Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE
14A-6(E)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-12
ONLINE VACATION CENTER HOLDINGS CORP.
-------------------------------------
(Name of Registrant as Specified in Its Charter)
Not Applicable
--------------
(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: Not
Applicable
2) Aggregate number of securities to which the transaction applies: Not
Applicable
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.): Not
Applicable
4) Proposed maximum aggregate value of transaction: Not Applicable
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: Not Applicable
2) Form, Schedule or Registration Statement No.: Not Applicable
3) Filing Party: Not Applicable
4) Date Filed: Not Applicable
ONLINE VACATION CENTER HOLDINGS CORP.
1801 NW 66th Avenue
Plantation, FL 33313
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 15, 2007
To our Shareholders:
The Annual Meeting of Shareholders (the "Annual Meeting") of Online Vacation
Center Holdings Corp. and its subsidiaries (the "Company") will be held on May
15, 2007, at 8:30 a.m. at the Sheraton Suites Plantation located at 311 North
University Drive, Plantation, Florida 33324, for the following purposes:
1. To elect four directors to serve until the Annual Meeting of
Shareholders or until their successors are elected and qualified;
2. To ratify the appointment of Jewett, Schwartz, Wolfe & Associates
as the Company's independent public accountants for the fiscal
year ended December 31, 2007; and
3. To transact such other business as may properly come before the
Annual Meeting.
All shareholders of record at the close of business on March 30, 2007 will be
entitled to notice of and to vote at the Annual Meeting or any adjournments or
postponements thereof. This proxy statement and the accompanying proxy card are
first being mailed to our shareholders on or about April 9, 2007.
Whether or not you plan to attend the Annual Meeting in person, you are
requested to complete, date, sign and return the enclosed proxy card in the
enclosed envelope, which requires no postage if mailed in the United States. If
you attend the Annual Meeting, you may vote in person if you wish, even if you
previously return your proxy card.
By Order of the Board of Directors
/s/ RICHARD A. McKINNON
------------------------------------
Dated: April 3, 2007 Richard A, McKinnon, Chairman of the
Plantation, Florida Board of Directors
2
ONLINE VACATION CENTER HOLDINGS CORP.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
to be held on May 15, 2007
General
We are providing these proxy materials in connection with the
solicitation by the Board of Directors of Online Vacation Center Holdings Corp.
of proxies to be voted at our 2007 Annual Meeting of Shareholders and at any and
all postponement or adjournment thereof. Our Annual Meeting will be held on May
15, 2007, at 8:30 a.m. at the Sheraton Suites Plantation located at 311 North
University Drive, Plantation, Florida 33324. In this proxy statement, Online
Vacation Center Holdings Corp. and its subsidiaries are referred to as the
"Company," "we," "our" or "us."
Outstanding Securities and Voting Rights
Only holders of record of the Company's common stock at the close of
business on March 30, 2007, the record date, will be entitled to notice of, and
to vote at, the Annual Meeting. On that date, we had 18,492,977 shares of common
stock outstanding. Each share of common stock is entitled to one vote at the
Annual Meeting.
A majority of the outstanding shares of our common stock present in
person or represented by proxy constitutes a quorum for the transaction of
business at the Annual Meeting. Abstentions and broker non-votes will be
included in determining the presence of a quorum at the Annual Meeting. A broker
non-vote occurs when a nominee holding shares for a beneficial owner does not
vote on a particular proposal because the nominee does not have discretionary
voting power with respect to that item and has not received instructions from
the beneficial owner.
Under applicable rules governing brokers who represent shares held in
street name, brokers have the authority to vote those shares on routine matters,
but not on non-routine matters. Routine matters include the election of
directors (Proposal One) and ratification of our independent public accountants
(Proposal Two). Accordingly, broker non-votes will not affect Proposals One and
Two. Abstentions will have the same effect as a vote against a proposal.
Proxy Voting
Shares for which proxy cards are properly executed and returned will be
voted at the Annual Meeting in accordance with the directions given or, in the
absence of directions, will be voted "FOR" Proposal 1 - the election of each of
the nominees to the Board named herein and "FOR" Proposal 2 - the ratification
of Jewett, Schwartz, Wolfe & Associates as the Company's independent public
accountants. If, however, other matters are properly presented, the person named
in the proxies in the accompanying proxy card will vote in accordance with their
discretion with respect to such matters.
The manner in which your shares may be voted depends on how your shares
are held. If you own shares of record, meaning that your shares are represented
by certificates or book entries in your name so that you appear as a shareholder
on the records of Securities Transfer Corporation, our transfer agent, a proxy
3
card for voting those shares will be included with this proxy statement. If you
own shares in street name, meaning that your shares are held by a bank or
brokerage firm or other nominee, you may instead receive a voting instruction
form from that institution with this proxy statement to instruct it how to vote
your shares.
All votes will be tabulated by an Inspector of Elections appointed for
the Annual Meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. A list of the shareholders entitled to vote at
the Annual Meeting will be available at the Company's executive office, located
at 1801 NW 66th Avenue, Plantation, Florida 33313 for a period of ten (10) days
prior to the Annual Meeting for examination by any shareholder.
Attendance and Voting at the Annual Meeting
If you own common stock of record, you may attend the Annual Meeting
and vote in person, regardless of whether you have previously voted by proxy
card. If you own common stock in street name, you may attend the Annual Meeting
but in order to vote your shares at the Annual Meeting, you must obtain a "legal
proxy" from the bank or brokerage firm that holds your shares. You should
contact your bank or brokerage account representative to learn how to obtain a
legal proxy. We encourage you to vote your shares in advance of the Annual
Meeting, even if you plan on attending the Annual Meeting. If you have already
voted prior to the Annual Meeting, you may nevertheless change or revoke your
vote at the Annual Meeting in the manner described below.
Revocation
If you own common stock of record, you may revoke a previously granted
proxy at any time before it is voted by delivering to Mary Lou Ruderman, the
Corporate Secretary of the Company, a written notice of revocation or a duly
executed proxy bearing a later date or by attending the Annual Meeting and
voting in person. Any shareholder owning common stock in street name may change
or revoke previously granted voting instructions by contacting the bank or
brokerage firm holding the shares or by obtaining a legal proxy from such bank
or brokerage firm and voting in person at the Annual Meeting.
BENEFICIAL SECURITY OWNERSHIP
The following table set forth certain information regarding the
beneficial ownership of our common stock as of March 30, 2007 by (i) each of our
directors, (ii) each Named Executive Officer (as defined on page 9), (iii) all
of our directors and Named Executive Officers as a group, and (iv) each person
known by us to be the beneficial owner of more than five percent (5%) of the
shares outstanding of our common stock. Unless otherwise noted, each shareholder
has sole voting and investment power with respect to the indicated shares and
the address for each shareholder is 1801 NW 66th Avenue, Plantation, Florida
33313.
4
Number of Shares
Beneficially Percent of
Name and Address of Beneficial Holder Owned Shares (1)
------------------------------------- ---------------- ----------
Simon Todd 1,463,150 7.9%
Edward B. Rudner 10,495,400 (1) 55.5%
Richard A. McKinnon 150,000 *
Brian P. Froelich 35,000 *
Frank Bracken 50,000 *
All current executive officers and
directors as a group -(5 persons) 12,193,550 (2) 64.5%
5% or greater holders:
William A. Cataldo 1,195,310 (3) 6.5%
Reginald Flosse 3,060,050 (4) 16.5%
B.P. 21426
Papeete, Tahiti
------------------
* Less than one percent.
(1) Includes an aggregate of 1,680,000 shares held in trust for the benefit
of Mr. Rudner's children and 1,680,000 shares held by Mr. Rudner's
wife. Also includes 400,000 shares of common stock underlying options
which are exercisable.
(2) Includes 400,000 shares of common stock underlying options which are
exercisable.
(3) Includes 125,000 shares held by Cataldo Family Partners, Ltd., an
entity in which Cataldo serves as general partner and 1,070,310 shares
held by Pacific Tour Services, Inc., a company beneficially controlled
by Mr. Cataldo. Cataldo's ownership interest excludes 589,980 shares
held by the Cataldo Family Trust, a trust in which Cataldo is a
beneficiary, but does not hold voting control
(4) The mailing address for Mr. Flosse is B.P. 21426, Papeete, Tahiti.
Information was obtained from a Schedule 13d filed by Mr. Flosse with
the SEC on March 28, 2006.
5
EXECUTIVE OFFICER AND DIRECTOR
The following table sets forth certain information with respect to our
Chief Executive Officer and directors as of December 31, 2006:
Name Age Position
---- --- --------
Edward B. Rudner 56 Chief Executive Officer, President,
Chief Financial Officer and
Director
Richard A. McKinnon 66 Chairman of the Board of Directors
Brian P. Froelich 60 Director
Frank Bracken 66 Director
Edward B. Rudner has served as our Chief Executive Officer, President, Chief
Financial Officer and as a director since March 15, 2006, the effective date of
the share exchange agreement ("Share Exchange Agreement") between the Company
and Online Vacation Center Holdings, Inc. and its shareholders. Mr. Rudner has
served as an executive officer and director of Online Vacation Center Holdings,
Inc. since its inception in October 2000. Prior to founding Online Vacation
Center Holdings, Inc., Mr. Rudner served as Chief Financial Officer and then
Chief Operating Officer of Alamo Rent A Car. During his tenure Alamo Rent A Car
expanded from a Florida company with 400 cars to a national car rental company
with over 50,000 cars. In 1984, Mr. Rudner became President and Chief Executive
Officer of Certified Tours, which grew from selling 10,000 vacation packages a
year to over 250,000. In 1989, Mr. Rudner became Chairman and Chief Executive
Officer of Renaissance Cruises, which expanded ship assets from $60 million to
over $1 billion and increased revenues from $20 million to over $300 million by
1999. Following his departure, on September 25, 2001, Renaissance Cruises filed
for bankruptcy under Chapter 11 in the United States Bankruptcy Court, Southern
District of Florida. Renaissance Cruises ceased operations and its assets were
placed in a liquidating trust. Mr. Rudner holds a BA in history, cum laude from
the University of Massachusetts.
Richard Anthony (Tony) McKinnon has served as the Chairman of the Board of
Directors of the Company since March 15, 2006, the effective date of the Share
Exchange Agreement. With a background at senior levels in marketing and
executive management, Mr. McKinnon has accumulated over thirty years of
experience in the travel industry. His experiences include executive
responsibilities at American Airlines, Pan American World Airways, Delta Air
Lines, Wyndham Resort Hotels, USAir, American Hawaii Cruises and The Delta Queen
Steamboat Company. Most recently, McKinnon successfully developed Vacation.com,
which is currently a network of approximately 6,000 travel agencies across North
America. With the sale of Vacation.com to Amadeus, a leading global distribution
system and technology provider serving the marketing, sales and distribution
needs of the world's travel and tourism industries, Mr. McKinnon served as CEO
of Amadeus' North American Operations from 2000 through 2003. In 2004, he served
as a senior adviser to the Seabury Group, a consulting firm. Mr. McKinnon
currently provides consulting services to travel industry companies. He also
currently serves as a director for the Baptist Foundation of Texas, Tauck, Inc.
and Passport Online, Inc. Mr. McKinnon holds a BS from the United States
Military Academy and a JD from Emory University School of Law.
Brian P. Froelich has served as a director since March 15, 2006, the effective
date of the Share Exchange Agreement. After four years in public accounting with
Arthur Anderson and Coopers and Lybrand and five years at US Life, he founded
BPF Travel in 1979. In 1984 he sold BPF Travel to American Express. With BPF
Travel's acquisition by American Express, he became part of the senior executive
6
team of American Express. During his tenure at American Express, he was general
manager of the domestic Travel Management Services business. As a result of his
performance he was named to the American Express Hall of Fame. From 1999 through
2001 he served as Senior Vice President, Consumer Travel, American Express. From
2001 through 2002 he served as president and CEO of Allied Tours, a subsidiary
of Global Vacation Group, Inc. (NYSE: GVG) where he affected the turnaround of
Allied Tours and sold it to a large European travel company. Since 2003 he has
served as president and CEO of Fenevations, LLC, a U.S.-based manufacturer of
custom windows and doors. Mr. Froelich holds a BS in Finance from Boston
College, an MBA from Rutgers University, and a JD from Seton Hall Law School.
Frank Bracken has served as a director since March 15, 2006, the effective date
of the Share Exchange Agreement. Mr. Bracken retired from Haggar Clothing Co. in
2005. He had served as President and Chief Operating Officer of Haggar Clothing
Co. since July 20, 1994, becoming the first non-Haggar family member in the
company's 75-year history to assume that responsibility. Mr. Bracken served his
entire 42-year professional career at Haggar, joining the company as a
management trainee in 1963. In 1971, he was named Regional Sales Manager, in
1976 he was named Vice President/National Sales Manager, and then earned the
title of Senior Vice President of Sales and Merchandising in 1984. In 1988, all
marketing functions were added to that responsibility and he was named Senior
Vice President of Marketing. In 1991, he added the responsibilities of Domestic
and International Manufacturing, Private Label Products and the Horizon Group,
Haggar's division for mass market retailers and was named Executive Vice
President. In 1994, he assumed the position of President and COO. Mr. Bracken
sits on the Chancellor's Advisory Committee at the University of North Texas
(UNT) and serves on the UNT Foundation Board, Athletic Board, and College of
Business Advisory Board. He was honored as Distinguished UNT Alumnus in 1995. He
is the Board Chair on the National Board for Big Brothers Big Sisters of America
and serves as Board Development Chair for Big Brothers Big Sisters of North
Texas. Mr. Bracken serves on numerous other industry and charitable boards.
CORPORATE GOVERNANCE AND RELATED MATTERS
Board Meetings and Committees
The Board of Directors oversees our business and affairs and monitors
the performance of management. In accordance with corporate governance
principles, the Board does not involve itself in the Company's day to day
operations. The directors keep themselves informed through discussions with the
Chief Executive Officer, other key executives and by reading the reports and
other materials that we send them and by participating in Board and committee
meetings. Our directors hold office until their successors have been elected and
duly qualified; unless the director resigns or by reason of death or other cause
is unable to serve in the capacity of director.
The Board meets regularly during the year to review matters affecting
our Company and to act on matters requiring Board approval. In also holds
special meetings whenever circumstances require and may act by unanimous written
consent. During fiscal 2006, there were seven meetings of the Board. All persons
who were serving as directors during fiscal 2006 attended at least 75% of the
aggregate of the meetings of the Board and committees of which they were
members. At December 31, 2006, the persons serving on our Board were Edward
Rudner, Richard A. McKinnon, Brian Froelich and Frank Bracken. Prior to March
15, 2006, the sole director of our Company was Alan Rubin, who resigned in
connection with the Share Exchange Agreement.
7
The Board has determined that Brian Froelich and Frank Bracken are
independent directors as defined by the listing requirements of the American
Stock Exchange ("AMEX"). We have a standing Audit Committee and Compensation
Committee.
Audit Committee
The Audit Committee consists of Brian Froelich (Chairman) and Frank
Bracken, each of whom is a non-employee director of the Company, independent
under AMEX listing requirements for audit committees, and has been designated by
the Board as an "audit committee financial expert" as defined by the rules and
regulations of the Securities and Exchange Commission ("SEC"). The Audit
Committee recommends the engagement of independent public accountants to the
board, initiates and oversees investigations into matters relating to audit
functions, reviews the plans and results of audits with our independent public
accountants, reviews our internal accounting controls and approves services to
be performed by our independent public accountants. The Audit Committee met once
during fiscal 2006. The Audit Committee has a written charter and current copy
of such charter is available at the Company's website at
www.onlinevacationcenter.com.
Compensation Committee
The Compensation Committee consists of Brian Froelich (Chairman) and
Frank Bracken, each of whom is a non-employee director of the Company and each
of whom is independent under the AMEX listing requirements. The responsibilities
and duties of the Compensation Committee consist of but are not limited to: (1)
approving salaries and incentive compensation of executive officers, as well as
the compensation of our Board members; (2) reviewing compensation of certain
other employees and (3) administering the employee stock option and benefit
plans. The Compensation Committee met once during fiscal 2006. The Compensation
Committee has a written charter and current copy of such charter is available at
the Company's website at www.onlinevacationcenter.com.
Nominating Committee
We have not established a formal nominating committee or adopted a
written charter for this committee at the present time. Our entire Board of
Directors performs the functions served by a nominating committee. At the
present time, we do not believe that maintaining a nominating committee would
lead to the identification of a broader pool of candidates eligible and willing
to serve as directors of the Company. If the Board identifies a need to replace
a current member of the Board, to fill a vacancy on the Board, or to expand the
size of the Board, the Board considers candidates from a variety of sources. The
process followed by the Board to identify and evaluate candidates include (a)
meetings to evaluate biographical information and background material relating
to candidates, (b) requiring candidates to complete questionnaires to elicit
information of the type required to be disclosed by us in reports filed with the
SEC, (c) conducting background investigations by qualified independent
organizations experienced in conducing criminal and civil investigatory reviews,
(d) interviews of selected candidates by members of the Board and (e) such other
personal and financial reviews and analyses as the Board of Directors may deem
appropriate in connection with the consideration of candidates.
Recommendations by the Board of candidates for inclusion in the Board
slate of director nominees are based upon criteria such as business experience
and skills, independence as defined by the AMEX listing requirements or other
independence standard deemed appropriate by the Board, distinction in their
activities, integrity, the ability to commit sufficient time and attention to
8
the Board's activities and the absence of potential conflicts with the Company's
interests. The Board also considers any other relevant factors that it may from
time to time deem appropriate, including the current composition of the Board,
the balance of management and independent directors, the need for audit
committee expertise and the evaluation of all prospective nominees. The Board of
Directors considers candidates for Board membership, including those suggested
by shareholders applying the same criteria to all candidates.
Shareholder Nominations to the Board
We do not have a formal policy with regard to the consideration of
director candidates recommended by our shareholders. Shareholders that desire to
recommend candidates for consideration by our Board of Directors should mail or
deliver written recommendations to us as follows: Board of Directors, c/o Online
Vacation Center Holdings Corp., 1801 NW 66th Avenue, Plantation, Florida 33313.
Each recommendation should include biographical information indicating the
background and experience of the candidate that qualifies the candidate for
consideration as a director. Shareholders who wish to nominate a candidate for
election to the our Board of Directors, as opposed to recommending a potential
nominee for consideration by the Board of Directors, are required to comply with
the advance notice requirements required by applicable laws and regulations.
Communications with the Board of Directors and Director Attendance at Annual
Meetings
Shareholders may communicate with the Board of Directors by writing to
the Chairman of the Board of the Company, in care of the Board of Directors (or
at the shareholder's option, care of a specific director), at Online Vacation
Center Holdings Corp., 1801 NW 66th Avenue, Plantation, Florida 33313. We will
ensure that all communications to the Board of Directors or any particular
director (marked and addressed as set forth above) will be delivered to the
Chairman of the Board of Directors or a specified director, as the case may be.
We do not have a formal policy regarding director attendance at our
Annual Meeting of Shareholders. Nevertheless, directors are encouraged to attend
the Company's Annual Meeting of Shareholders each year. All of the directors are
expected to attend our Annual Meeting of Shareholders to be held on May 15,
2007.
Code of Ethics
We have adopted a Code of Ethical Conduct that includes provisions
ranging from conflicts of interest to compliance with all applicable laws and
regulations. All officers and directors are bound by this Code of Ethical
Conduct, violations of which may be reported to the Chairman of the Board of
Directors.
Section 16(a) Beneficial Ownership Reporting Compliance
To our knowledge, based solely on a review of the copies of such
reports furnished to us and written representations that no other reports were
required, the Company believes that during the year ended December 31, 2006, our
officers, directors and greater-than-10% shareholders timely filed all reports
required by Section 16(a).
9
EXECUTIVE COMPENSATION
The following Summary Compensation table sets forth information
regarding compensation earned by, awarded to or paid to our Chief Executive
Officer, our Vice President and our former Chief Executive Officer for the year
ended December 31, 2006 ("fiscal 2006"). We refer to these officers as our Named
Executive Officers in other parts of this proxy statement. We currently do not
have any other individual employee of the Company designated as an executive
officer.
SUMMARY COMPENSATION TABLE
---------------------------------------------------------------------------------------------------------------------
Name and Stock Option All
Principal Salary Bonus Awards Awards Other Total
Position Year $ $ $ (1) $ (1) Compensation $
---------------------------------------------------------------------------------------------------------------------
Edward B.
Rudner
CEO.
President and CFO (2) 2006 $ 230,768 (3) $ - $ 170 $ 68,292 $ 43,846 (4) $ 343,076
---------------------------------------------------------------------------------------------------------------------
Simon Todd 2006 $ 77,154 $ 110,000 $ - $ - $ 140 $ 187,294
Vice President (5)
---------------------------------------------------------------------------------------------------------------------
Alan Rubin
Former CEO and CFO (6) 2006 $ 20,000 $ - $ - $ - $ 52,333 (7) $ 72,333
---------------------------------------------------------------------------------------------------------------------
---------------
1. Amounts shown do not reflect compensation actually received by the
Named Executive Officers. Instead, the amounts shown are the
compensation costs recognized by the Company in fiscal 2006 for option
awards and stock awards as determined pursuant to FAS 123R. The
assumptions used to calculate the value of the option awards using the
Black-Scholes option-pricing model were as follows: average expected
life between 2.5 and 3.5 years; 4.44% risk-free interest rate; 40%
volatility and a 5% forfeiture rate. The weighted fair value of options
granted during 2006 was $0.17.
2. Mr. Rudner has served as our CEO, President and CFO since March 15,
2006.
3. Excludes $154,410 which was paid to Mr. Rudner by Online Vacation
Center Holdings, Inc. pursuant to his prior employment agreement prior
to March 15, 2006, the closing date of the Share Exchange Agreement.
4. Represents a car allowance of $13,846 and a country club allowance of
$30,000. Excludes $23,830 in benefits which were paid to Mr. Rudner by
Online Vacation Center Holdings, Inc.
5. Mr. Todd became our Vice President on September 1, 2006 in conjunction
with our acquisition of Phoenix International Publishing LLC.
6. Mr. Rubin served as our CEO from October 16, 2000 until March 15, 2006,
at which time, he resigned both as director and CEO in conjunction with
the Share Exchange Agreement. Mr. Rubin's 2006 salary represents his
salary from January 1, 2006 until March 15, 2006.
7. Mr. Rubin's other annual compensation during 2006 represents
remuneration in conjunction with a consulting agreement with us which
terminated in September 2006.
10
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
The following table provides information concerning unexercised options
and stock that has not vested for each of our Named Executive Officers for the
fiscal year ended December 31, 2006. All options and stock were granted under
our 2005 Plan.
Option Awards Stock Awards
------------------------------------------------------------ --------------------------
Market
Number of Number of Number of Value of
Securities Securities Shares or Shares or
Underlying Underlying Units of Units of
Unexercised Unexercised Option Stock That Stock That
Options- Options- Exercise Option Have Not Have Not
Exercisable Unexercisable Price Expiration Vested Vested
Name (#) (#) ($) Date ($) $ (1)
---- ------------ -------------- -------- ------------- ------------ ------------
Edward B. 300,000 (2) 200,000 (3) $ 1.27 03-16-2011 800 (3) $ 2,160
Rudner -- 200,000 (4) $ 1.27 03-16-2011 -- --
Simon Todd -- -- -- -- -- --
Alan Rubin -- -- -- -- -- --
--------------
1. Value is based on the closing price of our common stock on December 29,
2006, which was $2.70 per share.
2. These options were granted in conjunction with his execution of an
employment agreement with us on March 16, 2006.
3. Mr. Rudner received a grant of 1,000 restricted stock awards on March
16, 2006, which vest at the rate of 20% per annum with vesting dates of
March 16, 2006, March 16, 2007, March 16, 2008, March 16, 2009 and
March 16, 2010.
4. These options were granted to Mr. Rudner in his capacity as director of
the Company. These options vest on March 16, 2008.
EMPLOYMENT AGREEMENTS
Edward B. Rudner. Effective as of March 16, 2006, we entered into an
employment agreement with Edward B. Rudner to serve as our President and Chief
Executive Officer which replaced the employment agreement which Mr. Rudner had
with Online Vacation Center Holdings, Inc. The employment agreement has no
stated termination date and has a perpetual term of 3 years. We will pay Mr.
Rudner an initial annual base salary of $300,000, payable bi-weekly for a term
of 3 years. The base salary is subject to annual automatic incremental increases
of the greater of the percentage increase in the consumer price index or 6% of
the previous year's base salary. Mr. Rudner is also entitled to a
performance-based bonus and to participate in all Company benefit programs. He
is entitled to five weeks paid vacation per year, reimbursement of all
reasonable out-of-pocket business expenses, a monthly automobile allowance of
$1,500, automobile insurance coverage and reimbursement for memberships in
social, charitable or religious organizations or clubs for up to $30,000 per
year.
11
In addition, we granted Mr. Rudner options to purchase 500,000 shares
of our common stock, with 300,000 options vesting immediately and 100,000
options vesting on March 16, 2007 and the remaining 100,000 vesting on March 16,
2008. The exercise price of the options is $1.27 per share and all of the
options were granted under the 2005 Management and Director Equity Incentive and
Compensation Plan. Mr. Rudner also received options in connection with his
service as a director of the Company.
In the event of Mr. Rudner's death or disability during the term of the
agreement, Mr. Rudner or his beneficiaries are entitled to all compensation and
benefits under his employment agreement for a period of one year following the
date of his death or disability. In the event that Mr. Rudner is terminated "for
cause", he will be entitled to receive his salary and earned but unpaid bonuses
due up to the date of termination. "Cause" is defined as committing or
participating in an injurious act of fraud or embezzlement against the company;
engaging in a criminal enterprise involving moral turpitude; conviction of an
act constituting a felony of a crime of violence, fraud or dishonesty; or any
attempt by Mr. Rudner to assign the employment agreement. In the event there is
a "Change in Control" or "Attempted Change in Control," as such terms are
defined in his employment agreement, Mr. Rudner shall have the right to
terminate his employment upon thirty (30) days written notice given at any time
within one year after the occurrence of such event. A Change in Control is
defined as any event set forth in Section 280G of the Internal Revenue Code or
any event that would be required to be reported as a change in control in
response to Item 1 of the SEC form for a current report on Form 8-K, in effect
as of March 16, 2006 and an "Attempted Change of Control" shall be deemed to
have occurred if any substantial attempt accompanied by significant work efforts
and expenditures of money is made to accomplish a Change of Control. In the
event that Mr. Rudner is terminated for any other reason other than for cause,
death or disability or if he terminates his employment because of a Change in
Control or Attempted Change of Control, he will receive all compensation and
benefits under his employment agreement for a period of three years following
the date of termination. He shall also be entitled to receive a bonus equal to
the amount received for the prior year or if no prior bonus was received, an
amount equal to $150,000, as well as all earned but unpaid bonuses from previous
years. The employment agreement also includes a one-year covenant not to compete
and non-disclosure provision. The agreement has a perpetual term of three years.
As of March 15, 2006, Online Vacation Center Holdings, Inc. had an
obligation to Mr. Rudner under the terms of his previous employment agreement
for compensation and benefits in the amount of $579,990. The obligation has been
assumed by us. In August 2006, we established the Online Vacation Center
Holdings Corp. Deferred Compensation Plan in order to provide for payments to be
made to Mr. Rudner for this obligation. We will make a series of twenty-six (26)
bi-weekly cash payments totaling $579,990 to Mr. Rudner, commencing on January
19, 2007.
Simon Todd. In connection with our acquisition of Phoenix International
Publishing, LLC ("Phoenix"), we entered into an employment agreement with Simon
Todd to serve as Vice President of our Company and as the President of Phoenix
effective as of August 31, 2006. Mr. Todd is entitled to a base salary of
$202,000 per annum which increases by 4% per annum until August 31, 2009, the
termination date of the Agreement. In addition, Mr. Todd is entitled to a
retention bonus, a bonus in conjunction with the closing of certain acquisition
prospects and a bonus in conjunction with Phoenix achieving certain
profitability thresholds.
2005 Management and Director Equity Compensation Plan
Effective as of March 15, 2006, our Board of Directors and shareholders
approved our 2005 Management and Director Equity Compensation Plan (the "Plan"
12
or "2005 Plan"). We have reserved an aggregate of 2,500,000 shares of common
stock for issuance under the this Plan which provides for the grants of stock
options, restricted stock, performance-based and other equity-based incentive
awards to directors, officers and key employees. Our Board of Directors (or at
their discretion a committee of our board members) administers the Plan
including, without limitation, the selection of recipients of awards under the
Plan, the granting of stock options, restricted share or performance shares, the
determination of the terms and conditions of any such awards, the interpretation
of the Plan and any other action they deem appropriate in connection with the
administration of the Plan. As of December 31, 2006, we had granted 1,870,000
options and 35,000 stock awards under the Plan.
Compensation of Directors
We use a combination of cash and equity based compensation to attract
and retain qualified candidates to serve on the Board. In setting director
compensation, we consider the significant amount of time that directors expend
in fulfilling their duties, as well as the skill-level required by members of
the Board.
We pay each director an annual retainer of $25,000. We pay the Chairman
of the Board of Directors an additional annual fee of $50,000 for his additional
duties as the Chairman. To ensure that directors have an ownership interest
aligned with the Company's other shareholders, we may also grant options or
stock awards to purchase shares of the Company's common stock to our directors
from time to time. In connection with the closing of the Share Exchange
Agreement, we awarded an aggregate of 1,300,000 options to our directors.
The table below summarizes the total compensation paid by us to our
directors for the fiscal year ended December 31, 2006. All directors began
serving as directors, effective as of March 15, 2006 after the closing of the
Share Exchange Agreement. Alan Rubin, who served as a director of the Company
from October 2000 through March 15, 2006, is not listed in this table because
the compensation that he received as a director of the Company during the first
quarter of 2006 is listed in the enclosed Summary Compensation table.
Fees Earned All
or Paid in Option Other
Name Cash Awards (1)(2) Compensation Total
----------------- ----------- ------------- ------------ -------
Richard McKinnon $ 56,250 $ 42,645 $ 120,000 (3) $ 218,895
Edward B. Rudner $ 18,750 $ 14,215 -- $ 32,965
Brian P. Froelich $ 18,750 $ 21,323 -- $ 40,073
Frank Bracken $ 18,750 $ 14,215 -- $ 32,965
--------------
(1) Amounts shown do not reflect compensation actually received by the
directors. Instead, the amounts shown are the compensation costs
recognized by the Company in fiscal 2006 for option awards as
determined pursuant to FAS No. 123R. The assumptions used to calculate
the value of the option awards using the Black-Scholes option-pricing
model were as follows: average expected life between 2.5 and 3.5 years;
4.44% risk-free interest rate; 40% volatility and a 5% forfeiture rate.
The weighted fair value of options granted during 2006 was $0.17.
13
(2) On March 16, 2006, we granted 600,000 options to Mr. McKinnon, 200,000
options to Mr. Rudner, 300,000 options to Mr. Froelich and 200,000
options to Mr. Bracken under our 2005 Plan. All options have a five
year term and an exercise price of $1.27 per share. The options vest on
March 16, 2008.
(3) Fees earned pursuant to a consulting agreement between Mr. McKinnon and
the Company.
Equity Compensation Plan Information
The table below lists information regarding our common stock assumable
upon the exercise of stock options, the weighted average exercise price of those
options and the number of shares available for issuance under the Company's 2005
Management and Director Equity Incentive and Compensation Plan as of December
31, 2006. We have no other equity compensation plan and there are no warrants or
other rights outstanding that would result in the issuance of shares of our
common stock as of December 31, 2006.
Equity Compensation Plan Information
------------------------------------
(a) (b) (c)
Number of securities
remaining available
Number of securities for future issuance
to be issued upon Weighted-average under equity
exercise of exercise price of compensation plans
outstanding outstanding (excluding securities
options, warrants options reflected in
Plan Category and rights warrants and rights column (a))
------------------------------------------------------------------------------------------------------------------
Equity compensation
plans approved by
security holders 1,870,000 $1.27 623,000
------------------------------------------------------------------------------------------------------------------
Equity compensation
plans not approved by
by security holders - -
------------------------------------------------------------------------------------------------------------------
Total 1,870,000 $1.27 623,000
------------------------------------------------------------------------------------------------------------------
Change of Control
Management is not aware of an arrangement which may, at a subsequent
date, result in a change of control of the Company. As noted above, only Mr.
Rudner's employment agreement with the Company has provisions which address a
change of control, as defined in his employment agreement.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Following the closing of the Share Exchange Agreement, we engaged Alan
Rubin, the former principal shareholder and sole executive officer and director
of the Company to perform certain consulting services for us for a six month
period beginning on April 15, 2006 and ending on September 15, 2006. Under this
agreement, Mr. Rubin's consulting fee was equal to $52,333. Mr. Rubin assisted
14
us with transition issues relating to our new ownership of the Company,
including but not limited to preparing the Company's financial statements and
tax returns for the fiscal years ended December 31, 2005 and 2006.
Effective as of October 2005, we engaged Richard McKinnon to provide
consulting services to us. In consideration for such services, Mr. McKinnon
receives a monthly fee of $10,000. The term of the arrangement is on a
month-to-month basis. During 2006 and 2005 Mr. McKinnon received $120,000 and
$30,000, respectively in consulting fees. Mr. McKinnon became a director of our
Company on March 15, 2006.
AUDIT COMMITTEE REPORT
The Audit Committee reviews the Company's financial reporting process
on behalf of the Board. Management has the primary responsibility for
establishing and maintaining adequate internal control over financial reporting,
for preparing the financial statements and for the reporting process. The Audit
Committee members do not serve as professional accountants or auditors, and
their functions are not intended to duplicate or to certify the activities of
management or the independent public accounting firm. We have engaged Jewett,
Schwartz, Wolfe & Associates as our independent public accountants to report on
the conformity of the Company's financial statements to accounting principles
generally accepted in the United States.
In this context, the Audit Committee reviewed and discussed with
management and Jewett, Schwartz, Wolfe & Associates the Company's audited
financial statements for the year ended December 31, 2006. The Audit Committee
has discussed with Jewett, Schwartz, Wolfe & Associates the matters required to
be discussed by Statement on Auditing Standards No. 61 (Communication with Audit
Committees), as amended. In addition, the Audit Committee has received from
Jewett, Schwartz, Wolfe & Associates the written disclosures required by
Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees) and discussed with them their independence from the Company and its
management.
Following the reviews and discussions referred to above, the Audit
Committee recommended to the Board that the audited financial statements be
included in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 2006, for filing with the Securities and Exchange Commission.
The foregoing has been furnished by the Audit Committee:
Brian Froelich, Chairman
Frank Bracken
This section is not "Soliciting Material," is not deemed filed with the SEC and
it not to be incorporated by reference in any filing of the Company under the
Securities Act of 1933, as amended or the Securities Exchange Act of 1934,
whether made before or after the date hereof and irrespective of any general
incorporation language in any such filing.
15
PROPOSALS TO THE SHAREHOLDERS
PROPOSAL ONE: ELECTION OF DIRECTORS
The four persons set below, each of whom is currently a director, are
proposed to be re-elected as directors at the Annual Meeting. If elected, each
of these directors will hold office until the next Annual Meeting of
Shareholders in the year 2008 or until his or her successor is duly elected and
qualified.
Richard McKinnon
Edward B. Rudner
Brian P. Froelich
Frank Bracken
All of the nominees are currently serving as directors. Each nominee has agreed
to be named in this proxy statement and to serve as a director if elected. For
biographical information regarding the nominees, see "Management" on pages 5-6.
Management expects that each nominee will be available for election, but if any
of them is not a candidate at the time when the election occurs, it is intended
that such proxy will be voted for the election of another nominee to be
designated by the Board of Directors to fill such vacancy.
Vote Required and Recommendation
The four nominees for election to the Board of Directors who receive
the greatest number of votes cast for the election of directors by the shares
present, in person or by proxy, shall be elected directors. Shareholders do not
have the right to cumulate their votes for directors. In the election of
directors, an abstention or broker non-vote will have no effect on the outcome.
The Board recommends shareholders to vote "for" each of the nominees for
director set forth above.
PROPOSAL NO. 2
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
We are asking our shareholders to ratify the Audit Committee's
appointment of Jewett, Schwartz, Wolfe & Associates as our independent public
accountants for the fiscal year ending December 31, 2007. In the event our
shareholders fail to ratify the appointment, the Audit Committee will reconsider
this appointment. Even if the appointment is ratified, the Audit Committee, in
its discretion, may direct the appointment of a different independent public
accounting firm at any time during the year if the Audit Committee determines
that such a change would be in our Company and our shareholder's best interests.
We engaged Jewett, Schwartz, Wolfe & Associates as our independent
public accountants on May 17, 2003 and it audited the Company's consolidated
financial statements for the fiscal years ended December 31, 2006, 2005, 2004
and 2003. Representatives of Jewett, Schwartz, Wolfe & Associates are expected
to be present at the Annual Meeting and will have the opportunity to make a
statement if they desire to do so. It is also expected that they will be
available to respond to appropriate questions.
16
Principal Accountant Fees and Services
The following is a summary of the fees billed to us by Jewett,
Schwartz, Wolfe & Associates for professional services rendered for the fiscal
years ended December 31, 2006 and 2005:
Fee Category Fiscal 2006 Fiscal 2005
------------ ------------- -------------
Audit Fees $ 59,800 $ 51,360
Audit Related Fees $ 75,000 $ 0
Tax Fees $ 0 $ 0
------------- -------------
All Other Fees 0 0
Total Fees $ 134,800 $ 51,360
============= =============
Audit fees consisted of fees billed for professional services rendered
for the audit of the Company's consolidated financial statements included in our
annual report on Form 10-KSB for the years ended December 31, 2006 and 2005, and
for reviews of the consolidated financial statements included in the Company's
quarterly reports on Form 10-QSB during fiscal 2006 and 2005.
Audit related fees consists of general assistance on SEC matters and
due diligence regarding acquisitions completed in 2006.
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit
Services of Independent Auditors
The Audit Committee's policy is to pre-approve all audit and
permissible non-audit services provided by the independent public accountants.
These services may include audit services, audit-related services, tax services
and other services. Pre-approval is generally provided for up to one year and
any pre-approval is detailed as to the particular service or category of
services and is generally subject to a specific budget. The independent public
accountants and management are required to periodically report to the Audit
Committee regarding the extent of services provided by the independent public
accountants in accordance with this pre-approval, and the fees for the services
performed to date. The Audit Committee may also pre-approve particular services
on a case by case basis. The Audit Committee approved one hundred percent (100%)
of all such professional services provided by Jewett, Schwartz, Wolfe and
Associates during fiscal 2006.
Vote Required and Recommendation
The ratification of the selection of Jewett, Schwartz, Wolfe &
Associates as our independent public accountants for the fiscal year ending
December 31, 2007, requires the affirmative vote of the holders of a majority of
shares of the Company's common stock present, in person or by proxy, at the
Annual Meeting. Broker non-votes will have no effect on the outcome of this
matter. Abstentions will be counted as present at the Annual Meeting for
purposes of this matter and will have the effect of a vote against the
ratification of the appointment of Jewett, Schwartz, Wolfe & Associates.
17
The Board recommends shareholders to vote "for" the ratification of the
selection of Jewett, Schwartz, Wolfe & Associates as our independent public
accountants for the fiscal year ended December 31, 2007.
INFORMATION CONCERNING SHAREHOLDERS PROPOSALS
Next year's Annual Meeting of Shareholders is currently scheduled to be
held on May 15, 2008. Any shareholder desiring to submit a proposal for action
at the 2008 Annual Meeting of Shareholders which is desired to be presented in
the Company's proxy statement with respect to the 2008 Annual Meeting of
Shareholders, should mail the proposal by certified mail return receipt
requested, to the Company, 1801 NW 66th Avenue, Plantation, Florida 33313,
Attention: Mary Lou Ruderman, Corporate Secretary. All such proposals must be
received by the Company not later than January 16, 2008 or if the date of the
2008 Annual Meeting is changed by more than 30 days from the date of the 2007
Annual Meeting, then a reasonable time before we print and the mail the proxy
materials for the 2008 Annual Meeting. We are not required to include in our
proxy statement any shareholder proposal not timely received by us or that is
not otherwise in compliance with SEC rules and regulations.
HOUSEHOLDING OF ANNUAL MEETING MATERIALS
Some banks, brokers and other nominee record holders may be
participating in the practice of "householding" proxy statements and annual
reports. This means that only one copy of the Company's proxy statement and
annual report may have been sent to multiple shareholders in your household. We
will promptly deliver a separate copy of either document to you if you write us
c/o Mary Lou Ruderman, Corporate Secretary, 1801 NW 66th Avenue, Plantation,
Florida 33313. If you want to receive separate copies of the proxy statement and
our annual report in the future, or if you are receiving multiple copies and
would like to receive only one copy for your household, you should contact your
bank, broker, or other nominee record holder, or you may contact us at the above
address.
AVAILABILITY OF FORM 10-KSB ANNUAL REPORT
A copy of the Company's annual report on Form 10-KSB for the fiscal
year ended December 31, 2006, exclusive of certain exhibits filed with the SEC,
accompanies this proxy statement. These exhibits, as well as our interim
quarterly reports on Form 10-QSB and other reports that we filed with the SEC,
are available without charge to shareholders on our website at
www.onlinevacationcenter.com, by calling our offices at (954) 377-6400 or upon
written request to Mary Lou Ruderman, Corporate Secretary, 1801 NW 66th Avenue,
Plantation, FL 33313. The information on our website is not a part of this proxy
statement. Copies of our filings are also available at the Securities and
Exchange Commission website at http://www.sec.gov.
COSTS OF MAILING AND SOLICITATION
The cost of preparing, assembling and mailing this proxy statement and
the enclosed proxy is to be borne by us. In addition to the use of the mail, our
employees may solicit proxies personally and by telephone. Our employees will
receive no compensation for soliciting proxies other than their regular
salaries. We may request banks, brokers and other custodians, nominees and
fiduciaries to forward copies of the proxy material to their principals and to
request authority for the execution of proxies. We may reimburse such persons
for their expenses in so doing. At this time, we do not anticipate that we will
be retaining a third-party solicitation firm, but should we determine, in the
future, that it is in our best interests to do so, we will retain a solicitation
firm and pay for all costs and expenses associated with retaining this
solicitation firm.
18
OTHER MATTERS
Management is not aware of any other matters to come before the Annual
Meeting. If any other matter not mentioned in this proxy statement is brought
before the Annual Meeting, the persons named as proxyholders in the enclosed
form of proxy will have discretionary authority to vote all proxies with respect
thereto in accordance with the recommendations of management.
By Order of the Board of Directors
Dated: April 3, 2007
Plantation, Florida /s/ RICHARD A. MCKINNON
-----------------------
Richard A. McKinnon, Chairman of
the Board of Directors
19
FOLD AND DETACH HERE
--------------------------------------------------------------------------------
ONLINE VACATION CENTER HOLDINGS CORP.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS, MAY 15, 2007
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned revokes all previous proxies, acknowledges receipt of the notice
of the Annual Meeting of Shareholders to be held May 15, 2007 and the proxy
statement, and hereby appoints Richard A. McKinnon and Edward B. Rudner or
either of them to the proxy of the undersigned, with the full power of
substitution to vote all shares of Common Stock of Online Vacation Center
Holdings Corp. ("ONVC") that the undersigned is entitled to vote, either on his
or her own behalf or on behalf of an entity or entities, at the Annual Meeting
of Shareholders of ONVC to be held on Tuesday, May 15, 2007 at 8:30 a.m., and at
any adjournment or postponement thereof, with the same force and effect as the
undersigned might or could do if personally present thereat.
THIS PROXY, WHEN PROPERLY EXECUTED AND RETURNED IN A TIMELY MANNER, WILL BE
VOTED AS SPECIFIED. IF NO CHOICE IS SPECIFIED, THEN THIS PROXY WILL BE VOTED IN
FAVOR OF PROPOSAL 1, ELECTING THE FOUR NOMINEES NOTED HEREON TO THE BOARD OF
DIRECTORS, AND FOR PRPPOSAL 2. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED
TO VOTE UPON SUCH BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY
POSTPONEMENT OR ADJOURNMENT THEREOF.
SEE REVERSE SIDE
TO BE SIGNED AND DATED ON REVERSE SIDE
SEE REVERSE SIDE
--------------------------------------------------------------------------------
ONLINE VACATION CENTER HOLDINGS CORP.
1801 NW 66TH STREET, SUITE 102
PLANATATION, FLORIDA 33313
Mark, sign and date your proxy card and return it in the postage-paid envelope
we have provided
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS
KEEP THIS PORTION FOR YOUR RECORDS
--------------------------------------------------------------------------------
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
DETACH AND RETURN THIS POTION ONLY
ONLINE VACATION CENTER HOLDINGS CORP.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES LISTED
BELOW.
PROPOSAL 1- To elect four directors from the nominees below.
For All [ ] Withhold From All [ ] For All Except [ ]
To withhold authority to vote for any individual nominee, mark "For All Except"
and write the nominee's name below
1) Richard A. McKinnon
2) Edward B. Rudner
3) Brian P. Froelich
4) Frank Bracken
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2.
Proposal 2- To ratify the appointment of Jewett, Schwartz, Wolfe & Associates as
independent public accountants for 2007
For [ ] Against [ ] Abstain [ ]
This proxy card should be signed for your instructions to be executed. Each
joint owner should sign. Signatures should correspond with names printed on
proxy card. Attorneys, executors, administrators, guardians, trustees, corporate
officers or others signing in a representative capacity should give full title.
Signature:
Signature:
Date:
--------------------------------------------------------------------------------