<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF
1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
MICROFLUIDICS INTERNATIONAL CORPORATION
----------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter
MICROFLUIDICS INTERNATIONAL CORPORATION
----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
_________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
_________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
_________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
_________________________________________________________________________
(5) Total fee paid:
_________________________________________________________________________
[_] Fee paid previously with preliminary materials.
[_] 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.
(1) Amount Previously Paid:
_________________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
_________________________________________________________________________
(3) Filing Party:
_________________________________________________________________________
(4) Date Filed:
_________________________________________________________________________
<PAGE>
MICROFLUIDICS INTERNATIONAL CORPORATION
30 OSSIPEE ROAD
NEWTON, MASSACHUSETTS 02164
----------------
NOTICE OF SPECIAL MEETING IN LIEU OF
ANNUAL MEETING OF SHAREHOLDERS
----------------
To our Shareholders:
The Special Meeting in Lieu of Annual Meeting of Shareholders of
Mircrofluidics International Corporation, a Delaware corporation (the
"Company" or "MFIC"), will be held on Tuesday, June 11, 1996, at 10:00 a.m.,
local time, at the offices of the Company located at 30 Ossipee Road, Newton,
Massachusetts 02164, for the following purposes:
1. To elect a Board of Directors to serve for the ensuing year and until
their respective successors have been duly elected and qualified.
The nominees the Board of Directors proposes to present for election are:
Irwin J. Gruverman, Robert L. Bogomolny, Marshall S. Sterman, Michael K.
Hooker and James N. Little.
2. To amend the 1989 Non-Employee Director Stock Option Plan (the "1989
Plan"), as described in the Proxy Statement dated May 1, 1996 accompanying
this Notice of Special Meeting.
3. To ratify the selection of the firm of Coopers & Lybrand L.L.P. as
auditors for the Company for the fiscal year ending December 31, 1996.
4. To transact such other business as may properly come before the
meeting and any adjournments thereof.
Only shareholders of record on the transfer books of the Company at the
close of business on April 16, 1996 are entitled to notice of, and to vote at,
the meeting.
Please sign, date and return the enclosed proxy in the enclosed envelope at
your earliest convenience. If you return your proxy, you may nevertheless
attend the meeting and vote your shares in person.
All shareholders are cordially invited to attend the meeting.
By Order of the Board of Directors
Irwin J. Gruverman
Chairman of the Board of Directors,
Chief Executive Officer and
Secretary
Newton, Massachusetts
May 1, 1996
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. WHETHER OR
NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN, DATE AND MAIL THE
ENCLOSED PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IN THE
UNITED STATES.
<PAGE>
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
OF MICROFLUIDICS INTERNATIONAL CORPORATION
JUNE 11, 1996
Proxies in the form enclosed with this proxy statement are solicited by the
Board of Directors of Microfluidics International Corporation, a Delaware
corporation (the "Company" or "MFIC"), for use at the Special Meeting in Lieu
of Annual Meeting of Shareholders to be held on Tuesday, June 11, 1996, at
10:00 a.m., local time, at the offices of the Company located at 30 Ossipee
Road, Newton, Massachusetts, and at any adjournment thereof (the "Meeting").
Only shareholders of record as of the close of business on April 16, 1996
will be entitled to notice of and to vote at the Meeting. As of that date,
5,075,450 shares of Common Stock, par value $.01 per share, of the Company
were issued and outstanding and entitled to vote at the Meeting. The shares of
Common Stock are the only outstanding voting securities of the Company.
Shareholders are entitled to cast one vote for each share held of record.
The persons named as attorneys in the proxies are directors and/or officers
of the Company. All properly executed proxies returned in time to be counted
at the meeting will be voted as stated below under "Voting Procedures." Any
shareholder giving a proxy has the right to withhold authority to vote for any
individual nominee to the Board of Directors by writing that nominee's name in
the space provided on the proxy.
Execution of a proxy will not in any way affect a shareholder's right to
attend the meeting and vote in person. A proxy may be revoked at any time
before it is voted at the Meeting by notifying the Secretary of the Company in
writing at the address set forth above, by submitting a properly executed
proxy bearing a later date, or by revoking the proxy at the Meeting.
Attendance at the Meeting will not by itself constitute the revocation of a
proxy.
In addition to the election of directors, the shareholders will consider and
vote upon proposals to (i) amend the 1989 Non-Employee Director Stock Option
Plan (the "1989 Plan") to increase the authorized amount of shares of Common
Stock issuable under the 1989 Plan by 260,000 shares to 500,000 shares and to
grant additional options pursuant to the 1989 Plan, and (ii) to ratify the
selection of auditors as further described in this proxy statement. Where a
choice has been specified on the proxy with respect to these matters, the
shares represented by the proxy will be voted in accordance with the
specification and will be voted FOR all of these matters if no specification
is indicated.
The Board of Directors of the Company knows of no other matters to be
presented at the Meeting. If any other matter should be presented at the
Meeting upon which a vote properly may be taken, shares represented by all
proxies received by the Board of Directors will be voted with respect thereto
in accordance with the judgment of the persons named as attorneys in the
proxies.
An Annual Report to Shareholders, containing financial statements for the
fiscal year ended December 31, 1995, is being mailed together with this proxy
statement to all shareholders entitled to vote. This proxy statement and the
form of proxy enclosed with this proxy statement were first mailed to
shareholders on or about May 1, 1996.
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth as of April 16, 1996, the name of each person
who, to the knowledge of the Company, owned beneficially more than 5% of the
shares of Common Stock of the Company outstanding at such date, the number of
shares owned by each of such persons and the percentage of the class
represented thereby.
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(1) OF CLASS
------------------------------------ ------------ --------
<S> <C> <C>
Irwin J. Gruverman(2)..................................... 770,555 15.2%
30 Ossipee Road
Newton, Massachusetts 02164
G.D. Searle & Co.......................................... 600,000 11.8%
Box 5110
Chicago, Illinois 60680
Funds affiliated with FMR Corp.(3)........................ 374,500 7.4%
82 Devonshire Street
Boston, Massachusetts 02109
</TABLE>
- --------
(1) Information with respect to beneficial ownership is based upon information
furnished by such shareholder.
(2) Includes 472,805 shares held jointly by Mr. Gruverman and his wife.
Includes 113,750 shares subject to options granted to Mr. Gruverman
exercisable at April 16, 1996, or within 60 days thereafter.
(3) Includes 291,400 shares held by Fidelity Management & Research Company
("Fidelity Research") and 83,100 shares held by Fidelity Management Trust
Company ("Fidelity Trust"). Fidelity Research and Fidelity Trust are both
wholly-owned subsidiaries of FMR Corp., Edward C. Johnson 3d, Chairman of
FMR Corp., and Abigail P. Johnson, a Director of FMR Corp., own 12.0% and
24.5%, respectively, of the outstanding voting common stock of FMR Corp.
Various Johnson family members and trusts for their benefit are the
predominant owners of the FMR Corp. voting common stock. These Johnson
family members, through the ownership of voting common stock and the
execution of a shareholders' voting agreement, may be deemed to form a
controlling group with respect to FMR Corp. Neither FMR Corp. nor Mr.
Johnson has the sole power to vote or direct the voting of the shares
owned directly by Fidelity Research, which power resides with Fidelity
Research's Board of Trustees. Fidelity Research carries out the voting of
the shares under written guidelines established by Fidelity Research's
Board of Trustees. Mr. Johnson and FMR Corp., through their control of
Fidelity Trust, have sole voting and dispositive power over the shares
owned by Fidelity Trust. Fidelity Research has advised the Company that,
as of the date of this Proxy Statement, it holds 208,400 shares.
ELECTION OF DIRECTORS
The directors of the Company are elected annually and hold office for the
ensuing year and until their successors have been elected and qualified. The
Company's by-laws state that the number of directors constituting the entire
Board of Directors shall be determined by resolution of the Board of
Directors. The number of directors currently fixed by the Board of Directors
is five. This number may be changed by resolution of the Board of Directors.
Shares represented by all proxies received by the Board of Directors and not
marked as withholding authority to vote for any individual director or for all
directors will be voted FOR the election of all the nominees named below,
unless one or more nominees is unable or unwilling to serve. The Board of
Directors knows of no reason why any such nominee would be unable or unwilling
to serve as a director, but if such should be the case, proxies may be voted
for the election of some other person or for fixing the number of directors at
a lesser number. A plurality of the votes cast by the shareholders present or
represented by proxy and entitled to vote at the meeting is required for the
election of directors. See "Voting Procedures."
COMPENSATION OF DIRECTORS
Directors, with the exception of Mr. Gruverman, are reimbursed for
reasonable expenses incurred in attending meetings of the Board of Directors.
Mr. Bogomolny holds options to purchase 42,500 shares of the Company's Common
Stock at an average per share exercise price of $4.08. Mr. Sterman holds
options to purchase 40,000 shares of the Company's Common Stock at an average
per share exercise price of $4.10 Mr. Hooker holds options to purchase 45,000
shares of the Company's Common Stock at an average per share exercise price of
$4.06. Mr. Little holds options to purchase 25,000 shares at a per share
exercise price of $1.63 per share. Messrs. Bogomolny, Sterman, Hooker and
Little were granted the foregoing options pursuant to the 1989 Plan, which
automatically grants to each non-employee director of the Company who holds
office at the beginning of each fiscal year an option to purchase 7,500 shares
of the Company's Common Stock. Upon any
2
<PAGE>
non-employee director's first appointment to the Board of Directors, that
director receives an automatic grant of an option to purchase 25,000 shares of
the Company's Common Stock.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
The Board of Directors of the Company held four (4) meetings and acted by
unanimous written consent on two (2) occasions during the fiscal year ended
December 31, 1995. The Board of Directors of the Company has no standing
nominating committee. Currently, the Compensation Committee, of which Messrs.
Sterman, Bogomolny and Little are members, determines who should receive stock
options under the Company's stock plans (except for the 1989 Non-Employee
Director Stock Option Plan) and also reviews and approves employee
remuneration. The Audit Committee, which currently consists of Messrs.
Gruverman, Sterman and Hooker, oversees the accounting and tax functions of
the Company, including matters relating to the appointment and activities of
the Company's independent auditors. The Compensation Committee held one (1)
meeting during fiscal 1995. The Audit Committee did not meet during fiscal
1995. Ratification of the full Board of Directors is required with respect to
decisions taken by either committee.
BENEFICIAL OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth nominees to be elected at the Meeting and
each executive officer named in the Summary Compensation Table set forth on
page 5, the positions currently held by each such person with the Company and
the number and percentage of outstanding shares of Common Stock beneficially
owned by each such person and by all directors and executive officers as a
group as of April 16, 1996.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
POSITIONS AND OFFICES OF BENEFICIAL PERCENT
WITH THE COMPANY OWNERSHIP(1)(2) OF CLASS
---------------------------------- ----------------- --------
<S> <C> <C> <C>
Irwin J. Gruverman...... Chief Executive Officer, 770,555(3)(4) 15.2%
Chairman of the Board of
Directors and Secretary
Michael A. Lento........ President and Treasurer 13,450(5) *
Robert P. Bruno......... Vice-President Sales and Marketing 0 *
Robert L. Bogomolny..... Director 72,696(6) 1.4%
Marshall S. Sterman..... Director 44,384(7)(8) *
Michael K. Hooker....... Director 38,075(9) *
James N. Little......... Director 6,250(10) *
All current directors
and executive officers
as a group (7
persons)............... 945,410(3)(7)(11) 18.63%
</TABLE>
- --------
*Less than 1%.
(1) Unless otherwise indicated, each person possesses sole voting and
investment power with respect to the shares.
(2) The inclusion herein of any shares of Common Stock deemed beneficially
owned does not constitute an admission of beneficial ownership of those
shares.
(3) Includes 472,805 shares owned jointly by Mr. Gruverman and his wife.
(4) Includes options to purchase 113,750 shares, which were exercisable at
April 16, 1996, or within 60 days thereafter.
(5) Includes options to purchase 13,000 shares, which were exercisable at
April 16, 1996, or within 60 days thereafter.
(6) Includes options to purchase 35,875 shares, which were exercisable at
April 16, 1996, or within 60 days thereafter.
(7) Includes 2,509 shares owned by M.S. Sterman and Associates, Inc., of
which Mr. Sterman is the sole stockholder. Also includes 500 shares owned
by Mr. Sterman's wife.
(8) Includes options to purchase 33,875 shares, which were exercisable at
April 16, 1996, or within 60 days thereafter.
(9) Includes options to purchase 37,875 shares, which were exercisable at
April 16, 1996, or within 60 days thereafter.
(10) Includes options to purchase 6,250 shares, which were exercisable at
April 16, 1996, or within 60 days thereafter.
(11) Includes options to purchase 240,625 shares, which options are held by
directors or executive officers and were exercisable at April 16, 1996,
or within 60 days thereafter.
3
<PAGE>
OCCUPATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth as to the nominees for election at the
Meeting and for each executive officer: (i) name; (ii) age; and (iii) present
position with the Company:
<TABLE>
<CAPTION>
NAME AGE TITLE
---- --- -----
<S> <C> <C>
Irwin J. Gruverman....... 62 Chief Executive Officer, Chairman of the Board and
Secretary
Michael A. Lento......... 45 President and Treasurer
Robert L. Bogomolny...... 57 Director
Marshall S. Sterman...... 64 Director
Michael K. Hooker........ 50 Director
James N. Little.......... 55 Director
</TABLE>
IRWIN J. GRUVERMAN has been the Chief Executive Officer, Chairman of the
Board of Directors and Secretary of the Company since its inception in 1983.
Mr. Gruverman was also President of the Company from 1983 to February 1993.
Mr. Gruverman has been the President of G&G Diagnostics Corp. and a general
partner of G&G Diagnostics Limited Partnerships I, II & III since 1990. See
"Related Transactions". Mr. Gruverman currently serves on the Board of
Directors of the following public companies: North American Scientific, Inc.;
In Vitro International, Inc.; FiberChem International, Inc. and Endogen, Inc.
MICHAEL A. LENTO has been the President and Treasurer of the Company since
September, 1995. From August 1994 until August 1995, Mr. Lento served as the
Vice President of Marketing of the Company. From November 1993 until August
1994, Mr. Lento, on a consulting basis, acted as the manager of the Company's
cooperative venture with Catalytica. From 1992 until October 1993, Mr. Lento
was the Chief Executive Officer of Medical & Scientific Enterprises, Inc., a
developer and manufacturer of medical scanning and imaging equipment. In 1991,
Mr. Lento served as a management consultant in the technology business
development field.
ROBERT L. BOGOMOLNY has been a director of the Company since its inception
in 1983. Mr. Bogomolny has been the Senior Vice President, General Counsel and
Corporate Secretary of G.D. Searle & Co., a subsidiary of Monsanto, since
1987.
MARSHALL S. STERMAN has been a director of the Company since 1986. Since
1986, Mr. Sterman has been the President of the Mayflower Group, Ltd., a
Boston based merchant banking firm with a variety of investment interests. Mr.
Sterman is a director of Epigen, Inc., U.S. Lan Systems Corporation, the
Standish Care Company and KTI, Inc., all publicly held companies. Mr. Sterman
is also a director and an executive officer of (i) Las Colinas Retirement
Center, Inc. ("Las Colinas"), and (ii) Skyland Golf Resorts, Inc. ("Skyland").
Both Las Colinas and Skyland have filed for bankruptcy protection within the
last five years. The Las Colinas bankruptcy proceeding was brought in the U.S.
Bankruptcy Court for the District of New Mexico as a Chapter 11 reorganization
on February 28, 1992 and has since been completed. Skyland filed a petition
for Chapter 11 reorganization in the U.S. Bankruptcy Court for the District of
Colorado on or about February 8, 1992, which proceeding has since been
completed.
MICHAEL K. HOOKER has been a director of the Company since 1988. Mr. Hooker
is the Chancellor on the University of North Carolina at Chapel Hill. For the
previous three years, Mr. Hooker was the President of the University of
Massachusetts. Prior to 1992, he was the President of the University of
Maryland, at Baltimore County.
JAMES N. LITTLE became a director of the Company on December 14, 1995. Since
1981, Mr. Little has been a Senior Vice President of Sales, Marketing and
Business Development for Zymark Corporation, a manufacturer of scientific
robotics equipment.
4
<PAGE>
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION SUMMARY TABLE
The Summary Compensation table shows compensation information for (i) the
Chief Executive Officer, and (ii) each other executive officer of the
Corporation who earned more than $100,000 in salary and bonus in 1995
(together with the Chief Executive Officer, the "Named Executive Officers")
for services rendered in all capacities during the three fiscal years most
recently ended.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION(2)
------------------- ---------------
NAME AND PRINCIPAL POSITION(1) YEAR SALARY BONUS STOCK OPTIONS
------------------------------ ---- ------- ------ ---------------
<S> <C> <C> <C> <C>
Irwin J. Gruverman...................... 1995 $76,000 0 75,000
Chief Executive Officer, Chairman of 1994 100,000 0 25,000
the Board of Directors and Secretary 1993 50,000 12,500 25,000
Michael A. Lento........................ 1995 91,227 0 180,000
</TABLE>
- --------
(1) In July 1995, the Company and Michael T. Rumley, the Company's former
President and Treasurer, agreed to terminate Mr. Rumley's employment. Mr.
Rumley was also a Director of the Company. In connection with the
termination of Mr. Rumley's employment, the Company entered into an
Agreement (the "Rumley Agreement") with Mr. Rumley that provides for
certain payments and other benefits to him. Under the Rumley Agreement,
the Company agreed to pay Mr. Rumley (i) $4,460.50 on a bi-weekly basis
until January 28, 1996, (ii) $2,973.66 thereafter on a bi-weekly basis
until the earlier of July 28, 1996 or the day on which Mr. Rumley becomes
employed, and (iii) $446.05 thereafter on a bi-weekly basis until July 28,
1996. The Company also agreed to endeavor to facilitate the sale of Mr.
Rumley's exercisable stock options. Mr. Rumley received a salary of
$113,859, $128,859 and $71,864, a bonus of $12,500, $0 and $0, and stock
options of 25,000, 25,000 and 0 in 1993, 1994 and 1995, respectively. In
1995, Mr. Rumley received $64,009 in other compensation, which reflects
compensation paid pursuant to the Rumley Agreement.
(2) The Corporation did not grant any restricted stock awards or stock awards
or stock appreciation rights or make any long-term incentive plan payouts
during fiscal years 1994 or 1995.
OPTIONS
The following table shows information regarding grants of stock options
during the fiscal year ended December 31, 1995 to the Named Executive
Officers. The Company did not grant any stock appreciation rights in fiscal
1995.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------
PERCENT OF
TOTAL OPTIONS
GRANTED TO
OPTIONS EMPLOYEES TO EXERCISE EXPIRATION
NAME GRANTED(1) FISCAL YEAR PRICE DATE
---- ---------- ------------- -------- ----------
<S> <C> <C> <C> <C>
Irwin J. Gruverman.............. 75,000 29.2% 1.93 12/15/05
Michael A. Lento................ 180,000 70.2% 1.75 12/15/05
</TABLE>
- --------
(1) Mr. Lento's and Mr. Gruverman's stock options were granted at an exercise
price equal to the fair market value of the Company's Common Stock on the
date of grant. These stock options were granted pursuant to the Company's
1988 Stock Option Plan. The stock options vest ratably over four years
from date of grant. Mr. Rumley was not granted a stock option in fiscal
1995.
5
<PAGE>
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table summarizes for each of the Named Executive Officers the
number of stock options, if any, exercised during the fiscal year ended
December 31, 1995, the aggregate dollar value realized upon exercise, the
total number of unexercised options held at December 31, 1995 and the
aggregate dollar value of in-the-money, unexercised options held at December
31, 1995. None of the Named Executive Officers exercised or held any stock
appreciation rights. The value of unexercised in-the-money options at the
fiscal year end is the difference between the exercise price and the fair
market value of the underlying stock on December 31, 1995, the last business
day of the fiscal year. The closing price of the Company's Common Stock on the
Nasdaq National Market on such date was $1.94.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND DECEMBER 31, 1995 OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED FISCAL YEAR END FISCAL YEAR END(1)
UPON OPTION VALUE ---------------- --------------------
NAME EXERCISE REALIZED VESTED UNVESTED VESTED UNVESTED
---- ----------- -------- ------- -------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Irwin J. Gruverman... 0 $ 0 113,750 121,250 $ 145,437 $ 105,687
Michael A. Lento..... 0 $ 0 13,000 208,000 $ 44,130 $ 56,510
</TABLE>
- --------
(1) These values have not been and may never be realized. Actual gains, if
any, on exercise will depend on the value of the Common Stock on the date
of sale of any shares acquired upon exercise of the option. Mr. Rumley did
not exercise any options in 1995 and held vested options to purchase
84,250 shares of Common Stock, valued at $96,305, and no unvested options
at the end of 1995.
RELATED TRANSACTIONS
The Company and G&G Diagnostics Corporation ("G&G"), a corporation of which
Mr. Gruverman is the President, sole employee and sole stockholder, have
entered into an agreement whereby G&G leases space from, and makes payments
to, the Company for rent and direct expenses based on quarterly invoices
provided by the Company. The total amount paid to the Company by G&G for
reimbursement of expenses in 1995 was approximately $31,155. In addition, in
1995 the Company paid G&G $53,478 for legal services that were provided to the
Company by a consultant hired by G&G.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities and Exchange Act of 1934 requires the
Company's directors and executive officers, and person who own more than ten
percent of the Company's Common Stock ("Reporting Persons"), to file reports
of ownership and changes in ownership with the Securities and Exchange
Commission (the "SEC") and the Nasdaq Stock Market. Reporting Persons are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on a review of the copies of such forms received by the Company
and on written representations from certain Reporting Persons, the Company
believes that during the year ended December 31, 1995, all filing requirements
applicable to its directors, executive officers and greater than ten percent
beneficial owners were met.
6
<PAGE>
AMENDMENT OF 1989 PLAN
The Microfluidics International Corporation 1989 Non-Employee Director Stock
Option Plan (the "1989 Plan") was approved by the Company's Board of Directors
and stockholders in 1989. The 1989 Plan provides for the automatic grant of
non-qualified options to non-employee directors of the Company. The purpose of
the 1989 Plan includes providing an incentive to obtain and retain services of
qualified persons who are neither employees nor officers of the Company to
serve as members of the Board of Directors.
PROPOSED AMENDMENTS OF THE 1989 PLAN
The 1989 Plan limits the number of shares of Common Stock that may be issued
pursuant to options granted under the Plan to 240,000 shares. Authorized and
unissued shares or treasury shares or both, are available for grant under the
1989 Plan. Since December 14, 1995, 5,000 shares of Common Stock remain
eligible for grant under the 1989 Plan; as of such date, options to purchase
137,500 shares of Common Stock were outstanding under the 1989 Plan and 97,500
shares of Common Stock had been purchased pursuant to the exercise of options
granted under the Plan. As discussed below, on January 2 of each year the 1989
Plan automatically grants options to purchase 7,500 shares of Common Stock to
each non-employee director. Because there were only 5,000 shares available
under the 1989 Plan, the Company was unable to grant these annual options to
each of the four non-employee directors on January 2, 1996. The Board of
Directors of the Company has adopted amendments to the 1989 Plan, subject to
the approval of such amendments by the Company's shareholders at this Meeting
(i) to increase the authorized amount of shares of Common Stock issuable under
the 1989 Plan to 500,000 shares, and (ii) to grant options to purchase 7,500
shares of Common Stock to each of the four non-employee directors on June 11,
1996.
ADMINISTRATION OF THE PLAN
The 1989 Plan is administered by the Board of Directors. Subject to the
provisions of the 1989 Plan, the Board of Directors may make interpretations
and prescribe, amend and rescind rules and regulations and make all of the
determinations for the administration of the 1989 Plan. However, as described
below, stock option grants are automatic and therefore, the Board of Directors
has no discretion to determine the directors who may receive stock options or
any of the terms of the stock option grants.
OPTIONS
Stock options are granted under the 1989 Plan only to directors of the
Company who are not employees. As of the date of this Proxy Statement, there
are four non-employee directors, Messrs. Bogomolny, Sterman, Hooker and
Little.
Any non-employee director joining the Board of Directors will automatically
receive an option for 25,000 shares on the date of his or her appointment.
Each non-employee director also receives additional automatic grants of
options to purchase 7,500 shares on January 2 of each year. The exercise price
of each option under the 1989 Plan is equal to the fair market value of a
share of Common Stock on the date of grant. As of April 16, 1996, the market
value of the Common Stock, based on the closing price of such Common Stock as
quoted on the Nasdaq Stock Market, was $1.63 per share.
Each option has a term of five (5) years from the date of grant. Options
vest over three years as follows, 25% of the shares subject to the option vest
six months and one day after the date of grant and 25% of the shares subject
to the option vest on each of the next three anniversary dates of the grant.
An option is not transferable by the option holder except by will or by the
laws of descent and distribution. No option may be exercised more than 10 days
following termination of service as a director, unless the termination is due
to death or disability, in which case the option is exercisable for a maximum
of 360 and 180 days, respectively, after such termination.
7
<PAGE>
The 1989 Plan provides that the date on which an option may be exercised
will be accelerated in the event of (a) a dissolution or liquidation of the
Company, (b) certain mergers or consolidations of the Company, or (c) a
transaction in which the beneficial ownership or control of the Company is or
may be changed such that one or more persons or entitles (other than persons
or entities who beneficially owned more than twenty percent (20%) of the
outstanding shares of Common Stock of the Company on January 1, 1989) obtains
beneficial ownership or control of more than thirty-five percent (35%) of the
combined voting power of the Company.
TERM AND AMENDMENT OF THE 1989 PLAN
Unless sooner terminated, the 1989 Plan will remain in effect until all
shares have been issued upon the exercise of stock options or until all
options expire. The Board of Directors may, from time to time, amend the 1989
Plan. However, without the prior approval of the shareholders, no such
amendment may affect the 1989 Plan such that shareholder approval would be
required in order to ensure compliance with Rule 16b-3 of the Securities and
Exchange Commission.
OPTIONS GRANTED
The following persons have been granted options to purchase the following
amounts of Common Stock under the 1989 Plan (97,500 shares have been
exercised):
<TABLE>
<CAPTION>
PERSON OPTIONS
------ -------
<S> <C>
Robert L. Bogomolny.................................................. 70,000
Marshall S. Sterman.................................................. 70,000
Michael K. Hooker.................................................... 70,000
James N. Little...................................................... 25,000
</TABLE>
FEDERAL INCOME TAX CONSEQUENCES
The grant of a non-qualified stock option is not a taxable event to the
grantee. The difference between the exercise price and the fair market value
of the shares on the date of exercise of a non-qualified stock option is
taxable as ordinary income to the grantee at the time of exercise. Such amount
is subject to withholding of federal income tax. If, however, the grantee is
subject to Section 16(b) of the Securities Exchange Act of 1934, such amount
will normally be measured and taxed to the grantee at a date six months
following the date of exercise unless the grantee elects to be taxed at the
time of exercise. Gain or loss on the subsequent sale of shares acquired upon
exercise of a non-qualified stock option will be eligible for capital gain or
loss treatment (long-term or short-term, as the case may be). For this
purpose, such stock has a basis equal to the option exercise price plus the
amount, if any, included in income by the grantee. In general, the Company
will be entitled to an income tax deduction in the same amount and at the same
date as the grantee recognizes ordinary income. If a grantee pays all or part
of the exercise price by surrendering previously acquired shares, the
foregoing tax consequences may be modified.
The Board of Directors recommends a vote FOR the amendments to the 1989
Plan.
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected the firm of Coopers & Lybrand L.L.P.,
independent certified public accountants, to serve as auditors for the fiscal
year ending December 31, 1996. Coopers & Lybrand L.L.P. has served as the
Company's auditors since 1983. The Board of Directors recommends a vote FOR
the ratification of this selection.
It is expected that a member of the firm of Coopers & Lybrand L.L.P. will be
present at the Meeting. The representative will be given the opportunity to
make a statement if he or she desires to do so and will be available to
respond to appropriate questions.
8
<PAGE>
VOTING PROCEDURES
The presence, in person or by proxy, of at least a majority of the
outstanding shares of Common Stock entitled to vote at the Meeting is
necessary to establish a quorum for the transaction of business. Shares
represented by proxies pursuant to which votes have been withheld from any
nominee for director, or which contain one or more abstentions or broker "non-
votes," are counted as present for purposes of determining the presence or
absence of a quorum for the Meeting. A "non-vote" occurs when a broker or
other nominee holding shares for a beneficial owner votes on one proposal, but
does not vote on another proposal because the broker does not have
discretionary voting power and has not received instructions from the
beneficial owner.
For all matters being submitted to stockholders at this Meeting, the
affirmative vote of the majority of shares present, in person or represented
by proxy, and voting on that matter is required for approval. Shares voted to
abstain, since they are not affirmative votes for the matter, will have the
same effect as votes against the matter. Shares subject to broker "non-votes"
are not considered to have been voted for the particular matter and have the
practical effect of reducing the number of affirmative votes required to
achieve a majority for such matter by reducing the total number of shares from
which the majority is calculated.
OTHER BUSINESS
The Board of Directors knows of no business which will be presented for
consideration at the Meeting other than that stated above. If any other
business should come before the Meeting, votes may be cast pursuant to proxies
in respect to any such business in the best judgment of the person or persons
acting under the proxies.
SHAREHOLDER PROPOSALS
If a shareholder desires to present a proposal for inclusion in the proxy
statement to be furnished to all shareholders entitled to vote at the next
annual meeting of the Company, such shareholder must submit such proposal in
writing to the Company at the Company's principal executive offices not later
than January 2, 1997. In order to curtail controversy as to the date on which
a proposal was received by the Company, it is suggested that proponents submit
their proposals by Certified Mail-Return Receipt Requested.
EXPENSES AND SOLICITATION
The cost of solicitation of proxies will be borne by the Company. Proxies
will be solicited principally through the mails. Further solicitation of
proxies from some shareholders may be made by directors, officers and regular
employees of the Company personally, by telephone, telegraph or special
letter. No additional compensation, except for reimbursement of reasonable
out-of-pocket expenses, will be paid for any such further solicitation. In
addition, the Company may request banks, brokers, and other custodians,
nominees and fiduciaries to solicit customers of theirs who have shares of the
Company registered in the name of the nominee. The Company will reimburse any
such persons for their reasonable out-of-pocket expenses.
9
<PAGE>
DETACH HERE
MICROFLUIDICS INTERNATIONAL CORPORATION
Proxy for Special Meeting in Lieu of Annual Meeting
of Shareholders, June 11, 1996
P THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
R
O The undersigned hereby appoints Irwin J. Gruverman and Michael A.
X Lento, and each of them, with full power of substitution to vote all shares
Y of stock of MICROFLUIDICS INTERNATIONAL CORPORATION (the "Company") which
the undersigned is entitled to vote at the Special Meeting in Lieu of
Annual Meeting of Shareholders of the Company to be held on Tuesday, June
11, 1996, at 10:00 a.m. local time, at the offices of the Company, 30
Ossipee Road, Newton, Massachusetts 02164, and at any adjournment thereof,
upon matters set forth in the Notice of Special Meeting in Lieu of Annual
Meeting and Proxy Statement dated May 1, 1996, a copy of which has been
received by the undersigned.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS SPECIFIED. IF NO
CHOICE IS SPECIFIED, THEN THIS PROXY WILL BE VOTED IN FAVOR OF ELECTING THE
NOMINEES, OR ANY NOMINEE FOR WHICH APPROVAL HAS NOT BEEN WITHHELD, IN FAVOR
OF THE AMENDMENTS TO THE 1989 PLAN, AS DESCRIBED IN THE PROXY STATEMENT
DATED MAY 1, 1996, AND IN FAVOR OF SELECTION OF COOPERS & LYBRAND LLP, AS
AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1996. IN THEIR DISCRETION,
THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING. ----------------
SEE REVERSE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
----------------
<PAGE>
DETACH HERE
[X] PLEASE MARK
VOTES AS IN -----
THIS EXAMPLE. |
The Board of Directors recommends a vote FOR the following proposals:
1. To elect a Board of Directors for the ensuing year
except as marked to the contrary below:
NOMINEES: Irwin J. Gruverman, Robert L. Bogomolny, Marshall S. Sterman,
Michael K. Hooker and James N. Little
[_] FOR [_] WITHHELD
ALL FROM ALL
NOMINEES NOMINEES
MARK HERE [_]
FOR ADDRESS
CHANGE AND
[_]______________________________________ NOTE BELOW
For all nominees except as noted above
FOR AGAINST ABSTAIN
2. To amend the 1989 Non-Employee [_] [_] [_]
Director Stock Option Plan, as
described in the Proxy Statement
dated May 1.
FOR AGAINST ABSTAIN
3. To ratify the selection of the [_] [_] [_]
firm of Coopers & Lybrand LLP
as auditors for the Company
for the fiscal year ending
December 31, 1996.
4. To transact such other business as may properly come before the meeting
and any adjournments thereof.
Please sign your name exactly as it appears on your stock certificate, write
in the date and return this proxy as soon as possible in the enclosed
envelope. If the stock is registered in more than one name, each joint owner
should sign. If signing as attorney, executor, trustee, administrator or
guardian, please give full title as such. Only authorized officers should
sign for a corporation.
Signature: ________________________ Date: ___________
Signature: ________________________ Date: ___________
