Contract
EXHIBIT 4.1
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY MAY BE CONVERTED 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 TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED
IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
AMENDED AND RESTATED
10% CONVERTIBLE DEBENTURE
10% CONVERTIBLE DEBENTURE
| $768,199.24 | September 15, 2005 (the “Effective Date”) |
FOR VALUE RECEIVED, the undersigned, US DATAWORKS, INC. (the “Company”), hereby promises to pay to
the order of Xxxxx Xxxxxx, 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 seven hundred and
sixty eight thousand and one hundred and ninety nine dollars and twenty four cents ($768,199.24). Two-thirds (2/3) of the principal hereof, together with any unpaid accrued
interest thereon, shall be due and payable on the first anniversary of the Effective Date; payment
on the second anniversary date shall be for all of the outstanding principal balance and accrued
and unpaid interest (the “Maturity Date”). Payment of all amounts due hereunder shall be made at
the address of the Holder provided herein. The Company further promises to pay interest at the
rate of ten percent (10%) per annum (“Interest”) on the outstanding principal balance hereof.
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 or
otherwise disposed of, unless such securities are registered under the Act, or an exemption from
the registration requirements of the Act is available.
Any capitalized terms not defined herein shall have the meaning ascribed to such term as
provided in that certain Settlement and Release Agreement dated November 12, 2004, entered into by
and between Company and Holder (the “Settlement Agreement”).
1. Redemption. The Company may redeem this Debenture prior to the Maturity Date only
if the Holder agrees, in writing, to the terms and condition of such redemption. Any
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| US Dataworks, Inc. Amended and Restated Convertible Debenture September 15, 2005 |
partial redemption of the outstanding principal amount shall in no way release,
discharge or affect the remaining obligations of the Company under this 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 not include obligations to insiders and 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-settlement
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 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 Debenture.
The Company 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 Xxxxxxxxx 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 Company to the extent applicable to the Superior Bank Indebtedness until the
principal of, and premium, if any, and Interest on the Debenture 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 Holder of the Debenture would be
entitled except for the provisions of this Section 2. It is understood that the provisions of this
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| US Dataworks, Inc. Amended and Restated Convertible Debenture September 15, 2005 |
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. Assignment of Rights. The rights hereunder may be freely assigned by the Holder
provided such assignment is in compliance with applicable federal and state securities laws.
4. Conversion.
(a) At the Holder’s option any and all portions of this Debenture and any and all accrued and
unpaid Interest may be converted into the common stock of the Company, $0.0001 par value per share,
and any securities into which such common stock may hereafter be reclassified (“Common Stock”).
The Holder shall deliver to Company notice of such conversion (“Conversion Notice”) at any time
prior to or on the Maturity Date.
(b) The Debenture shall be convertible into such number of Common Stock (the “Debenture
Shares”) as will be determined by dividing the principal amount of the Debenture, and all accrued
Interest, if any, by the Per Share Conversion Price. The Per Share Conversion Price equals One
Dollar ten cents ($1.10), subject to the adjustment for any reverse or forward stock splits, stock
dividends, stock combinations and other similar transactions of the Common Stock that may occur
after the date of this Agreement.
(c) The Company agrees that such Xxxxxxxxx Shares shall be deemed to be issued to the Holder
as the record holder of such shares as of the close of business on the date of the Holder’s
issuance of the Conversion Notice (the “Conversion Notice Date”). A stock certificate for the
shares of Common Stock shall be delivered to the Holder within ten (10) trading days following the
Conversion Notice Date. No adjustments shall be made to the number of shares issuable upon
conversion of this Debenture 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.
(d) The Company hereby agrees that the Holder shall have certain registration rights as set
forth in the Settlement Agreement.
5. Default. The occurrence of any one of the following events shall constitute an
Event of Default:
(a) The non-payment of any principal or Interest when such payment becomes due and payable and
the Company’s continued failure to make such payment for a period of ten (10) days thereafter;
(b) The material breach of this Agreement and such default continues for ten (10) days after
written notice of such default is received by Company;
(c) The commencement by the Company 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 Company as
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| US Dataworks, Inc. Amended and Restated Convertible Debenture September 15, 2005 |
insolvent
or bankrupt by a decree of a court of competent jurisdiction; or the petition or application by the
Company for, acquiescence in, or consent by the Company to, the appointment of any receiver or
trustee for the Company or for all or a substantial part of the property of the Company; or the
assignment by the Company for the benefit of creditors; or the written admission of the Company of
its inability to pay its debts as they mature; or
(d) The commencement against the Company of any proceeding relating to the Company 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 Company 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 Company or for all or a substantial part of the property of the Company, 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 Company.
Upon the occurrence of any Event of Default, the Holder may, by written notice to the Company
(i) declare all or any portion of the unpaid principal amount due to Holder, together with all
accrued interest thereon, immediately due and payable.
6. 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 Company is:
US Dataworks, Inc.
0000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
0000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Company 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 Company.
7. Consent to Jurisdiction and Service Of Process. The Company consents to the
jurisdiction of any court of the State of Texas and of any federal court located in the State of
Texas. The Company 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 Company at the location provided for in
Section 8 hereof, or, in the alternative, in any other form or manner permitted by law.
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| US Dataworks, Inc. Amended and Restated Convertible Debenture September 15, 2005 |
8. 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.
9. Conformity With Law. All agreements between the Holder and Company 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.
10. 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.
11. Waiver; Amendment. The Company hereby waives presentment, demand, protest and
notices of protest, demand, dishonor and nonpayment. Any provision of this Debenture may be
amended, waived or modified only upon the written consent of the parties hereto.
12. 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.
13. Assignability. The Company’s obligations hereunder are nontransferable and
nonassignable without the prior written consent of Xxxxxx.
14. Entire Agreement. This Debenture amends, restates and replaces that certain 10%
Convertible Debenture dated September 15, 2004 between the Holder and the Company (the “Original
Debenture”). Subject to that certain Letter Agreement dated as of September 15, 2005 between the
Holder and the Company (the “Letter Agreement”) and the Settlement Agreement (as well as any
Transaction Documents attached thereto or described therein), this Debenture embodies the entire
agreement and understanding between the Holder and the Company with respect to the subject matter
and supersedes all prior conflicting or inconsistent agreements, consents and understandings
relating to such subject matter, including the Original Debenture. The terms and conditions of
this Debenture shall control the obligations of the
Company to the Holder with respect to the subject matter hereof. In the event of conflict
between the Letter Agreement and this Debenture, this Debenture shall control.
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| US Dataworks, Inc. Amended and Restated Convertible Debenture September 15, 2005 |
15. Facsimile Execution. Any signature delivered by facsimile transmission shall
create a valid and binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page were an original
thereof.
16. Legal Representation. Company 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 undersigneds have caused this Debenture to be duly executed by their
respective authorized signatories as of the date first indicated above.
HOLDER
|
US DATAWORKS, INC. | |
/s/ Xxxxx Xxxxxx
|
/s/ Xxxx X. Xxxxxxx | |
Its authorized representative
|
Its authorized representative | |
Individual
|
Xxxx X. Xxxxxxx | |
Title
|
Title CFO | |
Address for Notice: |
||
Xxxxx Xxxxxx |
||
00000 Xxxxx Xxx. |
||
Glidden, IA 51443 |
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| US Dataworks, Inc. Amended and Restated Convertible Debenture September 15, 2005 |
