exv10w1



 







Exhibit 10.1




EMPLOYMENT AGREEMENT




     THIS EMPLOYMENT AGREEMENT (this “Agreement”) dated and effective as of May 23, 2006 (the
“Effective Date”) is by and between US Dataworks, Inc., a Nevada corporation (the
“Company”), and Charles E. Ramey (“Ramey”). In consideration of the mutual covenants and promises
contained herein, the parties agree as follows.



     WHEREAS, Ramey has been employed by the Company since 2001, and the services of Ramey, his
managerial and financial expertise, and his knowledge of the affairs of the Company are of great
value to the Company;



     WHEREAS, the Company deems it essential that it have the advantage of the continued services
of Ramey and desires to enter into a continuing agreement of employment with him, and Ramey desires
to enter into such an agreement with the Company upon the terms and conditions stated hereunder.



ARTICLE 1




GENERAL PROVISIONS




     Section 1.1 Employment. The Company hereby employs Ramey, and Ramey accepts such
employment by the Company upon the terms and conditions hereof.



     Section 1.2 Term. Subject to earlier termination as specifically set forth herein,
the initial term of this Agreement shall be two (2) years commencing on the Effective Date and
continuing until May 22, 2008 (the “Term”). The Term shall be extended automatically without
further action by either party for successive one (1) year terms (each extension expiring on the
anniversary of May 22), unless either party shall have served not less than ninety (90) days prior
written notice upon the other party that this Agreement shall terminate.



     Section 1.3 Termination. Ramey’s employment and this Agreement shall terminate upon
the earliest to occur of any of the following events (the actual date of such termination being
referred to herein as the “Termination Date”):



     (a) Pursuant to Section 1.2.



     (b) In the event of Ramey’s death or disability as set forth in Section 3.6.



     (c) Termination of Ramey’s employment by the Company for cause without any prior notice (no
prior notice is required except as specifically set forth below), upon the occurrence of any of the
following events (each of which shall constitute “Cause”):



          (i) any embezzlement or wrongful diversion of funds of the Company or any affiliate of the
Company by Ramey;




          (ii) gross malfeasance by Ramey in the conduct of Ramey’s duties;




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          (iii) breach of this Agreement or any of the Company’s written policies and, if such breach is
capable of being cured, as determined by the Board of Directors of the Company (the “Board of
Directors”), failure of Ramey to cure such breach after notice and reasonable opportunity to cure
such breach;




          (iv) gross neglect by Ramey in carrying out Ramey’s duties; or




          (v) willful violation by Ramey of any applicable federal or state securities laws or
regulations.




     (d) Termination of Ramey’s employment by the Company at any time without Cause.



     (e) Termination by Ramey of his employment at any time.



     Section 1.4 Termination Obligations: Return of Company Property. Upon termination of
his employment, Ramey shall promptly return all Company property.



ARTICLE 2




POSITION AND DUTIES; OTHER BUSINESS ACTIVITIES




     Section 2.1 Position. Company agrees to employ Ramey in the position of Chief
Executive Officer and President, or in such other positions as the parties may mutually agree.
Ramey shall also continue to serve as a director of the Company at the pleasure of the Board of
Directors and the stockholders.



     Section 2.2 Duties: Full Attention to Business. The primary focus of Ramey’s
employment is to develop and execute strategies for the organic and inorganic revenue and profit
growth of the Company. Ramey shall perform such services for the Company that reasonably serve the
purpose of this Agreement and/or meet the needs of the Company, and that are consistent with the
position Ramey holds. Ramey shall devote his full business time, energies, interest, abilities,
and productive efforts to the business of the Company. Except as may be approved by the Company’s
Board of Directors, Ramey shall not render any consulting services to others for compensation and,
in addition, shall not engage in any activity which conflicts or interferes with his performance of
duties hereunder. Notwithstanding the provisions of this Section 2.2, Ramey may, with the prior
written consent of the Board of Directors, engage in civic, charitable, or educational activities,
provided that such service and activities do not, individually or in the aggregate, interfere with
the performance of Ramey’s duties under the Agreement.



     Section 2.3 Covenant Not To Compete During Term. During the Term, Ramey shall comply
in all respects with the Company’s written policies with respect to conflicts of interest. Except
as may be approved by the Company’s Board of Directors, Ramey shall not engage in or be interested,
directly or indirectly, in any business or operation competitive with the Company. For the purpose
of this paragraph, Ramey shall be deemed to be interested in a business or operation which is
competitive with the Company if Ramey is a holder of five percent (5%) or more of the issued and
outstanding ownership interests in such business or operation, or serves as



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a director, officer, employee, agent, partner, individual proprietor, lender, consultant, or
independent contractor of such business or operation.



     Section 2.4 Non-Disclosure of Confidential Information. Ramey acknowledges that in
connection with his employment by the Company or its affiliates, he has and may acquire or learn
“Confidential Information” of the Company by virtue of a relationship of trust and confidence
between Ramey and the Company. Ramey warrants and agrees that during the Term he shall not
disclose to anyone (other than to officers of the Company or to such other persons as such officers
may designate), or use, except in the course of his employment with the Company or its affiliates,
any Confidential Information acquired by him in the course of or in connection with his employment.
As used herein, the term “Confidential Information” shall include, but not be limited to: all
information of any type or kind, whether or not reduced to a writing and whether or not conceived,
originated, discovered or developed in whole or in part by Ramey, which is directly related to the
Company, its operations, policies, agreements with third parties, its financial affairs and related
matters, including business plans, strategic planning information, product information, purchase
and sales information and terms, supplier negotiation points, styles and strategies, contents and
terms of contracts between the Company and suppliers, advertisers, vendors, contact persons, terms
of supplier and/or vendor contracts or particular transactions, potential supplies and/or vendors,
or other related data; marketing information such as but not limited to, prior, ongoing or proposed
marketing programs, presentations, or agreements by or on behalf of the Company, pricing
information, customer bonus programs, marketing tests and/or results of marketing efforts, computer
files, lists and reports, manuals and memos pertaining to the business of the Company, lists or
compilations of vendor and/or supplier names, addresses, phone numbers, requirements and
descriptions, contract information sheets, compensation requirements or terms, benefits, policies,
and any other financial information whether about the Company, entities related or affiliated with
the Company or other key information pertaining to the business of the Company, including but not
limited to all information which is not generally available to or known in the information services
industry (or is available only as a result of an unauthorized disclosure) and is treated by the
Company as “Confidential Information” during the term of this Agreement, regardless of whether or
not such Information is a “trade secret” as otherwise defined by applicable law unless such
information is in the public domain.



     Section 2.5 No Solicitation of Company’s Employees. Ramey specifically agrees that
during the Term and for a period of one (1) year after his termination of employment with the
Company, Ramey shall not, directly or indirectly, either for himself or for any other person, firm,
corporation, or legal entity, solicit any individual, then employed by the Company to leave the
employment of the Company.



     Section 2.6 Ownership of Work Product and Ideas. Any discoveries, inventions,
patents, materials, licenses and ideas applicable to the industry or relating to Ramey’s services
for the Company or its affiliates, whether or not patentable or copyrightable, created by Ramey
during his employment by the Company or its affiliates (“Work Product”) and all business
opportunities within the industry (“Opportunities”) introduced to Ramey by the Company or its
affiliates will be owned by the Company, and Ramey will have no personal interest in such, except
to the extent that the Company allows Ramey to invest or participate in or have other rights to
such Work Product or Opportunities. Ramey will, in such connection, promptly



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disclose any such Work Product and Opportunities to the Company and, upon request of the
Company, will assign to the Company all right in such Work Product and Opportunities.



ARTICLE 3




COMPENSATION; BENEFITS




     Section 3.1 Salary. The Company shall pay Ramey nine thousand one hundred sixty six
Dollars and sixty seven cents ($9,166.67) on a semi-monthly basis, for an annualized base salary
(“Base Salary”) of Two Hundred Twenty Thousand Dollars ($220,000). Beginning with the first
anniversary of the Effective Date and for each subsequent year of employment (or any portion of any
such year), Ramey shall be entitled to a Base Salary review by the Company to determine if any
increase to Base Salary is warranted as a result of performance.



     Section 3.2 Bonus. In recognition for Ramey’s part in achieving record revenue in
FY2006, the Company will grant Ramey one hundred thousand (100,000) shares of restricted stock that
will vest on May 23, 2006. In addition, Ramey will be eligible to receive a discretionary
performance bonus (“Bonus”) for each fiscal year. The Bonus shall be based on Ramey’s performance
as measured in the fiscal year as determined by the Compensation Committee of the Board of
Directors in its sole discretion. The Bonus, if any, shall be considered earned by, and owed to,
Executive as of the last business day of the fiscal year, even if such bonuses customarily are not
paid until a later date and even if Executive is no longer employed by the Company as of the date
the bonuses are paid.



     Section 3.3 Paid Vacation. Ramey shall be entitled to paid vacation time under the
Company’s policies applicable to other senior executives of the Company, but in no event shall
Ramey be eligible for less than four (4) weeks of paid time off per calendar year.



     Section 3.4 Stock Options.



     (a) Subject to approval of the Compensation Committee of the Board of Directors, which such
grant shall be made as promptly hereafter as practicable, the Company will grant to Ramey an option
to purchase six hundred thousand (600,000) shares of common stock of the Company under the US
Dataworks, Inc. Amended and Restated 2000 Stock Option Plan, as amended (the “Plan”). This option
shall be intended to qualify as an incentive stock option to the maximum extent permitted under
Section 422 of the Internal Revenue Code of 1986, as amended. The option shall be subject to the
terms and conditions of the Plan and an option agreement to be entered into between the Company and
Ramey, in a form approved by the Compensation Committee of the Board of Directors. The option
agreement shall provide that such option shall have a ten (10) year term (subject to earlier
termination in connection with termination of employment). All such options will have the exercise
price per share equal to the fair market value of the Company’s common stock as of the date of
grant.



     (b) The option shall vest and become exercisable, subject to continued employment as follows:



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          (i) three hundred thousand (300,000) shares of common stock shall vest on May 22, 2007, and,




          (ii) three hundred thousand (300,000) shares of common stock shall vest on May 22, 2008.




          (iii) in each case to become fully vested and exercisable upon a Change in Control (as defined
in the Plan );.




     (c) Ramey shall be eligible to receive additional grants of options pursuant to the Plan in
the sole discretion of the Compensation Committee of the Board of Directors.



     Section 3.5 Other Benefits. During the Term, Ramey shall be entitled to participate
in present and future employee benefit plans which are available to the Company’s employees,
subject to eligibility requirements thereunder.



     Section 3.6 Disability or Death. If the Board of Directors determines, on the basis
of professional medical advice, that Ramey has become unable to substantially perform his duties
under this Agreement with reasonable accommodation due to illness or mental or physical disability,
and that such failure or inability has continued or is reasonably expected to continue for any
consecutive six-month period, the Company shall have the option to terminate this Agreement by
giving written notice to Ramey thereof and the basis therefor at least thirty (30) days prior to
the effective date of termination. This Agreement shall also terminate immediately upon Ramey’s
death. If Ramey’s employment with the Company is terminated pursuant to this Section 3.6, the
Company shall pay Ramey the salary and bonuses which are earned but unpaid as of the date of
termination.



     Section 3.7 Severance.



     (a) If the Company terminates Ramey’s employment other than for Cause pursuant to Section
1.3(c), other than by reason of death or Disability pursuant to Section 3.6, or if Ramey resigns
within ten (10) days following a material reduction in his duties (as provided in Section 2.2) or
material reduction of compensation (as provided in Section 3.1), if either reduction occurs within
six (6) months following a Change in Control, then subject to Ramey’s continuing obligations under
Section 2.4 and Section 2.5, and in consideration of the execution, delivery and effectiveness of a
general release of claims in a standard form approved by the Company, the Company shall pay to
Ramey a lump sum of two (2) times Ramey’s current annual Base Salary in cash, any accrued, unpaid
Bonus, and shall vest one hundred percent (100%) of Ramey’s then remaining unvested portion of the
Stock Options granted in accordance with this Agreement, in addition to other amounts payable from
qualified plans, nonqualified retirement plans, and deferred compensation plans, which amounts
shall be paid in accordance with the terms of such plans, within fifteen (15) days after the date
of termination (or, if later, upon the effectiveness of the general release following any
applicable revocation period).



     (b) If the Company terminates Ramey’s employment for Cause, or if Ramey resigns (other than
pursuant to Section 3.7(a)), then Ramey shall only be entitled to be paid his accrued, unpaid
salary and any accrued, unpaid Bonus through the effective date of his termination of employment
and his entitlement to other amounts payable from qualified plans, nonqualified



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retirement plans, and deferred compensation plans shall be determined in accordance with the
terms of such plans.



     (c) No severance benefits shall be provided pursuant to this Section 3.7 if Ramey’s employment
is terminated by reason of expiration or non-renewal of this Agreement in accordance with Section
1.2.



     Section 3.8 Excess Parachute Payments.



     (a) If there is a “Change in Control” of the Company within the meaning of Section 280G of
the Internal Revenue Code of 1986, as amended (the “Code”), a portion of the benefits to which
Ramey is entitled under this Agreement could be characterized as “excess parachute payments”
within the meaning of Section 280G of the Code. The parties hereto acknowledge that the protections
set forth in this Section 3.8 are important, and it is agreed that Ramey should not have to bear
the full burden of the excise tax that might be levied under Section 4999 of the Code or any
similar provision of federal, state of local law, in the event that any portion of the benefits
payable to Ramey pursuant to this Agreement or the other incentive plans of the Company are treated
as an excess parachute payment. The parties, therefore, have agreed as set forth in this Section
3.8.



     (b) Anything in this Agreement to the contrary notwithstanding, if it shall be determined that
any payment or distribution (including income recognized by Ramey upon the early vesting of
restricted property or upon the exercise of options whose exercise date has been accelerated) by
the Company or any other Person to or for the benefit of Ramey (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined
without regard to any additional payments required under this Section 3.8, (a “Payment”) would be
subject to the excise tax imposed by Section 4999 of the Code or any similar provision of any
federal, state or local law or any interest or penalties are incurred by Ramey with respect to such
excise tax (such excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the “Excise Tax”), then the Company shall pay an additional payment,
not to exceed the amount of Ramey’s then current Base Salary in the aggregate (a “Gross-Up
Payment”), in an amount such that after payment by Ramey of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without limitation, any income taxes (and
any interest and penalties imposed with respect thereto) and Excise Tax imposed on the Gross-Up
Payment, Ramey retains an amount of the Gross-Up Payment equal to fifty percent (50%) of the Excise
Tax imposed on the Payments. Ramey will bear the cost of the remaining fifty percent (50%) until
the aggregate Gross-Up Payments from the Company have reached the amount of Ramey’s then current
Base Salary, and will thereafter bear all additional taxes, interest or penalties.



     (c) In the event of any dispute as to the applicability or amount of any Gross-Up Payment, all
determinations required to be made under this Section 3.8, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in
arriving at such determination, shall be made by the independent public accounting firm regularly
employed by the Company (the “Accounting Firm”) which shall provide detailed supporting
calculations both to the Company and to Ramey within fifteen (15) business days after the receipt
of notice from Ramey that there has been a Payment, or such



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earlier time as is requested by the Company. All fees and expenses of the Accounting Firm
will be borne by the Company. If the Accounting Firm determines that no Excise Tax is payable by
Ramey, it shall furnish Ramey with a written statement that failure to report the Excise Tax on
Ramey’s applicable federal income tax return would not result in the imposition of a negligence or
similar penalty. Any determination by the Accounting Firm shall be binding on the Company and
Ramey unless and until a final determination is received from the Internal Revenue Service
indicating a contrary result. As a result of uncertainty in the application of Section 4999 of the
Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments may not have been made by the Company that should have been made
(“Underpayment”), consistent with the calculations required to be made hereunder. If Ramey
thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by
the Company to or for the benefit of Ramey, consistent with the maximum limitation stated in this
Section 3.8. In the event it is determined by the Accounting Firm that the Gross Payments
previously made by the Company exceeded the limitations stated in this Section 3.8, upon written
notice from the Company, accompanied by a copy of the Accounting Firm’s calculation of same, the
amount of such overpayment shall be promptly paid by Ramey to the Company.



ARTICLE 4




MISCELLANEOUS PROVISIONS




     Section 4.1 Entire Agreement. This Agreement contains the entire Agreement between
the Parties and supersedes all prior oral and written Agreements, understandings, commitments, or
practices between the parties with respect to the subject matter hereof. Other than as expressly
set forth herein, Ramey and the Company acknowledge and represent that there are no other promises,
terms, conditions or representations (verbal or written) regarding any matter relevant hereto. No
supplement, modification, or amendment of any term, provision or condition of this Agreement shall
be binding or enforceable unless evidenced in writing and executed by the parties. The provisions
of Sections 2.4, 2.5, and 2.6 shall survive termination of this Agreement.



     Section 4.2 Applicable Law. This Agreement shall be governed exclusively by and
construed in accordance with the laws of the State of Texas, notwithstanding choice of law
provisions thereof; and the venue of any litigation commenced hereunder shall be Houston, Texas.



     Section 4.3 Injunctive Relief. Ramey acknowledges that his services are of a special,
unique, unusual, extraordinary and intellectual character, which gives them a peculiar value, the
loss of which cannot be reasonably or adequately compensated in damages in an action at law. If he
should breach this Agreement, in addition to its rights and remedies under general law, the Company
shall be entitled to seek equitable relief by way of injunction or otherwise.



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     Section 4.4 Partial Invalidity. If the application of any provision of this
Agreement, or any section, subsection, subdivision, sentence, clause, phrase, word or portion of
this Agreement should be held invalid or unenforceable, the remaining provisions thereof shall not
be affected thereby, but shall continue to be given full force and effect as if the invalid or
unenforceable provision had not been included herein.



     Section 4.5 Notices. Notices given under this Agreement shall be given by registered
or certified mail, postage prepaid, return receipt requested, or by personal delivery to the
respective addresses of the parties. Notices to Ramey shall be sent to Charles E. Ramey, 6 Cypress
Ridge Lane, Sugar Land, Texas 77479. Notices to the Company shall be sent to 5301 Hollister Road,
Suite 250, Houston, Texas 77040, Attn: Compensation Committee Chairperson. A mailed first-class
notice shall be deemed given two (2) business days after deposit with U.S. Postal Service.



     Section 4.6 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which shall constitute one and the same
instrument.



     Section 4.7 Assignment. This Agreement may not be assigned or encumbered in any way
by Ramey. The Company may assign this Agreement to any successor (whether by merger, consolidation,
or purchase of the Company’s stock) to all or a controlling interest in the Company’s business, in
which case this Agreement shall be binding upon and inure to the benefit of such successor(s) and
assign(s).



     Section 4.8 Limitation on Waiver. A waiver of any term, provision, or condition of
this Agreement shall not be deemed to be, or constitute a waiver of any other term, provision or
condition herein, whether or not similar. No waiver shall be binding unless in writing and signed
by the waiving party.



     Section 4.9 Attorney’s Fees. In the event that any proceeding is commenced involving
the interpretation or enforcement of the provisions of this Agreement, the Party prevailing in such
proceeding shall be entitled to recover its reasonable costs and attorneys’ fees.



     Section 4.10 Taxes. All payments made pursuant to the provisions of this Agreement
shall be subject to the withholding of applicable taxes.



     Section 4.11 Not for the Benefit of Creditors or Third Parties. The provisions of
this Agreement are intended only for the regulation of relations among the parties. This Agreement
is not intended for the benefit of creditors of the parties or other third parties and no rights
are granted to creditors of the parties or other third parties under this Agreement.



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     IN WITNESS WHEREOF, this Agreement is executed as of the Effective Date.



	 	 	 	 	 	 	 
	 	 	US DATAWORKS, INC.	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Terry Stepanik	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Name
	 	Terry Stepanik	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:
	 	President & COO
	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ Charles E. Ramey	 	 
	 	 	 
	 	 	Charles E. Ramey	 	 







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