Mainstreet Equity Corp.

Mainstreet Equity Corp.

November 08, 2005 12:35 ET

Mainstreet Equities Corp. Share Purchase Agreement Update

CALGARY, ALBERTA--(CCNMatthews - Nov. 8, 2005) - Mainstreet Equity Corp. (TSX:MEQ) ("Mainstreet" or the "Corporation") issued the following statement.

Since issuing the press release on October 27, 2005, Mainstreet has received a number of questions from existing shareholders seeking further clarification of the share purchase agreement involving Mainstreet directors, officers and employees and Mainstreet's overall compensation philosophy. Mainstreet would like to take this opportunity to address the questions it has received and explain why Mainstreet believes its equity participation program is in the best interest of Mainstreet shareholders and its valued employees.

Management of Mainstreet has set up a new employee share purchase plan as a benefit to Mainstreet's employees. The share purchase plan is completely voluntary, meaning no one has a mandatory requirement to partake in it. According to Bob Dhillon, President & CEO of Mainstreet "the Alberta economy has been extremely robust over the past five years and with no signs of slowing down in the near term, organizations are going to face increasing pressure to retain and attract good employees, particularly skilled labour."

The Mainstreet share purchase plan is outlined as follows:

- Mainstreet will loan 80% of the cost of the common shares for a term of 4 years, with the employee funding the remaining 20% personally.

- The common shares will be sold to employees at the current market price of $5.00/ common share.

- The common shares will be sold and purchased by way of private transaction between each participant and private individuals. No new common shares will be issued by the Corporation.

- The common shares will be pledged to and held by Mainstreet as collateral security until the loan is paid in full.

- If the employee remains with Mainstreet for the entire 4 year term the loan will be interest free.

- In the event that an employee under the share purchase agreement resigns or is terminated during the term of the loan, the loan will become immediately due. Interest will then become payable from the initial loan date until the loan is paid in full, based on a stepped interest payment schedule starting at 8.0% in the first year and decreasing to 5.0% in the fourth year.

- In order for Mainstreet's employees to take full advantage of the interest free benefit of the loan and the share purchase plan, they would have to remain employees of the Corporation for the full 4 years.

- Shares may be sold prior to the maturity date, provided that the proceeds from the sale will first be applied to the repayment of the loan.

- In the event the loan is not repaid, Mainstreet has limited recourse against the pledged common shares, including the 20% of the common shares which the employee originally pays for with his or her own money.

Mr. Dhillon further stated "As of today, there are no outstanding stock options to Mainstreet employees, directors or the CEO Bob Dhillon. Under this share purchase structure, our employees are motivated to remain as an employee of Mainstreet, but more importantly they have an economic interest in the company and its long term financial performance."

The common shares purchased under the employee share purchase plan were purchased from a non-board member and were not issued from treasury and are therefore not dilutive to the existing shareholders. In total, 300,000 shares were purchased by the employees, officers and directors of Mainstreeet. After all employee demand was satisfied, Mr. Dhillon was then able to participate in the transaction, whereby Mr. Bob Dhillon purchased 100,000 common shares of the Corporation under the same terms and conditions as the other employees of Mainstreet.

Mainstreet is a publicly traded real estate company focused on the acquisition, redevelopment, repositioning and management of "mid-market" multi-family residential rental properties across Canada.

Contact Information

  • Mainstreet Equity Corp.
    Bob Dhillon
    Main Phone: (403) 215-6060
    Dir. Phone: (403) 215-6070
    (403) 266-8867 (FAX)
    Mainstreet Equity Corp.
    Suite 100, 1122 - 8th Avenue SW,
    Calgary, Alberta T2P 1J5