NIGHTHAWK SYSTEMS, INC.
10715 GULFDALE, SUITE 200
SAN ANTONIO, TX 78258
(303) 337-4811
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 6, 2005
To Our Stockholders:
A Special Meeting of Stockholders (the "Special Meeting") of Nighthawk Systems,
Inc. (the "Company") will be held at 10715 Gulfdale, Suite 200, San Antonio,
Texas 78258 on January 6, 2005 at 10:00 a.m., local time, to consider and act
upon the following matter, as more fully described in the accompanying proxy
statement:
- To amend our Amended and Restated Articles of Incorporation to increase
the number of authorized shares of common stock of the Company from 50,000,000
shares to 200,000,000 shares.
Stockholders holding shares of common stock of record at the closing of business
on November 10, 2004 will be entitled to receive notice of and vote at the
Special Meeting.
Stockholders, whether or not they expect to be present at the Special Meeting,
are requested to sign and date the enclosed proxy and return it promptly in the
envelope provided. You may revoke this proxy at any time prior to the Special
Meeting, and, if you attend the Special Meeting, you may vote your shares in
person.
All stockholders are cordially invited to attend the Special Meeting.
YOU ARE URGED TO DATE, SIGN AND PROMPTLY RETURN YOUR PROXY SO THAT YOUR SHARES
MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES. GIVING YOUR PROXY DOES NOT AFFECT
YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.
By Order of the Board of Directors,
/s/ H. Douglas Saathoff
---------------------------
H. Douglas Saathoff
Corporate Secretary
San Antonio, Texas
December 3, 2004
NIGHTHAWK SYSTEMS, INC.
10715 GULFDALE, SUITE 200
SAN ANTONIO, TX 78258
(303) 337-4811
PROXY STATEMENT FOR SPECIAL MEETING OF STOCKHOLDERS
JANUARY 6, 2005
PROXY SOLICITATION INFORMATION
DATE, TIME, AND PLACE
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Nighthawk Systems, Inc. for use at the
Special Meeting to be held on January 6, 2005, at 10:00 a.m., local time, at
10715 Gulfdale, Suite 200, San Antonio, Texas 78216.
MAILING OF PROXY STATEMENT, PROXY AND FORM 10-KSB ANNUAL REPORT
This Proxy Statement and the accompanying Proxy will be mailed on or about
December 13, 2004 to all Stockholders entitled to notice of and to vote at the
Meeting.
We will provide without charge, a copy of our annual report on Form 10-KSB
for the fiscal year ended December 31, 2003 and related financial statements and
financial statement schedules to each stockholder entitled to vote at the
meeting, who request a copy of such in writing or by phone. Requests should be
sent to: Nighthawk Systems, Inc., at 10715 Gulfdale, Suite 200, San Antonio, TX
78258. Our telephone number is (303) 337-4811.
RECORD DATE; SHARES ENTITLED TO VOTE; QUORUM
Our board of directors has fixed the close of business on November 10, 2004
as the record date for stockholders entitled to notice of and to vote at the
Special Meeting. As of the record date, there were 30,622,518 shares of common
stock outstanding. Stockholders are entitled to one vote for each share of
common stock they own.
The holders of a majority of the outstanding shares of stock issued and
entitled to vote at the Special Meeting must be present in person or by proxy to
establish a quorum for business to be conducted at the Special Meeting.
Abstentions and broker "non-votes" are treated as shares that are present and
entitled to vote for purposes of determining the presence of a quorum.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the votes cast by the
stockholders present or represented by proxy and entitled to vote at the Special
Meeting is required to approve an amendment to our Amended and Restated Articles
of Incorporation to increase the number of our authorized common shares from
50,000,000 to 200,000,000. A properly executed proxy marked "Abstain" with
respect to this proposal will be treated as shares present or represented and
entitled to vote on such proposal and will have the same effect as a vote
against the proposal.
VOTING OF PROXIES
All valid, unrevoked proxies will be voted as directed. In the absence of
instructions to the contrary, properly executed proxies will be voted in favor
of amending our Amended and Restated Articles of Incorporation to increase the
number of our authorized common shares from 50,000,000 to 200,000,000.
Votes cast in person or by proxy at the Special Meeting will be tabulated
at the Special Meeting.
RETURNED PROXY CARDS WITH NO VOTING INSTRUCTIONS
Proxies that are signed and returned will be voted in the manner instructed
by the stockholder. If you sign and return your proxy card with no
instructions, the proxy will be voted "For" the items set forth in the
Proposal.
BROKER NON-VOTES
If you hold your shares of Common Stock in "street name" (that is, through
a broker, bank or other representative), you are considered the beneficial owner
of the shares held in street name. As the beneficial owner, you have the right
to direct your broker how to vote. Brokers who have not received instructions
from beneficial owners generally have the authority to vote on certain "routine"
matters, including the election of directors and ratification of the selection
of auditors. With respect to a non-routine matter, a broker is not permitted to
vote such shares on your behalf as to such matter. Shares representing such
broker non-votes" with respect to a non-routine matter will not be voted in
favor of such matter and will also not be counted as votes cast on such matter.
Accordingly, "broker non-votes" will have no effect on the outcome of the vote.
REVOCABILITY OF PROXIES
Any Nighthawk stockholder who delivers a properly executed proxy may revoke
the proxy at any time before it is voted. Proxies may be revoked by:
- delivering a written revocation of the proxy to our Corporate Secretary
before the Special Meeting;
- signing and returning a later dated proxy; or
- attending the Special Meeting and voting in person.
Attendance at the Special Meeting will not, in and of itself, constitute
revocation of a proxy. If you would like to revoke your proxy to vote in person
at the Speical Meeting, you must notify the Inspector of Election or the
Corporate Secretary at the Special Meeting.
DEADLINE FOR VOTING BY PROXY
Proxy Cards sent to the Company by mail must be received prior to the
Special Meeting to be counted.
SOLICITATION OF PROXIES
Proxies will be solicited by mail. Proxies may also be solicited
personally, or by telephone, fax, or other means by our directors, officers and
employees. Directors, officers and employees soliciting proxies will receive no
extra compensation, but may be reimbursed for related out-of-pocket expenses.
In addition to solicitation by mail, we will make arrangements with brokerage
houses and other custodians, nominees and fiduciaries to send the proxy
materials to beneficial owners. We may reimburse these brokerage houses,
custodians and other persons for their reasonable out-of-pocket expenses in
doing so. The cost of solicitation of proxies will be paid by us.
PROPOSAL TO AMEND OUR AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO
INCREASE THE NUMBER OF AUTHORIZED SHARES
OF OUR COMMON STOCK
Our Amended and Restated Articles of Incorporation currently authorize us
to issue 50,000,000 shares of common stock and 5,000,000 shares of preferred
stock, par value $.001 per share. As of November 10, 2004, we had 30,622,518
shares of common stock issued and outstanding, leaving us, in the opinion of our
Board of Directors, with what could be an insufficient number of shares of
common stock available for issuance necessary for us to efficiently continue and
grow our operations. Additionally, we entered into an Investment Agreement with
Dutchess Private Equities Fund II, LP. Pursuant to the Investment Agreement, we
may require Dutchess to purchase up to $10,000,000 in our common stock. The
purchase price for the common stock will be 95% of the lowest closing best bid
price of the common stock during the five consecutive trading day period
immediately following the date of our notice to them of our election to put
shares. Based on current market prices for our common stock, we currently do
not have sufficient authorized shares to fully access the Investment Agreement
with Dutchess. In order to ensure that we can obtain funds in an expeditious
manner in the future under the Investment Agreement with Dutchess, or from other
funding sources that may become available to us, the Board of Directors believes
we should take the required steps now to adequately increase the authorized
shares of our common stock.
The Board has adopted a resolution (i) declaring the advisability of such
increase in the number of authorized shares of our common stock, subject to
Stockholder approval, (ii) in connection therewith, an amendment to our Amended
and Restated Certificate of Incorporation to effect such an increase in the
number of authorized shares of our common stock, subject to stockholder
approval, and (iii) authorizing any other action it deems necessary to effect
such an amendment, without further approval or authorization of our
stockholders. Accordingly, the Board of Directors recommends an increase in the
number of shares of common stock we are authorized to issue from 50,000,000
shares to 200,000,000 shares.
The additional shares of common stock to be authorized for issuance upon
the adoption of such amendment would possess rights identical to the currently
authorized common stock. The stockholders of common stock are entitled to one
vote for each share held of record on all matters to be voted on by the
stockholders. All voting is on a non-cumulative basis. The stockholders of
common stock do not have any preemptive rights, conversion rights, or applicable
redemption or sinking fund provisions. The amendment to authorize the issuance
of additional shares of common stock will not have any effect on the par value
of the common stock. Nevertheless, the issuance of such additionally authorized
shares of common stock would affect the voting rights of our current
stockholders because there would be an increase in the number of outstanding
shares entitled to vote on corporate matters, including the election of
directors, if and when any such shares of common stock are issued in the future.
If we issue additional shares of common stock, it would have the effect of
diluting our earnings per share and book value per share of common stock.
Additionally, it would have the effect of diluting the stock ownership and
voting rights of our stockholders.
An increase in the number of authorized shares of common stock will enable
us to take advantage of various potential business opportunities through the
issuance of our securities, including, without limitation, providing equity
incentives to employees, officers or directors, establishing certain strategic
relationships with other companies, selling equity for capital necessary to
build our business and expanding our business through acquisitions. We have no
present agreements to acquire any businesses.
The increase in authorized shares is reflected in our proposed Amended and
Restated Articles of Incorporation included with this proxy as Attachment A.
DISSENTERS' RIGHTS
Stockholders are not entitled to dissenters' rights.
POTENTIAL ANTI-TAKEOVER EFFECTS OF THE AMENDMENT
The increase in the number of authorized shares of common stock and the
subsequent issuance of all or a portion of those shares could have the effect of
delaying or preventing a change of control without further action by the
stockholders. Subject to applicable law and stock exchange requirements, we
could issue shares of authorized and unissued common stock in one or more
transactions that would make a change of control more difficult and therefore
less likely. Any issuance of additional shares could have the effect of
diluting the earnings per share and book value per share of the outstanding
shares of common stock or the stock ownership and voting rights of a person
seeking to obtain control of us.
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS AN INCREASE IN THE NUMBER OF AUTHORIZED SHARES
OF COMMON STOCK, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR
THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE IN THE PROXY.
NIGHTHAWK SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the
beneficial ownership of our outstanding classes of stock as of November 18,
2004, by each person known by us to (i) own beneficially more than 5% of each
class, (ii) by each of our Directors and Executive Officers and (iii) by all
Directors and Executive Officers as a group. Unless otherwise indicated below,
to our knowledge, all persons listed below have sole voting and investment power
with respect to their shares of common stock except to the extent that authority
is shared by spouses under applicable law.
The number of shares of common stock issued and outstanding on November 18, 2004
was 30,622,518 shares. The calculation of percentage ownership for each listed
beneficial owner is based upon the number of shares of common stock issued and
outstanding on November 18, 2004, plus shares of common stock subject to options
held by each person on November 18, 2004 and exercisable within 60 days
thereafter. The address for officers and directors is: c/o Nighthawk Systems,
Inc., 10715 Gulfdale, Suite 200, San Antonio, TX 78216.
AMOUNT AND NATURE
OF BENEFICIAL
OWNERSHIP OF PERCENT OF
-----------
NAME . . . . . . . . . . . . . . . . COMMON STOCK CLASS
-------------------------------------------------------------------------------
Steven Jacobson 3,775,654 (a)(b) 12.3%
6600 E. Hampden Ave., 3rd Fl.
Denver, CO 80224
Herbert Jacobson. . . . . . . . . . . . . . . 2,721,800 (c) 8.9%
1011 S. Valentia St., #87
Denver, CO 80247
Tomas Revesz. . . . . . . . . . . 3,996,894 (d) 11.7%
P.O. Box 2498
McAllen, Texas 78502-2498
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
Max Polinsky
525,000 (e) 1.7%
Patrick Gorman
175,000 (f) 1.0%
Myron Anduri . . . . . . . . . . . . . . . . . 3,608,486 (g) 11.6%
H. Douglas Saathoff. . . . . . . . . . . . . . 564,996 (h) 1.8%
Eric Berg. . . . . . . . . . . . . . . . . . . 66,667 (i) *
All officers and directors as a group. . . . 6,017,049 19.4%
Notes:
* Less than 1%.
(a) Includes 150,000 shares under options, which vest within 60 days, and
2,525,654 shares held under in an irrevocable voting agreement with Myron Anduri
which was executed on September 8, 2003 and which will survive for a period of
five years from that date. Pursuant to the Voting Agreement, Mr. Anduri has the
right to vote the proxy of said shares on all matters submitted to a vote of the
shareholders with the single exception of votes on any proposal to change fifty
one percent or more of our ownership. Steven Jacobson was Chief Executive
Officer and a director until March 2003, at which time he became a salaried
employee. He is no longer employed by Nighthawk.
(b) Includes 550,000 shares held in trust for Aaron Guth that expires on
June 11, 2006 and 550,000 shares held in trust for Adam Guth that expires on
March 31, 2009. Steven Jacobson acts as trustee for both, and has all rights
afforded any shareholder, including voting rights, until the trusts expire.
(c) Includes 1,500,500 shares held in the name of Mr. Jacobson's wife,
Sharon Jacobson.
(d) Includes an estimated 2,857,143 shares from a warrant to exercise up to
$200,000 in stock at a price equal to 50% of the average closing price of
Nighthawk stock for the ten day period preceding the exercise of the warrants,
exercisable at any time up to March 31, 2005, and 750,000 shares that are
convertible under a promissory note. These shares are convertible at any time.
(e) Includes 200,000 shares that are owned by Venbanc, Inc., of which Mr.
Polinsky is a partner, and 75,000 shares under option that vest November 13,
2004.
(f) Includes 75,000 shares underlying options that vested November 13, 2004.
(g) Includes 1,082,832 shares (including 431,416 shares underlying warrants
and options) owned directly by Mr. Anduri and 2,525,654 shares held under an
irrevocable voting agreement with Steve Jacobson which was executed on October
23, 2003 and which will survive for a period of five years from that date.
Pursuant to this agreement, Mr. Anduri has the right to vote the proxy of said
shares on all matters submitted to a vote of the shareholders with the single
exception of votes on any proposal to change fifty one percent or more of our
ownership. Mr. Anduri receives no economic benefits from the shares subject to
this Voting Agreement.
(h) Includes 166,667 shares underlying options exercisable as of January 1,
2004.
(i) All are shares underlying options which vest in thirds on each of three
successive anniversaries following the grant of these options.
ATTACHMENT A
PROPOSED
CERTIFICATE OF AMENDMENT
TO
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
NIGHTHAWK SYSTEMS, INC.
Pursuant to the applicable provisions of the Nevada Business Corporations
Act, Nighthawk Systems, Inc. (the "Corporation") adopts the following
Certificate of Amendment to its Amended and Restated Articles of Incorporation
by stating the following:
FIRST: The present name of the Corporation is Nighthawk Systems, Inc.
SECOND: The following amendments to its Amended and Restated Articles of
Incorporation were adopted by a majority vote of shareholders of the corporation
on January 6, 2004 in the manner prescribed by Nevada law.
1. Article IV is amended to read as follows:
Capitalization. (a) Common Stock. The Corporation shall have authority to
issue 200,000,000 shares of common stock having a par value of one mil ($0.001).
All common stock of the Corporation shall be of the same class and shall have
the same rights and preferences. Fully paid common stock of this corporation
shall not be liable for further call or assessment. The authorized common
shares shall be issued at the discretion of the Directors. (b) Preferred Stock.
The Corporation shall have the authority to issue 5,000,000 shares of preferred
stock each having a par value of $0.001, with such rights, preferences and
designations as to be issued in such series as determined by the Board of
Directors of the Corporation.
The number of shares of the Corporation outstanding at the time of the adoption
of the foregoing was 30,622,518 and the number of shares entitled to vote
thereon was the same. The number of shares consenting to the action was
17,833,098. The shareholders consenting to the action represented a majority of
the issued and outstanding shares.
Effective this 6th day of January 2004.
/s/ H. Douglas Saathoff
---------------------------------
H. Douglas Saathoff
Chief Executive Officer