Attached files
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EX-31.2 - EX-31.2 - ZAREBA SYSTEMS INC | c54252exv31w2.htm |
EX-23.1 - EX-23.1 - ZAREBA SYSTEMS INC | c54252exv23w1.htm |
EX-31.1 - EX-31.1 - ZAREBA SYSTEMS INC | c54252exv31w1.htm |
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Amendment No. 1)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year ended June 30, 2009
Commission file number 0-1388
Commission file number 0-1388
ZAREBA SYSTEMS, INC.
State of Incorporation: Minnesota
IRS Employer Identification No. 41-0832194
IRS Employer Identification No. 41-0832194
13705 26th Avenue N., Suite 102, Minneapolis, MN 55441 (763) 551-1125
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, $0.01 par value per share, registered on the Nasdaq Capital Market
Series A Preferred Stock Purchase Rights Pursuant to Rights Agreement
Common Stock, $0.01 par value per share, registered on the Nasdaq Capital Market
Series A Preferred Stock Purchase Rights Pursuant to Rights Agreement
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of
the Securities Act. Yes o No þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or
Section 15(d) of the Act. Yes o No þ
Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for
such shorter period that the registrant was required to submit and post such files). Yes o
No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K
(§229.405 of this chapter) is not contained herein, and will not be contained, to the best of
registrants knowledge, in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. þ
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
Large accelerated filer o | Accelerated filer o | Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company þ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes o No þ
The aggregate market value of the voting and non-voting common equity held by non-affiliates
computed by reference to the price at which the common equity was last sold, as of the last day of
the Companys most recently completed second fiscal quarter was $2,379,204.
The number of shares outstanding of the Companys Common Stock on October 14, 2009 was 2,481,973.
Table of Contents
DOCUMENTS INCORPORATED BY REFERENCE
None.
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EXPLANATORY NOTE
On September 28, 2009, Zareba Systems, Inc. (the Company, Zareba Systems, we, our or us)
filed its Annual Report on Form 10-K for the year ended June 30, 2009 (the Original Filing) with
the Securities and Exchange Commission (the SEC). The Original Filing intended to incorporate
Part III of Form 10-K by reference to the Companys definitive proxy statement (to be subsequently
filed). This Amendment No. 1 (this Amendment) on Form 10-K/A, which amends and restates items
identified below with respect to the Original Filing, is being filed to provide the disclosure
required by Part III of Form 10-K.
This Form 10-K/A only amends information in Part III, Item 10 (Directors, Executive Officers and
Corporate Governance), Item 11 (Executive Compensation), Item 12 (Security Ownership of Certain
Beneficial Owners and Management and Related Stockholder Matters), Item 13 (Certain Relationships
and Related Transactions, and Director Independence), Item 14 (Principal Accounting Fees and
Services) and Part IV, Item 15 (Exhibits, Financial Statement Schedules). All other items as
presented in the Original Filing are unchanged. Except for the foregoing amended and restated
information, this Amendment does not amend, update or change any other information presented in the
Original Filing.
In addition, as required by Rule 12b-15 of the Securities Exchange Act of 1934, this Form 10-K/A
contains new certifications by our principal executive officer and our principal financial and
accounting officer, filed as exhibits hereto.
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INDEX TO FORM 10-K/A
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PART III
Item 10. Directors, Executive Officers and Corporate Governance
Directors
Following is information about our current directors:
First Became | ||||||
Name | Age | Principal Occupation | a Director | |||
Michael L. Bochert |
65 | Independent Investment Banker | 2008 | |||
Class II, term expires at next annual meeting |
||||||
Eugene W. Courtney |
73 | Independent Management Consultant | 2003 | |||
Class II, term expires at next annual meeting |
||||||
William R. Franta |
67 | Technology Consultant | 1997 | |||
Class I, term expires 2011 |
||||||
John A. Grimstad |
59 | Vice President of Fredrikson & Byron, P.A. | 1996 | |||
Class I, term expires 2011 |
||||||
Dale A. Nordquist |
55 | President and Chief Executive Officer | 2004 | |||
Class I, term expires 2011 |
Mr. Bochert has been a director since August 2008. Mr. Bochert is currently an independent
investment banker and has 40 years of experience in investment banking and finance. From August
2007 to February 2008, Mr. Bochert was Executive Vice President of Corporate Strategy and Finance
of the John Ryan Company. From 2004 to 2007, Mr. Bochert was a Managing Director of Investment
Banking of Cherry Tree Securities, LLC, and from 2001 to 2004 he was a Principal with the Stonehill
Group. Mr. Bochert has also held positions with Dain Bosworth, L.F. Rothschild, Unterberg, Towbin,
and Piper, Jaffray & Hopwood, and was the founding President of the Minnesota Cooperation Office.
Mr. Courtney has served as an independent management consultant since December 1998. From October
1999 to February 2001, he served as President and Chief Executive Officer of RSI Systems, Inc., a
company that designs, manufactures and distributes videoconferencing systems. Mr. Courtney served
as Chief Executive Officer of HEI, Inc., a company which designs and manufactures microelectronics,
from 1990 until December 1998; he also served as HEIs President from 1990 to July 1998 and as its
Executive Vice President from 1988 to 1990.
Mr. Franta is currently an independent business, market and technology consultant to several
venture finance companies. From October 2000 to May 2003, he was Director Venture Finance for GATX
Corporation. From June 1999 to October 2000, he was the Vice President of Product Strategies at
REAL Solutions, Ltd. From August 1997 to February 2000, he was the Vice President of Marketing at
Centron in Minneapolis, MN. Between February 1997 and August 1997, he was a Business Development
and Technology Consultant in Minneapolis, MN. From January 1987 to February 1997, he served as
Senior Vice President of Network Systems Corporation.
Mr. Grimstad has been engaged in the private practice of law since 1977 and has been a Vice
President and shareholder of Fredrikson & Byron, P.A., our principal outside counsel, since 1984.
Mr. Grimstad has served as our Secretary since 1995.
Mr. Nordquist has been a director since 2004 and our President and Chief Executive Officer since
June 2008. Mr. Nordquist served as Senior Vice President of Sales and Marketing of Winland
Electronics, Inc. from December 2002 to June 2008. From October 2001 to December 2002, Mr.
Nordquist was the Vice President of Sales EMS Western Region for Winland Electronics. From May
1999 to October 2001, Mr. Nordquist served as Vice President of Sales and Marketing for Quickdraw
Conveyor Systems, Inc. From 1981 to May 1999, Mr. Nordquist served as Vice President of Sales and
Marketing for HEI, Inc., a Minnesota based designer and manufacturer of ultra-miniature electronic
devices and high technology products incorporating these devices.
Code of Business Conduct and Ethics
The Board of Directors has approved a Code of Business Conduct and Ethics, which applies to all of
our employees,
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directors and officers, including our principal executive officer, principal financial officer,
principal accounting officer and controller. The Code of Business Conduct and Ethics addresses
such topics as protection and proper use of our assets, compliance with applicable laws and
regulations, accuracy and preservation of records, accounting and financial reporting, conflicts of
interest and insider trading. The Code of Business Conduct and Ethics is available free of charge
through our website at www.zarebasystemsinc.com and is available to any shareholder who sends a
request for a paper copy to Zareba Systems, Inc., Attn. Director of Investor Relations, 13705 26th
Avenue N., Suite 102, Minneapolis, MN 55441. Zareba Systems intends to include on its website any
amendment to, or waiver from, a provision of its code of ethics that applies to our principal
executive officer, principal financial officer, principal accounting officer and controller that
relates to any element of the code of ethics definition enumerated in Item 406(b) of Regulation
S-K. Zareba Systems has contracted with an independent professional organization to provide
anonymous hotline services that permit its employees to communicate any concerns about behavior or
practices of Zareba Systems, its employees, officers or directors. The service was established to
assist the Board of Directors in effective internal control.
Audit Committee
The Company has an Audit Committee, which consists of Messrs. Franta, Courtney and Bochert, all of
whom are independent directors. The Board has determined that William R. Franta is the audit
committee financial expert as defined by Item 407(d) of Regulation S-K. A description of Mr.
Frantas experience is set forth above under Directors. We acknowledge that the designation of
Mr. Franta as the audit committee financial expert does not impose on Mr. Franta any duties,
obligations or liability that are greater than the duties, obligations and liability imposed on Mr.
Franta as a member of the Audit Committee and the Board of Directors in the absence of such
designation or identification.
Executive Officers
Set forth below are the names and ages of our current executive officers, as well as information
regarding their positions with Zareba Systems and their business experiences. There are no family
relationships among any of the officers named, nor is there any arrangement or understanding
pursuant to which any person was selected as an officer.
Dale A. Nordquist. See Directors for information with respect to Mr. Nordquist.
Jeffrey S. Mathiesen, age 48, has served as our Vice President and Chief Financial Officer since
December 2005. From July 2004 to December 2005, Mr. Mathiesen was Vice President and Chief
Financial Officer of Delphax Technologies, Inc. From April 2003 to July 2004, Mr. Mathiesen headed
The Mathiesen Group, Inc., a provider of management and financial consulting services. From
September 1996 to April 2003, Mr. Mathiesen was Vice President and Chief Financial Officer, then
Vice President of Business Development for Micro Component Technology, Inc.
Donald G. Dalland, age 49, has served as our Vice President, Engineering and Operations since
November 2005. From October 1994, when he joined us, to November 2005, Mr. Dalland served as our
Vice President of Manufacturing. Prior to joining Zareba Systems, Mr. Dalland was Manufacturing
Manager with Zytec Corporation, a power supply manufacturer.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires our officers and directors, and
persons who own more than ten percent (10%) of the registered class of our equity securities, to
file reports of ownership and changes in ownership with the Securities and Exchange Commission.
Officers, directors and greater than ten-percent shareholders are required by SEC regulation to
furnish us with copies of all Section 16(a) forms they file.
To our knowledge, based on a review of the copies of such reports furnished to us during the fiscal
year ended June 30, 2009, our officers, directors, and greater than ten-percent beneficial owners
complied with all Section 16(a) filing requirements.
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Item 11. Executive Compensation
Overview
In this section we describe our compensation programs and policies and the material elements of
compensation for the executive officers named in the Summary Compensation Table below, who we refer
to as our named executive officers, for the year ended June 30, 2009.
Employment Agreements
Dale A. Nordquist was appointed as our President and Chief Executive Officer on June 2, 2008 and
began serving in such position on June 30, 2008. In connection with this appointment, we entered
into an employment agreement with Mr. Nordquist. Under the employment agreement, Mr. Nordquist
serves as an at will employee until his employment is terminated in accordance with the terms of
the agreement or he resigns. The employment agreement provided for an initial annual base salary
of $190,000 and for Mr. Nordquist to be eligible to participate in any executive management
incentive programs approved by the Board from time to time, with the maximum payout in any year to
be 50% of his then current annual base salary. The employment agreement also provided for a
minimum incentive compensation award of $20,000 for our fiscal year ended June 30, 2009, provided
Mr. Nordquist was employed as President and Chief Executive Officer through such date. Mr.
Nordquist is also entitled to participate in all of our employee benefit plans. The employment
agreement also provides that from time to time, the Board may grant to Mr. Nordquist stock options,
restricted stock or other equity-based awards, as further described below in the narrative entitled
Equity Awards. The agreement further provides for termination benefits which are described below
under Severance Arrangements. Mr. Nordquist has agreed to a covenant not to compete and a
non-solicitation covenant following termination of the agreement.
We have not entered into employment agreements with any other employees.
Base Salary
Our Compensation Committee evaluates the competitiveness of base salaries based on information
drawn from a variety of sources, including published and proprietary survey data and our own
experience recruiting and retaining executives, although complete information is not easily
obtainable. Our base salary levels are intended to be consistent with competitive practice and
level of responsibility, with salary increases reflecting competitive trends, our overall financial
performance and the performance of the individual executive. Base salary compensation for our
executive officers is reviewed during the second quarter of each fiscal year, with changes in
annual base compensation, if any, effective January 1 of each year. We increased the annual base
salaries of each of our named executives by 3.5%, effective January 1, 2009.
Equity Awards
Equity awards to our named executive officers generally consist of incentive stock options, which
the Compensation Committee periodically grants to provide additional incentives to maximize our
share value and to make equity ownership an important component of executive compensation. Stock
option award levels are determined based on market data, and vary based on an individuals position
within our company, time at our company, and contributions to our performance. Equity incentives
are reviewed from time to time as the Compensation Committee determines the need to ensure that
equity incentives are properly aligned with our objectives. Stock options are granted at the
closing market price of our Common Stock on the date of grant and vest over time.
No equity awards were granted in fiscal year 2009 to any of our named executive officers.
Non-Equity Incentive Compensation
Our Compensation Committee periodically uses annual cash awards to motivate executives to achieve
target performance for short-term goals, specifically, sales, sales performance and timeliness of
new product and market initiatives, and net income. The Compensation Committee generally commences
its review of annual incentive compensation plans in the fourth quarter of each fiscal year, in
conjunction with approval of our annual operating plan for the following year. Incentive
compensation payments are determined in the following year, upon
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completion of our audited consolidated financial statements for the prior fiscal year and the
filing of such financial statements on Form 10-K. Annual incentive compensation for executive
officers during fiscal year 2009 was based upon the companys sales and operating income and, in
the case of one of the named executive officers, project objectives, in each case in accordance
with targets set by the Compensation Committee, with minimum threshold and maximum threshold
ranges.
Perquisites and Other Personal Benefits
We provide the named executive officers with certain perquisites and other personal benefits.
These perquisites and other personal benefits include matching amounts under our 401(k) plan and
certain medical, dental, life insurance, and long term disability insurance benefits beyond those
available to all other employees.
Severance Arrangements
Our employment agreement with Mr. Nordquist provides that if we terminate his employment without
cause, he will continue to receive his base salary for a period of 12 months following termination,
subject to a capped amount based upon provisions of the Internal Revenue Code. In addition, on
September 25, 2009, we entered into Executive Severance Agreements with all of our named executive
officers. Each of these agreements provides that in the event of the termination of the officer
without cause by us or for good reason by the officer within 12 months following a change in
control, the officer will receive a continuation of base pay and health insurance benefits for an
18 month period following termination. No continuation of payments will occur if the termination is
for cause. These agreements also include non-solicitation covenants and non-competition provisions
that prevent each officer from having certain relationships with our competitors for a period of 12
months following termination of employment. The provisions of the agreement with Mr. Nordquist
supersede any similar provisions contained in Mr. Nordquists employment agreement in the event of
a change of control, and such employment agreement is deemed amended to give effect to these
provisions.
Summary Compensation Table for the Years Ended June 30, 2008 and June 30, 2009
The following table sets forth information concerning the compensation of our named executive
officers for fiscal years 2009 and 2008:
Non-Equity | ||||||||||||||||||||||||||||
Option | Incentive Plan | All Other | ||||||||||||||||||||||||||
Name and Principal | Salary | Bonus | Awards | Compensation | Compensation | Total | ||||||||||||||||||||||
Position | Year | ($) | ($) | ($)(1) | ($) | ($)(2) | ($) | |||||||||||||||||||||
Dale A. Nordquist(3) |
2009 | 194,231 | | 20,697 | 79,000 | 9,186 | 303,114 | |||||||||||||||||||||
President and |
2008 | 731 | | 1,725 | | | 2,456 | |||||||||||||||||||||
Chief Executive Officer |
||||||||||||||||||||||||||||
Jeffrey S. Mathiesen |
2009 | 183,968 | | | 49,000 | 12,011 | 244,979 | |||||||||||||||||||||
Vice President and |
2008 | 177,531 | | | 10,116 | 187,647 | ||||||||||||||||||||||
Chief Financial
Officer |
||||||||||||||||||||||||||||
Donald G. Dalland |
2009 | 182,130 | | | 37,000 | 7,188 | 226,318 | |||||||||||||||||||||
Vice President, |
2008 | 175,331 | | | | 8,013 | 183,344 | |||||||||||||||||||||
Engineering and
Operations |
(1) | Represents the amounts recognized for financial statement reporting purposes for the 2009 and
2008 fiscal years in accordance with Statement of Financial Accounting Standards No. 123(R),
Share-Based Payment (SFAS 123(R)), and thus may include amounts from awards granted in and
prior to such years. The assumptions used to determine the valuation of the awards are
discussed in Note 3 to our consolidated financial statements included in our Annual Report on
Form 10-K for the fiscal year ended June 30, 2009. See the table entitled Outstanding Equity
Awards at Fiscal Year-End and the narrative discussion entitled Equity Awards for further
information regarding stock option awards. |
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(2) | Consisted of the following: |
Match of 401(k) | Company-Paid Medical and | |||||||||||||||
Contribution | Life Insurance Premiums | |||||||||||||||
2008 | 2009 | 2008 | 2009 | |||||||||||||
Mr. Nordquist |
$ | | $ | 2,564 | $ | | $ | 6,622 | ||||||||
Mr. Mathiesen |
$ | 3,721 | $ | 5,691 | $ | 6,395 | $ | 6,320 | ||||||||
Mr. Dalland |
$ | 3,767 | $ | 2,966 | $ | 4,246 | $ | 4,222 |
(3) | Mr. Nordquist joined us as President and Chief Executive Officer effective June 30, 2008. |
Outstanding Equity Awards at Fiscal Year-End June 30, 2009
The following table sets forth information concerning outstanding equity awards held by our named
executive officers at fiscal year end 2009:
Number of | ||||||||||||||||
Securities | Number of Securities | Option | ||||||||||||||
Underlying | Underlying | Exercise | Option | |||||||||||||
Unexercised Options | Unexercised Options | Price | Expiration | |||||||||||||
Name | (#) Exercisable | (#) Unexercisable | ($) | Date | ||||||||||||
Dale A. Nordquist |
5,025 | | 8.47 | 11/3/14 | ||||||||||||
5,000 | | 8.38 | 10/27/15 | |||||||||||||
10,000 | 30,000 | (1) | 2.45 | 6/2/18 | ||||||||||||
Donald G. Dalland |
4,875 | | 4.00 | 2/5/10 |
(1) | Options are exercisable in 10,000 share increments on June 2 of each of 2010, 2011 and 2012. |
Directors Compensation Table for the Year Ended June 30, 2009
Each non-employee, non-officer director, excluding Mr. Grimstad, receives an annual retainer fee of
$16,000 and meeting attendance fees of (i) $750 for each quarterly meeting of the Board attended,
(ii) $50 for each breakfast or dinner meeting of the Board attended and (iii) $500 for each meeting
of a Committee attended on which he serves. The chair of the Audit and Compensation Committees
receives an additional annual retainer of $5,000 per committee. The Chairman of the Board receives
an annual retainer of $7,500 and the chair of the Nominating Committee receives an annual retainer
of $3,000. Each director receives reimbursement of travel expenses. Such directors also receive a
monthly stipend of $50 to cover miscellaneous travel, telephone and meal expenses associated with
Board responsibilities.
Compensation of our non-employee directors during fiscal year 2009 appears in the following table:
Fees earned or paid | All other | |||||||||||||||
in cash | Option awards | compensation | Totals | |||||||||||||
Name | ($) | ($)(1) | ($)(2) | ($) | ||||||||||||
Michael L. Bochert |
21,417 | 7,449 | 600 | 29,466 | ||||||||||||
Eugene W. Courtney |
24,500 | | 600 | 25,100 | ||||||||||||
William R. Franta(3) |
45,000 | | 600 | 45,600 | ||||||||||||
John A. Grimstad(4) |
| | | |
(1) | Represents the amount recognized for financial statement reporting purposes for the 2009 fiscal year in accordance with Statement of Financial Accounting Standards No. 123(R), Share-Based Payment (SFAS 123(R)), and thus may include amounts from awards granted in and prior to such years. The assumptions used to determine the valuation of the awards are discussed in Note 3 to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2009. As of June 30, 2009, each non-employee director had the following number of options outstanding: Mr. Bochert, 5,025; Mr. Courtney, 10,025; Mr. Franta, 20,000; and Mr. Grimstad, 20,000. | |
(2) | Amount represents the $50 monthly stipend for miscellaneous travel and incidental expenses. | |
(3) | Mr. Frantas fees include annual retainers totaling $20,500 for serving as Chairman of the Board of Directors and of the Audit, Compensation and Nominating Committees. | |
(4) | Mr. Grimstad serves as our outside legal counsel and does not receive cash compensation for Board services. |
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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Principal Shareholders
The following table provides information concerning the only persons known to us to be the
beneficial owners of more than 5% of our outstanding Common Stock as of October 14, 2009.
Unless otherwise indicated in the footnotes to the table, each shareholder named in the table has
sole voting and investment power with respect to the shares of Common Stock set forth opposite the
shareholders name. We have based our calculation of the percentage of beneficial ownership on
2,481,973 shares of Common Stock outstanding on October 14, 2009.
Amount and Nature of | ||||||||
Name and Address of Beneficial Owner | Beneficial Ownership(1) | Percent of Class | ||||||
Duane Schiefelbein |
177,084 | (2) | 7.1 | % | ||||
1670 Robert Street, P.O. Box 357 West St. Paul, MN 55118-3919 |
||||||||
Woodland Investment Company |
258,000 | (3) | 10.4 | % | ||||
4400 State Highway 360, Grapevine, TX 76051 |
||||||||
Heartland Advisors, Inc. |
176,167 | (4) | 7.1 | % | ||||
789 North Water Street, Milwaukee, WI 53202 |
||||||||
Nicole F. Kohl Gift Trust |
135,000 | (5) | 5.4 | % | ||||
4400 State Highway 360, Grapevine, TX 76051 |
(1) | Under the rules of the Securities and Exchange Commission, an individual is also deemed to
beneficially own shares that are not outstanding but which the individual has the right to
acquire as of October 14, 2009, or within 60 days of such date. Such shares not outstanding
but so deemed beneficially owned are treated as outstanding when determining the percent of
the class owned by the particular individual and when determining the percent owned by the
group. |
|
(2) | Represents 6,216 shares held by Mr. Schiefelbein and 170,868 shares held by Peace Shalom
Foundation. Mr. Schiefelbein is the trustee of Peace Shalom Foundation and has voting and
investment power of such shares. We have relied upon information contained in a Schedule
13G/A filed with the Securities and Exchange Commission by Mr. Schiefelbein on January 8, 2009
and information provided to us. |
|
(3) | According to information known to us, the power to vote and dispose (or to direct the vote or
disposition) of such shares is shared with Atlee M. Kohl and Nicole F. Kohl, each of whom are
thereby deemed to be beneficial owners of such shares. |
|
(4) | Represents shares held for clients of Heartland Advisors, Inc. (Heartland), over which
Heartland has shared dispositive power, and William J. Nasgovitz, President and principal
shareholder of Heartland, may be deemed to have both voting and investment power over the
shares. We have relied on information known to us as of August 26, 2009. |
|
(5) | According to information known to us, the power to vote and dispose (or to direct the vote or
disposition) of such shares is shared by the Northern Trust Company and Atlee M. Kohl,
trustees of the Kohl Gift Trust. Mr. Kohl is deemed to be a beneficial owner of such shares. |
Management Shareholdings
The following table sets forth the beneficial ownership of our Common Stock as of October 14, 2009
by (i) each director, (ii) the executive officers named in the Summary Compensation Table, and
(iii) all directors and executive officers as a group, as of October 14, 2009.
Unless otherwise indicated in the footnotes to the table, each shareholder named in the table has
sole voting and investment power with respect to the shares of Common Stock set forth opposite the
shareholders name. We have based our calculation of the percentage of beneficial ownership on
2,481,973 shares of Common Stock outstanding on October 14, 2009.
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Amount and Nature of | ||||||||
Name of Officer or Director | Beneficial Ownership(1) | Percent of Class | ||||||
Dale A. Nordquist
|
50,673(2) | 2.0 | % | |||||
Michael L. Bochert
|
5,025(3) | * | ||||||
Eugene W. Courtney
|
10,025(4) | * | ||||||
William R. Franta
|
20,000(5) | * | ||||||
John A. Grimstad
|
45,875(6) | 1.8 | % | |||||
Donald J. Dalland
|
11,699(7) | * | ||||||
Jeffrey S. Mathiesen
|
2,318 | * | ||||||
Officers and Directors as a Group (7 persons)
|
145,615(8) | 5.7 | % |
* | Less than 1%. | |
(1) | Under the rules of the Securities and Exchange Commission, an individual is also deemed to
beneficially own shares that are not outstanding but which the individual has the right to
acquire as of October 14, 2009 or within 60 days of such date. Such shares not outstanding
but so deemed beneficially owned are treated as outstanding when determining the percent of
the class owned by the particular individual and when determining the percent owned by the
group. |
|
(2) | Includes 20,025 shares which may be purchased by Mr. Nordquist upon exercise of options that
are exercisable within 60 days of October 14, 2009. |
|
(3) | Includes 5,025 shares which may be purchased by Mr. Bochert upon exercise of options that are
exercisable within 60 days of October 14, 2009. |
|
(4) | Represents 10,025 shares which may be purchased by Mr. Courtney upon exercise of options that
are exercisable within 60 days of October 14, 2009. |
|
(5) | Represents 20,000 shares which may be purchased by Mr. Franta upon exercise of options that
are exercisable within 60 days of October 14, 2009. |
|
(6) | Includes 3,300 shares held by Mr. Grimstads wife and 20,000 shares which may be purchased by
Mr. Grimstad upon exercise of options that are exercisable within 60 days of October 14, 2009. |
|
(7) | Includes 4,875 shares which may be purchased by Mr. Dalland upon exercise of options that are
exercisable within 60 days of October 14, 2009. |
|
(8) | Includes 79,950 shares which may be purchased by officers and directors upon exercise of
options that are exercisable within 60 days of October 14, 2009. |
Equity Compensation Plan Information
Reference is made to the information set forth in Part II, Item 5 of the Original Filing under
Equity Compensation Plan Information.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Certain Relationships And Related Transactions
Under its charter, the Audit Committee has the responsibility to review and approve all related
party transactions to which we may be a party prior to their implementation. To managements
knowledge, no director, officer or five percent shareholder or any family members of such persons
had in fiscal year 2008 or 2009, or currently has, any material interest, direct or indirect, in
any transaction in which Zareba Systems was involved that would require disclosure under Item 404
of Regulation S-K.
Director Independence
The Board of Directors has determined that a majority of its members are independent as defined
by the listing standards of the Nasdaq Stock Market since none of them are believed to have any
relationships that, in the opinion of the Board of Directors, would interfere with the exercise of
independent judgment in carrying out the responsibilities of a director. Our current independent
directors are Eugene W. Courtney, William R. Franta and Michael L. Bochert. The
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Board has also determined that it satisfies the independence standards of the
Nasdaq Stock Market with respect to the membership of the Boards Audit Committee, Nominating
Committee and Compensation Committee.
Item 14.
Principal Accountant Fees and Services
Fees
Baker Tilly Virchow Krause, LLP (formerly known as Virchow, Krause & Company, LLP) acted as our
independent registered public accounting firm for the fiscal years ended June 30, 2009 and 2008.
The aggregate fees billed by Baker Tilly for fiscal years 2009 and 2008 are as follows:
2009 | 2008 | |||||||
Audit Fees |
$ | 197,000 | $ | 216,000 | ||||
Audit-Related Fees |
0 | 0 | ||||||
Tax Fees |
44,000 | 44,000 | ||||||
All Other Fees |
0 | 0 | ||||||
$ | 241,000 | $ | 260,000 |
Audit fees in 2009 and 2008 include fees for the 2009 and 2008 audits, respectively. Tax fees in
2009 and 2008 include fees for services provided in connection with year-end preparation, planning
and services relating to preparation of federal and state tax returns.
The Audit Committee has considered whether provision of the above non-audit services is compatible
with maintaining accountants independence and has determined that such services are compatible
with maintaining accountants independence.
Pre-Approval Policy
The Audit Committee has not adopted a policy for pre-approval of all audit and non-audit services
by its independent auditors, but in fiscal 2009 it approved all audit and permitted non-audit
services to be performed for Zareba Systems by its independent auditors.
Item 15.
Exhibits, Financial Statement Schedules
Exhibits
Number
|
Description and Reference | |
3.1
|
Restated Articles of Incorporation, as amended to date,
incorporated by reference to Exhibit 3.1 to the Companys quarterly
report on Form 10-QSB for the fiscal quarter ended September 30,
2005. |
|
3.2
|
Amended and Restated Bylaws, as amended to date, incorporated by
reference to Exhibit 3.1 to the Companys quarterly report on Form
8-K dated May 10, 2007. |
|
3.3
|
Certificate of Designation of Series A Preferred Stock of Waters
Instruments, Inc., incorporated by reference as part of Exhibit 4.1
of the Companys Registration Statement on Form 8-A filed on March
16, 2005. |
|
4.1
|
Rights Agreement dated as of March 15, 2005 between Waters
Instruments, Inc. and Wells Fargo Bank, N.A. as Rights Agent,
together with the following exhibits thereto: (A) Certificate of
Designation of Series A Preferred Stock of Waters Instruments,
Inc.; (B) Summary of Rights to Purchase Shares of Series A
Preferred Stock; (C) Form of Right Certificate (pursuant to the
Rights Agreement, Right Certificates will not be delivered until as
soon as practicable after the Distribution Date), incorporated by
reference to Exhibit 4.1 of the Companys Registration Statement on
Form 8-A filed on March 16, 2005. |
|
10.1
|
1995 Stock Option Plan and forms of incentive stock option
agreement and nonqualified stock option agreement used under the
Companys 1995 Stock Option Plan, incorporated by reference to
Exhibit (d)(i) to the Companys Schedule 13E-3 filed August 12,
2009.** |
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10.2
|
1997 Associates Stock Purchase Plan, incorporated by reference to
Exhibit 10.7 to the Companys Annual Report on Form 10-KSB for the
fiscal year ended June 30, 1998.** |
|
10.3
|
Amendment No. 1 to 1995 Stock Option Plan, incorporated by
reference to Exhibit 10.8 to the Companys Annual Report on Form
10-KSB for fiscal year ended June 30, 2000.** |
|
10.4
|
Lease dated January 13, 2004 by and between 1620 Industrial Drive
LLC and Waters Instruments, Inc., incorporated by reference to
Exhibit 10.3 to the Companys Annual Report on Form 10-KSB/A-1 for
the fiscal year ended December 31, 2003. |
|
10.5
|
Credit Facility Letter by and between Zareba Systems Europe
Limited, a wholly-owned subsidiary of Waters Instruments, Inc., and
Bank of Scotland dated September 27, 2004, incorporated by
reference to Exhibit 10.2 to the Companys quarterly report on Form
10-QSB for the fiscal quarter ended September 30, 2004. |
|
10.6
|
Stock Purchase Agreement dated September 27, 2004 among Zareba
Systems Europe Limited, a wholly-owned subsidiary of Waters
Instruments, Inc., and certain individuals, incorporated by
reference to Exhibit 2.1 of Form 8-K filed October 1, 2004. |
|
10.7
|
2004 Equity Incentive Plan, incorporated by reference to Exhibit
10.1 to the Companys quarterly report on Form 10-QSB for the
fiscal quarter ended December 31, 2004.** |
|
10.8
|
Form of incentive stock option agreement and nonqualified stock option agreement currently used
under the 2004 Equity Incentive Plan, incorporated by reference to Exhibit 10.1 to the Companys
quarterly report on Form 10-QSB for the fiscal quarter ended March 31, 2005.** |
|
10.9
|
Form of restricted stock agreement currently used under the 2004 Equity Incentive Plan,
incorporated by reference to Exhibit 10.2 to the Companys quarterly report on Form 10-QSB for the
fiscal quarter ended March 31, 2005.** |
|
10.10
|
Form of stock appreciation rights agreement currently used under the 2004 Equity Incentive Plan,
incorporated by reference to Exhibit 10.3 to the Companys quarterly report on Form 10-QSB for the
fiscal quarter ended March 31, 2005.** |
|
10.11
|
Letter agreement dated October 17, 2005 with Jeff Mathiesen, incorporated by reference to Exhibit
10.1 to the Companys quarterly report on Form 10-QSB for the quarter ended December 31, 2005.** |
|
10.12
|
Stock Purchase Agreement for the Purchase and Sale of All Outstanding Shares of Capital Stock of
Waters Medical Systems, Inc. dated as of July 24, 2007 between the Company and Holding GC, Inc.,
incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated July 24, 2007 |
|
10.13
|
Revolving Credit Agreement dated as of August 29, 2007 by and between the Company, Zareba
Security, Inc. and JPMorgan Chase Bank, N.A., incorporated by reference to Exhibit 10.1 to Current
Report on Form 8-K dated August 29, 2007 |
|
10.14
|
Security Agreement dated as of August 29, 2007 by and between the Company and JPMorgan Chase Bank,
N.A., incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K dated August 29,
2007 |
|
10.15
|
Security Agreement dated as of August 29, 2007 by and between Zareba Security, Inc. and JPMorgan
Chase Bank, N.A., incorporated by reference to Exhibit 10.3 to Current Report on Form 8-K dated
August 29, 2007 |
|
10.16
|
Revolving Notes dated as of August 29, 2007 by Zareba Systems, Inc and Zareba Securities, Inc. as
Borrower and JPMorgan Chase Bank, N.A., as Lender, incorporated by reference to Exhibit 10.4 to
Current Report on Form 8-K dated August 29, 2007 |
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10.17
|
Stock Pledge Agreement effective August 29, 2007 by and between the Company and JPMorgan Chase
Bank, N.A., incorporated by reference to Exhibit 10.5 to Current Report on Form 8-K dated August
29, 2007 |
|
10.18
|
Negative Pledge Agreement dated August 29, 2007 by Zareba Systems, Inc. in favor of JPMorgan Chase
Bank, N.A., incorporated by reference to Exhibit 10.6 to Current Report on Form 8-K dated August
29, 2007 |
|
10.19
|
Third Amendment to Lease between Plymouth Properties Realty LLC and Zareba Systems, Inc., dated
February 5, 2008, incorporated by reference to Exhibit 10.20 to the Companys Annual Report on
Form 10-K for the fiscal year ended June 30, 2008 |
|
10.20
|
Resignation Agreement and Release between the Company and Gerald W. Grabowski, dated June 2, 2008,
incorporated by reference to Exhibit 10.20 to the Companys Annual Report on Form 10-K for the
fiscal year ended June 30, 2008** |
|
10.21
|
Resignation Agreement and Release between the Company and W. John Frederick, dated June 27, 2008,
incorporated by reference to Exhibit 10.21 to the Companys Annual Report on Form 10-K for the
fiscal year ended June 30, 2008** |
|
10.22
|
Employment Agreement between the Company and Dale A. Nordquist, dated June 30, 2008, incorporated
by reference to Exhibit 10.22 to the Companys Annual Report on Form 10-K for the fiscal year
ended June 30, 2008** |
|
10.23
|
Voluntary Cancellation Agreement of Incentive Stock Option Agreement between the Company and
Jeffrey S. Mathiesen, dated June 30, 2008, incorporated by reference to Exhibit 10.23 to the
Companys Annual Report on Form 10-K for the fiscal year ended June 30, 2008** |
|
10.24
|
Voluntary Cancellation Agreement of Incentive Stock Option Agreement between the Company and
Donald G. Dalland, dated June 30, 2008, incorporated by reference to Exhibit 10.24 to the
Companys Annual Report on Form 10-K for the fiscal year ended June 30, 2008** |
|
10.25
|
First Amendment to Revolving Credit Agreement, dated as of September 30, 2008, by and among Zareba
Systems, Inc., Zareba Security Inc. and JPMorgan Chase Bank, N.A., incorporated by reference to
Exhibit 10.1 to Current Report on Form 8-K dated October 8, 2008. |
|
10.26
|
Second Amendment to Revolving Credit Agreement, dated as of October 22, 2008, by and among Zareba
Systems, Inc., Zareba Security Inc. and JPMorgan Chase Bank, N.A., incorporated by reference to
Exhibit 10.1 to Current Report on Form 8-K dated October 22, 2008. |
|
10.27
|
Executive Severance Agreement between the Company and Dale A. Nordquist, dated September 25, 2009,
incorporated by reference to Exhibit 10.27 to the Companys Annual Report on Form 10-K for the
fiscal year ended June 30, 2009.** |
|
10.28
|
Executive Severance Agreement between the Company and Jeffrey S. Mathiesen, dated September 25,
2009, incorporated by reference to Exhibit 10.28 to the Companys Annual Report on Form 10-K for
the fiscal year ended June 30, 2009.** |
|
10.29
|
Executive Severance Agreement between the Company and Donald G. Dalland, dated September 25, 2009,
incorporated by reference to Exhibit 10.29 to the Companys Annual Report on Form 10-K for the
fiscal year ended June 30, 2009.** |
|
21.1
|
List of Subsidiaries, incorporated by reference to Exhibit 21.1 to the Companys Annual Report on
Form 10-K for the fiscal year ended June 30, 2009. |
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23.1*
|
Consent of Independent Registered Public Accounting Firm Baker Tilly Virchow Krause, LLP. |
|
24.1
|
Power of Attorney for Dale A. Nordquist, Jeffrey S. Mathiesen, William R. Franta, John A.
Grimstad, Eugene W. Courtney and Michael Bochert, incorporated by reference to Exhibit 24.1 to the
Companys Annual Report on Form 10-K for the fiscal year ended June 30, 2009. |
|
31.1*
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
31.2*
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
** | Management contract or compensatory plan. | |
* | Filed herewith. |
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Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
Company has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly
authorized, in Minneapolis, Minnesota, on October 27, 2009.
Zareba Systems, Inc. |
||||
By: | /s/ Dale A. Nordquist | |||
Dale A. Nordquist | ||||
President and Chief Executive Officer | ||||
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this
Report has been signed by the following persons, on behalf of the Registrant and in the capacities
and on the dates indicated.
Signature | Title | Date | ||
/s/ Dale A. Nordquist
|
President, Chief Executive Officer (Principal Executive Officer) and Director | October 27, 2009 | ||
/s/ Jeffrey S. Mathiesen
|
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | October 27, 2009 | ||
*
|
Director | October 27, 2009 | ||
*
|
Director and Secretary | October 27, 2009 | ||
*
|
Director | October 27, 2009 | ||
*
|
Director | October 27, 2009 |
*By
|
/s/ Dale A. Nordquist
|
|||
Dale A. Nordquist, Attorney In Fact |
16