UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
SCHEDULE
14A
(Rule
14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a)
of
the
Securities Exchange Act of 1934
Filed
by
the Registrant x
Filed
by
a Party other than the Registrant o
Check
the
appropriate box:
o
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Preliminary
Proxy Statement
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o
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Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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x |
Definitive
Proxy Statement
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o |
Definitive
Additional Materials
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o |
Soliciting
Material Pursuant to §240.14a-12
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iDNA,
Inc.
(Name
of
Registrant as Specified in Its Charter)
Payment
of Filing Fee (Check the appropriate box):
o |
Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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(1) |
Title
of each class of securities to which transaction
applies:
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(2) |
Aggregate
number of securities to which transaction
applies:
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(3)
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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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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) |
Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement
No.:
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Dear
Fellow Stockholder:
You
are
most cordially invited to attend the 2008 Annual Meeting of Stockholders of
iDNA, Inc. to be held at 10:00 A.M., local time, on Wednesday, July 30, 2008,
at
the Reed Smith Conference Center, 599 Lexington Avenue, 22nd
Floor,
New York, New York 10022. If you need more specific details regarding the venue
for the meeting, please contact the company by telephone at (212)
644-1400.
The
enclosed Notice of Annual Meeting of Stockholders and Proxy Statement on the
following pages describe the matters to be presented at the Annual
Meeting.
It
is
important that your shares be represented at the Annual Meeting to assure the
presence of a quorum. Whether or not you plan to attend the Annual Meeting,
we
hope that you will have your shares represented by signing, dating and returning
your proxy in the enclosed envelope, which requires no postage if mailed in
the
United States, as
soon as possible.
Your
shares will be voted in accordance with the instructions you have given in
your
proxy.
Thank
you
for your continued support.
Sincerely,
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/s/
James J. McNamara
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James
J. McNamara
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Chairman
of the Board and
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Chief
Executive Officer
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iDNA,
INC.
415
Madison Avenue, 7th Floor
New
York, NY 10017
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To
Be Held On July 30, 2008
Dear
Stockholders:
The
Annual Meeting of the Stockholders of iDNA, Inc. (“iDNA”
or
the
“Company”)
will
be held on Wednesday, July 30, 2008, at 10:00 A.M. (EDT), at the ReedSmith
Conference Center, 599 Lexington Avenue, 22nd
Floor,
New York, New York 10022, for the following purposes:
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(1)
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To
elect all directors of the Company to serve until the Annual Meeting
of
the Stockholders to be held in 2009 and until their successors have
been
duly elected and qualified;
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(2)
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Ratify
the selection of Grant Thornton LLP as our independent registered
public
accounting firm for the fiscal year ending January 31, 2009;
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(3)
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To
consider and act upon a proposal to ratify and approve an amendment
to our
2005 Equity Compensation Plan to increase the number of shares issuable
thereunder by one million (1,000,000) shares;
and
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(4)
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Transact
such other business as may properly come before the Annual Meeting
or any
adjournments thereof.
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Only
stockholders of record at the close of business on June 23, 2008 are entitled
to
notice of, and to vote at, the Annual Meeting, or any adjournment or
adjournments thereof. A complete list of such stockholders will be open to
examination by any stockholder during ordinary business hours at our executive
offices at 415 Madison Avenue, 7th Floor, New York, NY 10017 for a period of
10
days prior to the Annual Meeting and a copy shall be available for examination
at the time and place of the Annual Meeting. The Annual Meeting may be adjourned
from time to time without notice other than by announcement to such effect
at
the Annual Meeting.
It
is important that your shares be represented at the Annual Meeting. Your shares
cannot be voted unless they are represented by proxy or you make other
arrangements to have them represented at the Annual Meeting. Whether or not
you
plan to attend the Annual Meeting, please fill in, date and sign the enclosed
proxy and return it promptly in the enclosed envelope. The prompt return of
proxies will ensure a quorum and save us the expense of further
solicitation.
By
Order of the Board of Directors,
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/s/
Robert V. Cuddihy, Jr.
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Robert
V. Cuddihy, Jr.
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Chief
Financial Officer,
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Secretary
and Treasurer
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New
York,
New York
June
26,
2008
iDNA,
INC.
415
Madison Avenue, 7th Floor
New
York, NY 10017
General
These
proxy materials are furnished in connection with the solicitation of proxies
by
the Board of Directors of iDNA, Inc., a Delaware corporation (the “Company”
or
“iDNA”),
for
use at our 2008 Annual Meeting of Stockholders (the “Annual
Meeting”),
and
at any continuation or adjournment thereof. The Annual Meeting will be held
on
Wednesday, July 30, 2008, at 10:00 A.M. (EDT), at the Reed Smith Conference
Center, 599 Lexington Avenue, 22nd
Floor,
New York, New York 10022.
We
maintain principal executive offices at 415 Madison Avenue, 7th Floor, New
York,
NY 10017. This proxy statement and the accompanying form of proxy are being
mailed to stockholders on or about June 26, 2008. Our Annual Report on Form
10-K
for the fiscal year ended January 31, 2008, including financial statements
for
the year ended January 31, 2008, is being mailed to stockholders at the same
time.
Stockholders
Entitled To Vote
Holders
of shares of our common stock of record at the close of business on June 23,
2008 are entitled to notice of, and to vote at, the Annual Meeting and at any
and all adjournments or postponements of the Annual Meeting. Each share entitles
its owner to one vote. Under Section 216 of the Delaware General Corporation
Law
and Article II, Section 7 of our Second Amended and Restated By-Laws, the
holders of a majority of the shares entitled to vote at the Annual Meeting
must
be present in person or represented by proxy in order to constitute a quorum
for
all matters to come before the Annual Meeting. On the record date there were
10,585,864 shares of our common stock outstanding. Our Second Amended and
Restated Certificate of Incorporation and Second Amended and Restated By-Laws
do
not provide for cumulative voting.
Other
than the election of directors, which requires a plurality of the votes cast,
each matter to be submitted to the stockholders requires the affirmative vote
of
a majority of the votes cast at the meeting. For purposes of determining the
number of votes cast with respect to a particular matter, only those cast “For”
or “Against” are included. Abstentions and broker non-votes are counted only for
purposes of determining whether a quorum is present at the meeting.
How
To Vote
If
you
are a stockholder of record (i.e., a stockholder who holds shares in one’s own
name), you can vote by signing, dating and returning your proxy card in the
enclosed postage-paid envelope. If you sign and return your proxy card but
do
not give voting instructions, the shares represented by that proxy will be
voted
as recommended by our Board of Directors.
If
your
shares are held in “street name” (i.e., in the name of a bank, broker or other
holder of record), you will receive instructions from the holder of record
that
you must follow in order to vote your shares.
Changing
Your Vote
You
may
change your vote at any time before the proxy is exercised. If you voted by
mail, you may revoke your proxy at any time before it is voted by executing
and
delivering a timely and valid later-dated proxy, by voting by ballot at the
meeting or by giving written notice to our Secretary. Attendance at the Annual
Meeting will not have the effect of revoking a proxy unless you give proper
written notice of revocation to the Secretary before the proxy is exercised
or
you vote by written ballot at the Annual Meeting.
Householding
of Proxy Materials
The
Securities and Exchange Commission has adopted rules that permit companies
and
intermediaries (e.g., brokers, banks and nominees) to satisfy the delivery
requirements for proxy statements and annual reports with respect to two or
more
stockholders sharing the same address by delivering a single proxy statement
and
annual report addressed to those stockholders. This process, which is commonly
referred to as “householding,” potentially means extra convenience for
stockholders and cost savings for companies and intermediaries.
This
year, a number of brokers, banks and nominees with account holders who are
iDNA
stockholders may be householding our proxy materials. In such circumstances,
a
single proxy statement will be delivered to multiple stockholders sharing an
address unless contrary instructions have been received by the broker, bank
or
nominee from one or more of the affected stockholders. We have not initiated
householding with respect to the small number of our record holders, because
such householding would increase our costs. If, at any time, you would like
to
receive a separate copy of our proxy statement and annual report, we will
promptly send you an additional copy upon written or oral request directed
to
Robert V. Cuddihy, Jr., Chief Financial Officer, Secretary and Treasurer, at
our
offices located at 415 Madison Avenue, 7th Floor, New York, NY 10017, telephone
(212) 644-1400. If you are a beneficial owner, you can request additional copies
of the proxy statement and the Annual Report on Form 10-K for the fiscal year
ended January 31, 2008. If your shares are held in “street name,” you can
request a change in your householding status by notifying your broker, bank
or
nominee.
Stockholder
Proposals, Director Nominations and Other Information
To
be
included in our proxy statement and proxy card for the 2009 Annual Meeting
of
Stockholders, stockholder proposals and director nominations must be received
by
us on or before February 25, 2009. Proposals and nominations should be directed
to the attention of Robert V. Cuddihy, Jr., Chief Financial Officer, Secretary
and Treasurer, at our offices located at 415 Madison Avenue, 7th Floor, New
York, NY 10017.
In
addition, if a stockholder wishes to present a proposal or a director nomination
at our 2009 Annual Meeting of Stockholders which is not intended to be included
in the proxy statement for that meeting, we must receive written notice of
the
stockholder proposal or nomination not less than fourteen (14) nor more than
fifty (50) days prior to such meeting (such meeting is tentatively projected
to
be held in July 2009). If we do not receive timely notice of such proposal
or
nomination, we will retain discretionary authority to vote proxies on such
proposal or nomination even if it is not specifically reflected on the proxy
card and stockholders have not had an opportunity to vote on the proposal or
nomination by proxy.
Stockholder
Communication with our Board of Directors
Stockholders
who wish to communicate with our Board of Directors may do so by sending written
communications addressed to the Board of Directors, iDNA, Inc., c/o Henry Y.
L.
Toh, Lead Independent Director at 415 Madison Avenue, 7th Floor, New York,
NY
10017. This information is also contained on our website at www.idnausa.com.
It
is our policy that all nominees or directors standing for election at an annual
meeting of stockholders attend such annual meeting. All of our directors
standing for election attended our 2006 Annual Meeting of
Stockholders.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
There
were, as of May 29, 2008, approximately 1,205 holders of record and
approximately 2,912 beneficial holders of our common stock. The following
table sets forth certain information that, unless otherwise noted, is as of
June
23, 2008, with respect to holdings of our common stock by: (i) each person
known
by us to be the beneficial owner of more than 5% of the total number of shares
of our common stock outstanding as of such date, based upon currently available
Schedules 13D and 13G, and other reports, filed with the Securities and Exchange
Commission; (ii) each of our directors, nominees and named executive officers;
and (iii) all directors and executive officers as a group.
Name
and Address
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Number of Shares
Beneficially Owned (1)
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Percentage
Beneficially Owned (2)
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(i)
Beneficial Owners:
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Campus
Family 2000 Trust
42
Oak Avenue
Tuckahoe,
NY 10707
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1,883,333(3)
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15.1%
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(ii)
Directors, Nominees and Named Executive Officers:
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James
McNamara
415
Madison Avenue, 7th
Floor
New
York, New York 10017
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3,635,075(4)
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31.7%
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John
A. Gleason
415
Madison Avenue, 7th
Floor
New
York, New York 10017
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292,500(5)
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2.7%
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Henry
Y. L. Toh
415
Madison Avenue, 7th
Floor
New
York, New York 10017
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292,500(5)
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2.7%
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Robert
V. Cuddihy, Jr.
415
Madison Avenue, 7th
Floor
New
York, New York 10017
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500,000(6)
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4.7%
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James
M. Augur
415
Madison Avenue, 7th
Floor
New
York, New York 10017
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382,500(7)
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3.6%
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Donald
Shek
415
Madison Avenue, 7th
Floor
New
York, New York 10017
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82,500(7)
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0.8%
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(iii)
All Directors and Executive Officers as a Group
(6
persons)
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5,185,075(8)
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42.4%
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(1)
Pursuant to rules promulgated under Section 13(d) of the Securities Exchange
Act
of 1934, an individual is considered to beneficially own shares of our common
stock if he, she or it directly or indirectly has or shares (i) voting power,
which includes the power to vote or direct the voting of shares; or (ii)
investment power, which includes the power to dispose or direct the disposition
of the shares. Unless otherwise noted, we believe that all shares listed in
the
table are owned of record by each individual named as beneficial owner and
that
such individual has sole voting and dispositive power with respect to the shares
of our common stock owned by him, her or it. Such person’s percentage ownership
is determined by assuming that the options or convertible securities that are
held by such person, and which are exercisable within 60 days from June 23,
2008, have been exercised or converted, as the case may be.
(2)
Applicable percentage of beneficial ownership is based on 10,585,864 shares
of
common stock outstanding on June 23, 2008, unless otherwise noted.
(3)
Pursuant to the terms of a $2.8 million convertible promissory note outstanding
at June 23, 2008, the holder has the option to convert the note into shares
of
our common stock at the conversion price of $1.50 per share for an aggregate
of
1,883,333 shares of common stock if fully converted.
(4)
Includes 2,760,075 shares of our common stock and 875,000 shares issuable upon
exercise of options.
(5)
Includes 260,000 shares issuable upon exercise of options.
(6)
Includes 150,000 shares issuable upon exercise of options.
(7)
Includes 50,000 shares issuable upon exercise of options.
(8)
Includes 3,240,075 outstanding shares and an additional 1,645,000 shares
issuable upon exercise of options.
EQUITY
COMPENSATION PLAN INFORMATION
(as
of January 31, 2008)
The
following table provides information about securities authorized for issuance
under our equity compensation plans as of January 31, 2008:
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(a)
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(b)
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(c)
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Plan Category
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Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
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Weighted-average
exercise price of
outstanding options,
warrants and rights
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Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a))
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Equity
compensation plans approved by security holders
(1)
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3,030,784(2)
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$
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0.70
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560,068
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Equity
compensation plans not approved by security holders
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—
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—
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28,000
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Total
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3,030,784(2)
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$
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0.70
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588,068(3)
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(1) |
Consists
of our following equity compensation plans: 1993 Equity Incentive
Plan;
2003 Restricted Stock Plan; and 2005 Equity Compensation
Plan.
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(2) |
Consists
of 1,548,284 shares
subject to outstanding stock options issued under our 1993 Equity
Incentive Plan and 1,482,500 shares
subject to outstanding stock options issued under our 2005 Equity
Compensation Plan.
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(3) |
Consists
of 155,068 shares available for issuance under our 1993 Equity Incentive
Plan to our officers and employees, 28,000 shares available for issuance
under our 2003 Restricted Stock Plan to our employees, and 405,000
shares
available for issuance under our 2005 Equity Compensation Plan to
our
officers, directors, employees, consultants and advisors (not including
the additional 1,000,000 shares that may become available for issuance
under our 2005 Equity Compensation Plan should Proposal No. 3 be
adopted
at the Annual Meeting).
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PROPOSAL
NO. 1
ELECTION
OF DIRECTORS
Pursuant
to our Second Amended and Restated Certificate of Incorporation, each member
of
our Board of Directors is subject to election on an annual basis — at our annual
meeting of stockholders — for a one year term. There are currently five members
of our Board of Directors. At the Annual Meeting, all five directors are to
be
duly elected to hold office until the Annual Meeting of Stockholders to be
held
in 2009 and until their successors shall have been elected and qualified, or
until any such director’s earlier death, resignation, or removal. The nominees
for election to our Board of Directors are James J. McNamara, John A. Gleason,
James M. Augur, Donald Shek, and Henry Y.L. Toh.
The
following table sets forth biographical information for the directors of the
Company, each of whom has been nominated by the Board of Directors for election
at this year’s Annual Meeting of Stockholders:
Director
Nominees Subject to Election at the Annual Meeting
Director
Nominees for
Terms
Ending in 2009
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Present
Position, Age and Recent Business Experience
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James
J. McNamara
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James
J. McNamara, age 59, has been our Chairman of the Board and Chief
Executive Officer since November 2000. Mr. McNamara has been a director
of
our Company since February 1998 and previously served as our Chairman
from
April 1998 to November 1999. Mr. McNamara has also been President
of Film
Management Corporation (a film company) since 1995, and he has been
President and Chief Executive Officer of Celebrity Entertainment,
Inc. (an
entertainment company) since 1992. Mr. McNamara was Chairman of the
Board
and Chief Executive Officer of Princeton Media Group, Inc. (a magazine
publisher) from 1994 to 1998.
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James
M. Augur
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James
M. Augur, age 72, has been a director of our Company since May 2004.
Mr.
Augur has been a commercial and residential architect for over 30
years.
Mr. Augur currently serves as a consultant to owners and developers
for
land planning and architectural services and is the Chairman and
President
of JMA and Associates since its founding in 1973.
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John
A. Gleason
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John
A. Gleason, age 59, has been a director of our Company since April
2000.
Mr. Gleason previously served as a director of our Company from February
1998 to September 1999. From 1995 to 1998, Mr. Gleason served on
our
Dealer Advisory Board, serving as Chairman of such panel from 1996
to
1998. Mr. Gleason has been the President and principal of Automax,
Inc.,
an independent car dealership since 1987. Mr. Gleason has been the
President of Auto Place USA Inc., DBA New Franklin, Inc., an automobile
finance consulting firm, since 1992, and has been a partner in Runco
Properties LLC, a real estate firm, since 2003.
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Donald
Shek
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Donald
Shek, age 58, has been a director of our Company since December 2003.
Mr.
Shek has been a financial consultant in private practice since January
1998. From 1993 to 2002, Mr. Shek was a registered representative
for the
Financial West Group, an NASD broker/dealer.
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Henry
Y.L. Toh
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Henry
Y.L. Toh, age 50, has been a director of our Company since December
1998.
Mr. Toh is also a director of four other public companies: (i) C2
Global
Technologies, Inc., an Internet telephone company (since 1992), (ii)
Isolagen, Inc., a biotechnology company (since January 2004), (iii)
Teletouch Communications, Inc., a retail provider of Internet, cellular
and paging services (since December 2001), and (iv) American Surgical
Holdings, Inc. (since April 2007). Since August 2005, Mr. Toh has
served
as a director of Labock Technologies, Inc., and from September 2004
until
August 2005, Mr. Toh served as a director of Vaso Active Pharmaceuticals,
Inc. Mr. Toh has been the principal officer of Four M. International,
Inc.
(a private investment entity) and has served as a director and Chief
Executive Officer of Amerique Investments since 1992. Mr. Toh was
also a
director of Bigmar, Inc., a pharmaceutical company, from April 2002
to
February 2004. Mr. Toh began his career with KPMG Peat Marwick from
1980
to 1992, where he specialized in international taxation and mergers
and
acquisitions.
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The
Corporate Governance and Nominating Committee of our Board of Directors has
nominated, and our Board of Directors has ratified the nomination of, each
of
James J. McNamara, John A. Gleason, James M. Augur, Donald Shek, and Henry
Y.L.
Toh for election to our Board of Directors at the Annual Meeting, whose terms
will expire at the next Annual Meeting of Stockholders (in 2009), if elected
at
the Annual Meeting.
The
Corporate Governance and Nominating Committee will consider director candidates
recommended by our stockholders. In order to be considered by the Corporate
Governance and Nominating Committee, a stockholder must submit, in writing,
information regarding the stockholder and the recommended candidate to the
Corporate Governance and Nominating Committee, Attention: Chairman, c/o iDNA,
Inc.- Secretary, 415 Madison Avenue, 7th Floor, New York, NY 10017. The
information must be sent by registered mail or certified mail, return receipt
requested, and should include at least the following information: the name,
age,
business address and residence address of the recommended candidate; the
principal occupation or employment of such person; and a description of any
and
all arrangements or understandings between the stockholder and proposed
candidate. The recommending stockholder should also include complete contact
information with regard to himself or herself, indicate the number of shares
of
our common stock owned by the stockholder, and indicate whether the person
recommended as a candidate consents to being named in the proxy statement as
a
nominee for director.
The
following criteria have been identified by our Corporate Governance and
Nominating Committee, and adopted by our Board of Directors, to guide our
Corporate Governance and Nominating Committee in selecting Board
nominees:
1. Directors
should demonstrate integrity, accountability, informed judgment, financial
literacy, creativity and vision;
2. Directors
should have records of professional accomplishment in their chosen fields,
and
personal and professional reputations that complement and enhance the image
and
standing of iDNA;
3. Directors
should have varied educational and professional experiences and backgrounds
who,
collectively, provide meaningful counsel to management;
4. Directors
must be prepared and able to participate fully in Board activities, including
membership on Board of Director committees, and should therefore have sufficient
time to devote to us;
5. Directors
should represent the best interests of all of our stockholders, not just those
of one particular constituency; and
6. At
least
a majority of the members of our Board of Directors should be “independent”, as
defined by The Nasdaq Global Market, Inc., and should not have any real or
apparent conflicts of interest in serving as a director.
The
Corporate Governance and Nominating Committee utilizes a variety of methods
for
identifying and evaluating nominees for director, and there are no differences
in the manner in which the Corporate Governance and Nominating Committee
evaluates director nominees based on whether the nominee is recommended by
a
stockholder. Candidates may come to the attention of the Corporate Governance
and Nominating Committee via the recommendation of current directors,
stockholders or other persons. Candidates are evaluated at meetings of the
Corporate Governance and Nominating Committee and, subject to the timing details
included above for consideration at our 2009 Annual Meeting, may be considered
at any point during the year.
If
the
enclosed proxy is properly executed and received in time for the Annual Meeting,
it is the intention of the persons named in the proxy to vote the shares
represented thereby for the persons nominated for election to our Board of
Directors unless authority to vote shall have been withheld. If any nominee
should refuse or be unable to serve, the proxy will be voted for such person
as
shall be designated by our Board of Directors to replace such nominee or, in
lieu thereof, our Board of Directors may reduce the number of directors. Our
Board of Directors has no reason to believe that the nominees will be unable
to
serve if elected. The nominees have consented to being named in this proxy
statement and to serve if elected. Proxies cannot be voted for a greater number
of persons than the number of nominees set forth herein.
OUR
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” EACH
NOMINEE.
CORPORATE
GOVERNANCE
Independence
of Directors
Four
of
the five members of our Board of Directors (the entire Board of Directors,
with
the exception of Mr. McNamara, our Chairman of the Board and Chief Executive
Officer) are not affiliated with us in any capacity (except, by virtue of their
directorship and beneficial stock ownership) and are therefore “independent”, as
defined under Rule 4200(a)(15) of The NASDAQ Stock Market, Inc. Marketplace
Rules (the “NASDAQ
Marketplace Rules”)
and
the applicable rules of the Securities and Exchange Commission, as affirmatively
determined by our Board of Directors. While we are not listed on any of the
NASDAQ Global Select Market, NASDAQ Global Market or NASDAQ Capital Market
and
therefore are not subject to the NASDAQ Marketplace Rules, our Board of
Directors believes that this standard is a useful one in assisting it in making
its determination of director independence.
Meetings
and Committees of our Board of Directors
During
the fiscal year ended January 31, 2008, there were four (4) meetings of our
Board of Directors. Each incumbent director attended at least 75% of the
meetings of our Board of Directors and any committee or committees on which
he
or she served, during the period of time that such director served on such
committee or committees. Our Board of Directors has established an Audit
Committee, a Corporate Governance and Nominating Committee and a Compensation
and Stock Option Committee.
The
Audit
Committee currently consists of Mr. Toh, as chairman, Mr. Shek and Mr. Gleason.
Messrs. Toh, Shek and Gleason are each “independent” as defined by the current
NASDAQ Marketplace Rules and the applicable rules of the Securities and Exchange
Commission, as affirmatively determined by our Board of Directors. Our Board
of
Directors has also determined that each of Messrs. Toh and Shek is an “audit
committee financial expert,” as that term is defined by the rules of the
Securities and Exchange Commission, and is financially sophisticated under
the
NASDAQ Marketplace Rules. Pursuant to guidelines established by a written
charter adopted by our Board of Directors in November 2005, a copy of which
is
annexed to this proxy statement as Appendix
A,
our
Audit Committee assists our Board of Directors in fulfilling its
responsibilities of ensuring that management is maintaining an adequate system
of internal controls such that there is reasonable assurance that assets are
safeguarded and that financial reports are properly prepared, that there is
consistent application of generally accepted accounting principles, and that
there is compliance with management’s policies and procedures. In performing its
functions, our Audit Committee meets periodically with the independent
registered public accounting firm (including meeting in an executive session
without management present) and management to review their work and confirm
that
they are properly discharging their respective responsibilities. Our Audit
Committee met four (4) times during the fiscal year ended January 31, 2008.
The
Audit Committee Report is included below.
Our
Corporate Governance and Nominating Committee currently consists of Mr. Augur,
as chairman, Mr. Shek and Mr. Toh, each of whom are “independent” as defined by
the current NASDAQ Marketplace Rules and the applicable rules of the Securities
and Exchange Commission, as affirmatively determined by our Board of Directors.
Our Corporate Governance and Nominating Committee identifies individuals
qualified to become members of our Board of Directors, reviews the
qualifications of candidates and selects the director nominees for each annual
meeting of stockholders. Our Corporate Governance and Nominating Committee
also
develops and recommends corporate governance principles to our Board of
Directors, plans for and assists in the transitioning of directors on to and
off
of our Board of Directors, provides a review function for directors, helps
prepare for management succession, and leads our Board of Directors in complying
with its corporate governance principles. A copy of the Corporate Governance
and
Nominating Committee Charter is annexed to this proxy statement as Appendix
B.
Our
Corporate Governance and Nominating Committee met one (1) time during
the fiscal year ended January 31, 2008.
Our
Compensation and Stock Option Committee (or “Compensation
Committee”)
currently consists of Mr. Gleason, as chairman, and Mr. Augur, each of whom
is
“independent” as defined by the current NASDAQ Marketplace Rules and the
applicable rules of the Securities and Exchange Commission, as affirmatively
determined by our Board of Directors. Our Compensation Committee considers
compensation of our executive officers and directors, and considers, reviews
and
approves issues and matters concerning the compensation of directors and
employees and the objectives and policies instituted by our Board of Directors.
A copy of the Compensation Committee Charter is annexed to this proxy statement
as Appendix
C.
Our
Compensation and Stock Option Committee met two (2) times
during the fiscal year ended January 31, 2008. The Compensation Committee Report
is included below.
Code
of Ethics
We
have
adopted a Code
of
Business Conduct, Ethics and Corporate Governance (“Code
of Ethics”)
(which
was filed as Exhibit 99.4 to our Current Report on Form 8-K filed with the
Securities and Exchange Commission on November 8, 2005) that applies to all
of
our officers, directors and employees. A copy of our Code of Ethics will be
provided free of charge, upon written request to the following address: iDNA,
Inc., 415 Madison Avenue, 7th Floor, New York, NY 10017, Attention: Robert
V.
Cuddihy, Jr.
Compensation
Committee Interlocks and Insider Participation
As
described above, all members of our Compensation Committee are independent
directors, and none of them are present or past employees or officers of ours.
No member of the Compensation Committee has had any relationship with us
requiring disclosure under Item 404 of Regulation S-K promulgated by the
Securities and Exchange Commission. None of our executive officers has served
on
the board of directors or compensation committee (or other committee serving
an
equivalent function) of any other entity, one of whose executive officers has
served on our Board of Directors or our Compensation Committee.
AUDIT
COMMITTEE REPORT
The
Audit
Committee of the Board of Directors has furnished the following report, in
accordance with rules established by the Securities and Exchange Commission,
for
inclusion in this proxy statement.
The
Audit
Committee of the Board of Directors, which consists of Mr. Toh, as chairman,
Mr.
Shek and Mr. Gleason, reviews the results and scope of the annual audit and
the
services provided by Grant Thornton LLP, iDNA’s independent registered public
accounting firm and performs such additional functions as are set forth in
a
written charter adopted by the Board of Directors, a copy of which is annexed
to
this proxy statement as Appendix
A.
As part
of its ongoing activities, the Audit Committee has:
|
·
|
Reviewed
and discussed with iDNA’s management and Grant Thornton LLP the audited
financial statements for the fiscal year ended January 31, 2008;
|
|
·
|
Reviewed
and discussed with iDNA’s management and Grant Thornton LLP the evaluation
of iDNA’s design and functioning of its internal control over financial
reporting;
|
|
·
|
Held
separate executive sessions with Grant Thornton
LLP;
|
|
·
|
Discussed
with Grant Thornton LLP the matters required to be discussed by Statement
on Auditing Standards No. 61, Communications with Audit Committees,
as
amended; and
|
|
·
|
Received
the written disclosures and the letter from Grant Thornton LLP required
by
Independence Standards Board Standard No. 1, Independence Discussions
with
Audit Committees, and has discussed with Grant Thornton LLP its
independence.
|
Based
on
the review and discussions referred to above, the Audit Committee recommended
to
the Board of Directors that the audited financial statements be included in
the
Annual Report on Form 10-K for the fiscal year ended January 31, 2008. The
Audit
Committee also recommends that iDNA’s stockholders ratify the Board of
Directors’ selection of Grant Thornton LLP as the independent registered public
accounting firm for the fiscal year ending January 31, 2009.
Respectfully
submitted,
Audit
Committee
Henry
Y.L. Toh, Chairman
Donald
Shek
John
A.
Gleason
COMPENSATION
COMMITTEE REPORT
The
Compensation Committee has reviewed and discussed the Compensation Discussion
and Analysis (found below in this proxy statement) with management. Based on
the
review and discussions, the Compensation Committee recommended to the Board
of
Directors that the Compensation Discussion and Analysis be included in this
proxy statement.
Respectfully
submitted,
Compensation
Committee
John
A.
Gleason, Chairman
James
M.
Augur
DIRECTOR
COMPENSATION
The
following table sets forth a summary of our non-employee directors’ compensation
for the fiscal year ended January 31, 2008.
Director
Compensation Table - Fiscal 2008
|
|
Fees Earned
of Paid in
Cash
|
|
Stock
Awards
|
|
Option
Awards
|
|
Non-Equity
Incentive
Plan
Compensation
|
|
Change in
Pension Value
and Non-
qualified
Deferred
Compensation
|
|
All Other
Compensation
|
|
Total
|
|
Name
(1,3)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
M. Augur
|
|
$
|
25,000
|
|
$
|
-
|
|
$
|
-(2)
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
25,000
|
|
John
A. Gleason
|
|
$
|
25,000
|
|
$
|
-
|
|
$
|
-(2)
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
25,000
|
|
Donald
Shek
|
|
$
|
25,000
|
|
$
|
-
|
|
$
|
-(2)
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
25,000
|
|
Henry
Y. L. Toh
|
|
$
|
25,000
|
|
$
|
-
|
|
$
|
-(2)
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
25,000
|
|
|
(1) |
Reflects
the dollar amount of compensation expense incurred for financial
statement
reporting purposes for the fiscal year ended January 31, 2008 in
accordance with FAS 123R for stock option awards pursuant to our
equity
compensation plans. Assumptions used in the calculation of these
amounts
are included in Note 10 to our audited financial statements for the
fiscal
year ended January 31, 2008 included in our Annual Report on Form
10-K
filed with the Securities and Exchange Commission on May 15, 2008.
|
|
(2) |
The
full grant date fair value of the stock options issued to each of
our
non-employee directors during the fiscal year ended January 31, 2008,
calculated in accordance with FAS 123R, was $0,
as
no new stock options were issued to our non-employee directors during
such
fiscal year.
|
|
(3)
|
The
aggregate numbers of shares subject to option awards outstanding
and fully
vested as of January 31, 2008 were as follows: 50,000 for James M.
Augur;
260,000 for John A. Gleason; 50,000 for Donald Shek; and 260,000
for Henry
Y.L. Toh.
|
Overview
of Compensation of Directors
Under
our
currently-effective policy, each member of our Board of Directors (other than
Mr. McNamara, who is our employee) receives compensation of $15,000 per annum.
Non-employee directors serving on the Audit Committee or Compensation Committee
of our Board of Directors are also entitled to additional compensation of
$10,000 per annum.
All
option grants made to our non-employee directors shall cease to vest if the
grantee-director resigns from our Board of Directors, or the applicable
committee thereof, or otherwise ceases to serve, unless our Board of Directors
determines that the circumstances warrant continuation of vesting.
All
options granted to non-employee directors shall vest immediately if (i) there
is
a change of control and (ii) the optionee will cease to serve as a member of
our
Board of Directors as a result of such change of control (in each case, change
of control has the meaning assigned to such term in the individual option award
agreement entered into by us with our respective non-employee
directors).
In
addition to compensation under our currently effective policy, the members
of
our Board of Directors are also entitled to reimbursement for all reasonable
fees and expenses incurred in connection with the performance of services on
behalf of us. Fees and expenses are reimbursed upon submission to iDNA of
appropriate documentation for such fees and expenses in accordance with our
current company policy.
EXECUTIVE
OFFICERS WHO ARE NOT DIRECTORS
The
name,
age and position of each person who is currently serving as an executive officer
and who is not currently a director, is listed below, followed by a summary
of
his background and principal occupations. Executive officers are elected
annually, and serve at the discretion of the Board of Directors.
Name
|
|
Position
and Age
|
Robert
V. Cuddihy, Jr.
|
|
Robert
V. Cuddihy, Jr., age 48, has been our Chief Financial Officer and
Treasurer since September 2001 and our Secretary since January 2003.
Previously, Mr. Cuddihy served as an independent financial consultant
to
our Company from May 2001 to August 2001. From July 1987 to March
2001,
Mr. Cuddihy was the Chief Financial Officer of HMG Worldwide Corporation,
a company engaged in in-store marketing and retail store fixture
design
and manufacture, and also served as a director of such entity from
February 1998 to May 2001. HMG Worldwide Corporation effected an
assignment of its assets for the benefit of creditors in 2002. From
July
1981 to July 1987, Mr. Cuddihy was with KPMG Peat Marwick where he
last
served as a senior audit manager.
|
COMPENSATION
DISCUSSION AND ANALYSIS
The
purpose of this Compensation Discussion and Analysis is to describe the material
elements of compensation provided to our named executive officers for fiscal
year ended January 31, 2008. This analysis focuses on the compensation paid
to
our “named executive officers”, which is a defined term generally encompassing
all persons that served as our principal executive officer or principal
financial officer at any time during the year, as well as certain other highly
paid executive officers serving in such positions at the end of the fiscal
year.
During the fiscal year ended January 31, 2008, our named executive officers
consisted of (i) James McNamara, Chairman of the Board and Chief Executive
Officer, and (ii) Robert V. Cuddihy, Jr., Chief
Financial Officer, Secretary and Treasurer.
Overview
of Compensation and Process
Our
executive compensation program is designed to attract, retain, motivate and
reward executives with the skills and dedication necessary to provide the
leadership, strategic direction and vision to anticipate and respond to current
and future market opportunities or trends. The executive compensation program
design considers (i) issues pertaining to policies for allocating long-term
incentive and currently paid-out compensation, (ii) the manner in which
compensation is allocated between cash and non-cash compensation, (iii) an
executive officer’s current and future roles, responsibilities and expectations,
and (iv) an executive officer’s performance individually and as a part of the
management team.
The
compensation components for our executives include (i) salary, (ii) merit based
performance bonuses, (iii) long term equity compensation via grants of
restricted shares of our common stock and/or stock options, (iv) employee fringe
benefits including health, life and disability insurance and participation
in
our 401(k) savings and profit sharing plan, and (v) perquisites. Our
compensation program is designed to strengthen the relationship between
compensation, both cash and equity-based, and performance, by emphasizing
variable, at-risk compensation that is dependent upon the successful achievement
of specified corporate, business unit and individual performance goals. Our
compensation program is characterized by a balance between at-risk incentive
cash and equity-based compensation, on the one hand, and an executive’s base
compensation, on the other hand. Our compensation program is designed to be
competitive with corresponding programs of other corporate communications,
advertising, technology and entertainment businesses, while also providing
consideration to each executive’s unique skills and contributions to our long
term strategic goals.
Each
fiscal year, the Compensation Committee meets, together with our executive
management, in order to (i) discuss corporate and individual performance
objectives for the previous year, (ii) review the performance against the
objectives as well as the specific management responsibilities, (iii) establish
current year corporate and individual performance objectives, and (iv) review
management strategies to achieve such objectives. Through this process, the
compensation elements for executives are aligned with the long term interests
of
our stockholders and thereby maximize stockholder value. Base compensation
for
each executive is established either via a mutually agreed-upon employment
contract between iDNA and the executive or at a scheduled meeting of our
Compensation Committee. All executive employment agreements are negotiated,
reduced to writing, reviewed and approved by the Compensation Committee and
confirmed by our Board of Directors prior to execution by us.
Total
Overall Compensation
To
assist
us in establishing targeted overall compensation for our named executive
officers (i.e., the aggregate level of compensation to be paid if stated
performance goals are fully met), the Compensation Committee periodically
engages an independent compensation consultant. During the fiscal year ended
January 31, 2007, the Compensation Committee had engaged an independent
compensation consultant, Michael Preston (the “Consultant”),
to
assist our Company in structuring a new employment agreement with our Chief
Executive Officer, James McNamara. At the request of the Compensation Committee,
the Consultant conducted a study of the compensation programs at various public
companies in the corporate communications, advertising, technology or
entertainment businesses. The selected companies had attributes similar to
our
Company with respect to (i) market capitalization, (ii) annual revenues, (iii)
number of employees, (iv) stock price and (v) types of executive management
recruited by such companies. In addition, the Compensation Committee discussed
with the Consultant (i) our current and historical operations, (ii) our wind
down and exit process from the now discontinued sub-prime auto finance and
rental business, (iii) our entrance into the strategic communications,
information services and entertainment segments, and (iv) our vision and
strategic plans for the future.
The
results of the Consultant’s study provided the Compensation Committee with a
starting point to create a comprehensive compensation program for our Chief
Executive Officer that balances the strategic vision mutually shared by all
parties, while also providing due consideration to the significant contributions
made by Mr. McNamara during his tenure with us and the future expectations
of
our Board of Directors and our Compensation Committee. As a consequence of
(i)
the Compensation Committee’s efforts and due diligence, (ii) the study and
recommendations provided by the Consultant, (iii) the Compensation Committee’s
consultation with our independent counsel, (iv) various Compensation Committee
meetings and discussions and (v) direct negotiations held over a six month
period of time with Mr. McNamara, the Compensation Committee developed a
comprehensive compensation program for Mr. McNamara which is consistent with
our
compensation philosophy of balancing current base compensation with at-risk
incentive cash and equity-based compensation.
The
details of Mr. McNamara’s employment agreement (which, while entered into during
the fiscal year ended January 31, 2007, was still effective throughout the
fiscal year ended January 31, 2008 and is currently still effective), along
with
the employment agreement that we had previously entered into with Robert V.
Cuddihy, Jr., our Chief Financial Officer, Secretary and Treasurer (and which
is
still effective) are described below under the heading “Employment
Contracts.”
Equity
Compensation
In
keeping with our executive compensation program and philosophy for incentivizing
the performance of our named executive officers, we have also established our
2005 Equity Compensation Plan, our 1993 Equity Incentive Plan and our 2003
Restricted Stock Plan, the terms of which are described below at length (under
the heading “Stock
Option and Equity Incentive Programs”).
Pursuant to these plans, our named executive officers are eligible for grants
of
incentive stock options, non-qualified stock options, stock appreciation rights,
restricted stock appreciation rights and restricted shares of our common stock.
These equity compensation plans serve the purpose of reinforcing the alignment
of interests of our named executive officers with those of our stockholders,
as
the value of the awards granted thereunder is linked to the value of our common
stock, which, in turn, is indirectly attributable to the performance of our
named executive officers.
EXECUTIVE
COMPENSATION
The
following table sets forth a summary of the compensation for the fiscal years
ended January 31, 2008 (“Fiscal
2008”),
January 31, 2007 (“Fiscal
2007”)
and
January 31, 2006 (“Fiscal
2006”)
earned
by, or paid to, our named executive officers.
SUMMARY
COMPENSATION TABLE
|
|
Year
|
|
Salary
($)
|
|
Bonus
($)
|
|
Stock
Awards
($)
(1)
|
|
Option
Awards
($)(1)
|
|
Non-Equity
Incentive
Plan
Compensation
($)
|
|
Change
in Pension Value and
Non-Qualified
Deferred
Compensation
Earnings
($)
|
|
All
Other
Compensation
($)
|
|
Total
($)
|
|
James
J. McNamara
|
|
|
2008
|
|
$
|
590,000
|
|
$
|
200,000
|
|
$
|
-
|
|
$
|
63,895
(2)
|
|
$
|
-
|
|
$
|
-
|
|
$
|
27,000
(3)
|
|
$
|
880,895
|
|
Chairman
and
|
|
|
2007
|
|
$
|
513,846
|
|
$
|
-
|
|
$
|
290,000
|
|
$
|
75,300
(2)
|
|
$
|
-
|
|
$
|
-
|
|
$
|
76,800
(3)
|
|
$
|
955,946
|
|
Chief
Executive Officer
|
|
|
2006
|
|
$
|
500,000
|
|
$
|
250,000
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
95,140
(3)
|
|
$
|
845,140
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
V. Cuddihy, Jr.
|
|
|
2008
|
|
$
|
265,000
|
|
$
|
50,000
|
|
$
|
-
|
|
$
|
17,375
(4)
|
|
$
|
-
|
|
$
|
-
|
|
$
|
28,532
(5)
|
|
$
|
360,907
|
|
Chief
Financial Officer,
|
|
|
2007
|
|
$
|
265,000
|
|
$
|
-
|
|
$
|
-
|
|
$
|
17,375
(4)
|
|
$
|
-
|
|
$
|
-
|
|
$
|
30,288
(5)
|
|
$
|
312,603
|
|
Secretary
& Treasurer
|
|
|
2006
|
|
$
|
265,000
|
|
$
|
39,800
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
38,307
(5)
|
|
$
|
343,107
|
|
(*)
|
Employees
who also served on our Board of Directors during Fiscal 2008, Fiscal
2007
or Fiscal 2006 did not receive any additional compensation for such
service.
|
(1)
|
Represents
the compensation expense incurred by us in the respective fiscal
years in
connection with the grants of shares of our common stock or stock
options,
as applicable, calculated in accordance with FAS 123R. Assumptions
used in
the calculation of these amounts are included in Note 10 to our audited
financial statements for the fiscal year ended January 31, 2008 included
in our Annual Report on Form 10-K filed with the Securities and Exchange
Commission on May 15, 2008.
|
(2)
|
Pursuant
to the terms of Mr. McNamara’s employment agreement, he received options
to acquire 500,000 shares of our common stock, subject to vesting
over the
term of the agreement. For Fiscal 2008 and Fiscal 2007, we charged
to
operations $63,895 and $75,300, respectively, representing the dollar
value of such option grants recognized for financial statement reporting
purposes, calculated in accordance with FAS
123R.
|
(3)
|
The
amounts included in all other compensation for Mr. McNamara for Fiscal
2008, Fiscal 2007 and Fiscal 2006 include (i) executive life insurance
premiums of $0, $50,000 and $68,740, respectively, (ii) auto allowances
of
$18,000, $18,000 and $18,000, respectively, and (iii) employee benefits
paid to our 401(k) savings and profit sharing plan of $9,000, $8,800
and
$8,400, respectively.
|
(4)
|
During
Fiscal 2007, our Board of Directors approved a grant to Mr. Cuddihy
of
options to acquire 150,000 shares of our common stock. These stock
options
are subject to vesting over three years. For Fiscal 2008 and Fiscal
2007,
we charged to operations $17,375 and $17,375, respectively, for the
fair
value of the vested portion of the stock options granted to Mr. Cuddihy,
calculated in accordance with FAS
123R.
|
(5)
|
The
amounts included in all other compensation for Mr. Cuddihy for Fiscal
2008, Fiscal 2007 and Fiscal 2006 include (i) auto allowances and
related
expenses of $19,531, $21,428 and $29,907, respectively, and (ii)
employee
benefits paid to our 401(k) savings and profit sharing plan of $9,000,
$8,800 and $8,400, respectively.
|
GRANTS
OF PLAN BASED AWARDS DURING FISCAL YEAR 2008
The
table
reporting grants of stock and stock options to our named executive officers
during Fiscal 2008 has been omitted, as we did not make any such grants to
our
named executive officers during such fiscal year.
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
The
following table sets forth certain information concerning outstanding stock
options for iDNA’s named executive officers at January 31, 2008.
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
Equity
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
Incentive Plan
|
|
Incentive Plan
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Awards:
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Market or
|
|
|
|
Number of
|
|
Number of
|
|
Awards:
|
|
|
|
|
|
Number of
|
|
Market Value
|
|
Unearned
|
|
Payout Value
|
|
|
|
Securities
|
|
Securities
|
|
Number of
|
|
|
|
|
|
Shares or
|
|
of Shares or
|
|
Shares, Units
|
|
of Unearned
|
|
|
|
Underlying
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
Units of
|
|
Units of
|
|
or Other
|
|
Shares, Units
|
|
|
|
Unexericsed
|
|
Unexericsed
|
|
Unexericsed
|
|
Option
|
|
Option
|
|
Stock That
|
|
Stock That
|
|
Rights That
|
|
or Other Rights
|
|
|
|
Options #
|
|
Options #
|
|
Unearned
|
|
Exercise
|
|
Expiration
|
|
Have Not
|
|
Have Not
|
|
Have Not
|
|
That Have Not
|
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
Options (#)
|
|
Price ($)
|
|
Date
|
|
Vested (#)
|
|
Vested (#)
|
|
Vested (#)
|
|
Vested (#)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
J. McNamara
|
|
|
375,000
|
|
|
|
|
|
-
|
|
$
|
0.66
|
|
|
12/16/2010
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Chairman
and
|
|
|
125,000
|
|
|
|
|
|
-
|
|
$
|
0.61
|
|
|
11/29/2013
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Chief
Executive Officer
|
|
|
125,000
|
|
|
|
|
|
-
|
|
$
|
0.73
|
|
|
11/29/2013
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
$
|
0.88
|
|
|
11/29/2013
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
-
|
|
|
125,000(1)
|
|
|
-
|
|
$
|
1.05
|
|
|
11/29/2013
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
V. Cuddihy, Jr.
|
|
|
75,000
|
|
|
75,000(2)
|
|
|
-
|
|
$
|
0.52
|
|
|
01/23/2012
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Chief
Financial Officer,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secretary
and Treasurer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Pursuant
to the terms of Mr. McNamara’s employment agreement, these stock options vest in
annual installments of 125,000 options on each of November 29, 2008 and
November
29, 2009.
(2)
These
options vest in annual installments of 37,500 options on each of December
31,
2008 and December 31, 2009.
OPTION
EXERCISES AND STOCK VESTED
The
table
setting forth information concerning the exercise of options and the vesting
of
stock awards for our named executive officers during Fiscal 2008 has been
omitted, as no options were exercised by, and no stock awards vested for, our
named executive officers during Fiscal 2008.
PENSION
BENEFITS
The
table
disclosing the actuarial present value of each named executive officer's
accumulated benefit under defined benefit plans, the number of years of credited
service under each such plan, and the amount of pension benefits paid to each
named executive officer during Fiscal 2008 has been omitted because we do not
have tax-qualified defined benefit plans or supplemental executive retirement
plans in effect that provide benefits that cover our named executive officers.
The only retirement plan available to our named executive officers in Fiscal
2008 was our qualified 401(k) Savings and Profit Sharing Plan, which was
available to substantially all of our active employees.
NONQUALIFIED
DEFERRED COMPENSATION
The
table
disclosing contributions to non-qualified defined contributions and other
deferred compensation plans, and each named executive officer’s withdrawals,
earnings and fiscal year-end balances in those plans has been omitted because,
in Fiscal 2008, we had no nonqualified defined contribution or nonqualified
deferred compensation plans or benefits in effect for our named executive
officers or other employees.
Employment
Contracts
James
J. McNamara, Chief Executive Officer
On
November 29, 2006, our Board of Directors approved, and we consummated, an
employment agreement with James J. McNamara. Under the terms of the employment
agreement, Mr. McNamara is employed as our Chief Executive Officer for an
initial term of approximately three years, until January 31, 2010 (the
“Initial
Term”),
with
an initial base salary of $590,000 per year (the “Base
Salary”),
which
shall increase annually by $15,000 each January 31st,
beginning January 31, 2008 (each year under the employment agreement commencing
January 31st,
an
“Employment
Year”).
Mr.
McNamara is also entitled to receive an annual bonus of $100,000 if, at the
end
of a particular Employment Year, the price of our common stock exceeds the
previous Employment Year’s price per share by 125%. Furthermore, Mr. McNamara is
also entitled to incentive compensation of up to $200,000 in the event that
we
achieve certain performance objectives established by our Board of Directors.
The incentive compensation may also be increased by our Board of Directors
if
the Board believes it appropriate to reward Mr. McNamara’s performance for a
given year.
For
Fiscal 2008, our Board of Directors awarded the full $200,000 of incentive
compensation to Mr. McNamara under the employment agreement as a consequence
of
our initiation and/or completion of various strategic initiatives, including:
(i) implementation of an integrated marketing system to market and cross-sell
our broad range of products and services; (ii) implementation of marketing
initiatives to attract new clients and retain and expand existing client
relationships; (iii) implementation of a consolidation program for our New
York
facilities and personnel, thereby eliminating redundant expenses; (iv) the
development of a program which seeks to improve our operating results through
a
combination of (A) new client and program initiatives and (B) a further
reduction in our overhead expenses; and (v) our consummation (via our wholly
owned subsidiary, iDNA Cinema Holdings, Inc.) of a secured Master Loan and
Security Agreement pursuant to which we obtained a term loan in an aggregate
principal amount of $4.25 million.
In
addition to cash and bonus compensation, the employment agreement provided
Mr.
McNamara, as a signing bonus, a grant of 500,000 shares of our common stock.
However, in
the
event of Mr. McNamara’s resignation or termination for any reason prior to the
expiration of the Initial Term, we may redeem and repurchase, at the price
of
$0.01 per share, (i) 375,000 shares of common stock, if such resignation or
termination precedes the passage of one Employment Year under the employment
agreement, (ii) 250,000 shares of common stock, if such resignation or
termination occurs after the passage of one Employment Year but prior to the
completion of the second Employment Year under the employment agreement, or
(iii) 125,000 shares of common stock, if such resignation or termination follows
the completion of two Employment Years but precedes the completion of the third
Employment Year under the employment agreement.
Besides
the grant of shares of our common stock, the employment agreement also provided
for the grant to Mr. McNamara of stock options exercisable for 500,000 shares
of
our common stock at
the
following exercise prices: (i) 125,000 options at $0.61 per share; (ii) 125,000
options at $0.73 per share; (iii) 125,000 options at $0.88 per share; and (iv)
125,000 options at $1.05 per share. The stock options, having a seven year
term
from the grant date, were granted (upon approval by our Board of Directors)
pursuant to the terms of our
2005
Equity Compensation Plan.
Of the
500,000 options granted, 125,000 options vested (and became exercisable)
immediately as of the grant date, an additional 125,000 options vested on
November 29, 2007, and the remaining 250,000 options are subject to vesting
and
become exercisable in two equal, annual installments of 125,000 options each,
provided that Mr. McNamara is employed as of November 29, 2008 and 2009,
respectively.
The
employment agreement also provides for certain payments to Mr. McNamara in
the
event of a termination without cause by us or a termination for good reason
by
Mr. McNamara, including in the event of a Change in Control (as defined in
the
employment agreement). Such payments, and the terms and conditions governing
such payments, are described below in the separate section titled, “POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL.”
Robert
V. Cuddihy, Jr., Chief Financial Officer,
Secretary
and Treasurer
In
addition to Mr. McNamara’s employment agreement, we are party to an employment
agreement with Mr. Cuddihy, our Chief Financial Officer, Secretary and
Treasurer. Under the terms of the agreement, Mr. Cuddihy is employed as our
Chief Financial Officer and Treasurer (he was subsequently appointed as our
Secretary as well) at a base salary of $240,000 per year and a minimum annual
bonus of $25,000 per year. Mr. Cuddihy is also entitled to various employee
benefits, including health insurance and participation in our 401(k) plan and
in
related programs. The initial three year term of the agreement expired on
December 31, 2004; however, the agreement has been renewed on a month-to-month
basis unless ninety (90) days prior written notice of termination is provided
by
either party. In the event that the agreement is terminated by us without cause,
Mr. Cuddihy is entitled to severance compensation, as described below in the
section titled “POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL.”
During
Fiscal 2008, in consideration of Mr. Cuddihy’s achievements, our Board of
Directors approved the payment of a $50,000 bonus to him. Similarly, during
Fiscal 2007, in recognition of his achievements, Mr. Cuddihy was granted options
to acquire 150,000 shares of our common stock, based on the determination of
our
Board of Directors. The stock options granted to Mr. Cuddihy are subject to
vesting over a three year period.
Stock
Option and Equity Incentive Programs
2005
Equity Compensation Plan
Our
2005
Equity Compensation Plan (“2005
Plan”)
was
created in Fiscal 2006 and approved by our stockholders on January 31, 2006.
The
2005 Plan provides for the granting of incentive and non-qualified stock
options, stock appreciation rights, and common stock and restricted common
stock
awards (all of which are sometimes collectively referred to as “Grants”)
to key
employees, non-employee members of our Board of Directors, and to certain
consultants and advisors who perform services for us. Grants may be awarded
singlely, in combination or in tandem. In addition, Grants may be made in
combination or in tandem with, in replacement of, or as the payment for grants
or rights under any other compensation plan of ours, including the 1993 Plan
(as
defined below) or the plan of any acquired entity. Shares issued under the
2005
Plan may be authorized and un-issued shares, treasury shares or a combination
thereof. The Compensation Committee administers this plan, along with the 2003
Plan (as defined below) and the 1993 Plan. The directors serving on the
Compensation Committee must be “disinterested persons,” as defined under the
2005 Plan.
There
are
2,000,000 shares of our common stock, in the aggregate, authorized for issuance
pursuant to Grants under the 2005 Plan. If our stockholders approve Proposal
No.
3, the total number of shares authorized for issuance under the 2005 Plan will
increase by 1,000,000 shares to 3,000,000. Each stock option award or other
Grant that we may issue under the 2005 Plan is subject to vesting over a
specific period of time, and, in certain cases, vesting is dependent upon
compliance with certain performance criteria. During Fiscal 2007, we awarded
1,605,000 stock options and other Grants to officers, non-employee directors,
advisors and employees under the 2005 Plan. During Fiscal 2008, we did not
grant
any stock options, under the 2005 Plan, whereas, separately, Grants for a total
of 10,000 shares were cancelled. As of January 31, 2008, there were 405,000
shares available for future Grants under the 2005 Plan.
1993
Equity Incentive Plan
Our
1993
Equity Incentive Plan (the “1993
Plan”)
provides for the grant of incentive options, non-qualified options, stock
appreciation rights, restricted stock appreciation rights, restricted stock
and
common stock (all of which are sometimes collectively referred to as
“Awards”)
to our
named executive officers listed in the Summary Compensation Table above as
well
as to other employees of iDNA and its subsidiaries, any former employee of
iDNA
eligible to receive an assumed or replacement award or award settlement, and
non
employee members of our Board of Directors. Awards may be granted singlely,
in
combination or in tandem. In addition, Awards may be made in combination or
in
tandem with, in replacement of, or as the payment for, grants or rights under
any of our other compensation plans, including the 2005 Plan and the plan of
any
acquired entity.
There
are
2,200,000 shares of our common stock, in the aggregate, authorized for issuance
pursuant to Awards under the 1993 Plan. In Fiscal 2008, Awards for an aggregate
of 300,000 shares were granted to certain of our financial advisors under the
1993 Plan, while in Fiscal 2007, there were no Awards granted under the 1993
Plan. During
Fiscal 2008, Awards for a total of 133,668 shares
were cancelled. As
of
January 31, 2007, there were 155,068 shares available for future Awards under
the 1993 Plan. The shares issued under the 1993 Plan may be authorized and
un-issued shares, treasury shares or a combination thereof. As with the 2005
Plan, the 1993 Plan is administered by the Compensation Committee, which must
be
composed solely of “disinterested persons” as defined under the 1993 Plan.
2003
Restricted Stock Plan
We
also
sponsor a 2003 Restricted Stock Plan (the “2003
Plan”),
under
which restricted stock grants may be made to our employees. The 2003 Plan
authorizes the grant of up to a maximum of 400,000 restricted shares of our
common stock to our employees. Shares granted under the 2003 Plan may not be
sold, transferred, pledged or otherwise disposed of until they vest. Each award
under the 2003 Plan vests at the rate of 20% per year over a five year vesting
period. During the vesting period, unvested shares are voted by the manager
of
the business unit within which the grantee is employed. No shares have been
granted to executive officers or directors under the 2003 Plan. For Fiscal
2004,
iDNA granted an aggregate of 372,000 shares under the 2003 Plan. No further
grants were made under the 2003 Plan during the fiscal year ended January 31,
2005, Fiscal 2006, Fiscal 2007 or Fiscal 2008, and no further grants have been
made thereunder since January 31, 2008.
POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Each
of
our executive officers is party to an individual agreement with us concerning
termination of the executive generally, and, more specifically, termination
of
the executive in the event of a change in control. Such agreement is embedded
in
each executive’s employment agreement with us.
James
J. McNamara, Chief Executive Officer
Mr.
McNamara’s employment agreement provides for certain payments to Mr. McNamara in
the event of a termination without cause by us or a termination for good reason
by Mr. McNamara, as follows: we will pay to Mr. McNamara, in accordance with
our
normal payroll payment practices, the lesser of (i) thirty months of his Base
Salary or (ii) one dollar ($1) less than the amount that would constitute an
“excess parachute payment” under Section 280G of the Internal Revenue Code. As a
result of such termination, we shall also continue to provide Mr. McNamara
with
all employee benefits in which he was participating or which he was receiving
from us as of the effective date of termination (or, if greater, as of the
end
of the prior year) for thirty months following termination. At our own election,
we may make a lump sum payment of eighteen months of base compensation and
employee benefits as full termination compensation pursuant to the terms of
Mr.
McNamara’s employment agreement.
If,
upon
a change in control (as defined in Mr. McNamara’s employment agreement), as a
result of any payment or the vesting of any options pursuant to the terms of
his
employment agreement (or pursuant to any other plan, agreement or program)
(collectively, a “Payment”),
it is
determined that Mr. McNamara would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code (the “Parachute
Tax”),
then
Mr. McNamara shall be entitled to receive an additional payment or payments
(a
“Gross-Up
Payment”)
in an
amount such that, after payment by Mr. McNamara of all taxes (including any
Parachute Tax) imposed upon the Gross-Up Payment, Mr. McNamara will retain
an
amount of the Gross-Up Payment equal to the Parachute Tax imposed upon the
Payment.
Robert
V. Cuddihy, Jr., Chief Financial Officer,
Secretary
and Treasurer
Mr.
Cuddihy’s employment agreement with us provides that in the event that the
agreement is terminated by us without cause, Mr. Cuddihy will receive one year’s
worth of compensation in the form of severance compensation.
401(k)
PROFIT SHARING PLAN
We
have
adopted a tax-qualified 401(k) Savings and Profit Sharing Plan
(the
“401(k)
Plan”).
The
401(k) Plan is
a
defined contribution benefit program under Internal Revenue Code Section 401(k)
that covers substantially all of our active employees who are at least
twenty-one (21) years of age and have completed ninety (90) days of service.
The
401(k) Plan allows eligible employees to contribute up to 50% of their
compensation on a pre-tax basis. The 401(k) Plan provides a safe harbor matching
contribution by us of (i) 100% of the first 3% of the employee’s contribution
and (ii) 50% of the next 2% of the employees’ contribution, for a maximum of a
4% matching contribution. Vesting for our safe harbor matching contributions
is
immediate.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
In
accordance with the terms of our Code of Business Conduct, Ethics and Corporate
Governance, which was adopted by our Board of Directors on November 3, 2005,
we
have a written policy that requires the Audit Committee of our Board of
Directors to review and approve, in advance, the terms and conditions of all
related person transactions. Related person transactions to which this policy
applies includes any transaction to which we may be party with any of our
directors, executive officers or 5% stockholders or their respective immediate
family members. In
each
such case, the related person is required to work with our Board of Directors
and/or the Audit Committee, as appropriate, to monitor any potential conflict
of
interest (or appearance thereof) raised by the subject transaction and to ensure
that the counter-party to the transaction is acting in the best interests of
the
Company and its stockholders. Although
we have not entered into any transactions with any related persons since the
start of Fiscal 2008 that require disclosure under Item 404(a) of Regulation
S-K
promulgated by the Securities and Exchange Commission, if we were to do so
in
the future, any such transaction would need to be approved by the Audit
Committee of our Board of Directors prior thereto. Any transaction entered
into
by us with any related person will need to be on commercially available terms
that are as favorable to us as would be obtainable from an unaffiliated
party.
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under
the
securities laws of the United States, directors, executive officers and any
person holding more than 10% of our common stock are required to report their
ownership of common stock and any changes in that ownership to the Securities
and Exchange Commission on Forms 3, 4 and 5. Based solely on a review of the
copies of such reports furnished to us, we believe that the following
delinquencies and failures to file required reports had existed with respect
to
Section 16(a) reporting persons, but, as stated below, have all since been
cured:
John
A. Gleason:
Mr.
Gleason was late in filing a Form 3 to report his initial beneficial ownership
of our securities upon his being appointed a director of the Company (in
February 1998). Mr. Gleason was also late in filing a Form 4 to report our
grant
to him of options to purchase 75,000 shares in May 1998, options to purchase
100,000 shares in July 1999, options to purchase 35,000 shares in December
2000,
options to purchase 50,000 shares in December 2006, and 32,500 shares of
restricted stock in April 2008. His initial beneficial ownership was
subsequently reported in a Form 3 filing (in May 2008) and the grants of options
and restricted stock were subsequently reported in a Form 4 filing (in May
2008).
James
M. Augur:
Mr.
Augur was late in filing a Form 3 reporting his initial beneficial ownership
of
our securities upon his being appointed a director of the Company (in May 2004)
and was also late in filing a Form 4 reporting our grant to him of options
to
purchase 50,000 shares in December 2006 and 32,500 shares of restricted stock
in
April 2008. His initial beneficial ownership was subsequently reported in a
Form
3 filing (in May 2008) and the grants of options and restricted stock were
subsequently reported in a Form 4 filing (in May 2008).
Donald
Shek:
Mr.
Shek was late in filing a Form 3 reporting his initial beneficial ownership
of
our securities upon his being appointed a director of the Company (in December
2003) and was also late in filing a Form 4 reporting our grant to him of options
to purchase 50,000 shares in December 2006 and 32,500 shares of restricted
stock
in April 2008. His initial beneficial ownership was subsequently reported in
a
Form 3 filing (in May 2008), and the grants of options and restricted stock
were
subsequently reported in a Form 4 filing (in May 2008).
Henry
Y.L. Toh.:
Mr. Toh
was late in filing a Form 3 reporting his initial beneficial ownership of our
securities upon his being appointed a director of the Company (in December
1998). He was also late in filing a Form 4 to report our grant to him of options
to purchase 75,000 shares in December 1998, options to purchase 100,000 shares
in July 1999, options to purchase 35,000 shares in December 2000, options to
purchase 50,000 shares in December 2006, and 32,500 shares of restricted stock
in April 2008. His initial beneficial ownership was subsequently reported in
a
Form 3 filing (in May 2008) and the grants of options and restricted stock
were
subsequently reported in a Form 4 filing (in May 2008).
PROPOSAL
NO. 2
RATIFICATION
OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
Our
Board
of Directors has appointed Grant Thornton LLP as our independent registered
public accounting firm for the fiscal year ending January 31, 2009. Stockholder
ratification of the appointment is not required by our Second Amended and
Restated Certificate of Incorporation, By-Laws or otherwise, but the Board
of
Directors has decided to ascertain the position of our stockholders on the
appointment. Our Board of Directors will reconsider the appointment if it is
not
ratified. The affirmative vote of a majority of the shares voted at the meeting
is required for ratification. Abstentions and broker non-votes are not counted
in determining the number of votes cast in connection with the ratification
of
the appointment.
One
or
more representatives of Grant Thornton LLP are expected to attend the Annual
Meeting and will have an opportunity to make a statement and/or respond to
appropriate questions from our stockholders.
AUDIT
AND OTHER FEES
Our
independent registered public accounting firm during the fiscal years ended
January 31, 2008 and 2007 was Grant Thornton LLP. The fees billed to us by
Grant
Thornton LLP for the fiscal years ended January 31, 2008 (“Fiscal
2008”)
and
January 31, 2007 (“Fiscal
2007”)
were
as follows:
|
|
Fiscal 2008
|
|
Fiscal 2007
|
|
Audit
fees
|
|
$
|
342,000
|
|
$
|
248,000
|
|
|
|
|
|
|
|
|
|
Audit-related
fees
|
|
$
|
0
|
|
$
|
12,000
|
|
|
|
|
|
|
|
|
|
Tax
fees
|
|
$
|
68,000
|
|
$
|
90,000
|
|
|
|
|
|
|
|
|
|
Other
fees and services
|
|
$
|
0
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
Total
fees and services
|
|
$
|
410,000
|
|
$
|
350,000
|
|
Audit
Fees
The
fees
for audit services by Grant Thornton LLP for the fiscal years ended January
31,
2008 and 2007 were $342,000 and $248,000, respectively. These fees relate to
services rendered for the audit of our annual financial statements, review
of
our quarterly financial statements, and assistance with and review of documents
filed with the Securities and Exchange Commission.
Audit-Related
Fees
The
fees
for audit-related services by Grant Thornton LLP for the fiscal years ended
January 31, 2008 and 2007 were $0 and $12,000, respectively. These fees relate
to assurance and related services rendered that are reasonably related to the
audit and review of our financial statements for such fiscal years, exclusive
of
the Audit Fees described above. These fees include benefit plans and audits,
assistance with registration statements, and comfort letters and consents not
performed directly in connection with audits.
Tax
Fees
The
fees
for tax services by Grant Thornton LLP for the fiscal years ended January 31,
2008 and 2007 were $68,000 and $90,000, respectively. These fees relate to
tax
compliance, consulting and planning services rendered during Fiscal 2008 and
Fiscal 2007, including the preparation of tax returns, review of restrictions
on
net operating loss carryforwards and other general tax services.
All
Other Fees
We
did
not incur fees for any services rendered by our independent registered public
accounting firm, other than the fees disclosed above relating to audit,
audit-related and tax services, during Fiscal 2008 or Fiscal 2007.
Audit
Committee Pre-Approval Policies and Procedures
In
accordance with the requirements of the Sarbanes-Oxley Act of 2002 and the
rules
and regulations promulgated thereunder, the Audit Committee of our Board of
Directors has adopted an informal approval policy that it believes will result
in an effective and efficient procedure for the pre-approval of services
performed by our independent auditor.
Audit
Services.
Audit
Services include the annual financial statement audit (including quarterly
reviews) and other procedures required to be performed by the independent
auditor in order for it to form an opinion as to our financial statements.
The
Audit Committee may pre-approve specified annual audit services engagement
terms
and fees and other specified audit fees. All other audit services must be
specifically approved in advance by the Audit Committee. The Audit Committee
monitors the audit services engagement and may approve, if necessary, any
changes in terms, conditions and fees resulting from changes in audit scope
or
other items.
Audit-Related
Services. Audit-related
services are assurance and related services that are reasonably related to
the
performance of the audit or review of our financial statements which
historically have been provided to us by the independent auditor and are
consistent with the Securities and Exchange Commission’s rules on auditor
independence. The Audit Committee may pre-approve specified audit-related
services within pre-approved fee levels. All other audit-related services must
be approved in advance by the Audit Committee.
Tax
Services.
The
Audit Committee may pre-approve specified tax services that the Audit Committee
believes would not impair the independence of the auditor and that are
consistent with Securities and Exchange Commission rules and guidance. All
other
tax services must be specifically approved by the Audit Committee.
All
Other Services.
Other
services are services provided by the independent auditor that do not fall
within the established audit, audit-related and tax services categories. The
Audit Committee may pre-approve specified other services that do not fall within
any of the specified prohibited categories of services.
Procedures.
All
requests for services to be provided by the independent auditor, which must
include a detailed description of the services to be rendered and the amount
of
corresponding fees, are submitted to our Chief Financial Officer. The Chief
Financial Officer authorizes services that have been pre-approved by the Audit
Committee. If there is any question as to whether a proposed service fits within
a pre-approved service category, the Chairman of our Audit Committee is
consulted for a determination. Our Chief Financial Officer submits requests
or
applications to provide services that have not been pre-approved by the Audit
Committee, which must include an affirmation by the Chief Financial Officer
and
the independent auditor that the request or application is consistent with
the
Securities and Exchange Commission’s rules on auditor independence, to the Audit
Committee (or its Chairman or any of its other members pursuant to delegated
authority) for approval.
OUR
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” APPROVAL OF
GRANT
THORNTON LLP TO
AUDIT THE ACCOUNTS OF THE COMPANY FOR THE FISCAL YEAR ENDING JANUARY 31,
2009.
PROPOSAL
NO. 3
RATIFICATION
AND APPROVAL OF
AN
AMENDMENT TO OUR
2005
EQUITY COMPENSATION PLAN
On
April
24, 2008, our Board of Directors approved an amendment to our 2005 Equity
Compensation Plan (the “2005
Plan”)
which,
if approved by our stockholders, will increase
the number of shares of our common stock reserved for issuance under any form
of
stock award under the 2005 Plan from 2,000,000 shares to 3,000,000 shares
and provide that a maximum of 3,000,000 shares will be issuable as incentive
stock options under the 2005 Plan. In
the
event that any option or other grant under the 2005 Plan expires or is otherwise
terminated without having been exercised or vested in full, as the case may
be,
the stock not acquired under the award shall revert to and again become
available for issuance under the 2005 Plan.
A
description of the 2005 Plan is included below. It is not a complete statement
of the 2005 Plan. The
full
text of the 2005 Plan was annexed as Appendix
B
to our
Definitive Proxy Statement on Schedule 14A for our 2006 annual meeting of
stockholders, filed on December 14, 2005 with the Securities and Exchange
Commission (the “SEC”),
which
is available at the SEC’s website located at www.sec.gov. The currently proposed
form of amendment to the 2005 Plan is annexed as Appendix
D
to this
proxy statement, a copy of which is also available at the SEC’s website. If
approved by our stockholders, the amendment to the 2005 Plan will be effective
on the date of the Annual Meeting, July 30, 2008.
Introduction
The
2005
Plan provides our employees, non-employee directors, consultants and advisors
with the opportunity to receive grants of incentive stock options, nonqualified
stock options, stock awards, and stock appreciation rights related to our stock.
Unless terminated earlier by our Board of Directors or extended with stockholder
approval, the 2005 Plan will terminate on October 31, 2015.
The
purpose of the 2005 Plan is to give participants an ownership interest in our
Company and to create an incentive for them to contribute to our growth, thereby
benefiting our stockholders, and aligning the economic interests of the
participants with those of our stockholders. On May 29, 2008, the closing price
of our common stock was $0.14 per share.
Administration
Compensation
and Stock Option Committee
The
2005
Plan is administered and interpreted by the members of the Compensation and
Stock Option Committee of our Board of Directors (the “Compensation
Committee”),
which
consists of “outside directors,” as defined under Section 162(m) of the Internal
Revenue Code of 1986, as amended (the “Code”),
and
related Treasury regulations, and “non-employee directors,” as defined under
Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the
“Exchange
Act”).
In
addition, our Board of Directors may ratify or approve any grants as it deems
appropriate, and the Board of Directors approves and administers all grants
made
to non-employee directors. Our Compensation Committee may delegate authority
to
one (1) or more delegates as it deems appropriate.
Committee
Authority
Our
Compensation Committee or its delegate has the sole authority to (i) determine
the individuals to whom grants are made under the 2005 Plan; (ii) determine
the
type, size, and terms of the grants to be made to any such individual; (iii)
determine the time when the grants will be made and the duration of any
applicable exercise or restriction period, including the criteria for
exercisability and the acceleration of exercisability; (iv) amend the terms
of
any previously issued grant; and (v) deal with any other matters arising under
the 2005 Plan. Notwithstanding anything in the 2005 Plan to the contrary, in
no
event may our Board of Directors, our Compensation Committee or its delegate
(A)
amend
a stock option to reduce the exercise price; (B) substitute a stock option
for
another stock option with a lower exercise price; (C) cancel a stock option
and
issue a new stock option with a lower exercise price to the same holder within
six (6) months following the date of the cancellation; or (D) cancel an
outstanding stock option with an exercise price below our stock’s fair market
value for the purpose of granting a replacement equity award of a different
type
within six (6) months following the date of the cancellation.
Committee
Determinations
Our
Compensation Committee has full power and authority to administer and interpret
the 2005 Plan, to make factual determinations and to adopt or amend such rules,
regulations, agreements, and instruments for implementing the 2005 Plan and
for
the conduct of its business as it deems necessary or advisable, in its sole
discretion. The interpretations of our Compensation Committee regarding the
2005
Plan and all determinations made by our Compensation Committee pursuant to
the
powers vested in it under the 2005 Plan are conclusive and binding on all
persons having any interest in the 2005 Plan or in any awards granted under
the
2005 Plan. All powers of our Compensation Committee may be executed in its
sole
discretion, in the best interest of the Company, not as a fiduciary, and in
keeping with the objectives of the 2005 Plan and need not be uniform as to
similarly situated individuals.
Other
Equity Awards
The
terms
of the 2005 Plan do not impact or govern our administration of, or the rights
of
any holders of an option or stock award granted pursuant to our
1993
Equity Incentive Plan (the “1993
Plan”)
or our
2003 Restricted Stock Plan (the “2003
Plan”).
Unless
otherwise provided by us and agreed to by the recipient of an award under the
1993 Plan or 2003 Plan, all awards granted pursuant to those plans continue
to
be governed by the terms of such plans.
Eligibility
All
of
our employees, including employees who are officers or members of our Board
of
Directors, and members of our Board of Directors who are not our employees
(“Non-Employee
Directors”)
are
eligible to participate in the 2005 Plan. Consultants and advisors who perform
services for us (“Key
Advisors”)
are
also eligible to participate in the 2005 Plan.
As
of May
30, 2008, we had five (5) directors and approximately sixty-eight (68)
employees, which included two (2) executive officers. In addition, we routinely
utilize varying levels of consultants and advisors to conduct our normal
business operations.
Shares
Subject to the 2005 Plan
The
2005
Plan currently authorizes the issuance of 2,000,000 shares of our common stock
pursuant to any form of grant. If the proposed amendment to the 2005 Plan is
approved by our stockholders, the number of shares authorized for issuance
shall
be increased to 3,000,000 shares. Of such 3,000,000 shares, a maximum of
3,000,000 shares will be issuable under stock awards. Also assuming the adoption
of the amendment, the maximum number of shares that will be subject to grants
made to any individual under the 2005 Plan during any calendar year will be
3,000,000 shares. If any grant of shares under the 2005 Plan shall for any
reason expire or otherwise terminate, in whole or part, without having been
exercised in full, the stock not acquired shall revert to and again become
available for issuance under the 2005 Plan.
These
limits will be adjusted by the Compensation Committee for stock splits, stock
dividends, recapitalizations, a merger or reorganization in which we are the
surviving corporation, a reclassification or change in the par value of our
stock, or other similar transactions affecting our stock. Shares used to make
grants may be issued directly by us or purchased on the open market and then
transferred to participants by us.
Types
of Grants Available Under the 2005 Plan
The
following types of grants are available under the 2005 Plan:
|
·
|
Incentive
stock options;
|
|
·
|
Nonqualified
stock options;
|
|
·
|
Stock
appreciation rights;
|
|
·
|
Restricted
stock units.
|
Options
The
2005
Plan provides for the award of incentive stock options and nonqualified stock
options, which provide the option holder with the right to purchase shares
of
our common stock at a specified exercise price during a specified period of
time.
Nonqualified
stock options may be awarded to anyone eligible to participate in the 2005
Plan,
including employees, Non-Employee Directors and Key Advisors. However, only
our
employees (or employees
of any subsidiary) are
eligible to receive incentive stock options.
Under
the
2005 Plan, the exercise price of nonqualified and incentive stock options must
be equal to or greater than the fair market value of a share of our common
stock
on the date of grant. Only $100,000 of any incentive stock options (based on
the
fair market value of the stock on the date(s) of grant) may first become
exercisable by an employee during any calendar year. In other words, the
aggregate amount of all incentive stock options granted under all of our plans
that first become exercisable by a single employee in any calendar year may
not exceed $100,000. Any options that exceed this limit must be nonqualified
stock options. In addition, if an employee who receives an incentive stock
option owns more than 10% of the voting power of our stock or the stock of
a
subsidiary, the exercise price must be at least equal to 110% of the fair market
value of our stock on the date of grant. See “Federal Income Tax Consequences”
below, which includes a discussion regarding the tax differences between a
nonqualified stock option and an incentive stock option.
Option
Terms
Each
grant under the 2005 Plan is accompanied by a grant instrument. The grant
instrument describes the type and number of grants that the option holder has
been awarded and the terms and restrictions applicable to the grant. The grant
instrument for an option describes when the option becomes
exercisable.
Exercise
of Options
The
exercise term of each option is determined by our Compensation Committee and
set
forth in the applicable grant instrument. The term of an option may not exceed
ten years; provided, however, if an option holder owns more than 10% of the
voting power of our stock or the stock of a subsidiary, an incentive stock
option may not have a term that exceeds five years from the date of grant.
Our
Compensation Committee may accelerate the exercisability of options awarded
under the 2005 Plan at any time for any reason.
An
option
holder may pay the exercise price, as specified in the applicable grant
instrument (i) in cash, (ii) through a broker by having a broker sell our common
stock simultaneously with the exercise of the option, or (iii) by such other
method of payment as our Compensation Committee may approve.
Termination
Unless
our Compensation Committee determines otherwise or an option expires by its
terms within a shorter period, if an option holder ceases to be employed by,
or
provide services to, us for any reason other than death, disability or
termination for misconduct, the option holder has ninety (90) days from the
date
of termination to exercise any vested options. If an option holder is terminated
for misconduct, the option holder has thirty (30) days from the date of
termination to exercise any vested options. Unless our Compensation Committee
determines otherwise or an option expires by its terms within a shorter period,
if an option holder ceases to be employed by, or provide services to, us on
account of (i) disability, or (ii) death (during the term of service or within
ninety (90) days thereafter for reasons other than termination for misconduct),
the option holder has one year from the termination date to exercise any vested
options. If an option holder dies while employed by, or providing services
to
the Company, all of the unexercised options of the person becomes immediately
exercisable. Unless our Compensation Committee determines otherwise, all options
that have not become exercisable on the date on which an option holder ceases
to
be employed by, or provide services to, us terminate. To the extent that a
Company-sponsored plan or agreement provides for a longer exercise period,
that
exercise period applies in lieu of the exercise periods summarized in this
paragraph.
Stock
Appreciation Rights (SARs)
SARs
give
the recipient the right to receive the appreciation in the value of our stock
over a specified period of time. SARs which are settled in shares of our stock
are counted in full against the number of shares available for award under
the
2005 Plan, regardless of the number of shares of stock issued upon the exercise
and settlement of the SAR. Our Compensation Committee may grant SARs separately
or in tandem with any option. Tandem SARs may be granted either at the time
that
an option is granted or at any time while an option remains outstanding;
however, with respect to incentive stock options, tandem SARs may be granted
only at the time of grant. When an option is exercised, any SARs relating to
the
stock covered by such option terminate. When a tandem SAR is exercised, the
related option terminates to the extent of an equal number of shares of our
stock.
Value
When
an
SAR is exercised, the holder receives an amount of our stock equal to the amount
by which the fair market value of the underlying stock on the date of exercise
exceeds the base amount of the SAR. Unless our Compensation Committee determines
otherwise, the base amount of each SAR equals the per share exercise price
of
the related option, or, if there is no related option, the fair market value
of
a share of our common stock as of the date of grant of the SAR.
Terms
SARs
are
exercisable and are subject to vesting and other restrictions as specified
in
the applicable grant instrument. Our Compensation Committee may accelerate
the
exercisability of all or any outstanding SARs at any time for any reason.
Termination
Unless
our Compensation Committee determines otherwise or an SAR expires by its terms
within a shorter period, SARs terminate on the same terms as discussed above
with respect to options.
Stock
Awards
Stock
awards are grants of our stock that are subject to restrictions or no
restrictions, as set forth in the grant instrument. Our Compensation Committee
determines whether stock awards are granted, the type of award (including
restricted stock units), the number of shares that are awarded, any restrictions
applicable to the stock awards and when and how the restrictions lapse. Until
the restrictions lapse, stock awards cannot be sold, assigned, transferred,
pledged or otherwise disposed of. Unless our Compensation Committee determines
otherwise, if employment or service terminates while stock awards are subject
to
restrictions, any shares whose restrictions have not yet lapsed are forfeited
and must be returned to us.
Qualified
Performance-Based Compensation
Our
Compensation Committee may determine that stock awards will be granted as
qualified performance-based compensation for tax purposes. The Code limits
a
company’s ability to deduct compensation for each of its five highest paid
executives in excess of $1 million per year. The Code provides an exception
to
this limit if the compensation is designated as qualified performance-based
compensation. If our Compensation Committee grants stock awards that are
intended to be qualified performance-based compensation, we must meet specified
performance goals, designated by our Compensation Committee, in order for the
qualified performance-based compensation to be payable.
Our
Compensation Committee establishes the performance goals for qualified
performance-based compensation, the performance period during which the goals
must be met, the threshold, target and maximum amounts that may be paid if
the
performance goals are met, and any other conditions deemed appropriate and
consistent with the 2005 Plan and legal requirements. Our
Compensation Committee establishes the performance goals for qualified
performance-based compensation in writing at the beginning of a performance
period, or during a period that is no later than the earlier of either 90 days
after the beginning of the performance period, or the date on which 25% of
the
performance period has been completed, or such other date that is permitted
under the Code.
The
performance goals are based on objective criteria such as stock price, earnings
per share, net earnings, operating earnings, return on assets, stockholder
return, return on equity, growth in assets, unit volume, sales, market share,
or
strategic business criteria based on our meeting specific revenue goals, market
penetration goals, geographic business expansion goals, cost targets, or goals
relating to acquisitions or divestitures.
The
performance goal results are announced for each performance period immediately
following the announcement of our financial results for the performance period.
If the performance goals for a performance period are not met, the grants
subject to the performance goals are forfeited.
Restricted
Stock Units
Restricted
stock units provide a grant that represents the right of the holder to receive
an amount of cash or Company stock based upon a value of the restricted stock
unit, if performance goals are met, or upon a vesting schedule. A restricted
stock unit is based upon the fair market value of a share of Company stock
or
such other measurement base as the Compensation Committee deems appropriate.
Change
in Control
If
a
change of control (as defined in the 2005 Plan) occurs, where the Company is
not
the survivor corporation, unless the Company determines otherwise, (i) all
outstanding options and SARs that are not exercised shall be assumed by, or
replaced by the surviving corporation, and outstanding stock awards and
restricted stock units shall be converted to stock awards and restricted stock
units of the surviving corporation. In addition, any of the following actions
may occur: (i) outstanding options and SARs shall accelerate and become
exercisable in whole or in part; (ii) the restrictions and conditions on all
outstanding stock awards and restricted stock units shall lapse, in whole or
in
part; (iii) option holders shall be required to surrender their outstanding
options and SARs in exchange for a payment in cash or stock, in an amount equal
to the amount by which the fair market value of the shares of Company stock
subject to the option exceeds the exercise price of the options or the base
amount exceeds the unexercised SAR; and (iv) after giving option holders an
opportunity to exercise their outstanding options and SARs, all outstanding
options and SARs shall terminate as of the date of the change of control or
such
other date as specified.
Transferability
Generally,
grants are not transferable except upon death. Grants may only be exercised
during the lifetime of the recipient and may not be transferred except by will,
through the laws of descent and distribution or, in the case of grants other
than incentive stock options, pursuant to a domestic relations order, if
permitted by our Compensation Committee.
However, our Compensation Committee may permit the transfer of nonqualified
stock options to family members
or a trust or other entity established for the benefit of family members of
a
grantee under the 2005 Plan.
Further
Amendment of the Plan
The
2005
Plan may be further amended by our Board of Directors at any time. However,
our
stockholders must approve any amendment for which stockholder approval is
required under applicable provisions of the Code or under applicable exchange
requirements.
Federal
Income Tax Consequences
The
current United States federal income tax treatment of options and stock awards
under the 2005 Plan is generally described below. This description of tax
consequences is not a complete description. There may be different income tax
consequences under certain circumstances, and there may be gift and estate
tax
consequences. Local, state and other taxing authorities may also tax grants
under the 2005 Plan. Tax laws are subject to change. Each award holder should
consult with his or her personal tax advisor concerning the application of
the
general principles discussed below to his or her own situation and the
application of other tax laws. The 2005 Plan is not subject to the Employee
Retirement Income Security Act of 1974 and is not a tax-qualified plan under
Section 401 of the Code.
Nonqualified
Stock Options
There
generally are no federal income tax consequences upon the grant of a
nonqualified stock option. Upon the exercise of a nonqualified stock option,
the
recipient recognizes ordinary income in an amount equal to the difference
between the exercise price and the fair market value of the underlying stock
on
the date of exercise. Any gain or loss realized on disposition of shares
purchased upon exercise of a nonstatutory stock option is treated as a capital
gain or loss for federal income tax purposes. The capital gain tax rate will
depend on the length of time the participant holds the shares and other factors.
We generally are entitled to a corresponding federal income tax
deduction.
If
a
participant surrenders shares underlying a nonqualified stock option to pay
the
exercise price, such person recognizes no gain or loss on the surrendered
shares, and his or her basis and holding period for the surrendered shares
continues to apply to that number of new shares equal to the surrendered shares.
To the extent that the number of shares received upon the exercise of the option
exceeds the number surrendered, the fair market value of the excess shares
on
the date of exercise, reduced by any cash paid by the participant upon exercise,
is includible in gross income. The basis in the excess shares equals the sum
of
the cash paid upon the exercise of the stock option plus any amount included
in
the exercising person’s gross income as a result of the exercise.
Incentive
Stock Options
There
generally are no federal income tax consequences upon the grant of an incentive
stock option. A recipient does not recognize income for purposes of the regular
federal income tax upon the exercise of an incentive stock option. However,
for
purposes of the alternative minimum tax, in the year in which an incentive
stock
option is exercised, the amount by which the fair market value of the shares
acquired upon exercise exceeds the exercise price is included in alternative
minimum taxable income.
Income
is
recognized upon the sale of stock acquired upon exercise of an incentive stock
option. If the shares acquired upon exercise of an incentive stock option are
disposed after two years from the date the option was granted and after one
year
from the date the shares were transferred upon the exercise of the option,
the
person recognizes long-term capital gain or loss in the amount of the difference
between the amount realized on the sale and the exercise price. We are not
entitled to any corresponding tax deduction.
If
a
participant disposes of shares acquired upon exercise of an incentive stock
option before satisfying both holding period requirements (a disqualifying
disposition), the gain recognized on the disposition is taxed as ordinary income
to the extent of the difference between the fair market value of the shares
on
the date of exercise (or the amount realized on the disposition, if less) and
the exercise price, and, generally, we are entitled to a deduction in that
amount. The gain, if any, in excess of the amount recognized as ordinary income
is long-term or short-term capital gain, depending upon the length of time
the
participant held the shares before the disposition.
If
a
participant surrenders shares received upon the exercise of a prior incentive
stock option to pay the exercise price of any option within either the two-year
or one-year holding periods described above, the disqualifying disposition
of
the shares used to pay the exercise price results in income (or loss) to the
participant and, to the extent of recognized income, a tax deduction for us.
If
a participant surrenders the shares after the holding period requirements are
met, or if a participant surrenders shares that were not received upon the
exercise of an incentive stock option, the participant recognizes no gain or
loss on the surrendered shares, and the basis and the holding period for the
surrendered shares continues to apply to that number of new shares that is
equal
to the surrendered shares. The holding period for purposes of determining
whether a participant has a disqualifying disposition for the new shares when
the participant sells the shares begins on the date the shares were exercised.
To the extent that the number of shares received exceeds the number of shares
surrendered, the basis in the excess shares equals the amount of cash, if any,
paid for such excess shares and the holding period with respect to the excess
shares begins on the date the shares were exercised.
Stock
Appreciation Rights
There
generally are no federal income tax consequences upon the grant of an SAR.
Upon
exercise of an SAR, the participant recognizes ordinary compensation income
equal to the fair market value of any shares received. We generally are entitled
to a corresponding federal income tax deduction at the time of exercise of
the
SAR.
When
a
participant sells any shares acquired by the exercise of an SAR, he or she
has
capital gain or loss in an amount equal to the difference between the amount
realized upon the sale and the adjusted tax basis in the shares (the amount
of
ordinary income recognized at the time of exercise of the SAR).
Stock
Awards
If
a
participant receives restricted stock awards, he or she generally does not
recognize taxable income, and we are not entitled to a deduction, until the
stock is transferable or no longer subject to a substantial risk of forfeiture
for federal tax purposes, whichever occurs earlier. When the stock is either
transferable or is no longer subject to a substantial risk of forfeiture, the
participant recognizes ordinary income in an amount equal to the fair market
value of the shares (less any amounts paid for the shares) at that time, and
generally, we are entitled to a deduction in the same amount.
However,
a participant may elect to recognize ordinary income in the year when the
restricted stock awards are granted in an amount equal to the fair market value
of the shares subject to the award (less any amounts paid for such shares)
at
that time, determined without regard to any restrictions. In that event, we
generally are entitled to a corresponding deduction in the same year. Any gain
or loss recognized by a participant upon a later disposition of the shares
is a
capital gain or loss.
If
a
participant receives stock awards that are not subject to a substantial risk
of
forfeiture or are transferable at grant, the participant recognizes ordinary
income on the value of the shares at the date of grant. We are generally
entitled to a corresponding tax deduction.
Tax
Withholding
We
have
the right to deduct from all grants or other compensation payable to a
participant any taxes required to be withheld with respect to grants under
the
2005 Plan. We may require that a participant pay to us the amount of any
required withholding. Our Compensation Committee may permit a participant to
satisfy our tax withholding obligation with respect to a grant by having shares
withheld. However, the value of shares withheld may not exceed the minimum
required tax withholding amount.
Transfer
of Stock Options
A
participant may be permitted to transfer nonqualified stock options to family
members or a trust or other entity established for the benefit of family
members, consistent with applicable law. The tax consequences of stock option
transfers are complex and should be carefully evaluated by a participant with
the advice of his or her tax advisor.
Generally,
a participant does not recognize income at the time such participant makes
a
gift of a nonqualified stock option to a family member or a trust or other
entity. When the transferee later exercises the option, the transferor (and
not
the transferee) must recognize ordinary income on the difference between the
fair market value of the stock and the exercise price.
For
federal gift tax purposes, if an option is transferred before the option has
become exercisable, the transfer is not considered by the Internal Revenue
Service to be a completed gift until the option becomes exercisable. The value
of the gift is determined when the option becomes exercisable. Gifts of options
may qualify for the $12,000 gift tax annual exclusion. If
a
participant dies after transferring an option in a completed gift transaction,
the transferred option may be excluded from the participant’s estate for estate
tax purposes if the applicable estate tax requirements have been
met.
OUR
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” RATIFICATION AND APPROVAL
OF AN AMENDMENT TO OUR 2005 EQUITY COMPENSATION PLAN INCREASING THE NUMBER
OF
SHARES ISSUABLE THEREUNDER BY ONE MILLION (1,000,000)
SHARES.
OTHER
MATTERS
Management
knows of no matters other than those described above that are to be brought
before the meeting. However, if any other matter properly comes before
the
meeting, the persons named in the enclosed proxy will vote the proxy in
accordance with their best judgment on the matter.
We
will
bear the cost of preparing and mailing the enclosed material. We may use
the
services of our officers and employees (who will receive no additional
compensation) to solicit proxies. We intend to request banks and brokers
holding
shares of our common stock to forward copies of the proxy materials to
those
persons for whom they hold shares and to request authority for the execution
of
proxies. We will reimburse banks and brokers for their out-of-pocket expenses.
We have retained our transfer agent, American Stock Transfer & Trust
Company, to aid in the solicitation, at an estimated cost of approximately
$3,000.
Certain
information contained in this proxy statement relating to the occupations
and
security holdings of our directors and officers is based upon information
received from the individual directors and officers.
Upon
request, we will furnish, without charge, by first class mail, a copy of
our
Annual Report on Form 10-K for the year ended January 31, 2008, including
financial statements and schedules thereto, to each of our stockholders
of
record on June 23, 2008 and to each beneficial stockholder on that date.
Such
requests are to be made to Robert V. Cuddihy, Jr., Chief Financial Officer,
Secretary & Treasurer, at our offices located at 415 Madison Avenue, 7th
Floor, New York, NY 10017 or by telephone at (212) 644-1400. We will mail
such
materials within one business day of our receipt of the request. A reasonable
fee will be charged for copies of requested exhibits.
By
Order
of the Board of Directors,
Robert
V.
Cuddihy, Jr.
Chief
Financial Officer, Secretary and Treasurer
New
York,
New York
June
26,
2008
P
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iDNA,
INC.
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R
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PROXY
CARD
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|
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O
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PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
THE
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ANNUAL
MEETING OF STOCKHOLDERS TO BE HELD ON JULY 30,
2008
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X
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Y
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The
undersigned hereby: (a) acknowledges receipt of the Notice of Annual Meeting
of
Stockholders of iDNA, Inc. (the “Company”)
to be
held on July 30, 2008 and the Proxy Statement in connection therewith,
each
dated June 26, 2008; (b) appoints James J. McNamara and Robert V. Cuddihy,
Jr.,
and each of them with power of substitution, as Proxies; (c) authorizes
the
Proxies to represent and vote, as designated hereon, all the shares of
Common
Stock of the Company, held of record by the undersigned on June 23, 2008,
at
such Annual Meeting and at any adjournment(s) thereof; and (d) revokes
any
proxies heretofore given.
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PLEASE
SIGN AND DATE ON THE REVERSE SIDE AND MAIL THIS PROXY
CARD
PROMPTLY USING THE ENCLOSED ENVELOPE
|
|
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SEE
REVERSE SIDE
|
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR”
EACH
OF
PROPOSALS 1, 2 AND 3.
1.
Election
of Directors
DIRECTOR-
NOMINEES:
James
J. McNamara
|
o
FOR o
WITHHOLD AUTHORITY
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James
M. Augur
|
o
FOR o
WITHHOLD AUTHORITY
|
John
A. Gleason
|
o
FOR o
WITHHOLD AUTHORITY
|
Donald
Shek
|
o
FOR o
WITHHOLD AUTHORITY
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Henry
Y. L. Toh
|
o
FOR o
WITHHOLD
AUTHORITY
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_________________________________________
2.
Ratification of GRANT THORNTON LLP as the Company’s independent
auditors
o
FOR o
AGAINST o
ABSTAIN
3.
|
Ratification
of an amendment to the 2005 Equity Compensation Plan increasing
the number
of shares issuable thereunder by one million (1,000,000)
shares
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o
FOR o
AGAINST o
ABSTAIN
THIS
PROXY WILL BE VOTED AS DIRECTED, OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL
BE VOTED FOR PROPOSALS 1, 2 AND 3 AND AS SAID PROXIES DEEM ADVISABLE ON SUCH
OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
o
Check
here if you plan to attend the meeting
SIGNATURE(S)_________________________________
SIGNATURE(S)_________________________________
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NOTE:
|
Please
sign exactly as name appears hereon. Joint owners should each sign.
When
signing as attorney, executor, administrator, trustee or guardian,
please
give full title as such.
|
DATE_________________________________________
APPENDIX
A
iDNA,
INC.
AUDIT
COMMITTEE CHARTER
Purpose
The
Audit
Committee (or the “Committee”)
appointed by the Board of Directors (the “Board”)
of
iDNA, Inc. (the “Company”)
shall
oversee the accounting and financial reporting processes of the Company and
the
audits of the Company’s financial statements. In
that
regard, the Audit Committee assists the Board in monitoring (1) the integrity
of
the financial statements of the Company, (2) the independent auditor’s
qualifications and independence, (3) the performance of the Company’s internal
audit function and
independent auditors, and (4) the compliance by the Company with legal and
regulatory requirements. The Audit Committee shall prepare the report required
by the rules of the Securities and Exchange Commission (the “SEC”)
to be
included in the Company’s annual proxy statement.
Committee
Composition and Member Qualifications
The
Audit
Committee shall consist of no fewer than three members. Each
member of the Audit Committee shall meet the independence requirements of
Rules
4350(d)(2) and 4200(a)(15) of The Nasdaq Stock Market, Inc. Marketplace Rules
(the “Nasdaq
Marketplace Rules”) and
Rule
10A-3 promulgated under the Securities Exchange Act of 1934, as amended (the
“Exchange
Act”).
No
member of the Audit Committee shall have participated in the preparation
of the
financial statements of the Company or any current subsidiary of the Company
at
any time during the past three years. All
members of the Audit Committee shall be sophisticated in financial matters
and
shall able to read and understand fundamental financial statements, including
the Company’s balance sheet, income statement and cash flow
statement.
In
addition, at least one member of the committee shall have had past employment
experience in finance or accounting, requisite professional certification
in
accounting or any other comparable experience or background which results
in the
individual’s financial sophistication, including having been a chief executive
officer, chief financial officer or other senior officer with financial
oversight responsibilities, and shall be an “audit committee financial expert”
as defined by the rules promulgated by the SEC.
Notwithstanding
the above requirements, one director who does not meet the definition of
independence as set forth in Nasdaq Marketplace Rule 4200, but who does meet
the
criteria set forth in Section 10A(m)(3) under the Exchange Act and the rules
thereunder, and who is not a current officer or employee of the Company or
an
immediate family member of such person, may serve for no more than two years
on
the Committee if the Board, under exceptional and limited circumstances,
determines that such individual’s membership is required by the best interests
of the Company and its shareholders. Such person must satisfy the independence
requirements set forth in Section 10A(m)(3) of the Exchange Act, and may
not
chair the Audit Committee. The use of this “exceptional and limited
circumstances” exception, as well as the nature of the individual’s relationship
to the Company and the basis for the Board’s determination, shall be disclosed
by the Company in its next annual proxy statement following such determination
by the Board.
In
addition, if an Audit Committee member ceases to be independent as defined
under
Rule 10A-3(b)(1) under the Exchange Act and Nasdaq Marketplace Rule 4350(d)(2)
for reasons outside the member’s reasonable control, his or her membership on
the Audit Committee may continue until the earlier of the Company’s next annual
shareholders’ meeting or one year from the occurrence of the event that caused
the failure to qualify as independent.
If the
Company falls out of compliance with the requirements regarding Audit Committee
composition under Nasdaq Marketplace Rule 4350(d)(2)(A) due to a single vacancy
on the Audit Committee, and is not already relying upon the cure period with
respect to a non-independent member of the Committee (as described in the
previous sentence), the Company shall have until the earlier of its next
annual
shareholders’ meeting or one year from the occurrence of the event that caused
the failure in compliance to rectify the Committee’s composition by filling the
vacancy with a new member meeting the required qualifications.
The
Company shall provide notice to Nasdaq immediately upon learning of the event
or
circumstance that caused non-compliance with the Audit Committee composition
requirements if it expects to rely on either of the provisions allowing for
the
cure period described above.
In
addition to, not limitation of, the foregoing, the Committee’s composition shall
at all times comply with the relevant rules and regulations of the SEC, the
Nasdaq Marketplace Rules (until such time as the Company’s securities are listed
on an exchange other than Nasdaq), the New York Stock Exchange or any other
national securities exchange to which the Company is, or may become,
subject.
The
members of the Audit Committee shall be appointed and may be replaced by
the
Board.
Meetings
The
Audit
Committee shall meet as often as it determines necessary but not less frequently
than on a quarterly basis. The Audit Committee shall meet periodically in
separate executive sessions with the Company’s management, the Company’s
internal auditors and the Company’s independent auditor, and have such other
direct and independent interaction with such persons from time to time as
the
members of the Audit Committee deem appropriate.
The
Audit Committee may request that any officer or employee of the Company or
the
Company’s outside counsel or independent auditor attend a meeting of the Audit
Committee or meet with any members of, or consultants to, the Audit Committee.
Compensation
Members
of the Audit Committee shall be eligible for compensation in amounts up to
$10,000 per year for service thereon, such compensation to be in addition
to the
payments for which such members shall be eligible based upon their service
as
members of the Board at large.
Committee
Authority and Responsibilities- Generally
The
Audit
Committee shall have the sole authority to appoint, determine funding for,
retain and oversee the Company’s outside, independent auditor (subject to
shareholder ratification at the annual meeting of shareholders).
The
Audit Committee shall be directly responsible for the compensation and oversight
of the work of the independent auditor (including resolution of disagreements
between the Company’s management and the independent auditor regarding financial
reporting) for the purpose of preparing or issuing an audit report or performing
other audit, review or attest services. The independent auditor shall report
directly to the Audit Committee.
The
Audit
Committee shall pre-approve all auditing services, internal control-related
services and permitted non-audit services (including the fees and terms thereof)
to be performed for the Company by its independent auditor,
subject
to the de
minimis
exception for non-audit services that are approved by the Audit Committee
prior
to the completion of the audit.
The
Audit Committee may form and delegate authority to subcommittees consisting
of
one or more members when appropriate, including the authority to grant
pre-approvals of audit and permitted non-audit services, provided that decisions
of such subcommittee to grant pre-approvals shall be presented to the full
Audit
Committee at its next scheduled meeting.
The
Audit
Committee shall have the authority, to the extent it deems necessary or
appropriate to carry out its duties, to engage and determine funding for
independent legal, accounting or other advisors.
The
Company shall provide for appropriate funding, as determined by the Audit
Committee, for payment of compensation to the independent auditor for the
purpose of rendering or issuing an audit report or performing other audit,
review or attest services for the Company and to any advisors employed by
the
Audit Committee, as well as funding for the payment of ordinary administrative
expenses of the Audit Committee that are necessary or appropriate in carrying
out its duties.
The
Audit
Committee shall make regular reports to the Board. The Audit Committee shall
review and reassess the adequacy of this Charter annually and recommend any
proposed changes to the Board for approval.
Financial
Statement and Disclosure Matters
The
Audit
Committee, to the extent it deems necessary or appropriate, shall:
• |
Review
and discuss with management and the independent auditor the annual
audited
financial statements, including disclosures made in management’s
discussion and analysis, and recommend to the Board whether the audited
financial statements should be included in the Company’s Form
10-K.
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• |
Review
and discuss with management and the independent auditor the Company’s
quarterly financial statements prior to the filing of its Form 10-Q,
including the results of the independent auditor’s review of the quarterly
financial statements.
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• |
Discuss
with management and the independent auditor significant financial
reporting issues and judgments made in connection with the preparation
of
the Company’s financial statements, including any significant changes in
the Company’s selection or application of accounting principles, any major
issues as to the adequacy of the Company’s internal controls and any
special steps adopted in light of material control
deficiencies.
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• |
Review
and discuss with management and the independent auditor any major
issues
as to the adequacy of the Company’s internal controls, any special steps
adopted in light of material control deficiencies and the adequacy
of
disclosures about changes in internal control over financial
reporting.
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• |
Review
and discuss with management (including the senior internal audit
executive) and the independent auditor the Company’s internal controls
report and the independent auditor’s attestation of the report prior to
the filing of the Company’s Form 10-K.
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• |
Review
and discuss quarterly reports from the independent auditor
on:
|
o all
critical accounting policies and practices to be used;
o all
alternative treatments of financial information within generally
accepted
accounting principles that have been discussed with management, ramifications
of
the use of such alternative disclosures and treatments, and the treatment
preferred by the independent auditor;
and
o
other
material written communications between the independent auditor
and management,
such as any management letter or schedule of unadjusted
differences.
• |
Discuss
with management the Company’s earnings press releases, including the use
of “pro forma” or “adjusted” non-GAAP information, as well as financial
information and earnings guidance provided to analysts
and rating
agencies. Such discussions may be conducted in a general
manner
(consisting of discussions regarding the types of information
to be
disclosed and types of presentations to be made).
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• |
Discuss
with management and the independent auditor the effect
of regulatory and
accounting initiatives as well as off-balance sheet structures
on the
Company’s financial statements.
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• |
Discuss
with management the Company’s major financial risk exposures and the steps
management has taken to monitor and control such exposures,
including the
Company’s risk assessment and risk management policies.
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• |
Discuss
with the independent auditor the matters required to be
discussed by
Statement on Auditing Standards No. 61 relating to the
conduct of the
audit, including any difficulties encountered in the course
of the audit
work, any restrictions on the scope of activities or access
to requested
information, and any significant disagreements with
management.
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• |
Review
disclosures made to the Audit Committee by the Company’s Chief Executive
Officer and Chief Financial Officer during the process leading
up to their
certifications for the Company’s Forms 10-K and 10-Q regarding any
significant deficiencies in the design or operation of internal
controls
or material weaknesses therein, any changes in internal control
over
financial reporting and any fraud involving management or other
employees
who have a significant role in the Company’s internal
controls.
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Ensure
that a public announcement of the Company’s receipt of an audit opinion
that contains a going concern qualification is made promptly.
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Review
expense records of the Company’s senior management.
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Review
and evaluate the lead partner of the independent auditor team.
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Oversight
of the Company’s Relationship with
the Independent Auditor
• |
Obtain
and review a report from the independent auditor at least annually
regarding (a) the independent auditor’s internal quality-control
procedures, (b) any material issues raised by the most recent internal
quality-control review, or peer review, of the firm, or by any
inquiry or
investigation by governmental or professional authorities within
the
preceding five years respecting one or more independent audits
carried out
by the firm and (c) any steps taken to deal with any such issues.
Evaluate
the qualifications, performance and independence of the independent
auditor, including considering whether the auditor’s quality controls are
adequate and the provision of permitted non-audit services is compatible
with maintaining the auditor’s independence, and taking into account the
opinions of management and internal auditors. The Audit Committee
shall
present its conclusions with respect to the independent auditor
to the
Board.
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• |
Obtain
from the independent auditor a formal written statement delineating
all
relationships between the independent auditor and the Company.
It is the
responsibility of the Audit Committee to actively engage in a dialogue
with the independent auditor with respect to any disclosed relationships
or services that may impact the objectivity and independence of
the
auditor and for purposes of taking, or recommending that the full
Board
take, appropriate action to oversee the independence of the outside
auditor.
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• |
Ensure
the rotation of the lead (or coordinating) audit partner having
primary
responsibility for the audit and the audit partner responsible
for
reviewing the audit as required by law. Consider whether, in order
to
assure continuing auditor independence, it is appropriate to adopt
a
policy of rotating the independent auditing firm on a regular
basis.
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• |
Recommend
to the Board policies for the Company’s hiring of employees or former
employees of the independent auditor.
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• |
Discuss
with the independent auditor material issues on which the national
office
of the independent auditor was consulted by the Company’s audit
team.
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•
|
Meet
with the independent auditor prior to the audit to discuss the
planning
and staffing of the audit.
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Oversight
of the Company’s Internal Audit Function
• |
Review
the appointment and replacement of the senior internal auditing
executive.
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• |
Review
the significant reports to management prepared by the internal
auditing
department and management’s responses.
|
• |
Discuss
with the independent auditor and management the internal audit
department
responsibilities, budget and staffing and any recommended changes
in the
planned scope of the internal audit.
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• |
Implement
appropriate systems to coordinate the internal audit function
and the
internal audit staff with the Company’s independent
auditor.
|
Compliance
Oversight Responsibilities
• |
Obtain
from the independent auditor assurance that Section 10A(b)
of the Exchange
Act has not been implicated (i.e., a finding by the independent
auditor
that an illegal act has occurred).
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• |
Obtain
reports from management, the Company’s senior internal auditing executive
and the independent auditor that the Company and its subsidiary/foreign
affiliated entities are in conformity with applicable legal
requirements
and the Company’s Code of Business Conduct and Ethics. Advise the Board
with respect to the Company’s policies and procedures regarding compliance
with applicable laws and regulations and with the Company’s Code of
Business Conduct and Ethics.
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• |
Establish
procedures for the receipt, retention and treatment of
complaints received
by the Company regarding accounting, internal accounting
controls or
auditing matters, and the confidential, anonymous submission
by employees
of concerns regarding questionable accounting or auditing
matters.
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• |
Discuss
with management and the independent auditor any correspondence
with
regulators or governmental agencies and any published
reports which raise
material issues regarding the Company’s financial statements or accounting
policies.
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• |
Discuss
with the Company’s General Counsel legal matters that may have
a material
impact on the financial statements or the Company’s compliance
policies.
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Compliance
with Rules of SEC and the Company’s Exchange
The
Audit
Committee shall comply with the relevant rules and regulations of the SEC,
the
Nasdaq Marketplace Rules (until such time as the Company’s securities are listed
on an exchange other than Nasdaq or Nasdaq’s Over-the-Counter Bulletin Board),
the New York Stock Exchange or any other national securities exchange to
which
the Company is, or may become, subject.
Limitation
of Audit Committee’s Role
Although
the Audit Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Audit Committee to plan or conduct audits
or
to determine that the Company’s financial statements and disclosures are
complete and accurate and are in accordance with generally accepted accounting
principles and applicable rules and regulations. Those are the responsibilities
of the Company’s management and the Company’s independent auditor.
APPENDIX
B
iDNA,
INC.
CORPORATE
GOVERNANCE AND NOMINATING COMMITTEE CHARTER
Purpose
The
purpose of the Corporate Governance and Nominating Committee (the “Committee”)
of
iDNA, Inc. (the “Company”)
is to
(1) identify qualified individuals to become members of the Company’s Board of
Directors (the “Board”),
(2)
select the director nominees to be presented for election at each annual
meeting
of shareholders, (3) regularly develop, review and recommend to the Board
a set
of corporate governance policies applicable to the Company, and (4) provide
oversight for the evaluation of the performance of the Board.
Committee
Membership and Organization
The
Committee shall be compose of two or more directors, each of whom shall meet
the
independence requirements of Rules 4200(a)(15) of The Nasdaq Stock Market,
Inc.
Marketplace Rules (the “Nasdaq
Marketplace Rules”).
The
Committee members shall be appointed by the Board and may be removed by the
Board in its discretion in accordance with the Company’s By-Laws, as in effect
at such time. The Chairman of the Committee shall be designated by the Board.
The Board shall affirmatively determine at all times required under the Nasdaq
Marketplace Rules that the members of the Committee are independent. As more
fully set forth in the Nasdaq Marketplace Rules, independent directors must
not
have any current or past relationships with the Company which would interfere
with their exercise of independent judgment and must not otherwise fail to
meet
the independence standards set forth in the Nasdaq Marketplace
Rules.
Committee
Meetings
The
Committee shall meet as often as its members deem necessary to perform the
Committee’s responsibilities. The Committee may also act by unanimous written
consent as the Committee may decide. Committee meetings will be governed
by the
quorum and other procedures generally applicable to meetings of the Board
under
the Company’s By-Laws (the “By-Laws”),
unless otherwise stated in the By-Laws or in a resolution of the Board or
the
Committee. The Committee, as it may determine to be appropriate, may meet
in
separate executive sessions with other directors, the Chairman of the Board,
the
Chief Executive Officer and other Company employees, agents or representatives
invited by the Committee.
Committee
Responsibilities and Authority
The
Committee shall have the following authority and responsibilities:
(a)
Nominations
and Qualifications of Directors
(1)
Prior
to each annual meeting of shareholders, following determination by the Board
of
the number of directors to be elected at such meeting, the Committee shall
identify individuals qualified to stand for re-election or to become new
members
of the Board, consistent with any qualifications, expertise and characteristics
which may have been approved by the Board or determined by the Committee
from
time to time; the Committee shall evaluate incumbent directors whose terms
are
expiring at the meeting and consider their qualifications to stand for
re-election; and the Committee shall evaluate nominees for election to the
Board
submitted by shareholders in accordance with procedures adopted by the
Committee, the By-Laws of the Company, and applicable law.
(2)
In
the event of a vacancy on the Board, following determination by the Board
that
such vacancy shall be filled, the Committee shall identify individuals qualified
to fill such vacancy, consistent with any qualifications, expertise and
characteristics which may have been approved by the Board or determined by
the
Committee from time to time.
(3)
Before selecting any nominee for director, the Committee shall review the
candidate’s availability and willingness to serve. In light of its
responsibility outlined above, the Committee shall seek candidates with the
following minimum qualifications:
· |
a
candidate must demonstrate integrity, accountability, informed judgment,
financial literacy, creativity and
vision;
|
· |
a
candidate must be prepared to represent the best interests of all
of the
Company’s shareholders, not just those of one particular
constituency;
|
· |
a
candidate must have a record of professional accomplishment in his
or her
chosen field; and
|
· |
a
candidate must be prepared and able to participate fully in Board
activities, including membership on Board
committees.
|
In
addition to the above guiding qualifications, the Committee’s decisions
regarding Board nominations shall be based upon the belief that it is important
to have directors from various backgrounds and professions in order to ensure
that the Board has a wealth of experiences to inform its decisions. Consistent
with this philosophy, in addition to the minimum standards set forth above,
business and managerial experience and an understanding of financial statements
are very important.
The
Committee shall have the authority, to the extent it deems necessary or
appropriate, to retain any search firm to assist in identifying and evaluating
director candidates and to retain independent legal counsel and any other
advisors. The Company shall provide adequate funding, as determined by the
Committee, for payment of compensation for any advisors retained by the
Committee.
(b)
Committees
and Appointments
If
and
when requested periodically by the Board, the Committee shall identify and
recommend to the Board the appointees to be selected by the Board for service
on
the Audit, Compensation and Stock Option, Corporate Governance and Nominating
and other key committees of the Board. The Committee shall recommend to the
Board changes as appropriate, whether in the creation of additional committees
or elimination of existing committees.
(c)
Board
Size
The
Committee shall periodically review the size of the Board and recommend to
the
Board any adjustments in size as deemed appropriate.
(d)
Governance
Policies
The
Committee shall regularly assess and evaluate the corporate governance
principles to be recommended to the Board and which are appropriate for the
Company in light of the Nasdaq Marketplace Rules, the rules and requirements
under the Securities Exchange Act of 1934, as amended and the nature of the
Company’s business, including principles to be incorporated into the Company’s
Code of Business Conduct, Ethics and Corporate Governance. The Committee
shall
advise the Board as to the means to be employed in implementing such
principles.
Reports
The
Committee shall make regular reports to the Board and shall propose any
necessary action to the Board.
Annual
Charter Review and Performance Review
The
Committee shall review and reassess the adequacy of this charter on an annual
basis and recommend any proposed changes to the Board. The Committee shall
evaluate the Committee’s own performance on an annual basis and provide a report
regarding such evaluation to the Board.
APPENDIX
C
iDNA,
INC.
COMPENSATION
AND STOCK OPTION COMMITTEE CHARTER
1.
Purpose
The
basic
responsibility of the Compensation and Stock Option Committee of the Board
of
Directors (the “Committee”)
of
iDNA, Inc. (the “Company”)
is to
review the performance and development of the management of the Company in
achieving corporate goals and objectives and to assure that senior executives
of
the Company are compensated effectively in a manner consistent with the strategy
of the Company, competitive practice, and the requirements of the appropriate
regulatory bodies. Toward that end, the Committee will oversee, review and
administer all compensation, equity and employee benefit plans and
programs.
2.
Composition of the Committee
The
Committee will consist of two or more directors, each of whom shall be (a)
an
“independent director” as required by the rules of The Nasdaq Stock Market, Inc.
(“Nasdaq”),
(b) a
“Non-Employee Director” as defined in Rule 16b-3 under the Securities Exchange
Act of 1934, as amended (the “Exchange
Act”),
and
(c) an “outside director” within the meaning of Section 162(m) of the Internal
Revenue Code, as amended (the “IRS
Code”).
Each
appointed Committee member will be subject to annual reconfirmation by the
Board
of Directors of the Company (the “Board”)
and
may be removed by the Board at any time. The
Committee’s composition shall at all times comply with the relevant rules and
regulations of the United States Securities and Exchange Commission
(“SEC”),
the
Nasdaq Marketplace Rules (until such time as the Company’s securities are listed
on an exchange other than Nasdaq or Nadsaq’s Over-the-Counter Bulletin Board),
the New York Stock Exchange or any other national securities exchange to
which
the Company is, or may become, subject.
3.
RESPONSIBILITIES AND DUTIES
In
carrying out its purpose, the Committee will have the following responsibilities
and duties:
|
• |
Review
annually and approve the Company’s compensation strategy to ensure that
employees of the Company are rewarded appropriately for their
contributions to company growth and
profitability.
|
|
• |
Review
annually and approve corporate goals and objectives relevant to
executive
compensation and evaluate performance in light of those
goals.
|
|
• |
Review
annually and determine the individual elements of total compensation
for
the Chief Executive Officer and all other officers (as such term
is
defined in Rule 16a-1(f) under the Exchange Act) of the Company,
and
communicate in the annual Board Compensation and Stock Option Committee
Report-- to be issued to the Board and shared with the Company’s
shareholders-- the factors and criteria on which the Chief Executive
Officer’s and all other executive officers’ (as such term is defined in
Rule 3b-7 under the Exchange Act ) compensation for the last year
was
based. The approval of senior executive compensation by the Committee
shall be in addition to the approval required from the Company’s
independent directors under Article III, Section 9(c) of the Company’s
By-Laws.
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Approve
all special perquisites, special cash payments and other special
compensation and benefit arrangements for the Company’s
officers.
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• |
Review
and recommend compensation for non-employee members of the Board,
including but not limited to the following elements: retainer,
meeting
fees, committee fees, committee chair fees, equity or stock compensation,
benefits and perquisites, subject to the restrictions on such compensation
set forth in the Company’s By-Laws.
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• |
Make
and approve stock option grants and other discretionary awards
under the
Company’s stock option or other equity incentive plans to all persons who
are Board members or officers.
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Review
and implement an appropriate combination of cash compensation (base
salary
and bonus) and non-cash compensation designed to give performance
incentives based upon the Company’s revenues, earnings, common stock price
or other appropriate criteria.
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Grant
stock options and other discretionary awards under the Company’s stock
option or other equity incentive plans to all other eligible individuals
in the Company’s service. Any grants of stock options to directors or
officers shall be subject to the Committee’s approval and shall be made in
compliance with relevant
SEC rules and regulations and Nasdaq rules and regulations (unless
the
Company’s
shares are hereafter traded on an exchange other than Nasdaq, in
which
case the Nasdaq rules and regulations shall not apply). The
Committee may delegate to one or more corporate officers designated
by the
Committee the authority to make grants to eligible individuals
(other than
any such corporate officer) who are not officers, provided that
the
Committee shall have fixed the price (or a formula for determining
the
price) and the vesting schedule for such grants, approved the form
of
documentation evidencing such grants, and determined the appropriate
number of shares or the basis for determining such number of shares
by
position, compensation level or category of personnel. Any corporate
officer(s) to whom such authority is delegated shall regularly
report to
the Committee the grants so made. Any such delegation may be revoked
at
any time by the Committee.
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Amend
the provisions of the Company’s stock option or other equity incentive
plans, to the extent authorized by the Board, and make recommendations
to
the Board with respect to incentive compensation and equity-based
plans.
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• |
Approve
for submission to the shareholders stock option or other equity
incentive
plans or amendments thereto.
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• |
Oversee
and periodically review the operation of all of the Company’s employee
benefit plans, including but not limited to the
2005 Equity Compensation Plan, the 1993
Equity Incentive Plan, and the 2003 Restricted Stock Plan.
Responsibility for day-to-day administration of such plans, including
the
preparation and filing of all government reports and the preparation
and
delivery of all required employee materials and communications,
need not
be performed by the Committee directly and may be performed by
Company
personnel instead.
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Ensure
that the Company’s annual incentive compensation plan is administered in a
manner consistent with the Company’s compensation strategy and the terms
of such plan, including but not limited to the following: participation,
target annual incentive awards, corporate financial goals, actual
awards
paid to officers of the Company, total funds reserved for payment
under
the plan, and potential qualification under IRS Code Section 162(m),
including the certification that any performance goals were
satisfied.
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• |
Review
matters related to management performance, compensation and succession
planning (including periodic review and approval of Chief Executive
Officer and other officer succession planning) and executive development
for executive staff.
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• |
Approve
senior executive separation packages and senior executive severance
benefits (in conjunction with the approval required from the Company’s
independent directors under Article III, Section 9(c) of the Company’s
By-Laws), whether such packages or benefits are within or outside
of the
ordinary limits of the Company’s incentive compensation plan.
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• |
Have
full access to the Company’s executives and personnel as necessary to
carry out its responsibilities.
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• |
Obtain
such data or other resources as it deems necessary to perform its
duties,
including but not limited to obtaining external consultant reports
or
published salary surveys, and engaging independent compensation
consultants and other professionals to assist in the design, formulation,
analysis and implementation of compensation programs for the Company’s
officers and other key employees.
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• |
Have
responsibility for the review and approval of all reports and summaries
of
compensation policies and decisions as may be appropriate for operational
purposes or as may be required under applicable
law.
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• |
Perform
any other activities consistent with this Charter, the Company’s By-Laws
and relevant law as the Committee or the Board deems necessary
or
appropriate.
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• |
Review
the Committee’s Charter from time to time and recommend any changes
thereto to the Board.
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• |
Report
to the Board on the major items covered at each Committee meeting.
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Notwithstanding
the foregoing, any action of the Committee may be subject to Board review
and
may be revised, modified or rescinded by the Board.
4.
Committee Meetings
The
Committee will meet at least on an annual basis, or more frequently as is
may
deem advisable or necessary to carry out its responsibilities. Meetings may
be
called by the Chairman of the Committee and/or by the management of the Company.
Minutes of each meeting will be kept and duly filed together with the records
of
the meetings of the Board. Reports of meetings of the Committee will be made
to
the Board at the Board’s next regularly scheduled meeting following the
Committee meeting, accompanied by any recommendations to the Board approved
by
the Committee. The Chief Executive Officer of the Company may not be present
during voting or deliberations by the Committee.
The
Committee will also meet as and when necessary to act upon any other matters
within its jurisdiction under this Charter. A majority of the total number
of
members of the Committee shall constitute a quorum at all Committee meetings,
and the actions, recommendations and findings approved by a majority of the
members of the Committee shall be binding upon the Committee.
5.
Compliance
with Rules of SEC and the Company’s Exchange
The
Committee shall comply with the relevant rules and regulations of the SEC,
the
Nasdaq Marketplace Rules (until such time as the Company’s securities are listed
on an exchange other than Nasdaq), the New York Stock Exchange or any other
national securities exchange to which the Company is, or may become,
subject.
APPENDIX
D
AMENDMENT
2008-1 TO THE iDNA, INC.
2005
EQUITY COMPENSATION PLAN
WHEREAS,
iDNA,
Inc. (formerly known as National Auto Credit, Inc.) (the “Company”)
maintains the iDNA, Inc. 2005 Equity Compensation Plan (the “Plan”)
to
provide (i) designated employees of the Company and its parents and
subsidiaries, (ii) certain consultants and advisors who perform services
for the
Company or its parents or subsidiaries and (iii) non-employee members of
the
Board of Directors of the Company with the opportunity to receive grants
of
incentive stock options, nonqualified stock options, stock awards, and stock
appreciation rights;
WHEREAS,
the
Plan currently provides that the maximum aggregate number of shares of common
stock of the Company (“Company
Stock”)
that
may be issued or transferred under the Plan is 2,000,000 shares;
WHEREAS,
the
Company desires to amend the Plan to increase the number of shares of Company
Stock that may be issued or transferred under the Plan by 1,000,000 shares
to a
total of 3,000,000 shares of Company Stock and to provide that all 3,000,000
shares may be issuable as incentive stock options; and
WHEREAS,
pursuant to Section 13(a) of the Plan the Company may amend the Plan.
NOW
THEREFORE,
effective as of July 30, 2008, the Plan shall be amended as
follows:
1. The
first
sentence of Section 3(a) of the Plan is hereby amended in its entirety to
read
as follows:
“Shares
Authorized.
Subject
to adjustment as described below, (i) the maximum aggregate number of shares
of
common stock of the Company (“Company
Stock”)
that
may be issued or transferred under any forms of Grants under the Plan
is 3,000,000 shares,
(ii) the maximum aggregate number of shares of Company Stock that may be
issued
under the Plan under Incentive Stock Options is 3,000,000, and (iii) the
maximum
aggregate number of shares of Company Stock that may be issued under the
Plan
under awards other than Options and SARs is 3,000,000 shares.”
IN
WITNESS WHEREOF,
iDNA,
Inc. has caused this Amendment 2008-1 to be duly executed as of the day and
year first written above.
Attest:
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iDNA,
Inc.
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_______________________________
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By:
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________________________________
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Name:
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________________________________
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Title:
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________________________________
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