UNITED
STATES
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SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549
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SCHEDULE 14A
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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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Filed by a Party other than the
Registrant
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Check the appropriate box:
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x
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Preliminary Proxy Statement
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Confidential, for
Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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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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CIPRICO
INC.
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(Name
of Registrant as Specified In Its Charter)
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(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment of Filing Fee (Check the
appropriate box):
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x
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No fee required.
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o
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Fee computed on table below per
Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to
which transaction applies:
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(2)
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Aggregate number of securities to
which transaction applies:
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(3)
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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)
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Proposed maximum aggregate value of
transaction:
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(5)
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Total fee paid:
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o
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Fee paid previously with preliminary
materials.
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o
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Check box if any part of the fee is
offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule and the date
of its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration
Statement No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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Persons who are to respond to
the collection of information contained in this form are not required to
respond unless the form displays a currently valid OMB control number.
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CIPRICO INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held February 7, 2008
The Annual Meeting of
Stockholders of Ciprico Inc. (the Company) will be held on February 7,
2008, at 3:30 p.m. (CST), at the Doubletree Hotel Minneapolis Park
Place, 1500 Park Place Blvd, Minneapolis, Minnesota 55416, for the following
purposes:
1.
To approve the
proposed amendment to the Companys Certificate of Incorporation to increase
the number of authorized Common Stock from 9,000,000 shares of Common Stock to 14,000,000
shares of Common Stock.
2.
To elect two Class II
directors for the ensuing year.
3.
To consider and
act upon such other matters as may properly come before the meeting and any
adjournments thereof.
Only stockholders of record at
the close of business on December 26, 2007, are entitled to notice of and
to vote at the meeting or any adjournment thereof.
Your vote is important. We ask that you complete, sign, date and
return the enclosed proxy in the envelope provided for your convenience or vote
via the online methodology outlined in the enclosed proxy. The prompt return of proxies will save us the
expense of further requests.
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BY
ORDER OF THE BOARD OF DIRECTORS
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James
W. Hansen
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Chairman
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St.
Louis Park, Minnesota
January 2,
2008
CIPRICO INC.
ANNUAL MEETING OF STOCKHOLDERS
February 7, 2008
PROXY STATEMENT
INTRODUCTION
Your proxy is solicited by the
Board of Directors of Ciprico Inc. (Ciprico, we, our, or the Company)
for use at the Annual Meeting of Stockholders to be held on February 7,
2008, at the location and for the purposes set forth in the Notice of Meeting,
and at any adjournment or postponements thereof (Annual Meeting).
The cost of soliciting proxies,
including the preparation, assembly and mailing of the proxies and soliciting
material, as well as the cost of forwarding such material to beneficial owners
of stock, approximately $15,000, will be borne by the Company. Directors, officers and regular employees of
the Company may, without compensation other than their regular remuneration,
solicit proxies personally or by telephone.
Any stockholder giving a proxy
may revoke it at any time prior to its use at the meeting by giving written
notice of such revocation to the Secretary of the Company. Proxies not revoked will be voted in
accordance with the choice specified by stockholders by means of the ballot
provided on the proxy for that purpose.
Proxies which are signed but which lack any such specification will,
subject to the following, be voted in favor of the proposals set forth in the
Notice of Meeting. If a stockholder
abstains from voting as to any matter, then the shares held by such stockholder
shall be deemed present at the meeting for purposes of determining a quorum and
for purposes of calculating the vote with respect to such matter, but shall not
be deemed to have been voted in favor of such matter. Abstentions, therefore, as to any proposal
will have the same effect as votes against such proposal. If a broker returns a non-vote proxy,
indicating a lack of voting instructions by the beneficial holder of the shares
and a lack of discretionary authority on the part of the broker to vote on a
particular matter, then the shares covered by such non-vote proxy shall be
deemed present at the meeting for purposes of determining a quorum but shall
not be deemed to be represented at the meeting for purposes of calculating the
vote required for approval of such matter.
If your shares of Common Stock
are registered in the name of a bank or brokerage firm, you may be eligible to
vote your shares electronically via the internet or telephone. A large number of banks and brokerage firms
are participating in the ADP Investor Communications Services (ADP) online
program. The program provides eligible
stockholders who receive a paper copy of the proxy statement the opportunity to
vote via the Internet or telephone. If
your bank or brokerage firm is participating in ADPs program, your proxy will
provide instructions.
1
If
your voting form does not refer to Internet or telephone information, please
complete and return the paper proxy card in the postage paid envelope provided.
The
mailing address of the principal executive office of the Company is 7003 West
Lake Street, Suite 400, St. Louis Park, Minnesota 55426. The Company expects that this Proxy
Statement, the related Proxy Card and Notice of Meeting will first be mailed to
stockholders on or about January 2, 2008.
OUTSTANDING SHARES AND VOTING
RIGHTS
The
Board of Directors of the Company has fixed December 26, 2007, as the
Record Date (Record Date) for determining stockholders entitled to vote at
the Annual Meeting. Persons who were not
stockholders on such date will not be allowed to vote at the Annual
Meeting. At the close of business on December 26
2007, [ ] shares of the
Companys Common Stock were issued and outstanding. The Common Stock is the only outstanding
class of capital stock of the Company entitled to vote at the meeting. Each share of Common Stock (Common Stock) is entitled to one vote on
each matter to be voted upon at the meeting.
Holders of Common Stock are not entitled to cumulative voting rights.
CORPORATE
GOVERNANCE
Our business affairs are conducted under the direction of the Board of
Directors of the Company (the Board) in accordance with the Delaware General
Corporation Law and our Certificate of Incorporation and Bylaws. Members
of the Board of Directors are informed of our business through discussions with
management, by reviewing materials provided to them and by participating in
meetings of the Board of Directors and its committees. The corporate
governance practices that we follow are summarized below.
Independence
The Board has determined that a majority of its members are independent
as within the meaning of the listing standards of the NASDAQ Stock
Market. Our independent directors are Mr. Burniece, Mr. Hokkanen,
Mr. Griffiths, Mr. Gerson and Mr. Marmen.
Code of Ethics and Business Conduct
The Board has approved a Code of Ethics and Business Conduct, which
applies to all of our employees, directors and officers, including our
principal executive officer and principal financial and accounting
officer. The Code of Ethics and Business Conduct addresses such topics as
protection and proper use of our assets, compliance with applicable laws and
regulations, accuracy and preservation of records, accounting and financial
reporting, conflicts of interest and insider trading. The Code of Ethics
and Business Conduct is available free of charge through our website at
www.ciprico.com and is available in print to any stockholder who sends a
request for a paper copy to Ciprico Inc., Attn. Compliance Officer, 7003 West
Lake Street, Suite 400, St. Louis Park, Minnesota 55426. We include
on our website any amendment to, or waiver from, a provision of our Code of
Ethics and Business Conduct that applies to our principal
2
executive
officer, principal financial officer, principal accounting officer or
controller and relates to any element of the code of ethics definition
enumerated in Item 406(b) of Regulation S-B.
Communications with Board
Stockholders may communicate directly with the Board. All
communications should be in writing and be directed to the Corporate Secretary
at the address below and should prominently indicate on the outside of the
envelope that it is intended for the Board or for non-management
directors. If no director is specified, the communication will be
forwarded to the chair of the Nominating and Governance Committee.
Stockholder communications to the Board should be sent to:
Attention:
Corporate
Secretary
Ciprico Inc.
7003
West Lake Street, Suite 400
St.
Louis Park, MN 55426
Director Attendance at Annual
Meetings
The Company does not have a specific policy on director attendance at
annual meetings, but all incumbent directors did attend the Annual Meeting of
Stockholders held on January 25, 2007.
Executive Sessions of the Board
The non-employee directors hold regularly scheduled executive sessions,
generally in conjunction with regularly scheduled board meetings, but in no
event less than two times per year.
Committee and Board Meetings
The Board has three standing committees (each, a Committee): the
Audit Committee, the Human Capital Committee and the Nominating and Governance
Committee.
Audit Committee
The Audit Committee members consist of Mr. Gerson, Mr. Burniece
and Mr. Hokkanen. This committee is responsible for selecting the
Companys independent auditors, reviewing the Companys internal audit
procedures, reviewing quarterly and annual financial statements independently
and with the Companys independent auditors, reviewing the results of the
annual audit and implementing and monitoring the Companys cash investment
policy. In addition, the Audit Committee assists the Board in its
oversight of corporate accounting and internal controls, reporting practices
and the quality and integrity of the financial reports of the Company.
The Audit Committee met six times during fiscal 2007. Currently, each the
Audit Committee member is considered an independent director within the
meaning of applicable NASDAQ listing standards. Our Board has determined
that Mr. Gerson qualifies as an audit committee financial expert, as
defined under SEC rules. The Company acknowledges that the designation of
Mr. Gerson as the audit committee financial expert does not impose on Mr. Gerson
any duties, obligations or liability greater than the duties, obligations and
liability imposed on Mr. Gerson as
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a
member of the Audit Committee and the Board of Directors in the absence of such
designation or identification. The Charter for the Audit Committee is on
our website at www.ciprico.com.
The Audit Committees Report is included on page 19.
Human Capital Committee
The Human Capital Committee consists of Mr. Hokkanen, Mr. Gerson
and Mr. Griffiths. Upon his election to the Board in November 2007,
Mr. Marmen was added to the Human Capital Committee and selected as its
chair. The Human Capital Committee
recommends to the Board the salaries and other compensation to be paid to
executive officers of the Company and administers the Companys stock option
and restricted stock plans. The Human Capital Committee met three times
during fiscal 2007. Each member of the Human Capital Committee is
considered an independent director within the meaning of applicable NASDAQ
listing standards. The Human Capital
Committees Report is included on page 16.
Nominating and Governance Committee
The Nominating and Governance Committee consists of Mr. Burniece, Mr. Griffiths
and Mr. Marmen. The Nominating and Governance Committee establishes
corporate governance principles, evaluates qualifications and candidates for
positions on the Board, nominates new and replacement members for the Board and
recommends Board committee composition. In addition, the Nominating and
Governance Committee facilitates an annual evaluation by Board members of the
Board and individual director performance. The Charter for the Nominating and
Governance Committee is available on our website at www.ciprico.com. Each members of the
Nominating and Governance Committee is considered an independent director
within the meaning of applicable NASDAQ listing standards. The Nominating and
Governance Committee, in connection with the entire Board, approved the
nomination of the directors to be elected at the Companys 2007 annual meeting
of stockholders.
Nominating
Policy
The Nominating and Governance Committee will consider candidates for
nomination as a director recommended by stockholders, directors, third party
search firms and other sources. In evaluating director nominees, a
candidate should have certain minimum qualifications, including being able to
read and understand basic financial statements, having high moral character and
mature judgment, and being able to work collegially with others. In
addition, factors such as the following shall be considered:
·
ownership in
the Company;
·
needs of the
Board with respect to particular talent and industry experience;
·
knowledge,
skills and experience of the nominee;
·
familiarity
with domestic and international business affairs;
·
legal and
regulatory requirements;
·
appreciation of
the relationship of our business to the changing needs of society;
·
desire to
balance the benefit of continuity with the periodic injection of the fresh
perspective provided by a new member; and
·
diversity of
experiences.
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Stockholders who wish to recommend one or more directors must provide
written recommendation to the Corporate Secretary of the Company. Notice
of a recommendation must include the stockholders name, address and the number
of Company shares owned, along with information about the prospective nominee,
i.e. name, age, business address, residence address, current principal
occupation, five-year employment history with employer names and a description
of the employers business, the number of shares beneficially owned by the
prospective nominee, whether such person can read and understand basic
financial statements and other board memberships, if any. The
recommendation must be accompanied by a written consent of the prospective
nominee to stand for election and allow for a background check if nominated by
the Board and to serve if elected by the stockholders. The Company may
require any nominee to furnish additional information that may be needed to
determine the eligibility of the nominee and may conduct a background search to
confirm information provided to the Company.
Stockholders who wish to present a proposal at an annual meeting of
stockholders must submit such proposal to our Corporate Secretary at the
address below in conformity with the requirements of and the dates set forth in
the Stockholders Proposals section of this proxy statement. The Corporate
Secretary will forward the proposals and recommendations to the Nominating and
Governance Committee.
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Attention:
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Corporate
Secretary
Ciprico Inc.
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7003
West Lake Street, Suite 400
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St.
Louis Park, MN 55426
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The Board and Committee members often communicate informally to discuss
the affairs of the Company and, when appropriate, take formal Board and
Committee action by unanimous written consent of all Board or Committee
members, in accordance with Delaware law, rather than hold formal
meetings. During fiscal 2007, the Board held nine regular meetings, some
handled telephonically. The majority of the Board members attended 100%
of the meetings, and no Director attended less than 6 of the meetings.
Directors Fees
Directors who are not employees of the Company receive $500 for each
Board or committee meeting attended in person ($250 if attendance is
telephonically) and an additional $500 if they serve as Committee Chair. Mr. Hansen
receives a monthly fee of $1,500 as Chairman and directors Burniece, Hokkanen,
Griffiths, Marmen and Gerson receive a monthly fee of $1,000. In
addition, each Director receives an annual grant of 2,500 restricted shares,
which vest over two years. These restricted shares are issued 30 days
after the annual meeting and carry two additional conditions: a 5% increase in
per share price from the grant price and a requirement to keep 50% of such
shares for at least one year beyond the vesting date.
In addition, any director who is elected or re-elected to the Board,
receives 1,000 restricted shares with a one-year vesting.
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The following Director Compensation table sets forth information
concerning compensation for services rendered by directors of the Company for
the Companys fiscal year ended September 30, 2007:
Name
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Fees earned or paid
in cash
($)
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Stock awards (1)
($)
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Total
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Thomas F. Burniece
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14,750
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17,700
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32,450
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Gary L. Hokkanen
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18,000
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17,700
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35,700
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Mark D. Griffiths
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15,250
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17,700
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32,950
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James D. Gerson
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15,500
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17,700
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33,200
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Thomas Marmen (2)
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Michael M. Vekich (3)
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21,250
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24,500
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45,750
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(1)
These amounts represent the
aggregate grant date fair value computed in accordance with FAS 123(R).
(2)
Mr. Marmen joined the
Board on November 21, 2007
(3)
Mr. Vekich resigned
from the Board on September 10, 2007.
Per Board resolution these stock awards continue to vest and at the time
of such vesting the holding restriction shall cease.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The
following table provides information concerning persons known to the Company to
be the beneficial owners of more than 5% of the Companys outstanding Common
Stock as of the dates indicated in the respective footnotes to the table. Unless otherwise indicated, the stockholders
listed in the table have sole voting and investment powers with respect to the
shares indicated.
Name and Address
of Beneficial Owner
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Number of Shares
Beneficially Owned
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Approximate Percent
of Class
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Dimensional Fund Advisors
1299 Ocean Avenue
Santa Monica, CA 90401
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365,716
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(1)(2)
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7.15
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%
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Coghill Capital Management
One North Wacker Drive
Suite 4350
Chicago, IL 60606
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386,207
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(1)
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7.55
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%
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(1)
Reported on such
shareholders most recent 13G filing with the SEC as of
[ ].
(2)
Dimensional Fund Advisors (Dimensional)
disclaims beneficial ownership of such securities as they are owned by
investment companies, trusts and separate accounts to whom Dimensional
furnishes investment advice.
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The above table is based on [ ] shares outstanding as of December
26, 2007.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the number of shares
of Common Stock beneficially owned as of December 26, 2007, by each
executive officer of the Company, by each director of the Company and by all
directors and executive officers as a group.
Unless otherwise indicated, the stockholders listed in the table have
sole voting and investment powers with respect to the shares indicated.
Name of Beneficial
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Number of Shares
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Percent
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Owner or Identity of Group
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Beneficially Owned
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of Class
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James W. Hansen
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162,110
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(1)
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[ ]
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%
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James D. Gerson
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93,729
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(6)
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[ ]
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Steven D. Merrifield
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89,954
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(2)
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[ ]
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%
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Monte S. Johnson
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79,894
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(3)
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[ ]
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%
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Thomas F. Burniece
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62,000
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(4)
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[ ]
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%
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Mark D. Griffiths
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34,000
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(5)
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*
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Gary L. Hokkanen
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18,500
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(7)
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*
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Andrew Mills
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18,500
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(8)
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*
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All current
officers and directors
as a group (9 persons)
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613,465
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(9)
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[ ]
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%
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*
Less than 1%
(1)
Amount includes 77,500
shares purchasable upon exercise of options presently exercisable or
exercisable within sixty days of December 26, 2007. Amount also includes 6,477 shares issuable
upon exercise of warrants to purchase our Common Stock and 6,477 outstanding
shares issuable upon conversion of convertible promissory notes at a conversion
price of $3.86 per share.
(2)
Amount includes 50,000
shares purchasable upon exercise of options presently exercisable or
exercisable within sixty days of December 26, 2007 and a 25,000 Restricted
Shares which vest in January of 2009 provided additional performance based
conditions related to the increase in share price are met -see the Note to
table below. Amount also includes 6,477
shares issuable upon exercise of warrants to purchase our Common Stock and
6,477 outstanding shares issuable upon conversion of convertible promissory
notes at a conversion price of $3.86 per share.
(3)
Amount includes 30,000
shares purchasable upon exercise of options presently exercisable or
exercisable within sixty days of December 26, 2007 and Restricted Stock
grants of 19,000 and 15,000 shares, which vest in February of 2008 and January of
2009, respectively, provided additional performance based conditions related to
an increase in share price are met -see the Note to table below. Amount also includes 6,477 shares issuable
upon exercise of warrants to purchase our Common Stock and 6,477 outstanding
shares issuable upon conversion of convertible promissory notes at a conversion
price of $3.86 per share.
7
(4)
Amount includes 49,000
shares purchasable upon exercise of options presently exercisable or
exercisable within sixty days of December 26, 2007, a Restricted Stock
grant of 2,500 shares which vest in February of 2008, and a Restricted
Stock grant of 2,500 shares which vest in February of 2009 -see the Note
to table below.
(5)
Amount includes 23,500
shares purchasable upon exercise of options presently exercisable or exercisable
within sixty days of December 26, 2007, a Restricted Stock grant of 2,500
shares which vest in February of 2008, and a Restricted Stock grant of
2,500 shares which vest in February of 2009 - see the Note to table below.
(6)
Amount includes a Restricted
Stock grant of 2,500 shares which vest in February of 2008, and a
Restricted Stock grant of 2,500 shares which vest in February of 2009 -
see in the Note to table below. Amount
also includes 32,383 shares issuable upon exercise of warrants to purchase our
Common Stock and 32,383 outstanding shares issuable upon conversion of
convertible promissory notes at a conversion price of $3.86 per share.
(7)
Amount includes 10,000
shares purchasable upon exercise of options presently exercisable or
exercisable within sixty days of December 26, 2007, a Restricted Stock
grant of 2,500 shares which vest in February of 2008, and a Restricted
Stock grant of 2,500 shares which vest in February of 2009 - see the Note
to table below.
(8)
Amount includes 18,500
shares purchasable upon exercise of options presently exercisable or
exercisable within sixty days of December 26, 2007.
(9)
Amount includes 258,750
shares purchasable upon exercise of options presently exercisable or
exercisable within sixty days of December 26, 2007 and Restricted shares
totaling
.
The above table is based on [ ] shares outstanding as of December
26, 2007.
Note to table: Restricted stock grants scheduled to vest in February 2008
and 2009 and January 2009 do so only if certain additional conditions are
met, one of which is a 5% increase in our stock price from grant date to
vesting date. The grant date stock price
for shares that vest in February 2008 and 2009 was $5.79 and $7.08,
respectively, and the grant date stock price for shares that vest in January 2009
was $6.80. Our stock price at December 26,
2007 was $ . In addition, restricted stock grants carry
the additional condition that 50% of such shares must be held one year beyond
the vesting date.
PROPOSAL 1
APPROVAL TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF OUR COMMON STOCK
Proposal
Our
Certificate of Incorporation authorizes 9,000,000 shares of Common Stock and
1,000,000 shares of Preferred Stock for issuance. The Board has unanimously authorized and
approved an amendment to our Certificate of Incorporation to increase the
number of our shares of Common Stock authorized for issuance from 9,000,000
shares to 14,000,000 shares. Subject to
stockholder approval, Article 4 of our Certificate of Incorporation would
be amended to read as follows and would be filed with the Delaware Secretary of
State:
8
ARTICLE 4 CAPITAL STOCK
4.1)
Authorized Shares; Establishment of
Series.
The aggregate number of
shares the corporation has authority to issue shall be 15,000,000 shares, of
which 14,000,00 shares of the par value of $.01 shall be designated as Common
Stock and 1,000,000 shares of the par value of $.01 shall be designated as Preferred
Stock. The Board of Directors, by
resolution adopted and filed in the manner provided by law, has the authority
to establish one or more series of Preferred Stock, and to fix the powers,
preferences, rights and limitations of such class or series.
Purpose
of Authorizing Additional Common Stock
The
Board adopted the amendment above in order to ensure that the Company would
have sufficient Common Stock to meet our current needs for issuances of stock
and as well as future needs. The Company
has disclosed it is considering a public offering in respect to ensuring
sufficient capital to pay off Convertible Promissory Notes issued by the
Company for short term needs.
At
December 26, 2007 there are 9,000,000 authorized shares of Common
Stock. The present issuance of, and
commitments for, such authorized number of shares is as follows:
·
Issued and Outstanding = 5,112,994 (includes issued Restricted Stock)
·
Stock Options outstanding = 909,450
·
Stock Option Reserve = 280,597
·
Restricted Stock Plan Reserve = 209,180
·
Reserved for issuance under terms of
Convertible Notes = 1,500,000
·
Reserved for shares related to warrants =
930,000
The
total issuance and commitments total 8,942,221 shares, which is very close to
the limit of our authorized Common Stock.
If
stockholders approve the proposed amendment, the amendment will become
effective upon filing of a Certificate of Amendment of Certificate of
Incorporation with the Secretary of State of Delaware, which would be filed
shortly after our Annual Meeting.
Impact
on Existing Stockholders
Stock
are issued and outstanding. The terms of
the additional shares of Common Stock will be identical to those of the
currently outstanding shares of Common Stock.
Although the increase in the
authorized number of shares of Common Stock will not, in and of itself, have
any immediate effect on the rights of our stockholders, any future issuance of
additional shares of Common Stock, including issuances pursuant to the Convertible
Promissory Notes or a subsequent offering, could affect our stockholders in a
number of respects, including diluting the voting power of current stockholders
and diluting the book value per share of outstanding shares of our Common
Stock.
9
No
Appraisal Rights
Under
Delaware law, stockholders are not entitled to appraisal rights with respect to
the amendment to our Certificate of Incorporation.
Recommendation
of our Board
Our
Board has determined that the increase in the number of authorized shares of
our Common Stock is advisable and in the best interest of our stockholders, and
recommends that all stockholders vote FOR the approval of Proposal 1.
Vote
Required
The
affirmative vote of the holders of a majority of the shares outstanding and
entitled to vote is required to approve Proposal 1.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1
10
PROPOSAL 2
Election of Class II Directors
THE BOARD RECOMMENDS THAT
TWO CLASS II DIRECTORS BE ELECTED AT THE ANNUAL MEETING. THE BOARD
OF DIRECTORS, UPON THE RECOMMENDATION OF THE NOMINATING AND GOVERNANCE
COMMITTEE, NOMINATES MR. THOMAS F. BURNIECE AND MR. GARY L. HOKKANEN FOR
ELECTION AS
CLASS II DIRECTORS.
If
elected, each of Mr. Burniece and Mr. Hokkanen will serve for a
three-year term as a Class II Director and until his successor has been
duly elected and qualified.
Unless authority is withheld, the proxies solicited hereby will be
voted for the election of each of Mr. Burniece and Mr. Hokkanen as
directors for a term of three years. If, prior to the meeting, it should
become known that any Class II Director nominee will be unable to serve as
a director after the meeting by reason of death, incapacity or other unexpected
occurrence, the proxies will be voted for such substitute nominee as is
selected by the Nominating and Governance Committee or, alternatively, not
voted for any nominee. The Board has no reason to believe that either
nominee will be unable to serve.
The
election of the nominees requires the
affirmative vote by a plurality of
the voting power of the shares present and entitled to vote on the election of
directors at a meeting at which a quorum is present
. Board recommends a vote FOR.
Nominees For Election To The Board Of Directors
Thomas F. Burniece
(Class II,
term ending at 2007 Annual Meeting), age 66, has been a director of the Company
since November 1999, and was Chairman of the Board from November 2000
through January 2003. Mr. Burniece is currently President and
Chief Executive Officer of iVivity Inc., a privately held fabless semiconductor
company that has developed a high performance chip for the storage and networking
market. He served as Senior Vice President at COPAN Systems, a privately
held company developing a unique disk-based replacement for tape storage from August 2004
to May 2005. Prior to COPAN, Mr. Burniece was a partner in
In-fusion, LLC, a consulting firm specializing in business development for
companies in the networked storage market, from June 2000 to August 2004.
Mr. Burniece was Chief Executive Officer from April 1997 until December 2000
of Voelker Technologies, Inc., a private company developing an intelligent
physical layer switching product. In addition, in June 1998 he
co-founded and served as the original Chief Executive Officer, as well as a
director until May 2001 of Rutilus Software, Inc., a private company
developing a unique, centrally-managed approach to the backup of
network-attached desktop computers. Mr. Burniece has also served as
a board member or as an advisor to a number of other small private companies
across several high technology markets. His previous experience also
includes senior management positions at Maxtor, Digital Equipment Corporation
and Control Data Corporation.
Gary L. Hokkanen
(Class II,
term ending at 2007 Annual Meeting), age 61, was appointed by the Board on June 24,
2004. Mr. Hokkanen is currently an affiliate partner of Lindsay Goldberg,
a private equity fund. He was Chief
Operating Officer of the Carlson Marketing Group from 2002 to 2005. From 1984
through 2002, Mr. Hokkanen owned The
11
Cynergi
Group, Inc., a contract executive consulting company. Mr. Hokkanens
assignments with The Cynergi Group included: President of Wam!Net, Inc.
from 1999 to 2001 and Chief Executive Officer of The Miner Group, Inc.
from 1997 to 1999. Mr. Hokkanen is a graduate of the Advanced
Management Program at Harvard University and earned a B.S. degree in electronic
intelligence from the Presidio at Monterey.
All Other Directors of the Company whos Terms Continue
Beyond the Annual Meeting
Mark D. Griffiths
(Class III,
term ending at 2008 Annual Meeting), age 47, has been a director of the Company
since May 2001. Mr. Griffiths has been an independent marketing
consultant working with companies delivering solutions to enterprises since
2005. Mr. Griffiths was Vice President of Security Services at
Verisign, Inc. from August 2003 to October 2005. From May 1997
to October 2001, he held several positions at VERITAS Software, his last
position being Vice President of Corporate Marketing. Prior to joining
VERITAS Software, Mr. Griffiths also held the position of Director of
Product Marketing for the Internet Division of Cisco Systems from September 1996
to May 1997. Prior to Cisco, Mr. Griffiths spent nine years at
Novell Inc., culminating his career there as the Director of Marketing for
Novells Internet Commerce Division.
James D. Gerson
(Class III,
term ending at 2008 Annual Meeting), age 64, has been a director of the Company
since January 2006. Mr. Gerson is currently a private investor.
He was Vice President of Fahnestock & Co., Inc. (now known as
Oppenheimer & Co.) from March 1994 until April 2003, where
he held a variety of positions in the corporate finance, research, and
portfolio management areas. Mr. Gerson also serves as a Director of Fuel
Cell Energy, Inc., and is a director of several private companies in the
lighting, web development, and car sharing industries.
James W. Hansen
(Class I,
term ending at 2009 Annual Meeting), age 51, has been a director of the Company
since April 2001 and Chairman of the Board since January 2003.
Mr. Hansen served as Chief Executive Officer of the Company from September 30,
2004 to December 7, 2006 and served as Interim Chief Executive Officer of
the Company from March 18, 2004 to September 30,
2004. Since 1992, Mr. Hansen has served as an investor,
chairman, director, president or vice president of several private companies in
the medical services and private equity backed companies including JamF
Software and Reliable Property Services where he continues as Chairman. Mr. Hansen
was President, CEO and Treasurer of E.mergent Incorporated from November 1996
and Chairman of the Board of Directors from May 1997 until the sale of the
company in May 2002. From 1986 to 1992, he was Senior Vice President
and General Manager of the pension division of Washington Square Capital, a
Reliastar Company, a NYSE-traded financial services company now known as ING
Reliastar. From 1983 to 1986, he was Vice President of Apache
Corporation, a NYSE-traded oil and gas exploration company.
From 1979 to 1983, Mr. Hansen was a teacher and management
consultant. He has also served as a director of three public companies
and has taught in the MBA program at the University of St. Thomas since 1984.
Steven D. Merrifield,
(Class I,
term ending at 2009 Annual Meeting), age 51, was appointed by the Board on January 25,
2008. He
joined the Company on December 8,
2006 as President and Chief Executive Officer. Prior to joining the Company he
was Senior Vice
12
President
of Global Sales and a member of the Board of Directors of Hitachi GST
Corporation, a $4.5 billion storage products company. From 1978 until
joining Hitachi, Mr. Merrifield was an employee of IBM and held the
following positions: Sales Representative, Branch Manager, Administrative
Assistant to the Chairman and CEO, Director of SMB Software and Services for
Europe, Director of Worldwide OEM software sales and marketing, Vice President
Dell Strategic Alliance and culminating his tenure at IBM as Vice President
Global Sales for the technology group. He is a graduate of Oklahoma State
University.
Thomas Marmen
(Class I, term ending
at 2009 Annual Meeting), age 64, was appointed by the Board on November 20,
2007. Mr. Marmen currently a
private investor. He was Chief
executive of RAIDCore Corp.
a
Nashua, N.H.-based company
focused on the development of data protection and virtualization software, from
November, 2001 until January of 2004.
RAIDCore Corp. was sold to Broadcom in January, 2004 and Marmen served
as vice president and general manager of Broadcoms Storage Line of business
through April of 2006. Prior to joining RAIDCore, Marmen was a senior vice
president and general manager of the high-end storage division of Quantum
Corp., and vice president of the Enterprise Solutions Group at Adaptec, Inc.,
where he was responsible for that companys RAID business. Prior to Adaptec, Mr. Marmen spent 18
years at Digital Equipment in senior management positions in the LSI group and
Storage group. Marmen received his
bachelors of science degree in Mathematics from Salem State College in 1965,
and a masters degree in physics from Worcester Polytechnic Institute in 1968.
There are no arrangements or understandings between any of the
directors or any other person (other than arrangements or understandings with
directors acting as such) pursuant to which any person was selected as a
director or nominee of the Company. There are no family relationships among the
Companys directors.
CERTAIN
TRANSACTIONS WITH DIRECTORS
On December 26, 2007, the Company entered into a convertible Note
Purchase agreement with multiple accredited investors, including Mr. Hansen,
Mr. Gerson, and Mr. Merrifield, for the private placement of a minimum of
$3,000,000 and a maximum of $7,800,000 of convertible notes and common stock
warrants for $0.25 worth of warrant shares for each $1.00 of principal
invested.
The conversion price for the notes and the exercise price for the
warrants is fixed at an amount equal to the average closing bid price of the
Companys common stock for the five (5) consecutive trading days ending on the
trading day prior to the issue date. That price was $3.86 for the initial
closing on December 26, 2007.
The notes are due and payable in full on the 15-month anniversary of
the date of issuance and the warrants are exercisable from the date of issuance
until the five year anniversary. The number of shares issuable upon exercise of
the warrant is subject to adjustment in the event of stock splits or dividends,
business combinations, sale of assets or other similar transitions.
On December 26, 2007 Mr. Hansen purchased a Note from the Company in
the amount of $100,000 and was issued 6,577 warrants. Mr. Gerson purchased a
Note from the Company in the amount of $500,000, and was issued 32,383
warrants. Mr. Merrifield purchased a Note from the Company in the amount of
$100,000 and was issued 6,477 warrants.
13
EXECUTIVE
OFFICERS
The names, ages and positions of the executive officers
are as follows:
Name
|
|
Age
|
|
Position(s)
|
|
|
|
|
|
Steven
D. Merrifield
|
|
51
|
|
President
and Chief Executive Officer
|
|
|
|
|
|
Monte
S. Johnson
|
|
49
|
|
Senior
Vice President and Chief Financial Officer
|
|
|
|
|
|
Andrew
Mills
|
|
44
|
|
Senior
Vice President, Marketing and Development
|
Steven D. Merrifield
joined the
company on December 8, 2006 as President and Chief Executive Officer.
Prior to joining the Company he was Senior Vice President of Global Sales and a
member of the Board of Directors of Hitachi GST Corporation, a $4.5
billion storage products company. From 1978 until joining Hitachi, Mr. Merrifield
was an employee of IBM and held the following positions: Sales Representative,
Branch Manager, Administrative Assistant to the Chairman and CEO, Director of
SMB Software and Services for Europe, Director of Worldwide OEM software sales
and marketing, Vice President Dell Strategic Alliance and culminating his
tenure at IBM as Vice President Global Sales for the technology group. He is a
graduate of Oklahoma State University.
Monte S.
Johnson
has been Senior Vice President
and Chief Financial Officer since January 2006 and prior to that was Vice
President of Finance and Chief Financial Officer since June 1, 2005.
Mr. Johnson had previously served as Interim Chief Financial
Officer of the Company from March 10, 2005 to June 1, 2005. Mr. Johnson
is President of MSJ & Associates, LLC, a business consulting company
focused on finance, strategic planning and operational consulting for public
and private companies and was its principal consultant from 2001 to 2005. From
1999 to 2001, Mr. Johnson was Senior Vice President, Chief Financial
Officer and Chief Administrative Officer of Pro Staff Personnel Services.
From 1991 to 1999, Mr. Johnson served in various financial and management
positions at General Electric Company and Honeywell Inc. Prior to 1991 Mr. Johnson
worked 11 years at Deloitte & Touche International. Mr. Johnson
is a CPA and received his MBA from the Carlson School of Management at the
University of Minnesota in 1997.
Andrew
Mills
joined
the company on December 8, 2006 as Senior Vice President, Marketing and
Development. From 2002 until joining the
company he was President and Chief Executive Officer of NetCell Corporation, a
developer of host adapter storage acceleration silicon devices for the ATA and
SATA RAID host bus adapter, server, PC, workstation and embedded storage
markets. Prior to NetCell, Mr. Mills spent four years at TDK Semiconductor
Corp. in a variety of key management positions, the most recent of which was as
Senior Vice President and General Manager of Broadband Communications
. Mr. Mills graduated from University
College of North Wales with a Bachelor and Master of Electronics and Electrical
Engineering degrees.
14
EXECUTIVE
COMPENSATION
Summary Compensation Table
The following summary compensation table sets forth information
concerning compensation for services rendered in all capacities for the year
ended September 30, 2007 and 2006, awarded to, earned by, or paid to: (i) the
individual who serves as our principal executive officer (our CEO) during
fiscal 2007 and (ii) our two most highly paid executive officers (as
determined based on total compensation) other than our CEO as of September 30,
2007.
Name and Principal Position
|
|
Year
|
|
Salary ($)
|
|
Bonus ($)
|
|
Stock Awards
($)
|
|
Option Awards
($)
|
|
Total ($)
|
|
|
|
|
|
|
|
(1)
|
|
(2)
|
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven D. Merrifield (4)
|
|
2007
|
|
195,538
|
|
|
|
170,000
|
|
406,400
|
|
771,938
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James W. Hansen (5)
|
|
2007
|
|
167,999
|
|
|
|
|
|
|
|
167,999
|
|
President and Chief Executive Officer
|
|
2006
|
|
163,046
|
|
|
|
144,750
|
(6)
|
|
|
307,796
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Monte S. Johnson
|
|
2007
|
|
189,998
|
|
37,999
|
|
102,000
|
|
|
|
329,997
|
|
Sr Vice President and Chief Financial Officer
|
|
2006
|
|
162,996
|
|
23,500
|
|
110,010
|
(7)
|
43,215
|
|
339,721
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Andrew Mills (8)
|
|
2007
|
|
171,096
|
|
21,000
|
|
|
|
152,400
|
|
344,496
|
|
Sr Vice President, Marketing and Development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1)
Bonus amounts are earned during the fiscal year, even
though paid in the following fiscal year, and relate to achievement of
individual goals. No bonus amounts were
earned related to Company operating results.
2)
Stock award amounts represent the aggregate grant date
fair value computed in accordance with FAS 123(R) as discussed in our
Annual Report on form 10-KSB Stock
awards granted in fiscal 2007 are scheduled to vest in January 2009 and
vest only if certain additional conditions are met, one of which is a 5%
increase in the stock price from grant date to vesting date. The grant date stock price for shares that
vest in January 2009 was $6.80.
The closing price of our Common Stock on the NASDAQ Stock Market at December 26,
2007 was $ . In addition, these restricted stock grants
carry the additional condition that 50% of such share must be held one year
beyond the vesting date.
3)
Option awards amounts represent the aggregate grant
date fair value of Restricted Stock grants computed in accordance with FAS 123(R) as
discussed in our Annual Report on form 10-KSB.
Restricted Stock grants in fiscal 2007 vest over four years in
conformity with our option plan, and have a grant date fair value of $2.03 per
option. The exercise price is fixed by
the board as of the grant date. The
exercise price for the options awards granted in fiscal 2007 was $5.34.
4)
Mr. Merrifield was appointed as President and CEO
on December 8, 2006.
5)
Mr. Hansen was appointed as President and CEO on September 30,
2004 and served in such capacity through December 7, 2006.
6)
In February of 2006, Mr. Hansen was awarded
a Restricted Stock grant of 25,000 shares, which was to have vested in February 2008
and carried additional conditions on vesting.
On December 7, 2006, Mr. Hansen
voluntarily forfeited
these 25,000 shares of Restricted Stock
due to his recommendation of a
change in
Company management.
7)
In February of
2006, Mr. Johnson was awarded a Restricted Stock grant of 19,000 shares,
which vest two years from the date of grant and carry additional conditions on
vesting including a 5% increase in share price.
The grant date stock price for shares that vest in February 2008
was $5.79. The closing price of our
Common Stock on the NASDAQ Stock Market at December 26, 2007 was
$ .
8)
Mr. Mills was
appointed as Senior Vice President, Marketing and Development on December 8,
2006.
15
Outstanding Equity Awards
The following tables provide information on
all restricted stock and stock option awards held by our named executive
officers as of September 30, 2007:
|
|
Option
awards
|
|
Stock
awards
|
|
Name and Principal Position
|
|
Number
of securities underlying unexercised options (#) Exercisable
|
|
Number
of securities underlying unexercised options (#) Unexercisable
|
|
Option
exercise price ($)
|
|
Option
expiration date
|
|
Number
of shares or units of stock that have not vested (#)
|
|
Market
value of shares or units of stock that have not vested (5) ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven D. Merrifield
|
|
|
|
200,000
|
(1)
|
5.34
|
|
12/8/2011
|
|
25,000
|
(6)
|
187,500
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James W. Hansen
|
|
6,000
|
|
|
(2)
|
6.00
|
|
1/24/2009
|
|
|
|
|
|
President and Chief Executive Officer
|
|
3,000
|
|
|
(2)
|
5.68
|
|
1/23/2011
|
|
|
|
|
|
|
|
25,000
|
|
|
(3)
|
4.80
|
|
2/28/2014
|
|
|
|
|
|
|
|
25,000
|
|
12,500
|
(4)
|
4.65
|
|
10/5/2010
|
|
|
|
|
|
|
|
6,000
|
|
|
(2)
|
4.59
|
|
1/30/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Monte S. Johnson
|
|
12,500
|
|
12,500
|
(1)
|
4.20
|
|
6/6/2010
|
|
19,000
|
(6)
|
142,500
|
|
Sr Vice President and Chief Financial Officer
|
|
5,000
|
|
|
(1)
|
4.24
|
|
6/10/2010
|
|
15,000
|
(7)
|
112,500
|
|
|
|
6,250
|
|
18,750
|
(1)
|
4.22
|
|
10/24/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Andrew Mills
|
|
|
|
75,000
|
(1)
|
5.34
|
|
12/8/2011
|
|
|
|
|
|
Sr Vice President, Marketing and Development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
These option
awards have a stated term of 5 years and vest 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.
(2)
These option
awards have a stated terms of 7 years
(3)
These option
awards have a stated term of 10 years.
(4)
These option
awards expire October 5, 2010 and vest 50% on the date of grant, and the
remaining shares vesting on December 11, 2007.
(5)
These amounts
represent the number of Restricted Stock grant shares which have not vested
multiplied by the closing market price of our stock at September 30,
2007. The closing price of our Common
Stock on that day on the NASDAQ Stock Market was $7.50. Closing stock price on December 26, 2007
was $
(6)
These stock
awards are Restricted Stock grants that were granted on January 25, 2007
when the closing price of our Common Stock on the NASDAQ Stock Market was
$6.80. The awards vest in two years from
the date of grant and carry additional performance based conditions on vesting
including increase in share price.
(7)
These stock
awards are Restricted Stock grants that were granted on February 24, 2006
when the closing price of our Common Stock on the NASDAQ Stock Market was
$5.79. The awards vest in two years
from the date of grant and carry additional performance based conditions on
vesting including increase in share price.
We have not granted any stock appreciation rights.
16
HUMAN
CAPITAL COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Human Capital Committee Interlocks
and Insider Participation.
During our fiscal year
ended September 30, 2007, the Human Capital Committee members were Mr..
Hokkanen, Mr. Gerson, and Mr. Griffiths. None of the members of
the Human Capital Committee was an employee or officer of the Company during
fiscal 2007.
Overview and Philosophy.
The Companys
executive compensation program is comprised of base salaries, annual and quarterly
performance bonuses, long-term incentive compensation in the form of stock
options and restricted stock grants and various benefits, including the Companys
savings plan in which all qualified employees of the Company may participate.
In addition, the Human Capital Committee from time to time may award special
cash bonuses, stock options and restricted stock grants in connection with new
hiring, promotions or non-recurring, extraordinary performance.
The Human Capital Committee has followed a policy of paying annual base
salaries that are on the moderate side of being competitive in our industry and
of awarding cash bonuses based primarily on achievement of revenue and
operating profit goals and secondarily on achievement of individual goals. The key executive officers can earn cash
bonuses up to 100 percent of their annual salary. The goals are established annually by the
Human Capital Committee and the Chief Executive Officer of the Company.
The Human Capital Committee has met three times during fiscal 2007
regarding compensation plans and the use of options and restricted stock for
both directors and employees.
General.
The Company
provides medical and insurance benefits to its executive officers, which are
generally available to all Company employees. The Company has a savings
plan in which all qualified employees, including the executive officers, may
participate. Each year the Company contributes to the savings plan an
amount equal to 50% of the first 6% of gross wages for each employee who
participates in the savings plan. The Company may contribute an
additional 2% of gross wages based on the operating profit of the Company for
the fiscal year and plan contributions by the individual employee. The
amount of perquisites allowed to executive officers, as determined in
accordance with rules of the SEC, did not exceed 10% of salary in fiscal
2007.
Chief Executive Officer Compensation
The Company has an Employment Agreement and a Change of Control
Agreement (collectively the Merrifield Agreements) with Steven D. Merrifield
to serve as Chief Executive Officer of the Company for a term commencing December 8,
2006 and ending on December 7, 2008. Under the terms of the Merrifield
Agreements, Mr. Merrifield is entitled to a monthly base salary of $20,000
for fiscal 2007 and $20,833 for the remaining term of the Merrifield
Agreements. Mr. Merrifields salary shall be paid in accordance with
the Companys normal payroll procedures and policies and be reviewed annually
by the Board. Mr. Merrifield shall be eligible to participate in the
Companys short-term and long-term management bonus programs as approved by the
Board.
17
Mr. Merrifield was also granted options on December 8, 2007
to purchase 200,000 shares of the Companys Common Stock at an exercise price
equal to the closing sale price for such Common Stock on the grant date, which
was $5.34, as set by the Board, under the Incentive Stock Option Plan.
The option award vests at the rate of 25% per year and will expire five years
following the date of grant. The Merrifield Agreement also provides for
grants of 25,000
restricted common stock to
Mr. Merrifield in
January of 2007, and 25,000 in January 2008,
subject to approval by the Board of Directors who shall set the grant date and
vesting conditions.
The Merrifield Agreements also include a provision that in the event Mr. Merrifields
employment is terminated without good cause or if Mr. Merrrifield
chooses to voluntarily terminate such employment with good reason within a
twelve-month period following a change in control of the Company, the Company
shall pay a lump sum severance payment equal to twelve months of his current
compensation (base salary plus bonus, such bonus to be not less than 50% of
base salary), or the remaining amount of Mr. Merrifields then current
compensation under his employment agreement, whichever is greater.
Other Compensation Arrangements
The Company has an Employment Agreement and Change of Control Agreement
with Monte S. Johnson (collectively, the Johnson Agreements) to serve as
Senior Vice-President and Chief Financial Officer of the Company through September 30,
2008. Under the Johnson Agreements, Mr. Johnson receives a monthly
base salary of $15,833, which salary is paid in accordance with the Companys
normal payroll procedures and policies and is reviewed annually by the Board.
In addition, the Company pays MSJ & Associates, LLC, a company
controlled by Mr. Johnson, $1,250 per month for strategic planning
services.
The Johnson Agreements also include a provision that in the event Mr. Johnsons
employment is terminated without good cause or if Mr. Johnson chooses to
voluntarily terminate such employment with good reason within a twelve-month
period following a change of control of the Company, the Company shall pay Mr. Johnson
a lump sum severance payment equal to twelve months of his current base salary,
or the remaining amount of Mr. Johnsons then current compensation under
his employment agreement, whichever is greater.
The Company has an Employment Agreement and Change of Control Agreement
with Andrew Mills (collectively, the Mills Agreements) to serve as Senior
Vice President, Marketing and Development for a term commencing December 8,
2006 and ending on December 7, 2008. He receives a monthly base salary of
$17,500 for the length of his two-year Agreements.
The Mills Agreements also include a provision that in the event Mr. Mills
employment is terminated without good cause or if Mr. Mills chooses to
voluntarily terminate such employment with good reason within a twelve-month
period following a change of control of the Company, the Company shall pay Mr. Mills
a lump sum severance payment equal to twelve months of current compensation, or
the remaining amount of Mr. Mills then current compensation under his
employment agreement, whichever is greater.
Summary.
The Human
Capital Committee annually reviews its compensation policies but anticipates
generally continuing its policy of paying relatively moderate base salaries,
basing
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bonuses
primarily on specific revenue or operating profit goals and granting stock
options and restricted stock to provide long-term incentives.
AUDIT
COMMITTEE REPORT
The Board maintains an Audit Committee comprised of three of the
Companys outside directors. The Board and the Audit Committee believe
that the Audit Committees member composition satisfies the applicable NASDAQ
listing requirements that govern audit committee composition, including the
requirement that audit committee members all be independent directors as that
term is defined within such requirements.
The Board has determined that Mr. Gerson qualifies as an audit
committee financial expert as defined by the rules of the SEC.
In accordance with its written charter adopted by the Board (attached
as Appendix A to the 2004 Proxy Statement), the Audit Committee assists the
Board with fulfilling its oversight responsibility regarding the quality and
integrity of the accounting, auditing and financial reporting practices of the
Company. In discharging its oversight responsibilities regarding the
audit process, the Audit Committee:
(1)
reviewed and
discussed the audited financial statements with management;
(2)
met with
auditors independent of management prior to and subsequent to the completion of
the audit fieldwork to review planning and results of audit;
(3)
discussed with
the independent auditors the material required to be discussed by Statement on
Auditing Standards No. 61; and
(4)
reviewed the
written disclosures and the letter from the independent auditors required by
the Independence Standards Boards Standard No. 1, and discussed with the
independent auditors any relationships that may impact their objectivity and
independence.
Based upon the review and discussions referred to above, the Audit
Committee recommended to the Board that the audited financial statements be
included in the Companys Annual Report on Form 10-KSB for the fiscal year
ended September 30, 2007, as filed with the SEC.
SUBMITTED BY MEMBERS OF THE FISCAL 2007 AUDIT
COMMITTEE
James D. Gerson
Thomas Burneice
Gary L. Hokkanen
INDEPENDENT
AUDITORS
Grant Thornton LLP acted as the Companys independent auditors for fiscal
2007. Representatives of Grant Thornton LLP are expected to be present at
the Annual Meeting, will be given an opportunity to make a statement regarding
financial and accounting matters of the
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Company
if they so desire, and will be available at the meeting to respond to
appropriate questions from the Companys stockholders.
Audit Fees.
The
aggregate fees billed by Grant Thornton LLP for professional services rendered
in connection with the audit of the Companys annual financial statements for
fiscal 2007 and 2006 and included in the Companys Forms 10-QSB for fiscal
years ended September 30, 2007 and 2006 were $77,800 and $71,300,
respectively.
Audit Related Fees.
The
aggregate fees billed by Grant Thornton LLP for products and services provided
by the principal accountant, other than the Companys annual financial
statements and the Companys Forms 10-QSB for the fiscal years ended September 30,
2007 and 2006 were $13,500 and $12,100, respectively. These fees were
primarily for the audit of the Companys benefit plan.
Tax Fees.
The
aggregate fees billed by Grant Thornton LLP for professional services rendered
by the principal accountant for tax compliance, tax advice and tax planning for
the fiscal years ended September 30, 2007 and 2006 were $17,150 and
$17,100, respectively. These fees were primarily for the preparation of
the Companys income tax returns.
All Other Fees.
There
were no aggregate fees billed by Grant Thornton LLP for products and services
provided by the principal accountant other than Audit Fees, Audit Related Fees
and Tax Fees for either the fiscal years ended September 30, 2007 and
2006.
Pre-Approval Policy
Pursuant to its written charter, the Audit Committee is required to
pre-approve all audit and non-audit services performed by the Companys
independent registered public accountants in order to assure that the provision
of such services does not impair the independence of the Companys independent
registered public accountants. The Audit Committee has determined that
such services are compatible with maintaining independence.
The Audit Committees Pre-Approval Policy was recommended by the Audit
Committee and approved by the Board on June 24, 2004. Unless a particular
service has received general pre-approval by the Audit Committee, each service
provided must be specifically pre-approved. Any proposed services
exceeding pre-approved costs levels will require specific pre-approval by the
Audit Committee. The Audit Committee has delegated pre-approval authority
to Michael M. Vekich, the Chairman of the Audit Committee, who will then report
any pre-approval decisions to the Audit Committee at its next scheduled
meeting. The Audit Committee has approved the proposal by Grant Thornton LLP to
provide audit and tax services up to $78,200 in fiscal 2008.
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SECTION 16(A) BENEFICIAL
OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended
(the Exchange Act) requires executive officers and directors of the Company,
and persons who beneficially own more than 10% of the Companys outstanding
shares of Common Stock, to file initial reports of ownership and reports of
changes in ownership of securities of the Company with the SEC. Officers,
directors and greater than 10% stockholders are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file.
Based upon a review of the copies of such reports furnished to or
obtained by the Company and upon other information known to the Company, the
Company believes that during the fiscal year ended September 30, 2007, all
filing requirements applicable to its directors, officers or beneficial owners
of more than 10% of the Companys outstanding shares of Common Stock were
complied with.
STOCKHOLDER
PROPOSALS
Stockholders interested in presenting a proposal for consideration at
the Companys 2008 Annual Meeting of Stockholders must follow the procedures
prescribed in the Companys bylaws and the SEC proxy rules. The Company must receive any proposal
submitted by a stockholder of the Company pursuant to rule 14a-8
promulgated under the Exchange Act, and intended to be presented at the 2008
Annual Meeting of Stockholders by August 14, 2008, to be considered for
inclusion in the Companys proxy statement and related proxy for the next
annual meeting.
Also, if a stockholder proposal intended to be presented at the next
annual meeting but not included in the Companys proxy statement and proxy is
received by the Company after October 28, 2008, then management named in
the Companys proxy form for the next annual meeting will have discretionary
authority to vote shares represented by such proxies on the stockholder
proposal, if presented at the meeting, without including information about the
proposal in the Companys proxy material.
OTHER
BUSINESS
Management knows of no other matters to be presented at the
meeting. If any other matter properly comes before the meeting, the
appointees named in the proxies will vote the proxies in accordance with their
best judgment.
ANNUAL
REPORT TO STOCKHOLDERS
A copy of the Companys Annual Report to Stockholders for the fiscal
year ended September 30, 2007, accompanies this notice of meeting and
Proxy Statement. No part of such Annual Report is incorporated herein and no
part thereof is to be considered proxy-soliciting material.
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FORM 10-KSB
THE
COMPANY WILL FURNISH WITHOUT CHARGE TO EACH PERSON WHOSE PROXY IS BEING
SOLICITED, UPON WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF THE COMPANYS
ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2007,
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE FINANCIAL
STATEMENTS AND THE FINANCIAL STATEMENT SCHEDULES THERETO. THE COMPANY WILL
FURNISH TO ANY SUCH PERSON ANY EXHIBIT DESCRIBED IN THE LIST ACCOMPANYING THE FORM 10-KSB,
UPON THE PAYMENT, IN ADVANCE, OF REASONABLE FEES RELATED TO THE COMPANYS
FURNISHING SUCH EXHIBIT(S). REQUESTS FOR COPIES OF SUCH REPORT AND/OR EXHIBIT(S) SHOULD
BE DIRECTED TO MR. MONTE S. JOHNSON, CHIEF FINANCIAL OFFICER, AT THE COMPANYS
PRINCIPAL ADDRESS. THE COMPANYS FORM 10-KSB MAY ALSO BE ACCESSED
THROUGH THE SECS WEBSITE AT HTTP://WWW.SEC.GOV.
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BY ORDER OF THE BOARD
OF DIRECTORS
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/s/ James W. Hansen
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James W. Hansen
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Chairman
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Dated:
January 2, 2008
St.
Louis Park, Minnesota
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CIPRICO INC.
ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 7, 2008
3:30 PM
DOUBLETREE HOTEL MINNEAPOLIS PARK PLACE
1500 PARK PLACE BLVD, MINNEAPOLIS,
MINNESOTA 55416
CIPRICO
INC.
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7003
WEST LAKE STREET
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proxy
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SUITE 400
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ST.
LOUIS PARK, MINNESOTA 55426
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THIS
PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL MEETING ON
FEBRUARY 7, 2008.
The
shares of stock you hold in your account or in a dividend reinvestment account
will be voted as you specify below.
By
signing the proxy, you revoke all prior proxies, acknowledge receipt of the
Notice of Annual Meeting of Stockholders to be held February 7, 2008, and
appoint Steven D. Merrifield and Monte S. Johnson, and each of them, with full
power of substitution, to vote your shares on the matters shown on the reverse
side and any other matters which may come before the Annual Meeting and all
adjournments, or postponements thereof.
See reverse for voting instructions.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH PROPOSAL BELOW.
1.
To approve the proposed amendment to
the Companys Certificate of Incorporation to increase the number of
authorized Common Stock from 9,000,000 shares of Common Stock to 14,000,000
shares of Common Stock
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o
For
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o
Against
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o
Abstain
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2.
To Elect two Class II directors:
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01
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Vote FOR all
nominees
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Vote Withheld for
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02
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(except as marked)
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all nominees
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To
withhold authority to vote for any individual nominee, write the name of such
nominee on the box at the right
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3. OTHER MATTERS.
To consider and act upon other matters as may property come before the
meeting and any adjournments thereof:
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THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS
GIVEN, WILL BE VOTED
FOR
EACH PROPOSAL.
Address Change? Mark
Box
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Indicate changes below:
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Date
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Signature(s) in
Box. Please sign exactly as your name(s) appear on Proxy. If held
in joint tenancy, all persons must sign. Trustees, administrators, etc.,
should include title and authority. Corporations should provide full name of
corporation and title of authorized officer signing the Proxy.
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BY
ORDER OF THE BOARD OF DIRECTORS
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James
W. Hansen
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Chairman
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St.
Louis Park, Minnesota
January 2,
2008
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