UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 SCHEDULE 14A (RULE 14a-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) Filed by the Registrant |X| Filed by a Party other than the Registrant | | Check the appropriate box: | | Preliminary Proxy Statement | | Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |X| Definitive Proxy Statement | | Definitive Additional Materials | | Soliciting Material Pursuant to ss. 240.14a-12 NEW CENTURY EQUITY HOLDINGS CORP. ------------------------------------------------ (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): |X| No fee required. | | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. (i) Title of each class of securities to which transaction applies - -------------------------------------------------------------------------------- (ii) Aggregate number of securities to which transaction applies: - --------------------------------------------------------------------------------(iii) 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): - -------------------------------------------------------------------------------- (iv) Proposed maximum aggregate value of transaction: - -------------------------------------------------------------------------------- (v) Total fee paid | | Fee paid previously with preliminary materials. | | 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. (1) Amount previously paid: - -------------------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: - -------------------------------------------------------------------------------- (3) Filing Party: - -------------------------------------------------------------------------------- (4) Date Filed: - -------------------------------------------------------------------------------- NEW CENTURY EQUITY HOLDINGS April 30, 2007 Dear Stockholder: You are cordially invited to attend the 2007 Annual Meeting of Stockholders (the "Annual Meeting") of New Century Equity Holdings Corp. (the "Company"). The Annual Meeting will be held on June 6, 2007, at 10:00 a.m. local time, at the Company's offices located at 200 Crescent Court, Suite 1400, Dallas, Texas, or at any adjournment or postponement thereof. This year, you are being asked to act upon (i) the election of one (1) director to serve until the 2009 Annual Meeting of Stockholders and until his successor is duly elected and qualified and two (2) directors to serve until the 2010 Annual Meeting of Stockholders and until their respective successors are duly elected and qualified, (ii) the ratification of the appointment of Burton McCumber & Cortez, L.L.P. as our independent accountants for fiscal 2007 and (iii) any other matter that may properly come before the Annual Meeting or any adjournment or postponement thereof. These matters are discussed in greater detail in the attached Notice of Annual Meeting of Stockholders and Proxy Statement. REGARDLESS OF THE NUMBER OF SHARES YOU OWN AND WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE ENVELOPE PROVIDED. RETURNING THE PROXY CARD WILL NOT DEPRIVE YOU OF YOUR RIGHT TO ATTEND THE MEETING AND VOTE YOUR SHARES IN PERSON. IF YOU ATTEND THE MEETING, YOU MAY WITHDRAW YOUR PROXY AND VOTE YOUR OWN SHARES. On behalf of the Board of Directors, I would like to express our appreciation for your continued interest in our Company. We look forward to seeing you at the Annual Meeting. Sincerely, /S/ Mark E. Schwarz - ---------------------- Mark E. Schwarz CHAIRMAN OF THE BOARD NEW CENTURY EQUITY HOLDINGS CORP. 200 CRESCENT COURT, SUITE 1400 DALLAS, TEXAS 75201 (214) 661-7488 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS NOTICE IS HEREBY GIVEN that the 2007 Annual Meeting of Stockholders (the "Annual Meeting") of New Century Equity Holdings Corp. (the "Company") will be held on June 6, 2007, at 10:00 a.m., local time, at the Company's offices located at 200 Crescent Court, Suite 1400, Dallas, Texas, or at any adjournment or postponement thereof to consider and vote on the following matters described in the accompanying Proxy Statement: 1. To elect one (1) director to hold office until the 2009 Annual Meeting of Stockholders and until his successor is duly elected and qualified and two (2) directors to hold office until the 2010 Annual Meeting of Stockholders and until his successor is duly elected and qualified; 2. To ratify the appointment of Burton McCumber & Cortez, L.L.P. as the Company's independent public accountants for fiscal 2007; and 3. To act upon any other matter that may properly come before the Annual Meeting or any adjournment thereof. The Board of Directors of the Company is presently unaware of any other business to be presented to a vote of the stockholders at the Annual Meeting or any adjournment or postponement thereof. The Board of Directors of the Company has fixed the close of business on April 23, 2007 as the record date (the "Record Date") for determining stockholders entitled to notice of and to vote at the Annual Meeting. A complete list of the stockholders entitled to vote at the Annual Meeting will be maintained and available for inspection at the Company's principal executive offices at 200 Crescent Court, Suite 1400, Dallas, Texas 75201 during ordinary business hours for a period of ten (10) days prior to the Annual Meeting. The list will be open for the examination by any stockholder for any purpose germane to the Annual Meeting during this time. The list will be produced at the time and place of the Annual Meeting and will be open during the whole time thereof. IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING. WE URGE YOU TO PROMPTLY SIGN, DATE AND RETURN THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE. ANY STOCKHOLDER GIVING A PROXY MAY REVOKE IT AT ANY TIME BEFORE THE PROXY IS VOTED BY GIVING WRITTEN NOTICE OF REVOCATION TO THE SECRETARY OF THE COMPANY, BY SUBMITTING A LATER-DATED PROXY, OR BY ATTENDING THE ANNUAL MEETING AND VOTING IN PERSON. By Order of the Board of Directors /s/ Steven J. Pully ----------------------------------- Steven J. Pully CHIEF EXECUTIVE OFFICER Dated: April 30, 2007 WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, YOU ARE URGED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE THAT IS PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES OF AMERICA. 2 NEW CENTURY EQUITY HOLDINGS CORP. 200 CRESCENT COURT, SUITE 1400 DALLAS, TEXAS 75201 ---------------------------------------- PROXY STATEMENT ----------------------------------------- INTRODUCTION This Proxy Statement is being provided to the stockholders of New Century Equity Holdings Corp., a Delaware corporation (the "Company", "we," "our" or "us"), in connection with the solicitation of proxies by the Board of Directors for use at the 2007 Annual Meeting of Stockholders or any adjournment thereof (the "Annual Meeting") to be held on June 6, 2007, at 10:00 a.m., local time, at the Company's offices located at 200 Crescent Court, Suite 1400, Dallas, Texas, or at any adjournment or postponement thereof, for the purposes set forth in the foregoing Notice of Annual Meeting of Stockholders. Properly executed proxies received in time for the Annual Meeting will be voted. At the Annual Meeting, stockholders will be asked to act upon (i) the election of one (1) director to serve until the 2009 Annual Meeting of Stockholders and until his successor has been elected and qualified and two (2) directors to serve until the 2010 Annual Meeting of Stockholders and until their respective successors have been elected and qualified, (ii) the ratification of the appointment of Burton McCumber & Cortez, L.L.P. as our independent public accountants for fiscal 2007 and (iii) any other matter that may properly come before the Annual Meeting or any adjournment or postponement thereof. The mailing address of the Company's principal executive offices is 200 Crescent Court, Suite 1400, Dallas, Texas 75201. THE ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2006 IS BEING FURNISHED WITH THIS PROXY STATEMENT AND PROXY CARD, WHICH ARE BEING MAILED ON OR ABOUT MAY 1, 2007 TO THE HOLDERS OF RECORD OF SHARES OF COMMON STOCK, $.01 PAR VALUE, OF THE COMPANY (THE "COMMON STOCK"), ON THE RECORD DATE (AS DEFINED BELOW). THE ANNUAL REPORT ON FORM 10-K DOES NOT CONSTITUTE A PART OF THIS PROXY STATEMENT. RECORD DATE AND VOTING SECURITIES The securities of the Company entitled to vote at the Annual Meeting consist of shares of Common Stock. At the close of business on April 23, 2007, the record date for determining stockholders entitled to notice of and to vote at the Annual Meeting (the "Record Date"), there were 53,883,872 outstanding shares of Common Stock. QUORUM AND VOTING REQUIREMENTS A majority of the outstanding shares of Common Stock entitled to vote as of the Record Date must be present in person or represented by proxy at the Annual Meeting in order to hold the meeting and conduct business. This presence is called a quorum. Your shares will be counted as present at the Annual Meeting if you are present and vote in person at the Annual Meeting or if you have 1 properly submitted a proxy card. Abstentions and broker non-votes (which are described below) will be considered to be shares present at the Annual Meeting for purposes of a quorum. The holders of record of Common Stock (the "Common Stockholders") on the Record Date will be entitled to one (1) vote per share. ABSTENTIONS AND BROKER NON-VOTES The effect of abstentions (i.e., if you or your broker marks "ABSTAIN" on a proxy card) and broker non-votes on the counting of votes for each proposal is described below. Broker non-votes occur when shares held by a broker for a beneficial owner are not voted with respect to a particular proposal because (1) the broker does not receive voting instructions from the beneficial owner, and (2) the broker lacks discretionary authority to vote the shares. Banks and brokers cannot vote on their clients' behalf on "non-routine" proposals. For purposes of determining broker non-votes, proposals (i) and (ii) described above are considered routine proposals. For the purpose of determining whether stockholders have approved a matter, abstentions are treated as shares present or represented and voting. Broker non-votes are not counted or deemed to be present or represented for the purpose of determining whether stockholders have approved a matter, though they are counted toward the presence of a quorum as discussed above. REQUIRED VOTES The Common Stockholders are entitled to elect three (3) directors at the Annual Meeting. A plurality of the total votes cast by the stockholders entitled to vote is required for the election of such directors, meaning that the three nominees who receive the most votes will be elected. Holders of Common Stock shall be entitled to one (1) vote per share on the election of such directors. For the ratification of the appointment of the public accountants to be approved, the favorable vote of a majority of shares present and entitled to vote thereon is required. Abstentions count for quorum purposes and will have the same effect as a vote against the proposal to ratify the appointment of the auditors. VOTING OF PROXIES Stockholders whose shares are registered in their own names may vote by mailing a completed Proxy Card. To vote by mailing a Proxy Card, please complete, date and sign the accompanying Proxy Card and promptly return it in the enclosed envelope or otherwise mail it to the Company. Properly executed Proxy Cards received in time for the Annual Meeting will be voted. Stockholders are urged to specify their choices on the Proxy Card, but if no choice is specified, eligible shares will be voted FOR the election of the director nominees named in this Proxy Statement and FOR the ratification of the appointment of Burton McCumber & Cortez, L.L.P. as our independent public accountants for fiscal 2007. As of the date of this Proxy Statement, management of the Company knows of no other matters that are likely to be brought before the Annual Meeting. However, if any other matters should properly come before the Annual Meeting, the persons named in the enclosed Proxy Card will have discretionary authority to vote such Proxy Card in accordance with their best judgment on such matters. Any stockholder giving a proxy may revoke it at any time before the proxy is voted by giving written notice of revocation to the Secretary of the Company, by submitting a later-dated proxy, or by attending the Annual Meeting and voting in person. 2 ATTENDANCE AT THE ANNUAL MEETING If your shares are held by a bank, broker or other intermediary and you plan to attend the Annual Meeting, please send written notification to New Century Equity Holdings Corp., 200 Crescent Court, Suite 1400, Dallas, Texas 75201 and enclose evidence of your ownership (such as a letter from the bank, broker or intermediary confirming your ownership or a bank or brokerage firm account statement). The names of all those planning to attend will be placed on an admission list held at the registration desk at the entrance to the meeting. RIGHTS OF FORMER PREFERRED STOCKHOLDERS Newcastle Partners, L.P. ("Newcastle") previously owned 4.8 million shares of Series A Convertible Preferred Stock (the "Series A Preferred Stock"), which it acquired from the Company for $5.0 million in June 2004 (the "Newcastle Transaction"). The Certificate of Designations of the Series A Preferred Stock provides that, so long as any shares of Series A Preferred Stock remain outstanding, among other things, (1) the Company's Board of Directors is prohibited from exceeding four members, and (2) the holders of the Series A Preferred Stock have the right to elect two directors to the Company's Board of Directors. Newcastle converted all of the Series A Preferred Stock into Common Stock on July 3, 2006 and accordingly no longer has any special voting rights or privileges in respect of the election of directors to the Board of Directors or other matters that are subject to a vote of the Company's stockholders. 3 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information known to the Company with respect to beneficial ownership as of the Record Date of the Company's voting securities by (i) all persons who are beneficial owners of five percent (5%) or more of the Company's voting securities, (ii) each director of the Company, (iii) the Named Executive Officers, and (iv) all directors and executive officers as a group. As of the Record Date, 53,883,872 shares of the Common Stock were outstanding. For purposes of this Proxy Statement, beneficial ownership is defined in accordance with the rules of the SEC. The persons listed have sole voting power and sole dispositive power with respect to all shares set forth in the table unless otherwise specified in the footnotes to the table. Unless otherwise indicated, the address of each beneficial owner listed in the table is c/o New Century Equity Holdings Corp., 200 Crescent Court, Suite 1400, Dallas, Texas 75201. Information with respect to beneficial ownership of the persons and entities named in the table below is based upon information furnished by them to the Company or contained in filings made with the SEC. Common Stock --------------------------- Name of Beneficial Owner Shares %(1) - ------------------------------------ ------------- ----- 5% SECURITY HOLDERS Newcastle Partners, L.P. 19,380,768(2) 36.0% NAMED EXECUTIVE OFFICERS AND DIRECTORS Mark E. Schwarz 19,480,768(3) 36.1% Steven J. Pully 150,000(4) * John Murray 50,000(5) * James Risher 90,000(6) * 1900 Eastwood Road, Suite 11 Wilmington, NC 28403 Jonathan Bren 0 0% 767 5th Avenue, 23rd Floor New York, NY 10153 All directors and executive officers as a group (five persons) 19,770,768(7) 36.4% - ------------------------- * Less than 1% 4 (1) Percentage ownership is based on 53,883,872 shares of Common Stock outstanding as of the Record Date. With the exception of shares that may be acquired by employees pursuant to the Company's 401(k) retirement plan, a person is deemed to be the beneficial owner of Common Stock that can be acquired within 60 days after the Record Date upon exercise of options. Each beneficial owner's percentage ownership of Common Stock is determined by assuming that options that are held by such person, but not those held by any other person, and that are exercisable or convertible within 60 days of the Record Date have been exercised or converted. (2) Represents securities held by Newcastle as disclosed in a Schedule 13D/A filed by Newcastle with the SEC on April 10, 2006, including 19,230,768 shares of Common Stock issued by the Company upon conversion of 4,807,692 shares of Series A Convertible Preferred Stock on July 3, 2006. Newcastle Capital Management, L.P. ("Newcastle Management") as the general partner of Newcastle, may be deemed to beneficially own the securities beneficially owned by Newcastle. Newcastle Capital Group, L.L.C. ("Newcastle Capital"), as the general partner of Newcastle Management, which in turn is the general partner of Newcastle, may be deemed to beneficially own the securities beneficially owned by Newcastle. Mark E. Schwarz, as the managing member of Newcastle Capital, the general partner of Newcastle Management, which in turn is the general partner of Newcastle, may also be deemed to beneficially own the securities beneficially owned by Newcastle. Each of Newcastle Management, Newcastle Capital and Mr. Schwarz disclaims beneficial ownership of the securities beneficially owned by Newcastle except to the extent of their pecuniary interest therein. (3) Consists of 100,000 shares of Common Stock issuable upon the exercise of options within 60 days of the Record Date and the 19,380,768 shares of Common Stock beneficially owned by Newcastle of which Mr. Schwarz may also be deemed to beneficially own by virtue of his power to vote and dispose of such shares. Mr. Schwarz disclaims beneficial ownership of the 19,380,768 shares of Common Stock beneficially owned by Newcastle except to the extent of his pecuniary interest therein. (4) Consists of shares of Common Stock issuable upon the exercise of options within 60 days of the Record Date. Mr. Pully is the President of Newcastle Management. Mr. Pully disclaims beneficial ownership of the 19,380,768 shares of Common Stock beneficially owned by Newcastle. (5) Consists of shares of Common Stock issuable upon the exercise of options within 60 days of the Record Date. Mr. Murray is the Chief Financial Officer of Newcastle Management. Mr. Murray disclaims beneficial ownership of the 19,380,768 shares of Common Stock beneficially owned by Newcastle. (6) Consists of shares of Common Stock issuable upon the exercise of options within 60 days of the Record Date. (7) Consists of securities beneficially owned by the directors and executive officers named in the security ownership table. 5 PROPOSAL 1 ELECTION OF DIRECTORS There are currently four (4) directors serving on the Board of Directors consisting of (i) Mark E. Schwarz and Steven J. Pully, representatives of the former holder of the Series A Preferred Stock, and (ii) James Risher and Jonathan Bren, both independent directors. The Amended and Restated Certificate of Incorporation of the Company (the "Charter") and the Amended and Restated By-Laws of the Company (the "By-Laws") provide that the directors, other than those who may be elected by the holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation, shall be classified into three classes, as nearly equal in number as possible, serving staggered three-year terms. The Certificate of Designations of the Series A Preferred Stock provided holders with the contractual right to elect two directors to annual terms and limited the number of directors serving on the Board of Directors to a maximum of four. As a result of the conversion of all the shares of Series A Preferred Stock by Newcastle into Common Stock on July 3, 2006, the term of office of Messrs. Schwarz and Pully expires at the Annual Meeting. As a Class I director, Mr. Bren's term expires at the Annual Meeting. Mr. Risher is a Class II director whose term expires at the 2008 Annual Meeting of Stockholders and until his successor shall be duly elected and qualified. In order to comply with the requirement in the Charter and By-Laws that the directors be classified into three classes as nearly equal in number as possible, the Board of Directors has nominated (i) Mr. Pully as a Class III director who, if elected, shall serve for a term expiring at the 2009 Annual Meeting of Stockholders and until his successor has been duly elected and qualified and (ii) Messrs. Schwarz and Bren as Class I directors who, if elected, shall serve for a term expiring at the 2010 Annual Meeting of Stockholders and until their respective successors shall have been duly elected and qualified. Unless otherwise specified, all of the Proxies received will be voted in favor of the election of Messrs. Schwarz, Pully and Bren. Management has no reason to believe that any of the director nominees will be unable or unwilling to serve as directors, if elected. Should any of Messrs. Schwarz, Pully or Bren not remain a candidate for election at the date of the Annual Meeting, the Proxies may be voted for a substitute nominee or nominees selected by the Board of Directors. NOMINEES FOR ELECTION BY THE COMMON STOCKHOLDERS AT THE ANNUAL MEETING Position with Director Name Age Class Company Since ---- --- ----- ------- ----- Mark E. Schwarz 46 I Chairman of the Board June 2004 Steven J. Pully 47 III Director, Chief June 2004 Executive Officer and Secretary Jonathan Bren 46 I Director June 2005 6 There are no family relationships between any two directors or executive officers. MARK E. SCHWARZ has served as Chairman of the Board of the Company since June 18, 2004 as a result of the Newcastle Transaction. He has served as the general partner, directly or through entities which he controls, of Newcastle, a private investment firm, since 1993. Mr. Schwarz has served as Chairman of the Board of Hallmark Financial Services, Inc., a property and casualty insurance company, since October 2001 and was its Chief Executive Officer from January 2003 to August 2006. He currently serves as Chairman of the Boards of Bell Industries, Inc., a computer systems integrator, and Pizza Inn, Inc., a franchisor and food and supply distributor, and a director of (i) Nashua Corporation, a specialty paper, label and printing supplies manufacturer and (ii) SL Industries, Inc., a power and data quality products manufacturer. STEVEN J. PULLY has served as a director, Chief Executive Officer and Secretary of the Company since June 18, 2004 as a result of the Newcastle Transaction. Mr. Pully has served as the President of Newcastle Management, the general partner of Newcastle, since January 2003 and has been with Newcastle since December 2001. From 2003 to 2004, he also served as Chief Executive Officer of privately-held Pinnacle Frames and Accents, Inc., a domestic picture frame manufacturer. Prior to joining Newcastle Management, from 2000 to 2001, Mr. Pully served as a managing director in the investment banking department of Banc of America Securities, Inc. and from 1997 to 2000 he was a member of the investment banking department of Bear Stearns where he became a senior managing director in 1999. Mr. Pully is a director of Pizza Inn, Inc., a franchisor and operator of pizza restaurants. Mr. Pully is a CPA, a member of the Texas Bar and is also a CFA charterholder. JONATHAN BREN serves as the Global Managing Partner of Bren Ventures L.L.C., an entity he formed in January of 2005 to make strategic investments in early stage hedge fund managers. From July 1998 to December 2004, Mr. Bren was a partner of Hunt Financial Ventures, L.P., which made strategic investments in early stage and emerging hedge fund managers and also made direct investments into other hedge fund operations. He also served as President of HFV Investments Inc., a broker dealer affiliated with Hunt Financial Ventures, L.P. During the fifteen years prior to joining Hunt Financial Ventures, L.P., Mr. Bren worked for a series of asset management, investment banking and merchant banking organizations. DIRECTOR WITH TERM EXPIRING AT 2008 ANNUAL MEETING OF STOCKHOLDERS: Position with Director Name Age Class Company Since ---- --- ----- ------- ----- James A. Risher 64 II Director June 2004 JAMES A. RISHER has served as a director of the Company since October 2004. Mr. Risher has been the Managing Partner of Lumina Group, LLC, a private company engaged in the business of consulting and investing in small 7 and mid-size companies, since 1998. Mr. Risher has served as the Chief Executive Officer and president of Del Global Technologies Corporation ("Del Global"), a leader in medical imaging and power electronics, since September 2006. Mr. Risher was appointed interim Chief Executive Officer of Del Global in August 2006. In addition, Mr. Risher has served as a director of Del Global since June 2004. From February 2001 to May 2002, Mr. Risher served as Chairman and Chief Executive Officer of BlueStar Battery Systems International, Inc. ("BlueStar"), a Canadian public company that is an e-commerce distributor of electrical and electronic products to selected automotive aftermarket segments and targeted industrial markets. From 1986 to 1998, Mr. Risher served as a director, Chief Executive Officer and President of Exide Electronics Group, Inc. ("Exide"), a global leader in the uninterruptible power supply industry. He also served as Chairman of Exide from December 1997 to July 1998. Mr. Risher currently serves as a director of SL Industries, Inc., a power and data quality products manufacturer. REQUIRED VOTE A plurality of the votes cast is required for the election of the Company's directors. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE DIRECTOR NOMINEES PROPOSAL II RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS The Board has selected Burton McCumber & Cortez, L.L.P. to serve as the Company's independent public accountants. Although it is not required to do so, the Board is submitting to stockholders for ratification the selection of Burton McCumber & Cortez, L.L.P. as the Company's independent public accountants for the year ending December 31, 2007. Such ratification of the selection of Burton McCumber & Cortez, L.L.P. will require the affirmative vote of the holders of a majority of the shares of Common Stock entitled to vote thereon and represented at the Annual Meeting. A representative of Burton McCumber & Cortez, L.L.P. will not be present at the Annual Meeting. Aggregate fees for professional services rendered to the Company by Burton McCumber & Cortez, L.L.P. for the years ended December 31, 2006 and December 31, 2005 were as follows: 2006 2005 ------- ------- Audit .................................. $96,672 $87,996 Audit Related .......................... 0 0 Tax .................................... 0 0 Other .................................. 0 0 ======= ======= Total ................................ $96,672 $87,996 8 AUDIT FEES The aggregate fees billed by Burton McCumber & Cortez, L.L.P. for professional services required for the audit of the Company's annual financial statements on Form 10-K and the review of the interim financial statements included in the Company's Forms 10-Q were $96,672 and $87,996 for fiscal years 2006 and 2005, respectively. AUDIT-RELATED FEES The Company did not engage or pay Burton McCumber & Cortez, L.L.P. for assurance and related services related to the performance of the audit of the Company's annual financial statements or the review of the interim financial statements included in the Company's Forms 10-Q for fiscal years 2006 and 2005. TAX FEES The Company did not engage or pay Burton McCumber & Cortez, L.L.P. for professional services relating to tax compliance, tax advice or tax planning in fiscal years 2006 and 2005. ALL OTHER FEES The Company did not engage or pay Burton McCumber & Cortez, L.L.P. for additional services, other than the services described above, in fiscal years 2006 and 2005. PRE-APPROVAL POLICIES AND PROCEDURES All audit and non-audit services to be performed by the Company's independent auditors must be approved in advance by the Audit Committee. Consistent with applicable law, limited amounts of services, other than audit, review or attest services, may be approved by one or more members of the Audit Committee pursuant to authority delegated by the Audit Committee, provided each such approved service is reported to the full Audit Committee at its next meeting. All of the engagements and fees for the Company's fiscal year ended December 31, 2006 were approved by the Audit Committee. In connection with the audit of the Company's financial statements for the fiscal year ended December 31, 2006, Burton McCumber & Cortez, L.L.P. only used full-time, permanent employees. The Audit Committee has considered whether the provision by Burton McCumber & Cortez, L.L.P. of the services covered by the fees other than the audit fees is compatible with maintaining Burton McCumber & Cortez, L.L.P.'s independence and believes that it is compatible. REQUIRED VOTE The approval of the proposal to ratify the appointment of Burton McCumber & Cortez, L.L.P. requires the affirmative vote of a majority of the votes cast. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE APPOINTMENT OF BURTON MCCUMBER & CORTEZ, L.L.P. FOR THE FISCAL YEAR ENDING DECEMBER 31, 2007 9 CORPORATE GOVERNANCE MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS The business of the Company is managed under the direction of its Board of Directors. The Board of Directors held one special meeting and took action on three occasions by unanimous written consent during 2006. Each of the directors of the Company attended at least 75% of the aggregate of the total number of meetings of the Board of Directors (held during the period for which he has been a director) and the total number of meetings held by all committees of the Board of Directors on which he served (during the periods that he served) during 2006. Each director is expected to make reasonable efforts to attend meetings of the Board of Directors, meeting of the committees of which such director is a member and the Annual Meetings of Stockholders. Two of the Company's directors were present at the previous Annual Meeting of Stockholders. The Board of Directors currently has an Audit Committee and a Compensation Committee but does not have a Nominating Committee. It is the intention of the Board of Directors to establish a Nominating Committee, consisting solely of independent directors. The Board of Directors also had a Special Litigation Committee that investigated claims by an alleged stockholder described in more detail in the section entitled "Legal Proceedings." The Special Litigation Committee was dissolved on June 23, 2006 upon the settlement of the claims. AUDIT COMMITTEE The Audit Committee is currently comprised of James Risher, who is not an employee of the Company or any of its subsidiaries. The Audit Committee is only comprised of one director although the Charter of the Audit Committee provides that at least three directors shall serve as members of the Audit Committee. The Audit Committee meets with the independent auditors and management representatives, recommends to the Board of Directors appointment of independent auditors, approves the scope of audits and other services to be performed by the independent auditors, considers whether the performance of any professional services by the auditors other than services provided in connection with the audit function could impair the independence of the auditors and reviews the results of audits and the accounting principles applied in financial reporting and financial and operational controls. The independent auditors have unrestricted access to the Audit Committee and vice versa. The Board of Directors has determined that James Risher satisfies the "audit committee financial expert" criteria established by the SEC. The Audit Committee held four meetings during the fiscal year ended December 31, 2006. James Risher is an independent director, as independence is defined in Rule 4200(a)(15) of the NASD listing standards. The Board of Directors has adopted a written Charter of the Audit Committee which is attached as Appendix A to the Company's definitive proxy statement on Schedule 14A filed with the SEC on May 2, 2005. The Charter of the Audit Committee is not available in the Company's website. COMPENSATION COMMITTEE The Compensation Committee is comprised of Jonathan Bren, who is not an employee of the Company or any of its subsidiaries. Mr. Bren is an independent director, as independence is defined in Rule 4200(a)(15) of the NASD listing standards. The Compensation Committee's functions include making recommendations 10 to the Board of Directors on policies and procedures relating to compensation and employee stock and other benefit plans of key executives and approval of individual salary adjustments and stock awards. The Compensation Committee did not meet during fiscal year ended December 31, 2006. The Compensation Committee does not have a charter. CODE OF CONDUCT AND ETHICS The Company has adopted a code of conduct and ethics (the "Code") that applies to all directors, officers and employees. The Code is reasonably designed to deter wrongdoing and promote (i) honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships, (ii) full, fair, accurate, timely and understandable disclosure in reports and documents filed with, or submitted to, the SEC and in other public communications made by the Company, (iii) compliance with applicable governmental laws, rules and regulations, (iv) the prompt internal reporting of violations of the Code to appropriate persons identified in the Code, and (v) accountability for adherence to the Code. Amendments to the Code and any grant of a waiver from a provision of the Code requiring disclosure under applicable SEC rules will be disclosed in a Current Report on Form 8-K. The Code is filed as Exhibit 14.1 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2003. NOMINATION OF DIRECTORS Currently, the Board of Directors does not have a Nominating Committee. The independent directors of the Board serve such function of a nomination committee and the Board of Directors may formalize their designation as such in the future. While the Company also at the current time does not have a charter governing the nomination of directors and the Company does not have policies with regard to consideration of director candidates recommended by the Company's stockholders, it is the Board of Directors' intention to adopt a charter outlining the qualifications for director candidates, as well as policies with regard to consideration of director candidates by the stockholders of the Company. Provided that director candidates meet the delineated qualifications and the nominations are submittted timely pursuant to the Company's Bylaws. The Board of Directors does not anticipate that the Nomination Committee will differentiate evaluating nominees for directors based on their source. The independent directors of the Board of Directors identify prospective candidates to serve as directors by reviewing candidates' credentials and qualifications, and interviewing prospective candidates before submitting their respective names to the Board of Directors. Each of the independent directors of the Board of Directors that serve the function of the Nominating Committee meet the criteria for being "independent" set forth under Section 4200(a)(15) of Nasdaq's listing standards. The independent directors of the Board of Directors consider recommendations for director nominees from a wide variety of sources, including members of the Company's Board of Directors, business contacts, community leaders, other third-party sources and members of management. The independent directors of the Board of Directors also consider stockholders' recommendations for director nominees that are properly received in accordance with the procedures for contacting directors described in this Proxy Statement. 11 The Board of Directors believes that all of its directors should have the highest personal integrity and have a record of exceptional ability and judgment. The Board of Directors also believes that its directors should ideally reflect a mix of experience and other qualifications. There is no firm requirement of minimum qualifications or skills that candidates must possess. The independent directors of the Board of Directors evaluate director candidates based on a number of qualifications, including their independence, judgment, leadership ability, expertise in the industry, experience developing and analyzing business strategies, financial literacy, risk management skills, and, for incumbent directors, his or her past performance. The independent directors of the Board of Directors initially evaluate a prospective nominee on the basis of his or her resume and other background information that has been made available to the Board of Directors. An independent director of the Board of Directors will contact for further review and interview those candidates who the independent directors of the Board of Directors believe are qualified, who may fulfill a specific Board of Directors need and who would otherwise best make a contribution to the Board of Directors. If, after further discussions with the candidate, and other review and consideration as necessary, the independent directors of the Board of Directors believe that they have identified a qualified candidate, they will consider nominating the candidate for election as a director. DIRECTOR INDEPENDENCE Annually, as well as in connection with the election or appointment of a new director to the Board of Directors, the Company's Board of Directors considers the business and charitable relationships between it and each non-employee director to determine compliance with the NASD listing standards for independent directors. Based on that review, the Board of Directors has determined that Messrs. Bren and Risher are independent under Rule 4200(a)(15) of the NASD listing standards. OTHER EXECUTIVE OFFICERS In addition to Mr. Pully, the only other Executive Officer of the Company is John Murray, whose biographical information is set forth below: JOHN MURRAY (Age 38) has served as the Chief Financial Officer of the Company since June 18, 2004. Mr. Murray has served as the Chief Financial Officer of Newcastle Management, the general partner of Newcastle, since January 2003. From January 1998 until June 2001, Mr. Murray served as a partner at Speer & Murray, Ltd., a Dallas-based accounting firm. From October 1991 until November 1995, Mr. Murray served as an accountant with Ernst & Young, LLP. Mr. Murray has been a Certified Public Accountant since January 1992. SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires that the Company's directors, executive officers and persons who own more than 10% of a registered class of the Company's equity securities file with the SEC initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Directors, executive officers and greater than 10% stockholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. 12 To the Company's knowledge, based solely on a review of the copies of the Section 16(a) reports furnished to the Company and written representations that no other reports were required during the fiscal year ended December 31, 2006, there was compliance with all Section 16(a) filing requirements applicable to its directors, executive officers and greater than 10% stockholders. EXECUTIVE COMPENSATION COMPENSATION DISCUSSION AND ANALYSIS The Compensation Committee consists of one independent director appointed by the Board of Directors. The Compensation Committee's functions include making recommendations to the Board of Directors on policies and procedures relating to compensation and employee stock and other benefit plans of key executives and approval of individual salary adjustments and stock awards. The Compensation Committee does not have a charter. During fiscal year 2006, although there were two executive officers of the Company, Steven J. Pully and John Murray, only Mr. Pully receives an annual salary from the Company. COMPENSATION PHILOSOPHY AND OBJECTIVE The Company's compensation program is designed to reward its officers consistent with an individual's performance and efforts on behalf of the Company. The Company recognizes that its success depends, in large part, on leadership with the skills, commitment and motivation necessary to successfully manage the Company and execute on its business plan of identifying strategic acquisitions that enhance shareholder value. Although the Company's current annual compensation program is narrowly focused - consisting of a cash salary and 401K matching contributions for Mr. Pully - the Company is in a position to structure a more comprehensive compensation program in the future as circumstances warrant. The Company recognizes the importance of maintaining sound principles for the development and administration of compensation and benefit programs. The Compensation Committee expects that if and when the Company expands its business and additional individuals are hired, the Company will modify its compensation program accordingly. DETERMINATION OF COMPENSATION AWARDS The Compensation Committee is provided with the primary authority to determine and recommend to the Board of Directors the compensation awards available to the Company's executive officers. Each named executive officer, in turn, participates in an annual performance review with the Board of Directors to provide input about their contributions to the Company's business for the period being assessed. Pursuant to the Settlement (as more fully described in the section entitled "Legal Proceedings"), the Company agreed to certain limitation on cash compensation of employees other than Mr. Pully until such time as the Company acquires a revenue generating business. Mr. Murray continues to be eligible for equity grants and other benefits from the Company. 13 COMPENSATION BENCHMARKING AND PEER GROUP The Compensation Committee seeks to take into account input from the other independent member of the Board of Directors and publicly available data relating to the compensation practices and policies of other companies within and outside the Company's industry. The Company benchmarks its executive compensation against the median compensation (both at a total cash compensation level and long-term incentive level) paid by peer group companies. While benchmarking may not always be appropriate as a stand-alone tool for setting compensation due to the aspects of the Company's business and objectives that may be unique to it, the Company generally believes that gathering this information is an important part of its compensation-related decision-making process. The Company recognizes that to attract, retain and motivate key individuals, such as the named executive officers, the Compensation Committee may determine that it is in the Company's best interests to negotiate total compensation packages with its executive management that may deviate from the general principle of targeting total compensation at the median level for the peer group. Actual pay for each named executive officer is determined around this structure, driven by the performance of the executive over time, as well as the Company's annual performance. ELEMENTS OF COMPENSATION PROGRAM The Company's total current compensation program consists of the following elements: o Base salary; o Long-term equity grants; and o Retirement benefits. BASE SALARY. The Company's goal is to establish a salary sufficient to motivate and retain its leadership. Factors considered in establishing the salary level of Mr. Pully - the only salaried employee of the Company - include a review of the individual's performance, an accounting of the Company's performance, the scope of Mr. Pully's responsibility, the experience level necessary for his position and certain peer group executive compensation information. The Company has access to information from independent salary surveys, broken out by position, to assist in this analysis. The foregoing factors will apply in the event that the Company determines it necessary and appropriate to pay other officers a base salary, including Mr. Murray. LONG-TERM EQUITY GRANTS. The Company believes that an officer's ownership in the Company aligns the officer's interests with the Company's interests. Accordingly, the Company has in place the New Century Equity Holdings Corp. 1996 Employee Comprehensive Stock Plan (the "Employee Stock Plan"), which provides for grants of incentive stock options, non-qualified stock options and restricted stock. The Employee Stock Plan grants broad authority to the Compensation Committee to grant options or award restricted shares to full-time employees and officers of the Company and its subsidiaries (a total of two (2) eligible individuals at December 31, 2006), to determine the number of shares 14 subject to options or awards and to provide for the appropriate periods and methods of exercise and requirements regarding the vesting of options and awards of restricted shares. The purpose of the Plan is to encourage and enable employees of the Company to hold a personal financial interest in the Company, to incentivize the Company's success, and to promote the continued service of employees. Options are issued to the employees for a term of ten years. The Company does not necessarily make equity grants on an annual basis if existing holdings of officers are viewed as satisfactorily aligning the officer's interests with the Company's interests, and accordingly did not make any long term equity grants in the year ended December 31, 2006. RETIREMENT BENEFITS. The Company's primary retirement benefit consists of participation in the New Century Equity Holdings Corp. 401(k) Retirement Plan (the "401(k) Retirement Plan"). Participation in the 401(k) Retirement Plan is available to employees of the Company who are 21 years of age and who have completed six months of service during which they worked at least 500 hours. The 401K Retirement Plan provides that participants may make voluntary salary deferral contributions, on a pre-tax basis, of between 1% and 15% of their base compensation in the form of voluntary payroll deductions up to a maximum amount as indexed for cost-of-living adjustments. The Company may from time to time make additional discretionary contributions at the sole discretion of the Company's Board of Directors. The discretionary contributions, if any, are allocated to participants' accounts based on a discretionary percentage of the participants' respective salary deferrals. SUMMARY COMPENSATION TABLE The Summary Compensation Table and following table show the cash and non-cash compensation awarded to or earned by our executive officers for the last three fiscal years. Other than the individuals named below, we did not have any other executive officers during fiscal year 2006. Columns have been omitted from the table when there has been no compensation awarded to, earned by or paid to any of the executive officers required to be reported in that column. All Other Name and Option Compensation Principal Position Year Salary ($) Bonus ($) Awards ($)(1) ($) Total ($) ------------------ ---- ---------- --------- ------------- ------------- --------- Steven J. Pully 2006 $150,000 -- -- $ 7,500(2) $157,500 Chief 2005 $150,000 -- $ 7,500(2) $157,500 Executive Officer 2004 $ 81,346 $ 38,145 $ 3,229(2) $122,720 John Murray 2006 -- -- -- -- -- Chief 2005 -- -- -- -- -- Financial Officer 2004 -- -- $ 12,715 -- $ 12,175 (1) The methodology and assumptions used in the valuation of stock option awards are included in Note 9 to the Company's financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2006. 15 (2) Represents 401(k) Retirement Plan contributions made on behalf of Mr. Pully. GRANTS OF PLAN BASED AWARDS TABLE There were no grants of equity and non-equity plan-based awards to the Company's executive officers during the year ended December 31, 2006. NARRATIVE DISCLOSURE TO SUMMARY COMPENSATION TABLE EMPLOYMENT AGREEMENTS AND ARRANGEMENTS All of our employees are employed at will and do not have employment, severance or change in control agreements. Mr. Murray does not receive salary compensation at the current time for his day-to-day services to the Company. Pursuant to the Settlement (as more fully described under the section entitled "Legal Proceedings"), the Company agreed to certain limitations on cash compensation of employees other than Mr. Pully until such time as the Company acquires a revenue generating business. In addition, Mr. Murray continues to be eligible for equity grants and other benefits from the Company. POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL The Company has no plans or other arrangements in respect of remuneration received or that may be received by our executive officers to compensate such officers in the event of termination of employment (as a result of resignation, retirement or change in control) or other events following a change in control. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END TABLE The following table shows the unexercised stock options held at the end of fiscal year 2006 by the executive officers named in the Summary Compensation Table. Columns have been omitted from the table where there are no outstanding equity awards required to be reported in that column. Option Awards ------------------------------------------------------------------------------------------- Number of Securities Number of Securities Unexercised Underlying Underlying Unexercised Option Option Name Options (#) Exercisable Options (#) Unexercisable Exercise Price ($) Expiration Date ---- ----------------------- ------------------------- ------------------ --------------- Steven J. Pully 100,000 50,000(1) $ .28 6-18-14 Chief Executive Officer John Murray 33,333 16,667(2) $ .28 6-18-14 Chief Financial Officer (1) Option grants become exercisable on June 18, 2007. (2) Option grants become exercisable on June 18, 2007. 16 EQUITY COMPENSATION PLAN INFORMATION - ------------------------------------------------------------------------------- Plan Category Number of Weighted Number of securities securities to average remaining available be issued upon exercise for future issuance exercise of price of under equity outstanding outstanding compensation plans options, options, (excluding securities warrants and warrants and reflected in column rights rights (A)) (A) (B) (C) - ------------------------------------------------------------------------------- Equity compensation 975,000 $ 4.30 13,583,802 plans approved by security holders - ------------------------------------------------------------------------------- Equity compensation 0 N/A N/A plans not approved by security holders - ------------------------------------------------------------------------------- Total 975,000 $ 4.30 13,583,802 - ------------------------------------------------------------------------------- OPTION EXERCISES AND STOCK VESTED TABLE There were no option exercises during the year ended December 31, 2006 by any of the executive officers named in the Summary Compensation Table. Additionally, no stock awards were issued or outstanding during the year ended December 31, 2006. PENSION BENEFITS TABLE The Company does not provide pension benefits to any of its executive officers. NONQUALIFIED DEFERRED COMPENSATION TABLE The Company does not provide non-qualified deferred compensation to any of its executive officers. COMPENSATION OF DIRECTORS A total of 1,300,000 shares of Common Stock are subject to the Company's 1996 Non-Employee Director Plan (the "Director Plan"). In November of 2002, the Board of Directors revised the Director Plan to reflect the following (effective with the Board of Directors meetings held in 2003): each non-employee director of the Company will be entitled to annual compensation consisting of $28,000 or stock options to purchase 100,000 shares of Common Stock. As an alternative, each non-employee director may elect a combination of stock and options. For the fiscal year 2006, Mr. Schwarz, Mr. Risher and Mr. Bren each elected to receive their annual compensation all in cash. Compensation for services performed during fiscal year 2006 is shown in the table below. For each quarterly Board meeting not attended by a non-employee director, twenty-five percent (25%) of such annual compensation (both cash and stock options) will be forfeited. 17 Fees Earned All Other or Paid in Option Compensation Name Cash ($) Awards ($) ($) Total ($) - ---- ----------- ---------- ------------ -------- Mark E. Schwarz $28,000 0 0 $28,000 Steven J. Pully $ 0 0 0 $ 0 Jonathan Bren $28,000 0 0 $28,000 James A. Risher $28,000 0 0 $28,000 COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION Jonathan Bren was the sole member of the Compensation Committee during the fiscal year ended December 31, 2006. There are no compensation committee interlocks as such term is defined in the Exchange Act. COMPENSATION COMMITTEE REPORT The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K, and based on the review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement. Compensation Committee of the Board of Directors Jonathan Bren THE ABOVE REPORT OF THE COMPENSATION 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 (THE "SECURITIES ACT"), OR THE EXCHANGE ACT, EXCEPT TO THE EXTENT THAT WE SPECIFICALLY INCORPORATE THIS INFORMATION BY REFERENCE, AND SHALL NOT OTHERWISE BE DEEMED FILED UNDER THE SECURITIES ACT OR THE EXCHANGE ACT. AUDIT COMMITTEE REPORT GENERAL The Audit Committee currently consists of one director who is independent as defined in the listing standards of Nasdaq. A brief description of the responsibilities of the Audit Committee is set forth above under the heading "CORPORATE GOVERNANCE - Audit Committee." The Audit Committee has reviewed and discussed the Company's audited financial statements for the year ended December 31, 2006 with management of the Company. The Audit Committee has discussed with Burton McCumber & Cortez, L.L.P., the Company's independent accountants for the year ended December 31, 2006, the matters required to be discussed by the Statement on Audit Standards No. 61, as amended. The Audit Committee has also received the written disclosures and the letter from Burton McCumber & Cortez, L.L.P. required by Independence Standards Board Standard No. 1 (Independent Standards Board No. 1, Independence Discussions with Audit Committees), and has discussed with Burton McCumber & Cortez, L.L.P. its independence. 18 Based on the review and the discussions referred to above, the Audit Committee recommended to the Board of Directors that the Company's audited financial statements be included in the Company's Annual Report on Form 10-K for the year ended December 31, 2006 for filing with the SEC. During the year ended December 31, 2006, the Audit Committee approved in advance any and all audit services, including the audit engagement fees and terms, and non-audit services provided to the Company by its independent auditors (subject to the de minimus exception for non-audit services contained in Section 10A(i)(1)(B) of the Exchange Act). The independent auditors and the Company's management are required to periodically report to the Audit Committee the extent of services provided by the independent auditors and the fees associated with these services. The Audit Committee has forwarded this report on its activities with respect to its oversight responsibilities during the year ended December 31, 2006. The report is not deemed to be "soliciting material" or to be "filed" with the SEC or subject to the SEC's proxy rules or to the liabilities of Section 18 of the Exchange Act, and the report shall not be deemed incorporated by reference into any prior or subsequent filing by the Company under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates it by reference to such filing. AUDIT COMMITTEE OF THE BOARD OF DIRECTORS JAMES RISHER 19 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The Board of Directors of the Company reviews all relationships and transactions in which the Company and our directors and executive officers or their immediate family members are participants to determine whether such persons have a direct or indirect material interest. The Board of Directors is primarily responsible for the development and implementation of processes and controls to obtain information from the directors and executive officers with respect to related person transactions and for then determining, based on the facts and circumstances, whether the Company or a related person has a direct or indirect material interest in the transaction. As required under SEC rules, transactions that are determined to be directly or indirectly material to the Company or a related person are disclosed in the Company's proxy statement. In addition, the Audit Committee reviews and approves or ratifies any related person transaction that is required to be disclosed. In the course of its review and approval or ratification of a related party transaction to be disclosed, the Audit Committee considers: (i) the nature of the related person's interest in the transaction; (ii) the material terms of the transaction, including, without limitation, the amount and type of transaction; (iii) the importance of the transaction to the related person; (iv) the importance of the transaction to the Company; (v) whether the transaction would impair the judgment of a director or executive officer to act in the best interest of the Company; and (vi) any other matters the committee deems appropriate. Any member of the Board of Directors who is a related person with respect to a transaction under review may not participate in the deliberations or vote respecting approval or ratification of the transaction, provided, however, that such director may be counted in determining the presence of a quorum at a meeting of the committee that considers the transaction. In June 2004, when Newcastle acquired the Series A Preferred Stock, Mark Schwarz, Chief Executive Officer and Chairman of Newcastle Management, Steven J. Pully, President of Newcastle Management, and John Murray, Chief Financial Officer of Newcastle Management, assumed positions as Chairman of the Board, Chief Executive Officer and Chief Financial Officer, respectively, of the Company. Mr. Pully receives an annual salary of $150,000 as Chief Executive Officer of the Company. Newcastle Management is the general partner of Newcastle, which owns 19,380,768 shares of Common Stock of the Company. The Company's corporate headquarters are currently located at 200 Crescent Court, Suite 1400, Dallas, Texas 75201, which are also the offices of Newcastle Management. Pursuant to an oral agreement, the Company previously occupied a portion of Newcastle Management's space on a month-to-month basis at no charge, and received accounting and administrative services from employees of Newcastle Management at no charge. Pursuant to a services agreement entered into between the parties on October 1, 2006, the Company occupies a portion of Newcastle Management's space on a month-to-month basis at $2,500 per month. 20 PROCEDURES FOR CONTACTING DIRECTORS The Board of Directors has established a process for stockholders to send communications to the Board of Directors. Stockholders may communicate with the Board of Directors generally or a specific director at any time by writing to: Corporate Secretary, New Century Equity Holdings Corp., 200 Crescent Court, Suite 1400, Dallas, Texas 75201. The Corporate Secretary reviews all messages received, and forwards any message that reasonably appears to be a communication from a stockholder about a matter of stockholder interest that is intended for communication to the Board of Directors. Communications are sent as soon as practicable to the director to whom they are addressed, or if addressed to the Board of Directors generally, to the Chairman of the Board. Because other appropriate avenues of communication exist for matters that are not of stockholder interest, such as general business complaints or employee grievances, communications that do not relate to matters of stockholder interest are not forwarded to the Board of Directors. The Corporate Secretary has the right, but not the obligation, to forward such other communications to appropriate channels within the Company. 21 LEGAL PROCEEDINGS On August 11, 2004, Craig Davis, allegedly a stockholder of the Company, filed a lawsuit in the Chancery Court of New Castle County, Delaware (the "Lawsuit"). The Lawsuit asserted direct claims, and also derivative claims on the Company's behalf, against five former and three current directors of the Company. On April 13, 2006, the Company announced that it reached an agreement with all of the parties to the Lawsuit to settle all claims relating thereto (the "Settlement"). On June 23, 2006, the Chancery Court approved the Settlement, and on July 25, 2006, the Settlement became final and non-appealable. As part of the Settlement, the Company set up a fund (the "Settlement Fund"), which was distributed to stockholders of record as of July 28, 2006, with a payment date of August 11, 2006. The portion of the Settlement Fund distributed to stockholders pursuant to the Settlement was $2,270,017 or approximately $.04 per common share on a fully diluted basis, provided that any Common Stock held by defendants in the Lawsuit who were formerly directors of the Company would not be entitled to any distribution from the Settlement Fund. The total Settlement proceeds of $3,200,000 were funded by the Company's insurance carrier and by Parris H. Holmes, Jr., the Company's former Chief Executive Officer, who contributed $150,000. Also included in the total Settlement proceeds is $600,000 of reimbursement for legal and professional fees paid to the Company by its insurance carrier and subsequently contributed by the Company to the Settlement Fund. As part of the Settlement, the Company and the other defendants in the Lawsuit agreed not to oppose the request for fees and expenses by counsel to the plaintiff of $929,813. Under the Settlement, the plaintiff, the Company and the other defendants (including Mr. Holmes) also agreed to certain mutual releases. In connection with the resolution of the Lawsuit, the Company ceased funding of legal and professional fees of the current and former director defendants. The funding of legal and professional fees was made pursuant to indemnification arrangements that were in place during the respective terms of each of the defendants. We have met the $500,000 retention as stipulated in our directors' and officers' liability insurance policy. The directors' and officers' liability insurance policy carries a maximum coverage limit of $5,000,000. We are currently negotiating a settlement with the insurance carrier with respect to remaining reimbursement amounts. We are vigorously pursuing enforcement of our rights under the policy. Nonpayment of the claim for reimbursement of legal and professional fees could have a material adverse effect on the results of operations of the Company. The Settlement does not preclude us from seeking reimbursement of legal and professional fees up to the amount remaining within the policy limit. The Settlement provides that, if the Company has not acquired a business that generates revenues by the date of March 1, 2007, the plaintiff in the Lawsuit maintains the right to pursue a claim to liquidate the Company. This custodian claim was one of several claims asserted in the Lawsuit. Even if such a claim is elected to be pursued, there is no assurance that it will be successful. In addition, the Company believes that it has preserved its right to assert that its investment in ACP Investments L.P. (d/b/a Ascendant Capital Partners), as more fully described in its Annual Report on Form 10-K for the year ended December 31, 2006, meets the foregoing requirement to acquire a business. Pursuant to the sale of 4,807,692 newly issued shares of the Series A Preferred Stock to Newcastle on June 18, 2004, the Company agreed to indemnify Newcastle from any liability, loss or damage, together with all costs and expenses related thereto that the Company may suffer which arises out of affairs 22 of the Company, its Board of Directors or employees prior to the closing of the Newcastle Transaction. The Company's obligation to indemnify may be satisfied at the option of the purchaser by issuing additional Series A Preferred Stock to the purchaser, modifying the conversion price of the Series A Preferred Stock, a payment of cash or a redemption of Series A Preferred Stock or a combination of the foregoing. On July 3, 2006, Newcastle converted its Series A Preferred Stock into 19,230,768 shares of the Common Stock. On December 12, 2005, the Company received a letter from the SEC, based on a review of the Company's Form 10-K filed for the year ended December 31, 2004, requesting that the Company provide a written explanation as to whether the Company is an "investment company" (as such term is defined in the Investment Company Act of 1940). The Company provided a written response to the SEC, dated January 12, 2006, stating the reasons why it believes it is not an "investment company". The Company has provided certain confirmatory information requested by the SEC. In the event the SEC or a court took the position that the Company is an investment company, the Company's failure to register as an investment company would not only raise the possibility of an enforcement or other legal action by the SEC and potential fines and penalties, but also could threaten the validity of corporate actions and contracts entered into by the Company during the period it was deemed to be an unregistered investment company, among other remedies. During February 2006, the Company entered into an agreement with a former employee to settle a dispute over a severance agreement the employee had entered into with the Company. The severance agreement, which was executed by former management, provided for a payment of approximately $98,000 upon the occurrence of certain events. The Company paid approximately $85,000 to settle all claims associated with the severance agreement. During May 2006, the Company entered into an agreement to settle a dispute with a law firm that had previously been hired by the Company. In accordance with the terms of the agreement, the Company received a refund of legal and professional fees of $125,000 during May 2006. PROPOSALS FOR THE 2008 ANNUAL MEETING REQUIREMENTS FOR STOCKHOLDER PROPOSALS TO BE CONSIDERED FOR INCLUSION IN THE COMPANY'S PROXY MATERIALS Stockholder proposals submitted pursuant to Rule 14a-8 of the Exchange Act ("Rule 14a-8"), and intended to be presented at the Company's 2008 Annual Meeting of Stockholders, must be received by the Company and addressed to the Corporate Secretary at 200 Crescent Court, Suite 1400, Dallas, Texas 75201, no later than January 1, 2008 to be considered for inclusion in the Company's proxy materials for that meeting. REQUIREMENTS FOR STOCKHOLDER PROPOSALS OUTSIDE THE SCOPE OF RULE 14A-8 A stockholder may present a proposal for consideration at the 2008 Annual Meeting of Stockholders by providing written notice in a timely manner to the Secretary of the Company setting forth the following information: a brief description of the proposal to be brought before the annual meeting and the reasons for conducting such business at the annual meeting; the name and address 23 of the stockholder making the proposal; the class and number of shares of the Company which are beneficially owned by the stockholder and a representation that the stockholder intends to appear in person or by proxy at the meeting to introduce the proposal or proposals specified in the notice. To be timely, notice must be received by the Company (a) in the case of an annual meeting, not less than 120 days prior to the date of the Company's proxy materials for the previous year's annual meeting, or (b) in the case of a special meeting, not less than the close of business on the seventh day following the day on which notice of such meeting is first given to stockholders. No business shall be conducted at a meeting except business brought before the annual meeting in accordance with the procedures set forth above. If the Chairman or other officer presiding at a meeting determines that the stockholder proposal was not properly brought before such meeting, such proposal will not be introduced at such meeting. REQUIREMENTS FOR STOCKHOLDER NOMINATIONS OF DIRECTORS The advance notification procedures that stockholders must follow in order to nominate directors (the "Nomination Procedure"), set forth in Section 8.3 of the Charter and Section 3.16 of the By-Laws, provides that only persons who are nominated by or at the direction of the Board of Directors, or by a stockholder who has given timely prior written notice to the Secretary of the Company prior to the meeting at which directors are to be elected will be eligible for election as directors. To be timely, notice must be received by the Company (a) in the case of an annual meeting, not less than 90 days prior to the annual meeting, or (b) in the case of a special meeting, not later than the seventh day following the day on which notice of such meeting is first given to stockholders. Under the Nomination Procedure, notice to the Company from a stockholder who proposes to nominate a person or persons at a meeting for election as a director must contain certain information, including the name and address of the stockholder who intends to make the nomination and the person to be nominated, a representation that the stockholder is a holder of record of stock of the Company entitled to vote at such meeting and intends to appear in person or by proxy to nominate the person, a description of all arrangements or understandings between the stockholder and each nominee and any other person pursuant to which the nomination is to be made, such other information regarding each nominee as would be required to be included in a proxy statement filed pursuant to the Proxy Rules of the SEC had the nominee been nominated by the Board of Directors and the consent of such nominee to serve as a director if so elected. If the Chairman presiding at the meeting determines that a person was not nominated in accordance with the Nomination Procedure, such person will not be eligible for election as a director. 24 ANNUAL REPORT ANY STOCKHOLDER OF THE COMPANY MAY OBTAIN WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2006 (WITHOUT EXHIBITS), INCLUDING THE COMPANY'S CERTIFIED FINANCIAL STATEMENTS, AS FILED WITH THE SEC, BY WRITING TO THE CORPORATE SECRETARY, NEW CENTURY EQUITY HOLDINGS CORP., 200 CRESCENT COURT, SUITE 1400, DALLAS TEXAS 75201. OTHER MATTERS As of the date of this Proxy Statement, management does not intend to present any other items of business and is not aware of any matters to be presented for action at the Annual Meeting other than those described above. However, if any other matters should come before the Annual Meeting, it is the intention of the persons named as proxies in the accompanying Proxy Card to vote in accordance with their best judgment on such matters. EXPENSES OF SOLICITATION The cost of preparing, assembling and mailing this Proxy Statement is being paid by the Company. In addition to solicitation by mail, Company directors, officers and employees may solicit proxies by telephone or other means of communication. Arrangements will also be made with brokerage firms and other custodians, nominees and fiduciaries that hold the voting securities of record for the forwarding of solicitation materials to the beneficial owners thereof. The Company will reimburse such brokers, custodians, nominees and fiduciaries for reasonable out-of-pocket expenses incurred by them in connection therewith. By order of the Board of Directors, /s/ Steven J. Pully ----------------------------------- Steven J. Pully SECRETARY April 30, 2007 25 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS NEW CENTURY EQUITY HOLDINGS CORP. Annual Meeting of Stockholders June 6, 2007 The undersigned, a stockholder of New Century Equity Holdings Corp., a Delaware corporation (the "Company"), does hereby appoint Mark E. Schwarz and Steven J. Pully, and each of them, the true and lawful attorneys and proxies with full power of substitution, for and in the name, place and stead of the undersigned, to vote all of the shares of Common Stock of the Company which the undersigned would be entitled to vote if personally present at the 2007 Annual Meeting of Stockholders of the Company to be held at the offices of the Company located at 200 Crescent Court, Suite 1400, Dallas, Texas, on June 6, 2007 at 10:00 a.m., local time, or at any adjournment or adjournments thereof. The undersigned hereby instructs said proxies or their substitutes. Please mark your vote like this /X/ ELECTION OF DIRECTORS: The election of Steven J. Pully to the Board of Directors, to serve until the 2009 Annual Meeting of Stockholders and until his successor is duly elected and shall qualify and the election of Mark E. Schwarz and Jonathan Bren to the Board of Directors, to serve until the 2010 Annual Meeting of Stockholders and until their respective successors are duly elected and shall qualify. WITHHOLD AUTHORITY FOR ALL TO VOTE FOR ALL NOMINEES _____ NOMINEES _____ _________________________________ TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, PRINT NAME ABOVE. RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS The ratification of the appointment of Burton McCumber & Cortez, L.L.P. as the independent public accountants of the Company for the fiscal year ending December 31, 2007. FOR / / AGAINST / / ABSTAIN / / DISCRETIONARY AUTHORITY: In their discretion, the proxies are authorized to vote upon such other and further business as may properly come before the meeting. (CONTINUED, AND TO BE MARKED, DATED AND SIGNED ON THE OTHER SIDE.) THIS PROXY WILL BE VOTED IN ACCORDANCE WITH ANY DIRECTIONS HEREINBEFORE GIVEN. UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS NAMED HEREIN AND FOR THE RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS. The undersigned hereby revokes any proxy or proxies heretofore given, and ratifies and confirms that all the proxies appointed hereby, or any of them, or their substitutes, may lawfully do or cause to be done by virtue hereof. Dated: _______________________, 2007 _____________________________ (L.S.) _____________________________ (L.S.) Signature(s) NOTE: PLEASE SIGN EXACTLY AS YOUR NAME OR NAMES APPEAR HEREON. WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE INDICATE THE CAPACITY IN WHICH SIGNING. WHEN SIGNING AS JOINT TENANTS, ALL PARTIES IN THE JOINT TENANCY SHOULD SIGN. WHEN A PROXY IS GIVEN BY A CORPORATION, IT SHOULD BE SIGNED WITH FULL CORPORATE NAME BY A DULY AUTHORIZED OFFICER. PLEASE MARK, DATE, SIGN AND MAIL THIS PROXY IN THE ENVELOPE PROVIDED FOR THIS PURPOSE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
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DEF 14A Filing
Wilhelmina International (WHLM) DEF 14ADefinitive proxy
Filed: 30 Apr 07, 12:00am