UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
DEFINITIVE
SCHEDULE 14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934
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the Registrant
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a Party other than the Registrant
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for Use of the Commission Only (as permitted by Rule
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to §240.14a-12
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PREMIER
POWER RENEWABLE ENERGY, INC.
(Name
of Registrant as Specified in Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
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No
fee required.
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(4) 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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Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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4)
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Proposed
maximum aggregate value of transaction:
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5)
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Total
fee paid:
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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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4961
Windplay Drive, Suite 100
El Dorado Hills, California
95762
September
30, 2010
Dear
Stockholders:
You are
cordially invited to attend the annual meeting of stockholders of Premier Power
Renewable Energy, Inc. to be held at our principal executive office located at
4961 Windplay Drive, Suite 100, El Dorado Hills, California 95762 on November 4,
2010 at 9 a.m. (local time).
At the
meeting, stockholders will be asked to vote on the re-election of five
directors; the ratification of the appointment of Macias Gini & O’Connell,
LLP as our independent registered public accounting firm for the 2010 fiscal
year; to approve the increase in the number of shares of our common stock
reserved for issuance under our 2008 Equity Incentive Plan by 2,000,000 shares;
and to approve an amendment to our Certificate of Incorporation to effect a
reverse stock split of our issued and outstanding shares of common stock of not
more than one-for-five, with the final ratio to be decided upon at the sole
discretion of our management and to be approved by the Board, for the purpose of
seeking a listing of our common stock on a national securities
exchange.
The
Notice of Annual Meeting of Stockholders and Proxy Statement accompanying this
letter provide detailed information concerning matters to be considered at the
meeting.
Your vote
is important. I urge you to vote as soon as possible, whether or not
you plan to attend the annual meeting.
Thank you
for your continued support of Premier Power.
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Sincerely,
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/s/
Dean Marks
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Dean
Marks
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Chairman
of the Board and Chief Executive
Officer
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4961
Windplay Drive, Suite 100
El Dorado Hills, California
95762
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
September
30, 2010
TO THE
STOCKHOLDERS OF PREMIER POWER RENEWABLE ENERGY, INC.:
The
annual meeting of the stockholders of Premier Power Renewable Energy, Inc., a
Delaware corporation, (the “Company”), will be held on November 4, 2010, at 9
a.m. (local time), at our principal executive offices located at 4961 Windplay
Drive, Suite 100, El Dorado Hills, California 95762 for the following
purposes:
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1.
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To re-elect five directors to
serve until the 2011 annual meeting of
stockholders;
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2.
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To ratify the appointment of
Macias Gini & O’Connell, LLP as our registered independent public
accountants for the fiscal year ending December 31,
2010;
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3.
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To
approve the increase in the number of shares of common stock reserved for
issuance under our 2008 Equity Incentive Plan by 2,000,000
shares;
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4.
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To
approve an amendment to our Certificate of Incorporation to effect a
reverse stock split of our issued and outstanding shares of common stock
of not more than one-for-five, with the final ratio to be decided upon at
the sole discretion of our management and to be approved by the Board, for
the purpose of seeking a listing of our common stock on a national
securities exchange; and
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5.
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To transact such other business
as may properly come before the
meeting.
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The Board
of Directors has fixed the close of business on September 29, 2010 as the record
date for the determination of stockholders entitled to notice of and to vote at
the annual meeting. We hope that you will attend the meeting, but if you cannot
do so, please complete, date, and sign the enclosed proxy card and return it in
the accompanying envelope as promptly as possible. Your proxy card or broker may
also provide instructions on voting electronically. Returning the enclosed proxy
card (or voting electronically) will not affect your right to vote in person if
you attend the meeting.
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By
Order of the Board of Directors
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Dean
Marks
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Chairman
of the Board and Chief Executive
Officer
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El Dorado
Hills, California
TABLE
OF CONTENTS
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Page
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GENERAL
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2
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ABOUT
THE MEETING
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2
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PROPOSAL
1 – ELECTION OF DIRECTORS
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4
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PROPOSAL
2 – RATIFICATION OF INDEPENDENT ACCOUNTANTS
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5
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PROPOSAL
3 – INCREASE IN SHARES OF COMMON STOCK RESERVED FOR ISSUANCE UNDER 2008
EQUITY INCENTIVE PLAN
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5
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PROPOSAL
4 – AMENDMENT TO CERTIFICATE OF INCORPORATION TO EFFECT A REVERSE STOCK
SPLIT
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6
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THE
BOARD OF DIRECTORS AND ITS COMMITTEES
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8
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PRINCIPAL
ACCOUNTANT FEES AND SERVICES
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10
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AUDIT
COMMITTEE REPORT
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10
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DIRECTORS
AND EXECUTIVE OFFICERS
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11
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DIRECTOR
AND EXECUTIVE COMPENSATION
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13
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SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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16
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CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
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17
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STOCKHOLDER
PROPOSALS
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SOLICITATION
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FORM
10-K – ANNUAL REPORT
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OTHER
MATTERS
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18
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ANNEX
A – PROPOSED AMENDED 2008 EQUITY INCENTIVE PLAN
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19
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ANNEX
B – PROPOSED AMENDMENT TO CERTIFICATE OF INCORPORATION
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31
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4961
Windplay Drive, Suite 100
El Dorado Hills, California
95762
PROXY
STATEMENT
ANNUAL
MEETING OF STOCKHOLDERS
TO BE
HELD NOVEMBER 4, 2010
September
30, 2010
GENERAL
The
enclosed proxy is solicited on behalf of the Board of Directors of Premier Power
Renewable Energy, Inc., a Delaware corporation (the “Company”), for use at the
annual meeting of stockholders to be held on November 4, 2010, at 9 a.m. (local
time), or at any adjournment or postponement of the meeting, for the purposes
set forth in this proxy statement and in the accompanying Notice of Annual
Meeting. The annual meeting will be held at our principal executive offices
located at 4961 Windplay Drive, Suite 100, El Dorado Hills, California 95762.
We intend to mail this proxy statement and accompanying proxy card on or
about October 8, 2010 to all stockholders entitled to vote at the annual
meeting.
ABOUT
THE MEETING
Why
did I receive this proxy statement?
You
received this proxy statement because you held shares of the Company’s common
stock on September 29, 2010 (the “Record Date”) and are entitled to vote at the
annual meeting. The Board of Directors is soliciting your proxy to vote at the
meeting.
What
am I voting on?
You are
being asked to vote on three items:
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1.
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The election of five directors
(see page 4).
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2.
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The ratification of Macias Gini
& O’Connell, LLP as our independent registered public accounting firm
for the 2010 fiscal year (see page
5).
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3.
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The
approval of an increase in the number of shares of common stock reserved
for issuance under our 2008 Equity Incentive Plan by 2,000,000 shares (see
page 5).
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4.
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The
approval of an amendment to our Certificate of Incorporation to effect a
reverse stock split of our issued and outstanding shares of common stock
of not more than one-for-five, with the final ratio to be decided upon at
the sole discretion of our management and to be approved by the Board (see
page 6).
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How
do I vote?
Stockholders of
Record
If you
are a stockholder of record, there are three ways to vote:
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By completing and returning your
proxy card in the postage-paid envelope provided by the
Company;
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2.
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By following the instructions for
electronic voting using the Internet or telephone, which are printed on
your proxy card; or
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3.
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By voting in person at the
meeting.
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Street Name
Holders
Shares
that are held in a brokerage account in the name of the broker are said to be
held in “street name.” If your shares are held in street name, you
should follow the voting instructions provided by your broker. You may complete
and return a voting instruction card to your broker, or, in many cases, your
broker may also allow you to vote via the telephone or internet. Check your
proxy card for more information. If you hold your shares in street name and wish
to vote at the meeting, you must obtain a legal proxy from your broker and bring
that proxy to the meeting. Regardless of how your shares are
registered, if you complete and properly sign the accompanying proxy card and
return it to the address indicated, it will be voted as you
direct.
What
are the voting recommendations of the Board of Directors?
The Board
of Directors recommends that you vote in the following manner:
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1.
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FOR each of the persons nominated
to serve as directors.
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2.
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FOR the ratification of the
appointment of Macias Gini & O’Connell, LLP as our independent
registered public accounting firm for the 2010 fiscal
year.
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3.
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FOR the approval of an increase
in shares of common stock reserved for issuance under our 2008 Equity
Incentive Plan by 2,000,000
shares.
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4.
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FOR the approval of an amendment
to our Certificate of Incorporation to effect a reverse stock split of our
issued and outstanding shares of common stock of not more than
one-for-five.
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Unless
you give contrary instructions on your proxy card, Dean Marks, as proxy, will
vote your shares in accordance with the recommendations of the
Board.
Will
any other matters be voted on?
We do not
know of any other matters that will be brought before the stockholders for a
vote at the annual meeting. If any other matter is properly brought before the
meeting, your signed proxy card would authorize Dean Marks to vote on such
matters in his discretion.
Who
is entitled to vote at the meeting?
Only
stockholders of record at the close of business on the Record Date are entitled
to receive notice of and to vote at the annual meeting. If you were a
stockholder of record on that date, you will be entitled to vote all of the
shares that you held on that date at the meeting, or any postponement or
adjournment of the meeting.
How
many votes do I have?
For
holders of common stock, you will have one vote for each share of the Company’s
common stock that you owned on the Record Date.
How
many votes can be cast by all stockholders?
The
Company had 29,099,750 outstanding shares of common stock on the Record Date,
and each of these shares is entitled to one vote.
How
many votes must be present to hold the meeting?
The
holders of at least one-third of the Company’s common stock outstanding on the
Record Date must be present at the meeting in person or by proxy in order to
fulfill the quorum requirement necessary to hold the meeting. This means at
least 9,699,916 common shares must be present in person or by
proxy.
If you
vote, your shares will be part of the quorum. Abstentions and broker non-votes
will also be counted in determining the quorum. A broker non-vote occurs when a
bank or broker holding shares in street name submits a proxy that states that
the broker does not vote for some or all of the proposals because the broker has
not received instructions from the beneficial owners on how to vote on the
proposals and does not have discretionary authority to vote in the absence of
instructions.
We urge
you to vote by proxy even if you plan to attend the meeting so that we will know
as soon as possible that a quorum has been achieved.
What
vote is required to approve each proposal?
The five
nominees for directors who receive the most votes will be
elected. The required vote to approve the ratification of the
appointment of Macias Gini & O’Connell, LLP as our independent registered
public accounting firm for the 2010 fiscal year, the increase in shares of
common stock reserved for issuance under our 2008 Equity Incentive Plan by
2,000,000 shares, and an amendment to our Certificate of Incorporation to effect
a reverse stock split of our issued and outstanding shares of common stock of
not more than one-for-five is the affirmative vote of a majority of the votes
cast, excluding abstentions. An abstention with respect to these
proposals will be counted for the purposes of determining the number of shares
entitled to vote that are present in person or by proxy. Accordingly, an
abstention will have the effect of a negative vote. If a broker
indicates on the proxy that it does not have discretionary authority to vote on
a particular matter, those shares will not be considered as present and entitled
to vote with respect to the matter.
Can
I change my vote?
Yes. You
may change your vote by sending in a new proxy card with a later date, or, if
you are a stockholder of record, sending written notice of revocation to the
Company at the address on the cover of this proxy statement, Attn: Corporate
Secretary. Also, if you attend the meeting and wish to vote in person, you may
request that your previously submitted proxy not be used.
Who
can attend the annual meeting?
Any
person who was a stockholder of the Company on September 29, 2010 may attend the
meeting. If you own shares in street name, you should ask your broker or bank
for a legal proxy to bring with you to the meeting. If you do not receive the
legal proxy in time, bring your most recent brokerage statement so that we can
verify your ownership of our stock and admit you to the meeting. You will not,
however, be able to vote your shares at the meeting without a legal
proxy.
What
happens if I sign and return the proxy card but do not indicate how to vote on
an issue?
If you
return a proxy card without indicating your vote, your shares will be voted as
follows:
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FOR each of the nominees for
director named in this proxy statement;
and
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FOR ratification of the
appointment of Macias Gini & O’Connell, LLP as our independent
registered public accounting firm for the 2010 fiscal year;
and
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FOR the increase in the shares of
common stock reserved for issuance under our 2008 Equity Incentive Plan by
2,000,000 shares; and
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FOR
the amendment to our Certificate of Incorporation to effect a reverse
stock split of our issued and outstanding shares of common stock of not
more than one-for-five.
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PROPOSAL
1 - ELECTION OF DIRECTORS
Under our
bylaws, the number of directors of the Company is fixed by the Board of
Directors and may be increased or decreased by resolution of the Board.
Currently, the Board has fixed the number of directors at 5 persons. Five
directors are to be elected to our Board at the annual meeting. The Company’s
“independent directors” (as defined by NASDAQ’s Marketplace Rule 5605(a)(2))
unanimously recommends that Dean Marks, Miguel de Anquin, Kevin Murray, Robert
Medearis, and Tommy Ross serve as directors. All of the nominees currently serve
on our Board.
Nominees
for Director
Dean R. Marks -
Chairman of the Board, President, and Chief Executive Officer
.
Mr. Marks has
served as our Chief Executive Officer and President and is the Chairman of the
Board since September 9, 2008. In 1981, he joined Servamatic Solar
Systems, a solar sales organization, and eventually served as part of its
management. During his time at Servamatic, which ended in 1984, Mr. Marks
was key to its national growth, helping to attain over 2,000 employees in over
26 markets across the U.S. From 1983 to 2001, he pioneered multiple
applications of solar energy for Trident Energy Systems, Simply Solar, and
Bright Future Technologies, LLC (“Bright Future”), a Nevada limited liability
company and the wholly owned subsidiary of Premier Power Renewable Energy, Inc.
(“Premier Power California”), a California corporation and our wholly owned
subsidiary, including thermal, radiant floor and space heating, and PV systems
for the residential, commercial, and industrial markets. He has also
served as the President and CEO of Premier Power California and Bright Future
since 2001. Mr. Marks has served on the California Solar Energy Industry
Association (CALSEIA) board and has been an active participant in the solar
industry for over 25 years. He has co-authored several preeminent papers
promoting renewable energy. Mr. Marks holds a Bachelor of Science degree from
Auburn University, with special emphasis in Environmental Science.
Miguel de
Anquin - Director, Chief Operating Officer, and Corporate Secretary
.
Mr. de Anquin has
served as our Chief Operating Officer and Corporate Secretary and sits on our
Board since September 9, 2008. He has also been the Executive Vice
President and President of World Wide Sales at Premier Power California since
2001. His career includes positions such as Director of Marketing for
Nordic Information System and Next Information System. He was a Technology
Advisor for GE and IBM, and he developed the data security auditing system for
Bank of America. Mr. de Anquin holds a Masters in Business Administration
from the University of California at Davis and a Bachelor of Science degree in
Computer Science from the Universidad de Belgrano in Buenos Aires,
Argentina.
Kevin Murray –
Director
.
Mr. Murray was elected to the board of directors on December 8,
2008. He is currently the Managing Partner of The Murray Group, a law and
consulting firm, specializing in public policy, entertainment, and media, which
he founded in 2009. Prior to that, he was a Senior Vice President at
the William Morris Agency (“WMA”), working primarily in its corporate consulting
division, a position he held since re-joining WMA in 2007 after serving twelve
years in the California State Legislature. From 1998 to 2006, Mr. Murray
was a member of the California State Senate, and from 1994 to 1998 he has a
member of the California State Assembly. Concurrent to his directorship
with the Company, Mr. Murray sits on the board of the Federal Home Loan Bank of
San Francisco and California American Water. Mr. Murray graduated from
California State University, Northridge with a degree in business administration
and accounting and holds a Masters of Business Administration from Loyola
Marymount University and a Juris Doctorate from Loyola Law School. He also
serves on the non-profit boards of The Los Angeles Urban League, Rock the Vote,
and the Beverly Hills Bar Association. He is a member of the California
State Bar and holds a California Real Estate Brokers License.
Robert Medearis –
Director
.
Mr. Medearis was
elected to the board of directors on December 8, 2008. He is currently
retired as a management consultant and professor, and has been for the past 5
years, but he sits on the board of several private companies, including Solaicx,
Inc., Geographic Expeditions, and Visual Network Design Inc., and the non-profit
organization Freedom From Hunger. Mr. Medearis graduated from Stanford
University with a degree in civil engineering and holds a Masters of Business
Administration from the Harvard University Graduate School of Business
Administration.
Tommy Ross –
Director
.
Mr.
Ross was elected to the board of directors on March 18, 2009. He is
currently the President and Chief Executive Officer of Pinnacle Strategic Group,
a business and political consulting firm. From 2003 to 2008, he was
employed at Southern California Edison, at which he served as Vice President of
Public Affairs from 2007 to 2008. Mr. Ross’ experience in the political
arena also include holding positions to which he was appointed by California
Governor Arnold Schwarzenegger, former California Governor Pete Wilson, and
former California Governor Jerry Brown. He is the former Chairman and
founding member of the California African American Political Action Committee, a
Lincoln Fellow at The Claremont Institute, and the founder, Chairman and
President of The Research and Policy Institute of California. Mr. Ross
graduated from Claremont Men’s College with a degree in political
science.
The
Board recommends a vote “FOR” each nominee.
PROPOSAL
2 - RATIFICATION OF INDEPENDENT ACCOUNTANTS
The
Board’s Audit Committee recommends Macias Gini & O’Connell, LLP (“MGO”) as
our independent registered public accountants for the fiscal year ending
December 31, 2010. MGO was our independent registered public accountants for the
fiscal years ended December 31, 2008 and 2009. The Board requests that
stockholders ratify its selection of MGO as the independent auditor for the
fiscal year ending December 31, 2010. If the stockholders do not ratify the
selection of MGO, the Board of Directors will select another firm of
accountants.
Representatives
of MGO are not expected to be present at the 2010 annual meeting.
The
Board recommends a vote “FOR” the ratification of the appointment of Macias Gini
& O’Connell, LLP as the Company’s independent registered public accounting
firm.
PROPOSAL
3 – INCREASE IN SHARES OF COMMON STOCK
RESERVED
FOR ISSUANCE UNDER 2008 EQUITY INCENTIVE PLAN
Introduction
On
December 19, 2008, our Board of Directors approved the 2008 Equity Incentive
Plan (the “Plan”). On September 1, 2010, the Board approved an
increase in the number of shares of common stock authorized and reserved for
issuance under the Plan by 2,000,000 shares, from 2,951,875 shares to 4,951,875
shares. The purpose of the Plan is encourage certain officers,
employees, directors, and consultants to acquire and hold stock in the Company
as an added incentive to remain with the Company and increase their efforts in
promoting our interests, and to enable the Company to attract and retain capable
individuals.
The Plan
is administered by our Board, and the Board establishes certain terms of option
awards, including the exercise price and duration, in the applicable option
agreement. The Plan allows for adjustments for changes in common stock and
certain other events, including, but not limited to, any stock split, reverse
stock split, stock dividend, recapitalization, combination of shares,
reclassification of shares, spin-off, any distribution to holders of common
stock other than a normal cash dividend, and liquidation or
dissolution.
Federal Tax
Consequences
The
following brief summary of the effect of federal income taxation upon the
recipients and us with respect to the shares under the Plan does not purport to
be complete, and does not discuss the tax consequences of a recipient's death or
the income tax laws of any state or foreign country in which the recipient may
reside.
Tax
Treatment to the Recipients
The
common stock is not qualified under Section 401(a) of the Internal Revenue Code.
The recipients therefore, will be required for federal income tax purposes to
recognize compensation during the taxable year of issuance unless the shares are
subject to a substantial risk of forfeiture. Accordingly, absent a specific
contractual provision to the contrary, the recipients will receive compensation
taxable at ordinary rates equal to the fair market value of the shares on the
date of receipt since there will be no substantial risk of forfeiture or other
restrictions on transfer. If, however, the recipients receive shares of common
stock pursuant to the exercise of an option or options at an exercise price
below the fair market value of the shares on the date of exercise, the
difference between the exercise price and the fair market value of the stock on
the date of exercise will be deemed compensation for federal income tax
purposes. The recipients are urged to consult each of their tax advisors on this
matter. Further, if any recipient is an "affiliate," Section 16(b) of the
Exchange Act is applicable and will affect the issue of taxation.
Tax
Treatment to the Company
The
amount of income recognized by any recipient hereunder in accordance with the
foregoing discussion will be a tax-deductible expense by the Company for federal
income tax purposes in the taxable year of the Company during which the
recipient recognizes income.
Incorporation
by Reference
.
The
foregoing is only a summary of the Plan, reflecting the proposed amendment
described in this Proposal 3, and is qualified in its entirety by reference to
its full text, as proposed to be amended, a copy of which is attached hereto as
Annex
A
.
The
Board recommends a vote “FOR” the increase in the number of shares of common
stock reserved for issuance under our 2008 Equity Incentive Plan by 2,000,000
shares, from 2,951,875 shares to 4,951,875 shares.
PROPOSAL
4 – AMENDMENT TO CERTIFICATE OF INCORPORATION
TO
EFFECT A REVERSE STOCK SPLIT
Introduction
On
September 1, 2010, our Board of Directors approved an amendment to our
Certificate of Incorporation to effect a reverse stock split of the issued and
outstanding shares of our common stock up to a ratio of one-for-five (the
“Split”), with the final ratio to be decided upon at the sole discretion of our
management and to be approved by the Board. If management decides to
implement the Split, it will become effective upon the filing of the amendment
to our Certificate of Incorporation, as amended, with the Secretary of State of
the State of Delaware. If the Split is implemented, the number of
issued and outstanding shares of common stock would be reduced in accordance
with the exchange ratio selected by management. The total number of authorized
shares of common stock would remain unchanged at its current total of five
hundred million (500,000,000). The form of amendment to our
Certificate of Incorporation to effect the Split is attached as
Annex B
hereto.
Reasons for the Reverse
Stock Split
The
Board’s primary objective in proposing the Split is to increase the per share
trading value of our common stock in order to seek the listing of the common
stock on The NASDAQ Stock Market, the NYSE Amex, or such other stock exchange
determined by our Board. Generally speaking, the minimum daily
closing bid price per share of common stock must be $4.00 or greater for initial
listing on The NASDAQ Stock Market and $2.00 or greater for the NYSE
Amex. The believes that an increase in the trading price of the our
common stock and listing on The NASDAQ Stock Market or NYSE Amex, or alternative
exchange, will make the Company a more attractive
investment. Management intends to effect the proposed Split, if at
all, only if it believes that a decrease in the number of shares outstanding is
likely to improve the trading market for the common stock and the likelihood of
the common stock’s listing on The NASDAQ Stock Market, NYSE Amex, or alternative
exchange. If the trading price of our common stock increases without
the Split, the Split may be deemed unnecessary. Even if we effect the
Split, however, there can be no assurance of a proportional or relative increase
in the per share trading price of our common stock.
The
purpose of seeking stockholder approval of an exchange ratio of not more than
one-for-five, rather than a fixed exchange ratio, is to provide the Company with
the flexibility to achieve the desired results of the Split. If the
stockholders approve this proposal, management and the Board would effect a
Split only upon the determination that a Split would be in the best interests of
the Company at that time. No further action on the part of
stockholders would be required to either implement or abandon the
Split. Management and the Board reserve the right to elect not to
proceed with the Split if it determines that this proposal is no longer in the
best interests of the Company.
The
closing sale price of our common stock on the Over-the-Counter Bulletin Board on
September 29, 2010 was $1.33 per share.
Material Effects of Proposed
Reverse Stock Split
The Board
believes that the Split will increase the price level of our common stock. The
Board cannot predict, however, the effect of the Split upon the market price for
our common stock, and the history of similar reverse stock splits for companies
in like circumstances is varied. The market price per share of common
stock after the Split may not rise in proportion to the reduction in the number
of shares of common stock issued and outstanding resulting from the Split, which
would reduce the market capitalization of the Company. The market
price of the common stock may also reflect our performance and other factors,
the effect of which the Board cannot predict.
The Split
will affect all stockholders of the Company uniformly and will not affect any
stockholder’s percentage ownership interests or proportionate voting power,
except to the extent that the Split results in any of stockholders owning a
fractional share. In lieu of issuing fractional shares, the Company
will round up the number of shares of common stock to be received by the
stockholder. The rounding up of fractional shares will not have a
material effect of any stockholder’s percentage ownership interest or
proportionate voting power.
The
principal effects of the Split will be that (i) the number of shares of
common stock issued and outstanding will be reduced from 29,099,750 shares of
common stock as of September 29, 2010 up to 5,819,950 shares of common stock,
depending on the exact split ratio chosen by management and the Board, and
subject to immaterial differences because fractional shares will not be issued
and the number of shares of a holder will be rounded up, (ii) all
outstanding options and warrants entitling the holders thereof to purchase
shares of common stock will enable such holders to purchase, upon exercise of
their options or warrants, up to one-fifth of the number of shares of common
stock which such holders would have been able to purchase upon exercise of their
options or warrants immediately preceding the Split, at an exercise price equal
to up to five times the exercise price specified before the Split, resulting in
the same aggregate price being required to be paid upon exercise thereof
immediately preceding the Split, and (iii) the number of shares reserved
for issuance pursuant to our Plan will be reduced to up to one-fifth of the
number of shares included in the Plan.
Procedure for Effecting
Reverse Split and Exchange of Stock Certificates
If the
Split is approved by our stockholders, and management and the Board determines
it is in the best interests of the Company to effect the Split, the Split would
become effective at such time as the amendment to our Certificate of
Incorporation is filed with the Secretary of State of the State of Delaware.
Upon the filing of the amendment, all of our existing common stock will be
converted into new common stock as set forth in the amendment.
As soon
as practicable after the effective date of the Split, stockholders will be
notified that the Split has been effected. The notice will contain
instructions for the surrender of old certificates representing pre-Split shares
to Computershare, our transfer agent, in exchange for new certificates
representing the post-Split shares. Until so surrendered, each
current certificate representing pre-Split shares will be deemed for all
corporate purposes after the effective time of the amendment implementing the
Split to evidence ownership of shares in the appropriately reduced whole number
of shares of our common stock. Stockholders should not destroy any
stock certificates and should not send in their old stock certificates to
Computershare until they have received the notice.
Generally,
stockholders whose shares are held by their broker do not need to submit old
share certificates for exchange. These shares will automatically
reflect the new quantity of shares based on the Split. If you hold
your shares with such a bank, broker, or other nominee and if you have questions
in this regard, you are encouraged to contact your nominee.
Management
and Board Discretion to Implement the Reverse Stock
Split
If the
proposed amendment is approved by our stockholders, it will be implemented, if
at all, only upon a determination by our management and our Board of Directors
that a reverse stock split, at a ratio determined by management and the Board up
to one-for-five, is in the best interests of our stockholders. The
determination as to whether such a split will be implemented and, if so, the
ratio, will be based upon several factors, including existing and expected
marketability and liquidity of our common stock, prevailing market conditions,
and the likely effect on the market price of our common
stock.
Fractional
Shares
We will
not issue fractional certificates for post-Split shares in connection with the
Split. In lieu of issuing fractional shares, we will round up the
number of shares to be received by the holder to the next whole number of
shares.
No Dissenter’s
Rights
Under the
Delaware General Corporation Law, stockholders will not be entitled to
dissenter’s rights with respect to the proposed amendment to our Certificate of
Incorporation to effect the Split, and we do not intend to independently provide
stockholders with any such right.
Certain Material U.S.
Federal Income Tax Consequences of the Reverse Stock Split
The
following is a summary of certain U.S. federal income tax consequences relating
to the Split as of the date hereof. Except where noted, this summary
deals only with a stockholder who is a U.S. Holder and holds common stock as a
capital asset. This summary does not address the tax considerations
arising under the laws of any foreign, state, or local
jurisdiction.
For
purposes of this summary, a “U.S. holder” means a beneficial owner of common
stock who is any of the following for U.S. federal income tax purposes:
(i) a citizen or resident of the United States, (ii) a corporation
created or organized in or under the laws of the United States, any state
thereof, or the District of Columbia, (iii) an estate the income of which
is subject to U.S. federal income taxation regardless of its source, or
(iv) a trust if (1) its administration is subject to the primary
supervision of a court within the United States and one or more U.S. persons
have the authority to control all of its substantial decisions, or (2) it
has a valid election in effect under applicable U.S. Treasury regulations to be
treated as a U.S. person. A non-U.S. holder of common stock is a
stockholder who is not a U.S. holder.
This
summary is based upon provisions of the Internal Revenue Code of 1986, as
amended (the “Code”), and regulations, rulings, and judicial decisions as of the
date hereof. Those authorities may be changed, perhaps retroactively,
so as to result in U.S. federal income tax considerations different from those
summarized below. This summary does not represent a detailed
description of the U.S. federal income tax consequences to a stockholder in
light of his, her or its particular circumstances. In addition, it
does not purport to be complete and does not address all aspects of federal
income taxation that may be relevant to stockholders in light of their
particular circumstances or to stockholders that may be subject to special tax
rules, including, without limitation: (1) stockholders subject to the
alternative minimum tax; (2) banks, insurance companies, or other financial
institutions; (3) tax-exempt organizations; (4) dealers in securities
or commodities; (5) regulated investment companies or real estate
investment trusts; (6) traders in securities that elect to use a
mark-to-market method of accounting for their securities holdings;
(7) foreign stockholders or U.S. stockholders whose “functional
currency” is not the U.S. dollar; (8) persons holding common stock as
a position in a hedging transaction, “straddle,” “conversion transaction” or
other risk reduction transaction; (9) persons who acquire shares of common
stock in connection with employment or other performance of services;
(10) dealers and other stockholders that do not own their shares of common
stock as capital assets; (11) U.S. expatriates, (12) foreign
entities; or (13) non-resident alien individuals. Moreover, this
description does not address the U.S. federal estate and gift tax, alternative
minimum tax, or other tax consequences of the Split.
Each
stockholder should consult his, her or its own tax advisers concerning the
particular U.S. federal tax consequences of the Split, as well as the
consequences arising under the laws of any other taxing jurisdiction, including
any foreign, state, or local income tax consequences.
To
ensure compliance with Treasury Department Circular 230, each holder of common
stock is hereby notified that: (a) any discussion of U.S. federal tax
issues in this proxy statement is not intended or written to be used, and cannot
be used, by such holder for the purpose of avoiding penalties that may be
imposed on such holder under the Code; (b) any such discussion has been
included by the Company in furtherance of the Split on the terms described
herein; and (c) each such holder should seek advice based on its particular
circumstances from an independent tax advisor.
Generally,
a reverse stock split will not result in the recognition of gain or loss by a
U.S. holder for U.S. federal income tax purposes. We believe that the
Split will qualify as a “reorganization” under Section 368(a)(1)(E) of the
Code. Accordingly, provided that the fair market value of the
post-Split shares is equal to the fair market value of the pre-Split shares
surrendered in exchange therefor:
|
|
·
|
A
stockholder should not recognize any gain or loss in the
Split.
|
|
|
·
|
A
stockholder’s aggregate tax basis in its shares of post-Split shares
should be equal to its aggregate tax basis in the pre-Split shares
exchanged therefor.
|
|
|
·
|
A
stockholder’s holding period for the post-Split shares should include the
period during which the pre-Split shares surrendered in exchange therefor
were held.
|
No
opinion of counsel or ruling from the Internal Revenue Service has been or will
be sought, and this discussion is not binding on the Internal Revenue
Service.
The
Board recommends a vote “FOR” the amendment to our Certificate of Incorporation
to effect a reverse split of our issued and outstanding shares of common stock
of not more than one-for five, with the final split ratio to be decided upon at
the sole discretion of our management and approved by our Board.
THE
BOARD OF DIRECTORS AND ITS COMMITTEES
Our Board
of Directors currently consists of five members. Our bylaws provide that our
directors will hold office until the annual meeting of stockholders or until
their successors have been elected and qualified. Our Board of Directors is
responsible for the business and affairs of the Company and considers various
matters that require its approval. During the fiscal year ended December 31,
2009, the Board met and/or took action by unanimous written consent 16
times.
There are
two committees of the Board of Directors — the Audit Committee and the
Compensation Committee. The Board created these committees and adopted charters
for both committees on December 19, 2008. Copies of these charters are attached
to our 2009 proxy statement provided to stockholders. Committee assignments are
re-evaluated annually. The Board has determined that, in its judgment as of the
date of this Proxy Statement, Mr. Murray, Mr. Medearis, and Mr. Ross are
independent directors within the meaning of NASDAQ Marketplace Rule 5605(a)(2).
Accordingly, all of the members of the Audit Committee and Compensation
Committee are independent directors.
Attendance
of Directors at Stockholder Meetings
All of
our directors are expected to attend the 2010 annual stockholder
meeting.
Audit
Committee
The Audit
Committee was established in accordance with Section 3(a)(58)(A) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Audit
Committee assists Board oversight of (i) the integrity of the Company’s
financial statements, (ii) the Company’s compliance with legal and regulatory
requirements, (iii) the independent auditor’s qualifications and independence,
and (iv) the performance of the Company’s internal audit function and
independent auditor, and prepares the report that the Securities and Exchange
Commission requires to be included in our annual proxy statement. The current
members of the Audit Committee are Robert Medearis, Kevin Murray, and Tommy
Ross, and Mr. Medearis serves as the Chairman. During the fiscal year ended
December 31, 2009, the Audit Committee met and/or took action by unanimous
written consent 6 times. The Board has determined that Mr. Medearis is an “audit
committee financial expert” within the meaning of Item 407(d)(5)(ii) of
Regulation S-K promulgated by the SEC.
Compensation
Committee
The
Compensation Committee is responsible for overseeing and, as appropriate, making
recommendations to the Board regarding the annual salaries and other
compensation of our executive officers and general employees and other policies,
and for providing assistance and recommendations with respect to the
compensation policies and practices of the Company. The current members of the
Compensation Committee are Kevin Murray, Robert Medearis, and Tommy Ross, and
Mr. Murray serves as the Chairman. During the fiscal year ended December 31,
2009, the Compensation Committee met and/or took action by unanimous written
consent 3 times.
The
Compensation Committee:
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·
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on an annual basis, without the
participation of the Chief Executive Officer, (i) reviews and approves the
corporate goals and objectives with respect to compensation for the Chief
Executive Officer, (ii) evaluates the Chief Executive Officer's
performance in light of the established goals and objectives, and (iii)
sets the Chief Executive Officer's annual compensation, including salary,
bonus, incentive, and equity
compensation.
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·
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on an annual basis, reviews and
approves (i) the evaluation process and compensation structure for the
Company’s other senior executives, (ii) the Chief Executive Officer’s
evaluation of the performance and his recommendations concerning the
annual compensation, including salary, bonus, incentive, and equity
compensation, of other company executive officers, (iii) the recruitment,
retention, and severance programs for the Company’s senior executives, and
(iv) the compensation structure for the Board of
Directors.
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·
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as appropriate, makes
recommendations to the Board with respect to executive
incentive-compensation plans and equity-based
plans.
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·
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assists the Board in developing
and evaluating potential candidates for senior officer positions,
including the Chief Executive Officer, and oversee the development of
executive succession plans.
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·
|
reviews an annual report on
executive compensation, if required, for inclusion in the Company’s proxy
statement.
|
The
Compensation Committee has the authority to obtain advice and seek assistance
from internal and external legal, accounting, and other advisors such as
consultants and shall determine the extent of funding necessary for the payment
of compensation to such persons.
Director
Nominations Process
We do not
have a standing nominating committee as the Board adopted a director nominations
process (“Nominations Process”), under which the selection and recommendation of
director nominees are made by a majority of our independent directors (“Majority
Independent Directors), which consists of Kevin Murray, Robert Medearis, and
Tommy Ross. The Board adopted the Nominations Process on February 13,
2009, a copy of which is attached to our 2009 proxy statement delivered to
stockholders. The Nominations Process sets forth the following
process for identifying and evaluating nominees for director:
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·
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The Majority Independent
Directors first determine the incumbent directors whose terms expire at
the upcoming meeting and who wish to continue their service on the
Board.
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○
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The Majority Independent
Directors evaluate the qualifications and performance of the incumbent
directors who desire to continue their service. In particular, as to
each such incumbent director, the Majority Independent Directors (i)
consider if the director continues to satisfy the minimum qualifications
for director candidates adopted by the Board; (ii) review the assessments
of the performance of the director during the preceding term; and (iii)
consider any special facts and circumstances that may lead the Board to
believe a director should not be
re-nominated.
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○
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If the Majority Independent
Directors determine that an incumbent director consenting to re-nomination
continues to be qualified and has satisfactorily performed his or her
duties as director during the preceding term, and there exist no reasons,
including considerations relating to the composition and functional needs
of the Board as a whole, why in the Majority Independent Directors’ view
the incumbent should not be re-nominated, the Majority Independent
Directors, absent special circumstances, proposes the incumbent director
for re-election.
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·
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The Majority Independent
Directors identify and evaluate new candidates for election to the Board
where there is no qualified and available incumbent, including for the
purpose of filling vacancies arising by reason of the resignation,
retirement, removal, death, or disability of an incumbent director or a
decision of the directors to expand the size of the
Board.
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○
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The Majority Independent
Directors solicit recommendations for nominees from persons that they
believe are likely to be familiar with qualified candidates. These persons
may include members of the Board and management of the Company. The
Majority Independent Directors may also determine to engage a professional
search firm to assist in identifying qualified
candidates.
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○
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As to each recommended candidate
that the Majority Independent Directors believe merit consideration, they
(i) cause to be assembled information concerning the background and
qualifications of the candidate, including information concerning the
candidate required to be disclosed in the Company’s proxy statement under
the rules of the SEC and any relationship between the candidate and the
person or persons recommending the candidate; (ii) determine if the
candidate satisfies the minimum qualifications required of candidates for
election as director; (iii) consider the contribution that the candidate
can be expected to make to the overall functioning of the Board; and (iv)
considers the extent to which the membership of the candidate on the Board
will promote diversity among the
directors.
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○
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The Majority Independent
Directors may, in their discretion, solicit the views of other members of
the Board regarding the qualifications and suitability of candidates to be
nominated as directors.
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○
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In making their selection, the
Majority Independent Directors may consider director candidates
recommended by stockholders. In addition to the criteria for evaluation of
other candidates to the Board (as listed above), they may consider the
size and duration of the interest of the recommending stockholder or
stockholder group in the equity of the Company. They may also consider the
extent to which the recommending stockholder intends to continue holding
its interest in the Company, including, in the case of nominees
recommended for election at an annual meeting of stockholders, whether the
recommending stockholder intends to continue holding its interest at least
through the time of such annual
meeting.
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Any
stockholder filing a written notice of nomination for director must describe
various matters regarding the nominee and the stockholder, including such
information as name, address, occupation, and shares held. For further
details on submitting stockholder proposals for director candidates, see
“Stockholder Proposals” below.
Stockholder
Communications with Non-Management Members of the Board
The Board
of Directors has not adopted a formal process for stockholders to send
communications to the independent members of the Board. Stockholders may,
however, communicate with the non-management members of the Board by sending
correspondence addressed to a non-management member at the address of our
principal executive office.
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
MGO
served as our independent registered public accounting firm for our fiscal year
ended December 31, 2009 and a portion of our fiscal year ended December 31,
2008, and Li & Company, PC (“Li & Company”) served as our independent
registered public accounting firm for a portion of our fiscal year ended
December 31, 2008. The following table shows the fees that were
billed for audit and other services provided by MGO and Li & Company during
the 2009 and 2008 year:
|
|
Fiscal Year Ended December 31,
|
|
|
|
2009
|
|
2008
|
|
|
|
MGO
|
|
MGO
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|
Li &
Company
|
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Total
|
|
|
Audit
Fees (1)
|
|
$
|
200,266
|
|
|
$
|
185,000
|
|
|
$
|
11,500
|
|
|
$
|
196,500
|
|
|
Audit-Related
Fees (2)
|
|
|
156,456
|
|
|
|
214,000
|
|
|
|
―
|
|
|
|
214,000
|
|
|
Tax
Fees (3)
|
|
|
―
|
|
|
|
―
|
|
|
|
―
|
|
|
|
―
|
|
|
All
Other Fees (4)
|
|
|
―
|
|
|
|
―
|
|
|
|
―
|
|
|
|
―
|
|
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Total
|
|
$
|
356,722
|
|
|
$
|
399,000
|
|
|
$
|
11,500
|
|
|
$
|
410,500
|
|
|
|
(1)
|
Audit Fees
– This
category includes the audit of our annual financial statements, review of
financial statements included in our Quarterly Reports on Form 10-Q, and
services that are normally provided by independent auditors in connection
with the engagement for fiscal years. This category also
includes advice on audit and accounting matters that arose during, or as a
result of, the audit or the review of interim financial
statements.
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(2)
|
Audit-Related Fees
–
This category consists of assurance and related services by our
independent auditors that are reasonably related to the performance of the
audit or review of our financial statements and are not reported above
under "Audit Fees." The services for the fees disclosed under
this category include consultation regarding our correspondence with the
SEC.
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(3)
|
Tax Fees
– This category
consists of professional services rendered by our independent auditors for
tax compliance and tax advice. The services for the fees
disclosed under this category include tax return preparation and technical
tax advice.
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(4)
|
All Other Fees
– This
category consists of fees for other miscellaneous
items.
|
Pre-Approval
Policies and Procedures of the Audit Committee
Our Audit
Committee approves the engagement of our independent auditors and is also
required to pre-approve all audit and non-audit expenses. During the
fiscal year ended December 31, 2009, the Audit Committee approved 100% of all
audit and non-audit expenses.
AUDIT
COMMITTEE REPORT
The Audit
Committee oversees the Company’s financial reporting process on behalf of the
Board of Directors. The Audit Committee operates under a written charter
approved by the Board. The charter provides, among other things, that the Audit
Committee has full authority to engage the independent auditor. The Audit
Committee has, with regards to the following oversight responsibilities with
respect to the audited financial statements included in our Annual Report on
Form 10-K for the fiscal year ended December 31, 2009:
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·
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reviewed
and discussed the audited financial statements with
management;
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·
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discussed
with the independent auditors the matters required to be discussed by the
statement on Auditing Standards No. 61, as amended (AICPA, Professional
Standards, Vol. 1, AU section 380), as adopted by the Public Company
Accounting Oversight Board;
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·
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received
the written disclosures and the letter from the independent accountants
required by Independence Standards Board Standard No. 1 (Independence
Standards Board Standard No. 1, Independence Discussions with Audit
Committees), as adopted by the Public Company Accounting Oversight Board,
and discussed with the independent accountant the independent accountant’s
independence; and
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·
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based
on the review and discussions referred to above, recommended to the Board
that the audited financial statements be included in the Company’s Annual
Report on Form 10-K.
|
Respectfully
submitted,
The
Audit Committee of the Board of Directors
|
Robert
Medearis, Chairman of the Audit Committee
|
|
|
DIRECTORS
AND EXECUTIVE OFFICERS
The
following table identifies our current executive officers and directors, their
respective offices and positions, and their respective dates of election or
appointment:
|
Name
|
|
Position Held
|
|
Date of Election or
Appointment
|
|
Dean
R. Marks
|
|
Chairman
of the Board, President, and Chief Executive Officer
|
|
September
9, 2008
|
|
Miguel
de Anquin
|
|
Chief
Operating Officer, Corporate Secretary, and Director
|
|
September
9, 2008
|
|
Frank
J. Sansone
|
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Chief
Financial Officer
|
|
November
5, 2009
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|
Kevin
Murray
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Director
|
|
December
8, 2008
|
|
Robert
Medearis
|
|
Director
|
|
December
8, 2008
|
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Tommy
Ross
|
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Director
|
|
March
18, 2009
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Arrangements
Involving Directors or Executive Officers
There is
no arrangement or understanding between any of our directors or executive
officers and any other person pursuant to which any director or officer was or
is to be selected as a director or officer, and there is no arrangement, plan,
or understanding as to whether non-management stockholders will exercise their
voting rights to continue to elect the current board of directors. There are
also no arrangements, agreements, or understandings to our knowledge between
non-management stockholders that may directly or indirectly participate in or
influence the management of our affairs.
Family
Relationships
There are
no family relationships among our directors and executive officers.
Business
Experience
The
business experience of our directors, including all executive officers serving
as directors, is provided above. The experience of our executive officer who is
not also a director is described below.
Frank J. Sansone
- Chief Financial Officer.
Mr. Sansone was appointed Chief
Financial Officer of the Company on November 5, 2009. He has over 16 years
of finance experience. Prior to his appointment with the Company, Mr.
Sansone was the Chief Financial Officer and a member of the Board of Directors
of LiveOffice LLC, a provider of software-as-a service email archiving and
Hosted Exchange 2007 solutions, from 2008 to 2009. From 2002 to 2008, he
was the Chief Financial Officer of Guidance Software, Inc., a NASDAQ-listed
company with operations in digital investigative solutions. Mr. Sansone
graduated from the University of La Verne with a bachelor’s degree in
accounting. He is a member of the American Institute of Certified Public
Accountants and the California Society of Certified Public Accountants.
Mr. Sansone is currently a member of the Board of Directors of Ditech Networks,
Inc., a NASDAQ-listed company, and two other private companies.
Legal
Proceedings
None of
our directors or executive officers has, during the past ten years:
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Had
any petition under the federal bankruptcy laws or any state insolvency law
filed by or against, or had a receiver, fiscal agent, or similar officer
appointed by a court for the business or property of such person, or any
partnership in which he was a general partner at or within two years
before the time of such filing, or any corporation or business association
of which he was an executive officer at or within two years before the
time of such filing;
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Been
convicted in a criminal proceeding or a named subject of a pending
criminal proceeding (excluding traffic violations and other minor
offenses);
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Been
the subject of any order, judgment, or decree, not subsequently reversed,
suspended, or vacated, of any court of competent jurisdiction, permanently
or temporarily enjoining him from, or otherwise limiting, the following
activities:
|
|
|
(i)
|
Acting
as a futures commission merchant, introducing broker, commodity trading
advisor, commodity pool operator, floor broker, leverage transaction
merchant, any other person regulated by the Commodity Futures Trading
Commission, or an associated person of any of the foregoing, or as an
investment adviser, underwriter, broker or dealer in securities, or as an
affiliated person, director or employee of any investment company, bank,
savings and loan association or insurance company, or engaging in or
continuing any conduct or practice in connection with such
activity;
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(ii)
|
Engaging
in any type of business practice;
or
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(iii)
|
Engaging
in any activity in connection with the purchase or sale of any security or
commodity or in connection with any violation of federal or state
securities laws or federal commodities
laws;
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Been
the subject of any order, judgment, or decree, not subsequently reversed,
suspended, or vacated, of any federal or state authority barring,
suspending, or otherwise limiting for more than 60 days the right of such
person to engage in any activity described in (i) above, or to be
associated with persons engaged in any such
activity;
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|
·
|
Been
found by a court of competent jurisdiction in a civil action or by the SEC
to have violated any federal or state securities law, where the judgment
in such civil action or finding by the SEC has not been subsequently
reversed, suspended, or vacated; or
|
|
|
·
|
Been
found by a court of competent jurisdiction in a civil action or by the
Commodity Futures Trading Commission to have violated any federal
commodities law, where the judgment in such civil action or finding by the
Commodity Futures Trading Commission has not been subsequently reversed,
suspended, or vacated;
|
|
|
·
|
Been
the subject of, or a party to, any federal or state judicial or
administrative order, judgment, decree, or finding, not subsequently
reversed, suspended or vacated, relating to an alleged violation
of:
|
|
|
(i)
|
Any
federal or state securities or commodities law or regulation;
or
|
|
|
(ii)
|
Any
law or regulation respecting financial institutions or insurance companies
including, but not limited to, a temporary or permanent injunction, order
of disgorgement or restitution, civil money penalty or temporary or
permanent cease-and-desist order, or removal or prohibition order;
or
|
|
|
(iii)
|
Any
law or regulation prohibiting mail or wire fraud or fraud in connection
with any business entity; or
|
|
|
·
|
Been
the subject of, or a party to, any sanction or order, not subsequently
reversed, suspended or vacated, of any self-regulatory organization (as
defined in Section 3(a)(26) of the Securities Exchange Act of 1934), any
registered entity (as defined in Section 1(a)(29) of the Commodity
Exchange Act), or any equivalent exchange, association, entity or
organization that has disciplinary authority over its members or persons
associated with a member
|
Section
16(a) Beneficial Ownership Reporting Compliance
We are
not subject to reporting obligations under Section 16(a) of the Exchange Act as
we are registered under Section 15(d) of the Exchange Act rather than Section
12(b) or Section 12(g).
Director
Independence
Our board
of directors has determined that it currently has 3 members who
qualify as "independent" as the term is used in Item 407 of Regulation S-K as
promulgated by the SEC and NASDAQ’s Marketplace Rule 5605(a)(2). The
independent directors are Kevin Murray, Robert Medearis, and Tommy
Ross. All of the members of our Audit Committee and Compensation
Committee qualify as independent.
Code
of Ethics
We have
adopted a code of ethics that applies to all directors, officers, and employees,
including our Chief Executive Officer and Chief Financial Officer. We will
provide to any person, without charge and upon request, a copy of the code of
ethics. Any such request must be made in writing to the address of our principal
executive office, Attn: Corporate Secretary.
Diversity
While the
Company does not have a policy regarding diversity of its board members,
diversity is one of a number of factors that is typically taken into account in
identifying board nominees. We believe that we have a very diverse
board of directors in terms of previous business experience and educational
and personal background of the members of our board.
Indemnification
Our
certificate of incorporation provides that we must indemnify our officers,
directors, and certain others to the fullest extent permitted by the General
Corporation Law of Delaware (“DGCL”). Section 145 of the DGCL provides that we,
as a Delaware corporation, are empowered, subject to certain procedures and
limitations, to indemnify any person against expenses (including attorney’s
fees), judgments, fines, and amounts paid in settlement actually and reasonably
incurred by him in connection with any threatened, pending, or completed action,
suit, or proceeding (including a derivative action) in which such person is made
a party by reason of his being or having been a director, officer, employee, or
agent of the Company (each, an “Indemnitee”); provided that the right of an
Indemnitee to receive indemnification is subject to the following limitations:
(i) an Indemnitee is not entitled to indemnification unless he acted in good
faith and in a manner that he reasonably believed to be in or not opposed to the
best interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe such conduct was unlawful, and
(ii) in the case of a derivative action, an Indemnitee is not entitled to
indemnification in the event that he is judged to be liable to the Company
(unless and only to the extent that the court determines that the Indemnitee is
fairly and reasonably entitled to indemnification for such expenses as the court
deems proper). The statute provides that indemnification pursuant to our
provisions is not exclusive of other rights of indemnification to which a person
may be entitled under any bylaw, agreement, vote of stockholders, or
disinterested directors, or otherwise.
Pursuant
to Section 145 of the DGCL, we have purchased a $5,000,000 director’s and
officer’s liability insurance policy on behalf of our present and former
directors and officers against any liability asserted against or incurred by
them in such capacity or arising out of their status as such.
In
accordance with Section 102(b)(7) of the DGCL, our certificate of incorporation
eliminates personal liability of our directors to the Company or our
stockholders for monetary damages for breach of their fiduciary duties as a
director, with certain limited exceptions set forth in Section 102(b) (7) of the
DGCL.
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers, or persons controlling the Company pursuant to
the foregoing provisions, or otherwise, we have been advised that in the opinion
of the SEC such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
DIRECTOR
AND EXECUTIVE COMPENSATION
Summary
of Compensation
The
following summary compensation table indicates the cash and non-cash
compensation earned during the fiscal years ended December 31, 2009, 2008,
and 2007 by (i) our Chief Executive Officer (principal executive officer), (ii)
our Chief Financial Officer (principal financial officer), (iii) the three most
highly compensated executive officers other than our CEO and CFO who were
serving as executive officers at the end of our last completed fiscal year,
whose total compensation exceeded $100,000 during such fiscal year ends, and
(iv) up to two additional individuals for whom disclosure would have been
provided but for the fact that the individual was not serving as an executive
officer at the end of our last completed fiscal year, whose total compensation
exceeded $100,000 during such fiscal year ends.
Summary
Compensation Table
|
Name and Principal Position
|
|
Year
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
Awards
( $)(1)
|
|
|
Option
Awards
($)(2)
|
|
|
Non-
Equity
Incentive
Plan
Compensation
($)
|
|
|
Non-
qualified
Deferred
Compensation
Earnings
($)
|
|
|
All Other
Compensation
( $)
|
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dean
R. Marks,
|
|
2009
|
|
$
|
184,231
|
(3)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
24,104
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
21,005
|
(4)
|
|
$
|
229,679
|
|
|
Chairman
of the Board,
|
|
2008
|
|
$
|
158,077
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
158,077
|
|
|
President,
and CEO
|
|
2007
|
|
$
|
159,766
|
|
|
$
|
1,344
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,959
|
(5)
|
|
$
|
167,069
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Miguel
de Anquin,
|
|
2009
|
|
$
|
184,231
|
(3)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
24,104
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
21,005
|
(4)
|
|
$
|
229,679
|
|
|
COO,
former CFO,
|
|
2008
|
|
$
|
153,462
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
153,462
|
|
|
Secretary,
and Director
|
|
2007
|
|
$
|
125,280
|
|
|
$
|
1,344
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,918
|
(6)
|
|
$
|
132,542
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frank
J. Sansone,
|
|
2009
|
|
$
|
24,231
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9,768
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
33,999
|
|
|
CFO
(7)
|
|
2008
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
2007
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Teresa
Kelley
|
|
2009
|
|
$
|
130,931
|
|
|
$
|
—
|
|
|
$
|
740
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
131,671
|
|
|
former
CFO (8)
|
|
2008
|
|
$
|
25,962
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
25,962
|
|
|
|
|
2007
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
(1)
|
The amounts shown in this column
indicate the grant date fair value of stock awards granted in the subject
year computed in accordance with FASB ASC Topic 718 (formerly FAS
123R).
|
|
(2)
|
The amounts shown in this column
indicate the grant date fair value of option awards granted in the subject
year computed in accordance with FASB ASC Topic 718 (formerly FAS
123R).
|
|
(3)
|
The amount shown includes $4,231
that was earned during the 2009 fiscal year as a result of an extra pay
period during the year.
|
|
(4)
|
The amount shown represents a
$12,560 pay-out for sick leave, an $8,400 automobile allowance, and $45 in
life insurance premiums paid for the named executive
officer.
|
|
(5)
|
The amount shown represents
compensation earned under the 401(k)
Plan.
|
|
(6)
|
The amount shown represents the
following: (a) $67 as the dollar amount recognized for life insurance
premiums paid for the named executive officer, and (b) $5,851 as
compensation earned under the 401(k)
Plan.
|
|
(7)
|
Mr. Sansone was appointed as our
Chief Financial Officer on November 5,
2009.
|
|
(8)
|
Ms. Kelley was our Chief
Financial Officer from October 24, 2008 to her resignation on October 30,
2009.
|
Grants
of Plan-Based Awards
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
Exercise
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Awards:
|
|
|
or Base
|
|
|
Grant Date
|
|
|
|
|
|
|
Estimated Future Payouts Under
|
|
|
Estimated Future Payouts Under
|
|
|
Number
|
|
|
Number of
|
|
|
Price of
|
|
|
Fair Value
|
|
|
|
|
|
|
Non-Equity Incentive Plan Awards
|
|
|
Equity Incentive Plan Awards
|
|
|
of Shares
|
|
|
Securities
|
|
|
Option
|
|
|
of Stock
|
|
|
|
|
Grant
|
|
Thres-
|
|
|
Target
|
|
|
Max-
|
|
|
Thres-
|
|
|
Target
|
|
|
Max-
|
|
|
of Stock
|
|
|
Underlying
|
|
|
Awards
|
|
|
and Option
|
|
|
Name
|
|
Date
|
|
hold ($)
|
|
|
($)
|
|
|
imum ($)
|
|
|
hold ($)
|
|
|
($)
|
|
|
imum ($)
|
|
|
or
Units (#)
|
|
|
Options (#)
|
|
|
($/Sh)
|
|
|
Awards (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dean
Marks (2)
|
|
1/9/09
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
|
―
|
|
|
|
83,932
|
|
|
$
|
4.675
|
|
|
$
|
24,104
|
|
|
Miguel
de Anquin(2)
|
|
1/9/09
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
|
―
|
|
|
|
83,932
|
|
|
$
|
4.675
|
|
|
$
|
24,104
|
|
|
Teresa
Kelley (3)(4)
|
|
1/9/09
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
|
―
|
|
|
|
100,000
|
|
|
$
|
4.25
|
|
|
$
|
36,399
|
|
|
Teresa
Kelley (3)(5)
|
|
1/9/09
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
|
―
|
|
|
|
250,000
|
|
|
$
|
4.25
|
|
|
$
|
60,706
|
|
|
Teresa
Kelley (3)
|
|
8/28/09
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
|
200
|
|
|
|
―
|
|
|
$
|
―
|
|
|
$
|
740
|
|
|
Frank
Sansone (4)
|
|
11/5/09
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
|
―
|
|
|
|
250,000
|
|
|
$
|
2.90
|
|
|
$
|
9,767
|
|
|
(1)
|
Reflects dollar amount expensed
by the Company during the applicable fiscal year for financial statement
reporting purposes pursuant to FAS
123R.
|
|
(2)
|
The vesting schedule for these
options is as follows: 20% on each of the 1
st
, 2
nd
, 3
rd
, 4
th
, and 5
th
year anniversary of the grant
date.
|
|
(3)
|
Ms. Kelley was our Chief
Financial Officer from October 24, 2008 to her resignation on October 30,
2009. Ms. Kelley’s grants expired on January 31,
2010.
|
|
(4)
|
The vesting schedule for these
options is as follows: 25% on each of the 1
st
, 2
nd
, 3
rd
, and 4
th
year anniversary of the grant
date.
|
|
(5)
|
The vesting schedule for these
options is as follows: 33.33% on each of the 2
nd
, 3
rd
, and 4
th
year anniversary of the grant
date.
|
Outstanding
Equity Awards
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
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 (#)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dean
R. Marks
|
|
|
16,786
|
(1)
|
|
|
67,146
|
(1)
|
|
|
―
|
|
|
$
|
4.675
|
|
1/9/19
|
|
|
―
|
|
|
|
―
|
|
|
|
―
|
|
|
|
―
|
|
|
Miguel
de Anquin
|
|
|
16,786
|
(1)
|
|
|
67,146
|
(1)
|
|
|
―
|
|
|
$
|
4.675
|
|
1/9/19
|
|
|
―
|
|
|
|
―
|
|
|
|
―
|
|
|
|
―
|
|
|
Frank
J. Sansone
|
|
|
―
|
|
|
|
250,000
|
(2)
|
|
|
―
|
|
|
$
|
2.90
|
|
11/5/19
|
|
|
―
|
|
|
|
―
|
|
|
|
―
|
|
|
|
―
|
|
|
(1)
|
20% of this named executive
officer’s options vest(ed) on January 1, 2010, January 1, 2011, January 1,
2012, January 1, 2013, and January 1,
2014.
|
|
(2)
|
25% of this named executive
officer’s options vest on November 5, 2010, November 5, 2011, November 5,
2012, and November 5, 2013.
|
Retirement
Plans
Except as
described below, we currently have no plans that provide for the payment of
retirement benefits, or benefits that will be paid primarily following
retirement, including but not limited to tax-qualified defined benefit plans,
supplemental executive retirement plans, tax-qualified defined contribution
plans and nonqualified defined contribution plans.
Premier
Power California maintains a 401(k) plan that is tax-qualified for its
employees, including its executive officers. Premier Power California does not
offer employer matching with the 401(k) plan. The 401(k) plan does, however,
offer a discretionary employer contribution at year end.
Potential
Payments upon Termination or Change-in-Control
Except as
described below under “Employment Agreements,” we currently have no contract,
agreement, plan or arrangement, whether written or unwritten, that provides for
payments to a named executive officer at, following, or in connection with any
termination, including without limitation resignation, severance, retirement or
a constructive termination of a named executive officer, or a change in control
of the registrant or a change in the named executive officer’s responsibilities,
with respect to each named executive officer.
Employment
Agreements
The
following are summaries of our employment agreements with our current and former
executive officers whose compensation is listed in the Summary Compensation
Table above.
We
adopted an employment agreement between Dean R. Marks and Premier Power
California by entering into an Employment Agreement with Mr. Marks on May 17,
2010 for his services as President and Chief Executive Officer. The term
of the agreement ends on August 21, 2013. Mr. Marks’ total annual salary
is $180,000, and he is to receive additional compensation in the form of, and
based on, the following: (i) 0.5% of our annual EBITDA in excess of $200,000 if
the annual EBITDA margin is less than 5%, and (ii) 1.5% of our annual EBITDA in
excess of $200,000 if the annual EBITDA margin is equal to or greater than
5%, both forms of additional compensation of which is due to Mr. Marks within 90
days of our fiscal year-end and which payments will be accelerated in a year in
which a change of control of the Company occurs such that a portion of the
payment due for that year is due upon the change of control calculated as of the
first day of such year and through the date of the change of control. Mr.
Marks is entitled to a severance payment of $180,000 upon termination by the
Company without cause if such termination occurs between December 31, 2008 and
December 31, 2010, and a severance payment of $90,000 upon termination by the
Company without cause if such termination occurs between December 31, 2010 and
the expiration of the agreement.
We
adopted an employment agreement between Miguel de Anquin and Premier Power
California by entering into an Employment Agreement with Mr. de Anquin on May
17, 2010 for his services as Chief Operating Officer and Corporate
Secretary. The term of the agreement ends on August 21, 2013. Mr. de
Anquin’s total annual salary is $180,000, and he is to receive additional
compensation in the form of, and based on, the following: (i) 0.5% of our annual
EBITDA in excess of $200,000 if the annual EBITDA margin is less than 5%, and
(ii) 1.5% of our annual EBITDA in excess of $200,000 if the annual EBITDA margin
is equal to or greater than 5%, both forms of additional compensation of
which is due to Mr. de Anquin within 90 days of our fiscal year-end and which
payments will be accelerated in a year in which a change of control of the
Company occurs such that a portion of the payment due for that year is due
upon the change of control calculated as of the first day of such year and
through the date of the change of control. Mr. de Anquin is entitled to a
severance payment of $180,000 upon termination by the Company without cause if
such termination occurs between December 31, 2008 and December 31, 2010, and a
severance payment of $90,000 upon termination by the Company without cause if
such termination occurs between December 31, 2010 and the expiration of the
agreement.
Similar
to the bonus compensation payable to Messrs. Marks and de Anquin, the bonus
payable by Premier Power California to Bjorn Persson, its Executive Vice
President of European Operations, is based on the following (i) 0.5% of European
operations’ EBITDA in excess of €200,000 if European operations’ annual EBITDA
margin is less than 5%, and (ii) 1.5% of European operations’ annual EBITDA in
excess of €200,000 if European operations’ annual EBITDA margin is greater than
5%. Such bonus compensation will also be accelerated upon a change of
control event.
We
entered into an Employment Agreement with Frank J. Sansone on November 5, 2009
in connection with his services as Chief Financial Officer over a four-year
term. Mr. Sansone’s compensation consists of an annual base salary of
$180,000. He was granted options under our 2008 Equity Incentive Plan to
purchase an aggregate 250,000 shares of our common stock, exercisable at $2.90
per share. The stock options vest 25% per year for each year of employment
from the date of grant. A sale of over 50% of our common stock to a third party
will trigger accelerated vesting where the portion that would have vested at the
next annual anniversary of the grant date will vest in full on the date of the
triggering event. We agreed to indemnify Mr. Sansone against any claims arising
from his services as Chief Financial Officer unless such claims are due to his
gross negligence or misconduct. We may terminate the Employment Agreement
without cause upon a sale of over 50% of our common stock to a third
party. In the event we terminate Mr. Sansone without cause, he is entitled
to a severance payment equal to six months of his annual compensation. Mr.
Sansone agreed not to enter into any business with operations that compete
directly with the Company for a period of three years after his employment
agreement terminates.
We
entered into an Employment Agreement with Teresa Kelley on October 24, 2008 for
her services as Chief Financial Officer. Ms. Kelley’s annual compensation
was $150,000. Ms. Kelley resigned on October 31, 2009.
Director
Compensation
The
following table provides compensation information for our directors during the
fiscal year ended December 31, 2009:
|
Name
|
|
Fees
Earned or
Paid in
Cash
($)
|
|
|
Stock
Awards
($)(1)
|
|
|
Option
Awards
($)
|
|
|
Non-Equity
Incentive Plan
Compensation
($)
|
|
|
Non-Qualified
Deferred
Compensation
Earnings
($)
|
|
|
All Other
Compensation
($)
|
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dean
R. Marks (2)
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Miguel
de Anquin (2)
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin
Murray
|
|
$
|
23,750
|
|
|
$
|
58,333
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
82,083
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
Medearis
|
|
$
|
32,000
|
|
|
$
|
58,333
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
90,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tommy
Ross
|
|
$
|
26,250
|
|
|
$
|
41,438
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
―
|
|
|
$
|
67,688
|
|
|
(1)
|
The
amounts shown in this column indicate the grant date fair value of stock
awards granted in the subject year computed in accordance with FASB ASC
Topic 718 (formerly FAS 123R).
|
|
(2)
|
This
individual does not receive compensation for his services as a
director. His compensation as an executive officer is reflected in
the Summary Compensation Table
above.
|
We
entered into directors’ agreements with Messrs. Murray, Medearis, and
Ross. Messrs. Murray and Medearis agreed to serve on the Board until
October 15, 2011, and Mr. Ross agreed to serve on the Board until March 11,
2011, such terms being subject to re-election at our subsequent annual meeting
of stockholders. These directors are each required to attend at least two
Board meetings via teleconference and at least two Board meetings in person per
year, and each will be compensated in cash for his services to the Board with
$2,500 per Board meeting attended in person or by telephone and $1,000 per
month. Meetings attended by telephone for which $2,500 cash compensation
is due must be a meeting considered, at our sole discretion, to be of
substantive significance and not incidental to each of these directors’ role on
the Board. Each of these directors received 16,500 shares of common stock
after completion of their first year of service on the Board, and will each
receive an additional 16,500 shares of common stock after the second year of
service on the Board and 17,000 shares of common stock after the third year of
service on the Board.
We are
required to maintain a Directors’ Errors and Omissions insurance policy insuring
the entire Board, including Messrs. Murray, Medearis, and Ross for a policy
amount of no less than $5,000,000, and in the event the policy coverage is
insufficient to cover losses occasioned by actions of the Board, we also agreed
to indemnify and hold each of Messrs. Murray, Medearis, and Ross harmless from
and against any loss, damages, costs, expenses, liabilities, and or causes of
action that may arise as a result of any of his dutiful and responsible
performance of each of his duties as a Board member.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth information regarding the beneficial ownership of our
common stock as of September 3, 2010, for (i) each of our directors and each of
the named executive officers, (ii) all directors and named executive officers as
a group, and (iii) each person who is known by us to own beneficially 5% or more
of our common stock.
Beneficial
ownership is determined in accordance with the rules of the SEC. Unless
otherwise indicated in the table, the persons and entities named in the table
have sole voting and sole investment power with respect to the shares set forth
opposite the stockholder’s name. Unless otherwise indicated, the address
of each beneficial owner listed below is 4961 Windplay Drive, Suite 100, El
Dorado Hills, California 95762. The percentage of class beneficially owned
set forth below is based on 29,099,750 shares of common stock outstanding on
September 3, 2010.
|
Name and Position
|
|
Number of
Shares of
Common Stock
Beneficially
Owned (1)
|
|
|
% of
Shares of
Common Stock
Beneficially
Owned (1)
|
|
|
Dean
R. Marks,
Chairman
of the Board, President, and Chief
Executive
Officer
|
|
|
11,256,601
|
(2)
|
|
|
38.7
|
%
|
|
Miguel
de Anquin,
Chief
Operating Officer, Corporate Secretary, and Director
|
|
|
6,761,424
|
(3)
|
|
|
23.2
|
%
|
|
Frank
J. Sansone,
Chief
Financial Officer
|
|
|
875
|
|
|
|
*
|
|
|
Kevin
Murray,
Director
|
|
|
16,500
|
|
|
|
*
|
|
|
Robert
Medearis,
Director
|
|
|
16,500
|
|
|
|
*
|
|
|
Tommy
Ross,
Director
|
|
|
19,190
|
(4)
|
|
|
*
|
|
|
Teresa
Kelley,
Former
Chief Financial Officer (5)
|
|
|
200
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
5%
Stockholders:
|
|
|
|
|
|
|
|
|
|
Bjorn
Persson
|
|
|
2,560,699
|
(6)
|
|
|
8.8
|
%
|
|
Genesis
Capital Advisors, LLC (7)
|
|
|
1,580,598
|
|
|
|
5.4
|
%
|
|
Vision
Opportunity Master Fund, Ltd. (8)
|
|
|
2,909,972
|
(9)
|
|
|
9.99
|
%(9)
|
|
|
|
|
|
|
|
|
|
|
|
All Executive Officers and
Directors as a Group
(6 persons)
|
|
|
18,071,090
|
|
|
|
62.0
|
%
|
|
(1)
|
Under Rule 13d-3, a beneficial
owner of a security includes any person who, directly or indirectly,
through any contract, arrangement, understanding, relationship, or
otherwise has or shares: (i) voting power, which includes the power to
vote, or to direct the voting of shares; and (ii) investment power, which
includes the power to dispose or direct the disposition of shares. Certain
shares may be deemed to be beneficially owned by more than one person (if,
for example, persons share the power to vote or the power to dispose of
the shares). In addition, shares are deemed to be beneficially owned by a
person if the person has the right to acquire the shares (for example,
upon exercise of an option) within 60 days of the date as of which the
information is provided. In computing the percentage ownership of any
person, the amount of shares outstanding is deemed to include the amount
of shares beneficially owned by such person (and only such person) by
reason of these acquisition rights. As a result, the percentage of
outstanding shares of any person as shown in this table does not
necessarily reflect the person's actual ownership or voting power with
respect to the number of shares of common stock actually
outstanding.
|
|
(2)
|
This number includes 16,786
shares of common stock issuable upon exercise of stock options that were
granted to this stockholder on January 9, 2009, 200 shares of common stock
held by the stockholder’s wife, who is one of our employees, and 5,400
shares of common stock issuable upon exercise of stock options that were
granted to this stockholder’s wife on January 9,
2009.
|
|
(3)
|
This number includes 16,786
shares of common stock issuable upon exercise of stock options that were
granted to this stockholder on January 9,
2009.
|
|
(4)
|
This number includes an aggregate
1,270 shares of common stock held by the stockholder’s children, and 370
shares of common stock held in the stockholder’s IRA
account.
|
|
(5)
|
The address for this stockholder
is 4135 Meadow Wood Drive, El Dorado Hills, CA
95762.
|
|
(6)
|
This number includes 13,573
shares of common stock issuable upon exercise of stock options that were
granted to this stockholder on January 9,
2009.
|
|
(7)
|
The address for this stockholder
is 15760 Ventura Blvd., Suite 1550, Encino, CA 91436. Ronald Andrikian and
Charles Gilreath, as the members of this stockholder, have shared
dispositive and voting power over these securities and may be deemed to be
the beneficial owner of these
securities.
|
|
(8)
|
The address for this stockholder
is c/o Ogier Fiduciary Services (Cayman) Limited, 89 Nexus Way, Camana
Bay, Grand Cayman, KY1-9007, Cayman Islands. Adam Benowitz, as the
managing member of Vision Capital Advisors, LLC, the investment advisor to
this stockholder, has dispositive and voting power over these securities
and may be deemed to be the beneficial owner of these
securities.
|
|
(9)
|
This number includes 2,178,000
shares of common stock and 731,972 shares of common stock issuable
upon conversion of 731,972 shares of our Series A Preferred Stock, which
are presently convertible. This number does not include (i) 2,768,028
shares of common stock underlying its shares of Series A Preferred Stock,
(ii) 2,800,000 shares of common stock underlying its shares of Series B
Preferred Stock, or (iii) 1,600,000 shares of common stock underlying an
option to purchase such shares because each of these securities held by
the stockholder contains a restriction on conversion or exercise, as the
case may be, limiting such holder’s ability to convert or exercise to the
extent that such conversion or exercise would cause the beneficial
ownership of the holder, together with its affiliates, to exceed 9.99% of
the number of shares of common stock outstanding immediately after giving
effect to the issuance of shares of common stock as a result of a
conversion or exercise. The stockholder may waive this limitation upon 61
days’ notice to the Company. If the stockholder were to waive the
limitation and convert its shares of Series B Preferred Stock and Series A
Preferred Stock, as well as exercise its options, its percentage interest
could be as high as 28.3%, diluting the other stockholders by
approximately 18.4%. As of September 8, 2010, however, the
Company has not received any such
notice.
|
Change
in Control
To the
knowledge of management, there are no present arrangements or pledges of
securities of our company that may result in a change of control of the
Company.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Set forth
below are our related party transactions since January 1, 2008:
On July
11, 2008, Dean Marks transferred 18% of his 85% holdings of shares of common
stock in Premier Power California to Miguel de Anquin. Following this transfer,
Dean Marks and Miguel de Anquin held 67% and 33%, respectively, of the shares of
common stock in Premier Power California.
On August
27, 2008, Bjorn Persson and Juan Ostiz each exchanged 100% of their interests in
Premier Power Sociedad Limitada (“Premier Power Spain”), a Spanish limited
liability company and wholly owned subsidiary of Premier Power California, for
shares of common stock in Premier Power California. On September 1, 2008, Dean
Marks and Miguel de Anquin each exchanged 100% of their interests in Premier
Power Spain and Bright Future for shares of common stock in Premier Power
California. Following these transfers, Dean Marks, Miguel de Anquin, Bjorn
Persson, and Juan Ostiz held approximately 54.1%, 30.7%, 12.6%, and 2.6%,
respectively of the shares of common stock in Premier Power California, and
Premier Power Spain and Bright Future became wholly owned subsidiaries of
Premier Power California.
On
September 9, 2008, in a share exchange transaction, we acquired a solar energy
business based in California that specializes in solar integration, by executing
a Share Exchange Agreement (“Exchange Agreement”) by and among the Company,
Premier Power California, and the holders of 100% of Premier Power California’s
issued and outstanding capital stock (the “PPG Owners”).
Under the
Exchange Agreement, we acquired all of the outstanding shares of Premier Power
California through the issuance of 24,218,750 shares of our common stock to the
PPG Owners. Immediately prior to the share exchange, we had 1,800,000 shares of
common stock outstanding, after taking account of our cancellation of 25,448,000
shares of our common stock held by Vision Opportunity Master Fund (“Vision”),
which cancellation occurred concurrently with the share exchange. Immediately
after the issuance of the shares to the PPG Owners, we had 26,018,750 shares of
common stock issued and outstanding. As a result of the share exchange, the PPG
Owners became our controlling stockholders, and Premier Power California became
our wholly owned subsidiary. In connection with Premier Power California
becoming our wholly owned subsidiary, we acquired the business and operations of
Premier Power California, Bright Future, and Premier Power Spain, which became
our principal business.
Concurrently
with the closing of the September 9, 2008 share exchange and pursuant to a
purchase and sale agreement, we sold all of the outstanding membership interests
of our wholly owned subsidiary, Harry’s Trucking, LLC, a California limited
liability company, to Haris Tajyar and Omar Tajyar in full satisfaction of
related party cash advances and their indemnity with respect to the Company’s
prior business operations.
On June
16, 2009, we entered into a Securities Purchase Agreement with Vision under
which we sold to Vision 2,800,000 shares of our Series B Convertible Preferred
Stock (bearing no liquidation preference, no coupon payments, and no redemption
rights) in exchange for the cancellation of 3,500,000 warrants, held by Vision,
and $3,000,000 in cash. The cancellation of warrants resulted in the
elimination of all our issued and outstanding warrants. The cancellation
of the 3,500,000 warrants included (i) the cancellation by us of 4-year Series A
Warrants issued to Vision on September 9, 2008 exercisable for an aggregate
1,750,000 shares of our common stock at $2.50 per share, and (ii) the
cancellation by us of 4-year Series B Warrants issued to Vision on September 9,
2008 exercisable for an aggregate 1,750,000 shares of our common stock at $3.00
per share. We recorded $1,435,000 as a gain on share settled debt from
this cancellation
In
connection with this transaction, Vision, a holder of our Series A Preferred
Stock, agreed in writing that no adjustment will be made to
the conversion price of its Series A Preferred Stock shares as would have
been required pursuant to the anti-dilution terms of the Series A Preferred
Stock.
Additionally,
certain stockholders have guaranteed certain obligations under the Company’s
outstanding borrowings and operating leases.
STOCKHOLDER
PROPOSALS
Stockholders
who intend to have a proposal considered for inclusion in the Company’s proxy
statement and form of proxy for presentation at our 2011 annual meeting of
stockholders pursuant to Rule 14a-8 under the Exchange Act must submit the
proposal to our principal executive offices at 4961 Windplay Drive, Suite 100,
El Dorado Hills, California 95762, Attn: Corporate Secretary, not later than
April 1, 2011.
Stockholders
who intend to present a proposal at such meeting without inclusion of such
proposal in our proxy statement and form of proxy must give us notice by April
18, 2011. If the date of next year’s annual meeting is moved more than 30 days
before or 30 days after the anniversary of this year’s meeting, then notice of
such proposal must be received no later than the close of business on the later
of (i) the date 90 days prior to the meeting, and (ii) the date 10
days after public announcement of the meeting date. The Company reserves the
right to reject, rule out of order, or take other appropriate action with
respect to any proposal that does not comply with these and other applicable
requirements, including conditions established by the SEC.
SOLICITATION
The
Company will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing, and mailing of this proxy statement, the proxy
card, and any additional information furnished to stockholders. Copies of
solicitation materials will be furnished to banks, brokerage houses,
fiduciaries, and custodians holding in their names shares of common stock
beneficially owned by others to forward to such beneficial owners. The Company
may reimburse persons representing beneficial owners of common stock for their
costs of forwarding solicitation materials to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, telegram, or
personal solicitation by directors, officers, or other regular employees of the
Company. No additional compensation will be paid to directors, officers, or
other regular employees for such services.
FORM
10-K – ANNUAL REPORT
Enclosed
herewith is our Annual Report on Form 10-K for our fiscal year ended December
31, 2009. Additional copies may be requested in writing. Such requests should be
submitted to Frank J. Sansone, Chief Financial Officer, Premier Power Renewable
Energy, Inc., 4961 Windplay Drive, Suite 100, El Dorado Hills, California 95762.
Exhibits to the Form 10-K will also be provided upon specific request. The
materials will be provided without charge.
OTHER
MATTERS
The Board
of Directors does not know of any other matters that will be presented for
consideration at the 2010 annual meeting. If any other matters are properly
brought before the 2010 annual meeting, Dean Marks, as proxy, will vote on such
matters in accordance with his best judgment.
* * * *
*
ANNEX A
PREMIER
POWER RENEWABLE ENERGY, INC.
PROPOSED
AMENDED
2008
EQUITY INCENTIVE PLAN
|
1.
|
ESTABLISHMENT
OF PLAN; DEFINITIONS
|
1.1
Purpose
. The
purpose of the Premier Power Renewable Energy, Inc. 2008 Equity Incentive Plan
is to encourage certain officers, employees, directors, and consultants of
Premier Power Renewable Energy, Inc., a Delaware corporation (the “Company”), to
acquire and hold stock in the Company as an added incentive to remain with the
Company and increase their efforts in promoting the interests of the Company,
and to enable the Company to attract and retain capable
individuals.
1.2
Definitions
. Unless
the context clearly indicates otherwise, the following terms shall have the
meanings set forth below:
1.2.1 “Award”
shall mean, individually or collectively, a grant under this Plan of Stock
Options or Stock Awards.
1.2.2 “Award
Agreement” shall mean a written agreement containing the terms and conditions of
an Award, not inconsistent with this Plan.
1.2.3 “Beneficiary”
and “Beneficial Ownership” shall mean the person, persons, trust, or trusts that
have been designated by a Grantee in his or her most recent written beneficiary
designation filed with the Committee to receive the benefits specified under
this Plan upon such Grantee's death or to which Awards or other rights are
transferred if and to the extent permitted under Section 7.2.4
hereof. If, upon a Grantee's death, there is no designated
Beneficiary or surviving designated Beneficiary, then the term Beneficiary shall
mean the person, persons, trust, or trusts entitled by will or the laws of
descent and distribution to receive such benefits.
1.2.4 “Beneficial
Owner” shall have the meaning ascribed to such term in Rule 13d-3 under the
Exchange Act and any successor to such Rule.
1.2.5 "Board"
shall mean the board of directors of the Company.
1.2.6 “Change
in Control” shall mean a Change in Control as defined in Section
7.1.1(b).
1.2.7 "Code"
shall mean the Internal Revenue Code of 1986, as it may be amended from time to
time.
1.2.8 "Committee"
shall mean the Board or a committee of the Board appointed pursuant to Section
1.4 of this Plan.
1.2.9 “Common
Stock” shall mean the Company’s common stock, par value $0.0001 per
share.
1.2.10 "Company"
shall mean Premier Power Renewable Energy, Inc., a Delaware
corporation.
1.2.11 "Consultants"
shall mean individuals who provide services to the Company and any Subsidiary
who are not also Employees or Directors and which services are not in connection
with the offer or sale of securities in a capital-raising transaction and do not
directly or indirectly promote or maintain a market for the Company’s
securities.
1.2.12 “Covered
Employee” shall mean a Grantee who, as of the date of vesting and/or payout of
an Award, or the date the Company or any of its Subsidiaries is entitled to a
tax deduction as a result of the Award, as applicable, is one of the group of
“covered employees,” as defined in the regulations promulgated under Code
Section 162(m), or any successor statute.
1.2.13 “Designated
Officer” shall mean any executive officer of the Company to whom duties and
powers of the Board or Committee hereunder have been delegated pursuant to
Section 1.4.3.
1.2.14 "Directors"
shall mean those members of the Board or the board of directors of any
Subsidiary who are not also Employees.
1.2.15 "Disability"
shall mean a medically determinable physical or mental condition that causes an
Employee, Director, or Consultant to be unable to engage in any substantial
gainful activity and that can be expected to result in death or to be of
long-continued and indefinite duration.
1.2.16 “Effective
Date” shall mean the effective date of this Plan, which shall be the Shareholder
Approval Date.
1.2.17 "Employee"
shall mean any common law employee, including Officers, of the Company or any
Subsidiary as determined under the Code and the Treasury Regulations
thereunder.
1.2.18 “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended from time to
time, or any successor act thereto.
1.2.19 "Fair
Market Value" shall mean (i) if the Common Stock is listed on a national
securities exchange or the NASDAQ system, the mean between the highest and
lowest sales prices for the Common Stock on such date, or, if no such prices are
reported for such day, then on the next preceding day on which there were
reported prices; (ii) if the Common Stock is not listed on a national securities
exchange or the NASDAQ system, the mean between the bid and asked prices for the
shares on such date, or if no such prices are reported for such day, then on the
next preceding day on which there were reported prices; or (iii) as determined
in good faith by the Board.
1.2.20 "Grantee"
shall mean an Officer, Employee, Director, or Consultant granted an
Award.
1.2.21 "Incentive
Stock Option" shall mean a Stock Option that meets the requirements of Code
Section 422 and is granted pursuant to the Incentive Stock Option provisions as
set forth in Section 2.
1.2.22 “Incumbent
Board” shall mean the Incumbent Board as defined in Section
7.1.1(b)(ii).
1.2.23 "Non-Statutory
Stock Option" shall mean a Stock Option that does not meet the requirements of
Code Section 422 and is granted pursuant to the Non-Statutory Stock Option
provisions as set forth in Section 3.
1.2.24 “Officer”
shall mean a person who is an officer of the Company or a Subsidiary within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
1.2.25 “Performance
Award” shall mean an Award under Section 6 hereof.
1.2.26 “Performance
Measure” shall mean one or more of the following criteria, or such other
operating objectives, selected by the Committee to measure performance of the
Company or any Subsidiary for a Performance Period, whether in absolute or
relative terms: basic or diluted earnings per share of Stock; earnings per share
of Common Stock growth; revenue; operating income; net income (either before or
after taxes); earnings and/or net income before interest and taxes; earnings
and/or net income before interest, taxes, depreciation, and amortization; return
on capital; return on equity; return on assets; net cash provided by operations;
free cash flow; Common Stock price; economic profit; economic value; total
stockholder return; and gross margins and costs. Each such measure
shall be determined in accordance with generally accepted accounting principles
as consistently applied and, as determined by the independent accountants of the
Company in the case of a Performance Award to a Covered Employee, to the extent
intended to meet the performance-based compensation exception under Code Section
162(m), or as determined by the Committee for other Performance Awards, adjusted
to omit the effects of extraordinary items, gain or loss on the disposal of a
business segment, unusual or infrequently occurring events and transactions, and
cumulative effects of changes in accounting principles.
1.2.27 “Performance
Period” shall mean a period of not less than one (1) year over which the
achievement of targets for Performance Measures is determined.
1.2.28 “Person”
shall have the meaning ascribed to such term in Section 3(a)(9) of the
Exchange Act and used in Sections 13(d) and 14(d) thereof, and shall include a
“group” as defined in Section 13(d) thereof.
1.2.29 "Plan"
shall mean the Premier Power Renewable Energy, Inc. 2008 Equity Incentive Plan
as set forth herein and as amended from time to time.
1.2.30 “Related
Entity” shall mean any Subsidiary, and any business, corporation, partnership,
limited liability company, or other entity designated by the Board, in which the
Company or a Subsidiary holds a substantial ownership interest, directly or
indirectly.
1.2.31 "Restricted
Stock" shall mean Common Stock that is issued pursuant to the Restricted Stock
provisions as set forth in Section 4.
1.2.32 "Restricted
Stock Units" shall mean Common Stock that is issued pursuant to the Restricted
Stock Unit provisions as set forth in Section 5.
1.2.33 “Rule 16b-3”
shall mean Rule 16b-3 promulgated under the Exchange Act or any successor
thereto.
1.2.34 “Shareholder
Approval Date” shall mean the date on which this Plan is approved by the
shareholders of the Company eligible to vote in the election of directors, by a
vote sufficient to meet the requirements of Code Sections 162(m) (if applicable)
and 422, Rule 16b-3 under the Exchange Act (if applicable), applicable
requirements under the rules of any stock exchange or automated quotation system
on which the Common Stock may be listed on quoted, and other laws, regulations,
and obligations of the Company applicable to this Plan.
1.2.35 "Stock
Award" shall mean an award of Restricted Stock or Restricted Stock Units granted
pursuant to this Plan.
1.2.36 "Stock
Option" shall mean an option granted pursuant to this Plan to purchase shares of
Common Stock.
1.2.37 “Subsidiary”
shall mean any corporation (other than the Company) in an unbroken chain of
corporations beginning with and including the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
1.3
Shares of Common Stock
Subject to this Plan
.
1.3.1 Subject
to the provisions of Section 7.1, the shares of Common Stock that may be issued
pursuant to Stock Options and Stock Awards granted under this Plan shall not
exceed Four Million Nine Hundred Fifty One Thousand Eight Hundred Seventy Five
(4,951,875) shares in the aggregate. If a Stock Option shall expire
and terminate for any reason, in whole or in part, without being exercised or,
if Stock Awards are forfeited because the restrictions with respect to such
Stock Awards shall not have been met or have lapsed, the number of shares of
Common Stock that are no longer outstanding as Stock Awards or subject to Stock
Options may again become available for the grant of Stock Awards or Stock
Options. There shall be no terms and conditions in a Stock Award or
Stock Option that provide that the exercise of an Incentive Stock Option reduces
the number of shares of Common Stock for which an outstanding Non-Statutory
Stock Option may be exercised; and there shall be no terms and conditions in a
Stock Award or Stock Option that provide that the exercise of a Non-Statutory
Stock Option reduces the number of shares of Common Stock for which an
outstanding Incentive Stock Option may be exercised.
1.3.2 The
maximum number of shares of Common Stock subject to Awards that may be granted
during any one calendar year
to any one Covered
Employee shall be limited to One Million Five Hundred Thousand
(1,500,000). To the extent required by Code Section 162(m) and so
long as Code Section 162(m) is applicable to persons eligible to participate in
this Plan, shares of Common Stock subject to the foregoing maximum with respect
to which the related Award is terminated, surrendered, or cancelled shall
nonetheless continue to be taken into account with respect to such maximum for
the calendar year in which granted.
1.4
Administration of this
Plan
.
1.4.1 The
Plan shall be administered by the Board. In the alternative, the
Board may delegate authority to a Committee to administer this Plan on behalf of
the Board, subject to such terms and conditions as the Board may
prescribe. Such Committee shall consist of not less than two (2)
members of the Board each of whom is a “non-employee director” within the
meaning of Rule 16b-3, or any successor rule of similar import, and an “outside
director” within the meaning of Section 162(m) of the Code and the regulations
promulgated thereunder. Once appointed, the Committee shall continue
to serve until otherwise directed by the Board. From time to time,
the Board may increase the size of the Committee and appoint additional members
thereof, remove members (with or without cause) and appoint new members in
substitution therefor, fill vacancies, however caused, and remove all members of
the Committee and, thereafter, directly administer this Plan. In the
event that the Board is the administrator of this Plan in lieu of a Committee,
the term “Committee” as used herein shall be deemed to mean the
Board.
1.4.2 The
Committee shall meet at such times and places and upon such notice as it may
determine. A majority of the Committee shall constitute a
quorum. Any acts by the Committee may be taken at any meeting at
which a quorum is present and shall be by majority vote of those members
entitled to vote. Additionally, any acts reduced to writing or
approved in writing by all of the members of the Committee shall be valid acts
of the Committee.
1.4.3 The
Board may, in its sole discretion, divide the duties and powers of the Committee
by establishing one or more secondary Committees to which certain duties and
powers of the Board hereunder are delegated (each of which shall be regarded as
a “Committee” under this Plan with respect to such duties and powers), or
delegate all of its duties and powers hereunder to a single
Committee. Additionally, if permitted by applicable law, the Board or
Committee may delegate any or all of its duties and powers hereunder to a
Designated Officer subject to such conditions and limitations as the Board or
Committee shall prescribe. However, only the Committee described
under Section 1.4.1 may designate and grant Awards to Grantees who are subject
to Section 16 of the Exchange Act or Section 162(m) of the Code. The
Committee shall also have the power to establish sub-plans (which may be
included as appendices to this Plan or the respective Award Agreement), which
may constitute separate programs, for the purpose of establishing programs that
meet any special tax or regulatory requirements of jurisdictions other than the
United States and its subdivisions. Any such interpretations, rules,
administration and sub-plans shall be consistent with the basic purposes of this
Plan.
1.4.4
Powers of the
Committee
. The Committee shall have all the powers vested in
it by the terms of this Plan, such powers to include authority, in its sole and
absolute discretion, to grant Awards under this Plan, prescribe Award Agreements
and establish programs for granting Awards. The Committee shall have
full power and authority to take all other actions necessary to carry out the
purpose and intent of this Plan, including, but not limited to, the authority
to:
(a) determine
the Grantees to whom, and the time or times at which, Awards shall be
granted;
(b) determine
the types of Awards to be granted;
(c) determine
the number of shares of Common Stock and/or amount of cash to be covered by or
used for reference purposes for each Award;
(d) impose
such terms, limitations, vesting schedules, restrictions, and conditions upon
any such Award as the Committee shall deem appropriate, including without
limitation establishing, in its discretion, Performance Measures that must be
satisfied before an Award vests and/or becomes payable, the term during which an
Award is exercisable, the purchase price, if any, under an Award, and the
period, if any, following a Grantee’s termination of employment or service with
the Company or any Subsidiary during which the Award shall remain
exercisable;
(e) modify,
extend, or renew outstanding Awards, accept the surrender of outstanding Awards,
and substitute new Awards, provided that no such action shall be taken with
respect to any outstanding Award that would materially and adversely affect the
Grantee without the Grantee’s consent, or constitute a repricing of stock
options without the consent of the holders of the Company’s voting securities
under Section 1.4.4(f) below;
(f) only
with the approval of the holders of the voting securities of the Company to the
extent that such approval is required by applicable law, regulation, or the
rules of a national securities exchange or automated quotation system to which
the Company is subject, reprice Incentive Stock Options and Non-Statutory Stock
Options either by amendment to lower the exercise price or by accepting such
stock options for cancellation and issuing replacement stock options with a
lower exercise price or through any other mechanism;
(g) accelerate
the time in which an Award may be exercised or in which an Award becomes payable
and waive or accelerate the lapse, in whole or in part, of any restriction or
condition with respect to an Award;
(h) establish
objectives and conditions, including targets for Performance Measures, if any,
for earning Awards and determining whether Awards will be paid after the end of
a Performance Period; and
(i)
permit the deferral of, or require a Grantee to defer such
Grantee’s receipt of or the delivery of Stock and/or cash under an Award that
would otherwise be due to such Grantee and establish rules and procedures for
such payment deferrals, provided the requirements of Code Section 409A are met
with respect to any such deferral.
The
Committee shall have full power and authority to administer and interpret this
Plan and to adopt such rules, regulations, agreements, guidelines, and
instruments for the administration of this Plan as the Committee deems
necessary, desirable or appropriate in accordance with the bylaws of the
Company.
1.4.5 To
the maximum extent permitted by law, no member of the Board or Committee or a
Designated Officer shall be liable for any action taken or decision made in good
faith relating to this Plan or any Award thereunder.
1.4.6 The
members of the Board and Committee and any Designated Officer shall be
indemnified by the Company in respect of all their activities under this Plan in
accordance with the procedures and terms and conditions set forth in the
Certificate of Incorporation and bylaws of the Company as in effect from time to
time. The foregoing right of indemnification shall not be exclusive
of any other rights of indemnification to which such persons may be entitled
under the Company’s Certificate of Incorporation and bylaws, as a matter of law,
or otherwise.
1.4.7 All
actions taken and decisions and determinations made by the Committee or a
Designated Officer on all matters relating to this Plan pursuant to the powers
vested in it hereunder shall be in the Committee’s or Designated Officer’s sole
and absolute discretion and shall be conclusive and binding on all parties
concerned, including the Company, its stockholders, any Grantees, and any other
Employee, and their respective successors in interest.
1.5
Amendment or
Termination
.
1.5.1 The
Committee, without further approval of the Company’s stockholders, may amend or
terminate this Plan or any portion thereof at any time, except that no amendment
shall become effective without prior approval of the stockholders of the Company
to increase the number of shares of Common Stock subject to this Plan or if
stockholder approval is necessary to comply with any tax or regulatory
requirement or rule of any national securities exchange or national automated
quotation system upon which the Common Stock is listed or quoted (including for
this purpose stockholder approval that is required for continued compliance with
Rule 16b-3 or stockholder approval that is required to enable the Committee to
grant Incentive Stock Options pursuant to this Plan).
1.5.2 The
Committee shall be authorized to make minor or administrative amendments to this
Plan as well as amendments to this Plan that may be dictated by the requirements
of U.S. federal or state laws applicable to the Company or that may be
authorized or made desirable by such laws. The Committee may amend
any outstanding Award in any manner as provided in Section 1.4.4 and to the
extent that the Committee would have had the authority to make such Award as so
amended.
1.5.3 No
amendment to this Plan or any Award may be made that would materially adversely
affect any outstanding Award previously made under this Plan without the
approval of the Grantee. Further, no amendment to this Plan or an
Award shall be made that would cause any Award to fail to either comply with or
meet an exception from Code Section 409A.
1.6
Effective Date and Duration
of this Plan
. This Plan shall become effective on the
Effective Date. This Plan shall terminate at such time as may be
determined by the Board, and no Stock Award or Stock Option may be issued or
granted under this Plan thereafter, but such termination shall not affect any
Stock Award or Stock Option theretofore issued or granted.
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2.
|
INCENTIVE
STOCK OPTION PROVISIONS
|
2.1
Granting of Incentive Stock
Options
.
2.1.1 Only
Employees of the Company shall be eligible to receive Incentive Stock Options
under this Plan. Officers, Directors, and Consultants of the Company
who are not also Employees shall not be eligible to receive Incentive Stock
Options.
2.1.2 The
purchase price of each share of Common Stock subject to an Incentive Stock
Option shall not be less than 100% of the Fair Market Value of a share of the
Common Stock on the date the Incentive Stock Option is granted. If an
Employee owns or is deemed to own (by reason of the attribution rules applicable
under Section 424(d) of the Code) more than 10% of the combined voting power of
all classes of stock of the Company (or any parent corporation or subsidiary
corporation of the Company, as those terms are defined in Sections 424(e) and
(f) of the Code, respectively) and an Incentive Stock Option is granted to such
Employee, the exercise price of such Incentive Stock Option (to the extent
required by the Code at the time of grant) shall be no less than 110% of the
Fair Market Value of a Share on the date such Incentive Stock Option is
granted.
2.1.3 No
Incentive Stock Option shall be exercisable more than ten (10) years from the
date the Incentive Stock Option was granted; provided however, that if a Grantee
owns or is deemed to own (by reason of the attribution rules of Section 424(d)
of the Code) more than 10% of the combined voting power of all classes of stock
of the Company (or any parent corporation or subsidiary corporation of the
Company, as those terms are defined in Sections 424(e) and (f) of the Code,
respectively) and the Incentive Stock Option is granted to such Grantee, the
term of the Incentive Stock Option shall be (to the extent required by the Code
at the time of the grant) for no more than five (5) years from the date of
grant.
2.1.4 The
Committee shall determine and designate from time to time those Employees who
are to be granted Incentive Stock Options and specify the number of shares
subject to each Incentive Stock Option.
2.1.5 The
Committee, in its sole discretion, shall determine whether any particular
Incentive Stock Option shall become exercisable in one or more installments,
specify the installment dates, and, within the limitations herein provided,
determine the total period during which the Incentive Stock Option is
exercisable. Further, the Committee may make such other provisions as
may appear generally acceptable or desirable to the Committee or necessary to
qualify its grants under the provisions of Section 422 of the Code.
2.1.6 The
Committee may grant at any time new Incentive Stock Options to an Employee who
has previously received Incentive Stock Options or other options whether such
prior Incentive Stock Options or other options are still outstanding, have
previously been exercised in whole or in part, or are cancelled in connection
with the issuance of new Incentive Stock Options. The purchase price
of the new Incentive Stock Options may be established by the Committee without
regard to the existing Incentive Stock Options or other options.
2.1.7 Notwithstanding
any other provisions hereof, the aggregate Fair Market Value (determined at the
time the option is granted) of the Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by the Employee during any
calendar year (under all such plans of the Grantee's employer corporation and
its parent corporation or subsidiary corporation as those terms are defined in
Sections 424(e) and (f) of the Code, respectively) shall not (to the extent
required by the Code at the time of the grant) exceed One Hundred Thousand
Dollars ($100,000). To the extent that such aggregate Fair Market
Value shall exceed One Hundred Thousand Dollars ($100,000), or other applicable
amount, such Stock Options to the extent of the Common Stock in excess of such
limit shall be treated as Non-Statutory Stock Options. In such case,
the Company may designate the shares of Common Stock that are to be treated as
Stock acquired pursuant to the exercise of an Incentive Stock
Option.
2.2
Exercise of Incentive Stock
Options
. The exercise price of an Incentive Stock Option shall
be payable on exercise of the option (i) in cash or by check, bank draft,
or postal or express money order, (ii) ) if provided in the written
Award agreement and permitted by applicable law, by the surrender of Common
Stock then owned by the Grantee, which Common Stock such Grantee has held for at
least six (6) months, (iii) the proceeds of a loan from an independent
broker-dealer whereby the loan is secured by the option or the stock to be
received upon exercise, or (iv) any combination of the foregoing;
provided,
that each such method and time for payment and each such borrowing and terms and
conditions of repayment shall then be permitted by and be in compliance with
applicable law. Shares of Common Stock so surrendered in accordance
with clause (ii) or (iv) shall be valued at the Fair Market Value thereof on the
date of exercise, surrender of such Common Stock to be evidenced by delivery of
the certificate(s) representing such shares in such manner, and endorsed in such
form, or accompanied by stock powers endorsed in such form, as the Committee may
determine.
2.3
Termination of
Employment
.
2.3.1 If
a Grantee's employment with the Company is terminated other than by Disability
or death, the terms of any then outstanding Incentive Stock Option held by the
Grantee shall extend for a period ending on the earlier of the date on which
such Stock Option would otherwise expire or three (3) months after such
termination of employment, and such Stock Option shall be exercisable to the
extent it was exercisable as of such last date of employment.
2.3.2 If
a Grantee's employment with the Company is terminated by reason of Disability,
the term of any then outstanding Incentive Stock Option held by the Grantee
shall extend for a period ending on the earlier of the date on which such Stock
Option would otherwise expire or twelve (12) months after such termination of
employment, and such Stock Option shall be exercisable to the extent it was
exercisable as of such last date of employment.
2.3.3 If
a Grantee's employment with the Company is terminated by reason of death, the
representative of his estate or beneficiaries thereof to whom the Stock Option
has been transferred shall have the right during the period ending on the
earlier of the date on which such Stock Option would otherwise expire or twelve
(12) months after such date of death, to exercise any then outstanding Incentive
Stock Options in whole or in part. If a Grantee dies without having
fully exercised any then outstanding Incentive Stock Options, the representative
of his estate or beneficiaries thereof to whom the Stock Option has been
transferred shall have the right to exercise such Stock Options in whole or in
part.
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3.
|
NON-STATUTORY
STOCK OPTION PROVISIONS
|
3.1
Granting of Stock
Options
.
3.1.1 Officers,
Employees, Directors, and Consultants shall be eligible to receive Non-Statutory
Stock Options under this Plan.
3.1.2 The
Committee shall determine and designate from time to time those Officers,
Employees, Directors, and Consultants who are to be granted Non-Statutory Stock
Options and the amount subject to each Non-Statutory Stock Option.
3.1.3 The
Committee may grant at any time new Non-Statutory Stock Options to an Employee,
Director, or Consultant who has previously received Non-Statutory Stock Options
or other Stock Options, whether such prior Non-Statutory Stock Options or other
Stock Options are still outstanding, have previously been exercised in whole or
in part, or are cancelled in connection with the issuance of new Non-Statutory
Stock Options.
3.1.4 The
Committee shall determine the purchase price of each share of Common Stock
subject to a Non-Statutory Stock Option. Such price shall not be less
than 100% of the Fair Market Value of such Common Stock on the date the
Non-Statutory Stock Option is granted.
3.1.5 The
Committee, in its sole discretion, shall determine whether any particular
Non-Statutory Stock Option shall become exercisable in one or more installments,
specify the installment dates, and, within the limitations herein provided,
determine the total period during which the Non-Statutory Stock Option is
exercisable. Further, the Committee may make such other provisions as
may appear generally acceptable or desirable to the Committee, including the
extension of a Non-Statutory Stock Option, provided that such extension does not
extend the option beyond the period specified in Section 3.1.6
below.
3.1.6 No
Non-Statutory Stock Option shall be exercisable more than ten (10) years from
the date such option is granted.
3.2
Exercise of Stock
Options
. The exercise price of a Non-Statutory Stock
Option shall be payable on exercise of the Stock Option (i) in cash or by
check, bank draft, or postal or express money order, (ii) if provided in
the written Award agreement and permitted by applicable law, by the surrender of
Common Stock then owned by the Grantee, which Common Stock such Grantee has held
for at least six (6) months, (iii) the proceeds of a loan from an independent
broker-dealer whereby the loan is secured by the option or the stock to be
received upon exercise, or (iv) any combination of the foregoing;
provided,
that each such method and time for payment and each such
borrowing and terms and conditions of repayment shall then be permitted by and
be in compliance with applicable law. Shares of Common Stock so
surrendered in accordance with clause (ii) or (iv) shall be valued at the Fair
Market Value thereof on the date of exercise, surrender of such Common Stock to
be evidenced by delivery of the certificate(s) representing such shares in such
manner, and endorsed in such form, or accompanied by stock powers endorsed in
such form, as the Committee may determine.
3.3
Termination of
Relationship
.
3.3.1 If
a Grantee's employment with the Company is terminated, a Director Grantee ceases
to be a Director, or a Consultant Grantee ceases to be a Consultant, other than
by reason of Disability or death, the terms of any then outstanding
Non-Statutory Stock Option held by the Grantee shall extend for a period ending
on the earlier of the date established by the Committee at the time of grant or
three (3) months after the Grantee's last date of employment or cessation of
being a Director or Consultant, and such Stock Option shall be exercisable to
the extent it was exercisable as of the date of termination of employment or
cessation of being a Director or Consultant.
3.3.2 If
a Grantee's employment is terminated by reason of Disability, a Director Grantee
ceases to be a Director by reason of Disability or a Consultant Grantee ceases
to be a Consultant by reason of Disability, the term of any then outstanding
Non-Statutory Stock Option held by the Grantee shall extend for a period ending
on the earlier of the date on which such Stock Option would otherwise expire or
twelve (12) months after the Grantee's last date of employment or cessation of
being a Director or Consultant, and such Stock Option shall be exercisable to
the extent it was exercisable as of such last date of employment or cessation of
being a Director or Consultant.
3.3.3 If
a Grantee's employment is terminated by reason of death, a Director Grantee
ceases to be a Director by reason of death or a Consultant Grantee ceases to be
a Consultant by reason of death, the representative of his estate or
beneficiaries thereof to whom the Stock Option has been transferred shall have
the right during the period ending on the earlier of the date on which such
Stock Option would otherwise expire or twelve (12) months following his death to
exercise any then outstanding Non-Statutory Stock Options in whole or in
part. If a Grantee dies without having fully exercised any then
outstanding Non-Statutory Stock Options, the representative of his estate or
beneficiaries thereof to whom the Stock Option has been transferred shall have
the right to exercise such Stock Options in whole or in part.
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4.
|
RESTRICTED
STOCK AWARDS
|
4.1
Grant of Restricted
Stock
.
4.1.1 Officers,
Employees, Directors and Consultants shall be eligible to receive grants of
Restricted Stock under this Plan.
4.1.2 The
Committee shall determine and designate from time to time those Officers,
Employees, Directors and Consultants who are to be granted Restricted Stock and
the number of shares of Common Stock subject to such Stock Award.
4.1.3 The
Committee, in its sole discretion, shall make such terms and conditions
applicable to the grant of Restricted Stock as may appear generally acceptable
or desirable to the Committee.
4.2
Termination of
Relationship
.
4.2.1 If
a Grantee's employment with the Company is terminated, a Director Grantee ceases
to be a Director, or a Consultant Grantee ceases to be a Consultant, prior to
the lapse of any restrictions applicable to the Restricted Stock, then such
Common Stock shall be forfeited and the Grantee shall return the certificates
representing such Common Stock to the Company.
4.2.2 If
the restrictions applicable to a grant of Restricted Stock shall lapse, then the
Grantee shall hold such Common Stock free and clear of all such restrictions
except as otherwise provided in this Plan.
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5.
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RESTRICTED
STOCK UNIT AWARDS
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5.1
Grant of Restricted Stock
Units
.
5.1.1 Officers,
Employees, Directors, and Consultants shall be eligible to receive grants of
Restricted Stock Units under this Plan.
5.1.2 The
Committee shall determine and designate from time to time those Officers,
Employees, Directors and Consultants who are to be granted Restricted Stock
Units and number of shares of Common Stock subject to such Stock
Award.
5.1.3 The
Committee, in its sole discretion, shall make such terms and conditions
applicable to the grant of Restricted Stock Units as may appear generally
acceptable or desirable to the Committee.
5.2
Termination of
Relationship
.
5.2.1 If
a Grantee's employment with the Company is terminated, a Director Grantee ceases
to be a Director, or a Consultant Grantee ceases to be a Consultant, prior to
the lapse of any restrictions applicable to the Restricted Stock Units, then
such Common Stock shall be forfeited and the Grantee shall return the
certificates representing such Common Stock to the Company.
5.2.2 If
the restrictions applicable to a grant of Restricted Stock Units shall lapse,
then the Grantee shall hold such Common Stock free and clear of all such
restrictions except as otherwise provided in this Plan.
6.1 The
Committee, in its discretion, may establish targets for Performance Measures for
selected Grantees and authorize the granting, vesting, payment, and/or delivery
of Performance Awards in the form of Incentive Stock Options, Non-Statutory
Stock Options, Restricted Stock, and Restricted Stock Units to such Grantees
upon achievement of such targets for Performance Measures during a Performance
Period. The Committee, in its discretion, shall determine the
Grantees eligible for Performance Awards, the targets for Performance Measures
to be achieved during each Performance Period, and the type, amount, and terms
and conditions of any Performance Awards. Performance Awards may be
granted either alone or in addition to other Awards made under this
Plan.
6.2 After
the Company is subject to Code Section 162(m), in connection with any
Performance Awards granted to a Covered Employee that are intended to meet the
performance-based compensation exception under Code Section 162(m), the
Committee shall (i) establish in the applicable Award Agreement the specific
targets relative to the Performance Measures that must be attained before the
respective Performance Award is granted, vests, or is otherwise paid or
delivered, (ii) provide in the applicable Award Agreement the method for
computing the portion of the Performance Award that shall be granted, vested,
paid, and/or delivered if the target or targets are attained in full or part,
and (iii) at the end of the relevant Performance Period, and prior to any such
grant, vesting, payment, or delivery, certify the extent to which the applicable
target or targets were achieved and whether any other material terms were in
fact satisfied. The specific targets and the method for computing the
portion of such Performance Award that shall be granted, vested, paid, or
delivered to any Covered Employee shall be established by the Committee prior to
the earlier to occur of (A) ninety (90) days after the commencement of the
Performance Period to which the Performance Measure applies and (B) the elapse
of twenty-five percent (25%) of the Performance Period and in any event while
the outcome is substantially uncertain. In interpreting Plan
provisions applicable to Performance Measures and Performance Awards that are
intended to meet the performance-based compensation exception under Code Section
162(m), it is the intent of this Plan to conform with the standards of
Section 162(m) of the Code and Treasury Regulations Section 1.162-27(e)(2),
and the Committee in interpreting this Plan shall be guided by such
provisions.
7.1
Adjustment
Provisions
.
7.1.1
Change of
Control
.
(a)
Effect of “Change in
Control.
” If and only to the extent provided in the Award
Agreement, or to the extent otherwise determined by the Committee, upon the
occurrence of a “Change in Control,” as defined in Section
7.1.1(b):
(i) The
Committee shall take such action as it deems appropriate and equitable to
effectuate the purposes of this Plan and to protect the grantees of Awards,
which action may include, without limitation, any one or more of the following,
provided such action is in compliance with Code Section 409A if
applicable: (i) acceleration or change of the exercise and/or
expiration dates of any Award to require that exercise be made, if at all, prior
to the Change in Control; and (ii) cancellation of any Award upon payment to the
holder in cash of the Fair Market Value of the Stock subject to such Award as of
the date of (and, to the extent applicable, as established for purposes of) the
Change in Control, less the aggregate exercise price, if any, of the
Award.
(ii) Notwithstanding
the foregoing or any provision in any Award Agreement to the contrary, if in the
event of a Change in Control, the successor company assumes or substitutes for a
Stock Option or Stock Award, then each such outstanding Stock Option or Stock
Award shall not be accelerated as described in Sections
7.1.1(a)(i). For the purposes of this Section 7.1.1(a)(ii), such
Stock Option or Stock Award shall be considered assumed or substituted for if
following the Change in Control the Award confers the right to purchase or
receive, for each share of Common Stock subject to the Stock Option or Stock
Award immediately prior to the Change in Control, the consideration (whether
stock, cash, or other securities or property) received in the transaction
constituting a Change in Control by holders of Common Stock shares for each
Common Stock share held on the effective date of such transaction (and if
holders were offered a choice of consideration, the type of consideration chosen
by the holders of a majority of the outstanding shares); provided, however, that
if such consideration received in the transaction constituting a Change in
Control is not solely common stock of the successor company or its parent or
subsidiary, the Committee may, with the consent of the successor company or its
parent or subsidiary, provide that the consideration to be received upon the
exercise or vesting of a Stock Option or Stock Award, for each Common Stock
share subject thereto, will be solely common stock of the successor company or
its parent or subsidiary substantially equal in fair market value to the per
share consideration received by holders of Common Stock shares in the
transaction constituting a Change in Control. The determination of
such substantial equality of value of consideration shall be made by the
Committee in its sole discretion and its determination shall be conclusive and
binding.
(b)
Definition of “Change in
Control”
. Unless otherwise specified in an Award Agreement, a
“Change in Control” shall mean the occurrence of any of the
following:
(i) The
acquisition by any Person of Beneficial Ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of more than fifty percent (50%) of
either (A) the value of then outstanding equity securities of the Company (the
“Outstanding Company Stock”) or (B) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the
election of directors (the “Outstanding Company Voting Securities”) (the
foregoing Beneficial Ownership hereinafter being referred to as a "Controlling
Interest"); provided, however, that for purposes of this Section 7.1.1, the
following acquisitions shall not constitute or result in a Change in Control:
(v) any acquisition directly from the Company; (w) any acquisition by the
Company; (x) any acquisition by any Person that as of the Effective Date owns
Beneficial Ownership of a Controlling Interest; (y) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any Related Entity; or (z) any acquisition by any entity pursuant to a
transaction that complies with clauses (A), (B), and (C) of subsection
7.1.1(b)(iii) below; or
(ii) During
any period of two (2) consecutive years (not including any period prior to the
Effective Date) individuals who constitute the Board on the Effective Date (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
the Effective Date whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(iii) Consummation
of a reorganization, merger, statutory share exchange, or consolidation or
similar transaction involving the Company or any of its Related Entities, a sale
or other disposition of all or substantially all of the assets of the Company,
or the acquisition of assets or equity of another entity by the Company or any
of its Related Entities (each a “Business Combination”), in each case, unless,
following such Business Combination, (A) all or substantially all of the
individuals and entities who were the Beneficial Owners, respectively, of the
Outstanding Company Stock and Outstanding Company Voting Securities immediately
prior to such Business Combination beneficially own, directly or indirectly,
more than fifty percent (50%) of the value of the then outstanding equity
securities and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of members of the board of
directors (or comparable governing body of an entity that does not have such a
board), as the case may be, of the entity resulting from such Business
Combination (including, without limitation, an entity that as a result of such
transaction owns the Company or all or substantially all of the Company’s assets
either directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business Combination
of the Outstanding Company Stock and Outstanding Company Voting Securities, as
the case may be, (B) no Person (excluding any employee benefit plan (or related
trust) of the Company or such entity resulting from such Business Combination or
any Person that as of the Effective Date owns Beneficial Ownership of a
Controlling Interest) beneficially owns, directly or indirectly, fifty percent
(50%) or more of the value of the then outstanding equity securities of the
entity resulting from such Business Combination or the combined voting power of
the then outstanding voting securities of such entity except to the extent that
such ownership existed prior to the Business Combination, and (C) at least a
majority of the members of the Board or other governing body of the entity
resulting from such Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or
(iv) Approval
by the shareholders of the Company of a complete liquidation or dissolution of
the Company.
7.1.2
Adjustments to
Awards
. In the event that any extraordinary dividend or other
distribution (whether in the form of cash, Common Stock, or other property),
recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, share exchange, liquidation,
dissolution or other similar corporate transaction or event affects the Common
Stock and/or such other securities of the Company or any other issuer such that
a substitution, exchange, or adjustment is determined by the Committee to be
appropriate, then the Committee shall, in such manner as it may deem equitable,
substitute, exchange, or adjust any or all of (A) the number and kind of
Shares that may be delivered in connection with Awards granted thereafter,
(B) the number and kind of Shares by which annual per-person Award
limitations are measured under this Plan’s provisions, (C) the number and
kind of Shares subject to or deliverable in respect of outstanding Awards,
(D) the exercise price, grant price or purchase price relating to any Award
and/or make provision for payment of cash or other property in respect of any
outstanding Award, and (E) any other aspect of any Award that the Committee
determines to be appropriate.
7.1.3
Adjustments in Case of
Certain Transactions
. In the event of any merger,
consolidation or other reorganization in which the Company does not survive, or
in the event of any Change in Control, any outstanding Awards may be dealt with
in accordance with any of the following approaches, as determined by the
agreement effectuating the transaction or, if and to the extent not so
determined, as determined by the Committee: (a) the continuation of the
outstanding Awards by the Company, if the Company is a surviving entity, (b) the
assumption or substitution for, as those terms are defined in Section
7.1.1(b)(iv), the outstanding Awards by the surviving entity or its parent or
subsidiary, (c) full exercisability or vesting and accelerated expiration of the
outstanding Awards, or (d) settlement of the value of the outstanding Awards in
cash or cash equivalents or other property followed by cancellation of such
Awards (which value, in the case of Stock Options, shall be measured by the
amount, if any, by which the Fair Market Value of a share of Common Stock
exceeds the exercise or grant price of the Stock Option as of the effective date
of the transaction). The Committee shall give written notice of any
proposed transaction referred to in this Section 7.1.3 a reasonable period of
time prior to the closing date for such transaction (which notice may be given
either before or after the approval of such transaction), in order that Grantees
may have a reasonable period of time prior to the closing date of such
transaction within which to exercise any Awards that are then exercisable
(including any Awards that may become exercisable upon the closing date of such
transaction). A Grantee may condition his exercise of any Awards upon the
consummation of the transaction.
7.1.4
Other Adjustments
.
The Committee (and the Board if and only to the extent such authority is not
required to be exercised by the Committee to comply with Section 162(m) of the
Code) is authorized to make adjustments in the terms and conditions of, and the
criteria included in, Awards (including Performance Awards, or performance goals
relating thereto) in recognition of unusual or nonrecurring events (including,
without limitation, acquisitions and dispositions of businesses and assets)
affecting the Company, any Related Entity or any business unit, or the financial
statements of the Company or any Related Entity, or in response to changes in
applicable laws, regulations, accounting principles, tax rates and regulations
or business conditions or in view of the Committee's assessment of the business
strategy of the Company, any Related Entity or business unit thereof,
performance of comparable organizations, economic and business conditions,
personal performance of a Grantee, and any other circumstances deemed relevant;
provided that no such adjustment shall be authorized or made if and to the
extent that such authority or the making of such adjustment would cause Stock
Options or Stock Awards granted pursuant to Section 6 to Grantees designated by
the Committee as Covered Employees and intended to qualify as “performance-based
compensation” under Code Section 162(m) and the regulations thereunder to
otherwise fail to qualify as “performance-based compensation” under Code Section
162(m) and regulations thereunder.
7.1.5
Fractional
Shares
. No adjustment or substitution provided for in this
Section 7.1 shall require the Company to sell a fractional share, and the total
substitution or adjustment with respect to each outstanding Stock Option shall
be limited accordingly.
7.1.6
Adjustment
Certificates
. Upon any adjustment made pursuant to this
Section 7.1 the Company will, upon request, deliver to the Grantee a certificate
setting forth the exercise price thereafter in effect and the number and kind of
shares or other securities thereafter purchasable on the exercise of such Stock
Option.
7.2
General
.
7.2.1 Each
Stock Option and Stock Award shall be evidenced by an Award Agreement containing
such terms and conditions, not inconsistent with this Plan, as the Committee
shall approve.
7.2.2 The
granting of a Stock Option or Stock Award in any year shall not give the Grantee
any right to similar grants in future years or any right to be retained in the
employ of the Company, and all Employees shall remain subject to discharge to
the same extent as if this Plan were not in effect.
7.2.3 No
Officer, Employee, Director, or Consultant and no beneficiary or other person
claiming under or through him, shall have any right, title or interest by reason
of any Stock Option or any Stock Award to any particular assets of the Company,
or any shares of Common Stock allocated or reserved for the purposes of this
Plan or subject to any Stock Option or any Stock Award except as set forth
herein. The Company shall not be required to establish any fund or
make any other segregation of assets to assure the payment of any Stock Option
or Stock Award.
7.2.4
Limits on
Transferability
.
(a) Except
to the extent otherwise provided in the respective Award Agreement, no Award,
other right, or interest granted under this Plan shall be pledged, hypothecated,
or otherwise encumbered or subject to any lien, obligation, or liability of such
Grantee to any party, or assigned or transferred by such Grantee otherwise than
by will or the laws of descent and distribution or to a Beneficiary upon the
death of a Grantee. Unless otherwise determined by the Committee in
accordance with the provisions of the immediately preceding sentence, an Award
may be exercised during the lifetime of the Grantee only by the Grantee or,
during the period the Grantee is under a Disability, by the Grantee’s guardian
or legal representative.
(b) Notwithstanding
Section 7.2.4(a), an Award other than an Incentive Stock Option may, in the
Committee’s sole discretion, be transferable by gift or domestic relations order
to (i) the Grantee’s child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, daughter-in-law, son-in-law, brother-in-law, or sister-in-law,
including adoptive relationships (such persons, “Family Members”), (ii) a
corporation, partnership, limited liability company, or other business entity
whose only stockholders, partners, or members, as applicable are the Grantee
and/or Family Members, or (iii) a trust in which the Grantee and/or Family
Members have all of the beneficial interests, and subsequent to any such
transfer any Award may be exercised by any such transferee, provided, however,
no Award may be transferred for value (as defined in the General Instructions to
Form S-8 Registration Statement).
(c) Notwithstanding
Sections 7.2.4(a) and 7.2.4(b), an Award may be transferred pursuant to a
domestic relations order that would satisfy Section 414(p)(1)(A) of the Code if
such Section applied to an Award under this Plan, but only if the tax
consequences flowing from the assignment or transfer are specified in said
order, the order is accompanied by signed agreement by both or all parties to
the domestic relations order, and, if requested by the Committee, an opinion is
provided by qualified counsel for the Grantee that the order is enforceable by
or against this Plan under applicable law, and said opinion further specifies
the tax consequences flowing from the order and the appropriate tax reporting
procedures for this Plan.
7.2.5 Notwithstanding
any other provision of this Plan or agreements made pursuant thereto, the
Company's obligation to issue or deliver any certificate or certificates for
shares of Common Stock under a Stock Option or Stock Award, and the
transferability of Common Stock acquired by exercise of a Stock Option or grant
of a Stock Award, shall be subject to all of the following
conditions:
(a) Any
registration or other qualification of such shares under any state or federal
law or regulation, or the maintaining in effect of any such registration or
other qualification that the Board shall, in its absolute discretion upon the
advice of counsel, deem necessary or advisable; and
(b) The
obtaining of any other consent, approval, or permit from any state or federal
governmental agency that the Board shall, in its absolute discretion upon the
advice of counsel, determine to be necessary or advisable.
The
Company may, to the extent deemed necessary or advisable by the Committee,
postpone the issuance or delivery of Common Stock or payment of other benefits
under any Award until completion of such registration or qualification of such
Common Stock (including, but not limited to, the conditions described in
Sections 7.2.5(a) and 7.2.5(b) above) or other required action under any federal
or state law, rule or regulation, listing, or other required action with respect
to any stock exchange or automated quotation system upon which the Shares or
other Company securities are listed or quoted, or compliance with any other
obligation of the Company, as the Committee, may consider appropriate, and may
require any Grantee to make such representations, furnish such information and
comply with or be subject to such other conditions as it may consider
appropriate in connection with the issuance or delivery of Shares or payment of
other benefits in compliance with applicable laws, rules, and regulations,
listing requirements, or other obligations.
7.2.6 All
payments to Grantees or to their legal representatives shall be subject to any
applicable tax, community property, or other statutes or regulations of the
United States or of any state or country having jurisdiction over such
payments. The Grantee may be required to pay to the Company the
amount of any withholding taxes that the Company is required to withhold with
respect to a Stock Option or its exercise or a Stock Award. In the
event that such payment is not made when due, the Company shall have the right
to deduct, to the extent permitted by law, from any payment of any kind
otherwise due to such person all or part of the amount required to be
withheld.
7.2.7 In
the case of a grant of a Stock Option or Stock Award to any Employee of a
Subsidiary, the Company may, if the Committee so directs, issue or transfer the
shares, if any, covered by the Stock Option or Stock Award to such Subsidiary,
for such lawful consideration as the Committee may specify, upon the condition
or understanding that such Subsidiary will transfer the shares to the Employee
in accordance with the terms of the Stock Option or Stock Award specified by the
Committee pursuant to the provisions of this Plan.
7.2.8 A
Grantee entitled to Common Stock as a result of the exercise of a Stock Option
or grant of a Stock Award shall not be deemed for any purpose to be, or have
rights as, a shareholder of the Company by virtue of such exercise, except to
the extent that a stock certificate is issued therefor and then only from the
date such certificate is issued. No adjustments shall be made for
dividends or distributions or other rights for which the record date is prior to
the date such stock certificate is issued. The Company shall issue
any stock certificates required to be issued in connection with the exercise of
a Stock Option with reasonable promptness after such exercise.
7.2.9 The
grant or exercise of Stock Options granted under this Plan or the grant of a
Stock Award under this Plan shall be subject to, and shall in all respects
comply with, applicable law relating to such grant or exercise, or to the number
of shares of Common Stock that may be beneficially owned or held by any
Grantee.
7.2.10 The
Company intends that this Plan shall comply with the requirements of Rule 16b-3
(the “Rule”) under the Securities Exchange Act of 1934, as amended, during the
term of this Plan. Should any additional provisions be necessary for this Plan
to comply with the requirements of the Rule, the Board may amend this Plan to
add to or modify the provisions of this Plan accordingly.
7.2.11
Code Section
409A
.
(a) If
any Award constitutes a “nonqualified deferred compensation plan” under Section
409A of the Code (a “Section 409A Plan”), then the Award shall be subject to the
following additional requirements, if and to the extent required to comply with
Section 409A of the Code:
(i) Payments
under the Section 409A Plan may not be made earlier than (u) the Grantee’s
separation from service, (v) the date the Grantee becomes disabled, (w) the
Grantee’s death, (x) a specified time (or pursuant to a fixed schedule)
specified in the Award Agreement at the date of the deferral of such
compensation, (y) a change in the ownership or effective control of the
corporation, or in the ownership of a substantial portion of the assets of the
corporation, or (z) the occurrence of an unforeseeable emergency;
(ii) The
time or schedule for any payment of the deferred compensation may not be
accelerated, except to the extent provided in applicable Treasury Regulations or
other applicable guidance issued by the Internal Revenue Service;
(iii) Any
elections with respect to the deferral of such compensation or the time and form
of distribution of such deferred compensation shall comply with the requirements
of Section 409A(a)(4) of the Code; and
(iv) In
the case of any Grantee who is specified employee, a distribution on account of
a separation from service may not be made before the date that is six (6) months
after the date of the Grantee’s separation from service (or, if earlier, the
date of the Grantee’s death).
For
purposes of the foregoing, the terms “separation from service”, “disabled,” and
“specified employee”, all shall be defined in the same manner as those terms are
defined for purposes of Section 409A of the Code, and the limitations set forth
herein shall be applied in such manner (and only to the extent) as shall be
necessary to comply with any requirements of Section 409A of the Code that are
applicable to the Award.
(b) The
Award Agreement for any Award that the Committee reasonably determines to
constitute a Section 409A Plan, and the provisions of this Plan applicable to
that Award, shall be construed in a manner consistent with the applicable
requirements of Section 409A, and the Committee, in its sole discretion and
without the consent of any Grantee, may amend any Award Agreement (and the
provisions of this Plan applicable thereto) if and to the extent that the
Committee determines that such amendment is necessary or appropriate to comply
with the requirements of Section 409A of the Code. No Section 409A Plan shall be
adjusted, modified, or substituted for, pursuant to any provision of this Plan,
without the consent of the Grantee if any such adjustment, modification, or
substitution would cause the Section 409A Plan to violate the requirements of
Section 409A of the Code.
(c) The
Company intends that this Plan shall comply with the requirements of Section
409A of the Code, to the extent applicable. Should any changes to
this Plan be necessary for this Plan to comply with the requirements of Section
409A, the Board may amend this Plan to add to or modify the provisions of this
Plan accordingly.
7.2.12 The
validity, construction, and effect of this Plan, any rules and regulations under
this Plan, and any Award Agreement shall be determined in accordance with the
laws of the State of California without giving effect to principles of conflict
of laws, and applicable federal law. Unless otherwise provided in the
Award Agreement, recipients of an Award under this Plan are deemed to submit to
the exclusive jurisdiction and venue of the federal or state courts whose
jurisdiction covers California to resolve any and all issues that may arise out
of or relate to this Plan or any related Award Agreement.
7.2.13 The
Board shall have the authority to adopt such modifications, procedures, and
subplans as may be necessary or desirable to comply with provisions of the laws
of foreign countries in which the Company or its Related Entities may operate to
assure the viability of the benefits from Awards granted to Grantees performing
services in such countries and to meet the objectives of this Plan.
7.2.14 The
Company will seek stockholder approval in the manner and to the degree required
under applicable laws. If the Company fails to obtain any required
stockholder approval of this Plan within twelve (12) months after the date this
Plan is adopted by the Board, pursuant to Section 422 of the Code, any Option
granted as an Incentive Stock Option at any time under this Plan will not
qualify as an Incentive Stock Option within the meaning of the Code and will be
deemed to be a Non-Statutory Stock Option.
[End of
Document]
ANNEX B
PROPOSED
CERTIFICATE
OF AMENDMENT
TO
CERTIFICATE
OF INCORPORATION
OF
PREMIER
POWER RENEWABLE ENERGY, INC.
The
undersigned,
[ ],
hereby certifies that:
1. He
is the
[ ]
of Premier Power Renewable Energy, Inc., a Delaware corporation (the
“Corporation”), and is duly authorized by the unanimous written consent of the
Board of Directors of the Corporation to execute this instrument.
2. This
Certificate of Amendment of the Certificate of Incorporation was duly approved
by the Corporation’s Board of Directors, in accordance with the applicable
provisions of Sections 141 and 242 of the General Corporation Law of the State
of Delaware, and duly adopted by written consent of the holders of a majority of
the outstanding shares of common stock of the Corporation, in accordance with
the applicable provisions of Sections 228 and 242 of the General Corporation Law
of the State of Delaware.
3. The
following paragraph in full is hereby added to Article FOURTH of the Certificate
of Incorporation:
“4.
Reverse Stock
Split
. Effective at 5:00 p.m. (Delaware time) on
,
201 each
[ ]
shares of common stock issued and outstanding at such time shall be combined
into one (1) share of Common Stock (the “Reverse Stock
Split”). No fractional shares shall be issued upon the Reverse Stock
Split. All shares of Common Stock (including fractions thereof)
issuable upon the Reverse Stock Split to a given holder shall be aggregated for
purposes of determining whether the Reverse Stock Split would result in the
issuance of a fractional share. If, after the aforementioned
aggregation, the Reverse Stock Split would result in the issuance of a fraction
of a share of Common Stock, the Corporation shall, in lieu of issuing any such
fractional share, round up to the nearest whole number of shares in order to
bring the number of shares held by such holder up to the next whole number of
shares of Common Stock.”
4. This
Certificate of Amendment is effective immediately upon filing.
IN WITNESS WHEREOF
, the
Corporation has caused this Certificate of Amendment of the Certificate of
Incorporation to be executed this
[ ] day of
[ ].
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PREMIER
POWER RENEWABLE ENERGY, INC.
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Premier Power Renewable ... (CE) (USOTC:PPRW)
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