SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
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¨
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Filed
by a Party other than the
Registrant
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Check the
appropriate box:
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x
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Preliminary
Proxy Statement
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¨
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Confidential,
for use by Commission Only (as permitted by Rule
14a-6(e)(2))
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¨
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Definitive
Proxy Statement
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¨
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Definitive
Additional Materials
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¨
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Soliciting
Material Pursuant to §240.14a-12
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DAIS
ANALYTIC CORPORATION
(Name
of Registrant As Specified in its Charter)
N/A
(Name
of Persons Filing Proxy Statement, if other than Registrant)
Payment
of Filing Fee (Check the appropriate box):
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¨
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
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1)
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Title
of each class of securities to which transaction
applies:
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2)
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Aggregate
number of securities to which transaction
applies:
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3)
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Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11: Set
forth the amount on which the filing fee is calculated and state how it
was determined.
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4)
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Proposed
maximum aggregate value of
transaction:
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¨ 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 date of its filing.
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1) Amount
Previously Paid:
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2) Form,
Schedule or Registration Statement No.:
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DAIS
ANALYTIC CORPORATION
11552
Prosperous Drive
Odessa,
Florida 33556
October
____, 2009
Dear
Fellow Shareholder:
The 2009 Annual Meeting of Shareholders
(the “Annual Meeting”) of Dais Analytic Corporation (the “Company” or “Dais”)
will be held at 10:00 a.m. on Thursday, November 5, 2009 at the offices of the
Company located at 11552 Prosperous Drive, Odessa Florida,
33556. Enclosed you will find a formal Notice of Annual Meeting,
Proxy Card and Proxy Statement, detailing the matters which will be acted
upon. Directors and officers of the Company will be present to help
host the meeting and to respond to any questions from our
shareholders. I hope you will be able to attend.
Please sign, date and return the
enclosed Proxy Card without delay in the enclosed envelope. If you
attend the Annual Meeting, you may vote in person, even if you have previously
mailed a Proxy, by withdrawing your Proxy and voting at the
meeting. Any shareholder giving a Proxy may revoke the same at any
time prior to the voting of such Proxy by giving written notice of revocation to
the Company, by submitting a later dated Proxy or by attending the Annual
Meeting and voting in person. The Company’s Annual Report on Form
10-K (including audited financial statements) for the fiscal year ended December
31, 2008 accompanies the Proxy Statement. All shares represented by
Proxies will be voted at the Annual Meeting in accordance with the
specifications marked thereon, or if no specifications are made, (a) as to
Proposal 1, the Proxy confers authority to vote “FOR” all of the three (3)
persons listed as candidates for a position on the Board of Directors to serve
until the 2010 Annual Meeting or until their successors have been duly elected
or appointed and qualified, (b) as to Proposal 2, the Proxy confers authority to
vote “FOR” amending the Company’s Certificate of Incorporation to increase the
amount of the Company’s authorized shares from 110,000,000 comprised of
100,000,000 shares of common stock, par value $.01 per share (the “Common
Stock”) and 10,000,000 shares of preferred stock to 210,000,000 shares,
comprised of 200,000,000 shares of Common Stock and 10,000,000 shares of
preferred stock, (c) as to Proposal 3, the Proxy confers authority to vote “FOR”
adoption of our 2009 Long-Term Incentive Plan, (d) as to Proposal 4, the Proxy
confers authority to vote “FOR” the ratification and approval of (i) a five-year
warrant to purchase 3,000,000 shares of Common Stock previously issued to
Timothy N. Tangredi, the Company’s President, Chief Executive Officer and
Chairman of the Board and (ii) a five-year warrant to purchase 250,000 shares of
Common Stock previously issued to Scott Ehrenberg, the Company’s Chief
Technology Officer and Secretary, and (e) as to any other business which comes
before the Annual Meeting, the Proxy confers authority to vote in the Proxy
holder’s discretion.
The Company’s Board of Directors
believes that a favorable vote for the re-election of each candidate for a
position on the Board of Directors, for the amendment to the Certificate of
Incorporation, for the adoption of the Company’s 2009 Long-Term Incentive Plan,
for the ratification and approval of previous issued warrants to Mr. Tangredi
and Mr. Ehrenberg, and for all other matters described in the attached Notice of
Annual Meeting and Proxy Statement is in the best interest of the Company and
its shareholders and recommends a vote “FOR” all candidates and all other
matters. Accordingly, we urge you to review the accompanying material
carefully and to return the enclosed Proxy Card promptly.
Thank you for your investment and
continued interest in Dais Analytic Corporation.
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Sincerely,
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Timothy
N. Tangredi
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President,
Chief Executive Officer and
Chairman
of the Board
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DAIS
ANALYTIC CORPORATION
11552
PROSPEROUS DRIVE
ODESSA,
FLORIDA 33556
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
TO
BE HELD THURSDAY, NOVEMBER 5, 2009
_____________________
To our
Shareholders:
Notice is
hereby given that the 2009 Annual Meeting (the “Annual Meeting”) of Shareholders
of Dais Analytic Corporation (the “Company” or “Dais”), a New York corporation,
will be held at our principal office at 11552 Prosperous Drive, Odessa Florida
33556, on Thursday, November 5,, 2009 at 10:00 a.m., for the following
purposes:
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1.
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To
elect three Directors to the Board of Directors to serve until the 2010
Annual Meeting of Shareholders or until their successors have been duly
elected or appointed and qualified (“Proposal
1”);
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2.
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To
amend the Company’s Certificate of Incorporation to increase the amount of
the Company’s authorized shares from 110,000,000 comprised of 100,000,000
shares of common stock, par value $.01 per share (the “Common Stock”) and
10,000,000 shares of preferred stock to 210,000,000 shares, comprised of
200,000,000 shares of Common Stock and 10,000,000 shares of preferred
stock (“Proposal 2”);
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3.
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To
adopt the Company’s 2009 Long-Term Incentive Plan (“Proposal
3”);
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4.
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To
ratify and approve (i) a five-year warrant to purchase 3,000,000 shares of
Common Stock previously issued to Timothy N. Tangredi, the Company’s
President, Chief Executive Officer and Chairman of the Board and (ii) a
five-year warrant to purchase 250,000 shares of Common Stock previously
issued to Scott Ehrenberg, the Company’s Chief Technology Officer and
Secretary (“Proposal 4”); and
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5.
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To
consider and take action upon such other business as may properly come
before the Annual Meeting or any adjournments
thereof.
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The Board
of Directors has fixed the close of business on September 25, 2009, as the
record date (the “Record Date”) for determining the shareholders entitled to
notice of, and to vote at, the Annual Meeting or any adjournments
thereof.
For a
period of 10 days prior to the Annual Meeting, a shareholders list will be kept
at the Company’s office and shall be available for inspection by shareholders
during usual business hours. A shareholders list will also be
available for inspection at the Annual Meeting.
This
Proxy Statement, the accompanying Notice of Annual Meeting of Shareholders and
the Proxy Card will be first sent to shareholders on or about
October 5, 2009.
Your
attention is directed to the accompanying Proxy Statement for further
information regarding each proposal to be made.
SHAREHOLDERS
UNABLE TO ATTEND THE MEETING IN PERSON ARE URGED TO COMPLETE, DATE AND SIGN THE
ACCOMPANYING PROXY CARD AND MAIL IT IN THE ENCLOSED STAMPED, SELF-ADDRESSED
ENVELOPE AS PROMPTLY AS POSSIBLE. IF YOU SIGN AND RETURN YOUR PROXY
WITHOUT SPECIFYING YOUR CHOICES IT WILL BE UNDERSTOOD THAT YOU WISH TO HAVE YOUR
SHARES VOTED IN ACCORDANCE WITH THE DIRECTORS’ RECOMMENDATIONS. IF
YOU ATTEND THE ANNUAL MEETING, YOU MAY, IF YOU DESIRE, REVOKE YOUR PROXY AND
VOTE IN PERSON.
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By
order of the Board of Directors
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October
_____, 2009
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Timothy
N. Tangredi
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President,
Chief Executive Officer and Chairman of the
Board
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DAIS
ANALYTIC CORPORATION
TABLE
OF CONTENTS
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Page
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INTRODUCTION
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PROPOSAL
1. ELECTION OF DIRECTORS
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12 |
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PROPOSAL
2. APPROVAL OF AN AMENDMENT TO THE CERTIFICATE OF
INCORPORATION
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17 |
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PROPOSAL
3. APPROVAL AND ADOPTION OF THE 2009 LONG-TERM INCENTIVE
PLAN
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19 |
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PROPOSAL
4. RATIFICATION AND APPROVAL OF WARRANTS ISSUED TO
TIMOTHY N. TANGREDI AND SCOTT G. EHRENBERG
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29 |
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OTHER
INFORMATION
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32 |
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Beneficial
Ownership of Principal Shareholders, Officers and
Directors
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32 |
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Section
16(a) Beneficial Ownership Reporting Compliance
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35 |
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Compensation
of Directors and Executive Officers
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35 |
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Related
Party Transactions
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42 |
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Proxy
Solicitation
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43 |
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Proxies
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43 |
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Changes
in Registrant’s Certifying Accountant
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43 |
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Relationship
With Independent Public Accountants
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44 |
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Shareholder
Communications
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45 |
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Submission
of Shareholder Proposals for 2010 Annual Meeting of
Shareholders
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45 |
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Other
Business
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45 |
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Incorporation
by Reference of Other Information in This Proxy Statement
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46 |
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Additional
Information
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46 |
DAIS
ANALYTIC CORPORATION
11552
Prosperous Drive
Odessa,
Florida 33556
PROXY
STATEMENT
ANNUAL
MEETING OF SHAREHOLDERS
November
5, 2009
This
Proxy is being furnished in connection with the solicitation of proxies by the
Board of Directors (the “Board of Directors” or “Board”) of Dais Analytic
Corporation (the “Company” or “Dais”) for use at the Annual Meeting of the
Shareholders of the Company (the “Annual Meeting”) to be held at 10:00 a.m.
(Easter Standard Time) on Thursday, November 5, 2009 at the offices of the
Company located at 11552 Prosperous Drive, Odessa, Florida 33556, and at any
adjournment or postponements thereof.
INFORMATION
ABOUT THE ANNUAL MEETING
When
is the Annual Meeting?
November
5, 2009, 10:00 a.m. (local time).
Where
will the Annual Meeting be held?
The
annual meeting will be held at the office of the Company located at 11552
Prosperous Drive, Odessa, Florida 33556.
What
is being considered at the meeting?
At the
Meeting, Shareholders will consider and vote on the following
proposals:
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1.
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To
elect three Directors to the Board of Directors to serve until the 2010
Annual Meeting of Shareholders or until their successors have been duly
elected or appointed and qualified;
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2.
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To
adopt an amendment to the Company’s Certificate of Incorporation to
increase the amount of the Company’s authorized shares from 110,000,000
comprised of 100,000,000 shares of common stock, par value $.01 per share
(the “Common Stock”) and 10,000,000 shares of preferred stock to
210,000,000 shares, comprised of 200,000,000 shares of Common Stock and
10,000,000 shares of preferred
stock;
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3.
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To
adopt the Company’s 2009 Long-Term Incentive
Plan;
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4.
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To
ratify and approve (i) a five-year warrant to purchase 3,000,000 shares of
Common Stock previously issued to Timothy N. Tangredi, the Company’s
President, Chief Executive Officer and Chairman of the Board and (ii) a
five-year warrant to purchase 250,000 shares of Common Stock previously
issued to Scott Ehrenberg, the Company’s Chief Technology Officer and
Secretary.
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5.
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To
transact such other business as may properly come before the meeting or
any adjournment or postponements
thereof.
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In
addition, our management will report on our progress and respond to your
questions.
Who
is entitled to vote at the meeting?
You may
vote at the Annual Meeting if you owned Common Stock as of the close of business
on Record Date which is September 25, 2009. Each share of Common Stock is
entitled to one vote.
YOUR
BOARD OF DIRECTORS HAS APPROVED EACH OF THE PROPOSALS SET FORTH
HEREIN.
ACCORDINGLY,
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF THE THREE DIRECTORS, THE
ADOPTION OF THE AMENDMENT TO THE CERTIFICATE OF INCORPORATION, THE ADOPTION OF
THE 2009 LONG-TERM INCENTIVE PLAN, AND RATIFICATION AND APPROVAL OF THE
PREVIOUSLY ISSUED WARRANTS TO MR. TANGREDI AND MR. EHRENBERG.
How
do I vote?
You can
vote in two ways:
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by
attending the Annual Meeting at 10:00 a.m. (Easter Standard Time) on
Thursday, November 5, 2009 at the offices of the Company located at 11552
Prosperous Drive, Odessa, Florida 33556, and at any adjournment or
postponements thereof and voting thereat; or
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by
completing, signing, dating and returning the enclosed Proxy
Card.
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What
if I return my Proxy Card but do not include voting instructions?
Proxies
that are signed and returned but do not include voting instructions will be
voted FOR the election
of the three candidates as directors, FOR the authorization and
approval of the amendment to the Certificate of Incorporation, FOR the adoption of the 2009
Long-Term Incentive Plan and FOR the ratification and
approval of the previously issued warrants to Mr. Tangredi and Mr.
Ehrenberg.
What
does it mean if I receive more than one Proxy Card?
It means
you may have multiple accounts with brokers and/or our transfer agent. Please
vote all of these shares of Common Stock. We recommend that you contact your
broker and/or our transfer agent to consolidate as many accounts as possible
under the same name and address. Our transfer agent is Island Stock Transfer
located at 100 Second Avenue South, Suite 104N St. Petersburg, Florida 33701,
telephone (727) 289-0010.
Will
my shares be voted if I do not provide my Proxy?
If you
hold your shares directly in your own name, they will not be voted if you do not
provide a Proxy.
Your
shares may be voted under certain circumstances if they are held in the name of
a brokerage firm. Brokerage firms generally have the authority to vote
customers’ un-voted shares on certain “routine” matters, including the election
of directors. Neither the adoption of the amendment to the Certificate of
Incorporation, adoption of the 2009 Long-Term Incentive Plan, nor approval of
the previously issued warrants to Mr. Tangredi and Mr. Ehernberg are considered
“routine” matters. When a brokerage firm votes its customers’ un-voted shares,
these shares are counted for purposes of establishing a quorum. At
our Annual Meeting these shares will be counted as voted by the brokerage firm
in the election of directors.
How
do I vote if I hold shares registered in the name of a broker or
bank?
If, on
Record Date which is September 25, 2009, your shares were not held in
your name, but rather were held in an account at a brokerage firm, bank, dealer,
or other similar organization, then you are the beneficial owner of shares held
in “street name” and a Notice of Proxy Materials was forwarded to you by that
organization. The organization holding your account is considered to be the
shareholder of record for purposes of voting at the Annual Meeting. As a
beneficial owner, you have the right to direct your broker or other agent
regarding how to vote the shares held in your account. You are also invited to
attend the Annual Meeting. However, since you are not the shareholder of record,
you may not vote your shares in person at the meeting unless you request and
obtain a valid proxy from your broker or other agent and bring such proxy to the
annual meeting. If you want to attend the Annual Meeting, and vote at the Annual
Meeting, you must provide proof of beneficial ownership as of the Record Date,
such as your most recent account statement showing ownership as of September 25,
2009, a copy of the voting instruction card provided by your broker or other
agent, or other similar evidence of ownership. Whether or not you plan to attend
the Annual Meeting, we urge you to vote by proxy in advance of the Annual
Meeting to ensure your vote is counted.
Can
I change my mind after I return my Proxy?
Yes. You
may change your vote at any time before your Proxy is voted at the Annual
Meeting. If you are a shareholder of record, you can do this by giving written
notice to your respective corporate secretary, by submitting another Proxy with
a later date, or by attending the Annual Meeting and voting in person. If you
are a shareholder in “street” or “nominee” name, you should consult with the
bank, broker or other nominee regarding that entity’s procedures for revoking
your voting instructions.
How
many shares are eligible to be voted at the Annual Meeting?
The
record date for the Annual Meeting is September
25, 2009. Only shareholders of record at the close of
business on September 25, 2009, will be entitled to vote at the
Annual Meeting. At the close of business on that date, there were
issued and outstanding 19,655,513 shares of the Company’s Common Stock entitled
to one vote per share.
How
many votes must be present to hold the meeting?
Your
shares are counted as present at the meeting if you attend the meeting and vote
in person or if you properly return a Proxy by mail. In order for us to conduct
our meeting, a majority of our outstanding shares of Common Stock as of
September 25, 2009 must be present in person or by proxy at the meeting. This is
referred to as a quorum. On September 25, 2009, there were
19,655,513 shares of Common Stock outstanding and entitled to vote.
If a quorum is not present, then either the chairman of the meeting or the
shareholders entitled to vote at the meeting may adjourn the meeting until a
later time. Abstentions and broker “non-votes” are counted as present or
represented for purposes of determining the presence or absence of a quorum. A
broker “non-vote” occurs when a broker holding shares for a beneficial owner
votes on one proposal, but does not vote on another proposal because, in respect
of such other proposal, the broker does not have discretionary voting power and
has not received instructions from the beneficial owner.
What
vote is required to elect directors?
Directors
are elected by a plurality of the votes cast. Abstentions and broker “non-votes”
(shares held by brokers or nominees as to which they have no discretionary
authority to vote on a particular matter and have received no instructions from
the beneficial owners or persons entitled to vote thereon) will have no effect
on the vote for election of directors.
What
vote is required to adopt the amendment to the Certificate of
Incorporation?
The
adoption of the amendment to the Certificate of Incorporation will require the
affirmative vote of at least a majority of the Company’s outstanding shares of
Common Stock. Thus, any abstentions, “broker non-votes”, or other limited
proxies will have the effect of a vote against the amendment to the Company’s
Articles of Incorporation.
What
vote is required to adopt the 2009 Long-Term Incentive Plan?
The
adoption of the 2009 Long-Term Incentive Plan will require an affirmative vote
of the majority of the votes cast in person or by proxy, provided that a quorum
is present at the Meeting. Only proxies indicating votes “FOR,” “AGAINST” or
“ABSTAIN” on this proposal or providing the designated proxies with the right to
vote in their judgment and discretion on this proposal are counted to determine
the number of shares present and entitled to vote. Broker non-votes
and abstentions will have no effect on the results of the vote on this
proposal.
What
vote is required to approve the previously issued warrants to Mr. Tangredi and
Mr. Ehrenberg?
The
approval of previously issued warrants to Mr. Tangredi and Mr. Ehrenberg will
require an affirmative vote of the majority of the votes cast in person or by
proxy, provided that a quorum is present at the Meeting. Only proxies indicating
votes “FOR,” “AGAINST” or “ABSTAIN” on this proposal or providing the designated
proxies with the right to vote in their judgment and discretion on this proposal
are counted to determine the number of shares present and entitled to
vote. Broker non-votes and abstentions will have no effect on the
results of the vote on this proposal.
How
will voting on any other business be conducted?
Although
we do not know of any business to be conducted at the Annual Meeting other than
the proposal described in this Proxy Statement, if any other business comes
before the Annual Meeting, your signed Proxy Card gives authority to the Proxy
holders to vote on those matters at their discretion.
Who
will bear the costs of this solicitation?
We will
bear the entire cost of solicitation of proxies, including preparation,
assembly, printing and mailing of this Proxy Statement, the Proxy Card and any
additional information furnished to shareholders. Copies of solicitation
materials will be furnished to banks, brokerage houses, fiduciaries and
custodians holding in their names shares of Common Stock beneficially owned by
others to forward to the beneficial owners. We may reimburse persons
representing beneficial owners of Common Stock for their costs of forwarding
solicitation materials to the beneficial owners. Original solicitation of
proxies by mail may be supplemented by telephone, facsimile or personal
solicitation by our directors, officers or other regular employees.
How
can I find out the results of the voting at the Annual Meeting?
Preliminary
voting results will be announced at the Annual Meeting. Final voting results
will be published in our quarterly report or on a Current Report on Form
8-K.
When
are shareholder proposals for the 2010 Annual Meeting due?
Any
shareholder proposals for the 2010 annual meeting must be received by us,
directed to the attention of the Company’s President, Mr. Timothy Tangredi, Dais
Analytic Corporation, 11552 Prosperous Drive, Odessa, Florida 33556 no later
than July 5, 2010. The use of certified mail, return receipt requested, is
advised. To be eligible for inclusion, a proposal must comply with our Bylaws,
Rule 14a-8 and all other applicable provisions of Regulation 14A under the
Securities Exchange Act of 1934.
PROPOSAL
1
ELECTION
OF DIRECTORS
At the
Annual Meeting, three individuals will be elected to serve as directors until
the next annual meeting or until their successors are duly elected, appointed
and qualified. The Company’s Board of Directors currently consists of three
persons. The three individuals who are nominated for election to the Board of
Directors are existing directors of the Company. Unless a shareholder WITHHOLDS
AUTHORITY, a properly signed and dated Proxy will be voted “FOR ALL” of the
three persons named below to serve as dreictors, unless the Proxy contains
contrary instructions. Management has no reason to believe that any of the
nominees will not be a candidate or will be unable to serve as a director.
However, in the event any nominee is not a candidate or is unable or unwilling
to serve as a director at the time of the election, unless the shareholder
WITHHOLDS AUTHORITY from voting, the proxies will be voted “FOR” any nominee who
shall be designated by the present Board of Directors to fill such
vacancy.
The three
current Directors to be considered for re-election are Timothy N. Tangredi,
Raymond Kazyaka Sr. and Robert W. Schwartz.
Our
Directors will generally serve one-year terms and shall hold office until the
2010 annual meeting of shareholders and until his successor has been duly
elected, appointed and qualified. If all the nominees are elected, the Board of
Directors will consist of three Directors.
Unless
Proxy Cards are otherwise marked, the persons named as proxies will vote all
proxies received FOR the election of each nominee named in this
section.
Our
Certificate of Incorporation, as amended, allows directors to be elected by a
plurality of the shares represented in person or by proxy at any such meeting
and entitled to vote on the election of directors.
At each
annual meeting of shareholders, directors will be elected by the holders of
Common Stock to succeed those directors whose terms are expiring. Directors will
be elected annually and will serve until successors are duly elected and
qualified or until a director’s earlier death, resignation or removal. Our
bylaws provide that the authorized number of directors may be changed by action
of the majority of the Board of Directors or by a vote of the shareholders of
our Company. Vacancies in our Board of Directors may be filled by a majority
vote of the Board of Directors with such newly appointed director to serve until
the next annual meeting of shareholders, unless sooner removed or
replaced.
The
following table sets forth certain information concerning each nominee for
election as a Director of the Company:
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Name
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Age
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Position
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Director
Since
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Timothy
N. Tangredi
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53
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President,
Chief Executive Officer and Chairman of the Board of
Directors
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1997
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Robert
W. Schwartz
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65
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Director
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2001
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Raymond
Kazyaka Sr.
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78
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Director
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1995
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Background
The
following is a brief summary of the background of each nominee for Director of
the Company:
Timothy N. Tangredi has
been our Chief Executive Officer since 1996. Mr. Tangredi joined the Company in
1996, and was appointed a member of our Board of Directors in
1997. In 1999 and 2000, respectively, Mr. Tangredi initiated and
executed the strategic purchases of Analytic Power and American Fuel Cell
Corporation. From 1979 to 1990, Mr. Tangredi worked for AT&T, as
a member of the Leadership Continuity Program working in technical marketing,
network operations, and project management. Mr. Tangredi earned his BS from
Siena College and MBA from Rensselaer Polytechnic Institute. He
is a founder and member of the board of directors of Aegis BioSciences, LLC
(“Aegis”). Aegis, created in 1995, is a licensee of the Company’s
nano-structured intellectual property and materials in the biomedical and
healthcare fields. Mr. Tangredi spends approximately one to two days per month
on Aegis business and is compensated by Aegis for his time and
contribution(s).
Robert W. Schwartz was
appointed to our Board of Directors in 2001. Mr. Schwartz founded the
Schwartz-Heslin Group (“SHG”) in 1985 and serves as one of its Managing
Directors. Mr. Schwartz specializes in corporate planning, finance and
development. Prior to starting SHG, he was a founder, President and Chief
Executive Officer of a venture-funded high tech telecommunications company
(Windsource, Inc.). In addition, he was the President and Chief Operating
Officer of an American Stock Exchange listed company (Coradian Corporation). He
was also the Chief Financial Officer of a major manufacturer of outdoor power
equipment (Troy Built Products, Troy, NY). His earlier experience was
with KPMG as a management consultant and with IBM. Mr. Schwartz received a
Bachelor of Science from Cornell University in 1967 and attended graduate
studies in business at the University of New York Albany.
Raymond Kazyaka Sr. was
appointed to our Board of Directors in 1995. Mr. Kazyaka is the
former President (1976-2006) and a co-founder of Wright Malta Corporation, which
was founded in 1972. Wright Malta, liquidated in 2005, owned and
operated the Malta Test Station, which had performed military product
development for various governmental and commercial
organizations. Mr. Kazyaka has also served as a consultant to the
Canadian National Defense on facility noise abatement. Prior to
founding Wright Malta, Mr. Kazyaka worked for General Electric as a rocket
engine design engineer and a manager. Mr. Kazyaka holds several
patents on rocket engine components and noise abatement systems, and is a senior
member of the American Institute of Aeronautics and Astronautics. Mr.
Kazyaka graduated from Union College with a degree in Mechanical
Engineering in 1953.
Involvement in Certain Legal
Proceedings
None of
our directors has been, during the past five years:
(i) involved
in any bankruptcy petition filed by or against such person or any business of
which such person was a general partner or executive officer, either at the time
of the bankruptcy or within two years prior to that time;
(ii) convicted
of any criminal proceeding or subject to a pending criminal proceeding
(excluding traffic violations and other minor offences);
(iii) subject
to any order, judgment, or decree, not subsequently reversed, suspended or
vacated, of any court of competent jurisdiction, permanently or temporarily
enjoined, barred, suspended or otherwise limited from involvement in any type of
business, securities, futures, commodities or banking activities;
or
(iv)
found by a court of competent jurisdiction (in a civil action), the Securities
and Exchange Commission or the Commodity Futures Trading Commission to have
violated a federal or state securities or commodities law, and the judgment has
not been reversed, suspended, or vacated
Corporate
Governance
As the
Over-the-Counter Bulletin Board, on which the Company’s shares of Common Stock
are quoted, has no independence requirements, the Company has adopted the
independence definitions and requirements of NASDAQ. The discussion below
reflects such standards of independence.
Director
Independence
Our Board
of Directors has determined that it currently has two members who
qualify as “independent” as the term is used in Item 407 of Regulation S-K as
promulgated by the SEC and as that term is defined under NASDAQ Rule
4200(a)(15). The independent directors are Raymond Kazyaka Sr. and Robert W.
Schwartz.
Board
Meetings and Committees; Annual Meeting Attendance
Our Board
of Directors has not adopted any committees to the Board of Directors. Our Board
of Directors held eight formal meeting during the most recently completed fiscal
year. Other proceedings of the Board of Directors were conducted by resolutions
consented to in writing by all the directors and filed with the minutes of the
proceedings of the directors. Such resolutions consented to in writing by the
directors entitled to vote on that resolution at a meeting of the directors are,
according to the corporate laws of the State of New York and our bylaws, as
valid and effective as if they had been passed at a meeting of the directors
duly called and held.
We
currently do not have a policy regarding the attendance of board members at the
annual meeting of shareholders.
Audit
Committee
Due to
the size and structure of the Company and its Board, the Board does not have a
standing Audit Committee, and as a result does not have an audit committee
charter. The functions that would be performed by the audit committee are
performed by the entire Board. The Board views its duties as an audit committee
as follows: (i) review recommendations of independent registered
accountants concerning the Company’s accounting principles, internal controls
and accounting procedures and practices; (ii) review the scope of the
annual audit; (iii) approve or disapprove each professional service or type
of service other than standard auditing services to be provided by the
registered public accountants; and (iv) review and discuss with the independent
registered public accountants the audited financial statements. There are no
board members that are considered to have significant financial
experience. When independent directors with the appropriate financial
background join the board, the board plans to establish an audit committee,
which will then adopt an appropriate charter and pre-approval policies and
procedures in connection with services to be rendered by the independent
auditors.
Nominating
Committee and Selection of Director Candidates
The Board
of Directors does not currently have a standing Nominating Committee or a
charter regarding the nominating process. The Board of Directors believes that
it is appropriate for it to not have such a committee because it has delegated
to the independent members of the Board of Directors the authority to identify,
evaluate and recommend qualified nominees for election or appointment to the
Company’s Board of Directors.
Shareholders
who wish to recommend nominees for consideration by the independent members of
the Board of Directors must submit their nominations in writing to our Corporate
President. Submissions must include sufficient biographical information
concerning the recommended individual for the committee to consider, including
age, five-year employment history with employer names and a description of the
employer’s business, whether such individual can read and comprehend basic
financial statements, and other board memberships (if any) held by the
recommended individual. The submission must be accompanied by a written consent
of the individual to stand for election if nominated by the Board of Directors
and to serve if elected by the shareholders. The independent members of the
Board of Directors may consider such shareholder recommendations when it
evaluates and recommends nominees to the Board of Directors for submission to
the shareholders at each annual meeting.
In
addition, shareholders may nominate directors for election without consideration
by the Board of Directors. Any shareholder of record may nominate an individual
by following the procedures and deadlines set forth in the “Submission of
Shareholder Proposals for 2010 Annual Meeting of Shareholders” section of this
Proxy Statement and by complying with the eligibility, advance notice and other
provisions of our bylaws.
Compensation
Committee
The Board
of Directors does not currently have a standing Compensation Committee. The
Board of Directors believes it is appropriate for the Company to not have such a
committee because it has delegated to the independent members of the Board of
Directors the authority to establish executive officer
compensation.
The
independent members of the Board of Directors are, among other things,
responsible for:
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making
recommendations to the Board and to the boards of subsidiaries on all
matters of policy and procedures relating to executive
compensation;
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reviewing
and approving corporate goals and objectives relevant to the chief
executive officer’s compensation, and determining and approving the chief
executive officer’s compensation level based on the Board’s performance
evaluation of the chief executive
officer;
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determining
and approving the compensation of the other executive
officers;
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reviewing,
recommending, and discussing with management the compensation discussion
and analysis section included in the Company’s annual Proxy Statement;
and
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evaluating
its performance on an annual basis.
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Code
of Ethics
We have
adopted a code of ethics that applies to our officers, directors and employees
in accordance with applicable federal securities laws. We have filed a
copy of our code of ethics as an exhibit to the Annual Report on Form 10-K for
the fiscal year ended December 31, 2008. These documents may be reviewed by
accessing our public filings at the SEC’s web site at www.sec.gov. In
addition, a copy of the code of ethics will be provided without charge upon
request to us. We intend to disclose any amendments to or waivers of
certain provisions of our code of ethics in a Current Report on Form
8-K
Required
Vote
Directors
are elected by a plurality of the votes cast. Abstentions and broker “non-votes”
will have no effect on the vote for election of directors.
No
Appraisal Rights
Shareholders
will not have dissenters’ or appraisal rights under New York Business
Corporation Law or under the Company’s certificate of incorporation in
connection with the election of directors.
Recommendation
of the Board of Directors
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF TIMOTHY
N. TANGREDI, RAYMOND KAZYAKA SR. AND ROBERT W. SCHWARTZ TO SERVE ON THE
COMPANY’S BOARD OF DIRECTORS UNTIL THE 2010 ANNUAL MEETING OR UNTIL
THEIR SUCCESSORS ARE DULY ELECTED AND QUALIFIED
PROPOSAL
2
AMENDMENT
TO THE CERTIFICATE OF INCORPORATION
Description
of the Amendment
The Board
has approved, and is recommending to the shareholders for approval at the Annual
Meeting, an amendment to the Certificate of Incorporation to increase the amount
of the Company’s authorized shares from 110,000,000 comprised of 100,000,000
shares of common stock, par value $.01 per share (the “Common Stock”) and
10,000,000 shares of preferred stock to 210,000,000 shares, comprised of
200,000,000 shares of Common Stock and 10,000,000 shares of preferred stock. The
Board determined that this amendment is advisable and should be considered at
the Annual Meeting.
In the
event that shareholder approval of the proposed amendment is obtained, the
Company expects to file a Certificate of Amendment of the Certificate of
Incorporation with the New York State on or shortly after the close of business
on the date of the Annual Meeting. A copy of the proposed Certificate of
Amendment has been attached to this Proxy Statement as Exhibit
A.
Reasons
for the Proposal
Due to
the limited number of shares of Common Stock available to be issued, the Board
has unanimously approved, and voted to recommend that the shareholders approve,
an amendment to the Company’s Certificate of Incorporation pursuant to which the
number of shares of Common Stock which the Company would be authorized to issue
would be increased from 100,000,000 shares to 200,000,000 shares. This amendment
will not increase or decrease the number of preferred stock that the Company
would be authorized to issue.
The Board
believes that an increase in authorized Common Stock would provide the Company
with increased flexibility to issue and/or sell Common Stock from time to time
at the discretion of the Board, and without further authorization by the
shareholders, for one or more of the following business purposes: (i) in public
or private offerings as a means of obtaining additional capital for the
Company’s business; (ii) as part or all of the consideration required to be paid
for the acquisition of ongoing businesses or other assets (none currently
contemplated); (iii) to satisfy any current or future financial obligations of
the Company, including funding operations and repaying promissory notes that are
currently due; (iv) in connection with the exercise of options, warrants or
rights, or the conversion of convertible securities or notes that have been or
may be issued by the Company; or (v) pursuant to any benefit, option or stock
ownership plan or employment agreement.
Effects of the Proposal on Our
Shareholders
The
proposed increase in the number of authorized shares of Common Stock will not
change the number of shares of Common Stock outstanding or the rights of the
holders of such stock. Other than for the possibility of issuing new shares of
Common Stock upon the exercise of outstanding stock options or warrants, the
Company does not have any immediate plans, arrangements, commitments or
understandings with respect to the issuance of any of the additional shares of
Common Stock that would be authorized by the proposed amendment to the
Certificate of Incorporation. However, the Company is looking to raise
additional equity capital and anticipates that it will continue through the
issuance of Common Stock or other securities that are convertible into, or
otherwise grant the holder thereof the right to purchase, Common
Stock.
Any
issuance of additional shares of Common Stock could reduce the current
shareholders’ proportionate interests in the Company, depending on the number of
shares issued and the purpose, terms and conditions of the issuance. Moreover,
the issuance of additional shares of Common Stock could discourage attempts to
acquire control of the Company by tender offer or other means. In such a case,
shareholders might be deprived of benefits that could result from such an
attempt, such as realization of a premium over the market price of their shares
in a tender offer or the temporary increase in market price that could result
from such an attempt. Although the Board intends to issue Common Stock only when
it considers such issuance to be in the best interest of the Company, the
issuance of additional shares of Common Stock may have, among others, a dilutive
effect on earnings per share of Common Stock and on the equity and voting rights
of holders of shares of Common Stock. The Board believes, however, that the
benefits of providing the flexibility to issue shares without delay for any
business purpose outweigh any such possible disadvantages.
Ownership
of shares of Common Stock entitles each shareholder to one vote per share of
Common Stock. Holders of shares of Common Stock do not have pre-emptive rights
to subscribe to additional securities that may be issued by the Company, which
means that current shareholders do not have a prior right to purchase any new
issue of capital stock of the Company in order to maintain their proportionate
ownership. Shareholders wishing to maintain their interest, however, may be able
to do so through normal market purchases.
Assuming
the increase in authorized Common Stock is approved by the shareholders at the
Annual Meeting, the Certificate of Amendment of the Certificate of Incorporation
will be filed with the Secretary of State of the State of New York, and the
increase in authorized Common Stock will become effective as of 5:00 p.m. EDST
time on the date of such filing. The Company expects that such filing will take
place on or shortly after the date the Annual Meeting is held. The increase in
authorized Common Stock may be abandoned by the Board at any time before or
after the Annual Meeting should the shareholders not approve this
proposal.
Required
Vote
The
adoption of the amendment to the Certificate of Incorporation will require the
affirmative vote of at least a majority of the Company’s outstanding shares of
Common Stock. Thus, any abstentions, “broker non-votes”, or other limited
proxies will have the effect of a vote against the Amended and Restated the
Company’s Articles of Incorporation.
No
Appraisal Rights
Shareholders
will not have dissenters’ or appraisal rights under New York Business
Corporation Law or under the Company’s certificate of incorporation in
connection with the proposed amendment to the Certificate of
Incorporation.
Recommendation
of Board of Directors
OUR
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO AMEND OUR
CERTIFICATE OF INCORPORATION.
PROPOSAL
3
APPROVAL
OF THE 2009 LONG TERM INCENTIVE PLAN
Background
The
Company’s 2009 Long-Term Incentive Plan (the “Incentive Plan”) has been approved
by the Board on September 17 , 2009, subject to the approval of our
shareholders. The Incentive Plan, if approved by our shareholders, will expire
on September 16, 2019. The purposes of the Company’s Incentive Plan are to
create incentives designed to motivate the Company’s employees to significantly
contribute toward the Company’s growth and profitability, to provide the
Company’s executives, directors and other employees, and persons who, by their
position, ability and diligence, are able to make important contributions to the
Company’s growth and profitability, with an incentive to assist us in achieving
the Company’s long-term corporate objectives, to attract and retain executives
and other employees of outstanding competence, and to provide such persons with
an opportunity to acquire an equity interest in the Company.
The
Company may grant incentive and non-qualified stock options, stock appreciation
rights, performance units, restricted stock awards and performance bonuses, or
collectively, awards, to the Company’s officers and key employees, and those of
the Company’s subsidiaries when and if established. In addition, the Incentive
Plan authorizes the grant of non-qualified stock options and restricted stock
awards to the Company’s directors and to any independent contractors and
consultants who by their position, ability and diligence are able to make
important contributions to the Company’s future growth and profitability.
Generally, all classes of the Company’s employees are eligible to participate in
the Company’s Incentive Plan. The following is a summary of the material
provisions of the Company’s Incentive Plan and is qualified in its entirety by
reference to the complete text of the Company’s Incentive Plan, a copy of which
is attached to this Proxy Statement as Exhibit
B.
Shares
Subject to the 2009 Incentive Plan
Upon the
approval of Proposal 3, the Company will have reserved a maximum of Fifteen
Million shares of the Company’s authorized Common Stock for issuance upon the
exercise of awards to be granted pursuant to the Incentive Plan. Each share
issued under an option or under a restricted stock award will be counted against
this limit. Shares to be delivered at the time a stock option is exercised or at
the time a restricted stock award is made may be available from authorized but
unissued shares or from stock previously issued but which the Company has
reacquired and holds in the Company’s treasury.
In the
event of any change in the Company’s outstanding Common Stock by reason of any
reorganization, recapitalization, stock split, stock dividend, combination of
shares, asset acquisition, consolidation, issuance of rights or other similar
transactions, the number of the Company’s Common Stock which may be issued upon
exercise of outstanding options, and the exercise price of options previously
granted under the Company’s Incentive Plan, will be proportionally adjusted to
prevent any enlargement or dilution of the rights of holders of previously
granted options under the Company’s Incentive Plan as may be appropriate to
reflect any such transaction or event.
Administration
The
Board, or a Committee appointed by the Board, will administer the Incentive
Plan. The Board or the Committee shall have exclusive power to:
(a)
Select Eligible Employees and Consultants to participate in the
Plan.
(b)
Determine the time or times when Awards will be made to Eligible Employees or
Consultants.
(c)
Determine the form of an Award.
(d)
Determine whether Awards will be granted singly or in combination.
(e)
Accelerate the vesting, exercise or payment of an Award or the performance
period of an Award.
(f)
Determine whether and to what extent a Performance Bonus may be deferred, either
automatically or at the election of the Participant or the Board.
(g)
Take any and all other action it deems necessary or advisable for the proper
operation or administration of the Plan.
Types
of Awards
The
Company’s Incentive Plan permits the grant of the following types of
awards.
Stock Options. Stock
options are contractual rights entitling an optionee who has been granted a
stock option to purchase a stated number of the Company’s Common Stock at an
exercise price per share determined at the date of the grant. Options are
evidenced by stock option agreements with the respective optionees. The exercise
price for each stock option granted under the Company’s Incentive Plan will be
determined by the Board or a committee of the Board at the time of the grant,
but will not be less than fair market value on the date of the grant. The Board
or a committee of the Board will also determine the duration of each option;
however, no option may be exercisable more than ten years after the date the
option is granted. Within the foregoing limitations, the Board or committee of
the Board may, in its discretion, impose limitations on exercise of all or some
options granted under the Company’s Incentive Plan, such as specifying minimum
periods of time after grant during which options may not be exercised. Options
granted under the Company’s Incentive Plan will vest at rates specified in the
option agreement at the time of grant; however, all options granted under the
Company’s Incentive Plan will vest upon the occurrence of a Change of Control,
as defined in the Incentive Plan. The Company’s Incentive Plan also contains
provisions for the Company’s Board or a committee of the Board to provide in the
participants’ option award agreements for accelerating the right of an
individual employee to exercise his or her stock option or restricted stock
award in the event of retirement or other termination of employment. No cash
consideration is payable to us in exchange for the grant of
options.
The
Company may grant either Incentive Stock Options or Non-Qualified Options.
Incentive Stock Options are options within the meaning of Section 422 of the
Internal Revenue Code of 1986 (the “Code”). Non-Qualified Options are any
options that are not Incentive Stock Options.
Incentive
Stock Options may be granted only to the Company’s employees or employees of the
Company’s subsidiaries, and must be granted at a per share option price not less
than the fair market value of the Company’s Common Stock on the date the
Incentive Stock Option is granted. The exercise price of stock options may be
paid in cash, in whole shares of the Company’s Common Stock held by the grantee
for more than six months, in a combination of cash and Common Stock, or in such
other form of consideration as the Board or the committee of the Board may
determine, equal in value to the exercise price. In the case of an Incentive
Stock Option granted to a shareholder who owns shares of the Company’s
outstanding stock representing more than 10% of the total combined voting power
of all of the Company’s outstanding stock entitled to vote in the election of
directors, the per share option price must be not less than 110% of the fair
market value of one ordinary share on the date the Incentive Stock Option is
granted, and the term of such option may not exceed five years. Under the Code,
the aggregate fair market value, determined at the time an Incentive Stock
Option is granted, of the Company’s Common Stock with respect to which Incentive
Stock Options may be exercised by an optionee for the first time during any
calendar year under all of the Company’s incentive stock option plans may not
exceed $100,000. Options granted under the Incentive Plan shall be exercisable,
in whole or in such installments and at such times, and shall expire at such
time, as shall be determined by the Board when the options are awarded. The
Board shall also determine other terms and conditions related to the options,
such as employee service periods, holding periods and terms of
forfeiture.
Non-Qualified
Options may be granted to the Company’s employees, directors, independent
contractors and consultants and the per share exercise price for Non-Qualified
Options may not be less than the fair market value of one ordinary share on the
date the Non-Qualified Option is granted. Non-Qualified Options are not subject
to any of the restrictions described above with respect to Incentive Stock
Options. The exercise price of stock options may be paid in cash, in whole
shares of the Company’s Common Stock held by the grantee for more than six
months, in a combination of cash and Common Stock, or in such other form of
consideration as the Board or the committee of the Board may determine, equal in
value to the exercise price. Options granted under the Incentive Plan shall be
exercisable, in whole or in such installments and at such times, and shall
expire at such time, as shall be determined by the Board when the options are
awarded. The Board shall also determine other terms and conditions of related to
the options, such as employee service periods, holding periods and terms of
forfeiture. However, only Common Stock which the option holder has held for at
least six months on the date of the exercise may be surrendered in payment of
the exercise price for the options. In no event may a stock option be exercised
after the expiration of its stated term.
Restricted Stock.
Restricted Common Stock may be granted under the Company’s Incentive Plan
subject to such terms and conditions, including forfeiture and vesting
provisions, and restrictions against sale, transfer or other disposition as the
Board, or a committee of the Board, may determine to be appropriate at the time
of making the award. In addition, the Board or a committee of the Board may
direct that share certificates representing restricted stock be inscribed with a
legend as to the restrictions on sale, transfer or other disposition, and may
direct that the certificates, along with a stock power signed in blank by the
grantee, be delivered to and held by the Company until such restrictions lapse.
The Board or a committee of the Board, in its discretion, may provide in the
award agreement for a modification or acceleration of shares of restricted stock
in the event of permanent disability, retirement or other termination of
employment or business relationship with the grantee.
Stock Appreciation
Rights. A stock appreciation right permits the grantee to receive
an amount (in cash, Common Stock, or a combination thereof) equal to the number
of stock appreciation rights exercised by the grantee multiplied by the excess
of the fair market value of the Company’s Common Stock on the exercise date over
the stock appreciation rights’ exercise price. Stock appreciation rights may or
may not be granted in connection with the grant of an option. The exercise price
of stock appreciation rights granted under the Incentive Plan will be determined
by the Board or a committee of the Board; provided, however, that such exercise
price cannot be less than the fair market value of one ordinary share on the
date the stock appreciation right is granted (subject to adjustments). A stock
appreciation right may be exercised in whole or in such installments and at such
times as determined by the Board or a committee of the Board.
Performance Units. The
Incentive Plan permits grants of performance units, which are rights to receive
cash payments equal to the difference (if any) between the fair market value of
one ordinary share on the date of grant and its fair market value on the date of
exercise of the award, except to the extent otherwise provided by the Board or a
committee of the Board, or as required by law. Such awards are subject to the
fulfillment of conditions that may be established by the Board or a committee of
the Board including, without limitation, the achievement of performance targets
based upon the factors described above relating to restricted stock
awards.
Performance Bonus. The
Incentive Plan permits grants of performance bonuses, which may be paid in cash,
Common Stock or a combination thereof, as determined by the Board or a committee
of the Board. The maximum value of performance bonus awards granted under the
Incentive Plan shall be established by the Board at the time of the grant. An
employee’s receipt of such amount will be contingent upon achievement of
performance targets during the performance period established by the Board. The
performance targets will be determined by the Board or a committee of the Board
based upon the factors described above relating to restricted stock awards.
Following the end of the performance period, the Board or a committee of the
Board will determine the achievement of the performance targets for such
performance period. Payment may be made within 60 days of such determination.
Any payment made in Common Stock will be based upon the fair market value of the
Common Stock on the payment date.
Transferability
With the
exception of Non-Qualified Stock Options, awards are not transferable other than
by will or by the laws of descent and distribution, except as specifically
approved by the Board. Non-Qualified Stock Options are transferable on a limited
basis. Restricted stock awards are not transferable during the restriction
period.
Termination
of Employment/Relationship
If
employment terminates as a result of death, Disability or Retirement, or as a
result of termination by the Company other than for Cause, unless otherwise
provided in the option agreement, the grantee shall be entitled to purchase all
or any part of the shares subject to any (i) vested Incentive Stock Option for a
period of up to three months from such date of termination (one year in the case
of death or Disability in lieu of the three-month period), and (ii) vested
Nonqualified Stock Option for a period of up to three months from such date of
termination (one year in the case of death or Disability in lieu of the
three-month period) or at the discretion of the Board, during the remaining term
of the Option. If employment terminates for Cause, all Awards granted shall
immediately terminate. If employment terminates for any other reason, the
grantee shall be entitled to exercise vested Option for a period of up to three
months from such date of termination. The Board may accelerate the vesting of
unvested Options in the event of termination of employment of any
Participant.
In the
event a Consultant ceases to provide services to the Company or an Eligible
Director terminates service as a director of the Company, the unvested portion
of any Award shall be forfeited unless otherwise accelerated pursuant to the
terms of the Eligible Director’s Award Agreement or by the Board. Except where
cessation or termination is for cause, the Consultant shall have a period of
three months following the date he ceases to provide consulting services and the
Eligible Director shall have a period of three years following the date he
ceases to be a director to exercise any Nonqualified Stock Options which are
otherwise exercisable on his date of termination of service, unless the Board
allows a longer period. Where cessation or termination is for cause, the vested
options of the Consultant and the Eligible Director shall not be exercisable
after such termination or cessation of service
Dilution;
Substitution
As
described above, the Company’s Incentive Plan will provide protection against
substantial dilution or enlargement of the rights granted to holders of awards
in the event of stock splits, recapitalizations, asset acquisitions,
consolidations, reorganizations or similar transactions. New award rights may,
but need not, be substituted for the awards granted under the Company’s
Incentive Plan, or the Company’s obligations with respect to awards outstanding
under the Company’s Incentive Plan may, but need not, be assumed by another
corporation in connection with any asset acquisition, consolidation,
acquisition, separation, reorganization, sale or distribution of assets,
liquidation or like occurrence in which the Company is involved. In the event
the Company’s Incentive Plan is assumed, the stock issuable with respect to
awards previously granted under the Company’s Incentive Plan shall thereafter
include the stock of the corporation granting such new option rights or assuming
the Company’s obligations under the Incentive Plan.
Amendment
of the Incentive Plan
The
Company’s Board may amend the Company’s Incentive Plan at any time. However,
without shareholder approval, the Company’s Incentive Plan may not be amended in
a manner that would:
•
increase the number of shares that may be issued
under the Company’s Incentive Plan;
•
materially modify the requirements for eligibility
for participation in the Company’s Incentive Plan;
•
materially increase the benefits to participants
provided by the Company’s Incentive Plan; or
•
otherwise disqualify the Company’s Incentive Plan for
coverage under Rule 16b-3 promulgated under the Securities Exchange Act of 1934,
as amended.
Awards
previously granted under the Company’s Incentive Plan may not be impaired or
affected by any amendment of the Company’s Incentive Plan, without the consent
of the affected grantees.
Registration
Following
adoption of the Incentive the Board may determine to file with the SEC a
Registration Statement on Form S-8 with respect to shares of Common Stock
subject to Awards hereunder.
Accounting
Treatment
Under
generally accepted accounting principles with respect to the financial
accounting treatment of stock options used to compensate employees, upon the
grant of stock options under the Company’s Incentive Plan, the fair value of the
options will be measured on the date of grant and this amount will be recognized
as a compensation expense ratably over the vesting period. Stock appreciation
rights granted under the Incentive Plan must be settled in Common Stock.
Therefore, stock appreciation rights granted under the Incentive Plan will
receive the same accounting treatment as options. The cash the Company receives
upon the exercise of stock options will be reflected as an increase in the
Company’s capital. No additional compensation expense will be recognized at the
time stock options are exercised, although the issuance of Common Stock upon
exercise may reduce basic earnings per share, as more Common Stock would then be
outstanding.
When the
Company makes a grant of restricted stock, the fair value of the restricted
stock award at the date of grant will be determined and this amount will be
recognized over the vesting period of the award. The fair value of a restricted
stock award is equal to the fair market value of the Company’s Common Stock on
the date of grant.
Due to
consideration of the accounting treatment of stock options and restricted stock
awards by various regulatory bodies, it is possible that the present accounting
treatment may change.
Tax
Treatment
The
following is a brief description of the federal income tax consequences, under
existing law, with respect to awards that may be granted under the Company’s
Incentive Plan.
Incentive Stock
Options. An optionee will not realize any taxable income upon the
grant or the exercise of an Incentive Stock Option. However, the amount by which
the fair market value of the shares covered by the Incentive Stock Option (on
the date of exercise) exceeds the option price paid will be an item of tax
preference to which the alternative minimum tax may apply, depending on each
optionee’s individual circumstances. If the optionee does not dispose of the
shares of the Company’s Common Stock acquired by exercising an Incentive Stock
Option within two years from the date of the grant of the Incentive Stock Option
or within one year after the shares are transferred to the optionee, when the
optionee later sells or otherwise disposes of the stock, any amount realized by
the optionee in excess of the option price will be taxed as a long-term capital
gain and any loss will be recognized as a long-term capital loss. The Company
generally will not be entitled to an income tax deduction with respect to the
grant or exercise of an Incentive Stock Option.
If any of
the Company’s Common Stock acquired upon exercise of an Incentive Stock Option
are resold or disposed of before the expiration of the prescribed holding
periods, the optionee would realize ordinary income, instead of capital gain.
The amount of the ordinary income realized would be equal to the lesser of (i)
the excess of the fair market value of the stock on the exercise date over the
option price; or (ii) in the case of a taxable sale or exchange, the amount of
the gain realized. Any additional gain would be either long-term or short-term
capital gain, depending on whether the applicable capital gain holding period
has been satisfied. In the event of a premature disposition of shares of stock
acquired by exercising an Incentive Stock Option, the Company would be entitled
to a deduction equal to the amount of ordinary income realized by the
optionee.
Non-Qualified Options.
An optionee will not realize any taxable income upon the grant of a
Non-Qualified Option. At the time the optionee exercises the Non-Qualified
Option, the amount by which the fair market value at the time of exercise of the
shares covered by the Non-Qualified Option exceeds the option price paid upon
exercise will constitute ordinary income to the optionee in the year of such
exercise. The Company will be entitled to a corresponding income tax deduction
in the year of exercise equal to the ordinary income recognized by the optionee.
If the optionee thereafter sells such shares, the difference between any amount
realized on the sale and the fair market value of the shares at the time of
exercise will be taxed to the optionee as capital gain or loss, short- or
long-term depending on the length of time the stock was held by the optionee
before sale.
Stock Appreciation
Rights. A participant realizes no taxable income and the Company is
not entitled to a deduction when a stock appreciation right is granted. Upon
exercising a stock appreciation right, a participant will realize ordinary
income in an amount equal to the fair market value of the shares received minus
any amount paid for the shares, and the Company will be entitled to a
corresponding deduction. A participant’s tax basis in the Common Stock received
upon exercise of a stock appreciation right will be equal to the fair market
value of such shares on the exercise date, and the participant’s holding period
for such shares will begin at that time. Upon sale of the Common Stock received
upon exercise of a stock appreciation right, the participant will realize
short-term or long-term capital gain or loss, depending upon whether the shares
have been held for more than one year. The amount of such gain or loss will be
equal to the difference between the amount realized in connection with the sale
of the shares, and the participant’s tax basis in such shares.
Restricted Stock Award.
A recipient of restricted stock generally will not recognize any taxable income
until the shares of restricted stock become freely transferable or are no longer
subject to a substantial risk of forfeiture. At that time, the excess of the
fair market value of the restricted stock over the amount, if any, paid for the
restricted stock is taxable to the recipient as ordinary income. If a recipient
of restricted stock subsequently sells the shares, he or she generally will
realize capital gain or loss in the year of such sale in an amount equal to the
difference between the net proceeds from the sale and the price paid for the
stock, if any, plus the amount previously included in income as ordinary income
with respect to such restricted shares.
A
recipient has the opportunity, within certain limits, to fix the amount and
timing of the taxable income attributable to a grant of restricted stock.
Section 83(b) of the Code permits a recipient of restricted stock, which is not
yet required to be included in taxable income, to elect, within 30 days of the
award of restricted stock, to include in income immediately the difference
between the fair market value of the shares of restricted stock at the date of
the award and the amount paid for the restricted stock, if any. The election
permits the recipient of restricted stock to fix the amount of income that must
be recognized by virtue of the restricted stock grant. The Company will be
entitled to a deduction in the year the recipient is required (or elects) to
recognize income by virtue of receipt of restricted stock, equal to the amount
of taxable income recognized by the recipient.
Performance Units and Performance
Bonuses. A participant realizes no taxable income and the Company
is not entitled to a deduction when performance units or performance bonuses are
awarded. When the performance units or performance bonuses vest and become
payable upon the achievement of the performance objectives, the participant will
realize ordinary income equal to the amount of cash received or the fair market
value of the shares received minus any amount paid for the shares, and the
Company will be entitled to a corresponding deduction. A participant’s tax basis
in Common Stock received upon payment will be equal to the fair market value of
such shares when the participant receives them. Upon sale of the shares, the
participant will realize short-term or long-term capital gain or loss, depending
upon whether the shares have been held for more than one year at the time of
sale. Such gain or loss will be equal to the difference between the amount
realized upon the sale of the shares and the tax basis of the shares in the
participant’s hands.
Section 162(m) of the
Code. Section 162(m) of the Code precludes a public corporation
from taking a deduction for annual compensation in excess of $1.0 million paid
to its chief executive officer or any of its four other highest-paid officers.
However, compensation that qualifies under Section 162(m) of the Code as
“performance-based” is specifically exempt from the deduction limit. Based on
Section 162(m) of the Code and the regulations thereunder, the Company’s ability
to deduct compensation income generated in connection with the exercise of stock
options or stock appreciation rights granted under the Incentive Plan should not
be limited by Section 162(m) of the Code. Further, the Board believes that
compensation income generated in connection with performance awards granted
under the Incentive Plan should not be limited by Section 162(m) of the Code.
The Incentive Plan has been designed to provide flexibility with respect to
whether restricted stock awards or performance bonuses will qualify as
performance-based compensation under Section 162(m) of the Code and, therefore,
be exempt from the deduction limit. If the vesting restrictions relating to any
such award are based solely upon the satisfaction of one of the performance
goals set forth in the Incentive Plan, then the Board believes that the
compensation expense relating to such an award will be deductible by us if the
awards become vested. However, compensation expense deductions relating to such
awards will be subject to the Section 162(m) deduction limitation if such awards
become vested based upon any other criteria set forth in such award (such as the
occurrence of a change in control or vesting based upon continued employment
with us).
Certain Awards Deferring or
Accelerating the Receipt of Compensation. Section 409A of the
Internal Revenue Code, enacted as part of the American Jobs Creation Act of
2004, imposes certain new requirements applicable to “nonqualified deferred
compensation plans.” If a nonqualified deferred compensation plan subject to
Section 409A fails to meet, or is not operated in accordance with, these new
requirements, then all compensation deferred under the plan may become
immediately taxable. Stock appreciation rights and deferred stock awards which
may be granted under the plan may constitute deferred compensation subject to
the Section 409A requirements. It is the Company’s intention that any award
agreement governing awards subject to Section 409A will comply with these new
rules.
Equity
Compensation Plan Information
The
following table sets forth information regarding our 2000 Incentive Compensation
Plan (the “2000 Plan”) under which our securities are authorized for issuance as
of December 31, 2008.
|
Plan Category
|
|
Number of Securities to
be Issued Upon
Exercise
of Outstanding Options
and other Rights
|
|
|
Weighted Average
Exercise Price of
Outstanding
Options and other
Rights
|
|
|
Number of
Securities
Remaining
Available for
Future Issuance
Under Equity
Compensation
Plans
|
|
|
Equity
compensation plans approved by security
holders:
|
|
|
8,606,557
|
|
|
|
.263
|
|
|
|
3,767,325
|
|
|
Equity
compensation plans not approved by security holders:
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
In June
2000, our Board of Directors adopted, and our shareholders approved, the 2000
Plan, which provides for the grant of stock options, incentive stock options,
stock appreciation rights, restricted stock, restricted stock units and bonus
stock and other awards to eligible persons, as defined in said plan, including,
but not limited to, officers, directors and employees of the Company.
Certain awards under the 2000 Plan may be subject to performance
conditions.
Number of Shares of Common Stock
Available Under the 2000 Plan. As of December 31, 2008, our Board
of Directors approved and made available 11,093,882 shares of Common Stock to be
issued pursuant to the 2000 Plan. The 2000 Plan permits grants of options to
purchase common shares authorized and approved by the Company’s Board of
Directors and shareholders for issuance prior to the enactment of the 2000
Plan.
Administration of the 2000
Plan. The 2000 Plan is administered by a committee of two or more
directors designated by the Board of Directors to administer the 2000 Plan (the
“Committee”) or, in the absence of such Committee, by the Board of
Directors. Currently, the 2000 Plan is administered by our Board of
Directors. The Board of Directors has the authority to select the
participants to whom awards under the 2000 Plan will be granted, grant awards,
determine the type, number and other terms and conditions of, and all other
matters relating to, awards granted under the 2000 Plan and to prescribe the
rules and regulations for the administration of the 2000 Plan. No option
or stock appreciation rights granted under the 2000 Plan shall be exercisable,
however, more than ten years after the date of the grant.
Exercise Price. The
2000 Plan requires the Committee to grant qualified options with an exercise
price per share not less than the fair market price of a share of Common Stock
on the date of grant of the option.
Transferability. Awards granted under
the 2000 Plan are generally not transferable by the optionee otherwise than by
will or the laws of descent and distribution and generally exercisable during
the lifetime of the optionee only by the optionee.
Change in Control. All awards granted
under the 2000 Plan which were not previously exercisable and vested shall
become fully exercisable and vested upon a change of control of the Company,
which includes the consummation of a merger or consolidation of the Company with
or into any other entity, sale of all or substantially all of our assets,
replacement of a majority of our Board of Directors, acquisition by any person
of securities representing 20% or more of the voting power of our then
outstanding securities (other than securities issued by us) or any other event
which the Board of Directors determines would materially alter our structure or
ownership.
Options Granted to Non-Employee
Directors. Non-employee directors of the Company are usually
granted options each year, which generally become exercisable upon the date of
grant, and generally expire on the earlier of ten years from the date of grant
or up to three years after the date that the optionee ceases to serve as a
director.
Stand-Alone
Grants
Our Board
of Directors may grant common share purchase options or warrants to selected
directors, officers, employees, consultants and advisors in payment of goods or
services provided by such persons on a stand-alone basis outside of any of
our Plans. The terms of these grants may be individually
negotiated.
Required
Vote
The
adoption of the 2009 Long-Term Incentive Plan will require an affirmative vote
of the majority of the votes cast in person or by proxy, provided that a quorum
is present at the Meeting. Only proxies indicating votes “FOR,” “AGAINST” or
“ABSTAIN” on this proposal or providing the designated proxies with the right to
vote in their judgment and discretion on this proposal are counted to determine
the number of shares present and entitled to vote. Broker non-votes and
abstentions will have no effect on the results of the vote on this
proposal.
Interests
of Directors or Officers
Our
directors may grant awards under the 2009 Long-Term Incentive Plan to themselves
as well as our officers, in addition to granting awards to our other
employees.
No
Appraisal Rights
Shareholders
will not have dissenters’ or appraisal rights under New York Business
Corporation Law or under the Company’s certificate of incorporation in
connection with the adoption of the 2009 Long-term Incentive Plan.
Recommendation
of Board of Directors
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE “FOR” THE
ADOPTION OF THE 2009 LONG-TERM INCENTIVE PLAN.
PROPOSAL
4
RATIFICATION
AND APPROVAL OF PREVIOUSLY ISSUED WARRANTS TO TIMOTHY.N. TANGREDI AND SCOTT
EHRENBERG
We are
asking our shareholders to consider and approve the previously issued warrants
to Mr. Tangredi and Mr. Ehrenberg. Dais is a New York corporation, and the
issuance of warrants to directors or officers shall be approved by a
majority of the votes cast at a meeting of shareholders by the holders
of shares entitled to vote thereon pursuant to Section 505 of New York
Business Corporation Law.
Purpose
of Issuance of the Warrants to Mr. Tangredi and Mr. Ehrenberg
The
Company’s Board of Directors authorized and issued a Stock Purchase Warrant to
purchase up to 3,000,000 shares of the Company’s Common Stock to Mr. Tangredi
(“Tangredi Warrant”), and authorized and issued a Stock Purchase Warrant to
purchase up to 250,000 shares of the Company’s Common Stock to Mr. Ehrenberg
(“Ehrenberg Warrant”, together with “Tangredi Warrant”, the “Warrants”).The
purpose of issuance of Warrants to Mr. Tangredi was to reward Mr. Tangredi
for his achievement of certain Company goals of successfully negotiating the
conversion of certain convertible notes issued by the Company, securing a
release with respect to the consulting agreement with Gray Capital
Partners, Inc., and securing and closing upon certain financings and to give him
an incentive to remain with the Company. The purpose of issuance of Warrants to
Mr. Ehrenberg was to reward Mr. Ehrenberg for his achievement of certain Company
goals of successfully securing the Gray Capital Partner release,
contributions to certain product improvements and patent applications and to
give him an incentive to remain with the Company
Description
of the Warrants
In 2008
we issued Mr. Tangredi a Stock Purchase Warrant dated April 4, 2008 to purchase
3,000,000 shares of the Company’s Common Stock at an exercise price of $.36 per
share. The warrant had a five year term, vested upon issuance, provided for a
cashless exercise and contained standard anti-dilution provisions. The market
value of our Common Stock as of April 4, 2008 was US $..36 per
share.
In the
same year we issued Mr. Ehrenberg a Stock Purchase Warrant dated August 4, 2008
to purchase 250,000 shares of company’s Common Stock at the exercise price of
$.30 per share with all other terms and conditions being the same as those of
the Tangredi Warrant. The market value of our Common Stock as of August 4, 2008
was US $.30 per share.
The
Warrants vested on the date of issuance. Each of the Warrants must be exercised
within 5 years of its date of issue or else it expires. Mr. Tangredi and Mr.
Ehrenberg may exercise all or a portion of the Warrants at any time prior to
their expiration on April 4, 2013 and August 4, 2013, respectively.
Use
of Proceeds
If all of
these outstanding warrants are exercised for cash, we would receive aggregate
gross proceeds of approximately $ 1,155,000. We intend to use any proceeds from
the exercise of warrants for working capital and other general corporate
purposes.
Certain
Federal Income Tax Consequences
The
Warrants will generally be treated for tax purpose the same as non-qualified
stock options (“Non-qualified Stock Options”). Please refer to the dissuasion
under the caption “Tax Treatment” in Proposal 3 on Page___ for tax treatment of
Non-qualified Stock Options. Ordinarily Non-qualified Stock Options do not
result in tax liability for Federal income tax purposes to the participant upon
grant. Generally, upon exercise of a Non-qualified Stock Option, the
participant recognizes ordinary income for Federal income tax purposes equal to
the difference between the fair market value of the stock on the day of exercise
and the exercise price. Generally, the Company receives a tax deduction
for the amount the participant reports as ordinary income by reason of the
exercise if the amount of ordinary income the participant should recognize is
included in the participant’s income reported on a timely Form W-2 or
1099. Upon a subsequent sale or disposition of the stock received from
exercise of a Warrant, the holder is generally taxable on any excess of the
selling price over its fair market value at the date of exercise.
Effects
of Issuance of the Warrants on Our Shareholders
The
issuance of shares upon the exercise of Warrants would be dilutive to the voting
power of existing shareholders and could be dilutive with regard to dividends
and other economic aspects of the Common Stock. Because the number of shares of
Common Stock that would be so issued and the timing of any issuance is not
currently known, the actual dilutive effect cannot be predicted. In addition,
because the exercise price per share at the time of exercise could well be less
than the net asset value per share at the time of exercise and because we would
incur expenses in connection with any such sale, such exercise could result in a
dilution of net asset value per share at the time of exercise for all
shareholders.
Mr.
Tangredi is President, Chief Executive Officer and Chairman of the Board of
Directors of the Company and owns 7,095,858 shares of the Company, including the
3,000,000 shares upon the exercise of the Tangredi Warrant, as of August 31,
2009. Mr. Ehrenberg is Chief Technology Officer and Secretary of the Company and
owns 826,132 shares of the Company, including the 250,000 shares upon the
exercise of the Ehrenberg Warrant, as of August 31, 2009. There were 19,080,037
shares of Common Stock outstanding as of August 31, 2009. If Mr. Tangredi
exercises the Warrant in full when the Warrant become exercisable, he will
beneficially own about 28% of our Common Stock (including outstanding stock
options and restricted stock units, based on 19,080,037 shares outstanding as of
August 31, 2009). If Mr. Ehrenberg exercises the Warrant in full when the
Warrant become exercisable, Mr. Ehrenberg will beneficially own about 4.0% of
our Common Stock (including outstanding stock options and restricted stock
units, based on 19,080,037 shares outstanding as of August 31,
2009).
Directors’
other Interests
Mr.
Tangredi is the Company’s President, Chief Executive Officer and Chairman of the
Board and approving this Proposal would benefit Mr. Tangredi.
Required
Vote
The
approval of ratification of the previously issued warrants to Mr. Tangredi and
Mr. Ehrenberg will require an affirmative vote of the majority of the votes cast
in person or by proxy, provided that a quorum is present at the Meeting. Only
proxies indicating votes “FOR,” “AGAINST” or “ABSTAIN” on this proposal or
providing the designated proxies with the right to vote in their judgment and
discretion on this proposal are counted to determine the number of shares
present and entitled to vote. Broker non-votes and abstentions will have
no effect on the results of the vote on this proposal.
Since the
Company is obligated to issue Mr. Tangredi and Mr. Ehrenberg the Warrants, in
the event that the Shareholders do not ratify and approve the issuance of the
Warrants pursuant to Section 505 of the New York Business Corporation Law, the
Company would have to meet its obligation to them by negotiating alternate deal
with them, including, but not limited to canceling the Warrants issued to Mr.
Tangredi and Mr. Ehrenberg and granting them the same number of options pursuant
to the 2000 plan. Any such grant to them of options under the 2000 plan would
presumably be made on terms similar to the terms of the Warrants previously
granted to them. To date the Company has not had any discussion with them on any
actions that is will take in the event that this Proposal is not approved by the
Shareholders at this Annual Meeting.
No
Pre-emptive Rights
No
shareholder of the Corporation shall have any pre-emptive rights, and,
therefore, no shareholder shall be entitled as of right to subscribe for,
purchase or receive any new or additional shares, whether now or hereafter
authorized.
No
Appraisal Rights
Shareholders
will not have dissenters’ or appraisal rights under New York Business
Corporation Law or under the Company’s certificate of incorporation in
connection with the approval of this Proposal.
Recommendation
of Board of Directors
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE “FOR” THIS
PROPOSAL.
[Remainder
of page intentionally left blank]
OTHER
INFORMATION
Beneficial
Ownership of Principal Shareholders, Officers and Directors
The
following table sets forth information as of the date of this Proxy Statement as
to each person or group who is known to us to be the beneficial owner of more
than 5% of our outstanding voting securities and as to the security and
percentage ownership of each of our executive officers and directors and of all
of our officers and directors as a group.
Beneficial
ownership is determined under the rules of the SEC and generally includes voting
or investment power over securities. The number of shares shown as beneficially
owned in the tables below are calculated pursuant to Rule 13d-3(d)(1) of the
Exchange Act. Under Rule 13d-3(d)(1), shares not outstanding that are subject to
options, warrants, rights or conversion privileges exercisable within 60 days
are deemed outstanding for the purpose of calculating the number and percentage
owned by such person, but not deemed outstanding for the purpose of calculating
the percentage owned by each other person listed. Except in cases where
community property laws apply or as indicated in the footnotes to this table, we
believe that each shareholder identified in the table possesses sole voting and
investment power over all of the shares of Common Stock shown as beneficially
owned by the shareholder.
The
address for each of the persons named below is 11552 Prosperous Drive, Odessa,
FL 33556, unless otherwise indicated.
Applicable
percentage ownership in the following table is based on approximately 18,516,755
shares of Common Stock outstanding as of July 15,2009, 2009, plus,
for each individual, any securities that individual has the right to acquire
within 60 days of July 15,2009.
|
|
|
Common Stock
Beneficially Owned
|
|
|
|
|
Number
Of
Shares of
Common
Stock
|
|
|
Percentage
Of Class
|
|
|
Name of Beneficial Owner
|
|
|
|
|
|
|
|
|
|
Timothy
N. Tangredi (Officer and Chairman) (1)
|
|
|
7,095,858 |
|
|
|
27.9 |
% |
|
Robert
W. Brown (Officer) (2)
|
|
|
411,415 |
|
|
|
2.2 |
% |
|
Scott
G. Ehrenberg(3) (Officer)
|
|
|
826,132 |
|
|
|
4.3 |
% |
|
Harold
Mandelbaum (Officer)(4)
|
|
|
50,000 |
|
|
|
027 |
% |
|
Raymond
Kazyaka Sr. (Director) (5)
|
|
|
404,600 |
|
|
|
2.1 |
% |
|
Robert
W. Schwartz (Director) (6)
|
|
|
374,600 |
|
|
|
2.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
Executive
officers and directors as a group (6 persons)
|
|
|
9,162,604 |
|
|
|
33.4 |
% |
|
Walt
Robb (7) 300 Troy Road Schenectady, NY 12309
|
|
|
1,424,126 |
|
|
|
7.6 |
% |
|
Brian
A. Kelly 181C Hague Blvd. Glenmont, N.Y. 12077
|
|
|
2,254,085 |
|
|
|
12.2 |
% |
|
Michael
Gotomski (8) 1666 Valley View Dr. Winnona,
MN 55987
|
|
|
2,086,842 |
|
|
|
10.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
Louis
M. Jaffe (9) 1500 S. Ocean Blvd #5201 Boca Raton,
FL 33432
|
|
|
3,631,646 |
|
|
|
18.4 |
% |
|
Lawrence
D. Isen (10) 4653 Carmel Mtn. Suite 308-402 San Diego,
CA 92130
|
|
|
1,077,918 |
|
|
|
5.5 |
% |
|
Michael
Frederick Stone (11-3) 18 Ozone Avenue Venice, CA 90291
|
|
|
2,158,795 |
|
|
|
10.4 |
% |
|
Michael
J. McGrath (12) 1250 West Division Street Chicago,
IL 60622
|
|
|
1,079,397 |
|
|
|
5.5 |
% |
|
Marisa
Stadmauer (13) 26 Columbia Turnpike Florham Park, NJ 07932
|
|
|
1,835,373 |
|
|
|
9.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
Mark
Nordlich (17) 152 West 575th St. 4th Floor New York,
NY 10019
|
|
|
7,657,073 |
|
|
|
34.0 |
% |
|
Erick
Richardson (18) 10900 Wilshire Blvd. Suite 500 Los Angeles, CA
90024
|
|
|
1,833,758 |
|
|
|
9.2 |
% |
|
Leonard
Samuels (19) 1011 Centennial Road Penn Valley,
PA 19072
|
|
|
7,812,933 |
|
|
|
29.7 |
% |
|
Leah
Kaplan Samuels (20) 1011 Centennial Road Penn Valley,
PA 19072
|
|
|
1,885,741 |
|
|
|
9.2 |
% |
(1) Includes
5,110,000 shares of common issuable upon exercise of stock options and warrants,
including the 3,000,000 warrants which is the subject of Proposal 4, and
1,965,858 shares beneficially owned by Mr. Tangredi’s wife, Patricia Tangredi.
1,838,058 of Ms. Tangredi’s shares are issuable upon the exercise of stock
options.
(2) Includes
411,415 shares of Common Stock issuable upon exercise of stock
options.
(3) Includes
743,333 shares of Common Stock issuable upon the exercise of stock options and
warrants, including the 250,000 warrants which is the subject of Proposal 4, and
41,400 shares beneficially owned by Mr. Ehrenberg's wife, Linda
Ehrenberg.
(4) Includes
50,000 shares of Common Stock issuable upon exercise of stock
options.
(5) Includes
404,600 shares of Common Stock issuable upon exercise of stock
options.
(6) Includes
374,600 shares of Common Stock issuable upon exercise of stock
options.
(7) Includes
249,750 common shares issuable upon exercise of certain warrants issued in
connection with the conversion of notes issued in the Additional Financing to
CounterPoint Ventures LLC. The natural person with voting power and investment
power on behalf of CounterPoint Ventures LLC is Walt Robb.
(8)
Includes 287,794 common shares issued on conversion and 18,750 common shares
issuable upon exercise of certain warrant issued in connection with the
conversion of notes issued in the Additional Financing. Also includes
415,038 shares of Common Stock issued upon conversion of principal and interest
due pursuant to the convertible note and 499,875 shares of Common Stock issuable
upon exercise of warrants issued in connection with the Financing. Also
included are 576,923 shares of Common Stock and 288,462 shares of Common Stock
issuable upon exercise of a certain warrant issued in connection with a stock
purchase dated March 9, 2009.
(
(9)
Includes 554,247 shares of Common Stock issued upon conversion of convertible
notes and 666,500 shares of Common Stock issuable upon exercise of certain
outstanding warrants issued in connection with the Financing to Louis M. Jaffe
2004 Intangible Asset Mgmt. TR U/A DTD 5/24/04, 1,262,814 shares held by
the aforementioned trust, 250,004 shares held by the Louis Jaffe TTEE
Irrevocable Trust – Jennifer Jaffe and 250,004 shares held by the Louis Jaffe
TTEE Irrevocable Trust – Lara Jaffe Taylor, 100,000 shares held by the Diana G.
Jaffe Revocable Trust Dated 8/4/99.. The natural person with voting
power and investment power on behalf each of the first three aforementioned
trusts is Louis M. Jaffe and the natural person with voting power and investment
power on behalf the last aforementioned trust is Diana G. Jaffe, wife of Louis
M. Jaffe . Also includes 298,077 shares of Common Stock issuable upon
exercise of a certain outstanding warrant issued in connection with a
stock purchase consummated June 30,2009 and 250,000 shares of Common Stock
issuable upon exercise of certain outstanding warrants issued in connection
with a Consulting Agreement executed in April of 2009.
(10)
Includes 577,918 shares of Common Stock issuable upon conversion of convertible
notes and 500,000 shares of Common Stock issuable upon exercise of warrants
issued in connection with the Financing in the name of Market Byte LLC. The
natural person with voting power and investment power on behalf of Market Byte
L.L.C. Defined Benefit & Trust is Lawrence D. Isen.
(11) Includes
1,158,795 shares of Common Stock issuable upon conversion of certain outstanding
convertible notes and 1,000,000 shares of Common Stock issuable upon exercise of
certain outstanding warrants issued in connection with the
Financing.
(12)
Includes 579,397shares of Common Stock issuable upon conversion of convertible
notes and 500,000 shares of Common Stock issuable upon exercise of warrants
issued in connection with the Financing.
(13)
Includes 835,623 shares of Common Stock issued upon conversion of convertible
notes and 999,750 shares of Common Stock issuable upon exercise of warrants
issued in connection with the Financing in the name of MSSRPS, LLC. The natural
person with voting power and investment power on behalf of MSSRPS, LLC is Marisa
Stadmauer.
(14)
Includes 3,324,740 shares of Common Stock issued upon conversion of convertible
notes and 3,999,000 shares of Common Stock issuable upon exercise of warrants
issued in connection with the Financing to Platinum Montaur Life Sciences LLC.
Also includes 333,333 shares held by Platinum Montaur Life
Sciences,Inc. The natural person with voting power and investment
power on behalf of Platinum Montaur Life Sciences LLC is Mark
Nordlich.
(15)
Includes 574,342 shares of Common Stock issuable upon conversion of certain
outstanding convertible notes and 500,000 shares of Common Stock issuable upon
exercise of certain outstanding warrants issued in connection with the Financing
in the name of RP Capital LLC. Erick Richardson and Nimish Patel of Richardson
& Patel LLP own RP Capital LLC. Also includes 367,108 shares in
the name of Richardson & Patel LLP and warrants to purchase an additional
392,308 shares. Erick Richardson is a partner at Richardson & Patel LLP, our
legal counsel. The natural person with voting and investment control over the
shares held by these entities is Erick Richardson.
(16)
Includes 1,010,741 shares of Common Stock issuable upon conversion of certain
outstanding convertible notes and 875,000 shares of Common Stock issuable upon
exercise of certain outstanding warrants issued in connection with the Financing
held in the name of Leah Kaplan-Samuels and Leonard Samuels JTWROS. The natural
persons with voting power and investment power on behalf of Leah Kaplan-Samuels
and Leonard Samuels JTWROS are Leah Kaplan-Samuels and Leonard
Samuels. Also includes 5,927,192 shares of Common Stock underlying
the convertible notes and warrants in the Financing issued to shareholder RBC
Dain – Custodian for Leonard Samuels IRA.
(17)
Includes 1,020,741 shares of Common Stock issuable upon conversion of certain
outstanding convertible notes and 875,000 shares of Common Stock issuable upon
exercise of warrants issued in connection with the Financing held in the name of
Leah Kaplan-Samuels and Leonard Samuels JTWROS. The natural persons with voting
power and investment power on behalf of Leah Kaplan-Samuels and Leonard Samuels
JTWROS are Leah Kaplan-Samuels and Leonard Samuels.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Exchange Act, as amended, requires our executive officers,
directors and persons who own more than ten percent of a registered class of our
equity securities (“Reporting Persons”) to file reports of ownership and changes
in ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission.
These Reporting Persons are required by SEC regulation to furnish us with copies
of all Forms 3, 4 and 5 they file with the SEC. Based solely upon our review of
the copies of the forms we have received, we believe that all Reporting Persons
complied on a timely basis with all filing requirements applicable to them with
respect to transactions during fiscal 2008.
Compensation
of Directors and Executive Officers
The
following table provides certain summary information concerning compensation
paid to the named executive officers and directors for the years stated.
Individuals we refer to as our “named executive officers” include our current
Chief Executive Officer, our former Chief Financial Officer, and our most highly
compensated executive officers and employees whose salary and bonus for services
rendered in all capacities exceeded $100,000 during the fiscal year ended
December 31, 2008.
SUMMARY
COMPENSATION TABLE
| |
|
|
Summary Compensation Table
|
|
|
Name and principal
position
|
|
Year
|
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
Awards
($)(2)
|
|
|
Option
Awards
($)(2)
|
|
|
Non-
Equity
Incentive
Plan
|
|
|
Non-
qualified
Deferred
Compen-
sation
Earnings
($)
|
|
|
All other
compensation
($)
|
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
|
Timothy N.
Tangredi
Chief Executive Officer,
President, Treasurer and Chairman of the Board of
Directors(1)
|
|
|
2007
2008
|
|
|
|
170,000
170,000
|
|
|
|
-
-
|
|
|
|
-
-
|
|
|
|
107,455
752,450
|
(3) |
|
|
-
-
|
|
|
|
-
-
|
|
|
|
-
-
|
|
|
|
277,455
922,450
|
|
|
Robert W.
Brown
Secretary and Vice President of
Marketing
|
|
|
2007
2008
|
|
|
|
83,451 75,000 |
|
|
|
-
-
|
|
|
|
-
-
|
|
|
|
13,920 23,412 |
|
|
|
-
-
|
|
|
|
-
-
|
|
|
|
-
-
|
|
|
|
97,371
98,412
|
|
|
Scott G.
Ehrenberg,
Chief Technology
Officer
|
|
|
2007
2008
|
|
|
|
60,000 88,000 |
|
|
|
- |
|
|
|
-
-
|
|
|
|
43,523
84,337
|
(3) |
|
|
-
-
|
|
|
|
-
-
|
|
|
|
-
-
|
|
|
|
103,523 172,337 |
|
|
Patricia
K. Tangredi (4)
|
|
|
2007
2008
|
|
|
|
115,000
115,000 |
|
|
|
|
|
|
|
|
|
|
|
61,100
125,275 |
|
|
|
|
|
|
|
|
|
|
|
-
-
|
|
|
|
176,100
240,275 |
|
(1) Mr.
Tangredi receives a salary of $170,000 per year, and a bonus in an amount not to
exceed 100% of his salary, which bonus shall be measured by meeting certain
performance goals as determined in the sole discretion of our Board of
Directors. In 2008 and 2007, Mr. Tangredi was paid $117,500 and
$65,833, respectively and has accrued unpaid salary of $52,500 for 2008,
$104,167 for 2007, $105,145 for 2006 and $116,166 for 2005 and accrued bonus of
$87,500 for year 2006.
(2) The
amounts included in these columns are the aggregate dollar amounts of
compensation expense recognized by us for financial statement reporting purposes
in accordance with FAS 123R for the fiscal years ended December 31, 2008 and
December 31, 2007, and thus include amounts from option awards granted in and
prior to the indicated year. For information on the valuation
assumptions used in calculating these dollar amounts, see Note 9 to our audited
financial statements included in this Report for the fiscal years ended December
31, 2008 and December 31, 2007, each as filed with the SEC. These amounts
reflect our accounting expense for these awards and do not correspond to the
actual value that may be recognized by the individuals upon option
exercise.During the fiscal year ended December 31, 2008, there were 666,666
option award forfeitures related to service-based vesting
conditions.
(3) In
2008 we issued Mr. Tangredi a warrant to purchase 3,000,000 shares of the
Company’s Common Stock at an exercise price of $.36 per share. The warrant had a
five year term, vested upon issuance, provided for a cashless exercise and
contained standard anti-dilution provisions. In the same year we issued Mr.
Ehrenberg a warrant to purchase 250,000 shares of company’s Common Stock at the
exercise price of $.30 per share with all other terms and conditions being the
same as those of the Tangredi warrant.
(4) Ms.
Tangredi receives a salary of $115,000 per year. In 2008 and 2007, Ms. Tangredi
was paid $110,000 and $65,833, respectively and accrued unpaid salary of $5,000
for 2008 and $49,167 for 2007.
Narrative
Disclosure to Summary Compensation Table
Employment
Agreements
Officer
Employment Agreement
Timothy N.
Tangredi. We are party to an employment agreement with Mr.
Tangredi, our President, Chief Executive Officer, and director. The
employment agreement, as amended and restated on July 29, 2008, sets forth Mr.
Tangredi’s compensation level and eligibility for salary increases, bonuses,
benefits, royalty sharing for newer applications, and option
grants. Mr. Tangredi’s employment agreement provided for an initial
term of three years with the term extending on the second anniversary thereof
for an additional one year period and on each subsequent anniversary of the
agreement for an additional year period. The agreement sets forth Mr. Tangredi’s
compensation level, conditions for certain option grants, benefits and the
obligations of the Company in the event of termination. Mr. Tangredi’s base
salary is $170,000, plus certain allowances as well as performance related
payments and option issuances.
For each
product for which the Company commences commercial sale or licensing during the
term and receives more than $1 million of revenue during any 12 month period,
Mr. Tangredi, in addition to any other compensation which he may receive under
the agreement, shall be granted options to purchase 10,000 shares of the
Company's Common Stock at an exercise price equal to either (i) the lower of:
(a) $2.50 per share or (b) the fair market value per share of the stock on the
date of grant as determined in good faith by the Compensation Committee of the
Board of Directors, if the Company has not conducted an initial public offering
prior to the date of grant (as hereinafter defined), or (ii) at an exercise
price equal to 75% of the market price of the Common Stock, if the Company has
completed an initial public offering of its Common Stock prior to the date of
grant (with the market price to be the average of the closing sale prices during
the five trading days immediately preceding the date of grant of the
option). Such options, as well as any other options granted to Mr.
Tangredi during the term of his employment, shall be granted under the Company's
then existing stock option plan, shall be immediately exercisable, have a term
of ten years, shall be exercisable for up to three years after termination of
employment (unless termination is for cause, in which event they shall expire on
the date of termination), shall have a "cashless" exercise feature, and shall be
subject to such additional terms and conditions as are then applicable to
options granted under such plan provided they do not conflict with the terms set
forth in the agreement.
In the
event that the fair market value of the Company's Common Stock (the average of
the closing prices of the Common Stock for any five consecutive trading days, as
reported by the principal exchange or other stock market on which the commons
stock is then traded) equals or exceeds 200% of the price at which the Company
sells Common Stock in an initial public offering (the "Target Value") at any
time during the term of the agreement, Mr. Tangredi shall be granted options to
purchase 50,000 shares of Common Stock at an exercise price equal to 75% of the
Target Value, on terms identical to the options provided for above.
In the
event Mr. Tangredi's employment is terminated by the Company without cause or by
Mr. Tangredi for good reason, death or disability, Mr. Tangredi shall be
entitled to the following:
(i) An
amount equal to the sum of (A) the greater of 200% of the base salary then in
effect for Mr. Tangredi or $270,000 plus (B) the cash bonus, if any, awarded to
Mr. Tangredi for the most recent year shall be payable by the Company in full
within 10 days following termination;
(ii) The
Company shall continue to provide Mr. Tangredi the health and life insurance,
car allowance and other benefits set forth in the agreement until two years
following termination of employment, and shall continue to offer any of such
benefits to Mr. Tangredi beyond such two year period to the extent required by
COBRA or similar statute which may then be in effect;
(iii) All
stock options, to the extent they were not exercisable at the time of
termination of employment, shall become exercisable in full; and
(iv) Any
indebtedness of Mr. Tangredi to the Company shall thereupon be
cancelled and of no further force and effect, and the Company shall pay to Mr.
Tangredi, within ten days following receipt of a written demand therefore, any
income or other taxes resulting from such cancellation.
In the
event that Mr. Tangredi elects to terminate employment within one
year following a change in control of the Company, he shall receive, within the
later of ten days following the date on which the change in control occurs or
the date on which he gives notice of his election to terminate employment, a
lump sum payment equal to three times the greater of (i) his then current base
salary plus the cash bonus, if any, awarded to him for the most recent year or
(ii) $350,000 plus said cash bonus. In addition, he will be entitled
to accelerated vesting of outstanding options and continuing benefits as
described above.
Significant
Employee
Patricia K.
Tangredi. We are a party to an employment agreement with Ms.
Tangredi. The agreement, provided for an initial term of 3 years beginning on
January 1, 2001, with automatic extensions for subsequent one year
terms, unless the Company or Ms. Tangredi provides the other
party with written notice of intent not to renew. The agreement was
subsequently amended and restated on July 29, 2008. The employment
agreement set forth Ms. Tangredi’s compensation level and eligibility for salary
increases, options, royalty sharing for newer applications, benefits and the
obligations of the Company in the event of termination. A portion of Ms.
Tangredi’s salary has been accrued and carried on the Company’s books since
2002.
In the
event Ms. Tangredi's employment is terminated by the Company without cause or by
the Ms. Tangredi for good reason or by reason of death or disability, Ms.
Tangredi shall be entitled to the following:
(i) the
greater of 100% of the base salary then in effect for Employee or $115,000,
which amount shall be payable by the Company in full within 10 days following
termination;
(ii) the
Company shall provide, at its sole cost, Ms. Tangredi with the
medical benefits for one year following the date of termination. The Company
shall continue to offer such benefits to Ms. Tangredi beyond such one year
period to the extent required by COBRA or any similar statute which may then be
in effect; and
(iii) all
stock options granted to Ms. Tangredi at any time during the course of the term
shall be exercisable in full.
In the
event that Ms. Tangredi elects to terminate her employment within six months
following a change in control of the Company, she shall receive, within the
later of 10 days following the date on which the change in control occurs or the
date on which she give notice of her election to terminate employment, a lump
sum payment equal to the greater of three times her then current base salary or
$235,000. In addition, she will be entitled to accelerated vesting of
outstanding options and continuing medical benefits as described
above.
Outstanding
Equity Awards
The
following table summarizes outstanding unexercised options, unvested stocks and
equity incentive plan awards held by each of our name executive officers, as of
December 31, 2008.
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
|
OPTION AWARDS
|
|
STOCK AWARDS
|
|
Name
|
|
Number of
securities
underlying
unexercised
options (#)
Exercisable
|
|
|
Number of
securities
underlying
unexercised
options (#)
Unexercis-able
|
|
|
Equity
Incentive
Plan
Awards:
Number of
Securities
underlying
unexercised
unearned
options (#)
|
|
|
Option
exercise
price ($)
|
|
Option
expiration
date
|
|
Number
of shares
or units
of stock
that have
not
vested (#)
|
Market
value of
shares or
units of
stock that
have not
vested ($)
|
Equity
incentive
plan
awards:
number
of
unearned
shares,
units or
other
rights that
have not
vested (#)
|
Equity
incentive
plan
awards:
Market or
payout
value of
unearned
shares,
units or
other
rights that
have not
vested ($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
(f)
|
|
(g)
|
(h)
|
(i)
|
(j)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy
N. Tangredi (1)
|
|
|
825,000 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
.26 |
|
9/23/2014
|
|
|
|
|
|
|
|
|
|
150,000 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
.10 |
|
5/10/2015
|
|
|
|
|
|
|
|
|
|
120,000 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
.10 |
|
10/1/2015
|
|
|
|
|
|
|
|
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
.30 |
|
5/2/2016
|
|
|
|
|
|
|
|
|
|
110,000 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
.55 |
|
11/1/2016
|
|
|
|
|
|
|
|
|
|
140,000 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
.55 |
|
2/20/2017
|
|
|
|
|
|
|
|
|
|
300,000 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
.21 |
|
8/10/2017
|
|
|
|
|
|
|
|
|
|
350,000 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
.21 |
|
1/30/2018
|
|
|
|
|
|
|
|
|
|
3,000,000 |
* |
|
|
0 |
|
|
|
0 |
|
|
$ |
.36 |
|
4/18/2013
|
|
|
|
|
|
|
*Warrant Subject
to Proposal
4
|
|
Robert
W. Brown (2)
|
|
|
106,416 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
.26 |
|
9/23/2014
|
|
|
|
|
|
|
|
|
|
120,000 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
.10 |
|
5/10/2015
|
|
|
|
|
|
|
|
|
|
120,000 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
.10 |
|
10/1/2015
|
|
|
|
|
|
|
|
|
|
48,333 |
|
|
|
24,167 |
|
|
|
24,167 |
|
|
$ |
.55 |
|
11/1/2016
|
|
|
|
|
|
|
|
|
|
16,666 |
|
|
|
33,334 |
|
|
|
33,334 |
|
|
$ |
.21 |
|
8/18/2017
|
|
|
|
|
|
|
|
|
|
0 |
|
|
|
200,000 |
|
|
|
200,000 |
|
|
$ |
.30 |
|
8/4/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott
G. Ehrenberg (3)
|
|
|
140,000 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
.26 |
|
9/23/2014
|
|
|
|
|
|
|
|
|
|
110,000 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
.10 |
|
5/10/2015
|
|
|
|
|
|
|
|
|
|
80,000 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
.10 |
|
10/1/2015
|
|
|
|
|
|
|
|
|
|
26,667 |
|
|
|
13,333 |
|
|
|
13,333 |
|
|
$ |
.55 |
|
11/1/2016
|
|
|
|
|
|
|
|
|
|
80,000 |
|
|
|
40,000 |
|
|
|
40,000 |
|
|
$ |
.55 |
|
2/20/2017
|
|
|
|
|
|
|
|
|
|
33,334 |
|
|
|
16,666 |
|
|
|
16,666 |
|
|
$ |
.21 |
|
8/18/2017
|
|
|
|
|
|
|
|
|
|
0 |
|
|
|
250,000 |
|
|
|
250,000 |
|
|
$ |
.30 |
|
8/4/2018
|
|
|
|
|
|
|
|
|
|
*250,000 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
.30 |
|
8/4/2013
|
|
|
|
|
|
|
*Warrant
Subject to Proposal 4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brooke
E. Evans (4)
|
|
|
0 |
|
|
|
216,667 |
|
|
|
216,667 |
|
|
$ |
.17 |
|
10/1/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patricia
K
Tangredi
(5)
|
|
|
395,000 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
.26 |
|
9/23/2014
|
|
|
|
|
|
|
|
|
|
278,058 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
.10 |
|
5/10/2015
|
|
|
|
|
|
|
|
|
|
140,000 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
.10 |
|
10/1/2015
|
|
|
|
|
|
|
|
|
|
125,000 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
.55 |
|
11/1/2016
|
|
|
|
|
|
|
|
|
|
350,000 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
.21 |
|
8/10/2017
|
|
|
|
|
|
|
|
|
|
300,000 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
.21 |
|
1/30/2018
|
|
|
|
|
|
|
|
|
|
250,000 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
.30 |
|
8/4/2018
|
|
|
|
|
|
|
(1)
|
Mr.
Tangredi receives a salary of $170,000 per year, and a bonus in an amount
not to exceed 100% of his salary, which bonus shall be measured by meeting
certain performance goals as determined in the sole discretion of our
Board of Directors. The April 2008 warrant grant to Mr.
Tangredi was made by the Board of Directors in recognition for Mr.
Tangredi’s achievement of the following goals: negotiating conversion of
the convertible notes issued in the Additional Financing, securing a
release with respect to the consulting agreement with Gray Capital
Partners, Inc., securing and closing upon the Financing. Mr.
Tangredi has accrued unpaid salary of $104,167 for 2007, $105,150 for 2006
and $116,166 for 2005 and accrued bonus of $87,500 for year 2006. All
stock options issued to Mr. Tangredi were issued under the 2000
Plan.
|
|
|
(2)
|
All
stock options issued to Mr. Brown were issued under the 2000
Plan.
|
|
|
(3)
|
All
stock options issued to Mr. Ehrenberg were issued under the 2000
Plan.
|
|
|
(4)
|
All
stock options issued to Ms. Evans were issued under the 2000
Plan.
|
|
|
(5)
|
All
stock options issued to Ms. Tangredi were issued under the 2000
Plan
|
Director
Compensation
The
following table sets forth the compensation awarded to, earned by or paid to the
directors during the fiscal year ended December 31, 2008.
DIRECTOR
COMPENSATION
|
Name
|
|
Fees Earned
or Paid in
Cash
($)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards
($)
|
|
|
Non-
Equity
Incentive
Plan
Compen-
sation
($)
|
|
|
Change in
Pension
Value and
Non-qualified
Deferred
Compensation
Earnings
($)
|
|
|
All Other
Compensation
($)
|
|
|
Total ($)
|
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
Timothy N. Tangredi,
Chairman
|
|
|
- |
|
|
|
- |
|
|
|
20,718 |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
20,718 |
|
|
Raymond Kazyaka Sr.,
Director(1)
|
|
|
- |
|
|
|
- |
|
|
|
20,718 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
20,718 |
|
|
Robert
W. Schwartz, Director(2)
|
|
|
- |
|
|
|
- |
|
|
|
20,718 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
20,718 |
|
|
|
(1)
|
At
fiscal year end December 31, 2008, Mr. Kasyaka had 404,600 option
awards outstanding and no stock awards
outstanding.
|
|
|
(2)
|
At
fiscal year end December 31, 2008, Mr. Schwartz had
374,600 option awards outstanding and no stock awards
outstanding.
|
We do not
have a plan pursuant to which our directors are compensated and directors do not
receive cash compensation for their services on the Board of Directors although
they do receive stock options as determined by the full Board of Directors.
Raymond Kazyaka Sr. and Robert W. Schwartz were each granted an option on August
18, 2007 to purchase 60,000 shares of Common Stock at an exercise price of $0.21
per share, vesting immediately upon issuance and exercisable for a period of ten
years.
Our
non-employee directors are currently compensated with the issuance of stock
options, which generally become exercisable upon the date of grant, and which
generally expire on the earlier of ten years from the date of grant or up to
three years after the date that the optionee ceases to serve as a director.
Non-employee directors are also reimbursed for out-of-pocket expenses associated
with attending to the Company’s business.
Related
Party Transactions
Timothy N. Tangredi,
the Company’s Chief Executive Officer and Chairman, is a founder and a member of
the Board of Directors of Aegis BioSciences, LLC (“Aegis”). Aegis,
created in 1995, is a licensee of the Company’s nano-structured intellectual
property and materials in the biomedical and healthcare fields. Mr. Tangredi
spends approximately one to two days per month on Aegis business and is
compensated by Aegis for his time and contribution(s). We granted Aegis two
exclusive, world-wide licenses, the first in 1995 and the second in 2005.
Pursuant to these licenses, Aegis has the right to use and sell products
containing our polymer technologies in biomedical and health care applications.
The first license was entered into in 1995 and has been amended twice. In 2005,
we agreed to accept $150,000 as payment in full of all royalties and no further
license revenue will be forthcoming. The second license allows Aegis the use of
our intellectual property in the field of health care. A one time payment
of $50,000 was made under this license in 2005. In addition, under the second
license Aegis is to make royalty payments of 1.5% of the net sales price it
receives with respect to any personal hygiene product, surgical drape or
clothing products (the latter when employed in medical and animal
related fields) and license revenue it receives should Aegis grant a sublicense
to a third party. To date Aegis has sold no such products nor has it received
any licensing fees requiring a royalty payment be made to us. All obligations
for such payments will end on the earlier of June 2, 2015 or upon the aggregate
of all sums paid to us by Aegis under the agreement reaching $1 million.
The term of each respective license runs for the duration of the patented
technology.
During
the year ended December 31, 2007, Mr. Tangredi, a shareholder and officer
of the Company loaned the Company an aggregate of $156,500 pursuant to three
loan agreements. One loan was unsecured, due on demand and did not
accrue interest. The other two loans were unsecured, due in one and
two months respectively, and accrued interest at 12 percent, increasing by 1
percent for every 30 days the principle balance is outstanding. Prior
to year end, the Company repaid the loans.
The
Company rents a building that is owned by two stockholders of the Company, one
of which is the Chief Executive Officer. Base rent expense is $3,800
per month. The Company recognized rent expense of $12,198 in each of
the three-month periods ended March 31, 2009 and 2008. These amounts
are not necessarily indicative of the amounts that would have been incurred had
comparable transactions been entered into with independent parties. However, at
the time the Company entered into the lease agreement, based on then current
economic conditions, the real estate market, and the Company’s prospects, the
Company believed that the lease was on terms no less favorable to the Company
than could generally be obtained from independent parties.
On May
21, 2009, to evidence a loan, Company issued its Chief Executive Officer a
promissory note in the principal amount of $51,900. The note is unsecured and
bears a simple interest rate of 7% per annum. The principal amount plus all
accrued interest is to be paid in full to the holder no later than July 31,
2009. This note was paid in full prior to July 31, 2009.
On June
10, 2009, to evidence a loan, the Company issued a promissory note in the
principal amount of $10,000 to Ethos Business Ventures, an entity in which its
Chief Executive Officer holds a position. The note is unsecured and bears a
simple interest rate of 7% per annum. The principal amount plus all interest
accrued is to be paid in full to the holder no later than July 31,
2009. This note was paid in full prior to July 31,
2009.
The
Company also has accrued compensation due to the Chief Executive Officer and one
other employee for deferred salaries earned and unpaid as of March 31, 2009 of
$1,206,939.
The
Company regularly grants equity awards to management and the Board of Directors
as compensation for their services under the compensation plan.
There are
no material relationships between us and our directors or executive officers
except as previously discussed herein.
Since the
beginning of our last fiscal year, we have not been a participant in any
transaction, or proposed transaction, not disclosed herein in which any related
person had or will have a direct or indirect material interest and in which the
amount involved exceeds the lesser of $120,000 or one percent of our total
assets at year end for the last two completed fiscal years.
Proxy
Solicitation
All costs
of solicitation of proxies will be borne by the Company. In addition to
solicitation by mail, the Company’s officers and regular employees may solicit
proxies personally or by telephone. The Company does not intend to utilize a
paid solicitation agent.
Proxies
A
shareholder may revoke his, her or its Proxy at any time prior to its use by
giving written notice to the Secretary of the Company, by executing a revised
Proxy at a later date or by attending the Meeting and voting in person. Proxies
in the form enclosed, unless previously revoked, will be voted at the Meeting in
accordance with the specifications made thereon or, in the absence of such
specifications in accordance with the recommendations of the Company’s Board of
Directors.
Changes
in Registrant’s Certifying Accountant
Effective
April 23, 2009, Pender Newkirk & Company LLP (“Pender”) notified the Company
that it declined to stand for re-election as the Company’s independent
registered public accounting firm since “the Company no longer met Pender’s
continuation criteria”.
Effective
April 24, 2009, the Board of Directors of the Company recommended and approved
the appointment of Cross, Fernandez and Riley, LLP, Bayshore Center, 2907 Bay to
Bay Blvd, Suite 360, Tampa, FL 33629 (“CFR”) as our new independent certified
public accounting firm for the fiscal year ending December 31,
2009.
During
the Company's two most recent fiscal years ended December 31, 2008 and 2007, the
audit reports of Pender did not contain an adverse opinion or a disclaimer of
opinion, and were not qualified or modified as to uncertainty, audit scope or
accounting principles, except as follows: In the Company’s Annual Report on Form
10-K for the fiscal years ending December 31, 2008, the Audit Report regarding
the Company’s audited financial statements for the fiscal year ending December
31, 2008 and 2007 contained an opinion regarding the significant doubt about the
Company’s ability to continue as a going concern due to its lack of working
capital and no near term prospect to raise additional growth
capital.
During
the Company's two most recent fiscal years ended December 31, 2008 and 2007 and
any subsequent interim period preceding such declination to stand for
re-election and through the date of this Current Report, there were: (i) no
disagreements between the Company and Pender on any matters of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedures, which disagreements, if not resolved to the satisfaction of Pender,
would have caused Pender to make reference to the subject matter of the
disagreement in their reports on the Company’s financial statements for such
years, and (ii) no reportable events within the meaning set forth in Item
304(a)(1)(v) of Regulation S-K.
During
the Company’s two most recent fiscal years, and any subsequent interim period
prior to engaging Cross, Fernandez and Riley, LLP neither the Company nor anyone
on behalf of the Company has consulted with Cross, Fernandez and Riley,
LLP regarding either:
|
|
1.
|
The
application of accounting principles to specified transactions, either
completed or proposed or the type of audit opinion that might be rendered
on the Company’s financial statements, and neither was a written report
provided to the Company nor was oral advice provided that Cross, Fernandez
and Riley, LLP concluded was an important factor considered by the Company
in reaching a decision as to an accounting, auditing or financial
reporting issue; or
|
|
|
2.
|
Any
matter that was either the subject of a disagreement or a reportable
event, as each term is defined in Items 304(a)(1)(iv) or (v) of Regulation
S-K, respectively.
|
Relationship
with Independent Public Accountants
Pender
Newkirk & Company LLP served as our independent auditors for the fiscal year
ending December 31, 2008. Representatives from Pender Newkirk & Company LLP
are not expected to attend the Annual Meeting. We do not have a policy of asking
our shareholders to ratify the appointment of auditors.
Audit
Fees
The
aggregate audit fees billed for the years ended December 31, 2008 and 2007 were
$94,559 and $39,821 respectively. Audit services include the audits
of the consolidated financial statements included in the Company’s annual
reports on Form 10-K and reviews of interim financial statements
included in the Company’s quarterly reports on Form
10-Q.
Audit-Related
Fees
The
aggregate audit-related fees billed during the year ended December 31, 2008 for
services related to the Company’s registration statement were
$17,949.
Tax
Fees
None
All
Other Fees
None
Pre-approval
Policies
As of the
date of this Proxy Statement, the Company does not have an established audit
committee. The appointment of Pender Newkirk & Company LLP for
the year 2008 was approved by the Board of Directors as the principal auditors
for the Company. There are no board members that are considered to have
significant financial experience. When independent directors with the
appropriate financial background join the board, the board plans to establish an
audit committee, which will then adopt an appropriate charter and pre-approval
policies and procedures in connection with services to be rendered by the
independent auditors.
Submission
of Shareholder Proposals for 2010 Annual Meeting of Shareholders
Shareholders
may present proposals for inclusion in the Proxy Statement for the 2010 Annual
Meeting of Shareholders provided that such proposals are received by the
Company’s President, Mr. Timothy Tangredi, Dais Analytic Corporation, 11552
Prosperous Drive, Odessa, Florida 33556 no later than July 5, 2010. The use of
certified mail, return receipt requested, is advised. To be eligible for
inclusion, a proposal must comply with our Bylaws, Rule 14a-8 and all other
applicable provisions of Regulation 14A under the Securities Exchange Act of
1934. Proposals submitted not in accordance with such regulations will be deemed
untimely or otherwise deficient; however, the Company will have discretionary
authority to include such proposals in the 2010 Proxy Statement.
OTHER
BUSINESS
As of the
date of this Proxy Statement, management knows of no other matters to be brought
before the shareholders at the Annual Meeting. Should any other matters properly
come before the meeting, action may be taken thereon pursuant to the proxies in
the form enclosed, which confer discretionary authority on the persons named
therein or their substitutes with respect to such matters.
Shareholder
Communications
Shareholders
wishing to communicate with the Board of Directors may direct such
communications to the Board of Directors c/o the Company, Attn: Timothy N.
Tangredi. Mr. Tangredi will present a summary of all shareholder communications
to the Board of Directors at subsequent Board of Directors meetings. The
directors will have the opportunity to review the actual communications at their
discretion.
Incorporation
by Reference of Other Information in This Proxy Statement
For the
further information of the shareholders, the Company is delivering with this
Proxy Statement a copy of its Annual Report on Form 10-K for the fiscal year
ended December 31, 2008 (the "Form 10-K") filed with the Securities and Exchange
Commission. Certain portions of the Form 10-K, including, without limitation,
Item 6 (Selected Financial Data), Item 7 (Management's Discussion and Analysis
of Financial Condition and Results of Operations), Item 8 (Financial Statements
and Supplementary Data) and Item 9 (Changes in and Disagreements With
Accountants on Accounting and Financial Disclosure Controls and Procedures), are
incorporated in the Proxy Statement by reference. You should refer to the Form
10-K which accompanies the Proxy Statement and review such
information.
Additional
Information
We are
required to file annual, quarterly and current reports, Proxy Statements and
other information with the SEC. You may read and copy these proxy materials and
any other documents we have filed at the SEC’s Public Reference Room at 100 F
Street, N.E., Room 1580, Washington D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the Public Reference Room. Our SEC
filings are also available to the public at the SEC’s website at http://www.sec.gov.
Preliminary
Copy
DAIS
ANALYTIC CORPORATION
ANNUAL
MEETING PROXY CARD
THIS
PROXY IS BEING SOLICITED ON BEHALF OF OUR BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF SHAREHOLDERS TO BE HELD ON NOVEMBER 5,
2009
The
undersigned hereby appoints Timothy N. Tangredi and David Selengut, each and
together as proxies and each with full power of substitution, to represent and
to vote all shares of Common Stock of Dais Analytic Corporation (the “Company”
or “Dais”) at the annual meeting of shareholders of the Company to be held on
Thursday, November 5, 2009 at 10:00 a.m. Eastern Time, and at any adjournment or
postponement thereof, hereby revoking any and all proxies heretofore
given.
|
1.
|
Proposal 1: To elect
three Directors for a term expiring at the Company’s next annual meeting
or until their successors are duly elected and
qualified.
|
INSTRUCTION:
To withhold authority to vote for any individual nominee, mark “For All Except”
and write that nominee’s name in the space provided below.
Nominees: Timothy N. Tangredi,
Raymond Kazyaka Sr. and Robert W. Schwartz
|
|
¨
FOR ALL
|
¨
WITHHOLD
|
¨
FOR ALL EXCEPT
|
|
|
3.
|
Proposal 2: To amend
the Company’s Certificate of Incorporation to increase the amount of the
Company’s authorized shares from 110,000,000 comprised of 100,000,000
shares of Common Stock, par value $.01 per share (the “Common Stock”) and
10,000,000 shares of preferred stock to 210,000,000 shares, comprised of
200,000,000 shares of Common Stock and 10,000,000 shares of preferred
stock.
|
|
|
¨
FOR
|
¨
AGAINST
|
¨
ABSTAIN
|
|
|
|
Proposal
3: To adopt our 2009 Long-Term Incentive
Plan.
|
|
|
¨
FOR
|
¨
AGAINST
|
¨
ABSTAIN
|
|
|
|
Proposal 4: To ratify
and approve (i) a five-year warrant to purchase 3,000,000 shares of Common
Stock previously issued to Timothy N. Tangredi, the Company’s President,
Chief Executive Officer and Chairman of the Board and (ii) a five-year
warrant to purchase 250,000 shares of Common Stock previously issued to
Scott Ehrenberg, the Company’s Chief Technology Officer and
Secretary.
|
|
|
¨
FOR
|
¨
AGAINST
|
¨
ABSTAIN
|
|
Our
Board of Directors believes that Proposal 1, Proposal 2, Proposal 3, and
Proposal 4 are fair to, and in the best interests of, all of our shareholders.
Accordingly, our Board of Directors unanimously recommends that you vote “FOR”
the three nominees in Proposal 1, “FOR” Proposal 2, “FOR” Proposal 3, and “FOR”
Proposal 4.
In their
discretion, the proxies are authorized to vote upon such other matters as may
properly come before the special meeting or any adjournments thereof. If you
wish to vote in accordance with our Board of Directors’ recommendations, just
sign below. You need not mark any boxes.
|
Dated
|
2009
|
|
Signature
of Shareholder
|
|
|
Signature
of Shareholder (if held jointly)
|
|
NOTES:
|
1.
|
Please
sign your name exactly as your name appears hereon. If the shares are
owned by more than one person, all owners should sign. Persons signing as
executors, administrators, trustees or in similar capacities should so
indicate. If a corporation, please sign the full corporate name by the
president or other authorized officer. If a partnership, please sign in
the partnership name by an authorized
person.
|
|
2.
|
To
be valid, the enclosed form of Proxy for the annual meeting, together with
the power of attorney or other authority, if any, under which it is
signed, must be received by 8:00 A.M. Eastern Time, on November 4, 2009 at
the offices of our transfer agent, Island Stock Transfer located at 100
Second Avenue South, Suite 104N St. Petersburg, Florida 33701, telephone
(727) 289-0010.
|
|
3.
|
Returning
the enclosed form of Proxy will not prevent you from attending and voting
in person at the annual meeting or any adjournment or postponement
thereof.
|
PLEASE
COMPLETE, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY
TO ISLAND STOCK TRANSFER
EXHIBIT
A
CERTIFICATE
OF AMENDMENT
OF
THE
CERTIFICATE OF INCORPORATION
OF
DAIS
ANALYTIC CORPORATION
(Pursuant
to Section 805 of the Business Corporation Law)
_______________________
It is
hereby certified that:
FIRST: The
name of the corporation is DAIS ANALYTIC CORPORATION.
SECOND: The
certificate of incorporation of the corporation was filed with the Department of
State on April 8, 1993 under the name THE DAIS CORPORATION.
THIRD: The
amendment of the certificate of incorporation of the corporation effected by
this certificate of amendment is as follows:
Article FOURTH
is hereby amended to effect an increase in the authorized capital from
110,000,000 shares with a par value of $.01 per share, of which 100,000,000 was
designated as Common Stock, par value $.01 per share, and 10,000,000 was
designated as Preferred Stock, par value $0.01 per share to 210,000,000 shares
with a par value of $0.01 per share, of which 200,000,000 shall be designated as
Common Stock, par value $0.01 per share, and 10,000,000 shall remain designated
as Preferred Stock with a par value of $0.01 per share. There is no
change in the number or par value of issued shares in connection
therewith.
Section 1
of the Paragraph FOURTH of the certificate of incorporation, which refers to
authorized shares, is amended to read as follows:
“FOURTH: SHARES
OF STOCK."
Section
1. Authorized
Capital. The Corporation is authorized to issue two classes of
stock to be designated, respectively, “Common Stock” and “Preferred Stock;” and
collectively referred to herein as the “Capital Stock.” The total
number of shares of Capital Stock which the Corporation shall have authority to
issue shall be 210,000,000 shares, consisting of 200,000,000 shares of Common
Stock, having a par value of $0.01 per share, and 10,000,000 shares of Preferred
Stock, having a par value of $0.01 per share.
FOURTH: The
amendment to the certificate of incorporation was authorized by the unanimous
vote of the board of directors and by the requisite majority vote of the
shareholders at an annual meeting of the shareholders.
IN
WITNESS WHEREOF, the undersigned has subscribed this document on the date set
forth below and does hereby affirm, under the penalties of perjury, that the
statements contained therein have been examined by me and are true and
correct.
Executed
on this
[ ],
2009.
|
|
By:
|
/s/ Timothy
N. Tangredi
|
|
|
|
Name:
Timothy N. Tangredi
|
|
|
|
Title:
President, CEO and Chairman
|
CERTIFICATE
OF AMENDMENT
OF
THE
CERTIFICATE OF INCORPORATION
OF
DAIS
ANALYTIC CORPORATION
(Pursuant
to Section 805 of the Business Corporation Law)
Filer:
Yingying
Chen, Esq.
Ellenoff
Grossman & Schole, LLP
150 East
42nd
Street, 11th
Floor
New York,
New York 10017
EXHIBITS
B
DAIS
ANALYTIC CORPORATION
2009
LONG-TERM INCENTIVE PLAN
ARTICLE
I
PURPOSE
Section 1.1 Purpose. This
2009 Long-Term Incentive Plan (the “Plan”) is established by Dais Analytic
Corporation, a New York corporation (the “Company”), to create incentives which
are designed to motivate Participants to put forth maximum effort toward the
success and growth of the Company and to enable the Company to attract and
retain experienced individuals who by their position, ability and diligence are
able to make important contributions to the Company’s success. Toward these
objectives, the Plan provides for the grant of Options, Restricted Stock Awards,
Stock Appreciation Rights (“SARs”), Performance Units and Performance Bonuses to
Eligible Employees and the grant of Nonqualified Stock Options, Restricted Stock
Awards, SARs and Performance Units to Consultants and Eligible Directors,
subject to the conditions set forth in the Plan.
Section 1.2 Establishment.
The Plan is effective as of September 17, 2009 and for a period of ten years
thereafter. The Plan shall continue in effect until all matters relating to the
payment of Awards and administration of the Plan have been settled. The Plan is
subject to approval by the Company’s shareholders in accordance with applicable
law which approval must occur within the period ending twelve months after the
date the Plan is adopted by the Board. Pending such approval by the
shareholders, Awards under the Plan may be granted, but no such Awards may be
exercised prior to receipt of shareholder approval. In the event shareholder
approval is not obtained within a twelve-month period, all Awards granted shall
be void.
Section 1.3 Shares Subject to the
Plan. Subject to the limitations set forth in the Plan, Awards may be
made under this Plan for a total of 15,000,000 shares of the Company’s common
stock, par value $.01 per share (the “Common Stock”).
ARTICLE
II
DEFINITIONS
Section 2.1 “Account” means
the recordkeeping account established by the Company to which will be credited
an Award of Performance Units to a Participant.
Section 2.2 “Affiliated
Entity” means any corporation, partnership, limited liability company or
other form of legal entity in which a majority of the partnership or other
similar interest thereof is owned or controlled, directly or indirectly, by the
Company or one or more of its Subsidiaries or Affiliated Entities or a
combination thereof. For purposes hereof, the Company, a Subsidiary or an
Affiliated Entity shall be deemed to have a majority ownership interest in a
partnership or limited liability company if the Company, such Subsidiary or
Affiliated Entity shall be allocated a majority of partnership or limited
liability company gains or losses or shall be or control a managing director or
a general partner of such partnership or limited liability company.
Section 2.3 “Award” means,
individually or collectively, any Option, Restricted Stock Award, SAR,
Performance Unit or Performance Bonus granted under the Plan to an Eligible
Employee by the Board or any Nonqualified Stock Option, Performance Unit SAR or
Restricted Stock Award granted under the Plan to a Consultant or an Eligible
Director by the Board pursuant to such terms, conditions, restrictions, and/or
limitations, if any, as the Board may establish by the Award Agreement or
otherwise.
Section 2.4 “Award Agreement”
means any written instrument that establishes the terms, conditions,
restrictions, and/or limitations applicable to an Award in addition to those
established by this Plan and by the Board’s exercise of its administrative
powers.
Section 2.5 “Board” means the
Board of Directors of the Company and, if the Board has appointed a Committee as
provided in Section 3.1, the term “Board” shall include such
Committee.
Section 2.6 “Cause” shall
mean any of the following:
|
|
(i)
|
a
material breach or material default by Participant of the terms of any
employment agreement to which such Participant is
subject;
|
|
|
(ii)
|
gross
negligence or willful misconduct by Participant or the breach of fiduciary
duty by Participant in the performance of his/her duties as an employee,
consultant or director of the
Company;
|
|
|
(iii)
|
the
commission by Participant of an act of fraud, embezzlement or any other
crime in connection with Participant’s duties to the Company;
or
|
|
|
(iv)
|
conviction
of Participant of a felony or any other crime that would materially
interfere with the performance of Participant’s duties owed to the Company
or would, in the sole discretion of the Company, materially damage the
reputation of the Company.
|
Section
2.7 Intentionally Deleted
Section 2.8 “Code” means the
Internal Revenue Code of 1986, as amended. References in the Plan to any section
of the Code shall be deemed to include any amendments or successor provisions to
such section and any regulations under such section.
Section 2.9 “Committee” means
the Committee appointed by the Board as provided in Section 3.1.
Section 2.10 “Common Stock”
means the common stock, par value $.01 per share, of the Company, and after
substitution, such other stock as shall be substituted therefore as provided in
Article X.
Section 2.11 “Consultant”
means any person or entity who is engaged by the Company, a Subsidiary or an
Affiliated Entity to render consulting or advisory services.
Section 2.12 “Date of Grant”
means the date on which the grant of an Award is authorized by the Board or such
later date as may be specified by the Board in such authorization.
Section 2.13 “Disability”
means the Participant is unable to continue employment by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months. For purposes of this Plan, the determination of Disability shall
be made in the sole and absolute discretion of the Board.
Section 2.14 “Eligible
Employee” means any employee of the Company, a Subsidiary, or an
Affiliated Entity as approved by the Board.
Section 2.15 “Eligible
Director” means any member of the Board who is not an employee of the
Company, a Subsidiary or an Affiliated Entity.
Section 2.16 “Exchange Act”
means the Securities Exchange Act of 1934, as amended.
Section 2.17 “Fair Market
Value” means (A) during such time as the Common Stock is registered under
Section 12 of the Exchange Act, the closing price of the Common Stock as
reported by an established stock exchange or automated quotation system on the
day for which such value is to be determined, or, if no sale of the Common Stock
shall have been made on any such stock exchange or automated quotation system
that day, on the next preceding day on which there was a sale of such Common
Stock, or (B) during any such time as the Common Stock is not listed upon an
established stock exchange or automated quotation system, the mean between
dealer “bid” and “ask” prices of the Common Stock in the over-the-counter market
on the day for which such value is to be determined, as reported by the National
Association of Securities Dealers, Inc., or (C) during any such time as the
Common Stock cannot be valued pursuant to (A) or (B) above, the fair market
value shall be as determined by the Board considering all relevant information
including, by example and not by limitation, the services of an independent
appraiser.
Section 2.18 “Incentive Stock
Option” means an Option within the meaning of Section 422 of the
Code.
Section 2.19 “Nonqualified Stock
Option” means an Option which is not an Incentive Stock
Option.
Section 2.20 “Option” means
an Award granted under Article V of the Plan and includes both Nonqualified
Stock Options and Incentive Stock Options to purchase shares of Common
Stock.
Section 2.21 “Participant”
means an Eligible Employee, a Consultant or an Eligible Director to whom an
Award has been granted by the Board under the Plan.
Section 2.22 “Performance
Bonus” means the cash bonus which may be granted to Eligible Employees
under Article IX of the Plan.
Section 2.23 “Performance
Units” means those monetary units that may be granted to Eligible
Employees, Consultants or Eligible Directors pursuant to Article VIII
hereof.
Section 2.24 “Plan” means
this Dais Analytic Corporation. 2009 Long-Term Incentive Plan.
Section 2.25 “Restricted Stock
Award” means an Award granted to an Eligible Employee, Consultant or
Eligible Director under Article VI of the Plan.
Section 2.26 “Retirement”
means the termination of an Eligible Employee’s employment with the Company, a
Subsidiary or an Affiliated Entity on or after attaining age __.
Section 2.27 “SAR” means a
stock appreciation right granted to an Eligible Employee, Consultant or Eligible
Director under Article VII of the Plan.
Section 2.28 “Subsidiary”
shall have the same meaning set forth in Section 424 of the Code.
ARTICLE
III
ADMINISTRATION
Section 3.1 Administration of the
Plan by the Board. The Board shall administer the Plan. The Board may, by
resolution, appoint a Committee to administer the Plan and delegate its powers
described under this Section 3.1 and otherwise under the Plan for purposes of
Awards granted to Eligible Employees and Consultants.
Subject
to the provisions of the Plan, the Board shall have exclusive power
to:
(a) Select
Eligible Employees and Consultants to participate in the Plan.
(b) Determine
the time or times when Awards will be made to Eligible Employees or
Consultants.
(c) Determine
the form of an Award, whether an Incentive Stock Option, Nonqualified Stock
Option, Restricted Stock Award, SAR, Performance Unit, or Performance Bonus, the
number of shares of Common Stock or Performance Units subject to the Award, the
amount and all the terms, conditions (including performance requirements),
restrictions and/or limitations, if any, of an Award, including the time and
conditions of exercise or vesting, and the terms of any Award Agreement, which
may include the waiver or amendment of prior terms and conditions or
acceleration or early vesting or payment of an Award under certain circumstances
determined by the Board.
(d) Determine
whether Awards will be granted singly or in combination.
(e) Accelerate
the vesting, exercise or payment of an Award or the performance period of an
Award.
(f) Determine
whether and to what extent a Performance Bonus may be deferred, either
automatically or at the election of the Participant or the Board.
(g) Take
any and all other action it deems necessary or advisable for the proper
operation or administration of the Plan.
Section 3.2 Administration of Grants
to Eligible Directors. The Board shall have the exclusive power to select
Eligible Directors to participate in the Plan and to determine the number of
Nonqualified Stock Options, Performance Units, SARs or shares of Restricted
Stock awarded to Eligible Directors selected for participation. If the Board
appoints a Committee to administer the Plan, it may delegate to the Committee
administration of all other aspects of the Awards made to Eligible
Directors.
Section 3.3 Board to Make Rules and
Interpret Plan. The Board in its sole discretion shall have the
authority, subject to the provisions of the Plan, to establish, adopt, or revise
such rules and regulations and to make all such determinations relating to the
Plan, as it may deem necessary or advisable for the administration of the Plan.
The Board’s interpretation of the Plan or any Awards and all decisions and
determinations by the Board with respect to the Plan shall be final, binding,
and conclusive on all parties.
Section 3.4 Section 162(m)
Provisions. The Company intends for the Plan and the Awards made there
under to qualify for the exception from Section 162(m) of the Code for
“qualified performance based compensation” if it is determined by the Board that
such qualification is necessary for an Award. Accordingly, the Board shall make
determinations as to performance targets and all other applicable provisions of
the Plan as necessary in order for the Plan and Awards made there under to
satisfy the requirements of Section 162(m) of the Code.
ARTICLE
IV
GRANT
OF AWARDS
Section 4.1 Grant of Awards.
Awards granted under this Plan shall be subject to the following
conditions:
(a) Any
shares of Common Stock related to Awards which terminate by expiration,
forfeiture, cancellation or otherwise without the issuance of shares of Common
Stock or are exchanged in the Board’s discretion for Awards not involving Common
Stock, shall be available again for grant under the Plan and shall not be
counted against the shares authorized under Section 1.3.
(b) Common
Stock delivered by the Company in payment of an Award authorized under Articles
V and VI of the Plan may be authorized and unissued Common Stock or Common Stock
held in the treasury of the Company.
(c) The
Board shall, in its sole discretion, determine the manner in which fractional
shares arising under this Plan shall be treated.
(d) Separate
certificates or a book-entry registration representing Common Stock shall be
delivered to a Participant upon the exercise of any Option.
(e) The
Board shall be prohibited from canceling, reissuing or modifying Awards if such
action will have the effect of repricing the Participant’s Award.
(f) Eligible
Directors may only be granted Nonqualified Stock Options, Restricted Stock
Awards, SARs or Performance Units under this Plan.
(g) The
maximum term of any Award shall be ten years.
ARTICLE
V
STOCK
OPTIONS
Section 5.1 Grant of Options.
The Board may, from time to time, subject to the provisions of the Plan and such
other terms and conditions as it may determine, grant Options to Eligible
Employees. These Options may be Incentive Stock Options or Nonqualified Stock
Options, or a combination of both. The Board may, subject to the provisions of
the Plan and such other terms and conditions as it may determine, grant
Nonqualified Stock Options to Eligible Directors and Consultants. Each grant of
an Option shall be evidenced by an Award Agreement executed by the Company and
the Participant, and shall contain such terms and conditions and be in such form
as the Board may from time to time approve, subject to the requirements of
Section 5.2.
Section 5.2 Conditions of
Options. Each Option so granted shall be subject to the following
conditions:
(a) Exercise
Price. As limited by Section 5.2(e) below, each Option shall state the exercise
price which shall be set by the Board at the Date of Grant; provided, however,
no Option shall be granted at an exercise price which is less than the Fair
Market Value of the Common Stock on the Date of Grant. The Administrator also
may authorize payment in accordance with a cashless exercise program under
which, if so instructed by the Participant, Stock may be issued upon a cashless
exercise of the option.
(b) Form
of Payment. The exercise price of an Option may be paid (i) in cash or by check,
bank draft or money order payable to the order of the Company; (ii) by
delivering shares of Common Stock having a Fair Market Value on the date of
payment equal to the amount of the exercise price, but only to the extent such
exercise of an Option would not result in an adverse accounting charge to the
Company for financial accounting purposes with respect to the shares used to pay
the exercise price unless otherwise determined by the Board. However, only
Common Stock which the option holder has held for at least six months on the
date of the exercise may be surrendered in payment of the exercise price for the
options. In no event may a stock option be exercised after the expiration of its
stated term.; (iii) a combination of the foregoing or (iv) in such other form of
consideration as the Board or the committee of the Board may determine, equal in
value to the exercise price. In addition to the foregoing, the Board may permit
an Option granted under the Plan to be exercised by a broker-dealer acting on
behalf of a Participant through procedures approved by the Board.
Notwithstanding the foregoing, the Company may require a Participant to pay all
applicable income and employment taxes, required by law to be withheld, in cash
as a precondition to exercising the Participant’s Option until such time as the
Company has registered its stock and has established a relationship with a
broker-dealer acting on the Company’s behalf to sell the stock in the
market.
(c) Exercise
of Options. Options granted under the Plan shall be exercisable, in whole or in
such installments and at such times, and shall expire at such time, as shall be
provided by the Board in the Award Agreement. Exercise of an Option shall be by
written notice to the Secretary of the Company at least two business days in
advance of such exercise stating the election to exercise in the form and manner
determined by the Board. Every share of Common Stock acquired through the
exercise of an Option shall be deemed to be fully paid at the time of exercise
and payment of the exercise price.
(d) Other
Terms and Conditions. Among other conditions that may be imposed by the Board,
if deemed appropriate, are those relating to (i) the period or periods and the
conditions of exercisability of any Option; (ii) the minimum periods during
which Participants must be employed by the Company, its Subsidiaries, or an
Affiliated Entity, or must hold Options before they may be exercised; (iii) the
minimum periods during which shares acquired upon exercise must be held before
sale or transfer shall be permitted; (iv) conditions under which such Options or
shares may be subject to forfeiture; (v) the frequency of exercise or the
minimum or maximum number of shares that may be acquired at any one time; (vi)
the achievement by the Company of specified performance criteria; and (vii)
non-compete and protection of business matters.
(e) Special
Restrictions Relating to Incentive Stock Options. Options issued in the form of
Incentive Stock Options shall only be granted to Eligible Employees of the
Company or a Subsidiary, and not to Eligible Employees of an Affiliated Entity
unless such entity shall be considered as a “disregarded entity” under the Code
and shall not be distinguished for federal tax purposes from the Company or the
applicable Subsidiary.
(f) Application
of Funds. The proceeds received by the Company from the sale of Common Stock
pursuant to Options will be used for general corporate purposes.
(g) Shareholder
Rights. No Participant shall have a right as a shareholder with respect to any
share of Common Stock subject to an Option prior to purchase of such shares of
Common Stock by exercise of the Option.
ARTICLE
VI
RESTRICTED
STOCK AWARDS
Section 6.1 Grant of Restricted
Stock Awards. The Board may, from time to time, subject to the provisions
of the Plan and such other terms and conditions as it may determine, grant a
Restricted Stock Award to Eligible Employees, Consultants or Eligible Directors.
Restricted Stock Awards shall be awarded in such number and at such times during
the term of the Plan as the Board shall determine. Each Restricted Stock Award
shall be subject to an Award Agreement setting forth the terms of such
Restricted Stock Award and may be evidenced in such manner as the Board deems
appropriate, including, without limitation, a book-entry registration or
issuance of a stock certificate or certificates.
Section 6.2 Conditions of Restricted
Stock Awards. The grant of a Restricted Stock Award shall be subject to
the following:
(a) Restriction
Period. Restricted Stock Awards granted to an Eligible Employee shall require
the holder to remain in the employment of the Company, a Subsidiary, or an
Affiliated Entity for a prescribed period. Restricted Stock Awards granted to
Consultants or Eligible Directors shall require the holder to provide continued
services to the Company for a period of time. These employment and service
requirements are collectively referred to as a “Restriction Period”. The Board
or the Committee, as the case may be, shall determine the Restriction Period or
Periods which shall apply to the shares of Common Stock covered by each
Restricted Stock Award or portion thereof. In addition to any time vesting
conditions determined by the Board or the Committee, as the case may be,
Restricted Stock Awards may be subject to the achievement by the Company of
specified performance criteria based upon the Company’s achievement of all or
any of the operational, financial or stock performance criteria set forth on
Exhibit A annexed hereto, as may from time to time be established by the Board
or the Committee, as the case may be. At the end of the Restriction Period,
assuming the fulfillment of any other specified vesting conditions, the
restrictions imposed by the Board or the Committee, as the case may be shall
lapse with respect to the shares of Common Stock covered by the Restricted Stock
Award or portion thereof. The Board or the Committee, as the case may be, may,
in its discretion, accelerate the vesting of a Restricted Stock Award in the
case of the death, Disability or Retirement of the Participant who is an
Eligible Employee or resignation of a Participant who is a Consultants or an
Eligible Director.
(b) Restrictions.
The holder of a Restricted Stock Award may not sell, transfer, pledge, exchange,
hypothecate, or otherwise dispose of the shares of Common Stock represented by
the Restricted Stock Award during the applicable Restriction Period. The Board
shall impose such other restrictions and conditions on any shares of Common
Stock covered by a Restricted Stock Award as it may deem advisable including,
without limitation, restrictions under applicable Federal or state securities
laws, and may legend the certificates representing Restricted Stock to give
appropriate notice of such restrictions.
(c) Rights
as Shareholders. During any Restriction Period, the Board may, in its
discretion, grant to the holder of a Restricted Stock Award all or any of the
rights of a shareholder with respect to the shares, including, but not by way of
limitation, the right to vote such shares and to receive dividends. If any
dividends or other distributions are paid in shares of Common Stock, all such
shares shall be subject to the same restrictions on transferability as the
shares of Restricted Stock with respect to which they were
paid.
ARTICLE
VII
STOCK
APPRECIATION RIGHTS
Section 7.1 Grant of SARs.
The Board may from time to time, in its sole discretion, subject to the
provisions of the Plan and subject to other terms and conditions as the Board
may determine, grant a SAR to any Eligible Employee, Consultant or Eligible
Director. SARs may be granted in tandem with an Option, in which event, the
Participant has the right to elect to exercise either the SAR or the Option.
Upon the Participant’s election to exercise one of these Awards, the other
tandem Award is automatically terminated. SARs may also be granted as an
independent Award separate from an Option. Each grant of a SAR shall be
evidenced by an Award Agreement executed by the Company and the Participant and
shall contain such terms and conditions and be in such form as the Board may
from time to time approve, subject to the requirements of the Plan. The exercise
price of the SAR shall not be less than the Fair Market Value of a share of
Common Stock on the Date of Grant of the SAR.
Section 7.2 Exercise and
Payment. SARs granted under the Plan shall be exercisable in whole or in
installments and at such times as shall be provided by the Board in the Award
Agreement. Exercise of a SAR shall be by written notice to the Secretary of the
Company at least two business days in advance of such exercise. The amount
payable with respect to each SAR shall be equal in value to the excess, if any,
of the Fair Market Value of a share of Common Stock on the Exercise Date over
the Exercise Price of the SAR. Payment of amounts attributable to a SAR shall be
made in shares of Common Stock.
Section 7.3 Restrictions. In
the event a SAR is granted in tandem with an Incentive Stock Option, the Board
shall subject the SAR to restrictions necessary to ensure satisfaction of the
requirements under Section 422 of the Code. In the case of a SAR granted in
tandem with an Incentive Stock Option to an Eligible Employee who owns more than
10% of the combined voting power of the Company or its Subsidiaries on the date
of such grant, the amount payable with respect to each SAR shall be equal in
value to the applicable percentage of the excess, if any, of the Fair Market
Value of a share of Common Stock on the Exercise Date over the exercise price of
the SAR, which exercise price shall not be less than 110% of the Fair Market
Value of a share of Common Stock on the date the SAR is granted.
ARTICLE
VIII
PERFORMANCE
UNITS
Section 8.1 Grant of Awards.
The Board may, from time to time, subject to the provisions of the Plan and such
other terms and conditions as it may determine, grant Performance Units to
Eligible Employees, Consultants and Eligible Directors. Each Award of
Performance Units shall be evidenced by an Award Agreement executed by the
Company and the Participant, and shall contain such terms and conditions and be
in such form as the Board may from time to time approve, subject to the
requirements of Section 8.2.
Section 8.2 Conditions of
Awards. Each Award of Performance Units shall be subject to the following
conditions:
(a) Establishment
of Award Terms. Each Award shall state the target, maximum and minimum value of
each Performance Unit payable upon the achievement of performance
goals.
(b) Achievement
of Performance Goals. The Board shall establish performance targets for each
Award for a period of no less than a year based upon some or all of the
operational, financial or performance criteria listed on Exhibit A attached
hereto. The Board shall also establish such other terms and conditions as it
deems appropriate to such Award. The Award may be paid out in cash or Common
Stock as determined in the sole discretion of the Board.
ARTICLE
IX
PERFORMANCE
BONUS
Section 9.1 Grant of Performance
Bonus. The Board may from time to time, subject to the provisions of the
Plan and such other terms and conditions as the Board may determine, grant a
Performance Bonus to certain Eligible Employees selected for participation. The
Board will determine the amount that may be earned as a Performance Bonus in any
period of one year or more upon the achievement of a performance target
established by the Board. The Board shall select the applicable performance
target(s) for each period in which a Performance Bonus is awarded. The
performance target shall be based upon all or some of the operational, financial
or performance criteria more specifically listed in Exhibit A
attached.
Section 9.2 Payment of Performance
Bonus. In order for any Participant to be entitled to payment of a
Performance Bonus, the applicable performance target(s) established by the Board
must first be obtained or exceeded. Payment of a Performance Bonus shall be made
within 60 days of the Board’s certification that the performance target(s) has
been achieved unless the Participant has previously elected to defer payment
pursuant to a nonqualified deferred Plan adopted by the Company. Payment of a
Performance Bonus may be made in either cash or Common Stock as determined in
the sole discretion of the Board.
ARTICLE
X
STOCK
ADJUSTMENTS
In the
event that the shares of Common Stock, as constituted on the effective date of
the Plan, shall be changed into or exchanged for a different number or kind of
shares of stock or other securities of the Company or of another corporation
(whether by reason of merger, consolidation, recapitalization, reclassification,
stock split, spin-off, combination of shares or otherwise), or if the number of
such shares of Common Stock shall be increased through the payment of a stock
dividend, or a dividend on the shares of Common Stock, or if rights or warrants
to purchase securities of the Company shall be issued to holders of all
outstanding Common Stock, then there shall be substituted for or added to each
share available under and subject to the Plan, and each share theretofore
appropriated under the Plan, the number and kind of shares of stock or other
securities into which each outstanding share of Common Stock shall be so changed
or for which each such share shall be exchanged or to which each such share
shall be entitled, as the case may be, on a fair and equivalent basis in
accordance with the applicable provisions of Section 424 of the Code; provided,
however, with respect to Options, in no such event will such adjustment result
in a modification of any Option as defined in Section 424(h) of the Code. In the
event there shall be any other change in the number or kind of the outstanding
shares of Common Stock, or any stock or other securities into which the Common
Stock shall have been changed or for which it shall have been exchanged, then if
the Board shall, in its sole discretion, determine that such change equitably
requires an adjustment in the shares available under and subject to the Plan, or
in any Award, theretofore granted, such adjustments shall be made in accordance
with such determination, except that no adjustment of the number of shares of
Common Stock available under the Plan or to which any Award relates that would
otherwise be required shall be made unless and until such adjustment either by
itself or with other adjustments not previously made would require an increase
or decrease of at least 1% in the number of shares of Common Stock available
under the Plan or to which any Award relates immediately prior to the making of
such adjustment (the “Minimum Adjustment”). Any adjustment representing a change
of less than such minimum amount shall be carried forward and made as soon as
such adjustment together with other adjustments required by this Article X and
not previously made would result in a Minimum Adjustment. Notwithstanding the
foregoing, any adjustment required by this Article X which otherwise would not
result in a Minimum Adjustment shall be made with respect to shares of Common
Stock relating to any Award immediately prior to exercise, payment or settlement
of such Award. No fractional shares of Common Stock or units of other securities
shall be issued pursuant to any such adjustment, and any fractions resulting
from any such adjustment shall be eliminated in each case by rounding downward
to the nearest whole share.
ARTICLE
XI
GENERAL
Section 11.1 Amendment or
Termination of Plan. The Board may alter, suspend or terminate the Plan
at any time provided, however, that it may not, without shareholder approval,
adopt any amendment which would (i) increase the aggregate number of shares of
Common Stock available under the Plan (except by operation of Article X), (ii)
materially modify the requirements as to eligibility for participation in the
Plan, or (iii) materially increase the benefits to Participants provided by the
Plan.
Section 11.2 Termination of
Employment; Termination of Service. If an Eligible Employee’s employment
with the Company, a Subsidiary or an Affiliated Entity terminates as a result of
death, Disability or Retirement, or as a result of termination by the Company
other than for Cause, the Eligible Employee (or personal representative in the
case of death) shall be entitled to purchase all or any part of the shares
subject to any (i) vested Incentive Stock Option for a period of up to three
months from such date of termination (one year in the case of death or
Disability (as defined above) in lieu of the three-month period), and (ii)
vested Nonqualified Stock Option for a period of up to three months from such
date of termination (one year in the case of death or Disability in lieu of the
three-month period) or at the discretion of the Board, during the remaining term
of the Option. If an Eligible Employee’s employment terminates for Cause, all
Awards granted to such Eligible Employee, whether vested or not, shall
immediately terminate. If an Eligible Employee’s employment
terminates for any other reason, the Eligible Employee shall be entitled to
purchase all or any part of the shares subject to any vested Option for a period
of up to three months from such date of termination. In no event shall any
Option be exercisable past the term of the Option. The Board may, in
its sole discretion, accelerate the vesting of unvested Options in the event of
termination of employment of any Participant.
In the
event a Consultant ceases to provide services to the Company or an Eligible
Director terminates service as a director of the Company, the unvested portion
of any Award shall be forfeited unless otherwise accelerated pursuant to the
terms of the Eligible Director’s Award Agreement or by the Board. The Consultant
shall have a period of three months following the date he ceases to provide
consulting services and the Eligible Director shall have a period of three years
following the date he ceases to be a director, to exercise any Nonqualified
Stock Options which are otherwise exercisable on his date of termination of
service , unless the Board allows a longer period.
Section 11.3 Limited Transferability
– Options. The Board may, in its discretion, authorize all or a portion
of the Nonqualified Stock Options granted under this Plan to be on terms which
permit transfer by the Participant to (i) the ex-spouse of the Participant
pursuant to the terms of a domestic relations order, (ii) the spouse, children
or grandchildren of the Participant (“Immediate Family Members”), (iii) a trust
or trusts for the exclusive benefit of such Immediate Family Members, or (iv) a
partnership or limited liability company in which such Immediate Family Members
are the only partners or members. In addition, there may be no consideration for
any such transfer. The Award Agreement pursuant to which such Nonqualified Stock
Options are granted expressly provide for transferability in a manner consistent
with this paragraph. Subsequent transfers of transferred Nonqualified Stock
Options shall be prohibited except as set forth below in this Section 11.3.
Following transfer, any such Nonqualified Stock Options shall continue to be
subject to the same terms and conditions as were applicable immediately prior to
transfer, provided that for purposes of Section 11.2 hereof the term
“Participant” shall be deemed to refer to the transferee. The events of
termination of employment of Section 11.2 hereof shall continue to be applied
with respect to the original Participant, following which the Nonqualified Stock
Options shall be exercisable by the transferee only to the extent, and for the
periods specified in Section 11.2 hereof. No transfer pursuant to this Section
11.3 shall be effective to bind the Company unless the Company shall have been
furnished with written notice of such transfer together with such other
documents regarding the transfer as the Board shall request. With the exception
of a transfer in compliance with the foregoing provisions of this Section 11.3,
all other types of Awards authorized under this Plan shall be transferable only
by will or the laws of descent and distribution; however, no such transfer shall
be effective to bind the Company unless the Board has been furnished with
written notice of such transfer and an authenticated copy of the will and/or
such other evidence as the Board may deem necessary to establish the validity of
the transfer and the acceptance by the transferee of the terms and conditions of
such Award.
Section 11.4 Withholding
Taxes. Unless otherwise paid by the Participant, the Company, its
Subsidiaries or any of its Affiliated Entities shall be entitled to deduct from
any payment under the Plan, regardless of the form of such payment, the amount
of all applicable income and employment taxes required by law to be withheld
with respect to such payment or may require the Participant to pay to it such
tax prior to and as a condition of the making of such payment. In accordance
with any applicable administrative guidelines it establishes, the Board may
allow a Participant to pay the amount of taxes required by law to be withheld
from an Award by (i) directing the Company to withhold from any payment of the
Award a number of shares of Common Stock having a Fair Market Value on the date
of payment equal to the amount of the required withholding taxes or (ii)
delivering to the Company previously owned shares of Common Stock having a Fair
Market Value on the date of payment equal to the amount of the required
withholding taxes. However, any payment made by the Participant pursuant to
either of the foregoing clauses (i) or (ii) shall not be permitted if it would
result in an adverse accounting charge with respect to such shares used to pay
such taxes unless otherwise approved by the Board.
Section
11.5 Intentionally Deleted.
Section 11.6 Amendments to
Awards. Subject to the limitations of Article IV, such as the prohibition
on repricing of Options, the Board may at any time unilaterally amend the terms
of any Award Agreement, whether or not presently exercisable or vested, to the
extent it deems appropriate. However, amendments which are
materially
adverse
to the Participant shall require the Participant’s consent.
Section 11.7 Registration;
Regulatory Approval. Following adoption of the Plan by the shareholders
of the Company as provided in Section 1.2 of the Plan, the Board, in its sole
discretion, may determine to file with the Securities and Exchange Commission
and keep continuously effective, a Registration Statement on Form S-8 with
respect to shares of Common Stock subject to Awards hereunder. Notwithstanding
anything contained in this Plan to the contrary, the Company shall have no
obligation to issue shares of Common Stock under this Plan prior to the
obtaining of any approval from, or satisfaction of any waiting period or other
condition imposed by, any governmental agency which the Board shall, in its sole
discretion, determine to be necessary or advisable.
Section 11.8 Right to Continued
Employment. Participation in the Plan shall not give any Eligible
Employee any right to remain in the employ of the Company, any Subsidiary, or
any Affiliated Entity. The Company or, in the case of employment with a
Subsidiary or an Affiliated Entity, the Subsidiary or Affiliated Entity reserves
the right to terminate any Eligible Employee at any time. Further, the adoption
of this Plan shall not be deemed to give any Eligible Employee or any other
individual any right to be selected as a Participant or to be granted an
Award.
Section 11.9 Reliance on
Reports. Each member of the Board and each member of the Committee shall
be fully justified in relying or acting in good faith upon any report made by
the independent public accountants of the Company and its Subsidiaries and upon
any other information furnished in connection with the Plan by any person or
persons other than himself or herself. In no event shall any person who is or
shall have been a member of the Board be liable for any determination made or
other action taken or any omission to act in reliance upon any such report or
information or for any action taken, including the furnishing of information, or
failure to act, if in good faith.
Section 11.10 Construction.
Masculine pronouns and other words of masculine gender shall refer to both men
and women. The titles and headings of the sections in the Plan are for the
convenience of reference only, and in the event of any conflict, the text of the
Plan, rather than such titles or headings, shall control.
Section 11.11 Governing Law.
The Plan shall be governed by and construed in accordance with the laws of the
State of New York except as superseded by applicable Federal law.
Section 11.12 Other Laws. The
Board may refuse to issue or transfer any shares of Common Stock or other
consideration under an Award if, acting in its sole discretion, it determines
that the issuance or transfer of such shares or such other consideration might
violate any applicable law or regulation or entitle the Company to recover the
same under Section 16(b) of the Exchange Act, and any payment tendered to the
Company by a Participant, other holder or beneficiary in connection with the
exercise of such Award shall be promptly refunded to the relevant Participant,
holder or beneficiary.
Section 11.13 No Trust or Fund
Created. Neither the Plan nor an Award shall create or be construed to
create a trust or separate fund of any kind or a fiduciary relationship between
the Company and a Participant or any other person. To the extent that a
Participant acquires the right to receive payments from the Company pursuant to
an Award, such right shall be no greater than the right of any general unsecured
creditor of the Company.
Section 11.14 Conformance to Section
409A of the Code To the extent that the Committee determines that any
Award granted under the Plan is subject to Section 409A of the Code, the Award
Agreement evidencing such Award shall incorporate the terms and conditions
required by Section 409A of the Code. To the extent applicable, the Plan and
Award Agreements shall be interpreted in accordance with Section 409A of the
Code and Department of Treasury regulations and other interpretive guidance
issued thereunder, including without limitation any such regulations or other
guidance that may be issued after the Effective Date. Notwithstanding any
provision of the Plan to the contrary, in the event that the Committee
determines that any Award may be subject to Section 409A of the Code and related
Department of Treasury guidance, the Committee may adopt such amendments to the
Plan and the applicable Award Agreement or adopt other policies and procedures
(including amendments, policies and procedures with retroactive effect), or take
any other actions, that the Committee determines are necessary or appropriate to
(i) exempt the Award from Section 409A of the Code or (ii) comply with the
requirements of Section 409A of the Code and related Department of Treasury
guidance.
EXHIBIT
A
2009
Long-Term Incentive Plan
Performance
Criteria
Operational
Criteria may include:
Reserve
additions/replacements
Finding
& development costs
Production
volume
Production
Costs
Financial
Criteria may include:
Earnings(net
income, earnings before interest, taxes, depreciation and amortization
(“EBITDA”)
Earnings
per share:
Cash
flow
Operating
income
General
and Administrative Expenses
Debt to
equity ratio
Debt to
cash flow
Debt to
EBITDA
EBITDA to
Interest
Return on
Assets
Return on
Equity
Return on
Invested Capital
Profit
returns/margins
Midstream
margins
Stock
Performance Criteria:
Stock
price appreciation
Total
shareholder return
Relative
stock price performance