¨
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Preliminary
Proxy Statement
|
o
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Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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x
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Definitive
Proxy Statement
|
o
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Definitive
Additional Materials
|
o
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Soliciting
Material Pursuant to §240.14a-12
|
x
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|
No
fee required.
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||
o
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|
Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title
of each class of securities to which transaction applies:
Not
Applicable
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(2)
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Aggregate
number of securities to which transaction applies:
Not
Applicable
|
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|
(3)
|
|
Per
unit price or other underlying value of transaction computed pursuant
to
Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is
calculated and state how it was determined):
Not
Applicable
|
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|
(4)
|
|
Proposed
maximum aggregate value of transaction:
Not
Applicable
|
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(5)
|
|
Total
fee paid:
Not
Applicable
|
o
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|
Fee
paid previously with preliminary materials.
|
o
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|
Check
box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
|
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(1)
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Amount
Previously Paid:
Not
Applicable
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(2)
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Form,
Schedule or Registration Statement No.:
Not
Applicable
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(3)
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Filing
Party:
Not
Applicable
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(4)
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Date
Filed:
Not
Applicable
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Sincerely,
|
|
|
Sheldon
Nelson
Chairman
of the Board and Chief Executive Officer
|
Page
|
||||
PROXY
STATEMENT FOR THE ANNUAL MEETING OF STOCKHOLDERS
|
1
|
|||
ABOUT
THE MEETING
|
2
|
|||
DIRECTORS
AND OFFICERS
|
6
|
|||
PROPOSAL 1 —
ELECTION OF DIRECTORS
|
6 | |||
Directors
Whose Terms Will Expire at the 2008 Annual Meeting
|
6
|
|||
Directors
Whose Terms Will Expire at the 2009 Annual Meeting
|
6
|
|||
Directors
Whose Terms Will Expire at the 2010 Annual Meeting
|
7
|
|||
Recommendation
of the Board of Directors
|
7
|
|||
BOARD
OF DIRECTORS AND COMMITTEES
|
7
|
|||
Nomination
of Directors
|
8
|
|||
Compensation
of Directors
|
9
|
|||
AUDIT
COMMITTEE REPORT
|
10
|
|||
CORPORATE
GOVERNANCE AND NOMINATING COMMITTEE REPORT
|
10
|
|||
BENEFICIAL
OWNERSHIP OF COMMON STOCK
|
11
|
|||
EXECUTIVE
COMPENSATION
|
12
|
|||
Compensation
Discussion and Analysis
|
12
|
|||
Summary
Compensation Table
|
15
|
|||
Exercises
of Stock Options
|
16
|
|||
Outstanding
Equity Awards
|
17
|
|||
Employment
and Severance Agreements
|
17
|
|||
Certain
Relationships and Related Transactions
|
18
|
|||
Section 16(a)
Beneficial Ownership Reporting Compliance
|
19
|
|||
PROPOSAL
NO. 2 — RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
|
19
|
|||
Independent
Registered Public Accounting Firm Fees
|
19
|
|||
Recommendation
of the Board of Directors
|
20
|
|||
STOCKHOLDERS
PROPOSALS
|
20
|
|||
OTHER
BUSINESS
|
20
|
|
|
BY
ORDER OF THE BOARD OF DIRECTORS,
|
Totowa,
New Jersey
February
25, 2008
|
|
Bradley
D. Holmstrom
Corporate
Secretary
|
|
•
|
|
The
election of one director for a term of one year to serve until
the next
Annual Meeting of Stockholders or until their respective successors
have
been elected or appointed, and one director for a term of two years
or
until the Annual Meeting of Stockholders for that year or until
his
respective successor has been elected or appointed;
|
|
•
|
|
To
ratify the Audit Committee’s selection of J.H. Cohn LLP as the Company’s
independent registered public accounting firm for the fiscal year
ending
September 30, 2008; and
|
|
•
|
|
To
consider and act upon such other matters as may properly come before
the
meeting or any adjournment(s) thereof.
|
|
•
|
|
Vote
by marking, signing, dating and returning the enclosed proxy card
in the
accompanying postage-paid envelope;
|
|
•
|
|
Vote
by telephone or Internet; or
|
|
•
|
|
Vote
in person by attending the Annual Meeting. We will distribute written
ballots to any stockholder of record who wishes to vote in person
at the
Annual Meeting.
|
Name
|
Age
|
Position
|
Sheldon
Nelson (3)
|
46
|
President,
Chief Executive Officer
|
Douglas
Hooper (1)
|
47
|
Director,
Chair of Compensation Committee,
|
J.E.
“Ted” Boyle (3)
|
61
|
Director,
Chair of Audit Committee
|
Carolyn
Howard (1)(2)
|
44
|
Director,
Chair of Corporate Governance Committee
|
Richard
Newman (1)(3)
|
56
|
Director
|
Patrick
Cunningham
|
39
|
Vice
President of Sales and Marketing
|
Carmen
Ragusa, Jr.
|
59
|
Vice
President of Finance and Administration
|
Joe
Nassau
|
51
|
Vice
President of Operations
|
Bradley
Holmstrom
|
43
|
General
Counsel, Corporate Secretary
|
(1)
|
Member
of Audit Committee
|
(2)
|
Member
of Compensation Committee
|
(3)
|
Member
of Corporate Governance and Nominating
Committee
|
·
|
Doug
Hooper’s term as a Board member expires in May
2008.
|
·
|
J.E.
“Ted” Boyle’s term as a Board member expires as of this Annual Meeting.
Mr. Boyle is standing for election for an additional one year term
to
expire in 2009.
|
·
|
Carolyn
Howard’s term does not expire until 2009.
|
·
|
Richard
Newman joined the Board in December 2007 and is standing for election
to a
two year term to expire in 2010.
|
·
|
Sheldon
Nelson’s term does not expire until
2010.
|
·
|
an
understanding of business and financial affairs and the complexities
of a
business organization. Although a career in business is not essential,
the
nominee should have a proven record of competence and accomplishments
through leadership in industry, education, the professions or government
and should be willing to maintain a committed relationship with
the
Company as a director;
|
·
|
a
genuine interest in representing all of the stockholders and the
interest
of the Company overall;
|
·
|
a
willingness and ability to spend the necessary time to function
effectively as a director;
|
·
|
an
open-minded approach to matters and the resolve to make up their
own minds
on matters presented for
consideration;
|
·
|
a
reputation for honesty and integrity beyond question; and
|
·
|
independence
as defined by Rule 4200 of the National Association of Securities
Dealers and qualifications otherwise required in accordance with
applicable law or regulation.
|
|
|
Stock
Options
|
||||||||||||||
Non-Employee
Director
|
Cash
($)
|
Stock
Awards
(shares)
|
Number
Options
|
Exercise
Price
($)
|
Grant
Date
|
|||||||||||
Doug
Hooper
|
13,000
|
20,000
|
- | |||||||||||||
J.E.
“Ted” Boyle
|
13,000
|
20,000
|
- | |||||||||||||
Carolyn
Howard
|
16,000 |
20,000
|
- |
Respectfully
submitted,
AUDIT
COMMITTEE
J.E.
“Ted” Boyle (Chair)
Carolyn
Howard
Doug
Hooper
Richard
Newman
|
Respectfully
submitted,
CORPORATE
GOVERNANCE & NOMINATING COMM.
Carolyn
Howard (Chair)
J.E.
“Ted” Boyle
Sheldon
Nelson
|
Amount
and Nature of Beneficial Ownership
|
Percent
of Class
|
||||||
Capital
Group International, Inc. and
Capital
Guardian Trust Co.
11100
Santa Monica Blvd., Los Angeles, CA 90025
|
7,564,490
|
15.0
|
%
|
||||
|
|||||||
SC
Fundamental, et al.
747
Third Ave., New York, NY 10017
|
2,863,000
|
5.7
|
%
|
||||
|
|||||||
Ronald
Ordway
1868
Tucker Indust. Rd., Tucker, GA 30084
|
4,564,500
|
8.9
|
%
|
Name
and of Beneficial Owner of Common Stock
|
Amount
and Nature of Beneficial Ownership
|
Percent
of Class
|
|||||
Sheldon
B. Nelson 1
|
1,727,431
|
3.4
|
|||||
Patrick
Cunningham 3
|
590,032
|
1.1
|
|||||
Brad
Holmstrom 4
|
453,405
|
0.8
|
|||||
Carmen
Ragusa, Jr. 6
|
301,604
|
0.5
|
|||||
Joe
Nassau 2
|
111,456
|
*
|
|||||
J.E.
(Ted) Boyle 7
|
210,000
|
*
|
|||||
Douglas
Hooper 8
|
180,000
|
*
|
|||||
Richard
Newman 9
|
56,850
|
*
|
|||||
Carolyn
Howard 10
|
346,500
|
0.7
|
|||||
All
executive officers and directors as group (10 persons)
|
3,977,278
|
7.6
|
11 |
|
(1)
|
1,727,431
Total Shares - Includes 972,916 shares held of record by 567780
BC Ltd., a British Columbia corporation wholly owned by the Sheldon
Nelson Family Trust whose trustees are Sheldon Nelson and his sister,
Nicole Nelson, 735,076 shares held personally and 19,439 shares
subject to
options exercisable within the next sixty days.
|
|
(2)
|
Includes
80,067 shares of common stock and 31,389 shares subject to options
exercisable within the next sixty days.
|
|
(3)
|
Includes
436,145 shares of common stock and 153,887 exercisable options,
within the
next sixty days, to purchase shares of common stock.
|
|
(4)
|
Includes
273,407 shares of common stock and 179,998 exercisable options,
within the
next sixty days, to purchase shares of common stock.
|
|
(5)
|
Includes
44,819 shares of common stock and 165,000 exercisable options,
within the
next sixty days, to purchase shares of common stock.
|
|
(6)
|
Includes
74,422 shares of common stock and 227,222 exercisable options,
within the
next sixty days, to purchase shares of common stock.
|
|
(7)
|
Includes
110,000 shares of common stock and 100,000 exercisable options.
|
|
(8)
|
Includes
80,000 shares of common stock and 100,000 exercisable options.
|
|
(9)
|
Mr.
Newman joined the Board in December of 2007
|
|
(10)
|
Includes
246,500 shares of common stock and 100,000 exercisable options.
|
|
(11)
|
Based
on 52,898,668 shares, which includes 51,821,733 outstanding shares on
January 30, 2008, and above mentioned 1,076,935 options.
|
|
•
|
annual
base salary;
|
|
||
|
•
|
annual
incentive bonus, the amount of which is dependent on both Company
and
individual performance during the prior fiscal year; and
|
|
||
|
•
|
long-term
incentive compensation, currently delivered in the form of stock
options
and/or bonus grants from the Employee Stock Purchase Plan that
are
designed to align executive officers’ interests with those of stockholders
by rewarding outstanding performance and providing long-term incentives.
|
·
|
Mr.
Nelson received a bonus of $45,375 in December 2007, which represented
17%
of his target bonus opportunity (100% of
salary).
|
·
|
Mr.
Cunningham received a bonus of $13,125 in December 2007, which
represented
30% of his target bonus opportunity (25% of
salary).
|
·
|
Mr.
Ragusa received a bonus of $12,750 in December 2007, which represented
30%
of his target bonus opportunity (25% of
salary).
|
·
|
Mr.
Nassau received a bonus of $11,625 in December 2007, which represented
30%
of his target bonus opportunity (25% of
salary).
|
·
|
Mr.
Holmstrom received a bonus of $13,125 in December 2007, which represented
30% of his target bonus opportunity (25% of
salary).
|
Name
and Principal Position
|
Fiscal
Year
|
Annual
Salary
|
Stock
Awards(2)
|
Bonus
|
All
Other Compensation
|
Total
|
|||||||||||||
Sheldon
Nelson,
|
2007
|
$
|
275,000
|
$
|
24,000
|
$
|
45,375
|
$
|
30,000
|
(1)
|
$
|
374,375
|
|||||||
Chief
Executive Officer
|
|
||||||||||||||||||
|
|||||||||||||||||||
Patrick
Cunningham,
|
2007
|
$
|
175,000
|
$
|
-
|
$
|
13,125
|
$
|
-
|
$
|
188,125
|
||||||||
VP
of Sales and Business Development
|
|
||||||||||||||||||
|
|
||||||||||||||||||
Bradley
Holmstrom,
|
2007
|
$
|
175,000
|
$
|
-
|
$
|
13,125
|
$
|
-
|
$
|
188,125
|
||||||||
General
Counsel
|
|
||||||||||||||||||
|
|
||||||||||||||||||
Carmen
Ragusa, Jr.,
|
2007
|
$
|
170,000
|
$
|
-
|
$
|
12,750
|
$
|
-
|
$
|
182,750
|
||||||||
VP
of Finance and Administration
|
|
||||||||||||||||||
|
|
||||||||||||||||||
Joe
Nassau,
|
2007
|
$
|
155,000
|
$
|
9,334
|
$
|
11,625
|
$
|
-
|
$
|
175,959
|
||||||||
VP
of Operations
|
(1)
|
Living
allowance of $2,500 per month during the calendar year of 2007
only in
lieu of other compensation.
|
(2)
|
Represents
the dollar amount recognized for financial statement reporting
purposes
for fiscal 2007, in accordance with FAS 123(R). Assumptions used
in the
calculation of this amount are included in Note 4 to our audited
financial
statements included in our Annual Report of Form 10-K for the year
ended
September 30, 2007.
|
Executive
Officer
|
Shares
Acquired on Exercise
|
Value
of Shares after Exercise on
Exercise
Date
|
Number
of Securities Underlying Unexercised Options at Fiscal Year End
|
Value
of Unexercised
in
the Money Options
at
Fiscal Year End
|
|||||||||||||||
|
|
|
Exercisable
|
Unexercisable
|
Exercisable
|
Unexercisable
|
|||||||||||||
Sheldon
Nelson,
|
45,000
|
$
|
20,700
|
(1)
|
515,275
|
134,725
|
$
|
500
|
$
|
1,400
|
|||||||||
Chief
Executive Officer
|
|||||||||||||||||||
|
|||||||||||||||||||
Patrick
Cunningham,
|
117,935
|
$
|
44,816
|
(2)
|
140,971
|
34,029
|
$
|
130
|
$
|
750
|
|||||||||
VP
of Sales and Business Dev.
|
|||||||||||||||||||
|
|||||||||||||||||||
Bradley
Holmstrom,
|
162,779
|
$
|
68,467
|
(3)
|
165,971
|
34,029
|
$
|
130
|
$
|
750
|
|||||||||
General
Counsel
|
|||||||||||||||||||
|
|||||||||||||||||||
Carmen
Ragusa, Jr.,
|
-0-
|
$
|
-0-
|
209,305
|
75,695
|
$
|
850
|
$
|
2,550
|
||||||||||
VP
of Finance and Admin.
|
|||||||||||||||||||
|
|||||||||||||||||||
Joseph
Nassau,
|
-0-
|
$
|
-0-
|
22,917
|
52,083
|
$
|
917
|
$
|
2,083
|
||||||||||
VP
of Operations
|
(1)
|
Value
of exercised options at $0.79/share on day of exercise, less exercise
price of $0.33/share.
|
(2)
|
Value
of exercised options at $0.71/share on day of exercise, less exercise
price of $0.33/share
|
(3)
|
Value
of exercised options at $0.71/share on day of exercise (121,463
shares)
and $0.87/share on day of exercise (41,316 shares), less exercise
price of
$0.33/share for both
|
Executive
Officer
|
Option
Expiration
Date
|
Option
Exercise
Price
($)
|
Number
of Securities
Underlying
Options (#)
Exercisable
|
Number
of Securities
Underlying
Options (#)
Unexercisable
|
|||||||||
Sheldon
Nelson,
|
2/1/10
|
3.01
|
500,000
|
(1)
|
100,000
|
(1)
|
|||||||
Chief
Executive Officer
|
10/20/11
|
.75
|
16,666
|
33,334
|
|||||||||
|
|
||||||||||||
Patrick
Cunningham,
|
12/5/08
|
1.35
|
50,000
|
0
|
|||||||||
VP
of Sales and Business Dev.
|
2/1/10
|
2.71
|
83,333
|
16,667
|
|||||||||
10/20/11
|
.75
|
8,333
|
16,667
|
||||||||||
|
|
||||||||||||
Bradley
Holmstrom,
|
12/5/08
|
1.35
|
75,000
|
0
|
|||||||||
General
Counsel
|
2/1/10
|
2.71
|
83,333
|
16,667
|
|||||||||
|
10/20/11
|
.75
|
8,333
|
16,667
|
|||||||||
|
|||||||||||||
Carmen
Ragusa, Jr.,
|
6/4/09
|
2.05
|
100,000
|
0
|
|||||||||
VP
of Finance and Admin.
|
2/1/10
|
2.71
|
83,333
|
16,667
|
|||||||||
10/20/11
|
.75
|
28,333
|
56,667
|
||||||||||
|
|||||||||||||
Joe
Nassau
|
10/20/11
|
.75
|
25,000
|
50,000
|
|||||||||
VP
Operations
|
|
(1)
|
Mr.
Nelson voluntarily forfeited these stock options back to the Company
for
no consideration on November 15,
2007.
|
Named
Executive Officer
|
Payments
upon a
termination
by the Company
without
cause(1)
|
Payments
upon a
termination
by the Company
without
cause or by the Executive upon
a
change in control(1)
|
|||||
Sheldon
Nelson
|
$ | 550,000 | $ | 825,000 | |||
Patrick
Cunningham
|
$ | 175,000 | $ | 350,000 | |||
Brad
Holmstrom
|
$ | 55,000 | $ | 175,000 | |||
Carmen
Ragusa, Jr.
|
$ | 53,000 | $ | 160,000 |
(1)
|
Does
not assume any pro-rata portion of target bonus for fiscal year
2008.
|
Respectfully
submitted,
COMPENSATION
COMMITTEE
Doug
Hooper (Chair)
Carolyn
Howard
|
|
Fiscal
year ended
September 30,
2007
|
Fiscal
year ended
September 30,
2006
|
|||||
Audit
Fees
|
$
|
131,111
|
$
|
124,299
|
|||
Audit
Related Fees
|
—
|
—
|
|||||
Tax
Fees
|
$
|
35,168
|
49,599
|
||||
All
Other Fees
|
$
|
—
|
$
|
—
|
|
|
By
Order of the Board of Directors,
|
Totowa,
New Jersey
|
|
Bradley
D. Holmstrom
Corporate
Secretary
|