UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14C
Information Statement Pursuant to Section 14(c) of the
Securities Exchange Act of 1934
Check the appropriate box:
[_] Preliminary Information Statement
[_] Confidential, for use of the Commission (only as permitted by Rule
14c-5(d)(2))
[X] Definitive Information Statement
Mortgage Assistance Center Corporation
(Name of Registrant As Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit 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:
[_] 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 fee 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:
WE ARE NOT ASKING YOU FOR A
PROXY AND YOU ARE REQUESTED NOT TO
SEND US A PROXY.
Mortgage Assistance Center Corporation
2614 Main St., Dallas, TX 75226
(214) 670-0005
INFORMATION STATEMENT AND NOTICE OF ACTIONS TAKEN
BY WRITTEN CONSENT OF THE MAJORITY SHAREHOLDERS
INTRODUCTION
This Information Statement is being mailed or furnished to the shareholders of
Mortgage Assistance Center Corporation , a Florida corporation ("MACC" or "the
Company"), in connection with the previous approval by unanimous written consent
on September 28, 2006, of the Company's Board of Directors ("the Board") of the
corporate actions referred to below and the subsequent adoption of such
corporate actions by written consent on September 28, 2006 of holders entitled
to vote a majority of the aggregate shares of common stock par value $0.001 per
share (the "Common Stock") of the Company, entitled to vote with respect to
those actions. Accordingly, all necessary corporate approvals in connection with
the matter referred to herein have been obtained and this Information Statement
is furnished solely for the purpose of informing the shareholders of the
Company, in the manner required under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), of this corporate action before it takes effect.
This Information Statement is first being mailed or furnished to the
shareholders of the Company on or about October 16, 2006, and the approval by
the shareholders will not become effective until 20 days from the date of
mailing of this Information Statement to our shareholders.
The actions approved by the Company's directors and shareholders are: 1.
The amendment of the Company's Articles of Incorporation to authorize the
issuance of up to 4,000,000 shares of Preferred Stock ("the Amendment"); and 2.
The adoption of the Company's 2006 Equity Incentive Plan ("the Plan").
The proposed Amendment will be filed with the Florida Secretary of State
and will be effective when filed. The anticipated filing date will be
approximately (and no sooner than) 20 days after the mailing of this Information
Statement to our shareholders. If the proposed Amendment were not adopted by
written majority shareholder consent, it would have been necessary for this
action to be considered by the Company's shareholders at a special shareholder's
meeting convened for the specific purpose of approving the Amendment.
The elimination of the need for a special meeting of the shareholders to
approve the Amendment is authorized by Section 607.0704 of the Florida Business
Corporation Act. This Section provides that the written consent of the holders
of outstanding shares, having not less than the minimum number of votes which
would be necessary to authorize or take the action at a meeting at which all
shares entitled to vote on a matter were present and voted, may be substituted
for the special meeting. According to Section 607.1003 of the Florida Business
Corporation Act, a majority of the outstanding shares entitled to vote on the
matter is required in order to amend the Company's Articles of Incorporation. In
order to eliminate the costs and management time involved in holding a special
meeting and to effect the Amendment as early as possible in order to accomplish
the purposes of the Company, the Board voted to use the written consent of the
majority shareholders of the Company.
This Information Statement was first sent to the shareholders on or about
October 16, 2006. The record date established by the Company for purposes of
determining the number of outstanding shares of Common Stock of the Company
entitled to vote with respect to the Amendment and the Plan was September 28,
2006, (the "Record Date").
OUTSTANDING VOTING STOCK OF THE COMPANY
As of the Record Date, there were 12,725,720 shares of Common Stock issued
and outstanding. The Common Stock constitutes the outstanding class of voting
securities of the Company. Each share of Common Stock entitles the holder to one
(1) vote on all matters submitted to the shareholders.
On October 11, 2006, the market value per share of Common Stock was $1.01.
SECURITY OWNERSHIP OF CERTAIN OWNERS AND MANAGEMENT
The following table shows, as of August 31, 2006, the shares of Common Stock
beneficially owned by all of the persons who currently serve as the directors or
officers of the Company or of Mortgage Assistance Corporation ("MAC"), the
Company's wholly owned subsidiary, as well as the principal shareholders
(greater than 5%) of the Company individually and, as to the directors and
officers, as a group.
The number of shares beneficially owned by each person or entity is determined
under rules of the Securities and Exchange Commission, and the information is
not necessarily indicative of beneficial ownership for any other purpose. Under
such rules, beneficial ownership includes any shares as to which the person has
the sole or shared voting power or investment power and also any shares which
the person has the right to acquire as of a date within 60 days after the
relevant date through the exercise of any stock option or other right.
Percent of Class
Name and address Number of Shares Beneficially Owned
- ---------------- ---------------- ------------------
Dale J. Hensel(1) 5,031,058 39.53%
Dan Barnett(2) 4,967,058 39.03%
Michelle Taylor(2) 1,036,375 8.14%
All Directors and
Officers as a Group 11,034,491 86.7%
(1) Dale Hensel is our sole officer and director. He is a director and president
of MAC, the wholly owned subsidiary of MACC. Holdings listed here include shares
beneficially owned by Mr. Hensel under a family limited partnership entity,
Leberknight, FLP which holds 3,840,000 common shares (30.18%).
(2) Dan Barnett and Michelle Taylor are officers and directors of MAC, the
wholly owned subsidiary of MACC.
ACTIONS BY BOARD OF DIRECTORS AND CONSENTING SHAREHOLDERS
The following corporate actions have been authorized by unanimous written
consent of the Board of Directors of the Company, and subsequently approved by
written consent of holders entitled to vote a majority of the Common Stock.
ACTION 1--AMENDMENT TO ARTICLES OF INCORPORATION TO AUTHORIZE SHARES OF
PREFERRED STOCK OF THE COMPANY
The Board has received written consent from holders of a majority of the
outstanding shares of the Company's Common Stock approving an amendment to the
Company's Articles of Incorporation to authorize up to 4,000,000 shares of
Preferred Stock of the Company to be issued in one or more series as may be
established from time to time by resolution of the Board of Directors, each
consisting of such number of shares and having such distinctive designation or
title as shall be fixed by resolutions of the Board of Directors prior to the
issuance of any shares of such series. Each such class or series of Preferred
Stock shall have such voting powers, full or limited, or no voting powers, and
2
such preferences and relative, participating, optional or other special rights
and such qualifications, limitations or restrictions thereof, as shall be stated
in such resolutions of the Board of Directors providing for the issuance of such
series of Preferred Stock. The Board of Directors is authorized to increase or
decrease (but not below the number of shares of such class or series then
outstanding) the number of shares of any series subsequent to the issuance of
shares of that series. The entire text of the Amendment is included here as
Exhibit A.
EFFECT AND PURPOSE OF AUTHORIZING SHARES OF PREFERRED STOCK
A. In General
The authorization of a new class of preferred shares provides the Company
with increased financial flexibility in meeting future capital requirements by
providing another type of security in addition to its common stock, as it will
allow preferred stock to be available for issuance from time to time and with
such features as determined by the board of directors for any proper corporate
purpose. It is anticipated that such purposes may include exchanging preferred
stock for common stock and, without limitation, may include the issuance of
preferred stock for cash as a means of obtaining capital for use by the Company,
or issuance as part or all of the consideration required to be paid by the
Company for acquisitions of other businesses or assets.
B. Transaction Currently Being Negotiated
On July 27, 2006, the Company and FAX, LP, a private venture capital firm
based in Dallas, Texas, executed a memorandum with a term sheet related in part
to issuance by the Company of shares of Series A Preferred Stock, having a total
purchase price of $3,000,000, to FAX, LP, or one of its affiliates. The term
sheet contemplates the issuance of up to $3,000,000 in Series A Preferred Stock,
with $1,500,000 in Series A Preferred Stock to be issued initially at closing,
and the remaining $1,500,000 to be issued in tranches of $500,000 at the
Company's option, assuming that the Company is able to meet certain benchmarks
to be agreed upon by the Company and the purchaser. The term sheet indicates
that in connection with the issuance of Series A Preferred Stock, the Company
will issue to the purchaser of Series A Preferred Stock warrants to purchase
common stock representing up to 37.5% of the fully diluted common stock of the
Company at a purchase price of $0.01 per share.
The term sheet indicates that the Series A Preferred Stock:
---Will pay dividends at the rate of 10% per annum on a compounding
quarterly basis (dividends may be deferred during the first 12 months);
---May be redeemed without penalty by the Company at any time prior to the
seventh anniversary of the date of issuance, and must be redeemed by the Company
on the seventh anniversary of the date of issuance, in either case, at the face
amount plus accrued but unpaid dividends; and
---Will have priority over common stock in the event of a liquidation of
the Company.
The term sheet indicates that the purchaser shall be entitled to designate
two of five seats or three of seven seats, as the case may be, of the board of
directors of the Company. Further, the term sheet provides that Bill Payne and
Rod Jones, principals of FAX, LP, will fill two board of directors seats
representing the purchasers' interests and Dale Hensel and Dan Barnett, major
shareholders and officers of the Company and MAC, will fill two board of
directors seats representing their respective interests, all being pursuant to a
voting agreement to be mutually agreed upon between the parties. The term sheet
provides that the Company's Board of Directors must approve specified
significant corporate actions and that the holders of preferred stock will have
customary anti-dilution and registration rights.
The issuance of Series A Preferred Stock as contemplated by the term sheet
also is subject to :
---Negotiation and execution of a mutually acceptable definitive purchase
agreement;
---The restructure of the Company's existing indebtedness so that all but
$500,000 of such existing indebtedness has a maturity of two years or more;
---Purchaser's completion of due diligence to its satisfaction; and
---The Company's ability to meet benchmarks to be agreed upon by the
purchaser and the Company before the balance of the $1.5 million, at the
Company's option, may be issued and funded in increments of $500,000, as
individually requested by the Company.
3
The Company is in the process of negotiating definitive documentation
related to the issuance of Series A Preferred Stock. However, no assurance can
be provided that such negotiations will be successful or result in an investment
in the Company. Filing of the Amendment with the Florida Secretary of State, as
well as a Certificate of Designations, Rights, and Preferences setting forth the
terms of any Series A Preferred Stock, would be a condition precedent to the
issuance by the Company of Series A Preferred Stock.
C. Potential Anti-Takeover Effects
Any issuance of preferred stock with voting rights could, under certain
circumstances, have the effect of delaying or preventing a change in control of
the Company by increasing the number of outstanding shares entitled to vote and
by increasing the number of votes required to approve a change in control of the
Company. Shares of voting or convertible preferred stock could be issued, or
rights to purchase such shares could be issued, to render more difficult or
discourage an attempt to obtain control of the Company by means of a tender
offer, proxy contest, merger, or otherwise. The ability of the Board of
Directors to issue such additional shares of preferred stock, with the rights
and preferences it deems advisable, could discourage an attempt by a party to
acquire control of the Company by tender offer or other means. Such issuances
could therefore deprive shareholders of benefits that could result from such an
attempt, such as the realization of a premium over the market price that such an
attempt could cause. Moreover, the issuance of such additional shares of
preferred stock to persons friendly to the Board of Directors could make it more
difficult to remove incumbent managers and directors from office even if such
change were to be favorable to shareholders generally.
While the increase in the number of preferred shares authorized may have
anti-takeover ramifications, the Board believes that the financial flexibility
offered by the Amendment outweighs any disadvantages. To the extent that the
increase in the number of preferred shares authorized may have anti-takeover
effects, the amendment may encourage persons seeking to acquire the Company to
negotiate directly with the Board, enabling the Board to consider the proposed
transaction in a manner that best serves the shareholders' interests.
Having made the above disclosures, the Board has no knowledge of any
current attempts to effect a takeover of the Company, and the Amendment is not
being proposed in response to any anticipated future attempts, but rather for
the reasons of financial flexibility described above.
ACTION 2--APPROVAL OF EQUITY INCENTIVE PLAN
In order to attract and retain the best available personnel for positions
of substantial responsibility, to provide additional incentive to employees,
non-employee directors, and consultants of the Company and its Subsidiaries, and
to promote the success of the Company's business, the Board has approved the
Equity Incentive Plan (`the Plan") attached as Exhibit B.
SUMMARY OF EQUITY INCENTIVE PLAN TERMS
The Plan will be administered by the board of directors of the Company or
committees thereof, and all terms and conditions of options or restricted stock
granted under the Plan will be set forth in a written agreement approved by the
board (the "Grant Agreement"). The Board is authorized to grant incentive stock
options (as defined under Section 422 of the Internal Revenue Code of 1986, as
amended) or nonstatutory stock options, as determined by the Board at the time
of grant of the option. Restricted stock may also be granted under the Plan.
If there is a stock split, stock dividend, or other relevant change
affecting the Company's shares, appropriate adjustments would be made in the
number of shares that could be issued in the future and in the number of shares
and price under all outstanding grants made before the event. Future options may
also cover such shares as may cease to be under option by reason of total or
partial expiration, termination, or voluntary surrender of an option.
Stock Subject to the Plan
Subject to adjustment as provided in the Plan, the maximum aggregate number
of shares that may be issued under the Plan is 4,250,000 shares of common stock,
provided, however, that (i) the aggregate number of shares that may be issued as
restricted stock may not exceed 1,062,500 and (ii) the aggregate number of
shares that may be issued under incentive stock options may not exceed
2,000,000. Subject to adjustment as provided in the Plan, the aggregate number
4
of shares that may be issued to any individual under the Plan, whether issued
under options or restricted stock, shall not exceed 1,000,000.
The vesting period for options granted under the Plan are set forth in the
Grant Agreement entered into with the recipient ("the Optionee").
Administration With Respect to Officers and Directors
With respect to awards to employees who are also officers or directors of
the Company, the Plan shall be administered by a committee designated by the
Board to administer the Plan, which committee shall be constituted in such a
manner as to permit the Plan to comply with Securities Exchange Act Rule 16b-3
with respect to a plan intended to qualify thereunder as a discretionary plan.
With respect to awards to non-employee directors, the Plan shall be administered
by the Board in accordance with Rule 16b-3, provided that no non-employee
director shall vote on any decision affecting his individual benefits under the
Plan. Once appointed, such committee shall continue to serve in its designated
capacity until otherwise directed by the Board. From time to time, the Board may
increase the size of the committee and appoint additional members thereof,
remove members (with or without cause) and appoint new members in substitution
therefor, fill vacancies however caused and remove all members of the committee
and thereafter directly administer the Plan, all to the extent permitted by Rule
16b-3 with respect to a plan intended to qualify thereunder as a discretionary
plan.
Option Exercise Price
The per share exercise price for shares to be issued pursuant to exercise
of an option shall be such price as is determined by the Board. Except as
otherwise provided in the plan, each option shall be granted at an exercise
price equal to no less than the fair market value of a share on the date of
grant. In the case of an incentive stock option granted to an employee who, at
the time the option is granted, owns stock possessing more than 10 percent of
the total combined voting power of all classes of stock of the Company or any
parent or subsidiary, each incentive stock option shall be granted at an
exercise price equal to no less than 110% of the fair market value of a share on
the date of grant.
Exercise of Options
Any option granted under the Plan shall be exercisable at such times and
under such conditions as determined by the Board. An option may not be exercised
for a fractional share.
An option shall be deemed to be exercised when written notice of such
exercise has been received by the Company in accordance with the terms of the
option by the person entitled to exercise the option and full payment for the
shares with respect to which the option is exercised has been received by the
Company. Full payment may, as authorized by the Board, consist of any
consideration and method of payment allowable under the Plan. Until the issuance
(as evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate (or book
entry shares) evidencing such shares, no right to vote or receive dividends or
any other rights as a stockholder shall exist with respect to the optioned
Stock, notwithstanding the exercise of the option. The Company shall issue (or
cause to be issued) such stock certificate (or book entry shares) promptly upon
exercise of the option. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the stock certificates (or book
entry shares) are issued, except as provided in the Plan.
Exercise of an option in any manner shall result in a decrease in the
number of shares which thereafter may be available, both for purposes of the
Plan and for exercise under the option, by the number of shares with respect to
which the option is exercised.
Retirement, Termination, Disability, and Death
Incentive stock options granted to an Optionee terminate three (3) months
after retirement or termination of employment for reasons other than death or
disability. In the case of nonstatutory stock options, an Optionee may exercise
options that are vested at the time of termination to the extent and subject to
the provisions of the Grant Agreement, but in no event later than one year after
5
the date of termination or, if earlier, the expiration date of the option as set
forth in the Grant Agreement. In the event of disability, incentive stock
options may be exercised only within one year of the date of termination of
employment, but in no event later than the expiration date of the option as set
forth in the Grant Agreement, and only to the extent that the Optionee was
entitled to exercise the option at the date of termination of employment. In the
event of death, incentive stock options may be exercised by the estate of the
Optionee, or by a person who acquired the right to exercise such option by
bequest or inheritance or by reason of the death of the Optionee, according to
its terms, but in no event later than the expiration date of the option as set
forth in the Grant Agreement, and only to the extent that the Optionee was
entitled to exercise the option at the date of death.
Restricted Stock
Awards of restricted stock under the Plan may be made to employees,
non-employee directors and consultants. Subject to the terms of the Plan, the
Board shall determine the amount of restricted stock to be granted to a
participant and the Board may impose different terms and conditions on any
particular award made to any participant. Such awards shall be subject to the
following terms and conditions, and Grant Agreements under which such awards are
granted shall contain such additional terms and conditions, which are not
inconsistent with the express terms of the Plan, as the Board shall deem
appropriate.
An award of restricted stock is the transfer of shares to a participant
subject to such terms and conditions and substantial risk of forfeiture as the
Board deems appropriate, including, but not limited to, (i) forfeiture of such
shares upon termination of the participant's continuous status as an employee
(in the case of an employee), status as a non-employee director of the Company
or consulting relationship (in the case of a consultant) during the restriction
period described in the Plan and (ii) restrictions on the sale, assignment,
transfer or other disposition of the shares as set forth in the Plan. Each
participant receiving a restricted stock grant shall be issued a stock
certificate (or book entry shares) in respect of the shares subject to the
grant. The certificate (or book entry shares) shall be registered in the name of
the participant, shall be accompanied by a stock power duly executed by the
participant, and shall bear an appropriate legend referring to the terms,
conditions and restrictions applicable to the restricted stock. The certificate
(or book entry shares) evidencing the shares shall be held in custody by the
Company until the restrictions imposed thereon shall have lapsed or been
removed.
Each award of restricted stock shall provide that in order for a
participant's interest in the award to vest, the participant must continuously
provide services for the Company or any parent or subsidiary, as an employee,
consultant or non-employee director, subject to relief for specified reasons
established by the Board in the terms of the grant, such as disability or change
of control, for a period commencing on the date of the grant and ending on such
later date or dates as the Board may designate at the time of the grant. During
the restriction period, a participant may not sell, assign, transfer, pledge,
encumber or otherwise dispose of shares received under a restricted stock grant.
The Board, in its sole discretion, may provide for the lapse of restrictions in
installments during the restriction period. Upon expiration of the restriction
period (or lapse of restrictions during the restriction period where the
restrictions lapse in installments), the participant shall be entitled to
receive unrestricted shares for all or the applicable portion of the restricted
stock award, as the case may be.
Except as otherwise provided in the Plan, a participant shall have, with
respect to the shares received under a restricted stock grant, all of the rights
of a shareholder of the Company, including the right to vote the shares and the
right to receive any cash dividends. Stock dividends and other property issued
with respect to the shares covered by a restricted stock grant shall be treated
as additional shares under the restricted stock award and shall be subject to
the same restrictions and other terms and conditions that apply to shares under
such award with respect to which the dividends are paid.
The Board may determine the purchase price, if any, to be paid by a
participant for restricted stock. In the event that an award of restricted stock
is forfeited, the Company shall return to the participant the purchase price, if
any, paid for such award without interest.
6
Consequences of Change in Control
The Board may include in any Grant Agreement terms and conditions providing
that, if the Company undergoes a change of control, such as a merger,
reorganization, consolidation, or sale of substantially all of the Company's
assets, all outstanding options, whether or not such options are vested at such
time, shall become vested and exercisable, and that all restricted stock then
outstanding, shall become vested, effective the day immediately prior to such
change of control.
FEDERAL INCOME TAX CONSEQUENCES
The holder of an incentive stock option does not realize taxable income
upon the grant or upon the exercise of the option (although the option spread is
an item of tax preference potentially subject to the alternative minimum tax).
If the stock acquired upon exercise of the option is sold or otherwise disposed
of within 2 years from the option grant date or within 1 year from the exercise
date then, in general, gain realized on the sale is treated as ordinary income
to the extent of the option spread at the exercise date, and the Company
receives a corresponding deduction. Any remaining gain is treated as capital
gain. If the stock is held for at least two 2 years from the grant date and 1
year from the exercise date, then gain or loss realized upon the sale will be
capital gain or loss and the Company will not be entitled to a deduction. A
special basis adjustment applies to reduce the gain for alternative minimum tax
purposes.
An optionee does not realize taxable income upon the grant of an
nonstatutory stock option if the exercise price is at least equal to the fair
market value, as is provided in the Plan. The optionee will realize income at
the time of exercise of the nonstatutory stock option in an amount equal to the
difference between the exercise price and the market value on the date of
exercise. The Company is entitled to a deduction at the same time and in a
corresponding amount.
In general, if an optionee delivers previously-owned shares in payment of
the exercise price of an option, no gain or loss will be recognized on the
exchange of the previously-owned shares for an equivalent number of newly issued
shares. However, if the previously-owned shares delivered in payment of the
exercise price were acquired pursuant to the exercise of an incentive stock
option and if the requisite option holding periods are not satisfied (see
above), then the optionee will realize ordinary income on the delivery of the
previously-owned shares as in the case of any other "early" disposition of
option-acquired shares.
Furthermore, as stated in the plan, to the extent that the aggregate fair
market value of shares with respect to which options designated as incentive
stock options are exercisable for the first time by an Optionee during any
calendar year exceeds $100,000, such excess shall be treated as nonstatutory
stock options. In the event that only a portion of the options granted at the
same time can be applied to the $100,000 limit, the Company shall issue separate
share certificates for such number of shares as does not exceed the $100,000
limit and shall designate such shares as incentive stock option shares in its
share transfer records.
With respect to restricted stock, under normal federal income tax rules
(assuming no election under Section 83(b) has been made, as discussed below), an
employee receiving restricted stock awards is not taxed at the time of the grant
Instead, the employee is taxed at vesting, when the restrictions lapse. The
amount of income subject to tax is the difference between the fair market value
of the grant at the time of vesting minus the amount paid for the grant, if any.
For grants that pay in actual shares, the employee's holding period begins at
the time of vesting, and the employee's tax basis is equal to the amount paid
for the stock plus the amount included as ordinary compensation income. Upon a
later sale of the shares, assuming the employee holds the shares as a capital
asset, the employee would recognize capital gain income or loss; whether such
capital gain would be short- or long-term depends on the time between the
beginning of the holding period at vesting and the date of the subsequent sale.
Section 83(b) of the Internal Revenue Code permits the taxpayer to change
the tax treatment of their restricted stock awards. Employees choosing to make
the Special Tax 83(b) election are electing to include the fair market value of
the stock at the time of the grant minus the amount paid for the shares (if any)
as part of their income (without regard to the restrictions). They will be
subject to required tax withholding at the time the restricted stock award is
received. In addition to the immediate income inclusion, a Special Tax 83(b)
election will cause the stock's holding period to begin immediately after the
award is granted.
Also with a Special Tax 83(b) election, employees will not be subject to
income tax when the shares vest (regardless of the fair market value at the time
of vesting), and they will not be subject to further tax until the shares are
sold. Subsequent gains or losses of the stock would be capital gains or losses
(assuming the stock is held as a capital asset). However, if an employee were to
leave the company prior to vesting, he would not be entitled to any refund of
taxes previously paid or a tax loss with respect to the stock forfeited.
7
NO DISSENTER'S RIGHTS
Under Florida Law, any dissenting shareholders are not entitled to
appraisal rights with respect to the Amendment, and we will not independently
provide shareholders with any such right.
FINANCIAL STATEMENTS, SUPPLEMENTARY FINANCIAL INFORMATION, MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS AND
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As required by Item 13 of Schedule 14A, this Information Statement
incorporates by reference the following documents previously filed with the SEC,
copies of which are being mailed with this Information Statement as Exhibit C:
--The Company's Form 10-KSB for the year ended December 31, 2005, which was
filed with the SEC on April 18, 2006
--The Company's Form 10-QSB for the quarter ended March 31, 2006, which was
filed with the SEC on May 19, 2006
--The Company's Form 10-QSB for the quarter ended June 30, 2006, which was
filed with the SEC on August 14, 2006
FOR MORE INFORMATION
Much of this information may be found on the SEC's EDGAR database at
http://www.sec.gov. Copies of public material not on the Commission's website
are available for a fee by sending an electronic mail message to the Internet
group mailbox publicinfo@sec.gov, by fax at (202) 777-1027, or mail at 100 F
Street N.E. Washington DC 20549.
CONCLUSION
As a matter of regulatory compliance, we are sending you this Information
Statement which describes the purpose and effect of the Amendment and the Equity
Incentive Plan. Your consent is not required with respect to either the
Amendment or the Plan, and is not being solicited in connection with this
action. This Information Statement is intended to provide our shareholders
information required by the rules and regulations of the Securities Exchange Act
of 1934.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
THE ATTACHED MATERIAL IS FOR INFORMATIONAL PURPOSES ONLY.
For the Board of Directors of
Date: October 16, 2006 Mortgage Assistance Center Corporation
/s/ Dale Hensel
--------------------------------------
By: Dale Hensel
Title: President/Chairman
of the Board
8
EXHIBIT A
---------
Amendment to Articles of Incorporation
A-1
ARTICLES OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
MORTGAGE ASSISTANCE CENTER CORPORATION
Pursuant to the provisions of Section 607.1006 of the Florida Business
Corporation Act ("FBCA"), Mortgage Assistance Center Corporation (the
"Company"), a for profit corporation organized and existing under and by virtue
of the FBCA, adopts the following amendments to its Articles of Incorporation:
Article IV, Capital Stock, is deleted in its entirety and replaced
with:
"The aggregate number of shares of Common Stock which this
corporation will have authority to issue is Fifty Million
(50,000,000), par value $0.001 per share.
The aggregate number of shares of Preferred Stock which this
corporation will have authority to issue is Four Million
(4,000,000), par value $0.001 per share.
Preferred Stock may be issued in one or more series as may be
determined from time to time by the Board of Directors. All
shares of any one series of Preferred Stock will be identical
except as to the dates of issue and the dates from which
dividends on shares of the series issued on different dates will
cumulate, if cumulative. Authority is hereby expressly granted to
the Board of Directors to authorize the issuance of one or more
series of Preferred Stock, and to fix by resolution or
resolutions providing for the issue of each such series the
voting powers, designations, preferences, and relative,
participating, optional, redemption, conversion, exchange or
other special rights, qualifications, limitations or restrictions
of such series, and the number of shares in each series, to the
full extent now or hereafter permitted by law."
These Articles of Amendment were adopted on September 28, 2006
These Articles of Amendment shall be effective as of the date and time of
acceptance for filing by the Florida Department of State.
This amendment was approved by the written consent of the shareholders in
accordance with Section 607.0704 of the FBCA. The number of votes cast was
sufficient for approval.
A-2
IN WITNESS WHEREOF, the Company's President, Dale Hensel, has signed this
certificate this __ day of ____________, 2006.
By:
----------------------
Dale Hensel, President
A-3
EXHIBIT B
---------
Equity Incentive Plan
B-1
MORTGAGE ASSISTANCE CENTER CORPORATION
2006 EQUITY INCENTIVE PLAN
1. Purposes of the Plan. The purposes of the Plan are to attract and retain
the best available personnel for positions of substantial responsibility, to
provide additional incentive to Employees, Non-Employee Directors and
Consultants of the Company and its Subsidiaries, and to promote the success of
the Company's business. Options granted under the Plan may be Incentive Stock
Options (as defined under Section 422 of the Code) or Nonstatutory Stock
Options, as determined by the Administrator at the time of grant of the Option.
Restricted Stock may also be granted under the Plan.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of its Committees, acting
pursuant to Section 4(a) of the Plan at the time in question.
(b) "Award" means any Incentive Stock Option, Nonstatutory Stock Option or
Restricted Stock granted under the Plan.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means a committee or committees appointed by the Board in
accordance with Section 4(a) of the Plan.
(f) "Common Stock" means the common stock, $0.0005 par value per share, of
the Company.
(g) "Company" means Mortgage Assistance Center Corporation, a Florida
corporation.
(h) "Consultant" means a member of any advisory board of the Company or any
Parent or Subsidiary and any person, including an advisor, who is engaged by the
Company or any Parent or Subsidiary to render services and is compensated for
such services; provided, however, that the term Consultant shall not include
directors who are paid only a director's fee by the Company or any Parent or
Subsidiary, unless such director is a member of any advisory board of the
Company or any Parent or Subsidiary.
(i) "Continuous Status as an Employee" means the absence of any
interruption or termination of the employment relationship with the Company or
any Parent or Subsidiary. Continuous Status as an Employee shall not be
considered interrupted in the case of: (i) sick leave; (ii) military leave;
(iii) any other leave of absence approved by the Administrator or pursuant to
Company policy adopted from time to time; or (iv) transfers between locations of
the Company or any Parent or Subsidiary.
B-2
(j) "Employee" means any person, including officers and directors, employed
by the Company or any Parent or Subsidiary of the Company. The payment of a
director's fee by the Company shall not be sufficient to constitute "employment"
by the Company.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(l) "Fair Market Value" means, in relation to the Common Stock, the most
recent closing sales price for such stock determined in good faith by the
Administrator based upon reference to established markets or market systems on
which the Common Stock is traded or quoted, or if the Common Stock is not traded
on any market or quoted on any market system, then on such valuation method as
is deemed appropriate by the Administrator.
(m) "Grant Agreement" means a written agreement evidencing the grant of an
Award in such form, and containing such terms and conditions, as the
Administrator may approve from time to time.
(n) "Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code.
(o) "Non-Employee Director" means a director of the Company who is not also
an Employee.
(p) "Nonstatutory Stock Option" means an Option not intended to qualify as
an Incentive Stock Option.
(q) "Option" means a stock option granted pursuant to the Plan.
(r) "Optioned Stock" means the Common Stock subject to an Option.
(s) "Optionee" means an Employee, Non-Employee Director or Consultant who
receives an Option.
(t) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(u) "Participant" means an Employee, Non-Employee Director or Consultant to
whom an Award is granted under this Plan.
(v) "Plan" means this Mortgage Assistance Center Corporation 2006 Equity
Incentive Plan, as amended.
(w) "Restriction Period" shall have the meaning ascribed to it in Section
10(b) of the Plan.
(x) "Restricted Stock" means Shares granted to a Participant pursuant to
Section 10 of the Plan, subject to such terms and conditions (including a
substantial risk of forfeiture) as specified in the Grant Agreement.
B-3
(y) "Share" means a share of Common Stock, as adjusted in accordance with
Section 14 of the Plan.
(z) "Subsidiary" means a "subsidiary corporation," whether now or hereafter
existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan.
(a) Plan Limit. Subject to adjustment as provided in Section 14 of the
Plan, the maximum aggregate number of Shares that may be issued under the Plan
is 4,250,000, provided, however, that (i) the aggregate number of Shares that
may be issued as Restricted Stock may not exceed 1,062,500 and (ii) the
aggregate number of Shares that may be issued under Incentive Stock Options may
not exceed 2,000,000. In computing the foregoing limits:
(i) To the extent any Options expire or become unexercisable for any
reason without having been exercised in full, the Common Stock subject to
such Options shall again be available for issuance under the Plan; and
(ii) To the extent any shares granted as Restricted Stock granted
under the Plan are forfeited, such Shares shall again be available for
issuance under the Plan.
(b) Individual Limit. Subject to adjustment as provided in Section 14 of
the Plan, the aggregate number of Shares that may be issued to any individual
under the Plan, whether issued under Options or Restricted Stock, shall not
exceed 1,000,000.
4. Administration of the Plan.
(a) Procedure.
(i) Administration with Respect to Officers and Directors. With
respect to Awards to Employees who are also officers or directors of the
Company, the Plan shall be administered by a Committee designated by the
Board to administer the Plan, which Committee shall be constituted in such
a manner as to permit the Plan to comply with Rule 16b-3 with respect to a
plan intended to qualify thereunder as a discretionary plan. With respect
to Awards to Non-Employee Directors, the Plan shall be administered by the
Board in accordance with Rule 16b-3, provided that no Non-Employee Director
shall vote on any decision affecting his individual benefits under the
Plan. Once appointed, such Committee shall continue to serve in its
designated capacity until otherwise directed by the Board. From time to
time, the Board may increase the size of the Committee and appoint
additional members thereof, remove members (with or without cause) and
appoint new members in substitution therefor, fill vacancies however caused
and remove all members of the Committee and thereafter directly administer
the Plan, all to the extent permitted by Rule 16b-3 with respect to a plan
intended to qualify thereunder as a discretionary plan.
(ii) Administration with Respect to Consultants and Other Employees.
With respect to Awards to Employees or Consultants who are neither
directors nor officers of the Company, the Plan shall be administered by
B-4
(A) the Board or (B) a Committee designated by the Board, which Committee
shall be constituted in such a manner as to satisfy the legal requirements
relating to the administration of incentive stock option plans, if any, and
of Florida corporate law, the Code and federal securities laws. Once
appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. From time to time, the
Board may increase the size of the Committee and appoint additional members
thereof, remove members (with or without cause) and appoint new members in
substitution therefor, fill vacancies however caused and remove all members
of the Committee and thereafter directly administer the Plan, all to the
extent permitted by applicable laws.
(b) Powers of the Administrator. Subject to the provisions of the Plan and,
in the case of a Committee, the specific duties delegated by the Board to the
Committee, the Administrator shall have the authority, in its sole discretion:
(i) to determine the Fair Market Value of the Common Stock in
accordance with Section 2(l) of the Plan;
(ii) to select the Employees, Non-Employee Directors and Consultants
to whom Awards may from time to time be granted under the Plan;
(iii) to determine whether and to what extent Incentive Stock Options,
Nonstatutory Stock Options or Restricted Stock, or any combination thereof,
are granted under the Plan;
(iv) to determine the number of Shares to be covered by each Award
granted under the Plan;
(v) to approve forms of Grant Agreements for use under the Plan;
(vi) to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any Award granted under the Plan (including, but not
limited to, the exercise price and method, form of settlement, vesting
period and acceleration of vesting and forfeiture restrictions and waiver
of forfeiture restrictions, based in each case on such factors as the
Administrator shall in its sole discretion determine), which terms and
conditions shall be set forth in a Grant Agreement approved by the
Administrator; and
(vii) with respect to any Employee or Consultant who is resident
outside the United States, to amend or vary the terms of the Plan in order
to conform such terms with the requirements of local law, to take advantage
of preferential provisions under local law, or to meet the objectives of
the Plan, establish administrative rules and procedures to facilitate the
operation of the Plan in any non-U.S. jurisdiction and establish one or
more sub-plans for these purposes.
B-5
5. Eligibility.
(a) Nonstatutory Stock Options and Restricted Stock may be granted to
Employees, Consultants or Non-Employee Directors. Incentive Stock Options may be
granted only to Employees. An Employee, Consultant or Non-Employee Director who
has been granted Awards under the Plan may, if such individual is otherwise
eligible, be granted additional Awards under the Plan.
(b) Each Option shall be designated in the Grant Agreement as either an
Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding
such designation, to the extent that the aggregate Fair Market Value of Shares
with respect to which Options designated as Incentive Stock Options are
exercisable for the first time by an Optionee during any calendar year exceeds
$100,000, such excess shall be treated as Nonstatutory Stock Options. In the
event that only a portion of the Options granted at the same time can be applied
to the $100,000 limit, the Company shall issue separate share certificates for
such number of Shares as does not exceed the $100,000 limit and shall designate
such Shares as Incentive Stock Option Shares in its Share transfer records.
(c) For purposes of Section 5(b), Incentive Stock Options shall be taken
into account in the order in which they are granted, and the Fair Market Value
of Shares shall be determined as of the time the Options with respect to such
Shares are granted.
6. Term of Plan. Subject to any applicable law, the Plan shall continue in
effect until terminated pursuant to Section 17, provided, however, that no
Incentive Stock Options or other Awards shall be granted under the Plan
following the expiration of 10 years from the date the Plan is adopted, or the
date the Plan is approved by the Company's stockholders, whichever is earlier.
7. Term of Options. The term of each Option shall be the term stated in the
Grant Agreement, provided, however, that no Option granted under the Plan shall
be exercisable after the expiration of 10 years from the date such Option is
granted or such shorter period as may be provided in the Grant Agreement. In the
case of an Incentive Stock Option granted to an Optionee who, at the time the
Incentive Stock Option is granted, owns stock representing more than 10 percent
of the total combined voting power of all classes of stock of the Company or any
Parent or Subsidiary, the Incentive Stock Option shall not be exercisable after
the expiration of five years from the date such Option is granted or such
shorter period as may be provided in the Grant Agreement.
8. Option Exercise Price and Consideration.
(a) The per share exercise price for Shares to be issued pursuant to
exercise of an Option shall be such price as is determined by the Board, but
shall be subject to the following:
(i) Except as provided in Section 8(a)(ii) below, each Option shall be
granted at an exercise price equal to no less than the Fair Market Value of
a share on the date of grant.
B-6
(ii) In the case of an Incentive Stock Option granted to an Employee
who, at the time the Option is granted, owns stock possessing more than 10
percent of the total combined voting power of all classes of stock of the
Company or any Parent or Subsidiary, each Incentive Stock Option shall be
granted at an exercise price equal to no less than 110% of the Fair Market
Value of a Share on the date of grant..
(b) The consideration to be paid for Shares to be issued upon exercise of
an Option, including the method of payment, shall be determined by the
Administrator at the time of grant (taking into consideration whether the type
of consideration authorized may reasonably be expected to benefit the Company)
and may consist of any consideration and method of payment for the issuance of
Shares permitted by applicable law, including any combination of:
(i) cash;
(ii) check or negotiable instrument;
(iii) promissory note, except as prohibited by the Sarbanes-Oxley Act
of 2002;
(iv) other Shares that have a Fair Market Value on the date of payment
equal to the aggregate exercise price of the Optioned Stock with respect to
which the Option is being exercised, provided, however, that if such Shares
(A) were acquired upon exercise of a compensatory stock option, the
Optionee has held such Shares for more than six months on the date of
surrender, or (B) were not acquired upon exercise of a compensatory stock
option, such Shares were not acquired directly or indirectly from the
Company;
(v) authorization for the Company to retain, from the total number of
Shares with respect to which the Option is being exercised, Shares having a
Fair Market Value on the date of exercise equal to the exercise price for
the total number of Shares with respect to which the Option is being
exercised; or
(vi) delivery of a properly executed exercise notice together with
irrevocable instructions to a broker to promptly deliver to the Company the
amount of sale or loan proceeds required to pay the exercise price.
9. Exercise of Options.
(a) Procedure for Exercise; Rights as a Stockholder. Any Option granted
under the Plan shall be exercisable at such times and under such conditions as
determined by the Administrator.
An Option may not be exercised for a fractional share.
An Option shall be deemed to be exercised when written notice of such
exercise has been received by the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
B-7
Company. Full payment may, as authorized by the Administrator, consist of any
consideration and method of payment allowable under Section 8(b) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate (or book entry shares) evidencing such Shares, no right to vote or
receive dividends or any other rights as a stockholder shall exist with respect
to the Optioned Stock, notwithstanding the exercise of the Option. The Company
shall issue (or cause to be issued) such stock certificate (or book entry
shares) promptly upon exercise of the Option. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the stock
certificates (or book entry shares) are issued, except as provided in Section 14
of the Plan.
Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for exercise under the Option, by the number of Shares with respect to
which the Option is exercised.
(b) Termination of Consultancy or Employment. In the event of termination
of an Optionee's consulting relationship (in the case of a Consultant),
Continuous Status as an Employee (in the case of an Employee) or status as a
Non-Employee Director of the Company, subject to Section 11 of the Plan:
(i) in the case of Incentive Stock Options, an Optionee may exercise
Options that are vested at the date of termination to the extent and
subject to the provisions of the Grant Agreement, but in no event later
than three months after the date of termination or, if earlier, the
expiration date of the Option as set forth in the Grant Agreement; and
(ii) in the case of Nonstatutory Stock Options, an Optionee may
exercise Options that are vested at the time of termination to the extent
and subject to the provisions of the Grant Agreement, but in no event later
than one year after the date of termination or, if earlier, the expiration
date of the Option as set forth in the Grant Agreement.
To the extent that an Optionee is not entitled to exercise an Option
at the date of termination or does not exercise such Option to the extent
so entitled within the time specified in this Section 9(b), the Option
shall terminate.
(c) Disability of Optionee. Notwithstanding the provisions of Section 9(b),
above, in the case of an Incentive Stock Option, in the event of termination of
an Optionee's Continuous Status as an Employee as a result of the Optionee's
permanent and total disability, as defined in Section 22(e)(3) of the Code, such
Option may be exercised only within one year of the date of termination of
employment, but in no event later than the expiration date of the Option as set
forth in the Grant Agreement, and only to the extent that the Optionee was
entitled to exercise the Option at the date of termination of employment. To the
extent that an Optionee is not entitled to exercise an Incentive Stock Option at
the date of termination of employment or does not exercise such Option to the
extent so entitled within the time specified in this Section 9(c), the Option
shall terminate.
B-8
(d) Death of Optionee. In the event of the death of an Optionee, an Option
may be exercised by the estate of the Optionee, or by a person who acquired the
right to exercise such Option by bequest or inheritance or by reason of the
death of the Optionee, according to its terms, but in no event later than the
expiration date of the Option as set forth in the Grant Agreement, and only to
the extent that the Optionee was entitled to exercise the Option at the date of
death. To the extent that an Optionee is not entitled to exercise an Option at
the date of the Optionee's death, such unvested portion of the Option shall
terminate.
(e) Rule 16b-3. Options granted to Participants subject to Section 16(b) of
the Exchange Act must comply with Rule 16b-3 and shall contain such additional
conditions or restrictions as may be required thereunder to qualify for the
broadest exemption from Section 16 of the Exchange Act with respect to Plan
transactions.
10. Restricted Stock. Awards of Restricted Stock under the Plan may be made
to Employees, Non-Employee Directors and Consultants. Subject to the terms of
the Plan, the Administrator shall determine the amount of Restricted Stock to be
granted to a Participant and the Administrator may impose different terms and
conditions on any particular Award made to any Participant. Such Awards shall be
subject to the following terms and conditions, and Grant Agreements under which
such Awards are granted shall contain such additional terms and conditions,
which are not inconsistent with the express terms of the Plan, as the
Administrator shall deem appropriate.
(a) Restricted Stock Grants. An Award of Restricted Stock is the transfer
of Shares to a Participant subject to such terms and conditions and substantial
risk of forfeiture as the Administrator deems appropriate, including, but not
limited to, (i) forfeiture of such Shares upon termination of the Participant's
Continuous Status as an Employee (in the case of an Employee), status as a
Non-Employee Director of the Company or consulting relationship (in the case of
a Consultant) during the Restriction Period described in Section 10(b), below
and (ii) restrictions on the sale, assignment, transfer or other disposition of
the Shares as set forth in Section 10(b), below. Each Participant receiving a
Restricted Stock grant shall be issued a stock certificate (or book entry
shares) in respect of the Shares subject to the grant. The certificate (or book
entry shares) shall be registered in the name of the Participant, shall be
accompanied by a stock power duly executed by the Participant, and shall bear an
appropriate legend referring to the terms, conditions and restrictions
applicable to the Restricted Stock. The certificate (or book entry shares)
evidencing the Shares shall be held in custody by the Company until the
restrictions imposed thereon shall have lapsed or been removed.
(b) Restriction Period. Each Award of Restricted Stock shall provide that
in order for a Participant's interest in the Award to vest, the Participant must
continuously provide services for the Company or any Parent or Subsidiary, as an
Employee, Consultant or Non-Employee Director, subject to relief for specified
reasons established by the Administrator in the terms of the grant, such as
disability or change of control, for a period commencing on the date of the
grant and ending on such later date or dates as the Administrator may designate
at the time of the grant. During the Restriction Period, a Participant may not
sell, assign, transfer, pledge, encumber or otherwise dispose of Shares received
under a Restricted Stock grant. The Administrator, in its sole discretion, may
B-9
provide for the lapse of restrictions in installments during the Restriction
Period. Upon expiration of the Restriction Period (or lapse of restrictions
during the Restriction Period where the restrictions lapse in installments), the
Participant shall be entitled to receive unrestricted Shares for all or the
applicable portion of the Restricted Stock Award, as the case may be.
(c) Rights as a Stockholder. Except as provided in this Section 10, a
Participant shall have, with respect to the Shares received under a Restricted
Stock grant, all of the rights of a stockholder of the Company, including the
right to vote the Shares and the right to receive any cash dividends. Stock
dividends and other property issued with respect to the Shares covered by a
Restricted Stock grant shall be treated as additional Shares under the
Restricted Stock Award and shall be subject to the same restrictions and other
terms and conditions that apply to Shares under such Award with respect to which
the dividends are paid.
(d) Payment for Restricted Stock. The Administrator may determine the
purchase price, if any, to be paid by a Participant for Restricted Stock. In the
event that an Award of Restricted Stock is forfeited, the Company shall return
to the Participant the purchase price, if any, paid for such Award without
interest.
11. Termination for Cause. If a Participant's employment with the Company
or any Subsidiary shall be terminated for Cause, such Participant's right to any
further payments, vesting or exercisability with respect to any Award shall
terminate in its entirety. "Cause" means termination of Participant's employment
for "cause" as defined in any employment or severance agreement the Participant
may have with the Company or a Subsidiary or, if no such agreement exists,
unless otherwise provided in a particular Grant Agreement, "cause" means (a)
conviction or pleading guilty or no contest to any crime (whether or not
involving the Company or any of its Subsidiaries) constituting a felony in the
jurisdiction involved; (b) engaging in any substantiated act involving moral
turpitude; (c) engaging in any act which, in each case, subjects, or if
generally known would subject, the Company or any of its Subsidiaries to public
ridicule or embarrassment; (d) material violation of the Company's or any of its
Subsidiaries' policies, including, without limitation, those relating to sexual
harassment or the disclosure or misuse of confidential information; (e) serious
neglect or misconduct in the performance of the Participant's duties for the
Company or any of its Subsidiaries or willful or repeated failure or refusal to
perform such duties; in each case as determined by the Committee, which
determination will be final, binding and conclusive.
12. Non-transferability of Awards. Awards may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent and distribution and Options may be exercised,
during the lifetime of the Optionee, only by the Optionee.
13. Stock Withholding to Satisfy Withholding Tax Obligations.
(a) Cash Remittance. Whenever a taxable event occurs that imposes a tax
withholding obligation on the Company or a Subsidiary as a result of Options
B-10
being exercised or Restricted Stock becoming vested or settled, the Company
shall have the right to require the Participant to remit to the Company, in
cash, an amount sufficient to satisfy the federal, state and local withholding
tax and social insurance contribution requirements (including withholding
requirements of non-U.S. taxing jurisdictions), if any, attributable to such
taxable event. In addition, the Company shall have the right to withhold from
any cash payments required to be made under the Plan an amount sufficient to
satisfy the federal, state and local withholding tax and social insurance
contribution requirements (including withholding requirements of non-U.S. taxing
jurisdictions), if any, attributable to such payments.
(b) Share Remittance. At the election of a Participant, and subject to the
approval of the Administrator, the Participant may, in lieu of remitting cash as
provided in Section 13(a), tender to the Company a number of Shares, the Fair
Market Value of which at the tender date is (i) sufficient to satisfy the
federal, state and local withholding tax and social insurance contribution
requirements (including withholding requirements of non-U.S. taxing
jurisdictions), if any, attributable to such taxable event and (ii) not greater
than the withholding tax and social insurance contribution obligations
attributable to such taxable event. If the Participant is subject to Rule 16b-3
under the Exchange Act, the election must comply with such Rule 16b-3 and shall
be subject to such additional conditions or restrictions as may be required
thereunder to qualify for the broadest exemption from Section 16(b) of the
Exchange Act with respect to Plan transactions.
(c) Share Withholding. Whenever a taxable event occurs that imposes a tax
withholding obligation on the Company as a result of Options being exercised or
Restricted Stock becoming vested, the Administrator, in its sole discretion,
shall have the right to withhold a number of Shares, the Fair Market Value of
which at the relevant date is (i) sufficient to satisfy the federal, state and
local withholding tax and social insurance contribution requirements (including
withholding requirements of non-U.S. taxing jurisdictions), if any, attributable
to such taxable event and (ii) not greater than the withholding tax and social
insurance contribution obligations attributable to such taxable event.
14. Adjustments upon Changes in Capitalization or Merger. Subject to any
required action by the stockholders of the Company, the number of shares of
Common Stock covered by each outstanding Award, the number of shares of Common
Stock that have been authorized for issuance under the Plan, as well as the
price per share of Common Stock covered by each such outstanding Award, and the
limit on the number of shares that may be issued to an individual (as provided
in Section 3(b) of the Plan) shall be proportionately adjusted for any increase
or decrease in the number of issued shares of Common Stock resulting from a
stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company, provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
B-11
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.
In the event of a corporate merger, consolidation, acquisition of property or
stock, separation, reorganization or liquidation, the Administrator shall be
authorized (x) to assume under the Plan previously issued Awards, or to
substitute new Awards for previously issued compensatory Awards as part of such
adjustment; (y) to cancel Awards that are Stock Options and give the
Participants who are the holders of such Awards notice and opportunity to
exercise for 30 days prior to such cancellation; or (z) to cancel any such
Awards and to deliver to the Participants cash in an amount that the Committee
shall determine in its sole discretion is equal to the Fair Market Value of such
Awards on the date of such event, which in the case of Stock Options shall be
the excess of the Fair Market Value of Common Stock on such date over the
exercise or strike price of such Awards.
15. Vesting of Awards in Certain Events. The Administrator may, in its
discretion, include in any Grant Agreement terms and conditions providing that,
if the Company undergoes a change of control, as defined in the next sentence,
then all outstanding Options, whether or not such Options are vested at such
time, shall become vested and exercisable, and that all Restricted Stock then
outstanding, shall become vested, effective the day immediately prior to such
change of control. For purposes of the preceding sentence, a change of control
shall occur if the Company is merged, consolidated or reorganized into or with
another person, entity or group of entities under common control or if a
majority of the outstanding capital stock or all or substantially all of the
assets of the Company are sold to any other person, entity or group of entities
under common control and as a result of such merger, consolidation,
reorganization or sale of capital stock or assets, more than 51 percent of the
combined voting power of the then outstanding voting securities of the surviving
person or entity immediately after such transaction are held in the aggregate by
a person, entity or group of entities under common control who beneficially
owned less than 51 percent of the combined voting power of the Company prior to
such transaction. Notwithstanding the foregoing, any transaction that is
effected by the Company for the purposes of internal corporate restructuring of
the Company and its affiliated companies, which results in any or all of the
combined voting power of the voting securities of the Company being held by an
entity affiliated with the Company immediately prior to such transaction, shall
not constitute or result in a "Change of Control" for purposes of this Section
15.
16. Time of Granting Options. The date of grant of an Option shall, for all
purposes, be the date on which the Administrator completes all actions required
to effectuate the Award under applicable laws. Notice of the determination shall
be given to each Employee, Consultant or Non-Employee Director to whom an Option
is so granted within a reasonable time after the date of such grant.
17. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend, alter,
suspend or discontinue the Plan, but no amendment, alteration, suspension or
discontinuation shall be made which would impair the material rights of any
Participant under any Award theretofore made, without the Participant's consent.
B-12
In addition, to the extent necessary and desirable to comply with Rule 16b-3
under the Exchange Act, Section 162(m) or 422 of the Code or any other
applicable law or regulation, including the listing requirements of any other
exchanges or markets on which the Shares are traded, the Company shall obtain
stockholder approval of any Plan amendment in such a manner and to such a degree
as required.
(b) Effect of Amendment or Termination. Any such amendment or termination
of the Plan shall not affect Options or Restricted Stock already granted under
the Plan, and such grants shall remain in full force and effect as if the Plan
had not been amended or terminated, unless mutually agreed otherwise between the
Participant and the Board, which agreement must be in writing and signed by the
Participant and the Company.
18. Conditions upon Issuance of Shares. Shares shall not be issued under
the Plan unless the issuance of and delivery of such Shares pursuant thereto
shall comply with all relevant provisions of law, including, but not limited to,
the Securities Act of 1933, as amended, the Exchange Act, the rules and
regulations promulgated thereunder and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
As a condition to the issuance of any Shares under the Plan, the Company may
require the person acquiring such Shares to represent and warrant at the time of
any such issuance that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
19. Reservation of Shares. The Company, during the term of the Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan. The inability of the Company
to obtain authority from any regulatory body having jurisdiction, which
authority is deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.
20. Grant Agreements. Grants of Options and Restricted Stock shall be
evidenced by written Grant Agreements in such form, and containing such terms
and conditions, as the Administrator shall approve from time to time. The
Administrator in its sole discretion may utilize different forms, with varying
terms and conditions, for grants or awards.
21. Employment Rights; Existing Plans; Company Policy.
(a) The Plan shall not confer upon any Employee, Consultant or Non-Employee
Director any right with respect to continuation of any employment, consulting or
other relationship with the Company or any Parent or Subsidiary. Nor shall the
Plan limit in any way the right of the Company or any Parent or Subsidiary to
terminate any employment, consulting or other relationship of any Employee,
Consultant or Non-Employee Director with the Company or any Parent or
Subsidiary.
B-13
(b) The adoption of this Plan shall not affect the existence of other
compensatory equity programs of the Company, and any such existing plans will
remain in full force and effect according to their terms.
(c) The Company reserves the right to adopt and enforce policies relating
to transactions in its securities by Employees, Consultants and Non-Employee
Directors. All grants made under this Plan, and all transactions in Shares
relating to such grants, will be subject to any applicable policy of the Company
relating to transactions in its securities, whether such policy is adopted or
amended before or after the grant.
22. Code Section 409A. The Plan is intended to comply with the requirements
of Section 409A of the Code. Any terms of the Plan or any Grantee Agreement that
conflict with such guidance shall be null and void. To the extent necessary or
advisable, the Administrator may amend the Plan or any Award to delete any
conflicting provisions and to add such other provisions as are required to fully
comply with the applicable provisions of Section 409A and any other legislative
or regulatory requirements applicable to the Plan.
23. Governing Law. This Plan and all determinations made and actions taken
pursuant hereto, to the extent not otherwise governed by mandatory provisions of
the Code or the securities laws of the United States, shall be governed by and
construed in accordance with the laws of the State of Florida.
B-14
EXHIBIT C
---------
Form 10-KSB for year ended December 31, 2005
Form 10-QSB for quarter ended March 31, 2006
Form 10-QSB for quarter ended June 30, 2006
C-1