UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
Filed
by the Registrant
x
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Filed
by a Party other than the Registrant
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Check
the appropriate box:
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x
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Preliminary
Proxy Statement
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Confidential,
For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to Rule 14a-11(c) or Rule 14a-12
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WILSON
HOLDINGS,
INC.
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(Name
of Registrant
as Specified In Its Charter)
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(Name
of Person(s) Filing Proxy Statement if other than the
Registrant)
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Payment
of Filing Fee (Check the appropriate box):
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title
of each class of securities to which transaction applies:
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(2)
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Aggregate
number of securities to which transaction applies:
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(3)
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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 is determined)
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(4)
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Proposed
maximum aggregate value of transaction:
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Fee
paid previously with preliminary proxy materials.
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Check
box if any part of the fee is offset as provided by Exchange Act
Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid
previously. Identify the previous filing by registration statement
number,
or the form or schedule and the date of its filing.
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(1)
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Amount
previously paid:
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(2)
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Form,
Schedule or Registration Statement no.:
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[WILSON
HOLDINGS, INC. LOGO]
Wilson
Holdings, Inc.
8121
Bee
Caves Rd.
You
are
cordially invited to attend the annual meeting of shareholders of Wilson
Holdings, Inc. to be held at ●, local time, on ●, 2008 at 8121 Bee Caves Rd.,
Austin, Texas 78746.
The
formal notice of the annual meeting and proxy statement are attached to this
letter. This material contains information concerning the business to
be conducted at the meeting and the nominees for election as
directors.
Even
if
you are unable to attend the meeting in person, it is important that your shares
be represented. Whether or not you plan to attend the annual meeting,
please complete, date, sign and return the enclosed proxy card. You
may revoke your proxy at any time before it is exercised by giving written
notice to, or filing a duly executed proxy bearing a later date with the
Secretary of the Company, or by voting in person at the meeting.
By
order
of the Board of Directors,
Clark
N.
Wilson
President,
Chief Executive Officer and Secretary
[WILSON
HOLDINGS LOGO]
Wilson
Holdings, Inc.
8121
Bee
Caves Road
Austin,
TX 78746
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
To
our
Shareholders:
The
2008
annual meeting of shareholders of Wilson Holdings, Inc. (“Wilson Holdings” or
the “Company”) will be held at ●, local time, on ●, 2008 at 8121 Bee Caves Road,
Austin, Texas 78746. At the meeting, shareholders will act on the
following matters:
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1.
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Election
of five directors;
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2.
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Reincorporation
of the Company in Texas;
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3.
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Amendment
of the Company’s Certificate of Formation to change the name of the
Company from Wilson Holdings to Green Builders, Inc.;
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4.
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Ratification
of the appointment of PMB Helin Donovan, LLP as independent auditors
for
the Company for the fiscal year ending September 30, 2008; and
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5.
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Any
other matters that properly come before the meeting or any postponements
or adjournments thereof.
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Holders
of record of the Company’s common stock at the close of business on February ●,
2008 will be entitled to notice of and to vote at the meeting or any
adjournments or postponements thereof. A list of such shareholders
will be available at the Company’s headquarters, 8121 Bee Caves Road, Austin,
Texas 78746, for examination during normal business hours by any shareholder
for
any purpose germane to the meeting for a period of ten days prior to the
meeting.
Please
date, sign and complete the enclosed proxy and return it without delay, even
if
you plan to attend the annual meeting, in the enclosed envelope, which requires
no postage if mailed in the United States.
By
order of the Board
of Directors,
Clark
N.
Wilson
Secretary
[WILSON
HOLDINGS LOGO]
Austin,
TX 78746
PROXY
STATEMENT
We
are
providing this proxy statement to you in connection with the solicitation on
behalf of our Board of Directors of proxies to be voted at the 2008 annual
meeting of shareholders of Wilson Holdings, Inc. (“we,” “us,” or the “Company”)
to be held on ●, beginning at ●, local time, at 8121 Bee Caves Road, Austin,
Texas 78746 and at any postponements or adjournments thereof. This
proxy statement and the enclosed proxy are first being mailed to the Company’s
shareholders on or about February ●, 2008.
Our
directors, officers and employees may solicit proxies in person or by telephone,
mail, electronic mail, facsimile or telegram. We will pay the expenses of
soliciting proxies, although we will not pay additional compensation to these
individuals for soliciting proxies.
Management
expects that the only matters to be presented for action at the meeting will
be
(i) the election of directors, (ii) the reincorporation of the Company in Texas,
(iii) the amendment of the Company’s Certificate of Formation to change the
Company’s name to Green Builders, Inc. and (iv) the ratification of PMB Helin
Donovan, LLP as independent auditors.
At
the
close of business on February ●, 2008, the record date for determining the
shareholders entitled to notice of and to vote at the meeting, there were
outstanding and entitled to vote ● shares of the Company’s common stock, par
value $0.001 per share. Each share of common stock entitles the
holder to one vote on all matters presented at the meeting.
ABOUT
THE MEETING
What
is the purpose of the annual meeting?
At
our
annual meeting, shareholders will act upon the matters described in the
accompanying notice of meeting, including the election of five directors, the
reincorporation of the Company in Texas, the approval of the proposed amendment
to the Company’s Certificate of Formation to change the Company’s name to Green
Builders, Inc., and the ratification of PMB Helin Donovan, LLP as our
independent auditors. In addition, our management will respond to
questions from shareholders.
Who
is entitled to vote?
Only
holders of record of the Company’s common stock at the close of business on the
record date, February ●, 2008, are entitled to receive notice of and to vote at
the meeting, or any postponements or adjournments of the
meeting. Each holder of common stock is entitled to one vote at the
annual meeting for each share held by such shareholder.
Who
can attend the meeting?
All
shareholders as of the record date, or their duly appointed proxies, may attend
the meeting. Cameras, recording devices and other electronic devices
will not be permitted at the meeting.
What
constitutes a quorum?
The
presence at the meeting, in person or by proxy, of the holders of a majority
of
the shares of common stock of the Company issued and outstanding on the record
date and entitled to vote at the annual meeting will constitute a
quorum. A quorum is required for business to be conducted at the
meeting. As of ●, 2008, ● shares of common stock of the Company were
outstanding and entitled to vote. If you submit a properly executed
proxy card, even if you abstain from voting, then you will be considered for
purposes of determining the presence of a quorum at the annual
meeting. However, abstentions are not counted in the tally of votes
FOR or AGAINST a proposal. A WITHHELD vote is treated the same as an
abstention. Broker non-votes, which are described below, will also be
counted for purposes of determining the presence of a quorum at the annual
meeting.
How
do I vote?
Mark,
sign and date each proxy card you receive and return it in the prepaid envelope.
Your shares will be voted as you indicate on the proxy card. If you
return your signed proxy card but do not mark the boxes indicating how you
wish
to vote, your shares will be voted FOR proposals 1, 2, 3 and 4.
Can
I change my vote after I return my proxy card?
Yes. Even
after you have submitted your proxy, you may change your vote at any time before
the proxy is exercised at the meeting. Regardless of the way in which
you submitted your original proxy, you may change it by:
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Returning
a later-dated, signed proxy card;
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Delivering
a written notice of revocation to Computershare, 250 Royall Street,
Canton, Massachusetts, 02021; or
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Voting
in person at the meeting.
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If
your
shares are held through a broker or other nominee, you will need to contact
that
institution if you wish to change your voting instructions.
What
are
the Board’s recommendations?
The
Board’s recommendations are set forth after the description of each item in this
proxy statement. In summary, the Board recommends a vote:
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FOR
the election of the five persons nominated to serve as directors
(see
Proposal 1);
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FOR
the proposal to reincorporate the Company in Texas (see Proposal
2);
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FOR
the proposed amendment to the Company’s Certificate of Formation to change
the Company’s name to Green Builders, Inc. (see Proposal 3); and
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FOR
ratification of the Audit Committee’s selection of PMB Helin Donovan, LLP
as our independent auditors (see Proposal 4).
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Unless
you give other instructions on your proxy card, the persons named as proxy
holders on the proxy card will vote in accordance with the recommendations
of
the Board of Directors.
What
vote is required to approve each item?
A
quorum
is required in order to transact any business at the meeting.
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Election
of Directors. The affirmative vote of a plurality of the shares of
common
stock present in person or represented by proxy at the annual meeting
and
entitled to vote is required for the election of the nominees as
directors. That is, the nominees receiving the greatest number of
votes
will be elected. A “WITHHELD” vote will not affect the election of the
nominees as directors.
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Other
Proposals. The affirmative vote of the holders of a majority of the
shares
of common stock present in person or represented by proxy at the
annual
meeting and entitled to vote is required to (i) reincorporate the
Company
in Texas, (ii) amend the Company’s Certificate of Formation to change the
Company’s name to Green Builders, Inc., and (iii) ratify PMB Helin
Donovan, LLP as our independent
auditors.
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Effect
of Withheld Votes and Abstentions. In the election of directors,
you may
withhold your vote. Withheld votes will have no effect on the outcome
of
the election. You may vote to “abstain” on each of the other three
proposals. If you vote to “abstain” on a proposal, your shares will be
counted as present at the meeting for purposes of that proposal and
will
have the same effect as a vote against that proposal.
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Broker-dealers
who hold their customer’s shares in street name may, under the applicable
rules of the exchange and other self-regulatory organizations of
which the
broker-dealers are members, sign and submit proxies for such shares
and
may vote such shares on routine matters, which under such rules typically
include the election of directors and ratification of auditors.
Broker-dealers may not vote such shares on other matters without
specific
instructions from the customers who beneficially own such shares.
Proxies
signed and submitted by broker-dealers which have not been voted
on
matters described in the previous sentence are referred to as broker
non-votes. Broker non-votes on a particular matter are not deemed
to be
shares present and entitled to vote on such matters. Broker non-votes,
if
any, will not be counted as votes cast on any proposal.
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Who
will count the vote?
The
Secretary of the Company will count the votes and act as the inspector of
election at the annual meeting.
What
shares are included on my proxy card(s)?
The
shares on your proxy card(s) represent ALL of your shares of common stock that
the Company’s stock transfer records indicate that you hold. If you
hold shares through a broker or other nominee, you will receive a separate
voting instruction card for those shares.
What
does it mean if I receive more than one proxy card?
If
your
shares are registered under different names or are in more than one account,
you
will receive more than one proxy card. To ensure that all your shares
are voted, sign and return all proxy cards. We encourage you to have
all accounts registered in the same name and address (whenever possible). You
can accomplish this by contacting our transfer agent, Computershare, at (781)
575-4593.
How
will voting on any other business be conducted?
We
currently do not know of any business to be considered at the 2008 annual
meeting other than the proposals described in this proxy
statement. If any other business is properly presented at the annual
meeting, your proxy gives authority to Clark N. Wilson to vote on such matters
at his discretion.
How
much did this proxy solicitation cost?
We
will
bear the entire cost of solicitation, including the preparation, assembly,
printing and mailing, of this proxy statement, the proxy and any additional
solicitation materials furnished to the shareholders. Copies of
solicitation materials will be furnished to brokerage houses, fiduciaries and
custodians holding shares in their names that are beneficially owned by others
so that they may forward this solicitation material to such beneficial
owners. In addition, we may reimburse such persons for their costs in
forwarding the solicitation materials to such beneficial owners. The
original solicitation of proxies by mail may be supplemented by a solicitation
by telephone or other means by our directors, officers or
employees. No additional compensation will be paid to these
individuals for any such services. Except as described above, we do
not presently intend to solicit proxies other than by mail.
How
can I submit a shareholder proposal for the 2009 annual meeting of
shareholders
To
be
considered for inclusion in our proxy statement and form of proxy for the 2008
annual meeting shareholder proposals must be received at our offices by ●, 2008.
Proposals must meet all of the requirements of the SEC and our Amended and
Restated Bylaws to be eligible for inclusion in our 2008 proxy materials, and
must be submitted in writing delivered or mailed to the Secretary, Wilson
Holdings, Inc., 8121 Bee Caves Road, Austin, Texas 78746. Nothing in this
paragraph shall be deemed to require the Company to include in its proxy
statement and proxy relating to the 2009 annual meeting of shareholders any
shareholder proposal which may be omitted from the Company’s proxy materials
pursuant to applicable regulations of the SEC in effect at the time such
proposal is received.
ELECTION
OF DIRECTORS
(Proposal
1)
The
Company’s Amended and Restated Bylaws allow for the Board of Directors to fix
the number of directors, and the Company’s Board of Directors currently consists
of five members. All of the current members of the Board of Directors
have been nominated for election to the Board of Directors to serve until the
next annual meeting of shareholders and until their respective successors are
elected and qualified or until their earlier resignation or
removal.
Approval
of the nominees requires the affirmative vote of a plurality of the shares
of
common stock present in person or represented by proxy at the annual meeting
and
entitled to vote on the election of the nominees. It is intended that
the persons named in the proxy will, unless otherwise instructed, vote for
the
election of the five nominees listed below. If for any reason any
nominee should not be available for election or able to serve as a director,
the
persons named in the proxy intend to vote for the election of such substitute
nominee for director as the Board of Directors may designate. It is
not anticipated that any of the nominees will be unable or unwilling to serve
as
a director.
The
Board
of Directors recommends that shareholders vote “FOR” the election of the five
persons nominated to serve as directors.
The
following table sets forth, for each nominee for election as a director, his
name, title, age and the year in which he first became a director of the
Company. The nominees have furnished the information set forth below
and elsewhere in this proxy statement concerning them and their security
holdings to the Company.
Name
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Title
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Age
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Began
Service
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Clark
N. Wilson
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Director
and Chairman
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51
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2005
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Victor
Ayad
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Director
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50
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2007
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Jay
Gouline
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Director
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55
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2006
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Sidney
Christopher Ney
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Director
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40
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2005
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Barry
Williamson
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Director
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50
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2005
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Clark
N. Wilson
has served as
the Chairman of the Board and as our President and Chief Executive Officer
since
October 2005. Beginning in 2002, Mr. Wilson served as a principal in Athena
Equity Partners-Hays, L.P., a Texas limited partnership that specialized in
commercial real estate investments, which merged with Wilson Family Communities,
Inc. in May 2005. Mr. Wilson served as the President and Chief Executive Officer
of Clark Wilson Homes, Inc., a subsidiary of Capital Pacific Holdings, from
1992
to 2002. Previously, Mr. Wilson was the President of Doyle Wilson Homebuilder,
Inc., serving in that position in 1992. Mr. Wilson served as Vice President
of
Doyle Wilson Homebuilder, Inc. from 1986 to 1992. Mr. Wilson attended Amarillo
College and the University of Texas at Austin, and has nearly 25 years of
experience in the homebuilding industry. Mr. Wilson also currently sits on
the
board of directors of Tejas Incorporated, the public parent company of Tejas
Securities Group, Inc., a full-service brokerage and investment-banking firm
headquartered in Austin.
Victor
Ayad
has served as a
director of our company since June 2007. Mr. Ayad has been a
self-employed management consultant for acquisition and investment banking
matters since 2004. Mr. Ayad was also the President of Green Builders, Inc.
until its acquisition by the Company in June 2007. From 1991 to 2004, Mr. Ayad
served as the co-founder and managing partner of Eastbridge Partners LP
(formerly Asset Recovery Fund, Inc.), a privately-held real estate
investment company specializing in distressed and turnaround
assets.
Jay
Gouline
has served as a
director of our company since March 2006. Since 1982, Mr. Gouline has served
as
the Managing Member of Mayfield Associates, LLC, and the President of the
General Partner of its predecessor in interest, Mayfield Associates Limited
Partnership, a private company engaged in real estate acquisition, development
and property management activities. From 1982 until 2007, Mr. Gouline
also served as President of Springlake Corporation, a private company engaged
in
real estate acquisition, development and property management activities. Since
1991, Mr. Gouline also has served as an instructor at the Edward Saint John
School of Real Estate at Johns Hopkins University. From
September 1985 to May 1991, Mr. Gouline served as an instructor at the
University of Maryland, University College. Mr. Gouline holds a B.A. in
Economics and Political Science from Lake Forest College and an MBA with majors
in Finance and Accounting from the University of Chicago.
Sidney
Christopher Ney
has
served as a director of our company since October 2005. Since 1998, Mr. Ney
has
served as the founder and Chief Executive Officer of CoreTrac, Inc., a software
company specializing in the financial industry. Mr. Ney is also a registered
representative at Century Securities and a registered broker-dealer. Prior
to
founding CoreTrac, from 1990 to 1998, Mr. Ney worked for several broker-dealers,
focusing on both investment banking and brokerage activities. Mr. Ney is a
graduate of Texas A&M University.
Barry
A. Williamson
has
served as a director of our company since October 2005. Mr. Williamson has
been
an attorney in private practice since 1999 and represents clients in matters
involving energy, utilities, telecommunication, transportation, environment,
deregulation, and advanced technology. From 1993 to 1999, Mr. Williamson served
a six-year term on the Texas Railroad Commission, including as its Chairman
in
1995. From 1988 to 1992, Mr. Williamson worked in the administration of
President Ronald Reagan as a principal advisor to the U.S. Secretary of Energy,
and then in the administration of President George H.W. Bush as the Director
of
the Minerals Management Service in the U.S. Department of the Interior. Mr.
Williamson currently serves as Chairman of the Board of SPACEHAB, Inc., a
publicly traded commercial and government space services company, and on the
board of Tejas Incorporated. Mr. Williamson holds a B.A. in Political Science
from the University of Arkansas and a J.D. from the University of Arkansas
Law
School.
CORPORATE
GOVERNANCE
On
an
annual basis each director and executive officer is obligated to complete a
Directors and Officers Questionnaire which requires disclosure of any
transactions with the Company in which the director or executive officer, or
any
member of his or her immediate family, have a direct or indirect material
interest. The Board is charged with resolving any conflicts of interest
involving the Chief Executive Officer, the Chief Financial Officer or any
executive officer of the Company.
Communications
with the Board
Shareholders
and other interested parties may communicate with one or more members of the
Board or the non-management directors as a group in writing by regular mail.
The
following address may be used by those who wish to send such communications
by
regular mail:
[Board
of
Directors] or [Name of Individual Director(s)]
Wilson
Holdings, Inc.
c/o
Corporate Secretary
8121
Bee
Caves Road
Austin,
Texas 78746
Any
such
communication must contain (i) a representation that the shareholder is a holder
of record of stock of the corporation, (ii) the name and address, as they appear
on the Company’s books, of the shareholder sending such communication, and (iii)
the class and number of shares of Wilson Holdings, Inc. common stock that are
beneficially owned by such shareholder.
The
Board
has instructed the Corporate Secretary Counsel to review all communications
so
received and to exercise his discretion not to forward to the Board
correspondence that is inappropriate such as business solicitations, frivolous
communications and advertising, routine business matters (i.e. business
inquiries, complaints, or suggestions) and personal grievances. However, any
director may at any time request the Corporate Secretary to forward any and
all
communications received by the Corporate Secretary and not forwarded to the
Board.
Code
of
Ethics
We
have adopted a Code of Business Conduct and Ethics that applies to all officers,
directors, employees and consultants. The code is intended to comply with Item
406 of Regulation S-B of the Securities Exchange Act of 1934. Our Code of
Business Conduct and Ethics is posted on our Internet website under the
“Investor Relations” tab of our “Corporate” page. Our Internet website address
is
http://www.wilsonfamilycommunities.com
.
MEETINGS
AND COMMITTEES OF THE BOARD
Board
Meetings
The
Board
of Directors conducts its business through meetings and through its
committees. The Board of Directors consisted of four directors at the
start of 2007 and one director was added in June 2007.
Each
director is expected to devote sufficient time, energy and attention to ensure
diligent performance of his or her duties and to attend all Board, applicable
committee and shareholders’ meetings. The Board of Directors met
eight times during fiscal 2007. During fiscal 2007, each director
attended or participated in at least 75% of the aggregate of the meetings held
by our Board of Directors and each committee of the Board of Directors on which
he or she served during the period for which he or she served. One
member of our Board of Directors, Clark N. Wilson, is an employee of Wilson
Family Communities, Inc., our wholly-owned subsidiary.
Board
Committees
The
Board
has three standing committees to facilitate and assist the Board in the
execution of its responsibilities. The committees are currently the Audit
Committee, the Compensation Committee and the Nominating and Corporate
Governance Committee. In accordance with best practice, all the committees
are
comprised solely of non-employee, independent directors. The charter
of each committee is available in print to any shareholder who requests it.
The
table below shows current membership of each of the standing Board
committees:
Audit
Committee
|
Compensation
Committee
|
Nominating
and Corporate
Governance
Committee
|
Jay
Gouline*
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Barry
Williamson*
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Sidney
Christopher Ney*
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Sidney
Christopher Ney
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Sidney
Christopher Ney
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Barry
Williamson
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Barry
Williamson
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*
Denotes Committee Chairman
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Audit
Committee
Audit
Committee
. Our Audit Committee oversees our accounting and
financial reporting processes, internal systems of accounting and financial
controls, relationships with independent auditors, and audits of financial
statements. Specific responsibilities include the following:
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selecting,
hiring and terminating our independent auditors;
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evaluating
the qualifications, independence and performance of our independent
auditors;
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approving
the audit and non-audit services to be performed by our independent
auditors;
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reviewing
the design, implementation, adequacy and effectiveness of our internal
controls and critical accounting policies;
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overseeing
and monitoring the integrity of our financial statements and our
compliance with legal and regulatory requirements as they relate
to
financial statements or accounting matters;
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reviewing
any earning announcements and other public announcements regarding
our
results of operations in collaboration with our management and independent
auditors; and
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preparing
the report that the Securities and Exchange Commission requires in
our
annual proxy statement.
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Our
Audit
Committee is comprised of Messrs. Gouline, Ney and Williamson. Mr. Gouline
serves as Chairman of the Audit Committee. Our Board of Directors has determined
that all members of the Audit Committee are independent under the rules of
the
Securities and Exchange Commission. The Board further has determined that Mr.
Gouline qualifies as an “audit committee financial expert,” as defined by the
rules of the Securities and Exchange Commission.
Compensation
Committee
. Our Compensation Committee assists our Board of
Directors in determining the compensation of our directors, officers and other
key employees. Specific responsibilities include:
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approving
the compensation and benefits of our executive officers and other
key
employees;
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reviewing
the performance objectives and actual performance of our executive
officers and other key employees;
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administering
our stock option and other equity compensation plans; and
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reviewing
and discussing with management the compensation discussion and analysis
that the Securities and Exchange Commission requires in registration
statements, annual reports on Form 10-K and proxy statements that
are
filed with the Securities and Exchange Commission.
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Our
Compensation Committee is comprised of Messrs. Williamson and Ney. Mr.
Williamson serves as Chairman of the Compensation Committee.
Nominating
and Corporate Governance
Committee
. Our Nominating and Corporate Governance Committee
assists the board by identifying and recommending individuals qualified to
become members of our Board of Directors, reviewing correspondence from our
stockholders, and establishing, evaluating and overseeing our corporate
governance guidelines. Specific responsibilities include the
following:
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evaluating
the composition, size and governance of our Board of Directors and
its
committees and making recommendations regarding future planning and
the
appointment of directors to our Board committees;
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establishing
a policy for considering stockholder nominees for election to our
Board of
Directors; and
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evaluating
and recommending candidates for election to our Board of Directors.
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Our
Nominating and Corporate Governance Committee is comprised of Messrs. Ney and
Williamson. Mr. Ney serves as chairman of our Nominating and Corporate
Governance Committee.
Nominations
for Directors
Identifying
Candidates
The
Nominating and Corporate Governance Committee is responsible for screening
potential director candidates and recommending qualified candidates to the
Board
for nomination. The committee considers recommendations of potential candidates
from current directors, management and shareholders. Shareholders’ nominations
for directors must be made in writing and be addressed to the Chairman of the
Nominating Committee in care of the Secretary of the Company at the Company’s
headquarters address listed below, and must be received no later than ●, 2008 in
order to be included in the proxy statement for the next annual election of
directors.
Chairman
of the Nominating Committee
Wilson
Holdings, Inc.
c/o
Corporate Secretary
8121
Bee
Caves Road
Austin,
Texas 78746
Any
such
shareholder nomination notice should clearly indicate that it is a
recommendation of a director candidate by a shareholder and must set forth
(i)
the name, age, business address and residential address of the recommended
candidate; (ii) the principal occupation or employment of such recommended
candidate; (iii) the class and number of shares of our stock that are
beneficially owned by such recommended candidate; (iv) a description of all
understandings or arrangements between the shareholder and the recommended
candidate and any other person or persons pursuant to which the recommendations
are to be made by the shareholder; and (v) any other information relating to
such recommended candidate that is required to be disclosed in solicitations
of
proxies for the election of directors. In addition, such notice must contain
(i)
a representation that the shareholder is a holder of record of our common stock
entitled to vote at such meeting; (ii) the name and address, as they appear
on
our books, of the shareholder proposing such nomination; (iii) the class and
number of shares of our common stock that are beneficially owned by such
shareholder; (iv) any material interest of the shareholder in such
recommendation; and (v) any other information that is required to be provided
by
the shareholder pursuant to Regulation 14A under the Securities Exchange Act
of
1934, as amended, in such shareholder’s capacity as proponent of a shareholder
proposal. Assuming that a shareholder recommendation contains the information
required above, the Nominating and Corporate Governance Committee will evaluate
a candidate recommended by a shareholder by following substantially the same
process, and applying substantially the same criteria, as for candidates
identified through other sources.
Independent
Director Meetings
The
independent members of our Board of Directors meet in conjunction with each
regularly scheduled meeting of our Board of Directors and other sessions may
be
called at the request of the independent directors.
Attendance
at Annual Meetings
The
Company does not have a policy regarding the attendance of Board members at
annual meetings. The Company’s stockholders acted by written consent
in lieu of a meeting of stockholders for the 2007 annual meeting.
Compensation
Committee Interlocks and Insider Participation
All
members of the Compensation Committee are independent directors, and none of
them are past or present employees or officers of the Company or any of our
subsidiaries. No member of our Compensation Committee has any relationship
with
us requiring disclosure under Item 404 of Regulation S-K under the Exchange
Act.
None of our executive officers has served on a board or compensation committee
(or other committee serving an equivalent function) of any other entity, one
of
whose executive officers serve on our board or our compensation
committee.
AUDIT
COMMITTEE REPORT
The
Audit
Committee reports as follows with respect to the audit of our fiscal 2007
audited financial statements:
Management
is responsible for Wilson Holdings Inc.’s internal controls and the financial
reporting process. The independent auditors are responsible for
performing an independent audit of Wilson Holdings, Inc.’s consolidated
financial statements in accordance with generally accepted auditing standards
and expressing an opinion on the conformity of those audited financial
statements in accordance with generally accepted accounting
principles. The Audit Committee’s responsibility is to monitor and
oversee these processes.
The
Audit
Committee has met and held discussions with management regarding the audited
financials statements. Management has represented to the Audit
Committee that the Company’s consolidated financial statements were prepared in
accordance with generally accepted accounting principles.
We
have
discussed with the Company’s independent auditors, PMB Helin Donovan, LLP, the
matters required to be discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees, as amended by Statement on Auditing
Standards No. 90, by the Auditing Standards Board of the American Institute
of
Certified Public Accountants.
We
have
received and reviewed the written disclosures and the letter from PMB Helin
Donovan, LLP required by Independence Standard No. 1, Independence Discussions
with Audit Committees, as amended, by the Independence Standards Board, and
have
discussed with the auditors the auditors’ independence.
Based
on
the reviews and discussions referred to above, we recommended to the Board
of
Directors that the financial statements referred to above be included in the
Company’s annual report on Form 10-KSB for the fiscal year ended September 30,
2007 for filing with the Securities and Exchange Commission.
Submitted
by the Audit Committee of the Board of Directors:
EXECUTIVE
OFFICERS OF THE COMPANY
Clark
N.
Wilson
. See Mr. Wilson’s biography above.
Cindy
Hammes
has served as
our Vice President of Finance since January 2008. From May 2007 to
January 2008, she served as Controller of Wilson Holdings, Inc. From
July 2006 to May 2007, Ms. Hammes served as Controller for Andrew Harper Travel,
a privately-held luxury travel services company. From November 2003
to May 2006, Ms. Hammes served in various capacities at Capital Pacific Homes,
a
privately-held national homebuilding company, including as Controller/Division
CFO and Senior Financial Analyst. From August 2001 to November 2003,
Ms. Hammes served in various capacities at Deloitte and Touche, LLP, including
as a Senior Auditor. Ms. Hammes is a Certified Public Accountant and
holds a B.S. in Finance and Accounting from Kansas State
University.
David
Goodrum
has served as
our Vice President of Land Development since October 2005 and served in the
same
capacity at Wilson Family Communities. From 2003 to 2005, Mr. Goodrum was a
partner and General Manager of Operations, Sales and Marketing for HBH SYSTEMS,
a company which provides liquid petroleum gas to residential subdivisions with
contracts in Dallas, Waco and Austin, Texas. From 1998 to 2002, Mr. Goodrum
served as General Manager of the El Paso County Water Authority, prior to which
he served as Contracts Manager for Eco Resources, Inc. from 1994 to 1998. Mr.
Goodrum also has worked as a project engineer for Warner Engineering in Palm
Desert, California from 1988 to 1994, and as a civil designer with Murfee
Engineering Co. in Austin from 1984 to 1988. Mr. Goodrum is a graduate of Texas
State Technical Institute.
EXECUTIVE
COMPENSATION
Summary
Compensation Table
SUMMARY
COMPENSATION
TABLE
Name
& Principal Position
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
Incentive
Plan Compensation
($)
|
|
Nonqualified
Deferred
Compensation Earnings ($)
|
|
All
Other Compensation
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clark
N. Wilson,
|
|
2007
|
|
203,138
|
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
|
1,061
|
|
204,199
|
Chairman,
President
|
|
2006
|
|
240,000
|
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
|
4,275
|
|
244,275
|
&
CEO
|
|
2005
|
|
100,000
|
|
–
|
|
–
|
|
27,590
|
|
–
|
|
–
|
|
–
|
|
127,590
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
Goodrum,
|
|
2007
|
|
93,750
|
|
–
|
|
–
|
|
90,000
|
|
–
|
|
–
|
|
–
|
|
183,750
|
Director of
Land
|
|
2006
|
|
102,500
|
|
–
|
|
–
|
|
5,250
|
|
–
|
|
–
|
|
6,000
|
|
113,750
|
Development
|
|
2005
|
|
42,822
|
|
–
|
|
–
|
|
28,029
|
|
–
|
|
–
|
|
–
|
|
70,851
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark
Gram
|
|
2007
|
|
60,000
|
|
–
|
|
–
|
|
45,000
|
|
–
|
|
|
|
–
|
|
105,000
|
Former
Senior
VP
|
|
2006
|
|
80,000
|
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
|
16,459
|
|
96,459
|
of
Marketing
(4)
|
|
2005
|
|
63,126
|
|
–
|
|
–
|
|
27,814
|
|
–
|
|
–
|
|
–
|
|
90,940
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bob
Antle,
|
|
2007
|
|
26,667
|
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
|
80,000
(6)
|
|
106,667
|
Former
VP of
|
|
2006
|
|
146,667
|
|
–
|
|
–
|
|
23,250
|
|
–
|
|
–
|
|
–
|
|
322,167
|
Homebuilding
(3)
|
|
2005
|
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arun
Khurana,
|
|
2007
|
|
168,750
|
|
–
|
|
–
|
|
675,000
|
|
–
|
|
|
|
–
|
|
843,750
|
Former
COO
|
|
2006
|
|
93,750
|
|
–
|
|
–
|
|
94,500
|
|
–
|
|
–
|
|
96,000(5)
|
|
199,200
|
&
CFO
(5)
|
|
2005
|
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
(
|
(1)
|
All
amounts listed
for 2007 are for the fiscal year beginning January 1, 2007 and ended
September 30, 2007.
|
|
(2)
|
Amounts
calculated
pursuant to SFAS 123R.
|
|
(3)
|
Mr.
Antle served as
our non-executive Vice President of Homebuilding and Homebuilding Services
in 2006. Mr. Antle ceased his employment with us in February
2007.
|
|
(4)
|
Mr.
Gram served as
Senior Vice President of Marketing until January 2008.
|
|
(5)
|
Mr.
Khurana is a
partner in Izon Consulting LLC. Prior to joining Wilson as an employee,
Mr. Khurana performed services as a consultant to us. The amounts reflect
the total amount paid by us prior to Mr. Khurana joining us as an
employee. Mr. Khurana ceased his employment with us in December 2007
and
now serves as a Consultant to us.
|
|
(6)
|
Amounts
paid to Mr.
Antle as compensation for consulting
services.
|
Outstanding
Equity Awards at 2007 Fiscal Year-End
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Number
of Securities Underlying Options(#) Exercisable
|
|
|
Number
of Securities Underlying Unexercised Options(#)
Unexercisable
|
|
|
Equity
Incentive
Plan
Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options(#)
|
|
|
Option
Exercise Price ($)
|
|
|
Option
Expiration Date
|
|
|
Number
of Shares or Units of Stock That Have Not Vested (#)
|
|
|
Market
Value of Shares or Units of Stock That Have Not Vested ($)
|
|
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units
or
Other
Rights
That
Have
Not
Vested
(#)
|
|
|
Equity
Incentive
Plan
Awards:
Market
or
Payout
Value
of Unearned
Shares,
Units
or
Other
Rights That Have
Not
Vested
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clark
N.
Wilson
|
|
|
100,000
|
|
|
|
–
|
|
|
|
–
|
|
|
$
|
2.00
|
|
|
5/28/2015
|
|
|
|
53,333
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
David
Goodrum
|
|
|
100,000
|
|
|
|
–
|
|
|
|
–
|
|
|
$
|
2.00
|
|
|
8/29/2015
|
|
|
|
58,333
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
|
50,000
|
|
|
|
–
|
|
|
|
–
|
|
|
$
|
2.26
|
|
|
7/12/2016
|
|
|
|
38,344
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
|
50,000
|
|
|
|
–
|
|
|
|
–
|
|
|
$
|
3.25
|
|
|
5/17/2017
|
|
|
|
50,000
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
Mark
Gram
|
|
|
100,000
|
|
|
|
–
|
|
|
|
–
|
|
|
$
|
2.00
|
|
|
5/28/2015
|
|
|
|
53,333
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
|
25,000
|
|
|
|
–
|
|
|
|
–
|
|
|
$
|
3.25
|
|
|
5/17/2017
|
|
|
|
25,000
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
Bob
Antle
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
Arun
Khurana
|
|
|
125,000
|
|
|
|
–
|
|
|
|
–
|
|
|
$
|
2.26
|
|
|
7/10/2016
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
|
250,000
|
|
|
|
–
|
|
|
|
–
|
|
|
$
|
3.25
|
|
|
5/17/2017
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
|
125,000
|
|
|
|
–
|
|
|
|
–
|
|
|
$
|
3.25
|
|
|
5/17/2017
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
Clark
N.
Wilson.
All outstanding options can be
exercised. 46,667 options were vested as of September 30,
2007.
David
Goodrum.
100,000 shares
granted August 30, 2005, 41,666 shares were vested as of September 30,
2007. 50,000 shares granted July 13, 2006, 11,666 of which were
vested as of September 30, 2007. 50,000 shares granted May 18, 2007,
none of which were vested as of September 30, 2007.
Mark
Gram.
All
outstanding options can be exercised. 100,000 shares granted on May
29, 2005, 46,667 shares were vested on September 30, 2007. 25,000
shares granted May 18, 2007, none of which were vested as of September 30,
2007.
Arun
Khurana.
All
outstanding options can be exercised and are fully vested as of December 31,
2007.
Board
of Director Compensation
Director
Compensation
As
the
only director on our Board of Directors who also is an employee of our company,
Mr. Clark Wilson does not receive any additional compensation for his service
as
a member of our Board of Directors. We reimburse our directors for travel and
lodging expenses in connection with their attendance at Board and committee
meetings. Our non-employee directors each received an option to purchase 20,000
shares of common stock upon joining our Board. In addition, in fiscal
2007 our non-employee directors received an annual retainer of $18,750 rather
than $25,000 due to the change in our fiscal year, and an option to purchase
20,000 shares of common stock. In 2007, two of our non-employee
directors, Messrs. Ney and Williamson, received an additional grant of 100,000
for their service on the Board of Directors in 2005 that was not paid at that
time. Audit committee members receive additional compensation equal
to $5,000 per year and compensation committee members receive additional
compensation equal to $3,000 per year.
Director
Compensation - 2007
|
|
Fees
Earned or
Paid in Cash
($)
|
|
|
|
|
|
|
|
|
Non-Equity
Incentive Plan Compensation
($)
|
|
|
Nonqualified
Deferred Compensation Earnings
($)
|
|
|
All
Other Compensation
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Victor
Ayad
|
|
|
6,250
|
|
|
|
–
|
|
|
|
48,800
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
55,050
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jay
Gouline
|
|
|
21,250
|
|
|
|
–
|
|
|
|
24,400
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
43,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sidney
Christopher Ney
|
|
|
22,750
|
|
|
|
–
|
|
|
|
182,400
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
201,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barry
Williamson
|
|
|
22,750
|
|
|
|
–
|
|
|
|
182,400
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
201,150
|
|
Compensation
Committee Interlocks and Insider Participation
None
of
our executive officers serves as a member of the board of directors or
compensation committee of any entity that has one or more of its executive
officers serving as a member of our Board of Directors or Compensation
Committee. No member of the Compensation Committee of our Board of Directors
serves or has served as an officer or employee of Wilson Holdings.
Reincorporation
of the Company in Texas
(Proposal
2)
On
●,
2008, the Board approved the proposal (the “Reincorporation Proposal”) to change
the Company’s state of incorporation from Nevada to Texas. The
Company believes that it would be in the best interests of the Company's
stockholders for the Company to become incorporated under the laws of the State
of Texas. The Reincorporation Proposal is subject to the approval of the
stockholders. All references to the Reincorporation Proposal and the Conversion
(as hereinafter defined) are qualified by and subject to the more complete
information set forth in the Plan of Conversion and Certificate of Formation
referenced below. The following discussion summarizes certain aspects of the
Reincorporation Proposal and Conversion.
Summary
of the Reincorporation Proposal
If
the
Reincorporation Proposal is approved by the stockholders, the Reincorporation
Proposal will be effected by converting (the “Conversion” or the
“Reincorporation”) the Company into a company incorporated in Texas (“Texas
Company”), pursuant to the terms more particularly described in the Plan of
Conversion (the “Plan of Conversion”), a copy of which is attached as Exhibit
A. A copy of the Certificate of Formation of the Texas Company (the
“Texas Certificate”) is attached as Exhibit B. The Texas Company has
not engaged in any business, and will not engage in any business prior to the
Conversion. Upon completion of the Conversion, the Company will convert into
the
Texas Company, and the Texas Company will own all of the Company's assets and
will assume the Company’s liabilities. Further, each outstanding share of the
Company's Common Stock will automatically convert into one share of common
stock, par value $.001 per share, of the Texas Company (the “Texas Company
Common Stock”). Such conversion of shares will not result in any change in the
present ownership of shares of stock of the Company. The Company's employee
benefit plans will not be changed in any material respect by the Conversion.
Outstanding options to purchase the Company's Common Stock will automatically
be
converted into options to purchase the Texas Company Common Stock. Options
and
warrants exercisable into the Company's Common Stock will be automatically
adjusted so that such options and warrants will be exercisable into the same
number of shares of Texas Company Common Stock upon the same terms and
conditions as in effect immediately prior to the Effective Date (as hereinafter
defined). Following the Conversion, previously outstanding Company Common Stock
certificates may be delivered in effecting sales, through a broker or otherwise,
of shares of the Texas Company Common Stock. The Texas Company Common Stock
will
continue to be traded on the American Stock Exchange (“AMEX”) under the symbol
WIH unless and until the Name Change (as described in Proposal 3 below) has
been
effected.
Exchange
of Certificates
Following
the Effective Date, certificates representing shares of the Company's Common
Stock will be deemed to represent an equal number of shares of the Texas Company
Common Stock. IT WILL NOT BE NECESSARY FOR THE HOLDERS OF THE COMPANY'S COMMON
STOCK TO SURRENDER THEIR CERTIFICATES FOR NEW CERTIFICATES REPRESENTING TEXAS
COMPANY COMMON STOCK. The Texas Company Common Stock is expected to be listed
on
the AMEX, as a successor to the Company's Common Stock. AMEX will consider
the
existing stock certificates as constituting “good delivery” in transactions
subsequent to the Conversion.
Under
Nevada law, the Company's Board must adopt the Reincorporation Proposal and
recommend it to the stockholders, and the Reincorporation Proposal, including
the merger, must be approved by the affirmative vote of a majority of the
outstanding shares of Common Stock. The Company's Board has unanimously adopted
the Reincorporation Proposal and recommends the Reincorporation Proposal to
the
stockholders. If approved by the stockholders, it is anticipated the
Reincorporation Proposal and the Conversion will become effective as soon as
practicable (the “Effective Date”), following the Annual Meeting. However,
either the Board of the Company or the Texas Company may abandon the Conversion
either before or after stockholder approval has been obtained.
At
the
Effective Date of the Reincorporation Proposal, the Company will be governed
by
the Texas Business Organizations Code, as amended (“TBOC”), the Texas
Certificate and the new bylaws (the “Texas Bylaws”). With certain exceptions,
the TBOC is substantially similar to the Nevada Private Corporation Law of
the
Nevada Revised Statutes (“Nevada PCL”). Material differences in stockholder
rights and the powers of management under the TBOC and the Nevada PCL are
discussed below under “Certain Changes in the Rights of Stockholders.” Except
for the imposition of changes required to conform to applicable Texas law,
the
Texas Certificate
and Texas Bylaws (collectively “Texas Charter
Documents”) will be substantially similar to the Company's existing articles of
incorporation (the “Nevada Articles”) and the Company's existing bylaws (the
“Nevada Bylaws”) (collectively, the “Nevada Charter
Documents”).
The
Reincorporation Proposal will effect only a change in the legal domicile of
the
Company as well as certain other changes of a legal nature, certain of which
are
described in this proxy statement. The Reincorporation Proposal will NOT result
in any material change in the name, business, management, fiscal year, assets,
liabilities (except to the extent of legal and other costs of effecting the
reincorporation), financial position of the Company, location of the principal
facilities of the Company, or in the persons who constitute the Board. Prior
to
the Effective Date of the Conversion, the Company will obtain any requisite
consents to the Conversion from parties with whom it may have material
contractual arrangements (the “Material Agreements”). As a result, the Company's
rights and obligations under such Material Agreements will continue and be
assumed by the Texas Company.
Securities
Act Consequences
After
the
Effective Date of the Conversion, the Texas Company will be a publicly held
company, the Texas Company Common Stock is expected to be quoted on AMEX, and
will have the same periodic reporting obligations and make the same information
available to its stockholders as the Company has in the past. The shares of
the
Texas Company to be issued in exchange for shares of the Company are not being
registered under the Securities Act of 1933, as amended (the “Securities Act”)
in reliance upon an exemption with respect to a conversion which has as its
sole
purpose a change in the domicile of the corporation. Stockholders whose stock
in
the Company is freely tradable before the Conversion will own freely tradable
shares of the Texas Company. Stockholders holding restricted securities of
the
Texas Company will be subject to the same restrictions on transfer as those
to
which their present shares of stock in the Company are subject. For purposes
of
computing compliance with the holding period of Rule 144 under the Securities
Act, the stockholders will be deemed to have acquired their shares in the Texas
Company on the date they acquired their shares in the Company. In summary,
the
Texas Company and its stockholders will be in the same respective position
under
the Federal securities laws after the Effective Date of the Reincorporation
Proposal as were the Company and its stockholders prior to the Reincorporation
Proposal.
Principal
Reasons for the Proposed Reincorporation
Conform
Legal Residence to Principal
Place of Business
. The primary reason to approve the
Reincorporation Proposal is to conform the Company's legal residence to its
principal place of business. Also, the Board believes that having the Company's
legal residence in Texas may have certain advantages. For example, it could
enable the Company to have a more significant voice in the legislative process
with respect to corporate and other Texas laws directly affecting it. This
opportunity can be important as corporations are substantially affected by
changes in the legal and financial environment in which they operate and by
the
variety of legislative and other governmental actions that may be taken in
response to such changes.
Decreased
Expenditures for Legal and
Corporate Matters
. In addition, the move to the state in which the
Company's principal place of business is situated will reduce legal costs
incurred by the Company. For example, a corporation's state of incorporation
is
likely to be a litigation forum from time to time, and litigation at a distance
from the Company's principal offices can result in significant inconveniences
and added expenses to the Company. In addition, the legal fees associated with
general corporate matters should decrease because the Company's primary legal
counsel is located in the State of Texas. This will allow the Company to
dispense with the hiring of additional Nevada counsel to review its corporate
transactions from time to time. Furthermore, the logistics of state filings
will
be simplified, and the costs related to such filings will be
reduced.
Suitability
of the TBOC to Needs of
the Company
. The Board believes that the TBOC will meet the
Company's business needs. The TBOC is a comprehensive, modern and flexible
statute. For the most part, it provides the flexibility in the management of
a
corporation and in the conduct of various business transactions that is
characteristic of the Nevada PCL.
Maintain
Ability to Attract and
Retain Qualified Directors
. The TBOC, like the Nevada PCL,
permits a corporation to include a provision in its certificate of incorporation
that reduces or limits the monetary liability of directors for breaches of
fiduciary duty in certain circumstances. The increasing frequency of claims
and
litigation directed against directors and officers has greatly expanded the
risks facing directors and officers of corporations in exercising their
respective duties. The amount of time and money required to respond to such
claims and to defend such litigation can be substantial. It is the Company's
desire to limit these risks to its directors and officers and to limit
situations in which monetary damages can be recovered against directors so
that
the Company may continue to attract and retain qualified directors who otherwise
might be unwilling to serve because of the risks involved.
Franchise
Tax Issues.
Texas
imposes an entity-level tax on the portion of income apportioned to
Texas. Under this tax, the Texas Company will be subject to tax at a
maximum effective rate of 1.0% of its gross income apportioned to
Texas. Nevada does not impose a corporate franchise
tax. However, because the Company's principal place of business and
headquarters are presently located in Texas, the Company is already subject
to
the Texas franchise tax. The Board does not believe the Company will incur
any
additional franchise taxes as a result of the Reincorporation
Proposal.
Federal
Tax Consequences
The
following is a discussion of the material U.S. federal income tax consequences
that are applicable to U.S. holders (as defined below) of Company Common Stock
if the Reincorporation Proposal and Conversion are approved. It is
based on the Internal Revenue Code of 1986, as amended (the “Code”), applicable
Treasury regulations, judicial authority, and administrative rulings and
practice, all as of the date of this proxy statement and all of which are
subject to change, including changes with retroactive effect. This
discussion does not address all the U.S. federal income tax consequences that
may be relevant to particular shareholders in light of their individual
circumstances or to shareholders that are subject to special rules.
For
purposes of this discussion, the term U.S. holder means a beneficial owner
of
common stock that is:
|
·
|
a
citizen or resident of the United States;
|
|
·
|
a
corporation or other entity treated as a corporation for U.S. federal
income tax purposes created or organized under the laws of the U.S.
or any
of its political subdivisions;
|
|
·
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a
trust that (1) is subject to the supervision of a court within the
U.S.
and the control of one or more U.S. persons or (2) has validly elected
under applicable U.S. treasury regulations to be treated as a U.S.
person;
or
|
|
·
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an
estate that is subject to U.S. federal income tax on its income regardless
of its source.
|
If
a
partnership (including an entity treated as a partnership for U.S. federal
income tax purposes) holds shares of common stock, the U.S. federal income
tax
consequences to each partner generally will depend on the status of the partner
and the activities of the partnership and the partner. Partners
holding common stock and partners in such partnerships are urged to consult
their own tax advisors with respect to the U.S. federal income tax consequences
of the reincorporation.
The
tax
consequences to holders of options to acquire Company Common Stock are also
not
discussed herein. In addition, the following discussion does not
address the tax consequences of transactions effected prior to or after the
Reincorporation (whether or not such transactions are in connection with the
Reincorporation).
The
Reincorporation is intended to be a tax free reorganization under Section
368(a)(1)(F) of the Code. Assuming the Reincorporation qualifies
as a tax free reorganization, no gain or loss will be recognized by the holders
of the Company’s Common Stock upon the receipt of Texas Company Common Stock
pursuant to the transaction. No gain or loss will be recognized by
the Company and, likewise, no gain or loss will be recognized by the Texas
Company as a result of the Reincorporation. Each former holder of the Company's
Common Stock will have the same basis in the Texas Common Stock as such holder
has in the Company's Common Stock for shares held on the Effective Date of
the
Reincorporation. Each stockholder’s holding period with respect to the Texas
Common Stock will include the period during which such holder held the
corresponding Company Common Stock surrendered in exchange therefor, provided
the latter is held as a capital asset on the Effective Date of the
Reincorporation.
Although
the Company believes that the foregoing summary describes the material federal
income tax consequences of the Reincorporation Proposal, there can be no
assurance that the actual tax consequences will not be different. Stockholders
should be advised that the Company has not obtained, and does not intend to
request, either a ruling from the Internal Revenue Service or an opinion of
counsel regarding any such tax consequences of the Reincorporation or any
related transaction. Furthermore, the foregoing is only a summary of the federal
income tax consequences of the Reincorporation and does not deal with
state, local or foreign tax considerations or the tax consequences that may
be
relevant to particular stockholders, including but not limited to stockholders
who are dealers in securities; persons who are not U.S. holders; expatriates;
stockholders who acquired the Company's Common Stock upon the exercise of stock
options or in other employment related or compensatory transactions; insurance
companies; regulated investment companies; real estate investment trusts;
tax-exempt organizations; financial institutions; persons that have a functional
currency other than the United States dollar; holders of Company Common Stock
as
part of a hedge, straddle or conversion transaction; or persons that do not
hold
Company Common Stock as a capital asset at the time the Reincorporation
is approved.
STOCKHOLDERS
ARE URGED TO CONSULT THEIR OWN TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES
TO THEM OF THE PROPOSED TRANSACTION UNDER ALL APPLICABLE TAX LAWS, INCLUDING
THE
APPLICABILITY OF FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS.
No
Right to Dissent
Under
Section 92A.390 of the Nevada PCL, the holders of the Company's Common Stock
do
not have the right to dissent from the Reincorporation Proposal because such
shares are listed on the AMEX.
Effect
on Stock Price
The
Company does not know of any reason why implementation of the Reincorporation
Proposal and the conversion of shares of the Company's Common Stock into shares
of the Texas Company Common Stock would cause the market value of the Texas
Company Common Stock following the Effective Date of the Reincorporation
Proposal to be different from the present market value of the outstanding shares
of the Company's Common Stock
Authorized
Shares of Common and Preferred Stock
The
Nevada Articles currently authorize the Company to issue up to 100,000,000
shares of Nevada Common Stock, par value $0.001 per share; and 10,000,000 shares
of “blank check” preferred stock, $0.001 par value (the “Nevada Preferred
Stock”). There are currently no shares of the Nevada Preferred Stock
outstanding. The
Texas Certificate provides that
the Company is authorized to issue 100,000,000 shares of Texas Common Stock,
par
value $0.001 per share and 10,000,000 shares of blank check preferred stock,
par
value $.001 per share.
Both
the
Nevada Articles and the Texas Certificate provide that the Board of the Company
is entitled to determine the powers, preferences and rights and the
qualifications, limitations or restrictions, of the authorized and unissued
preferred stock. Although they have no present intention of doing so, the Board
of Directors of the Texas Company, without stockholder approval, could authorize
the issuance of preferred stock in the future upon terms or with any rights,
preferences and privileges which could have the effect of delaying or preventing
a change in control of either company or modifying the effective rights of
holders of either company's common stock under applicable Texas law. The Board
of Directors could also utilize such shares for further financings, possible
acquisitions and other uses.
Certain
Changes in the Rights of Stockholders
The
Company is incorporated under the laws of the State of Nevada, and the Texas
Company is incorporated under the laws of the State of Texas. The Company's
stockholders, whose rights as stockholders are currently governed by Nevada
law
and the Nevada Charter Documents, will become, upon consummation of the
Conversion and Reincorporation Proposal, stockholders of the Texas Company
whose
rights will be governed by Texas law and the Texas Charter Documents. The
following summary does not purport to be a complete statement of the rights
of
the Company's stockholders nor a complete description of all differences under
applicable Nevada law and the Nevada Charter Documents as compared with the
rights of the Texas stockholders under applicable Texas law and the Texas
Charter Documents and is qualified in its entirety by the TBOC and the Nevada
PCL to which stockholders are referred. Generally, the provisions of the Texas
Charter Documents are similar to those of the Nevada Charter Documents in most
respects.
Charter
Amendments
Under
Texas law, an amendment to the articles of incorporation requires the approval
of the holders of at least two-thirds of the outstanding shares of the
corporation, unless a different amount, not less than a majority, is specified
in the certificate of formation. Nevada law provides that amendments
to the articles of
incorporation must be approved by the
holders of a majority of the corporation's stock entitled to vote thereon,
unless the articles of incorporation provide for a greater number. Neither
state
requires stockholder approval for the board of directors of a corporation to
fix
the voting powers, designation, preferences, limitations, restrictions and
rights of a class of stock provided that the corporation's charter documents
grant such power to its board of directors. The holders of the outstanding
shares of a particular class are entitled to vote as a class on a proposed
amendment if the amendment would alter or change the power, preferences or
special rights of one or more series of any class so to affect them
adversely. The Nevada Articles do not amend the statutory voting
requirements for charter amendments. The Texas Certificate may only
be amended by a majority vote.
Bylaw
Amendments
Nevada
law provides that subject to the bylaws, if any, adopted by the stockholders,
the board of directors may dictate the bylaws of the company. Texas law provides
that the power to adopt, amend or repeal the bylaws may be reserved exclusively
to the board of directors. The Nevada Articles and the Texas Certificate reserve
the power to adopt, amend or repeal the bylaws to the board of
directors.
Stockholder
Vote for Mergers and Other Corporate Reorganizations
Under
Texas law, stockholders have the right (subject to certain narrow exceptions)
to
vote on all mergers to which the corporation is a party. In certain
circumstances, different classes of securities may be entitled to vote
separately as classes with respect to such transactions. Unless the
certificate of formation provides otherwise, approval of the holders of at
least
two-thirds of all outstanding shares entitled to vote is required by Texas
law
to approve a merger in most cases. Unless the certificate of formation provides
otherwise, the approval of the stockholders of the corporation in a merger
is
not required under Texas law if: (i) the corporation is the sole
surviving corporation in the merger; (ii) the certificate of
formation of the corporation following the merger will not
differ from the corporation's certificate of formation
before the merger;
(iii) immediately after the effective date of the merger, each
shareholder of the corporation whose shares were outstanding immediately before
the effective date of the merger will hold the same number of shares, with
identical designations, preferences, limitations, and relative rights;
(iv) the sum of the voting power of the number of voting shares
outstanding immediately after the merger and the voting power of securities
that
may be acquired on the conversion or exercise of securities issued under the
merger does not exceed by more than 20 percent the voting power of the total
number of voting shares of the corporation that are outstanding immediately
before the merger; and (5) the sum of the number of participating
shares that are outstanding immediately after the merger and the number of
participating shares that may be acquired on the conversion or exercise of
securities issued under the merger does not exceed by more than 20 percent
the
total number of participating shares of the corporation that are outstanding
immediately before the merger.
Unless
the articles of incorporation provide otherwise, Nevada law requires the
approval of the holders of a majority of shares (except for parent-subsidiary
mergers in which the parent owns at least 90% of the subsidiary) to effect
a
merger. In certain circumstances, different classes of securities may be
entitled to vote separately as classes with respect to such transactions. In
addition, the approval of the stockholders of the surviving corporation is
not
required if: (i) the articles of the surviving corporation do not change; (ii)
each stockholder of the surviving corporation holds the same number of shares
with the same rights before and after the merger; (iii) the voting power of
the
shares outstanding after the merger plus the voting power of the shares issuable
as a result of the merger does not exceed the voting power of the shares
outstanding prior to the merger by more than 20%; and (iv) the number of
participating shares outstanding after the merger plus the participating shares
issuable as a result of the merger does not exceed the number of participating
shares outstanding prior to the merger by more than 20%. Neither the Texas
Certificate nor the Nevada Articles alter these provisions.
Business
Combinations With Affiliated Stockholders
Both
Nevada and Texas law limit the ability of corporations to enter into business
combinations with affiliated stockholders and other affiliated parties within
the three year period following the acquisition of shares by the affiliated
stockholder. Nevada and Texas law both provide narrow exceptions to
this prohibition, and the exceptions in Nevada law are more narrow than those
in
Texas law. Both Texas and Nevada allow corporations to opt out of
being subject to state business combination laws in their formation
documents. The Nevada Company elected in the Nevada Articles to not
be subject to Nevada business combination law, and the Texas Company will make
the same election.
Sales,
Leases, Exchanges or Other Dispositions
The
sale,
lease, exchange or other disposition (not including any pledge, mortgage, deed
of trust or trust indenture, unless otherwise provided in the articles of
incorporation) of all, or substantially all, of the property and assets of
a
Texas corporation requires the approval of the holders of at least two-thirds
of
the outstanding shares of the corporation. Under Nevada law, stockholder
approval is required for a sale, lease or exchange of all property and assets
of
a Nevada corporation, and the approval of holders of only a majority of the
outstanding shares of the corporation is required. Neither the Texas
Certificate nor the Nevada Articles alter these provisions.
Classified
Board of Directors
Texas
law
permits any Texas corporation to classify its board of directors into as many
as
three classes with staggered terms of office. Nevada law also permits
corporations to classify boards of directors provided that at least one-fourth
of the directors is elected annually. Neither the Nevada Articles nor the Texas
Certificate provide for a staggered board.
Cumulative
Voting
Cumulative
voting for directors entitles each stockholder to cast a number of votes that
is
equal to the number of voting shares held by such stockholder multiplied by
the
number of directors to be elected and to cast all such votes for one nominee
or
distribute such votes among up to as many candidates as there are positions
to
be
filled. Cumulative voting may enable a minority
stockholder or group of stockholders to elect at least one representative to
the
Board of Directors where such stockholders would not be able to elect any
directors without cumulative voting. Nevada and Texas law permits cumulative
voting in the election of directors if the articles of incorporation or
certificate of formation so provide as long as certain procedures are followed.
Neither the Nevada Articles nor the Texas Certificate provides for cumulative
voting.
Preemptive
Rights
Under
Nevada and Texas law, stockholders have no preemptive right to acquire
additional, unissued, or treasury shares of the corporation, or securities
of
the corporation convertible into or carrying a right to subscribe to or acquire
shares, except to the extent that such rights are expressly provided in its
articles of incorporation or the certificate of formation. Stockholders of
the
Company currently do not have, nor will they have, such rights as stockholders
of the Texas Company.
Class
Voting
Under
Texas law, class voting is required in connection with certain amendments of
a
corporation's articles of incorporation, a merger or consolidation requiring
stockholder approval if the plan of merger or consolidation contains any
provision which, if contained in a proposed amendment to a corporation's
articles of incorporation, would require class voting or certain sales of all
or
substantially all of the assets of a corporation. Under Nevada law, class voting
is required in the case of an amendment to a corporation's articles of
incorporation that adversely affects a class of shares and in the case of a
merger that effects changes to stockholder rights that, if accomplished via
an
amendment to the articles of incorporation, would require a class
vote.
Board
Vacancies
Under
Texas law, vacancies on the Board during the year may be filled by the
affirmative vote of a majority of the remaining directors then in office, even
if less than a quorum, or by election at an annual or special meeting of the
stockholders called for that purpose, provided, however, that the Board shall
not fill more than two vacancies created by an increase in the number of
directors per year. Any director appointed shall hold office for the unexpired
term of his predecessor in office. Nevada law provides that vacancies
may be filled by a majority of the remaining directors, though less than a
quorum, unless the articles of incorporation provide otherwise. Neither the
Texas Certificate nor the Nevada Articles provide otherwise.
Removal
of Directors
Under
Texas law, the certificate of formation or bylaws may provide that holders
of a
number, but not less than a majority, of voting shares of each class entitled
to
vote at an election of directors may vote to remove any director or the entire
board with or without cause at a meeting called for that purpose, by a vote
of
the holders of a majority of the shares entitled to vote at an election of
the
director or directors. If the certificate of formation entitles the
holders of a class or series of shares or a group of classes or series of shares
to elect one or more directors, only the holders of shares of that class,
series, or group may vote on the removal of a director elected by the holders
of
shares of that class, series, or group. If the certificate of
formation permits cumulative voting and less than the entire board is to be
removed, a director may not be removed if the votes cast against the removal
would be sufficient to elect the director if cumulatively voted at an election
of the entire board of directors, or if there are classes of directors, at
an
election of the class of directors of which the director is a
part. In the case of a corporation the directors of which serve
staggered terms, a director may not be removed except for cause unless the
certificate of formation provides otherwise. Nevada law requires at
least two-thirds of the voting shares or class entitled to vote at an election
of directors to remove a director, unless the corporation has cumulative voting
in which case no director may be removed except upon the vote of stockholders
owning sufficient shares to have prevented the director's election in the first
place. Furthermore, Nevada law does not make a distinction between
removals for cause and removals without
cause. The Texas Bylaws
allow for the removal of directors by majority vote for cause (as defined in
the
Texas Bylaws).
Actions
Written by Consent of Stockholders
Nevada
law and Texas law each provide that any action required or permitted to be
taken
at a meeting of the stockholders may be taken without a meeting if the holders
of outstanding stock having at least the minimum number of votes that would
be
necessary to authorize or take such action at a meeting consents to the action
in writing. In addition, Texas law requires the corporation to give prompt
notice of the taking of corporate action without a meeting by less than
unanimous written consent to those stockholders who did not consent in writing.
Right
to Call Special Meetings of Stockholders
Under
Texas law special meetings of stockholders may be called by (1) the president,
the board of directors, or such other person or persons as may be authorized
in
the articles of incorporation or (2) the holders of a percentage of the number
of shares entitled to vote as specified in the certificate of formation (not
to
exceed fifty percent), or if no such percentage is specified, holders of at
least ten percent of the number of shares entitled to vote. Nevada
law provides that meetings of the stockholders may be called by the entire
board, by any two directors or by the president of the corporation. The Nevada
Bylaws require a majority of the entire board to call a special
meeting. The Texas Certificate provides that special meetings may be
called by the president or a majority of the board of directors or by the
holders of at least fifty percent of the number of shares entitled to vote
at
such meeting.
Stockholders’
Dissenters’ Rights
In
both
jurisdictions, dissenting stockholders of a corporation engaged in certain
major
corporate transactions are entitled to appraisal rights. Appraisal rights permit
a stockholder to receive cash equal to the fair market value of the
stockholder's shares (as determined by agreement by the parties or by a court),
in lieu of the consideration such stockholder would otherwise receive in any
such transaction.
Under
Texas law, appraisal rights are generally available for the shares of any class
or series of stock of the Texas Company in a merger or consolidation, provided
that no appraisal rights are available for the shares of any class or series
of
stock which, at the record date for the meeting held to approve such
transaction, were (i) listed on a national securities exchange or a similar
system; (ii) listed on the Nasdaq Stock Market or a successor quotation system;
(iii) designated as a national market security on an interdealer quotation
system by the National Association of Securities Dealers, Inc., or a successor
system; or (iv) held of record by at least 2,000 owners. Even
if the shares of any class or series of stock meet the requirements of clauses
(i) through (iv) above, appraisal rights are available for such class or series
if the holders thereof receive in the merger or consolidation: (i) consideration
that is different from (other than cash in lieu of fractional shares) the
consideration to any other holder of shares of the same class or series; (ii)
shares of stock of any other corporation other than shares that are, at the
effective date of the merger or consolidation, either listed on a national
securities exchange, designated as a national market system security on an
interdealer quotation system by the NASD, or held of record by more than 2,000
stockholders. No appraisal rights are available to stockholders of the surviving
corporation if the merger did not require their approval.
Under
Nevada law, a stockholder is entitled to dissent from and to obtain payment
for
the fair value of his shares in the event of either a consummation of a plan
of
merger or plan of exchange in which the corporation is a party or any corporate
action taken pursuant to a vote of the stockholders to the extent that the
articles of incorporation, bylaws or a resolution of the board of directors
provides that voting or nonvoting stockholders are entitled to dissent and
obtain payment for their shares. As with Texas law, Nevada law provides an
exception to dissenters' rights. Holders (i) of securities listed on a national
securities exchange included on the national market system by the NASD or (ii)
of securities held by 2,000 stockholders of record are not entitled to
dissenters' rights unless the (i) articles of incorporation of the issuing
corporation provide otherwise; or (ii) the stockholders are required under
a
plan of merger or exchange to accept anything but cash, ownership interests,
or
ownership interests and cash in lieu of fractional shares of: (a) the surviving
or acquiring entity, or (b) another entity that, at the effective date of the
plan of merger or exchange, were either listed on a national securities
exchange, included in the national market system by the NASD, or held of record
by at least 2,000 owners. The Company's Common Stock is presently listed on
AMEX
and the Texas Company Common Stock will be listed or authorized for listing
upon
official notice of issuance by AMEX, after the Effective Date.
Stockholder
Inspection Rights
Texas
law
grants any person who has been a stockholder for at least six months immediately
preceding his demand or who is the holder of at least 5% of all the outstanding
shares of a corporation the right to inspect and to copy for any proper purpose
the corporation’s stock ledger, a list of its stockholders, and its other
records.
Nevada
law also provides that any person who has been a stockholder of record of a
corporation for at least six months immediately preceding his demand or any
person who owns or has been authorized by the holders of at least 5% of all
of
its outstanding shares is entitled to inspect and copy the stock
ledger.
Derivative
Suits
Under
Texas and Nevada law, a stockholder may bring a derivative action on behalf
of
the corporation only if the stockholder was a stockholder of the corporation
at
the time of the transaction in question or the stockholder acquired the stock
thereafter by operation of law.
Dividends
and Distributions
Nevada
law prohibits distributions to stockholders when the distributions would (i)
render the corporation unable to pay its debts as they become due in the usual
course of business; and (ii) except as authorized in the corporation’s articles
of incorporation, render the corporation's total assets less than the sum of
its
total liabilities plus the amount that would be needed to satisfy the
preferential rights upon dissolution of stockholders whose preferential rights
are superior to those receiving the distribution.
Texas
law
prohibits distributions if (i) after giving effect to the distribution, the
corporation will be insolvent or (ii) the distribution exceeds the surplus
of
the corporation. Surplus is defined under Texas law as the excess of net assets
over stated capital. This limitation does not apply to distributions
involving a purchase or redemption of shares to eliminate fractional shares,
collect indebtedness, pay dissenting stockholders or redeem shares if net assets
equal or exceed the proposed distribution. Nonetheless, the payment of
dividends, if any, is still within the discretion of the Board of Directors
of
the Texas Company and will continue to depend upon the Texas Company's earnings,
its capital requirements and financial condition, and other relevant
factors.
Indemnification
of Directors and Officers
Texas
law
and Nevada law have substantially similar provisions and limitations regarding
indemnification by a corporation of its officers, directors, employees and
agents. If the Reincorporation Proposal is approved, the indemnification
provisions of Texas law will not apply to any act or omission that occurs before
the Effective Date. The following is a summary comparison of the indemnification
provisions of Texas and Nevada law.
Scope
Under
Texas law, a corporation is permitted to provide indemnification or advancement
of expenses, by a bylaw provision, agreement, security arrangement or otherwise
against judgments, penalties, fines, settlements and reasonable expenses
actually incurred by the person in connection with the
proceeding. However, if the person is found liable to the
corporation, or if the person is found liable on the basis he received an
improper personal benefit, indemnification under Texas law is limited in the
reimbursement of reasonable expenses. No indemnification will be
available if the person is found liable for willful or intentional misconduct,
breaching of the duty of loyalty to the corporation, or committing an act or
omission not committed in good faith.
Under
Nevada law, a corporation is permitted to provide indemnification or advancement
of expenses, by a bylaw provision, agreement or otherwise, against judgments,
fines, expenses and amounts paid in settlement actually and reasonably incurred
by the person in connection with such proceeding if he is not liable under
Nevada law regarding the exercise of powers and performance of duties by
directors (Nevada Revised Statutes 78.138) or if he otherwise acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
best
interest of the corporation and with respect to criminal matters, he had
reasonable cause to believe his conduct was lawful.
The
Nevada Charter Documents and the Texas Charter Documents make indemnification
mandatory on the part of the Company or the Texas Company, as applicable, for
its officers and directors to the fullest extent permitted by law.
Advancement
of Expenses
Under
Texas law, reasonable court costs and attorneys' fees incurred by a director
who
was, is, or is threatened to be made, a named defendant or respondent in a
proceeding because the person is or was a director of such corporation may
be
paid or reimbursed by the corporation in advance of the final disposition of
the
proceeding after the corporation receives (i) a written affirmation by the
director of his good faith belief that he has met the standard of conduct
necessary for indemnification under Texas law and (ii) a written undertaking
by
or on behalf of the director to repay the amount paid or reimbursed if it is
ultimately determined that he has not met those requirements or indemnification
for such expenses is precluded under Texas law.
Nevada
law provides for the advancement of expenses to directors and officers for
such
proceedings upon receipt of a similar undertaking as to repayment. However,
Nevada law does not require that such person give an affirmation regarding
his
conduct in order to receive an advance of expenses.
Procedure
for Indemnification
Texas
law
provides that a determination that indemnification is appropriate under Texas
law shall be made (i) by a majority vote of a quorum consisting of directors
who
are not party to the proceeding, (ii) if such a quorum cannot be obtained,
by a
special committee of the board of directors consisting of at least two directors
not party to the proceeding, (iii) by special legal counsel, or (iv) by
stockholder vote.
Similar
to Texas law, Nevada law provides that a determination that indemnification
is
appropriate under Nevada law shall be made (i) by stockholder vote, (ii) by
a
majority vote of a quorum of directors who are not party to the proceeding,
(iii) if such a quorum of directors so directs, by independent legal counsel,
or
(iv) if such a quorum of directors cannot be obtained, by independent legal
counsel.
Mandatory
Indemnification
Under
Texas law, indemnification by the corporation is mandatory only if the director
is wholly successful, on the merits or otherwise, in the defense of the
proceeding. Nevada law requires
indemnification with respect
to any claim, issue or matter on which the director is successful on the merits
or otherwise, in the defense of the proceeding.
Insurance
Texas
law
and Nevada law both allow a corporation to purchase and maintain insurance
on
behalf of any person who is or was a director, officer, employee or agent of
the
corporation against any liability asserted against such person and incurred
by
such person in such a capacity or arising out of his status as such a person
whether or not the corporation would have the power to indemnify him against
that liability. In addition, a corporation may also establish and maintain
arrangements, other than insurance, to protect these individuals, including
a
trust fund or surety arrangement.
Standard
of Care
The
standard of care required under Texas and Nevada law is substantially the same.
In general, directors are charged with the duty in their decision-making process
and oversight responsibilities to act as would a reasonably prudent person
in
the conduct of such person's own affairs.
Stockholder
Reports
Texas
law
requires a report to the stockholders upon indemnification or advancement of
expenses. Nevada law does not have a similar reporting requirement.
Limited
Liability of Directors
Texas
law
permits a corporation to eliminate in its charter all monetary liability of
a
director to the corporation or its stockholders for conduct in the performance
of such director's duties. However, Texas law does not permit any limitation
of
the liability of a director for breaching the duty of loyalty to the corporation
or its stockholders or an act or omission that was not in good faith that
constitutes intentional misconduct or a known violation of law, a transaction
from which the director obtains an improper benefit, or a violation of
applicable statutes which expressly provide for the liability of a
director. Subject to certain exceptions, Nevada law eliminates all
monetary liability of a director or an officer to the corporation and the
stockholders except for acts or omissions that involve intentional misconduct,
fraud or a knowing violation of law, or an act constituting a breach of
fiduciary duty, unless otherwise set forth in the corporation’s certificate of
incorporation. The Nevada Articles and Texas Certificate contain such
a limitation on director liability.
Vote
Required for Approval
The
affirmative vote of the holders of a majority of the shares of Common Stock
outstanding on the Record Date, entitled to vote and represented at the Annual
Meeting, in person or by proxy, will constitute approval of the Reincorporation
Proposal.
THE
BOARD
OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE REINCORPORATION
PROPOSAL.
AMENDMENT
TO THE CERTIFICATE OF FORMATION
TO
CHANGE
THE
NAME
OF
THE
COMPANY
FROM WILSON HOLDINGS, INC. TO GREEN BUILDERS, INC.
(Proposal
3)
The
Board
of Directors has adopted resolutions approving, declaring advisable and
recommending that the Company’s shareholders approve an amendment to the
Company’s Certificate of Formation to change its corporate name from “Wilson
Holdings, Inc.” to “Green Builders, Inc.” If approved, the change in corporate
name will become effective upon the filing of a certificate of amendment to
the
Company’s Certificate of Formation with the Secretary of State of the State of
Texas. The Company currently plans to file the certificate of amendment as
soon
as reasonably practicable after receiving approval of the amendment from its
shareholders.
If
this
proposal is approved, Article 1 of the Company’s Certificate of Formation, as
amended, will be amended to read in its entirety as follows:
ARTICLE
I
NAME
The
name
of the corporation is Green Builders, Inc. (hereinafter referred to as the
“
Corporation
”).
Purpose
and Rationale for the Proposed Amendment
The
Board
is recommending the approval of the Company’s name change to reflect the
Company’s commitment to green homebuilding and to change the Company’s name to
the name of its homebuilding subsidiary, Green Builders, Inc. The
Board believes that changing the Company’s name to reflect the name of one of
its primary subsidies and the subsidiary which is engaged in the Company’s
homebuilding activities will further promote the national awareness of the
Company in the minds of consumers, vendors, shareholders and the investment
community.
Effect
of the Proposed Amendment
If
approved by shareholders, the change in corporate name will not affect the
validity or transferability of any existing stock certificates that bear the
name “Wilson Holdings, Inc.” If the proposed name change is approved,
shareholders with certificated shares should continue to hold their existing
stock certificates. The rights of shareholders holding certificated shares
under
existing stock certificates and the number of shares represented by those
certificates will remain unchanged. Direct registration accounts and any new
stock certificates that are issued after the name change becomes effective
will
bear the name “Green Builders, Inc.”
Currently
the Company’s stock is quoted on the American Stock Exchange under the symbol
“WIH.” If the proposed name change is approved, the stock will trade under a new
trading symbol which has not yet been assigned.
If
the
proposal to change the corporate name is not approved, the proposed amendment
to
the Company’s Certificate of Formation will not be made and its corporate name
will remain unchanged.
Required
Approvals
The
affirmative vote of the holders of a majority of the total number of shares
of
common stock outstanding as of the record date will be required to approve
this
proposal. Abstentions and broker non-votes will have the same effect
as a vote against this proposal.
The
Board recommends that you vote FOR the amendment to the Restated Certificate
of
Incorporation, and your proxy will be so voted unless you specify
otherwise.
RATIFICATION
OF THE APPOINTMENT OF THE INDEPENDENT AUDITORS
(Proposal
4)
The
Audit
Committee of our Board of Directors appointed the firm of PMB Helin Donovan,
LLP, independent auditors, for the fiscal year ending September 30,
2008. The Audit Committee is asking the shareholders to ratify this
appointment. The affirmative vote of a majority of the shares
represented and voting at the annual meeting is required to ratify the selection
of PMB Helin Donovan, LLP. PMB Helin Donovan LLP has served in this
capacity since 2005.
In
the
event the shareholders fail to ratify the appointment, our Audit Committee
will
reconsider its selection. Even if the selection is ratified, the
audit committee in its discretion may direct the appointment of a different
independent auditing firm at any time during the year if the Audit Committee
believes that such a change would be in the best interests of the Company and
our shareholders.
The
Company has invited representatives of PMB Helin Donovan, LLP to participate
in
the annual meeting of shareholders.
The
following is a summary of the fees billed to Wilson Holdings for professional
services rendered for the years ended September 30, 2007 and December 31,
2006:
Fee
Category
|
|
Fiscal
2007
|
|
|
Fiscal
2006
|
|
Audit
Fees
|
|
$
|
177,918
|
|
|
|
131,775
|
|
Audit-Related
Fees
|
|
|
-
|
|
|
|
-
|
|
Tax
Fees
|
|
|
17,170
|
|
|
|
3,500
|
|
All
Other Fees
|
|
|
25,910
|
|
|
|
-
|
|
Total
Fees
|
|
$
|
220,998
|
|
|
|
135,275
|
|
The
aggregate fees included in the Audit Fees category are fees billed for the
fiscal years for the audit of our annual financial statements and review of
financial statements and statutory and regulatory filings or engagements. The
aggregate fees for each of the other categories are fees billed in the fiscal
years.
Audit
Fees
. Consists of fees billed for professional services
rendered in connection with the audit of our consolidated financial statements
included in our Annual Report on Form 10-KSB, for the review of the financial
statements included in our Quarterly Reports on Form 10-QSB and registration
statement consent procedures. Audit fees in fiscal 2007 consisted of $177,918
and audit fees in 2006 consisted of $131,775, in each case as billed to us
by
PMB Helin, Donovan, LLP, formerly known as Helin, Donovan, Trubee &
Wilkinson LLP.
Audit-Related
Fees
. Consists of fees billed for assurance and related
services that are reasonably related to the performance of the audit and review
of our consolidated financials statements that are not already reported under
“Audit Fees.”
Tax
Fees
. Consists
of fees billed for professional services for tax compliance, tax advice and
tax
planning. These services included the preparation of our tax returns and work
performed which was related to our change in independent auditors. We had tax
fees of approximately $17,170 in fiscal 2007 and $3,500 in 2006.
All
Other
Fees
. Consists of fees incurred in connection with the
preparation and filing of our Registration Statement on Form S-1. We
had other fees of approximately $25,910 in fiscal 2007 and none in
2006.
Pre-Approval
Policies
The
Audit
Committee pre-approves all audit and non-audit services provided by our
independent auditors prior to the engagement of the independent auditors with
respect to such services. The Chairman of the Audit Committee has the authority
to approve any additional audit services and permissible non-audit services,
provided the Chairman informs the Audit Committee of such approval at its next
regularly scheduled meeting. Our independent registered public accounting firm
and management are required to periodically report to the Audit Committee
regarding the extent of services provided by the independent registered public
accounting firm in accordance with this pre-approval, and the fees for the
services performed to date.
The
Board of Directors recommends a vote FOR the ratification of the Audit
Committee’s appointment of PMB Helin Donovan, LLP as independent
auditors.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER
MATTERS
The
following table sets forth certain information known to us with respect to
the
beneficial ownership of our common stock as of January 30, 2008 (unless
otherwise indicated), by:
|
·
|
each
person known by us to be a beneficial owner of five percent (5%)
or more
of our common stock;
|
|
·
|
each
current director, each of whom is also a nominee for election as
a
director;
|
|
·
|
each
current executive officer named in the summary compensation table
in Item
11 of this Annual Report; and
|
|
·
|
all
current directors and executive officers as a group.
|
Shares
outstanding is based on 23,135,539 shares of common stock outstanding (shares
of
common stock subject to options or warrants which are currently exercisable
or
will become exercisable within 60 days after January 30, 2008 or issuable upon
conversion of convertible notes are deemed outstanding for computing the
percentage for the person or group holding such shares or warrants, but are
not
deemed outstanding for computing the percentage for any other person or
group). We also currently have outstanding options to purchase
1,835,000 shares of common stock, warrants to purchase 1,143,125 shares of
our
common stock at an exercise price of $2.00 per share, and convertible promissory
notes which can be converted into 8,250,000 shares of our common stock. Except
as indicated below, the security holders listed possess sole voting and
investment power with respect to the shares beneficially owned by that
person.
Name
|
|
Shares
Owned
|
|
|
Percent
of
Class
|
|
Directors
and Executive Officers
|
|
|
|
|
|
|
Clark
N. Wilson (1)
|
|
|
13,699,888
|
|
|
|
58.6
|
%
|
Victor
Ayad (2)
|
|
|
120,000
|
|
|
|
*
|
|
Jay
Gouline (3)
|
|
|
50,000
|
|
|
|
*
|
|
Sidney
Christopher Ney (3)
|
|
|
160,000
|
|
|
|
*
|
|
Barry
Williamson (3)
|
|
|
160,000
|
|
|
|
*
|
|
Cindy
Hammes (3)
|
|
|
100,000
|
|
|
|
*
|
|
David
Goodrum (3)
|
|
|
200,000
|
|
|
|
*
|
|
Current
Directors and Officers as a Group (7 persons)
|
|
|
14,489,888
|
|
|
|
60.2
|
|
Other
5% Shareholders
|
|
|
|
|
|
|
|
|
Tejas
Securities Group, Inc. 401(k) Plan & Trust FBO John J. Gorman, John J.
Gorman TTEE (4)
|
|
|
4,145,213
|
|
|
|
17.2
|
|
Grandview
LLC (5)
|
|
|
1,946,875
|
|
|
|
7.7
|
|
Harbert
Management Corporation (6)
|
|
|
2,300,000
|
|
|
|
9.9
|
|
LC
Capital Master Fund (7)
|
|
|
2,517,170
|
|
|
|
9.8
|
%
|
*Less
than 1%.
Notes
Regarding Beneficial Ownership Table:
The
address for all officers and directors is c/o Wilson Holdings, Inc., 8121 Bee
Caves Road, Austin, Texas 78746.
(1)
Includes 12,460,826 shares held directly by Mr. Wilson, 100,000 shares issuable
upon exercise of stock options, 125,000 shares issuable upon the conversion
of
convertible promissory notes, and 14,062 shares issuable upon the exercise
of
warrants. Also includes 1,000,000 shares held by certain trusts for the benefit
of Mr. Wilson’s minor children. Mr. Wilson does not have voting or dispositive
power over the shares held by such trusts and Mr. Wilson disclaims beneficial
ownership of such shares.
(2)
40,000 shares listed as owned are issuable upon exercise of stock
options.
(3)
All
shares listed as owned are issuable upon exercise of stock options.
(4)
Includes 900,000 shares issuable upon conversion of convertible promissory
notes
and 101,250 shares issuable upon the exercise of warrants. The
mailing address of Tejas Securities Group, Inc. 401(k) Plan & Trust FBO John
J. Gorman, John J. Gorman TTEE is 8226 Bee Caves Road, Austin, TX
78746.
(5)
Share
ownership pursuant to Schedule 13D/A filed October 3, 2006. All shares listed
as
owned are issuable upon conversion of convertible promissory notes and the
exercise of warrants. The mailing address of Grandview LLC is 666
Fifth Avenue, 8th Floor, New York, NY 10103.
(6)
Share
ownership pursuant to Schedule 13G filed June 4, 2007. Each of
Harbert Management Corporation, Philip Falcone, Raymond J. Harbert, and Michael
D. Luce reported shared voting and dispositive power over the shares; each
specifically disclaimed beneficial ownership in such shares, except to the
extent of their pecuniary interest therein. The mailing address of
Harbert Management Corporation is One Riverchase Parkway South, Birmingham,
Alabama 35244.
(7)
Share
ownership pursuant to Schedule 13D filed November 14, 2006. All shares listed
as
owned are issuable upon conversion of convertible promissory notes and the
exercise of warrants. Pursuant to certain contractual agreements between LC
Capital Master Fund and us, LC Capital Master Fund may only elect to convert
that number of shares issuable upon conversion of its convertible promissory
notes or exercise that number of shares issuable upon exercise of its warrants
equal to 9.9% of our outstanding common stock. Absent such contractual
agreements, LC Capital Master Fund would be deemed to beneficially own 4,171,875
shares of common stock, all of which would be issuable upon conversion of
convertible promissory notes or exercise of warrants. The mailing
address of LC Capital Master Fund is 680 Fifth Avenue, Suite 1202, New York,
NY
10019.
Certain
Relationships and Related Transactions
Prior
to
becoming our Chief Financial Officer, Arun Khurana provided his services and
the
services of other professionals to us through the consulting firm of Izon
Consulting LLC (aka Khurana LLC). Izon Consulting LLC received payments of
approximately $66,000, $264,000, and $87,588 for the years ended
2005, 2006 and 2007, respectively. The services provided included SEC and
financial statement document preparation, and various accounting and consulting
projects. Donald Turner, a partner in Izon Consulting LLC and a former
consultant to us, also provided services during the same periods and was
compensated out of the amounts paid to Izon Consulting LLC.
Employment
Agreements with Executive Officers
On
February 14, 2007, we entered into an employment agreement with Clark N. Wilson,
our President and Chief Executive Officer. In the event of the involuntary
termination of Mr. Wilson’s service with us, the agreement provides for monthly
payments equal to Mr. Wilson’s monthly salary payments to continue for 12
months. The agreement contains a provision whereby Mr. Wilson is not permitted
to be employed in any position in which his duties and responsibilities comprise
residential land development and homebuilding in Texas or in areas within 200
miles of any city in which we are conducting land development or homebuilding
operations at the time of such termination of employment for a period of one
year from the termination of his employment, if such termination is voluntary
or
for cause, or involuntary and in connection with a corporate
transaction.
On
September 18, 2007, we entered into a Consulting Agreement with Arun Khurana,
our Vice President and Chief Financial Officer, pursuant to which Mr. Khurana
will transition from his position as an executive officer of the Company into
a
consulting role, beginning on the date we filed our Annual Report on Form 10-KSB
for the transition period ending September 30, 2007 (December 31, 2007) and
ending on October 31, 2008 (the “Consulting Term”). Mr. Khurana
agreed to remain as our Vice President and Chief Financial Officer,
and principal financial officer, until the beginning of the Consulting Term.
Pursuant to the Consulting Agreement, during the Consulting Term Mr. Khurana
will (i) review and provide comments on our periodic filings with the Securities
and Exchange Commission, (ii) advise us on our Sarbanes-Oxley Act compliance
and
implementation efforts, (iii) advise us regarding financing and joint
venture matters, and (iv) transition his responsibilities to the principal
financial officer. During the Consulting Period, Mr. Khurana will
receive a consulting fee of $11,500 per month and all unvested options to
purchase our common stock will vest in full.
Consulting
Arrangement with Audrey Wilson
In
March
2007, we entered into a consulting agreement with Audrey Wilson, the wife of
Clark N. Wilson, our President and Chief Executive Officer. Pursuant to the
consulting agreement, we agreed to pay Ms. Wilson $10,000 per month for a
maximum of 6 months. Ms. Wilson agreed to devote at least twenty-five hours
per
week assisting us with the following activities: (i) the establishment of
“back-office” processes for homebuilding activities, including procurement,
sales and marketing and other related activities, and (ii) developing our
marketing strategy for marketing and sale of land to homebuilders. We believe
that the services Ms. Wilson provided to us were provided at fair market
value. As of July 2007, Ms. Wilson continues to provide consulting
services to us at no cost to us.
NO
INCORPORATION BY REFERENCE OF CERTAIN PORTIONS OF THIS PROXY
STATEMENT
Notwithstanding
anything to the contrary set forth in any of our previous filings made under
the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as
amended, that might incorporate future filings made by us under those statutes,
the Audit Committee Report is not to be incorporated by reference into any
such
prior filings, nor shall such report be incorporated by reference into any
future filings made by us under those statutes.
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under
the
securities laws of the United States, the Company’s directors, its executive
officers, and any persons holding more than ten percent of a registered class
of
the Company’s equity securities are required to report their ownership of the
Company’s common stock and other equity securities and any changes in that
ownership to the SEC. Based solely upon a review of forms received by
us and written representations of the reporting persons, we believe that all
filing requirements applicable to the Company’s officers, directors and greater
than 10% shareholders have been met for the fiscal year ended September 30,
2007.
2007
ANNUAL REPORT
We
filed
an annual report on Form 10 KSB with the Securities and Exchange Commission
on
December 31, 2007. Shareholders may obtain a copy of this report,
without charge, by writing to the attention of Investor Relations, at our
principal executive offices, located at 8121 Bee Caves Road, Austin, Texas
78746.
THE
BOARD
OF DIRECTORS OF WILSON HOLDINGS, INC.
Exhibit
A
PLAN
OF CONVERSION
FOR
WILSON
HOLDINGS, INC.
THIS
PLAN
OF CONVERSION (the “
Plan
”)
is
entered into effective [_____________, 2008] by Wilson Holdings, Inc.,
a Nevada
corporation (the “
NV
Corporation
”), which is converting to a corporation under the laws of the
state of Texas.
1.
The name of the converting entity is “Wilson Holdings, Inc.,” a Nevada
corporation. The name of the converted entity is “Wilson Holdings,
Inc.,” a Texas corporation. The NV Corporation hereby adopts this
Plan in order to convert to Wilson Holdings, Inc., a Texas corporation
(the
“
TX
Corporation
”).
2.
By the conversion, the NV Corporation will be continuing its existence
in the
form of a Texas Corporation.
3.
Shares of the NV Corporation will be converted into shares of the TX Corporation
as follows:
|
a.
|
Each
share in the NV Corporation will be exchanged for one share in
the TX
Corporation.
|
|
b.
|
There
will be no change in ownership or control as a result of the
conversion.
|
|
c.
|
Shares
held in the NV Corporation will maintain all rights, preferences
and
privileges as a result of the conversion.
|
4.
The Certificate of Formation of the TX Corporation is attached as Exhibit
“A” to
this Plan.
5.
The address of the TX Corporation will not change from the current address
of
the NV Corporation, such address being 8121 Bee Caves Rd., Austin, TX
78746.
6.
The conversion will become effective upon the last to occur of (a) compliance
by
the TX Corporation with all the jurisdictional requirements for organizing
and
registering a Texas corporation and (b) the filing of the Certificate of
Conversion with the Texas Secretary of State.
IN
WITNESS WHEREOF, this Plan of Conversion has been duly executed by the
NV
Corporation as of the date first written above.
|
WILSON
HOLDINGS, INC., a Nevada Corporation
|
|
|
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By:
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/s/ Clark
N. Wilson
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Name: Clark
N. Wilson
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Title: President,
Chief Executive Officer and Secretary
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Exhibit
B
CERTIFICATE
OF FORMATION
OF
WILSON
HOLDINGS, INC.
The
undersigned natural person of the age of at least eighteen years acting as
incorporator of a corporation under the Texas Business Organizations Code
(“
TBOC
”)
does hereby adopt the following Certificate of Formation for such
corporation. This document becomes effective when the document is
filed by the Secretary of State of the State of Texas.
ARTICLE
I
NAME
The
name
of the entity is WILSON HOLDINGS, INC. (the “
Corporation
”).
ARTICLE
II
TYPE
OF
ENTITY
The
type
of filing entity being formed is a Texas for-profit corporation.
ARTICLE
III
DURATION
The
period of its duration is perpetual.
ARTICLE
IV
PURPOSE
The
purpose for which this Corporation is formed is to engage in any lawful activity
and business as from time to time determined by the Board of
Directors.
ARTICLE
V
INITIAL
REGISTERED OFFICE
AND AGENT
The
street address of the entity’s initial registered office is 8121 Bee Caves Road,
Austin, TX 78746, and the name of its initial registered agent at such address
is Clark N. Wilson.
ARTICLE
VI
ORGANIZER
|
The
name and address of the organizer is:
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Brannon
F. Andrews
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ARTICLE
VII
AUTHORIZED
SHARES
(a)
Authorized Capital Stock. The authorized capital stock of the Corporation
consists of One Hundred Ten Million (110,000,000) shares having a par value
of
one tenth of one cent ($.001) per share, divided into One Hundred Million
(100,000,000) shares of Common Stock and Ten Million (10,000,000) shares
of
Preferred Stock.
(b)
Preferred Stock. The Preferred Stock may be issued by the Corporation from
time
to time in one or more series and in such amounts as may be determined by
the
Board of Directors thereof. The designations, voting rights, amounts of
preference upon distribution of assets, rates of dividends, premiums of
redemption, conversion rights and other variations, if any, the qualifications,
limitations or restrictions thereof, if any, of the Preferred Stock, and
of each
series thereof, shall be such as are fixed by the Board of Directors, the
authority so to do being hereby expressly granted, and as are stated and
expressed in a resolution or resolutions adopted by the Board of Directors
providing for the issue of such series of Preferred Stock (hereinafter called
“Directors’ Resolution”). The Directors’ Resolution as to any series shall (a)
designate the series, (b) fix the dividend rate or method of determining
the
dividend rate, if any, of such series, the payment dates for dividends on
shares
of such series and the date or dates, or the method of determining the date
or
dates, if any, from which dividends on shares of such series shall be
cumulative, and any other conditions to such dividends, (c) fix the amount
or
amounts payable on shares of such series upon voluntary or involuntary
liquidation, dissolution or winding up, or method of determining the same
and
(d) if the shares of such series may be redeemed, state the price or prices
or
rate or rates, and adjustments, or method of determining the same, if any,
and
the time or times, or method of determining the same, and the terms and
conditions on which, the shares of such series may be redeemed. The Directors’
Resolution may (a) limit the number of shares of such series that may be
issued,
(b) provide for a sinking fund for the purchase or redemption of shares of
such
series and determine the terms and conditions governing the operation of
any
such fund, (c) deny or grant voting rights, full or limited, to the holders
of
shares of such series, (d) impose conditions or restrictions upon the creation
of indebtedness of the Corporation or upon the issuance of additional Preferred
Stock or other capital stock ranking on a parity therewith, or prior thereto,
with respect to dividends or distribution of assets upon liquidation, (e)
impose
conditions or restrictions upon the payment of dividends upon, or the making
of
other distributions to, or the acquisition of, shares ranking junior to the
Preferred Stock or to any series thereof with respect to dividends or
distributions of assets upon liquidation, (f) state the price or prices or
the
rate or rates of exchange and other terms, conditions and adjustments upon
which
shares of any such series may be convertible into, or exchangeable for shares
of
any of the class or classes or of any other series of Preferred Stock or
any
other class or classes of stock, or the method of determining the same, and
(g)
grant such other special rights and impose such qualifications, limitations
or
restrictions thereon as shall be fixed by the Board of Directors and any
voting
power, designation, preference, right, qualification, limitation or restriction
on the Preferred Stock, and any rate, condition or time for payment of dividends
of the Preferred Stock, may be made dependent upon any fact which may be
ascertained outside of these Articles of Incorporation or the Directors’
Resolution or, with respect to any rate, condition or time for payment of
dividends of the Preferred Stock, in the resolution providing for the dividends,
if the manner in which a fact may operate upon the voting power, designation,
preference, right, qualification, limitation or restriction, or the rate,
condition or time of payment of such dividend, is stated in these Articles
of
Incorporation or the Directors’ Resolution or, with respect to any rate,
condition or time for payment of dividends of the Preferred Stock, in the
resolution providing for the dividends.
(c)
Common Stock. Except as otherwise required by law, the Articles of Incorporation
or as otherwise provided in any Director’s Resolution, all shares of Common
Stock shall be identical and the holders of Common Stock shall exclusively
possess all voting power and each share of Common Stock shall have one
vote.
(d)
Relative Ranking of Common Stock. The Common Stock is junior to the Preferred
Stock and is subject to all the powers, rights, privileges, preferences and
priorities of the Preferred Stock as herein set forth and as may be stated
in
any Directors’ Resolution or Resolutions.
(e)
Assessment of Shares. The capital stock of the Corporation, after the amount
of
the consideration for the issuance of shares, as determined by the Board
of
Directors, has been paid, is not subject to assessment to pay the debts of
the
Corporation and no stock issued as fully paid up may ever be assessed, and
the
Articles of Incorporation cannot be amended in this respect.
(f)
Cumulative Voting. Unless expressly granted pursuant to any Directors’
Resolution with respect to holders of one or more series of Preferred Stock,
cumulative voting by any shareholder is hereby denied.
ARTICLE
VIII
GOVERNING
BOARD
The
members of the governing board of
the Corporation are designated as Directors. The members of the Board of
Directors will serve until his or her successor or successors are elected
and
qualified. The number of directors, whether a fixed number of directors or
a
variable number of directors with a fixed minimum and maximum, and the manner
in
which the number of directors may increased or decreased, shall be as provided
in the bylaws of the Corporation. Elections of Directors need not be by written
ballot except and to the extent required by the bylaws of the Corporation.
The
Board of Directors is expressly authorized to adopt, amend or repeal the
bylaws
of the Corporation.
The
number of persons constituting the initial board of directors is five (5)
and
the names and addresses of the persons who are to serve as directors until
the
next annual meeting of shareholders or until (their) successor(s) are elected
and qualified are:
Name
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Address
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Clark
N. Wilson
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c/o
Green Builders, Inc.
8121
Bee Caves Road
Austin,
TX 78746
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Victor
Ayad
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Jay
Gouline
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Sidney
Christopher Ney
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Barry
Williamson
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ARTICLE
IX
SALE
OF CORPORATION’S
ASSETS
The
Corporation may sell, lease or exchange all of the Corporation’s property and
assets, including the Corporation’s good will and corporate franchises, upon the
affirmative vote of a majority of the Board of Directors and no vote of the
shareholders shall be required.
ARTICLE
X
MEETINGS
OF
SHAREHOLDERS
An
annual
meeting of the shareholders shall be held at such times as may be stated
or
fixed in accordance with the bylaws. Special meetings may only be
called by the Corporation’s President or a majority of the Board of Directors or
by the holders of at least fifty percent of the number of shares entitled
to
vote at such meeting.
ARTICLE
XI
LIMITATION
OF LIABILITY
OF GOVERNING PERSONS
To
the
fullest extent permitted by applicable law, a governing person of the
Corporation shall not be liable to the Corporation or its shareholders for
monetary damages for an act or omission in such governing person’s capacity as a
director. This Article XI does not eliminate or limit the liability
of a governing person to the extent such governing person is found liable
under
applicable law for (i) a breach of such governing person’s duty of loyalty to
the Corporation or its shareholders; (ii) an act or omission not in good
faith
that (A) constitutes a breach of the duty of loyalty of the governing person
to
the organization, or (B) involves intentional misconduct or a knowing violation
of the law; (iii) a transaction from which the governing person received
an
improper benefit, regardless of whether the benefit resulted from an action
taken within the scope of the person’s duties; or (iv) an act or omission for
which the liability of a person is expressly provided for by
statute. If the Texas Business Organizations Code or any other
statute is amended subsequently to the effective date of this Certificate
of
Formation to authorize corporate action further eliminating or limiting the
personal liability of governing person, then the liability of a governing
person
of the Corporation shall be eliminated or limited to the full extent permitted
by such statute, as so amended.
Any
repeal or modification of the foregoing paragraph by the shareholders of
the
Corporation shall not adversely affect any right or protection of a governing
person of the Corporation existing at the time of such repeal or
modification.
ARTICLE
XII
INDEMNIFICATION
(a)
The Corporation shall indemnify and hold harmless the Directors (each, an
“
Indemnified
Person
”) to the fullest extent permitted by law from and against any and
all losses, claims, demands, costs, damages, liabilities, joint or several,
expenses of any nature (including reasonable attorneys’ fees and disbursements),
judgments, fines, settlements and other amounts arising from any and all
claims,
demands, actions, suits or proceedings, whether civil, criminal, the Indemnified
Person may be involved or threatened to be involved, as a party or otherwise,
arising out of or incidental to the business or activities of or relating
to the
Corporation regardless of whether the Indemnified Person continues to be
a
director at the time any such liability or expense is paid or
incurred. The indemnification provided in this Article XII may not be
made to or on behalf of any director if a final adjudication establishes
that
the Indemnified Person’s acts or omissions involved intentional misconduct,
fraud or a knowing violation of the law.
(b)
Expenses (including reasonable attorneys’ fees and disbursements) incurred by an
Indemnified Person in defending any claim, demand, action, suit, or proceeding
subject to this Article XII shall, from time to time, upon request by this
Indemnified Person, be advanced by the Corporation prior to the final
disposition of such claim, demand, action, suit or proceeding upon receipt
by
the Corporation if (i) a written affirmation by such Indemnified Person of
his,
her or its good faith belief that he, she or it has met the standard of conduct
necessary for indemnification under this Article XII, and (ii) a written
undertaking, by or on behalf of such Indemnified Person, to repay such amount
if
it shall ultimately be determined, by a court of competent jurisdiction that
such indemnified person is not entitled to be indemnified as authorized by
this
Article XII or otherwise.
(c)
Any indemnification hereunder shall be satisfied only out of the assets of
the
Corporation, and the shareholders shall not be subject to personal liability
by
reason of these indemnification provisions.
(d)
An Indemnified Person shall not be denied indemnification in whole or in
part
under this Article XII or otherwise by reason of the fact that the Indemnified
Person had an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise permitted or not
expressly prohibited by the terms of this Certificate of Formation.
(e)
The provisions of this Article XII are for the benefit of the Indemnified
Persons, their heirs, successors, assigns and administrators and shall not
be
deemed to create any rights for the benefit of any other person(s) or
entity(ies).
ARTICLE
XIII
AMENDMENT
OR
REPEAL
The
Corporation reserves the right to amend, alter, change or repeal any provisions
of this Certificate of Formation in the manner now or hereafter prescribed
by
statute and all rights, except to the extent specifically provided for in
Article XI above, conferred by this Certificate are granted subject to this
reservation.
ARTICLE
XIV
CREATION
PURSUANT TO
CONVERSION
The
Corporation was incorporated pursuant to a plan of conversion whereby Wilson
Holdings, Inc., a Nevada corporation (the “
converting
entity
”), was converting into Wilson Holdings, Inc., a Texas corporation
(the “
converted
entity
”). The converting entity was incorporated in Nevada on
_________________, ______. The address of the converting entity is
8121 Bee Caves Road, Austin, TX 78746, which remained the address of the
converted entity.
Dated
as
of the ___ day of ________________, 2008.
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WILSON
HOLDINGS, INC., a Nevada Corporation
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By:
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/s/ Clark
N. Wilson
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Name: Clark
N. Wilson
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Title: President,
Chief Executive Officer and Secretary
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