UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant
to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant
x
Filed by a
Party other than the Registrant
¨
Check the appropriate box:
¨
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Preliminary Proxy Statement
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¨
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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x
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Definitive Proxy Statement
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¨
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Definitive Additional Materials
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¨
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Soliciting Material Pursuant to Rule 240.14a-12
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MICRONETICS, INC.
(Name of Registrant as Specified in Its Charter)
Not Applicable
(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 Rules 14a-6(i)(1) and 0-11.
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(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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¨
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Fee paid previously with preliminary materials.
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¨
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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MICRONETICS, INC.
26 Hampshire Drive
Hudson, New Hampshire 03051
NOTICE OF 2009 ANNUAL MEETING OF STOCKHOLDERS
To Be Held at 11:00 a.m. on October 22, 2009
T
O
THE
S
TOCKHOLDERS
OF
M
ICRONETICS
, I
NC
.:
NOTICE IS HEREBY GIVEN that the 2009 Annual
Meeting of Stockholders (the Meeting) of MICRONETICS, INC. (the Company) will be held on October 22, 2009 at 11:00 A.M. at the offices of Morse, Barnes-Brown & Pendleton, P.C., 1601 Trapelo Road, Suite 205,
Waltham, Massachusetts, to consider and vote on the following matters described under the corresponding numbers in the attached Proxy Statement:
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1.
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To elect four directors; and
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2.
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To transact such other business as may properly come before the Meeting.
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The Board of Directors has fixed the close of business on August 27, 2009 as the record date for the determination of stockholders entitled to vote at the Meeting, and only holders of shares of Common Stock of
record at the close of business on that day will be entitled to vote. The stock transfer books of the Company will not be closed.
A
complete list of stockholders entitled to vote at the Meeting shall be available for examination by any stockholder, for any purpose germane to the Meeting, during ordinary business hours from September 22, 2009 until the Meeting at the
principal executive offices of the Company. The list will also be available at the Meeting.
Whether or not you expect to be present at the
Meeting, please fill in, date, sign, and return the enclosed Proxy, which is solicited by management. The Proxy is revocable and will not affect your vote in person in the event you attend the Meeting.
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By Order of the Board of Directors
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K
EVIN
B
EALS
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Secretary
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September 15, 2009
Requests for additional copies of the proxy materials and the Companys Annual Report for its fiscal year ended March 31, 2009 should be addressed to Shareholder Relations, Micronetics, Inc., 26 Hampshire
Drive, Hudson, New Hampshire 03051. This material will be furnished without charge to any stockholder requesting it.
YOUR VOTE IS
IMPORTANT.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN THE ENCLOSED
PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED STAMPED ENVELOPE.
MICRONETICS, INC.
26 Hampshire Drive
Hudson, New Hampshire 03051
Proxy Statement
The enclosed proxy
is solicited by the management of Micronetics, Inc. in connection with the 2009 Annual Meeting of Stockholders to be held on October 22, 2009 at 11:00 A.M. (the Meeting) at the offices of Morse, Barnes-Brown & Pendleton,
P.C., 1601 Trapelo Road, Suite 205, Waltham, Massachusetts and any adjournment thereof. The Board of Directors of the Company (the Board of Directors) has set the close of business on August 27, 2009 as the record date for the
determination of stockholders entitled to vote at the Meeting. A stockholder executing and returning a proxy has the power to revoke it at any time before it is exercised by filing a later-dated proxy with, or other communication to, the Secretary
of the Company or by attending the Meeting and voting in person.
The proxy will be voted in accordance with your directions to:
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1.
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Consider and act upon a motion to elect four directors; and
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2.
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Transact such other business as may properly come before the Meeting.
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In the absence of direction, the proxy will be voted in favor of managements proposals.
The
Proxy Statement, the attached Notice of Meeting, the enclosed form of proxy and the Annual Report are being mailed to stockholders on or about September 15, 2009. The Companys principal executive offices are located at 26 Hampshire Drive,
Hudson, New Hampshire 03051 and its telephone number at that location is (603) 883-2900.
Important Notice Regarding the
Availability of Proxy Materials for the Shareholder Meeting to be Held on October 22, 2009:
The Proxy Statement for the Annual Meeting and the Annual Report to Shareholders for the year ended March 31, 2009 are available at
www.micronetics.com/2009ProxyMaterials
.
The entire cost of soliciting proxies will be borne by the Company. The costs of
solicitation, which represent an amount believed to be normally expended for a solicitation relating to an uncontested election of directors, will include the costs of supplying necessary additional copies of the solicitation materials and the
Companys Annual Report to Stockholders for its fiscal year ended March 31, 2009 (the Annual Report) to beneficial owners of shares held of record by brokers, dealers, banks, trustees, and their nominees, including the
reasonable expenses of such recordholders for completing the mailing of such materials and Annual Reports to such beneficial owners.
Only
stockholders of record of the Companys 4,553,635 shares of Common Stock (the Common Stock) outstanding at the close of business on August 27, 2009, will be entitled to vote at the Meeting.
Each share of Common Stock is entitled to one vote. A majority of the outstanding shares of the Common Stock represented in person or by proxy at the
Meeting will constitute a quorum at the Meeting. All shares of the Common Stock represented in person or by proxy (including shares which abstain or do not vote for any reason with respect to one or more of the matters presented for stockholder
approval) will be counted for purposes of determining whether a quorum is present at the Meeting. Abstentions will be treated as shares that are present and entitled to vote for purposes of determining the number of shares present and entitled to
vote with respect to any particular matter, but will not be counted as a vote in favor of such matter. Accordingly, an abstention from voting on a matter has the same legal effect as a vote against the matter. If a broker or nominee holding stock in
street name indicates on the proxy that it does not have discretionary authority to vote as to a particular matter (broker non-votes), those shares will not be considered as present and entitled to vote with respect to such
matter. Accordingly, a broker non-vote on a matter has no effect on the voting on such matter.
The Directors will be elected by a
plurality of the votes property cast at the Meeting. Abstentions and broker non-votes as to this election do not count as votes for or against such election.
1
PROPOSAL 1
ELECTION OF DIRECTORS
Four directors are to be elected by a plurality of the shares present in
person or represented by proxy at the Meeting and entitled to vote thereon, each to hold office until the next Annual Meeting of Stockholders and until his or her respective successor is elected and qualified. The persons named in the accompanying
proxy have advised management that it is their intention to vote for the election of the following nominees as directors unless authority is withheld:
Management has no reason to believe that any
nominee will be unable to serve. In the event that any nominee becomes unavailable, the proxies may be voted for the election of such person or persons who may be designated by the Board of Directors.
The Board of Directors recommends that you vote FOR the election of the four nominees set forth above.
2
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information as to our current directors:
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Name
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Age
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Position with the Company
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Director Since
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David Siegel*
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83
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Director
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April 1987
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David Robbins
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44
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Chief Executive Officer and Director
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August 2003
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Gerald Y. Hattori*
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57
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Lead Director
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September 2004
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Stephen N. Barthelmes, Jr.**
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42
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President of Stealth Microwave, Inc., a wholly-owned subsidiary of the Company, and Director
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October 2005
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DAnne Hurd*
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58
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Director
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October 2006
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*
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Member of Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee.
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**
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Mr. Barthelmes term on the Board of Directors will expire at the Meeting and he will not be standing for reelection upon expiration of his term.
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Mr. David Siegel
has been a director of the Company since April 1987. Mr. Siegel is also a director of Surge Components, Inc., a
distributor of passive electronic components, and a director and member of the audit and compensation committees of Nu Horizons, Inc. a distributor of electronic components. Mr. Siegel has also been Vice President of Great American Electronics,
a distribution company, since 1983.
Mr. David Robbins
has been Chief Executive Officer and a director of the Company since
August 2003. Mr. Robbins also served as President of the Company from August 2003 until August 2008. Mr. Robbins served as Senior Vice President of the Companys Defense Electronics Group from March 1999 until August 2003. He has been
employed by the Company in various capacities since February 1992.
Mr. Gerald Y. Hattori
has been a director of the
Company since September 2004 and has been Lead Director since October 2006. In 2000, Mr. Hattori founded Evolution Management, Inc., a business advisory and strategic planning consulting firm, where he is currently employed. From February 1999
until July 2000, Mr. Hattori was Vice-President and Chief Financial Officer, Treasurer and Secretary of Airnet Communications Corporation, then a publicly-traded company which manufactured wireless telecommunications infrastructure equipment.
From September 1996 until February 1999, Mr. Hattori was Vice President of Finance, Chief Financial Officer and Treasurer of Nexar Technologies, Inc., a personal computer manufacturer.
Mr. Stephen N. Barthelmes, Jr.
has been President of Stealth Microwave, Inc., a wholly-owned subsidiary of the Company
(Stealth), since the date of its acquisition by the Company in June 2005. He was Vice President of Operations of Stealth prior to the acquisition for more than 10 years and was one of Stealths founding members.
Ms. DAnne Hurd
has been a Director of the Company since October 2006. Ms. Hurd currently serves as Vice President and General
Counsel for Worcester Polytechnic Institute (WPI) and Vice President for Business Development at Gateway Park (WPIs life sciences/ bioengineering development). She has held these positions since January 2006. Ms. Hurd is Chairman of the
Audit Committee of Data Translation, Inc. and Vaso Active Pharmaceuticals, Inc. She brings over 30 years of experience in start-ups as well as established public companies, most recently serving as Senior Vice President, CFO and Treasurer of NMS
Communications, Inc. Ms. Hurd served as CFO and General Counsel of STARBAK Communications, Inc. and its predecessor company, Vividon, Inc. from March 2001 until January 2004. Prior to joining Vividon, Inc., Ms. Hurd served as CFO and
General Counsel for NaviPath, Inc., a majority-owned subsidiary of CMGI, Inc. Previously, Ms. Hurd was the CFO and General Counsel for SmartRoute Systems, Inc., the Cambridge, MA provider of real-time, digital traffic data. Ms. Hurds
years of experience in executive-level management also include senior finance positions at GTE Corporation and PepsiCo, Inc. where she was responsible for their global cash management and banking relationships, and seven years as an associate with
the Boston law firm Burns & Levinson, where she advised private and public clients on all aspects of corporate finance and securities law. Ms. Hurd also served on the
3
Board of Directors of the New England Chapter of the National Association of Corporate Directors (NACD) for several years and currently serves on the Board
of several other nonprofit entities.
During the Companys fiscal year ended March 31, 2009 (Fiscal 2009), the
Board of Directors held six meetings and acted three times by unanimous written consent. During Fiscal 2009, each director attended each meeting. All of the Board members attended the Companys 2008 Annual Meeting of Stockholders, and the
Company expects that all of the Board members, with the exception of Mr. Barthelmes whose term will expire at the 2009 Annual Meeting, will attend the 2009 Annual Meeting.
Other Executive Officers
Mr. Kevin Beals
, 47, has been President of the Company since
August 2008. Mr. Beals served as Vice President of Business Development of the Company from October 2006 until August 2008. From 1991 until October 2006, Mr. Beals held various positions, including District Sales Manager, with M/A-COM, a
manufacturer of RF, microwave and millimeter wave semiconductors, components and technologies. From 1983 until 1991, Mr. Beals was a Product Line Manager and held various engineering positions with Alpha Industries.
Mr. Carl Lueders
, 59, was appointed Acting Chief Financial Officer of the Company in August 2008. Mr. Lueders spent 22 years at Polaroid
Corporation, a $2 billion manufacturer and distributor of instant, photographic products. During his last six years at Polaroid, Mr. Lueders served as Chief Financial Officer, Treasurer and Vice-President and Controller. While at Polaroid he
also held a variety of planning and analysis and business unit controller positions. Most recently, from 2005 until 2007, Mr. Lueders was Chief Financial Officer of Pro-Pharmaceuticals, Inc. an early stage public biotech company. From 2003
until 2004, Mr. Lueders was the Chief Financial Officer of R. F. Morse & Son, Inc., a privately-held supplier of agricultural products. Mr. Lueders has joined Micronetics as an independent contractor.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of Securities Exchange Act of 1934 requires the Companys executive officers, directors, and persons who own more than ten percent of a registered class of the Companys equity securities to file reports of
ownership and changes in ownership with the Securities and Exchange Commission (the Commission). Based solely on its review of the copies of such forms and amendments thereto received by it, the Company believes that during Fiscal 2009
all executive officers, directors and owners of ten percent of the outstanding shares of Common Stock complied with all applicable filing requirements.
Code of Conduct and Ethics
Micronetics has adopted a Code of Conduct and Ethics applicable to its directors, officers and
employees including its principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions. A copy of Micronetics Code of Conduct and Ethics is available on
Micronetics website
www.Micronetics.com
. Micronetics intends to post amendments to or waivers from its Code of Conduct and Ethics (to the extent applicable to its principal executive officer, principal financial officer or principal
accounting officer) on its website. Micronetics website is not part of this proxy statement.
Certain Relationships and Related Transactions
Item 404 of Regulation S-K requires Micronetics to disclose any transaction or currently proposed transaction in which
Micronetics is a participant and in which any related person has or will have a direct or indirect material interest involving the lesser of $120,000 or one percent (1%) of the average of Micronetics total assets as of the end of last two
completed fiscal years. A related person is any executive officer, director, nominee for director, or holder of 5% or more of the Companys common stock, or an immediate family member of any of those persons.
4
Micronetics has entered into a lease with SBJ Development, LLC (the Landlord) for a new
headquarters for its subsidiary Stealth Microwave, Inc. The property is located in Ewing Township, New Jersey. Each of Stephen N. Barthelmes, Jr., a director of Micronetics and President of Micronetics subsidiary Stealth Microwave, Inc., and
Kevin Beals, President of Micronetics, is a member of the Landlord. The lease has an initial term of five years and contains three options to extend the lease each for a term of five years. The proposed rent for the initial term of the lease is
$216,000 per year. Mr. Barthelmes and Mr. Beals own twenty-one percent and sixteen percent, respectively, of the outstanding units of membership interest of the Landlord.
In accordance with our Audit Committee charter, the Audit Committee has reviewed and approved the terms of the lease.
Since April 1, 2008, Micronetics has not been a participant in any other transaction that is reportable under Item 404 of Regulation S-K.
Policies and Procedures Regarding Review, Approval or Ratification of Related Person Transactions
In accordance with our Audit Committee charter, the Audit Committee is responsible for reviewing and approving the terms of any transaction in which
Micronetics is a participant and in which any related person has or will have a direct or indirect material interest. Therefore, any material financial transaction between Micronetics and any related person would need to be approved by our Audit
Committee prior to us entering into such transaction.
5
EXECUTIVE COMPENSATION
Summary Compensation Table
The following Summary Compensation Table sets forth the total
compensation paid or accrued for the fiscal years ended March 31, 2008 and March 31, 2009 for our principal executive officer and our other two most highly compensated executive officers who were serving as executive officers on
March 31, 2009. We refer to these officers as our named executive officers.
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Name and Principal Position
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Year
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Salary
($)
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Bonus
($)
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Option
Awards
($)(1)
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All Other
Compensation
($)
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Total
($)
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David Robbins
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2009
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$
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200,000
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$
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22,085
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$
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10,082
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(2)
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$
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232,167
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Chief Executive Officer
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2008
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$
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195,192
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$
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140,936
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$
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40,101
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$
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9,335
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(3)
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$
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385,564
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Stephen N. Barthelmes, Jr.
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2009
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$
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169,615
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$
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41,381
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$
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6,052
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(4)
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$
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217,048
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President of Stealth Microwave, Inc. a wholly owned subsidiary of Micronetics, Inc.
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2008
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$
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173,253
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$
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65,000
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$
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93,535
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$
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4,716
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(5)
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$
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363,504
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Kevin Beals
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2009
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$
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179,920
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$
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25,000
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$
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50,735
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$
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11,233
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(6)
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$
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266,888
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President
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2008
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$
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138,840
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$
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25,000
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$
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50,786
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$
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6,969
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(7)
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$
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221,595
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(1)
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The amounts listed in this column do not reflect compensation actually received by our named executive officers. The amounts in this column represent the amount of stock based
compensation recognized for financial statement reporting purposes in our financial statements for the fiscal years ended March 31, 2009 and March 31, 2008, in accordance with SFAS No. 123(R) and therefore may include amounts from
awards granted in prior fiscal years. Please see Note 10 Stock Option Plans and Stock Based Compensation in our Form 10-K for the fiscal year ended March 31, 2009 filed with the SEC on June 29, 2009, which identifies
assumptions used in the valuation of our option awards in accordance with SFAS No. 123(R). The calculation in the table above excludes all assumptions with respect to forfeitures. A forfeiture rate was used in the expense calculation in the
financial statements. There can be no assurance that the amounts set forth in the Option Awards column will ever be realized.
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(2)
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Includes expenses relating to furnishing an automobile of $6,000, company matching contributions to the Companys 401(k) plan of $3,000 and life and disability insurance
premiums of $1,082.
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(3)
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Includes expenses relating to furnishing an automobile of $6,000, company matching contributions to the Companys 401(k) plan of $3,231 and life and disability insurance
premiums of $104.
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(4)
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Includes expenses relating to, company matching contributions to the Companys 401(k) plan of $5,088 and life and disability insurance premiums of $964.
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(5)
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Includes expenses relating to company matching contributions to the Companys 401(k) plan of $4,612, and life insurance premiums paid for term life and disability insurance
premiums of $104.
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(6)
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Includes expenses relating to furnishing an automobile of $4,800, company matching contributions to the Companys 401(k) plan of $5,398 and life and disability insurance
premiums of $1,035.
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(7)
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Includes expenses relating to furnishing an automobile of $4,800, contributions to the Companys 401(k) plan of $2,065 and life and disability insurance premiums of $104.
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Employment Agreements
David Robbins
On July 16, 2007, the Company entered into an Employment Agreement with David Robbins, its Chief Executive Officer. Pursuant to
the terms of the Employment Agreement, Mr. Robbins will receive an annual base salary of $200,000, which may be increased by the Board of Directors from time to time, and will be eligible to receive employee benefits available to the
Companys employees as well as benefits available to other officers of the Company. In addition, Mr. Robbins will receive an annual cash bonus in an amount equal to the sum of
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(i) 3% of the Companys income before taxes for the applicable fiscal year, plus (ii) 5% of the excess (if any) of the Companys income
before taxes for the current fiscal year over the Companys income before taxes for the immediately preceding fiscal year.
If
Mr. Robbins employment is terminated without Cause or for Good Reason (as such terms are defined in the Employment Agreement), the Company must pay Mr. Robbins a lump sum severance payment equal to
(i) six months of his base salary, (ii) the cash bonus for the current fiscal year, pro-rated for the portion of the fiscal year for which Mr. Robbins was employed by the Company, and (iii) an additional bonus calculated as set
forth above for the six-month period ending on the last day of the calendar month immediately preceding the date of termination. In addition, for a period of six months from the date of such termination of employment the Company must continue to
provide Mr. Robbins with the employee benefits then in effect for officers of the Company.
The Employment Agreement contains
customary provisions regarding the protection of the Companys confidential information and assignment of intellectual property to the Company. Pursuant to the terms of the Employment Agreement, Mr. Robbins covenants not to compete with
the Company during the term of his employment with the Company and for a period of one year from the date of termination of his employment with the Company.
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth information concerning outstanding stock
options for each named executive officer as of March 31, 2009.
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Option
Grant Date
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Number of Securities
Underlying Unexercised
Options
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Option
Exercise
Price
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Option
Expiration
Date
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Name
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Exercisable
Options
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Unexercisable
Options
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David Robbins
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11/15/2004
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50,000
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$
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6.95
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11/15/2009
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5/11/2005
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7,500
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2,500
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$
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8.11
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05/11/2010
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Stephen N. Barthelmes, Jr.
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6/10/2005
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30,000
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10,000
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$
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8.00
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06/10/2015
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6/10/2005
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63,750
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21,250
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$
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8.00
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06/10/2010
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Kevin Beals
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10/16/2006
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22,500
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22,500
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$
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8.09
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10/19/2016
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All of the options listed above vest annually at the rate of 25% per year beginning the first anniversary of
the grant date provided the holder of the option is an employee of the company. The exercise price of each option is set at the closing stock price on the date of grant. Option grants are approved by the Board of Directors. No options were exercised
in Fiscal 2009.
7
COMPENSATION OF DIRECTORS
Director Compensation
The following table sets forth information concerning the compensation of our
Directors who are not named executive officers for the fiscal year ended March 31, 2009.
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Name
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Fees Earned or
Paid in Cash
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Option Awards
(1)(2)
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All Other
Compensation
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Total
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Gerald Y. Hattori
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$
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50,000
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$
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29,589
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$
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79,589
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DAnne Hurd
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$
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30,000
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$
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22,657
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$
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52,657
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David Siegel
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$
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24,000
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$
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29,589
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$
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53,589
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(1)
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The amounts listed in this column do not reflect compensation actually received by the Directors. The amounts in this column represent the amount of stock based compensation
recognized for financial statement reporting purposes in our financial statements for the fiscal year ended March 31, 2009, in accordance with SFAS No. 123(R) and therefore may include amounts from awards granted in prior fiscal years.
Please see Note 10 Stock Option Plans and Stock Based Compensation in our Form 10-K for the fiscal year ended March 31, 2009 filed with the SEC on June 29, 2009, which identifies assumptions used in the valuation of our option
awards in accordance with SFAS No. 123(R). The calculation in the table above excludes all assumptions with respect to forfeitures. A forfeiture rate was used in the expense calculation in the financial statements. There can be no assurance
that the amounts set forth in the Option Awards column will ever be realized.
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(2)
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As of March 31, 2009, each non-employee director holds the following aggregate number of shares under outstanding stock options:
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Name
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Number of Shares Underlying
Outstanding Stock Options
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Gerald Y. Hattori
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45,000
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DAnne Hurd
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20,000
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David Siegel
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45,000
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Each non-employee director of Micronetics receives a fee of $2,000 per month. In addition,
Mr. Hattori, as Lead Director and Chair of the Audit Committee and Compensation Committee, receives an annual fee of $24,000, and Ms. Hurd, as Chair of the Nominating and Corporate Governance Committee, receives an annual fee of $6,000.
Travel and lodging expenses are also reimbursed.
8
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
At the close of business on July 20, 2009, there were issued and outstanding 4,553,635 shares of our Common Stock entitled to cast 4,553,635
votes. On July 20, 2009, the closing price of our Common Stock as reported on the Nasdaq Capital Market was $3.18 per share. The following table provides information, as of July 20, 2009, with respect to the beneficial ownership
of our Common Stock by:
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each person known by us to be the beneficial owner of five percent or more of our Common Stock;
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each of our directors and nominees for director;
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each of our named executive officers; and
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all of our current directors and executive officers as a group.
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This information is based upon information received from or on behalf of the individuals named therein.
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Name (1)
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Shares of
Common
Stock
Owned
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Common
Stock
Options
Owned(2)
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Total
Beneficial
Ownership
(2)
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Percent of
Outstanding
Shares
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Noelle Kalin
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571,363
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571,363
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12.5
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%
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c/o Dillon, Bitar & Luther, LLC
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53 Maple Avenue
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Morristown NJ 07960
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Babson Capital Management LLC
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365,000
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(3)
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365,000
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(3)
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8.0
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%
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Cobbs Wharf Master Fund L.P.
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470 Atlantic Avenue
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Boston, MA 02210
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David Siegel
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182,770
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(4)
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35,000
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217,770
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(4)
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4.7
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%
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David Robbins
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124,880
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60,000
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184,880
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4.0
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%
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Gerald Y. Hattori
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35,000
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35,000
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*
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Stephen N. Barthelmes, Jr.
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1,000
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125,000
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126,000
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2.7
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%
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DAnne Hurd
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7,500
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7,500
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*
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Kevin Beals
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10,097
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22,500
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32,597
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*
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All current executive officers and directors as a group (7 persons)
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322,613
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(5)
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285,000
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607,613
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(5)
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12.6
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%
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(1)
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Unless otherwise noted: (i) each person identified possesses sole voting and investment power over the shares listed; and (ii) the address of each person identified is c/o
Micronetics, Inc., 26 Hampshire Drive, Hudson, New Hampshire 03051.
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(2)
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Includes shares subject to currently exercisable options (including options that will become exercisable within 60 days of July 20, 2009). These shares are deemed to be
outstanding for purposes of determining the percent of outstanding shares with respect to each beneficial owner and all executive officers and directors as a group.
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(3)
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Based on the Schedule 13G filed by the holder on June 3, 2009. Babson Capital Management LLC serves as an investment advisor to Cobbs Wharf Master Fund, L.P., a Cayman Islands
limited partnership, which was the registered holder of the shares reported as beneficially owned by Babson Capital.
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(4)
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Includes (i) 33,050 shares of Common Stock owned of record by RJW Trading Corp., a personal holding company 100% owned by Mr. Siegel and members of his family, and
(ii) 14,970 shares of Common Stock held in his retirement account.
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(5)
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Includes shares of common stock owned by Carl L. Lueders, Micronetics Acting Chief Financial Officer.
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9
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee.
Audit Committee
The purpose of the Audit Committee
is to perform general oversight of the Companys accounting and financial reporting processes and the audits of its financial statements. Ms. Hurd and Messrs. Siegel and Hattori are the current members of the Audit Committee. All three of
the current members of the Audit Committee are independent directors within the meaning of the applicable rules of the Commission and the Nasdaq Stock Market, Inc. Mr. Hattori is the chairman of the Audit Committee. The Board of
Directors has determined that all members of the Audit Committee qualify as audit committee financial experts as defined in Item 407(d)(5) of Regulation S-K. The Board of Directors has adopted a written charter for the Audit
Committee. A copy of such charter is available on the Companys website,
www.Micronetics.com
. During Fiscal 2009, the Audit Committee met five times and each member of the Audit Committee attended each such meeting.
Compensation Committee
The Company established a
Compensation Committee on October 20, 2005. The primary function of the Compensation Committee is to review and make recommendations to the Board on the Companys compensation practices and policies; and to recommend the salaries and
incentive compensation of the Chief Executive Officer and other executive officers. In addition the Compensation Committee administers and interprets the Companys equity-based plans, including determining the individuals to whom stock options
are awarded, the terms upon which the option grants are made, and the number of shares subject to each option granted. Ms. Hurd and Messrs. Siegel and Hattori are the current members of the Compensation Committee. Mr. Hattori is the
chairman of the Compensation Committee. The Board of Directors has adopted a written charter for the Compensation Committee. A copy of such charter is available on the Companys website,
www.Micronetics.com
. During Fiscal 2009, the
Compensation Committee acted once through unanimous written consent.
Nominating and Corporate Governance Committee
The Company established a Nominating and Corporate Governance Committee on October 19, 2006. The primary functions of the Nominating and Corporate
Governance Committee are to (i) identify individuals qualified to become members of the Board and recommend nominees for election as directors at each annual meeting of stockholders and nominees for election by the Board to fill any vacancies
on the Board, (ii) develop and recommend to the Board corporate governance principles, and (iii) be responsible for an annual review of the performance of the Board. Ms. Hurd and Messrs. Siegel and Hattori are currently members of the
Nominating and Corporate Governance Committee. Ms. Hurd is the chair of the Nominating and Corporate Governance Committee.
The
Nominating and Corporate Governance Committee may consider candidates recommended by stockholders as well as from other sources such as other directors or officers, third party search firms or other appropriate sources. For all potential candidates,
the Nominating and Corporate Governance Committee may consider all factors it deems relevant, such as a candidates personal integrity and sound judgment, business and professional skills and experience, independence, possible conflicts of
interest, diversity, the extent to which the candidate would fill a present need on the Board, and concern for the long-term interests of the stockholders. The Nominating and Corporate Governance Committee does not assign specific weights to
particular criteria and no particular criterion is a prerequisite for each prospective nominee. The Nominating and Corporate Governance Committee believes that the backgrounds and qualifications of its directors, considered as a group, should
provide a composite mix of experience, knowledge and abilities that will allow the Board of Directors to fulfill
10
its responsibilities. In general, persons recommended by stockholders will be considered on the same basis as candidates from other sources. If a stockholder
wishes to recommend a candidate for director for election at the 2010 Annual Meeting of Stockholders, it must follow the procedures described in Stockholder Proposals and Recommendations for Director.
The Board of Directors has adopted a written charter for the Nominating and Corporate Governance Committee. A copy of such charter is available on the
Companys website,
www.Micronetics.com
. During Fiscal 2009, the Nominating and Corporate Governance Committee did not hold a formal meeting.
Communications with the Board of Directors
The Company encourages stockholder communications with the Board of Directors.
Interested persons may directly contact any individual member of the Board of Directors as follows: Mr. Robbins at drobbins@micronetics.com; Mr. Hattori at ghattori@evolution-management.com; and Mr. Barthelmes, Mr. Siegel and
Ms. Hurd at Micronetics, Inc., 26 Hampshire Drive, Hudson, New Hampshire 03051.
Audit Committee Report
The Audit Committee consists of three independent directors, all of whom are independent directors within the meaning of the applicable rules
of the Commission and the Nasdaq Stock Market, Inc. The Audit Committees responsibilities are as described in a written charter adopted by the Board, a copy of which is available on the Companys website at www.Micronetics.com.
The Audit Committee has reviewed and discussed the Companys audited financial statements for Fiscal 2009 with management and with
the Companys independent registered public accounting firm, Grant Thornton LLP. The Audit Committee also discussed with Grant Thornton LLP matters required to be discussed by Statement on Auditing Standards No. 61, as amended, as adopted
by the Public Company Accounting Oversight Board (PCAOB) in Rule 3200T. The Audit Committee has received the written disclosures and the letter from Grant Thornton LLP as to that firms independence from management and the Company,
as required by the Independence Standards Board Standard No. 1, Independence Discussion with Audit Committees, as adopted by the PCAOB in Rule 3600T, and has discussed with Grant Thornton LLP their independence.
Based on the Audit Committees review of the audited financial statements and the review and discussions described in the foregoing paragraph, the
Audit Committee recommended to the Board that the audited financial statements for Fiscal 2009 be included in the Companys Annual Report on Form 10-K for Fiscal 2009 for filing with the Commission.
Submitted by the members of the Audit Committee:
Gerald Hattori, Chairman
David Siegel
DAnne Hurd
Upon the recommendation of the Audit Committee, the Board of Directors has reappointed Grant Thornton LLP to audit the consolidated financial statements
of the Company for Fiscal 2010. Grant Thornton LLP has served as the Companys independent registered public accounting firm since Fiscal 2005. A representative from Grant Thornton LLP is expected to be present at the meeting with the
opportunity to make a statement if he or she desires to do so and to be available to respond to appropriate questions.
11
Audit Fees
The following table shows the aggregate fees that the Company paid or accrued for the audit and other services provided by Grant Thornton LLP for Fiscal 2009 and Fiscal 2008.
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Amount of Fee for
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Type of Service
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Fiscal
2008
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Fiscal
2009
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Audit Fees
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$
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359,031
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$
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330,314
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Audit-Related Fees
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Tax Fees
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63,550
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13,502
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All Other Fees
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Total
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$
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422,581
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$
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343,816
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Audit Fees
. This category includes fees for the audits of the Companys annual
financial statements, review of financial statements included in the Companys Form 10-Q Quarterly Reports and services that are normally provided by the independent auditors in connection with statutory and regulatory filings or engagements
for the relevant fiscal years.
Audit-Related Fees
. This category consists of due diligence in connection with acquisitions, various
accounting consultations, and benefit plan audits.
Tax Fees
. This category consists of professional services rendered for tax
compliance, tax planning and tax advice. The services for the fees disclosed under this category include tax return preparation, research and technical tax advice.
All Other Fees
. This category includes fees for all other products and services which do not fall within the above categories.
The Company retained Grant Thornton, LLP for tax preparation services in Fiscal 2008 and did not retain Grant Thornton, LLP for tax preparation services in Fiscal 2009. The Company did not retain Grant Thornton for
any other services in either Fiscal 2009 or Fiscal 2008.
Audit Committee Pre-Approval Policies and Procedures.
Before an independent public accounting firm is engaged by the Company to render audit or non-audit services, the engagement is approved by the Audit
Committee. Our Audit Committee has the sole authority to approve the scope of the audit and any audit-related services as well as all audit fees and terms. Our Audit Committee must pre-approve any audit and non-audit related services by our
independent registered public accounting firm. During our fiscal year ended March 31, 2009, no services were provided to us by our independent registered public accounting firm other than in accordance with the pre-approval procedures described
herein.
Other Matters
The Board of
Directors has no knowledge of any other matters which may come before the Meeting and does not intend to present any other matters. However, if any other matters shall properly come before the Meeting or any adjournment thereof, the persons named as
proxies will have discretionary authority to vote the shares of Common Stock represented by the accompanying proxy in accordance with their best judgment.
12
Stockholder Proposals and Recommendations for Director
Any stockholder of the Company who wishes to present a proposal to be considered at the next annual meeting of stockholders of the Company and who wishes
to have such proposal presented in the Companys Proxy Statement for such meeting must deliver such proposal in writing to the Company at 26 Hampshire Drive, Hudson, New Hampshire 03051 on or before June 10, 2010.
Stockholders may recommend individuals to the Board of Directors for consideration as potential director candidates by following the requirements under
Article I, Section 10 of the Bylaws. In order to be eligible to nominate a person for election to our Board of Directors a stockholder must (i) comply with the notice procedures set forth in the Bylaws and (ii) be a stockholder of
record on the date of giving such notice of a nomination as well as on the record date for determining the stockholders entitled to vote at the meeting at which directors will be elected.
To be timely, a stockholders notice must be in writing and received by our corporate secretary at our principal executive offices as follows:
(A) in the case of an election of directors at an annual meeting of stockholders, not less than 90 days nor more than 120 days prior to the first anniversary of the preceding years annual meeting; provided, however, that in the event that
the date of the annual meeting is advanced by more than 20 days, or delayed by more than 60 days, from the first anniversary of the preceding years annual meeting, a stockholders notice must be so received not earlier than the 120th day
prior to such annual meeting and not later than the close of business on the later of (x) the 90th day prior to such annual meeting and (y) the tenth day following the day on which notice of the date of such annual meeting was mailed or
public disclosure of the date of such annual meeting was made, whichever first occurs; or (B) in the case of an election of directors at a special meeting of stockholders, provided that the board of directors has determined that directors shall
be elected at such meeting, not earlier than the 120th day prior to such special meeting and not later than the close of business on the later of (1) the 90th day prior to such special meeting and (2) the tenth day following the day on
which notice of the date of such special meeting was mailed or public disclosure of the date of such special meeting was made, whichever first occurs.
In addition, a stockholders notice must contain the information specified in Article I, Section 10 of the Bylaws and must be accompanied by the written consent of the proposed nominee to serve as a director
if elected. The stockholder making a nomination must personally appear at the annual or special meeting of stockholders to present the nomination, otherwise the nomination will be disregarded.
Stockholders interested in making a nomination should refer to the complete requirements set forth in our Bylaws filed as an exhibit to our Current
Report on Form 8-K filed with the Securities and Exchange Commission on March 17, 2006. Provided that the date of next years annual meeting of stockholders is not advanced by more than 20 days, or delayed by more than 60 days, from the
first anniversary of the 2009 annual meeting, any stockholder who wishes to make a nomination to be considered for the next annual meeting must deliver the notice specified by our Bylaws between June 25, 2010 and July 25, 2010. The By-Laws
contain a number of substantive and procedural requirements which should be reviewed by any interested stockholder. Any notice should be mailed to: Secretary, Micronetics, Inc., 26 Hampshire Drive, Hudson, NH 03051.
By Order of the Board of Directors
K
EVIN
B
EALS
Secretary
September 15, 2009
13
Appendix A
PROXY
MICRONETICS, INC.
26 Hampshire Drive
Hudson, New Hampshire 03051
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL
The Notice of Meeting, proxy statement and proxy card
are available at
www.micronetics.com/2009ProxyMaterials
The undersigned, revoking all proxies, hereby appoints David Siegel and David Robbins and each of them,
proxies with power of substitution to each, for and in the name of the undersigned to vote all shares of Common Stock of Micronetics, Inc. (the Company) which the undersigned would be entitled to vote if present at the Annual Meeting of
Stockholders of the Company to be held on October 22, 2009, at 11:00 A.M. at the offices of Morse, Barnes-Brown & Pendleton, P.C., 1601 Trapelo Road, Suite 205, Waltham, Massachusetts and any adjournments thereof, upon the matters set
forth in the Notice of Annual Meeting.
The undersigned acknowledges receipt of the Notice of Annual Meeting, Proxy Statement and the Companys Annual
Report.
The Board of Directors Recommends a Vote
FOR All Director Nominees.
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For
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Withhold
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1
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David Siegel
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¨
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¨
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2
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David Robbins
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¨
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¨
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3
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Gerald Y. Hattori
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¨
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¨
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4
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DAnne Hurd
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¨
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¨
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B.
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In Their Discretion, on Such Other Matters as May Properly Come Before the Meeting.
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¨
For
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¨
Against
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¨
Abstain
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Please Sign on the Reverse Side and Return this Proxy Promptly in the Enclosed Envelope.
This Proxy is solicited on behalf of the Board of Directors, and when properly executed will be voted as directed herein. If no direction is given, this Proxy will be
voted FOR all Proposals.
Date:
, 2009
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(Signature)
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(Signature, if held jointly)
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Where stock is registered in the names of two or more persons ALL should sign. Signature(s) should correspond
exactly with the name(s) as shown above. Please sign, date and return promptly in the enclosed envelope. No postage need be affixed if mailed in the United States.
Requests for copies of proxy materials, the Companys Annual Report for its fiscal year ended March 31, 2009 on Form 10-K should be addressed to Shareholder Relations, Micronetics, Inc., 26 Hampshire Drive, Hudson, New Hampshire
03051. This material will be furnished without charge to any stockholder requesting it.
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