EXHIBIT 10.7
US DATA WORKS, INC.
COMMON STOCK PURCHASE AND WARRANTS AGREEMENT
THIS COMMON STOCK PURCHASE AND WARRANTS AGREEMENT (this "AGREEMENT"),
dated September 30, 2003, is entered into by and between US Dataworks, Inc., a
Nevada corporation (the "COMPANY"), and ACI Communications Holdings, Inc., a
California corporation ("PURCHASER"). The Company and Purchaser may be referred
herein as the "PARTIES" or each, a "PARTY".
WHEREAS, the Company completed a one-for-five reverse split of the
Company's issued and outstanding common stock, effective September 29, 2003 (the
"REVERSE SPLIT");
WHEREAS, the Company desires to sell, and Purchaser agrees to purchase
common stock of the Company, $0.0001 par value per share ("COMMON STOCK"),
subject to the terms and conditions set forth herein.
WHEREAS, as an inducement to Purchaser to purchase the Common Stock,
the Company wishes to grant Purchaser additional warrants (the "WARRANTS")
entitling Purchaser to purchase shares of Common Stock ("WARRANTS SHARES")
pursuant to the terms of the Common Stock Purchase Warrant, which is attached
hereto as Exhibit A.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and Purchaser agrees as
follows:
Article I
DEFINITIONS
1.1 DEFINITIONS. In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms have the
meanings indicated in this Section 1.1:
"AFFILIATE" means any Person that, directly or indirectly
through one or more intermediaries, controls or is controlled by or is
under common control with a Person as such terms are used in and
construed under Rule 144. With respect to a Purchaser, any investment
fund or managed account that is managed on a discretionary basis by the
same investment manager as such Purchaser will be deemed to be an
Affiliate of such Purchaser.
"BUSINESS DAY" means any day except Saturday, Sunday and any
day which shall be a federal legal holiday or a day on which banking
institutions in the State of Nevada are authorized or required by law
or other governmental action to close.
"CLOSING" means the date upon which the Purchaser acquires the
Common Stock and Warrants pursuant to Section 2.3.
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"CLOSING DATE" means the date of the Closing.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the common stock of the Company, $0.0001
par value per share, and any securities into which such common stock
may hereafter be reclassified.
"CONVERSION NOTICE" means notice from the Company advising
Purchaser of the conversion of their Common Stocks effective as of the
Conversion Date.
"DISCLOSURE SCHEDULES" means the Disclosure Schedules
concurrently delivered herewith.
"EFFECTIVE DATE" means the date that a registration statement
is first declared effective by the Commission.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"MATERIAL ADVERSE EFFECT" shall have the meaning as set forth
in Section 3.1(b).
"LIEN" shall mean any lien, charge, security interest,
encumbrance, right of first refusal or other restriction levied or
secured against any tangible or intangible asset of the Company.
"PER SHARE PRICE " equals Two Dollars ($2.00), subject to the
adjustment for any reverse or forward stock splits, stock dividends,
stock combinations and other similar transactions of the Common Stock
that may occur after the date of this Agreement. In the event that the
average closing price for the Common Stock for the Price Reset Period
is less than Two Dollars ($2.00), the Per Share Price shall be adjusted
to equal the average closing price for the Common Stock for the thirty
(30) Trading Days immediately preceding December 1, 2003, discounted by
twenty-five percent (25%); provided, however that under no circumstance
will the Per Share Price be less than Sixty Cents ($0.60).
"PERSON" means an individual or corporation, partnership,
trust, incorporated or unincorporated association, joint venture,
limited liability company, joint stock company, government (or an
agency or subdivision thereof) or other entity of any kind.
"PRICE RESET PERIOD" shall mean the period beginning five (5)
Trading Days immediately preceding December 1, 2003 and continuing
until the date that is five (5) Trading Days following December 1,
2003.
"REGISTRATION AGREEMENT" shall mean that certain limited
registration rights agreement entered into by and between the Company
and Purchaser of even date herewith.
"RULE 144" means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time
to time, or any similar rule or
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regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
"SECURITIES" means the Common Stocks, the Common Stock Shares
and the Warrant Shares.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SUBSCRIPTION AMOUNT" means, as to Purchaser, the amounts set
forth below such Purchaser's signature block on the signature page of
the this Agreement.
"TRADING DAY" means (i) a day on which the Common Stock is
traded on a Trading Market, or (ii) if the Common Stock is not listed
on a Trading Market, a day on which the Common Stock is traded on the
over-the-counter market, as reported by the OTC Bulletin Board, or
(iii) if the Common Stock is not quoted on the OTC Bulletin Board, a
day on which the Common Stock is quoted in the over-the-counter market
as reported by the National Quotation Bureau Incorporated (or any
similar organization or agency succeeding to its functions of reporting
prices); provided, that in the event that the Common Stock is not
listed or quoted as set forth in (i), (ii) and (iii) hereof, then
Trading Day shall mean a Business Day.
"TRADING MARKET" means the following markets or exchanges on
which the Common Stock is listed or quoted for trading on the date in
question: the American Stock Exchange, the Nevada Stock Exchange, the
Nasdaq National Market or the Nasdaq SmallCap Market.
"TRANSACTION DOCUMENTS" means this Agreement, the Warrants and
any other documents or agreements executed in connection with the
transactions contemplated hereunder.
"WARRANTS" shall have the meaning ascribed to such term in
Section 2.2.
"WARRANT SHARES" means the shares of Common Stock issuable
upon exercise of the Warrants.
ARTICLE II
CONVERTIBLE COMMON STOCKS, NEW WARRANTS AND AMENDMENTS TO THE
REGISTRATION RIGHTS AGREEMENT
2.1 COMMON STOCK PURCHASE. Upon the execution of this Agreement and
payment in full and in cash of the Subscription Amount, the Purchaser shall
receive 417,084 shares of Common Stock, which equals the Subscription Amount
divided by the Per Share Price of Two Dollars ($2.00). In the event that the
average closing price for the Common Stock for the Price Reset Period is less
than Two Dollars ($2.00), the Per Share Price shall be adjusted to equal the
average closing price for the Common Stock for the thirty (30) Trading Days
immediately preceding December 1, 2003, discounted by twenty-five percent (25%);
provided, however, that under no circumstance will the Per Share Price be less
than Sixty Cents ($0.60). Should the Per Share Price be adjusted as a result of
the condition described in the previous sentence, the
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Company shall issue to Purchaser the additional shares of Common Stock necessary
to give Purchaser that amount equal to the Subscription Amount divided by the
(adjusted) Per Share Price less the number of shares previously issued
hereunder.
2.2 WARRANTS. Contemporaneously with execution of this Agreement,
Company shall execute the Common Stock Purchase Warrant attached as Exhibit A
and shall grant Warrants to Purchaser as described in Exhibit A., The Warrants
shall have a term of three (3) years.
2.3 CLOSING. At the Closing, Purchaser shall accept payment in full of
an existing debt equal to the Subscription Amount, which constitutes all
principal and interest Company owes Purchaser pursuant to a certain promissory
note dated December 31, 2002 (the "NOTE"), for 417,084 shares of the Company's
Common Stock. The Company shall deliver to the Purchaser, as soon as
practicable, a certificate representing 417,084 shares of Common Stock In
addition and in consideration for the purchase of the Common Stock, Purchaser
shall be issued Warrants pursuant to the Common Stock Purchase Warrant attached
hereto as Exhibit A. Upon satisfaction of the conditions set forth in Section
2.4, the Closing shall occur at the offices of the Company or such other
location as the parties shall mutually agree.
2.4 CLOSING CONDITIONS.
(a) At the Closing (unless otherwise specified below) the
Company shall deliver or cause to be delivered on behalf of Purchaser
the following:
(i) this Agreement duly executed by the Company;
(ii) the Common Stock Purchase Warrant duly executed
by the Company; and
(iii) a Registration Agreement duly executed by the
Company.
(b) At the Closing, Purchaser shall deliver or cause to be
delivered the following:
(i) this Agreement duly executed by Purchaser;
(ii) the canceled Note; and
(iii) a Registration Agreement duly executed by
Purchaser.
(c) All representations and warranties of the other party
contained herein shall remain true and correct as of the Closing Date.
(d) As of the Closing Date, there shall have been no Material
Adverse Effect with respect to the Company since the date hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set forth
under the corresponding section of the Disclosure Schedules delivered
concurrently herewith, the
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Company hereby makes the following representations and warranties as of the date
hereof and as of the Closing Date to Purchaser:
(a) SUBSIDIARIES. The Company has no direct or indirect
subsidiaries. If the Company has no subsidiaries, any references to
subsidiaries in the Transaction Documents shall be disregarded.
(b) ORGANIZATION AND QUALIFICATION. The Company is an entity
duly incorporated or otherwise organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization (as applicable), with the requisite corporate power and
authority to own and use its properties and assets and to carry on its
business as currently conducted. The Company is not in violation of any
of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents and
is duly qualified to conduct business and is in good standing as a
foreign corporation or other entity in each jurisdiction in which the
nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or
in good standing, as the case may be, would not have or reasonably be
expected to result in (i) a material adverse effect on the legality,
validity or enforceability of any Transaction Document, (ii) a material
adverse effect on the results of operations, assets, business or
financial condition of the Company, taken as a whole, or (iii) a
material adverse effect on the Company's ability to perform in any
material respect on a timely basis its obligations under any
Transaction Document (any of (i), (ii) or (iii), a "MATERIAL ADVERSE
EFFECT").
(c) AUTHORIZATION; ENFORCEMENT. The Company has the requisite
corporate power and authority to enter into and to consummate the
transactions contemplated by each of the Transaction Documents and
otherwise to carry out its obligations thereunder, including issuing
the Common Stock Shares and the Warrant Shares. The execution and
delivery of each of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated thereby have been
duly authorized by all necessary action on the part of the Company and
no further action is required by the Company in connection therewith.
Each Transaction Document has been (or upon delivery will have been)
duly executed by the Company and, when delivered in accordance with the
terms hereof; will constitute the valid and binding obligation of the
Company enforceable against the Company in accordance with its terms
except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally and (ii) as
limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies, and (iii) with respect
to the indemnification provisions set forth in the Registration Rights
Agreement, as limited by public policy.
(d) NO CONFLICTS. The execution, delivery and performance of
the Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated thereby do not and will not
(i) conflict with or violate any provision of the Company's certificate
or articles of incorporation, bylaws or other organizational or charter
documents, or (ii) conflict with, or constitute a default (or an event
that 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 (with or without notice, lapse of
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time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company debt or otherwise) or other
understanding to which the Company is a party or by which any property
or asset of the Company is bound or affected, or (iii) result in a
violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority to
which the Company is subject (including federal and state securities
laws and regulations), or by which any property or asset of the Company
is bound or affected; except in the case of each of clauses (ii) and
(iii), such as would not have or reasonably be expected to result in a
Material Adverse Effect.
(e) FILINGS. CONSENTS AND APPROVALS. The Company is not
required to obtain any consent, waiver, authorization or order of, give
any notice to, or make any filing or registration with, any court or
other federal, state, local or other governmental authority or other
Person in connection with the execution, delivery and performance by
the Company of the Transaction Documents, other than (a) the filing
with the Commission of the Registration Statement, the application(s)
to each Trading Market for the listing of the Shares and Warrant Shares
for trading thereon in the time and manner required thereby, and
applicable Blue Sky filings and (b) such as have already been obtained
or such exemptive filings as are required to be made under applicable
securities laws.
(f) ISSUANCE OF THE SECURITIES. The Securities are duly
authorized and, when issued and paid for in accordance with the
Transaction Documents, will be duly and validly issued, fully paid and
nonassessable, free and clear of all Liens. The Company has reserved
from its duly authorized capital stock the maximum number of shares of
Common Stock issuable pursuant to this Agreement and the Warrants.
(g) CAPITALIZATION. The capitalization of the Company is as
described in the Company's most recent periodic report filed with the
Commission. The Company has not issued any capital stock since such
filing other than pursuant to the exercise of employee stock options
under the Company's stock option plans and pursuant to the conversion
or exercise of Common Stock Equivalents outstanding on the date hereof.
No Person has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents. Except as a result of the
purchase and sale of the Securities and except for employee stock
options under the Company's stock option plans, there are no
outstanding options, warrants, script rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities,
rights or obligations convertible into or exchangeable for, or giving
any Person any right to subscribe for or acquire, any shares of Common
Stock, or contracts, commitments, understandings or arrangements by
which the Company is or may become bound to issue additional shares of
Common Stock, or securities or rights convertible or exchangeable into
shares of Common Stock. The issue and sale of the Securities will not
obligate the Company to issue shares of Common Stock or other
securities to any Person (other than the Purchasers) and will not
result in a right of any holder of Company securities to adjust the
exercise, conversion, exchange or reset price under such securities.
(h) SEC REPORTS; FINANCIAL STATEMENTS. The Company has filed
all reports required to be filed by it under the Securities Act and the
Exchange Act, including
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pursuant to Section 13(a) or 15(d) of the Exchange Act, for the two
years preceding the date hereof (or such shorter period as the Company
was required by law to file such material) (the foregoing materials,
including the exhibits thereto, being collectively referred to herein
as the "SEC REPORTS" and, together with the Disclosure Schedules to
this Agreement, the "DISCLOSURE MATERIALS") on a timely basis or has
received a valid extension of such time of filing and has filed any
such SEC Reports prior to the expiration of any such extension. As of
their respective dates, the SEC Reports complied in all material
respects with the requirements of the Securities Act and the Exchange
Act and the rules and regulations of the Commission promulgated
thereunder, as applicable, and none of the SEC Reports, when filed,
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. The financial statements of the Company
included in the SEC Reports comply in all material respects with
applicable accounting requirements and the rules and regulations of the
Commission with respect thereto as in effect at the time of filing.
Such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
during the periods involved ("GAAP"), except as may be otherwise
specified in such financial statements or the notes thereto and except
that unaudited financial statements may not contain all footnotes
required by GAAP, and fairly present in all material respects the
financial position of the Company and its consolidated subsidiaries as
of and for the dates thereof and the results of operations and cash
flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments.
(i) MATERIAL CHANGES. Since the date of the latest audited
financial statements included within the SEC Reports, except as
disclosed in the SEC Reports, (i) there has been no event, occurrence
or development that has had or that could reasonably be expected to
result in a Material Adverse Effect, (ii) the Company has not incurred
any liabilities (contingent or otherwise) other than (A) trade payables
and accrued expenses incurred in the ordinary course of business
consistent with past practice and (B) liabilities not required to be
reflected in the Company's financial statements pursuant to GAAP or
required to be disclosed in filings made with the Commission, (iii) the
Company has not altered its method of accounting, (iv) the Company has
not declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any
agreements to purchase or redeem any shares of its capital stock and
(v) the Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company stock option
plans. The Company does not have pending before the Commission any
request for confidential treatment of information.
(j) LITIGATION. Except as disclosed in the SEC Reports, there
is no action, suit, inquiry, notice of violation, proceeding or
investigation pending or, to the knowledge of the Company, threatened
against or affecting the Company, any subsidiary or any of their
respective properties before or by any court, arbitrator, governmental
or administrative agency or regulatory authority (federal, state,
county, local or foreign) (collectively, an "ACTION") which (i)
adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the Securities or
(ii) could, if there were an unfavorable decision, have or reasonably
be expected to result in a Material Adverse
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Effect. Neither the Company nor any subsidiary, nor, to the knowledge
of the Company, any director or officer thereof, is or has been the
subject of any Action involving a claim of violation of or liability
under federal or state securities laws or a claim of breach of
fiduciary duty. There has not been, and to the knowledge of the
Company, there is not pending or contemplated, any investigation by the
Commission involving the Company or any current or former director or
officer of the Company. The Commission has not issued any stop order or
other order suspending the effectiveness of any registration statement
filed by the Company under the Exchange Act or the Securities Act.
(k) LABOR RELATIONS. No material labor dispute exists or, to
the knowledge of the Company, is imminent with respect to any of the
employees of the Company that could reasonably be expected to result in
a Material Adverse Effect.
(l) COMPLIANCE. Except as disclosed in the SEC Reports,
neither the Company nor any subsidiary (i) is in default under or in
violation of (and no event has occurred that has not been waived that,
with notice or lapse of time or both, would result in a default by the
Company under), nor has the Company received notice of a claim that it
is in default under or that it is in violation of, any indenture, loan
or credit agreement or any other agreement or instrument to which it is
a party or by which it or any of its properties is bound (whether or
not such default or violation has been waived), (ii) is in violation of
any order of any court, arbitrator or governmental body, or (iii) is or
has been in violation of any statute, rule or regulation of any
governmental authority, including without limitation all foreign,
federal, state and local laws applicable to its business, except in the
case of clauses (i), (ii) and (iii) as would not have or reasonably be
expected to result in a Material Adverse Effect.
(m) REGULATORY PERMITS. The Company possess all certificates,
authorizations and permits issued by the appropriate federal, state,
local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where the
failure to possess such permits would not have or reasonably be
expected to result in a Material Adverse Effect ("MATERIAL PERMITS"),
and neither the Company nor any subsidiary has received any notice of
proceedings relating to the revocation or modification of any Material
Permit.
(n) TITLE TO ASSETS. The Company has good and marketable title
in fee simple to all real property owned by them that is material to
the business of the Company, taken as a whole, and good and marketable
title in all personal property owned by them that is material to the
business of the Company, taken as a whole, in each case free and clear
of all Liens, except for Liens as do not materially affect the value of
such property and do not materially interfere with the use made and
proposed to be made of such property by the Company and Liens for the
payment of federal, state or other taxes, the payment of which is
neither delinquent nor subject to penalties. Any real property and
facilities held under lease by the Company are held by it under valid,
subsisting and enforceable leases with which the Company is in material
compliance.
(o) PATENTS AND TRADEMARKS. To the knowledge of the Company,
the Company has, or has rights to use, all patents, patent
applications, trademarks, trademark applications, service marks, trade
names, copyrights, licenses and other similar rights that
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are necessary or material for use in connection with their respective
businesses as described in the SEC Reports and which the failure to so
have could have or reasonably be expected to result in a Material
Adverse Effect (collectively, the "INTELLECTUAL PROPERTY RIGHTS").
Neither the Company nor any subsidiary has received a written notice
that the Intellectual Property Rights used by the Company violates or
infringes the rights of any Person. To the knowledge of the Company,
all such Intellectual Property Rights are enforceable.
(p) INSURANCE. The Company is insured by insurers of
recognized financial responsibility against such losses and risks and
in such amounts as is prudent and customary in the businesses in which
the Company is engaged. Neither the Company nor any subsidiary has any
reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue
its business without a significant increase in cost.
(q) TRANSACTIONS WITH AFFILIATES AND EMPLOYEES. Except as set
forth in the SEC Reports, none of the officers or directors of the
Company and, to the knowledge of the Company, none of the employees of
the Company is presently a party to any transaction with the Company
(other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or
from any officer, director or such employee or, to the knowledge of the
Company, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee
or partner, in each case in excess of $60,000 other than (a) for
payment of salary or consulting fees for services rendered, (b)
reimbursement for expenses incurred on behalf of the Company and (c)
for other employee benefits, including stock option agreements under
any stock option plan of the Company.
(r) INTERNAL ACCOUNTING CONTROLS. The Company maintains a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability, (iii) access
to assets is permitted only in accordance with management's general or
specific authorization, and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences. The
Company has established disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the Company and designed
such disclosure controls and procedures to ensure that material
information relating to the Company is made known to the certifying
officers by others within those entities, particularly during the
period in which the Company's Form 10-K (or 10-KSB) or 10-Q (or
10-QSB), as the case may be, is being prepared. The Company's
certifying officers have evaluated the effectiveness of the Company's
controls and procedures as of a date within 90 days prior to the filing
date of the Form 10-Q (or 10-QSB) for the quarter ended December 31,
2002 (such date, the "EVALUATION DATE"). The Company presented in its
Form 10-Q (or 10-QSB) for the quarter ended December 31, 2002 the
conclusions of the certifying officers about
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the effectiveness of the disclosure controls and procedures based on
their evaluations as of the Evaluation Date. Since the Evaluation Date,
there have been no significant changes in the Company's internal
controls (as such term is defined in Item 307(b) of Regulation S-K
under the Exchange Act) or, to the Company's knowledge, in other
factors that could significantly affect the Company's internal
controls.
(s) PRIVATE PLACEMENT. Assuming the accuracy of the Purchasers
representations and warranties set forth in Section 3.2, no
registration under the Securities Act is required for the offer and
sale of the Securities by the Company to the Purchasers as contemplated
hereby. The issuance and sale of the Securities hereunder does not
contravene the rules and regulations of the Trading Market.
(t) INVESTMENT COMPANY. The Company is not, and is not an
Affiliate of, an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(u) FORM S-3 ELIGIBILITY. Subject to the Company's continued
listing on the American Stock Exchange, the Company is eligible to
register the resale of its Common Stock by the Purchasers under Form
S-3 promulgated under the Securities Act.
(v) LISTING AND MAINTENANCE REQUIREMENTS. The Company has not,
in the 12 months preceding the date hereof, received notice from any
Trading Market on which the Common Stock is or has been listed or
quoted to the effect that the Company is not in compliance with the
listing or maintenance requirements of such Trading Market. The Company
is, and has no reason to believe that it will not in the foreseeable
future continue to be, in compliance with all such listing and
maintenance requirements.
(w) APPLICATION OF TAKEOVER PROTECTIONS. The Company and its
Board of Directors have taken all necessary action, if any, in order to
render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights
agreement) or other similar anti-takeover provision under the Company's
Certificate of Incorporation (or similar charter documents) or the laws
of its state of incorporation that is or could become applicable to the
Purchasers as a result of the Purchasers and the Company fulfilling
their obligations or exercising their rights under the Transaction
Documents, including without limitation the Company's issuance of the
Securities and the Purchasers' ownership of the Securities.
(x) DISCLOSURE. The Company confirms that, neither the Company
nor any other Person acting on its behalf has provided any of the
Purchasers or their agents or counsel with any information that
constitutes or might constitute material, non-public information. The
Company understands and confirms that the Purchasers will rely on the
foregoing representations and covenants in effecting transactions in
securities of the Company. All disclosure provided to the Purchasers
regarding the Company, its business and the transactions contemplated
hereby, including the Disclosure Schedules to this Agreement, furnished
by or on behalf of the Company is true and correct and do not contain
any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading.
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(y) NO INTEGRATED OFFERING. Neither the Company, 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 cause this offering of the Securities to be integrated with prior
offerings by the Company for purposes of the Securities Act or any
applicable shareholder approval provisions, including, without
limitation, under the rules and regulations of any exchange or
automated quotation system on which any of the securities of the
Company are listed or designated.
(z) SOLVENCY. Based on the financial condition of the Company
as of the Closing Date, (i) the Company's fair saleable value of its
assets exceeds the amount that will be required to be paid on or in
respect of the Company's existing debts and other liabilities
(including known contingent liabilities) as they mature; (ii) the
Company's assets do not constitute unreasonably small capital to carry
on its business for the current fiscal year as now conducted and as
proposed to be conducted including its capital needs taking into
account the particular capital requirements of the business conducted
by the Company, and projected capital requirements and capital
availability thereof, and including the anticipated proceeds of the
sale of the Securities; and (iii) the current cash flow of the Company,
together with the proceeds the Company would receive, were it to
liquidate all of its assets, after taking into account all anticipated
uses of the cash, would be sufficient to pay all amounts on or in
respect of its debt when such amounts are required to be paid. The
Company does not intend to incur debts beyond its ability to pay such
debts as they mature (taking into account the timing and amounts of
cash to be payable on or in respect of its debt).
(aa) MOST FAVORED NATION. Between September 1, 2003 and
October 4, 2003 Company has not and shall not enter into an agreement
or arrangement for new debt or equity financing or the restructuring of
an existing debt on terms more favorable than the terms granted to
Purchaser under this Agreement, the Common Stock Purchase Warrant and
Registration Agreement (all of which are dated September 30, 2003).
3.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. Each Purchaser
hereby, for itself and for no other Purchaser, represents and warrants as of the
date hereof and as of the Closing Date to the Company as follows:
(a) ORGANIZATION; AUTHORITY. Purchaser has the power and
authority to enter into and to consummate the transactions contemplated
by the Transaction Documents and otherwise to carry out its obligations
thereunder. Each Transaction Document to which Purchaser is a party has
been duly executed by Purchaser, and when delivered by Purchaser in
accordance with the terms hereof, will constitute the valid and legally
binding obligation of such Purchaser, enforceable against it in
accordance with its terms.
(b) INVESTMENT INTENT. Such Purchaser understands that the
Securities are "restricted securities" and have not been registered
under the Securities Act or any applicable state securities law and is
acquiring the Securities as principal for its own account for
investment purposes only and not with a view to or for distributing or
reselling such Securities or any part thereof, has no present intention
of distributing any of such Securities and has no arrangement or
understanding with any other persons
11
regarding the distribution of such Securities (this representation and
warranty not limiting such Purchaser's right to sell the Securities
pursuant to the registration statement or otherwise in compliance with
applicable federal and state securities laws). Such Purchaser is
acquiring the Securities hereunder in the ordinary course of its
business. Such Purchaser does not have any agreement or understanding,
directly or indirectly, with any Person to distribute any of the
Securities.
(c) PURCHASER STATUS. At the time such Purchaser was offered
the Securities, it was, and at the date hereof it is an "accredited
investor" as defined in Rule 501(a) under the Securities Act. Such
Purchaser is not required to be registered as a broker-dealer under
Section 15 of the Exchange Act.
(d) EXPERIENCE OF PURCHASER. Purchaser, either alone or
together with its representatives, has such knowledge, sophistication
and experience in business and financial matters so as to be capable of
evaluating the merits and risks of the prospective investment in the
Securities, and has so evaluated the merits and risks of such
investment. Such Purchaser is able to bear the economic risk of an
investment in the Securities and, at the present time, is able to
afford a complete loss of such investment.
(e) GENERAL SOLICITATION. Such Purchaser is not purchasing the
Securities as a result of any advertisement, article, notice or other
communication regarding the Securities published in any newspaper,
magazine or similar media or broadcast over television or radio or
presented at any seminar or any other general solicitation or general
advertisement.
The Company acknowledges and agrees that Purchaser does not make or has
not made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in the Security
Purchase Agreement and this Section 3.2.
ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
4.1 TRANSFER RESTRICTIONS.
(a) The Securities may only be disposed of in compliance with
state and federal securities laws. In connection with any transfer of
Securities other than pursuant to an effective registration statement,
to the Company, to an Affiliate of a Purchaser or in connection with a
pledge as contemplated in Section 4.1(b), the Company may require the
transferor thereof to provide to the Company an opinion of counsel
selected by the transferor, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that
such transfer does not require registration of such transferred
Securities under the Securities Act. As a condition of transfer, any
such transferee shall agree in writing to be bound by the terms of this
Agreement and shall have the rights of a Purchaser under this Agreement
and the Registration Rights Agreement.
(b) The Purchaser agrees to the imprinting, so long as is
required by this Section 4.1(b), of a legend on any of the Securities
in the following form:
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THESE SECURITIES HAVE NOT 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 OH BRED 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. THESE SECURITIES MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A
REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL
INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN
RULE 501 (a) UNDER THE SECURITIES ACT.
The Company acknowledges and agrees that a Purchaser may from
time to time pledge pursuant to a bona fide margin agreement with a
registered broker-dealer or grant a security interest in some or all of
the Securities to a financial institution that is an "accredited
investor" as defined in Rule 501(a) under the Securities Act and, if
required under the terms of such arrangement, such Purchaser may
transfer pledged or secured Securities to the pledgees or secured
parties. Such a pledge or transfer would not be subject to approval of
the Company and no legal opinion of legal counsel of the pledgee,
secured party or pledgor shall be required in connection therewith.
Further, no notice shall be required of such pledge. At the appropriate
Purchaser's expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Securities
may reasonably request in connection with a pledge or transfer of the
Securities, including the preparation and filing of any required
prospectus supplement under Rule 424(b)(3) under the Securities Act or
other applicable provision of the Securities Act to appropriately amend
the list of Selling Stockholders thereunder.
(c) Certificates evidencing the Common Stocks Shares and
Warrant Shares shall not contain any legend (including the legend set
forth in Section 4.1(b)), (i) while a registration statement covering
the resale of such security is effective under the Securities Act, or
(ii) following any sale of such Common Stocks Shares or Warrant Shares
pursuant to Rule 144, or (iii) if such Common Stocks Shares or Warrant
Shares are eligible for sale under Rule 144(k), or (iv) if such legend
is not required under applicable requirements of the Securities Act
(including judicial interpretations and pronouncements issued by the
Staff of the Commission). The Company shall cause its counsel to issue
a confirming statement to the Company's transfer agent promptly after
the Effective Date if required by the Company's transfer agent to
effect the removal of the legend hereunder. If all or any portion of a
Warrant is exercised at a time when there is an effective registration
statement to cover the resale of the Warrant Shares, such Warrant
Shares shall be issued free of all legends. The Company agrees that
following the Effective Date or at such time as such legend is no
longer required under this Section 4.1(c), it will, no
13
later than three Trading Days following the delivery by a Purchaser to
the Company or the Company's transfer agent of a certificate
representing Common Stocks Shares or Warrant Shares, as the case may
be, issued with a restrictive legend, deliver or cause to be delivered
to such Purchaser a certificate representing such Securities that is
free from all restrictive and other legends. The Company may not make
any notation on its records or give instructions to any transfer agent
of the Company that enlarge the restrictions on transfer set forth in
this Section.
(d) Purchaser agrees that the removal of the restrictive
legend from certificates representing Securities as set forth in this
Section 4.1 is predicated upon the Company's reliance that Purchaser
will sell any Securities pursuant to either the registration
requirements of the Securities Act, including any applicable prospectus
delivery requirements, or an exemption therefrom. Purchaser hereby
holds the Company harmless from any and all losses, liabilities,
obligations, claims, contingencies, damages, costs and expenses,
including all judgments, amounts paid in settlements, court costs and
reasonable attorneys' fees and costs of investigation that the Company
may suffer or incur as a result of or relating to Purchaser's sale of
certificates representing Securities, without the restrictive legend,
in violation of the registration requirements of the Securities Act
(unless under an exemption therefrom).
4.2 FURNISHING OF INFORMATION. As long as any Purchaser owns
Securities, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act. Upon the request of any such holder of Securities, the Company
shall deliver to such holder a written certification of a duly authorized
officer as to whether it has complied with the preceding sentence. As long as
any Purchaser owns Securities, if the Company is not required to file reports
pursuant to the Exchange Act, it will prepare and furnish to the Purchaser and
make publicly available in accordance with Rule 144(c) such information as is
required for the Purchaser to sell the Securities under Rule 144. The Company
further covenants that it will take such further action as any holder of
Securities may reasonably request, all to the extent required from time to time
to enable such Person to sell such Securities without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144.
4.3 INTEGRATION. The Company shall not sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the Securities in a manner that would require the registration under the
Securities Act of the sale of the Securities to the Purchaser or that would be
integrated with the offer or sale of the Securities for purposes of the rules
and regulations of any Trading Market.
4.4 LIMITED DEMAND REGISTRATION RIGHTS. Purchaser shall have certain
limited registration rights as set forth in that certain Registration Agreement
entered into by and between the Company and Purchaser of even date herewith (the
"REGISTRATION AGREEMENT"). A copy of the Registration Agreement is attached
hereto as Exhibit B.
4.5 DISCLOSURE; PUBLICITY. The Company and Purchaser shall consult with
each other in issuing any press releases with respect to the transactions
contemplated hereby, and neither the
14
Company nor any Purchaser shall issue any such press release or otherwise make
any such public statement without the prior consent of the Company, with respect
to any press release of any Purchaser, or without the prior consent of
Purchaser, with respect to any press release of the Company, which consent shall
not unreasonably be withheld, except if such disclosure is required by law, in
which case the disclosing party shall promptly provide the other party with
prior notice of such public statement or communication. Notwithstanding the
foregoing, the Company shall not publicly disclose the name of any Purchaser, or
include the name of any Purchaser in any filing with the Commission or any
regulatory agency or Trading Market, without the prior written consent of such
Purchaser, except (i) as required by federal securities law in connection with
the registration statement contemplated by the Registration Rights Agreement and
(ii) to the extent such disclosure is required by law or Trading Market
regulations, in which case the Company shall provide the Purchaser with prior
notice of such disclosure permitted under subclause (i) or (ii).
4.6 SHAREHOLDERS RIGHTS PLAN. No claim will be made or enforced by the
Company or any other Person that any Purchaser is an "Acquiring Person" under
any shareholders rights plan or similar plan or arrangement in effect or
hereafter adopted by the Company, or that any Purchaser could be deemed to
trigger the provisions of any such plan or arrangement, by virtue of receiving
Securities under the Transaction Documents or under any other agreement between
the Company and the Purchaser.
4.7 NON-PUBLIC INFORMATION. The Company covenants and agrees that
neither it nor any other Person acting on its behalf will provide any Purchaser
or its agents or counsel with any information that the Company believes
constitutes material non-public information, unless prior thereto such Purchaser
shall have executed a written agreement regarding the confidentiality and use of
such information. The Company understands and confirms that Purchaser shall be
relying on the foregoing representations in effecting transactions in securities
of the Company.
4.8 REIMBURSEMENT. If any Purchaser becomes involved in any capacity in
any legal proceeding by or against any Person who is a stockholder of the
Company (except as a result of sales, pledges, margin sales and similar
transactions by such Purchaser to or with any current stockholder), solely as a
result of such Purchaser's acquisition of the Securities under this Agreement,
the Company will reimburse such Purchaser for its reasonable legal and other
expenses (including the cost of any investigation preparation and travel in
connection therewith) incurred in connection therewith, as such expenses are
incurred. The reimbursement obligations of the Company under this paragraph
shall be in addition to any liability which the Company may otherwise have,
shall extend upon the same terms and conditions to any Affiliates of the
Purchaser who are actually named in such action, proceeding or investigation,
and partners, directors, agents, employees and controlling persons (if any), as
the case may be, of the Purchaser and any such Affiliate, and shall be binding
upon and inure to the benefit of any successors, assigns, heirs and personal
representatives of the Company, the Purchaser and any such Affiliate and any
such Person. The Company also agrees that neither the Purchaser nor any such
Affiliates, partners, directors, agents, employees or controlling persons shall
have any liability to the Company or any Person asserting claims on behalf of or
in right of the Company solely as a result of acquiring the Securities under
this Agreement.
4.9 INDEMNIFICATION OF PURCHASER. The Company will indemnify and hold
the Purchaser and their directors, officers, shareholders, partners, employees
and agents (each, a
15
"PURCHASER PARTY") harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys' fees and
costs of investigation that any such Purchaser Party may suffer or incur as a
result of or relating to: (a) any misrepresentation, breach or inaccuracy, or
any allegation by a third party that, if true, would constitute a breach or
inaccuracy, of any of the representations, warranties, covenants or agreements
made by the Company in this Agreement or in the other Transaction Documents; or
(b) any cause of action, suit or claim brought or made against such Purchaser
Party and arising solely out of or solely resulting from the execution,
delivery, performance or enforcement of this Agreement or any of the other
Transaction Documents and without causation by any other activity, obligation,
condition or liability pertaining to such Purchaser. The Company will reimburse
such Purchaser for its reasonable legal and other expenses (including the cost
of any investigation, preparation and travel in connection therewith) incurred
in connection therewith, as such expenses are incurred.
4.10 RESERVATION OF COMMON STOCK. The Company shall use its
commercially reasonable efforts to reserve and continue to reserve and keep
available at all times, free of preemptive rights, a sufficient number of shares
of Common Stock for the purpose of enabling the Company to issue Common Stock
Shares pursuant to this Agreement and Original Warrants Shares and Warrants
Shares pursuant to the Original Warrants and Warrants, respectively.
ARTICLE V
MISCELLANEOUS
5.1 FEES AND EXPENSES. Each party shall pay all other fees and expenses
of its advisers, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement. The Company shall pay all stamp and
other taxes and duties levied in connection with the sale of the Securities.
5.2 ENTIRE AGREEMENT. The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.
5.4 NOTICES. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified on the signature pages attached hereto prior to 5:30 p.m. (Central
Standard time) on a Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number on the signature pages attached hereto on a day that is not a
Trading Day or later than 5:30 p.m. (Central Standard time) on any Trading Day,
(c) the Trading Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service, or (d) upon actual receipt by the party to
whom such notice is required to be given. The address for such notices and
communications shall be as set forth on the signature pages attached hereto.
16
5.5 AMENDMENTS; WAIVERS. No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment,
by the Company and Purchaser or, in the case of a waiver, by the party against
whom enforcement of any such waiver is sought. No waiver of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any subsequent
default 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.
5.6 CONSTRUCTION. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.
5.7 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of Purchaser. Any Purchaser may assign any or
all of its rights under this Agreement to any Person, provided such transferee
agrees in writing to be bound, with respect to the transferred Securities, by
the provisions hereof that apply to the "Purchaser".
5.8 NO THIRD-PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Sections 4.9.
5.9 GOVERNING LAW. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
Nevada, without regard to the principles of conflicts of law thereof. Each party
agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and any other
Transaction Documents (whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, employees or agents) shall be
commenced exclusively in the state and federal courts sitting in Houston, Texas.
Each party hereto hereby irrevocably submits to the exclusive jurisdiction of
the state and federal courts sitting in Houston, Texas, for the adjudication of
any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein (including with respect to the
enforcement of any of the Transaction Documents), and hereby irrevocably waives,
and agrees not to assert in any suit, action or proceeding, any claim that it is
not personally subject to the jurisdiction of any such court, that such suit,
action or proceeding is improper. Nothing contained herein shall be deemed to
limit in any way any right to serve process in any manner permitted by law. Each
party hereto (including its Affiliates, agents, officers, directors and
employees) hereby irrevocably waives, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby. If either party shall commence an action or proceeding to enforce any
provisions of a Transaction Document, then the prevailing party in such action
or proceeding shall be reimbursed by the other party for its reasonable
attorneys fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding.
17
5.10 SURVIVAL. The representations, warranties, agreements and
covenants contained herein shall survive the Closing and shall continue to
survive for a period of one (1) year following the Closing Date.
5.11 EXECUTION. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.
5.12 SEVERABILITY. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
5.13 REPLACEMENT OF SECURITIES. If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Securities.
5.14 REMEDIES. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchaser and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.
5.15 PAYMENT SET ASIDE. To the extent that a Party makes a payment or
payments to any other Party pursuant to any Transaction Document or a Party
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the paying Party, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall, to the
extent permissible under applicable law, be revived and continued in full force
and effect as if such payment had not been made or such enforcement or setoff
had not occurred.
5.16 INDEPENDENT NATURE OF PURCHASER'S OBLIGATIONS AND RIGHTS. The
obligations of Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the
18
obligations of any other Purchaser ββββββ any Transaction Document. Nothing
contained herein or in my Transaction Document, and no action taken by any
Purchaser pursuant thereto, shall be deemed to constitute the Purchaser as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchaser are in any way acting in concert or as a
group wine respect to such oblations or the bona contemplated by the Transaction
Document. Each Purchaser shall be entitled to independently protect and enforce
its rights, including without limitation, the rights arising out of thus
Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose. Purchaser has been represented by its own separate
legal counsel in its review and negotiation of the Transaction Documents.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized signatories as of the date first
indicated above.
US DATAWORKS, INC. ADDRESS FOR NOTICE:
-------------------
ββββ βββββββββ ββββ, βββββ βββ
βββββββ, ββ βββββ
Attn: CEO
Tel: (βββ) βββ-ββββ
Fax: (βββ) βββ-ββββ
By: /S/ βββββββ β. βββββ
--------------------------------------------
Name: βββββββ β. βββββ
Title: CEO
With a copy to (which shall not constitute notice:"
[SIGNATURE PAGE CONTINUES]
19
PURCHASER SIGNATURE PAGE
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed by their respective authorized signatories as of the date first
indicated above.
PURCHASER ACI COMMUNICATIONS HOLDINGS, INC.
ADDRESS FOR NOTICE:
-------------------
ACI Communications Holdings, Inc.
βββββ ββββββββββ and General Counsel
βββββ ββββββββ ββββββ
ββββββββββ, ββ βββββ
By: /S/ βββββββ βββββββ
------------------------------------
Name: βββββββ βββββββ
Title: CFO
SUBSCRIPTION AMOUNT: $834,167.73
[Amount of debt to be converted to Common Stock]
WARRANT SHARES: 208,542
[50% of the Subscription Amount, divided by $2.00
per share]
With a copy to:
ββββββββββββ ββββ & βββββββββ LLP.
βββ β. ββββββββ ββββββ
βββββ ββββ
βββ βββββββ, ββ βββββ
Fax: βββ-βββ-ββββ
ATTN: βββββββ β. βββββββ, Esq.
20