SCHEDULE
14C INFORMATION
Information
Statement Pursuant to Section 14(c) of the Securities Exchange Act of
1934
Check the
appropriate box:
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Preliminary
Information Statement
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Confidential,
for Use of the Commission Only (as permitted by
Rule 14c-5(d)(2))
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Definitive
Information Statement
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TOUCHSTONE MINING LIMITED
(Name of
Registrant As Specified In Its Charter)
Payment
of Filing Fee (Check the appropriate box):
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Fee
computed on table below per Exchange Act Rules 14c-5(g) and
0-11
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unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
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Proposed
maximum aggregate value of transaction:
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Fee
paid previously with preliminary
materials.
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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.
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(1)
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Amount
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Form,
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TOUCHSTONE
MINING LIMITED
11923
S.W. 37 Terrace
NOTICE
OF ACTION TO BE TAKEN PURSUANT TO WRITTEN CONSENT
OF
STOCKHOLDERS IN LIEU OF A MEETING
To the
Stockholders of Touchstone Mining Limited (the “Company”):
Notice is
hereby given that stockholders owning a majority of our outstanding shares of
common stock, pursuant to a signed written consent, dated October __, 2010, have
authorized and approved the following:
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1.
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Amended
and Restated Articles of Incorporation which, among other things, (i)
change the Company’s name to 22nd Century Group, Inc.; (ii) increase the
Company’s authorized capitalization from 100,000,000 shares, consisting of
100,000,000 shares of common stock, $0.00001 par value per share, to
310,000,000 shares, consisting of 300,000,000 shares of common stock,
$0.00001 par value per share, and 10,000,000 shares of preferred stock,
$0.00001 par value per share; and (iii) limit the liability of the
Company’s officers and directors to the Company, its stockholders and
creditors to the fullest extent permitted by Nevada
law.
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2.
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Adoption
of our 2010 Equity Incentive Plan;
and
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3.
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Transfer
of our assets and liabilities to a split-off subsidiary to be transferred
to the Company’s majority stockholder in consideration of the surrender of
his shares of Company stock for cancellation (the
“Split-Off”).
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The
details of the foregoing actions and other important information are set forth
in the accompanying Information Statement. The Board of Directors of the
Company has unanimously approved the above actions.
PLEASE NOTE THAT THIS IS NOT A NOTICE
OF A MEETING OF STOCKHOLDERS AND NO STOCKHOLDERS MEETING WILL BE HELD TO
CONSIDER THE MATTERS DESCRIBED HEREIN. THE HOLDERS OF A MAJORITY OF OUR
OUTSTANDING SHARES OF COMMON STOCK HAVE VOTED TO APPROVE THE ACTIONS DESCRIBED
HEREIN. THE NUMBER OF VOTES RECEIVED IS SUFFICIENT TO SATISFY THE STOCKHOLDER
VOTE REQUIREMENT AND NO ADDITIONAL VOTES WILL CONSEQUENTLY BE NEEDED TO APPROVE
THESE ACTIONS. THIS INFORMATION STATEMENT IS BEING FURNISHED TO YOU SOLELY FOR
THE PURPOSE OF INFORMING STOCKHOLDERS OF THE MATTERS DESCRIBED HEREIN PURSUANT
TO SECTION 14(C) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AND THE
REGULATIONS PROMULGATED THEREUNDER, INCLUDING REGULATION
14C.
WE
ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY.
This
Information Statement is being mailed to you on or about __________,
2010.
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By
Order of the Board of Directors,
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Ronald
Asirwathan
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President
and Director
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TOUCHSTONE
MINING LIMITED
11923
S.W. 37 Terrace
INFORMATION
STATEMENT
October
__, 2010
This
Information Statement is being furnished to stockholders of Touchstone Mining
Limited, a Nevada corporation (the “Company”), to advise them of corporate
actions approved without a meeting by less than unanimous written consent of
stockholders. These actions are (1) the adoption of Amended and Restated
Articles of Incorporation (the “Charter Amendment”) to, among other things, (a)
change the Company’s name to 22nd Century Group, Inc.; (b) increase the
Company’s authorized capital stock from 100,000,000 shares, consisting of
100,000,000 shares of common stock, $0.00001 par value per share, to 310,000,000
shares, consisting of 300,000,000 shares of common stock, $0.00001 par value per
share and 10,000,000 shares of preferred stock, $0.00001 par value per share;
and (c) limit the liability of the Company’s officers and directors to the
Company, its stockholders and creditors to the fullest extent permitted by
Nevada law; (2) the adoption of our 2010 Equity Incentive Plan (the “Plan
Adoption”); and (3) the approval of the Split-Off. The Charter Amendment,
Plan Adoption and Split-Off require the affirmative vote of a majority of the
outstanding shares of common stock entitled to vote thereon. There are no
dissenters’ rights applicable to the Charter Amendment, Plan Adoption or
Split-Off.
A copy of
the Amended and Restated Articles of Incorporation of the Company is attached to
this Information Statement as Appendix A. A copy of
the 2010 Equity Incentive Plan is attached to this Information Statement as
Appendix
B.
The
record date for determining stockholders entitled to receive this Information
Statement has been established as the close of business on October __, 2010 (the
“Record Date”). As of the Record Date, there were outstanding 6,238,889
shares of the Company’s common stock. The holders of all outstanding
shares of common stock are entitled to one vote per share of common stock
registered in their names on the books of the Company at the close of business
on the Record Date.
The Board
of Directors of the Company, by written consent on October __, 2010, has
approved, and stockholders holding 3,300,000 shares (approximately 52.9%) of the
Company’s outstanding common stock on October __, 2010, have consented in
writing to, the Charter Amendment, Plan Adoption and Split-Off.
Accordingly, all corporate actions necessary to authorize the Charter Amendment,
Plan Adoption and Split-Off have been taken. Under Section 78.320 of the
Nevada Revised Statutes (“NRS”), any action required or permitted by the NRS to
be taken at an annual or special meeting of stockholders of a Nevada corporation
may be taken without a meeting, without prior notice and without a vote, if a
consent in writing, setting forth the action so taken, is signed by the holders
of outstanding stock having at least a majority of the voting power that would
be necessary to authorize or take such action at a meeting. Prompt notice
of the approval of the Charter Amendment, Plan Adoption and Split-Off must be
given to those stockholders who have not consented in writing to the action and
who, if the action had been taken at a meeting, would otherwise have been
entitled to notice of the meeting. In accordance with the regulations
under the Securities Exchange Act of 1934, as amended, the Charter Amendment
will not be filed with the Nevada Secretary of State until at least 20 days
after the Company has mailed this Information Statement to its stockholders; the
Charter Amendment will become effective upon its filing with the Nevada
Secretary of State. The Plan Adoption became effective upon its approval
by the Company’s Board of Directors. The effective date of the Split-Off
is not presently known but it will be after the expiration of the 20-day period
following the Company’s mailing of this Information Statement to its
stockholders’.
PLEASE
BE ADVISED THAT THIS IS ONLY AN INFORMATION STATEMENT. THE COMPANY IS NOT
ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND THE COMPANY A
PROXY.
This
Information Statement is first being sent or given to the holders of the
Company’s outstanding common stock, the Company’s only class of voting
securities outstanding, on or about __________, 2010. Each holder of
record of shares of the Company’s common stock at the close of business on
October __, 2010 is entitled to receive a copy of this Information
Statement.
FREQUENTLY
ASKED QUESTIONS
The
following questions and answers are intended to respond to frequently asked
questions concerning the actions approved by our board of directors and a
majority of the stockholder entitled to vote. These questions do not, and
are not intended to, address all the questions that may be important to
you. You should carefully read the entire Information Statement, as well
as its appendices and the documents incorporated by reference in this
Information Statement.
Q: WHY
AREN’T WE HOLDING A MEETING OF STOCKHOLDERS?
A: The
Board of Directors has already approved the amendment to our Articles of
Incorporation, the 2010 Equity Incentive Plan and the Split-Off and has received
the written consent of a majority of the voting interests entitled to vote on
such actions. Under the Nevada Revised Statutes these actions may be
approved by the written consent of a majority of the voting interests entitled
to vote on such matters. Since we have already received written consents
representing the necessary number of votes, a meeting is not necessary and
represents a substantial and avoidable expense.
Q: CAN
I REQUIRE YOU TO PURCHASE MY STOCK?
A: No.
Under the Nevada Revised Statutes, you are not entitled to appraisal and
purchase of your stock as a result of the Charter Amendment, Plan Adoption or
Split-Off.
Q: WHO
WILL PAY THE COSTS OF THE CHARTER AMENDMENT, PLAN ADOPTION AND
SPLIT-OFF?
A: We
will pay all of the costs of the Charter Amendment, Plan Adoption, and Split-Off
including distributing this Information Statement. To the extent
applicable, we may also pay brokerage firms and other custodians for their
reasonable expenses for forwarding information materials to the beneficial
owners of our common stock.
The Board
of Directors of the Company and stockholders holding a majority of the Company’s
outstanding shares of common stock (the “Majority Stockholders”) have approved
Amended and Restated Articles of Incorporation to, among other things, change
our name, increase our authorized common stock, create blank check preferred
stock and limit the liability of the Company’s officers and directors to the
Company, its stockholders and creditors to the fullest extent permitted by
Nevada law.
We intend
to file, as soon as practicable on or after the twentieth (20th) day
after this Information Statement is sent to our stockholders, the Charter
Amendment effectuating the above-described amendments with the Nevada Secretary
of State. The Charter Amendment will become effective on the date it is
accepted for filing with the Nevada Secretary of State. It is presently
contemplated that such filing will be made on or after __________,
2010.
Name Change. We have entered
into a non-binding Letter of Intent with 22nd Century Limited, LLC, a Delaware
limited liability corporation (“22nd Century”), regarding a possible business
combination involving the two companies. At this stage, neither party is
bound to proceed with the transaction. With the permission of 22nd
Century, we will change our name to “22nd Century Group, Inc.” to facilitate the
proposed transaction. If the parties determine not to proceed with the
business combination, we will change our name back to Touchstone Mining Limited
or adopt another name.
Increase in Authorized Capital
Stock. Our Articles of Incorporation authorizes us to issue 100,000,000
shares of capital stock, consisting of 100,000,000 shares of common stock,
$0.00001 par value per share. Our Board of Directors and the Majority
Stockholders have approved an amendment to our Articles of Incorporation to
increase our authorized capitalization to 310,000,000 shares, consisting of
300,000,000 shares of common stock, $0.00001 par value per share and 10,000,000
shares of preferred stock, $0.00001 par value per share.
Holders
of shares of our outstanding shares of common stock are entitled to receive
dividends out of assets or funds legally available for the payment of dividends
at such times and in such amounts as our Board of Directors may from time to
time determine. Holders of common stock are entitled to one vote for each share
held on all matters submitted to a vote of stockholders. There is no cumulative
voting of the election of directors then standing for election. Our common stock
is not entitled to pre-emptive rights and is not subject to conversion or
redemption. Upon liquidation, dissolution or winding up of our Company, the
assets legally available for distribution to stockholders are distributable
ratably among the holders of our common stock after payment of liquidation
preferences, if any, on any outstanding payment of other claims of
creditors.
Upon the
Charter Amendment becoming effective, shares of preferred stock may be issued
from time to time in one or more series, each of which will have such
distinctive designation or title as shall be determined by our Board of
Directors prior to the issuance of any shares thereof. Preferred stock will have
such voting powers, full or limited, or no voting powers, and such preferences
and relative, participating, optional or other special rights and such
qualifications, limitations or restrictions thereof, as shall be stated in such
resolution or resolutions providing for the issue of such class or series of
preferred stock as may be adopted from time to time by the Board of Directors
prior to the issuance of any shares thereof. The number of authorized shares of
preferred stock may be increased or decreased (but not below the number of
shares thereof then outstanding) by the affirmative vote of the holders of a
majority of the voting power of all the then outstanding shares of our capital
stock entitled to vote generally in the election of the directors, voting
together as a single class, without a separate vote of the holders of the
preferred stock, or any series thereof, unless a vote of any such holders is
required pursuant to any preferred stock designation.
Our Board
of Directors believes that the increase in authorized common stock is desirable
in order to provide the Company with a greater degree of flexibility to issue
shares of common stock, without the expense and delay of a special stockholders’
meeting, in connection with future equity financings, future opportunities for
expanding the business through investments or acquisitions, management incentive
and employee benefit plans and for other general corporate purposes. The Company
expects to issue shares of common stock in connection with the proposed business
combination with 22nd Century
Limited, LLC.
We do not
have any current plans, proposals or arrangements, written or otherwise, to
create or issue any shares of preferred stock using the “blank check” authority
that would be afforded the Board of Directors by the Charter Amendment. However,
the Board believes that the authorization of this authority would be beneficial
because it would provide us with increased flexibility in pursuit of equity
financing. Authorizing “blank check” preferred stock permits us to issue
preferred stock for purposes which may be identified in the future, including
(i) to raise additional capital or (ii) to engage in a range of investment and
strategic opportunities through equity financings. The Charter Amendment would
permit our Board of Directors to undertake the foregoing actions on an expedited
basis, without the delay and expense ordinarily attendant on obtaining further
shareholder approvals. In addition, our Board of Directors believes that the
authorization of “blank check” preferred stock improves our ability to attract
needed investment capital, as various series of the preferred stock may be
customized to meet the needs of any particular transaction or market conditions.
“Blank check” preferred stock is commonly authorized by publicly traded
companies and is frequently used as a preferred means of raising capital. In
particular, in recent years, smaller companies have been required to utilize
senior classes of securities to raise capital, with the terms of those
securities being highly negotiated and tailored to meet the needs of both
investors and the issuing companies. Such senior securities typically include
liquidation and dividend preferences, protections, conversion privileges and
other rights not found in common stock. We presently lack the authority to issue
preferred stock and, accordingly, are limited to issuing common stock or debt
securities to raise capital.
The
increase in authorized capital will not have any immediate effect on the rights
of existing stockholders. However, the Board of Directors will have the
authority to issue authorized common stock or preferred stock at such times, for
such purposes and for such consideration as the Board may determine to be
appropriate without requiring future stockholder approval of such issuances,
except as may be required by applicable law or stock exchange regulations.
To the extent that additional authorized common shares are issued in the future,
they will decrease our existing stockholders’ percentage equity ownership and,
depending upon the price at which they are issued, could be dilutive to the
existing stockholders. The holders of our common stock have no preemptive
rights.
The
increase in authorized capital with respect to the authorized number of shares
of common stock and the subsequent issuance of such shares could have the effect
of delaying or preventing a change in control of the Company without further
action by our stockholders. Shares of authorized and unissued common stock
could be issued (within the limits imposed by applicable law) in one or more
transactions. Any such issuance of additional stock could have the effect
of diluting the earnings per share and book value per share of outstanding
shares of common stock, and such additional shares could be used to dilute the
stock ownership or voting rights of a person seeking to obtain control of the
Company.
While the
amendment may have anti-takeover ramifications, the Board of Directors believes
that the financial flexibility offered by the amendment outweighs any
disadvantages. To the extent that the amendment may have anti-takeover effects,
the amendment may encourage persons seeking to acquire the Company to negotiate
directly with the Board of Directors enabling the Board to consider the proposed
transaction in a manner that best serves the stockholders’
interests.
The
issuance of preferred stock could affect the relative rights of the holders of
our common stock. Depending on the exact powers, preferences and rights, if any,
of the preferred stock as determined by our Board of Directors at the time of
issuance, the voting power and economic interest of the holders of our common
stock may be diluted. For example, the holders of preferred stock may be
entitled to (i) certain preferences over the holders of our common stock with
respect to dividends or the power to approve the declaration of a dividend, (ii)
in the event of liquidation of the Company, receive a certain amount per share
of their preferred stock before the holders of our common stock receive any
distribution, (iii) rights to convert their preferred stock into common stock,
and (iv) voting rights which would tend to dilute the voting rights of the
holders of our common stock. The aforementioned are only examples of how shares
of our preferred stock, if issued, could result in:
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Reduction
of the amount of funds otherwise available for payment of dividends on our
common stock;
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Restrictions
on dividends on our common stock;
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Dilution
of the voting power of our common stock;
and
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Restrictions
on the rights of holders of our common stock to share in our assets upon
liquidation until satisfaction of any liquidation preference granted to
the holders of our preferred
stock.
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Indemnification of Directors and
Officers. Our Articles of Incorporation entitle our directors and
officers to indemnification to the fullest extent permitted by the laws of the
State of Nevada. The Charter Amendment protects our directors and officers
against personal liability to the Company, its stockholders and its creditors to
the fullest extent permitted by the laws of the State of Nevada. This
exclusion of liability does not limit any right which a director or officer may
have to be indemnified and does not affect any director’s or officer’s liability
under federal or applicable state securities laws. The Board of Directors
believes the Charter Amendment will better enable us to engage and retain
qualified officers and directors.
Possible Anti-Takeover
Effects of the Proposed Amendments
The Board
of Directors acknowledges that the issuance of preferred stock may have the
effect of discouraging or thwarting persons seeking to take control of the
Company through a corporation transaction, tender offer or a proxy fight or
otherwise seeking to bring about the removal of the Company’s incumbent
management. Because the authorization of “blank check” preferred stock could be
used by the Board of Directors for the adoption of a shareholder rights plan or
“poison pill,” the preferred stock may be viewed as having the effect of
discouraging an attempt by another person or entity to acquire control of the
Company through the acquisition of a substantial numbers of shares of common
stock. While the Charter Amendment may have anti-takeover ramifications, the
Board believes that the reasons for such the Charter Amendment set forth above
outweigh any disadvantages. To the extent that such amendment may have
anti-takeover effects, such amendment may encourage persons seeking to acquire
the Company to negotiate directly with the Board enabling the Board to consider
the proposed transaction in a manner that best serves the stockholders’
interests. The Charter Amendment has not been made in response to, and is not
being presented to deter, any effort to obtain control of the
Company.
Adoption
of 2010 Equity Incentive Plan
The Board
of Directors of the Company and our Majority Stockholders have approved our 2010
Equity Incentive Plan. The 2010 Equity Incentive Plan became effective upon its
adoption by our Board of Directors by written consent on October __,
2010.
The
following is a description of the material provision of the 2010 Equity
Incentive Plan. The summary that follows is not intended to be complete. Please
see the copy of the 2010 Equity Incentive Plan attached hereto as Appendix B for a
complete statement of its terms and conditions.
The
purpose of the 2010 Equity Incentive Plan is to attract and retain the best
available personnel for positions of substantial responsibility; to provide
incentives to individuals who perform services for the Company; and to promote
the success of the Company’s business.
The 2010
Equity Incentive Plan reserves a total of 4,250,000 shares of our common stock
for issuance under the 2010 Equity Incentive Plan. If an incentive award
granted under the 2010 Equity Incentive Plan expires, terminates, is unexercised
or is forfeited, or if any shares are surrendered to us in connection with an
incentive award, the shares subject to such award and the surrendered shares
will become available for further awards under the 2010 Equity Incentive
Plan.
The
number of shares of our common stock subject to the 2010 Equity Incentive Plan,
any number of shares subject to any numerical limit in the Plan, and the number
of shares and terms of any incentive award will be adjusted in the event of any
change in our outstanding common stock by reason of any stock dividend,
spin-off, split-up, stock split, reverse stock split, recapitalization,
reclassification, merger, consolidation, liquidation, business combination or
exchange of shares or similar transaction.
Administration
If
formed, the compensation committee of the Board of Directors will administer the
2010 Equity Incentive Plan. In the event the compensation committee is not
formed by our Board of Directors, our entire Board of Directors will serve the
role of the committee. The administrative body will be hereinafter referred to
as the “Administrator.” Subject to the terms of the 2010 Equity Incentive Plan,
the Administrator will have complete authority and discretion to determine the
terms of awards under the 2010 Equity Incentive Plan.
Awards
The 2010
Equity Incentive Plan authorizes the grant of incentive stock options,
nonqualified stock options, stock appreciation rights, restricted stock,
restricted stock units, performance shares, restricted stock or restricted stock
units.
Stock Options. Stock options
entitle the participant, upon exercise, to purchase a specified number of shares
of the Company’s common stock at a specified price and for a specified period of
time. The exercise price for each stock option shall be determined by the
Administrator but shall not be less than 100% of the fair market value of the
Company’s common stock on the date of grant. The “fair market value” means the
value of the common stock as the Administrator may determine in good faith, by
reference to the closing price of such stock on any established stock exchange
or national market system on which the Company’s common stock is listed on the
day of determination, or if the Company’s common stock is not so listed, the
value of such stock as may be determined by the Administrator in good
faith.
Any stock
options granted in the form of an incentive stock option will be intended to
comply with the requirements of Section 422 of the Internal Revenue Code of
1986, as amended. Only options granted to employees qualify for incentive stock
option treatment.
Each
stock option shall expire at such time as the Administrator shall determine at
the time of grant. No stock option shall be exercisable later than the tenth
anniversary of its grant. A stock option may be exercised in whole or in
installments. A stock option may not be exercisable for a fraction of a share.
Shares of the Company’s common stock purchased upon the exercise of a stock
option must be paid for in full at the time of exercise in cash or such other
consideration determined by the Administrator.
Stock Appreciation Rights. A
stock appreciation right (“SAR”) is the right to receive a payment equal to the
excess of the fair market value of a specified number of shares of common stock
on the date the SAR is exercised over the exercise price of the SAR. The
exercise price for each SAR shall not be less than 100% of the fair market value
of the Company’s common stock on the date of grant, and the term shall be no
more than ten years from the date of grant. At the discretion of the
Administrator, the payment upon an SAR exercise may be in cash, in shares
equivalent thereof, or in some combination thereof.
Upon
exercise of an SAR, the participant shall be entitled to receive payment from
the Company in an amount determined by multiplying the excess of the fair market
value of a share of the Company’s common stock on the date of exercise over the
exercise price of the SAR by the number of shares with respect to which the SAR
is exercised. The payment may be made in cash or stock, at the discretion of the
Administrator.
Restricted Stock and Restricted
Stock Units. Restricted stock and restricted stock units may be awarded
or sold to participants under such terms and conditions as shall be established
by the Administrator. Restricted stock and restricted stock units shall be
subject to such restrictions as the Administrator determines, including a
prohibition against sale, assignment, transfer, pledge or hypothecation, and a
requirement that the participant forfeit such shares or units in the event of
termination of employment. A restricted stock unit provides a participant the
right to receive payment at a future date after the lapse of restrictions or
achievement of performance criteria or other conditions determined by the
Administrator.
Performance Stock. The
Administrator shall designate the participants to whom long-term performance
stock are to be awarded and determine the number of shares, the length of the
performance period and the other vesting terms and conditions of each such
award; provided the stated performance period will not be less than twelve (12)
months. Each award of performance stock shall entitle the participant to a
payment in the form of shares of common stock of the Company upon the attainment
of performance goals and other vesting terms and conditions specified by the
Administrator. The Administrator may, in its discretion, make a cash payment
equal to the fair market value of shares of common stock otherwise required to
be issued to a participant pursuant to a Performance Stock Award.
All
awards are discussed in more detail in the 2010 Equity Incentive Plan. All
awards made under the 2010 Equity Incentive Plan may be subject to vesting and
other contingencies as determined by the Administrator and will be evidenced by
agreements approved by the Administrator which set forth the terms and
conditions of each award.
Duration, Amendment and
Termination
Unless
sooner terminated by the Administrator, the 2010 Equity Incentive Plan will
terminate on _______, 2020. The Board of Directors will have the power to
amend, alter, suspend or terminate the 2010 Equity Incentive Plan at any time or
from time to time without stockholder approval or ratification, unless necessary
and desirable to comply with applicable law. No change may be made that
increases the total number of shares of common stock reserved for issuance
pursuant to the Plan or reduces the minimum exercise price for options or
exchange of options for other incentive awards, unless such change is authorized
by our stockholders within one year. However, before an amendment may be
made that would adversely affect a participant who has already been granted an
award, the participant’s consent must be obtained.
Split-Off
As
previously stated, we have entered into a non-binding Letter of Intent with 22nd
Century regarding a possible business combination. At this stage, no
definitive agreements have been executed and neither party is bound to proceed
with the transaction. Not less than one (1) business day prior to the
business combination with 22nd Century, the Company intends to contribute,
assign, convey and transfer to a wholly owned subsidiary, to be formed, (the
“Split-Off Subsidiary”) all of its pre-transaction assets (including its mining
assets) and liabilities, including all assets and liabilities set forth on its
balance sheet, and split off the Split-Off Subsidiary, through the sale of all
of the outstanding capital stock of the Split-Off Subsidiary to its majority
stockholder, Nanuk Warman, who is a former officer and director of the
Company. Mr. Warman’s address is 11923 SW 37 Terrace, Miami, FL
3317.5 In exchange for capital stock of the Split-Off Subsidiary, the
majority stockholder will surrender his shares of the Company’s common stock to
the Company for cancellation without further consideration. If the Company
and 22nd Century determine not to proceed with the business combination, we may
chose to effect a Split-Off in connection with a future business
combination.
The
effective date of the Split-Off is not presently known but it will be after the
twentieth (20th) day
after the mailing of this Information Statement to our
stockholders.
No
Dissenters’ Rights
Under the
Nevada Revised Statutes, our Articles of Incorporation and our By-Laws, holders
of our voting securities are not entitled to dissenters’ rights with respect to
the Charter Amendment, Plan Adoption, or Split-Off.
Security
Ownership of Certain Beneficial Owners and Management
The
following table sets forth information as of October __, 2010 with respect to
the beneficial ownership of shares of our common stock by (i) each person known
by us to be the owner of more than 5% of the outstanding shares of common stock,
(ii) each director and executive officer, and (iii) all executive officers and
directors as a group. The percentages in the table have been calculated on
the basis of treating as outstanding for a particular person, all shares of our
common stock outstanding on such date and all shares of our common stock
issuable to such holder in the event of exercise of outstanding options,
warrants, rights or conversion privileges owned by such person at said date
which are exercisable within 60 days of October __, 2010. Except as
otherwise indicated, the persons listed below have sole voting and investment
power with respect to all shares of our common stock owned by them, except to
the extent such power may be shared with a spouse.
|
Name and Address
of Beneficial Owner
|
|
Title of Class
|
|
Amount and Nature
of Beneficial
Ownership
|
|
Percentage
of Class(1)
|
|
| |
|
|
|
|
|
|
|
|
Ronald
Asirwathan
11923
S.W. 37 Terrace
|
|
Common
Stock, par value $0.00001 per share
|
|
0
shares
|
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
Nanuk
Warman
11923
S.W. 37 Terrace
|
|
Common
Stock, par value $0.00001 per share
|
|
3,300,000
shares – direct
|
|
|
52.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
All
executive officers and directors as a group (1 person)
|
|
Common
Stock, par value $0.0001 per share
|
|
0
shares
|
|
|
N/A |
|
|
(1)
|
Based
upon 6,238,889 shares issued and outstanding on October __,
2010.
|
Where
You Can Find More Information
We are
subject to the informational requirements of the Securities Exchange Act of
1934, as amended, and in accordance with the requirements thereof, file reports,
proxy statements and other information with the Securities and Exchange
Commission (“SEC”). For further information about us, you may refer
to:
Copies of
these reports and other information can be obtained at the SEC’s public
reference facilities at 100 F Street, N.E., Washington, DC 20549.
Additionally, these filings may be viewed at the SEC’s website at http://www.sec.gov.
|
October
__, 2010
|
By
Order of the Board of Directors
|
|
|
|
|
|
|
|
|
Ronald
Asirwathan
|
|
|
President
|
APPENDIX
A
AMENDED
AND RESTATED
ARTICLES
OF INCORPORATION
OF
TOUCHSTONE
MINING LIMITED
ARTICLE
I
NAME
On the
effective date hereof, the name of the Corporation shall be 22nd Century Group,
Inc.
ARTICLE
II
RESIDENT
AGENT AND REGISTERED OFFICE
The name
and address of the Corporation’s resident agent for service of process is Vcorp
Services, LLC, 4675 W. Teco Avenue, Suite 240, Las Vegas, NV 89118
ARTICLE
III
PURPOSE
The
purpose of the Corporation is to engage in any lawful act or activity for which
corporations may be organized under the laws of the State of
Nevada.
ARTICLE
IV
CAPITAL
STOCK
4.1 Number of Authorized Shares;
Par Value. The aggregate number of shares which the Corporation shall
have authority to issue is three hundred ten million (310,000,000) shares, of
which three hundred million (300,000,000) shares shall be designated as Common
Stock, $0.00001 par value per share, and of which ten million (10,000,000) shall
be designated as Preferred Stock, $0.00001 par value per share.
4.2 Preferred
Stock. The Preferred Stock may be issued at any time or from time
to time, in any one or more series, and any such series shall be comprised of
such number of shares and may have such voting powers, whole or limited, or no
voting powers, and such designations, preferences and relative, participating,
options or other special rights and qualifications, limitations or restrictions
thereof, including liquidation preferences, as shall be stated and expressed in
the resolution or resolutions of the board of directors of the Corporation, with
the board of directors being hereby expressly vested with such power and
authority to the full extent now or hereafter permitted by law.
ARTICLE
V
DIRECTORS
The
business and affairs of the Corporation shall be managed by or under the
direction of the board of directors, which shall consist of at least one
director. Provided that the Corporation has at least one director, the number of
directors may at any time or times be increased or decreased as provided in the
bylaws; provided, however that the number of directors shall not exceed
ten.
ARTICLE
VI
Directors’
and Officers’ Liability
6.1 Elimination of
Liability. Directors or officers of the Corporation shall not be
individually liable to the Corporation, its stockholders or creditors to the
fullest extent permitted by the laws of the State of Nevada. In the event
that the laws of the State of Nevada are amended to authorize the further
elimination or limitation of liability of directors or officers following the
date hereof, then this Article VI shall also be deemed amended to provide for
the elimination or limitation of liability to the fullest extent permitted by
the laws of the State of Nevada, as so amended.
6.2 Mandatory
Indemnification. The Corporation shall indemnify directors,
officers, employees and agents of the Corporation to the fullest extent
permitted by the laws of the State of Nevada as the same exists or may hereafter
be amended from time to time.
6.3 Mandatory Payment of
Expenses. The Corporation shall pay the expenses incurred by a
director or officer in defending any civil, criminal, administrative, or
investigative action, suit or proceeding in advance of the final disposition of
such action, suit or proceeding upon receipt of an undertaking by or on behalf
of such director or officer to repay such amount if it should be ultimately
determined that the director or officer is not entitled to be indemnified by the
Corporation as authorized by the laws of the State of Nevada.
6.4 Effect of Amendment or
Repeal. Any amendment to or repeal of any of the provisions in this
Article VI shall not adversely affect any right or protection of a director or
officer of the Corporation for or with respect to any act or omission of such
director or officer occurring prior to such amendment or repeal.
ARTICLE
VII
EFFECTIVE
DATE
ARTICLE
VIII
AMENDMENT
OR REPEAL
The
Corporation reserves the right to amend, alter, change or repeal any provisions
of these Articles of Incorporation in the manner now or hereafter prescribed by
statutes and all rights, except to the extent specifically provided for in
Article VI above, conferred by these Articles are granted subject to this
reservation.
* * * * *
IN
WITNESS WHEREOF, the Corporation has caused these Amended and Restated Articles
of Incorporation to be signed by Ronald Asirwatham, its President and Chief
Executive Officer, on this ____ day of __________, 2010.
|
|
TOUCHSTONE
MINING LIMITED
|
|
|
|
|
|
|
|
|
Ronald
Asirwatham
|
|
|
President
and Chief Executive Officer
|
APPENDIX
B
TOUCHSTONE
MINING LIMITED
2010
EQUITY INCENTIVE PLAN
1.
PURPOSE.
The Touchstone Mining Limited 2010 Equity Incentive Plan has two
complementary purposes: (a) to attract and retain outstanding
individuals to serve as officers, employees, directors, consultants and advisors
to the Company and its Affiliates, and (b) to increase stockholder value.
The Plan will provide participants incentives to increase stockholder value by
offering the opportunity to acquire shares of the Company’s Common Stock or
receive monetary payments based on the value of such Common Stock, on the
potentially favorable terms that this Plan provides.
2.
EFFECTIVE
DATE. The
Plan shall become effective and Awards may be granted on and after the date on
which the proposed business combination with 22nd Century Limited, LLC becomes
effective, subject to approval by the stockholders of the Company within twelve
(12) months of the effective date. Any Awards granted under the Plan prior
to such stockholder approval shall be conditioned on such approval.
3.
DEFINITIONS. Capitalized terms used
in this Plan have the following meanings:
(a) “Affiliate”
means any entity that, directly or through one or more intermediaries, is
controlled by, controls, or is under common control with, the Company within the
meaning of Code Sections 414(b) or (c), provided that, in applying
such provisions, the phrase “at least fifty percent (50%)” shall be used in
place of “at least eighty percent (80%)” each place it appears
therein.
(b) “Award”
means a grant of Options (as defined below), Stock Appreciation Rights (as
defined in Section 8 hereof), Performance Shares (as defined in Section 3(p)
hereof), Restricted Stock (as defined in Section 3(s) hereof), or Restricted
Stock Units (as defined in Section 3(t) hereof).
(c) “Bankruptcy”
shall mean (i) the filing of a voluntary petition under any bankruptcy or
insolvency law, or a petition for the appointment of a receiver or the making of
an assignment for the benefit of creditors, with respect to the Participant, or
(ii) the Participant being subjected involuntarily to such a petition or
assignment or to an attachment or other legal or equitable interest with respect
to the Participant’s assets, which involuntary petition or assignment or
attachment is not discharged within 60 days after its date, and (iii) the
Participant being subject to a transfer of its Issued Shares by operation of law
(including by divorce, even if not insolvent), except by reason of
death.
(d)
“Board” means the Board of Directors of the Company.
(e) “Change
of Control” shall be deemed to have occurred as of the first day that any one or
more of the following conditions is satisfied, including, but not limited to,
the signing of documents by all parties and approval by all regulatory agencies,
if required:
(i) The
stockholders approve a plan of complete liquidation or dissolution of the
Company; or
(ii) The
consummation of (A) an agreement for the sale or disposition of all or
substantially all of the Company’s assets (other than to an Excluded Person (as
defined below)), or (B) a merger, consolidation or reorganization of the Company
with or involving any other corporation, other than a merger, consolidation or
reorganization that would result in the holders of voting securities of the
Company outstanding immediately prior thereto continuing to hold (either by
remaining outstanding or by being converted into voting securities of the
surviving entity), at least fifty percent (50%) of the combined voting power of
the voting securities of the Company (or such other surviving entity)
outstanding immediately after such merger, consolidation or
reorganization.
An
Excluded Person means: (i) the Company or any of its Affiliates, (ii) a trustee
or other fiduciary holding securities under any employee benefit plan of the
Company or any of its Affiliates, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities or (iv) a corporation
owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock in the
Company.
Notwithstanding
the foregoing, with respect to an Award that is considered deferred compensation
subject to Code Section 409A, if the definition of “Change of Control” results
in the payment of such Award, then such definition shall be amended to the
minimum extent necessary, if at all, so that the definition satisfies the
requirements of a change of control under Code Section 409A.
(f) “Code”
means the Internal Revenue Code of 1986, as amended. Any reference to a specific
provision of the Code includes any successor provision and the regulations
promulgated under such provision.
(g) “Committee”
means the Compensation Committee of the Board (or a successor committee with
similar authority) or if no such committee is named by the Board, than it shall
mean the Board.
(h) “Common
Stock” means the Common Stock of the Company, par value $0.0001 per
share.
(i) “Company”
means Touchstone Mining Limited, a Nevada corporation, or any successor
thereto.
(j) “Exchange
Act” means the Securities Exchange Act of 1934, as amended from time to
time. Any reference to a specific provision of the Exchange Act shall be
deemed to include any successor provision thereto.
(k) “Fair
Market Value” means, per Share on a particular date, the value as determined by
the Committee using a reasonable valuation method within the meaning of Code
Section 409A, based on all information in the Company’s possession at such time,
or if applicable, the value as determined by an independent appraiser selected
by the Board or Committee.
(l) “Issued
Shares” means, collectively, all outstanding Shares issued pursuant to an Award
and all Option Shares.
(m) “Option”
means the right to purchase Shares at a stated price upon and during a specified
time. “Options” may either be “incentive stock options” which meet the
requirements of Code Section 422, or “nonqualified stock options” which do
not meet the requirements of Code Section 422.
(n) “Option
Shares” means
outstanding Shares that were issued to a Participant upon the exercise of an
Option.
(o) “Participant”
means an officer or other employee of the Company or its Affiliates, or an
individual that the Company or an Affiliate has engaged to become an officer or
employee, or a consultant or advisor who provides services to the Company or its
Affiliates, including a non-employee director of the Board, whom the Committee
designates to receive an Award.
(p) “Performance
Shares” means the right to receive Shares to the extent the Company, Subsidiary,
Affiliate or other business unit and/or Participant achieves certain goals that
the Committee establishes over a period of time the Committee
designates.
(q) “Permitted
Transferee” means, in connection with a transfer made for bona fide estate
planning purposes, either during a Participant’s lifetime or on death by will or
intestacy, to his or her spouse, child (natural or adopted), or any other direct
lineal descendant of such Participant (or his or her spouse) (all of the
foregoing collectively referred to as “family members”), or any other relative
approved unanimously by the Board of Directors of the Company, or any custodian
or trustee of any trust, partnership or limited liability company for the
benefit of, or the ownership interests of which are owned wholly by, such
Participant or any such family members.
(r) “Plan”
means this Touchstone Mining Limited 2010 Equity Incentive Plan, as amended from
time to time.
(s) “Restricted
Stock” means Shares that are subject to a risk of forfeiture and/or restrictions
on transfer (including but not limited to stock grants with the recipient having
the right to make an election under Section 83(b) of the Code), which may lapse
upon the achievement or partial achievement of performance goals during a
specified period and/or upon the completion of a period of service or upon the
occurrence of other events, as determined by the Committee.
(t) “Restricted
Stock Unit” means the right to receive a Share, or a cash payment, the amount of
which is equal to the Fair Market Value of a Share, which is subject to a risk
of forfeiture which may lapse upon the achievement or partial achievement of
performance goals during a specified period and/or upon the completion of a
period of service or upon the occurrence of other events, as determined by the
Committee.
(u) “Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations
thereunder.
(v) “Share”
means a share of Common Stock.
(w) “Stock
Appreciation Right” or “SAR” means the right of a Participant to receive cash,
and/or Shares with a Fair Market Value, equal to the excess of the Fair Market
Value of a Share over the grant price.
(x) “Subsidiary”
means any corporation in an unbroken chain of corporations beginning with the
Company if each of the corporations (other than the last corporation in the
chain) owns stock possessing more than fifty percent (50%) of the total combined
voting power of all classes of stock in one of the other corporations in the
chain.
(y) “10%
Owner-Employee” means an employee who, at the time an incentive stock option is
granted, owns (directly or indirectly, within the meaning of Code Section
424(d)) more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or of any Subsidiary.
4.
ADMINISTRATION.
(a) Committee
Administration. The Committee has full authority to administer this
Plan, including the authority to (i) interpret the provisions of this Plan,
(ii) prescribe, amend and rescind rules and regulations relating to this
Plan, (iii) correct any defect, supply any omission, or reconcile any
inconsistency in any Award or agreement covering an Award in the manner and to
the extent it deems desirable to carry this Plan into effect, and (iv) make
all other determinations necessary or advisable for the administration of this
Plan. All actions or determinations of the Committee are made in its sole
discretion and will be final and binding on any person with an interest
therein. If at any time the Committee is not in existence, the Board shall
administer the Plan and references to the Committee in the Plan shall mean the
Board.
(b) Delegation to Committees or
Officers. To the extent applicable law permits, the Board may
delegate to another committee of the Board or to one or more officers of the
Company, or the Committee may delegate to a sub-committee, any or all of the
authority and responsibility of the Committee. If the Board or Committee
has made such a delegation, then all references to the Committee in this Plan
include such committee, sub-committee or one or more officers to the extent of
such delegation.
(c) No Liability. No member
of the Committee, and no individual or officer to whom a delegation under
subsection (b) has been made, will be liable for any act done, or determination
made, by the individual in good faith with respect to the Plan or any
Award. The Company will indemnify and hold harmless such individual to the
maximum extent that the law and the Company’s bylaws permit.
5.
DISCRETIONARY
GRANTS OF AWARDS.
Subject to the terms of this Plan, the Committee has full power and
authority to: (a) designate from time to time the Participants to receive Awards
under this Plan; (b) determine the type or types of Awards to be granted to each
Participant; (c) determine the number of Shares with respect to which an Award
relates; and (d) determine any terms and conditions of any Award including but
not limited to permitting the delivery to the Company of Shares or the
relinquishment of an appropriate number of vested Shares under and exercisable
Option in satisfaction of part of all of the exercise price of, or withholding
taxes with respect to, an Award. Awards may be granted either alone or in
addition to, in tandem with, or in substitution for any other Award (or any
other award granted under another plan of the Company or any Affiliate). The
Committee’s designation of a Participant in any year will not require the
Committee to designate such person to receive an Award in any other
year.
6.
SHARES RESERVED UNDER THIS
PLAN.
(a) Plan Reserve. An
aggregate of four million two hundred fifty thousand (4,250,000) Shares are
reserved for issuance under this Plan, all of which may issued as any form of
Award; provided, however, that Awards for a maximum of one million six hundred
thousand (1,600,000) Shares may be granted during the first 12 months following
the effective date of this Plan.
(b) Replenishment of Shares Under this
Plan. If an Award lapses, expires, terminates or is cancelled
without the issuance of Shares or payment of cash under the Award, then the
Shares subject to or reserved for in respect of such Award, or the Shares to
which such Award relates, may again be used for new Awards as determined under
subsection (a), including issuance pursuant to incentive stock options. If
Shares are delivered to (or withheld by) the Company in payment of the exercise
price or withholding taxes of an Award, then such Shares may be used for new
Awards under this Plan as determined under subsection (a), including issuance
pursuant to incentive stock options. If Shares are issued under any Award
and the Company subsequently reacquires them pursuant to rights reserved upon
the issuance of the Shares, then such Shares may be used for new Awards under
this Plan as determined under subsection (a), but excluding issuance pursuant to
incentive stock options.
7.
OPTIONS. Subject to the terms
of this Plan, the Committee will determine all terms and conditions of each
Option, including but not limited to:
(a) Whether
the Option is an incentive stock option or a nonqualified stock option; provided that in the case of
an incentive stock option, if the aggregate Fair Market Value (determined at the
time of grant) of the Shares with respect to which such option and all other
incentive stock options issued under this Plan (and under all other incentive
stock option plans of the Company or any Affiliate that is required to be
included under Code Section 422) are first exercisable by the Participant during
any calendar year exceeds $100,000, such Option automatically shall be treated
as a nonqualified stock option to the extent this limit is exceeded. Only
employees of the Company or a Subsidiary are eligible to be granted incentive
stock options;
(b) The
number of Shares subject to the Option;
(c) The
exercise price per Share, which may not be less than the Fair Market Value of a
Share as determined on the date of grant; provided that an incentive
stock option granted to a 10% Owner-Employee must have an exercise price that is
at least one hundred ten percent (110%) of the Fair Market Value of a Share on
the date of grant;
(d) The
terms and conditions of exercise; and
(e) The
termination date, except that each Option must terminate no later than the tenth
(10th) anniversary of the date of grant, and each incentive stock option
granted to any 10% Owner-Employee must terminate no later than the fifth (5th)
anniversary of the date of grant.
In all
other respects, the terms of any incentive stock option should comply with the
provisions of Code Section 422 except to the extent the Committee
determines otherwise.
8.
STOCK
APPRECIATION RIGHTS. Subject to the terms
of this Plan, the Committee will determine all terms and conditions of each SAR,
including but not limited to:
(a) The
number of Shares to which the SAR relates;
(b) The
grant price, provided
that the grant price shall not be less than the Fair Market Value of the Shares
subject to the SAR as determined on the date of grant;
(c) The
terms and conditions of exercise or maturity;
(d) The
term, provided that an
SAR must terminate no later than the tenth (10th)
anniversary of the date of grant; and
(e) Whether
the SAR will be settled in cash, Shares or a combination thereof.
9.
PERFORMANCE
SHARE AWARDS.
Subject to the terms of this Plan, the Committee will determine all terms
and conditions of each Performance Share Award, including but not limited
to:
(a) The
number of Shares to which the Performance Share Award relates;
(b) The
terms and conditions of each Award, including, without limitation, the selection
of the performance goals that must be achieved for the Participant to realize
all or a portion of the benefit provided under the Award; and
(c) Whether
all or a portion of the Shares subject to the Award will be issued to the
Participant, without regard to whether the performance goals have been attained,
in the event of the Participant’s death, disability, retirement or other
circumstance.
10.
RESTRICTED
STOCK AND RESTRICTED STOCK UNIT AWARDS. Subject to the terms
of this Plan, the Committee will determine all terms and conditions of each
award of Restricted Stock or Restricted Stock Units, including but not limited
to:
(a) The
number of Shares or Restricted Stock Units to which such Award
relates;
(b) The
period of time over which, and/or the criteria or conditions that must be
satisfied so that, the risk of forfeiture and/or restrictions on transfer
imposed on the Restricted Stock or Restricted Stock Units will
lapse;
(c) Whether
all or a portion of the Restricted Shares or Restricted Stock Units will be
released from a right of repurchase and/or be paid to the Participant in the
event of the Participant’s death, disability, retirement or other
circumstance;
(d) With
respect to awards of Restricted Stock, the manner of registration of
certificates for such Shares, and whether to hold such Shares in escrow pending
lapse of the risk of forfeiture, right of repurchase and/or restrictions on
transfer or to issue such Shares with an appropriate legend referring to such
restrictions;
(e) With
respect to awards of Restricted Stock, whether dividends paid with respect to
such Shares will be immediately paid or held in escrow or otherwise deferred and
whether such dividends shall be subject to the same terms and conditions as the
Award to which they relate; and
(f) With
respect to awards of Restricted Stock Units, whether to credit dividend
equivalent units equal to the amount of dividends paid on a Share and whether
such dividend equivalent units shall be subject to the same terms and conditions
as the Award to which they relate.
11.
TRANSFERABILITY. Except as set forth in
Section 15 hereof, each award granted under this plan is not transferable other
than by will or the laws of descent and distribution, or to a revocable trust,
or as permitted by Rule 701 of the Securities Act.
12.
TERMINATION AND
AMENDMENT.
(a) Term. Subject to the
right of the Board or Committee to terminate the Plan earlier pursuant to
Section 00, the Plan
shall terminate on, and no Awards may be granted after the tenth (10th)
anniversary of the Plan’s effective date.
(b) Termination and
Amendment. The Board or Committee may amend, alter, suspend,
discontinue or terminate this Plan at any time, provided that:
(i) the
Board must approve any amendment of this Plan to the extent the Company
determines such approval is required by: (a) action of the Board,
(b) applicable corporate law, or (c) any other applicable law or rule of a
self-regulatory organization;
(ii) stockholders
must approve any of the following Plan amendments: (a) an
amendment to materially increase any number of Shares specified in
Section 6(a) (except as permitted by Section 0) or expand the class of individuals eligible to
receive an Award to the extent required by the Code, the Company’s bylaws or any
other applicable law, (b) any other amendment if required by applicable law
or the rules of any self-regulatory organization, or (c) an amendment that would
diminish the protections afforded by Section 12(e).
(c) Amendment, Modification or
Cancellation of Awards. Except as provided in subsection
(e) and subject to the restrictions of this Plan, the Committee may modify
or amend an Award or waive any restrictions or conditions applicable to an Award
(including relating to the exercise, vesting or payment thereof), and
the Committee may modify the terms and conditions applicable to any Award
(including the terms of the Plan), and the Committee may cancel any Award, provided that the Participant
(or any other person as may then have an interest in such Award as a result of
the Participant’s death or the transfer of an Award) must consent in writing if
any such action would adversely affect the rights of the Participant (or other
interested party) under such Award. Notwithstanding the foregoing, the
Committee need not obtain Participant (or other interested party) consent for
the amendment, modification or cancellation of an Award pursuant to the
provisions of Section 0, or the amendment or
modification of an Award to the extent deemed necessary to comply with any
applicable law, the listing requirements of any principal securities exchange or
market on which the Shares are then traded, or to preserve favorable accounting
treatment of any Award for the Company.
(d) Survival of Committee Authority and
Awards. Notwithstanding the foregoing, the authority of the
Committee to administer this Plan and modify or amend an Award, and the
authority of the Board or Committee to amend this Plan, shall extend beyond the
date of this Plan’s termination. In addition, termination of this Plan will not
affect the rights of Participants with respect to Awards previously granted to
them, and all unexpired Awards will continue in full force and effect after
termination of this Plan except as they may lapse or be terminated by their own
terms and conditions.
(e) Repricing Prohibited.
Notwithstanding anything in this Plan to the contrary, neither the Committee nor
any other person may decrease the exercise price of any Option or the grant
price of any SAR nor take any action that would result in a deemed decrease of
the exercise price or grant price of an Option or SAR under Code Section 409A,
after the date of grant, except in accordance with Section 0 and Section 1.409A-1(b)(5)(v)(D) of the Treasury
Regulations (26 C.F.R.), or in connection with a transaction which is considered
the grant of a new Option or SAR for purposes of Section 409A of the Code, provided that the new
exercise price or grant price is not less than the Fair Market Value of a Share
on the new grant date.
(f) Foreign Participation.
To assure the viability of Awards granted to Participants employed or residing
in foreign countries, the Committee may provide for such special terms as it may
consider necessary or appropriate to accommodate differences in local law, tax
policy or custom. Moreover, the Committee may approve such supplements to, or
amendments, restatements or alternative versions of this Plan as it determines
is necessary or appropriate for such purposes. Any such amendment, restatement
or alternative versions that the Committee approves for purposes of using this
Plan in a foreign country will not affect the terms of this Plan for any other
country.
13.
TAXES.
(a) Withholding. In the
event the Company or any Affiliate is required to withhold any foreign, Federal,
state or local taxes or other amounts in respect of any income recognized by a
Participant as a result of the grant, vesting, payment or settlement of an Award
or disposition of any Shares acquired under an Award, the Company may deduct (or
require an Affiliate to deduct) from any payments of any kind otherwise due the
Participant cash, or with the consent of the Committee, Shares otherwise
deliverable or vesting under an Award, to satisfy such tax obligations.
Alternatively, the Company may require such Participant to pay to the
Company, in cash, promptly on demand, or make other arrangements satisfactory to
the Company regarding the payment to the Company of the aggregate amount of any
such taxes and other amounts required to be withheld. If Shares are
deliverable upon exercise or payment of an Award, the Committee may permit a
Participant to satisfy all or a portion of the foreign, Federal, state and local
withholding tax obligations arising in connection with such Award by electing to
(a) have the Company withhold Shares otherwise issuable under the Award,
(b) tender back Shares received in connection with such Award, or
(c) deliver other previously owned Shares; provided that the amount to
be withheld may not exceed the total minimum foreign, federal, state and local
tax withholding obligations associated with the transaction to the extent needed
for the Company to avoid an accounting charge. If an election is provided,
the election must be made on or before the date as of which the amount of tax to
be withheld is determined and otherwise as the Company requires. In any
case, the Company may defer making payment or delivery under any Award if any
such tax may be pending unless and until indemnified to its
satisfaction.
(b) No Guarantee of Tax
Treatment. Notwithstanding any provisions of the Plan, the Company
does not guarantee to any Participant or any other person with an interest in an
Award that any Award intended to be exempt from Code Section 409A shall be so
exempt, nor that any Award intended to comply with Code Section 409A shall so
comply, nor that any Award designated as an incentive stock option within the
meaning of Code Section 422 qualifies as such, and neither the Company or any
Affiliate shall indemnify, defend or hold harmless any individual with respect
to the tax consequences of any such failure.
14.
ADJUSTMENT PROVISIONS;
CHANGE OF CONTROL.
(a) Adjustment of Shares.
If (i) the Company shall at any time be involved in a merger or other
transaction in which the Shares are changed or exchanged; (ii) the Company shall
subdivide or combine the Shares or the Company shall declare a dividend payable
in Shares, other securities or other property; (iii) the Company shall effect a
cash dividend the amount of which, on a per Share basis, exceeds ten percent
(10%) of the Fair Market Value of a Share at the time the dividend is declared,
or the Company shall effect any other dividend or other distribution on the
Shares in the form of cash, or a repurchase of Shares, that the Committee
determines by resolution is special or extraordinary in nature or that is in
connection with a transaction that is a recapitalization or reorganization
involving the Shares; or (iv) any other event shall occur, which, in the case of
this subsection (iv), in the judgment of the Committee necessitates an
adjustment to prevent dilution or enlargement of the benefits or potential
benefits intended to be made available under this Plan, then, in each case, the
Committee shall, in such manner as it may deem equitable, adjust any or all of:
(w) the number and type of Shares subject to this Plan (including the
number and type of Shares that may be issued pursuant to incentive stock
options), (x) the number and type of Shares subject to outstanding Awards,
(y) the grant, purchase, or exercise price with respect to any Award, and
(z) the performance goals established under any Award.
(i) In
any such case, the Committee may also make provision for a cash payment, in an
amount determined by the Committee, to the holder of an outstanding Award in
exchange for the cancellation of all or a portion of the Award (without the
consent of the holder of an Award), effective at such time as the Committee
specifies (which may be the time such transaction or event is effective); provided that any such
adjustment to an Award that is exempt from Code Section 409A shall be made in a
manner that permits the Award to continue to be so exempt, and any adjustment to
an Award that is subject to Code Section 409A shall be made in a manner that
complies with the provisions thereof. However, with respect to Awards of
incentive stock options, no such adjustment may be authorized to the extent that
such authority would cause this Plan to violate Code Section 422(b).
Further, the number of Shares subject to any Award payable or denominated in
Shares must always be a whole number.
(ii) Without
limitation, in the event of any reorganization, merger, consolidation,
combination or other similar corporate transaction or event, whether or not
constituting a Change of Control, other than any such transaction in which the
Company is the continuing corporation and in which the outstanding Common Stock
is not being converted into or exchanged for different securities, cash or other
property, or any combination thereof, the Committee may substitute, on an
equitable basis as the Committee determines, for each Share then subject to an
Award, the number and kind of shares of stock, other securities, cash or other
property to which holders of Common Stock are or will be entitled in respect of
each Share pursuant to the transaction.
(iii) Notwithstanding
the foregoing, in the case of a stock dividend (other than a stock dividend
declared in lieu of an ordinary cash dividend) or subdivision or combination of
the Shares (including a reverse stock split), adjustments contemplated by this
subsection that are proportionate shall nevertheless automatically be made as of
the date of such stock dividend or subdivision or combination of the
Shares.
(b) Issuance or Assumption.
Notwithstanding any other provision of this Plan, and without affecting the
number of Shares otherwise reserved or available under this Plan, in connection
with any merger, consolidation, acquisition of property or stock, or
reorganization, the Committee may authorize the issuance or assumption of awards
upon such terms and conditions as it may deem appropriate.
(c) Change of Control. Upon
a Change of Control, the Committee may, in its discretion, determine that any or
all outstanding Awards held by Participants who are then in the employ or
service of the Company or any Affiliate shall vest or be deemed to have been
earned in full, and:
(i) If
the successor or surviving corporation (or parent thereof) so agrees, all
outstanding Awards shall be assumed, or replaced with the same type of award
with similar terms and conditions, by the successor or surviving corporation (or
parent thereof) in the Change of Control. If applicable, each Award which
is assumed by the successor or surviving corporation (or parent thereof) shall
be appropriately adjusted, immediately after such Change of Control, to apply to
the number and class of securities which would have been issuable to the
Participant upon the consummation of such Change of Control had the Award been
exercised or vested immediately prior to such Change of Control, and such other
appropriate adjustments in the terms and conditions of the Award shall be
made.
(ii) If
the provisions of paragraph (i) do not apply, then all outstanding Awards shall
be cancelled as of the date of the Change of Control in exchange for a payment
in cash and/or Shares (which may include shares or other securities of any
surviving or successor entity or the purchasing entity or any parent thereof)
equal to:
(1) In
the case of an Option or SAR, the excess of the Fair Market Value of the Shares
on the date of the Change of Control covered by the vested portion of the Option
or SAR that has not been exercised over the exercise or grant price of such
Shares under the Award;
(2) In
the case of Restricted Stock Units, the Fair Market Value of a Share on the date
of the Change of Control multiplied by the number of vested units, unless
otherwise provided in the Award agreement and subject to the repurchase right
set forth in Section 15 hereof; and
(3) In
the case of a Performance Share Award, the Fair Market Value of a Share on the
date of the Change of Control multiplied by the number of earned
Shares.
(d) Parachute Payment
Limitation.
(i) Except
as may be set forth in a written agreement by and between the Company and the
holder of an Award, in the event that the Company’s auditors determine that any
payment or transfer by the Company under the Plan to or for the benefit of a
Participant (a “Payment”) would be nondeductible by the Company for federal
income tax purposes because of the provisions concerning “excess parachute
payments” in Code Section 280G, then the aggregate present value of all
Payments shall be reduced (but not below zero) to the Reduced Amount (defined
herein). For purposes of this Section 14(d), the “Reduced Amount” shall be
the amount, expressed as a present value, which maximizes the aggregate present
value of the Payments without causing any Payment to be nondeductible by the
Company because of Code Section 280G.
(ii) If
the Company’s auditors determine that any Payment would be nondeductible by the
Company because of Code Section 280G, then the Company shall promptly give
the Participant notice to that effect and a copy of the detailed calculation
thereof and of the Reduced Amount, and the Participant may then elect, in his or
her sole discretion, which and how much of the Payments shall be eliminated or
reduced (as long as after such election the aggregate present value of the
Payments equals the Reduced Amount) and shall advise the Company in
writing of his or her election within ten (10) days of receipt of notice.
If no such election is made by the Participant within such ten (10) day period,
then the Company may elect which and how much of the Payments shall be
eliminated or reduced (as long as after such election the aggregate present
value of the Payments equals the Reduced Amount) and shall notify the
Participant promptly of such election. For purposes of this
Section 14(d), present value shall be determined in accordance with Code
Section 280G(d)(4). All determinations made by the Company’s auditors
under this Section 14(d) shall be binding upon the Company and the
Participant and shall be made within sixty (60) days of the date when a Payment
becomes payable or transferable. As promptly as practicable following such
determination and the elections hereunder, the Company shall pay or transfer to
or for the benefit of the Participant such amounts as are then due to him or her
under the Plan and shall promptly pay or transfer to or for the benefit of the
Participant in the future such amounts as become due to him or her under the
Plan.
(iii) As
a result of uncertainty in the application of Code Section 280G at the time
of an initial determination by the Company’s auditors hereunder, it is possible
that Payments will have been made by the Company that should not have been made
(an “Overpayment”) or that additional Payments that will not have been made by
the Company could have been made (an “Underpayment”), consistent in each case
with the calculation of the Reduced Amount hereunder. In the event that
the Company’s auditors, based upon the assertion of a deficiency by the Internal
Revenue Service against the Company or the Participant that the auditors believe
has a high probability of success, determine that an Overpayment has been made,
such Overpayment shall be treated for all purposes as a loan to the Participant
which he or she shall repay to the Company, together with interest at the
applicable federal rate provided in Code Section 7872(f)(2); provided, however, that no
amount shall be payable by the Participant to the Company if and to the extent
that such payment would not reduce the amount subject to taxation under Code
Section 4999. In the event that the auditors determine that an
Underpayment has occurred, such Underpayment shall promptly be paid or
transferred by the Company to or for the benefit of the Participant, together
with interest at the applicable federal rate provided in Code
Section 7872(f)(2).
(iv) For
purposes of this Section 14(d), the term “Company” shall include affiliated
corporations to the extent determined by the auditors in accordance with Code
Section 280G(d)(5).
15.
STOCK TRANSFER
RESTRICTIONS.
(a) Restriction on Transfer of
Options. No Option shall be transferable by the Participant
otherwise than by will or by the laws of descent and distribution and all
Options shall be exercisable, during the Participant’s lifetime, only by the
Participant, or by the Participant’s legal representative or guardian in the
event of the Participant’s incapacity. The Participant may elect to
designate a beneficiary by providing written notice of the name of such
beneficiary to the Company, and may revoke or change such designation at any
time by filing written notice of revocation or change with the Company, and any
such beneficiary may exercise the Participant’s Option in the event of the
Participant’s death to the extent provided herein. If the Participant does
not designate a beneficiary, or if the designated beneficiary predeceases the
Participant, the legal representative of the Participant may exercise the Option
in the event of the Participant’s death to the extent provided herein.
Notwithstanding the foregoing, the Committee, in its sole discretion, may
provide in the Award agreement regarding a given Option that the Participant may
transfer, without consideration for the transfer, his or her Options to members
of his or her immediate family, to trusts for the benefit of such family
members, or to partnerships in which such family members are the only partners,
provided that the
transferee agrees in writing with the Company to be bound by all of the terms
and conditions of this Plan and the applicable Option.
(b) Issued Shares. No
Issued Shares shall be sold, assigned, transferred, pledged, hypothecated, given
away or in any other manner disposed of or encumbered, whether voluntarily or by
operation of law, unless such transfer is in compliance with the terms of the
applicable Award, all applicable securities laws (including, without limitation,
the Securities Act and the Exchange Act), and with the terms and conditions of
this Section 15. In connection with any proposed transfer, the Committee
may require the transferor to provide at the transferor’s own expense an opinion
of counsel to the transferor, satisfactory to the Committee, that such transfer
is in compliance with all foreign, federal and state securities laws (including,
without limitation, the Securities Act). Any attempted disposition of
Issued Shares not in accordance with the terms and conditions of this Section 15
shall be null and void, and the Company shall not reflect on its records any
change in record ownership of any Issued Shares as a result of any such
disposition, shall otherwise refuse to recognize any such disposition and shall
not in any way give effect to any such disposition of Issued
Shares.
(c) Legends. The Company
may cause a legend or legends to be put on any certificates for shares to make
appropriate references to any applicable legal restrictions on
transfer.
(d) Adjustments for Changes in Capital
Structure. If, as a result of any reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or other
similar change in the outstanding Shares of the Company, the outstanding Shares
are increased or decreased or are exchanged for a different number or kind of
shares of the Company’s stock, the restrictions contained in this
Section 15 shall apply with equal force to additional and/or substitute
securities, if any, received by Participant in exchange for, or by virtue of his
or her ownership of, Issued Shares.
16.
MISCELLANEOUS.
(a) Other Terms and
Conditions. The grant of any Award under this Plan may also be
subject to other provisions (whether or not applicable to the Award awarded to
any other Participant) as the Committee determines appropriate, subject to any
limitations imposed in the Plan.
(b) Code Section 409A. The
provisions of Code Section 409A are incorporated herein by reference to the
extent necessary for any Award that is subject to Code Section 409A to comply
therewith.
(c) Employment or Service.
The issuance of an Award shall not confer upon a Participant any right with
respect to continued employment or service with the Company or any Affiliate, or
the right to continue as a consultant or director. Unless determined
otherwise by the Committee, for purposes of the Plan and all Awards, the
following rules shall apply:
(i) a
Participant who transfers employment between the Company and any Affiliate, or
between Affiliates, will not be considered to have terminated
employment;
(ii) a
Participant who ceases to be a consultant, advisor or non-employee director
because he or she becomes an employee of the Company or an Affiliate shall not
be considered to have ceased service with respect to any Award until such
Participant’s termination of employment with the Company and its
Affiliates;
(iii) a
Participant who ceases to be employed by the Company or an Affiliate of the
Company and immediately thereafter becomes a non-employee director of the
Company or any Affiliate, or a consultant to the Company or any Affiliate, shall
not be considered to have terminated employment until such Participant’s service
as a director of, or consultant to, the Company and its Affiliates has ceased;
and
(iv)
a Participant employed by an Affiliate will
be considered to have terminated employment when such entity ceases to be an
Affiliate of the Company.
Notwithstanding
the foregoing, with respect to an Award subject to Code Section 409A, a
Participant shall be considered to have terminated employment (where termination
of employment triggers payment of the Award) upon the date of his separation
from service within the meaning of Code Section 409A.
(d) No Fractional Shares.
No fractional Shares or other securities may be issued or delivered pursuant to
this Plan, and the Committee may determine whether cash, other securities or
other property will be paid or transferred in lieu of any fractional Shares or
other securities, or whether such fractional Shares or other securities or any
rights to fractional Shares or other securities will be canceled, terminated or
otherwise eliminated.
(e) Unfunded Plan. This
Plan is unfunded and does not create, and should not be construed to create, a
trust or separate fund with respect to this Plan’s benefits. This Plan does not
establish any fiduciary relationship between the Company and any Participant. To
the extent any person holds any rights by virtue of an Award granted under this
Plan, such rights are no greater than the rights of the Company’s general
unsecured creditors.
(f) Requirements of Law.
The granting of Awards under this Plan and the issuance of Shares in connection
with an Award are subject to all applicable laws, rules and regulations and to
such approvals by any governmental agencies or national securities exchanges as
may be required. Notwithstanding any other provision of this Plan or any award
agreement, the Company has no liability to deliver any Shares under this Plan or
make any payment unless such delivery or payment would comply with all
applicable laws and the applicable requirements of any securities exchange or
similar entity. In such event, the Company may substitute cash for
any Share(s) otherwise deliverable hereunder without the consent of the
Participant or any other person.
(g) Governing
Law. This Plan, and all agreements under this Plan, shall be
construed in accordance with and governed by the laws of the State of New York,
without reference to any conflict of law principles. Any legal action
or proceeding with respect to this Plan, any Award or any award agreement, or
for recognition and enforcement of any judgment in respect of this Plan, any
Award or any award agreement, may only be brought and determined in a court
sitting in the State of New York, Erie County.
(h) Limitations on
Actions. Any legal action or proceeding with respect to this
Plan, any Award or any Award agreement, must be brought within one year (365
days) after the day the complaining party first knew or should have known of the
events giving rise to the complaint.
(i) Construction. Whenever
any words are used herein in the masculine, they shall be construed as though
they were used in the feminine in all cases where they would so apply; and
wherever any words are used in the singular or plural, they shall be construed
as though they were used in the plural or singular, as the case may be, in all
cases where they would so apply. Title of sections are for general
information only, and the Plan is not to be construed with reference to such
titles.
(j) Severability. If
any provision of this Plan or any award agreement or any Award (i) is or
becomes or is deemed to be invalid, illegal or unenforceable in any
jurisdiction, or as to any person or Award, or (ii) would disqualify this
Plan, any award agreement or any Award under any law the Committee deems
applicable, then such provision should be construed or deemed amended to conform
to applicable laws, or if it cannot be so construed or deemed amended without,
in the determination of the Committee, materially altering the intent of this
Plan, award agreement or Award, then such provision should be stricken as to
such jurisdiction, person or Award, and the remainder of this Plan, such award
agreement and such Award will remain in full force and effect.
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