Name | | Age | | Class | | Position |
Michael F. Adams | | 5355 | | I | | Nominee for Director,
President & Chief Executive Officer* Officer |
William J. O'Neill, Jr. | | 6769 | | II | | Director, Chairman of the Board |
Anthony J. Armini, Ph.D. | | 7173 | | I | | Nominee for Director*Director |
Michael L. Barretti | | 6466 | | II | | Director |
Jeremiah E. DorseyMark R. Tauscher | | 6459 | | III | | DirectorNominee for Director* |
Jeremiah E. Dorsey | | 66 | | III | | Departing Director** |
| * | Nominee for election as a director at this Meeting. |
* Nominee for election as a director at this Meeting. | ** | Mr. Dorsey’s term as a Class III director expires at the 2011 Annual Meeting. Based on the recommendation of the Nominating/Corporate Governance Committee, the Board determined not to nominate Mr. Dorsey for re-election to the Board and to reduce the size of the Board from six to five members. |
There are no family relationships between any director, executive officer, or person nominated or chosen to become a director or executive officer.
NomineesNominee for Election as Class III Director For a Three Year Term Expiring at the 2014 Annual Meeting
Mark R. Tauscher
Mr. Tauscher was elected as a director by vote of the members of our Board of Directors on October 5, 2010. Since December 1999, Mr. Tauscher has been the President, Chief Executive Officer and director of PLC Systems Inc. Mr. Tauscher has also served as President, Chief Executive Officer and a director of PLC Medical Systems, Inc. since January 2001. Prior to joining PLC Systems Inc. and PLC Medical Systems, Inc., from November 1988 to December 1999, Mr. Tauscher served as Executive Vice President of Sales and Marketing at Quinton Instrument Company, a developer, manufacturer and marketer of cardiology products, medical devices and fitness equipment. From November 1996 to November 1998, Mr. Tauscher served as Division President of Marquette Medical Systems, Medical Supplies. From May 1994 to November 1996, Mr. Tauscher served as General Manager of Hewlett-Packard, Medical Supplies. Mr. Tauscher earned a BS from Southern Illinois University.
Our Board of Directors has concluded that Mr. Tauscher is uniquely qualified to serve as a director based on his 30 years of medical industry experience, inside perspective of the day-to-day operations of a medical device company, and his past and current leadership and executive roles.
Directors Continuing in Office
The following individuals are continuing directors and are not standing for election this year.
Continuing Class I Directors Whose Terms Expire at the 2012 Annual Meeting
Mr. Michael F. Adams
Mr. Adams has been our director since May 1999. Mr. Adams was appointed as our President & Chief Executive Officer on August 7, 2006. From April 1, 2006 until August 7, 2006, Mr. Adams was our Vice President of Regulatory Affairs and Business Development. Prior to April 2006, Mr. Adams was the Vice President of PLC Systems, Inc. Prior to joining PLC Systems in September 2000, Mr. Adams was Vice President of Assurance Medical, Inc. Prior to joining Assurance Medical in June 1999, Mr. Adams was the Chief Operating Officer and Vice President of Regulatory Affairs and Quality Assurance of CardioTech from June 1998 to May 1999. From November 1994 through June 1998, Mr. Adams served as the Vice President of Cytyc Corporation. Mr. Adams received a BS from the University of Massachusetts.
Dr. Our Board has concluded that Mr. Adams is an appropriate person to represent management on our Board of Directors given his position as our Chief Executive Officer, his tenure with us, which dates back to June 1998, his professional credentials, and his standing in the medical community, including expertise in regulatory and operational matters as they relate to the development, production, marketing and sales of medical devices.
Anthony J. Armini, Ph.D.
Dr. Armini has been our director since August 2000. Dr. Armini was the President, Chief Executive Officer, and Chairman of the Board of Directors of Implant Science Corporation from 1984 through 2007. From 1972 to 1984, prior to founding Implant Sciences, Dr. Armini was Executive Vice President at Spire Corporation. From 1967 to 1972, Dr. Armini was a Senior Scientist at McDonnell Douglas Corporation. Dr. Armini received his Ph.D. in nuclear physics from the University of California, Los Angeles in 1967. Dr. Armini is the author of eleventwenty-two patents fifteen patents pending and fourteen publications in the field of implant technology. Dr. Armini has over thirty years of experience working with cyclotronsin the development of total knee and linear accelerators, the productionhip implants, coronary stents, and characterization of radioisotopes,radiation therapy implants; and fifteen years experience with ion implantation in the medical and semiconductor fields.
Our Board has concluded that Dr. Armini’s education and background in nuclear physics, coupled with his experience as Founder, Chairman and Chief Executive Officer of Implant Sciences Corporation, where he applied his educational and technical experience in the development of medical devices and coatings using ion implantation technologies, provide him with a unique background and skill set that qualify him to serve on our Board. Also, Dr. Armini’s leadership role as the CEO of a public company and knowledge of related corporate governance matters make him well-suited to serve as a member of our Board.
Directors Continuing in Office
The following individuals are continuing directors and are not standing for election this year:
Continuing Class II DirectorsDirector Whose Terms ExpireTerm Expires at the 20102013 Annual Meeting
Mr. William J. O’Neill, Jr.
Mr. O’Neill has been our director since May 2004 and was appointed as Chairman on August 7, 2006. Mr. O’Neill is currently the Dean of the Frank Sawyer School of Management at Suffolk University in Boston, Massachusetts. Prior to this appointment, Mr. O’Neill spent thirty years (1969-1999) with the Polaroid Corporation, where he held the positions of Executive Vice President of the Corporation, President of Corporate Business Development, and Chief Financial Officer. He was also Senior Financial Analyst at Ford Motor Company. Mr. O’Neill was a Trustee at the Dana Farber Cancer Institute, and is currently a member of the Massachusetts Bar Association, a member of the Board of Directors of the Greater Boston Chamber of Commerce, and serves on the Board of Directors of Concord Camera and EDGAR Online, Inc.. He earned a BA at Boston College in mathematics, a MBA in finance from Wayne State University, and a JD from Suffolk University Law School.
Our Board of Directors has concluded that Mr. O’Neill is uniquely qualified to serve as a director and Chairman of our Board based on his past and current leadership and executive roles, financial skills and overall business judgment.
Michael L. Barretti
Mr. Barretti has been our director since January 1998. Mr. Barretti is the executive in residenceDirector of Executive Education and professor of marketing at Suffolk University in Boston. Mr. Barretti has been the President of Cool Laser Optics, Inc., a company which commercializes optical technology specific to the medical laser industry, since July 1996. From September 1994 to July 1996, Mr. Barretti was Vice President of Marketing for Cynosure, Inc., a manufacturer of medical and scientific lasers. From June 1987 to September 1994, Mr. Barretti was a principal and served as Chief Executive Officer of NorthFleet Management Group, a marketing management firm serving the international medical device industry. From January 1991 to May 1994, Mr. Barretti also acted as President of Derma-Lase, Inc., the U.S. subsidiary of a Glasgow, Scotland supplier of solid-state laser technologies to the medical field. Mr. Barretti received his BA from St. Johns University and an MBA from Suffolk University. Mr. Barretti is retired as a United States Marine Corps officer.
Continuing Class III Director Whose Term Expires at the 2011 Annual Meeting
Our Board of Directors has concluded that Mr. Jeremiah E. Dorsey has been ourBarretti is uniquely qualified to serve as a director since May, 2004. Mr. Dorsey retired in 2002. From 1992 to 2002, Mr. Dorsey was Presidentbased on his experience and Chief Operating Officer of The West Company (Lionville, PA), a leading supplier of components to the pharmaceutical,leadership roles with medical device companies; his tenure with us, which dates back to January 1998; and dental businesses. From 1990 to 1992, Mr. Dorsey was Presidentmarketing expertise at both the corporate and Chief Executive Officer of Foster Medical (Waltham, MA), a supplier of hospital equipment. From 1988 to 1990, he was President of Towles Housewares Company (Newburyport, MA), and Vice President and Board Member of J&J Dental Products Company (East Windsor, NJ), a world leader in composite materials, dental amalgams, cleaning and polishing products. Mr. Dorsey received a BA from Assumption College and an MBA from Fairleigh Dickinson University.academic levels.
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Corporate Governance and Guidelines
AdvanSource’s Board of Directors has long believed that good corporate governance is important to ensure that AdvanSource is managed for the long-term benefit of stockholders. During the past year, AdvanSource’s Board of Directors has continued to review its governance practices in light of the Sarbanes-Oxley Act of 2002 and recently revised SEC rules and regulations. This section describes key corporate governance guidelines and practices that we have adopted. Complete copies of the corporate governance guidelines, committee charters and code of ethics described below are available on our website at www.advbiomaterials.com, and any amendments to any of the foregoing corporate governance documents or any waivers of our code of ethics will be posted on our website. Alternatively, you can request a copy of any of these documents by writing to the Acting Chief Financial Officer, AdvanSource Biomaterials Corporation, 229 Andover Street, Wilmington, MA 01887.
The Board has adopted corporate governance guidelines to assist the Board in the exercise of its duties and responsibilities and to serve in our best interests and those of its stockholders. These guidelines, which provide a framework for the conduct of the Board’s business, include that:
· | the principal responsibility of the directors is to oversee our management; |
· | a majority of the members of the Board shall be independent directors; |
· | the non-management directors meet regularly in executive session; and |
· | directors have full and free access to management and, as necessary and appropriate, independent advisors. |
Independence of the Board of Directors
The Board of Directors has adopted director independence guidelines that are consistent with the definitions of “independence” as set forth in Section 301 of the Sarbanes-Oxley Act of 2002, Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and NYSE Amex listing standards. In accordance with these guidelines, the Board of Directors has reviewed and considered facts and circumstances relevant to the independence of each of our directors and director nominees and has determined that, each of our non-management directors qualifies as “independent” under NYSE Amex listing standards.
Board Attendance
The Board met five (5)two (2) times during the year ended March 31, 2008.2011. With the exception of Mr. Dorsey, each director attended in excess of 75% of the total number of meetings of the Board and of committees of the Board on which he served during fiscal 2009.2011. Our 20082010 Annual Meeting was attended by all directors except Mr. Dorsey. The non-management members of the Board regularly meet, without any members of management present, at each scheduled Board of Directors meeting. The members of the Board and its committees did not act by unanimous written consent during the year ended March 31, 20092011 pursuant to Delaware law. We do not have a formal policy regarding attendance at the Annual Meeting by directors, but we strongly encourage all directors to attend the Annual Meeting.
Committees of the Board of Directors
The Board of Directors has an Audit Committee, Compensation Committee and Nominating/Corporate Governance Committee. The membership of each, as of JuneJuly 15, 2009,2011, is indicated in the table below.
Directors | | Audit | | Compensation | | Nominating/ Corporate Governance |
William J. O'Neill, Jr. | | Chair | | | | |
Michael L. Barretti | | | | Chair | | Chair |
Anthony J. Armini | | X | | X | | X |
Mark R. Tauscher | | | | | | |
Jeremiah E. Dorsey | | X | | X | | X |
The Board of Directors has determined that all of the members of each committee are independent as defined under the NYSE Amex rules, including, in the case of all members of the Audit Committee, the independence requirements contemplated by Rule 10A-3 under the Exchange Act. In addition, all of the members of the Audit Committee are independent as defined by the NYSE Amex rules that apply to us until the date of the Annual Meeting and otherwise satisfy the NYSE Amex eligibility requirements for Audit Committee membership.
Audit Committee
The Audit Committee was established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Board has designated from among its members Mr. William J. O’Neill, Jr., and Dr. Anthony J. Armini and Mr. Jeremiah E. Dorsey as the members of the Audit Committee. The primary functions of the Audit Committee are to represent and assist the Board of Directors with the oversight of:
· | appointing, approving the compensation of, and assessing the independence of the our independent auditors; |
· | overseeing the work of our independent auditors, including through the receipt and consideration of certain reports from the independent auditors; |
· | reviewing and discussing with management and the independent auditors our annual and quarterly financial statements and related disclosures; |
· | coordinating the Board of Director’s oversight of our internal control over financial reporting, disclosure controls and procedures and code of conduct and ethics; |
· | establishing procedures for the receipt and retention of accounting related complaints and concerns; |
· | meeting independently with our internal auditing staff, independent auditors and management; and |
· | preparing the audit committee report required by SEC rules. |
The Board of Directors has determined that Mr. O’Neill is an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K. Mr. O’Neill also acts as the Chairman of the Audit Committee.
During the fiscal year ended March 31, 2009,2011, the Audit Committee met five (5)four (4) times. The responsibilities of the Audit Committee are set forth in its written charter, which is posted on our website at www.advbiomaterials.com under the “Investor Relations – Corporate Governance” section.
Compensation Committee
The Compensation Committee consists of Mr. Michael L. Barretti, chairman, Jeremiah E. Dorsey and Dr. Anthony J. Armini. The Compensation Committee is responsible for implementing our compensation philosophies and objectives, establishing remuneration levels for our executive officers and implementing our incentive programs, including our equity compensation plans. The Board of Directors has determined that each of the members of the Compensation Committee is an “independent” director within the meaning of the NYSE Amex listing standards, a “Non-Employee” director as defined in Rule 16b-3 of the Exchange Act, and an “Outside” director as defined in Section 162(m) of the Internal Revenue Code, as amended. The Compensation Committee met one time in fiscal 2009.2011.
Compensation is paid to our executive officers in both fixed and discretionary amounts which are established by the Board of Directors based on existing contractual agreements and the determinations of the Compensation Committee. Pursuant to its charter, the responsibilities of the Compensation Committee are (i) to assist the Board of Directors in discharging its responsibilities in respect of compensation of our senior executive officers; (ii) review and analyze the appropriateness and adequacy of our annual, periodic or long-term incentive compensation programs and other benefit plans and administer those compensation programs and benefit plans; and (iii) review and recommend compensation for directors, consultants and advisors. Except for the delegation of authority to the Chief Executive Officer to grant certain de minimus equity compensation awards to our non-executive employees, the Compensation Committee has not delegated any of its responsibilities to any other person.
Nominating/Corporate Governance Committee
The Nominating/Corporate Governance Committee consists of Mr. Michael L. Barretti, chairman, and Dr. Anthony J. Armini. The Nominating/Corporate Governance Committee’s responsibilities include identifying individuals qualified to become Board members; recommending to the Board the persons to be nominated for election as directors and to each of the Board’s committees; and reviewing and making recommendations to the Board with respect to management succession planning. During the fiscal year ended March 31, 2009,2011, the Nominating/Corporate Governance Committee met once in a joint meeting with the full Board of Directors in connection with the unanimous approval by the Board of Directors of the nominee for election as Class III Director at our 20082011 annual meeting of stockholders to be held on October 15, 2008.4, 2011 and the decision to reduce the size of the Board of Directors from six to five members. The responsibilities of the Nominating/Corporate Governance Committee are set forth in its written charter, which is posted on our website at www.advbiomaterials.com under the “Investors – Corporate Governance” section.
Board Leadership Structure
The Board has appointed Mr. William J. O’Neill, Jr., an independent director, to serve as the Chairman of the Board of Directors. The Board has elected to separate the Chairman function from that of the Chief Executive Officer, who serves as our principal executive officer, due to a belief that separating these functions, and empowering an independent director to chair the Board meetings, will result in increased Board oversight of management activities.
Director Nomination Procedures
The nominating committee assesses the appropriate size of the Board of Directors, and whether any vacancies on the Board of Directors are expected due to retirement or otherwise. In the event that vacancies are anticipated or otherwise arise, the committee utilizes a variety of methods for identifying and evaluating director candidates. Candidates may come to the attention of the committee through current directors, professional search firms, stockholders or other persons. Once the committee has identified a prospective nominee, the committee will evaluate the prospective nominee in the context of the then current constitution of the Board of Directors and will consider a variety of other factors, including the prospective nominee’s business, finance and financial reporting experience, and attributes that would be expected to contribute to an effective Board of Directors. The committee seeks to identify nominees who possess a wide range of experience, skills, areas of expertise, knowledge and business judgment. Successful nominees must have a history of superior performance or accomplishments in their professional undertakings and should have the highest personal and professional ethics and values. The committee does not evaluate stockholder nominees differently than any other nominee.
Pursuant to procedures set forth in our bylaws, our nominating committee will consider stockholder nominations for directors if we receive timely written notice, in proper form, of the intent to make a nomination at a meeting of stockholders. To be timely, the notice must be received within the time frame identified in our bylaws, a discussion of which appears below under the heading “Deadline For Submission of Stockholder Proposals.” To be in proper form, the notice must, among other matters, include each nominee’s written consent to serve as a director if elected, a description of all arrangements or understandings between the nominating stockholder and each nominee and information about the nominating stockholder and each nominee. These requirements are detailed in our bylaws, which were filed as Appendix D to our definitive proxy statement on Schedule 14A as filed with the SEC on August 30, 2007. A copy of our bylaws will be provided upon written request to the Acting Chief Financial Officer at AdvanSource Biomaterials Corporation, 229 Andover Street, Wilmington, MA 01887.
Code of Conduct and Ethics
We have adopted a code of ethics that applies to itsour chief executive officer and acting chief financial officer. The code of ethics is posted on our website at www.advbiomaterials.com. We intend to include on our website any amendments to, or waivers from, a provision of our code of ethics that applies to our chief executive officer or acting chief financial officer that relates to any element of the code of ethics definition enumerated in Item 406 of Regulation S-K.
Stockholder Communications with the Board of Directors
Pursuant to procedures set forth in our bylaws, our nominating committee will consider stockholder nominations for directors if we receive timely written notice, in proper form, of the intent to make a nomination at a meeting of stockholders. To be timely, the notice must be received within the time frame identified in our bylaws, discussed below. To be in proper form, the notice must, among other matters, include each nominee’s written consent to serve as a director if elected, a description of all arrangements or understandings between the nominating stockholder and each nominee and information about the nominating stockholder and each nominee. These requirements are detailed in our bylaws, which were filed as Appendix D to our definitive proxy statement on Schedule 14A as filed with the SEC on August 30, 2007. A copy of our bylaws will be provided upon written request.
The Board will give appropriate attention to written communications that are submitted by stockholders, and will respond if and as appropriate. Stockholders who wish to send communications on any topic to the Board should address such communications to Board of Directors c/o Acting Chief Financial Officer, AdvanSource Biomaterials Corporation, 229 Andover Street, Wilmington, MA 01887.
NAMED EXECUTIVE OFFICERS
The named executive officers, their agesage and positionsposition at AdvanSource, as well as certain biographical information of these individuals, areis set forth below. The agesage of thethese individuals are provided as of JuneJuly 15, 2009.
2011.
Name | | Age | | Position |
Named Executive Officer | | | | |
Michael F. Adams | | 5255 | | President, Chief Executive Officer and Director |
| | | | |
Financial Consultant and Acting Chief Financial Officer |
David Volpe | | 5456 | | Acting Chief Financial Officer |
Andrew M. Reed, Ph.D. (1) | | 56 | | Vice President of Science & Technology |
(1) Dr. Reed tendered his resignation as our Vice President of Science & Technology, effective July 31, 2009, to pursue other opportunities.Named Executive Officer
Mr. Michael F. Adams has been our director since May 1999. Mr. Adams was appointed as our President & Chief Executive Officer on August 7, 2006. From April 1, 2006 until August 7, 2006, Mr. Adams was the our Vice President of Regulatory Affairs and Business Development. Prior to April 2006, Mr. Adams was the Vice President of PLC Systems, Inc. Prior to joining PLC Systems in September 2000, Mr. Adams was Vice President of Assurance Medical, Inc. Prior to joining Assurance Medical in June 1999, Mr. Adams was the Chief Operating Officer and Vice President of Regulatory Affairs and Quality Assurance of CardioTech from June 1998 to May 1999. From November 1994 through June 1998, Mr. Adams served as the Vice President of Cytyc Corporation. Mr. Adams received a BS from the University of Massachusetts.
Financial Consultant and Acting Chief Financial Officer
David Volpe was appointed as our Acting Chief Financial Officer on March 3, 2009. Mr. Volpe has over 2225 years of experience in executive level financial management, business development, merger and acquisition, strategic turnaround, investor relations, and private and public financing. From April 2003 through the date of his appointment as Acting Chief Financial Officer, Mr. Volpe was the strategic and financial advisor to our Chief Executive Officer and former Chief Financial Officer, operating through Carmel Lake Ventures, LLC, Mr. Volpe’s privately-owned consulting firm. From July 1999 through April 2003, Mr. Volpe was our Acting Chief Financial Officer. In addition, Mr. Volpe held the position of Vice President of Strategic Development from April 2003 through December 2008 and Acting Chief Financial Officer from May 2001 through February 2003 for Implant Sciences Corporation, a publicly-held technology company formerly listed on the NYSE Amex. From December 2005 through March 2009, Mr. Volpe served on the American Stock Exchange Listed Company Advisory Council. From 1986 through 1991, Mr. Volpe was an Audit Manager at Price Waterhouse focusing his efforts on emerging growth, technology-based companies. In May 2003, Mr. Volpe entered into a settlement agreement with the SEC, pursuant to a complaint filed against a registrant, including certain of its officers and directors, for whom Mr. Volpe had provided financial consulting services and was named, whereby he agreed, among certain things, to adhere to all SEC reporting rules. In connection with this settlement, no sanctions of any manner were imposed against Mr. Volpe. Mr. Volpe holds BS degrees in geology and accounting from the California State Universities at Northridge and Bakersfield, respectively.
Dr. Andrew M. Reed was our Vice President of Science & Technology from April 2006 through July 2009. Prior to April 2006, Dr. Reed was Executive Vice President of CCS Medical a direct to patient provider of diabetic, respiratory, ostomy and wound care supplies. From 1999 to 2005 he was Chief Operating Officer and Vice President of Gericare Providers, Inc. a supplier of wound care products for patient in-home use. He was President of Innovative Technologies (US), Inc. the US Division of a UK based private label manufacturer of proprietary wound care products from 1997 through 1999. From 1990 to 1997, Dr. Reed held management positions of increasing responsibilities at PolyMedica Corporation, a direct to consumer diabetic, pharmaceutical and wound care product manufacturer and provider, including Vice President of Research and Development and President of PolyMedica Wound Care Company. Dr. Reed was responsible for research and development and manufacturing functions. Earlier in his career, Dr. Reed was a Senior Research Chemist at Millipore Corporation. Dr. Reed is the holder of several U.S. Patents, primarily in the area of polyurethane and wound dressing technologies, and is the co-inventor of ChronoFlex. Dr. Reed received his Ph.D. in Polymer Chemistry from the University of Liverpool, UK. He is the author and co-author of numerous published scientific papers.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of shares of our common stock, as of JuneJuly 15, 2009,2011, of (i) each person known by us to beneficially own five percent (5%) or more of such shares; (ii) each of our directors and current and acting executive officers named in the Summary Compensation Table; and (iii) all of our current and acting executive officers directors, and significant employeesdirectors as a group. Except as otherwise indicated, all shares are beneficially owned, and the persons named as owners hold investment and voting power.
Beneficial ownership has been determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934. Under this rule, certain shares may be deemed to be beneficially owned by more than one person, if, for example, persons share the power to vote or the power to dispose of the shares. In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire shares, for example, upon exercise of an option or warrant, within sixty (60) days of JuneJuly 15, 2009.2011. In computing the percentage ownership of any person, the amount of shares is deemed to include the amount of shares beneficially owned by such person, and only such person, by reason of such acquisition rights. As a result, the percentage of outstanding shares of any person as shown in the following table does not necessarily reflect the person’s actual voting power at any particular date.
Name and Address of Beneficial Owner (1) | | Amount and Nature of Beneficial Ownership | | Percentage of Class (2) |
Executive Officers and Directors | | | | |
Michael F. Adams (3) | | 389,347 | | 1.8% |
Michael L. Barretti (4) | | 223,129 | | 1.1% |
Anthony J. Armini, Ph.D. (5) | | 168,520 | | * |
William J. O'Neill, Jr. (6) | | 105,000 | | * |
Jeremiah E. Dorsey (7) | | 136,874 | | * |
Andrew M. Reed, Ph.D. (8) | | 225,000 | | 1.1% |
All executive officers and directors as a group (6 persons) (9) | | 1,247,870 | | 5.9% |
Name and Address of Beneficial Owner (1) | | Amount and Nature of Beneficial Ownership | Percentage of Class (2) |
Michael F. Adams (3) | | 790,532 | | 3.7% |
Michael L. Barretti (4) | | 245,510 | | 1.1% |
Anthony J. Armini, Ph.D. (5) | | 248,895 | | 1.2% |
William J. O'Neill, Jr. (6) | | 230,000 | | 1.1% |
Jeremiah E. Dorsey (7) | | 181,252 | | * |
David Volpe (8) | | 150,000 | | * |
All current and acting executive officers and directors as a group (6 persons) (9) | 1,846,189 | | 7.8% |
(1) | Unless otherwise indicated, the business address of the stockholders named in the table above is AdvanSource Biomaterials Corporation, Inc. 229 Andover Street, Wilmington, MA 01887. |
(2) | Based on 21,128,64721,350,055 outstanding shares as of JuneJuly 15, 2009.2011. |
(3) | Includes 388,964620,395 shares of common stock, which may be purchased within sixty (60) days of JuneJuly 15, 20092011 upon the exercise of stock options. |
(4) | Includes 206,964245,395 shares of common stock, which may be purchased within sixty (60) days of JuneJuly 15, 20092011 upon the exercise of stock options. |
(5) | Includes 162,520242,895 shares of common stock, which may be purchased within sixty (60) days of JuneJuly 15, 20092011 upon the exercise of stock options. |
(6) | Includes 105,000230,000 shares of common stock, which may be purchased within sixty (60) days of JuneJuly 15, 20092011 upon the exercise of stock options. |
(7) | Includes 136,874181,252 shares of common stock, which may be purchased within sixty (60) days of JuneJuly 15, 20092011 upon the exercise of stock options. |
(8) | Includes 225,000150,000 shares of common stock, which may be purchased within sixty (60) days of JuneJuly 15, 20092011 upon the exercise of stock options. |
(9) | See footnotes (3) through (8). |
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table provides information concerning compensation for services rendered to us in all capacities for the fiscal years ended March 31, 20092011 and 20082010 by our ChiefNamed Executive Officer, and our other most highly compensated executive officer, and a former executive officer whose total compensation exceeded $100,000 in fiscal 2009.Officers.
Name and Principal Position | | Fiscal Year | | Salary ($) | | | Bonus ($) | | | Option Awards ($) (1) | | | All Other Compensation ($) (2) | | | Total ($) | |
Named Executive Officers | | | | | | | | | | | | | | | | | | |
Michael F. Adams President & CEO | | 2009 | | $ | 292,000 | | | $ | 36,000 | | | $ | - | | | $ | 17,000 | (3 | ) | | $ | 345,000 | |
| | 2008 | | $ | 279,000 | | | $ | - | | | $ | 109,000 | | | $ | 17,000 | (3 | ) | | $ | 405,000 | |
| | | | | | | | | | | | | | | | | | | | | | | |
Andrew M. Reed, Ph.D. (4) Vice President of Science & Technology | | 2009 | | $ | 183,000 | | | $ | - | | | $ | - | | | $ | 2,000 | | | | $ | 185,000 | |
| | 2008 | | $ | 172,000 | | | $ | - | | | $ | 13,000 | | | $ | 2,000 | | | | $ | 187,000 | |
| | | | | | | | | | | | | | | | | | | | | | | |
Former Executive Officer | | | | | | | | | | | | | | | | | | | | | | | |
Eric G. Walters (5) Former Vice President & CFO | | 2009 | | $ | 196,000 | | | $ | - | | | $ | - | | | $ | 14,000 | (6 | ) | | $ | 210,000 | |
| | 2008 | | $ | 190,000 | | | $ | - | | | $ | 19,000 | | | $ | 15,000 | (6 | ) | | $ | 224,000 | |
Name and Principal Position | Fiscal Year | | Salary ($) | | | Bonus ($) | | | Option Awards ($) (1) | | | All Other Compensation ($) (2) | | | Total ($) | |
Named Executive Officer | | | | | | | | | | | | | | | | | | | | | | |
Michael F. Adams President & CEO | 2011 | | $ | 320,000 | | | $ | - | | | $ | 61,000 | | | | (3 | ) | | $ | 27,000 | | | | (4 | ) | | $ | 408,000 | |
| 2010 | | $ | 292,000 | | | $ | 39,000 | | | $ | 47,000 | | | | (3 | ) | | $ | 42,000 | | | | (4 | ) | | $ | 420,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Financial Consultant and Acting Chief Financial Officer | | | | | | | | | | | | | | | | | | | | | | | | |
David Volpe Acting CFO | 2010 | | $ | - | | | $ | - | | | $ | 34,000 | | | | (5 | ) | | $ | 201,000 | | | | | | | $ | 235,000 | |
| 2010 | | $ | - | | | $ | - | | | $ | 36,000 | | | | (5 | ) | | $ | 157,000 | | | | | | | $ | 193,000 | |
(1) | The amount reported in this column for the Named Executive Officernamed executive officers represents the dollar amount recognized for financial statement reporting purposes in fiscal 2008,grant date fair value of equity awards determined in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 123R, “Share-Based Compensation.” See Note A of Notes to Consolidated Financial Statements set forth in our Annual Report on Form 10-Kthe accounting standards for fiscal year 2008 for the assumptions used in determining the value of such awards. stock-based compensation. |
(2) | All other compensation includes, but is not limited to, premiums paid by us for medical, dental, disability and group term life insurance for all namedthe chief executive officers and a former executive officer,officer; and consulting fees paid to our Acting Chief Financial Officer.the financial consultant and acting chief financial officer. |
(3) | Mr. Adams received an option award exercisable into 250,000 and 200,000 shares of our common stock, pursuant to our 2003 Stock Option Plan, on July 1, 2010 and May 8, 2009, respectively. The July 1, 2010 option award was valued using the Black-Scholes model with the following assumptions: volatility 100.8%; risk-free interest rate of 2.4%; expected life of 7.5 years; and expected dividend yield of 0.00%.The May 8, 2009 option award was valued using the Black-Scholes model with the following assumptions: volatility 94.3%; risk-free interest rate of 2.2%; expected life of 5.8 years; and expected dividend yield of 0.00%. |
(4) | All other compensation of Mr. Adams is composed of approximately $2,000 in$12,000 and $12,000 for premiums paid by us for disabilitymedical and group termdental insurance, and personal use of leased vehicles in the approximate amount of $15,000 for each of the years ended March 31, 2009 and 2008, respectively. |
(4) | On July 31, 2009, Dr. Reed resigned as our Vice President of Science & Technology to pursue other interests. |
(5) | All other compensation of Mr. Walters is composed of $2,000$3,000 and $3,000 in premiums paid by us for disability and group termlife insurance, and $12,000 and $27,000 for vehicle allowance and personal use of leased vehicles in the approximate amount of $12,000 for each ofduring the years ended March 31, 20092011 and 2008,2010, respectively. |
(6)(5) | We enteredMr. Volpe received an option award exercisable into a Separation Agreement150,000 and General Release (the “Separation Agreement”)150,000 shares of our common stock, pursuant to our 2003 Stock Option Plan, on October 6, 2010 and August 11, 2009, respectively. The October 6, 2010 option award was valued using the Black-Scholes model with Mr. Walters, our former Vice Presidentthe following assumptions: volatility 105.2%; risk-free interest rate of 1.8%; expected life of 7.5 years; and Chief Financial Officer, on February 28,expected dividend yield of 0.00%. The August 11, 2009 (the “Separation Date”). Underoption award was valued using the termsBlack-Scholes model with the following assumptions: volatility 94.3%; risk-free interest rate of the Separation Agreement, which supersedes the previous employment agreement entered into on April 3, 2006,3.3%; expected life of 7.7 years; and amended on July 10, 2007, and beginning on the Separation Date, Mr. Walters will: (i) receive a severance paymentexpected dividend yield of approximately $129,000 to be paid over 34 weeks on our regularly scheduled paydays, and (ii) be eligible for COBRA health benefits, which premiums will be paid by Mr. Walters and us for a period of 34 weeks in accordance with our health benefit contribution policies.0.00%. |
Employment Agreements; Change in Control and Severance Provisions
Terms of Employment Agreement with NamedChief Executive Officer
We entered into an employment agreement with Michael F. Adams on September 13, 2006, effective August 7, 2006 (the “Adams Agreement”).
The Adams Agreement provides for Mr. Adams to serve as our President & Chief Executive Officer. Pursuant to the terms of the Adams Agreement, as amended on July 10, 2007, Mr. Adams is to receive an annual base salary of $290,000, effective April 1, 2007. Mr. Adams’ salary will be reviewed annually by the Board. Additionally, Mr. Adams may also be entitled to receive an annual bonus payment in an amount, if any, to be determined by the Compensation Committee of the Board. In May 2010, the Compensation Committee of the Board of Directors approved an increase in Mr. Adams’ annual base salary to $320,000, retroactive to April 1, 2010, and awarded a bonus of approximately $39,000 which was recorded as accrued expense as of March 31, 2010 and paid to Mr. Adams in May 2010. There was no bonus awarded to Mr. Adams during the fiscal year ended March 31, 2011.
The term of the Adams Agreement is set to expireexpired on August 6, 2008. After such time, the term ofThe Company did not renew the Adams Agreement willat the end of the initial term, however, the Adams agreement provides that lacking any express agreement between the parties at the end of the Employment Period, the Adams Agreement shall be deemed to continue on a month-to-month basis. As a result, the Adams Agreement currently continues on a month-to-month basis if not expressly extended while Mr.and is subject to all of the terms and conditions of the Adams remains employed by us.Agreement. We and Mr. Adams each have the right to terminate the Adams Agreement at any time, with or without cause, as defined below, upon thirty (30) days prior written notice. In the event that we terminate the applicable Adams Agreement without cause, or Mr. Adams terminates his employment for good reason following a change in control, as defined below, or we fail to renew the Adams Agreement within two (2) years following the occurrence of a change in control, Mr. Adams will be entitled to receive severance equal to 2.0 times his annual base salary at termination. In such event, Mr. Adams will be bound by a non-compete covenant for one (1) year following termination of his employment.
Employment Agreement Definitions
Good Reason. “Good Reason” shall mean, during the nine (9) month period following a Change in Control, (1) a good faith determination by the namedchief executive officer that as a result of such Change in Control he is not able to discharge his duties effectively or (2) without the namedchief executive officer’s express written consent, the occurrence of any of the following circumstances: (a) the assignment to the namedchief executive officer of any duties inconsistent (except in the nature of a promotion) with the position in the Company that he held immediately prior to the Change in Control or a substantial adverse alteration in the nature or status of his position or responsibilities or the conditions of his employment from those in effect immediately prior to the Change in Control; (b) a reduction by the Company in the Base Salary as in effect on the date of the Change in Control; (c) the Company’s requiring the namedchief executive officer to be based more than twenty-five (25) miles from the Company’s offices at which he was principally employed immediately prior to the date of the Change in Control except for required travel on the Company’s business to an extent substantially consistent with his present business travel obligations; or (d) the failure by the Company to continue in effect any material compensation or benefit plan in which the namedchief executive officer participates immediately prior to the Change in Control unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the failure by the Company to continue the namedchief executive officer’s participation therein (or in such substitute or alterative plan) on a basis not materially less favorable, both in terms of the amount of benefits provided and the level of his participation relative to other participants, than existed at the time of the Change in Control. The namedchief executive officer’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason hereunder.
Change in Control. A “Change in Control” shall occur or be deemed to have occurred only if any of the following events occur: (i) any “person,” as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), (other than any majority owned subsidiary thereof, the Company, any trustee or other fiduciary holding securities under an employee benefit plan of the Company, any trustee or other fiduciary of a trust treated for federal income tax purposes as a grantor trust of which the Company is the grantor, or any corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportion as their ownership of stock of the Company) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding securities on any matter which could come before its stockholders for approval; (ii) individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of the Company, as such terms are used in Rule 14a-11 of Regulation 14A under the Exchange Act) shall be, for purposes of this Agreement, considered as though such person were a member of the Incumbent Board; (iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than (A) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 80% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no “person” (as hereinabove defined) acquires more than 50% of the combined voting power of the Company’s then outstanding securities; or (iv) the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets.
Cause. “Cause” shall mean any of the following:
· | misconduct of the namedchief executive officer during the course of his employment which is materially injurious to the Company and which is brought to the attention of the namedchief executive officer promptly after discovery by the Company, including but not limited to, theft or embezzlement from the Company, the intentional provision of services to competitors of the Company, or improper disclosure of proprietary information, but not including any act or failure to act by the namedchief executive officer that he believed in good faith to be proper conduct not adverse to his duties hereunder; |
· | willful disregard or neglect by the namedchief executive officer of his duties or of the Company’s interests that continues after being brought to the attention of the namedchief executive officer; |
· | unavailability, except as provided for in Section 3.5 of the Employment Agreement (Disability or Death), of the namedchief executive officer to substantially perform the duties provided for herein; |
· | conviction of a fraud or felony or any criminal offense involving dishonesty, breach of trust or moral turpitude during the namedchief executive officer’s employment; |
· | the namedchief executive officer’s breach of any of the material terms of the Employment Agreement (including the failure of the namedchief executive officer to discharge his duties in a highly competent manner) or any other agreements executed in connection with the Employment Agreement. |
Potential Payments Upon Termination or Change in Control
The following table describes the estimated incremental compensation upon (i) termination by us of the NamedChief Executive Officer without Cause, (ii) termination for Good Reason by the NamedChief Executive Officer following a Change in Control, or (iii) failure by us to renew the Employment Agreement within two (2) years following the occurrence of a Change in Control. The estimated incremental compensation assumes the triggering event had occurred on March 31, 2009.2011. Benefits generally available to all employees are not included in the table. The actual amount of compensation can only be determined at the time of termination or change in control. No other named executive officer in fiscal 2011 is entitled to receive any payments upon termination or a change of control.
Named Executive Officer | | Base Salary Continuation | | | COBRA Premiums (2) | | Life Insurance Premiums (3) | | Other | | | Base Salary Continuation | | | COBRA Premiums (2) | | Life Insurance Premiums (3) | | Other | |
Michael F. Adams | | $ | 580,000 | | (1 | ) | | $ | - | | | $ | 1,176 | | | $ | - | | | $ | 580,000 | | | | (1 | ) | | $ | - | | | $ | 1,176 | | | $ | - | |
(1) | Lump-sum payment equal to 2.0 times Mr. Adams’ base salary of $290,000 per annum, the base salary then in effect as of March 31, 2009.2010. |
(2) | Represents estimated out-of-pocket COBRA health insurance premium expenses incurred by the NamedChief Executive Officer over the six (6) month period following termination to be reimbursed by us. Currently, Mr. Adams does not subscribe to health benefits provided by us. |
(3) | Represents estimated life insurance premiums to be paid by us on behalf of the NamedChief Executive Officer after termination. We shall continue in full force and effect, at our expense, the life insurance benefits provided in the Employment Agreement for a period of 12 months after termination of the NamedChief Executive Officer’s employment or until the NamedChief Executive Officer becomes employed, whichever occurs first. |
Terms of Separation Agreement with Former Executive Officer
We entered into a Separation Agreement and General Release (the “Separation Agreement”) with Mr. Walters, our former Vice President and Chief Financial Officer, on February 28, 2009 (the “Separation Date”). Under the terms of the Separation Agreement and beginning on the Separation Date, Mr. Walters will: (i) receive a severance payment of approximately $129,000 to be paid over 34 weeks on our regularly scheduled paydays, and (ii) be eligible for COBRA health benefits, which premiums will be paid by Mr. Walters and us for a period of 34 weeks in accordance with our health benefit contribution policies. All other terms and conditions of Mr. Walters’ previous agreements with us were terminated and/or superseded by the Separation Agreement.
Outstanding Equity Awards at 20082011 Fiscal Year-End
The following table provides information regarding outstanding stock options held by each Named Executive Officerthe named executive officers as of the fiscal year ended March 31, 2009.2011.
Named Executive Officers | | Number of Securities Underlying Unexercised Options Exercisable | | | Number of Securities Underlying Unexercised Options Unexercisable | | | Option Exercise Price ($) | | Option Expiration Date |
Michael F. Adams | | | 14,444 | | | | - | | | | | $ | 0.75 | | 7/29/2009 |
| | | 75,000 | | | | - | | | | | | 0.50 | | 1/3/2010 |
| | | 9,500 | | | | - | | | | | | 0.50 | | 1/3/2010 |
| | | 19,625 | | | | - | | | | | | 2.06 | | 10/26/2010 |
| | | 25,000 | | | | - | | | | | | 1.10 | | 4/30/2011 |
| | | 25,522 | | | | - | | | | | | 1.61 | | 10/1/2011 |
| | | 27,373 | | | | - | | | | | | 1.59 | | 10/28/2012 |
| | | 10,000 | | | | - | | | | | | 5.40 | | 12/31/2013 |
| | | 2,500 | | | | - | | | | | | 5.40 | | 12/31/2013 |
| | | 30,000 | | | | - | | | | | | 2.60 | | 2/14/2015 |
| | | 100,000 | | | | - | | (1 | ) | | | 1.23 | | 10/16/2017 |
| | | 50,000 | | | | 50,000 | | (2 | ) | | | 1.23 | | 10/16/2017 |
| | | 388,964 | | | | 50,000 | | | | | | | | |
| | | | | | | | | | | | | | | |
Andrew M. Reed, Ph.D. | | | 40,000 | | | | - | | | | | | 1.10 | | 4/30/2011 |
| | | 160,000 | | | | - | | | | | | 2.57 | | 3/20/2016 |
| | | 25,000 | | | | 25,000 | | (2 | ) | | | 1.23 | | 10/16/2017 |
| | | 225,000 | | | | 25,000 | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | 613,964 | | | | 75,000 | | | | | | | | |
| | | | | | | | | | | | | | | |
(1) | Options vested 100% on October 16, 2007, the date of grant. |
(2) | Options will vest at the rate of 25% on October 16, 2007, the date of grant, and 25% on each annual anniversary thereafter ending on October 16, 2010. |
Named Executive Officers | | Number of Securities Underlying Unexercised Options Exercisable | | | Number of Securities Underlying Unexercised Options Unexercisable | | | Option Exercise Price ($) | | Option Expiration Date |
Chief Executive Officer | | | | | | | | | | | | | |
Michael F. Adams | | | 25,000 | | | | - | | | | | | $ | 1.10 | | 4/30/2011 |
| | | 25,522 | | | | - | | | | | | | 1.61 | | 10/1/2011 |
| | | 27,373 | | | | - | | | | | | | 1.59 | | 10/28/2012 |
| | | 12,500 | | | | - | | | | | | | 5.40 | | 12/31/2013 |
| | | 30,000 | | | | - | | | | | | | 2.60 | | 2/14/2015 |
| | | 100,000 | | | | - | | | | | | | 1.23 | | 10/16/2017 |
| | | 100,000 | | | | - | | | | | | | 1.23 | | 10/16/2017 |
| | | 200,000 | | | | - | | | | | | | 0.31 | | 5/8/2019 |
| | | 62,500 | | | | 187,500 | | | | (1 | ) | | | 0.29 | | 7/1/2020 |
| | | 582,895 | | | | 187,500 | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Financial Consultant and Acting Chief Financial Officer | | | | | | | | | | |
David Volpe | | | 75,000 | | | | 75,000 | | | | (2 | ) | | | 0.29 | | 8/11/2019 |
| | | 37,500 | | | | 112,500 | | | | (3 | ) | | | 0.26 | | 10/6/2020 |
| | | 112,500 | | | | 187,500 | | | | | | | | | | |
| | | 695,395 | | | | 375,000 | | | | | | | | | | |
The following table provides information regarding outstanding stock options held by the Former Executive Officer as of the fiscal year ended March 31, 2009.
Former Executive Officer | | Number of Securities Underlying Unexercised Options Exercisable | | | Number of Securities Underlying Unexercised Options Unexercisable | | | Option Exercise Price ($) | | Option Expiration Date |
Eric G. Walters | | | 200,000 | | | | - | (2) | | | 2.32 | | 5/29/2009 |
| | | 37,500 | | | | - | (1) (2) | | | 1.23 | | 5/29/2009 |
| | | 237,500 | | | | - | | | | | | |
(1) | Option willOptions vested at the rate of 25% on July 1, 2010, the date of grant, and continue to vest 25% on each annual anniversary thereafter ending on July 1, 2013. |
(2) | Options vested at the rate of 25% on August 11, 2009, the date of grant, and continue to vest 25% on each annual anniversary thereafter ending on August 11, 2012. |
(3) | Options vested at the rate of 25% on October 16, 2007,6, 2010, the date of grant, and continue to vest 25% on each annual anniversary thereafter ending on October 16, 2010.6, 2013. |
(2) | As a result of Mr. Walters’ separation as of February 28, 2009, all unvested options as of that date expired and all options unexercised and exercisable expire on May 29, 2009 if not earlier exercised. |
20092011 Option Exercises and Stock Vested
During the year ended March 31, 2009,2011, there were no exercises of option awards by any of the Named Executive Officers.Officer.
DIRECTORS COMPENSATION
The following table sets forth the annual compensation of AdvanSource non-employee directors for fiscal 2009,2011, which consisted of annual cash retainers, including amounts associated with serving as Chairman of the Board and the chair and member of Board committees, and equity awards in the form of options pursuant to the 2003 Stock Option Plan. Employee directors do not receive any separate compensation for their service on the Board.
Name | | Fees Earned or Paid in Cash ($) | | | Option Awards ($) (1) | | | All Other Compensation ($) | | | Total ($) | | | Fees Earned or Paid in Cash ($) | | | Option Awards ($) (1) | | | All Other Compensation ($) | | | Total ($) | |
William J. O'Neill, Jr. | | $ | 25,000 | | | $ | - | | | $ | - | | | $ | 25,000 | | | $ | 24,000 | | | $ | - | | | $ | - | | | $ | 24,000 | |
Michael L. Barretti (2) | | | 15,000 | | | | - | | | | 50,000 | | | | 65,000 | | | | 15,000 | | | | - | | | | 37,000 | | | | 52,000 | |
Anthony J. Armini, Ph.D. | | | 20,000 | | | | - | | | | - | | | | 20,000 | | | | 18,000 | | | | - | | | | - | | | | 18,000 | |
Jeremiah E. Dorsey | | | - | | | | 4,000 | (3) | | | - | | | | 4,000 | | | | - | | | | - | | | | - | | | | - | |
(1) | The amount reported in this column for the non-employee directordirectors represents the dollar amount recognized for financial statement reporting purposes in fiscal 2008,grant date fair value of equity awards determined in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 123R, “Share-Based Compensation.” See Note A of Notes to Consolidated Financial Statements set forth in our Annual Report on Form 10-Kthe accounting standards for fiscal year 2008 for the assumptions used in determining the value of such awards. stock-based compensation. |
(2) | During fiscal 2007, we entered into a consulting agreement with Mr. Barretti for an annualized fee of $50,000. DuringIn April 2010, the fiscal year ended MarchCompany and Mr. Barretti mutually agreed to terminate the consulting agreement as of December 31, 2009, we recognized $50,0002010. A payment of expense related to services incurred under thisapproximately $37,000, representing the prorated consulting agreement.fee for the remaining nine (9) months through December 31, 2010, was paid in April 2010. Mr. Barretti continues as a director of the Company. |
(3) | Mr. Dorsey received 11,250There were no option awards pursuantgranted to our 2003 Stock Option Plan between the dates of May 28, 2008 and August 7, 2008. The option awards were valued using the Black-Scholes model with the following assumptions: volatility 68.3% to 70.0%; risk-free interest rate of 3.1% to 3.7%; expected life of 5.3 to 5.4 years; and expected dividend yield of 0.00%.non-employee directors during fiscal 2011. |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers, directors and persons who beneficially own more than 10% of a registered class of our securities to file reports of ownership and changes in ownership with the SEC. Based solely on a review of copies of such forms submitted to us, we believe that all persons subject to the requirements of Section 16(a) filed such reports on a timely basis in fiscal 2009.2011.
Certain Relationships and Related Transactions
During fiscalOn January 1, 2007, wethe Company entered into a consulting agreement with Michael L. Barretti, a member of theits Board and Chairman of the Compensation Committee,Directors, for an annualized fee of $50,000. During each of the fiscal years ended March 31, 20092011 and 2008, we2010, the Company recognized $37,000 and $50,000, respectively, of expense related to services incurred under this consulting agreement, which was recorded as selling, general and administrative expense. In April 2010, the Company and Mr. Barretti mutually agreed to terminate the consulting agreement as of December 31, 2010. A payment of approximately $37,000, representing the prorated consulting fee for the remaining nine (9) months through December 31, 2010, was paid in April 2010. Mr. Barretti continues as a director of the Company.
Transactions with related parties, including, but not limited to, members of the Board of Directors, are reviewed and approved by all members of the Board of Directors. In the event a transaction with a member of the Board is contemplated, the Director having a beneficial interest in the transaction is not allowed to participate in the decision-making and approval process. The policies and procedures surrounding the review, approval or ratification of related party transactions are not in writing, nevertheless, such reviews, approvals and ratifications of related party transactions are documented in the minutes of the meetings of the Board of Directors and any such transactions are committed to writing between the related party and us in an executed engagement agreement.
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board, on the recommendation of its Audit Committee, has selected the firm of Caturano and Company, P.C.McGladrey & Pullen, LLP (“Caturano”McGladrey”) as our independent registered public accounting firm for the current year. Caturanofiscal year ending March 31, 2012. McGladrey has served as our independent public accountants since its appointmentJuly 20, 2010, the date it completed the acquisition of the attest practice of Caturano and Company, Inc., our former independent public accountants who were appointed in March 2009.
The affirmative vote of the holders of a majority of the votes cast by stockholders entitled to vote is required for the ratification of CaturanoMcGladrey as our independent registered public accounting firm. Abstentions will be counted as a vote AGAINST the ratification of CaturanoMcGladrey as our independent registered public accounting firm for the fiscal year ending March 31, 2010.2012. Broker non-votes will have no effect on the ratification of CaturanoMcGladrey as our independent registered public accounting firm.
Representatives of CaturanoMcGladrey are expected to be present at the Annual Meeting. They will have the opportunity to make a statement if they desire to do so and will also be available to respond to appropriate questions from the stockholders.
If the stockholders do not ratify the selection of CaturanoMcGladrey as our independent registered public accounting firm, the selection of such firm will be reconsidered by the Audit Committee. The Audit Committee reserves the right to change the independent public accountants for the current year if it determines that there is a valid reason to do so. At this time, the Audit Committee does not know of any such reason.
Board Recommendation
Accordingly, the Board believes ratification of the selection of CaturanoMcGladrey as AdvanSource’s independent registered public accounting firm for the current year is in the best interests of AdvanSource and its stockholders and recommends a vote FOR the proposal.
Independent Auditor Fees and Other Matters
The following is a summary of the fees billed to us by Caturano and Company, P.C.,McGladrey & Pullen, LLP, our independent registered public accounting firm; and Ernst & Young LLP,Caturano and Company, Inc., our predecessor independent registered public accounting firm, for professional services rendered for the fiscal years ended March 31, 20092011 and 2008.2010. The Audit Committee considered and discussed with Ernst & Young LLP the provision of non-audit services to us and the compatibility of providing such services with maintaining its independence as our auditor. Fee Category | | Years Ended March 31, | | | Years Ended March 31, | |
(in thousands) | | 2009 | | | 2008 | | | 2010 | | | 2010 | |
Audit fees - Ernst & Young LLP | | $ | 126 | | | $ | 245 | | |
Audit fees - Caturano and Company, P.C. | | | 65 | | | | - | | |
Audit-related fees | | | - | | | | - | | |
Audit fees - McGladrey & Pullen, LLP | | | $ | 112 | | | $ | - | |
Audit fees - Caturano and Company, Inc. | | | | - | | | | 116 | |
Other audit related fees | | | | - | | | | 7 | |
Tax fees | | | - | | | | - | | | | 18 | | | | 17 | |
All other fees | | | - | | | | - | | |
Total fees | | $ | 191 | | | $ | 245 | | | $ | 130 | | | $ | 140 | |