SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
(Amendment
No. 3)
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Filed
by the Registrant o
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Filed
by a Party other than the Registrant x
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Check
the appropriate box:
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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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Definitive
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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Payment
of Filing Fee (Check the appropriate box):
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x
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No
fee required.
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Fee
computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11.
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(1)
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Title
of each class of securities to which transaction
applies:
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(2)
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Aggregate
number of securities to which transaction applies:
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(3)
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Per
unit price or other underlying value of transaction computed pursuant
to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4)
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Proposed
maximum aggregate value of transaction:
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(5)
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Total
fee paid:
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Fee
paid previously with preliminary materials.
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Check
box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement No.:
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(3)
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Filing
Party:
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(4)
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Date
Filed:
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May
21, 2007
Dear
Fellow Shareholders:
I
have
chosen three nominees to replace Convergence Ethanol's current directors,
and I
am seeking your support at the 2007 Annual Meeting of Shareholders.
The
shareholder meeting is being held notwithstanding the active opposition of
the
Convergence board. On February 23, 2007, the First Judicial District Court
of
the State of Nevada in and for Carson City confirmed the lawfulness of the
demand (made by myself and fellow shareholder Charles L. Christensen) that
Convergence hold an annual meeting, the first one in many years.
Many
of you may know that I co-founded the company's predecessor, serving in a
part
time capacity beginning on July 1, 2002, as the Chief Operating Officer (“COO”)
and Chief Technical Officer (“CTO”) of the private company, MEMS USA Inc., which
was the predecessor of Convergence. I became a director and the full-time
COO
and CTO when MEMS merged with a subsidiary of Convergence, a public company,
on
February 18, 2004 and continued to serve in those positions until I resigned
from the Board of Directors in November 2006. I resigned because I had grave
concerns regarding whether Dr. Latty had undisclosed material financial
interests in two material transactions between Convergence and two private
companies that he and/or his wife controlled, the Accelon Company in Thousand
Oaks, California (“Accelon Company”) and the Accelon Corporation Inc, a Nevada
corporation (“Accelon Nevada”). Subsequently, I have observed, several instances
of what I consider to be acts of entrenchment by the current directors that
have
only reinforced my growing concerns with the current direction of
Convergence.
We
believe Dr. Latty should answer some questions
Did
you know that--
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In
March of 2003, Convergence entered into a money-losing contract
with the
Accelon Company, under which Convergence lost hundreds of thousands
of
dollars. The contract was to build one prototype of a fuel blending
skid
or mechanical mixing machine. C.A. Lombardi, Executive Vice President
of
Accelon stated in the bid solicitation that Accelon planned to
purchase up
to 20 of these mixing systems in the same calendar year. A project
report
shows projecting revenues of $8 million with an 18-month demand
for 100 to
120 units in follow on purchases and that Dr. Latty was Convergence’s
project “lead.”
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There
was no public disclosure of a relationship between Dr. Latty, his
wife
Cathy A. Latty (C.A. Lombardi-maiden name) and the two companies;
the
Accelon Company and Accelon Nevada. To the best of my knowledge,
there was
never any disclosure of these facts inside
Convergence.
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James
Latty’s wife’s maiden name (C. A. Lombardi) is the same as the officer of
Accelon who signed the contract with Convergence, on behalf of
the Accelon
Company. Why did documents filed with the U.S. Patent and Trademark
Office
by Dr. Latty reflect that he and C.A. Lombardi shared the same
mailing
address?
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How
was it that this C. A. Lombardi had the authority to sign and issue
checks
to Convergence, on behalf of two separate companies; the Accelon
Company
and Accelon Nevada?
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Why
did Dr. Latty, as an individual person, file for a trademark in
May of
2003 for the generic name "Accelon" for a mechanical mixing machine,
the
same as the product that Convergence was prototyping for the Accelon
Company?
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Lawrence
Weisdorn, Charles L. Christensen and I had raised these questions.
Each of
us was terminated or resigned. I resigned on account of the Company’s
reticence to provide the answers. The Company still does not provide
answers to these questions, and we feel the shareholders are entitled
to
these answers.
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The
right to vote is our most important right and our most precious right as
shareholders, and there is no justification for Convergence's unwillingness
to
afford us this right.
Did
you know that--
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The
2007 Annual Meeting will be held because Convergence was ordered
by a
Nevada court to hold this meeting.
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Ironically,
Convergence has spent large amounts of money trying to frustrate
the
shareholders' rights to vote for its
directors.
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Convergence
has held no prior shareholders' meetings since March 18, 2002 (five
years).
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Not
a single current Convergence director was ever elected by you,
the
shareholders.
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When
asked to distribute my proxy materials, Convergence demanded $60,000
from
me. Convergence would be entitled only to its "reasonable expenses"
to
distribute (not to print or review) proxy
statements.
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There
is no justification for Convergence electing its directors one-at-a-time
since
the shareholders have not had any meetings for over five
years.
Did
you know that--
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The
Bylaws provide for a three-year term for directors? The shareholders
never
had an opportunity to vote on it.
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Convergence
intends to elect only one director, instead of all three, at the
2007
Annual Meeting.
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Dr.
Latty, serving as a director of Convergence since February 18,
2004, has
already served over three years, already longer than as provided
in the
Convergence bylaws themselves. The Convergence position is that
Dr. Latty
is "protected" from being voted in or out this year. It also so
happens
that, according to the Company's proxy, "Ratification of [Latty's]
new
three-year [employment] agreement by the Board of Directors is
anticipated."
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When
Dr. Latty was elected as a director, the bylaws provided for a
one-year
term for directors; and Nevada Revised Statutes 780.330.2 provides
that
the directors in office at the time of changing bylaws to provide
for a
"three-year" term do not thereby receive three-year term; they
would
continue to have a one-year term.
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According
to the Convergence bylaws themselves, all “replacement" directors elected
by the board are supposed to only serve out the remaining term
of the
director that they are replacing. Since two of the current directors
are
replacement directors, and the prior directors were elected on
February
18, 2004, their terms have already been extended beyond the three
years
limitations set forth in Convergence's own
bylaws.
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It
compounds my concern that Convergence has chosen to object to a shareholder
vote
while the current board and management are overseeing a desperate financial
situation.
I
believe the Dr. Latty has failed to raise sufficient capital as necessary
for
Convergence to position itself for future growth and to deliver value to
shareholders.
Did
you know that--
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Under
Dr. Latty's leadership, Convergence has not raised one dollar of
external
equity or debt funding to advance the Hearst Ethanol One, Inc.
project? As
a matter of fact, according to Convergence's most recent Form 10-KSB,
"[Convergence] plan[s] to obtain the additional working capital
through
private placement sales of our equity securities. [Convergence
has] not
received any funds, nor can there be any assurance that such funds
will be
forthcoming."
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Development
of the HEO project is Convergence's best hope to become self-sustaining.
As a matter of fact, according to Convergence's most recent Form
10-KSB,
"[Convergence] expect[s] to continue incurring operating losses
until we
are able to derive meaningful revenues from our proposed business
relating
to ethanol production, energy generation and
supply."
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By
alleged non-performance of promises to previous investors, I am concerned
that
Convergence is jeopardizing its opportunities to raise much-needed additional
financing.
Did
you know that--
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Convergence
received private financing in 2005 and, as alleged in a demand
made by
investors but not made public by Convergence, to date has failed
to issue
and deliver the securities sold to the investors. In addition,
based on
public filings, Convergence has also not attempted to register
those
securities as allegedly promised.
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Convergence
raised private financing in 2006, allegedly based on a promise
that the
funds would be held in an escrow account and not released to Convergence
until the funds in escrow exceeded $350,000. The investors allege
that
Convergence raised only $130,000 and notwithstanding its promise
expended
those funds for its own account.
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On
March 13, 2007, Convergence received a demand for payment of liquidated
damages in the amount of $145,906.61 (the “Notice”) plus $2,353.33 per day
after March 13, 2007 from GCA Strategic Investment Fund Limited
(“GCA”)
pursuant to a Securities Purchase Agreement dated October 31, 2006
between
Convergence and GCA (the “Purchase Agreement”). Pursuant to the Purchase
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Agreement,
Convergence was required to file and obtain an effective Registration
Statement covering the resale of the Registrable Securities no
later than
January 25, 2007. The Company has not even filed a Registration
Statement
covering the Registrable Securities. The foregoing liquidated
damages are
payable in cash upon demand. If payment is not received by GCA
in
accordance with the terms of the Purchase Agreement and the Notice,
GCA
has threatened to issue to the Company a notice of default and
accelerate
Convergence’s outstanding obligation to GCA. Convergence would then owe
the holders at least 110% of the $3,530,000 original principal
amount,
110% of default interest at the rate of 18% per year, and 110%
of the
liquidated damages, or more based on a market price formula,
plus an
amount equal to the appraised value of the outstanding warrants
based on a
Black-Scholes model, or more based on a market price
formula.
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MY
NOMINEES HAVE A REAL PLAN AND THE EXPERIENCE NECESSARY TO DELIVER VALUE TO
CONVERGENCE SHAREHOLDERS
We
believe that the following strategic actions will deliver maximum value for
the
Convergence shareholders:
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Promptly
seeking capital for moving forward with the Hearst Ethanol
Project.
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Promptly
hiring a new, highly-qualified and experienced
CEO.
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Removing
the current "defensive" and "anti-change of control" provisions
of the
board-approved Bylaws in accordance with the highest standards
of
corporate governance.
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I
believe
your voice in the future of Convergence can best be expressed through the
election of the Shareholder Nominees at the annual meeting. If my nominees
are
elected, we intend to apply or experience and knowledge toward achieving
the
highest and best use of Convergence's valuable assets for the benefit of
all the
shareholders.
Thank
you
for your careful consideration.
Sincerely,
/s/
Daniel K. Moscaritolo
DANIEL
K.
MOSCARITOLO
If
your shares are not held in a brokerage account and a stock certificate is
registered in your own name, you are the Shareholder of
record and would vote by signing and dating the accompanying form of proxy
and
sending it to PROXY SOLICITOR, 300 S. HARBOR BL., SUITE 500, ANAHEIM, CA
92805.
On
the other hand, 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," and in that case these proxy materials
are being forwarded to you by your broker who is considered, with respect
to
those shares, the Shareholder of record. To vote as a beneficial owner, you
may
either--
A.
Direct your broker to vote your shares, and your broker or nominee shall
have
enclosed a voting instruction card for you to use;
OR
B.
Specifically request a document called a "legal proxy" from your broker and
either bring it with you to the Annual Meeting or sign and date the accompanying
form of proxy and forward it along with your "legal proxy" to PROXY SOLICITOR,
300 S. HARBOR BL., SUITE 500, ANAHEIM, CA 92805.
PLEASE
CAREFULLY READ THE ACCOMPANYING PROXY STATEMENT FOR MORE DETAILED INFORMATION
ABOUT THE NOMINATING SHAREHOLDER’S NOMINEES FOR DIRECTOR. IF YOU HAVE ANY
QUESTIONS, REQUIRE ASSISTANCE IN VOTING 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 BL., SUITE 500, ANAHEIM, CA 92805 OR CALL 714-765-0012.
PROXY
STATEMENT
OF
THE
NOMINATING SHAREHOLDER--DANIEL K. MOSCARITOLO
(OPPOSING
THE NOMINEE(S) OF THE CURRENT BOARD OF DIRECTORS
OF
CONVERGENCE ETHANOL, INC.)
ANNUAL
MEETING OF SHAREHOLDERS
OF CONVERGENCE
ETHANOL, INC.
This
Proxy Statement and form of proxy are in favor of the nominees of Daniel
K.
Moscaritolo (the "Nominating Shareholder") and are being sent to holders
(the
"Shareholders") of the Common Stock of Convergence Ethanol, Inc., a Nevada
corporation (the "Company"), in connection with his solicitation of proxies
for
the 2007 Annual Meeting of Shareholders of the Company (including any
adjournments or postponements thereof, called the “Annual
Meeting”).
The
Annual Meeting was adjourned by the Company to an indefinite, not-yet-announced
time and place. It was originally 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.
The time and place of the adjourned meeting must be provided by Convergence
in a
notice to Shareholders. At present, Convergence has not announced either
the
time or place for the adjourned meeting to reconvene. We will supplement
this
Proxy Statement to announce the time and place for the Annual
Meeting.
Shareholders
who owned Common Stock on February 15, 2007 (the "Record Date") are entitled
to
vote at the Company's Annual Meeting. In order to have this record date,
the
meeting must be held not later than June 15, 2007. If the record date is
changed, we will supplement this Proxy Statement to announce the new record
date.
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.
The
Nominating Shareholder is soliciting votes in opposition to the Director
(or
Directors) nominated for election by the Company.
In
the event that the Company is ordered by the First Judicial District Court
of
the State of Nevada in and for Carson City or voluntarily 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. If only
one
director can be elected at the Annual Meeting, then the proxies solicited
hereby
will be voted for Daniel K. Moscaritolo.
The
name and address of the Nominating Shareholder is: Daniel K. Moscaritolo,
4010
Lemonberry Place, Thousand Oaks, CA 91362. The Nominating Shareholder
beneficially owns 2,462,887 shares of Common Stock, which represents
approximately 12.09% of the Company's outstanding Common Stock as of the
Record
Date. 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 in this Proxy
Statement. 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 form of proxy are intended to be first sent or given
to
Shareholders on or about May 21, 2007.
Your
last dated proxy is the only one that counts, so return the form of proxy
even
if you have previously delivered another proxy card to the Company. The
Nominating Shareholder urges you not to return any form of proxy sent to
you by
the Company other than the accompanying form of proxy.
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 form of proxy 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 accompanying form of
proxy
should be signed by all such persons to ensure that all shares are voted
for the
Shareholder Nominees.
Holders
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 PERSON
NAMED AS PROXY ON THE ACCOMPANYING FORM OF PROXY 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
If
your shares are not held in a brokerage account and a stock certificate is
registered in your own name, you are the Shareholder of record and would
vote by
signing and dating the accompanying form of proxy and sending it to PROXY
SOLICITOR, 300 S. HARBOR BL., SUITE 500, ANAHEIM, CA
92805.
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,"
and in
that case these proxy materials are being forwarded to you by your broker
who is
considered, with respect to those shares, the Shareholder of record. To vote
as
a beneficial owner, you may either—
A.
Direct your broker to vote your shares, and your broker or nominee shall
have
enclosed a voting instruction card for you to use;
OR
B.
Specifically request a
document called a "legal proxy" from your broker and either bring it with
you to
the Annual Meeting or sign and date the accompanying form of proxy and forward
it along with your "legal proxy" to PROXY SOLICITOR, 300 S. HARBOR BL., SUITE
500, ANAHEIM, CA 92805.
REASONS
FOR REPLACING THE INCUMBENT DIRECTORS
Management
and the Incumbent Directors Have Failed to Answer Questions Arising from
the
Company’s Dealings with Accelon
The
Company once had a money-losing contract with a Company called Accelon, under
which the Company lost hundreds of thousands of dollars. The contract was
to
build one prototype of a fuel mixer. Dr. Latty’s wife’s maiden name, Cathy Anne
Lombardi, is the same as the officer of Accelon who signed the contract.
Additionally, on May 11, 2003 Dr. Latty filed for a trademark for the word
mark
“Accelon” for a fuel mixer, the product that the Company was prototyping for
Accelon. Also mentioned in a subsequent trademark assignment is a person
with
the same maiden name as Dr. Latty’s wife’s maiden name. In addition, the address
listed for Cathy Lombardi on the trademark assignment is the same address
listed
by Dr. Latty on the trademark’s registration. There was no public disclosure of
a relationship between Dr. Latty and Accelon and no disclosure inside the
Company either.
Lawrence
Weisdorn, Charles L. Christensen and the Nominating Shareholder at different
times had raised these questions. Each of these former directors or officers
was
terminated or resigned. The Nominating Shareholder resigned on account of
the
Company’s reticence to provide the answers to you, the shareholders. The Company
still has not provided answers to these questions, and we feel the shareholders
are entitled these answers.
Management
and the Incumbent Director’s Attempts at Entrenchment Could Impede the
Shareholders from Having the Opportunity to Vote on the Leadership of the
Company
The
most
fundamental right of shareholders is their right to decide who should serve
as
the directors of their company. Ever since the Nominating Shareholder initially
sought to have the Company hold an annual meeting of shareholders, the incumbent
directors have been wasting the Company’s resources in their efforts to prevent
the Company’s shareholders from being able to exercise that right. The 2007
Annual Meeting will be held only because the Company was ordered by the First
Judicial District Court of the State of Nevada in and for Carson City to
hold
this meeting. The incumbent directors and management have been actively opposing
the Nominating Shareholder’s efforts to have an annual meeting in litigation
before the court. Even when faced with an order by the court to hold the
Annual
Meeting, the incumbent directors and management persisted in their attempt
to
stymie a vote by demanding that the Nominating Shareholder pay them $60,000
to
distribute these proxy materials. The incumbent directors and management
took
this action despite the fact that the Company would be entitled only to its
"reasonable expenses" to distribute (not to print or produce) proxy statements.
The
Nominating Shareholder believes that the actions of the incumbent directors
and
management to prevent the Company’s shareholders from having the opportunity to
vote on the leadership of their Company are indicative of the incumbent
directors’ and management’s lack of concern for shareholder rights. These
actions are even more troubling to the Nominating Shareholder given that
the
Company has not held a shareholders’ meeting since March 18, 2002. In fact, the
very same incumbent directors who have been seeking to entrench themselves
have
never even been elected by the Company’s shareholders. The Nominating
Shareholder believes that having a board of directors who has never been
elected
by the shareholders and who have frustrated attempts at a shareholder vote
is
certainly not in the best in interests of the Company or its shareholders.
In
an
attempt to retain control of the Company and to avoid a shareholder vote
on all
of the director seats, the incumbent directors also filed a notice with the
court indicating that they intend to elect only one director at the Annual
Meeting. The incumbent directors rely on bylaws which provide for a three-year
term for directors, despite the fact that those bylaws were never approved
by
the shareholders of the Company. Dr. Latty, serving as a director of the
Company
since February 18, 2004, has already served over three years, already longer
than as provided in those bylaws themselves. The Company’s position is that Dr.
Latty is "protected" from being voted in or out this year. It also so happens
that, according to the Company's preliminary proxy statement, "Ratification
of
[Latty's] new three-year [employment] agreement by the Board of Directors
is
anticipated."
Moreover,
When Dr. Latty was elected as a director, the bylaws provided for a one-year
term for directors; and Nevada Revised Statutes 780.330.2 provides that the
directors in office at the time of changing bylaws to provide for a "three-year"
term do not thereby receive three-year term; rather they would continue to
have
a one-year term. According to the Company’s bylaws themselves, all directors
elected by the board are supposed to only serve out the term of the director
that is replaced. Since two of the current directors are replacement directors,
and the prior directors were elected on February 18, 2004, their terms have
already been more than three years, the term as provided in Company’s own
bylaws.
Failure
to Raise Sufficient Capital to Position Itself for Future
Growth
The
Hearst Ethanol One, Inc. project involves plans by the Company’s subsidiary,
Hearst Ethanol One, Inc., an Ontario corporation (“HEO”), to build an
ecologically sound wood waste refinery to produce bio-renewable, fuel-grade
alcohol or ethanol in Hearst Ontario Canada. Development of the HEO project
is
the Company’s best hope to become self-sustaining. As a matter of fact,
according to the Company’s most recent Form 10-KSB, "[Convergence] expect[s] to
continue incurring operating losses until we are able to derive meaningful
revenues from our proposed business relating to ethanol production, energy
generation and supply." Yet, under Dr. Latty's leadership, the Company has
not
raised one dollar of external equity or debt funding to advance the Hearst
Ethanol One, Inc. project. As a matter of fact, according to the Company’s most
recent Form 10-KSB, "[Convergence] plan[s] to obtain the additional working
capital through private placement sales of our equity securities. [Convergence
has] not received any funds, nor can there be any assurance that such funds
will
be forthcoming."
The
Nominating Shareholder is troubled by Dr. Latty’s failure to raise the funds
necessary to complete the Hearst Ethanol One, Inc. project. The Nominating
Shareholder believes that it would be in the best interest of the shareholders
and the Company to replace the Company’s incumbent directors with a board which
would promptly seek capital to complete the Hearst Ethanol One, Inc.
project.
The
Company Has Raised Some Financing Privately and Subsequently Disputes Have
Arisen
The
Company received $1,005,000 of private financing in 2005 and, as alleged
in a
demand made by investors but not made public by the Company, to date has
failed
to issue and deliver the securities sold to the investors. In addition, based
on
public filings, the Company has also failed to register those securities
as
promised.
The
Company raised private financing in 2006, allegedly based on a promise that
the
funds would be held in an escrow account and not released to Convergence
until
the funds in escrow exceeded $350,000. The investors allege that the Company
raised only $130,000 and notwithstanding its promise expended those funds
for
its own account.
On
March 13, 2007, Company received a demand for payment of liquidated damages
in
the amount of $145,906.61 from GCA Strategic Investment Fund Limited (“GCA”)
pursuant to a Securities Purchase Agreement dated October 31, 2006 between
the
Company and GCA (the “Purchase Agreement”). Pursuant to the Purchase Agreement,
Convergence was required to file and obtain an effective Registration Statement
covering the resale of the Registrable Securities no later than January 25,
2007. The Company has not even filed a Registration Statement covering the
Registrable Securities. On March 13, 2007, GCA delivered a Notice to the
Company
claiming liquidated damages in an amount not less than $145,906.61 plus
$2,353.33 per day after March 13, 2007. The foregoing liquidated damages
are
payable in cash upon demand. If payment is not received by GCA in accordance
with the terms of the Purchase Agreement and the Notice, GCA has threatened
to
issue to the Company a notice of default and to accelerate Convergence’s
outstanding obligation to GCA. Convergence would then owe the holders at
least
110% of the $3,530,000 original principal amount, 110% of default interest
at
the rate of 18% per year, and 110% of the liquidated damages, or more based
on a
market price formula, plus an amount equal to the appraised value of the
outstanding warrants based on a Black-Scholes model, or more based on a market
price formula.
The
Nominating Shareholder believes that this history and trend of alleged
non-performance of promises to previous investors in the Company is jeopardizing
the Company’s opportunities to raise much-needed additional
financing.
As discussed above, the Nominating Shareholder believes that the HEO project
is
the Company’s best hope to become self-sustaining. In order to complete the HEO
project the Company will require additional financing. The Nominating
Shareholder believes that the incumbent directors’ and management’s alleged
track record of broken promises to investors reduces the Company’s prospects of
moving the HEO project forward.
The
Public Disclosures by Convergence to Its Shareholders Fall Short of Relating
All
the Relevant Facts
The
Nominating Shareholder is concerned about the adequacy of the current
management’s and directors’ public disclosure of information to the Company’s
shareholders. The Nominating Shareholder is particularly troubled by the
Company’s disclosure of the following events.
On
July
1, 2005, the Company filed a Form 8-K announcing it had reached an agreement
for
the separation of the Company’s prior CEO, Lawrence Weisdorn. The Company
included as exhibits a separation agreement and a letter of resignation,
both of
which were followed by the typewritten name of Lawrence Weisdorn. However,
in a
lawsuit commenced by the Company on October 17, 2005, Mr. Weisdorn asserted
in a
cross compliant on November 3, 2006 that the Form 8-K and its accompanying
exhibits were false and that he in fact never signed or agreed to either
of
those documents. Then, three months later, on February 2, 2006 Convergence
disclosed in a Form 10-KSB that the litigation had been settled. That disclosure
did not mention that Mr. Weisdorn had alleged breach of fiduciary duty and
self-dealing, nor did it disclose that one of the defendants in that lawsuit
was
Dr. Latty’s wife, Cathy Latty, based on her alleged involvement in a
self-dealing transaction.
On
November 14, 2006, Mr. Moscaritolo submitted a letter of resignation to the
Company to resign as a member of the Board of Directors. Mr. Moscaritolo’s
resignation was not reported by the Company until nearly a month later when
it
was finally disclosed to the shareholders on a Form 8-K filed on December
12,
2006, despite the fact that Item 5.02 of Form 8-K would require such an event
to
be reported by the Company within four business days. Furthermore, the Company
filed a very blurry copy of Mr. Moscaritolo’s resignation letter as Exhibit 99.1
to that Form 8-K.
Although
the Company had a staggered board provision and other provisions we consider
anti-takeover provisions, the Company did not disclose in any of its filings
with the SEC these provisions, except that it filed its original bylaws as
an
exhibit and it describes the staggered board provision in its proxy statement
related to this meeting.
A
Form
10-KSB filed by the Company February 2, 2006, discusses a placement agency
agreement made with S.W. Bach and Company and the Company includes a copy
of the
sales agency agreement as Exhibit 10.1 but fails to include a copy of the
securities agreement. The Company filings make reference to multiple securities
and financing agreements entered into by the Company and its subsidiaries
but
often fail to provide copies of the agreements as appropriate exhibits.
On
another occasion, on April 26, 2006, the Company filed a Form 8-K announcing
a
contract with Tri-Works, Inc. to create a new company logo and to draft the
positioning statement to appear in the Company’s financial statements and
announcements for $83 to $91 per hour plus costs. In actuality, the contract
was
with Try-Works Productions of which Stephen Latty, son of Dr. Latty, was
disclosed within the Company as the owner. The Form 8-K made no mention of
Stephen Latty’s relation to the Company’s President and CEO.
REASONS
TO ELECT THE SHAREHOLDER NOMINEES
The
Nominating Shareholder believes that the following strategic actions will
deliver maximum value for the Company’s shareholders:
Promptly
Seeking Capital for Moving Forward with the Hearst Ethanol
Project
The
Nominating Shareholder believes
that promptly seeking capital for moving forward with the HEO project is
necessary for the future success of the Company. If elected, the Shareholder
Nominees would, consistent with their fiduciary duties, seek out the capital
necessary to move the HEO project forward, in addition to other financing
needs.
There
is no assurance that the Shareholder Nominees will be successful in raising
any
significant capital or that they will be able to raise capital on terms
favorable to the Company. Raising capital for the HEO project and otherwise
may
also result in adverse effects on the Company’s shareholders including possible
dilution of the current shareholders and the issuance of securities with
rights
senior to those of the current shareholders. Convergence requires additional
capital to continue to fund its ongoing operations, and failure to obtain
sufficient financing promptly could result in a serious curtailment of future
business and financing activity.
Promptly
Hiring a New CEO.
The
Nominating Shareholder believes that promptly hiring a new, highly-qualified
and
experienced Chief Executive Officer is in the best interests of the Company
and
its shareholders. If elected, the Shareholder Nominees would promptly conduct
a
search for a suitable executive with prior public company and ethanol industry
experience who would be able to effectively advance the HEO
project.
There
is
no assurance that the Shareholder Nominees will be successful in identifying
and
hiring a CEO with the necessary experience or that the performance of any
CEO
selected by the Nominating Shareholders would exceed the performance of the
Company’s current CEO. There is always a significant risk that replacing a CEO
may have adverse effects on the Company including a potential decrease in
Company’s operating performance, loss of customers, suppliers and employees, and
disruption of operations.
Removing
the Current "Defensive" and "Anti-change of Control" Provisions of the
Board-approved Bylaws in Accordance with the Highest Standards of Corporate
Governance.
The
Nominating Shareholder believes that removing the current “defensive” and
“anti-change of control” provisions contained in the Company’s bylaws would
result in more effective corporate governance and enhance the accountability
of
the board of directors to the Company’s shareholders.
The
current bylaws of the Company provide for a staggered board of directors.
Because of this classified structure, shareholders may only vote for one-third
of the directors each year, assuming that an annual meeting is held every
year.
This is not in the best interest of shareholders because it reduces
accountability.
An
increasing number of investors have come to believe that classified boards
reduce accountability of directors because they limit the ability of
shareholders to evaluate and elect all directors on an annual basis.
Accordingly, an increasing number of companies have been taking actions to
provide for the annual election of all directors.
The
Nominating Shareholder believes that the election of directors is a primary
means for shareholders to influence corporate governance policies and hold
management accountable for implementing those policies. The Nominating
Shareholder believes that the annual election of all directors is in the
best
interests of the Company and its shareholders. Accordingly, if elected, the
Shareholder Nominees will propose an amendment to the Company’s bylaws to remove
the current classified structure and to provide for the annual election of
all
directors.
Although
the Nominating Shareholders are in favor of the annual election of all
directors, proponents of classified boards believe that they provide continuity
and stability to the board, facilitate a long-term outlook by the board and
enhance the independence of non-employee directors.
Expanding
the Board.
The
Nominating Shareholder supports
increasing the number of directors as and when candidates who are capable
and
willing can be identified and believes that the current number of directors
(three) does not assure a diversity of viewpoints, experience and skills
on the
Board of Directors.
Honoring
the contractual rights of investors.
The
Nominating Shareholder supports, if
consistent with the fiduciary duties of the Board, honoring existing agreements
with investors, which would include obligations to take actions necessary
to
register additional shares of common stock for resale. Convergence will not
obtain any additional funds, and definitely will incur significant expenses,
in
connection with such undertakings. Also, additional shares being resold would
have an adverse effect on the market price of the Common Stock. However,
such
obligations exist. The Nominating Shareholder believes that to continue to
default on such obligations would have a more serious adverse effect on
Convergence and impair its ability to raise additional financing of any
kind.
PROPOSAL
ONE
ELECTION
OF THE SHAREHOLDER NOMINEES
The
Company's Board of Directors is currently comprised of three Directors. The
Company has filed a notice in First Judicial District Court of the State
of
Nevada in and for Carson City 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. The existing
bylaws provide that Directors will be elected for a three-year term and electing
one Director per year. If one Director is elected, it would be for a three-year
term. If three Directors are elected, one would have a three-year term, one
would have a two-year term, and one would have a one-year term. That would
be
the legal effect under the bylaws as they currently exist, and until the
bylaws
are amended. The Nominating Shareholder and the Shareholder Nominees plan
to
support a change of that bylaw upon their election to the board, They are
planning to support and approve a bylaw amendment to eliminate “classification”
of the board or the “staggered board” and return to electing all Directors
annually as soon as reasonably possible if not immediately upon
election.
When
you return the Nominating Shareholder's accompanying form of proxy, 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 each Nominee
has agreed to serve whether elected as one of three valid Directors or the
nominee is elected as the sole valid Director at the Annual Meeting. We have
no
information concerning the Company’s nominees’ intention to serve in any case.
We make no assurance whatsoever that the Company's nominees will serve if
elected with any of the Shareholder Nominees. 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 three Shareholder
Nominees as a Director. To the extent that the Company proposes to elect
fewer
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 in the following order: (1) Daniel Moscaritolo and (2)
Charles L. Christensen.
The
Company has not called a shareholders’ meeting for several years, and it is
proper that the entire Board should be elected at the Annual Meeting because
the
Nevada law clearly and emphatically requires it. In fairness to the
Shareholders, Nevada law says directors cannot unilaterally extend their
terms
in office to three years by creating a staggered board in the
bylaws.
All
of
the Company’s incumbent directors have already continued in office more than
three years since their terms began.
The
Nominating Shareholder is prepared to nominate and vote for one or three
directors, depending upon the number to be elected according to the official
records of the Annual Meeting. The Company feels as though it only needs
to hold
an election of one director, so that James A. Latty and John C. Fitzgerald
continue in office for at lest one or two more years with no vote.
In
the
State of Nevada, the Nominating Shareholder has asked the First Judicial
District Court of the State of Nevada in and for Carson City to rule on a
motion
to require the Company to hold an election for all three directors. If the
Nominating Shareholder succeeds, and the court orders the Company to hold
an
election for all three directors, we will nominate all three nominees, and
in
the alternative situation we shall also nominate all three directors, in
order
to preserve our rights.
The
Nominating Shareholder seeks to remove the incumbent board members, who have
invalidly extended their own terms as directors and have opposed holding
this
Annual Meeting, and to replace them with the Shareholder Nominees.
The
Company’s Board itself adopted a staggered board of directors simply by amending
the bylaws. The adoption of the bylaws, according to the Company extends
the
directors terms from one year to three years. However, the Company’s position
directly violates Nevada law. The entire Board should have been up for election
(ever since 2005 in fact) because Nevada Revised Statutes 78.330.2, provides
"If
an amendment reclassifying the directors would otherwise increase the term
of a
director, unless the amendment is to the articles of incorporation and otherwise
provides, the term of each incumbent director on the effective date of the
amendment terminates on the date it would have terminated had there been
no
reclassification.” The Nominating Shareholder hopes that the Board of the
Company does not succeed in fooling the Shareholders any longer.
Moreover,
the terms of office of the incumbent directors have already been at least
three
years. The bylaws were reclassified in 2004, and the "three-year terms" would
have already started before that. They would have expired by now even if
they
were three years, so it seems quite remarkable that the law requires Mr.
Latty’s
position to be up for reelection, yet despite this Mr. Latty does not stand
for
reelection, he offers up another person who has served a much shorter time.
Furthermore,
another separate, independent and sufficient reason why all three of the
incumbent directors should be standing for reelection at the Annual Meeting
is
that the staggered board provision was in the Company’s bylaws, but not the ones
actually in effect. The Company filed amended bylaws with the Securities
and
Exchange Commission on March 1, 2007 as Exhibit 3.2 to its Periodic Report
on
Form 10-QSB/A. The amended bylaws do not provide for a staggered board. Rather,
those bylaws provide that the directors shall hold office for the terms
specified in the Company’s Articles of Incorporation. The Company’s Articles of
Incorporation do not have a provision for a staggered board and cannot be
amended to add such a provision without shareholder approval.
The
law
is plain, and it should be plain to you also that Mr. Latty is cleverly
masquerading as a director with a continuing term, which is a shameless refusal
to let go the reigns of power.
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 Bl., Suite 500, Anaheim, CA
92805.
Daniel
K.
Moscaritolo tendered his 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. Mr. Moscaritolo received full time compensation for services rendered
to the Company during the fiscal years ended September 30, 2006, 2005 and
2004,
as set forth below:
Summary
Compensation Table
| |
Annual
Compensation
|
Long-Term
Compensation
|
|
Name
and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Other
Annual
Comp-ensation
($)
|
Securities
Underlying
Options
(#)
|
All
Other
Comp-ensation
($)
|
|
Daniel
K. Moscaritolo,
COO
and CTO
|
2006
|
240,000
|
-
|
9,350
|
-
|
-
|
|
2005
|
240,000
|
-
|
10,200
|
-
|
-
|
|
2004
|
240,000
|
-
|
94,770
|
1,284,343
|
-
|
Aggregated
Option/SAR Exercises in 2006 Fiscal Year
and
FY-End Option/SAR Values
|
Name
|
Shares
Acquired
on
Exercise
(#)
|
Value
Realized
($)
|
Number
of Securities
Underlying
Options/SARS
At
FY-End (#)
Exercisable/
Unexercisable
|
Value
of Unexercised
In-the-Money
Options/ SARS
at
FY-End ($)
Exercisable/
Unexercisable
|
|
Daniel
K. Moscaritolo
|
-
|
-
|
-0-
/ -0-
|
$0/$0
|
Mr.
Moscaritolo entered into an employment agreement with the Company dated as
of
July 1, 2002 with an initial term of four years which provided that Mr.
Moscaritolo would receive a salary at a rate of $20,000 per month for full-time
employment. The Company terminated Mr. Moscaritolo on November 17, 2006.
In his
Whistleblower Action (defined below) Mr. Moscaritolo alleges that he should
be
reinstated and that the Company had approved an increase to his salary and
that
he was entitled to receive additional compensation at a rate of $7,500 each
month effective November 6, 2004.
In
September 2005 Mr. Moscaritolo loaned the Company approximately $105,800.
The
terms of the note required payment of principal and interest, which accrued
at a
rate of ten percent (10%) per annum. The note was accompanied by a security
agreement that granted Mr. Moscaritolo a security interest in all personal
property belonging to the Company, as well as granting an undivided 1/2 security
interest in all of the Company’s right title and interest to any trademarks,
trade names, contract rights, and leasehold interests. On October 31, 2006
the
Company paid Mr. Daniel Moscaritolo a sum of $54,358 of which $8,558 was
for
accrued interest. As of October 31, 2006 Mr. Moscaritolo's loan was paid
in
full.
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).
Legal
Proceedings
On
December 13, 2006, Mr. Moscaritolo presented the Company’s management with a
purported action by written consent of the Shareholders of the Company
indicating that the Shareholders had elected to remove the current board
of
directors and elect Messrs. Moscaritolo and Hemingway as directors in their
place. Mr. Moscaritolo also presented the Company’s management with two separate
purported actions by written consent of the new purported board of directors
indicating that the Company's current officers, James A. Latty and Richard
W.
York, were terminated and that Mr. Moscaritolo was elected to serve as Secretary
of the Company and Mr. Hemingway was elected to serve as President and Chief
Executive Officer of the Company. The Company rejected the purported shareholder
action on the grounds that, on its face, the purported action showed an
insufficient number of votes had been obtained to approve the requested action,
and on the further grounds that the consent of shareholders was solicited
and
obtained in violation of the proxy rules set forth in Section 14 of the
Securities Exchange Act of 1934, as amended (the “Act”). As a consequence of the
invalidity of the purported shareholder action, the Company also rejected
the
actions of the new purported board of directors terminating and replacing
the
officers of the Company.
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 for alleged violations of the Act, declaratory relief,
breach of fiduciary duty, intentional interference with contract, and conversion
(the “Company Action”). Specifically, the Company alleged that Mr. Moscaritolo's
actions to replace the incumbent board of directors were invalid and unlawful.
On February 8, 2007, a default was entered against Mr. Moscaritolo and on
February 12, 2007, the Court entered an Order granting the Company’s Motion for
a Preliminary Injunction. Pursuant to the Order, the Court ruled that: (1)
the
attempted shareholder action initiated by Mr. Moscaritolo and his purported
proxies was void as the proxies were solicited and obtained in violation
of
federal securities laws; (2) Mr. Moscaritolo and those acting in his control
or
direction were enjoined from (a) attempting to vote any of the illegally
obtained proxies; (b) purporting to act as directors of officers of the Company
or its subsidiaries; (c) further soliciting shareholder proxies in violation
of
federal securities laws; and (d) disclosing any confidential portion of a
particular ethics report.
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 Mr. Latty and Mr. York
for
injunctive relief, declaratory relief, receivership, and accounting relating
to
the failed effort to remove them from the Board of Directors of the Company
and
seeking a court order approving their removal (the “Moscaritolo Action”). In
January 2007, Mr. Moscaritolo and Mr. Hemingway voluntarily dismissed the
Moscaritolo Action.
On
January 10, 2007, Mr. Moscaritolo and Mr. 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, Dr. Latty, and Steven Newsom,
a
current director, for injunctive relief to hold an Annual Shareholders Meeting
(the “Second Moscaritolo Action”). 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”) (the “Whistleblower Action”). 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.
Interests
of Nominees
If
the
Shareholder Nominees are elected, the Nominating Shareholder will ask the
board
to consider and vote upon a proposal to terminate the Chief Executive Officer
and to consider whether each of the other current executive officers of the
Company should be removed. The Nominating Shareholder also intends to propose
that the Company then conduct a search to find a new highly, qualified and
experienced executive to serve as the Company’s Chief Executive Officer. Pending
the hiring of a permanent Chief Executive Officer, the Nominating Shareholder
plans to propose to engage Thomas Hemingway on an interim basis. Compensation
that would be paid to Mr. Hemingway for his services as interim CEO have
not
been determined or discussed. Mr. Hemingway will also be reimbursed in an
amount
estimated at approximately $20,000 for expenses incurred in connection with
this
proxy solicitation and will be paid a fee of $20,000 for his services as
the
Nominating Shareholder’s proxy solicitor.
Also,
the
Nominating Shareholder intends to propose that the Shareholder Nominees appoint
Mr. Moscaritolo as the Chief Operating Officer and Chief Technology Officer.
Mr.
Moscaritolo intends to seek compensation for his services as COO and CTO
in the
form of a base salary at a monthly rate of $27,500 per month. Mr. Moscaritolo
will also seek a payment from the Company of approximately $182,712 in
settlement of a claim relating to his full time employment with the Company
during the period from November 4, 2004 until November
17,
2006.
Mr. Moscaritolo will also seek an additional payment from the Company of
approximately $177,205 comprising of back pay for the period since Mr.
Moscaritolo’s termination.
The
Nominating Shareholder also intends to seek reimbursement from the Company
for
those expenses incurred by the Nominating Shareholder relating
to the Proxy Solicitation, if any Shareholder Nominees are elected, but does
not
intend to submit the question of such reimbursement to a vote of the
Shareholders. 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 $300,000 of which approximately $150,000 has been incurred
to
date.
Mr.
Christensen has no intentions of becoming an employee of Convergence, even
on an
interim basis, because he has other commitments during normal working
hours.
If
elected, the Shareholder Nominees who are non-employee directors would each
receive the compensation for their services as directors as may be determined
from time to time.
For
information regarding ownership of the Company's stock by the Shareholder
Nominees and the Nominating Shareholder and regarding purchases and sales
of the
Company's securities during the past two years, please see "CERTAIN
INFORMATION CONCERNING THE PARTICIPANTS."
Other
Information
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.
The
accompanying form of proxy 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 accompanying form of proxy 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 accompanying form
of
proxy 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 neither for nor against the
ratification of the accountants (proposal 2). The accompanying form of proxy
gives you no opportunity to indicate your own preference. If you return the
accompanying form of proxy, you will not be voting at all on proposal 2.
The
Nominating Shareholder believes that your non-vote on that matter should
have no
affect whatsoever on the outcome of voting on proposal 2. However, if the
Company determines to the contrary, then the non-vote would have the same
effect
as a vote against proposal 2.
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 person authorized as
proxy
in the accompanying form of proxy will vote on such matters in his discretion.
The person named as proxy may exercise discretionary authority only as to
matters unknown to the Nominating Shareholder a reasonable time before this
proxy solicitation.
RECORD
DATE AND VOTING
At
the close of business on the Record Date the Company, according to its
preliminary proxy statement, had outstanding 20,367,593 shares of voting
common
stock. 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.
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 form of proxy 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 form of
proxy. Shares represented by a properly executed form of proxy where no
specification has been made will be voted FOR the Shareholder Nominees and
in
the discretion of the person named as proxy on all other matters as may properly
come before the Annual Meeting. The person named as proxy in the accompanying
form of proxy may exercise discretionary authority only as to matters unknown
to
the Nominating Shareholder a reasonable time before the Annual
Meeting.
You
are
being asked to elect the Shareholder Nominees named in this Proxy Statement.
IF
YOU WISH TO VOTE FOR THE ELECTION OF THE SHAREHOLDER NOMINEES TO THE COMPANY'S
BOARD, PLEASE SIGN, DATE AND RETURN PROMPTLY THE ACCOMPANYING FORM OF PROXY
TO
PROXY
SOLICITOR, 300 S. HARBOR BL., SUITE 500, ANAHEIM, CA
92805.
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.
SHAREHOLDER
PROPOSALS
Any
shareholder who intends to present a proposal pursuant to Rule 14a-8 of
Regulation 14A of the Securities Exchange Act of 1934, as amended, at the
Company’s 2008 Annual Meeting of Shareholders must ensure that the proposal is
received by the Company’s Chief Executive Officer at Convergence Ethanol, Inc.,
5701 Lindero Canyon Road, Suite 2-100, Westlake Village, California 91362
no
later than November 20, 2007 in order to be considered for inclusion in the
Company’s proxy materials for the 2008 Annual Meeting.
ADDITIONAL
INFORMATION
The
principal executive offices of the Company are located at 5701 Lindero Canyon
Road, Suite 2-100, Westlake Village, California 91362. None of the participants
in this solicitation, nor any of their respective affiliates or associates,
is
presently an officer or director of, or otherwise engaged in the management
of,
the Company, and the Nominating Shareholder has not had access to the books
and
records of the Company since November 2006. The information concerning the
Company contained in this proxy statement has been taken from, or is based
upon,
publicly available information. Although the Nominating Shareholder does
not
have any knowledge indicating that any statement made herein is untrue, the
Nominating Shareholder does not take any responsibility for the accuracy
or
completeness of statements taken from public documents and records that were
not
prepared by or on his behalf, or for any failure by the Company to disclose
events that may affect the significance or accuracy of such
information.
At
present, the Company has not yet announced the date, time and place for the
adjourned meeting. When this information becomes available, 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 statement indicating the date, time and place
for the
adjourned meeting. Requests should be directed to the attention of Daniel
K.
Moscaritolo, 4010 Lemonberry Place, Thousand Oaks, CA 91362.
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 $300,000 of which approximately $150,000
has
been incurred to date. The estimated total expenditures include the amounts
to
be paid to the proxy solicitor for reimbursement of costs and fees. 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 accompanying form of proxy must
be
signed, dated and returned to PROXY SOLICITOR, 300 S. HARBOR BL., SUITE 500,
ANAHEIM, CA 92805 in time to be voted at the Annual Meeting. If you wish
to vote
for the Shareholder Nominees, you must submit the accompanying form of proxy.
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 accompanying
form
of proxy. 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, 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. The following table 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 (1)
|
|
|
|
|
|
|
|
Daniel
K. Moscaritolo
|
|
2,462,887
|
|
12.1
|
|
|
|
|
|
|
|
Charles
L. Christensen
|
|
345,917
|
|
1.7
|
|
|
|
|
|
|
|
Thomas
Hemingway
|
|
--
|
|
*
|
*Less
than 1%.
(1)
Calculated based on the 20,367,593 shares of Common Stock of the Company
outstanding as of the Record Date according to the Preliminary Proxy Statement
of Convergence.
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)
|
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, (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.
VOTING
SECURITIES OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The
following table sets forth the
beneficial ownership of the Company's common stock as of February 15, 2007,
by
(i) each person known by the Company to be the beneficial owner of more than
five percent (5%) of the Company's common stock, (ii) by each director, (iii)
each of the Company’s principal executive officers, and (iv) all directors and
executive officers as a group. Except as otherwise indicated in the footnotes
to
the table, the persons and entities named in the table have sole voting and
investment power with respect to all shares beneficially owned, subject to
community property laws, where applicable. The following information as to
the
security ownership of the Company, other than information as to the number
of
shares owned by Mr. Moscaritolo, is based solely on the Company’s preliminary
proxy statement filed with the Securities and Exchange Commission on April
2,
2007.
|
Beneficial
Owner (1)
|
Number
of Shares
|
Percentage
Owned (2)
|
|
Dr.
James A. Latty
|
3,464,468
(3)
|
16.2
%
|
|
Steve
Newsom
|
300,000
(4)
|
1.5
%
|
|
Richard
W. York
|
96,336
(5)
|
0.5
%
|
|
Mark
Trumble
|
1,569,902
|
7.7
%
|
|
Daniel
K. Moscaritolo
|
2,462,887
(6)
|
12.08
%
|
|
John
C. Fitzgerald
|
333,613
(7)
|
1.6
%
|
|
All
Directors & Executive Officers as a Group
(4
persons)
|
4,194,417
|
19.04
%
|
(1)
Unless otherwise indicated, the address of each beneficial owner is 5701
Lindero
Canyon Road, Suite 2-100, Westlake Village, California 91362.
(2)
The calculations of percentage of beneficial ownership are based on 20,367,593
shares of common stock outstanding on February 15, 2007.
(3)
Includes options granted to Dr. Latty to purchase 1,000,000 shares of common
stock exercisable within 60 days of February 15, 2007.
(4)
Represent shares underlying options exercisable within 60 days of February
15,
2007.
(5)
Includes shares underlying 65,000 options granted to Mr. York exercisable
within
60 days of February 15, 2007.
(6)
Mr. Moscaritolo’s address is 4010 Lemonberry Place, Thousand Oaks, CA
91362.
(7)
Includes shares underlying 300,000 options granted to Mr. Fitzgerald exercisable
within 60 days of February 15, 2007.
CHANGE
IN CONTROL PROVISIONS
The
SECURITIES PURCHASE AGREEMENT, dated as of October 27, 2006, between Convergence
and GCA Strategic Investment Fund Limited, filed by Convergence on March
1, 2007
as Exhibit 10.1 with its Form 10-QSB/A, provides that replacing a majority
of
incumbent directors in the manner contemplated by this solicitation constitutes
a change in control and thus would give the holders of a majority of the
Convergence convertible notes a right to demand redemption of the notes and
the
warrants. Convergence would then owe the holders at least 110% of the $3,530,000
original principal amount, 110% of default interest at the rate of 18% per
year,
and 110% of the liquidated damages, or more based on a market price formula,
plus an amount equal to the appraised value of the outstanding warrants
based on a Black-Scholes model, or more based on a market price formula.
Independently of any change in control, GCA has already threatened to accelerate
these obligations in connection with the continuing breach by Convergence
of the
registration rights provisions. See "REASONS FOR REPLACING THE INCUMBENT
DIRECTORS--The Company Has Raised Some Financing Privately and Subsequently
Disputes Have Arisen."
According
to the Company’s preliminary proxy statement, Dr. Latty, the Company’s current
Chairman, President and Chief Executive Officer, entered into an employment
agreement dated as of July 1, 2002 that was assumed by the Company. Dr. Latty’s
employment agreement expired on July 1, 2006 and is currently up for
renewal.
The Company has indicated that ratification by the Board of Directors of
a new
three-year agreement with Dr. Latty is anticipated. The expired agreement
with
Dr. Latty provided that any unvested option granted to Dr. Latty under the
agreement shall immediately vest if the Company enters a merger or acquisition
agreement whereby a controlling interest in the Company could change hands
or be
purchased or otherwise acquired.
According
to the Company’s preliminary proxy statement, Richard W. York, the Company’s
current Chief Financial Officer, entered into an employment agreement with
the
Company dated November 1, 2006 which provides for certain payments and benefits
to be provided to him in the event that he is terminated without “cause” or that
he resigns for “good reason.” If Mr. York is terminated without “cause” or
resigns for “good reason” then, subject to Mr. York’s compliance with certain
covenants (including a convent not to compete with the Company for a proscribed
period), Mr. York will receive (i) a lump a severance payment equal to 12
months
of his salary, (ii) any individual incentive compensation earned under any
annual incentive plan approved by the Company’s Board of Directors on a pro rate
basis, and (iii) reimbursement for the cost of up to the first twelve months
of
premiums for continuing group health plan coverage which Mr. York and his
covered dependents receive pursuant to COBRA. Mr. York’s current salary is
payable at a rate of $120,000 per year.
If
the Shareholder Nominees are
elected, the Shareholder Nominees intend to review the terms of any change
of
control provisions that the Company is party to and evaluate whether the
change
of control provisions contained therein have been triggered and, consistent
with
their fiduciary duties, any other relevant circumstances.
If
you have any questions or need assistance in voting your shares, please call
THE
NOMINATING SHAREHOLDER'S PROXY SOLICITOR at 714-765-0012
Dated:
May 21, 2007 Sincerely,
/s/
Daniel K. Moscaritolo
Daniel
K. Moscaritolo
If
your shares are not held in a brokerage account and a stock certificate is
registered in your own name, you are the Shareholder of record and would
vote by
signing and dating the accompanying form of proxy and sending it to PROXY
SOLICITOR, 300 S. HARBOR BL., SUITE 500, ANAHEIM, CA
92805.
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,"
and in
that case these proxy materials are being forwarded to you by your broker
who is
considered, with respect to those shares, the Shareholder of record. To vote
as
a beneficial owner, you may either--
A.
Direct your broker to vote your shares, and your broker or nominee shall
have
enclosed a voting instruction card for you to use;
OR
B.
Specifically request a document called a "legal proxy" from your broker and
either bring it with you to the Annual Meeting or sign and date the accompanying
form of proxy and forward it along with your "legal proxy" to PROXY SOLICITOR,
300 S. HARBOR BL., SUITE 500, ANAHEIM, CA 92805.
[FORM
OF PROXY]
NOMINATING
SHAREHOLDER’S PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS OF CONVERGENCE
ETHANOL, INC.
ORIGINALLY
SCHEDULED FOR 7:30 A.M., CALIFORNIA TIME, ON APRIL 16,
2007
The
undersigned shareholder of Convergence Ethanol, Inc. (the “COMPANY”) hereby
appoints Daniel K. Moscaritolo, as proxy, 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 SHAREHOLDER
NOMINEES
FOR DIRECTOR
|
|
|
|
|
|
|
|
Daniel
K. Moscaritolo
|
o FOR
|
o WITHHOLD
|
|
|
|
Charles
L. Christensen
|
o FOR
|
o WITHHOLD
|
|
|
|
Thomas
Hemingway
|
o FOR
|
o WITHHOLD
|
| |
|
|
|
|
| |
|
IF
NO CONTRARY INSTRUCTIONS ARE GIVEN ABOVE, THE SIGNED AND DATED
PROXY WILL
BE VOTED FOR ALL OF THE SHAREHOLDER NOMINEES.
|
|
|
|
|
|
|
|
|
|
|
|
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:
|
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 ABOVE. 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 May 21, 2007 is
hereby acknowledged.
|
Dated:
____________________, 2007
|
|
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___________________________________________________
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(Signature
of Shareholder)
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___________________________________________________
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(Signature
if held jointly)
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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.
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PLEASE
SIGN, DATE AND MAIL TODAY TO
PROXY
SOLICITOR, 300 S. HARBOR BL., SUITE 500, ANAHEIM, CA
92805.