EXHIBIT 10.13
US DATAWORKS, INC.
NOTE AND WARRANT CONVERSION AGREEMENT
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THIS NOTE AND WARRANT CONVERSION AGREEMENT (this "AGREEMENT"), dated
June ___, 2003, is entered into by and among US DATAWORKS, INC., a Nevada
corporation (the "COMPANY"), and each Investor identified at SCHEDULE 1 hereto
(each an "INVESTOR," and collectively, the "INVESTORS").
WHEREAS, in March 2001, the Investors, for the payment of $1,775,000 in
cash, purchased six convertible promissory notes ( the "NOTES") paying 10%
interest on the outstanding principal balance, payable in full in one year. The
Notes are secured by security interest in all of the assets of the Company as
provided in that certain Security Agreement executed by the Company in favor of
the Investors dated December 18, 2001 (the "Security Agreement"). The Investors
also were issued warrants (the "ORIGINAL WARRANTS") entitling the holders to
acquire an additional 1,775,000 shares of the Company's common stock ("COMMON
STOCK") at the exercise price of $1.00 per share.
WHEREAS, pursuant to a letter agreement dated March 25, 2002, the
Company and the Investors agreed to: (1) convert one-half of the principal
balance of the Notes into Common Stock; (2) extended the remaining one-half
($887,500) of the principal balance of the Notes for another one year term; (3)
issue the Investors additional warrants (the "ADDITIONAL WARRANTS") entitling
the holders to acquire an additional 177,500 shares of the Company's Common
Stock at the exercise price of $0.50 per share; and, (4) adjust the exercise
price of the Original Warrants to $0.50.
WHEREAS, pursuant to a certain Note Extension and Warrant Agreement,
dated May 5, 2003 (the "NOTE AND WARRANT AGREEMENT"), the Company and the
Investors agreed, in lieu of the Company paying the outstanding principal
balance of the Notes that had become due, to: (i) extend the terms of the Notes
until September 30, 2003, with ten percent (10%) to be paid quarterly on the
outstanding principal balance due on June 1, 2003 and September 1, 2003; (ii)
have the Company issue the Investors new warrants ("NEW WARRANTS") entitling the
holders to acquire up to 2,840,000 shares of the Company's Common Stock at the
exercise price of twelve cents ($0.12) per share; and (iii) have the Investors
surrender the Original Warrants and the Additional Warrants to be cancelled by
the Company.
WHEREAS, the Company and the Investors now agree, and as an inducement
to cause the Investors to convert their all of the remaining principal balance
of their Notes and to exercise their New Warrants in full, to adjust the
conversion price of the Notes and the exercise price of the New Warrants as set
forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
as set forth herein and for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. For purposes of this Agreement, capitalized terms not
otherwise defined in this Agreement shall have the following meanings:
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
or any similar successor federal statute and the rules and regulations
thereunder, all as the same shall be in effect from time to time.
"KNOWLEDGE OF THE COMPANY" means the Company's actual knowledge after
due and diligent inquiry of its officers, directors and other employees and its
Subsidiaries reasonably believed to have knowledge of such matters.
"LIEN" means, with respect to any asset, any mortgage, pledge, security
interest, encumbrance, lien or charge of any kind in respect of such asset.
"MATERIAL ADVERSE EFFECT" means any change, violation, inaccuracy,
circumstance or effect that is materially adverse to the business, properties,
assets (including intangible assets), liabilities, capitalization or financial
condition of the Company and its Subsidiaries, taken as a whole; provided,
however, that the following shall not be taken into account in determining
whether there has been a Material Adverse Effect: (i) any occurrences relating
to the economy of the United States in general and (ii) changes in trading
prices for the Company's securities or for securities in general.
"PERSON" means an individual, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or any agency or
instrumentality thereof.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
similar successor federal statute and the rules and regulations thereunder, all
as the same shall be in effect from time to time.
"SEC DOCUMENTS" means the Company's periodic reports filed with the
Securities and Exchange Commission (the "SEC").
"SUBSIDIARY" ( or plural, "SUBSIDIARIES") means a Person, whether
incorporated or unincorporated, of which (i) more than fifty percent (50%) of
the securities or other ownership interests, or (ii) securities or other
interests having by their terms ordinary voting power to elect more than fifty
percent (50%) of the board of directors or others performing similar functions
with respect to such corporation or other organization, is directly owned or
controlled by such Person or by any one or more of its Subsidiaries.
2. CONVERSION OF THE NOTES AND NET ISSUE EXERCISE OF THE NEW WARRANTS.
2.1 CONVERSION OF THE NOTES.
(a) Pursuant to the Note and Warrant Agreement, the Company
entered into with each Investor a certain Note Extension Agreement, of even date
therewith (the "NOTE EXTENSION AGREEMENT"), for the principal amount as shown
for that Investor in SCHEDULE 1. A copy of the Note Extension Agreement is
attached as EXHIBIT A. Section 3 of the Note Extension Agreement is hereby
deleted in its entirety and replaced with the following:
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Upon execution of the Note and Warrant Conversion Agreement dated June 25,
2003, Noteholder shall convert 80.3717953897242% of the Note into such
number of shares of Common Stock as is determined by dividing
80.3717953897242% of the principal amount of the Note, plus any and all
accrued and unpaid interest due on the Note through such date, by the
Conversion Price. The "CONVERSION PRICE" shall be seven cents ($0.07). On
September 30, 2003, Noteholder may convert into shares of Common Stock the
remaining principal amount of the Note, together with any and all accrued
and unpaid interest due thereon through such date, in accordance with the
same formula. All other terms and conditions of the Note shall remain
unchanged.
(b) The Investors shall surrender the Notes to the Company for
cancellation. The Company agrees that the corresponding number shares of Common
Stock as set forth in SCHEDULE 1, representing the outstanding principal balance
of the extended Notes and the unpaid interest accrued as of the Closing Date (as
hereinafter defined), shall be deemed to be issued to the Investor as the record
holder of such shares as of the close of business on the Closing Date. A stock
certificate for the such number of shares as set forth in SCHEDULE 1 shall be
delivered to each Investor as promptly as practicable and, upon each Investor's
receipt of such certificate, all outstanding Notes shall be void. No adjustments
shall be made to the number of shares issuable on the conversion of the Notes
for any cash dividends paid or payable to holders of record of Common Stock
prior to the date as of which the Investors shall be deemed to be the record
holder of such shares.
(c) No quarterly interest payment for June 1, 2003 pursuant to
the Note Extension Agreement shall be due as such amount is added to the
outstanding principal balance of the extended Notes.
(d) The lien upon all of the assets of the Company as provided
in the Security Agreement shall be immediately terminated.
2.2 NET ISSUE EXERCISE OF THE NEW WARRANTS.
(a) The Company shall grant replacement warrants ("REPLACEMENT
WARRANTS"), equal to the number of New Warrants and in accordance with a certain
Replacement Warrant agreement ("WARRANT AGREEMENT"), substantially in the form
attached hereto as EXHIBIT B, to each Investor entitling him to exercise such
Replacement Warrants as shown for that Investor in SCHEDULE 1. The exercise
price for the Replacement Warrants shall be seven cents ($0.07) per share of
Common Stock.
(b) Each Investor shall surrender his Original Warrants,
Additional Warrants and New Warrants to the Company for cancellation and, upon
execution of this Agreement, any such outstanding Original Warrants, Additional
Warrants and New Warrants shall hereinafter be void.
(c) Upon Execution of this Agreement each Investor shall
exercise all of his Replacement Warrants and receive, without the payment by the
Investor of any additional consideration, such number of fully paid and
nonassessable shares of Common Stock as computed using the following formula:
X = Y (A-B)
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A
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where
X = the number of Shares to be issued to the holder pursuant to
this Section 2.2.
Y = the number of Shares listed in SCHEDULE 1.
A = the closing stock price of one share of Common Stock as
reported by the American Stock Exchange national market the
trading day immediately prior to the Closing Date.
B = seven cents ($0.07).
The Company agrees that such shares of Common Stock shall be deemed to be issued
to the Investor as the record holder of such shares as of the close of business
on the Closing Date. A stock certificate for the shares of Common Stock shall be
delivered to each Investor within ten (10) days following the Closing Date. No
adjustments shall be made to the number of shares issuable upon exercise of the
Warrants ("WARRANT SHARES") for any cash dividends paid or payable to holders of
record of Common Stock prior to the date as of which the Investor shall be
deemed to be the record holder of such Warrant Shares.
2.3 RESERVATION OF SHARES. The Company will at all times reserve and
keep available, free from preemptive rights, out of the aggregate of its
authorized but unissued Shares or its authorized and issued Shares held in its
treasury for the purpose of enabling it to satisfy any obligation to issue
Shares upon exercise of Warrants, the full number of Shares deliverable upon the
exercise of all outstanding Warrants. The Company covenants that all Shares
which may be issued upon exercise of Warrants will be validly issued, fully paid
and nonassessable outstanding Shares of the Company.
2.4 CLOSING. The consummation of this transaction (the "CLOSING") shall
take place at the offices of the Company, 0000 Xxxxxxxxx Xxxx, Xxxxx 000,
Xxxxxxx, XX 00000, on June ___, 2003, or at such other time and place as the
Company and the Investors mutually agree in writing. The date on which the
Closing takes place is referred to as the "CLOSING DATE." At the Closing, the
Company shall deliver to each Investor a duly executed Replacement Warrant
Agreement with each to be registered in the name of the Investor or, if so
indicated on the Replacement Warrant Certificate Questionnaire, attached hereto
as EXHIBIT C, in the name of a nominee designated by the Investor.
3. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY.
The Company hereby represents and warrants to, and agrees with, each
Investor that, except as otherwise disclosed in the SEC Documents, all of which
qualify the following representations and warranties in their entirety:
3.1 ORGANIZATION AND QUALIFICATION. The Company is duly incorporated
and is validly existing as a corporation in good standing under the laws of the
State of Nevada. The Company has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as currently
conducted. The Company is qualified as a foreign corporation and is in good
standing in all states where the conduct of its business or its ownership or
leasing of property requires such qualification, except where the failure to be
so qualified would not have a Material Adverse Effect on the Company.
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3.2 AUTHORIZATION. All corporate action on the part of the Company
necessary for the authorization, execution and delivery of this Agreement, the
performance of all obligations of the Company hereunder and thereunder, and the
authorization, issuance and delivery of the Notes and Replacement Warrants has
been taken or will be taken on or prior to the Closing. This Agreement
constitutes a legal, valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except (a) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting the enforcement of creditors' rights generally,
(b) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies, and (c) to the extent the
indemnification provisions contained in this Agreement may be limited by
applicable federal or state securities laws.
3.3 VALID ISSUANCE. The Notes, the Replacement Warrants and the shares
of Common Stock issuable upon conversion of the Notes and exercise of the
Replacement Warrants have been duly authorized and, when issued, sold and
delivered to the Investors after payment therefore in accordance with the terms
hereof, will be validly issued, fully paid and nonassessable, and, assuming the
accuracy of the representations and warranties of the Investors set forth at
Section 4.6 of this Agreement, will be issued in compliance with all applicable
federal and state securities laws and will be free of all Liens or other
encumbrances other than as set forth in the legends contained in Section 4.8 of
this Agreement.
3.4 SEC DOCUMENTS AND FINANCIAL STATEMENTS. The financial statements
included in the SEC Documents are hereafter collectively referred to as the
"FINANCIAL STATEMENTS." The balance sheet contained in the Company's quarterly
report on Form 10-Q for the quarter ended December 31, 2002 shall be referred
herein as the "COMPANY BALANCE SHEET" and the date of such balance sheet shall
be referred to herein as the "COMPANY BALANCE SHEET DATE." The balance sheets
included in the Financial Statements (including any related notes and schedules)
presents fairly the financial position of the Company as of its date, and the
other financial statements included in the Financial Statements (including any
related notes and schedules) present fairly the results of operations or other
information included therein of the Company for the periods or as of the dates
therein set forth (subject, in the case of interim financial statements, to
normal year-end adjustments), and each of the Financial Statements was prepared
in accordance with generally accepted accounting principles consistently applied
during the periods involved (except as otherwise stated therein and except that
interim financial statements may not contain all footnotes required by generally
accepted accounting principles).
3.5 NO MATERIAL ADVERSE CHANGE. Since the Company Balance Sheet Date,
except as set forth in the Company's SEC Documents (a) there has been no
material adverse change in the business, properties, results of operations or
financial condition of the Company, whether or not arising in the ordinary
course of business, and (b) there has been no dividend or distribution of any
kind declared, paid or made by the Company on any class of its capital stock.
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3.6 ACCESS TO INFORMATION. Prior to the Closing, the Company will
provide to the Investor, its officers, employees and professional
representatives such information as such persons from time to time may
reasonably request with respect to the Company and prior to the Closing shall
permit the Investor, its officers, employees and professional representatives
reasonable access, during regular business hours and upon reasonable notice, to
the properties, books and records of the Company as the Investor from time to
time may reasonably request.
3.7 PRIVATE OFFERING3.8 . Neither the Company nor any authorized Person
acting on its behalf has, in connection with the offer, sale, exchange or
issuance of the Securities, engaged in (i) any form of general solicitation or
general advertising (as those terms are used within the meaning of Rule 502(c)
under the Securities Act), (ii) any action involving a public offering within
the meaning of Section 4(2) of the Securities Act, or (iii) any action that
would require the registration under the Securities Act of the offering, sale,
exchange or issuance of the Securities pursuant to this Agreement or that would
violate applicable state securities or "blue sky" laws. The Company has not made
and will not prior to the Closing Date make, directly or indirectly, any offer
or sale of the Securities, or of securities of the same or similar class as the
Securities if, as a result, the offer and sale contemplated hereby would fail to
be entitled to exemption from the registration requirements of the Securities
Act. As used herein, the terms "offer" and "sale" have the meanings specified in
Section 2(3) of the Securities Act.
4. EACH INVESTOR, SEVERALLY AND NOT JOINTLY, HEREBY REPRESENTS AND
WARRANTS TO THE COMPANY THAT:
4.1 AUTHORIZATION. The Investor has all requisite power and authority
to enter into the transactions contemplated by this Agreement and that this
Agreement constitutes a valid and legally binding obligation of the Investor
except (a) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting the enforcement of
creditors' rights generally, (b) as limited by laws relating to the availability
of specific performance, injunctive relief or other equitable remedies, and (c)
to the extent the indemnification provisions contained in this Agreement may be
limited by applicable federal or state securities laws.
4.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. The Securities and Common Stock
issuable upon conversion of the Note or exercise of the Replacement Warrant to
be purchased by the Investor will be acquired for investment for the Investor's
own account, and not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and the Investor has no present intention of
selling, granting any participation in, or otherwise distributing the same. The
Investor is not a party to any contract, undertaking, agreement or arrangement
with any person to sell, transfer or otherwise dispose of any of the Securities
or Common Stock issuable upon conversion of the Note or exercise of the
Replacement Warrant purchased by it.
4.3 RELIANCE UPON INVESTOR'S REPRESENTATIONS. The Investor understands
that the issuance and sale of the Securities and Common Stock issuable upon
conversion of the Note or exercise of the Replacement Warrant will not be
registered under the Securities Act on the ground that such issuance and sale
will be exempt from registration under the Securities Act pursuant to Rule 506
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of Regulation D and/or Section 4(2) thereof, and that the Company's reliance on
such exemption is based on each Investor's representations set forth herein. The
Investor realizes that the basis for the exemption may not be present if,
notwithstanding such representations, any Investor has in mind merely acquiring
the securities for a fixed or determinable period in the future, or for a market
rise, or for sale if the market does not rise. Such Investor has no such present
intention.
4.4 RECEIPT OF INFORMATION. The Investor has had an opportunity to ask
questions and receive answers from the Company regarding the terms and
conditions of the issuance and sale of the Securities and Common Stock issuable
upon conversion of the Note or exercise of the Replacement Warrant and the
business, properties, prospects and financial condition of the Company and to
obtain additional information (to the extent the Company possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify the accuracy of any information furnished to it or to which
it had access. The foregoing, however, does not limit or modify the
representations and warranties of the Company in Section 3 of this Agreement or
the right of the Investor to rely thereon. No person other that the Company has
been authorized to give any information or to give any representation not
contained in this Agreement in connection with the Offering and, if given or
made, such information or representation must not be relied upon as having been
authorized by the Company.
4.5 INVESTMENT EXPERIENCE. The Investor is experienced in evaluating
and investing in securities of companies and acknowledges that it is able to
fend for itself, can bear the economic risk of its investment, and has such
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of the investment in the Securities.
4.6 ACCREDITED INVESTOR. The Investor is an "ACCREDITED INVESTOR" as
such term is defined in Rule 501 of Regulation D promulgated under the
Securities Act.
4.7 RESTRICTED SECURITIES. The Investor understands that the Securities
or Common Stock issuable upon conversion of the Note or exercise of the
Replacement Warrant may not be sold, transferred or otherwise disposed of
without registration under the Securities Act or an exemption therefrom, and
that in the absence of an effective registration statement covering the
Securities or Common Stock issuable upon conversion of the Note or exercise of
the Replacement Warrant or an available exemption from registration under the
Securities Act, the Securities or Common Stock issuable upon conversion of the
Note or exercise of the Replacement Warrant must be held indefinitely. In
particular, the Investor is aware that the Securities or Common Stock issuable
upon conversion of the Note or exercise of the Replacement Warrant may not be
sold pursuant to Rule 144 promulgated under the Securities Act unless all of the
conditions of that Rule are met. Among the conditions for use of Rule 144 is the
availability of current information to the public about the Company.
5. RESTRICTED TRANSFERABILITY.
5.1 LEGENDS. Each certificate or other document evidencing the
Securities or Common Stock issuable upon conversion of the Note or exercise of
the Replacement Warrant shall be endorsed with the legends set forth below, and
the Investor covenants that, except to the extent such restrictions are waived
by the Company, the Investor shall not transfer the shares represented by any
such certificate without complying with the restrictions on transfer described
in the legends endorsed on such certificate:
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(a) The following legend under the Act:
"THE SECURITIES DESCRIBED IN THIS AGREEMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE
SECURITIES LAWS OF CERTAIN STATES, AND MAY NOT BE OFFERED, SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND
ANY APPLICABLE STATE LAWS, (ii) TO THE EXTENT APPLICABLE, RULE 144
UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT RELATING TO THE
DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH
OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT
AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE LAW
IS AVAILABLE."
(b) Such other legends as may be required under state
securities laws.
5.2 PIGGYBACK REGISTRATION RIGHTS. Notwithstanding Section 4.3 or
anything contained in this Agreement, the Company hereby agrees that each
Investor shall have "piggyback" registration rights entitling such Investor to
include any and all of the shares issued to such Investor upon conversion of the
Notes or exercise of the Replacement Warrants in any future registration of any
shares of the Company. The Company shall give each Investor at least ten (10)
days' prior written notice for any proposed registration of the Company's shares
in order for such Investor to determine whether any or all of the shares issued
to Investor upon conversion of the Notes or exercise of the Replacement Warrants
shall be included therein. The Company's obligations pursuant to this Section
5.2 shall terminate as to any Investor on the earlier to occur of: (a) the
second anniversary of the date of issuance of the Common Stock upon conversion
of the Notes or exercise of the Replacement Warrants and (b) such time when all
Common Stock held by the Investor may be sold pursuant to Rule 144 under the
Securities Act during any three (3) month period.
5.3 INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each
Investor (and each person, if any, who controls such Investor within the meaning
of section 15 of the Securities Act) from and against any losses, claims,
damages or liabilities to which such Investor (or such person, if any, who
controls such Investor within the meaning of section 15 of the Securities Act)
may become subject (under the Securities Act or otherwise) insofar as such
losses, claims, damages or liabilities (or actions or proceedings in respect
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thereof) arise out of, or are based upon (i) a material breach of any term of
this Agreement, the Notes and the Warrants, or (ii) the material breach of any
representation, warranty or covenant of this Agreement, the Notes and the
Warrants. The Company will reimburse such Investor (and each person, if any, who
controls such Investor within the meaning of section 15 of the Securities Act)
for any reasonable legal or other expenses reasonably incurred in investigating,
defending or preparing to defend any such action, proceeding or claim; provided,
however, that the Company shall not be liable in any such case to the extent
that such loss, claim, damage or liability arises out of, or is based upon the
breach by any Investor to comply with its representations, warranties, covenants
and agreements contained in this Agreement.
(b) The Investor agrees to indemnify and hold the Company
harmless from and against any losses, claims, damages or liabilities to which
the Company may become subject (under the Securities Act or otherwise) insofar
as such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of, or are based upon a material breach of any
representation, warranty or covenant of this Agreement, the Notes and the
Warrants. The Investor will reimburse the Company for any reasonable legal or
other expenses reasonably incurred in investigating, defending or preparing to
defend any such action, proceeding or claim; provided, however, that the
Investor shall not be liable in any such case to the extent that such loss,
claim, damage or liability arises out of, or is based upon the breach by the
Company to comply with its representations, warranties, covenants and agreements
contained in this Agreement.
6. MISCELLANEOUS.
6.1 REASONABLE EFFORTS; OTHER ACTIONS. Subject to the terms and
conditions herein provided and applicable law, the Company and Investor shall
use all commercially reasonable efforts promptly to take, or cause to be taken,
all other actions and do, or cause to be done, all other things necessary,
proper or appropriate under applicable laws and regulations to consummate and
make effective the transactions contemplated by this Agreement.
6.2 INTERPRETATION. When a reference is made in this Agreement to
Exhibits, such reference shall be to an Exhibit to this Agreement unless
otherwise indicated. The words "include," "includes" and "including" when used
herein shall be deemed in each case to be followed by the words "without
limitation." In this Agreement, any reference to any event, change, condition or
effect being "material" with respect to any entity or group of entities means
any material event, change, condition or effect related to the condition
(financial or otherwise), properties, assets (including intangible assets),
liabilities, business, operations or results of operations of such entity or
group of entities. The phrase "made available" in this Agreement shall mean that
the information referred to has been made available if requested by the party to
whom such information is to be made available. The phrases "the date of this
Agreement", "the date hereof", and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to June ____, 2003. The headings
and subheadings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement. Any
reference in this Agreement to a statutory provision or rule or regulation
promulgated thereunder shall be deemed to include any similar successor
statutory provision or rule or regulation promulgated thereunder.
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6.3 SUCCESSORS AND ASSIGNS. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors and
assigns of the parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement. Neither the Company nor the Investor shall assign this
Agreement or any rights hereunder or delegate any duties hereunder without the
prior written consent of the other except as otherwise provided herein.
6.4 NOTICES. Unless otherwise provided, any notice, request, demand or
other communication required or permitted under this Agreement shall be given in
writing and shall be deemed effectively given upon personal delivery to the
party to be notified, or when sent by Facsimile (with receipt confirmed and
promptly confirmed by personal delivery, U.S. first class mail, or courier), or
overnight courier service, or upon deposit with the United States Post Office,
by registered or certified mail, postage prepaid and addressed as follows (or at
such other address as a party may designate by notice to the other):
If to the Company:
US Dataworks, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx Xxxxx, President
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
with a copy to:
Pillsbury Winthrop LLP
0000 Xxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
If to the Investor:
See the address provided by the Investor on its counter-part signature
page.
with a copy to:
Xxxxxx & Xxxxxx
1900 Avenue of the Stars, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
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6.5 SURVIVAL. All representations and warranties contained or provided
for herein shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the party benefiting from any such
representation or warranty, and shall survive the Closing to the extent of
applicable statutes of limitations.
6.6 AMENDMENTS AND WAIVERS. This Agreement may be amended or modified
only by a written instrument signed by the Company and the Investors hereunder.
The observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively) only with
the written consent of the party against whom such waiver is sought to be
enforced. No waiver by either party of any default with respect to any
provision, condition or requirement hereof shall be deemed to be a continuing
waiver in the future thereof or a waiver of any other provision, condition or
requirement hereof; nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right accruing
to it thereafter.
6.7 SEVERABILITY. If one or more provisions of this Agreement are held
to be unenforceable, invalid or void by a court of competent jurisdiction, such
provision shall be excluded from this Agreement and the balance of this
Agreement shall be interpreted as if such provision were so excluded and shall
be enforceable in accordance with its terms.
6.8 ENTIRE AGREEMENT. This Agreement and the documents referred to
herein contain the entire understanding of the parties with respect to the
matters covered herein and supersedes all prior agreements and understandings,
written or oral, between the parties relating to the subject matter hereof.
6.9 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of California (irrespective of its choice of law
principles); provided, however, that neither this Agreement nor any provision
hereof shall be construed for or against any party on the basis that such party
drafted this Agreement or any provision hereof.
6.10 COUNTERPARTS. This Agreement may be executed by facsimile copies
and in two or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
6.11 ATTORNEYS' FEES. Within ten (10) days following the Closing,
Company shall reimburse or pay any and all reasonable attorneys' fees and costs
incurred by Investors in connection with the negotiation and documentation of
the transactions covered or contemplated by this Agreement.
6.12 LIMITATION ON NOTE CONVERSION. The Company shall not issue Common
Stock upon conversion of the Note if such issuance, when added to the number of
shares of Common Stock issued by the Company upon exercise of Replacement
Warrants, would equal or exceed twenty percent (20%) of the total number of
Common Stock issued and outstanding on the date of such conversion without first
obtaining the approval of its voting shareholders to such issuance in accordance
with the rules of the American Stock Exchange or any other market rules with
which the Company shall be required to comply at the time of such conversion.
-11-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
COMPANY
US DATAWORKS, INC.
By ________________________
Name ______________________
Title _____________________
INVESTORS
---------
[Investor signatures follow on
attached counterparts]
-12-
SIGNATURE PAGE TO
NOTE AND WARRANT PURCHASE AGREEMENT
DATED AS OF JUNE ___ 2003
BY AND AMONG
US DATAWORKS, INC.
AND EACH INVESTOR NAMED THEREIN
The undersigned hereby executes and delivers this Note and Warrant
Conversion Agreement (the "AGREEMENT") to which this Signature Page is attached
effective as of the date of the Agreement, which Agreement and Signature Page,
together with all counterparts of such Agreement and signature pages of the
other Investors named in such Agreement, shall constitute one and the same
document in accordance with the terms of such Agreement.
Common Stock issued upon Conversion of
extended Note: _______________________________________
Number of Replacement Warrants: _______________________________________
Signature: _______________________________________
Print name: _______________________________________
Date: _______________________________________
-13-
SCHEDULE 1
----------
SCHEDULE OF INVESTORS
PRINCIPAL
INITIAL BALANCE OF 91 DAYS'
INVESTMENT IN EXTENDED ACCRUED ORIGINAL ADDITIONAL REPLACEMENT
INVESTOR THE COMPANY NOTE INTEREST WARRANTS WARRANTS NEW WARRANTS WARRANTS
-------- ----------- ---- -------- -------- -------- ------------ --------
Xxxx Xxxxxxx $375,000 $187,500 $4,687.50 375,000 37,500 600,000 600,000
Xxxx Xxxxxx $400,000 $200,000 $5,000.00 400,000 40,000 640,000 640,000
Xxxxxx Xxxxx $500,000 $250,000 $6,250.00 500,000 50,000 800,000 800,000
Xxxxx Xxxxxxx $500,000 $250,000 $6,250.00 500,000 50,000 800,000 800,000
TOTALS $1,775,000 $887,500 $22,187.50 1,775,000 177,500 2,840,000 2,840,000
(continued)
COMMON STOCK
ISSUED UPON
COMMON STOCK 19.63% CONVERSION OF
ISSUED UPON REMAINING 19.63%
80.37 % BALANCE OF REMAINING
CONVERSION OF EXTENDED NOTE BALANCE OF
INVESTOR EXTENDED NOTE DUE 9/30/2003 EXTENDED NOTE
-------- ------------- ------------- -------------
Xxxx Xxxxxxx 2,206,637 $36,803 538,899
Xxxx Xxxxxx 2,353,745 $39,256 574,826
Xxxxxx Xxxxx 2,942,182 $49,071 718,532
Xxxxx Xxxxxxx 2,942,182 $49,071 718,532
TOTALS 10,444,745 $174,200 2,550,790
EXHIBIT A
---------
NOTE EXTENSION AGREEMENT
EXHIBIT B
---------
FORM OF REPLACEMENT WARRANT AGREEMENT
EXHIBIT C
---------
US DATAWORKS, INC.
REPLACEMENT WARRANT QUESTIONNAIRE
Pursuant to Section 2.4 of this Agreement, please provide us with the
following information:
1. The exact name that your
Replacement Warrant is to be
registered in (this is the name
that will appear on your stock
certificate(s)). You may use a
nominee if appropriate: ___________________________________
2. The relationship between the
Investor and the registered holder
listed in response to item 1 above: ___________________________________
3. The mailing address of the
registered holder listed in
response to item 1 above: ___________________________________
4. The Social Security Number of Tax
Identification Number of the
registered holder listed in the
response to item 1 above: ___________________________________
