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
(Amendment
No. __)
Filed
by the Registrant ☑
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))
☑ Definitive Proxy Statement
☐ Definitive Additional Materials
☐ Soliciting Material under Rule
14a-12
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PEDEVCO CORP.
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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)
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Payment
of Filing Fee (Check the appropriate box):
☑ 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:
PEDEVCO CORP.
575 N.
Dairy Ashford, Suite 210
Houston,
Texas 77079
(713)
221-1768
July
20, 2021
Dear
Stockholder:
The
board of directors and officers of PEDEVCO Corp., a Texas
corporation, join me in extending to you a cordial invitation to
attend the 2021 annual meeting of our stockholders, which we refer
to as the annual meeting. This meeting will be held on Wednesday,
September 1, 2021 at 10:00 a.m. central time. Due to the
continuing significant public health impact of the coronavirus
pandemic (COVID-19) and to support and protect the health and
well-being of our officers, directors and stockholders, the annual
meeting will be held in a virtual meeting format only. You will not
be able to attend the annual meeting physically. The annual meeting
will be held via an audio teleconference. Stockholders may attend,
vote and submit questions during the annual meeting via the
Internet by logging in at https://agm.issuerdirect.com/ped,with
your Control ID and Request ID, and thereafter following the
instructions to join the virtual meeting. In addition to voting by
submitting your proxy prior to the annual meeting and/or voting
online as discussed herein, you also will be able to vote your
shares electronically during the annual meeting. We expect to
resume in person stockholder meetings in successive years. Details
regarding the business to be conducted are more fully described in
the accompanying Notice of Annual Meeting and Proxy
Statement.
As
permitted by the rules of the Securities and Exchange Commission
(the “SEC” or the
“Commission”), we have
provided access to our proxy materials over the Internet.
Accordingly, we are sending a Notice of Internet Availability of
Proxy Materials, or E-proxy notice, on or about July 20, 2021 to
our stockholders of record as of the close of business on July 6,
2021. The E-proxy notice contains instructions for your use of this
process, including how to access our proxy statement and annual
report and how to authorize your proxy to vote. In addition, the
E-proxy notice contains instructions on how you may receive a paper
copy of the proxy statement and annual report or elect to receive
your proxy statement and annual report over the Internet. We
believe these rules allow us to provide you with the information
you need while lowering the costs of delivery and reducing the
environmental impact of the annual meeting.
To be
admitted to the virtual annual meeting, stockholders must enter the
Control ID number found on their proxy card or E-proxy notice at
the website provided above, at the time of the virtual annual
meeting. If you are unable to attend the virtual annual meeting, it
is very important that your shares be represented and voted at the
meeting. You may authorize your proxy to vote your shares over the
Internet as described in the E-proxy notice. Alternatively, if you
received a paper copy of the proxy card by mail, please complete,
date, sign and promptly return the proxy card. You may also
authorize your proxy to vote your shares by telephone or fax as
described in your proxy card. If you authorize your proxy to vote your shares
over the Internet, return your proxy card by mail or vote by
telephone prior to the annual meeting, you may nevertheless revoke
your proxy and cast your vote personally at the
meeting.
We look
forward to your participation at the September 1, 2021 annual
meeting. Your vote and participation in our governance is very
important to us.
Sincerely,
/s/ John J. Scelfo
John J.
Scelfo, Chairman
Important Notice Regarding the Availability of Proxy Materials for
the Virtual Annual Meeting of Stockholders to Be Held on September
1, 2021.
Our
proxy statement and Annual Report on Form 10-K for the year ended
December 31, 2020 are available at the following cookies-free
website that can be accessed anonymously: https://agm.issuerdirect.com/ped.
Stockholders may also vote prior to the meeting at
www.iproxydirect.com/PED.
PEDEVCO CORP.
575 N. Dairy Ashford, Suite 210
Houston, Texas 77079
(713) 221-1768
___________________________
NOTICE OF VIRTUAL ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 1, 2021
___________________________
To the
Stockholders of PEDEVCO Corp.:
We are
pleased to provide you notice of, and to invite you to attend, the
2021 annual meeting of the stockholders of PEDEVCO Corp., a Texas
corporation, which will be held in a virtual meeting format only,
by live audio webcast, on Wednesday, September 1, 2021 at
10:00 a.m. Central time. Stockholders may attend, vote and submit
questions during the annual meeting via the Internet by logging in
at https://agm.issuerdirect.com/ped
with your Control ID and Request ID, and thereafter following the
instructions to join the virtual meeting. The annual meeting is
being held for the following purposes:
1.
To
consider and vote upon a proposal to elect four directors to the
board of directors, each to serve a term of one year and until
their respective successors have been elected and qualified, or
until their earlier resignation or removal, as named in, and set
forth in greater detail in this proxy statement.
2.
To
approve the PEDEVCO Corp. 2021 Equity Incentive Plan.
3.
To
consider and vote upon a proposal to ratify the appointment of
Marcum LLP, as our independent auditors for the fiscal year ending
December 31, 2021.
4.
To
transact such other business as may properly come before the annual
meeting or any adjournment or postponement thereof.
THE BOARD, INCLUDING THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT YOU VOTE “FOR”
EACH OF PROPOSALS ONE THROUGH FOUR.
We do
not expect to transact any other business at the annual meeting.
Our board of directors has fixed the close of business on July
6, 2021 as the record date for determining those stockholders
entitled to vote at the annual meeting and any adjournment or
postponement thereof. Accordingly, only stockholders of record at
the close of business on that date are entitled to notice of, and
to vote at, the annual meeting. A complete list of our stockholders
will be available for examination at our offices in Houston, Texas,
during ordinary business hours for a period of 10 days prior
to the annual meeting.
We
cordially invite you to attend the virtual annual meeting if you
were a stockholder of record who owned the Company’s common
stock shares at the close of business on July 6, 2021. However, to
ensure your representation at the annual meeting, please authorize
the individuals named on your proxy card to vote your shares by
calling the toll-free telephone number, faxing your proxy card or
by using the Internet as described in the instructions included
with your proxy card or voting instruction card. Alternatively, if
you received a paper copy of the proxy card by mail, please
complete, date, sign and promptly return the proxy card. This will
not prevent you from voting at the meeting, but will help to secure
a quorum and avoid added solicitation costs. If your shares are
held in “street
name” by your broker or other nominee, only that
holder can vote your shares and the vote cannot be cast unless you
provide instructions to your broker. You should follow the
directions provided by your broker regarding how to instruct your
broker to vote your shares. Your proxy may be revoked at any time
before it is voted. Please review the proxy statement accompanying
this notice for more complete information regarding the matters to
be voted on at the meeting.
The
enclosed proxy statement, notice of which is first being mailed to
stockholders on July 20, 2021, is also available
at https://agm.issuerdirect.com/ped.
This website also includes copies of the form of proxy and our
Annual Report on Form 10-K for the year ended December 31, 2020,
which we refer to as the 2020 annual report. Stockholders may also vote prior to the meeting
at www.iproxydirect.com/PED.
Materials will also be hosted on this site in addition to the
virtual meeting link. Stockholders may also request a
copy of the proxy statement and our annual report by contacting our
main office at (713) 221-1768.
Even
if you plan to attend the virtual annual meeting, we request that
you submit a proxy by following the instructions on your proxy card
as soon as possible and thus ensure that your shares will be
represented at the annual meeting if you are unable to
attend.
By
Order of the Board of Directors
/s/ John J. Scelfo
John J.
Scelfo
Chairman
Houston,
Texas
July
20, 2021
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IMPORTANT: WHETHER OR NOT YOU PLAN TO ATTEND THE VIRTUAL ANNUAL
MEETING, WE ASK YOU TO VOTE BY TELEPHONE, MAIL, FAX OR ON THE
INTERNET USING THE INSTRUCTIONS ON THE PROXY CARD.
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GENERAL
INFORMATION
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1
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Information
Contained in This Proxy Statement
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1
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Important
Notice Regarding the Availability of Proxy Materials
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1
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Meeting
Time and Location
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1
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Reason
for Holding a Virtual Meeting
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1
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Procedures
at the Virtual Meeting
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2
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Record
Date and Shares Entitled to Vote
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2
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Voting
Process
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2
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Revocability
of Proxies
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3
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Attendance
at the Annual Meeting
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3
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Conduct
at the Meeting
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3
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Quorum
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4
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Votes
Required to Approve Each Proposal
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4
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Broker
Non-Votes and Abstentions
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4
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Board
of Directors Voting Recommendations
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4
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Mailing
Costs and Solicitation of Proxies
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5
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Inspector
of Voting
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5
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Stockholders
Entitled to Vote at the Meeting
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5
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Voting
Instructions
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5
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Confidential
Voting
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5
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Stockholder
of Record and Shares Held in Brokerage Accounts
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5
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Multiple
Stockholders Sharing the Same Address
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5
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Voting
Results
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Company
Mailing Address
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NOTE
ABOUT FORWARD-LOOKING STATEMENTS
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INFORMATION
REFERENCED IN THIS PROXY STATEMENT
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6
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INCORPORATION
BY REFERENCE
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6
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VOTING
RIGHTS AND PRINCIPAL STOCKHOLDERS
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6
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Security
Ownership of Management and Certain Beneficial Owners and
Management
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Changes
in Control
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CORPORATE
GOVERNANCE
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9
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Board
Leadership Structure
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9
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Risk
Oversight
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9
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Family
Relationships
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9
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Other
Directorships
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9
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Arrangements
Between Officers and Directors
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9
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Involvement in
Certain Legal Proceedings
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Meetings of the
Board of Directors and Annual Meeting
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10
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Committees of the
Board
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Audit
Committee
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Compensation
Committee
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10
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Compensation
Committee Interlocks and Insider Participation
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11
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Nominating and
Corporate Governance Committee
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11
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Outside
Advisors
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11
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Controlled Company
Status
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12
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Stockholder
Communications with the Board of Directors
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12
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Executive Sessions
of the Board of Directors
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12
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Director
Independence
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12
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Website
Availability of Documents
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12
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Insider
Trading/Anti-Hedging Policies
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12
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Rule
10b5-1 Trading Plans
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12
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Policy
on Equity Ownership
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Compensation
Recovery
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Code
of Ethics
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Report
of Audit Committee
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AUDIT
COMMITTEE REPORT
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EXECUTIVE
OFFICERS
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EXECUTIVE
COMPENSATION
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15
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Summary
Compensation Table
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Outstanding Equity
Awards at Fiscal Year-End
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Issuances of
Equity to Executive Officers and Greater than 5%
stockholders
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Compensation of
Directors
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Securities
Authorized for Issuance Under Equity Compensation
Plans
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Equity
Compensation Plan Information
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2020
Say on Pay Vote
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Agreements with
Current Named Executive Officers
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20
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Temporary Salary
Reductions and Amendments to Employment Agreements
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CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
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Related
Transactions
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Review
and Approval of Related Party Transactions
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Delinquent Section
16(a) Reports
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PROPOSAL
1 – ELECTION OF DIRECTORS
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Nominees for
Appointment to the Board of Directors
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Director
Qualifications
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Vote
Required
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PROPOSAL
2 – APPROVAL OF THE PEDEVCO CORP. 2021 EQUITY INCENTIVE
PLAN
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Summary of 2021
Plan
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Vote
Required
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PROPOSAL
3 – RATIFICATION OF APPOINTMENT OF AUDITORS
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Audit
Fees
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Pre-Approval
Policies
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Vote
Required
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ADDITIONAL
INFORMATION AND MATTERS
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35
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Stockholder
Proposals for 2022 Annual Meeting of Stockholders and 2022 Proxy
Materials
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Additional
Filings
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35
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Documents
Incorporated by Reference
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Other
Matters
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36
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Interest of
Certain Persons in or Opposition to Matters to Be Acted
Upon:
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Company Contact
Information
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TABLE OF APPENDIXES
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Appendix A
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PEDEVCO
Corp. 2021 Equity Incentive Plan (see proposal 2)
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PEDEVCO CORP.
PROXY STATEMENT
FOR 2021 VIRTUAL ANNUAL MEETING OF STOCKHOLDERS
PEDEVCO
Corp. (“PEDEVCO,”
“we,”
“us”,
“our”
or the “Company”) has made these
materials available to you on the Internet or, upon your request,
has delivered printed versions of these materials to you by mail,
in connection with the Company’s 2021 virtual annual meeting
of stockholders, which we refer to as our annual meeting, to be
held on Wednesday, September 1, 2021 at 10:00 a.m., Central time,
at https://agm.issuerdirect.com/ped
(please note this link is case
sensitive), and at any postponement(s) or adjournment(s)
thereof. These materials were first sent or given to stockholders
on July 20, 2021. You are invited to attend the virtual annual
meeting and are requested to vote on the proposals described in
this Proxy Statement.
The
information in this proxy statement relates to the proposals to be
voted on at the annual meeting, the voting process, the
compensation of our directors and executive officers, corporate
governance, and certain other required information. Included with
this proxy statement is a copy of the Company’s Annual Report on Form
10-K for the year ended December 31, 2020, as filed with the
SEC on March 23, 2021, which we refer to as the 2020 annual report.
If you requested printed versions of these materials by mail, these
materials also include the proxy card or vote instruction form for
the annual meeting.
Pursuant to rules
adopted by the SEC, the Company uses the Internet as the primary
means of furnishing proxy materials to stockholders. Accordingly,
the Company is sending a Notice of Internet Availability of Proxy
Materials, which we refer to as the notice, to the Company’s
stockholders. All stockholders will have the ability to access the
proxy materials (including the Company’s Annual Report on
Form 10-K, which does not constitute a part of, and shall not be
deemed incorporated by reference into, this proxy statement or the
enclosed form of proxy) via the Internet at https://agm.issuerdirect.com/ped
or request a printed set of the proxy materials. Stockholders may also request materials at
www.iproxydirect.com/PED.
Instructions on how to access the proxy materials over the Internet
or to request a printed copy may be found in the notice. The notice
contains a Control ID and Request ID that you will need to vote
your shares and access the virtual annual meeting. Please keep the
notice for your reference through the meeting date. In addition,
stockholders may request to receive proxy materials in printed form
by mail or electronically by email on an ongoing basis. The Company
encourages stockholders to take advantage of the availability of
the proxy materials on the Internet to help reduce the
environmental impact of its annual meetings.
The
Company’s 2021 virtual annual meeting of stockholders will be
held on Wednesday, September 1, 2021 at 10:00 a.m., Central time.
The annual meeting will be a virtual meeting of stockholders, which
will be conducted via live audio webcast, accessible at
https://agm.issuerdirect.com/ped
(please note this link is case sensitive). Additional information
on how to access the virtual annual meeting can be found below
under “Attendance at the
Annual Meeting”.
Due to
the continuing significant public health impact of the coronavirus
pandemic (COVID-19), and to support and protect the health and
well-being of our officers, directors and stockholders, we have
decided that the annual meeting will be held in a virtual meeting
format only. You will not be able to attend the annual meeting
physically. The annual meeting will be held via an audio
teleconference. See also “Attendance at the
Annual Meeting” below.
Stockholders may
attend, vote and submit questions during the annual meeting via the
Internet by logging in at https://agm.issuerdirect.com/ped
with your Control ID and Request ID, and thereafter following the
instructions to join the virtual meeting. Questions will be relayed
to the meeting organizers and forwarded to the Chairman of the
meeting for review. Questions regarding matters to be acted upon at
the meeting will be answered after each matter has been presented,
as appropriate. Questions from stockholders not relating to
proposals will be grouped by topic with a representative question
read aloud and answered as time permits and to the extent such
questions do not relate to material non-public information,
off-topic items or other matters which the Chairman in his
discretion, believes should not be addressed at the annual
meeting.
Our
board of directors has fixed the close of business on July 6, 2021
as the record date for determining the holders of shares of our
voting stock entitled to receive notice of and to vote at our
annual meeting and any adjournments or postponements thereof. Only
holders of record of shares of common stock at the close of
business on that date will be entitled to vote at our annual
meeting and at any adjournment or postponement of that meeting. As
of the record date, there were 79,461,603 shares of common stock
outstanding and entitled to vote at our annual meeting, held by
approximately 689 holders of record.
Each
share of common stock is entitled to one vote on each proposal
presented at our annual meeting and at any adjournment or
postponement thereof, for 79,461,603 total voting shares.
Stockholders do not have the right to cumulate their votes in the
election of directors.
In
order for us to satisfy our quorum requirements, the holders of at
least 33 1/3% of our total number of outstanding voting shares
entitled to vote at the meeting must be present. You will be deemed
to be present if you attend the meeting or if you submit a proxy
(including through the mail, by fax or by telephone or the
Internet) that is received at or prior to the meeting (and not
revoked).
If your
proxy is properly executed and received by us in time to be voted
at our annual meeting, the shares represented by your proxy
(including those given through the mail, by fax or by telephone or
the Internet) will be voted in accordance with your instructions.
If you execute your proxy but do not provide us with any
instructions, your shares will be voted “FOR” the proposals set
forth in the notice of annual meeting.
The
only matters that we expect to be presented at our annual meeting
are set forth in the notice of annual meeting. If any other matters
properly come before our annual meeting, the persons named in the
proxy card will vote the shares represented by all properly
executed proxies on such matters in their best
judgment.
If you
are a stockholder of record, there are five ways to
vote:
● At
the meeting. You may vote your shares at the virtual annual
meeting. Instructions regarding how to vote will be provided when
you log into the meeting web site.
● Via
the Internet. You may vote by proxy via the Internet by
following the instructions provided in the notice.
● By
Telephone. If you request printed copies of the proxy
materials by mail, you may vote by proxy by calling the toll-free
number found on the proxy card.
● By
Fax. If you request printed copies of the proxy materials by
mail, you may vote by proxy by faxing your proxy to the number
found on the proxy card.
● By
Mail. If you request printed copies of the proxy materials
by mail, you may vote by proxy by filling out the proxy card and
returning it in the envelope provided.
The
presence of a stockholder at our annual meeting will not
automatically revoke that stockholder’s proxy. However, a
stockholder may revoke a proxy at any time prior to its exercise
by:
●
submitting a
written revocation prior to the annual meeting to the Corporate
Secretary, PEDEVCO Corp., 575 N. Dairy Ashford, Suite 210, Houston,
Texas 77079;
●
submitting another
signed and later dated proxy card and returning it by mail in time
to be received before our annual meeting or by submitting a later
dated proxy by the Internet or telephone prior to the annual
meeting; or
●
attending our
annual meeting and voting at the meeting through the web
portal.
Attendance at the
annual meeting is limited to holders of record of our common stock
at the close of business on the record date, July 6, 2021 and our
guests.
Stockholders of
record as of the record date may attend the annual meeting via the
Internet and may vote prior
to the meeting by logging in at https://agm.issuerdirect.com/ped
(please note this link is case sensitive) with your Control ID and
Request ID, and thereafter following the instructions to join
the virtual meeting. Stockholders participating in the annual
meeting will be able to listen only and will not be able to speak
during the webcast. However, in order to maintain the interactive
nature of the annual meeting, virtual attendees will be able
to:
●
vote
online via the annual meeting portal; and
●
submit
questions or comments to the Company’s officers during the
annual meeting via the online portal. Information on how to submit
questions will be provided at the time of the meeting once
stockholders login.
To the
best of our knowledge, the virtual annual meeting platform is fully
supported across browsers (Internet Explorer, Firefox, Chrome, and
Safari) and devices (desktops, laptops, tablets, and cell phones)
running the most updated version of applicable software and
plugins. Participants should ensure they have a strong Internet
connection wherever they intend to participate in the annual
meeting. Participants should also allow plenty of time to log in
and ensure that they can hear streaming audio prior to the start of
the annual meeting.
If
shares of our common stock are held on your behalf in a brokerage
account or by a bank or other nominee, you are considered to be the
beneficial owner of shares that are held in “street name”. As the
beneficial owner, you have the right to direct your broker, bank or
other nominee as to how to vote your shares in the manner provided
in the voting instructions you receive from your broker, bank or
other nominee. If you request a printed copy of our proxy materials
by mail, your broker, bank or other nominee will provide a voting
instruction form for you to use. Street name stockholders are also
invited to attend the virtual annual meeting, provided that such
stockholders must contact Emily Watson at proxy@issuerdirect.com
in advance of the virtual annual meeting, and prior to August 21,
2021, and present proof of their ownership of common stock, such as
a bank or brokerage account statement indicating that they owned
shares of common stock at the close of business on the record date,
in order to be issued a Control ID and Request ID in order to
access the virtual annual meeting. Additionally, because a street
name stockholder is not the stockholder of record, you may not vote
your shares of our common stock virtually at the annual meeting
unless you follow your broker, bank or other nominee’s
procedures for obtaining a legal proxy.
If you
encounter any difficulties accessing the virtual meeting during the
check-in or meeting time, please call the technical support number
that will be posted on the login page at https://agm.issuerdirect.com/ped
(please note this link is case sensitive).
The
Chairman of the meeting has broad responsibility and legal
authority to conduct the annual meeting in an orderly and timely
manner. Rules regarding the annual meeting and the procedure for
asking questions at the annual meeting will be posted at the web
portal located at https://agm.issuerdirect.com/ped
(please note this link is case sensitive), once you
login.
If you
vote at the annual meeting or by proxy at our annual meeting, you
will be counted for purposes of determining whether there is a
quorum at the meeting. Shares of our capital stock present in
person or by proxy at our annual meeting that are entitled to vote
will be counted for the purpose of determining whether there is a
quorum for the transaction of business at our annual meeting. Our
bylaws, as amended, provide that 33 1/3% of the outstanding shares
of our capital stock entitled to vote at the meeting, represented
in person or by proxy, constitutes a quorum at a meeting of our
stockholders.
Appointment of
directors. With respect to the election of directors
(proposal 1), under plurality voting, the four nominees receiving
the highest number of affirmative votes of our common stock will be
elected as directors to serve until the next annual meeting of
stockholders and until their successors are duly elected and
qualified.
Approval of the PEDEVCO
Corp. 2021 Equity Incentive Plan. The approval of the
PEDEVCO Corp. 2021 Equity Incentive Plan (proposal 2), requires the
affirmative vote of a majority of the shares present in person
or represented by proxy at the annual meeting and entitled to vote
on, and who voted for, against, or expressly abstained with respect
to, the proposal.
Ratification of independent
auditor. For the approval of the proposal to ratify the
appointment of Marcum LLP as our independent auditors for the
fiscal year ended December 31, 2021 (proposal 3), a majority of the
shares present in person or represented by proxy at the annual
meeting and entitled to vote on, and who voted for, against, or
expressly abstained with respect to, the proposal, must be voted
“FOR”
approval and adoption of such proposal in order for such proposal
to be approved and adopted, assuming a quorum is present at the
annual meeting.
A
broker “non-vote” occurs when a
nominee holding shares for a beneficial owner does not vote on a
particular proposal because the nominee does not have discretionary
voting power with respect to that item, and the broker has not
received voting instructions from the beneficial owner. If a broker
indicates on the proxy that it does not have discretionary
authority as to certain shares to vote on a particular matter,
those shares will not be considered as present and entitled to vote
with respect to that matter or proposal.
A
broker is entitled to vote shares held for a beneficial owner on
“routine” matters, such as
the ratification of the appointment of Marcum LLP as our
independent registered public accounting firm (proposal 3), without
instructions from the beneficial owner of those shares. On the
other hand, absent instructions from the beneficial owner of such
shares, a broker is not entitled to vote shares held for a
beneficial owner on certain “non-routine” matters,
which include all of the other proposals up for vote at the annual
meeting.
With
respect to the election of directors (proposal 1), under plurality
voting, broker non-votes and abstentions have no effect on
determining the nominees elected, except to the extent that they
affect the total votes received by any particular candidate. If you
hold your shares in street name and you do not instruct your broker
how to vote in the election of directors, the broker will not vote
your shares in the director election.
With respect to the proposal to approve the
PEDEVCO Corp. 2021 Equity Incentive Plan (proposal 2),
broker non-votes and abstentions could prevent the proposal from
receiving the affirmative vote of a majority of the shares present
in person or represented by proxy at the annual meeting and
entitled to vote on, and who voted for, against, or expressly
abstained with respect to, such proposal.
Abstaining shares
will be considered present at the annual meeting and
“entitled to
vote” on the applicable provisions so that the effect
of abstentions will be the equivalent of a vote “AGAINST” each applicable
proposal. With respect to broker non-votes, the shares subject to a
broker non-vote will not be considered present at the annual
meeting for each proposal, since they are not “entitled to vote” on such
proposals, so broker non-votes will have the practical effect of
reducing the number of affirmative votes required to achieve a
majority vote of the shares present in person or represented by
proxy at the annual meeting and entitled to vote on such applicable
proposals, by reducing the total number of shares from which the
majority is calculated.
Our
board of directors recommends that you vote your
shares:
● “FOR”
election of all four director nominees to the board of directors,
each to serve a term of one year and until their respective
successors have been elected and qualified, or until their earlier
resignation or removal (proposal 1);
● “FOR”
approval of the PEDEVCO Corp. 2021 Equity Incentive Plan (proposal
2); and
● “FOR”
ratification of the appointment of Marcum LLP, as our independent
auditors for the fiscal year ending December 31, 2021 (proposal
3).
In
addition to solicitation by use of the mails, certain of our
officers and employees may solicit the return of proxies personally
or by telephone, electronic mail or facsimile. We have not and do
not anticipate retaining a third-party proxy solicitation firm to
solicit proxies on behalf of the board of directors. The cost of
any solicitation of proxies will be borne by us. Arrangements may
also be made with brokerage firms and other custodians, nominees
and fiduciaries for the forwarding of material to, and solicitation
of proxies from, the beneficial owners of our securities held of
record at the close of business on the record date by such persons.
We will reimburse such brokerage firms, custodians, nominees and
fiduciaries for the reasonable out-of-pocket expenses incurred by
them in connection with any such activities.
It is
anticipated that representatives of Issuer Direct Corporation will
tabulate the votes and act as inspector of election at the Annual
Meeting.
A
complete list of stockholders entitled to vote at the annual
meeting will be available for examination at our principal
executive offices (575 N. Dairy Ashford, Suite 210, Houston, Texas
77079), for any purpose germane to the annual meeting, during
ordinary business hours, for a period of ten days prior to the
annual meeting. The list of stockholders will also be
available during the annual meeting through the annual meeting
website (https://agm.issuerdirect.com/ped
(please note this link is case sensitive)) for those stockholders
who choose to attend. Stockholders
may also vote prior to the meeting at www.iproxydirect.com/PED.
You will need your Control ID in order to access the virtual annual
meeting and review the list of stockholders.
Your
vote is very important. Whether or not you plan to attend the
annual meeting, we encourage you to read this proxy statement and
submit your proxy or voting instructions as soon as possible. For
specific instructions on how to vote your shares, please refer to
the instructions on the Notice of Internet Availability of Proxy
Materials you received in the mail, or, if you requested to receive
printed proxy materials, your enclosed proxy card.
Independent
inspectors count the votes. Your individual vote is kept
confidential from us unless special circumstances exist. For
example, a copy of your proxy card will be sent to us if you write
comments on the card, as necessary to meet applicable legal
requirements, or to assert or defend claims for or against the
Company.
If on
the record date your shares were registered in your name with our
transfer agent, then you are a stockholder of record and you may
vote in person at the meeting, by proxy or by any other means
supported by us. If on the record date your shares were held in an
account at a brokerage firm, bank, dealer, or other similar
organization, then you are the beneficial owner of shares held in
“street
name” and the proxy statement is required to be
forwarded to you by that organization. The organization holding
your account is considered the stockholder of record for purposes
of voting at the annual meeting. As a beneficial owner, you have
the right to direct your broker or other agent on how to vote the
shares in your account. You are also invited to attend the virtual
annual meeting. However, since you are not the stockholder of
record, you may not vote your shares in person at the meeting
unless you request and obtain a valid proxy from your broker or
other agent. Additionally, you must contact Emily Watson at
proxy@issuerdirect.com in advance of the virtual annual meeting and
present proof of your ownership of common stock, such as a bank or
brokerage account statement indicating that you owned shares of
common stock at the close of business on the record date, in order
to be issued a Control ID and Request ID in order to access the
virtual annual meeting.
In some
cases, one copy of this proxy statement and the accompanying notice
of annual meeting of stockholders, and 2020 annual report, is being
delivered to multiple stockholders sharing an address, at the
request of such stockholders. We will deliver promptly, upon
written or oral request, a separate copy of this proxy statement or
the accompanying notice of annual meeting of stockholders, and 2020
annual report, to such a stockholder at a shared address to which a
single copy of the document was delivered. Stockholders sharing an
address may also submit requests for delivery of a single copy of
this proxy statement or the accompanying notice of annual meeting
of stockholders, and 2020 annual report, but in such event will
still receive separate forms of proxy for each account. To request
separate or single delivery of these materials now or in the
future, a stockholder may submit a written request to our Corporate
Secretary, Clark R. Moore, at our principal executive offices at
575 N. Dairy Ashford, Suite 210, Houston, Texas 77079, or a
stockholder may make a request by calling our Corporate Secretary,
Clark R. Moore at (713) 221-1768.
If you
receive more than one notice, it means that your shares are
registered differently and are held in more than one account. To
ensure that all shares are voted, please either vote each account
as discussed above under “Voting
Process”, or sign and return by mail all proxy
cards or voting instruction forms.
The
final voting results will be tallied by the inspector of voting and
published in our Current Report on Form 8-K, which we are required
to file with the SEC within four business days following the annual
meeting.
The
mailing address of our principal executive offices is 575 N. Dairy
Ashford, Suite 210, Houston, Texas 77079.
This
proxy statement contains forward-looking statements. All statements
contained in this proxy statement other than statements of
historical fact, including statements regarding our future results
of operations and financial position, our business strategy and
plans, and our objectives for future operations, are
forward-looking statements. The words “believe,”
“may,”
“will,”
“estimate,”
“continue,”
“anticipate,”
“intend,”
“expect,” and similar
expressions are intended to identify forward-looking statements. We
have based these forward-looking statements largely on our current
expectations and projections about future events and trends that we
believe may affect our financial condition, results of operations,
business strategy, short-term and long-term business operations and
objectives, and financial needs. These forward-looking statements
are subject to a number of risks, uncertainties, and assumptions,
including those described in our Annual Report on Form 10-K for the
year ended December 31, 2020. Moreover, we operate in a very
competitive and rapidly changing environment. New risks emerge from
time to time. It is not possible for our management to predict all
risks, nor can we assess the impact of all factors on our business
or the extent to which any factor, or combination of factors, may
cause actual results to differ materially from those contained in
any forward-looking statements we may make. In light of these
risks, uncertainties, and assumptions, the future events and trends
discussed in this proxy statement may not occur and actual results
could differ materially and adversely from those anticipated or
implied in the forward-looking statements. We undertake no
obligation to revise or publicly release the results of any
revision to these forward-looking statements, except as required by
law. Given these risks and uncertainties, readers are cautioned not
to place undue reliance on such forward-looking
statements.
The
content of the websites referred to in this proxy statement are not
deemed to be part of, and are not incorporated by reference into,
this proxy statement.
To the extent that this proxy statement has been
or will be specifically incorporated by reference into any other
filing of the Company under the Securities Act of 1933, as amended,
or the Securities Exchange Act of 1934, as amended (the
“Exchange
Act”), the section of
this proxy statement titled “Audit Committee
Report” (to the extent
permitted by the rules of the U.S. Securities and Exchange
Commission (the “SEC” or the “Commission”))
shall not be deemed to be so incorporated, unless specifically
provided otherwise in such filing.
Holders
of record of our common stock at the close of business on the
record date, July 6, 2021, will be entitled to one vote per share
on all matters properly presented at the annual meeting and at any
adjournment or postponement thereof. As of the record date, there
were 79,461,603 shares of common stock outstanding and entitled to
vote at the annual meeting and at any adjournment or postponement
thereof, held by approximately 689 holders of record. Each share of
common stock is entitled to one vote on each proposal presented at
our annual meeting, for 79,461,603 total voting
shares.
Our
stockholders do not have dissenters’ rights or similar rights
of appraisal with respect to the proposals described herein and,
moreover, do not have cumulative voting rights with respect to the
election of directors.
The
following table sets forth, as of the record date, July 6, 2021,
the number and percentage of outstanding shares of our common stock
beneficially owned by: (a) each person who is known by us to be the
beneficial owner of more than 5% of our outstanding shares of
common stock; (b) each of our directors; (c) our executive officers
(including where applicable, former executive officers who are
Named Executive Officers as defined below under “Executive
Compensation—Summary Compensation Table”);
and (d) all current directors, our director nominees and executive
officers, as a group. As of the record date, there were 79,461,603 shares of common stock and no shares of
Series A Convertible Preferred Stock issued and
outstanding.
Beneficial
ownership has been determined in accordance with Rule 13d-3 under
the Exchange Act of 1934, as amended, which we refer to as the
Exchange Act. Under this rule, certain shares may be deemed to be
beneficially owned by more than one person (if, for example,
persons share the power to vote or the power to dispose of the
shares). In addition, shares are deemed to be beneficially owned by
a person if the person has the right to acquire shares (for
example, upon exercise of an option or warrant or upon conversion
of a convertible security) within 60 days of the date as of which
the information is provided. In computing the percentage ownership
of any person, the amount of shares is deemed to include the amount
of shares beneficially owned by such person by reason of such
acquisition rights. As a result, the percentage of outstanding
shares of any person as shown in the following table does not
necessarily reflect the person’s actual voting power at any
particular date.
To
our knowledge, except as indicated in the footnotes to this table
and pursuant to applicable community property laws, the persons
named in the table have sole voting and investment power with
respect to all shares of common stock shown as beneficially owned
by them.
Beneficial ownership as set forth below is based on our review of
our record stockholders list and public ownership reports filed by
certain stockholders of the Company, and may not include certain
securities held in brokerage accounts or beneficially owned by the
stockholders described below.
|
|
Common Stock
|
|
|
|
Number of Common Stock
Shares Beneficially Owned (1)
|
Percent of Common Stock (1)
|
|
Named Executive Officers and Directors
|
|
|
|
Simon
G. Kukes (2)
|
54,066,368
|
68.0%
|
|
J.
Douglas Schick (3)
|
472,400
|
*
|
|
Clark
R. Moore (4)
|
462,763
|
*
|
|
Ivar
Siem (5)
|
307,100
|
*
|
|
John
J. Scelfo (6)
|
269,500
|
*
|
|
H.
Douglas Evans (7)
|
250,000
|
*
|
|
Paul
A. Pinkston (8)
|
240,000
|
*
|
|
All Named Executive Officers and Directors as a group (seven
persons)
|
56,032,131
|
70.3%
|
|
|
|
|
|
Greater than 5% Stockholders
|
|
|
|
SK
Energy, LLC (9)
|
51,791,325
|
65.2%
|
|
Viktor
Tkachev (10)
|
7,846,000
|
9.9%
|
*Less than 1%.
Unless otherwise stated, the address of each stockholder is c/o
PEDEVCO Corp., 575 N. Dairy Ashford, Suite 210, Houston, Texas
77079.
(1) Ownership voting percentages are based on 79,461,603 total
shares of common stock which were outstanding as of July 6,
2021.
(2) Consisting of the
following: (a) 51,791,325 shares of common stock held by SK
Energy LLC, an entity which Simon G. Kukes is deemed to
beneficially own; (b) 1,527,043 shares of fully-vested common
stock held by Simon Kukes; (c) 740,000 unvested shares of
common stock held by Simon Kukes, 100,000 of which vest on December
12, 2021, 170,000 of which vest on each of January 13, 2022 and
January 13, 2023, and 100,000 of which vest on each of January 19,
2022, January 19, 2023 and January 19, 2024 provided that Simon
Kukes remains employed by us, or is a consultant to us, on such
vesting dates; (d) 2,000 shares of fully-vested common stock
held by the spouse of Simon Kukes; (e) 1,000 unvested shares of
common stock held by the spouse of Simon Kukes, which vest on
December 12, 2021, provided that his spouse remains an employee of,
or consultant to, the Company on such vesting date; and (f) options
to purchase 5,000 of common stock exercisable by the spouse of
Simon Kukes at an exercise price of $1.68 per share. Simon Kukes
has voting control over his unvested shares of common
stock.
(3) Consisting of the following: (a) 77,066 shares of
fully-vested common stock held by Mr. Schick; and (b) 395,334
unvested shares of common stock held by Mr. Schick, 37,334 of which
vest on December 12, 2021, 54,000 which vest on each of January 13,
2022 and January 13, 2023, and 83,333 which vests on each of
January 19, 2022 and January 19, 2023, and 83,334 which vest on
January 19, 2024, in each case provided that Mr. Schick remains
employed by us, or is a consultant to us, on such vesting dates.
Mr. Schick has voting control over his unvested shares of common
stock.
(4) Consisting of the following: (a) 25,562 fully-vested
shares of common stock held by Mr. Moore; (b) 2,867
fully-vested shares of common stock held by Mr. Moore’s minor
child, which he is deemed to beneficially own; (c) 375,000
unvested shares of common stock held by Mr. Moore, 17,000 of which
vest on December 12, 2021, 54,000 of which vest on each of January
13, 2022 and January 13, 2023, and 83,333 of which vest on each of
January 19, 2022 and January 19, 2023, and 83,334 which vests on
January 19, 2024, in each case provided that Mr. Moore remains
employed by us, or is a consultant to us, on such vesting dates;
and (d) options to purchase 23,334 shares of common stock
exercisable by Mr. Moore at an exercise price of $5.10 per share.
Mr. Moore has voting control over his unvested shares of common
stock.
(5) Consisting of the following: (a) 187,100 shares of common
stock held by American Resources Offshore Inc., which shares Mr.
Siem is deemed to beneficially own (Mr. Siem disclaims beneficial
ownership of the securities held by American Resources Offshore
Inc., except to the extent of his pecuniary interest therein);
(b) 50,000 fully-vested shares of common stock held by Mr.
Siem; and (c) 70,000 unvested shares of PEDEVCO Common Stock
held by Mr. Siem, which vest on July 12, 2021, provided that Mr.
Siem remains a director, employee of, or consultant to PEDEVCO on
such vesting date. Mr. Siem has voting control over his unvested
shares of PEDEVCO Common Stock.
(6) Consisting of the following: (a) 49,500 shares of
fully-vested common stock held by Mr. Scelfo; (b) 100,000
unvested shares of common stock, which vest on July 12, 2021,
provided that Mr. Scelfo remains a director, employee of, or
consultant to the Company on such vesting date; and
(c) options to purchase 120,000 shares of common stock
exercisable by Mr. Scelfo at an exercise price of $2.19 per share.
Mr. Scelfo has voting control over his unvested shares of common
stock.
(7) Consisting of the following: (a) 80,000 shares of
fully-vested common stock held by Mr. Evans; (b) 70,000
unvested shares of common stock, which vest on September 27, 2021,
provided that Mr. Evans remains a director, employee of, or
consultant to the Company on such vesting date; and
(c) options to purchase 100,000 shares of common stock
exercisable by Mr. Evans at an exercise price of $2.19 per share.
Mr. Evans has voting control over his unvested shares of common
stock.
(8) Consisting of the following: (a) 40,000 shares of
fully-vested common stock held by Mr. Pinkston; and
(b) 200,000 unvested shares of common stock, 30,000 of which
vest on each of January 13, 2022 and January 13, 2023, and 46,666
of which vest on of January 19, 2022, and 46,667 of which vest on
each of January 22, 2023 and January 19, 2024, in each case
provided that Mr. Pinkston remains employed by us, or is a
consultant to us, on such vesting dates. Mr. Pinkston has voting
control over his unvested shares of common stock.
(9) Consisting of 51,791,325 shares of common stock held by SK
Energy LLC, an entity which Simon G. Kukes is deemed to
beneficially own due to his position as the Chief Executive Officer
and 100% owner of SK Energy.
(10) Consisting of 7,846,000 shares of common stock held by Mr.
Tkachev. The information presented with respect to the
holder’s beneficial ownership is based solely on the
Company’s record stockholder list and securities which the
holder beneficially owns, to the best of the Company’s
knowledge, which information has not been independently verified or
confirmed. Address: Arhitektora Vlasova Street 22, Apt
93, Moscow, Russia 117393.
The
Company is not currently aware of any arrangements which may at a
subsequent date result in a change of control of the
Company.
We
promote accountability for adherence to honest and ethical conduct;
endeavor to provide full, fair, accurate, timely and understandable
disclosure in reports and documents that we file with the SEC and
in other public communications made by us; and strive to be
compliant with applicable governmental laws, rules and
regulations.
Information
regarding the members of and biographical information of our board
of directors is provided below under “Proposal 1- Election
of Directors”, beginning on page
25.
Our board of directors has the responsibility for
selecting our appropriate leadership structure. In making
leadership structure determinations, the board of directors
considers many factors, including the specific needs of our
business and what is in the best interests of our stockholders. Our
current leadership structure is comprised of a separate Chairman of
the board of directors and Chief Executive Officer
(“CEO”). Mr. John J. Scelfo serves as
Chairman and Mr. Simon Kukes serves as CEO. The board of directors
does not have a policy as to whether the Chairman should be an
independent director, an affiliated director, or a member of
management. Our board of directors believes that the
Company’s current leadership structure is appropriate because
it effectively allocates authority, responsibility, and oversight
between management (the Company’s CEO, Simon Kukes) and
the members of our board of directors. It does this by giving
primary responsibility for the operational leadership and strategic
direction of the Company to its CEO, while enabling our Chairman to
facilitate our board of directors’ oversight of management,
promote communication between management and our board of
directors, and support our board of directors’ consideration
of key governance matters. The board of directors believes that its
programs for overseeing risk, as described below, would be
effective under a variety of leadership frameworks and therefore do
not materially affect its choice of
structure.
Effective
risk oversight is an important priority of the board of directors.
Because risks are considered in virtually every business decision,
the board of directors discusses risk throughout the year generally
or in connection with specific proposed actions. The board of
directors’ approach to risk oversight includes understanding
the critical risks in our business and strategy, evaluating our
risk management processes, allocating responsibilities for risk
oversight among the full board of directors, and fostering an
appropriate culture of integrity and compliance with legal
responsibilities.
The board of directors exercises direct oversight
of strategic risks to us. Our Audit Committee reviews and assesses
our processes to manage business and financial risk and financial
reporting risk. It also reviews our policies for risk assessment
and assesses steps management has taken to control significant
risks. Our Compensation Committee oversees risks relating to
compensation programs and policies. In each case management
periodically reports to our board of directors or the relevant
committee, which provides the relevant oversight on risk assessment
and mitigation (the Company’s committees are described
in greater detail below under “Committees of the
Board”, beginning on page 10).
None of
our directors are related by blood, marriage, or adoption to any
other director, executive officer, or other key
employees.
Other
than Mr. Siem, who currently serves on the Board of Directors of
Petrolia Energy Corporation, (OTCQB: BBLS), no directors of the
Company are also directors of issuers with a class of securities
registered under Section 12 of the Exchange Act (or which otherwise
are required to file periodic reports under the Exchange
Act).
There is no arrangement or understanding between
our directors and executive officers and any other person pursuant
to which any director or officer was or is to be selected as a
director or officer, and there is no arrangement, plan or
understanding as to whether non-management stockholders will
exercise their voting rights to continue to elect the current board
of directors. There are also no
arrangements, agreements or understandings to our knowledge between
non-management stockholders that may directly or indirectly
participate in or influence the management of our
affairs.
To the best of our knowledge, during the past
ten years, none of our directors or executive officers were
involved in any of the following: (1) any bankruptcy
petition filed by or against any business of which such person was
a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that time; (2) any
conviction in a criminal proceeding or being a named subject
to a pending criminal proceeding (excluding traffic violations and
other minor offenses); (3) being subject to any order,
judgment, or decree, not subsequently reversed, suspended or
vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining, barring, suspending or otherwise limiting
his involvement in any type of business, securities or banking
activities; (4) being found by a court of competent
jurisdiction (in a civil action), the SEC or the Commodities
Futures Trading Commission to have violated a federal or state
securities or commodities law; (5) being the subject of, or a
party to, any Federal or State judicial or administrative order,
judgment, decree, or finding, not subsequently reversed, suspended
or vacated, relating to an alleged violation of (i) any
Federal or State securities or commodities law or regulation;
(ii) any law or regulation respecting financial institutions
or insurance companies including, but not limited to, a temporary
or permanent injunction, order of disgorgement or restitution,
civil money penalty or temporary or permanent cease-and-desist
order, or removal or prohibition order; or (iii) any law or
regulation prohibiting mail or wire fraud or fraud in connection
with any business entity; or (6) being the subject of, or a
party to, any sanction or order, not subsequently reversed,
suspended or vacated, of any self-regulatory organization (as
defined in Section 3(a)(26) of the Exchange Act), any
registered entity (as defined in Section 1(a)(29) of the
Commodity Exchange Act), or any equivalent exchange, association,
entity or organization that has disciplinary authority over its
members or persons associated with a
member.
During the fiscal year
that ended on December 31, 2020, the Board held eleven meetings and
took various other actions via the unanimous written consent of the
board of directors and the various committees described above. All
directors attended all of the board of directors’ meetings
and committee meetings relating to the committees on which each
director served during fiscal year 2020. The Company held annual
stockholders meetings on June 26, 2014, October 7, 2015, December
28, 2016, December 28, 2017, September 27, 2018, August 28, 2019
and August 27, 2020, at which meetings all directors were present
in person or via teleconference/web. Each director of the Company
is expected to be present at annual meetings of stockholders,
absent exigent circumstances that prevent their attendance. Where a
director is unable to attend an annual meeting in person but is
able to do so by electronic conferencing, the Company will arrange
for the director’s participation by means where the director
can hear, and be heard, by those present at the
meeting.
Committees of the Board
We
currently maintain a Nominating and Corporate Governance Committee,
Compensation Committee and Audit Committee which have the following
committee members: The committees
of the board of directors consist of the following members as of
the date of this filing:
|
Director
|
Audit Committee
|
Compensation Committee
|
Nominating and Corporate Governance Committee
|
Independent
|
|
Simon
Kukes
|
|
|
|
|
|
Ivar
Siem
|
|
|
|
|
|
John
J. Scelfo (1)
|
C
|
C
|
M
|
X
|
|
H.
Douglas Evans
|
M
|
M
|
C
|
X
|
C - Chairman of Committee.
M – Member.
(1) – Chairman of the board of directors.
Each of these committees has the duties described
below and operates under a charter that has been approved by our
board of directors and is posted on our website. Our website
address is http://www.PEDEVCO.com.
The audit committee’s duties include (A)
assisting the Board with oversight of (1) the integrity of the
Company’s financial statements, (2) compliance with
applicable laws, rules and regulations regarding the public
reporting of financial information, including financial information
in periodic reports filed with the SEC, (3) the selection,
qualifications, independence and performance of the Company’s
independent registered public accounting firm, and (4) the
performance of the Company’s internal audit function and
controls; (B) reviewing the Company’s annual audited
financial statements and quarterly financial statements, including
the notes to such financial statements, the draft annual audit
report and the accompanying “management’s
discussion and analysis of financial condition and results of
operations” with
management and the independent registered public accounting firm
prior to filing such financial statements with the SEC; and (C)
establishing procedures for (1) the receipt, retention and
treatment of complaints received by the Company regarding
accounting, internal accounting controls or auditing matters and
(2) the confidential, anonymous submission by the Company’s
employees of concerns regarding questionable accounting or auditing
matters.
Mr. Scelfo serves as Chair of the Audit Committee
and our board of directors has determined that Mr. Scelfo is an
“audit committee
financial expert” as
defined under Item 407(d)(5) of Regulation S-K of the Exchange
Act.
During
the year ended December 31, 2020, the audit committee held four
meetings.
The compensation committee’s duties
include reviewing annually and
approving the corporate objectives relevant to the compensation of
all officers of the Company, including the Chief Executive Officer;
reviewing annually and determining, or recommending to the Board
for determination, the salary, bonus and other non-equity based
elements of total compensation for each officer; reviewing
annually, determining and awarding to officers any stock option
grants and other discretionary awards under the Company’s
stock option or other equity incentive plans that the Committee
believes are appropriate; approving (or recommend to the Board for
determination) all special perquisites, special cash payments and
other special compensation and benefit arrangements for officers;
considering the results of the most recent “say-on-pay”
vote; reviewing and discussing with the Company’s management
the discussion of the Company’s compensation policies as set
forth in annual reports and proxy statements; reviewing and
recommending to the Board for determination, the compensation for
non-employee directors; administering the Company’s equity
incentive plans; and approving severance agreements. Mr.
Scelfo serves as Chair of the compensation
committee.
During
the year ended December 31, 2020, the compensation committee held
three meetings.
The
current members of the compensation committee are Messrs. John J.
Scelfo (Chairman) and H. Douglas Evans, who are each independent
members of our board of directors. No member of the compensation
committee is an employee or a former employee of the Company.
During fiscal 2020, none of our executive officers served on the
compensation committee (or its equivalent) or board of directors of
another entity whose executive officer served on our Compensation
Committee. Accordingly, the compensation committee members have no
interlocking relationships required to be disclosed under SEC rules
and regulations.
The
nominating and corporate governance committee assists our board of
directors in fulfilling its responsibilities by: identifying and
approving individuals qualified to serve as members of our board of
directors, selecting director nominees for our annual meetings of
stockholders, evaluating the performance of our board of directors,
and developing and recommending to our board of directors corporate
governance guidelines and oversight procedures with respect to
corporate governance and ethical conduct. Mr.
Scelfo serves as Chair of the nominating and corporate
governance committee.
In
considering individual director nominees and Board committee
appointments, our nominating and corporate governance committee
seeks to achieve a balance of knowledge, experience and capability
on the Board and Board committees and to identify individuals who
can effectively assist the Company in achieving our short-term and
long-term goals, protecting our stockholders’ interests and
creating and enhancing value for our stockholders. In so doing, the
nominating and corporate governance committee considers a
person’s diversity attributes (e.g., professional
experiences, skills, background, race and gender) as a whole and
does not necessarily attribute any greater weight to one attribute.
Moreover, diversity in professional experience, skills and
background, and diversity in race and gender, are just a few of the
attributes that the nominating and corporate governance committee
takes into account.
The
nominating and governance committee of the board of directors
considers nominees for director based upon a number of
qualifications, including their personal and professional
integrity, ability, judgment, and effectiveness in serving the
long-term interests of our stockholders. There are no specific,
minimum or absolute criteria for membership on the board of
directors. The committee makes every effort to ensure that the
board of directors and its committees include at least the required
number of independent directors, as that term is defined by
applicable standards promulgated by the
NYSE American and/or the SEC.
While there are no specific minimum requirements that the
nominating and corporate governance committee believes must be met
by a prospective director nominee, the nominating and corporate
governance committee does believe that director nominees should
possess personal and professional integrity, have good business
judgment, have relevant experience and skills, and be willing and
able to commit the necessary time for Board and Board committee
service. The Company does not have a formal diversity policy.
However, the nominating and corporate governance committee
evaluates each individual in the context of the Board as a whole,
with the objective of recommending individuals that can best
perpetuate the success of our business and represent stockholder
interests through the exercise of sound business judgment using
their diversity of experience in various areas. We believe our
current directors possess diverse professional experiences, skills
and backgrounds, in addition to (among other characteristics) high
standards of personal and professional ethics, proven records of
success in their respective fields and valuable knowledge of our
business and our industry.
The
nominating and corporate governance committee uses a variety of
methods for identifying and evaluating director nominees. The
nominating and corporate governance committee also regularly
assesses the appropriate size of the Board and whether any
vacancies on the Board are expected due to retirement or other
circumstances. In addition, the nominating and corporate governance
committee considers, from time to time, various potential
candidates for directorships. Candidates may come to the attention
of the nominating and corporate governance committee through
current Board members, professional search firms, stockholders or
other persons. These candidates may be evaluated at regular or
special meetings of the nominating and corporate governance
committee and may be considered at any point during the year. The
nominating and governance committee may use its network of contacts
to compile a list of potential candidates. The nominating and
governance committee has not in the past relied upon professional
search firms to identify director nominees but may engage such
firms if so desired. The nominating and governance committee may
meet to discuss and consider candidates’ qualifications and
then choose a candidate by majority vote.
The
committee evaluates director nominees at regular or special
committee meetings pursuant to the criteria described above and
reviews qualified director nominees with the Board. The committee
selects nominees that best suit the Board’s current needs and
recommends one or more of such individuals for election to the
Board.
The nominating and governance committee will
consider qualified director candidates recommended in good faith
by stockholders, provided those
nominees meet the requirements of NYSE American and
applicable federal securities law. The nominating and governance
committee’s evaluation of candidates recommended by
stockholders does not differ
materially from its evaluation of candidates recommended from other
sources. The Committee will consider candidates recommended
by stockholders if the
information relating to such candidates are properly submitted in
writing to the Secretary of the Company in accordance with the
manner described for stockholder proposals under “Stockholder Proposals
for 2022 Annual Meeting of Stockholders and 2022 Proxy
Materials” on
page 35
below. Individuals recommended by
stockholders in accordance with these procedures will receive the
same consideration received by individuals identified to the
Committee through other means.
During
the year ended December 31, 2020, the nominating and corporate
governance committee held one meeting.
Our
board of directors and each of its committees may retain outside
advisors, legal counsel, and consultants of their choosing at our
expense. The board of directors and its committees need not obtain
management’s consent to retain such outside advisors, legal
counsel, and consultants.
Because
Mr. Kukes controls a majority of our outstanding voting power, we
are a “controlled
company” under the corporate governance rules of The
NYSE American. Therefore, we are not required to have a majority of
our board of directors be independent, nor are we required to have
a compensation committee or an independent nominating function. We
have nevertheless opted to have a majority of our board of
directors be independent and to have a compensation, nominating and
governance committee comprised of independent directors, as more
fully described herein.
Our stockholders and other interested parties may
communicate with members of the board of directors by submitting
such communications in writing to our Corporate Secretary, 575 N.
Dairy Ashford, Suite 210, Houston, Texas 77079 who, upon receipt of
any communication other than one that is clearly marked
“Confidential,”
will note the date the communication was received, open the
communication, make a copy of it for our files and promptly forward
the communication to the director(s) to whom it is addressed.
Upon receipt of any communication that is clearly marked
“Confidential,”
our Corporate Secretary will not open the communication, but will
note the date the communication was received and promptly forward
the communication to the director(s) to whom it is addressed.
If the correspondence is not addressed to any particular board
member or members, the communication will be forwarded to a board
member to bring to the attention of the board of
directors.
The
independent members of our board of directors meet in executive
session (with no management directors or management
present) from time to time. The executive sessions include
whatever topics the independent directors deem
appropriate.
The
board of directors annually determines the independence of each
director and nominee for election as a director. The Board makes
these determinations in accordance with the NYSE American’s
listing standards for the independence of directors and the
SEC’s rules.
In
assessing director independence, the Board considers, among other
matters, the nature and extent of any business relationships,
including transactions conducted, between the Company and each
director and between the Company and any organization for which one
of our directors is a director or executive officer or with which
one of our directors is otherwise affiliated.
Our
board of directors has determined that Mr. Scelfo and Mr. Evans are
independent directors as defined in the NYSE American rules
governing members of boards of directors and as defined under Rule
10A-3 of the Exchange Act. Accordingly, 50% of the members of our
board of directors are independent as defined in the NYSE American
rules governing members of boards of directors and as defined under
Rule 10A-3 of the Exchange Act.
The charters of the Audit Committee, Compensation Committee and
Nominating and Corporate Governance Committee and our Code of
Business Conducts and Ethics can be found on our website at
https://pedevco.com/ped/corporate_governance.
Unless specifically stated herein, documents and information on our
website are not incorporated by reference in this proxy
statement.
All
employees, officers and directors of, and consultants and
contractors to, us or any of our subsidiaries are subject to our
Insider Trading Policy. The policy prohibits the unauthorized
disclosure of any nonpublic information acquired in the workplace
and the misuse of material nonpublic information in securities
trading. The policy also includes specific anti-hedging
provisions.
To ensure compliance with the policy and
applicable federal and state securities laws, all individuals
subject to the policy must refrain from the purchase or sale of our
securities except in designated trading windows or pursuant to
preapproved 10b5-1 trading plans. Even during a trading window
period, certain identified insiders, which include the named
executive officers and directors, must comply with our designated
pre-clearance policy prior to trading in our securities. The
anti-hedging provisions prohibit all employees, officers and
directors from engaging in “short
sales” of our securities
or from trading in options with maturities less than nine months on
our stock.
Our
executive officers and directors are encouraged to conduct purchase
or sale transactions under a trading plan established pursuant to
Rule 10b5-1 under the Exchange Act. Through a Rule 10b5-1 trading
plan, the executive officer or director contracts with a broker to
buy or sell shares of our common stock on a periodic basis. The
broker then executes trades pursuant to parameters established by
the executive officer or director when entering into the plan,
without further direction from them. The executive officer or
director may amend or terminate the plan in specified
circumstances.
The Company does not have a policy on equity
ownership at this time. However, as illustrated in the
“Security Ownership of
Management and Certain Beneficial Owners” table beginning on page 7, all Named Executive Officers and
directors are beneficial owners of stock of the
Company.
Under
the Sarbanes–Oxley Act of 2002 (the “Sarbanes-Oxley Act”), in
the event of misconduct that results in a financial restatement
that would have reduced a previously paid incentive amount, we can
recoup those improper payments from our Chief Executive Officer and
Chief Accounting Officer. We plan to implement a claw back policy
in the future, although we have not yet implemented such
policy.
In 2012, in accordance with SEC rules, our board
of directors adopted a Code of Business Conduct and Ethics for our
directors, officers and employees. Our board of directors believes
that these individuals must set an exemplary standard of conduct.
This code sets forth ethical standards to which these persons must
adhere and other aspects of accounting, auditing and financial
compliance, as applicable. The Code of Business Conduct and Ethics
is available on our website at www.PEDEVCO.com.
We intend to disclose any amendments to our Code
of Business Conduct and Ethics and any waivers with respect to our
Code of Business Conduct and Ethics granted to our principal
executive officer, our principal financial officer, or any of our
other employees performing similar functions on our website at
www.PEDEVCO.com, within four
business days after the amendment or waiver. In such case, the
disclosure regarding the amendment or waiver will remain available
on our website for at least 12 months after the initial
disclosure. There have been no waivers granted with respect to our
Code of Business Conduct and Ethics to any such officers or
employees to date.
The following report of the Audit Committee does not constitute
soliciting materials and should not be deemed filed or incorporated
by reference into any other Company filing under the Securities Act
of 1933, as amended, or the Exchange Act, except to the extent we
specifically incorporate such report by reference
therein.
The
Audit Committee represents and assists the board of directors in
fulfilling its responsibilities for general oversight of the
integrity of the Company’s financial statements, the
Company’s compliance with legal and regulatory requirements,
the independent registered public accounting firm’s
qualifications and independence, the performance of the
Company’s internal audit function and independent registered
public accounting firm, and risk assessment and risk management.
The Audit Committee manages the Company’s relationship with
its independent registered public accounting firm (which reports
directly to the Audit Committee). The Audit Committee has the
authority to obtain advice and assistance from outside legal,
accounting or other advisors as the Audit Committee deems necessary
to carry out its duties and receives appropriate funding, as
determined by the Audit Committee, from the Company for such advice
and assistance.
In connection with the audited financial
statements of the Company for the year ended December 31, 2020, the
Audit Committee of the board of directors of the Company (1) reviewed and discussed the
audited financial statements with the Company’s management;
(2) discussed with the Company’s independent auditors the
applicable requirements of the Public Company Accounting Oversight
Board (PCAOB) and the Securities and Exchange Commission; (3)
received the written disclosures and the letter from the
independent auditors required by the applicable requirements of the
PCAOB regarding the independent auditors’ communications with
the Audit Committee concerning independence; (4) discussed with the
independent auditors the independent auditors’ independence;
and (5) considered whether the provision of non-audit services by
the Company’s principal auditors is compatible with
maintaining auditor independence.
Based
upon these reviews and discussions, the Audit Committee recommended
to the board of directors, and the board of directors approved,
that the audited financial statements for the year ended December
31, 2020 be included in the Company’s Annual Report on Form
10-K for the year ended December 31, 2020 for filing with the
Securities and Exchange Commission.
The
undersigned members of the Audit Committee have submitted this
Report to the board of directors.
Audit Committee
/s John J. Scelfo (Chairman)
/s/ H. Douglas Evans
The following table sets forth certain information with respect to
our executive officers (ages are as of the record
date).
|
Name
|
|
Age
|
|
Executive
Position
|
|
Simon
Kukes
|
|
74
|
|
Chief
Executive Officer and Director
|
|
J.
Douglas Schick
|
|
46
|
|
President
|
|
Paul
Pinkston
|
|
53
|
|
Chief
Accounting Officer
|
|
Clark
R. Moore
|
|
48
|
|
Executive
Vice President, General Counsel and Secretary
|
Simon Kukes, Chief Executive Officer and Director
Mr. Kukes’s biographical information is presented below in
“Proposal 1 Election of
Directors”, beginning on page 25 .
J. Douglas Schick, President
Mr.
Schick has over twenty years of experience in the oil and gas
industry. Prior to joining the Company as President on August 1,
2018, Mr. Schick was employed by American Resources, Inc., a
Houston, Texas-based privately-held oil and gas investment,
development and operating company which he co-founded and continues
to serve as Chief Executive Officer (from August 2017 to the
present) and formerly as Chief Financial Officer and Vice
President of Business Development (from August 2013 to August
2017), provided that Mr. Schick’s service to American
Resources requires only minimal time commitment from Mr. Schick
that does not conflict with his duties and responsibilities to the
Company. Prior to starting American Resources, Mr. Schick served as
the founder, owner and principal of J. Douglas Enterprises, a
Houston, Texas-based energy industry focused business development
and financial consulting firm (from June 2011 to August
2013) as Vice President of Finance (from January 2011 until
its sale in June 2011) for Highland Oil and Gas, a private
equity-backed E&P company headquartered in Houston, Texas, as
Manager of Planning and then Director of Planning at Houston,
Texas-based Mariner Energy, Inc. (from December 2006 until its
merger with Apache Corp. in December 2010), and in various roles of
increasing responsibility in finance, planning, M&A, treasury
and accounting at The Houston Exploration Company, ConocoPhillips
and Shell Oil Company (from 1998 to 2006). Mr. Schick currently
serves on the Board of Directors of Rockdale Marcellus, LLC, a
Houston, Texas-based subsidiary of Rockdale Energy, LLC engaged in
the development of natural gas in Northeastern
Pennsylvania.
Mr.
Schick holds a BBA in Finance from New Mexico State University and
an MBA with a specialization in Finance from Tulane
University.
Paul A. Pinkston, Chief Accounting Officer
Mr.
Pinkston brings over 20 years of accounting, compliance, and
financial reporting expertise to the Company, with extensive
experience in handling and managing corporate compliance, financial
reporting and audits, and other regulatory functions for companies
engaged in the oil and gas industry in the U.S. Prior to
joining the Company on December 1, 2018, from August 2017 to
February 2018, Mr. Pinkston served as Corporate Controller and
Secretary for Trecora Resources (NYSE: TREC), a Sugar Land,
Texas-based petrochemical manufacturing and customer processing
service company. Prior to joining Trecora Resources, from May
2013 to June 2017, Mr. Pinkston served in various roles of
increasing authority and responsibility at Camber Energy, Inc.
(NYSE American: CEI), a Houston, Texas-based oil and gas
exploration and production company, including as Camber
Energy’s Chief Accounting Officer, Secretary and Treasurer
(August 2016 to June 2017), and as its Director of Financial
Reporting (May 2013 to August 2016). Before joining Camber
Energy, Mr. Pinkston served as a Senior Consultant with Sirius
Solutions LLLP, where he performed accounting, audit and finance
consulting services (January 2006 to May 2013), as a Corporate
Auditor performing internal audits for Baker Hughes, Inc. (January
2002 to November 2005), and as a Senior Auditor, conducting public
and private audits, at Arthur Andersen LLP (from September 1998 to
November 2001).
Mr.
Pinkston received a Bachelor of Business Administration (Finance
and Marketing) degree from the University of Texas and earned
a Master of Business Administration (Accounting) degree from
the University of Houston. Mr. Pinkston is a Certified Public
Accountant registered in the State of Texas.
Clark R. Moore, Executive Vice President, General Counsel and
Secretary
Mr.
Moore has served as the Executive Vice President, General Counsel,
and Secretary of Pacific Energy Development since its inception in
February 2011, and has served as the Executive Vice President,
General Counsel, and Secretary of the Company since its acquisition
of Pacific Energy Development in July 2012. Mr. Moore began his
career in 2000 as a corporate attorney at the law firm of Venture
Law Group located in Menlo Park, California, which later merged
into Heller Ehrman LLP in 2003. In 2004, Mr. Moore left Heller
Ehrman LLP and launched a legal consulting practice focused on
representation of private and public company clients in the energy
and high-tech industries. In September 2006, Mr. Moore joined Erin
Energy Corporation (OTCMKTS:ERN) (formerly CAMAC Energy, Inc.), an
independent energy company headquartered in Houston, Texas, as its
acting General Counsel and continued to serve in that role through
February 2011, when he left to serve as a co-founder of Pacific
Energy Development. In addition, since June 1, 2018, Mr. Moore has
served as a partner at Foundation Law Group, LLP.
Mr.
Moore received his J.D. with Distinction from Stanford Law School
and his B.A. with Honors from the University of
Washington.
The following table sets forth the compensation
for services paid in all capacities for the two fiscal years ended
December 31, 2020 and 2019 to (a) Simon Kukes, our current
Chief Executive Officer and Director, (b) J. Douglas Schick,
our current President, (c) Clark R. Moore, our Executive Vice
President, General Counsel and Secretary, and (d) Paul A
Pinkston, our current Chief Accounting Officer (collectively, the
“Named Executive
Officers”). There were no
other executive officers who received compensation in excess of
$100,000 in either 2020 or 2019.
|
Name and Principal Position
|
Fiscal Year
|
Salary ($)
|
Bonus ($)
|
Option Awards ($)
|
Stock Awards ($)
|
All Other Compensation
($)
|
Total ($)
|
|
Simon
Kukes
|
2020
|
-
|
-
|
-
|
856,800(1)
|
-
|
856,800
|
|
Chief
Executive Officer
|
2019
|
-
|
-
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
J.
Douglas Schick
|
2020
|
212,500
|
63,000
|
-
|
272,160(2)
|
-
|
547,660
|
|
President
|
2019
|
250,000
|
-
|
-
|
-
|
-
|
250,000
|
|
|
|
|
|
|
|
|
|
|
Clark
R. Moore
|
2020
|
212,500
|
63,000
|
-
|
272,160(3)
|
27,691(4)
|
575,351
|
|
Executive
Vice President, General Counsel and Secretary
|
2019
|
250,000
|
-
|
-
|
-
|
-
|
250,000
|
|
|
|
|
|
|
|
|
|
|
Paul
A. Pinkston
|
2020
|
119,861
|
18,000
|
-
|
151,200(5)
|
-
|
289,061
|
|
Chief
Accounting Officer
|
2019
|
140,000
|
-
|
-
|
-
|
-
|
140,000
|
Does not include perquisites and other personal benefits or
property, unless the aggregate amount of such compensation is more
than $10,000. No executive officer earned any non-equity
incentive plan compensation or nonqualified deferred compensation
during the periods reported above. Stock Awards represent the
aggregate grant date fair value of awards computed in accordance
with Financial Accounting Standards Board Accounting Standard
Codification Topic 718. For additional information on the valuation
assumptions with respect to the restricted stock grants, refer to
“Part
II” -
“Item 8. Financial
Statements and Supplementary Data“ - “Note 11 – Share-Based
Compensation” of the 2020
annual report, which is included with these proxy materials. These
amounts do not correspond to the actual value that will be
recognized by the named individuals from these
awards.
|
(1)
|
Consists
of the value of 510,000 shares of restricted common stock granted
in January 2020 at $1.68 per share.
|
|
(2)
|
Consists
of the value of 162,000 shares of restricted common stock granted
in January 2020 at $1.68 per share.
|
|
(3)
|
Consists
of the value of 162,000 shares of restricted common stock granted
in January 2020 at $1.68 per share.
|
|
(4)
|
Consists
of accrued vacation paid out during the applicable fiscal year in
cash.
|
|
(5)
|
Consists
of the value of 90,000 shares of restricted common stock granted in
January 2020 at $1.68 per share.
|
The
following table sets forth information as of December 31, 2020
concerning outstanding equity awards for the executive officers
named in the Summary Compensation Table.
|
|
Option Awards
|
Stock Awards
(3)
|
||||
|
Name
|
Number of securities underlying unexercised options
(#) exercisable
|
Number of
securities underlying unexercised options (#)
unexercisable
|
Option Exercise price ($)
|
Option expiration date
|
Number of shares or units of stock that have not vested
(#)
|
Market value of shares or units of stock that have not vested
($)(4)
|
|
Simon
Kukes
|
-
|
-
|
-
|
-
|
200,000(1)
|
$302,000
|
|
|
-
|
-
|
-
|
-
|
510,000(2)
|
$770,100
|
|
|
|
|
|
|
|
|
|
J.
Douglas Schick
|
-
|
-
|
-
|
-
|
74,677(1)
|
$112,762
|
|
|
-
|
-
|
-
|
-
|
162,000(2)
|
$244,620
|
|
|
|
|
|
|
|
|
|
Clark
R. Moore
|
18,887
|
-
|
$5.10
|
6/18/2022
|
17,000(1)
|
$25,670
|
|
|
4,447
|
-
|
$5.10
|
6/18/2022
|
162,000(2)
|
$244,620
|
|
|
28,000*
|
-
|
$2.20
|
1/7/2021
|
-
|
-
|
|
|
|
|
|
|
|
|
|
Paul
A. Pinkston
|
-
|
-
|
-
|
-
|
90,000(2)
|
$135,900
|
(1)
Stock
award vests on December 12, 2021, subject to the holder remaining
an employee of or consultant to the Company on such vesting
dates.
(2)
Stock award vests
33.3% on January 13, 2021, 33.3% on January 13, 2022, and January
13, 2023, subject to the holder remaining an employee of or
consultant to the Company on such vesting dates.
(3)
There were no unearned shares, units or other rights that have not
vested as of December 31, 2020.
(4)
Calculated by multiplying the closing market price of
the Company’s common stock at the end of the last completed
fiscal year by the number of shares of stock.
*
Since expired unexercised.
On August 27, 2020, restricted stock awards were
granted to board
members John J. Scelfo, Ivar
Siem and H. Douglas Evans, then-affiliate Viktor Tkachev, and an advisor for an aggregate of
240,000, 70,000, and 70,000 shares, respectively, of the
Company’s restricted common stock, under the Company’s
Amended and Restated 2012 Equity Incentive Plan. The grant of the
240,000 shares of restricted common stock vest as follows: 100% of
170,000 shares and 100% of 70,000 shares vesting on July 12, 2021,
and September 21, 2021, respectively, contingent upon each
recipient’s continued service with the Company. These shares
have a total fair value of $506,000, based on the market price on
the issuance date. The grant of the remaining aggregate of
140,000 shares of restricted common stock vest as follows: 100% on
the six-month anniversary of the grant date, subject to each
recipient’s continued service with the Company. These
affiliate and advisor shares have a total fair value of $295,000,
based on the market price on the issuance
date.
On August 28, 2019, restricted stock awards were
granted to board
members John J. Scelfo, Ivar
Siem and H. Douglas Evans for an aggregate of 170,000 shares
of the Company’s common stock, under the Company’s
Amended and Restated 2012 Equity Incentive Plan. The grant for a
total of 120,000 of the restricted stock awards vests as follows:
100% on July 12, 2020, subject to the recipient’s continued
service with the Company. These shares have a total fair value of
$187,000 based on the market price on the issuance date. The grants
for 50,000 shares of restricted stock vest as follows: 100% on
September 27, 2020, subject to the recipient’s continued
service with the Company. These shares have a total fair value of
$78,000 based on the market price on the issuance date.
Additionally, 50,000 shares of restricted stock were awarded
to director Ivar Siem for advisory services provided to the
Company under the Company’s Amended and Restated 2012 Equity
Incentive Plan. The restricted stock vests as follows: 100% on July
12, 2020, subject to the recipient’s continued service with
the Company. These shares have a total fair value of $78,000, based
on the market price on the issuance date.
On
November 8, 2019, the Company entered into an Advisory Agreement
and Restricted Shares Grant Agreement with Viktor Tkachev, a then
greater than 10% stockholder of the Company (who acquired $12
million of shares of common stock on September 17, 2019),
under which Mr. Tkachev agreed to provide strategic planning and
business development services, and pursuant to which 100,000 shares
of restricted common stock were awarded to Mr. Tkachev under the
Company’s Amended and Restated 2012 Equity Incentive Plan,
100% of which vest on the six-month anniversary of the grant date,
subject to the recipient’s continued service with the Company
and the terms and conditions of these agreements. These shares have
a total fair value of $128,000 based on the market price on the
issuance date.
Also
on November 8, 2019, the Company entered into an Advisory Agreement
with Ivar Siem, a member of the board of directors, pursuant to
which the 50,000 restricted shares of common stock previously
awarded to Mr. Siem on August 28, 2019 under the Plan continue to
vest, with 100% vesting on July 12, 2020, subject to Mr. Siem
continuing to provide advisory services to the Company on such
vesting date, and subject to the terms and conditions of a
Restricted Shares Grant Agreement entered into by and between the
Company and Mr. Siem on August 28, 2019. The Advisory Agreement
contains customary confidentiality, indemnification and no conflict
language; and may be terminated by the Company or the advisor with
15 days prior written notice for any reason.
The
awarded shares above are subject to trading restrictions, and
forfeiture, subject to the vesting terms described above. When such
securities are vested in accordance with their terms, the trading
restrictions are lifted.
The
following table sets forth compensation information with respect to
our non-executive directors during our fiscal year ended December
31, 2020.
|
Name
|
Fees Earned or Paid in Cash ($)*
|
Stock Awards ($) (1) (2)
|
All Other Compensation ($)
|
Total ($)
|
|
John
J. Scelfo
|
$-
|
$211,000
|
$-
|
$211,000
|
|
Ivar
Siem
|
$-
|
$147,700
|
$-
|
$147,700
|
|
H.
Douglas Evans
|
$-
|
$147,700
|
$-
|
$147,700
|
* The table above does not include the amount of any expense
reimbursements paid to the above directors. No directors received
any Non-Equity Incentive Plan Compensation or Nonqualified Deferred
Compensation. Does not include perquisites and other personal
benefits, or property, unless the aggregate amount of such
compensation is more than $10,000.
|
(1)
|
Amounts
in this column represent the aggregate grant date fair value of
awards computed in accordance with Financial Accounting Standards
Board Accounting Standard Codification Topic 718. For additional
information on the valuation assumptions with respect to the
restricted stock grants, refer to “Part II” -
“Item 8. Financial Statements
and Supplementary Data” -
“Note 11 –
Share-Based Compensation” of the 2020 Annual Report,
which is included with this proxy statement. These amounts do not
correspond to the actual value that will be recognized by the named
individuals from these awards.
|
|
(2)
|
Mr.
Scelfo, Mr. Evans and Mr. Siem received grants of 100,000, 70,000
and 70,000 shares of restricted stock, respectively, on August 27,
2020, each with an aggregate grant date fair value of $211,000,
$147,000 and $147,000, respectively, which will vest in full on
July 12, 2021, September 27, 2021, and July 12, 2021, respectively.
For the year ended December 31, 2020, there was compensation of
$169,000, related to these grants.
|
Effective
September 27, 2018, the Board no longer has a formal compensation
program; provided that the board of directors and/or the
Compensation Committee may authorize compensation (including, but
not limited to cash, options and restricted stock) to the
members of the board of directors from time to time in their
discretion.
The
following table sets forth information, as of December 31, 2020,
with respect to our compensation plans under which common stock is
authorized for issuance.
|
Plan
Category
|
Number of
securities to be issued upon exercise of outstanding options,
warrants and rights
(A)
|
Weighted-average
exercise price of outstanding options, warrants and
rights
(B)
|
Number of
securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in Column
A)
(C)
|
|
Equity compensation
plans approved by stockholders (1)
|
1,181,135
|
$2.31
|
1,490,370(2)
|
|
Equity compensation
plans not approved by stockholders (3)
|
204,043
|
$1.58
|
-
|
|
Total
|
1,385,178
|
$2.20
|
1,490,370
|
|
(1)
|
Consists
of (i) options to purchase 21,635 shares of common stock
issued and outstanding under the Pacific Energy Development Corp.
2012 Amended and Restated Equity Incentive Plan, and
(ii) options to purchase 1,159,500 shares of common stock
issued and outstanding under the PEDEVCO Corp. 2012 Amended and
Restated Equity Incentive Plan.
|
|
(2)
|
Consists
of 1,490,370 shares of common stock reserved and available for
issuance under the PEDEVCO Corp. 2012 Amended and Restated Equity
Incentive Plan.
|
|
(3)
|
Consists
of (i) options to purchase 53,714 shares of common stock
granted by Pacific Energy Development Corp. to employees and
consultants of the company in October 2011 and June 2012, and
(ii) warrants to purchase 150,329 shares of common stock
granted by PEDEVCO Corp. to lenders in June 2018.
|
2012 Plan
General. On June 26, 2012, our board of directors
adopted the Blast Energy Services, Inc. 2012 Equity Incentive Plan,
which was approved by our stockholders on July 30, 2012 and
subsequently renamed to the PEDEVCO Corp. 2012 Equity Incentive
Plan in connection with our name change from Blast Energy Services,
Inc. to PEDEVCO Corp. The 2012 Equity Incentive Plan provides for
awards of incentive stock options, non-statutory stock options,
rights to acquire restricted stock, stock appreciation rights, or
SARs, and performance units and performance shares. Subject to the
provisions of the 2012 Equity Incentive Plan relating to
adjustments upon changes in our common stock, an aggregate
of 200,000 shares of common stock were reserved for
issuance under the 2012 Equity Incentive Plan. On April 23, 2014,
the board of directors adopted an amended and restated 2012 Equity
Incentive Plan, to increase by 500,000 shares, the number
of awards available for issuance under the plan, which was approved
by stockholders on June 27, 2014. On July 27, 2015, the board of
directors adopted an amended and restated 2012 Equity Incentive
Plan, to increase by 300,000 shares, the number of awards
available for issuance under the plan, which was approved by
stockholders on October 7, 2015. On October 21, 2016, the board of
directors adopted an amended and restated 2012 Equity Incentive
Plan, to increase by 500,000 shares, the number of awards
available for issuance under the plan, which was approved by
stockholders on December 28, 2016. On November 6, 2017, the board
of directors adopted an amended and restated 2012 Equity Incentive
Plan, to increase by 1,500,000 shares, the number of awards
available for issuance under the plan, which was approved by
stockholders on December 28, 2017. On August 10, 2018, the board of
directors adopted an amended and restated 2012 Equity Incentive
Plan, to increase by 3,000,000 shares, the number of awards
available for issuance under the plan, which was approved by
stockholders on September 27, 2018. On July 1, 2019, the board of
directors adopted an amended and restated 2012 Equity Incentive
Plan, to increase by 2,000,000 shares, the number of awards
available for issuance under the plan, which was approved by
stockholders on August 28, 2019.
We
refer to the 2012 Amended and Restated Incentive Plan as the 2012
Plan.
Purpose. Our board of directors adopted the 2012 Plan to
provide a means by which our employees, directors and consultants
may be given an opportunity to benefit from increases in the value
of our common stock, to assist in attracting and retaining the
services of such persons, to bind the interests of eligible
recipients more closely to our interests by offering them
opportunities to acquire shares of our common stock and to afford
such persons stock-based compensation opportunities that are
competitive with those afforded by similar
businesses.
Administration. Unless
it delegates administration to a committee, our board of directors
administers the 2012 Plan. Subject to the provisions of the 2012
Plan, our board of directors has the power to construe and
interpret the 2012 Plan, and to determine: (a) the fair value
of common stock subject to awards issued under the 2012 Plan;
(b) the persons to whom and the dates on which awards will be
granted; (c) what types or combinations of types of awards
will be granted; (d) the number of shares of common stock to
be subject to each award; (e) the time or times during the
term of each award within which all or a portion of such award may
be exercised; (f) the exercise price or purchase price of each
award; and (g) the types of consideration permitted to
exercise or purchase each award and other terms of the
awards.
Eligibility. Incentive
stock options may be granted under the 2012 Plan only to employees
of us and our affiliates. Employees, directors and consultants of
us and our affiliates are eligible to receive all other types of
awards under the 2012 Plan.
Terms of Options and
SARs. The exercise price
of incentive stock options may not be less than the fair market
value of the common stock subject to the option on the date of the
grant and, in some cases, may not be less than 110% of such fair
market value. The exercise price of nonstatutory options also may
not be less than the fair market value of the common stock on the
date of grant.
Options granted under the 2012 Plan may be
exercisable in cumulative increments, or “vest,”
as determined by our board of directors. Our board of directors has
the power to accelerate the time as of which an option may vest or
be exercised. The maximum term of options, SARs and performance
shares and units under the 2012 Plan is ten years, except that in
certain cases, the maximum term is five years. Options, SARs
and performance shares and units awarded under the 2012 Plan
generally will terminate three months after termination of the
participant’s service, subject to certain
exceptions.
A
recipient may not transfer an incentive stock option otherwise than
by will or by the laws of descent and distribution. During the
lifetime of the recipient, only the recipient may exercise an
option, SAR or performance share or unit. Our board of directors
may grant nonstatutory stock options, SARs and performance shares
and units that are transferable to the extent provided in the
applicable written agreement.
Terms of Restricted Stock
Awards. Our board of
directors may issue shares of restricted stock under the 2012 Plan
as a grant or for such consideration, including services, and,
subject to the Sarbanes-Oxley Act of 2002, promissory notes, as
determined in its sole discretion.
Shares
of restricted stock acquired under a restricted stock purchase or
grant agreement may, but need not, be subject to forfeiture to us
or other restrictions that will lapse in accordance with a vesting
schedule to be determined by our board of directors. In the event a
recipient’s employment or service with us terminates, any or
all of the shares of common stock held by such recipient that have
not vested as of the date of termination under the terms of the
restricted stock agreement may be forfeited to us in accordance
with such restricted stock agreement.
Rights
to acquire shares of common stock under the restricted stock
purchase or grant agreement shall be transferable by the recipient
only upon such terms and conditions as are set forth in the
restricted stock agreement, as our board of directors shall
determine in its discretion, so long as shares of common stock
awarded under the restricted stock agreement remain subject to the
terms of such agreement.
Adjustment
Provisions. If any change is made to our outstanding shares of
common stock without our receipt of consideration (whether through
reorganization, stock dividend or stock split, or other specified
change in our capital structure), appropriate adjustments may be
made in the class and maximum number of shares of common stock
subject to the 2012 Plan and outstanding awards. In that event, the
2012 Plan will be appropriately adjusted in the class and maximum
number of shares of common stock subject to the 2012 Plan, and
outstanding awards may be adjusted in the class, number of shares
and price per share of common stock subject to such
awards.
Effect of Certain Corporate
Events. In the event of (a) a liquidation or
dissolution of the Company; (b) a merger or consolidation of
the Company with or into another corporation or entity (other than
a merger with a wholly-owned subsidiary); (c) a sale of all or
substantially all of the assets of the Company; or (d) a
purchase or other acquisition of more than 50% of the outstanding
stock of the Company by one person or by more than one person
acting in concert, any surviving or acquiring corporation may
assume awards outstanding under the 2012 Plan or may substitute
similar awards. Unless the stock award agreement otherwise
provides, in the event any surviving or acquiring corporation does
not assume such awards or substitute similar awards, then the
awards will terminate if not exercised at or prior to such
event.
Duration, Amendment and
Termination. Our board of
directors may suspend or terminate the 2012 Plan without
stockholder approval or ratification at any time or from time to
time. Unless sooner terminated, the 2012 Plan will terminate ten
years from the date of its adoption by our board of directors,
i.e., in June 2022.
Our
board of directors may also amend the 2012 Plan at any time, and
from time to time. However, except as it relates to adjustments
upon changes in common stock, no amendment will be effective unless
approved by our stockholders to the extent stockholder approval is
necessary to preserve incentive stock option treatment for federal
income tax purposes. Our board of directors may submit any other
amendment to the 2012 Plan for stockholder approval if it concludes
that stockholder approval is otherwise advisable.
As of
the Record Date, options to purchase 1,242,167 shares of
common stock and 6,396,560 shares of restricted stock
have been issued under the 2012 Plan, with 361,273 shares
of common stock remaining available for issuance under the 2012
Plan. The options have a weighted average exercise price of
$1.60 per share and have expiration dates ranging from 2021
to 2026.
2012 Pacific Energy Development (Pre-Merger) Plan
On
February 9, 2012, prior to the Pacific Energy Development merger,
Pacific Energy Development adopted the Pacific Energy Development
2012 Equity Incentive Plan, which we refer to as the 2012
Pre-Merger Plan. We assumed the obligations of the 2012 Pre-Merger
Plan pursuant to the Pacific Energy Development merger, though the
2012 Pre-Merger Plan was superseded by the 2012 Plan (described
above).
The
2012 Pre-Merger Plan provides for awards of incentive stock
options, non-statutory stock options, rights to acquire restricted
stock, stock appreciation rights, or SARs, and performance units
and performance shares. Subject to the provisions of the 2012
Pre-Merger Plan relating to adjustments upon changes in our common
stock, an aggregate of 100,000 shares of common stock have
been reserved for issuance under the 2012 Pre-Merger
Plan.
The
board of directors of Pacific Energy Development adopted the 2012
Pre-Merger Plan to provide a means by which its employees,
directors and consultants may be given an opportunity to benefit
from increases in the value of its common stock, to assist in
attracting and retaining the services of such persons, to bind the
interests of eligible recipients more closely to our interests by
offering them opportunities to acquire shares of our common stock
and to afford such persons stock-based compensation opportunities
that are competitive with those afforded by similar
businesses.
The exercise price of incentive stock options may
not be less than the fair market value of the common stock subject
to the option on the date of the grant and, in some cases, may not
be less than 110% of such fair market value. The exercise price of
nonstatutory options also may not be less than the fair market
value of the common stock on the date of grant. Options granted
under the 2012 Pre-Merger Plan may be exercisable in cumulative
increments, or “vest,”
as determined by the board of directors of Pacific Energy
Development at the time of grant.
Shares
of restricted stock could be issued under the 2012 Pre-Merger
Plan as a grant or for such consideration, including services, and,
subject to the Sarbanes-Oxley Act of 2002, promissory notes, as
determined in the sole discretion of the Pacific Energy Development
board of directors. Shares of restricted stock acquired under a
restricted stock purchase or grant agreement could, but need not,
be subject to forfeiture or other restrictions that will lapse in
accordance with a vesting schedule determined by the board of
directors of Pacific Energy Development at the time of grant. In
the event a recipient’s employment or service with the
Company terminates, any or all of the shares of common stock held
by such recipient that have not vested as of the date of
termination under the terms of the restricted stock agreement may
be forfeited to the Company in accordance with such restricted
stock agreement.
Appropriate
adjustments may be made to outstanding awards in the event of
changes in our outstanding shares of common stock, whether through
reorganization, stock dividend or stock split, or other specified
change in capital structure of the Company. In the event of
liquidation, merger or consolidation, sale of all or substantially
all of the assets of the Company, or other change in control, any
surviving or acquiring corporation may assume awards outstanding
under the 2012 Pre-Merger Plan or may substitute similar awards.
Unless the stock award agreement otherwise provides, in the event
any surviving or acquiring corporation does not assume such awards
or substitute similar awards, then the awards will terminate if not
exercised at or prior to such event.
As of
the date of Record Date, 17,382 options remain
outstanding under the 2012 Pre-Merger Plan. These options have a
weighted average exercise price of $4.95 per share and have
expiration dates ranging from February 8, 2022, to June
18, 2022.
2020 Say on Pay Vote
At the
annual meeting of our stockowners held on August 27, 2020,
stockholders holding 88.7% of the total shares eligible to be voted
at the annual meeting, 92.4% of the shares voted at the annual
meeting and 99.7% of the total votes cast on the proposal, voted in
favor of our named executive officers’ 2020 compensation. The
board of directors and the Compensation Committee considered these
favorable results and did not make significant changes to our
executive compensation program because they believe this advisory
stockholder vote indicates strong support for our current
compensation policies. Stockholders will be asked to vote on
execution compensation again at our 2023 annual meeting of
stockholders.
Simon Kukes. Simon Kukes has agreed to receive an annual salary
of $1 as his compensation for serving as Chief Executive Officer of
the Company and as a member of the board of directors and to not
charge the Company for any personal business expenses he incurs in
connection with such positions. Notwithstanding the above, Simon
Kukes was not paid any salary for 2020, 2019 or 2018.
Notwithstanding the above, Simon Kukes may receive bonuses (in any
amount) consisting of cash, grants of restricted stock and/or
options granted in the board of directors’ sole discretion,
from time to time, provided that none are currently
contemplated.
J. Douglas
Schick. On August 1, 2018, in
connection with his appointment as President of the Company, we
entered into an offer letter with J. Douglas Schick (the
“Offer
Letter”). Pursuant to the
Offer Letter, Mr. Schick agreed to serve as President of the
Company on an at-will basis; the Company agreed to pay Mr. Schick
$20,833 per month (which was temporarily reduced by the
Temporary Salary Reductions discussed below) and that Mr. Schick is
eligible for an annual bonus in the discretion of the Company
totaling up to 40% of his then current salary and may also receive
bonuses (in any amount) consisting of cash, grants of restricted
stock and/or options granted in the board of directors’ sole
discretion, from time to time. Mr. Schick’s employment may be
terminated by him or the Company with 30 days prior written
notice. In the event Mr. Schick’s employment with the
Company is terminated by the Company without
“Cause,”
the Company will (a) pay Mr. Schick an amount equal to twelve
(12) months of his then-current annual base salary, and
(b) immediately accelerate by twelve (12) months the
vesting of all outstanding Company restricted stock and options
exercisable for Company capital stock held by Mr. Schick. For
purposes of the Offer Letter, “Cause”
means Mr. Schick’s (1) conviction of, or plea of nolo
contendere to, a felony or any other crime involving moral
turpitude; (2) fraud on or misappropriation of any funds or
property of the Company or any of its affiliates, customers or
vendors; (3) act of material dishonesty, willful misconduct,
willful violation of any law, rule or regulation, or breach of
fiduciary duty involving personal profit, in each case made in
connection with his responsibilities as an employee, officer or
director of the Company and which has, or could reasonably be
deemed to result in, a material adverse effect upon the Company;
(4) illegal use or distribution of drugs; (5) willful
material violation of any policy or code of conduct of the Company;
or (6) material breach of any provision of the Offer Letter or
any other employment, non-disclosure, non-competition,
non-solicitation or other similar agreement executed by him for the
benefit of the Company or any of its affiliates, all as reasonably
determined in good faith by the board of directors of the Company.
However, an event that is or would constitute
“Cause”
shall cease to be “Cause”
if he reverses the action or cures the default that constitutes
“Cause”
within 10 days after the Company notifies him in writing that Cause
exists.
The
Offer Letter contains standard confidentiality provisions; a
standard non-compete restriction prohibiting Mr. Schick from
competing against the Company during the term of his employment and
for one year thereafter in connection with any directly competitive
enterprise, commercial venture, or project involving petroleum
exploration, development, or production activities in the same
geographic areas as the Company’s activities or doing
business with the Company during the six-month period before the
termination of his employment, with certain exceptions; and a
non-solicitation provision prohibiting him from inducing or
attempting to induce any employee of the company from leaving their
employment with the Company and/or attempting to induce any
consultant, service provider, customer or business relation of the
Company from terminating their relationship with the Company during
the term of his employment and for one year
thereafter.
On March 31, 2020, Mr. Schick and the Company
entered into an amendment to his Offer Letter discussed in greater
detail below under “Temporary Salary
Reductions and Amendments to Employment
Agreements”.
Clark R.
Moore. Pacific Energy
Development, our wholly-owned subsidiary, has entered into an
employment agreement, dated June 10, 2011, as amended January 11,
2013, with Clark Moore, its Executive Vice President, Secretary and
General Counsel (the “Moore Employment
Agreement”), pursuant to
which, effective June 1, 2011, Mr. Moore has been employed by
Pacific Energy Development, with a current annual base salary
of $250,000 (which has been reduced by the Temporary Salary
Reductions discussed below), and a target annual cash bonus of
between 20% and 40% of his base salary, awardable by the board of
directors in its discretion, provided that Mr. Moore may also
receive bonuses (in any amount) consisting of cash, grants of
restricted stock and/or options granted in the board of
directors’ sole discretion, from time to time. In addition,
Mr. Moore’s employment agreement includes, among other
things, severance payment provisions that would require the Company
to make lump sum payments equal to 18 months’ salary and
target bonus to Mr. Moore in the event his employment is terminated
due to his death or disability, terminated without
“Cause”
or if he voluntarily resigns for “Good
Reason” (36 months in
connection with a “Change of
Control”), and
continuation of benefits for up to 36 months (48 months in
connection with a “Change of
Control”), as such terms
are defined in the employment agreement. The employment agreement
also prohibits Mr. Moore from engaging in competitive activities
during and following termination of his employment that would
result in disclosure of our confidential information but does not
contain a general restriction on engaging in competitive
activities.
For purposes of the Moore Employment Agreement,
the term “Cause”
means his (1) conviction of, or plea of nolo contendere to, a
felony or any other crime involving moral turpitude; (2) fraud
on or misappropriation of any funds or property of our company or
any of its affiliates, customers or vendors; (3) act of
material dishonesty, willful misconduct, willful violation of any
law, rule or regulation, or breach of fiduciary duty involving
personal profit, in each case made in connection with his
responsibilities as an employee, officer or director of our company
and which has, or could reasonably be deemed to result in, a
Material Adverse Effect upon our company; (4) illegal use or
distribution of drugs; (5) material violation of any policy or
code of conduct of our company; or (6) material breach of any
provision of the employment agreement or any other employment,
non-disclosure, non-competition, non-solicitation or other similar
agreement executed by him for the benefit of our company or any of
its affiliates, all as reasonably determined in good faith by the
board of directors of our company. However, an event that is or
would constitute “Cause”
shall cease to be “Cause”
if he reverses the action or cures the default that constitutes
“Cause”
within 10 days after our company notifies him in writing that Cause
exists. No act or failure to act on Mr. Moore’s part will be
considered “willful”
unless it is done, or omitted to be done, by him in bad faith or
without reasonable belief that such action or omission was in the
best interests of our company. Any act or failure to act that is
based on authority given pursuant to a resolution duly passed by
the board of directors, or the advice of counsel to our company,
shall be conclusively presumed to be done, or omitted to be done,
in good faith and in the best interests of the
Company.
For purposes of the Moore Employment Agreement,
“Material Adverse
Effect” means any event,
change or effect that is materially adverse to the condition
(financial or otherwise), properties, assets, liabilities,
business, operations or results of operations of our company or its
subsidiaries, taken as a whole.
For purposes of the Moore Employment Agreement,
“Good
Reason” means the
occurrence of any of the following without his written consent:
(a) the assignment to him of duties substantially inconsistent
with this employment agreement or a material adverse change in his
titles or authority; (b) any failure by our company to comply
with the compensation provisions of the agreement in any material
way; (c) any material breach of the employment agreement by
our company; or (d) the relocation of him by more than fifty
(50) miles from the location of our company’s office
located in Danville, California. However, an event that is or would
constitute “Good
Reason” shall cease to be
“Good
Reason” if: (i) he
does not terminate employment within 45 days after the event
occurs; (ii) before he terminates employment, we reverse the
action or cure the default that constitutes
“Good
Reason” within 10 days
after he notifies us in writing that Good Reason exists; or
(iii) he was a primary instigator of the
“Good
Reason” event and the
circumstances make it inappropriate for him to receive
“Good
Reason” termination
benefits under the employment agreement (e.g., he agrees
temporarily to relinquish his position on the occurrence of a
merger transaction he assists in negotiating).
For purposes of the Moore Employment Agreement,
“Change of
Control” means:
(i) a merger, consolidation or sale of capital stock by
existing holders of capital stock of our company that results in
more than 50% of the combined voting power of the then outstanding
capital stock of our company or its successor changing ownership;
(ii) the sale, or exclusive license, of all or substantially
all of our company’s assets; or (iii) the individuals
constituting our company’s board of directors as of the date
of the employment agreement (the “Incumbent Board of
Directors”) cease
for any reason to constitute at least 1/2 of the members of the
board of directors; provided, however, that if the election, or
nomination for election by our stockholders, of any new director
was approved by a vote of the Incumbent Board of Directors, such
new director shall be considered a member of the Incumbent Board of
Directors. Notwithstanding the foregoing and for purposes of
clarity, a transaction shall not constitute a Change in Control if:
(w) its sole purpose is to change the state of our
company’s incorporation; (x) its sole purpose is to
create a holding company that will be owned in substantially the
same proportions by the persons who held our company’s
securities immediately before such transaction; or (y) it is a
transaction effected primarily for the purpose of financing our
company with cash (as determined by the board of directors in its
discretion and without regard to whether such transaction is
effectuated by a merger, equity financing or
otherwise).
On March 31, 2020, Mr. Moore and Pacific Energy
Development entered into an amendment to his employment agreement
discussed in greater detail below under “Temporary Salary
Reductions and Amendments to Employment
Agreements”.
Paul A.
Pinkston. On December 1,
2018, the Company appointed Mr. Pinkston as the Chief Accounting
Officer of the Company and Mr. Pinkston commenced employment with
the Company pursuant to the terms of an Offer Letter, dated October
16, 2018, and effective December 1, 2018, entered into by and
between the Company and Mr. Pinkston (the
“Pinkston
Offer Letter”). Also
effective on December 1, 2018, Mr. Pinkston commenced serving as
the Company’s Principal Financial and Accounting Officer of
the Company.
Pursuant
to the Pinkston Offer Letter, Mr. Pinkston agreed to serve as Chief
Accounting Officer of the Company on an at-will basis, the Company
agreed to pay Mr. Pinkston $11,666.67 per month (subject to the
Temporary Salary Reductions discussed below), Mr. Pinkston is
eligible for an annual bonus in the discretion of the board of
directors of the Company totaling up to 30% of his then current
salary, provided that Mr. Pinkston may also receive bonuses (in any
amount) consisting of cash, grants of restricted stock and/or
options granted in the board of directors’ sole discretion,
from time to time. Mr. Pinkston’s employment may be
terminated by him or the Company with 30 days prior written notice.
In addition, Mr. Pinkston was granted 30,000 shares of the
Company’s common stock under the Company’s employee
equity incentive plan, 50% of which shares vest on Mr.
Pinkston’s one (1) year anniversary of his employment
commencement date, and 50% of which shares vest on Mr.
Pinkston’s two (2) year anniversary of his employment
commencement date, subject to Mr. Pinkston’s continued
service with the Company and the terms of a Board-approved
restricted stock purchase agreement entered into between Mr.
Pinkston and the Company.
The
Pinkston Offer Letter contains standard confidentiality provisions
and a standard a non-solicitation provision prohibiting him from
inducing or attempting to induce any employee of the Company from
leaving their employment with the Company and/or attempting to
induce any consultant, service provider, customer or business
relation of the Company from terminating their relationship with
the Company during the term of his employment and for one year
thereafter.
On March 31, 2020, as part of our efforts to
reduce operating and corporate costs, the independent Compensation
Committee of the Board approved a 20% reduction in salary for all
of the Company’s salaried employees, effective April 1, 2020
(the “Temporary Salary
Reductions”).
In connection with the 20% salary reduction, on
March 31, 2020, the Company and each of Mr. Douglas J. Schick, our
President, and Mr. Clark R. Moore, our Executive Vice President,
General Counsel, and Secretary, entered into amendments to their
respective employment agreements (the “Amendments”)
to effect the salary reductions on a temporary basis, until such
time as the Company determines, in its reasonable discretion, that
oil markets have recovered to acceptable levels (the
“Salary Reduction
Period”), which
determination has not been made to date. The Amendments to Messrs.
Schick’s and Moore’s employment agreements do not,
however, reduce the amount of severance compensation that such
executive would receive under their respective employment
agreements in the event of an applicable termination of their
respective employment, subject to the terms of such employment
agreements.
In addition, the amendment entered into with Mr.
Schick includes a provision whereby, in the event Mr.
Schick’s employment with the Company is voluntarily
terminated by him due to the Company’s failing to pay his
base salary (as currently reduced as disclosed above) without his
written consent, the Company will (a) continue to pay Mr. Schick an
amount equal to his base salary as in effect immediately before his
termination of employment on the same bi-monthly schedule and
amounts (less required withholdings) as he received such salary
payments prior to his date of termination (the
“Cash
Payments”), which Cash
Payments shall be reported by the Company on IRS Form 1099 as
income to Mr. Schick and will continue until the earlier to occur
of (x) the date that is twelve (12) months after the termination of
his employment or (y) the date that he commences employment with
another employer that pays him a base salary equal to, or greater
than, his base salary as in effect immediately before his
termination of employment, provided that, if his new employer pays
him less than his Company base salary, he shall only be entitled to
Cash Payment amounts going forward through the remainder of the
twelve (12) month term equal to (i) his Company base salary at the
time of his termination minus the salary he receives from his new
employer; and (b) continue to vest his outstanding Company
restricted stock and options exercisable for Company capital stock
issued to him by the Company which are then held by him on his date
of termination on their then-current vesting schedules during the
period of up to twelve (12) months that he continues to receive the
Cash Payments, in exchange for a full and complete release of
claims against the Company, its affiliates, officers and directors
in a form reasonably acceptable to the Company. Upon the date that
his Cash Payments discontinue, he shall no longer continue to vest
into any outstanding Company restricted stock or options. The Cash
Payments payable to Mr. Schick and the other amounts, based on his
salary, which may be due to him upon termination of his offer
letter upon certain events, and subject to the terms thereof,
during the Salary Reduction Period will continue to be based on Mr.
Schick’s non-reduced salary.
As
discussed above, Simon Kukes, our Chief Executive Officer and
director, has agreed to receive an annual salary of $1 as his
compensation for serving as Chief Executive Officer of the Company
and as a member of our Board and to not charge the Company for any
personal business expenses he incurs in connection with such
positions. The Company does not currently have a formal written
agreement in place with Simon Kukes. To date, Simon Kukes has not
accepted any salary from the Company (including his $1 annual
compensation).
Effective
April 1, 2021, the board of directors reversed the 20% reduction in
salary for all the Company’s salaried employees. The
reduction in salary was reversed as the Company determined that oil
markets have recovered to acceptable levels. As a result, the
annual salaries for each of Mr. Douglas J. Schick, the
Company’s President, and Mr. Clark R. Moore, the
Company’s Executive Vice President, General Counsel, and
Secretary, have returned to their previous $250,000 levels, and the
salary of Mr. Paul Pinkston, the Company’s Chief Accounting
Officer, has returned to its previous $140,000 level, effective
April 1, 2021.
Except
as discussed below, referenced below, or otherwise disclosed above
under “Executive
Compensation“ — “Issuances
of Equity to Executive Officers and Greater than 5%
Stockholders”, “Agreements with
Current Named Executive Officers” and
“Temporary Salary
Reductions and Amendments to Employment Agreements”,
beginning on pages 16, 20 and 22, respectively, there have
been no transactions since January 1, 2019, and there is not
currently any proposed transaction, in which the Company was or is
to be a participant, where the amount involved exceeds $120,000,
and in which any officer, director, or any stockholder owning
greater than five percent (5%) of our outstanding voting shares,
nor any member of the above referenced individual’s immediate
family, had or will have a direct or indirect material
interest.
January 2019 SK Energy Convertible Note
On January 11, 2019, the Company borrowed $15.0
million from SK Energy LLC, which is 100% owned and controlled by
Simon Kukes, the Company’s Chief Executive Officer and
director, through the issuance of a convertible promissory note in
the amount of $15.0 million (the “January 2019
Convertible Note”). The January 2019 Convertible Note
accrues interest monthly at 8.5% per annum, which is payable on the
maturity date, unless otherwise converted into shares of the
Company’s common stock as described below. The January 2019
Convertible Note and all accrued interest thereon are convertible
into shares of the Company’s common stock, at the option of
the holder thereof, at a conversion price equal to $1.50 per share.
Further, the conversion of the January 2019 Convertible Note is
subject to a 49.9% conversion limitation which prevents the
conversion of any portion thereof into common stock of the Company
if such conversion would result in SK Energy or any of its
affiliates beneficially owning more than 49.9% of the
Company’s outstanding shares of common stock. The January
2019, Convertible Note is due and payable on January 11, 2022 but
may be prepaid at any time without penalty. In February 2019, the
January 2019 Convertible Note was converted into common stock as
discussed below.
Convertible Notes Amendment and Conversion
On
February 15, 2019, the Company and SK Energy agreed to amend the
terms of $23.6 million in Convertible Promissory Notes sold in
August 2018 (including $22 million acquired by SK Energy) and
a $7 million Convertible Note sold to SK Energy in October 2018, as
well as the January 2019 Convertible Note, whereby each of the
notes were amended to remove the conversion limitation that
previously prevented SK Energy from converting any portion of the
notes into common stock of the Company if such conversion would
have resulted in SK Energy beneficially owning more than 49.9% of
the Company’s outstanding shares of common
stock.
Immediately
following the entry into the amendment, on February 15, 2019, SK
Energy elected to convert (i) all $15,000,000 of the
outstanding principal and all $126,000 of accrued interest under
the January 2019 Convertible Note into common stock of the Company
at a conversion price of $1.50 per share as set forth in the
January 2019 Convertible Note into 10,083,819 shares of restricted
common stock of the Company, and (ii) all $7,000,000 of the
outstanding principal and all $18,700 of accrued interest under the
October 2018 note into common stock of the Company at a conversion
price of $1.79 per share as set forth in the October 2018 note into
4,014,959 shares of restricted common stock of the Company, which
shares in aggregate represented approximately 47.1% of the
Company’s then 29,907,223 shares of issued and outstanding
Company common stock after giving effect to the
conversions.
SK Energy Note Amendment; Note Purchases and
Conversion
On March 1, 2019, the Company and SK Energy
entered into a First Amendment to Promissory Note (the
“SK Energy Note
Amendment”) which
amended a note dated June 25, 2018, evidencing $7.7 million of
principal owed to SK Energy (the “SK Energy
Note”), to provide SK
Energy the right, at any time, at its option, to convert the
principal and interest owed under such SK Energy Note, into shares
of the Company’s common stock, at a conversion price of $2.13
per share. The SK Energy Note previously only included a conversion
feature whereby the Company had the option to pay quarterly
interest payments on the SK Energy Note in shares of Company common
stock instead of cash, at a conversion price per share calculated
based on the average closing sales price of the Company’s
common stock on the NYSE American for the ten trading days
immediately preceding the last day of the calendar quarter
immediately prior to the quarterly payment
date.
In addition, on March 1, 2019, the holders of
$1,500,000 in aggregate principal amount of Convertible Notes
issued by the Company on August 1, 2018 (the
“August 2018
Notes”) sold their
August 2018 Notes at face value plus accrued and unpaid interest
through March 1, 2019 to SK Energy (the “August 2018 Note
Sale”). Holders which
sold their August 2018 Notes pursuant to the August 2018 Note Sale
to SK Energy include an executive officer of SK Energy ($200,000 in
principal amount of August 2018 Notes); a trust affiliated with
John J. Scelfo, a director of the Company ($500,000 in principal
amount of August 2018 Notes); an entity affiliated with Ivar Siem,
a director of the Company, and J. Douglas Schick the President of
the Company ($500,000 in principal amount of August 2018 Notes);
and Harold Douglas Evans, a director of the Company ($200,000 in
principal amount of August 2018 Notes).
Following the August 2018 Note Sale, the
Company’s sole issued and outstanding debt was the
(i) $7,700,000 in principal, plus accrued interest, under the
SK Energy Note held by SK Energy, (ii) an aggregate of
$23,500,000 in principal, plus accrued interest, under the August
2018 Notes and SK Energy $22 million Convertible Note held by SK
Energy, and (iii) $100,000 in principal, plus accrued
interest, under an August 2018 Note held by an unaffiliated holder
(the “Unaffiliated
Holder”).
Immediately following the effectiveness of the SK
Energy Note Amendment and August 2018 Note Sale, on March 1, 2019,
SK Energy and the Unaffiliated Holder elected to convert all
$31,300,000 of outstanding principal and an aggregate of $1,462,818
of accrued interest under the SK Energy Note, SK Energy $22 million
Convertible Note and August 2018 Notes into common stock of the
Company at a conversion price of $2.13 per share (the
“Conversion
Price” and the
“Conversions”) as
set forth in the SK Energy Note, as amended, and the August 2018
Notes and SK Energy $22 million Convertible Note (collectively, the
“Notes”),
into an aggregate of 15,381,605 shares of restricted common stock
of the Company (the “Conversion
Shares”).
Common Stock Issuance to SK Energy LLC
On May 21, 2019, we raised $14,999,998.20
through the sale of 6,818,181 shares of restricted Company common
stock at a price of $2.20 per share (the “Purchase
Price”) to SK Energy,
pursuant to a Common Stock Subscription Agreement, dated May 21,
2019, entered into by and between the Company and SK Energy (the
“Subscription
Agreement”). The Purchase
Price represents a premium to the closing price of the
Company’s common stock on the NYSE American Exchange as of
the closing date and was above the greater of the book/market price
of the Company’s common stock for the purposes of the NYSE
American Exchange.
Advisory Agreements
Effective November 8, 2019, the Company entered
into an Advisory Agreement and Restricted Shares Grant Agreement
with Viktor Tkachev, a then greater than 10% stockholder of the
Company (who acquired $12 million of shares of common stock on
September 17, 2019), under which Mr. Tkachev agreed to
provide strategic planning and business development services,
and pursuant to which 100,000 shares of restricted common
stock were awarded to Mr. Tkachev under the Company’s Amended
and Restated 2012 Equity Incentive Plan (the
“2012
Plan”), vesting in full
on the six-month anniversary of the grant date, subject to his
continued service with the Company, in consideration for advisory
services to be provided by Mr. Tkachev to the Company. The Advisory
Agreement contains customary confidentiality, indemnification and
no conflict language, and unless terminated by the Company or the
advisor with 15 days prior written notice for any reason, the
Advisory Agreement has an indefinite term. The Advisory Agreement
was terminated effective March 23, 2021.
Effective
November 8, 2019, the Company entered into an Advisory Agreement
with Ivar Siem, a member of the board of directors, pursuant to
which the 50,000 restricted shares of common stock previously
awarded to Mr. Siem on August 28, 2019 under the Plan became fully
vested on July 12, 2020. The Advisory Agreement contains customary
confidentiality, indemnification and no conflict language; and,
unless terminated by the Company or the advisor with 15 days prior
written notice for any reason, the Advisory Agreement has an
indefinite term.
Additional Miscellaneous Related Party Transactions
On September 20, 2018, SK Energy entered into an
agreement with American Resources Inc. (“American”),
whose principals are Ivar Siem, a member of the board of directors
of the Company, and J. Douglas Schick, the President of the
Company. Pursuant to the agreement, American agreed to assist Mr.
Kukes with his investments in the Company and SK Energy agreed to
pay American 25% of the profit realized by SK Energy, if any,
following the sale or disposal of the securities of the Company
which SK Energy holds and may acquire in the future (prior to such
sale/disposition). The profit is to be calculated based on
(x) the amount of consideration received by SK Energy in
connection with the sale of such securities, minus (y) the
consideration paid by SK Energy for the securities, increased by
10% each year that such securities are held. The agreement has a
term of four years but can be terminated at any time by SK Energy
with written notice to American.
On
November 1, 2019, the Company began subleasing approximately 300
square feet of office space at its current headquarters to SK
Energy, which is owned and controlled by Mr. Kukes, our Chief
Executive Officer and a member of the board of directors. The lease
renews on a monthly basis, may be terminated by either party at any
time upon prior written notice delivered to the other party, and
has a monthly base rent of $1,200.
Out Audit Committee is tasked with reviewing and
approving proposed transactions between the Company and
“related
persons” as defined in
Item 404 of SEC Regulation S-K, such as those described above.
However, such transactions may also be presented to, and approved
by, the independent members of the board of directors (typically
through an ad hoc committee formed solely for the purpose of
approving each individual transaction), or by a majority of the
board (with the interested parties abstaining) and future material
transactions between us and members of management or their
affiliates shall be on terms no less favorable than those available
from unaffiliated third parties.
In addition, our Code of Ethics (described above
under “Code of
Ethics” on page 13), which is applicable to all of our employees,
officers and directors, requires that all employees, officers and
directors avoid any conflict, or the appearance of a conflict,
between an individual’s personal interests and our
interests.
Section
16(a) of the Exchange Act requires our executive officers and
directors and persons who own more than 10% of a registered class
of our equity securities to file with the SEC initial statements of
beneficial ownership, reports of changes in ownership and annual
reports concerning their ownership in our common stock and other
equity securities, on Form 3, 4 and 5 respectively. Executive
officers, directors and greater than 10% stockholders are required
by the SEC regulations to furnish our company with copies of all
Section 16(a) reports they file.
Based
solely on our review of the copies of such reports received by us
and on written representation by our officers and directors
regarding their compliance with the applicable reporting
requirements under Section 16(a) of the Exchange Act, we
believe that all filings required to be made under Section
16(a) during 2020 were timely made.
At the
annual meeting, four directors are to be elected to hold office
until the 2022 annual meeting of stockholders and until their
respective successors are duly elected and qualified. The
Nominating and Governance Committee has recommended, and the board
of directors has selected, the following nominees for election:
John J. Scelfo, Simon Kukes, Ivar Siem and H. Douglas Evans, all of
whom are current members of the board of directors of the
Company.
If any
nominee for any reason is unable to serve or for good cause will
not serve, the proxies may be voted for such substitute nominee as
the proxy holder may determine. We are not aware of any nominee who
will be unable to, or for good cause will not, serve as a
director.
The
Company’s Nominating Committee has reviewed the
qualifications of the director nominees and has recommended each of
the nominees for election to the Board.
We
believe that each of our directors possesses high standards of
personal and professional ethics, character, integrity and values;
an inquisitive and objective perspective; practical wisdom; mature
judgment; diversity in professional experience, skills and
background and a proven record of success in their respective
fields; and valuable knowledge of our business and industry.
Moreover, each of our directors is willing to devote sufficient
time to carrying out his or her duties and responsibilities
effectively and is committed to serving us and our stockholders.
Set forth below is a brief description of the specific experiences,
qualifications and skills attributable to each of our directors
that led the board of directors, as of the date of this proxy
statement, to its conclusion that such director should serve as a
director of the Company. Director nominee ages set forth below are
as of the record date.
THE BOARD OF DIRECTORS RECOMMENDS
VOTING “FOR” EACH OF THE NOMINEES LISTED
BELOW.
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JOHN J. SCELFO (AGE
63)
DIRECTOR
CHAIRMAN OF THE AUDIT COMMITTEE
CHAIRMAN OF THE COMPENSATION COMMITTEE
MEMBER OF THE CORPORATE GOVERNANCE AND NOMINATING
COMMITTEE
Director since July 2018
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Mr.
Scelfo brings 40 years of experience in oil and gas management,
finance and accounting to the Board. Mr. Scelfo currently serves as
principal and owner of JJS Capital Group, a Fort Lauderdale,
Florida-based family investment company that he formed in April
2014. Prior to forming JJS Capital, Mr. Scelfo was Senior Vice
President, Finance and Corporate Development (from February 2004 to
March 2014), and Chief Financial Officer, Worldwide Exploration
& Producing (from April 2003 to January 2004) of New York,
New York-based Hess Corporation, a large integrated oil and gas
company, where he served as one of eight members of the
company’s Executive Committee and was responsible for the
company’s corporate treasury, strategy and upstream
commercial activities. Prior to joining Hess Corporation, Mr.
Scelfo served as Executive Vice President and Chief Financial
Officer of publicly listed Sirius Satellite Radio (from April 2001
to March 2003), as Vice President and Chief Financial Officer of
Asia Pacific & Japan for Dell Computer (November 1999 to March
2001), and in various roles of increasing responsibility with Mobil
Corporation (from June 1980 to October 1999).
Mr.
Scelfo holds a bachelor’s degree and an M.B.A. from Cornell
University. In 2011, he was awarded Cornell ILR School’s
Alpern Award given to those who “have been exceedingly
generous in their support of the ILR School in general and in
support of Off-Campus Credit Programs in
particular”.
The
board of directors believes that Mr. Scelfo’s over 30
years’ experience in management, finance and accounting in
the energy industry working at major oil and gas and other publicly
traded companies, and the insights he has gained from these
experiences, will provide crucial guidance for our future
operations, capital raising efforts, and financial accounting and
reporting functions.
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SIMON KUKES (AGE 74)
CHIEF EXECUTIVE OFFICER AND DIRECTOR
Director Since July 2018
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Simon
Kukes is a globally renowned oil executive.
Holding
various positions over the years, Kukes has served as the principal
of his personal investment company, SK Energy LLC, since April
2013. From January 2005 to April 2013, Kukes was the CEO at
Samara-Nafta, a Russian oil company that partnered with US-based
international oil company, Hess Corporation. He was also the
President and Chief Executive of Tyumen Oil Company (TNK) from 1998
until it combined with British Petroleum in 2003 to create TNK-BP.
Following his time at TNK, Kukes joined Yukos Oil Company in Moscow
presiding as the CEO and Chairman. From 1979 to 1986 he was the
Technical Director of oil-refining and petro-chemistry for Phillips
Petroleum and in 1986 joined Amoco and in 1993 became
Vice-President over marketing and business development for Amoco.
Since October 2014, Kukes has served on the board of directors of
Leverate Technological Trading Ltd., an Israel-based technology and
services provider in the brokerage industry, since June 2014 he has
served on the board of directors of Fletschhorn, a Swiss-based
hotel and restaurant company, and since June 2018 he has served as
chairman and member the board of directors of GLAMZ Ltd., a
privately-held Israel-based beauty products and salon booking
platform company in which he owns a controlling
interest.
Kukes
boasts several awards and achievements over his lifespan. In 1999,
the Wall Street Journal voted Kukes as one of the Top 10 Central
European Executives. He is also the recipient of the Medal of the
Ministry for Natural Resources of the Russian Federation, as well
as the American Society of Competition Development Award for
Leadership. In 2003, he was named by The Financial Times and
PricewaterhouseCoopers as one of the 64 most respected business
leaders in the world.
Kukes
attended several prestigious universities all over the globe,
receiving his Bachelor of Science in Chemical Engineering from the
University for Chemical Technology in Moscow, where he graduated
with Honors. From there, he pursued his PhD in Physical Chemistry
at the Academy of Sciences in Moscow, where he would later be a
Research Associate for Nuclear and Electronic Resonance. Kukes then
attended Rice University in Houston, Texas, where he was a
Postdoctoral Fellow. Kukes has also served as an Adjunct Professor
at the University of Delaware and on the Editorial Board of Fuel
Magazine.
His
commitment to the oil and gas industry has inspired Kukes to
publish more than 60 scientific papers and two books on the oil and
gas industry of Russia and the United States. Kukes is also the
holder of more than 130 patents, primarily in Oil and Petrochemical
Processing.
Mr. Kukes brings to the board of directors decades
of leadership and experience in the global energy industry. The
board of directors believes that Mr. Kukes’ experience and
strategic leadership and vision will provide crucial guidance for
our management and operations, and provide key insights and
guidance in the evaluation of oil and gas acquisition and
development opportunities.
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IVAR SIEM (AGE
75)
DIRECTOR
Director since July 2018
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Mr.
Siem has broad experience from both the upstream and the service
segments of the oil and gas industry, has been the founder of
several companies, and has been involved in several roll-ups and
restructuring processes throughout his career. He currently serves
as the Chairman of American Resources, Inc., and as a Managing
Partner of its affiliated investment vehicle, Norexas, LLC, both
privately held Houston, Texas-based companies active in oil and gas
investment, acquisition and development and has served in that
capacity since 2013. Previously, Mr. Siem served as Chairman and
Chief Executive Officer of American Resources, Inc. (from 2013
through July 2017) and Chairman of Blue Dolphin Energy Company
(OTCQX: BDCO), Houston, Texas after taking the company out of
bankruptcy in 1990. Blue Dolphin was an offshore Gulf of Mexico
operator until a merger in 2012 with an independent refiner and
marketer of petroleum products. Mr. Siem’s role as CEO ended
with the merger and he left the board in 2014. From January 2007 to
present, Mr. Siem served as President of Drillmar Oil and Gas,
Inc., a subsidiary of Drillmar Energy, Inc. In 1999, Mr. Siem
acquired a small distressed public company, American Resources
Offshore, Inc. and worked with creditors and existing management to
achieve a voluntary reorganization. From 1995 to 2000, Mr. Siem
served as Chairman and interim CEO of DI Industries/Grey Wolf
Drilling while restructuring the company financially and
operationally. Through several mergers and acquisitions, the
company emerged as one of the leading land drilling contractors in
the US. The company was subsequently acquired by Precision Drilling
in 2008. From 1996 to 1997 Mr. Siem served as the initial Chairman
and CEO of Seateam Technology ASA when it was spun off from DSND
ASA and listed on the Oslo exchange. Prior to Seateam, Mr. Siem
held various executive roles at multiple E&P and oil field
service companies. Mr. Siem started his career at Amoco working as
an engineer in various segments of upstream
operations.
Mr.
Siem is currently on the Board of Directors at Siem Industries,
Inc., the Drillmar Energy Group of companies, and Petrolia Energy
Corporation (OTCQB: BBLS), and has served on the board of several
privately held and publicly traded companies including Frupor SA,
Avenir ASA, and DSND ASA. Siem Industries is a holding company
which invests in shipping and offshore oil and gas construction
services. Frupor SA, is a Portuguese agricultural business, which
Mr. Siem cofounded with his brother O. M. Siem in
1988.
Mr.
Siem holds a Bachelor of Science in Mechanical Engineering with a
minor in Petroleum from the University of California, Berkeley and
an Executive MBA from the Amos Tuck School of Business, Dartmouth
University.
The
board of directors believes that Mr. Siem’s broad experience
from both the upstream and the service segments of the oil and gas
industry, and executive management, technical and operating
experience at publicly-traded oil and gas companies, and the
insights he has gained from these experiences, will provide crucial
guidance for our future management and operations, and provide key
insights and guidance in the evaluation of oil and gas acquisition
and development opportunities.
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H. DOUGLAS EVANS (AGE
73)
DIRECTOR
CHAIRMAN OF
THE CORPORATE
GOVERNANCE AND NOMINATING COMMITTEE
MEMBER OF THE AUDIT COMMITTEE
MEMBER OF THE COMPENSATION COMMITTEE
Director since September 2018
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Mr. Evans has 50 years of oil and gas industry
experience, 40 years of which have been spent in various executive
management positions with Gulf Interstate Engineering Company
(“GIE”), a privately-held Houston, Texas-based
firm specializing in the engineering of oil, gas and liquid
pipeline systems, where he has served as Honorary Chairman since
November 2017, and previously served as President and Chief
Executive Officer (July 2004-November 2017), President (February
2003-November 2017), Senior Vice President (September 1994-July
2004), and in various other roles since he joined the company in
1978. During Mr. Evans’ tenure as an executive at GIE, he has
successfully overseen the company’s organic growth from $25
million in sales in 1996 to over $250 million in sales in recent
years, with GIE involved in almost every major onshore oil and gas
pipeline in the world over the last 20 years.
Mr.
Evans holds a B.S. Civil Engineering and Master of Business
Administration from Queen’s University at Kingston, Ontario,
and is a registered Professional Engineer in Ontario and Alberta,
Canada. Mr. Evans currently serves as Honorary Chairman of GIE
(since November 2017), and previously a member of the Board of
Directors of Gulf Interstate Field Services, a GIE affiliate
engaged in providing oil and gas pipeline construction inspection
services, and a number of other GIE affiliated companies, the Board
of Directors and Chairman of the Strategy Committee for the
International Pipe Line and Offshore Contractors Association
(IPLOCA) (through September 2019), a member of the Board of
Houston, Texas-based Crossroads School, Inc. (2004 to 2020), and a
former member of the Board of the Cystic Fibrosis Foundation
– Texas Gulf Coast Chapter.
The
board of directors believes that Mr. Evans’ over 45
years’ experience in management and operations in the energy
industry, and the insights he has gained from his experiences, will
provide crucial guidance for our management and
operations.
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The
board of directors believes that each of our director nominees is
highly qualified to serve as a member of the board of directors.
Each of the director nominees has contributed to the mix of skills,
core competencies and qualifications of the board of directors.
When evaluating candidates for election to the board of directors,
the board of directors seeks candidates with certain qualities that
it believes are important, including integrity, an objective
perspective, good judgment, and leadership skills. Our director
nominees are highly educated and have diverse backgrounds and
talents and extensive track records of success in what we believe
are highly relevant positions.
A
plurality of the votes cast in person or by proxy by the holders of
our common stock entitled to vote at the annual meeting are
required to elect the nominees. A plurality of the votes cast means
(1) the director nominee with the most votes for a particular seat
is elected for that seat; and (2) votes cast shall include
votes to “withhold
authority” (shown as “AGAINST” on the enclosed
form of proxy) and exclude abstentions and broker non-votes with
respect to that director’s election. Therefore, abstentions
and broker non-votes (which occur if a broker or other nominee does
not have discretionary authority and has not received instructions
with respect to a particular director nominee within ten days of
the annual meeting) will not be counted in determining the number
of votes cast with respect to that director’s
election.
Properly executed
proxies will be voted at the annual meeting in accordance with the
instructions specified on the proxy; if no such instructions are
given, the persons named as agents and proxies in the enclosed form
of proxy will vote such proxy “FOR” the election of the
nominees named herein. Should any nominee become unavailable for
election, discretionary authority is conferred to the persons named
as agents and proxies in the enclosed form of proxy to vote for a
substitute.
Pursuant to the
power provided to the board of directors in our Bylaws, the board
of directors has set the number of directors that shall constitute
the board of directors at four. Proxies cannot be voted for a
greater number of persons than the number of nominees named on the
enclosed form of proxy, and stockholders may not cumulate their
votes in the election of directors.
THE
BOARD OF DIRECTORS RECOMMENDS
VOTING “FOR” EACH OF THE NOMINEES
LISTED ABOVE.
At the
annual meeting, stockholders are requested to approve the PEDEVCO
Corp. 2021 Equity Incentive Plan, which we refer to as the 2021
Plan. The 2021 Plan was approved by the board of directors of the
Company on July 10, 2021, subject to approval by the stockholders
at the annual meeting. If
this proposal 2 is not approved by our stockholders the 2021 Plan
will not become effective. The 2021 Plan is intended as the
successor to the PEDEVCO Corp. Amended and Restated 2012 Equity
Incentive Plan.
The
following is a summary of the principal features of the 2021 Plan.
This summary does not purport to be a complete description of all
of the provisions of the 2021 Plan. It is qualified in its entirety
by reference to the full text of the 2021 Plan, as proposed to be
amended, which has been filed with the SEC with this proxy
statement as Appendix
A.
General
The
2021 Equity Incentive Plan provides for awards of incentive stock
options, non-statutory stock options, rights to acquire restricted
stock, stock appreciation rights, or SARs, and performance units
and performance shares. Subject to the provisions of the 2021 Plan
relating to adjustments upon changes in our common stock, an
aggregate of 8,000,000 shares of common stock are
reserved for issuance under the 2021 Plan.
The
2021 Plan provides for awards of incentive stock options,
non-statutory stock options, rights to acquire restricted stock,
stock appreciation rights, or SARs, and performance units and
performance shares. Incentive stock options granted under the 2021
Plan are intended to qualify as “incentive stock options”
within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended (the “Code”). Non-statutory
stock options granted under the 2021 Plan are not intended to
qualify as incentive stock options under the Code. See
“Federal Income Tax
Consequences” below beginning on page 32 for a
discussion of the principal federal income tax consequences of
awards under the 2021 Plan.
Purpose
Our
board of directors adopted the 2021 Plan to provide a means by
which our employees, directors and consultants may be given an
opportunity to benefit from increases in the value of our common
stock, to assist in attracting and retaining the services of such
persons, to bind the interests of eligible recipients more closely
to our interests by offering them opportunities to acquire shares
of our common stock and to afford such persons stock-based
compensation opportunities that are competitive with those afforded
by similar businesses. All of our employees, directors and
consultants are eligible to participate in the 2021
Plan.
Administration
Unless
it delegates administration to a committee as described below, our
board of directors will administer the 2021 Plan. Subject to the
provisions of the 2021 Plan, our board of directors has the power
to construe and interpret the 2021 Plan, and to determine: (i) the
fair value of common stock subject to awards issued under the 2021
Plan; (ii) the persons to whom and the dates on which awards will
be granted; (iii) what types or combinations of types of awards
will be granted; (iv) the number of shares of common stock to be
subject to each award; (v) the time or times during the term of
each award within which all or a portion of such award may be
exercised; (vi) the exercise price or purchase price of each award;
and (vii) the types of consideration permitted to exercise or
purchase each award and other terms of the awards.
Our
board of directors has the power to delegate administration of the
2021 Plan to a committee composed of one or more directors. In the
discretion of our board of directors, a committee may consist
solely of two or more “independent directors” or
two or more “non-employee directors”
(as such terms are defined in the 2021 Plan).
Stock Subject to the 2021 Plan
Subject
to the provisions of the 2021 Plan relating to adjustments upon
changes in our common stock, an aggregate of 8,000,000 shares of
common stock will be reserved for issuance under the 2021
Plan.
If
shares of common stock subject to an option, SAR or performance
share or unit granted under the 2021 Plan expire or otherwise
terminate without being exercised (or exercised in full), such
shares shall become available again for grants under the 2021 Plan.
If shares of restricted stock awarded under the 2021 Plan are
forfeited to us or repurchased by us, the number of shares
forfeited or repurchased shall again be available under the 2021
Plan. Where the exercise price of an option granted under the 2021
Plan is paid by means of the optionee’s surrender of
previously owned shares of common stock, or our withholding of
shares otherwise issuable upon exercise of the option as may be
permitted under the 2021 Plan, only the net number of shares issued
and which remain outstanding in connection with such exercise shall
be deemed “issued” and no longer
available for issuance under the 2021 Plan.
Eligibility
Incentive stock
options may be granted under the 2021 Plan only to employees of our
company and its affiliates. Employees, directors and consultants of
our company and its affiliates are eligible to receive all other
types of awards under the 2021 Plan.
No
incentive stock option may be granted under the 2021 Plan to any
person who, at the time of the grant, owns (or is deemed to own)
stock possessing more than 10% of the total combined voting power
of our company or any affiliate of our company, unless the exercise
price is at least 110% of the fair market value of the stock
subject to the option on the date of grant and the term of the
option does not exceed five years from the date of grant. In
addition, no employee may be granted options under the 2021 Plan
exercisable for more than 8,000,000 shares of common stock during
any twelve-month period.
Terms of Options and
SARs
Options, SARs and
performance shares and units may be granted under the 2021 Plan
pursuant to stock option agreements, stock appreciation rights
agreements and performance award agreements, respectively. The
following is a description of the permissible terms of options,
SARs and performance units under the 2021 Plan. Individual grants
of options, SARs and performance shares and units may be more
restrictive as to any or all of the permissible terms described
below.
Exercise Price; Payment
The
exercise price of incentive stock options may not be less than the
fair market value of the common stock subject to the option on the
date of the grant and, in some cases (see “Eligibility” above), may
not be less than 110% of such fair market value. The exercise price
of nonstatutory options also may not be less than the fair market
value of the common stock on the date of grant. The base value of
an SAR or performance share or unit may not be less than the fair
market value of the common stock on the date of grant. The exercise
price of options granted under the 2021 Plan must be paid either in
cash at the time the option is exercised or, at the discretion of
our board of directors, (i) by delivery of already-owned
shares of our common stock, (ii) pursuant to a deferred
payment arrangement, (iii) pursuant to a net exercise
arrangement, or (iv) pursuant to a cashless exercise as permitted
under applicable rules and regulations of the SEC.
In
addition, the holder of an SAR is entitled to receive upon exercise
of such SAR only shares of our common stock at a fair market value
equal to the benefit to be received by the exercise.
Vesting
Options
granted under the 2021 Plan may be exercisable in cumulative
increments, or “vest,” as determined by
our board of directors. Our board of directors has the power to
accelerate the time as of which an option may vest or be
exercised.
Tax Withholding
To the
extent provided by the terms of an option, SAR or performance share
or unit, a participant may satisfy any federal, state or local tax
withholding obligation relating to the exercise of such option, SAR
or performance share or unit by a cash payment upon exercise, or in
the discretion of our board of directors, by authorizing us to
withhold a portion of the stock otherwise issuable to the
participant, by delivering already-owned shares of our common stock
or by a combination of these means.
Term
The
maximum term of options, SARs and performance shares and units
under the 2021 Plan is ten years, except that in certain cases (see
“Eligibility” above) the
maximum term is five years. Options, SARs and performance shares
and units awarded under the 2021 Plan generally will terminate
three months after termination of the participant’s service;
however, pursuant to the terms of the 2021 Plan, a grantee’s
employment shall not be deemed to terminate by reason of such
grantee’s transfer from us to an affiliate of us, or vice
versa, or sick leave, military leave or other leave of absence
approved by our board of directors, if the period of any such leave
does not exceed ninety (90) days or, if longer, if the
grantee’s right to reemployment by us or any of our
affiliates is guaranteed either contractually or by
statute.
Restrictions on Transfer
A
recipient may not transfer an incentive stock option otherwise than
by will or by the laws of descent and distribution. During the
lifetime of the recipient, only the recipient may exercise an
option, SAR or performance share or unit. Our board of directors
may grant nonstatutory stock options, SARs and performance shares
and units that are transferable to the extent provided in the
applicable written agreement.
Terms of Restricted Stock Awards
Restricted stock
awards may be granted under the 2021 Plan pursuant to restricted
stock purchase or grant agreements. No awards of restricted stock
may be granted under the 2021 Plan after ten (10) years from our
board of directors’ adoption of the 2021 Plan (July
2031).
Payment
Our
board of directors may issue shares of restricted stock under the
2021 Plan as a grant or for such consideration, including services,
and, subject to the Sarbanes-Oxley Act of 2002, promissory notes,
as determined in its sole discretion. If restricted stock under the
2021 Plan is issued pursuant to a purchase agreement, the purchase
price must be paid either in cash at the time of purchase or, at
the discretion of our board of directors, pursuant to any other
form of legal consideration acceptable to our board of
directors.
Vesting
Shares
of restricted stock acquired under a restricted stock purchase or
grant agreement may, but need not, be subject to forfeiture to us
or other restrictions that will lapse in accordance with a vesting
schedule to be determined by our board of directors. In the event a
recipient’s employment or service with us terminates, any or
all of the shares of common stock held by such recipient that have
not vested as of the date of termination under the terms of the
restricted stock agreement may be forfeited to us in accordance
with such restricted stock agreement.
Tax Withholding
Our
board of directors may require any recipient of restricted stock to
pay to us in cash upon demand amounts necessary to satisfy any
applicable federal, state or local tax withholding requirements. If
the recipient fails to pay the amount demanded, our board of
directors may withhold that amount from other amounts payable by us
to the recipient, including salary, subject to applicable law. With
the consent of our board of directors in its sole discretion, a
recipient may deliver shares of our common stock to us to satisfy
this withholding obligation.
Restrictions on Transfer
Rights
to acquire shares of common stock under the restricted stock
purchase or grant agreement shall be transferable by the recipient
only upon such terms and conditions as are set forth in the
restricted stock agreement, as our board of directors shall
determine in its discretion, so long as shares of common stock
awarded under the restricted stock agreement remain subject to the
terms of such agreement.
Adjustment Provisions
If any
change is made to our outstanding shares of common stock without
our receipt of consideration (whether through reorganization, stock
dividend or stock split, or other specified change in our capital
structure), appropriate adjustments may be made in the class and
maximum number of shares of common stock subject to the 2021 Plan
and outstanding awards. In that event, the 2021 Plan will be
appropriately adjusted in the class and maximum number of shares of
common stock subject to the 2021 Plan, and outstanding awards may
be adjusted in the class, number of shares and price per share of
common stock subject to such awards.
Effect of Certain Corporate Events
In the event of (i) a liquidation or
dissolution of the Company; (ii) a merger or consolidation of the
Company with or into another corporation or entity (other than a
merger with a wholly-owned subsidiary); (iii) a sale of all or
substantially all of the assets of the Company; or (iv) a purchase
or other acquisition of more than 50% of the outstanding stock of
the Company by one person or by more than one person acting in
concert, any surviving or acquiring corporation may assume awards
outstanding under the 2021 Plan or may substitute similar awards.
Unless the stock award agreement otherwise provides, in the event
any surviving or acquiring corporation does not assume such awards
or substitute similar awards, then the awards will terminate if not
exercised at or prior to such event.
Duration, Amendment and Termination
Our
board of directors may suspend or terminate the 2021 Plan without
stockholder approval or ratification at any time or from time to
time. Unless sooner terminated, the 2021 Plan will terminate ten
years from the date of its adoption by our board of directors,
i.e., in July 2031.
Our
board of directors may also amend the 2021 Plan at any time, and
from time to time. However, except as it relates to adjustments
upon changes in common stock, no amendment will be effective unless
approved by our stockholders to the extent stockholder approval is
necessary to preserve incentive stock option treatment for federal
income tax purposes. Our board of directors may submit any other
amendment to the 2021 Plan for stockholder approval if it concludes
that stockholder approval is otherwise advisable.
Federal Income Tax Consequences
The
following is a summary of the principal United States federal
income tax consequences to the recipient and us with respect to
participation in the 2021 Plan. This summary is not intended to be
exhaustive, and does not discuss the income tax laws of any city,
state or foreign jurisdiction in which a participant may
reside.
Incentive Stock Options
There
will be no federal income tax consequences to either us or the
recipient upon the grant of an incentive stock option. Upon
exercise of the option, the excess of the fair market value of the
stock over the exercise price, or the “spread,” will be added to
the alternative minimum tax base of the recipient unless a
disqualifying disposition is made in the year of exercise. A
disqualifying disposition is the sale of the stock prior to the
expiration of two years from the date of grant and one year from
the date of exercise, which may be deemed to occur in connection
with a net settlement, cashless exercise of an incentive stock
option, provide that incentive stock option treatment of the full
option may also be lost upon such net settlement exercise of an
incentive stock option, depending on the current interpretation of
applicable law. If the shares of common stock are disposed of in a
disqualifying disposition, the recipient will realize taxable
ordinary income in an amount equal to the spread at the time of
exercise, and we will be entitled (subject to the requirement of
reasonableness, the provisions of Section 162(m) of the Code
and the satisfaction of a tax reporting obligation) to a federal
income tax deduction equal to such amount. Any gain or loss
recognized on such a disqualifying disposition of the shares
issuable upon exercise of the incentive stock option in excess of
the amount treated as ordinary income is treated as long-term or
short-term capital gain or loss, depending on how long the shares
were held by the participant prior to the sale. The amount of
ordinary income recognized by the participant is subject to payroll
taxes. If the recipient sells the shares of common stock after the
specified periods, the gain or loss on the sale of the shares will
generally be long-term capital gain or loss and we will not be
entitled to a federal income tax deduction.
Non-statutory Stock Options and Restricted Stock
Awards
Non-statutory stock
options and restricted stock awards granted under the 2021 Plan
generally have the following federal income tax
consequences.
There
are no tax consequences to the participant or us by reason of the
grant. Upon acquisition of the stock, the recipient will recognize
taxable ordinary income equal to the excess, if any, of the
stock’s fair market value on the acquisition date over the
purchase price. However, to the extent the stock is subject to
“a substantial risk
of forfeiture” (as defined in Section 83 of the Code),
the taxable event will be delayed until the forfeiture provision
lapses unless the recipient elects to be taxed on receipt of the
stock by making a Section 83(b) election within 30 days of receipt
of the stock. If such election is not made, the recipient generally
will recognize income as and when the forfeiture provision lapses,
and the income recognized will be based on the fair market value of
the stock on such future date. On that date, the recipient’s
holding period for purposes of determining the long-term or
short-term nature of any capital gain or loss recognized on a
subsequent disposition of the stock will begin. If a recipient
makes a Section 83(b) election, the recipient will
recognize ordinary income equal to the difference between the
stock’s fair market value and the purchase price, if any, as
of the date of receipt and the holding period for purposes of
characterizing as long-term or short-term any subsequent gain or
loss will begin at the date of receipt.
With respect to employees, we are generally
required to withhold from regular wages or supplemental wage
payments an amount based on the ordinary income recognized. Subject
to the requirement of reasonableness, the provisions of
Section 162(m) of the Code and the satisfaction of a tax
reporting obligation, we will generally be entitled to a business
expense deduction equal to the taxable ordinary income realized by
the participant.
Upon
disposition of the stock, the recipient will recognize a capital
gain or loss equal to the difference between the selling price and
the sum of the amount paid for such stock plus any amount
recognized as ordinary income with respect to the stock. Such gain
or loss will be long-term or short-term depending on whether the
stock has been held for more than one year.
Stock Appreciation Rights or SARs
A
recipient receiving a stock appreciation right will not recognize
income, and we will not be allowed a tax deduction, at the time the
award is granted. When a recipient exercises the stock appreciation
right, the fair market value of any shares of common stock received
will be ordinary income to the recipient and will be allowed as a
deduction to us for federal income tax purposes.
Potential Limitation on Company Deductions
Section 162(m)
of the Code denies a deduction to any publicly held corporation for
compensation paid to certain senior executives of the Company (a
“covered
employee”) in a taxable year to the extent that
compensation to such employees exceeds $1,000,000. It is possible
that compensation attributable to awards, when combined with all
other types of compensation received by a covered employee from the
Company, may cause this limitation to be exceeded in any particular
year.
THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF U.S. FEDERAL
INCOME TAXATION WITH RESPECT TO THE GRANT AND EXERCISE OF AWARDS
UNDER THE 2021 PLAN. IT DOES NOT PURPORT TO BE COMPLETE AND DOES
NOT DISCUSS THE TAX CONSEQUENCES OF AN INDIVIDUAL’S DEATH OR
THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE,
OR FOREIGN COUNTRY IN WHICH ANY ELIGIBLE INDIVIDUAL MAY
RESIDE.
Securities Issued and Granted Under 2021 Plan
As of
the date of this proxy statement, no awards have been made under
the 2021 Plan, and the
Company does not have any present intention to grant any awards
under the 2021 Plan, provided that the board of directors may, upon
such time as the 2021 Plan is adopted by stockholders, immediately
grant awards to eligible recipients pursuant to the terms of the
2021 Plan. Information regarding all of our equity compensation
plans can be found above under “Equity Compensation
Plan Information”, on page 18.
The
benefits or amounts that will be received by or allocated to each
named executive officer, all current executive officers as a group,
all directors who are not executive officers as a group, and all
employees who are not executive officers as a group under the 2021
Stock Plan are not presently
determinable.
Reasons for Adoption of the 2021 Plan
As of
the date of this proxy statement, and not including the 8,000,000
shares eligible for awards under the 2021 Plan, when and if such
plan is ratified and approved by stockholders, only a total of
361,273 shares remain available for awards under our Amended and Restated 2012 Equity Incentive
Plan.
The
reason for the adoption of the 2021 Plan is solely to increase the
shares available for issuances under our equity incentive plans in
order for us to be able to issue additional equity incentive
compensation awards for the purpose of attracting and retaining the
best available personnel for positions of substantial
responsibility, providing additional incentive to employees,
directors and consultants, and promoting the success of our
business.
We
believe that the number of shares available for grants under the
2021 Plan, based on current assumptions of management, will be
sufficient for anticipated issuances under the 2021 Plan through
2023.
Although
Section 710 of the NYSE American Company Guide, requires the
affirmative vote of the holders of voting stock representing a
majority of the votes cast at a stockholders meeting held by a NYSE
American listed company on a proposal to approve a stock plan or
amendment thereto such as the approval of the 2021 Plan, our bylaws
and the Texas Business Organizations Code, which supersede the NYSE
American Company Guide requirements, require the affirmative vote
by our stockholders of a majority of the shares present in person
or represented by proxy at the annual meeting and entitled to vote
on, and who voted for, against, or expressly abstained with respect
to, this proposal 2, in order to approve the proposal relating to
the approval of the 2021 Plan as set forth in this proposal 2,
assuming a quorum is present at the annual meeting.
Our
board of directors has approved the adoption of the 2021 Plan
described in proposal 2, subject to stockholder approval at the
annual meeting. If
proposal 2 is not approved by our stockholders at the annual
meeting, the 2021 Plan will not become
effective.
THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE PROPOSAL TO
APPROVE THE AMENDMENT TO THE 2021 PLAN.
The
board of directors has selected Marcum LLP (“Marcum”), as our
independent auditors for the fiscal year ended December 31, 2021,
and recommends that the stockholders vote to ratify such
appointment. Marcum served as our independent registered public
accounting for the years ended December 31, 2020 and
2019.
We do
not anticipate a representative from Marcum to be present at the
annual stockholders meeting. In the event that a representative of
Marcum is present at the annual meeting, the representative will
have the opportunity to make a statement if he/she desires to do so
and we will allow such representative to be available to respond to
appropriate questions.
The
following table presents fees for professional audit services
performed by Marcum LLP for the audit of our annual financial
statements for the years ended December 31, 2020 and 2019 (in
thousands).
|
|
2020
|
2019
|
|
Audit Fees
(1)
|
$181
|
$131
|
|
Audit-Related Fees
(2)
|
-
|
-
|
|
Tax Fees
(3)
|
80
|
40
|
|
All Other Fees
(4)
|
19
|
14
|
|
Total
|
$280
|
$185
|
(1) Audit fees include professional services rendered for (1) the
audit of our annual financial statements for the fiscal years ended
December 31, 2020 and 2019 and (ii) the reviews of the financial
statements included in our quarterly reports on Form 10-Q for such
years.
(2) Audit-related fees consist of fees billed for professional
services that are reasonably related to the performance of the
audit or review of our consolidated financial statements but are
not reported under “Audit
fees.”
(3) Tax fees include professional services relating to preparation
of the annual tax return.
(4) Other fees include professional services for review of various
filings and issuance of consents.
It
is the policy of our board of directors that all services to be
provided by our independent registered public accounting firm,
including audit services and permitted audit-related and non-audit
services, must be pre-approved by our board of directors. Our board
of directors pre-approved all services, audit and non-audit,
provided to us by Marcum LLP for 2020 and 2019.
In
order to assure continuing auditor independence, the Audit
Committee periodically considers the independent auditor’s
qualifications, performance and independence and whether there
should be a regular rotation of our independent external audit
firm. We believe the continued retention of Marcum to serve as our
independent auditor is in the best interests of the Company and its
stockholders, and we are asking our stockholders to ratify the
appointment of Marcum as our independent auditor for the year ended
December 31, 2021. While the Audit Committee is responsible for the
appointment, compensation, retention, termination and oversight of
the independent registered public accounting firm, the Audit
Committee and our board of directors are requesting, as a matter of
policy, that the stockholders ratify the appointment of Marcum as
our independent registered public accounting firm.
Ratification of
this appointment shall be effective upon the affirmative vote of a
majority of the shares present in person or represented by proxy at
the annual meeting and entitled to vote on, and who voted for,
against, or expressly abstained with respect to, this proposal,
provided that a quorum exists at the annual meeting. Abstentions
with respect to the ratification of this appointment will have the
effect of a vote “AGAINST” ratification of
this appointment. Properly executed proxies will be voted at the
annual meeting in accordance with the instructions specified on the
proxy; if no such instructions are given, the persons named as
agents and proxies in the enclosed form of proxy will vote such
proxy “FOR” the ratification of
the appointment of Marcum.
The
Audit Committee is not required to take any action as a result of
the outcome of the vote on this proposal. In the event stockholders
fail to ratify the appointment, the Audit Committee may reconsider
this appointment. Even if the appointment is ratified, the Audit
Committee, in its discretion, may direct the appointment of a
different independent accounting firm at any time during the year
if the committee determines that such a change would be in our and
the stockholders’ best interests.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR”
THE APPOINTMENT OF MARCUM LLP AS OUR INDEPENDENT AUDITORS FOR THE
FISCAL YEAR ENDED DECEMBER 31, 2021.
Proposals of
holders of our voting securities intended to be presented at our
2022 annual meeting of stockholders and included in our proxy
statement and form of proxy relating to such meeting pursuant to
Rule 14a-8 of Regulation 14A must be received by us, addressed to
our Corporate Secretary, at our principal executive offices at 575
N. Dairy Ashford, Suite 210, Houston, Texas 77079, not earlier than
the close of business on May 4, 2022, and not later than the close
of business on June 3, 2022, together with written notice of the
stockholder’s intention to present a proposal for action at
the fiscal 2022 annual meeting of stockholders, unless our annual
meeting date occurs more than 30 days before or 30 days after
September 1, 2022. In that case, we must receive proposals not
earlier than the close of business on the 120th day prior to the
date of the fiscal 2022 annual meeting and not later than the close
of business on the later of the 90th day prior to the date of the
annual meeting or, if the first public announcement of the date of
the annual meeting is less than 100 days prior to the date of the
meeting, the 10th day following the day on which we first make a
public announcement of the date of the meeting.
Stockholder
proposals must be in writing and must include (a) the name and
record address of the stockholder who intends to propose the
business and the class or series and number of shares of capital
stock of us which are owned beneficially or of record by such
stockholder; (b) a representation that the stockholder is a holder
of record of stock of us entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting to introduce
the business specified in the notice; (c) a brief description of
the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting; (d)
any material interest of the stockholder in such business; and (e)
any other information that is required to be provided by the
stockholder pursuant to Regulation 14A under the Exchange Act. The
board of directors reserves the right to refuse to submit any
proposal to stockholders at an annual meeting if, in its judgment,
the information provided in the notice is inaccurate or incomplete,
or does not comply with the requirements for stockholder proposals
set forth in our Bylaws.
Additionally, the
Nominating and Governance Committee will consider director
candidates recommended by stockholders, provided stockholders
include (a) as to each person whom the stockholder proposes for the
Nominating and Governance Committee to consider for nomination for
election as a director (i) the name, age, business address and
residence address of the person, (ii) the principal occupation or
employment of the person, (iii) the class or series and number of
shares of capital stock of us which are owned beneficially or of
record by the person and (iv) any other information relating to the
person that would be required to be disclosed in a proxy statement
or other filings required to be made in connection with
solicitations of proxies for election of directors pursuant to
Section 14 of the Exchange Act, and the rules and regulations
promulgated thereunder; and (b) as to the stockholder giving the
notice (i) the name and record address of such stockholder, (ii)
the class or series and number of shares of capital stock of us
which are owned beneficially or of record by such stockholder,
(iii) a description of all arrangements or understandings between
such stockholder and each proposed nominee and any other person or
persons (including their names) pursuant to which the nomination(s)
are to be made by such stockholder, (iv) a representation that such
stockholder intends to appear in person or by proxy at the meeting
to nominate the persons named in its notice and (v) any other
information relating to such stockholder that would be required to
be disclosed in a proxy statement or other filings required to be
made in connection with solicitations of proxies for election of
directors pursuant to Section 14 of the Exchange Act and the rules
and regulations promulgated thereunder. Such notice must be
accompanied by a written consent of each proposed nominee to being
named as a nominee and to serve as a director if elected.
Individuals recommended by stockholders in accordance with these
procedures will receive the same consideration received by
individuals identified to the Nominating and Governance Committee
through other means.
Our Forms 10-K, 10-Q, 8-K and
all amendments to those reports are available without charge
through our website (www.pedevco.com) as soon as
reasonably practicable after they are electronically filed with, or
furnished to, the SEC. Information on our website does not
constitute part of this proxy statement.
We will
provide, without charge, to each person to whom a proxy statement
is delivered, upon written or oral request of such person and by
first class mail or other equally prompt means within one business
day of receipt of such request, a copy of any of the filings
described above. Individuals may request a copy of such information
by sending a request to us, Attn: Corporate Secretary, PEDEVCO
Corp., 575 N. Dairy Ashford, Suite 210, Houston, Texas
77079.
None.
As of
the date of this proxy statement, our management has no knowledge
of any business to be presented for consideration at the annual
meeting other than that described above. If any other business
should properly come before the annual meeting or any adjournment
thereof, it is intended that the shares represented by properly
executed proxies will be voted with respect thereto in accordance
with the judgment of the persons named as agents and proxies in the
enclosed form of proxy.
The
board of directors does not intend to bring any other matters
before the annual meeting of stockholders and has not been informed
that any other matters are to be presented by others.
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(a)
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No
officer or director of us has any substantial interest in the
matters to be acted upon, other than his or her role as an officer
or director of us, or as a stockholder of us.
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(b)
No director of us
has informed us that he or she intends to oppose the action taken
by us set forth in this proxy statement.
All
inquiries regarding our Company should be addressed to our
Company’s principal executive office:
PEDEVCO Corp.
575 N. Dairy Ashford, Suite 210
Houston, Texas 77079
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By
Order of the Board of Directors,
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/s/ John J. Scelfo
John J.
Scelfo
Chairman
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APPENDIX A
PEDEVCO CORP.
2021 EQUITY INCENTIVE PLAN
1. Purposes
of the Plan. PEDEVCO Corp., a Texas
corporation (the “Company”) hereby
establishes the PEDEVCO CORP. 2021 EQUITY INCENTIVE PLAN (the
“Plan”). The purposes of
this Plan are to attract and retain the best available personnel
for positions of substantial responsibility, to provide additional
incentive to Employees, Directors and Consultants, and to promote
the long-term growth and profitability of the Company. The Plan
permits the grant of Incentive Stock Options, Nonstatutory Stock
Options, Restricted Stock, Restricted Stock Units, Stock
Appreciation Rights, Performance Units and Performance Shares as
the Administrator may determine.
2. Definitions. The
following definitions will apply to the terms in the
Plan:
“Administrator” means the
Board or any of its Committees as will be administering the Plan,
in accordance with Section 4.
“Applicable Laws” means
the requirements relating to the administration of equity-based
awards under U.S. state corporate laws, U.S. federal and state
securities laws, the Code, any stock exchange or quotation system
on which the Common Stock is listed or quoted and the applicable
laws of any foreign country or jurisdiction where Awards are, or
will be, granted under the Plan.
“Award” means,
individually or collectively, a grant under the Plan of Options,
SARs, Restricted Stock, Restricted Stock Units, Performance Units
or Performance Shares.
“Award Agreement” means
the written or electronic agreement setting forth the terms and
provisions applicable to each Award granted under the Plan. The
Award Agreement is subject to the terms and conditions of the
Plan.
“Board” means the Board of
Directors of the Company.
“Change in Control” means
the occurrence of any of the following events:
(i) Any
“person” (as such term is
used in Sections 13(d) and 14(d) of the Exchange Act) becomes the
“beneficial
owner” (as defined in Rule 13d-3 of the Exchange Act),
directly or indirectly, of securities of the Company representing
fifty percent (50%) or more of the total voting power represented
by the Company’s then outstanding voting securities; provided
however, that for purposes of this subsection (i) any acquisition
of securities directly from the Company shall not constitute a
Change in Control;
(ii) The
consummation of the sale or disposition by the Company of all or
substantially all of the Company’s assets;
(iii) A change
in the composition of the Board occurring within a two-year period,
as a result of which fewer than a majority of the directors are
Incumbent Directors. “Incumbent Directors”
means directors who either (A) are Directors as of the effective
date of the Plan, or (B) are elected, or nominated for election, to
the Board with the affirmative votes of at least a majority of the
Incumbent Directors at the time of such election or nomination (but
will not include an individual whose election or nomination is in
connection with an actual or threatened proxy contest relating to
the election of directors to the Company); or
(iv) The
consummation of a merger or consolidation of the Company with any
other corporation, other than a merger or consolidation which would
result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities
of the surviving entity or its parent) at least fifty percent (50%)
of the total voting power represented by the voting securities of
the Company or such surviving entity or its parent outstanding
immediately after such merger or consolidation.
For
avoidance of doubt, a transaction will not constitute a Change in
Control if: (i) its sole purpose is to change the state of the
Company’s incorporation, or (ii) its sole purpose is to
create a holding company that will be owned in substantially the
same proportions by the persons who held the Company’s
securities immediately before such transaction.
“Code” means the Internal
Revenue Code of 1986, as amended. Any reference in the Plan to a
section of the Code will be a reference to any successor or amended
section of the Code.
“Committee” means a
committee of Directors or of other individuals satisfying
Applicable Laws appointed by the Board in accordance with Section 4
hereof.
“Common Stock” means the
common stock of the Company.
“Company” means PEDEVCO
Corp., a Texas corporation, or any successor thereto.
“Consultant” means any
person, including an advisor, engaged by the Company or a Parent or
Subsidiary to render services to such entity.
“Director” means a member
of the Board.
“Disability” means a
medically determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a
continuous period of not less than 12 months, and that either (1)
renders a Participant unable to engage in any substantial gainful
activity or (2) results in a Participant receiving income
replacement benefits for a period of not less than three months
under an employee accident and health plan covering the
Participant.
“Employee” means any
person, including Officers and Directors, employed by the Company
or any Parent or Subsidiary of the Company. Neither service as a
Director nor payment of a director’s fee by the Company will
be sufficient to constitute “employment” by the
Company.
“Exchange Act” means the
Securities Exchange Act of 1934, as amended.
“Fair Market Value” means,
as of any date, the value of Common Stock determined as
follows:
(i) If the
Common Stock is listed on any established stock exchange or a
national market system, including without limitation any division
or subdivision of the Nasdaq Stock Market, its Fair Market Value
will be the closing sales price for such stock (or the closing bid,
if no sales were reported) as quoted on such exchange or system on
the day of determination, as reported in The Wall Street Journal or
such other source as the Administrator deems reliable;
(ii) If the
Common Stock is regularly quoted by a recognized securities dealer
but selling prices are not reported, including without limitation
quotation through the over the counter bulletin board
(“OTCQB®”) quotation
service administered by the Financial Industry Regulatory Authority
(“FINRA”), the Fair Market
Value of a Share will be the closing price for the Common Stock on
the day of determination, as reported in The Wall Street Journal or
such other source as the Administrator deems reliable;
or
(iii) In
the absence of an established market for the Common Stock, the Fair
Market Value will be determined in good faith by the Administrator,
and to the extent Section 15 applies (a)
with respect to ISOs, the Fair Market Value shall be determined in
a manner consistent with Code section 422 or (b) with respect to
NSOs or SARs, the Fair Market Value shall be determined in a manner
consistent with Code section 409A.
“Fiscal Year” means the
fiscal year of the Company.
“Grant Date” means, for
all purposes, the date on which the Administrator determines to
grant an Award, or such other later date as is determined by the
Administrator, provided that the Administrator cannot grant an
Award prior to the date the material terms of the Award are
established. Notice of the Administrator’s determination to
grant an Award will be provided to each Participant within a
reasonable time after the Grant Date.
“Incentive Stock Option”
or “ISO” means an Option that
by its terms qualifies and is otherwise intended to qualify as an
incentive stock option within the meaning of Section 422 of the
Code and the regulations promulgated thereunder.
“Nonstatutory Stock
Option” or “NSO” means an Option that
by its terms does not qualify or is not intended to qualify as an
ISO.
“Officer” means a person
who is an officer of the Company within the meaning of Section 16
of the Exchange Act and the rules and regulations promulgated
thereunder.
“Option” means a stock
option granted pursuant to the Plan.
“Optioned Shares” means
the Common Stock subject to an Option.
“Optionee” means the
holder of an outstanding Option.
“Parent” means a
“parent
corporation,” whether now or hereafter existing, as
defined in Section 424(e) of the Code.
“Participant” means the
holder of an outstanding Award.
“Performance Share” means
an Award denominated in Shares which may vest in whole or in part
upon attainment of performance goals or other vesting criteria as
the Administrator may determine pursuant to Section
10.
“Performance Unit” means
an Award which may vest in whole or in part upon attainment of
performance goals or other vesting criteria as the Administrator
may determine and which may be settled for cash, Shares or other
securities or a combination of the foregoing pursuant to Section
10.
“Period of Restriction”
means the period during which Shares of Restricted Stock are
subject to forfeiture or restrictions on transfer pursuant to
Section 7.
“Plan” means this 2021
Equity Incentive Plan.
“Restricted Stock” means
Shares awarded to a Participant which are subject to forfeiture and
restrictions on transferability in accordance with Section
7.
“Restricted Stock Unit”
means the right to receive one Share at the end of a specified
period of time, which right is subject to forfeiture in accordance
with Section 8 of the Plan.
“Rule 16b-3” means Rule
16b-3 of the Exchange Act or any successor to Rule
16b-3.
“Section” means a
paragraph or section of this Plan.
“Section 16(b)” means
Section 16(b) of the Exchange Act.
“Service Provider” means
an Employee, Director or Consultant.
“Share” means a share of
the Common Stock, as adjusted in accordance with Section
13.
“Stock Appreciation Right”
or “SAR” means the right to
receive payment from the Company in an amount no greater than the
excess of the Fair Market Value of a Share at the date the SAR is
exercised over a specified price fixed by the Administrator in the
Award Agreement, which shall not be less than the Fair Market Value
of a Share on the Grant Date. In the case of a SAR which is granted
in connection with an Option, the specified price shall be the
Option exercise price.
“Subsidiary” means a
“subsidiary
corporation,” whether now or hereafter existing, as
defined in Section 424(f) of the Code.
“Ten Percent Owner” means
any Service Provider who is, on the grant date of an ISO, the owner
of Shares (determined with application of ownership attribution
rules of Code Section 424(d)) possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any
of its Subsidiaries.
3. Stock
Subject to the Plan.
(a) Stock
Subject to the Plan. Subject to the provisions of Section
13, the maximum aggregate number of Shares that may be issued under
the Plan is eight million (8,000,000) Shares. The Shares may be
authorized but unissued, or reacquired Common Stock.
(b) Lapsed
Awards. If an Award expires or becomes unexercisable without
having been exercised in full or, with respect to Restricted Stock,
Restricted Stock Units, Performance Shares or Performance Units, is
forfeited in whole or in part to the Company, the unpurchased
Shares (or for Awards other than Options and SARs, the forfeited or
unissued Shares) which were subject to the Award will become
available for future grant or sale under the Plan (unless the Plan
has terminated). With respect to SARs, only Shares actually issued
pursuant to a SAR will cease to be available under the Plan; all
remaining Shares subject to the SARs will remain available for
future grant or sale under the Plan (unless the Plan has
terminated). Shares that have actually been issued under the Plan
under any Award will not be returned to the Plan and will not
become available for future distribution under the Plan; provided,
however, that if Shares issued pursuant to Awards of Restricted
Stock, Restricted Stock Units, Performance Shares or Performance
Units are forfeited to the Company, such Shares will become
available for future grant under the Plan. Shares withheld by the
Company to pay the exercise price of an Award or to satisfy tax
withholding obligations with respect to an Award will become
available for future grant or sale under the Plan. To the extent an
Award under the Plan is paid out in cash rather than Shares, such
cash payment will not result in reducing the number of Shares
available for issuance under the Plan.
(c) Share
Reserve. The Company, during the term of this Plan, will at
all times reserve and keep available such number of Shares as will
be sufficient to satisfy the requirements of the Plan.
4. Administration
of the Plan.
(a) Procedure.
The Plan shall be administered by the Board or a Committee (or
Committees) appointed by the Board, which Committee shall be
constituted to comply with Applicable Laws. If and so long as the
Common Stock is registered under Section 12(b) or 12(g) of the
Exchange Act, the Board shall consider in selecting the
Administrator and the membership of any committee acting as
Administrator the requirements regarding: (i) “nonemployee directors”
within the meaning of Rule 16b-3 under the Exchange Act; (ii)
“independent
directors” as described in the listing requirements
for any stock exchange on which Shares are listed; and
(iii) Section
15(b)(i) of the Plan, if the Company pays salaries for
which it claims deductions that are subject to the Code section
162(m) limitation on its U.S. tax returns. The Board may delegate
the responsibility for administering the Plan with respect to
designated classes of eligible Participants to different committees
consisting of two or more members of the Board, subject to such
limitations as the Board or the Administrator deems appropriate.
Committee members shall serve for such term as the Board may
determine, subject to removal by the Board at any
time.
(b) Powers
of the Administrator. Subject to the provisions of the Plan
and the approval of any relevant authorities, and in the case of a
Committee, subject to the specific duties delegated by the Board to
such Committee, the Administrator will have the authority, in its
discretion:
(i) to
determine the Fair Market Value;
(ii) to select
the Service Providers to whom Awards may be granted
hereunder;
(iii) to
determine the number of Shares to be covered by each Award granted
hereunder;
(iv) to
approve forms of agreement for use under the Plan;
(v) to
determine the terms and conditions, not inconsistent with the terms
of the Plan, of any Award granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price, the
time or times when Awards may be exercised (which may be based on
continued employment, continued service or performance criteria),
any vesting acceleration (whether by reason of a Change of Control
or otherwise) or waiver of forfeiture restrictions, and any
restriction or limitation regarding any Award or the Shares
relating thereto, based in each case on such factors as the
Administrator, in its sole discretion, will determine;
(vi) to
construe and interpret the terms of the Plan and Awards granted
pursuant to the Plan, including the right to construe disputed or
doubtful Plan and Award provisions;
(vii) to
prescribe, amend and rescind rules and regulations relating to the
Plan;
(viii) to
modify or amend each Award (subject to Section 19(c)) to the extent
any modification or amendment is consistent with the terms of the
Plan. The Administrator shall have the discretion to extend the
exercise period of Options generally provided the exercise period
is not extended beyond the earlier of the original term of the
Option or 10 years from the original grant date, or specifically
(1) if the exercise period of an Option is extended (but to no more
than 10 years from the original grant date) at a time when the
exercise price equals or exceeds the fair market value of the
Optioned Shares or (2) an Option cannot be exercised because such
exercise would violate Applicable Laws, provided that the exercise
period is not extended more than 30 days after the exercise of the
Option would no longer violate Applicable Laws.
(ix) to allow
Participants to satisfy withholding tax obligations in such manner
as prescribed in Section 14;
(x) to
authorize any person to execute on behalf of the Company any
instrument required to effect the grant of an Award previously
granted by the Administrator;
(xi) to delay
issuance of Shares or suspend Participant’s right to exercise
an Award as deemed necessary to comply with Applicable Laws;
and
(xii) to make
all other determinations deemed necessary or advisable for
administering the Plan.
(c) Effect
of Administrator’s Decision. The Administrator’s
decisions, determinations and interpretations will be final and
binding on all Participants and any other holders of Awards. Any
decision or action taken or to be taken by the Administrator,
arising out of or in connection with the construction,
administration, interpretation and effect of the Plan and of its
rules and regulations, shall, to the maximum extent permitted by
Applicable Laws, be within its absolute discretion (except as
otherwise specifically provided in the Plan) and shall be final,
binding and conclusive upon the Company, all Participants and any
person claiming under or through any Participant.
5. Eligibility.
NSOs, Restricted Stock, Restricted Stock Units, SARs, Performance
Units and Performance Shares may be granted to Service Providers.
ISOs may be granted as specified in Section 15(a).
6. Stock
Options.
(a) Grant
of Options. Subject to the terms and conditions of the Plan,
the Administrator, at any time and from time to time, may grant
Options to Service Providers in such amounts as the Administrator
will determine in its sole discretion. For purposes of the
foregoing sentence, Service Providers shall include prospective
employees or consultants to whom Options are granted in connection
with written offers of employment or engagement of services,
respectively, with the Company; provided that no Option granted to
a prospective employee or consultant may be exercised prior to the
commencement of employment or services with the Company. The
Administrator may grant NSOs, ISOs, or any combination of the two.
ISOs shall be granted in accordance with Section 15(a) of the
Plan.
(b) Option
Award Agreement. Each Option shall be evidenced by an Award
Agreement that shall specify the type of Option granted, the Option
price, the exercise date, the term of the Option, the number of
Shares to which the Option pertains, and such other terms and
conditions (which need not be identical among Participants) as the
Administrator shall determine in its sole discretion. If the Award
Agreement does not specify that the Option is to be treated as an
ISO, the Option shall be deemed a NSO.
(c) Exercise
Price. The per Share exercise price for the Shares to be
issued pursuant to exercise of an Option will be no less than the
Fair Market Value per Share on the Grant Date.
(d) Term
of Options. The term of each Option will be stated in the
Award Agreement. Unless terminated sooner in accordance with the
remaining provisions of this Section 6, each Option shall expire
either ten (10) years after the Grant Date, or after a shorter term
as may be fixed by the Board.
(e) Time
and Form of Payment.
(i) Exercise
Date. Each Award Agreement shall specify how and when Shares
covered by an Option may be purchased. The Award Agreement may
specify waiting periods, the dates on which Options become
exercisable or “vested” and, subject to
the termination provisions of this section, exercise periods. The
Administrator may accelerate the exercisability of any Option or
portion thereof.
(ii) Exercise
of Option. Any Option granted hereunder will be exercisable
according to the terms of the Plan and at such times and under such
conditions as determined by the Administrator and set forth in the
Award Agreement. An Option may not be exercised for a fraction of a
Share. An Option will be deemed exercised when the Company
receives: (1) notice of exercise (in such form as the Administrator
shall specify from time to time) from the person entitled to
exercise the Option, and (2) full payment for the Shares with
respect to which the Option is exercised (together with all
applicable withholding taxes). Full payment may consist of any
consideration and method of payment authorized by the Administrator
and permitted by the Award Agreement and the Plan (together with
all applicable withholding taxes). Shares issued upon exercise of
an Option will be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or
her spouse. Until the Shares are issued (as evidenced by the
appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company), no right to vote or
receive dividends or any other rights as a stockholder will exist
with respect to the Optioned Shares, notwithstanding the exercise
of the Option. The Company will issue (or cause to be issued) such
Shares promptly after the Option is exercised. No adjustment will
be made for a dividend or other right for which the record date is
prior to the date the Shares are issued, except as provided in
Section 13.
(iii) Payment.
The Administrator will determine the acceptable form of
consideration for exercising an Option, including the method of
payment. Such consideration may consist entirely of:
(1) cash;
(2) check;
(3) to the
extent not prohibited by Section 402 of the Sarbanes-Oxley Act of
2002, a promissory note;
(4) other
Shares, provided Shares have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to
which said Option will be exercised;
(5) to the
extent not prohibited by Section 402 of the Sarbanes-Oxley Act of
2002, in accordance with any broker-assisted cashless exercise
procedures approved by the Company and as in effect from time to
time;
(6) by asking
the Company to withhold Shares from the total Shares to be
delivered upon exercise equal to the number of Shares having a
value equal to the aggregate Exercise Price of the Shares being
acquired;
(7) any
combination of the foregoing methods of payment; or
(8) such other
consideration and method of payment for the issuance of Shares to
the extent permitted by Applicable Laws.
(f) Forfeiture
of Options. All unexercised Options shall be forfeited to
the Company in accordance with the terms and conditions set forth
in the Award Agreement and again will become available for grant
under the Plan.
7. Restricted
Stock.
(a) Grant
of Restricted Stock. Subject to the terms and conditions of
the Plan, the Administrator, at any time and from time to time, may
grant Shares of Restricted Stock to Service Providers in such
amounts as the Administrator will determine in its sole
discretion.
(b) Restricted
Stock Award Agreement. Each Award of Restricted Stock will
be evidenced by an Award Agreement that will specify the Period of
Restriction, the number of Shares granted, and such other terms and
conditions (which need not be identical among Participants) as the
Administrator will determine in its sole discretion. Unless the
Administrator determines otherwise, the Company as escrow agent
will hold Shares of Restricted Stock until the restrictions on such
Shares have lapsed.
(c) Vesting
Conditions and Other Terms.
(i) Vesting
Conditions. The Administrator, in its sole discretion, may
impose such conditions on the vesting of Shares of Restricted Stock
as it may deem advisable or appropriate, including but not limited
to, achievement of Company-wide, business unit, or individual goals
(including, but not limited to, continued employment or service),
or any other basis determined by the Administrator in its
discretion. The Administrator, in its discretion, may accelerate
the time at which any restrictions will lapse or be removed. The
Administrator may, in its discretion, also provide for such
complete or partial exceptions to an employment or service
restriction as it deems equitable.
(ii) Voting
Rights. During the Period of Restriction, Service Providers
holding Shares of Restricted Stock granted hereunder may exercise
full voting rights with respect to those Shares, unless the
Administrator determines otherwise.
(iii) Dividends
and Other Distributions. During the Period of Restriction,
Service Providers holding Shares of Restricted Stock will be
entitled to receive all dividends and other distributions paid with
respect to such Shares, unless the Administrator determines
otherwise. If any such dividends or distributions are paid in
Shares, the Shares will be subject to the same restrictions on
transferability and forfeitability as the Shares of Restricted
Stock with respect to which they were paid.
(iv) Transferability.
Except as provided in this Section, Shares of Restricted Stock may
not be sold, transferred, pledged, assigned, or otherwise alienated
or hypothecated until the end of the applicable Period of
Restriction.
(d) Removal
of Restrictions. All restrictions imposed on Shares of
Restricted Stock shall lapse and the Period of Restriction shall
end upon the satisfaction of the vesting conditions imposed by the
Administrator. Vested Shares of Restricted Stock will be released
from escrow as soon as practicable after the last day of the Period
of Restriction or at such other time as the Administrator may
determine, but in no event later than the 30th day following the
date on which vesting occurred.
(e) Forfeiture
of Restricted Stock. On the date set forth in the Award
Agreement, the Shares of Restricted Stock for which restrictions
have not lapsed will be forfeited and revert to the Company and
again will become available for grant under the Plan.
8. Restricted
Stock Units.
(a) Grant
of Restricted Stock Units. Subject to the terms and
conditions of the Plan, the Administrator, at any time and from
time to time, may grant Restricted Stock Units to Service Providers
in such amounts as the Administrator will determine in its sole
discretion.
(b) Restricted
Stock Units Award Agreement. Each Award of Restricted Stock
Units will be evidenced by an Award Agreement that will specify the
number of Restricted Stock Units granted, vesting criteria, form of
payout, and such other terms and conditions (which need not be
identical among Participants) as the Administrator will determine
in its sole discretion.
(c) Vesting
Conditions. The Administrator shall set vesting criteria in
its discretion, which, depending on the extent to which the
criteria are met, will determine the number of Restricted Stock
Units that will be paid out to the Participant. The Administrator
may set vesting criteria based upon the achievement of
Company-wide, business unit, or individual goals (including, but
not limited to, continued employment or service), or any other
basis determined by the Administrator in its discretion. At any
time after the grant of Restricted Stock Units, the Administrator,
in its sole discretion, may reduce or waive any vesting criteria
that must be met to receive a payout.
(d) Time
and Form of Payment. Upon satisfaction of the applicable
vesting conditions, payment of vested Restricted Stock Units shall
occur in the manner and at the time provided in the Award
Agreement, but in no event later than the 15th day of the third
month following the end of the year in which vesting occurred.
Except as otherwise provided in the Award Agreement, Restricted
Stock Units may be paid in cash, Shares, or a combination thereof
at the sole discretion of the Administrator. Restricted Stock Units
that are fully paid in cash will not reduce the number of Shares
available for issuance under the Plan.
(e) Forfeiture
of Restricted Stock Units. All unvested Restricted Stock
Units shall be forfeited to the Company on the date set forth in
the Award Agreement and again will become available for grant under
the Plan.
9. Stock
Appreciation Rights.
(a) Grant
of SARs. Subject to the terms and conditions of the Plan,
the Administrator, at any time and from time to time, may grant
SARs to Service Providers in such amounts as the Administrator will
determine in its sole discretion.
(b) Award
Agreement. Each SAR grant will be evidenced by an Award
Agreement that will specify the exercise price, the number of
Shares underlying the SAR grant, the term of the SAR, the
conditions of exercise, and such other terms and conditions (which
need not be identical among Participants) as the Administrator will
determine in its sole discretion.
(c) Exercise
Price and Other Terms. The per Share exercise price for the
exercise of an SAR will be no less than the Fair Market Value per
Share on the Grant Date.
(d) Time
and Form of Payment of SAR Amount. Upon exercise of a SAR, a
Participant will be entitled to receive payment from the Company in
an amount no greater than: (i) the difference between the Fair
Market Value of a Share on the date of exercise over the exercise
price; times (ii) the number of Shares with respect to which the
SAR is exercised. An Award Agreement may provide for a SAR to be
paid in cash, Shares of equivalent value, or a combination
thereof.
(e) Forfeiture
of SARs. All unexercised SARs shall be forfeited to the
Company in accordance with the terms and conditions set forth in
the Award Agreement and again will become available for grant under
the Plan.
10. Performance
Units and Performance Shares.
(a) Grant
of Performance Units and Performance Shares. Performance
Units or Performance Shares may be granted to Service Providers at
any time and from time to time, as will be determined by the
Administrator, in its sole discretion. The Administrator will have
complete discretion in determining the number of Performance Units
and Performance Shares granted to each Participant.
(b) Award
Agreement. Each Award of Performance Units and Shares will
be evidenced by an Award Agreement that will specify the initial
value, the Performance Period, the number of Performance Units or
Performance Shares granted, and such other terms and conditions
(which need not be identical among Participants) as the
Administrator will determine in its sole discretion.
(c) Value
of Performance Units and Performance Shares. Each
Performance Unit will have an initial value that is established by
the Administrator on or before the Grant Date. Each Performance
Share will have an initial value equal to the Fair Market Value of
a Share on the Grant Date.
(d) Vesting
Conditions and Performance Period. The Administrator will
set performance objectives or other vesting provisions (including,
without limitation, continued status as a Service Provider) in its
discretion which, depending on the extent to which they are met,
will determine the number or value of Performance Units or
Performance Shares that will be paid out to the Service Providers.
The time period during which the performance objectives or other
vesting provisions must be met will be called the
“Performance
Period.” The Administrator may set performance
objectives based upon the achievement of Company-wide, divisional,
or individual goals or any other basis determined by the
Administrator in its discretion.
(e) Time
and Form of Payment. After the applicable Performance Period
has ended, the holder of Performance Units or Performance Shares
will be entitled to receive a payout of the number of vested
Performance Units or Performance Shares by the Participant over the
Performance Period, to be determined as a function of the extent to
which the corresponding performance objectives or other vesting
provisions have been achieved. Vested Performance Units or
Performance Shares will be paid as soon as practicable after the
expiration of the applicable Performance Period, but in no event
later than the 15th day of the third month following the end of the
year the applicable Performance Period expired. An Award Agreement
may provide for the satisfaction of Performance Unit or Performance
Share Awards in cash or Shares (which have an aggregate Fair Market
Value equal to the value of the vested Performance Units or
Performance Shares at the close of the applicable Performance
Period) or in a combination thereof.
(f) Forfeiture
of Performance Units and Performance Shares. All unvested
Performance Units or Performance Shares will be forfeited to the
Company on the date set forth in the Award Agreement, and again
will become available for grant under the Plan.
11. Leaves
of Absence/Transfer Between Locations. Unless the
Administrator provides otherwise or as required by Applicable Laws,
vesting of Awards will be suspended during any unpaid leave of
absence. An Employee will not cease to be an Employee in the case
of (i) any leave of absence approved by the Company or (ii)
transfers between locations of the Company or between the Company,
its Parent, or any Subsidiary.
12. Transferability
of Awards. Unless determined otherwise by the Administrator,
an Award may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by
the laws of descent or distribution and may be exercised, during
the lifetime of the Participant, only by the Participant. If the
Administrator makes an Award transferable, such Award will contain
such additional terms and conditions as the Administrator deems
appropriate.
13. Adjustments;
Dissolution or Liquidation; Merger or Change in
Control.
(a) Adjustments.
In the event that any dividend or other distribution (whether in
the form of cash, Shares, other securities, or other property),
recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase,
or exchange of Shares or other securities of the Company, or other
change in the corporate structure of the Company affecting the
Shares occurs, the Administrator, in order to prevent diminution or
enlargement of the benefits or potential benefits intended to be
made available under the Plan, shall appropriately adjust the
number and class of Shares that may be delivered under the Plan
and/or the number, class, and price of Shares covered by each
outstanding Award.
(b) Dissolution
or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Administrator will notify each
Participant as soon as practicable prior to the effective date of
such proposed transaction. To the extent it has not been previously
exercised, an Award will terminate immediately prior to the
consummation of such proposed action.
(c) Change
in Control. In the event of a merger or Change in Control,
any or all outstanding Awards may be assumed by the successor
corporation, which assumption shall be binding on all Participants.
In the alternative, the successor corporation may substitute
equivalent Awards (after taking into account the existing
provisions of the Awards). The successor corporation may also
issue, in place of outstanding Shares of the Company held by the
Participant, substantially similar shares or other property subject
to vesting requirements and repurchase restrictions no less
favorable to the Participant than those in effect prior to the
merger or Change in Control.
In the
event that the successor corporation does not assume or substitute
for the Award, unless the Administrator provides otherwise, the
Participant will fully vest in and have the right to exercise all
of his or her outstanding Options and SARs, including Shares as to
which such Awards would not otherwise be vested or exercisable, all
restrictions on Restricted Stock and Restricted Stock Units will
lapse, and, with respect to Performance Shares and Performance
Units, all Performance Goals or other vesting criteria will be
deemed achieved at target levels and all other terms and conditions
met. In addition, if an Option or SAR is not assumed or substituted
in the event of a Change in Control, the Administrator will notify
the Participant in writing or electronically that the Option or SAR
will be exercisable for a period of time determined by the
Administrator in its sole discretion, and the Option or SAR will
terminate upon the expiration of such period.
For the
purposes of this Section 13(c), an Award will be considered assumed
if, following the Change in Control, the Award confers the right to
purchase or receive, for each Share subject to the Award
immediately prior to the Change in Control, the consideration
(whether stock, cash, or other securities or property) or, in the
case of a SAR upon the exercise of which the Administrator
determines to pay cash or a Performance Share or Performance Unit
which the Administrator can determine to pay in cash, the fair
market value of the consideration received in the merger or Change
in Control by holders of Common Stock for each Share held on the
effective date of the transaction (and if holders were offered a
choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided,
however, that if such consideration received in the Change in
Control is not solely common stock of the successor corporation or
its Parent, the Administrator may, with the consent of the
successor corporation, provide for the consideration to be received
upon the exercise of an Option or SAR or upon the payout of a
Restricted Stock Unit, Performance Share or Performance Unit, for
each Share subject to such Award (or in the case of Restricted
Stock Units and Performance Units, the number of implied shares
determined by dividing the value of the Restricted Stock Units and
Performance Units, as applicable, by the per share consideration
received by holders of Common Stock in the Change in Control), to
be solely common stock of the successor corporation or its Parent
equal in fair market value to the per share consideration received
by holders of Common Stock in the Change in Control.
Notwithstanding
anything in this Section 13(c) to the contrary, an Award that
vests, is earned or paid-out upon the satisfaction of one or more
performance goals will not be considered assumed if the Company or
its successor modifies any of such performance goals without the
Participant’s consent; provided, however, a modification to
such performance goals only to reflect the successor
corporation’s post-Change in Control corporate structure will
not be deemed to invalidate an otherwise valid Award
assumption.
14. Tax
Withholding.
(a) Withholding
Requirements. Prior to the delivery of any Shares or cash
pursuant to an Award (or exercise thereof), the Company will have
the power and the right to deduct or withhold, or require a
Participant to remit to the Company, an amount sufficient to
satisfy federal, state, local, foreign or other taxes required by
Applicable Laws to be withheld with respect to such Award (or
exercise thereof).
(b) Withholding
Arrangements. The Administrator, in its sole discretion and
pursuant to such procedures as it may specify from time to time,
may permit a Participant to satisfy such tax withholding
obligation, in whole or in part by (without limitation) (i) paying
cash, (ii) electing to have the Company withhold otherwise
deliverable Shares having a Fair Market Value equal to the amount
required to be withheld, or (iii) delivering to the Company
already-owned Shares having a Fair Market Value equal to the amount
required to be withheld. The amount of the withholding requirement
will be deemed to include any amount which the Administrator agrees
may be withheld at the time the election is made. The Fair Market
Value of the Shares to be withheld or delivered will be determined
as of the date that the taxes are required to be
withheld.
15. Provisions
Applicable In the Event the Company or the Service Provider is
Subject to U.S. Taxation.
(a) Grant
of Incentive Stock Options. If the Administrator grants
Options to Employees subject to U.S. taxation, the Administrator
may grant such Employee an ISO and the following terms shall also
apply:
(i) Maximum
Amount. Subject to the provisions of Section 13, to the
extent consistent with Section 422 of the Code, not more than an
aggregate of eight million (8,000,000) Shares may be issued as ISOs
under the Plan.
(ii) General
Rule. Only Employees shall be eligible for the grant of
ISOs.
(iii) Continuous
Employment. The Optionee must remain in the continuous
employ of the Company or its Subsidiaries from the date the ISO is
granted until not more than three months before the date on which
it is exercised. A leave of absence approved by the Company may
exceed ninety (90) days if reemployment upon expiration of such
leave is guaranteed by statute or contract. If reemployment upon
expiration of a leave of absence approved by the Company is not so
guaranteed, then three (3) months following the ninety-first (91st)
day of such leave any ISO held by the Optionee will cease to be
treated as an ISO.
(iv) Award
Agreement.
(1) The
Administrator shall designate Options granted as ISOs in the Award
Agreement. Notwithstanding such designation, to the extent that the
aggregate Fair Market Value of the Shares with respect to which
ISOs are exercisable for the first time by the Optionee during any
calendar year (under all plans of the Company and any Parent or
Subsidiary) exceeds one hundred thousand dollars ($100,000),
Options will not qualify as an ISO. For purposes of this section,
ISOs will be taken into account in the order in which they were
granted. The Fair Market Value of the Shares will be determined as
of the time the Option with respect to such Shares is
granted.
(2) The Award
Agreement shall specify the term of the ISO. The term shall not
exceed ten (10) years from the Grant Date or five (5) years from
the Grant Date for Ten Percent Owners.
(3) The Award
Agreement shall specify an exercise price of not less than the Fair
Market Value per Share on the Grant Date or one hundred ten percent
(110%) of the Fair Market Value per Share on the Grant Date for Ten
Percent Owners.
(4) The Award
Agreement shall specify that an ISO is not transferable except by
will, beneficiary designation or the laws of descent and
distribution.
(v) Form
of Payment. The consideration to be paid for the Shares to
be issued upon exercise of an ISO, including the method of payment,
shall be determined by the Administrator at the time of grant in
accordance with Section 6(e)(iii).
(vi) ”Disability,”
for purposes of an ISO, means total and permanent disability as
defined in Section 22(e)(3) of the Code.
(vii) Notice.
In the event of any disposition of the Shares acquired pursuant to
the exercise of an ISO within two years from the Grant Date or one
year from the exercise date, the Optionee will notify the Company
thereof in writing within thirty (30) days after such disposition.
In addition, the Optionee shall provide the Company with such
information as the Company shall reasonably request in connection
with determining the amount and character of Optionee’s
income, the Company’s deduction, and the Company’s
obligation to withhold taxes or other amounts incurred by reason of
a disqualifying disposition, including the amount
thereof.
(b) Performance-based
Compensation. If the Company pays salaries for which it
claims deductions that are subject to the Code section 162(m)
limitation on its U.S. tax returns, then the following terms shall
be applied in a manner consistent with the requirements of, and
only to the extent required for compliance with, the exclusion from
the limitation on deductibility of compensation under Code Section
162(m):
(i) Outside
Directors. The Board shall consider in selecting the
Administrator and the membership of any committee acting as
Administrator the provisions regarding “outside directors” within
the meaning of Code Section 162(m).
(ii) Maximum
Amount.
(1) Subject to
the provisions of Section 13, the maximum number of Shares that can
be awarded to any individual Participant in the aggregate in any
one fiscal year of the Company is eight million (8,000,000)
Shares;
(2) For Awards
denominated in Shares and satisfied in cash, the maximum Award to
any individual Participant in the aggregate in any one fiscal year
of the Company is the Fair Market Value of eight million
(8,000,000) Shares on the Grant Date; and
(3) The
maximum amount payable pursuant to any cash Awards to any
individual Participant in the aggregate in any one fiscal year of
the Company is the Fair Market Value of eight million (8,000,000)
Shares on the Grant Date.
(iii) Performance
Criteria. All performance criteria must be objective and be
established in writing prior to the beginning of the performance
period or at later time as permitted by Code Section 162(m).
Performance criteria may include alternative and multiple
performance goals and may be based on one or more business and/or
financial criteria. In establishing the performance goals, the
Committee in its discretion may include one or any combination of
the following criteria in either absolute or relative terms, for
the Company or any Subsidiary:
(1) Increased
revenue;
(2) Net income
measures (including but not limited to income after capital costs
and income before or after taxes);
(3) Stock
price measures (including but not limited to growth measures and
total stockholder return);
(4) Market
share;
(5) Earnings
per Share (actual or targeted growth);
(6) Earnings
before interest, taxes, depreciation, and amortization
(“EBITDA”);
(7) Cash flow
measures (including but not limited to net cash flow and net cash
flow before financing activities);
(8) Return
measures (including but not limited to return on equity, return on
average assets, return on capital, risk-adjusted return on capital,
return on investors’ capital and return on average
equity);
(9) Operating
measures (including operating income, funds from operations, cash
from operations, after-tax operating income, sales volumes,
production volumes, and production efficiency);
(10) Expense
measures (including but not limited to overhead cost and general
and administrative expense);
(11) Margins;
(12) Stockholder
value;
(13) Total
stockholder return;
(14) Proceeds
from dispositions;
(15) Production
volumes;
(16) Total
market value; and
(17) Corporate
values measures (including but not limited to ethics compliance,
environmental, and safety).
(c) Stock
Options and SARs Exempt from Code section 409A. If the
Administrator grants Options or SARs to Employees subject to U.S.
taxation the Administrator may not modify or amend the Options or
SARs to the extent that the modification or amendment adds a
feature allowing for additional deferral within the meaning of Code
section 409A.
16. No
Effect on Employment or Service. Neither the Plan nor any
Award will confer upon any Participant any right with respect to
continuing the Participant’s relationship as a Service
Provider with the Company or any Parent or Subsidiary of the
Company, nor will they interfere in any way with the
Participant’s right or the Company’s or its
Parent’s or Subsidiary’s right to terminate such
relationship at any time, with or without cause, to the extent
permitted by Applicable Laws.
17. Effective
Date. The Plan’s effective date is the date on which
it is adopted by the Board, so long as it is approved by the
Company’s stockholders at any time within twelve (12) months
of such adoption. Upon approval of the Plan by the stockholders of
the Company, all Awards issued pursuant to the Plan on or after the
Effective Date shall be fully effective as if the stockholders of
the Company had approved the Plan on the Effective Date. If the
stockholders fail to approve the Plan within one year after the
Effective Date, any Awards made hereunder shall be null and void
and of no effect.
18. Term
of Plan. The Plan will terminate 10 years following the
earlier of (i) the date it was adopted by the Board or (ii) the
date it became effective upon approval by stockholders of the
Company, unless sooner terminated by the Board pursuant to Section
19.
19. Amendment
and Termination of the Plan.
(a) Amendment
and Termination. The Board may at any time amend, alter,
suspend or terminate the Plan.
(b) Stockholder
Approval. The Company will obtain stockholder approval of
any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.
(c) Effect
of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan will impair the rights of any
Participant, unless mutually agreed otherwise between the
Participant and the Administrator, which agreement must be in
writing and signed by the Participant and the Company. Termination
of the Plan will not affect the Administrator’s ability to
exercise the powers granted to it hereunder with respect to Awards
granted under the Plan prior to the date of such
termination.
20. Conditions
Upon Issuance of Shares.
(a) Legal
Compliance. The Administrator may delay or suspend the
issuance and delivery of Shares, suspend the exercise of Options or
SARs, or suspend the Plan as necessary to comply with Applicable
Laws. Shares will not be issued pursuant to the exercise of an
Award unless the exercise of such Award and the issuance and
delivery of such Shares will comply with Applicable Laws and will
be further subject to the approval of counsel for the Company with
respect to such compliance.
(b) Investment
Representations. As a condition to the exercise of an Award,
the Company may require the person exercising such Award to
represent and warrant at the time of any such exercise that the
Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is
required.
21. Inability
to Obtain Authority. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which
authority is deemed by the Company’s counsel to be necessary
to the lawful issuance and sale of any Shares hereunder, will
relieve the Company of any liability in respect of the failure to
issue or sell such Shares as to which such requisite authority will
not have been obtained.
22. Repricing
Prohibited; Exchange And Buyout of Awards. The
repricing of Options or SARs is prohibited without prior
stockholder approval. The Administrator may authorize the Company,
with prior stockholder approval and the consent of the respective
Participants, to issue new Option or SAR Awards in exchange for the
surrender and cancellation of any or all outstanding Awards. The
Administrator may at any time repurchase Options with payment in
cash, Shares or other consideration, based on such terms and
conditions as the Administrator and the Participant shall
agree.
23. Substitution
and Assumption of Awards. The Administrator may make Awards
under the Plan by assumption, substitution or replacement of
performance shares, phantom shares, stock awards, stock options,
stock appreciation rights or similar awards granted by another
entity (including a Parent or Subsidiary), if such assumption,
substitution or replacement is in connection with an asset
acquisition, stock acquisition, merger, consolidation or similar
transaction involving the Company (and/or its Parent or Subsidiary)
and such other entity (and/or its affiliate). The Administrator may
also make Awards under the Plan by assumption, substitution or
replacement of a similar type of award granted by the Company prior
to the adoption and approval of the Plan. Notwithstanding any
provision of the Plan (other than the maximum number of shares of
Common Stock that may be issued under the Plan), the terms of such
assumed, substituted or replaced Awards shall be as the
Administrator, in its discretion, determines is
appropriate.
25.
Restrictions on
Awards. No awards may be made under this Plan
inconsideration for services in connection with the offer or sale
of securities in a capital-raising transaction, or which directly
or indirectly promote or maintain a market for the Company’s
securities.
25. Governing
Law. The Plan and all Agreements shall be construed in
accordance with and governed by the laws of the State of
Texas.
Adopted
by the Board of Directors on July 10, 2021 and approved and
ratified by the stockholders on September 1, 2021.
FORM OF PROXY
(SEE ATTACHED)
