Moscaritolo PREC14A
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
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by a Party other than the Registrant x
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
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Definitive
Proxy Statement
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Additional Materials
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Soliciting
Material Pursuant to §240.14a-12
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CONVERGENCE
ETHANOL, INC.
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(Name
of Registrant as Specified In Its Charter)
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Daniel
K. Moscaritolo
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(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
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Exchange Act Rule 0-11 (set forth the amount on which the filing fee
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THE
NOMINATING SHAREHOLDER
March
29,
2007
Dear
Fellow Shareholders:
Daniel
K.
Moscaritolo, is a current Shareholder (the "Nominating Shareholder") of
Convergence Ethanol, Inc., a Nevada corporation (the "Company"). Mr. Moscaritolo
is asking for your vote at the 2007 Annual Meeting of Shareholders of the
Company in order to elect up to three highly qualified nominees, Daniel K.
Moscaritolo, Charles L. Christensen and Thomas Hemingway, to the Company's
Board
of Directors.
In
the
Nominating Shareholder’s view, the Company's current Directors and senior
management have failed to explore all of the possible methods for maximizing
shareholder value and have instead chosen to perpetuate themselves in
office.
The
Nominating Shareholder feels that the Company's Board should take a new
approach. The Nominating Shareholder believes that the best way to do this
is to
replace the current Board with new Directors who will consider new ways for
enhancing shareholder value.
The
Nominating Shareholder is seeking your support at the 2007 Annual Meeting of
Shareholders. Please carefully read the enclosed Proxy Statement for more
detailed information about the Nominating Shareholder’s nominees for
Director.
Thank
you
for your support,
THE
NOMINATING SHAREHOLDER
/s/
DANIEL K. MOSCARITOLO
DANIEL
K.
MOSCARITOLO
IF
YOU
HAVE ANY QUESTIONS, REQUIRE ASSISTANCE IN VOTING YOUR PROXY CARD OR NEED
ADDITIONAL COPIES OF THE NOMINATING SHAREHOLDER'S PROXY MATERIALS, PLEASE
CONTACT THE NOMINATING SHAREHOLDER’S PROXY SOLICITOR, THOMAS HEMINGWAY (THE
"PROXY SOLICITOR") AT:
300
S.
HARBOR
SUITE
500
ANAHEIM,
CA 92805
CONVERGENCE
ETHANOL, INC.
ANNUAL
MEETING OF SHAREHOLDERS
TO
BE HELD ON APRIL 16, 2007
PROXY
STATEMENT
OF
THE
NOMINATING SHAREHOLDER
(OPPOSING
THE BOARD OF DIRECTORS OF CONVERGENCE ETHANOL, INC.)
This
Proxy Statement and proxy card are being furnished to the holders (the
"Shareholders") of the common stock, $.001 par value par share (the "Common
Stock"), of Convergence Ethanol, Inc., a Nevada corporation (the "Company"),
in
connection with the solicitation of proxies by one of the Company's current
Shareholders, Daniel K. Moscaritolo, (the "Nominating Shareholder") at the
2007
Annual Meeting of Shareholders of the Company (including any adjournments or
postponements thereof or any special meeting that may be called in lieu thereof)
(the “Annual Meeting”). The Annual Meeting is scheduled to be held on April 16,
2007, at 7:30 a.m., Pacific Time, at the Company's principal executive offices,
located at 5701 Lindero Canyon Road, Suite 2-100, Westlake Village, California
91362. Shareholders who owned Common Stock on February 15, 2007 (the "Record
Date") are entitled to vote at the Company's Annual Meeting.
At
the
Annual Meeting, the Company will be seeking to elect a Director to hold office
until the year 2010 Annual Meeting or until such Director’s successor is elected
and qualified. The Company will also be seeking the shareholders to ratify
the
selection of Kabani & Company, Inc. as the Company’s independent auditors
for the year ending September 30, 2007.
The
Nominating Shareholder beneficially owns 2,462,887 shares of Common Stock,
which
represents approximately 14.08% of the Company's outstanding Common Stock,
as of
February 10, 2007, based upon the Company's most recent Periodic Report on
Form
10-QSB/A as filed with the Securities and Exchange Commission (“SEC”) on March
1, 2007. The Nominating Shareholder is soliciting the votes of other
Shareholders at the Annual Meeting to elect Daniel K. Moscaritolo, Charles
L.
Christensen and Thomas Hemingway (the "Shareholder Nominees") to serve as
Directors of the Company to hold office until the year 2010 Annual Meeting
or
until such Directors’ successors are elected and qualified. The Nominating
Shareholder is soliciting the votes in opposition to the Director or Directors
nominated for election by the Company. In the event that the Company proposes
to
elect three Directors at the Annual Meeting of Stockholders, the Nominating
Shareholder will vote the proxies solicited by the Nominating Shareholder in
favor of electing each of the Shareholder Nominees as a Director. To the extent
that the Company proposes to elect less than three Directors at the Annual
Meeting, the Nominating Shareholder will vote the proxies solicited by the
Nominating Shareholder in favor of electing the Shareholder Nominees as a
Director in the following order: (1) Daniel Moscaritolo and (2) Charles L.
Christensen. The Nominating Shareholder is not soliciting proxies to vote on
the
Company’s proposal to ratify the selection of Kabani & Company, Inc. as the
Company’s independent auditors for the year ending September 30,
2007.
This Proxy Statement and proxy card are being first mailed on or about April
9,
2007.
The
name
and address of the Nominating Shareholder is: Daniel K. Moscaritolo, 4010
Lemonberry Place, Thousand Oaks, CA 91362.
The
Nominating Shareholder has been a beneficial owner of the Company's Common
Stock
for over two years. Additional information concerning the Nominating Shareholder
and Shareholder Nominees is set forth on Exhibit A, Exhibit B and Exhibit C
to
this Proxy Statement.
The
Nominating Shareholder's goal is to maximize Shareholder value. The Nominating
Shareholder believes that one of the best ways to accomplish this goal is
through electing new Directors who are willing to explore options that the
current Directors do not appear to have seriously considered.
Your
last
dated proxy is the only one that counts, so return the proxy card in the
enclosed postage-paid envelope even if you have previously delivered a proxy
card to the Company. The Nominating Shareholder urges you not to return any
proxy card sent to you by the Company.
Your
vote
is important, no matter how many or how few shares you hold. If your shares
are
held in the name of a brokerage firm, bank or nominee, only they can vote your
shares, and only upon receipt of your specific instructions. Accordingly, please
return the proxy card in the envelope provided by your bank or broker or contact
the person responsible for your account and give instructions for such shares
to
be voted for the Shareholder Nominees. You should be aware that if your shares
of Common Stock are held through a bank, brokerage firm or other nominee, you
will be unable to change your vote at the Annual Meeting unless you obtain
a
"legal proxy" from the bank, brokerage firm or other nominee.
If
your
shares are registered in more than one name, the proxy card should be signed
by
all such persons to ensure that all shares are voted for the Shareholder
Nominees.
Holders
of record of shares of Common Stock on the Record Date are urged to submit
a
proxy, even if such shares have been sold after the Record Date.
THIS
SOLICITATION IS BEING MADE BY THE NOMINATING SHAREHOLDER AND NOT ON BEHALF
OF
THE COMPANY. EXCEPT AS SET FORTH HEREIN, THE NOMINATING SHAREHOLDER IS NOT
AWARE
OF ANY OTHER MATTERS TO BE BROUGHT BEFORE THE ANNUAL MEETING. SHOULD OTHER
MATTERS, WHICH THE NOMINATING SHAREHOLDER IS NOT AWARE OF A REASONABLE TIME
PRIOR TO THE ANNUAL MEETING, BE BROUGHT BEFORE THE ANNUAL MEETING, THE PERSONS
NAMED AS PROXIES IN THE ENCLOSED PROXY CARD WILL VOTE ON SUCH MATTERS IN THEIR
DISCRETION.
If
you
have any questions or need assistance in voting your shares, please
call:
THE
NOMINATING SHAREHOLDER'S PROXY SOLICITOR at 714-765-0012
REASONS
FOR THE SOLICITATION
The
Nominating Shareholder believes that the Company's current management and Board
of Directors have not done all they should do to maximize Shareholder value.
The
Nominating Shareholder is concerned that, if the Board's nominee or nominees
for
Director are reelected, the Board will not significantly increase or broaden
its
efforts in this regard.
PROPOSAL
ONE
ELECTION
OF THE SHAREHOLDER NOMINEES
The
Company's Board of Directors is currently composed of three Directors. The
Company has filed a notice in First Judicial District Court of the State of
Nevada indicating that it will propose to elect one Director at the Annual
Meeting. The Nominating Shareholder believes that the Company should propose
to
elect three Directors at the Annual Meeting. The Nominating Shareholder is
seeking your support at the Annual Meeting to elect the Shareholder Nominees
to
the Company’s Board of Directors until the year 2010 Annual Meeting or until
such Directors’ successors are elected and qualified.
When
you
return the Nominating Shareholder's proxy card, you will be voting for Messrs.
Moscaritolo, Christensen and Hemingway to be members of the Company's Board
of
Directors. Each of Messrs. Moscaritolo, Christensen and Hemingway has consented
to being named in this Proxy Statement and has agreed to serve as a Director
of
the Company, if elected. Neither Mr. Moscaritolo nor Mr. Christensen, if
elected, would qualify as an independent director under the independence
standards of the Nasdaq Stock Market. Mr. Hemingway, if elected, would qualify
as an independent director under the independence standards of the Nasdaq Stock
Market.
In
the
event that the Company proposes to elect three Directors at the Annual Meeting
of Stockholders, the Nominating Shareholder will vote the proxies solicited
by
the Nominating Shareholder in favor of electing each of the Shareholder Nominees
as a Director. To the extent that the Company proposes to elect less than three
Directors at the Annual Meeting, the Nominating Shareholder will vote the
proxies solicited by the Nominating Shareholder in favor electing the
Shareholder Nominees as a Director in the following order: (1) Daniel
Moscaritolo and (2) Charles L. Christensen.
Information
With Respect to the Shareholder Nominees
Listed
below are the Shareholder Nominees, with information showing the principal
occupation or employment of the Shareholder Nominees, the principal business
of
the corporation or other organization in which such occupation or employment
is
carried on, and such nominees' business experience during the past five years.
Such information has been furnished to the Company by the Nominating
Shareholder:
Daniel
K. Moscaritolo,
age 54,
is a Master Degreed-Mechanical Engineer, inventor, technical businessman and
an
expert in advanced backflushable filtration systems and New Product Development.
Mr. Moscaritolo recently served as a Director of the Company from July 1, 2002
through November 14, 2006. He also served as the Chief Operating Officer and
Chief Technology Officer of the Company from July 1, 2002 through November
17,
2006 and the Chief Human Resources Officer and Ombudsman of the Company from
September/October of 2004 to November 17, 2006. Mr. Moscaritolo served as the
Director of Hearst Ethanol One (“HEO”), a Canadian Subsidiary of which the
Company owns an 87.3% interest, from December 21, 2005 to at least November
17,
2006 (the termination date is unknown), and served as President of HEO from
October 10, 2006 to at least November 17, 2006 (the termination date is
unknown). Mr. Moscaritolo previously worked for 14 years at various divisions
of
ESCO Technologies, including his last position as Vice President of Technology
and New Product Development for PTI Technologies Inc. Mr. Moscaritolo’s business
address is 4010 Lemonberry Place, Thousand Oaks, CA 91362.
Charles
L. Christensen, age
50,
currently serves as the President and Director of Recycled Energy Corporation
and has held those positions since September 1, 2006. Mr. Christensen served
as
the Director of Company from June 2004 to August 20, 2004, the President of
MEMS
USA Applied Technology, a division of the Company from September 8, 2003 to
June
23, 2006 and the President of Bott Equipment, a division of the Company, from
November 1, 2004 to June 23, 2006. He previously served as Vice President and
General Manager of Kaydon Custom Filtration Corp. from August 30, 1999 to
September 5, 2003. Mr. Christensen’s business address is Recycled Energy
Corporation, 3040 Saturn Street, Suite 104, Brea, CA 92821
Thomas
Hemingway, age
50,
currently serves as Chairman and COO of NextPhase Wireless, Inc. (since 2006),
Director of Financial Media Group (since 2004) and Director of Great American
Coffee Company (since 2006). He previously served as Chairman and CEO of Oxford
Media from August 2004 to May 2006 and Chief Executive Officer and Chairman
of
the Esynch Corporation from 1998 to 2004. He also was the Chairman and CEO
of
Intermark Corporation, a software developer and publisher in the entertainment
markets, from 1995 to 1998 and previously was the President and CEO of Omni
Advanced Technologies and Intellinet Information Systems. Mr. Hemingway’s
business address is 300 S. Harbor, Suite 500, Anaheim, CA 92805.
Daniel
K.
Moscaritolo tendered his “noisy” resignation from the Board of Directors of the
Company on November 14, 2006. A copy of Mr. Moscaritolo’s resignation letter is
attached as Exhibit C to this Proxy Statement. Mr. Moscaritolo’s employment as
the Chief Operating Officer, Chief Technology Officer, Chief Human Resources
Officer and Ombudsman of the Company was subsequently terminated by the Company
on November 17, 2006. Items 5.02(a), 5.02(b) and 9.01 of Company’s Current
Report on Form 8-K as filed with the Securities and Exchange Commission (“SEC”)
on December 12, 2006 which address Mr. Moscaritolo’s resignation from the Board
of Directors of the Company and termination as an officer of the Company are
incorporated herein by reference.
Mr.
Moscaritolo received full time compensation for services rendered to the Company
during the fiscal years ended September 30, 2006, 2005 and 2004. Item 11 of
the
Company’s Annual Report on Form 10-KSB as filed with the SEC on January 23, 2007
which describes Mr. Moscaritolo’s compensation and Mr. Moscaritolo’s employment
agreement filed as Exhibit 10.11 to the Company’s Periodic Report on Form
10-QSB/A as filed with the SEC on March 1, 2007 are incorporated herein by
reference.
In
September 2005 Mr. Moscaritolo loaned the Company approximately $105,800. The
description of that loan transaction as set forth on page F-19 of the Company’s
Periodic Report on Form 10-QSB/A as filed with the SEC on March 1, 2007 and
the
Note filed as Exhibit 10.8 to that Periodic Report are hereby incorporated
by
reference.
On
December 14, 2006, the Company filed a lawsuit in the United States District
Court, Central District of California, Western Division (Case No.: CV06-07971)
against Mr. Moscaritolo (the “Company Action”). On December 15, 2006, Mr.
Moscaritolo and Mr. Hemingway, individually, and on behalf of the shareholders
of the Company, filed a lawsuit in Nevada State Court, County of Washoe (Case
No.: CV0603002) against James A. Latty, the Company’s Chief Executive Officer,
President and Chairman of the Board of Directors, and Richard W. York, the
Company’s Chief Financial Officer (the “Moscaritolo Action”). On January 10,
2007, Mr. Moscaritolo and Charles L. Christensen filed a lawsuit in the First
Judicial District Court of the State of Nevada in and for Carson City (Case
No.:
07-00035A) against the Company, Mr. Latty, and Steve Newsom, a Director of
the
Company (the “Second Moscaritolo Action”). Item 1 of Part II of the Company’s
Periodic Report on Form 10-QSB/A as filed with the SEC on March 1, 2007 includes
a description of the Company Action, Moscaritolo Action and Second Moscaritolo
Action and is incorporated herein by reference. On February 23, 2007 the court
in the Second Moscaritolo Action issued an order that the Company give notice
and hold its Annual Meeting on or before April 15, 2007.
On
January 29, 2007, Mr. Moscaritolo filed a Sarbanes-Oxley Whistleblower complaint
(No. 9-3290-07-019) for discrimination with the Occupational Safety and Health
Administration (“OSHA”) under Section 806 of the Corporate and Criminal Fraud
Accountability Act of 2002, Title VIII of the Sarbanes-Oxley Act of 2002, 18
U.S.C. 1514A (“SOX”). In the complaint Mr. Moscaritolo alleges he was
constructively demoted, retaliated against, intimidated with punitive threats,
and ultimately terminated after continuing a third-party independent ethics
investigation of alleged fraud, theft and SEC violations allegedly committed
by
Mr. Latty. Mr. Moscaritolo is seeking relief in the form of back pay owed
immediately due upon termination, back pay owed if and when he is reinstated,
and reinstatement.
Mr.
Moscaritolo’s termination from the Company may form the basis for additional
litigation by Mr. Moscaritolo against the Company or its
management.
Mr.
Christensen previously served as the Director of Company from June 2004 to
August 20, 2004, President of MEMS USA Applied Technology, a division of the
Company, from September 8, 2003 to June 30, 2003 and President of Bott
Equipment, a division of the Company, from November 1, 2004 to June 23,
2006.
Mr.
Moscaritolo filed one late Form 3 on December 29, 2006, and four late Forms
4,
with each Form 4 reporting a single transaction, on March 28, 2007 pursuant
to
Section 16(a) of the Securities Exchange Act of 1934, as amended (“Section
16(a)”). Mr. Christensen filed one late Form 3 on March 28, 2007 pursuant to
Section 16(a).
Daniel
K.
Moscaritolo, Thomas Hemingway and Donald Hejmanowski have a verbal agreement
that Mr. Moscaritolo will be appointed Chief Technology Officer of the Company
if the Shareholder Nominees are elected Directors. Other Shareholder Nominees
and the Nominating Shareholder may also be appointed as officers of the Company
in the future if the Shareholder Nominees are elected Directors.
For
information regarding ownership of the Company's stock by the Shareholder
Nominees and the Nominating Shareholder, see Exhibit A. For information
regarding purchases and sales of the Company's securities during the past two
years by the Shareholder Nominees and the Nominating Shareholder, see Exhibit
B.
The
Nominating Shareholder is seeking the authority to vote for the Shareholder
Nominees. Directors of the Company are elected by a plurality of the votes
cast
with a quorum present. At the Annual Meeting, the three persons who receive
the
greatest number of votes of the Shareholders represented in person or by proxy
at the Annual Meeting will be elected Directors. Shareholders may not vote
their
shares cumulatively for the election of Directors. Abstentions are considered
in
determining the presence of a quorum, but will not affect the plurality vote
required for the election of Directors. If the three Shareholder Nominees are
elected to the Board, they will replace the incumbent Directors. Information
about the Company’s nominee or nominees may be found in the proxy statement to
be filed by the Company.
The
proxy
card being furnished to you by the Nominating Shareholder provides you with
an
opportunity to withhold authority with respect to any of the Shareholder
Nominees by marking the appropriate box.
The
Shareholder Nominees understand that, if elected as Directors of the Company,
each of them will have an obligation under Nevada law to discharge his duties
as
a Director in good faith, consistent with his fiduciary duties to the Company
and its Shareholders.
The
Nominating Shareholder does not expect that the Shareholder Nominees will be
unable to stand for election, but, in the event that such persons are unable
to
serve or for good cause will not serve, the shares of Common Stock represented
by the enclosed proxy card will be voted for substitute nominees. In addition,
the Nominating Shareholder reserves the right to nominate substitute persons
if
the Company makes or announces any changes to the Company's bylaws or articles
of incorporation or takes or announces any other action that has, or if
consummated would have, the effect of disqualifying the Shareholder Nominees.
In
any such case, shares of Common Stock represented by the enclosed proxy card
will be voted for such substitute.
THE
NOMINATING SHAREHOLDER STRONGLY RECOMMENDS THAT YOU VOTE
"FOR"
THE
ELECTION OF THE SHAREHOLDER NOMINEES.
OTHER
PROPOSALS
The
Company has proposed that the shareholders ratify the selection of Kabani &
Company, Inc. as the Company’s independent auditors for the year ending
September 30, 2007. The Nominating Shareholder is not soliciting proxies to
vote
on that proposal.
The
Nominating Shareholder is not aware of any other proposals to be brought before
the Annual Meeting. However, the Nominating Shareholder intends to bring before
the Annual Meeting such business as may be appropriate or make other proposals
as may be appropriate to address any action of the Company's Board of Directors
not publicly disclosed prior to the date of this Proxy Statement. Should other
proposals be brought before the Annual Meeting, the persons named as proxies
in
the enclosed proxy card will vote on such matters in their discretion. The
persons named as proxies may exercise discretionary authority only as to matters
unknown to the Nominating Shareholder a reasonable time before this proxy
solicitation.
RECORD
DATE AND VOTING
Information
about the number of shares of Common Stock outstanding as of February 15, 2007
(the "Record Date") and entitled to be voted at the Annual Meeting will be
contained in the proxy statement to be filed by the Company. According to the
Company's most recent Periodic Report on Form 10-QSB/A as filed with the
Securities and Exchange Commission on March 1, 2007, the Company had outstanding
17,487,254 shares of Common Stock as of February 10, 2007. Each share
outstanding as of the Record Date is entitled to one vote on each matter
submitted to a vote of Shareholders. Only Shareholders of record at the close
of
business on the Record Date will be entitled to vote at the Annual Meeting.
If
your shares are registered directly in your name with the Company's transfer
agent, you are considered with respect to those shares the Shareholder of
record, and these proxy materials are being sent directly to you. As the
Shareholder of record, you have the right to submit your voting proxy directly
to the Company using the enclosed proxy card or to vote in person at the Annual
Meeting.
If
your
shares are held in a stock brokerage account or by a bank or other nominee,
you
are considered the beneficial owner of shares held in "street name." These
proxy
materials are being forwarded to you by your broker who is considered, with
respect to those shares, the Shareholder of record. As the beneficial owner,
you
have the right to direct your broker to vote your shares, and your broker or
nominee has enclosed a voting instruction card for you to use. If your shares
are held by a broker or nominee, please return your voting card as early as
possible to ensure that your shares will be voted in accordance with your
instructions. You are also invited to attend the Annual Meeting; however, since
you are not the Shareholder of record, you may not vote these shares in person
at the Annual Meeting unless you specifically request a document called a "legal
proxy" from your broker and bring it to the Annual Meeting.
Under
Nevada law and the Company's bylaws, the presence of a quorum is required to
transact business at the Annual Meeting. At the Annual Meeting, a quorum will
require the presence, either in person or by proxy, of a majority of the shares
entitled to vote.
Brokerage
firms have the authority to vote clients' unvoted shares on some "routine"
matters under applicable stock exchange rules. When a brokerage firm votes
its
clients' unvoted shares on routine matters, these shares are counted to
determine if a quorum exists to conduct business at the meeting. A brokerage
firm cannot vote clients' unvoted shares on non-routine matters, which results
in a broker non-vote. Since there is a contested election for Directors, the
election should be treated as a non-routine matter. Thus, if you do not give
your broker specific instructions, your shares will not be considered to be
present or votes cast and will have no effect on the election of Directors
at
the Annual Meeting.
Shares
of
Common Stock represented by a valid, unrevoked proxy card will be voted as
specified. You may vote for the Shareholder Nominees or withhold authority
to
vote for the Shareholder Nominees by marking the proper box on the proxy card.
Shares represented by a properly executed proxy card where no specification
has
been made will be voted for the Shareholder Nominees and in the discretion
of
the persons named as proxies on all other matters as may properly come before
the Annual Meeting. The persons named as proxies in the enclosed proxy card
may
exercise discretionary authority only as to matters unknown to the Nominating
Shareholder a reasonable time before the Annual Meeting.
If
your
shares are held in the name of a custodian and you want to vote in person at
the
Annual Meeting, you may specially request a document called a "legal proxy"
from
the custodian and bring it to the Annual Meeting.
IF
YOU
NEED ASSISTANCE, PLEASE CONTACT THE NOMINATING SHAREHOLDER’S PROXY
SOLICITOR
You
are
being asked to elect the Shareholder Nominees named in this Proxy Statement.
Shareholders should refer to the Company's proxy statement for the names,
backgrounds, qualifications and other information concerning the Company's
nomination or nominations for Director.
IF
YOU
WISH TO VOTE FOR THE ELECTION OF THE SHAREHOLDER NOMINEES TO THE COMPANY'S
BOARD, PLEASE SIGN, DATE AND RETURN PROMPTLY THE ENCLOSED PROXY CARD IN THE
POSTAGE-PAID ENVELOPE PROVIDED.
REVOCATION
OF PROXIES
Shareholders
may revoke their proxies at any time prior to exercise by attending the Annual
Meeting and voting in person (although attendance at the Annual Meeting will
not
in and of itself constitute revocation of a proxy) or by delivering a written
notice of revocation. The delivery of a subsequently dated proxy which is
properly completed will constitute a revocation of any earlier proxy. The
revocation may be delivered to the Secretary of Convergence Ethanol, Inc.,
Richard W. York, Corporate Secretary, 5701 Lindero Canyon Road, Suite 2-100,
Westlake Village, California 91362. Although a revocation is effective if
delivered to the Company, the Nominating Shareholder requests that either the
original or photostatic copies of all revocations be mailed to Thomas Hemingway
(the "Proxy Solicitor"), so that the Proxy Solicitor will be aware of all
revocations and can more accurately determine if and when proxies have been
received from the holders of record on the Record Date of a majority of the
outstanding shares of Common Stock. Additionally, the Proxy Solicitor may use
this information to contact Shareholders who have revoked their proxies in
order
to solicit later dated proxies for the election of the Shareholder Nominees
and
approval of the other proposal described herein.
ADDITIONAL
INFORMATION
The
principal executive offices of the Company are located at 5701 Lindero Canyon
Road, Suite 2-100, Westlake Village, California 91362. Except as otherwise
noted
herein, the information concerning the Company has been taken from or is based
upon documents and records on file with the SEC and other publicly available
information.
This
Proxy Statement incorporates by reference important information about the
Nominating Shareholder and the Shareholder Nominees from other documents that
are not included in or delivered with this Proxy Statement. Such information
is
included in documents filed by the Company with the SEC and is available on
with
SEC’s website at www.sec.gov. The Nominating Shareholder will provide, without
charge, to each person whom a copy of this Proxy Statement is delivered, upon
the written or oral request of such person and by first class mail or other
equally prompt means within one business day of receipt of such request, a
copy
of the documents incorporated by reference herein. Requests should be directed
to the attention of Daniel K. Moscaritolo, 4010 Lemonberry Place, Thousand
Oaks,
CA 91362.
Additional
information concerning the Nominating Shareholder and Shareholder Nominees
is
also contained in Exhibits A, B and C to this Proxy Statement and in the
Schedule 13D filed by Mr. Moscaritolo with the SEC on March 22, 2007, available
at the SEC's website at www.sec.gov.
PROXY
SOLICITATION; EXPENSES
Proxies
may be solicited by the Nominating Shareholder by mail, advertisement,
telephone, facsimile, electronic and personal solicitation. Phone calls will
be
made to individual Shareholders by the Nominating Shareholder and his affiliates
and employees of the Proxy Solicitor. Certain of the employees of affiliates
of
the Nominating Shareholder may perform secretarial work in connection with
the
solicitation of proxies, for which no additional compensation will be paid.
Banks, brokerage houses and other custodians, nominees and fiduciaries will
be
requested to forward the Nominating Shareholder's solicitation material to
their
customers for whom they hold shares and the Nominating Shareholder will
reimburse them for their reasonable out-of-pocket expenses. The Nominating
Shareholder has retained the Proxy Solicitor to assist in the solicitation
of
proxies and for related services. The Nominating Shareholder will pay the Proxy
Solicitor a fee of approximately $5,000 and have agreed to reimburse it for
its
reasonable out-of-pocket expenses. In addition, the Nominating Shareholder
has
agreed to indemnify the Proxy Solicitor against certain liabilities and
expenses, including liabilities and expenses under the federal securities laws.
The Securities and Exchange Commission deems such an indemnification to be
against public policy. Approximately five (5) persons will be used by the Proxy
Solicitor in its solicitation efforts.
The
entire expense of preparing, assembling, printing and mailing this Proxy
Statement and related materials and the cost of soliciting proxies will be
borne
by the Nominating Shareholder. The Nominating Shareholder does not intend to
solicit proxies using Internet voting. Although no precise estimate can be
made
at the present time, the Nominating Shareholder currently estimates that the
total expenditures relating to the Proxy Solicitation incurred by the Nominating
Shareholder will be approximately $25,000 of which $0 has been incurred to
date.
The Company has informed the Nominating Shareholder that Company estimates
that
the cost of mailing this Proxy Statement will be approximately $60,000. The
Nominating Shareholder intends to seek reimbursement from the Company for those
expenses incurred by the Nominating Shareholder, if any Shareholder Nominees
are
elected, but does not intend to submit the question of such reimbursement to
a
vote of the Shareholders.
For
the
proxy solicited hereby to be voted, the enclosed proxy card must be signed,
dated and returned to the Nominating Shareholder, c/o Proxy Solicitor, in the
enclosed envelope in time to be voted at the Annual Meeting. If you wish to
vote
for the Shareholder Nominees, you must submit the enclosed proxy card. Do NOT
submit the Company's proxy card. If you have already returned the Company's
proxy card, you have the right to revoke it as to all matters covered thereby
and may do so by subsequently signing, dating and mailing the enclosed proxy
card. ONLY YOUR LATEST DATED PROXY WILL COUNT AT THE ANNUAL
MEETING.
Only
holders of record of the Common Stock on the Record Date will be entitled to
vote at the Annual Meeting. If you are a Shareholder of record on the Record
Date, you will retain the voting rights in connection with the Annual Meeting
even if you sell such shares after the Record Date. Accordingly, it is important
that you vote the shares of Common Stock held by you on the Record Date, or
grant a proxy to vote such shares on the proxy card, even if you sell such
shares after such date.
Proxies
solicited by this Proxy Statement may be exercised only at the Annual Meeting
and any adjournment or postponement of the Annual Meeting and will not be used
for any other meeting.
CERTAIN
INFORMATION CONCERNING THE PARTICIPANTS
The
Nominating Shareholder and each of the Shareholder Nominees is a participant
in
this solicitation.
For
information regarding ownership of the Company's stock by the Nominating
Shareholder and Shareholder Nominees, see Exhibit A.
For
information regarding purchases and sales of the Company's securities during
the
past two years by the Nominating Shareholder and the Shareholder Nominees,
see
Exhibit B.
Except
as
set forth in this Proxy Statement, no Shareholder Nominee or the Nominating
Shareholder is involved in any material pending legal proceedings with respect
to the Company. Except as set forth in this Proxy Statement, there is no other
arrangement or understanding between any Shareholder Nominee and any other
person pursuant to which he was or is to be selected as a Shareholder Nominee
or
Director.
The
Nominating Shareholder reserves the right to retain one or more financial
advisors and proxy solicitors, who may be considered participants in a
solicitation under Regulation 14A of the Securities Exchange Act of 1934. The
Nominating Shareholder will pay the expenses of any such
solicitation.
Except
as
set forth in this Proxy Statement (including Exhibits A, B and C), (i) during
the past 10 years, no participant in this solicitation has been convicted in
a
criminal proceeding (excluding traffic violations or similar misdemeanors);
(ii)
no participant in this solicitation directly or indirectly beneficially owns
any
of the Company's securities; (iii) no participant in this solicitation owns
any
of the Company's securities which are owned of record but not beneficially;
(iv)
no participant in this solicitation has purchased or sold any of the Company's
securities during the past two years; (v) no part of the purchase price or
market value of the Company's securities owned by any participant in this
solicitation is represented by funds borrowed or otherwise obtained for the
purpose of acquiring or holding such securities; (vi) no participant in this
solicitation is, or within the past year was, a party to any contract,
arrangements or understandings with any person with respect to any of the
Company's securities, including, but not limited to, joint ventures, loan or
option arrangements, puts or calls, guarantees against loss or guarantees of
profit, division of losses or profits, or the giving or withholding of proxies;
(vii) no associate of any participant in this solicitation owns beneficially,
directly or indirectly, any of the Company's securities; (viii) no participant
in this solicitation owns beneficially, directly or indirectly, any securities
of any parent or subsidiary of the Company; (ix) no participant in this
solicitation or any of his/its associates was a party to any transaction, or
series of similar transactions, since the beginning of the Company's last fiscal
year, or is a party to any currently proposed transaction, or series of similar
transactions, to which the Company or any of its subsidiaries was or is to
be a
party, in which the amount involved exceeds $120,000; (x) no participant in
this
solicitation has, nor do any of their associates have, any arrangement or
understanding with any person with respect to any future employment by the
Company or its affiliates; (xi) no participant in this solicitation has, nor
do
any of their associates have, any arrangement or understanding with any person
with respect to any future transactions to which the Company or any of its
affiliates will or may be a party; (xii) no person, including the participants
in this solicitation, who is a party to an arrangement or understanding pursuant
to which the Shareholder Nominees are proposed to be elected has a substantial
interest, direct or indirect, by security holdings or otherwise in any matter
to
be acted on at the Annual Meeting; (xiii) no participant in this solicitation
is
aware of any arrangement (including any pledge, voting trust, or contract for
sale) which may at a subsequent date result in a change in control of the
Company; (xvi) no participant in this solicitation is aware of any arrangement,
or has reason to believe that any arrangement exists, under which 5% or more
of
any class of the Company’s voting securities is held or is to be held subject to
any voting agreement, voting trust or other similar agreement; (xv) no
participant in this solicitation is aware of any person or group that holds
beneficial ownership of more than 5% of the outstanding shares of the Company
or
has the right to acquire beneficial ownership of more than 5% of such
outstanding voting securities, except for persons or groups who may be
identified through a review of publicly available information regarding the
beneficial ownership of the Company.
IMPORTANT
If
your
shares are held in "street name," only your bank or broker can vote your shares
and only upon receipt of your specific instructions. Please return the proxy
provided to you or contact the person responsible for your account and instruct
them to vote for the Shareholder Nominees on the proxy card.
If
you
have any questions, or need further assistance, please contact the Nominating
Shareholder’s proxy solicitor: Thomas Hemingway, at 300 S. Harbor, Suite
500, Anaheim, CA 92805, Phone: 714-765-0012.
THE
NOMINATING SHAREHOLDER HAS OMITTED FROM THIS PROXY STATEMENT CERTAIN DISCLOSURE
REQUIRED BY APPLICABLE LAW THAT IS INCLUDED IN THE COMPANY'S PROXY STATEMENT.
THIS DISCLOSURE INCLUDES, AMONG OTHER THINGS, SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS, DIRECTORS AND MANAGEMENT, INFORMATION REGARDING SHAREHOLDER
PROPOSALS FOR THE ANNUAL MEETING, BIOGRAPHICAL INFORMATION ON THE COMPANY'S
DIRECTORS AND EXECUTIVE OFFICERS, INFORMATION CONCERNING EXECUTIVE COMPENSATION
AND AN ANALYSIS OF CUMULATIVE TOTAL RETURNS ON AN INVESTMENT IN SHARES DURING
THE PAST FIVE YEARS. SHAREHOLDERS SHOULD REFER TO THE COMPANY'S PROXY STATEMENT
IN ORDER TO REVIEW THIS DISCLOSURE. THE NOMINATING SHAREHOLDER URGES YOU TO
SIGN, DATE AND RETURN THE PROXY CARD IN FAVOR OF THE ELECTION OF THE SHAREHOLDER
NOMINEES.
Dated:
March 29, 2007
Sincerely,
THE
NOMINATING SHAREHOLDER
/s/
Daniel K. Moscaritolo
Daniel
K.
Moscaritolo
EXHIBIT
A
INFORMATION
CONCERNING THE NOMINATING SHAREHOLDER
AND
SHAREHOLDER NOMINEES
The
following sets forth the name and the number of shares of Common Stock of the
Company beneficially owned as of March 29, 2007, by the Nominating Shareholder
and each of the Shareholder Nominees.
|
Name
of Beneficial Owner
|
|
Number of Shares
Beneficially
Owned
|
|
Percent
of Class
|
|
|
|
|
|
|
|
Daniel
K. Moscaritolo
|
|
2,462,887
|
|
14.08
|
|
|
|
|
|
|
|
Charles
L. Christensen
|
|
345,917
|
|
1.98
|
|
|
|
|
|
|
|
Thomas
Hemingway
|
|
--
|
|
*
|
*Less
than 1%.
EXHIBIT
B
PURCHASES
AND SALES OVER PAST TWO YEARS BY THE NOMITATING SHAREHOLDER AND SHAREHOLDER
NOMINEES
The
following table sets forth for the Nominating Shareholder and each of the
Shareholder Nominees their purchases and sales (indicated in parenthesis) of
Common Stock (including put options and call options) within the previous two
years, the dates of the transactions and the amounts purchased or
sold:
|
Account
Name
|
|
Trade
Date
|
|
Quantity
|
|
Daniel
K. Moscaritolo
|
|
04-10-2005
|
|
32,782
|
|
Daniel
K. Moscaritolo
|
|
04-15-2005
|
|
(17,500)
|
|
Daniel
K. Moscaritolo
|
|
05-10-2005
|
|
(15,282)
|
|
Daniel
K. Moscaritolo
|
|
09-10-2005
|
|
(105,800)
|
EXHIBIT
C
LETTER
of RESIGNATION
Date:
Tuesday November 14, 2006
To:
Dr.
James A. Latty, Chairman of the Board, CEO and President, MEMS USA Inc. Steven
S. Newsom, BOD, MEMS USA Inc.
Gentlemen:
I
write
to inform you of my decision to resign from the Board of Directors of MEMS
USA.
I understand that you must report my departure within 5 days and I request
that
this letter, with its attachment, be included as an exhibit to the Form 8-K
you
file.
As
you
know, the law firm of Moscarino & Connolly performed an investigation
arising from the allegation of Chuck Christensen that Dr. James A. Latty had
committed ethics violations. On October 11, 2006, the law firm issued its
report, and I attach a copy of the report to this letter. The report
concluded that there is reasonable cause to believe that Dr. Latty (1) had
a
conflict of interest in connection with the Accelon blending skid project;
(2)
willfully failed to disclose his conflict of interest; (3) actively influenced
company policy with respect to Mems’ financial dealings with Accelon without
disclosing the conflicts of interest. Further, the report concluded that
the nature of the conflicts likely interfered with Dr. Latty’s ability to fairly
and impartially make business decisions on behalf of the company, and that
had
Dr. Latty disclosed his conflicts of interest, the company might have arrived
at
different conclusions about its business relationship with Accelon, including
different terms and conditions in the contract and different decisions
about the company’s response to cost overruns.
Upon
receipt of the report, I told the Board that the report’s conclusions demanded
further action by the Board. The response I received was from Board member
Steve Newsom, who told me after 3 days of private closed door meetings with
Dr.
Latty that, “this was old information…that they just wanted to put this all
behind them.”
Approximately
two weeks ago, I again told the Board that Dr. Latty apparently breached his
fiduciary duties and that it was serious enough that the information should
be
provided to investors in an 8K. The Board did not respond. I then told the
Board
that we could not ignore the findings as they raised matters that needed to
be
disclosed and corrected, and, at the least, there should be a thorough
evaluation of the steps necessary to correct the problems identified. I said
that if this was not done there could be liability on the part of the company
or
the Board. They told me nothing was to be disclosed.
On
November 1, 2006, Mr. Newsom proposed a Board resolution under which Dr.
Latty would agree to personally obtain ownership of the blending skid from
Accelon and then sell the blending skid and all intellectual property related
to
the design or manufacture or sale or lease of the skid to the company for the
amount that the company was paid to build the blending skid and for a settlement
agreement that would serve as a general release of all the company’s claims
against him from the violations identified in the investigative report. I
disagreed vehemently and voted “NO”, but Mr. Newsom voted “YES” and
allowed Dr Latty to vote “YES”,
which
was in my mind clearly a conflict of interest. The resolution passed because
Dr.
Latty was allowed to vote.
Subsequently,
I sent Dr. Latty and Mr. Newsom a very strongly worded response to what I
perceived as a clear breach of their fiduciary duty to our shareholders. I
also
made a proposal that I thought would resolve the conflicts in the best interests
of the company. The proposal was rejected out of hand. I understand that since
that time a Board meeting was called for on Sunday
November
12, 2006, without proper notice, without an agenda, and at which the Board
presumably took some type of action adverse to me. I understand this because,
since then, I have been locked out of the office and told that an armed security
guard was present to prevent my entry into the office. I have been blocked
in
every sense of the word from performing my duties as chief ethics officer and
ombudsman, not to mention my duties as chief technology officer and chief
operating officer. However, I have not been notified that I have been
terminated nor have I resigned my officer or ombudsman positions. I intend
to fulfill those duties unless I am terminated.
However,
I can no longer participate as a member of the Board, as I believe it is now
operating in complete disregard of its duties to shareholders. I will not
participate in any effort that could block shareholders’ rights to view the
conduct of their company. I also have information I believe could show that
Dr.
Latty has participated in fabricating documents for purposes of defrauding
potential company investors, as well as information that I believe could show
that Dr. Latty purposely delayed renewing his MEMS employment contract
which
expired on July 1, 2006 so
that
he could manipulate company stock prices to their lowest point to obtain the
lowest, most favorable strike price on his new stock options package. Based
upon
the way my complaints concerning this conduct have been handled as well as
Mr.
Newsom’s turning a blind eye to the matters raised by the investigative report,
I believe it would be futile to move the Board to take action on this
information. I thus really have no choice but to resign.
I
am
submitting a copy of this letter to company counsel Richardson Patel, knowing
that I had previously asked that the information concerning Dr. Latty’s conduct
be disclosed and corrected, or at least that the company conduct a thorough
vetting of the proper response to the report. To make matters worse, on or
about
September 21, 2006 counsel from Richardson Patel apparently had assisted Dr.
Latty in an attempt to “buy me out” of the company. Specifically, Mark Abdou of
Richardson Patel, apparently on behalf of Dr. Latty, assisted Chuck Rosenblum
of
Rosenblum Partners, LLC, in preparing a proposed term sheet whereby I would
sell
1.6 million of my shares to Rosenblum, requiring that I resign from all Officer
and Board positions that I held. I see this apparent representation
of Dr. Latty as a conflict of interest with the company and I question the
law
firm’s willingness to fulfill its duties to shareholders as company
counsel.
Sincerely,
/s/ D.
K. Moscaritolo
Daniel
K.
Moscaritolo
Cc:
Mark Abdou, Richardson Patel (By US Post Office only)
Enclosure
[FRONT
OF PROXY CARD]
CONVERGENCE
ETHANOL, INC.
NOMINATING
SHAREHOLDER’S PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
AT
7:30
A.M., MONDAY, APRIL 16, 2007
The
undersigned shareholder of Convergence Ethanol, Inc. (the “COMPANY”) hereby
appoints Daniel K. Moscaritolo and Charles L. Christensen, or either of them,
as
proxies, each with full powers of substitution, to vote the shares of the
undersigned at the above-stated Annual Meeting and at any adjournment(s) or
postponement(s) thereof:
|
1.
|
|
TO
APPROVE THE ELECTION OF ANY OR ALL OF THE FOLLOWING NOMINEES FOR
DIRECTOR
|
|
|
|
|
|
|
|
Daniel
K. Moscaritolo
|
o FOR
|
o WITHOLD
|
|
|
|
Charles
L. Christensen
|
o FOR
|
o WITHOLD
|
|
|
|
Thomas
Hemingway
|
o FOR
|
o WITHOLD
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE
PROXIES SHALL BE AUTHORIZED TO ACT IN THEIR DISCRETION ON ANY OTHER
BUSINESS THAT MAY PROPERLY COME BEFORE THE MEETING.
THIS
PROXY HEREBY REVOKES ANY PROXY OR PROXIES HERETOFORE GIVEN BY THE
UNDERSIGNED:
|
(Please
sign on the reverse side)
[BACK
OF PROXY CARD]
(Continued
from reverse side)
THIS
PROXY IS SOLICITED IN OPPOSITION TO THE BOARD OF DIRECTORS OF CONVERGENCE
ETHANOL, INC. BY THE NOMINATING SHAREHOLDER AND FOR THE SHAREHOLDER NOMINEES
LISTED BELOW. THIS PROXY IS NOT BEING SOLICITED BY THE BOARD OF DIRECTORS OF
CONVERGENCE ETHANOL, INC.
Receipt
herewith of the Nominating Shareholder’s Proxy Statement, dated March 29, 2007
is hereby acknowledged.
|
Dated:
|
|
,
2007
|
|
|
|
|
|
|
|
|
|
|
(Signature
of Shareholder)
|
|
|
|
|
|
|
|
|
|
|
|
(Signature
if held jointly)
|
|
|
|
|
|
|
|
|
|
|
IMPORTANT:
Please date this proxy and sign exactly as your name or names appear(s)
on
your stock certificate. All joint owners whose names appear should
sign.
Executors, administrators, trustees, guardians, attorneys and others
holding stock in a representative or fiduciary capacity, should sign
and
also give their title. If a corporation, please sign in corporate
name by
the president or other authorized officer. If a partnership, please
sign
in partnership name by an authorized
person.
|
PLEASE
SIGN, DATE AND MAIL TODAY.