UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Sec. 240.14a-12
PERFORMANCE CAPITAL MANAGEMENT, LLC
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) 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) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[X] 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:
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2) Form Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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PERFORMANCE CAPITAL MANAGEMENT, LLC
7001 Village Drive, Suite 255
Buena Park, California 90621
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NOTICE OF 2007 ANNUAL MEETING OF MEMBERS
TO BE HELD ON JUNE 11, 2007
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To our Members:
NOTICE IS HEREBY GIVEN that the 2007 Annual Meeting of Members of Performance
Capital Management, LLC, a California limited liability company (the "Company"),
will be held on Monday, June 11, 2007, at 10:00 a.m., local time, at the Double
Tree Hotel, 100 City Drive, Orange, California 92868. The purposes of the Annual
Meeting are:
1. To elect four Class II directors to serve a two-year term and
until each director's successor has been duly elected and qualified;
2. To ratify the selection of Moore Stephens Wurth Frazer and
Torbet, LLP, as independent auditors for Performance Capital
Management, LLC for the fiscal year ending December 31, 2007; and
3. To transact such other business as may properly come before the
Annual Meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy Statement
accompanying this Notice. Members of record on the books of Performance Capital
Management, LLC at the close of business on MONDAY, APRIL 23, 2007, will be
entitled to notice of and to vote at the Annual Meeting or any adjournment or
postponement thereof.
ALL MEMBERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON, BUT
EVEN IF YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, YOU ARE REQUESTED TO
MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN
THE ENVELOPE PROVIDED TO ENSURE YOUR REPRESENTATION. MEMBERS ATTENDING THE
ANNUAL MEETING MAY VOTE IN PERSON EVEN IF THEY HAVE PREVIOUSLY VOTED BY PROXY.
By Order of the Board of Directors,
/s/ William D. Constantino
William D. Constantino
Chief Officer of Legal Affairs
Buena Park, California
April 27, 2007
[PCMLLC LETTERHEAD]
April 27, 2007
Dear Member:
You are cordially invited to attend the 2007 Annual Meeting of Members of
Performance Capital Management, LLC, which will be held at the Double Tree
Hotel, 100 City Drive, Orange, California 92868, on Monday, June 11, 2007, at
10:00 a.m., local time.
The Notice of the 2007 Annual Meeting of Members and a Proxy Statement,
which describe the formal business to be conducted at the meeting, accompany
this letter. Our 2007 Annual Report is also enclosed for your information.
All Members entitled to vote are invited to attend the Annual Meeting.
However, to ensure your representation at the Annual Meeting, you are urged to
complete, date, sign and return the enclosed Proxy Card (a postage-prepaid
envelope is enclosed for that purpose).
YOUR LLC UNITS CANNOT BE VOTED UNLESS YOU DATE, SIGN AND RETURN THE
ENCLOSED PROXY CARD OR ATTEND THE ANNUAL MEETING IN PERSON. Regardless of the
number of LLC Units you own, your careful consideration of, and vote upon, the
matters before the Members are important.
I look forward very much to seeing you on June 11th.
Sincerely,
PERFORMANCE CAPITAL MANAGEMENT, LLC
/s/ David J. Caldwell
David J. Caldwell
Chief Operations Officer
PERFORMANCE CAPITAL MANAGEMENT, LLC
PROXY STATEMENT
FOR THE ANNUAL MEETING OF MEMBERS
TO BE HELD ON JUNE 11, 2007
TABLE OF CONTENTS
PAGE
GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Delivery of Proxy Materials and Annual Report. . . . . . . . . . 1
Record Date and Voting Rights. . . . . . . . . . . . . . . . . . 1
Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
List of Members Entitled to Vote . . . . . . . . . . . . . . . . 2
Attendance and Voting at the Annual Meeting. . . . . . . . . . . 2
Date and Time of Opening and Closing of the Polls. . . . . . . . 2
Proxy Voting Procedures . . . . . . . . . . . . . . . . . . . . 3
Revocation . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Interest of Certain Persons in Matters to Be Acted Upon. . . . . 3
PROPOSAL NO. 1: ELECTION OF DIRECTORS. . . . . . . . . . . . . . . . 3
Nominees for the Board of Directors . . . . . . . . . . . . . . 3
Directors and Executive Officers . . . . . . . . . . . . . . . . 4
Corporate Governance . . . . . . . . . . . . . . . . . . . . . . 6
Board of Directors Information . . . . . . . . . . . . . . . . . 6
Unit Holder Communications with Directors . . . . . . . . . . . 9
Audit Committee Report . . . . . . . . . . . . . . . . . . . . . 9
Security Ownership of Certain Beneficial Owners and Management . 9
Section 16(A) Beneficial Ownership Reporting Compliance. . . . . 10
Changes in Control . . . . . . . . . . . . . . . . . . . . . . . 10
Compensation of Directors and Executive Officers . . . . . . . . 11
Certain Relationships and Related Transactions . . . . . . . . . 13
Code of Ethics . . . . . . . . . . . . . . . . . . . . . . . . . 13
PROPOSAL NO. 2: RATIFY SELECTION OF INDEPENDENT AUDITORS FOR 2007. . 13
Principal Accountant Fees and Services . . . . . . . . . . . . . 14
Policy on Pre-Approval of Audit and Non-Audit Services . . . . . 14
PROPOSALS OF MEMBERS. . . . . . . . . . . . . . . . . . . . . . . . . 15
ADDITIONAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . 15
OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
PERFORMANCE CAPITAL MANAGEMENT, LLC
7001 VILLAGE DRIVE, SUITE 255
BUENA PARK, CALIFORNIA 90621
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PROXY STATEMENT
ANNUAL MEETING OF MEMBERS TO BE HELD ON MONDAY, JUNE 11, 2007
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GENERAL
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This Proxy Statement is furnished to the Members of Performance Capital
Management, LLC, a California limited liability company (the "Company"), in
connection with the solicitation of proxies by the Board of Directors of
Performance Capital Management, LLC (also referred to as the "Board"). The
proxies are to be voted at the 2007 Annual Meeting of Members of Performance
Capital Management, LLC (the "Annual Meeting") to be held at the Double Tree
Hotel, 100 City Drive, Orange, California 92868, at 10:00 a.m., local time, on
Monday, June 11, 2007, and any adjournment or postponement thereof, for the
purposes set forth in the accompanying Notice. The Board is not aware of any
other matters to be presented at the Annual Meeting. If any other matter should
be presented at the Annual Meeting upon which a vote properly may be taken, LLC
Units represented by all duly executed proxies received by the Board will be
voted with respect thereto in accordance with the best judgment of the persons
designated as the proxies. This Proxy Statement and the accompanying form of
Proxy Card have been mailed to Members on or about May 3, 2007.
Our principal executive offices are located at 7001 Village Drive, Suite 255,
Buena Park, California, 90621 and our telephone number is 714.736.3736.
We will pay all costs of solicitation, including the costs of preparing,
assembling, printing and mailing this Proxy Statement, the Proxy Card and any
additional information furnished to Members. If our tracking of responses to our
solicitation reveals a risk that we may not obtain sufficient proxies to have a
quorum present at the Annual Meeting, we may have either our employees or
temporary employees contact Members directly to remind them to execute their
proxy cards and return them to us. No additional compensation will be paid to
directors, officers or other regular employees for their services in connection
with this proxy solicitation.
DELIVERY OF PROXY MATERIALS AND ANNUAL REPORT
An Annual Report to Members (the "Annual Report"), containing audited
consolidated financial statements for the fiscal year ended December 31, 2006,
accompanies this Proxy Statement. Members are referred to the Annual Report for
financial and other information about the activities of Performance Capital
Management, LLC. The Annual Report is not incorporated by reference into this
Proxy Statement and is not deemed to be a part hereof.
UPON WRITTEN REQUEST, WE WILL FURNISH TO YOU, WITHOUT CHARGE, A COPY OF OUR
ANNUAL REPORT ON FORM 10-KSB FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
REQUESTS FOR COPIES OF THE FORM 10-KSB SHOULD BE DIRECTED TO HARVEY "BUD" WEBB,
MEMBER RELATIONS, AT PERFORMANCE CAPITAL MANAGEMENT, LLC'S PRINCIPAL ADDRESS AT
7001 VILLAGE DRIVE, SUITE 255, BUENA PARK, CALIFORNIA, 90621. IN THE
ALTERNATIVE, YOU MAY FIND THE FORM 10-KSB ON THE SECURITIES AND EXCHANGE
COMMISSION'S WEB-SITE AT WWW.SEC.GOV.
RECORD DATE AND VOTING RIGHTS
Only LLC Unit Holders of record of our voting LLC Units at the close of business
on April 23, 2007 (the "Record Date") will be entitled to notice of, and to vote
at, the Annual Meeting. On the Record Date, we had 526,522 voting LLC Units
outstanding. Each LLC Unit is entitled to one vote at the Annual Meeting.
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The following table summarizes the voting requirements for these proposals:
PROPOSAL VOTE REQUIRED
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Proposal No. 1: Election of four Class II For each nominee, the affirmative vote of a majority
directors. of the LLC Units held by Members present, in person
or by proxy, and entitled to vote at the Annual
Meeting.
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Proposal No. 2: Ratification of our Audit The affirmative vote of a majority of the LLC Units
Committee's selection of Moore Stephens Wurth held by Members present, in person or by proxy,
Frazer and Torbet, LLP as the Company's and entitled to vote at the Annual Meeting.
auditors for fiscal year ending December 31,
2007.
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QUORUM
Members present in person or by proxy whose aggregate number of voting LLC Units
exceed one-third of our issued and outstanding voting LLC Units constitute a
quorum for the transaction of business at the Annual Meeting. Abstentions will
be included in determining the presence of a quorum at the Annual Meeting.
However, an abstention will count as a vote AGAINST the proposal.
If a broker submits a proxy that indicates the broker does not have
discretionary authority to vote shares, those shares will be counted as shares
that are present and entitled to vote for purposes of determining the presence
of a quorum at the meeting, but will not be considered as present and entitled
to vote on the matters voted on at the meeting.
If a quorum is not present at the Annual Meeting, then Members present whose LLC
Units constitute a majority of the LLC Units of all Members present at the
Annual Meeting may adjourn the meeting from time to time without further notice.
At an adjourned meeting at which a quorum is present, any business may be
transacted that might have been transacted at the original meeting.
LIST OF MEMBERS ENTITLED TO VOTE
At least 10 days before the Annual Meeting, our Chief Officer of Legal Affairs
will make a complete list of the Members entitled to vote at the Annual Meeting
arranged in alphabetical order, with the address of and number of LLC Units held
by each Member. The list will be kept on file at the principal offices of
Performance Capital Management, LLC and will be subject to inspection by any
Member at any time during normal business hours. The list will also be present
for inspection at the Annual Meeting.
ATTENDANCE AND VOTING AT THE ANNUAL MEETING
If you own voting LLC Units of record, you may attend the Annual Meeting and
vote in person, regardless of whether you have previously voted on a Proxy Card.
We encourage you to vote your LLC Units in advance of the Annual Meeting date,
even if you plan on attending the Annual Meeting. You may change or revoke your
proxy at the Annual Meeting as described below even if you have already voted.
DATE AND TIME OF OPENING AND CLOSING OF THE POLLS
The date and time of the opening of the polls for the Annual Meeting shall be
10:00 a.m., local time, on Monday, June 11, 2007. The time of the closing of the
polls for voting shall be announced at the Annual Meeting. No ballot, proxies or
votes, nor any revocations or changes to a vote, shall be accepted after the
closing of the polls unless a court of equity, upon application by a Member,
determines otherwise.
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PROXY VOTING PROCEDURES
LLC Units for which Proxy Cards are properly executed and returned will be voted
at the Annual Meeting in accordance with the directions noted thereon or, in the
absence of directions, will be voted (i) "FOR" the election of each of the
nominees to the Board of Directors and (ii) "FOR" the ratification of our Audit
Committee's selection of Moore Stephens Wurth Frazer and Torbet, LLP as the
Company's auditors for fiscal year ending December 31, 2007. It is not expected
that any matters other than those referred to in the Notice and this Proxy
Statement will be brought before the Annual Meeting. If, however, other matters
are properly presented, the persons named as proxies will vote in accordance
with their discretion with respect to such matters.
A PROXY CARD FOR VOTING YOUR LLC UNITS IS INCLUDED WITH THIS PROXY STATEMENT.
YOU MAY VOTE YOUR LLC UNITS BY COMPLETING, SIGNING AND RETURNING THE PROXY CARD
IN THE ENCLOSED ENVELOPE.
REVOCATION
Any Member holding voting LLC Units of record may revoke a previously granted
proxy at any time before it is voted by delivering to our Chief Officer of Legal
Affairs at the principal offices of the Company a written notice of revocation
or a duly executed Proxy Card bearing a later date or by attending the Annual
Meeting and voting in person.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
Our directors and executive officers, and their associates, do not have any
substantial interest in the matters to be acted upon at the Annual Meeting.
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PROPOSAL NO. 1: ELECTION OF DIRECTORS
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NOMINEES FOR THE BOARD OF DIRECTORS
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Our Board of Directors has proposed that four nominees be elected at the Annual
Meeting, each of whom shall hold office for two years, as provided below, and
until his or her successor shall have been elected and qualified. Unless
otherwise instructed, it is the intention of the persons named as proxies on the
accompanying Proxy Card to vote LLC Units represented by properly executed
proxies for the election of such nominees. Although our Board anticipates that
the four nominees will be available to serve as directors of Performance Capital
Management, LLC, if any of them should be unwilling or unable to serve, it is
intended that the proxies will be voted for the election of such substitute
nominee or nominees as may be designated by our Board.
The following persons currently serve and have been nominated to continue to
serve as our directors. If elected, the term of office of these Class II
directors will expire at the second annual meeting of Members after their
election. Absent his or her death, resignation or removal, a director shall
continue to serve despite the expiration of the director's term until his or her
successor is elected and qualified or until there is a decrease in the number of
directors.
The following nominees for the Board of Directors will stand for election at the
2007 Annual Meeting:
Class II Directors:
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- Lester Bishop
- Larry Smith
- David Barnhizer
- Sanford Lakoff
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Biographical information regarding each of the nominees for the Board of
Directors is set forth below.
OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION OF THE CLASS
II DIRECTORS NAMED ABOVE.
DIRECTORS AND EXECUTIVE OFFICERS
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The following table sets forth the name, age and position of each of our
directors (and nominees for election) and executive officers as of April 23,
2007.
NAME AGE POSITION
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Larisa Gadd 44 Co-Chairperson of the Board *
Lester T. Bishop 74 Co-Chairperson of the Board / Nominee **
Larry C. Smith 69 Director / Nominee **
David Barnhizer 63 Director / Nominee **
Rodney Woodworth 69 Director *
Sanford Lakoff 75 Director / Nominee **
Donald W. Rutherford 67 Director *
David J. Caldwell 53 Chief Operations Officer
Edward M. Rucker 60 Accounting Manager
Darren S. Bard 40 Chief Information Officer
William D. Constantino 56 Chief Officer of Legal Affairs
* Class I Director
** Class II Director
All of the current directors except Mr. Rutherford were appointed to the Board
of Directors and our current officers were elected to office on February 4,
2002. Mr. Rutherford was appointed to the Board of Directors on January 12,
2004, following the resignation of Mr. Robert Price in July 2003. Our Operating
Agreement currently provides that our two classes of directors serve staggered
two-year terms. All directors hold office until their respective successors are
elected and qualified or until their earlier death, resignation or removal. The
terms of our Class I Directors expire at our 2008 annual meeting. The terms of
our Class II Directors expire at our 2007 annual meeting, and, assuming their
re-election, their new terms will expire at our 2009 annual meeting. Executive
officers are duly elected by the Board of Directors to serve until their
respective successors are elected and qualified. Our officers serve at the
discretion of the Board of Directors. There are no family relationships between
or among any of our directors or executive officers.
The following information with respect to the principal occupation or
employment, other affiliations and business experience during the last five
years of our directors and executive officers has been furnished to us by each
director and executive officer.
LARISA GADD. For a period of 16 years ending in 2004, Ms. Gadd was a business
partner at Scenic Express, Inc., in Los Angeles. Scenic Express fabricates
theatrical scenery for stage and screen. Currently, Ms. Gadd is instrumental in
the research, acquisition, and management of commercial/industrial, residential,
and resort real estate. From 1987 to 1988, Ms. Gadd was an instructor at Chaffey
College in Alta Loma in the area of Social Sciences. She received a B.S. degree
in Psychology and English from the California State University, Fullerton in
1984 and a M.A. degree in Organizational and Applied Social Psychology from
Claremont Graduate School in 1986.
LESTER T. BISHOP. Mr. Bishop is retired. Prior to retiring, Mr. Bishop taught
kindergarten through 12th grade students for 20 years. At the same time, Mr.
Bishop owned solely and in partnership with others a number of privately held
businesses, including Whitiok Day Camp, Good Time Promotions, Mall Munchies,
Park Riviera Motel, and Imperial Executive Suites. He has also owned and managed
both residential and commercial real estate. Mr. Bishop received a B.A. degree
in Education from the University of California, Los Angeles in 1960 and a M.A.
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degree from the California State University, Los Angeles in Educational
Administration in 1965 with advanced credentials in reading, counseling and
teacher effectiveness.
LARRY C. SMITH. Mr. Smith retired in 1994. Prior to retirement, from 1987 to
1994, Mr. Smith was a Senior Systems Engineering Manager at TRW Space Systems.
In that position, Mr. Smith managed the systems engineering teams in support of
classified satellite space systems development and new satellite system studies.
Mr. Smith is a registered U.S. Patent Agent and holds three patents. Mr. Smith
received a B.S. degree in Engineering from the University of Washington in 1959
and completed four years of graduate studies at the University of California,
Los Angeles in Control Systems and Electronics.
DAVID BARNHIZER. Mr. Barnhizer is currently Professor of Law at Cleveland State
University College of Law and has held that position since 1972. He teaches or
has taught courses dealing primarily with business and environmental law. From
1997 to 1998, he was a Strategic Consultant to the Government of Mongolia to the
Mongolian Action Programme for the 21st Century for British Petroleum (BP) and
Sovonics Solar Systems. During that same period, he was also a consultant on
sustainable economic development and the creation of a Central American trade
zone to the U.N. Development Program. From 1995 to 1997, he was a member of the
Board of Editors for the Journal of Legal Education and served as President of
the Board of Directors of the Fairmount Fine Arts Center. Mr. Barnhizer has
published nine books / manuals and approximately 40 professional articles. He
received a Bachelor of Arts degree from Muskingum College in 1966, a Juris
Doctor degree from Ohio State University College of Law in 1969, and a Master of
Law degree from Harvard Law School in 1972.
RODNEY WOODWORTH. Mr. Woodworth retired in 1998. From 1988 to 1998, Mr.
Woodworth was the Senior Vice President of Operations at Zimmerman Holdings,
Inc., which is in the business of buying troubled manufacturing businesses,
turning them around, growing them and then selling them. Prior to working at
Zimmerman Holdings, Inc., he was the Senior Vice President of Fairchild
Industries and President of its Commercial and Industrial Products Group. Mr.
Woodworth is an alumni of the Stanford Graduate Business School and received a
B.S. degree in Mechanical Engineering from the California State Polytechnical
University, San Luis Obispo in 1960.
SANFORD LAKOFF. Mr. Lakoff is Research Professor of Political Science Emeritus
at the University of California, San Diego. He has taught at UCSD since 1974,
when he was appointed Founding Chair of the Department of Political Science. Mr.
Lakoff has written or edited twelve books and published approximately 50
scholarly articles as well as contributing to entries in the Dictionary of the
History of Ideas, the Encyclopedia of Democracy, the Encyclopedia of U.S.
Foreign Relations, and the Encyclopedia of Nationalism. He received a B.A.
degree from Brandeis University in 1953. In 1959, he received his Ph.D. from
Harvard University.
DONALD W. RUTHERFORD. Mr. Rutherford is CFO of BPO Management, Services, Inc.,
a public company, and of Grant Life Sciences, Inc., a public company, which
positions he has held since April 2005 and January 2007, respectively. Mr.
Rutherford is a partner with Tatum LLC in Orange County, California, which he
joined in January 2000. Since joining Tatum, Mr. Rutherford has served as Chief
Administrative Officer for a $100 million manufacturer and direct marketer of
promotional products, as CFO of Aspeon, Inc., a public technology products
company, as CFO of LifePoint, Inc., a public medical device company, and as
interim CFO of Composite Technology Corporation, a public developer of
innovative applications of composite materials. From 1995 to 1999, Mr.
Rutherford served as CFO of USGT Resources Inc., a natural gas marketer and
asset manager. Mr. Rutherford obtained his Chartered Accountant degree from the
Institute of Chartered Accountants in Canada in 1965 after obtaining a degree in
industrial engineering from University of Toronto in 1962.
DAVID J. CALDWELL. Mr. Caldwell is a business operations professional with over
20 years of experience in the consumer credit card industry. Before becoming
Chief Operations Officer of Performance Capital Management, LLC on February 4,
2002, Mr. Caldwell was Chief Operating Officer of Performance Capital
Management, Inc., one of the predecessor companies to Performance Capital
Management, LLC, from January 1998 to February 2002. As Chief Operating Officer,
Mr. Caldwell is responsible for the operational activities of Performance
Capital Management, LLC, including management of a collection center and the
sales and acquisitions of charged-off portfolios as well as the day-to-day
operations of the business. From 1975 to 1998, Mr. Caldwell worked in various
capacities at General Electric Capital Corporation, including Vice President of
Recovery Operations for the General Electric Capital Services division from
March 1997 to January 1998 and Vice President of Cardholder Operations for the
Consumer Card Services division of General Electric Capital Corporation from May
1994 to March 1997. As
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Vice President of Recovery Operations, he was responsible for the successful
operation of the Retailer Financial Services Recovery Operation, including
management of the recovery call center, bankruptcy collections, payment
processing unit, mailroom, facilities, petition processing, legal, probate,
compliance, outside attorney collections, skip tracing, and interface with 12
outlying business centers. As Vice President of Cardholder Operations, he was
responsible for the successful operation of the G.E. Rewards Mastercard call
center, including managing over 500,000 incoming calls per month, leading a
workforce of 215 people, and overseeing a financial budget of $5 million. Mr.
Caldwell received a B.S. degree in Business Administration from Western Michigan
University in 1975.
EDWARD M. RUCKER. Before becoming the Accounting Manager of Performance Capital
Management, LLC on February 4, 2002, Mr. Rucker was the Accounting Manager of
Performance Capital Management, Inc., one of the predecessor companies to
Performance Capital Management, LLC, from October 2001 to February 2002. As
Accounting Manager, Mr. Rucker has overall responsibility for preparing the
Company's accounting records and financial statements. From 1995 to August 2001,
Mr. Rucker was Controller and the Chief Financial Officer of Pickard
Construction, Inc., a construction firm performing as general contractor for
major national firms. In that position, Mr. Rucker was responsible for the
entire accounting and related financial functions of the firm. Mr. Rucker is a
Certified Public Accountant. Mr. Rucker received a B.S. degree in Accounting
from the California State University, Los Angeles in 1968.
DARREN S. BARD. Before becoming Chief Information Officer of Performance
Capital Management, LLC on February 4, 2002, Mr. Bard was Chief Information
Officer of Performance Capital Management, Inc., one of the predecessor
companies to Performance Capital Management, LLC, from April 1998 to February
2002. As Chief Information Officer, Mr. Bard manages the Information Technology
and Acquisitions/Sales Support Departments. Prior to becoming an officer of
Performance Capital Management, Inc., from April 1996 to April 1998, Mr. Bard
worked as Site Production Planning/Operations Manager at General Electric
Capital Corporation. Mr. Bard received a B.A. degree in psychology from The Ohio
State University in 1991.
WILLIAM D. CONSTANTINO. Mr. Constantino has served as the Chief Officer of
Legal Affairs of Performance Capital Management, LLC since it was formed in
January 2002. Prior to that date, from July 2000 to January 2002, he served as
Chief Legal Compliance Officer of Performance Capital Management, Inc., one of
the predecessor companies to Performance Capital Management, LLC. As in-house
counsel to Performance Capital Management, LLC, Mr. Constantino is responsible
for ensuring that all collection procedures comply with federal and state
consumer protection laws, assisting with the negotiation and purchase of
portfolios, and is the general legal resource for day-to-day corporate
operations. From January 1999 to July 2000, Mr. Constantino practiced law as a
sole practitioner focusing on all aspects of insolvency law, including
commercial and consumer collections, bankruptcy law, and civil litigation. From
January 1982 to December 1998, he was managing partner in the Law Offices of
Leibowitz and Constantino. That firm focused on insolvency law and consumer
protection law. Mr. Constantino received a B.S. degree in Business
Administration from the State University of New York, Albany in 1972 and a Juris
Doctor degree from Western State University School of Law in 1979.
CORPORATE GOVERNANCE
--------------------
The Company believes that good corporate governance is important in ensuring
that it is managed for the long-term benefit of its Unit Holders. It
continuously reviews the Board's structure, policies and practices and compares
them to those suggested by various authorities in corporate governance and to
the practices of other public companies.
BOARD OF DIRECTORS INFORMATION
------------------------------
Our Board of Directors provides oversight with respect to our overall
performance, strategic direction and key corporate policies. It approves major
initiatives, advises on key financial and business objectives, and monitors
progress with respect to these matters. Members of the Board of Directors are
kept informed of our business by various reports and documents provided to them
on a regular basis, including operating and financial reports made at Board of
Directors and committee meetings by the Company's executive officers.
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Our Board of Directors has seven members, each of whom is independent as defined
by the NASDAQ listing standards and by the SEC. Our directors are divided into
two classes, with each class serving for a two-year period. Our Board of
Directors held a total of 12 meetings during the fiscal year ended December 31,
2006. Each of our directors attended at least 75% of the meetings of the Board
of Directors. In addition to participation at Board and committee meetings, our
directors discharge their responsibilities throughout the year through personal
meetings and other communications, including considerable telephone contact with
the executive officers and others regarding matters of interest and concern to
the Company.
Our Board of Directors has established an Audit Committee in accordance with
Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended, and a
Compensation Committee. It currently has no other separately-designated
committees.
AUDIT COMMITTEE
The Audit Committee of the Board of Directors is composed of three directors,
Messrs. Rutherford, Smith and Woodworth, each of whom is independent as defined
by the NASDAQ listing standards and by the SEC. The Audit Committee is
responsible to the full Board of Directors and operates under a written Audit
Committee Charter, which was adopted by the Board of Directors in February 2003.
A copy of the Audit Committee Charter was included as Appendix A to our Proxy
Statement filed with the SEC on April 28, 2006.
The Audit Committee consults with the auditors concerning the scope of the
audit, reviews the results of their examination, and reviews and approves any
material accounting policy changes affecting the Company's operating results.
The Audit Committee is responsible for, among other things, monitoring the
integrity and adequacy of Performance Capital Management, LLC's financial
information, control systems, and reporting practices, and for recommending to
the Board of Directors for ratification by the Members the Audit Committee's
selection of independent auditors for Performance Capital Management, LLC. The
Audit Committee has appointed and the Board of Directors has recommended to the
Members ratification of the selection of Moore Stephens Wurth Frazer and Torbet,
LLP as Performance Capital Management, LLC's independent auditor for the fiscal
year ending December 31, 2007.
The Board of Directors designated Donald W. Rutherford as an "audit committee
financial expert" as defined by the Securities and Exchange Commission rules;
however, the members of the Audit Committee are not professionally engaged in
the practice of accounting or auditing. A description of the business experience
of each member for the past five years may be found in this Proxy Statement
under the section entitled "Directors and Executive Officers." The Audit
Committee relies, without independent verification, on the information provided
to it and on the representations made by management and the independent auditors
that the consolidated financial statements have been prepared with integrity and
objectivity and on the representations of management and the opinion of the
independent auditors that such consolidated financial statements have been
prepared in conformity with generally accepted accounting principles.
The Audit Committee met five times last year. Each of the members of the Audit
Committee attended at least 75% of the meetings held by that committee.
NOMINATING COMMITTEE
Our Board of Directors does not have a nominating committee, as nominations are
made by the members of the Board as a whole. Our Board of Directors does not
have a nominating committee charter. All of our directors are independent as
defined by the NASDAQ listing standards and by the SEC. Our Board has not
established a separate nominating committee because all of our directors are
independent and vacancies have occurred only with respect to one director slot.
Our Board of Directors seeks to identify qualified individuals to become Board
members and determine the composition of the Board and its Audit Committee. Our
Board does not have any formal specific minimum qualifications for evaluating
potential director candidates. When considering a potential director candidate,
the Board looks for personal and professional integrity, demonstrated ability
and judgment, prior service as a director, and business experience. Our Board
believes it is important to have at least one director who is a financial expert
to serve on our Audit Committee. The Board will review and consider director
nominees recommended by Members. There are no differences in the manner in which
the Board evaluates director nominees
7
based on whether the nominee is recommended by a Member or otherwise. Any Member
who would like to recommend a director candidate should contact Mr. William
Constantino, our Chief Officer of Legal Affairs, at our principal executive
offices.
Our Board of Directors does not have a policy with regard to consideration of
director candidates recommended by our Members. With the exception of Mr.
Rutherford, who joined the Board in January 2004, all of our directors were
initially appointed by the bankruptcy judge prior to our emergence from
bankruptcy in February 2002. These directors were all members of The Official
Committee of Equity Security Holders that represented our Members' interests in
the bankruptcy proceeding. Our Board has viewed its continuity during bankruptcy
and since our emergence from bankruptcy as an important stabilizing influence.
As the bankruptcy proceeding recedes further into the past and our business
evolves, our Board intends to assess whether to adopt a policy with regard to
consideration of director candidates recommended by our Members. No Member has
contacted us either suggesting a director candidate or requesting information on
how to recommend a director candidate.
We do not have a specific process for identifying new directors because we do
not regularly need to nominate new directors. In the most recent case where we
identified a new director, our Board identified Mr. Rutherford through contacts
at a firm that provides executive talent to clients on a supplemental, interim,
project or employed basis. We did not pay a fee for the introduction to Mr.
Rutherford. Our executive officers and the full Board of Directors interviewed
Mr. Rutherford prior to electing him a director. We recruited Mr. Rutherford
primarily with a view to him serving as a financial expert on our Audit
Committee, but also to enhance the accounting and financial expertise of the
Board of Directors.
In 2007, all of the director nominees are directors standing for re-election.
COMPENSATION COMMITTEE
The full Board of Directors determines the salaries, bonuses and perquisites, if
any, of the Company's and its subsidiary's executive officers as well as the
terms of any employment agreement with an executive officer. Matters and actions
taken concerning executive compensation are conducted in executive sessions of
the Board of Directors in the absence of the Company's executive officers.
Executive compensation is determined by the full Board of Directors using
information gathered by the Compensation Committee, which is comprised of Ms.
Larisa Gadd, Mr. Sanford Lakoff and Mr. Lester Bishop, each of whom is
independent as defined by the NASDAQ listing standards and by the SEC. The
Compensation Committee does not have a charter. Its function to date has been to
gather information regarding executive compensation in the industry and present
the information to the full Board of Directors for its consideration.
We compensate the Company's named executive officers through a mix of base
salary and cash bonus awards. The compensation program is designed to attract
and retain the best possible executive talent and to tie annual compensation to
the achievement of measurable corporate and individual performance objectives.
Compensation levels are reviewed annually and are based in part on results of
operations for the previous fiscal year. In addition, we provide our named
executive officers a variety of other benefits that we also make available
generally to all salaried employees. The Board of Directors believes that the
Company's executive compensation provides a level of compensation that is
competitive for companies in comparable industries and of comparable
development, complexity and size.
We have employment agreements with each of our named executive officers, which
are summarized in this Proxy Statement under the section entitled "Employment
Contracts" and have been included as exhibits to our disclosure reports filed
with the SEC. The employment agreements with Messrs. David Caldwell, William
Constantino and Darren Bard were entered into on July 31, 2002.
The Compensation Committee met three times last year. Each of the members of
the Compensation Committee attended at least 75% of the meetings held by that
committee.
8
ATTENDANCE AT ANNUAL MEETINGS
We do not have any policy regarding director attendance at Annual Meetings of
Members, although all directors are strongly encouraged to attend. Last year,
all seven directors attended the 2006 Annual Meeting.
UNIT HOLDER COMMUNICATIONS WITH DIRECTORS
-----------------------------------------
We have no formal procedure for Unit Holder communications with directors.
However, our Board of Directors has provided by resolution that any Unit Holder
who wishes to communicate with a particular director or directors or with the
entire Board of Directors should direct the communication to the Chief Officer
of Legal Affairs at the Company's principal executive offices. Our Chief Officer
of Legal Affairs will process all communications received from Unit Holders in
accordance with the process approved by our Board. The Chief Officer of Legal
Affairs will forward written communications addressed to the full Board to one
of the Chairpersons of the Board and written communications addressed to any
individual director or directors to the individual(s) to whom the communication
is directed. However, materials that are unduly hostile, threatening, illegal or
similarly unsuitable generally will not be forwarded.
AUDIT COMMITTEE REPORT
----------------------
The Audit Committee has reviewed and discussed Performance Capital Management,
LLC's audited consolidated financial statements for the fiscal year ended
December 31, 2006 with management, which has primary responsibility for the
financial statements. The Audit Committee has discussed with Moore Stephens
Wurth Frazer and Torbet, LLP the matters that are required to be discussed by
Statement on Auditing Standards No. 61, "Communication with Audit Committees."
The Audit Committee has discussed with Moore Stephens Wurth Frazer and Torbet,
LLP the auditors' independence from Performance Capital Management, LLC and
management and has received from Moore Stephens Wurth Frazer and Torbet, LLP the
written disclosures and the letter required by Independence Standards Board
Standard No. 1, "Independence Discussions with Audit Committees."
The Audit Committee has considered whether the services provided by Moore
Stephens Wurth Frazer and Torbet, LLP are compatible with maintaining the
independence of Moore Stephens Wurth Frazer and Torbet, LLP and has concluded
that the independence of Moore Stephens Wurth Frazer and Torbet, LLP is
maintained and not compromised by the services provided.
Based on the review and discussion referred to above, the Audit Committee
recommended to the Board of Directors that the audited consolidated financial
statements be included in Performance Capital Management, LLC's Annual Report on
Form 10-KSB for the fiscal year ended December 31, 2006, for filing with the
Securities and Exchange Commission.
Respectfully Submitted by the Audit Committee,
Donald W. Rutherford
Larry C. Smith
Rodney Woodworth
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
To our knowledge, the following table sets forth information with respect to the
beneficial ownership of our securities as of April 23, 2007 by (i) each person
known by us to beneficially own more than 5% of our voting securities; (ii) each
of our executive officers; (iii) each of our directors; and (iv) all of our
executive officers and directors as a group. Beneficial ownership is determined
in accordance with the rules of the Securities and Exchange Commission and
includes voting or investment power with respect to the securities. Unless
otherwise indicated, the address for those listed below is c/o Performance
Capital Management, LLC, 7001 Village Drive, Suite 255, Buena Park, California,
90621. Subject to applicable community property laws, the persons named in the
table have sole
9
voting power with respect to all LLC Units shown as beneficially owned by them.
The number of outstanding LLC Units entitled to vote as of April 23, 2007 was
526,522. Except as noted otherwise, the amounts reflected below are based upon
information provided to us and in filings with the Securities and Exchange
Commission.
AMOUNT AND PERCENT OF
NAME OF BENEFICIAL OWNER NATURE OF BENEFICIAL OWNERSHIP OUTSTANDING
- ---------------------------------------------------------- ------------------------------ ------------
Larisa Gadd, Co-Chairperson of the Board (1) 4,777 *
- ---------------------------------------------------------- ------------------------------ ------------
Lester T. Bishop, Co-Chairperson of the Board (2) 398 *
- ---------------------------------------------------------- ------------------------------ ------------
Larry C. Smith, Director (3) 995 *
- ---------------------------------------------------------- ------------------------------ ------------
David Barnhizer, Director (4) 1,094 *
- ---------------------------------------------------------- ------------------------------ ------------
Rodney Woodworth, Director 2,239 *
- ---------------------------------------------------------- ------------------------------ ------------
Sanford Lakoff, Director (5) 1,593 *
- ---------------------------------------------------------- ------------------------------ ------------
Donald W. Rutherford, Director 0 *
- ---------------------------------------------------------- ------------------------------ ------------
David J. Caldwell, Chief Operations Officer 0 *
- ---------------------------------------------------------- ------------------------------ ------------
Edward M. Rucker, Accounting Manager 0 *
- ---------------------------------------------------------- ------------------------------ ------------
Darren S. Bard, Chief Information Officer 0 *
- ---------------------------------------------------------- ------------------------------ ------------
William D. Constantino, Chief Officer of Legal Affairs 0 *
- ---------------------------------------------------------- ------------------------------ ------------
ALL EXECUTIVE OFFICERS & DIRECTORS AS A GROUP (11 Persons) 11,096 2.11%
- ---------------------------------------------------------- ------------------------------ ------------
* Less than 1%.
(1) The 4,777 LLC Units are owned by the GADD FAMILY TRUST DTD
5/30/97, of which Ms. Gadd and her husband are trustees.
(2) The 398 LLC Units are owned jointly by Mr. Bishop and his wife.
(3) The 995 LLC Units are held by the TRUST COMPANY OF AMERICA in the
form of an IRA of which Mr. Smith is sole beneficiary and owner.
(4) The 1,094 LLC Units are owned by RAINDANCE PARTNERSHIP COMPANY,
of which Mr. Barnhizer's wife is Managing Partner and Mr. Barnhizer is
General Counsel.
(5) The 1,593 LLC Units are owned by the LAKOFF FAMILY TRUST 1/13/97,
of which Mr. Lakoff is the trustee.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
-------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our
directors, our executive officers and persons who own more than ten percent of
our LLC Units to file with the Securities and Exchange Commission and
Performance Capital Management, LLC reports on Forms 3, 4 and 5 reflecting
transactions affecting beneficial ownership. No such forms were required to be
filed for the period from January 1, 2006 to December 31, 2006. We have received
a written representation from each of our directors and executive officers that
no Forms 5 are required for the fiscal year ended December 31, 2006.
CHANGES IN CONTROL
------------------
No change in control of Performance Capital Management, LLC has occurred since
the beginning of 2006. We are not aware of any arrangement that would upset the
control mechanisms currently in place over the Company. Although it is
conceivable that a third party could attempt a hostile takeover of Performance
Capital Management, LLC, we have not received notice of any such effort.
10
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
------------------------------------------------
The following table sets forth the compensation that we have paid to our Named
Executive Officers for the years ended December 31, 2006 and 2005. Except as
provided in the employment contracts and employment benefit plan discussed on
pages 11 and 12, we do not have a long-term compensation plan and do not grant
any long-term compensation to our executive officers. No other compensation was
granted for the periods covered.
- --------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------
SALARY BONUS ALL OTHER COMPENSATION TOTAL
NAME AND PRINCIPAL POSITION FISCAL YEAR ENDED ($) ($) ($) ($)
======================================================================================================
David Caldwell 2006 206,255 6,616 - 212,871
Chief Operations Officer 2005 200,004 20,180 - 220,184
======================================================================================================
William Constantino 2006 139,690 6,616 - 146,306
Chief Officer of Legal Affairs 2005 135,003 18,929 - 153,932
======================================================================================================
Darren Bard 2006 139,690 6,616 - 146,306
Chief Information Officer 2005 135,003 18,929 - 153,932
======================================================================================================
OPTION GRANTS
We do not have an employee option plan, nor have we granted any options to our
officers or directors.
COMPENSATION OF DIRECTORS
In 2006, all seven of our directors each received $1,500.00 per attended meeting
of the Board of Directors. The Board of Directors has regularly scheduled
meetings once per month. The total amount paid to each of the seven directors
during the fiscal year ended December 31, 2006, was $18,000.00.
The Board of Directors has approved an increase in the amount paid to Mr. Donald
Rutherford per attended meeting in 2007 from $1,500.00 to $2,333.33 for his
service as a director, an Audit Committee member and the Company's audit
committee financial expert. The other six members of the Board of Directors will
continue to receive $1,500.00 per attended meeting during 2007.
All directors receive reimbursement for travel and out-of-pocket expenses
incurred in connection with attendance at all meetings. Except as described
above, during the fiscal year ended December 31, 2006, none of our directors
received any other compensation for performance of services as a director of
Performance Capital Management, LLC or a member of any committee of our Board of
Directors.
EMPLOYMENT CONTRACTS
We have entered into employment agreements with our three named executive
officers. The term of each employment agreement is five years commencing on July
31, 2002. On July 31 of each successive year, the term of each employment
agreement is automatically extended for an additional year unless we or the
officer gives 90 days advance termination notice.
We reserve the right to terminate the agreement "for cause" if the officer
willfully breaches or habitually neglects the duties that he is required to
perform pursuant to the provisions of the agreement, or commits acts of
dishonesty, fraud, misrepresentation or other acts of moral turpitude as would
prevent the effective performance of his or her duties. If we terminate the
agreement "for cause", we shall pay to the officer any compensation due under
the agreement, including any unused vacation, prorated through the date of
termination, and we shall have the option to purchase the entire
11
ownership interest of the officer, if any, in accordance with the agreement. The
executive officer may terminate the agreement by giving us at least 30 days
notice in advance. Such a termination will be considered "for cause". If we
terminate the employment of an executive officer without cause and the executive
officer does not accept a position with a competitor of the Company, we are
required to pay the executive officer severance in an amount equal to six months
of his base salary as well as any other compensation due under his employment
agreement, including any unused vacation, prorated through the date of
termination.
Base salaries and any bonuses for our executive officers are determined and
approved annually by the full Board of Directors. The agreements provide that
the executive officers shall receive the following benefits: three weeks of
vacation, paid holidays, sick days and health care benefits.
The officers will receive in lieu of any outstanding equity or equivalent
interest in Performance Capital Management, LLC, a sum equal to the total of all
executive annual salaries divided by the total number of executive officers
employed by us at the time of (a) Performance Capital Management, LLC becoming a
"C" corporation or (b) Performance Capital Management, LLC selling substantially
all of its membership units or assets.
The agreements will not be terminated by any voluntary or involuntary
dissolution of Performance Capital Management, LLC resulting from either a
merger or consolidation in which Performance Capital Management, LLC is not the
consolidated or surviving company, or a transfer of all or substantially all of
the assets of Performance Capital Management, LLC. Any rights, benefits and
obligations under the agreements are to be assigned to the surviving or
resulting company or the transferee of Performance Capital Management, LLC's
assets. On the sale or change in control of Performance Capital Management, LLC,
the executive officers will receive an amount equal to the total of all
executive officer salaries divided by the total number of executive officers.
Each of the agreements provides that we will indemnify the executive officer, if
he or she is made a party to or threatened to be made a party to, or otherwise
involved in, any proceeding commenced during the employment term, or after the
employment term, because the officer is or was an employee or agent of
Performance Capital Management, LLC. A similar Indemnification Agreement with
Edward Rucker, our Accounting Manager, was approved by the Board and executed on
August 8, 2005. The indemnification includes any and all expenses, judgments,
fines, penalties, settlements, and other amounts, actually and reasonably
incurred by the executive officer in connection with the defense or settlement
of any such proceeding. The executive officer must have acted in good faith and
in a manner that the officer reasonably believes to be in the best interests of
Performance Capital Management, LLC and, in a criminal proceeding, the officer
must have no reasonable cause to believe that his or her conduct was unlawful.
Any and all expenses, including filing fees, costs of investigation, attorney's
fees, messenger and delivery expenses, postage, court reporters' fees and
similar fees and expenses, incurred by the executive officer in any proceeding
are to be advanced by Performance Capital Management, LLC prior to the final
disposition of the proceeding and subject to considerations of reasonableness at
the written request of the officer, but only if the officer undertakes to repay
the advanced expenses to the extent he is not entitled to indemnification. The
indemnification contemplated by the agreements is not to be deemed exclusive of
any other rights the officers may have to indemnification. We have been advised
that the SEC takes the position that these indemnification provisions do not
affect the liability of any officer or director under applicable federal and
state securities laws.
EMPLOYMENT BENEFIT PLAN
We have a defined contribution plan covering all eligible full-time employees of
Performance Capital Management, LLC (the "Plan Sponsor") who are currently
employed by the Company, including our executive officers, and have completed
six months of service from the time of enrollment. The Plan was effective as of
September 1994. The Plan was established by a predecessor of the Plan Sponsor to
provide retirement income for its employees and is subject to the provisions of
the Employee Retirement Income Security Act of 1974, as amended (ERISA).
The Plan is a contributory plan whereby participants may contribute a percentage
of pre-tax annual compensation as outlined in the Plan agreement and as limited
by Federal statute. Participants may also contribute amounts representing
distributions from other qualified defined benefit or contribution plans. The
Plan Sponsor does not make matching contributions.
We do not have any compensation plans that will result in the issuance of LLC
Units or other equity interests.
12
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
The Company recognizes that transactions between the Company and any of its
directors or executives can present potential or actual conflicts of interest
and create the appearance that Company decisions are based on considerations
other than the best interests of the Company and its Unit Holders. Therefore, as
a general matter and in accordance with the Company's Code of Business Conduct
and Ethics, it is the Company's preference to avoid such transactions.
Nevertheless, the Company recognizes that there are situations where such
transactions may be in, or may not be inconsistent with, the best interests of
the Company. The Board of Directors will review any transaction in which the
Company is or will be a participant, and in which any of the Company's directors
or executive officers had, has or will have a direct or indirect material
interest. After its review, the Board will only approve or ratify those
transactions that are in, or are not inconsistent with, the best interests of
the Company and its Unit Holders. A related party transaction will only be
approved if the Board determines that it is in the best interests of the
Company. If a director is involved in the transaction, he or she will be recused
from all decisions about the transaction.
We are not aware of any related party transactions that would require
disclosure.
CODE OF ETHICS
--------------
On December 8, 2003, our Board of Directors adopted a Code of Business Conduct
and Ethics that applies to our Chief Operations Officer and senior financial
officers. A copy of the Code of Business Conduct and Ethics was filed as an
exhibit to our Annual Report on Form 10-KSB for the year ended December 31,
2003, and incorporated by reference into our Annual Reports on Form 10-KSB for
the years ended December 31, 2006, 2005 and 2004.
Upon written request, we will furnish to you, without charge, a copy of our Code
of Business Conduct and Ethics that has been filed with the Securities and
Exchange Commission. Requests for copies of the Code of Business Conduct and
Ethics should be directed to Harvey "Bud" Webb, Member Relations, at Performance
Capital Management, LLC's principal address at 7001 Village Drive, Suite 255,
Buena Park, California, 90621. In the alternative, you may find the Code of
Business Conduct and Ethics on the Securities and Exchange Commission's web-site
at www.sec.gov as an exhibit to our Annual Report on Form 10-KSB for the year
ended December 31, 2003.
================================================================================
PROPOSAL NO. 2: RATIFY SELECTION OF INDEPENDENT AUDITORS FOR 2007
================================================================================
Moore Stephens Wurth Frazer and Torbet, LLP has served as our independent
auditors for the fiscal year ended December 31, 2006, and has been selected by
our Audit Committee to continue as our independent auditors for the fiscal year
ending December 31, 2007.
Although the selection of Moore Stephens Wurth Frazer and Torbet, LLP is not
required to be submitted to a vote of the Members, our Board of Directors
believes it appropriate as a matter of policy to request that the Members ratify
the selection of the independent auditors for the fiscal year ending December
31, 2007. In the event that a majority of the LLC Units held by Members present,
in person or by proxy, and entitled to vote at the Annual Meeting do not vote
"FOR" ratification, the adverse vote will be considered as a direction to our
Board of Directors to select other auditors for the fiscal year ending December
31, 2007.
A representative from Moore Stephens Wurth Frazer and Torbet, LLP is expected to
be present at the Annual Meeting. The representative will have the opportunity
to make a statement and will be available to respond to appropriate questions
submitted either orally or in writing at the meeting.
13
OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" RATIFICATION OF THE
SELECTION OF MOORE STEPHENS WURTH FRAZER AND TORBET, LLP, CERTIFIED PUBLIC
ACCOUNTANTS, AS OUR INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31,
2007.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
--------------------------------------
Moore Stephens Wurth Frazer and Torbet, LLP has audited our financial statements
for the past five years. Our Board of Directors maintains an Audit Committee in
accordance with applicable SEC rules. The Audit Committee is directly
responsible for the appointment, compensation, retention and oversight of the
work of the independent auditors for the purpose of preparing and issuing its
audit report or performing other audit, review and tax services for us. The
independent auditors report directly to the Audit Committee and the Audit
Committee is directly responsible for reviewing in advance, and granting any
appropriate pre-approvals of, (a) all auditing services to be provided by the
independent auditor and (b) all non-audit services to be provided by the
independent auditor (as permitted by the Exchange Act), and in connection
therewith to approve all fees and other terms of engagement, as required by the
applicable rules of the Exchange Act and subject to the exemptions provided for
in such rules.
The aggregate fees for professional services rendered by Moore Stephens Wurth
Frazer and Torbet, LLP for 2006 and 2005 were:
TYPES OF FEES 2006 2005
- ---------------------- -------- --------
Audit Fees $130,689 $137,874
Audit-Related Fees 6,731 -
Tax Fees 16,437 19,840
All Other Fees - -
-------- --------
TOTAL FEES $153,857 $157,714
======== ========
In the above table, in accordance with new SEC definitions and rules, "audit
fees" are fees billed by Moore Stephens Wurth Frazer and Torbet, LLP for
professional services rendered for the audit of our annual financial statements
and review of financial statements included in our Quarterly Reports on Form
10-QSB, and for services that are normally provided by the auditors in
connection with statutory and regulatory filings or engagements; "audit-related
fees" are fees billed by Moore Stephens Wurth Frazer and Torbet, LLP for
assurance and related services that are traditionally performed by the auditor,
including review of our proxy statement, attendance at audit committee and
annual members meetings and SEC compliance work; "tax fees" are fees billed by
Moore Stephens Wurth Frazer and Torbet, LLP for tax compliance and related tax
advice, including preparation of Forms K-1 and tax returns for the Company and
its subsidiary; and "all other fees" are fees billed by Moore Stephens Wurth
Frazer and Torbet, LLP to us for any services not included in the first three
categories.
POLICY ON PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES
------------------------------------------------------
The Audit Committee's Charter provides that the Audit Committee shall
pre-approve all auditing services and permitted non-audit services to be
performed by the Company's independent auditors, subject to the de minimis
exceptions for non-audit services that are approved by the Audit Committee prior
to the completion of the audit. As part of its pre-approval process, the Audit
Committee considers whether such services are consistent with the rules of the
Securities and Exchange Commission on auditor independence. The policy does not
delegate to management the Audit Committee's responsibility to pre-approve
permitted services of the independent auditors.
During 2006, our Audit Committee specifically pre-approved the services
performed by Moore Stephens Wurth Frazer and Torbet, LLP in connection with our
2006 audit. All of the other services performed by Moore Stephens Wurth Frazer
and Torbet, LLP for us during 2006 were approved by our Audit Committee as to
the scope of such services and fees paid for such services.
14
----------------------------------
PROPOSALS OF MEMBERS
--------------------
A Member proposal is a Member's recommendation or requirement that we and/or our
Board of Directors take certain action, which the Member intends to present at a
meeting of our Members. The proposal should state as clearly as possible the
course of action that the Member believes we should follow and should be
accompanied by a supporting statement. The proposal, including the accompanying
supporting statement, may not exceed 500 words.
Any proposal or nomination received from a Member will be given careful
consideration by us in accordance with Rules 14a-5 and 14a-8 under the
Securities Exchange Act of 1934, as amended. Member proposals and nominations
are eligible for consideration for inclusion in the proxy statement for the 2008
Annual Meeting of Members if they are received by us on or before January 2,
2008. Member proposals and nominations should be directed to the attention of
the Chief Officer of Legal Affairs, Performance Capital Management, LLC, at 7001
Village Drive, Suite 255, Buena Park, California, 90621.
In order for a Member proposal or nomination submitted OUTSIDE of Rule 14a-8 to
be considered "timely" within the meaning of Rule 14a-4(c), such proposal or
nomination must be received by us on or before March 17, 2008. We will have
discretionary authority with respect to Member proposals and nominations
submitted for consideration at the 2008 Annual Meeting of Members that are not
"timely" within the meaning of Rule 14a-4(c). We reserve the right to reject,
rule out of order, or take other appropriate action with respect to any proposal
or nomination that does not comply with these and other applicable requirements.
ADDITIONAL INFORMATION
----------------------
Members should direct communications regarding change of address, requests for
transfer of LLC Unit ownership or lost LLC Unit certificates to Performance
Capital Management, LLC, Attn: Harvey "Bud" Webb, Member Relations, 7001 Village
Drive, Suite 255, Buena Park, California, 90621. Mr. Webb may also be reached by
telephone at 714.736.3736 or by facsimile at 714.736.3733.
OTHER MATTERS
-------------
We know of no other matters that are likely to be brought before the Annual
Meeting. If, however, other matters not presently known or determined properly
come before the Annual Meeting, the persons named as proxies in the enclosed
Proxy Card or their substitutes will vote such proxy in accordance with their
discretion with respect to such matters.
By Order of the Board of Directors,
/s/ David J. Caldwell
David J. Caldwell
Chief Operations Officer
Buena Park, California
April 27, 2007
15
PROXY THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORSOF
PERFORMANCE CAPITAL MANAGEMENT, LLC
2007 ANNUAL MEETING OF MEMBERS - JUNE 11, 2007
The undersigned Member(s) of PERFORMANCE CAPITAL MANAGEMENT, LLC, a California
limited liability company (the "Company"), hereby acknowledges receipt of the
Notice of Annual Meeting of Members and the Proxy Statement, and hereby appoints
David Caldwell and Darren Bard, or either of them, as proxies and
attorneys-in-fact, with full power to each of substitution, on behalf and in the
name of the undersigned, to represent the undersigned at the 2007 Annual Meeting
of Members of the Company to be held on Monday, June 11, 2007, and at any
adjournment(s) or postponement(s) thereof, and to vote all LLC Units that the
undersigned would be entitled to vote, if then and there personally present, on
the matters set forth below and, in accordance with their discretion, on any
other business that may come before the meeting:
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" THE PROPOSALS
DESCRIBED IN THE PROXY STATEMENT. IF A PROXY IS SIGNED AND DATED BUT NOT MARKED,
YOU WILL BE DEEMED TO HAVE VOTED "FOR" THE PROPOSALS DESCRIBED IN THE PROXY
STATEMENT. THIS PROXY REVOKES ALL PRIOR PROXIES GIVEN BY THE UNDERSIGNED WITH
RESPECT TO THE LLC UNITS COVERED HEREBY.
PROPOSAL NO. 1 - TO ELECT FOUR CLASS II DIRECTORS TO SERVE A TWO-YEAR TERM AND
UNTIL EACH DIRECTOR'S SUCCESSOR HAS BEEN DULY ELECTED AND QUALIFIED.
Nominees: Lester Bishop
Larry Smith
David Barnhizer
Sanford Lakoff
[_] For the Nominees Listed above [_] Withhold Authority to Vote for
(except as indicated below) All Nominees
Instruction: To withhold authority to vote for any Nominee, write that
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Nominee's name on the line immediately below.
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PROPOSAL NO. 2 - TO RATIFY THE SELECTION OF MOORE STEPHENS WURTH FRAZER AND
TORBET, LLP, AS INDEPENDENT AUDITORS FOR THE COMPANY FOR THE FISCAL YEAR ENDING
DECEMBER 31, 2007.
[_]For [_]Against [_] Abstain
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
NOTE: This Proxy should be marked, dated and signed by each Member exactly as
his or her or its name appears on the LLC Unit certificate(s), and returned in
the enclosed postage-paid envelope.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned Member(s). If you do not sign and return this proxy or attend
the meeting and vote by ballot, your LLC Units cannot be voted. If you wish to
vote in accordance with the Board of Directors' recommendations, just sign where
indicated. You need not mark any boxes.
IF YOU DO NOT MARK A BOX INDICATING HOW YOU WANT TO VOTE ON A PROPOSAL, YOUR LLC
UNITS WILL BE VOTED "FOR" THAT PROPOSAL.
When LLC Units are held of record by joint tenants, both should sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such. If a corporation, please sign in full corporate name as its
authorized officer. If a partnership, please sign in partnership name as its
authorized person.
DATED: , 2007.
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Print name(s) exactly as shown on LLC Unit Certificate(s)
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Signature (and Title, if any) Signature (if held jointly)