initial setup and ongoing communications costs associated with the terminals connected through WEPS or terminals deployed via the previous credit-card portfolios. The services margin was $36,000 for the current quarter versus a loss of $14,000 for the same quarter of the prior year. The spread in services revenue and cost structure are impacted by the initialization of new terminals, the quantity of active terminals, transaction volume and the associated rates the Company bills its Clients for such services versus its charges from the various carrier networks. Prior period service costs were distorted by excess wireless addresses associated with the previous credit-card portfolios or other inventorying of addresses. Operating Expenses Selling, general and administrative expense was $1,953,000 in the current quarter, versus $431,000 in the third quarter of fiscal 1999. For the current nine-month period, selling, general and administrative expense was $4,016,000 versus $3,857,000 in the prior year. Selling, general and administrative expense for the same quarter of the prior year was reduced due to a $658,000 non-cash credit to reflect a change in the carrying value of a variable stock option due to the change in the Company's stock during the quarter. Increases in other expenses for the current quarter versus the same quarter of the previous fiscal year include increased activity for marketing, including promotions and travel, recruiting, and other general and administrative expenses. Also adding to the increase were non-cash charges for warrant grants valued at $52,000 for investor relations and $95,000 for executive recruiting. The Company also accrued $182,000 in the current quarter for the proration of Mr. Leavitt's bonus. 20 Selling, general and administrative expenses increased $159,000 to $4,016,000 for the nine months ended March 31, 2000, versus the same period of the prior year. The underlying makeup of the expenses are changing as the Company transitions to its new business plan. Research and development expenses increased to $391,000 in the third fiscal quarter of 2000 from $105,000 in the same quarter of the prior year. This increase was due primarily to an increase in the number of employees and full time consultants focused on the implementation of WEPS. For the nine-month period ending this fiscal year versus the prior, research and development increased $496,000 to $859,000, also due primarily to increased staffing. Interest, Other Income and Preferred Stock Dividends Interest income amounted to $65,000 for the current fiscal quarter versus negligible amounts for prior periods. Prior to March 2000, the Company had substantial liquidity problems. The Company's receipt of the net cash from the Private Placement in late March 2000 provided the Company with a large cash balance from which it earned interest income in March, and from which it will earn interest or other investment income in future periods. Interest expense of $462,000 in the quarter ended March 31, 2000, includes $451,000 of non-cash interest expense related to the Bridge Warrants. Interest expense of $1,118,000 for the same quarter of the previous year includes $950,000 of interest and late registration penalties on the 6% Debentures. Interest expense for the first nine months of this fiscal year decreased to $1,394,000 from $1,757,000 for the same period of the previous fiscal year. The Interest credit of $597,000 in the quarter ended March 31, 2000, related primarily to the reversal of accrued interest and penalties on the 6% Debentures and Series B Preferred Stock. The interest and penalties were waived as part of the redemption agreements reached with the holders. Other income of $128,000 for the nine-month period ended March 31, 2000 included a $124,000 gain on the July 1999 sale of a portion of USWD's merchant credit card portfolio to PMT Services Inc., a wholly owned subsidiary of Nova Corporation. The transaction resulted in a cash payment to USWD of $450,000. The sale included approximately 450 installed USWD owned TRANZ Enabler point-of-sale devices deployed with a portion of the respective merchants. The $42,864,000 preferred stock dividend for the third fiscal quarter of 2000 includes $42,364,000 charged for the value of the "in the money" conversion feature for the Series C Preferred Stock from the closings of the Private Placement and $592,000 for warrants issued and cash paid to induce the redemption of the Series B Preferred Stock. Preferred stock dividends of $43,849,000 for the nine month period ended March 31, 2000, include, in addition to the amounts above, $874,000 to accrete the value of the Series B preferred stock up to its redemption value by the date at which mandatory redemption is available to the holders. The preferred stock dividend of $571,000 for the nine months ended March 31, 1999, includes $465,000 of warrants and cash paid in the inducement of the redemption of the Series A Preferred Stock and $106,000 of dividends accrued for the Series A Preferred Stock. 21 FINANCIAL CONDITION, CAPITAL RESOURCES AND LIQUIDITY In late March 2000, the Company closed on $50.616 million in gross proceeds from the Private Placement. Net proceeds to the Company amounted to $44.6 million, after payment of commissions, fees and expenses of $6 million. As of May 10, 2000, the Company has redeemed all outstanding Series A Preferred Stock, Series B Preferred Stock, 6% Debentures and repaid the notes from the Bridge Financing and other notes, and has no current financing needs. The Company's success in raising funds from the Private Placement frees management from the daily struggles of operating with little to no liquidity and long-term solution to its cash needs. During the implementation of its new business plan that the Company expects to aggressively pursue, the Company expects expenses to continue to exceed revenues during the initial phases of the plan. Interest income provided from the available cash balance will help to reduce monthly deficits. The Company's cash position of $38.5 million as of March 31, 2000, provides, in management's opinion, the financial resources to pursue it's business plan and fund monthly deficits. In addition, the Company's currently anticipated capital equipment expenditures for its technology infrastructure are not extensive. Prior to March 2000, USWD faced significant challenges due to its then current financial condition and lack of liquidity. The Company has incurred recurring losses from operations and has an accumulated deficit of approximately $84.6 million at March 31, 2000. PART II OTHER INFORMATION ITEM 1 - LITIGATION Settlement of Claims of Certain Noteholders In April 1998, USWD entered into an agreement with certain former noteholders of its Demand Notes under which USWD issued 525,800 shares of common stock in settlement of the dispute regarding conversion terms of their notes. Terms of the settlement entitled the noteholders to certain guarantee and/or "put" provisions related to the shares issued in conversion of the notes. The shares originally issued upon conversion of the notes and the additional shares resulting from the settlement were reflected as redeemable common stock on the balance sheet. The guarantee expired as to all shares on June 19, 1999. The "put" expired as to all shares on June 24, 1999. As of June 30, 1999, the "put" provisions related to the shares had expired or been relinquished in return for the Company's agreement to issue up to 200,000 shares of common stock to certain holders who had exercised their "put" rights. In the fourth fiscal quarter of 1999, $49,000 was accrued to reflect the settlement. The agreement has been executed and 200,000 shares of common stock were issued on February 22, 2000. 22 ITEM 2 - CHANGES IN SECURITIES Recent Sales of Unregistered Securities During the fiscal quarter ended March 31, 2000, the Company sold or issued the following equity securities without registering the securities under the Securities Act of 1933, as amended (the "Act"). On January 20, 2000, the Company issued a 22,500 share common stock purchase warrant to RBB Bank. On February 11, 2000, holders of the 6% Debentures converted $800,000 of the debt into 404,599 shares of common stock per the specified conversion formula. On March 15, 2000, the Company retained Lippert/Heilshorn and Associates, Inc. to provide investor relations services. In addition to monthly fees and expenses, the Company agreed to issue Lippert/Heilshorn a 15,000 share common stock purchase warrant each year for the next 3 years. The warrants vest one year after date of grant, are issued with an exercise price equal to the market price of the underlying stock on the date of grant, and expire 5 years from the vesting date. The first year grant was issued on March 28, 2000, with an exercise price of $5.344 per share. On March 28, 2000, the Company issued a 50,000 share common stock purchase warrant to Cornell Consulting International, Inc. for executive search services. The warrant vests immediately and is exercisable at $5.344 per share. On March 31, 2000, the Company redeemed 1,500,000 shares of the Company's Series B Convertible Preferred Stock from Bold Street, LLC. The Company also issued a common stock purchase warrant, expiring April 30, 2004, to purchase 150,000 shares of Common Stock exercisable at $2.28 per share. Bold Street received certain "piggyback" registration rights as to the shares of Common Stock underlying the warrant. For the third fiscal quarter ended March 31, 2000: (i) 109,600 common stock shares were issued on exercise of employee options, (ii) 8,712,000 common stock shares were issued on exercise of the Bridge Warrants, and (iii) 218,235 common stock shares were issued on cashless exercises of warrants aggregating 394,632 shares. As to each of the foregoing transactions, the Company relied upon the registration exemption contained in Section 4(2) of the Act. The transactions did not involve a public offering of securities; the Company received investment representations from each purchaser to the effect that such purchaser was taking for investment only and not with a view to distribution of the securities; the Company had reason to believe that each purchaser had such knowledge and experience, either alone or through a purchaser representative not affiliated with the Company, that such purchaser was capable of evaluating the merits and risks of an investment in the Company; each purchaser, either in his or her capacity as an investor or an employee or consultant to the Company, had access to adequate information concerning the Company and its business; all certificates representing the securities were appropriately imprinted 23 with customary "restricted securities" legends, and instructions were lodged with the Company's transfer agent with respect to all shares of common stock issued in the transactions as "restricted securities." ITEM 3 - DEFAULT ON SENIOR SECURITIES In the fourth quarter of fiscal 1999, USWD entered into an agreement with the purchasers of its Series B Preferred Stock and holders of its 6% Debentures to file a registration statement with the SEC covering the common stock underlying the Series B Preferred Stock, a common stock purchase warrant issued at the same time as the Series B Preferred Stock, the 6% Debentures, and the common stock purchase warrants issued to the 6% Debenture holders in July 1998, within 30 days of May 6, 1999, to be effective within 90 days of May 6, 1999. This date was subsequently extended to May 11, 1999. USWD filed the required registration statement on June 30, 1999. The Company thereby became subject to a late filing penalty of $74,000 (following waiver of the "late filing" penalty by the holder of 1,500,000 shares of Series B Preferred Stock). The registration statement did not become effective by August 10, 1999. The Company therefore become subject to an initial "late effectiveness" penalty of 3% of the total original purchase price of $1,800,000 of 6% Debentures and 1,954,705 shares of Series B Preferred Stock, which were outstanding as of August 10, 1999. Additional late effectiveness penalties accrue monthly (or for any portion of any month) that the registration statement is not effective, in amounts equal to 2% of the original purchase price of the outstanding Series B Preferred Stock and 3% of the face amount of the outstanding 6% Debentures. As of December 31, 1999, $413,000 of penalties was accrued as a charge to interest expense. The registration statement has not become effective as of the date of filing this report. As of October 10, 1999, the Series B Registration Statement had not been declared effective. The holders of the Series B Preferred Stock had the right to require USWD to redeem the shares of Series B Preferred Stock for $1.25 per share plus accrued penalties and dividends (approximately $2,700,000 as of December 31, 1999), and holders of the 6% Debentures to redeem the $1,800,000 face amount at 120% of the face value (increased to 125% based on pending redemption proposal) plus accrued penalties and interest (approximately 2,520,000 as of December 31, 1999). As of March 31, 2000, the Company had redeemed 1,727,353 shares of Series B Preferred Stock at prices equal to 125% of the liquidation value of the Series B Preferred Stock and warrants to purchase and aggregate of 150,000 shares of Common Stock at $1.50 per share, and repurchased $200,000 of the 6% Debentures. The remaining $800,000 of 6% Debentures and accrued interest were converted into 404,745 shares of Common Stock at $2.05 per share. The Company redeemed the remaining 227,353 shares of Series B Preferred Stock on May 3, 2000, for an aggregate of $350,000 and warrants to purchase an aggregate of 25,000 shares of Common Stock at an exercise price of $1.50 per share. In connection with these redemptions, the holders of the securities waived any rights they may have had arising out of any of the above described defaults. ITEM 5 - OTHER INFORMATION On January 4, 2000, the Board of Directors approved an amendment to the Company's Articles of Incorporation to increase authorized capital from 55,000,000 shares to 225,000,000 shares. Of that number, 200,000,000 shares would be designated as no par value Common Stock and 25,000,000 shares would be designated as preferred stock, with the rights, designations and preferences of any series of preferred stock to be fixed and determined by the Board of Directors at the time of issuance, without further action by shareholders. The amendment to the Articles of Incorporation is to be submitted to the Company's shareholders as soon as practicable. 24 On January 4, 2000, the Board of Directors approved a new stock option plan, subject to approval by the Company's shareholders at the next shareholder meeting. Once approved by shareholders (and assuming an increase in authorized common stock is also approved by shareholders) the option plan would reserve 15,000,000 shares of Common Stock for issuance pursuant to options that may be granted under the plan. To date, Dean Leavitt, the Company's Chief Executive Officer, was granted 2,500,000 options, and other employees were granted 678,000 options, to be issued with the exercise price to be set as of the date of shareholder approval of the plan. The plan is to be submitted to the Company's shareholders as soon as practicable. On May 3, 2000, pursuant to Purchase Agreements reached with the holders, the Company redeemed the remaining 227,352 outstanding shares of Series B Preferred Stock. The Company intends to enter into a new lease for office space in New York City for a term of ten years. At the same time, the Company is also negotiating with its current landlord and a prospective tenant for the termination of its existing New York City lease. ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits required by Item 601 of Regulation S-B 4.1 Form of Nonqualified Stock Option Certificate issued to Edwin M. Cooperman dated March 29, 2000 * 4.2 Form of Nonqualified Stock Option Certificate issued to Michael S. Falk dated March 29, 2000 * 4.3 Form of Nonqualified Stock Option Certificate issued to Barry A. Kaplan dated March 29, 2000 * 4.4 Form of Nonqualified Stock Option Certificate issued to Amy L. Newmark dated March 29, 2000 * 4.5 Nonqualified Stock Option Certificate issued to Charles I. Leone dated February 15, 2000 * 4.6 Form of Common Stock Purchase Warrant (originally issued to Dean M. Leavitt as of May 3, 1999), as re-executed as of January 4, 2000 to reflect repricing authorized as of such date * 4.7 Form of Common Stock Purchase Warrant for 22,500 shares issued to RBB Bank dated January 20, 2000. 4.8 Form of Common Stock Purchase Warrant for 15,000 shares issued to Lippert/Heilshorn & Associates, Inc. dated March 28, 2000 4.9 Form of Common Stock Purchase Warrant for 50,000 shares issued to Cornell Consulting International, Inc. dated March 28, 2000 4.10 Form of Common Stock Purchase Warrant for 25,000 shares issued to Cornell Consulting International, Inc. dated May 4, 2000 4.11 Lock-up Agreement between the Company and John M. Liviakis and Liviakis Financial Communications, Inc. dated March 15, 2000** 25 10.1 Form of Redemption Agreement between the Company and Bold Street, LLC dated January 31, 2000** 10.2 Form of Repurchase Agreement between the Company and RBB Bank Aktiengesellschaft dated January 18, 2000** 10.3 Form of Purchase Agreement between the Company and The Cuttyhunk Fund dated May 3, 2000 10.4 Form of Purchase Agreement between the Company and Tonga Partners LP dated May 3, 2000 10.5 Form of Employment Agreement between USWD and Charles I. Leone dated February 11, 2000 * 27 Financial Data Schedule - ----------------- * Management compensatory agreement. ** To be filed by amendment. b) Reports on Form 8-K On January 12, 2000, the Company filed a report on Form 8-K reporting an event of December 23, 1999. The report contained disclosures under Item 5 - Other Events, relating to various agreements entered into in connection with a proposed equity private placement and a bridge financing. On March 24, 2000, the Company filed a report on Form 8-K reporting an event of March 17, 2000. The report contained disclosures under Item 5 - Other Events, relating to the issuance of a press release on March 20, 2000 announcing a closing of a private placement raising $37.8 million of gross proceeds. The Report also disclosed the relocation of the Company's principal executive offices from California to New York. On March 30, 2000, the Company filed a report on Form 8-K reporting an event of March 28, 2000. The report contained disclosures under Item 5 - Other Events, relating to the issuance of a press release on March 29, 2000 announcing a closing of a private placement raising an additional $12.8 million of gross proceeds. The press release also announced the appointment of four new Directors to the Board of Directors, raising the number of Board Members to seven. On April 12, 2000, the Company filed a report on Form 8-K reporting an event of March 28, 2000. The report contained disclosures under Item 1 - Change of Control and Item 5 - Other Events, relating to a series of transactions entered into in connection with the equity private placement. On April 18, 2000, the Company filed a report on Form 8-K/A, amending the Form 8-K filing of April 12, 2000, to include various Exhibits. On April 24, 2000, the Company filed a report on Form 8-K/A-2, further amending the Form 8-K filing of April 12, 2000, to include an additional Exhibit. 26 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 thereunto duly authorized. U.S. WIRELESS DATA, INC. Registrant Date: May 15, 2000 By: \s\ Dean M. Leavitt --------------------------- Chief Executive Officer May 15, 2000 By: \s\ Charles I. Leone --------------------------- Chief Financial Officer and Chief Operating Officer 27 EX-4.1 2 NONQUALIFIED STOCK OPTION CERTIFICATE--COOPERMAN THIS OPTION 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 OPTION AND SUCH SHARES 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. NO REGISTRATION RIGHTS HAVE BEEN GRANTED WITH RESPECT TO THIS OPTION AS OF ITS ORIGINAL DATE OF ISSUANCE. U.S. WIRELESS DATA, INC. NONQUALIFIED STOCK OPTION CERTIFICATE U.S. Wireless Data, Inc., a Colorado corporation ("Company"), for good and valuable consideration, including the incentive to the Optionee to remain as a director, employee or consultant to the Company as a result of ownership or increased ownership of the Company's no par value common stock ("Common Stock"), the receipt and sufficiency of which consideration hereby is acknowledged, irrevocably grants to the Optionee the option ("Option") to purchase the following number of shares of Common Stock: Optionee Number of Shares -------- ---------------- Edwin M. Cooperman ---250,000--- The effective date of this grant is March 29, 2000 ("Date of Grant") and is subject to the following terms and conditions: 1. EXERCISE PRICE. The purchase price ("Exercise Price") for shares of Common Stock purchasable pursuant to this Option shall be One and 50/100 Dollars ($1.50) per share, which shall be paid in full in cash at the time of exercise; provided, however, that the Board of Directors of the Company may in its sole discretion permit payment to be made with shares of the Company's Common Stock owned by Optionee (a "Cashless Exercise"). Optionee shall have no rights with respect to dividends or have any other rights as a shareholder with respect to shares subject to this Option until Optionee has given written notice of the exercise of the Option and has paid in full for such shares. 2. VESTING AND TIME OF EXERCISE. This Option will vest one third per yearly anniversary date following grant date. This Option may be exercised as to all or any portion of the vested shares covered by this Option Grant at any time, and shall expire on the earlier of ten years from the grant date, or one year after cessation of the Optionee's relationship with the Company in any capacity, including service provided to the Company as an employee, officer, director or consultant. The period of time during which the Option may be exercised is referred to herein as the "Option Period." 3. NUMBER OF SHARES PURCHASABLE AT ANY ONE TIME. This Option may be exercised only for at least 100 shares of Common Stock or a multiple thereof or for the full number of shares for which the Option is then exercisable. 4. NONTRANSFERABILITY OF OPTION. This Option may not be transferred by Optionee otherwise than by will or the laws of descent and distribution. During Optionee's lifetime, this Option shall be exercisable only by Optionee. 5. CHANGES IN CAPITAL; CERTAIN REORGANIZATIONS. If the outstanding Common Stock of the Company which is subject to this Option shall at any time be changed or exchanged by declaration of a stock dividend, split-up, subdivision or combination of shares, recapitalization, merger, consolidation or other corporate reorganization in which the Company is the surviving corporation, the number of and kind of shares subject to the Option and the Option Price shall be appropriately and equitably adjusted so as to maintain the proportionate number of shares without changing the aggregate option price. In the event of a dissolution or liquidation of the Company, or a merger, consolidation, sale of all or substantially all of its assets, or other corporate reorganization in which the Company is not the surviving corporation, or in which the Company is the surviving corporation but holders of Common Stock receive securities of another corporation, this Option shall terminate as of the effective date of such event, provided that immediately prior to such event, Optionee shall have the right to exercise this Option as to all shares underlying this Option, irrespective of the number of Options actually vested at the time. 6. MANNER OF EXERCISE. (a) This Option may be exercised in whole or in part at any time and from time to time within the Option Period, subject to the terms and conditions contained herein, by the delivery of written notice of exercise to the Chief Financial Officer of the Company, as required by subsection (d) of this Section, accompanied by (i) full payment, in cash or certified or bank check, payable to the Company, or, (ii) if permitted by the Company's Board of Directors in its sole discretion, shares of the Company's Common Stock having a fair market value equal to the aggregate exercise price for the number of shares purchased which the Optionee has held for at least six months prior to the time of exercise of the Option. (b) For purposes of this Section, "Market Price" means the average of the closing prices of sales on the principal domestic securities exchange on which such security may at the time be listed, or, if there have been no sales on any such exchange on any day, the average of the highest bid and lowest asked prices on all such exchanges at the end of such day, or, if on any day such security is not so listed, the average of the bid and asked prices quoted on Nasdaq (including the OTC Bulletin Board ) as of the close of trading in New York City on such day, in each such case averaged over a period of five (5) consecutive days consisting of the business day immediately preceding the day as of which Market Price is being determined and the four (4) consecutive business days prior to such day; provided that if such security is listed on any principal domestic securities exchange or quoted on Nasdaq, the terms "business 2 day" and "business days" means a day or days, as applicable, on which such exchange or Nasdaq is open for trading or quotation, as the case may be, notwithstanding whether any quotation is available on any particular business day and, if not, then the Market Price shall be determined based upon those remaining days during the aforesaid 5-day period for which quotations are available. If the shares are not so listed or traded on any principal domestic securities exchange or quoted on Nasdaq, the Market Price shall be the fair value thereof, as determined in good faith by the Board of Directors of the Company. (c) Certificates for the shares of Common Stock purchased upon exercise of this Option shall be delivered by the Company to the Purchaser within five (5) business days after the Exercise Date. (d) The notice of exercise (i) shall state the election to exercise the Option, (ii) shall state the number of shares in respect to which the Option is being exercised, (iii) shall state Optionee's address, (iv) shall state Optionee's social security number, (v) shall contain such representations and agreements concerning Optionee's investment intent with respect to such shares of Common Stock as shall be satisfactory to the Company's counsel, and (vi) shall be signed by Optionee. As a further condition to the exercise of this Option, the Company may require Optionee to make any representation and warranty to the Company as may be required by any applicable law or regulation. (e) Unless this Option has expired or all of the purchase rights represented hereby have been exercised, the Company shall, in addition to certificates for Common Stock issued upon exercise of this Option, prepare upon exercise of this Option, a new Option representing the rights formerly represented by this Option that have not expired or been exercised. The Company shall, within five (5) business days after the Exercise Date, deliver such new Option to the Optionee. 7. AMENDMENT AND ADMINISTRATION. The Board of Directors shall have the authority to interpret this Option, and generally to conduct and administer the exercise of this Option and to make all determinations in connection herewith which may be necessary or advisable, and all such actions of the Board shall be final and conclusive for all purposes and binding upon Optionee. 8. MISCELLANEOUS. This Option shall inure to the benefit of and be binding upon each successor of the Company. All obligations imposed upon and all rights granted to the Optionee and all rights reserved by the Company under this Option shall be binding upon and inure to the benefit of Optionee, Optionee's heirs, personal representatives, administrators and successors. Unless the context requires otherwise, words denoting the singular may be construed as denoting the plural, and words of the plural may be construed as denoting the singular and words of one gender my be construed as denoting such other gender as is appropriate. 3 IN WITNESS WHEREOF, this Option has been issued by the Company effective as of the Date of Grant. U.S. WIRELESS DATA, INC. Accepted by Optionee: a Colorado corporation By -------------------------------- -------------------------------- Dean M. Leavitt Print Name Chief Executive Officer Attest ------------------------------ Charles I. Leone Secretary 4 EX-4.2 3 NONQUALIFIED STOCK OPTION CERTIFICATE--FALK THIS OPTION 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 OPTION AND SUCH SHARES 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. NO REGISTRATION RIGHTS HAVE BEEN GRANTED WITH RESPECT TO THIS OPTION AS OF ITS ORIGINAL DATE OF ISSUANCE. U.S. WIRELESS DATA, INC. NONQUALIFIED STOCK OPTION CERTIFICATE U.S. Wireless Data, Inc., a Colorado corporation ("Company"), for good and valuable consideration, including the incentive to the Optionee to remain as a director, employee or consultant to the Company as a result of ownership or increased ownership of the Company's no par value common stock ("Common Stock"), the receipt and sufficiency of which consideration hereby is acknowledged, irrevocably grants to the Optionee the option ("Option") to purchase the following number of shares of Common Stock: Optionee Number of Shares -------- ---------------- Michael S. Falk ---250,000--- The effective date of this grant is March 29, 2000 ("Date of Grant") and is subject to the following terms and conditions: 1. EXERCISE PRICE. The purchase price ("Exercise Price") for shares of Common Stock purchasable pursuant to this Option shall be One and 50/100 Dollars ($1.50) per share, which shall be paid in full in cash at the time of exercise; provided, however, that the Board of Directors of the Company may in its sole discretion permit payment to be made with shares of the Company's Common Stock owned by Optionee (a "Cashless Exercise"). Optionee shall have no rights with respect to dividends or have any other rights as a shareholder with respect to shares subject to this Option until Optionee has given written notice of the exercise of the Option and has paid in full for such shares. 2. VESTING AND TIME OF EXERCISE. This Option will vest one third per yearly anniversary date following grant date. This Option may be exercised as to all or any portion of the vested shares covered by this Option Grant at any time, and shall expire on the earlier of ten years from the grant date, or one year after cessation of the Optionee's relationship with the Company in any capacity, including service provided to the Company as an employee, officer, director or consultant. The period of time during which the Option may be exercised is referred to herein as the "Option Period." 3. NUMBER OF SHARES PURCHASABLE AT ANY ONE TIME. This Option may be exercised only for at least 100 shares of Common Stock or a multiple thereof or for the full number of shares for which the Option is then exercisable. 4. NONTRANSFERABILITY OF OPTION. This Option may not be transferred by Optionee otherwise than by will or the laws of descent and distribution. During Optionee's lifetime, this Option shall be exercisable only by Optionee. 5. CHANGES IN CAPITAL; CERTAIN REORGANIZATIONS. If the outstanding Common Stock of the Company which is subject to this Option shall at any time be changed or exchanged by declaration of a stock dividend, split-up, subdivision or combination of shares, recapitalization, merger, consolidation or other corporate reorganization in which the Company is the surviving corporation, the number of and kind of shares subject to the Option and the Option Price shall be appropriately and equitably adjusted so as to maintain the proportionate number of shares without changing the aggregate option price. In the event of a dissolution or liquidation of the Company, or a merger, consolidation, sale of all or substantially all of its assets, or other corporate reorganization in which the Company is not the surviving corporation, or in which the Company is the surviving corporation but holders of Common Stock receive securities of another corporation, this Option shall terminate as of the effective date of such event, provided that immediately prior to such event, Optionee shall have the right to exercise this Option as to all shares underlying this Option, irrespective of the number of Options actually vested at the time. 6. MANNER OF EXERCISE. (a) This Option may be exercised in whole or in part at any time and from time to time within the Option Period, subject to the terms and conditions contained herein, by the delivery of written notice of exercise to the Chief Financial Officer of the Company, as required by subsection (d) of this Section, accompanied by (i) full payment, in cash or certified or bank check, payable to the Company, or, (ii) if permitted by the Company's Board of Directors in its sole discretion, shares of the Company's Common Stock having a fair market value equal to the aggregate exercise price for the number of shares purchased which the Optionee has held for at least six months prior to the time of exercise of the Option. (b) For purposes of this Section, "Market Price" means the average of the closing prices of sales on the principal domestic securities exchange on which such security may at the time be listed, or, if there have been no sales on any such exchange on any day, the average of the highest bid and lowest asked prices on all such exchanges at the end of such day, or, if on any day such security is not so listed, the average of the bid and asked prices quoted on Nasdaq (including the OTC Bulletin Board ) as of the close of trading in New York City on such day, in each such case averaged over a period of five (5) consecutive days consisting of the business day immediately preceding the day as of which Market Price is being determined and the four (4) consecutive business days prior to such day; provided that if such security is listed on any principal domestic securities exchange or quoted on Nasdaq, the terms "business day" and "business days" means a day or days, as applicable, on which such exchange or Nasdaq is open for trading or quotation, as the case may be, notwithstanding whether any quotation is available on any particular business day and, if not, then the Market Price shall be determined based upon those remaining days during the aforesaid 5-day period for which quotations are available. If the shares are not so listed or traded on any principal domestic securities exchange or quoted on Nasdaq, the Market Price shall be the fair value thereof, as determined in good faith by the Board of Directors of the Company. 2 (c) Certificates for the shares of Common Stock purchased upon exercise of this Option shall be delivered by the Company to the Purchaser within five (5) business days after the Exercise Date. (d) The notice of exercise (i) shall state the election to exercise the Option, (ii) shall state the number of shares in respect to which the Option is being exercised, (iii) shall state Optionee's address, (iv) shall state Optionee's social security number, (v) shall contain such representations and agreements concerning Optionee's investment intent with respect to such shares of Common Stock as shall be satisfactory to the Company's counsel, and (vi) shall be signed by Optionee. As a further condition to the exercise of this Option, the Company may require Optionee to make any representation and warranty to the Company as may be required by any applicable law or regulation. (e) Unless this Option has expired or all of the purchase rights represented hereby have been exercised, the Company shall, in addition to certificates for Common Stock issued upon exercise of this Option, prepare upon exercise of this Option, a new Option representing the rights formerly represented by this Option that have not expired or been exercised. The Company shall, within five (5) business days after the Exercise Date, deliver such new Option to the Optionee. 7. AMENDMENT AND ADMINISTRATION. The Board of Directors shall have the authority to interpret this Option, and generally to conduct and administer the exercise of this Option and to make all determinations in connection herewith which may be necessary or advisable, and all such actions of the Board shall be final and conclusive for all purposes and binding upon Optionee. 8. MISCELLANEOUS. This Option shall inure to the benefit of and be binding upon each successor of the Company. All obligations imposed upon and all rights granted to the Optionee and all rights reserved by the Company under this Option shall be binding upon and inure to the benefit of Optionee, Optionee's heirs, personal representatives, administrators and successors. Unless the context requires otherwise, words denoting the singular may be construed as denoting the plural, and words of the plural may be construed as denoting the singular and words of one gender my be construed as denoting such other gender as is appropriate. 3 IN WITNESS WHEREOF, this Option has been issued by the Company effective as of the Date of Grant. U.S. WIRELESS DATA, INC. Accepted by Optionee: a Colorado corporation By -------------------------------- -------------------------------- Dean M. Leavitt Print Name Chief Executive Officer Attest ------------------------------ Charles I. Leone Secretary 4 EX-4.3 4 NONQUALIFIED STOCK OPTION CERTIFICATE--KAPLAN THIS OPTION 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 OPTION AND SUCH SHARES 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. NO REGISTRATION RIGHTS HAVE BEEN GRANTED WITH RESPECT TO THIS OPTION AS OF ITS ORIGINAL DATE OF ISSUANCE. U.S. WIRELESS DATA, INC. NONQUALIFIED STOCK OPTION CERTIFICATE U.S. Wireless Data, Inc., a Colorado corporation ("Company"), for good and valuable consideration, including the incentive to the Optionee to remain as a director, employee or consultant to the Company as a result of ownership or increased ownership of the Company's no par value common stock ("Common Stock"), the receipt and sufficiency of which consideration hereby is acknowledged, irrevocably grants to the Optionee the option ("Option") to purchase the following number of shares of Common Stock: Optionee Number of Shares -------- ---------------- Barry A. Kaplan ---250,000--- The effective date of this grant is March 29, 2000 ("Date of Grant") and is subject to the following terms and conditions: 1. EXERCISE PRICE. The purchase price ("Exercise Price") for shares of Common Stock purchasable pursuant to this Option shall be One and 50/100 Dollars ($1.50) per share, which shall be paid in full in cash at the time of exercise; provided, however, that the Board of Directors of the Company may in its sole discretion permit payment to be made with shares of the Company's Common Stock owned by Optionee (a "Cashless Exercise"). Optionee shall have no rights with respect to dividends or have any other rights as a shareholder with respect to shares subject to this Option until Optionee has given written notice of the exercise of the Option and has paid in full for such shares. 2. VESTING AND TIME OF EXERCISE. This Option will vest one third per yearly anniversary date following grant date. This Option may be exercised as to all or any portion of the vested shares covered by this Option Grant at any time, and shall expire on the earlier of ten years from the grant date, or one year after cessation of the Optionee's relationship with the Company in any capacity, including service provided to the Company as an employee, officer, director or consultant. The period of time during which the Option may be exercised is referred to herein as the "Option Period." 3. NUMBER OF SHARES PURCHASABLE AT ANY ONE TIME. This Option may be exercised only for at least 100 shares of Common Stock or a multiple thereof or for the full number of shares for which the Option is then exercisable. 4. NONTRANSFERABILITY OF OPTION. This Option may not be transferred by Optionee otherwise than by will or the laws of descent and distribution. During Optionee's lifetime, this Option shall be exercisable only by Optionee. 5. CHANGES IN CAPITAL; CERTAIN REORGANIZATIONS. If the outstanding Common Stock of the Company which is subject to this Option shall at any time be changed or exchanged by declaration of a stock dividend, split-up, subdivision or combination of shares, recapitalization, merger, consolidation or other corporate reorganization in which the Company is the surviving corporation, the number of and kind of shares subject to the Option and the Option Price shall be appropriately and equitably adjusted so as to maintain the proportionate number of shares without changing the aggregate option price. In the event of a dissolution or liquidation of the Company, or a merger, consolidation, sale of all or substantially all of its assets, or other corporate reorganization in which the Company is not the surviving corporation, or in which the Company is the surviving corporation but holders of Common Stock receive securities of another corporation, this Option shall terminate as of the effective date of such event, provided that immediately prior to such event, Optionee shall have the right to exercise this Option as to all shares underlying this Option, irrespective of the number of Options actually vested at the time. 6. MANNER OF EXERCISE. (a) This Option may be exercised in whole or in part at any time and from time to time within the Option Period, subject to the terms and conditions contained herein, by the delivery of written notice of exercise to the Chief Financial Officer of the Company, as required by subsection (d) of this Section, accompanied by (i) full payment, in cash or certified or bank check, payable to the Company, or, (ii) if permitted by the Company's Board of Directors in its sole discretion, shares of the Company's Common Stock having a fair market value equal to the aggregate exercise price for the number of shares purchased which the Optionee has held for at least six months prior to the time of exercise of the Option. (b) For purposes of this Section, "Market Price" means the average of the closing prices of sales on the principal domestic securities exchange on which such security may at the time be listed, or, if there have been no sales on any such exchange on any day, the average of the highest bid and lowest asked prices on all such exchanges at the end of such day, or, if on any day such security is not so listed, the average of the bid and asked prices quoted on Nasdaq (including the OTC Bulletin Board ) as of the close of trading in New York City on such day, in each such case averaged over a period of five (5) consecutive days consisting of the business day immediately preceding the day as of which Market Price is being determined and the four (4) consecutive business days prior to such day; provided that if such security is listed on any principal domestic securities exchange or quoted on Nasdaq, the terms "business day" and "business days" means a day or days, as applicable, on which such exchange or Nasdaq is open for trading or quotation, as the case may be, notwithstanding whether any quotation is available on any particular business day and, if not, then the Market Price shall be determined based upon those remaining days during the aforesaid 5-day period for which quotations are available. If the shares are not so listed or traded on any principal domestic securities exchange or quoted on Nasdaq, the Market Price shall be the fair value thereof, as determined in good faith by the Board of Directors of the Company. 2 (c) Certificates for the shares of Common Stock purchased upon exercise of this Option shall be delivered by the Company to the Purchaser within five (5) business days after the Exercise Date. (d) The notice of exercise (i) shall state the election to exercise the Option, (ii) shall state the number of shares in respect to which the Option is being exercised, (iii) shall state Optionee's address, (iv) shall state Optionee's social security number, (v) shall contain such representations and agreements concerning Optionee's investment intent with respect to such shares of Common Stock as shall be satisfactory to the Company's counsel, and (vi) shall be signed by Optionee. As a further condition to the exercise of this Option, the Company may require Optionee to make any representation and warranty to the Company as may be required by any applicable law or regulation. (e) Unless this Option has expired or all of the purchase rights represented hereby have been exercised, the Company shall, in addition to certificates for Common Stock issued upon exercise of this Option, prepare upon exercise of this Option, a new Option representing the rights formerly represented by this Option that have not expired or been exercised. The Company shall, within five (5) business days after the Exercise Date, deliver such new Option to the Optionee. 7. AMENDMENT AND ADMINISTRATION. The Board of Directors shall have the authority to interpret this Option, and generally to conduct and administer the exercise of this Option and to make all determinations in connection herewith which may be necessary or advisable, and all such actions of the Board shall be final and conclusive for all purposes and binding upon Optionee. 8. MISCELLANEOUS. This Option shall inure to the benefit of and be binding upon each successor of the Company. All obligations imposed upon and all rights granted to the Optionee and all rights reserved by the Company under this Option shall be binding upon and inure to the benefit of Optionee, Optionee's heirs, personal representatives, administrators and successors. Unless the context requires otherwise, words denoting the singular may be construed as denoting the plural, and words of the plural may be construed as denoting the singular and words of one gender my be construed as denoting such other gender as is appropriate. 3 IN WITNESS WHEREOF, this Option has been issued by the Company effective as of the Date of Grant. U.S. WIRELESS DATA, INC. Accepted by Optionee: a Colorado corporation By -------------------------------- -------------------------------- Dean M. Leavitt Print Name Chief Executive Officer Attest ------------------------------ Charles I. Leone Secretary 4 EX-4.4 5 NONQUALIFIED STOCK OPTION CERTIFICATE--NEWMARK THIS OPTION 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 OPTION AND SUCH SHARES 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. NO REGISTRATION RIGHTS HAVE BEEN GRANTED WITH RESPECT TO THIS OPTION AS OF ITS ORIGINAL DATE OF ISSUANCE. U.S. WIRELESS DATA, INC. NONQUALIFIED STOCK OPTION CERTIFICATE U.S. Wireless Data, Inc., a Colorado corporation ("Company"), for good and valuable consideration, including the incentive to the Optionee to remain as a director, employee or consultant to the Company as a result of ownership or increased ownership of the Company's no par value common stock ("Common Stock"), the receipt and sufficiency of which consideration hereby is acknowledged, irrevocably grants to the Optionee the option ("Option") to purchase the following number of shares of Common Stock: Optionee Number of Shares -------- ---------------- Amy L. Newmark ---250,000--- The effective date of this grant is March 29, 2000 ("Date of Grant") and is subject to the following terms and conditions: 1. EXERCISE PRICE. The purchase price ("Exercise Price") for shares of Common Stock purchasable pursuant to this Option shall be One and 50/100 Dollars ($1.50) per share, which shall be paid in full in cash at the time of exercise; provided, however, that the Board of Directors of the Company may in its sole discretion permit payment to be made with shares of the Company's Common Stock owned by Optionee (a "Cashless Exercise"). Optionee shall have no rights with respect to dividends or have any other rights as a shareholder with respect to shares subject to this Option until Optionee has given written notice of the exercise of the Option and has paid in full for such shares. 2. VESTING AND TIME OF EXERCISE. This Option will vest one third per yearly anniversary date following grant date. This Option may be exercised as to all or any portion of the vested shares covered by this Option Grant at any time, and shall expire on the earlier of ten years from the grant date, or one year after cessation of the Optionee's relationship with the Company in any capacity, including service provided to the Company as an employee, officer, director or consultant. The period of time during which the Option may be exercised is referred to herein as the "Option Period." 3. NUMBER OF SHARES PURCHASABLE AT ANY ONE TIME. This Option may be exercised only for at least 100 shares of Common Stock or a multiple thereof or for the full number of shares for which the Option is then exercisable. 4. NONTRANSFERABILITY OF OPTION. This Option may not be transferred by Optionee otherwise than by will or the laws of descent and distribution. During Optionee's lifetime, this Option shall be exercisable only by Optionee. 5. CHANGES IN CAPITAL; CERTAIN REORGANIZATIONS. If the outstanding Common Stock of the Company which is subject to this Option shall at any time be changed or exchanged by declaration of a stock dividend, split-up, subdivision or combination of shares, recapitalization, merger, consolidation or other corporate reorganization in which the Company is the surviving corporation, the number of and kind of shares subject to the Option and the Option Price shall be appropriately and equitably adjusted so as to maintain the proportionate number of shares without changing the aggregate option price. In the event of a dissolution or liquidation of the Company, or a merger, consolidation, sale of all or substantially all of its assets, or other corporate reorganization in which the Company is not the surviving corporation, or in which the Company is the surviving corporation but holders of Common Stock receive securities of another corporation, this Option shall terminate as of the effective date of such event, provided that immediately prior to such event, Optionee shall have the right to exercise this Option as to all shares underlying this Option, irrespective of the number of Options actually vested at the time. 6. MANNER OF EXERCISE. (a) This Option may be exercised in whole or in part at any time and from time to time within the Option Period, subject to the terms and conditions contained herein, by the delivery of written notice of exercise to the Chief Financial Officer of the Company, as required by subsection (d) of this Section, accompanied by (i) full payment, in cash or certified or bank check, payable to the Company, or, (ii) if permitted by the Company's Board of Directors in its sole discretion, shares of the Company's Common Stock having a fair market value equal to the aggregate exercise price for the number of shares purchased which the Optionee has held for at least six months prior to the time of exercise of the Option. (b) For purposes of this Section, "Market Price" means the average of the closing prices of sales on the principal domestic securities exchange on which such security may at the time be listed, or, if there have been no sales on any such exchange on any day, the average of the highest bid and lowest asked prices on all such exchanges at the end of such day, or, if on any day such security is not so listed, the average of the bid and asked prices quoted on Nasdaq (including the OTC Bulletin Board ) as of the close of trading in New York City on such day, in each such case averaged over a period of five (5) consecutive days consisting of the business day immediately preceding the day as of which Market Price is being determined and the four (4) consecutive business days prior to such day; provided that if such security is listed on any principal domestic securities exchange or quoted on Nasdaq, the terms "business day" and "business days" means a day or days, as applicable, on which such exchange or Nasdaq is open for trading or quotation, as the case may be, notwithstanding whether any quotation is available on any particular business day and, if not, then the Market Price shall be determined based upon those remaining days during the aforesaid 5-day period for which quotations are available. If the shares are not so listed or traded on any principal domestic securities exchange or quoted on Nasdaq, the Market Price shall be the fair value thereof, as determined in good faith by the Board of Directors of the Company. 2 (c) Certificates for the shares of Common Stock purchased upon exercise of this Option shall be delivered by the Company to the Purchaser within five (5) business days after the Exercise Date. (d) The notice of exercise (i) shall state the election to exercise the Option, (ii) shall state the number of shares in respect to which the Option is being exercised, (iii) shall state Optionee's address, (iv) shall state Optionee's social security number, (v) shall contain such representations and agreements concerning Optionee's investment intent with respect to such shares of Common Stock as shall be satisfactory to the Company's counsel, and (vi) shall be signed by Optionee. As a further condition to the exercise of this Option, the Company may require Optionee to make any representation and warranty to the Company as may be required by any applicable law or regulation. (e) Unless this Option has expired or all of the purchase rights represented hereby have been exercised, the Company shall, in addition to certificates for Common Stock issued upon exercise of this Option, prepare upon exercise of this Option, a new Option representing the rights formerly represented by this Option that have not expired or been exercised. The Company shall, within five (5) business days after the Exercise Date, deliver such new Option to the Optionee. 7. AMENDMENT AND ADMINISTRATION. The Board of Directors shall have the authority to interpret this Option, and generally to conduct and administer the exercise of this Option and to make all determinations in connection herewith which may be necessary or advisable, and all such actions of the Board shall be final and conclusive for all purposes and binding upon Optionee. 8. MISCELLANEOUS. This Option shall inure to the benefit of and be binding upon each successor of the Company. All obligations imposed upon and all rights granted to the Optionee and all rights reserved by the Company under this Option shall be binding upon and inure to the benefit of Optionee, Optionee's heirs, personal representatives, administrators and successors. Unless the context requires otherwise, words denoting the singular may be construed as denoting the plural, and words of the plural may be construed as denoting the singular and words of one gender my be construed as denoting such other gender as is appropriate. 3 IN WITNESS WHEREOF, this Option has been issued by the Company effective as of the Date of Grant. U.S. WIRELESS DATA, INC. Accepted by Optionee: a Colorado corporation By -------------------------------- -------------------------------- Dean M. Leavitt Print Name Chief Executive Officer Attest ------------------------------ Charles I. Leone Secretary 4 EX-4.5 6 NONQUALIFIED STOCK OPTION CERTIFICATE--LEONE THIS OPTION 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 OPTION AND SUCH SHARES 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. NO REGISTRATION RIGHTS HAVE BEEN GRANTED WITH RESPECT TO THIS OPTION AS OF ITS ORIGINAL DATE OF ISSUANCE. U.S. WIRELESS DATA, INC. NONQUALIFIED STOCK OPTION CERTIFICATE U.S. Wireless Data, Inc., a Colorado corporation ("Company"), for good and valuable consideration, including the incentive to the Optionee to remain as an employee of the Company as a result of ownership or increased ownership of the Company's no par value common stock ("Common Stock"), the receipt and sufficiency of which consideration hereby is acknowledged, irrevocably grants to the Optionee the option ("Option") to purchase the following number of shares of Common Stock: Optionee Number of Shares -------- ----------------- Charles I. Leone 350,000 The effective date of this grant is February 15, 2000 ("Date of Grant") and is subject to the following terms and conditions: 1. EXERCISE PRICE. The purchase price ("Exercise Price") for shares of Common Stock purchasable pursuant to this Option shall be Two and 434/1000 Dollars ($2.434) per share, which shall be paid in full in cash at the time of exercise; provided, however, that the Board of Directors of the Company may in its sole discretion permit payment to be made with shares of the Company's Common Stock owned by Optionee (a "Cashless Exercise"). The Exercise Price represents the fair market price of the Company's Common Stock as of the date this Option is granted. Optionee shall have no rights with respect to dividends or have any other rights as a shareholder with respect to shares subject to this Option until Optionee has given written notice of the exercise of the Option and has paid in full for such shares. 2. VESTING AND TIME OF EXERCISE. This Option will vest 116,666 shares per yearly anniversary date following grant date. In the event Optionee is terminated from employment with the Company without "cause" or elects to terminate his employment with the Company for "good reason" (as such terms are defined in the Employment Agreement between the Company and Optionee entered into as of February 11, 2000), all of the options represented hereby shall become immediately vested at said termination date. This Option may be exercised as to all or any portion of the vested shares covered by this Option Grant at any time, and shall expire on the earlier of ten years from the grant date, or one year after cessation of the Executive's relationship with the Company in any capacity, including service provided to the Company as an employee, officer, director or consultant. The period of time during which the Option may be exercised is referred to herein as the "Option Period." 3. NUMBER OF SHARES PURCHASABLE AT ANY ONE TIME. This Option may be exercised only for at least 100 shares of Common Stock or a multiple thereof or for the full number of shares for which the Option is then exercisable. 4. DEATH OF OPTIONEE. If Optionee dies during Optionee's employment with the Company, this Option shall be exercisable only as to that portion exercisable as of the date of death and within one year after Optionee's death, or the last day of the Option Period, whichever is earlier, by the personal representative or administrator of Optionee's estate, or by any trustee, heir, legatee or beneficiary to whom Optionee's rights under this Option shall pass by will or the laws of descent and distribution to the extent that Optionee was entitled to exercise this Option at the time of Optionee's death. 5. RETIREMENT OF OPTIONEE. If Optionee's employment with the Company terminates by reason of retirement, the Option shall be exercisable within the one year period following Optionee's retirement as described above, but not later than the last day of the Option Period, and then only to the extent to which the Option was exercisable at the time of such termination of employment by retirement. However, if Optionee dies within three months after termination by retirement, the Option, to the extent it was exercisable at the time of Optionee's death, shall thereafter be exercisable for one year after the date of Optionee's death, but not later than the last day of the Option Period. 6. DISABILITY OF OPTIONEE. If Optionee becomes permanently and totally disabled, and at the time of such disability Optionee is entitled to exercise one or more installments under this Option, Optionee shall have the right to exercise this Option within one year after such disability provided Optionee exercises this Option within the Option Period and then only to the extent to which this Option was exercisable at the time of such disability. For purposes of this Section, an Optionee shall be considered to be totally and permanently disabled if a qualified medical physician approved by the Company certifies to the Company that such Optionee is unable to be gainfully employed by the Company by reason of a diagnosed and determinable physical or mental impairment which can be expected to result in death or has lasted and can be expected to last for a continuous period of not less than 12 months. 7. NONTRANSFERABILITY OF OPTION. This Option may not be transferred by Optionee otherwise than by will or the laws of descent and distribution. During Optionee's lifetime, this Option shall be exercisable only by Optionee. 8. LEAVE OF ABSENCE. For purposes of this Option, (i) a leave of absence, duly authorized in writing by the Company, for military service or sickness, or for any other purpose approved by the Company, if the period of such leave does not exceed 90 days, and (ii) a leave of absence in excess of 90 days, duly authorized in writing by the Company, provided Optionee's right to reemployment is guaranteed either by statute or by contract, shall not be deemed a termination of employment. 9. CHANGES IN CAPITAL; CERTAIN REORGANIZATIONS. If the outstanding Common Stock of the Company which is subject to this Option shall at any time be changed or exchanged by declaration of a stock dividend, split-up, subdivision or combination of shares, recapitalization, merger, consolidation or other corporate reorganization in which the Company is the surviving corporation, the number of and kind of shares subject to the Option and the Option Price shall be appropriately and equitably adjusted so as to maintain the proportionate number of shares without changing the aggregate option price. In the event of a dissolution or liquidation of the Company, or a merger, consolidation, sale of all or substantially all of its assets, or other corporate reorganization in which the Company is not the surviving corporation, or in which the Company is the surviving corporation but holders of Common Stock receive securities of another corporation, this Option shall terminate as of the effective date of such event, provided that immediately prior to such event, Optionee shall have the right to exercise this Option as to all shares underlying this Option, irrespective of the number of Options actually vested at the time. 10. MANNER OF EXERCISE. (a) This Option may be exercised in whole or in part at any time and from time to time within the Option Period, subject to the terms and conditions contained herein, by the delivery of written notice of exercise to the Chief Financial Officer of the Company, as required by subsection (d) of this Section, 2 accompanied by (i) full payment, in cash or certified or bank check, payable to the Company, or, (ii) if permitted by the Company's Board of Directors in its sole discretion, shares of the Company's Common Stock having a fair market value equal to the aggregate exercise price for the number of shares purchased which the Optionee has held for at least six months prior to the time of exercise of the Option. (b) For purposes of this section, "Market Price" means the average of the closing prices of sales on the principal domestic securities exchange on which such security may at the time be listed, or, if there have been no sales on any such exchange on any day, the average of the highest bid and lowest asked prices on all such exchanges at the end of such day, or, if on any day such security is not so listed, the average of the bid and asked prices quoted on Nasdaq (including the OTC Bulletin Board ) as of the close of trading in New York City on such day, in each such case averaged over a period of five (5) consecutive days consisting of the business day immediately preceding the day as of which Market Price is being determined and the four (4) consecutive business days prior to such day; provided that if such security is listed on any principal domestic securities exchange or quoted on Nasdaq, the terms "business day" and "business days" means a day or days, as applicable, on which such exchange or Nasdaq is open for trading or quotation, as the case may be, notwithstanding whether any quotation is available on any particular business day and, if not, then the Market Price shall be determined based upon those remaining days during the aforesaid 5-day period for which quotations are available. If the shares are not so listed or traded on any principal domestic securities exchange or quoted on Nasdaq, the Market Price shall be the fair value thereof, as determined in good faith by the Board of Directors of the Company. (c) Certificates for the shares of Common Stock purchased upon exercise of this Option shall be delivered by the Company to the Purchaser within five (5) business days after the Exercise Date. (d) The notice of exercise (i) shall state the election to exercise the Option, (ii) shall state the number of shares in respect to which the Option is being exercised, (iii) shall state Optionee's address, (iv) shall state Optionee's social security number, (v) shall contain such representations and agreements concerning Optionee's investment intent with respect to such shares of Common Stock as shall be satisfactory to the Company's counsel, and (vi) shall be signed by Optionee. As a further condition to the exercise of this Option, the Company may require Optionee to make any representation and warranty to the Company as may be required by any applicable law or regulation. (e) Unless this Option has expired or all of the purchase rights represented hereby have been exercised, the Company shall, in addition to certificates for Common Stock issued upon exercise of this Option, prepare upon exercise of this Option, a new Option representing the rights formerly represented by this Option that have not expired or been exercised. The Company shall, within five (5) business days after the Exercise Date, deliver such new Option to the Optionee. 11. AMENDMENT AND ADMINISTRATION. The Board of Directors shall have the authority to interpret this Option, and generally to conduct and administer the exercise of this Option and to make all determinations in connection herewith which may be necessary or advisable, and all such actions of the Board shall be final and conclusive for all purposes and binding upon Optionee. 12. MISCELLANEOUS. This Option shall inure to the benefit of and be binding upon each successor of the Company. All obligations imposed upon and all rights granted to the Optionee and all rights reserved by the Company under this Option shall be binding upon and inure to the benefit of Optionee, Optionee's heirs, personal representatives, administrators and successors. Unless the context requires otherwise, words denoting the singular may be construed as denoting the plural, and words of the plural may be construed as denoting the singular and words of one gender my be construed as denoting such other gender as is appropriate. 3 IN WITNESS WHEREOF, this Option has been issued by the Company effective as of the Date of Grant, which is February 15, 2000. U.S. WIRELESS DATA, INC. Accepted by Optionee: a Colorado corporation By /s/ Dean M. Leavitt /s/ Charles I. Loene ------------------------------------- ---------------------------- Dean M. Leavitt Charles I. Leone Chief Executive Officer 4 EX-4.6 7 STOCK PURCHASE WARRANT--LEAVITT WARRANT THE SECURITIES REPRESENTED BY THIS INSTRUMENT (INCLUDING THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS AND HAVE BEEN TAKEN FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION THEREOF. THE SECURITIES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION AND QUALIFICATION WITHOUT, EXCEPT UNDER CERTAIN SPECIFIC LIMITED CIRCUMSTANCES, AN OPINION OF COUNSEL FOR THE HOLDER, CONCURRED IN BY COUNSEL FOR THE COMPANY THAT SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED. Number: DML-1 5,375,000 Shares WARRANT TO PURCHASE COMMON STOCK U.S. Wireless Data, Inc, a Colorado corporation (the "Corporation"), hereby grants to Dean Michael Leavitt (the "Holder") the right to purchase from the Corporation 5,375,000 shares of the common stock of the Corporation (the "Warrant Shares"), subject to the terms and conditions set forth below. This Warrant is issued in connection with and subject to certain rights, privileges and restrictions set forth in the Employment Agreement entered into between the Holder and the Corporation (the "Employment Agreement") as of May 3, 1999. 1) Term. This Warrant may be exercised into fully paid and nonassessable shares of the Corporation's Common Stock, at the option of the Holder, at any time and from time to time in whole or in part during the ten years ending May 3, 2009 (the "Exercise Period"). 2) Purchase Price. 2,687,500 shares of this Warrant shall be exercisable into the Corporation's Common Stock at a price of Eighty-Seven and one half cents (.875) per share (the current fair market value of the Common Stock), as adjusted pursuant to Section 9 below (the "Market Portion"). 2,687,500 shares of this Warrant shall be exercisable into the Corporation's Common Stock at a price of One and 465/1000 Dollars ($1.465) per share as adjusted pursuant to Section 9 below (the "$1.465 Portion"). 3) Exercise of Warrant. This Warrant may be exercised in whole or in part, but not for less than one thousand (1000) Warrant Shares and in excess of 1000 Warrant Shares in increments of 1000 Warrant Shares. It is exercisable at any time during the Exercise Period as set forth below by the surrender of the Warrant to the Corporation at its principal office together with the Notice of Exercise annexed hereto duly completed and executed on behalf of the Holder, accompanied by the amount, in full, of the aggregate purchase price of the Warrant Shares in immediately available funds. The Corporation agrees that the Warrant Shares so purchased shall be issued as soon as practicable thereafter, and that the Holder shall be deemed the record owner of such Warrant Shares as of and from the close of business on the date on which this Warrant shall be surrendered together with payment in full as required above. (a) The Market Portion of this Warrant shall vest only during employment of Holder by the Corporation (except for acceleration as provided herein) and shall be exercisable in accordance with the following formula: (1) 10% on or after the date of this Warrant; plus an additional (2) 7.5% on or after each of the 2nd day of each of the 12 calendar months thereafter (3) 100% on or after May 2, 2000 (b) The $1.465 Portion of this Warrant shall vest only during employment of Holder by the Corporation (except for acceleration as provided herein) and shall be exercisable in accordance with the following formula: (1) 50% on or after May 2, 2000; plus an additional (2) 8.33% on or after each of the 2nd day of each of the 6 calendar months thereafter (3) 100% on or after November 2, 2000 (c) The Market Portion of this Warrant and any portion thereof must be exercised, to the extent otherwise exercisable, within 180 days of termination of Holder's employment with the Corporation or any unexercised portion shall then expire, except that if such 180-day period expires in the same calendar year as termination of employment, such post-termination exercise period will extend until January 31 of the following year. Holder shall have until 5 years from date of his termination of employment with the Corporation to exercise the $1.465 Portion of this Warrant, to the extent otherwise exercisable upon termination.. (d) Section 5(a)(3) of the Employment Agreement contains provisions for acceleration of this Warrant upon a Change of Control or termination without Cause or for Good Reason. 4) Cashless Exercise Option. Notwithstanding the foregoing, in lieu of exercising this Warrant for cash, the Holder may elect to receive Warrant Shares equal to the value of this Warrant (or equal to the value of the portion of the Warrant Shares thereof being exercised) which shall be that number of Warrant Shares when multiplied times the Fair Market Value for such Warrant Shares is equal to the excess, if any, by which the Fair Market Value of the aggregate Warrant Shares being exercised exceeds the aggregate Exercise Price (determined by subtracting the Warrant Exercise Price for one Warrant Share on the exercise date from the Fair Market Value of one Warrant Share on the exercise date multiplied by the number of Warrant Shares exercised) on the exercise date. Fair Market Value of one share of a Warrant Share shall mean the closing price per share of the Corporation's Common Stock for the trading day immediately preceding such date. The closing price for each such day shall be the last sale price regular way or, in the case no such sale takes place on such day, the average of the closing bid and asked prices regular way, in either case on the principal securities exchange on which the shares of such Common Stock of the Corporation are listed or admitted to trading, or if applicable, the last sale price, or in the case no sale takes place on such day, the average of the closing bid and asked prices of such Common Stock on the National Association of Securities Dealers, Inc. (the "NASD") Automated Quotation System (the NASD Automated Quotation System being hereinafter referred to as "Nasdaq") or as listed on the OTC Electronic Bulletin Board (the quotation system for the non-Nasdaq over-the-counter market) (Nasdaq and the OTC Electronic Bulletin Board being collectively referred to hereinafter as the "OTC Market"), or on or with any comparable quotation or listing service, or if there shall have been no sales in the OTC Market on such day or, if such Common Stock is not quoted or listed in the OTC Market, or on or with any comparable quotation or listing service, the average of the closing bid and asked prices as furnished by two members of the NASD selected from time to time by the Corporation for that purpose. If such bid and asked prices are not available, then the Fair Market Value per share shall be equal to the fair market value of such Common Stock as determined in good faith by the board of directors of the Corporation. In the event of a cashless exercise, the underlying Warrant must be surrendered, and no new Warrant shall be issued, except for the balance of the Warrant not exercised or used to pay the Warrant Exercise Price. 5) Fractional Interest. The Corporation shall not be required to issue any fractional shares on the exercise of this Warrant. 6) Warrant Confers No Rights of Shareholder. The Holder shall not have any rights as a shareholder of the Corporation with regard to the Warrant Shares prior to actual exercise resulting in the purchase of the Warrant Shares. However, as long as the Warrant remains outstanding, Holder shall receive all shareholder notices and correspondence, shall be notified of all shareholder action and meetings and shall have the right to attend all shareholder meetings. 2 7) Investment Representation. Neither this Warrant nor the Warrant Shares issuable upon the exercise of this Warrant have been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws. The Holder acknowledges by acceptance of the Warrant that (a) he has acquired this Warrant for investment and not with a view to distribution; and either (b) he has a pre-existing personal or business relationship with the Corporation, or its executive officers, or by reason of his business or financial experience be has the capacity to protect his own interests in connection with the transaction; and (c) he is an accredited investor as that term is defined in Regulation D promulgated under the Securities Act. The Holder agrees that any Warrant Shares issuable upon exercise of this Warrant will be acquired for investment and not with a view to distribution and such Warrant Shares will not be registered under the Securities Act and applicable state securities laws and that such Warrant Shares may have to be held indefinitely unless they are subsequently registered or qualified under the Securities Act and applicable state securities laws or, based on an opinion of counsel reasonably satisfactory to the Corporation, an exemption from such registration and qualification is available. The Holder by acceptance hereof, consents to the placement of the following restrictive legends or similar legends, on each certificate to be issued to the Holder by the Corporation in connection with the issuance of such Warrant Shares: THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS (A) There IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR LAWS COVERING SUCH SECURITIES, OR (B) THE HOLDER RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THE SECURITIES SATISFACTORY TO THE CORPORATION, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND THE QUALIFICATION REQUIREMENTS UNDER APPLICABLE STATE LAW. 8) Reservation of Shares. The Corporation agrees at all times during the Exercise Period to have authorized and reserved, for the exclusive purpose of issuance and delivery upon exercise of this Warrant, a sufficient number of shares of its common stock to provide for the exercise of the rights represented hereby. The Corporation intends to increase the authorized Common Stock under the Articles of Incorporation at the next meeting of shareholders, to a number as appropriate to take into consideration the foreseeable needs of the Corporation. 9) Adjustment for Re-Classification of Capital Stock. If the Corporation at any time during the Exercise Period shall, by subdivision, combination or re-classification of securities, change any of the securities to which purchase rights under this Warrant exist under the same or different number of securities of any class or classes, this Warrant shall thereafter entitle the Holder to acquire such number and kind of securities as would have been issuable as a result of such change with respect to the Warrant Shares immediately prior to such subdivision, combination, or reclassification. If shares of the Corporation's common stock are subdivided into a greater number of shares of common stock, the purchase price for the Warrant Shares upon exercise of this Warrant shall be proportionately reduced and the Warrant Shares shall be proportionately increased; and conversely, if shares of the Corporation's common stock are combined into a smaller number of common stock shares, the price shall he proportionately increased, and the Warrant Shares shall be proportionately decreased. 10) Pre-emptive Rights. In case the Corporation offers any shares of its Common Stock, or any rights, options, or warrants to subscribe for or purchase Common Stock (or securities convertible into or exchangeable for Common Stock), as part of a financing of the Corporation (and not pursuant to an acquisition, merger, incentive or compensatory arrangement approved by the Board), the Holder shall be entitled to subscribe for such Common Stock, or any rights, options, or warrants to subscribe for or purchase Common Stock (or securities convertible into or exchangeable for Common Stock), at such price as shall be so offered in proportion to the holdings the Holder would have had this Warrant been exercised immediately prior to the offerings in relationship to all of the issued and outstanding equity securities of the Corporation. 3 11) Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the Corporation of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of any Warrant or stock certificate, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon reimbursement to the Corporation of all reasonable expenses incidental thereto, and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Corporation will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of this Warrant or stock certificate. 12) Assignment. The Holder of this Warrant shall not assign or transfer this Warrant without the written consent of the Corporation; provided however, that the Holder, if a limited liability company, may assign this Warrant to its Members without the consent of the Corporation, and provided further that the Holder may assign and transfer the Warrant to members of his immediate family, or to a family trust or the like without consent to the Corporation, and upon death of the Holder, his personal representative, executor or the like may exercise all vested portions of the Warrant. Notwithstanding the foregoing, Holder may transfer or pledge any vested portion of the $1.465 Portion of this Warrant and may pledge any vested portion of the Market Portion of this Warrant, without Corporation consent. The Holder of this Warrant shall not assign his Warrant unless such assignment is in compliance with applicable state and federal securities laws. In giving its consent to an assignment, the Corporation may request an opinion of counsel reasonably acceptable to it that such transfer is in compliance with all applicable state and federal securities laws. 13) Registration Rights. (a) If, at any time following the date of issuance of this Warrant, the Corporation shall file a registration statement for the sale by the Corporation to the public of its equity securities (other than any registration statement on Form S-4, Form S-8, or any successor form) with the Securities and Exchange Commission (the "Commission") while any Registrable Securities (as hereinafter defined) are outstanding, the Corporation shall give the Holder at least 45 days' prior written notice of the filing of such registration statement. If requested by the Holder in writing within 30 days after receipt of any such notice, the Corporation shall, at the Corporation's sole expense (other than the fees and disbursements of counsel for the Holder and the underwriting discounts, if any, payable in respect of the Registrable Securities sold by the Holder), register or qualify all or, at the Holder's option, any portion of the Registrable Securities of the Holder concurrently with the registration of such other securities, all to the extent requisite to permit the public offering and sale of the Registrable Securities through the facilities of all securities exchanges and the over-the-counter markets on which the Corporation's securities are traded, and will use its best efforts through its officers, directors, auditors, and counsel to cause such registration statement to become effective as promptly as practicable. Notwithstanding the foregoing, if the managing underwriter of any such offering shall advise the Corporation in writing that, in its opinion, the distribution of all or a portion of the Registrable Securities requested to be included in the registration concurrently with the securities being registered by the Corporation would materially adversely affect the distribution of such securities by the Corporation for its own account, then the Holder if he has requested registration of his Registrable Securities shall not be entitled to have such Holder's Registrable Securities (or the portions thereof so designated by the managing underwriter) included in such registration statement, provided that no such exclusion or reduction shall be made as to any Registrable Securities if any securities of the Corporation are included in such registration statement for the account of any person other than the Corporation and the holder unless the securities included in such registration statement for such other person shall have been reduced pro rata to the reduction of the Registrable Securities which were requested to be included in such registration. As used herein, "Registrable Securities" shall mean the Warrant Shares then issuable thereunder, if any which, in each case, have not been previously sold pursuant to a registration statement or Rule 144 promulgated under the Securities Act. 4 (b) In the event of a registration pursuant to the provisions of this Section 13, the Corporation shall use its best efforts to cause the Registrable Securities so registered to be registered or qualified for sale under the securities or blue sky laws of such jurisdictions as the Holder may reasonably request; provided, however, that the Corporation shall not by reason of this Section 13 be required to qualify to do business in any state in which it is not otherwise required to qualify to do business or to file a general consent to service of process. (c) The Corporation shall keep effective any registration or qualification contemplated by this Section 13 and shall from time to time amend or supplement each applicable registration statement, preliminary prospectus, final prospectus, application, document, and communication for such period of time as shall be required to permit the Holder to complete the offer and sale of the Registrable Securities covered thereby. The Corporation shall in no event be required to keep any such registration or qualification in effect for a period in excess of nine months from the date on which the Holder is first free to sell such Registrable Securities; provided, however, that, if the Corporation is required to keep any such registration or qualification in effect with respect to securities other than the Registrable Securities beyond such period, the Corporation shall keep such registration or qualification in effect as it relates to the Registrable Securities for so long as such registration or qualification remains or is required to remain in effect in respect of such other securities. (d) In the event of a registration pursuant to the provisions of this Section 13, the Corporation shall furnish to the Holder such reasonable number of copies of the registration statement and of each amendment and supplement thereto (in each case, including all exhibits), such reasonable number of copies of each prospectus contained in such registration statement and each supplement or amendment thereto (including each preliminary prospectus), all of which shall conform to the requirements of the Securities Act and the rules and regulations thereunder, and such other documents, as the Holder may reasonably request to facilitate the disposition of the Registrable Securities included in such registration. (e) In the event of a registration pursuant to the provisions of this Section 13, the Corporation shall furnish the Holder with an opinion of its counsel (reasonably acceptable to the Holder) to the effect that (i) the registration statement has become effective under the Securities Act and no order suspending the effectiveness of the registration statement, preventing or suspending the use of the registration statement, any preliminary prospectus, any final prospectus, or any amendment or supplement thereto has been issued, nor to the best knowledge of such counsel has the Commission or any securities or blue sky authority of any jurisdiction instituted or threatened to institute any proceedings with respect to such an order, (ii) each document, if any, incorporated by reference in the registration statement and the prospectus included therein (except for financial statements and related schedules, as to which such counsel need express no opinion) complied as to form when filed with the Commission in all material respects with the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations of the Commission thereunder, and (iii) the registration statement and the prospectus included therein and any supplements or amendments thereto (except for financial statements and related schedules, as to which such counsel need express no opinion) comply as to form in all material respects with the Securities Act and the rules and regulations of the Commission thereunder. In addition, such counsel shall state that it has participated in conferences with officers and other representatives of the Corporation, and representatives of independent accountants for the Corporation, at which conferences such counsel made inquiries of such officers, representatives and accountants; discussed the contents of the preliminary prospectus; the registration statement; and the prospectus and related matters were discussed and, although such counsel is not passing and does not assume any responsibility for accuracy, completeness or 5 fairness, the statements contained in the preliminary prospectus, the registration statement and the prospectus, on the basis of the foregoing, no facts have come to the attention of such counsel which lead it to believe that either the registration statement or on any amendment thereto, at the time such registration statement or amendment became effective or the preliminary prospectus or prospectus or amendment or any supplement thereto as of the date of such opinion contained any untrue statement or a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading (it being understood that such counsel need express no opinion with respect to the financial statements and schedules and other financial and statistical data included in the preliminary prospectus, the registration statement or prospectus). The Corporation shall also furnish to the Holder a "cold" comfort letter from the independent certified public accountants of the Corporation in customary form and substance. (f) In the event of a registration pursuant to the provisions of this Section 13, the Corporation and the Holder shall enter into a cross-indemnity agreement and a contribution agreement, each in customary form, with each underwriter, if any, and, if requested, enter into an underwriting agreement containing conventional representations, warranties, allocation of expenses, and customary closing conditions, including, without limitation, opinions of counsel and accountants, "cold" comfort letters, with any underwriter who acquires any Registrable Securities. (g) The Corporation agrees that, until all the Registrable Securities have been sold under a registration statement or pursuant to Rule 144 under the Act, it shall keep current in filing all reports, statements and other materials required to be filed with the Commission to permit holders of the Registrable Securities to sell such securities under Rule 144. 14) Indemnification. (a) Subject to the conditions set forth below, the Corporation agrees to indemnify and hold harmless the Holder and each person, if any, who controls the Holder within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act, from and against any and all loss, liability, charge, claim, damage and expense whatsoever (which shall include, for all purposes of this Section 14, without limitation, attorneys' fees and any and all expense whatsoever incurred in investigating, preparing, or defending against any litigation, commenced or threatened, or any claim whatsoever, and any and all amounts paid in settlement of any claim or litigation), as and when incurred, arising out of, based upon, or in connection with (i) any untrue statement or alleged untrue statement of a material fact contained (A) in any registration statement, preliminary prospectus, or final prospectus (as from time to time amended and supplemented), or any amendment or supplement thereto, relating to the sale of any of the Registrable Securities, or (B) in any application or other document or communication (in this Section 10 collectively called an "application") executed by or on behalf of the Corporation or based upon written information furnished by or on behalf of the Corporation filed in any jurisdiction in order to register or qualify any of the Registrable Securities under the securities or blue sky laws thereof or filed with the Commission or any securities exchange; or any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, unless such statement or omission was made in reliance upon and in conformity with written information furnished to the Corporation with respect to the Holder by or on behalf of such person expressly for inclusion in any registration statement, preliminary prospectus, or final prospectus, or any amendment or supplement thereto, or in any application, as the case may be, or (ii) any breach of any representation, warranty, covenant, or agreement of the Corporation contained in this Warrant. The foregoing agreement to indemnify shall be in addition to any liability the Corporation may otherwise have, including liabilities arising under this Warrant. 6 If any action is brought against the Holder or any controlling persons of the Holder (an "indemnified party") in respect of which indemnity may be sought against the Corporation pursuant to the foregoing paragraph, such indemnified party or parties shall promptly notify the Corporation in writing of the institution of such action (but the failure so to notify shall not relieve the Corporation from any liability under this Section 13(a) unless the Corporation shall have been materially prejudiced by such failure or relieve the Corporation from any liability other than pursuant to this Section 13(a)) and the Corporation shall promptly assume the defense of such action, including the employment of counsel (reasonably satisfactory to such indemnified party or parties) and payment of expenses. Such indemnified party or parties shall have the right to employ its or their own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of such indemnified party or parties unless the employment of such counsel shall have been authorized in writing by the Corporation in connection with the defense of such action or the Corporation shall not have employed counsel reasonably satisfactory to such indemnified party or parties to have charge of the defense of such action or such indemnified party or parties shall have reasonably concluded that there may be one or more legal defenses available to it or them or to other indemnified parties which are different from or additional to those available to the Corporation, in any of which events such fees and expenses shall be borne by the Corporation and the Corporation shall not have the right to direct the defense of such action on behalf of the indemnified party or parties. Anything in this Section 13 to the contrary notwithstanding, the Corporation shall not be liable for any settlement of any such claim or action effected without its written consent, which shall not be unreasonably withheld. The Corporation agrees promptly to notify the Holder of the commencement of any litigation or proceedings against the Corporation or any of its officers or directors in connection with the sale of any Registrable Securities or any preliminary prospectus, prospectus, registration statement, or amendment or supplement thereto, or any application relating to any sale of any Registrable Securities. (b) The Holder agrees to indemnify and hold harmless the Corporation, each director of the Corporation, each officer of the Corporation who shall have signed any registration statement covering Registrable Securities held by the Holder, each other person, if any, who controls the Corporation within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act, and its or their respective counsel, to the same extent as the foregoing indemnity from the Corporation to the Holder in Section 13(a), but only with respect to statements or omissions, if any, made in any registration statement, preliminary prospectus, or final prospectus (as from time to time amended and supplemented), or any amendment or supplement thereto, or in any application, in reliance upon and in conformity with written information furnished to the Corporation with respect to the Holder by or on behalf of the Holder expressly for inclusion in any such registration statement, preliminary prospectus, or final prospectus, or any amendment or supplement thereto, or in any application, as the case may be. If any action shall be brought against the Corporation or any other person so indemnified based on any such registration statement, preliminary prospectus, or final prospectus, or any amendment or supplement thereto, or in any application, and in respect of which indemnity may be sought against the Holder pursuant to this Section 13(b), the Holder shall have the rights and duties given to the Corporation, and the Corporation and each other person so indemnified shall have the rights and duties given to the indemnified parties, by the provisions of Section 13(a); provided, however, that the obligations of the Holder hereunder shall be limited to an amount equal to the net proceeds to the Holder of securities sold as contemplated herein. (c) To provide for just and equitable contribution, if (i) an indemnified party makes a claim for indemnification pursuant to Section 14(a) or (b) (subject to the limitations thereof) but it is found in a final judicial determination, not subject to further appeal, that such indemnification may not be enforced in such case, even though this Warrant expressly provides for indemnification in such case, or (ii) any indemnified or indemnifying party seeks contribution under the Securities Act, the Exchange Act or otherwise, then the Corporation (including for this purpose any contribution made by or on 7 behalf of any director of the Corporation, any officer of the Corporation who signed any such registration statement, any controlling person of the Corporation, and its or their respective counsel), as one entity, and the Registrable Securities of the Holder included in such registration in the aggregate (including for this purpose any contribution by or on behalf of an indemnified party), as a second entity, shall contribute to the losses, liabilities, claims, damages, and expenses whatsoever to which any of them may be subject, on the basis of relevant equitable considerations such as the relative fault of the Corporation and the Holder in connection with the facts which resulted in such losses, liabilities, claims, damages and expenses. The relative fault, in the case of an untrue statement, alleged untrue statement, omission, or alleged omission, shall be determined by, among other things, whether such statement, alleged statement, omission, or alleged omission relates to information supplied by the Corporation or by the Holder, and the parties, relative intent, knowledge, access to information, and opportunity to correct or prevent such statement, alleged statement, omission, or alleged omission. The Corporation and the Holder agree that it would be unjust and inequitable if the respective obligations of the Corporation and the Holder for contribution were determined by pro rata or per capita allocation of the aggregate losses, liabilities, claims, damages and expenses (even if the Holder and the other indemnified parties were treated as one entity for such purpose) or by any other method of allocation that does not reflect the equitable considerations referred to in this Section 14(c). No person guilty of a fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who is not guilty of such fraudulent representation. For purposes of this Section 14(c), each person, if any, who controls the Holder within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act and counsel to the Holder or control person shall have the same rights to contribution as the Holder or control person and each person, if any, who controls the Corporation within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act, each officer of the Corporation who shall have signed any such registration statement, each director of the Corporation, and its or their respective counsel shall have the same rights to contribution as the Corporation, subject in each case to the provisions of this Section 14(c). Anything in this Section 14 to the contrary notwithstanding, no party shall be liable for contribution with respect to the settlement of any claim or action effected without its or his written consent. This Section 14 is intended to supersede any right to contribution under the Securities Act, the Exchange Act or otherwise. 15) Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State of Colorado applicable to contracts between Colorado residents entered into and to be performed entirely within the State of Colorado. 16) Amendments. Any term of this Warrant may be amended with the written consent of the Company and the Holders. 17) Notices. Unless otherwise provided, any notice required or permitted under this Warrant shall be given in writing and shall be deemed effectively given upon personal delivery to the party to be notified by hand or professional courier service or five (5) days after deposit with the United States Post Office, by registered or certified mail, postage prepaid and addressed to the party to be notified at the address indicated for such party in the Subscription Agreement, or at such other address as such party may designate by ten (10) days' advance written notice to the other parties. 18) Attorneys' Fees. If any action at law or in equity is necessary to enforce or interpret the terms of this Warrant, the prevailing party shall be entitled to reasonable attorneys' fees, costs and disbursements in addition to any other relief to which such party may be entitled. 8 19) Expenses. The Corporation shall pay all registrar and transfer agent and similar expenses in connection with issuance of the Warrant and the shares of Common Stock upon exercise of the Warrant. Originally executed as of May 3, 1999; reexecuted as of January 4, 2000, to reflect repricing authorized as of such date. By: ------------------------------- U.S. Wireless Data, Inc. The name and address of the registered Holder of this Warrant is: Dean Michael Leavitt 50 Catherine Road Scarsdale, New York 10583 NOTICE OF EXERCISE To: ______________________ 1. The undersigned hereby elects to purchase ______ shares of Common Stock of ____________________________, pursuant to the terms of the attached Warrant and tenders herewith payment of the purchase price for such shares in full. 2. In exercising this Warrant, the undersigned hereby confirms and acknowledges that the shares of Common Stock are being acquired solely for the account of the undersigned and not as a nominee for any other party, or for investment, and that the undersigned will not offer, sell or otherwise dispose of any such shares of Common Stock except under circumstances that will not result in a violation of the Securities Act of 1933, as amended, or any state securities laws. 3. Please issue a certificate representing said shares of Common Stock in the name of the undersigned: 4. Please issue a new Warrant for the unexercised portion of the attached Warrant in the name of the undersigned: Dated: HOLDER ------------------------------- By: --------------------------------- (Print Name & Title) EX-4.7 8 STOCK PURCHASE WARRANT--RBB BANK WARRANT AND THE STOCK ISSUABLE UPON THE EXERCISE HEREOF HAVE THIS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND CAN BE TRANSFERRED ONLY IN COMPLIANCE WITH 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"), RBB BANK or registered assigns (the "Holder") is hereby granted the right to purchase at any time until 5:00 P.M., Pacific Coast time, on July 6, 2004 (the "Expiration Date"), (22,500) 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) 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 Warrants. 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 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 the securities acquirable upon exercise of this Warrant are subdivided into a greater number of securities (including pursuant to any stock dividend paid to all holders of such securities), 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: No Registration Rights. 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 of 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 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 for the restrictions on transfer contained in this Section. The holder is not being granted any rights to have the Warrant or the Warrant Shares registered under the Act of any state securities laws. 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 to facsimile transmission, or, if mailed, two days after the date of deposit in the United States mails, as follows: (i) if to the Company, to: U.S. Wireless Data, Inc. 2200 Powell Street, Suite 800 Emeryville, California 94608 ATTN: Robert Robichaud, Chief Financial Officer Telecopier No.: (510) 596-2029 Telephone No.: (510) 5596-2025 (ii) If to the Holder, to such address and facsimile number as appears in the records of the Company. A party shall give notice to the other in accordance with this Section to change the address, facsimile number or person to whom notices shall be given. 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 Colorado 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. 3 IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of January 20, 2000. U.S. WIRELESS DATA, INC. By: ------------------------------- DEAN M. LEAVITT Chief Executive Officer Attest: - --------------------------------- Name: Robert R. Robichaud Chief Financial Officer EX-4.8 9 STOCK PURCHASE WARRANT--LIPPERT/HEILSHORN THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON THE EXERCISE HEREOF HAVE THIS 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 Dated March 28, 2000 Warrant No. 15 1. Issuance; Exercisability. For good and valuable consideration, the receipt of which is hereby acknowledged by U.S. Wireless Data, Inc., a Colorado corporation (the "Company"), Lippert/Heilshorn & Associates, Inc., or registered assigns (the "Holder"), is hereby granted the right to purchase at any time commencing on March 28, 2001 and continuing until 5:00 P.M., Eastern Time, on March 27, 2006 (or the next regular business day thereafter if such day is not a regular business day) (the "Expiration Date"), Fifteen Thousand (15,000) fully paid and nonassessable shares of the Company's Common Stock, no par value per share (the "Common Stock") at an exercise price of $5.344 per share (the "Exercise Price") subject to further adjustment as set forth in Section 7 hereof. 2. Exercise of Warrants; Cashless Exercise Option. This Warrant is exercisable in whole or in part for whole shares of Common Stock at the Exercise Price per share 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: (a) the average last sale price on the principal exchange on which the Common Stock is traded, for the five (5) business days immediately preceding the Company's receipt of the duly executed Notice of Exercise Form; or (b) if the Common Stock is not traded on an exchange, the average closing bid price of a share of Common Stock on the OTC Bulletin Board or equivalent trading market where the Common Stock is traded, for the five (5) business days Warrant Exercise Agreement U.S Wireless Data, Inc. Page 2 immediately preceding the Company's receipt of the duly executed Notice of Exercise Form; or (c) if not publicly traded, an amount determined in good faith by the Company's Chief Financial Officer. 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. Representations of Holder. In connection with the issuance of this Warrant, Holder represents and warrants to the Company that: a) Holder is acquiring the Warrant (and if applicable the Warrant Shares) for investment only and has no intention to transfer, sell or otherwise dispose of such Warrant, except as permitted pursuant to, and in compliance with, applicable federal and state securities laws. b) Holder, either alone or through the assistance of advisors not affiliated with the Company, has such experience in business and financial matters that Holder is fully capable of evaluating the merits and risks of making an investment in the Company. c) Holder is aware that the Company files reports with the United States Securities and Exchange Commission under the Securities Exchange Act of 1934 pursuant to which it reports current information concerning the Company, its business and financial condition. Holder has examined such reports to the full extent necessary prior to determining to accept this Warrant. Holder also has been given the opportunity to ask questions of, and has received satisfactory answers to, all such questions from the Company's authorized representatives. Holder is familiar with the business and financial condition of the Company and that ownership of the Warrant is a speculative investment. d) Holder acknowledges and understands that this and the underlying Warrant Shares cannot be transferred unless they are currently or subsequently registered under the Securities Act of 1933 (the "Securities Act") and applicable state securities laws, or exemptions from such registration requirements are available. Holder further acknowledges and understands that the Company is under no obligation to register the Warrant or the Warrant Shares to make any exemption from registration available and that in the absence of registration or an available registration exemption, the Warrant and the Warrant Shares may not be transferred to any other person without the consent of the Company, which it may validly withhold if the Warrant and the Warrant Shares are not registered or exempt from registration. e) Holder understands that the certificate evidencing the Warrant and the Warrant Shares may be imprinted with legends, and/or stop-transfer instructions may be lodged with the Company's transfer agent, prohibiting the transfer of the Warrant and the Warrant Shares unless they are registered, or registration is not required in the opinion of counsel satisfactory to the Company. Holder consents to the lodging of any such stop transfer instructions Warrant Exercise Agreement U.S Wireless Data, Inc. Page 3 and/or such legends being imprinted on the certificates evidencing the Warrant and the Warrant Shares. Holder does not have any contract, agreement or arrangement with any person to sell, transfer or grant participation of any sort with respect to any of the Warrant or the Warrant Shares. f) Holder is aware of the terms and conditions of Rule 144 adopted by the United States Securities and Exchange Commission under the Securities Act, which permits limited public resale of securities acquired in a non-public offering, including the securities issued on exercise of the Warrant, subject to the satisfaction of certain conditions. Those conditions include, among other things: the availability of certain public information about the Company, the resale occurring not less than one year after the party has purchased and paid for the securities to be sold, the sale's being through a broker in an unsolicited "brokers' transaction," and the amount of securities being sold during any three-month period not exceeding specified limitations (generally, 1% of the total outstanding shares if the Company). Holder understands that unless the Warrant and the Warrant Shares are registered for public resale that the most likely method for resale of the Warrant Shares will be pursuant to SEC Rule 144. Holder understands and acknowledges that the Company has not made any representations, guarantees or commitments about the availability of Rule 144 to allow sales of the Warrant or the Warrant Shares in the future. g) Holder understands that there may be tax implications of the acceptance of this Warrant and/or an exercise of the right to purchase shares of Common Stock pursuant to the exercise of this Warrant. Holder also understands that it is Holder's obligation to confer with its tax advisor with respect to such tax implications, and to the extent Holder felt necessary, has done so prior to accepting or exercising the Warrant. h) Holder understands that an investment in the Warrant is inherently risky and could result in the loss of all money invested in purchasing the Warrant and/or the Warrant Shares. Holder would not be required to change lifestyle in the event of a loss of all of the money invested in purchasing the Warrant or the Warrant Shares. i) Holder fully understands the implications of accepting the Warrant and (if applicable) determining to exercise the Warrant, and has consulted with any and all persons it deemed appropriate, including its attorney and/or accountant, prior to determining to accept or exercise this Warrant. 7. 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 the securities acquirable upon exercise of this Warrant are subdivided into a greater number of securities (including pursuant to any stock dividend paid to all holders of such securities), or if such securities are combined into a lesser number of securities, then the purchase price for, and the number of shares issuable upon, exercise of this Warrant shall be proportionately and equitably adjusted. 8. Transfer to Comply with the Securities Act; No Registration Rights. 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 Warrant Exercise Agreement U.S Wireless Data, Inc. Page 4 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. The holder is not being granted any rights to have the Warrant or the Warrant Shares registered under the Act or any state securities laws. 9. 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. ATTN: Chief Financial Officer 805 Third Avenue, 8th Floor New York, NY 10022 Telecopier No.: (212) 750-7836 Telephone No.: (212) 750-7766 (ii) if to the Holder, to such address and facsimile number as appears in the records of the Company. A party shall give notice to the other in accordance with this Section to change the address, facsimile number or person to whom notices shall be given. 10. 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. 11. Governing Law. This Warrant shall be deemed to be a contract made under the laws of the State of Colorado 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. 12. 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 effective as of the date first set forth above (the date agreement was reached by the Warrant Exercise Agreement U.S Wireless Data, Inc. Page 5 parties that this Warrant be issued and the date as of which all consideration receivable by the Company from the Holder for issuance of this Warrant had been received). U.S. WIRELESS DATA, INC. By: -------------------------------------- Name: --------------------------------- Title: -------------------------------- Attest: - ------------------------------------- Name: -------------------------------- Title: ------------------------------- HOLDER Lippert/Heilshorn & Associates, Inc. By: -------------------------------------- Name: --------------------------------- Title: -------------------------------- Address: ----------------------------------------- ----------------------------------------- Facsimile: ------------------------------- Telephone: ------------------------------- Warrant Exercise Agreement U.S Wireless Data, Inc. Page 6 WARRANT EXERCISE AGREEMENT To: U.S. Wireless Data, Inc. Attn: Finance 805 Third Ave, 8th Floor New York, NY 10022 Dated: THE UNDERSIGNED Registered Holder, pursuant to the provisions set forth in the attached Common Stock Purchase Warrant dated ______________________, hereby subscribes for and purchases _________________ shares of Common Stock covered by such Warrant (the "Shares") and herewith elects to make: [Check the box below that applies.] ( ) a Cashless Exercise at the Exercise Price provided by such Warrant. ( ) full cash payment of $ for the Shares -------------------------------------- at the Exercise Price provided by such Warrant. THE UNDERSIGNED Registered Holder, in order to induce the Company to issue the Shares, represents that: 1. If I am a natural person, I am over eighteen (18) years of age. I am acquiring the Shares for investment only and that I have no intention to transfer, sell or otherwise dispose of such Shares, except as permitted pursuant to, and in compliance with, applicable federal and state securities laws. 2. I represent and warrant that I, either alone or through the assistance of advisors not affiliated with the Company, have such experience in business and financial matters that I am fully capable of evaluating the merits and risks of making an investment in the Company. 3. I am aware that the Company files reports with the United States Securities and Exchange Commission under the Securities Exchange Act of 1934 pursuant to which it reports current information concerning the Company, its business and financial condition. I have examined such reports to the full extent I felt necessary prior to determining to exercise this Warrant. I have also been given the opportunity to ask questions of, and have received satisfactory answers to, all such questions from the Company's authorized representatives. I am familiar with the business and financial condition of the Company and that ownership of the Shares is a speculative investment. 4. I acknowledge and understand that the Shares must be held indefinitely unless they are currently or subsequently registered under the Securities Act of 1933 (the "Securities Act") and applicable state securities laws, or exemptions from such registration requirements are available. I further acknowledge and understand that the Company is under no obligation to register the Shares or to make any exemption from registration available to me and that in the absence of registration or an available registration exemption, the Shares may not be transferred to any other person without the consent of the Company, which it may validly withhold if the Shares are not registered or exempt from registration. Warrant Exercise Agreement U.S Wireless Data, Inc. Page 7 5. I understand that the certificate evidencing the Shares may be imprinted with legends, and/or stop-transfer instructions may be lodged with the Company's transfer agent, prohibiting the transfer of the Shares unless they are registered, or registration is not required in the opinion of counsel satisfactory to the Company. I consent to the lodging of any such stop transfer instructions and/or such legends being imprinted on the certificates evidencing the Shares. I do not have any contract, agreement or arrangement with any persons to sell, transfer or grant participation of any sort to any third person with respect to any of the Shares. 6. I am aware of the terms and conditions of Rule 144 adopted by the United States Securities and Exchange Commission under the Securities Act, which permits limited public resale of securities acquired in a non-public offering, including the securities issued on exercise of the Warrant, subject to the satisfaction of certain conditions. Those conditions include, among other things: the availability of certain public information about the Company, the resale occurring not less than one year after the party has purchased and paid for the securities to be sold, the sale's being through a broker in an unsolicited "brokers' transaction," and the amount of securities being sold during any three-month period not exceeding specified limitations (generally, 1% of the total outstanding shares if the Company). I understand that unless the Shares are registered for public resale that the most likely method for resale will be pursuant to SEC Rule 144. I understand and acknowledge that the Company has not made any representations, guarantees or commitments to me about the availability of Rule 144 to allow sales of the Shares in the future. 7. I acknowledge that the number of shares of Common Stock subject to the Warrant is hereafter reduced by the number of shares of Common Stock represented by the Shares and request that the Company reissue another Warrant for any remaining shares (as applicable in the case where I have exercised the Warrant for less than the full number of shares issuable on exercise). 8. I understand that there may be tax implications of my exercise of my right to purchase shares of Common Stock pursuant to the exercise of this Warrant. I also understand that it is my obligation to confer with my own tax advisor with respect to such tax implications, and to the extent I felt it necessary, I have done so prior to exercising this Warrant. 9. I understand that an investment in the Shares is inherently risky and that I could lose all of the money I am investing in purchasing the Shares. I would not be required to change my lifestyle in the event I was to lose all of the money I am investing in purchasing the Shares. 10. I fully understand the implications of exercising this Warrant and have consulted with any and all persons I deemed appropriate, including my attorney and/or accountant, prior to determining to exercise the Warrant. These agreements shall bind and inure to the benefit of my heirs, legal representatives, successors and assigns. My current address of record is: -------------------------------------------------- -------------------------------------------------- Warrant Exercise Agreement U.S Wireless Data, Inc. Page 8 and my Social Security Number is: ----------------------------------------------- --------------------------------------------- (Signature) --------------------------------------------- (Print or type name) --------------------------------------------- --------------------------------------------- (Address) NOTICE: The signature on this Exercise Agreement must correspond with the name as written upon the face of the within Warrant, or upon the Assignment thereof if applicable, in every particular, without alteration, enlargement, or any change whatsoever, and must be Medallion guaranteed by a bank (other than a savings bank), or by a firm having membership on a registered national securities exchange. SIGNATURE GUARANTEE Authorized Signature: ----------------------------------------------------------- Name of Bank or Firm: ----------------------------------------------------------- Dated: -------------------------------------------------------------------------- EX-4.9 10 STOCK PURCHASE WARRANT--CORNELL CONSULTING(1) THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON THE EXERCISE HEREOF HAVE THIS 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 Dated March 28, 2000 Warrant No. 16 1. Issuance; Exercisability. For good and valuable consideration, the receipt of which is hereby acknowledged by U.S. Wireless Data, Inc., a Colorado corporation (the "Company"), Cornell Consulting International, Inc., or registered assigns (the "Holder") is hereby granted the right to purchase at any time commencing on March 28, 2000 and continuing until 5:00 P.M., Eastern Time, on March 27, 2005 (or the next regular business day thereafter if such day is not a regular business day) (the "Expiration Date"), Fifty Thousand (50,000) fully paid and nonassessable shares of the Company's Common Stock, no par value per share (the "Common Stock") at an exercise price of $5.344 per share (the "Exercise Price") subject to further adjustment as set forth in Section 7 hereof. 2. Exercise of Warrants; Cashless Exercise Option. This Warrant is exercisable in whole or in part for whole shares of Common Stock at the Exercise Price per share 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: (a) the average last sale price on the principal exchange on which the Common Stock is traded, for the five (5) business days immediately preceding the Company's receipt of the duly executed Notice of Exercise Form; or (b) if the Common Stock is not traded on an exchange, the average closing bid price of a share of Common Stock on the OTC Bulletin Board or equivalent trading market where the Common Stock is traded, for the five (5) business days immediately preceding the Company's receipt of the duly executed Notice of Exercise Form; or (c) if not publicly traded, an amount determined in good faith by the Company's Chief Financial Officer. 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. Warrant Agreement U.S Wireless Data, Inc. Page 2 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. Representations of Holder. In connection with the issuance of this Warrant, Holder represents and warrants to the Company that: a) Holder is acquiring the Warrant (and if applicable the Warrant Shares) for investment only and has no intention to transfer, sell or otherwise dispose of such Warrant, except as permitted pursuant to, and in compliance with, applicable federal and state securities laws. b) Holder, either alone or through the assistance of advisors not affiliated with the Company, has such experience in business and financial matters that Holder is fully capable of evaluating the merits and risks of making an investment in the Company. c) Holder is aware that the Company files reports with the United States Securities and Exchange Commission under the Securities Exchange Act of 1934 pursuant to which it reports current information concerning the Company, its business and financial condition. Holder has examined such reports to the full extent necessary prior to determining to accept this Warrant. Holder also has been given the opportunity to ask questions of, and has received satisfactory answers to, all such questions from the Company's authorized representatives. Holder is familiar with the business and financial condition of the Company and that ownership of the Warrant is a speculative investment. d) Holder acknowledges and understands that the Warrant and the underlying Warrant Shares cannot be transferred unless they are currently or subsequently registered under the Securities Act of 1933 (the "Securities Act") and applicable state securities laws, or exemptions from such registration requirements are available. Holder further acknowledges and understands that the Company is under no obligation to register the Warrant or the Warrant Shares to make any exemption from registration available and that in the absence of registration or an available registration exemption, the Warrant and the Warrant Shares may not be transferred to any other person without the consent of the Company, which it may validly withhold if the Warrant and the Warrant Shares are not registered or exempt from registration. e) Holder understands that the certificate evidencing the Warrant and the Warrant Shares may be imprinted with legends, and/or stop-transfer instructions may be lodged with the Company's transfer agent, prohibiting the transfer of the Warrant and the Warrant Shares unless they are registered, or registration is not required in the opinion of counsel satisfactory to the Company. Holder consents to the lodging of any such stop transfer instructions and/or such legends being imprinted on the certificates evidencing the Warrant and the Warrant Shares. Holder does not have any contract, agreement or arrangement with any person to sell, transfer or grant participation of any sort with respect to any of the Warrant or the Warrant Shares. f) Holder is aware of the terms and conditions of Rule 144 adopted by the United States Securities and Exchange Commission under the Securities Act, which permits limited public resale of securities acquired in a non-public offering, including the securities issued on exercise of the Warrant, subject to the satisfaction of certain conditions. Those conditions include, among other things: the availability of certain public information about the Company, the resale occurring not less than one year after the party has purchased and paid Warrant Agreement U.S Wireless Data, Inc. Page 3 for the securities to be sold, the sale's being through a broker in an unsolicited "brokers' transaction," and the amount of securities being sold during any three-month period not exceeding specified limitations (generally, 1% of the total outstanding shares if the Company). Holder understands that unless the Warrant and the Warrant Shares are registered for public resale that the most likely method for resale of the Warrant Shares will be pursuant to SEC Rule 144. Holder understands and acknowledges that the Company has not made any representations, guarantees or commitments about the availability of Rule 144 to allow sales of the Warrant or the Warrant Shares in the future. g) Holder understands that there may be tax implications of the acceptance of this Warrant and/or an exercise of the right to purchase shares of Common Stock pursuant to the exercise of this Warrant. Holder also understands that it is Holder's obligation to confer with its tax advisor with respect to such tax implications, and to the extent Holder felt necessary, has done so prior to accepting or exercising the Warrant. h) Holder understands that an investment in the Warrant is inherently risky and could result in the loss of all money invested in purchasing the Warrant and/or the Warrant Shares. Holder would not be required to change lifestyle in the event of a loss of all of the money invested in purchasing the Warrant or the Warrant Shares. i) Holder fully understands the implications of accepting the Warrant and (if applicable) determining to exercise the Warrant, and has consulted with any and all persons it deemed appropriate, including its attorney and/or accountant, prior to determining to accept or exercise this Warrant. 7. 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 the securities acquirable upon exercise of this Warrant are subdivided into a greater number of securities (including pursuant to any stock dividend paid to all holders of such securities), or if such securities are combined into a lesser number of securities, then the purchase price for, and the number of shares issuable upon, exercise of this Warrant shall be proportionately and equitably adjusted. 8. Transfer to Comply with the Securities Act; No Registration Rights. 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. The holder is not being granted any rights to have the Warrant or the Warrant Shares registered under the Act or any state securities laws. 9. 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: Warrant Agreement U.S Wireless Data, Inc. Page 4 (i) if the to Company, to: U.S. Wireless Data, Inc. ATTN: Chief Financial Officer 805 Third Avenue, 8th Floor New York, NY 10022 Telecopier No.: (212) 750-7836 Telephone No.: (212) 750-7766 (ii) if to the Holder, to such address and facsimile number as appears in the records of the Company. A party shall give notice to the other in accordance with this Section to change the address, facsimile number or person to whom notices shall be given. 10. 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. 11. Governing Law. This Warrant shall be deemed to be a contract made under the laws of the State of Colorado 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. 12. 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 effective as of the date first set forth above (the date agreement was reached by the parties that this Warrant be issued and the date as of which all consideration receivable by the Company from the Holder for issuance of this Warrant had been received). U.S. WIRELESS DATA, INC. By: -------------------------------------- Name: --------------------------------- Title: -------------------------------- Attest: - ------------------------------------- Name: -------------------------------- Title: ------------------------------- Warrant Agreement U.S Wireless Data, Inc. Page 5 HOLDER Cornell Consulting International, Inc. By: -------------------------------------- Name: --------------------------------- Title: -------------------------------- Address: ----------------------------------------- ----------------------------------------- Facsimile: ------------------------------- Telephone: ------------------------------- Warrant Exercise Agreement U.S Wireless Data, Inc. Page 6 WARRANT EXERCISE AGREEMENT To: U.S. Wireless Data, Inc. Attn: Finance 805 Third Ave, 8th Floor New York, NY 10022 Dated: THE UNDERSIGNED Registered Holder, pursuant to the provisions set forth in the attached Common Stock Purchase Warrant dated ______________________, hereby subscribes for and purchases _________________ shares of Common Stock covered by such Warrant (the "Shares") and herewith elects to make: [Check the box below that applies.] ( ) a Cashless Exercise at the Exercise Price provided by such Warrant. ( ) full cash payment of $ for the Shares -------------------------------------- at the Exercise Price provided by such Warrant. THE UNDERSIGNED Registered Holder, in order to induce the Company to issue the Shares, represents that: 1. If I am a natural person, I am over eighteen (18) years of age. I am acquiring the Shares for investment only and that I have no intention to transfer, sell or otherwise dispose of such Shares, except as permitted pursuant to, and in compliance with, applicable federal and state securities laws. 2. I represent and warrant that I, either alone or through the assistance of advisors not affiliated with the Company, have such experience in business and financial matters that I am fully capable of evaluating the merits and risks of making an investment in the Company. 3. I am aware that the Company files reports with the United States Securities and Exchange Commission under the Securities Exchange Act of 1934 pursuant to which it reports current information concerning the Company, its business and financial condition. I have examined such reports to the full extent I felt necessary prior to determining to exercise this Warrant. I have also been given the opportunity to ask questions of, and have received satisfactory answers to, all such questions from the Company's authorized representatives. I am familiar with the business and financial condition of the Company and that ownership of the Shares is a speculative investment. 4. I acknowledge and understand that the Shares must be held indefinitely unless they are currently or subsequently registered under the Securities Act of 1933 (the "Securities Act") and applicable state securities laws, or exemptions from such registration requirements are available. I further acknowledge and understand that the Company is under no obligation to register the Shares or to make any exemption from registration available to me and that in the absence of registration or an available registration exemption, the Shares may not be transferred to any other person without the consent of the Company, which it may validly withhold if the Shares are not registered or exempt from registration. Warrant Exercise Agreement U.S Wireless Data, Inc. Page 7 5. I understand that the certificate evidencing the Shares may be imprinted with legends, and/or stop-transfer instructions may be lodged with the Company's transfer agent, prohibiting the transfer of the Shares unless they are registered, or registration is not required in the opinion of counsel satisfactory to the Company. I consent to the lodging of any such stop transfer instructions and/or such legends being imprinted on the certificates evidencing the Shares. I do not have any contract, agreement or arrangement with any persons to sell, transfer or grant participation of any sort to any third person with respect to any of the Shares. 6. I am aware of the terms and conditions of Rule 144 adopted by the United States Securities and Exchange Commission under the Securities Act, which permits limited public resale of securities acquired in a non-public offering, including the securities issued on exercise of the Warrant, subject to the satisfaction of certain conditions. Those conditions include, among other things: the availability of certain public information about the Company, the resale occurring not less than one year after the party has purchased and paid for the securities to be sold, the sale's being through a broker in an unsolicited "brokers' transaction," and the amount of securities being sold during any three-month period not exceeding specified limitations (generally, 1% of the total outstanding shares if the Company). I understand that unless the Shares are registered for public resale that the most likely method for resale will be pursuant to SEC Rule 144. I understand and acknowledge that the Company has not made any representations, guarantees or commitments to me about the availability of Rule 144 to allow sales of the Shares in the future. 7. I acknowledge that the number of shares of Common Stock subject to the Warrant is hereafter reduced by the number of shares of Common Stock represented by the Shares and request that the Company reissue another Warrant for any remaining shares (as applicable in the case where I have exercised the Warrant for less than the full number of shares issuable on exercise). 8. I understand that there may be tax implications of my exercise of my right to purchase shares of Common Stock pursuant to the exercise of this Warrant. I also understand that it is my obligation to confer with my own tax advisor with respect to such tax implications, and to the extent I felt it necessary, I have done so prior to exercising this Warrant. 9. I understand that an investment in the Shares is inherently risky and that I could lose all of the money I am investing in purchasing the Shares. I would not be required to change my lifestyle in the event I was to lose all of the money I am investing in purchasing the Shares. 10. I fully understand the implications of exercising this Warrant and have consulted with any and all persons I deemed appropriate, including my attorney and/or accountant, prior to determining to exercise the Warrant. These agreements shall bind and inure to the benefit of my heirs, legal representatives, successors and assigns. My current address of record is: -------------------------------------------------- -------------------------------------------------- Warrant Exercise Agreement U.S Wireless Data, Inc. Page 8 and my Social Security Number is: ----------------------------------------------- --------------------------------------------- (Signature) --------------------------------------------- (Print or type name) --------------------------------------------- --------------------------------------------- (Address) NOTICE: The signature on this Exercise Agreement must correspond with the name as written upon the face of the within Warrant, or upon the Assignment thereof if applicable, in every particular, without alteration, enlargement, or any change whatsoever, and must be Medallion guaranteed by a bank (other than a savings bank), or by a firm having membership on a registered national securities exchange. SIGNATURE GUARANTEE Authorized Signature: ----------------------------------------------------------- Name of Bank or Firm: ----------------------------------------------------------- Dated: -------------------------------------------------------------------------- EX-4.10 11 STOCK PURCHASE WARRANT--CORNELL CONSULTING(2) THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON THE EXERCISE HEREOF HAVE THIS 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 Dated May 4, 2000 1. Issuance; Exercisability. For good and valuable consideration, the receipt of which is hereby acknowledged by U.S. Wireless Data, Inc., a Colorado corporation (the "Company"), Cornell Consulting International, Inc., or registered assigns (the "Holder") is hereby granted the right to purchase at any time commencing on May 4, 2000 and continuing until 5:00 P.M., Eastern Time, on May 3, 2005 (or the next regular business day thereafter if such day is not a regular business day) (the "Expiration Date"), Twenty-Five Thousand (25,000) fully paid and nonassessable shares of the Company's Common Stock, no par value per share (the "Common Stock") at an exercise price of $3.1875 per share (the "Exercise Price") subject to further adjustment as set forth in Section 7 hereof. 2. Exercise of Warrants; Cashless Exercise Option. This Warrant is exercisable in whole or in part for whole shares of Common Stock at the Exercise Price per share 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: (a) the average last sale price on the principal exchange on which the Common Stock is traded, for the five (5) business days immediately preceding the Company's receipt of the duly executed Notice of Exercise Form; or (b) if the Common Stock is not traded on an exchange, the average closing bid price of a share of Common Stock on the OTC Bulletin Board or equivalent trading market where the Common Stock is traded, for the five (5) business days immediately preceding the Company's receipt of the duly executed Notice of Exercise Form; or (c) if not publicly traded, an amount determined in good faith by the Company's Chief Financial Officer. 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. Representations of Holder. In connection with the issuance of this Warrant, Holder represents and warrants to the Company that: a) Holder is acquiring the Warrant (and if applicable the Warrant Shares) for investment only and has no intention to transfer, sell or otherwise dispose of such Warrant, except as permitted pursuant to, and in compliance with, applicable federal and state securities laws. b) Holder, either alone or through the assistance of advisors not affiliated with the Company, has such experience in business and financial matters that Holder is fully capable of evaluating the merits and risks of making an investment in the Company. c) Holder is aware that the Company files reports with the United States Securities and Exchange Commission under the Securities Exchange Act of 1934 pursuant to which it reports current information concerning the Company, its business and financial condition. Holder has examined such reports to the full extent necessary prior to determining to accept this Warrant. Holder also has been given the opportunity to ask questions of, and has received satisfactory answers to, all such questions from the Company's authorized representatives. Holder is familiar with the business and financial condition of the Company and that ownership of the Warrant is a speculative investment. d) Holder acknowledges and understands that the Warrant and the underlying Warrant Shares cannot be transferred unless they are currently or subsequently registered under the Securities Act of 1933 (the "Securities Act") and applicable state securities laws, or exemptions from such registration requirements are available. Holder further acknowledges and understands that the Company is under no obligation to register the Warrant or the Warrant Shares to make any exemption from registration available and that in the absence of registration or an available registration exemption, the Warrant and the Warrant Shares may not be transferred to any other person without the consent of the Company, which it may validly withhold if the Warrant and the Warrant Shares are not registered or exempt from registration. e) Holder understands that the certificate evidencing the Warrant and the Warrant Shares may be imprinted with legends, and/or stop-transfer instructions may be lodged with the Company's transfer agent, prohibiting the transfer of the Warrant and the Warrant Shares unless they are registered, or registration is not required in the opinion of counsel satisfactory to the Company. Holder consents to the lodging of any such stop transfer instructions and/or such legends being imprinted on the certificates evidencing the Warrant and the Warrant Shares. Holder does not have any contract, agreement or arrangement with any person to sell, transfer or grant participation of any sort with respect to any of the Warrant or the Warrant Shares. f) Holder is aware of the terms and conditions of Rule 144 adopted by the United States Securities and Exchange Commission under the Securities Act, which permits limited public resale of securities acquired in a non-public offering, including the securities issued on exercise of the Warrant, subject to the satisfaction of certain conditions. Those conditions include, among other things: the availability of certain public information about the Company, the resale occurring not less than one year after the party has purchased and paid for the securities to be sold, the sale's being through a broker in an unsolicited "brokers' transaction," and the amount of securities being sold during any three-month period not exceeding specified limitations (generally, 1% of the total outstanding shares if the Company). Holder understands that unless the Warrant and the Warrant Shares are registered for public resale that the most likely method for resale of the Warrant Shares will be pursuant to SEC Rule 144. Holder understands and acknowledges that the Company has not made any representations, guarantees or commitments about the availability of Rule 144 to allow sales of the Warrant or the Warrant Shares in the future. 2 g) Holder understands that there may be tax implications of the acceptance of this Warrant and/or an exercise of the right to purchase shares of Common Stock pursuant to the exercise of this Warrant. Holder also understands that it is Holder's obligation to confer with its tax advisor with respect to such tax implications, and to the extent Holder felt necessary, has done so prior to accepting or exercising the Warrant. h) Holder understands that an investment in the Warrant is inherently risky and could result in the loss of all money invested in purchasing the Warrant and/or the Warrant Shares. Holder would not be required to change lifestyle in the event of a loss of all of the money invested in purchasing the Warrant or the Warrant Shares. i) Holder fully understands the implications of accepting the Warrant and (if applicable) determining to exercise the Warrant, and has consulted with any and all persons it deemed appropriate, including its attorney and/or accountant, prior to determining to accept or exercise this Warrant. 7. 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 the securities acquirable upon exercise of this Warrant are subdivided into a greater number of securities (including pursuant to any stock dividend paid to all holders of such securities), or if such securities are combined into a lesser number of securities, then the purchase price for, and the number of shares issuable upon, exercise of this Warrant shall be proportionately and equitably adjusted. 8. Transfer to Comply with the Securities Act; No Registration Rights. 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. The holder is not being granted any rights to have the Warrant or the Warrant Shares registered under the Act or any state securities laws. 9. 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: 3 (i) if the to Company, to: U.S. Wireless Data, Inc. ATTN: Chief Financial Officer 805 Third Avenue, 8th Floor New York, NY 10022 Telecopier No.: (212) 750-7836 Telephone No.: (212) 750-7766 (ii) if to the Holder, to such address and facsimile number as appears in the records of the Company. A party shall give notice to the other in accordance with this Section to change the address, facsimile number or person to whom notices shall be given. 10. 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. 11. Governing Law. This Warrant shall be deemed to be a contract made under the laws of the State of Colorado 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. 12. 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 effective as of the date first set forth above (the date agreement was reached by the parties that this Warrant be issued and the date as of which all consideration receivable by the Company from the Holder for issuance of this Warrant had been received). U.S. WIRELESS DATA, INC. By: ----------------------------------- Name: ------------------------------ Title: ----------------------------- Attest: Name: --------------------------------- Title: -------------------------------- HOLDER Cornell Consulting International, Inc. By: ----------------------------------- Name: ------------------------------ Title: ----------------------------- Address: ------------------------------ -------------------------------------- Facsimile: ---------------------------- Telephone: ---------------------------- 4 WARRANT EXERCISE AGREEMENT To: U.S. Wireless Data, Inc. Attn: Finance 805 Third Ave, 8th Floor New York, NY 10022 Dated: THE UNDERSIGNED Registered Holder, pursuant to the provisions set forth in the attached Common Stock Purchase Warrant dated ______________________, hereby subscribes for and purchases _________________ shares of Common Stock covered by such Warrant (the "Shares") and herewith elects to make: [Check the box below that applies.] ( ) a Cashless Exercise at the Exercise Price provided by such Warrant. ( ) full cash payment of $ for the Shares -------------------------------------- at the Exercise Price provided by such Warrant. THE UNDERSIGNED Registered Holder, in order to induce the Company to issue the Shares, represents that: 1. If I am a natural person, I am over eighteen (18) years of age. I am acquiring the Shares for investment only and that I have no intention to transfer, sell or otherwise dispose of such Shares, except as permitted pursuant to, and in compliance with, applicable federal and state securities laws. 2. I represent and warrant that I, either alone or through the assistance of advisors not affiliated with the Company, have such experience in business and financial matters that I am fully capable of evaluating the merits and risks of making an investment in the Company. 3. I am aware that the Company files reports with the United States Securities and Exchange Commission under the Securities Exchange Act of 1934 pursuant to which it reports current information concerning the Company, its business and financial condition. I have examined such reports to the full extent I felt necessary prior to determining to exercise this Warrant. I have also been given the opportunity to ask questions of, and have received satisfactory answers to, all such questions from the Company's authorized representatives. I am familiar with the business and financial condition of the Company and that ownership of the Shares is a speculative investment. 4. I acknowledge and understand that the Shares must be held indefinitely unless they are currently or subsequently registered under the Securities Act of 1933 (the "Securities Act") and applicable state securities laws, or exemptions from such registration requirements are available. I further acknowledge and understand that the Company is under no obligation to register the Shares or to make any exemption from registration available to me and that in the absence of registration or an available registration exemption, the Shares may not be transferred to any other person without the consent of the Company, which it may validly withhold if the Shares are not registered or exempt from registration. 5. I understand that the certificate evidencing the Shares may be imprinted with legends, and/or stop-transfer instructions may be lodged with the Company's transfer agent, prohibiting the transfer of the Shares unless they are registered, or registration is not required in the opinion of counsel satisfactory to the Company. I consent to the lodging of any such stop transfer instructions and/or such legends being imprinted on the certificates evidencing the Shares. I do not have any contract, agreement or arrangement with any persons to sell, transfer or grant participation of any sort to any third person with respect to any of the Shares. 6. I am aware of the terms and conditions of Rule 144 adopted by the United States Securities and Exchange Commission under the Securities Act, which permits limited public resale of securities acquired in a non-public offering, including the securities issued on exercise of the Warrant, subject to the satisfaction of certain conditions. Those conditions include, among other things: the availability of certain public information about the Company, the resale occurring not less than one year after the party has purchased and paid for the securities to be sold, the sale's being through a broker in an unsolicited "brokers' transaction," and the amount of securities being sold during any three-month period not exceeding specified limitations (generally, 1% of the total outstanding shares if the Company). I understand that unless the Shares are registered for public resale that the most likely method for resale will be pursuant to SEC Rule 144. I understand and acknowledge that the Company has not made any representations, guarantees or commitments to me about the availability of Rule 144 to allow sales of the Shares in the future. 7. I acknowledge that the number of shares of Common Stock subject to the Warrant is hereafter reduced by the number of shares of Common Stock represented by the Shares and request that the Company reissue another Warrant for any remaining shares (as applicable in the case where I have exercised the Warrant for less than the full number of shares issuable on exercise). 8. I understand that there may be tax implications of my exercise of my right to purchase shares of Common Stock pursuant to the exercise of this Warrant. I also understand that it is my obligation to confer with my own tax advisor with respect to such tax implications, and to the extent I felt it necessary, I have done so prior to exercising this Warrant. 9. I understand that an investment in the Shares is inherently risky and that I could lose all of the money I am investing in purchasing the Shares. I would not be required to change my lifestyle in the event I was to lose all of the money I am investing in purchasing the Shares. 10. I fully understand the implications of exercising this Warrant and have consulted with any and all persons I deemed appropriate, including my attorney and/or accountant, prior to determining to exercise the Warrant. These agreements shall bind and inure to the benefit of my heirs, legal representatives, successors and assigns. My current address of record is: -------------------------------------------------- -------------------------------------------------- and my Social Security Number is: ----------------------------------------------- --------------------------------------------- (Signature) --------------------------------------------- (Print or type name) --------------------------------------------- --------------------------------------------- (Address) NOTICE: The signature on this Exercise Agreement must correspond with the name as written upon the face of the within Warrant, or upon the Assignment thereof if applicable, in every particular, without alteration, enlargement, or any change whatsoever, and must be Medallion guaranteed by a bank (other than a savings bank), or by a firm having membership on a registered national securities exchange. SIGNATURE GUARANTEE Authorized Signature: ----------------------------------------------------------- Name of Bank or Firm: ----------------------------------------------------------- Dated: -------------------------------------------------------------------------- EX-10.3 12 REDEMPTION AGREEMENT--CUTTYHUNK FUND PURCHASE AGREEMENT U.S. Wireless Data, Inc. (the "Company") and The Cuttyhunk Fund Limited ("Cuttyhunk") hereby agree as follows: (1) Cuttyhunk represents and warrants to the Company that Cuttyhunk is the record and beneficial owner of 90,941 shares of the Company's Series B Convertible Preferred Stock (the "Securities"). (2) Cuttyhunk agrees to sell the Securities to the Company, and the Company agrees to purchase such securities for $140,000 and warrants in the form attached as Annex I hereto to purchase 10,000 shares of the Company's Common Stock (the "Purchase Price"). (3) Within three business days of the date of this Agreement, Cuttyhunk shall deliver to the Company by federal express at its address set forth in Section 6 below certificates representing the Securities, duly endorsed for transfer and free and clear of all Liens (as defined below). Within two business days of receipt of such Securities duly endorsed, the Company shall deposit the cash portion of the Purchase Price and the executed warrants in federal express to the address set forth in Section 6 below. (4) Cuttyhunk represents and warrants to the Company, and by delivering the Securities to the Company at the closing shall be deemed to represent and warrant to the Company as of the closing date, that: (a) Cuttyhunk has good and valid title to the Securities, free and clear of all liens, encumbrances, equities, claims, proxies or other voting rights ("Liens"); and, upon delivery of such Securities and the consummation of the sale pursuant hereto, the Company will receive good and valid title to such Securities, free and clear of all Liens. (b) All consents, approvals, authorizations and orders necessary for the execution, delivery and performance by Cuttyhunk of this Agreement have been obtained; and Cuttyhunk has full right, power and authority to execute, deliver and perform this Agreement; and this Agreement is a valid and binding obligation of Cuttyhunk, enforceable against Cuttyhunk in accordance with its terms. (c) Upon receipt of the Purchase Price, Cuttyhunk will have no claims against the Company with respect to the Securities or any convertible debentures and the related agreements, including without limitation, any claims as to registration rights (including a claim that the Company has been late in registering any securities, including common stock underlying convertible debentures) or any interest or penalties (whether related to the Securities or convertible debentures). (5) Each party, for itself and on behalf of all direct and indirect partners, officers, directors, employees, affiliates (both persons and entities), representatives, agents, representatives, servants, trustees, beneficiaries, predecessors in interest, successors in interest, assigns, nominees and insurers (collectively, the "Releasing Parties"), shall be deemed to have released and forever discharged the other party and its officers, directors, employees, affiliates (both persons and entities), agents, representatives, servants, trustees, beneficiaries, processors in interest, successors in interest, assigns, nominees and insurer of each such party, of and from any and all claims, demands, actions and causes of actions, whether known or unknown, fixed or contingent, that any of the Releasing Parties may have had, may now have or may hereafter acquire with respect to any matters whatsoever arising under or in any way related to the purchase and sale of the Company's 6% convertible debentures due July 21, 2000 and Series B Preferred Stock. Notwithstanding anything to the contrary contained herein, the foregoing release shall not release either party from claims arising from a breach of this agreement or under the warrants delivered as part of the Purchase Price. Each of the parties hereto represents, warrants and covenants that it has not, and at the time this release becomes effective will not have, sold, assigned, transferred or otherwise conveyed to any other person or entity all or any portion of its rights, claims, demands, actions or causes of action herein released. Each of the parties hereto acknowledge that its is familiar with Section 1542 of the Civil Code of the State of California, which provides as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor." Each of the parities hereto hereby waives any and all rights and benefits that it now has or in the future may have under Section 1542 of the Civil Code (and under the comparable provisions of any other applicable law) and agrees and acknowledges that this Agreement contains a full and final release applying to unknown and unanticipated claims, injuries or damages arising out of the subject matter hereof, as well as to those now known or disclosed. (6) Notices. Each notice required hereunder shall be in writing, be delivered by hand, mail, telegram, or facsimile transmission, postage prepaid, and shall be deemed to have been duly given or made when received by the party to which it was sent at its following address (or at such other address as may hereafter be furnished by one party to the other in writing): To the Company: US Wireless Data, Inc. 805 Third Avenue - 8th Floor New York, NY 10022 Attn: Dean Leavitt To The Cuttyhunk Fund Limited c/o Optima Management 1285 Avenue of the Americas New York, New York 10019 Attn: Geoffrey Lewis 2 (7) Counterparts. This Agreement may be executed in any number of counterparts with the same effect as if all signing parties had signed the same document. All counterparts shall be construed together and constitute the same instrument. IN WITNESS WHEREOF, the parties have has signed this Agreement as of this _______ day of May 2000. THE CUTTYHUNK FUND LIMITED By: ---------------------------- Name: ---------------------- Title: ---------------------- U.S. WIRELESS DATA, INC. By: ---------------------------- Name: ---------------------- Title: ---------------------- 3 EX-10.4 13 REDEMPTION AGREEMENT--TONGA PARTNERS PURCHASE AGREEMENT U.S. Wireless Data, Inc. (the "Company") and Tonga Partners, L.P. ("Tonga") hereby agree as follows: (1) Tonga represents and warrants to the Company that Tonga is the record and beneficial owner of 136,411 shares of the Company's Series B Convertible Preferred Stock (the "Securities"). (2) Tonga agrees to sell the Securities to the Company, and the Company agrees to purchase such securities for $210,000 and warrants in the form attached as Annex I hereto to purchase 15,000 shares of the Company's Common Stock (the "Purchase Price"). (3) Within three business days of the date of this Agreement, Tonga shall deliver to the Company by federal express at its address set forth in Section 6 below certificates representing the Securities, duly endorsed for transfer and free and clear of all Liens (as defined below). Within two business days of receipt of such Securities duly endorsed, the Company shall deposit the cash portion of the Purchase Price and the executed warrants in federal express to the address set forth in Section 6 below. (4) Tonga represents and warrants to the Company, and by delivering the Securities to the Company at the closing shall be deemed to represent and warrant to the Company as of the closing date, that: (a) Tonga has good and valid title to the Securities, free and clear of all liens, encumbrances, equities, claims, proxies or other voting rights ("Liens"); and, upon delivery of such Securities and the consummation of the sale pursuant hereto, the Company will receive good and valid title to such Securities, free and clear of all Liens. (b) All consents, approvals, authorizations and orders necessary for the execution, delivery and performance by Tonga of this Agreement have been obtained; and Tonga has full right, power and authority to execute, deliver and perform this Agreement; and this Agreement is a valid and binding obligation of Tonga, enforceable against Tonga in accordance with its terms. (c) Upon receipt of the Purchase Price, Tonga will have no claims against the Company with respect to the Securities or any converitble debentures and the related agreements, including without limitation, any claims as to registration rights (including a claim that the Company has been late in registering any securities, including common stock underlying convertible debentures) or any interest or penalties (whether related to the Securities or convertible debentures). (5) Each party, for itself and on behalf of all direct and indirect partners, officers, directors, employees, affiliates (both persons and entities), representatives, agents, representatives, servants, trustees, beneficiaries, predecessors in interest, successors in interest, assigns, nominees and insurers (collectively, the "Releasing Parties"), shall be deemed to have released and forever discharged the other party and its officers, directors, employees, affiliates (both persons and entities), agents, representatives, servants, trustees, beneficiaries, processors in interest, successors in interest, assigns, nominees and insurer of each such party, of and from any and all claims, demands, actions and causes of actions, whether known or unknown, fixed or contingent, that any of the Releasing Parties may have had, may now have or may hereafter acquire with respect to any matters whatsoever arising under or in any way related to the purchase and sale of the Company's 6% convertible debentures due July 21, 2000 and Series B Preferred Stock. Notwithstanding anything to the contrary contained herein, the foregoing release shall not release either party from claims arising from a breach of this agreement or under the warrants delivered as part of the Purchase Price. Each of the parties hereto represents, warrants and covenants that it has not, and at the time this release becomes effective will not have, sold, assigned, transferred or otherwise conveyed to any other person or entity all or any portion of its rights, claims, demands, actions or causes of action herein released. Each of the parties hereto acknowledge that its is familiar with Section 1542 of the Civil Code of the State of California, which provides as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor." Each of the parities hereto hereby waives any and all rights and benefits that it now has or in the future may have under Section 1542 of the Civil Code (and under the comparable provisions of any other applicable law) and agrees and acknowledges that this Agreement contains a full and final release applying to unknown and unanticipated claims, injuries or damages arising out of the subject matter hereof, as well as to those now known or disclosed. (6) Notices. Each notice required hereunder shall be in writing, be delivered by hand, mail, telegram, or facsimile transmission, postage prepaid, and shall be deemed to have been duly given or made when received by the party to which it was sent at its following address (or at such other address as may hereafter be furnished by one party to the other in writing): To the Company: US Wireless Data, Inc. 805 Third Avenue - 8th Floor New York, NY 10022 Attn: Dean Leavitt To Tonga Partners, L.P.: c/o Cannell Capital Management 600 California Street San Francisco, California 94108 Attn: Linda Fung 3 (7) Counterparts. This Agreement may be executed in any number of counterparts with the same effect as if all signing parties had signed the same document. All counterparts shall be construed together and constitute the same instrument. IN WITNESS WHEREOF, the parties have has signed this Agreement as of this _______ day of May 2000. THE CUTTYHUNK FUND LIMITED By: ------------------------------ Name: ------------------------ Title: ------------------------ U.S. WIRELESS DATA, INC. By: ------------------------------ Name: ------------------------ Title: ------------------------ 4 EX-10.5 14 EMPLOYMENT AGREEMENT--CHARLES I. LEONE EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT is made this 11th day of February 2000 between U.S. Wireless Data, Inc., a Colorado corporation (the "Company"), and Charles I. Leone, an individual who presently resides at 11 Leon Court, Rockville Centre, New York 11570 (the "Executive"). WHEREAS, the parties hereto wish to enter into an employment agreement to document the employment of the Executive as Chief Financial Officer and Chief Operating Officer of the Company, and to set forth certain additional agreements between the Executive and the Company. NOW, THEREFORE, in consideration of the mutual covenants, agreements and representations contained herein, the parties hereto agree as follows: 1. TERM. The Company will employ the Executive, and the Executive will serve the Company, under the terms of this Agreement for a term of two (2) years, commencing on the date hereof, which term shall be subject to automatic renewal for successive one-year terms unless either party notifies the other party of its or his intent not to renew this Agreement (which non-renewal may be for any or no reason by either party) at least ninety (90) days prior to the end of the applicable term or renewal term. Notwithstanding the foregoing, the Executives employment hereunder may be earlier terminated, as provided in Section 4 hereof. The term of this Agreement, as in effect from time to time in accordance with the foregoing, shall be referred to herein as the Term. The period of time between the commencement and the termination of the Executives employment hereunder shall be referred to herein as the Employment Period. 2. EMPLOYMENT. a. EnhancedEnhancedPosition. The Company hereby employs the Executive for the Employment Period as its Chief Financial Officer and Chief Operating Officer on the terms and conditions set forth in this Agreement. b. Authority and Duties. The Executive shall perform all duties and functions and discharge all responsibilities as are customarily performed by the Chief Financial Officer of a publicly-held company and, in addition, all duties, functions and responsibilities specified by the Chief Executive Officer of the Company to the extent such specifications are consistent with the Executives position as Chief Financial Officer. The Executive shall report directly and be responsible to the Chief Executive Officer of the Company. During the Employment Period, the Executive shall devote his full business time, skill and efforts to the business of the Company and use his best efforts in performing services for the Company. The Executive shall work out of the Companys offices located in the New York City metropolitan area; provided, however, the Executive shall be required to travel in performing services under this Agreement and to provide services to the Company from time to time at other locations to the extent required by the Companys Board of Directors or Chief Executive Officer. Executive will not be required to relocate his residence outside of the New York City Metropolitan area. 3. COMPENSATION AND BENEFITS. a. Salary. During the Employment Period, the Company shall pay to the Executive, as compensation for the performance of his duties and obligations under this Agreement, a base salary at the rate of $175,000 per annum, payable in arrears in accordance with the normal payroll practices of the Company in effect from time to time. The present normal payroll practices of the Company provide for base salary payments not less frequently than twice each month. Such base salary shall be subject to annual review after each year worked with the first such review to take place during the first calendar quarter of 2001 with respect to services performed from the date of this Agreement through February 10, 2001. Each party agrees that there has been no promise or inducement to Executive that his base salary will be increased. b. Annual Bonus. During the Employment Period, the Executive shall have the opportunity to earn an annual bonus. The Company, through its Chief Executive Officer, acting on behalf of the Company, and the Executive, shall endeavor to mutually establish from time to time certain corporate and/or individual performance goals for Executive, it being understood and agreed by both parties to this Agreement that the Company and its officers shall not have any liability to the Executive for or in respect of a bonus or the failure to pay a bonus if the parties fail to agree on said goals. Without in any way limiting the discretion of the Chief Executive Officer of the Company to determine whether to pay or not pay bonuses and to determine the amount of any such bonuses, the Company has set a target bonus of $75,000 for Executive for each full year (February 11 of any year through February 10 of the immediately succeeding year) worked for the Company. Such bonuses, if and to the extent payable, will be paid after the expiration of each calendar year by the end of the first calendar quarter of the next year with the first such bonus payable after February 11, 2001. c. Equity Participation. The Companys Board of Directors has granted the Executive an option to purchase shares of common stock of the Company, which options will be subject to option agreements between the Company and the Executive to be entered into and, if applicable, the Companys qualified stock option plan. d. Other Benefits. During the Employment Period, the Executive shall be entitled to participate in all of the employee benefit plans, programs and arrangements of the Company in effect during the Employment Period which are generally available to senior executives of the Company, subject to and on a basis consistent with the terms, conditions and overall administration of such plans, programs and arrangements, as amended from time to time. In addition, during the Employment Period, the Executive shall be entitled to fringe benefits and perquisites comparable to those generally available to all other senior executives of the Company, as amended from time to time. e. Business Expenses. During the Employment Period, the Company shall reimburse the Executive for all documented reasonable business expenses incurred by the Executive in the performance of his duties under this Agreement, in accordance with the Companys policies as in effect from time to time. f. Indemnification. During the Employment Period, the Company shall indemnify Executive for losses suffered by Executive arising out of third party lawsuits relating directly to his employment by the Company to the extent such indemnification is permitted by applicable Colorado law and consistent with and in accordance with the Companys articles or certificate of incorporation and by-laws; provided, however, Executive shall promptly notify Company of any such lawsuit and cooperate with Company in connection therewith. 2 4. TERMINATION OF EMPLOYMENT. a. Termination for Cause. The Company may at any time terminate the Executives employment hereunder for cause. For purposes of this Agreement and subject to the Executives opportunity to cure to the extent provided in Section 4.c. hereof, the Company shall have cause to terminate the Executives employment hereunder if such termination shall be the result of: (1) Fraud in connection with the Executive's performance hereunder; (2) Dishonesty in connection with the Executive's performance hereunder except to the extent the Executive proves such dishonesty was both unintentional and covered only a matter which was de minimis; (3) The failure by the Executive to perform his duties hereunder or any other breach by Executive of this Agreement; (4) The failure by the Executive to follow the lawful directions of or policies established by the Board of Directors or the Chief Executive Officer of the Company unless the tasks are of the type which could not reasonably be required of Executive pursuant to this Agreement; (5) The conviction for, or plea of nolo contendere to, a charge of commission of a felony or crime involving moral turpitude; (6) The Executive's performance of any services under this Agreement while under the influence of drugs, alcohol or any controlled substance except, with respect to controlled substances only, to the extent Executive proves (a) taking any controlled substance was prescribed by a medical doctor to treat a medical problem, (b) such controlled substance was used only in accordance with said doctor's instructions, and (c) taking such controlled substance does not and did not adversely affect Executive's job performance during more than a de minimis period of time; or (7) The Executive acting in a manner which damages or could reasonably be expected to damage the business or reputation of the Company. The parties agree that each of the foregoing breaches, events, crimes, behaviors, acts, inactions or occurrences constitutes independent grounds for "cause" and the failure of any breach, event, crime, behavior, act, inaction or occurrence to constitute "cause" under any paragraph of this Section 4.a. shall not prevent that same breach, event, crime, behavior, act, inaction or occurrence from constituting "cause" under a different paragraph of this Section 4.a. 3 b. Termination for Good Reason. The Executive shall have the right at any time to terminate his employment with the Company and for any reason upon twenty (20) days prior written notice. For purposes of this Agreement and subject to the Companys opportunity to cure as provided in Section 4.c. hereof, the Executive shall have good reason to terminate his employment hereunder only if such termination shall be the result of: (1) A breach by the Company of the compensation and benefits provisions set forth in Section 3 hereof; or (2) A material breach by the Company of any other material term of this Agreement. c. Notice and Opportunity to Cure. It shall be a condition precedent to the Companys right to terminate the Executives employment for cause and the Executives right to terminate his employment for good reason that (1) the party seeking the termination shall first have given the other party written notice stating with reasonable specificity the reason for the termination (breach) and (2) if such breach is susceptible of cure or remedy, a period of ten (10) days from and after the giving of such notice shall have elapsed without the breaching party having effectively cured or remedied such breach during such 10-day period, unless such breach cannot be cured or remedied within ten (10) days, in which case the period for remedy or cure shall be extended for a reasonable time (not to exceed an additional ten (10) days) provided the breaching party has made and continues to make a diligent effort to effect such remedy or cure. Notwithstanding anything contained in this Agreement, the parties agree that any breach, event, crime, behavior, action, inaction or occurrence constituting cause (or which would constitute cause after the giving of notice) under Section 4.a.(1), (2), (5), (6) or (7) shall not under any circumstances be susceptible or capable of cure or remedy under this Section 4.c. d. Termination Upon Death or Permanent and Total Disability. The Employment Period shall automatically without further action be terminated by the death of the Executive. The Employment Period may be terminated by the Company at any time if the Executive shall be rendered incapable of performing his duties to the Company at the same level by reason of any medically determined physical or mental impairment that (i) can reasonably be expected to result in death or (ii) can reasonably be expected to last or has lasted for a period of three (3) or more consecutive months or for a period of four (4) or more months during any twelve (12) month period from the first date of the Executives impairment or absence or projected absence due to the disability (Disability). If the Employment Period is terminated by reason of a Disability of the Executive, the Company shall give thirty (30) days advance written notice to that effect to the Executive. 5. CONSEQUENCES OF TERMINATION. a. Termination Without Cause or for Good Reason. In the event of termination of the Executives employment hereunder by the Company without cause (other than upon death or Disability or non-renewal) or by the Executive for good reason (each as defined in Section 4 hereof), subject to Section 8 the Executive shall be entitled to only the following pay and benefits: 4 (1) Severance Pay. Executive shall receive severance payments for a 150-day period after the termination date (the "Severance Period") in regular payroll increment payments with each such payment to be equal to the base salary payments which would have been received under this Agreement on each such date if Executive's employment had not been terminated. Executive shall also receive, at the time bonuses are otherwise payable under this Agreement, for services performed during the year of termination, a prorated portion of the targeted annual bonus of $75,000, with the prorated bonus being equal to (a) $75,000 multiplied by the number of days worked during the year the Executive was terminated, divided by (b) the actual number of days in the year. The parties agree that for purposes of this Section 5.a.(1), any year shall commence on February 11 of the applicable year and terminate on February 10 of the immediately succeeding year; and (2) Benefits Continuation. Continuation for the Severance Period of coverage under the group medical care, disability and life insurance benefit plans or arrangements in which the Executive is participating at the time of termination; provided, however, that the Company's obligation to provide such coverages shall be terminated if the Executive obtains comparable substitute coverage from another employer at any time during the Severance Period. The Executive shall be entitled, at the expiration of the Severance Period, to elect continued medical coverage in accordance with Section 4980B of the Internal Revenue Code of 1986, as amended (or any successor provision thereto). b. Other Terminations. In the event of termination of the Executives employment hereunder for any reason other than (a) without cause or (b) for good reason (i.e., termination for death, Disability, with cause or without good reason), or if Executive makes the election provided for in Section 8, or if the Term is not renewed, the Executive shall be paid base salary only through the date of termination or non-renewal, and Executive shall not be entitled to any severance, bonus or other pay, or any benefits continuation rights, except for benefits continuation rights as may otherwise be provided (e.g., Cobra benefits) under the applicable benefit plans relating to the Executive; provided, however, that upon termination for death or Disability, the Company in its sole and absolute discretion, may consider granting to Executive or his estate a pro rated bonus of up to the amount provided in connection with a termination without cause (but Company shall have no obligation to grant any such bonus). 6. CONFIDENTIALITY. The Executive agrees that he shall not at any time during the Term hereof or at any time thereafter for any reason, in any fashion, form or manner, either directly or indirectly, divulge, disclose or communicate to any person, firm, corporation or other business entity, in any manner whatsoever, any confidential information or trade secrets concerning the business of the Company, including, without limiting the generality of the foregoing, the techniques, methods or systems of its operation or management, any information regarding its financial matters, or any other information concerning the business of the Company, its manner of operation, its plans or other data. The provisions of this Section 6 shall not apply to (i) information that is public knowledge other than as a result of disclosure by the Executive in breach of this Section 6; or (ii) information disclosed by Executive under a requirement of law or as directed by applicable legal authority having jurisdiction over the Executive. 7. INVENTIONS. The Executive is hereby retained in a capacity such that the Executives responsibilities include the making of technical and managerial contributions of value to the Company. The Executive hereby assigns to Company all right, title and interest in such contributions and inventions made or conceived by the Executive alone or jointly with others during the Employment Period which relate to the business of the Company. This assignment shall include, without limitation, (a) the right to file and prosecute patent applications on such inventions in any and all countries, (b) the patent applications filed and patents issuing thereon, and (c) the right to obtain copyright, trademark or trade name protection for any such work product. The Executive shall promptly and fully disclose all such contributions and 5 inventions to the Company and assist the Company in obtaining and protecting the rights therein (including patents thereon), in any and all countries; provided, however, that said contributions and inventions will be the property of Company, whether or not patented or registered for copyright, trademark or trade name protection, as the case may be. 8. NON-COMPETITION. The Executive agrees that he shall not during the Employment Period and, if applicable, the Severance Period, without the approval of the Board of Directors of the Company, directly or indirectly, alone or as partner, joint venturer, officer, director, employee, consultant, agent, independent contractor, stockholder or otherwise (other than as provided below), engage in any "Competitive Business" within the United States. For purposes of the foregoing, the term "Competitive Business" shall mean any business involved in development, marketing, sale or support of products or services (a) which can reasonably be expected to cause customers not to use the Company's or any of its subsidiaries' or affiliates' products or services or (b) which are similar to or competitive with products or services provided or supplied by the Company or any of its subsidiaries or affiliates. Notwithstanding the foregoing, the Executive shall not be prohibited during the non-competition period applicable above from acting as a passive investor by owning not more than one percent (1%) of the issued and outstanding capital stock of any publicly-held company. The Executive, at his option, may elect to eliminate the above restrictions in this Section 8 only during the Severance Period but any such election shall, without further action, be deemed an automatic and irrevocable relinquishment by Executive and termination of all of his rights to pay and benefits under Section 5.a. During the Employment Period and the Severance Period, if applicable, and for a period of one (1) year after the later of expiration of the Employment Period and the Severance Period, the Executive shall not, without the prior written consent of the Board of Directors of the Company, directly, or indirectly, alone or as partner, joint venturer, officer, director, employee, consultant, agent, independent contractor, stockholder or otherwise, (a) solicit or induce any employee, independent contractor or consultant of the Company or any current or future subsidiary or affiliate thereof to terminate or reduce his or her employment or engagement with the Company or any current or future subsidiary or affiliate thereof or (b) solicit the business of or any business from any current or future customer or supplier to the Company or any current or future subsidiary or affiliate thereof or induce any such customer or supplier not to do business with or reduce its business transactions with the Company or any subsidiary or affiliate thereof. 9. BREACH OF RESTRICTIVE COVENANTS; SEVERABILITY. The parties hereto intend all provisions of this Agreement to be enforced to the fullest extent permitted by law. The parties agree that Sections 6, 7 and 8 are reasonable and necessary to protect the Companys interests and properties and that a breach or violation of Sections 6, 7 or 8 hereof will result in immediate and irreparable injury and harm to the innocent party, who shall have, in addition to any and all remedies of law and other consequences under this Agreement, the right to an injunction, specific performance or other equitable relief to prevent the violation of the covenant or agreement hereunder. The parties agree that each of such covenants and agreements is separate, distinct and severable not only from the other of such covenants and agreements but also from the other and remaining provisions of this Agreement; that the unenforceability of any such covenant or agreement shall not affect the validity or enforceability of any other such covenants or agreements or any other provision or provisions of this Agreement. Should a 6 court of competent jurisdiction determine that the scope of any provision of this Agreement is too broad to be enforced as written, the parties intend that the court should reform the provision to such narrower scope as it determines to be enforceable. If, however, any provision of this Agreement is held to be illegal or unenforceable or by its severance, invalid or unenforceable under present or future law, such provision shall be fully severable from this Agreement, this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision were never a part hereof and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance. 10. NOTICE. For the purposes of this Agreement, notices, demands and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given within one business day of dispatch if sent by hand delivery or reputable overnight courier, addressed as follows: a. If to the Company, to: U.S. Wireless Data, Inc. 805 Third Avenue New York, New York 10022 Attention: Chief Executive Officer b. If to the Executive, to: Charles I. Leone 11 Leon Court Rockville Centre, NY 11570 or to such other respective addresses as the parties hereto shall designate to the other by like notice, provided that notice of a change of address shall be effective only upon receipt thereof. 11. JURISDICTION; VENUE; LEGAL FEES; ETC. a. Executive hereby irrevocably consents to the exclusive jurisdiction of any State or federal court located within the SOUTHERN DISTRICT of New York OR NEW YORK COUNTY in connection with any dispute or legal proceeding arising under this Agreement. Executive hereby waives any objection that it may have to the conduct of any action or proceeding in any such court based on improper venue or forum non conveniens, waives personal service of any and all process upon it, and consents that all service of process may be made by mail or courier service directed to it at the address designated for it set forth in this Agreement and that service so made shall be deemed to be completed upon the earlier of actual receipt or ten (10) days after the same shall have been posted. Each of the parties hereby waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any litigation directly or indirectly arising out of, under or in connection with this Agreement. Each of the parties certifies that no representative, agent or attorney of either party has represented, expressly or otherwise, that the other would not, in the event of litigation, seek to enforce the foregoing waivers. b. The prevailing party in any proceeding brought under this Agreement shall be reimbursed by the other party for all costs, fees and expenses, including without limitation, attorneys fees and expenses, incurred by such prevailing party in preparation for, in the investigation of, and/or otherwise directly or indirectly in connection with any such proceeding. 7 12. WAIVER OF BREACH. Any waiver of any breach of the Agreement shall not be construed to be a continuing waiver or consent to any subsequent breach on the part either of the Executive or of the Company. 13. NON-ASSIGNMENT; SUCCESSORS. Executive may not assign or in any way transfer his rights or delegate or in any way transfer his duties or obligations under this Agreement. This Agreement shall inure to the benefit of the successors and assigns of the Company and this Agreement shall inure to the benefit of and be binding upon the heirs, representatives, estate and successors of the Executive. 14. WITHHOLDING OF TAXES. All payments required to be made by the Company to the Executive under this Agreement shall be subject to the withholding of such amounts, if any, relating to tax, and other payroll deductions as the Company may reasonably determine it should withhold pursuant to any applicable law or regulation or as agreed to by Executive and Company. 15. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. 16. GOVERNING LAW. Except as set forth in Section 3.f., this Agreement shall be construed, interpreted and enforced in accordance with the laws of the State of New York, without giving effect to the conflict of law principles thereof. The parties have selected a New York choice of law for this Agreement because the Company is relocating its offices to New York. 17. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement by the Company and the Executive with respect to the subject matter hereof (except with respect to the stock options referred to in Section 3.c. which shall not be governed by this Agreement) and supersedes any and all prior agreements or understandings between the Executive and the Company with respect to the subject matter hereof, whether written or oral. This Agreement may be amended or modified only by a written instrument executed by the Executive and the Company. 18. CAPTIONS. Paragraph captions contained in this Agreement are inserted only as a matter of convenience and for reference and in no way define, limit or extend or describe the scope of this Agreement or the intent of any provision hereof. 19. LEGAL COUNSEL. Each party hereto has retained counsel in connection with the drafting and negotiation of this Agreement . Each party hereby waives any right, claim or defense he may have that any provision of this Agreement or that any provision thereof is unenforceable, illegal, invalid or unconscionable arising out of or relating to his failure to retain counsel in connection with this transaction. 8 20. AGREEMENT NOT TO BE CONSTRUED AGAINST DRAFTSPERSON. This Agreement shall be construed without giving effect or regard to any principle that a contract should be construed against its draftsperson. IN WITNESS WHEREOF, the parties have executed this Agreement as of February 11, 2000. U.S. WIRELESS DATA, INC. By: ---------------------------------- Name: Dean Leavitt Title: President -------------------------------- Charles I. Leone 9 EX-27 15 FINANCIAL DATA SCHEDULE
5 3-MOS JUN-30-2000 JAN-01-2000 MAR-31-2000 38,514,000 0 208,000 51,000 147,000 39,013,000 870,000 200,000 39,781,000 1,990,000 0 350,000 51,000 32,328,000 (5,062,000) 39,781,000 0 199,000 266,000 0 (65,000) 0 (135,000) (2,211,000) 0 (2,211,000) 0 0 0 (2,211,000) (1.89) (1.89)
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