EXHIBIT 99.4
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.
COMMON STOCK PURCHASE WARRANT
To Purchase _________ Shares of Common Stock of
US DATAWORKS, INC.
This common stock purchase warrant (the "NEW WARRANT")
certifies that, for value received, ______________________________ (the
"HOLDER"), is entitled, upon the terms and subject to the limitations on
exercise and the conditions hereinafter set forth, at any time on or after the
Initial Exercise Date (as defined in Section 3, below) and on or prior to the
close of business on the third anniversary of the Initial Exercise Date (the
"TERMINATION DATE") but not thereafter, to subscribe for and purchase from US
Dataworks, Inc., a corporation incorporated in the State of Nevada (the
"COMPANY"), one thousand (1,000) shares of common stock, par value $0.0001 per
share, of the Company (the "COMMON STOCK") for every ten thousand dollars
($10,000) such Holder paid of Subscription Amount (as such term is defined in
the Securities Purchase Agreement) to the Company. The purchase price of one
share of Common Stock (the "EXERCISE PRICE") under this New Warrant shall be
NINE CENTS ($0.09), subject to adjustment hereunder. The Exercise Price and the
number of shares of Common Stock for which the Warrant is exercisable (such
shares, "NEW WARRANT SHARES") shall be subject to adjustment as provided herein.
Capitalized terms used and not otherwise defined herein shall
have the meanings set forth in that certain Securities Purchase Agreement (the
"SECURITIES PURCHASE AGREEMENT"), dated August 4, 2003, between the Company and
the purchasers signatory thereto.
1. TITLE TO WARRANT. Prior to the Termination Date and subject
to compliance with applicable laws and Section 7 of this New Warrant, this New
Warrant and all rights hereunder are transferable, in whole or in part, at the
office or agency of the Company by the Holder in person or by duly authorized
attorney, upon surrender of this New Warrant together with the Assignment Form
annexed hereto properly endorsed. The transferee shall sign an investment letter
in form and substance reasonably satisfactory to the Company.
2. AUTHORIZATION OF SHARES. The Company covenants that all New
Warrant Shares which may be issued upon the exercise of the purchase rights
represented by this New Warrant will, upon exercise of the purchase rights
represented by this New Warrant, be duly authorized, validly issued, fully paid
and nonassessable and free from all taxes, liens and charges in respect of the
issue thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue).
3. EXERCISE OF WARRANT.
(a) Exercise of the purchase rights represented by
this New Warrant may be made at any time or times on or after the Initial
Exercise Date and on or before the Termination Date by the surrender of this New
Warrant and the Notice of Exercise Form annexed hereto duly executed, at the
office of the Company (or such other office or agency of the Company as it may
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designate by notice in writing to the registered Holder at the address of such
Holder appearing on the books of the Company) and upon payment of the Exercise
Price of the shares thereby purchased by wire transfer or cashier's check drawn
on a United States bank or by means of a cashless exercise pursuant to Section
3(d), the Holder shall be entitled to receive a certificate for the number of
New Warrant Shares so purchased. The "INITIAL EXERCISE DATE" shall mean the
Trading Day immediately following the earlier of either (i) the approval by the
Company's shareholders and implementation of a reverse stock split, the result
of which causing enough authorized but not issued Common Stock to accommodate
the full conversion of the Debentures and exercise of the Original Warrants and
New Warrants held by each of the signatories to the Securities Purchase
Agreement; (ii) the approval and implementation of an increase to the authorized
Common Stock, such increase in the authorized number of Common Stock substantial
enough to accommodate the full conversion of the Debentures and full exercise of
the Original Warrants and New Warrants held by each of the signatories to the
Securities Purchase Agreement; or (iii) the period ending ten Trading Days
following July 30, 2004. Certificates for shares purchased hereunder shall be
delivered to the Holder within three (3) Trading Days after the date on which
this New Warrant shall have been exercised as aforesaid. This New Warrant shall
be deemed to have been exercised and such certificate or certificates shall be
deemed to have been issued, and the Holder or any other person so designated to
be named therein shall be deemed to have become a holder of record of such
shares for all purposes, as of the date the Warrant has been exercised by
payment to the Company of the Exercise Price and all taxes required to be paid
by the Holder, if any, pursuant to Section 5 prior to the issuance of such
shares, have been paid. If the Company fails to deliver to the Holder a
certificate or certificates representing the New Warrant Shares pursuant to this
Section 3(a) by the close of business on the third Trading Day after the date of
exercise, then the Holder will have the right to rescind such exercise. In
addition to any other rights available to the Holder, if the Company fails to
deliver to the Holder a certificate or certificates representing the New Warrant
Shares pursuant to an exercise by the close of business on the third Trading Day
after the date of exercise, and if after such third Trading Day the Holder is
required by its broker to purchase (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by the Holder of the
New Warrant Shares which the Holder anticipated receiving upon such exercise (a
"BUY-IN"), then the Company shall (1) pay in cash to the Holder the amount by
which (x) the Holder's total purchase price (including brokerage commissions, if
any) for the shares of Common Stock so purchased exceeds (y) the amount obtained
by multiplying (A) the number of New Warrant Shares that the Company was
required to deliver to the Holder in connection with the exercise at issue times
(B) the price at which the sell order giving rise to such purchase obligation
was executed, and (2) at the option of the Holder, either reinstate the portion
of the Warrant and equivalent number of New Warrant Shares for which such
exercise was not honored or deliver to the Holder the number of shares of Common
Stock that would have been issued had the Company timely complied with its
exercise and delivery obligations hereunder. For example, if the Holder
purchases Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted exercise of shares of Common Stock with an
aggregate sale price giving rise to such purchase obligation of $10,000, under
clause (1) of the immediately preceding sentence the Company shall be required
to pay the Holder $1,000. The Holder shall provide the Company written notice
indicating the amounts payable to the Holder in respect of the Buy-In, together
with applicable confirmations and other evidence reasonably requested by the
Company. Nothing herein shall limit a Holder's right to pursue any other
remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with
respect to the Company's failure to timely deliver certificates representing
shares of Common Stock upon exercise of the Warrant as required pursuant to the
terms hereof.
(b) If this New Warrant shall have been exercised in
part, the Company shall, at the time of delivery of the certificate or
certificates representing New Warrant Shares, deliver to Holder a new Warrant
evidencing the rights of Holder to purchase the unpurchased New Warrant Shares
called for by this New Warrant, which new Warrant shall in all other respects be
identical with this New Warrant.
(c) Notwithstanding anything herein to the contrary,
in no event shall the Holder be permitted to exercise this New Warrant for New
Warrant Shares to the extent that (i) the number of shares of Common Stock
beneficially owned by such Holder, together with any affiliate thereof (other
than New Warrant Shares issuable upon exercise of this New Warrant) plus (ii)
the number of New Warrant Shares issuable upon exercise of this New Warrant,
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would be equal to or exceed 4.9999% of the number of shares of Common Stock then
issued and outstanding, including shares issuable upon exercise of this New
Warrant held by such Holder after application of this Section 3(c). As used
herein, beneficial ownership shall be determined in accordance with Section
13(d) of the Exchange Act and the rules promulgated thereunder. To the extent
that the limitation contained in this Section 3(c) applies, the determination of
whether this New Warrant is exercisable (in relation to other securities owned
by the Holder) and of which a portion of this New Warrant is exercisable shall
be in the sole discretion of such Holder, and the submission of a Notice of
Exercise shall be deemed to be such Holder's determination of whether this New
Warrant is exercisable (in relation to other securities owned by such Holder)
and of which portion of this New Warrant is exercisable, in each case subject to
such aggregate percentage limitation, and the Company shall have no obligation
to verify or confirm the accuracy of such determination. Nothing contained
herein shall be deemed to restrict the right of a Holder to exercise this New
Warrant into New Warrant Shares at such time as such exercise will not violate
the provisions of this Section 3(c). The provisions of this Section 3(c) may be
waived by the Holder upon, at the election of the Holder, not less than
sixty-one (61) days' prior notice to the Company, and the provisions of this
Section 3(c) shall continue to apply until such 61st day (or such later date, as
determined by the Holder, as may be specified in such notice of waiver). No
exercise of this New Warrant in violation of this Section 3(c) but otherwise in
accordance with this New Warrant shall affect the status of the New Warrant
Shares as validly issued, fully-paid and nonassessable.
(d) If, but only if, at any time after one year from
the date of issuance of this New Warrant there is no effective Registration
Statement registering the resale of the New Warrant Shares by the Holder, this
New Warrant may also be exercised at such time by means of a "cashless exercise"
in which the Holder shall be entitled to receive a certificate for the number of
New Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by
(A), where:
(A) = the VWAP on the Trading Day preceding the date of such
election;
(B) = the Exercise Price of the Warrants, as adjusted; and
(X) = the number of New Warrant Shares issuable upon exercise
of the Warrants in accordance with the terms of this New
Warrant.
4. NO FRACTIONAL SHARES OR SCRIP. No fractional shares or
scrip representing fractional shares shall be issued upon the exercise of this
New Warrant. As to any fraction of a share which Holder would otherwise be
entitled to purchase upon such exercise, the Company shall pay a cash adjustment
in respect of such final fraction in an amount equal to such fraction multiplied
by the Exercise Price.
5. CHARGES, TAXES AND EXPENSES. Issuance of certificates for
New Warrant Shares shall be made without charge to the Holder for any issue or
transfer tax or other incidental expense in respect of the issuance of such
certificate, all of which taxes and expenses shall be paid by the Company, and
such certificates shall be issued in the name of the Holder or in such name or
names as may be directed by the Holder; provided, however, that in the event
certificates for New Warrant Shares are to be issued in a name other than the
name of the Holder, this New Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the Holder;
and the Company may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental thereto.
6. CLOSING OF BOOKS. The Company will not close its
stockholder books or records in any manner which prevents the timely exercise of
this New Warrant, pursuant to the terms hereof.
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7. TRANSFER, DIVISION AND COMBINATION.
(a) Subject to compliance with any applicable
securities laws and the conditions set forth in Sections 1 and 7(e) hereof and
to the provisions of Section 4.1 of the Securities Purchase Agreement, this New
Warrant and all rights hereunder are transferable, in whole or in part, upon
surrender of this New Warrant at the Trading office of the Company, together
with a written assignment of this New Warrant substantially in the form attached
hereto duly executed by the Holder or its agent or attorney and funds sufficient
to pay any transfer taxes payable upon the making of such transfer. Upon such
surrender and, if required, such payment, the Company shall execute and deliver
a warrant or warrants in the name of the assignee or assignees and in the
denomination or denominations specified in such instrument of assignment, and
shall issue to the assignor a new Warrant evidencing the portion of this New
Warrant not so assigned, and this New Warrant shall promptly be cancelled. A
Warrant, if properly assigned, may be exercised by a new holder for the purchase
of New Warrant Shares without having a new warrant issued.
(b) This New Warrant may be divided or combined with
other warrants upon presentation hereof at the aforesaid office of the Company,
together with a written notice specifying the names and denominations in which
new warrants are to be issued, signed by the Holder or its agent or attorney.
Subject to compliance with Section 7(a), as to any transfer which may be
involved in such division or combination, the Company shall execute and deliver
a new warrant or warrants in exchange for the New Warrant to be divided or
combined in accordance with such notice.
(c) The Company shall prepare, issue and deliver at
its own expense (other than transfer taxes) the new warrant or warrants under
this Section 7.
(d) The Company agrees to maintain, at its aforesaid
office, books for the registration and the registration of transfer of the New
Warrants.
(e) If, at the time of the surrender of this New
Warrant in connection with any transfer of this New Warrant, the transfer of
this New Warrant shall not be registered pursuant to an effective registration
statement under the Securities Act and under applicable state securities or blue
sky laws, the Company may require, as a condition of allowing such transfer (i)
that the Holder or transferee of this New 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 transfer 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.
8. NO RIGHTS AS SHAREHOLDER UNTIL EXERCISE. This New Warrant
does not entitle the Holder to any voting rights or other rights as a
shareholder of the Company prior to the exercise hereof. Upon the surrender of
this New Warrant and the payment of the aggregate Exercise Price (or by means of
a cashless exercise), the New Warrant Shares so purchased shall be and be deemed
to be issued to such Holder as the record owner of such shares as of the close
of business on the later of the date of such surrender or payment.
9. LOSS, THEFT, DESTRUCTION OR MUTILATION OF NEW WARRANT. The
Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this New
Warrant or any stock certificate relating to the New Warrant Shares, and in case
of loss, theft or destruction, of indemnity or security reasonably satisfactory
to it (which, in the case of the Warrant, shall not include the posting of any
bond), and upon surrender and cancellation of such Warrant or stock certificate,
if mutilated, the Company will make and deliver a new Warrant or stock
certificate of like tenor and dated as of such cancellation, in lieu of such
Warrant or stock certificate.
10. SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If the last or
appointed day for the taking of any action or the expiration of any right
required or granted herein shall be a Saturday, Sunday or a legal holiday, then
such action may be taken or such right may be exercised on the next succeeding
day not a Saturday, Sunday or legal holiday.
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11. ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF NEW WARRANT
SHARES.
(a) STOCK SPLITS, ETC. The number and kind of
securities purchasable upon the exercise of this New Warrant and the Exercise
Price shall be subject to adjustment from time to time upon the happening of any
of the following. In case the Company shall (i) pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock to holders of its
outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock
into a greater number of shares, (iii) combine its outstanding shares of Common
Stock into a smaller number of shares of Common Stock, or (iv) issue any shares
of its capital stock in a reclassification of the Common Stock, then the number
of New Warrant Shares purchasable upon exercise of this New Warrant immediately
prior thereto shall be adjusted so that the Holder shall be entitled to receive
the kind and number of New Warrant Shares or other securities of the Company
which it would have owned or have been entitled to receive had such Warrant been
exercised in advance thereof. Upon each such adjustment of the kind and number
of New Warrant Shares or other securities of the Company which are purchasable
hereunder, the Holder shall thereafter be entitled to purchase the number of New
Warrant Shares or other securities resulting from such adjustment at an Exercise
Price per Warrant Share or other security obtained by multiplying the Exercise
Price in effect immediately prior to such adjustment by the number of New
Warrant Shares purchasable pursuant hereto immediately prior to such adjustment
and dividing by the number of New Warrant Shares or other securities of the
Company resulting from such adjustment. An adjustment made pursuant to this
paragraph shall become effective immediately after the effective date of such
event retroactive to the record date, if any, for such event.
(b) ANTI-DILUTION PROVISIONS. During a period of one
year from the Initial Exercise Date, the Exercise Price and the number of New
Warrant Shares issuable hereunder and for which this New Warrant is then
exercisable pursuant to Section 1 hereof shall be subject to adjustment from
time to time as provided in this Section 11(b). In the event that any adjustment
of the Exercise Price as required herein results in a fraction of a cent, such
Exercise Price shall be rounded up or down to the nearest cent.
(i) ADJUSTMENT OF EXERCISE PRICE. If and whenever the
Company issues or sells, or in accordance with Section 11(b)
hereof is deemed to have issued or sold any shares of Common
Stock for a consideration per share of less than the then
Exercise Price or for no consideration (such lower price, the
"BASE SHARE PRICE" and such issuances collectively, a
"DILUTIVE ISSUANCE"), then, the Exercise Price shall be
reduced to equal the Base Share Price. Such adjustment shall
be made whenever such shares of Common Stock or Capital Share
Equivalents are issued.
(ii) EFFECT ON EXERCISE PRICE OF CERTAIN EVENTS. For
purposes of determining the adjusted Exercise Price under
Section 11(b) hereof, the following will be applicable:
(A) 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 Exercise Price ("BELOW BASE
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PRICE OPTIONS"), then the maximum total number of
shares of Common Stock issuable upon the exercise of
all such Below Base Price Options (assuming full
exercise, conversion or exchange of Convertible
Securities, if applicable) will, as of the date of
the issuance or grant of such Below Base Price
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 Base Price 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 Base Price Options, plus the minimum
aggregate amount of additional consideration, if any,
payable to the Company upon the exercise of all such
Below Base Price Options, plus, in the case of
Convertible Securities issuable upon the exercise of
such Below Base Price 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 Base Price Options
(assuming full conversion of Convertible Securities,
if applicable). No further adjustment to the Exercise
Price will be made upon the actual issuance of such
Common Stock upon the exercise of such Below Base
Price Options or upon the exercise, conversion or
exchange of Convertible Securities issuable upon
exercise of such Below Base Price Options.
(B) ISSUANCE OF CONVERTIBLE
SECURITIES. 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 is less
than the Exercise Price, 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 will be made upon
the actual issuance of such Common Stock upon
exercise, conversion or exchange of such Convertible
Securities.
(C) CHANGE IN OPTION PRICE OR
CONVERSION RATE. If there is a change at any time in
(i) the amount of additional consideration payable to
the Company upon the exercise of any Options; (ii)
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 in effect at the time of such change
will be readjusted to the Exercise Price 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.
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(D) 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
New 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, the amount of the consideration other than
cash received by the Company 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 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 fair
market value of any consideration other than cash or
securities 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.
(E) EXCEPTIONS TO ADJUSTMENT OF
EXERCISE PRICE. Notwithstanding the foregoing, no
adjustment will be made hereunder in respect of (A)
the granting of options to employees, officers and
directors of the Company pursuant to any stock option
plan duly adopted by a majority of the non-employee
members of the Board of Directors of the Company or a
majority of the members of a committee of
non-employee directors established for such purpose,
(B) upon the exercise of this New Warrant or any
other Warrant of this series or of any other series
or security issued by the Company in connection with
the offer and sale of this Company's securities
pursuant to the Securities Purchase Agreement, or (C)
acquisitions or strategic investments, the primary
purpose of which is not to raise capital.
(iii) MINIMUM ADJUSTMENT OF EXERCISE PRICE; LIMIT ON
REDUCTION. No adjustment of the Exercise Price shall be made
in an amount of less than 1% of the Exercise Price in effect
at the time such adjustment is otherwise 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. In no instance shall any adjustment made
pursuant to this subsection 11(b) cause the Exercise Price to
be reduced to a price less than seven cents ($0.07) per share.
12. REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION OR
DISPOSITION OF ASSETS. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where there
is a change in or distribution with respect to the Common Stock of the Company),
or sell, transfer or otherwise dispose of all or substantially all its property,
assets or business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, shares of common stock of the successor or acquiring corporation, or any
cash, shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation ("Other
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Property"), are to be received by or distributed to the holders of Common Stock
of the Company, then the Holder shall have the right thereafter to receive, at
the option of the Holder, (a) upon exercise of this New Warrant, the number of
shares of Common Stock of the successor or acquiring corporation or of the
Company, if it is the surviving corporation, and Other Property receivable upon
or as a result of such reorganization, reclassification, merger, consolidation
or disposition of assets by a Holder of the number of shares of Common Stock for
which this New Warrant is exercisable immediately prior to such event, or (b)
cash equal to the value of this New Warrant as determined in accordance with the
Black-Sholes option pricing formula. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than the Company) shall expressly assume the
due and punctual observance and performance of each and every covenant and
condition of this New Warrant to be performed and observed by the Company and
all the obligations and liabilities hereunder, subject to such modifications as
may be deemed appropriate (as determined in good faith by resolution of the
Board of Directors of the Company) in order to provide for adjustments of New
Warrant Shares for which this New Warrant is exercisable which shall be as
nearly equivalent as practicable to the adjustments provided for in this Section
12. For purposes of this Section 12, "common stock of the successor or acquiring
corporation" shall include stock of such corporation of any class which is not
preferred as to dividends or assets over any other class of stock of such
corporation and which is not subject to redemption and shall also include any
evidences of indebtedness, shares of stock or other securities which are
convertible into or exchangeable for any such stock, either immediately or upon
the arrival of a specified date or the happening of a specified event and any
warrants or other rights to subscribe for or purchase any such stock. The
foregoing provisions of this Section 12 shall similarly apply to successive
reorganizations, reclassifications, mergers, consolidations or disposition of
assets.
13. VOLUNTARY ADJUSTMENT BY THE COMPANY. The Company may at
any time during the term of this New Warrant reduce the then current Exercise
Price to any amount and for any period of time deemed appropriate by the Board
of Directors of the Company.
14. NOTICE OF ADJUSTMENT. Whenever the number of New Warrant
Shares or number or kind of securities or other property purchasable upon the
exercise of this New Warrant or the Exercise Price is adjusted, as herein
provided, the Company shall give notice thereof to the Holder, which notice
shall state the number of New Warrant Shares (and other securities or property)
purchasable upon the exercise of this New Warrant and the Exercise Price of such
New Warrant Shares (and other securities or property) after such adjustment,
setting forth a brief statement of the facts requiring such adjustment and
setting forth the computation by which such adjustment was made.
15. NOTICE OF CORPORATE ACTION. If at any time:
(a) the Company shall take a record of the holders of
its Common Stock for the purpose of entitling them to receive a
dividend or other distribution, or any right to subscribe for or
purchase any evidences of its indebtedness, any shares of stock of any
class or any other securities or property, or to receive any other
right, or
(b) there shall be any capital reorganization of the
Company, any reclassification or recapitalization of the capital stock
of the Company or any consolidation or merger of the Company with, or
any sale, transfer or other disposition of all or substantially all the
property, assets or business of the Company to, another corporation or,
(c) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall give to Holder (i) at
least 20 days' prior written notice of the date on which a record date shall be
selected for such dividend, distribution or right or for determining rights to
vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, liquidation or winding up, and (ii)
in the case of any such reorganization, reclassification, merger, consolidation,
sale, transfer, disposition, dissolution, liquidation or winding up, at least 20
days' prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause also shall specify (i) the date
on which any such record is to be taken for the purpose of such dividend,
distribution or right, the date on which the holders of Common Stock shall be
8
entitled to any such dividend, distribution or right, and the amount and
character thereof, and (ii) the date on which any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up is to take place and the time, if any
such time is to be fixed, as of which the holders of Common Stock shall be
entitled to exchange their New Warrant Shares for securities or other property
deliverable upon such disposition, dissolution, liquidation or winding up. Each
such written notice shall be sufficiently given if addressed to Holder at the
last address of Xxxxxx appearing on the books of the Company and delivered in
accordance with Section 17(d).
16. AUTHORIZED SHARES. The Company covenants that during the
period the Warrant is outstanding, it will reserve from its authorized and
unissued Common Stock a sufficient number of shares to provide for the issuance
of the New Warrant Shares upon the exercise of any purchase rights under this
New Warrant. The Company further covenants that its issuance of this New Warrant
shall constitute full authority to its officers who are charged with the duty of
executing stock certificates to execute and issue the necessary certificates for
the New Warrant Shares upon the exercise of the purchase rights under this New
Warrant. The Company will take all such reasonable action as may be necessary to
assure that such New Warrant Shares may be issued as provided herein without
violation of any applicable law or regulation, or of any requirements of the
Trading Market upon which the Common Stock may be listed.
Except and to the extent as waived or consented to by
the Holder, the Company shall not by any action, including, without
limitation, amending its certificate of incorporation 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 of this New Warrant, but will at
all times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect the
rights of Holder as set forth in this New Warrant against impairment. Without
limiting the generality of the foregoing, the Company will (a) not increase the
par value of any New Warrant Shares above the amount payable therefor upon such
exercise immediately prior to such increase in par value, (b) take all such
action as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable New Warrant Shares upon the
exercise of this New Warrant, and (c) use commercially reasonable efforts to
obtain all such authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof as may be necessary to enable the
Company to perform its obligations under this New Warrant.
Before taking any action which would result in an
adjustment in the number of New Warrant Shares for which this New Warrant is
exercisable or in the Exercise Price, the Company shall obtain all such
authorizations or exemptions thereof, or consents thereto, as may be necessary
from any public regulatory body or bodies having jurisdiction thereof.
17. MISCELLANEOUS.
(a) JURISDICTION. This New Warrant shall constitute a
contract under the laws of New York, without regard to its conflict of law,
principles or rules.
(b) RESTRICTIONS. The Holder acknowledges that the
New Warrant Shares acquired upon the exercise of this New Warrant, if not
registered, will have restrictions upon resale imposed by state and federal
securities laws.
(c) NONWAIVER AND EXPENSES. No course of dealing or
any delay or failure to exercise any right hereunder on the part of Holder shall
operate as a waiver of such right or otherwise prejudice Xxxxxx's rights, powers
or remedies, notwithstanding all rights hereunder terminate on the Termination
Date. If the Company willfully and knowingly fails to comply with any provision
of this New Warrant, which results in any material damages to the Holder, the
Company shall pay to Holder such amounts as shall be sufficient to cover any
costs and expenses including, but not limited to, reasonable attorneys' fees,
including those of appellate proceedings, incurred by Holder in collecting any
amounts due pursuant hereto or in otherwise enforcing any of its rights, powers
or remedies hereunder.
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(d) NOTICES. Any notice, request or other document
required or permitted to be given or delivered to the Holder by the Company
shall be delivered in accordance with the notice provisions of the Securities
Purchase Agreement; provided upon any permitted assignment of this New Warrant,
the assignee shall promptly provide the Company with its contact information.
(e) LIMITATION OF LIABILITY. No provision hereof, in
the absence of any affirmative action by Holder to exercise this New Warrant or
purchase New Warrant Shares, and no enumeration herein of the rights or
privileges of Holder, shall give rise to any liability of Holder for the
purchase price of any Common Stock or as a stockholder of the Company, whether
such liability is asserted by the Company or by creditors of the Company.
(f) REMEDIES. Holder, in addition to being entitled
to exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this New Warrant. The
Company agrees that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this New Warrant
and hereby agrees to waive the defense in any action for specific performance
that a remedy at law would be adequate.
(g) SUCCESSORS AND ASSIGNS. Subject to applicable
securities laws, this New Warrant and the rights and obligations evidenced
hereby shall inure to the benefit of and be binding upon the successors of the
Company and the successors and permitted assigns of Holder. The provisions of
this New Warrant are intended to be for the benefit of all Holders from time to
time of this New Warrant and shall be enforceable by any such Holder or holder
of New Warrant Shares.
(h) AMENDMENT. This New Warrant may be modified or
amended or the provisions hereof waived with the written consent of the Company
and the Holder.
(i) SEVERABILITY. Wherever possible, each provision
of this New Warrant shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this New Warrant shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of
this New Warrant.
(j) HEADINGS. The headings used in this New Warrant
are for the convenience of reference only and shall not, for any purpose, be
deemed a part of this New Warrant.
********************
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IN WITNESS WHEREOF, the Company has caused this New Warrant to
be executed by its officer thereunto duly authorized.
Dated: August 4, 2003
US DATAWORKS, INC.
By:___________________________
Name:
Title:
11
NOTICE OF EXERCISE
To: US Dataworks, Inc.
(1) The undersigned hereby elects to purchase ________ New
Warrant Shares of US Dataworks, Inc. pursuant to the terms of the attached
Warrant (only if exercised in full), and tenders herewith payment of the
exercise price in full, together with all applicable transfer taxes, if any.
(2) Payment shall take the form of (check applicable box):
[ ] in lawful money of the United States; or
[ ] the cancellation of such number of New Warrant
Shares as is necessary, in accordance with the
formula set forth in subsection 3(d), to exercise
this New Warrant with respect to the maximum number
of New Warrant Shares purchasable pursuant to the
cashless exercise procedure set forth in subsection
3(d).
(3) Please issue a certificate or certificates representing
said New Warrant Shares in the name of the undersigned or in such other name as
is specified below:
-------------------------------
The New Warrant Shares shall be delivered to the following:
-------------------------------
-------------------------------
-------------------------------
(4) ACCREDITED INVESTOR. The undersigned is an "accredited
investor" as defined in Regulation D promulgated under the Securities Act of
1933, as amended.
BONANZA MASTER FUND LTD.
By: ______________________________
Name:
Title:
Dated: ________________________
ASSIGNMENT FORM
(To assign the foregoing warrant,
execute this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights
evidenced thereby are hereby assigned to _____________________________________
______________________________________________________________________________
whose address is _____________________________________________________________
Dated: ______________, _______
Holder's Signature: _____________________________
Holder's Address: _____________________________
_____________________________
Signature Guaranteed: ___________________________________________
NOTE: THE SIGNATURE TO THIS ASSIGNMENT FORM MUST CORRESPOND WITH THE NAME AS IT
APPEARS ON THE FACE OF THE NEW WARRANT, WITHOUT ALTERATION OR ENLARGEMENT OR ANY
CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A BANK OR TRUST COMPANY. OFFICERS
OF CORPORATIONS AND THOSE ACTING IN A FIDUCIARY OR OTHER REPRESENTATIVE CAPACITY
SHOULD FILE PROPER EVIDENCE OF AUTHORITY TO ASSIGN THE FOREGOING NEW WARRANT.
