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 [_]
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
Rule 14a-11(c) or Rule 14a-12
MicroFrame, Inc.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] $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:
----------------------------------------------------------------------
<PAGE>
(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.:
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(3) Filing Party:
----------------------------------------------------------------------
(4) Date Filed:
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-2-
<PAGE>
MICROFRAME, INC.
21 Meridian Road
Edison, New Jersey 08820
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on September 15, 1997
To the Shareholders of MICROFRAME, INC.:
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Shareholders
(the "Meeting") of MicroFrame, Inc., a New Jersey corporation (the "Company"),
will be held at the offices of the Company, 21 Meridian Road, Edison, New Jersey
08820 on September 15, 1997, at 10:00 A.M. for the following purposes:
1. To elect a board of seven directors to serve until the
next annual meeting of shareholders and until their respective successors are
elected and qualified;
2. To ratify and approve the appointment of Coopers & Lybrand
L.L.P. to serve as the Company' s independent accountants for the fiscal year
ending March 31, 1998; and
3. To transact such other business as may properly come
before the Meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. Management is aware of no other business
which will come before the Meeting.
The Board of Directors has fixed the close of business on August 1,
1997 as the record date for the determination of shareholders entitled to notice
of and to vote at the Meeting or any adjournment or postponement thereof.
Holders of a majority of the outstanding shares must be present in person or by
proxy in order for the Meeting to be held.
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. YOU ARE
URGED TO SIGN, DATE AND OTHERWISE COMPLETE THE ENCLOSED PROXY CARD AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING.
IF YOU ATTEND THE MEETING, YOU MAY VOTE YOUR SHARES IN PERSON IF YOU WISH TO DO
SO, EVEN IF YOU HAVE SIGNED AND RETURNED YOUR PROXY CARD.
By Order of the Board of Directors,
Michael Radomsky, Secretary
Edison, New Jersey
August 5, 1997
IT IS IMPORTANT THAT THE ENCLOSED PROXY FORM
BE COMPLETED AND RETURNED PROMPTLY
<PAGE>
MICROFRAME, INC.
21 Meridian Road
Edison, New Jersey 08820
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
September 15, 1997
SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation
by the board of directors ("Board of Directors" or "the Board") of MicroFrame,
Inc., a New Jersey corporation (the "Company"), of proxies to be voted at the
Annual Meeting of Shareholders of the Company to be held on September 15, 1997
(the "Meeting"), at 10:00 A.M. at 21 Meridian Road, Edison, New Jersey 08820 and
at any adjournment or postponement thereof.
A form of proxy is enclosed for use at the Meeting. The proxy may be
revoked by a shareholder at any time before it is voted by execution of a proxy
bearing a later date or by written notice to the Secretary before the Meeting,
and any shareholder present at the Meeting may revoke his or her proxy there at
and vote in person if he or she desires. When such proxy is properly executed
and returned, the shares it represents will be voted at the Meeting in
accordance with any instructions noted thereon. If no direction is indicated,
all shares represented by valid proxies received pursuant to this solicitation
(and not revoked prior to exercise) will be voted (i) for the election of the
nominees for director named in this Proxy Statement, (ii) for ratification and
approval of the appointment of Coopers & Lybrand L.L.P. to serve as the
Company's independent accountants for the fiscal year ending March 31, 1998 and
(iii) in accordance with the judgment of the persons named in the proxy as to
such other matters as may properly come before the Meeting and any adjournment
or postponement thereof.
The cost for soliciting proxies on behalf of the Board of Directors
will be borne by the Company. In addition to solicitation by mail, proxies may
be solicited in person or by telephone, telefax or cable by personnel of the
Company who will not receive any additional compensation for such solicitation.
The Company may reimburse brokers or other persons holding stock in their names
or the names of their nominees for the expenses of forwarding soliciting
material to their principals and obtaining their proxies. This Proxy Statement
and the accompanying form of proxy will be first mailed to shareholders on or
about August 5, 1997.
The close of business on August 1, 1997 has been fixed as the record
date (the "Record Date") for the determination of shareholders entitled to
notice of and to vote at the Meeting. On that date there were 4,839,302 shares
of common stock, par value $.001 per share, of the Company
<PAGE>
("Common Stock") outstanding. Each share entitles the holder thereof to one vote
and a vote of a majority of the shares present, or represented, and entitled to
vote at the Meeting is required to approve each proposal to be acted upon at the
Meeting. The holders of a majority of the shares of Common Stock outstanding on
the Record Date and entitled to be voted at the Meeting, present in person or by
proxy, will constitute a quorum for the transaction of business at the Meeting
and at any adjournment or postponement thereof.
-2-
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
At the Meeting, the shareholders will elect seven directors to serve
until the next annual meeting of shareholders and until their respective
successors are elected and qualified. Unless otherwise directed, the persons
named in the Proxy Statement intend to cast all proxies received for the
election of Messrs. Stephen M. Deixler, Stephen B. Gray, Michael Radomsky,
William H. Whitney, David I. Gould, Stephen P. Roma and Alexander C. Stark, Jr.
(the "nominees") to serve as directors upon their nomination at the Meeting. At
the Meeting a total of seven nominees will stand for election. The Company's
Nominating Committee is presently considering additional candidates for the
three vacant seats on the Board. Proxies cannot be voted for a greater number of
persons than the number of nominees named and the seven nominees for election to
the Board of Directors who receive the greatest number of votes cast at the
Meeting will be elected to the Board of Directors.
Each of the nominees has consented to serve as a director if elected.
All of the nominees currently serves as a director. Unless authority to vote for
any director is withheld in a proxy, it is intended that each proxy will be
voted FOR each of the nominees. In the event that any of the nominees for
director should before the Meeting become unable to serve or for good cause will
not serve if elected, it is intended that shares represented by proxies which
are executed and returned will be voted for such substitute nominees as may be
recommended by the Company's existing Board of Directors, unless other
directions are given in the proxies. To the best of the Company's knowledge, all
the nominees will be available to serve.
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company, their ages and
present positions with the Company are as follows:
Director
Name Age Position Held with the Company Since
---- --- ------------------------------ -----
Stephen M. Deixler+*X 62 Chairman of the Board of Directors 1985
Stephen B. Gray 39 President, Chief Executive Officer and 1996
Chief Operating Officer
Michael Radomsky 44 Executive Vice President, Secretary, 1982
Director
William H. Whitney 42 Chief Technology Officer, Assistant 1982
Secretary, Director
John F. McTigue 36 Chief Financial Officer and Treasurer
David E. Sawyer 50 Senior Vice President - Sales
-3-
<PAGE>
Director
Name Age Position Held with the Company Since
---- --- ------------------------------ -----
Robert M. Groll 63 Vice President - Marketing
David I. Gould +*X 67 Director 1985
Stephen P. Roma+*X 49 Director 1991
Alexander C. Stark 64 Director 1997
- ------------------------------
+ Member of Compensation/Stock Option Committee
* Member of Nominating Committee
X Member of Audit Committee
INFORMATION ABOUT NOMINEES
Set forth below is certain information with respect to each nominee:
STEPHEN M. DEIXLER has been Chairman of the Board of Directors since
1985 and served as Chief Executive Officer of the Company from April 1996 to May
1997, as well as from June 1985 through October 1994. He was President of the
Company from May 1982 to June 1985 and served as Treasurer of the Company from
its formation in 1982 until September 1993 and currently has served as Treasurer
of the Company since October 1994. During April 1995, Mr. Deixler sold his
interest in Princeton Credit Corporation, a company engaged in the business of
buying, selling, and leasing high technology products, to Greyvest Capital Inc.,
a Toronto Stock Exchange company. Prior to the sale, Mr. Deixler was Chairman of
Princeton Credit Corporation. He previously served as President of Atlantic
International Brokerage, a leasing company, which is a wholly owned subsidiary
of Atlantic Computer Systems, Inc., which was liquidated as a result of the
bankruptcy proceedings of its parent company, Atlantic Computer Systems PLC.
Prior to holding this position, he was President and sole shareholder of
Princeton Computer Associates, Inc. ("PCA"). PCA was a company engaged in the
business of buying, selling and leasing of large-scale computer systems as well
as functioning in consulting and facilities management and was sold to Atlantic
Computer Systems, Inc. in 1988.
STEPHEN B. GRAY has been President and Chief Operating Officer since
April 1996. He has served as the Chief Executive Officer since May 1997. He also
is a director of MicroFrame Europe N.V. He served as Senior Vice
President-Sales, Marketing and Support of the Company from December 1994 through
March 1996. From July 1993 through December 1994, Mr. Gray was an independent
consultant, engaged in assisting both private and publicly-held companies with
strategy development, internal operational reviews and shareholder value
enhancement programs. From September 1988 through June 1993, he held a series of
management positions within Siemens Nixdorf USA, the last as Vice President,
(reporting to the Chief Executive Officer and Board of Directors), and a member
of the executive committee overseeing Siemens Information Systems
-4-
<PAGE>
businesses in the United States. Prior to joining Siemens, Mr. Gray previously
held a series of rapidly progressive positions within IBM including various
technical, sales and marketing management assignments.
MICHAEL RADOMSKY is an original founder of the Company and has been
the Executive Vice President and a director since the Company's formation in
1982 and has served as Secretary of the Company since November 1994. He is
responsible for the identification of industry directions, and the technical
appropriateness of Company designs as well as products acquired, licensed or
jointly developed with others. In addition, Mr. Radomsky has been responsible
for the design of network topologies for large corporate customers, ensuring
compatibility for future products. Mr. Radomsky has also previously been
responsible for the Company's technical support, purchasing and manufacturing
operations. Prior to 1989, Mr. Radomsky was responsible for the mechanical and
electronic engineering of the Company's products.
WILLIAM H. WHITNEY is an original founder of the Company and has been
the Vice President - Software Development (which title has currently been
changed to Chief Technology Officer ) and a director since the Company's
formation in 1982 and has served as Assistant Secretary of the Company since
November 1994. Along with Mr. Radomsky, he developed all of the Company's
initial products, including the DL-4000 and the IPC product line. As Chief
Technology Officer, Mr. Whitney has been responsible for development of hardware
and software for all of the Company's standard offerings, including all products
being sold through OEM and distributor channels.
DAVID I. GOULD, retired as Vice Chairman of the Board of Directors at
the end of April 1995, a position in which he had served since December 1993. He
presently is a director of the Company and has been since April 1985. Mr. Gould
is President of Gould Consulting a position he has held since May 1, 1995. He
served as President and Chief Operating Officer of the Company from June 1985
until December 1993. He was Vice President-Marketing of the Company from April
1985 until June 1985. From 1982 until joining the Company in 1985, he was an
officer of The Ultimate Corporation ("Ultimate"), a computer manufacturer listed
on the New York Stock Exchange, eventually serving as Senior Vice President of
Marketing. During his three years at Ultimate, Mr. Gould managed the growth of
that company's revenues from $40 million to more than $100 million.
STEPHEN P. ROMA has been a director of the Company since August 1991
and since August 1994 is the President and Chief Executive Officer of WOW! Work
Out World a chain of neighborhood health and fitness centers. During April 1995,
he sold his interest in Princeton Credit Corporation, a company engaged in the
business of buying, selling and leasing high technology products, to Greyvest
Capital, Inc., a Toronto Stock Exchange company. Prior to the sale, Mr. Roma was
President and Chief Operating Officer of Princeton Credit Corporation. He
previously served as Vice President of Sales/Northeast Region of Atlantic
Computer Systems, Inc., which was liquidated as a result of the bankruptcy
proceedings of its parent company, Atlantic Computer Systems, PLC. Prior to
holding this position, he was a principal and President and Chief Operating
Officer of Princeton Computer Group, Inc., which was sold to Atlantic Computer
Systems, Inc. in 1988.
-5-
<PAGE>
ALEXANDER C. STARK JR. is the President of AdCon, Inc., a consulting
firm organized to advise and council senior officers of global telecom
companies. Mr. Stark previously worked for 40 years at AT&T. Ten of those years
was served as a Senior Vice President. He recently retired from AT&T Mr. Stark
is a former member of the Institute of Radio Engineers and a past Vice President
and Treasurer of Lambda Chi Alpha. He is a former member of: the Board of
Directors College Careers Fund of Westchester; the Board of adjustment of
Allendale, New Jersey; the Board of Trustees of Archer Methodist Church in
Allendale; and the County Trust Company Board of Advisors. He was the 1977
General Campaign Chairman, United Way of Westchester, and cited by the National
Conference of Christians and Jews for imaginative community leadership In 1991
Mr. Stark was honored as the Distinguished Engineer of the Year by Rutgers
University. He also served for many years as a Director-at-Large of the American
Electronics Association and Chaired the International Public Affairs committee.
NON-DIRECTOR EXECUTIVE OFFICERS
Set forth below is certain information with respect to each executive
officer of the Company who is not also a director of the Company:
JOHN F. McTIGUE has been the Company's Chief Financial Officer and
Treasurer since July 1997. His responsibilities include finance and
administration. Mr. McTigue is a finance professional and Certified Public
Accountant. From 1996 through 1997, he was with Fundtech Corporation, a software
developer, where he served as Chief Financial Officer. From 1989 to 1996, Mr.
McTigue was with Dawn Technologies, Inc., a manufacturer of hi-tech goods, where
he served as the Chief Executive Officer from 1994 through 1996 and Chief
Financial Officer and Treasurer from 1989 through 1994. Prior to this, he was
with Rothstein Kass & Company.
DAVID E. SAWYER was elected as the Senior Vice President - Sales in
July 1997. Mr. Sawyer joined the Company in June 1997. Prior to joining the
Company Mr. Sawyer was with Fore Systems from April 1996 to June 1997 as Senior
Manager for Channel Sales. Prior to joining Fore Systems, Mr. Sawyer was with
3COM (formerly CHIPCOM Corp.) from January 1993 to April 1996 in various
managerial positions, initially as a District Manager and most recently as a
Territorial Manager. From January 1989 to November 1992 Mr. Sawyer was employed
at Xyplex , Inc. where he served as a Carolina District Manager from January
1992 through November 1992 and as the Northeast District Manager from January
1989 through January 1992.
ROBERT M. GROLL has been Vice President - Marketing of the Company
since March 1986. From 1970 until joining the Company in June 1985, as Director
of Marketing, Mr. Groll was the President of PTM Associates, Inc. ("PTM"), a
firm engaged in management consulting in the areas of technical marketing and
computer system design. While with PTM, during 1983 and 1984, Mr. Groll became
Vice President of Cable Applications, Inc. a New York corporation, where he was
responsible for initiating and managing new product development efforts.
-6-
<PAGE>
The officers of the Company are elected by the Board of Directors at
its first meeting after each annual meeting of the Company's shareholders and
hold office until their successors are chosen and qualified, until their death,
or until they resign or have been removed from office. No family relationship
exists between any director or executive officer and any other director or
executive officer.
BOARD MEETINGS AND COMMITTEES
The Nominating Committee of the Board of Directors currently consists
of Messrs. Gould, Deixler and Roma. The Nominating Committee nominates members
of the Board of Directors and it will consider nominees recommended by
shareholders. The Nominating Committee held no meetings during fiscal 1997.
The Board of Directors has a Compensation/Stock Option Committee
which currently consists of Messrs. Deixler, Roma and Gould. The function of the
Compensation/Stock Option Committee is to review and establish policies,
practices and procedures relating to compensation of key employees, including
officers and directors who are key employees, outside directors and consultants,
to grant cash and non-cash bonuses to employees and grant non-plan stock options
and warrants to employees, outside directors and consultants and to administer
employee benefit plans, including all stock option plans of the Company. During
the fiscal year ended March 31, 1997, the Compensation/Stock Option Committee
took action by unanimous written consent on eleven occasions.
The Company's Audit Committee currently consists of Messrs. Roma,
Deixler and Gould. The Audit Committee held no meetings during fiscal 1997.
During the Company's fiscal year ended March 31, 1997, there were
twelve meetings of the Board of Directors and action taken by unanimous written
consent on five occasions. Each of the members of the Board of Directors who is
currently a nominee for election attended 75% or more of the meetings of the
Board of Directors during fiscal 1997 and attended all of meetings held by the
committees on which such nominee served.
COMPENSATION OF DIRECTORS
On September 26, 1996, each of Stephen M. Deixler, Stephen P. Roma
and David I. Gould, the Company's non-employee directors were granted a
non-employee director option pursuant to the Company's 1994 Plan to purchase
10,000 shares of Common Stock exercisable as to 2,500 shares upon each
three-month anniversary of the date of grant, provided that such individual
continues to serve as a non-employee director of the Company on such dates.
In addition, the Company adopted a policy commencing October 1, 1995,
that all non-employee directors traveling more than fifty miles to a meeting of
the Board of Directors shall be reimbursed for all reasonable travel expenses.
-7-
<PAGE>
EXECUTIVE OFFICERS
The executive officers of the Company are Stephen M. Deixler,
Chairman of the Board of Directors, Stephen B. Gray, President, Chief Executive
Officer and Chief Operating Officer, John F. McTigue, Chief Financial Officer
and Treasurer, Michael Radomsky, Executive Vice President and Secretary, William
H. Whitney, Chief Technology Officer and Assistant Secretary, David E. Sawyer,
Senior Vice President-Sales, and Robert M. Groll, Vice President-Marketing.
-8-
<PAGE>
BENEFICIAL OWNERSHIP OF THE COMPANY'S COMMON STOCK
The following table sets forth the number of shares of Common Stock
known to the Company to be beneficially owned as of July 15, 1997 by (i) holders
known to the Company to own beneficially 5% or more of the outstanding shares of
Common Stock of the Company, (ii) each of the directors and nominees, (iii) each
executive officer named in the Summary Compensation Table under the caption
"Executive Compensation" below, and (iv) all directors and executive officers of
the Company as a group, and the percentage of the total outstanding shares of
Common Stock such shares represented as of July 15, 1997. The Company
understands that, except as noted below, each beneficial owner has sole voting
and investment power with respect to all shares attributable to such owner.
Number of Shares
Name and Address of Beneficially Percent
Beneficial Owner Owned* of Class
- ---------------- ------ --------
Stephen M. Deixler(1) 750,532 15.3%
371 Eagle Drive
Jupiter, Florida 33477
David I. Gould(2) 275,837 5.6%
10844 White Aspen Way
Boca Raton, Florida 33428
Michael Radomsky(3) 313,804 6.4%
8 Zaydee Drive
Edison, New Jersey 08837
William H. Whitney (4) 182,159 3.7%
15 Jackson Avenue
Chatham, New Jersey 07928
Robert M. Groll(5) 82,913 1.7%
52 Village Lane
Freehold, New Jersey 07728
Stephen P. Roma(6) 474,399 9.7%
91 Durand Drive
Marlboro, New Jersey 07748
-9-
<PAGE>
Number of Shares
Name and Address of Beneficially Percent
Beneficial Owner Owned* of Class
- ---------------- ------ --------
Stephen B. Gray(7) 202,309 4.0%
37 Shy Creek Road
Alexandria, New Jersey 08867
Alexander C. Stark, Jr. 0 *
356 Eagle Drive
Jupiter, Florida 33477
John F. McTigue (8) 67,647 1.3%
3 Huckleberry Court
Kinnelon, New Jersey 07405
David E. Sawyer (9) 100,000 2.0%
604 Wheeler Drive
Angier, North Carolina 27501
Special Situations Fund, III, L.P.(10) 855,863 16.8%
MGP Advisers Limited Partnership (10) 855,863 16.8%
AWM Investment Company, Inc. (10) 1,170,133 22.5%
Austin W. Marxe (10) 1,170,133 22.5%
Jay Associates LLC (11) 480,000 9.3%
1118 Avenue J
Brooklyn, New York 11230
Alpha Investments LLC (12) 336,000 6.6%
5611 North 16th Street #300
Phoenix, Arizona 85016
Jules Nordlicht (13) 300,000 6.1%
225 West Beach Avenue
Long Beach, New York 11561
Directors and executive
officers as a group (10 Persons) 2,393,532 47.3%
-10-
<PAGE>
* All shares and per share amounts have been adjusted to take into account
the Company's Reverse Stock Split.
** Less than 1% of the outstanding shares of Common Stock.
(1) Does not include 214,436 shares of Common Stock owned by Mr. Deixler's
wife, mother, children and grandchildren as to which shares Mr. Deixler
disclaims beneficial ownership. Includes 120,406 shares of Common Stock
held by Merrill Lynch Pierce Fenner & Smith custodian f/b/o Stephen M.
Deixler, IRA. Includes 17,500 shares of Common Stock which may be acquired
pursuant to currently exercisable non- employee director options under the
1994 Plan. Also includes 53,330 shares issuable upon exercise of currently
exercisable Class A and Class B Warrants of the 1996 Private Placement.
(2) Does not include 21,800 shares of Common Stock owned by Mr. Gould's
grandchildren as to which shares Mr. Gould disclaims beneficial ownership.
Includes 50,000 shares of Common Stock which may be acquired pursuant to
currently exercisable options granted outside the Company's 1984 Stock
Option Plan and the 1994 Plan. Also includes 17,500 shares of common Stock
which may be acquired pursuant to currently exercisable non-employee
director options under the 1994 Plan.
(3) Includes 90,000 shares of Common Stock which may be acquired pursuant to
currently exercisable options granted outside the Company's 1994 Plan. Also
includes 9,400 shares of Common Stock which may be acquired pursuant to
currently exercisable options granted under the Company's 1994 Plan.
(4) Includes 90,000 shares of Common Stock which may be acquired pursuant to
currently exercisable options granted outside the Company's 1994 Plan. Also
includes 9,345 shares of Common Stock which may be acquired pursuant to
currently exercisable options granted under the Company's 1994 Plan.
(5) Includes 10,000 shares of Common Stock which may be acquired pursuant to
currently exercisable options granted under the Company's 1984 Plan. Also
includes 28,745 shares of Common Stock which may be acquired pursuant to
currently exercisable options granted under the 1994 Plan.
(6) Includes 31,540 shares of Common Stock which may be acquired pursuant to
currently exercisable options granted under the 1994 Plan.
(7) Includes 200,000 shares of Common Stock which may be acquired pursuant to
currently exercisable options granted outside the Company's 1994 Plan. Also
includes 2,309 shares of Common Stock which may be acquired pursuant to
currently exercisable options granted under the Company's 1994 Plan.
Includes 31,540 shares
-11-
<PAGE>
of Common Stock which may be acquired pursuant to currently exercisable
options granted under the 1994 Plan.
(8) Includes 15,000 shares of Common Stock which may be acquired pursuant to
currently exercisable options granted under the Company's 1994 Plan.
(9) Includes 50,000 shares of Common Stock which may be acquired pursuant to
currently exercisable options granted under the Company's 1994 Plan.
(10) Special Situations Fund III, L.P., a Delaware limited partnership (the
"Fund"), MGP Advisers Limited Partnership, a Delaware limited partnership
("MGP"), AWM Investment Company, Inc., a Delaware corporation ("AWM"), and
Austin W. Marxe have filed a Schedule 13G, the latest amendment of which is
dated January 5, 1996. All presented information is based on the
information contained in the Schedule 13G and subsequent information known
to the Company. The address of each of the reporting persons is 153 East
53rd Street, New York, New York 10022. The Fund has sole voting and
dispositive power with respect to 855,863 shares; MGP has sole dispositive
power with respect to 855,863 shares; AWM has sole voting power with
respect to 308,270 shares and sole dispositive power with respect to
1,164,133 shares; and Mr. Marxe has sole voting power with respect to
308,270 shares, shared voting power with respect to 855,863 shares and sole
dispositive power with respect to 1,164,133 shares. MGP is a general
partner of and investment advisor to the Fund. AWM, which is primarily
owned by Mr. Marxe, is the sole general partner of MGP. Mr. Marxe, the
principal limited partner of MGP and the President of AWM, is principally
responsible for the selection, acquisition and disposition of the portfolio
securities by AWM on behalf of MGP, the Fund and another fund that
beneficially owns shares included in the shares beneficially owned by AWM
and Mr. Marxe. Also includes 267,242 shares issuable upon exercise of
currently exercisable Class A and Class B Warrants of the 1996 Private
Placement held by the Fund and MGP and 364,422 shares issuable upon
exercise of currently exercisable Class A and Class B Warrants of the 1996
Private Placement held by AWM and Mr. Marxe.
(11) Includes 320,000 shares issuable upon exercise of currently exercisable
Class A and Class B Warrants of the 1996 Private Placement.
(12) Includes 224,000 shares issuable upon exercise of currently exercisable
Class A and Class B Warrants of the 1996 Private Placement.
(13) Includes 200,000 shares issuable upon exercise of currently exercisable
Class A and Class B Warrants of the 1996 Private Placement.
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<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The following persons have failed to file on a timely basis certain
reports required by Section 16(a) of the Securities Exchange Act of 1934 as
follows: Each of Messrs. Stephen M. Deixler, Stephen P. Roma and David I. Gould
filed one late report on Form 5, disclosing the grant of a non-employee stock
option pursuant to the Company's 1994 Stock Option Plan, as amended (the "1994
Plan"). Each of Messrs. Stephen B. Gray, Michael Radomsky, William Whitney and
Mark Simmons filed one late report, a Form 4 disclosing the grant of a non-plan
stock option. Mr. William Whitney has filed two late reports on Form 4,
disclosing the sale of stock. During the fiscal year ended March 31, 1997, the
Company is not aware of other late filings, or failure to file, any other
reports required by Section 16(a) of the Exchange Act.
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<PAGE>
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid or accrued by
the Company during the three fiscal years ended March 31, 1997, to those
individuals who as of March 31, 1997 served as the Company's Chief Executive
Officer during fiscal 1997 and to the Company's four most highly compensated
officers other than those who served as the Chief Executive Officer during
fiscal 1997 (these five executive officers being hereinafter referred to as the
"Named Executive Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
---------------------------- -------------------------------------------------------------------
Awards Payouts
-------------------------- ------------------------
Other
Annual Restricted Securities All Other
Principal Compen- Stock Underlying LTIP Compen-
Position Year Salary ($) Bonus($) sation($) Awards(s)($) Options(#) Payouts ($) sation($)
- -------- ---- ---------- -------- --------- ------------ ---------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Stephen M. Deixler 1997 14,000(1) -- -- -- 10,000 -- --
Chairman, Chief 1996 -- -- -- -- -- -- --
Executive Officer(1) 1995 -- -- -- -- -- -- --
Stephen B. Gray 1997 163,386 -- -- -- 400,000 -- --
President, Chief 1996 134,675 -- -- -- 2,309 -- --
Executive Officer (2), 1995 42,000(2) 2,213(3) -- -- 40,000 -- --
Chief Operating Officer
Michael Radomsky 1997 128,773 -- -- -- 90,000 -- 541(4)
Executive Vice- 1996 122,800 -- -- -- 8,208 -- 1,047(4)
President 1995 111,588 2,910(3) -- -- 1,192 -- 1,997(4)
William H. Whitney 1997 128,773 -- -- -- 90,000 -- 2,318(4)
Chief Technology 1996 122,800 -- -- -- 8,136 -- 2,152(4)
Officer 1995 111,588 2,841(3) -- -- 1,209 -- 1,997(4)
Mark Simmons, former
Vice President- 1997 116,956 -- -- -- 40,000 -- 2,105(4)
Operations and Chief 1996 92,800 -- -- -- 6,579 -- 1,612(4)
Financial Officer (5) 1995 16,012 1,513(3) -- -- 20,000 -- 177(4)
-14-
<PAGE>
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
---------------------------- -------------------------------------------------------------------
Awards Payouts
-------------------------- ------------------------
Other
Annual Restricted Securities All Other
Principal Compen- Stock Underlying LTIP Compen-
Position Year Salary ($) Bonus($) sation($) Awards(s)($) Options(#) Payouts ($) sation($)
- -------- ---- ---------- -------- --------- ------------ ---------- ----------- ---------
John F. McTigue
Chief Financial Officer
and Treasurer(5) 1997 115,000(6) -- -- 0
David E. Sawyer 1997 125,000(6) -- -- 0
</TABLE>
(1) The Company does not have a written employment agreement with Mr. Stephen
M. Deixler, the Company's Chairman of the Board. However, under an informal
agreement, the Company has agreed to pay him $1,000 per day to perform such
services as jointly agreed to by the Company and Mr. Deixler, and approved
by the Board of Directors. Mr. Deixler ceased to serve as the Chief
Executive Officer of the Company on May 19, 1997.
(2) Mr. Gray was elected to serve in the additional capacity as the Chief
Executive Officer of the Company on May 19, 1997. Compensation for Mr. Gray
includes payments he earned as a consultant of the Company in the amounts
of $42,000. Mr. Gray served as a consultant to the Company prior to the
time he became a full-time employee pursuant to his employment agreement
with the Company dated March 27, 1995.
(3) Represents compensation earned under the Company's Incentive Bonus Plan for
the fiscal year ended March 31, 1995 (the "Incentive Plan"). The Incentive
Plan covers all Company employees and was effective as of October 1, 1994.
The Incentive Plan is based on achievement in three specific areas -
Company revenue, Company operating income, and individual/ departmental
objectives.
(4) Represents the contribution of the Company under the Company's 401(k) Plan.
(5) Mr. Simmons tendered his resignation effective June 30, 1997. Mr. McTigue
was elected as the Chief Financial Officer on July 21, 1997 to replace Mr.
Simmons who resigned as of June 30, 1997.
(6) No salary was payable to this officer during fiscal 1997. This figure
represents the salary payable to him on an annualized basis assuming he had
been an employee of the Company during the entire fiscal year ending March
31, 1997.
-15-
<PAGE>
OPTION GRANTS IN FISCAL YEAR 1996
The following table sets forth certain information concerning stock
option grants during the year ended March 31, 1997 to the Named Executive
Officers (after giving effect to the Reverse Stock Split):
Individual Grants
--------------------------------------------------------
Percent
Number of of Total
Securities Options
Underlying Granted to Exercise or
Options Employee in Base Price Expiration
Name Granted(#) Fiscal Year ($/Sh) Date
Stephen M. Deixler 10,000(1) (1) $1.50 9/17/01
65,784 5.3% $1.31 (2)
Stephen B. Gray 400,000 32.3% $1.16 9/25/06
45,850 3.7% $1.31 (2)
Michael Radomsky 90,000 7.3% $1.16 9/25/06
45,850 3.7% $1.31 (2)
William H. Whitney 90,000 7.3% $1.16 9/25/06
Mark A. Simmons (3) 39,869 3.2% $1.31 (2)
40,000 3.2% $1.16 9/25/06
(1) Represents stock options granted to Mr. Deixler under the 1994 Stock Option
Plan in consideration of his service to the Company as a non-employee
director. Mr. Deixler is not considered an employee of the Company
(2) Represent options issued under a Time Accelerated Restricted Stock Award
Program (TARSAP). These options were terminated by mutual agreement between
the Company and the Named Executive Officers on March 31, 1997.
(3) Mr. Simmons is no longer an officer of the Company.
-16-
<PAGE>
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1996
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information concerning each
exercise of stock options during the fiscal year ended March 31, 1997 by each of
the Named Executive Officers and the number and value of unexercised options
held by each of the Named Executive Officers on March 31, 1997 (after giving
effect to the Reverse Stock Split).
<TABLE>
<CAPTION>
Value of
Number of Securities Unexercised
Underlying Unexer- In-the-Money
Shares cised Options Options at
Acquired on Value at FY-End(#) FY-End ($)(1)
Name Exercise(#) Realized($) Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ----------- ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Stephen M. Deixler -- -- 15,000/5,000 $1,250/$1,250
Stephen B. Gray -- -- 202,309/200,000 $118,000/$118,000
Michael Radomsky -- -- 99,400/0 $53,100/$0
William H. Whitney -- -- 99,345/0 $53,100/$0
Mark A. Simmons (2) -- -- 46,579/0 $23,600/$0
</TABLE>
- -----------------------
(1) The average price for the Common Stock as reported by the National
Quotation Bureau on March 31, 1997 was $1.75 per share. Value is calculated
on the basis of the difference between the option exercise price and $1.75
multiplied by the number of shares of Common Stock underlying the options.
(2) Mr. Simmons is no longer an officer of the Company.
COMPENSATION OF DIRECTORS
On September 17, 1996, each of Stephen M. Deixler, Stephen P. Roma
and David I. Gould, the Company's non-employee directors, were granted a
non-employee director option pursuant to the Company's 1994 Plan to purchase
10,000 shares of Common stock exercisable as to 2,500 shares upon each
three-month anniversary of the date of grant, provided that such individual
continues to serve as a non-employee director of the Company on such dates.
In addition, the Company adopted a policy commencing October 1, 1995,
that all non-employee directors traveling more than fifty miles to a meeting of
the Board of directors shall be reimbursed for all reasonable travel expenses.
-17-
<PAGE>
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
ARRANGEMENTS
The Company entered into employment agreements with each of Messrs.
Robert M. Groll, Michael Radomsky and William H. Whitney, which commenced as of
July 1, 1994 and expired as of June 30, 1997. Each of the executives has agreed
not to disclose any confidential information of the Company during the term of
his employment or thereafter and will not compete with the Company for a period
of two years following the expiration or termination of his employment
agreement.
On April 1, 1996, the Board of Directors did not renew the Company's
employment agreement with Mr. Lonnie L. Sciambi, the Company's then President
and Chief Executive Officer and simultaneously approved a compensation agreement
between the Company and Mr. Sciambi to be effective as of such date. See
"Certain Relationships and Related Transactions".
On March 27, 1995, the Company entered into an employment agreement
with Mr. Stephen B. Gray, in which he was appointed Senior Vice President -
Sales, Marketing and Support for a period of one year with an option to renew
for two additional years. The agreement provides for an initial annual salary of
$125,000 from the commencement of the agreement until March 31, 1996 ("Initial
Salary") with additional annual increases or decreases in the Initial Salary
based upon the Company's performance in the prior fiscal year measured against
the achievement by the Company of certain performance goals as established by
the Board of Directors with respect to certain weighted performance criteria.
Pursuant to the employment agreement, Mr. Gray also received 40,000 options to
acquire 40,000 shares of Common Stock under the Company's 1994 Plan. In
addition, Mr. Gray receives in accordance with the agreement, reimbursement for
reasonable expenses and fringe benefits that generally are available to the
Company's executives. Mr. Gray has agreed not to disclose confidential
information of the Company during the term of his employment or thereafter and
will not compete with the Company for a period of two years following
termination of his employment. On April 29, 1996, the Board of Directors of the
Company elected Mr. Gray as the President and Chief Operating Officer of the
Company and an employment agreement reflecting the terms of Mr. Gray's
employment in this capacity is currently being negotiated between the Company
and Mr. Gray.
CERTAIN TRANSACTIONS
Mr. David I. Gould, formerly an executive officer and a current
director of the Company entered into a consulting agreement with the Company
which become effective on May 1, 1995 upon the expiration date of his employment
agreement on April 30, 1995. The consulting agreement provides for a four-year
term, with an automatic one year renewal, and compensation at the rate of $1,000
per day for services provided. The consulting agreement further provides that
Mr. Gould will not receive less than $40,000 nor more than $220,000 per year,
and that the rendering of any services above $40,000 must be with the prior
approval of the Company.
On April 1, 1996, the Company entered into a six-month compensation
agreement with Mr. Lonnie L. Sciambi, a former executive officer and director of
the Company after not renewing its existing employment agreement with Mr.
Sciambi. The compensation agreement provides for compensation in the aggregate
sum of $100,000, as well as certain benefits during the term. In
-18-
<PAGE>
addition, Mr. Sciambi was granted a stock option under the Company's 1994 Plan
to purchase 23,196 shares of Common Stock.
In April 1996, the Company completed the 1996 Private Placement to
accredited investors of an aggregate of 1,101,467 Units for gross proceeds of
$1,376,933.75, each Unit consisting of one share of Common Stock and one Class A
Warrant and one Class B Warrant, each of which are exercisable into one share of
Common Stock. Stephen M. Deixler, an executive officer and a director of the
Company and Stephen P. Roma, a director of the Company, who each held preemptive
rights to purchase Units in this offering, each purchased 26,665 Units at a
price of $1.25 per Unit for aggregate consideration of $33, 331.25.
Additionally, in connection with the 1996 Private Placement, Special Situations
Fund III, L.P., also the holder of preemptive rights purchased 133,621 Units at
$1.25 for aggregate consideration of $167,026.25.
In September 1995, the Company formed a wholly-owned subsidiary,
MicroFrame Europe N.V., which, in turn, acquired all of the issued and
outstanding shares of capital stock of European Business Associates BVBA ("EBA")
of Brussels, Belgium from Marc Kegelaers, its sole shareholder. In connection
with such acquisition, MicroFrame Europe N.V. entered into a consulting
agreement with Mr. Kegelaers for a term of five years. The consulting agreement
provides for a consulting fee in the aggregate sum of U.S.$75,000, as well as
the reimbursement of certain expenses during the term. The consulting fee
increases by five percent each of the subsequent four years of the term.
-19-
<PAGE>
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT
OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected the accounting firm of Coopers &
Lybrand L.L.P. to serve as independent accountants of the Company for the year
ending March 31, 1998 and proposes the ratification of such decision. Coopers &
Lybrand L.L.P. has served as the principal independent accountants of the
Company since January 30, 1996 and is familiar with the business and operations
of the Company, and is intended to continue to serve for the year ending March
31, 1998. Representatives of Coopers & Lybrand L.L.P. are expected to be present
at the Meeting and will have the opportunity to make a statement if they desire
to do so. Such representatives are also expected to be available to respond to
appropriate questions during the Meeting.
On January 10, 1996, the Company received from Price Waterhouse LLP,
its independent accountants for the fiscal year ended March 31, 1995, a letter
confirming that the relationship has ceased. On January 15, 1996, the Company's
Board of Directors approved the resignation of Price Waterhouse LLP. There was
no adverse opinion or disclaimer of opinion, or modification as to uncertainty,
audit scope or accounting principles contained in the reports of Price
Waterhouse LLP for the fiscal year ended March 31, 1995.
During the Company's fiscal year ended March 31, 1995 and the
subsequent interim period preceding Price Waterhouse LLP's resignation on
January 10, 1996, there were no disagreements with Price Waterhouse LLP on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which disagreements, if not resolved to the
satisfaction of Price Waterhouse, LLP would have caused Price Waterhouse LLP to
make reference in connection with its report concerning the Company's financial
statements to the subject matter of the disagreements.
The Board of Directors recommends a vote FOR ratification of the
selection of Coopers & Lybrand L.L.P. as the independent accountants for the
Company for the year ending March 31, 1998.
-20-
<PAGE>
SHAREHOLDER PROPOSALS
Shareholders who wish to include proposals for action at the
Company's 1997 Annual Meeting of Shareholders in next year's proxy statement and
proxy card must cause their proposals to be received in writing by the Company
at its address set forth on the first page of this Proxy Statement no later than
April 1, 1998. Such proposals should be addressed to the Company's Secretary.
OTHER MATTERS
The Board of Directors of the Company does not know of any other
matters that are to be presented for action at the Meeting. Should any other
matters properly come before the Meeting or any adjournments thereof, the
persons named in the enclosed proxy will have the discretionary authority to
vote all proxies received with respect to such matters in accordance with their
judgment.
ANNUAL REPORT TO SHAREHOLDERS
The Company's 1997 Annual Report to Shareholders has been mailed to
shareholders prior to the mailing of this Proxy Statement, but except as herein
stated, such report is not incorporated herein and is not deemed to be a part of
this proxy solicitation material.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB AS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION, WITHOUT EXHIBITS, WILL BE FURNISHED
WITHOUT CHARGE TO ANY PERSON FROM WHOM THE ACCOMPANYING PROXY IS SOLICITED UPON
WRITTEN REQUEST TO THE COMPANY'S SECRETARY, MICHAEL RADOMSKY, MICROFRAME, INC.,
21 MERIDIAN ROAD, EDISON, NEW JERSEY 08820.
By Order of the Board of Directors
Michael Radomsky, Secretary
Edison, New Jersey
August 5, 1997
SHAREHOLDERS ARE URGED TO SPECIFY THEIR CHOICES AND DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE. A PROMPT RESPONSE IS HELPFUL
AND YOUR COOPERATION WILL BE APPRECIATED.
-21-
<PAGE>
PROXY MICROFRAME, INC. PROXY
(Solicited on behalf of the Board of Directors)
The undersigned holder of Common Stock of MICROFRAME, INC., revoking all
proxies heretofore given, hereby constitutes and appoints Stephen B. Gray and
John F. McTigue and each of them, Proxies, with full power of substitution, for
the undersigned and in the name, place and stead of the undersigned, to vote all
of the undersigned's shares of said stock, according to the number of votes and
with all the powers the undersigned would possess if personally present, at the
1997 Annual Meeting of Shareholders of MICROFRAME, INC. to be held at the
offices of the corporation at 21 Meridan Road, Edison, New Jersey, on Monday,
September 15, 1997 at 10:00 A.M., Eastern Daylight Time, and at any adjournments
or postponements thereof.
The undersigned hereby acknowledges receipt of the Notice of Meeting and
Proxy Statement relating to the Meeting and hereby revokes any proxy or proxies
heretofore given.
Each properly executed Proxy will be voted in accordance with the
specifications made on the reverse side of this Proxy and in the discretion of
the Proxies on any other matter that may come before the meeting. Where no
choice is specified, this Proxy will be voted (i) FOR all listed nominees to
serve as directors and (ii) FOR the ratification and approval of the appointment
of Coopers & Lybrand L. L. P., as the Company's independent auditors for the
fiscal year ending March 31, 1998 and in accordance with their discretion on
such other matters as may properly come before the meeting.
The Board of Directors Recommends a Vote FOR all listed nominees.
1. Election of seven directors FOR all WITHHOLD AUTHORITY to vote for
nominees listed (except as marked to all below
the listed nominees contrary)
[_] [_]
Nominees: Stephen M. Deixler, Stephen B. Gray, Michael Radomsky, William
H. Whitney, David I. Gould, Stephen P. Roma and Alexander C. Stark, Jr.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, CIRCLE
THAT NOMINEE'S NAME IN THE LIST PROVIDED ABOVE.)
PLEASE MARK, DATE AND SIGN THIS PROXY ON THE REVERSE SIDE
<PAGE>
2. The ratification and approval of the appointment of Coopers & Lybrand L.
L.P., as the Company's independent auditors for the fiscal year ending
March 31, 1998
[_] FOR [_] AGAINST [_] ABSTAIN
3. The proxies are authorized to vote in their discretion upon such other
matters as may properly come before the meeting.
The shares represented by this Proxy will be voted in the manner directed.
In the absence of any direction, the shares will be voted FOR each nominee
listed above, FOR the ratification and approval of the appointment of Coopers &
Lybrand L. L. P. as the Company's independent auditors for the fiscal year
ending March 31, 1998 and in accordance with their discretion on such other
matters as may properly come before the Meeting.
Dated _____________________, 1997
__________________________________
__________________________________
Signature(s)
(Signature(s) should conform to
names as registered. For jointly
owned shares, each owner should
sign. When signing as attorney,
executor, administrator, trustee,
guardian or officer of a
corporation, please give full
title.)
