(1)			Title of each class of securities to which transaction applies:

(2)	Aggregate number of securities to which transaction applies:

(3)	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):

 

 

(4)	Proposed maximum aggregate value of transaction:

(5)	Total fee paid:

x	Fee paid previously with preliminary materials.

o	Check box if any part of the fee is offset as provided by Exchange Act Rule 240.0-11 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.

(1)	Amount previously paid:

(2)	Form, Schedule or Registration Statement No.:

(3)	Filing Party:

(4)	Date Filed:

 

 

 

 

 

1.	To elect five members to the Board of Directors of the Company;

2.	To ratify the appointment of MaloneBailey, LLP as the independent auditors of the Company for the fiscal year ending March 31, 2013;

3.

To approve the Agreement and Plan of Merger (the “Merger Agreement”) among Blackwater Midstream Holdings LLC, a Delaware limited liability company (the “Parent”), Blackwater Acquisition Sub Inc., a Nevada close corporation managed by its stockholders and a direct wholly-owned subsidiary of Parent (the “Merger Sub”), and the Blackwater Midstream Corp. (the “Company”), dated June 29, 2012.

4.	To adjourn the Meeting, if necessary, to solicit additional proxies in favor of the proposal to approve the Merger Agreement;

5.	To consider and take action upon such other matters as may properly come before the meeting or any adjournment or adjournments thereof.

 

2.

“FOR” the ratification of MaloneBailey, LLP as the as the independent auditors of the Company for the fiscal year ending March 31, 2013;

3.

“FOR” approval the Merger Agreement;

4.

“FOR” adjournment of the Meeting, if necessary, to solicit additional proxies in favor of the proposal to approve the Merger Agreement.

	By Order of the Board of Directors,   /s/ Michael D. Suder
	Michael D. Suder
	Board of Directors, Chair

 

 

 

 

 

 

 

·

Blackwater Midstream Corp., a Nevada corporation, is an independent developer and operator of petroleum, chemical and agricultural bulk liquid terminal storage facilities.  The Company, through its wholly-owned subsidiaries, Blackwater New Orleans, L.L.C., Blackwater Georgia, L.L.C. and Blackwater Maryland, L.L.C., owns and operates three terminal sites located in Westwego, Louisiana; Brunswick, Georgia; and Salisbury, Maryland, respectively.  Shares of Blackwater stock are traded on the Over the Counter Bulletin Board (“OTCBB”).

·

ArcLight Capital Partners, LLC, a Delaware limited liability company, is an energy-focused private equity investment firm, having invested over $9 billion of capital since its inception over a decade ago. ArcLight is headquartered in Boston, Massachusetts with offices in New York and Luxembourg.

·

Blackwater Midstream Holdings, LLC, a Delaware limited liability company (“Parent”), and Blackwater Acquisition Sub, Inc., a Nevada corporation (“Merger Sub”), were formed by ArcLight for the sole purpose of entering into the Merger Agreement and consummating the transactions contemplated by the Merger Agreement.  Merger Sub is a wholly-owned subsidiary of Parent.

·

each share of common stock of the Company issued and outstanding immediately prior to the closing (other than (i) any shares held by the Company or any direct or indirect wholly-owned subsidiary of the Company, (ii) any shares held by Parent or Merger Sub, and (iii) any shares owned by stockholders who have properly demanded, perfected and not withdrawn the rights of dissenting stockholders under the Nevada Revised Statutes (“NRS”)) will convert into the right to receive the Merger Consideration, as described below; and

·

all shares of Company common stock so converted will, at the closing of the merger, be cancelled, and each holder of a certificate representing any shares of Company common stock will cease to have any rights with respect thereto, except the right to receive the Merger Consideration, defined below, upon surrender of such certificate (if such shares are certificated).

·

Company stockholders (other than those shares of common stock subject to rollover agreements) will no longer have any interest in, and will no longer be stockholders of, the Company, and will not participate in any of the Company’s future earnings or growth; and

·

shares of the Company common stock will no longer be listed on the OTCBB, and price quotations with respect to shares of Company common stock in the public market will no longer be available.

 

 

·

initiate, solicit, encourage (including by providing information) or facilitate any inquiries, proposals or offers with respect to, or the making or completion of, an Alternative Proposal (as defined in the Merger Agreement);

·

engage or participate in any negotiations concerning, or provide or cause to be provided any non-public information or data relating to the Company or any of its subsidiaries, in connection with, or have any discussions with any person relating to, an actual or proposed Alternative Proposal, or otherwise knowingly encourage or facilitate any effort or attempt to make or implement an Alternative Proposal;

·

approve, endorse or recommend, or propose publicly to approve, endorse or recommend, any Alternative Proposal;

 

 

·

approve, endorse or recommend, or propose to approve, endorse or recommend, or execute or enter into, any letter of intent, agreement in principle, merger agreement, acquisition agreement, option agreement or other similar agreement relating to any Alternative Proposal;

·

amend, terminate, waive or fail to enforce, or grant any consent under, any confidentiality, standstill or similar agreement; or

·

resolve to propose or agree to do any of the foregoing.

·

furnish information with respect to the Company and its subsidiaries to the person making such Alternative Proposal and its representatives pursuant to a customary confidentiality agreement; and

·

participate in discussions or negotiations with such person and its representatives regarding such Alternative Proposal; provided

·

that Parent will be entitled to receive an executed copy of such confidentiality agreement prior to or substantially simultaneously with the Company furnishing information to the person making such Alternative Proposal or its representatives, and

·

the Company will simultaneously provide or make available to Parent any non-public information concerning the Company or any of its subsidiaries that is provided to the person making such Alternative Proposal or its representatives which was not previously provided or made available to Parent.

·

the closing has not occurred on or before November 30, 2012 (the “End Date”) and the party seeking to terminate the Merger Agreement has not breached its obligations under the Merger Agreement in any manner that will have proximately caused the failure to consummate the merger on or before the End Date;

 

 

·

an injunction, other legal restraint or order have been entered by a governmental entity permanently restraining, enjoining or otherwise prohibiting the consummation of the merger and such injunction, other legal restraint or order will have become final and non-appealable, provided that the party seeking to terminate the Merger Agreement has used its reasonable best efforts to remove such injunction, other legal restraint or order; or

·

the Meeting has concluded and, upon a vote taken at such meeting, the Company stockholder approval contemplated by the Merger Agreement will not have been obtained, provided that the right to terminate the Merger Agreement will not be available to the Company where the failure to obtain the stockholder approval is proximately caused by change in board adoption of the Merger Agreement and recommendation to the Company’s stockholders, as provided in the Merger Agreement.

·

Parent has breached or failed to perform any of its representations, warranties, covenants or other agreements contained in the Merger Agreement, which breach or failure to perform (i) would result in a failure of a condition set forth in the Merger Agreement and (ii) cannot be cured by the End Date, provided that the Company has given Parent written notice, delivered at least thirty (30) days prior to such termination, stating the Company’s intention to terminate the Merger Agreement and the basis for such termination; provided that the Company is not then in material breach of the Merger Agreement; or

·

prior to the receipt of the Company stockholder approval: (i) the Blackwater Board has received a Superior Proposal, as defined in the Merger Agreement and below at page 80, which did not result from a breach by the Company of the Merger Agreement; (ii) in light of such Superior Proposal a majority of the disinterested directors of the Company has determined in good faith, after consultation with outside counsel and financial advisors, that withdrawal or modification of its recommendation is necessary in order to comply with its fiduciary duties under applicable law; (iii) the Company has notified Parent in writing of the determinations described in clause (ii) above; (iv) at least five (5) business days following receipt by Parent of the notice referred to in clause (iii) above, and taking into account any revised proposal made by Parent since receipt of the notice referred to in clause (iii) above, such Superior Proposal remains a Superior Proposal and a majority of the disinterested directors of the Company has again made the determinations referred to in clause (ii) above; (v) the Company has previously paid (or concurrently pays) the termination fee provided for in the Merger Agreement; and (vi) the Blackwater Board has approved or concurrently approves, and the Company concurrently enters into, a definitive agreement providing for the implementation of such Superior Proposal.

·

the Company has breached or failed to perform any of its representations, warranties, or other agreements contained in the Merger Agreement, which breach or failure to perform (i) would result in a failure of a condition of the merger and (ii) cannot be cured by the End Date, provided that Parent has given the Company written notice, delivered at least thirty (30) days prior to such termination, stating the Parent’s intention to terminate the Merger Agreement and the basis for such termination and provided that Parent is not then in material breach of the Merger Agreement;

 

 

·

the Blackwater Board or a committee thereof withdraws, modifies or qualifies in a manner adverse to Parent or Merger Sub, or resolves or publicly proposes to do so, in a manner adverse to Parent or Merger Sub, its recommendation, fails to recommend to the Company’s stockholders that they approve the Merger Agreement or approves, endorses or recommends, or resolves to or publicly proposes to do so, any Alternative Proposal, including in any disclosure made pursuant to Rule 14d-9 or Rule 14e-2(a) promulgated under the Exchange Act;

·

the Company or any of its subsidiaries or representatives materially breaches certain of its obligations under the Merger Agreement or the Company gives Parent notification of a Superior Proposal, as defined in the Merger Agreement, in accordance with the terms of the Merger Agreement; or

·

subsequent to the date of execution of the Merger Agreement there occurs a Company Material Adverse Effect, as defined in the Merger Agreement, that cannot be cured by the End Date.

 

 

 

 

·

certain members of the Blackwater Board presently hold Notes that, in accordance with the terms of the Notes and the Merger Agreement, may be converted into shares of Blackwater common stock at the conversion rate of $0.40 per share; and such conversion shares would then be entitled, upon consummation of the merger, to receive Merger Consideration at the rate of $0.64 per share, less any applicable withholding taxes;

·

accelerated vesting of stock options;

·

accelerated vesting of restricted shares of Company common stock and cash payments with respect to restricted shares of Company common stock;

·

the anticipated entry by each of Michael Suder, Chief Executive Officer, Dale Chatagnier, Chief Operations Officer, Francis Marrocco, Chief Commercial Officer, and Donald St. Pierre, Chief Financial Officer, into a new employment agreements in connection with the completion of the merger;

·

the expected ownership of equity interests in Parent by the Rollover Stockholders who are executive officers and members of our senior management team; and

·

continued indemnification and liability insurance for directors and officers following completion of the merger.

 

 

A:

On June 29, 2012, Blackwater Midstream Corp. (the “Company,” “Blackwater,” “we,” “us,” or “our”) we entered into an Agreement and Plan of Merger, (the “Merger Agreement”) with Blackwater Midstream Holdings LLC, a Delaware limited liability company (the “Parent”) and Blackwater Acquisition Sub Inc., a Nevada close corporation managed by its stockholders and a direct wholly-owned subsidiary of Parent (the “Merger Sub”).  Under the terms of the Merger Agreement, Merger Sub will be merged with and into the Company, with the Company surviving that merger .  You are receiving this proxy statement in connection with the solicitation of proxies by the board of directors of the Company (the “Blackwater Board”) in favor of the approval of the Merger Agreement.

Q:	What am I being asked to vote on?

A:	Blackwater stockholders are being asked to vote on the following proposals:

1.

Election of five members of the board of directors;

2.

Ratification of the appointment of MaloneBailey, LLP as the independent auditors of the Company for the fiscal year ending March 31, 2013;

3.

Approval of the Merger Agreement (attached as Annex A to this document) and the transactions contemplated thereby, including the merger;

4.

Adjournment of the Meeting, if necessary, to solicit additional proxies in favor of the proposal to approve the Merger Agreement; and

5.

To consider and take action upon such other matters as may properly come before the meeting.

Q:	As a stockholder, what will I receive in the merger?

A:	If the merger is completed, you will be entitled to $0.64 in cash, without interest thereon and less any required withholding taxes, for each share of Company common stock that you own immediately prior to the effective time of the merger as described in the Merger Agreement.

 

 

Q:	When and where is the annual meeting of our stockholders?

A:	The annual meeting (the “Meeting”) will be held at the Omni Royal Orleans Hotel, 621 St. Louis Street, New Orleans, LA 70140 on October 1, 2012.  At the Meeting, you will be asked to, among other things, approve the Merger Agreement.

Q:	What vote of our stockholders is required to approve the Merger Agreement?

A:	Approval of the Merger Agreement requires the affirmative vote of stockholders holding at least a majority of outstanding shares of Company common stock, entitled to vote.  See “Annual Meeting of Blackwater Stockholders” beginning on page 33 for additional information.

Q:	Who can attend and vote at the Meeting?

A:

You may vote at the Meeting if you owned any shares of Company common stock at the close of business on August 20, 2012, the record date for the Meeting. On that date, there were 56,476,186 shares of Company common stock outstanding and entitled to vote at the Meeting.  You may cast one vote for each share of Company common stock that you owned on that date.

Q:	How does the Blackwater Board recommend that I vote on the matters to be considered at the Meeting?

A:	The Blackwater Board recommends that the stockholders of Blackwater vote:

“FOR” the election of the five members of the board of directors;

“FOR” the ratification of the appointment of MaloneBailey, LLP as the independent auditors of the Company for the fiscal year ending March 31, 2013;

“FOR” the approval of the Merger Agreement and the transactions contemplated thereby, including the merger; and

“FOR” adjournment of the Meeting, if necessary, to solicit additional proxies in favor of the proposal to approval the Merger Agreement.

You should read “Proposal 3 The Merger-Blackwater's Reasons for the Merger; Recommendation of the Blackwater Board” beginning on page 48.

In considering the recommendation of the Blackwater Board with respect to the Merger Agreement and the transactions contemplated thereby, including the merger, you should be aware that some of Blackwater’s directors and executive officers have interests in the merger that are different from, or in addition to, the interests of Blackwater stockholders generally. See “Proposal 3 The Merger - Interests of Blackwater’s Executive Officers and Directors in the Merger” beginning on page 53.

 

 

Q:	How will our directors and executive officers vote on the proposal to approve the Merger Agreement?

A:

Each member of the Blackwater Board and each of Blackwater’s executive officers have entered into a voting agreement (the “Voting Agreement”) with the Parent which provides that all signatories thereto agree to vote all of their Blackwater shares in favor of the Merger Agreement.  Collectively, these stockholders currently hold approximately 22.62% of Blackwater’s outstanding shares of common stock.

Q:	Am I entitled to exercise the rights of dissenting stockholders instead of receiving the Merger Consideration?

A:

Yes.  Stockholders of Company common stock who do not vote in favor of approval of the Merger Agreement will have the right to receive the fair value of their shares of Company common stock in lieu of receiving the Merger Consideration if the merger closes, but only if they properly demand, perfect and do not withdraw their rights of dissenting stockholders under Nevada law.

Q:	How do I cast my vote if I am a holder of record?

A:

If you are a holder of record on August 20, 2012, you may vote in person at the Meeting or by submitting a proxy for the Meeting.  You can submit your proxy by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed, postage-paid envelope.  Holders of record may also vote by telephone or the Internet by following the instructions of the proxy card.

 

Q:	If my Blackwater shares are held in “street name” by my broker or other nominee, will my broker or other nominee vote my units without instructions from me?

A:

No. Your broker will not be able to vote your Blackwater shares without instructions from you. Please follow the procedure your broker provides to vote your shares.  If you do not provide your broker, dealer, commercial bank or trust company or other nominee instructions on how to vote your shares, your shares of Company common stock will not be voted, which will have no impact on the votes to ratify the appointment of MaloneBailey, LLP, to adjourn the Meeting, if necessary, to solicit additional proxies in favor of the Merger Agreement, or in the election of directors, except to the extent that the failure to vote for any individual may result in another individual receiving a larger proportion of the vote.  However, any of your shares which are not voted by your broker or other nominee in favor of the Merger Agreement will have the same effect as voting “AGAINST” the proposal to approve the Merger Agreement.

Q:	If I am planning on attending the Meeting in person, should I still submit a proxy?

A:

Yes. Whether or not you plan to attend the Meeting, you should submit a proxy.  Your shares will not be voted if you do not submit a proxy and then do not vote in person at the Meeting.  Failure to submit a proxy or to vote in person in favor of the approval of the Merger Agreement and the transactions contemplated thereby will be the equivalent of a vote against such proposal.  Failure to submit a proxy or to vote in person will have no effect with respect to the ratification of MaloneBailey, LLP or the proposal to adjourn the Meeting.  Likewise, failure to submit a proxy or to vote in person will have no effect with respect to the election of directors, except to the extent that the failure to vote for any individual may result in another individual receiving a larger proportion of the vote.

Q:	What do I do if I want to change my vote after I have delivered my proxy card?

A:

You may change your vote at any time before your Company shares are voted at the Meeting.  You can do this by sending a written notice to the Secretary of Blackwater in time to be received before the Meeting stating that you revoke your proxy; by submitting a later dated proxy by mail or telephone or the internet, in which case your later-submitted proxy will be recorded and your earlier proxy revoked; or by attending the Meeting in person and voting.  If your shares are held in an account at a broker or other nominee, you should contact your broker or other nominee to change your vote.

Q:	What should I do if I receive more than one set of voting materials for the Meeting?

A:

You may receive more than one set of voting materials for the Meeting and the materials may include multiple proxy cards or voting instruction cards.  For example, you will receive a separate voting instruction card for each brokerage account in which you hold shares.  If you are a holder of record registered in more than one name, you will receive more than one proxy card.  Please complete, sign, date and return each proxy card and voting instruction card that you receive according to the instructions on it to ensure that all of your shares are voted.

 

 

Q:	What happens if the merger is not completed?

A:

If the Merger Agreement is not approved by our stockholders, or if the merger is not completed for any other reason, our stockholders will not receive payment for their Company common stock pursuant to the Merger Agreement.  Instead we will remain a public company.  Under specified circumstances, we may be required to pay Parent a termination fee or reimburse Parent for expenses or Parent may be required to pay a reverse termination fee.  See “The Merger Agreement –Termination Fee; Expenses” beginning on page 83.

Q:	When is the merger expected to be completed?

A:

We are working to complete the merger as quickly as possible.  We currently expect the transaction to close during the fourth quarter of fiscal year 2012.  We cannot predict the exact timing of the merger.  In order to complete the merger, we must first obtain stockholder approval and satisfy other closing conditions under the Merger Agreement.  In the event the transaction has not closed by November 30, 2012, any party to the merger may terminate the agreement, provided that party’s breach of its obligations under the Merger Agreement has not caused the failure to close.

Q:	Who can help answer my questions?

A:

If you have any questions about the merger or how to submit your proxy, or if you need additional copies of this proxy statement or the enclosed proxy card, you should contact Donald St. Pierre, CFO, Blackwater Midstream Corp., 660 LaBauve Drive, Westwego, LA 70094 or by telephone at (504) 340-3000.

Name of Beneficial Owner		Number of Shares Beneficially Owned (1)				Percentage Ownership
Michael D. Suder, CEO & Director		3,839,451		(2)		6.70%
Donald St. Pierre, CFO			800,453			1.42%
Dale T. Chatagnier, COO			1,510,150			2.67%
Francis (Frank) Marrocco, CCO			1,513,887			2.68%
Mathijs van Houweninge, Former Director			1,561,654			2.77%
Christopher A. Wilson, Former Officer and Director			612,625	(3)		1.08%
Herbert N. Whitney, Director			472,709			0.84%
Philip Oliver Tracy, Director			3,525,000	(4)		6.20%
William Weidner, III, Director			1,429,500			2.53%
William Gore, Director			1,380,750	(5)		2.43%
Douglas Wu, Stockholder			4,806,000			8.50%
All executive officers, directors and 5% beneficial owner as a group (11 persons)			21,452,179			36.89%

(1)

Beneficial ownership is determined in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”).  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 held by that person that are currently exercisable or exercisable within 60 days of August 20, 2012 are deemed outstanding.  Such shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person. Except as indicated in the footnotes to the following table or pursuant to applicable community property laws, each stockholder named in the table has sole voting and investment power with respect to the shares set forth opposite such stockholder’s name.  The percentage of beneficial ownership is based on 58,052,068 shares of Common Stock outstanding as of August 20, 2012, which includes potential common shares from conversions and exercise of options.

(2)	Includes (i) 3,033,569 shares of common stock, (ii) options to purchase 705,882 shares of common stock, and (iii) the ability to convert loans at $0.50 per share into 100,000 shares of common stock.

(3)	Includes (i) 592,625 shares of common stock (which is shown net of 60,000 shares of common stock that Mr. Wilson donated in December 2010), (ii) options to purchase 20,000 shares of common stock.

(4)	Includes (i) 3,125,000 shares of common stock, and (ii) the ability to convert loans at $0.50 per share into 400,000 shares of common stock.

(5)	Includes (i) 930,750 shares of common stock, and (ii) the ability to convert loans at $0.50 per share into 450,000 shares of common stock.

 

Name		Age		Office
Michael D. Suder		58		Chief Executive Officer and Director
Donald St. Pierre		56		Chief Financial Officer
Dale T. Chatagnier		50		Chief Operating Officer and Secretary
Francis A. Marrocco		50		Chief Commercial Officer

 

 

 

 

 

 

(1)	Bonuses were paid to our named executive officers during the fiscal year ended March 31, 2010 in the amount of $120,000, $89,667 was paid in the fiscal year ended March 31, 2011 and $175,000 was paid in the fiscal year ended March 31, 2012.

(2)	Mr. Suder’s and Mr. Chatagnier’s employment began May 2008.  Mr. St. Pierre’s and Mr. Marrocco’s employment began in June 2008.

(3)

For each, Mr. Suder, Mr. Chatagnier and Mr. Marrocco, includes 43,465 shares of restricted common stock granted on September 1, 2010 valued at $0.30 per share as of such date and 15,000 shares of restricted common stock granted on November 19, 2010 valued at $0.63 per share as of such date; both with a vesting date of January 1, 2012.  Includes 74,500 shares of restricted common stock granted on June 11, 2011 valued at $0.60 per share as of such date with a vesting date of January 1, 2015.  On December 1, 2011, the Board of Directors of the Company amended all of the restricted share grants with a revised vesting date of January 1, 2012 wherein, the vesting dates were changed to be January 1, 2015.

(4)

Includes $32,500 in compensation paid to Mr. Suder during the year ended March 31, 2010 for his services as a member of the Board of Directors; and includes $6,000 in compensation paid to Mr. Suder during the year ended March 31, 2011 and $17,000 in compensation paid during the year ended March 31, 2012 for his services as a member of the Board of Directors.

 

 

(5)

For Mr. St. Pierre, includes 43,465 shares of restricted common stock granted on September 1, 2010 valued at $0.30 per share as of such date and 9,125 shares of restricted common stock granted on November 19, 2010 valued at $0.63 per share as of such date; both with a vesting date of January 1, 2012.  Includes 74,500 shares of restricted common stock granted on June 11, 2011 valued at $0.60 per share as of such date with a vesting date of January 1, 2015.  On December 1, 2011, the Board of Directors of the Company amended all of the restricted share grants with a revised vesting date of January 1, 2012 wherein, the vesting dates were changed to be January 1, 2015.

		Option Awards																				Stock Awards
Name		Number of Securities Underlying Unexercised Options  (#) Exercisable				Number of Securities Underlying Unexercised Options (#) unexercisable				Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)				Option Exercise Price ($)				Option Expiration Date				Number  of Shares or Units of Stock  That Have Not Vested (#)				Market Value of Shares or Units of Stock That Have Not Vested ($)				Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)				Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
Michael D. Suder			0				0			705,882		(1)		$	0.17			5/4/2019					0				0			2,935,553		(2)		1,521,920
Donald St. Pierre			0				0				0				0				0				0				0			777,090		(3)		161,988
Dale T. Chatagnier			0				0				0				0				0				0				0			1,483,828		(4)		601,539
Francis Marrocco			0				0				0				0				0				0				0			1,483,828		(5)		742,142

(1)

Such options are fully vested and are exercisable at $0.17 per share, the closing price of the common stock on April 1, 2009, the date that such options were issued.  Mr. Suder received this compensation as a director as well as for his services as an executive officer of the Company during the fiscal year ending March 31, 2009.

(2)

Includes (i) 480,690 shares of restricted common stock granted on May 7, 2008 at $2.00 per share as of such date; (ii) 1,321,898 shares of restricted common stock granted on January 1, 2009, valued at $0.29 per share as of such date; (iii) 1,000,000 shares of restricted common stock granted on March 2, 2009, valued at $0.11 per share as of such date; (iv) 43,465 shares of restricted common stock granted on September 1, 2010, valued at $0.30 per share as of such date; and (v) 15,000 shares of restricted common stock granted on November 19, 2010, valued at $0.63 per share as of such date.  The shares referenced in items “i”, “ii”, “iii” “iv” and “v” immediately preceding, all vest according to the revised vesting date of January 1, 2012, and only if Mr. Suder is employed by the Company on such date.  Includes 74,500 shares of restricted common stock granted on June 11, 2011 valued at $0.60 per share as of such date with a vesting date of January 1, 2015.  On December 1, 2011, the Board of Directors of the Company amended all of the restricted share grants with a revised vesting date of January 1, 2012 wherein, the vesting dates were changed to be January 1, 2015.

 

 

(3)

Includes (i) 150,000 shares of restricted common stock granted on January 1, 2009, valued at $0.29 per share as of such date; (ii) 500,000 shares of restricted common stock granted on March 2, 2009, valued at $0.11 per share as of such date; (iii) 43,465 shares of restricted common stock granted on September 1, 2010, valued at $0.30 per share as of such date; and (iv) 9,125 shares of restricted common stock granted on November 19, 2010, valued at $0.63 per share as of such date.  The shares referenced in items “i”, “ii”, ”iii” and “iv” immediately preceding, all vest according to the revised vesting date of January 1, 2012, and only if Mr. St. Pierre is employed by the Company on such date.  Includes 74,500 shares of restricted common stock granted on June 11, 2011 valued at $0.60 per share as of such date with a vesting date of January 1, 2015.  On December 1, 2011, the Board of Directors of the Company amended all of the restricted share grants with a revised vesting date of January 1, 2012 wherein, the vesting dates were changed to be January 1, 2015.

(4)

Includes (i) 120,173 shares of restricted common stock granted on May 14, 2008, valued at $2.60 per share as of such date and; (ii) 480,690 shares of restricted common stock granted on January 1, 2009, valued at $0.29 per share as of such date; (iii) 750,000 shares of restricted common stock granted on March 2, 2009, valued at $0.11 per share on such date; (iv) 43,465 shares of restricted common stock granted on September 1, 2010, valued at $0.30 per share as of such date; and (v) 15,000 shares of restricted common stock granted on November 19, 2010, valued at $0.63 per share as of such date.  The shares referenced in items “i”, “ii”, “iii”, “iv” and “v” immediately preceding, all vest according to the revised vesting date of January 1, 2012, and only if Mr. Chatagnier is employed by the Company on such date.  Includes 74,500 shares of restricted common stock granted on June 11, 2011 valued at $0.60 per share as of such date with a vesting date of January 1, 2015.  On December 1, 2011, the Board of Directors of the Company amended all of the restricted share grants with a revised vesting date of January 1, 2012 wherein, the vesting dates were changed to be January 1, 2015.

(5)

Includes (i) 120,173 shares of restricted common stock granted on June 1, 2008, valued at $3.77 per share as of such date; (ii) 480,690 shares of restricted common stock granted on January 1, 2009, valued at $0.29 per share as of such date; (iii) 750,000 shares of restricted common stock granted on March 2, 2009, valued at $0.11 per share as of such date; (iv) 43,465 shares of restricted common stock granted on September 1, 2010, valued at $0.30 per share as of such date; and (v) 15,000 shares of restricted common stock granted on November 19, 2010, valued at $0.63 per share as of such date.  The shares referenced in items “i”, “ii”, “iii”, “iv” and “v” immediately preceding, all vest according to the revised vesting date of January 1, 2012, and only if Mr. Marrocco is employed by the Company on such date.  Includes 74,500 shares of restricted common stock granted on June 11, 2011 valued at $0.60 per share as of such date with a vesting date of January 1, 2015.  On December 1, 2011, the Board of Directors of the Company amended all of the restricted share grants with a revised vesting date of January 1, 2012 wherein, the vesting dates were changed to be January 1, 2015.

 

 

 

	Cash Severance
Michael D. Suder	Up to $150,000
Dale T. Chatagnier	Up to $112,500
Francis Marrocco	Up to $118,750

		Value of Equity Awards: Termination Without Cause or For Good Reason (1)				Value of Equity Awards: In Connection With a Change in Control
Michael D. Suder			$2,221,275	(2)			$2,221,275
Dale T. Chatagnier			$905,135	(3)			$905,135
Francis Marrocco			$905,135	(3)			$905,135

(1)	The market price of our common stock on the OTCBB on July 20, 2012 was $0.61 per share

(2)	Includes 2,935,553 shares of unvested restricted common stock and, unexercised options to purchase 705,882 shares of common stock.

(3)	Includes 1,483,828 shares of unvested restricted common stock.

 

A)

Up to $60,000 in value of shares of the Company’s common stock at the grant date with immediate vesting, or

B)

Stock options equal to double the number of shares of stock equal to $60,000 at the grant date, with immediate vesting.

 

 

 

 

 

 

Name				Fees Earned or Paid in Cash ($)				Stock Awards ($)				Options Awards ($)				Non-equity incentive plan compensation ($)				Nonqualified deferred compensation earnings ($)				All Other Compensation ($)				Total ($)
Christopher A Wilson		2011		$	7,000			$	13,039			$	0				0				0				0			$	20,039
		2012		$	0			$	0			$	0				0				0				0			$	0
Mathijs van Houweninge		2011		$	6,500			$	13,039			$	0				0				0				0			$	19,539
		2012		$	0			$	0			$	0				0				0				0			$	0
Michael D. Suder		2011		$	6,000			$	0			$	0				0				0				0			$	6,000
		2012		$	17,000			$	0			$	0				0				0				0			$	17,000
Herbert N. Whitney		2011		$	7,000			$	13,039			$	0				0				0				0			$	20,039
		2012		$	17,000			$	0			$	0				0				0				0			$	17,000
Philip O. Tracy		2011		$	0			$	0			$	0				0				0				0			$	0
		2012		$	17,000			$	0			$	0				0				0				0			$	17,000
William Gore (1)		2011		$	0			$	0			$	0				0				0				0			$	0
		2012		$	17,000			$	0			$	0				0				0				0			$	17,000
William Weidner		2011		$	0			$	0			$	0				0				0				0			$	0
		2012		$	17,000			$	0			$	0				0				0				0			$	17,000

(1)	Does not include fees paid to PMC Advisers, LTD for consulting services in March 2012 in the amount of $14,341.  Mr. Gore is an owner of PMC Advisers, LTD.

 

OFFERING		INVESTOR		AMOUNT				RELATIONSHIP
September 2009		Frances Suder, transferred to Michael Suder		$	50,000			Mother (deceased) to Michael Suder, CEO & Director
September 2009		Jonathan Suder			100,000			Brother to Michael Suder, CEO & Director
September 2009		Nicolle Suder			30,000			Sister to Michael Suder, CEO & Director
September 2009		Philip Tracy (1)			100,000			Member of the Company’s Board of Directors since June 2011
September 2009		William Gore (1)			150,000			Member of the Company’s Board of Directors since June 2011
January 2010		Isaac Suder, transferred to Jonathan Suder			50,000			Father (deceased) of Michael Suder, CEO & Director
January 2010		Nicolle Suder			20,000			Sister to Michael Suder, CEO & Director
January 2010		Philip Tracy (1)			100,000			Member of the Company’s Board of Directors since June 2011
January 2010		William Gore (1)			75,000			Member of the Company’s Board of Directors since June 2011
		TOTAL		$	675,000

(1)

Philip Tracy and William Gore were not related parties at the time of the convertible debt offerings, but were appointed to the Company’s Board of Directors in June 2011 and were elected to serve on the Company’s Board of Directors by the stockholders at the Company’s annual meeting on September, 12, 2011.

 

 

		MaloneBailey, LLP, Fiscal Year- Ended March 31, 2012					MaloneBailey, LLP, Fiscal Year- Ended March 31, 2011
Audit Fees		$	62,000				$	69,000
Audit-Related Fees			0					0
Tax Fees			0					0
All Other Fees			4,982					0
Total		$	66,982				$	69,000

 

·

any services prohibited by applicable law or by any rule or regulation of the SEC or other regulatory body applicable to the Company;

·

provision by the independent auditors to the Company of strategic consulting services of the type typically provided by management consulting firms; or

·

the retention of the independent auditors in connection with a transaction initially recommended by the independent auditors, the tax treatment of which may not be clear under the Internal Revenue Code and related regulations and which it is reasonable to conclude will be subject to audit procedures during an audit of the Company’s financial statements.

·

whether the service creates a mutual or conflicting interest between the auditor and the Company;

·

whether the service places the auditor in the position of auditing his or her own work;

·

whether the service results in the auditor acting as management or an employee of the Company; and

·

whether the service places the auditor in a position of being an advocate for the Company.

 

Blackwater stockholders are being asked to vote on the following proposals:

1.

Election of five members of the board of directors;

2.

Ratification of the appointment of MaloneBailey, LLP as the independent auditors of the Company for the fiscal year ending March 31, 2013;

3.

Approval of the Merger Agreement (attached as Annex A to this document) and the transactions contemplated thereby, including the merger;

4.

Adjournment of the Meeting, if necessary, to solicit additional proxies in favor of the proposal to approve the Merger Agreement; and

5.

To consider and take action upon such other matters as may properly come before the meeting.

 

 

 

·

timely delivery of a valid, later- dated proxy or timely submission of a later- dated proxy by telephone or internet;

·

written notice to the secretary of Blackwater before the Meeting that you have revoked your proxy; or

·

voting at the Meeting.

 

 

Name	Age	Director Since
Michael D. Suder  (1)	58	May 7, 2008
Herbert N. Whitney  (1) (2) (3)	71	June 14, 2011
Philip Oliver Tracy  (1) (2) (3)	62	June 14, 2011
William Weidner, III  (1) (2) (3)	61	June 14, 2011
William Gore  (1) (2) (3)	68	June 14, 2011