PRELIMINARY
INFORMATION
STATEMENT
FOR
VERECLOUD,
INC.,
A
NEVADA CORPORATION
6560
South Greenwood Plaza Boulevard, Number 400
Englewood,
Colorado 80111
Telephone
Number: (877) 711-6492
July __,
2010
To our
stockholders:
Enclosed
please find an information statement providing information to you regarding
action recently taken to: (i) authorize an amendment to Verecloud, Inc.'s (the
"Company") Articles of Incorporation, which increases the amount of the
Company's authorized common stock, par value $0.001 per share from 100,000,000
shares to 200,000,000 shares; and (ii) authorize and establish the Company's
2009 Equity Incentive Plan (the "Plan"), and approve the First Amendment to the
Plan, which increases the authorized under the Plan from 8,000,000 to
16,000,000. These actions were approved by a joint written consent in lieu of a
special meeting of a stockholder holding more than a majority of our issued and
outstanding common stock and our Board of Directors on June 22,
2010.
Your vote
is not required to approve any of these actions, and the enclosed information
statement is not a request for your vote or a proxy. The accompanying
information statement is furnished only to inform stockholders of the actions
taken by the written consent described above before they take effect in
accordance with Rule 14c-2 promulgated under the Securities Exchange Act of
1934, as amended. This information statement is first being mailed to you on or
about July __, 2010 and we anticipate the effective date of the actions to be
July __, 2010, or as soon thereafter as practicable in accordance with
applicable law.
Please
read the accompanying information statement carefully.
By Order
of the Board of Directors,
Very truly yours,
VERECLOUD, INC.
By:
/s/ JOHN F.
MCCAWLEY
John
F. McCawley
Chief Executive Officer
PRELIMINARY
INFORMATION
STATEMENT
FOR
VERECLOUD,
INC.
6560
South Greenwood Plaza Boulevard, Number 400
Englewood,
Colorado 80111
Telephone
Number: (877) 711-6492
NOTICE
OF ACTION TAKEN BY WRITTEN CONSENT OF OUR MAJORITY STOCKHOLDER
WE
ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY.
This
information statement is first being furnished on or about July __, 2010 to the
holders of record as of the close of business on July __, 2010 (the "Notice
Date") of the common stock, par value $0.001 per share ("Common Stock"), of
Verecloud, Inc. (referred to in this information statement as "we", "us", "our",
the "Company", or "Verecloud").
This
information statement is being furnished to inform our stockholders about the
following transactions approved by written consent of our majority stockholder
and Board of Directors on June 22, 2010: (i) the approval of an
amendment to the Company's Articles of Incorporation, which increases the amount
of the Company's authorized common stock, par value $0.001 ("
Common Stock"
)
from
100,000,000 shares to 200,000,000 shares (the "Amendment"); and (ii) the
approval of the Company's 2009 Equity Incentive Plan (the "Plan"), and approve
the First Amendment to the Plan (the "
Plan
Amendment"
),
which increases the authorized shares under the Plan from 8,000,000 to
16,000,000
. This information statement is being filed with the
U.S. Securities and Exchange Commission ("SEC") pursuant to Section 14(c) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and provided
to the Company’s stockholders pursuant to Rule 14c-2 promulgated under the
Exchange Act.
We will
pay all costs associated with the distribution of this information statement,
including the costs of printing and mailing. We will reimburse
brokerage firms and other custodians, nominees and fiduciaries for reasonable
expenses incurred by them in sending this information statement to the
beneficial owners of our Common Stock.
FORWARD
LOOKING STATEMENTS
This
information statement and other reports that we file with the SEC contain
certain forward-looking statements relating to future events performance. In
some cases, you can identify forward-looking statements by terminology such as
"may," "will," "should," "expect," "intend," "plan," anticipate," "believe,"
"estimate," "predict," "potential," "continue," or similar terms, variations of
such terms or the negative of such terms. These statements are only predictions
and involve known and unknown risks, uncertainties and other factors, including
those risks discussed elsewhere herein. Although forward-looking statements, and
any assumptions upon which they are based, are made in good faith and reflect
our current judgment, actual results could differ materially from those
anticipated in such statements. Except as required by applicable law, including
the securities laws of the United States, we do not intend to update any of the
forward-looking statements to conform these statements to actual
results.
The date
of this information statement is July __, 2010.
QUESTIONS
AND ANSWERS ABOUT THIS INFORMATION STATEMENT
On June
22, 2010, the Company's majority stockholder and Board of Directors executed a
written consent in lieu of a special meeting pursuant to Nevada Revised Statutes
Sections 78.315 and 78.320 in which the majority stockholder and the Board of
Directors approved: (i) the Amendment, which increases the
amount of the Company's authorized Common Stock from 100,000,000 shares to
200,000,000 shares; (ii) the Plan (the Plan was previously authorized by a
written consent in lieu of a special meeting by the Board of Directors on
October 27, 2009, and pursuant to the Plan, stockholder authorization is
required within 12 months of the effective date of the Plan – October 31, 2009);
and (iii) the Plan Amendment, which increases the amount of shares of Common
Stock authorized to be issued under the Plan from 8,000,000 shares to 16,000,000
shares and increases the maximum individual grant under the Plan from 4,000,000
shares to 8,000,000 shares.
The
following questions and answers address briefly some questions you may have
regarding this information statement. These questions and answers may
not address all questions that may be important to you as a
stockholder. Please refer to the more detailed information contained
elsewhere in this information statement.
Q:
|
Why
did you send me this information
statement?
|
A:
|
We
sent you this information statement to inform you about recent actions
taken by the holder of a majority of the voting power of the Company’s
issued and outstanding Common Stock by executing a written consent in lieu
of a special meeting. You are not required to take any action
with respect to any of the information set forth in this information
statement. The Board of Directors has fixed the close of
business on July __, 2010 as the Notice Date for the determination of
stockholders entitled to receive this information
statement.
|
Q:
|
Will
the actions taken by written consent also be submitted to all of the
Company’s stockholders for
approval?
|
A:
|
No. Under
Nevada Revised Statutes Section 78.320 and the Company’s Bylaws,
stockholder action taken by written consent in lieu of a special meeting
is effective as if taken at a special meeting of the Company’s
stockholders. No further stockholder approval is necessary and
there will be no meeting specifically called for the purpose of approving
again the actions taken by written consent described
herein. Under Rule 14(c) of the Exchange Act, the actions
approved by the majority stockholder on June 22, 2010 will become
effective not less than 20 calendar days after the date this information
is sent or given to our stockholders, which we anticipate to be on August
__, 2010.
|
Q:
|
Will
there be a meeting of the Company’s stockholders during
2010?
|
A: The
Company intends to hold its annual meeting of stockholders in the Fall of
2010.
Q:
|
How
many shares of Common Stock were eligible to consent to the actions
described in this information statement and who was eligible to take
action by written consent in lieu of
meeting?
|
A:
|
As
of June 22, 2010, the date of the written consent of the majority
stockholder, there were 70,083,000 shares of Common Stock issued and
outstanding and eligible to vote with respect to actions to be taken by
our stockholders. For purposes of this calculation, we did not include
shares of Common Stock underlying outstanding options issued under the
Plan or outstanding warrants.
|
Q:
|
What
vote was required to authorize and approve the actions taken by written
consent in lieu of meeting?
|
A:
|
Under
Nevada law and pursuant to the Company’s Bylaws, any action required or
permitted to be taken at a special meeting of the Company’s stockholders
may be taken without a meeting if, before or after the action, a written
consent thereto is signed by stockholders holding at least a majority of
the voting power entitled to consent thereto. A stockholder
holding an aggregate of 42,320,000 shares of Common Stock or 60.37% of the
voting power executed the written
consent.
|
Q:
|
When
did the Board of Directors approve the actions subject to this information
statement?
|
A:
|
Our
Board of Directors approved the actions described in this information
statement in two separate written consents in lieu of a special
meeting: (i) on October 27, 2009, the Board of Directors
approved the Plan, and pursuant to the Plan, stockholder approval is
required within 12 months of the Plan's effective date of October 31,
2009; and (ii) on June 22, 2010, our Board of Directors approved the
remaining actions set forth in this information
statement.
|
Q:
|
Do
the Company’s stockholders have any dissenters’ rights or rights of
appraisal with respect to the actions described in this information
statement?
|
A:
|
No. Under
Nevada law, our stockholders do not have dissenters’ or appraisal rights
in connection with any of the stockholder actions taken by written consent
in lieu of a meeting described in this information
statement.
|
Q:
|
At
what point may the Company take the actions approved by the Company’s
majority stockholder in the written consent in lieu of
meeting?
|
A:
|
The
Company can take the actions previously approved by its majority
stockholder and Board of Directors not less than 20 calendar days after
the date this information statement is sent or given to our stockholders,
which we anticipate to be August __,
2010.
|
Q:
|
Where
can I find out more information about the
Company?
|
A:
|
We
are subject to the informational requirements of the Exchange Act, which
requires that we file reports, proxy statements and other information with
the SEC. The SEC maintains a website on the Internet that
contains reports, proxy and information statements and other information
regarding registrants, including us, that file electronically with the
SEC. The SEC’s website address is http://www.sec.gov. In
addition, our Exchange Act filings may be inspected and copied at the
SEC’s Public Reference Room located at 100 F. Street, N.E., Washington,
D.C. 20549. Copies of our Transition Report on Form 10-KT for
the six months ended June 30, 2009 may be obtained without charge upon
request made to Verecloud, Inc., 6560 South Greenwood Plaza Boulevard,
Number 400, Englewood, Colorado 80111, Attention: Corporate
Secretary.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Beneficial
ownership is determined in accordance with Rule 13d-3 under the Exchange Act. In
computing the number of shares beneficially owned by a person or a group and the
percentage ownership of that person or group, shares of our common stock subject
to options or warrants currently exercisable or exercisable within 60 days after
the date hereof are deemed outstanding, but are not deemed outstanding for the
purpose of computing the percentage ownership of any other
person. The following table sets forth certain information with
respect to beneficial ownership of our Common Stock based on 72,786,333 issued
and outstanding shares of Common Stock as of June 30, 2010 by:
|
|
|
|
•
|
each
person known to be the beneficial owner of 5% or more of the outstanding
Common Stock of the Company;
|
|
|
|
|
•
|
each
executive officer;
|
|
|
|
|
•
|
each
director; and
|
|
|
|
|
•
|
all
of the executive officers and directors as a
group.
|
Unless
otherwise indicated, 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, subject to community property laws where applicable.
Unless otherwise indicated, the address of each stockholder listed in the table
is c/o Verecloud, Inc.
6560 South Greenwood Plaza
Boulevard, Number 400,
Englewood, Colorado
80111.
|
|
|
|
|
|
|
|
Name
and Address of Beneficial Owner
|
|
|
Number
of Shares Beneficially Owned
|
|
|
Percent
of Class Beneficially Owned
|
|
|
|
|
|
|
|
|
|
Directors
and Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
F. McCawley, Chief Executive Officer and Director
|
|
|
42,320,000
|
|
|
58.1%
|
|
|
|
|
|
|
|
|
|
William
E. Wood, III, President
|
|
|
0
|
|
|
*
|
|
|
|
|
|
|
|
|
|
Michael
P. Cookson, Chief Operating Officer
|
|
|
843,333(1)
|
|
|
1.1%
|
|
|
|
|
|
|
|
|
|
James
R. Buckley, Chief Financial Officer
|
|
|
400,000
|
|
|
*
|
|
|
|
|
|
|
|
|
|
Mark
Faris, Executive Vice President, Director and Chairman of the
Board
|
|
|
710,000(1)
|
|
|
*
|
|
|
|
|
|
|
|
|
|
William
Perkins, Chief Technology Officer
|
|
|
1,150,000(1)
|
|
|
1.6%
|
|
|
|
|
|
|
|
|
|
Officers
and Directors as a group
|
|
|
45,423,333
|
|
|
62.4%
|
|
(total
of 6 persons)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5%
Stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TMG
Holdings, LLC (2)
c/o
The Mesa Group, Inc.
7598
North Mesa Street
El
Paso, TX 79912
|
|
|
21,800,000
|
|
|
30.0%
|
|
|
|
|
|
|
|
|
|
* Denotes
less than 1%.
(1)
Represents vested options to purchase Common Stock of the Company pursuant to
the Plan.
(2) TMG
Holdings, LLC, a Texas limited liability company, is beneficially owned 50% by
Scott Schwartz and 50% by Douglas Schwartz. Each of Scott Schwartz
and Douglas Schwartz controls 50% of the voting power and 50% of the investment
power of TMG Holdings, LLC.
ACTION
1 – APPROVAL OF AMENDMENT TO ARTICLES OF INCORPORATION TO INCREASE AUTHORIZED
AMOUNT OF COMMON STOCK
The Board
of Directors approved the Amendment via a written consent in lieu of a special
meeting dated June 22, 2010. The Amendment increases the amount of
authorized shares of Common Stock from 100,000,000 shares to 200,000,000
shares. On June 22, 2010, a stockholder holding 42,320,000 shares of
Common Stock, or 60.37% of the voting power, executed a written consent in lieu
of a special meeting approving the Amendment.
Reason for Increase in
Authorized Shares
As of
June 30, 2010, a total of 70,083,000 shares of our currently authorized
100,000,000 shares of Common Stock are issued and outstanding. In
addition, we have reserved an aggregate of 17,250,000 shares of Common Stock for
issuance pursuant to outstanding employee stock options and warrants. Therefore,
the limited number of authorized, non-designated shares of Common Stock
available for issuance in the future significantly impairs our ability to
conduct equity financings, acquisitions using our Common Stock as currency,
stock dividends and other transactions that involve the issuance of Common
Stock.
The
increase in the number of authorized, but unissued shares of Common Stock would
enable us, without further stockholder approval, to issue shares from time to
time as may be required for proper business purposes. These purposes
include, raising additional capital for ongoing operations, business and asset
acquisitions, stock splits and dividends, present and future employee benefit
programs and other corporate purposes.
Issuance
by the Company of any additional shares of Common Stock would dilute both the
equity interests and earnings per share of existing holders of Common
Stock. Such dilution may be substantial, depending on the amount of
shares issued. The newly authorized shares of Common Stock will have
voting and other rights identical to those of the currently authorized shares of
Common Stock. Therefore, the increase will have a dilutive effect on
the voting power of existing stockholders once additional shares of Common Stock
are issued.
In
addition to financing purposes, the Company could also issue shares of Common
Stock that may make it more difficult or discourage any attempt to obtain
control of our Company by means of a merger, tender offer, proxy contest or
other means. When, in the judgment of the Board of Directors, this
action will be in the best interest of the stockholders and our Company, such
shares could be used to create voting or other impediments or to discourage
persons seeking to gain control of our Company. Such shares also
could be privately placed with purchasers favorable to the Board of Directors in
opposing such action. In addition, the Board of Directors could
authorize holders of a series of Common Stock to vote either separately as a
class or with the holders of our Common Stock on any merger, sale or exchange of
assets by our Company or any other extraordinary corporate
transaction. The existence of the additional authorized shares could
have the effect of discouraging unsolicited takeover attempts. The
issuance of new shares also could be used to dilute the stock ownership of a
person or entity seeking to obtain control of our Company should the Board of
Directors consider the action of such entity or person not to be in the best
interest of the stockholders. The issuance of new shares also could
be used to entrench current management or deter an attempt to replace the Board
of Directors by diluting the number or rights of shares by individuals seeking
to control our Company by obtaining a certain number of seats on the Board of
Directors.
Except
for potential equity financings, the shares reserved under the Plan, and the
shares reserved under other outstanding securities, including warrants,
convertible into or exercisable for shares of Common Stock, there are currently
no plans, arrangements, commitments or understandings for the issuance of the
additional shares of Common Stock which are to be authorized.
ACTION
2 – APPROVAL OF VERECLOUD, INC. 2009 EQUITY INCENTIVE PLAN
On
October 27, 2009, the Board of Directors executed a written consent in lieu of a
special meeting approving the Plan. Pursuant to the Plan, stockholder
approval of the Plan is required within 12 months of the Plan's effective date
of October 31, 2009. In addition, the Board of Directors
executed a written consent in lieu of a special meeting on June 22, 2010
approving the Plan Amendment. On June 22, 2010, a stockholder holding
42,320,000 shares of Common Stock or 60.37% of the voting power executed a
written consent in lieu of a special meeting approving the Plan and the Plan
Amendment. The Plan Amendment increases the amount of shares of
Common Stock available for issuance under the Plan from 8,000,000 shares to
16,000,000 shares and increases the maximum amount for an individual grant under
the Plan from 4,000,000 shares to 8,000,000 shares.
Reasons for Approval of the
Plan
The
purpose of the Plan is to benefit the Company's stockholders by furthering the
growth and development of the Company by affording an opportunity for stock
ownership to attract, retain and provide incentives to employees and directors
of, and non-employee consultants to, the Company and its affiliates, and to
assist the Company in attracting and retaining new employees, directors and
consultants; to encourage growth of the Company through incentives that are
consistent with the Company's goals; to provide incentives for individual
performance; and to promote teamwork.
Under the
Plan, the Board of Directors in its sole discretion may grant stock options,
stock appreciation rights, restricted stock, restricted stock units, bonus
stock, deferred stock or other equity-based awards (each, an "Award") to the
Company's employees, directors and consultants (or those of the Company's
affiliates). The Awards available under the Plan also include
performance-based Awards, which would have pre-established performance goals
that relate to the achievement of the Company’s business
objectives. The performance-based stock Awards available under the
Plan are intended to comply with the requirements of Section 162(m) of the
Internal Revenue Code of 1986, as amended, to allow such Awards, when payable,
to be tax deductible by the Company.
The
Company initially reserved a total of 8,000,000 shares of Common Stock for
issuance under the Plan. However, when the Plan is amended, there
will be 16,000,000 shares of Common Stock reserved for issuance. To
the extent that an Award expires, ceases to be exercisable, is forfeited or
repurchased by the Company, any shares subject to the Award may be used again
for new grants under the Plan. In addition, shares tendered or
withheld to satisfy the grant or exercise price or tax withholding obligation
with respect to any Award (other than with respect to options) may be used for
grants under the Plan. Initially, the maximum number of shares of
Common Stock that may be subject to one or more Awards to a participant pursuant
to the Plan during any fiscal year of the Company is
4,000,000. However, the Plan, as amended, increases this maximum
amount to 8,000,000 shares.
The Plan
Amendment increases the maximum number of shares of Common Stock reserved for
issuance under the Plan from 8,000,000 to 16,000,000, and increases the maximum
amount available for an individual grant to 8,000,000 shares of Common
Stock. As of June 30, 2010, 15,300,000 options to acquire shares
of Common Stock and restricted shares have been issued and are
outstanding under the Plan (options issued to acquire in excess of
8,000,000 shares of Common Stock are subject to the effectiveness of the Plan
Amendment) leaving 700,000 shares of Common Stock remaining available for option
and stock awards under the Plan. The 15,300,000 options to acquire shares of
Common Stock and restricted shares consist of the following:
·
|
15,100,000
options to acquire shares of Common Stock. In general, each option vests
evenly on the last day of each fiscal quarter, based on a three-year
period commencing upon the employee’s original date-of-hire. As
of June 30, 2010, 4,627,083 options have
vested.
|
·
|
200,000
shares awarded as restricted stock to those employees of the Company put
on furlough as a result of the November 2, 2009 contract termination with
SkyTerra Communications. Each restricted stock award will vest
evenly on the first day of each third month over a two-year period
commencing on November 1, 2009, provided that the employee has been
reinstated to a full-time position at the Company on or before July 1,
2010. Effective July 1, 2010, 180,000 of these shares
were cancelled and became eligible for option and stock awards under the
Plan since the employees who received these shares were not reinstated to
employment on or before July 1, 2010. Of the remaining 20,000 restricted
shares that were not cancelled, 5,000 shares vested on June
30, 2010.
|
In light
of historical usage and potential future grants, we anticipate the number of
shares of Common Stock, as increased, available for Awards under the Plan will
be adequate to meet our requirements, until our stockholders' meeting this
fall.
The
summary description of the Plan is qualified in its entirety by the actual text
of the Plan, which has been previously disclosed on the Company's Current Report
on Form 8-K, filed November 2, 2009. The summary description of the
Plan Amendment is qualified in its entirety by the complete text of the Plan
Amendment, which is attached hereto as
Exhibit A
and
incorporated herein by reference.
The
following table sets forth the dollar values and number of units awarded for the
Plan per SEC guidance:
NEW
PLAN BENEFITS
Verecloud,
Inc. 2009 Equity Incentive Plan
Name
and Position
|
|
Dollar
Value ($)
|
|
|
Number
of Units
|
|
|
|
|
|
|
|
|
John
F. McCawley – Chief Executive Officer and Director
|
|
$
|
--
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
William
E. Wood, III – President
|
|
$
|
114,000.00
|
|
|
|
5,700,000
|
|
|
|
|
|
|
|
|
|
|
William
Perkins – Chief Technology Officer
|
|
$
|
87,500.00
|
|
|
|
1,500,000
|
|
|
|
|
|
|
|
|
|
|
Mark
Faris – Executive Vice President and Director
|
|
$
|
94,000.00
|
|
|
|
1,420,000
|
|
|
|
|
|
|
|
|
|
|
Mike
Cookson – Chief Operating Officer
|
|
$
|
74,400.00
|
|
|
|
1,420,000
|
|
|
|
|
|
|
|
|
|
|
James
R. Buckley – Chief Financial Officer
|
|
$
|
38,000.00
|
|
|
|
1,900,000
|
|
|
|
|
|
|
|
|
|
|
Total
– Named Executive Officers
|
|
$
|
413,300.00
|
|
|
|
11,940,000
|
|
|
|
|
|
|
|
|
|
|
Total
– Non-Executive Director Group
|
|
|
--
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
Non-Executive
Officer Employee Group
|
|
$
|
202,700.00
|
|
|
|
3,360,000
|
|
COMPENSATION
OF OFFICERS AND DIRECTORS
Summary
Compensation Information
The
following table provides certain summary information concerning the compensation
earned for services rendered in all capacities to the Company and its
subsidiaries for the fiscal years ended June 30, 2010 and June 30, 2009 by the
Company’s Principal Executive Officer, Principal Financial Officer and the
Company’s three other most highly compensated executive officers whose total
compensation for the fiscal years ended June 30, 2010 and June 30, 2009 was in
excess of $100,000 and who were serving as executive officers at the end of that
fiscal year. No other executive officers who would have otherwise been
includable in such table on the basis of total compensation for the 2010 or 2009
fiscal years have been included by reason of their termination of employment or
change in executive officer status during that year. The listed individuals
shall be hereinafter referred to as the "named executive officers."
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
|
|
Salary
|
|
|
|
Bonus
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
F. McCawley
|
2010
|
|
$
|
247,334
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
247,334
|
|
|
2009
|
|
$
|
240,000
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
240,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William
Perkins
|
2010
|
|
$
|
166,685
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
56,330
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
223,015
|
|
|
2009
|
|
$
|
170,050
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
170,050
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark
Faris
|
2010
|
|
$
|
179,308
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
34,778
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
214,085
|
|
|
2009
|
|
$
|
100,000
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
P. Cookson
|
2010
|
|
$
|
169,945
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
41,309
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
211,254
|
|
|
2009
|
|
$
|
158,875
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
158,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
R. Buckley
|
2010
|
|
$
|
7,500
|
|
(1)
|
|
$
|
-
|
|
|
$
|
28,000
|
|
(2)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
174,013
|
|
(1)
|
|
$
|
209,513
|
|
|
2009
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
55,125
|
|
(1)
|
|
$
|
55,125
|
|
(1)
|
James
R. Buckley served as a consultant from November 2008 to June 22, 2010 and
received payments totaling $174,013 and $55,125 for the fiscal years ended
June 30, 2010 and 2009, respectively, that are included in the Other
Compensation column. Effective June 22, 2010, Mr. Buckley became the
full-time Chief Financial Officer of the Company with a base salary of
$180,000 per year.
|
(2)
|
On
February 24, 2010, the Company granted Mr. Buckley 400,000 shares of
Common Stock for his consulting services as Chief Financial Officer of the
Company.
|
Elements
of Compensation
Our
compensation program for the named executive officers consists of base salary,
equity in the form of stock options, and a discretionary bonus. There is no
retirement plan, long-term incentive plan or other such plans. The base salary
we provide is intended to equitably compensate the named executive officers
based upon their level of responsibility, complexity and importance of role,
leadership and growth potential, and experience.
Base
Salary
Our named
executive officers receive base salaries commensurate with their roles and
responsibilities. On June 22, 2010, we executed employment agreements
with William E. Wood, III, Michael P. Cookson, James R. Buckley and William
Perkins as described below. Base salaries and subsequent adjustments,
if any, are reviewed and approved by our Board of Directors annually, based on
independent evaluations of each executive’s performance for the prior year,
expertise and position, and objective sources such as
PayScale.com. The base salaries and other compensation paid to our
named executive officers (excluding Mr. Wood who was appointed as President
on June 22, 2010) in the fiscal years ended June 30, 2010 and 2009 are reflected
in the Summary Compensation Table above.
Stock-Based
Awards
Our named
executive officers are eligible to receive options to purchase Common Stock
pursuant to the Plan, which our Board of Directors approved on October 27,
2009. These option grants are based upon numerous factors including a
combination of performance and relative value of different job
types. In addition, the Board of Directors believes that stock-based
awards, based upon individual performance, will maximize shareholder value
through incentivizing the Company’s named executive officers and retaining them
through multi-year vesting periods. As of June 30, 2010, there have
been 6,240,000 options to purchase the Company’s Common Stock issued to our
named executive officers, of which 2,703,333 have vested.
Unit
Bonus Plan
On
January 26, 2010, the Board of Directors adopted the Verecloud, Inc. Unit Bonus
Plan (the "Unit Bonus Plan") and granted unit awards ("Unit Awards") to certain
current key employees of the Company pursuant to the terms of the Unit Bonus
Plan. The Unit Bonus Plan provides that a participant’s Unit Award
will vest and become payable only upon one of the following events: (i) a change
in control of the Company (a "Change in Control"); (ii) a valuation of the
Company equal to or greater than $30 million that is sustained for a period of
15 consecutive days (a "Market Valuation Event"); or (iii) the participant’s
involuntary separation from service by the Company without cause or by reason of
the participant’s death or disability (an "Involuntary
Separation").
The
Company may pay the Unit Award to the participant (or the participant’s
beneficiary) in cash or Common Stock as determined by the Board of Directors in
its sole discretion. The Company will make payments in connection
with a Change in Control no later than five days following such
event. The Company will make payments in connection with a Market
Valuation Event no later than 30 days following such event. For
payments in connection with a participant’s Involuntary Separation, the Company
will pay the participant 25 percent of the participant’s Unit Award on the first
day of the first month following the date of his Involuntary Separation and will
pay the balance to the participant in three subsequent annual payments beginning
on the anniversary date of the first payment date. However, if the
participant separated from service by reason of his death or, if the participant
dies after his Involuntary Separation but prior to receiving his entire Unit
Award payment, the Company will pay the participant the balance of such Unit
Award in a lump sum no more than 30 days after receiving notification of the
participant’s death. The Unit Bonus Plan provides that if the making
of any payment would jeopardize the ability of the Company to continue as a
going concern, the payment will be delayed until the date that the payment would
not have such an effect on the Company.
The total
value of the unit pool is equal to, as applicable, 12.5 percent of the following
amounts: (i) the total consideration received by the Company upon a Change in
Control; or (ii) the fair market value of the outstanding shares of Common Stock
of the Company at the time of a Market Valuation Event or an applicable
Involuntary Separation (the "Company Value"). Mark Faris, Executive
Vice President and the Chairman of the Board of Directors, received a Unit Award
equal to 5 percent of the Company Value, William Perkins, Chief Technology
Officer, received a Unit Award equal to 2.5 percent of the Company Value and
Michael P. Cookson, Chief Operating Officer, received a Unit Award equal to 2
percent of the Company Value.
Retention
Bonus Agreements
On
January 26, 2010, the Board of Directors also approved the Company entering into
Retention Bonus Agreements (each, a "Retention Agreement") with four current
employees, including Lynn Schlemeyer, Mark Faris, Michael P. Cookson and William
Perkins. From November 1, 2009 thru June 15, 2010, the annual salary
of each of these four employees was reduced by 25 percent. Each
Retention Agreement provides that, subject to the employee’s continuous service
with the Company from the effective date of the Retention Agreement through the
date of the Triggering Event (as defined below), the employee may receive a
bonus, in the form of either cash or stock, in an amount equal to the salary
such employee has foregone since November 1, 2009. The "Triggering
Event" is the board of director’s declaration to pay a bonus based on one of the
following events: (i) a Change of Control, as such term is defined in
the Plan; (ii) removal of the "going concern" status of the Company rendered by
an external audit and as reported in the Company’s public filings; (iii) the
receipt of intermediate-term financing, which is determined by the Board of
Directors to merit the approval of the bonus; or (iv) the entry into a material
definitive agreement, which is determined by the Board of Directors to merit the
approval of the bonus. On June 22, 2010 and in connection with the
Loan Agreement by and between the Company and TMG Holdings Colorado, LLC, a
Texas limited liability company, as previously disclosed on the Company's
Current Report on Form 8-K, filed June 16, 2010, the Board of Directors deemed
the loan to the Company as the "receipt of intermediate-term financing" and
authorized the payment of a bonus under each Retention Agreement. As a result,
the Company accrued $107,042 related to the amounts owed the four employees
noted above, which have been included in the Summary Compensation Table, where
applicable. Of this amount, $40,000 was paid in cash on June 30, 2010. The
remainder will be paid in cash or stock prior to March 31, 2011.
Incentive
Compensation Plan
On June
22, 2010, the Company's Board of Directors approved the Verecloud, Inc. 2010
Incentive Compensation Plan (the "Incentive Compensation Plan"). The
purpose of the Incentive Compensation Plan is to motivate the Company's
employees to achieve performance-based financial results by rewarding employees
for their contributions to the Company's performance. The Incentive
Compensation Plan is only in effect for the Company's 2011 Fiscal Year (July 1,
2010 through June 30, 2011). All individuals employed by the Company
in a full-time capacity before July 1, 2010 are eligible to participate in the
Incentive Compensation Plan. The Incentive Compensation Plan has two
components: first, there is a corporate performance factor, which is
measured by the Company’s EBITDA; and second, there is an individual performance
factor, which is based on each employee's individual performance review. The
corporate performance factor is weighted at 75 percent and the individual
performance factor is weighted at 25 percent. Percentage achievement of these
weighted factors is multiplied by each participant’s target incentive to
determine the amount payable under the Incentive Compensation Plan to that
participant. Amounts payable under the Plan are calculated semi-annually and are
targeted to be paid on or about January 15, 2011 and August 15, 2011. Each
participant’s semi-annual payment under the Incentive Compensation Plan is
subject to his continuous employment through the date his lump sum payment is
distributed by the Company. As of July __, 2010, there have
been no issuances or payments made under the Incentive Compensation
Plan.
Retirement
Benefits
Currently,
we do not provide any company sponsored retirement benefits to any employee,
including the named executive officers.
Perquisites
Historically,
we have not provided our named executive officers with any perquisites or other
personal benefits. We do not view perquisites as a significant element of our
compensation structure, but do believe that perquisites can be useful in
attracting, motivating and retaining the executive talent for which we compete.
It is expected that our historical practices regarding perquisites will continue
and will be subject to periodic review by our by our Board of Directors.
Employment
Agreements
On June
22, 2010, we entered into employment agreements (the "Employment Agreements")
with the following executives: (i) our new President, William E.
Wood, III; (ii) our Chief Financial Officer, James R. Buckley; (iii) our Chief
Operating Officer, Michael P. Cookson; and (iv) our Chief Technology Officer,
William Perkins.
Pursuant
to the Employment Agreements:
(a) Mr.
Wood is to receive a base salary of $225,000 per annum and options to purchase
5,700,000 shares of the Company's Common Stock at $0.02 per share;
(b) Mr.
Buckley is to receive a base salary of $180,000 per annum and options to
purchase 1,900,000 shares of the Company's Common Stock at $0.02 per
share;
(c) Mr.
Cookson is to receive a base salary of $180,000 per annum and options to
purchase 500,000 shares of the Company's Common Stock at $0.02 per share;
and
(d) Mr.
Perkins is to receive a base salary of $180,000 per annum and options to
purchase 350,000 shares of the Company's Common Stock at $0.02 per
share.
Each
option granted above will vest 1/12 on the last day of each calendar quarter
commencing September 30, 2010, so that if each executive remains continuously
employed by the Company, their respective options will fully vest on June 30,
2013.
In
addition, the Employment Agreements provide that each of the executives is
eligible to participate in the Company's benefit plans (including, as they
become available, savings, profit-sharing, life, disability, health, accident
and other programs), will accrue three weeks paid vacation per year and be
entitled to paid holidays in accordance with the Company's vacation
policy.
In the
event any executive's employment is terminated without cause (as defined in the
Employment Agreements) or the executive resigns for good reason (as defined in
the Employment Agreements), upon execution of a release of claims against the
Company, the executive would be entitled to receive an amount equal to six times
the amount of his monthly base salary. However, in the event the executive's
employment is terminated without cause (as defined in the Employment Agreements)
or the executive resigns for good reason (as defined in the Employment
Agreements), at anytime during the period beginning three months prior to a
change in control (as defined in the Employment Agreements) and ending 12 months
after a change in control, the executive would instead be entitled to receive a
lump sum payment equal to the sum of (i) 1.0 times his base salary, plus
(ii) the bonus he earned for the prior calendar year, plus (iii) 12.0 times the
monthly premium amount for the executive's employee benefits.
In
addition, the Employment Agreements include a "modified 280G cutback" which
provides that, in the event of a change in control (as defined in the Employment
Agreements), if the executive would receive payments in excess of the Internal
Revenue Code Section 280G statutory safe harbor
amount, he will receive
the amount of payments that results in the greatest after-tax
proceeds.
The
foregoing discussion of the Employment Agreements are qualified in their
entirety by reference to the complete text of the Employment Agreements, which
have been previously disclosed in the Company's Current Report on Form 8-K,
filed June 28, 2010.
Compensation
Policies and Practices as they Relate to the Company's Risk
Management
We
conducted a review of our compensation policies and procedures as they relate to
an overall risk management policy. We have concluded that our
compensation policies and practices are not reasonably likely to have a material
adverse effect on the Company.
Outstanding Equity Awards
at Fiscal Year-End (June 30, 2010)
Option
Awards (1)(2)
|
|
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 of 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
|
John
F. McCawley
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William
Perkins
|
|
1,150,000
|
|
|
|
|
|
|
$0.07
|
|
11/24/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
350,000
|
|
|
|
$0.02
|
|
6/21/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark
Faris
|
|
710,000
|
|
|
710,000
|
|
|
|
$0.07
|
|
11/24/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
P. Cookson
|
|
843,333
|
|
|
76,667
|
|
|
|
$0.07
|
|
11/24/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500,000
|
|
|
|
$0.02
|
|
6/21/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
R Buckley
|
|
|
|
|
1,900,000
|
|
|
|
$0.02
|
|
6/21/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Options
have a ten year term and vest 1/12 on the last day of the calendar
quarter.
|
(2)
|
The
unvested portion of each outstanding stock option and restricted stock
unit awards may, at the Board’s discretion, fully vest on an accelerated
basis upon certain changes in control or ownership of the
Company.
|
Director
Compensation
None of
our directors receives any compensation for serving as such director, for
serving on committees of the Board of Directors, or for special
assignments. As of the date of this information statement, there were
no other arrangements between us and our directors that resulted in our making
payments to any of our directors for any services provided to us by them as
directors.
INTEREST
OF CERTAIN PERSON IN OR OPPOSITION TO MATTERS TO BE ACTED UPON
Each of
our executive officers and directors has an interest in the approval of the Plan
and the Plan Amendment because each of them is eligible to receive awards
thereunder.
HOUSEHOLDING
We will
be "householding" this information statement. This means that only
one copy of this information statement will be sent to you and the other
stockholders who share your address unless we have received contrary
instructions from one or more of those stockholders. Householding is
designed to reduce the volume of duplicate information that stockholders receive
and reduce our printing and mailing expenses.
If your
household has received only one copy of this notice, and you would prefer to
receive separate copies of this document, either now or in the future, please
call us at Verecloud, Inc., 6560 South Greenwood Plaza Boulevard, Number 400,
Englewood, Colorado 80111, Attention: Corporate
Secretary. We will deliver separate copies promptly. If
you are now receiving multiple copies of our proxy materials and would like to
have only one copy of these documents delivered to your household in the future,
please contact us in the same manner.
WHERE
YOU CAN FIND MORE INFORMATION
As
required by law, we file annual, quarterly and current reports and other
information with the SEC that contain additional information about our Company.
You can inspect and copy these materials at the public reference facilities of
the SEC’s Washington, D.C. office, 100 F Street, NE, Washington, D.C. 20549 and
on its Internet site at http://www.sec.gov.
EFFECTIVE
DATE
Pursuant
to Rule 14c-2 under the Exchange Act, the above actions shall not be effective
until a date at least 20 days after the date on which the definitive information
statement has been mailed to our stockholders. We anticipate that the actions
contemplated hereby will be effected on or about the close of business on August
__, 2010.
MISCELLANEOUS
MATTERS
The
entire cost of furnishing this information statement will be borne by the
Company. We will request brokerage houses, nominees, custodians, fiduciaries and
other like parties to forward this information statement to the beneficial
owners of Common Stock held of record by them and will reimburse such persons
for their reasonable charges and expenses in connection therewith. The Board of
Directors has fixed the close of business on July __, 2010, as the Notice Date
for the determination of stockholders who are entitled to receive this
information statement.
This
information statement is being mailed on or about July __, 2010 to all
stockholders of record as of the record date.
CONCLUSION
As a
matter of regulatory compliance, we are sending you this information statement
that describes the purpose and effect of the above actions. Your consent to the
above action is not required and is not being solicited in connection with this
action. This information statement is intended to provide our stockholders
information required by the rules and regulations of the Securities Exchange Act
of 1934, as amended.
WE ARE
NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY.
THE ATTACHED MATERIAL IS FOR INFORMATIONAL PURPOSES ONLY.
BY ORDER
OF THE BOARD OF DIRECTORS
July __,
2010
By:
/s/ John F.
McCawley
John F.
McCawley
Chief
Executive Officer
FIRST
AMENDMENT
TO
THE
NETWORK
CADENCE, INC. 2009 EQUITY INCENTIVE PLAN
AS EFFECTIVE OCTOBER 31,
2009
Effective
June 22, 2010, the Network Cadence, Inc. 2009 Equity Incentive Plan, as
effective October 31, 2009 (the “
Plan
”), is hereby
amended as follows:
1.
|
The
title of the Plan and all relevant headings are hereby amended to delete
“Network Cadence, Inc.” and replace such term with “Verecloud,
Inc.”
|
2.
|
Section
4.1(a) of the Plan, “
Plan Limit
,” is hereby
amended in its entirety as follows:
|
4.1
Plan
Limit
.
(a)
Aggregate
Limit
. Subject to the provisions of Article 13, the aggregate
number of shares of Common Stock that may be issued under Awards granted
pursuant to the Plan shall not exceed 16 million shares of Common Stock;
provided, however
, no more
than 8 million shares of Common Stock may be issued in the form of Full Value
Awards. Such shares of Common Stock shall be authorized but unissued shares.
Shares of Common Stock shall be deemed to have been issued under the Plan solely
to the extent actually issued and delivered pursuant to an
Award. Shares of Common Stock subject to Awards granted under the
Plan that are cancelled, expire or are forfeited shall be available for re-grant
under the Plan. If a Participant pays the exercise or purchase price
of an Award granted under the Plan through the tender or withholding of shares,
or if shares are tendered or withheld to satisfy any Company withholding
obligations, the number of shares so tendered or withheld shall become available
for re-issuance thereafter under the Plan. Subject to the provisions
of Article 13, no more than the aggregate maximum number of shares of Common
Stock approved by the Stockholders from time to time may be issued pursuant to
Incentive Stock Options.
(b)
Section
162(m) Limit
. During any single calendar year, no Participant
shall be eligible to be granted Awards exceeding 8million shares of Common
Stock.
3.
|
Any
inconsistent provisions of the Plan shall be read consistent with this
amendment.
|
6.
|
Except
as amended above, each and every other provision of the Plan, as it
previously may have been amended, shall remain in full force and effect
without change or
modification.
|
IN
WITNESS WHEREOF, the undersigned have executed this First Amendment to the Plan
on this 22nd day of June, 2010.
VERECLOUD, INC. BOARD OF
DIRECTORS
:
/s/
John McCawley
|
John
McCawley
|
|
/s/
Mark Faris
|
Mark
Faris
|