SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the registrant X Filed by a party other than the registrant |_|
Check the appropriate box:
|_| Preliminary proxy statement
X Definitive proxy statement
|_| Definitive additional materials
|_| Soliciting material pursuant to Rule 14a-11 or Rule 14a-12
Alternative Technology Resources, Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (check the appropriate box):
|_| $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(I)(1), or
14a-6(j)(2).
|_| $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(I)(3).
|_| Fee computed on table below per Exchange Act Rules 14a-6(I)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11.
(4) Proposed maximum aggregate value of transaction:
|_| 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.
(1) Amount previously paid:
(2) Form, schedule or registration statement No.:
(3) Filing party:
(4) Date filed:
ALTERNATIVE TECHNOLOGY RESOURCES, INC.
629 J Street
Sacramento, CA 95814
To the Shareholders of Alternative Technology Resources, Inc.:
You are cordially invited to attend the Annual Meeting (the "Meeting") of
the Shareholders of Alternative Technology Resources, Inc. (the "Company") which
will be held on Tuesday November 20, 2001, at 10:00 a.m. (local time) at the
Sacramento offices located at 629 J Street, Sacramento, California 95814. As
used in this Proxy Statement, the terms "we", "us" and "our" also mean the
Company.
The accompanying Notice of the Annual Meeting of the Shareholders and Proxy
Statement contain the matters to be considered and acted upon, and you should
read the material carefully.
The Proxy Statement contains important information about the four (4)
nominees for election as Directors. The Board of Directors strongly recommends
your approval of these nominees.
We hope you will be able to attend the meeting, but, if you cannot do so,
it is important that your shares be represented. Accordingly, we urge you to
mark, sign, date and return the enclosed proxy promptly. You may, of course,
revoke your proxy, if you attend the meeting and choose to vote in person.
Sincerely,
/s/ James W. Cameron, Jr.
James W. Cameron, Jr.
Chairman of the Board
Sacramento, California
October 16, 2001
ALTERNATIVE TECHNOLOGY RESOURCES, INC.
629 J Street
Sacramento, CA 95814
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS OF
ALTERNATIVE TECHNOLOGY RESOURCES, INC.
TO BE HELD NOVEMBER 20, 2001
To Our Stockholders:
The Annual Meeting of Stockholders of Alternative Technology Resources, Inc., a
Delaware corporation (the "Company"), will be held on Tuesday, November 20,
2001, at 10:00 a.m., local time, at 629 J Street, Sacramento, California 95814,
for the following purposes:
1. To elect four directors;
2. To consider and act upon such other matters as may properly come
before the meeting.
All of the above matters are more fully described in the accompanying Proxy
Statement. Stockholders of record as of the close of business on October 8, 2001
are entitled to notice of and to vote at the meeting or any postponement or
adjournment thereof.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ James W. Cameron, Jr.
JAMES W. CAMERON, JR.
Chairman of the Board
Sacramento, California
October 16, 2001
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTAGE
PREPAID ENVELOPE. ANY PERSON GIVING A PROXY HAS THE POWER TO REVOKE THAT PROXY
AT ANY TIME PRIOR TO VOTING, AND SHAREHOLDERS WHO ARE PRESENT AT THE MEETING MAY
WITHDRAW THEIR PROXIES AND VOTE IN PERSON IF THEY WISH.
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ALTERNATIVE TECHNOLOGY RESOURCES, INC.
629 J Street
Sacramento, CA 95814
PROXY STATEMENT
Solicitation of Proxies
Your proxy in the form enclosed is solicited by the Board of Directors of
Alternative Technology Resources, Inc. (the "Company") for use in voting at the
Annual Meeting of Stockholders to be held on Tuesday, November 20, 2001, at
10:00 a.m. local time, at the Company's Sacramento office located at 629 J
Street, Sacramento, California 95814. This Proxy Statement and the accompanying
form of proxy are being mailed to stockholders on or about October 16, 2001.
The expense of soliciting proxies will be borne by the Company. The principal
solicitation of proxies is being made by mail and personal delivery. However,
additional solicitations may be made by telephone, telegram or other means by
directors, officers, employees or agents of the Company. No additional
compensation will be paid to these individuals for any such services.
In the case of employee stockholders located in the Company's office in
Sacramento, California, and in the case of certain other stockholders (see
"Certain Relationships and Related Transactions"), this Proxy Statement and
related materials may be hand delivered.
Voting Securities
Only stockholders of record on the books of the Company at the close of business
on October 8, 2001, will be entitled to vote at the Annual Meeting. At the close
of business on that date, there were outstanding 59,418,344 shares of common
stock of the Company. Each share of common stock is entitled to one vote for
each of the matters to be presented at the Annual Meeting.
Required Vote
The representation in person or by proxy of at least a majority of the
outstanding shares entitled to vote is necessary to provide a quorum at the
Annual Meeting. Abstentions and broker non-votes are counted as present in
determining whether the quorum requirement is satisfied. The plurality of the
votes of the common stock present in person or represented by proxy at the
Annual Meeting and entitled to vote on the election of directors shall elect the
nominees for the Board of Directors. With regard to the election of directors,
votes may be cast "For" or "Withheld" for each nominee; votes that are withheld
will be excluded entirely from the vote and will have no effect. Brokers who
hold shares in street name have the authority to vote in their discretion on
"routine" items (such as for the election of directors) when they have not
received instructions from beneficial owners. With respect to "non-routine"
items, no broker may vote shares held for customers without specific
instructions from such customers. Under Delaware law, a broker non-vote will
have no effect on the outcome of the election of directors.
Revocability of Proxies
Shares represented by a duly executed proxy in the accompanying form received by
the Board of Directors prior to the Annual Meeting will be voted at the Annual
Meeting. Any such proxy may be revoked at any time prior to exercise by written
request delivered to the Secretary of the Company stating that the proxy is
revoked, by the execution and submission of a later dated proxy, or by voting in
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person at the Annual Meeting. If a stockholder specifies a choice with respect
to any matter to be voted upon by means of the accompanying form of proxy, the
shares will be voted in accordance with the specification so made. If the
endorsed proxy does not specify how the shares represented thereby are to be
voted, the proxy will be voted as recommended by the Board of Directors.
PROPOSAL NO. 1
NOMINATION AND ELECTION OF DIRECTORS
Four directors are to be elected at the Annual Meeting, each to serve until the
next Annual Meeting of Stockholders and until his successor shall be elected and
qualified or until his earlier death, resignation or removal. Each of the
nominees listed below, currently serves on the Board of Directors. If any
nominee is not available for election, the Board of Directors will recommend the
election of a substitute nominee and proxies in the accompanying form will be
voted for the election of the substitute nominee unless authority to vote such
proxies in the election of directors has been withheld. The Board of Directors
has no reason to believe that any of the nominees will be unavailable for
election.
The following table indicates certain information concerning the nominees.
Name Age Principal Occupation at Present and for the Past Five Years
---- --- -----------------------------------------------------------
James W. Cameron, Jr. 53 Chairman of the Board of Directors since November 1999;
Chief Executive Officer from August 1999 and until February
2000 and Chief Financial Officer since November 2000. He
was also a Director of the Company and Chairman of the
Board from November 1993 until November 1994. Mr. Cameron
is the Owner and Chief Executive Officer of Cameron and
Associates, a consulting and investment company founded in
February 1992. He co-founded and was a director of
Occupational-Urgent Care Health Systems, Inc. ("OUCH") from
its inception in January 1983 until February 1992, when
OUCH merged with First Health Group Corp. He was OUCH's
President from January 1983 until July 1988, at which time
he became Chief Executive Officer until February 1992. Mr.
Cameron served as a Director of First Health Group Corp.
from February 1992 until May 1993.
Edward L. Lammerding 72 Director since November 1993, Chief Financial Officer from
1995 and until November 2000; Chairman of the Board from
1995 until November 1999; President of Sierra Resources
Corporation from 1982 to 1996; Chairman of the Board of
Digital Power Corporation from 1989 to 1998; former member
California Lottery Commission; retired member of the St.
Mary's College Board of Trustees; Director and Secretary of
OUCH from September 1983 to February 1992.
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Name Age Principal Occupation at Present and for the Past Five Years
---- --- -----------------------------------------------------------
Jeffrey S. McCormick 39 Director since November 2000, Chief Executive Officer since
February 2000. Founder and Managing Director since 1993 of
Saturn Asset Management, Inc., a Boston based venture
capital and private equity firm, which predominantly
focuses on healthcare, electronic commerce, digital media
and telecommunications. He currently sits on the Board of
Directors of Saturn and MediaSite, Inc., a Saturn portfolio
company.
Thomas W. O'Neil, Jr. 72 Director since November 1995; Certified Public Accountant;
Partner, Wallace and O'Neil, CPA's since April 1991.
Director of Digital Power Corporation since 1991; Retired
Partner, KPMG Peat Marwick, 1955 to 1991; Former Chairman
of the Board of Directors, California Exposition and State
Fair; Director, Regional Credit Association; member of the
St. Mary's College Board of Regents.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING FOR THE NOMINEES FOR THE
ELECTION OF DIRECTORS.
Committees of the Board; Meetings and Attendance
The Company has Compensation and Audit Committees. The Company does not have a
Nominating Committee.
The Audit Committee provides advice and assistance regarding accounting,
auditing and financial reporting practices of the Company. It reviews with the
Company's independent auditors the scope and results of their audit, fees for
services and independence in servicing the Company. Current members of the audit
committee are Messrs. O'Neil and Lammerding. The Audit Committee has adopted an
audit charter which is attached as Exhibit A.
From 1995 until November 2000, Mr. Edward L. Lammerding served as the Company's
Chief Financial Officer. Because Mr. Lammerding was a prior officer of the
Company during this fiscal year, he may not be deemed an independent director as
defined by the NASD rules.
The Board of Directors has evaluated the above-described non-independent
relationship and has determined in its business judgment that the best interest
of the Company and its shareholders will be served by Mr. Lammerding's
appointment to the Audit Committee. In light of the limited number of directors
and that Mr. Lammerding was not compensated for serving as Chief Financial
Officer, the Board of Directors has determined, in its business judgment, that
the prior relationship does not interfere with Mr. Lammerding's exercise of
independent judgment.
In accordance with Securities and Exchange Commission regulations, the following
is the Audit Committee Report. Such report is not deemed to be filed with the
Securities and Exchange Commission.
5
Audit Committee Report
The Audit Committee oversees the financial reporting process for Alternative
Technology Resources, Inc. on behalf of the Board of Directors. In fulfilling
its oversight responsibilities, the Audit Committee reviewed the annual
financial statements included in the annual report and filed with the Securities
and Exchange Commission as well as the unaudited financial statements filed with
the Company's quarterly reports on Form 10-Q.
In accordance with the Statements on Accounting Standards (SAS) No. 61,
discussions were held with management and the independent auditors regarding the
acceptability and the quality of the accounting principles used in the reports.
These discussions included the clarity of the disclosures made therein, the
underlying estimates and assumptions used in the financial reporting, and the
reasonableness of the significant judgments and management decisions made in
developing the financial statements. In addition, the Audit Committee has
discussed with the independent auditors their independence from Alternative
Technology Resources, Inc. and its management, including the matters in the
written disclosures required by Independence Standards Board Standard No. 1.
The Audit Committee has also met and discussed with Alternative Technology
Resources, Inc. management, and its independent auditors, issues related to the
overall scope and objectives of the audits conducted, the internal controls used
by Alternative Technology Resources, Inc., and the selection of Alternative
Technology Resources, Inc.'s independent auditors. In addition, the Audit
Committee discussed with the independent auditors with management present the
specific results of audit investigations and examinations and the auditor's
judgments regarding any and all of the above issues.
Pursuant to the review and discussions described above, the Audit Committee
recommended to the Board of Directors that the audited financial statements be
included in the Annual Report on Form 10-K for the fiscal year ended June 30,
2001, for filing with the Securities and Exchange Commission.
Signed by the Audit Committee this 26th day of September 2001.
Edward L. Lammerding Thomas W. O'Neil, Jr.
Member Member
The Compensation Committee reviews and approves the compensation and benefits
for our key executive officers, administers our stock option plans and makes
recommendations to the Board of Directors regarding such matters. Current
members of the Compensation Committee are Messrs. O'Neil and Lammerding.
During fiscal 2001, the Board met nine times and acted by unanimous written
consent three times, the audit committee met once, and the compensation
committee met twice. None of the nominees for director attended fewer than 75%
of the aggregate total number of meetings of the Board of Directors or
committees of the Board on which he served during the period that he served.
Compensation of Directors
Directors do not receive cash compensation for serving as such; however, each
Director can be granted annual stock options under the Company's 1997 Stock
Option/Stock Issuance Plan. Messrs. Cameron, McCormick, Lammerding and O'Neil
were granted options to purchase 25,000 shares of the Company's common stock at
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an exercise price equal to the fair market value on the date of grant in January
2001 (for fiscal year 2001 service).
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Financing Arrangements
The Company has received short-term, unsecured financing to fund its operations
in the form of notes payable of $3,740,450 as of June 30, 2001, from Mr. Cameron
and another stockholder. These notes bear interest at 10.25%. On September 11,
2000, the Company agreed with Mr. Cameron to extend the due date on notes
payable to him until December 31, 2001, in exchange for an extension fee of 2%.
These extended notes total $1,511,635, including accrued interest and extension
fees, and bear interest at 10.25% per annum. Also on September 11, 2000, the
Company agreed with the other note holder to extend the due date of his notes
until December 31, 2001, in consideration of such notes becoming convertible
promissory notes. The convertible promissory notes total $2,228,815, including
accrued interest, bear interest at 10.25% per annum and are convertible into
common stock at $3.00 per share (approximate public trading price on that date)
at the note holder's option. Subsequent to June 30, 2001 the due dates of these
notes were extended from December 31, 2001 to December 31, 2002. Mr. Cameron's
extended notes total $1,630,529, including accrued interest and extension fees
of 2%, and bear interest at 10.25% per annum. The convertible promissory notes
total $2,423,826, including accrued interest at 10.25% per annum.
On August 28, 2000, the Company sold $10,000,000 of its common stock at $3.00
per share. Proceeds net of offering costs were $9,560,345. The Company's Chief
Executive Officer and related entities purchased 2,333,335 shares of the
Company's common stock in the private placement. Because the purchase price of
such stock was less than the public trading price on the date of purchase, the
Company recorded compensation expense of $1,458,334 in the first fiscal quarter
ended September 30, 2000.
Other
On August 1, 2000, Mr. Cameron entered into an agreement with Mr. McCormick, the
Company's Chief Executive Officer, to grant him the option to purchase 6,000,000
shares of the Company's common stock from Mr. Cameron at the purchase price of
$3.625 per share, which represented the trading price of the Company's stock on
that date. This option is vested immediately, and on September 17, 2001 the
expiration date of the option grant was extended from the original date of
August 1, 2003 until August 1, 2006.
In November 1995, the Company entered into a lease agreement for its Sacramento
facility under a one-year lease with Mr. Cameron. The lease has been extended to
January 31, 2004. At June 30, 2001, $496,472 of rent owed for fiscal years 1996
through 2001 is included in the balance of accounts payable to stockholders.
Rent expense under this lease was $139,272, $114,285 and $88,676 for the years
ended June 30, 2001, 2000 and 1999 respectively.
During the fiscal years ended June 30, 2001 and 2000, Cameron & Associates,
which is wholly owned by Mr. Cameron, provided consulting services to the
Company. Fees for such services totaled $120,000 in fiscal year 2001, $90,000 in
fiscal year 2000 and none in 1999.
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COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Based solely upon review of written declarations and any copies of such forms
received by it from officers, directors and stockholders owning more than ten
percent of the outstanding shares, the Company believes that during fiscal 2001
all filing requirements applicable to officers, directors and greater than ten
percent stockholders were satisfied.
EXECUTIVE COMPENSATION
Executive Compensation report from the Compensation Committee
Compensation Committee. The Compensation Committee of the Board of Directors is
composed of two non-employee, independent directors, currently consisting of
Messrs. O'Neil and Lammerding. The Compensation Committee reviews and approves
the compensation and benefits for our key executive officers, administers our
stock option plans and makes recommendations to the Board of Directors regarding
such matters. The Compensation Committee held two meetings during fiscal year
2001.
Compensation Philosophy. The Compensation Committee develops and implements the
Company's executive compensation philosophy to offer compensation opportunities
that attract and retain executives whose abilities and skills are critical to
the long-term success of the Company. The Committee provides the Company's
executive officers with annual stock option grants under the Company's 1997
Stock Option/Stock Issuance Plan and outside this plan at an exercise price
equal to the fair market value on the date of grant.
The tables that follow, and accompanying narrative, reflect the decisions
covered by the above discussion.
Thomas W. O'Neil, Jr.
Edward L. Lammerding
The following table contains information regarding compensation paid with
respect to the three preceding fiscal years to the Company's Chief Executive
Officer and each other executive officer whose salary and bonus exceeded
$100,000 (the "Named Executives" for the fiscal year ended June 30, 2001):
Summary Compensation Table
Long-Term Compensation
Annual Compensation Awards
----------------------------------- -----------------------------
Other Securities All Other
Fiscal Annual Underlying Compensation
Name Year Salary ($) Bonus Compensation Options/SARs# and LTIP
---- ---- ---------- ----- ------------ ------------- --------
Jeffrey S. McCormick (1) 2001 $150,000 None None 25,000(2)) None
Chief Executive Officer 2000 $ 25,000 None None 7,000,000(3) None
1999 None None None None None
James W. Cameron, Jr. (4) 2001 None None $ 120,000(5) 25,000(2) None
Chief Financial Officer 2000 None None $ 90,000(5) 25,000(6) None
1999 None None None None None
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(1) Mr. McCormick was named Chief Executive Officer of the Company on February
17, 2000 and was elected to the Board of Directors in November 2000. See
"Employment Agreement with Jeffrey S. McCormick."
(2) On January 2, 2001, the Company granted to Mr. McCormick and Mr. Cameron an
option to purchase 25,000 shares of common stock at $1.34 per share.
(3) On April 14, 2000 the Company granted to Mr. McCormick a non-qualified
option to purchase 7,000,000 shares of common stock at $3.00, the closing
price per share of the Company's common stock as of the date of the
employment agreement.
(4) Mr. Cameron was elected Chairman of the Board of Directors in November
1999. From August 1999 until February 2000, he was Chief Executive Officer
and a Director of the Company and was named Chief Financial Officer in
November 2000.
(5) Amounts were paid to Cameron and Associates for providing consulting
services to the Company.
(6) On January 3, 2000, the Company granted to Mr. Cameron an option to
purchase 25,000 shares of common stock at $4.44 per share.
The following table provides information relating to stock options granted
during fiscal year ended June 30, 2001.
Option/SAR Grants in Last Fiscal Year
% of Total Potential Realized Value at
Options Assumed Annual Rates of
Granted to Exercise Stock Price Appreciation for
Options/SARs Employees in Price per Expiration Option Term
Granted # Fiscal Year Share Date 5% 10%
------------ ------------ --------- ---------- -----------------------------
James W. Cameron, Jr. 25,000 2.72% $1.34 1/2/2011 $ 54,731 $ 87,150
Jeffrey S. McCormick 25,000 2.72% $1.34 1/2/2011 $ 54,731 $ 87,150
The exercise price of each option was equal to the fair market value of our
common stock on the date of the grant. Percentages shown under "Percent of Total
Options Granted to Employees in the Last Fiscal Year" are based on an aggregate
of 920,600 options granted to our employees under the 1997 Stock Option Plan and
outside of this plan during the year ended June 30, 2001.
Potential realizable value is based on the assumption that our common stock
appreciates at the annual rate shown, compounded annually, from the date of
grant until the expiration of the ten-year term. These numbers are calculated
based on Securities and Exchange Commission regulations and do not reflect our
projection or estimate of future stock price growth. Potential realizable values
are computed by:
o Multiplying the number of shares of common stock subject to a given
option by the exercise price.
o Assuming that the aggregate stock value derived from that calculation
compounds at the annual 5% or 10% rate shown in the table for the
entire ten-year term of the option, and
o Subtracting from that result the aggregate option exercise price.
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Fiscal Year End Option Values
The following table sets forth for each of the executive officers named in the
Summary Compensation Table the number and value of exercisable and unexercisable
options and SARs at fiscal year end:
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Options/SARs In-The-Money Options/SARs
Acquired on Value At June 30, 2000 At June 30, 2000
Exercise(#) Realized ($) ExercisableUnexercisable Exercisable Unexercisable
----------- ------------ ------------------------ ---------------------------
James W. Cameron, Jr. None None 25,000 None Exercise None
price
exceeds
market price
None None 25,000 None $ 18,150 None
Jeffrey S. McCormick None None 1,400,000 5,600,000 Exercise Exercise
price price
exceeds exceed
market price market price
None None 25,000 None $ 18,150 None
Amounts shown under the column "Value of Unexercised In-The-Money Options at
June 30, 2001," represent the difference between the trading price of a share of
common stock underlying the options at June 30, 2001, of $2.07 per share (the
closing price on June 30, 2001, as reported by the OTC Bulletin Board) less the
corresponding exercise price of such options.
Employment Agreement with Jeffrey S. McCormick
In April 2000, we entered into an employment agreement with Mr. McCormick to
become our Chief Executive Officer effective February 17, 2000. Beginning July
1, 2000, and for the remaining term of Mr. McCormick's employment, the Board
shall nominate him to serve as a Director of the Company. The initial term of
the agreement is 5 years, automatically continuing for successive terms of one
(1) year unless terminated by either party by written notice at least 30 days
prior to the end of the initial or any succeeding terms. The agreement
established Mr. McCormick's initial annual base salary at $150,000 per year
beginning May 1, 2000, and provided for a grant to Mr. McCormick of a
non-qualified stock option to purchase up to 7,000,000 shares of the Company's
common stock at an exercise price of $3.00 (the fair market value of the
Company's common stock on the date of grant.)
The option vests ratably over 5 years and expires on April 14, 2010. The
agreement provides that vesting shall accelerate and the option become 100%
vested upon: death of Mr. McCormick, a change of control of the Company, a
change of a majority of the current Board of Directors during the term of his
employment, or a termination by Mr. McCormick for a "good reason" or termination
by the Company without "cause." "Piggy-back" registrations rights are applicable
to all option stock issued to Mr. McCormick, including stock related to a
6,000,000 option from Mr. Cameron to Mr. McCormick. The agreement provides that
in the event Mr. McCormick terminates for a "good reason" or is terminated
without "cause," he shall receive an amount equal to 18 months of his base
salary, at the rate then in effect, to be paid in a lump sum no later than 30
days following termination, and he shall continue to receive fringe benefits as
in effect at the time of termination for 18 months following such termination.
In addition he shall also receive any bonus amount, or pro rata share of any
bonus amount that may have been awarded to him as the compensation committee of
the Board, in its sole discretion, may have authorized as a bonus.
10
1993 and 1997 Stock Option/Stock Issuance Plans
The 1993 Stock Option/Stock Issuance Plan (the "1993 Plan"), pursuant to which
key employees (including officers) and consultants of the Company and the
non-employee members of the Board of Directors may acquire an equity interest in
the Company, was adopted by the Board of Directors on August 31, 1993 and became
effective at that time. The 1993 Plan provided that up to 400,000 shares of
common stock could be issued over the ten year term of the 1993 Plan. Upon
stockholder approval of the 1997 Stock Option Plan (the "1997 Plan"), the Board
of Directors terminated the 1993 Plan, which termination shall not alter the
vesting provisions or any other term or condition of any option granted prior to
the termination of the 1993 Plan.
The 1997 Plan, pursuant to which key employees (including officers) and
consultants of the Company and the non-employee members of the Board of
Directors may acquire an equity interest in the Company, was adopted by the
Board of Directors on November 18, 1997 and became effective at that time.
An aggregate of 3,000,000 shares of common stock may be issued over the five
year term of the 1997 Plan. Subject to the oversight and review of the Board of
Directors, the 1997 Plan shall generally be administered by the Company's
Compensation Committee consisting of at least two non-employee directors as
appointed by the Board of Directors. The grant date, the number of shares
covered by an option and the terms and conditions for exercise of options, shall
be determined by the Committee, subject to the 1997 Plan requirements. The Board
of Directors shall determine the grant date, the number of shares covered by an
option and the terms and conditions for exercise of options to be granted to
members of the Committee.
During fiscal 2001, the Company granted options to purchase shares of common
stock to Messrs. Cameron, and McCormick under the 1997 Plan (see table of
"Option/SAR Grants in Last Fiscal Year"). As of June 30, 2001, approximately
1,236,900 shares are available under the 1997 Plan for grant.
COMPANY STOCK PRICE PERFORMANCE
The Securities and Exchange Commission regulations require the stock price
performance graph below. This graph shall not be deemed to be filed under the
Securities Act or Exchange Act, or incorporated by reference by any general
statement incorporating this proxy statement by reference into any filing made
under the Securities Act or Exchange Act, except to the extent that we
specifically incorporate this graph by reference.
11
The graph below compares the cumulative total stockholder return on their common
stock, the NASDAQ Stock Market - Composite Index and the Dow Jones US Technology
Software Index. Cumulative total stockholder return represents share value
appreciation through June 30, 2001, assuming the investment of $100 in the
common stock of the Company at September 1996 quarter end and in each of the
other indexes during the same period, and reinvestment of all dividends. The
comparisons in the graph below are based on historical data and are not intended
to forecast the possible future performance of our common stock.
[FUTURE COMMON STOCK PERFORMANCE CHART]
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PRINCIPAL STOCKHOLDERS
The following table sets forth certain information as to (i) the persons or
entities known to the Company to be beneficial owners of more than 5% of the
Company's common stock as of September 17, 2001, (ii) all directors of the
Company, (iii) all executive officers of the Company and (iv) all directors and
executive officers of the Company as a group. The address of all owners is 629 J
Street, Sacramento, California 95814, with the exception of Mr. McCormick whose
address is 33 Jewel Court, Portsmouth, New Hampshire 03801.
Common Stock
Name of Beneficial Owner Number of Shares Percent
------------------------ ---------------- -------
James W. Cameron, Jr. 39,441,784 (1) 56.24%
Jeffrey S. McCormick 15,677,135 (2) 23.60%
Edward L. Lammerding 50,000 (3) *
Thomas W. O'Neil, Jr. 106,050 (4) *
All directors and executive 49,274,969 (5) 80.10%
officers as a group (4 persons)
* Less than 1.0%.
(1) Includes 50,000 shares issuable upon exercise of options, none of which are
subject to repurchase, and includes 6,000,000 shares optioned to Mr.
McCormick and immediately exercisable.
(2) Includes 7,000,000 shares issuable upon exercise of options, of which
5,600,000 are subject to vesting, and includes 25,000 shares issuable upon
exercise of options, none of which are subject to repurchase and includes
6,000,000 shares under option from Mr. Cameron and immediately exercisable.
(3) Represents 50,000 shares issuable upon exercise of options, none of which
are subject to repurchase.
(4) Includes 55,000 shares issuable upon exercise of options, none of which are
subject to repurchase.
(5) Includes 7,180,000 shares issuable upon exercise of options, 180,000 of
which are not subject to repurchase.
APPOINTMENT OF INDEPENDENT AUDITORS
Ernst & Young LLP, has been selected as the Company's independent auditors for
the year ended June 30, 2002. Representatives of Ernst & Young LLP are expected
to be present at the Annual Meeting with the opportunity to make a statement if
they desire to do so and will be available to respond to appropriate questions.
During the year ended June 30, 2001, the following fees were paid for services
provided by Ernst & Young LLP.
Audit Fees. The aggregate fees paid for the annual audit and/or the review of
Alternative Technology Resources, Inc.'s financial statements included in
Alternative Technology Resources, Inc.'s Forms 10-Q, and Form 10-K for the
fiscal year ended June 30, 2001, amounted to $66,500.
Financial Information Systems Design and Implementation Fees. During the fiscal
year ended June 30, 2001, Alternative Technology Resources, Inc. paid no fees to
Ernst & Young LLP related to the design or implementation of a hardware or
software system to compile source data underlying Alternative Technology
Resources, Inc.'s financial statements or generate information significant to
Alternative Technology Resources, Inc.'s financial statements.
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All Other Fees. The aggregate fees paid for other non-audit services, including
fees for tax related services, registration statement on Form S-1 review, and
other non-audit services rendered by Ernst & Young LLP during Alternative
Technology Resources, Inc.'s most recent fiscal year ending June 30, 2001
amounted to $51,004.
OTHER MATTERS
As of the date of this proxy statement, there are no other matters which the
Board of Directors intends to present or has reason to believe others will
present at the Annual Meeting of Stockholders. If other matters properly come
before the Annual Meeting, those persons named in the accompanying proxy will
vote in accordance with their judgment.
2002 ANNUAL MEETING OF STOCKHOLDERS
Stockholders are entitled to present proposals for action at stockholders'
meetings if they comply with the requirements of the proxy rules. In connection
with this year's Annual Meeting, no stockholder proposals were presented. Any
proposals intended to be presented at the 2002 Annual Meeting be received at the
Company's offices on or before June 12, 2002, in order to be considered for
inclusion in the Company's proxy statement and form of proxy relating to such
meeting.
Additional Information
Copies of the exhibits to our Annual Report on Form 10-K will be provided to any
requesting shareholder. Shareholders should direct their request to: Corporate
Secretary, Alternative Technology Resources, Inc., 629 J Street, Sacramento,
California 95814.
ALL SHAREHOLDERS ARE URGED TO EXECUTE THE ACCOMPANYING PROXY AND TO RETURN IT
PROMPTLY IN THE ACCOMPANYING ENVELOPE. SHAREHOLDERS MAY REVOKE THE PROXY IF THEY
DESIRE AT ANY TIME BEFORE IT IS VOTED.
Alternative Technology Resources, Inc.
By Order of the Board of Directors
/S/ James W. Cameron, Jr
October 16, 2001 James W. Cameron, Jr.
Chairman of the Board
Sacramento, California
A-1
Exhibit A
ALTERNATIVE TECHNOLOGY RESOURCES
Audit Committee Charter
Preamble
Alternative Technology Resources ("Company"), as part of its continuous
improvement efforts, desires to strengthen its board oversight of accounting and
reporting functions through this Charter setting forth the duties and authority
of the Company's audit committee.
Organization
The audit committee of the board of directors shall be comprised of at least two
directors who are independent of management and the Company, and shall be
considered independent if they have no employment or other relationship with the
Company that might interfere with the exercise of their independence from the
Company or management. All audit committee members will be financially literate,
by experience or otherwise, and at least one member will have accounting or
related financial management expertise.
Statement of Policy
The audit committee shall provide assistance to the Board of Directors in
fulfilling the members' responsibility to the stockholders, potential
stockholders, and the investment community relating to corporate accounting and
reporting practices of the Company, and the quality and integrity of financial
reports of the Company. In so doing, it is the responsibility of the audit
committee to maintain free and open communication between the members of the
Board of Directors, the independent auditors, and the Company's principal
financial officer.
Responsibilities
In carrying out its responsibilities, the audit committee believes its policies
and procedures should remain flexible, in order to best react to changing
conditions and to ensure to the Board of Directors and stockholders that the
corporate accounting and reporting practices of the company are in accordance
with all requirements and are of the highest quality.
In carrying out these responsibilities, the audit committee will:
o Obtain the full board of directors' approval of this Charter and review and
reassess this Charter as conditions dictate, but no less frequently than
annually following the review of the Company's annual report on Form 10-K.
o Review and recommend to the Board of Directors the selection of independent
auditors to audit the financial statements of the Company.
o Have a clear understanding with the independent auditors that the
independent auditors are ultimately accountable to the Board of Directors
and the audit committee, as the stockholders' representatives, who have the
ultimate authority in deciding to engage, evaluate, and if appropriate,
terminate their services.
o Review and concur with management's appointment, termination, or
replacement of the Chief Financial Officer.
A-2
o Meet with the independent auditors and financial management of the Company
to review the scope of the proposed audit and timely quarterly reviews for
the current year and the procedures to be utilized, the adequacy of the
independent auditor's compensation, and at the conclusion thereof review
such audit or review, including any comments or recommendations of the
independent auditors.
o Review with the independent auditors, the Company's principal financial
officer, and financial and accounting personnel, the adequacy and
effectiveness of the accounting and financial controls of the company, and
elicit any recommendations for the improvement of such internal controls or
particular areas where new or more detailed controls or procedures are
desirable. Particular emphasis should be given to the adequacy of internal
controls to expose any payments, transactions, or procedures that might be
deemed illegal or otherwise improper
o Review reports received from regulators and other legal and regulatory
matters that may have a material effect on the financial statements or
related company compliance policies.
o Inquire of management, and the independent auditors about significant risks
or exposures and assess the steps management has taken to minimize such
risks to the Company.
o Direct the independent auditors to communicate directly to each member of
the audit committee with respect to any disagreement with the Company on
any financial treatment or accounting practice that is reflected in the
quarterly reports on Form 10-Q upon review.
o Review the quarterly financial statements with financial management prior
to the filing of the Form 10-Q (or prior to the press release of results,
if possible) to determine that the independent auditors do not take
exception to the disclosure and content of the financial statements, and
discuss any other matters required to be communicated to the committee by
the independent auditors. The chair of the committee may represent the
entire committee for purposes of this review and any required discussions
with the independent auditor.
o Review the financial statements contained in the annual report to
shareholders with management and the independent auditors to determine that
the independent auditors are satisfied with the disclosure and content of
the financial statements to be presented to the shareholders. Review with
financial management and the independent auditors the results of their
timely analysis of significant financial reporting issues and practices,
including changes in, or adoptions of, accounting principles and disclosure
practices, and discuss any other matters required to be communicated to the
committee by the auditors. Also review with financial management and the
independent auditors their judgments about the quality, not just
acceptability, of accounting principles and the clarity of the financial
disclosure - practices used or proposed to be used, and particularly, the
degree of aggressiveness or conservatism of the organization's accounting
principles and underlying estimates, and other significant decisions made
in preparing the financial statements.
o Provide sufficient opportunity for the Company's principal accounting
officer and the independent auditors to meet with the members of the audit
committee without members of management present. Among the items to be
discussed in these meetings are the independent auditors' evaluation of the
company's financial and accounting personnel, and the cooperation that the
independent auditors received during the course of audits.
o Review accounting and financial human resources and succession planning
within the Company.
o Report the results of the annual audit to the board of directors. If
requested by the board, invite the independent auditors to attend the full
board of directors meeting to assist in reporting the results of the annual
audit or to answer other directors' questions (alternatively, the other
A-3
directors, particularly the other independent directors, may be invited to
attend the audit committee meeting during which the results of the annual
audit are reviewed).
o On an annual basis, obtain from the independent auditors a written
communication delineating all their relationships and professional services
as required by Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees. In addition, review with the independent
auditors the nature and scope of any disclosed relationships or
professional services and take, or recommend that the board of directors
take, appropriate action to ensure the continuing independence of the
auditors.
o Review the report of the audit committee in the annual report to
shareholders and the Annual Report on Form 10-K disclosing whether or not
the committee had reviewed and discussed with management and the
independent auditors, as well as discussed within the committee (without
management or the independent auditors present), the financial statements
and the quality of accounting principles and significant judgments
affecting the financial statements. In addition, disclose the committee's
conclusion on the fairness of presentation of the financial statements in
conformity with GAAP based on those discussions.
o Submit the minutes of all meetings of the audit committee to, or discuss
the matters discussed at each committee meeting with, the board of
directors.
o Investigate any matter brought to its attention within the scope of its
duties, with the power to retain outside counsel for this purpose if, in
its judgment, that is appropriate.
o Review the Company's disclosure in the proxy statement for its Annual
Meeting of shareholders that describes that the Committee has satisfied its
responsibilities under this Charter for the prior year. In addition,
include a copy of this Charter in the annual report to shareholders or the
proxy statement at least triennially or the year after any significant
amendment to the Charter.
ALTERNATIVE TECHNOLOGY RESOURCES, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
Annual Meeting of Stockholders - November 20, 2001
The undersigned stockholder of ALTERNATIVE TECHNOLOGY RESOURCES, INC. (the
"Company"), revoking all previous proxies, hereby appoints JAMES W. CAMERON, JR.
and JEFFREY S. MCCORMICK, or any of them, as proxies of the undersigned, and
authorizes either or both of them to vote all shares of the Company's Common
Stock held of record by the undersigned as of the close of business on October
8, 2001, at the Annual Meeting of Stockholders of the Company to be held on
Tuesday, November 20, 2001, at 10:00 a.m., local time, at 629 J Street,
Sacramento, California 95814, and at any adjournment(s) or postponement(s)
thereof (the "Annual Meeting"), according to the votes the undersigned would be
entitled to cast if then personally present.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. IF NO DIRECTION IS GIVEN, THIS PROXY WILL
BE VOTED "FOR" ALL OF THE NOMINEES:
1. Election of Directors:
|_| FOR ALL NOMINEES LISTED BELOW (EXCEPT AS SPECIFIED) |_| WITHHOLD AUTHORITY FOR ALL NOMINEES
James W. Cameron, Jr. Edward L. Lammerding Jeffrey S. McCormick Thomas W.O'Neil Jr.
To withhold authority to vote for any individual nominee, draw a line
through that nominee's name.
2. The authority of the proxy, in his discretion, to vote on such other business
as may properly come before the Annual Meeting, or any adjournment(s) or
postponement(s) thereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF NOTICE OF THE ANNUAL MEETING
AND THE PROXY STATEMENT FURNISHED IN CONNECTION THEREWITH. The undersigned also
hereby ratifies all that the said proxy may do by virtue hereof and hereby
confirms that this proxy shall be valid and may be voted regardless of whether
the stockholder's name is signed as set forth below or a seal affixed or the
descriptions, authority or capacity of the person signing is given or any other
defect of signature exists.
Please complete, sign and date this Proxy and return it promptly in the
enclosed envelope regardless of whether or not you plan to attend the Annual
Meeting.
DATED: ________________ ,2001
_____________________________
Signature
_____________________________
Signature if held jointly
Please sign this Proxy exactly as the name appears in the address above. If
shares are registered in more than one name, all owners should sign. If signing
in a fiduciary or representative capacity, such as attorney-in-fact, executor,
administrator, trustee or guardian, please give full title and attach evidence
of authority. If signer is a corporation, please sign the full corporate name
and an authorized officer should sign his name and title and affix the corporate
seal.