Filed
by the Registrant ý
|
||
Filed
by a Party other than the Registrant o
|
||
Check
the appropriate box:
|
||
¨
|
|
Preliminary
Proxy Statement
|
o
|
|
Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
|
x
|
|
Definitive
Proxy Statement
|
o
|
|
Definitive
Additional Materials
|
o
|
|
Soliciting
Material Pursuant to §240.14a-12
|
MDU
COMMUNICATIONS INTERNATIONAL, INC.
|
|||||
(Name
of Registrant as Specified In Its Charter)
|
|||||
|
|||||
(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
|
|||||
|
|
|
|
|
|
Payment
of Filing Fee (Check the appropriate box):
|
|||||
x
|
|
No
fee required.
|
|||
o
|
|
Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
|
|||
|
|
(1)
|
|
Title
of each class of securities to which transaction applies:
Not
Applicable
|
|
|
|
(2)
|
|
Aggregate
number of securities to which transaction applies:
Not
Applicable
|
|
|
|
(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
|
|
|
|
(4)
|
|
Proposed
maximum aggregate value of transaction:
Not
Applicable
|
|
|
|
(5)
|
|
Total
fee paid:
Not
Applicable
|
|
o
|
|
Fee
paid previously with preliminary materials.
|
|||
o
|
|
Check
box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
|
|||
|
|
(1)
|
|
Amount
Previously Paid:
Not
Applicable
|
|
|
|
(2)
|
|
Form,
Schedule or Registration Statement No.:
Not
Applicable
|
|
|
|
(3)
|
|
Filing
Party:
Not
Applicable
|
|
|
|
(4)
|
|
Date
Filed:
Not
Applicable
|
|
|
Sincerely,
|
|
|
Sheldon
Nelson
Chairman
of the Board and Chief Executive Officer
|
|
|
|
|
|
Page
|
||
|
|
||
PROXY
STATEMENT FOR THE ANNUAL MEETING OF STOCKHOLDERS
|
1
|
||
PROPOSAL 1 —
ELECTION OF DIRECTORS
|
2
|
||
|
Nominees
for Directors Whose Terms Will Expire at the 2007 Annual Meeting
|
2
|
|
|
Nominees
for Directors Whose Terms Will Expire at the 2008 Annual Meeting
|
3
|
|
|
Nominees
for Directors Whose Terms Will Expire at the 2009 Annual Meeting
|
3
|
|
|
Recommendation
of the Board of Directors
|
3
|
|
|
Board
of Directors and Committees
|
3
|
|
|
Corporate
Governance and Nominating Committee
|
4
|
|
|
Nomination
of Directors
|
4
|
|
|
Compensation
of Directors
|
5
|
|
|
Audit
Committee Report
|
6
|
|
|
Corporate
Governance and Nominating Committee Report
|
7
|
|
BENEFICIAL
OWNERSHIP OF COMMON STOCK
|
7
|
||
EXECUTIVE
COMPENSATION
|
8
|
||
|
Compensation
Committee Report
|
8
|
|
|
Summary
Compensation Table
|
10
|
|
|
Stock
Option Grants in Fiscal 2005
|
11
|
|
|
Exercises
of Stock Options in Fiscal 2005
|
12
|
|
|
Employment,
Severance and Change-in-Control Arrangements
|
12
|
|
|
Certain
Relationships and Related Transactions
|
13
|
|
|
Section 16(a)
Beneficial Ownership Reporting Compliance
|
13
|
|
PROPOSAL
NO. 2 — RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
|
13
|
||
|
Independent
Registered Public Accounting Firm Fees
|
13
|
|
|
Recommendation
of the Board of Directors
|
14
|
|
PROPOSAL
NO. 3 — APPROVAL TO EXTEND THE TERM OF THE COMPANY’S 2001 EMPLOYEE
STOCK PURCHASE PLAN FOR AN ADDITIONAL FIVE YEARS
|
14
|
||
|
General
Information and Background of Proposal
|
14
|
|
|
Recommendation
of the Board of Directors
|
16
|
|
STOCKHOLDERS
PROPOSALS
|
16
|
||
OTHER
BUSINESS
|
16
|
||
APPENDIX
A - 2001 Employee Stock Purchase Plan
|
A-1
|
1. |
To
elect two directors each to a one-year term, one director to a two-year
term and one director to a three-year term;
|
2. |
To
ratify the selection of JH Cohn LLP as the Company's independent
public
accountants;
|
3. |
To
extend the term of the Company's 2001 Employee Stock Purchase Plan
for an
additional five years; and
|
4. |
To
transact any other business that may properly come before the meeting.
|
|
|
BY
ORDER OF THE BOARD OF DIRECTORS,
|
Totowa,
New Jersey
May
5, 2006
|
|
Bradley
D. Holmstrom
Corporate
Secretary
|
·
|
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 (1)
|
|||||||||||||
Exercise
|
|||||||||||||
Non-Employee
Director
|
Cash
($)
|
Number
|
Price
($)
|
Grant
Date
|
|||||||||
Doug
Hooper
|
13,000
|
-
|
|||||||||||
J.E.
“Ted” Boyle
|
13,000
|
-
|
|||||||||||
Ed
Huguez (1)
|
12,000
|
-
|
|||||||||||
Steve
Cox
|
2,000
|
100,000
|
1.83
|
7/21/05
|
|||||||||
Carolyn
Howard
|
5,000
|
100,000
|
1.83
|
7/21/05
|
(1)
|
Mr. Huguez
retired from the Board of Directors in July
2005.
|
Respectfully
submitted,
J.E.
“Ted” Boyle (Chair)
Douglas
Hooper
Carolyn
Howard
|
Respectfully
submitted,
Steve
Cox (Chair)
Sheldon
Nelson
|
Name
and Address of Beneficial Owner of Common Stock
|
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
|
5,559,390
|
11.2
|
%
|
||||
SC
Fundamental, et al.
747
Third Ave., New York, NY 10017
|
2,863,000
|
5.7
|
%
|
||||
Fuller
& Thaler, et al.
411
Borel Ave., Suite 402, San Mateo, CA 94402
|
2,842,367
|
5.7
|
%
|
Amount
and Nature of Beneficial Ownership
|
Percent
of Class
|
||||||
Sheldon
B. Nelson 1
|
1,712,866
|
3.0
|
|||||
Tom
Tracey 2
|
41,667
|
*
|
|||||
Patrick
Cunningham 3
|
455,862
|
1.0
|
|||||
Brad
Holmstrom 4
|
342,841
|
1.0
|
|||||
Michael
Stanway 5
|
122,013
|
*
|
|||||
Carmen
Ragusa, Jr. 2
|
58,334
|
*
|
|||||
J.E.
(Ted) Boyle 6
|
150,000
|
*
|
|||||
Douglas
Hooper 7
|
150,000
|
*
|
|||||
Steve
Cox 2
|
50,000
|
*
|
|||||
Carolyn
Howard 8
|
150,200
|
*
|
|||||
All
executive officers and directors as group (10 persons)
|
3,233,283
|
6.3
9
|
|
(1)
|
Includes
971,016 shares held of record by 55,930 BC Ltd., a British Columbia
corporation wholly owned by the Sheldon Nelson Family Trust whose
trustees
are Sheldon Nelson and his sister, Nicole Nelson, 566,850 held personally
and 175,000 shares subject to options exercisable within 60 days.
|
|
(2)
|
Includes
only exercisable options, within the next sixty days, to purchase
shares
of common stock.
|
|
(3)
|
Includes
234,979 shares of common stock and 220,883 exercisable options, within
the
next sixty days, to purchase shares of common stock.
|
|
(4)
|
Includes
82,425 shares of common stock and 260,416 exercisable options, within
the
next sixty days, to purchase shares of common stock.
|
|
(5)
|
Includes
54,819 shares of common stock and 145,000 exercisable options, within
the
next sixty days, to purchase shares of common stock.
|
|
(6)
|
Includes
50,000 shares of common stock and 100,000 exercisable options, within
the
next sixty days, purchase shares of common stock.
|
|
(7)
|
Includes
50,000 shares of common stock and 100,000 exercisable options, within
the
next sixty days, to purchase shares of common stock.
|
|
(8)
|
Includes
100,200 shares of common stock and 50,000 exercisable options, within
the
next sixty days, to purchase shares of common stock.
|
|
(9)
|
Based
on 51,014,222 outstanding shares and above mentioned 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.
|
Respectfully
submitted,
Douglas
Hooper (Chair)
J.E.
“Ted” Boyle
|
|
|
Annual
Compensation
|
Long
Term Compensation Awards
|
|||||||||||||
Name
and Principal Position
|
Fiscal
Year
|
Salary
|
Bonus
|
Other
Comp2
|
Securities
Underlying
Options
(shares, cumulative) 3
|
|||||||||||
Sheldon
B. Nelson,
|
2005
|
$
|
269,743
|
$
|
200,000
|
$
|
-0-
|
1,400,000
|
||||||||
Chief
Executive Officer
|
2004
|
$
|
200,000
|
$
|
30,000
|
$
|
-0-
|
800,000
|
||||||||
|
2003
|
$
|
192,000
|
$
|
50,000
|
$
|
-0-
|
800,000
|
||||||||
|
||||||||||||||||
Tom
Tracey,
|
2005
|
$
|
82,212
1
|
$
|
35,000
|
$
|
2,306
|
500,000
|
||||||||
Chief
Operating Officer, Pres.
|
||||||||||||||||
|
||||||||||||||||
Patrick
Cunningham,
|
2005
|
$
|
173,070
|
$
|
45,706
|
$
|
2,000
|
450,000
|
||||||||
VP
of Sales and Business Dev.
|
2004
|
$
|
160,000
|
$
|
6,000
|
$
|
6,000
|
350,000
|
||||||||
|
2003
|
$
|
160,000
|
$
|
-0-
|
$
|
6,000
|
300,000
|
||||||||
|
||||||||||||||||
Bradley
Holmstrom,
|
2005
|
$
|
157,744
|
$
|
63,907
|
$
|
-0-
|
425,000
|
||||||||
General
Counsel
|
2004
|
$
|
138,900
|
$
|
10,000
|
$
|
1,500
|
325,000
|
||||||||
|
2003
|
$
|
109,250
|
$
|
-0-
|
$
|
5,750
|
250,000
|
|
|
|
|
|
|
|||||||||||
Michael
Stanway,
|
2005
|
$
|
110,609
|
$
|
7,875
|
$
|
-0-
|
225,000
|
||||||||
VP
of Product Engineering
|
2004
|
$
|
105,600
|
$
|
-0-
|
$
|
-0-
|
225,000
|
||||||||
|
||||||||||||||||
Carmen
Ragusa, Jr.,
|
2005
|
$
|
145,006
|
$
|
10,000
|
-0-
|
200,000
|
|||||||||
VP
of Finance and Admin.
|
2004
|
$
|
54,034
1
|
$
|
-0-
|
-0-
|
100,000
|
|||||||||
|
||||||||||||||||
John
Silvers,
|
2005
|
$
|
32,307
1
|
$
|
-0-
|
$
|
1,385
2
|
-0-
|
||||||||
VP
of Field Operations
|
||||||||||||||||
|
||||||||||||||||
Joe
Nassau,
|
2005
|
$
|
37,692
1
|
$
|
-0-
|
$
|
-0-
|
-0-
|
||||||||
VP
of Subscriber Operations
|
(1) |
Partial
year salary.
|
(2) |
Auto
allowance.
|
(3) |
Includes
total options granted since commencement of employment, not reduced
by
exercise.
|
Executive
Officer
|
Number
of
Securities
Underlying Options Granted
|
%
of Total Options Granted to Employees
in
Fiscal Year
|
Exercise
or
Base
Price
|
Expiration
Date
|
|||||||||
Sheldon
B. Nelson,
|
600,000
|
30
|
%
|
$
|
3.01
|
2/1/2010
|
|||||||
Chief
Executive Officer
|
|||||||||||||
|
|||||||||||||
Tom
Tracey,
|
500,000
|
25
|
%
|
$
|
2.01
|
5/5/2010
|
|||||||
Chief
Operating Officer, Pres.
|
|||||||||||||
|
|||||||||||||
Patrick
Cunningham,
|
100,000
|
5
|
%
|
$
|
2.83
|
2/24/2010
|
|||||||
VP
of Sales and Business Dev.
|
|||||||||||||
|
|||||||||||||
Bradley
Holmstrom,
|
100,000
|
5
|
%
|
$
|
2.83
|
2/24/2010
|
|||||||
General
Counsel
|
|||||||||||||
|
|||||||||||||
Carmen
Ragusa, Jr.,
|
100,000
|
5
|
%
|
$
|
2.83
|
2/24/2010
|
|||||||
VP
of Finance and Admin.
|
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
B. Nelson,
|
570,000
|
$
|
1,658,7001
|
175,000
|
500,000
|
$
|
107,250
|
$
|
0
|
||||||||||
Chief
Executive Officer
|
|||||||||||||||||||
|
|||||||||||||||||||
Tom
Tracey,
|
-0-
|
-0-
|
41,667
|
458,333
|
$
|
0
|
$
|
0
|
|||||||||||
President/COO
|
|||||||||||||||||||
|
|||||||||||||||||||
Patrick
Cunningham,
|
40,000
|
$
|
116,8002
|
220,833
|
104,167
|
$
|
258,918
|
$
|
6,834
|
||||||||||
VP
of Sales/Business Dev.
|
|||||||||||||||||||
|
|||||||||||||||||||
Bradley
Holmstrom,
|
31,023
|
$
|
62,9763
|
260,416
|
114,584
|
$
|
304,791
|
$
|
11,959
|
||||||||||
General
Counsel
|
|||||||||||||||||||
|
|||||||||||||||||||
Michael
Stanway,
|
30,000
|
$
|
80,1004
|
145,000
|
50,000
|
$
|
189,475
|
$
|
89,375
|
||||||||||
VP
of Product Engineering
|
|||||||||||||||||||
|
|||||||||||||||||||
Carmen
Ragusa, Jr.,
|
-0-
|
-0-
|
58,344
|
141,666
|
$
|
0
|
$
|
0
|
|||||||||||
VP
of Finance and Admin.
|
1.
|
Value
of exercised options at $3.24/share on day of exercise, less exercise
price of $0.33/share.
|
2.
|
Value
of exercised options at $3.25/share on day of exercise, less exercise
price of $0.33/share.
|
3.
|
Value
of exercised options at $2.36/share on day of exercise, less exercise
price of $0.33/share.
|
4.
|
Value
of exercised options at $3.00/share on day of exercise, less exercise
price of $0.33/share.
|
Fiscal
year ended
September 30,
2005
|
Fiscal
year ended
September 30,
2004
|
||||||
Audit
Fees
|
$
|
148,417
|
$
|
117,057
|
|||
Audit
Related Fees
|
—
|
—
|
|||||
Tax
Fees
|
$
|
23,612
|
$
|
38,277
|
|||
All
Other Fees
|
$
|
--
|
$
|
--
|
|
|
By
Order of the Board of Directors,
|
|
|
Bradley
D. Holmstrom
Corporate
Secretary
|
1. |
Personal
Information.
|
2.
|
Eligibility.
Any Employee whose customary employment is more than 20 hours per
week and
more than 5 months per calendar year, who has been an Employee for
more
than 6 consecutive calendar months and who does not hold (directly
or
indirectly) five percent (5%) or more of the combined voting power
of the
Company, a parent or a subsidiary, whether in stock or options to
acquire
stock is eligible to participate in the MDU Communications International,
Inc. 2001 Employee Stock Purchase Plan (the "ESPP"); provided, however,
that Employees who are subject to the rules or laws of a foreign
jurisdiction that prohibit or make impractical the participation
of such
Employees in the ESPP are not eligible to participate.
|
3.
|
Definitions.
Each capitalized term in this Subscription Agreement shall have the
meaning set forth in the ESPP.
|
4.
|
Subscription.
I hereby elect to participate in the ESPP and subscribe to purchase
shares
of the Company's Common Stock in accordance with this Subscription
Agreement and the ESPP. I have received a complete copy of the ESPP
and a
prospectus describing the ESPP and understand that my participation
in the
ESPP is in all respects subject to the terms of the ESPP. The
effectiveness of this Subscription Agreement is dependent on my
eligibility to participate in the ESPP.
|
5.
|
Payroll
Deduction Authorization.
|
Percentage
of Salary to be Deducted:
|
_____%
|
Percentage
of Bonus and other Compensation:
|
_____%
|
Direct
Payment Amount:
|
$______________
|
6.
|
ESPP
Accounts and Purchase Price. I understand that all payroll deductions
will
be credited to my account under the ESPP. No additional payments
may be
made to my account. No interest will be credited on funds held in
the
account at any time including any refund of the account caused by
withdrawal from the ESPP. All payroll deductions shall be accumulated
for
the purchase of Company Common Stock at the applicable Purchase Price
determined in accordance with the
ESPP.
|
7.
|
Withdrawal
and Changes in Payroll Deduction. I understand that I may discontinue
my
participation in the ESPP at any time prior to an Exercise Date as
provided in Section 10 of the ESPP, any accumulated payroll deductions
will be applied automatically to purchase Company Common Stock. I
may
increase or decrease the rate of my payroll deductions in whole percentage
increments to not less than one percent (1%) on one occasion during
any
Purchase Period by completing and timely filing a Change of Status
Notice.
Any increase or decrease will be effective for the full payroll period
occurring after three (3) business days from the Company's receipt
of the
Change of Status Notice.
|
8.
|
Perpetual
Subscription. I understand that this Subscription Agreement shall
remain
in effect for successive Offer Periods until I withdraw from participation
in the ESPP, or termination of the ESPP.
|
9.
|
Taxes.
I have reviewed the ESPP prospectus discussion of the federal tax
consequences of participation in the ESPP and consulted with tax
consultants as I deemed advisable prior to my participation in the
ESPP. I
hereby agree to notify the Company in writing within fifteen (15)
days of
any disposition (transfer or sale) of any shares purchased under
the ESPP
if such disposition occurs within two (2) years of the Enrollment
Date
(the first day of the Offer Period during which the shares were purchased)
or within one (1) year of the Exercise Date (the date I purchased
such
shares), and I will make adequate provision to the Company for foreign,
federal, state or other tax withholding obligations, if any, which
arise
upon the disposition of the shares. In addition, the Company may
withhold
from my Compensation any amount necessary to meet applicable tax
withholding obligations incident to my participation in the ESPP,
including any withholding necessary to make available to the Company
any
tax deductions or benefits contingent on such withholding.
|
10.
|
Dispute
Resolution. The provisions of this Section 10 and Section 28 of the
ESPP
shall be the exclusive means of resolving disputes arising out of
or
relating to the Plan. The Company and I, or our respective successors
(the
"parties"), shall attempt in good faith to resolve any disputes arising
out of or relating to the Plan by negotiation between individuals
who have
authority to settle the controversy. Negotiations shall be commenced
by
either party by notice of a written statement of the party's position
and
the name and title of the individual who will represent the party.
Within
thirty (30) days of the written notification, the parties shall meet
at a
mutually acceptable time and place, and thereafter as often as they
reasonably deem necessary, to resolve the dispute. If the dispute
has not
been resolved by negotiation, the Company and I agree that any suit,
action, or proceeding arising out of or relating to the Plan shall
be
brought in the United States District Court for the District of New
Jersey
(or should such court lack jurisdiction to hear such action, suit
or
proceeding, in a New Jersey state court in Passaic County) and that
we
shall submit to the jurisdiction of such court. The Company and I
irrevocably waive, to the fullest extent permitted by law, any objection
we may have to the laying of venue for any such suit, action or proceeding
brought in such court. THE COMPANY AND I ALSO EXPRESSLY WAIVE ANY
RIGHT WE
HAVE OR MAY HAVE TO A JURY TRIAL OF ANY SUCH SUIT, ACTION OR PROCEEDING.
If any one or more provisions of this Section 10 or Section 28 of
the ESPP
shall for any reason be held invalid or unenforceable, it is the
specific
intent of the Company and I that such provisions shall be modified
to the
minimum extent necessary to make it or its application valid and
enforceable.
|
11. |
Designation
of Beneficiary. In the event of my death, I hereby designate the
following
person or trust as my beneficiary to receive all payments and shares
due
to me under the ESPP:
|
o
I am
single
|
o
I am
married
|
12.
|
Termination
of ESPP. I understand that the Company has the right, exercisable
in its
sole discretion, to amend or terminate the ESPP at any time, and
a
termination may be effective as early as an Exercise Date, including
the
establishment of an alternative date for an Exercise Date within
each
outstanding Offer Period.
|
Date:
___________________________________
|
Employee
Signature: ___________________________________
|
Spouse’s
signature (if new beneficiary is other than spouse):
|
|
___________________________________________________
|
o |
Withdrawal
and Purchase of Common Stock:
|
o |
Change
in Payroll Deduction:
|
Percentage
of Salary to be Deducted:
|
____%
|
Percentage
of Bonus and other Compensation to be Deducted:
|
____%
|
o
Change of
Beneficiary:
|
o
I am single
|
o
I am married
|
Date:
___________________________________
|
Employee
Signature: ___________________________________
|
Spouse’s
signature (if new beneficiary is other than spouse):
|
|
___________________________________________________
|
|