Document:

exv4w2

 

Exhibit 4.2

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 REASONABLY ACCEPTABLE TO THE COMPANY TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE
REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY 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.

COMMON STOCK PURCHASE WARRANT

To Purchase up to 650,000 shares of Common Stock of

US Dataworks, Inc.

     THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) CERTIFIES that, for value received,
Peter Simons (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 date of issuance of
this Warrant (the “Initial Exercise Date”) and on or prior to the three (3) year
anniversary of the Initial Exercise Date (the “Termination Date”) but not thereafter, to
subscribe for and purchase from US Dataworks, Inc., a Nevada corporation (the “Company”),
up to Six Hundred Fifty Thousand (650,000) shares of the Company’s common stock, par value $0.0001
per share, (the “Common Stock”). The price at which this Warrant shall be exercised is
Fifty-nine cents ($0.59) per share; up to a maximum not to exceed Three Hundred Eighty-Three
Thousand Five Hundred Dollars ($383,500) upon exercise for the purchase of 650,000 shares
(“Warrant Shares”). The Exercise Price and the number of Warrant Shares for which the
Warrant is exercisable 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 Settlement and
Release Agreement (the “Settlement Agreement”), dated November 14, 2004, between the
Company and the Holder.

     1.      Title to Warrant. Subject to compliance with applicable laws and Section
6 of this Warrant, this 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 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 Warrant Shares
which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon
exercise of the purchase rights represented by this 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 Warrant may be made at any
time or times on or after the Initial Exercise Date and on or before the Termination Date by
delivery to the Company of the Notice of Exercise Form, surrender of this Warrant and payment of
the aggregate Exercise Price (or such other office or agency of the Company as it may designate by
notice in writing to the registered Holder at the address of such Holder appearing on the books of
the Company). Certificates for shares purchased hereunder shall be delivered to the Holder within
10 Trading Days from the delivery to the Company of the Notice of Exercise Form, surrender of this
Warrant and payment of the aggregate Exercise Price as set forth above (“Warrant Share Delivery
Date”). This Warrant shall be deemed to have been exercised on the date the Exercise Price is
received by the Company. The Warrant Shares shall be deemed to have been issued, and 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.

          (b)      If this Warrant shall have been exercised in part, the Company shall, at the
time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder
a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for
by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

     4.      No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this 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 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 Warrant Shares are to be issued in a name other than the name of the Holder,
this 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. Transfer, Division and Combination.

           (a)      Subject to compliance with any applicable securities laws and the conditions set
forth in Sections 1 and 6(e) hereof and to the Settlement Agreement, this Warrant and all rights
hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal
office of the Company, together with a written assignment of this 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 new 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 Warrant
not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly assigned,
may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant
issued.

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           (b)      This 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 6(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 Warrant or Warrants 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 6.

           (d)      The Company agrees to maintain, at its aforesaid office, books for the
registration and the registration of transfer of the Warrants.

           (e)      If, at the time of the surrender of this Warrant in connection with any transfer
of this Warrant, the transfer of this 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 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)(1), (a)(2), (a)(3), (a)(7), or (a)(8) promulgated under the Securities Act or a qualified
institutional buyer as defined in Rule 144A(a) under the Securities Act.

     7.      No Rights as Shareholder until Exercise. This 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 Warrant and the payment of the aggregate Exercise
Price (or by means of a cashless exercise), the 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.

     8.      Loss, Theft, Destruction or Mutilation of 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 Warrant or any stock certificate relating to the 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.

     9.      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.

     10.      Adjustments of Exercise Price and Number of Warrant Shares; Stock Splits,
etc. The number and kind of securities purchasable upon the exercise of this 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

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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 Warrant Shares purchasable upon
exercise of this Warrant immediately prior thereto shall be adjusted so that the Holder shall be
entitled to receive the kind and number of 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 Warrant Shares or other securities of
the Company which are purchasable hereunder, the Holder shall thereafter be entitled to purchase
the number of 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 Warrant Shares purchasable pursuant hereto
immediately prior to such adjustment and dividing by the number of Warrant Shares or other
securities of the Company that are purchasable pursuant hereto immediately after 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.

     11.      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 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 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 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 Warrant is exercisable immediately prior to such event or (b)
cash equal to the value of this Warrant as determined in accordance with the Black Scholes option
pricing formula. For purposes of this Section 11, “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
11 shall similarly apply to successive reorganizations, reclassifications, mergers, consolidations
or disposition of assets.

     12.      Notice of Adjustment. Whenever the number of Warrant Shares or number
or kind of securities or other property purchasable upon the exercise of this 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 Warrant Shares (and other securities or property)
purchasable upon the exercise of this Warrant and the Exercise Price of such 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.

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     13.      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
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 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 Holder appearing on the books of the Company and
delivered in accordance with Section 15(d).

     14.      Miscellaneous.

           (a)      Jurisdiction. All questions concerning the construction, validity,
enforcement and interpretation of this Warrant shall be determined in accordance with the
provisions of the Settlement Agreement. The prior sentence notwithstanding, this Warrant shall be
subject to the laws of the state of Nevada.

           (b)      Restrictions. The Holder acknowledges that the Warrant Shares acquired
upon the exercise of this 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 Holder’s rights, powers or remedies, notwithstanding all rights hereunder
terminate on the Termination Date.

           (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 Settlement Agreement.

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           (e)      Limitation of Liability. No provision hereof, in the absence of any
affirmative action by Holder to exercise this Warrant or purchase 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 Warrant.

           (g)      Successors and Assigns. Subject to applicable securities laws, this
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 Warrant are intended to be for the benefit of all Holders from time to time of
this Warrant and shall be enforceable by any such Holder or holder of Warrant Shares.

           (h)      Amendment. This 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 Warrant shall
be interpreted in such manner as to be effective and valid under applicable law, but if any
provision of this 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 Warrant.

           (j)      Headings. The headings used in this Warrant are for the convenience of
reference only and shall not, for any purpose, be deemed a part of this Warrant.

           IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer
thereunto duly authorized.

Initial Exercise Date: September 15, 2005

	 	 	 	 	 
	 	US DATAWORKS, INC.

 	 
	 	By:  	/s/ John S. Reiland
 	 
	 	 	Name:  	John S. Reiland 	 
	 	 	Title:  	CFO 	 
	 

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NOTICE OF EXERCISE

To:      US Dataworks, Inc.

           (1)      The undersigned hereby elects to purchase            Warrant Shares of the Company
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 lawful money of the United States.

           (3)      Please issue a certificate or certificates representing said Warrant Shares in
the name of the undersigned or in such other name as is specified below:

                                        

The Warrant Shares shall be delivered to the following:

                                        

                                        

                                        

     (4) Accredited Investor. The undersigned is an “accredited investor” as defined in
Regulation D under the Securities Act of 1933, as amended.

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 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
Warrant.exv4w3

 

Exhibit 4.3

REGISTRATION AGREEMENT

     REGISTRATION AGREEMENT, dated as of September 15, 2005, between US DATAWORKS, INC. a Nevada
corporation (the “Company”), and PETER SIMONS (“Simons”).

WITNESSETH

     Simons is acquiring from the Company a warrant, of even date herewith (the “Warrant”),
exercisable into shares (“Warrant Shares”) of the Company’s common stock, par value $0.0001 per
share (the “Common Stock”) pursuant to the terms of a Letter Agreement dated September 15, 2005.
The Warrant Shares will be “restricted securities” as defined in Rule 144 under the Securities Act
of 1933, as amended. As a result, there will be substantial restrictions on the ability of the
Holders (as defined below) to sell the Warrant Shares in the absence of registration under the
Securities Act of 1933 and applicable state securities laws. In order to enable the Holder to sell
all or a portion of the Warrant Shares, the Company has agreed to the terms of this Agreement.

     NOW THEREFORE, in consideration of the premises, and other good and valuable consideration,
the receipt, adequacy and sufficiency of which are hereby acknowledged by the parties, the parties
hereby agree as follows:

1      REGISTRATION

     1.1      Definitions. As used in this Agreement, the following terms shall have the following
meanings:

          (a)     The term “Act” means the Securities Act of 1933, as amended.

          (b)     The term “AMEX” means the American Stock Exchange.

          (c)     The term “Blackout Period” means any period: (i) beginning on the date on which the
Company notifies Holder in writing that the Board of Directors of the Company, in its good faith
judgment, has determined that the Company proposes to engage in a material acquisition,
consolidation, tender offer or other material transaction, including a primary underwritten
offering of its securities, in each case not in the ordinary course of business, such that
registration or qualification of the Registrable Securities would have a material adverse effect on
the Company and its shareholders, and (ii) ending as promptly as practicable but in any event not
more than 90 days after the date on which the Company notifies Holder of the Board of Directors’
determination.

          (d)     The terms “Closing” and “Closing Date” have the meanings ascribed to such terms in the
Agreement.

          (e)     The term “Common Stock” has the meaning ascribed to such term in the Agreement.

          (f)     The term “Warrant Shares” means the shares of Common Stock issued to Holder pursuant to
the exercise of the Warrant.

          (g)     The term “Registration Deadline” means the one hundred and eightieth (180th)
calendar day following the date hereof.

 

 

          (h)     The term “Holder” means any person owning or having the right to acquire, through exercise
of the Warrant or otherwise, Registrable Securities.

          (i)      The terms “register,” “registered” and “registration” each refer to a registration
effected by preparing and filing a registration statement or similar document in compliance with
the Act, and the declaration or ordering of effectiveness of such registration statement or
document.

          (j)     The terms “Registrable Security” and “Registrable Securities” refer to: (i) all of the
Warrant Shares issuable pursuant to the exercise of the Warrant, and (ii) any shares of Common
Stock or other securities of the Company that may be issued or issuable with respect to the Warrant
Shares as a result of a stock split or dividend or any securities into which the Warrant Shares may
thereafter be changed as a result of merger, consolidation, recapitalization or otherwise. As to
any particular Registrable Securities, such securities will cease to be Registrable Securities when
they have been (1) distributed to the public pursuant to an offering registered under the Act, (2)
sold to the public in compliance with Rule 144 (as defined below) or (3) eligible for sale without
restriction under Rule 144(k) under the Act.

          (k)      The term “Rule 144” means Rule 144 promulgated under the Act, as such rule may be amended
from time to time, or any similar rule or regulation thereafter adopted by the Commission.

          (l)     The term “Rule 415” means Rule 415 promulgated under the Act, as such rule may be amended
from time to time, or any similar rule or regulation thereafter adopted by the Commission.

          (m)     The term “Commission” means the Securities and Exchange Commission.

          (n)     The term “1934 Act” means the Securities Exchange Act of 1934, as amended.

     1.2      Filing of Registration.

          (a)     Registration Statement. The Company agrees to use its commercially reasonable
efforts to prepare and file with the Commission a registration statement under the Act of Form S-1,
S-2 or S-3 (or any other appropriate form that may be reasonably used for the registration of
Registrable Securities) covering one hundred and percent (100%) of the number of shares of Common
Stock issuable on the exercise of the Warrant (such number to be determined using the exercise
price without regard to any restriction on the ability of any Holder to exercise such Holder’s
Warrant as of such date). The Registration Statement shall state, to the extent permitted by Rule
416 under the Securities Act, that it also covers such indeterminate number of additional shares of
Common Stock as may become issuable upon exercise of the Warrant in order to prevent dilution
resulting from stock splits, stock dividends or similar events.

          (b)     Effectiveness. The Company shall use its commercially reasonable efforts to cause
the Registration Statement to become effective prior to the Registration Deadline. The Company
shall respond promptly to any and all comments made by the staff of the Commission on the
Registration Statement, and shall submit to the Commission, within two (2) Business Days after the
Company learns that no review of the Registration Statement will be made by the staff of the
Commission or that the staff of the Commission has no further comments on the Registration
Statement, as the case may be, a request for acceleration of the effectiveness of the Registration
Statement to a time and date not later than forty-eight (48) hours after the submission of such
request.

 

 

The Company will maintain the effectiveness of the Registration Statement until the earlier to
occur of (i) the date on which all of the Registrable Securities eligible for resale thereunder
have been publicly sold pursuant to either the Registration Statement or Rule 144 and (ii) the date
on which all of the Registrable Securities remaining to be sold under the Registration Statement
(in the reasonable opinion of counsel to the Holder) may be immediately sold to the public under
Rule 144(k) or any successor provision, assuming that all Warrant Shares are issued by means of a
cashless exercise of the Warrants (the period beginning on the Closing Date and ending on the
earlier to occur of (i) or (ii) above being referred to herein as the “Registration
Period”).

     1.3      Obligations of the Company. In addition to performing its obligations hereunder,
including without limitation those pursuant to Sections 1.2(a) and (b) above, the Company shall:

          (a)     prepare and file with the Commission such amendments and supplements to the Registration
Statement and the prospectus used in connection with the Registration Statement as may be necessary
to comply with the provisions of the Securities Act or to maintain the effectiveness of the
Registration Statement during the Registration Period, or as may be reasonably requested by a
Holder in order to incorporate information concerning such Holder or such Holder’s intended method
of distribution;

          (b)     as soon as practicable, secure the listing of all Registrable Securities on the AMEX, and
provide each Holder with reasonable evidence thereof;

          (c)     upon the effectiveness of the Registration Statement, furnish to each Holder such number
of copies of the prospectus included in the Registration Statement, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such other documents as
such Holder may reasonably request in order to facilitate the disposition of such Holder’s
Registrable Securities;

          (d)     use all commercially reasonable efforts to register or qualify the Registrable Securities
under the securities or “blue sky” laws of such jurisdictions within the United States as shall be
reasonably requested in writing from time to time by a Holder, and do any and all other acts or
things which may be necessary or advisable to enable such Holder to consummate the public sale or
other disposition of the Registrable Securities in such jurisdictions; provided that the Company
shall not be required in connection therewith or as a condition thereto to qualify to do business,
to subject itself to taxation in any such jurisdiction or to file a general consent to service of
process in any such jurisdiction;

          (e)     in the event of an underwritten public offering of the Registrable Securities, enter into
(together with all Holders proposing to distribute Registrable Securities through such
underwriting) and perform its obligations under an underwriting agreement, in usual and customary
form reasonably acceptable to the Company, with the managing underwriter of such offering;

          (f)     notify each Holder immediately after becoming aware of the occurrence of any event (but
shall not, without the prior written consent of such Holder, disclose to such Holder any facts or
circumstances constituting material non-public information) as a result of which the prospectus
included in the Registration Statement, as then in effect, contains an untrue statement of material
fact or omits to state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing, and (except during
an Allowed Delay (as hereinafter defined)) as promptly as practicable prepare, file with the
Commission and

 

 

furnish to each Holder a reasonable number of copies of a supplement or an amendment to such
prospectus as may be necessary so that such prospectus does not contain an untrue statement of
material fact or omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances then existing.

          The Company may delay the disclosure of material non-public information, and suspend the
availability of the Registration Statement, for no more than (i) ten (10) consecutive Business Days
or (ii) thirty (30) calendar days in any twelve (12) month period, in the event of a proposed
merger, reorganization or similar transaction involving the Company, as long as its board of
directors (a) has determined, upon the advice of counsel, that such information would be required
to be disclosed in an offering registered under the Securities Act and (b) reasonably deems it in
the Company’s best interests not to disclose such information publicly (an “Allowed
Delay”).

          (g)     use all commercially reasonable efforts to prevent the issuance of any stop order or other
order suspending the effectiveness of the Registration Statement and, if such an order is issued,
to obtain the withdrawal thereof at the earliest possible time and to notify each Holder of the
issuance of such order and the resolution thereof;

          (h)     provide to each Holder and its representatives, upon reasonable prior notice, the
opportunity to conduct a reasonable inquiry of the Company’s financial and other records during
normal business hours and make available its officers for questions regarding information which
such Holder may reasonably request in order to fulfill any due diligence obligation on its part;

          (i)      in the event that, at any time, the number of shares available under the Registration
Statement is insufficient to cover one hundred percent 100% of the Registrable Securities issuable
under the Warrant (such number to be determined using the Exercise Price in effect at such time and
without regard to any restriction on the ability of any Holder to exercise such Holder’s Warrant)
the Company shall promptly amend the Registration Statement or file a new registration statement,
in any event as soon as practicable, but not later than the tenth (10th) day following notice from
a Holder of the occurrence of such event, so that the Registration Statement or such new
registration statement, or both, covers no less than one hundred percent (100%) of the Registrable
Securities eligible for resale thereunder and issuable under the related Warrant (such number to be
determined using the exercise price in effect at the time of such amendment or filing and without
regard to any restriction on the ability of any Holder to exercise such Holder’s Warrant). The
Company shall use its best efforts to cause such amendment and/or new Registration Statement to
become effective as soon as practicable following the filing thereof. Any Registration Statement
filed pursuant to this Section 1.3(i) shall state that, to the extent permitted by Rule 416 under
the Securities Act, such Registration Statement also covers such indeterminate number of additional
shares of Common Stock as may become issuable upon conversion of the Preferred Stock and exercise
of the Warrants in order to prevent dilution resulting from stock splits, stock dividends or
similar events.

     1.4      Obligations of Holders. In connection with the registration of Registrable
Securities pursuant to a Registration Statement, each holder shall:

          (a)     timely furnish to the Company in writing such information regarding itself and the
intended method of disposition of such Registrable Securities as the Company shall reasonably
request in order to effect the registration thereof;

 

 

          (b)     upon receipt of any notice from the Company of the happening of any event of the kind
described in Sections 1.3(f) or (g), immediately discontinue any sale or other disposition of such
Registrable Securities pursuant to such Registration Statement until the filing of an amendment or
supplement as described in Section 1.3(f) or withdrawal of the stop order referred to in Section
1.3(g), and use commercially reasonable efforts to maintain the confidentiality of such notice and
its contents;

          (c)     in the event of an underwritten offering of such Registrable Securities in which such
Holder participates, enter into a customary and reasonable underwriting agreement and execute such
other documents as the Company and the managing underwriter for such offering may reasonably
request;

          (d)     notify the Company when it has sold all of the Registrable Securities held by it; and

          (e)     notify the Company in the event that any information supplied by such Holder in writing
for inclusion in such Registration Statement or related prospectus is untrue or omits to state a
material fact required to be stated therein or necessary to make such information not misleading in
light of the circumstances then existing; immediately discontinue any sale or other disposition of
such Registrable Securities pursuant to such Registration Statement until the filing of an
amendment or supplement to such prospectus as may be necessary so that such prospectus does not
contain an untrue statement of material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of the circumstances
then existing; and use commercially reasonable efforts to assist the Company as may be appropriate
to make such amendment or supplement effective for such purpose.

     1.5      Expenses of Registration. The Company shall bear and pay all expenses, other than
underwriting discounts and commissions and fees and expenses of counsel and other advisors to each
Holder, incurred in connection with registrations, filings or qualifications described herein,
including (without limitation) all registration , filing and qualification fees, printers’ and
accounting fees, the fees and disbursements of counsel for the Company, with respect to Registrable
Securities included in such registration.

     1.6      Indemnification. In the event any Registrable Securities are included in a Registration
Statement under this Agreement:

          (a)     The Company will indemnify and hold harmless, to the full extent permitted by law, each
Holder, the officers, directors, employees, affiliates and agents of each Holder, any underwriter
(as defined in the Act) for such Holder and each person, if any, who controls such Holder or
underwriter within the meaning of the Act or the 1934 Act (each, an “Indemnified Holder”), against
any losses, claims, damages and liabilities (joint or several), and expenses (including costs of
investigation and legal expenses) incurred in connection with investigating, preparing or defending
against such losses, claims, damages and liabilities (collectively, “Losses”) to which such
Indemnified Holder may become subject under the Act, the 1934 Act, or other federal, state, local,
foreign or other law, insofar as such Losses arise out of or are based upon any of the following
statements, omissions or violations (collectively a “Violation”): (i) any untrue statement or
alleged untrue statement of a material fact contained in any registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendments or supplements
thereto, or (ii) the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading; provided,
however, that the indemnity agreement contained in this

 

 

Section 1.6(a) shall not apply to amounts paid in settlement of any such Loss if such
settlement is effected without the consent of the Company, which consent shall not be unreasonably
withheld or delayed, nor shall the Company be liable in any such Loss to the extent that it arises
out of or is based upon (i) a Violation that occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by such Indemnified
Holder, or (ii) the failure of such Indemnified Holder to deliver a copy of the registration
statement or the prospectus, or any amendments or supplements thereto, after the Company has
furnished such person with a sufficient number of copies of the same.

          (b)     Each selling Holder will indemnify and hold harmless, to the full extent permitted by law,
the Company and each of its officers, directors, employees, affiliates and agents, and each person,
if any, who controls the Company within the meaning of the Act or the 1934 Act (each, a “Company
Indemnitee”), against any Losses to which any such Company Indemnitee may become subject under the
Act, the 1934 Act, or other federal, state, local, foreign or other law, insofar as such Losses
arise out of or are based upon any Violation, in each case to the extent (and only to the extent)
that such Violation occurs in reliance upon and in conformity with written information furnished by
such Holder expressly for use in connection with such registration; provided,
however, that the indemnity agreement contained in this Section 1.6(b) shall not apply to
amounts paid in settlement of any such Losses if such settlement is effected without the consent of
such Holder, which consent shall not be unreasonably withheld or delayed. Notwithstanding anything
to the contrary herein contained, a Holder’s indemnity obligation, in such person’s capacity as a
Holder, shall be limited to the net proceeds received by such Holder from the offering out of which
the indemnity obligation arises.

          (c)     Promptly after receipt by an indemnified party under this Section 1.6 of notice of the
commencement of any action (including any governmental action), such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party under this Section 1.6,
deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying
party shall have the right to participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to assume the defense thereof with
counsel mutually satisfactory to the parties; provided, however, that an
indemnified party shall have the right to retain its own counsel, with the fees and expenses to be
paid by the indemnified party, except that such fees and expenses shall be paid by the indemnifying
party if representation of such indemnified party by the counsel retained by the indemnifying party
would be inappropriate due to actual or potential differing interests between such indemnified
party and any other party represented by such counsel in such proceedings. The failure to deliver
written notice to the indemnifying party within a reasonable time of the commencement of any such
action, if materially prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section 1.6, but the
omission so to deliver written notice to the indemnifying party will not otherwise relieve it of
any liability that it may have to any indemnified party under this Section 1.6.

          (d)     The indemnification provided by this Section 1.6 shall be a continuing right to
indemnification and shall survive the registration and sale of any of the Registrable Securities
hereunder and the expiration or termination of this Agreement.

     1.7      Reports Under Securities Exchange Act of 1934. With a view to making available to each
Holder the benefits of Rule 144 and any other similar rule or regulation of the Commission that may
at anytime permit such Holder to sell securities of the Company to the public without registration,
the Company agrees to use commercially reasonable efforts to:

 

 

          (a)     make and keep public information available, as those terms are understood and
defined in Rule 144;

          (b)     file with the Commission in a timely manner all reports and other documents required of
the Company under the Act and the 1934 Act; and

          (c)     furnish to any Holder, as long as the Holder owns any Registrable Securities, promptly
upon written request (i) a written statement by the Company, if true, that it has complied with the
reporting requirements of Rule 144, the Act and the 1934 Act, (ii) to the extent not publicly
available through the Commission’s EDGAR database, a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by the Company, and (iii) such
other information as may be reasonably requested by such Holder’s compliance with any rule or
regulation of the Commission which permits the selling of any such securities without registration.

2      MISCELLANEOUS

     2.1      No Inconsistent Agreements. The Company shall not on or after the date of this Agreement
enter into any other agreement with respect to any of its securities that is inconsistent with the
rights granted to Holder or otherwise conflicts with the provisions of this Agreement.

     2.2      Adjustments Affecting Registrable Securities. Except as may be required by any federal or
state securities laws, the Company shall not take any action or permit any change to occur with
respect to the Registrable Securities that would (i) adversely affect the ability of Holder to
include such Registrable Securities in a registration undertaken pursuant to this Agreement or (ii)
adversely affect the marketability or pricing of such Registrable Securities in any such
registration.

     2.3      Amendment and Waiver. Any amendment or waiver of any provision under this Agreement may
be effected only with the written consent of the Company and the Holders of at least a majority of
the Registrable Securities then outstanding.

     2.4      Remedies. The parties hereto acknowledge and agree that the breach of any part of this
Agreement may cause irreparable harm and that monetary damages alone may be inadequate. The
parties hereto therefore agree that any party shall be entitled to injunctive relief or such other
applicable remedy as a court of competent jurisdiction may provide. Nothing contained herein will
be construed to limit any party’s right to any remedies at law, including recovery of damages for
breach of any part of this Agreement.

     2.5      Controlling Law. This Agreement, and all questions relating to its validity,
interpretation, performance and enforcement, shall be governed by and construed in accordance with
the laws of the state of Nevada, notwithstanding any Nevada or other conflict-of-law provisions to
the contrary.

     2.6      Notices. All notices, requests, demands and other communications required or permitted
under this Agreement shall be in writing and shall be deemed to have been duly given, made and
received when delivered against receipt, 12 hours after being sent by facsimile or e-mail, or 72
hours after being sent by registered or certified mail, postage prepaid, as set forth below:

 

 

	 	 	 
	(a)

	 	If to the Company:
	 
	 	 
	 

	 	US Dataworks, Inc.
	 

	 	5301 Hollister Road
	 

	 	Suite 250
	 

	 	Houston, TX 77040
	 

	 	Attention: CEO
	 

	 	Phone: (713) 934-3855
	 

	 	Fax: (713) 934-8127
	 
	 	 
	(b)

	 	If to any Holder:
	 
	 	 
	 

	 	Peter Simons
	 

	 	22262 Robin Ave.
	 

	 	Glidden, IA 51443

     Any party may alter the address to which communications or copies are to be sent by
giving notice of such change to each of the other parties hereto in conformity with the provisions
of this Section for the giving of notice.

     2.7      Holder of Record. A person is deemed to be a Holder whenever such person owns or is
deemed to own of record such Registrable Securities. If the Company receives conflicting
instructions, notices or elections from two or more persons with respect to the same Registrable
Securities, the Company shall act upon the basis of instructions, notice or election received from
the record owner of such Registrable Securities.

     2.8      Binding Nature of Agreement. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, personal representatives, successors and
assigns.

     2.9      Entire Agreement. This Agreement contains the entire agreement and understanding among
the parties hereto with respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements and understandings, inducements or conditions, express or implied, oral
or written, except as herein contained. The express terms hereof control and supersede any course
of performance and/or usage of the trade inconsistent with any of the terms hereof. This Agreement
may not be modified or amended other than by an agreement in writing by the parties hereto.

     2.10      Construction. The Section headings in this Agreement are for convenience of reference
only, do not constitute a part of this Agreement and shall not affect its interpretation. Words
used herein, regardless of the number and gender specifically used, shall be deemed and construed
to include any other number, singular or plural, and any other gender, masculine, feminine or
neuter. The words “include” or “including” shall be deemed to be followed by “without limitation”
whether or not they are followed by such phrases or words of like import. The words “hereof,”
“herein,” “hereby,” “hereunder” and similar terms in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement. All references to Section in this
Agreement are to those portions of this Agreement unless otherwise specified.

     2.11      Indulgences, Not Waivers. Neither the failure nor any delay on the part of a party to
exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude
any other or further exercise of the same or any other right, remedy, power or privilege, nor shall
any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as
a waiver of such right,

 

 

remedy, power or privilege with respect to any other occurrence. No waiver shall be effective
unless it is in writing and is signed by the party asserted to have granted such waiver.

     2.12      Execution in Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original as against any party whose signature appears
thereon, and all of which shall together constitute one and the same instrument. This Agreement
shall become binding when one or more counterparts hereof, individually or taken together, shall
bear the signatures of all of the parties reflected hereon as the signatories. Any photographic or
xerographic copy of this Agreement, with all signatures reproduced on one or more sets of signature
pages, shall be considered for all purposes as of it were an executed counterpart of this
Agreement.

     2.13      Severability. Each and every provision set forth in this Agreement is independent and
severable from the others, and no provision shall be rendered unenforceable by virtue of the fact
that, for any reason, any other or others of them may be unenforceable in whole or in part. The
parties hereto agree that if any provision of this Agreement shall be declared by a court of
competent jurisdiction to be unenforceable for any reason whatsoever, the court may appropriately
limit or modify such provision, and such provision shall be given effect to the maximum extent
permitted by applicable law.

IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the date and year
first above written.

	 	 	 	 	 
	 	US DATAWORKS, INC.

 	 
	 	By:  	 /s/ John S. Reiland 	 
	 	 	Name:  	John S. Reiland 	 
	 	 	Title:  	CFO 	 
	 

	 	 	 	 	 
	 	PETER SIMONS

 	 
	 	                                           /s/ Peter Simons

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