REAL GOODS TRADING CORPORATION
3440 AIRWAY DRIVE
SANTA ROSA, CALIFORNIA 95403
NOTICE OF ANNUAL MEETING OF SHAREHOWNERS AUGUST 21, 1999
The Annual Meeting of Shareowners of Real Goods Trading
Corporation (the "Company") will be held on Saturday, August 21,
1999 at 11:00 a.m. at 13771 S. Hwy. 101, Hopland, California,
95449, for the following purposes:
1. To elect five directors to the Board of Directors of the
Company;
2. To approve an amendment of the Company's Fiscal 1993 Stock
Incentive Plan to increase the number of shares of the Company's
common stock issuable thereunder from 600,000 to 1,200,000.
3. To transact such other business as may be properly brought
before the Annual Meeting and any adjournment or postponement
thereof.
The close of business on June 29, 1999, has been fixed as the
record date for the determination of shareowners entitled to
notice of and to vote at the meeting. The stock transfer books
will not be closed.
Les Seely, Secretary
June 29, 1999
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING.
PLEASE SIGN, DATE AND MAIL THE ENCLOSED PROXY IN THE ENVELOPE
PROVIDED, WHICH REQUIRES NO POSTAGE. YOU MAY NEVERTHELESS VOTE
IN PERSON IF YOU ATTEND THE MEETING.
REAL GOODS TRADING CORPORATION PROXY STATEMENT
FOR THE 1999 ANNUAL MEETING OF SHAREOWNERS
INTRODUCTION
This Proxy Statement is furnished to the shareowners of Real
Goods Trading Corporation, a California corporation (the
"Company") by the Board of Directors (the "Board") of the Company
in connection with the solicitation of proxies for use at the
Annual Meeting of Shareowners (the "Meeting") to be held on
Saturday, August 21, 1999, at 11:00 a.m., local time, and at any
adjournment or postponement thereof, for the purposes set forth
herein and in the accompanying Notice of Annual Meeting of
Shareowners. The Meeting will be held at 13771 S. Hwy. 101,
Hopland, California 95449. The Company's principal executive
offices are located at 3440 Airway Drive, Santa Rosa, California
95403. Its telephone number is (707) 542-2600. These proxy
solicitation materials were first mailed on or about July 14,
1999 to all shareowners entitled to vote at the Meeting.
ANNUAL REPORT
The Annual Report of the Company for the year ended March 31,
1999, is furnished concurrently to all shareowners entitled to
vote at the Meeting. The Annual Report is not to be regarded as
proxy soliciting material or as a communication by means of which
any solicitation is to be made.
RECORD DATE, SHARES OUTSTANDING AND VOTING RIGHTS
Shareowners of record at the close of business on June 29, 1999,
are entitled to notice of and to vote at the Meeting. On such
date 4,080,742 shares of the Company's Common Stock (without par
value) were issued and outstanding. Each outstanding share of
capital stock entitles its holder to one vote with respect to the
matters properly brought before the meeting. However, in the
election of directors, if prior to the voting any shareowner
gives notice at the Meeting of his or her intention to cumulate
his or her votes, every shareowner shall be entitled to the
number of votes equal to the number of shares owned by him or her
multiplied by the number of directors to be elected. In the
event that cumulative voting occurs, each shareowner may cast all
such votes for a single nominee or distribute them among two or
more nominees. No shareowner may cumulate votes for any
candidate whose name has not been placed into nomination prior to
the voting.
SOLICITATION
The solicitation of proxies is made by the Company and all
related costs will be borne by the Company. In addition, the
Company may reimburse brokerage firms and other persons
representing beneficial owners of shares of the Company's stock
for their expenses in forwarding solicitation material to such
beneficial owners. Proxies may also be solicited by certain of
the Company's directors, officers and regular employees, without
additional compensation, personally or by telephone or telegram.
VOTING OF PROXIES
The shares represented by the proxies solicited hereby will be
voted FOR the election of the Company's nominees for the Board,
FOR the amendment of the Fiscal 1993 Stock Incentive Plan and at
the discretion of the proxy holders on any other matters that may
properly come before the Meeting, if no contrary instruction is
indicated on a proxy.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by
the person giving it at any time before its use (i) by delivery
to the Secretary of the Company of a written notice of revocation
or a duly executed proxy bearing a later date, or (ii) by
attending the Meeting and voting in person.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding
beneficial ownership of the Company's Common Stock as of June 29,
1999, by (i) each person (including any "group" as that term is
used in Section 13(d)(3) of the Securities Exchange Act of 1934
(the "Exchange Act")) who is known by the Company to own
beneficially 5% or more of the Common Stock, (ii) each director
of the Company, and (iii) all directors and executive officers as
a group. Unless otherwise indicated, all persons listed below
have sole voting power and investment power with respect to such
shares.
<TABLE>
<CAPTION>
Share Amount and
Name and Address of Nature of Percentage
Beneficial Owner Beneficial Ownership* of Class
<C> <C> <C>
John Schaeffer 1,844,588 1 45.2%
3440 Airway Drive
Santa Rosa, CA 95403
Stephen Morris 34,300 2 **
3440 Airway Drive
Santa Rosa, CA 95403
Sam Salkin 1,000 3 **
3440 Airway Drive
Santa Rosa, CA 95403
John Lenser 6,000 4 **
3440 Airway Drive
Santa Rosa, CA 95403
Barry Reder NONE 5 N/A
222 Kearny Street,
7th Floor
San Francisco, CA 94108
All directors and 1,885,888 46.2%
officers as a
group(7 persons)
</TABLE>
* The amounts and percentages indicated as beneficially
owned were calculated pursuant to Rule 13d-3(d)(1) under the
Exchange Act which provides that beneficial ownership of a
security is acquired by a person if that person has the right to
acquire beneficial ownership of such security within 60 days
through the exercise of a right such as the exercise of an option
or the conversion of a convertible security into common stock.
Any securities not outstanding which are subject to options or
conversion privileges are deemed outstanding for the purpose of
computing the percentage of outstanding securities of the class
owned by the person who owns the option or conversion privilege
but are not deemed outstanding for the purpose of computing the
percentage of the class owned by any other person.
** Less than one percent of such class of stock.
1 The amount reported excludes 3,000 shares transferred in
December 1994 and 10,600 shares transferred in October 1997 by
Mr. Schaeffer to an irrevocable trust established for the benefit
of Mr. Schaeffer's children. Mr. Schaeffer does not have voting
or investment powers over these 10,600 shares, and Mr. Schaeffer
disclaims beneficial ownership of all of the shares held in this
irrevocable trust.
2 Includes 31,300 shares subject to issuance within 60 days
after May 20, 1999, upon the exercise of stock options granted
pursuant to Company's Fiscal 1993 Stock Incentive Plan, as
amended (the "1993 Plan") and 3,000 shares subject to issuance
within 60 days after May 20, 1999, upon the exercise of stock
options granted subject to the 1995 Non-Employee Directors' Stock
Option Plan.
3 Shares owned in Individual Retirement Account.
4 Includes 6,000 shares subject to issuance within 60 days
after May 20, 1999 upon the exercise of stock options granted
pursuant to the Company's Non-Employee Directors' Stock Option
Plan.
5 The policies of Mr. Reder's law firm prohibit him from
owning shares of the Company's common stock.
BOARD OF DIRECTORS
MEETINGS
During the fiscal year ended March 31, 1999, the Board met
on five (5) occasions, met by conference call on three (3)
occasions, and took action by written consent on six (6)
occasions. Each person who was then a Board member attended at
least 80% of the Board meetings.
BOARD COMMITTEES
The Compensation Committee. The Compensation Committee,
which met once in fiscal 1999, currently has two members, John
Lenser and Barry Reder. The Compensation Committee establishes
the compensation and evaluates the performance of the officers of
the Company and provides advice and counsel to the Board of
Directors with respect to compensation policies and practices
THE AUDIT COMMITTEE. The Audit Committee, which met once in
fiscal 1999, currently has two members, Barry Reder and Sam
Salkin. The Audit Committee meets at least annually with the
auditors of the Corporation and consults with them and with the
Chief Financial Officer of the Corporation as is necessary. The
Audit Committee has the responsibility of recommending the annual
appointment of the public accounting firm to serve as the
Company's independent auditors and reviewing any matters with the
auditors that might affect the financial statements, internal
controls, or other financial aspects of the operation of the
Company. The Audit Committee also reviews the Company's
accounting procedures and systems of control and the Company's
quarterly and annual financial statements.
None of the members of the Compensation Committee or the Audit
Committee is an employee of the Company.
REPORTS REQUIRED BY SECTION 16(A)
Section 16(a) of the Exchange Act requires the Company's
directors and executive officers and persons who own more than
ten percent (10%) of the Company's Common Stock to file with the
Securities and Exchange Commission and any exchange on which the
Company's stock is traded reports of ownership and changes in
ownership of the Company's Common Stock.
Based solely on its review of the copies of Forms 3, 4 and 5
received by the Company or written representations from certain
reporting persons that no Form 5 reports were required for such
persons, the Company believes that, during the fiscal year ended
March 31, 1999, all Section 16(a) filing requirements applicable
to its officers, directors and 10% shareholders were complied
with.
GENERAL INFORMATION REGARDING DIRECTORS AND EXECUTIVE OFFICERS
Information about (i) each director nominee and (ii) the
executive officers of the Company who are not directors is set
forth below as of June 22, 1999:
<TABLE>
<CAPTION>
Name Age Office Director Term
Since Expires
<S> <C> <C> <C> <C>
John Schaeffer 50 Chief Executive 1990 1999
Officer and
Chairman
of the Board
Stephen Morris 52 Director 1993 1999
Samuel Salkin 49 Director August 1999
1998
John Lenser 55 Director May 1999
1996
Barry Reder 54 Director May 1999
1996
Mark Swedlund 48 President N/A N/A
Les Seely 55 Chief Financial N/A N/A
Officer and
Secretary
</TABLE>
PROFESSIONAL EXPERIENCE OF EXECUTIVE OFFICERS AND DIRECTORS:
JOHN SCHAEFFER. Mr. Schaeffer founded the Company's
predecessor in 1986 and since 1990 has been the Company's
Chief Executive Officer and Chairman of the Board. Mr. Schaeffer
has been involved in retail businesses since 1978. In 1994 Mr.
Schaeffer was named California Small Businessperson of the Year.
Mr. Schaeffer received a B.A. degree in anthropology from the
University of California at Berkeley in 1971.
STEPHEN MORRIS. Mr. Morris joined the Company's Board of
Directors in October 1993. On July 1, 1994, Mr. Morris became
Executive Vice President and Chief Operating Officer of the
Company. He resigned from such position in June, 1995.
Prior to July 1, 1994 and subsequent to June, 1995, Mr. Morris
has been the principal of Stephen Morris Associates, a provider
of sales and marketing consulting services. He is currently the
President and Publisher at Chelsea Green Publishing Co. in
Vermont. Mr. Morris received an A.B. degree in Psychology from
Yale University in 1970.
SAMUEL SALKIN. Mr. Salkin joined the Company's Board of
Directors in August 1998. Mr. Salkin has held the position of
Merchant for GreenTree Nutrition. com, an e-commerce start-up
specializing in health and wellness. In 1997 and 1998, Mr.
Salkin was Chief Operating Officer for the San Francisco Jewish
Community Federation and from 1994 to 1996 served as President
and CEO of Peet's Coffee & Tea, Inc. Mr. Salkin has also held
high level positions with other consumer product and direct
marketing companies and is a visiting lecturer at The Haas School
of Business at UC Berkeley. He holds his BS and MS degrees from
Cornell University.
JOHN LENSER. Mr. Lenser joined the Company's Board of
Directors in May 1996. Mr. Lenser was President of Hearthsong
and David Kay Catalog from 1992 to 1995. Mr. Lenser has been an
independent consultant from 1994 to the present. Mr. Lenser
received a B.A. degree in 1966 and a Masters Degree in 1969 from
the University of California at Berkeley.
BARRY REDER. Mr. Reder joined the Company's Board of
Directors in May 1996. Since October 1993, Mr. Reder has been a
partner at the San Francisco firm of Coblentz, Patch, Duffy &
Bass, a California law firm. Mr. Reder has served as counsel to
the Company since 1990. He is general corporate and securities
counsel for a broad range of businesses throughout the United
States. His expertise is in mergers and acquisitions, venture
capital, contracts and real estate. Mr. Reder received a B.A.
degree from Wesleyan University in 1966 and a J.D. degree from
Cornell Law School in 1969.
MARK SWEDLUND. Mr. Swedlund was elected President of the
Company on June 14, 1999. Mr. Swedlund served as Senior Vice
President and Division President of Foster & Gallagher, Inc. from
1990 to 1997. From 1982 to 1990 he was a partner of The Silbert
Group, a consulting firm specializing in providing strategic
services to consumer catalog marketers. From 1978 to 1982, he
was a consultant with Kestnbaum & Company. Mr. Swedlund is a
1973 graduate of the College of the University of Chicago and
received a Master's in Business Administration from that
institution in 1978.
LES SEELY. Mr. Seely was appointed Chief Financial Officer
and Secretary of Real Goods in June, 1998. Prior to joining the
Company, Mr. Seely served as Chief Financial Officer for Schurman
Fine Papers from 1991 to 1997 and prior to that as Chief
Financial Officer of Dakin Inc. from 1984 to 1990. He received
his B.A. degree from the University of Colorado in 1966, his MBA
degree from the Wharton Graduate School of Business in 1970 and
his CPA certificate in 1975.
There is no family relationship among the directors,
executive officers or persons nominated or chosen by the Company
to become directors or executive officers.
REMUNERATION OF DIRECTORS
Under the Company's Amended and Restated Non-Employee Directors'
Plan (the "Amended Directors' Plan") each Director receives an
option to purchase 10,000 shares of the Company's Common Stock
upon election, and an option to purchase 2,000 shares of stock on
the sixth and each succeeding anniversary of service thereafter.
In accordance with policies of his law firm, Mr. Reder has
disclaimed participation in the Amended Directors' Plan.
Each non-employee director of the Company receives an annual cash
retainer fee of $6,000 per year, and each non-employee director
who chairs the Compensation Committee and Audit Committee of the
Board receives an additional $3,000 per year for chairing each
such committee. Mr. Reder is the chairman of the Audit Committee
and the Compensation Committee.
The directors are reimbursed for their extraordinary travel
expenses in connection with their service on the Company's Board.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the cash, bonus and other annual
compensation received by Mr. Schaeffer, the Company's Chairman of
the Board and Chief Executive Officer, and the compensation of
each other officer in excess of $100,000 per year for the three
fiscal years ending on March 31, 1997 thru 1999, respectively.
Mr. Schaeffer received no bonuses, reportable perquisites,
securities or property, long term compensation awards in the form
of restricted stock awards, option or SAR awards, or payouts
pursuant to any long term incentive plan during fiscal 1999 or
the two receding fiscal years. During the period covered by the
table, Mr Schaeffer was granted no options to purchase any of the
Company's securities including Common Stock. Options granted to
Mr. Zell to purchase 120,000 shares of the Company's common stock
did not vest prior to termination of his employment in April,
1999.
Summary Compensation Table
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Name and Annual All Other
Principal Fiscal Compensation Compensation
Position Year Salary 1,2 3
John Schaeffer, 1999 $82,199 $12,966
Chairman of the 1998 69,225 10,509
Board and Chief 1997 70 981 8,812
Executive Officer
Ronald A. Zell 1999 $116,385 $ -
President 1998 - -
1997 - -
</TABLE>
1 Includes amounts deferred at the election of Mr. Schaeffer
pursuant to the Company's 401(k) Plan established pursuant to
Section 401(k) of the Internal Revenue Code of 1986, as amended.
2 Includes certain amounts accrued during the year indicated
and paid the following year.
3 Consists entirely of the cash value benefit to Mr. Schaeffer
of split-dollar life insurance premiums paid by the Company on a
$2,500,000 life insurance policy owned by the Schaeffer 1994
Irrevocable Trust. The figure was established using the demand
loan valuation method and assuming a long-term interest rate of
7.5%. Such split-dollar life insurance policy and the arrangement
between Mr. Schaeffer, the Schaeffer 1994 Irrevocable Trust and
the Company regarding such policy is discussed under "Employment
Contracts, Employment Termination and Change-in-Control
Arrangements" below.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In April 1997, the Company entered into a line of credit
agreement for $1,500,000 with National Bank of the Redwoods. In
April 1999 the line of credit agreement was extended until August
31, 1999. Mr. Schaeffer personally guaranteed each line of
credit. On March 31, 1999 no amounts were outstanding under the
extended line of credit.
Stephen Morris, a director of the Company, currently serves
as the publisher at, and owns 10% of the Common Stock of, Chelsea
Green Publishing Co. ("CGP") in Vermont, a company which has
co-published several books with the Company and is a distributor
of the Company's Real Goods Solar Living Sourcebook. All
transactions between the Company and CGP resulted in total gross
payments of $207,201 made by the Company to CGP from April 1,
1998 through March 31, 1999.
EMPLOYMENT CONTRACTS, EMPLOYMENT TERMINATION AND
CHANGE-IN-CONTROL ARRANGEMENTS
John Schaeffer has had an employment agreement with the Company
since June 1990. The agreement is renewable on an annual basis,
commencing February 28th of each year, and is terminable by Mr.
Schaeffer upon thirty (30) days' notice, or by the Company upon
sixty (60) days' notice. Mr. Schaeffer's base salary is subject
to annual increase by the Board as determined by the Board. Mr.
Schaeffer is also eligible to participate in the Company's
benefit plans, including option, profit sharing, insurance and
similar plans. If Mr. Schaeffer becomes disabled during the term
of his employment, his disability benefits will be paid through
the remaining term of the agreement. The agreement requires Mr.
Schaeffer's full-time service to the Company.
Mr. Schaeffer owns 1,858,188 shares of the Company's Common
Stock. Mr. Schaeffer and the Company have been advised that on
the death of Mr. Schaeffer the estate may be required to sell all
or a substantial portion of such shares to satisfy estate tax
obligations. The sale of such number of shares would likely
destabilize the market for the Company's stock. The Company
agreed to pay a portion of the premiums due on a life insurance
policy for Mr. Schaeffer (the "Policy"). The Policy is owned by
the Schaeffer 1994 Irrevocable Trust (the "Trust") established
for the benefit of Mr. Schaeffer's children. Pursuant to a
Split-Dollar Agreement dated May 15, 1995, among the Company, Mr.
Schaeffer and the Trustee of the Trust, the Company will be
reimbursed for the amount of the premiums it pays on the policy
at such time as the Split-Dollar Agreement is terminated, the
Trust surrenders or cancels the Policy, or when the Policy's
death benefit proceeds are paid. Such repayment has been secured
by the collateral assignment of the Policy by the Trust to the
Company.
Mr. Morris, Mr. Lenser and Mr. Salkin have all served as
part-time consultants to the Company on an infrequent basis. In
fiscal 1999, aggregate fees paid to all three were less than
$10,000. Mr. Morris may exercise stock options to purchase
31,300 shares of Company Common Stock at any time until 30 days
after his term as a part-time consultant has ended.
FUTURE TRANSACTIONS
Any future transactions (including loans) between the Company and
any officer, director, principal shareholder or affiliate of the
Company will be approved by a majority of the directors
disinterested in such transactions and by a majority of the
independent outside directors, each of whom shall have determined
that the transaction is fair to the Company and its shareowners
and that the terms of such transaction are no less favorable to
the Company than could be obtained from unaffiliated parties.
MATTERS SUBMITTED TO THE VOTE OF SHAREOWNERS
1. ELECTION OF DIRECTORS
The Company's By-Laws authorize a Board of four to seven members,
the specific number of which is currently fixed at six but can be
fixed within that range by the Board. Each director holds office
for a term which expires at the next annual meeting when his or
her successor is elected and qualified. Unless otherwise
instructed, the proxyholders will vote the proxies received by
them for the Company's nominees, John Lenser, Stephen Morris,
Barry Reder, Sam Salkin and John Schaeffer. The Company plans to
have a vacancy in the Board of Directors at the present time. In
the event that any of these individuals is unable or declines to
serve as a director at the time of the Meeting, the proxies will
be voted for any nominee who shall be designated by the Chairman
of the Board to fill the vacancy. It is not expected that any
nominee will be unable or will decline to serve as a director.
The five nominees receiving the highest number of votes at the
Meeting will be elected directors.
THE BOARD OF DIRECTORS RECOMMENDS VOTING FOR ALL MANAGEMENT
NOMINEES FOR THE ELECTION OF DIRECTORS.
2. INCREASE IN AUTHORIZED SHARES UNDER OPTION PLAN
Under the Company's Second Amended and Restated Fiscal 1993
Stock Incentive Plan ("Employee Plan"), the Company can grant
incentive and non-qualified options to purchase 600,000 shares of
common stock. The management and Board of Directors believe that
stock options are an important factor in attracting, motivating
and retaining qualified personnel who will be essential to the
future success of the Company. The Employee Plan is intended to
offer a significant incentive by helping employees to purchase
the Company's common stock at a price equal to the fair market
value on the date of grant. These options will only become
valuable if the price of the Company's stock increases over time
and as the options vest. Currently a maximum of 600,000 shares
may be granted. As of March 31, 1999, subject to shareowner
approval to increase the number of shares subject to the
Employee Plan, options to purchase 627,950 shares had been
granted and were outstanding, options to purchase 26,100 shares
had been exercised, and options to purchase 145,950 shares were
available for grant. A subsequent action also subject to
shareowner approval further increased the number of shares
subject to the Employee Plan. The amendment would, following
action, now increase the number of shares issuable under the Plan
by 600,000 to 1,200,000. A summary of the provisions of the
Employee Plan is attached as Exhibit A to the Proxy Statement.
THE BOARD OF DIRECTORS RECOMMENDS VOTING FOR THE AMENDMENT TO THE
STOCK INCENTIVE PLAN.
GENERAL VOTING INFORMATION
A shareowner may, with respect to the election of directors
(i) vote for the election of all director nominees named herein,
or (ii) withhold authority to vote for the director nominees or
(iii) vote for the election of one or more of such director
nominees and against the other director nominee or nominees by so
indicating on the proxy. Withholding authority to vote for a
director nominee will not prevent such director nominee from
being elected. Shares will be voted as instructed in the
accompanying proxy. If there are no instructions from the
shareowner on an executed proxy, the proxy will be voted as
recommended by the Board.
When a broker is not permitted to vote stock held in street
name on certain matters in the absence of instructions from the
beneficial owner of the stock and so indicates that it is not
voting certain stock on any or all matters on the proxy, the
shares which are not being voted with respect to a particular
matter (the "non-voted shares") will be considered shares not
present and entitled to vote on such matter, although such shares
may be considered present and entitled to vote for other purposes
and will count for purposes of determining the presence of a
quorum. Approval of each matter specified in the Meeting notice
requires the affirmative vote of a majority of the shares of
Common Stock present in person or by proxy at the meeting and
entitled to vote on such matter. Accordingly, non-voted shares
with respect to such matters will not affect the determination of
whether such matters are approved or the outcome of the election
of directors. In determining whether the requisite shareholder
approval has been received on the other matters, broker non-votes
will not be counted, while a vote to abstain will be counted and
therefore have the effect of a vote against the matter.
INDEPENDENT AUDITOR
The Company's independent auditor for the year ended March
31, 1999 was Deloitte and Touche, LLP. Representatives of
Deloitte & Touche, LLP are expected to be present at the meeting
with the opportunity to make a statement if they desire to do so
and are expected to be available to respond to appropriate
questions. The Board generally selects independent auditors to
audit the financial statements of the Company at the end of each
fiscal year. As of the date hereof, the Board has not selected
such auditors for the fiscal year ending March 31, 1999 but shall
make a selection after reviewing the cost, availability and
expertise of such accountants.
DEADLINE FOR RECEIPT OF SHAREOWNER PROPOSALS
Proposals that shareowners of the Company would like to
present at next year's Annual Meeting must be received by the
Company no later than April 21, 2000 in order that they may be
included in the proxy statement and form of proxy related to that
meeting and in order that they might be presented at that
meeting.
OTHER MATTERS
The Company knows of no other matters to be submitted at the
Meeting. If any other matters properly come before the Meeting,
it is the intention of the persons named in the enclosed form of
Proxy to vote the shares they represent as the Board may
recommend.
Form 10-KSB
A copy of the Company's Annual Report on Form 10-KSB, as
filed with the Securities and Exchange Commission on or around
June 25, 1999, is available without charge upon written request
to Investor Relations, Real Goods Trading Corporation, 3440
Airway Drive, Santa Rosa, California 95403.
By signing and returning the enclosed Proxy, shareowners
will be assured of representation at the Annual Meeting in
connection with approval of the matters discussed herein. Each
shareowner should review, complete, execute, date and return the
enclosed Proxy to the Company in the envelope provided as
promptly as possible, and in any event before August 13, 1999.
The Board appreciates the cooperation of the shareowners.
By Order of the Board of Directors
[S]LES SEELY
Les Seely
Secretary
Dated: June 29, 1999
</PAGE>
EXHIBIT A
SECOND AMENDED AND RESTATED FISCAL 1993 STOCK INCENTIVE PLAN
PLAN SUMMARY
Effective May 22, 1999, the Board, subject to stockholder
approval, further amended the Second Amended and Restated 1993
Stock Incentive Plan ("the 1993 Plan"). The amendment increases
to the number of shares subject to the 1993 Plan.
GENERAL.
The 1993 Plan was initially approved by the stockholders at
the 1992 Annual Meeting of Stockholders. The purpose of the 1993
Plan is to attract and retain the best available personnel for
positions of substantial responsibility and to provide the
additional incentives which would promote the success of the
Company's business.
NUMBER AND TYPES OF SHARES.
Under the 1993 Plan, the Company can grant Incentive Stock
Options ("ISOs"), Non-Qualified Stock Options ("NSOs") and
bonuses of restricted Stock ("Stock Bonuses"). To the extent
that options are unexercised and lapse or Stock Bonuses are
forfeited and returned to the Company, the shares subject thereto
shall again become available for issuance and sale under the 1993
Plan.
ADMINISTRATION AND PARTICIPATION.
The 1993 Plan may be administered by a committee designated
by the Board (such as the Compensation Committee) or by the Board
itself. The Administrator has the power to determine the
participation, sale or exercise price, number of shares, class of
shares, other terms and conditions of each grant, and otherwise
to administer the 1993 Plan. The Administrator is also permitted
to make certain amendments to the Plan without shareholder
approval.
ISOs may be granted to all persons who are "employees"
within the meaning of the Internal Revenue Code (which generally
means persons over whose service the Company has control). NSOs
and Stock Bonuses may be granted to all Company employees,
officers, and consultants, as well as to directors of the Company
who are not employees.
SPECIAL ISO LIMITATION AND OTHER TERMS.
Options may be designated or granted as ISOs under the 1993
Plan only to the extent that the aggregate fair market value of
all stock with respect to which ISOs first become exercisable
during a calendar year does not exceed $100,000. For purposes of
this provision, all Incentive Stock Options outstanding under any
plan of the Company shall be aggregated, and fair market value of
Common Stock subject to options shall be determined as of the
grant date of the respective options.
Optionees may be granted ISOs, NSOs or both. Participation
in the 1993 Plan does not confer upon any optionee or grantee of
Stock Bonuses any right to continuation of employment by,
consultancy with, or directorship of, the Company. If an option
is designated as an ISO but does not qualify as an ISO under the
Internal Revenue Code, it shall be treated under the 1993 Plan as
a NSO.
TERMS OF OPTIONS.
The maximum term for ISOs and NSOs generally shall be 10 years,
provided that a maximum of 5 years applies to persons owning more
than 10% of the outstanding shares of the Company's voting stock.
EXERCISE PRICE.
The exercise price per share of a NSO may not be less than
85% of the fair market value thereof on the date of grant. The
exercise price per share of an ISO may not be less than the fair
market value thereof on the date of grant; provided, however,
that such exercise price may be higher if required under federal
income tax law. Although the fair market value will be
determined by the Administrator because there is a public market
for the Company's Common Stock, the fair market value per share
shall generally be determined as the mean of the high and low
sale prices of such stock on the Nasdaq Small Cap Market as of
the date of grant.
Generally, ISO and NSO grants are effective on the date of
the Administrator's approval, although the Administrator may
designate a later effective date. As described above, currently
ISOs and NSOs generally vest at a rate of not less than 20% per
year, and terminate, if unexercised, ten years after the date of
grant. Under the 1993 Plan, the Administration will determine
the vesting provisions.
PURCHASE PRICE.
As determined by the Administrator, the option exercise
price may be paid in cash, check, one or more adequately secured
promissory notes or shares of stock or other securities of the
Company, which will be valued at their fair market value (without
regard to any restrictions under the Securities Act of 1933, as
amended) determined as set forth above. The Company may withhold
or require payment as necessary to comply with applicable income
or employment tax law.
EXERCISE OF OPTIONS
Options are exercisable at such times and under such
conditions as are determined by the Administrator. Until the
issuance of the stock certificate representing the shares
issuable upon exercise, no optionee has any rights as a
stockholder. The Company may require individual optionees to
report their subsequent sales or dispositions of stock acquired
under options and of other benefits under the 1993 Plan, in order
for the Company to realize and benefit from all available income
tax deductions and for the purposes of complying with securities
laws reporting obligations. Under the 1993 Plan, the
Compensation Committee can accelerate the exercisability of
options on a case-by-case basis.
TERMINATION OF EMPLOYMENT OF OPTIONEE.
If an optionee holding an ISO shall cease to be an employee
of the Company, he or she may exercise his or her option within
the three months after termination of his or her employment or
such lesser period as the Administrator shall prescribe;
provided, however, if the termination is due to disability or
death, the option may be exercised for one year after termination
of employment. The Administrator may specify comparable
provisions for NSOs.
STOCK BONUSES.
The Administrator may grant Stock Bonuses; shares of the
Company's Stock may be transferred to recipients without cash or
equivalent consideration or sold at a discount from fair market
value. Stock Bonuses may be subject to forfeiture or repurchase
at the original purchase price depending on the recipient's
compliance with certain restrictions (which the Company
anticipates will be related to continued employment) or
achievement of certain goals (which may be related to the
Company's performance or to individual performance). Such
restrictions and goals are determined by the Administrator.
Certificates evidencing shares issued as Stock Bonuses shall bear
legends to reflect these restrictions and may be held in escrow
by the Company as well to assure compliance with the
restrictions. To date, no Stock Bonuses have been granted by the
Company.
AMENDMENT AND TERMINATION.
Unless sooner terminated, the 1993 Plan shall continue in
effect for a term of 10 years after the June 1992 adoption by the
Board.
The Board may from time to time amend or terminate the 1993
Plan, except that without the approval of the holders of a
majority of the outstanding shares, no such revision or amendment
may be adopted unilaterally by the Board which would (i) increase
the number of shares subject to the 1993 Plan except in
accordance with the provisions of the 1993 Plan relating to
adjustments due to changes in capitalization, (ii) change the
designation of the class of employees eligible to be granted ISOs
or (iii) amend the 1993 Plan in a manner which would materially
alter any outstanding option terms. No such termination or
amendment shall alter or impair the rights under any previously
granted options or Stock Bonuses.
MISCELLANEOUS.
Neither ISOs nor NSOs may be sold, transferred or disposed
of other than by will or the laws of descent or distribution and
may be exercised, during the lifetime of the optionee, only by
the optionee or his or her legal representative.
In the event of changes in the capitalization of the
Company, such as stock splits and stock dividends, outstanding
options and shares issued as Stock Bonuses shall be equitably
adjusted, and the respective purchase prices shall be equitably
adjusted, to reflect the change. The number of shares remaining
in the 1993 Plan and those reserved for exercise of outstanding
options shall also be adjusted accordingly.
The shares issuable with respect to options shall be issued
only in compliance with applicable law, and the Company shall at
all times reserve a number of shares sufficient to satisfy the
requirements of the 1993 Plan. If the Company is unable to
obtain the necessary authorization to implement the 1993 Plan,
the Company shall be relieved of liability with respect thereto.
All grants of options and of Stock Bonuses shall be evidenced by
written agreements.
TAX EFFECTS OF PARTICIPATION.
The following describes certain federal income tax
consequences to 1993 Plan participants and the Company. Because
each person's individual income tax circumstances inevitably
vary, participants under the 1993 Plan are advised to consult
their personal tax advisors concerning specific consequences of
the particular transaction and any appropriate action to be
taken. Furthermore, this summary does not discuss the provisions
of the income tax laws of any municipality, state or foreign
country in which the participant may reside.
(a) INCENTIVE STOCK OPTIONS.
If an ISO granted under the 1993 Plan qualifies under applicable
laws and regulations to be treated as an ISO, the participant
will recognize no income upon grant of the option and will
recognize no income upon exercise of the ISO unless the
alternative minimum tax rules apply. See "Alternative Minimum
Tax" below.
Upon the sale of shares purchased pursuant to the exercise
of an ISO at least two years after the grant of the ISO and one
year after its exercise (the "statutory holding periods"), any
gain, measured by the difference between the sale price and the
exercise price, will be taxed to the participant as long-term
capital gain. Under current law, capital gain is taxed at a
maximum rate of 20%. If the statutory holding periods are not
satisfied (i.e., the participant makes a "disqualifying
disposition"), the participant will recognize ordinary income in
the year of disposition equal to the difference between the
exercise price and the lower of (i) the fair market value of the
stock at the date of the ISO exercise or (ii) the sale price of
the stock. The Company will be entitled to a deduction in the
same amount, subject to certain limitations discussed below. Any
additional gain or loss recognized on a disqualifying disposition
of the shares will be characterized as short term capital gain or
loss.
The 1993 Plan permits optionees to pay the exercise price
with shares of stock. If shares of Stock which were acquired on
exercise of an ISO are surrendered ("surrendered shares") in
connection with the exercise of an ISO within the statutory
holding periods, the exchange will be treated as a "disqualifying
disposition" with the consequences described above. At the time
of such disqualifying disposition, any excess of the fair market
value over the exercise price paid for such surrendered shares
which is not recognized as compensation income will not be
recognized as taxable gain at the time of the exchange and,
instead, such gain will be deferred until the disposition of the
acquired shares. The number of acquired shares equal to the
number of surrendered shares will have a basis equal to the
participant's basis in the surrendered shares, increased by any
compensation income recognized with respect to the surrendered
shares. Any additional shares acquired in the exchange will have
a zero basis. The surrendered shares will be deemed disposed of
beginning with those shares with the lowest basis. In any event,
the Company will be allowed a deduction in the amount of the
ordinary income recognized by the participant, subject to certain
limitations discussed below.
However, if payment of the ISO exercise price with shares
of stock does not result in a disqualifying disposition of the
surrendered shares, the participant will not recognize taxable
income at the time of such ISO exercise, and the gain realized on
surrender of such Stock will be deferred until the disposition of
the acquired shares. The number of acquired shares equal to the
number of surrendered shares will have a basis equal to the
participant's basis in the surrendered shares. Any additional
shares acquired in the exchange will have a zero basis.
(b) NONSTATUTORY OPTIONS.
A participant does not recognize any taxable income at the time
he or she is granted a NSO, as long as it does not have a readily
ascertainable fair market value on the date of grant. A NSO
granted pursuant to the 1993 Plan generally will not have a
readily ascertainable fair market value because the Company's
options (as distinguished from the Company's Common Stock) are
not traded on an established securities market. Upon exercise of
a NSO, the participant will generally recognize ordinary income
for federal tax purposes measured by the excess, if any, of the
then fair market value of the shares over the exercise price.
Upon a resale by the participant of shares acquired upon
exercise of a NSO, any difference between the sales price and the
fair market value of the shares on the date of exercise of the
NSO will generally be treated as capital gain or loss.
(c) STOCK BONUSES.
Stock Bonuses granted pursuant to the 1993 Plan may be
subject to vesting limitations and hence will be subject to a
"substantial risk of forfeiture" within the meaning of Section 83
of the Internal Revenue Code. As a result, a participant who
receives a grant of unvested Stock Bonuses will not recognize
ordinary income at the time of receipt. Instead, the participant
will recognize ordinary income as the stock vests and is no
longer subject to the Company's right to repurchase the stock at
less than fair market value. At vesting, the participant
recognizes ordinary income measured by the difference between the
purchase price paid for the stock by the participant, if any, and
the fair market value of the stock on the date of vesting.
A participant who receives unvested Stock Bonuses may
accelerate his or her recognition of income to the date of the
grant of the Stock Bonuses by filing a timely Section 83(b)
election, as described above. If the participant makes a Section
83(b) election, he or she will recognize ordinary income equal to
the difference between the purchase price paid, if any, and the
fair market value of the stock on the date of acquisition. The
capital gain holding period begins on the same date. A
participant should consult with his or her own tax advisor
concerning the advisability of filing a Section 83(b) election in
connection with the grant of Stock Bonuses.
(d) WITHHOLDING.
The ordinary income recognized by a participant who is also
an employee upon exercise of a NSO or upon receipt of Stock
Bonuses will be treated as wages and will be subject to tax
withholding by the Company out of the current compensation paid
to the participant. If such current compensation is insufficient
to satisfy the withholding obligations, the participant will be
required to make direct payment to the Company for the tax
liability. In the sole discretion of the Administrator, a
participant may satisfy his or her withholding obligations by
electing to have the Company withhold from the shares issuable
upon exercise or grant of his or her option or Stock Bonuses, as
the case may be, the amount of cash or number of shares having a
fair market value (as of the applicable tax date) equal to the
amount of tax to be withheld. The participant may also satisfy
the withholding requirement by transferring an amount of
previously owned shares with a fair market value equal to the
amount to be withheld.
(e) ALTERNATIVE MINIMUM TAX.
The exercise of an ISO granted under the 1993 Plan may
subject the participant to the alternative minimum tax ("AMT")
under Section 55 of the Internal Revenue Code. In computing AMT,
shares purchased on exercise of an ISO are treated as if they had
been acquired by the participant pursuant to a NSO (see
"Nonstatutory Options," above).
(f) LIMITATIONS ON CORPORATE DEDUCTION.
Generally, the Company will be entitled to a corresponding
tax deduction at the time the participant recognizes ordinary
income with respect to shares acquired upon exercise of a NSO,
subject to certain limitations discussed below. The Company is
not entitled to a compensation deduction in connection with
either the grant or the exercise of an ISO unless there is a
disqualifying disposition.
However, the Company's deduction for remuneration for
services to certain covered employees (generally the Company's
Chief Executive Officer and four most highly compensated
employees other than the Chief Executive Officer) during any one
year is limited to One Million Dollars ($1,000,000) per covered
employee. Under certain circumstances the compensation element
can be triggered by a participant's receipt, exercise or
disposition of options, Stock Bonuses or Company shares acquired
pursuant to the 1993 Plan.
-End of Plan Summary-
</PAGE>
REAL GOODS TRADING CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE 1999 ANNUAL MEETING OF SHAREOWNERS
August 21, 1999
The undersigned hereby appoints John Schaeffer and Mark Swedlund,
and each of them, proxies for the undersigned, with full power of
substitution, to vote (including the right to cumulate votes) all
shares of common stock of Real Goods Trading Corporation, a
California corporation (the "Company"), which the undersigned
would be entitled to vote at the Annual Meeting of Shareowners of
the Company which will be held at 13771 S. Highway 101, Hopland,
California 95449 on Saturday, August 21, 1999 at 11:00 AM, local
time, or at any adjournment thereof, upon the matters set forth
below and described in the accompanying Proxy Statement, and upon
such other business as properly comes before the meeting or any
adjournment thereof.
1. Election of Directors
For all nominees For all nominees Withold authority
listed below except as crossed out to vote for nominees
Instruction: To withhold authority for any nominee, cross out
that nominee's name below.
John Lenser Stephen Morris Barry Reder
Sam Salkin John Schaeffer
2. Approval of Amendment of the Stock Incentive Plan to
increase the number of shares issuable from 800,000 to
1,200,000.
COMMENTS/ADDRESS CHANGE
Please mark this box if you have written comments/address change
on the reverse side.
I PLAN TO ATTEND THE MEETING
(continued on reverse side)
</PAGE>
Please mark this proxy as indicated on the reverse side to vote
on any item. If you wish to vote in accordance with all of the
Board of Directors' recommendations, please sign below: no boxes
need be checked. If you sign this proxy and do not indicate that
you withhold authority to vote FOR the election of any director
nominee, this proxy shall be deemed to be a vote FOR all such
nominees
Receipt is hereby acknowledged of the Real Goods Trading
Corporation Notice of Meeting and Proxy Statement.
COMMENTS/ADDRESS CHANGE: Please date and sign
exactly as your name(s)
appear on your shares.
If signing for estates,
trusts, or corporations,
title or office should
be stated. If shares are
held jointly, each holder
should sign.
Please mark Comment/Address Box on Reverse Side
__________________________
__________________________
Signature of Shareowner(s)
Dated:_______________, 1999
Printed on recycled paper
