-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GCnvP0qHOFOGC7TSu4HzRjvrs6KHBvQjhrbBEzH4vVEG2CpnQlDCdqO+ovuaW4Hv 5HkbyYpx8J2HEY5x5z/hCA== 0001015402-04-001755.txt : 20040429 0001015402-04-001755.hdr.sgml : 20040429 20040429122052 ACCESSION NUMBER: 0001015402-04-001755 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20040614 FILED AS OF DATE: 20040429 EFFECTIVENESS DATE: 20040429 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PERFORMANCE CAPITAL MANAGEMENT LLC CENTRAL INDEX KEY: 0001221170 STANDARD INDUSTRIAL CLASSIFICATION: FINANCE SERVICES [6199] IRS NUMBER: 030375751 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-50235 FILM NUMBER: 04763507 MAIL ADDRESS: STREET 1: 222 SOUTH HARBOR BLVD SUITE 400 CITY: ANAHELM STATE: CA ZIP: 92805 DEF 14A 1 doc1.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 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 [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Under Sec. 240.14a-12 PERFORMANCE CAPITAL MANAGEMENT, LLC --------------------------------------------------------- (Name of Registrant as Specified in Its Charter) --------------------------------------------------------- (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: ----------------------------------------------------------------- 2) Aggregate number of securities to which transaction applies: ----------------------------------------------------------------- 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): ----------------------------------------------------------------- 4) Proposed maximum aggregate value of transaction: ----------------------------------------------------------------- 5) Total fee paid: ----------------------------------------------------------------- [ ] Fee paid previously with preliminary materials. [ ] 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: ------------------------------------------------- PERFORMANCE CAPITAL MANAGEMENT, LLC 222 South Harbor Blvd., Suite 400 Anaheim, California 92805 ================================================================================ NOTICE OF 2004 ANNUAL MEETING OF MEMBERS TO BE HELD ON JUNE 14, 2004 ================================================================================ To our Members: NOTICE IS HEREBY GIVEN that the 2004 Annual Meeting of Members of Performance Capital Management, LLC, a California limited liability company, will be held on Monday, June 14, 2004, 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 three Class I 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, 2004; 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 APRIL 16, 2004 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 Anaheim, California May 3, 2004 [PCMLLC LETTERHEAD] May 3, 2004 Dear Member: You are cordially invited to attend the 2004 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 14, 2004, at 10:00 a.m., local time. The Notice of the 2004 Annual Meeting of Members and a Proxy Statement, which describe the formal business to be conducted at the meeting, accompany this letter. Our 2003 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 14th. Sincerely, PERFORMANCE CAPITAL MANAGEMENT, LLC /s/ David J. Caldwell David J. Caldwell Chief Operations Officer PERFORMANCE CAPITAL MANAGEMENT, LLC 222 SOUTH HARBOR BLVD., SUITE 400 ANAHEIM, CALIFORNIA 92805 ================================================================================ PROXY STATEMENT ANNUAL MEETING OF MEMBERS TO BE HELD ON MONDAY, JUNE 14, 2004 ================================================================================ GENERAL This Proxy Statement is furnished to the Members of Performance Capital Management, LLC, a California limited liability 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 2004 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 14, 2004, 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, 2004. Our principal executive offices are located at 222 South Harbor Blvd., Suite 400, Anaheim, California, 92805 and our telephone number is 714.502.3736. 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. No additional compensation will be paid to directors, officers or other regular employees for their services in connection with this proxy solicitation. ANNUAL REPORT An Annual Report to Members (the "Annual Report"), containing audited financial statements for the year ended December 31, 2003, 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. We will furnish to you any exhibit described in the list accompanying the Annual Report, upon the payment, in advance, of the specified reasonable fees related to our furnishing of such exhibit(s). Requests for copies of the Annual Report and/or exhibit(s) should be directed to Harvey "Bud" Webb, Member Relations, at Performance Capital Management, LLC's principal address at 222 South Harbor Blvd., Suite 400, Anaheim, California, 92805 or by calling 714.502.3736. In the alternative, you may find the exhibits to the Annual Report on the Securities and Exchange Commission's web-site at www.sec.gov. RECORD DATE AND VOTING RIGHTS Only holders of record of our voting LLC Units at the close of business on April 16, 2004 (the "Record Date") will be entitled to notice of, and to vote at, the Annual Meeting. On the Record Date, we had 547,194 voting LLC Units outstanding. Each LLC Unit is entitled to one vote at the Annual Meeting. The following table summarizes the voting requirements for the two proposals: 1
PROPOSAL VOTE REQUIRED - ----------------------------------------------------------------------------------------------- Proposal No. 1: Election of three Class I The affirmative vote of a majority of the LLC Units directors. held by Members present in person or by proxy at the meeting. - ----------------------------------------------------------------------------------------------- Proposal No. 2: Ratification of our Audit The affirmative vote of a majority of the LLC Units Committee's selection of Moore held by Members present in person or by proxy at the Stephens Wurth Frazer and Torbet, LLP meeting. as the company's auditors for fiscal year ending December 31, 2004. - -----------------------------------------------------------------------------------------------
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 constitutes 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. 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 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. 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 "FOR" the election of each of the nominees to the Board of Directors, and "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, 2004. 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. 2 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 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. 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 14, 2004. 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. INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON Our directors and executive officers do not have any substantial interest in the matters to be acted upon at the Annual Meeting. 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 16, 2004 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, 222 South Harbor Blvd., Suite 400, Anaheim, California 92805. Subject to applicable community property laws, the persons named in the table have sole 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 16, 2004 was 547,194. Except as noted otherwise, the amounts reflected below are based upon information provided to us and in filings with the Securities and Exchange Commission.
- --------------------------------------------------------------------------------------- PERCENT OF NAME OF BENEFICIAL OWNER NUMBER OF UNITS 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 11,096 2.0% (11 Persons) - --------------------------------------------------------------------------------------- * Less than 1%. (1) The 4,777 Units are owned by the GADD FAMILY TRUST DTD 5/30/97, of which Ms. Gadd and her husband are trustees. (2) The 398 Units are owned jointly by Mr. Bishop and his wife. 3 (3) The 995 Units are owned by the TRUST COMPANY OF AMERICA, of which Mr. Smith is trustee. (4) The 1,094 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 Units are owned by the LAKOFF FAMILY TRUST 1/13/97, of which Mr. Lakoff and his wife are trustees.
CHANGES IN CONTROL No change in control of Performance Capital Management, LLC has occurred since the beginning of 2003. 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. ================================================================================ PROPOSAL NO. 1: ELECTION OF DIRECTORS ================================================================================ NOMINEES FOR THE BOARD OF DIRECTORS Our Board of Directors has proposed that three 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 three 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 I 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 2004 Annual Meeting: Class I Directors: ------------------- - Larisa Gadd - Rodney Woodworth - Donald W. Rutherford Biographical information regarding each of the nominees for the Board of Directors is set forth below, beginning on page 5. OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION OF THE CLASS I DIRECTORS NAMED ABOVE. 4 DIRECTORS AND EXECUTIVE OFFICERS 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 16, 2004. NAME AGE POSITION ---- --- -------- Larisa Gadd 41 Co-Chairperson of the Board / Nominee Lester T. Bishop 71 Co-Chairperson of the Board Larry C. Smith 66 Director David Barnhizer 60 Director Rodney Woodworth 66 Director / Nominee Sanford Lakoff 72 Director Donald W. Rutherford 64 Director / Nominee David J. Caldwell 50 Chief Operations Officer Edward M. Rucker 57 Accounting Manager Darren S. Bard 36 Chief Information Officer William D. Constantino 53 Chief Officer of Legal Affairs All of the current directors except Mr. Rutherford were appointed to the Board of Directors 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. 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 the past 16 years, Ms. Gadd has been a business partner at Scenic Express, Inc., in Los Angeles. Scenic Express fabricates theatrical scenery for stage and screen. Ms. Gadd is also working on obtaining a doctorate degree in Natural Health and Healing from Clayton College of Natural Health. 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 has taught kindergarten through 12th grade students for the past 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. 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 Senior Systems Engineering Manager of 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. 5 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. 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. Mr. Barnhizer has published nine books / manuals and approximately 30 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 eleven 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 a limited partner with Tatum CFO Partners, LLP in Orange, 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 Chief Financial Officer of USGT Resources Inc., a natural gas marketer and asset manager. As a key member of the management team, he had assisted the company from its starting stages and was responsible for staffing and developing and implementing systems and obtaining financing and credit to support a 300% growth over a four-year period to $500 million in sales. 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 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 6 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. 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. Based solely upon our review of the copies of such forms received by us, we believe that, for the period from January 1, 2003 to December 31, 2003, all persons complied with such filing requirements. We have received a written representation from each of our directors and executive officers that no Forms 5 are required for the period ended December 31, 2003. BOARD OF DIRECTORS INFORMATION Our Board of Directors has 7 members, each of whom is independent as defined by Nasdaq Market Listing rules. 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, 2003. Each of our incumbent directors, except Mr. Price who resigned as a director in July 2003 and Mr. Rutherford who was appointed by the Board in January 2004 to fill the vacancy left by Mr. Price, attended at least 75% of the meetings of the Board of Directors. 7 Our Board of Directors has established an Audit Committee. It currently has no other 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 Nasdaq Market Listing rules. 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 on April 29, 2003. 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, 2004. 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. 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 financial statements have been prepared with integrity and objectivity and on the representations of management and the opinion of the independent auditors that such financial statements have been prepared in conformity with generally accepted accounting principles. The Audit Committee met 3 times last year. Each of the members of the Audit Committee, except Mr. Price who resigned as a director in July 2003 and Mr. Rutherford who was appointed by the Board in January 2004 to fill the vacancy left by Mr. Price, 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 Nasdaq Market Listing rules. 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 based on whether the nominee is recommended by a Member. 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 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 8 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. 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. STOCKHOLDER COMMUNICATION WITH MEMBERS OF THE BOARD OF 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 with all or certain of the directors or with the entire Board of Directors should direct the communication to the Chief Officer of Legal Affairs. Our Chief Officer of Legal Affairs will process all communications received from Unit Holders in accordance with the process approved by our Board. ATTENDANCE AT ANNUAL MEETINGS We do not have any policy regarding director attendance at Annual Meetings of Members. Last year, six of the seven directors attended the 2003 Annual Meeting. AUDIT COMMITTEE REPORT The Audit Committee has reviewed and discussed the company's audited financial statements for the year ended December 31, 2003 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 financial statements be included in Performance Capital Management, LLC's Annual Report on Form 10-KSB for the year ended December 31, 2003, for filing with the Securities and Exchange Commission. Respectfully Submitted by the Audit Committee, Donald W. S. Rutherford Larry C. Smith Rodney Woodworth 9 COMPENSATION AND OTHER INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS The following table sets forth the compensation that we have paid to our Named Executive Officers for the period from February 4, 2002 (Inception) to December 31, 2002 and the year ended December 31, 2003. Except as provided in the employment contracts 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 ============================================================================= Annual Compensation ------------------------------------- Fiscal Other Annual Year Salary Bonus Compensation Name and Principal Position Ended ($) ($) ($) ============================================================================= David Caldwell 2003 200,002 -- -- Chief Operations Officer 2002 187,413 25,000 -- ============================================================================= William Constantino 2003 135,002 -- -- Chief Officer of Legal Affairs 2002 130,482 25,000 -- ============================================================================= Darren Bard 2003 135,171 -- -- Chief Information Officer 2002 132,839 25,000 -- =============================================================================
OPTION GRANTS We do not have an employee option plan, nor have we granted any options to our officers or directors. COMPENSATION OF DIRECTORS Our directors receive $1,500 per scheduled meeting of the Board of Directors. The Board of Directors has regularly scheduled meetings once per month. All directors receive reimbursement for travel and out-of-pocket expenses incurred in connection with attendance at all meetings. Except as described above, none of our directors receive 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 executive officers. We are in the process of formalizing an indemnification agreement with Edward Rucker, our accounting manager, which is expected to go before the Board of Directors for final approval in May 2004. The employment agreements with the executive officers provide for initial base salaries for David Caldwell, William Constantino and Darren Bard of $200,000, $135,000 and $135,000, respectively. Base salaries are to be adjusted periodically by the Board of Directors. The agreements provide for bonus payments of $25,000 each in 2002. The agreements also provide for an annual bonus at the end of the first year of employment as follows: each shall share in an equal amount with all other executives the sum of the total of all executive annual salaries times two and one half percent for each and every percentage point for which the ratio of operating expenses to gross revenues derived directly from collection activity (excluding e.g. sales revenues collections) is less than 55% for a specific calendar year as calculated on a cash flow basis. The bonus may be amended or cancelled by the Board of Directors on the anniversary of the effective date of the employment agreements. In addition, the officers will receive in lieu of 10 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. For purposes of the compensation section of the agreements, the executive officers shall be confined to the Chief Operations Officer, Chief Information Officer, Chief Officer of Legal Affairs and the Chief Human Resource Officer. 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 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 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". 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. 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. 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 and executive officers of Performance Capital Management, LLC, the Plan Sponsor, who are currently employed by us 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). 11 The Plan is a contributory plan whereby participants may contribute up to a maximum of 15% of pre-tax annual compensation. 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. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 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. ================================================================================ PROPOSAL NO. 2: RATIFY SELECTION OF INDEPENDENT AUDITORS FOR 2004 ================================================================================ Moore Stephens Wurth Frazer and Torbet, LLP served as our independent auditors for the year ended December 31, 2003, and has been selected by our Audit Committee to continue as our independent auditors for the year ending December 31, 2004. 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, 2004. In the event that the votes in opposition to ratification exceed the votes in favor of 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, 2004. 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 able to respond to appropriate questions submitted either orally or in writing at the meeting. We initially engaged Moore Stephens Wurth Frazer and Torbet, LLP in February 2002, to conduct an audit of our opening balance sheet upon emergence from bankruptcy. Prior to engaging Moore Stephens Wurth Frazer and Torbet, LLP, we, or someone on our behalf, did not consult with Moore Stephens Wurth Frazer and Torbet, LLP regarding the application of accounting principles to a specific completed or contemplated transaction, or the type of audit opinion that might be rendered on our financial statements, and no written or oral advice was provided by Moore Stephens Wurth Frazer and Torbet, LLP that was an important factor considered by us in reaching a decision as to an accounting, auditing or financial reporting issue. We have furnished the above disclosure, made in response to Item 304 of Regulation S-B, to Moore Stephens Wurth Frazer and Torbet, LLP for their review. 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, 2004. 12 PRINCIPAL ACCOUNTANT FEES AND SERVICES Moore Stephens Wurth Frazer and Torbet, LLP has audited our financial statements for the past two 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 by Moore Stephens Wurth Frazer and Torbet, LLP for 2003 and 2002 for these various services were: TYPES OF FEES 2003 2002 - -------------------------------------- -------- -------- Audit Fees $ 90,516 $120,504 Audit-Related Fees 19,639 5,500 Tax Fees 11,045 23,175 All Other Fees 3,286 -- -------- -------- TOTAL FEES $124,486 $149,179 ======== ======== In the above table, in accordance with new SEC definitions and rules, "audit fees" are fees we paid 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 the audit of our defined contribution employee benefit plan and SEC compliance work; "tax fees" are fees for tax compliance, tax advice and tax planning; 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 2003, our Audit Committee specifically pre-approved the services performed by Moore Stephens Wurth Frazer and Torbet, LLP in connection with our 2003 audit. All of the other services performed by Moore Stephens Wurth Frazer and Torbet, LLP for us during 2003 were pre-approved by our Audit Committee as to the scope of such services and fees paid for such services. There were no hours expended on Moore Stephens Wurth Frazer and Torbet, LLP's engagement to audit our financial statements for the most recent fiscal year that were attributed to work performed by persons other than the Moore Stephens Wurth Frazer and Torbet, LLP's full-time, permanent employees. ____________________________________ 13 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. Proposals received from Members are given careful consideration by us in accordance with Rule 14a-8 under the Securities Exchange Act of 1934, as amended. Member proposals are eligible for consideration for inclusion in the proxy statement for the 2005 Annual Meeting of Members if they are received by us on or before January 5, 2005. Any Member proposal should be directed to the attention of the Chief Officer of Legal Affairs, Performance Capital Management, LLC, at 222 South Harbor Blvd., Suite 400, Anaheim, California, 92805. In order for a Member proposal submitted OUTSIDE of Rule 14a-8 to be considered "timely" within the meaning of Rule 14a-4(c), such proposal must be received by us on or before March 21, 2005. We will have discretionary authority with respect to Member proposals submitted for consideration at the 2005 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 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, 222 South Harbor Blvd., Suite 400, Anaheim, California, 92805. Mr. Webb may also be reached by telephone at 714.502.3736 or by facsimile at 714.502.3733. 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 Anaheim, California May 3, 2004 14 PROXY THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF PERFORMANCE CAPITAL MANAGEMENT, LLC 2004 ANNUAL MEETING OF MEMBERS - JUNE 14, 2004 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 2004 Annual Meeting of Members of the Company to be held on Monday, June 14, 2004, 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 THREE CLASS I DIRECTORS TO SERVE A TWO-YEAR TERM AND UNTIL EACH DIRECTOR'S SUCCESSOR HAS BEEN DULY ELECTED AND QUALIFIED. Nominees: Larisa Gadd Rodney Woodworth Donald W. Rutherford [ ] For the Nominees Listed above [ ] Withhold Authority to (except as indicated below) Vote for All Nominees Instruction: To withhold authority to vote for any Nominee, write that Nominee's name on the line immediately below. -------------------------------------------------------------------- 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, 2004. [ ] For [ ] Against [ ] Abstain CONTINUED AND TO BE SIGNED ON REVERSE SIDE Page 1 of 2 NOTE: THIS PROXY SHOULD BE MARKED, DATED AND SIGNED BY EACH MEMBER(S) 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: , 2004. ---------------------- ----------------------------------------------------------------- Print name(s) exactly as shown on LLC Unit Certificate(s) ----------------------------- ---------------------------- Signature (and Title, if any) Signature (if held jointly) Page 2 of 2 -----END PRIVACY-ENHANCED MESSAGE-----