NOTE PURCHASE
AGREEMENT
THIS NOTE PURCHASE AGREEMENT (the
“Agreement”) is made as of the 13 th day of
August, 2008 by and between US DATAWORKS, INC., a Nevada
corporation (the “Company”), and signatories hereto
(collectively, the “Investors” and individually, the
“Investor”).
WHEREAS, the Company desires to issue and sell
to the Investor, and the Investor desires to purchase from the
Company, refinancing secured promissory notes of the Company, upon
the terms and subject to the conditions set forth
herein;
WHEREAS, the Refinancing Notes (as defined
below) will rank senior to all outstanding and future indebtedness
of the Company and its Subsidiaries to the extent required under
the Refinancing Notes and will be secured by a perfected security
interest, in all of the assets of the Company and the stock and
assets of each of the Subsidiaries as evidenced by a Security
Agreement, in the form attached hereto as Exhibit B (as
amended, or modified from time to time in accordance with its
terms, the “Security Agreement”); and
WHEREAS, the Investors desire to appoint Charles
E. Ramey as collateral agent with respect to the Collateral (as
defined in the Security Agreement) (in such capacity, the
“Collateral Agent”) pursuant to a Collateral Agency
Agreement in the form attached hereto as Exhibit C (as
amended or modified from time to time in accordance with its terms,
the “Collateral Agency Agreement”).
NOW, THEREFORE, the parties hereby agree as
follows:
1. Definitions . For purposes of this Agreement, the following
terms shall have the following respective meanings:
(a) “Affiliate” means, with respect to
any entity, an affiliate of that entity as defined in Rule 12b-2
under The Securities Exchange Act of 1934, as amended to
date.
(b) “Closing” has the meaning specified
in Section 2.2(a).
(c) “Closing Date” has the meaning
specified in Section 2.2(a).
(d) “Common Stock” shall mean the
common stock, $0.0001 par value, of the Company.
(e) “Company” has the meaning specified
in the preamble to this Agreement.
(f) “Financial Statements” has the
meaning specified in Section 3.7.
(g) “Form 10-KSB” has the meaning
specified in Section 3.6.
(h) “Governmental Authority”
means any court, agency, department or
other instrumentality of any foreign, federal, state, county, city
or other political subdivision.
(i) “Investor” has the meaning
specified in the preamble to this Agreement.
(j) “Lien” means, with respect to any
asset, any mortgage, pledge, security interest, encumbrance, lien
or charge of any kind in respect of such asset.
(k) “Material Adverse Effect” shall
mean individually or collectively, a material adverse effect on, or
a material adverse change in, or group of such effects on or
changes in, (i) the business, financial condition, results of
operations, assets or liabilities of the Company and its
Subsidiaries, taken as a whole, or (ii) the ability of the Company
to perform its obligations under or with respect to this Agreement
or any Note.
(l) “Refinancing Note” has the meaning
specified in Section 2.1(a).
(m) “Person” means a corporation, an
association, a partnership, a limited liability company, an
individual, a joint venture, a joint stock company, a trust, an
unincorporated organization or a government or an agency or a
political subdivision thereof.
(n) “Purchase Price” has the meaning
specified in Section 2.1(a).
(o) “SEC” has the meaning specified in
Section 3.6.
(p) “Securities Act” means the
Securities Act of 1933, as amended.
(q) “Subsidiary” means, with respect to
any entity, any other entity of which securities or other ownership
interest having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions
are owned directly or indirectly by such entity.
(r) “Voting Securities” means any
securities of the Company having the ordinary power to vote, in the
absence of contingencies, in the election of directors of the
Company.
2. Purchase and Sale of Notes
.
2.1 Sale and Issuance of Notes
.
(a) Purchase and Sale of the Refinancing
Notes . Subject to and
upon the terms and conditions of this Agreement, at the Closing,
the Company agrees to issue and sell to the Investors, and the
Investors agree to purchase from the Company, refinancing senior
secured promissory notes (each, a “Refinancing Note”
and collectively, the “Refinancing Notes”), in the
aggregate principal amount set forth opposite each Investor’s
name on the signature pages hereto (the “Purchase
Price”). Each Purchaser shall pay the Purchase Price therefor
in connection with the issuance of the Refinancing Notes and the
Company’s repayment of the Senior Secured Convertible Notes
due November 13, 2010 (the “Original Notes”). The
Refinancing Notes shall have a maturity date one (1) year from the
date of their original issuance, shall be in substantially the form
attached hereto as Exhibit A , and subject to adjustment
pursuant to, the terms of such Refinancing Note.
2.2 Closing .
(a) The closing of the purchase and sale of the
Refinancing Notes (the “Closing”) shall take place at
the offices of Pillsbury Winthrop Shaw Pittman LLP, 2475 Hanover
Street, Palo Alto, California, at 10:00 a.m. local time, or at such
other time and place as the Company and the Investors mutually
agree upon. The Closing shall occur on such date (the
“Closing Date”) that the Company.
3. Representations, Warranties and Agreements of
the Company . The Company
hereby represents and warrants to, and agrees with, each Investor
that:
3.1 Organization . The Company is a corporation duly
incorporated, validly existing and in good standing under the laws
of the State of Nevada, has the corporate power and authority to
own, lease and operate its properties and to carry on its business
as currently conducted, and is duly qualified to transact business
and is in good standing in each jurisdiction in which the conduct
of its business or its ownership or leasing of property requires
such qualification, except to the extent that the failure to be so
qualified or be in good standing would not be reasonably expected
to have a Material Adverse Effect. The Company has all requisite
corporate power and authority to own, lease and operate its
properties and to carry on its business as currently
conducted.
3.2 Authorization . All corporate action on the part of the
Company necessary for the authorization, execution and delivery of
this Agreement and the Refinancing Note, the performance of all
obligations of the Company hereunder and thereunder has been taken.
This Agreement constitutes a legal, valid and binding agreement of
the Company, enforceable against the Company in accordance with its
terms, except for the effect of bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or
affecting the rights of creditors generally and by equitable
principles of general applicability.
3.3 Valid Issuance . When delivered to and paid for by the
Investors in accordance with the terms of this Agreement, each
Refinancing Note will be a valid and binding obligation of the
Company, enforceable against the Company in accordance with its
terms, except for the effect of bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or
affecting the rights of creditors generally and by equitable
principles of general applicability. Based in part upon the
representations of the Investors in this Agreement, the Refinancing
Notes will be issued in compliance with all applicable federal and
state securities laws.
3.4 Non-Contravention . The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby and
thereby will not (a) conflict with, or result in any breach or
violation of the Certificate of Incorporation or the Bylaws of the
Company or (b) conflict with or constitute a breach of, or default
(or an event which with notice or lapse of time or both would
become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result
in the creation of a Lien on any property or asset of the Company
or any of its Subsidiaries pursuant to any contract, indenture,
mortgage, loan agreement, note, lease or other instrument to which
the Company or any of its Subsidiaries is a party or by which it or
any of its properties may be bound, or (c) to the Company’s
knowledge violate any law, administrative regulation or court
decree, except in the case of clauses (b) and (c) for conflicts,
breaches, defaults, violations or Liens which, either individually
or in the aggregate, would not be reasonably expected to have a
Material Adverse Effect.
3.5 Governmental Consents . No consent, approval, order or authorization
of, or registration, qualification, designation, declaration or
filing with, any federal, state, or local governmental authority on
the part of the Company is required in connection with the
consummation of the transactions contemplated by this Agreement,
except for such filings as may be required to be made pursuant to
applicable federal or state securities laws, and except for such
consents, approvals, authorizations or orders the absence of which,
either individually or in the aggregate, would not be reasonably
expected to have a Material Adverse Effect.
3.6 Litigation . Except as disclosed in the Company’s
Annual Report on Form 10-KSB filed with the Securities and Exchange
Commission (“SEC”) for the year ended March 31, 2008
(the “Form 10-KSB”), or any other filings by the
Company with the SEC, there is no action, suit or proceeding before
or by any court or governmental agency or body, domestic or
foreign, now pending, or, to the knowledge of the Company,
threatened, against or adversely affecting the Company that would,
if determined adversely to the Company, be reasonably expected to
have a Material Adverse Effect.
3.7 SEC Filings and Financial Statements
. The Company has previously made
available to the Investors true and complete copies of the Form
10-KSB. The financial statements included in such reports are
hereafter collectively referred to as the “Financial
Statements.” Each of the balance sheets included in the
Financial Statements (including any related notes and schedules)
presents fairly the financial position of the Company as of its
date, and the other financial statements included in the Financial
Statements (including any related notes and schedules) present
fairly the results of operations or other information included
therein of the Company for the periods or as of the dates therein
set forth (subject, in the case of interim financial statements, to
changes resulting from audits and year-end adjustments), and each
of the Financial Statements was prepared in accordance with
generally accepted accounting principles consistently applied
during the periods involved (except as otherwise stated therein and
except, in the case of interim financial statements, to the extent
they may not include footnotes or may be condensed or summary
statements). None of the documents filed with the SEC and referred
to in this Section 3.7 contained, as of its date, 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 the light of the circumstances under which
they were made, not misleading.
3.8 No Material Adverse Change
. Since June 30, 2008, except as
otherwise disclosed by the Company in writing to the Investors or
as set forth in the Company’s SEC filings, in each case on or
prior to the date hereof, (a) there has been no change or
development that individually or in the aggregate would reasonably
be expected to have a Material Adverse Effect, (b) there have been
no material transactions entered into by the Company, and (c) there
has been no dividend or distribution of any kind declared, paid or
made by the Company on any class of its capital stock.
3.9 General Solicitation . Neither the Company nor any other person or
entity authorized by the Company to act on its behalf has engaged
in a general solicitation or general advertising (within the
meaning of Regulation D of the Securities Act) of investors with
respect to offers or sales of the Refinancing Notes.
3.10 Indemnification . The Company agrees and undertakes to indemnify
and hold harmless each Investor against and from all costs, losses,
damages, actions, proceedings, claims, demands, liabilities,
charges and expenses of whatsoever nature and howsoever
(hereinafter, “Claims”) that the Investors may
in
