Document:

exv10w7

 

Exhibit
10.7

AGREEMENT AND PLAN OF MERGER

(Merger Sub)

     This Agreement and Plan of Merger, dated as of                               , 2005 (this
“Agreement”), is entered into by and among                               , a Delaware limited liability
company (“Merger Sub”) and wholly-owned subsidiary of Ensource Energy Income Fund LP, a
Delaware limited partnership (the “Partnership”), and Eastern American Natural Gas Trust, a
Delaware statutory trust (“NGT”). In this Agreement, each of the Partnership and NGT is
individually referred to as a “Party,” and those entities are collectively referred to as
the “Parties.”

W I T N E S S E T H:

     WHEREAS, the Partnership, through Ensource Energy Partners, LP, a Delaware limited partnership
and the Partnership’s sole general partner (the “General Partner”), has implemented a plan
to acquire directly or indirectly NGT (the “Acquisition Plan”), and in furtherance of such
Acquisition Plan, has effected an exchange offer pursuant to a registration statement on Form S-4
filed with the Securities and Exchange Commission (Commission File No. 333-126068) pursuant to
which the Partnership has offered to exchange depositary units of NGT for common units of the
Partnership on a one for one basis (the “Exchange Offer”); and

     WHEREAS, as a result of the Exchange Offer, the Partnership has accepted for exchange, and
owns, a total of ___depositary units representing more than 50% of the outstanding trust units
of NGT, and in furtherance of the Acquisition Plan and in accordance with that certain Second
Amended and Restated Trust Agreement of Eastern American Natural Gas Trust, dated January 1, 1993,
by and among Eastern American Energy Corporation, JPMorgan Chase Bank, as successor-in-interest to
Bank of Montreal Trust Company and trustee (the “Trustee”), and Wilmington Trust Company
(the “Trust Agreement”), the Partnership intends to effect the merger of the Merger Sub
with and into NGT, with NGT continuing as the surviving entity of such merger in accordance with
the terms and conditions set forth in this Agreement; and

     WHEREAS, the General Partner on behalf of the Partnership, as the parent of Merger Sub, deems
it advisable and in the best interest of Merger Sub to effect the contemplated merger, and in
connection therewith the General Partner on behalf of the Partnership has authorized, approved and
adopted this Agreement; and

     WHEREAS, the Partnership, being a trust unitholder of NGT qualified to call a special meeting
of trust unitholders, has exercised its rights under the Trust Agreement to call a special meeting
of trust unitholders of NGT for the purpose of approving and adopting this Agreement and the
transactions contemplated herein and to effect the Merger (as defined below); and

     WHEREAS, the Trust Agreement requires a vote of at least 50% of all trust units of NGT in
favor of the Merger (as defined below); and

 

 

     WHEREAS, the Partnership holds more than 50% of all trust units of NGT, has agreed to vote in
favor of the Merger (as defined below) and, therefore, does not intend to solicit proxies from the
other holders of NGT trust units; and

     WHEREAS, NGT and the Partnership intend to prepare and provide to the other holders of NGT
trust units a definitive information statement relating to the Merger (as defined below); and

     WHEREAS, the Trustee has approved and adopted this Agreement.

     NOW, THEREFORE, in consideration of the foregoing recitals and the respective representations,
warranties, covenants and agreements herein contained, and intending to be legally bound, the
Parties hereby agree as follows:

ARTICLE I. THE MERGER

     Section 1.1.   The Merger.   Upon the terms and subject to the conditions
contained in this Agreement, and in accordance with Section 18-209 of the Delaware Limited
Liability Company Act (the “DLLCA”) and Section 3815 of the Delaware Statutory Trust Act
(the “DSTA”), Merger Sub shall be merged with and into NGT (the “Merger”) at the
Effective Time (as defined in Section 1.3 of this Agreement). At the Effective Time, the
separate limited liability company existence of Merger Sub shall cease and NGT shall continue its
existence as the surviving entity (the “Surviving Entity”).

     Section 1.2.   Closing.   Subject to the satisfaction or waiver of the conditions
to closing set forth in Article III of this Agreement, the consummation of the Merger shall
occur as close in time as possible to, but in no case later than the same day (which shall be a day
upon which the Office of the Secretary of State of the State of Delaware is open for business) as,
the special meeting of NGT trust unitholders at which the Agreement and the transactions
contemplated herein are properly approved and adopted. The consummation of the Merger shall be
effected through a closing held at the offices of Andrews Kurth LLP, 450 Lexington Ave.,
15th Floor, New York, New York 10017, unless another place is agreed upon by the
Parties.

     Section 1.3.   Effective Time.   As soon as practicable after the conditions to
closing set forth in Article III of this Agreement have been satisfied or waived, the
Parties shall (A) file a certificate of merger in the form attached as Annex A to this
Agreement (the “Certificate of Merger”) with the Secretary of State of the State of
Delaware in accordance with Section 18-209(c) of the DLLCA and Section 3815(b) of the DSTA and (B)
make all other filings or recordings, if any, as shall be required to consummate the Merger under
applicable laws. The Merger shall become effective upon the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware (the date and time of such filing, the
“Effective Time”).

     Section 1.4.   Effects of the Merger.   At and after the Effective Time, the
Merger will have the effects set forth in the DLLCA, DSTA and this Agreement. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all the property
(including, without limitation, all rights, privileges, powers and franchises of the Merger Sub
shall be vested in the Surviving Entity, and all debts, liabilities and duties of the Merger Sub
shall become the debts, liabilities and duties of the Surviving Entity.

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     Section 1.5.   Certificate of NGT.   At and after the Effective Time, the
certificate of trust of NGT, as in effect immediately prior to the Effective Time, shall be the
certificate of trust of the Surviving Entity unless and until thereafter amended in accordance with
the terms thereof and applicable laws.

     Section 1.6.   Trust Agreement.   At and after the Effective Time, the Trust
Agreement, as in effect immediately prior to the Effective Time shall be amended and restated in
its entirety to be as set forth in Annex B attached hereto, which amended and restated
Trust Agreement shall be the Trust Agreement of the Surviving Entity unless and until thereafter
amended in accordance with the terms thereof and applicable laws.

     Section 1.7.   Officers, Managers and Committees of Managers.   At and after the
Effective Time, the Trustee shall be replaced by the Partnership as trustee of the Surviving
Entity, and the entity serving as the Delaware trustee of NGT immediately prior to the Effective
Time shall continue to serve in such capacity for the Surviving Entity, each of whom shall hold
office subject to the provisions of the Trust Agreement, the Delaware Statutory Trust Act and the
certificate of trust of NGT.

     Section 1.8.   Conversion of NGT Trust Units into Partnership Common Units.   At
the Effective Time, by virtue of the Merger and without any action on the part of any Party or any
holder of the securities of any Party, (i) subject to the proviso of the second sentence of this
Section 1.8, each trust unit of NGT outstanding immediately prior to the Effective Time
(except for trust units cancelled in accordance with the second sentence of this Section
1.8) shall be converted into 0.4 common units of the Partnership, subject to any adjustments
thereto, and (ii) each depositary unit of NGT outstanding immediately prior to the Effective Time
that is tendered to the Partnership on or after the Effective Time shall (except for depositary
units cancelled in accordance with the third sentence of this Section 1.8) entitle the
person so tendering to the right to receive one whole (1.0) common unit of the Partnership, subject
to any adjustments thereto, (collectively, the “Merger Consideration”); provided, however,
that no common units shall be issued in fractional part, and in lieu thereof shall be paid in cash
in an amount equal to such fractional part (expressed as a decimal and rounded to the nearest 0.01
of a common unit) multiplied by the average of the daily volume-weighted average prices, rounded to
four decimal points, of the Partnership common units on the New York Stock Exchange, as reported by
Bloomberg, for the 10 consecutive trading day period commencing on the first trading day on which
the common units trade regular way after the consummation of the Merger. As of the Effective Time,
(y) subject to the proviso of this clause (y), all trust units, including, but not limited to,
those underlying the depositary units, outstanding immediately prior to the Effective Time shall
automatically be cancelled and shall cease to exist, and any holder of any such trust units,
including, but not limited to, those underlying depositary units, shall cease to have any rights
with respect thereto, except the right to receive the Merger Consideration, without interest;
provided, however, that any trust units, including, but not limited to those underlying depositary
units, that are held by the Partnership immediately prior to the Effective Time shall remain issued
and outstanding at and after the Effective Time without any conversion thereof into Merger
Consideration; and (z) any trust units, including, but not limited to those underlying depositary
units, that are held in the treasury of NGT, if any, immediately prior to the Effective Time shall
automatically be cancelled and retired as of the Effective Time without any conversion thereof into
Merger Consideration and without any payment or distribution being

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made in respect thereto. Each equity security of the Partnership issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding at and after the
Effective Time, and shall constitute issued and outstanding equity securities of the Partnership.

ARTICLE II. APPROVAL OF TRUST UNITHOLDERS OF NGT

     Section 2.1.   Approval by Trust Unitholders.   This Agreement and the
transactions contemplated herein shall be submitted to the holders of trust units of NGT for their
approval, and it shall have no force and effect unless approved by such holders in the manner
provide by the Trust Agreement and the DSTA. The Trust Agreement requires a vote of at least a
majority of all trust units of NGT in favor of the Merger. The Partnership holds more than a
majority of all trust units of NGT and has agreed to vote in favor of the Merger. As a
consequence, neither NGT nor the Partnership intends to solicit proxies from the other holders of
NGT trust units and will, instead, provide them with a definitive information statement relating to
the Merger.

ARTICLE III. CONDITIONS TO THE MERGER; TERMINATION

     Section 3.1.   Conditions to Closing.   The respective obligations of each Party
to effect this Agreement and the transactions contemplated herein shall be subject to the
satisfaction at or immediately prior to the Effective Time of the following conditions:

     (a)      The approval of trust unitholders of NGT at the special meeting as contemplated by
Section 2.1 of the Agreement shall have been obtained.

     (b)      No temporary restraining order, preliminary or permanent injunction or other order issued
by any federal or state governmental authority (including, without limitation, any court of
competent jurisdiction) or any other legal restraint or prohibition preventing the consummation of
the Merger shall be in effect, and there shall not be in effect any law or other binding authority
that would make the consummation of the Merger illegal.

     Section 3.2.   Termination.   This Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time by the General Partner on behalf of the
Partnership, without liability or other consequence to any Party, notwithstanding approval of this
Agreement and the transactions contemplated herein by the trust unitholders of NGT.

ARTICLE IV. MISCELLANEOUS

     Section 4.1.   Amendments.   This Agreement may not be amended except by a
written instrument signed on behalf of each of the Parties.

     Section 4.2.   Governing Law.   This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware.

     Section 4.3.   Counterparts.   This Agreement may be executed in counterparts,
each of which when so executed shall be deemed to be an original, and such counterparts shall
together constitute one and the same instrument.

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     Section 4.4.   Principal Office of Surviving Entity.   The principal office of
the Partnership in the State of Delaware is, and at and after the Effective Time the principal
office of the Surviving Entity in the State of Delaware shall be, care of the Capitol Corporate
Services, Inc., 32 Loockerman Square, Suite 109, Dover, DE 19904.

[Signature Page Follows]

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     IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed and delivered as of
the date first written above.

	 	 	 	 	 
	 	The Partnership

 

Ensource Energy Income Fund LP

 	 
	 	By:  	Ensource Energy Partners, LP, its sole general partner 	 
	 	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	NGT

Eastern American Natural Gas Trust

 	 
	 	By:  	JPMorgan Chase Bank, its trustee 	 
	 	 	 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	Merger Sub

 

[To Come]	 
	 	 	 	 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

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Annex A

CERTIFICATE OF MERGER

MERGING

 

WITH AND INTO

EASTERN AMERICAN NATURAL GAS TRUST

 

Pursuant to Section 18-209 of the Delaware Limited Liability Company Act

and

Section 3815(b) of the Delaware Statutory Trust Act

 

     In connection with the merger (the “Merger”) of                               , a Delaware limited
liability company (the “Non-Surviving Entity”), with and into Eastern American Natural Gas
Trust, a Delaware statutory trust (the “Surviving Entity”), the Surviving Entity DOES
HEREBY CERTIFY:

     FIRST: The name and jurisdiction of formation or organization of each of the constituent
entities in the Merger are as follows:

	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	Jurisdiction of Formation	 
	 	Name of Entity	 	 	Form of Entity	 	 	or Organization	 
	 	Eastern American Natural Gas Trust

	 	 	Statutory Trust
	 	 	Delaware	 
	 	[To Come]

	 	 	Limited Liability Company
	 	 	Delaware	 
	 

     SECOND: An Agreement and Plan of Merger governing the Merger has been approved and executed by
each of the constituent entities.

     THIRD: Eastern American Natural Gas Trust shall be the surviving entity in the Merger.

     FOURTH: The name of the surviving entity in the Merger will be [Ensource Statutory Trust].

     FIFTH: The Certificate of Trust of the Surviving Entity in effect immediately prior to the
Merger shall be its Certificate of Trust after the Merger; provided, however, that Article FIRST of
such Certificate of Trust shall be amended to read as follows:

     The name of the trust is [Ensource Statutory Trust].

     SIXTH: An executed copy of the Agreement and Plan of Merger governing the Merger is on file
at the office of the Surviving Entity at 7500 San Felipe, Suite 440, Houston, Texas 77063.

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     SEVENTH: An executed copy of the Agreement and Plan of Merger governing the Merger will be
furnished by the Surviving Entity, on request and without cost, to any holder of trust units in the
Non-Surviving Entity and any holder of common units of the Surviving Entity.

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     IN WITNESS WHEREOF, the Surviving Entity has caused this Certificate of Merger to be executed
and attested by its authorized officers and delivered to the Delaware Secretary of State on this
the ___day of ___, 2005.

	 	 	 	 	 
	 	EASTERN AMERICAN NATURAL GAS TRUST

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

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Annex B

Amended and Restated Trust Agreement

[To Come]

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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

			
	$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 Peter Simons, 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 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 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 Debenture 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.

5301 Hollister Road, Suite 250

Houston, Texas 77040

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 Holder.

     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/ Peter Simons

	 	/s/ John S. Reiland
	 

	 	 
	Its authorized representative

	 	Its authorized representative
	 
	 	 
	     Individual

	 	John S. Reiland
	 

	 	 
	Title

	 	Title      CFO
	 
	 	 
	Address for Notice:
	 	 
	Peter Simons
	 	 
	22262 Robin Ave.
	 	 
	Glidden, IA 51443
	 	 

-6-

			
	 	 	US Dataworks, Inc.

Amended and Restated Convertible Debenture

September 15, 2005

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