UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14C
INFORMATION STATEMENT PURSUANT TO SECTION 14(c)
OF THE SECURITIES EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT [X]
FILED BY PARTY OTHER THAN THE REGISTRANT [_]
CHECK THE APPROPRIATE BOX:
[_] Preliminary Information Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
[X] Definitive Information Statement
THE JACKSON RIVERS COMPANY
(Name of Registrant as specified in its charter)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to exchange act rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by exchange act rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
THE JACKSON RIVERS COMPANY
27 RADIO CIRCLE, MOUNT KISCO
NEW YORK , 10549
TELEPHONE (619) 615-4242
January 10, 2005
To Our Stockholders:
The purpose of this information statement is to inform the holders of
record of shares of our common and preferred stock as of the close of business
on the record date, December 21, 2004 that our board of directors has
recommended, and that the holder of the majority of votes of our stock intends
to vote on January 31, 2005 to effect the following corporate actions:
1. Ratify the November 22, 2004 amendment to our articles of
incorporation to change the par value of our common and preferred stock from
$0.001 per share to $0.00001 per share;
2. Ratify the November 22, 2004 reverse split of our common stock on
the basis of one post-consolidation share for each one thousand
pre-consolidation shares;
3. Approve an amendment to our articles of incorporation to increase
the authorized number of shares of our common stock from 1,980,000,000 to
5,000,000,000 shares;
4. Approve an amendment to our articles of incorporation to increase
the authorized number of shares of our preferred stock from 200,000,000 to
1,000,000,000 shares;
5. Grant discretionary authority to our board of directors to implement
a reverse split of our common stock on the basis of one post-consolidation share
for up to each 2,000 pre-consolidation shares to occur at some time within 12
months of the date of this information statement, with the exact time of the
reverse split to be determined by the board of directors; and
6. Approve the following Stock Plans of The Jackson Rivers Company (the
"Stock Plans"):
(a) Employee Stock Incentive Plan for the Year 2004 No. 3, adopted
by the directors on August 9, 2004 with 150,000,000 shares available for
issuance under the Plan.
(b) Non-Employee Directors and Consultants Retainer Stock Plan for
the Year 2004 No. 3, adopted by the directors on August 9, 2004, with 49,000,000
shares available for issuance under the Plan.
(c) Employee Stock Incentive Plan for the Year 2004 No. 4, adopted
by the directors on September 8, 2004 with 400,000,000 shares available for
issuance under the Plan.
(d) Non-Employee Directors and Consultants Retainer Stock Plan for
the Year 2004 No. 4, adopted by the directors on September 8, 2004, with
99,000,000 shares available for issuance under the Plan.
On December 21, 2004, we had 92,474,495 shares of our common stock issued
and outstanding, 980,000 shares of the Series A preferred stock issued and
outstanding and no shares of our Series B preferred stock issued and
outstanding. We have a consenting stockholder, Dennis N. Lauzon, our president,
chief executive officer and director, who holds 22,000,000 shares of our common
stock and 980,000 shares of our Series A preferred stock. Each share of our
common stock is entitled to one vote on all matters brought before the
stockholders and each share of our Series A preferred stock outstanding entitles
the holder to 2,000 votes of the common stock on all matters brought before the
stockholders. Therefore, Mr. Lauzon will have the power to vote 1,982,000,000
shares of the common stock, which number exceeds the majority of the 92,474,495
issued and outstanding shares of our common stock on the record date.
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Mr. Lauzon will vote to ratify and approve the amendments to our articles
of incorporation, to ratify the November 22, 2004 reverse stock split, for the
grant of discretionary authority to the board with respect to the reverse stock
split and for the approval of the Stock Plans. Mr. Lauzon will have the power
to pass the proposed corporate actions without the concurrence of any of our
other stockholders.
WE ARE NOT ASKING FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
We appreciate your continued interest in The Jackson Rivers Company.
Very truly yours,
/s/ Dennis N. Lauzon
Dennis N. Lauzon
President
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THE JACKSON RIVERS COMPANY
27 RADIO CIRCLE, MOUNT KISCO
NEW YORK , 10549
TELEPHONE (619) 615-4242
INFORMATION STATEMENT
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND A
PROXY.
This information statement is furnished to the holders of record at the
close of business on December 21, 2004, the record date, of the outstanding
common and preferred stock of The Jackson Rivers Company, pursuant to Rule 14c-2
promulgated under the Securities Exchange Act of 1934, as amended, in connection
with an action by the holder of the majority of the votes of our stock intends
to take on January 31, 2005 to effect the following corporate actions:
1. Ratify the November 22, 2004 amendment to our articles of
incorporation to change the par value of our common and preferred stock from
$0.001 per share to $0.00001 per share;
2. Ratify the November 22, 2004 reverse split of our common stock on
the basis of one post-consolidation share for each one thousand
pre-consolidation shares;
3. Approve an amendment to our articles of incorporation to increase
the authorized number of shares of our common stock from 1,980,000,000 to
5,000,000,000 shares;
4. Approve an amendment to our articles of incorporation to increase
the authorized number of shares of our preferred stock from 200,000,000 to
1,000,000,000 shares;
5. Grant discretionary authority to our board of directors to implement
a reverse stock split of our common stock on the basis of one post-consolidation
share for up to each 2,000 pre-consolidation shares to occur at some time within
12 months of the date of this information statement, with the exact time of the
reverse split to be determined by the board of directors; and
6. Approve the following Stock Plans of The Jackson Rivers Company:
(a) Employee Stock Incentive Plan for the Year 2004 No. 3, adopted
by the directors on August 9, 2004 with 150,000,000 shares available for
issuance under the Plan.
(b) Non-Employee Directors and Consultants Retainer Stock Plan for
the Year 2004 No. 3, adopted by the directors on August 9, 2004, with 49,000,000
shares available for issuance under the Plan.
(c) Employee Stock Incentive Plan for the Year 2004 No. 4, adopted
by the directors on September 8, 2004 with 400,000,000 shares available for
issuance under the Plan.
(d) Non-Employee Directors and Consultants Retainer Stock Plan for
the Year 2004 No. 4, adopted by the directors on September 8, 2004, with
99,000,000 shares available for issuance under the Plan.
This information statement will be sent on or about January 10, 2005 to our
stockholders of record who do not sign the majority written consent described
herein.
VOTING SECURITIES
In accordance with our bylaws, our board of directors has fixed the close
of business on December 21, 2004 as the record date for determining the
stockholders entitled to notice of the above noted actions. The
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ratification and approval of the amendments to our articles of incorporation,
the ratification of the November 22, 2004 reverse stock split, the approval of
the discretionary authority with respect to the reverse stock split and the
approval of the Stock Plans require a majority of the votes entitled to be cast
on the matter within a separate voting group of stockholders once a quorum is
present and voting. The quorum necessary to conduct business of the stockholders
consists of one-third of the total shares entitled to be cast at a meeting of
the stockholders.
As of the record date, 92,474,495 shares of our common stock were issued
and outstanding and 980,000 shares of our Series A preferred stock were issued
and outstanding. We have a consenting stockholder, Dennis N. Lauzon, our
president, chief executive officer and director, who holds 22,000,000 shares of
our common stock and 980,000 shares of our Series A preferred stock. Each share
of our common stock is entitled to one vote on all matters brought before the
stockholders and each share of our Series A preferred stock outstanding entitles
the holder to 2,000 votes of the common stock on all matters brought before the
stockholders. Therefore, Mr. Lauzon will have the power to vote 1,982,000,000
shares of the common stock, which number exceeds the majority of the 92,474,495
issued and outstanding shares of our common stock on the record date.
Mr. Lauzon will vote to ratify and approve the amendments to our articles
of incorporation, to ratify the November 22, 2004 reverse stock split, for the
grant of discretionary authority to the board with respect to the reverse stock
split and for the approval of the Stock Plans. Mr. Lauzon will have the power
to pass the proposed corporate actions without the concurrence of any of our
other stockholders.
DISTRIBUTION AND COSTS
We will pay all costs associated with the distribution of this information
statement, including the costs of printing and mailing. In addition, we will
only deliver one information statement to multiple security holders sharing an
address, unless we have received contrary instructions from one or more of the
security holders. Also, we will promptly deliver a separate copy of this
information statement and future stockholder communication documents to any
security holder at a shared address to which a single copy of this information
statement was delivered, or deliver a single copy of this information statement
and future stockholder communication documents to any security holder or holders
sharing an address to which multiple copies are now delivered, upon written
request to us at our address noted above.
Security holders may also address future requests regarding delivery of
information statements and/or annual reports by contacting us at the address
noted above.
DISSENTERS' RIGHT OF APPRAISAL
No action will be taken in connection with the proposed corporate actions
by our board of directors or the voting stockholders for which Florida law, our
articles of incorporation or bylaws provide a right of a stockholder to dissent
and obtain appraisal of or payment for such stockholder's shares.
RATIFICATION OF THE NOVEMBER 22, 2004 AMENDMENT TO OUR ARTICLES OF INCORPORATION
TO CHANGE THE PAR VALUE OF OUR COMMON AND PREFERRED STOCK FROM $0.001 PER SHARE
TO $0.00001 PER SHARE
(PROPOSAL 1)
Our board of directors has unanimously adopted a resolution to amend our
articles of incorporation to change the par value of our common and preferred
stock from $0.001 per share to $0.00001 per share. The certificate of amendment
changing the par value of our common and preferred stock to $0.00001 per share
was filed with the Secretary of State of Florida on November 22, 2004. The
amendment will not have any material affect on our business, operations,
reporting requirements or stock price. Stockholders will not be required to
have new stock certificates reflecting the change in the par value. A copy of
the proposed resolution ratifying the amendment to our articles of incorporation
to change our par value per share is contained in Attachment A to this
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information statement. The amendment became effective upon filing of a
certificate of amendment of our articles of incorporation with the Secretary of
State of Florida effective November 22, 2004.
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We believe that a change from a par value of $0.001 to a par value of
$0.00001 will provide us with greater flexibility in utilizing our common shares
for various corporate purposes. We also believe that a reduction in par value
will provide us with greater flexibility with respect to the issuance of stock
and stock-based compensation because Florida law requires that we receive at
least the par value per share as payment for our common stock.
Par value is used to designate the lowest value for which a corporation can
sell its stock, and is used in valuing the common stock on a corporation balance
sheet. Historically, the concepts of par value and the stated capital of a
corporation were to protect creditors and senior security holders by ensuring
that a corporation received at least the par value as consideration for issuance
of its shares. Over time, these concepts have lost their significance for the
most part. In fact, Florida corporate law permits the issuance of shares without
par value. Most newly formed companies, including most of our peers, have no par
value or a minimal par value. The proposed change in par value will place us
among our peers with respect to our par value.
Furthermore, the reduction in the par value would have no effect on our
stockholders' equity as computed according to generally accepted accounting
principles and as such equity is shown in our financial statements. The change
in the par value would not change the number of authorized shares of our common
stock. The change in par value will also not affect our outstanding options or
employee benefit plans.
The change from par value of $0.001 per share to $0.00001 per share will
result in a reclassification of charges on our balance sheet, shifting values
within the "stockholder's equity" category between the "common stock" line item
and the "additional paid in capital" line item. This reclassification will not
affect the net value of the "stockholders' equity" line item, and thus will not
affect the overall balance sheet values. The change will not affect our profit
and loss statement.
VOTE REQUIRED
Once a quorum is present and voting, a majority of the total votes cast
within each of the voting groups is required to ratify the amendment to our
articles of incorporation to reduce the par value of our common and preferred
stock.
Our board of directors recommends that stockholders vote FOR the approval
of the amendment to our articles of incorporation to reduce the par value of our
common and preferred stock as described in Attachment A hereto.
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RATIFICATION OF THE NOVEMBER 22, 2004 ONE FOR ONE THOUSAND
REVERSE STOCK SPLIT
(PROPOSAL 2)
Effective November 22, 2004, our board of directors implemented a reverse
split of our common stock for the purpose of increasing the market price of our
common stock. The reverse split exchange ratio that the board of directors
approved and deemed advisable was 1,000 pre-consolidation shares for each one
post-consolidation share. A copy of the proposed resolution ratifying the
November 22, 2004 reverse split is contained in Attachment A to this information
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statement.
The reverse split became effective by filing of the articles of amendment
to our articles of incorporation with the Secretary of State of Florida with the
effective date of November 22, 2004.
We believe that the higher share price that might initially result from the
reverse stock split could help generate interest in The Jackson Rivers Company
among investors and thereby assist us in raising future capital to fund our
operations or make acquisitions.
Stockholders should note that the effect of the reverse split upon the
market price for our common stock cannot be accurately predicted. In particular,
there is no assurance that prices for shares of our common stock after the
November 22, 2004 reverse split will be 1,000 times greater than the price for
shares of our common stock immediately prior to the reverse split. Furthermore,
there can be no assurance that the market price of our common
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stock immediately after a reverse split will be maintained for any period of
time. Moreover, because some investors may view the reverse split negatively,
there can be no assurance that the reverse split will not adversely impact the
market price of our common stock or, alternatively, that the market price
following the reverse split will either exceed or remain in excess of the
current market price.
EFFECT OF THE REVERSE SPLIT
The reverse split will not affect the registration of our common stock
under the Securities Exchange Act of 1934, as amended, nor will it change our
periodic reporting and other obligations thereunder.
The voting and other rights of the holders of our common stock were not be
affected by the reverse split (other than as described below). For example, a
holder of 0.5 percent of the voting power of the outstanding shares of our
common stock immediately prior to the effective time of the reverse split
continued to hold 0.5 percent of the voting power of the outstanding shares of
our common stock after the reverse split. The number of stockholders of record
was not be affected by the reverse split (except to the extent that any
shareholder holds only a fractional share interest and receives cash for such
interest).
The authorized number of shares of our common stock and the par value of
our common stock under our articles of incorporation remained the same following
the effective time of the reverse split. However, when the amendment to our
articles of incorporation reducing the par value of our capital stock is
ratified, the par value of our common stock will be reduced to $0.00001 per
share effective November 22, 2004.
The number of shares of our common stock issued and outstanding was reduced
following November 22, 2004, the effective time of the reverse split, in
accordance with the following formula: every 1,000 shares of our common stock
owned by a stockholder were automatically changed into and became one new share
of our common stock.
Stockholders should recognize that they currently own a fewer number of
shares than they owned prior to the November 22, 2004 reverse split (a number
equal to the number of shares owned immediately prior to November 22, 2004
divided by the one for 1,000 exchange ratio, subject to adjustment for
fractional shares, as described below).
We currently have no intention of going private, and this reverse stock
split was not intended to be a first step in a going private transaction and did
not have the effect of a going private transaction covered by Rule 13e-3 of the
Exchange Act. Moreover, the reverse stock split does not increase the risk of
us becoming a private company in the future.
Issuance of Additional Shares. The number of authorized but unissued shares
of our common stock effectively was increased significantly by the November 22,
2004 reverse split of our common stock. For example, when we elected to
implement a one for 1,000 reverse split, based on the 772,000,000 shares of our
common stock outstanding on November 22, 2004, and the 1,980,000,000 shares of
our common stock that were authorized under our articles of incorporation,
1,208,000,000 shares of our common stock remained available for issuance prior
to the reverse split taking effect. A one for 1,000 reverse split had the effect
of decreasing the number of our outstanding shares of our common stock from
772,000,000 to 772,000- shares.
Based on the 1,980,000,000 shares of our common stock that were authorized
under our articles of incorporation, when we implemented the November 22, 2004
reverse stock split, the reverse split, when implemented, had the effect of
increasing the number of authorized but unissued shares of our common stock from
1,208,000,000 to 1,979,228,000 shares.
The issuance in the future of such additional authorized shares may have
the effect of diluting the earnings per share and book value per share, as well
as the stock ownership and voting rights, of the currently outstanding shares of
our common stock.
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The effective increase in the number of authorized but unissued shares of
our common stock may be construed as having an anti-takeover effect by
permitting the issuance of shares to purchasers who might oppose a hostile
takeover bid or oppose any efforts to amend or repeal certain provisions of our
articles of incorporation or bylaws. Such a use of these additional authorized
shares could render more difficult, or discourage, an attempt to acquire control
of us through a transaction opposed by our board of directors. At this time,
our board does not have plans to issue any common shares resulting from the
effective increase in our authorized but unissued shares generated by the
reverse split.
CASH PAYMENT IN LIEU OF FRACTIONAL SHARES
In lieu of any fractional shares to which a holder of our common stock
would otherwise have been entitled as a result of the November 22, 2004 reverse
split, we paid cash equal to such fraction multiplied by the average of the high
and low trading prices of our common stock on the OTCBB during regular trading
hours for the five trading days immediately preceding November 22, 2004.
FEDERAL INCOME TAX CONSEQUENCES
We did not recognize any gain or loss as a result of the reverse split.
The following description of the material federal income tax consequences
of the reverse split to our stockholders is based on the Internal Revenue Code
of 1986, as amended, applicable Treasury Regulations promulgated thereunder,
judicial authority and current administrative rulings and practices as in effect
on the date of this information statement. Changes to the laws could alter the
tax consequences described below, possibly with retroactive effect. We have not
sought and will not seek an opinion of counsel or a ruling from the Internal
Revenue Service regarding the federal income tax consequences of the reverse
split. This discussion is for general information only and does not discuss the
tax consequences that may apply to special classes of taxpayers (e.g.,
non-residents of the United States, broker/dealers or insurance companies). The
state and local tax consequences of the reverse split may vary significantly as
to each stockholder, depending upon the jurisdiction in which such stockholder
resides. You are urged to consult your own tax advisors to determine the
particular consequences to you.
In general, the federal income tax consequences of the reverse split will
vary among stockholders depending upon whether they received cash for fractional
shares or solely a reduced number of shares of our common stock in exchange for
their old shares of our common stock. We believe that the likely federal income
tax effects of the reverse split will be that a stockholder who received solely
a reduced number of shares of our common stock will not recognize gain or loss.
With respect to a reverse split, such a stockholder's basis in the reduced
number of shares of our common stock will equal the stockholder's basis in his
old shares of our common stock. A stockholder who receives cash in lieu of a
fractional share as a result of the reverse stock split will generally be
treated as having received the payment as a distribution in redemption of the
fractional share, as provided in Section 302(a) of the Code, which distribution
will be taxed as either a distribution under Section 301 of the Code or an
exchange to such stockholder, depending on that stockholder's particular facts
and circumstances. Generally, a stockholder receiving such a payment should
recognize gain or loss equal to the difference, if any, between the amount of
cash received and the stockholder's basis in the fractional share. In the
aggregate, such a stockholder's basis in the reduced number of shares of our
common stock will equal the stockholder's basis in its old shares of our common
stock decreased by the basis allocated to the fractional share for which such
stockholder is entitled to receive cash, and the holding period of the
post-effective reverse split shares received will include the holding period of
the pre-effective reverse split shares exchanged.
EFFECTIVE DATE
The reverse split became effective on November 22, 2004. Except as
explained herein with respect to fractional shares and stockholders who held
fewer than 1,000 shares at the effective time, all shares of our common stock
that were issued and outstanding immediately prior thereto were, automatically
and without any action on the part of the stockholders, converted into new
shares of our common stock in accordance with the one for 1,000 exchange ratio.
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RISKS ASSOCIATED WITH THE REVERSE SPLIT
This information statement includes forward-looking statements including
statements regarding our intent to solicit approval of a reverse split, the
timing of the proposed reverse split and the potential benefits of a reverse
split, including, but not limited to, increase investor interest and the
potential for a higher stock price. The words "believe," "expect," "will,"
"may" and similar phrases are intended to identify such forward-looking
statements. Such statements reflect our current views and assumptions, and are
subject to various risks and uncertainties that could cause actual results to
differ materially from expectations. The risks include that we may not have
sufficient resources to continue as a going concern; any significant downturn in
our industry or in general business conditions would likely result in a
reduction of demand for our products or services and would be detrimental to our
business; we will be unable to achieve profitable operations unless we increase
quarterly revenues or make further cost reductions; a loss of or decrease in
purchases by one of our significant customers could materially and adversely
affect our revenues and profitability; the loss of key personnel could have a
material adverse effect on our business; the large number of shares available
for future sale could adversely affect the price of our common stock; and the
volatility of our stock price. For a discussion of these and other risk
factors, see our annual report on Form 10-KSB for the year ended December 31,
2003 and other filings with the Securities and Exchange Commission.
The reverse stock split will result in some stockholders owning "odd-lots"
of less than 100 common shares of our stock on a post-consolidation basis. Odd
lots may be more difficult to sell, or require greater transaction costs per
share to sell than shares in "even lots" of even multiples of 100 shares.
VOTE REQUIRED
Once a quorum is present and voting, a majority of the total votes cast
within each of the voting groups is required to ratify the November 22, 2004
reverse stock split.
The board of directors recommends a vote FOR the ratification of the
November 22, 2004 reverse stock split as described in Attachment A hereto.
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AMENDMENT TO ARTICLES OF INCORPORATION TO
INCREASE THE NUMBER OF OUR AUTHORIZED COMMON SHARES
(PROPOSAL 3)
The board of directors has determined that it is advisable to increase our
authorized common stock and has adopted, subject to stockholder approval, an
amendment to our articles of incorporation to increase our authorized number of
shares of common stock from 1,980,000,000 shares to 5,000,000,000 shares, par
value $0.00001 per share. A copy of the proposed resolution amending our
articles of incorporation is contained in Attachment A to this information
------------
statement.
Authorizing an additional 3,020,000,000 shares of common stock would give
our board of directors the express authority, without further action of the
stockholders, to issue common stock from time to time as the board deems
necessary. The board of directors believes it is necessary to have the ability
to issue such additional shares of common stock for general corporate purposes.
Potential uses of the additional authorized shares may include equity
financings, issuance of options, acquisition transactions, stock dividends or
distributions, without further action by the stockholders, unless such action
were specifically required by applicable law or rules of any stock exchange or
similar system on which our securities may then be listed.
The following is a summary of the material matters relating to our common
stock.
Presently, the holders of our common stock are entitled to one vote for
each share held of record on all matters submitted to a vote of our
stockholders, including the election of directors. Our common stockholders do
not have cumulative voting rights. Subject to preferences that may be
applicable to any then outstanding series of our preferred stock, holders of our
common stock are entitled to receive ratably such dividends, if any, as may be
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declared by our board of directors out of legally available funds. In the event
of the liquidation, dissolution, or winding up of The Jackson Rivers Company,
the holders of our common stock will be entitled to share ratably in the net
assets legally available for distribution to our stockholders after the payment
of all our debts and other liabilities, subject to the prior rights of any
series of our preferred stock then outstanding.
The holders of our common stock have no preemptive or conversion rights or
other subscription rights and there are no redemption or sinking fund provisions
applicable to our common stock. The amendment would not alter or modify any
preemptive right of holders of our common stock to acquire our shares, which is
denied, or effect any change in our common stock, other than the number of
authorized shares.
The issuance of additional shares to certain persons allied with our
management could have the effect of making it more difficult to remove our
current management by diluting the stock ownership or voting rights of persons
seeking to cause such removal. In addition, an issuance of additional shares by
us could have an effect on the potential realizable value of a stockholder's
investment.
In the absence of a proportionate increase in our earnings and book value,
an increase in the aggregate number of our outstanding shares caused by the
issuance of the additional shares will dilute the earnings per share and book
value per share of all outstanding shares of our common stock. If such factors
were reflected in the price per share of common stock, the potential realizable
value of a stockholder's investment could be adversely affected.
The additional common stock to be authorized by adoption of the amendment
would have rights identical to our currently outstanding common stock. Adoption
of the proposed amendment and issuance of the common stock would not affect the
rights of the holders of our currently outstanding common stock, except for
effects incidental to increasing the number of outstanding shares of our common
stock, such as dilution of the earnings per share and voting rights of current
holders of common stock. If the amendment is adopted, it will become effective
upon filing of a certificate of amendment of our articles of incorporation with
the Secretary of State of Florida.
Issuance of additional shares. As of the date of this information
statement, our board has no plans to issue or use any of our newly authorized
shares of common stock. The increase in the number of our authorized common
shares is proposed by our management in order to ensure sufficient reserves of
our common stock for various capital purposes and to eliminate the need for
similar amendments in the near future, which could be costly and time-consuming.
The proposal with respect to our common stock is not being made by us in
response to any known accumulation of shares or threatened takeover.
VOTE REQUIRED
Once a quorum is present and voting, a majority of the total votes cast
within each of the voting groups is required to approve the amendment to our
articles of incorporation increasing the number of our authorized common shares.
The board of directors recommends a vote FOR the amendment to our articles
of incorporation increasing the number of our authorized common shares as
described in Attachment A hereto.
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AMENDMENT TO ARTICLES OF INCORPORATION TO INCREASE THE
NUMBER OF AUTHORIZED SHARES OF PREFERRED STOCK
(PROPOSAL 4)
The board of directors has determined that it is advisable to increase our
authorized preferred stock and has adopted, subject to stockholder approval, an
amendment to our articles of incorporation to increase our authorized number of
shares of preferred stock from 200,000,000 shares to 1,000,000,000 shares of
preferred stock, par value $0.00001 per share. A copy of the proposed resolution
amending our articles of incorporation is contained in Attachment A to
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this information statement.
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We currently have two series of preferred stock authorized, Series A and
Series B. 10,000,000 shares have been designated as our Series A preferred
stock and 10,000,000 shares have been designated as our Series B preferred
stock. 980,000 shares of the Series A preferred stock are issued and
outstanding and no shares of the Series B preferred stock are issued and
outstanding.
Pursuant to our certificate of designation establishing Series A preferred
stock, each share of our currently issued and outstanding Series A preferred
stock may be converted into 1,000 fully paid and nonassessable shares of our
common stock. Moreover, on all matters submitted to a vote of the holders of
the common stock, including, without limitation, the election of directors, a
holder of shares of the Series A preferred stock is entitled to 2,000 votes of
the common stock for each share of the Series A preferred stock held by such
stockholder.
Pursuant to our certificate of designation establishing Series B preferred
stock, each share of our currently issued and outstanding Series B preferred
stock may be converted into shares of our common stock at the per share
conversion price. The per share conversion price of our Series B preferred
stock means 80 percent of the OTCBB, (or such other exchange or market on which
the common stock is then listed, if the common stock is not listed on the OTCBB)
five-day average closing bid price for each share of the common stock for the
five days prior to the date of the conversion. The number of underlying shares
of the common stock issuable upon any conversion hereunder shall be calculated
by dividing the product of the number of shares of the Series B preferred stock
to be converted multiplied by the par value of the Series B preferred stock
($0.00001 per share) by the per share conversion price. Notwithstanding
anything contained herein to the contrary, as the result of any such conversion,
the holder of the Series B preferred stock may not hold more than 4.99 percent
of the issued and outstanding shares of the common stock, in the aggregate,
following any such conversion. The holders of shares of the Series B preferred
stock do not have voting rights.
The following is a summary of the material matters relating to our
preferred stock.
Authorizing the issuance of 300,000,000 additional shares of preferred
stock would give our board of directors the express authority, without further
action of our stockholders, to issue preferred stock from time to time as the
board deems necessary. The board of directors believes it is necessary to have
the ability to issue such shares of preferred stock for general corporate
purposes. Potential uses of the authorized shares may include equity
financings, issuance of options, acquisition transactions, stock dividends or
distributions, without further action by the stockholders, unless such action
were specifically required by applicable law or rules of any stock exchange or
similar system on which our securities may then be listed.
The issuance of the shares of preferred stock could have a number of
effects on our stockholders depending upon the exact nature and circumstances of
any actual issuance of authorized but unissued shares. The increase could have
an anti-takeover effect, in that the additional shares could be issued (within
the limits imposed by applicable law) in one or more transactions that could
make a change in control or takeover of The Jackson Rivers Company more
difficult. For example, additional shares could be issued by us so as to dilute
the stock ownership or voting rights of persons seeking to obtain control of The
Jackson Rivers Company. In some instances, each share of the preferred stock
may be convertible into multiple shares of our common stock. Likewise, shares
of our preferred stock could have voting rights equal to their converted status
as common stock, with the effect being that the stockholders of the preferred
stock would have the ability to control the vote of our stockholders, even
though they may own less that than a majority of our issued and outstanding
common stock.
The proposal with respect to our preferred stock is not being made by us in
response to any known accumulation of shares or threatened takeover. The
issuance of shares of preferred stock to certain persons allied with our
management could have the effect of making it more difficult to remove our
current management by diluting the stock ownership or voting rights of persons
seeking to cause such removal. In addition, an issuance of shares of preferred
stock by us could have an effect on the potential realizable value of a
stockholder's investment.
In the absence of a proportionate increase in our earnings and book value,
an increase in the aggregate number of our outstanding shares caused by the
issuance, upon the conversion of our preferred stock into shares of our common
stock, would dilute the earnings per share and book value per share of all
outstanding shares of our common stock. If such factors were reflected in the
price per share of common stock, the potential realizable value of the
stockholder's investment could be adversely affected.
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The proposed preferred stock would not carry with it preemptive rights to
acquire our shares of preferred stock.
Issuance of additional shares. As of the date of this information
statement, our board has no plans to issue or use any of our newly authorized
shares of preferred stock. The increase in the number of our authorized
preferred shares is proposed by us in order to ensure sufficient reserves of our
preferred stock for various capital purposes and to eliminate the need for
similar amendments in the near future, which could be costly and time-consuming.
VOTE REQUIRED
Once a quorum is present and voting, a majority of the total votes cast
within each of the voting groups is required to approve the amendment to our
articles of incorporation increasing the number of our authorized preferred
shares.
The board of directors recommends a vote FOR the amendment to our articles
of incorporation increasing the number of our authorized preferred shares as
described in Attachment A hereto.
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GRANT OF DISCRETIONARY AUTHORITY TO THE BOARD OF DIRECTORS
TO IMPLEMENT A ONE FOR UP TO 2,000 REVERSE STOCK SPLIT
(Proposal 5)
Our board of directors has adopted a resolution to seek stockholder
approval of discretionary authority to our board of directors to implement a
reverse split for the purpose of increasing the market price of our common
stock. The reverse split exchange ratio that the board of directors approved
and deemed advisable and for which it is seeking stockholder approval is up to
2,000 pre-consolidation shares for each one post-consolidation share, with the
reverse split to occur within 12 months of the date of this information
statement, the exact time of the reverse split to be determined by the directors
in their discretion. Approval of this proposal would give the board authority
to implement the reverse split on the basis of up to 2,000 pre-consolidation
shares for each one post-consolidation share at any time it determined within 12
months of the date of this information statement. In addition, approval of this
proposal would also give the board authority to decline to implement a reverse
split. A copy of the proposed resolution approving the grant of discretionary
authority to the directors with respect to the reverse split is contained in
Attachment A to this information statement.
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Our board of directors believes that stockholder approval of a range for
the exchange ratio of the reverse split (as contrasted with approval of a
specified ratio of the split) provides the board of directors with maximum
flexibility to achieve the purposes of a stock split, and, therefore, is in the
best interests of our stockholders. The actual ratio for implementation of the
reverse split would be determined by our board of directors based upon its
evaluation as to what ratio of pre-consolidation shares to post-consolidation
shares would be most advantageous to us and our stockholders.
Our board of directors also believes that stockholder approval of a
twelve-months range for the effectuation of the reverse split (as contrasted
with approval of a specified time of the split) provides the board of directors
with maximum flexibility to achieve the purposes of a stock split, and,
therefore, is in the best interests of our stockholders. The actual timing for
implementation of the reverse split would be determined by our board of
directors based upon its evaluation as to when and whether such action would be
most advantageous to us and our stockholders.
If you approve the grant of discretionary authority to our board of
directors to implement a reverse split and the board of directors decides to
implement the reverse split, we will effect a reverse split of our then issued
and outstanding common stock on the basis of up to 2,000 pre-consolidation
shares for each one post-consolidation share.
The board of directors believes that the higher share price that might
initially result from the reverse stock split could help generate interest in
The Jackson Rivers Company among investors and thereby assist us in raising
future capital to fund our operations or make acquisitions.
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Stockholders should note that the effect of the reverse split upon the
market price for our common stock cannot be accurately predicted. In
particular, if we elect to implement a reverse stock split, there is no
assurance that prices for shares of our common stock after a reverse split will
be up to 2,000 times greater than the price for shares of our common stock
immediately prior to the reverse split, depending on the ratio of the split.
Furthermore, there can be no assurance that the market price of our common stock
immediately after a reverse split will be maintained for any period of time.
Moreover, because some investors may view the reverse split negatively, there
can be no assurance that the reverse split will not adversely impact the market
price of our common stock or, alternatively, that the market price following the
reverse split will either exceed or remain in excess of the current market
price.
EFFECT OF THE REVERSE SPLIT
The reverse split would not affect the registration of our common stock
under the Securities Exchange Act of 1934, as amended, nor will it change our
periodic reporting and other obligations thereunder.
The voting and other rights of the holders of our common stock would not be
affected by the reverse split (other than as described below). For example, a
holder of 0.5 percent of the voting power of the outstanding shares of our
common stock immediately prior to the effective time of the reverse split would
continue to hold 0.5 percent of the voting power of the outstanding shares of
our common stock after the reverse split. The number of stockholders of record
would not be affected by the reverse split (except as described below).
The authorized number of shares of our common stock and the par value of
our common stock under our articles of incorporation would remain the same
following the effective time of the reverse split. The par value of our common
stock was reduced to $0.00001 per share effective November 22, 2004.
The number of shares of our common stock issued and outstanding would be
reduced following the effective time of the reverse split in accordance with the
following formula: if our directors decide to implement a one for 2,000 reverse
split, every 2,000 shares of our common stock owned by a stockholder will
automatically be changed into and become one new share of our common stock, with
2,000 being equal to the exchange ratio of the reverse split, as determined by
the directors in their discretion.
Stockholders should recognize that if a reverse split is effected, they
will own a fewer number of shares than they presently own (a number equal to the
number of shares owned immediately prior to the effective time divided by the
one for 2,000 exchange ratio, or such lesser exchange ratio as may be determined
by our directors, subject to adjustment for fractional shares, as described
below).
Fractional shares which would otherwise be held by the stockholders of our
common stock after a reverse split will be rounded up to the next whole share.
We will issue one new share of our common stock for up to each 2,000 shares of
our common stock held as of the record date. All fractional share amounts
resulting from the reverse split will be rounded up to the next whole new share.
The reverse split may reduce the number of holders of post-reverse split shares
as compared to the number of holders of pre-reverse split shares to the extent
that there are stockholders presently holding fewer than 2,000 shares (or such
lesser number as may be determined by our directors). However, the intention of
the reverse split is not to reduce the number of our stockholders. In fact, we
do not expect that the reverse split will result in any material reduction in
the number of our stockholders.
We currently have no intention of going private, and this proposed reverse
stock split is not intended to be a first step in a going private transaction
and will not have the effect of a going private transaction covered by Rule
13e-3 of the Exchange Act. Moreover, the proposed reverse stock split does not
increase the risk of us becoming a private company in the future.
Issuance of Additional Shares. The number of authorized but unissued
shares of our common stock effectively will be increased significantly by the
reverse split of our common stock. For example, if we elect to implement a one
for 1,000 reverse split, based on the 92,474,495 shares of our common stock
outstanding on the record date, and the 1,980,000,000 shares of our common stock
that are currently authorized under our articles of incorporation, prior to any
increase in our authorized common stock, 1,887,525,505 shares of our common
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stock remain available for issuance prior to the reverse split taking effect. A
one for 1,000 reverse split would have the effect of decreasing the number of
our outstanding shares of our common stock from 92,474,495 to 92,475 shares.
Based on the 1,980,000,000 shares of our common stock that are currently
authorized under our articles of incorporation, and prior to any increase in our
authorized common stock, if we elect to implement a one for 1,000 reverse stock
split, the reverse split, when implemented, would have the effect of increasing
the number of authorized but unissued shares of our common stock from
1,887,525,505 to 1,979,907,525 shares.
If we elect to implement a one for 2,000 reverse split, based on the
92,474,495 shares of our common stock outstanding on the record date, and the
1,980,000,000 shares of our common stock that are currently authorized under our
articles of incorporation, prior to any increase in our authorized common stock,
1,887,525,505 shares of our common stock remain available for issuance prior to
the reverse split taking effect. A one for 2,000 reverse split would have the
effect of decreasing the number of our outstanding shares of our common stock
from 92,474,495 to 46,237 shares.
Based on the 1,980,000,000 shares of our common stock that are currently
authorized under our articles of incorporation, and prior to any increase in our
authorized common stock, if we elect to implement a one for 2,000 reverse stock
split, the reverse split, when implemented, would have the effect of increasing
the number of authorized but unissued shares of our common stock from
1,887,525,505 to 1,979,953,763 shares.
The issuance in the future of such additional authorized shares may have
the effect of diluting the earnings per share and book value per share, as well
as the stock ownership and voting rights, of the currently outstanding shares of
our common stock.
The effective increase in the number of authorized but unissued shares of
our common stock may be construed as having an anti-takeover effect by
permitting the issuance of shares to purchasers who might oppose a hostile
takeover bid or oppose any efforts to amend or repeal certain provisions of our
articles of incorporation or bylaws. Such a use of these additional authorized
shares could render more difficult, or discourage, an attempt to acquire control
of us through a transaction opposed by our board of directors. At this time,
our board does not have plans to issue any common shares resulting from the
effective increase in our authorized but unissued shares generated by the
reverse split.
FEDERAL INCOME TAX CONSEQUENCES
We will not recognize any gain or loss as a result of the reverse split.
The following description of the material federal income tax consequences
of the reverse split to our stockholders is based on the Internal Revenue Code
of 1986, as amended, applicable Treasury Regulations promulgated thereunder,
judicial authority and current administrative rulings and practices as in effect
on the date of this information statement. Changes to the laws could alter the
tax consequences described below, possibly with retroactive effect. We have not
sought and will not seek an opinion of counsel or a ruling from the Internal
Revenue Service regarding the federal income tax consequences of the reverse
split. This discussion is for general information only and does not discuss the
tax consequences that may apply to special classes of taxpayers (e.g.,
non-residents of the United States, broker/dealers or insurance companies). The
state and local tax consequences of the reverse split may vary significantly as
to each stockholder, depending upon the jurisdiction in which such stockholder
resides. You are urged to consult your own tax advisors to determine the
particular consequences to you.
We believe that the likely federal income tax effects of the reverse split
will be that a stockholder who receives solely a reduced number of shares of our
common stock will not recognize gain or loss. With respect to a reverse split,
such a stockholder's basis in the reduced number of shares of our common stock
will equal the stockholder's basis in his old shares of our common stock.
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Effective Date
If the proposed reverse split is approved and the board of directors elects
to proceed with a reverse split, the split would become effective as of 5:00
p.m. Florida time on the date the split is approved by our stockholders, which
in any event shall not be later than 12 months from the date of this information
statement. Except as explained herein with respect to fractional shares and
stockholders who currently hold fewer than 2,000 shares, or such lesser amount
as we may determine, on such date, all shares of our common stock that were
issued and outstanding immediately prior thereto will be, automatically and
without any action on the part of the stockholders, converted into new shares of
our common stock in accordance with the one for 2,000 exchange ratio or such
other exchange ratio as we determine.
RISKS ASSOCIATED WITH THE REVERSE SPLIT
This information statement includes forward-looking statements including
statements regarding our intent to solicit approval of a reverse split, the
timing of the proposed reverse split and the potential benefits of a reverse
split, including, but not limited to, increase investor interest and the
potential for a higher stock price. The words "believe," "expect," "will,"
"may" and similar phrases are intended to identify such forward-looking
statements. Such statements reflect our current views and assumptions, and are
subject to various risks and uncertainties that could cause actual results to
differ materially from expectations. The risks include that we may not have
sufficient resources to continue as a going concern; any significant downturn in
our industry or in general business conditions would likely result in a
reduction of demand for our products or services and would be detrimental to our
business; we will be unable to achieve profitable operations unless we increase
quarterly revenues or make further cost reductions; a loss of or decrease in
purchases by one of our significant customers could materially and adversely
affect our revenues and profitability; the loss of key personnel could have a
material adverse effect on our business; the large number of shares available
for future sale could adversely affect the price of our common stock; and the
volatility of our stock price. For a discussion of these and other risk
factors, see our annual report on Form 10-KSB for the year ended December 31,
2003 and other filings with the Securities and Exchange Commission.
If approved and implemented, the reverse stock split will result in some
stockholders owning "odd-lots" of less than 100 common shares of our stock on a
post-consolidation basis. Odd lots may be more difficult to sell, or require
greater transaction costs per share to sell than shares in "even lots" of even
multiples of 100 shares.
VOTE REQUIRED
Once a quorum is present and voting, a majority of the total votes cast
within each of the voting groups is required to approve the grant of
discretionary authority to our directors to implement a reverse stock split.
The board of directors recommends a vote FOR approval of the grant of
discretionary authority to our directors to implement a reverse stock split, as
described in Attachment A hereto.
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APPROVAL OF STOCK PLANS
(PROPOSAL 6)
Our majority stockholder intends to approve the following Stock Plans of
The Jackson Rivers Company (the "Stock Plans"):
(a) Employee Stock Incentive Plan for the Year 2004 No. 3, adopted
by the directors on August 9, 2004 with 150,000,000 shares available for
issuance under the Plan.
(b) Non-Employee Directors and Consultants Retainer Stock Plan for
the Year 2004 No. 3, adopted by the directors on August 9, 2004, with 49,000,000
shares available for issuance under the Plan.
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(c) Employee Stock Incentive Plan for the Year 2004 No. 4, adopted
by the directors on September 8, 2004 with 400,000,000 shares available for
issuance under the Plan.
(d) Non-Employee Directors and Consultants Retainer Stock Plan for
the Year 2004 No. 4, adopted by the directors on September 8, 2004, with
99,000,000 shares available for issuance under the Plan.
As of the record date, 607,350,000 shares of our common stock have been
issued under the Stock Plans.
The following is a summary of the principal features of the Stock Plans. A
copy of the proposed resolution approving the Stock Plans is contained in
Attachment A to this information statement. Copies of the Stock Plans are
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contained in Attachment B to this information statement. Any stockholder who
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wishes to obtain copies of the Stock Plans may also do so upon written request
to our corporate secretary at our principal executive offices in Mount Kisco,
New York.
PURPOSE OF THE STOCK PLANS
The purpose of the Stock Plans is to provide incentives to attract, retain
and motivate eligible persons whose present and potential contributions are
important to the success of The Jackson Rivers Company and our subsidiaries, by
offering them an opportunity to participate in our future performance through
awards of options, restricted stock and stock bonuses.
The Stock Plans were administered by the compensation committee of the
board of directors.
Number of Shares Available. Subject to certain provisions of the Stock
Plans, before any reverse splits of our common stock, the total aggregate number
of shares of our common stock reserved and available for grant and issuance
pursuant to the Stock Plans was 698,000,000 plus shares of our common stock that
are subject to:
- Issuance upon exercise of an option but cease to be subject to such option
for any reason other than exercise of such option;
- An award granted but forfeited or repurchased by The Jackson Rivers Company
at the original issue price; and
- An award that otherwise terminates without shares of our common stock being
issued. At all times, The Jackson Rivers Company shall reserve and keep
available a sufficient number of shares of our common stock as shall be
required to satisfy the requirements of all outstanding options granted
under the Stock Plans and all other outstanding but unvested awards granted
under the Stock Plans.
ELIGIBILITY
Incentive Stock Options and Awards may be granted only to employees
(including, officers and directors who are also employees) of The Jackson Rivers
Company or of a parent or subsidiary of The Jackson Rivers Company.
DISCRETIONARY OPTION GRANT PROGRAM
The committee may grant options to eligible persons and will determine
whether such options will be Incentive Stock Options ("ISO") or Nonqualified
Stock Options ("NQSOs"), the number of shares of our common stock subject to the
option, the exercise price of the option, the period during which the option may
be exercised, and all other terms and conditions of the option, subject to the
following described conditions.
Form of Option Grant. Each option granted under the Stock Plans is
evidenced by an Award Agreement that will expressly identify the option as an
ISO or an NQSO (the "Option Agreement"), and will be in such form and contain
such provisions (which need not be the same for each participant) as the
committee may from time to time approve, and which will comply with and be
subject to the terms and conditions of the Stock Plans.
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Date of Grant. The date of grant of an option is the date on which the
committee makes the determination to grant such option, unless otherwise
specified by the committee. The Option Agreement and a copy of the applicable
Stock Plan shall be delivered to the participant within a reasonable time after
the granting of the option.
Exercise Period. Options may be exercisable within the times or upon the
events determined by the committee as set forth in the Stock Option Agreement
governing such option; provided, however, that no option will be exercisable
after the expiration of 10 years from the date the option is granted. For
further restrictions on the Exercise Periods, please refer to the Stock Plans.
Exercise Price. The exercise price of an option is determined by the
committee when the option is granted and may be not less than 85 percent of the
fair market value of the shares of our common stock on the date of exercise;
provided that the exercise price of any ISO granted to a Ten Percent Stockholder
as defined in the Stock Plans is not less than 110 percent of the fair market
value of the shares of our common stock on the date of grant. Payment for the
shares of our common stock purchased may be made in accordance with the Stock
Plans.
Method of Exercise. Options may be exercised only by delivery to The
Jackson Rivers Company of a written stock option exercise agreement (the "Notice
and Agreement of Exercise") in a form approved by the committee, together with
payment in full of the exercise price for the number of shares of our common
stock being purchased.
Termination. Notwithstanding the exercise periods set forth in the Stock
Option Agreement, exercise of an option is always subject to the following:
- Upon an Employee's Retirement, Disability (as those terms are defined in
the Stock Plans) or death, (a) all Stock Options to the extent then
presently exercisable shall remain in full force and effect and may be
exercised pursuant to the provisions thereof, and (b) unless otherwise
provided by the committee, all Stock Options to the extent not then
presently exercisable by the Employee shall terminate as of the date of
such termination of employment and shall not be exercisable thereafter.
Unless employment is terminated for Cause, as defined by applicable law,
the right to exercise in the event of termination of employment, to the
extent that the optionee is entitled to exercise on the date the employment
terminates as follows:
- At least six months from the date of termination if termination was caused
by death or disability.
- At least 30 days from the date of termination if termination was caused by
other than death or disability.
- Upon the termination of the employment of an Employee for any reason other
than those specifically set forth in the Stock Plans, (a) all Stock Options
to the extent then presently exercisable by the Employee shall remain
exercisable only for a period of 90 days after the date of such termination
of employment (except that the 90 day period shall be extended to 12 months
if the Employee shall die during such 90 day period), and may be exercised
pursuant to the provisions thereof, including expiration at the end of the
fixed term thereof, and (b) unless otherwise provided by the committee, all
Stock Options to the extent not then presently exercisable by the Employee
shall terminate as of the date of such termination of employment and shall
not be exercisable thereafter.
Limitations on Exercise. The committee may specify a reasonable minimum
number of shares of our common stock that may be purchased on any exercise of an
option, provided that such minimum number will not prevent the participant from
exercising the option for the full number of shares of our common stock for
which it is then exercisable. Subject to the provisions of the Stock Plans, the
Employee has the right to exercise his Stock Options at the rate of at least
33-1/3 percent per year over three years from the date the Stock Option is
granted.
Limitations on ISO. The aggregate fair market value (determined as of the
date of grant) of shares of our common stock with respect to which ISOs are
exercisable for the first time by a participant during any calendar year (under
the Stock Plans or under any other ISO plan of The Jackson Rivers Company, or
the parent or any subsidiary of The Jackson Rivers Company) will not exceed
$100,000.00. In the event that the Internal Revenue Code or the regulations
promulgated thereunder are amended after the effective date of the Stock Plans
to provide for a different
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limit on the fair market value of shares of our common stock permitted to be
subject to ISO, such different limit will be automatically incorporated in the
Stock Plans and will apply to any options granted after the effective date of
such amendment.
Modification, Extension or Renewal. The committee may modify or amend any
Award under the Stock Plans or waive any restrictions or conditions applicable
to the Award; provided, however, that the committee may not undertake any such
modifications, amendments or waivers if the effect thereof materially increases
the benefits to any Employee, or adversely affects the rights of any Employee
without his consent.
STOCKHOLDER RIGHTS AND OPTION TRANSFERABILITY
Awards granted under the Stock Plans, including any interest, are not
transferable or assignable by the participant, and may not be made subject to
execution, attachment or similar process, other than by will or by the laws of
descent and distribution.
GENERAL PROVISIONS
Term of Stock Plans/Governing Law. Unless earlier terminated as provided,
the Stock Plans will terminate 10 years from the date of adoption, or, if
earlier, from the date of stockholder approval. The Stock Plans and all
agreements thereunder shall be governed by and construed in accordance with the
laws of the State of Florida.
Amendment or Termination of the Stock Plans. Our board of directors may at
any time terminate or amend the Stock Plans including to preserve or come within
any exemption from liability under Section 16(b) of the Exchange Act, as it may
deem proper and in our best interest without further approval of our
stockholders, provided that, to the extent required under Florida law or to
qualify transactions under the Stock Plans for exemption under Rule 16b-3
promulgated under the Exchange Act, no amendment to the Stock Plans shall be
adopted without further approval of our stockholders and, provided, further,
that if and to the extent required for the Stock Plans to comply with Rule 16b-3
promulgated under the Exchange Act, no amendment to the Stock Plans shall be
made more than once in any six month period that would change the amount, price
or timing of the grants of our common stock hereunder other than to comport with
changes in the Code, the Employee Retirement Income Security Act of 1974, as
amended, or the regulations thereunder. The Board may terminate the Stock Plans
at any time by a vote of a majority of the members thereof.
AWARD OF STOCK BONUSES
Award of Stock Bonuses. A Stock Bonus is an award of shares of our common
stock (which may consist of Restricted Stock) for extraordinary services
rendered to The Jackson Rivers Company or any parent or subsidiary of The
Jackson Rivers Company. Each Award under the Stock Plans consists of a grant of
shares of our common stock subject to a restriction period (after which the
restrictions shall lapse), which shall be a period commencing on the date the
Award is granted and ending on such date as the committee shall determine (the
"Restriction Period"). The committee may provide for the lapse of restrictions
in installments, for acceleration of the lapse of restrictions upon the
satisfaction of such performance or other criteria or upon the occurrence of
such events as the committee shall determine, and for the early expiration of
the Restriction Period upon an Employee's death, Disability or Retirement as
defined in the Stock Plans or, following a Change of Control, upon termination
of an Employee's employment by us without "Cause" or by the Employee for "Good
Reason," as those terms are defined in the Stock Plans.
Terms of Stock Bonuses. Upon receipt of an Award of shares of our common
stock under the Stock Plans, even during the Restriction Period, an Employee is
the holder of record of the shares and has all the rights of a stockholder with
respect to such shares, subject to the terms and conditions of the Stock Plans
and the Award.
FEDERAL TAX CONSEQUENCES
Option Grants. Options granted under the Stock Plans may be either ISO
which satisfy the requirements of Section 422 of the Code or NQSOs which are not
intended to meet such requirements. The federal income tax treatment for the
two types of options differs as discussed below.
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Incentive Stock Options. The optionee recognizes no taxable income at the
time of the option grant, and no taxable income is generally recognized at the
time the option is exercised. However, the exercise of an ISO (if the holding
period rules set forth below are satisfied) will give rise to income includable
by the optionee in his alternative minimum taxable income for purposes of the
alternative minimum tax in an amount equal to the excess of the fair market
value of the shares acquired on the date of the exercise of the option over the
exercise price. The optionee will also recognize taxable income in the year in
which the exercised shares are sold or otherwise made the subject of a taxable
disposition. For federal tax purposes, dispositions are divided into two
categories: (i) qualifying and (ii) disqualifying. A qualifying disposition
occurs if the sale or other disposition is made after the optionee has held the
shares for more than two years after the option grant date and more than one
year after the exercise date. If either of these two holding periods is not
satisfied, then a disqualifying disposition will result. In addition, the
optionee must be an employee of The Jackson Rivers Company or a qualified
subsidiary at all times between the date of grant and the date three months (one
year in the case of disability) before exercise of the option (special rules
apply in the case of the death of the optionee).
Upon a qualifying disposition, the optionee will recognize long-term
capital gain or loss in an amount equal to the difference between (i) the amount
realized upon the sale or other disposition of the purchased shares over (ii)
the exercise price paid for the shares. If there is a disqualifying disposition
of the shares, then the excess of (i) the lesser of the fair market value of
those shares on the exercise date or the sale date and (ii) the exercise price
paid for the shares will be taxable as ordinary income to the optionee. Any
additional gain or loss recognized upon the disposition will be recognized as a
capital gain or loss by the optionee.
If the optionee makes a disqualifying disposition of the purchased shares,
then we will be entitled to an income tax deduction, for the taxable year in
which such disposition occurs, equal to the excess of (i) the fair market value
of such shares on the option exercise date or the sale date, if less, over (ii)
the exercise price paid for the shares. In no other instance will we be allowed
a deduction with respect to the optionee's disposition of the purchased shares.
Nonqualified Stock Options. No taxable income is recognized by an optionee
upon the grant of a NQSO. The optionee will in general recognize ordinary
income, in the year in which the option is exercised, equal to the excess of the
fair market value of the purchased shares on the exercise date over the exercise
price paid for the shares, and the optionee will be required to satisfy the tax
withholding requirements applicable to such income.
If the shares acquired upon exercise of the NQSO are unvested and subject
to repurchase, at the exercise price paid per share, by us in the event of the
optionee's termination of service prior to vesting in those shares, then the
optionee will not recognize any taxable income at the time of exercise but will
have to report as ordinary income, as and when our repurchase right lapses, an
amount equal to the excess of (i) the fair market value of the shares on the
date the repurchase right lapses over (ii) the exercise price paid for the
shares. The optionee may, however, elect under Section 83(b) of the Code to
include as ordinary income in the year of exercise of the option an amount equal
to the excess of (i) the fair market value of the purchased shares on the
exercise date over (ii) the exercise price paid for such shares. If the Section
83(b) election is made, the optionee will not recognize any additional income as
and when the repurchase right lapse and all subsequent appreciation in the
shares generally would be eligible for capital gains treatment.
We will be entitled to an income tax deduction equal to the amount of
ordinary income recognized by the optionee with respect to the exercised NQSO.
The deduction will in general be allowed for our taxable year in which such
ordinary income is recognized by the optionee.
Direct Stock Issuance. With respect to the receipt of a stock award not
subject to restriction, the participant would have ordinary income, at the time
of receipt, in an amount equal to the difference between the fair market value
of the stock received at such time and the amount, if any, paid by the holder
for the stock award.
With respect to the receipt of a stock award that is subject to
restrictions, or certain repurchase rights of The Jackson Rivers Company, unless
the recipient of such stock award makes an "83(b) election" (as discussed
below), there generally will be no tax consequences as a result of such a stock
award until the shares are no longer subject to a substantial risk of forfeiture
or are transferable (free of such risk). We intend that, generally, when the
restrictions are lifted, the holder will recognize ordinary income, and we will
be entitled to a deduction, equal to the difference
-16-
between the fair market value of the shares at such time and the amount, if any,
paid by the holder for the stock. Subsequently realized changes in the value of
the stock generally will be treated as long-term or short-term capital gain or
loss, depending on the length of time the shares are held prior to disposition
of such shares. In general terms, if a holder makes an "83(b) election" (under
Section 83(b) of the Code) upon the award of a stock award subject to
restrictions (or certain repurchase rights of The Jackson Rivers Company), the
holder will recognize ordinary income on the date of the award of the stock
award, and we will be entitled to a deduction, equal to (i) the fair market
value of such stock as though the stock were (A) not subject to a substantial
risk of forfeiture or (B) transferable, minus (ii) the amount, if any, paid for
the stock award. If an "83(b) election" is made, there will generally be no tax
consequences to the holder upon the lifting of restrictions, and all subsequent
appreciation in the stock award generally would be eligible for capital gains
treatment.
ACCOUNTING TREATMENT
Option grants or stock issuances with exercise or issue prices less than
the fair market value of the shares on the grant or issue date will result in a
compensation expense to our earnings equal to the difference between the
exercise or issue price and the fair market value of the shares on the grant or
issue date. Such expense will be amortized against our earnings over the period
that the option shares or issued shares are to vest.
Option grants or stock issuances with exercise or issue prices equal to the
fair market value of the shares at the time of issuance or grant generally will
not result in any charge to our earnings, but, in accordance with Generally
Accepted Accounting Principles, we must disclose in pro-forma statements to our
financial statements, the impact those option grants would have upon our
reported earnings (losses) were the value of those options treated as
compensation expense. Whether or not granted at a discount, the number of
outstanding options may be a factor in determining our earnings per share on a
fully diluted basis.
Should one or more optionee be granted stock appreciation rights that have
no conditions upon exercisability other than a service or employment
requirement, then such rights will result in a compensation expense to our
earnings. Accordingly, at the end of each fiscal quarter, the amount (if any)
by which the fair market value of the shares of common stock subject to such
outstanding stock appreciation rights has increased from the prior quarter-end
would be accrued as compensation expense, to the extent such fair market value
is in excess of the aggregate exercise price in effect for those rights.
VOTE REQUIRED
Once a quorum is present and voting, a majority of the total votes cast
within each of the voting groups is required to approve the Stock Plans.
Our board of directors recommends that stockholders vote FOR the approval
of our Stock Plans as described in Attachment A hereto.
-------------
Information regarding the beneficial ownership of our common and preferred
stock by management and the board of directors is noted below.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table presents information regarding the beneficial ownership
of all shares of our common stock and preferred stock as of the record date, by:
- Each person who beneficially owns more than five percent of the outstanding
shares of our common stock;
- Each person who beneficially owns outstanding shares of our preferred
stock;
- Each of our directors;
- Each named executive officer; and
-17-
- All directors and officers as a group.
COMMON STOCK BENEFICIALLY PREFERRED STOCK BENEFICIALLY
OWNED (2) OWNED (2)
--------- ---------
NAME AND ADDRESS OF BENEFICIAL OWNER (1) NUMBER PERCENT NUMBER PERCENT
---------------------------------------- ----------- ------------ ------------- ------------
Dennis N. Lauzon (3). . . . . . . . . . . . . . . . . 22,000,000 23.8 980,000 100
=========== ============ ============= ============
Joseph Khan (4) . . . . . . . . . . . . . . . . . . . 0 0 0 0
Nicholas A. Cortese, Jr.. . . . . . . . . . . . . . . 0 0 0 0
----------- ------------ ------------- ------------
All directors and officers as a group (three persons) 22,000,000 23.8 980,000 100
=========== ============ ============= ============
_______________________________
(1) Unless otherwise indicated, the address for each of these stockholders is
c/o The Jackson Rivers Company, 27 Radio Circle, Mount Kisco New York,
10549, and telephone (619) 615-4242. Also, unless otherwise indicated, each
person named in the table above has the sole voting and investment power
with respect to the shares of our common and preferred stock which he
beneficially owns.
(2) Beneficial ownership is determined in accordance with the rules of the SEC.
As of the record date, the total number of outstanding shares of the common
stock is 92,474,495, and the total number of outstanding shares of the
Series A preferred stock is 980,000 shares.
(3) Dennis N. Lauzon is our president, chief executive officer and director. He
owns 22,000,000 shares of our common stock and 980,000 shares of our Series
A preferred stock. Each share of our common stock is entitled to one vote
on all matters brought before the stockholders, each share of our Series A
preferred stock outstanding entitles the holder to 2,000 votes of the
common stock on all matters brought before the stockholders. Therefore, Mr.
Lauzon will have the power to vote 1,982,000,000 shares of the common
stock, which number exceeds the majority of the 92,474,495 issued and
outstanding shares of our common stock on the record date.
(4) Joseph Khan resigned from our board of directors effective December 23,
2004.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors, executive
officers and persons who own more than 10 percent of a registered class of our
equity securities, file with the SEC initial reports of ownership and reports of
changes in ownership of our equity securities. Officers, directors and greater
than 10 percent stockholders are required by SEC regulation to furnish us with
copies of all Section 16(a) forms they file. All such persons have filed all
required reports.
DOCUMENTS INCORPORATED BY REFERENCE
Our Annual Report on Form 10-KSB for the year ended December 31, 2003 and
financial information from our subsequent Quarterly Reports for the period ended
March 31, 2004, June 30, 2004 and September 30, 2004 are incorporated herein by
reference.
COPIES OF ANNUAL AND QUARTERLY REPORTS
We will furnish a copy of our Annual Report on Form 10-KSB for the year
ended December 31, 2003 all subsequent Quarterly Reports on Form 10-QSB and any
exhibit referred to therein without charge to each person to whom this
information statement is delivered upon written or oral request by first class
mail or other equally prompt means within one business day of receipt of such
request. Any request should be directed to our corporate secretary at 27 Radio
Circle, Mount Kisco, New York 10549 and telephone (619) 615-4242.
By order of the board of directors,
/s/ Dennis N. Lauzon
Dennis N. Lauzon
President
-18-
ATTACHMENT A
RESOLUTIONS TO BE ADOPTED BY THE
STOCKHOLDERS OF
THE JACKSON RIVERS COMPANY
(the "Company")
RESOLVED, that the November 22, 2004 amendment to the Company's
Articles of Incorporation reducing the par value of the Company's common
and preferred stock from $0.001 per share to $0.00001 per share is hereby
ratified and approved in all respects; and
RESOLVED FURTHER, that the November 22, 2004 one for 1,000 reverse
split of the Company's issued and outstanding common stock is hereby
ratified and approved in all respects; and
RESOLVED FURTHER, that the amendment to the Company's articles of
incorporation increasing the number of authorized shares of common stock to
5,000,000,000 shares is hereby approved in all respects; and
RESOLVED FURTHER, that the amendment to the Company's articles of
incorporation increasing the number of authorized shares of preferred stock
to 1,000,000,000 shares is hereby approved in all respects; and
RESOLVED FURTHER, that the grant of discretionary authority to the
board of directors to implement a reverse split of the Company's issued and
outstanding common stock on the basis of one post-consolidation share for
up to each 2,000 pre-consolidation shares within 12 months of the Company's
information statement on Schedule 14C is hereby approved in all respects;
and
RESOLVED FURTHER, that the Company's Stock Plans contained in
Attachment B to the Company's information statement on Schedule 14C are
-------------
hereby approved and ratified in all respects; and
RESOLVED FURTHER, that all issuances of shares of the Company's common
stock and options to purchase shares of the Company's common stock pursuant
to the Company's Stock Plans contained in Attachment B to the Company's
------------
information statement on Schedule 14C are hereby approved and ratified in
all respects; and
RESOLVED FURTHER, that the officers of the Company be, and each of
them hereby is, authorized, empowered and directed, for and on behalf of
the Company, to take any and all actions, to perform all such acts and
things, to execute, file, deliver or record in the name and on behalf of
the Company, all such instruments, agreements, or other documents, and to
make all such payments as they, in their judgment, or in the judgment of
any one or more of them, may deem necessary, advisable or appropriate in
order to carry out the transactions contemplated by the foregoing
resolutions.
ATTACHMENT B
STOCK PLANS
THE JACKSON RIVERS COMPANY
EMPLOYEE STOCK INCENTIVE PLAN FOR THE YEAR 2004 NO. 3
1. General Provisions.
-------------------
1.1 Purpose. This Stock Incentive Plan (the "Plan") is intended to
-------
allow designated officers and employees (all of whom are sometimes collectively
referred to herein as the "Employees," or individually as the "Employee") of The
Jackson Rivers Company, a Florida corporation (the "Company") and its
Subsidiaries (as that term is defined below) which they may have from time to
time (the Company and such Subsidiaries are referred to herein as the "Company")
to receive certain options (the "Stock Options") to purchase common stock of the
Company, par value $0.001 per share (the "Common Stock"), and to receive grants
of the Common Stock subject to certain restrictions (the "Awards"). As used in
this Plan, the term "Subsidiary" shall mean each corporation which is a
"subsidiary corporation" of the Company within the meaning of Section 424(f) of
the Internal Revenue Code of 1986, as amended (the "Code"). The purpose of this
Plan is to provide the Employees, who make significant and extraordinary
contributions to the long-term growth and performance of the Company, with
equity-based compensation incentives, and to attract and retain the Employees.
1.2 Administration.
--------------
1.2.1 The Plan shall be administered by the Compensation Committee (the
"Committee") of, or appointed by, the Board of Directors of the Company (the
"Board"). The Committee shall select one of its members as Chairman and shall
act by vote of a majority of a quorum, or by unanimous written consent. A
majority of its members shall constitute a quorum. The Committee shall be
governed by the provisions of the Company's Bylaws and of Florida law applicable
to the Board, except as otherwise provided herein or determined by the Board.
1.2.2 The Committee shall have full and complete authority, in its
discretion, but subject to the express provisions of this Plan (a) to approve
the Employees nominated by the management of the Company to be granted Awards or
Stock Options; (b) to determine the number of Awards or Stock Options to be
granted to an Employee; (c) to determine the time or times at which Awards or
Stock Options shall be granted; (d) to establish the terms and conditions upon
which Awards or Stock Options may be exercised; (e) to remove or adjust any
restrictions and conditions upon Awards or Stock Options; (f) to specify, at the
time of grant, provisions relating to exercisability of Stock Options and to
accelerate or otherwise modify the exercisability of any Stock Options; and (g)
to adopt such rules and regulations and to make all other determinations deemed
necessary or desirable for the administration of this Plan. All interpretations
and constructions of this Plan by the Committee, and all of its actions
hereunder, shall be binding and conclusive on all persons for all purposes.
1.2.3 The Company hereby agrees to indemnify and hold harmless each
Committee member and each Employee, and the estate and heirs of such Committee
member or Employee, against all claims, liabilities, expenses, penalties,
damages or other pecuniary losses, including legal fees, which such Committee
member or Employee, his estate or heirs may suffer as a result of his
responsibilities, obligations or duties in connection with this Plan, to the
extent that insurance, if any, does not cover the payment of such items. No
member of the Committee or the Board shall be liable for any action or
determination made in good faith with respect to this Plan or any Award or Stock
Option granted pursuant to this Plan.
1.3 Eligibility and Participation. The Employees eligible under this
-------------------------------
Plan shall be approved by the Committee from those Employees who, in the opinion
of the management of the Company, are in positions which enable them to make
significant contributions to the long-term performance and growth of the
Company. In selecting the Employees to whom Award or Stock Options may be
granted, consideration shall be given to factors such as employment position,
duties and responsibilities, ability, productivity, length of service, morale,
interest in the Company and recommendations of supervisors.
1.4 Shares Subject to this Plan. The maximum number of shares of the
------------------------------
Common Stock that may be issued pursuant to this Plan shall be 150,000,000
subject to adjustment pursuant to the provisions of Paragraph 4.1. If shares of
the Common Stock awarded or issued under this Plan are reacquired by the Company
due to a forfeiture
1
or for any other reason, such shares shall be cancelled and thereafter shall
again be available for purposes of this Plan. If a Stock Option expires,
terminates or is cancelled for any reason without having been exercised in full,
the shares of the Common Stock not purchased thereunder shall again be available
for purposes of this Plan. In the event that any outstanding Stock Option or
Award under this Plan for any reason expires or is terminated, the shares of
Common Stock allocable to the unexercised portion of the Stock Option or Award
shall be available for issuance under The Jackson Rivers Company's Non-Employee
Directors and Consultants Retainer Stock Plan for the Year 2004 No. 3. The
Compensation Committee may, in its discretion, increase the number of shares
available for issuance under this Plan, while correspondingly decreasing the
number of shares available for issuance under The Jackson Rivers Company's
Non-Employee Directors and Consultants Retainer Stock Plan for the Year 2004 No.
3.
2. Provisions Relating to Stock Options.
----------------------------------------
2.1 Grants of Stock Options. The Committee may grant Stock Options in
-------------------------
such amounts, at such times, and to the Employees nominated by the management of
the Company as the Committee, in its discretion, may determine. Stock Options
granted under this Plan shall constitute "incentive stock options" within the
meaning of Section 422 of the Code, if so designated by the Committee on the
date of grant. The Committee shall also have the discretion to grant Stock
Options which do not constitute incentive stock options, and any such Stock
Options shall be designated non-statutory stock options by the Committee on the
date of grant. The aggregate Fair Market Value (determined as of the time an
incentive stock option is granted) of the Common Stock with respect to which
incentive stock options are exercisable for the first time by any Employee
during any one calendar year (under all plans of the Company and any parent or
subsidiary of the Company) may not exceed the maximum amount permitted under
Section 422 of the Code (currently, $100,000.00). Non-statutory stock options
shall not be subject to the limitations relating to incentive stock options
contained in the preceding sentence. Each Stock Option shall be evidenced by a
written agreement (the "Option Agreement") in a form approved by the Committee,
which shall be executed on behalf of the Company and by the Employee to whom the
Stock Option is granted, and which shall be subject to the terms and conditions
of this Plan. In the discretion of the Committee, Stock Options may include
provisions (which need not be uniform), authorized by the Committee in its
discretion, that accelerate an Employee's rights to exercise Stock Options
following a "Change in Control," upon termination of the Employee's employment
by the Company without "Cause" or by the Employee for "Good Reason," as such
terms are defined in Paragraph 3.1 hereof. The holder of a Stock Option shall
not be entitled to the privileges of stock ownership as to any shares of the
Common Stock not actually issued to such holder.
2.2 Purchase Price. The purchase price (the "Exercise Price") of shares
--------------
of the Common Stock subject to each Stock Option (the "Option Shares") shall not
be less than 85 percent of the Fair Market Value of the Common Stock on the date
of the grant of the option. For an Employee holding greater than 10 percent of
the total voting power of all stock of the Company, either Common or Preferred,
the Exercise Price of an incentive stock option shall be at least 110 percent of
the Fair Market Value of the Common Stock on the date of the grant of the
option. As used herein, "Fair Market Value" means the mean between the highest
and lowest reported sales prices of the Common Stock on the New York Stock
Exchange Composite Tape or, if not listed on such exchange, on any other
national securities exchange on which the Common Stock is listed or on The
Nasdaq Stock Market, or, if not so listed on any other national securities
exchange or The Nasdaq Stock Market, then the average of the bid price of the
Common Stock during the last five trading days on the OTC Bulletin Board
immediately preceding the last trading day prior to the date with respect to
which the Fair Market Value is to be determined. If the Common Stock is not
then publicly traded, then the Fair Market Value of the Common Stock shall be
the book value of the Company per share as determined on the last day of March,
June, September, or December in any year closest to the date when the
determination is to be made. For the purpose of determining book value
hereunder, book value shall be determined by adding as of the applicable date
called for herein the capital, surplus, and undivided profits of the Company,
and after having deducted any reserves theretofore established; the sum of these
items shall be divided by the number of shares of the Common Stock outstanding
as of said date, and the quotient thus obtained shall represent the book value
of each share of the Common Stock of the Company.
2.3 Option Period. The Stock Option period (the "Term") shall commence
--------------
on the date of grant of the Stock Option and shall be 10 years or such shorter
period as is determined by the Committee. Each Stock Option shall provide that
it is exercisable over its term in such periodic installments as the Committee
may determine, subject to the provisions of Paragraph 2.4.1. Section 16(b) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") exempts
persons normally subject to the reporting requirements of Section 16(a) of the
Exchange
2
Act (the "Section 16 Reporting Persons") pursuant to a qualified employee stock
option plan from the normal requirement of not selling until at least six months
and one day from the date the Stock Option is granted.
2.4 Exercise of Options.
---------------------
2.4.1 Each Stock Option may be exercised in whole or in part (but not as
to fractional shares) by delivering it for surrender or endorsement to the
Company, attention of the Corporate Secretary, at the principal office of the
Company, together with payment of the Exercise Price and an executed Notice and
Agreement of Exercise in the form prescribed by Paragraph 2.4.2. Payment may be
made (a) in cash, (b) by cashier's or certified check, (c) by surrender of
previously owned shares of the Common Stock valued pursuant to Paragraph 2.2 (if
the Committee authorizes payment in stock in its discretion), (d) by withholding
from the Option Shares which would otherwise be issuable upon the exercise of
the Stock Option that number of Option Shares equal to the exercise price of the
Stock Option, if such withholding is authorized by the Committee in its
discretion, or (e) in the discretion of the Committee, by the delivery to the
Company of the optionee's promissory note secured by the Option Shares, bearing
interest at a rate sufficient to prevent the imputation of interest under
Sections 483 or 1274 of the Code, and having such other terms and conditions as
may be satisfactory to the Committee. Subject to the provisions of this
Paragraph 2.4 and Paragraph 2.5, the Employee has the right to exercise his or
her Stock Options at the rate of at least 20 percent per year over five years
from the date the Stock Option is granted.
2.4.2 Exercise of each Stock Option is conditioned upon the agreement of
the Employee to the terms and conditions of this Plan and of such Stock Option
as evidenced by the Employee's execution and delivery of a Notice and Agreement
of Exercise in a form to be determined by the Committee in its discretion. Such
Notice and Agreement of Exercise shall set forth the agreement of the Employee
that (a) no Option Shares will be sold or otherwise distributed in violation of
the Securities Act of 1933, as amended (the "Securities Act") or any other
applicable federal or state securities laws, (b) each Option Share certificate
may be imprinted with legends reflecting any applicable federal and state
securities law restrictions and conditions, (c) the Company may comply with said
securities law restrictions and issue "stop transfer" instructions to its
Transfer Agent and Registrar without liability, (d) if the Employee is a Section
16 Reporting Person, the Employee will furnish to the Company a copy of each
Form 4 or Form 5 filed by said Employee and will timely file all reports
required under federal securities laws, and (e) the Employee will report all
sales of Option Shares to the Company in writing on a form prescribed by the
Company.
2.4.3 No Stock Option shall be exercisable unless and until any applicable
registration or qualification requirements of federal and state securities laws,
and all other legal requirements, have been fully complied with. At no time
shall the total number of securities issuable upon exercise of all outstanding
options under this Plan, and the total number of securities provided for under
any bonus or similar plan or agreement of the Company exceed a number of
securities which is equal to 30 percent of the then outstanding securities of
the Company, unless a percentage higher than 30 percent is approved by at least
two-thirds of the outstanding securities entitled to vote. The Company will use
reasonable efforts to maintain the effectiveness of a Registration Statement
under the Securities Act for the issuance of Stock Options and shares acquired
thereunder, but there may be times when no such Registration Statement will be
currently effective. The exercise of Stock Options may be temporarily suspended
without liability to the Company during times when no such Registration
Statement is currently effective, or during times when, in the reasonable
opinion of the Committee, such suspension is necessary to preclude violation of
any requirements of applicable law or regulatory bodies having jurisdiction over
the Company. If any Stock Option would expire for any reason except the end of
its term during such a suspension, then if exercise of such Stock Option is duly
tendered before its expiration, such Stock Option shall be exercisable and
exercised (unless the attempted exercise is withdrawn) as of the first day after
the end of such suspension. The Company shall have no obligation to file any
Registration Statement covering resales of Option Shares.
2.5 Continuous Employment. Except as provided in Paragraph 2.7 below,
----------------------
an Employee may not exercise a Stock Option unless from the date of grant to the
date of exercise the Employee remains continuously in the employ of the Company.
For purposes of this Paragraph 2.5, the period of continuous employment of an
Employee with the Company shall be deemed to include (without extending the term
of the Stock Option) any period during which the Employee is on leave of absence
with the consent of the Company, provided that such leave of absence shall not
exceed three months and that the Employee returns to the employ of the Company
at the expiration of such leave of absence. If the Employee fails to return to
the employ of the Company at the expiration
3
of such leave of absence, the Employee's employment with the Company shall be
deemed terminated as of the date such leave of absence commenced. The continuous
employment of an Employee with the Company shall also be deemed to include any
period during which the Employee is a member of the Armed Forces of the United
States, provided that the Employee returns to the employ of the Company within
90 days (or such longer period as may be prescribed by law) from the date the
Employee first becomes entitled to a discharge from military service. If an
Employee does not return to the employ of the Company within 90 days (or such
longer period as may be prescribed by law) from the date the Employee first
becomes entitled to a discharge from military service, the Employee's employment
with the Company shall be deemed to have terminated as of the date the
Employee's military service ended.
2.6 Restrictions on Transfer. Each Stock Option granted under this Plan
------------------------
shall be transferable only by will or the laws of descent and distribution. No
interest of any Employee under this Plan shall be subject to attachment,
execution, garnishment, sequestration, the laws of bankruptcy or any other legal
or equitable process. Each Stock Option granted under this Plan shall be
exercisable during an Employee's lifetime only by the Employee or by the
Employee's legal representative.
2.7 Termination of Employment.
---------------------------
2.7.1 Upon an Employee's Retirement, Disability (both terms being defined
below) or death, (a) all Stock Options to the extent then presently exercisable
shall remain in full force and effect and may be exercised pursuant to the
provisions thereof, and (b) unless otherwise provided by the Committee, all
Stock Options to the extent not then presently exercisable by the Employee shall
terminate as of the date of such termination of employment and shall not be
exercisable thereafter. Unless employment is terminated for cause, as defined
by applicable law, the right to exercise in the event of termination of
employment, to the extent that the optionee is entitled to exercise on the date
the employment terminates as follows:
(i) At least six months from the date of termination if
termination was caused by death or disability.
(ii) At least 30 days from the date of termination if
termination was caused by other than death or disability.
2.7.2 Upon the termination of the employment of an Employee for any reason
other than those specifically set forth in Paragraph 2.7.1, (a) all Stock
Options to the extent then presently exercisable by the Employee shall remain
exercisable only for a period of 90 days after the date of such termination of
employment (except that the 90 day period shall be extended to 12 months if the
Employee shall die during such 90 day period), and may be exercised pursuant to
the provisions thereof, including expiration at the end of the fixed term
thereof, and (b) unless otherwise provided by the Committee, all Stock Options
to the extent not then presently exercisable by the Employee shall terminate as
of the date of such termination of employment and shall not be exercisable
thereafter.
2.7.3 For purposes of this Plan:
(a) "Retirement" shall mean an Employee's retirement from the
employ of the Company on or after the date on which the Employee attains the age
of 65 years; and
(b) "Disability" shall mean total and permanent incapacity of
an Employee, due to physical impairment or legally established mental
incompetence, to perform the usual duties of the Employee's employment with the
Company, which disability shall be determined (i) on medical evidence by a
licensed physician designated by the Committee, or (ii) on evidence that the
Employee has become entitled to receive primary benefits as a disabled employee
under the Social Security Act in effect on the date of such disability.
4
3. Provisions Relating to Awards.
--------------------------------
3.1 Grant of Awards. Subject to the provisions of this Plan, the
-----------------
Committee shall have full and complete authority, in its discretion, but subject
to the express provisions of this Plan, to (1) grant Awards pursuant to this
Plan, (2) determine the number of shares of the Common Stock subject to each
Award (the "Award Shares"), (3) determine the terms and conditions (which need
not be identical) of each Award, including the consideration (if any) to be paid
by the Employee for such Common Stock, which may, in the Committee's discretion,
consist of the delivery of the Employee's promissory note meeting the
requirements of Paragraph 2.4.1, (4) establish and modify performance criteria
for Awards, and (5) make all of the determinations necessary or advisable with
respect to Awards under this Plan. Each Award under this Plan shall consist of
a grant of shares of the Common Stock subject to a restriction period (after
which the restrictions shall lapse), which shall be a period commencing on the
date the Award is granted and ending on such date as the Committee shall
determine (the "Restriction Period"). The Committee may provide for the lapse
of restrictions in installments, for acceleration of the lapse of restrictions
upon the satisfaction of such performance or other criteria or upon the
occurrence of such events as the Committee shall determine, and for the early
expiration of the Restriction Period upon an Employee's death, Disability or
Retirement as defined in Paragraph 2.7.3, or, following a Change of Control,
upon termination of an Employee's employment by the Company without "Cause" or
by the Employee for "Good Reason," as those terms are defined herein. For
purposes of this Plan:
"Change of Control" shall be deemed to occur (a) on the date the Company
first has actual knowledge that any person (as such term is used in Sections
13(d) and 14(d)(2) of the Exchange Act) has become the beneficial owner (as
defined in Rule 13(d)-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 40 percent or more of the combined voting
power of the Company's then outstanding securities, or (b) on the date the
stockholders of the Company approve (i) a merger of the Company with or into any
other corporation in which the Company is not the surviving corporation or in
which the Company survives as a subsidiary of another corporation, (ii) a
consolidation of the Company with any other corporation, or (iii) the sale or
disposition of all or substantially all of the Company's assets or a plan of
complete liquidation.
"Cause," when used with reference to termination of the employment of an
Employee by the Company for "Cause," shall mean:
(a) The Employee's continuing willful and material breach of
his duties to the Company after he receives a demand from the Chief Executive of
the Company specifying the manner in which he has willfully and materially
breached such duties, other than any such failure resulting from Disability of
the Employee or his resignation for "Good Reason," as defined herein; or
(b) The conviction of the Employee of a felony; or
(c) The Employee's commission of fraud in the course of his
employment with the Company, such as embezzlement or other material and
intentional violation of law against the Company; or
(d) The Employee's gross misconduct causing material harm to
the Company.
"Good Reason" shall mean any one or more of the following, occurring
following or in connection with a Change of Control and within 90 days prior to
the Employee's resignation, unless the Employee shall have consented thereto in
writing:
(a) The assignment to the Employee of duties inconsistent with
his executive status prior to the Change of Control or a substantive change in
the officer or officers to whom he reports from the officer or officers to whom
he reported immediately prior to the Change of Control; or
(b) The elimination or reassignment of a majority of the duties
and responsibilities that were assigned to the Employee immediately prior to the
Change of Control; or
5
(c) A reduction by the Company in the Employee's annual base
salary as in effect immediately prior to the Change of Control; or
(d) The Company requiring the Employee to be based anywhere
outside a 35-mile radius from his place of employment immediately prior to the
Change of Control, except for required travel on the Company's business to an
extent substantially consistent with the Employee's business travel obligations
immediately prior to the Change of Control; or
(e) The failure of the Company to grant the Employee a
performance bonus reasonably equivalent to the same percentage of salary the
Employee normally received prior to the Change of Control, given comparable
performance by the Company and the Employee; or
(f) The failure of the Company to obtain a satisfactory
Assumption Agreement (as defined in Paragraph 4.13 of this Plan) from a
successor, or the failure of such successor to perform such Assumption
Agreement.
3.2 Incentive Agreements. Each Award granted under this Plan shall be
---------------------
evidenced by a written agreement (an "Incentive Agreement") in a form approved
by the Committee and executed by the Company and the Employee to whom the Award
is granted. Each Incentive Agreement shall be subject to the terms and
conditions of this Plan and other such terms and conditions as the Committee may
specify.
3.3 Amendment, Modification and Waiver of Restrictions. The Committee
----------------------------------------------------
may modify or amend any Award under this Plan or waive any restrictions or
conditions applicable to the Award; provided, however, that the Committee may
not undertake any such modifications, amendments or waivers if the effect
thereof materially increases the benefits to any Employee, or adversely affects
the rights of any Employee without his consent.
3.4 Terms and Conditions of Awards. Upon receipt of an Award of shares
-------------------------------
of the Common Stock under this Plan, even during the Restriction Period, an
Employee shall be the holder of record of the shares and shall have all the
rights of a stockholder with respect to such shares, subject to the terms and
conditions of this Plan and the Award.
3.4.1 Except as otherwise provided in this Paragraph 3.4, no shares of the
Common Stock received pursuant to this Plan shall be sold, exchanged,
transferred, pledged, hypothecated or otherwise disposed of during the
Restriction Period applicable to such shares. Any purported disposition of such
Common Stock in violation of this Paragraph 3.4 shall be null and void.
3.4.2 If an Employee's employment with the Company terminates prior to the
expiration of the Restriction Period for an Award, subject to any provisions of
the Award with respect to the Employee's death, Disability or Retirement, or
Change of Control, all shares of the Common Stock subject to the Award shall be
immediately forfeited by the Employee and reacquired by the Company, and the
Employee shall have no further rights with respect to the Award. In the
discretion of the Committee, an Incentive Agreement may provide that, upon the
forfeiture by an Employee of Award Shares, the Company shall repay to the
Employee the consideration (if any) which the Employee paid for the Award Shares
on the grant of the Award. In the discretion of the Committee, an Incentive
Agreement may also provide that such repayment shall include an interest factor
on such consideration from the date of the grant of the Award to the date of
such repayment.
3.4.3 The Committee may require under such terms and conditions as it
deems appropriate or desirable that (a) the certificates for the Common Stock
delivered under this Plan are to be held in custody by the Company or a person
or institution designated by the Company until the Restriction Period expires,
(b) such certificates shall bear a legend referring to the restrictions on the
Common Stock pursuant to this Plan, and (c) the Employee shall have delivered to
the Company a stock power endorsed in blank relating to the Common Stock.
6
4. Miscellaneous Provisions.
-------------------------
4.1 Adjustments Upon Change in Capitalization.
---------------------------------------------
4.1.1 The number and class of shares subject to each outstanding Stock
Option, the Exercise Price thereof (and the total price), the maximum number of
Stock Options that may be granted under this Plan, the minimum number of shares
as to which a Stock Option may be exercised at any one time, and the number and
class of shares subject to each outstanding Award, shall not be proportionately
adjusted in the event of any increase or decrease in the number of the issued
shares of the Common Stock which results from a split-up or consolidation of
shares, payment of a stock dividend or dividends exceeding a total of five
percent for which the record dates occur in any one fiscal year, a
recapitalization, a combination of shares or other like capital adjustment, so
that (a) upon exercise of the Stock Option, the Employee shall receive the
number and class of shares the Employee would have received prior to any such
capital adjustment becoming effective, and (b) upon the lapse of restrictions of
the Award Shares, the Employee shall receive the number and class of shares the
Employee would have received prior to any such capital adjustment becoming
effective.
4.1.2 Upon a reorganization, merger or consolidation of the Company with
one or more corporations as a result of which the Company is not the surviving
corporation or in which the Company survives as a wholly-owned subsidiary of
another corporation, or upon a sale of all or substantially all of the property
of the Company to another corporation, or any dividend or distribution to
stockholders of more than 10 percent of the Company's assets, adequate
adjustment or other provisions shall be made by the Company or other party to
such transaction so that there shall remain and/or be substituted for the Option
Shares and Award Shares provided for herein, the shares, securities or assets
which would have been issuable or payable in respect of or in exchange for such
Option Shares and Award Shares then remaining, as if the Employee had been the
owner of such shares as of the applicable date. Any securities so substituted
shall be subject to similar successive adjustments.
4.2 Withholding Taxes. The Company shall have the right at the time of
------------------
exercise of any Stock Option, the grant of an Award, or the lapse of
restrictions on Award Shares, to make adequate provision for any federal, state,
local or foreign taxes which it believes are or may be required by law to be
withheld with respect to such exercise (the "Tax Liability"), to ensure the
payment of any such Tax Liability. The Company may provide for the payment of
any Tax Liability by any of the following means or a combination of such means,
as determined by the Committee in its sole and absolute discretion in the
particular case (1) by requiring the Employee to tender a cash payment to the
Company, (2) by withholding from the Employee's salary, (3) by withholding from
the Option Shares which would otherwise be issuable upon exercise of the Stock
Option, or from the Award Shares on their grant or date of lapse of
restrictions, that number of Option Shares or Award Shares having an aggregate
Fair Market Value (determined in the manner prescribed by Paragraph 2.2) as of
the date the withholding tax obligation arises in an amount which is equal to
the Employee's Tax Liability or (4) by any other method deemed appropriate by
the Committee. Satisfaction of the Tax Liability of a Section 16 Reporting
Person may be made by the method of payment specified in clause (3) above only
if the following two conditions are satisfied:
(a) The withholding of Option Shares or Award Shares and the
exercise of the related Stock Option occur at least six months and one day
following the date of grant of such Stock Option or Award; and
(b) The withholding of Option Shares or Award Shares is made
either (i) pursuant to an irrevocable election (the "Withholding Election") made
by the Employee at least six months in advance of the withholding of Options
Shares or Award Shares, or (ii) on a day within a 10-day "window period"
beginning on the third business day following the date of release of the
Company's quarterly or annual summary statement of sales and earnings.
Anything herein to the contrary notwithstanding, a Withholding Election may
be disapproved by the Committee at any time.
7
4.3 Relationship to Other Employee Benefit Plans. Stock Options and
------------------------------------------------
Awards granted hereunder shall not be deemed to be salary or other compensation
to any Employee for purposes of any pension, thrift, profit-sharing, stock
purchase or any other employee benefit plan now maintained or hereafter adopted
by the Company.
4.4 Amendments and Termination. The Board of Directors may at any time
---------------------------
suspend, amend or terminate this Plan. No amendment, except as provided in
Paragraph 3.3, or modification of this Plan may be adopted, except subject to
stockholder approval, which would (1) materially increase the benefits accruing
to the Employees under this Plan, (2) materially increase the number of
securities which may be issued under this Plan (except for adjustments pursuant
to Paragraph 4.1 hereof), or (3) materially modify the requirements as to
eligibility for participation in this Plan.
4.5 Successors in Interest. The provisions of this Plan and the actions
----------------------
of the Committee shall be binding upon all heirs, successors and assigns of the
Company and of the Employees.
4.6 Other Documents. All documents prepared, executed or delivered in
----------------
connection with this Plan (including, without limitation, Option Agreements and
Incentive Agreements) shall be, in substance and form, as established and
modified by the Committee; provided, however, that all such documents shall be
subject in every respect to the provisions of this Plan, and in the event of any
conflict between the terms of any such document and this Plan, the provisions of
this Plan shall prevail.
4.7 Fairness of the Repurchase Price. In the event that the Company
------------------------------------
repurchases securities upon termination of employment pursuant to this Plan,
either: (a) the price will not be less than the fair market value of the
securities to be repurchased on the date of termination of employment, and the
right to repurchase will be exercised for cash or cancellation of purchase money
indebtedness for the securities within 90 days of termination of the employment
(or in the case of securities issued upon exercise of options after the date of
termination, within 90 days after the date of the exercise), and the right
terminates when the Company's securities become publicly traded, or (b) Company
will repurchase securities at the original purchase price, provided that the
right to repurchase at the original purchase price lapses at the rate of at
least 20 percent of the securities per year over five years from the date the
option is granted (without respect to the date the option was exercised or
became exercisable) and the right to repurchase must be exercised for cash or
cancellation of purchase money indebtedness for the securities within 90 days of
termination of employment (or in case of securities issued upon exercise of
options after the date of termination, within 90 days after the date of the
exercise).
4.8 No Obligation to Continue Employment. This Plan and the grants
----------------------------------------
which might be made hereunder shall not impose any obligation on the Company to
continue to employ any Employee. Moreover, no provision of this Plan or any
document executed or delivered pursuant to this Plan shall be deemed modified in
any way by any employment contract between an Employee (or other employee) and
the Company.
4.9 Misconduct of an Employee. Notwithstanding any other provision of
---------------------------
this Plan, if an Employee commits fraud or dishonesty toward the Company or
wrongfully uses or discloses any trade secret, confidential data or other
information proprietary to the Company, or intentionally takes any other action
which results in material harm to the Company, as determined by the Committee,
in its sole and absolute discretion, the Employee shall forfeit all rights and
benefits under this Plan.
4.10 Term of Plan. No Stock Option shall be exercisable, or Award
--------------
granted, unless and until the Directors of the Company have approved this Plan
and all other legal requirements have been met. This Plan was adopted by the
Board effective August 9, 2004. No Stock Options or Awards may be granted under
this Plan after August 9, 2014.
4.11 Governing Law. This Plan and all actions taken thereunder shall be
--------------
governed by, and construed in accordance with, the laws of the State of Florida.
4.12 Assumption Agreements. The Company will require each successor,
----------------------
(direct or indirect, whether by purchase, merger, consolidation or otherwise),
to all or substantially all of the business or assets of the Company, prior to
the consummation of each such transaction, to assume and agree to perform the
terms and provisions
8
remaining to be performed by the Company under each Incentive Agreement and
Stock Option and to preserve the benefits to the Employees thereunder. Such
assumption and agreement shall be set forth in a written agreement in form and
substance satisfactory to the Committee (an "Assumption Agreement"), and shall
include such adjustments, if any, in the application of the provisions of the
Incentive Agreements and Stock Options and such additional provisions, if any,
as the Committee shall require and approve, in order to preserve such benefits
to the Employees. Without limiting the generality of the foregoing, the
Committee may require an Assumption Agreement to include satisfactory
undertakings by a successor:
(a) To provide liquidity to the Employees at the end of the
Restriction Period applicable to the Common Stock awarded to them under this
Plan, or on the exercise of Stock Options;
(b) If the succession occurs before the expiration of any
period specified in the Incentive Agreements for satisfaction of performance
criteria applicable to the Common Stock awarded thereunder, to refrain from
interfering with the Company's ability to satisfy such performance criteria or
to agree to modify such performance criteria and/or waive any criteria that
cannot be satisfied as a result of the succession;
(c) To require any future successor to enter into an Assumption
Agreement; and
(d) To take or refrain from taking such other actions as the
Committee may require and approve, in its discretion.
4.13 Compliance with Rule 16b-3. Transactions under this Plan are
-----------------------------
intended to comply with all applicable conditions of Rule 16b-3 promulgated
under the Exchange Act. To the extent that any provision of this Plan or action
by the Committee fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Committee.
4.14 Information to Shareholders. The Company shall furnish to each of
-----------------------------
its stockholders financial statements of the Company at least annually.
IN WITNESS WHEREOF, this Plan has been executed effective as of August 9,
2004.
THE JACKSON RIVERS COMPANY
By /s/ Dennis N. Lauzon
-------------------------------------------
Dennis N. Lauzon, President
9
THE JACKSON RIVERS COMPANY
NON-EMPLOYEE DIRECTORS AND CONSULTANTS RETAINER STOCK PLAN
FOR THE YEAR 2004 NO. 3
1. Introduction. This Plan shall be known as the "The Jackson Rivers
------------
Company Non-Employee Directors and Consultants Retainer Stock Plan for the Year
2004 No. 3," and is hereinafter referred to as the "Plan." The purposes of this
Plan are to enable The Jackson Rivers Company, a Florida corporation (the
"Company"), to promote the interests of the Company and its stockholders by
attracting and retaining non-employee Directors and Consultants capable of
furthering the future success of the Company and by aligning their economic
interests more closely with those of the Company's stockholders, by paying their
retainer or fees in the form of shares of the Company's common stock, par value
$ 001 per share (the "Common Stock").
2. Definitions. The following terms shall have the meanings set forth
-----------
below:
"Board" means the Board of Directors of the Company.
"Change of Control" has the meaning set forth in Paragraph 12(d) hereof.
"Code" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations thereunder. References to any provision of the Code or rule or
regulation thereunder shall be deemed to include any amended or successor
provision, rule or regulation.
"Committee" means the committee that administers this Plan, as more fully
defined in Paragraph 13 hereof.
"Common Stock" has the meaning set forth in Paragraph 1 hereof.
"Company" has the meaning set forth in Paragraph 1 hereof.
"Consultants" means Company's consultants and advisors only if: (i) they
are natural persons; (ii) they provide bona fide services to the Company; and
(iii) the services are not in connection with the offer or sale of securities in
a capital-raising transaction, and do not directly or indirectly promote or
maintain a market for the Company's securities.
"Deferral Election" has the meaning set forth in Paragraph 6 hereof.
"Deferred Stock Account" means a bookkeeping account maintained by the
Company for a Participant representing the Participant's interest in the shares
credited to such Deferred Stock Account pursuant to Paragraph 7 hereof.
"Delivery Date" has the meaning set forth in Paragraph 6 hereof.
"Director" means an individual who is a member of the Board of Directors of
the Company.
"Dividend Equivalent" for a given dividend or other distribution means a
number of shares of the Common Stock having a Fair Market Value, as of the
record date for such dividend or distribution, equal to the amount of cash, plus
the Fair Market Value on the date of distribution of any property, that is
distributed with respect to one share of the Common Stock pursuant to such
dividend or distribution; such Fair Market Value to be determined by the
Committee in good faith.
"Effective Date" has the meaning set forth in Paragraph 3 hereof.
"Exchange Act" has the meaning set forth in Paragraph 12(d) hereof.
1
"Fair Market Value" means the mean between the highest and lowest reported
sales prices of the Common Stock on the New York Stock Exchange Composite Tape
or, if not listed on such exchange, on any other national securities exchange on
which the Common Stock is listed or on The Nasdaq Stock Market, or, if not so
listed on any other national securities exchange or The Nasdaq Stock Market,
then the average of the bid price of the Common Stock during the last five
trading days on the OTC Bulletin Board immediately preceding the last trading
day prior to the date with respect to which the Fair Market Value is to be
determined. If the Common Stock is not then publicly traded, then the Fair
Market Value of the Common Stock shall be the book value of the Company per
share as determined on the last day of March, June, September, or December in
any year closest to the date when the determination is to be made. For the
purpose of determining book value hereunder, book value shall be determined by
adding as of the applicable date called for herein the capital, surplus, and
undivided profits of the Company, and after having deducted any reserves
theretofore established; the sum of these items shall be divided by the number
of shares of the Common Stock outstanding as of said date, and the quotient thus
obtained shall represent the book value of each share of the Common Stock of the
Company.
"Participant" has the meaning set forth in Paragraph 4 hereof.
"Payment Time" means the time when a Stock Retainer is payable to a
Participant pursuant to Paragraph 5 hereof (without regard to the effect of any
Deferral Election).
"Stock Retainer" has the meaning set forth in Paragraph 5 hereof.
"Third Anniversary" has the meaning set forth in Paragraph 6 hereof.
3. Effective Date of the Plan. This Plan was adopted by the Board
------------------------------
effective August 9, 2004 (the "Effective Date").
4. Eligibility. Each individual who is a Director or Consultant on the
-----------
Effective Date and each individual who becomes a Director or Consultant
thereafter during the term of this Plan, shall be a participant (the
"Participant") in this Plan, in each case during such period as such individual
remains a Director or Consultant and is not an employee of the Company or any of
its subsidiaries. Each credit of shares of the Common Stock pursuant to this
Plan shall be evidenced by a written agreement duly executed and delivered by or
on behalf of the Company and a Participant, if such an agreement is required by
the Company to assure compliance with all applicable laws and regulations.
5. Grants of Shares. Commencing on the Effective Date, the amount of
------------------
compensation for service to directors or consultants shall be payable in shares
of the Common Stock (the "Stock Retainer") pursuant to this Plan. The deemed
issuance price of shares of the Common Stock subject to each Stock Retainer
shall not be less than 85 percent of the Fair Market Value of the Common Stock
on the date of the grant. In the case of any person who owns securities
possessing more than ten percent of the combined voting power of all classes of
securities of the issuer or its parent or subsidiaries possessing voting power,
the deemed issuance price of shares of the Common Stock subject to each Stock
Retainer shall be at least 100 percent of the Fair Market Value of the Common
Stock on the date of the grant.
6. Deferral Option. From and after the Effective Date, a Participant may
---------------
make an election (a "Deferral Election") on an annual basis to defer delivery of
the Stock Retainer specifying which one of the following ways the Stock Retainer
is to be delivered (a) on the date which is three years after the Effective Date
for which it was originally payable (the "Third Anniversary"), (b) on the date
upon which the Participant ceases to be a Director or Consultant for any reason
(the "Departure Date") or (c) in five equal annual installments commencing on
the Departure Date (the "Third Anniversary" and "Departure Date" each being
referred to herein as a "Delivery Date"). Such Deferral Election shall remain
in effect for each Subsequent Year unless changed, provided that, any Deferral
Election with respect to a particular Year may not be changed less than six
months prior to the beginning of such Year, and provided, further, that no more
than one Deferral Election or change thereof may be made in any Year.
2
Any Deferral Election and any change or revocation thereof shall be made by
delivering written notice thereof to the Committee no later than six months
prior to the beginning of the Year in which it is to be effected; provided that,
with respect to the Year beginning on the Effective Date, any Deferral Election
or revocation thereof must be delivered no later than the close of business on
the 30th day after the Effective Date.
7. Deferred Stock Accounts. The Company shall maintain a Deferred Stock
------------------------
Account for each Participant who makes a Deferral Election to which shall be
credited, as of the applicable Payment Time, the number of shares of the Common
Stock payable pursuant to the Stock Retainer to which the Deferral Election
relates. So long as any amounts in such Deferred Stock Account have not been
delivered to the Participant under Paragraph 8 hereof, each Deferred Stock
Account shall be credited as of the payment date for any dividend paid or other
distribution made with respect to the Common Stock, with a number of shares of
the Common Stock equal to (a) the number of shares of the Common Stock shown in
such Deferred Stock Account on the record date for such dividend or distribution
multiplied by (b) the Dividend Equivalent for such dividend or distribution.
8. Delivery of Shares.
--------------------
(a) The shares of the Common Stock in a Participant's Deferred Stock
Account with respect to any Stock Retainer for which a Deferral Election has
been made (together with dividends attributable to such shares credited to such
Deferred Stock Account) shall be delivered in accordance with this Paragraph 8
as soon as practicable after the applicable Delivery Date. Except with respect
to a Deferral Election pursuant to Paragraph 6 hereof, or other agreement
between the parties, such shares shall be delivered at one time; provided that,
if the number of shares so delivered includes a fractional share, such number
shall be rounded to the nearest whole number of shares. If the Participant has
in effect a Deferral Election pursuant to Paragraph 6 hereof, then such shares
shall be delivered in five equal annual installments (together with dividends
attributable to such shares credited to such Deferred Stock Account), with the
first such installment being delivered on the first anniversary of the Delivery
Date; provided that, if in order to equalize such installments, fractional
shares would have to be delivered, such installments shall be adjusted by
rounding to the nearest whole share. If any such shares are to be delivered
after the Participant has died or become legally incompetent, they shall be
delivered to the Participant's estate or legal guardian, as the case may be, in
accordance with the foregoing; provided that, if the Participant dies with a
Deferral Election pursuant to Paragraph 6 hereof in effect, the Committee shall
deliver all remaining undelivered shares to the Participant's estate
immediately. References to a Participant in this Plan shall be deemed to refer
to the Participant's estate or legal guardian, where appropriate.
(b) The Company may, but shall not be required to, create a grantor trust
or utilize an existing grantor trust (in either case, "Trust") to assist it in
accumulating the shares of the Common Stock needed to fulfill its obligations
under this Paragraph 8. However, Participants shall have no beneficial or other
interest in the Trust and the assets thereof, and their rights under this Plan
shall be as general creditors of the Company, unaffected by the existence or
nonexistence of the Trust, except that deliveries of Stock Retainers to
Participants from the Trust shall, to the extent thereof, be treated as
satisfying the Company's obligations under this Paragraph 8.
9. Share Certificates; Voting and Other Rights. The certificates for
-----------------------------------------------
shares delivered to a Participant pursuant to Paragraph 8 above shall be issued
in the name of the Participant, and from and after the date of such issuance the
Participant shall be entitled to all rights of a stockholder with respect to the
Common Stock for all such shares issued in his name, including the right to vote
the shares, and the Participant shall receive all dividends and other
distributions paid or made with respect thereto.
10. General Restrictions.
---------------------
(a) Notwithstanding any other provision of this Plan or agreements
made pursuant thereto, the Company shall not be required to issue or deliver any
certificate or certificates for shares of the Common Stock under this Plan prior
to fulfillment of all of the following conditions:
(i) Listing or approval for listing upon official notice of
issuance of such shares on the New York Stock Exchange, Inc., or such other
securities exchange as may at the time be a market for the Common Stock;
3
(ii) Any registration or other qualification of such shares
under any state or federal law or regulation, or the maintaining in effect of
any such registration or other qualification which the Committee shall, upon the
advice of counsel, deem necessary or advisable; and
(iii) Obtaining any other consent, approval, or permit from any
state or federal governmental agency which the Committee shall, after receiving
the advice of counsel, determine to be necessary or advisable.
(b) Nothing contained in this Plan shall prevent the Company from
adopting other or additional compensation arrangements for the Participants.
11. Shares Available. Subject to Paragraph 12 below, the maximum number
-----------------
of shares of the Common Stock which may in the aggregate be paid as Stock
Retainers pursuant to this Plan is 99,000,000. Shares of the Common Stock
issuable under this Plan may be taken from treasury shares of the Company or
purchased on the open market. In the event that any outstanding Stock Retainer
under this Plan for any reason expires or is terminated, the shares of Common
Stock allocable to the unexercised portion of the Stock Retainer shall be
available for issuance under The Jackson Rivers Company's Employee Stock
Incentive Plan for the Year 2004 No. 3. The Compensation Committee may, in its
discretion, increase the number of shares available for issuance under this
Plan, while correspondingly decreasing the number of shares available for
issuance under The Jackson Rivers Company's Employee Stock Incentive Plan for
the Year 2004 No. 3.
12. Adjustments; Change of Control.
---------------------------------
(a) In the event that there is, at any time after the Board adopts
this Plan, any change in corporate capitalization, such as a stock split,
combination of shares, exchange of shares, warrants or rights offering to
purchase the Common Stock at a price below its Fair Market Value,
reclassification, or recapitalization, or a corporate transaction, such as any
merger, consolidation, separation, including a spin-off, stock dividend, or
other extraordinary distribution of stock or property of the Company, any
reorganization (whether or not such reorganization comes within the definition
of such term in Section 368 of the Code) or any partial or complete liquidation
of the Company (each of the foregoing a "Transaction"), in each case other than
any such Transaction which constitutes a Change of Control (as defined below),
(i) the Deferred Stock Accounts shall not be credited with the amount and kind
of shares or other property which would have been received by a holder of the
number of shares of the Common Stock held in such Deferred Stock Account had
such shares of the Common Stock been outstanding as of the effectiveness of any
such Transaction, (ii) the number and kind of shares or other property subject
to this Plan shall also not be appropriately adjusted to reflect the
effectiveness of any such Transaction, and (iii) the Committee will not adjust
any other relevant provisions of this Plan to reflect any such Transaction.
(b) If the shares of the Common Stock credited to the Deferred Stock
Accounts are converted pursuant to Paragraph 12(a) into another form of
property, references in this Plan to the Common Stock shall be deemed, where
appropriate, to refer to such other form of property, with such other
modifications as may be required for this Plan to operate in accordance with its
purposes. Without limiting the generality of the foregoing, references to
delivery of certificates for shares of the Common Stock shall be deemed to refer
to delivery of cash and the incidents of ownership of any other property held in
the Deferred Stock Accounts.
(c) In lieu of the adjustment contemplated by Paragraph 12(a), in the
event of a Change of Control, the following shall occur on the date of the
Change of Control (i) the shares of the Common Stock held in each Participant's
Deferred Stock Account shall be deemed to be issued and outstanding as of the
Change of Control; (ii) the Company shall forthwith deliver to each Participant
who has a Deferred Stock Account all of the shares of the Common Stock or any
other property held in such Participant's Deferred Stock Account; and (iii) this
Plan shall be terminated.
(d) For purposes of this Plan, Change of Control shall mean any of
the following events:
(i) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (a
4
"Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 40 percent or more of either (1) the then outstanding
shares of the Common Stock of the Company (the "Outstanding Company Common
Stock"), or (2) the combined voting power of then outstanding voting securities
of the Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that the following
acquisitions shall not constitute a Change of Control (A) any acquisition
directly from the Company (excluding an acquisition by virtue of the exercise of
a conversion privilege unless the security being so converted was itself
acquired directly from the Company), (B) any acquisition by the Company, (C) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company or (D)
any acquisition by any corporation pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or consolidation, the
conditions described in clauses (A), (B) and (C) of paragraph (iii) of this
Paragraph 12(d) are satisfied; or
(ii) Individuals who, as of the date hereof, constitute the
Board of the Company (as of the date hereof, "Incumbent Board") cease for any
reason to constitute at least a majority of the Board; provided, however, that
any individual becoming a director subsequent to the date hereof whose election,
or nomination for election by the Company's stockholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of either an actual or threatened
election contest (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the Board; or
(iii) Approval by the stockholders of the Company of a
reorganization, merger, binding share exchange or consolidation, unless,
following such reorganization, merger, binding share exchange or consolidation
(A) more than 60 percent of, respectively, then outstanding shares of common
stock of the corporation resulting from such reorganization, merger, binding
share exchange or consolidation and the combined voting power of then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such reorganization, merger,
binding share exchange or consolidation in substantially the same proportions as
their ownership, immediately prior to such reorganization, merger, binding share
exchange or consolidation, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (B) no Person
(excluding the Company, any employee benefit plan (or related trust) of the
Company or such corporation resulting from such reorganization, merger, binding
share exchange or consolidation and any Person beneficially owning, immediately
prior to such reorganization, merger, binding share exchange or consolidation,
directly or indirectly, 20 percent or more of the Outstanding Company Common
Stock or Outstanding Company Voting Securities, as the case may be) beneficially
owns, directly or indirectly, 20 percent or more of, respectively, then
outstanding shares of common stock of the corporation resulting from such
reorganization, merger, binding share exchange or consolidation or the combined
voting power of then outstanding voting securities of such corporation entitled
to vote generally in the election of directors, and (C) at least a majority of
the members of the board of directors of the corporation resulting from such
reorganization, merger, binding share exchange or consolidation were members of
the Incumbent Board at the time of the execution of the initial agreement
providing for such reorganization, merger, binding share exchange or
consolidation; or
(iv) Approval by the stockholders of the Company of (1) a
complete liquidation or dissolution of the Company, or (2) the sale or other
disposition of all or substantially all of the assets of the Company, other than
to a corporation, with respect to which following such sale or other
disposition, (A) more than 60 percent of, respectively, then outstanding shares
of common stock of such corporation and the combined voting power of then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior to such
sale or other disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (B) no Person
(excluding the Company and any employee benefit plan (or related trust) of the
Company or such corporation and any Person beneficially owning, immediately
prior to such sale or other disposition, directly or indirectly, 20 percent or
more of the Outstanding Company Common Stock
5
or Outstanding Company Voting Securities, as the case may be) beneficially owns,
directly or indirectly, 20 percent or more of, respectively, then outstanding
shares of common stock of such corporation and the combined voting power of then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors, and (C) at least a majority of the members of the
board of directors of such corporation were members of the Incumbent Board at
the time of the execution of the initial agreement or action of the Board
providing for such sale or other disposition of assets of the Company.
13. Administration; Amendment and Termination.
--------------------------------------------
(a) This Plan shall be administered by a committee consisting of two
members who shall be the current directors of the Company or senior executive
officers or other directors who are not Participants as may be designated by the
Chief Executive Officer (the "Committee"), which shall have full authority to
construe and interpret this Plan, to establish, amend and rescind rules and
regulations relating to this Plan, and to take all such actions and make all
such determinations in connection with this Plan as it may deem necessary or
desirable.
(b) The Board may from time to time make such amendments to this
Plan, including to preserve or come within any exemption from liability under
Section 16(b) of the Exchange Act, as it may deem proper and in the best
interest of the Company without further approval of the Company's stockholders,
provided that, to the extent required under Florida law or to qualify
transactions under this Plan for exemption under Rule 16b-3 promulgated under
the Exchange Act, no amendment to this Plan shall be adopted without further
approval of the Company's stockholders and, provided, further, that if and to
the extent required for this Plan to comply with Rule 16b-3 promulgated under
the Exchange Act, no amendment to this Plan shall be made more than once in any
six month period that would change the amount, price or timing of the grants of
the Common Stock hereunder other than to comport with changes in the Code, the
Employee Retirement Income Security Act of 1974, as amended, or the regulations
thereunder. The Board may terminate this Plan at any time by a vote of a
majority of the members thereof.
14. Restrictions on Transfer. Each Stock Option granted under this Plan
--------------------------
shall be transferable only by will or the laws of descent and distribution. No
interest of any Employee under this Plan shall be subject to attachment,
execution, garnishment, sequestration, the laws of bankruptcy or any other legal
or equitable process. Each Stock Option granted under this Plan shall be
exercisable during an Employee's lifetime only by the Employee or by the
Employee's legal representative.
15. Term of Plan. No shares of the Common Stock shall be issued, unless
--------------
and until the Directors of the Company have approved this Plan and all other
legal requirements have been met. This Plan was adopted by the Board effective
August 9, 2004, and shall expire on August 9, 2014.
16. Governing Law. This Plan and all actions taken thereunder shall be
--------------
governed by, and construed in accordance with, the laws of the State of Florida.
17. Information to Shareholders. The Company shall furnish to each of its
---------------------------
stockholders financial statements of the Company at least annually.
18. Miscellaneous.
-------------
(a) Nothing in this Plan shall be deemed to create any obligation on
the part of the Board to nominate any Director for reelection by the Company's
stockholders or to limit the rights of the stockholders to remove any Director.
(b) The Company shall have the right to require, prior to the
issuance or delivery of any shares of the Common Stock pursuant to this Plan,
that a Participant make arrangements satisfactory to the Committee for the
withholding of any taxes required by law to be withheld with respect to the
issuance or delivery of such shares, including, without limitation, by the
withholding of shares that would otherwise be so issued or delivered, by
withholding from any other payment due to the Participant, or by a cash payment
to the Company by the Participant.
6
IN WITNESS WHEREOF, this Plan has been executed effective as of August 9,
2004.
THE JACKSON RIVERS COMPANY
By /s/ Dennis N. Lauzon
-----------------------------------------
Dennis N. Lauzon, President
7
THE JACKSON RIVERS COMPANY
EMPLOYEE STOCK INCENTIVE PLAN FOR THE YEAR 2004 NO. 4
1. General Provisions.
-------------------
1.1 Purpose. This Stock Incentive Plan (the "Plan") is intended to
-------
allow designated officers and employees (all of whom are sometimes collectively
referred to herein as the "Employees," or individually as the "Employee") of The
Jackson Rivers Company, a Florida corporation (the "Company") and its
Subsidiaries (as that term is defined below) which they may have from time to
time (the Company and such Subsidiaries are referred to herein as the "Company")
to receive certain options (the "Stock Options") to purchase common stock of the
Company, par value $0.001 per share (the "Common Stock"), and to receive grants
of the Common Stock subject to certain restrictions (the "Awards"). As used in
this Plan, the term "Subsidiary" shall mean each corporation which is a
"subsidiary corporation" of the Company within the meaning of Section 424(f) of
the Internal Revenue Code of 1986, as amended (the "Code"). The purpose of this
Plan is to provide the Employees, who make significant and extraordinary
contributions to the long-term growth and performance of the Company, with
equity-based compensation incentives, and to attract and retain the Employees.
1.2 Administration.
--------------
1.2.1 The Plan shall be administered by the Compensation Committee (the
"Committee") of, or appointed by, the Board of Directors of the Company (the
"Board"). The Committee shall select one of its members as Chairman and shall
act by vote of a majority of a quorum, or by unanimous written consent. A
majority of its members shall constitute a quorum. The Committee shall be
governed by the provisions of the Company's Bylaws and of Florida law applicable
to the Board, except as otherwise provided herein or determined by the Board.
1.2.2 The Committee shall have full and complete authority, in its
discretion, but subject to the express provisions of this Plan (a) to approve
the Employees nominated by the management of the Company to be granted Awards or
Stock Options; (b) to determine the number of Awards or Stock Options to be
granted to an Employee; (c) to determine the time or times at which Awards or
Stock Options shall be granted; (d) to establish the terms and conditions upon
which Awards or Stock Options may be exercised; (e) to remove or adjust any
restrictions and conditions upon Awards or Stock Options; (f) to specify, at the
time of grant, provisions relating to exercisability of Stock Options and to
accelerate or otherwise modify the exercisability of any Stock Options; and (g)
to adopt such rules and regulations and to make all other determinations deemed
necessary or desirable for the administration of this Plan. All interpretations
and constructions of this Plan by the Committee, and all of its actions
hereunder, shall be binding and conclusive on all persons for all purposes.
1.2.3 The Company hereby agrees to indemnify and hold harmless each
Committee member and each Employee, and the estate and heirs of such Committee
member or Employee, against all claims, liabilities, expenses, penalties,
damages or other pecuniary losses, including legal fees, which such Committee
member or Employee, his estate or heirs may suffer as a result of his
responsibilities, obligations or duties in connection with this Plan, to the
extent that insurance, if any, does not cover the payment of such items. No
member of the Committee or the Board shall be liable for any action or
determination made in good faith with respect to this Plan or any Award or Stock
Option granted pursuant to this Plan.
1.3 Eligibility and Participation. The Employees eligible under this
-----------------------------
Plan shall be approved by the Committee from those Employees who, in the opinion
of the management of the Company, are in positions which enable them to make
significant contributions to the long-term performance and growth of the
Company. In selecting the Employees to whom Award or Stock Options may be
granted, consideration shall be given to factors such as employment position,
duties and responsibilities, ability, productivity, length of service, morale,
interest in the Company and recommendations of supervisors.
1.4 Shares Subject to this Plan. The maximum number of shares of the
---------------------------
Common Stock that may be issued pursuant to this Plan shall be 400,000,000
subject to adjustment pursuant to the provisions of Paragraph 4.1. If shares of
the Common Stock awarded or issued under this Plan are reacquired by the Company
due to a forfeiture
1
or for any other reason, such shares shall be cancelled and thereafter shall
again be available for purposes of this Plan. If a Stock Option expires,
terminates or is cancelled for any reason without having been exercised in full,
the shares of the Common Stock not purchased thereunder shall again be available
for purposes of this Plan. In the event that any outstanding Stock Option or
Award under this Plan for any reason expires or is terminated, the shares of
Common Stock allocable to the unexercised portion of the Stock Option or Award
shall be available for issuance under The Jackson Rivers Company's Non-Employee
Directors and Consultants Retainer Stock Plan for the Year 2004 No. 4. The
Compensation Committee may, in its discretion, increase the number of shares
available for issuance under this Plan, while correspondingly decreasing the
number of shares available for issuance under The Jackson Rivers Company's
Non-Employee Directors and Consultants Retainer Stock Plan for the Year 2004 No.
4.
2. Provisions Relating to Stock Options.
----------------------------------------
2.1 Grants of Stock Options. The Committee may grant Stock Options
-------------------------
in such amounts, at such times, and to the Employees nominated by the management
of the Company as the Committee, in its discretion, may determine. Stock
Options granted under this Plan shall constitute "incentive stock options"
within the meaning of Section 422 of the Code, if so designated by the Committee
on the date of grant. The Committee shall also have the discretion to grant
Stock Options which do not constitute incentive stock options, and any such
Stock Options shall be designated non-statutory stock options by the Committee
on the date of grant. The aggregate Fair Market Value (determined as of the
time an incentive stock option is granted) of the Common Stock with respect to
which incentive stock options are exercisable for the first time by any Employee
during any one calendar year (under all plans of the Company and any parent or
subsidiary of the Company) may not exceed the maximum amount permitted under
Section 422 of the Code (currently, $100,000.00). Non-statutory stock options
shall not be subject to the limitations relating to incentive stock options
contained in the preceding sentence. Each Stock Option shall be evidenced by a
written agreement (the "Option Agreement") in a form approved by the Committee,
which shall be executed on behalf of the Company and by the Employee to whom the
Stock Option is granted, and which shall be subject to the terms and conditions
of this Plan. In the discretion of the Committee, Stock Options may include
provisions (which need not be uniform), authorized by the Committee in its
discretion, that accelerate an Employee's rights to exercise Stock Options
following a "Change in Control," upon termination of the Employee's employment
by the Company without "Cause" or by the Employee for "Good Reason," as such
terms are defined in Paragraph 3.1 hereof. The holder of a Stock Option shall
not be entitled to the privileges of stock ownership as to any shares of the
Common Stock not actually issued to such holder.
2.2 Purchase Price. The purchase price (the "Exercise Price") of
---------------
shares of the Common Stock subject to each Stock Option (the "Option Shares")
shall not be less than 85 percent of the Fair Market Value of the Common Stock
on the date of the grant of the option. For an Employee holding greater than 10
percent of the total voting power of all stock of the Company, either Common or
Preferred, the Exercise Price of an incentive stock option shall be at least 110
percent of the Fair Market Value of the Common Stock on the date of the grant of
the option. As used herein, "Fair Market Value" means the mean between the
highest and lowest reported sales prices of the Common Stock on the New York
Stock Exchange Composite Tape or, if not listed on such exchange, on any other
national securities exchange on which the Common Stock is listed or on The
Nasdaq Stock Market, or, if not so listed on any other national securities
exchange or The Nasdaq Stock Market, then the average of the bid price of the
Common Stock during the last five trading days on the OTC Bulletin Board
immediately preceding the last trading day prior to the date with respect to
which the Fair Market Value is to be determined. If the Common Stock is not
then publicly traded, then the Fair Market Value of the Common Stock shall be
the book value of the Company per share as determined on the last day of March,
June, September, or December in any year closest to the date when the
determination is to be made. For the purpose of determining book value
hereunder, book value shall be determined by adding as of the applicable date
called for herein the capital, surplus, and undivided profits of the Company,
and after having deducted any reserves theretofore established; the sum of these
items shall be divided by the number of shares of the Common Stock outstanding
as of said date, and the quotient thus obtained shall represent the book value
of each share of the Common Stock of the Company.
2.3 Option Period. The Stock Option period (the "Term") shall
--------------
commence on the date of grant of the Stock Option and shall be 10 years or such
shorter period as is determined by the Committee. Each Stock Option shall
provide that it is exercisable over its term in such periodic installments as
the Committee may determine, subject to the provisions of Paragraph 2.4.1.
Section 16(b) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") exempts persons normally subject to the reporting requirements of Section
16(a) of the Exchange
2
Act (the "Section 16 Reporting Persons") pursuant to a qualified employee stock
option plan from the normal requirement of not selling until at least six months
and one day from the date the Stock Option is granted.
2.4 Exercise of Options.
---------------------
2.4.1 Each Stock Option may be exercised in whole or in part (but not
as to fractional shares) by delivering it for surrender or endorsement to the
Company, attention of the Corporate Secretary, at the principal office of the
Company, together with payment of the Exercise Price and an executed Notice and
Agreement of Exercise in the form prescribed by Paragraph 2.4.2. Payment may be
made (a) in cash, (b) by cashier's or certified check, (c) by surrender of
previously owned shares of the Common Stock valued pursuant to Paragraph 2.2 (if
the Committee authorizes payment in stock in its discretion), (d) by withholding
from the Option Shares which would otherwise be issuable upon the exercise of
the Stock Option that number of Option Shares equal to the exercise price of the
Stock Option, if such withholding is authorized by the Committee in its
discretion, or (e) in the discretion of the Committee, by the delivery to the
Company of the optionee's promissory note secured by the Option Shares, bearing
interest at a rate sufficient to prevent the imputation of interest under
Sections 483 or 1274 of the Code, and having such other terms and conditions as
may be satisfactory to the Committee. Subject to the provisions of this
Paragraph 2.4 and Paragraph 2.5, the Employee has the right to exercise his or
her Stock Options at the rate of at least 20 percent per year over five years
from the date the Stock Option is granted.
2.4.2 Exercise of each Stock Option is conditioned upon the agreement
of the Employee to the terms and conditions of this Plan and of such Stock
Option as evidenced by the Employee's execution and delivery of a Notice and
Agreement of Exercise in a form to be determined by the Committee in its
discretion. Such Notice and Agreement of Exercise shall set forth the agreement
of the Employee that (a) no Option Shares will be sold or otherwise distributed
in violation of the Securities Act of 1933, as amended (the "Securities Act") or
any other applicable federal or state securities laws, (b) each Option Share
certificate may be imprinted with legends reflecting any applicable federal and
state securities law restrictions and conditions, (c) the Company may comply
with said securities law restrictions and issue "stop transfer" instructions to
its Transfer Agent and Registrar without liability, (d) if the Employee is a
Section 16 Reporting Person, the Employee will furnish to the Company a copy of
each Form 4 or Form 5 filed by said Employee and will timely file all reports
required under federal securities laws, and (e) the Employee will report all
sales of Option Shares to the Company in writing on a form prescribed by the
Company.
2.4.3 No Stock Option shall be exercisable unless and until any
applicable registration or qualification requirements of federal and state
securities laws, and all other legal requirements, have been fully complied
with. At no time shall the total number of securities issuable upon exercise of
all outstanding options under this Plan, and the total number of securities
provided for under any bonus or similar plan or agreement of the Company exceed
a number of securities which is equal to 30 percent of the then outstanding
securities of the Company, unless a percentage higher than 30 percent is
approved by at least two-thirds of the outstanding securities entitled to vote.
The Company will use reasonable efforts to maintain the effectiveness of a
Registration Statement under the Securities Act for the issuance of Stock
Options and shares acquired thereunder, but there may be times when no such
Registration Statement will be currently effective. The exercise of Stock
Options may be temporarily suspended without liability to the Company during
times when no such Registration Statement is currently effective, or during
times when, in the reasonable opinion of the Committee, such suspension is
necessary to preclude violation of any requirements of applicable law or
regulatory bodies having jurisdiction over the Company. If any Stock Option
would expire for any reason except the end of its term during such a suspension,
then if exercise of such Stock Option is duly tendered before its expiration,
such Stock Option shall be exercisable and exercised (unless the attempted
exercise is withdrawn) as of the first day after the end of such suspension.
The Company shall have no obligation to file any Registration Statement covering
resales of Option Shares.
2.5 Continuous Employment. Except as provided in Paragraph 2.7
----------------------
below, an Employee may not exercise a Stock Option unless from the date of grant
to the date of exercise the Employee remains continuously in the employ of the
Company. For purposes of this Paragraph 2.5, the period of continuous
employment of an Employee with the Company shall be deemed to include (without
extending the term of the Stock Option) any period during which the Employee is
on leave of absence with the consent of the Company, provided that such leave of
absence shall not exceed three months and that the Employee returns to the
employ of the Company at the expiration of such leave of absence. If the
Employee fails to return to the employ of the Company at the expiration
3
of such leave of absence, the Employee's employment with the Company shall be
deemed terminated as of the date such leave of absence commenced. The
continuous employment of an Employee with the Company shall also be deemed to
include any period during which the Employee is a member of the Armed Forces of
the United States, provided that the Employee returns to the employ of the
Company within 90 days (or such longer period as may be prescribed by law) from
the date the Employee first becomes entitled to a discharge from military
service. If an Employee does not return to the employ of the Company within 90
days (or such longer period as may be prescribed by law) from the date the
Employee first becomes entitled to a discharge from military service, the
Employee's employment with the Company shall be deemed to have terminated as of
the date the Employee's military service ended.
2.6 Restrictions on Transfer. Each Stock Option granted under this
--------------------------
Plan shall be transferable only by will or the laws of descent and distribution.
No interest of any Employee under this Plan shall be subject to attachment,
execution, garnishment, sequestration, the laws of bankruptcy or any other legal
or equitable process. Each Stock Option granted under this Plan shall be
exercisable during an Employee's lifetime only by the Employee or by the
Employee's legal representative.
2.7 Termination of Employment.
---------------------------
2.7.1 Upon an Employee's Retirement, Disability (both terms being
defined below) or death, (a) all Stock Options to the extent then presently
exercisable shall remain in full force and effect and may be exercised pursuant
to the provisions thereof, and (b) unless otherwise provided by the Committee,
all Stock Options to the extent not then presently exercisable by the Employee
shall terminate as of the date of such termination of employment and shall not
be exercisable thereafter. Unless employment is terminated for cause, as
defined by applicable law, the right to exercise in the event of termination of
employment, to the extent that the optionee is entitled to exercise on the date
the employment terminates as follows:
(i) At least six months from the date of termination if
termination was caused by death or disability.
(ii) At least 30 days from the date of termination if termination
was caused by other than death or disability.
2.7.2 Upon the termination of the employment of an Employee for any
reason other than those specifically set forth in Paragraph 2.7.1, (a) all Stock
Options to the extent then presently exercisable by the Employee shall remain
exercisable only for a period of 90 days after the date of such termination of
employment (except that the 90 day period shall be extended to 12 months if the
Employee shall die during such 90 day period), and may be exercised pursuant to
the provisions thereof, including expiration at the end of the fixed term
thereof, and (b) unless otherwise provided by the Committee, all Stock Options
to the extent not then presently exercisable by the Employee shall terminate as
of the date of such termination of employment and shall not be exercisable
thereafter.
2.7.3 For purposes of this Plan:
(a) "Retirement" shall mean an Employee's retirement from the
employ of the Company on or after the date on which the Employee attains the age
of 65 years; and
(b) "Disability" shall mean total and permanent incapacity of an
Employee, due to physical impairment or legally established mental incompetence,
to perform the usual duties of the Employee's employment with the Company, which
disability shall be determined (i) on medical evidence by a licensed physician
designated by the Committee, or (ii) on evidence that the Employee has become
entitled to receive primary benefits as a disabled employee under the Social
Security Act in effect on the date of such disability.
4
3. Provisions Relating to Awards.
3.1 Grant of Awards. Subject to the provisions of this Plan, the
-----------------
Committee shall have full and complete authority, in its discretion, but subject
to the express provisions of this Plan, to (1) grant Awards pursuant to this
Plan, (2) determine the number of shares of the Common Stock subject to each
Award (the "Award Shares"), (3) determine the terms and conditions (which need
not be identical) of each Award, including the consideration (if any) to be paid
by the Employee for such Common Stock, which may, in the Committee's discretion,
consist of the delivery of the Employee's promissory note meeting the
requirements of Paragraph 2.4.1, (4) establish and modify performance criteria
for Awards, and (5) make all of the determinations necessary or advisable with
respect to Awards under this Plan. Each Award under this Plan shall consist of
a grant of shares of the Common Stock subject to a restriction period (after
which the restrictions shall lapse), which shall be a period commencing on the
date the Award is granted and ending on such date as the Committee shall
determine (the "Restriction Period"). The Committee may provide for the lapse
of restrictions in installments, for acceleration of the lapse of restrictions
upon the satisfaction of such performance or other criteria or upon the
occurrence of such events as the Committee shall determine, and for the early
expiration of the Restriction Period upon an Employee's death, Disability or
Retirement as defined in Paragraph 2.7.3, or, following a Change of Control,
upon termination of an Employee's employment by the Company without "Cause" or
by the Employee for "Good Reason," as those terms are defined herein. For
purposes of this Plan:
"Change of Control" shall be deemed to occur (a) on the date the Company
first has actual knowledge that any person (as such term is used in Sections
13(d) and 14(d)(2) of the Exchange Act) has become the beneficial owner (as
defined in Rule 13(d)-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 40 percent or more of the combined voting
power of the Company's then outstanding securities, or (b) on the date the
stockholders of the Company approve (i) a merger of the Company with or into any
other corporation in which the Company is not the surviving corporation or in
which the Company survives as a subsidiary of another corporation, (ii) a
consolidation of the Company with any other corporation, or (iii) the sale or
disposition of all or substantially all of the Company's assets or a plan of
complete liquidation.
"Cause," when used with reference to termination of the employment of an
Employee by the Company for "Cause," shall mean:
(a) The Employee's continuing willful and material breach
of his duties to the Company after he receives a demand from the Chief Executive
of the Company specifying the manner in which he has willfully and materially
breached such duties, other than any such failure resulting from Disability of
the Employee or his resignation for "Good Reason," as defined herein; or
(b) The conviction of the Employee of a felony; or
(c) The Employee's commission of fraud in the course of his
employment with the Company, such as embezzlement or other material and
intentional violation of law against the Company; or
(d) The Employee's gross misconduct causing material harm
to the Company.
"Good Reason" shall mean any one or more of the following, occurring
following or in connection with a Change of Control and within 90 days prior to
the Employee's resignation, unless the Employee shall have consented thereto in
writing:
(a) The assignment to the Employee of duties inconsistent
with his executive status prior to the Change of Control or a substantive change
in the officer or officers to whom he reports from the officer or officers to
whom he reported immediately prior to the Change of Control; or
(b) The elimination or reassignment of a majority of the
duties and responsibilities that were assigned to the Employee immediately prior
to the Change of Control; or
5
(c) A reduction by the Company in the Employee's annual
base salary as in effect immediately prior to the Change of Control; or
(d) The Company requiring the Employee to be based anywhere
outside a 35-mile radius from his place of employment immediately prior to the
Change of Control, except for required travel on the Company's business to an
extent substantially consistent with the Employee's business travel obligations
immediately prior to the Change of Control; or
(e) The failure of the Company to grant the Employee a
performance bonus reasonably equivalent to the same percentage of salary the
Employee normally received prior to the Change of Control, given comparable
performance by the Company and the Employee; or
(f) The failure of the Company to obtain a satisfactory
Assumption Agreement (as defined in Paragraph 4.13 of this Plan) from a
successor, or the failure of such successor to perform such Assumption
Agreement.
3.2 Incentive Agreements. Each Award granted under this Plan shall
---------------------
be evidenced by a written agreement (an "Incentive Agreement") in a form
approved by the Committee and executed by the Company and the Employee to whom
the Award is granted. Each Incentive Agreement shall be subject to the terms
and conditions of this Plan and other such terms and conditions as the Committee
may specify.
3.3 Amendment, Modification and Waiver of Restrictions. The
-------------------------------------------------------
Committee may modify or amend any Award under this Plan or waive any
restrictions or conditions applicable to the Award; provided, however, that the
Committee may not undertake any such modifications, amendments or waivers if the
effect thereof materially increases the benefits to any Employee, or adversely
affects the rights of any Employee without his consent.
3.4 Terms and Conditions of Awards. Upon receipt of an Award of
----------------------------------
shares of the Common Stock under this Plan, even during the Restriction Period,
an Employee shall be the holder of record of the shares and shall have all the
rights of a stockholder with respect to such shares, subject to the terms and
conditions of this Plan and the Award.
3.4.1 Except as otherwise provided in this Paragraph 3.4, no shares of
the Common Stock received pursuant to this Plan shall be sold, exchanged,
transferred, pledged, hypothecated or otherwise disposed of during the
Restriction Period applicable to such shares. Any purported disposition of such
Common Stock in violation of this Paragraph 3.4 shall be null and void.
3.4.2 If an Employee's employment with the Company terminates prior to
the expiration of the Restriction Period for an Award, subject to any provisions
of the Award with respect to the Employee's death, Disability or Retirement, or
Change of Control, all shares of the Common Stock subject to the Award shall be
immediately forfeited by the Employee and reacquired by the Company, and the
Employee shall have no further rights with respect to the Award. In the
discretion of the Committee, an Incentive Agreement may provide that, upon the
forfeiture by an Employee of Award Shares, the Company shall repay to the
Employee the consideration (if any) which the Employee paid for the Award Shares
on the grant of the Award. In the discretion of the Committee, an Incentive
Agreement may also provide that such repayment shall include an interest factor
on such consideration from the date of the grant of the Award to the date of
such repayment.
3.4.3 The Committee may require under such terms and conditions as it
deems appropriate or desirable that (a) the certificates for the Common Stock
delivered under this Plan are to be held in custody by the Company or a person
or institution designated by the Company until the Restriction Period expires,
(b) such certificates shall bear a legend referring to the restrictions on the
Common Stock pursuant to this Plan, and (c) the Employee shall have delivered to
the Company a stock power endorsed in blank relating to the Common Stock.
6
4. Miscellaneous Provisions.
4.1 Adjustments Upon Change in Capitalization.
---------------------------------------------
4.1.1 The number and class of shares subject to each outstanding Stock
Option, the Exercise Price thereof (and the total price), the maximum number of
Stock Options that may be granted under this Plan, the minimum number of shares
as to which a Stock Option may be exercised at any one time, and the number and
class of shares subject to each outstanding Award, shall not be proportionately
adjusted in the event of any increase or decrease in the number of the issued
shares of the Common Stock which results from a split-up or consolidation of
shares, payment of a stock dividend or dividends exceeding a total of five
percent for which the record dates occur in any one fiscal year, a
recapitalization, a combination of shares or other like capital adjustment, so
that (a) upon exercise of the Stock Option, the Employee shall receive the
number and class of shares the Employee would have received prior to any such
capital adjustment becoming effective, and (b) upon the lapse of restrictions of
the Award Shares, the Employee shall receive the number and class of shares the
Employee would have received prior to any such capital adjustment becoming
effective.
4.1.2 Upon a reorganization, merger or consolidation of the Company
with one or more corporations as a result of which the Company is not the
surviving corporation or in which the Company survives as a wholly-owned
subsidiary of another corporation, or upon a sale of all or substantially all of
the property of the Company to another corporation, or any dividend or
distribution to stockholders of more than 10 percent of the Company's assets,
adequate adjustment or other provisions shall be made by the Company or other
party to such transaction so that there shall remain and/or be substituted for
the Option Shares and Award Shares provided for herein, the shares, securities
or assets which would have been issuable or payable in respect of or in exchange
for such Option Shares and Award Shares then remaining, as if the Employee had
been the owner of such shares as of the applicable date. Any securities so
substituted shall be subject to similar successive adjustments.
4.2 Withholding Taxes. The Company shall have the right at the time
------------------
of exercise of any Stock Option, the grant of an Award, or the lapse of
restrictions on Award Shares, to make adequate provision for any federal, state,
local or foreign taxes which it believes are or may be required by law to be
withheld with respect to such exercise (the "Tax Liability"), to ensure the
payment of any such Tax Liability. The Company may provide for the payment of
any Tax Liability by any of the following means or a combination of such means,
as determined by the Committee in its sole and absolute discretion in the
particular case (1) by requiring the Employee to tender a cash payment to the
Company, (2) by withholding from the Employee's salary, (3) by withholding from
the Option Shares which would otherwise be issuable upon exercise of the Stock
Option, or from the Award Shares on their grant or date of lapse of
restrictions, that number of Option Shares or Award Shares having an aggregate
Fair Market Value (determined in the manner prescribed by Paragraph 2.2) as of
the date the withholding tax obligation arises in an amount which is equal to
the Employee's Tax Liability or (4) by any other method deemed appropriate by
the Committee. Satisfaction of the Tax Liability of a Section 16 Reporting
Person may be made by the method of payment specified in clause (3) above only
if the following two conditions are satisfied:
(a) The withholding of Option Shares or Award Shares and
the exercise of the related Stock Option occur at least six months and one day
following the date of grant of such Stock Option or Award; and
(b) The withholding of Option Shares or Award Shares is
made either (i) pursuant to an irrevocable election (the "Withholding Election")
made by the Employee at least six months in advance of the withholding of
Options Shares or Award Shares, or (ii) on a day within a 10-day "window period"
beginning on the third business day following the date of release of the
Company's quarterly or annual summary statement of sales and earnings.
Anything herein to the contrary notwithstanding, a Withholding Election may
be disapproved by the Committee at any time.
7
4.3 Relationship to Other Employee Benefit Plans. Stock Options and
---------------------------------------------
Awards granted hereunder shall not be deemed to be salary or other compensation
to any Employee for purposes of any pension, thrift, profit-sharing, stock
purchase or any other employee benefit plan now maintained or hereafter adopted
by the Company.
4.4 Amendments and Termination. The Board of Directors may at any
----------------------------
time suspend, amend or terminate this Plan. No amendment, except as provided in
Paragraph 3.3, or modification of this Plan may be adopted, except subject to
stockholder approval, which would (1) materially increase the benefits accruing
to the Employees under this Plan, (2) materially increase the number of
securities which may be issued under this Plan (except for adjustments pursuant
to Paragraph 4.1 hereof), or (3) materially modify the requirements as to
eligibility for participation in this Plan.
4.5 Successors in Interest. The provisions of this Plan and the
------------------------
actions of the Committee shall be binding upon all heirs, successors and assigns
of the Company and of the Employees.
4.6 Other Documents. All documents prepared, executed or delivered
----------------
in connection with this Plan (including, without limitation, Option Agreements
and Incentive Agreements) shall be, in substance and form, as established and
modified by the Committee; provided, however, that all such documents shall be
subject in every respect to the provisions of this Plan, and in the event of any
conflict between the terms of any such document and this Plan, the provisions of
this Plan shall prevail.
4.7 Fairness of the Repurchase Price. In the event that the Company
---------------------------------
repurchases securities upon termination of employment pursuant to this Plan,
either: (a) the price will not be less than the fair market value of the
securities to be repurchased on the date of termination of employment, and the
right to repurchase will be exercised for cash or cancellation of purchase money
indebtedness for the securities within 90 days of termination of the employment
(or in the case of securities issued upon exercise of options after the date of
termination, within 90 days after the date of the exercise), and the right
terminates when the Company's securities become publicly traded, or (b) Company
will repurchase securities at the original purchase price, provided that the
right to repurchase at the original purchase price lapses at the rate of at
least 20 percent of the securities per year over five years from the date the
option is granted (without respect to the date the option was exercised or
became exercisable) and the right to repurchase must be exercised for cash or
cancellation of purchase money indebtedness for the securities within 90 days of
termination of employment (or in case of securities issued upon exercise of
options after the date of termination, within 90 days after the date of the
exercise).
4.8 No Obligation to Continue Employment. This Plan and the grants
--------------------------------------
which might be made hereunder shall not impose any obligation on the Company to
continue to employ any Employee. Moreover, no provision of this Plan or any
document executed or delivered pursuant to this Plan shall be deemed modified in
any way by any employment contract between an Employee (or other employee) and
the Company.
4.9 Misconduct of an Employee. Notwithstanding any other provision
---------------------------
of this Plan, if an Employee commits fraud or dishonesty toward the Company or
wrongfully uses or discloses any trade secret, confidential data or other
information proprietary to the Company, or intentionally takes any other action
which results in material harm to the Company, as determined by the Committee,
in its sole and absolute discretion, the Employee shall forfeit all rights and
benefits under this Plan.
4.10 Term of Plan. No Stock Option shall be exercisable, or Award
--------------
granted, unless and until the Directors of the Company have approved this Plan
and all other legal requirements have been met. This Plan was adopted by the
Board effective September 8, 2004. No Stock Options or Awards may be granted
under this Plan after September 8, 2014.
4.11 Governing Law. This Plan and all actions taken thereunder shall
--------------
be governed by, and construed in accordance with, the laws of the State of
Florida.
4.12 Assumption Agreements. The Company will require each successor,
----------------------
(direct or indirect, whether by purchase, merger, consolidation or otherwise),
to all or substantially all of the business or assets of the Company, prior to
the consummation of each such transaction, to assume and agree to perform the
terms and provisions
8
remaining to be performed by the Company under each Incentive Agreement and
Stock Option and to preserve the benefits to the Employees thereunder. Such
assumption and agreement shall be set forth in a written agreement in form and
substance satisfactory to the Committee (an "Assumption Agreement"), and shall
include such adjustments, if any, in the application of the provisions of the
Incentive Agreements and Stock Options and such additional provisions, if any,
as the Committee shall require and approve, in order to preserve such benefits
to the Employees. Without limiting the generality of the foregoing, the
Committee may require an Assumption Agreement to include satisfactory
undertakings by a successor:
(a) To provide liquidity to the Employees at the end of the
Restriction Period applicable to the Common Stock awarded to them under this
Plan, or on the exercise of Stock Options;
(b) If the succession occurs before the expiration of any
period specified in the Incentive Agreements for satisfaction of performance
criteria applicable to the Common Stock awarded thereunder, to refrain from
interfering with the Company's ability to satisfy such performance criteria or
to agree to modify such performance criteria and/or waive any criteria that
cannot be satisfied as a result of the succession;
(c) To require any future successor to enter into an
Assumption Agreement; and
(d) To take or refrain from taking such other actions as
the Committee may require and approve, in its discretion.
4.13 Compliance with Rule 16b-3. Transactions under this Plan are
-----------------------------
intended to comply with all applicable conditions of Rule 16b-3 promulgated
under the Exchange Act. To the extent that any provision of this Plan or action
by the Committee fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Committee.
4.14 Information to Shareholders. The Company shall furnish to each
-----------------------------
of its stockholders financial statements of the Company at least annually.
IN WITNESS WHEREOF, this Plan has been executed effective as of September
8, 2004.
THE JACKSON RIVERS COMPANY
By /s/ Dennis N. Lauzon
--------------------------------------
Dennis N. Lauzon, President
9
THE JACKSON RIVERS COMPANY
NON-EMPLOYEE DIRECTORS AND CONSULTANTS RETAINER STOCK PLAN
FOR THE YEAR 2004 NO. 4
1. Introduction. This Plan shall be known as the "The Jackson Rivers
------------
Company Non-Employee Directors and Consultants Retainer Stock Plan for the Year
2004 No. 4," and is hereinafter referred to as the "Plan." The purposes of this
Plan are to enable The Jackson Rivers Company, a Florida corporation (the
"Company"), to promote the interests of the Company and its stockholders by
attracting and retaining non-employee Directors and Consultants capable of
furthering the future success of the Company and by aligning their economic
interests more closely with those of the Company's stockholders, by paying their
retainer or fees in the form of shares of the Company's common stock, par value
$0.001 per share (the "Common Stock").
2. Definitions. The following terms shall have the meanings set forth
-----------
below:
"Board" means the Board of Directors of the Company.
"Change of Control" has the meaning set forth in Paragraph 12(d) hereof.
"Code" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations thereunder. References to any provision of the Code or rule or
regulation thereunder shall be deemed to include any amended or successor
provision, rule or regulation.
"Committee" means the committee that administers this Plan, as more fully
defined in Paragraph 13 hereof.
"Common Stock" has the meaning set forth in Paragraph 1 hereof.
"Company" has the meaning set forth in Paragraph 1 hereof.
"Consultants" means Company's consultants and advisors only if: (i) they
are natural persons; (ii) they provide bona fide services to the Company; and
(iii) the services are not in connection with the offer or sale of securities in
a capital-raising transaction, and do not directly or indirectly promote or
maintain a market for the Company's securities.
"Deferral Election" has the meaning set forth in Paragraph 6 hereof.
"Deferred Stock Account" means a bookkeeping account maintained by the
Company for a Participant representing the Participant's interest in the shares
credited to such Deferred Stock Account pursuant to Paragraph 7 hereof.
"Delivery Date" has the meaning set forth in Paragraph 6 hereof.
"Director" means an individual who is a member of the Board of Directors of
the Company.
"Dividend Equivalent" for a given dividend or other distribution means a
number of shares of the Common Stock having a Fair Market Value, as of the
record date for such dividend or distribution, equal to the amount of cash, plus
the Fair Market Value on the date of distribution of any property, that is
distributed with respect to one share of the Common Stock pursuant to such
dividend or distribution; such Fair Market Value to be determined by the
Committee in good faith.
"Effective Date" has the meaning set forth in Paragraph 3 hereof.
"Exchange Act" has the meaning set forth in Paragraph 12(d) hereof.
1
"Fair Market Value" means the mean between the highest and lowest reported
sales prices of the Common Stock on the New York Stock Exchange Composite Tape
or, if not listed on such exchange, on any other national securities exchange on
which the Common Stock is listed or on The Nasdaq Stock Market, or, if not so
listed on any other national securities exchange or The Nasdaq Stock Market,
then the average of the bid price of the Common Stock during the last five
trading days on the OTC Bulletin Board immediately preceding the last trading
day prior to the date with respect to which the Fair Market Value is to be
determined. If the Common Stock is not then publicly traded, then the Fair
Market Value of the Common Stock shall be the book value of the Company per
share as determined on the last day of March, June, September, or December in
any year closest to the date when the determination is to be made. For the
purpose of determining book value hereunder, book value shall be determined by
adding as of the applicable date called for herein the capital, surplus, and
undivided profits of the Company, and after having deducted any reserves
theretofore established; the sum of these items shall be divided by the number
of shares of the Common Stock outstanding as of said date, and the quotient thus
obtained shall represent the book value of each share of the Common Stock of the
Company.
"Participant" has the meaning set forth in Paragraph 4 hereof.
"Payment Time" means the time when a Stock Retainer is payable to a
Participant pursuant to Paragraph 5 hereof (without regard to the effect of any
Deferral Election).
"Stock Retainer" has the meaning set forth in Paragraph 5 hereof.
"Third Anniversary" has the meaning set forth in Paragraph 6 hereof.
3. Effective Date of the Plan. This Plan was adopted by the Board
------------------------------
effective September 8, 2004 (the "Effective Date").
4. Eligibility. Each individual who is a Director or Consultant on the
-----------
Effective Date and each individual who becomes a Director or Consultant
thereafter during the term of this Plan, shall be a participant (the
"Participant") in this Plan, in each case during such period as such individual
remains a Director or Consultant and is not an employee of the Company or any of
its subsidiaries. Each credit of shares of the Common Stock pursuant to this
Plan shall be evidenced by a written agreement duly executed and delivered by or
on behalf of the Company and a Participant, if such an agreement is required by
the Company to assure compliance with all applicable laws and regulations.
5. Grants of Shares. Commencing on the Effective Date, the amount of
------------------
compensation for service to directors or consultants shall be payable in shares
of the Common Stock (the "Stock Retainer") pursuant to this Plan. The deemed
issuance price of shares of the Common Stock subject to each Stock Retainer
shall not be less than 85 percent of the Fair Market Value of the Common Stock
on the date of the grant. In the case of any person who owns securities
possessing more than ten percent of the combined voting power of all classes of
securities of the issuer or its parent or subsidiaries possessing voting power,
the deemed issuance price of shares of the Common Stock subject to each Stock
Retainer shall be at least 100 percent of the Fair Market Value of the Common
Stock on the date of the grant.
6. Deferral Option. From and after the Effective Date, a Participant may
---------------
make an election (a "Deferral Election") on an annual basis to defer delivery of
the Stock Retainer specifying which one of the following ways the Stock Retainer
is to be delivered (a) on the date which is three years after the Effective Date
for which it was originally payable (the "Third Anniversary"), (b) on the date
upon which the Participant ceases to be a Director or Consultant for any reason
(the "Departure Date") or (c) in five equal annual installments commencing on
the Departure Date (the "Third Anniversary" and "Departure Date" each being
referred to herein as a "Delivery Date"). Such Deferral Election shall remain
in effect for each Subsequent Year unless changed, provided that, any Deferral
Election with respect to a particular Year may not be changed less than six
months prior to the beginning of such Year, and provided, further, that no more
than one Deferral Election or change thereof may be made in any Year.
2
Any Deferral Election and any change or revocation thereof shall be made by
delivering written notice thereof to the Committee no later than six months
prior to the beginning of the Year in which it is to be effected; provided that,
with respect to the Year beginning on the Effective Date, any Deferral Election
or revocation thereof must be delivered no later than the close of business on
the 30th day after the Effective Date.
7. Deferred Stock Accounts. The Company shall maintain a Deferred Stock
------------------------
Account for each Participant who makes a Deferral Election to which shall be
credited, as of the applicable Payment Time, the number of shares of the Common
Stock payable pursuant to the Stock Retainer to which the Deferral Election
relates. So long as any amounts in such Deferred Stock Account have not been
delivered to the Participant under Paragraph 8 hereof, each Deferred Stock
Account shall be credited as of the payment date for any dividend paid or other
distribution made with respect to the Common Stock, with a number of shares of
the Common Stock equal to (a) the number of shares of the Common Stock shown in
such Deferred Stock Account on the record date for such dividend or distribution
multiplied by (b) the Dividend Equivalent for such dividend or distribution.
8. Delivery of Shares.
--------------------
(a) The shares of the Common Stock in a Participant's Deferred Stock
Account with respect to any Stock Retainer for which a Deferral Election has
been made (together with dividends attributable to such shares credited to such
Deferred Stock Account) shall be delivered in accordance with this Paragraph 8
as soon as practicable after the applicable Delivery Date. Except with respect
to a Deferral Election pursuant to Paragraph 6 hereof, or other agreement
between the parties, such shares shall be delivered at one time; provided that,
if the number of shares so delivered includes a fractional share, such number
shall be rounded to the nearest whole number of shares. If the Participant has
in effect a Deferral Election pursuant to Paragraph 6 hereof, then such shares
shall be delivered in five equal annual installments (together with dividends
attributable to such shares credited to such Deferred Stock Account), with the
first such installment being delivered on the first anniversary of the Delivery
Date; provided that, if in order to equalize such installments, fractional
shares would have to be delivered, such installments shall be adjusted by
rounding to the nearest whole share. If any such shares are to be delivered
after the Participant has died or become legally incompetent, they shall be
delivered to the Participant's estate or legal guardian, as the case may be, in
accordance with the foregoing; provided that, if the Participant dies with a
Deferral Election pursuant to Paragraph 6 hereof in effect, the Committee shall
deliver all remaining undelivered shares to the Participant's estate
immediately. References to a Participant in this Plan shall be deemed to refer
to the Participant's estate or legal guardian, where appropriate.
(b) The Company may, but shall not be required to, create a grantor trust
or utilize an existing grantor trust (in either case, "Trust") to assist it in
accumulating the shares of the Common Stock needed to fulfill its obligations
under this Paragraph 8. However, Participants shall have no beneficial or other
interest in the Trust and the assets thereof, and their rights under this Plan
shall be as general creditors of the Company, unaffected by the existence or
nonexistence of the Trust, except that deliveries of Stock Retainers to
Participants from the Trust shall, to the extent thereof, be treated as
satisfying the Company's obligations under this Paragraph 8.
9. Share Certificates; Voting and Other Rights. The certificates for
-----------------------------------------------
shares delivered to a Participant pursuant to Paragraph 8 above shall be issued
in the name of the Participant, and from and after the date of such issuance the
Participant shall be entitled to all rights of a stockholder with respect to the
Common Stock for all such shares issued in his name, including the right to vote
the shares, and the Participant shall receive all dividends and other
distributions paid or made with respect thereto.
10. General Restrictions.
---------------------
(a) Notwithstanding any other provision of this Plan or agreements
made pursuant thereto, the Company shall not be required to issue or deliver any
certificate or certificates for shares of the Common Stock under this Plan prior
to fulfillment of all of the following conditions:
(i) Listing or approval for listing upon official notice of
issuance of such shares on the New York Stock Exchange, Inc., or such other
securities exchange as may at the time be a market for the Common Stock;
3
(ii) Any registration or other qualification of such shares
under any state or federal law or regulation, or the maintaining in effect of
any such registration or other qualification which the Committee shall, upon the
advice of counsel, deem necessary or advisable; and
(iii) Obtaining any other consent, approval, or permit from any
state or federal governmental agency which the Committee shall, after receiving
the advice of counsel, determine to be necessary or advisable.
(b) Nothing contained in this Plan shall prevent the Company from
adopting other or additional compensation arrangements for the Participants.
11. Shares Available. Subject to Paragraph 12 below, the maximum number
-----------------
of shares of the Common Stock which may in the aggregate be paid as Stock
Retainers pursuant to this Plan is 99,000,000. Shares of the Common Stock
issuable under this Plan may be taken from treasury shares of the Company or
purchased on the open market. In the event that any outstanding Stock Retainer
under this Plan for any reason expires or is terminated, the shares of Common
Stock allocable to the unexercised portion of the Stock Retainer shall be
available for issuance under The Jackson Rivers Company's Employee Stock
Incentive Plan for the Year 2004 No. 4. The Compensation Committee may, in its
discretion, increase the number of shares available for issuance under this
Plan, while correspondingly decreasing the number of shares available for
issuance under The Jackson Rivers Company's Employee Stock Incentive Plan for
the Year 2004 No. 4.
12. Adjustments; Change of Control.
---------------------------------
(a) In the event that there is, at any time after the Board adopts
this Plan, any change in corporate capitalization, such as a stock split,
combination of shares, exchange of shares, warrants or rights offering to
purchase the Common Stock at a price below its Fair Market Value,
reclassification, or recapitalization, or a corporate transaction, such as any
merger, consolidation, separation, including a spin-off, stock dividend, or
other extraordinary distribution of stock or property of the Company, any
reorganization (whether or not such reorganization comes within the definition
of such term in Section 368 of the Code) or any partial or complete liquidation
of the Company (each of the foregoing a "Transaction"), in each case other than
any such Transaction which constitutes a Change of Control (as defined below),
(i) the Deferred Stock Accounts shall not be credited with the amount and kind
of shares or other property which would have been received by a holder of the
number of shares of the Common Stock held in such Deferred Stock Account had
such shares of the Common Stock been outstanding as of the effectiveness of any
such Transaction, (ii) the number and kind of shares or other property subject
to this Plan shall also not be appropriately adjusted to reflect the
effectiveness of any such Transaction, and (iii) the Committee will not adjust
any other relevant provisions of this Plan to reflect any such Transaction.
(b) If the shares of the Common Stock credited to the Deferred Stock
Accounts are converted pursuant to Paragraph 12(a) into another form of
property, references in this Plan to the Common Stock shall be deemed, where
appropriate, to refer to such other form of property, with such other
modifications as may be required for this Plan to operate in accordance with its
purposes. Without limiting the generality of the foregoing, references to
delivery of certificates for shares of the Common Stock shall be deemed to refer
to delivery of cash and the incidents of ownership of any other property held in
the Deferred Stock Accounts.
(c) In lieu of the adjustment contemplated by Paragraph 12(a), in the
event of a Change of Control, the following shall occur on the date of the
Change of Control (i) the shares of the Common Stock held in each Participant's
Deferred Stock Account shall be deemed to be issued and outstanding as of the
Change of Control; (ii) the Company shall forthwith deliver to each Participant
who has a Deferred Stock Account all of the shares of the Common Stock or any
other property held in such Participant's Deferred Stock Account; and (iii) this
Plan shall be terminated.
(d) For purposes of this Plan, Change of Control shall mean any of
the following events:
(i) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (a
4
"Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 40 percent or more of either (1) the then outstanding
shares of the Common Stock of the Company (the "Outstanding Company Common
Stock"), or (2) the combined voting power of then outstanding voting securities
of the Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that the following
acquisitions shall not constitute a Change of Control (A) any acquisition
directly from the Company (excluding an acquisition by virtue of the exercise of
a conversion privilege unless the security being so converted was itself
acquired directly from the Company), (B) any acquisition by the Company, (C) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company or (D)
any acquisition by any corporation pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or consolidation, the
conditions described in clauses (A), (B) and (C) of paragraph (iii) of this
Paragraph 12(d) are satisfied; or
(ii) Individuals who, as of the date hereof, constitute the
Board of the Company (as of the date hereof, "Incumbent Board") cease for any
reason to constitute at least a majority of the Board; provided, however, that
any individual becoming a director subsequent to the date hereof whose election,
or nomination for election by the Company's stockholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of either an actual or threatened
election contest (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the Board; or
(iii) Approval by the stockholders of the Company of a
reorganization, merger, binding share exchange or consolidation, unless,
following such reorganization, merger, binding share exchange or consolidation
(A) more than 60 percent of, respectively, then outstanding shares of common
stock of the corporation resulting from such reorganization, merger, binding
share exchange or consolidation and the combined voting power of then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such reorganization, merger,
binding share exchange or consolidation in substantially the same proportions as
their ownership, immediately prior to such reorganization, merger, binding share
exchange or consolidation, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (B) no Person
(excluding the Company, any employee benefit plan (or related trust) of the
Company or such corporation resulting from such reorganization, merger, binding
share exchange or consolidation and any Person beneficially owning, immediately
prior to such reorganization, merger, binding share exchange or consolidation,
directly or indirectly, 20 percent or more of the Outstanding Company Common
Stock or Outstanding Company Voting Securities, as the case may be) beneficially
owns, directly or indirectly, 20 percent or more of, respectively, then
outstanding shares of common stock of the corporation resulting from such
reorganization, merger, binding share exchange or consolidation or the combined
voting power of then outstanding voting securities of such corporation entitled
to vote generally in the election of directors, and (C) at least a majority of
the members of the board of directors of the corporation resulting from such
reorganization, merger, binding share exchange or consolidation were members of
the Incumbent Board at the time of the execution of the initial agreement
providing for such reorganization, merger, binding share exchange or
consolidation; or
(iv) Approval by the stockholders of the Company of (1) a
complete liquidation or dissolution of the Company, or (2) the sale or other
disposition of all or substantially all of the assets of the Company, other than
to a corporation, with respect to which following such sale or other
disposition, (A) more than 60 percent of, respectively, then outstanding shares
of common stock of such corporation and the combined voting power of then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior to such
sale or other disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (B) no Person
(excluding the Company and any employee benefit plan (or related trust) of the
Company or such corporation and any Person beneficially owning, immediately
prior to such sale or other disposition, directly or indirectly, 20 percent or
more of the Outstanding Company Common Stock
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or Outstanding Company Voting Securities, as the case may be) beneficially owns,
directly or indirectly, 20 percent or more of, respectively, then outstanding
shares of common stock of such corporation and the combined voting power of then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors, and (C) at least a majority of the members of the
board of directors of such corporation were members of the Incumbent Board at
the time of the execution of the initial agreement or action of the Board
providing for such sale or other disposition of assets of the Company.
13. Administration; Amendment and Termination.
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(a) This Plan shall be administered by a committee consisting of two
members who shall be the current directors of the Company or senior executive
officers or other directors who are not Participants as may be designated by the
Chief Executive Officer (the "Committee"), which shall have full authority to
construe and interpret this Plan, to establish, amend and rescind rules and
regulations relating to this Plan, and to take all such actions and make all
such determinations in connection with this Plan as it may deem necessary or
desirable.
(b) The Board may from time to time make such amendments to this
Plan, including to preserve or come within any exemption from liability under
Section 16(b) of the Exchange Act, as it may deem proper and in the best
interest of the Company without further approval of the Company's stockholders,
provided that, to the extent required under Florida law or to qualify
transactions under this Plan for exemption under Rule 16b-3 promulgated under
the Exchange Act, no amendment to this Plan shall be adopted without further
approval of the Company's stockholders and, provided, further, that if and to
the extent required for this Plan to comply with Rule 16b-3 promulgated under
the Exchange Act, no amendment to this Plan shall be made more than once in any
six month period that would change the amount, price or timing of the grants of
the Common Stock hereunder other than to comport with changes in the Code, the
Employee Retirement Income Security Act of 1974, as amended, or the regulations
thereunder. The Board may terminate this Plan at any time by a vote of a
majority of the members thereof.
14. Restrictions on Transfer. Each Stock Option granted under this Plan
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shall be transferable only by will or the laws of descent and distribution. No
interest of any Employee under this Plan shall be subject to attachment,
execution, garnishment, sequestration, the laws of bankruptcy or any other legal
or equitable process. Each Stock Option granted under this Plan shall be
exercisable during an Employee's lifetime only by the Employee or by the
Employee's legal representative.
15. Term of Plan. No shares of the Common Stock shall be issued, unless
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and until the Directors of the Company have approved this Plan and all other
legal requirements have been met. This Plan was adopted by the Board effective
September 8, 2004, and shall expire on September 8, 2014.
16. Governing Law. This Plan and all actions taken thereunder shall be
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governed by, and construed in accordance with, the laws of the State of Florida.
17. Information to Shareholders. The Company shall furnish to each of its
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stockholders financial statements of the Company at least annually.
18. Miscellaneous.
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(a) Nothing in this Plan shall be deemed to create any obligation on
the part of the Board to nominate any Director for reelection by the Company's
stockholders or to limit the rights of the stockholders to remove any Director.
(b) The Company shall have the right to require, prior to the
issuance or delivery of any shares of the Common Stock pursuant to this Plan,
that a Participant make arrangements satisfactory to the Committee for the
withholding of any taxes required by law to be withheld with respect to the
issuance or delivery of such shares, including, without limitation, by the
withholding of shares that would otherwise be so issued or delivered, by
withholding from any other payment due to the Participant, or by a cash payment
to the Company by the Participant.
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IN WITNESS WHEREOF, this Plan has been executed effective as of September
8, 2004.
THE JACKSON RIVERS COMPANY
By /s/ Dennis N. Lauzon
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Dennis N. Lauzon, President
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