UNITED
STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
SCHEDULE 14A
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934 (Amendment No. )
Filed by
the Registrant
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Filed by
a Party other than the Registrant
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Check the
appropriate box:
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to §240.14a-12
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US Dataworks,
Inc.
(Name of
Registrant as Specified In Its Charter)
(Name of
Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
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No
fee required.
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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Title
of each class of securities to which transaction
applies:
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Aggregate
number of securities to which transaction applies:
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(3)
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Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
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Proposed
maximum aggregate value of transaction:
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Total
fee paid:
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Fee
paid previously with preliminary materials.
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Check
box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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Amount
Previously Paid:
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Form,
Schedule or Registration Statement No.:
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Filing
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Date
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US
DATAWORKS, INC.
One
Sugar Creek Center Boulevard, Suite 500
Sugar
Land, TX 77478
(281)
504-8000
August
___, 2009
Dear
Stockholder:
You are
cordially invited to attend our 2009 Annual Meeting of Stockholders to be held
at 10:00 a.m., local time, on Tuesday, September 15, 2009 at our offices at One
Sugar Creek Center Boulevard, Suite 500, Sugar Land, Texas.
The
formal notice of the Annual Meeting and the Proxy Statement have been made a
part of this invitation.
After
reading the Proxy Statement, please vote by signing, dating and returning the
enclosed proxy card, or by submitting your proxy voting instructions by
telephone or through the Internet. If you hold your shares through a
broker or other nominee you should contact your broker to determine whether you
may submit your proxy by telephone or Internet. YOUR SHARES CANNOT BE
VOTED UNLESS YOU SUBMIT YOUR PROXY OR ATTEND THE ANNUAL MEETING IN
PERSON. Your vote is important, so please submit your proxy
promptly.
A copy of
our Annual Report on Form 10-K for the fiscal year ended March 31, 2009 is also
enclosed.
The Board
of Directors and management look forward to seeing you at the
meeting.
Sincerely
yours,
/s/
Charles E. Ramey
Charles
E. Ramey
Chief
Executive Officer
US
DATAWORKS, INC.
_______________
Notice
of Annual Meeting of Stockholders
to
be held September 15, 2009
_______________
To the
Stockholders of US Dataworks, Inc.:
Notice is
hereby given that the Annual Meeting of Stockholders of US Dataworks, Inc. will
be held at our offices at One Sugar Creek Center Boulevard, Suite 500, Sugar
Land, Texas on September 15, 2009 at 10:00 a.m., local time, for the following
purposes:
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1.
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To
elect three Class I directors to serve until the 2012 Annual Meeting of
Stockholders and thereafter until their successors are elected and
qualified.
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2.
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To
ratify the appointment of Ham, Langston & Brezina, LLP as our
independent registered public accounting
firm.
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3.
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To
transact such other business as may properly come before the meeting and
any and all adjourned or postponed sessions
thereof.
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Stockholders
of record at the close of business on July 29, 2009 are entitled to notice of
and to vote at the Annual Meeting of Stockholders and any adjournment or
postponement thereof.
It is important that your shares are
represented at the Annual Meeting. Even if you plan to attend the
Annual Meeting, we urge
you to vote your shares at your
earliest convenience in order to ensure that your shares will be represented at
the Annual Meeting. You may revoke your proxy at any time prior to
its use.
By order
of the Board of Directors.
/s/ John
T. McLaughlin
John T.
McLaughlin
Secretary
Sugar
Land, Texas
August
___, 2009
Important
Notice Regarding the Availability of Proxy Materials
for
the Stockholder Meeting to Be Held on September 15, 2009.
Our Proxy
Statement for our 2009 Annual Meeting of Stockholders, along with the proxy card
and our Annual Report on Form 10-K for the fiscal year ended March 31, 2009 are
available on our website at www.usdataworks.com.
US
DATAWORKS, INC.
One
Sugar Creek Center Boulevard, Suite 500
Sugar
Land, TX 77478
_______________
PROXY
STATEMENT
_______________
INFORMATION
CONCERNING SOLICITATION AND VOTING
General
The
enclosed Proxy is solicited on behalf of the Board of Directors of US Dataworks,
Inc. (which we will refer to as “our company,” “the Company,” “US Dataworks,”
“we” or “us” throughout this Proxy Statement) for use at the 2009 Annual Meeting
of Stockholders to be held at our headquarters located at One Sugar Creek Center
Boulevard, Suite 500, Sugar Land, Texas on Monday, September 15, 2009, at 10:00
a.m., local time (the “2009 Annual Meeting”), and at any adjournment(s) or
postponement(s) thereof, for the purposes set forth herein and in the
accompanying Notice of Annual Meeting of Stockholders. Our principal
executive offices are located at the address listed at the top of the page and
the telephone number is (281) 504-8000.
Our
Annual Report on Form 10-K for the fiscal year ended March 31, 2009 (the “2009
Annual Report”), containing financial statements and financial statement
schedules required to be filed for the year ended March 31, 2009, is being
mailed together with these proxy solicitation materials to all stockholders
entitled to vote at the 2009 Annual Meeting. This Proxy Statement,
the accompanying Proxy and the 2009 Annual Report will first be mailed on or
about August ___, 2009 to all stockholders entitled to vote at the
meeting.
We will
provide copies of exhibits to the 2009 Annual Report to any requesting
stockholder upon the payment of a reasonable fee and upon the request of the
stockholder made in writing to US Dataworks, Inc., One Sugar Creek Center
Boulevard, Suite 500, Sugar Land, Texas, 77478, Attn: John T.
McLaughlin. The request must include a representation by the
stockholder that, as of July 29, 2009, the stockholder was entitled to vote at
the 2009 Annual Meeting.
Record
Date and Share Ownership
Stockholders
of record at the close of business on July 29, 2009 (the “Record Date”) are
entitled to notice of and to vote at the 2009 Annual Meeting and at any
adjournment(s) or postponement(s) thereof. We have one series of
common stock issued and outstanding, designated as Common Stock, $0.0001 par
value per share (“Common Stock”), and one series of preferred stock issued and
outstanding, designated Series B Convertible Preferred Stock, $0.0001 par value
per share (“Preferred Stock”). As of the Record Date, approximately
32,780,870 shares of Common Stock were issued and outstanding and entitled to
vote. Holders of Preferred Stock are entitled to the number of votes
equal to the number of shares of Common Stock into which such shares of
Preferred Stock could be converted as of the Record Date. As of the
Record Date, approximately 109,933 shares of Preferred Stock, on an as converted
basis, were issued and outstanding and entitled to vote.
How
You Can Vote
Stockholders
of record as of the Record Date may vote their shares at the 2009 Annual Meeting
either in person or by proxy. To vote by proxy, stockholders should
either:
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mark,
date, sign and mail the enclosed proxy form in the prepaid
envelope;
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submit
the proxy by telephone; or
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submit
the proxy using the Internet.
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Stockholders
who hold their shares through a broker or other nominee should contact their
broker to determine whether they may submit their proxy by telephone or
Internet. Submitting a proxy will not affect a stockholder’s right to
vote if the stockholder attends the 2009 Annual Meeting and wants to vote in
person.
Revocability
of Proxies
Stockholders
may revoke any proxy given pursuant to this solicitation at any time before its
use at the Annual Meeting in any of the three ways:
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by
delivering to our principal offices (Attention: Secretary) a written
notice of revocation;
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by
submitting a duly executed proxy bearing a later date;
or
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by
attending the 2009 Annual Meeting and voting in
person.
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However,
a proxy will not be revoked simply by attending the 2009 Annual Meeting and not
voting. To revoke a proxy previously submitted by telephone or the
Internet, a stockholder of record can simply vote again at a later date, using
the same procedures, in which case the later submitted vote will be recorded and
the earlier vote will thereby be revoked.
Voting
On all
matters, each share has one vote. Directors are elected by a
plurality vote. The nominees for the Class I director seats who
receive the most affirmative votes of shares present in person or represented by
proxy and entitled to vote on this proposal at the 2009 Annual Meeting will be
elected to serve as Class I directors. Each of the other proposals
submitted for stockholder approval at the 2009 Annual Meeting will be decided by
the affirmative vote of the majority of the shares present in person or
represented by proxy at the 2009 Annual Meeting and entitled to vote on such
proposal. Holders of Common Stock and Preferred Stock (on an as
converted basis) vote together as a single class on all proposals.
Solicitation
of Proxies
We will
bear the cost of soliciting proxies. Upon request, we may reimburse
brokerage firms and other persons representing beneficial owners of shares for
their expenses in forwarding solicitation material to such beneficial
owners. Proxies may also be solicited by certain of our directors,
officers and regular employees, without additional compensation, personally or
by telephone or facsimile. In addition, we have retained Broadridge
Proxy Services to solicit proxies by mail, courier, telephone and facsimile and
to request brokers, custodians and fiduciaries to forward proxy soliciting
materials to the owners of our stock held in their names. For these
services, we expect to pay approximately $7500, including expenses.
Quorum;
Abstentions; Broker Non-Votes
Votes
cast by proxy or in person at the 2009 Annual Meeting will be tabulated by the
Inspector of Elections (the “Inspector”), with the assistance of our transfer
agent. The Inspector will also determine whether or not a quorum is
present. In general, Nevada law provides that, for a given
stockholder meeting, a quorum consists of a majority of shares entitled to vote
and present or represented by proxy at that meeting.
The
Inspector will treat abstentions as being present and entitled to vote for
purposes of determining the presence of a quorum. As a result,
abstentions will have the effect of a negative vote for those proposals that
require the affirmative vote of a majority of shares present in person or by
proxy and entitled to vote. When proxies are properly dated, executed
and returned, the shares represented by such proxies will be voted at the 2009
Annual Meeting in accordance with the instructions of the
stockholder. If no specific instructions are given, the shares will
be voted:
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for
the election of the three nominees for Class I directors set forth
herein;
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for
the ratification of Ham, Langston & Brezina, LLP, as our registered
independent public accounting firm for the fiscal year ending March 31,
2010; and
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upon
such other business as may properly come before the 2009 Annual Meeting or
any adjournments or postponements thereof in accordance with the
discretion of the proxyholder.
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Proxies
that are not returned will not be counted in determining the presence of a
quorum and will not be counted toward any vote.
If a
broker indicates on the enclosed Proxy or its substitute that such broker does
not have discretionary authority as to certain shares to vote on a particular
matter, those shares will be considered as present for purposes of determining
the presence of a quorum but will not be treated as shares entitled to vote on
that matter.
Deadline
for Receipt of Stockholder Proposals
Proposals
of our stockholders that are intended to be presented by such stockholders at
our 2010 Annual Meeting must be received by the Secretary of US Dataworks no
later than March 31, 2010 in order that they may be included in our proxy
statement and form of proxy relating to that meeting.
A
stockholder proposal not included in our proxy statement for the 2010 Annual
Meeting will be ineligible for presentation at the meeting unless the
stockholder gives timely notice of the proposal in writing to the Secretary of
US Dataworks at our principal executive offices. To be timely, we
must have received the stockholder’s notice no later than June 14,
2010.
If a
stockholder wishing to present a proposal at the 2010 Annual Meeting (without
regard to whether it will be included in the proxy materials for that meeting)
fails to notify us by June 14, 2010, the proxies received for the 2010 Annual
Meeting will confer discretionary authority to vote on any stockholder proposals
properly presented at that meeting.
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IMPORTANT
PLEASE
SUBMIT YOUR PROXY AT YOUR EARLIEST CONVENIENCE SO THAT, WHETHER YOU INTEND
TO BE PRESENT AT THE 2009 ANNUAL MEETING OR NOT, YOUR SHARES CAN BE VOTED,
THIS WILL NOT LIMIT YOUR RIGHTS TO ATTEND OR VOTE AT THE ANNUAL
MEETING.
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Proposal
1: Election of Directors
Directors
and Nominees
Our
Amended and Restated Bylaws provide that we shall have not less than one or more
than eleven directors. The number of members of our Board of
Directors is currently set at nine.
Our
Amended and Restated Bylaws also provide for the classification of the Board of
Directors into three classes of directors, each consisting of a number of
directors equal as nearly as practicable to one-third the total number of
directors, with the term of office of one class expiring each
year. Unless otherwise instructed, the enclosed Proxy will be voted
“FOR” the election of the persons named below as Class I directors for a term of
three years expiring at the 2012 Annual Meeting of Stockholders and until their
successors are duly elected and qualified. If a nominee shall be
unavailable as a candidate as of the date of the 2009 Annual Meeting, votes
pursuant to the Proxy will be voted “FOR” either for a substitute nominee
designated by the Board of Directors or, in the absence of such designation, in
such other manner as the directors may in their discretion
determine. The Board of Directors does not anticipate that the
nominees will become unavailable as candidates. The nominees for
Class I directors, as selected by the Nominating and Corporate Governance
Committee of the Board of Directors, and the incumbent Class II and Class III
directors are as follows:
Nominees
as Class I Directors - Terms Expire 2012
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Business
Experience and Education
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Joe
Abrell
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75
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Mr.
Abrell has served as a director since October 1999. From July 1997 until
his retirement in December 1999, Mr. Abrell served as a consultant at
PrimeCo Personal Communications, a wireless technology company. From July
1986 to December 1999, Mr. Abrell operated his own public relations and
marketing firm, Joe Abrell, Inc. Mr. Abrell holds an AB from
Indiana University, an M.A. from Columbia University and an J.D. from the
University of Miami.
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John
L. Nicholson, M.D.
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74
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Dr.
Nicholson has served as a director since September 2002. Dr. Nicholson has
been in private medical practice since 1969. Dr. Nicholson has
served on many local, state, and national medical organizations and has
been an Associate Clinical Professor at Stanford University since
1969. Dr. Nicholson holds an M.D. from the University of
Rochester School of Medicine.
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G.
Richard Hicks
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75
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Mr.
Hicks has served as a director since February 2009. Mr. Hicks
has also served as the Chairman of the Institute of Molecular Medical
Sciences since 1992. Prior to joining the Institute of
Molecular Sciences, Mr. Hicks served as the Executive Vice President of
the Linus Pauling Institute of Science and Medicine from 1977 to 1992 and
as the Vice President and Assistant to the CEO of Dean Witter from 1959 to
1977. Mr. Hicks holds a B.S. in Finance from the University of
Notre Dame.
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Class
II Directors - Terms Expire 2010
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Business
Experience and Education
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Hayden
D. Watson
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60
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Mr.
Watson has served as a director since September 2002. In May 1999, Mr.
Watson founded The Mariner Group, Inc., an investment banking and
management consulting company, where he serves as President. From December
1996 to May 1999, Mr. Watson served as Managing Director of Bank
Operations for Fleet Financial Group, now FleetBoston Financial
Corporation, a financial holding company. Mr. Watson has served
as a director of Treaty Oak Bank since September 2004 and has served as a
director of Vision Bank Texas since June 2007. Mr. Watson holds
a BBA from the University of Texas at Austin.
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Thomas
L. West, Jr.
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72
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Mr.
West has served as a director since September 2002. Mr. West has served as
Chairman and Chief Executive Officer of WestMark Ventures, a venture
capital company, since January 2000. Prior to joining WestMark Ventures,
Mr. West held various positions at the American General Financial Group, a
financial services company, including Chairman and CEO of American General
Retirement Services, from April 1994 to January 2000. Mr. West
holds a B.S. in Industrial Engineering from the University of
Tennessee.
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Anna
C. Catalano
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Ms.
Catalano has served as a director since February 2009. Ms.
Catalano held the top marketing position at BP, PLC from 2000 to 2003 as
its Group Vice President, Marketing of BP, PLC and served as the Group
Vice President, New Markets, of BP, PLC from 1999 to 2000. From
1997 to 1999, Ms. Catalano served as the Senior Vice President, Sales
Operations for Amoco and served as its Vice President, International
Business Development from 1996 to 1997. From 1994 to 1996, Ms.
Catalano served as the President of Amoco Orient Oil
Company. Since 2003, Ms. Catalano has managed an active board
portfolio, formerly serving on the boards of Hercules Incorporated, SSL
International PLC, Aviva PLC and currently serving as a board member of
Willis Group Holdings and as an advisory board member of BT Global
Services and Amyris Biotechnologies. Ms. Catalano also serves
as a board member of the Houston Chapter of the Alzheimer’s Association
and as an advisory board member of the Houston Chapter of the Juvenile
Diabetes Research Foundation. Ms. Catalano holds a B.S. in
Marketing and Business Administration from the University of Illinois,
Champaign-Urbana.
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Class
III Directors - Terms Expire 2011
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Business
Experience and Education
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J.
Patrick Millinor, Jr.
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63
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Mr.
Millinor has served as a director since December 2004. Mr. Millinor served
as Chairman and Chief Executive Officer of Ampam, Inc. from October 2004
until his retirement in December 2005. From 2000 until he joined Ampam,
Mr. Millinor held several positions in connection with his association
with a venture capital group. His positions included Chairman of
Encompass, Inc., Chairman of ADViSYS, Inc., and Chief Financial Officer of
Agennix, Incorporated. Between 1986 and 2000, Mr. Millinor held several
executive positions, including Chief Executive Officer of GroupMAC, Inc.,
Chief Executive Officer of UltrAir, Inc., and Chief Operating Officer of
Commonwealth Financial Group, Inc. He was a partner with KPMG LLP for
eight years prior to 1986. Mr. Millinor holds a B.S. in Finance
and an MBA from Florida State University.
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Charles
E. Ramey
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68
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Mr.
Ramey has served as a director since July 2001 and became our Chairman of
the Board and Chief Executive Officer in December 2001. Prior to joining
US Dataworks, Mr. Ramey was a private investor from December 1998 through
July 2001 and was President and co-founder of PaymentNet Inc., now Signio
Inc., an outsourced e-commerce payment processing company, from April 1996
to December 1998. Mr. Ramey holds a B.S. in Mathematics from
the University of Tennessee.
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Mario
Villarreal
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Mr.
Villarreal was named President and Chief Operating Officer and appointed
to our Board in May 2008 and prior thereto served as our Vice President
and Chief Technology Officer since April 2001. In April 2004, Mr.
Villarreal was named Senior Vice President. In November 1997, Mr.
Villarreal co-founded US Dataworks and served as its Vice President from
November 1997 to April 2001. From June 1991 to May 1997, Mr. Villarreal
served as Manager of Systems Architecture Group at TeleCheck Services,
Inc. Mr. Villarreal holds a B.S. in Computer Science from Sam
Houston State University.
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Required
Vote
The
nominees for the Class I director seats who receive the most affirmative votes
of shares present in person or represented by proxy and entitled to vote on this
proposal at the meeting will be elected to serve as directors. Unless
marked to the contrary, proxies received will be voted “FOR” the
nominees.
The Board of Directors
recommends a vote “FOR” election of the nominees set forth above as Class I
directors
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Additional
Information
Director
Independence
The Board
of Directors has determined that, except for Messrs. Ramey and Villarreal, each
individual who currently serves as a member of the board is, and each individual
who served as a member of the board in fiscal year 2008 was, an “independent
director” within the meaning of Section 803 of the NYSE Amex Company
Guide. Messrs. Ramey and Villarreal are not independent because they
are employed by US Dataworks. All of the nominees are members of the
Board of Directors standing for re-election as directors.
Board
Meetings
The Board
of Directors held 6 meetings during fiscal year 2009. All
directors attended at least 75% of the aggregate of all meetings of the Board
and of the committees of the Board on which they served except that Mr. Hicks
missed one Audit Committee meeting which caused him to fall below the 75%
attendance threshold as there were only three Board and applicable Committee
meetings during his short tenure in fiscal 2009 beginning on February 19, 2009
and ending on March 31, 2009. We do not have a formal policy
regarding director attendance at annual meetings of stockholders; however, it is
expected that, absent good reason, all directors will be in
attendance. Due to the impact of Hurricane Ike, which made landfall
near the location of the meeting two days before the meeting, only two of our
directors were able to attend the 2008 Annual Meeting.
Committees
of the Board of Directors
Since
September 6, 2007, the Board of Directors has appointed an Audit Committee, a
Compensation Committee and a Nominating and Corporate Governance
Committee. Prior to this time, the Board of Directors had appointed a
separate Nominating Committee and Corporate Governance Committee. The
Board has determined that each director who serves on these committees is
“independent,” as that term is defined by applicable rules of the American Stock
Exchange and Securities and Exchange Commission. The Board of
Directors has adopted written charters for each of these
committees. The Audit Committee charter was attached as Appendix A to
the proxy statement for our 2006 Annual Meeting of Stockholders and the
Compensation Committee Charter was attached as Appendix A to the proxy statement
for our 2007 Annual Meeting of Stockholders. The Corporate
Governance/Nominating Committee Charter was attached as Appendix A to the proxy
statement for our 2008 Annual Meeting. All our committee charters are available
on our Investors’ Relations page of our Website (
www.usdataworks.com
).
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Audit
Committee
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Number of Members:
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5
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Current Members:
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Joe Abrell
J. Patrick Millinor, Jr., Chairman
and Financial Expert
John L. Nicholson,
MD
Hayden Watson
G. Richard Hicks (appointed on
February 19, 2009)
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Number of Meetings in Fiscal
2009:
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12
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Functions:
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The Audit Committee’s primary
functions are to oversee the integrity of our financial statements,
oversee our compliance with legal and regulatory reporting requirements,
appoint a firm of certified public accountants whose duty it is to audit
our financial records for the fiscal year for which it is appointed,
evaluate the qualifications and independence of the independent registered
public accounting firm, oversee the performance of our internal audit
function and independent registered public accounting firm, and determine
their compensation and oversee their work. It is not the duty of the Audit
Committee to plan or conduct audits or to determine that our financial
statements are complete and accurate and are prepared in accordance with
generally accepted accounting principles. Management is responsible for
preparing our financial statements and the independent registered public
accounting firm is responsible for auditing those financial
statements.
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Compensation
Committee
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Number of Members:
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5
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Current Members:
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John L. Nicholson,
MD
Hayden D.
Watson
Thomas L. West, Jr.,
Chairman
Joe Abrell (appointed on September
15, 2008)
Anna C. Catalano (appointed on
February 19, 2009)
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Number of Meetings in Fiscal
2009:
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12
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Functions:
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The Compensation Committee’s
primary functions are to (a) review and approve corporate goals and
objectives relevant to senior executive compensation (including that of
the Chief Executive Officer), evaluate senior management’s performance in
light of those goals and objectives, and determine and approve senior
management’s compensation levels based on their evaluation, (b) make
recommendations to the Board of Directors with respect to non-senior
management compensation, incentive-compensation plans and equity-based
plans, (c) administer our compensation plans and programs, and (d) review
management development and succession
programs.
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Nominating
and Corporate Governance Committee
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Number of Members:
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5
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Current Members:
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J.
Patrick Millinor, Jr.
John
L. Nicholson, MD
Hayden
D. Watson, Chairman
Thomas
L. West, Jr.
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G.
Richard Hicks (appointed on February 19, 2009)
Anna
C. Catalano (appointed on February 19, 2009)
Note:
Joe Abrell served on this committee through September 15,
2008.
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Number of Meetings in Fiscal
2009:
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6
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Functions:
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The
Nominating and Corporate Governance Committee’s primary functions are to
(a) recommend to the Board nominees for election at our annual meetings of
stockholders or to be appointed to fill an existing or newly-created
vacancy on the Board, (b) identify and make recommendation regarding
members to serve on Board committees, (c) develop and revise corporate
governance guidelines applicable to us, (d) review and make
recommendations to the Board candidates for director proposed by
stockholders, (e) consider and make recommendations to the Board
concerning the appropriate size of the Board, (f) evaluate on an annual
basis the functioning and effectiveness of the Board, its committees and
its individual members, (g) consider and make recommendations on matters
related to the practices, policies and procedures of the Board, (h)
formulate and recommend to the Board a list of corporate governance
guidelines, (i) recommend to the Board any revisions to the committee’s
Charter, (j) formulate and recommend to the Board a code of business
conduct and ethics for directors, officers and employees of the Company,
and (k) evaluate on an annual basis the performance of our management as a
whole and as individuals with respect to compliance with the corporate
governance guidelines.
|
|
|
|
Director
Nomination Policy
The
purpose of our director nomination policy is to prescribe the process by which
we select candidates for inclusion in our recommended slate of director
nominees. The director nomination policy is administered by the
Nominating and Corporate Governance Committee. Pursuant to its
charter, the Nominating and Corporate Governance Committee evaluates nominees to
the Board of Directors based on relevant industry experience, general business
experience, relevant financial experience, and compliance with independence and
other qualifications necessary to comply with any applicable tax and securities
laws and the rules and regulations of the American Stock Exchange and the
Securities and Exchange Commission.
The
policy provides that candidates for Board membership must possess the
background, skills and expertise to make significant contributions to the Board,
to us and to our stockholders. Desired qualities to be considered
include substantial experience in business or administrative activities; breadth
of knowledge about issues affecting us; and ability and willingness to
contribute special competencies to Board activities. The Nominating
and Corporate Governance Committee also considers whether members and potential
members are independent under the applicable rules of the American Stock
Exchange and the Securities and Exchange Commission. In addition,
candidates should possess the following attributes: personal integrity; absence
of conflicts of interest that might impede the proper performance of the
responsibilities of a director; ability to apply sound and independent business
judgment; sufficient time to devote to Board and Company matters; ability to
fairly and equally represent all stockholders; reputation and achievement in
other areas; and diversity of viewpoints, background and
experience.
The Board
of Directors intends to review the charter of the Nominating and Corporate
Governance Committee and the director nomination policy from time to time to
consider whether modifications to the charter or policy may be advisable as our
needs and circumstances evolve and as applicable legal or listing standards
change. The Board may amend the charter or the policy at any
time.
Stockholder
Nominations
The
Nominating and Corporate Governance Committee will consider director candidates
recommended by stockholders and will evaluate such director candidates in the
same manner in which it evaluates candidates recommended by other
sources. In making recommendations for director nominees for the
annual meeting of stockholders, the Nominating and Corporate Governance
Committee will consider any written recommendations of director candidates by
stockholders received by the Secretary of US Dataworks no later than 90 days
before the anniversary of the previous year’s annual meeting of stockholders,
except that if no annual meeting was held in the previous year or if the date of
the annual meeting is advanced by more than 30 days prior to, or delayed by more
than 60 days after such anniversary date, notice must be received by the 10
th
day
following the date that public disclosure of the date of the annual meeting is
given to stockholders. Recommendations must be mailed to US
Dataworks, Inc., One Sugar Creek Center Boulevard, Suite 500, Sugar Land,
TX 77478, Attention: Secretary, and include all information regarding
the candidate as would be required to be included in a proxy statement filed
pursuant to the proxy rules promulgated by the Securities and Exchange
Commission if the candidate were nominated by the Board of Directors (including
such candidate’s written consent to being named in the proxy statement as a
nominee and to serving as a director if elected). The stockholder
giving notice must provide (i) his or her name and address, as they appear on
our books, and (ii) the class and number of shares of our capital stock that are
beneficially owned by such stockholder. We may require any proposed
nominee to furnish such other information we may require to be set forth in a
stockholder’s notice of nomination that pertains to the nominee.
Communication
with Directors
The Board
of Directors welcomes communications from its stockholders and other interested
parties and has adopted a procedure for receiving and addressing those
communications. Stockholders and other interested parties may
communicate any concerns they may have about US Dataworks directly to either the
full Board of Directors or to one or more directors by mailing their
communications to US Dataworks at the following address: [Director],
US Dataworks, Inc., One Sugar Creek Center Boulevard, Suite 500, Sugar Land,
Texas 77478, Attention: Secretary (Board Matters). The
Secretary promptly will forward all stockholder communications and other
communications from interested parties unopened to the intended
recipient.
2009
Compensation of Directors
Directors
who are employees receive no additional compensation for service on our Board of
Directors. The following tables set forth the compensation amounts
earned or paid to each non-employee director for their service for the year
ended March 31, 2009:
|
|
|
Fees
Earned or
Paid
in Cash($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joe
Abrell
|
|
$12,500
|
|
$13,225
|
|
$25,725
|
|
|
|
|
|
|
|
|
|
J.
Patrick Millinor, Jr.
|
|
$22,500
|
|
$26,611
|
|
$49,141
|
|
|
|
|
|
|
|
|
|
John
L. Nicholson, MD
|
|
$12,500
|
|
$13,225
|
|
$25,725
|
|
|
|
|
|
|
|
|
|
Hayden
D. Watson
|
|
$54,750
|
|
$21,275
|
|
$76,025
|
|
|
|
|
|
|
|
|
|
Thomas
L. West, Jr.
|
|
$12,250
|
|
$13,800
|
|
$26,050
|
|
|
|
|
|
|
|
|
|
G.
Richard Hicks (3)
|
|
$5,000
|
|
----
|
|
$5,000
|
|
|
|
|
|
|
|
|
|
Anna
C. Catalano (3)
|
|
$5,000
|
|
----
|
|
$5,000
|
|
(1)
|
The
table below sets forth the aggregate number of option awards held by our
non-employee directors as of March 31,
2009.
|
|
|
|
|
|
|
|
Joe
Abrell
|
695,334
|
|
|
|
|
J.
Patrick Millinor, Jr.
|
603,335
|
|
|
|
|
John
L. Nicholson, MD
|
756,334
|
|
|
|
|
Hayden
D. Watson
|
1,066,000
|
|
|
|
|
Thomas
L. West, Jr.
|
815,667
|
|
(2)
|
Represents
the compensation costs for financial reporting purposes for the year under
the Statement of Financial Accounting Standards No. 123 (revised 2004)
(SFAS 123R). See Note 2 to the Notes of Financial Statements in
Item 7 in our 2008 Annual Report on Form 10-KSB for the assumptions made
in determining SFAS 123R values.
|
|
(3)
|
Mr.
Hicks and Ms. Catalano served on the Board of Directors from February 19,
2009 through March 31, 2009.
|
Narrative
of Director Compensation
During
fiscal 2009, each non-employee director received a fee of $5,000 for attendance
at a board meeting in person and $1,000 for attendance at a board meeting by
telephone. Additionally, we reimburse directors for reasonable out-of-pocket
expenses incurred in attending meetings of the Board of Directors or the
committees thereof, and for other expenses reasonably incurred in their capacity
as our directors. Also, during fiscal 2009, our non-employee directors also
received stock options under our US Dataworks, Inc. Amended and Restated 2000
Stock Option Plan (as amended through the date hereof, the “Stock Plan”) as
follows:
|
|
•
|
an
option to purchase 100,000 shares of our Common Stock (the “Election Stock
Option”) upon election or re-election to the Board of Directors at an
annual meeting of stockholders; provided, however, if elected to serve a
term of less than three years, the non-employee director received a pro
rata portion of the 100,000 shares;
|
|
|
•
|
an
annual option to purchase 60,000 shares of our Common Stock, which is
fully vested on the date of grant;
|
|
|
•
|
an
annual option to purchase 50,000 shares, 50,000 shares and 30,000 shares
of our Common Stock granted to the Lead Director, the Audit Committee
Chairperson and each Chairperson for the other committees,
respectively;
|
|
|
•
|
an
annual option to purchase 10,000 shares of our Common Stock granted to
each other committee member, other than those on the Audit Committee;
and
|
|
|
•
|
an
annual option to purchase 15,000 shares of our Common Stock granted to
members of the Audit Committee, except the
Chairperson.
|
The
Election Stock Option vests in three equal annual
installments. However, if the non-employee director is not initially
elected in a regular annual meeting, the shares vest in equal annual
installments such that the shares will be fully vested at the annual meeting for
which the non-employee’s Class of directors is to be elected. Except
as noted above, all other options vest in full on the one year anniversary of
the date of grant.
Effective
April 1, 2009, the Company instituted the following new compensation plan for
its outside directors:
|
1.
|
Base Quarterly Cash
Compensation
|
Each
person serving as an outside director of the Company shall receive base
compensation of $6,000 per calendar quarter, payable in cash (as a
non-refundable retainer fee) on the first business day of each calendar quarter
that such person is an outside director of the Company.
|
2.
|
Base Quarterly Equity
Compensation
|
Each
person serving as an outside director of the Company shall receive additional
base compensation equal to $825 per calendar quarter, payable in shares of the
Company’s common stock (as a non-refundable retainer fee) to be issued effective
as of the first business day of each calendar quarter that such person is an
outside director of the Company. Such common stock grants (which
shall be fully vested on the date of grant) shall be made under and pursuant to
the terms, provisions and conditions of the Stock Plan and shall be valued at
the “fair market value” of such common stock as provided in the Stock
Plan.
|
|
Note
:
|
As
an example, if the fair market value of the Company’s common stock on the
effective date of the grant (as defined in the Stock Plan) is $1.00 per
share, each outside director will receive 825 shares of common
stock.
|
|
3.
|
Additional Quarterly
Equity Compensation
|
Each
person serving as an outside director of the Company in the additional
capacities specified below shall receive the following additional compensation
per calendar quarter, payable in shares of the Company’s common stock (as a
non-refundable retainer fee) to be issued effective as of the first business day
of each calendar quarter that such person is serving in such
capacity. Such common stock grants (which shall be fully vested on
the date of grant), shall be made under and pursuant to the terms, provisions
and conditions of the Stock Plan, and shall be valued at the “fair market value”
of such common stock as provided in the Stock Plan.
|
-Lead
Director
|
|
$
|
450
|
|
|
-Chairman
of the Audit Committee
|
|
$
|
425
|
|
|
-Member
of the Audit Committee
|
|
$
|
125
|
|
|
-Chairman
of the Nominating and
|
|
|
|
|
|
Corporate
Governance Committee
|
|
$
|
250
|
|
|
-Member
of the Nominating and
|
|
|
|
|
|
Corporate
Governance Committee
|
|
$
|
100
|
|
|
-Chairman
of the Compensation Committee
|
|
$
|
250
|
|
|
-Member
of the Compensation Committee
|
|
$
|
100
|
|
Our
Executive Officers
Our
executive officers generally serve at the pleasure of the Board of Directors and
are subject to annual appointment by the Board at its first meeting following
the annual meeting of stockholders. Information regarding Messrs.
Ramey and Villarreal can be found under “Directors and
Nominees.” Our other executive officers as of the date hereof
are:
|
|
|
|
|
Business
Experience and Education
|
|
|
|
|
|
|
|
John
T. McLaughlin
|
|
54
|
|
Mr.
McLaughlin has served as our Chief Accounting Officer since March 2006,
and as our Controller from February 2005 to March 2006. Prior
to joining us, Mr. McLaughlin was self employed as a financial consultant
to companies involved in wholesale and retail distribution. From 1995
through 2000, he served in various accounting and finance roles with
companies involved in manufacturing and distribution of computer and
office equipment. Mr. McLaughlin’s earlier experience included internal
audit activities for a publicly traded oil and gas services
company. Mr. McLaughlin holds a BBA from the University of
Houston.
|
|
|
|
|
|
|
|
Randall
J. Frapart
|
|
51
|
|
Mr.
Frapart was appointed to serve as an Chief Financial Officer effective
July 15, 2009, and will serve in such capacity pursuant to an engagement
agreement among the Company, Mr. Frapart and Albeck Financial Services,
Inc. dated July 29, 2009. Prior to joining us, From March 2008 to December
2008, Mr. Frapart served as Chief Financial and Chief Operating Officer of
Plumgood Food, LLC, an online grocer providing the ordering and delivery
of groceries. From January 2006 to December 2007, Mr. Frapart served as
Executive Vice President and Chief Financial Officer of ForeFront Holdings
Inc, a publicly traded global golf accessory company. From September 2002
until December 2005. Mr. Frapart served as Senior Vice President and Chief
Financial Officer of HyperFeed Technologies, Inc., a publicly traded
provider of software, which provides ticker plant and smart order routing
technologies and managed services to exchanges, hedge funds and other
financial institutions. Mr. Frapart served as Chief Financial Officer and
later as Chief Executive Officer of Cyvent Technologies, a software and
consulting company serving large health insurers, from April 1995 to July
2001. Mr. Frapart began his career at KPMG in Chicago, where he held
various positions in the Information, Communication and Entertainment
Assurance practice for over 12 years. Mr. Frapart received his B.S. in
Accounting from Washington University in St. Louis, has his MBA in
Management from the University of Texas and is a certified public
accountant.
|
Executive
Compensation
2009
Summary Compensation Table
The
following table sets forth compensation for services rendered in all capacities
to US Dataworks for the fiscal year ended March 31, 2009 for (i) our Chief
Executive Officer, (ii) our two other executive officers as of March 31, 2009
whose total annual salary and bonus for fiscal 2009 exceeded $100,000 and (iii)
one other former executive officer who ceased being an executive officer during
fiscal 2009, whom we refer to collectively in this Proxy Statement as the named
executive officers.
|
Name & Principal
Position
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
Incentive Plan Compensation ($)
|
|
|
|
|
|
Charles
E. Ramey
Chief
Executive Officer
|
2009
|
|
|
212,500
|
|
|
|
1,000
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
213,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
220,000
|
|
|
|
1,000
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
221,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mario
Villarreal (2)
President
and Chief Operating Officer
|
2009
|
|
$
|
190,624
|
|
|
|
1,000
|
|
|
|
11,875
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
203,449
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
$
|
185,000
|
|
|
|
1,000
|
|
|
|
11,694
|
|
|
|
¾
|
|
|
|
66,397
|
|
|
|
264,091
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
T. McLaughlin
Chief
Accounting Officer and Secretary
|
2009
|
|
|
120,000
|
|
|
|
1,000
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
121,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
120,000
|
|
|
|
1,000
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
121,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terry
Stepanik (3)
President
and Vice Chairman
|
2009
|
|
|
75,833
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
75,833
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
190,000
|
|
|
|
1,000
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
191,000
|
|
|
(1)
|
Represents
the compensation costs for financial reporting purposes for the year under
the SFAS 123R. See Note 2 to the Notes to Financial Statements
in Item 8 in the 2009 Annual
Report.
|
|
(2)
|
Prior
to May 14, 2008, Mr. Villarreal served as our Senior Vice President and
Chief Technology Officer.
|
|
(3)
|
Mr.
Stepanik resigned from his position as an executive officer and as a
director effective May 14, 2008
|
Narrative
to Summary Compensation Table
On May
23, 2006, we entered into an employment agreement with Charles E. Ramey pursuant
to which he was employed as our Chief Executive Officer and Chairman of the
Board of Directors at an annual base salary of $220,000 for a term of two years.
Pursuant to the terms of the agreement, Mr. Ramey received an option to purchase
600,000 shares of our common stock under the Stock Plan at an exercise price of
$0.75 per share. The option vested as to 300,000 shares on each of May 23, 2007
and 2008. We also awarded Mr. Ramey 100,000 shares of restricted
stock under the Stock Plan, which vested immediately. Mr. Ramey was also
eligible to receive a bonus at the discretion of the Board of
Directors. The agreement automatically renewed for successive one
year terms unless either party gives timely notice of non-renewal. On
February 21, 2008, Mr. Ramey gave notice that he did not intend to renew his
agreement and such the agreement expired in accordance with its terms on May 22,
2008.
On April
3, 2006, we entered into an employment agreement with Terry Stepanik, pursuant
to which he was employed as our President, Payment Products Division and Vice
Chairman at an annual base salary of $190,000 for a term of three years.
Pursuant to the terms of the agreement, Mr. Stepanik received an option to
purchase 550,000 shares of our common stock under the Stock Plan at an exercise
price of $0.46 per share. The option vested as to 150,000 shares on April 3,
2006 and as to 200,000 shares on each of April 3, 2007 and 2008. Mr.
Stepanik also received a bonus of $96,250 for fiscal year 2006. The
agreement automatically renewed for successive one year terms unless either
party gives timely notice of non-renewal. Mr. Stepanik’s agreement
was not renewed and terminated in accordance with its terms on April 3,
2008.
On April
3, 2006, we entered into an employment agreement with Mario Villarreal, pursuant
to which he was employed as our Senior Vice President and Chief Technology
Officer at an annual base salary of $185,000 for a term of three years. Pursuant
to the terms of the agreement, Mr. Villarreal received 200,000 shares of
restricted stock under the Stock Plan. The restricted stock vested as to 25,000
shares on April 3, 2006 and as to 87,500 shares on each of April 3, 2007 and
2008. Mr. Villarreal was also eligible to receive a quarterly bonus equal to
3.5% of the increase in our revenue from quarter to quarter. The
agreement automatically renewed for successive one year terms unless either
party gives timely notice of non-renewal. Mr. Villarreal’s agreement
was not renewed and terminated in accordance with its terms on April 3,
2008.
In
connection with his promotion to President and Chief Operating Officer, we
entered into a new employment agreement with Mr. Villarreal on June 12,
2008. Under the new agreement Mr. Villarreal will receive an annual
base salary of $185,000 for a term of one year. If Mr. Villarreal is terminated,
other than for cause, death or disability, or resigns within 60 days following a
material reduction in duties or a material reduction in compensation within six
months following a change of control, Mr. Villarreal is entitled to receive a
lump sum payment equal to one-half (0.5) times his annual base salary and any
unpaid base salary and bonus, subject to compliance with certain ongoing
obligations and the delivery of a release to us. This agreement
terminated in accordance with its terms on June 12, 2009.
Outstanding
Equity Awards at 2009 Fiscal-Year End
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
Number
of Securities Underlying Unexercised Options
(#)
Exercisable
|
|
|
Number
of Securities Underlying Unexercised Options
(#)
Unexercisable
|
|
|
Option
Exercise Price
($)
|
|
|
|
|
|
Number
of Shares or Units of Stock that have not Vested
(#)
|
|
|
Market
Value of Shares or Units of Stock that have not Vested
($)
|
|
|
Equity
Incentive Plan Awards:
Number
of Unearned Shares, Units or Other Rights that have not
Vested
(#)
|
|
|
Equity
Incentive Plan Awards:
Market
Value of Unearned Shares, Units or Other Rights that have not
Vested
($)
|
|
|
Charles
E. Ramey
|
|
|
3,000
|
|
|
|
¾
|
|
|
|
1.20
|
|
|
10/03/2011
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
|
|
394,000
|
|
|
|
¾
|
|
|
|
1.00
|
|
|
05/20/2013
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
|
|
600,000
|
(1)
|
|
|
¾
|
|
|
|
0.75
|
|
|
05/23/2016
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
Terry
Stepanik
|
|
|
582,250
|
|
|
|
¾
|
|
|
|
0.55
|
|
|
05/14/2010
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
|
|
290,000
|
|
|
|
¾
|
|
|
|
1.49
|
|
|
05/14/2010
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
|
|
110,000
|
|
|
|
¾
|
|
|
|
0.46
|
|
|
05/14/2010
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
Mario
Villarreal
|
|
|
641,363
|
|
|
|
¾
|
|
|
|
0.55
|
|
|
04/25/2013
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
|
|
290,000
|
|
|
|
¾
|
|
|
|
1.49
|
|
|
04/26/2013
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
¾
|
|
|
|
150,000
|
(2)
|
|
$
|
31,500
|
|
|
|
¾
|
|
|
|
¾
|
|
|
John
T. McLaughlin
|
|
|
15,000
|
|
|
|
¾
|
|
|
|
0.79
|
|
|
02/07/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,200
|
|
|
|
¾
|
|
|
|
0.47
|
|
|
09/30/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
30,000
|
(3)
|
|
|
0.61
|
|
|
06/25/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Stock
Option vests as to 50% of the shares on each of May 22, 2007 and
2008.
|
|
(2)
|
Restricted
Stock Awards vests as follows: 50,000 shares on October 1, 2009, 50,000
shares on January 22, 2010 and 50,000 shares on June 15,
2010
|
|
(3)
|
Stock
options vest on March 15, 2010.
|
Security
Ownership of Certain Beneficial Owners and Management
The
following table sets forth certain information as of the date hereof, as to
shares of our common stock beneficially owned by: (i) each person who is known
by us to own beneficially more than 5% of any class of our capital stock, (ii)
each of our named executive officers, (iii) each of our directors and (iv) all
of our current directors and executive officers as a group. Unless otherwise
stated below, the address of each beneficial owner listed on the table is c/o US
Dataworks, Inc., One Sugar Creek Center Boulevard, Suite 500, Sugar Land, Texas
77478.
|
|
|
|
|
|
|
Amount and Nature of Beneficial
Ownership
|
|
|
|
|
|
|
Right
To
|
|
|
|
|
|
|
|
Acquire
|
|
|
|
|
|
Shares
of
|
Shares
of
|
Beneficial
|
|
Percentage
of Class
|
|
|
|
Common
|
Preferred
|
Ownership
of
|
|
Beneficially
Owned
|
Percentage
of Voting
|
|
|
Stock
|
Stock
|
Common
Stock
|
Total
|
|
Securities
|
|
Name
and Address of
|
Beneficially
|
Beneficially
|
within
60 days
|
Common
|
Common
|
|
Beneficially
|
|
Beneficial
Owner
|
Owned
|
Owned
|
of July 29,
2009
|
Stock
|
Stock
(2)
|
Preferred
Stock
|
Owned(1)(2)
|
|
5%
Stockholders
|
|
|
|
|
|
|
|
|
Mark
Deveau
|
39,322
|
11,200
|
11,200
|
50,522
|
*
|
10.2%
|
*
|
|
Harvey
M. Gammon (3)
|
44,569
|
56,000
|
56,000
|
100,569
|
*
|
50.9%
|
*
|
|
Thomas
& Lois Gibbons
|
503
|
13,400
|
13,400
|
13,903
|
*
|
12.2%
|
*
|
|
Highbridge
International LLC (4)
|
155,280
|
—
|
2,034,884
|
2,190,164
|
6.7%
|
|
6.7%
|
|
Castlerigg
Master Investments Ltd. (5)
|
—
|
—
|
2,325,581
|
2,325,581
|
7.1%
|
—
|
7.1%
|
|
|
|
|
|
|
|
|
|
|
Named
Officers and Directors
|
|
|
|
|
|
|
|
|
Charles
E. Ramey
|
2,140,210
|
—
|
1,351,141(6)
|
3,491,351
|
10.7%
|
—
|
10.6%
|
|
Terry
Stepanik (7)
|
473,466
|
—
|
982,250
|
1,455,716
|
4.4%
|
—
|
4.4%
|
|
Mario
Villarreal
|
564,170
|
—
|
931,363
|
1,495,533
|
4.6%
|
—
|
4.5%
|
|
Joe
Abrell
|
9,500
|
—
|
695,334
|
704,834
|
2.2%
|
—
|
2.1%
|
|
J.
Patrick Millinor, Jr.
|
14,572
|
—
|
670,001
|
684,573
|
2.1%
|
—
|
2.1%
|
|
John
L. Nicholson (8)
|
397,455
|
26,666
|
2,256,334
(9)
|
2,653,789
|
8.1%
|
24.3%
|
8.1%
|
|
Hayden
D. Watson
|
228,431
|
—
|
1,066,000
|
1,294,431
|
3.9%
|
—
|
3.9%
|
|
Thomas
L. West, Jr.
|
52,511
|
—
|
815,667
|
868,178
|
2.6%
|
—
|
2.6%
|
|
G.
Richard Hicks (10)
|
1,690,672
|
—
|
—
|
1,690,672
|
5.2%
|
—
|
5.1%
|
|
Anna
C. Catalano
|
8,297
|
—
|
—
|
8,297
|
*
|
—
|
*
|
|
John
T. McLaughlin
|
62,500
|
|
90,200
|
152,700
|
*
|
—
|
*
|
|
Randall J.
Frapart
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|
All
current directors and executive officers as a group (10
persons)
|
5,168,318
|
26,666
|
7,876,010
|
13,044,358
|
39.8%
|
24.3%
|
39.7%
|
|
|
|
*
Amount represents less than 1% of our Common Stock or voting
securities.
|
|
(1)
|
Except
as noted below, to our knowledge, the persons named in the table have sole
voting and investment power with respect to all shares of voting
securities shown as beneficially owned by them, subject to community
property law, where applicable, and the information contained in the
footnotes to this table.
|
|
(2)
|
Applicable
percentage ownership of (i) Common Stock is based on 32,780,870 shares of
Common Stock issued and outstanding as of July 29, 2009 and (ii) Preferred
Stock is based on 109,933 shares of Preferred Stock outstanding on July
29, 2009. Applicable percentage ownership of voting securities is based on
32,890803 shares of Common Stock issued and outstanding as of July 29,
2009, including the additional shares of Common Stock into which the
outstanding shares of Preferred Stock are convertible. Beneficial
ownership is determined in accordance with the rules and regulations of
the Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that
person, shares of Common Stock subject to options or convertible or
exchangeable into such shares of Common Stock, held by that person, that
are currently exercisable or exercisable within 60 days of July 29, 2008
are deemed outstanding. These shares, however, are not deemed outstanding
for the purposes of computing the percentage ownership of another
person.
|
|
(3)
|
Includes
25,873 shares held by the Sterling Trust Company Trustee FBO Harvey M.
Gammon.
|
|
(4)
|
Highbridge
Capital Management, LLC is the trading manager of Highbridge International
LLC and has voting control and investment discretion over securities held
by Highbridge International LLC. Glenn Dubin and Henry Swieca control
Highbridge Capital Management, LLC and have voting and dispositive power
over these securities. Each of Highbridge Capital Management, LLC, Glenn
Dubin and Henry Swieca disclaim beneficial ownership of the securities
held by Highbridge International LLC. Includes 2,034,884 shares
issuable upon exercise of certain warrants.
|
|
|
|
|
(5
|
Sandell
Asset Management Corp. is the investment manager of Castlerigg Master
Investments Ltd. Thomas Sandell, Cem Hacioglu and Matthew Pliskin of
Sandell Asset Management Corp. have voting and dispositive power over
these shares and may be deemed to share beneficial ownership of the shares
beneficially owned by Castlerigg Master Investments Ltd. Castlerigg
International Ltd. is the controlling shareholder of Castlerigg
International Holdings Limited which is the controlling shareholder of
Castlerigg Master Investments Ltd. Each of Castlerigg International
Holdings Limited and Castlerigg International Ltd. may be deemed to share
beneficial ownership of the shares beneficially owned by Castlerigg Master
Investments Ltd. Messrs. Sandell, Hacioglu and Pliskin and Sandell Asset
Management Corp., Castelrigg International Holdings Limited, and
Castlerigg International Ltd. each disclaims beneficial ownership of the
securities with respect to which indirect beneficial ownership is
described. Consists of 2,325,581 shares issuable upon exercise of certain
warrants.
|
|
(6)
|
Includes
warrants to acquire 354,141 shares of Common Stock at an exercise price of
$0.43 per share.
|
|
(7)
|
Based
on information reported on a Form 4 filed with the Securities and Exchange
Commission on September 5, 2007.
|
|
(8)
|
Includes
165,454 shares held by J.L. Nicholson MD Inc. 401-K FBO John L. Nicholson,
50,000 shares held by JLN Trust DTD April 26, 2001 and 55,031 shares held
by John L. Nicholson MD Inc. FBO John L.
Nicholson.
|
|
(9)
|
Includes
warrants to acquire 1,500,000 shares of Common Stock at an exercise price
of $0.43 per share.
|
|
|
|
|
(10)
|
Includes
7,000 shares of Common Stock held by Mr. Hicks’s spouse of which Mr. Hicks
disclaims beneficial ownership.
|
Certain
Relationships and Related Transactions
Loans
from Company Insiders
In connection with our redemption of
certain Senior Secured Convertible Promissory Notes due November 13, 2010 (the
“Convertible Notes”), on August 13, 2008, we issued (i) a $2,995,000 Senior
Secured Note due August 13, 2009 to Mr. Nicholson and (ii) a $708,500 Senior
Secured Note due August 13, 2009 to Mr. Ramey (collectively, the “Refinance
Notes”) in return for the payment to us of the principal amounts thereof to fund
such redemption. As originally issued, the Refinance Notes bore
interest at a rate of 12% per annum with interest payments due in arrears
monthly. As originally issued, the Refinance Notes provided that if
we failed to pay any amount of principal, interest, or other amounts when and as
due, then the Refinance Notes would bear an interest rate of 18% until such time
as we cure such default. In addition, if we are subject to certain
events of bankruptcy or insolvency, the Refinance Notes provide that Messrs.
Ramey and Nicholson may redeem all or a portion of the Refinance
Notes. The Refinance Notes are secured by a Security Agreement, dated
August 13, 2008, by and between the Company and Messrs. Ramey and Nicholson,
pursuant to which the Company granted Messrs., Ramey and Nicholson a first
priority security interest in all its personal property, whether now owned or
hereafter acquired, including but not limited to, all accounts receivable,
accounts, copyrights, trademarks, licenses, equipment and all proceeds as from
such collateral.
On February 19, 2009, we entered into
Note Modification Agreements with Messrs. Ramey and Nicholson, which amended the
Refinance Notes as follows: (1) the maturity date of the Refinance Notes was
extended from August 13, 2009 to December 31, 2009; (2) the annual interest rate
on the Refinance Notes increased from 12% to 13%; and (3) the interest rate
escalation clause related to an event of default was deleted. The Note
Modification Agreements also added a mandatory principal payment provision that
required us to reduce the principal balance of the Refinance Notes by 3% of the
original principal amount of the Refinance Notes after the end of each calendar
quarter starting with March 31, 2009 as long as such payment would not reduce
our cash balance below $500,000 as of the last day of such
quarter. If making such principal payment would reduce our cash
balance below $500,000 as of such date, the amount of the principal payment will
be reduced to the amount, if any, by which our cash balance as of such date
exceeds $500,000. The amount to be paid is to be determined each quarter and is
not cumulative from quarter to quarter. These principal payments are to be made
within 10 business days after the end of each quarter. An amendment fee of 1% of
the outstanding principal balances of the Refinance Notes will be paid to
Messrs. Ramey and Nicholson as follows: 50% upon execution of the Note
Modification Agreement and 50% on the 90th day following the execution of the
Note Modification Agreement.
On May 20, 2009, we again entered into
Note Modification Agreements with Messrs. Ramey and Nicholson that amended the
Refinance Notes as follows: (1) the Other Note (defined below) was included in
the definition of “Permitted Indebtedness” and (2) we were allowed to make
voluntary interest payments on the Other Note notwithstanding the fact that the
Refinance Notes are otherwise senior to the Other Note.
On June 26, 2009, we again entered into
Note Modification Agreements with Messrs. Ramey and Nicholson that amended the
Refinance Notes as follows: (1) the maturity date of the Refinance Notes
was extended from December 31, 2009 to July 1, 2009; and (2) the mandatory
principal payment provision was revised to provide that to the extent that our
cash balance at the end of each calendar quarter exceeds $611,105, one-fourth of
such excess amount must be used by us to pay down the principal balance of the
Refinance Notes and we have the discretion to use an additional one-fourth of
such excess amount to further pay down the principal balance of the Refinance
Notes. Other than this additional principal payment requirement, the
principal payment provisions remained unchanged. In consideration of these
amendments, we agreed to (i) pay to the holders of the Refinance Notes a fee of
$50,000 in cash on July 1, 2009, (ii) issue to Mr. Ramey warrants to purchase
354,141shares of Common Stock at an exercise price of $0.43 per share and (iii)
issue to Mr. Nicholson warrants to purchase 1,500,000 shares of Common Stock at
an exercise price of $0.43 per share, with these warrants being subject to the
additional terms specified in the Note Modification Agreements, copies of which
were filed as exhibits to the 2009 Annual Report.
In addition, on September 26, 2006, we
borrowed $500,000 from Mr. Ramey pursuant to our issuance of a promissory note
in that amount payable to Mr. Ramey. That note bore interest at a
rate of 8.75% per annum, was unsecured and was due September 25,
2007. On September 25, 2007, we issued a new promissory note to Mr. Ramey for
the same $500,000 original principal amount that replaced the earlier note (the
“Other Note”). As originally issued, the principal, together with any
unpaid accrued interest on the new note payable, was to be due and payable in
full on demand on the earlier of: (i) the full and complete satisfaction of the
Convertible Notes (the “November Notes”) and (ii) ninety-one (91) days following
the expiration of the term of the Convertible Notes, unless such date is
extended by the mutual agreement of the parties.
On May 20, 2009, we entered into a
Note Modification Agreement with Mr. Ramey that amended the Other Note as
follows: (1) it was clarified that the Other Note was a demand note for which
full payment can be required at any time on or after the maturity date; (2) the
maturity date of the Note was extended to December 31, 2009; and (3) we were
allowed to make voluntary prepayments under the Other Note without
penalty.
On June 26, 2009, we again entered into
a Note Modification Agreement with Mr. Ramey that extended the maturity date of
the Other Note from December 31, 2009 to July 1, 2010. In consideration of
this amendment, the Company agreed to pay to Mr. Ramey a fee of $6,666.67 in
cash on July 1, 2009.
During fiscal 2009, Mr. Ramey received
$51,267 in interest payments on his Refinance Note. During fiscal
2009, Mr. Nicholson received $216,721 in interest payments on his Refinance
Note. During fiscal 2009, Mr. Ramey received $45,000 in interest
payments on his Other Note.
Indemnification
of Directors and Officers
The laws
of the state of Nevada and our Amended and Restated Bylaws provide for
indemnification of our directors for liabilities and expenses that they may
incur in such capacities. In general, directors and officers are
indemnified with respect to actions taken in good faith in a manner reasonably
believed to be in, or not opposed to, our best interests, and with respect to
any criminal action or proceeding, actions that the indemnitee had no reasonable
cause to believe were unlawful.
We have
been advised that in the opinion of the Securities and Exchange Commission,
indemnification for liabilities arising under the Securities Act of 1933, as
amended is against public policy as expressed therein and is, therefore,
unenforceable.
Report
of the Audit Committee
The Audit
Committee is responsible for appointing the independent registered public
accounting firm and for reviewing the scope, results and costs of the audits and
other services provided by them. It is not the duty of the Audit
Committee to plan or conduct audits or to determine that the Company’s financial
statements are complete and accurate and are in accordance with generally
accepted accounting principles. Management is responsible for the
Company’s financial statements and the reporting process, including the system
of internal controls. The independent registered public accounting
firm is responsible in their report for expressing an opinion on the conformity
of those financial statements with generally accepted accounting
principles. The Board of Directors has adopted a written charter for
the Audit Committee, which was attached as Appendix A to the proxy statement for
our 2006 Annual Meeting of Stockholders. The current members of the
Audit Committee are Joe Abrell, J. Patrick Millinor, Jr., John L. Nicholson,
M.D., Hayden D. Watson and G. Richard Hicks, each of whom meets the independence
standards, set forth in Section 803 of the NYSE Amex Company Guide.
The Audit
Committee has reviewed the Company’s audited consolidated financial statements
and discussed such statements with management. The Audit Committee
has discussed with the Company’s independent registered public accounting firm
the matters required to be discussed by Statement of Auditing Standards No. 114
(Communication with Audit Committees).
The Audit
Committee received from the Company’s independent registered public accounting
firm the written disclosures and the letter required by Independence Standards
Board Standard No. 1 (Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees) and discussed with them their independence.
Based on the review and discussions noted above, the Audit Committee recommended
to the Board of Directors that the Company’s audited consolidated financial
statements be included in our Annual Report on Form 10-K for the fiscal year
ended March 31, 2009, and be filed with the Securities and Exchange
Commission.
This
report of the Audit Committee shall not be deemed incorporated by reference by
any general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
Audit
Committee
Joe
Abrell
J.
Patrick Millinor, Jr., Chairman
John L.
Nicholson, M.D.
Hayden D.
Watson
G.
Richard Hicks
Proposal
2: To Ratify the Appointment of Independent Registered Public
Accounting Firm
The Audit
Committee has appointed the firm of Ham, Langston & Brezina, LLP
(“HL&B”) as our independent registered public accounting firm for the fiscal
year ending March 31, 2010, subject to ratification by the
stockholders. Representatives of HL&B are expected to be present
at the 2009 Annual Meeting. They will have an opportunity to make a
statement, if they desire to do so, and will be available to respond to
appropriate questions.
Audit
Fees
The
aggregate fees billed for professional services rendered by HL&B for the
audit of our financial statements for each of the fiscal years ended March 31,
2009 and March 31, 2008 were $68,202 and $52,500, respectively.
Audit-Related
Fees
The
aggregate fees billed in each of the fiscal years ended March 31, 2009 and March
31, 2008 for assurance and related services rendered by HL&B that are
related to the performance of the review of our financial statements but not
reportable as audit fees were $21,717 and $28,503, respectively. Audit-related
fees in both fiscal 2009 and fiscal 2008 were primarily for review of the
financial statements included in our Forms 10-Q for such fiscal years and other
information contained in our SB-2, S-3 and S-8 filings with the
SEC.
Tax
Fees
The
aggregate fees billed for professional services rendered by HL&B for tax
compliance, tax advice, and tax planning in each of the fiscal years ended March
31, 2009 and March 31, 2008 were $8,250 and $8,050, respectively. Tax fees in
both fiscal 2009 and fiscal 2008 were incurred for: (i) preparation of the
preceding calendar year’s federal corporate tax return; (ii) preparation of
state franchise tax returns; and (iii) consultation.
All
Other Fees
There
were no other fees billed for services rendered by HL&B not reportable as
audit fees, audit-related fees or tax fees for each of the fiscal years ended
March 31, 2009 or March 31, 2008.
Audit
Committee Pre-Approval Policies
The Audit
Committee has established a policy intended to clearly define the scope of
services performed by our independent registered public accounting firm for
non-audit services. This policy relates to audit services, audit-related
services, tax and all other services which may be provided by our independent
registered public accounting firm and is intended to assure that such services
do not impair their independence. The policy requires the pre-approval by the
Audit Committee of all services to be provided by our independent registered
public accounting firm. Under the policy, the Audit Committee will annually
review and pre-approve the services that may be provided by the independent
registered public accounting firm without obtaining specific pre-approval from
the Audit Committee or its designee. In addition, the Audit Committee may
delegate pre-approval authority to one or more of its members. The member or
members to whom such authority is delegated is required to report to the Audit
Committee at its next meeting any services which such member or members has
approved. The policy also provides that the Audit Committee will pre-approve the
fee levels for all services to be provided by the independent registered public
accounting firm. Any proposed services exceeding these levels will require
pre-approval by the Audit Committee.
All of
the services provided by our independent registered public accounting firm
described above under the captions Audit Fees, Audit-Related Fees and Tax Fees
were approved in accordance with this policy and the Audit Committee has
determined that their independence has not been compromised as a result of
providing these services and receiving the fees for such services as noted
above.
Required
Vote
Ratification
will require the affirmative vote of a majority of the shares present and voting
at the meeting in person or by proxy. In the event ratification is
not obtained, the Audit Committee will review its selection of our independent
registered public accounting firm for the fiscal year ending March 31,
2010.
The Board of Directors
recommends a vote “FOR” ratification of the appointment of Ham, Langston &
Brezina, LLP as our independent registered public accounting
firm
.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934 requires our officers and
directors, and persons who own more than ten percent of a registered class of
our equity securities, to file reports of ownership and changes in ownership on
Forms 3, 4 and 5 with the Securities and Exchange Commission. Officers,
directors and greater than 10% shareholders are required to furnish us with
copies of all such forms that they file.
Based
solely on our review of copies of such forms filed during fiscal 2009 it has
received and written representations from certain reporting persons that they
were not required to file Forms 5 for fiscal 2009, we believe that all of our
officers, directors and greater than 10% beneficial owners complied with all
Section 16(a) filing requirements applicable to them with respect to
transactions during fiscal 2009 with the exception of the following:
|
|
(i)
|
Mr.
West was late filing a Form 4 to report a stock option grant in fiscal
2009;
|
|
|
|
Mr.
Abrell was late filing a Form 4 to report a stock option grant in fiscal
2009;
|
|
|
(iii)
|
Mr.
Watson was late filing three Form 4’s to report a stock option grant and
two stock grants in fiscal 2009;
|
|
|
(iv)
|
Mr. Nicholson
was late filing a Form 4 to report a stock option grant in fiscal
2009;
|
|
|
(v)
|
Mr.
Millinor was late filing a Form 4 to report a stock option grant in fiscal
2009;
|
|
|
(vi)
|
Mr.
Villarreal was late filing a Form 4 to report a stock grant in fiscal
2009; and
|
|
|
(vii)
|
Mr.
Hicks was one day late in filing his Form 3 due to an unexpected delay in
receiving his electronic filing
code.
|
Other
Matters
We know
of no business that will be presented at the 2009 Annual Meeting other than as
discussed herein. If any other business is properly brought before
the 2009 Annual Meeting, it is intended that proxies in the enclosed form will
be voted in accordance with the judgment of the persons voting the
proxies.
You
should rely only on the information contained (or incorporated by reference) in
this Proxy Statement. We have not authorized anyone to provide you with
information that is different from what is contained in this Proxy Statement.
This Proxy Statement is dated July 29, 2009. You should not assume that the
information contained in this Proxy Statement is accurate as of any date other
than that date (or as of an earlier date if so indicated in this Proxy
Statement).
By order
of the Board of Directors.
/s/
Charles E. Ramey
Charles
E. Ramey
Chief
Executive Officer
July 29,
2009
PLEASE
SIGN, DATE AND MAIL YOUR PROXY NOW OR
SUBMIT
YOUR PROXY BY TELEPHONE OR THE INTERNET
US
DATAWORKS APPRECIATES YOUR PROMPT RESPONSE
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