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Re: prokopton post# 398

Sunday, 02/24/2013 3:38:48 PM

Sunday, February 24, 2013 3:38:48 PM

Post# of 1350
Your assumption about the equity incentive plan are a bit off base, rarely are all the shares authorized under an incentive plan issued....and when they are issued, they're usually issued as options (if the company wants to be taken seriously), so the employee needs to pay something and the transaction isn't 100% "dilutive" to current shareholders.

Here's some relevant excerpts from the last S-1: "....IZEA, Inc. approved an increase in the number of shares of common stock reserved for issuance under its 2011 Equity Incentive Plan by 11,000,000 shares to a new total of 11,613,715 shares. Other than the increase in the number of shares reserved for issuance thereunder, no changes were made to the 2011 Equity Incentive Plan, which is described in IZEA's registration statement on Form S-1 (No. 333-181916), effective September 5, 2012. No awards have been made to date under the Plan with respect to such new shares".

"Equity Compensation Plan Information

In February 2007, the board of directors adopted the 2007 Equity Incentive Plan (the “2007 Plan”). The 2007 Plan allowed us to provide options as an incentive for employees and consultants. On May 11, 2011, the 2007 Plan was amended to increase the number available for issuance under the 2007 Plan from 2,313,317 to 4,889,829 shares of Series A common stock. In connection with the share exchange on May 12, 2011, all of the outstanding stock options to purchase 3,712,365 shares of Series A common stock under the 2007 Plan were canceled, effectively terminating the 2007 Plan. We simultaneously issued new stock options for 92,823 shares of common stock to the same employees under a new 2011 Equity Incentive Plan of IZEA, Inc. adopted on May 12, 2011 (the “May 2011 Plan”) which reserved an aggregate of 177,500 shares of common stock for future issuance. The cancellation and replacement of the stock options under the 2007 Plan were accounted for as a modification of the terms of the canceled awards. There was a minimal incremental difference required to be recorded on 2,743 shares where the fair value of the replacement options exceeded the fair value of the canceled options at the date of cancellation

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and replacement. On May 25, 2012, upon consent from holders of a majority of our outstanding voting capital stock, we increased the number of shares available thereunder for issuance from 177,500 to 613,715 shares. As of August 17, 2012 , stock options to purchase 360,620 shares are outstanding and 1,230 options have been exercised, leaving an aggregate of 251,865 shares of common stock available for future grants under our May 2011 Plan.

On August 22, 2011, we adopted the 2011 B Equity Incentive Plan of IZEA, Inc. (the “August 2011 Plan”) reserving for future issuance an aggregate of 87,500 shares of common stock under the August 2011 Plan. As of August 17, 2012 , stock options to purchase 37,500 shares have been granted and are outstanding, leaving an aggregate of 50,000 shares of common stock available for future grants under our August 2011 Plan.

Under both the May 2011 Plan and the August 2011 Plan, our board of directors determines the exercise price to be paid for the shares, the period within which each option may be exercised and the terms and conditions of each option. The exercise price of the incentive stock options will be equal to or exceed 100% of the fair market value per share of our common stock on the grant date. If an individual owns stock representing more than 10% of the outstanding shares, the price of each share of an incentive stock option will be equal to or exceed 110% of fair market value. The exercise price for nonqualified stock options may be less than fair market value of the common stock, as determined by our board of directors."

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