SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant ___
Filed by a Party other than the Registrant __
Check the appropriate box:
_ Preliminary Proxy Statement
_ Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
X Definitive Proxy Statement
_ Definitive Additional Materials
_ Soliciting Material Pursuant to 240.14a-12
JNS MARKETING, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
X No fee required.
__ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(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:
JNS MARKETING, INC.
4150 LONG BEACH BOULEVARD
LONG BEACH, CALIFORNIA 90807
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, FEBRUARY 28, 2002
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To The Shareholders of JNS Marketing, Inc.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of JNS
MARKETING, INC., a Colorado corporation (the "Company"), will be held on
Thursday, February 28, 2002, at 12:00 p.m., local time, at the Company's
principal executive office, 4150 Long Beach Boulevard, Long Beach, California
90807, for the following purposes:
1. To elect directors to serve for the ensuing year and until their successors
are elected.
2. To authorize and approve redomiciling and reincorporating the Company in
Nevada as Latinocare Management Corporation.
3. To ratify the adoption of the 2002 Stock Option Plan for the Company.
4. To ratify the selection of Oppenheim & Ostrick as the Company's independent
accountants for the transition of the Company's fiscal year end to December
31 and for fiscal year ending December 31, 2001.
5. To transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on January 25,
2002 as the record date for the determination of stockholders entitled to notice
of and to vote at this Annual Meeting and at any adjournment or postponement
thereof.
By Order of the Board of Directors
/s/Jose J. Gonzalez
President, Chief Executive Officer,
Secretary, and Chairman
Long Beach, California
January 14, 2002
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN
PERSON. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE,
SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE
YOUR REPRESENTATION AT THE MEETING. A RETURN ENVELOPE IS ENCLOSED FOR THAT
PURPOSE. EVEN IF YOU HAVE GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU
ATTEND THE MEETING. PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD
BY A BROKER, BANK OR OTHER NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST
OBTAIN FROM THE RECORD HOLDER A PROXY ISSUED IN YOUR NAME.
JNS MARKETING, INC.
4150 LONG BEACH BOULEVARD
LONG BEACH, CALIFORNIA 90807
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PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 28, 2002
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INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
JNS Marketing, Inc., a Colorado corporation (the "Company"), for use at the
Annual Meeting of Stockholders (the "Annual Meeting") to be held on February 28,
2002 at 12:00 p.m., local time, or at any adjournment or postponement thereof,
for the purposes set forth herein and in the accompanying Notice of Annual
Meeting. The Annual Meeting will be held at the Company's principal executive
office, 4150 Long Beach Boulevard, Long Beach, California 90807. This proxy
statement and accompanying proxy will first be mailed to stockholders entitled
to vote at the Annual Meeting on or about January 25, 2002.
SOLICITATION
The Company will bear the entire cost of solicitation of proxies,
including preparation, assembly, printing and mailing of this proxy statement,
the proxy and any additional information furnished to stockholders. Copies of
solicitation materials will be furnished to banks, brokerage houses, fiduciaries
and custodians holding in their names shares of Common Stock beneficially owned
by others to forward to such beneficial owners. The Company will reimburse
persons representing beneficial owners of Common Stock for their costs of
forwarding solicitation materials to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, telegram or
personal solicitation by the Company or its agents. No directors, officers or
other regular employees will be paid any additional compensation for such
services.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Common Stock at the close of business on
January 25, 2002 will be entitled to notice of and to vote at the Annual
Meeting. At the close of business on December 28, 2001, the Company had
outstanding and entitled to vote 14,529,100 shares of Common Stock, the only
outstanding class of securities entitled to vote at the Annual Meeting. Each
share of Common Stock will be entitled to one vote on all matters to be voted on
at the Annual Meeting.
QUORUM
A quorum must be present for any action to be taken on a voting matter
at the Annual Meeting. The presence in person or by proxy of persons holding
one-third of the shares of Common Stock outstanding and entitled to vote
constitutes a quorum. Except in the election of directors and the approval of
the redomicile and reincorporation of the Company, the affirmative vote of the
majority of the shares present in person or by proxy will be required for the
approval of all matters presented at the Annual Meeting. Directors will be
elected by plurality vote. The redomicile and reincorporation of the Company
must be approved by two-thirds of all of the votes entitled to vote. All votes
will be tabulated by the inspector of election appointed for the Annual Meeting,
who will separately tabulate affirmative and negative votes, abstentions and
broker non-votes. Broker non-votes occur when brokers or other nominees are
prohibited from exercising discretionary voting authority for beneficial owners
who have not provided voting instructions. Abstentions will be counted toward
the tabulation of votes cast on proposals presented to the stockholders and will
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have the same effect as negative votes. Broker non-votes will be counted for
purposes of determining the presence of a quorum, but will not be counted for
the purpose of determining whether a matter has been approved.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power
to revoke it at any time before it is voted. It may be revoked by filing with
the Secretary of the Company at the Company's principal executive office, 4150
Long Beach Boulevard, Long Beach, California 90807, a written notice of
revocation or a duly executed proxy bearing a later date, or it may be revoked
by attending the Annual Meeting and voting in person. Attendance at the Annual
Meeting will not, by itself, revoke a proxy.
DISSENTERS' RIGHT OF APPRAISAL
Colorado General Corporation Law provides for certain dissenters'
rights in connection with the proposed redomicile and reincorporation of the
Company in Nevada as Latinocare Management Corporation, which proposal is to be
considered at the Annual Meeting of Shareholders. The failure of a shareholder
to vote against this proposal will not constitute a waiver of any rights
otherwise afforded to any such shareholder by the laws of the State of Colorado,
however, a shareholder may not vote in favor of this proposal and still retain
dissenters' rights.
A shareholder who intends to dissent from the proposed corporate action
to redomicile and reincorporate the Company in Nevada as Latinocare Management
Corporation must make a payment demand for the fair value of his or her shares
in writing to the Company prior to the Annual Meeting of Shareholders. Such
demand, when made, is effective to require payment in lieu of retaining
ownership of the shares if a majority of the other shareholders take the
proposed corporate action. The dissenting shareholder may not vote his or her
shares in favor of the proposed corporate action. Provided the Company has
received the dissenter's share certificates and written payment demand prior to
the Annual Meeting of Shareholders, upon the effective date of the redomicile
and reincorporation of the Company in Nevada as Latinocare Management
Corporation, the Company will the pay the dissenter the amount the Company
estimates to be the fair value of the dissenter's shares. If the dissenter
refuses the offer by the Company, the dissenter may submit in writing to the
corporation the dissenter's estimate of the fair value of the dissenter's
shares. If the demand for payment remains unresolved, the Company may, within
sixty days after receiving the demand, file suit in a District Court in Colorado
to have the fair value of the shares determined by an independent party. The
Court would consider such appraisal at trial and render a decision as to the
value of the dissenter's shares. The Court may then enter a judgment for such
determined value in favor of the shareholder. A copy of Colorado Revised
Statutes Sections 7-113-201 through 209 is attached hereto as Exhibit A.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's capital stock as of December 28, 2001, by
(i) each stockholder who is known by the Company to be the beneficial owner of
more than 5% of the Company's Common Stock, the only class of the Company's
outstanding voting securities, (ii) each director and executive officer of the
Company who owns any shares of Common Stock, and (iii) all executive officers
and directors as a group. Except as otherwise indicated, the Company believes
that the beneficial owners of the shares listed below have sole investment and
voting power with respect to such shares, subject to community property laws
where applicable. These shareholders plan to vote all of their shares for the
adoption of all of the proposals disclosed in this Proxy Statement.
NUMBER OF SHARES BENEFICIALLY
NAME, TITLE, AND ADDRESS OWNED(1) PERCENTAGE OWNERSHIP
Jose J. Gonzalez
President, Chief Executive Officer,
Secretary, and Chairman.................... 6,904,218 47.5%
2
Joseph C. Luevanos
Chief Financial Officer, Chief Operating
Officer, and Director...................... 0 0
Dr. Roberto Chiprut
Director................................... 6,567,427 45.2%
All current Executive Officers as a Group.... 6,904,218 47.5%
All current Directors who are not Executive
Officers as a Group........................ 6,567,427 45.2%
(1) Except as pursuant to applicable community property laws, the persons
named in the table have sole voting and investment power with respect
to all shares of common stock beneficially owned. The total number of
issued and outstanding shares and the total number of shares owned by
each person does not include unexercised warrants and stock options,
and is calculated as of December 28, 2001.
PROPOSAL I
ELECTION OF DIRECTORS
The Company's By-Laws authorize a Board of Directors consisting of a
number to be fixed from time to time by resolution of the Board of Directors.
The number of directors is currently fixed at three (3). Accordingly, three (3)
directors will be elected at the Annual Meeting. Directors hold office until the
next annual meeting of stockholders or until their successors have been elected
and qualified.
It is the intention of each of the persons named in the accompanying
proxy to vote the shares represented thereby in favor of the three (3) nominees
listed below, unless contrary instructions are given. Proxies cannot be voted
for a greater number of persons than the number of nominees named. All of the
nominees listed below are currently directors of the Company. The Board of
Directors has no reason to believe that any of the nominees listed below will be
unable or will decline to serve. If, however, any nominee is unable or declines
to serve, the persons named in the accompanying proxy reserve the right to vote
the shares represented thereby in favor of the election of another person or
persons nominated by the Board of Directors in his stead or, if no other person
is so nominated, in favor of the remaining nominees.
NOMINEES
Set forth below is certain information, as of December 28, 2001,
concerning the nominees for election as directors at the Annual Meeting:
NAME OF NOMINEE AGE POSITION WITH THE COMPANY DIRECTOR SINCE
Jose J. Gonzalez................ 55 President, Chief Executive Officer, Secretary, and October 2001
Chairman
Joseph C. Luevanos.............. 54 Chief Financial Officer, Chief Operating Officer, and November 2001
Director
Dr. Roberto Chiprut............. 53 Director November 2001
JOSE J. GONZALES, age 55, has been the Chairman of the Board of
Directors, President, Chief Executive Officer, and Secretary of the Company
since October 2001. He has been the President and Chief Executive Officer of
Latinocare Management Corporation ("LMC"), a wholly owned subsidiary of the
Company, since its inception in February 1995. Mr. Gonzalez's connections to the
community and marketing and business experience have played an important role in
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the development of LMC's customer base. Mr. Gonzalez has more than 30 years of
experience in the health care industry, including hospital administration, group
and Independent Physician's Association development, managing community clinics
in Los Angeles and Orange County, and managed care contracting. From December
1984 to July 1987, he was President and Chief Executive Officer of Universal
Medi-Co., which contracted with group practices to provide management and
support services. In November 1983, he started the White Memorial Medical Group,
a hospital based group practice. Mr. Gonzalez is currently a member of the
Public Policy Committee for the California Association of Physicians
Organizations, as well as a member of the Advisory Board of the California
Department of Managed Health Care, an appointment he received from Governor Gray
Davis. Mr. Gonzalez received a Bachelor of Arts Degree in Language and
Communications from California State University, Long Beach in 1970 and a
Masters Degree in Public Administration, Health Care Management from Pepperdine
University in 1973.
JOSEPH C. LUEVANOS, age 54, has been the Chief Financial Officer and Chief
Operating Officer of the Company since October 2001 and a director of the
Company since November 2001. Mr. Luevanos has been the Chief Financial Officer,
Chief Operating Officer, and a director of LMC since August 2001. From August
2000 to July 2001, Mr. Luevanos worked as an independent consultant. From August
1997 to July 2000, Mr. Luevanos was the Executive Vice President for Finance and
Chief Financial Officer of Bentley Health Care, Inc. At Bentley Health Care,
Inc. he provided executive oversight in the development and implementation of
accounting and information systems, financial models for reviewing and
evaluating external proposals, and strategic business plans. He also
participated in contract negotiations with major medical centers to develop
state of art cancer centers and with major investment banks to obtain funding
for the company. From December 1976 to August 1997, Mr. Luevanos worked for
Cedars-Sinai Medical Center ("CSMC"). From March 1982 to August 1997, he was the
Chief Financial Officer and Senior Vice President of CSMC, responsible for the
overall operations of the general accounting, third party reimbursement,
contracting, risk management, cash management, and investment portfolio
departments. He was also an Ex Officio Member of the Board of Directors and
Assistant Treasurer of CSMC Corporation, served as Chairman of the Board of
Directors of the Medical Center for-profit subsidiary of CSMC, and had executive
oversight of CSMC's investment portfolio with assets in excess of $250 million.
From January 1980 to February 1992, Mr. Luevanos was the Director of Finance of
CSMC, responsible for organizing and managing the process for several bond
financing transactions and the process for the preparation of the Medical Center
annual budget and the automated systems to track actual results in comparison to
the budget. From December 1976 to December 1979, Mr. Luevanos was the Controller
for CSCM, responsible for developing, organizing, and managing the financial
process for negotiation of construction financing through the State of
California loan program. Mr. Luevanos has been a member of the Board of
Directors of Proyecto Pastoral in Los Angeles, California since 1998 and a
member of the Board of Directors of Latino Care in Los Angeles, California since
1996. He was a member of the Board of Directors of Public Counsel in Los
Angeles, California from 1992 to 1997 and a member of the Loan Committee of the
Officer of Statewide Health Planning and Development for the State of California
from 1979 to 1984. Mr. Luevanos received a Bachelor in Business Administration
from Loyola University in Los Angeles, California in 1969. He became a Certified
Public Accountant in the State of California in 1973.
ROBERTO CHIPRUT, M.D., age 53, has been a director of the Company since
November 2001 and has been a director of LMC since its inception in February
1995. Dr. Chiprut has been a physician for thirty years. He is currently on
staff at Cedars-Sinai Medical Center in Los Angeles, California, Charter
Suburban Hospital in Los Angeles, California, St. Francis Medical Center in Los
Angeles, California, Beverly Hills Medical Center in Los Angeles, California
(Courtesy Staff), and American British Cowdray Hospital in Mexico City, Mexico.
Dr. Chiprut was a member for the Board of Directors of the American Cancer
Society in 1988. In 1987, he was the President of Charter Suburban Hospital. In
1984, he was the Chief of Medicine at Dominguez Valley Hospital. From 1983 to
1984, Dr. Chiprut was the Chief of Professional Activities Committee for Charter
Suburban Hospital. In 1983, he was a member of the Research and Education
Institute of Harbor/UCLA Medical Center. Dr. Chiprut was the Chief of
Gastroenterology of St. Francis Medical Center in 1981. Dr. Chiprut is a member
of the American College of Physicians, American Society of Internal Medicine,
American Society for the Study of Liver Disease, American Society of
Gastrointestinal Endoscopy, American Gastroenterological Association, Profession
Staff Association of Harbor/UCLA Medical Center, Los Angeles County Medical
Association, American College of Gastroenterology, and Southern California
Society of Gastroenterology. He has received several honors, including but not
limited to, Fellow, American College of Physicians in 1983, Fellow, American
College of Gastroenterology in 1985, and the Mayor of Los Angeles Certificate
for Outstanding services in 1987 and 1989. Dr. Chiprut received a Bachelor of
Science degree, Magna Cum Laude, from Colegio Hebreo Sefardai in Mexico City,
Mexico in 1965. He Received a medical degree, Magna Cum Laude, from National
University of Mexico in Mexico City in 1971.
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's officers and directors, and persons who
own more than ten percent of its Common Stock, to file reports of ownership and
changes of ownership with the Securities and Exchange Commission. Such persons
are also required to furnish the Company with copies of all Section 16(a) forms
they file. Based solely on the Company's review of the copies of those forms
received by the Company or written representations from such persons that no
Forms 5 were required to be filed, to the Company's knowledge all reports due
were timely filed.
BOARD COMMITTEES AND MEETINGS
The Board of Directors does not currently maintain an Audit Committee
or a Compensation Committee, but plans to appoint an Audit Committee and a
Compensation Committee in the near future. During the fiscal year ended
September 30, 2001, the Board of Directors held no meetings.
COMPENSATION OF DIRECTORS
Directors receive no cash compensation for their services to the
Company as directors, but are reimbursed for expenses actually incurred in
connection with attending meetings of the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH
NAMED NOMINEE.
MANAGEMENT
Set forth below is certain information, as of December 28, 2001,
concerning the current executive officers of the Company. All officers serve at
the discretion of the Board of Directors. There are no family relationships
among any of the Company's directors or executive officers.
NAME AGE POSITION WITH THE COMPANY
Jose J. Gonzalez................ 55 President, Chief Executive
Officer, Secretary, and
Chairman
Joseph C. Luevanos.............. 54 Chief Financial Officer, Chief
Operating Officer, and Director
JOSE J. GONZALEZ has been the Chairman of the Board of Directors,
President, Chief Executive Officer, and Secretary of the Company since October
2001. He has been the President and Chief Executive Officer of Latinocare
Management Corporation ("LMC"), a wholly owned subsidiary of the Company, since
its inception in February 1995. See "Election of Directors--Nominees."
JOSEPH C. LUEVANOS has been the Chief Financial Officer and Chief
Operating Officer of the Company since October 2001 and a director of the
Company since November 2001. Mr. Luevanos has been the Chief Financial Officer,
Chief Operating Officer, and a director of LMC since August 2001. See "Election
of Directors--Nominees."
Under the Colorado General Corporation Law and the Company's Articles
of Incorporation, the Company's directors will have no personal liability to the
Company or its stockholders for monetary damages incurred as the result of the
breach or alleged breach by a director of his "duty of care." This provision
does not apply to the directors' (i) acts or omissions that involve intentional
misconduct or a knowing and culpable violation of law, (ii) acts or omissions
that a director believes to be contrary to the best interests of the corporation
or its shareholders or that involve the absence of good faith on the part of the
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director, (iii) approval of any transaction from which a director derives an
improper personal benefit, (iv) acts or omissions that show a reckless disregard
for the director's duty to the corporation or its shareholders in circumstances
in which the director was aware, or should have been aware, in the ordinary
course of performing a director's duties, of a risk of serious injury to the
corporation or its shareholders, (v) acts or omissions that constituted an
unexcused pattern of inattention that amounts to an abdication of the director's
duty to the corporation or its shareholders, or (vi) approval of an unlawful
dividend, distribution, stock repurchase or redemption. This provision would
generally absolve directors of personal liability for negligence in the
performance of duties, including gross negligence.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed that in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Act and is therefore unenforceable.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The annual compensation for the executive officers of the Company has
not yet been determined, but is expected to be established by a resolution of
the Company's Board of Directors in the near future. Directors receive no salary
for their services to the Company as directors, but are reimbursed for expenses
actually incurred in connection with attending meetings of the Board of
Directors, and may receive a cash fee for attending meetings, as well. The
following table and notes set forth the annual cash compensation paid to Jose
Gonzalez, the President, Chief Executive Officer, and Secretary of the Company,
by LMC during its fiscal years ended December 31, 2000, 1999, 1998, and 1997,
respectively. No other executive officer received compensation in excess of
$100,000 in any such year.
LONG-TERM
COMPENSATION ALL OTHER
ANNUAL COMPENSATION AWARDS COMPENSATION
SECURITIES
FISCAL OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY(1)(2) BONUS COMPENSATION OPTIONS
--------------------------- ----- ------------ ----- -------------- ------------- -------------
Jose J. Gonzalez................. 2000 - 0 - - 0 - - 0 - - 0 - $144,000(3)
President, Chief Executive
Officer, and Secretary
1999 - 0 - - 0 - - 0 - - 0 - $144,000(3)
1998 - 0 - - 0 - - 0 - - 0 - $151,000(3)
1997 - 0 - - 0 - - 0 - - 0 - $134,000(3)
(1) During LMC's fiscal year 2001, Mr. Jose J. Gonzalez received an annual
salary of $144,000.
(2) During LMC's fiscal year 2001, Mr. Joseph Luevanos, the Chief Financial
Officer and Chief Operating officer of the Company and LMC, received an
annual salary from LMC of $168,000.
(3) Prior to 2001, Mr. Jose J. Gonzalez received consulting fees from the
Company.
OPTIONS GRANTED IN LAST FISCAL YEAR
No options to purchase Common Stock of the Company have been granted to
the Company's executive officers.
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FISCAL YEAR-END OPTION EXERCISES AND OPTION VALUES
No options to purchase Common Stock of the Company have been granted to
the Company's executive officers.
EMPLOYMENT AGREEMENTS
The Company has not entered into any employment agreements with its
executive officers to date. The Company may enter into employment agreements
with them in the future.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PROPOSAL II
AUTHORIZATION TO REDOMICILE AND REINCORPORATE IN NEVADA AS
LATINOCARE MANAGEMENT CORPORATION
The Board of Directors is asking shareholders to approve the redomicile
and reincorporation of the Company in the State of Nevada as Latinocare
Management Corporation. In order to accomplish the redomicile and
reincorporation, the Company will incorporate a wholly owned subsidiary in the
State of Nevada to be named Latinocare Management Corporation ("LMC-NV") with
which the Company will merge. LMC-NV will be the surviving corporation.
Accordingly, the new name of the Company will be Latinocare Management
Corporation. The capitalization of LMC-NV is anticipated to consist of
50,000,000 shares of common stock, par value $0.001 per share, authorized and
2,000,000 shares of preferred stock, par value $0.001 per share, authorized with
such classes, rights, preferences, and privileges as the Board of Directors may
hereafter determine.
MANAGEMENT DISCUSSION OF REDOMICILE PROPOSAL
Management believes that there are no disadvantages to redomiciling in
Nevada from an operational standpoint, but that there are several advantages to
redomiciling in Nevada from a procedural standpoint. For example, many
acquisition/merger candidates consider the process of submitting a merger
proposal to shareholders for a vote through a registration statement filed with
the Securities Exchange Commission to be too lengthy and expensive to endure,
limiting corporate opportunities. Nevada law, however, permits the Board of
Directors to approve a merger without shareholder approval, provided that the
number of post-merger shares outstanding does not exceed 120% of the number of
pre-merger shares outstanding.
Additionally, Nevada Revised Statutes Section 78.320 provides that any
action required or permitted to be taken at a shareholders' meeting may be taken
without a meeting, if shareholders holding at least a majority of the
outstanding voting shares of the company sign a written consent. Colorado law
contains no such provision. In the case of a merger, this provision of Nevada
laws allows majority shareholders to forgo a shareholders meeting, even if a
merger will result in the issuance of more than an additional 20% of the
outstanding pre-merger shares.
The Company proposes authorizing blank check preferred stock. This
refers to future classes of preferred stock which have, at this time, no defined
rights and privileges. In the future, the Board of Directors may determine the
classes of preferred stock and rights and privileges thereof without shareholder
approval, and the rights and privileges could, in worst case, be so overbearing
and detrimental to the interests of common shareholders as to render common
shares worthless. Further, preferred shares could exercise total control. There
are currently no plans to issue any preferred stock with any defined rights and
privileges.
COMPARISON OF SHAREHOLDERS' RIGHTS
SHAREHOLDER VOTING. Under Colorado law, a corporate action requiring
shareholder approval must be approved at a shareholders' meeting unless all of
the shareholders entitled to vote consent to such action in writing.
Alternatively, under Nevada law, a corporate action requiring shareholder
approval may be approved by a majority of shareholders of the corporation by
written consent without a shareholders meeting.
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Under Colorado law, corporate actions involving a recapitalization or
merger require an affirmative vote of two-thirds of the outstanding shares of
the corporation unless the corporation's Articles of Incorporation provide for
approval by a simple majority of the outstanding shares. Under Nevada law,
however, corporate actions involving a recapitalization or merger require
shareholder approval by a simple majority of the outstanding shares, and such
approval may be done by written consent without a shareholder meeting.
DIVIDEND POLICIES. Under Colorado law, dividends on common stock may be
declared and authorized by the Board of Directors as a distribution, at any
time, so long as: (a) dividends on preferred classes of stock, if required, have
first been paid in full; (b) the distribution of dividends does not render the
corporation unable to pay debts in the usual course of business; and (c) the
total liabilities of the corporation do not exceed the total assets after
reserving any amounts needed to satisfy preferential rights of preferred
shareholders in the event of dissolution.
Under Nevada law, the Board of Directors has the authority to declare
dividends on common stock only if: (a) dividends on preferred classes of stock,
if required, have been paid in full; (b) the corporation remains able to pay its
debts as they become due in the usual course of business after the effect of the
dividend; and (c) the corporation's total assets would be less than the sum of
its total liabilities plus the amount needed to satisfy the preferential rights
of preferred shareholders in the event of dissolution.
Except with respect to distributions by purchase, redemption or other
acquisition of the corporation's shares or any other distribution of
indebtedness, both Colorado and Nevada law define the time parameters within
which the liquidity test set forth in (b) and (c) above must be measured as the
date the distribution (dividend) is authorized if payment occurs within 120 days
thereafter, or the date dividend payment is made if it occurs more than 120 days
after authorization.
DISSENTERS' RIGHTS. Under both Nevada and Colorado law, if the class of
shares entitled to vote with respect to a plan of merger or exchange is listed
on a national securities exchange registered under the federal Securities
Exchange Act of 1934, as amended, or on the National Market System of the
National Association of Securities Dealers Automated Quotation System, or the
shares are held by more than 2,000 shareholders of record, shareholders are not
entitled to dissenters' rights provided shareholders will receive cash or stock
or a combination of both.
Under Nevada law, if a corporate action creating dissenters' rights is
taken without a meeting of the shareholders, the corporation must, within ten
days after the effectuation of the corporate action, notify in writing all
shareholders entitled to dissent that the action was taken and the procedure for
dissenters to follow to make demand for payment. Within 30 days after receiving
a demand for payment, the corporation must pay the dissenter the fair value of
his shares. Similar to Colorado law, under Nevada law a dissenter who is
dissatisfied with the corporation's determination of the fair value of his
shares may submit his own estimate of fair value, and if the dissenter and the
corporation cannot agree as to fair value, the Court may determine fair value.
CORPORATE GOVERNANCE. Currently, the Company's Articles of
Incorporation do not provide for cumulative voting and the Articles of
Incorporation for Nevada would not provide for cumulative voting.
Under Nevada law, directors may be removed by a vote of 2/3 of the
shareholders entitled to vote whereas under Colorado law, directors may be
removed by a vote of a majority of the shareholders at a meeting called for such
purpose. In both states, vacant director positions may be filled by appointment
by the remaining members of the Board of Directors.
Under Nevada law, the Board of Directors may, without a vote of the
shareholders, approve and effectuate a reverse split or recapitalization of the
outstanding shares of the corporation. Colorado law requires shareholder
approval to accomplish a reverse split of shares.
Under Colorado law, any shareholder may, during reasonable business
hours upon five days prior written notice, inspect the books and financial
records of the corporation. Under Nevada law, a person holding or representing
15% or more of the outstanding shares may, on at least five days prior written
notice, inspect the books and financial records of the corporation.
There are no conversion rights or sinking fund provisions which are
applicable in Colorado or Nevada under the Company's current capital structure.
8
TAKEOVER BIDS. Under Nevada law, unless the Articles of Incorporation
provide that the anti-takeover sections of Nevada Revised Statutes Sections
78.378 to 78.3793 do not apply, Nevada law provides that in the event any person
or group acting together acquire control shares (defined as one fifth or more of
the outstanding shares), a takeover statement is required to be sent to the
shareholders, and the control shares may not be voted except by resolution of a
majority of the non-control shareholders at a special meeting of shareholders
called more than 30 days after delivery of an offeror's statement. Colorado law
has no such anti-takeover provisions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
PROPOSAL III
RATIFICATION OF 2002 STOCK OPTION PLAN FOR LATINOCARE MANAGEMENT CORP.
Effective as of January 31, 2002, the Board of Directors of the Company
unanimously adopted the 2002 Stock Option Plan for Latinocare Management Corp.
(the "Plan"), subject to shareholder ratification within twelve months of the
adoption of the Plan. The Company has not issued any stock options under the
Plan. The name of the Plan reflects the proposed new name of the Company.
DESCRIPTION OF THE PLAN
Below is a summary of the principal provisions of the Plan. The summary
is not necessarily complete, and reference is made to the full text of the Plan
attached as Exhibit C to this Proxy Statement. Capitalized terms used, but not
defined herein, have the same meaning as set forth in the Plan.
GENERAL. The Plan provides for the grant of stock options to directors,
officers, employees, consultants, and advisors of the Company. The Plan will be
administered by a committee consisting of members of the Board of Directors (the
"Stock Option Committee").
SHARES SUBJECT TO THE PLAN. The Plan provides for a total of 1,200,000
shares of common stock to be reserved for issuance subject to options. As of the
date of this Proxy Statement, the Board of Directors had not approved the grant
of any options to purchase stock.
ANTI-DILUTION PROTECTION. Proportionate adjustments will be made to the
number of shares of common stock subject to the Plan in the event of any change
in the capitalization of the Company affecting its common stock (e.g., a stock
split, reverse stock split, stock dividend, combination, recapitalization, or
reclassification). The Board or the Stock Option Committee, subject to Board
approval, may also provide additional anti-dilution protection to a participant
under the terms of such participant's option agreement or otherwise. Shares of
common stock subject to option grants that are canceled, terminated, or
forfeited will again be available for issuance under the Plan.
ADMINISTRATION OF THE PLAN. The Stock Option Committee will administer
the Plan and has the authority to modify an existing option, interpret the Plan,
adopt rules and procedures relating to the administration of the Plan, and make
such modifications to the Plan as are necessary to effectuate the intent of the
Plan as a result of any changes in the tax, accounting, or securities laws
treatment of participants and the Plan.
STOCK OPTIONS, RESTRICTED STOCK, AND STOCK APPRECIATION RIGHTS. From
time to time, the Stock Option Committee will recommend to the Board individuals
the Stock Option Committee believes should receive options, the amount of shares
of common stock the Stock Option Committee believes should be subject to such
option, and whether the option should be a qualified or nonqualified option. The
Board will consider, but need not accept, the Stock Option Committee's grant
recommendations.
The Board may grant nonqualified stock option or incentive stock
options to purchase shares of common stock. Any person who is not any employee
on the effective date of the grant of an option to such person may be granted
only a nonstatutory stock option. Moreover, to the extent that options
designated as incentive stock options become exercisable by a participant for
9
the first time during any calendar year for stock having a fair market value
greater than $100,000, the portions of such options that exceed such amount will
be treated as nonstatutory stock options. The Plan does not provide for stock
appreciation rights.
The Stock Option Committee, subject to approval by the Board, will
determine the number and exercise price of options, and the time or times that
the options become exercisable, provided that an option exercise price may not
be less than the fair market value of the common stock on the date of grant. The
term of an option will also be determined by the Stock Option Committee, subject
to approval by the Board, provided that the term of a qualified option may not
exceed ten years, or five years in the case of a qualified stock option granted
to a 10% shareholder, and that at least 20% of the shares of common stock
subject to each grant of options must become exercisable on each anniversary
date of the date of grant. The Plan provides that each grant of options will
vest in accordance with the applicable option agreement. The option exercise
price may be paid in cash, by check or in such other form of lawful
consideration (including promissory notes or shares of common stock then held by
the participant).
CHANGE OF CONTROL. The Plan provides that in the event of a sale by the
Company of all or substantially all of its assets, a merger of the Company with
another company, the sale or issuance of more than 50% of the total issued and
outstanding voting stock of the Company to another party or parties in a single
transaction or in a series of related transactions, resulting in a change of
control of the Company, or a similar business combination or extraordinary
transaction involving the Company, all outstanding options granted to any
officer, director, or employee of or key consultant to the Company which have
not vested will accelerate to a date at least ten (10) business days prior to
the closing date of such sale or similar business combination or extraordinary
transaction. The exercise of options the vesting of which has accelerated
accordingly will not be effective until the closing date of an above-referenced
extraordinary transaction or business combination. Such vested options will
terminate on the date of the closing of the event causing the vesting of the
options to accelerate. The vesting of the options is conditioned upon the
closing of the transaction that causes the vesting of the options to accelerate.
If said transaction does not close within 30 days from the acceleration date,
then the vesting of the accelerated options will not be effective, and the
options will revert to their original vesting schedule, subject to acceleration
again in accordance with the Plan if another extraordinary transaction or
business combination is proposed and closes.
TERMINATION OF EMPLOYMENT. If a participant becomes disabled, all
vested options may be exercised at any time within one year after the date on
which the participant's services terminated, but in any event no later than the
option expiration date. If a participant is terminated, his options will expire
and cease to be exercisable 90 days from the date on which the participant's
service terminated. If a participant dies, his options will expire and cease to
be exercisable 90 days after the death of the participant. The termination of
employment of a participant by death, disability or otherwise will not
accelerate or otherwise affect the number of shares with respect to which an
option may be exercised, and the option may only be exercised with respect to
that number of shares which could have been purchased under the option had the
option been exercised by the participant on the date of such termination.
TRANSFERABILITY. During the lifetime of the participant, options will
be exercisable only by the participant or the participant's guardian or legal
representative. No stock option may be assigned or transferred by the
participant, except by will or by the laws of descent and distribution.
STOCKHOLDER RATIFICATION. The Plan must be approved by the stockholders
of the Company within twelve months after the date of its adoption by the Board.
Options granted prior to stockholder ratification may become exercisable no
earlier than the date of stockholder ratification of the Plan. Options granted
to executive officers that are designated as performance based under Section
162(m) of the Code must be contingent on stockholder ratification of the
material terms of the Plan to the extent required under Section 162(m) of the
Code.
AMENDMENTS TO THE PLAN. The Board may amend or discontinue the Plan at
any time subject to certain restrictions set forth in the Plan. No amendment or
discontinuance may adversely affect any previously granted option award without
the consent of the recipient.
FEDERAL INCOME TAX CONSEQUENCES. The following general description of
federal income tax consequences is based upon current statutes, regulations and
interpretations and does not purport to be complete. Reference should be made to
the applicable provisions of the Internal Revenue Code of 1986 (the "Code"). In
10
addition, state, local and foreign income tax consequences may be applicable to
transactions involving options. The following description does not address
specific tax consequences applicable to an individual participant who receives
an option and does not address special rules that may be applicable to directors
and officers.
Under existing federal income tax provisions, a participant who
receives options will not normally realize any income, nor will the Company
normally receive any deduction for federal income tax purposes, upon the grant
of an option.
When a non-qualified stock option granted pursuant to the Plan is
exercised, the employee generally will realize ordinary income (compensation)
measured by the difference between the aggregate purchase price of the common
stock as to which the option is exercised and the aggregate fair market value of
the common stock on the exercise date, and the Company generally will be
entitled to a deduction in the year the option is exercised equal to the amount
the employee is required to treat as ordinary income. Any taxable income
recognized in connection with a non-qualified stock option exercised by an
optionee who is also an employee of the Company will be subject to tax
withholding by the Company. The basis for determining gain or loss upon a
subsequent disposition of common stock acquired upon the exercise of a
non-qualified stock option will be the purchase price paid to the Company for
the common stock increased by an amount included in the optionee's taxable
income resulting from the exercise of such option. The holding period for
determining whether gain or loss on such subsequent disposition is short-term or
long-term generally begins on the date on which the optionee acquires the common
stock.
An employee generally will not recognize any income upon the exercise
of an incentive stock option, but the exercise may, depending on particular
factors relating to the employee, subject the employee to the alternative
minimum tax. An employee will recognize capital gain or loss in the amount of
the difference between the exercise price and the sale price on the sale or
exchange of stock acquired pursuant to the exercise of an incentive stock
option, provided that the employee does not dispose of such stock within two
years from the date of grant and one year from the date of exercise of the
incentive stock option (the "Required Holding Periods"). An employee disposing
of such shares before the expiration of the Required Holding Periods will
recognize ordinary income equal to the lesser of (i) the difference between the
option price and the fair market value of the stock on the date of exercise, or
(ii) the total amount of gain realized. The remaining gain or loss is generally
treated as short term or long-term gain or loss depending on how long the shares
are held. The Company will not be entitled to a federal income tax deduction in
connection with the exercise of an incentive stock option, except where the
employee disposes of the shares of Common Stock received upon exercise before
the expiration of the Required Holding Periods.
INTERESTS OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
In considering whether to vote for approval of the Plan, stockholders
should be aware that each of the directors, nominees for director and executive
officers will be eligible for option grants under the Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
PROPOSAL IV
RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected Oppenheim & Ostrick as the
Company's independent accountants for the transition of the Company's fiscal
year end to December 31 and for the fiscal year ending December 31, 2001. Prior
to the change of control of the Company on October 22, 2001, Michael B. Johnson
& Company audited the Company's financial statements. Oppenheim & Ostrick has
audited LMC's financial statements since 1999 and the Board of Directors has
decided to utilize Oppenheim & Ostrick to audit the Company's financial
statements. Representatives of Oppenheim & Ostrick are expected to be present at
the Annual Meeting, will have an opportunity to make a statement if they so
desire and will be available to respond to appropriate questions.
Stockholder ratification of the selection of Oppenheim & Ostrick as the
Company's independent accountants is not required by the Company's By-laws or
otherwise. However, the Board is submitting the selection of Oppenheim & Ostrick
to the stockholders for ratification in order to obtain the views of
stockholders regarding such selection. If the stockholders fail to ratify the
11
selection of Oppenheim & Ostrick, the Board will reconsider its selection. Even
if this selection is ratified, the Board, in its discretion, may direct the
appointment of different independent accountants at any time during the year, if
it determines that such a change would be in the best interests of the Company
and its stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
OTHER MATTERS
The Board of Directors does not know of any other matters which may be
brought before the Annual Meeting. However, if any such other matters are
properly presented for action at the Annual Meeting, it is the intention of the
persons named in the accompanying proxy to vote the shares represented thereby
in accordance with their judgment on such matters.
SHAREHOLDER PROPOSALS
Proposals of stockholders that are intended to be presented at the
Company's 2003 Annual Meeting of Stockholders must be received by the Company
not later than November 1, 2002 in order to be included in the proxy statement
and proxy relating to that Annual Meeting.
ADDITIONAL INFORMATION
The Company will provide, without charge, to each person to whom a copy
of this proxy statement is delivered, upon the written or oral request of such
person, a copy of the annual report on Form 10-K of the Company, including
financial statements required to be filed with the United States Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934 for the
fiscal year ended September 30, 2001 . Requests should be directed to Chief
Financial Officer, c/o JNS Marketing, Inc., 4150 Long Beach Boulevard, Long
Beach, California 90807, telephone (562) 997-4420.
By Order of the Board of Directors
/s/Jose J. Gonzalez
Chief Executive Officer and President
January 14, 2002
12
JNS MARKETING, INC.
Proxy Card for Annual Meeting of Shareholders
Attention Shareholder:
Please Mark Your Vote Clearly for Each Proposal and Each Director/Nominee.
The undersigned shareholder of JNS Marketing, Inc., a Colorado corporation,
hereby appoints ___________________________ of ___________________,
_______________, my proxy to attend and represent me at the Annual Meeting of
the Shareholders of the corporation to be held on February 28, 2002, and at any
adjournment thereof, and to vote in favor of the following matters or
resolutions:
- -------------------------------------------------------------------------- -------------------- --------------------
PROPOSAL FOR AGAINST
- -------------------------------------------------------------------------- -------------------- --------------------
Proposal # 1: To elect directors to serve for the
ensuing year and until their successors are
elected.
- -------------------------------------------------------------------------- -------------------- --------------------
Proposal #2: To authorize and approve redomiciling
and reincorporating the Company in Nevada as
Latinocare Management Corporation.
- -------------------------------------------------------------------------- -------------------- --------------------
Proposal #3: To ratify the adoption of the 2002
Stock Option Plan for the Company.
- -------------------------------------------------------------------------- -------------------- --------------------
Proposal #4: To ratify the selection of Oppenheim
& Ostrick as the Company's independent accountants
for the transition of the Company's fiscal year
end to December 31 and for fiscal year ending
December 31, 2001.
- -------------------------------------------------------------------------- -------------------- --------------------
Nominees for Director (Vote for all directors.)
- ----------------------------------------------------------- --------------------------- ----------------------------
NAME OF NOMINEE FOR AGAINST
- ----------------------------------------------------------- --------------------------- ----------------------------
Jose J. Gonzalez
- ----------------------------------------------------------- --------------------------- ----------------------------
Joseph C. Luevanos
- ----------------------------------------------------------- --------------------------- ----------------------------
Dr. Roberto Chiprut
- ----------------------------------------------------------- --------------------------- ----------------------------
Shares owned: _________________.
Dated this _________ day of __________, 2002
- ------------------------------------------------------
Shareholder (Sign exactly as name appears on Certificate for shares.)
Please mail this Proxy Card, immediately after marking, back to the Company so
that it arrives before the meeting. JNS Marketing, Inc., 4150 Long Beach
Boulevard, Long Beach, California 90807.
EXHIBIT A
DISSENTERS' RIGHTS
SECTIONS 7-113-201 TO 209 OF
THE COLORADO REVISED STATUTES
7-113-201 - NOTICE OF DISSENTERS' RIGHTS.
(1) If a proposed corporate action creating dissenters' rights under section
7-113-102 is submitted to a vote at a shareholders' meeting, the notice of the
meeting shall be given to all shareholders, whether or not entitled to vote. The
notice shall state that shareholders are or may be entitled to assert
dissenters' rights under this article and shall be accompanied by a copy of this
article and the materials, if any, that, under articles 101 to 117 of this
title, are required to be given to shareholders entitled to vote on the proposed
action at the meeting. Failure to give notice as provided by this subsection (1)
shall not affect any action taken at the shareholders' meeting for which the
notice was to have been given, but any shareholder who was entitled to dissent
but, who was not given such notice shall not be precluded from demanding payment
for the shareholder's shares under this article by reason of the shareholder's
failure to comply with the provisions of section 7-113-202(1).
(2) If a proposed corporate action creating dissenters' rights under section
7-113-102 is authorized without a meeting of shareholders pursuant to section
7-107-104, any written or oral solicitation of a shareholder to execute a
writing consenting to such action contemplated in section 7-107-104 shall be
accompanied or preceded by a written notice stating that shareholders are or may
be entitled to assert dissenters' rights under this article, by a copy of this
article, and by the materials, if any, that, under articles 101 to 117 of this
title, would have been required to be given to shareholders entitled to vote on
the proposed action if the proposed action were submitted to a vote at a
shareholders' meeting. Failure to give notice as provided by this subsection (2)
shall not affect any action taken pursuant to section 7-107-104 for which the
notice was to have been given, but any shareholder who was entitled to dissent
but who was not given such notice shall not be precluded from demanding payment
for the shareholder's shares under this article by reason of the shareholder's
failure to comply with the provisions of section 7-113-202 (2).
7-113-202 - NOTICE OF INTENT TO DEMAND PAYMENT.
(1) If a proposed corporate action creating dissenters' rights under section
7-113-102 is submitted to a vote at a shareholders' meeting and if notice of
dissenters' rights has been given to such shareholder in connection with the
action pursuant to section 7-113-201 (1), a shareholder who wishes to assert
dissenters' rights shall:
(a) Cause the corporation to receive, before the vote is taken, written
notice of the shareholder's intention to demand payment for the shareholder's
shares if the proposed corporate action is effectuated; and
(b) Not vote the shares in favor of the proposed corporate action.
(2) If a proposed corporate action creating dissenters' rights under section
7-113-102 is authorized without a meeting of shareholders pursuant to section
7-107-104 and if notice of dissenters' rights has been given to such shareholder
in connection with the action pursuant to section 7-113-201 (2), a shareholder
who wishes to assert dissenters' rights shall not execute a writing consenting
to the proposed corporate action.
(3) A shareholder who does not satisfy the requirements of subsection (1) or (2)
of this section is not entitled to demand payment for the shareholder's shares
under this article.
7-113-203 - DISSENTERS' NOTICE.
(1) If a proposed corporate action creating dissenters' rights under section
7-113-102 is authorized, the corporation sha1l give a written dissenters' notice
to all shareholders who are entitled to demand payment for their shares under
this article.
(2) The dissenters' notice required by subsection (1) of this section shall be
given no later than ten days after the effective date of the corporate action
creating dissenters' rights under section 7-113-102 and shall:
(a) State that the corporate action was authorized and state the effective
date or proposed effective date of the corporate action;
(b) State an address at which the corporation will receive payment demands
and the address of a place where certificates for certificated shares must be
deposited;
(c) Inform holders of uncertificated shares to what extent transfer of the
shares will be restricted after the payment demand is received;
(d) Supply a form for demanding payment, which form shall request a
dissenter to state an address to which payment is to be made;
(e) Set the date by which the corporation must receive the payment demand
and certificates for certificated shares, which date shall not be less than
thirty days after the date the notice required by subsection (1) of this section
is given;
(f) State the requirement contemplated in section 7-113-103 (3), if such
requirement is imposed; and
(g) Be accompanied by a copy of this article.
7-113-204 - PROCEDURE TO DEMAND PAYMENT
(1) A shareholder who is given a dissenters' notice pursuant to section
7-113-203 and who wishes to assert dissenters' rights shall, in accordance with
the terms of the dissenters' notice:
(a) Cause the corporation to receive a payment demand, which may be the
payment demand form contemplated in section 7-113-203 (2)(d), duly completed, or
may be stated in another writing; and
(b) Deposit the shareholder's certificates for certificated shares.
(2) A shareholder who demands payment in accordance with subsection (1) of this
section retains all rights of a shareholder, except the right to transfer the
shares, until the effective date of the proposed corporate action giving rise to
the shareholder's exercise of dissenters' rights and has only the right to
receive payment for the shares after the effective date of such corporate
action.
(3) Except as provided in section 7-113-207 or 7-113-209(1) (b), the demand for
payment and deposit of certificates are irrevocable.
(4) A shareholder who does not demand payment and deposit the shareholder's
share certificates as required by the date or dates set in the dissenters'
notice is not entitled to payment for the shares under this article.
7-113-205 - UNCERTIFICATED SHARES.
(1) Upon receipt of a demand for payment under section 7-113-204 from a
shareholder holding uncertificated shares, and in lieu of the deposit of
certificates representing the shares, the corporation may restrict the transfer
thereof.
(2) In all other respects, the provisions of section 7-113-204 shall be
applicable to shareholders who own uncertificated shares.
7-113-206 - PAYMENT.
(1) Except as provided in section 7-113-208 upon the effective date of the
corporate action creating dissenters' rights under section 7-113-102 or upon
receipt of a payment demand pursuant to section 7-113-204 whichever is later,
the corporation shall pay each dissenter who complied with section 7-113-204, at
the address stated in the payment demand, or if no such address is stated in the
payment demand, at the address shown on the corporation's current record of
shareholders for the record shareholder holding the dissenter's shares, the
amount the corporation estimates to be the fair value of the dissenter's shares,
plus accrued interest.
(2) The payment made pursuant to subsection (1) of this section shall be
accompanied by:
(a) The corporation's balance sheet as of the end of its most recent fiscal
year or, if that is not available, the corporation's balance sheet as of the end
of a fiscal year ending not more than sixteen months before the date of payment,
an income statement for that year, and, if the corporation customarily provides
such statements to shareholders, a statement of changes in shareholders' equity
for that year and a statement of cash flow for that year, which balance sheet
and statements shall have been audited if the corporation customarily provides
audited financial statements to shareholders, as well as the latest available
financial statements, if any, for the interim or full-year period, which
financial statements need not be audited;
(b) A statement of the corporation's estimate of the fair value of the
shares;
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenter's right to demand payment under section
7-113-209; and
(e) A copy of this article.
7-113-207 - FAILURE TO TAKE ACTION.
(1) If the effective date of the corporate action creating dissenters' rights
under section 7-113-102 does not occur within sixty days after the date set by
the corporation by which the corporation must receive the payment demand as
provided in section 7-113-203, the corporation shall return the deposited
certificates and release the transfer restrictions imposed on uncertificated
shares.
(2) If the effective date of the corporate action creating dissenters' rights
under section 7-113-102 occurs more than sixty days after the date set by the
corporation by which the corporation must receive the payment demand as provided
in section 7-113-203, then the corporation shall send a new dissenters' notice,
as provided in section 7-113-203 and the provisions of sections 7-113-204 to
7-113-209 shall again be applicable.
7-113-208 - SPECIAL PROVISIONS RELATING TO SHARES ACQUIRED AFTER
ANNOUNCEMENT OF PROPOSED CORPORATE ACTION.
(1) The corporation may, in or with the dissenters' notice given pursuant to
section 7-11-203 state the date of the first announcement to news media or to
shareholders of the terms of the proposed corporate action creating dissenters'
rights under section 7-113-102 and state that the dissenter shall certify in
writing, in or with the dissenter's payment demand under section 7-113-204,
whether or not the dissenter (or the person on whose behalf dissenters' rights
are asserted) acquired beneficial ownership of the shares before that date. With
respect to any dissenter who does not so certify in writing, in or with the
payment demand, that the dissenter or the person on whose behalf the dissenter
asserts dissenters' rights acquired beneficial ownership of the shares before
such date, the corporation may, in lieu of making the payment provided in
section 7-113-206, offer to make such payment if the dissenter agrees to accept
it in full satisfaction of the demand.
(2) An offer to make payment under subsection (1) of this section shall include
or be accompanied by the information required by section 7-113-206 (2).
7-113-209 - PROCEDURE IF DISSENTER IS DISSATISFIED WITH PAYMENT OR OFFER.
(1) A dissenter may give notice to the corporation in writing of the dissenter's
estimate of the fair value of the dissenter's shares and of the amount of
interest due and may demand payment of such estimate, less any payment made
under section 7-113-206, or reject the corporation's offer under section
7-113-208 and demand payment of the fair value of the shares and interest due,
if:
(a) The dissenter believes that the amount paid under section 7-113-206 or
offered under section 7-113-208 is less than the fair value of the shares or
that the interest due was incorrectly calculated;
(b) The corporation fails to make payment under section 7-113-206 within
sixty days after the date set by the corporation by which the corporation must
receive the payment demand; or
(c) The corporation does not return the deposited certificates or release
the transfer restrictions imposed on uncertificated shares as required by
section 7-113-207 (1).
(2) A dissenter waives the right to demand payment under this section unless the
dissenter causes the corporation to receive the notice required by subsection
(1) of this section within thirty days after the corporation made or offered
payment for the dissenters shares.
EXHIBIT B
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement") is made and entered
into as of the 28th day of February 2002 by and between JNS Marketing, Inc., a
Colorado corporation ("JNS"), and Latinocare Management Corporation, a Nevada
corporation ("LMC"), with respect to the following facts:
RECITALS
A. JNS is a Colorado corporation engaged in the business of
managing LatinoCare Network Medical Group ("LNMG"), an
Independent Physician Association ("IPA") which primarily
services the growing Latin American community in the United
States, and in particular in California.
B. LMC is a Nevada corporation that does not currently have an
operating business and has no material assets or liabilities.
C. JNS desires to reincorporate in Nevada by merging with and
into LMC (the "Merger") in consideration for the right to
receive a total of 14,529,100 shares of the common stock of
LMC (the "Shares").
D. By the written consent of a majority of the shareholders of
LMC, the shareholders of LMC have approved the reincorporation
and merger with and into LMC.
E. At the annual meeting of shareholders of JNS on February 28,
2002, a majority of the shareholders of JNS approved the
reincorporation and merger with and into LMC.
F. At the effective time of the merger, the separate corporate
existence of JNS Marketing, Inc., a Colorado corporation (the
"Disappearing Corporation") will terminate, and Latinocare
Management Corporation, a Nevada corporation (the "Surviving
Corporation") shall be the surviving corporation.
NOW, THEREFORE, for good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged by the parties to this Agreement,
and in light of the above recitals to this Agreement, the parties to this
Agreement hereby agree as follows:
1. THE MERGER.
----------
Pursuant to the laws of the State of Colorado and subject to and in
accordance with the terms and conditions of this Agreement, JNS shall be merged
with and into LMC, and the outstanding shares of common stock of JNS (the "JNS
Common Stock") shall be converted into shares of common stock of LMC (the "LMC
Common Stock"). JNS and LMC shall execute Articles of Merger, to be filed with
the Secretary of State of Nevada, and Articles of Merger, to be filed with the
Secretary of State of Colorado, on the Closing Date, as defined in Section 5 of
this Agreement, or as soon thereafter as practicable. The merger of JNS with and
into LMC shall take effect upon the recording of the Articles of Merger (the
"Effective Time").
-1-
2. EFFECT OF MERGER.
----------------
At the Effective Time, JNS shall be merged with and into LMC in the
manner and with the effect provided by the Colorado General Corporation Law and
the Nevada General Corporation Law. At such time the separate corporate
existence of JNS shall cease, and LMC shall be the surviving corporation. The
outstanding shares of JNS Common Stock shall be converted into LMC Common Stock,
and the outstanding shares of common stock of LMC owned by the LMC shareholders
shall be cancelled, all on the basis, terms, and conditions described in Section
3 of this Agreement.
3. MERGER CONSIDERATION.
--------------------
3.1. JNS COMMON STOCK.
----------------
The shares of JNS Common Stock issued and outstanding immediately prior
to the Effective Time will, by virtue of the Merger and without any action on
the part of the holder thereof, cease to exist and be converted into the right
to receive a total of 14,529,100 shares of LMC Common Stock ("Merger
Consideration"). Upon the closing, each holder of outstanding JNS Common Stock
will receive one share of LMC Common Stock for each share of JNS owned by such
holder immediately prior to the closing of the Merger.
3.2. LMC COMMON STOCK.
----------------
Each share of LMC Common Stock issued and outstanding immediately prior
to the Effective Time shall be surrendered for cancellation to the Surviving
Corporation. Until so surrendered, the certificates, which prior to the Merger
represented shares of LMC Common Stock owned by JNS, shall be deemed, for all
corporate purposes, including voting entitlement, to evidence ownership by the
JNS shareholders of the shares of the LMC Common Stock into which such shares of
LMC Common Stock shall have been converted.
3.3. STOCK SPLITS.
------------
If, between the date of this Agreement and the Effective Time, the
outstanding shares of LMC Common Stock shall have been changed into a different
number of shares or a different class by reason of any reclassification,
combination, recapitalization, stock split, stock dividend, subdivision,
exchange of shares, or other extraordinary transaction, the number of shares of
LMC Common Stock issued as Merger Consideration shall be adjusted
proportionately.
4. SURRENDER AND CANCELLATION OF CERTIFICATES.
------------------------------------------
4.1. NO CERTIFICATE.
--------------
If the holder of JNS Common Stock is unable to deliver a certificate or
certificates representing the shares of JNS Common Stock owned by the holder
immediately prior to the Effective Time, LMC, in the absence of actual notice
that such shares have been acquired by a bona fide purchaser, shall deliver to
the JNS shareholders the number of shares of LMC Common Stock to which each JNS
shareholder is entitled in accordance with the provisions of this Agreement upon
the presentation of the following: (i) evidence satisfactory to LMC (a) that
said holder is the owner of such shares represented by each certificate claimed
by said holder to be lost, wrongfully taken, or destroyed and (b) that the
holder is the owner that would be entitled to present each such certificate for
conversion pursuant to this Agreement; and (ii) such security or indemnity as
may be reasonably requested by LMC to indemnify and hold LMC and the Transfer
Agent harmless.
-2-
4.2. NO FRACTIONAL SHARES.
--------------------
No certificates or script evidencing fractional shares of LMC Common
Stock shall be issued in the Merger. In lieu of a fractional share, LMC will
issue to any holder of JNS Common Stock who would otherwise be entitled to a
fraction of a share of LMC Common Stock one additional share of LMC Common
Stock. The provisions of this Section 4.2 shall apply to the aggregate number of
shares of JNS Common Stock held by each holder and each such holder will be
required to simultaneously surrender all certificates relating to shares of JNS
Common Stock held by such holder in accordance with Section 4 of this Agreement.
4.3. ESCHEAT.
-------
Neither JNS nor LMC shall be liable to any holder of shares of JNS
Common Stock or LMC Common Stock for any such shares of LMC Common Stock (or
dividends or distribution with respect thereto) or cash delivered to a public
official pursuant to any applicable abandoned property, escheat, or similar law.
4.4. WITHHOLDING RIGHTS.
------------------
LMC shall be entitled to deduct and withhold from the Merger
Consideration such amounts as LMC is required to deduct and withhold with
respect to the making of such payment under any provision of state, federal, or
local tax law. To the extent that amounts are so withheld by LMC, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
by the holder of the shares of JNS Common Stock in respect of which such
deduction and withholding was made by LMC.
5. THE CLOSING.
-----------
The closing of the Merger (the "Closing") shall take place at the
offices of Richardson & Associates, 1299 Ocean Avenue, Suite 900, Santa Monica,
California 90401 upon the recording of the Articles of Merger (the "Closing
Date"). The "Condition Completion Date" shall mean the business day on which the
last of the conditions set forth in Section 11 of the Agreement shall have been
fulfilled or waived (other than those conditions which, by their terms, are to
occur at the Closing).
6. SUBSEQUENT ACTIONS.
------------------
If, at any time after the Effective Time, LMC shall consider or be
advised that any deeds, bills of sale, assignments, assurances, or any other
actions or things are necessary or desirable to vest, perfect, or confirm of
record or otherwise in LMC its right, title, or interest in, to, or under any of
the rights, properties, or assets of JNS acquired or to be acquired by LMC as a
result of or in connection with the Merger or otherwise to carry out this
Agreement, the officers and directors of LMC are authorized to execute and
deliver, in the name and on behalf of JNS, or otherwise, all such deeds, bills
of sale, assignments, and assurances, and to take and do, in the name and on
behalf of JNS, or otherwise, all such other actions and things as may be
necessary or desirable to vest, perfect, or confirm any and all right, title,
and interest in, to, and under such rights, properties, or assets in LMC or
otherwise to carry out the purposes of this Agreement.
-3-
7.ARTICLES OF INCORPORATION, BYLAWS, AND DIRECTORS OF THE SURVIVING CORPORATION.
-----------------------------------------------------------------------------
7.1 ARTICLES OF INCORPORATION.
-------------------------
The Articles of Incorporation of LMC as in effect immediately prior to
the Effective Time shall be at and after the Effective Time (until amended as
provided by law) the Articles of incorporation of the Surviving Corporation.
7.2 BYLAWS.
------
The bylaws of LMC as in effect immediately prior to the Effective Time
shall be at and after the Effective Time (until amended as provided by law) the
bylaws of the Surviving Corporation.
7.3 DIRECTORS.
---------
The directors of LMC as in effect immediately prior to the Effective
Time shall be at and after the Effective Time the directors of the Surviving
Corporation, until their successors are elected or appointed and qualified or
until their resignation or removal.
8. LMC AFFILIATE REPRESENTATION LETTERS.
------------------------------------
To ensure that the Merger will comply with Rule 145 under the
Securities Act of 1933, as amended (the "Securities Act"), LMC shall cause each
of LMC's directors, executive officers, and beneficial owners of five percent or
more of LMC Common Stock to execute and deliver to JNS, at or prior to the
Closing, a representation letter substantially in a form reasonably satisfactory
to JNS.
9. REPRESENTATIONS AND WARRANTIES OF JNS.
-------------------------------------
JNS represents and warrants to LMC as follows:
9.1 POWER AND AUTHORITY; BINDING NATURE OF AGREEMENT.
------------------------------------------------
JNS has full power and authority to enter into this Agreement and to
perform its obligations hereunder. The execution, delivery and performance of
this Agreement by it has been duly authorized by all necessary action on its
part. Assuming that this Agreement is a valid and binding obligation of each of
the other parties hereto, this Agreement is a valid and binding obligation of
JNS.
9.2 SUBSIDIARIES.
------------
There is no corporation, general partnership, limited partnership,
joint venture, association, trust or other entity or organization other than LMC
and Latinocare Management Corporation, a California corporation which JNS
directly or indirectly controls or in which JNS directly or indirectly owns any
equity or other interest.
-4-
9.3 GOOD STANDING.
-------------
JNS (i) is duly organized, validly existing and in good standing under
the laws of Colorado, (ii) has all necessary power and authority to own its
assets and to conduct its business as it is currently being conducted, and (iii)
is duly qualified or licensed to do business and is in good standing in every
jurisdiction (both domestic and foreign) where such qualification or licensing
is required.
9.4 CHARTER DOCUMENTS AND CORPORATE RECORDS.
---------------------------------------
JNS has delivered to LMC complete and correct copies of (i) the
articles of incorporation, bylaws and other charter or organizational documents
of JNS, (ii) the shareholder records of JNS, and (iii) the minutes and other
records of the meetings and other proceedings of the board of directors and
shareholders of JNS. JNS is not in violation or breach of (i) any of the
provisions of its organizational documents, or (ii) any resolution adopted by
its board of directors or shareholders. There have been no meetings or other
proceedings of the board of directors or shareholders of JNS that are not fully
reflected in the appropriate minute books or other written records of JNS.
9.5 FINANCIAL STATEMENTS.
--------------------
JNS has delivered to LMC the following financial statements relating to
JNS on the Closing (the "JNS Financial Statements"): (i) the audited assets of
JNS as of September 30, 2001; and (ii) the audited balance sheets and statements
of income and retained earnings, shareholders' equity and changes in financial
position of JNS as of and for the twelve month period ended September 30, 2001.
Except as stated therein or in the notes thereto, the JNS Financial Statements:
(a) present fairly the financial position of JNS as of the respective dates
thereof and the results of operations and changes in financial position of JNS
for the respective periods covered thereby; and (b) have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods covered.
-5-
9.6 ABSENCE OF UNDISCLOSED LIABILITIES.
----------------------------------
JNS has no material debt, liability or other obligation of any nature
(whether due or to become due and whether absolute, accrued, contingent or
otherwise) that is not reflected or reserved against in the JNS Financial
Statements as of September 30, 2001, except for obligations incurred since
September 30, 2001 in the ordinary course of business consistent with past
practice or which have otherwise been disclosed to LMC prior to the Closing.
9.7 CONTRACTS.
---------
JNS has delivered to LMC complete and correct copies of all of the
contracts and other instruments including all amendment hereto. All of such
contracts and other instruments are valid and in full force and effect, and are
enforceable in accordance with their terms. There is no existing default by any
person under any of said contracts or other instruments, and there exists no
condition or set of circumstance which, with notice or lapse of time or both,
would constitute such a default.
9.8 JNS ASSETS.
----------
(a) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not to JNS's
knowledge result in a breach of the terms and conditions of, or result
in a loss of rights under, or result in the creation of any lien,
charge or encumbrance upon, any of JNS's assets pursuant to (i) JNS's
articles of incorporation, (ii) any franchise, mortgage, deed of trust,
lease, license, permit, agreement, contract, instrument or undertaking
to which JNS is a party or by which it or any of its properties are
bound, or (iii) any statute, rule, regulation, order, judgment, award
or decree.
(b) JNS has good and marketable title to all of its assets,
free and clear of all mortgages, liens, leases, pledges, charges,
encumbrances, equities or claims, except as disclosed in the JNS
Financial Statements or otherwise disclosed to LMC prior to the
Closing.
(c) To JNS's knowledge its assets are not subject to any
material liability, absolute or contingent, which is not listed as a
liability in the JNS Financial Statements or otherwise disclosed to LMC
prior to the Closing, nor is JNS subject to any material liability,
absolute or contingent, which has not been disclosed to LMC prior to
the Closing Date.
-6-
(d) All of the machinery, equipment, furniture and fixtures as
of the Closing Date will be in the same condition as on the date of
this Agreement, normal wear and tear excepted. JNS hereby conveys to
LMC (to the extent it is able under the applicable warranty documents)
any and all product warranty or similar rights that JNS may have
against third parties in respect of the condition of any of its assets.
9.9 COMPLIANCE WITH LAWS; LICENSES AND PERMITS.
------------------------------------------
JNS, to its knowledge, is not in violation of, nor has it failed to
conduct its business in full compliance with, any applicable federal, state,
local or foreign laws, regulations, rules, treaties, rulings, orders, directives
or decrees. JNS has delivered to LMC complete and correct copies of all of the
licenses, permits, authorizations and franchises to which JNS is subject and all
said licenses, permits, authorizations and franchises are valid and in full
force and effect. Said licenses, permits, authorizations and franchises
constitute all of the licenses, permits, authorizations and franchises necessary
to permit JNS to conduct its business in the manner in which it is now being
conducted, and JNS is not in violation or breach of any of the terms,
requirements or conditions of any of said licenses, permits, authorizations or
franchises.
9.10 LITIGATION.
----------
There is no action, suit, proceeding, dispute, litigation, claim,
complaint or investigation by or before any court, tribunal, governmental body,
governmental agency or arbitrator pending or, to JNS's knowledge, threatened
against or with respect to JNS which (i) if adversely determined would have an
adverse effect on the business, condition, assets, operations or prospects of
JNS, or (ii) challenges or would challenge any of the actions required to be
taken by JNS under this Agreement. To JNS's knowledge, there exists no basis for
any such action, suit, proceeding, dispute, litigation, claim, complaint or
investigation.
9.11 NON-CONTRAVENTION.
-----------------
Neither (a) the execution and delivery of this Agreement, nor (b) the
performance of this Agreement will: (i) contravene or result in a violation of
any of the provisions of the articles of incorporation, bylaws or other charter
or organizational documents of JNS; (ii) contravene or result in a violation of
any resolution adopted by the board of directors or shareholders of JNS; (iii)
result in a violation or breach of, or give any person the right to declare
(whether with or without notice or lapse of time) a default under or to
terminate, any agreement or other instrument to which JNS is a party or by which
JNS or any of its assets; (iv) give any person the right to accelerate the
maturity of any indebtedness or other obligation of JNS; (v) result in the loss
of any license or other contractual right of JNS; (vi) result in the loss of, or
in a violation of any of the terms, provisions or conditions of, any
governmental license, permit, authorization or franchise of JNS; (vii) result in
the creation or imposition of any lien, charge, encumbrance or restriction on
any of the assets of JNS; (viii) result in the reassessment or revaluation of
any property of JNS; by any taxing authority or other governmental authority;
(ix) result in the imposition of, or subject JNS to any liability for, any
conveyance or transfer tax or any similar tax; or (x) result in a violation of
any law, rule, regulation, treaty, ruling, directive, order, arbitration award,
judgment or decree to which JNS or any of its assets or any JNS Common Stock is
subject.
-7-
9.12 APPROVALS.
---------
No authorization, consent or approval of, or registration or filing
with, any governmental authority or any other person is required to be obtained
or made by JNS in connection with the execution, delivery or performance of this
Agreement.
9.13 BROKERS.
-------
JNS has not agreed to pay any brokerage fees, finder's fees or other
fees or commissions with respect to the transactions contemplated by this
Agreement, and, to JNS's knowledge, no person is entitled, or intends to claim
that it is entitled, to receive any such fees or commissions in connection with
such transaction.
9.14 FULL DISCLOSURE.
---------------
Neither this Agreement (including the exhibits hereto) nor any
statement, certificate or other document delivered to LMC by or on behalf of JNS
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the representations and other statements contained herein
and therein not misleading.
9.15 REPRESENTATIONS TRUE ON CLOSING DATE.
------------------------------------
The representations and warranties of JNS set forth in this Agreement
are true and correct on the date hereof, and will be true and correct on the
Closing Date as though such representations and warranties were made as of the
Closing Date.
10. REPRESENTATIONS AND WARRANTIES OF LMC.
-------------------------------------
LMC represents and warrants to JNS as follows:
10.1 POWER AND AUTHORITY; BINDING NATURE OF AGREEMENT.
------------------------------------------------
LMC has full power and authority to enter into this Agreement and to
perform its obligations hereunder. The execution, delivery and performance of
this Agreement by LMC have been duly authorized by all necessary action on its
part. Assuming that this Agreement is a valid and binding obligation of each of
the other parties hereto, this Agreement is a valid and binding obligation of
LMC.
-8-
10.2 GOOD STANDING.
-------------
LMC (i) is duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it is incorporated, (ii) has all necessary
power and authority to own its assets and to conduct its business as it is
currently being conducted, and (iii) is duly qualified or licensed to do
business and is in good standing in every jurisdiction (both domestic and
foreign) where such qualification or licensing is required.
10.3 CHARTER DOCUMENTS AND CORPORATE RECORDS.
---------------------------------------
LMC has delivered to JNS complete and correct copies of (i) the
articles of incorporation, bylaws and other charter or organizational documents
of LMC, including all amendments thereto, (ii) the stock records of LMC, and
(iii) the minutes and other records of the meetings and other proceedings of the
shareholders and directors of LMC. LMC is not in violation or breach of (i) any
of the provisions of its articles of incorporation, bylaws or other charter or
organizational documents, or (ii) any resolution adopted by its shareholders or
directors. There have been no meetings or other proceedings of the shareholders
or directors of LMC that are not fully reflected in the appropriate minute books
or other written records of LMC.
10.4 CAPITALIZATION.
--------------
The authorized capital stock of LMC consists of 50,000,000 shares of
common stock, par value $.001 per share, of which 100 shares are issued and
outstanding, and 2,000,000 shares of preferred stock, par value $.001 per share,
of which none are issued and outstanding. All of the outstanding shares of the
capital stock of LMC are validly issued, fully paid and nonassessable, and have
been issued in full compliance with all applicable federal, state, local and
foreign securities laws and other laws. Except as disclosed to JNS prior to the
Closing Date, there are no (i) outstanding options, warrants or rights to
acquire any shares of the capital stock or other securities of LMC, (ii)
outstanding securities or obligations which are convertible into or exchangeable
for any shares of the capital stock or other securities of LMC, or (iii)
contracts or arrangements under which LMC is or may become bound to sell or
otherwise issue any shares of its capital stock or any other securities.
10.5 FINANCIAL STATEMENTS.
--------------------
LMC has delivered the following financial statements relating to LMC on
the Closing (the "LMC Financial Statements"): the unaudited balance sheets and
statements of income and retained earnings, shareholders equity and changes in
financial position of LMC as of January 31, 2002. Except as stated therein in
the notes thereto, the LMC Financial Statements: (a) present fairly the
financial position of LMC as of the respective dates thereof and the results of
operations and changes in financial position of LMC for the respective periods
covered thereby; and (b) have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods covered.
10.6 ABSENCE OF CHANGES.
------------------
Except as otherwise disclosed to JNS prior to the Closing, since
January 31, 2002, there has not been any material adverse change in the
business, condition, assets, operations or prospects of LMC and no event has
occurred that might have an adverse effect on the business, condition, assets,
operations or prospects of LMC.
-9-
10.7 ABSENCE OF UNDISCLOSED LIABILITIES.
----------------------------------
LMC has no debt, liability or other obligation of any nature (whether
due or to become due and whether absolute, accrued, contingent or otherwise)
other than those that have been disclosed to JNS prior to the Closing.
10.8 LITIGATION.
----------
There is no action, suit, proceeding, dispute, litigation, claim,
complaint or investigation by or before any court, tribunal, governmental body,
governmental agency or arbitrator pending or, to LMC's knowledge, threatened
against or with respect to LMC which (i) if adversely determined would have an
adverse effect on the business, condition, assets, operations or prospects of
LMC, or (ii) challenges or would challenge any of the actions required to be
taken by LMC under this Agreement. To LMC's knowledge, there exists no basis for
any such action, suit, proceeding, dispute, litigation, claim, complaint or
investigation.
10.9 NON-CONTRAVENTION.
-----------------
Neither (a) the execution and delivery of this Agreement, nor (b) the
performance of this Agreement will: (i) contravene or result in a violation of
any of the provisions of the articles of incorporation, bylaws or other charter
or organizational documents of LMC; (ii) contravene or result in a violation of
any resolution adopted by the shareholders or directors of LMC; (iii) result in
a violation or breach of, or give any person the right to declare (whether with
or without notice or lapse of time) a default under or to terminate, any
agreement or other instrument to which LMC is a party or by which LMC or any of
its assets are bound; (iv) give any person the right to accelerate the maturity
of any indebtedness or other obligation of LMC; (v) result in the loss of any
license or other contractual right of LMC; (vi) result in the loss of, or in a
violation of any of the terms, provisions or conditions of, any governmental
license, permit, authorization or franchise of LMC; (vii) result in the creation
or imposition of any lien, charge, encumbrance or restriction on any of the
assets of LMC; (viii) result in the reassessment or revaluation of any property
of LMC by any taxing authority or other governmental authority; (ix) result in
the imposition of, or subject LMC to any liability for, any conveyance or
transfer tax or any similar tax; or (x) result in a violation of any law, rule,
regulation, treaty, ruling, directive, order, arbitration award, judgment or
decree to which LMC or any of its assets is subject.
10.10 APPROVALS.
---------
No authorization, consent or approval of, or registration or filing
with, any governmental authority or any other person is required to be obtained
or made by LMC in connection with the execution, delivery or performance of this
Agreement.
10.11 BROKERS.
-------
LMC has not agreed to pay any brokerage fees, finder's fees or other
fees or commissions with respect to the transactions contemplated by this
Agreement, and, to LMC's knowledge, no person is entitled, or intends to claim
that it is entitled, to receive any such fees or commissions in connection with
such transactions.
-10-
10.12 FULL DISCLOSURE.
---------------
Neither this Agreement (including the exhibits hereto) nor any
statement, certificate or other document delivered to JNS by or on behalf of LMC
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the representations and other statements contained herein
and therein not misleading.
10.13 REPRESENTATIONS TRUE ON CLOSING DATE.
------------------------------------
The representations and warranties of LMC set forth in this Agreement
are true and correct on the date hereof, and will be true and correct on the
Closing Date as though such representations and warranties were made as of the
Closing Date.
11. CONDITIONS TO CLOSING.
---------------------
11.1 CONDITIONS PRECEDENT TO LMC'S OBLIGATION TO CLOSE.
-------------------------------------------------
LMC's obligation to close the plan of reorganization and merger as
contemplated in this Agreement is conditioned upon the occurrence or waiver by
LMC of the following:
(a) Holders of more than 50% of the outstanding common stock
of LMC shall vote for and approve this plan of reorganization and
merger.
(b) All representations and warranties of JNS made in this
Agreement or in any exhibit hereto delivered by JNS shall be true and
correct as of the Closing Date with the same force and effect as if
made on and as of that date.
(c) JNS shall have performed and complied with all agreements,
covenants and conditions required by this Agreement to be performed or
complied with by JNS prior to or at the Closing Date.
11.2 CONDITIONS PRECEDENT TO JNS'S OBLIGATION TO CLOSE.
-------------------------------------------------
JNS's obligation to close the plan of reorganization and exchange as
contemplated in this Agreement is conditioned upon the occurrence or waiver by
JNS of the following:
(a) Holders of more than 50% of the outstanding common stock
of JNS shall vote for and approve this plan of reorganization and
merger.
(b) All representations and warranties of LMC made in this
Agreement or in any exhibit hereto delivered by LMC shall be true and
correct on and as of the Closing date with the same force and effect as
if made on and as of that date.
(c) LMC shall have performed and complied with all agreements
and conditions required by this Agreement to be performed or complied
with by LMC prior to or at the Closing Date.
-11-
12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
------------------------------------------
All representations and warranties made by each of the parties hereto
shall survive the closing for a period of two years after the Closing Date.
13. INDEMNIFICATION.
---------------
13.1 INDEMNIFICATION BY LMC.
----------------------
LMC agrees to indemnify, defend and hold harmless JNS against any and
all claims, demands, losses, costs, expenses, obligations, liabilities and
damages, including interest, penalties and attorney's fees and costs, incurred
by JNS arising, resulting from, or relating to any breach of, or failure by LMC
to perform, any of its representations, warranties, covenants or agreements in
this Agreement or in any exhibit or other document furnished or to be furnished
by LMC under this Agreement.
13.2 INDEMNIFICATION BY JNS.
----------------------
JNS agrees to indemnify, defend and hold harmless LMC against any and
all claims, demands, losses, costs, expenses, obligations, liabilities and
damages, including interest, penalties and attorneys' fees and costs incurred by
LMC arising, resulting from or relating to any breach of, or failure by JNS to
perform, any of its representations, warranties, covenants or agreements in this
Agreement or in any exhibit or other document furnished or to be furnished by
JNS under this Agreement.
14. INJUNCTIVE RELIEF.
-----------------
14.1 DAMAGES INADEQUATE.
------------------
Each party acknowledges that it would be impossible to measure in money
the damages to the other party if there is a failure to comply with any
covenants or provisions of this Agreement, and agrees that in the event of any
breach of any covenant or provision, the other party to this Agreement will not
have an adequate remedy at law.
14.2 INJUNCTIVE RELIEF.
-----------------
It is therefore agreed that the other party to this Agreement who is
entitled to the benefit of the covenants or provisions of this Agreement which
have been breached, in addition to any other rights or remedies which they may
have, shall be entitled to immediate injunctive relief to enforce such covenants
and provisions, and that in the event that any such action or proceeding is
brought in equity to enforce them, the defaulting or breaching party will not
urge a defense that there is an adequate remedy at law.
15. WAIVERS.
-------
If any party shall at any time waive any rights hereunder resulting
from any breach by the other party of any of the provisions of this Agreement,
such waiver is not to be construed as a continuing waiver of other breaches of
-12-
the same or other provisions of this Agreement. Resort to any remedies referred
to herein shall not be construed as a waiver of any other rights and remedies to
which such party is entitled under this Agreement or otherwise.
16. SUCCESSORS AND ASSIGNS.
----------------------
Each covenant and representation of this Agreement shall inure to the
benefit of and be binding upon each of the parties, their personal
representatives, assigns and other successors in interest.
17. ENTIRE AND SOLE AGREEMENT.
-------------------------
This Agreement constitutes the entire agreement between the parties and
supersedes all other agreements, representations, warranties, statements,
promises and undertakings, whether oral or written, with respect to the subject
matter of this Agreement. This Agreement may be modified or amended only by a
written agreement signed by the parties against whom the amendment is sought to
be enforced.
18. GOVERNING LAW.
-------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of California, and the venue for any action hereunder
shall be in the appropriate forum in the County of Los Angeles, State of
California.
19. COUNTERPARTS.
------------
This Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
such counterparts shall constitute but one and the same instrument.
20. ATTORNEYS' FEES AND COSTS.
-------------------------
In the event that either party must resort to legal action in order to
enforce the provisions of this Agreement or to defend such action, the
prevailing party shall be entitled to receive reimbursement from the
nonprevailing party for all reasonable attorneys' fees and all other costs
incurred in commencing or defending such action, or in enforcing this Agreement,
including but not limited to post judgment costs.
21. ASSIGNMENT.
----------
This Agreement shall not be assignable by any party without prior
written consent of the other parties.
22. REMEDIES.
--------
Except as otherwise expressly provided herein, none of the remedies set
forth in this Agreement are intended to be exclusive, and each party shall have
all other remedies now or hereafter existing at law, in equity, by statute or
otherwise. The election of any one or more remedies shall not constitute a
waiver of the right to pursue other available remedies.
-13-
23. SECTION HEADINGS.
----------------
The section headings in this Agreement are included for convenience
only, are not a part of this Agreement and shall not be used in construing it.
24. SEVERABILITY.
------------
In the event that any provision or any part of this Agreement is held
to be illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall not affect the validity or enforceability of any other
provision or part of this Agreement.
25. NOTICES.
-------
Each notice or other communication hereunder shall be in writing and
shall be deemed to have been duly given on the earlier of (i) the date on which
such notice or other communication is actually received by the intended
recipient thereof, or (ii) the date five (5) days after the date such notice or
other communication is mailed by registered or certified mail (postage prepaid)
to the intended recipient at the following address (or at such other address as
the intended recipient shall have specified in a written notice given to the
other parties hereto):
IF TO JNS:
JNS Marketing, Inc.
4150 Long Beach Boulevard
Long Beach, California 90807
Attention: Jose J. Gonzalez, President
Telephone: (562) 997-4420
Facsimile: (562) 997-1680
IF TO LMC:
Latinocare Management Corporation
4150 Long Beach Boulevard
Long Beach, California 90807
Attention: Joseph C. Luevanos, Chief Financial Officer
Telephone: (562) 997-4420
Facsimile: (562) 997-1680
26. PUBLICITY.
---------
No press release, notice to any third party or other publicity
concerning the transactions contemplated by this Agreement shall be issued,
given or otherwise disseminated without the prior approval of each of the
parties hereto; provided, however, that such approval shall not be unreasonably
withheld.
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27. AUTHORITY.
---------
All signatories to this Agreement do hereby declare that they have the
authority to execute this Agreement on behalf of the parties to this Agreement.
IN WITNESS WHEREOF, this Agreement has been entered into as of the date
first above written.
JNS: JNS MARKETING, INC.
A Colorado Corporation
BY:
----------------------------------------------
Jose J. Gonzalez, President
LMC: LATINOCARE MANAGEMENT CORPORATION
A Nevada Corporation
BY:
----------------------------------------------
Jose J. Gonzalez, President
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EXHIBIT C
2002 STOCK OPTION PLAN FOR
LATINOCARE MANAGEMENT CORP.
LATINOCARE MANAGEMENT CORP.
STOCK OPTION PLAN
FOR DIRECTORS, EXECUTIVE OFFICERS, AND EMPLOYEES OF
AND KEY CONSULTANTS TO LATINOCARE MANAGEMENT CORP.
1. PURPOSE. The purpose of this Stock Option Plan is to promote the
interests of Latinocare Management Corp. ("Company") and its shareholders by
enabling it to offer stock options to better attract, retain, and reward
directors, executive officers, and employees of and key consultants to the
Company and any other future subsidiaries that may qualify under the terms of
this Plan. The goal is to strengthen the mutuality of interests between those
persons and the shareholders of the Company by providing those persons with a
proprietary interest in pursuing the Company's long-term growth and financial
success.
2. DEFINITIONS. For purposes of this Plan, the following terms shall
have the meanings set forth below.
(a) "Board" means the Board of Directors of Latinocare Management Corp.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
Reference to any specific section of the Code shall be deemed to be a reference
to any successor provision of the Code.
(c) "Committee" means the administrative committee of this Plan that is
provided in Section 1 below.
(d) "Common Stock" means the common stock of the Company or any
security issued in substitution, exchange, or in lieu thereof.
(e) "Company" means Latinocare Management Corp., a Nevada corporation,
or any successor corporation. Except where the context indicates otherwise, the
term "Company" shall include its Parent and Subsidiaries.
(f) "Director" means any person who serves as a member of the Board of
Directors of Latinocare Management Corp. "Outside Director" means any person who
serves as a member of the Board of Directors of Latinocare Management Corp. and
is not a full-time employee of Latinocare Management Corp. or its subsidiaries.
(g) "Disabled" means permanent and total disability, as defined in Code
Section 22(e)(3).
(h) "Employee" means any person who is employed by Latinocare
Management Corp. or any Subsidiary or Parent of the Company on a full or
part-time basis, so that they have income taxes withheld and are eligible to
participate in employee benefits programs. Such person shall not cease to be an
Employee in the case of (i) any leave of absence approved by the Company or (ii)
transfers between locations of the Company or between the Company, its Parent,
any Subsidiary, or any successor. For purposes of Incentive Stock Options, no
such leave may exceed ninety days, unless re-employment upon expiration of such
leave is guaranteed by statute or contract. If employment upon expiration of
leave of absence approved by the Company is not so guaranteed, on the 181ST day
of such leave any Incentive Stock Option held by the Optionee shall cease to be
treated as an Incentive Stock Option and shall be treated for tax purposes as a
Non-Qualified Stock Option. Neither service as a Director nor payment of a
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director's fee by the Company shall be sufficient to constitute "employment" by
the Company.
(i) "Exchange Act" means the Securities Exchange Act of 1934.
(j) "Fair Market Value" per share means, on any given date:
(a) The last sale price of the Common Stock on the National
Association of Securities Dealers Automated Quotation National
Market System ("NMS") or in case no such reported sale takes
place, the average of the closing bid and ask prices on such
date; or
(b) If not quoted on the NMS, the average of the closing bid
and ask prices of the Common Stock on the National Association
of Securities Dealers Automated Quotation System ("NASDAQ") or
any comparable system; or
(c) If not quoted on any system, the fair market value
indicated by the last appraisal of the Company by a
professional appraiser or certified public accounting firm; or
(d) If not quoted on any system or valued by appraisal, the
fair market value determined by the Company's Board of
Directors in good faith.
(k) "Incentive Stock Option" means an option to purchase shares of
Common Stock that is intended to be an incentive stock option within the meaning
of Section 422 of the Code.
(l) "Insider" means a person who is subject to the provisions of
Section 16 of the Exchange Act.
(m) "Key Consultant" means a person who is engaged by Latinocare
Management Corp. or its Subsidiaries as a non-employee to perform tasks on a
contractual basis over a sufficient period of time that he or she satisfies the
eligibility criteria set forth by the Securities and Exchange Commission for a
non-employee to participate in a registered stock option plan.
(n) "Non-Qualified Stock Option" means any option to purchase shares of
Common Stock that is not an Incentive Stock Option.
(o) "Officer" is an employee of Latinocare Management Corp. or its
Subsidiaries who is granted the authority to commit the corporation to binding
agreements and to function as one of the executives of Latinocare Management
Corp. or its Subsidiaries.
(p) "Option" means an Incentive Stock Option or a Non-Qualified Stock
Option.
(q) "Parent" shall mean any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company if each of the
corporations (other than the Company) owns stock possessing fifty percent (50%)
or more of the total combined voting power of all classes of stock in one of the
other corporations in the chain, as determined in accordance with the rules of
Section 424(e) of the Code.
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(r) "Participant" means a person who has been granted an Option.
(s) "Plan" means this Latinocare Management Corp. Stock Option Plan for
Directors, Executive Officers, and Employees of and Key Consultants to
Latinocare Management Corp. and its Subsidiaries, as it may be amended from time
to time.
(t) "Securities Act" means the Securities Act of 1933, as amended.
(u) "Severance" means, with respect to a Participant, the termination
of the Participant's provision of services to the Company as an employee and
officer and director and consultant, as the case may be, whether by reason of
death, disability, or any other reason. A Participant who is on a leave of
absence that exceeds ninety (90) days will be considered to have incurred a
Severance on the ninety-first (91st) day of the leave of absence, unless the
Participant's rights to reemployment or reappointment are guaranteed by statute
or contract.
(v) "Subsidiary" means any corporation or entity in which the Company,
directly or indirectly, controls fifty percent (50%) or more of the total voting
power of all classes of its stock having voting power, as determined in
accordance with the rules of Code Section 424(f).
(w) "Ten Percent Shareholder" means any person who owns (after
taking into account the constructive ownership rules of Section 424(d) of the
Code) more than ten percent (10%) of the stock of the Company.
3. ADMINISTRATION.
(a) This Plan shall be administered by a Committee appointed by the
Board. The Board may remove members from, or add members to, the Committee at
any time.
(b) The Committee shall be composed of the members of the Compensation
Committee of the Company's Board of Directors and any other members that the
Board of Directors sees fit to appoint.
(c) The Committee may conduct its meetings in person or by telephone. A
majority of the members of the Committee shall constitute a quorum, and any
action shall constitute action of the Committee if it is authorized by:
(i) A majority of the members present at any meeting; or
(ii) The unanimous consent of all of the members in writing
without a meeting.
(d) The Committee is authorized to interpret this Plan and to adopt
rules and procedures relating to the administration of this Plan. All actions of
the Committee in connection with the interpretation and administration of this
Plan shall be binding upon all parties.
(e) The Committee may designate persons other than members of the
Committee to carry out its responsibilities under such conditions and
limitations as it may prescribe, except that the Committee may not delegate its
authority with regard to the granting of Options to Insiders.
(f) Subject to the limitations of Section 13 below, the Committee is
expressly authorized to make such modifications to this Plan as are necessary to
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effectuate the intent of this Plan as a result of any changes in the tax,
accounting, or securities laws treatment of Participants and the Plan.
4. DURATION OF PLAN.
(a) This Plan shall be effective as of January 31, 2002, the date of
its adoption by the Board, provided this Plan is approved by the majority of the
Company's shareholders, in accordance with the provisions of Code Section 422,
on or prior to twelve (12) months after its adoption. In the event that this
Plan is not so approved, this Plan shall terminate and any Options granted under
this Plan shall be void and have no further effect.
(b) This Plan shall terminate on January 31, 2012, except with respect
to Options then outstanding.
5. NUMBER OF SHARES.
(a) The aggregate number of shares of Common Stock which may be issued
pursuant to this Plan shall be one million two hundred thousand (1,200,000)
shares of Common Stock. This aggregate number may be adjusted from time to time
as set forth in Section 13 of this Plan.
(b) Upon the expiration or termination of an outstanding Option which
shall not have been exercised in full, any shares of Common Stock remaining
unissued shall again become available for the granting of additional Options.
6. ELIGIBILITY. Persons eligible for Options under this Plan shall be
limited to the directors, executive officers, and employees of and key
consultants to Latinocare Management Corp. and its Subsidiaries.
7. FORM OF OPTIONS. Options granted under this Plan may be Incentive
Stock Options or Non-Qualified Stock Options. Options shall be subject to the
following terms and conditions:
(a) Options may be granted under this Plan on such terms and in such
form as the Committee may approve, including by not limited to the right to
exercise Options on a cashless basis, which conditions shall not be inconsistent
with the provisions of this Plan.
(b) The exercise price per share of Common Stock purchasable under an
Option shall be set forth in the Option. The exercise price of an option,
determined on the date of the grant, shall be no less than:
(i) One hundred ten percent (110%) of the Fair Market Value of
the Common Stock in the case of a Ten Percent Shareholder; or
(ii) One hundred percent (100%) of the Fair Market Value of
the Common Stock in the case of any other employee.
(c) An Option shall be exercisable at such time or times and be subject
to such terms and conditions as may be set forth in the Option. Except in the
case of Options granted to Officers, Directors, and Consultants, Options shall
become exercisable at a rate of no less than 20% per year over five (5) years
from the date the Options are granted.
(d) The Committee may modify an existing Option, including the right
to:
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(i) Accelerate the right to exercise it;
(ii) Extend or renew it; or
(iii) Cancel it and issue a new Option.
(e) No modification may be made pursuant to Paragraph (d) above to an
Option that would impair the rights of the Participant holding the Option
without his or her consent. Whether a modification of an existing Incentive
Stock Option will be treated as the issuance of a new Incentive Stock Option
will be determined in accordance with the rules of Section 424(h) of the Code.
(f) The aggregate Fair Market Value (determined as of the date of
grant) of the number of shares of Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by a Participant during any
calendar year shall not exceed one hundred thousand dollars ($100,000) or such
other limit as may be required by Code Section 422. Should anyone exercise
Incentive Stock Options that exceed this limit, such options will be treated as
non-qualified stock options for tax purposes.
8. ISSUANCE OF OPTIONS.
Stock Options will be granted from time to time in the future on the
terms and conditions recommended by the Committee and approved by the Company's
Board of Directors. Each Option shall be evidenced by a written stock option
agreement, in form satisfactory to the Committee, executed by the Company and
the person to whom such Option is granted. The stock option agreement shall
specify whether each Option it evidences is a Non-Qualified Stock Option or an
Incentive Stock Option.
9. VESTING REQUIREMENT AND PERFORMANCE THRESHOLD.
The vesting requirements, performance thresholds and other terms and
conditions of additional Options which may be granted under this Plan from time
to time, if any, will be determined and approved by the Committee and Board of
Directors; provided, that in all cases unvested Options will automatically
expire and be canceled on the date of the Severance of an Employee or Insider
who holds such Options.
10. TERMINATION OF OPTIONS.
(a) Except to the extent the terms of an Option require its prior
termination, each Option shall terminate on the earliest of the following dates.
(i) The date which is ten (10) years from the
date on which the Option is granted or five
(5) years from the date of grant in the case
of an Incentive Stock Option granted to a
Ten Percent Shareholder.
(ii) If the Participant was Disabled at the time
of Severance, the date of the Severance of
the Participant to whom the Option was
granted, with respect to unvested Options,
and the date which is one (1) year from the
date of the Severance, with respect to
vested Options.
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(iii) The date of Severance of the Participant to
whom the Option was granted, with respect to
unvested Options, and the date which is
ninety (90) days from the date of the
Severance of the Participant to whom the
Option was granted, with respect to vested
Options.
(iv) The date which is ninety (90) days after the
death of the Participant, with respect to
vested Options, and the date of death of the
Participant, in the case of unvested
Options.
(v) In the case of any Severance other than one
described in Subparagraphs (ii) or (iii)
above, the date of the Participant's
Severance, with respect to unvested Options,
and the date that is ninety (90) days from
the date of the Participant's Severance,
with respect to vested Options.
11. NON-TRANSFERABILITY OF OPTIONS.
(a) During the lifetime of the Participant, each Option is exercisable
only by the Participant.
(b) No Option under this Plan shall be assignable or transferable,
except by will or the laws of descent and distribution.
12. ADJUSTMENTS.
(a) In the event of any change in the capitalization of the Company
affecting its Common Stock (e.g., a stock split, reverse stock split, stock
dividend, combination, recapitalization, or reclassification), the Committee
shall authorize such adjustments as it may deem appropriate with respect to:
(i) The aggregate number of shares of Common Stock for which
Options may be granted under this Plan;
(ii) The number of shares of Common Stock covered by each
outstanding Option; and
(iii) The exercise price per share in respect of each
outstanding Option.
(b) The Committee may also make such adjustments in the event of a
spin-off or other distribution (other than normal cash dividends) of Company
assets to shareholders.
13. AMENDMENT AND TERMINATION. The Board may at any time amend or
terminate this Plan. The Board may not, however, without the approval of the
majority-in-interest of the shareholders of the Company, amend the provisions of
this Plan regarding:
(a) The class of individuals entitled to receive
Incentive Stock Options.
(b) The aggregate number of shares of Common Stock that
may be issued under the Plan, except as provided in
Section 12 of this Plan.
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(c) To the extent necessary to comply with Rule 16(b)
under the Exchange Act, the Board may not make any
amendment without approval of the
majority-in-interest of the shareholders of the
Company that would:
(i) Materially increase the aggregate number of
shares of Common Stock which may be issued
to Insiders (except for adjustments under
Section 12 of this Plan);
(ii) Materially modify the requirements as to the
eligibility of Insiders to participate; or
(iii) Materially increase the benefits accruing to
Insiders under this Plan.
14. TAX WITHHOLDING.
(a) The Company shall have the right to take such actions as may be
necessary to satisfy its tax withholding obligations relating to the operation
of this Plan.
(b) If Common Stock is used to satisfy the Company's tax withholding
obligations, the stock shall be valued based on its Fair Market Value when the
tax withholding is required to be made.
15. NO ADDITIONAL RIGHTS.
(a) The existence of this Plan and the Options granted hereunder shall
not affect or restrict in any way the power of the Company to undertake any
corporate action otherwise permitted under applicable law.
(b) Neither the adoption of this Plan nor the granting of any Option
shall confer upon any Participant the right to continue performing services for
the Company, nor shall it interfere in any way with the right of the Company to
terminate the services of any Participant at any time, with or without cause.
(c) No Participant shall have any rights as a shareholder with respect
to any shares covered by an Option until the date a certificate for such shares
has been issued to the Participant following the exercise of the Option.
16. SECURITIES LAW RESTRICTIONS.
(a) No shares of Common Stock shall be issued under this Plan unless
the Committee shall be satisfied that the issuance will be in compliance with
applicable federal and state securities laws.
(b) The Committee may require certain investment or other
representations and undertakings by the Participant (or other person acquiring
the right to exercise the Option by reason of the death of the Participant) in
order to comply with applicable law.
(c) Certificates for shares of Common Stock delivered under this Plan
may be subject to such restrictions as the Committee may deem advisable. The
Committee may cause a legend to be placed on the certificates to refer to these
restrictions.
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17. EMPLOYMENT OR CONSULTING RELATIONSHIP. Nothing in the Plan or any
Option granted hereunder shall interfere with or limit in any way the right of
the Company or any of its Parents or Subsidiaries to terminate any Participant's
employment or consulting at any time, nor confer upon any Participant any right
to continue in the employ of, or consult with, the Company or any of its Parents
or Subsidiaries.
18. MARKET STANDOFF. Each Participant, if so requested by the Company
or any representative of the underwriters in connection with any registration of
the offering of any securities of the Company under the Securities Act, shall
not sell or otherwise transfer any shares of Common Stock acquired upon exercise
of Options during a specified period following the effective date of a
registration statement of the Company filed under the Securities Act not to
exceed six months; provided, however, that such restriction shall apply only to
the first registration statement of the Company to become effective under the
Securities Act after the date of adoption of the Plan which includes securities
to be sold on behalf of the Company to the public in an underwritten public
offering under the Securities Act. The Company may impose stop-transfer
instructions with respect to securities subject to the foregoing restriction
until the end of such six month period.
19. SHAREHOLDER'S AGREEMENT. Each Participant who acquires Common Stock
through the exercise of Options, if so requested by the Company, shall execute a
Shareholder's Agreement which provides for the disposition of the Common Stock
in the event the Participant seeks to dispose of his Common Stock or incurs a
Severance.
20. INDEMNIFICATION. To the maximum extent permitted by law, the
Company shall indemnify each member of the Board and of the Committee, as well
as any other Employee of or Key Consultant to the Company with duties under this
Plan, against expenses (including any amount paid in settlement) reasonably
incurred by him or her in connection with any claims against him or her by
reason of the performance of his or her duties under this Plan, unless the
losses are due to the individual's gross negligence or lack of good faith.
21. GOVERNING LAW. This Plan and all actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of
California. The venue for any legal proceeding under this Plan will be in the
appropriate forum in the County of Los Angeles, State of California.
Date: January 31, 2002 LATINOCARE MANAGEMENT CORP.,
a Nevada Corporation
BY:
------------------------
Jose Gonzalez, President
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EXHIBIT D
STOCK OPTION AGREEMENT FOR
LATINOCARE MANAGEMENT CORP.
STOCK OPTION AGREEMENT UNDER THE
LATINOCARE MANAGEMENT CORP.
STOCK OPTION PLAN
THIS STOCK OPTION AGREEMENT (the "Agreement") is dated as of [Date] by
and between Latinocare Management Corp. a Nevada corporation (the "Company"),
and [Name of Optionee] (the "Optionee") pursuant to the Company's 2002 Stock
Option Plan for Directors, Executive Officers, Employees and Key Consultants of
Latinocare Management Corp. and its Subsidiaries (the "Plan"). For purposes of
this Agreement, references to "Company" include its Parent and Subsidiaries (as
those terms are defined in the Plan).
Pursuant to authorization by the Committee of the Plan (the
"Committee") appointed by the Board of Directors of the Company, the parties
agree as follows:
1. GRANT OF OPTION.
The Company hereby grants to the Optionee the right (the "Option") to
purchase all or any portion of [Number] shares (the "Shares") of the Common
Stock of the Company (the "Common Stock") at a purchase price of [Exercise
Price] per share (the "Option Price").
2. TERM OF AGREEMENT.
This Agreement shall terminate upon the earliest of the following
events:
(a) Ten (10) years from the date on which the Option was
granted to the Optionee under this Agreement.
(b) In the case of the termination of the Optionee's position
as an officer and director and employee and consultant of the Company,
as the case may be, which results in a "Severance" as defined in
Section 2(t) of the Plan, this Agreement shall terminate with respect
to all unvested Options on the date of the Severance, and with respect
to vested Options, the earlier of (i) ten (10) years from the date of
grant or (ii) one (1) year from the date of Severance if the Optionee
was disabled (within the meaning of Section 22(e)(3) of the Internal
Revenue Code) at the time of his or her Severance, or (iii) ninety (90)
days immediately subsequent to his or her Severance for any reason.
(c) The Optionee's Severance (whether by reason of death or
otherwise) shall not accelerate the number of Shares with respect to
which an Option may be exercised.
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3. EXERCISABILITY. The Option shall vest and be exercisable in
accordance with the following schedule:
NAME OF GRANTEE DATE OF NUMBER OF VESTING EXERCISE EXPIRATION
GRANT OPTIONS SCHEDULE PRICE DATE
- ------------------------------------ -------------- ------------------ ------------------- -------------- -----------------
[Name of Optionee] [Date of [Number of [Vesting Schedule] [Exercise [Expiration
Grant] Options] Price] Date]
- --------------------------------------------
(1) The exercise price is equal to the fair market value on the date of the
issuance of the options. Each stock option will confer upon the holder
the right to purchase one share of the Company's common stock for a
price of [Exercise Price] per share at any time from the vesting date
to the expiration date.
4. METHOD OF EXERCISING. This Option may be exercised by the Optionee
upon delivery of the following documents to the Company at its principal
executive offices:
(a) Written notice specifying the number of full Shares to be
purchased;
(b) Payment of the full purchase price therefor in cash, by check,
or in such other form of lawful consideration as the Committee
may approve from time to time;
(c) Such agreements or undertakings that are required by the
Committee pursuant to the Plan; and
(d) Payment of any taxes which may be required.
5. ASSIGNMENTS.
(a) This Option shall be exercisable only by the Optionee during
the Optionee's lifetime.
(b) The rights of the Optionee under this Agreement may not be
assigned or transferred except by will or by the laws of
descent and distribution.
6. NO RIGHTS AS A SHAREHOLDER. The Optionee shall have no rights as a
shareholder of any Shares covered by this Option until the date a certificate
for such Shares has been issued to him or her following the exercise of the
Option.
7. INTERPRETATION OF AGREEMENT.
(a) This Agreement is made under the provisions of the Plan and
shall be interpreted in a manner consistent with it.
(b) Any provision in this Agreement inconsistent with the Plan
shall be superseded and governed by the Plan. A copy of the
Plan is attached hereto as Exhibit A.
8. LEGENDS ON CERTIFICATES. The Optionee acknowledges that the
certificates representing the Shares issued upon exercise of this Option may
bear such legends and be subject
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to such restrictions on transfer as the Company may deem necessary to comply
with all applicable state and federal securities laws and regulations.
9. MARKET STANDOFF. The Optionee, if so requested by the Company or any
representative of the underwriters in connection with any registration of the
offering of any securities of the Company under the Securities Act of 1933, as
amended (the "Act"), shall not sell or otherwise transfer any shares of Common
Stock acquired upon the exercise of the Option granted herein during the six
month period following the effective date of a registration statement of the
Company filed under the Act; provided, however, that such restriction shall only
apply to the first registration statement of the Company to become effective
under the Act after the date of adoption of the Plan which includes securities
to be sold on behalf of the Company to the public in an underwritten public
offering under the Act. The Company may impose stop-transfer instructions with
respect to securities subject to the foregoing restriction until the end of such
six month period.
10. INCENTIVE STOCK OPTION. To the extent permitted under Section 422
of the Internal Revenue Code of 1986, as amended, the stock options granted
under this Agreement shall be designated as Incentive Stock Options, as that
term is defined in the Plan. To the extent any stock options granted under this
Agreement may not be designated as Incentive Stock Options, such stock options
shall be designated as non-qualified stock options.
11. NOTICES. Any notice to be given under the terms of this Agreement
must be addressed to the Company in care of its Secretary at its principal
office, and any notice to be given to Optionee must be addressed to such
Optionee at the address maintained by the Company for such person or at such
other address as the Optionee may specify in writing to the Company.
12. BINDING EFFECT. This Agreement and any amendment hereto, will be
binding upon the parties hereto, their successors, heirs, next of kin,
executors, administrators, personal representatives, legal representatives,
assignees, creditors, including receivers, and all other persons with notice or
knowledge of the provisions hereof.
13. CHOICE OF LAW AND VENUE. This Agreement is made and entered into in
the State of California. It is the intention of the parties that this Agreement
will be subject to and will be governed by and construed in accordance with the
internal laws of the State of California without reference to its choice of law
provisions. Any legal proceeding arising out of this Agreement will be brought
only in a state of federal court of competent jurisdiction sitting in the County
of Los Angeles, State of California, and all parties hereto agree that venue
will lie therein and agree to submit themselves to the personal jurisdiction of
such court.
14. CONSTRUCTION. The captions contained in this Agreement are for
convenience of reference only and are not to be considered in construing this
Agreement. The language of this Agreement will be construed as to its fair
meaning and not strictly for or against any party.
15. SEVERABILITY. The provisions of this Agreement are independent of
and severable from each other, and no provision will be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other or
others of them may be invalid or unenforceable in whole or in part. Further, if
a court of competent jurisdiction determines that any provision of this
Agreement is invalid or unenforceable as written, such court may interpret,
construe, rewrite or revise such provision, to the fullest extent allowed by
law, so as to make it valid and enforceable consistent with the intent of the
parties hereto.
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16. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be deemed to be an original as against any
party hereto whose signature appears hereon, and all of which will together
constitute one and the same instrument. This Agreement will become binding when
one or more counterparts hereof, individually or taken together, bears the
signatures of all of the parties reflected hereon as the signatories.
17. APPLICATION OF PLAN. The Company has delivered and the Optionee
hereby acknowledges receipt of a copy of the Plan. The parties agree and
acknowledge that the Option granted hereunder is granted pursuant to the Plan
and subject to the terms and provisions thereof, and the rights of the Optionee
are subject to modifications and termination in certain events as provided in
the Plan.
IN WITNESS WHEREOF, the Company and the Optionee have executed this
Agreement as of the date first above written.
OPTIONEE: LATINOCARE MANAGEMENT CORP.
BY: BY:
- ---------------------------- -------------------------------
Jose J. Gonzalez, President
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EXHIBIT A
LATINOCARE MANAGEMENT CORP.
2002 STOCK OPTION PLAN