EXHIBIT 10.10
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.
5% CONVERTIBLE DEBENTURE
$500,000 JUNE 30, 2003 (THE "EFFECTIVE DATE")
FOR VALUE RECEIVED, the undersigned, US DATAWORKS, INC. (the "MAKER"),
hereby promises to pay to the order of Societe Financiere Privee, S.A., the
holder, or its assigns (the "HOLDER"), in lawful money of the United States of
America, and in immediately payable funds, the principal sum of five hundred
thousand dollars ($500,000). The principal hereof together with any unpaid
accrued interest thereon, shall be due and payable on June 30, 2004 (the
"MATURITY DATE"). Payment of all amounts due hereunder shall be made at the
address of the Holder provided herein. The Maker further promises to pay
interest at the rate of five percent (5%) PER ANNUM on the outstanding principal
balance hereof. The accrued interest shall be payable in cash semi-annually on
the dates six and twelve months following the Effective Date (the "SEMI-ANNUAL
INTEREST PAYMENTS"). The Semi-Annual Interest Payment due twelve months
following the effective date shall be paid on the Maturity Date.
This Debenture 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 Debenture 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 Maker may, at its option, at any time prior to the
Maturity Date, redeem this Debenture (the "Redemption"), in whole or in part, at
face value of the original principal amount, plus accrued and unpaid interest,
if any (the "Redemption Amount"), of the Debenture (or portion thereof) to be
redeemed, upon giving to the Holder a written notice five (5) business days
prior to such Redemption. Any 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 Debenture until this Debenture
is paid in full.
2. SUBORDINATION. For purposes of this Debenture 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 Maker 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
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trust company organized under the laws of the United States or any state or (ii)
any savings and loan association; (b) obligations of the Maker incurred pursuant
to agreements to factor the accounts receivable of the Maker; (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 Maker is responsible or liable, by
guarantees or otherwise; (d) obligations of the Maker 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 Maker 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 Debenture 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 Debentures.
The Maker agrees, and the Holder of the Debenture issued hereunder by
its acceptance thereof likewise agrees, that the Debenture shall be issued
subject to the provisions of this Section 2, each person holding any Debenture,
whether upon original issue or upon transfer or assignment thereof, accepts and
agrees to be bound by such provisions. This Debenture 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 Holder 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 Maker to the
extent applicable to the Superior Bank Indebtedness until the principal of, and
premium, if any, and interest on the Debentures 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 Debentures 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 Holder,
on the one hand, and the holders of the Superior Bank Indebtedness, on the other
hand.
3. TRANSFERABILITY. This Debenture shall be freely transferable by the
Holder provided such transfer is in compliance with applicable federal and state
securities laws.
4. CONVERSION. The Holder, in its sole discretion, shall be entitled to
convert the Debenture into shares of Common Stock, in whole or in part, upon
giving to the Maker written notice to such conversion. The Debenture, or portion
hereof, shall be convertible into such number of Common Stock (the "CONVERSION
STOCK") as will be determined by dividing the principal amount of the Debenture,
and all or any portion of the accrued interest (at Holder's sole discretion), if
any, by the Conversion Price. The Conversion Price shall be the listed closing
bid price for maker's common stock as listed on the American Stock Exchange on
the trading day immediately before the date of conversion (the "CONVERSION
DATe"). The Maker agrees that such shares of Common Stock shall be deemed to be
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issued to the Holder as the record holder of such shares as of the close of
business on the Conversion Date. A stock certificate for the shares of Common
Stock shall be delivered to the Holder within ten (10) days following the
Conversion Date. No adjustments shall be made to the number of shares issuable
upon conversion of this Debenture ("DEBENTURE SHARES") for any cash dividends
paid or payable to holders of record of Common Stock prior to the date as of
which the Holder shall be deemed to be the record holder of such Debenture
Shares. The Company hereby agrees that the Holder shall have "piggyback"
registration rights entitling such Holder to include any and all of the
Debenture Shares in any future registration of any shares of the Company. The
Company shall give Holder at least ten (10) days' prior written notice for any
proposed registration of the Company's shares in order for such Holder to
determine whether any or all of the Debenture Shares shall be included therein.
The Company's obligations pursuant to this Section 4 shall terminate on the
earlier to occur of: (a) the second anniversary of the date of issuance of the
Debenture Shares and (b) such time when all Debenture Shares held by the Holder
may be sold pursuant to Rule 144 under the Securities Act during any three (3)
month period.
The Company shall not issue Debenture Shares if such issuance, when
added to the number of shares of Common Stock issued by the Company upon
exercise of any warrants, would equal or exceed twenty percent (20%) of the
total number of Common Stock issued and outstanding on the date of such
conversion without first obtaining the approval of is voting shareholders to
such issuance in accordance with the rules of the American Stock Exchange or any
other market rules with which the Company shall be required to comply at the
time of such conversion.
5. PIGGYBACK REGISTRATION RIGHTS. Should the Maker propose to register
any of its common stock under the Securities Act for any reason other than a
registration of securities with respect to its employee benefit plans, the Maker
shall, at such time, promptly give Holder ten (10) days' advance written notice
of such registration ("REGISTRATION NOTICE"). Only in the instance where Holder
has given the Maker written notice, within five (5) days of its receipt of the
Registration Notice, directing the Maker NOT to register all of its Conversion
Stock, the Maker shall otherwise cause to be registered under the Securities Act
all of Holder's outstanding Conversion Stock, subject to any adjustment or
cutbacks made by the Maker's underwriter in its sole discretion. Holder agrees
to promptly return to the Maker any shareholder questionnaire or other
documentation the Maker may require Holder to submit as required under federal
and state securities laws. The Maker's obligations pursuant to this Section 5
shall terminate on the earlier to occur of: (a) the second anniversary of the
date of issuance of the Conversion Stock and (b) such time when all Conversion
Stock held by Holder may be sold pursuant to Rule 144 under the Securities Act
during any three (3) month period.
6. DEFAULT. The occurrence of any one of the following events shall
constitute an Event of Default:
(a) The non-payment of any principal or Semi-Annual Interest Payments
when such payment becomes due and payable and the Maker's continued failure to
make such payment for a period of ten (10) days thereafter;
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(b) The material breach of this Agreement and such default continues
for ten (10) 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 Holder may, by written
notice to the Maker (i) declare all or any portion of the unpaid principal
amount due to Holder, together with all accrued interest thereon, immediately
due and payable.
7. 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.
0000 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
Maker shall give written notice of any change of address to the Holder. The
address of the Holder is as set forth on the signature page to this Debenture,
and the Holder shall give written notice of any change of address to the Maker.
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8. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. The Maker consents
to the jurisdiction of any court of the State of Texas and of any federal court
located in the State of Texas. 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 Holder may elect, by certified
mail directed to the Maker at the location provided for in Section 8 hereof, or,
in the alternative, in any other form or manner permitted by law.
9. GOVERNING LAW. THIS DEBENTURE SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEVADA APPLICABLE TO
CONTRACT MADE AND TO BE PERFORMED ENTIRELY THEREIN, WITHOUT GIVING EFFECT TO THE
RULES AND CONFLICTS OF LAW.
10. CONFORMITY WITH LAW. All agreements between the Holder 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 Debenture
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.
11. SEVERABILITY. Every provision hereof is intended to be several. If
any provision of this Debenture 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.
12. WAIVER. Maker hereby waives presentment, demand, protest and
notices of protest, demand, dishonor and nonpayment. 13. WAIVER AND AMENDMENT.
Any provision of this Debenture may be amended, waived or modified only upon the
written consent of the parties hereto.
14. SUCCESSORS AND ASSIGNS. All the terms and provisions of this
Debenture shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns.
15. ASSIGNABILITY. Maker's obligations hereunder are nontransferable
and nonassignable without the prior written consent of Holder.
16. 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.
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17. COUNTERPARTS. This Debenture 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.
18. LEGAL REPRESENTATION. Maker and Holder, respectively, agree and
represent that each party has been represented by such party's legal counsel
with regard to all aspects of this Debenture, 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 Debenture.
IN WITNESS WHEREOF, the Maker has signed and sealed this Debenture and
delivered it in the state of California as of June 30, 2003.
US DATAWORKS, INC.
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Its authorized representative
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Title
HOLDER:
Societe Financiere Privee
0, Xxx Xxxxxxx
XX-0000 Xxxxxx
ATTN : Xxxxxxxx Xxxxxxx
Fax : (00) 00.000.00.00
Tel. : (00) 00.000.00.00
email : xxxxxxx@xxxxxxxx.xxx
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