þ
|
Preliminary Proxy
Statement
|
o
|
Confidential, For Use of the
Commission Only (As Permitted by Rule
14a-6(e)(2))
|
o
|
Definitive Proxy
Statement
|
o
|
Definitive Additional
Materials
|
o
|
Soliciting Material under
§240.14a-12
|
þ
|
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:
|
|
(2)
|
Aggregate number of securities to
which transaction applies:
|
|
(3)
|
Per unit price or other
underlying value of transaction computed pursuant to Exchange Act Rule
0-11 (set forth the amount on which the filing fee is calculated and state
how it was determined):
|
|
(4)
|
Proposed maximum aggregate value
of transaction:
|
|
(5)
|
Total fee
paid:
|
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:
|
|
(2)
|
Form, Schedule or Registration
Statement No.:
|
|
(3)
|
Filing
Party:
|
|
(4)
|
Date
Filed:
|
Barnsley,
UK
|
By
Order of the Board of Directors,
|
|
December
[__], 2010
|
||
/s/
Michael G. Jamieson
|
||
MICHAEL
G. JAMIESON
|
||
Chief
Executive Officer
|
PROXY
STATEMENT FOR 2010 ANNUAL MEETING OF STOCKHOLDERS
|
1
|
|||
Information
Concerning the Proxy Materials and the Annual Meeting
|
1
|
|||
Voting
Procedures and Vote Required
|
1
|
|||
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|
3
|
|||
ELECTION
OF DIRECTORS (Proposal No. 1)
|
6
|
|||
CORPORATE
GOVERNANCE
|
8
|
|||
Board
of Directors
|
8
|
|||
Director
Independence
|
8
|
|||
Board
Meetings and Attendance
|
8
|
|||
Annual
Meeting Attendance
|
8
|
|||
Stockholder
Communications with the Board
|
8
|
|||
Board
Committees
|
8
|
|||
Family
Relationships
|
9
|
|||
Involvement
in Certain Legal Proceedings
|
9
|
|||
DIRECTOR
COMPENSATION FOR FISCAL 2009
|
10
|
|||
INFORMATION
ABOUT OUR EXECUTIVE OFFICERS
|
11
|
|||
EXECUTIVE
COMPENSATION
|
12
|
|||
Compensation
Discussion and Analysis
|
12
|
|||
Compensation
Committee Report
|
17
|
|||
Summary
Compensation Table for Fiscal Years 2010, 2009 and 2008
|
18
|
|||
Employment
Agreements with Executive Officers
|
19
|
|||
Other
Compensation
|
20
|
|||
Outstanding
Equity Awards at 2009 Fiscal Year End
|
21
|
|||
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE
|
22
|
|||
COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT
|
25
|
RATIFICATION
OF APPOINTMENT OF INDEPENDENT AUDITORS (Proposal No.
2)
|
26
|
|||
APPROVAL
OF REVERSE AND FORWARD SPLIT (Proposal No. 3)
|
27
|
|||
APPROVAL
OF ADVISORY RESOLUTION ON EXECUTIVE COMPENSATION PROPOSAL (Proposal No.
4)
|
36
|
|||
APPROVAL
OF ADVISORY RESOLUTION ON THE FREQUENCY OF THE STOCKHOLDERS’ SAY ON PAY
PROPOSAL (Proposal No. 5)
|
37 | |||
AUDIT
COMMITTEE REPORT
|
38
|
|||
STOCKHOLDER
PROPOSALS FOR 2011 ANNUAL MEETING
|
39
|
|||
EXPENSES
AND SOLICITATION
|
39
|
|||
OTHER
BUSINESS
|
39
|
|||
ADDITIONAL
INFORMATION
|
39
|
Name and address of beneficial owner
|
Amount and Nature of
Beneficial Ownership
|
Percent of class of
Common Stock (1)
|
||||||
Wynnefield
Persons (2)
c/o
Wynnefield Capital Inc.
450
Seventh Ave., Suite 509
New
York, NY 10123
|
32,021,150
|
(3)
|
23.08
|
%
|
||||
BBE
Group Holdings, LLC
145
East 57th Street, 10th Floor
New
York, NY 10022
|
13,802,113
|
(4)
|
9.95
|
%
|
||||
ComVest
Capital LLC
105
S. Narcissus Ave.
West
Palm Beach, FL 33401
|
5,083,333
|
(5)
|
3.53
|
%
|
||||
Directors
and Officers:
|
||||||||
Michael
Jamieson
Chief
Executive Officer
|
2,260,000
|
(6)
|
1.63
|
%
|
||||
Charles
F. Trapp
Chief
Financial Officer
|
3,856,723
|
(7)
|
2.78
|
%
|
||||
Frederick
Wasserman,
Director
|
497,873
|
(8)
|
0.36
|
%
|
||||
Dwight
B. Mamanteo,
Director
|
2,149,906
|
(9)
|
1.55
|
%
|
||||
Marcus
Wohlrab,
Director
|
245,644
|
(10)
|
0.18
|
%
|
||||
Gerald
M. Czarnecki,
Chairman
|
3,028,714
|
(11)
|
2.18
|
%
|
||||
W.
Austin Lewis IV (12)
c/o
Lewis Asset Management Corp.
500
5th Ave suite 2240, New York, NY 10110
|
20,046,585
|
(13)
|
14.45
|
%
|
||||
Directors
and Officers as a group (7 persons)
|
32,085,445
|
23.12
|
%
|
|||||
Former
Officers and Directors:
|
||||||||
Ian
Warwick
Chief
Executive Officer
and
Chairman
|
4,561,452
|
3.29
|
%
|
|||||
Simon
Chadwick
Chief
Operating Officer
|
1,961,084
|
1.41
|
%
|
(1)
|
Based on a total of 138,733,246
shares of Common Stock outstanding as of December 11, 2010. In accordance
with Securities and Exchange Commission rules, each person’s percentage
interest is calculated by dividing the number of shares that person owns
by the sum of (a) the total number of shares outstanding as of December 11
2010 plus (b) the number of shares such person has the right to acquire
within sixty (60) days of December 11,
2010.
|
(2)
|
Comprised of Wynnefield Partners
Small Cap Value, LP (“Wynnefield Partners”) and Wynnefield Partners Small
Cap Value LP I (“Wynnefield Partners I”), and the general partner of each
of these entities, Wynnefield Capital Management, LLC (“Wynnefield LLC”);
Wynnefield Small Cap Value Offshore Fund Ltd. (“Wynnefield Offshore”) and
its investment manager, Wynnefield Capital, Inc. (“Wynnefield Capital”);
Wynnefield Capital, Inc. Profit Sharing & Money Purchase Plan (the
“Plan”); Channel Partnership II, LP (“Channel”); Nelson Obus, who serves
as principal and co-managing member of Wynnefield Capital Management, LLC,
principal executive officer of Wynnefield Capital, Inc. and general
partner of Channel Partnership II, LP; and Joshua H. Landes, who serves as
principal and co-managing member of Wynnefield Capital Management, LLC and
executive officer of Wynnefield Capital, Inc. (collectively, the
“Wynnefield Persons”). Dwight Mamanteo, one of the Company’s directors, is
an investment analyst with Wynnefield Capital. Mr. Mamanteo exercises
neither voting nor dispositive control over the shares beneficially owned
by Wynnefield Capital. The Company has been informed that Nelson Obus and
Joshua H. Landes share voting and investment control over the shares
beneficially owned by Wynnefield Partners, Wynnefield Partners I,
Wynnefield Offshore, Wynnefield LLC, Wynnefield Capital and the Plan, and
that Nelson Obus exercises sole voting and investment control over the
shares beneficially owned by Channel. Based upon information
provided in a Schedule 13D/A filed with the SEC on November 8, 2010
and a Form 4 filed on December 16, 2010. Note that the
Wynnefield Persons’ shareholdings have been reduced by an aggregate of
3,125,002 shares to reflect the surrender of the Exchange Warrants by the
Wynnefield Partners Small Cap Value, LP, Wynnefield Partners Small Cap
Value, LP I, Wynnefield SmallCap Offshore Fund, Ltd and Channel
Partnership II, LP to the Company as part of the Company’s proposed
Exchange Offer.
|
(3)
|
Represents an aggregate of
32,021,150 shares of common stock, which are beneficially owned as
follows: (i) 7,578,593 shares of common stock are beneficially owned by
Wynnefield Partners; (ii) 10,178,851 shares of common stock are
beneficially owned by Wynnefield Partners I; (iii) 12,560,463 shares of
common stock are beneficially owned by Wynnefield Offshore; (iv) 44,743
shares of common stock are beneficially owned by the Wynnefield Capital,
Inc. Profit Sharing & Money Purchase Plan; and (v) 1,658,500 shares of
common stock are beneficially owned by Channel. Based upon
information provided in a Form 4 filed with the SEC on December 16,
2010.
|
(4)
|
Represents (i) 9,996,626 shares
of common stock owned by BBE Group Holdings, LLC of which Whitney S.
Quillen and Parker L. Quillen each is a director/trustee and each has
shared voting and disposition power over these shares, and (ii)
651,285 shares owned by Q Properties, L.P. and indirectly by
Whitney S. Quillen, which in his capacity as General Partner has the sole
power to dispose or to direct the disposition and 350,354 shares owned
indirectly by him as custodian of his minor children and (iii) 2,803,848
shares of common stock owned by Parker L.
Quillen.
|
(5)
|
Includes the following shares
owned by ComVest Capital LLC: (i) 1,000,000 shares issuable upon exercise
of warrants to purchase shares of Common Stock, which are currently
exercisable at $0.0916 per share and expire December 31, 2013; (ii)
2,083,333 shares issuable upon exercise of warrants to purchase shares of
Common Stock, which are currently exercisable at $0.2448 per share and
expire December 31, 2013; (iii) 2,000,000 shares issuable upon exercise of
warrants to purchase shares of Common Stock, which are currently
exercisable at $0.0916 per share and expire December 31, 2013, and
(iv) The Company has been informed that Comvest Capital
Advisors, LLC is the managing entity of ComVest Capital, LLC, and that
Gary Jaggard, managing director of Comvest Capital, LLC, exercises voting
and investment control over the shares beneficially owned by ComVest
Capital, LLC. See “Certain Relationships and Related Transactions and
Director Independence” for additional
detail.
|
(6)
|
Includes 780,000 vested shares of
an award of an aggregate of 1,000,000 restricted shares of Common Stock
granted by the Company on May 13, 2008 for services previously
rendered.
|
(7)
|
Includes 585,000 vested shares of
an award of an aggregate 750,000 restricted shares of Common Stock granted
by the Company on May 13, 2008 for services previously
rendered.
|
(8)
|
Includes (i) 19,500 vested shares
of restricted Common Stock of an award for an aggregate 25,000 shares of
restricted Common Stock granted on May 13, 2008 by the Company for
services previously rendered; (ii) 82,473 vested shares of restricted
Common Stock out of an award of an aggregate of 110,000 shares of
restricted Common Stock granted on October 6, 2008; and (iii) 85,226
vested shares of restricted Common Stock out of an award of an aggregate
of 204,545 shares of restricted Common Stock granted on July 1, 2009, and
(iv) 23,438 vested shares of restricted Common Stock out of an award of an
aggregate of 281,250 shares of restricted Common Stock granted on July 1,
2010, and (v) 49,650 shares which will vest within 60 days of December 11,
2010.
|
(9)
|
Includes (i) 19,500 vested shares
of restricted Common Stock of an award for an aggregate 25,000 shares of
restricted Common Stock granted on May 13, 2008 by the Company for
services previously rendered; and (ii) 59,804 vested shares of restricted
Common Stock (net of taxes) out of an award of an aggregate of 104,000
shares of restricted Common Stock granted on October 6, 2008; and (iii)
77,803 vested shares of restricted Common Stock (net of taxes) out of an
award of an aggregate of 236,364 shares of restricted Common Stock granted
on July 1, 2009, and (iv) 27,083 vested shares of restricted Common Stock
out of an award of an aggregate of 325,000 shares of restricted Common
Stock granted on July 1, 2010, and (v) 55,447 shares which will vest
within 60 days of December 11,
2010.
|
(10)
|
Includes (i) 19,500 vested shares
of restricted Common Stock of an award for an aggregate 25,000 shares of
restricted Common Stock granted on May 13, 2008 by the Company for
services previously rendered; (ii) 78,003 vested shares of restricted
Common Stock out of an award of an aggregate of 104,000 shares of
restricted Common Stock granted on October 6, 2008; and (iii) 78,845
vested shares of restricted Common Stock out of an award of an
aggregate of 190,909 shares of restricted Common Stock granted on July 1,
2009, and (iv) 21,875 vested shares of restricted Common
Stock out of an award of an aggregate of 262,500 shares of
restricted Common Stock granted on July 1, 2010, and (v) 46,451
shares which will vest within 60 days of December 11,
2010.
|
(11)
|
Includes (i) 14,236 vested shares
of restricted Common Stock (net of taxes) out of an award for an aggregate
25,000 shares of restricted Common Stock granted by the Company for
joining the Board of Directors on October 6, 2008; (ii) 87,476 vested
shares of restricted Common Stock (net of taxes) out of an award of an
aggregate of 140,000 shares of restricted Common Stock granted on October
6, 2008; and (iii) 86,175 vested shares of restricted Common Stock (net of
taxes) out of an award of an aggregate of 318,182 shares of restricted
Common Stock granted on July 1, 2009, (iv) 23,698 vested shares of
restricted Common Stock (net of taxes) out of an award of an aggregate of
437,500 shares of restricted Common Stock granted on July 1, 2010,
(v) 76,030 shares which will vest within 60 days of December 11,
2010, and (vi) 1,727,968 shares of common stock, of which
720,895 shares are held under the name of Gerald M. Czarnecki IRA
account.
|
(12)
|
W. Austin Lewis IV is the
portfolio manager and general partner of Lewis Asset Management Corp., the
investment manager of Lewis Opportunity Fund, LP and LAM Opportunity Fund,
LTD. Accordingly, Mr. Lewis is deemed to be the beneficial owner of
the shares owned by Lewis Opportunity Fund, LP and LAM Opportunity Fund,
LTD. and beneficially owned by Lewis Asset Management
Corp.
|
(13)
|
Represents (i) 5,835,591 shares
owned directly by W. Austin Lewis IV, including 14,000 vested shares of
restricted Common Stock out of an award of an aggregate of 25,000 shares
of restricted Common Stock granted on February 20, 2009 (ii) 43,602 vested
shares of restricted Common Stock out of an award of an aggregate 80,000
shares of restricted Common Stock granted on February 20, 2009; (iii)
65,759 vested shares of restricted Common Stock out of an award of an
aggregate of 181,818 shares of restricted Common Stock granted on July 1,
2009, (iv) 20,833 vested shares of restricted Common Stock out of an award
of an aggregate of 250,000 shares of restricted Common Stock granted on
July 1, 2010, (v) 14,168,342 shares of common stock owned by Lewis
Opportunity Fund, LP; and (vi) 49,319 shares which will vest
within 60 days of December 11,
2010.
|
Name of Director
|
Age
|
Director since:
|
||
Michael
Jamieson
|
43
|
February
2010
|
||
Dwight
B. Mamanteo
|
41
|
March
2007
|
||
Marcus
Wohlrab
|
47
|
March
2007
|
||
Frederick
Wasserman
|
56
|
July
2007
|
||
Gerald
M. Czarnecki
|
70
|
August
2008
|
||
W.
Austin Lewis IV
|
34
|
January
2009
|
Compensation Committee
|
|
Audit Committee
|
Governance and Nomination
Committee
|
|
Dwight
B. Mamanteo - Chair
|
Frederick
Wasserman** - Chair
|
Marcus
Wohlrab – Chair
|
||
Marcus
Wohlrab
|
Dwight
B. Mamanteo
|
Dwight
B. Mamanteo
|
||
W.
Austin Lewis IV
|
W.
Austin Lewis IV
|
Frederick
Wasserman
|
||
Gerald
M. Czarnecki -ex officio member
|
Gerald
M. Czarnecki -ex officio member
|
Gerald
M. Czarnecki -ex officio
member
|
Fees
Earned or
Paid in
Cash
($)
|
Stock
Awards
($)(1)
|
Options
Awards
($)
|
Non-Equity
Incentive Plan
Compensation
($)
|
Nonqualified
Deferred
Compensation
Earnings
($)
|
All
Other
Compen-
sation
($)
|
Total
($)
|
||||||||||||||||||||||
Michael
G. Jamieson
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||
Ian
Warwick
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||
Simon
Chadwick
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||
Dwight
B. Mamanteo
|
26,000
|
(2)
|
6,785
|
(3)
|
—
|
—
|
—
|
—
|
32,785
|
|||||||||||||||||||
Marcus
Wohlrab
|
21,000
|
7,987
|
(4)
|
—
|
—
|
—
|
—
|
28,987
|
||||||||||||||||||||
Frederick
Wasserman
|
22,500
|
8,518
|
(5)
|
—
|
—
|
—
|
—
|
31,018
|
||||||||||||||||||||
Gerald
M. Czarnecki
|
35,000
|
(6)
|
8,359
|
(7)
|
—
|
—
|
—
|
—
|
43,359
|
|||||||||||||||||||
W.
Austin Lewis IV
|
20,000
|
(8)
|
8,353
|
(9)
|
—
|
—
|
—
|
—
|
28,353
|
(1)
|
The amount shown in the table
reflects the dollar amount recognized for fiscal 2010 financial statement
reporting purposes of the outstanding stock awards held by the directors
in accordance with FAS 123R. Refer to the Company’s Consolidated Financial
Statements for the Fiscal Years Ended June 30, 2010 and 2009, Note 1
“Stock Based Compensation” and Note 9 “Stockholders Equity” included in
the Company’s Annual Report on Form 10-K for the fiscal year ended June
30, 2010, with respect to valuation assumptions for this stock grant. The
directors held no other stock or option awards at June 30,
2010.
|
(2)
|
Includes 176,312 shares of Common
Stock valued at market price on the date of issuance, net of income taxes
of $4,550, and received in lieu of $19,500 of cash
compensation.
|
(3)
|
Includes 83,674 shares valued at
market price on the date of issuance, net of income taxes of
$2,433.
|
(4)
|
Includes 98,304 shares valued at
market price on the date of
issuance.
|
(5)
|
Includes 104,850 shares valued at
market price on the date of
issuance.
|
(6)
|
Includes 280,313 shares of Common
Stock valued at market price on the date of issuance, net of income taxes
of $12,250, and received in lieu of $22,750 of cash
compensation.
|
(7)
|
Includes 102,885 shares valued at
market price on the date of issuance, net of income taxes of
$4,502.
|
(8)
|
Includes 246,429 shares of Common
Stock valued at market price on date of issuance, and received in lieu of
$20,000 of cash
compensation.
|
(9)
|
Includes 101,276 shares valued at
market price on the date of
issuance.
|
Name
|
Age
|
Position
|
||
Michael
Jamieson
|
43
|
Chief
Executive Officer and Director
|
||
Charles
F. Trapp
|
61
|
Chief
Financial Officer
|
Name and
Principal Position
|
Fiscal
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-
Equity
Incentive
Plan
Compensation
($)
|
Non-
qualified
Deferred
Compensation
Earnings
($)
|
All
Other
Compensation
($)
|
Total
($)
|
|||||||||||||||||||||||||
Michael
G. Jamieson, (1)
|
||||||||||||||||||||||||||||||||||
Chief
Executive Officer,
|
||||||||||||||||||||||||||||||||||
President
and Director
|
2010
|
80,428
|
—
|
17,600
|
(5)
|
—
|
—
|
—
|
—
|
98,028
|
||||||||||||||||||||||||
Ian
Warwick (2)
|
2010
|
475,000
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||||||
Former
Chief Executive
|
2009
|
292,828
|
—
|
—
|
—
|
—
|
—
|
—
|
292,828
|
|||||||||||||||||||||||||
Officer,
President and Director
|
2008
|
349,195
|
—
|
—
|
—
|
—
|
—
|
—
|
349,195
|
|||||||||||||||||||||||||
Simon
Chadwick (3)
|
2010
|
356,250
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||||||
Former
Chief Operating
|
2009
|
218,780
|
—
|
—
|
—
|
—
|
—
|
—
|
218,780
|
|||||||||||||||||||||||||
Officer and
Director
|
2008
|
259,402
|
—
|
—
|
—
|
—
|
—
|
—
|
259,402
|
|||||||||||||||||||||||||
Charles
F. Trapp (4)
|
2010
|
220,000
|
—
|
13,200
|
(6)
|
—
|
—
|
—
|
—
|
233,200
|
||||||||||||||||||||||||
Executive
Vice President,
|
2009
|
224,166
|
—
|
5,775
|
(6)
|
—
|
—
|
—
|
—
|
229,941
|
||||||||||||||||||||||||
and
Chief Financial Officer
|
2008
|
214,583
|
—
|
25,500
|
(6)
|
—
|
—
|
—
|
—
|
240,083
|
(1)
|
Reflects salary paid to Mr.
Jamieson for services rendered to us and our subsidiaries during fiscal
2010 as MAM’s Chief Executive Officer and President. Salary was
paid by a subsidiary of the Company in British pounds at an annual salary
of 122,000 GBP per year. Mr. Jamieson became Interim Chief
Executive Officer and Interim President on February 1, 2010 and was paid
50,830 GBP for the period from February 1, 2010 to June 30, 2010 pursuant
to the terms of Mr. Jamieson’s employment agreement with our
subsidiary. The amount shown for 2010 was translated to US
dollars based on a June 30, 2010 currency conversion rate of 1 GBP =
$1.5823 (or $80,428). Mr. Jamieson did not receive any additional
compensation for his services as a director on our Board of
Directors.
|
(2)
|
Mr. Warwick resigned his position
as Chief Executive Officer, President and Director effective as of January
31, 2010. Reflects salary paid to Mr. Warwick for services
rendered to us and our subsidiaries during fiscal 2010, 2009 and 2008 as
MAM’s Chief Executive Officer and President. The salary for the
period from July 1, 2009 to January 31, 2010 was paid in US dollars at an
annual base rate of $300,000 (or $175,000 for the period), pursuant
to the terms of Mr. Warwick’s employment agreement. Pursuant to
the terms of Mr. Warwick’s Separation Agreement he was paid $300,000
in six equal monthly installments of $50,000 per month. Mr.
Warwick was paid in British pounds at an annual salary of 175,000 GBP for
each of the 2008 fiscal year, and for the period from July 1, 2008 to
November 30, 2008 (or 72,916 GBP). Salary for the period from
December 1, 2008 through June 30, 2009 was paid in US dollars at an annual
base rate of $300,000 (or $175,000 for the period), pursuant to the terms
of Mr. Warwick’s employment agreement. The amount shown for
2008 was translated to US dollars based on a June 30, 2008 currency
conversion rate of 1 GBP = $1.9954. The portion of Mr.
Warwick’s salary for fiscal 2009 which was paid in British pounds (for the
period from July 1, 2008 through November 30, 2008) was translated to US
dollars based on the June 30, 2009 currency conversion rate of 1 GBP=
$1.61593 (or $117,828). Mr. Warwick did not receive any additional
compensation for his services as a director on our Board of
Directors.
|
(3)
|
Mr. Chadwick resigned his
position as Chief Operating Officer and Director effective as of January
31, 2010. Reflects salary paid to Mr. Chadwick for services
rendered to us and our subsidiaries during fiscal 2010, 2009 and 2008 as
MAM’s Chief Operating Officer. The Salary for the period from
July 1, 2009 to January 31, 2010 was paid in US dollars at an annual base
rate of $225,000 (or $131,250 for the period), pursuant to the terms of
Mr. Chadwick’s employment agreement. Pursuant to the terms of
Mr. Chadwick’s Separation Agreement he was paid $225,000 in six equal
monthly installments of $37,500 per month. Salary was paid in British
pounds at an annual salary of 130,000 GBP for each of the 2008 fiscal
year, and for the period from July 1, 2008 to November 30, 2008 (or 54,167
GBP). Salary for the period from December 1, 2008 through June
30, 2009 was paid in US dollars at an annual base rate of $225,000 (or
$131,250 for the period), pursuant to the terms of Mr. Chadwick’s
employment agreement. The amount shown for 2008 was translated
to US dollars based on a June 30, 2008 currency conversion rate of 1 GBP =
$1.9954. The portion of Mr. Chadwick’s salary for fiscal 2009
which was paid in British pounds (for the period from July 1, 2008 through
November 30, 2008) was translated to US dollars based on the June 30, 2009
currency conversion rate of 1 GBP= $1.61593 (or $87,530). Mr. Chadwick did
not receive any additional compensation for his services as a director on
our Board of Directors.
|
|
|
(4)
|
Mr. Trapp was appointed Vice
President Finance and Chief Financial Officer effective as of December 1,
2007. For the year ended June 30, 2010, the amount shown in the table
reflects salary in the amount of $91,667 earned for services in these
capacities between July 1, 2009 and November 30, 2009, pursuant to the
terms of Mr. Trapp’s employment agreement, as well as salary in the amount
of $128,333 earned for services between December 1, 2009 and June 30, 2010
pursuant to a month to month verbal agreement. The salary for fiscal 2010
also includes $22,000 that was deferred and contributed by Mr. Trapp to
the Company’s plan established under section 401(k) of the Internal
Revenue Code of 1986, as amended. For the year ended June 30,
2009, the amount shown in the table reflects salary in the amount of
$95,833 earned for services in these capacities between July 1, 2008 and
November 30, 2008, as well as salary in the amount of $128,333 earned for
services between December 1, 2008 and June 30, 2009 pursuant to the terms
of Mr. Trapp’s employment agreement. The salary for fiscal 2009 also
includes $20,500 that was deferred and contributed by Mr. Trapp to the
Company’s plan established under section 401(k) of the Internal Revenue
Code of 1986, as amended. For the year ended June 30, 2008, the
amount shown in the table reflects salary in the amount of $134,167 earned
for services between December 1, 2007 and June 30, 2008, as well as salary
in the amount of $80,416 earned for services as an accountant prior to his
appointment as an officer. The salary for fiscal 2008 also includes
$20,500 that was deferred and contributed by Mr. Trapp to the Company’s
plan established under section 401(k) of the Internal Revenue Code of
1986, as amended.
|
(5)
|
The amount shown in the “Stock
Awards” column reflects the dollar amount recognized for fiscal 2010
financial statement reporting purposes of the outstanding stock awards
held by Mr. Jamieson in accordance with FAS 123R. Stock award represent an
award on May 13, 2008 of 1,000,000 shares of Common Stock with a grant
date closing price of $0.10 per share, of which 34% or 340,000 shares
vested immediately on the date of grant. The remaining 66% of the shares
or 660,000 shares will vest in three equal installments of 220,000 shares
on each of the first, second and third anniversaries of the grant date.
The shares were not issued pursuant to any existing compensation plan.
Refer to the Company’s Consolidated Financial Statements for the Fiscal
Years Ended June 30, 2010 and 2009, Note 1 “Stock Based Compensation” and
Note 9 “Stockholders Equity” included in this Annual Report on Form
10-K, with respect to valuation assumptions for this stock grant. Mr.
Jamieson held no other stock or option awards at June 30, 2010 and 2009,
respectively.
|
(6)
|
The amount shown in the “Stock
Awards” column reflects the dollar amount recognized for fiscal 2010, 2009
and 2008 financial statement reporting purposes of the outstanding stock
awards held by Mr. Trapp in accordance with FAS 123R. Stock award
represent an award on May 13, 2008 of 750,000 shares of Common Stock with
a grant date closing price of $0.10 per share, of which 34% or 255,000
shares vested immediately on the date of grant. The remaining 66% of the
shares or 495,000 shares will vest in three equal installments of 165,000
shares on each of the first, second and third anniversaries of
the grant date. The shares were not issued pursuant to any existing
compensation plan. Refer to the Company’s Consolidated Financial
Statements for the Fiscal Years Ended June 30, 2010 and 20097, Note 1
“Stock Based Compensation” and Note 9 “Stockholders Equity” included
in this Annual Report on Form 10-K, with respect to valuation assumptions
for this stock grant. Mr. Trapp held no other stock or option awards at
June 30, 2010 and 20098,
respectively.
|
Option Awards
|
Stock Awards
|
|||||||||||||||||||||||||||||||||||
Name
|
Number of
Securities
Underlying
Unexercised
Options
(# Exercisable)
|
Number of
Securities
Underlying
Unexercised
Option
(# Unexercisable)
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
|
Option
Exercise
Price
($)
|
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
($)
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other Rights
That Have
Not
Vested
(#)
|
Equity
Incentive
Plan Awards:
Market or
Payout
Value of
Unearned
Shares, Units
Or Other
Rights
That Have
Not
Vested
($)
|
|||||||||||||||||||||||||||
Michael
G.
Jamieson
|
— | — | — | — | — | 220,000 | (1) | $ | 17,600 | (3) | — | — | ||||||||||||||||||||||||
Charles
F. Trapp
|
— | — | — | — | — | 165,000 | (2) | $ | 13,200 | (3) | — | — | ||||||||||||||||||||||||
Ian
Warwick
|
— | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Simon
Chadwick
|
— | — | — | — | — | — | — | — | — |
(1)
|
Stock awards represent an award
on May 13, 2008 to Mr. Jamieson of 1,000,000 shares of Common Stock with a
grant date fair value of $0.10 per share, of which 34%, or 340,000 shares,
vested immediately on the date of grant, 220,000 shares valued at $.035
per share vested on May 13, 2009 and 220,000 shares valued at $.08 per
share vested on May 13, 2010 The remaining 220,000 shares reflected in the
table, will vest on May 13, 2011. The shares were not issued pursuant to
any existing compensation
plan.
|
(2)
|
Stock awards represent an award
on May 13, 2008 to Mr. Trapp of 750,000 shares of Common Stock with a
grant date fair value of $0.10 per share, of which 34%, or 255,000 shares,
vested immediately on the date of grant and 165,000 shares valued at $.035
per share vested on May 13, 2009 and 165,000 shares valued at $.08 per
share vested on May 13, 2010. The remaining 165,000 shares reflected in
the table, will vest on May 13, 2011. The shares were not issued pursuant
to any existing compensation
plan.
|
(3)
|
Based on the closing price of
$0.08 of the Company’s Common Stock on June 30,
2010.
|
For the Year Ended June 30,
|
||||||||
2010
|
2009
|
|||||||
Audit
fees (1)
|
$
|
123,200
|
$
|
175,000
|
||||
Audit-
related fees (2)
|
-
|
56,400
|
||||||
Tax
fees (3)
|
-
|
11,900
|
||||||
All
other fees
|
9,900
|
–
|
||||||
Total
fees
|
$
|
133,100
|
$
|
243,300
|
(1)
|
Audit fees are comprised of
annual audit fees and quarterly review
fees.
|
(2)
|
Audit-related fees for fiscal
years 2010 and 2009 are comprised of consent fees and work on registration
statements, consultation fees on accounting issues, and fees related to
the restatements of the fiscal 2008 quarterly reports that were filed in
fiscal 2009.
|
(3)
|
Tax fees are comprised of tax
compliance, preparation and consultation
fees.
|
|
·
|
existing and expected
marketability and liquidity of our common
stock;
|
|
·
|
prevailing stock market
conditions;
|
|
·
|
business developments affecting
us;
|
|
·
|
our actual or forecasted results
of operations; and
|
|
·
|
the likely effect on the market
price of our common stock.
|
Stockholder before completion of the Reverse/Forward
|
||
Split
|
Net Effect After Completion of the Reverse/Forward Split
|
|
Registered
stockholders holding 100 or more shares
|
Will
have between 2 and 50 shares depending on the forward split ratio set by
the Board.
|
|
Registered
stockholders holding fewer than 100 shares
|
Shares
will be converted into the right to receive cash at a price based on the
average daily closing price of the five days prior to and including the
effective date of the Reverse/Forward Split (see “Determination of
Cash-Out Price” at page 32). You will not have to pay any commissions or
other fees on this cash-out. Holders of these shares will not have any
continuing equity interest in the Company.
|
|
Stockholders
holding shares in street name through a nominee, such as bank or
broker
|
The
Company intends for the Reverse/Forward Split to treat stockholders
holding in street name through a nominee (such as a bank or broker)
identically as stockholders whose shares are registered in their names.
Nominees will be instructed to effect the Reverse/Forward Split for their
beneficial holders. However, nominees may have different procedures, and
The Company stockholders holding shares in street name should contact
their nominees.
|
Hypothetical Scenario
|
Result
|
|
Mr.
Smith is a registered stockholder who holds 72 shares in his account
immediately prior to the Reverse/Forward Split.
|
Instead
of receiving a fractional share (72/100) of a share) of common stock after
the reverse split, Mr. Smith’s 72 shares will be converted into the right
to receive cash. If the procedure described under “Determination of
Cash-Out Price” would result in a per share price of $[0.1408] per share,
Mr. Smith would receive $[10.14] ($[0.1408] × 72
shares).
|
|
Note:
If Mr. Smith wants to continue his investment in the Company, he can buy
at least 28 more shares of the Company common stock and hold them in
his account. Mr. Smith would have to act far enough in advance of the
Reverse/Forward Split so that the purchase is complete and settled by the
close of business on the record date for the Reverse/Forward
Split.
|
||
Ms.
Jones has 2 separate record accounts. As of the record date of the
Reverse/Forward Split, she holds 25 shares in one account and 45 shares in
the other. All of her shares are registered in her name
only.
|
Ms.
Jones will receive cash payments equal to the cash-out price of her shares
in each record account instead of receiving fractional shares
(25/100 share and 45/100 share). Assuming a hypothetical cash-out
price of $[0.1408] per share, Ms. Jones would receive two checks totaling
$[9.86] (25 × $[0.1408] = $[3.52];
45 × $[0.1408] = $[6.34];
$[3.52] + $[6.34] = $[9.86]).
|
|
Note:
If Ms. Jones wants to continue her investment in the Company, she can
consolidate/transfer her two record accounts prior to the record date of
the Reverse/Forward Split. Alternatively, Ms. Jones could buy at least
75 more shares for her first account and at least 55 shares for
her second account. In either case, her holdings will not be cashed out in
connection with the Reverse/Forward Split because she will hold at least
100 shares in each record account. She would have to act far enough
in advance so that the consolidation or the purchase is complete by the
close of business on the record date of the Reverse/Forward
Split.
|
Mr. Barber
holds 100 shares in his record account as of the date of the
Reverse/Forward Split.
|
After
the Reverse/Forward Split, Mr. Blue will continue to hold shares of
the Company common stock based on the ratio established by the Board for
the Forward Split.
|
|
Ms. Frank
holds 91 shares in a brokerage account as of the record date of the
Reverse/Forward Split.
|
Ms. Frank
will receive cash payments equal to the cash-out price of her shares in
her brokerage account instead of receiving fractional shares. Assuming a
hypothetical cash-out price of $[0.1408] per share, Ms. Frank would
receive a check totaling $[12.81] ($[0.1408] × 91
shares).
|
|
The
Company intends for the Reverse/Forward Split to treat stockholders
holding its shares in street name through a nominee (such as a bank or
broker) identically as stockholders whose shares are registered in their
names. Nominees will be instructed to effect the Reverse/Forward Split for
their beneficial holders. However, nominees may have different procedures
and stockholders holding shares in street name should contact their
nominees.
|
||
Note:
If Ms. Frank wants to continue her investment in the Company, he
could buy at least 9 more shares for her account. In such case, her
holdings will not be cashed out in connection with the Reverse/Forward
Split because she will hold at least 100 shares in her nominee account.
She would have to act far enough in advance so that the purchase is
complete by the close of business on the record date of the
Reverse/Forward Split.
|
|
·
|
You will not receive fractional
shares of stock as a result of the reverse split in respect of your shares
being cashed out.
|
|
·
|
Instead of receiving fractional
shares, you will receive a cash payment in respect of your affected
shares. See “Determination of Cash-Out Price” at
page 32.
|
|
·
|
After the reverse split, you will
have no further interest in the Company with respect to your cashed-out
shares. These shares will no longer entitle you to the right to vote as a
stockholder or share in the Company’s assets, earnings, or profits or in
any dividends paid after the reverse split. In other words, you will no
longer hold your cashed-out shares, you will just have the right to
receive cash for these
shares.
|
|
·
|
You will not have to pay any
service charges or brokerage commissions in connection with the
Reverse/Forward Split.
|
|
·
|
As soon as practicable after the
time we effect the Reverse/Forward Split, you will receive a payment
for the cashed out shares you held immediately prior to the reverse split
in accordance with the procedures described below. In addition, you will
not be entitled to receive interest with respect to the period of time
between the date of the reverse split and the date you receive your
payment for the cashed out
shares.
|
|
·
|
Many of the Company’s registered
stockholders hold their shares in book-entry form under the Direct
Registration System for securities. These stockholders do not have stock
certificates evidencing their ownership of the Company’s common stock.
They are, however, provided with a statement reflecting the number of
shares registered in their
accounts.
|
|
·
|
If you are a
Cashed-Out Stockholder who holds registered shares in a book-entry
account, you do not need to take any action to receive your cash
payment. We will
mail a check to you at your registered address as soon as practicable
after the date we affect the Reverse/Forward Split. By signing and cashing
this check, you will warrant that you owned the shares for which you
received a cash payment.
|
|
·
|
If you are a Cashed-Out
Stockholder with a stock certificate representing your cashed-out shares,
you will receive a transmittal letter from the Company as soon as
practicable after the date we effect the Reverse/Forward Split. The letter
of transmittal will contain instructions on how to surrender your
certificate(s) to the company’s transfer agent, Corporate Stock Transfer
for your cash payment. You will not
receive your cash payment until you surrender your outstanding
certificate(s) to Corporate Stock Transfer, together with a completed and
executed copy of the letter of transmittal. Please do not send your
certificates until you receive your letter of transmittal. For further information, see
“Stock Certificates” below.
|
|
1.
|
purchase a sufficient number of
shares of the Company common stock on the open market so that you hold at
least 100 shares of common stock in your account prior to the record date
of the reverse split; or
|
|
2.
|
if applicable, consolidate
existing accounts so that you hold at least [100] shares of the Company
common stock in one account prior to the record date of the reverse
split.
|
|
·
|
“Not Essentially Equivalent to a
Dividend.” You will satisfy the “not essentially equivalent to a dividend”
test if the reduction in your proportionate interest in Company resulting
from the Reverse/Forward Split is considered a “meaningful reduction”
given your particular facts and circumstances. The Internal Revenue
Service has ruled that a small reduction by a minority stockholder whose
relative stock interest is minimal and who exercises no control over the
affairs of the corporation will satisfy this
test.
|
|
·
|
“Substantially Disproportionate
Redemption of Stock.” The receipt of cash in the Reverse/Forward Split
will be a “substantially disproportionate redemption of stock” for you if
the percentage of the outstanding shares of Company common stock owned by
you immediately after the Reverse/Forward Split is less than 80% of the
percentage of shares of Company common stock owned by you immediately
before the Reverse/Forward Split and you own less than 50% of the
outstanding shares of Company common stock after the Reverse/Forward
Split.
|
|
•
|
Our
goal is to attract, motivate, and retain key executives and to reward
executives for value
creation.
|
|
•
|
We
have structured our compensation packages to foster a performance-oriented
environment by tying a significant portion of each executive’s cash
and equity compensation to the achievement of performance targets that are
important to the Company and its
stockholders.
|
|
•
|
This
is not a mechanical process, and our Board of Directors has used its
judgment and experience and works with our Compensation Committee to
determine the appropriate mix of compensation for each
individual.
|
|
•
|
Our
compensation program is designed to induce performance over a multi-year
period. A vote held every three years would be more consistent with, and
provide better input on, our long-term compensation, which constitutes a
significant portion of the compensation of our named executive
officers;
|
|
•
|
A
three-year vote cycle gives the Board sufficient time to thoughtfully
consider the results of the advisory vote and to implement any desired
changes to our executive compensation policies and
procedures; and
|
|
•
|
A
three-year cycle will provide stockholders sufficient time to evaluate the
effectiveness of our short- and long-term compensation strategies and the
related business outcomes of the
Company.
|
December
[__], 2010
|
By
Order of the Board of Directors,
|
/s/
Michael G. Jamieson
|
|
MICHAEL
G. JAMIESON
|
|
Chief
Executive
Officer
|
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” ALL PROPOSALS.
|
4. To
consider and act upon an advisory vote on compensation of named executive
officers
|
|
¨ FOR
THE PROPOSAL
|
||
1. Election
of Directors
¨ FOR ALL
NOMINEES
¨ Michael G.
Jamieson
¨ Dwight B.
Mamanteo
¨ Marcus
Wohlrab
¨ Frederick G.
Wasserman
¨ Gerald M.
Czarnecki
¨ W. Austin
Lewis IV
¨ WITHHOLD
AUTHORITY
FOR ALL NOMINEES
|
¨ AGAINST
THE PROPOSAL
¨ ABSTAIN
|
|
5. To
consider and act upon an frequency of advisory vote on the compensation of
named executive officers
|
||
¨ FOR
ALL EXCEPT
|
||
(See
Instruction below)
|
ONE
YEAR ¨ TWO
YEARS ¨ THREE
YEARS ¨ ABSTAIN
¨
|
|
¨ ABSTAIN
|
||
INSTRUCTION:
To withhold authority to vote for any individual nominee(s), mark “FOR ALL
EXCEPT” and write the name of the nominee you wish to withhold authority
in the box below.
|
||
To
change the address on your account, please
check ¨
|
||
the
box at right and indicate your new address in the
|
||
space
above. Please note that changes to the registered
|
||
name(s)
on the account may be submitted via this method.
|
||
2. To
consider and act upon a proposal to ratify the Board’s selection
of KMJ CORBIN &
COMPANY LLP as the Company’s independent auditors for
the fiscal year ending June 30, 2011.
|
THIS
PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED. IF NO DIRECTION
IS MADE, THE PROXY SHALL BE VOTED FOR THE ELECTION OF THE
LISTED NOMINEES AS DIRECTORS, FOR THE RATIFICATION OF
KMJ CORBIN & COMPANY LLP AS THE COMPANY’S
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING JUNE 30, 2011, FOR THE REVERSE SPLIT
OF THE COMPANY’S OUTSTANDING COMMON STOCK, FOR THE FORWARD SPLIT OF
THE COMPANY’S OUTSTANDING COMMON STOCK, FOR THE APPROVAL OF
THE EMPLOYEE STOCK PURCHASE PLAN, FOR AN INCREASE IN THE
NUMBER OF AUTHORIZED SHARES OF THE COMPANY’S COMMON STOCK, AND, IN THE
CASE OF OTHER MATTERS THAT LEGALLY COME BEFORE THE MEETING, AS SAID
ATTORNEY(S) MAY DEEM ADVISABLE.
|
|
¨ FOR
THE PROPOSAL
|
||
¨
AGAINST THE PROPOSAL
|
||
¨ ABSTAIN
|
||
3. To
consider and act upon a proposal to amend the Company’s Certificate of
Incorporation to effect a Reverse Split, followed by a Forward Split, of
the Company’s outstanding common stock.
|
PLEASE
CHECK HERE IF YOU PLAN TO ATTEND THE ANNUAL MEETING OF STOCKHOLDERS ON
FEBRUARY 18, 2011 AT 10:00 A.M. (EASTERN STANDARD TIME) AT THE OFFICES OF
GERSTEN SAVAGE LLP, 600 LEXINGTON AVE., NEW YORK, NY 10022 ¨
|
|
¨ FOR
THE PROPOSAL
|
||
¨ AGAINST
THE PROPOSAL
|
||
¨ ABSTAIN
|