SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant [ ]
CHECK THE APPROPRIATE BOX:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
|X| Definitive Proxy Statement permitted by Rule 14a-6
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
MARKET CENTRAL, INC.
------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other than the Registrant) Payment
of Filing Fee (Check the appropriate box):
|X| No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed maximum aggregate value of transaction:
MARKET CENTRAL, INC.
1650A GUM BRANCH ROAD
JACKSONVILLE, NC 28540
DECEMBER 19, 2003
TO THE STOCKHOLDERS OF MARKET CENTRAL, INC.
Dear Stockholder:
The Annual Meeting of Stockholders (the "Meeting") of Market Central,
Inc., a Delaware corporation (the "Company") will be held at Hammer's Glen Golf
and Country Club, 474 Hammer's Glen Drive, Homer, GA 30547, on January 21, 2004,
at 10:30 am, Eastern Time.
Details of the business to be conducted at the Meeting are in the
attached Proxy Statement and Notice of Meeting of Stockholders.
It is important that your shares be represented and voted at the
meeting. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN,
DATE AND PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE. Returning the proxy does NOT deprive you of your right to attend the
Meeting. If you decide to attend the Meeting and wish to change your proxy vote,
you may do so automatically by voting in person at the meeting.
On behalf of the Board of Directors, I would like to express our
appreciation for your continued interest in the affairs of the Company. We look
forward to seeing you at the Meeting.
Sincerely,
Terrence J. Leifheit
President and Chief Executive Officer
MARKET CENTRAL, INC.
1650A GUM BRANCH ROAD
JACKSONVILLE, NC 28540
------------------------
NOTICE OF MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 21, 2004
The Annual Meeting of Stockholders (the "Meeting") of Market Central,
Inc., a Delaware corporation (the "Company"), will be held at Hammer's Glen Golf
and Country Club, 474 Hammer's Glen Drive, Homer, GA 30547, on January 21, 2004,
at 10:30 am, Eastern Time, for the following purposes:
1. To re-elect five (5) directors and elect two (2) new directors
to the Board of Directors to serve in staggered terms as
described herein or until their successors have been duly
elected and qualified;
2. To ratify the appointment of Russell Bedford Stefanou
Mirchandani LLP("RBSM") as the Company's independent public
accountants for the fiscal year ending August 31, 2004;
3. To approve and ratify the Market Central, Inc. 2003 Amended
and Restated Stock Plan; and
4. To act upon any and all matters incident to the foregoing, and
such other business as may legally come before the meeting and
any adjournments or postponements thereof.
The foregoing items of business are more fully described in the
attached Proxy Statement.
Only stockholders of record at the close of business on December 10,
2003, are entitled to notice of, and to vote at, the Meeting and at any
adjournments or postponements thereof. A list of such stockholders will be
available for inspection at the Company's headquarters located at 1650A Gum
Branch Road, Jacksonville, NC during ordinary business hours for the ten-day
period prior to the Meeting.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ James Rapp
Secretary
Jacksonville, NC
December 19, 2003
IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE AND
PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO THE MEETING. IF YOU DECIDE TO
ATTEND THE MEETING AND WISH TO CHANGE YOUR PROXY VOTE, YOU MAY DO SO
AUTOMATICALLY BY VOTING IN PERSON AT THE MEETING.
MARKET CENTRAL, INC.
1650A GUM BRANCH ROAD
JACKSONVILLE, NC 28540
------------------------
PROXY STATEMENT
------------------------
FOR MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 21, 2004
These proxy materials are furnished in connection with the solicitation
of proxies by the Board of Directors of Market Central, Inc., a Delaware
corporation (the "Company"), for the Annual Meeting of Stockholders (the
"Meeting") to be held at Hammer's Glen Golf and Country Club, 474 Hammer's Glen
Drive, Homer, GA 30547, on January 21, 2004, at 10:30 am, Eastern Time, and at
any adjournment or postponement of the Meeting. These proxy materials were first
mailed to stockholders on or about December 19, 2003.
PURPOSE OF MEETING
The specific proposals to be considered and acted upon at the Meeting
are summarized in the accompanying Notice of Meeting of Stockholders. These
proposals are described in more detail in this Proxy Statement.
VOTING RIGHTS AND SOLICITATION OF PROXIES
The Company's Common Stock is the only type of security entitled to
vote at the Meeting. On December 10, 2003, the record date for determination of
stockholders entitled to vote at the Meeting, there were 13,262,969 shares of
Common Stock outstanding. Each stockholder of record on such date is entitled to
one vote for each share of Common Stock held by such stockholder on such date.
Shares of Common Stock may not be voted cumulatively. All votes will be
tabulated by the inspector of election appointed for the meeting, who will
separately tabulate affirmative and negative votes, abstentions and broker
non-votes.
QUORUM REQUIRED
The Company's bylaws provide that the holders of a majority of the
Company's voting stock issued and outstanding and entitled to vote at the
Meeting, present in person or represented by proxy, shall constitute a quorum
for the transaction of business at the Meeting. Abstentions and broker non-votes
will be counted as present for the purpose of determining the presence of a
quorum.
VOTES REQUIRED
PROPOSAL 1. Directors are elected by a plurality of the affirmative
votes cast by those shares present in person, or represented by proxy, and
entitled to vote at the Meeting. The seven (7) nominees for director receiving
the highest number of affirmative votes will be elected for the staggered terms
described herein. Abstentions and broker non-votes will not be counted toward a
nominee's total. Stockholders may not cumulate votes in the election of
directors.
PROPOSAL 2. Ratification of the appointment of RBSM as the Company's
independent public accountants for the fiscal year ending August 31, 2004,
requires the affirmative vote of a majority of those shares present in person,
or represented by proxy. Abstentions and broker non-votes will not be counted as
having been voted on the proposal.
PROPOSAL 3. Approval and ratification of the Market Central, Inc. 2003
Amended and Restated Stock Plan requires the affirmative vote of a majority of
those shares present in person, or represented by proxy. Abstentions and broker
non-votes will not be counted as having been voted on the proposal.
PROXIES
Whether or not you are able to attend the Meeting, you are urged to
complete and return the enclosed proxy, which is solicited by the Company's
Board of Directors and which will be voted as you direct on your proxy when
properly completed. In the event no directions are specified, such proxies will
be voted FOR Proposals Nos. 1, 2 and 3 and in the discretion of the proxy
holders as to other matters that may properly come before the Meeting. You may
revoke or change your proxy at any time before the Meeting. To do this, send a
written notice of revocation or another signed proxy with a later date to the
Secretary of the Company at the Company's principal executive offices before the
beginning of the Meeting. You may also automatically revoke your proxy by
attending the Meeting and voting in person. All shares represented by a valid
proxy received prior to the Meeting will be voted.
SOLICITATION OF PROXIES
The Company will bear the entire cost of solicitation, including the
preparation, assembly, printing, and mailing of this Proxy Statement, the proxy
and any additional soliciting material furnished to stockholders. Copies of
solicitation material will be furnished to brokerage houses, fiduciaries and
custodians holding shares in their names that are beneficially owned by others
so that they may forward this solicitation material to such beneficial owners.
The Company may reimburse brokerage houses, fiduciaries and custodians
representing beneficial owners of shares for their costs of forwarding the
solicitation material to such beneficial owners. The original solicitation of
proxies by mail may be supplemented by solicitation by telephone, telegram or
other means by directors, officers, employees or agents of the Company. No
additional compensation will be paid to these individuals for any such services.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Pursuant to the Company's Bylaws, the Company currently has authorized
up to nine (9) directors. Five (5) directors have been appointed and there are
currently four vacancies. At the Meeting, five (5) directors are to be nominated
to be re-elected, and two (2) new directors are to be nominated to be elected,
all for the staggered terms described below or until their successors are
elected and qualified. With respect to the remaining vacancies, we intend for
such vacancies to remain vacant until our Board of Directors desires to fill
such vacancies. Pursuant to our Bylaws, a vacancy on the Board of Directors may
be filled by a majority of the directors then in office.
The directors who are being nominated for election to the Board of
Directors (collectively, the "Nominees"), their ages as of December 10, 2003,
their positions and offices held with the Company, their staggered terms and
certain biographical information, are set forth below. The proxy holders intend
to vote all proxies received by them in the accompanying form FOR the Nominees
listed below unless otherwise instructed. In the event any Nominee is unable or
declines to serve as a director at the time of the Meeting, the proxies will be
voted for any nominee who may be designated by the present Board of Directors to
fill the vacancy. As of the date of this Proxy Statement, the Board of Directors
is not aware of any Nominee who is unable or will decline to serve as a
director. The seven (7) Nominees receiving the highest number of affirmative
votes of the shares entitled to vote at the Meeting will be elected directors of
the Company:
DIRECTOR
NAME AGE SINCE POSITION CLASS
---- --- ----- -------- -----
Terrence J. Leifheit 41 2002 Director, CEO and Pres. I
Glen H. Hammer 55 2003 Director, Co-Chairman III
William A. Goldstein 40 2003 Director, Co-Chairman III
James L. McGovern*# 60 1998 Director I
Clifford A. Clark 51 2002 Director, CFO I
Thomas A. Gordy*# 52 - II
Howard B. Workman*# 59 - II
- -----------------------------------
* member of Audit Committee
# member of Compensation Committee
The terms of the directors are divided into three separate three-year
classes, Classes I, II and III. Each director holds office until the year in
which his term expires. Messrs Leifheit's, McGovern's and Clark's terms expire
in 2005; Messrs. Gordy's and Workman's terms expire in 2006; and Messrs.
Hammer's and Goldstein's terms expire in 2007.
BOARD OF DIRECTORS MEETINGS
From September 1, 2002, through August 31, 2003, the Board of Directors
held five (5) meetings and acted by written consent in lieu of a meeting on
three (3) occasions. During such period, each of the directors during the term
of their tenure attended or participated in all of the meetings and consent
actions of the Board of Directors. The Board of Directors currently has no
committees.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has established an Audit and a Compensation
committee to devote attention to specific subjects and to assist it in the
discharge of its responsibilities. The functions of those committees, their
current members and the number of meetings held during the period from September
1, 2002, through August 31, 2003, with respect to such committees are described
below:
Audit Committee. The purpose of the Audit Committee is to assist the
board of directors in fulfilling its oversight responsibilities for (1) the
integrity of the company's financial statements, (2) the company's compliance
with legal and regulatory requirements, (3) the independent auditor's
qualifications and independence, and (4) the performance of the company's
internal audit function and independent auditors. The audit committee will also
prepare the report that SEC rules require be included in the company's annual
proxy statement. Mr. McGovern and William P. O'Reilly were the members of the
Audit Committee during the year ended August 31, 2003. Mr. O'Reilly has resigned
from the Board of Directors on December 1, 2003. Messrs. Gordy and Workman will
be members of the Audit Committee, together with Mr. McGovern, upon their
election to the Board of Directors. The report of Audit Committee for the fiscal
year ended August 31, 2003 is included herein under "Audit Committee Report".
Compensation Committee. The primary purpose of the Compensation
Committee of the Board of Directors is: (i) to assist the Board in discharging
its responsibilities with respect to compensation of the Company's executive
officers; (ii) to produce a report on executive compensation for inclusion in
the Company's annual proxy statement; (iii) to provide recommendations regarding
management successors; and (iv) to administer the Company's stock and other
incentive plans (in the absence of a separate Stock Plan Committee). Mr.
McGovern and William P. O'Reilly were the members of the Compensation Committee
during the year ended August 31, 2003. Mr. O'Reilly has resigned from the Board
of Directors on December 1, 2003. Messrs. Gordy and Workman will be members of
the Compensation Committee, together with Mr. McGovern, upon their election to
the Board of Directors.
Nominating Committee. The Company does not have a nominating or an
executive committee. The functions customarily attributable to these committees
are performed by the Board of Directors as a whole.
AUDIT COMMITTEE REPORT
The members of the Audit Committee from September 1, 2003 to August 31,
2003 were Messrs. McGovern and O'Reilly. The Audit Committee did not meet during
the fiscal year, but meet with management and the Company's auditors after the
end of the fiscal year. The Audit Committee is responsible for considering
management's recommendation of independent certified public accountants for each
fiscal year, recommending the appointment or discharge of independent
accountants to the board of directors and confirming the independence of the
accountants. It is also responsible for: reviewing and approving the scope of
the planned audit, the results of the audit and the accountants' compensation
for performing such audit; reviewing the Company's audited financial statements;
and reviewing and approving the Company's internal accounting controls and
discussing such controls with the independent accountants.
The Audit Committee adopted a written charter in September 2003, a copy
of which is attached to this proxy statement as Appendix A.
The Company's independent auditors are responsible for auditing the
financial statements. The activities of the Committee are in no way designed to
supersede or alter those traditional responsibilities. The Committee's role does
not provide any special assurances with regard to the Company's financial
statements, nor does it involve a professional evaluation of the quality of the
audits performed by the independent auditors.
In connection with the audit of Market Central, Inc.'s financial
statements for the year ended August 31, 2003, the Audit Committee met with
representatives from RBSM, the Company's independent auditors. The Audit
Committee reviewed and discussed with RBSM the Company's financial management
and financial structure, as well as the matters relating to the audit required
to be discussed by Statements on Auditing Standards 61 and 90.
The Audit Committee and RBSM also discussed RBSM's independence. On
December 13, 2003, the Audit Committee received from RBSM the written
disclosures and the letter regarding RBSM's independence required by
Independence Standards Board Standard No. 1.
In addition, the Audit Committee reviewed and discussed with management
the Company's audited financial statements for the fiscal year ended August 31,
2003.
Based upon the review and discussions described above, the Audit
Committee recommended to the Board of Directors that the Company's financial
statements audited by RBSM be included in the Company's Annual Report on Form
10-KSB for the fiscal year ended August 31, 2003.
December 19, 2003
Audit Committee
James L. McGovern
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The compensation of the Chief Executive Officer of the Company is
determined by the Compensation Committee. The Committee's determinations
regarding such compensation are based on a number of factors including, in order
of importance:
|X| Consideration of the operating and financial performance of
the Company, primarily its income before income taxes during
the preceding fiscal year, as compared with prior operating
periods;
|X| Attainment of a level of compensation designed to retain a
superior executive in a highly competitive environment; and
|X| Consideration of the individual's overall contribution to the
Company.
Compensation for Company executive officers (referred to in the summary
compensation table) other than the Chief Executive Officer is determined by the
Compensation Committee based upon consultation with the Chief Executive Officer,
taking into account the same factors considered by the Board in determining the
Chief Executive Officer's compensation as described above. Except as set forth
below, the Company has not established a policy with regard to Section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code"), since the Company
has not and does not currently anticipate paying compensation in excess of $1
million per annum to any employee.
The Company applies a consistent approach to compensation for all
employees, including senior management. This approach is based on the belief
that the achievements of the Company result from the coordinated efforts of all
employees working toward common objectives.
December 19, 2003
Compensation Committee
James L. McGovern
DIRECTOR COMPENSATION
Currently, directors of the Company who are also full-time employees of
the Company receive no additional compensation for their services as directors.
Additionally, each non-employee director who is also a principal stockholder of
the Company (Messrs. Hammer and Goldstein) currently receives no compensation
for services on our Board of Directors. The following is a summary of
compensation paid to directors:
PRINCIPAL
NON-EMPLOYEE, STOCKHOLDER/
NON-AFFILIATE MEMBER EMPLOYEE MEMBER
-------------------- ---------------
10,000 shares + 2,000 options that
New member initial grant vest at end of first term on the
Board None
$5,000 + 1,000 options per year of
Annual Retainer service restricted until end of
current term None
Meetings $1,000 per meeting + Reasonable Reasonable expenses
expenses
Conference call meetings and $250 per meeting + reasonable Reasonable expenses
Written Consents expenses
$500 per year + reasonable
expenses + 1,000 options per year
Committee Chairs except Audit while serving as Chair. Options
Comm. are vested after 12 months from
Reasonable Expenses award date.
$1,000 per year + reasonable
expenses + 1,200 options per year
Audit Committee Chair while serving as Chair. Options
are vested after 12 months from Not applicable
award date.
750 options per year on committee;
Committee members other than Vesting after 12 months from award
chair except Audit Committee date Reasonable expenses
1,000 options per year on
committee vesting after 12 months
Audi Committee members from award date + reasonable
expenses Not applicable
Liability insurance Paid by Company Paid by Company
The business experience of each of the persons listed above during the
past five years is as follows:
GLEN H. HAMMER serves as Co-Chairman of the Board of Directors for Market
Central. Mr. Hammer brings to the Company over 20 years of broad entrepreneurial
experience in the development and growth of both privately held and publicly
traded entities that provide services in which telemarketing and customer
support services are vital parts of the operations. He is the founder and
current Chairman of WACA, one of the nation's leading providers of consumer
product warranty related services, with more than 400 employees nationwide and
abroad. Previously, Mr. Hammer was the founder and Chairman of Automobile
Protection Corporation, which grew into one of the automotive industry's most
prominent automobile warranty service companies. Established in 1984, Mr. Hammer
successfully guided Automobile Protection Corporation's growth and transition to
a highly successful, publicly traded company in 1988, which was subsequently
sold to Ford Motor Corporation. Additionally, Mr. Hammer has substantial
business interests in real estate, as well as an extensive background in
management of mergers and acquisitions and the formation of strategic alliances.
WILLIAM A. GOLDSTEIN serves as the Co-Chairman of the Board of Market Central.
He is the founder and current Chairman and CEO of J & C Nationwide, Inc., one of
the largest physician staffing companies in the nation. a leading medical
staffing company based in Atlanta, Georgia. Mr. Goldstein has also founded and
acted as Chairman of several start-up ventures in a variety of industries,
including technology and other service industries. Mr. Goldstein is also an
investor and controlling shareholder in several start-up and early stage
companies including: 1-800Cheapseats, a discount travel agency; nPorta, Inc. a
technology company that has developed proprietary applications in the travel
industry; and Farequest Holdings, LLC, which owns proprietary software in the
online webfare marketplace. Mr. Goldstein is also Chairman of LA Digital Post,
Inc., a Los Angeles-based company, that is a leader in the post production
editing equipment rental industry.
TERRENCE J. LEIFHEIT became President, Chief Operating Officer and a Director of
Paladyne upon the ecom Merger and CEO and Chairman in April 2001. He presides
over all operations of Market Central, Inc. In 1993, he co-founded Gibralter and
led the evolution of that company from hardbound reference publishing into an
on-line publishing and membership organization with $20 million in sales to
customers in over 150 countries. In 1998, he founded Gibralter Data Services,
Inc., an Internet service provider specializing in Web page development and
hosting services. Prior to these activities, from 1991 to 1992, he served as
Vice President of Florida Safety Corporation and Vice President of Dallas
Chemicals Corporation. Mr. Leifheit attended the University of Texas at El Paso
where he majored in business.
CLIFFORD A. CLARK has been the Company's VP of Finance since February 2001 and a
director since July 2001. From 1999 to 2002, Mr. Clark served as Vice President
of Finance for Gibralter and other entities comprising Gibralter Publishing,
Inc. Mr. Clark served as President of Kane Realty from 1994 through 2001 and was
also President of Parallel Corporation from 1991 through June 2003. Mr. Clark's
experience includes more than 25 years in numerous financial and accounting
roles, including 11 years with Price Waterhouse and 5 years in the venture
capital arena. Mr. Clark has a bachelor's degree in Business Administration from
the University of North Carolina at Chapel Hill.
JAMES L. MCGOVERN has been President of McGovern & Associates since 1996. In
1996, he retired from Norstan where he was President of Norstan Communications
from 1985 to 1996. Prior, he was Chief Operating Officer of Electronic
Engineering Co., which was acquired by Norstan in 1985. McGovern also held a
number of key sales and management positions with Xerox Corporation. He was
Chairman of Virtual Hold Corporation, and a Director for Paknetx, which was
acquired by Aspect Telecommunications. Mr. McGovern holds a B.S. from
Northeastern University.
THOMAS A. GORDY is the President, Chief Executive Officer, and founder of
TAGG(R). Mr. Gordy has more than 25 years experience in business growth and
development. He is highly regarded as a growth and development strategist and
futurist and is a popular choice for speaking engagements. Mr. Gordy received
his bachelor's degree in theology from Mercer University in Macon and shortly
thereafter began his career in healthcare. He was a medical social worker, human
resources director, and became Administrator and CEO of his first hospital at
the age of 26. After several successful years in this role, Mr. Gordy began a
distinguished career as a development officer for a Fortune 400 healthcare
company. He has extensive experience in hospital administration and management,
new facility development, mergers and acquisitions, marketing, contractual
development, new product and service rollout, and operational and financial
system auditing. In 1988, Mr. Gordy established TAGG(R), a business accelerator
for strategic growth and development specializing in healthcare, technology
development, and telecom applications. The firm provides assistance in planning,
marketing, and support for growth of existing revenue sources as well as
development of new lines of business.
HOWARD B. WORKMAN is a licensed real estate broker in the states of New York and
Georgia. Since 1975 he has been President and CEO of Workman and Company, a real
estate company involved in brokerage, leasing and management of commercial real
properties. He is also President of Southeastern Acquisitions, a real estate
acquisitions firm, and Workco Development, which develops strip shopping centers
and office building throughout the southeast. His holdings are in Georgia,
Florida, North and South Carolina and Tennessee. Mr. Workman was a director and
member of the loan committee for Charter Bank and Trust in Marietta. He is on
the honorary Board of Georgia Special Olympics and Chairman of the Adoption
Committee for Cradle of Love Adoption Agency.
EXECUTIVE COMPENSATION
The following table sets forth all compensation actually paid or
accrued by the Company for services rendered to the Company for the years ended
August 31, 2001, 2002 and 2003 to the Company's Chief Executive Officer or
others who earned a salary greater than $100,000 annually for any of the periods
below:
STOCK WARRANTS
AND OPTIONS
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS ALL OTHER COMPENSATION ISSUED
- --------------------------- ---- ------ ----- ---------------------- -------
Terrence J. Leifheit, President CEO(1) 2001 $175,000 None
2002 $366,664 None (3)
2003 $247,819 None
Ronald L. Weindruch,(2) 2001 $123,438
Executive Vice President
William Hadel, 2002 $122,395 -0- 9,905 50,000
VP of Marketing 2003 $126,002
Robert Hornbuckle 2002 $107,708 None
VP of Information Technology 2003 $110,881
(All other compensation includes consulting and commission income)
In addition to cash compensation, Mr. Leifheit, Mr. Foster and Mr.
Weindruch participate in the Company's stock option plan. The following table
details options granted in fiscal year 2001 and 2003:
HOLDER # OF SHARES UNDERLYING OPTIONS % OF TOTAL OPTIONS GRANTED IN FY 01 EXER. PRICE EXP. DATE
------ ------------------------------ ----------------------------------- ----------- ---------
Terrence J. Leifheit(3) 51,595 58.4% $10.20 02/01/05
Terrence J. Leifheit 10,000 5.4% $ 2.20 12/4/05
No stock options held by this individual were exercised in the current fiscal
year whether the options were issued in the current year or in years prior, and
none of those options are "in the money."
EMPLOYEE STOCK OPTION PLAN
The Company's 1999 Stock Option Plan (the "Plan"), assumed the 1996
Stock Option Plan, as amended on the migratory merger, which was adopted in 1996
and amended in October, 1997, July 2001 and October 2003 to increase the number
of issuable shares under the Plan to 1,500,000 shares of common stock and to
clarify the basis for determining fair market value of shares in conjunction
with setting the exercise price of options at issuance. The purpose of the Plan
is to encourage stock ownership by management and employees of the Company, to
provide an additional incentive for those employees to contribute to the success
of the Company and to provide the Company with the opportunity to use stock
options as a means of recruiting new managerial personnel where appropriate.
- ----------------------
/1/ Mr. Leifheit's employment began in February 2001 in conjunction with the
ecom merger.
/2/ Mr. Weindruch's employment ceased in January 2002.
/3/ Does not include warrants issued to Mr. Leigheit upon the ecom merger.
The Plan authorizes the grant of options which qualify as incentive
stock options under Section 422A of the Internal Revenue Code ("qualified
options"), as well as stock options which do not qualify under that section of
the Code ("nonqualified options"). The Plan is administered by the Company's
Board of Directors who may delegate these duties to the Compensation Committee.
The Board is authorized to select the individual employees to receive options
under the Plan, the number of shares subject to each option, the option term and
other matters specified in the Plan.
The Plan provides that the exercise price of any option may not be less
than 100% of the fair market value of the Company's stock at the date of grant,
defined as the average bid and ask price over the prior five days' trading in
which at least 1,000 shares have traded. Options must be granted within ten
years from the date the Plan was approved by the Company's shareholders.
A maximum of 1,500,000 shares of the Company's Common Stock are
authorized for issuance pursuant to options granted under the Plan, subject to
adjustments to prevent dilution or enlargement of rights of participants in
certain circumstances. As of August 31, 2003, 298,424 options were outstanding
all of which were issued inside the Plan. As of August 31, 2003, 173,543 shares
are exercisable at an option price per share ranging from $2.00 to $25.00 per
share and with expiration dates from November 2003 through April 2005.
PROFIT SHARING PLAN
The Company sponsors a qualified employee savings plan (commonly
referred to as a "401K plan") for all eligible employees, including all the
officers of the Company. Participants may make contributions from their gross
pay (limited to 15% of the employee's compensation, as defined), with Market
Central matching such contributions (subject to certain limitations) at the rate
of 25% of the first 6% of each participant's contribution. Effective June 1,
2002, the Company modified the plan to eliminate any matching of contributions.
No other deferred compensation plan is currently in place.
EMPLOYMENT AGREEMENTS
The Company has employment agreements with Terrence J. Leifheit, its
President and with four other management personnel. Mr. Leifheit's employment
agreement was changed in February 2003 to being a two year term and an annual
salary of equal to 10% of the Company's EBITDA with a minimum salary payable of
$150,000 annually.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, to the best of the
Company's knowledge, as of August 31, 2003, with respect to each person known by
Company to own beneficially more than 5% of the outstanding Common Stock, each
director, each director nominee and all directors and executive officers as a
group.
AMOUNT AND NATURE OF BENEFICIAL
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(3) PERCENT OF CLASS(4)
- ------------------------------------ ------------ -------------------
Glen H. Hammer* 5,257,037(5) 39.6%
William A. Goldstein* 5,607,037(3) 42.2%
- ----------------------------------
/3/ Share amounts include, where indicated, Common Stock issuable upon the
exercise of certain stock options and stock warrants which are exercisable or
convertible within sixty days from August 31, 2003
/4/ Based upon 13,262,969 shares of Common Stock outstanding on August 31, 2003.
Percentage ownership is calculated separately for each person on the basis of
the actual number of outstanding shares as of August 31, 2003 and assumes the
exercise of certain stock options and warrants held by such person (but not by
anyone else) exercisable within sixty days.
/5/ Based upon 4,090,370 shares owned directly and 1,070,747 shares that may be
acquired by Mr. Hammer and Mr. Goldstein pursuant to the exercise of stock
purchase warrants exercisable within sixty days at exercise price of $3.16 per
share.
Terrence J. Leifheit* 2,206,102(6) 16.6%
A. Randall Barkowitz 700,000(7) 5.2%
James L. McGovern* 16,479(8) 0.1%
William P. O'Reilly*# 59,066(9) 0.4%
Clifford A. Clark* 35,017(10) 0.3%
Thomas A. Gordy* 0 --
Howard B. Workman* 0 --
All directors and executive officers as a group 13,880,738(11) 100.0%
(9 persons in group)
Unless otherwise noted, all persons address is 1650A Gum Branch Road,
Jacksonville, NC 28540.
- ----------------------------------
*DIRECTOR, DIRECTOR NOMINEE AND/OR EXECUTIVE OFFICER
#MR. O'REILLY RESIGNED AS A MEMBER OF THE BOARD OF DIRECTORS ON DECEMBER 1,
2003.
Note: Unless otherwise indicated in the footnotes below, the Company has been
advised that each person above has sole voting and investment power
over the shares indicated above.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Gibralter Publishing, Inc. is the Company's principal customer
comprising approximately 30% of the Company's revenues for the fiscal year ended
August 31, 2003. J&C Nationwide, Inc. and Cheapseats, Inc. are also related
party customers of the Company. Combined, these two companies represent 1% of
the Company's total revenues.
The Company leases office space to Gibralter Publishing, Inc. in its
Jacksonville facility.
- ----------------------------------
/6/ Includes (i) 1,151,173 shares owned directly and 1,000,000 shares issued to
Gibralter Publishing, Inc which Mr. Leifheit controls, (ii) 137,831 shares held
in a Voting Trust for which Mr. Leifheit is the sole voting trustee. Includes
34,399 shares that may be acquired by Mr. Leifheit pursuant to the exercise of
stock purchase options and warrants exercisable within sixty days at exercise
prices from $2.17 to $11.46 per share. Does not include (i) 36,559 shares of
Common Stock underlying warrants owned directly, (ii) 31,151 shares of Common
Stock underlying warrants held in trust for the benefit of Mr. Leifheit's minor
children, and which warrants are not presently exercisable.
/7/ Based upon 700,000 shares owned directly and 183,919 shares that may be
acquired by Mr. Barkowitz pursuant to the exercise of stock purchase warrants
exercisable within sixty days at exercise price of $3.16 per share.
/8/ Includes 10,000 shares that may be acquired by Mr. McGovern pursuant to the
exercise of stock purchase options and warrants exercisable within sixty days at
exercise prices from $2.20 per share.
/9/ Includes 21,667 shares that may be acquired by Mr. O'Reilly pursuant to the
exercise of stock purchase options and warrants exercisable within sixty days at
exercise prices from $2.20 to $30.00 per share.
/10/ Includes 28,538 shares that may be acquired by Mr. Clark pursuant to the
exercise of stock purchase options and warrants exercisable within sixty days at
exercise prices from $2.20 to $11.20 per share.
/11/ See notes 2 through 8
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED HEREIN.
PROPOSAL NO. 2
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Company is asking the stockholders to ratify the appointment of
RBSM as the Company's independent public accountants for the fiscal year ending
August 31, 2004. The affirmative vote of the holders of a majority of shares
present or represented by proxy and voting at the Meeting will be required to
ratify the appointment of RBSM.
In the event the stockholders fail to ratify the appointment, the Board
of Directors will reconsider its selection. Even if the appointment is ratified,
our Board of Directors, in its discretion, may direct the appointment of a
different independent accounting firm at any time during the year if our Board
of Directors feels that such a change would be in the Company's and its
stockholders' best interests.
AUDIT FEES
Audit fees for the fiscal years 2002 and 2003 were $92,838 and $79,054,
respectively.
TAX FEES
Tax fees for the fiscal years 2002 and 2003 were $0 and $7,525,
respectively.
NO OTHER FEES
There are no other fees for services rendered by RBSM for the fiscal
years 2002 and 2003.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
SELECTION OF RUSSELL BEDFORD STEFANOU MIRCHANDANI LLP TO SERVE AS THE COMPANY'S
INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING AUGUST 31, 2003.
PROPOSAL NO. 3
APPROVAL AND RATIFICATION OF THE MARKET CENTRAL, INC.
2003 AMENDED AND RESTATED STOCK PLAN
At the Meeting, Stockholders will be asked to approve and ratify the
Market Central, Inc. 2003 Amended and Restated Stock Plan as amended and
restated effective December 1, 2003 (the "Plan"). The Plan became effective
originally in 1996, and was amended previously in October 1997, July 2001 and
October 2003. The Plan provides for the grant of stock options, including
incentive stock options, restricted stock and stock appreciation rights
(collectively, "stock rights"). The Board of Directors has adopted the Plan,
subject to Stockholder approval.
WHY SHOULD YOU APPROVE THE PLAN?
The Company believes that long term equity compensation in the form of
stock rights is critical in order to attract qualified personnel to the Company
and to retain and provide incentive to current personnel, particularly in light
of the increasingly competitive environment for talented personnel. If the Plan
is not approved at the Meeting, grants under the Plan will not be eligible to be
incentive stock options.
WHAT ARE THE PURPOSES OF THE PLAN?
The purposes of the Plan are to facilitate the ownership of the
Company's stock by officers, other employees, directors and consultants of the
company, thereby aligning their interests with those of the Company
Stockholders, and to assist the company in attracting, motivating, and retaining
key personnel.
WHAT ARE THE MAIN FEATURES OF THE PLAN?
GRANT OF STOCK RIGHTS. Stock rights may be granted to key employees,
including executive officers of the Company, its subsidiaries and affiliates,
directors and consultants as determined by the Plan Committee, which Committee
consists of two members of the board of Directors (the "Plan Committee"). The
number of employees participating in the Plan will vary from year to year. The
shares to be granted with respect to stock rights under the Plan shall be shares
of Common Stock, which may consist, in whole or in part, of treasury stock or
authorized but unissued stock not reserved for any other purpose, and may not
exceed 3,000,000 shares of Common Stock. In the event of certain changes in the
Company's capital structure affecting the Common Stock, the Plan Committee may
make appropriate adjustments in the number and kinds of shares that may be
awarded and in the number and kinds of shares covered by options then
outstanding under the Plan, and, where applicable, exercise price of outstanding
options under the Plan. The Plan will be administered by the Plan Committee.
The Plan Committee may grant options to purchase shares of Common Stock
that are either "qualified," which includes those awards that satisfy the
requirements of Section 422 of the Internal Revenue Code for incentive stock
options, or "nonqualified," which includes those awards that are not intended to
satisfy the requirements of Section 422 of the Internal Revenue Code. Under the
terms of the Plan, the exercise price of the options will, unless the Plan
Committee determines otherwise in the case of nonqualified options, not be less
than such Common Stock's fair market value at the time of grant. The exercise
price of the options is payable in cash or its equivalent or by exchanging
shares of Common Stock owned by the participant, through an arrangement with a
broker approved by the Company where payment of the exercise price is
accomplished with the proceeds of the sale of Common Stock, or by a combination
of the foregoing.
EXERCISE OF OPTIONS. The options will generally have a term of five (5)
to ten (10) years, unless the Plan Committee specifies a shorter term, and will
become exercisable following the performance of a minimum period of service or
the satisfaction of performance goals, as determined by the Plan Committee. If
an option holder ceases employment with the Company as a result of the holder's
death, disability or retirement, the holder, or his or her beneficiary or legal
representative, may exercise any then exercisable option for a period of one
year, or a greater or lesser period as determined by the Plan Committee at
grant, but in no event after the date the option otherwise expires. If an option
holder's employment is terminated for any other reason, the holder may exercise
any then exercisable option for a period not exceeding 60 days as determined by
the Plan Committee, but in no event after the date the option otherwise expires;
provided that if the holder's employment is terminated for cause all of his or
her options will immediately terminate, regardless of whether then exercisable.
WHAT IS THE VALUE OF THE BENEFITS THAT DIRECTORS, EXECUTIVE OFFICERS AND
EMPLOYEES CAN OBTAIN UNDER THE PLAN?
The Company cannot currently determine the number of shares of Common
Stock subject to options that may be granted in the future to executive
officers, directors, employees and consultants under the Plan.
WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF AWARDS OF OPTIONS?
The Plan is not qualified under the provisions of section 401(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), and is not subject to
any of the provisions of the Employee Retirement Income Security Act of 1974, as
amended.
NONQUALIFIED STOCK OPTIONS. On exercise of a nonqualified stock option
granted under the Plan, an optionee will recognize ordinary income equal to the
excess, if any, of the fair market value on the date of exercise of the shares
of Common Stock acquired on exercise of the option over the exercise price. If
the optionee is one of our employees, that income will be subject to the
withholding of Federal income tax. The optionee's tax basis in those shares will
be equal to their fair market value on the date of exercise of the option, and
his holding period for those shares will begin on that date.
If an optionee pays for shares of Common Stock on exercise of an option
by delivering shares of our Common Stock, the optionee will not recognize gain
or loss on the shares delivered, even if their fair market value at the time of
exercise differs from the optionee's tax basis in them. The optionee, however,
otherwise will be taxed on the exercise of the option in the manner described
above as if he had paid the exercise price in cash. If a separate identifiable
stock certificate is issued for that number of shares equal to the number of
shares delivered on exercise of the option, the optionee's tax basis in the
shares represented by that certificate will be equal to his tax basis in the
shares delivered, and his holding period for those shares will include his
holding period for the shares delivered. The optionee's tax basis and holding
period for the additional shares received on exercise of the option will be the
same as if the optionee had exercised the option solely in exchange for cash.
The Company will be entitled to a deduction for Federal income tax
purposes equal to the amount of ordinary income taxable to the optionee,
provided that amount constitutes an ordinary and necessary business expense for
the Company and is reasonable in amount, and either the employee includes that
amount in income or the Company timely satisfies its reporting requirements with
respect to that amount.
INCENTIVE STOCK OPTIONS. The Plan provides for the grant of stock
options that qualify as "incentive stock options" as defined in section 422 of
the Code. Under the Code, an optionee generally is not subject to tax upon the
grant or exercise of an incentive stock option. In addition, if the optionee
holds a share received on exercise of an incentive stock option for at least two
years from the date the option was granted and at least one year from the date
the option was exercised (the "Required Holding Period"), the difference, if
any, between the amount realized on a sale or other taxable disposition of that
share and the holder's tax basis in that share will be long-term capital gain or
loss.
If, however, an optionee disposes of a share acquired on exercise of an
incentive stock option before the end of the Required Holding Period (a
"Disqualifying Disposition"), the optionee generally will recognize ordinary
income in the year of the Disqualifying Disposition equal to the excess, if any,
of the fair market value of the share on the date the incentive stock option was
exercised over the exercise price. If, however, the Disqualifying Disposition is
a sale or exchange on which a loss, if realized, would be recognized for Federal
income tax purposes, and if the sales proceeds are less than the fair market
value of the share on the date of exercise of the option, the amount of ordinary
income recognized by the optionee will not exceed the gain, if any, realized on
the sale. If the amount realized on a Disqualifying Disposition exceeds the fair
market value of the share on the date of exercise of the option, that excess
will be short-term or long-term capital gain, depending on whether the holding
period for the share exceeds one year.
An optionee who exercises an incentive stock option by delivering
shares of Common Stock acquired previously pursuant to the exercise of an
incentive stock option before the expiration of the Required Holding Period for
those shares is treated as making a Disqualifying Disposition of those shares.
This rule prevents "pyramiding" the exercise of an incentive stock option (that
is, exercising an incentive stock option for one share and using that share, and
others so acquired, to exercise successive incentive stock options) without the
imposition of current income tax.
For purposes of the alternative minimum tax, the amount by which the
fair market value of a share of Common Stock acquired on exercise of an
incentive stock option exceeds the exercise price of that option generally will
be an adjustment included in the optionee's alternative minimum taxable income
for the year in which the option is exercised. If, however, there is a
Disqualifying Disposition of the share in the year in which the option is
exercised, there will be no adjustment with respect to that share. If there is a
Disqualifying Disposition in a later year, no income with respect to the
Disqualifying Disposition is included in the optionee's alternative minimum
taxable income for that year. In computing alternative minimum taxable income,
the tax basis of a share acquired on exercise of an incentive stock option is
increased by the amount of the adjustment taken into account with respect to
that share for alternative minimum tax purposes in the year the option is
exercised.
The Company is not allowed an income tax deduction with respect to the
grant or exercise of an incentive stock option or the disposition of a share
acquired on exercise of an incentive stock option after the Required Holding
Period. However, if there is a Disqualifying Disposition of a share, we are
allowed a deduction in an amount equal to the ordinary income includible in
income by the optionee, provided that amount constitutes an ordinary and
necessary business expense for the Company and is reasonable in amount, and
either the optionee includes that amount in income or the Company timely
satisfies its reporting requirements with respect to that amount.
SECTION 162 LIMITATIONS. The Omnibus Budget Reconciliation Act of 1993
added Section 162(m) to the Code, which generally disallows a public company's
tax deduction for compensation to covered employees in excess of $1 million in
any tax year beginning on or after January 1, 1994. Compensation that qualifies
as "performance-based compensation" is excluded from the $1 million
deductibility cap, and therefore remains fully deductible by the Company to the
extent that the Company pays it. The Company intends that options granted to
employees whom the Plan Committee expects to be covered employees at the time a
deduction arises in connection with such options, will qualify as such
"performance-based compensation," so that such options will not be subject to
the Section 162(m) deductibility cap of $1 million. Future changes in Section
162(m) or the regulations thereunder may adversely affect the Company's ability
to ensure that options under the Plan will qualify as "performance-based
compensation" that is fully deductible by the Company under Section 162(m).
IMPORTANCE OF CONSULTING TAX ADVISER. The information set forth above
is a summary only and does not purport to be complete. In addition, the
information is based upon current Federal income tax rules and therefore is
subject to change when those rules change. Moreover, because the tax
consequences to any optionee may depend on his particular situation, each
optionee should consult his tax adviser as to the Federal, state, local and
other tax consequences of the grant or exercise of an option or the disposition
of Common Stock acquired on exercise of an option.
A COPY OF THE PLAN IS ATTACHED TO THIS PROXY STATEMENT AT APPENDIX B.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL AND
RATIFICATION OF THE MARKET CENTRAL, INC. 2003 AMENDED AND RESTATED STOCK PLAN.
HOUSEHOLDING
The SEC recently approved a new rule concerning the delivery of annual
reports and proxy statements. It permits a single set of these reports to be
sent to any household at which two or more stockholders reside if they appear to
be members of the same family. Each stockholder continues to receive a separate
proxy card. This procedure, referred to as householding, reduces the volume of
duplicate information stockholders receive and reduces mailing and printing
expenses. A number of brokerage firms have instituted householding. In
accordance with a notice sent earlier this year to certain beneficial
shareholders who share a single address, only one annual report and proxy
statement will be sent to that address unless any stockholder at that address
gave contrary instructions. However, if any such beneficial stockholder residing
at such an address wishes to receive a separate annual report or proxy statement
in the future, such stockholder may telephone 1-888-773-0501.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than ten percent of a registered class of
the Company's equity securities, to file reports of ownership and changes in
ownership with the SEC, and to furnish the Company with copies of the forms.
Based on its review of the forms it received, or written representations from
reporting persons, the Company believes that, during the year ended August
31,2003, each of its officers, directors and greater than ten percent
stockholders complied with all such filing requirements.
STOCKHOLDER PROPOSALS FOR 2005 MEETING
Stockholder proposals intended to be presented at the 2005 Meeting of
Stockholders must be received by the Company at its offices at 1650A Gum Branch
Road, Jacksonville, NC, 28540, Attn: Secretary, not later than December 1, 2004,
and satisfy the conditions established by the Securities and Exchange Commission
for stockholder proposals to be included in the Company's proxy statement for
that meeting.
Pursuant to new amendments to Rule 14a-4(c) of the Securities Exchange
Act of 1934, as amended, if a stockholder who intends to present a proposal at
the 2005 Meeting of Stockholders does not notify the Company of such proposal on
or prior to December 1, 2004, then management proxies would be allowed to use
their discretionary voting authority to vote on the proposal when the proposal
is raised at the Meeting, even though there is no discussion of the proposal in
the 2005 Proxy Statement. The Company currently believes that the 2005 Meeting
of Stockholders will be held during January, 2005.
OTHER MATTERS
The Board of Directors of the Company knows of no other matters to be
presented for stockholder action at the Meeting. However, if other matters do
properly come before the Meeting or any adjournments or postponements thereof,
the Board of Directors intends that the persons named in the proxies will vote
upon such matters in accordance with their best judgment.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ James Rapp
Secretary
Jacksonville, NC
December 19, 2003
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE AND
PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO THE MEETING. IF YOU DECIDE TO
ATTEND THE MEETING AND WISH TO CHANGE YOUR PROXY VOTE, YOU MAY DO SO
AUTOMATICALLY BY VOTING IN PERSON AT THE MEETING.
THANK YOU FOR YOUR ATTENTION TO THIS MATTER. YOUR PROMPT RESPONSE WILL
GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING.
APPENDIX A
MARKET CENTRAL, INC. AUDIT COMMITTEE CHARTER
ATTACHED
MARKET CENTRAL, INC.
AUDIT COMMITTEE CHARTER
ADOPTED BY THE BOARD OF DIRECTORS
ON SEPTEMBER 24, 2003
PURPOSE
The purpose of the Audit Committee is to assist the board of directors in
fulfilling its oversight responsibilities for (1) the integrity of the company's
financial statements, (2) the company's compliance with legal and regulatory
requirements, (3) the independent auditor's qualifications and independence, and
(4) the performance of the company's internal audit function and independent
auditors. The audit committee will also prepare the report that SEC rules
require be included in the company's annual proxy statement.
AUTHORITY
The audit committee has authority to conduct or authorize investigations into
any matters within its scope of responsibility. It is empowered to:
o Appoint, compensate, and oversee the work of the public accounting firm
employed by the organization to conduct the annual audit. This firm
will report directly to the audit committee.
o Resolve any disagreements between management and the auditor regarding
financial reporting.
o Pre-approve all auditing and permitted non-audit services performed by
the company's external audit firm.
o Retain independent counsel, accountants, or others to advise the
committee or assist in the conduct of an investigation.
o Seek any information it requires from employees - all of whom are
directed to cooperate with the committee's requests - or external
parties.
o Meet with company officers, external auditors, or outside counsel, as
necessary.
COMPOSITION
The audit committee will consist of at least three and no more than six members
of the board of directors. No committee member shall simultaneously serve on the
audit committees of more than two other public companies.
No committee member shall receive any consulting, advisory, or other
compensation from the company other than fees for service on the board of
directors and committees thereof. No committee member shall be an affiliate of
the company.
Each committee member shall be able to read and understand fundamental financial
statements.
MEETINGS
The committee will meet at least four times a year, with authority to convene
additional meetings, as circumstances require. All committee members are
expected to attend each meeting in person or via tele- or video-conference. The
committee will invite members of management, auditors or others to attend
meetings and provide pertinent information, as necessary. It will meet
separately, periodically, with management, with internal auditors and with
external auditors. It will also meet periodically in executive session. Meeting
agendas will be prepared and provided in advance to members, along with
appropriate briefing materials. Minutes will be prepared.
RESPONSIBILITIES
The committee will carry out the following responsibilities:
FINANCIAL STATEMENTS
o Review significant accounting and reporting issues and
understand their impact on the financial statements. These
issues include:
o Complex or unusual transactions and highly judgmental areas.
o Major issues regarding accounting principles and financial
statement presentations, including any significant changes in
the company's selection or application of accounting
principles.
o The effect of regulatory and accounting initiatives, as well
as off-balance sheet structures, on the financial statements
of the company.
o Review analyses prepared by management and/or the independent
auditor setting forth significant financial reporting issues
and judgments made in connection with the preparation of the
financial statements, including analyses of the effects of
alternative GAAP methods on the financial statements.
o Review with management and the external auditors the results
of the audit, including any difficulties encountered. This
review will include any restrictions on the scope of the
independent auditor's activities or on access to requested
information, and any significant disagreements with
management.
o Discuss the annual audited financial statements and quarterly
financial statements with management and the external
auditors, including the company's disclosures under
"Management's Discussion and Analysis of Financial Condition
and Results of Operations."
o Review disclosures made by CEO and CFO during the Forms 10-K
and 10-Q certification process about significant deficiencies
in the design or operation of internal controls or any fraud
that involves management or other employees who have a
significant role in the company's internal controls.
INTERNAL CONTROL
o Consider the effectiveness of the company's internal control system,
including information technology security and control.
o Understand the scope of internal and external auditors' review of
internal control over financial reporting, and obtain reports on
significant findings and recommendations, together with management's
responses.
INTERNAL AUDIT
o Review with management and the chief audit executive
the charter, plans, activities, staffing, and
organizational structure of the internal audit
function.
o Ensure there are no unjustified restrictions or
limitations, and review and concur in the
appointment, replacement, or dismissal of the chief
audit executive.
o On a regular basis, meet separately with the chief
audit executive to discuss any matters that the
committee or internal audit believes should be
discussed privately.
EXTERNAL AUDIT
o Review the external auditors' proposed audit scope and
approach, including coordination of audit effort with internal
audit.
o Review the performance of the external auditors, and exercise
final approval on the appointment or discharge of the
auditors. In performing this review, the committee will:
o At least annually, obtain and review a report by the
independent auditor describing: the firm's internal
quality-control procedures; any material issues raised by the
most recent internal quality-control review, or peer review,
of the firm, or by any inquiry or investigation by
governmental or professional authorities, within the preceding
five years, respecting one or more independent audits carried
out by the firm, and any steps taken to deal with any such
issues; and (to assess the auditor's independence) all
relationships between the independent auditor and the company.
o Take into account the opinions of management and internal
audit.
o Review and evaluate the lead partner of the independent
auditor.
o Present its conclusions with respect to the external auditor
to the board.
o Ensure the rotation of the lead audit partner every five years
and other audit partners every seven years, and consider
whether there should be regular rotation of the audit firm
itself.
o Present its conclusions with respect to the independent
auditor to the full board.
o Set clear hiring policies for employees or former employees of
the independent auditors.
o On a regular basis, meet separately with the external auditors
to discuss any matters that the committee or auditors believe
should be discussed privately.
COMPLIANCE
o Review the effectiveness of the system for monitoring
compliance with laws and regulations and the results of
management's investigation and follow-up (including
disciplinary action) of any instances of noncompliance.
o Establish procedures for: (i) the receipt, retention, and
treatment of complaints received by the company regarding
accounting, internal accounting controls, or auditing matters;
and (ii) the confidential, anonymous submission by employees
of the company of concerns regarding questionable accounting
or auditing matters.
o Review the findings of any examinations by regulatory
agencies, and any auditor observations.
o Review the process for communicating the code of conduct to
company personnel, and for monitoring compliance therewith.
o Obtain regular updates from management and company legal
counsel regarding compliance matters.
REPORTING RESPONSIBILITIES
o Regularly report to the board of directors about committee
activities and issues that arise with respect to the quality
or integrity of the company's financial statements, the
company's compliance with legal or regulatory requirements,
the performance and independence of the company's independent
auditors, and the performance of the internal audit function.
o Provide an open avenue of communication between internal
audit, the external auditors, and the board of directors.
o Report annually to the shareholders, describing the
committee's composition, responsibilities and how they were
discharged, and any other information required by rule,
including approval of non-audit services.
o Review any other reports the company issues that relate to
committee responsibilities.
RELATED PARTY TRANSACTIONS
o Review and approve, in advance, any transactions between the
company and any director, executive officer or holder of
greater than five percent of any class of voting securities of
the company.
OTHER RESPONSIBILITIES
o Discuss with management the company's major policies with
respect to risk assessment and risk management.
o Perform other activities related to this charter as requested
by the board of directors.
o Institute and oversee special investigations as needed.
o Review and assess the adequacy of the committee charter
annually, requesting board approval for proposed changes, and
ensure appropriate disclosure as may be required by law or
regulation.
APPENDIX B
MARKET CENTRAL, INC. 2003 AMENDED AND RESTATED STOCK PLAN
ATTACHED
-----------------------------------
MARKET CENTRAL, INC.
2003 AMENDED AND RESTATED
STOCK PLAN
---------------------------------
TABLE OF CONTENTS
1. Purpose..................................................................................................3
2. Definitions..............................................................................................3
3. Administration...........................................................................................7
(a) Authority of the Committee......................................................................7
(b) Manner of Exercise of Committee Authority.......................................................7
(c) Limitation of Liability.........................................................................7
4. Stock Subject to Plan....................................................................................8
(a) Limitation on Overall Number of Shares Subject to Awards........................................8
(b) Application of Limitations......................................................................8
5. Eligibility; Per-Person Award Limitations................................................................8
6. Specific Terms of Awards.................................................................................8
(a) General.........................................................................................8
(b) Options.........................................................................................8
(c) Stock Appreciation Rights......................................................................10
(d) Restricted Stock...............................................................................10
(e) Deferred Stock.................................................................................11
(f) Bonus Stock and Awards in Lieu of Obligations..................................................12
(g) Dividend Equivalents...........................................................................12
(h) Other Stock-Based Awards.......................................................................12
7. Certain Provisions Applicable to Awards.................................................................13
(a) Stand-Alone, Additional, Tandem, and Substitute Awards.........................................13
(b) Term of Awards.................................................................................13
(c) Form and Timing of Payment Under Awards; Deferrals.............................................13
(d) Exemptions from Section 16(b) Liability........................................................14
8. Performance and Annual Incentive Awards.................................................................14
(a) Performance Conditions.........................................................................14
(b) Performance Awards Granted to Designated Covered Employees.....................................14
(c) Annual Incentive Awards Granted to Designated Covered Employees................................15
(d) Written Determinations.........................................................................16
(e) Status of Section 8(b) and Section 8(c) Awards Under Code Section 162(m).......................16
9. Change in Control.......................................................................................17
(a) Effect of "Change in Control.".................................................................17
(b) Definition of "Change in Control...............................................................17
(c) Definition of "Change in Control Price.".......................................................18
10. General Provisions......................................................................................18
(a) Compliance With Legal and Other Requirements...................................................18
(b) Limits on Transferability; Beneficiaries.......................................................19
(c) Adjustments....................................................................................19
(d) Taxes..........................................................................................20
(e) Changes to the Plan and Awards.................................................................20
(f) Limitation on Rights Conferred Under Plan......................................................21
(g) Unfunded Status of Awards; Creation of Trusts..................................................21
(h) Nonexclusivity of the Plan.....................................................................21
(i) Payments in the Event of Forfeitures; Fractional Shares........................................21
(j) Governing Law..................................................................................21
(k) Plan Effective Date and Stockholder Approval; Termination of Plan..............................21
----------------------------
MARKET CENTRAL, INC.
2003 AMENDED AND RESTATED
STOCK PLAN
1. Purpose. The purpose of this MARKET CENTRAL, INC. 2003 AMENDED AND
RESTATED STOCK PLAN (the "Plan") is to assist Market Central, Inc., a Delaware
corporation (the "Company") and its Related Entities in attracting, motivating,
retaining and rewarding high-quality executives and other Employees, officers,
Directors, and Consultants by enabling such persons to acquire or increase a
proprietary interest in the Company in order to strengthen the mutuality of
interests between such persons and the Company's stockholders, and providing
such persons with annual and long term performance incentives to expend their
maximum efforts in the creation of shareholder value. The Plan is intended to
qualify certain compensation awarded under the Plan for tax deductibility under
Section 162(m) of the Code (as hereafter defined) to the extent deemed
appropriate by the Committee (or any successor committee) of the Board of
Directors of the Company.
2. Definitions. For purposes of the Plan, the following terms shall be
defined as set forth below, in addition to such terms defined in Section 1
hereof.
(a) "Annual Incentive Award" means a conditional right granted to a
Participant under Sections 8(a) and (c) hereof to receive a cash payment, Stock
or other Award, unless otherwise determined by the Committee, after the end of a
specified fiscal year.
(b) "Award" means any Option, Stock Appreciation Right (including
Limited Stock Appreciation Right), Restricted Stock, Deferred Stock, Stock
granted as a bonus or in lieu of another award, Dividend Equivalent, Other
Stock-Based Award, Performance Award or Annual Incentive Award, together with
any other right or interest, granted to a Participant under the Plan.
(c) "Beneficiary" means the person, persons, trust or trusts which
have been designated by a Participant in his or her most recent written
beneficiary designation filed with the Committee to receive the benefits
specified under the Plan upon such Participant's death or to which Awards or
other rights are transferred if and to the extent permitted under Section 10(b)
hereof. If, upon a Participant's death, there is no designated Beneficiary or
surviving designated Beneficiary, then the term Beneficiary means the person,
persons, trust or trusts entitled by will or the laws of descent and
distribution to receive such benefits.
(d) "Beneficial Owner", "Beneficially Owning" and "Beneficial
Ownership" shall have the meanings ascribed to such terms in Rule 13d-3 under
the Exchange Act and any successor to such Rule.
(e) "Board" means the Company's Board of Directors.
(f) "Cause" shall, with respect to any Participant, have the
equivalent meaning (or the same meaning as "cause" or "for cause") set forth in
any employment agreement between the Participant and the Company or a Related
Entity or, in the absence of any such agreement, such term shall mean (i) the
failure by the Participant to perform his or her duties as assigned by the
Company (or a Related Entity) in a reasonable manner, (ii) any violation or
breach by the Participant of his or her employment agreement with the Company
(or a Related Entity), if any, (iii) any violation or breach by the Participant
of his or her non-competition and/or non-disclosure agreement with the Company
(or a Related Entity), if any, (iv) any act by the Participant of dishonesty or
bad faith with respect to the Company (or a Related Entity), (v) chronic
addiction to alcohol, drugs or other similar substances affecting the
Participant's work performance, or (vi) the commission by the Participant of any
act, misdemeanor, or crime reflecting unfavorably upon the Participant or the
Company. The good faith determination by the Committee of whether the
Participant's Continuous Service was terminated by the Company for "Cause" shall
be final and binding for all purposes hereunder.
(g) "Change in Control" means a Change in Control as defined with
related terms in Section 9 of the Plan.
(h) "Change in Control Price" means the amount calculated in
accordance with Section 9(c) of the Plan.
(i) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, including regulations thereunder and successor provisions and
regulations thereto.
(j) "Committee" means a committee designated by the Board to
administer the Plan; provided, however, that the Committee shall consist of at
least two directors, and, each member of which shall be (i) a "non-employee
director" within the meaning of Rule 16b-3 under the Exchange Act, unless
administration of the Plan by "non-employee directors" is not then required in
order for exemptions under Rule 16b-3 to apply to transactions under the Plan,
and (ii) an "outside director" within the meaning of Section 162(m) of the Code,
unless administration of the Plan by "outside directors" is not then required in
order to qualify for tax deductibility under Section 162(m) of the Code.
(k) "Consultant" means any person (other than an Employee or a
Director, solely with respect to rendering services in such person's capacity as
a director) who is engaged by the Company or any Related Entity to render
consulting or advisory services to the Company or such Related Entity.
(l) "Continuous Service" means uninterrupted provision of services
to the Company in any capacity of Employee, Director, or Consultant. Continuous
Service shall not be considered to be interrupted in the case of (i) any
approved leave of absence, (ii) transfers among the Company, any Related
Entities, or any successor entities, in any capacity of Employee Director, or
Consultant, or (iii) any change in status as long as the individual remains in
the service of the Company or a Related Entity in any capacity of Employee,
Director, or Consultant (except as otherwise provided in the Option Agreement).
An approved leave of absence shall include sick leave, military leave, or any
other authorized personal leave.
(m) "Corporate Transaction" means a Corporate Transaction as defined
in Section 9(b)(i) of the Plan.
(n) "Covered Employee" means an Eligible Person who is a Covered
Employee as specified in Section 8(e) of the Plan.
(o) "Deferred Stock" means a right, granted to a Participant under
Section 6(e) hereof, to receive Stock, cash or a combination thereof at the end
of a specified deferral period.
(p) "Director" means a member of the Board or the board of directors
of any Related Entity.
(q) "Disability" means a permanent and total disability (within the
meaning of Section 22(e) of the Code), as determined by a medical doctor
satisfactory to the Committee.
(r) "Dividend Equivalent" means a right, granted to a Participant
under Section 6(g) hereof, to receive cash, Stock, other Awards or other
property equal in value to dividends paid with respect to a specified number of
shares of Stock, or other periodic payments.
(s) "Effective Date" means the effective date of the Plan, as
amended and restated, which shall be December 1, 2003.
(t) "Eligible Person" means each Executive Officer of the Company
(as defined under the Exchange Act) and other officers, Directors and Employees
of the Company or of any Related Entity, and Consultants with the Company or any
Related Entity. The foregoing notwithstanding, only employees of the Company,
the Parent, or any Subsidiary shall be Eligible Persons for purposes of
receiving any Incentive Stock Options. An Employee on leave of absence may be
considered as still in the employ of the Company or a Related Entity for
purposes of eligibility for participation in the Plan.
(u) "Employee" means any person, including an officer or Director,
who is an employee of the Company or any Related Entity. The Payment of a
director's fee by the Company or a Related Entity shall not be sufficient to
constitute "employment" by the Company.
(v) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, including rules thereunder and successor provisions
and rules thereto.
(w) "Executive Officer" means an executive officer of the Company as
defined under the Exchange Act.
(x) "Fair Market Value" means the fair market value of Stock, Awards
or other property as determined by the Committee or the Board, or under
procedures established by the Committee or the Board. Unless otherwise
determined by the Committee or the Board, the Fair Market Value of Stock as of
any given date after which the Company is a Publicly Held Corporation shall be
the closing sale price per share reported on a consolidated basis for stock
listed on the principal stock exchange or market on which Stock is traded on the
date as of which such value is being determined or, if there is no sale on that
date, then on the last previous day on which a sale was reported.
(y) "Good Reason" shall, with respect to any Participant, have the
equivalent meaning (or the same meaning as "good reason" or "for good reason")
set forth in any employment agreement between the Participant and the Company or
a Related Entity or, in the absence of any such agreement, such term shall mean
(i) the assignment to the Participant of any duties inconsistent in any respect
with the Participant's position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as assigned by the Company
(or a Related Entity), or any other action by the Company (or a Related Entity)
which results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied by the Company
(or a Related Entity) promptly after receipt of notice thereof given by the
Participant; (ii) any failure by the Company (or a Related Entity) to comply
with its obligations to the Participant as agreed upon, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which is
remedied by the Company (or a Related Entity) promptly after receipt of notice
thereof given by the Participant; (iii) any purported termination by the Company
(or a Related Entity) of the Participant's Continuous Service otherwise than for
Cause as defined in Section 2(f), or by reason of the Participant's Disability
as defined in Section 2(o), prior to the Expiration Date.
(z) "Incentive Stock Option" means any Option intended to be
designated as an incentive stock option within the meaning of Section 422 of the
Code or any successor provision thereto.
(aa) "Incumbent Board" means the Incumbent Board as defined in
Section 9(b)(ii) of the Plan.
(bb) "Limited Stock Appreciation Right" means a right granted to a
Participant under Section 6(c) hereof.
(cc) "Option" means a right granted to a Participant under Section
6(b) hereof, to purchase Stock or other Awards at a specified price during
specified time periods.
(dd) "Optionee" means a person to whom an Option or Incentive Stock
Option is granted under this Plan or any person who succeeds to the rights of
such person under this Plan.
(ee) "Other Stock-Based Awards" means Awards granted to a
Participant under Section 6(h) hereof.
(ff) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(gg) "Participant" means a person who has been granted an Award
under the Plan which remains outstanding, including a person who is no longer an
Eligible Person.
(hh) "Performance Award" means a right, granted to an Eligible
Person under Sections 8(a) and (b) hereof, to receive Awards based upon
performance criteria specified by the Committee or the Board.
(ii) "Person" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, and shall include a "group" as defined in Section 13(d) thereof.
(jj) "Publicly Held Corporation" shall mean a publicly held
corporation as that term is used under Section 162(m)(2) of the Code.
(kk) "Restricted Stock" means Stock granted to a Participant under
Section 6(d) hereof, that is subject to certain restrictions and to a risk of
forfeiture.
(ll) "Rule 16b-3" and "Rule 16a-1(c)(3)" means Rule 16b-3 and Rule
16a-1(c)(3), as from time to time in effect and applicable to the Plan and
Participants, promulgated by the Securities and Exchange Commission under
Section 16 of the Exchange Act.
(mm) "Stock" means the Company's Common Stock, and such other
securities as may be substituted (or resubstituted) for Stock pursuant to
Section 10(c) hereof.
(nn) "Stock Appreciation Right" means a right granted to a
Participant under Section 6(c) hereof.
(oo) "Subsidiary" means a "subsidiary corporation" whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. Administration.
(a) Authority of the Committee. The Plan shall be administered by
the Committee; provided, however, that except as otherwise expressly provided in
this Plan or, during the period that the Company is a Publicly Held Corporation,
in order to comply with Code Section 162(m) or Rule 16b-3 under the Exchange
Act, the Board may exercise any power or authority granted to the Committee
under this Plan. The Committee or the Board shall have full and final authority,
in each case subject to and consistent with the provisions of the Plan, to
select Eligible Persons to become Participants, grant Awards, determine the
type, number and other terms and conditions of, and all other matters relating
to, Awards, prescribe Award agreements (which need not be identical for each
Participant) and rules and regulations for the administration of the Plan,
construe and interpret the Plan and Award agreements and correct defects, supply
omissions or reconcile inconsistencies therein, and to make all other decisions
and determinations as the Committee or the Board may deem necessary or advisable
for the administration of the Plan. In exercising any discretion granted to the
Committee or the Board under the Plan or pursuant to any Award, the Committee or
the Board shall not be required to follow past practices, act in a manner
consistent with past practices, or treat any Eligible Person in a manner
consistent with the treatment of other Eligible Persons.
(b) Manner of Exercise of Committee Authority. In the event that the
Company is or becomes a Publicly Held Corporation, the Committee, and not the
Board, shall exercise sole and exclusive discretion on any matter relating to a
Participant then subject to Section 16 of the Exchange Act with respect to the
Company to the extent necessary in order that transactions by such Participant
shall be exempt under Rule 16b-3 under the Exchange Act. Any action of the
Committee or the Board shall be final, conclusive and binding on all persons,
including the Company, its Related Entities, Participants, Beneficiaries,
transferees under Section 10(b) hereof or other persons claiming rights from or
through a Participant, and stockholders. The express grant of any specific power
to the Committee or the Board, and the taking of any action by the Committee or
the Board, shall not be construed as limiting any power or authority of the
Committee or the Board. The Committee or the Board may delegate to officers or
managers of the Company or any Related Entity, or committees thereof, the
authority, subject to such terms as the Committee or the Board shall determine,
(i) to perform administrative functions, (ii) with respect to Participants not
subject to Section 16 of the Exchange Act, to perform such other functions as
the Committee or the Board may determine, and (iii) with respect to Participants
subject to Section 16, to perform such other functions of the Committee or the
Board as the Committee or the Board may determine to the extent performance of
such functions will not result in the loss of an exemption under Rule 16b-3
otherwise available for transactions by such persons, in each case to the extent
permitted under applicable law and subject to the requirements set forth in
Section 8(d). The Committee or the Board may appoint agents to assist it in
administering the Plan.
(c) Limitation of Liability. The Committee and the Board, and each
member thereof, shall be entitled to, in good faith, rely or act upon any report
or other information furnished to him or her by any Executive Officer, other
officer or Employee, the Company's independent auditors, Consultants or any
other agents assisting in the administration of the Plan. Members of the
Committee and the Board, and any officer or Employee acting at the direction or
on behalf of the Committee or the Board, shall not be personally liable for any
action or determination taken or made in good faith with respect to the Plan,
and shall, to the extent permitted by law, be fully indemnified and protected by
the Company with respect to any such action or determination.
4. Stock Subject to Plan.
(a) Limitation on Overall Number of Shares Subject to Awards.
Subject to adjustment as provided in Section 10(c) hereof, the total number of
shares of Stock reserved and available for delivery in connection with Awards
under the Plan shall be 3,000,000. If any Awards previously granted under the
Plan terminate without being exercised, expire, are forfeited or canceled, or
are surrendered in payment of any Awards or any tax withholding with regard
thereto, new Awards may thereafter be granted covering such shares of Stock. Any
shares of Stock delivered under the Plan may consist, in whole or in part, of
authorized and unissued shares or treasury shares. Subject to adjustment as
provided in Section 10(c) hereof, the number of shares of Stock which may be
issued pursuant to Incentive Stock Options shall not exceed 1,000,000 shares.
(b) Application of Limitations. The limitation contained in Section
4(a) shall apply not only to Awards that are settleable by the delivery of
shares of Stock but also to Awards relating to shares of Stock but settleable
only in cash (such as cash-only Stock Appreciation Rights). The Committee or the
Board may adopt reasonable counting procedures to ensure appropriate counting,
avoid double counting (as, for example, in the case of tandem or substitute
awards) and make adjustments if the number of shares of Stock actually delivered
differs from the number of shares previously counted in connection with an
Award.
5. Eligibility. Awards may be granted under the Plan only to Eligible
Persons.
6. Specific Terms of Awards.
(a) General. Awards may be granted on the terms and conditions set
forth in this Section 6. In addition, the Committee or the Board may impose on
any Award or the exercise thereof, at the date of grant or thereafter (subject
to Section 10(e)), such additional terms and conditions, not inconsistent with
the provisions of the Plan, as the Committee or the Board shall determine,
including terms requiring forfeiture of Awards in the event of termination of
Continuous Service by the Participant and terms permitting a Participant to make
elections relating to his or her Award. The Committee or the Board shall retain
full power and discretion to accelerate, waive or modify, at any time, any term
or condition of an Award that is not mandatory under the Plan. Except in cases
in which the Committee or the Board is authorized to require other forms of
consideration under the Plan, or to the extent other forms of consideration must
be paid to satisfy the requirements of Delaware law, no consideration other than
services may be required for the grant (but not the exercise) of any Award.
(b) Options. The Committee and the Board each is authorized to grant
Options to Participants on the following terms and conditions:
(i) Exercise Price. The exercise price per share of
Stock purchasable under an Option shall be determined by the
Committee or the Board, provided that such exercise price shall not,
in the case of Incentive Stock Options, be less than 100% of the
Fair Market Value of the Stock on the date of grant of the Option
and shall not, in any event, be less than the par value of a share
of Stock on the date of grant of such Option. If an employee owns or
is deemed to own (by reason of the attribution rules applicable
under Section 424(d) of the Code) more than 10% of the combined
voting power of all classes of stock of the Company or any Parent
Corporation or Subsidiary and an Incentive Stock Option is granted
to such employee, the option price of such Incentive Stock Option
(to the extent required by the Code at the time of grant) shall be
no less than 110% of the Fair Market Value of the Stock on the date
such Incentive Stock Option is granted.
(ii) Time and Method of Exercise. The Committee or the
Board shall determine the time or times at which or the
circumstances under which an Option may be exercised in whole or in
part (including based on achievement of performance goals and/or
future service requirements), the time or times at which Options
shall cease to be or become exercisable following termination of
Continuous Service or upon other conditions, the methods by which
such exercise price may be paid or deemed to be paid (including in
the discretion of the Committee or the Board a cashless exercise
procedure), the form of such payment, including, without limitation,
cash, Stock, other Awards or awards granted under other plans of the
Company or a Related Entity, or other property (including notes or
other contractual obligations of Participants to make payment on a
deferred basis), and the methods by or forms in which Stock will be
delivered or deemed to be delivered to Participants.
(iii) Incentive Stock Options. The terms of any
Incentive Stock Option granted under the Plan shall comply in all
respects with the provisions of Section 422 of the Code. Anything in
the Plan to the contrary notwithstanding, no term of the Plan
relating to Incentive Stock Options (including any Stock
Appreciation Right in tandem therewith) shall be interpreted,
amended or altered, nor shall any discretion or authority granted
under the Plan be exercised, so as to disqualify either the Plan or
any Incentive Stock Option under Section 422 of the Code, unless the
Participant has first requested the change that will result in such
disqualification. Thus, if and to the extent required to comply with
Section 422 of the Code, Options granted as Incentive Stock Options
shall be subject to the following special terms and conditions:
(A) the Option shall not be exercisable more than ten
years after the date such Incentive Stock Option is granted;
provided, however, that if a Participant owns or is deemed to own
(by reason of the attribution rules of Section 424(d) of the Code)
more than 10% of the combined voting power of all classes of stock
of the Company or any Parent Corporation and the Incentive Stock
Option is granted to such Participant, the term of the Incentive
Stock Option shall be (to the extent required by the Code at the
time of the grant) for no more than five years from the date of
grant; and
(B) The aggregate Fair Market Value (determined as of
the date the Incentive Stock Option is granted) of the shares of
stock with respect to which Incentive Stock Options granted under
the Plan and all other option plans of the Company or its Parent
Corporation during any calendar year exercisable for the first time
by the Participant during any calendar year shall not (to the extent
required by the Code at the time of the grant) exceed $100,000.
(iv) Repurchase Rights. The Committee and the Board
shall have the discretion to grant Options which are exercisable for
unvested shares of Common Stock. Should the Optionee's Continuous
Service cease while holding such unvested shares, the Company shall
have the right to repurchase, at the exercise price paid per share,
any or all of those unvested shares. The terms upon which such
repurchase right shall be exercisable (including the period and
procedure for exercise and the appropriate vesting schedule for the
purchased shares) shall be established by the Committee or the Board
and set forth in the document evidencing such repurchase right.
(c) Stock Appreciation Rights. The Committee and the Board each is
authorized to grant Stock Appreciation Right's to Participants on the following
terms and conditions:
(i) Right to Payment. A Stock Appreciation Right shall
confer on the Participant to whom it is granted a right to receive,
upon exercise thereof, the excess of (A) the Fair Market Value of
one share of stock on the date of exercise (or, in the case of a
"Limited Stock Appreciation Right" that may be exercised only in the
event of a Change in Control, the Fair Market Value determined by
reference to the Change in Control Price, as defined under Section
9(c) hereof), over (B) the grant price of the Stock Appreciation
Right as determined by the Committee or the Board. The grant price
of a Stock Appreciation Right shall not be less than the Fair Market
Value of a share of Stock on the date of grant except as provided
under Section 7(a) hereof.
(ii) Other Terms. The Committee or the Board shall
determine at the date of grant or thereafter, the time or times at
which and the circumstances under which a Stock Appreciation Right
may be exercised in whole or in part (including based on achievement
of performance goals and/or future service requirements), the time
or times at which Stock Appreciation Rights shall cease to be or
become exercisable following termination of Continuous Service or
upon other conditions, the method of exercise, method of settlement,
form of consideration payable in settlement, method by or forms in
which Stock will be delivered or deemed to be delivered to
Participants, whether or not a Stock Appreciation Right shall be in
tandem or in combination with any other Award, and any other terms
and conditions of any Stock Appreciation Right. Limited Stock
Appreciation Rights that may only be exercised in connection with a
Change in Control or other event as specified by the Committee or
the Board, may be granted on such terms, not inconsistent with this
Section 6(c), as the Committee or the Board may determine. Stock
Appreciation Rights and Limited Stock Appreciation Rights may be
either freestanding or in tandem with other Awards.
(d) Restricted Stock. The Committee and the Board each is authorized
to grant Restricted Stock to Participants on the following terms and conditions:
(i) Grant and Restrictions. Restricted Stock shall be
subject to such restrictions on transferability, risk of forfeiture
and other restrictions, if any, as the Committee or the Board may
impose, or as otherwise provided in this Plan. The restrictions may
lapse separately or in combination at such times, under such
circumstances (including based on achievement of performance goals
and/or future service requirements), in such installments or
otherwise, as the Committee or the Board may determine at the date
of grant or thereafter. Except to the extent restricted under the
terms of the Plan and any Award agreement relating to the Restricted
Stock, a Participant granted Restricted Stock shall have all of the
rights of a stockholder, including the right to vote the Restricted
Stock and the right to receive dividends thereon (subject to any
mandatory reinvestment or other requirement imposed by the Committee
or the Board). During the restricted period applicable to the
Restricted Stock, subject to Section 10(b) below, the Restricted
Stock may not be sold, transferred, pledged, hypothecated, margined
or otherwise encumbered by the Participant.
(ii) Forfeiture. Except as otherwise determined by the
Committee or the Board at the time of the Award, upon termination of
a Participant's Continuous Service during the applicable restriction
period, the Participant's Restricted Stock that is at that time
subject to restrictions shall be forfeited and reacquired by the
Company; provided that the Committee or the Board may provide, by
rule or regulation or in any Award agreement, or may determine in
any individual case, that restrictions or forfeiture conditions
relating to Restricted Stock shall be waived in whole or in part in
the event of terminations resulting from specified causes, and the
Committee or the Board may in other cases waive in whole or in part
the forfeiture of Restricted Stock.
(iii) Certificates for Stock. Restricted Stock granted
under the Plan may be evidenced in such manner as the Committee or
the Board shall determine. If certificates representing Restricted
Stock are registered in the name of the Participant, the Committee
or the Board may require that such certificates bear an appropriate
legend referring to the terms, conditions and restrictions
applicable to such Restricted Stock, that the Company retain
physical possession of the certificates, and that the Participant
deliver a stock power to the Company, endorsed in blank, relating to
the Restricted Stock.
(iv) Dividends and Splits. As a condition to the grant
of an Award of Restricted Stock, the Committee or the Board may
require that any cash dividends paid on a share of Restricted Stock
be automatically reinvested in additional shares of Restricted Stock
or applied to the purchase of additional Awards under the Plan.
Unless otherwise determined by the Committee or the Board, Stock
distributed in connection with a Stock split or Stock dividend, and
other property distributed as a dividend, shall be subject to
restrictions and a risk of forfeiture to the same extent as the
Restricted Stock with respect to which such Stock or other property
has been distributed.
(e) Deferred Stock. The Committee and the Board each is authorized
to grant Deferred Stock to Participants, which are rights to receive Stock,
cash, or a combination thereof at the end of a specified deferral period,
subject to the following terms and conditions:
(i) Award and Restrictions. Satisfaction of an Award of
Deferred Stock shall occur upon expiration of the deferral period
specified for such Deferred Stock by the Committee or the Board (or,
if permitted by the Committee or the Board, as elected by the
Participant). In addition, Deferred Stock shall be subject to such
restrictions (which may include a risk of forfeiture) as the
Committee or the Board may impose, if any, which restrictions may
lapse at the expiration of the deferral period or at earlier
specified times (including based on achievement of performance goals
and/or future service requirements), separately or in combination,
in installments or otherwise, as the Committee or the Board may
determine. Deferred Stock may be satisfied by delivery of Stock,
cash equal to the Fair Market Value of the specified number of
shares of Stock covered by the Deferred Stock, or a combination
thereof, as determined by the Committee or the Board at the date of
grant or thereafter. Prior to satisfaction of an Award of Deferred
Stock, an Award of Deferred Stock carries no voting or dividend or
other rights associated with share ownership.
(ii) Forfeiture. Except as otherwise determined by the
Committee or the Board, upon termination of a Participant's
Continuous Service during the applicable deferral period thereof to
which forfeiture conditions apply (as provided in the Award
agreement evidencing the Deferred Stock), the Participant's Deferred
Stock that is at that time subject to deferral (other than a
deferral at the election of the Participant) shall be forfeited;
provided that the Committee or the Board may provide, by rule or
regulation or in any Award agreement, or may determine in any
individual case, that restrictions or forfeiture conditions relating
to Deferred Stock shall be waived in whole or in part in the event
of terminations resulting from specified causes, and the Committee
or the Board may in other cases waive in whole or in part the
forfeiture of Deferred Stock.
(iii) Dividend Equivalents. Unless otherwise determined
by the Committee or the Board at date of grant, any Dividend
Equivalents that are granted with respect to any Award of Deferred
Stock shall be either (A) paid with respect to such Deferred Stock
at the dividend payment date in cash or in shares of unrestricted
Stock having a Fair Market Value equal to the amount of such
dividends, or (B) deferred with respect to such Deferred Stock and
the amount or value thereof automatically deemed reinvested in
additional Deferred Stock, other Awards or other investment
vehicles, as the Committee or the Board shall determine or permit
the Participant to elect.
(f) Bonus Stock and Awards in Lieu of Obligations. The Committee and
the Board each is authorized to grant Stock as a bonus, or to grant Stock or
other Awards in lieu of Company obligations to pay cash or deliver other
property under the Plan or under other plans or compensatory arrangements,
provided that, in the case of Participants subject to Section 16 of the Exchange
Act, the amount of such grants remains within the discretion of the Committee to
the extent necessary to ensure that acquisitions of Stock or other Awards are
exempt from liability under Section 16(b) of the Exchange Act. Stock or Awards
granted hereunder shall be subject to such other terms as shall be determined by
the Committee or the Board.
(g) Dividend Equivalents. The Committee and the Board each is
authorized to grant Dividend Equivalents to a Participant entitling the
Participant to receive cash, Stock, other Awards, or other property equal in
value to dividends paid with respect to a specified number of shares of Stock,
or other periodic payments. Dividend Equivalents may be awarded on a
free-standing basis or in connection with another Award. The Committee or the
Board may provide that Dividend Equivalents shall be paid or distributed when
accrued or shall be deemed to have been reinvested in additional Stock, Awards,
or other investment vehicles, and subject to such restrictions on
transferability and risks of forfeiture, as the Committee or the Board may
specify.
(h) Other Stock-Based Awards. The Committee and the Board each is
authorized, subject to limitations under applicable law, to grant to
Participants such other Awards that may be denominated or payable in, valued in
whole or in part by reference to, or otherwise based on, or related to, Stock,
as deemed by the Committee or the Board to be consistent with the purposes of
the Plan, including, without limitation, convertible or exchangeable debt
securities, other rights convertible or exchangeable into Stock, purchase rights
for Stock, Awards with value and payment contingent upon performance of the
Company or any other factors designated by the Committee or the Board, and
Awards valued by reference to the book value of Stock or the value of securities
of or the performance of specified Related Entities or business units. The
Committee or the Board shall determine the terms and conditions of such Awards.
Stock delivered pursuant to an Award in the nature of a purchase right granted
under this Section 6(h) shall be purchased for such consideration (including
without limitation loans from the Company or a Related Entity), paid for at such
times, by such methods, and in such forms, including, without limitation, cash,
Stock, other Awards or other property, as the Committee or the Board shall
determine. The Committee and the Board shall have the discretion to grant such
other Awards which are exercisable for unvested shares of Common Stock. Should
the Optionee's Continuous Service cease while holding such unvested shares, the
Company shall have the right to repurchase, at the exercise price paid per
share, any or all of those unvested shares. The terms upon which such repurchase
right shall be exercisable (including the period and procedure for exercise and
the appropriate vesting schedule for the purchased shares) shall be established
by the Committee or the Board and set forth in the document evidencing such
repurchase right. Cash awards, as an element of or supplement to any other Award
under the Plan, may also be granted pursuant to this Section 6(h).
7. Certain Provisions Applicable to Awards.
(a) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards
granted under the Plan may, in the discretion of the Committee or the Board, be
granted either alone or in addition to, in tandem with, or in substitution or
exchange for, any other Award or any award granted under another plan of the
Company, any Related Entity, or any business entity to be acquired by the
Company or a Related Entity, or any other right of a Participant to receive
payment from the Company or any Related Entity. Such additional, tandem, and
substitute or exchange Awards may be granted at any time. If an Award is granted
in substitution or exchange for another Award or award, the Committee or the
Board shall require the surrender of such other Award or award in consideration
for the grant of the new Award. In addition, Awards may be granted in lieu of
cash compensation, including in lieu of cash amounts payable under other plans
of the Company or any Related Entity, in which the value of Stock subject to the
Award is equivalent in value to the cash compensation (for example, Deferred
Stock or Restricted Stock), or in which the exercise price, grant price or
purchase price of the Award in the nature of a right that may be exercised is
equal to the Fair Market Value of the underlying Stock minus the value of the
cash compensation surrendered (for example, Options granted with an exercise
price "discounted" by the amount of the cash compensation surrendered).
(b) Term of Awards. The term of each Award shall be for such period
as may be determined by the Committee or the Board; provided that in no event
shall the term of any Option or Stock Appreciation Right exceed a period of ten
years (or such shorter term as may be required in respect of an Incentive Stock
Option under Section 422 of the Code).
(c) Form and Timing of Payment Under Awards; Deferrals. Subject to
the terms of the Plan and any applicable Award agreement, payments to be made to
the Company or a Related Entity upon the exercise of an Option or other Award or
settlement of an Award may be made in such forms as the Committee or the Board
shall determine, including, without limitation, cash, other Awards or other
property, and may be made in a single payment or transfer, in installments, or
on a deferred basis. The settlement of any Award may be accelerated, and cash
paid in lieu of Stock in connection with such settlement, in the discretion of
the Committee or the Board or upon occurrence of one or more specified events
(in addition to a Change in Control). Installment or deferred payments may be
required by the Committee or the Board (subject to Section 10(e) of the Plan) or
permitted at the election of the Participant on terms and conditions established
by the Committee or the Board. Payments may include, without limitation,
provisions for the payment or crediting of a reasonable interest rate on
installment or deferred payments or the grant or crediting of Dividend
Equivalents or other amounts in respect of installment or deferred payments
denominated in Stock.
(d) Exemptions from Section 16(b) Liability. If and to the extent
that the Company is or becomes a Publicly Held Corporation, it is the intent of
the Company that this Plan comply in all respects with applicable provisions of
Rule 16b-3 or Rule 16a-1(c)(3) to the extent necessary to ensure that neither
the grant of any Awards to nor other transaction by a Participant who is subject
to Section 16 of the Exchange Act is subject to liability under Section 16(b)
thereof (except for transactions acknowledged in writing to be non-exempt by
such Participant). Accordingly, if any provision of this Plan or any Award
agreement does not comply with the requirements of Rule 16b-3 or Rule
16a-1(c)(3) as then applicable to any such transaction, such provision will be
construed or deemed amended to the extent necessary to conform to the applicable
requirements of Rule 16b-3 or Rule 16a-1(c)(3) so that such Participant shall
avoid liability under Section 16(b). In addition, the purchase price of any
Award conferring a right to purchase Stock shall be not less than any specified
percentage of the Fair Market Value of Stock at the date of grant of the Award
then required in order to comply with Rule 16b-3.
8. Performance and Annual Incentive Awards.
(a) Performance Conditions. The right of a Participant to exercise
or receive a grant or settlement of any Award, and the timing thereof, may be
subject to such performance conditions as may be specified by the Committee or
the Board. The Committee or the Board may use such business criteria and other
measures of performance as it may deem appropriate in establishing any
performance conditions, and may exercise its discretion to reduce the amounts
payable under any Award subject to performance conditions, except as limited
under Sections 8(b) and 8(c) hereof in the case of a Performance Award or Annual
Incentive Award intended to qualify under Code Section 162(m). At such times as
the Company is a Publicly Held Corporation, if and to the extent required under
Code Section 162(m), any power or authority relating to a Performance Award or
Annual Incentive Award intended to qualify under Code Section 162(m), shall be
exercised by the Committee and not the Board.
(b) Performance Awards Granted to Designated Covered Employees. If
and to the extent that the Committee determines that a Performance Award to be
granted to an Eligible Person who is designated by the Committee as likely to be
a Covered Employee should qualify as "performance-based compensation" for
purposes of Code Section 162(m), the grant, exercise and/or settlement of such
Performance Award shall be contingent upon achievement of preestablished
performance goals and other terms set forth in this Section 8(b).
(i) Performance Goals Generally. The performance goals
for such Performance Awards shall consist of one or more business
criteria and a targeted level or levels of performance with respect
to each of such criteria, as specified by the Committee consistent
with this Section 8(b). Performance goals shall be objective and
shall otherwise meet the requirements of Code Section 162(m) and
regulations thereunder including the requirement that the level or
levels of performance targeted by the Committee result in the
achievement of performance goals being "substantially uncertain."
The Committee may determine that such Performance Awards shall be
granted, exercised and/or settled upon achievement of any one
performance goal or that two or more of the performance goals must
be achieved as a condition to grant, exercise and/or settlement of
such Performance Awards. Performance goals may differ for
Performance Awards granted to any one Participant or to different
Participants.
(ii) Business Criteria. One or more of the following
business criteria for the Company, on a consolidated basis, and/or
specified Related Entities or business units of the Company (except
with respect to the total stockholder return and earnings per share
criteria), shall be used exclusively by the Committee in
establishing performance goals for such Performance Awards: (1)
total stockholder return; (2) such total stockholder return as
compared to total return (on a comparable basis) of a publicly
available index such as, but not limited to, the Standard & Poor's
500 Stock Index or the S&P Specialty Retailer Index; (3) net income;
(4) pretax earnings; (5) earnings before interest expense, taxes,
depreciation and amortization; (6) pretax operating earnings after
interest expense and before bonuses, service fees, and extraordinary
or special items; (7) operating margin; (8) earnings per share; (9)
return on equity; (10) return on capital; (11) return on investment;
(12) operating earnings; (13) working capital or inventory; and (14)
ratio of debt to stockholders' equity. One or more of the foregoing
business criteria shall also be exclusively used in establishing
performance goals for Annual Incentive Awards granted to a Covered
Employee under Section 8(c) hereof that are intended to qualify as
"performanced-based compensation under Code Section 162(m).
(iii) Performance Period; Timing For Establishing
Performance Goals. Achievement of performance goals in respect of
such Performance Awards shall be measured over a performance period
of up to ten years, as specified by the Committee. Performance goals
shall be established not later than 90 days after the beginning of
any performance period applicable to such Performance Awards, or at
such other date as may be required or permitted for
"performance-based compensation" under Code Section 162(m).
(iv) Performance Award Pool. The Committee may establish
a Performance Award pool, which shall be an unfunded pool, for
purposes of measuring Company performance in connection with
Performance Awards. The amount of such Performance Award pool shall
be based upon the achievement of a performance goal or goals based
on one or more of the business criteria set forth in Section
8(b)(ii) hereof during the given performance period, as specified by
the Committee in accordance with Section 8(b)(iii) hereof. The
Committee may specify the amount of the Performance Award pool as a
percentage of any of such business criteria, a percentage thereof in
excess of a threshold amount, or as another amount which need not
bear a strictly mathematical relationship to such business criteria.
(v) Settlement of Performance Awards; Other Terms.
Settlement of such Performance Awards shall be in cash, Stock, other
Awards or other property, in the discretion of the Committee. The
Committee may, in its discretion, reduce the amount of a settlement
otherwise to be made in connection with such Performance Awards. The
Committee shall specify the circumstances in which such Performance
Awards shall be paid or forfeited in the event of termination of
Continuous Service by the Participant prior to the end of a
performance period or settlement of Performance Awards.
(c) Annual Incentive Awards Granted to Designated Covered Employees.
The Committee may, within its discretion, grant one or more Annual Incentive
Awards to any Eligible Person, subject to the terms and conditions set forth in
this Section 8(c).
(i) Annual Incentive Award Pool. The Committee may
establish an Annual Incentive Award pool, which shall be an unfunded
pool, for purposes of measuring Company performance in connection
with Annual Incentive Awards. In the case of Annual Incentive Awards
intended to qualify as "performance-based compensation" for purposes
of Code Section 162(m), the amount of such Annual Incentive Award
pool shall be based upon the achievement of a performance goal or
goals based on one or more of the business criteria set forth in
Section 8(b)(ii) hereof during the given performance period, as
specified by the Committee in accordance with Section 8(b)(iii)
hereof. The Committee may specify the amount of the Annual Incentive
Award pool as a percentage of any such business criteria, a
percentage thereof in excess of a threshold amount, or as another
amount which need not bear a strictly mathematical relationship to
such business criteria.
(ii) Potential Annual Incentive Awards. Not later than
the end of the 90th day of each fiscal year, or at such other date
as may be required or permitted in the case of Awards intended to be
"performance-based compensation" under Code Section 162(m), the
Committee shall determine the Eligible Persons who will potentially
receive Annual Incentive Awards, and the amounts potentially payable
thereunder, for that fiscal year, either out of an Annual Incentive
Award pool established by such date under Section 8(c)(i) hereof or
as individual Annual Incentive Awards. In the case of individual
Annual Incentive Awards intended to qualify under Code Section
162(m), the amount potentially payable shall be based upon the
achievement of a performance goal or goals based on one or more of
the business criteria set forth in Section 8(b)(ii) hereof in the
given performance year, as specified by the Committee; in other
cases, such amount shall be based on such criteria as shall be
established by the Committee. In all cases, the maximum Annual
Incentive Award of any Participant shall be subject to the
limitation set forth in Section 5 hereof.
(iii) Payout of Annual Incentive Awards. After the end
of each fiscal year, the Committee shall determine the amount, if
any, of (A) the Annual Incentive Award pool, and the maximum amount
of potential Annual Incentive Award payable to each Participant in
the Annual Incentive Award pool, or (B) the amount of potential
Annual Incentive Award otherwise payable to each Participant. The
Committee may, in its discretion, determine that the amount payable
to any Participant as an Annual Incentive Award shall be reduced
from the amount of his or her potential Annual Incentive Award,
including a determination to make no Award whatsoever. The Committee
shall specify the circumstances in which an Annual Incentive Award
shall be paid or forfeited in the event of termination of Continuous
Service by the Participant prior to the end of a fiscal year or
settlement of such Annual Incentive Award.
(d) Written Determinations. All determinations by the Committee as
to the establishment of performance goals, the amount of any Performance Award
pool or potential individual Performance Awards and as to the achievement of
performance goals relating to Performance Awards under Section 8(b), and the
amount of any Annual Incentive Award pool or potential individual Annual
Incentive Awards and the amount of final Annual Incentive Awards under Section
8(c), shall be made in writing in the case of any Award intended to qualify
under Code Section 162(m). The Committee may not delegate any responsibility
relating to such Performance Awards or Annual Incentive Awards if and to the
extent required to comply with Code Section 162(m).
(e) Status of Section 8(b) and Section 8(c) Awards Under Code
Section 162(m). It is the intent of the Company that Performance Awards and
Annual Incentive Awards under Section 8(b) and 8(c) hereof granted to persons
who are designated by the Committee as likely to be Covered Employees within the
meaning of Code Section 162(m) and regulations thereunder shall, if so
designated by the Committee, constitute "qualified performance-based
compensation" within the meaning of Code Section 162(m) and regulations
thereunder. Accordingly, the terms of Sections 8(b), (c), (d) and (e), including
the definitions of Covered Employee and other terms used therein, shall be
interpreted in a manner consistent with Code Section 162(m) and regulations
thereunder. The foregoing notwithstanding, because the Committee cannot
determine with certainty whether a given Participant will be a Covered Employee
with respect to a fiscal year that has not yet been completed, the term Covered
Employee as used herein shall mean only a person designated by the Committee, at
the time of grant of Performance Awards or an Annual Incentive Award, as likely
to be a Covered Employee with respect to that fiscal year. If any provision of
the Plan or any agreement relating to such Performance Awards or Annual
Incentive Awards does not comply or is inconsistent with the requirements of
Code Section 162(m) or regulations thereunder, such provision shall be construed
or deemed amended to the extent necessary to conform to such requirements.
9. Change in Control.
(a) Effect of "Change in Control." If and to the extent provided in
the Award, in the event of a "Change in Control," as defined in Section 9(b):
(i) The Committee may, within its discretion, accelerate
the vesting and exercisability of any Award carrying a right to
exercise that was not previously vested and exercisable as of the
time of the Change in Control, subject to applicable restrictions
set forth in Section 10(a) hereof;
(ii) The Committee may, within its discretion,
accelerate the exercisability of any limited Stock Appreciation
Rights (and other Stock Appreciation Rights if so provided by their
terms) and provide for the settlement of such Stock Appreciation
Rights for amounts, in cash, determined by reference to the Change
in Control Price;
(iii) The Committee may, within its discretion, lapse
the restrictions, deferral of settlement, and forfeiture conditions
applicable to any other Award granted under the Plan and such Awards
may be deemed fully vested as of the time of the Change in Control,
except to the extent of any waiver by the Participant and subject to
applicable restrictions set forth in Section 10(a) hereof; and
(iv) With respect to any such outstanding Award subject
to achievement of performance goals and conditions under the Plan,
the Committee may, within its discretion, deem such performance
goals and other conditions as having been met as of the date of the
Change in Control.
(b) Definition of "Change in Control. A "Change in Control" shall be
deemed to have occurred upon:
(i) Approval by the shareholders of the Company of a reorganization,
merger, consolidation or other form of corporate transaction or series of
transactions, in each case, with respect to which persons who were the
shareholders of the Company immediately prior to such reorganization, merger or
consolidation or other transaction do not, immediately thereafter, own more than
50% of the combined voting power entitled to vote generally in the election of
directors of the reorganized, merged or consolidated company's then outstanding
voting securities, or a liquidation or dissolution of the Company or the sale of
all or substantially all of the assets of the Company (unless such
reorganization, merger, consolidation or other corporate transaction,
liquidation, dissolution or sale (any such event being referred to as a
"Corporate Transaction") is subsequently abandoned);
(1) (ii) Individuals who, as of the date on
which the Award is granted, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at
least a majority of the Board, provided that any person
becoming a director subsequent to the date on which the
Award was granted whose election, or nomination for
election by the Company's shareholders, was approved by
a vote of at least a majority of the directors then
comprising the Incumbent Board (other than an election
or nomination of an individual whose initial assumption
of office is in connection with an actual or threatened
election contest relating to the election of the
Directors of the Company) shall be, for purposes of this
Agreement, considered as though such person were a
member of the Incumbent Board; or
(iii) the acquisition (other than from the Company) by any person,
entity or "group", within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act, of more than 50% of either the then outstanding shares
of the Company's Common Stock or the combined voting power of the Company's then
outstanding voting securities entitled to vote generally in the election of
directors (hereinafter referred to as the ownership of a "Controlling Interest")
excluding, for this purpose, any acquisitions by (1) the Company or a Related
Entity, (2) any person, entity or "group" that as of the date on which the Award
is granted owns beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act) of a Controlling Interest or (3)
any employee benefit plan of the Company a Related Entity.
(c) Definition of "Change in Control Price." The "Change in Control
Price" means an amount in cash equal to the higher of (i) the amount of cash and
fair market value of property that is the highest price per share paid
(including extraordinary dividends) in any Corporate Transaction triggering the
Change in Control under Section 9(b)(i) hereof or any liquidation of shares
following a sale of substantially all of the assets of the Company, or (ii) the
highest Fair Market Value per share at any time during the 60-day period
preceding and the 60-day period following the Change in Control.
10. General Provisions.
(a) Compliance With Legal and Other Requirements. The Company may,
to the extent deemed necessary or advisable by the Committee or the Board,
postpone the issuance or delivery of Stock or payment of other benefits under
any Award until completion of such registration or qualification of such Stock
or other required action under any federal or state law, rule or regulation,
listing or other required action with respect to any stock exchange or automated
quotation system upon which the Stock or other Company securities are listed or
quoted, or compliance with any other obligation of the Company, as the Committee
or the Board, may consider appropriate, and may require any Participant to make
such representations, furnish such information and comply with or be subject to
such other conditions as it may consider appropriate in connection with the
issuance or delivery of Stock or payment of other benefits in compliance with
applicable laws, rules, and regulations, listing requirements, or other
obligations. The foregoing notwithstanding, in connection with a Change in
Control, the Company shall take or cause to be taken no action, and shall
undertake or permit to arise no legal or contractual obligation, that results or
would result in any postponement of the issuance or delivery of Stock or payment
of benefits under any Award or the imposition of any other conditions on such
issuance, delivery or payment, to the extent that such postponement or other
condition would represent a greater burden on a Participant than existed on the
90th day preceding the Change in Control.
(b) Limits on Transferability; Beneficiaries. No Award or other
right or interest of a Participant under the Plan, including any Award or right
which constitutes a derivative security as generally defined in Rule 16a-1(c)
under the Exchange Act, shall be pledged, hypothecated or otherwise encumbered
or subject to any lien, obligation or liability of such Participant to any party
(other than the Company or a Subsidiary), or assigned or transferred by such
Participant otherwise than by will or the laws of descent and distribution or to
a Beneficiary upon the death of a Participant, and such Awards or rights that
may be exercisable shall be exercised during the lifetime of the Participant
only by the Participant or his or her guardian or legal representative, except
that Awards and other rights (other than Incentive Stock Options and Stock
Appreciation Rights in tandem therewith) may be transferred to one or more
Beneficiaries or other transferees during the lifetime of the Participant, and
may be exercised by such transferees in accordance with the terms of such Award,
but only if and to the extent such transfers and exercises are permitted by the
Committee or the Board pursuant to the express terms of an Award agreement
(subject to any terms and conditions which the Committee or the Board may impose
thereon, and further subject to any prohibitions or restrictions on such
transfers pursuant to Rule 16b-3). A Beneficiary, transferee, or other person
claiming any rights under the Plan from or through any Participant shall be
subject to all terms and conditions of the Plan and any Award agreement
applicable to such Participant, except as otherwise determined by the Committee
or the Board, and to any additional terms and conditions deemed necessary or
appropriate by the Committee or the Board.
(c) Adjustments.
(i) Adjustments to Awards. In the event that any dividend or
other distribution (whether in the form of cash, Stock, or other property),
recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, share exchange, liquidation,
dissolution or other similar corporate transaction or event affects the Stock
and/or such other securities of the Company or any other issuer such that a
substitution, exchange, or adjustment is determined by the Committee or the
Board to be appropriate, then the Committee or the Board shall, in such manner
as it may deem equitable, substitute, exchange or adjust any or all of (A) the
number and kind of shares of Stock which may be delivered in connection with
Awards granted thereafter, (B) the number and kind of shares of Stock by which
annual per-person Award limitations are measured under Section 5 hereof, (C) the
number and kind of shares of Stock subject to or deliverable in respect of
outstanding Awards, (D) the exercise price, grant price or purchase price
relating to any Award and/or make provision for payment of cash or other
property in respect of any outstanding Award, and (E) any other aspect of any
Award that the Committee or Board determines to be appropriate.
(ii) Adjustments in Case of Certain Corporate Transactions. In
the event of a proposed sale of all or substantially all of the Company's assets
or any reorganization, merger, consolidation, or other form of corporate
transaction in which the Company does not survive, or in which the shares of
Stock are exchanged for or converted into securities issued by another entity,
then the successor or acquiring entity or an affiliate thereof may, with the
consent of the Committee or the Board, assume each outstanding Option or
substitute an equivalent option or right. If the successor or acquiring entity
or an affiliate thereof, does not cause such an assumption or substitution, then
each Option shall terminate upon the consummation of sale, merger,
consolidation, or other corporate transaction. The Committee or the Board shall
give written notice of any proposed transaction referred to in this Section
10(c)(ii) a reasonable period of time prior to the closing date for such
transaction (which notice may be given either before or after the approval of
such transaction), in order that Optionees may have a reasonable period of time
prior to the closing date of such transaction within which to exercise any
Options that are then exercisable (including any Options that may become
exercisable upon the closing date of such transaction). An Optionee may
condition his exercise of any Option upon the consummation of the transaction.
(iii) Other Adjustments. In addition, the Committee (and the
Board if and only to the extent such authority is not required to be exercised
by the Committee to comply with Code Section 162(m)) is authorized to make
adjustments in the terms and conditions of, and the criteria included in, Awards
(including Performance Awards and performance goals, and Annual Incentive Awards
and any Annual Incentive Award pool or performance goals relating thereto) in
recognition of unusual or nonrecurring events (including, without limitation,
acquisitions and dispositions of businesses and assets) affecting the Company,
any Related Entity or any business unit, or the financial statements of the
Company or any Related Entity, or in response to changes in applicable laws,
regulations, accounting principles, tax rates and regulations or business
conditions or in view of the Committee's assessment of the business strategy of
the Company, any Related Entity or business unit thereof, performance of
comparable organizations, economic and business conditions, personal performance
of a Participant, and any other circumstances deemed relevant; provided that no
such adjustment shall be authorized or made if and to the extent that such
authority or the making of such adjustment would cause Options, Stock
Appreciation Rights, Performance Awards granted under Section 8(b) hereof or
Annual Incentive Awards granted under Section 8(c) hereof to Participants
designated by the Committee as Covered Employees and intended to qualify as
"performance-based compensation" under Code Section 162(m) and the regulations
thereunder to otherwise fail to qualify as "performance-based compensation"
under Code Section 162(m) and regulations thereunder.
(d) Taxes. The Company and any Related Entity are authorized to
withhold from any Award granted, any payment relating to an Award under the
Plan, including from a distribution of Stock, or any payroll or other payment to
a Participant, amounts of withholding and other taxes due or potentially payable
in connection with any transaction involving an Award, and to take such other
action as the Committee or the Board may deem advisable to enable the Company
and Participants to satisfy obligations for the payment of withholding taxes and
other tax obligations relating to any Award. This authority shall include
authority to withhold or receive Stock or other property and to make cash
payments in respect thereof in satisfaction of a Participant's tax obligations,
either on a mandatory or elective basis in the discretion of the Committee.
(e) Changes to the Plan and Awards. The Board may amend, alter,
suspend, discontinue or terminate the Plan, or the Committee's authority to
grant Awards under the Plan, without the consent of stockholders or
Participants, except that any amendment or alteration to the Plan shall be
subject to the approval of the Company's stockholders not later than the annual
meeting next following such Board action if such stockholder approval is
required by any federal or state law or regulation (including, without
limitation, Rule 16b-3 or Code Section 162(m)) or the rules of any stock
exchange or automated quotation system on which the Stock may then be listed or
quoted, and the Board may otherwise, in its discretion, determine to submit
other such changes to the Plan to stockholders for approval; provided that,
without the consent of an affected Participant, no such Board action may
materially and adversely affect the rights of such Participant under any
previously granted and outstanding Award. The Committee or the Board may waive
any conditions or rights under, or amend, alter, suspend, discontinue or
terminate any Award theretofore granted and any Award agreement relating
thereto, except as otherwise provided in the Plan; provided that, without the
consent of an affected Participant, no such Committee or the Board action may
materially and adversely affect the rights of such Participant under such Award.
Notwithstanding anything in the Plan to the contrary, if any right under this
Plan would cause a transaction to be ineligible for pooling of interest
accounting that would, but for the right hereunder, be eligible for such
accounting treatment, the Committee or the Board may modify or adjust the right
so that pooling of interest accounting shall be available, including the
substitution of Stock having a Fair Market Value equal to the cash otherwise
payable hereunder for the right which caused the transaction to be ineligible
for pooling of interest accounting.
(f) Limitation on Rights Conferred Under Plan. Neither the Plan nor
any action taken hereunder shall be construed as (i) giving any Eligible Person
or Participant the right to continue as an Eligible Person or Participant or in
the employ of the Company or a Related Entity; (ii) interfering in any way with
the right of the Company or a Related Entity to terminate any Eligible Person's
or Participant's Continuous Service at any time, (iii) giving an Eligible Person
or Participant any claim to be granted any Award under the Plan or to be treated
uniformly with other Participants and Employees, or (iv) conferring on a
Participant any of the rights of a stockholder of the Company unless and until
the Participant is duly issued or transferred shares of Stock in accordance with
the terms of an Award.
(g) Unfunded Status of Awards; Creation of Trusts. The Plan is
intended to constitute an "unfunded" plan for incentive and deferred
compensation. With respect to any payments not yet made to a Participant or
obligation to deliver Stock pursuant to an Award, nothing contained in the Plan
or any Award shall give any such Participant any rights that are greater than
those of a general creditor of the Company; provided that the Committee may
authorize the creation of trusts and deposit therein cash, Stock, other Awards
or other property, or make other arrangements to meet the Company's obligations
under the Plan. Such trusts or other arrangements shall be consistent with the
"unfunded" status of the Plan unless the Committee otherwise determines with the
consent of each affected Participant. The trustee of such trusts may be
authorized to dispose of trust assets and reinvest the proceeds in alternative
investments, subject to such terms and conditions as the Committee or the Board
may specify and in accordance with applicable law.
(h) Nonexclusivity of the Plan. Neither the adoption of the Plan by
the Board nor its submission to the stockholders of the Company for approval
shall be construed as creating any limitations on the power of the Board or a
committee thereof to adopt such other incentive arrangements as it may deem
desirable including incentive arrangements and awards which do not qualify under
Code Section 162(m).
(i) Payments in the Event of Forfeitures; Fractional Shares. Unless
otherwise determined by the Committee or the Board, in the event of a forfeiture
of an Award with respect to which a Participant paid cash or other
consideration, the Participant shall be repaid the amount of such cash or other
consideration. No fractional shares of Stock shall be issued or delivered
pursuant to the Plan or any Award. The Committee or the Board shall determine
whether cash, other Awards or other property shall be issued or paid in lieu of
such fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.
(j) Governing Law. The validity, construction and effect of the
Plan, any rules and regulations under the Plan, and any Award agreement shall be
determined in accordance with the laws of the State of Delaware without giving
effect to principles of conflicts of laws, and applicable federal law.
(k) Plan Effective Date and Stockholder Approval; Termination of
Plan. The Plan shall become effective on the Effective Date, subject to
subsequent approval within 12 months of its adoption by the Board by
stockholders of the Company eligible to vote in the election of directors, by a
vote sufficient to meet the requirements of Code Sections 162(m) (if applicable)
and 422, Rule 16b-3 under the Exchange Act (if applicable), applicable NASDAQ
requirements, and other laws, regulations, and obligations of the Company
applicable to the Plan. Awards may be granted subject to stockholder approval,
but may not be exercised or otherwise settled in the event stockholder approval
is not obtained. The Plan shall terminate at such time as no shares of Common
Stock remain available for issuance under the Plan and the Company has no
further rights or obligations with respect to outstanding Awards under the Plan.
ANNUAL MEETING OF STOCKHOLDERS OF
MARKET CENTRAL, INC.
JANUARY 21, 2004
Please date, sign and mail
your proxy card in the
envelope provided as soon
possible
(arrow down) (arrow down)
Please detach along perforated line and mail in the envelope provided.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS AND
"FOR" PROPOSALS 2 AND 3.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR
VOTE IN BLUE OR BLACK INK AS SHOWN HERE /X/
1. Election of Directors
/ / FOR ALL NOMINEES To re-elect Messrs. (01)Leifheit,
(02)Hammer, (03)Goldstein, (04)McGovern and
(05)Clark, and to elect Messrs. (06)Gordy
and (07)Workman to the Board of Directors
/ / WITHHOLD AUTHORITY for terms ending upon the 2005 Meeting of
FOR ALL NOMINEES Stockholders (with respect to Messrs.
Leifheit, McGovern and Clark), or upon the
2006 Meeting of Stockholders (with respect
/ / FOR ALL EXCEPT to Messrs. Gordy and Workman), or upon the
(See instructions below) 2007 Meeting of Stockholders (with respect
to Messrs. Hammer and Goldstein), or until
their successors are elected and qualified.
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
"FOR ALL EXCEPT" and write the nominee No.('s) or name(s) below:
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To change the address on your account, please check the box at right / /
and indicate your new address in the address space above. Please note
that changes to the registered name(s) on the account may not be
submitted via this method.
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FOR AGAINST ABSTAIN
2. To ratify the appointment of Russell Bedford Stefanou Mirchandani LLP as / / / / / /
Market Central's independent public accountants for the fiscal year
ending August 31, 2004.
3. To approve and ratify the Market Central, Inc. 2003 Amended and Restated / / / / / /
Stock Plan.
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the Meeting.
The undersigned acknowledges receipt of the accompanying Notice of Meeting of
Stockholders and Proxy Statement.
Signature of Stockholder Date: Signature of Stockholder Date:
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NOTE: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as
executor, administrator, attorney, trustee or guardian, please give full
title as such. If the signer is a corporation, please sign full corporate
name by duly authorized officer, giving full title as such. If signer is
a partnership, please sign in partnership name by authorized person.
MARKET CENTRAL, INC.
1650A GUM BRANCH ROAD -- JACKSONVILLE, NC 28540
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF MARKET CENTRAL, INC.
FOR THE MEETING OF STOCKHOLDERS TO BE HELD JANUARY 21, 2004
The undersigned holder of Common Stock of Market Central, Inc. ("Market
Central") hereby appoints James Rapp and Terrence Leifheit, or either of them,
proxies for the undersigned, each with full power of substitution, to represent
and to vote as specified in this Proxy all Common Stock of Market Central that
the undersigned stockholder would be entitled to vote if personally present at
the Meeting of Stockholders (the "Meeting") to be held on Wednesday, January 21,
2004, at 10:30 am, Eastern Time, at Hammer's Glen Golf and Country Club, 474
Hammer's Glen Drive, Homer, GA 30547, and at any adjournments or postponements
of the Meeting. The undersigned stockholder hereby revokes any proxy or proxies
heretofore executed for such matters.
This proxy, when properly executed, will be voted in the manner as directed
herein by the undersigned stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1, 2 AND 3 AND IN THE DISCRETION OF THE PROXIES AS TO ANY
OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING. The undersigned
stockholder may revoke this proxy at any time before it is voted by delivering
to the Corporate Secretary of Market Central either a written revocation of the
proxy or a duly executed proxy bearing a later date, or by appearing at the
Meeting and voting in person.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)