formpre14a.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of
the
Securities Exchange Act of 1934 (Amendment
No. )
Filed
by the Registrant
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Filed
by a Party other than the Registrant
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Check
the appropriate box:
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Preliminary
Proxy Statement
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Confidential, for Use of the
Commission Only (as permitted by Rule
14a-6(e)(2))
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material under Rule 14a-12
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MICROFLUIDICS
INTERNATIONAL CORPORATION
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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):
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x
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No
fee required.
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
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(1)
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Title
of each class of securities to which transaction applies:
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(2)
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Aggregate
number of securities to which transaction applies:
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(3)
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Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4)
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Proposed
maximum aggregate value of transaction:
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(5)
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Fee
paid previously with preliminary materials.
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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.
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(1)
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(2)
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Form,
Schedule or Registration Statement No.:
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MICROFLUIDICS
INTERNATIONAL CORPORATION
30
Ossipee Road
Newton,
Massachusetts 02464
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To Our
Stockholders:
The 2009
Annual Meeting of Stockholders of Microfluidics International Corporation, a
Delaware corporation (the “Company”), will be held on Thursday, June 4, 2009 at
9:00 a.m., local time, at the offices of the Company located at 30 Ossipee Road,
Newton, Massachusetts, for the following purposes:
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(1)
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To
elect a Board of Directors to serve for the ensuing year and until their
respective successors have been duly elected and
qualified.
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The
nominees the Board of Directors proposes to present for election
are:
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(2)
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To
amend the Company’s Certificate of Incorporation to increase the number of
authorized shares of common stock to 30,000,000 from
20,000,000.
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(3)
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To
ratify the appointment of the firm of UHY LLP as independent auditors for
the Company for the fiscal year ending December 31,
2009.
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(4)
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To
transact such other business as may properly come before the meeting and
any adjournments thereof.
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Only
stockholders of record on the transfer books of the Company at the close of
business on April xx
, 2009 are entitled to notice of, and to vote at, the
meeting.
Please
sign, date and return the enclosed proxy in the enclosed envelope at your
earliest convenience. If you return your proxy, you may nevertheless attend the
meeting and vote your shares in person.
All
stockholders are cordially invited to attend the meeting.
By Order
of the Board of Directors
/s/ James
N. Little
James N.
Little
Chairman
of the Board of Directors
Newton,
Massachusetts
April XX,
2009
IT IS
IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING, PLEASE SIGN, DATE AND MAIL THE ENCLOSED PROXY IN THE
ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED WITHIN THE UNITED
STATES.
This
proxy statement and the form of proxy enclosed with this proxy statement are
intended to be first mailed to stockholders on or about May xx,
2009.
IMPORTANT
NOTICE REGARDING THE INTERNET AVAILABILITY OF
PROXY
MATERIALS FOR THE 2009 ANNUAL MEETING
The U.S.
Securities and Exchange Commission recently adopted new e-proxy rules that
require companies to post their proxy materials on the internet and permit them
to provide only a Notice of Internet Availability of Proxy Materials to
shareholders. For this proxy statement, we have chosen to follow the SEC's "full
set" delivery option, and therefore, although we are posting a full set of our
proxy materials (this proxy statement, the proxy card and our Annual Report to
Shareholders for the fiscal year ended December 31, 2008) online, we are also
mailing a full set of our proxy materials to our shareholders by mail. The
Company's Proxy Statement for the 2009 Annual Meeting of Shareholders, Proxy
Card and Annual Report to Shareholders for the fiscal year ended December 31,
2008, are available at: www.mficcorp.com/________.
We are
mailing a full set of our printed proxy materials to shareholders of record on
or about April xx,
2009. On this date, all shareholders of record and beneficial owners will have
the ability to access all of the proxy materials on the website referred to
above. These proxy materials will be available free of charge.
PROXY
STATEMENT
MEETING
OF STOCKHOLDERS OF
MICROFLUIDICS
INTERNATIONAL CORPORATION
TO
BE HELD ON
June
4, 2009
Proxies
in the form enclosed with this proxy statement are being solicited by the Board
of Directors of Microfluidics International Corporation, a Delaware corporation
(the “Company”), for use at the Annual Meeting of Stockholders to be held on
Thursday, June 4, 2009, at 9:00 a.m., local time, at the offices of the Company
located at 30 Ossipee Road, Newton, Massachusetts 02464 and at any adjournments
thereof (the “Meeting”).
Only
stockholders of record as of the close of business on April xx,
2009 will be entitled to notice of and to vote at the Meeting. As of that
date,
10,xxx,xxx
shares of common stock, par value $.01 per share (the “Common Stock”), of the
Company were issued and outstanding and entitled to vote at the
Meeting. The shares of Common Stock are the only outstanding voting
securities of the Company. Stockholders are entitled to cast one vote for each
share held of record.
An Annual
Report to Stockholders, containing financial statements for the fiscal year
ended December 31, 2008, is being mailed together with this proxy statement to
all stockholders entitled to vote. This proxy statement and the form of proxy
enclosed with this proxy statement are intended to be first mailed to
stockholders on or about May xx,
2009.
All
properly executed proxies returned in time to be counted at the Meeting will be
voted as stated below under “Voting Procedures.” Any stockholder giving a proxy
has the right to withhold authority to vote for any individual nominee to the
Board of Directors by writing that nominee’s name in the space provided on the
proxy.
Stockholders
should return properly executed proxies to the address on the proxy cards.
Execution of a proxy will not in any way affect a stockholder’s right to attend
the Meeting and vote in person. A stockholder may revoke a proxy at any time
before it is voted at the Meeting by notifying the Secretary of the Company in
writing at the address set forth above, by submitting a properly executed proxy
bearing a later date, or by revoking the proxy at the Meeting. Attendance at the
Meeting will not by itself constitute the revocation of a proxy.
In
addition to the election of directors, the stockholders will consider a vote to
ratify the Board of Directors’ selection of the Company’s auditors (as
recommended by the Company’s Audit Committee), and a vote to amend the Company’s
Certificate of Incorporation so as to increase the number of authorized shares
of common stock of the Company to 30,000,000 from 20,000,000, each as further
described in this proxy statement. Where a choice has been specified
on the proxy with respect to these matters, the shares represented by the proxy
will be voted in accordance with the specification and will be voted FOR these
matters if no specification is indicated.
The Board
of Directors of the Company knows of no other matters to be presented at the
Meeting. If any other matter should be presented at the Meeting upon which a
vote properly may be taken, shares represented by all proxies received by the
Board of Directors will be voted with respect thereto in accordance with the
judgment of the persons named as attorneys in the proxies.
PROPOSAL
1
ELECTION
OF DIRECTORS
Each
director of the Company is elected annually and holds office for the ensuing
year and until his successor has been elected and qualified. The Company’s
By-laws state that the number of directors constituting the entire Board of
Directors shall be determined by resolution of the Board of Directors. The Board
of Directors has set the number of directors at five effective as of June 4,
2009.
Shares
represented by all proxies received by the Board of Directors and not marked as
withholding authority to vote for any individual director or for all directors
will be voted FOR the election of all the nominees, unless one or more nominees
is unable or unwilling to serve. The Board of Directors knows of no reason why
any such nominee would be unable or unwilling to serve as a director, but if
such should be the case, proxies may be voted for the election of some other
person as the Board of Directors may recommend in his place, or for fixing the
number of directors at a lesser number. The affirmative vote of a majority of
the shares present, in person or by proxy, and entitled to vote on the election
of directors is required to elect each member of the Board of Directors. See
“Voting Procedures.”
THE BOARD
OF DIRECTORS RECOMMENDS THE ELECTION OF MR. LITTLE, MR. WALTERS, MR.
UVEGES, MR. ROY, AND MR. FERRARA AS DIRECTORS, AND PROXIES SOLICITED
BY THE BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED
OTHERWISE ON THE PROXY.
Directors
and Executive Officers
Each
director of the Company is elected annually and holds office for the ensuing
year and until his successor has been elected and qualified. The names of the
Company’s other current directors and named executive officers and certain
information about them are set forth below:
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Michael
C. Ferrara
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66
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Chief
Executive Officer, President and Director
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Peter
Byczko
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41
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Vice
President of Finance and Chief Accounting Officer
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William
J. Conroy
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53
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Vice
President—Operations and Engineering
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James
N. Little
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68
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Chairman
of the Board
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Leo
Pierre Roy
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51
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Director
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George
Uveges
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61
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Director
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Eric
G. Walters
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56
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Director
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MICHAEL
C. FERRARA joined the Company on November 14, 2007 as the Chief Executive
Officer and is a member of the Company’s Board of Directors. Mr. Ferrara was
most recently President and CEO of X-Rite Incorporated, a NASDAQ-traded company
(XRIT). X-Rite develops, manufactures and markets color management solutions for
industrial, commercial and retail applications. Prior to X-Rite, Mr. Ferrara was
CEO of Marine Optical Group, CEO of N.I. World Trade, a trading subsidiary of
National Intergroup (formerly National Steel) and held positions of increasing
seniority over an 18-year period at Westinghouse Electric Corporation. Mr.
Ferrara currently serves on the Board of Directors of Integration Capital &
Trade, Inc., an investment company based in New York, New York, and the Board of
Advisors of PureColor, Inc., a privately held company based in Santa Fe, New
Mexico. Mr. Ferrara has a B.S in electrical engineering from Villanova
University and completed the Program for Management Development (PMD) at Harvard
Business School.
PETER F.
BYCZKO joined the company on March 12, 2009 as the Vice President of
Finance. On March 31, 2009, he was appointed as the Chief Accounting
Officer of the Company. Mr. Byczko was mostly recently the Director
of Financial Operations and Development at Open Solutions, a leading provider of
integrated computer systems and software for financial institutions around the
world. Prior to Open Solutions, Mr. Byczko was a Senior Project
Manager for Control Solutions International, a leading provider of internal
audit and risk management solutions worldwide working with clients such as CA,
Hewlett-Packard, and Bristol-Myers Squibb. Mr. Byczko served in
various senior management positions in areas of financial reporting,
acquisitions and treasury. Mr. Byczko practiced from 1989 to 1995 as
a Certified Public Accountant with various national and regional accounting
firms. Mr. Byczko holds a B.S. in accounting and finance from Nichols
College.
WILLIAM
J. CONROY joined the Company on March 18, 2008 as Vice President - Operations
and Engineering. Prior to joining the Company, Mr. Conroy served as Director of
Engineering and New Products at Optim Corporation and Senior Vice President of
Production and Operations at Remote Reality Corporation, a designer and
manufacturer of next-generation intelligent video systems for the
military/defense and security business sectors, and as the operations manager at
Northrop Grumman, Electronic Systems Division (ESD), in Canton, Mass., a global
defense and technology company that provides innovative systems, products, and
solutions in information and services, electronics, aerospace and shipbuilding
to government and commercial customers worldwide. Mr. Conroy’s responsibilities
at Northrop Grumman included manufacturing, production control, materials,
procurement, manufacturing engineering and quality assurance. Mr. Conroy earned
his Bachelor of Science degree in ceramic engineering from Alfred University.
Mr. Conroy has a ceramic pigment certification from Rutgers University; German
ALPS language certification from Dartmouth College; is a certified
Six-Sigma-Agile Specialist from Raytheon Missile Systems; and a Lean Green Belt
from Northrop Grumman Corporation. Mr. Conroy is a member of the American
Ceramic Society and the National Institute of Ceramic Engineers.
JAMES N.
LITTLE has served as a Director of the Company since December 1995 and was
appointed Chairman of the Board on December 13, 2007. Dr. Little
provides consulting services to a number of laboratory instrumentation and
analytical instrument companies. From December 2005 until August, 2006, Dr.
Little served as Senior Vice President of Cetek Corporation, a position he also
held from August 1998 until December 2001. From December 2001 until December
2005, he served as the President of Cetek, which is a biotechnology drug
discovery company. From 1981 to August 1998, Dr. Little served as a Senior Vice
President of Sales, Marketing and Business Development for Zymark Corporation
(which was later acquired by Caliper Life Sciences), a manufacturer of
scientific instrumentation. Prior to Zymark, Dr. Little was Senior Vice
President of Waters Corp., a publicly held supplier of scientific instruments.
Dr. Little currently serves as a director for both Horizon Technologies, based
in Salem, New Hampshire, and Aushon Biosystems, based in Billerica,
Massachusetts. Dr. Little serves on the Company’s Compensation, Audit and
Nominating and Corporate Governance Committees.
LEO
PIERRE ROY has served as a Director of the Company since June 2000. Mr. Roy has
more than 25 years of experience as a senior manager and consultant. Mr. Roy
currently serves as a Director and officer of Houqua & Company, a
privately held environmental consulting firm. Additionally, Mr. Roy
is presently a Principal and Director of Environmental and Energy Services at
Vanasse Hangen & Brustlin, Inc. (VHB), an engineering firm providing
transportation, land development, and environmental services. Prior to joining
VHB in September 2003, Mr. Roy was the Vice President and Chief Operating
Officer of The Bioengineering Group, Inc., a firm engaged in consulting in the
areas of erosion control, water quality, ecological restoration and
bioengineering from September 2000 to September 2003. Between 1998 and 2000 he
served as the President of Houqua & Company, Inc., a consulting firm
specializing in strategic planning and development services. From 1997 to 1998,
Mr. Roy served as President and Chief Operating Officer of Energy Answers
Corporation, a designer, developer and owner of resource recovery, power, and
recycling and solid waste management companies. From 1992 to 1996, Mr. Roy
served first as Director of Waste Policy and Planning and later as
Undersecretary of the Executive Office of Environmental Affairs for the
Commonwealth of Massachusetts. From 1990 to 1991, Mr. Roy was the Regional
Manager of Special Projects for Waste Management, Inc. From 1985 to 1989, he was
the Vice President and Chief Operating Officer of Orne Enterprises, a venture
capital, environmental technology holding company. Mr. Roy is the Chairman of
the Company’s Compensation Committee and serves on the Company’s Audit and
Nominating and Corporate Governance Committees.
GEORGE
UVEGES has served as a Director of the Company since November 2005. Mr. Uveges
is the founder and principal in the Tallwood Group, an angel investing firm that
provides financial and management advisory services in addition to investment
capital. Mr. Uveges was a member of the adjunct faculty at Newbury College from
2006 to 2008. From 2001 to 2004, Mr. Uveges served as the President and Chief
Executive Officer of TranXenoGen, Inc., a development-stage, publicly-held
biotech company focused on developing new methods for manufacturing therapeutic
proteins and a portfolio of products, including generics, a cancer treatment and
antibodies. He was also a director of that company from 2001 to 2005. Prior to
that, Mr. Uveges served as Chief Financial Officer at a number of companies and
also practiced as a certified public accountant. Mr. Uveges is a member of the
Board of Directors of Harvard Bioscience, Inc., a publicly held developer,
manufacturer and marketer of products used in life science research, where he
also serves as chairman of the audit committee. Mr. Uveges is also a
member of the Board of Directors of Operation ABLE, a non-profit corporation.
Mr. Uveges, a CPA, is a Member, American Institute of Certified Public
Accountants, Financial Executives International, and National Association of
Corporate Directors. Mr. Uveges is the Chairman of the Company’s Nominating and
Corporate Governance Committee, is a member of the Company’s Audit and
Compensation Committees and is a “financial expert” on the Audit
Committee.
ERIC G.
WALTERS has served as a Director of the Company since November
2005. Mr. Walters served as Vice President and Chief Financial
Officer of AdvanSource Biomaterials Corporation (formerly known as CardioTech
International, Inc.) a publicly traded company, which focuses on the development
and manufacture of medical grade polymers, from October 2005 to February 2009.
Prior to joining AdvanSource Biomaterials Corporation, Mr. Walters served as
Vice President and Chief Financial Officer at Konarka Technologies, Inc., a
developer of light-activated plastic (photovoltaic) material. Prior to joining
Konarka, Mr. Walters served in various capacities at PolyMedica Corporation
during a 13-year period, including Executive Vice President and Chief Financial
Officer. Mr. Walters is a member of the Board of Directors of CorNova, Inc., a
privately held developer of coronary stents and other medical devices. Mr.
Walters, a CPA, is a Member, American Institute of Certified Public Accountants,
a Fellow of the Massachusetts Society of Certified Public Accountants, and a
member in Financial Executives International. Mr. Walters is the Chairman of the
Audit Committee of the Board of Directors and is a “financial expert” on the
Audit Committee.
Significant
Employee
THOMAI
PANAGIOTOU was appointed Chief Technology Officer of the Company on July 23,
2008. Since January 1, 2005, Dr. Panagiotou held the position of Vice President
of Research and Development, and joined
the Company on March 31, 2003 as Director of Research and Development. Dr.
Panagiotou is a Member of both the American Chemical Society, and the American
Association of Pharmaceutical Scientists. Prior to joining the Company, Dr.
Panagiotou served from 2000 to 2003 as Manager at Arthur D. Little, Inc. Prior
to that, Dr. Panagiotou worked at TIAX, LLC, a consulting company where she was
involved in the development of a pulmonary delivery device. From 1997 to 2000,
Dr. Panagiotou was Principal Engineer at Physical Sciences, Inc., a company
providing contract research and development services in aerospace, energy,
environmental, manufacturing and medical applications. Dr. Panagiotou is 45
years old.
Certain
Relationships and Related Transactions
We are
not now, nor have we been since the beginning of 2008, a party to any
transaction, nor do we contemplate entering into any proposed transaction, with
any related person (which term includes any of our directors or executive
officers or any immediate family member of such directors or executive officers)
the value of which exceeds $75,385 (approximately one percent (1%) of the
average of our total assets at year-end for the last two completed fiscal
years), and in which any related person had or will have a direct or indirect
material interest.
Policies
And Procedures For Related Party Transactions
Our Board
of Directors reviews, approves and/or ratifies all transactions involving
related persons. The purpose of the review is to determine that such
transactions are conducted on terms not materially less favorable to us than
what would be usual and customary in transactions between unrelated persons and,
in the case of transactions involving Directors, to determine whether such
transactions affect the independence of a Director in accordance with the
relevant rules and standards issued by the Securities and Exchange Commission.
Our Code of Ethics provides guidance on business relations between us and our
Directors, officers, and employees. We filed our Code of Ethics with our Annual
Report on Form 10-K in 2005. The Code of Ethics is available on our website at
http://www.mficcorp.com/nethics.html.
Section
16(a) Beneficial Ownership Reporting Compliance
During
the fiscal year ended December 31, 2008, William Conroy failed to file in a
timely fashion one report required by Section 16(a) of the Exchange
Act. Specifically, Mr. Conroy received an option to purchase 20,000
shares of common stock on March 18, 2008. A Form 4 disclosing this
grant was not filed until March 28, 2008. Based solely on a review of
Forms 3, 4 and 5 and amendments thereto furnished to the Company by its
reporting persons, no other director, officer or beneficial owner of more than
ten percent of any class of securities of the Company failed to file on a timely
basis any report as required by Section 16(a) of the Exchange Act during the
most recent fiscal year.
Board
of Directors, Committees and Meetings
The
business and affairs of the Company are managed on a day-to-day basis by the
Company’s management and executive officers, under the supervision and review of
the Board of Directors. Each of the Directors, other than Mr. Ferrara, is
independent in accordance with the standards of the Securities and Exchange
Commission. In accordance with the disclosure requirements of the Securities and
Exchange Commission, although we are not presently listed on any national
securities exchange, each of the Directors, other than Mr. Ferrara, is
independent in accordance with the standards of the American Stock
Exchange. The Board of Directors of the Company held eight meetings
and acted by unanimous written consent five times during the fiscal year ended
December 31, 2008.
Ratification
by a majority of the full Board of Directors is required with respect to
decisions taken by the committees. During the fiscal year ended December 31,
2008, each of the directors attended more than 75% of (i) the total number of
meetings of the Board of Directors, and (ii) the total number of meetings held
by all committees on which each director served, for the period during which
such director held such position. Written communications from the Company’s
stockholders can be sent to the Board of Directors at the Company’s principal
business address and marked to the attention of the specific Director with which
the stockholder wishes to communicate, or if not to any specified director, then
to the Chairman of the Board of Directors. All stockholder communications are
forwarded to the specific Director to whom it is addressed. If addressed to the
Board of Directors as a whole, the Chairman of the Board of Directors reviews
each communication and determines, in his judgment, whether to forward it to the
Board of Directors as a whole. This process has been adopted by a majority of
the Company’s independent directors.
The
Company expects, absent extraordinary circumstances, that each member of the
Board of Directors will attend the Company’s Annual Meeting of Stockholders.
Last year, all then current members of the Board of Directors personally
attended the 2008 Annual Meeting of Stockholders.
The
Nominating and Corporate Governance Committee
The Board
of Directors of the Company has a standing Nominating and Corporate Governance
Committee comprised of Messrs. Little, Roy and Uveges, each of whom is
independent in accordance with the standards of the Securities and Exchange
Commission. In accordance with the disclosure requirements of the Securities and
Exchange Commission, although we are not presently listed on any national
securities exchange, each of the Directors on the Nominating and Corporate
Governance Committee is independent in accordance with the standards of the
American Stock Exchange.
The
Nominating and Corporate Governance Committee has a charter, which is reviewed
annually by the Nominating and Corporate Governance Committee and the entire
Board of Directors. The charter was filed with the Company’s proxy statement in
2008, and is available on the Company’s website at
http://www.mficcorp.com/index.php?option=com_content&task=view&id=44&Itemid=42.
The
Nominating and Corporate Governance Committee reviews and reports to the Board
on an occasional basis regarding the size and composition of the Board and
recommends to the Board nominees for election to the Board. The Nominating and
Corporate Governance Committee met twice during 2008.
The
Nominating and Corporate Governance Committee accepts and considers nominations
by directors, executive officers, employees, advisors, consultants and security
holders. The Company may hire an outside consultant to help in the search for a
new director or executive officer. Stockholders should submit nominations for
director positions in writing to the Company’s Board of Directors, which should
be mailed to the Company’s principal mailing address, addressed to the attention
of the Corporate Secretary. When the Nominating and Corporate Governance
Committee becomes aware of a vacant seat on the Board of Directors, whether
because of retirement or resignation of a director or otherwise, the Nominating
and Corporate Governance Committee, or a subcommittee thereof, reviews all
nominations received, and recommends whether nominees should be submitted to the
full Board of Directors. Neither the Nominating and Corporate Governance
Committee nor the Board of Directors has established any specific minimum
criteria or qualifications that a nominee must possess. The Nominating and
Corporate Governance Committee and the Board of Directors review all nominees on
the basis of the nominee’s qualifications, including the nominee’s independence,
education and business experience.
The
Audit Committee
The Audit
Committee, which currently consists of Messrs. Walters, Little, Roy and Uveges,
each of whom is an independent director under the standards of the Securities
Exchange Commission, oversees the accounting, financial reporting and tax
functions of the Company, including matters relating to the internal control
over financial reporting and the appointment and activities of our independent
accountants. In accordance with the disclosure requirements of the Securities
and Exchange Commission, although we are not presently listed on any national
securities exchange, each of the members of the Audit Committee is independent
in accordance with Section 121(B) of the listing standards of the American Stock
Exchange. Mr. Walters, the Chairperson of the Audit Committee, and Mr. Uveges
are each an Audit Committee “financial expert,” as defined under the rules of
the Securities Exchange Commission. The Audit Committee met four times last
year.
The Audit
Committee has a charter, which is reviewed at least annually by the Audit
Committee and the entire Board of Directors. The Audit Committee charter was
last revised on January 16, 2003 and was filed with the Company’s proxy
statement in 2005. The Audit Committee charter is available on the Company’s
website at
http://www.mficcorp.com/index.php?option=com_content&task=view&id=44&Itemid=42.
Compensation
Committee Interlocks and Insider Participation
The
Compensation Committee, which currently consists of Messrs. Little, Roy and
Uveges, determines who receives stock options under the Company’s stock plans
(except for the 2006 Stock Plan, under which grants that are automatically made
to non-employee directors) and also reviews and approves senior executive
remuneration. Each of the members of the Compensation Committee is independent
in accordance with the standards of the Securities Exchange Commission. In
accordance with the disclosure requirements of the Securities and Exchange
Commission, although we are not presently listed on any national securities
exchange, each of the members of the Compensation Committee is independent in
accordance with the standards of the American Stock Exchange. The Compensation
Committee held three meetings during the fiscal year ended December 31,
2008.
The
Compensation Committee adopted a charter on December 8, 2005, which was filed
with the Company’s proxy statement in 2006. The Compensation Committee charter
is available on the Company’s website at
http://www.mficcorp.com/index.php?option=com_content&task=view&id=44&Itemid=42.
During
the fiscal year ended December 31, 2008:
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no
executive officer of the Company served as a member of the compensation
committee of another entity, one of whose executive officers served on the
Compensation Committee of the
Company;
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no
executive officer of the Company served as a director of another entity,
one of whose executive officers served on the Compensation Committee of
the Company; and
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no
executive officer of the Company served as a member of the compensation
committee of another entity, one of whose executive officers served as a
director of the Company.
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EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
This
section discusses the material elements of compensation awarded to, earned by or
paid to the executive officers identified in the Summary Compensation Table in
this proxy statement (whom we refer to as our named executive
officers).
The
Compensation Committee of our Board of Directors generally has responsibility
for reviewing and determining on both an annual and an as-needed basis the
compensation of our named executive officers, directors, and key employees and
reporting to the Board regarding the foregoing. The Compensation Committee (also
referred to as the “Committee”) also has responsibility for administering our
stock plan, determining the number of stock options to be granted under the plan
and reporting to the Board regarding the foregoing. None of the named executive
officers are members of the Compensation Committee. The current Compensation
Committee members are Leo Pierre Roy (Chairman), James N. Little and George
Uveges.
Overview
of Compensation Programs and Objectives
The
objectives of the Compensation Committee in recommending the levels and
components of compensation for the named executive officers and key employees
are to:
|
1.
|
Attract,
motivate and retain talented and dedicated executives and key
employees;
|
|
2.
|
Motivate
performance to achieve our established key performance metrics, goals and
objectives; and
|
|
3.
|
Provide
both cash and equity incentives that align the interests of the named
executive officers and key employees with the long-term interests of our
stockholders.
|
The
Committee reviews the achievement of corporate goals and individual
contributions by our executives to our Company’s success. The Committee monitors
the results of our executive compensation program to assure that the
compensation paid to the named executive officers and key employees provides
overall competitive pay levels and appropriately rewards performance. The
Committee relies on judgment and not upon rigid guidelines or formulas in
determining the amount or mix of compensation elements for each named executive
officer and key employee. Factors affecting the Committee’s judgment include
performance compared to strategic goals, the nature of the named executive
officer’s or key employee’s responsibilities and his or her effectiveness in
leading our initiatives to achieve our goals. Our Chief Executive Officer, as
the manager of the members of the executive team, assesses the executives’ and
key employees’ individual contributions to their respective departmental goals
and makes recommendations to the Committee with respect to increases in base
salary, discretionary bonus and long-term incentive awards, for each member of
the executive team. The Committee evaluates, discusses and approves or modifies
these recommendations. Each member of the Board who is independent in accordance
with the standards of the Securities and Exchange Commission is permitted to
attend the Committee meetings and participate in the discussion. However,
approval of each named executive officer’s and key employee’s compensation is
made by the Committee and recommended to the Board for ratification. As
described in more detail below, the material components of the named executive
officers’ and key employees’ compensation include base salary, discretionary
bonus, long-term incentive awards, limited change-in-control benefits and
related severance protection, and other customary employee benefits. The
Committee reviews the total compensation package for each named executive
officer and key employee, including base salary, bonuses and incentive awards,
and adjusts these individual components to achieve a desired pay and performance
incentive package. The Committee believes that each element of our executive and
key employee compensation program helps us to achieve one or more of our
compensation objectives.
Base
salaries, option grants, change-in-control benefits and other employee benefits
are all primarily intended to attract and retain qualified executives and key
employees. The value of these components in any given year is less dependent on
performance than the other elements that comprise our executives’ and key
employees’ compensation package. The Committee believes that we need to provide
the named executive officers and key employees with a level of predictable
compensation in order to attract and retain top-caliber executives and key
employees' and reward their continued services. The Committee’s general
philosophy is that discretionary bonuses and long-term incentive compensation
should fluctuate with our success in achieving financial and other goals, and
that we should continue to use long-term compensation such as stock options to
align stockholder interests with the interests of the executives and key
employees. The Committee also believes that a mix of longer-term and short-term
elements allows us to achieve the dual goals of attracting and retaining
executives and key employees while motivating their continued performance and
aligning their financial interests with those of our stockholders.
The
Committee has used relevant data points for comparable companies, such as salary
surveys, to assist it in determining the compensation for each of our named
executive officers. The Committee has found it difficult to benchmark the
compensation levels of our named executive officers within a peer group of
comparable companies due to the unique nature, size, and global reach of our
business and technology. The Committee has evaluated the compensation practices
of other high technology companies, including other publicly-held advanced
materials, advanced technologies companies, and small capital equipment
manufacturers, in Massachusetts, in determining an appropriate level and mix of
compensation. Among other sources, the Committee used the Watson Wyatt Executive
Management Survey 2007/2008, a Mercer Compensation Management Survey, analyses
of benchmark job data from Salary.com, and the 2007 Equity Report from Equilar,
Inc.
The
Committee subscribes to the philosophy of “Pay-for-Performance”, linking
elements of each executive officer’s compensation to their job performance and
their role in our overall financial performance. Performance is tied to specific
goals and metrics, generally compared to the annual financial plan adopted by
the Company. Performance is considered on an annual basis, with goals for
revenue and gross margin, as well as execution of critical performance goals
such as strategic planning, technology advancement, and new product development
and introduction. In considering our compensation strategy, the Committee
acknowledges the goal of building stockholder value. To do this the executive
officers need to:
|
•
|
increase
profitability;
|
|
•
|
increase
customer focus;
|
|
•
|
advance
the technology;
|
|
•
|
penetrate
additional markets and diversify by industry and geography;
and
|
|
•
|
develop
employees to succeed by giving them career paths and internally developing
the future leadership of the
Company.
|
Current
Material Elements
Base Salary. In
contrast to 2007, there was significant restructuring of senior management in
2008. Establishment of base salaries was done through consultation
between the Compensation Committee and the CEO as part of the recruiting and
hiring process. Base salary is paid in cash.
The
Committee customarily determines any adjustments to the base salary of each of
our named executive officers at the end of the year preceding the year in which
the adjustment will take effect or at the start of the year in which the
adjustment will take effect. In December 2005, the Committee, after reviewing
management's budget/forecast for 2006, recommended that the base salaries of our
named executive officers remain unchanged for 2006. The Board adopted that
position. The base salary that we paid to each of our named executive officers
in 2006 is the amount reported for such officer in the line corresponding to
2006 under the "Salary" column of the Summary Compensation Table below. As a
result of our strong financial performance in 2006, which included an increase
in revenue of 35% compared to 2005 and a record performance with respect to
revenues in the fourth quarter of 2006, and based on management's
budget/forecast for 2007 and a desire to account for inflation in the general
economy, the Board adopted increases in base salary at year-end 2006 for 2007 of
approximately 12% for Mr. Gruverman and approximately 4.5% for each of the other
named executive officers. The base salary that we paid to each of our
named executive officers in 2007 is the amount reported for such officer in the
line corresponding to 2007 under the "Salary" column of the Summary Compensation
Table below. At the end of 2007, the Committee recommended to the
Board that base salaries in 2008 remain at 2007 levels due to an anticipated
worsening of general economic conditions and its potential negative effect on
our financial performance for 2008. The Board adopted that
position. The base salary that we paid to each of our named executive
officers in 2008 is the amount reported for such officer in the line
corresponding to 2008 under the "Salary" column of the Summary Compensation
Table below.
Discretionary
Bonuses. The Committee uses its discretion in recommending
discretionary bonuses. That discretion includes whether to grant bonuses at all,
the formula for determining the amount of the bonuses, and the individuals
participating in the discretionary bonus pool. In setting bonus targets, the
Committee considers the expected contributions of the individuals based on their
Key Performance metrics, and the anticipated financial performance of the
Company. Each employee eligible for a discretionary bonus has Key Performance
metrics established at the beginning of the year in discussions between the
employee and his or her supervisor. These Key Performance metrics are reviewed
by the Compensation Committee, which uses them at year end, in consultation with
the Chief Executive Officer, in determining eligibility for a discretionary
bonus. Discretionary bonuses, if any, for our named executive officers are paid
in cash upon the achievement of certain goals. Such bonuses are structured
either as payments on an individual basis to a particular named executive
officer or as payments to some or all of the named executive officers from a
bonus pool to which they are entitled to a certain percentage. The Committee has
customarily determined whether or not to grant discretionary bonuses to any of
our named executive officers at the end of the year preceding the year in which
the bonus is granted or at the start of the year in which the bonus is
granted. The Committee may recommend that discretionary bonuses be
paid on an individual basis to a particular named executive officer using
criteria which the Committee believes to be relevant, such as the performance of
the particular officer or the accomplishment of specific objectives by such
officer, as well as other factors such as our profitability, revenue, cash flow,
customer generation, market share and industry position. In
connection with the senior management restructuring during 2008, the amount
and criteria for the potential bonuses for 2008 was determined through
consultation between the Compensation Committee and the CEO as part of the
recruiting and hiring process.
No formal
discretionary bonus plan was established at the end of 2007 for 2008, except for
the CEO. As we did not meet our financial goals for 2008 no
bonus was earned by the CEO for 2008. As noted above, bonus potential
was addressed on an individual basis as named executive officers were
hired. Based on achievement of certain performance metrics, including
improvements in quality standards, a modest bonus was earned by Mr.
Conroy in 2008 and is expected to be paid in 2009.
In
December 2005, the Committee recommended that our named executive officers
participate in a bonus pool for possible payment during 2006 after actual
financial performance became measurable. The pool was established as a function
of our revenue and gross profit margin based on six-month and twelve-month
results. The named executive officers' percentage of participation was
determined pro rata based on their salaries. The Board adopted the Committee's
recommendation and established the bonus pool for 2006. Bonuses from the 2006
pool were to be paid at mid-year and following year-end depending on the
finalized financial results for the respective accounting period, as set forth
below.
If at
June 30, 2006, minimum revenue and gross margin for the six months then ended
were at the minimum level indicated in the table below, the amount shown in the
final column of such table would be placed in the mid-year bonus
pool.
June 30,
2006
Six-month
minimum revenue
|
|
Six-month
minimum gross margin
|
|
|
Placed
in mid-year bonus pool
|
|
|
|
|
|
|
|
|
$6.6 million
|
|
|
52.0
|
% |
|
$ |
15,000 |
|
If at
December 31, 2006, minimum revenue and gross margin for the twelve months
then ended were at the minimum levels indicated in the table below, the
amount(s) shown in the final column of such table would be placed in the
year-end bonus pool.
December 31,
2006
Twelve-month
minimum revenue
|
|
Twelve-month
minimum gross margin
|
|
|
Placed
in year-end bonus pool
|
|
|
|
|
|
|
|
|
$14.0 million
|
|
|
52.0
|
% |
|
$ |
25,000 |
|
$15.0 million
|
|
|
52.0
|
% |
|
Additional
$25,000
|
|
$15.6 million
|
|
|
52.0
|
% |
|
Additional
$25,000
|
|
Since our
revenue for the six-months ended June 30, 2006 exceeded the Committee's
threshold of $6.6 million, with a minimum gross profit margin of 52%, and
our revenue for the twelve-months ended December 31, 2006 exceeded the
Committee's threshold of $15.6 million, with a minimum gross profit margin
of 52%, we placed $15,000 and $75,000, respectively, in the bonus pools for the
six-month and twelve-month periods and allocated the bonuses among the named
executive officers. The corresponding bonuses that we paid to each of our named
executive officers for fiscal year 2006 are shown in the "Non-Equity Incentive
Plan Compensation" column of the Summary Compensation Table below.
In
December 2006, the Committee recommended that our named executive officers
participate in a bonus pool for possible payment during 2007 after actual
financial performance became measurable. Similar to the prior year, the pool was
established as a function of our revenue and gross profit margin based on six
month and twelve month results. The named executive officers' percentage of
participation was determined based on their expected contribution to our
financial performance and the total compensation targets for such individuals.
The bonus pools at mid-year and following year-end were allocated by the
Committee to the following individuals in the following
percentages:
The Board
adopted the Committee's recommendation and established the bonus pool for 2007.
Bonuses from the 2007 pool were to be paid at mid-year and following year-end
depending on the finalized financial results for the respective accounting
period, as set forth below.
If at
June 30, 2007, minimum revenue and gross margin for the six months then
ended were at the minimum levels indicated in the table below, the amount(s)
shown in the final column of such table would be placed in the mid-year bonus
pool.
June 30,
2007
Six-month
minimum revenue
|
|
Six-month
minimum gross margin
|
|
|
Placed
in mid-year bonus pool
|
|
|
|
|
|
|
|
|
$8.0 million
|
|
|
54.0
|
% |
|
$ |
15,000 |
|
$8.5 million
|
|
|
54.5
|
% |
|
Additional
$15,000
|
|
$9.0 million
|
|
|
55.0
|
% |
|
Additional
$20,000
|
|
The
maximum amount that could have been placed in the mid-year bonus pool at
June 30, 2007 was $50,000, an increase of more than three-fold from the
prior year. If the mid-year revenue and gross margin goals were not attained,
the applicable portion of the bonus pool set forth in the last column of the
above table would be forfeited and would not be available for distribution at
year-end or any other time.
If at
December 31, 2007, minimum revenue and gross margin for the twelve months
then ended were at the minimum levels indicated in the table below, the
amount(s) shown in the final column of such table would be placed in the
year-end bonus pool.
December 31,
2007
Twelve-month
minimum revenue
|
|
Twelve-month
minimum gross margin
|
|
|
Placed
in year-end bonus pool
|
|
|
|
|
|
|
|
|
$16.5 million
|
|
|
54.0
|
% |
|
$ |
35,000 |
|
$17.5 million
|
|
|
54.5
|
% |
|
Additional
$30,000
|
|
$18.5 million
|
|
|
55.0
|
% |
|
Additional
$25,000
|
|
The
maximum amount that could have been placed in the year-end bonus pool at
December 31, 2007 was $90,000, an increase of 20% from the prior year. The
mid-year and year-end goals set forth above were minimum thresholds. The Board
reserved the right to make further bonus recommendations if we achieved higher
levels of revenue and gross margin. However, financial performance between the
levels indicated was not to be prorated.
We did
not achieve our financial goals for 2007 and did not attain the revenue and
gross margin targets described above. As a result, no bonuses were earned under
the bonus pool in 2007, as shown in the "Non-Equity Incentive Plan Compensation"
column of the Summary Compensation Table below.
The
Committee may recommend that discretionary bonuses be paid on an individual
basis to a particular named executive officer using criteria which the Committee
believes to be relevant, such as the performance of the particular officer or
the accomplishment of specific objectives by such officer, as well as other
factors such as our profitability, revenue, cash flow, customer generation,
market share and industry position. The additional bonus that we paid to our
President and Chief Operating Officer, Mr. Robert P. Bruno, was the result of
our achievement of the revenue and gross profit margin for the twelve-months
ended December 31, 2006 set forth above is shown in the "Non-Equity Incentive
Plan Compensation" column of the Summary Compensation Table below. In December
2006, the Board adopted a Special Incentive Compensation Program for Mr.
Gruverman that could have resulted in payments to Mr. Gruverman in 2007 in a
maximum aggregate amount of $50,000 if certain personal and Company milestones
were met. Mr. Gruverman did not receive any bonus payments in
2007 under this Program.
No formal discretionary
bonus plan was established for 2008, except for Mr. Ferrara. Instead,
bonus potential was addressed on an individual basis as named executive officers
were hired. Due to our overall financial performance in 2008,
with the exception of Mr. Conroy described above, no bonuses were paid during
that year to any named executive officer, including neither of Mr. Ferrara or
Mr. LeClair pursuant to their employment agreement and offer letter,
respectively. Please see the “Employment Agreements” section
following the “Summary Compensation Table” below for additional
information.
Long-Term Incentive
Compensation. Periodically, the Committee grants long-term
incentive compensation to our named executive officers in order to provide a
long-term incentive which is directly tied to the performance of our stock.
These grants provide an incentive to maximize stockholder value by providing the
executives an equity interest which further aligns their interests with those of
the stockholders. Vesting periods associated with such grants are used to retain
our named executive officers and to emphasize the long-term aspect of
contribution and performance. In making grants of long-term incentive
compensation to our named executive officers, the Committee considers a number
of factors, including our performance, the performance of such persons, the
achievement of specific delineated goals, the responsibilities of such persons,
the number of stock options and other awards each such person currently
possesses and the underlying value of the options and other awards
held.
Our
stockholders adopted our 2006 Stock Plan on June 20, 2006. Upon the adoption of
the 2006 Stock Plan, we ceased granting new options and other awards under our
1988 Stock Plan and our 1989 Non-Employee Director Plan. The Committee will
continue to administer our 1988 Stock Plan and our 1989 Non-Employee Director
Plan so long as awards granted under such plans remain exercisable. Under the
2006 Stock Plan, the Committee may grant awards in the form of stock options,
restricted share rights, performance share rights and stock appreciation
rights.
Stock
Options. Pursuant to the terms of the 2006 Stock Plan, stock
options granted to our named executive officers usually have a term of ten
years. The exercise price of these grants is 100% of the closing price of the
underlying Common Stock on the date of grant. In general, the options granted to
our named executive officers vest in equal annual installments over a four-year
period beginning one year after the date of grant. The Committee may, in certain
instances, adjust the vesting period for performance-based options. In 2008 the
Committee decided to change its approach to granting options by eliminating an
automatic option grant of five percent (5%) of salary when a new employee was
hired. Instead, an option grant upon hire is now considered on a
case-by-case basis. The Committee also reconsidered the biannual
option grant of five percent (5%) of salary, and decided that option grants
would be based on performance, with management recommending the distribution of
a pool of options to non-executive employees, depending on individual
contribution. The Committee will continue to determine any option
grants to executives in its discretion.
Restricted share rights, performance
share rights and stock appreciation rights. Restricted share
rights typically “cliff vest,” all at one time, at a date several years
subsequent to their grant date. Performance restricted share rights vest upon
the achievement of milestones as defined by the Committee. Stock appreciation
rights, which may be paid in cash, allow the Committee to award units that
derive their value from the appreciation in our stock without the issuance of
additional shares. We did not issue any awards of restricted share rights,
performance share rights or stock appreciation rights to our named executive
officers in 2006, 2007 or 2008. Awards of restricted stock and stock
appreciation rights are not currently intended to comprise a major part of our
long-term incentive compensation strategy. The Committee may elect, however,
from time to time, to grant these types of awards as particular situations
arise.
The
Committee has customarily determined whether or not to grant long-term incentive
compensation to our named executive officers at the end of a year or at the
start of a year. The Committee adopted a new policy in 2008 to grant long-term
incentive compensation based upon the named executive officers’ performance
after the conclusion of the year in which the performance occurred. This
approach provides the Committee with a retrospective view on the performance of
such individuals before deciding whether to grant the incentive compensation.
The aggregate amount as determined under FAS No. 123R recognized for purposes of
our financial statements for 2007 and 2008 with respect to options granted to
the named executive officers is shown in the “Summary Compensation Table” below.
The grant date value of the options and other long-term incentive compensation
awarded to the named executive officers in 2007 and 2008 as determined under FAS
No. 123R for purposes of the financial statements is shown in the “Grants of
Plan-Based Awards Table” below. The “Grants of Plan-Based Awards Table” and
related narrative “Description of Summary Compensation and Plan-Based Awards
Tables” section below provide additional detail regarding the options and other
long-term incentive compensation granted to the named executive officers in 2007
and 2008, including the vesting and other applicable terms.
Equity Grant
Practices. The Committee may grant awards to our named
executive officers or other eligible participants under our 2006 Stock Plan at
any time during the year, including in connection with the hiring or promotion
of employees or based upon other special circumstances or performance. In
accordance with longstanding policy, we do not backdate or reprice options or
grant options retroactively. In addition, we do not coordinate grants of options
so that they are made before announcements of favorable information, or after
announcements of unfavorable information. Our options are granted at fair market
value (deemed to be the closing price of the underlying Common Stock on the date
of grant) on a fixed date or event (such as the first Board meeting following an
employee’s hire); with all required approvals obtained in advance of or on the
actual grant date. Board and Compensation Committee meetings are generally
scheduled months in advance and scheduling decisions are made without regard to
our anticipated earnings or other major announcements. In 2006, we ceased our
general practice of granting options to new employees on, or effective as of,
their date of hire and instead instituted a policy, subject to limited
exceptions at the discretion of the Board, whereby options are granted to such
individuals effective as of the next regularly scheduled Board meeting following
their date of hire. In 2008, we ceased our general practice of granting options
to all new employees. Instead, options for new employees are determined on a
case by case basis as part of their overall compensation package and such
options are granted at the next regularly scheduled board meeting following
their date of hire.
Change-in-Control Benefits and
Severance Protection. The change-in-control benefits and
related severance protection provided to each of our named executive officers
include the provisions in our 2006 Stock Plan that accelerate the vesting of
certain awards under certain circumstances upon our change in control. Pursuant
to our 2006 Stock Plan, outstanding stock options, restricted stock and stock
appreciation rights granted to a named executive officer may be assumed by a
successor corporation or accelerated if not assumed. In addition, 50% of the
unvested portion of an award will accelerate if, within 12 months following a
change in control, the successor corporation for a reason other than cause
terminates the employment of a named executive officer who holds an award
pursuant to the 2006 Stock Plan. Please see the “Employment Agreements” section
following the “Summary Compensation Table” below for a description of additional
payments that may be made to certain of the named executive officers following a
change in control.
Other Compensation and
Benefits. Our named executive officers participate in the same
group insurance and employee benefit plans as our other salaried employees. We
do not provide loans or other perquisites to our named executive officers. The
only exception is a $100,000 life insurance policy on former President Robert
Bruno for which we paid the premium. Premium payments in 2008 were
$2,340, compared to $1,607 in 2007 and $1,314 in 2006.
Employment
Agreements
We have
employment agreements with certain of our named executive officers providing for
payments upon termination under certain circumstances and/or following a change
in control. These payments are designed to provide our named executive officers
with continued compensation for a discrete period of time in limited situations
where their employment is unexpectedly terminated. In addition, as noted above,
upon a change in control, the vesting of certain awards made to our named
executive officers under the 2006 Stock Plan may accelerate.
Stock
Ownership Guidelines
The
Company currently does not require our directors or named executive officers to
own a particular amount of our Common Stock. The Committee recommends stock
holdings among the directors and named executive officers to provide motivation
and to align this group’s interests with those of our stockholders. All of our
directors and the CEO are stockholders of the Company.
Return
of Incentive Compensation by an Executive
In the
case of a significant restatement of our financial results caused by a named
executive officer’s fraudulent or intentional misconduct, the Board may take
action to seek reimbursement of some portion of performance-based or incentive
compensation that was paid or awarded to such executive which would not have
been paid or awarded if such compensation had been calculated based on the
restated financial results. The Audit Committee of the Board will determine
whether a financial restatement is significant and will make an initial
determination of the cause of the restatement.
Compensation
Consultant
The
Committee does not have any contractual arrangement with any compensation
consultant who has a role in determining or recommending the amount or form of
named executive officer or director compensation. In the future, in its sole
discretion, the Committee may engage or seek the advice of one or more
compensation consultants.
Compliance
with Section 162(m)
The
Committee currently intends for all compensation paid to our named executive
officers to be tax deductible to the Company pursuant to Section 162(m) of the
Internal Revenue Code of 1986, as amended (“Section 162(m)”). Section 162(m)
provides that the Company cannot deduct for Federal income tax purposes
compensation paid to our named executive officers in excess of $1,000,000,
unless, in general, (1) such compensation is performance-based, established by a
committee of outside directors and objective, and (2) the plan or agreement
providing for such performance-based compensation has been approved in advance
by stockholders. The Committee believes that stockholder interests are best
served by not restricting the Committee’s discretion and flexibility in crafting
compensation programs, even though such programs may result in certain
non-deductible compensation expenses. Accordingly, in the future, the Committee
may determine to adopt a compensation program that does not satisfy the
conditions of Section 162(m) if in its judgment, after considering the
additional costs of not satisfying Section 162(m), such program is appropriate.
However, the Committee does not anticipate paying any named executive officers
in excess of $1,000,000 in the near term.
COMPENSATION
COMMITTEE REPORT
The
Committee has reviewed and discussed the above Compensation Discussion and
Analysis with management. Based on its review and discussions with management,
the Committee recommended to the Board of Directors that the Compensation
Discussion and Analysis be incorporated by reference in the Company’s Annual
Report on Form 10-K for 2008 and included in this proxy statement.
|
Leo
Pierre Roy (Chairman)
|
|
James
N. Little
|
|
George
Uveges
|
Summary
Compensation
The
following table sets forth for the fiscal years ended December 31, 2008, 2007
and 2006, respectively, a summary of the compensation paid to our named
executive officers.
SUMMARY
COMPENSATION TABLE
FOR
THE YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006
Name
and Principal Position
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
Incentive
Plan
Compensation
($)
|
|
|
|
|
|
Change
in Pension
Value
and Non
Qualified
Deferred
Compensation
Earnings
($)
|
|
|
All
other
Compensation
($)
|
|
|
|
|
|
|
|
Michael
C. Ferrara
|
|
2008
|
|
|
230,000 |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
0 |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
230,000 |
|
Chief
Executive Officer
|
|
2007
|
|
|
29,192 |
|
|
|
(1) |
|
|
|
0 |
|
|
|
0 |
|
|
|
12,234 |
|
|
|
(2) |
|
|
|
0 |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
41,426 |
|
|
|
2006
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian
E. LeClair
|
|
2008
|
|
|
108,154 |
|
|
|
(3) |
|
|
|
0 |
|
|
|
0 |
|
|
|
13,782 |
|
|
|
(4) |
|
|
|
0 |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
121,936 |
|
Executive
Vice President,
|
|
2007
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
0 |
|
Chief
Financial Officer and Treasurer (former)
|
|
2006
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William
J. Conroy
|
|
2008
|
|
|
119,423 |
|
|
|
(5) |
|
|
|
0 |
|
|
|
0 |
|
|
|
8,614 |
|
|
|
(4) |
|
|
|
0 |
|
|
|
|
|
|
0 |
|
|
|
5,000 |
|
|
|
|
|
|
133,037 |
|
Vice
President
|
|
2007
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
0 |
|
Operations
and Engineering
|
|
2006
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Irwin
J. Gruverman
|
|
2008
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
0 |
|
Chief
Executive Officer
|
|
2007
|
|
|
140,000 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
|
|
|
0 |
|
|
|
25,679 |
|
|
|
(6) |
|
|
|
165,679 |
|
(former)
|
|
2006
|
|
|
125,000 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
22,050 |
|
|
|
(7) |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
147,050 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
P. Bruno
|
|
2008
|
|
|
85,000 |
|
|
|
(8) |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
105,199 |
|
|
|
(9) |
|
|
|
190,199 |
|
President,
Chief Operating
|
|
2007
|
|
|
170,000 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
4,800 |
|
|
|
(2) |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
1,607 |
|
|
|
(10) |
|
|
|
176,407 |
|
Officer
(former)
|
|
2006
|
|
|
163,000 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
53,710 |
|
|
|
(11) |
|
|
|
0 |
|
|
|
1,314 |
|
|
|
(10) |
|
|
|
218,024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jack
M. Swig
|
|
2008
|
|
|
75,000 |
|
|
|
(12) |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
100,286 |
|
|
|
(13) |
|
|
|
175,286 |
|
Vice
President, Corporate
|
|
2007
|
|
|
140,000 |
|
|
|
(14) |
|
|
|
0 |
|
|
|
0 |
|
|
|
2,400 |
|
|
|
(2) |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
142,400 |
|
Development
and General Counsel (former)
|
|
2006
|
|
|
115,000 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
20,250 |
|
|
|
(7) |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
135,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis
Riordan
|
|
2008
|
|
|
135,000 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
139,420 |
|
Controller
(former)
|
|
2007
|
|
|
115,000 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
2,400 |
|
|
|
(2) |
|
|
|
0 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
117,400 |
|
|
|
2006
|
|
|
110,000 |
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
18,990 |
|
|
|
(7) |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
128,990 |
|
|
(1)
|
Michael
C. Ferrara compensation for partial year based on $230,000 annual base
salary.
|
|
(2)
|
The
option awards reflect the dollar amount recognized for financial statement
reporting purposes in accordance with SFAS No. 123R with respect to stock
option grants in 2007. The assumptions used in the calculation of these
amounts are included in Note 1 to the Company’s audited consolidated
financial statements for the year ended December 31, 2007 included in the
Company’s Annual Report on Form 10-K filed with the Securities and
Exchange Commission on March 21, 2008 and incorporated by reference
herein.
|
|
(3)
|
Brian
E. LeClair compensation for partial year based on $190,000 annual base
salary.
|
|
(4)
|
The
option awards reflect the dollar amount recognized for financial statement
reporting purposes in accordance with SFAS No. 123R with respect to stock
option grants in 2008. The assumptions used in the calculation of these
amounts are included in Note 1 to the Company’s audited consolidated
financial statements for the year ended December 31, 2008 included in the
Company’s Annual Report on Form 10-K filed with the Securities and
Exchange Commission on March 30, 2009 and incorporated by reference
herein.
|
|
(5)
|
William
J. Conroy compensation for partial year based on $150,000 annual base
salary.
|
|
(6)
|
Represents
payment to Irwin J. Gruverman of accrued vacation upon departure from
employment.
|
|
(7)
|
Indicates
the amount earned by the named executive officer in 2006 in connection
with the bonus pool described under “Compensation Discussion and
Analysis—Current Material Elements—Discretionary
Bonuses.”
|
|
(8)
|
Robert
P. Bruno compensation for partial year based on $170,000 annual base
salary.
|
|
(9)
|
Represents
payment of the following amounts to Robert P. Bruno upon departure from
employment: (i) six (6) months severance payment, (ii) medical and dental
insurance coverage through December 31, 2008, (iii) pre-existing life
insurance coverage through December 31, 2008, and (iv) accrued vacation
upon departure from employment. Please see “Employment
Agreements—Robert P. Bruno” in the Company’s Schedule 14A filed with the
Securities and Exchange Commission on April 29, 2008 for additional
information, and incorporated by reference
herein.
|
|
(10)
|
The
Company paid a quarterly premium for additional life insurance for Mr.
Bruno.
|
|
(11)
|
In
2006, Mr. Bruno earned $28,710 in connection with the bonus pool and
$25,000 in connection with an additional bonus as a result of our
financial performance, each described under "Compensation Discussion and
Analysis—Current Material Elements—Discretionary
Bonuses."
|
|
(12)
|
Jack
M. Swig compensation for partial year based on $150,000 annual base
salary.
|
|
(13)
|
Represents
payment of the following amounts to Jack M. Swig upon departure from
employment: (i) six (6) months severance payment, (ii) medical and dental
insurance coverage through December 31, 2008, (iii) pre-existing life
insurance coverage through December 31, 2008, and (iv) accrued vacation
upon departure from employment. Please see “Employment
Agreements—Jack M. Swig” in the Company’s Schedule 14A filed with the
Securities and Exchange Commission on April 29, 2008 for additional
information, and incorporated by reference
herein.
|
|
(14)
|
Jack
M. Swig salary represents pro rated amount of base salary that became
effective as of April 26, 2007. Please see “Employment
Agreements—Jack M. Swig” in the Company’s Schedule 14A filed with the
Securities and Exchange Commission on April 29, 2008 for additional
information, and incorporated by reference
herein.
|
Employment
Agreements
As of
November 14, 2007, we entered into an employment agreement with Michael C.
Ferrara as described below. As of June 4, 2008, we entered into a
letter agreement with Brian E. LeClair as described below. Please see
the “Employment Agreements” section of our Schedule 14A filed with the
Securities and Exchange Commission on April 29, 2008 for a description of our
prior employment agreements with Robert P. Bruno, Jack M. Swig and Dennis P.
Riordan, which is incorporated by reference herein.
Michael
C. Ferrara
On
November 14, 2007, (the “Ferrara Effective Date”), the Company entered into an
employment agreement with Michael C. Ferrara (the “Ferrara Agreement”) in
connection with Mr. Ferrara’s appointment as Chief Executive Officer and member
of the Company’s Board of Directors. Mr. Ferrara will receive a base salary of
$230,000 per year (the “Base Salary”). The Base Salary shall be subject to
annual review by the Board. Any increase in the Base Salary shall be determined
by the Board in its sole discretion. The term of Mr. Ferrara’s employment
agreement (the “Employment Period”) commenced on the Ferrara Effective Date and
continues until such time as is specified by either party in its written notice
to the other given no less than thirty (30) days’ in advance thereof, or its
termination as described below, whichever occurs first. In connection with
compensation for calendar year 2008, Mr. Ferrara shall be eligible to receive
performance bonuses at the discretion of the Board and he will receive the
Company’s employee benefits as they may exist from time to time, including
health insurance, life insurance, 401k and stock purchase plans. The
Compensation Committee and Mr. Ferrara will work together to create and
implement performance bonus standards for future years of Mr. Ferrara’s
employment with the Company under the Ferrara Agreement. Mr. Ferrara will be
eligible to earn and use three (3) weeks of paid vacation per calendar year,
accruing at the rate of 1.25 days per month. Under the Ferrara Agreement, the
Company granted Mr. Ferrara an option to purchase 300,000 shares of the
Company’s common stock (the “Option”). This grant was effective, and the
exercise price of the Option was established as of the close of trading, on the
Ferrara Effective Date. The Option was granted pursuant to, and subject to the
terms and conditions of, the Company’s 2006 Stock Plan. The Option vests in four
equal annual installments commencing on the first anniversary of the Ferrara
Effective Date. If a Change of Control (as defined in the Ferrara Agreement)
occurs during the Employment Period, the Option shall immediately become vested
as to all 300,000 shares.
In the
event that (i) Mr. Ferrara is terminated for Cause (as defined in the Ferrara
Agreement), (ii) Mr. Ferrara voluntarily terminates his employment for a reason
other than Good Reason (as defined in the Ferrara Agreement) or (iii) Mr.
Ferrara dies or becomes Permanently Disabled (as defined in the Ferrara
Agreement), the Company will have no obligation to provide Mr. Ferrara with any
compensation or severance package, except for salary and benefits accrued prior
to the termination of employment.
In the
event that Mr. Ferrara’s employment is terminated by the Company “without
Cause”, or by Mr. Ferrara for Good Reason (each as defined in the Ferrara
Agreement), or by the Company for any reason within one hundred eighty (180)
days of a Change of Control, Mr. Ferrara will receive payment of the amounts
described in the preceding paragraph and shall be entitled to receive as
severance following the date of termination, (i) six (6) months of his Base
Salary (as of the effective date of such termination), payable in monthly
installments, (ii) six (6) monthly payments of the amount that the Company would
have paid in continuation of Mr. Ferrara’s medical coverage if he had remained
an employee of the Company, and (iii) if the termination is effective prior to
the end of a calendar year, a pro-rated portion of the bonus that would have
been paid to Mr. Ferrara under the Ferrara Agreement if he had remained employed
until the end of such calendar year. The foregoing severance will be contingent
on the execution by Mr. Ferrara of a general release of any claims that he may
have against the Company. After termination of the Employment Period, all of Mr.
Ferrara’s rights to employee benefits will cease as of the date of
termination.
Brian E. LeClair
As of
June 4, 2008, Mr. LeClair and the Company executed a letter agreement
(the “Letter”). Under the terms of the Letter, Mr. LeClair will
receive a base salary of $190,000 per year (the “Base
Salary”). The Base Salary is eligible for annual review and
adjustment based on comparable market data and company and individual
performance (“KRA’s”). Mr. LeClair is
eligible for a variable bonus of potentially 25% of his base salary on an
annualized basis, based upon achieving specific goals for the applicable twelve
month period. The variable bonus will be 70% based on company
performance EBITDA-2008 (-500k) and 30% based upon the achievement of personal
KRA’s to be established by July 1, 2008.
Under the
Letter, the Company granted Mr. LeClair an option to purchase 80,000 shares
of the Company’s common stock. This grant, which will vest at the rate of
twenty five percent (25%) per year, was granted pursuant to, and subject to the
terms and conditions of, the Company’s 2006 Stock Plan. Additional yearly
options can be granted to Mr. LeClair by the Company’s Compensation
Committee.
Mr. LeClair
will be eligible to participate in the Company’s employee benefit plans as they
may exist from time to time, including health insurance (including medical,
dental and vision), long term disability, term life insurance, and a
401(k) plan. Mr. LeClair will accrue three weeks of
vacation during each of the first five years of his employment with the
Company.
If
Mr. LeClair is terminated by the Company without cause, he will receive a
severance package which will include payment of his Base Salary for a minimum of
ninety (90) days following such termination. Mr. LeClair will
also be entitled to the benefits he is receiving at the time of his termination
during such ninety (90) day severance period. Pursuant to the Letter, the
final severance term for a termination without cause was to be reviewed by
the Company’s Board of Directors and Chief Executive Officer on or before
December 31, 2008. However, as referenced above, in no
event would the severance term following a termination without cause be
less than ninety (90) days. Mr. LeClair will be entitled to a
severance package which will include payment of his Base Salary for one hundred
eighty (180) days following termination upon a change in control of the
Company. Any severance package is subject to Mr. LeClair signing a
release statement that will include non-disclosure, non-disparagement and
non-compete clauses.
Mr. LeClair
resigned from his positions with the Company on March 30, 2009.
Grants
of Plan-Based Awards
During
the fiscal year ended December 31, 2008, no stock, equity incentive plan or
non-equity incentive plan awards were granted to our named executive officers.
The option awards granted to certain of our named executive officers during the
fiscal year ended December 31, 2008 are set forth below.
GRANTS
OF PLAN-BASED AWARDS
FOR
THE YEAR ENDED DECEMBER 31, 2008
|
|
|
|
|
Estimated
Future Payouts Under Non -Equity Incentive Plan
Awards
|
|
|
Estimated
Future Payouts Under Equity Incentive Plan Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
other Stock Awards: # of shares of Stock or units
|
|
|
All
other Option Awards: # of securities Underlying
Options
|
|
|
Exercise
or Base Price of Option Awards
|
|
|
Grant
Date Fair Value of Stock and Option Awards(1)
|
|
|
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
|
(#)
|
|
|
|
(#)
|
|
|
|
(#)
|
|
|
|
(#)
|
|
|
|
(#)
|
|
|
($/Sh)
|
|
|
($)
|
|
Michael
C. Ferrara
|
|
|
N/A |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
N/A |
|
|
|
0 |
|
Brian
E. LeClair
|
|
6/17/2008
|
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
80,000 |
|
|
|
1.12 |
|
|
|
68,800 |
|
William
J. Conroy
|
|
3/18/2008
|
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
20,000 |
|
|
|
1.10 |
|
|
|
17,000 |
|
|
|
6/17/2008
|
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
50,000 |
|
|
|
1.12 |
|
|
|
43,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis
P. Riordan
|
|
|
N/A |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
N/A |
|
|
|
0 |
|
Jack
M. Swig
|
|
|
N/A |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
N/A |
|
|
|
0 |
|
Robert
P. Bruno
|
|
|
N/A |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
N/A |
|
|
|
0 |
|
|
(1)
|
Represents
the grant date fair value of each option award computed in accordance with
SFAS No. 123R (grant date fair value of $0.85 per share with respect to
options granted to Mr. Conroy on 3/18/2008 and $0.86 per share with
respect to options granted to Messrs. LeClair and Conroy on
6/17/2008).
|
Discussion
of Summary Compensation and Grants of Plan-Based Awards Tables
Our
executive compensation policies and practices, pursuant to which the
compensation set forth in the Summary Compensation Table and the Grants of
Plan-Based Awards Table was paid or awarded, are described above under
“Compensation Discussion and Analysis.” In 2006, we implemented a
bonus pool for our named executive officers. The terms of our 2006 bonus pool
are described above under "Compensation Discussion and Analysis—Current Material
Elements—Discretionary Bonuses." The bonuses paid in connection with this bonus
pool are reported as "Non-Equity Incentive Plan Compensation" for 2006 in the
Summary Compensation Table. While the Company also established a 2007
bonus pool, the thresholds were not met and no bonuses were paid from the
pool. The Company did not establish a bonus pool or other
discretionary bonus plan for 2008. Grants of options to named
executive officers are 25% exercisable on each of the first four anniversaries
of the date of grant. Further, grants of options to named executive officers
expire ten years from the date of grant.
Outstanding
Equity Awards at Fiscal Year-End
The
following table sets forth information with respect to our named executive
officers concerning unexercised stock option awards and unvested stock awards as
of December 31, 2008.
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
AS
OF DECEMBER 31, 2008
|
|
|
|
|
|
|
|
Number
of Securities Underlying Unexercised Options(#)
Exercisable
|
|
|
Number
of Securities Underlying Unexercised Options(#)
Unexercisable
|
|
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised
Unearned Options(#)
|
|
|
|
|
|
|
Number
of Shares or Units of Stock that have not Vested (#)
|
|
|
Market
Value of Shares or Units of Stock that have not
Vested($)
|
|
|
Equity
Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights
that have not Vested (#)
|
|
|
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units,
or Other Rights that have not Vested ($)
|
|
Michael
C. Ferrara(1)
|
|
|
75,000
|
|
|
|
225,000 |
(2) |
|
|
0 |
|
|
|
1.05 |
|
11/14/2017
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
75,000
|
|
|
|
225,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian
E. LeClair(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
80,000 |
(3) |
|
|
0 |
|
|
|
1.12 |
|
6/17/2018
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
0
|
|
|
|
80,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William
J. Conroy(1)
|
|
|
|
|
|
|
20,000 |
(4) |
|
|
|
|
|
|
1.10 |
|
3/18/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
50,000 |
(5) |
|
|
0 |
|
|
|
1.12 |
|
6/17/2018
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
0
|
|
|
|
70,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis
P. Riordan(1)
|
|
|
25,000
|
|
|
|
0 |
|
|
|
0 |
|
|
|
0.31 |
|
1/3/2010
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
10,000
|
|
|
|
0 |
|
|
|
0 |
|
|
|
0.69 |
|
1/2/2011
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
25,000
|
|
|
|
0 |
|
|
|
0 |
|
|
|
0.51 |
|
1/2/2012
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
15,000
|
|
|
|
0 |
|
|
|
0 |
|
|
|
0.41 |
|
1/2/2013
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
15,000
|
|
|
|
0 |
|
|
|
0 |
|
|
|
2.25 |
|
1/2/2014
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
10,000
|
|
|
|
0 |
|
|
|
0 |
|
|
|
3.70 |
|
1/2/2015
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
8,000
|
|
|
|
0 |
|
|
|
0 |
|
|
|
1.34 |
|
12/6/2015
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
2,500
|
|
|
|
7,500 |
(6) |
|
|
0 |
|
|
|
1.55 |
|
1/3/2017
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
110,500 |
|
|
|
7,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Generally,
all unexercisable options for our named executive officers vest over a
four year period in equal annual installments, with the first 25% vesting
one year after date of grant.
|
|
(2)
|
The
option was granted on November 14, 2007 and 75,000 shares became
exercisable on November 14, 2008. Assuming continued employment
with the Company, 75,000 shares become exercisable on November 14 of each
of 2009, 2010 and 2011.
|
|
(3)
|
The
option was granted on June 17, 2008. As a result of Mr. LeClair’s
resignation from his positions with the Company on March 30, 2009, all of
the underlying shares of this grant automatically reverted back to the
2006 Plan on that date.
|
|
(4)
|
The
option was granted on March 18, 2008 and assuming continued employment
with the Company, 5,000 shares become exercisable on March 18 of each of
2009, 2010, 2011 and 2012.
|
|
(5)
|
The
option was granted on June 17, 2008 and assuming continued employment with
the Company, 12,500 shares become exercisable on June 17 of each of 2009,
2010, 2011 and 2012.
|
|
(6)
|
The
option was granted on January 3, 2007 (the “Option”). As of
December 31, 2008, 25% of the Option vested. Mr. Riordan
resigned from his positions with the Company on January 31, 2009 (the
“Resignation Date”). As of the Resignation Date, 50% of the
Option vested (such amount, the “Vested Options”). Pursuant to
the terms of the 2006 Plan, on April 30, 2009, the Vested Options, if they
remain unexercised, will expire and the shares covering such Vested
Options will revert back to the 2006 Plan. The shares covering
the unvested options at the Resignation Date automatically reverted back
to the 2006 Plan at that date.
|
Options
Exercises and Stock Vested
The
following table sets forth information with respect to our named executive
officers concerning the exercise of stock options during the fiscal year ended
December 31, 2008.
OPTION
EXERCISES AND STOCK VESTED
FOR
THE YEAR ENDED DECEMBER 31, 2008
|
|
|
|
|
|
|
|
|
Number
of Shares Acquired on Exercise
|
|
|
Value
Realized on Exercise
|
|
|
Number
of Shares Acquired on Vesting
|
|
|
Value
Realized on Vesting
|
|
|
|
|
(#)
|
|
|
|
|
|
|
(#)
|
|
|
|
|
Michael
C. Ferrara
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Brian
E. LeClair
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
William
J. Conroy
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Dennis
P. Riordan
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Jack
M. Swig
|
|
|
43,391 |
|
|
|
22,950 |
|
|
|
0 |
|
|
|
0 |
|
Robert
P. Bruno
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Pension
Benefits
As of
December 31, 2008, we had no pension benefits plans in effect.
PENSION
BENEFITS
FOR
THE YEAR ENDED DECEMBER 31, 2008
|
|
|
|
|
Number
of Years Credited Service
|
|
|
Present
Value of Accumulated Benefit
|
|
|
Payments
During Last Fiscal Year
|
|
|
|
|
|
|
|
(#)
|
|
|
|
|
|
|
|
Michael
C. Ferrara
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
Brian
E. LeClair
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
William
J. Conroy
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
Dennis
P. Riordan
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
Jack
M. Swig
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
Robert
P. Bruno
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
Nonqualified
Deferred Compensation
As of
December 31, 2008, we had no deferred compensation plans in effect.
NON
QUALIFIED DEFERRED COMPENSATION
FOR
THE YEAR ENDED DECEMBER 31, 2008
|
|
Executive
Contributions in Last FY
|
|
|
Registrant
Contributions in Last FY
|
|
|
Aggregate
Earnings in Last FY
|
|
|
Aggregate
Withdrawals/ Distributions
|
|
|
Aggregate
Balance at Last FYE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
C. Ferrara
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
Brian
E. LeClair
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
William
J. Conroy
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
Dennis
P. Riordan.
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
Director
Compensation
The table
below summarizes the compensation paid to our non-employee Directors for the
fiscal year ended December 31, 2008. Directors who are employees receive no
additional compensation for Board service.
DIRECTOR
COMPENSATION
FOR
THE YEAR ENDED DECEMBER 31, 2008
|
|
Fees
Earned or Paid in Cash(1)
|
|
|
|
|
|
|
|
|
Non-Equity
Incentive Plan Compensation
|
|
|
Change
in Pension Value and Nonqualified Deferred Compensation
Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
N. Little
|
|
|
22,000 |
|
|
|
0 |
|
|
|
1,275 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
23,275 |
|
Eric
G. Walters
|
|
|
24,000 |
|
|
|
0 |
|
|
|
1,275 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
25,275 |
|
George
Uveges
|
|
|
22,000 |
|
|
|
0 |
|
|
|
1,275 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
23,275 |
|
Leo
Pierre Roy
|
|
|
22,000 |
|
|
|
0 |
|
|
|
1,275 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
23,275 |
|
Note
1—Each Director received a fee of $4,500 per quarter for serving on the Board.
In addition, a director received additional compensation if he was the
chairperson of a Board committee.
Note
2—The option awards reflect the dollar amount recognized for financial statement
reporting purposes in accordance with SFAS No. 123R with respect to stock option
grants in 2008. The assumptions used in the calculation of these amounts are
included in Note 1 to the Company’s audited consolidated financial statements
for the year ended December 31, 2008 included in the Company’s Annual Report on
Form 10-K. The grant date fair value of all options granted in 2008 for all
Directors computed in accordance with SFAS No. 123R was $0.85 per
share.
Note
3—Mr. Little had 0 stock awards and 36,000 option awards outstanding as of
December 31, 2008.
Note
3—Mr. Roy had 0 stock awards and 36,000 option awards outstanding as of December
31, 2008.
Note
3—Mr. Uveges had 0 stock awards and 46,000 option awards outstanding as of
December 31, 2008.
Note
3—Mr. Walters had 0 stock awards and 46,000 option awards outstanding as of
December 31, 2008.
Non-employee
directors are granted an option to purchase 25,000 shares upon joining the Board
of Directors and 7,500 shares on the first business day after January 1 of each
calendar year if the non-employee director remains a director through that date.
The option grants are exercisable on the following terms, assuming continued
membership on the Board of Directors: 25% exercisable six months and one day
after the date of grant and the remaining 75% exercisable in three (3) equal
annual installments on each of the first three anniversaries of the date of
grant. All options were granted automatically pursuant to the terms of our 2006
Stock Plan and expire five (5) years from the date of grant.
Performance
Graph
COMPARISON OF 5 YEAR CUMULATIVE
TOTAL RETURN*
Among Microfluidics International Corporation, The
AMEX Composite Index
And A Peer Group
|
|
Cumulative
Total Returns as of December 31
|
|
|
|
|
12/03
|
|
|
|
12/04
|
|
|
|
12/05
|
|
|
|
12/06
|
|
|
|
12/07
|
|
|
|
12/08
|
|
MICROFLUIDICS
INTERNATIONAL CORPORATION
|
|
|
100.00 |
|
|
|
173.33 |
|
|
|
60.00 |
|
|
|
68.44 |
|
|
|
51.56 |
|
|
|
16.00 |
|
AMEX
Composite
|
|
|
100.00 |
|
|
|
124.13 |
|
|
|
155.00 |
|
|
|
184.30 |
|
|
|
271.52 |
|
|
|
132.72 |
|
Peer
Group
|
|
|
100.00 |
|
|
|
156.07 |
|
|
|
182.05 |
|
|
|
163.19 |
|
|
|
135.83 |
|
|
|
20.57 |
|
Our
competitors are either larger integrated companies or privately-held companies.
We have chosen a peer group consisting of companies with a market capitalization
from $7 million to $24 million in the information technology sector of the
American Stock Exchange. The peer group consists of the following
issuers:
·
|
Advance
Photonic Inc.
|
·
|
Softbrands
Inc.
|
·
|
Elecsys
Corporation
|
·
|
Telkonet
Inc.
|
·
|
Elixir
Gaming Technologies Inc.
|
·
|
Tucows
Inc.
|
·
|
Globalscape
Inc.
|
·
|
Widepoint
Corporation
|
·
|
Orsus
Xelent Technologies Inc.
|
·
|
Wireless
Telecom Group Inc.
|
·
|
Relm
Wireless Corporation
|
|
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Beneficial
Ownership of Directors and Executive Officers and Principal Holders of Voting
Securities
Our
Common Stock is the only class of securities entitled to vote at the Meeting. As
of March 25, 2009, 10,371,782 shares of Common Stock were issued and outstanding
and entitled to vote at the Meeting. Each share of Common Stock is entitled to
one vote. The following table sets forth information regarding ownership of our
Common Stock as of March 25, 2009 for (i) each of our named executive officers
and directors, (ii) holders of more than 5% of our Common Stock, and (iii) all
of our named executive officers and directors as of March 25, 2009 as a
whole. For named executive officers and directors, this table also includes the
position held by each such person.
|
Positions
and Offices with the Company, if any(1)
|
|
Amount
and Nature of Beneficial Ownership(2)
|
|
|
|
|
Michael
C. Ferrara
|
Chief
Executive Officer and Director
|
|
|
95,000 |
(4) |
|
|
* |
|
Brian
E. LeClair
|
Former
Chief Financial Officer, Executive Vice President and
Treasurer
|
|
|
0 |
|
|
|
* |
|
William
J. Conroy
|
Vice
President – Operations and Engineering
|
|
|
5,000 |
(5) |
|
|
* |
|
Robert
P. Bruno
|
Former
President, Chief Operating Officer
|
|
|
101,300 |
(6) |
|
|
* |
|
Jack
M. Swig
|
Former
Vice President – Corporate Development, Investor Relations Manager,
General Counsel and Secretary
|
|
|
70,931 |
(7) |
|
|
* |
|
Dennis
P. Riordan
|
Former
Controller and Treasurer
|
|
|
17,127 |
(8) |
|
|
* |
|
James
N. Little
|
Chairman
of the Board
|
|
|
56,375 |
(9) |
|
|
* |
|
Eric
G. Walters
|
Director
|
|
|
51,250 |
(10) |
|
|
* |
|
George
Uveges
|
Director
|
|
|
62,250 |
(11) |
|
|
* |
|
Leo
Pierre Roy
|
Director
|
|
|
71,486 |
(12) |
|
|
* |
|
Irwin
J. Gruverman
60
Seminary Drive
Newton,
MA 02466
|
|
|
|
1,697,805 |
(13) |
|
|
16.4 |
% |
Joseph
P. Daly
497
Circle Freeway
Cincinnati,
OH 45246
|
|
|
|
831,100 |
(14) |
|
|
8.0 |
% |
All
current directors and named executive officers as a group (7
persons)
|
|
|
|
341,361 |
(15) |
|
|
3.3 |
% |
Global
Strategic Partners, LLC
c/o
Corporation Service Company
2711
Centerville Road, Suite 400
Wilmington,
DE 19808
|
|
|
|
11,755,391 |
(16) |
|
|
* |
|
|
(1)
|
All
addresses are c/o Microfluidics International Corporation, 30 Ossipee
Road, Newton, MA 02464, unless otherwise
indicated.
|
|
(2)
|
Unless
otherwise indicated, each person possesses sole voting and investment
power with respect to the shares.
|
|
(3)
|
Shares
of Common Stock that a person has the right to acquire within 60 days of
March 25, 2009, according to Registrar & Transfer Company, our
transfer agent, pursuant to the exercise of options are deemed to be
outstanding for the purpose of computing the percentage ownership of such
person or entity, but are not deemed to be outstanding for the purpose of
computing the percentage ownership of any other person or entity shown in
the table. The inclusion herein of any shares of Common Stock deemed
beneficially owned does not constitute an admission of beneficial
ownership of those shares. Percentage ownership is based on 10,371,782
shares of Common Stock issued and outstanding on March 25,
2009.
|
|
(4)
|
Consists
of 20,000 shares of Common Stock and 75,000 shares of Common Stock subject
to currently exercisable options.
|
|
(5)
|
Consists
of 0 shares of Common Stock and 5,000 shares of Common Stock subject to
currently exercisable options.
|
|
(6)
|
Consists
of 101,300 shares of Common Stock and 0 shares of common stock subject to
currently exercisable options.
|
|
(7)
|
Consists
of 70,931 shares of Common Stock and 0 shares of Common Stock subject to
currently exercisable options.
|
|
(8)
|
Consists
of 17,127 shares of Common Stock and 0 shares of Common Stock subject to
currently exercisable options.
|
|
(9)
|
Consists
of 35,000 shares of Common Stock and 21,375 shares of common stock subject
to currently exercisable options.
|
|
(10)
|
Consists
of 19,000 shares of Common Stock and 32,250 shares of Common Stock subject
to currently exercisable options.
|
|
(11)
|
Consists
of 30,000 shares of Common Stock and 32,250 shares of Common Stock subject
to currently exercisable options.
|
|
(12)
|
Consists
of 50,111 shares of Common Stock and 21,375 shares of Common Stock subject
to currently exercisable options.
|
|
(13)
|
Information
with respect to beneficial ownership is based upon information furnished
by Irwin J. Gruverman in Schedule 13-D/A filed with the Securities and
Exchange Commission on February 15,
2008.
|
|
(14)
|
Information
with respect to beneficial ownership is based upon information furnished
by Joseph P. Daly in Schedule 13-D/A filed with the Securities and
Exchange Commission on February 5,
2009.
|
|
(15)
|
Includes
187,250 shares of Common Stock subject to currently exercisable options.
See footnotes 4 through 12 above.
|
|
(16)
|
Information
with respect to beneficial ownership is based upon information furnished
by Global Strategic Partners, LLC (“GSP”) in a Schedule 13D filed with the
Securities and Exchange Commission on November 24, 2008 (the
“Schedule”). GSP incorrectly reported on the Schedule that it
beneficially owned 19,755,391 shares of our common stock. GSP
made such incorrect report because we incorrectly reported in our
Quarterly Report on Form 10-Q for the quarter ended September 30, 2008
that, as of November 18, 2008, we had 18,345,532 shares of common stock
outstanding. As corrected in a Form 10-Q/A for the same quarter
that we filed with the Securities and Exchange Commission on November 20,
2008, the correct number of our shares of common stock outstanding as of
November 18, 2008 was 10,345,532. As of March 31, 2009, GSP has
not amended the Schedule to reflect this
correction.
|
Authorization
or Issuance of Securities Otherwise than for Exchange.
The
Company seeks, as further described below in Proposal 2, to increase the number
of shares of common stock authorized for issuance under its Certificate of
Incorporation, as amended, from 20,000,000 to 30,000,000 (such additional
shares, the “New Shares”). A description of the Company’s common
stock can be found on the Company’s registration statement on Form 8-A (File No.
0-11625) filed with the SEC under Section 12 of the Securities Exchange Act of
1934, including any amendment or report filed for the purpose of updating such
description, and is incorporated herein by reference. As further
detailed in Proposal 2 below, the Company seeks authorization of the New Shares
so that to comply with its obligations under a convertible debenture (the
“Debenture”) and a warrant (the “Warrant”) that it sold to Global Strategic
Partners, LLC, a Delaware limited liability company, pursuant to a Debenture and
Warrant Purchase Agreement (the “Agreement” and together with the Warrant and
Debenture, the “Transaction Documents”) dated November 14, 2008. A
detailed description of the Transaction Documents, including the nature and
amount of consideration we have received and could potentially receive in the
future under the Transaction Documents, can be found in the Form 8-K filed by
the Company with the Securities and Exchange Commission on November 20, 2008,
and is incorporated by reference herein.
The
approval of an amendment authorizing additional common shares will not cause any
change or dilution to the rights of existing holders of common stock of the
Company, unless and until such time as any common shares are actually issued by
the Board of Directors.
The
information required by Item 13(a) of Schedule 14A is included in Items 7, 7A, 8
and 9 of our Annual Report on Form 10-K for the fiscal year ended December 31,
2008 filed with the Securities and Exchange Commission on March 30, 2009, and is
incorporated by reference herein.
It is
expected that a member of the firm of UHY LLP will be present at the Annual
Meeting. The representative will be given the opportunity to make a statement if
he or she desires to do so and will be available to respond to appropriate
questions.
PROPOSAL
2
APPROVAL OF AN AMENDMENT TO THE
COMPANY'S CERTIFICATE OF INCORPORATION, AS AMENDED, TO INCREASE THE AUTHORIZED
SHARES OF COMMON STOCK.
Under our
existing Certificate of Incorporation we are authorized to issue 20,000,000
shares of common stock. As of March 25, 2009, 10,371,782 shares of
common stock were issued and outstanding. An additional 1,000,000 shares of
common stock are reserved for issuance pursuant to issued and outstanding stock
options and 801,347 shares are reserved for future issuance pursuant to the 2006
Plan. The remaining shares are reserved for issuance in satisfaction
of the Transaction Documents. The Board of Directors is requesting the
shareholders to approve an amendment to our Certificate of Incorporation
increasing the number of authorized shares of common stock from 20,000,000 to
30,000,000. The text of the proposed amendment is set forth in Appendix A to
this Proxy Statement.
Under the
terms of the Transaction Documents, we are required to amend our Certificate of
Incorporation to increase our authorized shares of common stock by at least that
number of shares as is necessary, when aggregated with the shares previously
authorized and available for issuance under the amended Certificate of
Incorporation, to permit us to fulfill our obligations under the Transaction
Documents. Failure to increase the number of authorized shares as required
would be an event of default under the terms of the Transaction Documents.
The Board of Directors has determined that an increase of 4,000,000 shares of
common stock is in our best interest and the best interest of our shareholders
and will permit us to fulfill our obligations under the Transaction
Documents.
The Board
of Directors believes that the additional increase of 6,000,000 authorized
common shares is advisable and in the best interests of the Company and its
shareholders for several reasons. This increase will permit the Board of
Directors to issue stock without further costs or delays in obtaining
shareholder approval and, thereby, provide us with maximum flexibility in
structuring acquisitions, joint ventures, strategic alliances, capital-raising
transactions and for other corporate purposes. Approval of this proposal would
enable us to respond promptly to and take advantage of market conditions and
other favorable opportunities without incurring the delay and expense associated
with calling a special shareholders' meeting to approve a contemplated stock
issuance. Although we presently contemplate no particular transaction involving
the issuance of common stock, our management and Board of Directors believes it
is in our best interests and the shareholders to be prepared to issue common
stock without the necessity of another shareholders' meeting should additional
common stock be a component of any future raising of capital.
The
directors have decided that, under applicable law, an affirmative vote of a
majority of the shares present, in person or represented by proxy, at the
Meeting and entitled to vote be required to approve such amendment.
THE BOARD
OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSED AMENDMENT TO THE COMPANY’S
CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF
COMMON STOCK FROM 20,000,000 TO 30,000,000 AND PROXIES SOLICITED BY THE BOARD OF
DIRECTORS WILL BE VOTED IN FAVOR OF SUCH AMENDMENT UNLESS A STOCKHOLDER HAS
OTHERWISE INDICATED ON THE PROXY CARD.
PROPOSAL
3
RATIFICATION
OF THE BOARD OF DIRECTORS’ APPOINTMENT OF AUDITORS
The Board
of Directors has approved the appointment by the Audit Committee of the firm of
UHY LLP, independent auditors, to serve as auditors for the fiscal year ending
December 31, 2009. UHY LLP served as the Company’s independent auditors in 2008.
The Board of Directors recommends that the stockholders approve this
appointment, although such ratification is not required under Delaware law, or
the Company’s Certificate of Incorporation or By-Laws. The directors have
decided that an affirmative vote of a majority of the shares present, in person
or represented by proxy, at the Meeting and entitled to vote be required to
ratify such appointment. It is expected that a member of the firm of UHY LLP
will be present at the Meeting. The representative will be given the opportunity
to make a statement if he or she desires to do so and will be available to
respond to appropriate questions.
The firm
of UHY LLP (“UHY”) acts as our principal independent registered public
accounting firm. Through and as of March 30, 2009, UHY had a continuing
relationship with UHY Advisors, Inc. (“Advisors”) through which UHY’s partners
provide non-audit services. UHY has only a few full-time employees. Therefore,
few, if any, of the audit services performed were provided by permanent
full-time employees of UHY. UHY manages and supervises the audit services and
audit staff, and is exclusively responsible for the opinion rendered in
connection with its examination.
In the
event that ratification of the Board of Directors’ appointment of UHY LLP is not
obtained at the Meeting, the Board of Directors will reconsider their
appointment.
THE BOARD
OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF UHY
LLP AS THE COMPANY’S AUDITORS, AND PROXIES SOLICITED BY THE BOARD OF DIRECTORS
WILL BE VOTED IN FAVOR OF SUCH RATIFICATION UNLESS A STOCKHOLDER HAS OTHERWISE
INDICATED ON THE PROXY CARD.
INDEPENDENT
ACCOUNTANT FEES FOR FISCAL YEARS 2008 AND 2007
Audit
Fees
During
the fiscal years ended December 31, 2008 and December 31, 2007, UHY LLP (“UHY”),
was paid approximately $110,000 and $101,000, respectively, for the audit of the
Company’s financial statements and review of financial statements included in
the Company’s reports on Form 10-Q or services that are normally provided by UHY
in connection with statutory and regulatory filings or engagements for those
fiscal years. All services were approved by the Audit Committee.
Audit-Related
Fees
During
the fiscal years ended December 31, 2008 and December 31, 2007, UHY was paid
approximately $24,000 and $26,000, respectively, for assurance and related
services that are reasonably related to the performance of audit or review of
our financial statements and are not reported under “Audit Fees” above. All
services were approved by the Audit Committee.
Tax
Fees
During
the fiscal years ended December 31, 2008 and December 31, 2007, UHY was paid
approximately $26,000 and $11,000, respectively, for tax compliance, tax advice
and tax planning services. All services were approved by the Audit
Committee.
All
Other Fees
During
the fiscal years ended December 31, 2008 and 2007, UHY received no payments for
non-audit services.
For each
fiscal year, the Audit Committee reviews the proposed audit and audit-related
services as well as proposed permissible non-audit services to be provided by
the Company’s independent public accountants and approves those services it
believes to be necessary and advisable. During the year, situations may arise in
which the Company desires to engage the independent public accountants to
perform services that were not foreseeable at the time of the initial approval.
The Audit Committee pre-approves any such additional services as required by the
Securities and Exchange Commission. The Audit Committee may delegate authority
to one or more of its members to pre-approve any audit or non-audit service,
provided that any pre-approval decisions are reported to the Audit Committee at
its next regularly scheduled meeting.
The Audit
Committee has considered whether the provision of non-core audit services to the
Company by the Company’s principal auditor is compatible with maintaining
independence and has affirmed in each instance that the provision of such
services was compatible with the principal auditor’s independent
role.
AUDIT
COMMITTEE REPORT
The
information in this Audit Committee Report is not deemed “soliciting material’
or to be “filed” with the Securities and Exchange Commission unless the Company
specifically requests that it be treated as soliciting material or specifically
incorporates it by reference into a document filed with the Securities and
Exchange Commission.
The Audit
Committee oversees the accounting, financial reporting and tax functions of the
Company, including matters relating to the internal control over financial
reporting and the appointment and activities of the Company’s independent
accountants. The Audit Committee has final authority to select, retain and
compensate the Company’s independent auditors.
The Audit
Committee operates under a written charter adopted by the Company’s Board of
Directors. The Audit Committee and the Board review annually the written
charter. A copy of the Audit Committee’s charter is available on the Company’s
website at
http://www.mficcorp.com/index.php?option=com_content&task=view&id=44&Itemid=42.
The Audit
Committee charter was last modified on January 16, 2003 and was attached as an
appendix to the Company’s proxy statement in 2005.
In
accordance with law, the Audit Committee pre-approves all services provided by
UHY LLP (“UHY”), the Company’s independent auditors.
|
1.
|
The
Audit Committee has reviewed and discussed the audited financial
statements with management.
|
|
2.
|
The
Audit Committee has discussed with the Company’s independent auditors,
UHY, the matters required to be discussed by SAS 61 (Codification of
Statements on Auditing Standards, AU Sec. 380), as may be modified or
supplemented.
|
|
3.
|
The
Audit Committee has received the written disclosures and the letter from
the independent auditors required by Independence Standards Board Standard
No. 1 (Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees), as may be modified or supplemented,
and has discussed with the independent auditors the independent auditors’
independence; and
|
|
4.
|
Based
on the review in paragraphs 1-3, the Audit Committee recommended to the
Board of Directors that the audited financial statements be included in
the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2008, which the Company filed with the Securities and
Exchange Commission on March 30,
2009.
|
|
Audit
Committee:
|
|
Eric
G. Walters (Chairperson)
|
|
James
N. Little
|
|
Leo
Pierre Roy
|
|
George
Uveges
|
WHERE
YOU CAN FIND MORE INFORMATION
The
Company files annual, quarterly and current reports, proxy and information
statements and other information with the SEC under the Exchange Act. You may
read and copy this information at the Public Reference Room located at
100 F Street, N.E., Washington, D.C. 20549. You may obtain
information on the operation of the Public Reference Room by calling the SEC at
1-800-732-0330. You may also obtain copies of the materials described above at
prescribed rates by writing to the SEC, Public Reference Section,
100 F Street, N.E., Washington, D.C. 20549.
The
Company files its reports, proxy statements and other information electronically
with the SEC. You may access information on the Company at the SEC web site
containing reports, proxy and information statements and other information
regarding issuers that file electronically with the SEC at
http://www.sec.gov.
The SEC
also permits us to “incorporate by reference” into this Proxy Statement
important business and financial information about the Company that is not
included in or delivered with this Proxy Statement. The following documents
filed with the SEC by the Company are incorporated by reference into this Proxy
Statement (excluding portions thereof that are deemed furnished and not
filed):
(1) the
Company’s Annual Report on Form 10-K for the fiscal year ended December 31,
2007, filed on March 21, 2008;
(2)
the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2008, filed on March 30, 2009;
(3) the
Company’s Schedule 14A filed on April 29, 2008;
(4) the
Company’s Current Report on Form 8-K filed on November 20, 2008;
and
(5)
Company’s registration statement on Form 8-A (File No. 0-11625) filed with the
SEC under Section 12 of the Securities Exchange Act of 1934, including any
amendment or report filed for the purpose of updating such
description.
You may
obtain copies of any of the documents incorporated by reference through the
Company or the SEC, as described above. Documents incorporated by reference are
available from us without charge, excluding all exhibits unless we have
specifically incorporated by reference an exhibit in the document. Shareholders
may obtain documents incorporated by reference in this document by requesting
them in writing or by telephone from the Company at the following
address:
|
Microfluidics
International Corporation
|
You
should rely only on the information contained or incorporated by reference in
this Proxy Statement. We have not authorized anyone to provide you with
information that is different from what is contained in this Proxy Statement,
including the documents incorporated herein by reference.
This
Proxy Statement is dated April __ , 2009. There may be changes in the
affairs of the Company after the date of this Proxy Statement, which are not
reflected in this document. We have not authorized anyone to give any
information or make any representation about the matters addressed in this Proxy
Statement that differs from, or adds to, the information in this document or in
the Company’s documents that are publicly filed with the SEC. Therefore, if
anyone does give you different or additional information, you should not rely
on it.
VOTING
PROCEDURES
The
presence, in person or by proxy, of at least a majority of the outstanding
shares of Common Stock entitled to vote at the Meeting is necessary to establish
a quorum for the transaction of business. Shares represented by proxies pursuant
to which votes have been withheld from any nominee for director, or which
contain one or more abstentions or broker “non-votes,” are counted as present
for purposes of determining the presence or absence of a quorum for the Meeting.
A “non-vote” occurs when a broker or other nominee holding shares for a
beneficial owner votes on one proposal, but does not vote on another proposal
because the broker does not have discretionary voting power and has not received
instructions from the beneficial owner.
For all
matters being submitted to stockholders at the Meeting, the affirmative vote of
a majority of shares present, in person or represented by proxy, and entitled to
vote on that matter, is required for approval. Shares voted to abstain, since
they are not affirmative votes for the matter, will have the same effect as
votes against the matter, while broker “non-votes,” since they are not entitled
to vote for the matter, have no effect on the vote.
OTHER
BUSINESS
The Board
of Directors knows of no business that will be presented for consideration at
the Meeting other than that stated above. If any other business should come
before the Meeting, votes may be cast pursuant to proxies in respect to any such
business in the best judgment of the person or persons acting under the
proxies.
STOCKHOLDER
PROPOSALS
Under
Rule 14a-8 promulgated under the Securities and Exchange Act of 1934,
stockholders of the Company may present proper proposals for inclusion in the
Company’s proxy statement and for consideration at the next annual meeting of
stockholders by submitting their proposals to the Company in a timely manner. In
order to be considered for inclusion in the proxy statement distributed to
stockholders prior to the annual meeting in the year 2010, a stockholder
proposal must be received by the Company no later than December 25, 2009 and
must otherwise comply with the requirements of Rule 14a-8. In order to be
considered for presentation at the annual meeting of stockholders in the year
2010, although not included in the proxy statement, a stockholder proposal must
comply with the requirements of the Company’s by-laws and be received by the
Company no later than April 25, 2010. Stockholder proposals should be delivered
in writing to [Name of ], Secretary, Microfluidics International
Corporation, P.O. Box 9101, 30 Ossipee Road, Newton, Massachusetts
02464.
EXPENSES
AND SOLICITATION
The cost
of solicitation of proxies will be borne by the Company. Proxies will be
solicited principally through the mail. Directors, officers and regular
employees of the Company may make further solicitation of proxies from some
stockholders personally, by telephone, telegraph or special letter. No
additional compensation, except for reimbursement of reasonable out-of-pocket
expenses, will be paid for any such further solicitation. In addition, the
Company may request banks, brokers, and other custodians, nominees and
fiduciaries to solicit customers of theirs who have shares of the Company
registered in the name of the nominee. The Company will reimburse any such
persons for their reasonable out-of-pocket expenses. The Company may engage a
proxy solicitor to which it would pay customary fees and expenses.
APPENDIX
A
Article
Fourth of the Company’s Certificate of Incorporation, as amended, is hereby
amended to increase the number of authorized shares of common stock to
30,000,000 shares by replacing Article Fourth in its entirety with the
following:
“FOURTH.The
total number of shares of stock which the Corporation shall have authority to
issue is 30,000,000 shares of Common Stock with a par value of $0.01 per
share.”
32