Unassociated Document
SCHEDULE
14A
(Rule
14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a)
of
the Securities Exchange Act of 1934
|
Filed
by the Registrant x |
|
|
|
|
|
|
|
|
|
|
|
|
Filed
by a Party other than the Registrant ¨ |
|
|
|
|
|
|
|
|
|
|
|
|
Check
the appropriate box: |
|
|
|
|
|
|
|
|
|
|
|
¨ |
|
Preliminary
Proxy Statement |
|
¨ |
|
Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)) |
x |
|
Definitive
Proxy Statement |
|
|
|
¨ |
|
Definitive
Additional Materials |
|
|
|
¨ |
|
Soliciting
Material Pursuant to §240.14a-12 |
|
|
|
MCF
CORPORATION
(Name
of Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
|
Payment of Filing Fee (Check the appropriate
box): |
|
|
|
|
|
|
|
|
|
|
|
x |
|
No
fee required. |
|
|
|
|
|
|
|
|
|
|
|
¨ |
|
Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11. |
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Title
of each class of securities to which transaction applies: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) |
Aggregate
number of securities to which transaction applies: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3) |
Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined): |
|
|
|
|
|
|
|
(4) |
Proposed
maximum aggregate value of transaction: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5) |
Total
fee paid: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
¨ |
|
Fee
paid previously with preliminary materials. |
|
|
|
|
|
|
|
|
|
|
|
¨ |
|
Check
box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing. |
|
|
|
|
|
|
|
|
(1) |
Amount
Previously Paid: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) |
Form,
Schedule or Registration Statement No.: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3) |
Filing
Party: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4) |
Date
Filed: |
|
|
|
|
MCF
CORPORATION
April 8,
2005
Dear MCF
Corporation Stockholder:
You are
cordially invited to attend MCF Corporation’s 2005 annual meeting of
stockholders to be held on Friday, May 6, 2005 at 1:30 p.m., Pacific standard
time, at 600 California Street, 9th Floor,
San Francisco, CA 94108.
An
outline of the business to be conducted at the meeting is given in the
accompanying Notice of Annual Meeting of Stockholders and Proxy Statement. In
addition to the matters to be voted on, there will be a report on our progress
and an opportunity for stockholders to ask questions.
I hope
you will be able to join us. To ensure your representation at the meeting, I
encourage you to complete, sign and return the enclosed proxy card as soon as
possible. Your vote is very important. Whether you own a few or many shares of
stock, it is important that your shares be represented.
|
Sincerely, |
|
|
|
D. Jonathan Merriman Chairman
and Chief Executive Officer |
MCF
CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May
6, 2005
TO THE
STOCKHOLDERS:
The 2005
annual meeting of stockholders of MCF Corporation will be held on Friday, May 6,
2005 at 1:30 p.m., Pacific standard time, at 600 California Street,
9th Floor,
San Francisco, CA 94108. At the meeting, you will be asked:
1. |
To
elect nine directors to serve until the 2006 annual meeting of
stockholders; |
2. |
To
approve the addition of shares of common stock to the 2003 MCF Corporation
Stock Option and Incentive Plan; and |
3. |
To
transact such other business as may properly be presented at the annual
meeting. |
The
foregoing items of business are more fully described in the proxy statement
accompanying this notice.
If you
were a stockholder of record at the close of business on April 5, 2005, you may
vote at the annual meeting and any adjournment or postponement.
We invite
all stockholders to attend the meeting in person. If you attend the meeting, you
may vote in person even if you previously signed and returned a
proxy.
|
By Order of the Board of
Directors |
|
|
|
Christopher
L. Aguilar Secretary |
San
Francisco, California
April 8,
2005
YOUR
VOTE IS IMPORTANT. TO ASSURE REPRESENTATION OF YOUR SHARES, PLEASE COMPLETE,
SIGN AND DATE THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
MCF
CORPORATION
600
California Street, 9th
Floor
San
Francisco, California 94108
PROXY
STATEMENT
FOR
THE 2005 ANNUAL MEETING OF STOCKHOLDERS
General
MCF
Corporation, a Delaware corporation, is soliciting this proxy on behalf of its
Board of Directors to be voted at the 2005 annual meeting of stockholders to be
held on Friday, May 6, 2005, at 1:30 p.m., Pacific standard time, or at any
adjournment or postponement thereof. The 2005 annual meeting of stockholders
will be held at Merriman Curhan Ford & Co., headquarters, 600 California
Street, 9th Floor,
San Francisco, California 94108.
Method
of Proxy Solicitation
These
proxy solicitation materials were mailed on or about April 8, 2005 to all
stockholders entitled to vote at the meeting. MCF will pay the cost of
soliciting these proxies. These costs include the expenses of preparing and
mailing proxy materials for the annual meeting and reimbursement paid to
brokerage firms and others for their expenses incurred in forwarding the proxy
materials. Directors, officers and employees of MCF may also solicit proxies
without additional compensation.
Voting
of Proxies
Your
shares will be voted as you direct on your signed proxy card. If you do not
specify on your proxy card how you want to vote your shares, we will vote signed
returned proxies:
· |
FOR
the election of the Board's nine nominees for director;
and |
· |
FOR
the approval of the addition of shares of common stock to the 2003 MCF
Corporation Stock Option and Incentive
Plan. |
We do not
know of any other business that may be presented at the annual meeting. If a
proposal other than those listed in the notice is presented at the annual
meeting, your signed proxy card gives authority to the persons named in the
proxy to vote your shares on such matters in their discretion.
Required
Vote
Record
holders of shares of MCF Corporation’s common stock at the close of business on
April 5, 2005, the voting record date, may vote at the meeting with respect to
the election of nine directors and approval of the addition of shares of common
stock to the 2003 MCF Corporation stock Option and Incentive Plan. Each share of
common stock outstanding on the record date has one vote. At the close of
business on April 5, 2005, there were 70,244,689 shares of common stock issued
and outstanding.
MCF’s
bylaws provide that a majority of the shares entitled to vote, represented in
person or by proxy, constitutes a quorum for transaction of business. Assuming
the presence of a quorum at the annual meeting, the vote of
the holders of at least a majority of the stock having voting power present in
person or represented by proxy is required to elect the nine directors and
approve the addition of shares of common stock to the 2003 MCF Corporation stock
Option and Incentive Plan. An automated system administered by MCF’s transfer
agent will tabulate the votes. Each is tabulated separately. Abstentions and
broker non-votes are counted as present for purposes of establishing a quorum.
Broker non-votes, however, will not be considered as part of the voting power
present or represented at the annual meeting for purposes of any matter voted on
at the meeting.
Revocability
of Proxies
You may
revoke your proxy by giving written notice to the Secretary of MCF Corporation
or by delivering a later proxy to the Secretary, either of which must be
received prior to the annual meeting, or by attending the meeting and voting in
person.
PROPOSAL
1: ELECTION OF DIRECTORS
The Board
of Directors has nominated nine directors for election at the 2005 annual
meeting. If you elect them, they will hold office until the next annual meeting,
until their respective successors are duly elected and qualified or until their
earlier resignation or removal. Cumulative voting is not permitted. Unless you
specify otherwise, your returned signed proxy will be voted in favor of each of
the Board’s nominees. In the event a nominee is unable to serve, your proxy may
vote for another person nominated by the Board. The Board of Directors has no
reason to believe that any of the nominees will be unavailable.
Vote
Required
The
affirmative vote of the holders of at least a majority of the stock having
voting power present in person or represented by proxy is required to elect the
nine nominees of the Board as directors.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” EACH OF
THE BOARD’S NOMINEES LISTED BELOW.
Directors
Set forth
below are the principal occupations of, and other information regarding, the
nine director nominees of the Board. Each of these persons is an incumbent
director.
D.
Jonathan Merriman, 44, has
served as our Chairman and Chief Executive Officer from February 2002. Prior to
that period, Mr. Merriman was President and CEO of Ratexchange Corporation,
the predecessor company to MCF Corporation. Mr. Merriman and his team
engineered the transition of Ratexchange, a software trading platform company,
into a financial services holding company, MCF Corporations, including the full
service institutional investment banking subsidiary, Merriman Curhan Ford &
Co. From June 1998 to October 2000, Mr. Merriman was Managing Director and
Head of the Equity Capital Markets Group and member of the Board of Directors at
First Security Van Kasper. In this capacity, he oversaw the Research,
Institutional Sales, Equity Trading, Syndicate and Derivatives Trading
departments. From June 1997 to June 1998, Mr. Merriman served as Managing
Director and Head of Capital Markets at The Seidler Companies in Los Angeles,
where he also served on the firm’s Board of Directors. Before Seidler,
Mr. Merriman was Director of Equities for Dabney/Resnick/Imperial, LLC. In
1989, Mr. Merriman co-founded the hedge fund company Curhan, Merriman
Capital Management, Inc., which managed money for high net worth individuals and
corporations. Before Curhan, Merriman Capital Management, Inc., he worked in the
Risk Arbitrage Department at Bear Stearns & Co. as a trader. Prior to Bear
Stearns, Mr. Merriman worked at Merrill Lynch as a financial analyst and as
an institutional equity salesman. Mr. Merriman received his Bachelor of
Arts in Psychology from Dartmouth College and completed coursework at New York
University’s Graduate School of Business. Mr. Merriman has served on
the Boards of several organizations over the past decade, including Ratexchange
(the predecessor of MCF Corporation) Leading Brands, Inc., Fiberstars Inc. &
The San Francisco Art Institute.
Patrick
H. Arbor, 68, has
served as a member of our Board of Director since February 2001 and has served
as a member of the audit committee since April 2001. Mr. Arbor is currently
Chairman of United Financial Holdings Inc., a bank holding company, and is
a principal of the trading firm of Shatkin-Arbor & Co. He is a longtime
member of the Chicago Board of Trade (CBOT), the world’s oldest derivatives
exchange, serving as the organization’s Chairman from 1993 to 1999. During that
period, Mr. Arbor also served on the Board of Directors of the National
Futures Association. Prior to that, he served as Vice Chairman of the CBOT for
three years and ten years as a Director. Mr. Arbor’s other exchange
memberships include the Chicago Board Options Exchange, the Mid-America
Commodity Exchange and the Chicago Stock Exchange. Mr. Arbor received his
undergraduate degree in business and economics from Loyola
University.
Donald H.
Sledge, 64, has
served as a member of our Board of Directors from September 1999 to present and
Chairman of our Board of Directors from February 2000 to June 2001. He has
served as a member of the compensation committee from April 2001 to present. He
also served as Chief Executive Officer from February 2000 to October 2000. From
September 1999 to February of 2000 he served as President, Chief Executive
Officer and Chairman of our subsidiary Ratexchange I, Inc. From October 2000 to
October 2003, Mr. Sledge was a general partner in Fremont Communications, a
venture capital fund, based in San Francisco. From January 1996 to September
1999, Mr. Sledge was Vice Chairman and Chief Executive Officer of TeleHub
Communications Corporation, a next generation ATM-based telecommunications
company. From 1994 to 1995, Mr. Sledge served as President and Chief
Operating Officer of WCT, a $160-million long distance telephone company that
was one of Fortune Magazine’s 25 fastest growing public companies before it was
acquired by Frontier Corporation. From 1993 to 1994, Mr. Sledge was head of
operations for New T&T, a Hong Kong-based start-up. He was Chairman and
Chief Executive Officer of New Zealand Telecom International from 1991 to 1993
and a member of the executive board of TCNZ, Mr.. Sledge held
various other senior positions with Telecom New Zealand from 1988 until
1993 as was instrumental in leading the IPO of the company.
Mr. Sledge also served four years as president and Chief Executive
Officer of Pacific Telesis International. Mr. Sledge is also an owner and
Board Member of DataProse, a company providing direct mail and billing statement
solutions. In addition, Mr. Sledge serves on the Board of
MobilePro (OTCBB:MOBL) and the Board of CasaByte, a private company providing
quality of service testing for cellular networks. Mr. Sledge holds a
Masters of Business Administration and Bachelor of Arts degree in industrial
management from Texas Technological University.
Ronald E.
Spears, 56, has
served as a member of our Board of Directors from March 2000 to present and
served as a member of the Audit Committee from April 2001 to August 2003.
Since March 2002, Mr. Spears has served as President of AT&T's
Signature Client Group, the sales organization that serves AT&T's
largest 325 Global accounts. From October 1990 until joining AT&T in
2002, Mr. Spears served in a number of early stage ventures primarily
involved in the development and sale of technology solutions to large corporate
enterprises. During this time, he served as Chief Operating Officer of
e.Spire Communications, an East Coast CLEC; Chief Executive Officer of CMGI
Solutions, an Internet Professional Services firm; and Chief Executive Officer
of Vaultus, a wireless software company. In these roles, he led several
successful equity and debt offerings for these ventures.
Mr. Spears also served in various capacities at MCI
Communications from 1979 to 1990; his last position was President of MCI's
Midwest Division from 1984 to 1990. A pioneer of the competitive long
distance industry, Mr. Spears began his career in telecommunications
as a manager at AT&T Long Lines in 1978, following eight years as
an officer in the United States Army. He is a graduate of the United
States Military Academy at West Point, and also holds a Master's Degree in
Public Service from Western Kentucky University.
Steven W.
Town, 44, has
served as a member of our Board of Directors from October 2000 to present and
has served as a member of the compensation committee since April 2001.
Mr. Town has served as Co-Chief Executive Officer of the Amerex Natural
Gas, Amerex Power and Amerex Bandwidth, Ltd. Mr. Town began his commodities
career in 1987 in the retail futures industry prior to joining the Amerex Group
of Companies. He began the Amerex futures and forwards brokerage group in
natural gas in 1990, in Washington D.C., and moved this unit of Amerex to
Houston in 1992. During Mr. Town’s tenure as Co-Chief Executive Officer,
the Amerex companies have become the leading brokerage organizations in their
respective industries. Amerex currently provides energy, power and bandwidth
brokerage services to many of the energy companies. Mr. Town is a graduate
of Oklahoma State University.
Raymond
J. Minehan, 63, has
served as a member of our Board of Directors and as a member of our audit
committee and compensation committee since August 2003. From February 2001 to
February 2002, Mr. Minehan served as the Chief Financial Officer at
Memestreams, Inc., a startup company that was developing information management
software. From January 1997 to August 2000, he served as the Chief
Administrative Officer at Sutro & Co. where he was responsible for all
administrative functions including finance, management information systems,
telecommunications, operations, human resources and facilities. From 1989 to
1997, he served as chief financial officer at Hambrecht & Quist, Inc. From
1972 to 1989, Mr. Minehan served as a partner with Arthur Andersen LLP.
Mr. Minehan served in the United States Air Force as a navigator assigned
to the Strategic Air Command as B-52 navigator/electronic warfare officer. He
attained the rank of Captain. Mr. Minehan received his Bachelor of Arts
degree in Finance from Golden Gate University.
Dennis G.
Schmal, 58, has
served as a member of our Board of Directors and as a member of our audit
committee since August 2003. From February 1972 to April 1999, Mr. Schmal
served as a partner in the audit practice at Arthur Andersen LLP.
Mr. Schmal now performs a variety of consulting services for a number
of companies. As a senior business advisor with special focus in finance,
he has extensive knowledge of financial reporting and holds the CPA designation.
Besides serving on the boards of two private companies, Mr. Schmal also
serves on the Board of Directors for Varian Semiconductor Equipment Associates ,
Inc. (VSEA), a public company. Mr. Schmal attended California State
University, Fresno where he received a Bachelor of Science in Business
Administration- Finance and Accounting Option.
Anthony
B. Helfet, 60, a retired
investment banker, has been a director since February 2004. Mr. Helfet was
a Special Advisor to UBS Warburg from September 2001 through December 2001. From
1991 to August 31, 2001, Mr. Helfet was a Managing Director of Dillon, Read
& Co. Inc. and its successor organization, UBS Warburg. Mr. Helfet was
also a Managing Director of the Northwest Region of Merrill Lynch Capital
Markets from 1979 to 1989. Mr. Helfet received his A.B. degree from
Columbia College in 1966 and his M.B.A. from the graduate school of business at
Columbia University in 1972. From 1967 until 1970, Mr. Helfet served as an
infantry officer in the United States Marine Corps and served in Vietnam in 1968
and 1969. Mr. Helfet serves on the Board of Directors of Layne Christensen
Company and Alliance Imaging Inc.
Scott
Potter, 36, became a
Director of MCF Corporation in August 2004. He currently serves as a Managing
Director of LMS Capital, the venture capital arm of London Merchant Securities
plc (LON:LMSO), where Mr. Potter is responsible for LMS’ North American
Private Equity portfolio. LMS is a FTSE 250 investment company. In his 12 year
Silicon Valley career, Mr. Potter has been involved in over 50 venture
capital financings, 25 IPO’s, and 20 M&A transactions. Prior to joining LMS,
Mr. Potter held the position of Senior Vice President, Field Operations at
Inktomi Corporation where he had responsibility for Inktomi’s sales force,
business development, consulting services, and field offices. From 1999-2002,
Mr. Potter served as President and CEO of Quiver, Inc., an enterprise
software company funded by some of the world’s leading Venture Capital firms,
including Hummer Winblad Venture Partners, El Dorado Ventures, Partech
International, Weiss Peck & Greer, and LMS Capital. Under Mr. Potter’s
leadership, Quiver became a leading company in the Information Management space,
and ultimately was acquired by Inktomi in August of 2002. Prior to his
tenure at Quiver, Mr. Potter was Executive Vice President in charge of
business development and corporate development at Worldres, Inc., an online
travel technology company. Mr. Potter’s career began as an attorney
for one of Silicon Valley's leading law firms, Venture Law Group. A frequent
speaker at technology industry conferences and investor forums, Mr. Potter
holds a BA in Industrial Psychology from the University of California at
Berkeley and a JD Degree from UC Berkeley's Boalt Hall School of
Law.
Executive
Officers
Gregory
S. Curhan, 43, has
served as our Executive Vice President from January 2002 to present and served
as Chief Financial Officer from January 2002 to January 2004. Previously, he
served as Chief Financial Officer of WorldRes.com from May 1999 through June
2001. Prior to joining WorldRes.com, Mr. Curhan served as Director of
Global Technology Research Marketing and Managing Director Specialty Technology
Institutional Equity Sales at Merrill Lynch & Co. from May 1998 to May 1999.
Prior to joining Merrill Lynch, Mr. Curhan was a partner in the investment
banking firm of Volpe Brown Whelan & Co., serving in various capacities
including Internet research analyst and Director of Equities from May 1993 to
May 1998. Mr. Curhan was a founder and principal of the investment advisor
Curhan, Merriman Capital Management from July 1988 through December 1992. Prior
to founding Curhan, Merriman, Mr. Curhan was a Vice President institutional
equity sales for Montgomery Securities from June 1985 through June 1988. From
August 1983 to May 1985, Mr. Curhan was a financial analyst in the
investment banking group at Merrill Lynch. Mr. Curhan earned his Bachelor
of Arts degree from Dartmouth College.
Robert E.
Ford, 45, has served as President and Chief Operating Officer for MCF
Corporation since February 2001. He brings 20 years of executive and operations
experience to the Company. Prior to joining MCF Corporation from February 2000
to February 2001, Mr. Ford was a co-Founder and CEO of Metacat, Inc., a
content management ASP that specialized in enabling supplier catalogs for Global
2000 private exchanges and eMarketplaces. From June 1996 to
December 1999, he was President/COO and on the founding team of JobDirect.com, a
leading resume and job matching service for university students, now a
wholly-owned subsidiary of Korn Ferry International. Previously, Mr. Ford
co-founded and managed an education content company from September 1994 to 1996.
Prior to that, from May 1992 to August 1994, he headed up a turnaround and
merger as General Manager of a 65 year-old manufacturing and distribution
company. Mr. Ford started his career as VP of Business Development at Lazar
Enterprises, a technology-consulting firm he helped operate from June 1989 to
February 1992. He earned his Masters in International Business and Law from the
Fletcher School of Law and Diplomacy in 1989 at Tufts University and a BA with
high distinction from Dartmouth College in 1982.
John D.
Hiestand, 37, joined MCF Corporation as the Controller in January 2002 and
became Chief Financial Officer in January 2004. From December 2000 to November
2001, he served as the Controller of the Metro-Switching Division at CIENA
Corporation. Mr. Hiestand had come to CIENA through the merger with Cyras
Systems, Inc., where he served as the Controller from March 2000 to December
2000. Prior to joining Cyras Systems, Inc., Mr. Hiestand served as a Senior
Manager in the audit practice at KPMG LLP in San Francisco. Mr. Hiestand
received a Bachelor of Arts in Business from California Polytechnic State
University at San Luis Obispo in 1991, and holds the Certified Public Accountant
(CPA) and Chartered Financial Analyst (CFA) designations.
Christopher
L. Aguilar, 42, has served as General Counsel of MCF Corporation from March 2000
to present and serves as General Counsel and Chief Compliance Officer of
Merriman Curhan Ford & Co. He brings 15 years of legal and regulatory
experience to the Company. From August 1995 to March 2000, Mr. Aguilar was
a partner at Bradley, Curley & Asiano, a San Francisco law firm, where he
represented the interests of public and private corporations, small businesses
and individuals in commercial litigation. Mr. Aguilar has also worked for
the San Francisco City Attorney and Alameda County District Attorney’s offices.
Mr. Aguilar received his juris doctorate degree from the University of
California, Hastings College of the Law. He also attended Oxford University as
an undergraduate and received his Bachelor of Arts degree from the Integral
Program at St. Mary’s College of California where he was included in Who’s Who
among American Colleges and Universities. Mr. Aguilar is presently an
adjunct professor at University of California, Hastings College of the Law. Mr.
Aguilar serves as a member of the Board of Directors of GoldSpring, Inc., a
public company.
Brock
Ganeles, 38,
has served as Director of Equities since February 2003. Previously, he served as
a Director in the Institutional Sales Group at Credit Suisse First Boston from
October 2000 to February 2003. At CSFB, Mr. Ganeles focused on Technology
products and covered both tier one and hedge accounts. In addition, he managed
the firm’s training program for institutional salespeople. Mr. Ganeles had come
to CSFB through the merger with Donaldson, Lufkin & Jenrette, where he spent
nine months covering west coast institutions and hedge funds. Prior to his bulge
bracket experience at CSFB / DLJ, Mr. Ganeles was a partner at Volpe Brown
Whelan & Co, a technology and healthcare boutique in San Francisco, from
1995 to 1999. Prior to Volpe, he was a partner at the Carson Group, an Investor
Relations Consulting Firm based in New York City, from 1991 to 1995. Mr. Ganeles
holds a Bachelor of Arts in Government from Wesleyan.
Board
Meetings and Committees
In 2004,
the Board of Directors held four regular meetings of the Board and one special
meeting. During 2004, no incumbent director attended fewer than 75% of the
aggregate of (a) the total number of meetings of the Board of Directors held
during the period for which he has been a director and (b) the total number of
meetings held by all committees of the Board of Directors on which he served
during the period that he served. MCF has the following Board
committees:
Audit
Committee. The
principal functions of the Audit Committee are to engage our independent
accounting firm, to consult with our auditors concerning the scope of the audit
and to review with them the results of their examination, to approve the
services performed by the independent auditors, to review and approve any
material accounting policy changes affecting our operating results and to review
our financial control procedures and personnel. The following Board members
served as Audit Committee members during 2004: Patrick Arbor, Raymond Minehan
and Dennis Schmal. Mr. Schmal serves as the Chairman of the Audit Committee and
is a Financial Expert in satisfaction of the Sarbanes-Oxley and the American
Stock Exchange requirements. Raymond Minehan has also been identified as a
Financial Expert. The Audit Committee held eight meetings in 2004.
The Audit
Committee approves the engagement of and the services to be performed by the
Company’s independent accountants and reviews the Company’s accounting
principles and its system of internal accounting controls. The Board has
determined that all members of the Audit Committee are “independent” as that
term is defined in Rule 121(A) of the listing standards of
the American Stock Exchange.
The Audit
Committee is committed to upholding the highest legal and ethical conduct in
fulfilling its responsibilities and expects the Company’s directors, as well as
its officers and employees, to act ethically at all times and to acknowledge
their adherence to the Company’s policies. The Company’s Board of Directors has
adopted a written charter for the Audit Committee.
Compensation
Committee. The
Compensation Committee of the Board of Directors has exclusive authority to
establish the level of compensation paid to the Company’s executive officers and
certain employees and administers the Company’s stock option plans. The
following Board members served as Compensation Committee members during 2003:
Donald Sledge, Steve Town, Jon Merriman and Ray Minehan. Mr. Sledge serves as
the Chairman of the Committee. Mr. Merriman was appointed to the Committee in
March 2003 and recuses himself from participation regarding his personal
compensation. The Compensation Committee held four meetings in
2004.
To date,
the Company has not established a nominating committee, and director nominations
have been considered by the Board as a whole. Given the relatively small size of
the Board of Directors, the Board has not encountered administrative
difficulties with this arrangement, and has felt that the advice and counsel of
all of its members was of value in considering Board nominations.
Stockholder
Communications with the Board of Directors. Stockholders
interested in communicating with our Board of Directors may do so by writing to
our General Counsel, Christopher Aguilar, at 600 California Street,
9th Floor,
San Francisco, CA 94108. Our General Counsel will review all stockholder
communications. Those that appear to contain subject matter reasonably related
to matters within the purview of our Board of Directors will be forwarded to the
entire Board or the individual Board member to whom the communication was
addressed. Obscene, threatening or harassing communications will not be
forwarded. We encourage the members of our Board to attend our annual meeting of
stockholders, although attendance is not mandatory. All of our outside directors
attended the 2004 annual meeting of stockholders.
AUDIT
COMMITTEE REPORT
The
information contained in this report shall not be deemed to be “soliciting
material” or “filed” or incorporated by reference in future filings with the
Securities and Exchange Commission, or subject to the liabilities of Section 18
of the Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates it by reference into a document filed under the
Securities Act of 1933, as amended, or Securities Exchange Act of 1934, as
amended.
The Audit
Committee reviews our financial reporting process on behalf of the Board of
Directors. In fulfilling its responsibilities, the Audit Committee has reviewed
and discussed the audited financial statements contained in the 2004 Annual
Report on Form 10-K with MCF’s management and the independent auditors.
Management is responsible for the financial statements and the reporting
process, including the system of internal controls. The independent auditors are
responsible for expressing an opinion on the conformity of those audited
financial statements with generally accepted accounting principles.
The Audit
Committee discussed with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees, as
amended. The audit committee has also received written disclosures and the
letter from the independent auditors required by Independence Standards Board
Standard No. 1 Independence Discussions with Audit Committees (which relates to
the accountant’s independence from the Company and its related entities) and has
discussed with the independent auditors their independence from the
Company.
In
reliance on the reviews and discussions referred to above, the Audit Committee
recommended to the board the inclusion of the audited financial statements in
MCF’s 2004 Annual Report on Form 10-K for filing with the Securities and
Exchange Commission.
|
AUDIT COMMITTEE |
|
|
|
Dennis
G. Schmal, Chairman Raymond
J. Minehan Patrick
H. Arbor |
COMPENSATION
OF DIRECTORS
Directors
may receive restricted stock and/or stock option grants for service on the
Board. During 2004, the members of the Board received the following restricted
stock grants to purchase shares of the Company’s common stock as compensation
for their services as Board members in 2004: Mr. Arbor received 20,000 shares of
restricted stock, Mr. Helfet received 40,000 shares of restricted stock, Mr.
Minehan received 20,000 shares of restricted stock, Mr. Potter received 18,110
shares of restricted stock, Mr. Schmal received 20,000 shares of restricted
stock, Mr. Sledge received 20,000 shares of restricted stock, Mr. Spears
received 20,000 shares of restricted stock and Mr. Town received 20,000 shares
of restricted stock. The variation in the number of shares granted to Mr. Helfet
and Mr. Potter was based upon the number of months the individual member served
on the Board during 2004. The restricted stock grants vest at the end of two
years from the date of grant. Vesting is accelerated by 25% upon the attendance
of each of the quarterly Board meetings, which means that directors who attend
all four of such quarterly meetings will be fully vested after approximately one
year. Directors also receive reimbursement of travel and other out-of-pocket
expenses related to Board meeting attendance. The members of the Board do not
receive salaries or other cash compensation for service on the Board.
COMPENSATION
OF EXECUTIVES
The
following table sets forth information regarding the compensation paid to our
Chief Executive Officer and each of the Company’s other executive officers whose
total salary and bonus for 2004 exceeded $100,000.
SUMMARY
COMPENSATION TABLE
|
|
|
|
Annual
Compensation |
|
Long-Term
Compensation Awards |
|
Name
and Principal Position |
|
Year |
|
Salary |
|
Bonus |
|
Restricted
Stock Awards |
|
Securities
Underlying Options |
|
|
|
|
|
|
|
|
|
|
|
|
|
D.
Jonathan Merriman (1) |
|
|
2004 |
|
$ |
150,000 |
|
$ |
773,674 |
|
|
- |
|
|
- |
|
Chairman
and Chief Executive Officer |
|
|
2003 |
|
$ |
800,000 |
|
$ |
- |
|
|
- |
|
|
5,000,000 |
|
|
|
|
2002 |
|
$ |
241,881 |
|
$ |
14,000 |
|
|
- |
|
|
1,387,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory
S. Curhan (2) |
|
|
2004 |
|
$ |
150,000 |
|
$ |
649,932 |
|
|
- |
|
|
- |
|
Executive
Vice President |
|
|
2003 |
|
$ |
733,333 |
|
$ |
16,667 |
|
|
- |
|
|
3,100,000 |
|
|
|
|
2002 |
|
$ |
122,195 |
|
$ |
33,334 |
|
|
- |
|
|
1,000,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
E. Ford (3) |
|
|
2004 |
|
$ |
150,000 |
|
$ |
291,224 |
|
$ |
371,250 |
|
|
275,000 |
|
President
and Chief Operating Officer |
|
|
2003 |
|
$ |
225,000 |
|
$ |
- |
|
|
- |
|
|
500,000 |
|
|
|
|
2002 |
|
$ |
125,000 |
|
$ |
45,000 |
|
|
- |
|
|
670,270 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
D. Hiestand (4) |
|
|
2004 |
|
$ |
150,000 |
|
$ |
100,000 |
|
$ |
51,200 |
|
|
- |
|
Chief
Financial Officer |
|
|
2003 |
|
$ |
120,342 |
|
$ |
30,000 |
|
$ |
60,000 |
|
|
- |
|
|
|
|
2002 |
|
$ |
113,273 |
|
$ |
- |
|
|
- |
|
|
100,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher
L. Aguilar (5) |
|
|
2004 |
|
$ |
150,000 |
|
$ |
100,000 |
|
$ |
35,500 |
|
|
- |
|
General
Counsel |
|
|
2003 |
|
$ |
113,167 |
|
$ |
28,000 |
|
$ |
48,000 |
|
|
- |
|
|
|
|
2002 |
|
$ |
108,850 |
|
$ |
- |
|
|
- |
|
|
20,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brock
Ganeles (6) |
|
|
2004 |
|
$ |
492,164 |
|
$ |
- |
|
$ |
- |
|
|
- |
|
Director
of Equities |
|
|
2003 |
|
$ |
170,078 |
|
$ |
- |
|
$ |
24,000 |
|
|
800,000 |
|
|
|
|
2002 |
|
|
n/a |
|
|
n/a |
|
|
n/a |
|
|
n/a |
|
(1) |
|
Mr.
Merriman was appointed to the Board of Directors in February 2000. Mr.
Merriman was hired on October 5, 2000 as President and Chief Executive
Officer. Effective May 28, 2001, Mr. Merriman was appointed Chairman of
our Board of Directors. The Board ratified his appointment on June 28,
2001. Mr. Merriman’s annual salary was $150,000 per year in 2002. In
July 2002, Mr. Merriman’s salary was changed to be in line with other
revenue producing registered representatives of the Company such that his
annual base salary was reduced to $75,000 and he received an annual draw
of $75,000 per year. Mr. Merriman earned $91,881 and $725,000 in
commissions after covering his draw during 2002 and 2003, respectively.
Commissions earned are included in the salary total set forth in the table
above. In 2004, Mr. Merriman’s salary was increased to $150,000 per year
and his bonus was tied directly to key operating metrics, including
revenue and profitability. In 2004, Mr. Merriman was no longer entitled to
earn commissions for revenue producing
activities. |
(2) |
|
Mr.
Curhan was hired on January 9, 2002 as Executive Vice President and Chief
Financial Officer with an annual salary of $125,000, plus bonus under his
employment agreement. In July 2002, Mr. Curhan’s salary was changed to be
in line with other revenue producing registered representatives of the
Company such that his annual base salary was reduced to $62,500 and he
received a draw of $62,500 per year. Mr. Curhan earned $670,833 in
commissions after covering his draw during 2003. Commissions earned are
included in the salary total set forth in the table above. In 2004, Mr.
Curhan’s salary was increased to $150,000 per year and his bonus was tied
directly to key operating metrics, including revenue and profitability. In
2004, Mr. Curhan was no longer entitled to earn commissions for revenue
producing activities. |
(3) |
|
Mr.
Ford was hired on February 19, 2001 as Chief Operating Officer with an
annual salary of $125,000, plus a bonus under his employment agreement.
Effective June 28, 2001, Mr. Ford was appointed President by the Board of
Directors. In January 2002, Mr. Ford entered into an employment agreement
with the Company. His annual salary under that agreement was $125,000,
plus bonus. In July 2002, Mr. Ford’s salary was changed to be in line with
other revenue producing registered representatives of the Company such
that his annual base salary was reduced to $62,500 and he received a draw
of $62,500 per year. Mr. Ford earned $162,500 in commissions after
covering his draw during 2003. Commissions earned are included in the
salary total set forth in the table above. In 2004, Mr. Ford’s salary was
increased to $150,000 per year and his bonus was tied directly to key
operating metrics, including revenue and profitability. In 2004, Mr. Ford
was no longer entitled to earn commissions for revenue producing
activities. As of December 31, 2004, Mr. Ford held 225,000 shares of the
Company’s restricted stock that was valued at $427,500 as of December 31,
2004. |
(4) |
|
Mr.
Hiestand was hired on January 29, 2002 as Controller with an annual salary
of $100,000. During 2002, Mr. Hiestand’s annual salary was increased to
$120,000 as Mr. Hiestand assumed additional responsibilities, including
managing brokerage operations. Effective January 1, 2004, Mr. Hiestand was
appointed Chief Financial Officer by the Board of Directors. In January
2004, Mr. Hiestand’s annual salary was increased to $150,000. Mr.
Hiestand’s bonus payouts are tied to achievement of company-wide
performance goals. As of December 31, 2004, Mr. Hiestand held 160,000
shares of the Company’s restricted stock that was valued at $304,000 as of
December 31, 2004. |
(5) |
|
Mr.
Aguilar was hired on March 27, 2000 as General Counsel with an annual
salary of $125,000. In March 2001, Mr. Aguilar’s salary was changed to
$95,000 to reflect the company management committee's voluntary reduction
in salary. In January 2002, Mr. Aguilar's salary was changed to $110,000.
In January 2004, Mr. Aguilar’s annual salary was increased to $150,000.
Mr. Aguilar’s bonus payouts are tied to achievement of company-wide
performance goals. As of December 31, 2004, Mr. Aguilar held 125,000
shares of the Company’s restricted stock that was valued at $237,500 as of
December 31, 2004. |
(6) |
|
Mr.
Ganeles was hired on February 26, 2003 as Director of Equities. Mr.
Ganeles is paid commissions in line with other revenue producing
registered representatives of the Company. Mr. Ganeles is also eligible to
receive commissions based upon sales and trading business production. The
commissions are determined based upon the level of revenue attributed to
the sales and trading department and a standardized payout rate.
Commission levels are set based primarily upon the commissions paid by
competitors of the Company. Commissions earned are included in the salary
total set forth in the table above. As of December 31, 2004, Mr. Ganeles
held 50,000 shares of the Company’s restricted stock that was valued at
$95,000 as of December 31, 2004. |
OPTION
GRANTS IN LAST FISCAL YEAR
The
following table sets forth information regarding options granted during fiscal
year 2004 to the named executive officers. No stock appreciation rights were
granted in 2004.
|
|
Individual
Grants |
|
Potential Realizable Value at
Assumed
Annual Rates of Stock Price Appreciation for Option
Term |
Name |
|
Number
of Securities
Underlying
Options
Granted |
|
Percent
of Total
Options to Employees
in 2003 |
|
|
Exercise or
Base
Price Per Share(1) |
|
Expiration
Date |
|
5% ($) |
|
10% ($) |
D.
Jonathan Merriman |
|
— |
|
n/a |
|
|
$ |
n/a |
|
n/a |
|
n/a |
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory
S. Curhan |
|
— |
|
n/a |
|
|
$ |
n/a |
|
n/a |
|
n/a |
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
E. Ford |
|
275,000 |
|
14.8 |
% |
|
$ |
1.65 |
|
7/16/14 |
|
739,111 |
|
1,176,911 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
D. Hiestand |
|
— |
|
n/a |
|
|
$ |
n/a |
|
n/a |
|
n/a |
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher
L. Aguilar |
|
— |
|
n/a |
|
|
$ |
n/a |
|
n/a |
|
n/a |
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brock
Ganeles |
|
— |
|
n/a |
|
|
$ |
n/a |
|
n/a |
|
n/a |
|
n/a |
(1)
The
exercise price of the options included in this table reflect the market value of
the shares on the grant date.
AGGREGATE
OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL
YEAR-END HOLDINGS
The
following table sets forth information with respect to each of the named
executive officers concerning the number of securities underlying unexercised
stock options at the end of fiscal year 2004 and the 2004 fiscal year-end value
of all unexercised in the money options held by such individuals. Stock options
to purchase 77,000 shares were exercised by Christopher Aguilar in fiscal year
2004.
|
|
|
|
|
|
Number
of Securities Underlying Unexercised Options |
|
Value
of Unexercised In-the-Money Options (1) |
Name |
|
Shares
Acquired on Exercise |
|
|
|
Exercisable |
|
Unexercisable |
|
Exercisable |
|
Unexercisable |
D.
Jonathan Merriman |
|
— |
|
— |
|
7,767,500 |
|
250,000 |
|
$ |
9,252,175 |
|
$ |
— |
Gregory
S. Curhan |
|
— |
|
— |
|
3,978,125 |
|
121,875 |
|
|
5,636,031 |
|
|
166,969 |
Robert
E. Ford |
|
— |
|
— |
|
2,169,436 |
|
8,334 |
|
|
2,369,336 |
|
|
12,751 |
John
D. Hiestand |
|
— |
|
— |
|
76,561 |
|
23,439 |
|
|
115,472 |
|
|
35,278 |
Christopher
L. Aguilar |
|
77,000 |
|
$
99,980 |
|
158,500 |
|
— |
|
|
37,300 |
|
|
— |
Brock
Ganeles |
|
— |
|
— |
|
366,666 |
|
433,334 |
|
|
608,666 |
|
|
719,334 |
(1)
Market
value of underlying securities at year-end minus the exercise price.
EQUITY
COMPENSATION PLAN INFORMATION
The
following table gives information about the Company’s common stock that may be
issued upon the exercise of options and warrants under all of our existing
equity compensation plans as of December 31, 2004, including the 1999 Stock
Option Plan, the 2000 Stock Option and Incentive Plan, the 2001 Stock Option and
Incentive Plan, the 2003 Stock Option and Incentive Plan and the 2002 Employee
Stock Purchase Plan.
Plan
Category |
|
Number
of Securities
to be
Issued Upon
Exercise
of Outstanding
Options
and Warrants |
|
Weighted
Average
Exercise
Price
of Outstanding
Options
and Warrants |
|
Number
of Securities
Remaining
Available
For Future
Issuance
Under
Equity Compensation
Plans |
Equity
compensation plans approved by stockholders: |
|
|
|
|
|
|
|
1999
Stock Option Plan |
|
2,497,167 |
|
$ |
0.54 |
|
211,584 |
2000
Stock Option and Incentive Plan |
|
4,231,851 |
|
$ |
1.91 |
|
24,526 |
2001
Stock Option and Incentive Plan |
|
4,258,827 |
|
$ |
0.42 |
|
78,606 |
2003
Stock Option and Incentive Plan |
|
10,257,917 |
|
$ |
0.58 |
|
2,654,767 |
2002
Employee Stock Purchase Plan |
|
— |
|
$ |
— |
|
2,892,214 |
Equity
compensation not approved by stockholders |
|
300,000 |
|
$ |
7.00 |
|
— |
COMPARATIVE
STOCK PERFORMANCE CHART
The
following graph compares our stockholder returns since July 10, 2000, the date
our common stock began trading on the American Stock Exchange, with the AMEX
Market Value (US) and the NASDAQ Financial index. The graph assumes an
investment of $100 in each of MCF and the AMEX Market Value (US) and the NASDAQ
Financial indices on July 10, 2000, including reinvestment of dividends.
The
points on the graph represent the following numbers:
|
|
July 10,
2000 |
|
December 31,
2000 |
|
December 31,
2001 |
|
December 31,
2002 |
|
December 31,
2003 |
|
December
31, 2004 |
MCF
Corporation |
|
100.00 |
|
37.24 |
|
12.60 |
|
5.96 |
|
15.15 |
|
32.34 |
AMEX
Market Value (U.S.) |
|
100.00 |
|
86.13 |
|
76.44 |
|
65.37 |
|
92.89 |
|
114.18 |
NASDAQ
Financial |
|
100.00 |
|
70.78 |
|
84.41 |
|
64.45 |
|
60.52 |
|
63.20 |
EMPLOYMENT
CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
AGREEMENTS
Donald
H. Sledge
Mr.
Sledge’s employment agreement provided for him to serve as Chairman and Chief
Executive Officer of Ratexchange Corporation, now known as MCF Corproation with
an annual base salary of $300,000, an annual incentive bonus of up to 50% of
base salary, a 10% interest in the subsidiary Ratexchange I, Inc., an expense
reimbursement and other employee benefits. Under this agreement, Mr. Sledge’s
employment could be terminated for cause or upon death or disability so long as
we paid all
compensation owed as of the date of termination. Mr. Sledge’s employment could
be terminated without cause if we pay him severance pay equal to one year’s
annual salary and a bonus payment of $150,000. In October 2000, Mr. Sledge
resigned as Chief Executive Officer, but continued to serve as Chairman at a
salary of $120,000 per year until May of 2001. Upon his leaving our company in
May 2001, we issued to Mr. Sledge a 7% convertible note, in an aggregate
principal amount of $400,000, due April 2003 as consideration for the severance
terms in his employment agreement. Interest is payable at the maturity of the
two-year term. The notes may be converted into shares of MCF’s common stock on
election of Mr. Sledge anytime before their maturity or their prior repurchase
by the Company. The conversion rate is 364 shares per each $1,000 principal
amount of notes, subject to adjustment in certain circumstances. In March 2003,
we modified the terms of the note payable to Mr. Sledge. The parties have agreed
to convert the principle and interest due at the April 2003 maturity into a
fully amortizing note payable over five years using an effective interest rate
of 4.0%.
D.
Jonathan Merriman
In
connection with Mr. Merriman’s appointment as our President and Chief Executive
Officer, we entered into a three year employment agreement with Mr. Merriman
during October 2000. His initial annual salary under his employment agreement
was $300,000. The agreement also included a $200,000 bonus paid to him on
January 2, 2001, expense reimbursement and other employee benefits. Effective
March 15, 2001, Mr. Merriman reduced his annual salary to $1.00, plus a
bonus tied to performance. Mr. Merriman’s salary was raised to $150,000 per year
after our company secured private financing. Effective May 28, 2001, Mr.
Merriman was appointed Chairman of the Board and resigned his position as
President of MCF Corporation. The Board ratified his appointment on June 28,
2001. In July 2002, Mr. Merriman’s salary was changed to be in line with other
revenue producing registered representatives of the Company such that his annual
base salary is equal to $75,000 and he receives a draw of $75,000 per year. Mr.
Merriman is also able to earn commissions based upon investment banking and
trading business.
Under his
employment agreement, Mr. Merriman has been awarded ten-year stock options,
which are incentive options to the extent permissible under Section 422 of the
Internal Revenue Code of 1986, as amended, to purchase a total of 2,000,000
shares of our common stock at an exercise price of $3.19 per share. As of
December 31, 2003, stock options to purchase 1,250,000 shares were vested. The
remaining options to purchase 750,000 shares will vest as follows:
|
• |
|
Options
to purchase 500,000 shares vested on January 1,
2005; |
|
• |
|
Options
to purchase 250,000 shares vesting on January 1, 2006, subject to
acceleration of vesting immediately after the common stock has traded on
AMEX at a price of $7.00 per share or more for 30 consecutive trading
days, subject, in either case, to continued employment on such
date. |
The
vesting of the stock options will accelerate, and Mr. Merriman will additionally
be entitled to receive a payment of $1.0 million from MCF, upon:
|
• |
|
A
sale of all or substantially all of our
assets; |
|
• |
|
A
merger of our company with another entity where we are not the surviving
entity or where our stockholders immediately prior to the merger own less
than 50% of our voting stock following the merger;
or |
|
• |
|
A
change in the membership of the Board of Directors such that individuals
who, as of October 5, 2000, constituted our Board of Directors cease for
any reason to constitute at least a majority of the Board of Directors;
provided that any individual becoming a director subsequent to October 5,
2000 whose election, or nomination for election by our stockholders, was
approved by a vote of at least a majority of the directors then comprising
the incumbent Board shall be considered as though the individual were a
member of the incumbent Board, but excluding, for this purpose, any
individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of proxies
or consents by or on behalf of a person other than our Board of
Directors. |
Under Mr.
Merriman’s employment agreement, Mr. Merriman’s employment may be terminated for
cause or upon death or disability so long as we pay all compensation owed as of
the date of termination. Mr. Merriman’s employment agreement may be
terminated by us without cause if we pay to Mr. Merriman his base salary for
twelve months following termination, any bonus that had been earned but not paid
at the time of termination and all other benefits and compensation he would have
been entitled to receive under the agreement had his employment not been
terminated. All stock options granted to him under his employment also would
immediately vest. Mr. Merriman would be entitled to receive the same payments
and acceleration of the vesting of his options if he were to terminate his
employment for “good reason,” as that term is defined in his employment
agreement.
During
October 2003, the Compensation Committee approved a three month extension of Mr.
Merriman’s employment agreement. On January 1, 2004, Mr. Merriman entered into a
new three year employment contract with MCF Corporation. A copy of this
agreement is included as an exhibit to the Company’s Quarterly Report on Form
10-Q filed on August 4, 2004. Under the terms of that agreement Mr. Merriman
receives a base salary of $150,000 and a bonus calculated by the following
formula:
(a)
Gross
revenue multiplied by 0.50% (one half of one percent), payable quarterly;
(b)
Incremental
revenue in 2005 that exceeds revenue in 2004 multiplied by 0.95% (ninety five
one hundredth of one percent), payable quarterly. This is calculated monthly on
a cumulative year-to-date basis using total revenue in 2004 divided by twelve
months. This component can either be $0 or a positive number. If cumulative 2005
revenue does not exceed cumulative 2004 revenue, this executive bonus component
will be $0 and not a reduction to the overall executive bonus
amount;
(c)
Incremental
revenue in 2005 that exceeds revenue in 2004 multiplied by 0.95% (ninety five
one hundredth of one percent), payable annually. This component can either be $0
or a positive number. If 2005 revenue does not exceed 2004 revenue, this
executive bonus component will be $0 and not a reduction to the overall
executive bonus amount; and
(d) Earnings before interest, taxes,
depreciation and amortization (EBITDA) multiplied by 2.50%, payable annually.
This component can either be $0 or a positive number. If 2005 EBITDA is a
negative amount, this executive bonus component will be $0 and not a
reduction to the overall executive bonus amount.
During
the term of this Agreement, upon (i) a sale of all or substantially all of the
assets of the Company, (ii) a merger of the Company with another entity where
the Company is not the surviving entity or where the stockholders of the Company
immediately prior to the merger own less than fifty percent (50%) of the voting
stock of the Company following the merger, or (iii) a change in the membership
of the Board of Directors such that individuals who, as of January 1, 2004
constitute the Board of Directors (the “Incumbent Board”) cease for any reason
to constitute at least a majority of the Board of Directors; provided, however,
that any individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company’s shareholders, was approved
by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though the individual
were a member of the Incumbent Board, but excluding, for this purpose, any
individual whose initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of directors
or other actual or threatened solicitation of proxies or consents by or on
behalf of a person other than the Company’s Board of Directors, the Executive
shall receive $1,000,000 from the Company and all of the Executive’s options
that have been granted pursuant to the terms set forth in this Agreement shall
vest immediately.
In the
case of (i) any termination other than “termination for cause," or (ii) any
termination by the Executive for “Good Reason” as defined below, Mr. Merriman
shall continue to receive for twelve months, commencing on the date of such
termination, his full base salary, any bonus that has been earned but not paid
before termination of employment; and all other benefits and compensation that
he would have been entitled to under the agreement in the absence of termination
of employment; provided,
further, that
all of Mr. Merriman's options that have been granted pursuant to the terms set
forth in the agreement shall vest immediately upon such
termination.
Gregory
S. Curhan
Mr.
Gregory S. Curhan joined our company on January 9, 2002 as our Executive Vice
President and Chief Financial Officer. On January 9, 2002, Mr. Curhan entered
into an employment contract with Ratexchange Corporation, now known as MCF
Corporation. His initial salary under his employment agreement was equal to
$125,000. The agreement also included a $50,000 bonus authorized upon signing
the employment agreement. The bonus was earned in three equal payments based
upon Mr. Curhan’s achievement of specific performance milestones as defined in
the employment contract. Under his employment agreement, Mr. Curhan has been
awarded ten-year stock options, which are incentive options to the extent
permissible under Section 422 of the Internal Revenue Code of 1986, as amended,
to purchase a total of 1,000,000 shares of our common stock at an exercise price
of $0.53 per share, as follows:
|
• |
|
An
option grant to purchase 450,000 shares of common stock, that will vest
25% on the first anniversary of Mr. Curhan’s employment and the remainder
vesting 1/36th
per month over the following three years,
and |
|
• |
|
An
option grant to purchase 550,000 shares of common stock that will vest on
January 1, 2007. The vesting of the shares in this grant will be
accelerated in three equal sums upon the Company achieving specific
financial performance milestones linked to profitability and share price,
described in the employment agreement. |
The
vesting of Mr. Curhan’s stock options will accelerate upon:
|
• |
|
A
sale of all or substantially all of our
assets; |
|
• |
|
A
merger of our company with another entity where we are not the surviving
entity or where our stockholders immediately prior to the merger own less
than 50% of our voting stock following the merger;
or |
|
• |
|
A
change in the membership of the Board of Directors such that individuals
who, as of January 9, 2002, constitute our Board of Directors cease for
any reason to constitute at least a majority of the Board of Directors;
provided that any individual becoming a director subsequent to January 9,
2002 whose election, or nomination for election by our stockholders, was
approved by a vote of at least a majority of the directors then comprising
the incumbent Board shall be considered as though the individual were a
member of the incumbent Board, but excluding, for this purpose, any
individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of proxies
or consents by or on behalf of a person other than our Board of
Directors. |
Upon such
change of control one half of Mr. Curhan’s options granted shall vest, unless
one half have already vested, in which case one half of the then remaining
options will vest.
Under Mr.
Curhan’s employment agreement, Mr. Curhan’s employment may be terminated for
cause or upon death or disability so long as we pay all compensation owed as of
the date of termination. Mr. Curhan’s employment agreement may be terminated by
us without cause if we pay to Mr. Curhan his base salary for six months
following termination, any bonus that had been earned but not paid at the time
of termination and all other benefits and compensation he would have been
entitled to receive under the agreement had his employment not been terminated.
Mr. Curhan would be entitled to receive the same payments and acceleration of
the vesting of his options if he were to terminate his employment for “good
reason,” as that term is defined in his employment agreement.
On
January 1, 2005, Mr. Curhan entered into a new two year employment contract with
MCF Corporation. A copy of this agreement will be included as an exhibit to the
Company’s Quarterly Report on Form 10-Q to be filed on or about May 5, 2005.
Under the terms of that agreement Mr. Curhan receives a base salary of $150,000
and a bonus calculated by the following formula:
(a)
Gross
revenue multiplied by 0.50% (one half of one percent), payable quarterly;
(b)
Incremental
revenue in 2005 that exceeds revenue in 2004 multiplied by 0.85% (eighty five
one hundredth of one percent), payable quarterly. This is calculated monthly on
a cumulative year-to-date basis using total revenue in 2004 divided by twelve
months. This component can either be $0 or a positive number. If cumulative 2005
revenue does not exceed cumulative 2004 revenue, this executive bonus component
will be $0 and not a reduction to the overall executive bonus
amount;
(c)
Incremental
revenue in 2005 that exceeds revenue in 2004 multiplied by 0.85% (eighty five
one hundredth of one percent), payable annually. This component can either be $0
or a positive number. If 2005 revenue does not exceed 2004 revenue, this
executive bonus component will be $0 and not a reduction to the overall
executive bonus amount; and
(d) Earnings
before interest, taxes, depreciation and amortization (EBITDA) multiplied by
2.50%, payable annually. This component can either be $0 or a positive number.
If 2005 EBITDA is a negative amount, this executive bonus component will be $0
and not a reduction to the overall executive bonus amount.
During
the term of this Agreement, upon (i) a sale of all or substantially all of the
assets of the Company, (ii) a merger of the Company with another entity where
the Company is not the surviving entity or where the stockholders of the Company
immediately prior to the merger own less than fifty percent (50%) of the voting
stock of the Company following the merger, or (iii) a change in the membership
of the Board of Directors such that individuals who, as of January 1, 2005
constitute the Board of Directors (the “Incumbent Board”) cease for any reason
to constitute at least a majority of the Board of Directors; provided, however,
that any individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company’s shareholders, was approved
by a vote of at least a majority of the directors then comprising the Incumbent
Board shall be considered as though the individual were a member of the
Incumbent Board, but excluding, for this purpose, any individual whose initial
assumption of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a person other
than the Company’s Board of Directors, the Executive shall receive $500,000 from
the Company and all of the Executive’s options that have been granted pursuant
to the terms set forth in this Agreement shall vest immediately.
In the
case of (i) any termination other than “termination for cause," or (ii) any
termination by the Executive for “Good Reason” as defined below, Mr. Curhan
shall continue to receive for six months, commencing on the date of such
termination, his full base salary, any bonus that has been earned but not paid
before termination of employment; and all other benefits and compensation that
he would have been entitled to under the agreement in the absence of termination
of employment; provided,
further, that
all of Mr. Curhan's options that have been granted pursuant to the terms set
forth in the agreement shall vest immediately upon such
termination.
Mr.
Robert E. Ford joined our company on February 19, 2001 as our Chief Operating
Officer. On June 28, 2001, Mr. Ford was appointed President of Ratexchange
Corporation, now known as MCF Corporation, by the Board of Directors in addition
to his role as Chief Operating Officer. On January 1, 2002, Mr. Ford entered
into a three year employment contract with us. His initial annual salary under
his employment agreement was $125,000, which shall be increased under the terms
of the agreement to $175,000 annually. Mr. Ford’s salary will be increased upon
the Company meeting specific performance milestones related to profitability and
shares price. The agreement also included a $145,000 bonus paid to him upon
signing his agreement. The bonus was paid $45,000 in cash, tied to salary
deferred for fiscal year 2001, and a stock option grant to purchase 270,270
shares of the Company’s common stock which number of shares were determined by
dividing $100,000 by the closing price of the Company’s stock on the day the
agreement was signed. The exercise price of the ten-year bonus option grant
shares is $0.62. Mr. Ford was also granted ten-year stock options, which are
incentive options to the extent permissible under Section 422 of the Internal
Revenue Code of 1986, as amended, to purchase a total of 400,000 shares of our
common stock at an exercise price equal to the closing price of our Private
Placement financing of November 2001, equal to $0.37. These shares were awarded
in three grants by the Board of Directors. The first grant of 100,000 shares
vested on the date of the agreement, January 1, 2002. The second grant of
100,000 shares vested on the first anniversary of the signing of the agreement.
The third grant of 200,000 shares vests at a rate of 1/24th per
month over the remaining two years following the first anniversary of the
agreement, subject to continued employment.
The
vesting of the stock options will accelerate, and Mr. Ford will additionally be
entitled to receive a payment of $500,000 from the Company, upon:
|
• |
|
A
sale of all or substantially all of our
assets; |
|
• |
|
A
merger of our company with another entity where we are not the surviving
entity or where our stockholders immediately prior to the merger own less
than 50% of our voting stock following the merger;
or |
|
• |
|
A
change in the membership of the Board of Directors such that individuals
who, as of January 1, 2002, constitute our Board of Directors cease for
any reason to constitute at least a majority of the Board of Directors;
provided that any individual becoming a director subsequent to January 1,
2002 whose election, or nomination for election by our stockholders, was
approved by a vote of at least a majority of the directors then comprising
the incumbent Board shall be considered as though the individual were a
member of the incumbent Board, but excluding, for this purpose, any
individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of proxies
or consents by or on behalf of a person other than our Board of
Directors. |
Under Mr.
Ford’s employment agreement, Mr. Ford’s employment may be terminated for cause
or upon death or disability so long as we pay all compensation owed as of the
date of termination. Mr. Ford’s employment agreement may be terminated by us
without cause if we pay to Mr. Ford his base salary for six months following
termination, any bonus that had been earned but not paid at the time of
termination, a lump sum payment of 50% of his full salary and all other benefits
and compensation he would have been entitled to receive under the agreement had
his employment not been terminated. Mr. Ford would be entitled to receive the
same payments and acceleration of the vesting of his options if he were to
terminate his employment for “good reason,” as that term is defined in his
employment agreement.
On
January 1, 2005, Mr. Ford entered into a new two year employment contract with
MCF Corporation. A copy of this agreement will be included as an exhibit to the
Company’s Quarterly Report on Form 10-Q to be filed on or about May 5, 2005.
Under the terms of that agreement Mr. Ford receives a base salary of $150,000
and a bonus calculated by the following formula:
(a)
Gross
revenue multiplied by 0.50% (one half of one percent), payable quarterly;
(b)
Incremental
revenue in 2005 that exceeds revenue in 2004 multiplied by 0.20% (two tenths of
one percent), payable quarterly. This is calculated monthly on a cumulative
year-to-date basis using total revenue in 2004 divided by twelve months. This
component can either be $0 or a positive number. If cumulative 2005 revenue does
not exceed cumulative 2004 revenue, this executive bonus component will be $0
and not a reduction to the overall executive bonus amount;
(c)
Incremental
revenue in 2005 that exceeds revenue in 2004 multiplied by 0.20% (two tenths of
one percent), payable annually. This component can either be $0 or a positive
number. If 2005 revenue does not exceed 2004 revenue, this executive bonus
component will be $0 and not a reduction to the overall executive bonus amount;
and
(d)
Earnings
before interest, taxes, depreciation and amortization (EBITDA) multiplied by
2.50%, payable annually. This component can either be $0 or a positive number.
If 2005 EBITDA is a negative amount, this executive bonus component will be $0
and not a reduction to the overall executive bonus amount.
During
the term of this Agreement, upon (i) a sale of all or substantially all of the
assets of the Company, (ii) a merger of the Company with another entity where
the Company is not the surviving entity or where the stockholders of the Company
immediately prior to the merger own less than fifty percent (50%) of the voting
stock of the Company following the merger, or (iii) a change in the membership
of the Board of Directors such that individuals who, as of January 1, 2005
constitute the Board of Directors (the “Incumbent Board”) cease for any reason
to constitute at least a majority of the Board of Directors; provided, however,
that any individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company’s shareholders, was approved
by a vote of at least a majority of the directors then comprising the Incumbent
Board shall be considered as though the individual were a member of the
Incumbent Board, but excluding, for this purpose, any individual whose initial
assumption of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a person other
than the Company’s Board of Directors, the Executive shall receive $500,000 from
the Company and all of the Executive’s options that have been granted pursuant
to the terms set forth in this Agreement shall vest immediately.
In the
case of (i) any termination other than “termination for cause," or (ii) any
termination by the Executive for “Good Reason” as defined below, Mr. Ford shall
continue to receive for six months, commencing on the date of such termination,
his full base salary, any bonus that has been earned but not paid before
termination of employment; and all other benefits and compensation that he would
have been entitled to under the agreement in the absence of termination of
employment; provided,
further, that
all of Mr. Ford's options that have been granted pursuant to the terms set forth
in the agreement shall vest immediately upon such termination.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
During
2001, the Company renegotiated the severance terms included in its employment
agreement with Donald Sledge, the former Chairman and CEO of the Company. Upon
his leaving the Company in May 2001, the Company issued to Mr. Sledge a 7%
convertible note, in an aggregate principal amount of $400,000, due May 2003.
Interest is payable at the maturity of the two-year term. In May 2003, the
Company and Mr. Sledge agreed to convert the principal and interest due at
maturity into a fully amortizing note payable over five years using an effective
interest rate of 4.0%. As of December 31, 2004 and 2003, the remaining principal
amount of the note payable was $321,000 and $407,000, respectively.
Mr. Sledge is a member of the Company’s Board of Directors.
For
certain other transactions with directors see, “Compensation Committee
Interlocks and Insider Participation.”
BOARD
COMPENSATION COMMITTEE 2004 REPORT ON EXECUTIVE
COMPENSATION
General
Compensation Policy
The
Compensation Committee of the Board of Directors has exclusive authority to
establish the level of compensation paid to the Company’s executive officers and
administers the Company’s stock option plans. Compensation policies of the
Committee are designed to attract, retain and motivate highly skilled executive
officers by providing compensation that is comparable to that provided by our
competitors for key personnel. It is the Committee’s policy to offer executive
officers competitive compensation that is based upon overall Company
performance, individual contributions to the Company’s financial success and the
scope of responsibilities performed pursuant to particular offices.
During
2004, the Committee established modest base salaries for the executive officers
and provided them with the opportunity to earn bonus compensation based on
overall revenue and profitability of the Company. The Committee administers the
executive compensation system through informal surveys of compensation programs
of other similar companies and application of the subjective business judgment
of each Committee member. In employing its discretion, the Committee principally
considers for each component of an executive's compensation factors such as
previous and anticipated Company performance, as well as demonstrated individual
initiative and performance. The principal components of the Company's executive
compensation include (a) annual base salary, (b) bonus compensation tied
directly to key operating metrics, including revenue and profitability of the
Company, (c) commission compensation for revenue production and (d) equity
awards. Currently, we do not contribute to any retirement programs or pension
plans on behalf of our executive officers.
Base
Salaries
Annual
base salaries for executive officers are initially determined by evaluating the
scope of the responsibilities of the office and the experience and knowledge of
the individual officer. A secondary consideration is the competitiveness of the
marketplace for executive talent. The Committee establishes base salaries of its
executives with the objective of ensuring that the salaries we offer remain
competitive with those of similar companies.
In
establishing the annual base salaries of our executive officers, the Company’s
Board of Directors specifically assessed the responsibilities of the officers,
evaluated the officers’ level of experience, skills and knowledge relevant to
the Company’s business objectives and informally reviewed the compensation for
executive officers of comparable companies. The Committee believes that the
annual base salaries of our executive officers are appropriate when compared to
salaries paid by other companies for the same offices, and in light of both the
scope of responsibilities and anticipated performance, as well as previous
related work experience and level of skill and knowledge of our
officers.
The
Committee anticipates that it will periodically review the individual salaries
of each of our executive officers. Adjustments to base salaries are made at the
discretion of the Committee, which takes into consideration factors such as past
and anticipated performance of the Company and the Committee’s subjective
perception of the individual’s performance.
Commissions
During
2004, Mr. Ganeles was eligible to receive commissions based upon sales and
trading business production. The commissions are determined based upon the level
of revenue attributed to the sales and trading department and a standardized
payout rate that has been established for the various revenue transactions.
Commission levels are set based primarily upon the commissions paid by
competitors of the Company. Commissions earned by Mr. Ganeles during 2004
amounted to $492,164.
Bonuses
Executive
officer bonuses are tied directly to key operating metrics, including revenue
and profitability. These bonuses are based on mathematical formulas and paid to
the executive officers on a quarterly basis. Bonuses earned by Mr. Merriman, Mr.
Curhan and Mr. Ford during 2004 amounted to $773,674, $649,932 and $291,224,
respectively.
Management
bonuses are designed to provide the Company with flexibility in devising
incentives for exceptional performance by our management officers. Generally,
cash bonus payouts are tied to achievement of company-wide performance goals.
The amount of the performance bonus awarded, if any, is tied to both the level
of our management’s performance and that of the Company. Bonuses earned by Mr.
Hiestand and Mr. Aguilar during 2004 amounted to $100,000 and $100,000,
respectively.
Equity
Awards
In
granting stock options and restricted stock, the Company's goals are to attract,
retain and motivate the highest caliber of executives by offering long-term
compensation that links a meaningful portion of the executives' total
compensation to the best interests of stockholders. Making stock options and
restricted stock a significant component of executive compensation provides each
executive officer with incentive to manage the Company from the perspective of
an owner with an equity interest in the Company. The Committee also believes
that, given the market in which the Company operates and the Company's early
stage of development, equity-based compensation provides the greatest incentive
for outstanding executive performance.
Chief
Executive Officer Compensation
Mr.
Merriman’s 2004 compensation; including salary, bonus and equity in the Company,
was based upon his function as the Chairman and Chief Executive Officer. Mr.
Merriman became the Company’s chief executive in October 2000 and its chairman
in May 2001. Mr. Merriman’s compensation was negotiated based upon the
then-current compensation being given to executives in similar businesses. Mr.
Merriman’s equity interest in the Company is earned based upon the performance
goals set forth in his employment agreement. See “Employment Contracts and
Termination of Employment and Change in Control Agreements.”
$1
Million Pay Deductibility Limit
Section
162(m) of the Internal Revenue Code of 1986, as amended, prohibits publicly
traded companies from taking a tax deduction for compensation in excess of $1
million paid to the chief executive officer or any of the four most highly
compensated executive officers for any fiscal year. Certain “performance-based
compensation” is excluded from this $1 million cap. At this time, none of the
Company’s executive officer’s compensation subject to the deductibility limit
exceeds $1 million. In the Committee’s view, the Company is not likely to be
affected by the non-deductibility rules in the near future.
Conclusion
In
conclusion, a significant portion of the Company's executive compensation was
linked directly to revenue production, profitability of the Company, as well as
individual performance of our executive officers as measured by the
accomplishment of the Company's strategic goals. The Committee intends to
continue the practice of linking executive compensation to Company performance,
individual officer performance and stockholder return, realizing, of course,
that the business cycle from time to time may result in an imbalance for a
particular period.
|
COMPENSATION COMMITTEE DURING
2004 |
|
|
|
Donald Sledge, Chairman Steven
Town Raymond
J. Minehan D.
Jonathan Merriman |
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During
2004, the following directors served as compensation committee members: D.
Jonathan Merriman, Raymond J. Minehan, Donald Sledge and Steve
Town.
During
fiscal 2004, there were no Compensation Committee interlocks that were required
to be reported under the rules and regulations of the Securities Exchange Act of
1934. Mr. Merriman, as Chairman and CEO, is an insider and is a member of the
Compensation Committee. However, Mr. Merriman recuses himself from participation
regarding his personal compensation. Additionally, Mr. Sledge was employed as
our executive from September 1999 to May 2001.
PROPOSAL
2: AMENDMENT OF THE 2003 STOCK OPTION AND INCENTIVE
PLAN
The Board
of Directors has adopted, subject to shareholder approval, amendments to the
Company’s 2003 Stock Option and Incentive Plan to increase by 1,500,000 the
number of shares of Common Stock available for issuance pursuant to awards
granted under the Stock Option and Incentive Plan and to extend the term of the
Stock Option and Incentive Plan for an additional one-year period, until March
7, 2015. As of March 31, 2005, 1,295,697shares
remained available for grant under the Stock Option and Incentive Plan. The
market price of the Company’s Common Stock as of the close of trading on March
31, 2004 was $1.41. The Stock Option and Incentive Plan was initially adopted by
the Board of Directors on March 7, 2003 and approved by shareholders on June 20,
2003.
Any
employee, Officer, director, consultant or advisor of the Company or any
subsidiary of the Company is eligible to receive awards under the Plan.
Because
participation and the types of awards under the 2003 Stock Option and Incentive
Plan are subject to the discretion of the Compensation Committee, the benefits
or amounts that will be received by any participant or groups of participants if
the amendments to the 2003 Stock Option and Incentive Plan are approved are not
currently determinable. The
Company estimates that approximately 129 individuals were eligible to
participate in the Plan as of March 31, 2005.
The Board
of Directors believes that stock options have been, and will continue to be an
important compensation element in attracting, motivating and retaining key
employees. The granting of incentive stock options to employees is consistent
with the Company’s past practices, with practices in the industry, and is a
factor in promoting the long-term development of the Company. The Board of
Directors believes that the increase in authorized shares is necessary because
of the need to continue to make awards under the Plan to attract, motivate and
retain key employees.
Description
of the Plan
A
description of the provisions of the 2003 Stock Option and Incentive Plan, as
amended, is set forth below. This summary is qualified in its entirety by the
detailed provisions of the 2003 Stock Option and Incentive Plan, as amended, a
copy of which is attached as Annex
A to this
proxy statement.
Administration.
The
Compensation Committee of the Board of Directors administers the 2003 Stock
Option and Incentive Plan. Subject to the terms of the plan, the Compensation
Committee may select participants to receive awards, determine the types of
awards and terms and conditions of awards and interpret provisions of the
plan.
Common
Stock Reserved for Issuance under the Plan. The
common stock to be issued under the 2003 Stock Option and Incentive Plan
consists of authorized but unissued shares. If any shares covered by an award
are not purchased or are forfeited, or if an award otherwise terminates without
delivery of any common stock, then the number of shares of common stock counted
against the aggregate number of shares available under the plan with respect to
the award will, to the extent of any such forfeiture or termination, again be
available for making awards under the 2003 Stock Option and Incentive
Plan.
Eligibility. Awards
may be made under the 2003 Stock Option and Incentive Plan to our directors,
employees of or consultants to MCF Corporation or any of our subsidiaries or
affiliates, including any such employee who is an officer or director of us or
of any subsidiary or affiliate.
Amendment
or Termination of the Plan. The Board
of Directors may terminate or amend the plan at any time and for any reason.
Unless amended, the 2003 Stock Option and Incentive Plan will terminate ten
years after its effective date. Amendments will be submitted for stockholder
approval to the extent required by the Internal Revenue Code or other applicable
laws.
Options.
The 2003
Stock Option and Incentive Plan permits the granting of options to purchase
shares of common stock intended to qualify as incentive stock options under the
Internal Revenue Code and stock options that do not qualify as incentive stock
options.
In the
case of incentive stock options, the exercise price of each stock option may not
be less than 100% of the fair market value of our common stock on the date of
grant. In the case of certain 10% stockholders who receive incentive stock
options, the exercise price may not be less than 110% of the fair market value
of the common stock on the date of grant. An exception to these requirements is
made for options that we grant in substitution for options held by employees of
companies that we acquire. In such a case the exercise price is adjusted to
preserve the economic value of the employee’s stock option from his or her
former employer. In no event will the exercise price be less than the par value
of a share of common stock on the date of grant.
The term
of each stock option is fixed by the Compensation Committee and may not exceed
10 years from the date of grant. Options may be made exercisable in
installments. The Compensation Committee may accelerate the exercisability of
options.
Unless
the Compensation Committee provides otherwise in the applicable option
agreement, unvested options will expire immediately and vested options will
expire 90 days after a grantee terminates employment with us for a reason other
than for death or disability. Unless the Compensation Committee provides
otherwise in the applicable option agreement, in the case of a termination of
employment due to death or disability, options will fully vest and remain
exercisable for a period of one year following termination of employment. In the
case of a termination for cause, we may cancel the options upon the grantee's
termination.
In
general, a grantee may pay the exercise price of an option by cash, certified
check, by tendering shares of common stock (which if acquired from us have been
held by the grantee for at least six months), or by means of a broker-assisted
cashless exercise.
Stock
options granted under the 2003 Stock Option and Incentive Plan may not be sold,
transferred, pledged or assigned other than by will or under applicable laws of
descent and distribution. However, we may permit limited transfers of
non-qualified options for the benefit of immediate family members of grantees to
help with estate planning concerns or to co-workers or employees of
grantees.
Other
Awards. The
Compensation Committee also may award:
· |
restricted
stock, which are shares of common stock subject to
restrictions. |
· |
restricted
stock units, which are common stock units subject to
restrictions. |
Effect
of Certain Corporate Transactions. Certain
change of control transactions involving us, such as a sale of MCF Corporation,
may cause awards granted under the 2003 Stock Option and Incentive Plan to vest,
unless the awards are continued or substituted for in connection with the change
of control transaction.
Adjustments
for Stock Dividends and Similar Events. The
Compensation Committee will make appropriate adjustments in outstanding awards
and the number of shares available for issuance under the 2003 Stock Option and
Incentive Plan, including the individual limitations on options, to reflect
common stock dividends, stock splits and other similar events.
Section 162(m)
of the Internal Revenue Code. Section 162(m)
of the Internal Revenue Code limits publicly-held companies such as Ratexchange
to an annual deduction for federal income tax purposes of $1 million for
compensation paid to their covered employees. However, “performance-based
compensation” is excluded from this limitation. The 2003 Stock Option and
Incentive Plan is designed to permit the Compensation Committee to grant options
that qualify as performance-based for purposes of satisfying the conditions of
Section 162(m).
To
qualify as performance-based:
(a) |
the
compensation must be paid solely on account of the attainment of one or
more pre-established, objective performance goals;
|
(b) |
the
performance goal under which compensation is paid must be established by a
compensation committee comprised solely of two or more directors who
qualify as outside directors for purposes of the exception;
|
(c) |
the
material terms under which the compensation is to be paid must be
disclosed to and subsequently approved by stockholders of the corporation
before payment is made in a separate vote; and
|
(d) |
the
compensation committee must certify in writing before payment of the
compensation that the performance goals and any other material terms were
in fact satisfied. |
In the
case of compensation attributable to stock options, the performance goal
requirement (summarized in (a) above) is deemed satisfied, and the
certification requirement (summarized in (d) above) is inapplicable, if the
grant or award is made by the compensation committee; the plan under which the
option is granted states the maximum number of shares with respect to which
options may be granted during a specified period to an employee; and under the
terms of the option, the amount of compensation is based solely on an increase
in the value of the common stock after the date of grant. The maximum number of
shares of common stock subject to options that can be awarded under the 2003
Stock Option and Incentive Plan to any person is 5,000,000 shares per year.
Federal
Income Tax Consequences
Incentive
Stock Options. The grant
of an option will not be a taxable event for the grantee or for us. A grantee
will not recognize taxable income upon exercise of an incentive stock option
(except that the alternative minimum tax may apply), and any gain realized upon
a disposition of the common stock received pursuant to the exercise of an
incentive stock option will be taxed as long-term capital gain if the grantee
holds the shares of common stock for at least two years after the date of grant
and for one year after the date of exercise (the “holding period requirement”).
We will not be entitled to any business expense deduction with respect to the
exercise of an incentive stock option, except as discussed below.
For the
exercise of an option to qualify for the foregoing tax treatment, the grantee
generally must be our employee or an employee of our subsidiary from the date
the option is granted through a date within three months before the date of
exercise of the option.
If all of
the foregoing requirements are met except the holding period requirement
mentioned above, the grantee will recognize ordinary income upon the disposition
of the common stock in an amount generally equal to the excess of the fair
market value of the common stock at the time the option was exercised over the
option exercise price (but not in excess of the gain realized on the sale). The
balance of the realized gain, if any, will be capital gain. We will be allowed a
business expense deduction to the extent the grantee recognizes ordinary income,
subject to our compliance with Section 162(m) of the Internal Revenue Code
and to certain reporting requirements.
Non-Qualified
Options. The grant
of an option will not be a taxable event for the grantee or for us. Upon
exercising a non-qualified option, a grantee will recognize ordinary income in
an amount equal to the difference between the exercise price and the fair market
value of the common stock on the date of exercise. Upon a subsequent sale or
exchange of shares acquired pursuant to the exercise of a non-qualified option,
the grantee will have taxable gain or loss, measured by the difference between
the amount realized on the disposition and the tax basis of the shares of common
stock (generally, the amount paid for the shares plus the amount treated as
ordinary income at the time the option was exercised).
If we
comply with applicable reporting requirements and with the restrictions of
Section 162(m) of the Internal Revenue Code, we will be entitled to a
business expense deduction in the same amount and generally at the same time as
the grantee recognizes ordinary income.
A grantee
who has transferred a non-qualified stock option to a family member by gift will
realize taxable income at the time the non-qualified stock option is exercised
by the family member. The grantee will be subject to withholding of income and
employment taxes at that time. The family member’s tax basis in the shares of
common stock will be the fair market value of the shares of common stock on the
date the option is exercised. The transfer of vested non-qualified stock options
will be treated as a completed gift for gift and estate tax purposes. Once the
gift is completed, neither the transferred options nor the shares acquired on
exercise of the transferred options will be includable in the grantee’s estate
for estate tax purposes.
Restricted
Stock. A grantee
who is awarded restricted stock will not recognize any taxable income for
federal income tax purposes in the year of the award, provided that the shares
of common stock are subject to restrictions (that is, the restricted stock is
nontransferable and subject to a substantial risk of forfeiture). However, the
grantee may elect under Section 83(b) of the Internal Revenue Code to
recognize compensation income in the year of the award in an amount equal to the
fair market value of the common stock on the date of the award, determined
without regard to the restrictions. If the grantee does not make such a
Section 83(b) election, the fair market value of the common stock on the
date the restrictions lapse will be treated as compensation income to the
grantee and will be taxable in the year the restrictions lapse. If we comply
with applicable reporting requirements and subject to the restrictions of
Section 162(m) of the Internal Revenue Code, we will be entitled to a
business expense deduction in the same amount and generally at the same time as
the grantee recognizes ordinary income.
Restricted
Stock Units. There are
no immediate tax consequences of receiving an award of restricted stock units
under the 2003 Stock Option and Incentive Plan. A grantee who is awarded
restricted stock units will be required to recognize ordinary income in an
amount equal to the fair market value of shares issued to such grantee at the
end of the restriction period or, if later, the payment date. If we comply with
applicable reporting requirements and subject to the restrictions of
Section 162(m) of the Internal Revenue Code, we will be entitled to a
business expense deduction in the same amount and generally at the same time as
the grantee recognizes ordinary income.
Required
Vote
The
affirmative vote of the holders of a majority of the stock having voting power
present in person or represented by proxy at the Annual Meeting is required to
approve the amendments to the 2003 Stock Option and Incentive Plan. Unless
otherwise indicated, properly executed proxies will be voted in favor of
Proposal 2 to approve the amendments to the 2003 Stock Option and Incentive
Plan.
THE
BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE
AMENDMENTS TO THE 2003 STOCK OPTION AND INCENTIVE PLAN.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth information regarding beneficial ownership of each
class of our voting securities as of April 5, 2005, by (a) each person who is
known by us to own beneficially more than five percent of each of our
outstanding classes of voting securities, (b) each of our directors, (c) each of
the named executive officers and (d) all directors and executive officers as a
group.
Name
and Address of Beneficial
Owner |
|
Common Stock Beneficially Owned |
|
Percent (1) |
|
|
|
|
|
|
|
Christopher
L. Aguilar (2) |
|
285,576 |
|
|
* |
|
|
|
|
|
|
Patrick
Arbor (3) |
|
370,000 |
|
|
* |
|
|
|
|
|
|
Gregory
S. Curhan (4) |
|
4,219,999 |
|
5.7 |
% |
|
|
|
|
|
|
Robert
E. Ford (5) |
|
2,618,819 |
|
3.6 |
% |
|
|
|
|
|
|
Brock
Ganeles (6) |
|
1,276,250 |
|
1.8 |
% |
|
|
|
|
|
|
Anthony
B. Helfet (7) |
|
265,400 |
|
|
* |
|
|
|
|
|
|
John
D. Hiestand (8) |
|
316,280 |
|
|
* |
|
|
|
|
|
|
D.
Jonathan Merriman (9) |
|
10,138,803 |
|
13.0 |
% |
|
|
|
|
|
|
Raymond
J. Minehan (10) |
|
106,976 |
|
|
* |
|
|
|
|
|
|
Scott
Potter (11) |
|
41,510 |
|
|
* |
|
|
|
|
|
|
Dennis
G. Schmal (12) |
|
79,067 |
|
|
* |
|
|
|
|
|
|
Donald
H. Sledge (13) |
|
280,400 |
|
|
* |
|
|
|
|
|
|
Ronald
E. Spears (14) |
|
390,400 |
|
|
* |
|
|
|
|
|
|
Steven
W. Town (15) |
|
311,650 |
|
|
* |
|
|
|
|
|
|
All
directors and executive officers as a group 14 persons
(16) |
|
20,701,130 |
|
24.1 |
% |
|
|
|
|
|
|
LMS
Capital (Bermuda) Limited (17)
Clarendon
House
2
Church Street
Hamilton
HM 08
Bermuda |
|
6,000,001 |
|
8.4 |
% |
Highfields
Capital Management L.P. (18)
John
Hancock Tower
200
Clarendon Street
Boston,
Massachusetts 02116 |
|
6,624,906 |
|
9.1 |
% |
(1) |
|
Applicable
percentage ownership is based on 70,244,689 shares of common stock
outstanding as of April 5, 2005. Pursuant to the rules of the Securities
and Exchange Commission, shares shown as “beneficially” owned include all
shares of which the persons listed have the right to acquire beneficial
ownership within 60 days of April 5, 2005, including (a) shares subject to
options, warrants or any other rights exercisable within 60 days of April
5, 2005, even if these shares are not currently outstanding, (b) shares
attainable through conversion of other securities, even if these shares
are not currently outstanding, (c) shares that may be obtained under the
power to revoke a trust, discretionary account or similar arrangement and
(d) shares that may be obtained pursuant to the automatic termination of a
trust, discretionary account or similar arrangement. This information is
not necessarily indicative of beneficial ownership for any other purpose.
Our directors and executive officers have sole voting and investment power
over the shares of common stock held in their names, except as noted in
the following footnotes. |
(2) |
|
Includes
Mr. Aguilar’s currently exercisable option to purchase 100,000 shares of
common stock at $5.69 per share, an option to purchase 18,000 shares of
common stock at $2.19 per share, an option to purchase 20,000 shares of
common stock at $1.40 per share, an option to purchase 8,000 shares of
common stock at $0.30 and an option to purchase 12,500 shares of common
stock at $0.74, all of which are currently exercisable. Also includes Mr.
Aguilar’s 125,000 shares of restricted common
stock. |
(3) |
|
Includes
Mr. Arbor’s currently exercisable option to purchase 125,000 shares of
common stock at $0.41 per share. Also includes Mr. Arbor’s 80,400 shares
of restricted common stock received for his board of director services to
MCF Corporation. |
(4) |
|
Includes
Mr. Curhan’s currently exercisable option to purchase 925,000 shares of
common stock at $0.53 per share, and an option to purchase 3,100,000
shares of common stock at $0.47 per share, all of which are currently
exercisable. |
(5) |
|
Includes
Mr. Ford’s currently exercisable option to purchase 20,000 shares of
common stock at $1.40 per share, an option to purchase 150,000 shares of
common stock at $2.05 per share, an option to purchase 150,000 shares of
common stock at $4.00 per share, an option to purchase 300,000 shares of
common stock at $0.34 per share, an option to purchase 100,000 shares of
common stock at $0.34 per share, an option to purchase 12,500 shares of
common stock at $0.74 per share, an option to purchase 400,000 shares at
$0.37 per shares common stock, an option to purchase 270,270 shares of
common stock at $0.65 per share, an option to purchase 500,000 shares of
common stock at $0.47 per share, and an option to purchase 275,000 shares
of common stock at $1.65, all of which are currently exercisable. Also
includes Mr. Ford’s 225,000 shares of restricted
common. |
(6) |
|
Includes
Mr. Ganeles’ currently exercisable option to purchase 450,000 shares of
common stock at $0.24 per share. Also includes Mr. Ganeles’ 50,000 shares
of restricted common stock. |
(7) |
|
Includes
Mr. Helfet’s 60,400 shares of restricted common stock received for his
board of director services to MCF Corporation. Mr.
Helfet holds no options or warrants. |
(8) |
|
Includes
Mr. Hiestand’s currently exercisable option to purchase 41,666 shares of
common stock at $0.53 per share, an option to purchase 17,708 shares of
common stock at $0.21 per share, and an option to purchase 25,000 shares
of common stock at $0.30 per share, all of which are currently
exercisable. Also includes Mr. Hiestand’s 160,00 shares of restricted
common stock. |
(9) |
|
Includes
Mr. Merriman’s currently exercisable option to purchase 100,000 shares of
common stock at $7.00 per share, an option to purchase 1,468,653 shares of
common stock at $3.19 per share, an option to purchase 30,000 shares of
common stock at $0.74 per share, an option to purchase 1,387,500 shares of
common stock at $0.41 per share, and an option to purchase 5,000,000
shares of common stock at $0.47 per share, all of which are currently
exercisable.. |
(10) |
|
Mr.
Minehan received 20,000 shares of restricted common stock for his board of
director services to MCF Corporation in 2004, of which 100% were eligible
to have the restriction lifted. He received 20,400 shares of restricted
common stock for his board of director services to MCF Corporation in
2005, of which 25% were eligible to have the restriction lifted. Mr.
Minehan holds no options or warrants. |
(11) |
|
Includes
Mr. Potter’s 38,510 shares of restricted common stock received for his
board of director services to MCF Corporation. Mr. Potter holds no options
or warrants.. |
(12) |
|
Includes
Mr. Schmal’s 67,067 shares of restricted common stock received for his
board of director services to MCF Corporation. Mr. Schmal holds no options
or warrants.. |
(13) |
|
Includes
Mr. Sledge’s currently exercisable option to purchase 140,000 shares of
common stock at $0.41 per share. He holds a warrant to purchase 100,000
shares of common stock at $0.21 per share. Also includes Mr. Sledge’s
40,400 shares of restricted common stock received for his board of
director services to MCF Corporation. |
(14) |
|
Includes
Mr. Spears’ currently exercisable option to purchase 100,000 shares of
common stock at $7.00 per share, and an option to purchase 200,000 shares
of common stock at $0.41 per share, all of which are currently
exercisable. Also includes Mr. Spears’ 80,400 shares of restricted common
stock received for his board of director services to MCF
Corporation. |
(15) |
|
Includes
Mr. Town’s currently exercisable option to purchase 100,000 shares of
common stock at $1.56 per share, and an option to purchase 115,000 shares
of common stock at $0.41 per share, all of which are currently
exercisable. Also includes Mr. Town’s 80,400 shares of restricted common
stock received for his board of director services to MCF
Corporation. |
(16) |
|
The
total for directors and executive officers as a group includes 15,661,797
shares subject to outstanding stock options that are currently exercisable
and 100,000 shares subject to outstanding warrants that are currently
exercisable. |
(17) |
|
Includes
a currently exercisable warrant to purchase 1,384,616 shares of common
stock at $1.48 per share. |
(18) |
|
According
to the Schedule 13G dated December 31, 2004, Highfields Capital
Management, L.P. is the investment manager to each of three limited
partnerships; Highfields Capital I, L.P., Highfields Capital II, L.P. and
Highfields Capital, Ltd. The three limited partnerships directly own
6,624,906 shares of common stock. These funds also own, in the aggregate,
warrants to purchase 1,250,000 shares of common stock at $0.30 per share
which are not currently exercisable according to their terms. These funds
also hold convertible promissory notes, due April 30, 2008, with an
aggregate principle amount of $1,000,000 and convertible into shares of
common stock at $0.20. These convertible promissory notes are not
currently convertible according to their terms. According to their terms
the warrants and promissory notes may not be exercised if Highfields
Capital Management, L.P. would own 10% or more of the Company at the time
of exercise or conversion. Highfields GP, LLC, the general partner of
Highfields Capital Management, L.P., Jonathon S. Jacobson, a managing
member of Highfields GP and Richard L. Grubman, a managing member of
Highfields GP are each members of a voting group that have voting power
over the shares. Highfields Capital, Ltd., a Cayman Islands, B.W.I., has
voting power over 4,637,434 of the shares. The securities were acquired
from the Company as part of a private placement closed on April 3,
2003. |
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Securities Exchange Act of 1934 required the Company’s directors
and executive officers to file reports with the SEC on Forms 3, 4 and 5 for the
purpose of reporting their ownership of and transactions in the Company’s equity
securities. During 2004, Brock Ganeles filed one report on Form 4 late. Scott
Potter filed one report on Form 4 late. Robert E. Ford filed one report on Form
4 late. D. Jonathan Merriman filed two reports on Form 4 late.
INDEPENDENT
PUBLIC ACCOUNTANTS
Ernst
& Young, LLP served as the Company’s independent public accountants for the
fiscal years ended December 31, 2004 and 2003 and are serving in such capacity
for the current fiscal year. Ernst & Young was first engaged to serve as our
auditors for the fiscal year ended December 31, 2002. Representatives of
Ernst & Young are expected to be available at the Annual Meeting. Such
representatives will have an opportunity to make a statement if they so desire
and will be available to respond to appropriate questions.
The
aggregate fees billed by Ernst & Young LLP for professional services to the
Company were $407,800 in 2004 and $262,500 in 2003.
Audit
Fees. The
aggregate fees billed by Ernst & Young for professional services rendered
for the audit of the Company’s annual financial statements, the review of the
Company’s quarterly financial statements and services that are normally provided
in connection with statutory and regulatory filings or engagements was
approximately $181,500 in 2004 and $177,900 in 2003.
Audit
Related Fees. The
aggregate fees billed by Ernst & Young LLP for professional assurance and
related services reasonably related to the performance of the audit of the
Company’s financial statements, but not included under Audit Fees, resulted from
compliance related services performed in connection with Section 404 of the
Sarbanes-Oxley Act of 2002. The aggregate fees were $200,000 in 2004 and $0 in
2003.
Tax
Fees. The
aggregate fees billed by Ernst & Young LLP for professional services for tax
compliance, tax advice and tax planning were $60,100 in 2004 and $84,600 in
2003. These fees primarily related to consultation for the preparation of the
Company’s Federal, state and local tax returns. These fees also related to
assisting the Company with analyzing shifts in the ownership of the Company’s
stock for purposes of determining the application of Section 382 of the Internal
Revenue Code to the Company.
All
Other Fees. The
aggregate fees for all other services rendered by Ernst & Young LLP were
$1,500 in 2004 and $0 in
2003. The 2004 amount represented a subscription to an online accounting and
auditing information database provided by Ernst & Young LLP.
The Audit
Committee has formal policies and procedures in place with regard to the
approval of all professional services provided to the Company by Ernst &
Young LLP. With regard to audit fees, the Audit Committee reviews the annual
audit plan and approves the estimated annual audit budget in advance. With
regard to tax services, the Audit Committee reviews the description and
estimated annual budget for tax services to be provided by Ernst & Young LLP
in advance. During 2004, Audit Committee approved all of the independent public
accountants’ fees in advance.
STOCKHOLDER
PROPOSALS FOR 2006 ANNUAL MEETING
If you
wish to submit proposals to be included in MCF Corporation’s 2006 proxy
statement, we must receive them on or before December 7, 2005. Please address
your proposals to the Corporate Secretary.
If you
wish to raise a matter before the stockholders at the year 2006 annual meeting,
you must notify the Secretary in writing by not later than February 20, 2006.
Please note that this requirement relates only to matters you wish to bring
before your fellow stockholders at the annual meeting. It is separate from the
SEC’s requirements to have your proposal included in next year’s proxy
statement.
ANNUAL
REPORT ON FORM 10-K
Our 2004
Annual Report to Stockholders was prepared on an integrated basis with our
Annual Report on Form 10-K for the year ended December 31, 2004, and accompanies
this proxy statement.
Stockholders may obtain a copy of the exhibits to the Company’s Form 10-K for
the year ended December 31, 2004 upon payment of a reasonable fee by writing to
MCF Corporation, 600 California Street, 9th
Floor, San Francisco, California 94108, Attention: Corporate
Secretary.
|
By Order of the Board of
Directors |
|
|
|
Christopher
L. Aguilar Secretary |
MCF
CORPORATION
ANNUAL
MEETING OF STOCKHOLDERS TO BE HELD MAY 6, 2005
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The
undersigned hereby appoints D. Jonathan Merriman and Robert E. Ford and each of
them, as proxies, with full power of substitution, and hereby authorizes them to
represent and vote, as designated on the reverse, all shares of common stock of
MCF Corporation, a Delaware corporation, held of record by the undersigned, on
April 5, 2005, at the 2005 annual meeting of stockholders to be held on Friday,
May 6, 2004, at 1:30 p.m., Pacific Standard Time, at Merriman Curhan Ford &
Co., headquarters, 600 California Street, 9th Floor, San Francisco, California
94108, or at any adjournment or postponement thereof, upon the matters set forth
on the reverse, all in accordance with and as more fully described in the
accompanying Notice of Annual Meeting of Stockholders and Proxy Statement,
receipt of which is hereby acknowledged.
1. To
elect nine directors.
` FOR all
nominees listed (except as marked to the contrary below) ` WITHHOLD AUTHORITY to
vote for all nominees listed
Nominees:
D. Jonathan Merriman, Patrick Arbor, Donald H. Sledge, Ronald Spears, Steven W.
Town, Raymond Minehan, Dennis Schmal, Anthony B. Helfet and Scott
Potter
(INSTRUCTION:
To withhold authority to vote for any individual nominee, write that nominee’s
name on the space provided below:
2. To
approve the amendment to the 2003 Stock Option and Incentive Plan.
For [
] Against [ ] Abstain [ ]
3. In
their discretion, the proxies are authorized to vote upon such other business as
may properly come before the annual meeting or any adjournment or postponement
thereof.
(CONTINUED
ON OTHER SIDE)
(CONTINUED
FROM OTHER SIDE)
THIS
PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
“FOR” THE ELECTION OF THE BOARD OF DIRECTORS’ NINE NOMINEES NAMED ON THE
REVERSE. PLEASE COMPLETE, SIGN AND DATE THIS PROXY WHERE INDICATED AND RETURN
PROMPTLY IN THE ACCOMPANYING PREPAID ENVELOPE.
Signature
Date:
Signature
Date:
Note:
Please sign above exactly as the shares are issued. When shares are held by
joint tenants, both should sign. When signing as an attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or other authorized
officer. If a partnership, please sign in partnership name by authorized
person.
PLEASE
MARK, SIGN, DATE AND RETURN THIS PROXY CARD IN THE ENCLOSED
ENVELOPE.