UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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Filed by the Registrant
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to
§240.14a-12
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MISONIX, 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):
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Fee computed on table below per Exchange Act
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MISONIX, INC.
__________________
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
__________________
Tuesday, June 13,
2017
To the Shareholders
of
MISONIX,
INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
“Annual Meeting”) of Misonix, Inc., a New York
corporation (the “Company”), will be held at the
Company’s Corporate Office, 1938 New Highway, Farmingdale, NY
11735 on Tuesday, June 13, 2017 at 10:00 a.m., or at any
adjournment thereof, for the following purposes:
1.
To
elect five Directors to the Board of Directors;
2.
To
consider and vote upon approval of the 2017 Equity Incentive Plan
covering an aggregate of 750,000 shares of the Company’s
common stock;
3.
To
conduct an advisory vote on the compensation of the Company’s
Named Executive Officers;
4.
To
ratify the selection of Grant Thornton LLP as the Company’s
independent registered public accounting firm; and
5.
To
consider and act upon such other business as may properly come
before the Annual Meeting or any adjournment thereof.
The above matters are set forth in the Proxy Statement attached to
this Notice to which your attention is directed.
Only shareholders of record on the books of the Company at the
close of business on April 27, 2017 will be entitled to vote at the
Annual Meeting or at any adjournment thereof. You are requested to
sign, date and return the enclosed Proxy at your earliest
convenience in order that your shares may be voted for you as
specified.
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By Order of the Board of Directors,
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RICHARD A. ZAREMBA
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Secretary
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Important Notice
Regarding Internet Availability of Proxy Materials
for the Annual Meeting to Be Held on June 13, 2017:
The proxy materials for
the Annual Meeting, including the Annual Report
and the Proxy Statement, are available at
http://www.cstproxy.com/mson/2017
.
MISONIX,
INC.
1938
New Highway
Farmingdale, New York 11735
____________________
PROXY
STATEMENT
____________________
ANNUAL MEETING OF SHAREHOLDERS
Tuesday, June 13, 2017
The Annual Meeting of Shareholders (the “Annual
Meeting”) of Misonix, Inc. (the “Company”) will
be held on Tuesday, June 13, 2017, at the Company’s Corporate
Office, 1938 New Highway, Farmingdale, NY 11735, at 10:00 a.m. for
the purposes set forth in the accompanying Notice of Annual Meeting
of Shareholders.
The enclosed Proxy is
solicited by and on behalf of the Board of Directors of the Company
(“Board of Directors” or “Board”) for use
at the Annual Meeting to be held on Tuesday, June 13, 2017, and at
any adjournments of such Meeting.
The approximate date on
which this Proxy Statement and the enclosed Proxy are being first
mailed to shareholders is April 28, 2017.
If a Proxy in the accompanying form is duly executed and returned,
the shares represented by such Proxy will be voted as specified. In
the absence of such directions, the Proxy will be voted in
accordance with the recommendations of the Board. Any person
executing a Proxy may revoke it prior to its exercise either by
letter directed to the Company or in person at the Annual
Meeting.
Voting Rights
On April 27, 2017 (the “Record Date”), the Company had
outstanding 9,023,354 shares of its only class of voting
securities, namely common stock, par value $.01 per share (the
“Common Stock”). Shareholders are entitled to one vote
for each share registered in their names at the close of business
on the Record Date. The affirmative vote of a plurality of the
votes cast at the Annual Meeting is required for the election of
Directors. The affirmative vote of holders of a majority of the
shares represented at the meeting and entitled to vote on the
matter is required for the approval of the 2017 Equity Incentive
Plan. The affirmative vote of holders of a majority of the shares
represented at the meeting and entitled to vote on the matter is
required for the approval (on an advisory basis) of the
compensation of the Company’s Named Executive Officers and
for the ratification of the selection of Grant Thornton LLP
(“Grant Thornton”) as the Company’s independent
registered public accountant firm. On all other matters which may
come before the Annual Meeting, the affirmative vote of holders of
a majority of the shares represented at the meeting and entitled to
vote on the matter is required. For purposes of determining whether
proposals have received a majority vote, abstentions will not be
included in the vote totals and, in instances where brokers are
prohibited from exercising discretionary authority for beneficial
owners who have not returned a Proxy (“broker
non-votes”), those votes will not be included in the vote
totals. Therefore, abstentions and broker non-votes will be counted
in the determination of a quorum, but will have no effect on the
vote for the election of Directors, the approval of the 2017 Equity
Incentive Plan, the approval (on an advisory basis) of the
compensation of the Company’s Named Executive Officers or the
ratification of the selection of Grant Thornton as the
Company’s independent registered public accounting firm.
Unless contrary instructions are given, all proxies received
pursuant to this solicitation will be voted in favor of the (i)
election of the nominees named in Proposal One, (ii) adoption of
the 2017 Equity Incentive Plan, (iii) approval on an advisory basis
of the compensation of the Company’s Named Executive Officers
and (iv) ratification of the selection of Grant Thornton.
Under the New York
Business Corporation Law, shareholders are not entitled to
dissenters’ rights with respect to the proposals set forth in
this Proxy Statement.
1
SECURITY
OWNERSHIP
The following table sets forth, as of April 27, 2017, certain
information with regard to the ownership of the Company’s
Common Stock by (i) each beneficial owner of more than 5% of the
Company’s Common Stock; (ii) each Director and nominee for
Director; (iii) each executive officer named in the “Summary
Compensation Table” below; and (iv) all executive officers
and Directors of the Company as a group. Unless otherwise stated,
the persons named in the table have sole voting and investment
power with respect to all Common Stock shown as beneficially owned
by them.
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Common Stock Beneficially Owned
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Stavros G. Vizirgianakis
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1,648,578
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(2)
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18.2
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%
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Michael A. McManus, Jr.
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851,017
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(3)
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9.0
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%
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Norman H. Pessin
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460,666
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(4)
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5.1
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%
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Dimensional Fund Advisors LP
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459,553
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5.1
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%
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John W. Gildea
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97,500
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(5)
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1.1
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%
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Patrick A. McBrayer
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11,350
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(6)
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*
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Dr. Charles Miner III
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85,000
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(7)
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*
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Thomas M. Patton
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3,750
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(8)
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*
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Richard A. Zaremba
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163,523
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(9)
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1.8
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%
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Robert S. Ludecker
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77,443
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(10)
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*
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Dan Voic
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207,645
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(11)
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2.3
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%
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Christopher H. Wright
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10,750
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(12)
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*
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All executive officers and Directors as a group
(Twelve persons)
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2,308,289
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(13)
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24.6
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%
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2
PROPOSAL ONE
ELECTION OF
DIRECTORS
Five Directors are to be elected at the Annual Meeting. The term of
each Director expires at the Annual Meeting, with Messrs. Gildea,
McBrayer, Miner, Patton and Vizirgianakis standing for reelection
for a term of one year. The following table contains information
regarding all Directors and executive officers of the Company:
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John W. Gildea
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73
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Director
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2004
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Dr. Charles Miner III
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65
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Director
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2005
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Stavros G. Vizirgianakis
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46
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Chief Executive Officer and Director
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2013
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Patrick A. McBrayer
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65
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Director
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2014
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Thomas M. Patton
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53
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Director
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2015
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Joseph P. Dwyer
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61
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Interim Chief Financial Officer
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—
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Richard A. Zaremba
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61
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Senior Vice President, Secretary and
Treasurer
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—
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Robert S. Ludecker
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49
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Senior Vice President, Global Sales and
Marketing
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—
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Dan Voic
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54
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Vice President of Research and Development and
Engineering
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—
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Joseph J. Brennan
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54
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Vice President of Operations
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—
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John J. Salerno
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61
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Vice President of Quality and Regulatory
Affairs
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—
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Christopher H. Wright
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42
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Vice President of Domestic Sales
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—
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Principal Occupations
and Business Experience of Directors and Executive
Officers
The following is a brief description of the business experience of
the Company’s Directors and executive officers:
Directors
John W. Gildea
is
the founding principal of Gildea Management Co., a management
company of special situations with middle market companies in the
United States and Central Europe. From 2000 to 2003, Gildea
Management formed a joint venture with J.O. Hambro Capital
Management Co. to manage accounts targeting high yield debt and
small capitalization equities. From 1996 to 2000, Gildea Management
formed and founded Latona Europe, a joint venture between Latona
U.S., Lazard Co. and Gildea Management to restructure several Czech
Republic companies. Before forming Gildea Management in 1990, Mr.
Gildea managed the Corporate Services Group at Donaldson, Lufkin
and Jenrette, an investment banking firm. Mr. Gildea is a graduate
of the University of Pittsburgh. Mr. Gildea has extensive
experience as an international investment banker and sits on the
board of several companies. The Board believes this experience in
addition to his experience as a Director of Misonix and knowledge
of the Company qualifies him to serve as a Director.
Dr. Charles Miner
III
currently practices internal medicine in Darien,
Connecticut. Dr. Miner is on staff at Stamford and Norwalk
Hospitals and since 1982 has held a teaching position at Columbia
Presbyterian Hospital. Dr. Miner received his M.D. from the
University of Cincinnati College of Medicine in 1979 and received a
Bachelor of Science from Lehigh University in 1974. Dr. Miner is an
experienced physician and teacher in the medical field. He serves
on the board of The Stamford Hospital Foundation Board. The Board
believes his experience as a medical doctor and his corporate
experience qualifies him to serve as a Director.
Stavros G.
Vizirgianakis
became the Company’s Interim Chief
Executive Officer in September 2016 and its full-time Chief
Executive Officer in December 2016. Mr. Vizirgianakis has a
distinguished career in the medical devices field having worked for
United States Surgical Corporation as director of sales for
sub-Saharan Africa and later Tyco Healthcare in the capacity of
General Manager South Africa. In 2006, Mr. Vizirgianakis co-founded
Surgical Innovations, which has become one of the largest privately
owned medical device distributors in the African region, and now
part of the Johannesburg Stock Exchange listed entity Ascendis
Health. In that capacity, Mr. Vizirgianakis acted as a distributor
of the Company’s products. Mr. Vizirgianakis was Managing
Director of Ascendis Medical from January 2014 through July 2016.
Mr. Vizirgianakis also served on the board of Tenaxis Medical and
is a strategic investor and advisor to numerous medical device
startups and established companies in this field. Mr. Vizirgianakis
has a degree in commerce from the University of South Africa.
The
3
Board believes Mr. Vizirgianakis’ industry knowledge, sales
and marketing experience and his vast international business
relationships qualify him to serve as a Director.
Patrick A.
McBrayer
has served since January 2016 as President and
Chief Executive Officer of ACell Corporation, a surgery and wound
care company. Mr. McBrayer previously served as President and Chief
Executive Officer and as a director of privately-held AxioMed Spine
Corporation from February 2006 to January 2015. AxioMed is a
medical device company focused on restoring the natural function of
the spine. Prior to joining AxioMed, he held positions with Xylos
Corporation (medical biomaterials); Exogen, Inc. (treatment of
musculoskeletal injury and disease); Osteotech, Inc. (tissue
technology); and Johnson and Johnson Products, Inc. (healthcare
products). Mr. McBrayer holds a B. S. in General Engineering from
the United States Military Academy. The Board believes Mr.
McBrayer’s industry knowledge and experience as a CEO
qualifies him to serve as a Director.
Thomas M. Patton
has served as President and Chief Executive Officer of CAS Medical
Systems, Inc. and as a member of its Board of Directors since
August 2010. He previously served as the CEO of Wright Medical
Group, an orthopedic device company, located in Memphis, Tennessee,
and as President of Novametrix Medical Systems, a
patient-monitoring company, located in Wallingford, Connecticut.
From 2003 to 2010, Mr. Patton acted as an advisor to the
healthcare-focused private equity group of Ferrer Freeman &
Company and, in that capacity, served as the interim CEO of
Informed Medical Communications on a part-time basis in 2006 and
2007. Mr. Patton is a co-founder and CEO of QDx, Inc., a start-up
company that developed a platform for hematology diagnostics
beginning in 2003. Mr. Patton attended The College of the Holy
Cross, where he majored in Economics and Accounting. After
graduating magna cum laude from Georgetown University Law Center,
Mr. Patton worked at the law firm of Williams & Connolly in
Washington, D.C. Thereafter, he joined Wright Medical Group as its
General Counsel where he served in various executive roles until
being appointed CEO. The Board believes Mr. Patton’s industry
knowledge and experience qualify him to serve as a director.
Executive Officers who are not Directors
Joseph P. Dwyer
has served as the Company’s Interim Chief Financial Officer
since September 2016. From June 2015 to the present, Mr. Dwyer has
provided financial consulting and advisory services to various
companies. Prior thereto, from November 2012 until June 2015, he
was Chief Financial Officer of Virtual Piggy, Inc., a
publicly-traded technology company. Prior to joining Virtual Piggy,
Mr. Dwyer served as chief financial officer of OpenLink Financial,
Inc., a privately held company, which provides software solutions
for trading and risk management in the energy, commodity, and
capital markets. During 2011 and 2012, Mr. Dwyer was a member of
the board of directors and chairman of the audit committee and
served as interim chief administrative officer of Energy Solutions
International, Inc., a privately-held company providing pipeline
management software to energy companies and pipeline operators.
From 2010 through 2011, Mr. Dwyer served as chief administrative
officer of Capstone Advisory Group, LLC, a privately- held
financial advisory firm providing corporate restructuring,
litigation support, forensic accounting, expert testimony and
valuation services. Mr. Dwyer served as a consultant to Verint
Systems, Inc., a software company listed on the NASDAQ Global
Market, from 2009 through 2010, assisting with SEC reporting and
compliance. From 2005 through 2009, Mr. Dwyer served as chief
financial officer and executive vice president of AXS-One Inc., a
publicly traded software company. During 2004, Mr. Dwyer served as
chief financial officer of Synergen, Inc., a privately held
software company providing energy technology to utilities. Prior to
2004, Mr. Dwyer also served as chief financial officer and
executive vice president of Caminus Corporation, an enterprise
application software company that was formerly listed on the NASDAQ
National Market, chief financial officer of ACTV, Inc., a digital
media company that was formerly listed on the NASDAQ National
Market, and chief financial officer of Winstar Global Products,
Inc., a manufacturer and distributor of hair care, bath and beauty
products until its acquisition by Winstar Communications, Inc. in
1995 when Mr. Dwyer went on to serve as senior vice president,
finance of Winstar Communications. Mr. Dwyer received his BBA in
Accounting from the University of Notre Dame in 1978 and is
licensed as a Certified Public Accountant in the State of New
York.
Richard A.
Zaremba
became Senior Vice President in 2004. He became Vice
President and Chief Financial Officer in February 1999 and in
September 2016, he became Senior Vice President, Finance. From
March 1995 to February 1999, he was the Vice President and Chief
Financial Officer of Converse Information Systems, Inc., a
manufacturer of digital voice recording systems. Previously, Mr.
Zaremba was Vice President and Chief Financial Officer of Miltope
Group, Inc., a manufacturer of electronic equipment. Mr. Zaremba is
a licensed certified public accountant in the state of New York and
holds BBA and MBA degrees in Accounting from Hofstra
University.
4
Robert S.
Ludecker
became Senior Vice President of Global Sales and
Marketing in May 2015. Prior to joining the Company as Global Vice
President of Sales and Marketing in May 2013, Mr. Ludecker served
from February 2011 to May 2013 as Vice President of Global Sales
and Marketing for BioMimetic Therapeutics, a NASDAQ-listed
biotechnology company, specializing in the development and
commercialization of products which promote the healing of
musculoskeletal injury and diseases, including orthopedic, spine,
and sports medicine applications. Prior to BioMimetic, Mr. Ludecker
served from February 2008 to February 2011 in a variety of senior
sales and marketing leadership positions with Small Bone
Innovations, a private New York City-based orthopedic company
specializing in small bones, and Smith and Nephew, a leading
U.K.-based global provider of orthopedic reconstruction implants
and a broad portfolio of medical instruments and supplies. Mr.
Ludecker holds a B. A. degree from Kenyon College.
Dan Voic
became
Vice President of Research and Development and Engineering in
January 2002. Prior thereto, he served as Engineering Manager and
Director of Engineering with the Company. Mr. Voic has in excess of
15 years’ experience in both medical and laboratory and
scientific products development. Mr. Voic holds an M.S. degree in
mechanical engineering from Polytechnic University “Traian
Vuia” of Timisoara, Romania and an MS degree in applied
mechanics from Polytechnic University of New York.
Joseph J. Brennan
became Vice President of Operations in November 2014. Prior to
joining the Company, Mr. Brennan served from October 2008 to August
2014 as Director of Operations for Air Techniques, Inc., a global
medical device company. Mr. Brennan holds a B. T. degree from the
State University of New York at Farmingdale.
John J. Salerno
became Vice President of Quality and Regulatory Affairs in March
2015. Prior to joining the Company, Mr. Salerno served from
December 2012 to March 2015 as Senior Director of Quality Assurance
for US Nonwovens Corp., a privately-held over the counter drug
products, cosmetics, personal care and EPA surface disinfectant
company. From May 2010 to December 2012, Mr. Salerno was a
consultant for US Nonwovens. From 2006 to 2010, Mr. Salerno held
the position of Vice President of Quality Assurance and Regulatory
Affairs for International Technidyne Corporation. Prior to 2006,
Mr. Salerno held the position of Vice President of Regulator
Compliance and Reliability Engineering for Pall Life Sciences. Mr.
Salerno holds a Master’s degree in Microbiology from Long
Island University and a Bachelor’s degree in biology from
Fordham University.
Christopher H.
Wright
became Vice President of Domestic Sales in July 2015.
Prior to joining the Company, Mr. Wright served from 2011 to 2013
in the position of Senior Business Director with Wright
Medical/BioMimetics, LLC. From 2007 – 2011 Mr. Wright held
the position for Regional Manager with Small Bone Innovations. From
2005 – 2007 he held the position of Territory business
manager with Baxter Healthcare. Prior to 2005, Mr. Wright was an
independent sales representative. Mr. Wright holds a Bachelor of
Arts degree in Business Administration from Xavier University of
New Orleans in Louisiana.
Executive officers are elected annually by, and serve at the
discretion of, the Board.
The Company’s
Board of Directors recommends a vote FOR the nominees described
in
Proposal One in this Proxy Statement.
Meetings of the Board of
Directors
During the fiscal year ended June 30, 2016 (“fiscal
2016”), the Board of Directors held five meetings and acted
three times by unanimous written consent. No Director attended less
than 75% of the aggregate of the total number of meetings of the
Board of Directors and meetings of Committees of which he was a
member that were held during fiscal 2016.
Committees of the
Board
During fiscal 2016, the only standing committees of the Board of
Directors of the Company were its Audit Committee and the
Compensation and Corporate Governance Committee. In October 2016,
the Board of Directors reconstituted its committees, to separate
the functions of the Compensation and Corporate Governance
Committee into two separate committees — a Compensation
Committee and a Nominating and Corporate Governance Committee.
5
The Board currently has standing Audit, Compensation, and
Nominating and Governance Committees. Further information regarding
these committees and the director nomination process is provided
below.
The Audit Committee, which met five times in fiscal 2016 and acted
once by unanimous written consent, monitors our financial reporting
standards and practices and our internal financial controls to
ensure compliance with the policies and objectives established by
the Board of Directors. The committee directly retains and
recommends for shareholder approval an independent accounting firm
to conduct the annual audit and discusses with our independent
accountants the scope of their examinations, with particular
attention to areas where either the committee or the independent
accountants believe special emphasis should be directed. The
committee reviews the quarterly and annual financial statements and
the annual independent accountants’ report, invites the
accountants’ recommendations on internal controls and on
other matters, and reviews the evaluation given and corrective
action taken by management. It reviews the independence of the
accountants and pre-approves audit and permissible non-audit
services. It has primary oversight responsibility for our
Compliance Program. Members of the committee are Messrs. Patton,
Gildea and McBrayer. Mr. Patton chairs the committee. Each member
of the committee is independent as defined in Rule 10A-3 of the
Securities and Exchange Commission and the listing standards of
Nasdaq. The Board of Directors has determined that Messrs. Patton
and Gildea each qualifies as an “audit committee financial
expert,” as that term is defined in Regulation S-K of the
Securities and Exchange Commission.
The Compensation Committee, which met two times in fiscal 2016
(while known as the Compensation and Corporate Governance
Committee), oversees our executive and director compensation
programs and policies and annually reviews all components of
compensation to ensure that our objectives are appropriately
achieved. These functions are not delegated to our officers or to
third-party professionals, although the committee may from time to
time retain third-party consultants to provide advice regarding
compensation issues. No such consultants were retained during
fiscal 2016. The committee also considers input from our executive
officers, although final decisions regarding executive compensation
are made by the committee. The committee also did not set
percentage compensation goals against a peer group of companies, or
benchmark, our executives’ compensation, though the
availability to our executives of alternative employment
opportunities is an important consideration in the compensation
design process. Rather, the committee used its marketplace
knowledge, background, experience and market information to make
recommendations concerning executive compensation. The committee is
also responsible for certain administrative aspects of our
compensation plans and stock plans and approves or recommends
changes in these plans. It also approves bonus payments and grants
under our stock plans for our executive officers. The committee
also reviews officers’ potential for growth and, with the
chief executive officer, will be responsible for succession
planning. The members are Messrs. McBrayer, Miner and Patton. Mr.
McBrayer is chairman of the committee. All members of the
Compensation Committee are independent, based upon the criteria
provided by Nasdaq rules.
The Nominating and Governance Committee, which was not yet formed
in fiscal 2016, reviews, on a periodic basis, the overall
effectiveness and/or appropriateness of our corporate governance
and recommends improvements when necessary; assists the Board in
identifying, screening, and reviewing individuals qualified to
serve as directors in accordance with criteria approved by the
Board and shall recommend to the Board candidates for nomination
for election at the annual meeting of stockholders or to fill Board
vacancies; develops and recommends to the Board and oversees
implementation of our policies and procedures for the receipt of
shareholder suggestions regarding Board composition and
recommendations of candidates for nomination by the Board; and
assists the Board in disclosing information relating to functions
of the committee as may be required in accordance with the Federal
securities laws. Members of the committee are Messrs. Gildea,
McBrayer and Patton. Mr. Gildea is the chairman of the committee.
All members serving on the committee are independent, based upon
the criteria provided by Nasdaq rules.
Each committee is governed by a written charter. Copies of each
committee charter are available on our website at
www.misonix.com
.
Nomination of
Directors
The process followed by the Nominating and Governance Committee to
identify and evaluate director candidates includes requests to the
members of our board of directors and others for recommendations,
meetings from time to time to evaluate biographical information and
background material relating to potential candidates and interviews
of selected candidates by members of the Nominating and Governance
Committee and our board of directors.
6
While we do not have a formal diversity policy for board
membership, we look for potential candidates that help ensure that
the board of directors has the benefit of a wide range of
attributes, including cultural, gender, ethnic and age diversity
and experience in industries beyond healthcare. We also look for
financial oversight experience, financial community experience and
a good reputation within the financial community; business
management experience and the potential to succeed top management
in the event board intervention is necessary on an unexpected
basis; business contacts, business knowledge and influence that may
be useful to our businesses; and knowledge about our industry and
technologies.
Our board of directors does not currently prescribe any minimum
qualifications for director candidates; however, the Nominating and
Governance Committee will take into account a potential
candidate’s experience, areas of expertise and other factors
relevant to the overall composition of our board of directors.
Shareholders may recommend individuals to the Nominating and
Governance Committee for consideration as potential director
candidates by submitting the names of the candidate(s), together
with appropriate biographical information and background materials
and a statement as to whether the shareholder or group of
shareholders making the recommendation has beneficially owned more
than 5% of our common stock for at least a year as of the date such
recommendation is made, to the Nominating and Governance Committee,
Attn: Corporate Secretary, Misonix, Inc., 1938 New Highway,
Farmingdale, New York 11735. Assuming that appropriate biographical
and background material has been provided on a timely basis, the
Nominating and Governance Committee will evaluate
shareholder-recommended candidates by following substantially the
same process, and applying substantially the same criteria, as it
follows for candidates submitted by others.
Director Compensation
For Fiscal 2016
Directors are compensated through payment of a cash fee and annual
stock option grants. Commencing February 3, 2015, each non-employee
director received an annual fee of $20,000 and the Chairman of the
Audit Committee received $25,000. Each non-employee director was
also reimbursed for reasonable expenses incurred while traveling to
attend a meeting of the Board of Directors or while traveling in
furtherance of the business of the Company.
The following table sets forth information for the fiscal year
ended June 30, 2016 with respect to the compensation of our
directors.
DIRECTOR COMPENSATION
FOR THE 2016 FISCAL YEAR
|
|
Fees
Earned or Paid in Cash
($)
|
|
|
|
|
Michael A. McManus, Jr.
|
|
—
|
|
—
|
|
—
|
John W. Gildea
|
|
22,000
|
|
71,994
|
|
93,994
|
Dr. Charles Miner III
|
|
22,000
|
|
71,994
|
|
93,994
|
T. Guy Minetti
|
|
27,500
|
|
71,994
|
|
99,494
|
Stavros G. Vizirgianakis
|
|
23,000
|
|
71,994
|
|
94,994
|
Thomas M. Patton
|
|
15,000
|
|
71,994
|
|
86,994
|
Patrick A. McBrayer
|
|
23,000
|
|
71,994
|
|
94,994
|
Fiscal 2016 cash payments include a catch-up of payments which were
due from fiscal 2015.
Outstanding options at June 30, 2016 for Messrs. Gildea, Miner and
Minetti were 105,000 shares each, Mr. Vizirgianakis was 60,000
shares, Mr. McBrayer was 30,000 shares and Mr. Patton was 15,000
shares.
Section 16(a) Beneficial
Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company’s
executive officers, directors and persons who own more than 10% of
a registered class of the Company’s equity securities
(“Reporting Persons”) to file reports of ownership and
changes in ownership on Forms 3, 4, and 5 with the SEC. These
Reporting Persons are required by SEC regulation to furnish the
Company with copies of all Forms 3, 4 and 5 they file with the SEC.
Based solely on the Company’s review of the copies of the
forms it has received, the Company believes that all Reporting
Persons, complied on a timely basis with all filing requirements
applicable to them with respect to transactions during fiscal year
2016.
7
Communications with
Directors
Shareholders, associates of the Company and other interested
parties may communicate directly with the Board of Directors, with
the non-management Directors or with a specific Board member, by
writing to the Board (or the non-management Directors or a specific
Board member) and delivering the communication in person or mailing
it to: Board of Directors, Privileged & Confidential, c/o
Richard A. Zaremba, Secretary, Misonix, Inc., 1938 New Highway,
Farmingdale, New York 11735. Correspondence will be discussed at
the next scheduled meeting of the Board of Directors, or as
indicated by the urgency of the matter. The non-management
Directors are: Messrs. Gildea, McBrayer, Miner and Patton. From
time to time, the Board of Directors may change the process by
which shareholders may communicate with the Board of Directors or
its members. Any changes in this process will be posted on the
Company’s website or otherwise publicly disclosed.
Director
Independence
The Company is required to have a Board of Directors a majority of
whom are “independent” as defined by the Nasdaq listing
standards and to disclose in the proxy statement for each annual
meeting those Directors that the Board of Directors has determined
to be independent. Based on such definition, the Board of Directors
has determined that all Directors other than Vizirgianakis, who is
an officer of the Company, are independent.
The Company is required to have an audit committee of at least
three members composed solely of independent Directors. The Board
of Directors is required under the Nasdaq listing standards to
affirmatively determine the independence of each Director on the
Audit Committee. The members of the Audit Committee are Messrs.
Patton, Gildea and McBrayer. The Board has determined that each
member of the Audit Committee is “independent” not only
under the Nasdaq listing standards but also within the definition
contained in a final rule of the SEC. Furthermore, the Board of
Directors has determined that Mr. Gildea and Mr. Patton are
“audit committee financial experts” within the
definition contained in a final rule adopted by the SEC.
Corporate
Governance
The Company has an ongoing commitment to good governance and
business practices. In furtherance of this commitment, we regularly
monitor developments in the area of corporate governance and review
our policies and procedures in light of such developments. We
comply with the rules and regulations promulgated by the SEC and
the Nasdaq Stock Market, and implement other corporate governance
practices we believe are in the best interests of the Company and
the shareholders.
Board Leadership and
Structure
Since September 2016, the Board of Directors has operated without a
formal chairman. The Board does not have a specifically designated
lead independent Director. However, Thomas M. Patton, an
independent Director and Chair of our Audit Committee, has
typically led the executive sessions of the Board and acts as a
liaison between the Directors and management. In addition, all
Directors have input into the preparation of the meeting agenda and
topics of board discussion and oversight. The Board of Directors
believes that this is an appropriate structure for the overall
governance of the Board.
Risk
Oversight
The Board oversees Company functions in an effort to assure that
Company assets are properly safeguarded, that appropriate financial
and other controls are maintained, and that the Company’s
business is conducted prudently and in compliance with applicable
laws, regulations and ethical standards.
While the Board is responsible for risk oversight, Company
management is responsible for managing risk. The Company has
developed internal processes and an internal control environment to
identify and manage risks and to communicate with the Board. The
Board monitors and evaluates the effectiveness of the internal
controls and the risk management program at least annually.
Management communicates routinely with the Board and individual
Directors on the significant risks identified and how they are
being managed. Directors are free to, and often do, communicate
directly with senior management.
The Audit Committee is responsibility for reviewing and overseeing
the Company’s financial statements, including the integrity
of the Company’s financial and disclosure controls, its legal
compliance programs and procedures, and its procedures for
identifying, evaluating and controlling material financial, legal
and operational risk.
8
Board Attendance at
Annual Meetings of Shareholders
The Company has not established a formal policy regarding director
attendance at its Annual Meetings of Shareholders, but the
Directors generally do attend the Annual Meeting. The Chairman of
the Board or the Chief Executive Officer presides at the Annual
Meeting of Shareholders, and the Board of Directors generally holds
one of its regular meetings in conjunction with the Annual Meeting
of Shareholders. Accordingly, unless one or more members of the
Board are unable to attend, all members of the Board are typically
present for the Annual Meeting. All of the members of the Board,
who were members at the time of our fiscal 2015 Annual Meeting of
Shareholders, held in February 2016, attended that meeting.
Code of
Ethics
The Company has adopted a code of ethics that applies to all of its
directors, officers (including its Chief Executive Officer, Chief
Financial Officer, Controller and any person performing similar
functions) and employees. The Company has made the Code of Ethics
available on its website at
www.MISONIX.com
.
Audit Committee
Report
Management is responsible for the Company’s financial
reporting process, including its system of internal control, and
for the preparation of consolidated financial statements in
accordance with accounting principles generally accepted in the
United States. The Company’s independent auditors are
responsible for auditing those financial statements. The Audit
Committee’s responsibility is to monitor and review these
processes. It is not the Audit Committee’s duty or
responsibility to conduct audit or accounting reviews or
procedures. The members of the Audit Committee are not employees of
the Company and may not be, and may not represent themselves to be
or to serve as, accountants or auditors by profession or experts in
the fields of accounting or auditing. Therefore, the Audit
Committee has relied, without independent verification, on
management’s representation that the financial statements
have been prepared with integrity and objectivity and in conformity
with accounting principles generally accepted in the United States
and on the representations of the independent registered public
accounting firm included in its report on the Company’s
financial statements. The Audit Committee’s oversight does
not provide it with an independent basis to determine that
management has maintained appropriate accounting and financial
reporting principles or policies, or appropriate internal controls
and procedures designed to assure compliance with accounting
standards and applicable laws and regulations. Furthermore, the
Audit Committee’s considerations and discussions with
management and the independent registered public accounting firm do
not assure that the Company’s financial statements are
presented in accordance with generally accepted accounting
principles in the United States, that the audit of the
Company’s financial statements has been carried out in
accordance with generally accepted auditing standards or that the
Company’s independent registered public accounting firm is in
fact “independent”.
In accordance with its written charter, the Audit Committee assists
the Board of Directors in fulfilling its responsibility to monitor
the integrity of the accounting, auditing and financial reporting
practices of the Company. Typically, for each fiscal year, the
Audit Committee selects the independent registered public
accounting firm to audit the financial statements of the Company
and its subsidiaries and such selection is subsequently presented
to the Company’s shareholders for ratification.
The Audit Committee has reviewed and discussed the audited
financial statements contained in our Annual Report on Form 10-K
for the year ended June 30, 2016 with our management and has
discussed with the independent registered public accounting firm
the matters required to be discussed by the statement on Auditing
Standards No. 1301 “
Communications With
Audit Committees
” as adopted by the Public Company
Accounting Oversight Board. The Audit Committee has also discussed
with the independent registered public accounting firm matters
relating to its independence, including a review of audit and
non-audit fees and the written disclosures and letter from the
independent registered public accounting firm to the Audit
Committee pursuant to the applicable requirements of the Public
Company Accounting Oversight Board regarding the independent
registered public accounting firm’s communications with the
Audit Committee concerning independence.
9
Based on the review and discussions of the above, the Audit
Committee recommended to our Board of Directors that the audited
financial statements be included in the Company’s Annual
Report on Form 10-K for the year ended June 30, 2016 for filing
with the SEC.
|
|
Reported upon by the Audit Committee
|
|
|
|
|
|
Thomas M. Patton, Chair
|
|
|
John W. Gildea
|
|
|
Patrick A. McBrayer
|
10
EXECUTIVE
COMPENSATION
Compensation Discussion
and Analysis
Overview of Compensation Program and Philosophy
Our compensation program is intended to:
•
Attract, motivate, retain and reward employees of outstanding
ability;
•
Link changes in employee compensation to individual and corporate
performance;
•
Align employees’ interests with those of the Company’s
shareholders.
The ultimate objective of our compensation program is to increase
shareholder value. We seek to achieve these objectives with a total
compensation approach which takes into account a competitive base
salary, bonus pay based on the annual performance of the Company
and individual goals and equity incentive awards.
The Board’s Compensation Committee, which is comprised solely
of independent directors and is responsible for making decisions
regarding the amount and form of compensation paid to the
Company’s executive officers, has carefully considered the
results of prior say-on-pay shareholder votes. Based upon the vote
results at the most recent annual shareholders meeting,
shareholders appear to be supportive of the Compensation
Committee’s approach to the executive compensation
program.
Base Salaries
Base salaries paid to executives are intended to attract and retain
highly talented individuals. In setting base salaries, individual
experience, individual performance, the Company’s performance
and job responsibilities during the year are considered. Executive
salaries are reconciled by Human Resources and evaluated on a
bi-annual basis against local companies of similar size and nature.
During the fiscal year ended June 30, 2016, Mr. Ludecker, Voic and
Zaremba each received base salary increases of 3% based on
performance.
Annual Bonus Plan Compensation
The Compensation Committee of the Board approves annual
performance-based compensation. The purpose of the annual
bonus-based compensation is to motivate executive officers and key
employees. Target bonuses, based upon recommendations from the
Chief Executive Officer, are evaluated and approved by the
Compensation Committee for all management employees other than the
Chief Executive Officer. The bonus recommendations are derived from
individual and Company performance but not based on a specific
formula and are discretionary. The Chief Executive Officer’s
bonus compensation is derived from the recommendation of the
Compensation Committee based upon the Chief Executive
Officer’s performance and Company performance but is not
based on a specific formula and is discretionary. Bonuses based on
performance in the fiscal 2016 year were paid to executive officers
as follows: $0 to Mr. McManus, $45,000 to Mr. Zaremba, $65,000 to
Mr. Ludecker and $25,000 to Mr. Voic.
Equity Incentive Awards
Company executives are eligible to receive restricted stock and
stock options (which give them the right to purchase shares of
common stock at a specified price in the future). These grants will
vest based upon the passage of time, the achievement of performance
metrics, or both. We believe that the use of restricted stock and
stock options as the basis for long-term incentive compensation
meets our defined compensation strategy and business needs by
achieving increased value for shareholders and retaining key
employees.
Stock option awards are intended to attract and retain highly
talented executives, to provide an opportunity for significant
compensation when overall Company performance is reflected in the
stock price and to help align executives’ and
shareholders’ interests. Stock options are typically granted
at the time of hire to key new employees and annually to a broad
group of existing key employees, including executive officers. We
have adopted a number of equity compensation plans governing the
grant of such stock options. All of our equity compensation plans
have been approved by our shareholders.
11
Annual option grants to executive officers are made at the
discretion of the Board or the Compensation Committee and may be in
the form of incentive stock options (“ISOs”) up to the
fullest extent permitted under tax laws, with the balance granted
in the form of nonqualified stock options. The option grants are
subject to the terms of the relevant plan. ISOs have potential
income tax advantage for executives if the executive disposes of
the acquired shares after satisfying certain holding periods. Tax
laws provide that the aggregate grant at date of grant for market
value of ISOs that become exercisable for any employee in any year
may not exceed $100,000.
Our current standard vesting schedule for all employees is 25% on
the first anniversary of the date of grant, 25% on the second
anniversary of the date of grant, 25% on the third anniversary of
the date of grant and 25% on the fourth anniversary of the date of
grant. We have on occasion issued options that have two year
vesting to employees.
The number of stock options granted in fiscal 2016 to the named
executive officers, and their estimated fair value, were as
follows:
|
|
|
|
Number of Options Granted
|
|
Estimated Fair Value of Awards at Grant
Date
|
Michael A. McManus, Jr.
|
|
8/19/2015
|
|
50,000
|
|
$
|
259,715
|
Robert S. Ludecker
|
|
8/18/2015
|
|
30,000
|
|
$
|
110,379
|
Richard A. Zaremba
|
|
8/18/2015
|
|
30,000
|
|
$
|
110,379
|
Dan Voic
|
|
8/18/2015
|
|
35,000
|
|
$
|
128,776
|
Christopher H. Wright
|
|
8/18/2015
|
|
15,000
|
|
$
|
55,190
|
The stock options awarded in August 2015 had an exercise price of
$9.38 (which was equal to the average of the opening and closing
market price per share of our stock on the date of grant). The
stock options awarded in August 2015 to Mr. McManus had an exercise
price of $9.60 (which was equal to the average of the opening and
closing market price per share of our stock on the date of
grant).
All stock options in the above table provide for vesting at 25% per
year on the first four year anniversary dates of the grant date,
with a stated expiration date of ten years after grant.
We did not make grants of restricted stock to our named executive
officers during fiscal 2016.
Other Annual Compensation and Benefits
Although direct compensation, in the form of salary, non-equity
incentive awards and long-term equity incentive awards provide most
of the compensation to each Executive Officer, we also provide for
the following items of additional compensation:
•
Retirement savings are provided by a 401(k) plan, in the same
manner to all U.S. employees. This plan includes an employer
matching contribution of 10% which is intended to encourage
employees (including the chief executive officer) to save for
retirement.
•
Health, life and disability benefits are offered to our executive
officers in the same manner to all of our U.S. employees. We
provided additional life insurance, long term care policies and
certain transportation expenses for our chief executive officer and
each of our executive officers.
Transportation expenses are provided to executive officers,
primarily in the form of an automobile allowance. Our former chief
executive officer had the use of a Company provided automobile with
driver.
Compensation Committee
Report
Our Compensation Committee has furnished the following report. The
information contained in the “
Compensation
Committee Report”
is not deemed to be
“soliciting material” or to be “filed” with
the SEC, nor is such information to be incorporated by reference
into any future filing under the Securities Act of 1933, as amended
(the “Securities Act”), or the Exchange Act, as
amended, except to the extent that we specifically incorporate it
by reference in to such filings.
12
Our Compensation Committee has reviewed and discussed the
“Compensation Discussion and Analysis” required by Item
402(b) of Regulation S-K of the Securities Act with management.
Based on such review and discussion, our Compensation Committee
recommended to our Board of Directors that the
“Compensation
Discussion and Analysis”
be included in this proxy
statement.
|
|
Compensation Committee
|
|
|
|
|
|
Patrick A. McBrayer, Chair
|
|
|
Dr. Charles Miner III
|
|
|
Thomas M. Patton
|
Compensation Committee
Interlocks and Insider Participation
During fiscal 2016, Messrs. Gildea, Miner and our former director,
T. Guy Minetti served as members of our Compensation Committee. No
Member of our Compensation Committee is or was during fiscal year
2016 an employee or an officer of Misonix or its subsidiaries.
Summary of
Compensation
The table and footnotes below describe the total compensation paid
for fiscal years ended June 30, 2016, June 30, 2015, and June 30,
2014 to the “named executive officers,” who are Michael
A. McManus, Jr. (the Company’s principal executive officer
during fiscal 2016), Richard A. Zaremba (the Company’s
principal financial officer during fiscal 2016), and the three
other most highly compensated individuals who were serving as
executive officers of the Company on June 30, 2016, the last day of
the fiscal year.
SUMMARY COMPENSATION
TABLE
Name
and Principal Position
|
|
Fiscal year Ended
June 30,
|
|
|
|
|
|
|
|
All
Other Compensation ($)
|
|
|
Michael A. McManus, Jr.
|
|
2016
|
|
325,000
|
|
—
|
|
259,715
|
|
99,730
|
(3)
|
|
684,445
|
President and Chief
|
|
2015
|
|
290,008
|
|
100,000
|
|
1,314,695
|
|
96,291
|
|
|
1,800,994
|
Executive Officer
(1)
|
|
2014
|
|
288,915
|
|
100,000
|
|
469,575
|
|
91,177
|
|
|
949,667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard A. Zaremba
|
|
2016
|
|
232,819
|
|
45,000
|
|
110,379
|
|
10,081
|
(4)
|
|
398,279
|
Senior Vice President,
|
|
2015
|
|
226,038
|
|
25,000
|
|
178,374
|
|
10,731
|
|
|
440,143
|
Chief Financial Officer,
|
|
2014
|
|
219,455
|
|
20,000
|
|
150,264
|
|
10,081
|
|
|
399,800
|
Secretary and Treasurer
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert S. Ludecker
|
|
2016
|
|
263,900
|
|
65,000
|
|
110,379
|
|
8,194
|
|
|
447,473
|
Senior Vice President-Medical
|
|
2015
|
|
215,098
|
|
45,000
|
|
748,751
|
|
8,376
|
|
|
1,017,225
|
Global Sales and Marketing
|
|
2014
|
|
203,000
|
|
40,000
|
|
37,566
|
|
7,632
|
|
|
288,198
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dan Voic
|
|
2016
|
|
180,119
|
|
25,000
|
|
128,776
|
|
11,885
|
(5)
|
|
345,780
|
Vice President of
|
|
2015
|
|
174,873
|
|
20,000
|
|
208,103
|
|
12,147
|
|
|
41,123
|
Research and Development
|
|
2014
|
|
169,375
|
|
15,000
|
|
131,481
|
|
11,125
|
|
|
326,981
|
and Engineering
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher H. Wright
|
|
2016
|
|
296,300
|
|
—
|
|
55,190
|
|
7,646
|
|
|
359,136
|
Vice President – U. S. Sales
|
|
2015
|
|
248,000
|
|
—
|
|
59,458
|
|
8,246
|
|
|
315,704
|
|
|
2014
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
13
Grants of Plan Based
Awards
The following table presents non-equity and equity awards granted
to the named executive officers in fiscal year 2016.
GRANTS OF PLAN-BASED
AWARDS IN FISCAL 2016
|
|
|
|
All
other Option Awards: Number of Securities Underlying
Options
|
|
(1)
Exercise or Base price of Option Awards ($/Share)
|
|
(2)
Grant Date Fair Value of Stock and Option Awards
($)
|
Michael A. McManus, Jr.
|
|
8/19/15
|
|
50,000
|
|
9.60
|
|
259,715
|
Richard A. Zaremba
|
|
8/18/15
|
|
30,000
|
|
9.38
|
|
110,379
|
Robert S. Ludecker
|
|
8/18/15
|
|
30,000
|
|
9.38
|
|
110,379
|
Dan Voic
|
|
8/18/15
|
|
35,000
|
|
9.38
|
|
128,776
|
Christopher H. Wright
|
|
8/18/15
|
|
15,000
|
|
9.38
|
|
55,190
|
14
The following table sets forth information regarding outstanding
equity awards held as of June 30, 2016 by our named executive
officers.
OUTSTANDING EQUITY
AWARDS AT 2016 FISCAL YEAR END
|
|
Number of Securities Underlying Unexercised Options (#)
Exercisable
|
|
Number of Securities Underlying Unexercised Options (#)
Unexercisable
|
|
Option Exercise Price ($)
|
|
|
Michael A. McManus, Jr.
|
|
55,000
|
|
—
|
|
|
1.91
|
|
11/04/18
|
|
|
50,000
|
|
—
|
|
|
2.44
|
|
9/9/19
|
|
|
75,000
|
|
—
|
|
|
1.82
|
|
9/7/20
|
|
|
100,000
|
|
—
|
|
|
2.19
|
|
9/13/21
|
|
|
89,025
|
|
29,675
|
(1)
|
|
2.96
|
|
9/13/22
|
|
|
4,725
|
|
1,575
|
(2)
|
|
6.18
|
|
12/5/22
|
|
|
62,500
|
|
62,500
|
(3)
|
|
4.68
|
|
9/10/23
|
|
|
31,250
|
|
93,750
|
(4)
|
|
7.67
|
|
9/9/24
|
|
|
—
|
|
100,000
|
(5)
|
|
11.88
|
|
5/22/25
|
|
|
—
|
|
50,000
|
(6)
|
|
9.60
|
|
8/19/25
|
|
|
|
|
|
|
|
|
|
|
Richard A. Zaremba
|
|
—
|
|
10,000
|
(1)
|
|
2.96
|
|
9/13/22
|
|
|
—
|
|
20,000
|
(3)
|
|
4.68
|
|
9/10/23
|
|
|
—
|
|
22,500
|
(4)
|
|
7.67
|
|
9/9/24
|
|
|
—
|
|
30,000
|
(7)
|
|
9.38
|
|
8/18/25
|
|
|
|
|
|
|
|
|
|
|
Robert S. Ludecker
|
|
5,000
|
|
5,000
|
(3)
|
|
4.68
|
|
9/10/23
|
|
|
8,750
|
|
26,250
|
(4)
|
|
7.67
|
|
9/9/24
|
|
|
—
|
|
80,000
|
(8)
|
|
12.77
|
|
5/14/25
|
|
|
—
|
|
30,000
|
(7)
|
|
9.38
|
|
8/18/25
|
|
|
|
|
|
|
|
|
|
|
Dan Voic
|
|
7,500
|
|
—
|
|
|
2.19
|
|
9/13/21
|
|
|
8,750
|
|
8,750
|
(1)
|
|
2.96
|
|
9/13/22
|
|
|
8,750
|
|
17,500
|
(3)
|
|
4.68
|
|
9/10/23
|
|
|
8,750
|
|
26,250
|
(4)
|
|
7.67
|
|
9/9/24
|
|
|
—
|
|
35,000
|
(7)
|
|
9.38
|
|
8/18/25
|
|
|
|
|
|
|
|
|
|
|
Christopher H. Wright
|
|
2,500
|
|
7,500
|
(4)
|
|
7.67
|
|
9/9/24
|
|
|
—
|
|
15,000
|
(7)
|
|
9.38
|
|
8/18/25
|
15
Stock Option
Exercises
The following table shows stock option exercises during fiscal 2016
by the named executive officers.
OPTION EXERCISES IN
FISCAL 2016
Name
of Executive Officer
|
|
|
|
Number of Shares Acquired On Exercise
|
|
Value
Realized On Exercise
(1)
|
Michael A. McManus, Jr.
|
|
6/30/2016
|
|
20,000
|
|
$
|
65,200
|
Richard A. Zaremba
|
|
10/30/2015
|
|
36,250
|
|
$
|
250,738
|
Dan Voic
|
|
9/14/2015
|
|
5,000
|
|
$
|
14,550
|
Summary of Potential
Payments Upon Termination or Following a
Change-In-Control
Severance Agreement
and Severance Payments
Except for our former Chief Executive Officer Michael A. McManus,
Jr., we did not have severance agreements with any of our Executive
Officers during fiscal 2016. As described below under
“— Employment and Severance Agreements,” we
subsequently entered into a Retirement Agreement and General
Release with Mr. McManus governing the terms of his retirement from
the Company and entered into severance letter agreements with Mr.
Zaremba and Mr. Ludecker that provide for payment of twelve (12)
months annual base salary upon certain employment termination
events.
Change-in-Control and
Change-in-Control Payments
In the event of a change-in-control, we are required to make
certain change-in-control payments to Mr. Zaremba, Mr. Ludecker,
and Mr. Voic under the terms of the change-in-control agreements.
The agreements provide for twelve (12) months base salary upon
change in control of the Company. These amounts currently represent
$236,260, $267,800 and $182,781, respectively. In addition,
unvested options granted to Mr. Zaremba, Mr. Ludecker and Mr. Voic
would vest upon a change-in-control. Assuming the change-in-control
occurred on June 30, 2016, the value of unvested options would have
been $382,585, $825,887 and $370,975, respectively.
Employment and Severance
Agreements
Vizirgianakis
Employment Agreement
On December 15, 2016, the Company entered into an Employment
Agreement (the “Vizirgianakis Agreement”) with Stavros
G. Vizirgianakis pursuant to which Mr. Vizirgianakis serves as the
Company’s full time President and Chief Executive Officer.
Mr. Vizirgianakis had been serving on an unpaid basis as interim
Chief Executive Officer of the Company since September 2, 2016. Mr.
Vizirgianakis continues to serve as a member of the Company’s
Board of Directors.
Pursuant to the Vizirgianakis Agreement, Mr. Vizirgianakis’
initial term of employment runs through September 13, 2019,
provided that the term shall be automatically renewed and extended
for consecutive one (1) year renewal terms, unless either party
sends to the other party a notice of non-renewal at least ninety
(90) days prior to the expiration of the initial term or any
then-current renewal term. Mr. Vizirgianakis will receive an annual
base salary of not less than three hundred sixty thousand dollars
($360,000) per annum, subject to review by the Board at least
annually for increase but not for decrease. Mr. Vizirgianakis is
also eligible to receive annual bonuses in the discretion of the
Board. The Vizirgianakis Agreement also provides for a one-time
$10,000 moving allowance and reimbursement of counsel fees relating
to visa matters and the negotiation of the Vizirgianakis Agreement.
If the Company terminates Mr. Vizirgianakis’ employment
without cause (as defined in the Vizirgianakis Agreement), the
Company provides a notice of non-renewal, or Mr. Vizirgianakis
terminates his employment for good reason (as defined in the
Vizirgianakis Agreement), Mr. Vizirgianakis shall be entitled to
receive (i) a lump-sum cash payment from the Company in an amount
equal to one and one-half (1.5) times the annual base salary as is
in effect immediately
16
prior to the date of such termination, and (ii) continuation of all
employee benefits and fringe benefits to which he was entitled
under the Vizirgianakis Agreement immediately prior to such
termination of employment for a period of eighteen (18) months
following the termination of employment. The Vizirgianakis
Agreement also contains non-competition and non-solicitation
covenants from Mr. Vizirgianakis during the term of employment and
for a period of 18 months thereafter.
In conjunction with the execution of the Vizirgianakis Agreement,
Mr. Vizirgianakis received grants of an aggregate of 400,000 shares
of restricted stock pursuant to the Company’s 2014 Employee
Equity Incentive Plan (the “Plan”) as follows: (i) a
grant of 134,000 shares vesting in five equal installments on
September 1, 2017, 2018, 2019, 2020 and 2021; (ii) a performance
grant of 133,000 shares which vests if both of the following
conditions are satisfied simultaneously: (A) at any time prior to
the third anniversary of the grant date, the most recent publicly
reported trailing four (4) fiscal quarter revenue of the Company
(exclusive of the impact of any acquisitions after the grant date)
is at least $35,000,000 and (B) the closing price of the
Company’s Common Stock is at least $10.50 per share (subject
to adjustment for stock splits, stock dividends and the like) for
ten (10) consecutive trading days; and (iii) a performance grant of
133,000 shares which vests if both of the following conditions are
satisfied simultaneously: (A) at any time prior to the fifth
anniversary of the grant date, the most recent publicly reported
trailing four (4) fiscal quarter revenue of the Company (exclusive
of the impact of any acquisitions after the grant date) is at least
$48,000,000 and (B) the closing price of the Company’s Common
Stock is at least $13.00 per share (subject to adjustment for stock
splits, stock dividends and the like) for ten (10) consecutive
trading days. The aforementioned performance grants will vest on a
change of control in accordance with the Plan only if the
applicable share price threshold is met in such transaction.
McManus Employment
Agreement
On May 22, 2015, the Employment Agreement, dated July 1, 2014, by
and between Michael A. McManus, Jr. and the Company was mutually
terminated and replaced by a new Employment Agreement whereby Mr.
McManus continued to serve as the Company’s President and
Chief Executive Officer (the “McManus Agreement”). The
McManus Agreement, effective as of May 22, 2015, had an initial
term expiring June 30, 2017 and would renew for successive one-year
periods thereafter unless terminated by either party not less than
ninety (90) days prior to the end of the then-current term. The
McManus Agreement provided for an annual base salary of (i)
$299,000 through June 30, 2015 and (ii) $325,000 commencing July 1,
2015, and an annual bonus based on Mr. McManus’ achievement
of annual goals and objectives as determined by the Compensation
Committee of the Company’s Board of Directors. Mr. McManus
also received a one-time grant of options to purchase 100,000
shares of Common Stock at an exercise price of $11.88 per share
(the “McManus Options”). The McManus Options vest in
their entirety on June 30, 2017.
Mr. McManus was entitled under the McManus Agreement to participate
in any plans and programs made available to the executive employees
of the Company generally.
The Company could terminate
the McManus Agreement for cause (as defined in the McManus
Agreement). Mr. McManus could terminate the McManus Agreement for
good reason (as defined in the McManus Agreement). If Mr. McManus
terminated the McManus Agreement for good reason, the Company was
required to (i) pay him an amount equal to two times his total
compensation (annual base salary plus bonus) at the highest rate
paid him at any time during the aggregate time he has been employed
by the Company, payable in a lump sum within sixty days of
termination of employment, and (ii) pay premiums for medical,
dental, vision, hospitalization and long term care coverage under
Company plans for a period of twenty-four (24) months.
Mr. McManus was entitled to severance pay and benefits if he
terminated his employment with the Company following a Change in
Control (as defined in the McManus Agreement), to provide him with
an incentive to remain with the Company and consummate a strategic
corporate sale or transaction that maximizes shareholder value.
Severance pay and benefits were triggered upon (i) his Involuntary
Termination without Cause (as defined in the McManus Agreement) for
a reason other than death or Disability (as defined in the McManus
Agreement) or (ii) as a result of a Constructive Termination (as
defined in the McManus Agreement) which in either case occurs: (x)
during the period not to exceed twenty-four (24) months after the
effective date of a Change in Control, or (y) before the effective
date of a Change in Control, but after the first date on which the
Board of Directors and/or senior management of the Company has
entered into formal negotiations with a potential acquirer that
results in the consummation of a Change in Control.
In the event that pay and benefits are so triggered, Mr. McManus
(A) was entitled to receive severance pay in an amount equal to two
(2) times the sum of (a) his annual base pay and (b) bonus at the
highest rate paid him for any fiscal year during the aggregate
period of his employment by the Company, payable in cash in a lump
sum; the payment of premiums for medical, dental, vision,
hospitalization and long term care coverage under Company plans for
a period of twenty-four (24) months;
17
(B) had the right, for a period of (i) ninety (90) days for stock
options granted under any of the Company’s Employee Stock
Option Plans adopted prior to 2005 and (ii) two (2) years for stock
options granted under the Company’s 2005 Employee Equity
Incentive Plan, 2009 Employee Equity Incentive Plan, 2014 Employee
Equity Incentive Plan and any plan adopted after the effective date
of the McManus Agreement, following his Termination Date (as
defined in the McManus Agreement) to exercise the options to the
extent such options were otherwise vested and exercisable as of the
Termination Date under the terms of the applicable stock option
McManus Agreement(s) and plan(s); and (C) would vest in all
unvested stock option grants with respect to options granted after
July 1, 2012.
Mr. McManus also agreed in the McManus Agreement to an eighteen
month post-termination covenant not-to-compete, as well as other
customary covenants concerning non-solicitation and non-disclosure
of confidential information of the Company.
The Company and Mr. McManus had previously entered into two letter
agreements (the “Letter Agreements”) providing for the
exercise of vested options by Mr. McManus (i) for a ninety (90) day
period after his retirement with respect to stock options granted
under certain of the Company’s stock option plans and (ii)
for two (2) years after Mr. McManus terminated his employment with
the Company in the event of a Change-in-Control (as defined in the
applicable stock option plans) and he was eligible for the
severance benefits provided for by the McManus Agreement. The
Company and Mr. McManus entered into a letter agreement to confirm
that the terms and conditions of the Letter Agreements continue to
be in full force and effect and apply to the McManus Agreement.
Assuming a Change in Control occurred on June 30, 2016, Mr. McManus
would have received (i) salary and bonus of $900,000; (ii)
perquisites of $40,000 and (iii) the value of unvested stock
options of $78,707.
McManus Retirement
Agreement
On August 26, 2016, the Company and Mr. McManus entered into a
Retirement Agreement and General Release (the “Retirement
Agreement”). Pursuant to the Retirement Agreement, on
September 2, 2016 Mr. McManus resigned as a Director and the
Chairman of the Board of Directors of the Company and retired as
President and Chief Executive Officer of the Company. Pursuant to
the Retirement Agreement, which supersedes the McManus Agreement
and letter agreements dated May 22, 2015, July 1, 2012 and July 1,
2012, respectively, the Company agreed to (i) pay Mr.
McManus’ salary through June 30, 2017 at the current level;
(ii) continue to pay premiums for Mr. McManus’ and his
dependents’ coverage under the Company’s medical,
dental, vision, hospitalization, long term care and life insurance
coverage through June 30, 2017 at the current levels upon timely
election by Mr. McManus under the law informally known as COBRA;
and (iii) extend the exercisability of previously granted and
currently vested options to purchase shares of the Company’s
Common Stock through June 30, 2017. In addition, Mr. McManus had
continued use of the vehicle provided him pursuant to the McManus
Agreement through December 31, 2016.
The Retirement Agreement provides for customary releases by both
the Company and Mr. McManus as well as customary provisions
concerning confidentiality, non-disparagement and cooperation.
The Retirement Agreement also provides that through June 30, 2017,
upon request of the Company’s (i) Board of Directors or (ii)
President and Chief Executive Officer, Mr. McManus will consult
with the Company for up to ten (10) hours per month without
compensation therefor except for reimbursement of reasonable travel
expenses.
Mr. McManus shall continue to be entitled to indemnification to the
extent permitted to him by the Company’s By-Laws and
Certificate of Incorporation. The Company has also agreed to
maintain directors’ and officers’ liability insurance
for Mr. McManus’ benefit, if any, that shall be no less
favorable to him than such insurance made available to or for the
benefit of former directors or officers of the Company.
Dwyer Consulting
Agreement
On September 13, 2016, the Company appointed Joseph Dwyer as the
Company’s interim Chief Financial Officer, reporting to the
Company’s Chief Executive Officer and Audit Committee. The
Company entered into a Consulting Agreement, dated September 13,
2016, with Dwyer Holdings LLC (“Dwyer Co.”) to provide
Mr. Dwyer’s services to the Company (the “Dwyer
Agreement”). The Dwyer Agreement is in effect for a one (1)
year period, cancellable by either party upon five (5) days’
notice any time after the initial two (2) months of the term. Dwyer
Co. will be paid $30,000 per month for Mr. Dwyer’s services.
On October 25, 2016, the Company entered into Amendment No. 1 to
Consulting Agreement (the “Amendment”) with Dwyer
Holdings LLC. The Amendment amends the Dwyer Agreement solely to:
(i) require that the Company provide Mr. Dwyer with coverage under
its directors’ and officers’ liability policy that is
no less favorable than the coverage then provided to
18
any other present or former executive, officer or director of the
Company during the term of the Dwyer Agreement and for a period of
at least five years thereafter and (ii) provide that should Mr.
Dwyer be required or requested by the Company to provide
documentary evidence or testimony in connection with any claim or
legal matter arising from or connected with the services provided
under the Dwyer Agreement, the Company shall pay all reasonable
expenses (including fees of legal counsel) in complying therewith
and, following the term of the Dwyer Agreement, $400 per hour for
sworn testimony or preparation therefor payable in advance.
Executive Severance
Agreements
On September 15, 2016, the Company and Richard A. Zaremba, Senior
Vice President – Finance, entered into a letter agreement
(the “Zaremba Agreement”) which provides that in the
event (i) Mr. Zaremba’s employment with the Company is
terminated by the Company on or before September 15, 2018 for any
reason other than for Cause (as defined in the Zaremba Agreement),
the Company will pay him a one-time additional compensation equal
to twelve (12) months annual base salary and (ii) of a Change in
Control of Misonix (as defined in the Zaremba Agreement) and his
employment by the Company or the acquiring company ceases (x)
involuntarily or (y) voluntarily in accordance with the terms of
the Zaremba Agreement, Mr. Zaremba will be entitled to a one-time
additional compensation equal to twelve (12) months annual base
salary. The Zaremba Agreement contains standard provisions
regarding (i) execution of a release and covenant not to sue; (ii)
cooperation; (iii) confidentiality; (iv) non-competition; (v)
non-solicitation; and (vi) non-disparagement.
On September 15, 2016, the Company and Robert S. Ludecker, Senior
Vice President, Global Sales and Marketing, entered into a letter
agreement (the “Ludecker Agreement”) which provides
that in the event (i) Mr. Ludecker’s employment with the
Company is terminated by the Company on or before September 15,
2018 for any reason other than for Cause (as defined in the
Ludecker Agreement), the Company will pay him a one-time additional
compensation equal to twelve (12) months annual base salary and
(ii) of a Change in Control of Misonix (as defined in the Ludecker
Agreement) and his employment by the Company or the acquiring
company ceases (x) involuntarily or (y) voluntarily in accordance
with the terms of the Ludecker Agreement, Mr. Ludecker will be
entitled to a one-time additional compensation equal to twelve (12)
months annual base salary. The Ludecker Agreement contains standard
provisions regarding (i) execution of a release and covenant not to
sue; (ii) cooperation; (iii) confidentiality; (iv) non-competition;
(v) non-solicitation; and (vi) non-disparagement.
Tax Deductibility of
Executive Compensation
Section 162 (m) of the Code limits to $1,000,000 per person the
amount that we may deduct for compensation paid to any of our most
highly compensated officers in any year. In fiscal 2016, there was
no executive officer’s compensation that exceeded
$1,000,000.
19
PROPOSAL TWO
APPROVAL OF THE MISONIX,
INC. 2017 EQUITY INCENTIVE PLAN
On April 12, 2017, the Compensation Committee of our Board of
Directors voted to adopt the Misonix, Inc. 2017 Equity Incentive
Plan (referred to as the Incentive Plan), subject to shareholder
approval. The Board believes that it is in the best interests of
the Company to adopt the Incentive Plan as provided herein so that
the Company can continue to attract and retain the services of
those persons essential to the Company’s growth and financial
success. As of April 12, 2017, only 131,850 shares of our common
stock remained available for issuance upon future grants under the
Company’s existing equity incentive plans.
Description of the Terms
of the Incentive Plan
. The Incentive Plan provides for
the availability of a maximum of 750,000 shares of our common
stock.
The following is a summary of the principal features of the
Incentive Plan. The following summary of certain important features
of the Incentive Plan is qualified by reference to the complete
text of the Incentive Plan, which is attached to this proxy
statement as
Exhibit A
.
Purposes
. The purposes of the Incentive Plan are:
•
to
make available to our key employees, directors, and consultants
certain compensatory arrangements related to the growth in value of
our common stock so as to generate an increased incentive to
contribute to our future financial success and prosperity;
•
to
enhance our ability to attract and retain exceptionally qualified
individuals whose efforts can affect our financial growth and
profitability; and
•
align, generally, the interests of our key employees, directors,
and consultants with the interests of our stockholders.
Principal Features of the Incentive Plan
. Awards that
may be granted under the Incentive Plan include options, restricted
stock and restricted stock units, dividend equivalents, and other
stock-based awards (which we refer to collectively as Awards).
Administration of Incentive Plan
. Our Compensation
Committee, consisting of directors chosen by our Board of
Directors, each of whom is a “disinterested person”
within the meaning of Rule 16b-3 under the Securities Exchange Act
of 1934, as amended, and each of whom are “outside
directors” within the meaning of Section 162(m) of the
Internal Revenue Code will, among other things, administer the
Incentive Plan, and will determine which of our employees,
directors and consultants (whom we refer to collectively as
Eligible Recipients) will receive Awards and the terms and
conditions of these Awards. The number of Eligible Recipients who
may receive Awards under the Incentive Plan will likely vary from
year to year.
Shares Available for Issuance
. The maximum number of
shares of our common stock that may be available under the
Incentive Plan would be 750,000 shares. It is expected that our
shares delivered under the Incentive Plan will be authorized but
unissued shares or shares that we have reacquired. Shares of our
common stock subject to Awards that are forfeited, terminated,
canceled, or settled without the delivery of our common stock under
the Incentive Plan will again be available for Awards under the
Incentive Plan. Also, (x) shares tendered to us in satisfaction or
partial satisfaction of the exercise price of any Award under the
Incentive Plan and (y) remittances from option exercises used to
repurchase shares of our common stock on the open market will
increase the number of shares available for delivery pursuant to
Awards granted under the Incentive Plan. In addition, any shares of
our common stock underlying Awards granted in assumption of, or in
substitution for, outstanding awards previously granted by a
company acquired by us, or with which we combine (which we refer to
as Substitute Awards) shall not be counted against the shares
available for delivery under the Incentive Plan.
Adjustments
. If a fundamental corporate event occurs,
our Compensation Committee may, as it deems appropriate, adjust the
number and kind of our shares that may be delivered under the
Incentive Plan in the future and the number and kind of shares and
the grant, exercise, or conversion price, if applicable, under all
outstanding Awards to preserve, or to prevent the enlargement of,
the benefits made available under the Incentive Plan. Cash payments
may also be made.
Grants Under the Incentive Plan
Stock
Options
. Our Compensation Committee may grant options
under the Incentive Plan in the form of non-statutory stock options
(which we refer to as NSOs) and incentive stock options (which we
refer to as ISOs). These options may contain
20
any terms that our Compensation Committee determines. The exercise
price shall not be less than 100% of the fair market value on the
date of grant. Our Compensation Committee shall have the discretion
to determine the terms and conditions upon which options shall be
exercisable.
Restricted Stock and
Restricted Stock Units
. Our Compensation Committee may
grant Eligible Recipients restricted stock units which provide a
contractual right to receive shares of our common stock or cash
based on the fair market value of the related shares at the end of
a restricted period determined by our Compensation Committee, which
restricted period is generally expected to be three years or more.
Our Compensation Committee also may grant shares of restricted
stock that are nontransferable and subject to substantial risk of
forfeiture during the applicable restricted period. Our
Compensation Committee shall have the discretion to provide that
Awards of restricted stock and restricted stock units will vest, if
at all, upon the (i) employee’s continued employment during
the relevant restricted period as determined by our Compensation
Committee and/or (ii) attainment or partial attainment of
performance objectives determined by our Compensation Committee. In
general, an employee who has been granted restricted stock, the
vesting restrictions of which relate solely to the passage of time
and continued employment, will from the date of grant have the
benefits of ownership in respect of such shares, including the
right to receive dividends and other distributions thereon, subject
to the restrictions set forth in the Incentive Plan and in the
instrument evidencing such Award. With respect to any performance
period, no Eligible Recipient may be granted Awards of incentive
stock or incentive units which vest upon the achievement of
performance objectives in respect of more than 500,000 shares of
our common stock or, if such Awards are settled in cash, the fair
market value of such shares determined at the time of payment (each
subject to adjustment as described above).
With respect to any Award of restricted stock or restricted stock
units made to one of our Eligible Recipients that our Compensation
Committee determines will vest based on the achievement of
performance objectives, such performance objectives shall relate to
at least one of the following criteria, which may be determined
solely by reference to our performance or the performance of a
subsidiary or an affiliate (or any business unit thereof) or based
on comparative performance relative to other companies: (i) net
income, (ii) earnings before income taxes, (iii) earnings per
share, (iv) return on stockholders’ equity, (v) expense
management, (vi) profitability of an identifiable business unit or
product, (vii) revenue growth, (viii) earnings growth, (ix) total
stockholder return, (x) cash flow, (xi) return on assets, (xii)
pretax operating income, (xiii) net economic profit (operating
earnings minus a charge for capital), (xiv) customer satisfaction,
(xv) provider satisfaction, (xvi) employee satisfaction, (xvii)
strategic innovation, or (xviii) any combination of the
foregoing.
Dividends and
Dividend Equivalents
. Our Compensation Committee may
provide that any Award shall include dividends or dividend
equivalents, payable in cash or deemed reinvested in our common
stock.
Other Stock-Based
Awards
. The Incentive Plan also authorizes our
Compensation Committee to grant other stock-based awards to
Eligible Recipients.
Limitation on Awards
. No Eligible Recipient may be
granted Awards covering more than 500,000 shares of our common
stock in respect of any one-year period in which the Incentive Plan
is in effect (subject to adjustment as described above).
Effect of Awards on Termination of Employment
. Our
Compensation Committee generally has broad discretion as to the
specific terms and conditions of each Award and any rules
applicable thereto, including but not limited to the effect thereon
of the death, retirement, or other termination of employment of the
Eligible Recipient.
Change of Control
. All Awards vest in full upon a
change in control of the Company (as such term is defined in the
Incentive Plan).
Award Agreement
. The terms of each Award are to be
evidenced by a written instrument delivered to the Eligible
Recipient.
Transferability
. Unless our Compensation Committee
expressly permits transfers for the benefit of charity or of
members of the Eligible Recipient’s immediate family or trust
or similar vehicle for their benefit, Awards under the Incentive
Plan may not be assigned or transferred except by will or the laws
of descent and distribution.
Amendment or Termination
. Our Board of Directors may
terminate or suspend the Incentive Plan at any time, but the
termination or suspension will not adversely affect any Awards then
outstanding under the Incentive Plan. Unless previously terminated
by action of the Board, no Award may be granted under the Incentive
Plan after the tenth anniversary of the date the Incentive Plan was
initially approved by the Board of Directors. The Incentive Plan
may be amended or terminated at any
21
time by our Board of Directors, except that no amendment may be
made without stockholder approval if our Compensation Committee
determines that such approval is necessary to comply with any tax
or regulatory requirement, including any approval requirement that
is a prerequisite for exemptive relief from Section 16 of the
Securities Exchange Act of 1934, as amended, for which or with
which our Compensation Committee determines that it is desirable to
qualify or comply. Our Compensation Committee may amend the term of
the Award granted, retroactively or prospectively, but no amendment
may adversely affect any Award without the holder’s
consent.
Certain Federal Income Tax Consequences
. The options
described above are intended to comply with the requirements of the
Internal Revenue Code regarding the deductibility of certain
performance-based compensation. Under currently applicable federal
income tax law, an Eligible Recipient will receive no taxable
income upon the grant of a non-qualified stock option (NSO) or an
incentive stock option (ISO). When an Eligible Recipient exercises
an NSO, the excess of the fair market value of the shares on the
date of exercise over the exercise price paid will be ordinary
income to the Eligible Recipient, and his or her employer,
generally, will be allowed a federal income tax deduction in the
same amount. When an Eligible Recipient exercises an ISO while
employed or within three months after termination of employment
(one year for disability), no income will be recognized upon
exercise of the ISO. However, the favorable regular tax treatment
that applies to an ISO doesn’t apply for alternative minimum
tax (AMT) purposes. An Eligible Recipient who exercises an ISO will
generally recognize AMT income in the year of exercise in an amount
equal to the excess of the fair market value of the stock on the
exercise date over the exercise price (unless the stock acquired
through exercise of the ISO is disposed of in the same tax year).
If the Eligible Recipient holds shares acquired for at least one
year after exercise and two years after the grant of the ISO, the
excess of the amount realized upon disposition of the shares over
the exercise price paid is treated as long-term capital gain for
the Eligible Recipient, and the Eligible Recipient’s employer
is not allowed a federal income tax deduction. A sale or other
exchange of the underlying stock before the end of either of the
required holding periods will be a “disqualifying
disposition” which will generally result in the Eligible
Employee being taxed on the gain derived from the exercise of an
ISO as though it were an NSO, and the Eligible Employee’s
employer, generally, will be allowed a federal income tax deduction
in the same amount. Special rules apply if the exercise price is
paid in shares.
New Plan Benefits
. The amount or type of grants that
will be allocated to or received by any person or group of persons
cannot be determined at this time.
Potential Dilution and Related Information
. The
issuance of additional shares of the Company’s common stock,
whether under the Incentive Plan or otherwise, will have the effect
of diluting the voting power and ownership of existing
stockholders. Total potential dilution (as a percentage of basic
shares of Company common stock outstanding) associated with the
750,000 shares of Company common stock authorized under the
Incentive Plan is approximately 8.3%.
The amount and timing for future grants is not currently known. The
average rate at which shares were granted to both employees and
directors under equity incentive plans over the past three full
fiscal years as a percentage of average shares outstanding in those
same years was 5.2%. On that basis, and the Board’s
reasonable estimates of future needs, the total number of shares
available for grant under the Incentive Plan would meet the
Company’s needs for approximately 2 years. In considering the
number of shares to authorize for the Incentive Plan, the Board
considered the facts above and the historical burn rate. The Board
will reevaluate the size of the pool going forward and intends to
be and has been diligent in making sure equity awards are being
issued on a conservative and mindful basis. Currently, the Board
has no near-term plan to issue additional equity awards to
executive officers of the Company.
The Board considered the possible dilutive effect of the additional
shares to be issued under the Incentive Plan, the benefits of
continuing to attract and retain the services of those persons
essential to the Company’s growth and financial success and
the past grants of stock awards. The Board received information
from management regarding the total number of shares available for
grants as a percentage of the total number of shares outstanding
for the Company. This information was considered by the Board in
their determination that the amount of shares to be issued under
the Incentive Plan was not excessive. No compensation consultants
were retained in connection with the approval of the Incentive
Plan.
The Company’s
Board of Directors recommends a vote FOR the proposal to
approve
the Misonix, Inc. 2017 Equity Incentive Plan.
22
PROPOSAL
THREE
PROPOSAL TO APPROVE (ON
AN ADVISORY BASIS) COMPENSATION OF THE NAMED
EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY STATEMENT
Pursuant to the Dodd-Frank Wall Street Reform and Consumer Act (the
“Dodd-Frank Act”), public companies are required to
give their shareholders the opportunity to cast an advisory vote on
a proposal (commonly known as a “say-on-pay” proposal)
to endorse or not endorse named executive officer compensation. At
our annual meeting held in 2013 our shareholders voted in favor of
annual say-on-pay votes, and our Board has submitted such votes to
the shareholders on an annual basis thereafter.
As discussed in the Compensation Discussion and Analysis above and
in the Compensation Disclosure Tables that follow, our executive
compensation program is designed to attract, retain, and reward
capable employees who can contribute to our success. We believe
that our executive compensation program is reasonable, competitive,
and focused on the principle of pay for performance. To that end,
compensation is based on a mix of base salary, performance-based
annual and long-term incentives, and benefits and perquisites.
Furthermore, we seek to maintain levels of compensation that are
competitive with similar companies in our industry. We believe that
the fiscal 2016 compensation of our named executive officers was
appropriate and aligned with the Company’s fiscal 2016
results. Accordingly, the Company is seeking shareholder approval
of the following resolution:
“RESOLVED, that the shareholders approve, on an advisory
basis, the compensation of the Company’s named executive
officers, as disclosed pursuant to the compensation disclosure
rules of the Securities and Exchange Commission in the
‘Compensation Discussion and Analysis’ and the related
accompanying tabular and narrative disclosure included in the
Company’s Proxy Statement for the fiscal 2016 Annual Meeting
of Shareholders.”
As an advisory vote, this proposal is not binding upon the Company
or the Board. Nevertheless, the Board’s Compensation
Committee, which is comprised solely of independent directors and
is responsible for making decisions regarding the amount and form
of compensation paid to the Company’s executive officers,
will carefully consider the shareholder vote on this matter, along
with the other expressions of shareholders views it receives on
specific policies and desirable actions. If there are a significant
number of unfavorable votes, the Company will seek to understand
the concerns that influenced the vote and address them in making
future decisions affection the executive compensation program. The
next shareholder advisory vote on executive compensation of our
named executive officers will take place at the next Annual Meeting
of Shareholders.
The Company’s
Board of Directors recommends a vote FOR the proposal to approve
compensation
of the Named Executive Officers as disclosed in this Proxy
Statement.
23
PROPOSAL FOUR
APPROVAL OF APPOINTMENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has selected Grant Thornton LLP to serve as the
Company’s independent registered public accounting firm for
the 2017 fiscal year. Grant Thornton will audit the Company’s
consolidated financial statements for the 2017 fiscal year and
perform other services. While shareholder ratification is not
required by the Company’s By-Laws or otherwise, the Board of
Directors, at the direction of the Audit Committee, is submitting
the selection of Grant Thornton to the shareholders for
ratification as part of good corporate governance practices. If the
shareholders fail to ratify the selection, the Audit Committee may,
but is not required to, reconsider whether to retain Grant
Thornton. Even if the selection is ratified, the Audit Committee in
its discretion may direct the appointment of a different accounting
firm as the independent registered public accounting firm for the
Company for the year ending June 30, 2017 at any time during the
year if it determines that such a change would be in the best
interest of the Company and its shareholders.
A representative of Grant Thornton is expected to be available
either personally or by telephone hookup at the Annual Meeting to
respond to appropriate questions from shareholders and will be
given the opportunity to make a statement if he or she desires to
do so.
Audit Fees
Grant Thornton billed the Company $960,351 and $485,000 in the
aggregate for services rendered for the audit of the
Company’s 2016 and 2015 fiscal years, respectively, and the
review of the Company’s interim financial statements included
in the Company’s Quarterly Reports on Form 10-Q for the
Company’s 2016 and 2015 fiscal years, respectively.
Audit-Related Fees
Grant Thornton billed the Company $16,000 and $20,000 for
audit-related services as defined by the SEC for the fiscal years
ended June 30, 2016 and 2015, respectively. The audit-related
services were for the audits of the Company’s pension
plan.
Tax Fees
Grant Thornton billed the company $31,200 for tax related services
in fiscal year 2016. Grant Thornton did not render any tax related
services, as defined by the SEC, to the Company for fiscal year
2015.
Policy on Pre-approval of Independent Registered Public
Accounting Firm Services
The charter of the Audit Committee provides for the pre-approval of
all audit services and all permitted non-audit services to be
performed for Misonix by the independent registered public
accounting firm, subject to the requirements of applicable law. The
procedures for pre-approving all audit and non-audit services
provided by the independent registered public accounting firm
include the Audit Committee reviewing audit-related services, tax
services and other services. The Audit Committee periodically
monitors the services rendered by and actual fees paid to the
independent registered public accounting firm to ensure that such
services are within the parameters approved by the Audit
Committee.
The Company’s
Board of Directors recommends a vote FOR the proposal to approve
the appointment
of its Independent Registered Public Accounting Firm as disclosed
in this Proxy Statement.
24
SHAREHOLDER
PROPOSALS
Under the SEC’s proxy rules, shareholder proposals with
respect to the Company’s next Annual Meeting of Shareholders
must be received by the Company no later than August 15, 2017 to be
considered for inclusion in the Company’s next Proxy
Statement. Under SEC proxy rules, Proxies solicited by the Board of
Directors for the next Annual Meeting may be voted at the
discretion of the persons named in such proxies (or their
substitutes) with respect to any shareholder proposal not included
in the Company’s Proxy Statement if the Company does not
receive notice of such proposal on or before August 15, 2017.
A copy of the Company’s Annual Report to Shareholders for the
fiscal year ended June 30, 2016 has been provided to all
shareholders. Shareholders are referred to the Report for financial
and other information about the Company, but such Report is not
incorporated in this Proxy Statement and is not part of the proxy
soliciting material.
OTHER
INFORMATION
As of the date of this Proxy Statement, the Board of Directors does
not know of any business other than that specified above to come
before the Annual Meeting, but, if any other business does lawfully
come before the Annual Meeting, it is the intention of the persons
named in the enclosed Proxy to vote in regard thereto in accordance
with their judgment.
The Company will pay the cost of soliciting Proxies in the
accompanying form and as set forth below. In addition to
solicitation by use of the mails, certain officers and regular
employees of the Company may solicit proxies by telephone, email or
personal interview without additional remuneration therefor.
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By Order of the Board of Directors,
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RICHARD A. ZAREMBA
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Secretary
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Dated: April 28, 2017
Farmingdale, New York
25
Exhibit
A
MISONIX, INC. 2017 EQUITY INCENTIVE PLAN
Section 1.
Purpose
.
The purposes of this Misonix, Inc. 2017 Equity Incentive Plan (the
“
Plan
”) are
(1) to make available to key employees, directors and consultants
certain compensatory arrangements related to the growth in value of
the common stock of the Company so as to generate an increased
incentive to contribute to the Company’s future financial
success and prosperity, (2) to enhance the ability of the Company
and its Affiliates to attract and retain exceptionally qualified
individuals whose efforts can affect the financial growth and
profitability of the Company, and (3) to align generally the
interests of key employees, directors and consultants of the
Company and its Affiliates with the interests of the
Company’s stockholders.
Section 2.
Definitions
.
As used in the Plan, the following terms shall have the meanings
set forth below:
(a)
“
Affiliate
”
shall mean (i) any entity that, directly or through one or more
intermediaries, is controlled by the Company or (ii) any entity in
which the Company has a significant equity interest, as determined
by the Committee.
(b)
“
Award
”
shall mean any Option, Restricted Stock Award, Restricted Stock
Unit, Dividend Equivalent, Other Stock-Based Award, Performance
Award or Substitute Award, granted under the Plan.
(c)
“
Award
Agreement
” shall mean any written agreement, contract,
or other instrument or document evidencing any Award granted under
the Plan.
(d)
“
Board of
Directors
” shall mean the Board of Directors of the
Company as it may be composed from time to time.
(e)
“
Business
Relationship
” shall mean, with respect to a
Consultant, such Consultant continuing to render, in the sole
determination of the Board of Directors or the Committee,
substantial ongoing services as an independent contractor of the
Company.
(f)
“
Code
” shall
mean the Internal Revenue Code of 1986, as amended from time to
time, or any successor code thereto.
(g)
“
Committee
”
shall mean the Board of Directors, excluding any director who is
not a “Non-Employee Director” within the meaning of
Rule 16b-3, or any such other committee designated by the Board of
Directors to administer the Plan, which committee shall be composed
of not less than the minimum number of members of the Board of
Directors from time to time required by Rule 16b-3 or any
applicable law, each of whom is a Non-Employee Director within the
meaning of Rule 16b-3.
(h)
“
Company
”
shall mean Misonix, Inc., or any successor thereto.
(i)
“
Company
Service
” shall mean any service with the Company or
any Affiliate in which the Company have at least a 51% ownership
interest.
(j)
“
Consultant
”
shall mean a natural person providing bona fide services to the
Company or any Affiliate that are not in connection with the offer
or sale of securities in a capital raising transaction, and such
party does not directly or indirectly promote or maintain a market
in the Company’s securities.
(k)
“
Covered
Award
” means an Award, other than an Option or other
Award with an exercise price per Share not less than the Fair
Market Value of a Share on the date of grant of such Award, to a
Covered Employee, if it is designated as such by the Committee at
the time it is granted. Covered Awards are subject to the
provisions of Section 13 of this Plan.
(l)
“
Covered
Employees
” means Participants who are designated by
the Committee prior to the grant of an Award who are, or are
expected to be at the time taxable income will be realized with
respect to the Award, “
covered
employees
” within the meaning of Section 162(m).
(m)
“
Dividend
Equivalent
” shall mean any right granted under Section
6(c) of the Plan.
A-1
(n)
“
Effective
Date
” shall mean the date that the Plan is first
approved by the stockholders of the Company.
(o)
“
Employee
”
shall mean any employee or employee director of the Company or of
any Affiliate.
(p)
“
Fair Market
Value
” shall mean, with respect to any property
(including, without limitation, any Shares or other securities),
the fair market value of such property determined by such methods,
or procedures as shall be established from time to time by the
Committee.
(q)
“
Incentive Stock
Option
” or “
ISO
” shall
mean an option granted under Section 6(a) of the Plan that is
intended to meet the requirements of Section 422 of the Code, or
any successor provision thereto.
(r)
“
Non-Qualified Stock
Option
” shall mean an option granted under Section
6(a) of the Plan that is not intended to be an Incentive Stock
Option.
(s)
“
Option
”
shall mean an Incentive Stock Option or a Non-Qualified Stock
Option.
(t)
“
Other Stock-Based
Award
” shall mean any Award granted under Section 6(d)
of the Plan.
(u)
“
Participant
”
shall mean an Employee, Consultant or member of the Board of
Directors who is granted an Award under the Plan.
(v)
“
Performance
Award
” shall mean any Award granted hereunder that
complies with Section 6(e)(ii) of the Plan.
(w)
“
Performance
Goals
” means one or more objective performance goals,
established by the Committee at the time an Award is granted, and
based upon the attainment of targets for one or any combination of
the following criteria, which may be determined solely by reference
to the Company’s performance or the performance of a
subsidiary or an Affiliate (or any business unit thereof) or based
on comparative performance relative to other companies: (i) net
income; (ii) earnings before income taxes; (iii) earnings per
share; (iv) return on stockholders’ equity; (v) expense
management; (vi) profitability of an identifiable business unit or
product; (vii) revenue growth; (viii) earnings growth; (ix) total
stockholder return; (x) cash flow; (xi) return on assets; (xii)
pre-tax operating income; (xiii) net economic profit (operating
earnings minus a charge for capital); (xiv) customer satisfaction;
(xv) provider satisfaction; (xvi) employee satisfaction; (xvii)
strategic innovation; or (xviii) any combination of the foregoing.
Performance Goals shall be set by the Committee within the time
period prescribed by Section 162(m).
(x)
“
Person
”
shall mean any individual, corporation, partnership, association,
joint stock company, trust, unincorporated organization, or
government or political subdivision thereof.
(y)
“
Released
Securities
” shall mean securities that were Restricted
Securities with respect to which all applicable restrictions have
expired, lapsed, or been waived.
(z)
“
Restricted
Securities
” shall mean Awards of Restricted Stock or
other Awards under which issued and outstanding Shares are held
subject to certain restrictions.
(aa) “
Restricted
Stock
” shall mean any Share granted under Section 6(b)
of the Plan.
(bb)
“
Restricted Stock
Unit
” shall mean any right granted under Section 6(b)
of the Plan that is denominated in Shares.
(cc) “
Rule 16b-3
”
shall mean Rule 16b-3 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934 as amended, or
any successor rule and the regulation thereto.
(dd)
“
Section
162(m)
” means Section 162(m) of the Code or any
successor thereto, and the Treasury Regulations thereunder.
(ee) “
Share
” or
“
Shares
”
shall mean share(s) of the common stock of the Company, and such
other securities or property as may become the subject of Awards
pursuant to the adjustment provisions of Section 4(c).
(ff)
“
Substitute
Award
” shall mean an Award granted in assumption of,
or in substitution for, an outstanding award previously granted by
a company acquired by the Company or with which the Company
combines.
A-2
Section 3.
Administration
.
(a)
The Plan
shall be administered by the Committee. Subject to the terms of the
Plan and applicable law, the Committee shall have full power and
authority to designate Participants and:
(i)
determine the type or types of Awards to be granted to each
Participant under the Plan;
(ii)
determine
the number of Shares to be covered by (or with respect to which
payments, rights, or other matters are to be calculated in
connection with) Awards;
(iii)
determine the
terms and conditions of any Award;
(iv)
determine whether, to what extent, and under what circumstances
Awards may be settled or exercised in cash, Shares, other
securities, other Awards, or other property, or to what extent, and
under what circumstances Awards may be canceled, forfeited, or
suspended, and the method or methods by which Awards may be
settled, exercised, canceled, forfeited, or suspended;
(v)
determine
whether, to what extent, and under what circumstances cash, Shares,
other securities, other Awards, other property, and other amounts
payable with respect to an Award under the Plan shall be deferred
either automatically or at the election of the holder thereof or of
the Committee;
(vi)
interpret and administer the Plan and any instrument or agreement
relating to the Plan, or any Award made under the Plan, including
any Award Agreement;
(vii)
establish, amend, suspend, or reconcile such rules and regulations
and appoint such agents as it shall deem appropriate for the proper
administration of the Plan; and
(viii)
make any
other determination and take any other action that the Committee
deems necessary or desirable for the administration of the
Plan.
(b)
Unless
otherwise expressly provided in the Plan, all designations,
determinations, interpretations, and other decisions under or with
respect to the Plan, any Award, or any Award Agreement, shall be
within the sole discretion of the Committee, may be made at any
time, and shall be final, conclusive, and binding upon all Persons,
including the Company, any Affiliate, any Participant, any holder
or beneficiary of any Award, and any employee of the Company or of
any Affiliate.
(c)
The
Committee may delegate to one or more executive officers of the
Company or to a committee of executive officers of the Company the
authority to grant Awards to Employees who are not officers or
directors of the Company and to amend, modify, cancel or suspend
Awards to such employees, subject to Sections 7 and 9.
Section
4
.
Shares Available For Awards.
(a)
Maximum Shares
Available
. The maximum number of Shares that
may be issued to Participants pursuant to Awards under the Plan
shall be 750,000 Shares (the “
Plan
Maximum
”), subject to adjustment as provided in
Section 4(c) below. Pursuant to any Awards, the Company may in its
discretion issue treasury Shares or authorized but previously
unissued Shares pursuant to Awards hereunder. For the purpose of
accounting for Shares available for Awards under the Plan, the
following shall apply:
(i)
Only Shares relating to Awards actually issued or granted hereunder
shall be counted against the Plan Maximum. Shares corresponding to
Awards that by their terms expired, or that are forfeited, canceled
or surrendered to the Company without full consideration paid
therefor shall not be counted against the Plan Maximum.
(ii)
Shares
that are forfeited by a Participant after issuance, or that are
reacquired by the Company after issuance without full consideration
paid therefor, shall be deemed to have never been issued under the
Plan and accordingly shall not be counted against the Plan
Maximum.
(iii)
Awards not denominated in
Shares shall be counted against the Plan Maximum in such amount and
at such time as the Committee shall determine under procedures
adopted by the Committee consistent with the purposes of the
Plan.
A-3
(iv)
Substitute Awards shall not be counted against the Plan Maximum,
and clauses (i) and (ii) of this Section shall not apply to such
Awards.
(v)
The
maximum number of Shares that may be the subject of Awards made to
a single Participant in any one year period shall be 500,000.
(vi)
With respect to any performance period no Participant may be
granted Awards of incentive stock or incentive units that vest upon
the achievement of performance objectives in respect of more than
500,000 Shares of common stock or, if such Awards are settled in
cash, the fair market value thereof determined at the time of
payment, each subject to adjustment as provided in Section 4(c)
below.
(b)
Shares
Available for ISOs
. The maximum number of Shares for which
ISOs may be granted under the Plan shall not exceed the Plan
Maximum as defined in Section 4(a) above, subject to adjustment as
provided in Section 4(c) below.
(c)
Adjustments to Avoid Dilution
. Notwithstanding
paragraphs (a) and (b) above, in the event of a stock or
extraordinary cash dividend, split-up or combination of Shares,
merger, consolidation, reorganization, recapitalization, or other
change in the corporate structure or capitalization affecting the
outstanding common stock of the Company, such that an adjustment is
determined by the Committee to be appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan or any Award, then the
Committee may make appropriate adjustments to (i) the number or
kind of Shares available for the future granting of Awards
hereunder, (ii) the number and type of Shares subject to
outstanding Awards, and (iii) the grant, purchase, or exercise
price with respect to any Award; or if it deems such action
appropriate, the Committee may make provision for a cash payment to
the holder of an outstanding Award;
provided,
however
, that with respect to any ISO no such adjustment
shall be authorized to the extent that such would cause the ISO to
violate Code Section 422 or any successor provision thereto. The
determination of the Committee as to the adjustments or payments,
if any, to be made shall be conclusive.
(d)
Other
Plans
. Shares issued under other plans of the Company
shall not be counted against the Plan Maximum under the Plan.
Section 5.
Eligibility.
Any director of the Company, Consultant or Employee shall be
eligible to be designated a Participant.
Section 6.
Awards.
(a)
Options
. The Committee is hereby authorized to grant
Options to Participants with the following terms and conditions and
with such additional terms and conditions, not inconsistent with
the provisions of the Plan, as the Committee shall determine:
(i)
Exercise
Price.
The exercise price per Share under an Option
shall be determined by the Committee; provided, however, that
except in the case of Substitute Awards, no Option granted
hereunder may have an exercise price of less than 100% of Fair
Market Value of a Share on the date of grant.
(ii)
Times and Method of
Exercise.
The Committee shall determine the time or
times at which an Option may be exercised in whole or in part; in
no event, however, shall the period for exercising an Option extend
more than 10 years from the date of grant. The Committee shall also
determine the method or methods by which Options may be exercised,
and the form or forms (including without limitation, cash, Shares,
other Awards, or other property, or any combination thereof, having
a Fair Market Value on the exercise date equal to the relevant
exercise price), in which payment of the exercise price with
respect thereto may be made or deemed to have been made.
(iii)
Incentive Stock
Options.
The terms of any Incentive Stock Option
granted under the Plan shall comply in all respects with the
provisions of Section 422 of the Code, or any successor provision
thereto, and any regulations promulgated thereunder.
A-4
(iv)
Termination.
In
the event that a Participant terminates employment or director
status or becomes disabled, or in the case of a Consultant, ceases
to have a Business Relationship with the Company, Options granted
hereunder shall be exercisable only as specified below:
(A)
Disability or
Death.
Except as otherwise provided in an employment
agreement with a Participant or as the Committee may otherwise
provide, if a Participant becomes disabled or dies, any vested,
unexercised portion of an Option that is at least partially vested
at the time of the termination shall be forfeited in its entirety
if not exercised by the Participant (or his or her heirs or
representatives) within six (6) months of the date of death or
disability, unless the Committee has in its sole discretion
established an additional exercise period (but in any case not
longer than the original option term). Except as otherwise provided
in an employment agreement with a Participant or as the Committee
may otherwise provide, any portion of such partially vested Option
that is not vested at the time of disability or death shall be
forfeited. Except as otherwise provided in an employment agreement
with a Participant or as the Committee may otherwise provide, any
outstanding Option granted to a Participant at the time of
disability or death, for which no vesting has occurred at the time
of disability or death, shall be forfeited on the date of
disability or death.
(B)
Termination for
Reasons Other Than Death or Disability.
Except as
otherwise provided in an employment agreement with a Participant or
as the Committee may otherwise provide, if a Participant terminates
employment or director status for reasons other than death or
disability, or in the case of a Consultant, ceases to have a
Business Relationship with the Company, any vested, unexercised
portion of an Option that is at least partially vested at the time
of the termination shall be forfeited in its entirety if not
exercised by the Participant within three (3) months of the date of
termination of employment or director status, unless the Committee
has in its sole discretion established an additional exercise
period (but in any case not longer than the original option term).
Any portion of such partially vested Option that is not vested at
the time of termination shall be forfeited unless the Committee has
in its sole discretion established that a Participant may continue
to satisfy the vesting requirements beyond the date of his or her
termination of employment, director or Consultant status. Except as
otherwise provided in an employment agreement with a Participant or
as the Committee may otherwise provide, any outstanding Option
granted to a Participant terminating employment, director or
Consultant status other than for death or disability, for which no
vesting has occurred at the time of the termination shall be
forfeited on the date of termination.
(C)
Sale of
Business.
Except as otherwise provided in an employment
agreement with a Participant or as the Committee may otherwise
provide, in the event the “
business
unit,
” (defined as a division, subsidiary, unit or
other delineation that the Committee in its sole discretion may
determine) for which the Participant performs substantially all of
his or her services is assigned, sold, outsourced or otherwise
transferred, including an asset, stock or joint venture
transaction, to an unrelated third party such that after such
transaction the Company owns or controls directly or indirectly
less than 51% of the business unit, the affected Participant shall
become 100% vested in all outstanding Options as of the date of the
closing of such transaction, whether or not fully or partially
vested, and such Participant shall be entitled to exercise such
Options during the three (3) months following the closing of such
transaction, unless the Committee has in its sole discretion
established an additional exercise period (but in any case not
longer than the original option term). Except as otherwise provided
in an employment agreement with a Participant or as the Committee
may otherwise provide, all Options which are unexercised at the end
of such three (3) months shall be automatically forfeited.
(D)
Conditions Imposed on
Unvested Options.
Notwithstanding the foregoing
provisions describing the additional exercise periods for Options
upon termination of employment, director or Consultant status, the
Committee may in its sole discretion condition the right of a
Participant to exercise any portion of a partially vested Option
for which the Committee has established an additional exercise
period on the Participant’s agreement to adhere to such
conditions and stipulations which the Committee may impose,
including, but not limited to, restrictions on the solicitation of
employees or independent contractors, disclosure of confidential
information, covenants not to compete, refraining from denigrating
through adverse or disparaging communication, written or oral,
whether or not true, the operations, business, management, products
or services of the Company or its current or former employees and
directors, including without limitation, the expression of personal
views, opinions or judgements. The unvested Options of any
Participant for whom the Committee has given an additional exercise
period subject to such
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conditions subsequent as set forth in this Section 6(a)(iv)(D)
shall be forfeited immediately upon a breach of such
conditions.
(E)
Forfeiture for Gross
Misconduct.
Notwithstanding anything to the
contrary herein, any Participant who engages in “
Gross
Misconduct
”, as defined herein, (including any
Participant who may otherwise qualify for disability status) shall
forfeit all outstanding, unexercised Options, whether vested or
unvested, as of the date such Gross Misconduct occurs. For purposes
of the Plan, Gross Misconduct shall be defined to mean (i) the
Participant’s conviction of a felony (or crime of similar
magnitude in non-U.S. jurisdictions) in connection with the
performance or nonperformance of the Participant’s duties or
(ii) the Participant’s willful act or failure to act in a way
that results in material injury to the business or reputation of
the Company or employees of the Company.
(F)
Vesting.
For purposes of the Plan, any
reference to the “
vesting
” of
an Option shall mean any events or conditions which, if satisfied,
entitle a Participant to exercise an Option with respect to all or
a portion of the shares covered by the Option. The complete vesting
of an Option shall be subject to Section 6(a)(iv)(E) hereof. Such
vesting events or conditions may be set forth in the Notice of
Grant or otherwise be determined by the Committee.
(b)
Restricted Stock and Restricted Stock Units
. The
Committee is hereby authorized to grant Awards of Restricted Stock
and or Restricted Stock Units to Participants with the following
terms and conditions.
(i)
Restrictions.
Shares
of Restricted Stock and Restricted Stock Units shall be subject to
such restrictions as the Committee may impose (including, without
limitation, continued employment, director or Consultant service
over a specified period or the attainment of specified Performance
Objectives (as defined in Section 6(e)(ii)(B)) or Performance
Goals, in accordance with Section 13), which restrictions may lapse
separately or concurrently at such time or times, in such
installments or otherwise, as the Committee may deem
appropriate.
(ii)
Registration.
Any
Restricted Stock granted under the Plan may be evidenced in such
manner as the Committee may deem appropriate including, without
limitation, book-entry registration or issuance of a stock
certificate or certificates. In the event any stock certificate is
issued in respect of Shares of Restricted Stock granted under the
Plan, such certificate shall be registered in the name of the
Participant and shall bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such Restricted
Stock.
(iii)
Termination.
Except
as otherwise provided in an employment agreement with a Participant
or as the Committee may otherwise provide, upon termination of
employment or director service of a Participant, or in the case of
a Consultant, ceases to have a Business Relationship with the
Company, for any reason during the applicable restriction period,
all Restricted Stock and all Restricted Stock Units, or portion
thereof, still subject to restriction shall be forfeited and
reacquired by the Company; provided, however, that in the event
termination of employment or director service is due to the death
or disability of the Participant, the Committee may waive in whole
or in part any or all remaining restrictions with respect to
Restricted Stock or Restricted Stock Units.
(c)
Dividend
Equivalents
. The Committee may grant to Participants
Dividend Equivalents under which the holders thereof shall be
entitled to receive payments equivalent to dividends with respect
to a number of Shares determined by the Committee, and the
Committee may provide that such amounts shall be deemed to have
been reinvested in additional Shares or otherwise reinvested.
Subject to the terms of the Plan, such Awards may have such terms
and conditions as the Committee shall determine.
(i)
Termination.
Except
as otherwise provided in an employment agreement with a Participant
or as the Committee may otherwise provide, upon termination of the
Participant’s employment or director service, or in the case
of a Consultant, ceases to have a Business Relationship with the
Company, for any reason during the term of a Dividend Equivalent,
the right of a Participant to payment under a Dividend Equivalent
shall terminate as of the date of termination; provided, however,
that in the event the Participant’s employment or director
service terminates because of the death or disability of a
Participant the Committee may determine that such right terminates
at a later date.
(d)
Other
Stock Based Awards
. The Committee is hereby authorized to
grant to Participants such other Awards that are denominated or
payable in, valued in whole or in part by reference to, or
otherwise based on or related to Shares (including
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without limitation securities convertible into Shares), as are
deemed by the Committee to be consistent with the purposes of the
Plan; provided, however, that such grants must comply with Rule
16b-3 and applicable law.
(i)
Consideration
. If
applicable, Shares or other securities delivered pursuant to a
purchase right granted under this Section 6(d) shall be purchased
for such consideration, which may be paid by such method or methods
and in such form or forms, including without limitation cash,
Shares, other securities, other Awards or other property, or any
combination thereof, as the Committee shall determine; provided,
however, that except in the case of Substitute Awards, no
derivative security (as defined in Rule 16b-3) awarded hereunder
may have an exercise price of less than 100% of Fair Market Value
of a Share on the date of grant.
(ii)
Termination
. In
granting any Stock-Based Award pursuant to this Section 6(d) the
Committee shall also determine what effect the termination of
employment or director service of the Participant holding such
Award, or in the case of a Consultant, ceasing to have a Business
Relationship with the Company, shall have on the rights of the
Participant pursuant to the Award.
(e)
General
. The following general provisions shall apply
to all Awards granted hereunder, subject to the terms of other
sections of this Plan or any Award Agreement.
(i)
Award
Agreements
. Each Award granted under this Plan shall be
evidenced by an Award Agreement which shall specify the relevant
material terms and conditions of the Award and which shall be
signed by the Participant receiving such Award, if so indicated by
the Award.
(ii)
Performance
Awards
. Subject to the other terms of this Plan, the
payment, release or exercisability of any Award, in whole or in
part, may be conditioned upon the achievement of such Performance
Objectives (as defined below) during such performance periods as
are specified by the Committee. Hereinafter in this Section
6(e)(ii) the terms payment, pay, and paid also refer to the release
or exercisability of a Performance Award, as the case may
require.
(A)
Terms.
The
Committee shall establish the terms and conditions of any
Performance Award including the Performance Objectives (as defined
below) to be achieved during any performance period, the length of
any performance period, any event the occurrence of which will
entitle the holder to payment, and the amount of any Performance
Award granted.
(B)
Performance
Objectives.
The Committee shall establish
“
Performance
Objectives
” the achievement of which shall entitle the
Participant to payment under a Performance Award. Performance
Objectives may be any measure of the business performance of the
Company, or any of its divisions or Affiliates, including but not
limited to the growth in book or market value of capital stock, the
increase in the earnings in total or per share, or any other
financial or non-financial indicator specified by the
Committee.
(C)
Fulfillment of
Conditions and Payment.
The Committee shall determine
in a timely manner whether all or part of the conditions to payment
of a Performance Award have been fulfilled and, if so, the amount,
if any, of the payment to which the Participant is entitled.
(iii)
Rule
16b-3 Six Month Limitations.
To the extent required in
order to render the grant of an Award, the exercise of an Award or
any derivative security, or the sale of securities corresponding to
an Award, an exempt transaction under Section 16(b) of the
Securities Exchange Act of 1934 only, any equity security granted
under the Plan to a Participant must be held by such Participant
for at least six months from the date of grant, or in the case of a
derivative security granted pursuant to the Plan to a Participant,
at least six months must elapse from the date of acquisition of the
derivative security to the date of disposition of the derivative
security (other than upon exercise or conversion) or its underlying
equity security. Terms used in the preceding sentence shall, for
the purposes of such sentence only, have the meanings if any,
assigned or attributed to them under Rule 16b-3.
(iv)
Limits on Transfer of
Awards.
No Award (other than Released Securities), and
no right under any such Award shall be assignable, alienable,
pledgeable, attachable, encumberable, saleable, or transferable by
a Participant other than by will or by the laws of descent and
distribution or pursuant to a domestic relations order (or, in the
case of Awards that are forfeited or canceled, to the Company); and
any purported assignment, sale, transfer, thereof shall be void and
unenforceable against the Company or Affiliate. If the Committee so
indicates in
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writing to a Participant, he or she may designate one or more
beneficiaries who may exercise the rights of the Participant and
receive any property distributable with respect to any Award upon
the death of the Participant.
(v)
Exercisability.
Each
Award, and each right under any Award, shall be exercisable, during
the Participant’s lifetime only by the Participant or, if
permissible under applicable law, by the Participant’s
guardian or legal representative or by a transferee receiving such
Award pursuant to a domestic relations order referred to above.
(vi)
No Cash Consideration
for Awards
. Awards may be granted for no cash
consideration, or for such minimal cash consideration as the
Committee may specify, or as may be required by applicable law.
(vii)
Awards May Be Granted
Separately or Together
. Awards may, in the discretion
of the Committee, be granted either alone or in addition to, in
tandem with, or in substitution for any other Award or any award
granted under any other plan of the Company or any Affiliate.
Awards granted in addition to or in tandem with other Awards or in
addition to or in tandem with awards granted under any other plan
of the Company or any Affiliate may be granted either at the same
time as or at a different time from the grant of such other Awards
or awards. Performance Awards and Awards which are not Performance
Awards may be granted to the same Participant.
(viii)
Forms of Payment
Under Awards
. Subject to the terms of the Plan and of
any applicable Award Agreement, payments or transfers to be made by
the Company or an Affiliate upon the grant, exercise, or payment of
an Award may be made in such form or forms as the Committee shall
determine, including, without limitation, cash, Shares, other
securities, other Awards, or other property, or any combination
thereof, and may be made in a single payment or transfer, in
installments, or on a deferred basis, in each case in accordance
with rules and procedures established by the Committee. Such rules
and procedures may include, without limitation, provisions for the
payment or crediting of reasonable interest on installment or
deferred payments or the grant or crediting of Dividend Equivalents
in respect of installment or deferred payments.
(ix)
Term of
Awards
. Except as provided in Sections 6(a)(ii) or
6(a)(iv), the term of each Award shall be for such period as may be
determined by the Committee.
(x)
Share
Certificates
. All certificates for Shares or other
securities delivered under the Plan pursuant to any Award or the
exercise thereof shall be subject to such stop transfer orders and
other restrictions as the Committee may deem advisable under the
Plan or the rules, regulations, and other requirements of the
Securities and Exchange Commission, any stock exchange upon which
such Shares or other securities are then listed, and any applicable
Federal or state securities laws, and the Committee may cause a
legend or legends to be put on any such certificates to make
appropriate reference to such restrictions. Unrestricted
certificates representing Shares, evidenced in such manner as the
Committee shall deem appropriate, shall be delivered to the holder
of Restricted Stock, Restricted Stock Units or any other relevant
Award promptly after such related Shares shall become Released
Securities.
Section 7.
Amendment and Termination of Awards.
Except to the extent prohibited by applicable law and unless
otherwise expressly provided in an Award Agreement or in the Plan,
the following shall apply to all Awards.
(a)
Amendments to Awards
. Subject to Section 6(b)(i), the
Committee may waive any conditions or rights under, amend any terms
of, or amend, alter, suspend, discontinue, cancel or terminate, any
Award heretofore granted without the consent of any relevant
Participant or holder or beneficiary of an Award; provided,
however, that no such amendment, alteration, suspension,
discontinuance, cancellation or termination that would be adverse
to the holder of such Award may be made without such holder’s
consent. Notwithstanding the foregoing, the Committee shall not
amend any outstanding Option to change the exercise price thereof
to any price that is lower than the original exercise price thereof
except in connection with an adjustment authorized under Section
4(c).
(b)
Adjustments of Awards Upon Certain Acquisitions
. In the
event the Company or an Affiliate shall issue Substitute Awards,
the Committee may make such adjustments, not inconsistent with the
terms of the Plan, in the terms of Awards as it shall deem
appropriate in order to achieve reasonable comparability or other
equitable relationship between the assumed awards and the
Substitute Awards granted under the Plan.
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(c)
Adjustments of Awards Upon the Occurrence of Certain Unusual or
Nonrecurring Events.
The Committee shall be authorized to
make adjustments in the terms and conditions of, and the criteria
included in, Awards in recognition of unusual or nonrecurring
events (including, without limitation, the events described in
Section 4(c) hereof) affecting the Company, any Affiliate, or the
financial statements of the Company or any Affiliate, or of changes
in applicable laws, regulations, or accounting principles, whenever
the Committee determines that such adjustments are appropriate in
order to prevent dilution or enlargement of the benefits or
potential benefits to be made available under the Plan or an Award
Agreement.
(d)
Correction of Defects, Omissions, and
Inconsistencies
. The Committee may correct any defect,
supply any omission, or reconcile any inconsistency in any Award
Agreement in the manner and to the extent it shall deem desirable
to carry the Plan into effect.
Section 8.
Acceleration upon a Change of Control.
In the event of
a Change of Control (as defined in Section 8(b) below) the
following shall apply:
(a)
Effect on
Awards
.
(i)
Options.
In
the event of a Change of Control, (1) all Options outstanding on
the date of such Change of Control shall become immediately and
fully exercisable without regard to any vesting schedule provided
for in the Option.
(ii)
Restricted Stock and
Restricted Stock Units.
In the event of a Change of
Control, all restrictions applicable to any Restricted Stock or
Restricted Stock Unit shall terminate and be deemed to be fully
satisfied for the entire stated restricted period of any such
Award, and the total number of underlying Shares shall become
Released Securities. The Participant shall immediately have the
right to the prompt delivery of certificates reflecting such
Released Securities.
(iii)
Dividend
Equivalents.
In the event of a Change of Control, the
holder of any outstanding Dividend Equivalent shall be entitled to
surrender such Award to the Company and to receive payment of an
amount equal to the amount that would have been paid over the
remaining term of the Dividend Equivalent, as determined by the
Committee.
(iv)
Other Stock Based
Awards.
In the event of a Change of Control, all
outstanding Other Stock Based Awards of whatever type shall become
immediately vested and payable in an amount that assumes that the
Awards were outstanding for the entire period stated therein, as
determined by the Committee.
(v)
Performance
Awards.
In the event of a Change of Control,
Performance Awards for all performance periods, including those not
yet completed, shall immediately become fully vested and payable in
accordance with the following:
(A)
Non-Financial
Performance Objectives.
The total amount of Performance
Awards conditioned on nonfinancial Performance Objectives and those
conditioned on financial performance shall be immediately payable
(or exercisable or released, as the case may be) as if the
Performance Objectives had been fully achieved for the entire
performance period.
(B)
Financial Performance
Objectives.
For Performance Awards conditioned
on financial Performance Objectives and payable in cash, the
Committee shall determine the amount payable under such Award by
taking into consideration the actual level of attainment of the
Performance Objectives during that portion of the performance
period that had occurred prior to the date of the Change of
Control, and with respect to the part of the performance period
that had not occurred prior to the date of the Change of Control,
the Committee shall determine an anticipated level of attainment
taking into consideration available historical data and the last
projections made by the Company’s Chief Financial Officer
prior to the Change of Control. The amount payable shall be the
present value of the amount so determined by the Committee
discounted using a factor that is the Prime Rate as established by
JP Morgan Chase, N.A. as of the date of the Change of
Control.
(vi)
Determination
Final.
The Committee’s determination of amounts
payable under this Section 8(a) shall be final. Except as otherwise
provided in Section 8(a)(1), any amounts due under this Section
8(a) shall be paid to Participants within 30 days after such Change
of Control.
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(vii)
Exclusion.
The
provisions of this Section 8(a) shall not be applicable to any
Award granted to a Participant if any Change of Control results
from such Participant’s beneficial ownership (within the
meaning of Rule 13d-3 under the Securities and Exchange Act of
1934, as amended (the “
Exchange
Act
”)) of Shares or other Company common stock or
Company voting securities.
(b)
Change of
Control Defined
. “
A Change of
Control
” shall be deemed to have occurred if:
(i)
there is an acquisition, in any one transaction or a series of
transactions, other than from the Company, by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Exchange Act), of beneficial ownership (within the meaning
of Rule 13(d)(3) promulgated under the Exchange Act) of 50% or more
of either the then outstanding shares of Common Stock or the
combined voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of
directors, but excluding, for this purpose, any such acquisition by
the Company or any of its subsidiaries, or any employee benefit
plan (or related trust) of the Company or its subsidiaries, or any
corporation with respect to which, following such acquisition, more
than 50% of the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or
indirectly, by the individuals and entities who were the beneficial
owners, respectively, of the common stock and voting securities of
the Company immediately prior to such acquisition in substantially
the same proportion as their ownership, immediately prior to such
acquisition, of the then outstanding shares of Common Stock or the
combined voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of
directors, as the case may be; or
(ii)
individuals who, as of March 1, 2017, constitute the Board (as of
such date, the “
Incumbent
Board
”) cease for any reason to constitute at least a
majority of the Board, provided that any individual becoming a
director subsequent to March 1, 2017 whose election, or nomination
for election by the Company’s stockholders, was approved by a
vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were
a member of the Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of office is in
connection with an actual or threatened election contest relating
to the election of the directors of the Company (as such terms are
used in Rule 14(a)(11) or Regulation 14A promulgated under the
Exchange Act); or
(iii)
there occurs
either (A) the consummation of a reorganization, merger or
consolidation, in each case, with respect to which the individuals
and entities who were the respective beneficial owners of the
common stock and voting securities of the Company immediately prior
to such reorganization, merger or consolidation do not, following
such reorganization, merger or consolidation, beneficially own,
directly or indirectly, more than 50% of, respectively, the then
outstanding shares of common stock and the combined voting power of
the then outstanding voting securities entitled to vote generally
in the election of directors, as the case may be, of the
corporation resulting from such reorganization, merger or
consolidation, or (B) an approval by the stockholders of the
Company of a complete liquidation of dissolution of the Company or
of the sale or other disposition of all or substantially all of the
assets of the Company.
(c)
Termination of Certain Awards
. In addition, in the
event of a Change of Control, the Committee may in its discretion
and upon at least 10 days’ advance notice to the affected
persons, cancel any outstanding Awards and pay to the holders
thereof, in cash or stock, or any combination thereof, the value of
such Awards based upon the price per share of the Shares received
or to be received by other shareholders of the Company in the
event. In the case of any Option or Other Stock-Based Award with an
exercise price that equals or exceeds the price paid for a Share in
connection with the Change of Control, the Committee may cancel the
Option or Other Stock-Based Award without the payment of
consideration therefor.
Section 9.
Amendment and Termination of the Plan.
Except to the extent prohibited by applicable law and unless
otherwise expressly provided in an Award Agreement or in the Plan,
the Board of Directors may amend, alter, suspend, discontinue, or
terminate the Plan, including without limitation any such action to
correct any defect, supply any omission or reconcile any
inconsistency in the Plan, without the consent of any stockholder,
Participant, other holder or beneficiary of an Award, or Person;
provided that any such amendment, alteration, suspension,
discontinuation, or termination that would impair the rights of any
Participant, or any other holder or beneficiary of any Award
heretofore granted shall not be effective without the approval of
the affected Participant(s); and
provided
further
, that,
notwithstanding any other provision of the Plan or any Award
Agreement, without the approval of the stockholders of the
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Company no such amendment, alteration, suspension, discontinuation
or termination shall be made that would increase the total number
of Shares available for Awards under the Plan, except as provided
in Section 4 hereof.
Section 10.
General Provisions
(a)
No Rights
to Awards
. No Employee, Participant or other Person shall
have any claim to be granted any Award under the Plan, and there is
no obligation for uniformity of treatment of Employees,
Participants, or holders or beneficiaries of Awards under the Plan.
The terms and conditions of Awards need not be the same with
respect to each recipient.
(b)
Withholding
. The Company or any Affiliate shall be
authorized to withhold from any Award granted or any payment due or
transfer made under any Award or under the Plan the amount (in
cash, Shares, other securities, other Awards, or other property) of
withholding taxes due in respect of an Award, its exercise, or any
payment or transfer under such Award or under the Plan and to take
such other action as may be necessary in the opinion of the Company
or Affiliate to satisfy all obligations for the payment of such
taxes.
(c)
No Limit
on Other Compensation Agreements
. Nothing contained in the
Plan shall prevent the Company or any Affiliate from adopting or
continuing in effect other or additional compensation arrangements
and such arrangements may be either generally applicable or
applicable only in specific cases.
(d)
No Right
to Employment
. The grant of an Award shall not be
construed as giving a Participant the right to be retained in the
employ of the Company or any Affiliate. Further, the Company or an
Affiliate may at any time dismiss a Participant from employment,
free from any liability or any claim under the Plan, unless
otherwise expressly provided in the Plan or in any Award
Agreement.
(e)
Governing
Law
. The validity, construction, and effect of the Plan
and any rules and regulations relating to the Plan shall be
determined in accordance with the laws of the State of New York and
applicable Federal law.
(f)
Severability
. If any provision of the Plan or any Award
is or becomes or is deemed to be invalid, illegal, or unenforceable
in any jurisdiction, or as to any Person or Award, or would
disqualify the Plan or any Award under any law deemed applicable by
the Committee, such provision shall be construed or deemed amended
to conform to applicable laws, or if it cannot be so construed or
deemed amended without, in the determination of the Committee,
materially altering the intent of the Plan or the Award, such
provision shall be stricken as to such jurisdiction, Person, or
Award and the remainder of the Plan and any such Award shall remain
in full force and effect.
(g)
No Trust
or Fund Created
. Neither the Plan nor any Award shall
create or be construed to create a trust or separate fund of any
kind or a fiduciary relationship between the Company or any
Affiliate and a Participant or any other Person. To the extent that
any Person acquires a right to receive payments from the Company or
any Affiliate pursuant to an Award, such right shall be that of an
unsecured general creditor of the Company or any Affiliate.
(h)
No
Fractional Shares
. No fractional Share shall be issued or
delivered pursuant to the Plan or any Award, and the Committee
shall determine whether cash, other securities, or other property
shall be paid or transferred in lieu of any fractional Shares, or
whether such fractional Shares, or whether such fractional Shares
or any rights thereto shall be canceled, terminated, or otherwise
eliminated.
(i)
Headings
. Headings are given to the sections and
subsections of the Plan solely as a convenience to facilitate
reference. Such headings shall not be deemed in any way material or
relevant to the construction or interpretation of the Plan or any
provision thereof.
Section 11.
Effective Date of the Plan.
The Plan shall be effective as of the date of its first approval by
the stockholders of the Company.
Section 12.
Term of the Plan.
No Award shall be granted under the Plan after the tenth
anniversary of the effective date hereof. However, unless otherwise
expressly provided in the Plan or in an applicable Award Agreement,
any Award theretofore granted may extend beyond such date, and the
authority of the Committee hereunder to amend, alter, adjust,
suspend, discontinue, or terminate any such Award,
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or to waive any conditions or rights under any such Award, and the
authority of the Board of Directors of the Company to amend the
Plan, shall extend beyond such date.
Section 13.
Participants Subject to Section 162(m)
.
(a)
Applicability
. The provisions of this Section 13 shall
be applicable to all Covered Awards. Covered Awards shall be made
subject to the achievement of one or more preestablished
Performance Goals, in accordance with procedures to be established
by the Committee from time to time. Notwithstanding any provision
of the Plan to the contrary, the Committee shall not, other than
upon a Change of Control, have discretion to waive or amend such
Performance Goals or to, except as provided in Section 4(c),
increase the number of Shares subject to Covered Awards or the
amount payable pursuant to Covered Awards after the Performance
Goals have been established; provided, however, that the Committee
may, in its sole discretion, reduce the number of Shares subject to
Covered Awards or the amount which would otherwise be payable
pursuant to Covered Awards; and provided, further, that the
provisions of Section 8 shall override any contrary provision of
this Section 13.
(b)
Certification
. No shares shall be delivered and no
payment shall be made pursuant to a Covered Award unless and until
the Committee shall have certified in writing that the applicable
Performance Goals have been attained.
(c)
Procedures
. The Committee may from time to time
establish procedures pursuant to which Covered Employees will be
permitted or required to defer receipt of amounts payable under
Awards made under the Plan.
(d)
Committee
. Notwithstanding any other provision of the
Plan, for all purposes involving Covered Awards, the Committee
shall consist of at least two members of the Board of Directors,
each of whom is an “
outside
director
” within the meaning of Section 162(m).
Section 14.
Code §409A Compliance
.
To the extent any Award hereunder provides for a deferral of
compensation (within the meaning of Code §409A and related
regulations), the material terms of the deferral, to the extent
required under Treasury Regulation §1.409A-1(c)(3) to
establish a deferred compensation plan, shall be set forth in the
written Award documentation (including by incorporation by
reference, if applicable) prior to the effective date of such
Award. Such provisions may include a requirement that if any
payment or acceleration of a payment is made upon a change of
control, the definition of change of control for purposes of such
award also complies with the requirements of Treasury Regulation
§1.409A-3(i)(5).
In addition, whenever it is provided in this Plan or in any Award
made hereunder that a payment or delivery is to be made
“promptly” after a given event, such payment or
delivery shall be made within 10 days of the event and the
recipient shall have no right to designate the taxable year of
payment or delivery.
Effective as of June ___, 2017.
A-12