SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
November 30, 2006
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Mortgage Assistance Center Corporation
(Exact name of registrant as specified in its charter)
Florida 000-21627 06-1413994
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(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
2614 Main St.
Dallas, Texas 75226
(Address of principal executive offices including Zip Code)
(214) 670-0005
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(Registrant's telephone number, including area code)
N/A
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[_] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01. Entry into a Material Definitive Agreement
Entry into Series A Preferred Stock and Common Stock Warrant Purchase Agreement
On November 30, 2006, Mortgage Assistance Center Corporation ("the
Company"), along with W.C. Payne Investments, L.L.C and FAX/MACC, L.P. (referred
to herein collectively as the "Investors") entered into a Series A Preferred
Stock and Common Stock Warrant Purchase Agreement, attached as Exhibit 10.01,
(the "Purchase Agreement") pursuant to which the Company sold to Investors
1,500,000 shares of the Company's Series A Preferred Stock at a price of $1.00
per share (the "Shares") as well as warrants, attached as Exhibits 10.04 and
10.05, to purchase 4,556,694 shares of the Company's common stock at an exercise
price of $.01 per warrant share (the "Warrants"). Under the terms of the
Purchase Agreement, the Investors purchased 1,500,000 of the Shares on November
30, 2006, with the additional 1,500,000 Shares to be purchased, in increments of
500,000, conditioned upon the satisfaction of the March 31, June 30, and
September 30, 2007 benchmarks set forth in the Purchase Agreement and included
below:
Performance for the Period Ended:
Three (3) Months Six (6) Months Nine (9) Months
Ended Ended Ended
3/31/07 6/30/07 9/30/07
Gross Operating Revenues $1,935,173 $4,907,192 $4,637,986
Net Operating Revenues $503,145 $1,275,870 $2,481,746
Portfolio Assets Purchased $3,877,168 $8,837,849 $15,164,060
Entry into Investors' Rights Agreement
Effective November 30, 2006, in connection with the Purchase Agreement,
the Company entered into a Series A Preferred Stock Investors' Rights Agreement
(the "Investors' Rights Agreement") with the Investors, attached as Exhibit
10.02. Pursuant to the Investors' Rights Agreement, the Company has, among other
things:
A) Agreed to file a registration statement covering the resale of all
issued shares of Company's Common Stock ("Common Stock"), and shares of Common
Stock issuable upon conversion or exercise of any convertible securities,
warrants, or options (not including any shares of Common Stock that have
previously been registered or that have been sold to the public pursuant to
either a registration statement or Rule 144 under the Securities Act of 1933),
that are held by the Investors, and will cause such registration statement to be
effective within eighteen (18) months of the effective date of the Investors'
Rights Agreement; and
B) Granted piggy-back registration rights with respect to the resale of
any issued shares of Common Stock, or shares of Common Stock issuable upon
conversion or exercise of any convertible securities, warrants, or options held
by the Investors but not covered by the above-mentioned registration statement.
Entry into Stockholders' Agreement
The Company has entered into a Stockholders' Agreement, attached to
this Form 8-K as Exhibit 10.03. The Stockholders' Agreement, which is by and
among the Company and the holders of Common Stock that are parties thereto (the
"Stockholders"), provides, among other things:
A) The Investors and the Company will have first offer rights,
providing that, with limited exceptions, should a Stockholder desire to transfer
any of its Shares, such Stockholder must first offer such Shares to the
Investors and then to the Company.
B) The Investors are to be granted a co-sale right, giving them the
option to include their Shares in any proposed sale of Common Stock that, when
aggregated with all other transfers of Common Stock, represents at least ten
percent (10%) of the outstanding shares of the Company's Common Stock.
C) Any Investor or group of Investors desiring to transfer to a third
party substantially all of the Shares and common stock equivalent shares held by
them, which Shares and common stock equivalent shares represent at least fifty
percent (50%) of each of their respective classes of the Company's stock, hold a
compelled sale right providing that, in the case of such a sale, any non-selling
minority stockholders will, at the election of the selling Investors, be
required to transfer their shares to the third-party purchaser upon the same
terms and conditions as the selling Investors.
D) All Stockholders and Investors are to be granted preemptive rights,
providing that, with limited exceptions, if at any time the Company proposes to
issue and sell any Common Stock, the Company must first offer such Common Stock
to each Stockholder and Investor.
Adoption of Equity Incentive Plan
The Board and the Company's stockholders have approved the Equity
Incentive Plan (the "Plan") attached to the Company's Definitive 14C Information
Statement, dated October 16, 2006, as Exhibit B.
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 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. 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 statutory stock options may not exceed
2,000,000, and (iii) the aggregate number of shares that may be issued under
non-statutory stock options may not exceed 1,187,500. Subject to adjustment as
provided in 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.
Hensel Employment Agreement
Effective as of November 30, 2006, the Company entered into a new
employment agreement (the "Hensel Employment Agreement") with Dale Hensel, a
resident of Texas (hereinafter referred to as "Mr. Hensel"). Pursuant to the
Hensel Employent Agreement, Mr. Hensel will receive an annual base salary of one
hundred thirty-five thousand dollars ($135,000) and a cash bonus equal to fifty
percent (50%) of his base salary, contingent upon the Company's meeting or
exceeding the annual financial budget projection for any fiscal year as approved
by the Board, in addition to any bonuses or incentive compensation granted by
the Board in their sole discretion, and Mr. Hensel will continue to serve the
Company as its President and Chief Executive Officer.
Upon execution of the Hensel Employment Agreement, Mr. Hensel was
granted incentive stock options for a total of 300,000 shares of Common Stock
under the Company's stock option plan. This grant is effective as of the date of
the Hensel Employment Agreement (or the date of grant under the plan, if later).
One third of such incentive stock options will become exercisable on each
successive anniversary of the date of the Hensel Employment Agreement, provided
that Mr. Hensel is employed by the Company on each such anniversary date.
The Hensel Employment Agreement will continue for the balance of the
calendar year 2006, and then for a period of three (3) years commencing January
1, 2007. Either party may terminate the agreement upon the provision of 90 days'
prior written notice to the other party. However, should the Hensel Employment
Agreement be terminated by the Company without good cause, Mr. Hensel is
entitled to receive all compensation and benefits provided under the Hensel
Employment Agreement for a period of twelve (12) months.
The Hensel Employment Agreement is attached as Exhibit 10.10.
Barnett Employment Agreement
Effective as of November 30, 2006, the Company entered into an
employment agreement (the "Barnett Employment Agreement") with Dan Barnett, a
resident of Texas (hereinafter referred to as "Mr. Barnett"). Pursuant to the
Barnett Employment Agreement, Mr. Barnett will receive an annual base salary of
one hundred thirty-five thousand dollars ($135,000) and a cash bonus equal to
fifty percent (50%) of his base salary, contingent upon the Company's meeting or
exceeding the annual financial budget projection for any fiscal year as approved
by the Board, in addition to any other bonuses or incentive compensation granted
by the Board in its sole discretion. Mr. Barnett will serve the Company as
Senior Vice President, Secretary, and Treasurer.
Upon execution of the Barnett Employment Agreement, Mr. Barnett was
granted incentive stock options for a total of 300,000 shares of Common Stock
under the Company's stock option plan. This grant is effective as of the date of
the Barnett Employment Agreement (or the date of grant under the plan, if
later). One third of such incentive stock options will become exercisable on
each successive anniversary of the date of the Barnett Employment Agreement,
provided that Mr. Barnett is employed by the Company on each such anniversary
date.
The Barnett Employment Agreement will continue for the balance of the
calendar year 2006, and then for a period of three (3) years commencing January
1, 2007. Either party may terminate the agreement upon the provision of 90 days'
prior written notice to the other party. However, should the Barnett Employment
Agreement be terminated by the Company without good cause, Mr. Barnett is
entitled to receive all compensation and benefits provided under the Barnett
Employment Agreement for a period of twelve (12) months.
The Barnett Employment Agreement is attached as Exhibit 10.11.
Grant of Warrants to New Directors
On November 30, 2006, the Company issued two warrant certificates (the
"Warrants"), one each to both Rod Jones and William Payne, in connection with
their election to the Board. The Warrants grant to each of Rod Jones and William
Payne the right to purchase seventy-five thousand (75,000) shares of Common
Stock at an initial purchase price of $0.39 per share, which price may be
adjusted in accordance with the terms of the Warrants. The option to purchase
under the Warrants is effective from November 30, 2006, until November 30, 2016.
The Warrants are attached as Exhibits 10.06 and 10.07.
Grant of Warrant to Legal Counsel
On November 30, 2006, the Company issued a warrant certificate to
Michael Caolo, Jr. ("Mr. Caolo") in connection with his services as legal
counsel to the Company. The warrant certificate grants to Mr. Caolo the right to
purchase four hundred sixty-seven thousand (467,000) shares of Common Stock at
an initial purchase price of $0.39 per share, which price may be adjusted in
accordance with the terms of the warrant certificate. The option to purchase
under the warrant certificate is effective from November 30, 2006, until
November 30, 2011. The warrant certificate is attached as Exhibit 10.08.
Grant of Warrant to Financial Advisor
On November 30, 2006, the Company issued a warrant certificate to
Parkwood Advisors, LLC. ("Parkwood") in connection with its services as
financial advisor to the Company. The warrant certificate grants to Parkwood the
right to purchase one hundred fifty thousand (150,000) shares of Common Stock at
an initial purchase price of $0.39 per share, which price may be adjusted in
accordance with the terms of the warrant certificate. The option to purchase
under the warrant certificate is effective from November 30, 2006, until
November 30, 2011. The warrant certificate is attached as Exhibit 10.09.
Item 3.02. Unregistered Sales of Equity Securities
As described in Item 1.01, on November 30, 2006, the Company and the
Investors entered into the Purchase Agreement pursuant to which the Company has
sold to Investors 1,500,000 shares of the Company's Series A Preferred Stock as
well as warrants, attached hereto as Exhibits 10.04 and 10.05, to purchase
4,556,694 shares of the Company's common stock. See Item 1.01 for a description
of this sale.
As described in Item 1.01, on November 30, 2006, the Company issued
warrants to both Rod Jones and William Payne in connection with their election
to the Board, and to both Michael Caolo, Jr., and Parkwood Advisors, LLC, in
connection with their provision of services to the Company. See Item 1.01 for a
description of these warrants.
As described in Item 1.01, on November 30, 2006, the Company entered
into employment agreements with both Dale Hensel and Dan Barnett. Pursuant to
those agreements, Mr. Hensel and Mr. Barnett have each been granted incentive
stock options for the purchase of up to 300,000 shares of Common Stock. See Item
1.01 for a description of these grants.
Item 5.02. Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers; Compensatory Arrangements of Certain
Officers.
Naming of New Directors
On November 30, 2006, William Payne, Rod Jones, and Dan Barnett were
elected to the Board of Directors of the Company, with William Payne and Rod
Jones having been nominated by the Investors.
William Payne is the managing member of W.C. Payne Investments, LLC,
which is a party to the Purchase Agreement described in Item 1.01.
Rod Jones is a limited partner in FAX/MACC, L.P., which is a party to
the Purchase Agreement described in Item 1.01. He is also the Managing Member of
FAX GenPar, LLC, which is the General Partner of Family Access Exchange II, L.P,
which is the General Partner of FAX/MACC, L.P.
In connection with their election as directors, both William Payne and
Rod Jones received warrants for the purchase of the Company's common stock. See
Item 1.01 for a description of these warrants.
Appointment of New Officers
Dan Barnett
On November 30, 2006, Dan Barnett was appointed Senior Vice President,
Secretary, and Treasurer of the Company.
Mr. Barnett has 22 years experience with Exxon Mobil with
responsibilities ranging from engineering to General Manager. Most recently, he
served as North American Planning Advisor in 2000. He also was founder and owner
of various real estate services and investment companies and holds a Texas Real
Estate Brokers license. In 2003, he founded Mortgage Solution Partners which was
acquired by Mortgage Assistance Corporation, a wholly owned subsidiary of the
Company, in 2004. Mr. Barnett has since served as Vice President and Chief
Operating Officer of Mortgage Assistance Corporation.
See Item 1.01 for a description of the Barnett Employment Agreement.
Sandra Valiquette
On November 30, 2006, Sandra Valiquette was appointed Chief Financial
Officer of the Company.
Ms. Valiquette was formerly the senior financial person in multiple
financial industry companies. Her experience is in both the insurance industry
and the savings & loan industry. She was responsible for all aspects of her
companys' financial management, including accounting, finance, risk management,
information technology, and human resources. Under Ms. Valiquette's guidance and
leadership, several start-up companies eventually became multi-million dollar
entities. At Summit Global Partners of Dallas, Texas, she guided the first 12
acquisitions of 450 employees and the integration of the infrastructure, which
is vital in the company's marketplace. Ms. Valiquette has since served as Chief
Financial Officer of Mortgage Assistance Corporation.
Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Year
Amendment Creating Class of Series A Preferred Stock
On November 30, 2006, the Company filed with the Florida Secretary of
State an Amendment to its Articles of Incorporation (the "Amendment") creating a
class of Series A Preferred Stock ("the Preferred Stock"). The Amendment was
effective as of the date filed and established the Preferred Stock as an
authorized series of the Corporation's preferred stock, par value $.001 per
share, limited in amount to 3,000,000 shares, and established the voting powers,
preferences, and relative, participating, optional, and other special rights of
the shares of such series, and the qualifications, limitations, and restrictions
thereof.
Holders of the Preferred Stock are entitled to a dividend, out of any
assets legally available, at the rate of 10% per annum (of the original
per-share issue price of the Preferred Stock) per share of Preferred Stock. Such
dividend will have preference over any payment or declaration of a dividend or
other distribution on the Common Stock of the Company.
The Preferred Stock is also subject to a mandatory conversion provision
whereby, upon the determination that a holder of the preferred stock is a
"Non-Participating Holder" pursuant to the Purchase Agreement, any Preferred
Stock held by such holder will automatically be converted into shares of Common
Stock on a 1:1 basis.
The Amendment is attached as Exhibit 3.01.
Item 9.01. Financial Statements and Exhibits
Exhibits
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3.01 Amendment to Articles of Incorporation
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10.01 Series A Preferred Stock and Common Stock Warrant Purchase Agreement
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10.02 Series A Preferred Stock Investors' Rights Agreement
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10.03 Stockholders' Agreement
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10.04 Warrant for Purchase of Shares of Common Stock--FAX
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10.05 Warrant for Purchase of Shares of Common Stock--W.C. Payne
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10.06 Warrant Certificate for Purchase of Shares of Common Stock--W. Payne
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10.07 Warrant Certificate for Purchase of Shares of Common Stock--R. Jones
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10.08 Warrant Certificate for Purchase of Shares of Common Stock--M. Caolo
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10.09 Warrant Certificate for Purchase of Shares of Common Stock--Parkwood
Advisors, LLC
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10.10 Hensel Employment Agreement
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10.11 Barnett Employment Agreement
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Mortgage Assistance Center
Corporation.
(Registrant)
Dated: December 6, 2006 By: /s/ Dale Hensel
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Name: Dale Hensel
Title: President and CEO