REDEMPTION AGREEMENT
THIS REDEMPTION AGREEMENT, dated as of January 31, 2000 (this "Agreement"),
is made by and between U.S. Wireless Data, Inc., a Colorado corporation (the
"Company"), and Bold Street, LLC, a Cayman Islands limited liability company
(the "Holder").
RECITALS
A. The Company issued 1,500,000 shares of Series B Cumulative Convertible
Redeemable Preferred Stock, no par value, $1.00 (plus accrued dividends)
liquidation preference of the Company (the "Preferred Shares"), pursuant to that
certain Securities Purchase Agreement, dated as of April 30, 1999, between the
Holder and the Company (the "Securities Purchase Agreement"). Capitalized terms
not otherwise defined herein shall have the meanings ascribed to them in the
Securities Purchase Agreement.
B. The Preferred Shares are convertible into shares of Common Stock (the
"Conversion Shares") upon the terms and subject to the conditions contained in
the Certificate of Designation for the Preferred Shares.
C. The Company agreed to register the Conversion Shares and other
securities, including, without limitation, the shares issuable upon the exercise
of that certain Warrant, dated as of April 30, 1999, issued by the Company to
Holder (the "Original Warrant") with the Securities and Exchange Commission on
Form SB-2, pursuant to that certain Registration Rights Agreement, dated as of
April 30, 1999, between the Holder and the Company (the "Registration Rights
Agreement") and to pay a three percent (3%) per month penalty in the event that
such registration was not effective on or before July 29, 1999.
D. The penalty accrued as of the date hereof pursuant to the Registration
Rights Agreement equals the sum of $270,000 (the "Accrued Penalty").
E. The Escrow Agent (as defined in the Securities Purchase Agreement)
retained in a trust account the sum of $45,000 (the "Registration Hold Back
Amount") which was to be paid on behalf of the Company to its securities
attorneys, the firm of Ireland Stapleton, upon the effective date of the
registration of Conversion Shares, which amount has not been paid from said
trust account.
F. The Holder has agreed, pursuant to the terms hereof, to the redemption
by the Company of the Preferred Stock and in consideration therefor the Company
has agreed to issue additional warrants to the Holder and release the
Registration Hold Back Amount to or on behalf of the Holder.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the Company and the Holder hereby
agree as follows:
1. Redemption.
(a) On condition that the Company (and Ireland Stapleton) authorizes
the release of the Registration Hold Back Amount pursuant to paragraph 2 below
and in consideration therefor, the Holder hereby agrees that at any time on or
before March 31, 2000, the Company may redeem the Preferred Stock for an amount
(the "Redemption Amount") equal to (i) One Million Eight Hundred Seventy Five
Thousand Dollars $1,875,000 (125% of the Stated Value), plus accrued dividends
on the date of the Redemption is consummated (the "Redemption Date"), less (ii)
$43,500 of the Redemption Hold Back Amount paid pursuant to paragraph 2 below.
As additional consideration for Holder's conditional waiver of penalties
provided for in paragraph 1(b) below, upon the consummation of the redemption
(and as a condition thereto) the Company shall issue a warrant, in the form
attached hereto as Exhibit A (the "Redemption Warrant"), to purchase 150,000
shares of the Company's Common Stock, at an exercise price equal to the lesser
of the closing bid price (as reported by Bloomberg) of the Company's Common
Stock on (i) the date hereof or (ii) the business day immediately prior to the
Redemption Date.
(b) On the condition that the redemption of the Preferred Shares (the
"Redemption") is consummated pursuant to the terms hereof on or before March 31,
2000, Holder hereby agrees to waive the Accrued Penalty and other sums arising
from Company's failure to timely register the Conversion Shares. Time is of the
essence with respect to the consummation of the redemption of the preferred
Shares by March 31, 2000 as a condition to the foregoing waiver of Accrued
Penalties. If the Company fails to redeem the Preferred Stock on or before March
31, 2000, the Holder's waiver of the Accrued Penalty, all other sums arising
from the failure to register the Conversion Shares (including the further
accruing of penalties during the calendar months of February and March) shall be
payable in full by the Company, less $43,500, the Redemption Hold Back Amount
applied to penalties pursuant to paragraph 2 hereof.
(c) On the condition that the Company is not in default hereunder,
Holder agrees not to sell, transfer, assign, otherwise convert or dispose of or
encumber or hypothecate the Preferred Shares prior to March 31, 2000.
(d) The Company shall provide written notice to Holder at least two
(2) business days prior to the Redemption Date and shall wire the Redemption
Amount to the trust account of an attorney designated by Holder (within two (2)
business days after receipt of Company's Notice), who shall hold the Redemption
Amount in trust until it receives (i) the origins certificate for the Preferred
Shares, with duly executed stock powers from the Holder, (ii) an original of the
Redemption Warrant from the Company (iii) and all other documents (i.e. form
escrow instructions) such attorney may reasonably require to disburse the
Redemption Amount and the Redemption Warrant to the Holder and the certificate
for the Preferred Shares, with duly executed stock powers to the Company. All
notices shall be sent as set forth in the Securities Purchase Agreement.
2. Payment of Registration Hold Back Amount.
(a) Upon the full execution hereof, the Company (and by its
acknowledgment hereof, Ireland Stapleton Pryor Pascoe, P.C.) hereby authorizes
and instructs the Escrow Agent to release from its trust account to the Law
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Offices of Michael S. Rosenblum, the sum of One Thousand Five Hundred Dollars
($1,500), for legal fees incurred by Holder in connection with the documentation
of this Agreement.
(b) Upon the full execution hereof, the Company (and by its
acknowledgment hereof, Ireland Stapleton Pryor Pascoe, P.C.) hereby authorizes
and instructs the Escrow Agent to release from its trust account to Holder the
sum of $43,500 to be applied to penalties due pursuant to paragraph ___ of the
Registration Statement for the Company's failure to Register the Conversion
Shares on or before July 29, 1999. If the Preferred Shares are Redeemed pursuant
to paragraph 1 on or before March 31, 2000 hereof (time being of the essence),
all penalties which have accrued under the Registration Statement shall be
waived, and the $43,500 shall be applied to the redemption of the Conversion
Shares pursuant to paragraph 1(a) above.
3. Company's Representation and Warranties.
The Company hereby makes the following representations and warranties, each
of which representations and warranties is and shall be (i) true in all respects
as of the date of this Agreement, and (ii) shall survive the closing of the
transactions contemplated hereby:
(a) Concerning the Settlement Shares. The shares issuable upon the
exercise of the Redemption Warrant, at the time of such issuance will be duly
authorized and will be duly and validly issued, fully paid and non-assessable
and will not subject the holder thereof to personal liability by reason of being
such holder. There are no preemptive rights of any stockholder of the Company to
acquire said shares.
(b) Reporting Company Status. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Colorado and has the requisite corporate power to own its properties and to
carry on its business as now being conducted. The Company is duly qualified as a
foreign corporation to do business and is in good standing in each jurisdiction
where the nature of the business conducted or property owned by it makes such
qualification necessary, other than those jurisdictions in which the failure to
so qualify would not have a material adverse effect on the business, operations
or prospects or condition (financial or otherwise) of the Company and its
subsidiaries, taken as a whole. The Company has registered its Common Stock
pursuant to Section 12 of the 1934 Act, and the Common Stock is listed and
traded on the NASDAQ/Bulletin Board market. The Company has received no notice,
either oral or written, with respect to the continued eligibility of the Common
Stock for such listing, and the Company has maintained all requirements for the
continuation of such listing,
(c) Settlement Agreement. This Agreement and the Transactions
contemplated hereby, have been duly and validly authorized by the Company. This
Agreement has been duly executed and delivered by the Company and is a valid and
binding agreement of the Company, enforceable in accordance with its terms, and
subject, as to enforceability, to general principles of equity and to
bankruptcy, insolvency, moratorium, and other similar laws affecting the
enforcement of creditors' rights generally.
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(d) Non-contravention. The execution and delivery of this Agreement by
the Company, and the consummation by the Company of the other transactions
contemplated by this Agreement, do not and will not conflict with or result in a
breach by the Company of any of the terms or provisions of, or constitute a
default under (i) the articles of incorporation or by-laws of the Company, each
as currently in effect, (ii) any indenture, mortgage, deed of trust, or other
material agreement or instrument to which the Company is a party or by which it
or any of its properties or assets are bound, including any listing agreement
for the Common Stock (except as herein set forth), (iii) to its knowledge, any
existing applicable law, rule, or regulation or any applicable decree, judgment,
or order of any court, United States federal or state regulatory body,
administrative agency, or other governmental body having jurisdiction over the
Company or any of its properties or assets, or (iv) any listing agreement for
its Common Stock, except such conflict, breach or default which would not have a
material adverse effect on the transactions contemplated herein.
(e) Approvals. No authorization, approval or consent of any court,
governmental body, regulatory agency, self-regulatory organization, or stock
exchange or market or the stockholders of the Company is required to be obtained
by the Company for the payment of the Redemption Amount or the issuance of
Redemption Warrant as contemplated by this Agreement, except such
authorizations, approvals and consents that have been obtained.
(f) SEC Filings. None of the Company's SEC Reports contained, at the
time they were filed, any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements made therein in light of the circumstances under which they were
made, not misleading, except as corrected by an amended filing made prior to the
date hereof. As of the date of this Agreement, the Company is current with all
requisite forms, reports (and exhibits thereto) which it is required to file
with the SEC.
(g) Full Disclosure. There is no fact known to the Company (other than
general economic conditions known to the public generally or as disclosed in the
Company's SEC Reports), that has not been disclosed in writing to the Holder
that (i) would reasonably be expected to have a material adverse effect on the
business or financial condition of the Company or (ii) would reasonably be
expected to materially and adversely affect the ability of the Company to
perform its obligations pursuant to this Agreement.
(h) Absence of Litigation. Except for the Litigation and as set forth
in the Company's SEC Reports, there is no action, suit, proceeding, inquiry or
investigation before or by any court, public board or body pending or, to the
knowledge of the Company, threatened against or affecting the Company, wherein
an unfavorable decision, ruling or finding would have a material adverse effect
on the properties, business or financial condition, results of operation or
prospects of the Company and its subsidiaries, the transactions contemplated by
this Agreement, or which would adversely affect the validity or enforceability
of, or the authority or ability of the Company to perform its obligations under,
this Agreement.
(i) Absence of Events of Default. No Event of Default (or its
equivalent term), as defined in the respective agreement to which the Company is
a party, and no event which, with the giving of notice or the passage of time or
both, would become an Event of Default (or its equivalent term) (as so defined
in such agreement), has occurred and is continuing, which would have a material
adverse effect on the Company's financial condition or results of operations.
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4. Holder's Representations and Warranties.
Holder hereby makes the following representations and warranties, each of
which representations and warranties is and shall be (i) true in all respects as
of the date of this Agreement, and (ii) shall survive the closing of the
transactions contemplated hereby:
(a) Settlement Agreement. This Agreement has been duly and validly
authorized, executed and delivered on behalf of Holder and is a valid and
binding agreement of Holder enforceable in accordance with its terms, subject as
to enforceability to general principles of equity and to bankruptcy, insolvency,
moratorium and other similar laws affecting the enforcement of creditors' rights
generally.
(b) Non-contravention. The execution and delivery of this Agreement by
Holder and the consummation by Holder of the other transactions contemplated by
this Agreement, do not and will not conflict with or result in a breach by
Holder of any of the terms or provisions of, or constitute a default under (i)
the incorporation/formation documents of Holder, as currently in effect, (ii)
any indenture, mortgage, deed of trust, or other material agreement or
instrument to which Holder is a party or by which it or any of its properties or
assets are bound, or (iii) to its knowledge, any existing applicable law, rule,
or regulation or any applicable decree, judgment, or order of any court, United
Stated federal or state regulatory body, administrative agency, or other
governmental body having jurisdiction over the Holder or any of its properties
or assets, except such conflict, breach or default which would not have a
material adverse effect on the transactions contemplated herein.
(c) Liens. Holder has good and valid title to the Preferred Shares,
free and clear of all liens, encumbrances, equities, claims, proxies or other
voting rights ("Liens"); and, upon delivery of the Preferred Shares upon the
consummation of the redemption pursuant to the terms hereof, the Company will
receive good and valid title to the Preferred Shares, free and clear of all
Liens.
5. Releases.
(a) The Company acknowledges and agrees that it has requested the
Holder to enter into this Agreement to facilitate the equity financing of the
Company by a third party and that Holder has entered into this Agreement as an
accommodation to the Company. The Company is not aware of any claims, defenses
or offsets that excuse its performance under the Securities Purchase Agreement,
the Registration Rights Agreement, the Original Warrant or any other agreements
entered into in connection therewith (the "Convertible Documents") and to the
extent that any such claims, defenses or offsets exist it hereby irrevocably and
unconditionally waives them to the fullest extent permitted by the law. In
furtherance thereof and as a condition of Holder's entering into this Agreement
and except for the performance by the Holder of the provisions of this Agreement
and further except for the representations and warranties of the Holder
contained herein (which representations, warranties and indemnities shall
survive the consummation of this Agreement and as to which the parties shall
continue to be liable), the Company, for itself and on behalf of all direct and
indirect partners, officers, directors, employees, affiliates (both persons and
entities), representatives, agents, servants, trustees, beneficiaries,
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predecessors in interest, successors in interest, assigns, nominees and insurers
(collectively, the "Company Releasing Parties"), shall be deemed to have
released and forever discharged the Holder, and all direct and indirect
partners, officers, directors, employees, affiliates (both persons and
entities), agents, representatives (including investment advisors and managers)
servants, trustees, beneficiaries, predecessors in interest, successors in
interest, assigns, nominees and insurers of each such party, of and from any and
all claims, demands, actions and causes of action, whether known or unknown,
fixed or contingent, that any of the Company 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 (i) the Convertible Documents, and (ii) any act
which may constitute a defense or offset to its performance of the Convertible
Documents.
(b) Upon the consummation of the redemption by the Company pursuant to
the terms hereof on or before March 31, 2000 (time being of the essence) and
except for the performance by the Company of the provisions of this Agreement,
the Redemption Warrant issued in connection herewith, and further except for the
representations and warranties of the Holder contained herein (which
representations, warranties and indemnities shall survive the consummation of
this Agreement and as to which the parties shall continue to be liable), the
Holder, for itself and on behalf of all direct and indirect partners, officers,
directors, employees, affiliates (both persons and entities), representatives,
agents, servants, trustees, beneficiaries, predecessors in interest, successors
in interest, assigns, nominees and insurers (collectively, the "Holder Releasing
Parties"), shall be deemed to have released and forever discharged the Company,
and all direct and indirect partners, officers, directors, employees, affiliates
(both persons and entities), agents, representatives, servants, trustees,
beneficiaries, predecessors in interest, successors in interest, assigns,
nominees and insurers of each such party, of and from any and all claims,
demands, actions and causes of action, whether known or unknown, fixed or
contingent, that any of the Holder 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 Convertible Documents. Notwithstanding anything to the
contrary contained herein, the foregoing release shall not release the Company
from any claims, demands, expenses or losses by the Holder Releasing Parties (
or causes of action or remedies related thereto) arising from (i) the breach by
the Company of covenants and obligations contained in the Convertible Documents
which require it to file and maintain the effectiveness of a Registration
Statement for the shares issuable upon exercise of the Original Warrant, (ii)
any indemnity by the Company for the benefit of the Holder Releasing Parties
contained in the Conversion Documents, or (iii) any breach by the Company of the
Original Warrant. This release by the Holder Releasing Party shall take effect
only upon the consummation of the Redemption pursuant to paragraph 1 hereof, and
if the Redemption is not consummated on or before March 31, 2000 (time being of
the essence) this Release shall be null and void.
(c) Each of the parties hereto represents, warrants and covenants that
he/she/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 acknowledges that it is familiar with Section
1542 of the Civil Code of the State of California, which provides as follows:
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"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 parties 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.
Each party represents and warrants that it has relied wholly upon its own
judgment, belief and knowledge of the existence, nature, extent or duration of
any claim, demand, debt, damage, liability, account, reckoning, obligation,
cost, expense, cause of action, chosen action, right of indemnity, agreement or
promise that it may have against the released parties and that it has made full
investigations with respect to potential rights and claims released and that
such releasing party has not been influenced to any extent whatsoever in making
the releases contemplated by this agreement by any representation or statement
regarding any such matter. Each party further represents and warrants that it is
executing and delivering this Agreement and the releases contemplated hereunder
after having received full legal advice as to its rights hereunder and the legal
effect thereof from legal counsel of its own choosing. Notwithstanding the
above, this Agreement is not intended to and does not, release or extinguish the
rights of any of the parties to enforce this Agreement.
6. General Provisions.
(a) Entire Agreement. This Agreement and the documents referred
to herein constitute the entire understanding, arrangement and agreement
among the parties hereto or any of them with respect to the subject matter
hereof, and supersedes all prior agreements, arrangements, understandings,
negotiations and discussions with respect thereto among the parties hereto.
(b) Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns.
(c) Modifications in Writing. No provisions of this Agreement may
be amended, supplemented or waived except by a writing signed by the party
or parties to be bound thereby.
(d) Execution in Counterparts. This Agreement may be executed in
two or more counterparts, all of which taken together shall be considered
one and the same agreement and each of which shall be deemed an original.
(e) Severability. In case any provision of this Agreement shall
be held illegal, invalid or unenforceable, the legality, validity and
enforceability of the remaining provisions hereof shall not in any way be
affected or impaired thereby.
(f) Construction. This Agreement shall be governed by and
construed under the laws of the State of California. The parties
acknowledge that each party and its counsel have reviewed and revised this
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Agreement and that no rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall be employed
in the interpretation of this Agreement or any amendments or exhibits to it
or any document executed and delivered by either party in connection with
this Agreement. All captions in this Agreement are for reference only and
shall not be used in the interpretation of this Agreement or any related
document. All Exhibits attached hereto are hereby incorporated herein by
reference.
(g) Attorneys' Fees. In the event any dispute between the parties
to this Agreement should result in litigation or other proceedings, the
prevailing party shall be reimbursed by the non-prevailing party for all
reasonable costs and expenses, including, without limitation, reasonable
attorneys' fees, incurred by the prevailing party in connection with such
litigation or other proceeding and any appeal thereof. Such costs, expenses
and fees shall be included in and made a part of the judgment recovered by
the prevailing party, if any.
(h) Conflicting Terms. To the extent any of the terms herein
conflict with the terms of the Convertible Documents, the terms herein
shall prevail.
(i) Informed Consent. The parties admit, acknowledge and declare
that each has given mature and careful thought and consideration to the
making of this Agreement and to all of the obligations hereby undertaken
and the rights hereby extinguished or created; that this Agreement is
entered into voluntarily, after advice of counsel, free of undue influence,
coercion, duress, menace or fraud of any kind; that this Agreement and each
and every paragraph and every part hereof has been carefully read and
explained; and, that each fully and completely understands and is cognizant
of all of the terms and conditions in this Agreement.
IN WITNESS WHEREOF, the undersigned has signed this Agreement as of
this __ day of January 2000.
U.S. Wireless Data, Inc., a Colorado corporation
By:
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Bold Street, LLC, a Cayman Islands limited
liability company
By:
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AGREED TO AND APPROVED WITH
RESPECT TO THE REDEMPTION
HOLD BACK AMOUNT, ON THIS _____
DAY OF FEBRUARY, 2000, BY:
Ireland Stapleton Pryor Pascoe, Inc.
By:
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