EXHIBIT 10.14
THE SECURITIES DESCRIBED IN THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF
CERTAIN STATES, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED
OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE LAWS, (ii) TO THE EXTENT
APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT RELATING
TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH
OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE LAW IS AVAILABLE.
FORM OF ___% CONVERTIBLE PROMISSORY NOTE
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$___________ ___________, 200_
FOR VALUE RECEIVED, the undersigned, US DATAWORKS, INC. (the "Maker" or
Company), hereby promises to pay to the order of _______________, the holder, or
its assigns (the "Noteholder"), in lawful money of the United States of America,
and in immediately payable funds, the principal sum of $_________ (THE NOTE).
The principal hereof together with any unpaid accrued interest thereon, shall be
due and payable twelve months from the date hereof (the Maturity Date). Payment
of all amounts due hereunder shall be made at the address of the Noteholder
provided for in this Note. The Maker further promises to pay interest at the
rate of ___ percent (__%) per annum on the outstanding principal balance hereof.
The accrued interest shall be payable in cash quarterly beginning _______, 200_,
________, 200_, ________, 200_ and ________, 200_.
This Note is one of a series of convertible promissory notes of like tenor
issued by the Company (each, a Note and, collectively, the Notes) being issued
and delivered pursuant to that certain Subscription Agreement dated of even date
herewith (the Subscription Agreement) by and between Maker, Noteholder and
others is made subject to the terms and conditions of the Subscription
Agreement, which terms are herein incorporated by reference. Unless otherwise
set forth herein, all capitalized terms used herein without definition shall
have the meanings ascribed to such terms in the Subscription Agreement.
This Note has not and will not be registered under the Securities Act of 1933,
as amended (the "Act") or applicable state securities laws, in reliance on the
exemption from registration afforded by Regulation D promulgated under the Act.
This Note may not be offered, sold, transferred or otherwise disposed of, unless
such securities are registered under the Act, or an exemption from the
registration requirements of the Act is available.
1. REDEMPTION. The Company may, at its option, at any time prior to ninety (90)
days of the Closing Date, redeem this Note, in whole or in part, at ___%, of the
face value of the original principal amount, plus accrued interest, if any; or
the Note may be redeemed in whole or in part at ___% of the face value anytime
after 90 days from the Closing Date of the Note (or portion thereof) to be
redeemed, upon giving to the Noteholder a written notice of such redemption.
Such redemption amount shall include all interest then due and payable on the
Note, with a minimum of the first quarterly interest payment and shall be first
applied to the payment of such accrued but unpaid interest. Each partial
redemption of the outstanding principal amount shall in no way release,
discharge or affect the obligation of the Maker to continue to make any other
payments due on the Note until this Note is paid in full.
2. SUBORDINATION. For purposes of this Note and specifically this Section 2
hereof, the term "Superior Bank Indebtedness" shall be defined as follows:
The principal of, and accrued and unpaid interest on (a) indebtedness of the
Company incurred in the ordinary course of business for money borrowed or in
respect of letters of credit issued for its own account, to (i) any bank or
trust company organized under the laws of the United States or any, state or
(ii) any savings and loan association; (b) obligations of the Company incurred
pursuant to agreements to factor the accounts receivable of the Company (c)
purchase money obligations entered into in the ordinary course of business,
evidenced by notes, lease purchase agreements, purchase contracts or agreements,
or similar instruments for the payment of which the Company is responsible or
liable, by guarantees or otherwise; (d) obligations of the Company incurred in
the ordinary course of business under any agreement to lease, or lease of, any
real or personal property which are required to be capitalized in accordance
with generally accepted accounting principles, or any other agreement to lease,
or lease of, any real or personal property for the benefit of the Company which,
by the terms thereof, are expressly designated as Superior Bank Indebtedness;
and (e) any modification, renewal, extension or refunding of any such
indebtedness, guarantee or obligation; in every case, whether such indebtedness,
guarantee or obligation, or such modification, renewal, extension or refunding
thereof, was outstanding on the date of execution of this Note or thereafter
created, incurred or assumed; unless, in the instrument creating or evidencing
the same or pursuant to which the same is outstanding, it is provided that such
indebtedness, guarantee or obligation, or such modification, renewal, extension
or refunding thereof, is not superior in right of payment to the Notes.
The Maker agrees, and the Noteholder of the Note issued hereunder by its
acceptance thereof likewise agrees, that the Note shall be issued subject to the
provisions of this Section 2, each person holding any Note, whether upon
original issue or assignment thereof, accepts and agrees to be bound by such
provisions. This Note issued hereunder shall, to the extent and in the manner
hereinafter set forth, be subordinated and subject in right of payment or
satisfaction to the prior payment of Superior Bank Indebtedness.
Subject to the payment of Superior Bank Indebtedness as provided above and
subject to applicable law, the rights of the Noteholder shall be appropriately
subrogated to the rights of the holders of Superior Bank Indebtedness to receive
payments or distributions of cash, property or securities of the Company to the
extent applicable to the Superior Bank Indebtedness until the principal of, and
premium, if any, and interest on the Notes shall be paid in full; and, for the
purposes of such subrogation, no payments or distributions to the holders of the
Superior Bank Indebtedness of any cash, property or securities to which the
Holders of the Notes would be entitled except for the provisions of this Section
2. It is understood that the provisions of this Section 2 are and are intended
solely for the purpose of defining the relative rights of the Noteholder, on the
one hand, and the holders of the Superior Bank Indebtedness, on the other hand.
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3. CONVERSION. Anytime after __________ (__) days following the Closing Date, as
defined in the Subscription Agreement, the Noteholder shall be entitled to
convert the Note into shares of common stock or other security of Maker, in
whole or in part. The Note, or portion hereof, shall be convertible into such
number of the securities of the Company as will be determined by dividing the
principal amount of the Note, and accrued interest, if any, by the Conversion
Price (the Conversion Securities). The Conversion Price of the Company's common
stock shall be equal to 80% of the average closing bid price of the Company's
common stock for the period of twenty (20) trading days immediately preceding
the conversion date, or _________ ($____) per share, whichever is lower. For the
purposes of this section, as may be applicable, the closing bid price of the
Company's common stock shall be the closing bid price as reported by the
American Stock Exchange, National Association of Securities Dealers, Inc. NASDAQ
SmallCap or National Markets, or the closing bid price in the over-the-counter
market or, in the event the common stock is listed on a stock exchange, the
closing bid price on such exchange as reported in THE WALL STREET JOURNAL.
4. DEFAULT. The occurrence of any one of the following events shall constitute
an Event of Default:
(a) The non-payment of any principal and/or interest pursuant to this
Note at maturity; and such failure continues for a period of ninety (90) days;
(b) The material breach of any representation or warranty, covenant or
undertaking in this Note, Subscription Agreement or the security Agreement; and
such default continues for ninety (90) days after written notice of such default
is received by Maker;
(c) The commencement by the Maker of any voluntary proceeding under any
bankruptcy, reorganization, insolvency, receivership, dissolution, or
liquidation law or statute or any jurisdiction, whether now or hereafter in
effect; or the adjudication of the Maker as insolvent or bankrupt by a decree of
a court of competent jurisdiction; or the petition or application by the Maker
for, acquiescence in, or consent by the Maker to, the appointment of any
receiver or trustee for the Maker or for all or a substantial part of the
property of the Maker; or the assignment by the Maker for the benefit of
creditors; or the written admission of the Maker of its inability to pay its
debts as they mature; or
(d) The commencement against the Maker of any proceeding relating to
the Maker under any bankruptcy, reorganization, insolvency, receivership,
dissolution or liquidation law or statute or any jurisdiction, whether now or
hereafter in effect, provided, however, that the commencement of such a
proceeding shall not constitute an Event of Default unless the Maker consents to
the same or admits in writing the material allegations of same, or said
proceeding shall remain undismissed for 20 days; or the issuance of any order,
judgment or decree for the appointment of a receiver or trustee for the Maker or
for all or a substantial part of the property of the Maker, which order,
judgment or decree remains undismissed for 20 days; or a warrant of attachment,
execution, or similar process shall be issued against any substantial part of
the property of the Maker.
Upon the occurrence of any Event of Default, the Noteholder may, by written
notice to the Maker, declare all or any portion of the unpaid principal amount
due to Noteholder, together with all accrued interest thereon, immediately due
and payable.
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5. NOTICES. Notices to be given hereunder shall be in writing and shall be
deemed to have been sufficiently given if delivered personally or sent by
overnight courier or messenger or sent by registered or certified mail (air mail
if overseas), return receipt requested, or by telex, facsimile transmission,
telegram or similar means of communication. Notice shall be deemed to have been
received on the date of personal delivery, telex, facsimile transmission,
telegram or similar means of communication, or if sent by overnight courier or
messenger, shall be deemed to have been received on the next delivery day after
deposit with the courier or messenger, or if sent by certified or registered
mail, return receipt requested, shall be deemed to have been received on the
third business day after the date of mailing. The address of the Maker is: US
Dataworks, Inc., 00000 Xxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxx 00000; and the
Maker shall give written notice of any change of address to the Noteholder. The
address of the Noteholder is as set forth on the signature page to this Note,
and the Noteholder shall give written notice of any change of address to the
Maker.
6. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. The Maker consents to the
jurisdiction of any court of the State of California and of any federal court
located in the State of California. The Maker waives personal service of any
summons, complaint or other process in connection with any such action or
proceeding and agrees that service thereof may be made, as the Noteholder may
elect, by certified mail directed to the Maker at the location provided for in
Section 5 hereof, or, in the alternative, in any other form or manner permitted
by law.
7. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACT
MADE AND TO BE PERFORMED ENTIRELY THEREIN, WITHOUT GIVING EFFECT TO THE RULES
AND CONFLICTS OF LAW.
8. CONFORMITY WITH LAW. All agreements between the Noteholder and Maker are
hereby expressly limited so that in no contingency or event whatsoever, whether
by reason of deferment or acceleration of the maturity of this Note or
otherwise, shall the rate of interest hereunder exceed the maximum rate
permissible under applicable law. If, from any circumstances whatsoever, the
rate of interest resulting from the payment and/or accrual of any amount of
interest hereunder, at any time that payment of interest is due and/or at any
time that interest is accrued, shall exceed the limits prescribed by such
applicable law, then payment and/or accrual of such interest shall be reduced to
that resulting from the maximum rate of interest permissible under such
applicable law. This provision shall never be superseded or waived.
9. SEVERABILITY. Every provision hereof is intended to be several. If any
provision of this Note is determined by a court of competent jurisdiction to be
illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall not effect the other provisions hereof, which shall
remain binding and enforceable.
10. WAIVER. The makers and endorsers of this Note do hereby severally waive
presentment, demand, protest and notices of protest, demand, dishonor and
nonpayment.
11. WAIVERS AND AMENDMENT. Any provision of this Note may be amended, waived or
modified only upon the written consent of the parties hereto.
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12. SUCCESSORS AND ASSIGNS. All the terms and provisions of this note shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
13. ASSIGNABILITY. Maker's obligations hereunder are nontransferable and
nonassignable without the prior written consent of Noteholder.
14. ENTIRE AGREEMENT. This Agreement represents the entire agreement between the
parties relating to the subject matter hereof. This Agreement alone fully and
completely expresses the agreement of the parties relating to the subject matter
hereof. There are no other courses of dealing, understandings, agreements,
representations or warranties, written or oral, except as set forth herein. This
Agreement may not be amended or modified, except by a written agreement signed
by all patties hereto.
15. COUNTERPARTS. This Note may be executed in multiple counterparts, each of
which shall be deemed an original and all of which taken together shall be but a
single instrument.
16. LEGAL REPRESENTATION. Maker and Noteholder, respectively, agree and
represent that each party has been represented by such party's legal counsel
with regard to all aspects of this Note, or if such party is acting without
legal counsel, that such party has had adequate opportunity and has been
encouraged to seek the advice of such party's legal counsel prior to the
execution of this Note.
IN WITNESS WHEREOF, the Maker has signed and sealed this Note and
delivered it in the state of California as of __________, 200_.
US DATAWORKS, INC.
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By: Xxxxxxx Xxxxxxx
Its: Chief Financial Officer
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