SECURITIES PURCHASE AGREEMENT
THIS AGREEMENT made and entered into this 23rd day of May,
2001, by and between AB FINANCIAL SERVICES, INC., a Nevada limited liability
company (herein called "Buyer") and US DATA AUTHORITY, INC., a Florida
corporation (herein called "Seller"):
THIS AGREEMENT is made and entered into with reference to the
following:
RECITALS
A. Buyer and Seller are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the provisions of Regulation D ("Regulation D"), as promulgated by the United
States Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "Securities Act").
B. Seller desires to sell, and Buyer desires to purchase, upon
the terms and conditions of this Agreement, (i) 40,000,000 shares of Seller's
$.02 par value common stock (the "Common Stock") and (ii) warrants (the
"Warrants"), in the form attached hereto as Exhibit "A," to acquire an aggregate
of 30,000,000 shares of Common Stock. The shares of Common Stock issuable upon
exercise of or otherwise pursuant to the Warrants are referred to herein as the
"Warrant Shares." The Common Stock, the Warrants and the Warrant Shares are
sometimes collectively referred to herein as the "Securities."
C. Contemporaneous with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement in the form attached hereto as Exhibit "B" (the "Registration Rights
Agreement"), pursuant to which the Seller has agreed to provide certain
registration rights under the Securities Act and the rules and regulations
promulgated thereunder, and applicable state securities laws.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
Agreement for Purchase and Sale of Common Stock and Warrants
SECTION 1.1. Purchase and Sale of Common Stock and Warrants.
The issuance, sale and purchase of the Common Stock and the Warrants shall take
place in one or more separate closings, the first of which is hereinafter
referred to as the "First Closing" and the others of which are hereinafter
referred to as the "Other Closings."
(i) On the First Closing Date, the Seller shall issue and sell
to Buyer, and the Buyer agrees to purchase from the Seller, 12,000,000 shares of
Common Stock for $600,000 and $10,000 for the Warrants (the "First Purchase
Price").
(ii) On the other Closing Dates, the Seller shall from time to
time issue and sell to the Buyer and the Buyer shall from time to time purchase
from the Seller, up to
28,000,000 shares of Common Stock for up to $4,200,000 (the "Other Purchase
Prices" and, together with the First Purchase Price, the "Purchase Prices").
SECTION 1.2. Form of Payment. At each Closing the Buyer shall
pay the aggregate Purchase Price for the Common Stock and Warrants being
purchased by the Buyer at such Closing hereunder by wire transfer to the Seller,
in accordance with the Seller's written wiring instructions, against delivery of
the duly executed shares of Common Stock and Warrants and the Seller shall
deliver such Common Stock and Warrants against delivery of such Purchase Price.
SECTION 1.3. Closing Dates. The date and time of the issuance
and sale of the Common Stock and Warrants pursuant to this Agreement shall be
(i) in the case of the First Closing, 12:00 noon on May 24, 2001, (the "First
Closing Date") and (ii) in the case of the Other Closings, 12:00 noon on the
fifth (5th) trading day following notification by Buyer to Seller of such
Closing, but, in any event, not later than June 20, 2001, or, in such case, such
other time, as may be mutually agreed upon by the Seller and the Buyer.
All Securities will be acquired by Buyer for investment only
and not for the purpose of resale or with a view of the distribution of any
thereof, except that Buyer has the right to sell the Securities purchased by
Buyer to other investors in a private transaction and shall restrict the resale
of such Securities accordingly. Seller agrees, if required by Buyer, to execute
a customary investment letter to said effect and further agrees that each
certificate representing the Securities issued pursuant to this Agreement shall
bear on its face a legend in substantially the, following form:
"The sale, transfer, assignment, pledge or hypothecation of
the shares represented by this certificate are subject to the registration
requirements of their Securities Act of 1933, as amended, (the "Act"). These
shares may not be sold, transferred, assigned, pledged or hypothecated unless
such transaction is duly registered under the Act or unless, in the opinion of
counsel for the company, such transaction is exempt from the registration
provisions of the Act."
SECTION 1.4. Restrictions on Disposition. Buyer is purchasing
the Securities for Buyer's own account and not with a present view toward the
public sale or distribution thereof, except pursuant to sales that are exempt
from the registration requirements of the Securities Act and/or sales registered
under the Securities Act. Buyer understands that Buyer must bear the economic
risk of this investment indefinitely, unless the Securities are registered
pursuant to the Securities Act and any applicable state securities or blue sky
laws or an exemption from such registration is available, and that Seller and
Buyer have executed the Registration Rights Agreement. Notwithstanding anything
in this Section 1.4 to the contrary, by making the representations herein, Buyer
does not agree to hold the Securities for any minimum or other specific term and
reserves the right to dispose of the Securities at any time in accordance with
or pursuant to a registration statement or an exemption under the Securities
Act.
ARTICLE II
Representations and Warranties of Seller
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Seller represents and warrants to Buyer as follows:
SECTION 2.1. Authorization Enforcement. (i) Seller has the
requisite corporate power and authority to enter into and perform its
obligations under this Agreement and the Registration Rights Agreement, to issue
and sell the Securities in accordance with the terms hereof; (ii) the execution,
delivery and performance of this Agreement and the Registration Rights Agreement
by the Seller and the consummation by it of the transactions contemplated hereby
and thereby have been duly authorized by the Seller's Board of Directors and no
further consent or authorization of the Seller, its Board of Directors or its
stockholders is required; and (iii) this Agreement constitutes, and upon
execution and delivery by the Seller of the Registration Rights Agreement, such
agreements will constitute valid and binding obligations of the Seller
enforceable against Seller in accordance with their terms.
SECTION 2.2. Stockholder Authorization. Neither the execution,
delivery nor performance of its obligations under this Agreement or the
Registration Rights Agreement by the Seller nor the consummation by it of the
transactions contemplated hereby or thereby require any consent of or
authorization by the Seller's stockholders.
SECTION 2.3. Corporate Status. Seller is a duly organized
corporation and in good standing under the laws of the State of Florida, and has
qualified to transact business in all other states requiring qualification
therein and where the failure so to qualify would have a Material Adverse
Effect. For purposes of this Agreement, "Material Adverse Effect" shall mean any
material adverse effect on (i) Securities, the ability of the Seller to perform
its obligations hereunder and under the Warrants or the Registration Rights
Agreement or (ii) the business, operations, properties, prospects or financial
condition of the Seller and its subsidiaries, taken as a whole. Seller has
corporate power to own all of its properties and assets and to carry on its
business as it is now being conducted. The execution and delivery of this
Agreement does not, and the consummation of the transactions contemplated herein
will not, violate any provision of any charter, by-law, mortgage, lien, lease,
agreement, instrument, order, judgment or decree to which Seller is a party or
by which Seller is bound, and will not violate any other restriction of any kind
or character to which Seller is subject. The corporate minute book of Seller is
complete, including therein the Articles of Incorporation and By-laws with any
amendment thereto, and the meetings of directors referred to therein were duly
called and held, and the minutes thereof represent all minutes of directors'
meetings heretofore held, and the signatures appearing on all documents
contained therein are the true signatures of the persons purporting to have
signed the same.
SECTION 2.4. SEC Documents, Financial Statements. Since
December 31, 1999, Seller has timely filed all reports, schedules, forms,
statements and other documents required to be filed by it with the SEC pursuant
to the reporting requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") (all of the foregoing filed prior to the date hereof and
after December 31, 1999, and all exhibits included therein and financial
statements and schedules thereto and documents incorporated by reference
therein, being hereinafter referred to herein as the "SEC Documents"). Seller
has delivered to the Buyer true and complete copies of the SEC Documents, except
for the exhibits and schedules thereto and the documents incorporated therein.
As of their respective dates, the SEC Documents complied in all material
respects with the requirements of the Exchange Act or the Securities Act, as the
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case may be, and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at the time they
were filed with the SEC, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. None of the statements made in any such SEC
Documents is, or has been, required to be amended under applicable law nor are
any such amendments presently contemplated. As of their respective dates, the
financial statements of Seller included in the SEC Documents complied as to form
in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC applicable with respect thereto. Such
financial statements have been prepared in accordance with U.S. generally
accepted accounting principles, consistently applied, during the periods
involved (except (i) as may be otherwise indicated in such financial statements
or the notes thereto, or (ii) in the case of unaudited interim statements, to
the extent they may not include footnotes or may be condensed or summary
statements) and fairly present in all material respects the consolidated
financial position of Seller and its consolidated subsidiaries as of the date
thereof and the consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to immaterial
year-end audit adjustments). Except as set forth in the financial statements of
Seller included in the SEC Documents filed prior to the date hereof, Seller has
no liabilities, contingent or otherwise, other than (i) liabilities incurred in
the ordinary course of business subsequent to the date of such financial
statements and (ii) obligations under contracts and commitments incurred in the
ordinary course of business and not required under generally accepted accounting
principles to be reflected in such financial statements, which liabilities and
obligations referred to in clauses (i) and (ii), individually or in the
aggregate, if reflected in such financial statements, would not have a Material
Adverse Effect.
SECTION 2.5. Title to Properties. Seller has good and
marketable title to its properties and assets (including, without limitation,
the assets reflected in the above described SEC Documents, except as
subsequently sold or otherwise disposed of in the ordinary course of business),
free and clear of all claims, rights, restrictions, conditions, covenants,
easements, liens and encumbrances except the lien of property taxes not yet due.
Seller makes the following representations and warranties with regard to the
following properties and assets:
(a) Seller has good and marketable title to those patents,
patent applications, certain trade practices approved by the Federal
Trade Commission, trademarks, trade names, service marks, copyrights,
copyright applications, licenses, permits, inventions, discoveries,
processes, scientific, technical, engineering and marketing data,
object and source codes, know-how (including trade secrets and other
unpatented and/or unpatenable proprietary or confidential information,
systems and procedures) and other similar rights and proprietary
knowledge and domain names (collectively "Intangibles") as described in
Schedule I attached hereto. Seller knows of no infirmities which would
offset the validity of same; nor does Seller know of any claim by any
other person, firm or corporation, which impairs, or tends to impair
the value or effectiveness of said Intangibles; nor does Seller know of
any action, or threatened action by any other person, firm or
corporation which infringes or tends to prohibit the use of the
Intangibles or to infringe said Intangibles, or any rights appurtenant
thereto.
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(b) Seller's employees have a standard clause in their
employment agreements transferring all of the Intangible property
rights developed while employees of Seller to Seller.
(c) Seller has good and marketable title to the marketing
agreements described in Schedule 2 attached hereto. Seller knows of no
infirmities which would offset the validity of same, nor does Seller
know of any claim by any other person, firm or corporation which
impairs, or tends to impair the value or effectiveness of said
marketing or other agreements pertaining thereto; nor does Seller know
of any action, or threatened action by any other person, firm or
corporation which infringes or tends to infringe said marketing or
other agreements, or any rights appurtenant thereto.
(d) The marketing agreements described in Schedule 2 attached
hereto, are valid and subsisting agreements. Seller knows of no claim,
or threatened claim by any person, firm or corporation that impairs, or
tends to impair Seller's respective rights under such agreements.
Seller knows of no action, or threatened action which diminishes, or
threatens to diminish the value of Seller's rights under said
agreements.
SECTION 2.6. Tax Returns
(a) Except as set forth in the SEC Documents filed prior to
the date hereof, Seller has timely filed or caused to be timely filed
all federal, state and local tax returns for income taxes, sales taxes,
withholding and all payroll taxes, property taxes, and all other taxes
of every kind whatsoever required by law to have been filed, and all
such tax returns are complete and accurate. For the purpose of the
preceding sentence, a return shall be deemed to be time filed if it is
filed after the date due but within any period allowed in an extension
granted by the taxing authority.
(b) Seller has paid or caused to be paid all taxes which have
become due, whether pursuant to said returns or pursuant to any
assessments or otherwise and there is no further liability (whether or
not disclosed on such returns or assessments) for any such taxes, and
no interest or penalties accrued or accruing with respect thereto,
except as may be set forth in the SEC Documents.
(c) The amounts set up as provisions for taxes in the SEC
Documents as of March 31, 2001, are sufficient for the payment of all
unpaid federal, state, county and local taxes of Seller accrued for or
applicable to the period ended on such date and all years and periods
prior thereto and for which Seller may be liable in its own right or as
transferee of the assets of, or as successor to any other corporation,
association, partnership, venture or other entity.
SECTION 2.7. Capitalization. The capitalization of Seller as
of the date hereof, including the authorized capital stock, the number of shares
issued and outstanding, the number of shares issuable and reserved for issuance
pursuant to the Seller's stock option plans, the number of shares issuable and
reserved for issuance pursuant to securities (other than the Warrants)
exercisable for, or convertible into or exchangeable for any shares of capital
stock, other than the number of shares reserved for issuance upon exercise of
the Warrants, is as set
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forth in the SEC Documents. All of such outstanding shares of capital stock have
been, or upon issuance will be, validly issued, fully paid and nonassessable. No
shares of capital stock of Seller are subject to preemptive rights or any other
similar rights of the stockholders of Seller or any liens or encumbrances.
Except for the Securities, as of the date of this Agreement, (i) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exercisable or exchangeable for, any shares of capital stock
of Seller or any of its subsidiaries, or arrangements by which Seller or any of
its subsidiaries is or may become bound to issue additional shares of capital
stock of Seller or any of its subsidiaries, nor are any such issuances or
arrangements contemplated and (ii) there are no agreements or arrangements under
which Seller or any of its subsidiaries is obligated to register the sale of any
of its or their securities under the Securities Act (except the Registration
Rights Agreement) other than as set forth in the SEC Documents. Seller has
furnished to the Buyer true and correct copies of Seller's Certificate of
Incorporation as in effect on the date hereof ("Certificate of Incorporation"),
the Seller's By-laws as in effect on the date hereof (the "By-laws"), and all
other instruments and agreements governing securities convertible into or
exercisable or exchangeable for capital stock of Seller.
SECTION 2.8. Litigation. Except as disclosed in the SEC
Documents filed prior to the date hereof, there is no action, suit, proceeding,
inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body including, without limitation, the
SEC or NASDAQ, pending or, to the knowledge of Seller or any of its
subsidiaries, threatened against or affecting Seller, any of its subsidiaries,
or any of their respective directors or officers in their capacities as such
which will have a Material Adverse Effect. There are no facts which, if known by
a potential claimant or governmental authority, could give rise to a claim or
proceeding which, if asserted or conducted with results unfavorable to Seller or
any of its subsidiaries, could have a Material Adverse Effect.
SECTION 2.9. Absence of Adverse Changes. Since the date of the
SEC Documents filed prior to the date hereof, Seller warrants and represents
that Seller
(a) has not suffered any material adverse change in its
business or financial affairs;
(b) has conducted its business in the ordinary course and has
not made any unusual commitments, acquisitions, purchases or sales.
(c) has not suffered any damage, destruction, or loss, whether
or not covered by insurance, materially and adversely affecting their
properties or business; (d) has not made any declaration or setting
aside or payment of any dividend or other distribution in respect of
its outstanding capital stock, or any direct or indirect redemption,
purchase or other acquisition of any such stock;
(e) has not made any reduction or increase in compensation
payable to or to become payable to any of its officers or agents or any
changes in employee benefit plans.
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There are no facts (either known to the Seller or which due
diligence would have disclosed) which are not set forth in this agreement, its
exhibits and other documents referred to herein and heretofore delivered to
Buyer and which would have a Material Adverse Effect on the operations of
Seller.
SECTION 2.10. Equipment. All equipment used by Seller is in
good repair and operating condition and conforms to all applicable ordinances
and regulations.
SECTION 2.11. Material Contracts. The full, true and complete
schedule of all leases and material contracts is attached hereto marked Exhibit
"C" and by this reference made a part hereof. For the purpose of this section, a
material contract is defined to be any contract involving a commitment in excess
of $10,000 but excluding, however, insurance policies and group insurance
policies of which Seller is a party. With respect to insurance policies and
group insurance policies to which Seller is a party, as well as all material
contracts together with all amendments and statements thereto, upon the request
of Buyer, Seller will make such policies and contracts available to Buyer or its
duly authorized representative prior to Closing Date as hereinafter specified.
There are no material defaults nor are there any obligations of Seller to be
performed under said material contracts.
SECTION 2.12. Indebtedness and Contingent Liabilities. Seller
does not have any liabilities except as reflected in the SEC Documents delivered
to Buyer and except as incurred in the ordinary course of business since the
date of the SEC Documents filed prior to the date hereof or disclosed otherwise
herein, subject to the terms of 2.9(b) hereof. All liabilities of Seller as of
the date hereof or incurred hereafter can be prepaid in full, without penalty,
by Seller at any time. Seller is not directly or indirectly liable upon or with
respect to (by discount, repurchase agreement, or otherwise), or obligated in
any other way to provide funds in respect of or to guarantee or assume any
debtor obligation of any corporation, association, partnership, joint venture or
other entity, except endorsements made in the ordinary course of business in
connection with the deposit of items for collection.
SECTION 2.13. Indebtedness of Seller to Certain Persons. Other
than as set forth in the SEC Documents filed prior to the date hereof, Seller is
not and on the Closing Date will not be indebted to any of its stockholders, or
to any officers or directors of Seller or to their respective spouses and/or
children in any amount whatsoever other than for payment of salaries and
compensation for services rendered.
SECTION 2.14. Ownership of Stock. The Common Stock and Warrant
Shares are duly authorized and reserved for issuance, and, upon exercise of the
Warrants in accordance with the terms thereof, will be validly issued, fully
paid and non-assessable, and free from all taxes, liens, claims and encumbrances
and will not be subject to preemptive rights or other similar rights of
stockholders of the Seller and will not impose personal liability upon the
holder thereof.
SECTION 2.15. Pension and Profit-Sharing Plan. Other than
described in the SEC Documents, there is not presently in existence to which
Seller is a party any profit sharing, pension or bonus plan for any of Seller's
officers, directors or employees.
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SECTION 2.16. Indemnification. Seller hereby indemnifies Buyer
against any loss incurred by Buyer by reason of the incorrectness or breach, of
any of the representations or warranties set forth in this Article II, and
against all costs, liability, and expense (including but not limited to
attorneys' fees), reasonably incurred by Buyer in defending any claim, action or
proceedings arising by reason of the incorrectness or breach of any of the
representations or warranties set forth in this Article II, provided, however,
that Buyer shall not incur substantial expense in defending any such claim until
after it has afforded Seller notice and a reasonable opportunity itself to
defend against such claim, but Buyer shall not be precluded from being
separately represented in connection with any defense provided by Seller.
SECTION 2.17. No Conflicts. The execution, delivery and
performance of this Agreement, the Registration Rights Agreement, and the
consummation by Seller of the transactions contemplated hereby and thereby will
not (i) result in a violation of the Certificate of Incorporation or By-laws or
(ii) conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which Seller or any of its subsidiaries is
a party, or result in a violation of any law, rule, regulation, order, judgment
or decree (including U.S. federal and state securities laws and regulations)
applicable to Seller or any of its subsidiaries or by which any property or
asset of Seller or any of its subsidiaries is bound or affected (except, with
respect to clause (ii), for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect). Neither Seller nor any of its
subsidiaries is in violation of its Certificate of Incorporation, By-laws or
other organizational documents and neither Seller nor any of its subsidiaries is
in default (and no event has occurred which, with notice or lapse of time or
both, would put Seller or any of its subsidiaries in default) under, nor has
there occurred any event giving others (with notice or lapse of time or both)
any rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which Seller or any of its subsidiaries is
a party, except for actual or possible violations, defaults or rights as would
not, individually or in the aggregate, have a Material Adverse Effect. The
businesses of the Seller and its subsidiaries are not being conducted, and shall
not be conducted so long as the Buyer owns any of the Common Stock, in violation
of any law, ordinance or regulation of any governmental entity, except for
actual or possible violations, if any, the sanctions for which either singly or
in the aggregate would not have a Material Adverse Effect. Except as
specifically contemplated by this Agreement and as required under the Securities
Act and any applicable state securities laws, Seller is not required to obtain
any consent, approval, authorization or order of, or make any filing or
registration with, any court or governmental agency or any regulatory or self
regulatory agency in order for it to execute, deliver or perform any of its
obligations under this Agreement or the Registration Rights Agreement, in each
case in accordance with the terms hereof or thereof.
SECTION 2.18. Acknowledgment Regarding the Buyer's Purchase of
Common Stock and Warrants. Seller acknowledges and agrees that the Buyer is not
acting as a financial advisor or fiduciary of Seller (or in any similar
capacity) with respect to this Agreement or the transactions contemplated
hereby, and the relationship between Seller and Buyer is "arms length" and that
any statement made by Buyer or any of its representatives or agents in
connection with this Agreement and the transactions contemplated hereby is not
advice or a recommendation and is merely incidental to Buyer's purchase of the
Securities and has not been
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relied upon by Seller, its officers or directors in any way. Seller further
represents to Buyer that Seller's decision to enter into this Agreement has been
based solely on an independent evaluation by Seller and its representatives.
SECTION 2.19. No General Solicitation. Neither Seller nor any
person participating on the Seller's behalf in the transactions contemplated
hereby has conducted any "general solicitation," as such term is defined in
Regulation D, with respect to any of the Securities being offered hereby.
SECTION 2.20. No Integrated Offering. Neither Seller, nor any
of its affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers to
buy any security under circumstances that would require registration of the
Securities being offered hereby under the Securities Act or cause this offering
of Securities to be integrated with any prior offering of securities of Seller
for purposes of the Securities Act or any applicable stockholder approval
provisions, including, without limitation, Rule 4460(i) of the NASD or any
similar rule.
SECTION 2.21. No Brokers. Seller has taken no action which
would give rise to any claim by any person for brokerage commissions, finder's
fees or similar payments by the Buyer relating to this Agreement or the
transactions contemplated hereby.
SECTION 2.22. Acknowledgment Regarding Securities. Seller's
executive officers have studied and fully understand the nature of the
Securities being sold hereunder. Seller acknowledges that it is selling the
Securities regardless of the dilution that such issuance may have on the
ownership interests of other stockholders. Taking the foregoing into account,
Seller's Board of Directors has determined in its good faith business judgment
that the issuance of the Securities hereunder and the consummation of the other
transactions contemplated hereby are in the best interests of the Seller and its
stockholders.
SECTION 2.23. Foreign Corrupt Practices. Neither the Seller,
nor any of its subsidiaries, nor any director, officer, agent, employee or other
person acting on behalf of the Seller or any subsidiary has, in the course of
his actions for, or on behalf of, the Seller, used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses; made any
direct or indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977; or made any bribe,
rebate, payoff, influence payment, kickback or other unlawful payment to any
foreign or domestic government official or employee.
SECTION 2.24. Disclosure. No representations or warranties
made by Seller in this Agreement or in any document, statement, certificate,
exhibit, list or schedule furnished or to be furnished to Buyer pursuant hereto,
or in connection with the transactions contemplated hereby, contains or will
contain any untrue statement of material fact or omits or will omit to state a
material fact necessary to make the statements or facts contained therein not
misleading.
ARTICLE III
Representations and Warranties of Buyer
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SECTION 3.1. Corporate Status. Buyer is a limited liability
company duly organized and in good standing under the laws of the State of
Nevada. Buyer has full power and authority to enter into and perform this
Agreement and that this Agreement has been duly and validly authorized by all
necessary company action on the part of the Buyer. This Agreement has been duly
executed and delivered by the Buyer and constitute valid and legally binding
obligations of the Buyer, enforceable in accordance with its terms. The
execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby will not, violate any provision of any charter,
by-law, mortgage, lien, lease, agreement, instrument, order, judgment or decree
to which Buyer is a party or by which Buyer is bound, and it will not violate
any other restriction of any kind or character to which Buyer is subject.
SECTION 3.2. Investment Representations. Buyer is acquiring
the Securities for investment and not with a view to, or for sale in connection
with, any distribution thereof.
SECTION 3.3. Disclosure. No representations or warranties made
by Buyer in this Agreement or in any document, statement, certificate, exhibit,
list or schedule furnished or to be furnished to Seller pursuant hereto, or in
connection with the transactions contemplated hereby, contains or will contain
any untrue statements of material fact or omits or will omit to state a material
fact necessary to make the statements or facts contained herein not misleading.
ARTICLE IV
Closing of Transactions, Delivery of Documents,
Conditions Precedent to Closing
SECTION 4.1. Closing of Transaction. This transaction shall be
consummated at the offices of the Seller in Boca Raton, Florida, or such other
place as may be mutually agreed upon between the parties hereto.
SECTION 4.2. Delivery of Documents by Seller. On the Closing
Dates, Seller shall deliver to Buyer the following:
4.2.1. The shares of Common Stock and Warrants that are the
subject of this Agreement duly executed and endorsed;
SECTION 4.3. Conditions Precedent to Closing Relating to
Warranties and Representations by Buyer. The obligations of Seller to perform
this Agreement is subject to each and all of the following conditions, any one
or more of which may, however, be waived in whole or in part by Seller by
written notice to that effect given to Buyer, provided that any such waiver
shall not be construed as a waiver by Seller of any action they may have by law
as a result of any breach by Buyer of any of the representations and warranties
set forth in Article III hereof.
4.3.1. Buyer shall have performed each and all of its
agreements as set forth herein, and the representations and warranties set forth
in Article III hereof shall be true and correct in all material respects at and
as of the closing date, with the same effect as though
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the same had been made on and as of such date. Buyer hereby indemnifies Seller
against any loss incurred by Seller by reason of the incorrectness or breach of
any of the representations or warranties set forth in Article III, and against
all cost, liability and expense (including but not limited to attorney's fees)
reasonably incurred by Seller in bringing or defending any claim, action or
proceedings arising by reason of the incorrectness or breach of any of the
representations or warranties set forth in Article III.
ARTICLE V
Board of Directors of Seller, Chief Executive Officer and Voting Rights
SECTION 5.1. Seller agrees that as long as Buyer owns shares
of Common Stock of Seller, it shall use its best efforts to elect a majority of
the Board of Directors to be recommended by Buyer to the Board of Directors of
Seller. Seller shall also appoint ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and Rich Scoglin to the
Seller's Board of Directors.
SECTION 5.2. Seller shall appoint ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as Chief
Executive Officer of Seller.
SECTION 5.3. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ shall assign his voting rights
with respect to the Seller's convertible preferred stock that he owns to the
Buyer for a period of one (1) year from the date of this Agreement.
ARTICLE VI
Additional Covenants
SECTION 6.1. Conduct of Business Prior to Closing. Between the
date hereof and the Closing Dates, except with the prior written consent of
Buyer:
6.1.1. Seller shall conduct its business only in the usual and
ordinary course and the character of such business shall not be changed by
Seller .
6.1.2. Seller shall conduct its business so that there is no
material change in the amount of any of the assets or liabilities as shown in
the SEC Documents filed prior to the date hereof..
6.1.3. No change shall be made in the Articles of
Incorporation or the By-laws of Seller.
6.1.4. No change shall be made in the authorized or issued
shares of capital stock of Seller.
6.1.5. No increase shall be made in the compensation paid or
payable by Seller to any of its directors, officers or agents, except in the
ordinary course of business.
6.1.6. No assets shall be sold by Seller except in the
ordinary course of business and for good and sufficient consideration. In no
event shall any fixed asset having a value of Ten Thousand ($10,000.00) Dollars
or more be sold by Seller.
11
6.1.7. Seller shall not enter into any contract described in
Section 2.11 hereof except in the ordinary course of business.
6.1.8. Seller shall not amend, terminate or change any
contract describe in Section 2.11 hereof to which it is a party, except in the
ordinary course of business.
6.1.9. Seller shall not issue or sell any stock, bonds or
other securities (within the meaning of the Securities Act of 1933, as amended).
6.1.10. Seller shall not incur any obligation or liability
(absolute or contingent) except current liabilities incurred in the ordinary
course of business or obligations under contracts which are not described in
Section 2.11 hereof
6.1.11. Seller shall not discharge or satisfy any lien or
encumbrance or pay any obligation or liability (absolute or contingent), other
than current liabilities shown on the balance sheets heretofore delivered and
current liabilities incurred since that date in the ordinary course of business.
6.1.12. Seller shall not make any payment or distribution to
its stockholders or purchase or redeem any shares of its capital stock.
6.1.13. Seller shall not mortgage, pledge or subject to lien
or encumbrance any of its assets, tangible or intangible.
6.1.14. Seller shall not cancel any debts or claims or waive
any rights.
6.1.15. Seller shall not sell, assign or transfer any patent
or other Intangible asset.
6.1.16. Seller shall not adopt any profit sharing, pension or
bonus plan.
Seller represents and warrants that he has not incurred any
obligations to any other party giving rise to any claim for commission or
finders' fees arising out of this transaction. Seller hereby indemnifies Buyer
and holds it harmless against or in respect of any such commissions or finders'
fees incurred or alleged to be incurred by Seller relative to the Agreement for
purchase of shares or the transactions contemplated hereby. Each party hereby
agrees to indemnify and hold harmless the other party from and against any
claim, liability, loss, damage or expense (including attorneys' fees and legal
expenses) arising out of or in respect of any commissions or brokerage fees of
any party as a result of the execution of the Agreement for purchase of shares
between the parties hereto.
In the event of any change prior to the purchase of the
Securities by reason of any stock dividend, split-up, merger, recapitalization,
combination or the like, the price and the number of Securities subject to
acquisition hereunder shall be appropriately adjusted.
12
ARTICLE VII
Other Services
SECTION 7.1. Buyer and Seller shall enter into an agreement whereby Buyer will
provide operational and financial advisory services to Seller. The agreement
shall provide for Buyer receiving a fee equal to forty percent (40%) of gross
margin on all goods and services sold by or through Buyer or any of Buyer's
designees.
ARTICLE VIII
Miscellaneous
SECTION 8.1. Free Access. Between the date of execution hereof
and the Closing Dates, Buyer's representatives shall be given full access to
Seller's books of accounts, minute books and reports.
SECTION 8.2. Expenses. Whether or not the transactions
contemplated hereby are consummated, Seller agrees to pay all expenses
(including travel and attorneys' fees incurred in connection with this
Agreement, the transactions contemplated hereby, the negotiations leading to the
same and the preparations made for carrying the same into effect).
SECTION 8.3. Notices. Any notice, request, instruction or
other document deemed by either party to be necessary or desirable to be given
to the other party shall be in writing and shall be mailed by registered mail or
certified mail, postage prepaid, with return receipt requested, addressed as
follows:
If to Buyer: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
If to Seller: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇.▇. ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Building 84
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
The persons and addresses to which mailings may be made may be changed from time
to time by a notice mailed as aforesaid.
SECTION 8.4. Entire Agreement. This Agreement contains the
entire agreement between the parties hereto and supersedes any and all prior
agreements, arrangements or understandings between them relating to the subject
matter hereof. No oral understandings, statements, promises or inducements
contrary to the terms of this Agreement exist. No representations, warranties,
covenants or conditions, express or implied, whether by statute or otherwise,
other than as set forth herein, have been made by either Buyer or Seller. No
waiver of any term, provision or condition of this Agreement, whether by conduct
otherwise, in any one or more instances shall be deemed to be or construed as a
further or continuing waiver of any such
13
term, provision or condition of this Agreement. This Agreement cannot be changed
or terminated orally.
SECTION 8.5. Binding on Successors. All of the terms,
provisions and conditions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, successors,
assigns and legal representatives.
SECTION 8.6. Titles. The titles of the Articles and Sections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement. When the context so requires in this
Agreement the masculine gender includes the feminine and/or neuter and the
singular number includes the plural.
SECTION 8.7. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original and all of
which taken together shall constitute one and the same document.
SECTION 8.8. Severability. The unenforceability or invalidity
of any paragraph or subparagraph of this Agreement shall not affect the
enforceability or valid of the balance of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date and year first above written.
AB FINANCIAL SERVICES, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇, Manager
US DATA AUTHORITY, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President and Chief Operating Officer
AGREED as to
Section 5.3 hereof:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
14
EXHIBIT A
VOID AFTER 5:00 P.M., NEW YORK CITY
TIME, ON THE FIFTH ANNIVERSARY OF ISSUANCE
THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
JURISDICTION. THE SECURITIES REPRESENTED HEREBY MAY NOT BE
OFFERED OR SOLD IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS
UNLESS OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.
Right to Purchase 30,000,000 shares of
Common Stock, par value $.02 per share
Date: May 23, 2001
US DATA AUTHORITY, INC.
STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, AB FINANCIAL
SERVICES, LLC, or its registered assigns, is entitled to purchase from US DATA
AUTHORITY, INC., a corporation organized under the laws of the State of Florida
(the "Company"), at any time or from time to time during the period specified in
Section 2 hereof, Thirty Million (30,000,000) fully paid and nonassessable
shares of the Company's common stock, par value $.02 per share (the "Common
Stock"), at an exercise price per share (the "Exercise Price") equal to $.10.
The number of shares of Common Stock purchasable hereunder (the "Warrant
Shares") and the Exercise Price are subject to adjustment as provided in Section
4 hereof and the Exercise Price is subject to reset as provided in Section 11
hereof. The term "Warrants" means this Warrant and the other warrants of the
Company issued pursuant to that certain Securities Purchase Agreement, dated as
of May 24, 2001, by and among the Company and the other signatory thereto (the
"Securities Purchase Agreement").
This Warrant is subject to the following terms, provisions and
conditions:
1. Manner of Exercise; Issuance of Certificates; Payment for Shares.
Subject to the provisions hereof, including, without limitation, the limitations
contained in Section 7 hereof, this Warrant may be exercised by the holder
hereof, in whole or in part, by the surrender of this Warrant, together with a
completed exercise agreement in the form attached hereto (the "Exercise
Agreement"), to the Company by 11:59 p.m. New York time on any business day at
the Company's principal executive offices (or such other office or agency of the
Company as it may designate by notice to the holder hereof) and upon (i) payment
to the Company in cash, by certified or official bank check or by wire transfer
for the account of the Company, of the Exercise Price for the Warrant Shares
specified in the Exercise Agreement or (ii) if the holder is permitted to effect
a Cashless Exercise (as defined in Section 12(c) hereof) pursuant to Section
12(c) hereof, delivery to the Company of a written notice of an election to
effect a Cashless Exercise for the Warrant Shares if specified in the Exercise
Agreement. The Warrant Shares so purchased shall be deemed to be issued to the
holder hereof or such holder's designee, as the record owner of such shares, as
of the close of business on the date on which this Warrant shall have been
surrendered and the completed Exercise Agreement shall have been delivered and
payment shall have been made for such shares as set forth above or, if such day
is not a business day, on the next succeeding business day. The Warrant Shares
so purchased, representing the aggregate number of shares specified in the
Exercise Agreement, shall be delivered to the holder hereof within a reasonable
time, not exceeding two business days, after this Warrant shall have been so
exercised (the "Delivery Period"). If the Company's transfer agent is
participating in the Depository Trust Company ("DTC") Fast Automated Securities
Transfer program. and so long as the certificates therefor do not bear a legend
and the holder is not obligated to return such certificate for the placement of
a legend thereon, the Company shall cause its transfer agent to electronically
transmit the Warrant Shares so purchased to the 'holder by crediting the account
of the holder or Its nominee with DTC through its Deposit Withdrawal Agent
Commission system ("DTC Transfer"). If the aforementioned conditions to a DTC
Transfer are not satisfied, the Company shall deliver to the holder physical
certificates representing, the Warrant Shares so purchased. Further, the holder
may instruct the Company to deliver to the holder physical certificates
representing the Warrant Shares so purchased in lieu of delivering such shares
by way of DTC Transfer. Any certificates so delivered shall be in such
denominations as may be requested by the holder hereof, shall be registered in
the name of such holder or such other name as shall be designated by such holder
and, following the date on which the Warrant Shares have been registered under
the Securities Act pursuant to that certain Registration Rights Agreement, dated
as of May 24, 2001, by and between the Company and the other signatory thereto
(the "Registration Rights Agreement") or otherwise may be sold by the holder
pursuant to Rule 144 promulgated under the Securities Act (or a successor rule),
shall not bear any restrictive legend. If this Warrant shall have been exercised
only in part, then, unless this Warrant has expired, the Company shall, at its
expense, at the time of delivery of such certificates, deliver to the holder a
new Warrant representing the number of shares with respect to which this Warrant
shall not then have been exercised.
If, at any time, a holder of this Warrant submits this Warrant, an
Exercise Agreement and payment to the Company of the Exercise Price for each of
the Warrant Shares specified in the Exercise Agreement, and the Company falls
for any reason to deliver, on or prior to the fourth business day following the
expiration of the Delivery Period for such exercise, the number of shares of
Common Stock to which the holder is entitled upon such exercise (an "Exercise
Default"), then the Company shall pay to the holder payments ("Exercise Default
Payments") for an Exercise Default in the amount of (a) (N/365), multiplied by
(b) the amount by which the Market Price (as defined in Section 4(l) hereof) on
the date the Exercise Agreement giving rise to the Exercise Default is
transmitted in accordance with this Section I (the "Exercise Default Date")
2
exceeds the Exercise Price in respect of such Warrant Shares, multiplied by (c)
the number of shares of Common Stock the Company failed to so deliver in such
Exercise Default, multiplied by (d) .24, where N = the number of days from the
Exercise Default Date to the date that the Company effects the full exercise of
this Warrant which gave rise to the Exercise Default. The accrued Exercise
Default Payment for each calendar month shall be paid in cash or shall be
convertible into Common Stock, at the holder's option, as follows:
(a) In the event holder elects to take such payment in cash,
cash payment shall be made to holder by the fifth day of the month following the
month in which it has accrued; and
(b) In the event holder elects to take such payment in Common
Stock, the holder may convert such payment amount into Common Stock at the lower
of the Exercise Price in respect of the Warrant Shares triggering the Exercise
Default or the Market Price (as defined in Section 4(l)) (as in effect at the
time of exercise) at any time after the fifth day of the month following the
month in watch it has accrued.
Nothing herein shall limit the holder's night to pursue actual damages
for the Company's failure to maintain a sufficient number of authorized shares
of Common Stock as required pursuant to the terms of Section 3(b) hereof or to
otherwise issue shares of Common Stock upon exercise of this Warrant in
accordance with the terms hereof, and the holder shall have the right lo pursue
all remedies available at law or in equity (including a decree of specific
performance and/or Injunctive relief).
2. Period of Exercise. This Warrant is immediately exercisable, at any
time or from time to time on or after the date of initial issuance of this
Warrant (the "Issue Date") and before 5:00 p.m., New York City time, on that
date which is five (5) years after the Issue Date (the "Exercise Period").
3. Certain Agreements of the Company. The Company hereby covenants and
agrees as follows:
(a) Shares to be Fully Paid. All Warrant Shares will, upon
issuance in accordance with the terms of this War-rant, be validly Issued, fully
paid, and nonassessable and free from all taxes, liens. claims and encumbrances.
(b) Reservation of Shares. During the Exercise Period, the
Company shall at all times have authorized, and reserved for the purpose of
issuance upon exercise of this Warrant, a sufficient number of shares of Common
Stock to provide for the exercise in full of this Warrant (without giving effect
to the limitations on exercise set forth in Section 7(g) hereof).
(c) Listing. The Company shall promptly secure the listing of
the shares of Common Stock issuable upon exercise of this Warrant upon each
national securities exchange or automated quotation system, if any, upon which
shares of Common Stock are then listed or become listed (subject to official
notice of issuance upon exercise of this Warrant) and shall maintain, so long as
any other shares of Common Stock shall be so listed, such listing of all shares
of Common Stock from time to time issuable upon the exercise of this Warrant;
and the Company shall so list on each national securities exchange or automated
quotation system, as the case may be, and shall maintain such listing of, any
other shares of capital stock of the Company issuable upon the exercise of this
3
Warrant if and so long as any shares of the same class shall be listed on such
national securities exchange or automated quotation system.
(d) Certain Actions Prohibited. The Company will not, by
amendment of its charter or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities, or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed by it hereunder, but will at all times in
good faith assist in the carrying out of all the provisions of this Warrant and
in the taking of all such action as may reasonably be requested by the holder of
this Warrant in order to protect the economic benefit inuring to the holder
hereof and the exercise privilege of the holder of this Warrant against dilution
or other impairment, consistent with the tenor and purpose of this Warrant.
Without limiting the generality of the foregoing, the Company (i) will not
increase the par value of any shares of Common Stock receivable upon the
exercise of this Warrant above the lowest Exercise Price then in effect, and
(ii) will take all such actions as may be necessary or appropriate in order that
the Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the exercise of this Warrant.
(e) Successors and Assigns. This Warrant will be binding upon
any entity succeeding to the Company by merger, consolidation, or acquisition of
all or substantially all of the Company's assets.
(f) Blue Sky Laws. The Company shall, on or before the date of
issuance of any Warrant Shares, take such actions as the Company shall
reasonably determine are necessary to qualify the Warrant Shares for, or obtain
exemption for the Warrant Shares for, sale to the holder of this Warrant upon
the exercise hereof under applicable securities or "blue sky" laws of the states
of the United States, and shall provide evidence of any such action so taken to
the holder of this Warrant prior to such date; provided, however, that the
Company shall not be required to qualify as a foreign corporation or file a
general consent to service of process in any such jurisdiction.
4. Antidilution Provisions. During the Exercise Period, except as
provided in Section 11(e) hereof, the Exercise Pr-ice (or Exercise Prices, in
the event that the Exercise Price as to some Warrant Shares has been reset
pursuant to Section 11 hereof) and the number of Warrant Shares issuable
hereunder shall be subject to adjustment from time to time as provided in this
Section 4.
In the event that any adjustment of the Exercise Price(s) as required
herein results in a fraction of a cent, such Exercise Price(s) shall be rounded
up or down to the nearest cent.
(a) Adjustment of Exercise Price(s). Except as otherwise
provided in Sections 4(c) and 4(e) hereof, if and whenever during the Exercise
Period the Company issues or sells, or in accordance with Section 4(b) hereof is
deemed to have issued or sold, any shares of Common Stock for no consideration
or for a consideration per share less than the Market Price (as hereinafter
defined) on the date of issuance (a "Dilutive Issuance"), then effective
immediately upon the Dilutive Issuance, the Exercise Price(s) will be adjusted
in accordance with the following formula:
4
E' = E x 0 + 0P/M
------------------
CSDO
where:
E' = the adjusted Exercise Price;
E = the then current Exercise Price;
M = the then current Market Price (as defined in Section 4(l)(ii));
O = the number of shares of Common Stock outstanding
immediately prior to the Dilutive Issuance;
P = the aggregate consideration, calculated as set
forth in Section 4(b) hereof, received by the Company
upon such Dilutive Issuance; and
CSDO the total number of shares of Common Stock Deemed
Outstanding (as defined in Section 4(l)(i))
immediately after the Dilutive Issuance.
(b) Effect on Exercise Price(s) of Certain Events. For
purposes of determining the adjusted Exercise Price(s) under Section 4(a)
hereof, the following will be applicable:
(i) Issuance of Rights or Options. If the Company in any
manner issues or grants any warrants, rights or options, whether or not
immediately exercisable, to subscribe for or to purchase Common Stock or other
securities exercisable, convertible into or exchangeable for Common Stock
("Convertible Securities") (such warrants, rights and options to purchase Common
Stock or Convertible Securities are hereinafter referred to as "Options") and
the price per share for which Common Stock is issuable upon the exercise of such
Options is less than the Market Price in effect on the date of issuance of such
Options ("Below Market Options"), then the maximum total number of shares of
Common Stock issuable upon the exercise of all such Below Market Options
(assuming full exercise, conversion or exchange of Convertible Securities, if a
liable will as of the date of the issuance or grant of such Below Market
Options, be deemed to be outstanding and to have been issued and sold by the
Company for such price per share. For purposes of the preceding sentence, the
"price per share for which Common Stock is issuable upon the exercise of such
Below Market Options" is determined by dividing (i) the total amount, if any,
received or receivable by the Company as consideration for the issuance or
granting of all such Below Market Options, plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the exercise of
all such Below Market Options, plus, in the case of Convertible Securities
issuable upon the exercise of such Below Market Options, the minimum aggregate
amount of additional consideration payable upon the exercise, conversion or
exchange thereof at the time such Convertible Securities first become
exercisable, convertible or exchangeable, by (ii) the maximum total number of
shares of Common Stock issuable upon the exercise of all such Below Market
Options (assuming full conversion of Convertible Securities, if applicable). No
further adjustment to the Exercise Price(s) will be made upon the actual
issuance of such Common Stock upon the exercise of such Below Market Options or
upon the exercise, conversion or exchange of Convertible Securities issuable
upon exercise of such Below Market Options.
(ii) Issuance of Convertible Securities.
5
(A) If the Company in any manner issues or sells any
Convertible Securities, whether or not immediately convertible (other than where
the same are issuable upon the exercise of Options) and the price per share for
which Common Stock is issuable upon such exercise, conversion or exchange (as
determined pursuant to Section 4(b)(ii)(B) if applicable) is less than the
Market Price in effect on the date of issuance of such Convertible Securities,
then the maximum total number of shares of Common Stock issuable upon the
exercise, conversion or exchange of all such Convertible Securities will, as of
the date of the issuance of such Convertible Securities, be deemed to be
outstanding and to have been issued and sold by the Company for such price per
share. For the purposes of the preceding sentence, the "price per share for
which Common Stock is issuable upon such exercise, conversion or exchange" is
determined by dividing (i) the total amount, if any, received or receivable by
the Company as consideration for the issuance or sale of all such Convertible
Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the Company upon the exercise, conversion or exchange thereof at
the time such Convertible Securities first become exercisable, convertible or
exchangeable, by (ii) the maximum total number of shares of Common Stock
issuable upon the exercise, conversion or exchange of all such Convertible
Securities. No further adjustment to the Exercise Price(s) will be made upon the
actual issuance of such Common Stock upon exercise, conversion or exchange of
such Convertible Securities.
(B) If the Company in any manner issues or sells any
Convertible Securities with a fluctuating conversion or exercise price or
exchange ratio (a "Variable Rate Convertible Security"), then the "price per
share for which Common Stock is issuable upon such exercise, conversion or
exchange" for purposes of the calculation contemplated by Section 4(b)(ii)(A)
shall be deemed to be the lowest price per share which would be applicable
(assuming all holding period and other conditions to any discounts contained in
such Convertible Security have been satisfied) if the Market Price on the date
of issuance of such Convertible Security was 75% of the Market Price on such
date (the "Assumed Variable Market Price"). Further, if the Market Price at any
time or times thereafter is less than or equal to the Assumed Variable Market
PT-ice last used for making any adjustment under this Section 4 with respect to
any Variable Rate Convertible Security, the Exercise Price(s) in effect at such
time shall be readjusted to equal the Exercise Price(s) which would have
resulted if the Assumed Variable Market Price at the time of issuance of the
Variable Rate Convertible Security had been 75% of the Market Price existing at
the time of the adjustment required by this sentence.
(iii) Change in Option Price or Conversion Rate. If there
is a change at any time in (1) the amount of additional consideration payable to
the Company upon the exercise of any Options; (11) the amount of additional
consideration, if any, payable to the Company upon the exercise, conversion or
exchange of any Convertible Securities; or (iii) the rate at which any
Convertible Securities are convertible into or exchangeable for Common Stock (in
each such case, other than under or by reason of provisions designed to protect
against dilution), the Exercise Price(s) in effect at the time of such change
will be readjusted to the Exercise Price(s) which would have been in effect at
such time had such Options or Convertible Securities still outstanding provided
for such changed additional consideration or changed conversion rate, as the
case may be, at the time initially granted, issued or sold.
(iv) Treatment of Expired Options and Unexercised
Convertible Securities. If, in any case, the total number of shares of Common
6
Stock issuable upon exercise of any Option or upon exercise, conversion or
exchange of any Convertible Securities is not, in fact, issued and the rights to
exercise such Option or to exercise, convert or exchange such Convertible
Securities shall have expired or terminated, the Exercise Price(s) then in
effect will be readjusted to the Exercise Price(s) which would have been in
effect at the time of such expiration or termination had such Option or
Convertible Securities, to the extent outstanding immediately prior to such
expiration or termination (other than in respect of the actual number of shares
of Common Stock issued upon exercise or conversion thereof), never been issued.
(v) Calculation of Consideration Received. If any Common
Stock, Options or Convertible Securities are issued, granted or sold for cash,
the consideration received therefor for purposes of this Warrant will be the
amount received by the Company therefor, before deduction of reasonable
commissions, underwriting discounts or allowances or other reasonable expenses
paid or incurred by the Company in connection with such issuance, grant or sale.
In case any Common Stock, Options or Convertible Securities are issued or sold
for a consideration part or all of which shall be other than cash, including, in
the case of a strategic or similar arrangement in which the other entity will
provide services to the Company, purchase services from the Company or otherwise
provide intangible consideration to the Company, the amount of the consideration
other than cash received by the Company (including the net present value of the
contribution expected by the Company for the provided or purchased services)
will be the fair market value of such consideration, except where such
consideration consists of securities, in which case the amount of consideration
received by the Company will be the Market Price thereof as of the date of
receipt. In case any Common I Stock, Options or Convertible Securities are
issued in connection with any merger or consolidation in which the Company is
the surviving corporation, the amount of consideration therefor will be deemed
to be the fair market value of such portion of the net assets and business of
the non-surviving corporation as is attributable to such Common Stock, Options
or Convertible Securities, as the case may be. The Company shall calculate,
using standard commercial valuation methods appropriate for valuing such assets,
the fair market value of any consideration other than cash or securities;
provided; however, that if the holder hereof does not agree to such fair market
value calculation within three (3) business days after receipt thereof from the
Company, then such fair market value will be determined in good faith by an
investment banker or other appropriate expert of national reputation selected by
the Company and reasonably acceptable to the holder hereof, with the costs of
such appraisal to be borne by the Company.
(c) Subdivision or Combination of Common Stock. If the
Company, at any time during the Exercise Period, subdivides (by any stock split,
stock dividend, recapitalization, reorganization, reclassification or otherwise)
its shares of Common Stock into a greater number of shares, then, after the date
of record for effecting such subdivision, the Exercise Price(s) in effect
immediately prior to such subdivision will be proportionately reduced. If the
Company, at any time during the Exercise Period, combines (by reverse stock
split, recapitalization, reorganization, reclassification or otherwise) its
shares of Common Stock into a smaller number of shares, then, after the date of
record for effecting such combination, the Exercise Price(s) in effect
immediately prior to such combination will be proportionately increased.
(d) Adjustment in Number of Shares. Upon each adjustment of
the Exercise Price(s) pursuant to the provisions of this Section 4, the number
of shares of Common Stock issuable upon exercise of this Warrant at each such
7
Exercise Price shall be adjusted by multiplying a number equal to the Exercise
Price in effect immediately prior to such adjustment by the number of shares of
Common Stock issuable upon exercise of this Warrant at such Exercise Price
immediately prior to such adjustment and dividing the product so obtained by the
adjusted Exercise Price.
(e) Consolidation, Merger or Sale. In case of any
consolidation of the Company with, or merger of the Company into, any other
corporation, or in case of any sale or conveyance of all or substantially all of
the assets of the Company other than in connection with a plan of complete
liquidation of the Company at any time during the Exercise Period, then as a
condition of such consolidation, merger or sale or conveyance, adequate
provision will be made whereby the holder of this Warrant will have the right to
acquire and receive upon exercise of this Warrant in lieu of the shares of
Common Stock immediately theretofore acquirable upon the exercise of this
Warrant, such shares of stock, securities, cash or assets as may be issued or
payable with respect to or in exchange for the number of shares of Common Stock
immediately theretofore acquirable and receivable upon exercise of this Warrant
had such consolidation, merger or sale or conveyance not taken place. In any
such case, the Company will make appropriate provision to insure that the
provisions of this Section 4 hereof will thereafter be applicable as nearly as
may be in relation to any shares of stock or securities thereafter deliverable
upon the exercise of this Warrant. The Company will not effect any
consolidation, merger or sale or conveyance unless prior to the consummation
thereof, the successor corporation (if other than the Company) assumes by
written instrument the obligations under this Warrant and the obligations to
deliver to the holder of this Warrant such shares of stock, securities or assets
as, in accordance with the foregoing provisions, the holder may be entitled to
acquire. Notwithstanding the foregoing, in the event of any consolidation of the
Company with, or merger of the Company into, any other corporation, or the sale
or conveyance of all or substantially all of the assets of the Company, at any
time during the Exercise Period, the holder of the Warrant shall, at its option.
have the right to receive, in connection with such transaction, cash
consideration equal to the fair value of this Warrant as determined in
accordance with customary valuation methodology used in the investment banking
industry.
(f) Distribution of Assets. In case the Company shall declare
or make any distribution of its assets (or rights to acquire its assets) to
holders of Common Stock as a partial liquidating dividend, stock repurchase, by
way of return of capital or otherwise (including any dividend or distribution to
the Company's shareholders of cash or shares (or rights to acquire shares) of
capital stock of a subsidiary) (a "Distribution"), at any time during the
Exercise Period, then the holder of this Warrant shall be entitled upon exercise
of this Warrant for the purchase of any or all of the shares of Common Stock
subject hereto, to receive the amount of such assets (or Tights) which would
have been payable to the holder had such holder been the holder of such shares
of Common Stock on the record date for the determination of shareholders
entitled to such Distribution.
(g) Notice of Adjustment. Upon the occurrence of any event
which requires any adjustment of the Exercise Price(s), then, and in each such
case, the Company shall give notice thereof to the holder of this Warrant, which
notice shall state the Exercise Price(s) resulting from such adjustment and the
increase or decrease in the number of Warrant Shares purchasable at each such
price upon exercise, setting forth in reasonable detail the method of
8
calculation and the facts upon which such calculation is based. Such calculation
shall be certified by the chief financial officer of the Company.
(h) Minimum Adjustment of Exercise Price. No adjustment of an
Exercise Price shall be made in an amount of less than 1% of the Exercise Price
in effect at the time such adjustment is other-wise required to be made, but any
such lesser adjustment shall be carried forward and shall be made at the time
and together with the next subsequent adjustment which, together with any
adjustments so carried forward, shall amount to not less than 1% of such
Exercise Price.
(i) No Fractional Shares. No fractional shares of Common Stock
are to be issued upon the exercise of this Warrant, but the Company shall pay a
cash adjustment in respect of any fractional share which would otherwise be
issuable in an amount equal to the same fraction of the Market Price of a share
of Common Stock on the date of such exercise.
(j) Other Notices. In case at any time:
(i) the Company shall declare any dividend upon the
Common Stock payable in shares of stock of any class or make any other
distribution (other than dividends or distributions payable in cash out of
retained earnings consistent with the Company's past practices with respect to
declaring dividends and making distributions) to the holders of the Common
Stock;
(ii) the Company shall offer for subscription pro rata to
the holders of the Common Stock any additional shares of stock of any class or
other rights;
(iii) there shall be any capital reorganization of the
Company, or reclassification of the Common Stock, or consolidation or merger of
the Company with or into, or. sale of all or substantially all of its assets to,
another corporation or entity; or
(iv) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Company;
then, in each such case, the Company shall give to the holder of this Warrant
(a) notice of the date or estimated date on which the books of the Company shall
close or a record shall be taken for determining the holders of Common Stock
entitled to receive any such dividend, distribution, or subscription rights or
for determining the holders of Common Stock entitled to vote in respect of any
such reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up and (b) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, notice of the date (or, if not then known, a reasonable estimate
thereof by the Company) when the same shall take place. Such notice shall also
specify the date on which the holders of Common Stock shall be entitled to
receive such dividend, distribution, or subscription rights or to exchange their
Common Stock for stock or other securities or property deliverable upon such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, or winding-up, as the case may be. Such notice shall be given at
least thirty (30) days prior to the record date or the date on which the
Company's books are closed in respect thereto. Failure to give any such notice
or any defect therein shall not affect the validity of the proceedings referred
to in clauses (i), (ii), and (iv) above. Notwithstanding the foregoing, the
9
Company shall publicly disclose the substance of any notice delivered hereunder
prior to delivery of such notice to the bolder of this Warrant.
(k) Certain Events. If, at any time during the Exercise
Period, any event occurs of the type contemplated by the adjustment provisions
of this Section 4 but not expressly provided for by such provisions, the Company
will give notice of such event as provided in Section 4(g) hereof, and the
Company's Board of Directors will make an appropriate adjustment in the Exercise
Price(s) and the number of shares of Common Stock acquirable upon exercise of Us
Warrant at each such Exercise Price so that the rights of the holder shall be
neither enhanced nor diminished by such event.
(l) Certain Definitions.
(i) "Common Stock Deemed Outstanding" shall mean the
number of shares of Common Stock actually outstanding (not including shares of
Common Stock held in the treasury of the Company), plus (x) in the case of any
adjustment required by Section 4(a) resulting from the issuance of any Options,
the maximum total number of shares of Common Stock issuable upon the exercise of
the Options for which the adjustment is required (including any Common Stock
issuable upon the conversion of Convertible Securities issuable upon the
exercise of such Options), and (y) in the case of any adjustment required by
Section 4(a) resulting from the issuance of any Convertible Securities, the
maximum total number of shares of Common Stock issuable upon the exercise,
conversion or exchange of the Convertible Securities for which the adjustment is
required, as of the date of issuance of such Convertible Securities, if any.
(ii) "Market Price," as of any date, (i) means the
average of the closing bid prices for the shares of Common Stock as reported on
The Nasdaq National Market ("Nasdaq") by Bloomberg Financial Markets
("Bloomberg") for the five consecutive trading days immediately preceding such
date, or (ii) if Nasdaq is not the principal trading market for the shares of
Common Stock, the average of the last reported bid prices as reported by
Bloomberg on the principal trading market for the Common Stock during the same
period, or, if there is no bid price for such period, the last reported sales
price as reported by Bloomberg for such period, or (iii) if market value cannot
be calculated as of such date on any of the foregoing bases, the Market Price
shall be the average fair market value as reasonably determined by an investment
banking firm selected by the Company and reasonably acceptable to the holder,
with the costs of the appraisal to be borne by the Company. The manner of
determining the Market Price of the Common Stock set forth in the foregoing
definition shall apply with respect to any other security in respect of which a
determination as to market value must be made hereunder.
(iii) "Common Stock," for purposes of this Section 4,
includes the Common Stock and any additional class of stock of the Company
having no preference as to dividends or distributions on liquidation, provided
that the shares purchasable pursuant to this Warrant shall include only Common
Stock in respect of which this Warrant is exercisable, or shares resulting from
any subdivision or combination of such Common Stock, or in the case of any
reorganization, reclassification, consolidation, merger, or sale of the
character referred to in Section 4(e) hereof, the stock or other securities or
property provided for in such Section.
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5. Issue Tax. The issuance of certificates for Warrant Shares upon the
exercise of this Warrant shall be made without charge to the holder of this
Warrant or such shares for any issuance tax or other costs in respect thereof,
provided that the Company shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than the holder of this Warrant.
6. No Rights or Liabilities as a Shareholder. This Warrant shall not
entitle the holder hereof to any voting rights or other rights as a shareholder
of the Company. No Provision of this Warrant, in the absence of affirmative
action by the holder hereof to purchase Warrant Shares, and no mere enumeration
herein of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the Exercise Price or as a shareholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.
7. Transfer, Exchange, Redemption and Replacement of Warrant.
(a) Restriction on Transfer. This Warrant and the rights
granted to the holder hereof are transferable, in whole or in part, upon
surrender of this Warrant, together with a properly executed assignment in the
form attached hereto, at the office or agency of the Company referred to in
Section 7(e) below, provided, however, that any transfer or assignment shall be
subject to the conditions set forth in Sections 7(f) and (g) hereof and to the
provisions of Sections 2(f) and 2(g) of the Securities Purchase Agreement. Until
due presentment for registration of transfer on the books of the Company, the
Company may treat the registered holder hereof as the owner and holder hereof
for all purposes, and the Company shall not be affected by any notice to the
contrary. Notwithstanding anything to the contrary contained herein, the
registration rights described in Section 8 hereof are assignable only in
accordance with the provisions of the Registration Rights Agreement.
(b) Warrant Exchangeable for Different Denominations. This
Warrant is exchangeable, upon the surrender hereof by the holder hereof at the
office or agency of the Company referred to in Section 7(e) below, for new
Warrants of like tenor of different denominations representing in the aggregate
the right to purchase the number of shares of Common Stock which may be
purchased hereunder, each of such new Warrants to represent the right to
purchase such number of shares (at the Exercise Price therefor) as shall be
designated by the holder hereof at the time of such surrender.
(c) Replacement of Warrant. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction, or
mutilation of this Warrant and, in the case of any such loss, theft, or
destruction, upon delivery of an indemnity agreement reasonably satisfactory in
form and amount to the Company, or, in the case of any such mutilation, upon
surrender and cancellation of this Warrant, the Company, at its expense, will
execute and deliver, in lieu thereof, a new Warrant of like tenor.
(d) Cancellation: Payment of Expenses. Upon the surrender of
this Warrant in connection with any transfer, exchange, or replacement as
provided in this Section 7, this Warrant shall be promptly canceled by the
Company. The Company shall pay all taxes (other than securities transfer taxes)
and all other expenses (other than legal expenses, if any, incurred by the
Holder or transferees) and charges payable in connection with the preparation,
11
execution, and delivery of Warrants pursuant to the Section 7. The Company shall
indemnify and reimburse the holder of this Warrant for all losses and damages
arising as a result of or related to any breach of the terms of this Warrant,
including costs and expenses (including reasonable legal fees) incurred by such
holder in connection with the enforcement of its rights hereunder.
(e) Warrant Register. The Company shall maintain, at its
principal executive offices (or such other office or agency of the Company as it
may designate by notice to the holder hereof), a register for this Warrant, in
which the Company shall record the name and address of the person in whose name
this Warrant has been issued, as well as the name and address of each transferee
and each prior owner of this Warrant.
(f) Exercise or Transfer Without Registration. If, at the time
of the surrender of this Warrant in connection with any exercise, transfer, or
exchange of this Warrant, this Warrant (or, in the case of any exercise, the
Warrant Shares issuable hereunder), shall not be registered under the Securities
Act and under applicable state securities or blue sky laws, the Company may
require, as a condition of allowing such exercise, transfer, or exchange, (i)
that the holder or transferee of this Warrant, as the case may be, furnish to
the Company a written opinion of counsel (which opinion shall be in form,
substance and scope customary for opinions of counsel in comparable
transactions) to the effect that such exercise, transfer, or exchange may be
made without registration under the Securities Act and under applicable state
securities or blue sky laws, (ii) that the holder or transferee execute and
deliver to the Company an investment letter in form and substance acceptable to
the Company and (iii) that the transferee be an "accredited investor" as defined
in Rule 501(a) promulgated under the Securities Act; provided that no such
opinion, letter, or status as an "accredited investor" shall be required in
connection with a transfer pursuant to Rule 144 under the Securities Act.
(g) Additional Restrictions on Exercise or Transfer.
Notwithstanding anything contained herein to the contrary, this Warrant shall
not be exercisable by a holder hereof to the extent (but only to the extent)
that (a) the number of shares of Common Stock beneficially owned by such holder
and its affiliates (other than shares of Common Stock which may be deemed
beneficially owned through the ownership of the unexercised portion of the
Warrants or the unexercised or unconverted portion of any other securities of
the Company (including the Debentures) subject to a limitation on conversion or
exercise analogous to the limitation contained herein) and (b) the number of
shares of Common Stock issuable upon exercise of the Warrants (or portion
thereof) with respect to which the determination described herein is being made,
would result in beneficial ownership by such holder and its affiliates of more
than 4.99% of the outstanding shares of Common Stock. To the extent the above
limitation applies, the determination of whether and to what extent this Warrant
shall be exercisable with respect to other securities owned by such holder shall
be in the sole discretion of the holder and submission of this Warrant for full
or partial exercise shall be deemed to be the holder's determination of whether
and the extent to which this Warrant is exercisable, in each case subject to
such aggregate percentage limitation. No prior inability to exercise the
Warrants pursuant to this Section shall have any effect on the applicability of
the provisions of this Section with respect to any subsequent determination of
exercisability. For purposes of the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and Regulation 13D-G thereunder, except as
otherwise provided in clause (a) hereof. The restrictions contained in this
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Section 7(g) may not be amended without the consent of the holder of this
Warrant and the holders of a majority of the Company's then outstanding Common
Stock.
8. Registration Rights. The initial holder of this Warrant (and certain
assignees thereof) is entitled to the benefit of such registration rights in
respect of the Warrant Shares as are set forth in the Registration Rights
Agreement, including the right to assign such rights to certain assignees, as
set forth therein.
9. Notices. Any notices required or permitted to be given under the
terms of this Warrant shall be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier or by confirmed
telecopy, and shall be effective five days after being placed in the mail, if
mailed, or upon receipt or refusal of receipt, if delivered personally or by
courier, or by confirmed telecopy, in each case addressed to a party. The
addresses for such communications shall be:
If to the Company:
US Data Authority, Inc.
▇▇▇▇ ▇.▇. ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Building 84
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
If to the holder, at such address as such holder shall have provided in writing
to the Company, or at such other address as such holder furnishes by notice
given in accordance with this Section 9.
10. Governing Law; Jurisdiction. This Warrant shall be governed by and
construed in accordance with the laws of the State of Florida applicable to
contracts made and to be performed in the State of Florida. The Company
irrevocably consents to the jurisdiction of the United States federal courts and
state courts located in the State of Florida in any suit or proceeding based on
or arising under this Warrant and irrevocably agrees that all claims in respect
of such suit or proceeding may be determined in such courts. The Company
irrevocably waives any objection to the laying of venue and the defense of an
inconvenient forum to the maintenance of such suit or proceeding. The Company
further agrees that service of process upon the Company mailed by certified or
registered mail shall be deemed in every respect effective service of process
upon the Company in any such suit or proceeding. Nothing herein shall affect the
holder's right to serve process in any other manner permitted by law. The
Company agrees that a final non-appealable judgment in any such suit or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on such judgment or in any other lawful manner.
11. Miscellaneous.
(a) Amendments. Except as provided in Section 7(g) hereof,
this Warrant and any provision hereof may only be amended by an instrument in
writing signed by the Company and the holder hereof.
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(b) Descriptive Headings. The descriptive headings of the
several Sections of this Warrant are inserted for purposes of reference only,
and shall not affect the meaning or construction of any of the provisions hereof
(c) Cashless Exercise. Notwithstanding anything to the
contrary contained in this Warrant, if the resale of the Warrant Shares by the
holder is not then registered pursuant to an effective registration statement
under the Securities Act, this Warrant may be exercised at any time after the
first anniversary of the Issue Date until the end of the Exercise Period, by
presentation and surrender of ties Warrant to the Company at its principal
executive offices with a written notice of the holder's intention to effect a
cashless exercise, including a calculation of the number of shares of Common
Stock to be issued upon such exercise in accordance with the terms hereof (a
"Cashless Exercise"). In the event of a Cashless Exercise, in lieu of paying the
Exercise Price in cash, the holder shall surrender this Warrant for that number
of shares of Common Stock determined by multiplying the number of Warrant Shares
to which it would otherwise be entitled by a fraction, the numerator of which
shall be the difference between the last reported sale price per share of the
Common Stock on the date of exercise (as reported on the Nasdaq National Market,
or if not so reported, as reported on the principle United States securities
market on which the Common Stock is then traded) and the Exercise Price, and the
denominator of which shall be such last reported sale price per share of Common
Stock.
(d) Business Day. For purposes of this Warrant, the term
"business day" means any day, other than a Saturday or Sunday or a day on which
banking institutions in the State of New York are authorized or obligated by
law, regulation or executive order to close.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be
signed by its duly authorized officer.
US DATA AUTHORITY, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief Executive Officer
15
FORM OF EXERCISE AGREEMENT
(To be Executed by the Holder in order to Exercise the Warrant)
To: US DATA AUTHORITY, INC.
▇▇▇▇ ▇.▇. ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
The undersigned hereby irrevocably exercises the right to purchase
________ shares of the Common Stock of US DATA AUTHORITY, INC., a corporation
organized under the laws of the State of Florida (the "Company"), evidenced by
the attached Warrant and herewith makes payment of the Exercise Price with
respect to such shares in full, all in accordance with the conditions and
provisions of said Warrant.
The undersigned agrees not to offer, sell, transfer or otherwise
dispose of any Common Stock obtained on exercise of the Warrant, except under
circumstances that will not result in a violation of the Securities Act of 1933,
as amended, or an state securities laws.
The undersigned requests that the Company cause its transfer agent to
electronically transmit the Common Stock issuable pursuant to this
Exercise Agreement to the account of the undersigned or its nominee
(which is __________) with DTC through its Deposit Withdrawal Agent
Commission System ("DTC Transfer").
In lieu of receiving the shares of Common Stock issuable pursuant to
this Exercise Agreement by way of DTC Transfer, the undersigned hereby
requests that the Company cause its transfer agent to issue and deliver
to the undersigned physical certificates representing such shares of
Common Stock.
The undersigned requests that a Warrant representing any unexercised
portion hereof be issued, pursuant to the Warrant, in the name of the Holder and
delivered to the undersigned at the address set forth below:
Dated: _______________________ ____________________________
Signature of Holder
____________________________
Name of Holder (Print)
Address:
____________________________
____________________________
____________________________
16
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers all the rights of the undersigned under the within Warrant, with
respect to the number of shares of Common Stock covered thereby set forth
hereinbelow, to:
Name of Assignee Address No of Shares
, and hereby irrevocably constitutes and appoints _________________________ as
agent and attorney-in-fact to transfer said Warrant on the books of the
within-named corporation, with full power of substitution in the remises.
Dated: _______________, ____
In the presence of
Name: ___________________________
Signature:______________________
Title of Signing officer or Agent
(if any):
______________________
Address: ______________________
______________________
Note: The above signature should
correspond exactly with the
name on the face of the
within Warrant.
17