Delaware | 6221 | 20-4568600 | ||
(State or other jurisdiction
of
incorporation or organization) |
(Primary Standard Industrial
Classification Code Number) |
(I.R.S. Employer
Identification Number) |
Andrew P. Gilbert, Esq.
David C. Schwartz, Esq. DLA Piper LLP 300 Campus Drive, Suite 100 Florham Park, New Jersey 07932 Tel: (973) 520-2550 Fax: (973) 520-2575 |
Joseph A. Hall, Esq.
Davis Polk & Wardwell LLP 450 Lexington Avenue New York, New York 10017 Tel: (212) 450-4500 Fax: (212) 450-3500 |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer þ | Smaller reporting company o |
Proposed Maximum
|
Proposed
|
|||||||||||
Title of Each Class of
|
Amount to be
|
Offering Price
|
Maximum Aggregate
|
Amount of
|
||||||||
Securities to Be Registered | Registered(1) | per Share(2) | Offering Price | Registration Fee(3) | ||||||||
Common Stock, par value $0.00001 per share
|
12,650,000 | $15.00 | $189,750,000 | $13,530 | ||||||||
(1) | Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(a) under the Securities Act of 1933, as amended. Includes shares of common stock that the underwriters have an option to purchase to cover over-allotments, if any. |
(2) | Anticipated to be between $13.00 and $15.00 per share. |
(3) | $13,574 of the registration fee has previously been paid. |
The
information in this prospectus is not complete and may be
changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these
securities and we are not soliciting offers to buy these
securities in any jurisdiction where the offer or sale is not
permitted.
|
Underwriting
|
Proceeds to
|
|||||||
Price to
|
Discounts and
|
Selling
|
||||||
Public | Commissions | Proceeds to Us | Stockholders | |||||
Per Share
|
$ | $ | $ | $ | ||||
Total
|
$ | $ | $ | $ |
MORGAN STANLEY | DEUTSCHE BANK SECURITIES |
JMP SECURITIES | RAYMOND JAMES |
SANDLER ONEILL + PARTNERS, L.P.
|
Page | ||||||||
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40 | ||||||||
40 | ||||||||
41 | ||||||||
41 | ||||||||
42 | ||||||||
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52 | ||||||||
82 | ||||||||
116 | ||||||||
155 | ||||||||
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165 | ||||||||
170 | ||||||||
173 | ||||||||
177 | ||||||||
181 | ||||||||
181 | ||||||||
181 | ||||||||
F-1 | ||||||||
EX-10.3 | ||||||||
EX-10.19 | ||||||||
EX-10.20 | ||||||||
EX-10.21 | ||||||||
EX-10.22 | ||||||||
EX-10.25 | ||||||||
EX-10.45 | ||||||||
EX-10.46 | ||||||||
EX-10.55 | ||||||||
EX-10.56 | ||||||||
EX-10.57 | ||||||||
EX-10.58 | ||||||||
EX-10.59 | ||||||||
EX-23.1 |
12
15
18
43
47
49
62
137
143
178
F-19
II-5
II-6
1
Table of Contents
2
Table of Contents
increasing recognition of currency trading as an alternative
investment and as a tool for portfolio diversification by retail
traders, authorized traders and investment professionals
globally;
improved access to the forex market, reduced transaction costs
and more efficient execution;
increased availability of investor education relating to the
forex market and trading opportunities;
expansion of marketing efforts by many leading firms in the
forex industry;
increasing media coverage of the forex market; and
rising global broadband and wireless penetration.
3
Table of Contents
4
Table of Contents
February 2009
We introduced trading of gold
and silver in the spot market.
August 2009
For our customers located outside
of the United States, we introduced trading in oil
contracts-for-difference,
including Brent Crude Oil and West Texas
contracts-for-difference.
September 2009
We launched a new version of
our active trader platform, FOREXTrader PRO, featuring an
updated user interface designed to improve overall usability and
deliver faster trade execution, enhanced charting tools and
improved chart-based trading capabilities.
February 2010
We introduced website trading
into the FOREX.com offering, which provides streamlined trading,
research and account management features in a secure, web-based
environment. The availability of website trading complements our
downloadable active trader platform, FOREXTrader PRO, and is an
important part of our long-term strategy to attract a more
diverse customer base, including novice traders who desire an
easy-to-use trading experience that also includes education,
research and customer support tools in a secure,
customer-friendly website, and self-directed retail investors in
the United States who are already accustomed to trading via the
websites of their online brokerage firms.
February 2010
We introduced a version of the
FOREX.com website designed for smartphones and web-enabled
mobile devices. This version provides customers and registered
practice trading account users with secure account access to
trade and manage their accounts from their mobile devices as
well as access to quotes, charts, news and research and an
extensive learning section featuring articles and video
tutorials.
March 2010
We launched GAIN GTX, our
institutional electronic communications network, for our
institutional customers consisting of commercial and investment
banks, hedge funds, institutional asset managers, corporate
treasuries and proprietary trading firms. GAIN GTX allows our
institutional customers to enter forex bids and offers or to buy
or sell instantly at competitive prices from leading
participating banks including forex dealers, clearing banks and
prime brokers.
April 2010
We launched a new Arabic language
service under our FOREX.com U.K. division to service growing
demand from retail traders in the Middle East.
June 2010
We further expanded our product
offering to include equity index
contracts-for-difference.
Equity index
contracts-for-difference
give our customers outside the United States access to trade
popular global equity indices located in the United Kingdom,
Germany, France and United States.
July 2010
We launched a full-featured iPhone
application that provides our customers and registered practice
trading account users with mobile trading capabilities along
with real-time news, charts, research and account information.
5
Table of Contents
The Retail Forex Market has Only Recently Become Accessible
to Retail Investors, and Accordingly, We Have a Limited
Operating History Upon Which to Evaluate Our
Performance.
Our prospects may be materially
adversely affected by the risks, expenses and difficulties
frequently encountered in the operation of a new business in a
rapidly evolving industry characterized by intense competition
and evolving regulatory oversight and rules.
Our Operations May be Restricted by Existing and Evolving
Regulatory Requirements
. We operate in a heavily
regulated environment that imposes significant compliance
requirements and where failure to comply may result in
regulatory actions and sanctions against us. For example, in
August 2010 the Commodity Futures Trading Commission released
new rules relating to the regulation of retail forex trading,
including minimum security deposits, registration, risk
disclosures relating to profits, record keeping, financial
reporting, minimum capital and other operational standards. In
addition, jurisdictions such as Japan and the United Kingdom
have imposed additional regulatory requirements on our business
operations in those jurisdictions.
The Susceptibility of Our Revenue and Profitability to
Changes in Domestic and International Market and Economic
Conditions
. Our revenue and profitability is
influenced by trading volume and currency volatility, which are
directly impacted by disruption and volatility in domestic and
international markets and economic conditions that are beyond
our control.
The Risk That Our Risk-Management Policies and Procedures May
not be Effective and May Expose us to Unidentified or
Unanticipated Risks
. We depend upon our
risk-management policies to identify, monitor and control a
variety of risks. Some of our methods for managing risk are
discretionary in nature and based upon internally developed
controls and observed historical market behaviors. Such policies
may not adequately prevent losses or anticipate changes in the
market.
6
Table of Contents
The Impact on Our Business from Potential Trading
Losses
. A substantial portion of our revenue and
operating profits is derived from our role as a market maker. In
such role, we are exposed to significant pricing and liquidity
risks, as well as to risks relating to possible inaccuracies in
our proprietary pricing mechanism, which may result in trading
losses.
The Risk of Corruption or Disruption of Our Proprietary
Technology
. Our success in the past has largely
been attributable to our proprietary technology. We rely on our
proprietary technology to receive and properly process internal
and external data in order to run our business. Any disruption
or corruption of our proprietary technology may result in
service interruptions or other negative consequences.
The Loss of Our Key Personnel.
Our key
employees have significant experience in the forex industry and
have made significant contributions to our business and
operations. Our continued success is dependent upon the
retention of these employees.
Our Dependence on Wholesale Forex Trading Partners and Prime
Brokers in Order to Continually Provide Our Market Making
Services
. Given the level of our customers
trading volume, we depend upon third-party financial
institutions to provide us with access to forex market liquidity
and competitive wholesale forex pricing spreads. In the event
that we no longer have access to the competitive wholesale forex
pricing spreads
and/or
levels of liquidity that we currently have, we may be unable to
provide competitive forex trading services, which will
materially adversely affect our business, financial condition
and results of operations and cash flows.
A Risk of Default by Financial Institutions Holding Our Funds
and Other Counterparties with Whom We do
Business.
Our forex market making operations
require a commitment of capital that involves risk of losses
because of the potential failure or default by the
counterparties with whom we do business.
7
Table of Contents
Forex Trading Products
Contracts-For-Difference
8
Table of Contents
Listed Exchange Products
9
Table of Contents
10
Table of Contents
11
Table of Contents
Common stock offered by us
407,692 shares
Common stock offered by the selling stockholders
10,592,308 shares
Total common stock offered in this offering
11,000,000 shares
Common stock to be outstanding immediately after this offering
31,148,058 shares
Over-allotment option
1,650,000 shares offered by selling stockholders
Use of proceeds
We intend to use the proceeds we receive from this offering only
to cover historical and expected costs from this offering. We
will not receive any of the proceeds from the sale of shares by
the selling stockholders. See Use of Proceeds.
Proposed New York Stock Exchange symbol
GCAP
Risk factors
See Risk Factors beginning on page 19 of this
prospectus and the other information included in this prospectus
for a discussion of factors you should carefully consider before
deciding to invest in shares of our common stock.
4,715,785 shares of common stock issuable upon the exercise
of outstanding stock options as of December 1, 2010 at a
weighted average exercise price of $2.32 per share;
1,909,843 shares of common stock issuable pursuant to
outstanding restricted stock units as of December 1, 2010;
3,297,743 shares of common stock issuable upon the exercise
of outstanding warrants as of December 1, 2010 at a
weighted average exercise price of $0.49 per share;
an aggregate of 1,400,000 shares of common stock that will
be reserved for future issuance under our 2010 Omnibus Incentive
Compensation Plan as of the closing of this offering; and
an aggregate of 500,000 shares of common stock that will be
reserved for future issuance under our 2011 Employee Stock
Purchase Plan.
Table of Contents
13
Table of Contents
Pro Forma
Pro Forma
for the
for the
Fiscal Year
Nine Months
Ended
Nine Months Ended
Ended
Year Ended December 31,
December 31,
September 30,
September 30,
2005
(1)
2006
(2)
2007
(2)
2008
(2)
2009
(2)
2009
(4)(5)
2009
(2)
2010
(2)
2010
(4)(5)
(in thousands, except share and per share data)
$
36,249
$
69,471
$
118,176
$
186,004
$
153,375
$
153,375
$
114,332
$
147,667
147,667
223
242
437
2,366
2,108
2,108
1,119
1,914
1,914
36,472
69,713
118,613
188,370
155,483
155,483
115,451
149,581
149,581
1,519
3,145
5,024
3,635
292
292
228
243
243
(110
)
(2,431
)
(4,299
)
(3,905
)
(2,456
)
(2,456
)
(1,848
)
(1,676
)
(1,676
)
1,409
714
725
(270
)
(2,164
)
(2,164
)
(1,620
)
(1,433
)
(1,433
)
37,881
70,427
119,338
188,100
153,319
153,319
113,831
148,148
148,148
9,511
17,258
25,093
37,024
41,503
41,503
29,621
34,031
34,031
3,256
12,517
21,836
29,312
36,875
36,875
26,791
28,192
28,192
7,279
10,321
10,436
16,310
14,955
14,955
10,431
18,601
18,601
507
935
2,316
3,754
4,466
4,466
3,415
3,170
3,170
494
897
1,911
2,496
2,689
2,689
2,013
2,568
2,568
424
873
1,659
2,467
2,676
2,676
1,950
2,209
2,209
530
1,045
1,616
2,419
3,548
3,548
2,391
2,963
2,963
836
574
1,164
1,418
760
760
593
514
514
761
1,295
1,380
3,104
3,729
3,729
2,549
2,623
2,623
21
78
123
888
1,132
1,132
712
1,431
1,431
15
48
187
773
698
698
565
205
205
1,897
61,732
165,280
(181,782
)
(1,687
)
(1,687
)
40,820
48,936
48,936
165
155
3,085
(627
)
1,424
1,746
1,746
1,091
3,846
3,846
23,789
110,823
232,374
(78,496
)
113,090
113,090
122,942
149,289
149,289
14,092
(40,396
)
(113,036
)
266,596
40,229
40,229
(9,111
)
(1,141
)
(1,141
)
5,881
9,063
21,615
34,977
12,556
12,556
11,423
18,192
18,192
(3
)
(43
)
(214
)
8,208
(49,502
)
(134,651
)
231,405
27,673
27,673
(20,534
)
(19,333
)
(19,333
)
(21
)
(321
)
(321
)
(15
)
(402
)
(402
)
$
8,208
$
(49,502
)
$
(134,651
)
$
231,426
$
27,994
$
27,994
$
(20,519
)
(18,931
)
$
(18,931
)
(39,006
)
(63,913
)
(63
)
2,205
$
8,145
$
(86,303
)
$
(134,651
)
$
167,513
$
27,994
$
27,994
$
(20,519
)
(18,931
)
(18,931
)
$
1.96
$
(30.90
)
$
(70.89
)
$
130.12
$
21.41
$
0.90
$
(15.71
)
$
(14.26
)
$
(0.61
)
$
0.49
$
(30.90
)
$
(70.89
)
$
11.17
$
1.88
$
0.74
$
(15.71
)
$
(14.26
)
$
(0.61
)
4,157,464
2,792,895
1,899,386
1,287,360
1,307,379
31,148,058
1,306,265
1,327,124
31,148,058
16,634,016
2,792,895
1,899,386
15,002,277
14,909,184
37,895,582
1,306,265
1,327,124
31,148,058
$
20.12
$
15.54
$
22.61
$
1.76
$
1.36
$
2.01
14
Table of Contents
Pro Forma
as of
As of December 31,
As of September 30,
September 30,
2005
2006
2007
2008
2009
2009
2010
2010
(4)(5)
(in thousands unless otherwise stated)
$
22,482
$
31,476
$
98,894
$
176,431
$
222,524
$
197,938
$
258,012
$
263,720
$
59,080
$
71,750
$
74,630
$
50,817
$
76,391
$
100,171
$
89,569
$
89,569
$
83,740
$
113,491
$
180,628
$
264,816
$
351,940
$
315,710
$
405,361
$
411,069
$
4,577
$
5,248
$
2,163
$
1,679
$
2,769
$
1,732
$
5,857
$
5,857
$
50,031
$
70,321
$
106,741
$
122,293
$
196,985
$
168,266
$
216,587
$
216,587
$
$
99,286
$
264,566
$
82,785
$
81,098
$
123,604
$
130,034
$
$
$
27,500
$
49,875
$
39,375
$
28,875
$
31,500
$
21,000
$
21,000
$
23,605
$
(154,242
)
$
(316,340
)
$
(172,154
)
$
(139,890
)
$
(188,831
)
$
(154,983
)
$
150,149
(1)
These amounts do not include the
impact of the embedded derivative liability of approximately
$37.6 million (unaudited) as of December 31, 2005 and
the change in fair value for the year ended December 31,
2005 of $28.8 million (unaudited).
(2)
For each of the periods indicated,
in accordance with Financial Accounting Standards Board
Accounting Standards Codification 815,
Derivatives and
Hedging
, we accounted for an embedded derivative liability
attributable to the redemption feature of our outstanding
preferred stock. This redemption feature and the associated
embedded derivative liability will no longer be required to be
recognized upon conversion of our preferred stock in connection
with the completion of this offering.
(3)
These adjusted amounts reflect the
reversal of the change in fair value associated with the
liability of our convertible, redeemable preferred stock
embedded derivative. For the year ended December 31, 2009
and the nine months ended September 30, 2009 and 2010, the
change in our preferred stock embedded derivative resulted in a
gain of $1.7 million and a loss of $40.8 million and $48.9
million, respectively.
(4)
Adjustments for the sale by the
Company of common stock pursuant to this offering based on an
assumed initial offering price of $14.00 per share, which is the
midpoint of the range listed on the cover page of this
prospectus, and the application of the estimated net proceeds
from this offering of $5.9 million, which gives effect to the
reimbursement of certain of our expenses by the underwriters, to
pay for our current and historical initial public offering
costs, which includes estimated expenses to be incurred of
$3.0 million.
(5)
Immediately prior to consummation
of the initial public offering, all convertible, redeemable
preferred stock will convert to common stock. The Company will
issue 407,692 shares of common stock to cover all of the
estimated costs for initial public offering. The common stock
split and conversions of the convertible, redeemable preferred
stock will result in 31,148,058 common shares issued and to be
outstanding after the offering. In addition the convertible,
redeemable preferred stock embedded derivative will be settled
in the Companys common stock and the liability will be
applied to additional paid in capital. We made pro forma
adjustments to the historical results of operations for the
fiscal year ended December 31, 2009 and for the nine months
ended September 30, 2010 to show the pro forma effect for
the
2.29-for-1
stock split of our common stock effected immediately prior to
the completion of this offering, the conversion of all of our
Series A, B, C, D, and E preferred stock into an
aggregate of 27,757,770 shares of common stock upon the
closing of this offering of our common stock and the offering of
407,692 shares of common stock which is based upon the initial
public offering price of $14.00 per share, the midpoint of the
estimated price range listed on the cover page of this
prospectus and other terms of this offering determined at
pricing.
Table of Contents
As of December 31,
As of September 30,
2005
2006
2007
2008
2009
2009
2010
($ in thousands unless otherwise stated)
30,626
63,576
105,924
154,190
211,136
195,559
264,834
3,202
8,395
19,869
27,358
27,362
27,362
28,819
11,761
27,836
41,120
36,744
51,652
47,374
70,618
1,631
4,799
9,702
2,839
1
8
1,029
$
20,065
$
15,296
$
44,856
$
98,571
$
71,087
$
68,604
$
60,565
Nine Months Ended
Year Ended December 31,
September 30,
2005
2006
2007
2008
2009
2009
2010
($ in thousands unless otherwise stated)
13,896
28,270
43,139
52,555
52,755
43,565
52,486
2,416
5,533
11,568
11,647
7
6
269
$
231.9
$
447.4
$
674.5
$
1,498.6
$
1,246.7
$
928.3
$
1,093.9
$
24.4
$
50.8
$
103.4
$
172.4
$
0.4
$
0.2
$
0.7
$
70.2
$
102.8
$
184.2
$
277.3
$
257.1
$
186.9
$
205.5
$
6.8
$
10.5
$
26.0
$
25.3
$
(1.4
)
$
(1.3
)
$
0.3
$
156.3
$
155.3
$
175.2
$
124.1
$
123.0
$
122.6
$
154.1
(6)
Opened retail customer accounts
represent accounts opened with us on a cumulative basis at any
time since we commenced operations.
(7)
Adjusted net capital in excess of
regulatory requirements represents the excess funds over the
regulatory minimum requirements as defined by the regulatory
bodies that regulate our operating subsidiaries.
Nine Months Ended
September 30,
2005
2006
2007
2008
2009
2009
2010
$
122.2
$
238.3
$
355.4
$
878.9
$
679.2
$
506.8
$
579.0
24.4
50.8
103.4
172.4
0.4
0.2
(9)
0.7
(10)
9.6
29.2
58.6
122.9
142.5
122.2
62.9
27.9
42.9
64.3
153.1
179.5
126.5
182.3
33.8
42.7
54.0
96.4
159.1
110.0
194.5
14.0
43.5
38.8
74.9
86.0
62.6
74.5
$
231.9
$
447.4
$
674.5
$
1,498.6
$
1,246.7
$
928.3
$
1,093.9
(8)
As a result of our review of our
regulatory compliance in China, we decided to terminate our
service offerings to residents of China and ceased our trading
operations located in that country as of December 31, 2008.
(9)
For the year ended
December 31, 2009, a small number of existing customer
accounts, which were originally opened through our relationship
with one of our introducing brokers prior to the termination of
our service offering in China, continued to trade using our
platform. The trading activity by these residual accounts
resulted in the trading volume for the period. All of these
accounts were closed as of December 31, 2009.
(10)
Based on our most recent review of
the relevant regulatory requirements in China, we now believe
that we can accept customers from China if the customers come to
our website without being solicited by us or by our introducing
brokers, agents or white label partners to do so. As a result,
we began accepting non-solicited customers from China in June
2010.
16
Table of Contents
Nine Months Ended
Year Ended December 31,
September 30,
2007
2008
2009
2009
2010
(in thousands unless otherwise stated)
$
(134,651
)
$
231,426
$
27,994
$
(20,519
)
$
(18,931
)
165,280
(181,782
)
(1,687
)
40,820
48,936
$
30,629
$
49,644
$
26,307
$
20,301
$
30,005
$
16.13
$
38.56
$
20.12
$
15.54
$
22.61
$
2.05
$
3.31
$
1.76
$
1.36
$
2.01
17
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As of September 30, 2010
Actual
Pro Forma
(in thousands)
$
258,012
$
263,720
$
405,361
$
411,069
$
21,000
$
21,000
$
169,390
$
$
(154,983
)
$
150,149
Table of Contents
19
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price changes in foreign currencies;
lack of liquidity in foreign currencies in which we have
positions; and
inaccuracies in our proprietary pricing mechanism, or rate
engine, which evaluates, monitors and assimilates market data
and reevaluates our outstanding currency quotes, and is designed
to publish prices reflective of prevailing market conditions
throughout the trading day.
20
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21
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22
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23
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24
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25
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changing customer demands;
the need to enhance existing services and products or introduce
new services and products;
evolving industry practices; and
rapidly evolving technology solutions.
develop products and services that are similar to ours, or that
are more attractive to customers than ours, in one or more of
our markets;
provide products and services we do not offer;
provide execution and clearing services that are more rapid,
reliable or efficient, or less expensive than ours;
offer products and services at prices below ours to gain market
share and to promote other businesses, such as forex options
listed securities, CFDs, spot-precious metals and OTC
derivatives;
adapt at a faster rate to market conditions, new technologies
and customer demands;
offer better, faster and more reliable technology;
outbid us for desirable acquisition targets;
more efficiently engage in and expand existing relationships
with strategic alliances;
market, promote and sell their products and services more
effectively; and
develop stronger relationships with customers.
26
Table of Contents
less developed or mature local technological infrastructure and
higher costs, which could make our products and services less
attractive or accessible in emerging markets;
difficulty in complying with the diverse regulatory requirements
of multiple jurisdictions, which may be more burdensome, not
clearly defined, and subject to unexpected changes, potentially
exposing us to significant compliance costs and regulatory
penalties;
less developed and established local financial and banking
infrastructure, which could make our products and services less
accessible in emerging markets;
reduced protection of intellectual property rights;
inability to enforce contracts in some jurisdictions;
difficulties and costs associated with staffing and managing
foreign operations, including reliance on newly hired local
personnel;
tariffs and other trade barriers;
currency and tax laws that may prevent or restrict the transfer
of capital and profits among our various operations around the
world; and
time zone, language and cultural differences among personnel in
different areas of the world.
27
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28
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29
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direct marketing to retail investors including the operation of
a website specifically targeted to investors in a particular
foreign jurisdiction; and
dealing with customers unless they can be classified as
professional, sophisticated or high net worth investors.
30
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31
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32
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33
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34
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35
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quarterly variations in our results of operations and cash flows
or the results of operations and cash flows of our competitors;
36
Table of Contents
our failure to achieve actual operating results that meet or
exceed guidance that we may have provided due to factors beyond
our control, such as currency volatility and trading volumes;
future announcements concerning us or our competitors, including
the announcement of acquisitions;
changes in government regulations or in the status of our
regulatory approvals or licensure;
public perceptions of risks associated with our services or
operations;
developments in our industry; and
general economic, market and political conditions and other
factors that may be unrelated to our operating performance or
the operating performance of our competitors.
support more rapid expansion;
develop new or enhanced services and products;
37
Table of Contents
respond to competitive pressures;
acquire complementary businesses, products or
technologies; or
respond to unanticipated requirements.
38
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39
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40
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41
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on an actual basis; and
on a pro forma basis to give effect to (i) the filing of
our amended and restated certificate of incorporation to reflect
the 2.29-for-1 stock split of our common stock effected
immediately prior to the completion of this offering,
(ii) the conversion of each share of our outstanding
preferred stock into an aggregate of 27,757,770 shares of
common stock prior to the completion of this offering (for
further information, please see Description of Capital
Stock), and (iii) the sale of
407,692 shares of our common stock at an assumed initial
public offering price of $14.00 per share, the midpoint of the
estimated price range listed on the cover page of this
prospectus and after deducting the estimated underwriting
discount and giving effect to the reimbursement of certain of
our expenses by the underwriters, which such proceeds will be
used to pay the current and historical estimated offering
expenses payable by us, including expenses related to the sale
of shares of our common stock by the selling stockholders.
As of September 30, 2010
Actual
Pro Forma
(in thousands, except share data)
$
258,012
$
263,720
$
21,000
$
21,000
2,009
5,412
5,319
39,840
116,810
42
Table of Contents
As of September 30, 2010
Actual
Pro Forma
(in thousands, except share data)
169,390
(174,795
)
130,337
548
548
19,264
19,264
(154,983
)
150,149
$
35,407
$
171,149
4,715,785 shares of our common stock issuable upon the
exercise of options that were outstanding as of December 1,
2010, with a weighted average exercise price of $2.32 per share;
1,909,843 shares of common stock issuable pursuant to
outstanding restricted stock units as of December 1, 2010;
3,297,743 shares of common stock issuable upon exercise of
warrants outstanding as of December 1, 2010 at a weighted
average exercise price of $0.49 per share;
1,400,000 shares of common stock reserved for future
issuance under our 2010 Omnibus Incentive Compensation Plan,
which will become effective on the date of this
prospectus; and
500,000 shares of common stock reserved for future issuance
under our 2011 Employee Stock Purchase Plan, which will become
effective on the date of this prospectus.
Table of Contents
$
14.00
$
10.64
6.00
$
4.64
0.18
4.82
$
9.18
Total
Average
Shares Purchased
Consideration
Price Per
Number
Percent
Amount
Percent
Share
30,740,366
98.7
%
$
165,077,178
96.7
%
$
5.37
407,692
1.3
5,707,692
3.3
14.00
31,148,058
100.0
%
$
170,784,870
100.0
%
$
5.48
44
Table of Contents
4,715,785 shares of common stock issuable upon the exercise
of outstanding stock options as of December 1, 2010 at a
weighted average exercise price of $2.32 per share;
1,909,843 shares of common stock issuable pursuant to
outstanding restricted stock units as of December 1, 2010;
3,297,743 shares of common stock issuable upon exercise of
outstanding warrants as of December 1, 2010 at a weighted
average exercise price of $0.49 per share;
an aggregate of 1,400,000 shares of common stock that will
be reserved for future issuance under our 2010 Omnibus Incentive
Compensation Plan as of the closing of this offering; and
an aggregate of 500,000 shares of common stock that will be
reserved for future issuance under our 2011 Employee Stock
Purchase Plan.
45
Table of Contents
Nine Months Ended
Year Ended December 31,
September 30,
2005
(1)
2006
(2)
2007
(2)
2008
(2)
2009
(2)
2009
(2)
2010
(2)
(in thousands, except share and per share data)
$
36,249
$
69,471
$
118,176
$
186,004
$
153,375
$
114,332
$
147,667
223
242
437
2,366
2,108
1,119
1,914
36,472
69,713
118,613
188,370
155,483
115,451
149,581
1,519
3,145
5,024
3,635
292
228
243
(110
)
(2,431
)
(4,299
)
(3,905
)
(2,456
)
(1,848
)
(1,676
)
1,409
714
725
(270
)
(2,164
)
(1,620
)
(1,433
)
37,881
70,427
119,338
188,100
153,319
113,831
148,148
9,511
17,258
25,093
37,024
41,503
29,621
34,031
3,256
12,517
21,836
29,312
36,875
26,791
28,192
7,279
10,321
10,436
16,310
14,955
10,431
18,601
507
935
2,316
3,754
4,466
3,415
3,170
494
897
1,911
2,496
2,689
2,013
2,568
424
873
1,659
2,467
2,676
1,950
2,209
530
1,045
1,616
2,419
3,548
2,391
2,963
46
Table of Contents
Nine Months Ended
Year Ended December 31,
September 30,
2005
(1)
2006
(2)
2007
(2)
2008
(2)
2009
(2)
2009
(2)
2010
(2)
(in thousands, except share and per share data)
836
574
1,164
1,418
760
593
514
761
1,295
1,380
3,104
3,729
2,549
2,623
21
78
123
888
1,132
712
1,431
15
48
187
773
698
565
205
1,897
61,732
165,280
(181,782
)
(1,687
)
40,820
48,936
165
155
3,085
(627
)
1,424
1,746
1,091
3,846
23,789
110,823
232,374
(78,496
)
113,090
122,942
149,289
14,092
(40,396
)
(113,036
)
266,596
40,229
(9,111
)
(1,141
)
5,881
9,063
21,615
34,977
12,556
11,423
18,192
(3
)
(43
)
(214
)
8,208
(49,502
)
(134,651
)
231,405
27,673
(20,534
)
(19,333
)
(21
)
(321
)
(15
)
(402
)
$
8,208
$
(49,502
)
$
(134,651
)
$
231,426
$
27,994
$
(20,519
)
$
(18,931
)
(39,006
)
(63,913
)
(63
)
2,205
$
8,145
$
(86,303
)
$
(134,651
)
$
167,513
$
27,994
$
(20,519
)
(18,931
)
$
1.96
$
(30.90
)
$
(70.89
)
$
130.12
$
21.41
$
(15.71
)
$
(14.26
)
$
0.49
$
(30.90
)
$
(70.89
)
$
11.17
$
1.88
$
(15.71
)
$
(14.26
)
4,157,464
2,792,895
1,899,386
1,287,360
1,307,379
1,306,265
1,327,124
16,634,016
2,792,895
1,899,386
15,002,277
14,909,184
1,306,265
1,327,124
$
20.12
$
15.54
$
22.61
$
1.76
$
1.36
$
2.01
Table of Contents
For the Twelve Months Ended December 31, 2009
For the Nine Months Ended September 30, 2010
As Reported
Adjustments
(4)(5)
Pro Forma
As Reported
Adjustments
(4)(5)
Pro Forma
$
153,375
$
$
153,375
$
147,667
$
$
147,667
2,108
2,108
1,914
1,914
155,483
155,483
149,581
149,581
292
292
243
243
(2,456
)
(2,456
)
(1,676
)
(1,676
)
(2,164
)
(2,164
)
(1,433
)
(1,433
)
153,319
153,319
148,148
148,148
41,503
41,503
34,031
34,031
36,875
36,875
28,192
28,192
14,955
14,955
18,601
18,601
4,466
4,466
3,170
3,170
2,689
2,689
2,568
2,568
2,676
2,676
2,209
2,209
3,548
3,548
2,963
2,963
760
760
514
514
3,729
3,729
2,623
2,623
1,132
1,132
1,431
1,431
698
698
205
205
(1,687
)
(1,687
)
48,936
48,936
1,746
1,746
3,846
3,846
113,090
113,090
149,289
149,289
$
40,229
$
$
40,229
$
(1,141
)
$
$
(1,141
)
12,556
12,556
18,192
18,192
27,673
27,673
(19,333
)
(19,333
)
(321
)
(321
)
(402
)
(402
)
27,994
27,994
(18,931
)
(18,931
)
$
$
$
$
$
$
$
$
$
$
$
$
$
27,994
$
$
27,994
$
(18,931
)
$
$
(18,931
)
$
21.41
$
$
0.90
$
(14.26
)
$
$
(0.61
)
$
1.88
$
$
0.74
$
(14.26
)
$
$
(0.61
)
1,307,379
29,840,679
31,148,058
1,327,124
29,820,934
31,148,058
14,909,184
22,986,398
37,895,582
1,327,124
29,820,934
31,148,058
48
Table of Contents
Pro Forma as of
As of December 31,
As of September 30,
September 30,
2005
2006
2007
2008
2009
2009
2010
2010
(4)(5)
(in thousands unless otherwise stated)
$
22,482
$
31,476
$
98,894
$
176,431
$
222,524
$
197,938
$
258,012
$
263,720
$
59,080
$
71,750
$
74,630
$
50,817
$
76,391
$
100,171
$
89,569
$
89,569
$
83,740
$
113,491
$
180,628
$
264,816
$
351,940
$
315,710
$
405,361
$
411,069
$
4,577
$
5,248
$
2,163
$
1,679
$
2,769
$
1,732
$
5,857
$
5,857
$
50,031
$
70,321
$
106,741
$
122,293
$
196,985
$
168,266
$
216,587
$
216,587
$
$
99,286
$
264,566
$
82,785
$
81,098
$
123,604
$
130,034
$
$
$
27,500
$
49,875
$
39,375
$
28,875
$
31,500
$
21,000
$
21,000
$
23,605
$
(154,242
)
$
(316,340
)
$
(172,154
)
$
(139,890
)
$
(188,831
)
$
(154,983
)
$
150,149
(1)
These amounts do not include the
impact of the embedded derivative liability of approximately
$37.6 million (unaudited) as of December 31, 2005 and
the change in fair value for the year ended December 31,
2005 of $28.8 million (unaudited).
(2)
For each of the periods indicated,
in accordance with FASB ASC 815,
Derivatives and
Hedging
, we accounted for an embedded derivative liability
attributable to the redemption feature of our outstanding
preferred stock. This redemption feature and the associated
embedded derivative liability will no longer be required to be
recognized upon conversion of our preferred stock in connection
with the completion of this offering.
(3)
These adjusted amounts reflect the
reversal of the change in fair value associated with the
liability of our convertible, redeemable preferred stock
embedded derivative. For the year ended December 31, 2009
and the nine months ended September 30, 2009 and 2010, the
change in our preferred stock embedded derivative resulted in a
gain of $1.7 million and a loss of $40.8 million and
$48.9 million, respectively.
(4)
Adjustments for the sale by the
Company of common stock pursuant to this offering based on an
assumed initial offering price of $14.00 per share, which is the
midpoint of the range listed on the cover page of this
prospectus, and the application of the estimated net proceeds
from this offering of $5.9 million, which gives effect to
the reimbursement of certain of our expenses by the
underwriters, to pay for our current and historical initial
public offering costs which includes estimated expenses to be
incurred of $3.0 million.
(5)
Immediately prior to consummation
of the initial public offering, all convertible, redeemable
preferred stock will convert to common stock. The Company will
issue 407,692 shares of common stock to cover all of the
estimated costs for initial public offering. The common stock
split and conversions of the convertible, redeemable preferred
stock will result in 31,148,058 common shares issued and to be
outstanding after the Offering. In addition the convertible,
redeemable preferred stock embedded derivative will be settled
in the Companys common stock and the liability will be
applied to additional paid in capital. We made pro forma
adjustments to the historical results of operations for the
fiscal year ended December 31, 2009 and for the nine months
ended September 30, 2010 to show the pro forma effect for
the
2.29-for-1
stock split of our common stock effected immediately prior to
the completion of this offering, the conversion of all of our
Series A, B, C, D, and E preferred stock into an
aggregate of 27,757,770 shares of common stock upon the
closing of this offering of our common stock and the offering of
407,692 shares of common stock which is based upon the initial
public offering price of $14.00 per share, the midpoint of the
estimated price range listed on the cover page of this
prospectus and other terms of this offering determined at
pricing.
Table of Contents
As of December 31,
As of September 30,
2005
2006
2007
2008
2009
2009
2010
($ in thousands unless otherwise stated)
30,626
63,576
105,924
154,190
211,136
195,559
264,834
3,202
8,395
19,869
27,358
27,362
27,362
28,819
11,761
27,836
41,120
36,744
51,652
47,374
70,618
1,631
4,799
9,702
2,839
1
8
1,029
$
20,065
$
15,296
$
44,856
$
98,571
$
71,087
$
68,604
$
60,565
Nine Months
Year Ended December 31,
Ended September 30,
2005
2006
2007
2008
2009
2009
2010
($ in thousands unless otherwise stated)
13,896
28,270
43,139
52,555
52,755
43,565
52,486
2,416
5,533
11,568
11,647
7
6
269
$
231.9
$
447.4
$
674.5
$
1,498.6
$
1,246.7
$
928.3
$
1,093.9
$
24.4
$
50.8
$
103.4
$
172.4
$
0.4
$
0.2
$
0.7
$
70.2
$
102.8
$
184.2
$
277.3
$
257.1
$
186.9
$
205.5
$
6.8
$
10.5
$
26.0
$
25.3
$
(1.4
)
$
(1.3
)
$
0.3
$
156.3
$
155.3
$
175.2
$
124.1
$
123.0
$
122.6
$
154.1
(6)
Opened customer accounts represent
accounts opened with us on a cumulative basis at any time since
we commenced operations.
(7)
Adjusted net capital in excess of
regulatory requirements represents the excess funds over the
regulatory minimum requirements as defined by the regulatory
bodies that regulate our operating subsidiaries.
50
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Nine Months
Ended September 30,
2005
2006
2007
2008
2009
2009
2010
$
122.2
$
238.3
$
355.4
$
878.9
$
679.2
$
506.8
$
579.0
24.4
50.8
103.4
172.4
0.4
0.2
(9)
0.7
(10)
9.6
29.2
58.6
122.9
142.5
122.2
62.9
27.9
42.9
64.3
153.1
179.5
126.5
182.3
33.8
42.7
54.0
96.4
159.1
110.0
194.5
14.0
43.5
38.8
74.9
86.0
62.6
74.5
$
231.9
$
447.4
$
674.5
$
1,498.6
$
1,246.7
$
928.3
$
1,093.9
(8)
As a result of our review of our
regulatory compliance in China, we decided to terminate our
service offerings to residents of China and ceased our trading
operations located in that country as of December 31, 2008.
(9)
For the year ended
December 31, 2009, a small number of existing customer
accounts, which were originally opened through our relationship
with one of our introducing brokers prior to the termination of
our service offering in China, continued to trade using our
platform. The trading activity by these residual accounts
resulted in the trading volume for the period, and all were
closed as of December 31, 2009.
(10)
Based on our most recent review of
the relevant regulatory requirements in China, we now believe
that we can accept customers from China if the customers come to
our website without being solicited by us or by our introducing
brokers, agents or white label partners to do so. As a result,
we began accepting non-solicited customers from China in June
2010.
51
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FINANCIAL CONDITION AND RESULTS OF OPERATIONS
52
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customer trading volume;
retail trading revenue per million traded;
net deposits received from retail customers;
traded retail accounts, and
retail customer equity.
53
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changes in the financial strength of market participants;
economic and political conditions;
trends in business and finance;
changes in the supply, demand and volume of foreign currency
transactions; and
legislative changes; and regulatory changes.
the effectiveness of our sales activities;
the attractiveness of our superior website;
the effectiveness of our customer service team; and
the effectiveness of our marketing activities.
54
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55
Table of Contents
Nine Months
Year Ended December 31,
Ended September 30,
2007
2008
2009
2009
2010
(in thousands unless otherwise stated)
$
(134,651
)
$
231,426
$
27,994
$
(20,519
)
$
(18,931
)
165,280
(181,782
)
(1,687
)
40,820
48,936
$
30,629
$
49,644
$
26,307
$
20,301
$
30,005
$
16.13
$
38.56
$
20.12
$
15.54
$
22.61
$
2.05
$
3.31
$
1.76
$
1.36
$
2.01
$
119,338
$
188,100
$
153,319
$
113,831
$
148,148
232,374
(78,496
)
113,090
122,942
149,289
(113,036
)
266,596
40,229
(9,111
)
(1,141
)
165,280
(181,782
)
(1,687
)
40,820
48,936
$
52,244
$
84,814
$
38,542
$
31,709
$
47,795
$
21,615
$
34,977
$
12,556
$
11,423
$
18,192
41.4
%
41.2
%
32.6
%
36.0
%
38.1
%
56
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57
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Nine Months
Nine Months
Ended
Ended
Increase/
September 30,
% of Net
September 30,
% of Net
(Decrease)
2009
Revenue
2010
Revenue
Amount
%
(dollars in thousands)
114,332
100.4
%
147,667
99.7
%
33,335
29.2
%
1,119
0.1
%
1,914
1.3
%
795
7.1
%
115,451
101.4
%
149,581
101.0
%
34,130
29.6
%
228
0.2
%
243
0.2
%
15
6.6
%
(1,848
)
(1.6
)%
(1,676
)
(1.1
)%
172
(9.3
)%
(1,620
)
(1.4
)%
(1,433
)
(1.0
)%
187
(11.5
)%
113,831
100.0
%
148,148
100.0
%
34,317
30.1
%
29,621
26.0
%
34,031
23.0
%
4,410
14.9
%
26,791
23.5
%
28,192
19.0
%
1,401
5.2
%
10,431
9.2
%
18,601
12.6
%
8,170
78.3
%
3,415
3.0
%
3,170
2.1
%
(245
)
(7.2
)%
2,013
1.8
%
2,568
1.7
%
555
27.6
%
1,950
1.7
%
2,209
1.5
%
259
13.3
%
2,391
2.1
%
2,963
2.0
%
572
23.9
%
593
0.5
%
514
0.3
%
(79
)
(13.3
)%
2,549
2.2
%
2,623
1.8
%
74
2.9
%
712
0.6
%
1,431
1.0
%
719
101.0
%
565
0.5
%
205
0.1
%
(360
)
(63.7
)%
40,820
35.9
%
48,936
33.0
%
8,116
19.9
%
1,091
1.0
%
3,846
2.6
%
2,755
252.5
%
122,942
108.0
%
149,289
100.8
%
26,347
21.4
%
(9,111
)
(8.0
)%
(1,141
)
(0.8
)%
7,970
(87.5
)%
11,423
10.0
%
18,192
12.3
%
6,769
59.3
%
0.0
%
0.0
%
0.0
%
(20,534
)
(18.0
)%
(19,333
)
(13.0
)%
1,201
(5.8
)%
(15
)
(0.0
)%
(402
)
(0.3
)%
(387
)
2,580.0
%
(20,519
)
(18.0
)%
(18,931
)
(12.8
)%
1,588
(7.7
)%
58
Table of Contents
customer trading volume increased by $165.6 billion to
$1,093.9 billion, or 17.8%;
retail trading revenue per million traded increased by $31.5 to
$154.1, or 25.7%;
net deposits received from retail customers increased by
$18.6 million to $205.5 million, or 10.0%; and
traded retail accounts increased from 43,565 to 52,486, or 20.5%.
59
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60
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Year Ended
Year Ended
Year Ended
Increase/(Decrease)
December 31,
% of Net
December 31,
% of Net
December 31,
% of Net
2008 Over
2009 Over
2007
Revenue
2008
Revenue
2009
Revenue
2007
2008
(dollars in thousands)
$
118,176
99.0
%
$
186,004
98.9
%
$
153,375
100.0
%
57.4
%
(17.5
)%
437
0.4
%
2,366
1.3
%
2,108
1.4
%
441.4
%
(10.9
)%
118,613
99.4
%
188,370
100.1
%
155,483
101.4
%
58.8
%
(28.4
)%
5,024
4.2
%
3,635
1.9
%
292
0.2
%
(27.6
)%
(92.0
)%
(4,299
)
(3.6
)%
(3,905
)
(2.1
)%
(2,456
)
(1.6
)%
(9.2
)%
(37.1
)%
725
0.6
%
(270
)
(0.1
)%
(2,164
)
(1.4
)%
(137.2
)%
701.5
%
119,338
100.0
%
188,100
100.0
%
153,319
100.0
%
57.6
%
(18.5
)%
25,093
21.0
%
37,024
19.7
%
41,503
27.1
%
47.5
%
12.1
%
21,836
18.3
%
29,312
15.6
%
36,875
24.1
%
34.2
%
25.8
%
10,436
8.7
%
16,310
8.7
%
14,955
9.8
%
56.3
%
(8.3
)%
2,316
1.9
%
3,754
2.0
%
4,466
2.9
%
62.1
%
19.0
%
1,911
1.6
%
2,496
1.3
%
2,689
1.8
%
30.6
%
7.7
%
1,659
1.4
%
2,467
1.3
%
2,676
1.7
%
48.7
%
8.5
%
1,616
1.4
%
2,419
1.3
%
3,548
2.3
%
49.7
%
46.7
%
1,164
1.0
%
1,418
0.8
%
760
0.5
%
21.8
%
(46.4
)%
1,380
1.2
%
3,104
1.7
%
3,729
2.4
%
124.9
%
20.1
%
123
0.1
%
888
0.5
%
1,132
0.7
%
622.0
%
27.5
%
187
0.2
%
773
0.4
%
698
0.5
%
313.4
%
(9.7
)%
0.0
%
1,897
1.0
%
0.0
%
0.0
%
(100.0
)%
165,280
138.5
%
(181,782
)
(96.6
)%
(1,687
)
(1.1
)%
(210.0
)%
(99.1
)%
(627
)
(0.5
)%
1,424
0.8
%
1,746
1.1
%
(327.1
)%
22.6
%
$
232,374
194.7
%
$
(78,496
)
(41.7
)%
$
113,090
73.8
%
(133.8
)%
(244.1
)%
$
(113,036
)
(94.7
)%
$
266,596
141.7
%
$
40,229
26.2
%
(335.9
)%
(84.9
)%
21,615
18.1
%
34,977
18.6
%
12,556
8.2
%
61.8
%
(64.1
)%
0.0
%
(214
)
(0.1
)%
0.0
%
0
(100.0
)%
61
Table of Contents
Year Ended
Year Ended
Year Ended
Increase/(Decrease)
December 31,
% of Net
December 31,
% of Net
December 31,
% of Net
2008 Over
2009 Over
2007
Revenue
2008
Revenue
2009
Revenue
2007
2008
(dollars in thousands)
(134,651
)
(112.8
)%
231,405
123.0
%
27,673
18.0
%
(271.9
)%
(88.0
)%
0.0
%
(21
)
0.0
%
(321
)
(0.2
)%
0.0
%
1428.6
%
$
(134,651
)
(112.8
)%
$
231,426
123.0
%
$
27,994
18.3
%
(271.9
)%
(87.9
)%
customer trading volume decreased by $251.9 billion to
$1,246.7 billion, or 16.8% ($0.4 million of trading
volume was attributable to customers residing in China for the
year ended December 31, 2009 compared to
$172.4 billion for the year ended December 31, 2008);
retail trading revenue per million traded decreased by $1.1 to
$123.0, or 0.9%;
net deposits received from retail customers decreased by
$20.2 million to net deposits of $257.1 million, or
7.3% ($1.4 million of withdrawals were attributable to
customers residing in China for the year ended December 31,
2009 compared to $25.3 million of net deposits during the
year ended December 31, 2008); and
traded retail accounts increased from 52,555 to 52,755 (seven
traded retail accounts were attributable to customers residing
in China for year ended December 31, 2009 compared to
11,647 traded retail accounts for the year ended
December 31, 2008).
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63
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64
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customer trading volume increased by $824.0 billion to
$1,498.6 billion, or 122.2% ($172.4 billion of trading
volume was attributable to customers residing in China for the
year ended December 31, 2008 compared to
$103.4 million for the year ended December 31, 2007);
retail trading revenue per million traded decreased by $51.1 to
$124.1, or 29.2%;
net deposits received from retail customers increased by
$93.1 million to $277.3 million, or 50.5%
($25.3 million of net deposits received was attributable to
customers residing in China for the year ended December 31,
2008 compared to $26.0 for the year ended December 31,
2007); and
traded retail accounts increased from 43,139 to 52,555, or 21.8%
(11,647 traded retail accounts were attributable to customers
residing in China for the year ended December 31, 2008).
65
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66
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67
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Three Months Ended
September 30,
December 31,
March 31,
June 30,
September 30,
December 31,
March 31,
June 30,
September 30,
2008
2008
(1)
2009
2009
2009
2009
2010
2010
2010
(dollars in thousands)
(unaudited)
$
42,921
$
56,673
$
31,885
$
45,208
$
37,239
$
39,043
$
42,059
$
54,459
$
51,149
1,226
383
710
257
152
989
446
730
738
44,147
57,056
32,595
45,465
37,391
40,032
42,505
55,189
51,887
1,008
455
91
79
57
65
63
103
77
(999
)
(747
)
(631
)
(614
)
(603
)
(608
)
(599
)
(585
)
(492
)
9
(292
)
(540
)
(535
)
(546
)
(543
)
(536
)
(482
)
(415
)
44,156
56,764
32,055
44,930
36,845
39,489
41,969
54,707
51,472
10,026
9,571
9,350
10,232
10,038
11,883
11,218
11,379
11,434
6,474
7,337
8,539
9,407
8,845
10,084
9,863
8,940
9,389
4,042
3,319
2,729
3,702
4,000
4,524
5,141
7,129
6,331
874
1,159
1,082
1,115
1,218
1,051
1,042
1,141
987
711
599
652
699
662
676
789
860
919
576
786
651
629
669
727
751
719
739
714
704
729
779
883
1,157
962
956
1,045
917
129
(167
)
156
603
168
242
113
159
1,119
1,123
736
920
892
1,181
692
821
1,110
283
347
284
250
177
421
426
600
405
237
207
181
207
177
133
67
70
68
1,897
(56,944
)
(11,502
)
4,303
57,654
(21,137
)
(42,507
)
(59,463
)
(820
)
109,219
417
382
179
560
352
655
589
1,615
1,642
$
(30,554
)
$
16,058
$
29,248
$
86,310
$
7,379
$
(9,847
)
$
(27,681
)
$
33,523
$
143,447
$
74,710
$
40,706
$
2,807
$
(41,380
)
$
29,466
$
49,336
$
69,650
$
21,184
$
(91,975
)
8,167
10,935
2,948
7,198
1,277
1,133
4,090
7,389
6,713
(44
)
(134
)
66,499
29,637
(141
)
(48,578
)
28,189
48,203
65,560
13,795
(98,688
)
(21
)
(45
)
34
(4
)
(306
)
(402
)
GAIN Capital Holdings, Inc.
$
66,499
$
29,658
$
(96
)
$
(48,612
)
$
28,193
$
48,509
$
65,962
$
13,795
(98,688
)
(1)
As of December 31, 2008, we
terminated our service offerings to residents of China and
ceased our trading operations located in that country.
68
Table of Contents
Minimum Regulatory
Capital Levels
Excess Net
Entity Name
Capital Requirements
Maintained
Capital
$
25.84
$
63.12
$
37.28
$
0.05
$
0.42
$
0.37
$
2.03
$
18.33
$
16.30
$
3.37
$
8.71
$
5.34
$
0.14
$
0.73
$
0.59
$
0.39
*
$
0.91
$
0.52
$
0.10
$
0.26
$
0.16
*
Which reflects the higher of
$0.39 million or the sum of 1.5% of its aggregate gross
foreign currency position and 5.0% of its adjusted liabilities
(as calculated in accordance with the Securities and Futures
(Financial Resources) Rules (Cap. 571N)).
69
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70
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Year Ended December 31,
Nine Months Ended September 30,
2007
2008
2009
2009
2010
$
77,774
$
69,320
$
62,127
$
32,349
$
55,088
(2,528
)
(3,792
)
(5,003
)
(2,748
)
(3,787
)
(7,828
)
12,062
(11,788
)
(8,573
)
(8,332
)
(53
)
757
479
(7,481
)
$
98,894
176,431
$
222,524
$
197,938
$
258,012
71
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72
Table of Contents
Payments Due by Period
Less Than 1
1-3
3-5
More Than
Contractual
Obligations
Total
Year
Years
Years
5 Years
(in thousands)
$
17,316
$
1,127
$
2,156
$
1,980
$
12,053
28,875
10,500
18,375
1,444
893
551
2,755
2,117
638
$
50,390
$
14,637
$
21,720
$
1,980
$
12,053
73
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74
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75
Table of Contents
The volatility of our stock price;
The expected life of the option;
Risk free interest rates; and
Expected dividend yield.
76
Table of Contents
77
Table of Contents
78
Table of Contents
79
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80
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81
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82
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83
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Entity Name
Business/Services
Applicable Regulator
Parent holding company
N/A
Managed account forex trading services
N/A
Holding company, U.S. operating entities
N/A
A registered FCM and RFED, engaging in forex trading services
and precious metals spot trading services
CFTC and NFA
Holding company, U.S. broker-dealer
N/A
Registered U.S. broker-dealer
SEC and FINRA
Technology support services
N/A
Holding company, international operating entities
N/A
Forex trading services and CFD trading services
Cayman Islands Monetary Authority (Cayman Islands)
Forex trading services corporate funds
N/A
Forex trading services and precious metals spot trading services
Hong Kong Securities and Futures Commission
Forex trading services and precious metals spot trading
Japan Financial Services Agency
Forex trading services and CFD trading services
Australian Securities and Investments Commission
Plan to register to provide forex trading services after we have
successfully completed our initial public offering
Monetary Authority of Singapore
Forex trading services and CFD trading service
U.K. Financial Services Authority
84
Table of Contents
increasing recognition of currency trading as an alternative
investment and as a tool for portfolio diversification by retail
traders, authorized traders and investment professionals
globally;
improved access to the forex market, reduced transaction costs
and more efficient execution;
increased availability of investor education relating to the
forex market and trading opportunities;
expansion of marketing efforts by many leading firms in the
forex industry;
increasing media coverage of the forex market; and
rising global broadband and wireless penetration.
85
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86
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February 2009
We introduced trading of gold
and silver in the spot market.
August 2009
For our customers located outside
of the United States we introduced trading in oil CFDs,
including Brent Crude Oil and West Texas
CFDs.
September 2009
We launched a new version of
our active trader platform, FOREXTrader PRO, featuring an
updated user interface designed to improve overall usability and
deliver faster trade execution, enhanced charting tools and
improved chart-based trading capabilities.
February 2010
We introduced website trading
into the FOREX.com offering, which provides streamlined trading,
research and account management features in a secure, web-based
environment. The availability of website trading complements our
downloadable active trader platform, FOREXTrader PRO, and is an
important part of our long-term strategy to attract a more
diverse customer base, including novice traders who desire an
easy-to-use trading experience that also includes education,
research and customer support tools in a secure,
customer-friendly website, and self-directed retail investors in
the United States who are already accustomed to trading via the
websites of their online brokerage firms.
February 2010
We introduced a version of the
FOREX.com website designed for smartphones and web-enabled
mobile devices. This version provides customers and registered
practice trading account users with secure account access to
trade and manage their accounts from their mobile devices as
well as access to quotes, charts, news and research and an
extensive learning section featuring articles and video
tutorials.
March 2010
We launched GAIN GTX, our
institutional electronic communications network, or ECN, for our
institutional customers consisting of commercial and investment
banks, hedge funds, institutional asset managers, corporate
treasuries and proprietary trading firms. GAIN GTX allows our
institutional customers to enter forex bids and offers or to buy
or sell instantly at competitive prices from leading
participating banks including forex dealers, clearing banks and
prime brokers.
April 2010
We launched a new Arabic language
service under our FOREX.com U.K. division to service growing
demand from retail traders in the Middle East.
June 2010
We further expanded our product
offering to include equity index CFDs. Equity index CFDs give
our customers outside the United States access to trade popular
global equity indices located in the United Kingdom, Germany,
France and United States.
July 2010
We launched a full-featured iPhone
application that provides our customers and registered practice
trading account users with mobile trading capabilities along
with real-time news, charts, research and account information.
87
Table of Contents
Minimum Regulatory
Capital Levels
Excess Net
Entity Name
Capital Requirements
Maintained
Capital
$
25.84
$
63.12
$
37.28
$
0.05
$
0.42
$
0.37
$
2.03
$
18.33
$
16.3
$
3.37
$
8.71
$
5.34
$
0.14
$
0.73
$
0.59
$
0.39
*
$
0.91
$
0.52
$
0.10
$
0.26
$
0.16
*
Which reflects the higher of
$0.39 million or the sum of 1.5% of its aggregate gross
foreign currency position and 5.0% of its adjusted liabilities
(as calculated in accordance with the Securities and Futures
(Financial Resources) Rules (Cap.571N)).
88
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89
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Forex Trading Products
Contracts-For-Difference
90
Table of Contents
Listed Exchange Products
91
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92
Table of Contents
Tool Name:
Functionality:
Our flagship trading platform for active traders, featuring a
highly intuitive user interface, advanced customization features
and a full suite of professional trading tools.
A comprehensive web-based environment featuring easy-to-use
trading tools, a robust learning center and seamless integration
of market information, trading functionality and account
management tools.
Our fully functional mobile trading platform that provides
real-time rates, market information and trading capabilities.
Third-party trading application that features robust charting
and technical analysis tools along with trade automation
capabilities.
Our proprietary web-based customer relationship management tool
providing support staff with detailed account and trade
information, as well as a full audit trail of support-related
customer interactions.
Our proprietary web-based tool used by authorized traders to
manage pooled customer funds and track trading performance;
handles all customer administration functions and reporting.
93
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Traditional financial services firms, such as banks or other
financial institutions seeking to provide an online forex
trading platform quickly and cost-effectively; or
94
Table of Contents
Established online brokers, which are registered broker-dealers,
FCMs or other online brokerage firms seeking to expand the
number of financial products they offer to their customers.
95
Table of Contents
Immediately offset the trade with one of our wholesale forex
trading partners. We refer to the order flow that we handle in
this manner as offset flow. Offset flow allows us to earn the
difference between the retail bid/offer spread we offer our
customers and the wholesale bid/offer spread we receive from our
wholesale forex trading partners, while minimizing market risk
in the transaction. From January 2007 to September 30,
2010, between 2.4% and 25.3% of our monthly executed forex trade
volume was immediately offset. For the nine months ended
September 30, 2010, 9.5% of our executed trade volume was
handled in this manner.
Direct the trade into our managed flow portfolio. Order flow
that is initially directed into our managed flow portfolio may
be subsequently reclassified as offset flow based on market
conditions. From January 2007 to September 30, 2010,
between 68.1% and 97.4% of our executed forex trade volume was
either naturally hedged or managed pursuant to our
risk-management policies and procedures. For the nine months
ended September 30, 2010, 78.1% of our executed trade
volume was handled in this manner.
Natural Hedging
Many trades are naturally
hedged, where one customer executing a trade in a currency is
offset by a trade made by another customer. When a transaction
within the portfolio is naturally hedged, we do not hedge our
exposure by entering into a transaction with our wholesale forex
trading partners. Accordingly, for naturally hedged transactions
we capture the entire bid/offer spread on the two offsetting
transactions while completely hedging our exposure and reducing
our overall risk.
Net Exposure
Generally, there is also a
portion of our managed flow portfolio that is not naturally
hedged, which we refer to as our net exposure. We manage our net
exposure by applying position and exposure limits established
under our risk-management policies and by continuous, active
monitoring by our traders. A portion of our net exposure may be
hedged with our wholesale forex trading partners based on our
risk-management guidelines. We do not actively initiate
proprietary directional market positions in anticipation of
future movements in the relative prices of the products we offer
in the market. However, as a result of our hedging activities,
we are likely to have open positions in various products at any
given time. In the event of unfavorable market movements, we may
take a loss on such positions.
Redirected Trades
In certain cases, specific
trades from customers generally handled in our managed flow
portfolio may be redirected and offset with our wholesale forex
trading partners. These trades may be selected based on size,
and whether they relate to currencies that are experiencing
lower transaction volume or higher volatility in trading prices.
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Bid
Ask
0.0054
0.0057
0.0053
0.0056
0.0055
0.0058
0.0054
0.0057
0.0055
0.0056
0.00555
(0.0002) 2 pips
0.00545
0.00565
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Branch Office
we maintain one branch office.
Our retail office is located in Woodmere, Ohio which allows
customers to receive
face-to-face
customer support.
Online
we have an online Internet website,
www.gainsecurities.com
, where customers can request
services on their accounts and obtain answers to frequently
asked questions. This website also provides customers with the
ability to send a secure message to our customer service
representatives, participate in
one-on-one
live chat with our customer service representatives and to
obtain specific information related to their account.
Telephone
we have toll-free and local
telephone numbers that route calls to our branch office. In
addition, we allow customers to access an automated phone system
for trading and account access.
Automated order placement and execution of U.S. equities,
options, exchange-traded funds and mutual funds;
Advanced trading capabilities (contingent, trailing stops),
real-time quotes, research and analysis tools;
Access to comprehensive listing of nonproprietary load, no-load
and no transaction fee mutual funds;
FDIC-insured sweep deposit accounts; and
Interest-earning checking, money market, and certificates of
deposit.
We offer our
non-U.S. customers
the ability to trade CFDs which are linked to the performance of
an underlying commodity, index or security. Our CFD product
offerings, which we began offering in August 2009, currently
include contracts for energy products, and, in the future, we
plan to offer additional CFDs as
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permitted by applicable laws and regulations. Because of
U.S. regulatory requirements, GAIN and its affiliates do
not trade or offer CFDs in the United States or to
U.S. residents.
We continuously receive market quotes from various market
sources which are aggregated and processed by our proprietary
rate engine in order to identify the prevailing market price for
the instruments underlying the CFDs we offer. From this market
data, we compute unique,
over-the-counter
prices and publish these prices to customers of GAIN
Capital-Forex.com U.K., or GAIN U.K., and GAIN Capital Forex.com
Australia Pty. Ltd., or GAIN A.U. Customers of GAIN U.K.
and GAIN A.U. place trade requests directly with GAIN U.K. and
GAIN A.U. and the trades are then executed with GAIN U.K. and
GAIN A.U. as counterparty. GAIN U.K. and GAIN A.U. hedges
their respective CFD exposure in accordance with preestablished
risk parameters through a variety of liquidity sources,
including futures and commodity options exchanges.
For our direct channel, we use a
one-to-one
strategy of direct marketing principally by leveraging our
FOREX.com brand to cost-effectively attract new
customers; and
For our indirect channel, we use a
one-to-many
strategy of forging partnerships with financial services firms,
including white label partnerships and introducing brokers, that
have existing customers to whom they wish to offer forex trading
capabilities.
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Customer contact information;
Account setup details;
Recent and historical account activity and status;
Customer-specific time and sales data;
Customer interaction review/research; and
Management metrics (including new accounts by date, account
representative and account type).
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Market Leading Forex Trading Firms:
include
our firm and other firms with similar business models, such as
Forex Capital Markets LLC, Global Futures & Forex, LLC
and OANDA Corporation. The firms within this category are our
primary competition for our existing forex trading services.
Small/Specialized Forex Trading Firms:
include
firms such as FXDirectDealer, LLC and InterbankFX, LLC. These
firms, to date, have not been our core competitors due to their
smaller size and technology and marketing limitations.
Other Online Trading Firms:
include firms such
as OptionsXpress Holdings, Inc., E*TRADE Financial Corp.,
TDAMERITRADE and Scottrade. These firms are generally either
niche players focused on a particular product, such as equity
options, or traditional online equity brokers, that have
expanded into other financial products that may already, or will
in the future, include forex trading.
Multiproduct Trading Firms:
include firms such
as Saxo Bank, CMC Group, IG Group Holdings plc, City Index
Limited and Interactive Brokers LLC. Among these firms,
U.S. firms tend to focus on listed products and provide
forex principally as a complementary offering. Other than Saxo
Bank, the international firms tend to focus on CFDs.
Functionality, performance and reliability of trading platform;
Speed and quality of trade executions;
Pricing;
Level of customer service;
Brand reputation;
Efficacy of sales and marketing efforts;
Strategic partnerships with financial services firms;
The ability to offer ancillary services, such as research and
education;
Range of product offering; and
Capacity of trading platform to handle large volumes of customer
transactions.
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sales practices, including our interaction with and solicitation
of customers and our marketing activities;
trading practices, including restrictions on our execution of
certain forex transactions and surveillance to detect potential
regulatory violations;
treatment of customer assets, including custody, control,
safekeeping and segregation of our customers funds and
securities;
licensing for our operating subsidiaries and registration and
continuing education requirements for our employees;
maintaining specified minimum amounts of capital and limiting
withdrawals of funds from our regulated operating subsidiaries;
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anti-money laundering practices;
recordkeeping and making financial and other reports to
regulators; and
supervision of our business, including the conduct of directors,
officers and employees.
impose an initial minimum security deposit amount of 2.0% of the
notional value for major currency pairs and 5.0% of the notional
value for all other retail forex transactions and provide that
the NFA will designate which currencies are major
currencies and review, at least annually, major currency
designations and security deposit requirements and adjust such
designations and requirements as necessary in light of changes
in the volatility of currencies and other economic and market
factors;
provide that introducing brokers must either meet the minimum
net capital requirements applicable to futures and commodity
options introducing brokers or enter into a guarantee agreement
with a
CFTC-regulated
forex dealer member, along with a requirement that such
introducing broker may be a party to only one guarantee
agreement at a time;
require that the risk disclosure statement provided to every
retail forex customer include disclosure of the number of
non-discretionary accounts maintained by the FCM or retail
foreign exchange dealer, or RFED, that were profitable and those
that were not during the four most recent calendar quarters;
prohibit the making of guarantees against loss to retail forex
customers by FCMs, RFEDs and introducing brokers and require
that FCMs, RFEDs and introducing brokers provide retail forex
customers with enhanced written disclosure statements that,
among other things, inform customers of the risk of loss;
require RFEDs to maintain net capital of at least
$20.0 million, plus 5.0% of such a RFEDs customer
obligations in excess of $10.0 million. Additionally, in
the event an RFEDs net capital position falls below 110.0%
of the minimum net capital requirement, then the RFED is subject
to additional reporting requirements;
require that introducing brokers, commodity trading advisors, or
CTAs, and commodity pool operators, or CPOs, become registered
or apply for exemptions from such registration
requirements; and
require that CTAs and CPOs provide information about their
trading programs, principals, conflicts of interest and past
performance results in accordance with provisions detailed in
the Commodity Exchange Act.
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the Financial Services Authority in the United Kingdom;
the Cayman Islands Monetary Authority;
the Financial Services Agency in Japan;
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the Securities and Futures Commission in Hong Kong; and
the Australian Securities and Investments Commission in
Australia.
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Minimum Regulatory
Capital Levels
Excess Net
Entity Name
Capital Requirements
Maintained
Capital
$
25.84
$
63.12
$
37.28
$
0.05
$
0.42
$
0.37
$
2.03
$
18.33
$
16.30
$
3.37
$
8.71
$
5.34
$
0.14
$
0.73
$
0.59
$
0.39
*
$
0.91
$
0.52
$
0.10
$
0.26
$
0.16
*
Which reflects the higher of
$0.39 million or the sum of 1.5% of its aggregate gross
foreign currency position and 5.0% of its adjusted liabilities
(as calculated in accordance with the Securities and Futures
(Financial Resources) Rules (Cap. 571N)).
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Headcount
as of
Lease
September 30,
Location
Function
Square Feet
Expiration
2010
Management, Marketing, Operations, Compliance, Legal, Human
Resources, Call Center
45,000
December 2025
215
Sales and Customer Service
23,294
May 2011
77
Management, Sales, Compliance, Operations
4,090
May 2011
20
Management, Operations, Customer Service, Compliance
2,496
October 2010
6
Management, Sales, Compliance, Operations
2,160
March 2011
30
Management, Sales, Compliance
1,804
February 2012
4
Management, Sales, Compliance, Operations
1,969
January 2013
3
Management, Sales, Compliance, Operations
1,888
March 2013
6
Sales
103
Month to Month
0
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Name
Age
Position
47
President, Chief Executive Officer and Director
47
Chief Financial Officer and Treasurer
46
Chief Dealer
40
Chief Marketing Officer
52
Chairman of the Board of Directors
39
Director
48
Director
44
Director
54
Director and Lead Independent Director
51
Director
40
Director
40
Director
53
Director
46
Executive Vice President, Operations
45
Chief Information Officer
39
Senior Vice President, Strategic Integration
39
Chief Accounting Officer and Corporate Controller
(1)
Member of Audit Committee.
(2)
Member of Nominating and Corporate
Governance Committee.
(3)
Member of Compensation Committee.
(4)
Member of Risk Committee.
(5)
Ms. Roady was appointed an
executive officer in August 2009.
(6)
Effective upon closing of our
initial public offering, Messrs. McCrory and OGrady
intend to resign as a member of our board of directors.
(7)
Mr. OGrady was elected to the
board of directors in October 2010.
(8)
Mr. Calhoun was elected to the
board of directors in October 2010.
(9)
Effective upon closing of our
initial public offering, Mr. Galant will step down as
chairman of our board of directors and Mr. Quick will be
appointed chairman of the board of directors.
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the class I directors will be Peter Quick, James C. Mills
and Glenn H. Stevens, and their terms will expire at the first
annual meeting of stockholders following consummation of this
offering;
the class II directors will be Mark E. Galant and
Christopher S. Sugden and their terms will expire at the second
annual meeting of stockholders following consummation of this
offering; and
the class III directors will be Susanne D. Lyons, Joseph
Schenk and Christopher W. Calhoun, and their terms will expire
at the third annual meeting of stockholders following
consummation of this offering.
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Change in
Pension
Value and
Fees
Non-Equity
Nonqualified
Earned or
Incentive
Deferred
Paid in
Stock
Option
Plan
Compensation
All Other
Cash
Awards
Awards
Compensation
Earnings
Compensation
(h)
Name
(a)
($)
(b)
($)
(1)(2)(c)
($)
(d)
($)
(e)
($)
(f)
($)
(g)
Total ($)
$
36,750
$
65,492
$
102,242
$
48,250
$
65,492
$
113,742
$
66,344
$
90,044
$
156,388
$
45,250
$
65,492
$
110,742
$
8,250
$
91,681
$
99,931
(1)
Represents the grant date fair
value of the stock awards granted in 2009 under FASB
ASC 718,
Compensation Stock Compensation
.
(2)
Mr. Tarika resigned from our board
of directors in October 2010. There are no disagreements between
Mr. Tarika and the Company on any matter relating to the
Companys operations, policies or procedures
(3)
The amount set forth under Stock
Awards consists of (i) $90,044 that vested in 2009 from his
immediately vested 2009 director grants.
(4)
Ms. Lyons was elected to our
board of directors in January 2009.
(5)
Mr. Hanau was elected to our
board of directors in June 2009 and resigned from our board of
directors in October 2010. There are no disagreements between
Mr. Hanau and the Company on any matter relating to the
Companys operations, policies or procedures.
(6)
Mr. Calhoun was elected to our
board of directors in October 2010.
(7)
Mr. OGrady was elected to our
board of directors in October 2010.
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too much focus on equity;
highly leveraged payout curves and uncapped payouts;
unreasonable goals or thresholds; and
steep payout cliffs at certain performance levels that may
encourage short-term business decisions to meet payout
thresholds.
the program design provides a balanced mix of cash and equity,
annual and longer-term incentives, and performance metrics
(revenue and strategic objectives);
maximum payout levels for bonuses and performance awards are
currently capped at 150% of target; and
compliance and ethical behaviors are integral factors considered
in all performance assessments.
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base salary;
annual incentive awards;
long-term equity incentive awards; and
retirement and other benefits.
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E*TRADE
GFI Group
Knight Capital
thinkorswim Group
OptionsXpress
TradeStation Group
BGC Partners
Marketaxess
LaBranche & Company
DST Systems
Interactive Data
Factset Research Systems
Advent Software
In April 2009, the 2009 annual revenue and EBITDA targets were
approved by our compensation committee and our board of
directors.
In April 2009, July 2009, and October 2009, the named executive
officers were paid their quarterly 2009 incentive award payouts
under the MIP based on quarterly progress toward the incremental
achievement of our annual revenue and EBITDA targets.
In December 2009, the named executive officers were provided
long-term equity incentive awards, consisting of restricted
stock units, which were based on an analysis by Frederic Cook of
our Peer Group from the January 2009 review.
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In January 2010, the named executive officers received the
fourth quarter 2009 incentive award payouts under the MIP based
on quarterly progress toward incremental achievement of our
annual revenue and EBITDA targets for 2009.
In March 2010, the named executive officers received the
remaining portion of their 2009 incentive award payouts under
the MIP. Despite the shortfall in our annual revenue and EBITDA
performance compared to target, several operating metrics,
including new accounts and customer deposits, grew significantly
in 2009. In addition, several strategic initiatives were
successfully accomplished. As a result, our CEO proposed and the
compensation committee approved, higher payouts for the
remaining portion of the 2009 incentive award payouts. The
compensation committee considered all of these factors in
determining the final 2009 non-equity incentive award payments
for the named executive officers.
Total Cash
Compensation
Calculated (Base
Salary Plus Annual
Total Cash Compensation
Awards Based on
Annual Incentive
Incentive Based on
Paid (Base Salary Plus
Revenue and EBITDA
Awards Actually
Revenue and EBITDA
Annual Incentive Actually
Name
Achievement
Paid
Achievement)
Paid)
$
552,000
$
694,000
$
1,202,000
$
1,344,000
$
88,000
$
91,000
$
413,000
$
416,000
$
315,000
$
478,000
$
555,000
$
718,000
$
98,000
$
159,000
$
338,000
$
399,000
$
$
$
126,250
$
126,250
(1)
In April 2009, Mr. Calhoun
agreed to modify his position as our managing director and he
assumed a part-time position as a senior advisor, overseeing
certain strategic initiatives. In connection with this change in
responsibility, Mr. Calhouns compensation was
modified to reflect his part-time employment, his salary was
reduced and he was no longer eligible to take part in the MIP
and other benefits. In October 2010, Mr. Calhoun was
elected to the board of directors.
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Target
Incentive
Compensation
as a %
Name
Base Salary
225
%
62
%
348
%
108
%
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Target Total
Incentive
Name
Compensation
$
1,462,500
$
201,000
$
836,000
$
260,000
$
2009 Non-Equity Incentive Compensation Payments
Q1
Q2
Q3
Q4
Annual
Total
$
44,000
$
145,000
$
50,000
$
51,000
$
404,000
$
694,000
$
$
18,000
$
8,000
$
7,000
$
58,000
$
91,000
$
40,000
$
85,000
$
42,000
$
40,000
$
271,000
$
478,000
$
9,000
$
30,000
$
10,000
$
8,000
$
102,000
$
159,000
$
$
$
$
$
$
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Target Total
Target %
Incentive
of
Name
Compensation
Base Salary
$
1,465,000
225
%
$
201,000
62
%
$
813,000
339
%
$
250,000
104
%
$
%
Restricted
Aggregate
Stock
Grant Date
Units
Fair Value
Name
(#)
($)
43,130
$
882,440
10,000
$
204,600
7,500
$
153,450
8,000
$
163,680
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Change in
Pension Value
and
Nonqualified
Non-Equity
Deferred
Name and
Stock
Option
Incentive Plan
Compensation
All Other
Principal
Salary
Awards
(1)
Awards
(1)
Compensation
Earnings
Compensation
Total
Position(a)
Year(b)
($)(c)
$(e)
(f)
($)(g)
($)(h)
($)(i)
($)(j)
2009
$
650,000
882,440
$
694,000
$
26,174
(2)
$
2,252,614
2008
$
650,000
2,205,000
$
2,302,000
$
24,748
(3)
$
5,181,748
2009
$
126,250
$
$
8,280
(5)
$
134,530
2008
$
263,125
735,000
$
440,000
$
22,852
(6)
$
1,460,977
2009
$
325,000
204,600
$
91,000
$
10,765
(7)
$
631,365
2008
$
270,833
918,750
$
253,000
$
429
(8)
$
1,443,012
2009
$
223,300
153,450
$
478,000
$
22,972
(9)
$
877,722
2008
$
200,000
367,500
$
968,000
$
14,014
(10)
$
1,549,514
2009
$
225,400
163,680
$
159,000
$
14,548
(11)
$
562,628
2008
$
203,333
367,500
$
316,000
$
13,930
(12)
$
900,763
(1)
The amounts shown in this column
represent the aggregate grant date fair value of restricted
stock units granted during fiscal year 2009 under the 2006
Equity Compensation Plan calculated in accordance with FASB
ASC 718,
Compensation Stock
Compensation
. For information on assumptions used in
determining fair value of these stock awards, refer to
Notes 2 and 13 to our consolidated financial statements
included in the prospectus.
(2)
This amount includes:
(i) $8,250 in employer matching contribution to our 401(k)
plan; (ii) $8,640 in car allowance ($720 per month);
(iii) $8,426 in country club membership; and (iv) $858
for payment of term life insurance premiums.
(3)
This amount includes:
(i) $7,750 in employer matching contribution to our 401(k)
plan; (ii) $8,640 in car allowance ($720 per month);
(iii) $7,500 in country club membership; and (iv) $858
for payment of term life insurance premiums.
(4)
In April 2009, Mr. Calhoun
agreed to modify his position as our managing director and he
agreed to assume a part-time position as a senior advisor,
overseeing certain strategic initiatives. In connection with
this change in responsibility, Mr. Calhouns
compensation was modified to reflect his part-time employment
and his salary was reduced to $50,000 per year. In October 2009,
Mr. Calhouns annual compensation was increased to
$100,000 annually to reflect increased responsibilities. In
October 2010, Mr. Calhoun was elected to our board of directors.
As a result, Mr. Calhoun is no longer a part-time employee.
(5)
This amount includes:
(i) $6,313 in employer matching contribution to our 401(k)
plan; (ii) $1,800 in car allowance; and (iii) $168 for
payment of term life insurance premiums.
(6)
This amount includes:
(i) $7,750 in employer matching contribution to our 401(k)
plan; (ii) $7,200 in car allowance ($600 per month);
(iii) $7,500 in country club membership; and (iv) $402
for payment of term life insurance premiums.
(7)
This amount includes:
(i) $1,872 in employer matching contribution to our 401(k)
plan; (ii) 8,426 in country club membership; and
(iii) $467 for payment of term life insurance premiums.
(8)
This amount includes $429 for
payment of term life insurance premiums.
(9)
This amount includes:
(i) $8,250 in employer matching contribution to our 401(k)
plan; (ii) $6,000 in car allowance ($500 per month);
(iii) $8,426 in country club membership; and (iv) $296
for payment of term life insurance premiums
(10)
This amount includes:
(i) $7,750 in employer matching contribution to our 401(k)
plan; (ii) $6,000 in car allowance ($500 per month); and
(iii) $264 for payment of term life insurance premiums.
(11)
This amount includes:
(i) $8,250 in employer matching contribution to our 401(k)
plan; (ii) $6,000 in car allowance ($500 per month); and
(iii) $298 for payment of term life insurance premiums.
(12)
This amount includes:
(i) $7,750 in employer matching contribution to our 401(k)
plan; (ii) $6,000 in car allowance ($500 per month); and
$180 for payment of term life insurance premium.
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All Other Stock
Awards:
Grant Date Fair
Estimated Possible Payouts Under Non-equity Incentive Plan
Awards
Number of
Value of Stock and
Threshold
Target
Maximum
Shares of Stock
Option Awards
Name (a)
Grant Date (b)
($)(c)
($)(d)
($)(e)
or Units (i)(#)
(1)(2)
12/15/09
$
1,462,500
43,130
$
882,440
12/15/09
$
201,000
10,000
$
204,600
12/15/09
$
836,000
7,500
$
153,450
12/15/09
$
260,000
8,000
$
163,680
(1)
Includes only those columns
relating to plan-based award granted during 2009. All other
columns have been omitted.
(2)
The grant date fair value was
determined by multiplying the number of shares times $20.46, the
fair value per share on the grant date.
Option Awards
Stock Awards
Equity
Equity
Incentive
Incentive Plan
Equity
Plan
Awards:
Incentive
Awards:
Market or
Plan
Number of
Payout
Awards:
Unearned
Value of
Number of
Number of
Number of
Number of
Shares,
Unearned
Securities
Securities
Securities
Shares
Market Value of
Units or
Shares,
Underlying
Underlying
Underlying
or Units of
Shares or
Other
Units or
Unexercised
Unexercised
Unexercised
Option
Option
Stock That
Units of Stock
Rights That
Other Rights
Options
Options
Unearned
Exercise
Expiration
Have Not
That Have Not
Have Not
That Have Not
Name
Exercisable
Unexercisable
Options
Price
Date
Vested
Vested
Vested
Vested
53,813
(1)
$
1.75
6/10/2013
20,000
(2)
$
2.50
1/30/2014
50,000
(2)
$
2.50
1/30/2014
10,000
(2)
$
2.50
4/15/2014
5,000
(2)
$
2.50
9/30/2014
60,000
(2)
$
3.50
1/31/2015
135,000
(1)
$
4.50
6/15/2015
50,000
(1)
$
5.50
12/30/2015
5,000
(3)(4)
$
94,500
1,983
(3)(4)
$
37,469
50,000
(3)(5)
$
945,000
45,000
(3)(6)
$
850,500
43,130
(3)(7)
$
815,157
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Option Awards
Stock Awards
Equity
Equity
Incentive
Incentive Plan
Equity
Plan
Awards:
Incentive
Awards:
Market or
Plan
Number of
Payout
Awards:
Unearned
Value of
Number of
Number of
Number of
Number of
Shares,
Unearned
Securities
Securities
Securities
Shares
Market Value of
Units or
Shares,
Underlying
Underlying
Underlying
or Units of
Shares or
Other
Units or
Unexercised
Unexercised
Unexercised
Option
Option
Stock That
Units of Stock
Rights That
Other Rights
Options
Options
Unearned
Exercise
Expiration
Have Not
That Have Not
Have Not
That Have Not
Name
Exercisable
Unexercisable
Options
Price
Date
Vested
Vested
Vested
Vested
10,833
(1)
$
4.50
6/15/2015
29,833
(2)
$
5.50
12/30/2015
25,000
(2)
$
6.50
1/31/2016
5,000
(3)(4)
$
94,500
20,000
(3)(5)
$
378,000
15,000
(3)(6)
$
283,500
18,750
(3)(6)
$
354,375
10,000
(3)(7)
$
189,000
3,333
(1)
$
3.50
1/31/2015
53,400
(1)
$
4.50
6/15/2015
50,000
(1)
$
5.50
12/30/2015
5,000
(3)(4)
$
94,500
1,343
(3)(4)
$
25,373
10,000
(3)(5)
$
189,000
7,500
(3)(6)
$
141,750
7,500
(3)(7)
$
141,750
45,175
(1)
$
4.50
6/15/2015
50,000
(1)
$
5.50
12/30/2015
5,000
(3)(4)
$
94,500
10,000
(3)(5)
$
189,000
7,500
(3)(6)
$
141,750
8,000
(3)(7)
$
151,200
(1)
Such stock options vest ratably
over three years, with one-third of the options vesting on each
of the first three anniversaries of the grant date and have a
term of ten years.
(2)
Such stock options were fully
vested on the date of grant and have a term of ten years.
(3)
Such restricted stock units vest
ratably over four years, with one-fourth of the options vesting
on each of the first four anniversaries of the grant date.
(4)
Such restricted stock units were
granted on December 31, 2006.
(5)
Such restricted stock units were
granted on June 30, 2007.
(6)
Such restricted stock units were
granted on April 15, 2008.
(7)
Such restricted stock units were
granted on December 15, 2009.
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Option Awards
Stock Awards
Number of
Number of
Shares
Value
Shares
Acquired on
Realized on
Acquired on
Value Realized
Name
Exercise
Exercise
Vesting
on
Vesting
(1)
$
46,983
$
1,083,738
$
20,000
$
445,843
$
6,250
$
137,262
$
13,843
$
282,664
$
12,500
$
261,788
(1)
Represents the fair market value of
our common stock on the applicable vesting date, multiplied by
the number of shares of restricted stock that vested on that
date.
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severance in the form of salary continuation payments for
18 months, equal to his monthly base salary in effect at
that time;
payment of any accrued and unpaid bonuses earned prior to the
date of his termination;
payment of a pro rata bonus, based on the actual achievement of
performance targets, for the performance periods (year
and/or
quarter, as applicable) in which his termination occurs. The pro
rata bonus will be paid after the close of the applicable
performance period when such bonuses are paid to other
executives;
continued health benefits at the same premium rates charged to
other current employees for the 18 month period following
termination of employment; and
with respect to outstanding equity awards, all equity grants
held by Mr. Stevens at the time of his termination that
would vest within the 24 month period following the
termination date will immediately vest and become exercisable.
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Mr. Stevens would be entitled to receive payment of a pro
rata bonus, based on his target bonus amount, for the
performance period in which his termination occurs. This pro
rata bonus will be paid in a lump sum upon his termination.
Mr. Stevens would be entitled to receive a lump sum
payment, upon his termination, in an amount equal to two times
his aggregate target incentive compensation for the fiscal year
in which his termination occurs.
Mr. Stevens would be entitled to receive severance payments
in an amount equal to 24 months of his monthly base salary
in effect at that time, six months worth of which is
payable in a lump sum upon his termination, and the remainder of
which is payable in installments over 18 months.
With respect to outstanding equity awards, all equity grants
held by Mr. Stevens at the time of his termination that are
subject to time-based vesting conditions will immediately vest
and become exercisable in full.
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These named executive officers will be entitled to receive
12 months worth of severance benefits and continued
healthcare coverage, rather than the 18 months (or
24 months for terminations in connections with a
Change in Control) worth provided to Mr. Stevens.
These named executive officers will be entitled to receive
12 months of accelerated vesting for time-based equity
awards outstanding at the time of employment termination absent
a Change in Control, rather than the 18 months of
accelerated vesting provided to Mr. Stevens.
These named executive officers will be entitled to receive the
enhanced severance package only if their termination of
employment occurs without Cause or with Good Reason within
12 months after a Change in Control, rather than within
18 months afterwards, but the enhanced severance is payable
in a lump sum upon such termination rather than a portion of it
being paid in installments.
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142
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Termination
Termination
Without Cause
Without Cause
or Resignation
or Resignation
Voluntary
for Good
for Good
Resignation
Reason
Reason
or
Prior to
Change
After
Termination
Change in
in
Change in
Death or
Name
Benefit
for Cause
Control
Control
Control
Disability
Cash severance
$
1,669,000
(2)
$
5,687,500
(3)
$
694,000
(4)
Option
Acceleration
Restricted Unit
Acceleration
$
1,637,647
(5)
$
2,742,069
(6)
Health Benefits
$
18,000
(7)
$
18,000
(7)
Total value
$
3,324,647
$
8,447,569
$
694,000
Cash severance
Option
Acceleration
Restricted Unit
Acceleration
$
756,000
(9)
Health Benefits
Total value
$
756,000
Cash severance
$
416,000
(10)
$
727,000
(11)
$
91,000
(12)
Option
Acceleration
Restricted Unit
Acceleration
$
165,375
(13)
$
543,375
(14)
Health Benefits
$
12,000
(15)
$
12,000
(15)
Total value
$
593,375
$
1,282,375
$
91,000
Cash severance
$
718,000
(16)
$
1,912,000
(17)
$
478,000
(18)
Option
Acceleration
Restricted Unit
Acceleration
$
297,070
(19)
$
592,383
(20)
Health Benefits
$
12,000
(21)
$
12,000
(21)
Total value
$
1,027,070
$
2,516,383
$
478,000
Cash severance
$
399,000
(22)
$
760,000
(23)
$
159,000
(24)
Option
Acceleration
Restricted Unit
Acceleration
$
274,050
(25)
$
576,450
(26)
Health Benefits
$
12,000
(27)
$
12,000
(27)
Total value
$
685,050
$
1,348,450
$
159,000
(1)
The amounts reflected in this table
are calculated based on the terms of the executives
employment agreement effective November 23 , 2010.
(2)
Pursuant to the terms of his
employment agreement, Mr. Stevens is entitled to payment of
eighteen (18) months continued base salary plus a pro
rata portion of the cash incentive compensation which he would
have otherwise been paid had his employment not terminated,
based on the amount that would actually have been earned. Since
the table assumes termination as of December 31, 2009,
Mr. Stevens pro rata incentive compensation payment
is reflected as the full amount of the aggregate cash incentive
compensation payable to him for the assumed year of termination.
The amount set forth in the table is equal to 1.5 times
Mr. Stevens 2009 base salary, $975,000, plus the full
amount of Mr. Stevens 2009 cash incentive
compensation, $694,000.
(3)
Pursuant to the terms of his
employment agreement, Mr. Stevens is entitled to payment of
twenty four (24) months base salary, six
(6) months of which is paid in a lump sum upon termination
and eighteen (18) months of which is paid in monthly
installments; plus a lump sum amount equal to two times his
aggregate target cash incentive compensation for the fiscal year
in which his termination occurs; plus a
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pro rata portion of the cash
incentive compensation which he would have otherwise been paid
for the year in which his termination occurs had his employment
not terminated, based on his target cash incentive compensation
amount for that year. Since the table assumes termination as of
December 31, 2009, Mr. Stevens pro rata
incentive compensation payment is reflected as the full amount
of the aggregate target cash incentive compensation payable to
him for the assumed year of termination. The amount set forth in
the table is equal to 2 times Mr. Stevens 2009 base
salary, $1,300,000, plus 2 times Mr. Stevens 2009
target cash incentive compensation amount, $2,925,000, plus the
full amount of Mr. Stevens 2009 target cash incentive
compensation amount, $1,462,500.
(4)
Pursuant to the terms of his
employment agreement, upon Mr. Stevens termination of
employment due to disability or death, Mr. Stevens or his
estate is entitled to any accrued and unpaid salary as well as
any accrued but unused paid time off, or PTO, and appropriate
expense reimbursements. Mr. Stevens or his estate is also
entitled to receive cash incentive compensation for such fiscal
year on a pro rata basis, based on the amount that would
actually have been earned. Since the table assumes termination
as of December 31, 2009, the amount reflected in the table
includes the full amount of the incentive compensation payable
to Mr. Stevens for 2009.
(5)
This amount reflects the
accelerated vesting and payment of 86,648 restricted stock units
based on a price per share as of December 31, 2009 of
$18.90.
(6)
This amount reflects the
accelerated vesting and payment of 145,083 restricted stock
units based on a price per share as of December 31, 2009 of
$18.90.
(7)
This amount is equal to eighteen
(18) months of continued health benefits assuming a monthly
cost to the Company of $1,000 to provide such benefits.
(8)
In April 2009, Mr. Calhoun
agreed to modify his position as managing director whereby he
agreed to assume the new role as our senior advisor and
corporate secretary. In connection with this change in
responsibility, Mr. Calhouns compensation was
modified to reflect his part-time employment and his annual
salary was $50,000, and he is no longer entitled to receive
severance. In October 2010, Mr. Calhoun was elected to our
board of directors. As a result, Mr. Calhoun is no longer a
part-time employee.
(9)
This amount reflects the
accelerated vesting and payment of 40,000 restricted stock units
based on a price per share as of December 31, 2009 of
$18.90.
(10)
Pursuant to the terms of his
employment agreement, Mr. Lyons is entitled to payment of
twelve (12) months continued base salary plus a pro
rata portion of the cash incentive compensation which he would
have otherwise been paid had his employment not terminated,
based on the amount that would actually have been earned. Since
the table assumes termination as of December 31, 2009,
Mr. Lyons pro rata incentive compensation payment is
reflected as the full amount of the aggregate cash incentive
compensation payable to him for the assumed year of termination.
The amount set forth in the table is equal to 1 times
Mr. Lyonss 2009 base salary, $325,000, plus the full
amount of Mr. Lyonss 2009 cash incentive
compensation, $91,000.
(11)
Pursuant to the terms of his
employment agreement, Mr. Lyons is entitled to payment of
twelve (12) months base salary, paid in a lump sum
upon termination; plus a lump sum amount equal to one
(1) times his aggregate target cash incentive compensation
for the fiscal year in which his termination occurs; plus a pro
rata portion of the cash incentive compensation which he would
have otherwise been paid for the year in which his termination
occurs had his employment not terminated, based on his target
cash incentive compensation amount for that year. Since the
table assumes termination as of December 31, 2009,
Mr. Lyonss pro rata incentive compensation payment is
reflected as the full amount of the aggregate target cash
incentive compensation payable to him for the assumed year of
termination. The amount set forth in the table is equal to 1
times Mr. Lyonss 2009 base salary, $325,000, plus 1
times the amount of Mr. Lyonss 2009 target cash
incentive compensation, $201,000, plus a pro rata incentive
compensation amount equal to the full amount of
Mr. Lyonss 2009 target cash incentive compensation,
$201,000.
(12)
Pursuant to the terms of his
employment agreement, upon Mr. Lyonss termination of
employment due to disability or death, Mr. Lyons or his
estate is entitled to any accrued and unpaid salary as well as
any accrued but unused paid time off, or PTO, and appropriate
expense reimbursements. Mr. Lyons or his estate is also
entitled to receive cash incentive compensation for such fiscal
year on a pro rata basis, based on the amount that would
actually have been earned. Since the table assumes termination
as of December 31, 2009, the amount reflected in the table
includes the full amount of the incentive compensation payable
to Mr. Lyons for 2009.
(13)
This amount reflects the
accelerated vesting and payment of 8,750 restricted stock units
based on a price per share as of December 31, 2009 of
$18.90.
(14)
This amount reflects the
accelerated vesting and payment of 28,750 restricted stock units
based on a price per share as of December 31, 2009 of
$18.90.
(15)
This amount is equal to twelve
(12) months of continued health benefits assuming a monthly
cost to the Company of $1,000 to provide such benefits.
(16)
Pursuant to the terms of his
employment agreement, Mr. OSullivan is entitled to
payment of twelve (12) months continued base salary
plus a pro rata portion of the cash incentive compensation which
he would have otherwise been paid had his employment not
terminated, based on the amount that would actually have been
earned. Since the table assumes termination as of
December 31, 2009, Mr. OSullivans pro rata
incentive compensation payment is reflected as the full amount
of the aggregate cash incentive compensation payable to him for
the assumed year of termination. The amount set forth in the
table is equal to 1 times Mr. OSullivans 2009
base salary, $240,000, plus the full amount of
Mr. OSullivans 2009 cash incentive
compensation, $478,000.
(17)
Pursuant to the terms of his
employment agreement, Mr. OSullivan is entitled to
payment of twelve (12) months base salary, paid in a
lump sum upon termination; plus a lump sum amount equal to one
(1) times his aggregate target cash incentive compensation
for the fiscal year in which his termination occurs; plus a pro
rata portion of the cash incentive compensation which he would
have otherwise been paid for the year in which his termination
occurs had his employment not terminated, based on his target
cash incentive compensation amount for that year. Since the
table assumes termination as of December 31, 2009,
Mr. OSullivans pro rata incentive compensation
payment is reflected as the full amount of the aggregate target
cash incentive compensation payable to him for the assumed year
of termination. The amount set forth in the table is equal to 1
times Mr. OSullivans 2009 base salary,
$240,000, plus 1 times the amount of
Mr. OSullivans
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2009 target cash incentive
compensation, $836,000, plus a pro rata incentive compensation
amount equal to the full amount of Mr. O
Sullivans 2009 target cash incentive compensation,
$836,000.
(18)
Pursuant to the terms of his
employment agreement, upon Mr. OSullivans
termination of employment due to disability or death,
Mr. OSullivan or his estate is entitled to any
accrued and unpaid salary as well as any accrued but unused paid
time off, or PTO, and appropriate expense reimbursements.
Mr. OSullivan or his estate is also entitled to
receive cash incentive compensation for such fiscal year on a
pro rata basis, based on the amount that would actually have
been earned. Since the table assumes termination as of
December 31, 2009, the amount reflected in the table
includes the full amount of the incentive compensation payable
to Mr. OSullivan for 2009.
(19)
This amount reflects the
accelerated vesting and payment of 15,718 restricted stock units
based on a price per share as of December 31, 2009 of
$18.90.
(20)
This amount reflects the
accelerated vesting and payment of 31,343 restricted stock units
based on a price per share as of December 31, 2009 of
$18.90.
(21)
This amount is equal to twelve
(12) months of continued health benefits assuming a monthly
cost to the Company of $1,000 to provide such benefits.
(22)
Pursuant to the terms of her
employment agreement, Ms. Roady is entitled to payment of
twelve (12) months continued base salary plus a pro
rata portion of the cash incentive compensation which she would
have otherwise been paid had her employment not terminated,
based on the amount that would actually have been earned. Since
the table assumes termination as of December 31, 2009,
Ms. Roadys pro rata incentive compensation payment is
reflected as the full amount of the aggregate cash incentive
compensation payable to her for the assumed year of termination.
The amount set forth in the table is equal to 1 times
Ms. Roadys 2009 base salary, $240,000, plus the full
amount of Ms. Roadys 2009 cash incentive
compensation, $159,000.
(23)
Pursuant to the terms of her
employment agreement, Ms. Roady is entitled to payment of
twelve (12) months base salary, paid in a lump sum
upon termination; plus a lump sum amount equal to one
(1) times her aggregate target cash incentive compensation
for the fiscal year in which her termination occurs; plus a pro
rata portion of the cash incentive compensation which she would
have otherwise been paid for the year in which her termination
occurs had her employment not terminated, based on her target
cash incentive compensation amount for that year. Since the
table assumes termination as of December 31, 2009,
Ms. Roadys pro rata incentive compensation payment is
reflected as the full amount of the aggregate target cash
incentive compensation payable to her for the assumed year of
termination. The amount set forth in the table is equal to 1
times Mr. Ms. Roadys 2009 base salary, $240,000,
plus 1 times the amount of Ms. Roadys 2009 target
cash incentive compensation, $260,000, plus a pro rata incentive
compensation amount equal to the full amount of
Ms. Roadys 2009 target cash incentive compensation,
$260,000.
(24)
Pursuant to the terms of her
employment agreement, upon Ms. Roadys termination of
employment due to disability or death, Ms. Roady or her
estate is entitled to any accrued and unpaid salary as well as
any accrued but unused paid time off, or PTO, and appropriate
expense reimbursements. Ms. Roady or her estate is also
entitled to receive cash incentive compensation for such fiscal
year on a pro rata basis, based on the amount that would
actually have been earned. Since the table assumes termination
as of December 31, 2009, the amount reflected in the table
includes the full amount of the incentive compensation payable
to Ms. Roady for 2009.
(25)
This amount reflects the
accelerated vesting and payment of 14,500 restricted stock units
based on a price per share as of December 31, 2009 of
$18.90.
(26)
This amount reflects the
accelerated vesting and payment of 30,500 restricted stock units
based on a price per share as of December 31, 2009 of
$18.90.
(27)
This amount is equal to twelve
(12) months of continued health benefits assuming a monthly
cost to the Company of $1,000 to provide such benefits.
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146
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147
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148
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149
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if a person, entity or affiliated group (with certain
exceptions) acquires more than 50.0% of our then outstanding
voting securities;
if we merge into another entity unless the holders of our voting
shares immediately prior to the merger have at least 50.0% of
the combined voting power of the securities in the merged entity
or its parent;
if we sell or dispose of all or substantially all of our assets;
if we are liquidated or dissolved; or
if a majority of the members of our board of directors is
replaced during any
12-month
period or less by directors whose appointment or election is not
endorsed by a majority of the incumbent directors.
150
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151
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if a person, entity or affiliated group acquires more than 50.0%
of our then outstanding voting securities;
if we merge with another entity, unless the holders of our
voting shares immediately prior to the merger have at least
50.0% of the combined voting power of the securities in the
merged entity or its parent;
if we merge with another entity and the members of our board of
directors prior to the merger would not constitute a majority of
our board of directors in the merged entity or its parent;
if we sell or dispose of all or substantially all of our assets;
if we are liquidated or dissolved; or
if a majority of the members of our board of directors is
replaced during any
12-month
period or less by directors whose appointment or election is not
endorsed by a majority of the incumbent directors.
the date all shares available for issuance under the plan have
been issued; or
the date all purchase rights are exercised in connection with a
change of control.
152
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for any breach of their duty of loyalty to us or our
stockholders;
for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law;
for voting or assenting to unlawful payments of dividends or
other distributions; or
for any transaction from which the director derived an improper
personal benefit.
153
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154
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155
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Aggregate
Number and Type of Securities
Purchase
Name
Repurchased by the
Company
Price
948,662 shares of Series A preferred stock
$
42,433,651
165,549 shares of Series A preferred stock
$
7,405,007
Warrant to purchase 88,206 shares of Series A preferred
stock
$
3,945,454
173,831 shares of Series C preferred stock (convertible
into 223,215 shares of common stock)
$
9,984,423
223,488 shares of common stock (189,954 shares were
repurchased on January 11, 2008 and 33,534 shares were
repurchased on January 25, 2008)
$
9,996,618
Options to purchase 13,000 shares of our common stock
$
581,490
48,037 shares of Series A preferred stock,
1,601 shares of Series B preferred Stock,
52,074 shares of common stock and options to purchase
5,001 shares of common stock
$
4,773,272
Total
$
79,119,915
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Aggregate
Number and Type of Securities
Purchase
Name
Repurchased by the
Company
Price
55,803 shares of common stock and options to purchase
160,524 shares of common stock
$
9,676,307
5,000 shares of common stock and options to purchase
66,000 shares of common stock
$
3,175,830
Options to purchase 65,187 shares of common stock
$
2,915,815
4,983 shares of common stock and options to purchase
263,512 shares of common stock
$
12,009,781
Total
$
27,777,733
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158
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159
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160
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each stockholder, or group of affiliated stockholders, that we
know owns more than 5.0% of our outstanding capital stock;
each other selling stockholder in this offering;
each of our named executive officers;
each of our directors; and
all of our directors and named executive officers as a group.
161
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Shares Beneficially Owned
Shares Being Sold in Offering
Immediately Following Offering
Assuming
Assuming
Assuming
Assuming
Underwriters
Underwriters
Underwriters Over-
Underwriters Over-
Shares Beneficially
Over-Allotment
Over-Allotment
Allotment
Allotment
Owned Prior
Option is
Option is
Option is
Option is
to Offering
Not
Exercised
Not Exercised
Exercised in Full
Beneficial Owner
Number
Percentage
Exercised
in Full
Number
Percentage
Number
Percentage
8,314,284
27.0
%
4,248,212
4,248,212
4,066,071
13.1
%
4,066,071
12.8
%
8,314,284
27.0
%
4,248,212
4,248,212
4,066,071
13.1
%
4,066,071
12.8
%
8,314,284
27.0
%
4,248,212
4,248,212
4,066,071
13.1
%
4,066,071
12.8
%
8,314,284
27.0
%
4,248,212
4,248,212
4,066,071
13.1
%
4,066,071
12.8
%
8,314,284
27.0
%
4,248,212
4,248,212
4,066,071
13.1
%
4,066,071
12.8
%
9,074,108
29.5
%
9,074,108
29.1
%
9,074,108
28.5
%
9,074,108
29.5
%
9,074,108
29.1
%
9,074,108
28.5
%
9,074,108
29.5
%
9,074,108
29.1
%
9,074,108
28.5
%
9,074,108
29.5
%
9,074,108
29.1
%
9,074,108
28.5
%
2,667,900
8.7
%
533,580
533,580
2,134,320
6.9
%
2,134,320
6.7
%
6,453,685
19.4
%
1,285,714
1,285,714
5,167,971
15.3
%
5,167,971
15.0
%
3,067,109
9.8
%
2,208,318
2,453,687
858,790
2.7
%
613,422
1.9
%
3,760,390
11.8
%
1,374,492
2,064,949
2,385,898
7.7
%
1,695,440
5.3
%
867,919
2.7
%
346,153
867,919
2.7
%
521,766
1.6
%
250,250
*
25,191
250,250
*
225,059
*
*
*
*
241,356
*
96,260
241,356
*
145,096
*
242,356
*
85,836
242,356
*
156,519
*
8,314,284
27.0
%
4,248,212
4,248,212
4,066,071
13.1
%
4,066,071
12.8
%
3,067,109
9.8
%
2,208,318
2,453,687
858,790
2.7
%
613,422
1.9
%
9,074,108
29.5
%
9,074,108
29.1
%
9,074,108
28.5
%
26,012
*
26,012
*
26,012
*
26,012
*
26,012
*
26,012
*
6,453,685
19.4
%
1,285,714
1,285,714
5,167,971
15.3
%
5,167,971
15.0
%
36,418
*
36,418
*
36,418
*
32,359,898
88.6
%
9,116,737
10,606,004
23,243,161
74.6
%
21,753,894
68.3
%
33,483
*
28,483
28,483
5,000
*
5,000
*
305,625
1.0
%
305,625
305,625
*
*
932
*
932
932
*
*
1,055,569
3.4
%
606,952
606,952
448,617
1.4
%
448,617
1.4
%
3,760,390
11.8
%
1,374,492
2,064,949
2,385,898
7.7
%
1,695,400
5.3
%
148,116
*
59,073
148,116
*
89,042
*
38,442
*
14,430
38,442
*
24,012
*
29,284
*
11,679
29,284
*
17,605
*
86,622
*
16,615
86,622
*
70,007
*
30,602
*
5,870
30,602
*
24,733
*
42,764
*
8,202
42,764
*
34,561
*
32,918
*
6,314
32,918
*
26,604
*
39,064
*
6,354
39,064
*
32,710
*
26,344
*
5,053
26,344
*
21,291
*
33,786
*
6,480
33,786
*
27,306
*
22,821
*
4,377
22,821
*
18,444
*
28,533
*
5,473
28,533
*
23,060
*
22,945
*
4,401
22,945
*
18,544
*
23,497
*
4,507
23,497
*
18,990
*
12,191
*
1,905
12,191
*
10,286
*
*
Represents ownership of less than
1.0%.
(1)
Amounts shown reflect the aggregate
number of shares of common stock issuable upon automatic
conversion of outstanding shares of preferred stock held by
3i U.S. Growth Partners L.P., 3i Technology
Partners III L.P., 3i Growth Capital (USA) D L.P.,
3i Growth Capital (USA) E L.P. and 3i Growth Capital
(USA) P L.P. 3i U.S. Growth Partners L.P.s
general partners are 3i US Growth Corporation, a
Delaware corporation, and 3i 2004 GmbH & Co. KG, a
German limited partnership. The general partner of each of
3i Growth Capital (USA) D L.P.,
162
Table of Contents
3i Growth Capital (USA) E L.P.
and 3i Growth Capital (USA) P L.P. is also 3i U.S.
Growth Corporation. The board of directors of 3i US Growth
Corporation holds voting and dispositive power for the shares
held by each of 3i U.S. Growth Partners L.P.,
3i Growth Capital (USA) D L.P., 3i Growth Capital
(USA) E L.P. and 3i Growth Capital (USA) P L.P. The current
members of the board of directors of 3i US Growth
Corporation are Ken Hanau, Robert Stefanowski, Richard Relyea
and Jim Rutherfurd. Each of the members disclaims beneficial
ownership of the shares except to the extent of their pecuniary
interest, if any. 3i Technology Partners III LPs
general partners are 3i Technology Corporation, a Delaware
corporation, and 3i 2004 GmbH & Co. KG, a German
limited partnership. The board of directors of
3i Technology Corporation holds voting and dispositive
power for the shares held by 3i Technology Partners III
L.P. The current members of the board of directors of
3i Technology Corporation are Ken Hanau, Robert
Stefanowski, Ian Lobley, Sundip Murthy, Richard Relyea and Jim
Rutherfurd. Each of the members disclaims beneficial ownership
of the shares except to the extent of their pecuniary interest,
if any. The address of the 3i Entities is c/o Mourant
& Co. Limited, 22 Grenville Street, St. Helier,
Jersey (Attention: Group 12).
(2)
Consists of
(i) 6,576,912 shares of common stock issuable upon the
automatic conversion of preferred stock upon completion of this
offering held by VantagePoint Venture Partners IV (Q),
L.P., (ii) 658,417 shares of common stock issuable
upon the automatic conversion of preferred stock upon completion
of this offering held by VantagePoint Venture Partners IV, L.P.,
(iii) 23,956 shares of common stock issuable upon the
automatic conversion of preferred stock upon completion of this
offering held by VantagePoint Venture Partners IV
Principals Fund, L.P., and (iv) 1,814,824 shares of
common stock issuable upon the automatic conversion of preferred
stock upon completion of this offering held by VP New York
Venture Partners, L.P., VantagePoint Venture Associates IV,
L.L.C., or VPVA, is the general partner of each of the
VantagePoint Venture Partners entities. Alan E. Salzman and
James D. Marver are the managing members of VPVA and may be
deemed to have voting and investment control over the shares
held by the VantagePoint Venture Partners entities. The
VantagePoint Venture Partners entities purchased the securities
in the ordinary course of business, and at the time of the
purchase of the securities to be resold, had no agreements or
understandings, directly or indirectly, with any person to
distribute the securities. The principal address of the
VantagePoint Venture Partners entities is 1001 Bayhill Drive,
Suite 300, San Bruno, CA 94066.
(3)
Consists of 2,667,900 shares
of common stock issuable upon the automatic conversion of
preferred stock upon completion of this offering. Tudor Ventures
Group L.P. is the general partner of Tudor Ventures II L.P.
Tudor Ventures Group LLC is the general partner of Tudor
Ventures Group L.P. Robert P. Forlenza and Carmen Scarpa are the
managing directors of Tudor Ventures Group L.L.C. and may be
deemed to have voting and investment control over the shares
held by Tudor Ventures II L.P. Tudor Ventures II L.P.
is the indirect owner of more than 10% of the equity interests
of Montgomery & Co., LLC and Pipeline Trading Systems,
LLC, each of which is a member of FINRA. Thus, Tudor
Ventures II L.P. may be deemed to be affiliated with a
broker-dealer. Tudor Ventures II L.P. purchased the
securities in the ordinary course of business, and at the time
of the purchase of the securities to be resold, had no
agreements or understandings, directly or indirectly, with any
person to distribute the securities. The principal address of
Tudor Ventures II L.P. is 1275 King Street, Greenwich, CT
06831. This reflects the tender to the Company of 91,127 shares
of common stock held by such reporting person in satisfaction of
certain indemnification obligations owed by such reporting
person.
(4)
Consists of
(i) 3,864,019 shares of common stock issuable upon the
automatic conversion of preferred stock upon completion of this
offering and (ii) warrants to purchase
2,589,666 shares of common stock. Mr. Sugden, one of
our directors, is a member of Edison Partners IV SBIC, LLC,
the general partner of Edison Venture Fund IV SBIC, L.P.
Mr. Sugden disclaims beneficial ownership of these shares
except to the extent of his pecuniary interest therein. Voting
and dispositive authority of the shares held by Edison Venture
Fund IV SBIC, L.P. are shared by John Martinson, Joseph
Allegra, Gary Golding, Ross Martinson and Christopher Sugden,
each a member of Edison Partners IV SBIC, LLC. The
principal address of Edison Venture Fund IV SBIC, L.P. is
1009 Lenox Drive #4, Lawrenceville, NJ 08648.
(5)
Consists of
(i) 2,561,675 shares of common stock issuable upon the
automatic conversion of preferred stock upon completion of this
offering, and (ii) warrants to purchase 505,434 shares
common stock. XATF Management, L.P. is the general partner of
Cross Atlantic Technology Fund, L.P. Cross Atlantic Capital
Partners, Inc. is the general partner of XATF Management, L.P.
Donald R. Caldwell is the sole shareholder of Cross Atlantic
Capital Partners, Inc. and may be deemed to have voting and
investment control over the shares held by Cross Atlantic
Technology Fund, L.P. The principal address of Cross Atlantic
Technology Fund L.P. is 5 Radnor Corporate Center,
Suite 555, Radnor, PA 19087. This reflects the tender to
the Company of 386,816 shares of common stock held by such
reporting person in satisfaction of certain indemnification
obligations owed by such reporting person.
(6)
Consists of
(i) 1,731,955 shares of common stock,
(ii) 23,414 shares of common stock issuable upon the
automatic conversion of preferred stock upon completion of this
offering, (iii) options to purchase 1,143,556 shares
of common stock, (iv) 861,464 shares of common stock
held by The 2007 Galant Family Trust, by and among Mark. E.
Galant, as donor, and the Goldman Sachs Trust Company of
Delaware and Farid Naib, as trustees. This reflects the tender
to the Company of (i) 66,441 shares of common stock by
Mark E. Galant and (ii) 24,574 shares of common stock
by The 2007 Galant Family Trust, in satisfaction of certain
indemnification obligations owed by each of Mark E. Galant and
The Galant Family Trust.
(7)
Consists of options to purchase
867,919 shares of common stock.
(8)
Consists of
(i) 101,759 shares of common stock, and
(ii) options to purchase 148,491 shares of common
stock.
(9)
Consists of options to purchase
241,356 shares of common stock.
(10)
Consists of
(i) 27,136 shares of common stock and
(ii) options to purchase 215,220 shares of common
stock.
(11)
Consists of 8,314,284 shares
of our common stock issuable upon automatic conversion of
outstanding shares of preferred stock held by the 3i entities.
The reporting person is a partner of 3i Corporation and
disclaims beneficial ownership of the reported securities except
to the extent of his pecuniary interest therein.
(12)
Consists of
(i) 2,561,675 shares of common stock issuable upon the
automatic conversion of preferred stock upon completion of this
offering, and (ii) warrants to purchase 505,434 shares
common stock held by Cross Atlantic Technology Fund, L.P. The
reporting person is a managing director of Cross Atlantic
Capital Partners and disclaims beneficial ownership of the
reported securities except to the extent of his pecuniary
interest therein.
(13)
Consists of
(i) 6,576,912 shares of common stock issuable upon the
automatic conversion of preferred stock upon completion of this
offering held by VantagePoint Venture Partners IV (Q),
L.P., (ii) 658,417 shares of common stock issuable
upon the automatic conversion of preferred stock upon completion
of this offering held by VantagePoint Venture Partners IV, L.P.,
(iii) 23,956 shares of common stock issuable upon the
automatic conversion of preferred stock upon completion of this
offering held by VantagePoint Venture Partners IV
Principals Fund, L.P., and (iv) 1,814,824 shares of
common stock issuable upon the automatic conversion of preferred
stock upon completion of this offering held by VP New York
Venture Partners, L.P., The reporting person is a managing
director of VantagePoint Venture Partners, Inc. and disclaims
beneficial ownership of the reported securities except to the
extent of his pecuniary interest therein.
163
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(14)
Consists of
(i) 3,864,019 shares of common stock issuable upon the
automatic conversion of preferred stock upon completion of this
offering and (ii) warrants to purchase
2,589,666 shares of common stock held by Edison Venture
Fund IV SBIC, L.P. The reporting person is a member of
Edison Venture Fund IV SBIC, L.P. and disclaims beneficial
ownership of the reported securities except to the extent of his
pecuniary interest therein.
(15)
See footnotes 6 through 14.
(16)
Susan L. Kostin is the trustee of
the Susan L. Kostin Revocable Trust. This reflects the tender to
the Company of 1,631 shares of common stock in satisfaction
of certain indemnification obligations owed by such person.
(17)
Consists of 305,625 shares of
common stock issuable upon the automatic conversion of preferred
stock upon completion of this offering. Raptor Capital
Management LP may be deemed to have voting and investment
control over the shares held by The Raptor Private Portfolio
L.P. The principal address of Raptor Private Portfolio, L.P. is
c/o Raptor
Capital Management LP, 50 Rowes Wharf, 6th Floor Boston, MA
02110. James J. Pallotta is the Chairman of the board of
directors, President and Managing Director of Raptor Capital
Management, Inc., which indirectly controls Raptor Capital
Management LP. As such, Mr. Pallotta may be deemed to
beneficially own the securities reported herein. Raptor Capital
Management, Inc., Raptor Capital Management LP, and
Mr. Pallotta do not directly own any of the shares
registered hereby and each expressly disclaims beneficial
ownership of such shares.
(18)
Consists of 932 shares of
common stock issuable upon the automatic conversion of preferred
stock upon completion of this offering. Raptor Capital
Management, as the investment advisor to The Altar Rock
Fund Liquidating Trust (formerly known as The Altar Rock
Fund L.P.), may be deemed to have voting and investment
control over the shares held by The Altar Rock
Fund Liquidating Trust. The principal address of The Altar
Rock Fund L.P. is
c/o Raptor
Capital Management LP, 50 Rowes Wharf, 6th Floor Boston, MA
02110. James J. Pallotta is the Chairman of the board of
directors, President and Managing Director of Raptor Capital
Management, Inc., which indirectly controls Raptor Capital
Management LP. As such, Mr. Pallotta may be deemed to
beneficially own the securities reported herein. Raptor Capital
Management, Inc., Raptor Capital Management LP, and
Mr. Pallotta do not directly own any of the shares
registered hereby and each expressly disclaims beneficial
ownership of such shares.
(19)
Consists of
(i) 852,927 shares of common stock issuable upon the
automatic conversion of preferred stock upon completion of this
offering, and (ii) warrants to purchase 202,642 shares
of common stock. Blue Rock Inc. is the corporate general partner
of Blue Rock Capital, L.P. Virginia G. Breen and P. Terry
Collison are the officers of Blue Rock Inc. and may be deemed to
have voting and investment control over the shares held by Blue
Rock Capital, L.P. The principal address of Blue Rock Capital,
L.P. is Andover, NJ. This reflects the tender to the Company of
67,502 shares of common stock held by such reporting person in
satisfaction of certain indemnification obligations owed by such
reporting person.
(20)
Consists of
(i) 861,464 shares of common stock held by The 2007
Galant Family Trust, by and among Mark. E. Galant, as donor, and
the Goldman Sachs Trust Company of Delaware and Farid Naib,
as trustees, (ii) 1,731,955 shares of common stock
held by Mark E. Galant, (iii) 23,414 shares of common
stock issuable upon the automatic conversion of preferred stock
upon completion of this offering held by Mark E. Galant, and
(iv) options to purchase 1,143,556 shares of common
stock held by Mark E. Galant. This reflects the tender to the
Company of (i) 66,441 shares of common stock by Mark
E. Galant and (ii) 24,574 shares of common stock by
The 2007 Galant Family Trust, in satisfaction of certain
indemnification obligations owed by each of Mark E. Galant and
The Galant Family Trust.
(21)
Consists of options to purchase
148,116 shares of common stock. Such person is currently
employed by the Company as Executive Vice President, Operations.
(22)
Consists of
(i) 2,261 shares of common stock and (ii) options
to purchase 36,181 shares of common stock. Such person is
currently employed by the Company as Chief Information Officer.
(23)
Consists of options to purchase
29,284 shares of common stock. Such person is currently
employed by the Company as Senior Vice President, Strategic
Integration.
(24)
Consists of options to purchase
86,622 shares of common stock. Such person is currently
employed by the Company as Senior Trader.
(25)
Consists of options to purchase
30,602 shares of common stock. Such person is currently
employed by the Company as Senior Vice President, Brand
Marketing.
(26)
Consists of options to purchase
42,764 shares of common stock. Such person is currently
employed by the Company as Senior Vice President, Client
Services.
(27)
Consists of options to purchase
32,918 shares of common stock. Such person is currently
employed by the Company as Vice President, Production Platform
Operations.
(28)
Consists of
(i) 5,936 shares of common stock and (ii) options
to purchase 33,128 shares of common stock. Such person is
currently employed by the Company as Vice President, Customer
Acquisition.
(29)
Consists of options to purchase
26,344 shares of common stock. Such person is currently
employed by the Company as Senior Vice President, Institutional
Sales.
(30)
Consists of options to purchase
33,786 shares of common stock. Such person is currently
employed by the Company as Senior Trader.
(31)
Consists of options to purchase
22,821 shares of common stock. Such person is currently
employed by the Company as Senior Software Engineer.
(32)
Consists of options to purchase
28,533 shares of common stock. Such person is currently
employed by the Company as Senior Vice President, Marketing Tech
& Ops.
(33)
Consists of options to purchase
22,945 shares of common stock. Such person is currently
employed by the Company as Vice President, Treasury and New
Accounts.
(34)
Consists of options to purchase
23,497 shares of common stock. Such person is currently
employed by the Company as Senior Trader.
(35)
Consists of
(i) 2,262 shares of common stock and (ii) options
to purchase 9,929 shares of common stock. Such person is
currently employed by the Company as Vice President, Business
Development (Asia).
164
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165
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166
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acquisition of our company by means of a tender offer, a proxy
contest or otherwise; and
removal of our incumbent officers and directors.
167
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168
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169
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Days After Date of
this Prospectus
Shares Eligible for Sale
Comment
11,000,000
Shares sold in this offering
192,826
Shares saleable under Rules 144 and 701 that are not subject to
a lock-up
19,955,232
Lock-up released; shares saleable under Rules 144 and 701
with the prior written consent of Morgan Stanley & Co.
Incorporated and Deutsche Bank Securities Inc.;
of shares of common stock or other securities acquired in open
market transactions after the completion of this offering;
as a distribution to limited partners or stockholders of a
holder of our common stock;
as a transfer by a business entity to another business entity so
long as the transferee controls or is under common control with
the holder; or
as a
bona fide
gift.
170
Table of Contents
1.0% of the number of shares of common stock then outstanding,
which will equal shares immediately after this offering; and
the average weekly trading volume of our common stock during the
four calendar weeks preceding the filing of a notice on
Form 144 with respect to the sale.
171
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172
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173
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174
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the gain is effectively connected with a trade or business of
the
non-United
States Holder in the United States, and, where a tax treaty
applies, is attributable to a permanent establishment in the
United States;
the
non-United
States holders is an individual who is present in the United
States for 183 or more days in the taxable year of the sale,
exchange, redemption or other disposition and certain other
conditions are met; or
we are or have been a United States real property holding
corporation for United States federal income tax purposes.
We believe that we are not currently and have not been, and we
do not anticipate becoming, a United States real
property holding corporation for United States federal
income tax purposes.
175
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176
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Number of
Name
Shares
11,000,000
177
Table of Contents
Per Share
Total
Without
With
Without
With
Over-
Over-
Over-
Over-
Allotment
Allotment
Allotment
Allotment
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
offer, pledge, sell, contract to sell, grant any option or
contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any
shares of common stock or any securities convertible into or
exercisable or exchangeable for common stock; or
enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences
of ownership of the common stock;
2.
transactions relating to shares of common stock or other
securities acquired in open-market transactions after completion
of our initial public offering;
3.
transfers of shares of common stock or any security convertible
into common stock as a
bona fide gift
;
4.
distributions of shares of common stock or any security
convertible into common stock to limited partners or
stockholders;
5.
the establishment of a trading plan pursuant to
Rule 10b5-1
under the Securities Exchange Act of 1934 for the transfer of
shares of Common Stock, provided that no such transfer occurs
during the period;
6.
transfers of shares of Common Stock to any affiliated entities
of the transferor; or
7.
the issuance by us of shares of common stock upon the exercise
of an option or a warrant or the conversion of a security
outstanding on the date of this prospectus of which the
underwriters have been advised in writing;
Table of Contents
during the last 17 days of the
180-day
restricted period we issue an earnings release or material news
event relating to us occurs, or
prior to the expiration of the
180-day
restricted period, we announce that we will release earnings
results during the 16 day period beginning on the last day
of the
180-day
period,
179
Table of Contents
offer, pledge, sell, contract to sell, grant any option or
contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any
shares of common stock or any securities convertible into or
exercisable or exchangeable for common stock; or
enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences
of ownership of the common stock;
1.
transactions relating to shares of common stock or other
securities acquired in open-market transactions after completion
of our initial public offering;
during the last 17 days of the
45-day
restricted period we issue an earnings release or material news
event relating to us occurs, or
prior to the expiration of the
45-day
restricted period, we announce that we will release earnings
results during the 16 day period beginning on the last day
of the
45-day
period,
180
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181
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182
FINANCIAL STATEMENT SCHEDULE
F-2
F-3
F-4
F-5
F-6
F-8
F-40
F-41
F-42
F-43
F-44
F-58
F-1
Table of Contents
F-2
Table of Contents
F-3
Table of Contents
For the Fiscal Year Ended December 31,
2007
2008
2009
(in thousands, except share and
per share data)
$
118,176
$
186,004
$
153,375
437
2,366
2,108
118,613
188,370
155,483
5,024
3,635
292
(4,299
)
(3,905
)
(2,456
)
725
(270
)
(2,164
)
119,338
188,100
153,319
25,093
37,024
41,503
21,836
29,312
36,875
10,436
16,310
14,955
2,316
3,754
4,466
1,911
2,496
2,689
1,659
2,467
2,676
1,616
2,419
3,548
1,164
1,418
760
1,380
3,104
3,729
123
888
1,132
187
773
698
1,897
165,280
(181,782
)
(1,687
)
(627
)
1,424
1,746
232,374
(78,496
)
113,090
(113,036
)
266,596
40,229
21,615
34,977
12,556
(214
)
(134,651
)
231,405
27,673
(21
)
(321
)
(134,651
)
231,426
27,994
28
288
(134,651
)
231,454
28,282
7
(24
)
$
(134,651
)
$
231,447
$
28,306
$
(63,913
)
$
$
(134,651
)
$
167,513
$
27,994
$
(70.89
)
$
130.12
$
21.41
$
(70.89
)
$
11.17
$
1.88
1,899,386
1,287,360
1,307,379
1,899,386
15,002,277
14,909,184
F-4
Table of Contents
(Accumulated
Accumulated
Additional
Deficit)/
Other
Common Stock
Paid in
Retained
Comprehensive
Noncontrolling
Shares
Amount
Capital
Earnings
Income
Interest
Total
(in thousands, except share and per share data)
2,382,990
$
$
(67,691
)
$
(86,551
)
$
$
$
(154,242
)
21,333
70
70
(870,070
)
(30,000
)
(30,000
)
43
43
943
943
(66
)
(66
)
1,563
1,563
(134,651
)
(134,651
)
1,534,253
(95,115
)
(221,225
)
(316,340
)
617,818
1,686
1,686
(914,572
)
(40,752
)
(40,752
)
(60,064
)
(60,064
)
66,530
(3,848
)
(3,848
)
10,709
10,709
1
1
4,492
4,492
21
7
28
529
529
231,426
(21
)
231,405
1,304,029
$
$
(182,891
)
$
10,201
$
21
$
515
$
(172,154
)
3,508
8
8
4,112
5,609
5,609
327
(39
)
288
(1,135
)
(179
)
(1,314
)
27,994
(321
)
27,673
1,311,649
$
$
(178,409
)
$
38,195
$
348
$
(24
)
$
(139,890
)
F-5
Table of Contents
For the Fiscal Year Ended December 31,
2007
2008
2009
(in thousands)
$
(134,651
)
$
231,405
$
27,673
2,740
1,776
(7,706
)
191
28
1,911
2,496
2,689
(1,479
)
(1,538
)
(932
)
(1,787
)
42
89
89
87
(183
)
(77
)
1,164
1,418
1,101
214
23
91
353
1,657
4,492
5,609
(10,709
)
165,280
(181,782
)
(1,687
)
(4,276
)
(24,817
)
37
(4,983
)
22,620
(26,068
)
(152
)
(849
)
(412
)
(615
)
(3,043
)
(2,426
)
4,874
(3,646
)
(42
)
35,473
13,528
81,312
1,453
354
(1,242
)
(3,085
)
(483
)
1,090
871
939
2,013
8,742
12,505
(10,538
)
77,774
69,320
62,127
(2,719
)
(2,679
)
(4,059
)
191
(666
)
(248
)
(199
)
(944
)
(2,528
)
(3,792
)
(5,003
)
(273
)
30,000
(1,296
)
(7,625
)
(10,500
)
(10,500
)
70
1,686
8
97
117,000
(190
)
10,709
(3,945
)
(30,000
)
(40,752
)
(62,043
)
(7,828
)
12,062
(11,788
)
F-6
Table of Contents
For the Fiscal Year Ended December 31,
2007
2008
2009
(in thousands)
(53
)
757
67,418
77,537
46,093
31,476
98,894
176,431
$
98,894
$
176,431
$
222,524
$
4,093
$
3,959
$
2,377
$
9,524
$
20,731
$
28,200
$
945
$
43
$
(66
)
$
153
$
1,233
$
$
650
$
325
$
350
$
42
436
$
1
$
F-7
Table of Contents
1.
Nature of
Operations and Significant Accounting Policies
GAIN Capital, Inc. acted as a retail, Internet based, market
maker for foreign exchange trading and converted to GAIN
Capital, LLC on March 27, 2006. At the same time, GAIN
Holdings, LLC, a newly created holding company and wholly-owned
subsidiary of GAIN Capital Holdings, Inc., became the sole
member and holder of all of the membership interests of Group,
LLC. GAIN Capital, LLC then merged into Group, LLC on
April 28, 2006 to complete the conversion.
Forex.com acted as a wholly owned introducing broker. Forex.com
merged into GAIN Capital Group, Inc. on February 24, 2006
and no longer exists as a separate legal entity.
The Company established a wholly-owned subsidiary, Jia Shen
Forex Software Development Technology, LLC (Jia Shen,
LLC) in Shanghai, China in 2007. This entity was closed in
2009. See Note 20 for additional information.
GCAM, LLC is a Delaware limited liability company formed on
April 10, 2006 to operate as a private investment vehicle.
GCAM, LLC is engaged primarily in the business of trading and
investing in over the counter (OTC) foreign
currencies and was the general partner of the GCAM Madison Fund,
L.P., through the fund closure in December 31, 2008. The
general partner directed the funds trading and investments
as well as its
day-to-day
operations. GCAM, LLC currently directs the asset management
program of Group, LLC. GAIN Capital Holdings, Inc. owned a
20.36% interest in GCAM, LLC as of December 31, 2006, and
acquired the remaining 79.64% interest in GCAM, LLC as of
January 1, 2007. Group, LLC subsequently transitioned its
investment in GCAM, LLC to the ultimate parent, GAIN Capital
Holdings, Inc.
F-8
Table of Contents
GAIN Global Markets, Inc. (GGMI) was incorporated in
the Cayman Islands on January 19, 2006. In 2007, GGMI
became wholly owned by GAIN Capital Holdings International,
LLC., which is 100% owned by the Company. GGMI is registered
with the Cayman Islands Monetary Authority (CIMA) as
an Exchange Contracts Dealer and operates a trading platform
called Trade Real-Time which provides self-directed traders with
direct access to Contracts for Difference (CFD),
Forex, Metals and Energy markets.
Group, LLC entered into a joint venture with Rosenthal Collins
Group (RCG), a leading independent futures clearing
firm, that was approved by the U.K. Financial Services Authority
(U.K. FSA) effective January 2008 in which Group,
LLC and RCG each owned a 50% interest in RCG GAIN Limited
(RCGGL). On December 22, 2008, Group, LLC
acquired RCGs 50% interest in RCGGL. Prior to the
acquisition of the remaining 50% interest, the joint venture was
accounted for as an equity method investment and was fully
consolidated as of December 31, 2008. Upon achieving
complete ownership, the legal name was changed to GAIN Capital
Forex.com UK Limited (GCUK).
On October 3, 2008, the Company acquired all outstanding
common stock of S.L. Bruce Financial Corporation, the parent
company of State Discount Brokers, Inc. which is a broker-dealer
registered with the Securities and Exchange Commission and a
member of the Financial Industry Regulatory Authority
(FINRA). The Company subsequently changed the name
of State Discount Brokers, Inc. to GAIN Capital Securities, Inc.
(GCSI).
GAIN Holdings International, LLC acquired a 51% controlling
interest, with rights to acquire up to a 95% interest, in
Fortune Capital Co., Ltd. (FORTUNE) on
December 12, 2008. On October 1, 2009, the Company
purchased an additional 196 shares of FORTUNE, increasing
the ownership interest from 51% to 70% of the outstanding
shares. FORTUNE was previously a privately owned provider of
forex trading services in Japan, and has been a white label
partner to Group, LLC since 2002. FORTUNE maintains a
Type I financial instruments business registration with
Japans Financial Services Agency (Japan FSA).
FORTUNE was subsequently renamed Forex.com Japan Co., Ltd.
(GC Japan).
The Company incorporated GAIN Capital Forex.com Hong Kong
Limited (GCHK) on July 9, 2008. In
July 2009, GCHK was granted a license by the Securities and
Futures Commission (SFC) which regulates forex
trading in Hong Kong.
The Company incorporated GAIN Capital Forex.com
Singapore Pte Ltd. in January 2009.
The Company incorporated GAIN Capital Forex.com Australia Pty
Ltd. in July 2009.
2.
Summary
of Significant Accounting Policies
F-9
Table of Contents
Valuation of assets and liabilities requiring fair value
estimates;
The allowance for doubtful accounts;
The realization of deferred taxes;
The carrying amount of goodwill and other intangible assets;
The amortization period of intangible assets with definite lives;
Incentive based compensation accruals and valuation of
share-based payment arrangements; and
Other matters that affect the reported amounts and disclosure of
contingencies in the consolidated financial statements.
F-10
Table of Contents
F-11
Table of Contents
3 years
3 years
Shorter of lease term or estimated useful life
3 years
3 years
5 years
F-12
Table of Contents
F-13
Table of Contents
$
(348
)
(1,209
)
428
(1,129
)
(1,418
)
334
(2,213
)
(1,101
)
2,641
341
$
(332
)
F-14
Table of Contents
F-15
Table of Contents
F-16
Table of Contents
F-17
Table of Contents
3.
Fair
Value Disclosures
Fair Value Measurements on a Recurring Basis
as of December 31, 2009
Level 1
Level 2
Level 3
Netting
(1)
Total
(in thousands)
$
43
$
43
$
24,997
$
24,997
$
(143
)
$
182
$
39
$
110
$
110
$
81,098
$
81,098
(1)
Represents cash collateral netting.
F-18
Table of Contents
Fair Value Measurements on a Recurring Basis
as of December 31, 2008
Level 1
Level 2
Level 3
Netting
(1)
Total
(in thousands)
$
82,785
$
82,785
$
82,785
(1,687
)
$
81,098
4.
Receivables
From Brokers
2008
2009
$
1,687
$
15,080
48,598
60,724
531
587
$
50,816
$
76,391
Table of Contents
5.
Property
and Equipment
2008
2009
$
5,419
$
7,846
3,048
3,801
243
1,235
146
609
159
226
145
93
43
87
12
9,215
13,897
(5,278
)
(7,054
)
$
3,937
$
6,843
6.
Intangible
Assets
$
929
(406
)
523
(203
)
$
320
F-20
Table of Contents
7.
Acquisitions
$
1,278
1,078
533
203
$
3,092
2008
2009
$
231,426
$
27,994
(1,136
)
$
231,426
$
26,858
F-21
Table of Contents
8.
Other
Assets
2008
2009
$
2,807
$
3,371
82
3,646
90
1,893
295
542
$
3,274
$
9,452
9.
Notes
Payable
F-22
Table of Contents
Years Ended December
31:
$
10,500
10,500
7,875
$
28,875
10.
Convertible,
Redeemable Preferred Stock
F-23
Table of Contents
F-24
Table of Contents
F-25
Table of Contents
Total
Convertible,
Preferred
Preferred
Preferred
Preferred
Preferred
Redeemable
Stock
Stock
Stock
Stock
Stock
Preferred
Series A
Series B
Series C
Series D
Series E
Stock
$
3,288
$
5,414
$
6,017
$
39,840
$
$
54,559
3,288
5,414
6,017
39,840
54,559
(1,279
)
(2
)
(698
)
(1,979
)
117,000
117,000
(190
)
(190
)
97
97
(97
)
(97
)
$
2,009
$
5,412
$
5,319
$
39,840
$
116,810
$
169,390
$
2,009
$
5,412
$
5,319
$
39,840
$
116,810
$
169,390
F-26
Table of Contents
2008
2009
$
13,317
$
14,308
38,634
41,490
13,562
14,471
14,902
10,462
2,370
367
$
82,785
$
81,098
11.
Shareholders
Deficit
12.
Related
Party Transactions
F-27
Table of Contents
13.
Share
Based Payment
F-28
Table of Contents
Weighted
Weighted
Average
Number of
Average
Remaining
Aggregate
Options
Exercise Price
Life (Years)
Intrinsic Value
1,554,099
$
3.90
(3,508
)
2.26
(516
)
5.86
1,550,075
$
3.90
5.03
$
23,251,462
1,550,075
$
3.90
5.03
$
23,251,462
1,550,075
$
3.90
5.03
$
23,251,462
$
85,152
7,937
$
77,215
Options Outstanding
Options Exercisable
Weighted
Average
Number
Weighted
Remaining
Number of
Weighted
Outstanding
Average
Contractual
Options
Average
Exercise Price
As of 12/31/09
Exercise Price
Life (Years)
Exercisable
Exercise Price
18,275
$
0.02
0.02
18,275
$
0.01
208,813
$
0.24
0.47
208,813
$
0.24
213,170
$
0.34
0.58
213,170
$
0.34
187,356
$
0.42
0.62
187,356
$
0.42
627,323
$
1.82
2.21
627,323
$
1.83
267,405
$
0.95
1.03
267,405
$
0.95
26,700
$
0.11
0.10
26,700
$
0.11
683
$
0.00
0.00
683
$
0.00
350
$
0.00
0.00
350
$
0.00
1,550,075
$
3.90
5.03
1,550,075
$
3.90
F-29
Table of Contents
Weighted Average
Number of
Grant Date
Non-Vested Shares
Shares
Fair Value
491,672
$
29.23
176,865
$
20.46
(207,441
)
$
25.05
(7,265
)
$
35.43
453,831
$
27.62
F-30
Table of Contents
14.
Income
Taxes
For the Fiscal Year Ended December 31,
2007
2008
2009
(amounts in thousands)
$
17,827
$
27,775
$
12,144
5,326
8,059
1,207
75
992
23,153
35,909
14,343
(1,203
)
(723
)
(1,482
)
(335
)
(209
)
(305
)
284
(377
)
(284
)
377
(1,538
)
(932
)
(1,787
)
$
21,615
$
34,977
$
12,556
F-31
Table of Contents
2008
2009
(amounts in thousands)
$
1,009
$
138
43
88
62
405
284
661
2,526
4,957
3,924
6,249
(284
)
(661
)
$
3,640
$
5,588
$
(3,466
)
$
(3,301
)
(84
)
(200
)
(141
)
(54
)
(3,550
)
$
(3,696
)
$
90
$
1,892
2007
2008
2009
(35.00
)%
35.00
%
35.00
%
2.87
%
1.91
%
0.08
%
51.24
%
(23.92
)%
(1.47
)%
0.45
%
0.16
%
(0.61
)%
0.10
%
0.03
%
0.17
%
(1.09
)%
(0.54
)%
(0.07
)%
(0.87
)%
19.12
%
13.11
%
31.21
%
F-32
Table of Contents
15.
Commitments
and Contingencies
Years Ended December
31:
$
1,127
1,166
990
990
990
12,053
$
17,316
Years Ended December
31:
$
335
335
$
670
F-33
Table of Contents
16.
Retirement
Plans
17.
Earnings
per Common Share
F-34
Table of Contents
For the Years Ended December 31,
2007
2008
2009
(amounts in thousands,
except share and per share data)
$
(134,651
)
$
231,426
$
27,994
(63,913
)
$
(134,651
)
$
167,513
$
27,994
1,899,386
1,287,360
1,307,379
899,666
865,154
2,610,254
2,610,210
1,361,768
1,355,669
3,254,678
3,254,678
2,540,251
2,611,606
1,408,725
1,382,921
1,380,283
1,264,707
259,292
256,860
1,899,386
15,002,277
14,909,184
$
(70.89
)
$
130.12
$
21.41
$
(70.89
)
$
11.17
$
1.88
For the Years Ended December 31,
2007
2008
2009
9,467,741
1,484,670
1,892,604
169,187
13,014,202
F-35
Table of Contents
18.
Regulatory
Requirements
For the Years Ended December 31,
2007
2008
2009
(amounts in thousands)
$
53,954
$
114,978
$
102,577
$
49,604
$
107,726
$
90,425
$
44,148
$
97,726
$
64,424
F-36
Table of Contents
19.
Segment
Information
20.
Closure
of Shanghai Company
21.
Subsequent
Events
F-37
Table of Contents
F-38
Table of Contents
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2010 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2010
(UNAUDITED)
F-39
Table of Contents
F-40
Table of Contents
F-41
Table of Contents
Accumulated
Additional
Other
Common Stock
Paid in
Retained
Comprehensive
Noncontrolling
Shares
Amount
Capital
Earnings
Income
Interest
Total
(in thousands, except per share data)
1,311,649
$
0.00
$
(178,409
)
$
38,195
$
348
$
(24
)
$
(139,890
)
16,832
47
47
25,103
0
4,181
4,181
200
32
232
(614
)
394
(220
)
(18,931
)
(402
)
(19,333
)
1,353,584
$
$
(174,795
)
$
19,264
$
548
$
$
(154,983
)
F-42
Table of Contents
For the Nine Months Ended September 30,
2009
2010
(in thousands)
$
(20,534
)
$
(19,333
)
(11,522
)
(35,048
)
(49
)
272
2,013
2,568
838
(188
)
65
66
(61
)
(34
)
593
514
258
37
3,372
4,181
40,820
48,936
30
5,013
(20,783
)
(13,325
)
(299
)
(8,021
)
(2,426
)
(453
)
(3,019
)
791
53,612
60,593
(2,091
)
298
53
3,087
2,017
1,828
(10,538
)
3,306
32,349
55,088
(2,748
)
(3,319
)
(468
)
(2,748
)
(3,787
)
(701
)
(78
)
(7,875
)
(7,875
)
3
48
(427
)
(8,573
)
(8,332
)
479
(7,481
)
21,507
35,488
176,431
222,524
$
197,938
$
258,012
$
1,824
$
1,524
$
23,950
$
13,263
$
7
$
17
$
407
$
320
F-43
Table of Contents
1.
Significant
Accounting Policies
F-44
Table of Contents
$
(332
)
(514
)
469
$
(377
)
F-45
Table of Contents
2.
Fair
Value Disclosures
Fair Value Measurements on a Recurring Basis
as of September 30, 2010
Level 1
Level 2
Level 3
Netting
(1)
Total
$
56
$
56
$
19,999
$
19,999
$
(75
)
$
128
$
53
$
131
$
131
$
130,034
$
130,034
(1)
Represents cash collateral netting.
F-46
Table of Contents
$
81,098
48,936
$
130,034
3.
Receivables
from Brokers
September 30,
2010
$
18,243
70,790
536
$
89,569
F-47
Table of Contents
4.
Property
and Equipment
September 30,
2010
$
9,656
4,466
1,359
219
617
198
638
17,153
(9,554
)
$
7,599
5.
Intangible
Assets
6.
Goodwill
September 30,
2010
$
1,278
1,078
533
203
$
3,092
F-48
Table of Contents
7.
Other
Assets
September 30,
2010
$
3,467
2,856
2,081
1,231
$
9,635
8.
Notes
Payable
Years Ended December
31:
$
2,625
10,500
7,875
$
21,000
F-49
Table of Contents
9.
Convertible,
Redeemable Preferred Stock
Total
Preferred
Preferred
Preferred
Preferred
Preferred
Convertible,
Stock
Stock
Stock
Stock
Stock
Redeemable
Series A
Series B
Series C
Series D
Series E
Preferred Stock
$
2,009
$
5,412
$
5,319
$
39,840
$
116,810
$
169,390
$
2,009
$
5,412
$
5,319
$
39,840
$
116,810
$
169,390
F-50
Table of Contents
2010
$
21,505
63,064
25,075
20,387
3
$
130,034
10.
Related
Party Transactions
11.
Employee
Compensation Plans
Nine Months Ended
September 30,
2009
September 30,
2010
$
$
138
3,372
4,043
$
3,372
$
4,181
F-51
Table of Contents
12.
Income
Taxes
Nine Months Ended
September 30,
2009
September 30,
2010
(35.00
)%
(35.00
)%
(0.81
)%
153.09
%
156.81
%
1,501.65
%
9.42
%
(54.45
)%
(3.61
)%
0.49
%
4.84
%
31.16
%
(1.92
)%
(6.32
)%
125.38
%
1,594.97
%
13.
Commitments
and Contingencies
Years Ended December
31:
$
631
1,770
1,112
1,009
990
12,053
$
17,565
F-52
Table of Contents
14.
Retirement
Plans
F-53
Table of Contents
15.
Earnings
Per Common Share
For the Nine Months
Ended September 30,
2009
2010
(amounts in thousands, except share and per share data)
$
(20,519
)
$
(18,931
)
$
(20,519
)
$
(18,931
)
1,306,265
1,327,124
1,306,265
1,327,124
$
(15.71
)
$
(14.26
)
$
(15.71
)
$
(14.26
)
F-54
Table of Contents
For the Nine Months
Ended September 30,
2009
2010
10,697,317
10,697,317
1,385,810
1,350,202
1,275,545
1,023,609
267,464
552,322
13,626,136
13,623,450
16.
Regulatory
Requirements
September 30,
2010
(amounts in thousands)
$
96,144
$
63,123
$
37,284
F-55
Table of Contents
17.
Segment
Information
18.
Subsequent
Events
F-56
Table of Contents
F-57
Table of Contents
INDEX TO SCHEDULE I FINANCIAL
INFORMATION OF GAIN CAPITAL HOLDINGS, INC.
(PARENT COMPANY ONLY) AS OF DECEMBER 31, 2008 AND 2009 AND
FOR
EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31,
2009
F-58
Table of Contents
F-59
Table of Contents
(PARENT COMPANY ONLY)
CONDENSED STATEMENTS OF FINANCIAL CONDITION
F-60
Table of Contents
(PARENT COMPANY ONLY)
CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME/(LOSS)
For the Fiscal Year Ended December 31,
2007
2008
2009
(in thousands, except share and per share data)
$
53,034
$
88,462
$
39,673
317
567
525
2
33
10
423
1,043
897
1,897
165,280
(181,782
)
(1,687
)
48
377
381
166,070
(177,865
)
126
(113,036
)
266,327
39,547
21,615
34,901
11,553
$
(134,651
)
$
231,426
$
27,994
21
16
$
(134,651
)
$
231,447
$
28,010
$
$
(63,913
)
$
$
(134,651
)
$
167,513
$
27,994
F-61
Table of Contents
(PARENT COMPANY ONLY)
CONDENSED STATEMENTS OF CASH FLOWS
For the Fiscal Year Ended
December 31,
2007
2008
2009
(in thousands)
$
(134,651
)
$
231,426
$
28,010
(56,722
)
(91,159
)
(41,340
)
59
203
(1,538
)
(842
)
(1,787
)
42
89
89
87
223
541
282
(10,709
)
165,280
(181,782
)
(1,687
)
1,520
2,637
3,737
(191
)
(160
)
4,874
(4,618
)
221
1,102
(527
)
8,742
12,505
(10,538
)
(11,962
)
(36,282
)
(28,338
)
19,878
24,873
39,362
19,878
24,873
39,362
30,000
(273
)
(1,296
)
(7,625
)
(10,500
)
(10,500
)
70
1,686
8
97
117,000
(190
)
10,709
(3,945
)
(30,000
)
(40,752
)
(62,043
)
(7,828
)
12,062
(11,788
)
(58
)
88
653
(822
)
164
252
905
$
252
$
905
$
83
$
3,469
$
2,795
$
1,622
$
9,524
$
20,731
$
28,200
$
945
$
$
$
43
$
$
$
(66
)
$
$
$
$
325
$
$
$
$
350
$
42
$
$
436
$
$
1
$
F-62
Table of Contents
(PARENT COMPANY ONLY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
1.
Basis of
Presentation
2.
Notes
Payable
3.
Convertible,
Redeemable Preferred Stock
4.
Shareholders
Deficit
5.
Transactions
with Subsidiaries
I-1
Table of Contents
(PARENT COMPANY ONLY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Continued)
6.
Income
Taxes
7.
Commitments
and Contingencies
I-2
Table of Contents
Table of Contents
Item 13.
Other
Expenses of Issuance and Distribution.
$
6,975
21,500
150,000
1,000,000
1,300,000
30,000
100,000
300,000
41,525
$
2,950,000
Item 14.
Indemnification
of Directors and Officers.
II-1
Table of Contents
Item 15.
Recent
Sales of Unregistered Securities.
II-2
Table of Contents
II-3
Table of Contents
Item 16.
Exhibits
and Financial Statement Schedules.
Exhibit
No.
Description
1
.1**
Underwriting Agreement.
3
.1**
Second Amended and Restated Certificate of Incorporation to be
superseded by the Third Amended and Restated Certificate of
Incorporation to be effective upon the closing of the offering.
3
.2**
Amended and Restated By-laws to be effective upon the closing of
the offering.
3
.3**
Form of Third Amended and Restated Certificate of Incorporation
to be effective upon the closing of the offering.
4
.1**
Specimen Certificate evidencing shares of common stock.
4
.2**
Investor Rights Agreement, dated January 11, 2008, by and
among the Company, the Investors and the Founding Stockholder,
as defined therein.
5
.1**
Opinion of DLA Piper LLP (U.S.).
10
.1***
Intentionally Left Blank.
10
.2**
2010 Omnibus Incentive Compensation Plan.
10
.3*
2011 Employee Stock Purchase Plan.
10
.4**
Form of Incentive Stock Option Agreement.
10
.5**
Form of Nonqualified Stock Option Agreement.
10
.6**
Form of Restricted Stock Agreement.
10
.7**
Form of Restricted Stock Unit Agreement (Time Vesting).
10
.8**
Form of Restricted Stock Unit Agreement (Performance Vesting).
10
.9***
Intentionally Left Blank.
10
.10**
Form of Indemnification Agreement with the Companys
Non-Employee Directors.
10
.11**
Loan and Security Agreement, dated as of March 29, 2006, by
and among GAIN Capital Holdings, Inc., Silicon Valley Bank and
JPMorgan Chase Bank, N.A.
10
.12**
Pledge and Security Agreement, dated as of March 29, 2006,
by and among GAIN Capital Holdings, Inc., Silicon Valley Bank
and JPMorgan Chase Bank, N.A.
10
.13**
Unconditional Guaranty, dated as of March 29, 2006, by and
among GAIN Holdings, LLC, Silicon Valley Bank and JPMorgan Chase
Bank, N.A.
10
.14**
First Loan Modification Agreement, dated as of October 16,
2006, by and among GAIN Capital Holdings, Inc., Silicon Valley
Bank and JPMorgan Chase Bank, N.A.
10
.15**
Second Loan Modification Agreement, dated as of March 20,
2007, by and among GAIN Capital Holdings, Inc., Silicon Valley
Bank and JP Chase Bank, N.A.
10
.16**
Third Loan Modification Agreement, dated June 6, 2007, by
and among GAIN Capital Holdings, Inc., Silicon Valley Bank and
JPMorgan Chase Bank, N.A.
10
.17**
Fourth Loan Modification Agreement, dated as of March 18,
2008, by and among GAIN Capital Holdings, Inc., Silicon Valley
Bank and JPMorgan Chase Bank, N.A.
10
.18**
Fifth Loan Modification Agreement, dated as of June 18,
2009 and effective as of March 17, 2009, by and among GAIN
Capital Holdings, Inc., Silicon Valley Bank and JPMorgan Chase
Bank, N.A.
10
.19*
Employment Agreement, dated as of January 1, 2008, by and
between GAIN Capital Holdings, Inc. and Glenn Stevens.
10
.20*
Employment Letter, dated as of August 26, 2009, by and
between GAIN Capital Holdings, Inc. and Christopher Calhoun.
II-4
Table of Contents
Exhibit
No.
Description
10
.21*
Employment Letter, dated as of March 23, 2009, by and
between GAIN Capital Holdings, Inc. and Henry Lyons.
10
.22*
Employment Letter, dated as of March 8, 2000, by and
between GAIN Capital Holdings, Inc. and Timothy OSullivan.
10
.23**
Separation Agreement, dated as of January 11, 2008, by and
between Mark Galant and GAIN Capital Holdings, Inc.
10
.24**
FX Prime Brokerage Master Agreement, dated as of
December 6, 2006, by and between GAIN Capital Group, LLC
and The Royal Bank of Scotland, plc.
10
.25*
FX Prime Brokerage Agreement, dated as of July 8, 2005, by
and between UBS AG and GAIN Capital, Inc.
10
.26**
Foreign Exchange Prime Brokerage Agency Agreement, dated as of
July 12, 2006, by and between GAIN Capital Group, LLC and
The Royal Bank of Scotland, plc.
10
.27**
Foreign Exchange Prime Brokerage Agreement, dated
October 18, 2005, by and between Deutsche Bank AG, London
Branch and GCAM, LLC.
10
.28**
Amendment to Foreign Exchange Prime Brokerage Agreement, dated
January 26, 2006, by and between Deutsche Bank AG, London
Branch and GCAM, LLC.
10
.29**
Form of ISDA Master Agreement, 1992 edition.
10
.30**
Form of Introducing Broker Agreement.
10
.31**
Form of Agreement for White Label Services.
10
.32**
Sublease, dated March 31, 2005, by and between GAIN
Capital, Inc. and NUI Corporation.
10
.33**
Agreement of Sublease, dated November 14, 2005, by and
between Mellon Investor Services LLC and GAIN Capital, Inc.
10
.34**
First Amendment to Sublease, dated July 20, 2006, by and
between Mellon Investor Services LLC and GAIN Capital, Inc.
10
.35**
Services Agreement, dated February 1, 2008, by and between
GAIN Capital Group, LLC and Scivantage, Inc.
10
.36**
Schedule 1(b) to Services Agreement, dated
February 15, 2009, by and between GAIN Capital Group, LLC
and Scivantage, Inc.
10
.37**
Lease and Lease Agreement, dated August 18, 2009, by and
between S/K Bed One Associates LLC and GAIN Capital Holdings,
Inc.
10
.38**
Access Agreement, dated December 1, 2004, by and between
Questrade, Inc. and GAIN Capital, Inc.
10
.39**
Agreement for Lease, dated May 5, 2009, by and between
Pontsarn Investments Limited and GAIN Capital
Forex.com U.K., Ltd.
10
.40**
Addendum to Access Agreement, dated July 23, 2007, by and
between GAIN Capital Group, LLC and Questrade, Inc.
10
.41**
Addendum to Access Agreement, dated October 12, 2007, by
and between GAIN Capital Group, LLC and Questrade, Inc.
10
.42**
Software Licensing and Services Agreement, dated
December 1, 2004, by and between Questrade, Inc. and GAIN
Capital, Inc.
10
.43**
License Agreement, dated August 9, 2007, by and between
GAIN Capital Group, LLC and MetaQuotes Software Corp.
10
.44**
Agreement, dated November 22, 2004, by and between esignal,
a division of Interactive Data Corporation, and GAIN Capital,
Inc.
10
.45*
Sales Lead Agreement, dated October 9, 2006, by and between
GAIN Capital Group, LLC and Trading Central.
10
.46*
Forex Introducing Broker Agreement, dated April 20, 2005,
by and between GAIN Capital Group, Inc. and TradeStation
Securities, Inc.
10
.47**
Addendum to Introducing Broker Agreement, dated October 1,
2007, by and between GAIN Capital Group, LLC and TradeStation
Securities, Inc.
Table of Contents
Exhibit
No.
Description
10
.48**
Second Addendum to Introducing Broker Agreement, dated
April 1, 2009, by and between GAIN Capital Group, LLC and
TradeStation Securities, Inc.
10
.49**
Form of ISDA Master Agreement, 2002 edition.
10
.50**
Sixth Loan Modification Agreement, dated June 16, 2010, by
and among GAIN Capital Holdings, Inc., Silicon Valley Bank and
JPMorgan Chase Bank, N.A.
10
.51***
Intentionally Left Blank.
10
.52**
Amended and Restated Employment Agreement, dated as of
November 23, 2010, by and between GAIN Capital Holdings,
Inc. and Glenn Stevens.
10
.53**
Executive Employment Agreement, dated as of November 23,
2010, by and between GAIN Capital Holdings, Inc. and Henry Lyons.
10
.54**
Retention Agreement, dated as of November 23, 2010, by and
between GAIN Capital Holdings, Inc. and Henry Lyons.
10
.55*
Executive Employment Agreement, dated as of December 6,
2010, by and between GAIN Capital Holdings, Inc. and Timothy
OSullivan.
10
.56*
Executive Employment Agreement, dated as of November 23,
2010, by and between GAIN Capital Holdings, Inc. and Samantha
Roady.
10
.57*
Executive Employment Agreement, dated as of November 24,
2010, by and between GAIN Capital Holdings, Inc. and Andrew
Haines.
10
.58*
Executive Employment, Agreement, dated as of November 23,
2010, by and between GAIN Capital Holdings, Inc. and Kenneth
OBrien.
10
.59*
Executive Employment Agreement, dated as of December 6,
2010, by and between GAIN Capital Holdings, Inc. and Alexander
Bobinski.
10
.60**
Amended and Restated 2006 Equity Compensation Plan, effective
December 31, 2006.
10
.61**
Amendment No. 2007-1 to the GAIN Capital Holdings, Inc. 2006
Equity Compensation Plan.
10
.62**
Amendment No. 2008-1 to the GAIN Capital Holdings, Inc. 2006
Equity Compensation Plan.
10
.63**
Amendment No. 2010-1 to the GAIN Capital Holdings, Inc. 2006
Equity Compensation Plan.
10
.64**
Asset Purchase Agreement, dated as of October 5, 2010, by
and among GAIN Capital Group, LLC, GAIN Capital-Forex.com U.K.,
and GAIN Capital Forex.com Japan, Co. Ltd., and Capital Market
Services, LLC, Capital Market Services UK Ltd., Capital Market
Services International BM, Ltd., and CMS Japan K.K.
10
.65**
Amendment No. 1 to Asset Purchase Agreement, dated as of
November 23, 2010, by and among GAIN Capital Group, LLC,
GAIN Capital-Forex.com U.K., and GAIN Capital Forex.com Japan,
Co. Ltd., and Capital Market Services, LLC, Capital Market
Services UK Ltd., Capital Market Services
International BM, Ltd., and CMS Japan K.K.
21
.1**
Subsidiaries of the Registrant.
23
.1*
Consent of Deloitte & Touche LLP.
23
.2**
Consent of DLA Piper LLP (U.S.) (included in Exhibit 5.1).
23
.3**
Consent of Aite Group, LLC, dated November 24, 2010.
23
.4***
Intentionally Left Blank.
24
.1**
Power of Attorney
*
Filed herewith.
**
Previously filed.
***
Previously filed document no longer
in effect.
Confidential treatment requested.
Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
Table of Contents
Item 17.
Undertakings.
II-7
Table of Contents
By:
II-8
Table of Contents
Signature
Title
Date
Director
December 6, 2010
Director
December 6, 2010
Director
December 6, 2010
* By:
December 6, 2010
II-9
Table of Contents
Exhibit
No.
Description
1
.1**
Underwriting Agreement.
3
.1**
Second Amended and Restated Certificate of Incorporation to be
superseded by the Third Amended and Restated Certificate of
Incorporation to be effective upon the closing of the offering.
3
.2**
Amended and Restated By-laws to be effective upon the closing of
the offering.
3
.3**
Form of Third Amended and Restated Certificate of Incorporation
to be effective upon the closing of the offering.
4
.1**
Specimen Certificate evidencing shares of common stock.
4
.2**
Investor Rights Agreement, dated January 11, 2008, by and
among the Company, the Investors and the Founding Stockholder,
as defined therein.
5
.1**
Opinion of DLA Piper LLP (U.S.).
10
.1***
Intentionally Left Blank.
10
.2**
2010 Omnibus Incentive Compensation Plan.
10
.3*
2011 Employee Stock Purchase Plan.
10
.4**
Form of Incentive Stock Option Agreement.
10
.5**
Form of Nonqualified Stock Option Agreement.
10
.6**
Form of Restricted Stock Agreement.
10
.7**
Form of Restricted Stock Unit Agreement (Time Vesting).
10
.8**
Form of Restricted Stock Unit Agreement (Performance Vesting).
10
.9***
Intentionally Left Blank.
10
.10**
Form of Indemnification Agreement with the Companys
Non-Employee Directors.
10
.11**
Loan and Security Agreement, dated as of March 29, 2006, by
and among GAIN Capital Holdings, Inc., Silicon Valley Bank and
JPMorgan Chase Bank, N.A.
10
.12**
Pledge and Security Agreement, dated as of March 29, 2006,
by and among GAIN Capital Holdings, Inc., Silicon Valley Bank
and JPMorgan Chase Bank, N.A.
10
.13**
Unconditional Guaranty, dated as of March 29, 2006, by and
among GAIN Holdings, LLC, Silicon Valley Bank and JPMorgan Chase
Bank, N.A.
10
.14**
First Loan Modification Agreement, dated as of October 16,
2006, by and among GAIN Capital Holdings, Inc., Silicon Valley
Bank and JPMorgan Chase Bank, N.A.
10
.15**
Second Loan Modification Agreement, dated as of March 20,
2007, by and among GAIN Capital Holdings, Inc., Silicon Valley
Bank and JP Chase Bank, N.A.
10
.16**
Third Loan Modification Agreement, dated June 6, 2007, by
and among GAIN Capital Holdings, Inc., Silicon Valley Bank and
JPMorgan Chase Bank, N.A.
10
.17**
Fourth Loan Modification Agreement, dated as of March 18,
2008, by and among GAIN Capital Holdings, Inc., Silicon Valley
Bank and JPMorgan Chase Bank, N.A.
10
.18**
Fifth Loan Modification Agreement, dated as of June 18,
2009 and effective as of March 17, 2009, by and among GAIN
Capital Holdings, Inc., Silicon Valley Bank and JPMorgan Chase
Bank, N.A.
10
.19*
Employment Agreement, dated as of January 1, 2008, by and
between GAIN Capital Holdings, Inc. and Glenn Stevens.
10
.20*
Employment Letter, dated as of August 26, 2009, by and
between GAIN Capital Holdings, Inc. and Christopher Calhoun.
10
.21*
Employment Letter, dated as of March 23, 2009, by and
between GAIN Capital Holdings, Inc. and Henry Lyons.
Table of Contents
Exhibit
No.
Description
10
.22*
Employment Letter, dated as of March 8, 2000, by and
between GAIN Capital Holdings, Inc. and Timothy OSullivan.
10
.23**
Separation Agreement, dated as of January 11, 2008, by and
between Mark Galant and GAIN Capital Holdings, Inc.
10
.24**
FX Prime Brokerage Master Agreement, dated as of
December 6, 2006, by and between GAIN Capital Group, LLC
and The Royal Bank of Scotland, plc.
10
.25*
FX Prime Brokerage Agreement, dated as of July 8, 2005, by
and between UBS AG and GAIN Capital, Inc.
10
.26**
Foreign Exchange Prime Brokerage Agency Agreement, dated as of
July 12, 2006, by and between GAIN Capital Group, LLC and
The Royal Bank of Scotland, plc.
10
.27**
Foreign Exchange Prime Brokerage Agreement, dated
October 18, 2005, by and between Deutsche Bank AG, London
Branch and GCAM, LLC.
10
.28**
Amendment to Foreign Exchange Prime Brokerage Agreement, dated
January 26, 2006, by and between Deutsche Bank AG, London
Branch and GCAM, LLC.
10
.29**
Form of ISDA Master Agreement, 1992 edition.
10
.30**
Form of Introducing Broker Agreement.
10
.31**
Form of Agreement for White Label Services.
10
.32**
Sublease, dated March 31, 2005, by and between GAIN
Capital, Inc. and NUI Corporation.
10
.33**
Agreement of Sublease, dated November 14, 2005, by and
between Mellon Investor Services LLC and GAIN Capital, Inc.
10
.34**
First Amendment to Sublease, dated July 20, 2006, by and
between Mellon Investor Services LLC and GAIN Capital, Inc.
10
.35**
Services Agreement, dated February 1, 2008, by and between
GAIN Capital Group, LLC and Scivantage, Inc.
10
.36**
Schedule 1(b) to Services Agreement, dated
February 15, 2009, by and between GAIN Capital Group, LLC
and Scivantage, Inc.
10
.37**
Lease and Lease Agreement, dated August 18, 2009, by and
between S/K Bed One Associates LLC and GAIN Capital Holdings,
Inc.
10
.38**
Access Agreement, dated December 1, 2004, by and between
Questrade, Inc. and GAIN Capital, Inc.
10
.39**
Agreement for Lease, dated May 5, 2009, by and between
Pontsarn Investments Limited and GAIN Capital
Forex.com U.K., Ltd.
10
.40**
Addendum to Access Agreement, dated July 23, 2007, by and
between GAIN Capital Group, LLC and Questrade, Inc.
10
.41**
Addendum to Access Agreement, dated October 12, 2007, by
and between GAIN Capital Group, LLC and Questrade, Inc.
10
.42**
Software Licensing and Services Agreement, dated
December 1, 2004, by and between Questrade, Inc. and GAIN
Capital, Inc.
10
.43**
License Agreement, dated August 9, 2007, by and between
GAIN Capital Group, LLC and MetaQuotes Software Corp.
10
.44**
Agreement, dated November 22, 2004, by and between esignal,
a division of Interactive Data Corporation, and GAIN Capital,
Inc.
10
.45*
Sales Lead Agreement, dated October 9, 2006, by and between
GAIN Capital Group, LLC and Trading Central.
10
.46*
Forex Introducing Broker Agreement, dated April 20, 2005,
by and between GAIN Capital Group, Inc. and TradeStation
Securities, Inc.
Table of Contents
Exhibit
No.
Description
10
.47**
Addendum to Introducing Broker Agreement, dated October 1,
2007, by and between GAIN Capital Group, LLC and TradeStation
Securities, Inc.
10
.48**
Second Addendum to Introducing Broker Agreement, dated
April 1, 2009, by and between GAIN Capital Group, LLC and
TradeStation Securities, Inc.
10
.49**
Form of ISDA Master Agreement, 2002 edition.
10
.50**
Sixth Loan Modification Agreement, dated June 16, 2010, by
and among GAIN Capital Holdings, Inc., Silicon Valley Bank and
JPMorgan Chase Bank, N.A.
10
.51***
Intentionally Left Blank.
10
.52**
Amended and Restated Employment Agreement, dated as of November
23, 2010, by and between GAIN Capital Holdings, Inc. and Glenn
Stevens.
10
.53**
Executive Employment Agreement, dated as of November 23, 2010,
by and between GAIN Capital Holdings, Inc. and Henry Lyons.
10
.54**
Retention Agreement, dated as of November 23, 2010, by and
between GAIN Capital Holdings, Inc. and Henry Lyons.
10
.55*
Executive Employment Agreement, dated as of December 6,
2010, by and between GAIN Capital Holdings, Inc. and Timothy
OSullivan.
10
.56*
Executive Employment Agreement, dated as of November 23,
2010, by and between GAIN Capital Holdings, Inc. and Samantha
Roady.
10
.57*
Executive Employment Agreement, dated as of November 24,
2010, by and between GAIN Capital Holdings, Inc. and Andrew
Haines.
10
.58*
Executive Employment Agreement, dated as of November 23,
2010, by and between GAIN Capital Holdings, Inc. and Kenneth
OBrien.
10
.59*
Executive Employment Agreement, dated as of December 6,
2010, by and between GAIN Capital Holdings, Inc. and Alexander
Bobinski.
10
.60**
Amended and Restated 2006 Equity Compensation Plan, effective
December 31, 2006.
10
.61**
Amendment No. 2007-1 to the GAIN Capital Holdings, Inc. 2006
Equity Compensation Plan.
10
.62**
Amendment No. 2008-1 to the GAIN Capital Holdings, Inc. 2006
Equity Compensation Plan.
10
.63**
Amendment No. 2010-1 to the GAIN Capital Holdings, Inc. 2006
Equity Compensation Plan.
10
.64**
Asset Purchase Agreement, dated as of October 5, 2010, by
and among GAIN Capital Group, LLC, GAIN Capital-Forex.com U.K.,
and GAIN Capital Forex.com Japan, Co. Ltd., and Capital Market
Services, LLC, Capital Market Services UK Ltd., Capital Market
Services International BM, Ltd., and CMS Japan K.K.
10
.65**
Amendment No. 1 to Asset Purchase Agreement, dated as of
November 23, 2010, by and among GAIN Capital Group, LLC,
GAIN Capital-Forex.com U.K., and GAIN Capital Forex.com Japan,
Co. Ltd., and Capital Market Services, LLC, Capital Market
Services UK Ltd., Capital Market Services
International BM, Ltd., and CMS Japan K.K.
21
.1**
Subsidiaries of the Registrant.
23
.1*
Consent of Deloitte & Touche LLP.
23
.2**
Consent of DLA Piper LLP (U.S.) (included in Exhibit 5.1).
23
.3**
Consent of Aite Group, LLC, dated November 3, 2010.
23
.4***
Intentionally Left Blank.
24
.1**
Power of Attorney
*
Filed herewith.
**
Previously filed.
***
Previously filed document no longer
in effect.
Confidential treatment requested.
Confidential materials omitted and filed separately with the
Securities and Exchange Commission.
Page | ||||
1. Purpose of the Plan
|
1 | |||
2. Definitions
|
1 | |||
3. Administration of the Plan
|
4 | |||
4. Stock Subject to Plan
|
4 | |||
5. Offering Periods
|
5 | |||
6. Eligibility
|
5 | |||
7. Payroll Deductions
|
6 | |||
8. Purchase Rights
|
7 | |||
9. Accrual Limitations
|
10 | |||
10. Effective Date and Term of the Plan
|
10 | |||
11. Amendment and Termination
|
11 | |||
12. General Provisions
|
11 | |||
Schedule A
|
A-1 |
i
1
2
3
4
5
6
7
8
9
10
11
12
A-1
GAIN CAPITAL HOLDINGS, INC. | |||||||
|
|||||||
By:
|
/s/ Mark E. Galant | ||||||
|
|
||||||
Name: Mark Galant | |||||||
Title: Chairman of the Board | |||||||
/s/ Glenn Stevens
|
|||||||
GLENN STEVENS |
-2-
Sincerely,
GAIN Capital Holdings, Inc. |
||||
/s/ Glen Stevens | ||||
Glen Stevens | ||||
President and Chief Executive Officer | ||||
Agreed and accepted:
|
||||
/s/ Christopher Calhoun | ||||
Christopher Calhoun | ||||
8-26-09 | ||||
Date | ||||
-3-
-2-
-3-
GAIN Capital Holdings, Inc.
|
||||
/s/ Glen Stevens | ||||
Glen Stevens | ||||
President and Chief Executive Officer | ||||
Agreed and accepted:
|
||||
/s/ Henry Lyons | ||||
Henry Lyons | ||||
3/23/09 | ||||
Date | ||||
-4-
1.
|
Salary | $130,000 | ||
|
||||
2.
|
Bonus | Part of the trading bonus pool, if company generates sufficient profit. Amount available for year 2000 is 10% of all trading revenues less all expenses except advertising. Actual dollar amount given to an individual trader will be at managements discretion. Factors in determining specific traders amount will be: traders P&L, amount of risk taken, teamwork and other value added given to the firm. | ||
|
||||
3.
|
Options | 80,000 out of a current 10,000,000 shares outstanding following GAINs first completed venture round. Strike price to be set between $.80 - $1.10 per share. Three year vest straight line (ie. You get 1/3 of your options on your first anniversary date). After closing, you will receive a detailed option agreement. Your options are part of an employee options pool that covers yourself and all other GAIN employees. The grant of options will be subject to approval by the Companys Board of Directors. On top of the 15% employee pool dilution, GAIN will actively be looking for a strategic partner(s) to invest in GAIN and give us additional credibility. This amount is likely to be at least 10% of existing shares. | ||
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4.
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Right to Purchase Preferred Stock | Before the second closing of GAINs first venture round, you also have the ability to purchase 40,000 shares of participating preferred stock at a price of $1.10 each. In connection with the purchase of preferred stock, you will be required to execute documents customary for transactions of this nature, together with a voting agreement. | ||
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5.
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Benefits | At this time we are anticipating health insurance 75% funded by GAIN, long- term disability insurance (60% of salary after 180 days), short-term disability insurance, life insurance (equal to salary), workmans compensation, and a 401k package. | ||
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6.
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Legal | All GAIN employees must sign a confidentiality, non-compete and non-hire agreement. All GAIN employees are employees at will. | ||
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7.
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Vacation | Three weeks per year. All vacations during the first 6 months of the year 2000 must be approved in advance by the CEO. |
/s/ Mark E. Galant | /s/ Tim OSullivan | |||||
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CEO
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March 8, 2000 | March 8, 2000 | |||||
Date | Date |
Clause | Page | |||
1. Interpretation
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3 | |||
2. Appointment of Customer as Agent of Prime Broker
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5 | |||
3. Prime Broker Counterparty Transactions
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6 | |||
4. Customer Transactions
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7 | |||
5. Unauthorised Transactions
|
7 | |||
6. Representations and Undertakings
|
8 | |||
7. Indemnity and Exclusions of Liability
|
8 | |||
8. Commission
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9 | |||
9. Material Interests
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10 | |||
10. Confidentiality
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10 | |||
11. Instructions
|
10 | |||
12. Notices
|
11 | |||
13. Termination
|
11 | |||
14. Conflict of Agreements and Inconsistency
|
11 | |||
15. Amendments
|
12 | |||
16. General
|
12 | |||
17. Governing Law
|
13 | |||
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Schedule
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1. Platform Provider
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14 | |||
2. Eligibilty Criteria, Spread and Commission
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15 |
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(1) | The Royal Bank of Scotland pIc, a company incorporated under the laws of Scotland, whose registered office is 36 St Andrew Square, Edinburgh EH2 2YB acting through its Global Banking & Markets division situated at 135 Bishopsgate, London EC3M 3UR (the Prime Broker ); and | |
(2) | Gain Capital Group, LLC incorporated under the laws of Delaware whose registered office/principal place of business is at 550 Hills Drive Bedminster, NJ 07921 (the Customer ). |
(A) | The Customer may utilise the Platform Trading Service (as defined below) subject to compliance with the terms of the User Agreement, including having in place an FX Prime Brokerage Master Agreement with the Prime Broker. | |
(B) | This Agreement is an FX Prime Brokerage Master Agreement. | |
(C) | The Prime Broker may establish dealing relationships with various Counterparties (as defined below) setting out the basis upon which the Prime Broker may appoint an agent to engage in Transactions on behalf of the Primer Broker with each Counterparty on the Platform Trading Service. | |
(D) | The Prime Broker hereby wishes to appoint the Customer as its agent in respect of certain Counterparties for the purposes set out in (C) above, and to trade with the Customer as principal, strictly on the terms, conditions and limits expressly stated below. |
(i) | entered into by the Customer within its authority under clause 2; or | |
(ii) | in the case of a Prime Broker Counterparty Transaction, entered into in accordance with the Customers undertakings under clause 3.3. |
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2.1 | Subject to its compliance with the terms of this Agreement, the Customer may from time to time enter into Counterparty Transactions as agent of the Prime Broker. | |
2.2 | The authorisation of the Customer under clause 2.1 is expressly limited as follows: |
(a) | the Customer shall only have authority to enter into Counterparty Transactions fulfilling the following criteria: |
(i) | each Counterparty Transaction shall be with a Counterparty; | ||
(ii) | each Counterparty Transaction shall be made utilising the Platform Trading Service; | ||
(iii) | each Counterparty Transaction shall be entered into in accordance with such terms as may be agreed between the Platform Provider and the Customer, if any; and | ||
(iv) | each Counterparty Transaction shall be an Eligible Transaction and for the avoidance of doubt, the Customer shall have no authority under this Agreement to enter into any transaction as agent for or in any way bind the Prime Broker, or to hold itself out as having authority to enter into any transaction as agent for the Prime Broker or in any way bind the Prime Broker other than in accordance with this sub-clause (a). |
(b) | the Customer shall not have authority (and shall not hold itself out as having authority): |
(i) | to vary the terms of, terminate, novate, assign or otherwise amend a Counterparty Master Agreement; or | ||
(ii) | to vary the terms of a pre-existing Counterparty Transaction. |
(c) | the Customers authority shall be suspended if and for so long as the Customer is in breach of the User Agreement or the Customer Master |
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Agreement; and |
(d) | the Prime Broker may suspend, limit or terminate, the Customers authority under this clause at any time by notice to any of the Customer, the Platform Provider, or a Counterparty (in respect of the Customers authority in respect of that Counterparty) provided that the Prime Broker may dispense with the giving of such notice in case of emergency. |
2.3 | The Customer shall not make any representation or warranty relating to the Prime Broker or the Customers authorisation under this Agreement, or hold itself out as agent of the Prime Broker: |
(a) | to any Counterparty (except to the extent such representation, warranty or holding out accurately reflects the authority of the Customer under this Agreement in relation to such Counterparty); or | ||
(b) | to any other person |
2.4 | The Prime Broker may amend the Eligibility Criteria at any time. Any such amendment shall take effect immediately irrespective of whether the Customer is aware of such amendment. If it is reasonably practicable to do so, the Prime Broker shall use reasonable commercial endeavours to notify the Customer in advance of any amendment to the Eligibility Criteria. If it is not practicable to provide advance notification of an amendment, the Prime Broker shall notify the Customer of the amendment as soon as reasonably practicable after the change is made. | |
3. | PRIME BROKER COUNTERPARTY TRANSACTIONS | |
3.1 | In the course of dealing on certain Platform Trading Services, as advised to the Customer by Prime Broker, the Customer may enter into Counterparty Transactions to which the Prime Broker is Counterparty (a Prime Broker Counterparty Transaction ). | |
3.2 | Where the Customer enters into a Prime Broker Counterparty Transaction, the parties agree that: |
(a) | the Customer acts as principal and not as agent for the Prime Broker in relation to the negotiation and agreement of the Prime Broker Counterparty Transaction; and | ||
(b) | the resultant Prime Broker Counterparty Transaction shall be deemed to be a Transaction between the Prime Broker acting in its capacity as Prime Broker under this Agreement and the Prime Broker acting in the capacity of Counterparty, and such Transaction shall constitute a Counterparty Transaction for all purposes of this Agreement (including without limitation for the purpose of forming the terms of a Customer Transaction pursuant to clause 4). |
3.3 | The Customer undertakes that: |
(a) | each Prime Broker Counterparty Transaction shall be entered into in accordance with the terms of the User Agreement; and |
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(b) | each Prime Broker Counterparty Transaction shall be an Eligible Transaction. |
4. | CUSTOMER TRANSACTIONS |
4.1 | On entry by the Customer into a Counterparty Transaction, a Customer Transaction shall arise. | |
4.2 | The terms of a Customer Transaction shall be as follows: |
(a) | the Prime Broker shall undertake obligations to and rights against the Customer such that the Prime Broker has rights and obligations equivalent to those of the Counterparty under the Counterparty Transaction, subject to paragraphs (c) and (d); | ||
(b) | the Customer shall undertake obligations to and rights against the Prime Broker such that the Customer has rights and obligations equivalent to those of the Prime Broker under the Counterparty Transaction, subject to paragraphs (c) and (d); | ||
(c) | if any Spread is set out in Schedule 2, the Spread shall be added to the payment obligation of the Customer under paragraph (a), and the right to payment of the Prime Broker under paragraph (b); and | ||
(d) | the Customer Trans,action shall be subject to and governed by the terms of the Customer Master Agreement. |
4.3 | Notwithstanding the provisions of clause 4.2, if the Customer enters into an Unauthorised Counterparty Transaction, the Unauthorised Customer Transaction which arises pursuant to such Unauthorised Counterparty Transaction shall be subject to the terms of clause 5 (Unauthorised Transactions), and the Prime Broker shall have all rights and remedies relating to the Unauthorised Counterparty Transaction and the Unauthorised Customer Transaction set out in this Agreement or otherwise arising at law or in equity. | |
5. | UNAUTHORISED TRANSACTIONS | |
5.1 | If the Customer enters into an Unauthorised Counterparty Transaction, the Prime Broker may (but shall not be obliged to) take such steps as it considers desirable or necessary acting in its sale discretion to discharge, offset, cancel or hedge its rights and obligations under the Unauthorised Counterparty Transaction. Such steps may include (without limitation): |
(a) | entering into one or more Transactions or other transactions with a third party to reduce or offset its obligations under the Unauthorised Counterparty Transaction (an Offsetting Transaction ); | ||
(b) | entering into an agreement with the Counterparty to compromise, settle or cancel (in whole or in part) the Unauthorised Counterparty Transaction (a Settlement Transaction ); | ||
(c) | amending the terms of or cancelling the Unauthorised Customer Transaction to which the Unauthorised Counterparty Transaction relates; or | ||
(d) | amending the terms of or cancelling any unsettled Authorised Customer Transaction. |
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5.2 | The Customer hereby gives its consent to the amendment or cancellation of any Customer Transaction under clause 5.1. | |
5.3 | This Clause 5 shall survive termination of this Agreement | |
6. | REPRESENTATIONS AND UNDERTAKINGS | |
6.1 | Each party represents and warrants to the other that: |
(a) | it is duly authorised and empowered to enter into and perform its obligations under or in connection with this Agreement, the Transactions contemplated hereby; | ||
(b) | this Agreement is a legally binding obligation binding on it and enforceable in accordance with its terms; | ||
(c) | all necessary authorities and authorisations (including without limitation any regulatory or governmental consents or approvals) to enable or entitle it enter into this Agreement and to perform its obligations hereunder are in full force and effect and will remain in full force and effect at all times during the term hereof; | ||
(d) | all information supplied to the other party is true, complete and accurate in all material respects and it will advise the other party forthwith of any material change to any information previously provided; and | ||
(e) | it will comply with all applicable legal and regulatory requirements in each jurisdiction in which it carries on business. |
6.2 | The representations and warranties set out in clause 6.1 shall be deemed to be repeated on each occasion on which the Customer acts as agent of the Prime Broker under this Agreement. | |
6.3 | The Customer undertakes that it will act as principal and not as agent for any other person in performing its duties and obligations under this Agreement (including without limitation the entry into and performance of Customer Transactions), except as provided in clause 2. | |
7. | INDEMNITY AND EXCLUSIONS OF LIABILITY | |
7.1 | Neither the Prime Broker nor any of its directors, officers, employees, nominees, delegates or agents will be liable for any loss suffered or for any action taken or not taken pursuant to or in the course of this Agreement, any Transaction or in connection with the Platform Trading Service unless the Prime Broker or such other person is negligent or guilty of willful misconduct or fraud. | |
7.2 | The Customer shall fully and promptly indemnify the Prime Broker and any of its directors, officers, employees, nominees, delegates or agents and will keep the Prime Broker and each of them indemnified from and against any claims, proceedings, expenses, costs, losses, damages and liabilities of every description (including legal fees, accountants fees, fines and penalties), direct or consequential in nature, which may be sustained or incurred by, or asserted against them directly or indirectly in connection with or arising out of: |
(a) | any act or omission of the Prime Broker in accordance with a request from the Customer under or in connection with this Agreement (including without |
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limitation any act or omission relating to the Prime Brokers participation on the Platform Trading Service) unless the Prime Broker is negligent or guilty of willful misconduct or fraud; | |||
(b) | the negligence, willful default, intentional misconduct, or fraud of the Customer; | ||
(c) | any breach of this Agreement (including the entry by the Customer into an Unauthorised Counterparty Transaction or Unauthorised Customer Transaction) (including any use of the Platform Trading Service in breach of applicable law) by the Customer; or | ||
(d) | any liability or obligation of the Prime Broker to the Platform Provider arising by virtue of or in connection with any of paragraphs (b) or (c). |
7.3 | The Prime Broker shall not incur any liability for any loss, cost, expense or liability suffered by the Customer resulting from any act or omission (including a default or misconduct) of the Platform Provider or any participant on the Platform Trading Service (including any Counterparty). In particular (but without limiting the generality of the foregoing) the Prime Broker is not responsible for the operation of the Platform Trading Service, or the form, accuracy or content of any data, notice, report, communication or material generated or communicated by the Platform Trading Service. | |
7.4 | The Prime Broker shall not incur any liability for failure to perform its obligations under this Agreement or for any loss, cost, expense or liability suffered by the Customer as a result of any act of God, war, riot, natural or other disaster, fire, industrial dispute, breakdown or failure of transmission, communication or computer facilities, change in any law or regulation, or any other cause beyond the reasonable control or anticipation of the Prime Broker. | |
7.5 | For the avoidance of any doubt, it is agreed that the Prime Broker shall in no circumstances be liable to the Customer for special, indirect and consequential damages arising as a result of any breach by the Prime Broker of any proviSion of this Agreement | |
7.6 | Nothing in this Agreement shall limit or exclude the liability of the Prime Broker for fraud, death or personal injury or otherwise to the extent prohibited under applicable law or regulation. | |
8. | COMMISSION | |
8.1 | This clause 8 shall apply if Schedule 2 specifies that Commission shall be payable. | |
8.2 | The Customer shall pay the Commission in accordance with the terms of Schedule 2 as amended from time to time. | |
8.3 | The Customer shall pay the Commission to the Prime Broker within thirty (30) days after it has received the relevant invoice from the Prime Broker in the place of the account specified by the Prime Broker in freely transferable funds and in the manner customary for payments in the required currency. If the Customer fails to make, when due, any payment under this Agreement the Prime Broker shall be entitled to take any action necessary in its sole and absolute discretion, including but not limited to deducting from any collateral or margin that Customer has pledged or given to Prime Broker or debiting any account maintained with the Prime Broker, in the amount of fees owed. |
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8.4 | All payments under this clause shall be exclusive of any applicable value added, sales, use, withholding or other tax or duty (which tax or duty shall be paid by the Customer). | |
9. | MATERIAL INTERESTS |
(a) | required to do so by any court, market or regulatory authority having jurisdiction over the party or any applicable law or regulation; | ||
(b) | such disclosure is necessary to carry out its obligations under this Agreement; | ||
(c) | the Confidential Information so disclosed is already in the public domain; or | ||
(d) | such disclosure is to, or use is by, the Platform Provider in accordance with the User Agreement or any agreement between the Prime Broker and the Platform Provider. |
10.3 | Notwithstanding clauses 10.1 and 10.2, the Prime Broker may disclose Confidential Information to Affiliates. The Customer hereby consents to and authorises such disclosure of Confidential Information and acknowledges that any duty of confidentiality owed by the Prime Broker, howsoever arising, will not be regarded as being breached by any such disclosure. | |
11. | INSTRUCTIONS | |
11.1 | The Prime Broker may rely conclusively on, and the Customer shall be bound by, any communication received through the Platform Trading Service which purports to originate from the Customer. For the purposes of this Agreement all such communications shall be deemed to be at the Customers request for all purposes of this Agreement. The Prime Broker is not obliged to do anything to establish the authority or identify of the person sending a communication through the Platform Trading Service. |
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11.2 | The Prime Broker is not responsible for errors or omissions made by the Customer or the Platform Provider in communicating instructions under this Agreement or resulting from fraud or the duplication of any communication by the Customer. | |
12. | NOTICES | |
12.1 | All written notices under this Agreement shall be delivered to the address of the recipient set out below (or such other address as it may specify in writing from time to time) unless otherwise specified by hand, courier, mail, facsimile or electronic means including where available through the Platform Trading Service and subject to clause 12.2 shall be effective upon receipt. | |
12.2 | Any notice sent by first class post (air mail in the case of international communications) shall be deemed to be received on the second day following the date of posting in the case of communications within the United Kingdom and the seventh day following the date of posting in the case of international communications. | |
12.3 | The addresses for the sending of notices under this Agreement shall be as follows: |
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issued by the Prime Broker and relating to the matters covered by this Agreement, and in the event of any conflict between this Agreement and the Prime Brokers standard terms of business, this Agreement shall prevail. |
14.2 | This Agreement shall not be deemed to vary or amend the Customer Master Agreement and, in the event of any inconsistency between this Agreement and the provisions of the Customer Master Agreement, the provision of the Customer Master Agreement shall prevail. | |
15. | AMENDMENTS | |
15.1 | The Prime Broker may amend this Agreement with immediate effect or such later date as it determines if it is, or reasonably believes it is, obliged to do so under applicable law or regulation. | |
15.2 | In any other circumstance including where such amendments are required as a result of amendments made by the Platform Provider to the terms upon which the Platform Trading Service is provided to the Prime Broker or the Customer, the Prime Broker may amend this Agreement by sending the Customer a written notice describing the relevant changes: such changes will become effective on a date to be specified in the notice, which must be at least ten (10) Business Days after the notice is sent to the Customer. | |
16. | GENERAL | |
16.1 | Nothing in this Agreement shall be deemed to constitute a partnership between the parties, nor constitute either party the agent of the other party, for any purpose except as set out in clause 2. | |
16.2 | This Agreement may be executed in any number of counterparts. This has the same effect as if the Signatures on the counterparts were on a single copy of this Agreement. | |
16.3 | The rights of each party under this Agreement: |
(a) | may be exercised as often as necessary; | ||
(b) | are cumulative and not exclusive of rights or remedies provided by law; and | ||
(c) | may be waived only in writing and specifically. | ||
Delay in exercising or non-exercise of any such right is not a waiver of that right. The rights and remedies provided under this Agreement are cumulative and not exclusive of those provided by law. The Prime Broker shall be under no obligation to exercise any right or remedy either at all or in a manner or at a time beneficial to the Customer. |
16.4 | If any term of this Agreement is or becomes illegal, invalid or unenforceable in any jurisdiction, that shall not affect: |
(a) | the legality, validity or enforceability in that jurisdiction of any other term of this Agreement; or | ||
(b) | the legality, validity or enforceability in other jurisdictions of that or any other provision of this Agreement. |
16.5 | Each party shall pay the costs and expenses incurred by it in connection with the entering into of this Agreement. |
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(a) | Research Provider represents and warrants now and on a continuing basis that: |
(1) | It has the requisite authority to enter into this Agreement. | ||
(2) | Research Provider represents and warrants that any copyrights, trademarks, service marks, trade names, logos or other commercial designations are owned by Research Provider free of encumbrances or claims of any kind, and Research Provider has right to grant SALES AGENT a license to use such items in accordance with the terms of this Agreement. | ||
(3) | Research Provider has all required governmental and regulatory approvals and licenses required to conduct the business contemplated by this Agreement, including any required registrations. |
(b) | SALES AGENT represents and warrants now and on a continuing basis that: |
(1) | It has the requisite authority to enter into this Agreement and to carry out the services as contemplated herein. | ||
(2) | It agrees to maintain the registrations and licenses necessary under |
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TRADING CENTRAL SA
|
GAIN CAPITAL GROUP, LLC | |
By:
|
By: | |
Name: Alain Pellier
|
Name: Christopher W. Calhoun | |
Title: CEO
|
Title: Chief Operating Officer | |
Date: 20 December 2006
|
Date: 10/11/07 |
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| Daily US Pre-Opening and Mid-Day Technical Levels and Trading Strategies on 6 Forex pairs | ||
| Weekly Forex Focus: mid-term trend outlook & key levels update on 6 Forex pairs | ||
| Pre-Opening and Weekly PDF or HTML documents published with your own logo and co-branded | ||
| Mid-Day update is a plain text e-mail with links to relevant graphs | ||
| Delivered to a pre-defined GAIN CAPITAL e-mail address |
| License to distribute TRADING Centrals research exclusively to 2,000 private individual investors identified as GAIN Capital Group LLC customers, excluding GAIN Capital Group LLC white-label customers. | ||
| License to distribute the Daily and Weekly newsletters to GAIN Capital Group LLC DEMO customers as part of our 30-Day free trial for teasing marketing purposes | ||
| License to display the Weekly newsletters on GAIN Capital Group LLC websites open access pages for teasing marketing purposes |
| XML feed delivered by FTP account | ||
| Daily coverage on 17 pairs as defined by GAIN CAPITAL pending agreement by TRADING CENTRAL |
| XML feed delivered by FTP account | ||
| Technical Pattern Alerts that display technical signals (buy or sell) when they arise | ||
| Based on TRADING Centrals algorithmic recognition of technical events: | ||
| Updates frequency: daily |
| XML feed delivered by FTP account | ||
| Japanese Candlestick Alerts that display technical signals (buy or sell) when they arise | ||
| Based on Trading Centrals algorithmic recognition of Japanese candlesticks patterns | ||
| Updates frequency: daily |
| License to distribute TRADING Centrals research in the password protected research pages of GAIN Capital Group LLC websites | ||
| License to distribute TRADING Centrals research exclusively to 2,000 private individual investors identified as | ||
| FOREX.com customers | ||
| License does not include the rights to integrate research into GAIN CAPITAL GROUP white-label customers | ||
| License to display two randomly selected analyses per day on GAIN Capital Group LLC websites open access pages for teasing marketing purposes |
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| USD 4,000 per month (33% Discount on Standard Pricing) | ||
| Additional Forex pair: USD 500 per month | ||
| Additional 1,000 FOREX.com customers: USD 500 per month | ||
| IT setup and maintenance fees (PDF/HTML design, programming and updating): included | ||
| Contract Length: 1 Year |
| Additional USD 2,500 per month (50% Discount on Standard Pricing) on Option 1 package if exercised within first 4 months of newsletter service | ||
| Additional USD 3,500 per month (30% Discount on Standard Pricing) on Option 1 package if exercised outside first 4 months of newsletter service | ||
| Additional Forex pair: USD 250 per month | ||
| Additional 2,000 FOREX.com customers: USD 500 per month | ||
| IT setup and maintenance fees (IT support and consultation prior, during and after integration | ||
| Contract length: 1 Year |
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COMPANY NAME: GAIN CAPITAL GROUP (FOREX.COM)
ADDRESS: 550 HILLS DRIVE, SUITE 210, BEDMINSTER, NJ 07921 USA
TELEPHONE NUMBER: +1.908.212.3930
FACSIMILE: +1.908.731.0701
SALES@TRADINGCENTRAL.COM
+44 207 847 4042
+331 55288040
+331 5528 8049
From:
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GAIN CAPITAL GROUP (FOREX.COM) | |
Address:
|
550 HILLS DRIVE, SUITE 210, BEDMINSTER, NJ 07921 USA | |
Contact name:
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KEN OBRIEN | |
Phone:
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+1.908.212.3930 | |
E-Mail:
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kobrien@gaincapital.com | |
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||
To:
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TRADING CENTRAL | |
Attn:
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JULIEN HEIDERSCHEID | |
Fax:
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1-646-349-2240 |
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A
- DEMO Services
|
= Savings | = - $2,000 |
B
- BASIC Services
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= Additional charge | = $1,000 |
C and D FX PLUS and PREMIER Services
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= Additional charge | = $5,000 | ||
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||||
TOTAL UPGRADE INVESTMENT
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= Additional charge | = $4,000 |
| Increased Web license from 2,000 users to Firm-wide (value of $4,000 per month) | ||
| Additional Forex pairs from 17 to 35 (value of $4,500 per month) | ||
| Daily Web Video commentary on global currency markets (value of $500 per month) | ||
| Training and educational material (value of $500 per month) | ||
| UPGRADED PACKAGE SAVINGS: ($8,500 $4,000) = $4,500 | ||
Note: these services are free as long as they are delivered in combination with the above upgraded package. Full pricing would apply should they be purchased separately |
| TOTAL FOREX RESEARCH INVESTMENT ($4,000 current + $4,000 upgrade) = USD 8,000 per month once all the above services are launched | |
| Contract length: 2 Years | |
| Special offer valid until September 30 th 2007 | |
DATE / NAME / TITLE SIGNATURE | ||
September 11 th 2007 | ||
Kenneth W. OBrien | ||
VP Strategic Alliances |
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A. | Broker wishes to introduce Brokers customers (Customers) on a fully-disclosed basis to GAIN, including Customers that may be referred to Broker by GAIN (as described later in this Agreement), for the purpose of enabling the Customers to enter into principal foreign exchange (forex) transactions with GAIN. | |
B. | The respective roles of GAIN and Broker with respect to forex accounts of Customers, generally speaking, shall be as follows. Brokers role is to acquire Customers, including Customers that may be referred to Broker by GAIN (as described later in this Agreement), for the forex services GAIN will provide, using whatever marketing, sales and account-opening methods, techniques, media and efforts that Broker, in its sole and absolute discretion, deems appropriate. Broker shall also provide customer and technical support services to the Customers, and otherwise own and maintain the customer relationship with Customers and all good will associated therewith (GAIN will, at no additional cost or expense to Broker, provide training and remote services directly to Broker to support these services as and when reasonably requested by Broker on a day to- day basis). GAIN will provide trade desk and technical support services to Brokers trade desk and client services personnel when they call with issues relating to orders, deals and other issues that may be raised by Customers with Broker on a daily basis. GAIN shall not deal directly with Customers. GAINs role is to act as a principal/counterparty in forex deals with Customers and to provide all order placement, execution, clearing, settlement, processing, reporting and other deal services and functions relating to forex transactions of and with Customers. Broker is not the only introducing broker from whom GAIN or its affiliates may be introduced forex customers or business, and GAIN is not or wil1not necessarily be the sole forex principal or clearing firm to or with whom Broker or its affiliates may introduce or transact forex business (i.e., neither party is granting or agreeing to an exclusive arrangement); provided, however, other than pursuant to any agreements or arrangements Broker has in |
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place on the date of this Agreement, Broker shall, as long as this Agreement is in effect, not use any forex principal other than GAIN during 2005. | ||
C. | Forex orders will be made by Customers by seamlessly accessing GAINs elec1ronic forex trading system via, as the complete front-end, Brokers TradeStation trading platform. In order to accomplish this, each party, at its own expense, shall, in cooperation with the other party, develop and complete such application program interfaces and other technical compatibilities as required to be able to provide to Customers, as promptly as possible, using a FIX server engine framework, the TradeStation trading platform for the design, back-testing, optimization, analysis, | |
automation and placement of forex trading strategies, including manual and automated trade execution seamlessly through GAINs electronic forex trading system, together with real-time access to Customers positions and other trading and account information (collectively, the Compatibility). |
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Broker:
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TradeStation Securities, Inc.
8050 SW 10th St., Suite 2000 Plantation, FL 33324 Fax No.: (954) 652-7019 and (954) 652-5701 and (954) 652-5021 Attn: Joseph Nikolson and Marc J. Stone |
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GAIN:
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GAIN Capital Group, Inc.
35 Technology Drive Warren, NJ 07059 Fax No.: (908) 731-0701 Attn: Glenn Stevens and Mark Galant |
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GAIN CAPITAL GROUP, INC. | ||||||
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||||||
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By: | |||||
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|||||
Glenn Stevens, Managing Director | ||||||
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TRADESTATION SECURITIES, INC. | ||||||
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By: | |||||
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|||||
Marc J. Stone, Vice President |
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Agreed to and Accepted: | ||||||
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||||||
GAIN CAPITAL GROUP, INC. | ||||||
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||||||
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By: | |||||
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|||||
Glenn Stevens, Managing Director | ||||||
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TRADESTATION SECURITIES, INC. | ||||||
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By: | |||||
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Marc J. Stone, Vice President |
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GAIN CAPITAL HOLDINGS, INC. | ||||
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By:
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/s/ Glenn Stevens | |||
Name:
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Title:
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President and Chief Executive Officer | |||
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/s/ Timothy OSullivan | ||||
Timothy OSullivan |
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By:
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/s/ Glenn Stevens | |||
Name:
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Title:
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President and Chief Executive Officer | |||
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/s/
Samantha Roady
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Samantha Roady
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GAIN CAPITAL HOLDINGS, INC.
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By: | /s/ Glenn Stevens | |||
Name: | Glenn Stevens | |||
Title: | President and Chief Executive Officer | |||
/s/ Andrew Haines | ||||
Andrew Haines | ||||
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GAIN CAPITAL HOLDINGS, INC. | ||||||
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By: /s/ Glenn Stevens | ||||||
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Name: Glenn Stevens | ||||||
Title: President and Chief Executive Officer | ||||||
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Ken OBrien | ||||||
Ken OBrien |
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GAIN CAPITAL HOLDINGS, INC. | ||||
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By:
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/s/ Glenn Stevens | |||
Name:
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Title:
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President and Chief Executive Officer | |||
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/s/
Alexander Bobinski
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Alexander Bobinski |
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