UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K/A
AMENDMENT
NO. 1
(Mark
One)
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x
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ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
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For
the Fiscal Year Ended December 31, 2008
OR
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¨
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
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For
the Transition Period from __________ to __________
Commission
File Number: 000-51828
ARBINET-THEXCHANGE,
INC.
(Exact
Name of Registrant As Specified in Its Charter)
Delaware
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13-3930916
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(State
or Other Jurisdiction of
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(I.R.S.
Employer)
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Incorporation
or Organization)
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120
Albany Street, Tower II, Suite 450
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New
Brunswick, New Jersey
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08901
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(Address
of Principal Executive Offices)
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(Zip
Code)
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(732)
509-9100
(Registrant’s
Telephone Number, Including Area Code)
Securities
registered pursuant to Section 12(b) of the Act:
Title
of Each Class
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Name
of Each Exchange on Which Registered
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Common
Stock, $0.001 par value
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The
NASDAQ Stock Market LLC
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Securities
registered pursuant to Section 12(g) of the Act: None
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
x
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
x
Indicate
by check mark whether the registrant: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the
“Exchange Act”) 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
x
No
o
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s 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.
o
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 the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
Large
accelerated filer
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Accelerated
filer
x
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Non-accelerated
filer
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Smaller
reporting company
¨
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(Do
not check if a smaller reporting
company)
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Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act) Yes
¨
No
x
The
aggregate market value of the Registrant’s common stock held by non-affiliates
computed by reference to the last reprinted sale price on June 30, 2008 was
$72,845,677. As of March 1, 2009, there were outstanding 22,227,271
shares of the Registrant’s common stock.
DOCUMENTS
INCORPORATED BY REFERENCE
None.
EXPLANATORY
NOTE
This Form
10-K/A constitutes Amendment No. 1 to the Annual Report on Form 10-K (this
“Amendment No. 1”) of Arbinet-thexchange, Inc. (the “Company”) for the period
ended December 31, 2008, originally filed with the Securities and Exchange
Commission on March 16, 2009 (the “Original Filing”). The Company is filing
this Amendment No. 1 to include information required by Items 10, 11, 12,
13 and 14 of Part III within the period required by General Instruction G(3) to
Form 10-K. In addition, Item 15 of Part IV has been amended to
contain currently dated certifications from our Chief Executive Officer and
Chief Financial Officer, as required by Section 302 of the Sarbanes-Oxley Act of
2002. These updated certifications are attached to this Amendment No.
1 as Exhibits 31.1 and 31.2. A power of attorney, which is set forth
on the signature page of this Amendment No. 1, has also been added to Item 15 of
Part IV. Item 9B of Part II has been amended to provide disclosure
regarding the appointment of an individual to our Board of Directors in November
2008, which was not reported in a Current Report on Form 8-K. Except
as described above, no other changes have been made to the Original Filing and
no attempt has been made in this Amendment No. 1 to modify or update
disclosures for events that occurred subsequent to the Original
Filing.
ARBINET-THEXCHANGE,
INC.
TABLE
OF CONTENTS
Item
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Page
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PART
II
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Item
9B
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1
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PART
III
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1
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Item
10. Directors, Executive Officers and Corporate Governance
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1
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Item
11. Executive Compensation
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4
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Item
12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
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46
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Item
13. Certain Relationships and Related Transactions, and Director
Independence
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49
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Item
14. Principal Accountant Fees and Services
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51
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PART
IV
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52
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Item
15. Exhibits, Financial Statements, and Financial Statement
Schedule
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52
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SIGNATURES
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53
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EXHIBIT
INDEX
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54
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PART
II
Item
9B. Other Information
On November 5, 2008, Arbinet-thexchange,
Inc. (“Arbinet” or the “Company”) issued a press release announcing that the
Board of Directors (our “Board”) of the Company, upon the recommendation of our
Nominating and Corporate Governance Committee, appointed Jose A. Cecin, Jr. to
our Board as a Class I director, effective as of November 5,
2008. Mr. Cecin will stand for election at our 2011 Annual Meeting of
Stockholders. Mr. Cecin was also appointed by our Board to our Audit
Committee and our Compensation Committee.
In
connection with his appointment, we granted Mr. Cecin (i) a nonstatutory stock
option to purchase a total of 16,000 shares of our common stock at an exercise
price per share equal to the closing price per share of our common stock on
November 5, 2008 (the “Grant Date”) and (ii) 7,000 shares of restricted
stock. The stock option and the shares of restricted stock each vest
as follows: one-third vests on the first anniversary date of the
Grant Date and the remaining two-thirds vests quarterly in eight equal amounts
over the following eight quarters.
There
were no arrangements between Mr. Cecin and any other persons pursuant to which
Mr. Cecin was selected as a director. In addition, there are no
transactions, or proposed transactions, to which the Company was or is to be
party and in which Mr. Cecin had or will have a direct or indirect material
interest that are required to be disclosed under Item 404(a) of Regulation
S-K.
PART
III
Item
10. Directors, Executive Officers and Corporate Governance
DIRECTORS
Set forth
below is certain information with respect to our directors. The class and term
of office of each director is also set forth below. This information has been
provided by each director at the request of the Company. None of the directors
is related to each other or any executive officer of the Company.
Name
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Age
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Position
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William
M. Freeman
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56
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Class
I Director and Chairman
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Jose
A. Cecin, Jr. (1)(2)
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45
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Class
I Director
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Stanley
C. Kreitman (3)
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77
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Class
II Director
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Shawn
F. O’Donnell
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44
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Chief
Executive Officer, President and Class III Director
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John
B. Penney (2)
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44
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Class
I Director
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Robert
M. Pons (3)
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52
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Class
II Director
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David
C. Reymann (1)
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50
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Class
II Director
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Jill
Thoerle
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57
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Class
III Director
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(1) Member
of the Audit Committee.
(2) Member
of the Compensation Committee.
(3) Member
of the Nominating and Corporate Governance Committee.
Class
I—Directors with Term Continuing until 2011
William “Bill” M. Freeman
has
served as a director since November 2007. Mr. Freeman served as
Chief Executive Officer and President of Arbinet from November 2007 until
September 2008. Mr. Freeman served as Chief Executive Officer and director
of Leap Wireless International, Inc., a wireless communications carrier, from
May 2004 to February 2005 and as President of the Public Communications Group of
Verizon Communications Inc., a communications services provider, from 2000 to
February 2004. Mr. Freeman served as President and Chief Executive Officer
of Bell Atlantic-New Jersey, a telephone company, from 1998 to 2000, President
and Chief Executive Officer of Bell Atlantic-Washington, D.C., a telephone
company, from 1994 to 1998, and in a number of other executive and management
positions at Verizon since beginning in 1974. Mr. Freeman serves as a
director of CIT Group Inc., a finance and leasing capital company, a director
and chairman of Terrestar Corp. (previously Motient Corp.), a wireless
communications company, and a director of Value Added Holdings, Inc., a
privately held communications company. Mr. Freeman is a founder and
co-owner of Synthesis Security LLC, a/k/a dsynthesis LLC, a software based
security systems integrator. Mr. Freeman serves on the Board of Trustees of
Drew University. Mr. Freeman received a B.A. in Economics from Drew
University and an M.B.A. from Rutgers University.
John B. Penney
has served as
a director since November 2006. Since September 2008, Mr. Penney has served
as President of Foresee Entertainment where he oversees operations and the
planning and development of strategy and partnership efforts for this media and
entertainment company. From September 2007 to September 2008, Mr.
Penney served as Head of Global Media Strategy for IMG, an international leader
in sports, entertainment, and media businesses. From April 2007 to July 2007,
Mr. Penney served as Senior Vice President–Advertising Supported Broadband
Channels for HBO, Inc., a subsidiary of Time Warner Inc., a media and
entertainment company. Prior to that, from July 2005 to April 2007,
Mr. Penney served as Senior Vice President–Business Development for HBO,
Inc. From November 2004 to July 2005, he served as Executive Director, Business
Development for SBC, Inc. (now AT&T), a communications company. From January
2004 to July 2005, he served as Vice President–Business Development for HBO,
Inc. From November 2001 to December 2003, he served as Executive Vice President,
Licensing & Business Development for ACTV, Inc. (now a division of
OpenTV), a provider of advanced digital television solutions, and from November
2001 to December 2003, he served as President of Media Online Services, Inc., a
subsidiary of ACTV, Inc., a digital media company. Mr. Penney received a
B.A. degree from Wesleyan University and a Masters in Public Policy &
Administration from Columbia University.
Jose A. Cecin, Jr.
has served
as a director since November 2008. Since September 2008, Mr. Cecin
has served as President and founder of Lumina Advisors, a strategy, operations
and corporate development advisory company. From April 2003 to August
2008, Mr. Cecin was Managing Director and Group Head of the Communications
Investment Banking practice at BB&T Capital Markets, the investment banking
division of BB&T Corporation. In 1999, Mr. Cecin co-founded
Cambrian Communications, a facilities-based telecommunications service provider,
where he served as Chief Operating Officer. Mr. Cecin is currently a
director of SkyTerra Communications, a satellite services company, and RCN
Corporation, a triple-play cable television and telecommunications services
company. From 1992 to 1996, Mr. Cecin served in several management
positions at Bell Atlantic Corporation (now known as Verizon). He
previously served as an officer in the United States Army’s 25
th
Infantry Division. Mr. Cecin received a B.S. degree in Electrical
Engineering from the United States Military Academy at West Point and an M.B.A.
from Stanford University.
Class
II—Directors with Term Continuing until 2009
Stanley C. Kreitman
has
served as a director since July 2007. Since 1993, Mr. Kreitman has served
as Chairman of Manhattan Associates, an investment banking company. In addition,
since 2001, he has served as Senior Advisor of the Advisory Board to Signature
Bank, a bank. From 1975 until his retirement in 1994, Mr. Kreitman was
President of United States Banknote Corporation, a securities printing company.
Mr. Kreitman serves as a member of the board of directors of CapLease, Inc.
(previously Capital Lease Funding), a real estate investment trust, CCA
Industries, Inc., a health and beauty aid company, Geneva Mortgage Corp., a
provider of residential mortgage banking products, KSW, Inc., a HVAC company,
and Medallion Financial Corp., a finance company. He also serves as Chairman of
the New York Board of Corrections and as a member of the board of directors of
Century Bank (Sarasota, Florida). Mr. Kreitman received a B.S. degree from
New York University and an M.B.A. from New York University Graduate School of
Business.
Robert M. Pons
has served as
a director since April 2009. Since January 2008, Mr. Pons has served as Senior
Vice President of Capital Markets for TMNG Global, a provider of strategy,
management, and technical consulting services to the global telecommunications
industry. From January 2003 to April 2007, Mr. Pons served as
President and Chief Executive Officer of Uphonia, Inc. (previously SmartServ
Online, Inc.), a mobile virtual network operator. From March 1999 to April
2002, Mr. Pons served as President and Chief Operating Officer of
FreedomPay Inc., a cashless retail payment system. Mr. Pons also serves on the
board of directors of LiveWire Mobile, Inc., a leading provider
of managed personalization services for mobile operators and subscribers, where
he serves as a member of their compensation committee, and on the board of
directors of Network1 Security Solutions Inc., an acquirer, developer and
licensor of intellectual property. Mr. Pons received a B.A degree from Rowan
University.
David C. Reymann
has served
as a director since January 2009. Since August 2007, Mr. Reymann has served as
the Chief Financial Officer for Critical Response Networks, LLC, a provider of
disaster relief housing solutions, where he is responsible for all financial and
operational functions of the company. From June 1998 to December 2006, Mr.
Reymann served as Chief Financial Officer of Aether Systems, Inc., a wireless
solutions provider. Mr. Reymann also serves on the board of directors of Avatech
Solutions, Inc., a design, engineering and facilities management technology
solutions company, where he serves as chairman of their audit committee, and
serves as a director of The Believe in Tomorrow Foundation. Mr. Reymann received
a B.A. degree in Accounting from The University of Baltimore and is a Certified
Public Accountant.
Class
III—Directors with Term Continuing until 2010
Shawn F. O’Donnell
has served
as a director since July 2007. Since September 2008, Mr. O’Donnell has served as
our Chief Executive Officer and President. From April 2007 until September 2008,
Mr. O’Donnell served as a Senior Director at the consulting firm CXO, which
specializes in management and operational consulting. From March 2003 through
December 2006, Mr. O’Donnell was a member of Capital and Technology
Advisors, a consulting firm specializing in the telecommunications and
technology sectors, serving as Chief Operating Officer from July 2005 through
December 2006. Previously, Mr. O’Donnell was Executive Vice President of
Network Services and Systems at PathNet Telecommunications, Inc., a wholesale
telecommunications carrier, from August 1999 to August 2001. Prior to that,
Mr. O’Donnell held several positions at MCI Telecommunications Corporation,
a communications service provider, including Director of Transmission and
Facility Standards and Engineering. Mr. O’Donnell served on the boards of
directors of Terrestar Networks, Inc. and Mobile Satellite Ventures, LP from
2004 through 2006. He is currently a member of the board of directors of Shared
Technologies Inc., a total solutions provider specializing in voice, data and
converged technologies. He received a B.S. degree in Electrical Engineering from
Pennsylvania State University and a Masters in Electrical Engineering from
Virginia Polytechnic University.
Jill Thoerle
has served as a
director since July 2007. In March 2007, Ms. Thoerle was appointed Chief
Financial Officer of Mediaport Entertainment Inc., a digital media distribution
company, where she has served as a member of the board of directors and advisor
since March 2006. In 2001, Ms. Thoerle co-founded the REO Group, a
consulting firm where she served through 2006. From 2001 through 2004,
Ms. Thoerle was an Operations Professional with Cerberus Capital
Management, where she provided investment and turnaround services for portfolio
companies in the media, technology, and communications sector. She served as the
President and Chief Executive Officer of OnTera Broadband, a telecommunication
services company, from 2000 through 2001. From 1996 through 2000,
Ms. Thoerle was Vice President, Corporate Strategy and New Business
Development, at AT&T/Teleport Communications Group. Ms. Thoerle also serves
on the board of directors of LiveWire Mobile, Inc., a leading provider of
managed personalization services for mobile operators and
subscribers, where she serves as a member of their nominating and
governance committee. Ms. Thoerle received a B.E. degree from
City College of New York and an M.E. degree from Columbia
University.
EXECUTIVE
OFFICERS
The
information relating to our executive officers in response to this item is
contained in part under the caption “Executive Officers of the Registrant” in
Part I of the Original Filing.
SECTION 16(A)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a)
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
requires that directors and executive officers of the Company and persons who
own more than 10% of a registered class of the Company’s equity securities, file
reports of ownership of, and changes in ownership of, Company securities with
the Securities and Exchange Commission. Such directors, executive officers and
10% stockholders are also required to furnish the Company with copies of all
Section 16(a) forms they file. To the Company’s knowledge, based solely on
a review of the copies of such reports furnished to the Company and written
representations that no other reports were required, all filings required to be
made by the Company’s Section 16(a) reporting persons during fiscal year
2008 were made on a timely basis, except as follows: the Singer Children’s
Management Trust did not timely file one Form 4 with respect to one
transaction.
CODE
OF ETHICS
We have
adopted a written Code of Business Conduct and Ethics that applies to all of our
employees, including our principal executive officer, principal financial
officer, principal accounting officer, controller, and persons performing
similar functions, as well as our Board. Our Code of Business Conduct
and Ethics is available on our website at
www.arbinet.com
under the
heading “Investor Info—Corporate Governance.” We annually require all employees
and members of our Board to recertify their compliance with this
code. We intend to disclose any amendments to, or waivers from, our
Code of Business Conduct and Ethics that are required to be publicly disclosed
pursuant to rules of the Securities and Exchange Commission and the NASDAQ
Global Market by filing such amendment or waiver with the Securities and
Exchange Commission and by posting it on our website.
DIRECTOR
CANDIDATES
There have been no material changes to
the procedures by which security holders may recommend nominees to our
Board.
AUDIT
COMMITTEE
As of the
end of fiscal year 2008, the members of our Audit Committee were Messrs. Cecin
and Ruane and Ms. Thoerle. Mr. Penney resigned from our Audit Committee in
November 2008 in connection with the appointment of Mr. Cecin to our Audit
Committee. Mr. Reymann joined our Audit Committee in January 2009. Mr. Ruane
served as our Audit Committee Chairman until his resignation from our Board in
April 2009, at which time Mr. Reymann was appointed as our Audit Committee
Chairman. Ms. Thoerle resigned from our Audit Committee on April 23, 2009. Each
of Messrs. Cecin and Reymann, the current members of our Audit Committee, is
considered “independent” within the meaning of the NASDAQ Marketplace Rules and
the rules under the Exchange Act. Each of Messrs. Penney and Ruane and Ms.
Thoerle, the former members of our Audit Committee that served during fiscal
year 2008, was considered “independent” within the meaning of the NASDAQ
Marketplace Rules and the rules under the Exchange Act during his or her tenure
on our Audit Committee. Both Mr. Ruane and Mr. Reymann are “audit committee
financial experts” under the Exchange Act.
The
NASDAQ Marketplace Rules require us to have an Audit Committee of at least three
members, each of whom must be considered “independent” within the meaning of the
NASDAQ Marketplace Rules and the rules under the Exchange Act. As a
result of Ms. Thoerle’s resignation from our Audit Committee on April 23, 2009
and as discussed above, our Audit Committee currently consists of two members,
Messrs. Reymann and Cecin, each of whom is considered “independent” within the
meaning of the NASDAQ Marketplace Rules and the rules under the Exchange
Act. The NASDAQ Marketplace Rules require that we appoint a third
member to our Audit Committee that is considered “independent” within the
meaning of the NASDAQ Marketplace Rules and the rules under the Exchange Act
within 180 days of April 23, 2009. Our Board intends to appoint a new
member to our Audit Committee within the period required by the NASDAQ
Marketplace Rules.
Item
11. Executive Compensation
COMPENSATION
COMMITTEE
As of the
end of fiscal year 2008, the members of our Compensation Committee were
Mr. Penney, the Compensation Committee Chairman, Ms. Thoerle and Mr. Cecin.
During a portion of fiscal year 2008, Messrs. Atkinson, Donahue and
O’Donnell also served on our Compensation Committee. Mr. Atkinson served as our
Compensation Committee Chairman until his retirement from our Board in June
2008, at which time Mr. Penney was appointed our Compensation Committee
Chairman. Mr. Donahue resigned from our Compensation Committee upon
his resignation from our Board in August 2008. Mr. O’Donnell resigned
from our Compensation Committee at the time of his appointment as our Chief
Executive Officer and President in September 2008. Ms. Thoerle joined our
Compensation Committee in October 2008 and served until her resignation from our
Compensation Committee on April 23, 2009. Mr. Cecin joined our
Compensation Committee in November 2008 in connection with his appointment to
our Board. Each of Messrs. Penney and Cecin, the current members of
our Compensation Committee, is considered “independent” within the meaning of
the NASDAQ Marketplace Rules and the rules of the Securities and Exchange
Commission. Each of Messrs. Atkinson, Donahue and O’Donnell and Ms.
Thoerle, former members of our Compensation Committee that served during fiscal
year 2008, was considered “independent” within the meaning of the NASDAQ
Marketplace Rules and the rules of the Securities and Exchange Commission during
his or her tenure on our Compensation Committee.
The
purpose of our Compensation Committee is to discharge the responsibilities of
our Board relating to compensation of our executive officers. Specific
responsibilities of our Compensation Committee include:
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·
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establishing
and periodically reviewing our compensation philosophy and the adequacy of
compensation plans and programs for our executive officers and other
employees;
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·
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establishing
compensation arrangements and incentive goals for our executive officers
and administering compensation
plans;
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·
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reviewing
the performance of our executive officers and awarding incentive
compensation and adjusting compensation arrangements as appropriate based
upon performance; and
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·
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preparing
our report on executive compensation for inclusion in our proxy statements
in accordance with Securities and Exchange Commission rules and
regulations.
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Our
Compensation Committee’s report on executive compensation appears on page
22
of this
Amendment No. 1.
COMPENSATION
DISCUSSION AND ANALYSIS
Among its
various functions, our Compensation Committee establishes and reviews the
compensation programs for our executive officers and ensures that our
compensation program is fair, reasonable and competitive.
Compensation
Philosophy and Objectives
Our
success is highly dependent on hiring, developing and retaining qualified people
who are motivated to perform for the benefit of our stockholders and the members
of our exchange. The fundamental objectives of our executive compensation
philosophy are to ensure that our executives are provided appropriate base
salary and incentives and compensated in a way that advances both the short- and
long-term interests of our stockholders while also ensuring that we are able to
retain and attract highly skilled executive talent. We believe that an effective
executive compensation program must be designed to reward the achievement of
specific annual, long-term and strategic goals, and align our executive
officers’ interests with the interests of our stockholders, with the ultimate
objective of enhancing stockholder value.
Our
compensation programs place emphasis on (1) attracting and retaining the best
talent in the communications, exchange, and high technology industries; (2)
providing overall compensation for key executives that is competitive with our
peer group and the broader telecommunications marketplace; (3) motivating
executives to achieve the goals set in our strategic plan; and (4) enhancing
stockholder value. We believe that compensation packages provided to our
executives, including our named executive officers listed in this Amendment No.
1, should include both cash and stock-based compensation that reward performance
as measured against established goals. Accordingly, our executive
compensation program consists of the following three key components: base
salary, cash bonus and equity grants in the form of stock options, restricted
stock, restricted stock units, stock appreciation rights and performance-based
shares, with an emphasis on incentive compensation rather than base salary. Our
executives are also eligible to participate in employee benefit and retirement
plans offered by us, which currently include a 401(k) plan and health care and
other insurance programs. The benefit programs available to executives are the
same as those available to all other eligible employees.
Compensation
Process
In 2005,
our Compensation Committee engaged an independent compensation consulting firm,
Aon/Radford Surveys + Consulting, a business unit of Aon Consulting (“Aon
Consulting”), to assist it in the review of our compensation philosophy and
objectives, as well as the design and implementation of compensation programs
that advance both the short- and long-term interests of our stockholders while
also ensuring that we are able to retain and attract highly skilled executive
talent. Aon Consulting serves as a consultant at the discretion of our
Compensation Committee, which has sole discretion to engage or terminate Aon
Consulting or other advisors. Our Compensation Committee has worked with Aon
Consulting in the design of our 2006, 2007, 2008 and 2009 compensation
programs.
In
connection with Aon Consulting’s review of our compensation programs in 2005, it
provided us with an analysis of base salary, short-term incentive compensation,
long-term incentive compensation, and benefit practices of our then current peer
group, which consisted of 20 peer companies (the “Original Peer Group”). Aon
Consulting choose these peer companies based on industry focus, revenue levels,
number of employees and market value, across the telecommunications, exchange
and high technology industries. In the fall of 2007, Aon Consulting, at the
request of our Compensation Committee, reviewed the Original Peer Group to
ensure that the companies included were still comparable to us based upon
industry focus, revenue levels, number of employees and market value. In
particular, Aon Consulting recommended removing companies from the Original Peer
Group that were significantly larger (in terms of revenue, market value and
number of employees) than us and companies that were no longer subject to public
disclosure obligations. Aon Consulting also recommended that our peer group
should include software and internet companies and not only software companies.
Based on this review, Aon Consulting recommended updating the peer group to a
group of 15 peer companies, which were more comparable to us based on the
factors discussed above.
The peer
group used by our Compensation Committee for its review of our 2008 compensation
programs consisted of the following companies (the “2008 Peer
Group”):
BGC
Partners, Inc.
|
|
J2
Global Communications, Inc.
|
Cbeyond,
Inc.
|
|
NeuStar,
Inc.
|
Equinix,
Inc.
|
|
Neutral
Tandem, Inc.
|
Fairpoint
Communications, Inc.
|
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SBA
Communications Corporation
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iBasis,
Inc.
|
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Surewest
Communications, Inc.
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inPhonic
|
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Syniverse
Holdings Inc.
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Internap
Network Services Corporation
|
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TNS
Inc.
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iPass,
Inc.
|
|
|
In
relation to the 2008 Peer Group, as of the date of Aon Consulting’s analysis,
our Company was above the 75
th
percentile for gross revenue, was between the 50
th
and
75
th
percentile for the average of gross revenue and net revenue and was below the
25
th
percentile in net revenue, market value and number of employees.
Because a
peer group analysis is limited to those positions for which compensation
information is disclosed publicly, these studies typically include only the five
most highly compensated officers at each company. Therefore, in connection with
our Compensation Committee’s review of our 2008 compensation programs, Aon
Consulting also relied upon its own survey, The Radford 2007 Executive
Compensation Survey, as well as the Mercer Telecom Survey, which are each
published compensation surveys. Both of these surveys was chosen because of
their industry focus and provides compensation information for executive
officers not included in the proxy statement data for the 2008 Peer
Group. For The Radford 2007 Executive Compensation Survey, Aon
Consulting reviewed companies with between $40 million and $500 million in
revenue and fewer than 1,000 employees and for the Mercer Telecom Survey, Aon
Consulting reviewed companies with under $500 million in
revenue.
Our total
compensation and each of the three components of our compensation package is
generally targeted at the 50
th
percentile of the peer group companies for the applicable year for each
position. As would be expected, specific pay positioning varies by
executive. Differences may reflect individual roles, performance,
experience and leadership ability. Compensation may also vary
annually due to corporate performance and/or economic conditions.
In
determining compensation opportunities for our Chief Executive Officer, our
three components of compensation and total compensation is compared to Aon
Consulting’s analysis, compensation survey data and the assessment of our Chief
Executive Officer’s performance by our Compensation Committee. In determining
compensation opportunities for our other executives, our three components of
compensation and total compensation is compared to Aon Consulting’s analysis,
compensation survey data and the assessment of the executive’s performance by
our Chief Executive Officer. Our Compensation Committee reports all compensation
decisions and actions to our Board.
In
connection with our Compensation Committee’s review of our 2009 compensation
programs, in the fall of 2008, Aon Consulting, at the request of our
Compensation Committee, reviewed the 2008 Peer Group to ensure that the
companies included were still comparable to us based upon industry focus,
revenue levels, number of employees and market value. Based on this review, Aon
Consulting recommended removing one company, inPhonic, from the 2008 Peer Group
because it had become insolvent and recommended replacing it with MarketAxess
Holdings (as amended, the “2009 Peer Group”). In addition, Aon Consulting
recommended that, for purposes of its review of the supplemental information in
The Radford Executive Compensation Survey, it would review information for
companies with between $50 million and $500 million in revenue and fewer than
1,000 employees.
In addition, as part of the annual review of our
compensation program for 2009, our Compensation Committee and management
considered how the unprecedented economic events of 2008 have impacted our
results and outlook as well as the impact on our share price during
2008. With lower performance in 2008 due to, among other things,
economic conditions and the overall economic decline, we continue to believe
that executive compensation must not only be reflective of those conditions but
also set the standard and tone for all employees. This analysis
discusses both decisions made for the 2008 fiscal year as well as actions taken
in early 2009 based on the economic decline, such as a deferral of raises to
base salaries and modified corporate performance metrics in the short term
incentive plan and the performance-based share awards for 2009. These
2009 considerations are addressed within the subsequent sections to which they
relate.
Setting
Executive Compensation
To
achieve our compensation objectives, our Compensation Committee has structured
our three components of compensation to motivate executives to achieve the
business goals set by us and reward executives for achieving such goals. Our
Compensation Committee, which is comprised solely of independent directors who
met the independence requirements of NASDAQ and qualify as “outside directors”
under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
“Code”), make all decisions regarding the compensation of our executives,
including our named executive officers. Our Chief Executive Officer
reviews and discusses with Aon Consulting its analysis and compensation survey
data for the other named executive officers and prepares an analysis for our
Compensation Committee recommending each element of the compensation to be paid
to the other named executive officers. Our Compensation Committee, however, has
final approval over all compensation decisions and may accept or adjust such
recommendations as it determines in the best interests of the Company and our
stockholders.
Our Chief
Executive Officer, Vice President of Human Resources and Aon Consulting each
provide advice, analysis and recommendations to our Compensation
Committee.
Elements
of Executive Compensation
Our
compensation program consists of three key components:
|
·
|
Performance-based
annual short-term incentive compensation, typically made in the form of
cash bonuses; and
|
|
·
|
Periodic
awards of long-term stock-based compensation, such as stock options,
restricted stock, restricted stock units, stock appreciation rights and
performance-based shares.
|
Each
element of compensation is chosen in order to attract and retain the necessary
executive talent and to reward corporate performance by creating a balanced
focus on shorter-term corporate performance and providing incentives for the
attainment of long-term strategic goals and enhancing stockholder
value. Generally, each element of compensation is targeted at the
50
th
percentile of the peer group companies for the applicable year for each
position.
Base
Salary
Base
salaries are intended to provide a fixed amount of compensation for an
executive’s regular work and are set at market levels deemed appropriate by our
Compensation Committee. Our base salary determinations principally reflect the
skills and performance level of individual executives, our needs and pay
practices of comparable public companies, including, for 2008, the 2008 Peer
Group. It is not our policy to pay our executive officers the highest base
salary. Instead, we target executive base salaries conservatively at or within a
mid-point range relative to an appropriate set of peers. We believe this policy
sets a prudent and fiscally responsible tone for our overall base salary
compensation program while still enabling us to attract and retain employees who
can contribute to our long-term success.
Base
salaries for all executives, including our named executive officers, are
determined by our Compensation Committee. In reviewing our executives’ base
salaries, our Compensation Committee primarily considers:
|
·
|
Aon
Consulting’s analysis and compensation survey data as well as proxy
statement data for the 2008 Peer
Group;
|
|
·
|
The
recent performance of the executive and our Compensation Committee’s
expectations for the position
itself;
|
|
·
|
For
our named executive officers other than our Chief Executive Officer, our
Chief Executive Officer’s recommendations;
and
|
|
·
|
Our
recent and expected overall
performance.
|
For 2008,
our Compensation Committee targeted a base salary for each of our named
executive officers at a mid-point range in relation to the 2008 Peer
Group.
In
setting the initial base salary compensation for Mr. O’Donnell when he was hired
in 2008, our Compensation Committee began by considering the base salary for Mr.
Freeman, our former Chief Executive Officer and President, in 2008, who Mr.
O’Donnell succeeded. Mr. Freeman’s base salary for 2008 of $375,000 was below
the mid-point
range
for the 2008 Peer Group. Mr. O’Donnell’s base salary for 2008 of
$340,000 was below Mr. Freeman’s base salary for 2008 and, therefore, was also
below the mid-point range for the 2008 Peer Group. Mr. O’Donnell was
appointed our Chief Executive Officer and President in September 2008 and was
paid his pro rata share of his base salary in 2008, $112,219. Until his
appointment as our Chief Executive Officer and President, Mr. O’Donnell was paid
for his services as a director in accordance with our director compensation
program. For more information on the fees that Mr. O’Donnell received
as a director during 2008, please see the section entitled “Director
Compensation” beginning on page 43 of this Amendment No.
1.
In
reviewing the base salaries to be paid to Messrs. Wynne, Wingfield, Heap, Sach
and Koeppen for 2008, our Compensation Committee began by considering Mr.
Freeman’s recommendations (our Chief Executive Officer and President at the time
base salaries for these executives for 2008 were set) and analyzing the
compensation practices of the 2008 Peer Group and targeted a mid-point range for
2008 base salary for each of Messrs. Wynne, Wingfield, Heap, Sach and Koeppen.
Our Compensation Committee selected the mid-point as the appropriate point of
comparison because we have moderately conservative compensation practices and
want to balance our goals of retaining and rewarding our executives and serving
our stockholders’ interests by not being a compensation leader. Each of Messrs.
Wynne, Wingfield, Heap, Sach and Koeppen’s base salary for 2008, set forth
below, was within the mid-point range for the 2008 Peer Group. In
setting the base salary to be paid to Mr. Powdermaker for 2008 upon his hiring
as our Senior Vice President of Sales and Marketing in December 2008, our
Compensation Committee began by considering Mr. O’Donnell’s recommendation and
analyzing the compensation practices of the 2008 Peer Group and targeted a
mid-point range for Mr. Powdermaker’s base salary for 2008. Mr. Powdermaker’s
base salary for 2008, set forth below, was within the mid-point range for the
2008 Peer Group.
The 2008
base salaries for our named executive officers (other than Mr. O’Donnell) are as
follows:
Name
|
|
2008 Base
Salary
|
|
John
B. Wynne, Jr. (1)
|
|
$
|
275,000
|
|
W.
Terrell Wingfield, Jr. (1)
|
|
$
|
250,000
|
|
Dan
Powdermaker (2)
|
|
$
|
250,000
|
|
Steven
Heap (3)
|
|
$
|
255,000
|
|
William
M. Freeman (4)
|
|
$
|
375,000
|
|
Peter
P. Sach (1) (5)
|
|
$
|
275,000
|
|
Curt
R. Koeppen (1) (6)
|
|
$
|
250,000
|
|
|
(1)
|
Our
Compensation Committee determined that the base salaries for Messrs.
Wynne, Wingfield, Sach and Koeppen were each within the mid-point range
for the 2008 Peer Group and, therefore, did not increase their respective
base salaries in 2008. Instead, our Compensation Committee
increased the target bonus percentages for each of Messrs. Wynne,
Wingfield, Sach and Koeppen, as discussed below in the section entitled
“—Short Term Incentive Compensation,” which compensation is tied directly
to our corporate performance.
|
|
(2)
|
Mr.
Powdermaker was hired as our Senior Vice President of Sales and Marketing
in December 2008 and was paid his pro rata share of his base salary in
2008, $7,692.
|
|
(3)
|
Mr.
Heap’s base salary was increased to $255,000 from $250,000, effective
April 1, 2008.
|
|
(4)
|
Mr.
Freeman was terminated without cause effective September 2008 and was paid
his pro rata share of his base salary in 2008, $250,000, excluding
severance payments made to him in connection with his termination without
cause, which are included in the Summary Compensation Table and discussed
in the section entitled “Executive Compensation—Potential Post—Employment
Payments” later in this Amendment No.
1.
|
|
(5)
|
Mr.
Sach was terminated without cause effective October 2008 and was paid his
pro rata share of his base salary in 2008, $187,740, excluding severance
payments made to him in connection with his termination without cause,
which are included in the Summary Compensation Table and discussed in the
section entitled “Executive Compensation—Potential Post—Employment
Payments” later in this Amendment No.
1.
|
|
(6)
|
Mr.
Koeppen was terminated without cause effective September 2008 and was paid
his pro rata share of his base salary in 2008, $187,500, excluding
severance payments made to him in connection with his termination without
cause, which are included in the Summary Compensation Table and discussed
in the section entitled “Executive Compensation—Potential Post—Employment
Payments” later in this Amendment No.
1.
|
In connection with its review of base salaries for 2009,
our Compensation Committee considered that Mr. O’Donnell’s 2008 base salary is
at the 25
th
percentile for the 2009 Peer Group and that the 2008
base salary for each of Messrs. Wynne, Wingfield, Heap and Powdermaker is at the
50
th
percentile for the 2009 Peer Group. Our
Compensation Committee also considered our overall performance in 2008,
including the decline in our revenue, the deteriorating global economic
condition and our policy to not pay our executive officers the highest base
salary. Based on these factors, our Compensation Committee has
decided, as of the date of this Amendment No. 1, to not make any adjustments to
the base salaries for our executive officers for 2009 at this
time.
Short
Term Incentive Compensation
Our
annual Short Term Cash Incentive Bonus Plan (the “Bonus Plan”) is designed to
motivate and reward eligible employees for their contributions by making a
significant portion of their cash compensation dependent upon Company
performance. The Bonus Plan establishes the terms under which annual cash bonus
compensation will be paid to our eligible employees, including all of our named
executive officers. Cash bonuses effectively link individual contributions to
overall business performance and encourage executives to increase stockholder
value in both the short- and long-term. The amount of cash incentive bonus
payments to be awarded to all employees, including our named executive officers,
depends upon the achievement of corporate performance objectives, which,
historically, have been in the key areas of net revenue and net
income.
For our
named executive officers, other than our Chief Executive Officer, at the
beginning of each year, our corporate performance objectives are recommended by
our Chief Executive Officer and reviewed and approved by our Compensation
Committee. Similarly, shortly after the end of each year, the amount of the
actual bonus award for our named executive officers, other than our Chief
Executive Officer, is recommended by our Chief Executive Officer and reviewed
and approved by our Compensation Committee. Our Compensation Committee has final
approval over all compensation decisions related to the Bonus Plan and may
accept or adjust such recommendations as it determines in the best interests of
the Company and our stockholders. Our Compensation Committee sets the corporate
performance objectives and determines the amount of the actual bonus award for
our Chief Executive Officer.
The terms
of the Bonus Plan for 2008, including the target bonus levels and relationship
of payouts to achievement of the corporate performance metrics, were established
by our Compensation Committee in consultation with Aon Consulting and reviewed
with our Board. Annually, our Compensation Committee reviews the Bonus Plan
(including the corporate performance metrics) to ensure that it is designed in a
manner that continues to motivate employees to achieve our performance goals and
is in line with our compensation philosophy and objectives, including generally
targeting compensation at the 50
th
percentile. Regardless of the actual award determined by the plan parameters,
our Compensation Committee has the authority to modify any award.
The
2008 Bonus Plan for Mr. O’Donnell
Mr.
O’Donnell was appointed our Chief Executive Officer and President on September
2, 2008. Under his employment agreement, it was agreed that for the
fiscal year ending December 31, 2008, Mr. O’Donnell would have the opportunity
to earn a bonus award pursuant to the Bonus Plan of up to $113,000, based upon
the achievement of corporate performance metrics as mutually and reasonably
agreed by Mr. O’Donnell and our Board. On October 17, 2008, our Board
established two corporate performance metrics for Mr. O’Donnell’s Bonus Plan for
2008: net revenue and annualized year-end operating expense run rate, excluding
restructuring costs. Our Board chose net revenue as one of the
corporate performance metrics because it has historically been one of the
corporate performance metrics used in our bonus plans for our named executive
officers. Our Board chose annualized year-end operating expense run
rate, excluding restructuring costs, because, among other things, our Board
asked Mr. O’Donnell to focus on bringing the Company’s cost structure more in
line with the Company’s revenue expectations and general economic
conditions. The two corporate performance metrics and associated
payouts established by our Board for Mr. O’Donnell’s Bonus Plan for 2008 were as
follows:
|
·
|
If
the Company achieved the following net revenue goals for the period from
September 2008 to December 2008, Mr. O’Donnell would be entitled to the
bonus amounts indicated below:
|
|
·
|
Achievement
by the Company of no less than $14.51 million in net revenue would result
in a bonus award equal to $50,850.
|
|
·
|
Achievement
by the Company of $16.13 million in net revenue would result in a bonus
award equal to $56,500.
|
|
·
|
Achievement
by the Company of $17.74 million or greater in net revenue would result in
a bonus award equal to $62,150.
|
|
·
|
If,
by the end of 2008, the Company had achieved the following annualized
year-end operating expense run rate, excluding restructuring costs, Mr.
O’Donnell would be entitled to the bonus amounts indicated
below:
|
|
·
|
Achievement
by the Company of an annualized year-end operating expense run rate,
excluding restructuring costs, of no more than $39.5 million would result
in a bonus award equal to $42,375.
|
|
·
|
Achievement
by the Company of an annualized year-end operating expense run rate,
excluding restructuring costs, of $38.9 million would result in a bonus
award equal to $56,500.
|
|
·
|
Achievement
by the Company of an annualized year-end operating expense run rate,
excluding restructuring costs, of $37.7 million or less would result in a
bonus award equal to $62,150.
|
Each of
the two corporate performance metrics is separately measured against our actual
performance and the failure to meet one of the metrics does not impact payment
under the other metric. The bonus amounts payable to Mr. O’Donnell with respect
to the two corporate performance metrics discussed above cannot exceed $113,000
in the aggregate.
To
determine the bonus eligibility of Mr. O’Donnell for 2008, our Compensation
Committee reviewed our performance
against the two
corporate performance metrics discussed above. For the period from
September 2008 to December 2008, we achieved net revenue of $14.10 million and,
therefore, Mr. O’Donnell was not eligible for a bonus pursuant to the net
revenue performance metric. By the end of 2008, we had achieved an
annualized year-end operating expense run rate, excluding restructuring costs,
of $36.9 million. Accordingly, Mr. O’Donnell was entitled to and
received a bonus payment of $62,150 pursuant to the annualized year-end
operating expense run rate performance metric.
The
2008 Bonus Plan for Messrs. Wynne, Wingfield, Heap and Powdermaker
For 2008,
the terms of the Bonus Plan for Messrs. Wynne, Wingfield and Heap were
recommended by Mr. Freeman, our Chief Executive Officer and President at the
time the goals for the 2008 Bonus Plan were established, and approved by our
Compensation Committee. Mr. Powdermaker was hired in December 2008
and, therefore, was not eligible to participate in the Bonus Plan for
2008.
For each
of Messrs. Wynne, Wingfield and Heap, the target amount of the bonus is a target
percentage of each executive’s base salary but can be greater or less than the
target percentage based upon underachievement or overachievement of the
corporate performance metrics, as determined by our Compensation Committee and
discussed below. The target percentages for Messrs. Wynne, Wingfield and Heap
for 2008 were:
Name
|
|
2008 Target
Bonus
|
John
B. Wynne, Jr. (1)
|
|
50%
of Base Salary
|
W.
Terrell Wingfield, Jr. (1)
|
|
50%
of Base Salary
|
Steven
Heap
|
|
45%
of Base
Salary
|
|
(1)
|
As
discussed in the section entitled “—Base Salary,” in 2008, the target
bonus amount for each of Messrs. Wynne and Wingfield was increased as
follows in lieu of an increase in base
salary:
|
Name
|
|
2007 Target
Bonus
|
|
2008 Target
Bonus
|
John
B. Wynne, Jr.
|
|
45%
of Base Salary
|
|
50%
of Base Salary
|
W.
Terrell Wingfield, Jr.
|
|
45%
of Base Salary
|
|
50%
of Base
Salary
|
The
target bonus for each of Mr. Wynne and Mr. Heap was at a mid-point range of the
2008 Peer Group and the target bonus for Mr. Wingfield was between the 50
th
and
75
th
percentile for the 2008 Peer Group. Mr. Wingfield’s target bonus is
set at a higher percentile than Messrs. Wynne and Heap because, when Mr.
Wingfield was hired in 2006, it was our policy that all executive officers that
reported directly to our Chief Executive Officer would have the same target
bonus percentage.
At the beginning of
2008, our Compensation Committee established corporate performance metrics based
upon our strategic objectives and reviewed these metrics with our
Board.
For 2008,
our short term incentive compensation program for Messrs. Wynne, Wingfield and
Heap was based on the following two components:
|
·
|
The
executive officer’s annual incentive target amount;
and
|
|
·
|
Achievement
of two corporate performance metrics, which are net revenue and EBITDA,
adjusted for certain expenses, primarily associated with non-cash
compensation as calculated in accordance with SFAS No. 123R (“Adjusted
EBITDA”).
|
Historically,
one of the corporate performance metrics for the Bonus Plan has been net income;
however, in connection with its review of the Bonus Plan for 2008, our
Compensation Committee decided that Adjusted EBITDA was a more appropriate
corporate performance metric for the Bonus Plan. Our Compensation
Committee believes that EBITDA is an important measure of our performance and
the performance of our management, drives our success and growth and is a key
metric by which management plans and monitors our business. Our
Compensation Committee further believes that certain expenses, primarily
non-cash compensation as calculated in accordance with SFAS No. 123R, should be
excluded from the EBITDA calculation because these related to matters that are
outside of the control of our management. In addition, one of the
historical components for the Bonus Plan for our named executive officers has
been individual performance objectives. However, in connection with
its review of the Bonus Plan for our named executive officers for 2008, our
Compensation Committee decided to eliminate the individual performance
objectives for our named executive officers and, instead, tie the bonus payment
solely to the achievement of the corporate performance metrics. Our
Compensation Committee believes that it is important for management to focus on
the Company’s performance and achieving the overall goals and long-term
strategic direction that our Board has set for the Company.
At the
beginning of 2008, our Compensation Committee set the corporate performance
metrics for Messrs. Wynne, Wingfield and Heap such that a bonus award
would have been earned as follows:
|
·
|
The
achievement by the Company of a threshold of $52 million in net revenue
would result in a bonus award equal to 30% of the target bonus percentage
for Messrs. Wynne, Wingfield and
Heap.
|
|
·
|
The
achievement by the Company of a threshold of $8.6 million in Adjusted
EBITDA would result in a bonus award equal to 20% of the target bonus
percentage for Messrs. Wynne, Wingfield and
Heap.
|
|
·
|
The
achievement by the Company of a target of $55 million in net revenue would
result in a bonus award equal to 60% of the target bonus percentage for
Messrs. Wynne, Wingfield and Heap.
|
|
·
|
The
achievement by the Company of a target of $11.1 million in Adjusted EBITDA
would result in a bonus award equal to 40% of the target bonus percentage
for Messrs. Wynne, Wingfield and
Heap.
|
Each of
the two corporate performance metrics is separately measured against our actual
performance and the failure to meet one of the metrics does not impact payment
under the other metric. Performance exceeding the threshold net
revenue goal and the threshold Adjusted EBITDA goal, as the case may be, will
result in progressively accelerating payments using straight-line
interpolation.
Our
Compensation Committee structured incentive payments under the Bonus Plan so
that we would provide significant rewards to executive officers for superior
performance, make smaller payments if we achieved financial performance levels
that exceed the threshold level of required performance but did not satisfy the
target levels, and not make incentive payments if we did not achieve the
threshold minimum corporate performance metrics established at the beginning of
the fiscal year. In establishing the corporate performance metrics,
our Compensation Committee strives to ensure that the incentives provided by the
Bonus Plan are consistent with the strategic goals set by our Board, that the
goals set are sufficiently ambitious so as to provide a meaningful incentive,
and that bonus payments, assuming target levels of performance are attained,
will be consistent with the overall compensation program established by our
Compensation Committee.
To
determine the bonus eligibility of Messrs. Wynne, Wingfield and Heap for 2008,
our Compensation Committee reviewed our corporate performance against the
corporate performance metrics of net revenue and Adjusted EBITDA. During 2008,
we achieved net revenue of $48.0 million and, therefore, Messrs. Wynne,
Wingfield and Heap were not eligible for a bonus pursuant to the net revenue
performance metric. During 2008, we achieved Adjusted EBITDA of $9.0 million.
Once the threshold Adjusted EBITDA amount of $8.6 million was achieved, actual
payments were based on straight-line interpolating between the levels discussed
above. Accordingly, Messrs. Wynne, Wingfield and Heap were eligible to receive
27.1% of their target bonus for 2008 based on the Adjusted EBITDA performance
metric.
Bonus
Plan awards for Messrs. Wynne, Wingfield and Heap for 2008 are outlined
below:
|
·
|
In
consideration of the Company’s Adjusted EBITDA, Mr. Wynne received a
bonus payment of $37,262.
|
|
·
|
In
consideration of the Company’s Adjusted EBITDA, Mr. Wingfield received a
bonus payment of $33,875.
|
|
·
|
In
consideration of the Company’s Adjusted EBITDA, Mr. Heap
received a bonus
payment of $31,097.
|
The
2008 Bonus Plan for Messrs. Freeman, Sach and Koeppen
For 2008,
the terms of the Bonus Plan for Mr. Freeman were established by our Compensation
Committee. The terms of the Bonus Plan for 2008 for Messrs. Sach and
Koeppen were recommended by Mr. Freeman, our Chief Executive Officer at the time
the goals for the Bonus Plan for 2008 were established, and approved by our
Compensation Committee. The target percentages for Messrs. Freeman, Sach and
Koeppen for 2008 were:
Name
|
|
2008 Target
Bonus
|
William
M. Freeman
|
|
100%
of Base Salary
|
Peter
P. Sach (1)
|
|
60%
of Base Salary
|
Curt
R. Koeppen(1)
|
|
70%
of Base
Salary
|
|
(1)
|
As
discussed in the section entitled “—Base Salary,” in 2008, the target
bonus amount for each of Messrs. Sach and Koeppen was increased as follows
in lieu of an increase in base
salary:
|
Name
|
|
2007 Target
Bonus
|
|
2008 Target
Bonus
|
Peter
P. Sach
|
|
45%
of Base Salary
|
|
60%
of Base Salary
|
Curt
R. Koeppen
|
|
65%
of Base Salary
|
|
70%
of Base
Salary
|
The
corporate performance metrics for Messrs. Freeman, Sach and Koeppen were the
same metrics for Messrs. Wynne, Wingfield and Heap, discussed above; however,
none of Messrs. Freeman, Sach and Koeppen was eligible to receive a bonus under
the Bonus Plan for 2008 because they were each terminated prior to the end of
2008.
2009
Bonus Plan
In
connection with its annual review of our compensation programs for 2009,
management and our Compensation Committee realized the challenges facing the
Company in 2009 due to, among other factors, the difficult economic conditions.
In light of these challenges, our Board and our Compensation Committee believe
that it is important for the Company to conserve cash. Accordingly,
our Compensation Committee decided to add a third corporate performance metric
to the Bonus Plan for 2009: cash utilization (EBITDA less net capital expenses,
interest and taxes). Our Compensation Committee believes that cash
utilization (EBITDA less net capital expenses, interest and taxes) is an
important measure of our performance during these difficult economic
conditions.
The
target bonus percentages for Messrs. O’Donnell, Wynne, Wingfield, Heap and
Powdermaker for 2009 are:
Name
|
|
2009 Target
Bonus
|
Shawn
F. O’Donnell
|
|
100%
of Base Salary
|
John
B. Wynne, Jr.
|
|
50%
of Base Salary
|
W.
Terrell Wingfield, Jr.
|
|
50%
of Base Salary
|
Steven
Heap
|
|
45%
of Base Salary
|
Dan
Powdermaker
|
|
80%
of Base
Salary
|
The
target bonus for each of Messrs. O’Donnell and Wingfield is at the 75
th
percentile for the 2009 Peer Group; however, Mr. O’Donnell’s 2009 base salary is
at the 25
th
percentile for the 2009 Peer Group. Our Compensation Committee
considered the level of Mr. O’Donnell’s base salary as compared to the 2009 Peer
Group when setting his target bonus for 2009 and also considered that the actual
amount of Mr. O’Donnell’s bonus is tied to our corporate performance, which, our
Compensation Committee believes, provides a greater incentive. Mr.
Wingfield’s target bonus is set at a higher percentile because, when Mr.
Wingfield was hired in 2006, it was our policy that all executive officers that
reported directly to our Chief Executive Officer would have the same target
bonus percentage. The target bonus for each of Messrs. Wynne and Heap is at the
mid-point range of the 2009 Peer Group. The target bonus for Mr.
Powdermaker is above the 75
th
percentile for the 2009 Peer Group.
Long
Term Incentive Compensation
Stock
Options, Restricted Stock, Restricted Stock Units and Stock
Appreciation Rights
The
granting of stock-based incentives by our Compensation Committee is viewed as a
desirable long-term incentive compensation strategy because it closely links the
interest of management with stockholder value, aids in employee retention and
motivates executives to improve the long-term stock market performance of our
common stock. Equity grants also provide an opportunity for increased equity
ownership.
When
granting stock-based incentives to our executive officers, our Compensation
Committee considers Aon Consulting’s analysis, as described earlier, as well as
our Chief Executive Officer’s recommendations for other executives, which are
based on each officer’s level of responsibility and contribution towards
achievement of our business plan and objectives. We have no set
formula for the granting of equity awards to executives or
employees.
Historically,
the primary form of equity compensation has been non-qualified stock options
because this was typically the form of equity award provided by our peer
companies. However, beginning in 2006, companies, including some of our peer
companies, also began issuing restricted stock and performance-based share
awards. As a result, our Compensation Committee assessed the desirability of
granting performance shares, shares of restricted stock and restricted stock
units to employees, particularly members of senior management, and concluded
that performance shares, restricted stock and restricted stock units would
provide an equally motivating form of incentive compensation while permitting us
to issue fewer shares, thereby reducing potential dilution to our stockholders.
For that same reason, in 2008, our Compensation Committee decided to begin
issuing stock appreciation rights, which are similar to stock option grants but
allow the holder to elect not to pay a purchase price and, instead, receive the
number of shares of common stock being exercised, less that number of shares
having a fair market value equal to the applicable exercise price.
Pursuant
to the terms of our 2004 Stock Incentive Plan, as amended (the “2004 Plan”), our
Compensation Committee has delegated authority to Mr. O’Donnell to grant
stock-based awards to newly-hired employees (other than our executive officers)
pursuant to guidelines established by our Compensation Committee. Pursuant to
these guidelines, our Compensation Committee established the range of salary,
bonus and stock option grants to be awarded in connection with our hiring of
qualified personnel in 2006 (including the maximum number of shares of common
stock subject to individual awards that Mr. O’Donnell may grant). Our
Compensation Committee reviews and ratifies all of the grants of stock-based
awards made by Mr. O’Donnell and establishes and approves all grants of
stock-based awards to our executive officers and any grants of stock-based
awards to non-executive officers that are outside the delegated authority of
Mr. O’Donnell or proposed at any time other than at hire. In addition, our
Compensation Committee approves the annual stock-based grants to our employees,
which are based on the recommendations of Mr. O’Donnell.
New hire
grants have typically been made on the last business day of the quarter in which
the employee began work. Historically, all stock option awards were made at the
closing price for our common stock on the day before the grant date. In 2006,
our Compensation Committee changed this practice and now all stock option awards
are made at the closing price for our common stock on the grant date. Unless
specifically approved in advance by our Compensation Committee, all stock-based
grants are effective on the last business day of the quarter. Traditionally,
director stock-based grants are made annually on the date of our Annual Meeting
of Stockholders.
We have
agreed to provide accelerated vesting of stock options, performance shares,
restricted stock awards, restricted stock units and stock appreciation rights to
our named executive officers in the event of, among other things, a change in
control. Further analysis of payments triggered by a change in control is
provided beginning on page 35 of this Amendment No. 1.
2006
Performance Share Awards
In 2006,
we granted performance share awards to our executive officers, including Messrs.
Wynne, Wingfield and Heap (the “2006 Performance Share Awards”). The 2006
Performance Share Awards provided recipients with the opportunity to earn shares
of our common stock, the number of which was determined pursuant to, and subject
to the attainment of corporate performance goals. The corporate performance
goals were determined by our Compensation Committee based on our compound annual
revenue growth and compound annual margin growth in earnings before interest,
taxes, depreciation, amortization, and non-cash compensation
expenses.
At our
Compensation Committee’s first meeting after each of December 31, 2007 and
December 31, 2008 (each a “Measurement Date”), which was required to be no
later than two and one-half months after the Measurement Date, our Compensation
Committee certified whether and to the extent the performance goals were met as
of such Measurement Date and directed the Company to issue the corresponding
number of shares of our common stock, if any, to the participant. At the meeting
of our Compensation Committee on February 6, 2008, our Compensation
Committee determined that, as of the Measurement Date for the year ended
December 31, 2007, we had not achieved either of the performance goals and,
therefore, no performance shares were awarded for fiscal year 2007. At the
meeting of our Compensation Committee on February 17, 2009, our
Compensation Committee determined that, as of the Measurement Date for the year
ended December 31, 2008, we had not achieved either of the performance goals
and, therefore, no performance shares were awarded for fiscal year
2008. The 2006 Performance Share Awards have expired with no shares
granted to our executives.
Equity
Awards Granted for 2008
In
setting the individual equity awards based on the available shares of common
stock under our 2004 Plan, our Compensation Committee considered comparisons to
the 2008 Peer Group, existing equity award holdings and current wealth creation
from those awards, the size of awards made to each executive in prior years, as
applicable, relative to our overall performance, available stock for issuance
under our 2004 Plan and potential grants in future years. Our Compensation
Committee targeted total equity awards for our named executive officers at a
mid-point range in relation to total equity awards in the 2008 Peer
Group. In 2008, Messrs. O’Donnell, Wynne, Wingfield and Heap each
received a total equity award, consisting of the types of equity awards
described below, at the mid-point range in relation to total equity awards in
the 2008 Peer Group, which our Compensation Committee determined to be
appropriate levels considering the factors discussed above as well as our
historic equity grant levels, the equity grants to the employee population
generally and each executive’s overall level of compensation.
2008
Stock Option Awards
In
connection with his appointment as our Chief Executive Officer and President in
September 2008, Mr. O’Donnell was granted a stock option to purchase 375,000
shares of our common stock, which was significantly more than the other named
executive officers received, because it was a new hire grant and in his role as
Chief Executive Officer he bears more of the responsibility for our performance
and
has a larger
variable compensation component that reflects this greater risk. In determining
the stock option award for Mr. O’Donnell in his role as our Chief Executive
Officer and President, our Compensation Committee considered the grant to Mr.
Freeman of a stock option to purchase 375,000 shares of our common stock in
connection with his appointment as our Chief Executive Officer and President.
Until his appointment as our Chief Executive Officer and President, Mr.
O’Donnell received equity grants as a director in accordance with our director
compensation program. For more information on the equity awards that
Mr. O’Donnell received as a director during 2008, please see the section
entitled “Director Compensation” beginning on page 43 of this Amendment No.
1.
In
connection with his appointment as our Senior Vice President of Sales and
Marketing in December 2008, Mr. Powdermaker was granted a stock option to
purchase 225,000 shares of our common stock.
2008
Performance Share Awards
In 2008
we granted the following restricted stock awards to Messrs. Wynne, Wingfield and
Heap in the following amounts (the “2008 Performance Share
Awards”):
Name
|
|
Minimum Number of
Shares of Restricted
Common
Stock
|
|
|
Target Number of
Shares of Restricted
Common
Stock
|
|
|
Maximum Number of
Shares of Restricted
Common
Stock
|
|
John
B. Wynne, Jr.
|
|
|
7,500
|
|
|
|
15,000
|
|
|
|
22,500
|
|
W.
Terrell Wingfield, Jr.
|
|
|
7,000
|
|
|
|
14,000
|
|
|
|
21,000
|
|
Name
|
|
Minimum Number of
Shares of Restricted
Common
Stock
|
|
|
Target Number of
Shares of Restricted
Common
Stock
|
|
|
Maximum Number of
Shares of Restricted
Common
Stock
|
|
Steven
Heap
|
|
|
6,500
|
|
|
|
13,000
|
|
|
|
19,500
|
|
The 2008
Performance Share Awards provided recipients with the opportunity to earn shares
of restricted common stock, the number of which was to be determined pursuant
to, and subject to the attainment of two corporate performance metrics. The
corporate performance metrics were determined by our Compensation Committee
based on our net revenue and Adjusted EBITDA, which are the same corporate
performance metrics used for the Bonus Plan in 2008, as discussed above under
the section entitled “—Short Term Incentive Compensation.” Our
Compensation Committee set the corporate performance metrics for Messrs. Wynne,
Wingfield and Heap such that the following number of shares of restricted common
stock would have been earned as follows:
|
·
|
The
achievement by the Company of a threshold of $52 million in net revenue
would result in a grant of restricted common stock equal to 30% of the
target number of shares of restricted common stock for Messrs. Wynne,
Wingfield and Heap.
|
|
·
|
The
achievement by the Company of a threshold of $8.6 million in Adjusted
EBITDA would result in a grant of restricted common stock equal to 20% of
the target number of shares of restricted common stock for Messrs. Wynne,
Wingfield and Heap.
|
|
·
|
The
achievement by the Company of a target of $55 million in net revenue would
result in a grant of restricted common stock equal to 60% of the target
number of shares of restricted common stock for Messrs. Wynne, Wingfield
and Heap.
|
|
·
|
The
achievement by the Company of a target of $11.1 million in Adjusted EBITDA
would result in a grant of restricted common stock equal to 40% of the
target number of shares of restricted common stock for Messrs. Wynne,
Wingfield and Heap.
|
|
·
|
The
achievement by the Company of $57 million in net revenue would result in a
grant of restricted common stock equal to 70% of the target number of
shares of restricted common stock for Messrs. Wynne, Wingfield and
Heap.
|
|
·
|
The
achievement by the Company of $12.3 million in Adjusted EBITDA would
result in a grant of restricted common stock equal to 50% of the target
number of shares of restricted common stock for Messrs. Wynne, Wingfield
and Heap.
|
Each of
the two corporate performance metrics is separately measured against our actual
performance and the failure to meet one of the metrics does not impact the grant
of restricted common stock under the other metric. Performance
exceeding the threshold net revenue goal and the threshold Adjusted EBITDA goal,
as the case may be, will result in progressively accelerating grants of
restricted common stock using straight-line interpolation.
The
shares of restricted common stock, if earned, were to be granted at the first
meeting of our Compensation Committee (the “Grant Date”) after December 31,
2008 (the “2008 Measurement Date”), which was required to be no later than two
and one-half months after the 2008 Measurement Date. On the Grant Date, our
Compensation Committee certified whether and to the extent the corporate
performance metrics were met as of the 2008 Measurement Date and directed the
Company to issue the corresponding number of shares of restricted common stock,
if any, to the executive officer.
At the
meeting of our Compensation Committee on February 17, 2009, our
Compensation Committee determined that, as of the 2008 Measurement Date, we
achieved net revenue of $48.0 million and, therefore, Messrs. Wynne, Wingfield
and Heap were not eligible for a grant of restricted common stock pursuant to
the net revenue performance metric. Our Compensation Committee also
determined that we achieved Adjusted EBITDA of $9.0 million. Once the
threshold Adjusted EBITDA amount of $8.6 million was achieved, actual payments
were based on straight-line interpolating between the levels discussed above.
Accordingly, our Compensation Committee directed the Company to issue to Messrs.
Wynne, Wingfield and Heap a grant of restricted common stock equal to 27.1% of
the target number of shares of restricted common
stock
that could be earned
based on the Adjusted EBITDA performance metric. The total number of
shares of restricted common stock that were awarded to each of Messrs. Wynne,
Wingfield and Heap are set forth below:
Name
|
|
Shares
of
Restricted Common
Stock
|
|
John
B. Wynne, Jr.
|
|
|
4,065
|
|
W.
Terrell Wingfield, Jr.
|
|
|
3,794
|
|
Steven
Heap
|
|
|
3,523
|
|
The
shares of restricted common stock vest one-third on the Grant Date, one-third on
the first anniversary of the Grant Date and one-third on the second anniversary
of the Grant Date. If the executive officer ceases to be an employee or director
of, or consultant or advisor to, the Company or a subsidiary for any reason
(including death) prior to vesting of the restricted stock, any shares not
vested will immediately and automatically be forfeited and returned to the
Company.
If there
is a change in control of the Company at any time after the 2008 Measurement
Date, and the shares of restricted common stock are assumed or otherwise
continued in effect or replaced with a cash incentive program:
|
·
|
Upon
the closing of the change in control of the Company, the restrictions on
the restricted common stock will lapse as to 50% of the unvested
restricted common stock, with the remaining unvested portion vesting
equally over the remaining portion of the vesting term (provided that the
executive officer is employed by the Company or a subsidiary or is
associated with the Company or a subsidiary as a director or consultant on
the applicable vesting date); and
|
|
·
|
If
within 12 months of such change in control of the Company, the executive
officer’s employment with the Company is terminated (other than a
termination for cause, as defined in the applicable agreement), then all
restrictions will lapse.
|
If the
shares of restricted common stock are not assumed or otherwise continued in
effect or replaced with a cash incentive program upon a change in control, then
all restrictions will lapse immediately prior to the consummation of the change
in control.
2008
Performance Share Awards for Messrs. Freeman, Sach and Koeppen
In 2008
we granted the following restricted stock awards to Messrs. Freeman, Sach and
Koeppen in the following amounts:
Name
|
|
Minimum Number of
Shares of Restricted
Common
Stock
|
|
|
Target Number of
Shares of Restricted
Common
Stock
|
|
|
Maximum Number of
Shares of Restricted
Common
Stock
|
|
William
M. Freeman
|
|
|
25,000
|
|
|
|
50,000
|
|
|
|
75,000
|
|
Peter
P. Sach
|
|
|
8,500
|
|
|
|
17,000
|
|
|
|
25,500
|
|
Curt
R. Koeppen
|
|
|
9,500
|
|
|
|
19,000
|
|
|
|
28,500
|
|
The
corporate performance metrics for Messrs. Freeman, Sach and Koeppen were the
same metrics for Messrs. Wynne, Wingfield and Heap, discussed above; however,
none of Messrs. Freeman, Sach and Koeppen was eligible to receive a grant of
restricted common stock because they were each terminated prior to the end of
2008.
2008
Stock Appreciation Right Awards for Messrs. Wynne, Wingfield and
Heap
In 2008
we granted the following stock appreciation rights awards (each a “SAR Award”
and collectively the “SAR Awards”) to Messrs. Wynne, Wingfield and
Heap:
Name
|
|
Number
of Stock
Appreciation Rights
|
|
John
B. Wynne, Jr.
|
|
|
38,167
|
|
W.
Terrell Wingfield, Jr.
|
|
|
34,895
|
|
Steven
Heap
|
|
|
33,805
|
|
The SAR
Awards vest monthly in equal installments over a four year period, beginning on
March 31, 2008, and have an exercise price of $4.61 per
share. Upon exercise, an executive officer may elect not to pay an
exercise price and, instead, receive the number of shares of common stock being
exercised, less that number of shares with a fair market value equal to the
applicable exercise price.
In the
event of a change in control of the Company, and if the SAR Awards are assumed
or otherwise continued in effect or replaced with a cash incentive
program:
|
·
|
Upon
the closing of the change in control, 50% of the unvested SAR Awards
will vest, with the remaining unvested portion vesting equally over the
remaining portion of the vesting term (provided that the executive officer
is employed by the Company or a subsidiary or is associated with the
Company or a subsidiary as a director or consultant on the applicable
vesting date); and
|
|
·
|
If
within 12 months of such change in control, the executive officer’s
employment with the Company is terminated (other than a termination for
cause, as defined in the applicable agreement), then the SAR Awards will
become fully vested.
|
If the
SAR Awards are not assumed or otherwise continued in effect or replaced with a
cash incentive program, then the SAR Awards will become fully vested immediately
prior to the closing of the change in control.
2008
Stock Appreciation Rights Awards for Messrs. Freeman, Sach and
Koeppen
In 2008
we granted the following SAR Awards to Messrs. Freeman, Sach and
Koeppen:
Name
|
|
Number
of Stock
Appreciation Rights
|
|
William
M. Freeman
|
|
|
125,407
|
|
Peter
P. Sach
|
|
|
43,619
|
|
Curt
R. Koeppen
|
|
|
47,981
|
|
The terms
of these SAR Awards were the same as the SAR Awards granted to Messrs. Wynne,
Wingfield and Heap, discussed above. Mr. Freeman’s SAR Award remains
outstanding and continues to vest because of his continued service as a member
of our Board. The SAR Awards granted to Messrs. Sach and Koeppen are
no longer outstanding because they were not exercised during the exercise period
following their termination of employment.
2009
Performance Share Awards
In 2009
we granted restricted common stock awards to Messrs. O’Donnell, Wynne,
Wingfield, Heap and Powdermaker in the following amounts (the “2009 Performance
Share Awards”):
Name
|
|
Minimum Number of
Shares of Restricted
Common Stock
|
|
|
Target Number of
Shares of Restricted
Common Stock
|
|
|
Maximum Number of
Shares of Restricted
Common Stock
|
|
Shawn
F. O’Donnell
|
|
|
32,500
|
|
|
|
65,000
|
|
|
|
81,250
|
|
John
B. Wynne, Jr.
|
|
|
10,834
|
|
|
|
21,667
|
|
|
|
27,084
|
|
W.
Terrell Wingfield, Jr.
|
|
|
10,834
|
|
|
|
21,667
|
|
|
|
27,084
|
|
Name
|
|
Minimum Number of
Shares of Restricted
Common Stock
|
|
|
Target Number of
Shares of Restricted
Common Stock
|
|
|
Maximum Number of
Shares of Restricted
Common Stock
|
|
Steven
Heap
|
|
|
7,584
|
|
|
|
15,167
|
|
|
|
18,959
|
|
Dan
Powdermaker
|
|
|
10,834
|
|
|
|
21,667
|
|
|
|
27,084
|
|
The 2009
Performance Share Awards provide recipients with the opportunity to earn shares
of restricted common stock, the number of which will be determined pursuant to,
and subject to the attainment of, three corporate performance metrics. The
corporate performance metrics were determined by our Compensation Committee
based on our net revenue, Adjusted EBITDA, and cash utilization (EBITDA less net
capital expenses, interest and taxes), which are the same corporate performance
metrics used for the Bonus Plan in 2009, as discussed above under the heading
“—Short Term Incentive Compensation.”
The
shares of restricted common stock, if earned, will be granted at the first
meeting of our Compensation Committee (the “2009 Award Grant Date”) after
December 31, 2009 (the “2009 Measurement Date”), which must be no later
than two and one-half months after the 2009 Measurement Date. On the 2009 Award
Grant Date, our Compensation Committee will certify whether and to the extent
the corporate performance metrics have been met as of the 2009 Measurement Date
and will direct the Company to issue the corresponding number of shares of
restricted common stock, if any, to the executive officer. Any shares of
restricted common stock granted by our Compensation Committee with respect to
the 2009 Performance Share Awards will vest one-third on the 2009 Award Grant
Date, one-third on the first anniversary of the 2009 Award Grant Date and
one-third on the second anniversary of the 2009 Award Grant Date. If the
executive officer ceases to be an employee or director of, or consultant or
advisor to, the Company or a subsidiary for any reason (including death) prior
to vesting of the restricted stock, any shares not vested will immediately and
automatically be forfeited and returned to the Company.
In the
event a change in control of the Company occurs prior to the 2009 Measurement
Date, the 2009 Performance Share Awards provide that the executive will be
issued a number of shares of common stock equal to the number of target shares
under the 2009 Performance Share Awards as of the consummation of the change in
control, free of any restrictions.
If there
is a change in control of the Company at any time after the 2009 Measurement
Date, and the shares of restricted common stock are assumed or otherwise
continued in effect or replaced with a cash incentive program:
|
·
|
Upon
the closing of the change in control of the Company, the restrictions on
the restricted common stock will lapse as to 50% of the unvested
restricted common stock, with the remaining unvested portion vesting
equally over the remaining portion of the vesting term (provided that the
executive officer is employed by the Company or a subsidiary or is
associated with the Company or a subsidiary as a director or consultant on
the applicable vesting date); and
|
|
·
|
If
within 12 months of such change in control of the Company, the executive
officer’s employment with the Company is terminated (other than a
termination for cause, as defined in the applicable agreement), then all
restrictions will lapse.
|
If the
shares of restricted common stock are not assumed or otherwise continued in
effect or replaced with a cash incentive program upon a change in control, then
all restrictions will lapse immediately prior to the consummation of the change
in control.
2009
Stock Appreciation Rights Awards for Messrs. O’Donnell, Wynne, Wingfield and
Heap
In 2009
we granted the following SAR Awards to Messrs. O’Donnell, Wynne, Wingfield and
Heap:
Name
|
|
Number of Stock
Appreciation Rights
|
|
Shawn
F. O’Donnell
|
|
|
150,000
|
|
John
B. Wynne, Jr.
|
|
|
50,000
|
|
Name
|
|
Number of Stock
Appreciation Rights
|
|
W.
Terrell Wingfield, Jr.
|
|
|
50,000
|
|
Steven
Heap
|
|
|
35,000
|
|
The SAR
Awards vest monthly in equal installments over a four year period, beginning on
March 31, 2009, and have an exercise price of $1.63 per
share. Upon exercise, an executive officer may elect not to pay an
exercise price and, instead, receive the number of shares of common stock being
exercised, less that number of shares with a fair market value equal to the
applicable exercise price.
In the
event of a change in control of the Company, and if the SAR Awards are assumed
or otherwise continued in effect or replaced with a cash incentive
program:
|
·
|
Upon
the closing of the change in control, 50% of the unvested SAR Awards
will vest, with the remaining unvested portion vesting equally over the
remaining portion of the vesting term (provided that the executive officer
is employed by the Company or a subsidiary or is associated with the
Company or a subsidiary as a director or consultant on the applicable
vesting date); and
|
|
·
|
If
within 12 months of such change in control, the executive officer’s
employment with the Company is terminated (other than a termination for
cause, as defined in the applicable agreement), then the SAR Awards will
become fully vested.
|
If the
SAR Awards are not assumed or otherwise continued in effect or replaced with a
cash incentive program, then the SAR Awards will become fully vested immediately
prior to the closing of the change in control.
401(k)
Plan
We
maintain a 401(k) Plan that covers substantially all of our employees. The
401(k) Plan is an essential part of the retirement package that our Compensation
Committee believes is essential to attract and retain our
employees.
We match
100% of each participant’s first 4% of voluntary salary contributions up to
$225,000 of eligible compensation. Both employer and employee contributions to
the 401(k) Plan are fully vested. The 401(k) benefit provided to our named
executive officers does not exceed the benefit levels offered to our other
full-time employees.
Welfare
Benefits
In order
to attract and retain employees, we provide certain welfare benefit plans to our
employees, which include medical and dental insurance benefits. Our named
executive officers participate in the medical and dental insurance plans under
the same terms as our other full-time employees.
We
provide one times base salary in life and accidental death and dismemberment
insurance for our full-time employees including our named executive officers.
The life insurance benefit provided to our named executive officers does not
exceed the benefit levels offered to other full-time employees and is subject to
certain plan-wide limitations.
We also
provide disability insurance to our full-time employees, including our named
executive officers. Our short-term disability provides up to 60% of base salary
income replacement beginning on the employee’s 15
th
day of
disability and continues until the employee is no longer disabled or for a
maximum of six continuous months, whichever comes first. Our long-term
disability provides up to 60% of base salary income replacement after six months
of qualified disability. The short- and long-term disability benefits provided
to our named executive officers do not exceed the benefit levels offered to
other full-time employees and are subject to certain plan-wide
limitations.
Perquisites
and Other Personal Benefits
We
provide our named executive officers with perquisites and other personal
benefits that our Compensation Committee believes are reasonable and consistent
with our overall compensation program. Perquisites include transportation
benefits and relocation benefits. Annually, our Compensation Committee reviews
the levels of perquisites and other personal benefits provided to our named
executive officers.
Severance
Benefits
We have
agreed to provide severance benefits to our named executive officers in the
event of, among other things, a change in control of the Company. These benefits
are designed to promote stability and continuity of senior management. Our
Compensation Committee believes that the interests of our stockholders will be
best served if the interests of our senior management are aligned with them. Our
Compensation Committee further believes that providing these benefits should
eliminate, or at least reduce, the reluctance of senior management to pursue
potential change in control transactions that may be in the best interests of
our stockholders. In April 2008, our Compensation Committee approved amendments
to our employment letters with Messrs. Wynne, Wingfield and Heap in light
of certain changes to Section 409A of the Code, as discussed in more detail
in the section entitled “Executive Compensation—Potential Post-Employment
Payments.” These amendments did not change the economic terms of
severance under the employment letters other than to require a six-month delay
to the payment of severance to the executive to the extent required by
Section 409A of the Code.
Further
analysis of payments triggered by a change in control is provided beginning on
page 35 of this Amendment No. 1.
Tax
Considerations
Section 162(m)
of the Code generally disallows a tax deduction to public companies for certain
compensation in excess of $1 million paid to our Chief Executive Officer and our
three other most highly compensated executive officers other than our Chief
Executive Officer and Chief Financial Officer. Certain compensation, including
qualified performance-based compensation, will not be subject to the deduction
limit if certain requirements are met. Our Compensation Committee reviews the
potential effect of Section 162(m) periodically and uses its judgment to
authorize compensation payments that may be subject to the limit when our
Compensation Committee believes such payments are appropriate and in our best
interests and the best interest of our stockholders, after taking into
consideration changing business conditions and the performance of our employees.
Our Compensation Committee believes it is important to maintain cash and equity
incentive compensation at certain levels to attract and retain the executive
officers essential to our growth and financial success, even if all or part of
that compensation may not be deductible by reason of the Section 162(m)
limitation. However, we believe that for the 2008 fiscal year the total amount
of compensation that we paid (whether in the form of cash payments or upon the
exercise or vesting of equity awards) should be fully deductible and not
affected by the Section 162(m) limitation.
COMPENSATION
COMMITTEE REPORT
Our
Compensation Committee has reviewed and discussed the Compensation Discussion
and Analysis report beginning on page 5 of this Amendment No. 1 with
management. Based on that review and discussion, our Compensation Committee
recommended to our Board that the Compensation Discussion and Analysis be
included in this Amendment No. 1.
The
foregoing report has been furnished by the members of our Compensation
Committee:
John B.
Penney, Chairman
Jose A.
Cecin, Jr.
(As
currently constructed)
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The
current members of our Compensation Committee are Messrs. Penney and Cecin.
We are not aware of any compensation committee interlocks or relationships
involving our executive officers or members of our Board requiring disclosure in
this item.
EXECUTIVE
COMPENSATION
Summary
Compensation
The
following table shows, for the fiscal years ended December 31, 2008,
December 31, 2007 and December 31, 2006, the compensation of each person
who served as Chief Executive Officer of the Company or Chief Financial Officer
of the Company in 2008, the most highly compensated executive officer of the
Company other than the Chief Executive Officer and Chief Financial Officer whose
total compensation exceeded $100,000 for the year ended December 31, 2008
and who was serving as an executive officer on December 31, 2008, two additional
individuals who served as executive officers for a period of time in 2008 and
for whom disclosure would have been provided but for the fact that such
individuals were not serving as executive officers on December 31, 2008 and one
executive officer for whom disclosure would have been provided but for the fact
that such executive officer’s total compensation did not exceed $100,000 for the
year ended December 31, 2008. The following table also shows the
compensation of Mr. Heap for the fiscal year ended December 31,
2008. Although Mr. Heap was not determined by our Board to be an
executive officer until February 2009, we have decided to include his
compensation for the fiscal year ended December 31, 2008 in the interest of full
disclosure.
SUMMARY
COMPENSATION TABLE (1)
Name
and Principal
Position
(2)
|
|
Year
|
|
Salary
($)
|
|
|
Bonus
($)
(3)
|
|
|
Stock
Awards
($)
(4)
|
|
|
Option
Awards
($)
(5)
|
|
|
Non-Equity
Incentive
Plan
Compensation
($)
(6)
|
|
|
All
Other
Compen
sation
($)
(7)
|
|
|
Total
($)
|
|
Shawn
F. O’Donnell
Chief
Executive Officer
and
President
|
|
2008
|
|
$
|
112,319
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
40,625
|
|
|
$
|
62,150
|
|
|
$
|
21,807
|
|
|
$
|
236,901
|
|
John
B. Wynne, Jr.
|
|
2008
|
|
$
|
275,000
|
|
|
|
—
|
|
|
$
|
63,889
|
|
|
$
|
122,319
|
|
|
$
|
37,262
|
|
|
$
|
20,206
|
|
|
$
|
518,676
|
|
Chief
Financial Officer
|
|
2007
|
|
$
|
275,000
|
|
|
$
|
72,400
|
|
|
$
|
37,188
|
|
|
$
|
107,346
|
|
|
|
—
|
|
|
$
|
24,015
|
|
|
$
|
515,949
|
|
|
|
2006
|
|
$
|
57,291
|
|
|
$
|
25,781
|
|
|
|
—
|
|
|
$
|
22,331
|
|
|
|
—
|
|
|
$
|
97,385
|
|
|
$
|
202,788
|
|
W.
Terrell Wingfield, Jr.
|
|
2008
|
|
$
|
250,000
|
|
|
|
—
|
|
|
$
|
63,560
|
|
|
$
|
124,660
|
|
|
$
|
33,875
|
|
|
$
|
12,419
|
|
|
$
|
484,604
|
|
General
Counsel and
|
|
2007
|
|
$
|
250,000
|
|
|
$
|
65,850
|
|
|
$
|
37,188
|
|
|
$
|
110,687
|
|
|
|
—
|
|
|
$
|
7,488
|
|
|
$
|
471,213
|
|
Secretary
|
|
2006
|
|
$
|
67,308
|
|
|
$
|
53,125
|
|
|
|
—
|
|
|
$
|
27,672
|
|
|
|
—
|
|
|
$
|
101
|
|
|
$
|
148,206
|
|
Steven
Heap
Chief
Technology Officer
|
|
2008
|
|
$
|
253,750
|
|
|
|
—
|
|
|
$
|
101,068
|
|
|
$
|
64,565
|
|
|
$
|
31,097
|
|
|
$
|
12,589
|
|
|
$
|
463,069
|
|
Dan
Powdermaker
Senior
Vice President of
Sales
and Marketing
|
|
2008
|
|
$
|
7,692
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
889
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
8,581
|
|
William
M. Freeman
|
|
2008
|
|
$
|
250,000
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
54,340
|
|
|
|
—
|
|
|
$
|
515,652
|
|
|
$
|
819,992
|
|
Former
President and
|
|
2007
|
|
$
|
46,875
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
30,159
|
|
|
|
—
|
|
|
$
|
6,062
|
|
|
$
|
83,096
|
|
Chief
Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
and Principal
Position
(2)
|
|
Year
|
|
Salary
($)
|
|
|
Bonus
($)
(3)
|
|
|
Stock
Awards
($)
(4)
|
|
|
Option
Awards
($)
(5)
|
|
|
Non-Equity
Incentive
Plan
Compensation
($)
(6)
|
|
|
All
Other
Compen
sation
($)
(7)
|
|
|
Total
($)
|
|
Peter
P. Sach
|
|
2008
|
|
$
|
187,710
|
|
|
|
—
|
|
|
$
|
60,692
|
|
|
$
|
41,615
|
|
|
|
—
|
|
|
$
|
366,015
|
|
|
$
|
656,032
|
|
Former
Chief Operating
|
|
2007
|
|
$
|
275,000
|
|
|
$
|
72,400
|
|
|
$
|
81,838
|
|
|
$
|
48,902
|
|
|
|
—
|
|
|
$
|
9,405
|
|
|
$
|
487,545
|
|
Officer
|
|
2006
|
|
$
|
275,000
|
|
|
$
|
61,875
|
|
|
$
|
47,625
|
|
|
$
|
50,881
|
|
|
|
—
|
|
|
$
|
9,205
|
|
|
$
|
444,586
|
|
Curt
R. Koeppen
|
|
2008
|
|
$
|
187,500
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
13,224
|
|
|
|
—
|
|
|
$
|
356,817
|
|
|
$
|
557,541
|
|
Former
Chief Marketing
|
|
2007
|
|
$
|
10,417
|
|
|
$
|
35,000
|
|
|
|
—
|
|
|
$
|
7,232
|
|
|
|
—
|
|
|
$
|
1,439
|
|
|
$
|
54,088
|
|
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
We
do not maintain any pension plans or non-qualified deferred compensation
plans.
|
(2)
|
Mr. O’Donnell
was appointed our Chief Executive Officer and President in September 2008
and his base salary for 2008 was $340,000. Mr. O’Donnell was paid his pro
rata share of his base salary for 2008, which amount is reflected in the
table. Mr. O’Donnell was also paid a bonus under our Bonus Plan
for 2008 for his service as our Chief Executive Officer and President,
which amount is reflected in the table. Mr. O’Donnell received
a stock option grant, which is reflected in the table, in connection with
his appointment as our Chief Executive Officer. Until his
appointment as our Chief Executive Officer and President, Mr. O’Donnell
was paid for his services as a director in accordance with our director
compensation program. Mr. O’Donnell only received compensation
as a director prior to his appointment as our Chief Executive Officer and
President. For more information on the fees, stock option grant
and restricted stock grant that Mr. O’Donnell received for his service as
a director during 2008, please see the section entitled “Director
Compensation” beginning on page 43 of this Amendment No.
1. Mr. Wynne joined the Company in October 2006 and his
base salary for 2006 was $275,000. Mr. Wynne was paid his pro rata share
of his base salary for 2006, which amount is reflected in the
table. Mr. Wingfield joined the Company in September 2006
and his base salary for 2006 was $250,000. Mr. Wingfield was paid his pro
rata share of his base salary for 2006, which amount is reflected in the
table. Mr. Heap’s base salary was increased from $250,000 to
$255,000 in April 2008. Mr. Powdermaker joined the Company in
December 2008 and his base salary for 2008 was $250,000. Mr. Powdermaker
was paid his pro rata share of his base salary for 2008, which amount is
reflected in the table. Mr. Freeman served as our Chief
Executive Officer and President from November 2007 through September
2008. Mr. Freeman’s base salary for 2007 and 2008 was
$375,000. Mr. Freeman was paid his pro rata share of his base
salary for 2007 and 2008, which amounts are reflected in the
table. Mr. Sach was terminated without cause as our Chief
Operating Officer effective in September 2008. Mr. Sach’s base
salary for 2008 was $275,000. Mr. Sach was paid his pro rata
share of his base salary for 2008, which amount is reflected in the
table. Mr. Koeppen served as our Chief Marketing Officer from
December 2007 through October 2008. Mr. Koeppen’s base salary
for 2007 and 2008 was $250,000. Mr. Koeppen was paid his pro
rata share of his base salary for 2007 and 2008, which amounts are
reflected in the table.
|
(3)
|
Bonus
payments include discretionary awards to Messrs. Wynne, Wingfield and Sach
for fiscal year 2007 and an award to Mr. Sach for fiscal year 2006
pursuant to our Bonus Plan. Awards for 2007 were discussed in
the Proxy Statement filed with the Securities and Exchange Commission on
April 28, 2008 in connection with our 2008 Annual Meeting of Stockholders
and awards for 2006 were discussed in the Proxy Statement filed with the
Securities and Exchange Commission on July 23, 2007 in connection with our
2007 Annual Meeting of Stockholders. Bonus payments were
accrued in the year indicated and paid in the succeeding fiscal year.
Thus, the 2006 bonus was paid in fiscal 2007 and the 2007 bonus was paid
in fiscal 2008. Messrs. Wynne and Wingfield received a pro
rated 2006 bonus of $25,781 and $28,125, respectively, which was paid in
fiscal 2007. In addition, Mr. Wingfield received a one-time signing bonus
of $25,000 when he joined the Company in 2006. Pursuant to the
Employment Agreement between Mr. Koeppen and the Company, dated December
17, 2007, Mr. Koeppen received a one-time signing bonus of $35,000, which
was paid in 2008.
|
(4)
|
Amount
listed reflects the dollar amount recognized for financial statement
reporting purposes in accordance with SFAS No. 123R of restricted
stock, restricted stock unit awards and performance-based share awards and
thus includes amounts from awards granted in and prior to 2008, 2007 and
2006, as applicable. For 2008, assumptions related to the
financial reporting of restricted stock, restricted stock unit awards and
performance-based share awards is presented in Footnote 10 to our
Consolidated Financial Statements presented in our Original
Filing. For 2007, assumptions related to the financial
reporting of restricted stock, restricted stock unit awards and
performance-based share awards is presented in Footnote 10 to our
Consolidated Financial Statements presented in our Annual Report on Form
10-K for the year ended December 31, 2007 (the “2007
Form 10-K”). For 2006, assumptions related to the
financial reporting of restricted stock, restricted stock unit awards and
performance-based share awards is presented in Footnote 9 to our
Consolidated Financial Statements presented in our Annual Report on Form
10-K for the year ended December 31, 2006 (the “2006 Form
10-K”).
|
(5)
|
Amount
listed reflects the dollar amount recognized for financial statement
reporting purposes in accordance with SFAS No. 123R of stock option
awards and stock appreciation rights awards and thus includes amounts from
awards granted in and prior to 2008, 2007 and 2006, as
applicable. For 2008, assumptions related to the financial
reporting of stock options and stock appreciation rights is presented in
Footnote 10 to our Consolidated Financial Statements presented in our
Original Filing. For 2007, assumptions related to the financial
reporting of stock options is presented in Footnote 10 to our Consolidated
Financial Statements presented in our 2007 Form 10-K. For
2006, assumptions related to the financial reporting of stock options is
presented in Footnote 9 to our Consolidated Financial Statements presented
in our 2006 Form 10-K.
|
(6)
|
Amounts
listed reflect payments under our Bonus Plan for 2008 as discussed in the
section entitled “Compensation Discussion and Analysis” earlier
in this Amendment No. 1. Bonus payments were accrued in the
year indicated and paid in the succeeding fiscal year. Thus, the 2008
bonus was paid in fiscal 2009.
|
(7)
|
The
table below shows the components of amounts set forth in this column for
2008, which include the Company’s match for each individual’s 401(k) Plan
contributions, imputed income related to life insurance benefits,
reimbursement of commuting expenses for Mr. Wynne, reimbursement of travel
and living expenses for Messrs. O’Donnell, Freeman, Koeppen and
Powdermaker and severance payments made to Messrs. Freeman, Sach and
Koeppen, as applicable.
|
Name
|
|
401(k)
Match
|
|
|
Life
Insurance
|
|
|
Reimburse-
ment of
Commuting
Expenses
|
|
|
Reimbursement
of Travel and
Living Expenses
|
|
|
Severance
Payments
|
|
|
Total
“All Other
Compensation”
|
|
Shawn
F. O’Donnell
|
|
$
|
4,490
|
|
|
$
|
76
|
|
|
|
—
|
|
|
$
|
17,241
|
(a)
|
|
|
—
|
|
|
$
|
21,807
|
|
John
B. Wynne, Jr.
|
|
$
|
12,063
|
|
|
$
|
406
|
|
|
$
|
7,737
|
(b)
|
|
|
—
|
|
|
|
—
|
|
|
$
|
20,206
|
|
W.
Terrell Wingfield, Jr.
|
|
$
|
11,384
|
|
|
$
|
1,035
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
12,419
|
|
Steven
Heap
|
|
$
|
11,535
|
|
|
$
|
1,054
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
12,589
|
|
Dan
Powdermaker
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
William
M. Freeman
|
|
$
|
13,125
|
|
|
$
|
968
|
|
|
|
—
|
|
|
$
|
23,434
|
(c)
|
|
$
|
478,125
|
(d)
|
|
$
|
515,652
|
|
Peter
P. Sach
|
|
$
|
12,440
|
|
|
$
|
338
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
353,237
|
(e)
|
|
$
|
366,015
|
|
Curt
R. Koeppen
|
|
$
|
7,500
|
|
|
$
|
1,188
|
|
|
|
—
|
|
|
$
|
16,238
|
(f)
|
|
$
|
331,891
|
(g)
|
|
$
|
356,817
|
|
(a)
|
Represents
the amount paid to Mr. O’Donnell for travel and living expenses associated
with commuting from his personal residence in Texas to the Company’s
corporate headquarters in New Jersey and residing in New Jersey as the
business needs of the Company
required.
|
(b)
|
Represents
the amount received by Mr. Wynne in 2008 for commuting expenses in lieu of
a relocation package. Mr. Wynne’s reimbursement for commuting
expenses cannot exceed $2,000 per
month.
|
(c)
|
Represents
the amount paid to Mr. Freeman for travel and living expenses associated
with commuting from his personal residence in Florida to the Company’s
corporate headquarters in New Jersey and residing in New Jersey as the
business needs of the Company
required.
|
(d)
|
Represents
the amounts paid to Mr. Freeman upon his termination without cause
effective September 2, 2008. Additional information regarding
payments made to Mr. Freeman in connection with his termination without
cause is set forth in this Amendment No. 1 under the heading “—Potential
Post-Employment Payments” below.
|
(e)
|
Represents
the amounts paid to Mr. Sach upon his termination without cause effective
October 22, 2008. Additional information regarding payments
made to Mr. Sach in connection with his termination without cause is set
forth in this Amendment No. 1 under the heading “—Potential
Post-Employment Payments” below.
|
(f)
|
Represents
the amount paid to Mr. Koeppen for travel and living expenses associated
with commuting from his personal residence in Florida to the Company’s
corporate headquarters in New Jersey and residing in New Jersey as the
business needs of the Company
required.
|
(g)
|
Represents
the amounts paid to Mr. Koeppen upon his termination without cause
effective September 30, 2008. Additional information regarding
payments made to Mr. Koeppen in connection with his termination without
cause is set forth in this Amendment No. 1 under the heading “—Potential
Post-Employment Payments”
below.
|
Grants
of Plan-Based Awards
The
following table contains information concerning grants of plan-based awards
under our cash and equity incentive plans to our named executive officers during
the year ended December 31, 2008.
GRANTS
OF PLAN-BASED AWARDS
|
|
|
|
|
|
Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards
|
|
|
Estimated Future Payouts Under
Equity Incentive
Plan Awards (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Date of
Approval by
the
Compen
sation
Com
mittee or
Board of
Directors
Approvals
|
|
Grant
Date
|
|
Threshold
($)
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
Threshold
(#)
|
|
|
Target
(#)
|
|
|
Maximum
(#)
|
|
|
All Other
Stock
Awards:
Number
of Shares
of Stock
or
Units(#)
(2)
|
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options (#)
(2)
|
|
|
Exercise or
Base Price
of Option
Awards
($/Sh)
|
|
|
Grant Date
Fair Value
Of Stock
And Option
Awards (3)
|
|
Shawn
F.
|
|
|
—
|
|
6/19/2008
|
(4)
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,000
|
(5)
|
|
|
—
|
|
|
|
—
|
|
|
$
|
3.74
|
|
O’Donnell
|
|
|
—
|
|
6/19/2008
|
(4)
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,000
|
(6)
|
|
$
|
3.69
|
|
|
$
|
1.64
|
|
|
|
|
—
|
|
9/2/2008
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
375,000
|
(7)
|
|
$
|
3.71
|
|
|
$
|
1.64
|
|
|
|
|
—
|
|
10/17/2008
|
|
|
—
|
|
|
$
|
62,150
|
(10)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
John
B. Wynne,
|
|
|
—
|
|
2/20/2008
|
(8)
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
38,167
|
(9)
|
|
$
|
4.61
|
|
|
$
|
1.89
|
|
Jr.
|
|
|
—
|
|
2/20/2008
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,500
|
|
|
|
15,000
|
|
|
|
22,500
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
N/A
|
|
|
|
|
—
|
|
2/20/2008
|
|
|
—
|
|
|
$
|
37,262
|
(10)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
W.
Terrell
|
|
|
—
|
|
2/20/2008
|
(8)
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
34,895
|
(9)
|
|
$
|
4.61
|
|
|
$
|
1.89
|
|
Wingfield,
Jr.
|
|
|
—
|
|
2/20/2008
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,000
|
|
|
|
14,000
|
|
|
|
21,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
N/A
|
|
|
|
|
—
|
|
2/20/2008
|
|
|
—
|
|
|
$
|
33,875
|
(10)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Steven
Heap
|
|
|
—
|
|
2/20/2008
|
(8)
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
33,805
|
(9)
|
|
$
|
4.61
|
|
|
$
|
1.89
|
|
|
|
|
—
|
|
2/20/2008
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,500
|
|
|
|
13,000
|
|
|
|
19,500
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
N/A
|
|
|
|
|
—
|
|
2/20/2008
|
|
|
—
|
|
|
$
|
31,097
|
(10)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards
|
|
|
Estimated Future Payouts Under
Equity Incentive
Plan Awards (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Date of
Approval by
the Compen
sation
Com
mittee or
Board of
Directors
Approvals
|
|
Grant
Date
|
|
Threshold
($)
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
Threshold
(#)
|
|
|
Target
(#)
|
|
|
Maximum
(#)
|
|
|
All Other
Stock
Awards:
Number
of Shares
of Stock
or
Units(#)
(2)
|
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options (#)
(2)
|
|
|
Exercise or
Base Price
of Option
Awards
($/Sh)
|
|
|
Grant Date
Fair Value
Of Stock
And Option
Awards (3)
|
|
Dan
Powdermaker
|
|
12/19/2008
(11)
|
|
12/22/2008
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
225,000
|
(12)
|
|
$
|
1.69
|
|
|
$
|
0.80
|
|
William
M.
|
|
—
|
|
2/20/2008
|
(8)
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
125,407
|
(9)
|
|
$
|
4.61
|
|
|
$
|
1.89
|
|
Freeman
|
|
—
|
|
2/20/2008
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
25,000
|
|
|
|
50,000
|
|
|
|
75,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
N/A
|
|
|
|
—
|
|
2/20/2008
|
|
|
—
|
|
|
$
|
375,000
|
(14)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Peter
P. Sach
|
|
—
|
|
2/20/2008
|
(8)
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
43,619
|
(9)(13)
|
|
$
|
4.61
|
|
|
$
|
1.89
|
|
|
|
—
|
|
2/20/2008
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,500
|
|
|
|
17,000
|
|
|
|
25,500
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
N/A
|
|
|
|
—
|
|
2/20/2008
|
|
|
—
|
|
|
$
|
165,000
|
(14)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Curt
R. Koeppen
|
|
—
|
|
2/20/2008
|
(8)
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
47,981
|
(9)(13)
|
|
$
|
4.61
|
|
|
$
|
1.89
|
|
|
|
—
|
|
2/20/2008
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
9,500
|
|
|
|
19,000
|
|
|
|
28,500
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
N/A
|
|
|
|
—
|
|
2/20/2008
|
|
|
—
|
|
|
$
|
175,000
|
(14)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
___________________________
(1)
|
The
amounts shown reflect the threshold, target and maximum number of shares
available under the performance share awards. These grants are
described in detail in the section entitled “Compensation Discussion and
Analysis—Long Term Incentive Compensation—2008 Performance Share Awards”
earlier in this Amendment No. 1. Unless otherwise indicated in
the table, the grant date represents the date that the terms of the
performance share awards were approved by our Compensation
Committee. In February 2009, our Compensation Committee
determined that, based on the Company’s performance, Messrs. Wynne,
Wingfield and Heap were entitled to a grant of restricted stock equal to
27.1% of the target number of shares of restricted common stock that could
be earned pursuant to this award. The total number of shares of
restricted common stock that were awarded to each of Messrs. Wynne,
Wingfield and Heap is as follows: Mr. Wynne: 4,065; Mr. Heap: 3,523; and
Mr. Wingfield: 3,794. One-third of the shares of restricted
common stock that were earned by Messrs. Wynne, Heap and Wingfield vest on
the date of grant, one-third on the first anniversary of the grant date
and one-third on the second anniversary of the grant
date. Messrs. Freeman, Sach and Koeppen were not eligible to
earn any shares of restricted common stock pursuant to their respective
performance share awards because they were each terminated prior to the
end of 2008. For more information regarding these performance share
awards, please see the discussion under “Compensation Discussion and
Analysis—Long Term Incentive Compensation—2008 Performance Share Awards,”
in this Amendment No. 1.
|
(2)
|
Stock
options and stock appreciation rights granted under our 2004
Plan. Except as otherwise noted herein, assuming that in
connection with a change in control the stock option is not assumed or
replaced in accordance with the terms of the stock option agreement, 100%
of the stock option grant will fully vest. Assuming that in connection
with a change in control the stock appreciation right is not assumed or
otherwise continued in effect or replaced with a cash incentive program in
accordance with the terms of the stock appreciation right agreement, then
the stock appreciation right award will fully vest. The number of shares
issuable under the 2004 Plan may be increased annually by the lowest of
(a) 3,000,000 shares of common stock, (b) 5% of the outstanding shares on
such date and (c) an amount determined by our Board. Any increase is
subject to the limitation that the aggregate shares issuable under any
equity compensation plans maintained by the Company may not exceed 25% of
the outstanding shares of the Company on the first day of the fiscal year
in which the increase is made. For fiscal year 2009, our Board determined
to increase the number of shares issuable under the 2004 Plan by 500,000
shares.
|
(3)
|
The
amounts included in this column represent the full grant date fair value
of the awards computed in accordance with SFAS No. 123R. Information
related to the financial reporting of stock options, stock appreciation
rights and restricted stock is presented in Footnote 10 to the
Consolidated Financial Statements presented in our Original
Filing.
|
(4)
|
Represent
grants made to Mr. O’Donnell for his service as a director but prior to
his appointment as our Chief Executive Officer and
President.
|
(5)
|
Represents
a grant of restricted stock, which vests in equal installments over three
years, beginning on June 19, 2009.
|
(6)
|
Represents
a grant of a stock option, which fully vests on June 19,
2009.
|
(7)
|
Represents
a grant of a stock option. Twenty-five percent of the shares
subject to the stock option will vest on September 2, 2009 and the
remaining shares will vest monthly, in equal installments, over the
following three years. If Mr. O’Donnell is terminated by the
Company without Cause (as defined in the Employment Agreement between Mr.
O’Donnell and the Company) before September 2, 2009, the stock option will
vest as to that percentage of the original number of shares equal to the
product of (i) 2.0833 and (ii) the number of full calendar months served
by Mr. O’Donnell pursuant to his Employment Agreement. Furthermore,
any unvested shares will become fully vested upon a change of control of
the Company, as defined in the non-qualified stock option agreement
between the Company and Mr. O’Donnell, dated September 2,
2008.
|
(8)
|
The
information presented in the table for grants on February 20, 2008
reflects adjustments made to the number of stock appreciation rights
outstanding on March 28, 2008 in connection with the special one-time
cash payment of $0.40 per share paid by the Company on March 28,
2008.
|
(9)
|
Represents
a stock appreciation right, which vests monthly, in equal installments
over the four years following the date of
grant.
|
(10)
|
These
non-equity incentive plan payments were earned in fiscal 2008 and are
included in the “Non-Equity Incentive Plan Compensation” column in the
Summary Compensation Table above. More information regarding
such payments is discussed in footnote 6 to the Summary Compensation Table
and in the “Compensation Discussion and Analysis” earlier in this
Amendment No. 1.
|
(11)
|
Our
Board voted on December 19, 2008 to grant a stock option award to Mr.
Powdermaker, effective as of the date of his hire, December 22,
2008.
|
(12)
|
Represents
a stock option. Twenty-five percent of the shares subject to
the stock option will vest on December 22, 2009 and the remaining shares
will vest monthly, in equal installments, over the following three
years.
|
(13)
|
In
connection with the termination without cause of Messrs. Sach and Koeppen,
each had three months from the date of their respective terminations to
exercise any vested stock appreciation
rights.
|
(14)
|
Messrs.
Freeman, Sach and Koeppen were not eligible to receive a bonus under the
Bonus Plan for 2008 because they were each terminated prior to the end of
2008. The amount listed is the amount that Messrs. Freeman,
Sach and Koeppen could have earned based on the applicable target
percentages of the Bonus Plan, assuming the Company had met both target
corporate performance metrics. For more information, please see
the discussion under “Compensation Discussion and Analysis—Short Term
Incentive Compensation” earlier in this Amendment No.
1.
|
Outstanding
Equity Awards at Fiscal Year End
The
following table sets forth information with respect to our named executive
officers concerning unexercised stock option awards and unvested stock awards as
of December 31, 2008.
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR END 2008 (1)
|
|
Options Awards
|
|
|
Stock Awards
|
|
Name (2)
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
|
|
|
Option
Exercise
Price ($)
|
|
|
Option
Expiration
Date
|
|
|
Number of
Shares or Units of
Stock That Have
Not Vested (#)
|
|
|
Market
Value
of
Shares
or
Units of
Stock
That
Have
Not
Vested
($) (3)
|
|
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested
(#)
|
|
|
Equity Incentive
Plan Awards:
Market or Payout
Value of
Unearned
Shares,
Units or
Other
Rights That
Have
Not Vested
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shawn
F. O’Donnell
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,666
|
(4)(5)
|
|
$
|
6,999
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
11,358
|
(4)
|
|
|
15,904
|
(4)(6)
|
|
|
—
|
|
|
$
|
5.41
|
|
|
7/12/2017
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
7,633
|
(4)
|
|
|
—
|
|
|
|
—
|
|
|
$
|
4.73
|
|
|
8/21/2017
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
7,000
|
(4)
(7)
|
|
|
—
|
|
|
$
|
3.69
|
|
|
6/18/2018
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,000
|
(4)(8)
|
|
$
|
10,500
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
375,000
|
(9)
|
|
|
—
|
|
|
$
|
3.71
|
|
|
9/2/2018
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
B. Wynne, Jr.
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
18,241
|
(10)
|
|
$
|
27,362
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
103,370
|
|
|
|
87,467
|
(11)
|
|
|
—
|
|
|
$
|
4.68
|
|
|
10/16/2016
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
7,951
|
|
|
|
30,216
|
(12)
|
|
|
—
|
|
|
$
|
4.61
|
|
|
2/20/2018
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
28,000
|
(13)
|
|
$
|
42,000
|
(13)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,500
|
(14)
|
|
$
|
11,250
|
(14)
|
|
|
Options Awards
|
|
|
Stock Awards
|
|
Name (2)
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexer
cisable
|
|
|
Equity
Incentive
Plan
Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
|
|
Option
Exercise
Price
($)
|
|
|
Option
Expiration
Date
|
|
|
Number
of
Shares
or Units
of
Stock
That
Have
Not
Vested
(#)
|
|
|
Market
Value
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
($)
(3)
|
|
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units
or
Other
Rights
That
Have
Not
Vested
(#)
|
|
|
Equity
Incentive
Plan
Awards:
Market
or
Payout
Value
of
Unearned
Shares,
Units
or
Other
Rights
That
Have
Not
Vested
($)
|
|
W.
Terrell Wingfield, Jr.
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
18,241
|
(10)
|
|
$
|
27,362
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
107,345
|
|
|
|
83,492
|
(15)
|
|
|
—
|
|
|
$
|
4.79
|
|
|
9/29/2016
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
7,269
|
|
|
|
27,626
|
(12)
|
|
|
—
|
|
|
$
|
4.61
|
|
|
2/20/2018
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
28,000
|
(13)
|
|
$
|
42,000
|
(13)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,000
|
(14)
|
|
$
|
10,500
|
(14)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven
Heap
|
|
|
44,301
|
(16)
|
|
|
—
|
|
|
|
—
|
|
|
$
|
7.63
|
|
|
3/16/2014
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
34,375
|
(16)
|
|
|
—
|
|
|
|
—
|
|
|
$
|
15.04
|
|
|
11/10/2014
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
32,714
|
(16)
|
|
|
—
|
|
|
|
—
|
|
|
$
|
23.07
|
|
|
2/22/2015
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
59,976
|
|
|
|
27,263
|
(17)
|
|
|
—
|
|
|
$
|
4.27
|
|
|
8/17/2016
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
16,782
|
(10)
|
|
$
|
25,173
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
7,042
|
|
|
|
26,763
|
(12)
|
|
|
—
|
|
|
$
|
4.61
|
|
|
2/20/2018
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
25,600
|
(13)
|
|
$
|
38,400
|
(13)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,500
|
(14)
|
|
$
|
9,75
0
|
|
|
|
Options Awards
|
|
|
Stock Awards
|
|
Name (2)
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
|
|
|
Option
Exercise
Price ($)
|
|
|
Option
Expiration
Date
|
|
|
Number of
Shares or Units of
Stock That Have
Not Vested (#)
|
|
|
Market
Value
of
Shares
or
Units of
Stock
That
Have
Not
Vested
($) (3)
|
|
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested
(#)
|
|
|
Equity Incentive
Plan Awards:
Market or Payout
Value of
Unearned
Shares,
Units or
Other
Rights That
Have
Not Vested
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dan
Powdermaker
|
|
|
—
|
|
|
|
225,000
|
(18)
|
|
|
—
|
|
|
$
|
1.69
|
|
|
12/22/2008
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William
M. Freeman
|
|
|
110,753
|
|
|
|
298,183
|
(19)
|
|
|
—
|
|
|
$
|
5.32
|
|
|
11/16/2017
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
26,126
|
|
|
|
99,281
|
(12)
|
|
|
—
|
|
|
$
|
4.61
|
|
|
2/20/2018
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter
P. Sach
|
|
|
158,243
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
0.15
|
|
|
1/20/2009
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
67
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
0.15
|
|
|
1/20/2009
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
30,527
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
1.67
|
|
|
1/20/2009
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
10,175
|
(16)
|
|
|
—
|
|
|
|
—
|
|
|
$
|
7.63
|
|
|
1/20/2009
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
20,312
|
(16)
|
|
|
—
|
|
|
|
—
|
|
|
$
|
15.04
|
|
|
1/20/2009
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
43,619
|
(16)
|
|
|
—
|
|
|
|
—
|
|
|
$
|
23.07
|
|
|
1/20/2009
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
45,777
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
4.27
|
|
|
1/20/2009
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
6,361
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
4.61
|
|
|
1/20/2009
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
___________________________
(1)
|
Except
as otherwise noted, the information in this table reflects adjustments
made to certain grants of restricted stock units, stock appreciation
rights and stock options that were granted prior to March 7, 2008 in
connection with the special one-time cash payment of $0.40 per share paid
by the Company on March 28, 2008.
|
(2)
|
Mr.
Koeppen did not have any equity awards outstanding on December 31,
2008.
|
(3)
|
Based
upon the fair market value of $1.50 per share of our common stock on
December 31, 2008, the last trading day of our 2008 fiscal
year.
|
(4)
|
Represent
grants made to Mr. O’Donnell while Mr. O’Donnell was a director but prior
to his appointment as our Chief Executive Officer and
President.
|
(5)
|
Represents
restricted stock, which vests in annual installments over a three year
period with the first installment having vested on August 21,
2008.
|
(6)
|
Represents
a stock option. One-third of the shares vested on July 13, 2008 and the
remaining two-thirds of the shares vest quarterly, in equal installments
over a two year period.
|
(7)
|
Represents
a stock option, which fully vests on June 19, 2009.
|
(8)
|
Represents
restricted stock, which vests in equal installments over a three year
period beginning on June 19, 2009.
|
(9)
|
Represents
a stock option. Twenty-five percent of the shares vest on September 2,
2009 and the remaining shares vest monthly, in equal installments over the
following three years.
|
(10)
|
Represents
restricted stock units, which vest in annual installments over a three
year period with the first installment having vested on February 29,
2008.
|
(11)
|
Represents
a stock option, which vests monthly in 48 equal installments over a four
year period with the first installment having vested on November 30,
2006.
|
(12)
|
Represents
stock appreciation rights, which vest monthly in 48 equal installments
over a four year period with the first installment vesting on March 31,
2008.
|
(13)
|
The
amounts shown reflect the threshold number of shares available under our
2006 Performance Share Awards upon attainment of corporate performance
metrics of the Company. These grants are described in detail in
the section entitled “Compensation Discussion and Analysis—Long Term
Incentive Compensation—2006 Performance Share Awards” earlier in this
Amendment No. 1. The values are calculated based on the
threshold number of shares vesting upon the achievement of corporate
performance metrics of the Company and on the closing price of $1.50 of
our common stock on December 31, 2008. Our Compensation
Committee determined in February 2008 and February 2009 that, based on the
Company’s performance, none of these performance shares
vested. Our 2006 Performance Share Awards expired with no
shares granted to our executives.
|
(14)
|
The
amounts shown reflect the threshold number of shares available under our
2008 Performance Share Awards upon attainment of corporate performance
metrics of the Company. These grants are described in detail in
the section entitled “Compensation Discussion and Analysis—Long Term
Incentive Compensation—2008 Performance Share Awards” earlier in this
Amendment No. 1. The values are calculated based on the
threshold number of shares vesting upon the achievement of corporate
performance metrics of the Company and on the closing price of $1.50 of
our common stock on December 31, 2008. In February 2009, our
Compensation Committee determined that, based on the Company’s
performance, Messrs. Wynne, Wingfield and Heap were entitled to a grant of
restricted stock equal to 27.1% of the target number or shares of
restricted common stock that could be earned pursuant to this
award. The total number of shares of restricted common stock
that were awarded to each of Messrs. Wynne, Wingfield and Heap is as
follows: Mr. Wynne: 4,065; Mr. Heap: 3,523; and Mr. Wingfield:
3,794. One-third of the shares of restricted common stock that
were earned by Messrs. Wynne, Heap and Wingfield vest on the date of
grant, one-third on the first anniversary of the grant date and one-third
on the second anniversary of the grant date.
|
(15)
|
Represents
a stock option, which vests monthly in 48 equal installments, over a four
year period, with the first installment having vested on October 31,
2006.
|
(16)
|
On
August 25, 2005, our Board approved the accelerated vesting of all
unvested employee stock options issued under our 2004 Plan having an
exercise price in excess of $10 per share and, therefore, these shares
were fully vested at such time. Based on the closing price of $6.35 on
August 24, 2005, none of these stock options had intrinsic economic
value at the time. In March 2008, our Board approved adjustments to the
number of shares underlying, and the exercise price of, stock options
outstanding on March 7, 2008, in connection with the special one-time
cash payment of $0.40 per share paid by the Company on March 28,
2008, only with respect to those stock options having an exercise price at
or below the closing price of $4.82 on March 7, 2008. As a result,
these stock option grants were not
adjusted.
|
(17)
|
Represents
a stock option, which vests as follows: 8,330 shares vested on
August 18, 2006 and the remaining shares vest monthly in equal
installments over a three-year, seven-month period.
|
(18)
|
Represents
a stock option. Twenty-five percent of the shares vest on December 22,
2009 and the remaining shares vest monthly, in equal installments, over
the following three years.
|
(19)
|
Represents
a stock option. Twenty-five percent of the shares vested on November 16,
2008 and the remaining shares vest monthly, in equal installments, over
the following three years.
|
Option
Exercises and Stock Vested
The
following table sets forth information with respect to our named executive
officers concerning the exercise of stock options and the vesting of stock
awards during the year ended December 31, 2008.
|
|
Option Awards
|
|
|
Stock Awards
|
|
Named Executive
Officer (1)
|
|
Number of
Shares
Acquired on
Exercise
(#)
|
|
|
Value Realized
on Exercise ($)
|
|
|
Number of Shares
Acquired on Vesting (#)
|
|
|
Value Realized
on Vesting ($)
(2)
|
|
Shawn
F. O’Donnell
|
|
|
—
|
|
|
|
—
|
|
|
|
2,334
|
|
|
$
|
8,706
|
|
John
B. Wynne, Jr.
|
|
|
—
|
|
|
|
—
|
|
|
|
8,334
|
(3)
|
|
$
|
41,670
|
|
W.
Terrell Wingfield, Jr.
|
|
|
—
|
|
|
|
—
|
|
|
|
8,334
|
(4)
|
|
$
|
41,670
|
|
Steven
Heap
|
|
|
—
|
|
|
|
—
|
|
|
|
7,667
|
(5)
|
|
$
|
38,335
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
9,120
|
(6)
|
|
$
|
34,382
|
|
Peter
P. Sach
|
|
|
—
|
|
|
|
—
|
|
|
|
7,667
|
(7)
|
|
$
|
38,335
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,209
|
(8)
|
|
$
|
30,948
|
|
(1)
|
None
of Messrs. Freeman, Koeppen or Powdermaker exercised any stock options or
held stock awards that vested in 2008.
|
(2)
|
Amounts
shown reflect the market value of the stock on the day the stock
vested.
|
(3)
|
Includes
2,952 shares of restricted stock withheld by us at the election of
Mr. Wynne to pay the minimum withholding tax due upon vesting of
restricted stock in 2008.
|
(4)
|
Includes
2,867 shares of restricted stock withheld by us at the election of
Mr. Wingfield to pay the minimum withholding tax due upon vesting of
restricted stock in 2008.
|
(5)
|
Includes
2,469 shares of restricted stock withheld by us at the election of
Mr. Heap to pay the minimum withholding tax due upon vesting of
restricted stock in 2008.
|
(6)
|
Includes
2,938 shares of restricted stock withheld by us at the election of
Mr. Heap to pay the minimum withholding tax due upon vesting of
restricted stock in 2008.
|
(7)
|
Includes
2,716 shares of restricted stock withheld by us at the election of
Mr. Sach to pay the minimum withholding tax due upon vesting of
restricted stock in 2008.
|
(8)
|
Includes
2,909 shares of restricted stock withheld by us at the election of
Mr. Sach to pay the minimum withholding tax due upon vesting of
restricted stock in 2008.
|
Potential
Post-Employment Payments
Our named
executive officers are entitled to certain compensation in the event of
termination of their employment. This section is intended to discuss these
post-employment payments, assuming separation from employment on
December 31, 2008 on the terms currently in effect between our named
executive officers and us.
We have
employment agreements with Mr. O’Donnell (the “O’Donnell Agreement”) and
Mr. Powdermaker (the “Powdermaker Agreement”) and employment letters with
each of Messrs. Wynne, Heap and Wingfield (as amended, each an “Employment
Letter” and collectively, with the O’Donnell Agreement and the Powdermaker
Agreement, the “Employment Letters”). Pursuant to the Employment Letters, each
officer will generally devote his full business time, interest and efforts to
the performance of his obligations with the Company.
In April
2008, we amended the Employment Letters with each of Messrs. Wynne, Heap and
Wingfield. Each of the applicable Employment Letters was amended to
provide that the definition of “Good Reason” be revised in accordance with
Section 409A of the Code to include only the following events: (1) a
substantial diminution or other substantive adverse change, not consented to by
the executive, in the nature or scope of his responsibilities, authorities,
powers, functions or duties; (2) an involuntary material reduction in the
executive’s base salary; (3) a breach by the Company of any of its other
material obligations under the applicable Employment Letter; or (4) a
material change in the geographic location at which the executive must perform
his services, provided that, in each instance, the executive provides the
Company with 90-day prior written notice of such event and the Company
subsequently has a 30-day period to cure any such event. In addition,
each of the applicable Employment Letters with Messrs. Wynne, Heap and Wingfield
was revised to require a six-month delay to the payment of severance to the
executive to the extent required by Section 409A of the Code to avoid the
imposition of the 20 percent excise tax. If a six-month delay is required, the
initial payment to the executive shall include a catch-up amount covering
amounts that would otherwise have been paid during the six-month period.
Further, any such deferred payment will earn simple interest calculated at the
short-term applicable federal rate in effect on the date of the executive’s
separation from service.
These amendments were
intended to make the applicable Employment Letters compliant with the provisions
of Section 409A of the Code and did not change the economic terms of severance
under the applicable Employment Letters other than to require a six-month delay
to the payment of severance to the executive to the extent required by
Section 409A of the Code.
The
Employment Letters with Messrs. O’Donnell and Powdermaker were entered into in
September 2008 and January 2009, respectively, and include the provisions
described above. The definition of “Good Reason” under the O’Donnell
Agreement also includes any involuntary material reduction in his base salary or
target bonus (except for across-the-board reductions similarly affecting all or
substantially of our senior management) and any requirement that he report to
someone other than our Board.
The
Employment Letters with each of Messrs. O’Donnell, Wynne, Powdermaker, Heap and
Wingfield provide that their employment is “at will” and the employment of each
executive officer may be terminated by either party at any time for any reason
or no reason.
Severance
Benefits
If (i) we
terminate Mr. O’Donnell’s or Mr. Powdermaker’s employment without cause (as
defined in the applicable Employment Letter) either (a) before a change of
control (as defined in the O’Donnell Agreement or Powdermaker Agreement, as
applicable) of the Company or (b) within 12 months of a change of control of the
Company, or (ii) Mr. O’Donnell or Mr. Powdermaker terminates his employment for
good reason (as defined in the O’Donnell Agreement or Powdermaker Agreement, as
applicable) within 12 months of a change of control of the Company, Mr.
O’Donnell and Mr. Powdermaker will each be entitled to receive:
•
|
a
severance payment equal to the officer’s one year base salary at the rate
in effect on the date of termination;
|
•
|
reimbursement
for certain COBRA payments for a period of one year following the date of
termination;
|
•
|
an
amount equal to potential employer contributions to our retirement plan
for one year; and
|
•
|
the
officer’s accrued and unpaid salary and vacation time as of the date of
termination.
|
The total
amounts paid Mr. O’Donnell or Mr. Powdermaker, as applicable, under the second
and third bullet points cannot be more than $25,000. In addition, in
the event we terminate Mr. O’Donnell’s or Mr. Powdermaker’s employment without
cause within 12 months of a change of control of the Company or Mr. O’Donnell or
Mr. Powdermaker terminates his employment for good reason (as defined in the
O’Donnell Agreement or Powdermaker Agreement, as applicable) within 12 months of
a change of control of the Company, the officer will be entitled to receive a
lump sum payment equal to his bonus payment in the preceding fiscal
year.
The
Employment Letters with each of Messrs. Wynne and Wingfield provide that if we
terminate the officer’s employment without cause (as defined in the applicable
Employment Letters) or if the officer terminates his employment for good reason
(as defined in the applicable Employment Letters), we are required to make the
following payments to the officer:
•
|
a
severance payment equal to the officer’s one year base salary at the rate
in effect on the date of termination;
|
•
|
reimbursement
for certain COBRA payments for a period of one year following the date of
termination;
|
•
|
an
amount equal to potential employer contributions to our retirement plan
for one year; and
|
•
|
the
officer’s accrued and unpaid salary and vacation time as of the date of
termination.
|
The total
amounts paid to each officer under the second and third bullet points cannot be
more than $25,000.
Mr. Wingfield’s
Employment Letter also provides that if we terminate him without cause during
the first three years of his employment, we will pay the broker’s commission to
sell his home in New Jersey and his documented moving expenses for him to
relocate to Virginia or other destination of similar distance, up to $150,000.
As of the date of filing this Amendment No. 1, Mr. Wingfield has not
relocated to New Jersey and, as such, this provision would not be triggered if
we terminated his employment without cause on December 31,
2008.
The
Employment Letter with Mr. Heap provides that if we terminate his employment
without cause (as defined in his Employment Letter) or if Mr. Heap terminates
his employment for good reason (as defined in his Employment Letter) within six
months following a change of control (as defined in his Employment Letter), we
are required to make the following payments to him:
•
|
a
severance payment equal to his one year base salary at the rate in effect
on the date of termination;
|
•
|
reimbursement
for certain COBRA payments for a period of one year following the date of
termination; and
|
•
|
his
accrued and unpaid salary and vacation time as of the date of
termination.
|
Treatment
of Stock Options, Restricted Stock Units, Stock Appreciation Rights and
Restricted Stock Awards
Generally,
the stock options, restricted stock units, stock appreciation rights and
restricted stock awards held by Messrs. O’Donnell, Wynne, Wingfield, Heap and
Powdermaker contain acceleration provisions. These acceleration
provisions provide for acceleration of vesting upon a change in control of the
Company. Generally, in connection with a change in control (as
defined in the respective agreements), if the grant is assumed or replaced in
accordance with its terms,
•
|
50%
of the grant will vest upon the change in control, with the remaining
unvested portion vesting monthly and equally over the remaining portion of
the vesting term, provided that the officer is employed by the Company or
a subsidiary or is associated with the Company or subsidiary as a director
or consultant on the applicable vesting dates; and
|
•
|
if
at any time during the twelve-month period following the change in
control, the Company terminates the officer for any reason other than for
cause (as defined in the respective agreements), then the grant will fully
vest.
|
If the
grant is not assumed or replaced in accordance with the terms of the applicable
equity award agreement, 100% of the grant will vest upon the change in
control.
Mr. O’Donnell
was granted a stock option under our 2004 Plan to purchase 375,000 shares of our
common stock. If Mr. O’Donnell is terminated by us without cause (as
defined in the O’Donnell Agreement) before September 2, 2009, the stock option
will vest as to that percentage of the original number of shares underlying the
stock option equal to the product of (i) 2.0833 and (ii) the number of full
calendar months served by Mr. O’Donnell pursuant to the O’Donnell Agreement.
In the event of a change of control of the Company (as defined in our
September 2008 non-qualified stock option agreement with Mr. O’Donnell) where
the stock option is not assumed or replaced, any unvested shares underlying Mr.
O’Donnell’s stock option to purchase 375,000 shares will accelerate in
full. In addition, we may pay in cash the difference, if any, of the
consideration per share received in connection with a change of control over the
exercise price per share of the stock option to purchase 375,000
shares.
In
addition to the provisions in the Employment Letters and stock option,
restricted stock unit, stock appreciation rights and restricted stock agreements
discussed above, certain of our named executive officers’ other option
agreements, restricted stock unit agreements and restricted stock agreements, as
the case may be, contain additional acceleration provisions triggered by a
change in control, as defined in those agreements, and quantified in the table
below.
Treatment
of the 2006 Performance Share Awards
As
discussed in more detail in the “Compensation Discussion and Analysis” section
of this Amendment No. 1, we granted performance share awards in 2006 to our
executive officers, including Messrs. Wynne, Wingfield and Heap (the “2006
Performance Share Awards”). If an officer were terminated by us or on
a voluntary basis for any reason prior to the attainment of the corporate
performance metrics (as certified by our Compensation Committee), the officer
would not receive any common stock under the 2006 Performance Share
Awards.
In the
event of a change in control prior to December 31, 2008, the officer would
receive the number of shares equal to his target shares based on the attainment
of our corporate performance metrics reduced by the number of shares of our
common stock previously issued to the officer under the 2006 Performance Share
Awards.
Our
Compensation Committee determined that, as of December 31, 2007 and December 31,
2008, we had not achieved the corporate performance metrics under the 2006
Performance Share Awards and, therefore, no performance shares were awarded for
fiscal years 2007 and 2008. The 2006 Performance Share Awards have
expired with no shares granted to our executives.
Treatment
of 2008 Performance Share Awards
As
discussed in more detail in the “Compensation Discussion and Analysis” section
of this Amendment No. 1, we granted performance-based stock awards in 2008 to
Messrs. Wynne, Wingfield and Heap (the “2008 Performance Share
Awards”). If the executive officer ceases to be an employee or
director of, or consultant or advisor to, the Company or a subsidiary for any
reason (including death) prior to vesting of the restricted stock, any shares
not vested will immediately and automatically be forfeited and returned to the
Company.
In the
event of a change in control of the Company prior to December 31, 2008, Messrs.
Wynne and Wingfield would forfeit any performance shares under the 2008
Performance Share Awards, while all of Mr. Heap’s performance shares under the
2008 Performance Share Awards would fully vest.
Under the
2008 Performance Share Awards for Messrs. Wynne, Heap and Wingfield, if there is
a change in control of the Company (as defined in the applicable restricted
stock award agreement) after December 31, 2008, and the shares of restricted
common stock are assumed or otherwise continued in effect or replaced with a
cash incentive program:
•
|
upon
the closing of the change in control of the Company, the restrictions on
the restricted common stock will lapse as to 50% of the unvested
restricted common stock, with the remaining unvested portion vesting
equally over the remaining portion of the vesting term, provided that the
executive officer is employed by the Company or a subsidiary or is
associated with the Company or a subsidiary as a director or consultant on
the applicable vesting date; and
|
|
|
•
|
if
within 12 months of such change in control of the Company, the executive
officer’s employment with the Company is terminated (other than a
termination for cause, as defined in the applicable agreement), then all
restrictions shall
lapse.
|
If the
shares of restricted common stock are not assumed or otherwise continued in
effect or replaced with a cash incentive program, then all restrictions lapse
immediately prior to the consummation of the change in control.
Additional
Provisions
Generally,
the Employment Letters also contain provisions that generally prevent our named
executive officers from competing with us, attempting to hire our employees, or
soliciting any of our customers during the respective terms of their employment
and for the one year following termination.
POTENTIAL
POST-EMPLOYMENT PAYMENTS TABLE
The following table outlines the
post-employment payments that would be made to Messrs. O’Donnell, Wynne,
Wingfield, Heap and Powdermaker, assuming separation from the Company on
December 31, 2008:
Payments and Benefits
|
|
Involuntary
Termination
without Cause
before a
change in control
|
|
|
By Executive
for Good
Reason
before a
change in
control
|
|
|
Involuntary
Termination
without Cause
after a change
in control
|
|
|
By Executive
for Good
Reason
after a
change in
control
|
|
Shawn
F. O’Donnell
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
$
|
340,000
|
(1)
|
|
$
|
0
|
|
|
$
|
340,000
|
(2)
|
|
$
|
340,000
|
(2)
|
Accelerated
Vesting of Equity Awards
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
5,250
|
(3)
|
|
$
|
5,250
|
(3)
|
Performance
Shares
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Other
Benefits
|
|
$
|
25,000
|
(4)
|
|
$
|
0
|
|
|
$
|
25,000
|
(4)
|
|
$
|
25,000
|
(4)
|
John
B. Wynne, Jr.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
$
|
275,000
|
(5)
|
|
$
|
275,000
|
(5)
|
|
$
|
275,000
|
(5)
|
|
$
|
275,000
|
(5)
|
Accelerated
Vesting of Equity Awards
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
25,000
|
(6)
|
|
$
|
25,000
|
(6)
|
Performance
Shares
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
47,500
|
(7)
|
|
$
|
47,500
|
(7)
|
Other
Benefits
|
|
$
|
25,000
|
(4)
|
|
$
|
25,000
|
(4)
|
|
$
|
25,000
|
(4)
|
|
$
|
25,000
|
(4)
|
W.
Terrell Wingfield, Jr.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
$
|
250,000
|
(5)
|
|
$
|
250,000
|
(5)
|
|
$
|
250,000
|
(5)
|
|
$
|
250,000
|
(5)
|
Accelerated
Vesting of Equity Awards
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
25,000
|
(8)
|
|
$
|
25,000
|
(8)
|
Performance
Shares
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
47,500
|
(7)
|
|
$
|
47,500
|
(7)
|
Other
Benefits
|
|
$
|
25,000
|
(4)
|
|
$
|
25,000
|
(4)
|
|
$
|
25,000
|
(4)
|
|
$
|
25,000
|
(4)
|
Steven
Heap
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
$
|
255,000
|
(5)
|
|
$
|
0
|
|
|
$
|
255,000
|
(5)
|
|
$
|
255,000
|
(5)
|
Accelerated
Vesting of Equity Awards
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
11,500
|
(9)
|
|
$
|
11,500
|
(9)
|
Performance
Shares
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
67,500
|
(7)
|
|
$
|
67,500
|
(7)
|
Other
Benefits
|
|
$
|
15,001
|
(10)
|
|
$
|
0
|
|
|
$
|
15,001
|
(10)
|
|
$
|
15,001
|
(10)
|
Payments and Benefits
|
|
Involuntary
Termination
without Cause
before a
change in control
|
|
|
By Executive
for Good
Reason
before a
change in
control
|
|
|
Involuntary
Termination
without Cause
after a change
in control
|
|
|
By Executive
for Good
Reason
after a
change in
control
|
|
Dan
Powdermaker
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
$
|
250,000
|
(5)
|
|
$
|
0
|
|
|
$
|
250,000
|
(11)
|
|
$
|
250,000
|
(11)
|
Accelerated
Vesting of Equity Awards
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Performance
Shares
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Other
Benefits
|
|
$
|
25,000
|
(4)
|
|
$
|
0
|
|
|
$
|
25,000
|
(4)
|
|
$
|
25,000
|
(4)
|
(1)
|
Mr.
O’Donnell is entitled to an amount equal to the sum of one times his base
salary in effect on the date of termination.
|
(2)
|
Following
a change of control, upon termination of Mr. O’Donnell’s employment by the
Company without cause or by Mr. O’Donnell for good reason (as defined in
the O’Donnell Agreement) on December 31, 2008, Mr. O’Donnell is entitled
to an amount equal to the sum of (a) one times his base salary in effect
on the date of termination and (b) an amount equal to the bonus
compensation paid to him in the immediately preceding fiscal
year. Mr. O’Donnell did not receive a bonus in 2007, which is
the immediately preceding fiscal year when December 31, 2008 is the date
of termination, because Mr. O’Donnell was not employed by the Company in
2007.
|
(3)
|
Upon
Mr. O’Donnell’s termination without cause in connection with a change in
control, or upon a change in control on December 31, 2008, assuming that
the successor company does not assume or replace Mr. O’Donnell’s equity
grants, certain of his unvested stock options and restricted stock will
fully vest. As a result, Mr. O’Donnell would be entitled to an incremental
value of $0 and $5,250 attributable to gains realized for the acceleration
of the unvested stock options and restricted stock, respectively, as of
December 31, 2008, using the closing stock price of $1.50 on December 31,
2008, the last trading day of our 2008 fiscal year.
|
(4)
|
Represents
amounts for reimbursement for certain COBRA payments for a period of one
year following the date of termination and amounts for potential employer
contributions to our retirement plan for one year following the date of
termination. Pursuant to the terms of the Employment Letters for each of
Messrs. O’Donnell, Wynne, Wingfield and Powdermaker, the total of these
two benefits cannot exceed $25,000.
|
(5)
|
Executive
is entitled to one times his base salary in effect on the date of
termination.
|
(6)
|
Upon
Mr. Wynne’s termination without cause in connection with a change in
control, or upon a change in control on December 31, 2008, assuming that
the successor company does not assume or replace Mr. Wynne’s equity
grants, his unvested stock options, stock appreciation rights and
restricted stock units will fully vest. As a result, Mr. Wynne would be
entitled to an incremental value of $0, $0 and $25,000, attributable to
gains realized for the acceleration of the unvested stock options, stock
appreciation rights and restricted stock unit grants, respectively, as of
December 31, 2008, using the closing stock price of $1.50 on December 31,
2008, the last trading day of our 2008 fiscal year.
|
(7)
|
In
the event of a change in control of the Company prior to December 31,
2008, Messrs. Wynne, Wingfield and Heap would receive a number of shares
of our common stock under the 2006 Performance Share Awards equal to the
number of target shares that would be issued upon attainment of target
corporate performance metrics of the Company, reduced by the number of
shares of our common stock previously issued to the executive officer
under the 2006 Performance Share Awards. In the event of a
change in control of the Company prior to December 31, 2008, Messrs. Wynne
and Wingfield would forfeit any performance shares under the 2008
Performance Share Awards, while the maximum number of shares that Mr. Heap
could earn based upon attainment of corporate performance metrics under
the 2008 Performance Share Awards would fully
vest. Accordingly, upon a change in control on December 31,
2008, each of Mr. Wynne and Mr. Wingfield would receive 35,000 performance
shares under the 2006 Performance Share Awards and Mr. Heap would receive
a total of 45,000 performance shares under the 2006 Performance Share
Awards and 2008 Performance Share Awards. At the closing price of $1.50 on
December 31, 2008, the last trading day of our 2008 fiscal year, the value
of the shares that would be due to Mr. Wynne and Mr. Wingfield under the
2006 Performance Share Awards would be $47,500 and the value of the shares
that would be due to Mr. Heap under the 2006 and 2008 Performance Share
Awards would be $67,500. As more fully described in the
“Compensation Discussion and Analysis” section of this Amendment No. 1,
our Compensation Committee determined in February 2009 that no performance
shares were earned under the 2006 Performance Share Awards because the
corporate performance metrics had not been attained. As more
fully described in the “Compensation Discussion and Analysis” section of
this Amendment No. 1, our Compensation Committee determined in February
2009 that the following performance shares were earned under the 2008
Performance Share Awards based on the attainment of the corporate
performance metrics: Mr. Wynne: 4,065; Mr. Heap: 3,523; and Mr.
Wingfield: 3,794. One-third of the shares of restricted common
stock that were earned by Messrs. Wynne, Heap and Wingfield vest on the
date of grant, one-third on the first anniversary of the grant date and
one-third on the second anniversary of the grant
date.
|
|
(8)
|
Upon
Mr. Wingfield’s termination without cause in connection with a change in
control, or upon a change in control on December 31, 2008, assuming that
the successor company does not assume or replace Mr. Wingfield’s equity
grants, his unvested stock options, stock appreciation rights and
restricted stock units will fully vest. As a result, Mr. Wingfield would
be entitled to an incremental value of $0, $0 and $25,000, attributable to
gains realized for the acceleration of the unvested stock options, stock
appreciation rights and restricted stock units, respectively, as of
December 31, 2008, using the closing stock price of $1.50 on December 31,
2008, the last trading day of our 2008 fiscal
year.
|
|
(9)
|
Upon
Mr. Heap’s termination without cause in connection with a change in
control, or upon a change in control on December 31, 2008, assuming that
the successor company does not assume or replace Mr. Heap’s equity grants,
his unvested stock options, stock appreciation rights and restricted stock
units will fully vest. As a result, Mr. Heap would be entitled to an
incremental value of $0, $0 and $11,250 attributable to gains realized for
the acceleration of the unvested stock options, stock appreciation rights
and restricted stock units, respectively, as of December 31, 2008, using
the closing stock price of $1.50 on December 31, 2008, the last trading
day of our 2008 fiscal year.
|
|
(10)
|
Represents
amounts for reimbursement for certain COBRA payments for a period of one
year following the date of
termination.
|
|
(11)
|
Following
a change of control, upon termination of Mr. Powdermaker’s employment by
the Company without cause or by Mr. Powdermaker for good reason (as
defined in the Powdermaker Agreement) on December 31, 2008, Mr.
Powdermaker is entitled to an amount equal to the sum of (a) one times his
base salary in effect on the date of termination and (b) an amount equal
to the bonus compensation paid to him in the immediately preceding fiscal
year. Mr. Powdermaker did not receive a bonus in 2007, which is
the immediately preceding fiscal year when December 31, 2008 is the date
of termination, because Mr. Powdermaker was not employed by the Company in
2007.
|
The
amounts shown in the above table do not include payments and benefits to the
extent they have been earned prior to the termination of employment or are
provided on a non-discriminatory basis generally to salaried employees upon
termination of employment. This includes accrued salary and vacation
pay.
William
M. Freeman
On
September 3, 2008, Mr. Freeman, our former Chief Executive Officer and
President, was terminated without cause effective September 2,
2008.
In
connection with Mr. Freeman’s departure, on September 3, 2008, we entered into a
Separation and Transition Services Agreement with Mr. Freeman (the “Separation
Agreement”), which became effective on September 10, 2008. Under the
Separation Agreement, Mr. Freeman agreed to provide, from September 3, 2008
until October 1, 2008 (the “Initial Transition Period”), full-time transition
assistance, including but not limited to, working on various matters related to
(a) evaluating potential merger, stock purchase, asset purchase,
recapitalization, reorganization, consolidation, amalgamation or other
transaction opportunities for the Company and (b) significant members of our
exchange. From October 2, 2008 through the 2009 Annual Meeting of
Stockholders (the “Annual Meeting”), Mr. Freeman agreed to provide services
requested from time to time by our Chief Executive Officer. Pursuant
to the Separation Agreement, Mr. Freeman agreed to serve as Chairman of our
Board until the Annual Meeting.
The
Separation Agreement provides that Mr. Freeman will receive separation pay in
the aggregate of $478,125, which is comprised of:
|
|
·
|
Aggregate
payments of $31,250, which equals the salary which would otherwise have
been payable under our employment agreement with Mr. Freeman (the “Freeman
Employment Agreement”), during the Initial Transition Period, payable in
periodic installments during the Initial Transition Period in accordance
with our ordinary payroll periods;
|
|
|
·
|
One
lump sum payment equal to the salary that would have otherwise been
payable under the Freeman Employment Agreement between October 2, 2008 and
November 16, 2008 in the amount of $46,875 within ten days of
September 3, 2008; and
|
|
|
·
|
One
lump sum payment of $400,000 payable on the earlier of (a) six months and
one day following October 1, 2008 and (b) Mr. Freeman’s death consisting
of:
|
|
|
·
|
Twelve
months’ base salary, equal to $375,000;
and
|
|
|
·
|
Reimbursement
for payments under COBRA for a period of one year plus an amount equal to
potential employer contributions to our retirement plan for one year up to
$25,000.
|
To
facilitate performance of the transition assistance, we agreed to reimburse
Mr. Freeman for all reasonable expenses incurred by him in performing
services through the Annual Meeting. In addition, we agreed to
reimburse Mr. Freeman for the cost of temporary housing in the New Jersey area
up to $1,500 per month. The amounts paid to Mr. Freeman in 2008 for
reimbursement of these expenses are included in the Summary Compensation Table
beginning on page 23 of this Amendment No. 1.
Peter
P. Sach
On August
22, 2008, we terminated the employment of Mr. Sach, our Chief Operating Officer,
without cause, effective October 22, 2008 (the “Sach Termination
Date”). Pursuant to our Offer Letter, as amended, with Mr. Sach (the
“Offer Letter”), in connection with his termination, we agreed to pay Mr. Sach
an aggregate of approximately $354,295, consisting of:
|
·
|
Mr.
Sach’s current base salary through the Sach Termination Date, or
approximately $45,833;
|
|
·
|
payment
for accrued vacation through the Sach Termination Date, or approximately
$8,462;
|
|
·
|
severance
pay equal to 12 months’ base salary, or $275,000;
and
|
|
·
|
reimbursement
for certain COBRA payments for a period of 12 months following the Sach
Termination Date and an amount equal to employer contributions to our
retirement plan for one year following the Sach Termination Date, assuming
he contributed the maximum amount to such plan, which amount to a payment
of $25,000 in accordance with the limits placed on these payments by the
terms of the Offer Letter.
|
Curt
R. Koeppen
On
September 26, 2008, we terminated the employment of Mr. Koeppen, our Chief
Marketing Officer, without cause, effective September 30, 2008 (the “Koeppen
Termination Date”). Pursuant to our employment agreement with Mr.
Koeppen (the “Koeppen Employment Agreement”), in connection with his
termination, we agreed to pay Mr. Koeppen an aggregate of approximately
$331,891, consisting of:
|
·
|
a
lump sum equal to the salary which would have otherwise been paid to Mr.
Koeppen through December 17, 2008, or approximately
$52,083;
|
|
·
|
payment
for accrued vacation through the Koeppen Termination Date, or
approximately $4,808;
|
|
·
|
severance
pay equal to 12 months’ base salary, or $250,000;
and
|
|
·
|
reimbursement
for certain COBRA payments for a period of 12 months following the Koeppen
Termination Date and an amount equal to employer contributions to our
retirement plan for one year following the Koeppen Termination Date,
assuming he contributed the maximum amount to such plan, which amount to a
payment of $25,000 in accordance with the limits placed on these payments
by the terms of the Koeppen Employment
Agreement.
|
DIRECTOR
COMPENSATION
We use a
combination of cash and stock-based incentive compensation to attract and retain
qualified candidates to serve on our Board. In setting director compensation, we
consider the role of the directors, amount of time that directors expend in
fulfilling their duties and the expertise required of Board
members.
For the
year ended December 31, 2008, each non-employee member of our Board received
fees as follows: $20,000 annual retainer for each director; $5,000 annual
retainer for each committee chair, however, the chairman of our Audit Committee
will receive a $10,000 annual retainer fee and each member of our Audit
Committee, other than the chairman, will receive an additional $5,000 annual
retainer fee; $2,000 per meeting of our Board attended in person; $350 per each
meeting of our Board attended by teleconference; $1,000 for each committee
meeting attended in person and not held on the day of a Board meeting; and $350
for each committee meeting that is attended by teleconference and not held on
the day of a Board meeting. Additionally, the Chairman of the Board received an
additional $20,000 annual retainer (if the Chairman of the Board is a
non-employee director).
In
November 2004, our Board approved our 2004 Plan pursuant to which each
non-employee director will automatically receive an option to purchase 25,000
shares of our common stock upon his or her appointment to our Board. In April
2005, our Board modified the initial grant to new non-employee directors under
our 2004 Plan. Each newly elected non-employee director has the choice of
receiving: (1) no shares of restricted stock and an option to purchase
25,000 shares; (2) 1,000 shares of restricted stock and an option to
purchase 22,000 shares; (3) 2,000 shares of restricted stock and an option
to purchase 19,000 shares; or (4) 3,000 shares of restricted stock and an
option to purchase 16,000 shares. The stock options and restricted stock vest
during the period of, and subject to, the non-employee director’s continued
service as a director.
Prior to
February 2006, each non-employee director would automatically receive an annual
grant of an option to purchase 10,000 shares of our common stock at each year’s
annual meeting after which he or she continues to serve as a director. In
February 2006, our Board modified the annual stock grant granted to each
non-employee director for continued service on our Board. As modified, each
non-employee director receives, at each year’s annual meeting of stockholders:
(1) an option to purchase 7,000 shares of our common stock and
(2) 7,000 shares of our restricted common stock. The stock options and the
restricted stock granted to non-employee directors vest as our Board determines,
subject to the non-employee director’s continued service as a
director.
DIRECTOR
COMPENSATION TABLE(1)
The table
below summarizes the compensation paid to non-employee directors for the fiscal
year ended December 31, 2008. Directors who are employees receive no
additional compensation for Board service.
Name
|
|
Fees Earned or
Paid in Cash
($) (3)
|
|
|
Stock Awards
($) (4)
|
|
|
Option
Awards
($) (5)
|
|
|
Total
($)
|
|
Shawn
F. O’Donnell (2)
|
|
$
|
28,024
|
|
|
$
|
15,983
|
|
|
$
|
25,342
|
|
|
$
|
69,349
|
|
Jose
A. Cecin, Jr. (6)
|
|
$
|
7,904
|
|
|
$
|
377
|
|
|
$
|
933
|
|
|
$
|
9,214
|
|
William
M. Freeman (2)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Name
|
|
Fees Earned or
Paid in Cash
($) (3)
|
|
|
Stock Awards
($) (4)
|
|
|
Option
Awards
($) (5)
|
|
|
Total
($)
|
|
Stanley
Kreitman
|
|
$
|
40,455
|
|
|
$
|
19,920
|
|
|
$
|
21,919
|
|
|
$
|
82,294
|
|
John
B. Penney, Jr.
|
|
$
|
44,641
|
|
|
$
|
17,822
|
|
|
$
|
30,351
|
|
|
$
|
92,814
|
|
Jill
Thoerle
|
|
$
|
41,000
|
|
|
$
|
21,887
|
|
|
$
|
20,208
|
|
|
$
|
83,095
|
|
Michael
J. Ruane (7)
|
|
$
|
50,800
|
|
|
$
|
27,695
|
|
|
$
|
11,081
|
|
|
$
|
89,576
|
|
Roger
H. Moore (7)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Michael
J. Donahue (7)
|
|
$
|
22,854
|
|
|
$
|
14,897
|
|
|
$
|
21,178
|
|
|
$
|
61,929
|
|
Robert
C. Atkinson (7)
|
|
$
|
22,835
|
|
|
$
|
17,545
|
|
|
$
|
5,560
|
|
|
$
|
45,940
|
|
Alex
Mashinsky (7)
|
|
$
|
37,100
|
|
|
$
|
18,996
|
|
|
$
|
167,680
|
(8)
|
|
$
|
223,776
|
(8)
|
|
(1)
|
We
do not maintain any non-equity incentive plans, pension plans or
non-qualified deferred compensation plans. None of our directors received
any other compensation other than what is listed above or in the Summary
Compensation Table. David C. Reymann was appointed to our Board
in January 2009 and Robert M. Pons was appointed to our Board in April
2009 and, therefore, Messrs. Reymann and Pons are not included in this
table.
|
|
(2)
|
Mr.
O’Donnell was appointed our Chief Executive Officer and President in
September 2008. Until his appointment as our Chief Executive Officer and
President, Mr. O’Donnell was paid for his services as a director in
accordance with our director compensation program. Mr. O’Donnell only
received compensation as a director prior to his appointment as Chief
Executive Officer and President. This table includes all director fees and
equity awards received by Mr. O’Donnell during 2008 for his service as a
director prior to his appointment as our Chief Executive Officer and
President. For more information on the compensation, including the value
of stock options, that Mr. O’Donnell received for his service as our Chief
Executive Officer and President during 2008, please see the section
entitled “Executive Compensation—Summary Compensation” beginning on page
23 of this Amendment No. 1. Mr. Freeman served as our Chief Executive
Officer and President from November 2007 until September 2008. Mr. Freeman
did not receive any compensation for his services as a director in 2008.
Mr. Freeman’s compensation for serving as our Chief Executive Officer and
President is set forth in the Summary Compensation Table beginning on page
23 of this Amendment No.
1.
|
|
(3)
|
Total
reflects fees and retainers earned.
|
|
(4)
|
Amount
listed reflects the dollar amount recognized for financial statement
reporting purposes in 2008 in accordance with SFAS No. 123R of
restricted stock awards and thus includes amounts from restricted stock
awards granted in and prior to 2008. Information related to the financial
reporting of restricted stock is presented in Footnote 10 to our
Consolidated Financial Statements presented in our Original
Filing.
|
|
(5)
|
Amount
listed reflects the dollar amount recognized for financial statement
reporting purposes in 2008 in accordance with SFAS No. 123R of stock
option awards and thus includes amounts from stock option awards granted
in and prior to 2008. Information related to the financial
reporting of stock options are presented in Footnote 10 to our
Consolidated Financial Statements presented in our Original
Filing.
|
|
(6)
|
Mr.
Cecin was appointed to our Board in November
2008.
|
|
(7)
|
Mr. Ruane
resigned from our Board in April 2009. Mr. Moore resigned
from our Board in January 2008. Mr. Donahue resigned from our
Board in August 2008. Mr. Atkinson retired from our Board in
June 2008. Mr. Mashinsky resigned from our Board in March
2009.
|
|
(8)
|
Includes
$142,623 for the value of stock options granted to Mr. Mashinsky in
exchange for consulting services pursuant to our Settlement and Standstill
Agreement, dated as of July 13, 2007 with Alex Mashinsky and
Governing Dynamics Investments, LLC and pursuant to an extension in
February 2008 of the term of the consulting
services.
|
The
following table sets forth information with respect to our non-employee
directors concerning outstanding stock option awards and unvested restricted
stock awards as of December 31, 2008. The information in this table
reflects adjustments made to certain grants of stock options in connection with
the special one-time cash payment of $0.40 per share paid by the Company on
March 28, 2008.
Name (1)
|
|
Grant Date
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
(Exercisable)
|
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
(Unexercisable)
|
|
|
Option
Exercise
Price ($)
|
|
|
Number of
Shares
or Units of
Stock
That
Have Not
Vested (#)
|
|
|
Grant Date
Fair
Value of
Stock
and
Option
Award
($) (2)
|
|
Jose
A. Cecin, Jr.
|
|
11/4/2008
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,000
|
|
|
$
|
2.89
|
|
|
|
11/4/2008
|
|
|
—
|
|
|
|
16,000
|
|
|
$
|
2.89
|
|
|
|
—
|
|
|
$
|
1.34
|
|
Stanley
Kreitman
|
|
6/19/2008
|
|
|
—
|
|
|
|
7,000
|
|
|
$
|
3.69
|
|
|
|
—
|
|
|
$
|
1.64
|
|
|
|
6/19/2008
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,000
|
|
|
$
|
3.74
|
|
|
|
8/21/2007
|
|
|
7,633
|
|
|
|
—
|
|
|
|
4.73
|
|
|
|
—
|
|
|
$
|
2.16
|
|
|
|
8/21/2007
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,666
|
|
|
$
|
5.15
|
|
|
|
7/13/2007
|
|
|
8,362
|
|
|
|
12,087
|
|
|
$
|
5.41
|
|
|
|
—
|
|
|
$
|
2.75
|
|
|
|
7/13/2007
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,333
|
|
|
$
|
5.89
|
|
John
B. Penney
|
|
11/16/2006
|
|
|
15,992
|
|
|
|
7,998
|
|
|
$
|
5.07
|
|
|
|
—
|
|
|
$
|
2.41
|
|
|
|
11/16/2006
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
333
|
|
|
$
|
5.51
|
|
|
|
8/21/2007
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,666
|
|
|
$
|
5.15
|
|
|
|
8/21/2007
|
|
|
7,663
|
|
|
|
—
|
|
|
$
|
4.73
|
|
|
|
—
|
|
|
$
|
2.16
|
|
|
|
6/19/2008
|
|
|
—
|
|
|
|
7,000
|
|
|
$
|
3.69
|
|
|
|
—
|
|
|
$
|
1.64
|
|
|
|
6/19/2008
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,000
|
|
|
$
|
3.74
|
|
Michael
J. Ruane
|
|
6/15/2005
|
|
|
10,904
|
|
|
|
—
|
|
|
$
|
11.01
|
|
|
|
—
|
|
|
$
|
1.57
|
|
|
|
6/15/2006
|
|
|
7,633
|
|
|
|
—
|
|
|
$
|
4.61
|
|
|
|
—
|
|
|
$
|
2.16
|
|
|
|
6/15/2006
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,333
|
|
|
$
|
5.01
|
|
|
|
8/21/2007
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,666
|
|
|
$
|
5.15
|
|
|
|
8/21/2007
|
|
|
7,633
|
|
|
|
—
|
|
|
$
|
4.73
|
|
|
|
—
|
|
|
$
|
2.16
|
|
|
|
6/19/2008
|
|
|
—
|
|
|
|
7,000
|
|
|
$
|
3.69
|
|
|
|
—
|
|
|
$
|
1.64
|
|
|
|
6/19/2008
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,000
|
|
|
$
|
3.74
|
|
Jill
Thoerle
|
|
7/13/2007
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,000
|
|
|
$
|
5.89
|
|
|
|
7/13/2007
|
|
|
7,269
|
|
|
|
10,178
|
|
|
$
|
5.41
|
|
|
|
—
|
|
|
$
|
2.52
|
|
|
|
8/21/2007
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,666
|
|
|
$
|
5.15
|
|
|
|
8/21/2007
|
|
|
7,633
|
|
|
|
—
|
|
|
$
|
4.73
|
|
|
|
—
|
|
|
$
|
2.16
|
|
|
|
6/19/2008
|
|
|
—
|
|
|
|
7,000
|
|
|
$
|
3.69
|
|
|
|
—
|
|
|
$
|
1.64
|
|
|
|
6/19/2008
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,000
|
|
|
$
|
3.74
|
|
Alex
Mashinsky
|
|
8/3/2006
|
|
|
15,539
|
|
|
|
5,180
|
|
|
$
|
4.15
|
|
|
|
—
|
|
|
$
|
2.03
|
|
|
|
8/3/2006
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
501
|
|
|
$
|
4.51
|
|
|
|
7/13/2007
|
|
|
54,524
|
|
|
|
—
|
|
|
$
|
5.40
|
|
|
|
—
|
|
|
$
|
3.45
|
|
|
|
8/21/2007
|
|
|
7,633
|
|
|
|
—
|
|
|
$
|
4.73
|
|
|
|
—
|
|
|
$
|
2.16
|
|
|
|
8/21/2007
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,666
|
|
|
$
|
5.15
|
|
|
|
2/7/2008
|
|
|
54,524
|
|
|
|
—
|
|
|
$
|
4.99
|
|
|
|
—
|
|
|
$
|
2.93
|
|
|
|
6/19/2008
|
|
|
—
|
|
|
|
7,000
|
|
|
$
|
3.69
|
|
|
|
—
|
|
|
$
|
1.64
|
|
|
|
6/19/2008
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,000
|
|
|
$
|
3.74
|
|
______________
(1)
|
Messrs.
Atkinson, Donahue and Moore are not included in the table above because
they did not have outstanding stock option awards and stock awards as of
December 31, 2008. Messrs. O’Donnell and Freeman are not
included in the table above because their equity ownership is set forth in
the tables above relating to compensation of our named executive
officers. Mr. O’Donnell was appointed our Chief Executive
Officer and President in September 2008. Mr. O’Donnell also served as a
director in 2008. Mr. O’Donnell’s equity ownership, including
with respect to grants received by Mr. O’Donnell for his service as a
director, is included in the section entitled “Executive
Compensation—Outstanding Equity Awards at Fiscal Year End 2008” beginning
on page 30 of this Amendment No. 1. Mr. Freeman
served as our Chief Executive Officer and President from November 2007
until September 2008. Mr. Freeman received no equity awards in
2008 for his service as a director. Information regarding Mr.
Freeman’s equity ownership is included in the section entitled “Executive
Compensation—Outstanding Equity Awards at Fiscal Year End 2008” beginning
on page 30 of this Amendment No.
1.
|
(2)
|
The
amounts included in this column represent the full grant date fair value
of the awards computed in accordance with SFAS No. 123R. Information
related to the financial reporting of restricted stock is presented in
Footnote 10 to our Consolidated Financial Statements presented in our
Original Filing.
|
Item
12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
EQUITY
COMPENSATION PLAN INFORMATION
The
following table sets forth information as of December 31, 2008 concerning
the number of shares of our common stock issuable under our existing equity
compensation plans.
Plan Category
|
|
Number of Securities to
be Issued Upon Exercise
of Outstanding Options,
Warrants and Rights
(a)
|
|
|
Weighted
Average Exercise
Price of
Outstanding
Options, Warrants
And Rights
(b)
|
|
|
Number of Securities
Remaining Available
For Future Issuance
Under Equity
Compensation Plans
(Excluding Securities
Reflected In Column (a))
(c)
|
|
Equity
compensation plans approved by security holders (1)
|
|
|
4,183,498
|
(2)
|
|
$
|
6.23
|
(3)
|
|
|
1,388,988
|
(4)
|
Equity
compensation plans not approved by security holders
|
|
|
0
|
|
|
$
|
0
|
|
|
|
0
|
|
Total
|
|
|
4,183,498
|
(2)
|
|
$
|
6.23
|
(3)
|
|
|
1,388,988
|
(4)
|
___________________
(1)
|
Consists
of the Amended and Restated 1997 Stock Incentive Plan, as amended (the
“1997 Plan”), and the 2004 Plan.
|
(2)
|
The
amount shown includes 199,244 performance shares, which is the maximum
number of shares available under our 2006 Performance Share Awards upon
attainment of corporate performance metrics of the Company. Our
2006 Performance Share Awards are described in detail in the section
entitled “Compensation Discussion and Analysis—Long Term Incentive
Compensation—2006 Performance Share Awards” earlier in this Amendment No.
1. Our Compensation Committee determined in February 2008 and
February 2009 that, based on the Company’s performance, none of the
199,244 performance shares available under our 2006 Performance Share
Awards vested. Our 2006 Performance Share Awards expired with
no shares granted to our executives. The amount shown also
includes 53,000 performance shares, which is the maximum number of shares
available under the 2008 Performance Share Awards upon attainment of
corporate performance metrics of the Company. The 2008
Performance Share Awards are described in detail in the section entitled
“Compensation Discussion and Analysis—Long Term Incentive
Compensation—2008 Performance Share Awards” earlier in this Amendment No.
1. In February 2009, our Compensation Committee determined
that, based on the Company’s performance, certain of our executives were
entitled to a grant of restricted stock equal to 27.1% of the target
number or shares of restricted common stock that could be earned pursuant
to the 2008 Performance Share Awards. A total of 11,382 shares
of restricted common stock were granted to our executives under the 2008
Performance Share Awards out of an aggregate of 53,000 shares available
under the 2008 Performance Share Awards upon the attainment of corporate
performance metrics of the Company.
|
(3)
|
Reflects
the weighted average exercise price of stock options and stock
appreciation rights.
|
(4)
|
Represents
1,388,988 shares of our common stock available for future issuance under
our 2004 Plan.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Unless
otherwise stated, the following table sets forth certain information as of
April 9, 2009 with respect to holdings of our common stock by (1) each
person known by us to beneficially own more than 5% of the total number of
shares of each class of common stock outstanding as of such date, (2) each
of our directors, (3) each of our named executive officers and (4) all
of our directors and executive officers as a group. This information is based
upon information furnished to us by each such person and/or based upon public
filings with the Securities and Exchange Commission. Unless otherwise indicated,
the address for the individuals below is our address.
The
number of shares beneficially owned by each stockholder is determined under
rules issued by the Securities and Exchange Commission. Under these rules,
beneficial ownership includes any shares as to which the individual or entity
has sole or shared voting power or investment power and includes any shares that
an individual or entity has the right to acquire beneficial ownership of within
60 days of April 9, 2009 through the exercise of any warrant, stock option or
other right.Each of the stockholders listed has sole voting and investment power
with respect to the shares beneficially owned by the stockholder unless noted
otherwise, subject to community property laws where
applicable.
Name and Address of Beneficial
Owner
|
|
Amount
and Nature of
Beneficial Ownership
|
|
|
Percent of Class (1)
|
|
Holders
of more than 5% of our voting securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Karen
Singer
|
|
|
4,590,714
|
(2)
|
|
|
20.7
|
%
|
212
Vaccaro Drive
|
|
|
|
|
|
|
|
|
Cresskill,
New Jersey 07626
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canton
Holdings, L.L.C. and related entities
|
|
|
1,144,442
|
(3)
|
|
|
5.2
|
%
|
1360
Peachtree Street, NE
|
|
|
|
|
|
|
|
|
Atlanta,
Georgia 30309
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Greywolf
Advisors LLC and related entities
|
|
|
1,244,723
|
(4)
|
|
|
5.6
|
%
|
4
Manhattanville Road, Suite 201
|
|
|
|
|
|
|
|
|
Purchase,
New York 10577
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lampe,
Conway &Co., LLC and related entities
|
|
|
2,247,480
|
(5)
|
|
|
10.1
|
%
|
680
Fifth Avenue, 12
th
Floor
|
|
|
|
|
|
|
|
|
New
York, New York 10019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lloyd
I. Miller, III and related entities
|
|
|
1,504,243
|
(6)
|
|
|
6.8
|
%
|
4550
Gordon Drive
|
|
|
|
|
|
|
|
|
Naples,
Florida 34102
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Directors
and Executive Officers:
|
|
|
|
|
|
|
|
|
Shawn
F. O’Donnell
|
|
|
30,938
|
(7)
|
|
|
*
|
|
John
B. Wynne, Jr.
|
|
|
137,758
|
(8)
|
|
|
*
|
|
W.
Terrell Wingfield, Jr.
|
|
|
141,601
|
(9)
|
|
|
*
|
|
Steven
Heap
|
|
|
208,355
|
(10)
|
|
|
*
|
|
Dan
Powdermaker
|
|
|
—
|
|
|
|
—
|
|
William
M. Freeman
|
|
|
153,350
|
(11)
|
|
|
*
|
|
Name and Address of Beneficial
Owner
|
|
Amount
and Nature of
Beneficial Ownership
|
|
|
Percent of Class (1)
|
|
Jose
A. Cecin, Jr.
|
|
|
3,000
|
(12)
|
|
|
*
|
|
Stanley
Kreitman
|
|
|
35,718
|
(13)
|
|
|
*
|
|
John
B. Penney
|
|
|
42,624
|
(14)
|
|
|
*
|
|
Robert
M. Pons
|
|
|
—
|
|
|
|
—
|
|
David
C. Reymann
|
|
|
—
|
|
|
|
—
|
|
Jill
Thoerle
|
|
|
36,610
|
(15)
|
|
|
*
|
|
Curt
R. Koeppen
|
|
|
—
|
|
|
|
—
|
|
Peter
P. Sach
|
|
|
—
|
|
|
|
—
|
|
All
directors and executive officers as a group (12 persons)
|
|
|
789,954
|
(16)
|
|
|
3.5
|
%
|
_____________________
*
|
Represents
beneficial ownership of less than one percent of common
stock.
|
(1)
|
Our
calculation of the percentage of shares beneficially owned by our
directors and executive officers is based upon the number of shares of our
common stock outstanding as of April 9, 2009 (22,162,623), plus for
each listed beneficial owner, any shares of common stock that the listed
beneficial owner has the right to acquire within 60 days of April 9,
2009. The percentage of shares beneficially owned by holders of 5% or more
of our voting securities is based on the information in the applicable
filings with the Securities and Exchange
Commission.
|
(2)
|
Based
on information set forth in the Form 4 filed with the Securities and
Exchange Commission under the Exchange Act on April 14, 2009.
Ms. Singer has sole dispositive and voting power with respect to the
shares as the trustee of the Singer Children’s Management
Trust.
|
(3)
|
Based
on information set forth in Schedule 13G filed with the Securities and
Exchange Commission under the Exchange Act on March 27, 2009. Consists of
(a) 1,111,942 shares of common stock held by Canton Holdings, L.L.C.
(“Canton”), as the investment manager to certain private investment funds,
and Archer Capital Management, L.P., as the general partner of Canton
(“Archer” and together with Canton, the “Canton Funds”) and
(b) 32,500 shares of common stock held by Eric J. Edidin. Mr. Edidin
and Joshua Lobel, as principals of Canton, may be deemed to be the
beneficial owners of all such shares owned by the Canton Funds and have
the power to vote and dispose of the shares held by the Canton
Funds.
|
(4)
|
Based
on information set forth in Amendment No. 2 to Schedule 13D filed with the
Securities and Exchange Commission under the Exchange Act on January 22,
2009. Consists of (a) 409,071 shares of common stock held directly by
Greywolf Capital Partners II LP (“Greywolf Capital II”) and (b) 835,652
shares of common stock held by Greywolf Capital Overseas Master Fund
(“Greywolf Overseas” and together with Greywolf Capital II, the “Greywolf
Funds”). Greywolf Advisors LLC (the “General Partner”), as general partner
to Greywolf Capital II, may be deemed to be the beneficial owner of all
such shares owned by Greywolf Capital II. Greywolf Capital Management LP
(the “Investment Manager”), as investment manager of the Greywolf Funds,
may be deemed to be the beneficial owner of all such shares owned by the
Greywolf Funds. Greywolf GP LLC (the “Investment Manager General
Partner”), as general partner of the Investment Manager, may be deemed to
be the beneficial owner of all such shares owned by the Greywolf Funds.
Jonathan Savitz, as the senior managing member of the General Partner and
as the sole managing member of the Investment Manager General Partner, may
be deemed to be the beneficial owner of all such shares owned by the
Greywolf Funds. Each of the General Partner, the Investment Manager, the
Investment Manager General Partner and Mr. Savitz have disclaimed any
beneficial ownership of any such shares. The address for Greywolf Overseas
is Queensgate House, South Church Street, P.O. Box 1234, George Town,
Grand Cayman.
|
(5)
|
Based
on information set forth in Amendment No. 1 to the Schedule 13D filed with
the Securities and Exchange Commission under the Exchange Act on June 3,
2008. Consists of (a) 2,044,055 shares of common stock held directly by LC
Capital Master Fund, Ltd. (“LC Capital”) and (b) 203,425 shares of common
stock held directly by LC Capital / Capital Z SPV, LP (“LC SPV” and
together with LC Capital, the “LC Funds”). Lampe, Conway &
Co., LLC (“LC&C”), as investment manager to LC Funds, may be deemed to
be the beneficial owner of all such shares owned by the LC
Funds. Steven G. Lampe and Richard F. Conway, as the sole
managing members of LC&C, may be deemed to be the beneficial owners of
all such shares owned by the LC Funds. Each of LC&C, Mr.
Lampe and Mr. Conway have disclaimed any beneficial ownership of any such
shares.
|
(6)
|
Based
on information set forth in Schedule 13G filed with the Securities and
Exchange Commission under the Exchange Act on January 23,
2009. Consists of (a) 615,434 shares of common stock held
either directly by Mr. Miller or by Mr. Miller in his capacity as the
manager of a limited liability company that is the general partner of a
certain limited partnership and (b) 888,809 shares of common stock held by
Mr. Miller in his capacity as an investment advisor to the trustee of
certain family trusts with respect to which Mr. Miller has shared voting
and investment power.
|
(7)
|
Consists
of (a) 4,667 shares of unvested restricted common stock; (b) 23,938 shares
of common stock which Mr. O’Donnell has the right to acquire within
60 days of April 9, 2009; and (c) 2,333 shares of common stock held
by Mr. O’Donnell.
|
(8)
|
Consists
of (a) 2,710 shares of unvested restricted common stock; (b) 123,382
shares of common stock which Mr. Wynne has the right to acquire
within 60 days of April 9, 2009; and (c) 11,666 shares of common
stock held by Mr. Wynne. Such amount does not include 11,927 stock
appreciation rights, which are exercisable within 60 days of April 9,
2009; however, based on the closing price of our common stock on
April 9, 2009, none of these stock appreciation rights are currently
exercisable.
|
(9)
|
Consists
of (a) 2,530 shares of unvested restricted common stock; (b) 127,358
shares of common stock which Mr. Wingfield has the right to acquire
within 60 days of April 9, 2009; and (c) 11,713 shares of common
stock held by Mr. Wingfield. Such amount does not include 10,904
stock appreciation rights, which are exercisable within 60 days of April
9, 2009; however, based on the closing price of our common stock on April
9, 2009, none of these stock appreciation rights are currently
exercisable.
|
(10)
|
Consists
of (a) 2,349 shares of unvested restricted common stock; (b) 180,548
shares of common stock which Mr. Heap has the right to acquire within
60 days of April 9, 2009; and (c) 25,458 shares of common stock held by
Mr. Heap. Such amount does not include 10,564 stock appreciation
rights, which are exercisable within 60 days of April 9, 2009; however,
based on the closing price of our common stock on April 9, 2009, none of
these stock appreciation rights are currently
exercisable.
|
(11)
|
Consists
of 153,350 shares of common stock which Mr. Freeman has the right to
acquire within 60 days of April 9, 2009. Such amount does not include
14,028 stock appreciation rights, which are exercisable within 60 days of
April 9, 2009; however, based on the closing price of our common stock on
April 9, 2009, none of these stock appreciation rights are currently
exercisable.
|
(12)
|
Consists
of 3,000 shares of unvested restricted common
stock.
|
(13)
|
Consists
of (a) 12,999 shares of unvested restricted common stock; (b) 19,718
shares of common stock which Mr. Kretiman has the right to acquire
within 60 days of April 9, 2009; and (c) 3,001 shares of common stock held
by Mr. Kreitman.
|
(14)
|
Consists
of (a) 11,999 shares of unvested restricted common stock; (b) 27,624
shares of common stock which Mr. Penney has the right to acquire
within 60 days of April 9, 2009; and (c) 3,001 shares of common stock held
by Mr. Penney.
|
(15)
|
Consists
of (a) 13,666 shares of unvested restricted common stock; (b) 17,810
shares of common stock which Ms. Thoerle has the right to acquire
within 60 days of April 9, 2009; and (c) 5,134 shares of common stock held
by Ms. Thoerle.
|
(16)
|
See
footnotes 7 through 15 above.
|
Item
13. Certain Relationships and Related Transactions, and Director
Independence
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
In
February 2008, we agreed to extend the term of the consulting agreement
contained in our Settlement and Standstill Agreement dated July 13, 2007 (the
“Mashinsky Agreement”) with Governing Dynamics Investments, LLC and Alex
Mashinsky, a member of our Board at the time, for an additional six
months. In exchange for additional consulting services provided by
Mr. Mashinsky under the extended consulting agreement, we granted
Mr. Mashinsky a stock option to purchase 54,524 shares of our common stock
at an exercise price of $4.99 per share (adjusted to reflect the special
one-time cash payment of $0.40 per share paid by the Company on
March 28, 2008). Such stock option vested over the six
month term of the consulting arrangement, beginning on February 29,
2008. As of February 29, 2008, the date of grant, this stock
option was valued at $272,075, as adjusted to reflect the special one-time cash
payment of $0.40 per share paid by the Company on
March 28, 2008. The extension to the consulting agreement
contained in the Mashinsky Agreement was approved by our Board (with
Mr. Mashinsky abstaining). For more information regarding the
extension to our consulting agreement with Mr. Mashinsky, please see the Current
Report on Form 8-K we filed with the Securities and Exchange Commission on
February 11, 2008.
On March
1, 2009, Mr. Mashinsky resigned from our Board. We engaged Mr. Mashinsky to
serve as a consultant to the Company pursuant to a Consulting Agreement, dated
as of March 4, 2009 (the “Consulting Agreement”), among the Company, the Alex
Mashinsky 2001 GRAT (the “Consultant”) and Mr. Mashinsky. The Consulting
Agreement was approved by our Board. Under the terms of the
Consulting Agreement, Mr. Mashinsky, on behalf of the Consultant, agreed to
provide advisory and consulting services to the Company for a period of six
months beginning on March 4, 2009. As compensation for the advisory and
consulting services, on March 4, 2009, we granted to the Consultant a stock
option to purchase 100,000 shares of our common stock at an exercise price of
$1.50 per share, which represents the closing price per share of our common
stock on the NASDAQ Global Market on March 4, 2009. The stock option vests
during the six-month term of the Consulting Agreement at a rate of 16.66% on the
final day of each month, beginning on April 30, 2009 and ending on September 30,
2009. For more information regarding the Consulting Agreement, please
see the Current Report on Form 8-K we filed with the Securities and Exchange
Commission on March 5, 2009.
On
May 30, 2008, we entered into a Stock Ownership Agreement (the “Stock
Ownership Agreement”) with the Singer Children’s Management Trust (the “Trust”),
Gary Singer and Karen Singer (collectively, the “Singer
Entities”). The Stock Ownership Agreement was approved by our
Board. Under the Stock Ownership Agreement, for purposes of
Section 203 of the Delaware General Corporation Law (“Section 203”), we
agreed that the Trust may purchase up to 18% of our outstanding voting stock
through open market purchases, privately negotiated transactions or
otherwise. The Stock Ownership Agreement also provides that if at any
time during the three year period from the date of the Stock Ownership
Agreement, the Singer Entities become the owner of 18% or more of our
outstanding voting stock, the Singer Entities will not be able to engage in any
“business combination” (as defined in Section 203) with us for a period of
three years following the date on which the Singer Entities become an owner of
18% or more of our outstanding voting stock. For more information
regarding the Stock Ownership Agreement, please see the Current Report on Form
8-K we filed with the Securities and Exchange Commission on June 10,
2008.
On
December 19, 2008, we entered into an Amended and Restated Stock Ownership
Agreement (the “Amended Stock Ownership Agreement”) with the Singer
Entities. The Amended Stock Ownership Agreement was approved by a
committee of disinterested members of our Board representing a majority of our
full Board of Directors. Under the Amended Stock Ownership Agreement,
for purposes of Section 203, we agreed that the Trust may purchase up to
5,141,608 shares of our outstanding voting stock (the “Share
Limit”). The Amended Stock Ownership Agreement also provides that if
at any time during the three year period from the date of the Amended Stock
Ownership Agreement, the Singer Entities become the owner of shares of voting
stock exceeding the Share Limit, the Singer Entities will not be able to engage
in any “business combination” (as defined in Section 203) with us for a period
of three years following the date on which the Singer Entities exceeded the
Share Limit. For more information regarding the Amended Stock
Ownership Agreement, please see the Current Report on Form 8-K we filed with the
Securities and Exchange Commission on December 19, 2008.
POLICIES
AND PROCEDURES FOR RELATED PARTY TRANSACTIONS
All
transactions involving directors and executive officers are reviewed on an
ongoing basis by our Board or our Audit Committee, and all such transactions
must be approved by either our Board or our Audit Committee. The
purpose of the review is to determine that such transactions are conducted on
terms not materially less favorable than what would be usual and customary in
transactions between unrelated persons and, in the case of transactions
involving directors, to determine whether such transactions affect the
independence of a director in accordance with the relevant rules and standards
issued by the Securities and Exchange Commission and the NASDAQ Marketplace
Rules. We do not maintain a formal written policy concerning the
aforementioned procedures. Our Audit Committee Charter and Code of Ethics each
provide guidance on business relations between us and our directors, officers
and employees.
DIRECTOR
INDEPENDENCE
We
operate within a comprehensive plan of corporate governance for the purpose of
defining director independence, assigning Board responsibilities, setting high
standards of professional and personal conduct for directors, officers, and
employees and assuring compliance with such responsibilities and standards. We
regularly monitor developments in the area of corporate governance.
Our Board
determined that each of the following individuals that was serving on our Board
as of the end of fiscal year 2008, constituting five of our eight directors at
that time, was an “independent director” as such term is defined in the NASDAQ
Marketplace Rules: Messrs. Kreitman, Cecin, Penney and Ruane and
Ms. Thoerle. Our Board further determined that, as of the date
of their respective appointments to our Board in fiscal year 2009, each of
Messrs. Reymann and Pons is an “independent director” as such term is defined in
the NASDAQ Marketplace Rules. Our Board also has determined that each
member of our Audit Committee, our Compensation Committee and our Nominating and
Corporate Governance Committee meets the independence requirements applicable to
those committees as prescribed by NASDAQ, the Securities and Exchange
Commission, the Internal Revenue Service and applicable committee charters. Our
Board has further determined that Mr. Reymann, who serves on our Audit
Committee, is an “audit committee financial expert” under the Exchange
Act.
Independent
directors of the Company meet in executive sessions outside the presence of
management. Currently, the presiding director for these meetings is
Mr. Penney.
Item
14. Principal Accountant Fees and Services
AUDIT
FEES AND ALL OTHER FEES
Our Board
has selected the accounting firm of Ernst & Young LLP, an independent
registered public accounting firm, to serve as our independent auditors for the
2008 fiscal year. Fees paid to Ernst & Young LLP for each of the
last two fiscal years are listed in the following table:
Year Ended December 31,
|
|
Audit Fees
|
|
|
Audit Related Fees
|
|
|
Tax Fees
|
|
|
All Other Fees
|
|
2008
|
|
$
|
870,019
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
2007
|
|
$
|
1,019,400
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Audit
Fees
Audit
fees include fees for professional services rendered for the audit of our annual
financial statements and review of our financial statements on a quarterly
basis.
Audit-Related
Fees
There
were no fees billed in fiscal year 2008 or 2007 for professional services
rendered by Ernst & Young LLP for audit-related services.
Tax
Fees
There
were no fees billed in fiscal year 2008 or 2007 for professional services
rendered by Ernst & Young LLP for tax services.
All
Other Fees
There
were no fees billed in fiscal year 2008 or 2007 for professional services
rendered by Ernst & Young LLP for products and services that are not
disclosed above.
AUDIT
COMMITTEE PRE-APPROVAL OF AUDIT AND PERMISSIBLE NON-AUDIT SERVICES OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit
Committee pre-approves all audit and permissible non-audit services provided by
the independent registered public accounting firm unless an exception to such
pre-approval exists under the Exchange Act or the rules of the Securities and
Exchange Commission. These services may include audit services, audit-related
services, tax services and other services. Each year, the Audit Committee
approves the appointment of the independent registered public accounting firm to
audit our financial statements, including the associated fee. Of the services
described in the section of this Amendment No. 1 entitled “Audit Fees and All
Other Fees,” 100% of such services were approved by the Audit Committee. The
Audit Committee has considered whether the provisions of such services,
including non-audit services, by Ernst & Young LLP is compatible with
maintaining Ernst & Young LLP’s independence and has concluded that it
is.
PART
IV
Item
15. Exhibits, Financial Statements, and Financial Statement
Schedule
(a)(1) Consolidated
Financial Statements.
Previously
filed.
(a)(2) Consolidated
Financial Statement Schedule.
Previously
filed.
(a)(3) Exhibits.
Reference
is made to the Index to Exhibits on Page 54.
Schedules
other than as listed above are omitted as not required or inapplicable or
because the required information is provided in the consolidated financial
statements, including the notes thereto.
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized this 29
th
day of
April, 2009.
ARBINET-THEXCHANGE,
INC.
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By:
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/s/
Shawn F. O’Donnell
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Shawn
F. O’Donnell, President,
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Chief
Executive Officer and Director
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(Principal
Executive
Officer)
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POWER
OF ATTORNEY
KNOWN ALL
MEN BY THESE PRESENTS that each individual whose signature appears below
constitutes and appoints each of Shawn F. O’Donnell and W. Terrell Wingfield,
Jr.
such person’s
true and lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for such person and in such person’s name, place and stead, in
any and all capacities, to sign any and all amendments to the Annual Report on
Form 10-K, and to file this Amendment No. 1 to the Annual Report on
Form 10-K, with all exhibits thereto, and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto each said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as such person might or could do
in person, hereby ratifying and confirming all that any said attorney-in-fact
and agent, or any substitute or substitutes of any of them, may lawfully do or
cause to be done by virtue hereof.
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
Signature
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Title
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Date
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/s/
Shawn F. O’Donnell
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President,
Chief Executive Officer and Director
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April
29, 2009
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Shawn
F. O’Donnell
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(Principal
Executive Officer)
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/s/
John B. Wynne, Jr.
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Chief
Financial Officer
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April
29, 2009
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John
B. Wynne, Jr.
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(Principal
Financial and Accounting Officer)
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/s/
Jose A. Cecin, Jr.
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Director
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April
29, 2009
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Jose
A. Cecin, Jr.
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/s/
William M. Freeman
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Director
and Chairman of the Board of Directors
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April
29, 2009
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William
M. Freeman
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/s/
Stanley C. Kreitman
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Director
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April
29, 2009
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Stanley
C. Kreitman
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/s/
John B. Penney
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Director
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April
29, 2009
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John
B. Penney
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/s/
David C. Reymann
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Director
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April
29, 2009
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David
C. Reymann
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/s/
Robert M. Pons
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Director
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April
29, 2009
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Robert
M. Pons
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/s/
Jill Thoerle
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Director
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April
29, 2009
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Jill
Thoerle
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EXHIBIT
INDEX
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2.1
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Asset
Purchase Agreement, dated September 2, 2004, by and among Band-X Limited,
Arbinet-thexchange Limited and the Company (Incorporated by reference to
Exhibit 2.1 to the Company’s Registration Statement on Form S-1 (File
Number 333-117278), which became effective on December 16,
2004).
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3.1
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Amended
and Restated Certificate of Incorporation of the Company, which became
effective upon the closing of the Company’s initial public offering
(Incorporated by reference to Exhibit 3.3 to the Company’s Registration
Statement on Form S-1 (File Number 333-117278), which became effective on
December 16, 2004).
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3.2
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Second
Amended and Restated By-laws of the Company, which became effective upon
the closing of the Company’s initial public offering (Incorporated by
reference to Exhibit 3.4 to the Company’s Registration Statement on Form
S-1 (File Number 333-117278), which became effective on December 16,
2004).
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3.3
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Certificate
of Amendment to the Second Amended and Restated By-Laws of the Company
(Incorporated by reference to Exhibit 3.1 to the Company’s Current Report
on Form 8-K, filed with the Securities and Exchange Commission on October
31, 2007).
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4.1
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Specimen
Certificate evidencing shares of common stock of the Company (Incorporated
by reference to Exhibit 4.1 to the Company’s Registration Statement on
Form S-1 (File Number 333-117278), which became effective on December 16,
2004).
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4.2
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Fourth
Amended and Restated Investors’ Rights Agreement, dated May 30, 2003, by
and among the Holders listed therein, the Founder listed therein and the
Company (Incorporated by reference to Exhibit 4.2 to the Company’s
Registration Statement on Form S-1 (File Number 333-117278), which became
effective on December 16, 2004).
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10.1*
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Amended
and Restated 1997 Stock Incentive Plan (Incorporated by reference to
Exhibit 10.1 to the Company’s Registration Statement on Form S-1 (File
Number 333-117278), which became effective on December 16,
2004).
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10.2*
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First
Amended and Restated Non-employee Directors’ and Advisors’ Stock Option
Plan (Incorporated by reference to Exhibit 10.2 to the Company’s
Registration Statement on Form S-1 (File Number 333-117278), which became
effective on December 16, 2004).
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10.3*
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2004
Stock Incentive Plan (Incorporated by reference to Exhibit 10.3 to the
Company’s Registration Statement on Form S-1 (File Number 333-117278),
which became effective on December 16, 2004).
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10.4†
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Factoring
Agreement, dated February 1, 2003, by and between GMAC Commercial Finance
LLC and the Company; Export Receivable Rider to Factoring Agreement, dated
February 10, 2003, by and between GMAC Commercial Finance LLC and the
Company; and Amendment to Factoring Agreement, dated December 12, 2003, by
and between GMAC Commercial Finance LLC and the Company (Incorporated by
reference to Exhibit 10.5 to the Company’s Registration Statement on Form
S-1 (File Number 333-117278), which became effective on December 16,
2004).
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10.5†
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Amended
and Restated GMAC Commercial Finance LLC Factoring Agreement and Export
Receivable Rider to Amended and Restated Factoring Agreement, by and
between the Company and GMAC Commercial Finance LLC, executed as of
November 10, 2005 (Incorporated by reference to Exhibit 10.4 to the
Company’s Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2005, which was filed with the Securities and Exchange
Commission on November 14, 2005).
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Exhibit
No.
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Description
of Exhibit
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10.6
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Accounts
Receivable Financing Agreement, dated February 3, 2003, by and between
Silicon Valley Bank and the Company; Intercreditor Agreement, dated
February 3, 2003, by and between Silicon Valley Bank and ORIX Merchant
Banking LLC; Letter Agreement, dated February 3, 2003, by and between
Silicon Valley Bank, ORIX Merchant Banking LLC, GMAC Commercial Finance
LLC and the Company; Letter Agreement, dated February 3, 2003, by and
between Silicon Valley Bank, ORIX Merchant Banking LLC and the Company;
Securities Account Control Agreement, dated February 3, 2003, by and
between SVB Securities, ORIX Merchant Banking LLC, Banc of America
Securities LLC and the Company; Securities Account Control Agreement,
dated February 3, 2003, by and between SVB Securities, Silicon Valley
Bank, Banc of America Securities LLC and the Company; Deposit Account
Control Agreement, dated February 3, 2003, by and between Silicon Valley
Bank, ORIX Merchant Banking LLC and the Company; First Amendment to
Accounts Receivable Financing Agreement, dated October 27, 2003, by and
between Silicon Valley Bank and the Company; and Second Amendment to
Accounts Receivable Financing Agreement, dated May 28, 2004, by and
between Silicon Valley Bank and the Company (Incorporated by reference to
Exhibit 10.7 to the Company’s Registration Statement on Form S-1 (File
Number 333-117278), which became effective on December 16,
2004).
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10.7
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Third
Amendment to Accounts Receivable Financing Agreement, dated as of May 2,
2005, by and between Silicon Valley Bank and the Company (Incorporated by
reference to Exhibit 10.8 to the Company’s Annual Report on Form 10-K for
the year ended December 31, 2005, filed with the Securities and Exchange
Commission on March 14, 2006).
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10.8†
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Non-Recourse
Receivables Purchase Agreement, dated as of November 28, 2005, by and
between the Company and Silicon Valley Bank (Incorporated by reference to
Exhibit 10.9 to the Company’s Annual Report on Form 10-K for the year
ended December 31, 2005, filed with the Securities and Exchange Commission
on March 14, 2006).
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10.9
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Master
Lease Agreement, dated as of June 5, 2003, by and between ATEL Ventures,
Inc. and the Company; and Notification of Rental Adjustment and Amendment
to Equipment Schedule No. 1 to Master Lease Agreement, dated June 24,
2003, by and between ATEL Venture Fund, LLC, ATEL Capital Equipment Fund
IX, LLC and the Company (Incorporated by reference to Exhibit 10.8 to the
Company’s Registration Statement on Form S-1 (File Number 333-117278),
which became effective on December 16, 2004).
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10.10*
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Employment
Offer Letter, dated as of July 12, 2001, by and between Peter P. Sach and
the Company (Incorporated by reference to Exhibit 10.12 to the Company’s
Registration Statement on Form S-1 (File Number 333-117278), which became
effective on December 16, 2004).
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10.11*
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Employment
Offer Letter, dated as of October 16, 2006, by and between John B. Wynne,
Jr. and the Company (Incorporated by reference to Exhibit 10.1 to the
Company’s Current Report on 8-K, filed with the Securities and Exchange
Commission on October 20, 2006).
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10.12*
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Settlement
Agreement, dated July 9, 2004, by and between Alex Mashinsky and the
Company (Incorporated by reference to Exhibit 10.14 to the Company’s
Registration Statement on Form S-1 (File Number 333-117278), which became
effective on December 16, 2004).
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10.13*
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Employment
Offer Letter, dated September 20, 2006, by and between W. Terrell
Wingfield, Jr. and the Company (Incorporated by reference to Exhibit 10.1
to the Company’s Current Report on Form 8-K/A, filed with the Securities
and Exchange Commission on March 16, 2007).
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10.14
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Albany
Street Office Lease, dated February 6, 2003, by and between Albany Street
Plaza Real Estate Management Company and the Company; Lease, dated June
11, 1999, by and between AMEC Properties Limited and Pacific Gateway
Exchange (U.K.) Limited; AT&T Center Office Lease, dated December 9,
1997, by and between Mitsui Fudosan (U.S.A.), Inc. and Pacific Gateway
Exchange; Office Lease, by and between Bruce Goodman and the Company;
Lease Agreement by and between Auda Properties, L.P. and the Company; and
Office lease, dated January 20, 2000, by and between 75 Broad, LLC, and
the Company (Incorporated by reference to Exhibit 10.17 to the Company’s
Registration Statement on Form S-1 (File Number 333-117278), which became
effective on December 16, 2004).
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Exhibit
No.
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Description
of Exhibit
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10.15*
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Form
of Incentive Stock Option Agreement under the 2004 Stock Incentive Plan,
as amended (Incorporated by reference to Exhibit 10.21 to the Company’s
Registration Statement on Form S-1 (File Number 333-117278), which became
effective on December 16, 2004).
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10.16*
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Form
of Nonstatutory Stock Option Agreement under the 2004 Stock Incentive
Plan, as amended (Incorporated by reference to Exhibit 10.22 to the
Company’s Registration Statement on Form S-1 (File Number 333-117278),
which became effective on December 16, 2004).
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10.17
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Standard
Purchase Agreement, dated May 19, 2003, by and between Tekelec and the
Company (Incorporated by reference to Exhibit 10.23 to the Company’s
Registration Statement on Form S-1 (File Number 333-117278), which became
effective on December 16, 2004).
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10.18
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Master
Procurement Agreement, dated March 7, 2003, by and between Tekelec (f/k/a
Santera Systems Inc.) and the Company; Amendment No. 1 to the Master
Procurement Agreement, dated September 5, 2003, by and between Tekelec
(f/k/a Santera Systems Inc.) and the Company; Amendment No. 2 to the
Master Procurement Agreement, dated December 31, 2003, by and between
Tekelec and the Company; Amendment No. 3 to the Master Procurement
Agreement, dated March 31, 2004, by and between Tekelec and the Company;
Amendment No. 4 to the Master Procurement Agreement, dated May 10, 2004,
by and between Tekelec and the Company (Incorporated by reference to
Exhibit 10.24 to the Company’s Registration Statement on Form S-1 (File
Number 333-117278), which became effective on December 16,
2004).
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10.19
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Amendment
No. 5 to the Master Procurement Agreement, dated as of March 31, 2005, by
and between Tekelec (f/k/a Santera Systems Inc.) and the Company
(Incorporated by reference to Exhibit 10.25 to the Company’s Annual Report
on Form 10-K for the year ended December 31, 2005, filed with the
Securities and Exchange Commission on March 14, 2006).
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10.20
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Amendment
No. 6 to the Master Procurement Agreement, dated as of December 21, 2005,
by and between Tekelec (f/k/a Santera Systems Inc.) and the Company
(Incorporated by reference to Exhibit 10.26 to the Company’s Annual Report
on Form 10-K for the year ended December 31, 2005, filed with the
Securities and Exchange Commission on March 14, 2006).
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10.21
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Lease
Termination Agreement, dated December 28, 2005, by and between Broad
Financial Center LLC and Arbinet Communications, Inc. (Incorporated by
reference to Exhibit 10.28 to the Company’s Annual Report on Form 10-K for
the year ended December 31, 2005, filed with the Securities and Exchange
Commission on March 14, 2006).
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10.22
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Patent
Acquisition Agreement by and between the Company and Summit Telecom
Systems, Inc., dated as of June 3, 2005 (Incorporated by reference to
Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the
Securities and Exchange Commission on July 25, 2005).
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10.23
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Amendment
to Patent Acquisition Agreement by and between the Company and Summit
Telecom Systems, Inc., dated as of July 21, 2005 (Incorporated by
reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K,
filed with the Securities and Exchange Commission on July 25,
2005).
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10.24
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Form
of Restricted Stock Unit Agreement under the 2004 Stock Incentive Plan, as
amended (Incorporated by reference to Exhibit 10.3 to the Company’s
Quarterly Report on Form 10-Q for the quarterly period ended September 30,
2005, filed with the Securities and Exchange Commission on November 14,
2005).
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Exhibit
No.
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Description
of Exhibit
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10.25
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Fourth
Amendment to Accounts Receivable Financing Agreement, by and between
Silicon Valley Bank and the Company, dated as of June 7, 2006
(Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly
Report on Form 10-Q for the quarterly period ended June 30, 2006, filed
with the Securities and Exchange Commission on August 9,
2006).
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10.26*
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Form
of Performance Share Award Agreement granted under the 2004 Stock
Incentive Plan, as amended (Incorporated by reference to Exhibit 10.1 to
the Company’s Current Report on Form 8-K, filed with the Securities and
Exchange Commission on August 24, 2006).
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10.27*
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Form
of Restricted Stock Award Agreement under the 2004 Stock Incentive Plan,
as amended (Grants made in 2005) (Incorporated by reference to Exhibit
10.1 to the Company’s Current Report on Form 8-K, filed with the
Securities and Exchange Commission on November 8,
2006).
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10.28*
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Form
of Restricted Stock Award Agreement under the 2004 Stock Incentive Plan,
as amended (Grants made to non-employee directors in 2006) (Incorporated
by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K,
filed with the Securities and Exchange Commission on November 8,
2006).
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10.29*
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Form
of Restricted Stock Award Agreement under the 2004 Stock Incentive Plan,
as amended (Grants made to executive officers in 2006) (Incorporated by
reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K,
filed with the Securities and Exchange Commission on November 8,
2006).
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10.30*
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Certificate
of Amendment to the 2004 Stock Incentive Plan, as amended (Incorporated by
reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q
for the quarterly period ended September 30, 2006, filed with the
Securities and Exchange Commission on November 9,
2006).
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10.31*
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Amendment
No. 1, dated as of March 16, 2007, to Offer Letter, dated as of May 9,
2001, by and between the Company and Robert Barbiere (Incorporated by
reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K,
filed with the Securities and Exchange Commission on March 16,
2007).
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10.32*
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Amendment
No. 1, dated as of March 16, 2007, to Employment Agreement, dated as of
October 11, 2002, by and between the Company and Chi K. Eng (Incorporated
by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K,
filed with the Securities and Exchange Commission on March 16,
2007).
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10.33*
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Amendment
No. 1, dated as of March 16, 2007, to Offer Letter, dated as of May 3,
2006, by and between the Company and Steven Heap (Incorporated by
reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K,
filed with the Securities and Exchange Commission on March 16,
2007).
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10.34*
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Amendment
No. 1, dated as of March 16, 2007, to Offer Letter, dated as of July 5,
2001, by and between the Company and Peter P. Sach (Incorporated by
reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K,
filed with the Securities and Exchange Commission on March 16,
2007).
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10.35*
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Resignation
Agreement by and between J. Curt Hockemeier and the Company, dated as of
June 11, 2007 (Incorporated by reference to Exhibit 10.1 to the Company’s
Current Report on Form 8-K/A, filed with the Securities and Exchange
Commission on June 19, 2007).
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10.36*
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Offer
Letter by and between Roger H. Moore and the Company, dated July 9, 2007
(Incorporated by reference to Exhibit 10.1 to the Company’s Current Report
on Form 8-K, filed with the Securities and Exchange Commission on July 10,
2007).
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10.37
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Settlement
and Standstill Agreement dated as of July 13, 2007 by and between the
Company and Alex Mashinsky and Governing Dynamics Investments, LLC
(Incorporated by reference to Exhibit 10.1 to the Company’s Current Report
on Form 8-K, filed with the Securities and Exchange Commission on July 16,
2007).
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Exhibit
No.
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Description
of Exhibit
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10.38
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Settlement
and Standstill Agreement dated as of July 13, 2007 by and between the
Company and Robert A. Marmon (Incorporated by reference to Exhibit 10.2 to
the Company’s Current Report on Form 8-K, filed with the Securities and
Exchange Commission on July 16, 2007).
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10.39
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Settlement
and Standstill Agreement dated as of July 13, 2007 by and between the
Company and Singer Children’s Family Trust, Karen Singer, and Gary Singer
(Incorporated by reference to Exhibit 10.3 to the Company’s Current Report
on Form 8-K, filed with the Securities and Exchange Commission on July 16,
2007).
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10.40
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Settlement
and Standstill Agreement dated as of July 13, 2007 by and between the
Company and Cadence Master Ltd. (Incorporated by reference to Exhibit 10.4
to the Company’s Current Report on Form 8-K, filed with the Securities and
Exchange Commission on July 16, 2007).
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10.41
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Settlement
and Standstill Agreement dated as of July 13, 2007 by and between the
Company and Archer Capital Master Fund, L.P. (Incorporated by reference to
Exhibit 10.5 to the Company’s Current Report on Form 8-K, filed with the
Securities and Exchange Commission on July 16, 2007).
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10.42
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Settlement
and Standstill Agreement dated as of July 13, 2007 by and between the
Company and LC Capital Master Fund, Ltd., LC Capital / Capital Z SPV, LP,
Lampe, Conway & Co. LLC, Steven G. Lampe, and Richard F. Conway
(Incorporated by reference to Exhibit 10.6 to the Company’s Current Report
on Form 8-K, filed with the Securities and Exchange Commission on July 16,
2007).
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10.43
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Settlement
and Standstill Agreement dated as of July 13, 2007 by and between the
Company and Bay Harbour Management, LC and Trophy Hunter Investments, Ltd.
(Incorporated by reference to Exhibit 10.7 to the Company’s Current Report
on Form 8-K, filed with the Securities and Exchange Commission on July 16,
2007).
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10.44
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Settlement
and Standstill Agreement dated as of July 13, 2007 by and between the
Company and Simplex Trading Company (Incorporated by reference to Exhibit
10.8 to the Company’s Current Report on Form 8-K, filed with the
Securities and Exchange Commission on July 16, 2007).
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10.45
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Voting
Support and Standstill Agreement dated as of July 13, 2007 by and between
the Company and Greywolf Capital Partners II LP, Greywolf Capital Overseas
Fund, Greywolf Advisors, Greywolf Capital Management LP, Greywolf GP LLC,
and Jonathan Savitz (Incorporated by reference to Exhibit 10.9 to the
Company’s Current Report on Form 8-K, filed with the Securities and
Exchange Commission on July 16, 2007).
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10.46*
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Non
Qualified Stock Option Agreement by and between William M. Freeman and the
Company, dated as of November 16, 2007 (Incorporated by reference to
Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the
Securities and Exchange Commission on November 19,
2007).
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10.47*
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Employment
Agreement by and between William M. Freeman and the Company, dated as of
November 16, 2007 (Incorporated by reference to Exhibit 10.2 to the
Company’s Current Report on Form 8-K, filed with the Securities and
Exchange Commission on November 19, 2007).
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10.48*
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Form
of Restricted Stock Award Agreement under the Arbinet-thexchange, Inc.
2004 Stock Incentive Plan, as amended (performance shares) (Incorporated
by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K,
filed with the Securities and Exchange Commission on February 26,
2008).
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10.49*
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Form
of Stock Appreciation Rights Agreement under the Arbinet-thexchange, Inc.
2004 Stock Incentive Plan, as amended (Incorporated by reference to
Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the
Securities and Exchange Commission on February 26,
2008).
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Exhibit
No.
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Description
of Exhibit
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10.50*
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Form
of Restricted Stock Award Agreement under the Arbinet-thexchange, Inc.
2004 Stock Incentive Plan, as amended (Incorporated by reference to
Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed with the
Securities and Exchange Commission on February 26,
2008).
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10.51*
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Form
of Restricted Stock Unit Agreement under the Arbinet-thexchange, Inc. 2004
Stock Incentive Plan, as amended (Incorporated by reference to Exhibit
10.4 to the Company’s Current Report on Form 8-K, filed with the
Securities and Exchange Commission on February 26,
2008).
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10.52*
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Summary
of the Arbinet-thexchange, Inc. Short Term Cash Incentive Bonus Plan
(2008) (Incorporated by reference to Exhibit 10.53 to the Company’s Form
10-K, filed with the Securities and Exchange Commission on March 17,
2008).
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10.53*
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Amendment
No. 1, dated as of April 24, 2008, to Offer Letter, dated as of October
16, 2006, by and between Arbinet-thexchange, Inc. and John B. Wynne, Jr.
(Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K,
filed with the Securities and Exchange Commission on April 29,
2008).
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10.54*
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Amendment
No. 1, dated as of April 23, 2008, to Offer Letter, dated as of September
20, 2006, by and between Arbinet-thexchange, Inc. and W. Terrell
Wingfield, Jr. (Incorporated by reference to Exhibit 10.2 to the Company’s
Form 8-K, filed with the Securities and Exchange Commission on April 29,
2008).
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10.55*
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Amendment
No. 2, dated as of April 23, 2008, to Offer Letter, dated as of July 5,
2001, by and between Arbinet-thexchange, Inc. and Peter P. Sach, as
amended March 16, 2007 (Incorporated by reference to Exhibit 10.3 to the
Company’s Form 8-K, filed with the Securities and Exchange Commission on
April 29, 2008).
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10.56
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Stock
Ownership Agreement, dated as of May 30, 2008, by and among
Arbinet-thexchange, Inc., the Singer Children’s Management Trust, Gary
Singer, and Karen Singer (Incorporated by reference to Exhibit 10.1 to the
Company’s Form 8-K, filed with the Securities and Exchange Commission on
June 9, 2008).
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10.57*
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Non
Qualified Stock Option Agreement by and between Shawn F. O’Donnell and
Arbinet-thexchange, Inc., dated as of September 2, 2008 (Incorporated by
reference to Exhibit 10.1 to the Company’s Form 8-K, filed with the
Securities and Exchange Commission on September 4,
2008).
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10.58*
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Employment
Agreement, by and between Shawn F. O’Donnell and Arbinet-thexchange, Inc.,
dated as of September 2, 2008 (Incorporated by reference to Exhibit 10.2
to the Company’s Form 8-K, filed with the Securities and Exchange
Commission on September 4, 2008).
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10.59
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Separation
and Transition Services Agreement by and between William M. Freeman and
Arbinet-thexchange, Inc., entered into as of September 3, 2008
(Incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K,
filed with the Securities and Exchange Commission on September 4,
2008).
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10.60
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Amended
and Restated Stock Ownership Agreement dated as of December 19, 2008 by
and among Arbinet-thexchange, Inc., the Singer Children’s Management
Trust, Gary Singer, and Karen Singer (Incorporated by reference to Exhibit
10.1 to the Company’s Form 8-K, filed with the Securities and Exchange
Commission on December 19, 2008).
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21.1
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Subsidiaries
of the Company (Incorporated by reference to Exhibit 21.1 to the Company’s
Annual Report on Form 10-K, filed with the Securities and Exchange
Commission on March 16, 2009).
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23.1
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Consent
of Ernst & Young LLP (Incorporated by reference to Exhibit 23.1 to the
Company’s Annual Report on Form 10-K, filed with the Securities and
Exchange Commission on March 16,
2009).
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Exhibit
No.
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Description
of Exhibit
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24.1**
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Power
of Attorney (included on signature page hereto).
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31.1**
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Certification
Pursuant to Rule 13a-14(a) and 15d-14(a) of the Exchange Act, as Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Executive
Officer).
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31.2**
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Certification
Pursuant to Rule 13a-14(a) and 15d-14(a) of the Exchange Act, as Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Financial
Officer).
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32.1
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Certification
Pursuant to 18 U.S.C. Section 1350 (Chief Executive Officer) (Incorporated
by reference to Exhibit 32.1 to the Company’s Annual Report on Form 10-K,
filed with the Securities and Exchange Commission on March 16,
2009).
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32.2
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Certification
Pursuant to 18 U.S.C. Section 1350 (Chief Financial Officer) (Incorporated
by reference to Exhibit 32.2 to the Company’s Annual Report on Form 10-K,
filed with the Securities and Exchange Commission on March 16,
2009).
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*
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A
management contract and compensatory plan or arrangement required to be
filed as an exhibit pursuant to Item 15(c) of Form
10-K.
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†
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Confidential
treatment has been requested and granted for a portion of this
exhibit.
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