UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE
14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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TABLE OF CONTENTS
GLOBAL
TELECOM & TECHNOLOGY, INC.
April 29,
2011
Dear Stockholder:
You are cordially invited to attend the annual meeting of
stockholders of Global Telecom & Technology, Inc. to
be held at 10:00 a.m., local time, on, Thursday,
June 9, 2011, at our offices, 8484 Westpark Drive,
Suite 720, McLean, Virginia 22102.
At the annual meeting, you will be asked to (i) elect eight
directors and (ii) approve a new equity incentive plan.
Details regarding the matters to be acted upon at this meeting
appear in the accompanying Notice of Annual Meeting and Proxy
Statement. Our Board of Directors unanimously recommends that
stockholders vote in favor of the election of the nominated
directors and approval of the new equity incentive plan.
If you plan to attend the annual meeting, we request that you
please attempt to provide at least two business days advance
notice of your intent to attend by contacting Chris McKee, our
General Counsel and Secretary, at
(703) 442-5500.
Whether or not you plan to attend the annual meeting, we urge
you to complete, sign and date the accompanying proxy card and
return it in the enclosed postage-prepaid envelope as soon as
possible so that your shares will be represented at the annual
meeting. If you later decide to attend the annual meeting or
change your vote, you may withdraw your proxy and vote in person
at the annual meeting. Voting by written proxy will ensure your
representation at the annual meeting if you do not attend in
person.
We thank you for your continued support of Global
Telecom & Technology.
Very truly yours,
/s/ Richard
D. Calder, Jr.
Richard D. Calder, Jr.
President and Chief Executive Officer
GLOBAL
TELECOM & TECHNOLOGY, INC.
8484 Westpark Drive
Suite 720
McLean, Virginia 22102
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE
HELD ON Thursday, June 9, 2011
The Annual Meeting of Stockholders of Global Telecom &
Technology, Inc., a Delaware corporation, will be held at
10:00 a.m., local time, on Thursday, June 9, 2011, at
our offices, 8484 Westpark Drive, Suite 720, McLean,
Virginia 22102 for the following purposes:
1. To elect eight directors to serve for a one-year term
expiring at the 2011 Annual Meeting or until their successors
are duly elected and qualified or until their earlier
resignation or removal;
2. To approve the Global Telecom & Technology,
Inc. 2011 Employee, Director and Consultant Stock Plan; and
3. To transact such other business as may properly come
before the meeting or any adjournment thereof.
These items of business are more fully described in the proxy
statement accompanying this Notice.
Only stockholders of record at the close of business on
April 18, 2011 are entitled to notice of and to vote at the
meeting.
All stockholders are cordially invited to attend the meeting and
vote in person. If you plan to attend the annual meeting, we
request that you please attempt to provide at least two business
days advance notice of your intent to attend by contacting the
undersigned at
(703) 442-5500.
To assure your representation at the meeting, however, you are
urged to mark, sign, date, and return the enclosed proxy as
promptly as possible in the postage-prepaid envelope enclosed
for that purpose. You may vote in person at the meeting even if
you have previously returned a proxy.
Sincerely,
Chris McKee
General Counsel and Secretary
McLean, Virginia
April 29, 2011
GLOBAL
TELECOM & TECHNOLOGY, INC.
8484 Westpark Drive
Suite 720
McLean, Virginia 22102
PROXY
STATEMENT
VOTING
AND OTHER MATTERS
General
The enclosed proxy is solicited on behalf of Global
Telecom & Technology, Inc., a Delaware corporation, by
our Board of Directors for use at our Annual Meeting of
Stockholders to be held on Thursday, June 9, 2011 at
10:00 a.m., local time, or at any adjournment thereof, for
the purposes set forth in this proxy statement and in the
accompanying meeting notice. The meeting will be held at our
offices, 8484 Westpark Drive, Suite 720, McLean,
Virginia 22102.
These proxy solicitation materials were first mailed on or about
May 9, 2011 to all stockholders entitled to vote at the
meeting.
Voting
Securities and Voting Rights
Stockholders of record at the close of business on
April 18, 2011, which we have set as the record date, are
entitled to notice of and to vote at the meeting. On the record
date, there were issued and outstanding 18,687,491 shares
of our common stock. Each stockholder voting at the meeting,
either in person or by proxy, may cast one vote per share of
common stock held on all matters to be voted on at the meeting.
The presence, in person or by proxy, of the holders of a
majority of our outstanding common stock entitled to vote at the
meeting constitutes a quorum for the transaction of business at
the meeting. Assuming that a quorum is present, a plurality of
affirmative votes properly cast in person or by proxy will be
required to elect directors.
Votes cast by proxy or in person at the meeting will be
tabulated by the inspector of elections appointed for the
meeting and will determine whether a quorum is present. The
inspector of elections will treat abstentions and broker
non-votes as shares that are present and entitled to vote for
purposes of determining the presence of a quorum. Abstentions
will be counted toward the tabulation of votes cast as proposals
presented to the stockholders and will have the same effect as
negative votes, whereas broker non-votes will not be counted for
purposes of determining whether a proposal has been approved.
Whether or not they plan to attend the Annual Meeting, a person
may vote by completing, signing and dating the accompanying
proxy card and returning it in the postage-prepaid envelope
enclosed for that purpose. If a person attends the meeting, he
or she may vote in person even if such individual had previously
returned a proxy card.
Voting of
Proxies
When a proxy is properly executed and returned, the shares it
represents will be voted at the meeting as directed. If no
specification is indicated, the shares will be voted
for the election as directors of the nominees set
forth in this proxy statement and for approval of
the Global Telecom & Technology, Inc. 2011 Employee,
Director and Consultant Stock Plan.
Revocability
of Proxies
Any person giving a proxy may revoke the proxy at any time
before its use by delivering to us either a written notice of
revocation or a duly executed proxy bearing a later date, or by
attending the meeting and voting in person.
Solicitation
We will pay for this solicitation. In addition, we may reimburse
brokerage firms and other persons representing beneficial owners
of shares for expenses incurred in forwarding solicitation
materials to such beneficial owners. Proxies also may be
solicited by certain of our directors and officers, personally
or by telephone or
e-mail,
without additional compensation.
Deadline
for Receipt of Stockholder Proposals
Proposals of stockholders intended for inclusion in the proxy
statement to be furnished to all stockholders entitled to vote
at our 2012 annual meeting of stockholders, pursuant to
Rule 14a-8
promulgated under the Securities Exchange Act of 1934, or
Exchange Act, by the Securities and Exchange Commission, or SEC,
must be received at our principal executive offices not later
than January 12, 2012 which is 120 days prior to the
first anniversary of the mailing date of this proxy statement.
Any proposal must comply with the requirements as to form and
substance established by the SEC for such proposal to be
included in our proxy statement.
If a stockholder who wishes to present a proposal fails to
notify us by January 12, 2012 and such proposal is brought
before the 2012 annual meeting, under the SECs proxy
rules, the proxies solicited by management with respect to the
2012 annual meeting will confer discretionary voting authority
with respect to the stockholders proposal on the persons
selected by management to vote the proxies. If a stockholder
makes a timely notification, the proxies may still exercise
discretionary voting authority under circumstances consistent
with the SECs proxy rules. Stockholders should submit
their proposals to Global Telecom & Technology, Inc.,
8484 Westpark Drive, Suite 720, McLean, Virginia
22102, Attention: Corporate Secretary.
Annual
Report and Other Matters
Our annual report on
Form 10-K
for the year ended December 31, 2010, which was mailed to
stockholders with or preceding this proxy statement, contains
financial and other information about our Company, but is not
incorporated into this proxy statement and is not to be
considered a part of these proxy soliciting materials or subject
to Regulations 14A or 14C or to the liabilities of
Section 18 of the Exchange Act.
We will provide, without charge, additional copies of our annual
report on
Form 10-K
for the year ended December 31, 2010, as filed with the
SEC, to each stockholder of record as of the record date who
requests a copy in writing. Any exhibits listed in the
Form 10-K
report also will be furnished upon request at the actual expense
we incur in furnishing such exhibit. Any such requests should be
directed to our Companys secretary at our executive
offices set forth in this proxy statement.
PROPOSAL 1
ELECTION
OF DIRECTORS
Nominees
Our certificate of incorporation and bylaws provide that the
number of our directors shall be fixed from time to time by
resolution of our Board of Directors. Presently, the number of
directors is fixed at eight. At each annual meeting of
stockholders, directors will be elected for one-year terms to
succeed the directors whose terms are expiring. Richard D.
Calder, Jr., H. Brian Thompson, S. Joseph Bruno, Didier
Delepine, Rhodric C. Hackman, Howard Janzen, Morgan E.
OBrien and Theodore B. Smith, III each have been
nominated by our Board of Directors Nominating and
Governance Committee for re-election for one-year terms expiring
in 2012.
Unless otherwise instructed, the proxy holders will vote the
proxies received by them for each of the nominees named above.
Each of the nominees is currently a director of our Company. In
the event that any nominee is unable or declines to serve as a
director at the time of the meeting, the proxies will be voted
for any nominee designated by the current Board of Directors to
fill the vacancy. It is not expected that any nominee will be
unable or will decline to serve as a director.
2
The
Board of Directors recommends a vote for the
nominees named herein.
Nominees
for Director Standing for Election
The specific backgrounds and qualifications of our current
directors, each of whom is nominated for re-election at our 2010
annual meeting of stockholders, is reflected in each
directors biography below.
Richard D. Calder, Jr.
, 47, has served as our Chief
Executive Officer and Director since May 2007. Prior to joining
us, from 2004 to 2006, Mr. Calder served as
President & Chief Operating Officer of InPhonic, Inc.,
a publicly-traded online seller of wireless services and
products. From 2001 to 2003, Mr. Calder served in a variety
of executive roles for Broadwing Communications, Inc., including
as President Business Enterprises and Carrier
Markets. From 1996 to 2001, Mr. Calder held several senior
management positions with Winstar Communications, ultimately
serving as President of the companys South Division. In
1994, Mr. Calder helped to co-found Go Communications, a
wireless communications company, and served as its Vice
President of Corporate Development from its founding until 1996.
Prior to co-founding Go Communications, Mr. Calder held a
variety of marketing, business development, and engineering
positions within MCI Communications, Inc. and Tellabs, Inc.
Mr. Calder holds a Masters in Business Administration from
Harvard Business School and received his Bachelor of Science in
Electrical Engineering from Yale University.
Mr. Calders role as an executive officer serving on
the Board of Directors, together with his extensive relevant
industry experience, qualify him for election to the Board of
Directors.
H. Brian Thompson
, 72, has served as Chairman of our
Board of Directors since January 2005 and as our Executive
Chairman since October 2006. From January 2005 until October
2006, Mr. Thompson also served as our Chief Executive
Officer. Mr. Thompson continues to head his own private
equity investment and advisory firm, Universal
Telecommunications, Inc., focused on both
start-up
companies and consolidations taking place in the
information/telecommunications business areas both domestically
and internationally. From December 2002 to June 2007, he was
Chairman of Comsat International, one of the largest independent
telecommunications operators serving all of Latin America. He
previously served as Chairman and Chief Executive Officer of
Global TeleSystems Group, Inc. from March 1999 through September
2000. Mr. Thompson also served as Chairman and CEO of LCI
International, Inc. from 1991 until its sale to Qwest
Communications International, Inc. in June 1998. He became Vice
Chairman of the Board for Qwest until his resignation in
December 1998. From 1981 to 1990, Mr. Thompson served as
Executive Vice President of MCI Communications Corporation. He
currently serves as a member of the board of directors of
Axcelis Technologies, Inc., ICO Global Communications (Holdings)
Limited, Penske Automotive Group, Inc. and Sonus Networks, Inc.
Mr. Thompson served as the Co-Chairman for the Americas and
is currently on the Executive Committee of the Global
Information Infrastructure Commission, a multinational
organization launched in Brussels in 1995 to chart the role of
the private sector in the developing global information and
telecommunications infrastructure. He serves as a member of the
Irish Prime Ministers
Ireland-America
Economic Advisory Board. Mr. Thompson received his Masters
of Business Administration from Harvards Graduate School
of Business and holds an undergraduate degree in Chemical
Engineering from the University of Massachusetts.
Mr. Thompsons extensive relevant industry experience,
as both an executive officer and board member of communications
companies, together with his investing experience, qualify him
for election to the Board of Directors.
S. Joseph Bruno
, 62, has been a Director since May 2007.
Mr. Bruno has served since 2003 as President and CEO of
Building Hope, a private foundation affiliated with Sallie Mae
that develops and finances real estate facilities for charter
schools in Washington, DC. From 2001 to 2004, Mr. Bruno
served as Senior Consultant- eHealth Division of BCE Emergis, an
eCommerce service provider in the health and financial services
sectors, where he focused on financial reporting, mergers and
acquisitions, and tax compliance. From 2000 to 2002,
Mr. Bruno also served as Director International
Operations for Carey International. From 1995 to 2000,
Mr. Bruno was Senior Vice President, Chief Financial
Officer and Corporate Secretary of United Payors &
United Providers, Inc., a publicly-traded service provider in
the health care industry. From 1989 to 1995, he was a partner at
Coopers & Lybrand LLP, an international public
accounting firm. From 1986 to 1989, Mr. Bruno served as
Senior Vice President of Operations and Chief Financial Officer
of Jurgovan & Blair, Inc., a health care and
information technology services provider, and from 1971 to 1986,
he was employed by KPMG Peat Marwick LLP, an international
public accounting firm, including six years as a partner.
Mr. Bruno currently serves on the boards of the
3
DC Prep Charter School, the Center City Public Charter Schools,
Georgetown University Hospital and Intergroup Service
Corporation. Mr. Bruno has been a certified public
accountant since 1972. Mr. Bruno received a B.A. in Finance
and Accounting from the University of Maryland.
Mr. Brunos extensive financial reporting experience,
together with his managerial experience as both an executive
officer and director, qualify him for election to the Board of
Directors.
Didier Delepine,
63, has been a Director since October
2006. Mr. Delepine served as president and Chief Executive
Officer of Equant NV, a global networking and managed
communications solution provider to multinational corporations
from 1998 to 2003. From 1995 to 1998, he served as president and
Chief Executive Officer of Equants Network Services
division. Mr. Delepine began his career at SITA, the global
telecommunications and technology organization supporting the
worlds airlines. From 1987 to 1997, as Senior Vice
President in charge of the global network, he led the network
development, investments and operation. He also served as
chairman and president of ITS Americas, a company specializing
in LAN/WAN integration and facility management for
U.S. corporations. Mr. Delepine is a member of the
board of directors of Viatel Ltd., Orbcomm Inc. and is a member
of the board of advisors of Ciena Corporation. Mr. Delepine
previously served on the boards of directors of Intelsat Ltd
(2003 to 2005) and Eircom Ltd (2003 to 2006) until
their privatizations. Mr. Delepines extensive
relevant industry experience, as both an executive officer and
board member of communications companies, qualify him for
election to the Board of Directors.
Rhodric C. Hackman
, 63, has been a Director since January
2005, and from January 2005 to October 2006 served as our
President and Secretary. In October 1999, Mr. Hackman
co-founded Mercator Capital L.L.C., a merchant and investment
bank focused on communications, media and technology.
Mr. Hackman has been a partner of Mercator Capital and its
affiliates since formation. Mr. Hackman received a B.S.
from the United States Naval Academy and an M.B.A. from Cornell
University. Mr. Hackmans extensive experience in
corporate finance regarding telecommunications companies qualify
him for election to the Board of Directors.
Howard E. Janzen
, 57, has been a Director since October
2006. From March 2007 to April 2011, Mr. Janzen served as
Chief Executive Officer of One Communications, a privately-held
competitive local telecommunications service provider.
Mr. Janzen previously served as President of Sprints
Business Solutions Group, a division of Sprint Corporation
serving business customers, from January 2004 to September 2005.
From May 2003 to January 2004, Mr. Janzen served as
President of Sprints Global Markets Group, a division of
Sprint serving both consumer and business customers. From
October 2002 to May 2003, Mr. Janzen served as President
and Chief Executive Officer of Janzen Ventures, Inc., a private
equity firm. From 1994 to October 2002, Mr. Janzen served
as President and Chief Executive Officer, and from 2001 to
October 2002 as Chairman, of Williams Communications Group,
Inc., a technology company, which emerged from bankruptcy in
October 2002 as WilTel Communications Group, Inc. Williams
Communications Group, Inc. filed a voluntary petition for
reorganization under Chapter 11 of the United States
Bankruptcy Code in April 2002. Mr. Janzen currently serves
on the board of directors of Sonus Networks, Inc., Vocera
Communications, Inc., Anyware Mobile Solutions, a division of
Macrosolve Inc. and Exanet, Inc. Mr. Janzen holds B.S. and
M.S degrees in Metallurgical Engineering from the Colorado
School of Mines. Mr. Janzens extensive relevant
industry experience, as both an executive officer and board
member of communications companies, qualify him for election to
the Board of Directors.
Morgan OBrien
, 66, has been a Director since
October 2006, and from January 2005 to October 2006 served as a
Special Advisor to our Company. Mr. OBrien is a
co-founder and serves as Chairman and Chief Executive Officer of
Cyren Call Communications, a company seeking to create a
nationwide, seamless, ultra-broadband network for public safety
communications. Mr. OBrien was the co-founder of
Nextel Communications, Inc. in 1987 and served as its Chairman
from 1987 to 1995, and then as Vice-Chairman until its merger
with Sprint Communications in 2005. Recently
Mr. OBrien was inducted into the Washington Business
Hall of Fame. He currently serves on the board of trustees of
The Field School in Washington, D.C. and as a member of the
Law Board of Northwestern University School of Law.
Mr. OBrien received an A.B. in Classical Studies from
Georgetown University and a law degree from Northwestern
University. Mr. OBriens extensive relevant
industry experience, as both an executive officer and board
member of communications companies, qualify him for election to
the Board of Directors.
4
Theodore B. Smith, III
, 48, has been a Director
since December 2007. Mr. Smith currently serves as the
Chairman and Chief Executive Officer of John Hassall, Inc., a
privately held manufacturer of cold formed rivets. From 1997 to
2004, Mr. Smith served as President of John Hassall, Inc.
prior to his election as its Chairman and Chief Executive
Officer. From 1989 to 1997, Mr. Smith served in various
positions in manufacturing and sales for John Hassall, Inc.
Mr. Smith holds Bachelors of Arts degrees in Economics and
Art from Colgate University. Mr. Smiths extensive
executive experience including his sales experience, qualify him
for election to the Board of Directors.
PROPOSAL 2
APPROVAL
OF THE GLOBAL TELECOM & TECHNOLOGY, INC. 2011
EMPLOYEE, DIRECTOR AND CONSULTANT STOCK PLAN
Overview
We are asking our stockholders to approve the Global
Telecom & Technology, Inc. 2011 Employee, Director and
Consultant Stock Plan , or the 2011 Plan. It is expected that
the Board of Directors will approve the 2011 Plan on May 3,
2011, and direct that it be submitted to the stockholders for
approval at the annual meeting. The 2006 Employee, Director and
Consultant Stock Plan, or the Existing Plan, will continue
according to its terms as in effect prior to the stockholder
approval of the 2011 Plan.
The purpose of the 2011 Plan is to encourage ownership of shares
of our Companys common stock by employees, directors and
certain consultants of our Company in order to attract and
retain them, to induce them to work for the benefit of our
Company (or an affiliate of our Company, as defined in the 2011
Plan) and to provide incentives for them to promote the success
of our Company (or our affiliate). If approved, the 2011 Plan
will be an important component of the total compensation package
offered to employees, directors and consultants. Unless
otherwise instructed, the proxy holders will vote the proxies
received by them for the proposal to approve the 2011 Plan.
The
Board of Directors recommends a vote for the
proposal to approve the 2011 Plan.
Description
of the 2011 Plan
The following is a summary of the principal features of the 2011
Plan and its operation and is qualified by reference to the full
text of the 2011 Plan, a copy of which is attached as
Appendix A to this proxy statement.
Administration.
The 2011 Plan is administered
by the Board of Directors except to the extent the Board of
Directors delegates its authority to a committee. Generally, a
committee that administers the plan shall be comprised of two or
more non-employee directors, as that term is defined
in
Rule 16b-3
adopted under the Exchange Act. If an award is intended to
qualify for the performance based compensation exemption to the
deduction limits under Section 162(m), or 162(m) Awards, of
the Internal Revenue Code of 1986, as amended, or the Code, the
committee granting the award shall also satisfy the requirements
of outside directors under Code Section 162(m).
Subject to the terms of the 2011 Plan, the Board of Directors
has the power to select the persons who are eligible to receive
awards under the 2011 Plan, the type and amount of awards to be
granted, and the terms and conditions of the awards and to
otherwise approve the total amount of awards that may be
granted, and to interpret the 2011 Plan. The Board of Directors
may delegate its authority under the 2011 Plan described in the
preceding sentence to the committee (as described above) or to
any member of any of them or other persons, to the extent
permitted by applicable law.
Eligibility.
Any employee, director or
consultant of our Company or one of our affiliates selected by
the 2011 Plan administrator is eligible to participate in the
2011 Plan. Grants of incentive stock options may only be made to
employees of our Company or one of our affiliates.
Shares Subject to the 2011 Plan.
The
maximum number of shares of our Companys common stock, par
value $0.001 per share, that may be delivered pursuant to awards
granted under the 2011 Plan is 3,000,000 shares. Any shares
subject to an award under the 2011 Plan that are forfeited or
terminated, expire unexercised, lapse or are
5
otherwise canceled or surrendered in a manner that the shares of
common stock covered by the award are not issued may be used
again for awards under the 2011 Plan.
Awards Available for Grant.
Awards may be made
under the 2011 Plan in the form of options (incentive stock
options or nonqualified stock options), stock grants (whether or
not subject to restrictions) and other stock based awards (which
would include stock appreciation rights, stock units and
dividend equivalents, among others), or any combination of the
foregoing. The administrator of the 2011 Plan may make grants
under the 2011 Plan at any time after it is adopted by the Board
of Directors. Grants made prior to approval of the 2011 Plan by
the stockholders that are intended to be 162(m) Awards will be
subject to and contingent on the stockholders approval. If
the stockholders fail to approve the 2011 Plan at the annual
meeting, the 2011 Plan will terminate and no further grants may
be made under the 2011 Plan. Any grants made prior to the
stockholders meeting, but after Board of Directors
approval (that are not subject to stockholder approval under the
2011 Plan) will remain outstanding in accordance with the
original terms of the grant.
No more than 3,000,000 shares of common stock may be issued
under the 2011 Plan or transferred upon exercise or settlement
of incentive stock options. Awards with respect to shares of
common stock, other than dividend equivalents, granted to any
one individual under the 2011 Plan may not be made with respect
to more than 3,000,000 shares of common stock, in the
aggregate, in any consecutive
12-month
period, subject to adjustment based on a change in the
capitalization of our Company as describe din the 2011 Plan.
Adjustment of Shares.
If (i) our
Companys common stock is subdivided or combined into a
greater or smaller number of shares or if our Company issues any
shares of common stock as a stock dividend on its outstanding
common stock, or (ii) additional shares or new or different
shares or other securities of our Company or other non-cash
assets are distributed with respect to the common stock, the
number of shares deliverable upon the exercise of an award under
the 2011 Plan shall be appropriately increased or decreased
proportionately, and appropriate adjustments shall be made
(including as to the purchase price or exercise price per share,
and the number of shares available under the 2011 Plan) to
reflect such events, as determined by the administrator. In the
event of a recapitalization or reorganization of our Company
(other than a corporate transaction, which is described below)
pursuant to which securities of our Company or of another
corporation are issued with respect to the outstanding shares of
our Companys common stock, a participant upon exercising
an option or accepting a stock award or other stock based award
after the recapitalization or reorganization shall be entitled
to receive, for the purchase price paid (if any) upon such
exercise or acceptance, the number of replacement securities
which would have been received if the option had been exercised
or the other award accepted prior to such recapitalization or
reorganization.
Amendment of the 2011 Plan.
The administrator
of the 2011 Plan has the power and authority to terminate or
amend the 2011 Plan at any time; provided, however, that, to the
extent that the administrator determines that the listing
requirements of any national securities exchange or quotation
system on which our Companys common stock is then listed
or quoted, or the Code or related treasury regulations, require
stockholder approval in order to maintain compliance with
applicable listing requirements or to maintain any favorable tax
advantages or qualifications, then the 2011 Plan shall not be
amended without approval of our Companys stockholders. The
Committee may amend any award agreement at any time. No
amendment to the 2011 Plan and no amendment to any award
agreement may adversely affect any rights of a holder of an
outstanding award under the 2011 Plan without the holders
consent, unless the right has been reserved in the 2011 Plan or
award agreement.
Repricing.
The Committee generally may not
reprice, replace or regrant or modify the exercise price or base
price of any award granted under the 2011 Plan other than that
which occurs as a result of an adjustment of shares, as
described above.
Deferrals.
The Committee may permit the
deferral of settlement of awards granted under the 2011 Plan.
Termination of the Plan.
The 2011 Plan will
terminate no later than the day before the tenth anniversary of
the date the stockholders approve the 2011 Plan, unless the 2011
Plan is terminated earlier or, with the approval of
stockholders, is extended by the Board of Directors.
6
Transferability.
Rights under any award
granted under the 2011 Plan may generally not be transferred
other than by will or the laws of descent and distribution
unless, for awards other than incentive stock options and those
subject to Section 409A of the Code, otherwise determined
by the administrator.
Corporate Transaction.
Upon the occurrence of
a corporate transaction (as defined in the 2011 Plan) the
administrator may provide for the continuation or termination of
outstanding awards.
Award Agreements and Term.
All awards under
the 2011 Plan will be authorized by the administrator of the
2011 Plan. Each award will be evidenced by award agreements
setting forth the terms and conditions of the award and, in some
instances, will be conditioned on the participants written
acknowledgement that all decisions and determinations by the
administrator under the 2011 Plan are final and binding. No new
awards may be granted under the 2011 Plan after ten years from
the date on which it is approved by the Board of Directors.
Registration Requirements.
The administrator
of the 2011 Plan is under no obligation to register the sale,
issuance, transfer or resale of shares of common stock subject
to the 2011 Plan by filing a
Form S-8
or
Form S-3
(or any applicable successor from under the Securities Act of
1933, or the Securities Act. The administrator may, in its
discretion, permit the issuance of shares under the 2011 Plan
prior to the registration if an exemption to registration under
applicable securities laws permits the issuance. Our Company
will not be liable for any losses to participants or their
successors resulting from our Companys failure to register
or any delay in registering shares issuable under the 2011 Plan
or otherwise issuing shares under the 2011 Plan in settlement of
an award.
Awards
Generally
Stock Options.
A grant of a stock option
entitles a participant to purchase from our Company a specified
number of shares of our Companys common stock at a
specified price per share. In the discretion of the
administrator of the 2011 Plan, stock options may be granted as
nonqualified stock options or incentive stock options, but
incentive stock options may only be granted to employees of our
Company or our affiliates.
The administrator may fix any price as the purchase price per
share of our Companys common stock which may be purchased
under a stock option but the price must be at least equal to the
fair market value of our Companys common stock on the date
of grant. Options granted under the 2011 Plan will be subject to
the terms, including price and conditions and timing of
exercise, as determined by the administrator and specified in
the applicable award agreement. The exercise price for shares of
common stock acquired on exercise of a stock option must be paid
in cash or, at the discretion of the administrator, by delivery
of shares of our Companys common stock, a net exercise, a
cashless exercise, or any other lawful method the administrator
determines to be acceptable. The administrator may establish and
change the rules for the timing of payment of the exercise or
base price and withholding taxes.
Stock Awards.
A stock award is an award of
shares of our Companys common stock, which may or may not
be subject to restrictions or limitations set forth in the 2011
Plan
and/or
in the related award agreement. The award agreement for stock
awards will specify the time or times within which the stock
award may be subject to forfeiture and any performance goals or
employment goals that must be met in order to remove any
restrictions on the stock award.
Other Awards.
The Committee may grant to any
participant other forms of awards based upon our Companys
common stock. The terms and conditions of the other forms of
awards shall be specified in the applicable award agreement.
Termination of Employment, Death or
Disability.
The 2011 Plan contemplates default
treatment of awards in the event of termination of employment,
death or disability. The administrator of the 2011 Plan may
specify in each award agreement other terms and conditions for
becoming vested in, and exercising (where applicable), and
forfeiting awards upon the termination of a participants
employment, death and disability.
Federal
Income Tax Consequences
The following is a general summary as of the date of this proxy
statement of the United States federal income tax consequences
associated with the grant of awards under the 2011 Plan. The
federal tax laws may change and the federal, state and local tax
consequences for any participant will depend upon his or her
individual circumstances.
7
Also, this information may not be applicable to employees of
foreign subsidiaries or to participants who are not residents of
the United States. Participants are encouraged to seek the
advice of a qualified tax advisor regarding the tax consequences
of participation in the 2011 Plan.
Nonqualified Stock Options.
A participant
receiving a nonqualified stock option will not recognize income
and our Company will not be allowed a deduction at the time the
option is granted. When a participant exercises a nonqualified
stock option, the participant will have ordinary income (subject
to applicable withholding requirements) equal to the excess, if
any, of the fair market value of the stock on the date of
exercise over the option price. Our Company will be entitled to
a deduction for federal income tax purposes in an equal amount
(subject to Code Section 162(m)). The participant will have
a basis in the shares equal to the fair market value of the
shares on the date of exercise of the option. When a participant
disposes of shares acquired by the exercise of the option, any
amount received in excess of the fair market value of the shares
on the date of exercise will be treated as short-term or
long-term capital gain, depending upon whether the participant
held the shares for more than one year following the exercise of
the option. If the amount received is less than the fair market
value of the shares on the date of exercise, the loss will be
treated as short-term or long-term capital loss, depending upon
whether the participant held the shares for more than one year
following the exercise of the option.
Incentive Stock Options.
Incentive stock
options granted under the 2011 Plan are intended to meet the
requirements of Code Section 422 to qualify as
incentive stock options. A participant receiving a
grant of incentive stock options will not recognize income and
our Company will not be allowed a deduction at the time the
option is granted. When a participant exercises an incentive
stock option while employed by our Company or our affiliates or
within the three-month (one year for disability) period after
termination of employment, no ordinary income will be recognized
by the participant at that time (and no deduction will be
allowed to our Company) but the excess of the fair market value
of the shares acquired by the exercise over the option price
will be taken into account in determining the participants
alternative minimum taxable income for purposes of the federal
alternative minimum tax. If the shares acquired upon exercise
are not disposed of until more than two years after the date of
grant and one year after the date of transfer of the shares to
the participant (statutory holding periods), the excess of the
sale proceeds over the aggregate option price of the shares will
be taxable as long-term capital gain, and our Company will not
be entitled to any federal income tax deduction. Except in the
event of death, if the shares are disposed of prior to the
expiration of the statutory holding periods (a
Disqualifying Disposition), the excess of the fair
market value of the shares at the time of exercise over the
aggregate option price (but not more than the gain on the
disposition if the disposition is a transaction in which a loss,
if sustained, would be recognized) will be ordinary income
(subject to applicable withholding requirements) at the time of
the Disqualifying Disposition (and our Company or our affiliate
will be entitled to a federal tax deduction in a like amount,
subject to Code Section 162(m)), and the balance of the
gain, if any, will be capital gain (short-term or long-term
depending upon whether the participant held the shares for more
than one year following the exercise of the option). To the
extent that the aggregate fair market value of stock (determined
on the date of grant) with respect to which incentive options
become exercisable for the first time during any calendar year
exceeds $100,000, the excess options will be treated as
nonqualified options.
Payment Using Shares.
If a participant pays
the exercise price of a nonqualified or incentive stock option
with certain previously-owned shares of our Companys
common stock and the transaction is not a Disqualifying
Disposition, the shares received equal to the number of shares
surrendered are treated as having been received in a tax-free
exchange. The shares received in excess of the number
surrendered will not be taxable if an incentive stock option is
being exercised, but will be taxable as ordinary income to the
extent of their fair market value if a nonqualified stock option
is being exercised. The participant does not recognize income
and our Company receives no deduction as a result of the
tax-free portion of the exchange transaction. If the use of
previously acquired incentive stock option shares to pay the
exercise price of another incentive stock option constitutes a
Disqualifying Disposition, the tax results are as described in
the preceding paragraph. The income treatment will apply to the
shares disposed of, but will not affect the favorable tax
treatment of the shares received.
Stock Awards.
For so long as a stock award
remains unvested or otherwise subject to a substantial risk of
forfeiture (i.e., restricted), a participant will not recognize
compensation income and our Company will not be allowed a
deduction. When an award vests or otherwise ceases to be subject
to a substantial risk of forfeiture, the excess of the fair
market value of the award on the date of vesting or the
cessation of the substantial risk of forfeiture
8
over the amount paid, if any, by the participant for the award
will be ordinary income (subject to applicable withholding
requirements) to the participant and will be claimed as a
deduction for federal income tax purposes by our Company
(subject to Code Section 162(m)). Upon disposition of the
shares received, the gain or loss recognized by the participant
will be treated as capital gain or loss, and the capital gain or
loss will be short-term or long-term depending upon whether the
participant held the shares for more than one year following the
vesting or cessation of the substantial risk of forfeiture.
However, by filing a Code Section 83(b) election with the
Internal Revenue Service within 30 days after the date of
grant, a participants ordinary income and commencement of
holding period and our Companys deduction will be
determined as of the date of grant. In this case, the amount of
ordinary income recognized by the participant and deductible by
our Company will be equal to the excess of the fair market value
of the award as of the date of grant over the amount paid, if
any, by the participant for the award. If a Code
Section 83(b) election is made and a participant later
forfeits his or her award, no refund or deduction will be
allowed for the amount previously included in the
participants income.
Other Stock Awards.
A participant granted
dividend equivalents or other stock based awards under the 2011
Plan generally will not recognize income and our Company will
not be allowed a deduction at the time the award is granted.
When a participant receives payment upon settlement of the
award, the amount paid to the participant for the award will be
ordinary income to the participant and will be claimed as a
deduction for federal income tax purposes by our Company
(subject to Code Section 162(m)).
Certain Limitations on Deductibility of Executive
Compensation Code
Section 162(m).
With certain exceptions,
Code Section 162(m) denies a deduction to a publicly held
corporation (such as our Company) for compensation paid to
certain executive officers in excess of $1 million per
executive per taxable year (including any deduction with respect
to the exercise of a nonqualified stock option or stock
appreciation right, or the disqualifying disposition of stock
purchased pursuant to an incentive stock option). One exception
applies to certain performance-based compensation, provided that
the compensation has been approved by stockholders in a separate
vote and certain other requirements are met. If approved by our
stockholders, we believe that stock options and any stock
appreciation rights granted under the 2011 Plan should qualify
for the performance-based compensation exception to Code
Section 162(m).
Requirements Regarding Deferred
Compensation.
It is intended that the benefits
under the 2011 Plan will not be subject to the additional tax
imposed by Code Section 409A (a recently enacted provision
governing nonqualified deferred compensation plans.) To the
extent there are any ambiguities in the 2011 Plan, the Plan will
be interpreted and administered according to the requirements of
Code Section 409A.
ERISA.
Our Company believes that the 2011 Plan
is not subject to any of the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA) and is not
qualified under Code Section 401(a).
New Plan
Benefits: Awards Granted under the 2011 Plan
The awards to be made under the 2011 Plan are not determinable
and past awards under the Existing Plan are not necessarily
representative of expectations for future awards under the 2011
Plan.
Information
Relating to Corporate Governance and the Board of
Directors
The Nominating and Governance Committee of our Board of
Directors has determined, after considering all the relevant
facts and circumstances, that each of Messrs. Bruno,
Delepine, Janzen, OBrien, and Smith are independent
directors, as independence is defined in the federal
securities laws and the Nasdaq Marketplace Rules.
Our bylaws authorize our Board of Directors to appoint among its
members one or more committees, each consisting of one or more
directors. Our Board of Directors has established three standing
committees: an Audit Committee, a Compensation Committee and a
Nominating and Governance Committee.
Our Board of Directors has adopted charters for the Audit,
Compensation and Nominating and Governance Committees describing
the authority and responsibilities delegated to each committee
by the Board of Directors. Our Board of Directors has also
adopted Corporate Governance Guidelines, a Code of Business
Conduct and Ethics and a Whistleblower Policy. We post on our
website, at
www.gt-t.net
, the charters of our Audit,
Compensation and
9
Nominating and Governance Committees and our Corporate
Governance Guidelines, Code of Business Conduct and Ethics and
Whistleblower Policy. These documents are also available in
print to any stockholder requesting a copy in writing from our
corporate secretary at our executive offices set forth in this
proxy statement. We intend to disclose on our website any
amendments to or waivers of a provision of our Code of Business
Conduct and Ethics made with respect to our directors or
executive officers.
Interested parties may communicate with our Board of Directors
or specific members of our Board of Directors, including our
independent directors and the members of our various board
committees, by submitting a letter addressed to the Board of
Directors of Global Telecom & Technology, Inc.
c/o any
specified individual director or directors at the address listed
herein. Any such letters will be sent to the indicated directors.
The
Audit Committee
The purpose of the Audit Committee is (i) to oversee the
accounting and financial and reporting processes of our Company
and the audits of the financial statements of our Company,
(ii) to provide assistance to our Board of Directors with
respect to its oversight of the integrity of the financial
statements of our Company, our Companys compliance with
legal and regulatory requirements, the independent registered
public accounting firms qualifications and independence,
and the performance of our Companys internal audit
function, if any, and independent registered public accounting
firm, and (iii) to prepare the report required by the rules
promulgated by the SEC. The primary responsibilities of the
Audit Committee are set forth in its charter and include various
matters with respect to the oversight of our Companys
accounting and financial reporting process and audits of the
financial statements of our Company on behalf of our Board of
Directors. The Audit Committee also selects the independent
registered public accounting firm to conduct the annual audit of
the financial statements of our Company; reviews the proposed
scope of such audit; reviews accounting and financial controls
of our Company with our financial accounting staff; and, unless
otherwise delegated by our Board of Directors to another
committee, reviews and approves transactions between us and our
directors, officers, and their affiliates.
The Audit Committee currently consists of Messrs. Bruno,
Smith, and Delepine, each of whom is an independent director of
our Company under the Nasdaq Marketplace Rules and under rules
adopted by the SEC pursuant to the Sarbanes-Oxley Act of 2002.
The Board of Directors previously determined that all members of
the Audit Committee meet the requirements for financial literacy
and that Mr. Bruno qualifies as an audit committee
financial expert in accordance with applicable rules and
regulations of the SEC. Mr. Bruno serves as the Chairman of
the Audit Committee.
The
Compensation Committee
The purpose of the Compensation Committee includes determining,
or recommending to our Board of Directors for determination, the
compensation of our Chief Executive Officer and any other
executive officer of our Company who reports directly to the
Board of Directors, and the members of the Board of Directors;
determining, or recommending to the Board of Directors for
determination, the compensation of all other executive officers
of our Company; and discharging the responsibilities of our
Board of Directors relating to our Companys compensation
programs and compensation of our Companys executives. In
fulfilling its responsibilities, the Compensation Committee
shall also be entitled to delegate any or all of its
responsibilities to a subcommittee of the Compensation
Committee. Information regarding our Companys processes
and procedures for the consideration and determination of
executive and director compensation is addressed in the
Compensation Discussion and Analysis below. The Compensation
Committee currently consists of Messrs. Janzen, Hackman,
and Smith. Mr. Janzen serves as the Chairman of the
Compensation Committee.
The
Nominating and Governance Committee
The purpose of the Nominating and Governance Committee includes
selecting, or recommending to our Board of Directors for
selection, the individuals to stand for election as directors at
each annual meeting of our stockholders or, if applicable, a
special meeting of our stockholders, overseeing the selection
and composition of committees of our Board of Directors,
overseeing our management continuity planning processes, and
reviewing and updating our corporate governance policies, as
applicable. The Nominating and Governance Committee
10
identifies and reviews the qualifications of new director
nominees consistent with selection criteria established by our
Board of Directors and recommends the slate of nominee for
inclusion in our Companys proxy statement. The Nominating
and Governance Committees process for selecting nominees
to our Board of Directors is described in more detail under
Nominating and Governance Committees Process for
Selecting Nominees to the Board of Directors
below.
The Nominating and Governance Committee is also responsible for
conducting the periodic evaluation of the performance of our
Board of Directors and its committees and for considering
questions of independence and possible conflicts of interest of
members of our Board of Directors and executive officers. The
Nominating and Governance Committee currently consists of
Messrs. Delepine, Janzen and OBrien.
Mr. Delepine serves as the Chairman of the Nominating and
Governance Committee.
Nominating
and Governance Committees Process for Selecting Nominees
to the Board of Directors
The Nominating and Governance Committee considers candidates for
membership to our Board of Directors who are suggested by its
members and other Board of Directors members, as well as by
management, stockholders and other interested parties. The
Nominating and Governance Committee may also retain a
third-party search firm to identify candidates from time to time
upon request of the Nominating and Governance Committee or the
Board of Directors.
Stockholders can recommend a prospective nominee for our Board
of Directors by writing to our Corporate Secretary at our
Companys corporate headquarters setting forth, as to each
person whom the stockholder proposes to nominate for election as
a director (a) the name, age, business address and
residence address of the person, (b) the principal
occupation or employment of the person, (c) a description
of the capital stock of our Company owned beneficially or of
record by the person, and (d) any other information
relating to the person that would be required to be disclosed in
a proxy statement, and whatever additional supporting material
the stockholder considers appropriate. Any stockholder
nominating a person for election as a director shall provide our
Companys Corporate Secretary with (a) the name and
record address of such stockholder, (b) a description of
the capital stock of our Company owned beneficially or of record
by such stockholder, (c) a description of all arrangements
or understandings between such stockholder and each proposed
nominee and any other person or persons (including their names)
pursuant to which the nomination(s) are to be made by such
stockholder, (d) a representation that such stockholder
intends to appear in person or by proxy at the meeting to
nominate the persons named in its notice, and (e) any other
information relating to such stockholder that would be required
to be disclosed in a proxy statement. Such notice must be
accompanied by a written consent of each proposed nominee to
being named as a nominee and to serve as a director if elected.
The Nominating and Governance Committees assessment of a
nominees qualification for Board of Directors membership
includes, among other things, the following criteria:
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The diversity, age, background and experience of the candidate;
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The personal qualities and characteristics, accomplishments and
reputation in the business community of the candidate;
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The knowledge and contacts of the candidate in the communities
in which we conduct business and in our industry or other
industries relevant to our business;
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The ability and expertise of the candidate in various activities
deemed appropriate by the Board of Directors; and
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The fit of the candidates skills, experience and
personality with those of other directors in maintaining an
effective, collegial and responsive Board of Directors.
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The initial determination to seek a Board of Directors candidate
is usually based on the need for additional Board of Directors
members to fill vacancies or to expand the size of the Board of
Directors, although the decision can also be based on the need
for certain skill sets or qualifications, such as financial
expertise. The Nominating and Governance Committees
process for identifying and evaluating nominees for director is
the same no matter who makes the recommendation.
11
Once the Nominating and Governance Committee has determined, in
consultation with other board members if appropriate, that
additional consideration of a candidate is warranted, the
Nominating and Governance Committee may, or it may request third
parties to, gather additional information about the prospective
candidates background, experience and independence.
Following review of this information, if the Nominating and
Governance Committee determines it is appropriate to proceed,
the Nominating and Governance Committee or other members of the
Board of Directors will generally interview the prospective
candidate. The Nominating and Governance Committee then
evaluates the prospective nominee against the standards and
qualifications set forth above and such other relevant factors
that the Nominating and Governance Committee or the Board of
Directors deems appropriate, including the current composition
of the board and the candidates personal qualities,
skills, characteristics and experience. Although we do not have
a formal diversity policy, to foster and maintain a diversity of
viewpoints, backgrounds and experiences on the Board of
Directors, the Nominating and Governance Committee evaluates the
mix of personal qualities, skills, characteristics and
experience of the directors and assesses the nominees and
potential candidates in the context of the current composition
of the Board of Directors and our requirements.
Following this evaluation, if the Nominating and Governance
Committee believes that the prospective candidate is qualified
for nomination, generally the Nominating and Governance
Committee will make a recommendation to the full Board of
Directors, and the full Board of Directors will make the final
determination whether the candidate should be nominated to the
Board of Directors.
Board
Leadership Structure
Our Chairman of the Board position is separate from the position
of Chief Executive Officer. Separating these positions allows
our Chief Executive Officer to focus on our
day-to-day
business, while allowing the Chairman of the Board to lead our
Board of Directors in its fundamental role of providing advice
to, and oversight of, management. Our Board recognizes the time,
effort and energy that the Chief Executive Officer is required
to devote to his position in the current business environment,
as well as the commitment required to serve as our Chairman,
particularly as the Boards oversight responsibilities
continue to grow. Our Board believes that having separate
positions is the appropriate leadership structure for our
Company at this time and allows each of the positions to be
carried out more effectively than if one person were tasked with
both the
day-to-day
oversight of our business as well as leadership of our Board.
Our Chairman and our Chief Executive Officer work closely
together to set the agenda for meetings of the Board of
Directors and stockholders and to facilitate information flow
between the Board of Directors and management.
Our Board of Directors has the necessary flexibility to
determine whether the positions of Chairman of the Board and
Chief Executive Officer should be held by the same person or by
separate persons based on the leadership needs of our Company at
any particular time.
Role of
the Board of Directors in Risk Oversight
The Board of Directors has an active role in overseeing our risk
management. In this regard, the Board of Directors regularly
reviews and discusses information presented by management
regarding our business and operations risks, including
information and risks related to our long-term business
strategy, actual and planned financial position and operational
performance, industry trends and their potential impact on us,
our competitive positioning, potential acquisitions and
divestitures, our technology and market direction and regulatory
and compliance matters, among others. The Board also reviews and
approves corporate goals and budgets on an annual basis. While
the Board of Directors has the ultimate oversight responsibility
for the risk management process, various committees of the Board
also have responsibility for risk management, as described
below. Senior management regularly reports to the Board or the
appropriate Committee of the Board on areas of material risk to
our Company, which may include financial, legal and regulatory
risks, and operational and strategic risks.
The Audit Committee oversees management of financial risks,
including but not limited to accounting matters, tax positions,
insurance coverage and security of our Companys cash
reserves. In particular, the Audit Committee focuses on
financial risk, including internal controls, and receives an
annual risk assessment report from our Companys internal
auditors. The Audit Committee discusses with management major
financial risk exposures and
12
the steps management has taken to monitor and control such
exposures, including our risk assessment and risk management
policies. The Compensation Committee oversees risk management as
it relates to our compensation plans, policies and practices in
connection with structuring our executive compensation programs
and reviewing our incentive compensation programs for other
employees, and in this regard the Compensation Committee strives
to create incentives that encourage a level of risk-taking
behavior consistent with our Companys business strategy.
The Compensation Committee discusses with management whether our
compensation programs may create incentives for our employees to
take excessive or inappropriate risks which could have a
material adverse effect on our Company. The Nominating and
Governance Committee manages risks associated with the
independence and possible conflicts of interest of the Board of
Directors. The Nominating and Governance Committee charter also
requires the Nominating and Governance Committee to review our
Companys risk exposure relating to its functions and to
provide guidance to the Board regarding its overall risk
oversight responsibilities. While each committee is responsible
for evaluating certain risks and overseeing the management of
such risks, the entire Board of Directors is regularly informed
about such risks by committee reports as well as advice and
counsel from expert advisors.
Board and
Committee Meetings
Our Board of Directors held a total of 4 meetings during the
fiscal year ended December 31, 2010, in addition to taking
action by unanimous written consent on 5 occasions. During the
fiscal year ended December 31, 2010, the Audit Committee
held a total of 7 meetings, the Compensation Committee held a
total of 6 meetings and the Nominating and Governance Committee
held 3 meetings. During 2010, no director attended fewer than
75% of the aggregate of (i) the total number of meetings of
our Board of Directors, and (ii) the total number of
meetings held by all Committees of our Board of Directors on
which he was a member. We encourage each of our directors to
attend the annual meeting of stockholders. Three members of our
Board of Directors were present at our 2010 annual meeting.
Director
Compensation and Other Information
The following table sets forth the compensation earned by our
non-employee directors in 2010.
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Fees
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Earned or
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Paid in
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Stock
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Cash
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Awards
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Total
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Name
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($)
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($)
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($)
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S. Joseph Bruno
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15,000
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15,000
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30,000
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Didier Delepine
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30,000
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30,000
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Rhodric C. Hackman
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12,500
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12,500
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25,000
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Howard Janzen
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30,000
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30,000
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Morgan E. OBrien
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25,000
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25,000
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Theodore B. Smith, III
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25,000
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25,000
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Overview
of Director Compensation
We compensated non-employee members of our Board of Directors
through a mixture of cash and equity-based compensation. We paid
each non-employee director annualized compensation of $25,000,
paid in four equal installments at the end of each calendar
quarter during which the non-employee director served as a
member of our Board of Directors. Each chairperson of a standing
committee received additional annualized compensation of $5,000,
paid in four equal installments at the end of each calendar
quarter during which the director served as the chairperson of
the particular committee. We reimbursed our directors for
reasonable travel and other expenses incurred in connection with
attending meetings of our Board of Directors.
All retainers and meeting fees were paid in cash, stock or a
mixture of cash and stock, at each directors election.
Employees who also serve as directors received no additional
compensation for their services as a director.
13
Compensation
Committee Interlocks and Insider Participation
No member of our Compensation Committee has served as one of our
officers or employees at any time. None of our executive
officers serve as a member of the compensation committee of any
other company that has an executive officer serving as a member
of our Board of Directors. None of our executive officers serve
as a member of the board of directors of any other company that
has an executive officer serving as a member of our Compensation
Committee.
REPORT
WITH RESPECT TO THE COMPANYS INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The firm of J.H. Cohn LLP, an independent registered public
accounting firm, has audited the consolidated financial
statements of our Company for the fiscal years ended
December 31, 2010 and 2009, respectively. We anticipate
that representatives of J.H. Cohn LLP will be present at the
meeting, will have the opportunity to make a statement if they
desire, and will be available to respond to appropriate
questions.
Our Company anticipates that J.H. Cohn LLP will provide
assistance during 2011 with respect to review of our
Companys quarterly filings with the SEC. However, our
Company, in consultation with the Audit Committee, has not yet
selected an independent registered public accounting firm with
respect to the audit of its 2011 consolidated financial
statements. Our Company anticipates completing the selection of
an independent auditor for the registered public accounting firm
of its 2011 consolidated financial statements in consultation
with the Audit Committee during the second quarter of 2011.
The aggregate fees billed to our Company by J.H. Cohn LLP for
the fiscal years ended December 31, 2010 and 2009 are as
follows:
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
Audit Fees(1)
|
|
$
|
232,000
|
|
|
$
|
257,000
|
|
Audit-Related Fees(2)
|
|
$
|
0
|
|
|
$
|
5,000
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
232,000
|
|
|
$
|
262,000
|
|
|
|
|
(1)
|
|
Audit Fees consist of fees incurred for the audits of our annual
financial statements and the review of our interim financial
statements included in our quarterly reports on
Form 10-Q
for the first three quarters of each fiscal year.
|
|
(2)
|
|
Audit-Related Fees consist of fees incurred for assurance and
related services that are reasonably related to the performance
of the audit or review of our financial statements and are not
reported under the category Audit Fees.
|
The charter of our Audit Committee provides that the duties and
responsibilities of our Audit Committee include the pre-approval
of all audit, audit-related, tax, and other services permitted
by law or applicable SEC regulations (including fee and cost
ranges) to be performed by our independent registered public
accounting firm. Any pre-approved services that will involve
fees or costs exceeding pre-approved levels will also require
specific pre-approval by the Audit Committee. Unless otherwise
specified by the Audit Committee in pre-approving a service, the
pre-approval will be effective for the
12-month
period following pre-approval. The Audit Committee will not
approve any non-audit services prohibited by applicable SEC
regulations or any services in connection with a transaction
initially recommended by the independent registered public
accounting firm, the purpose of which may be tax avoidance and
the tax treatment of which may not be supported by the Code and
related regulations.
To the extent deemed appropriate, the Audit Committee may
delegate pre-approval authority to the Chairman of the Audit
Committee or any one or more other members of the Audit
Committee provided that any member of the Audit Committee who
has exercised any such delegation must report any such
pre-approval decision to the Audit Committee at its next
scheduled meeting. The Audit Committee will not delegate to
management the pre-approval of services to be performed by the
independent registered public accounting firm.
Our Audit Committee requires that our independent registered
public accounting firm, in conjunction with our Chief Financial
Officer, be responsible for seeking pre-approval for providing
services to us and that any request for pre-approval must inform
the Audit Committee about each service to be provided and must
provide detail as to the particular service to be provided.
14
REPORT OF
THE AUDIT COMMITTEE
The Audit Committee oversees our Companys accounting and
financial reporting processes and the audits of its financial
statements, including the performance and compensation of our
Companys independent auditor. Management has the primary
responsibility for the financial statements and the reporting
process, including the systems of internal controls and the
certification of the integrity and reliability of our
Companys internal controls procedures.
In fulfilling its oversight responsibilities, the Audit
Committee has reviewed and discussed our Companys
financial statements for the years ended December 31, 2010
and 2009 and to our Companys Sarbanes-Oxley implementation
plan with our Companys management. The Audit Committee
also reviewed with J.H. Cohn LLP, our Companys independent
registered public accounting firm, the results of their audit.
The Audit Committee has also discussed with the independent
registered public accounting firm the matters required to be
discussed by the Statement on Auditing Standards No. 61
Communication with Audit Committees
, as amended, as
adopted by the Public Company Accounting Oversight Board in
Rule 3200T. This discussion included, among other things,
the quality of our Companys accounting principles, the
reasonableness of significant estimates and judgments, and the
clarity of disclosure in our Companys financial
statements, including the disclosures related to critical
accounting policies and practices used by our Company. The Audit
Committee has reviewed permitted services under the rules of the
SEC as currently in effect and discussed with J.H. Cohn LLP
their independence from management and our Company, including
the matters in the written disclosures and the letter from the
independent registered public accounting firm required by the
Public Company Accounting Oversight Board in Rule 3526
Communication with Audit Committees
, and has considered
and discussed the compatibility of non-audit services provided
by J.H. Cohn LLP with that firms independence. In
addition, the Audit Committee discussed the rules of the SEC
that pertain to the Audit Committee and the roles and
responsibilities of Audit Committee members.
Based on its review of the financial statements and the
aforementioned discussions, the Audit Committee concluded that
it would be reasonable to recommend, and on that basis did
recommend, to the Board of Directors that the audited financial
statements be included in our Companys Annual Report on
Form 10-K
for the year ended December 31, 2010.
Respectfully submitted by the Audit Committee,
Joseph Bruno, Chair
Didier Delepine
Theodore B. Smith, III
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Executive Summary.
During 2010, our management
team accomplished many performance goals. In 2010, GTT
successfully integrated an acquisition, expanded its core
network assets, grew distribution channels, and completed its
strongest sales year. Revenue increased to $81.1 million, a
26% increase over 2009, and EBITDA increased to
$6.7 million, a 58% increase over 2009. Additionally, our
management team refinanced maturing seller debt with new
$15 million credit facility at reduced cost, including a
5-year
$10 million term loan and a $5 million
2-year
revolving credit facility. These accomplishments demonstrate a
substantial effort and achievement by our management and
establish the basis for the bonuses our Compensation Committee
approved for 2010. In addition, the goals established for 2011
are based in part on the continued momentum of our management in
accomplishing growth.
We have prepared the following Compensation Discussion and
Analysis to provide you with information that we believe is
necessary to understand our executive compensation policies and
decisions as they relate to the compensation of our named
executive officers as identified in our Summary Compensation
Table.
15
Objectives.
We operate in a highly competitive
and challenging environment. To attract, retain, and motivate
qualified executive officers, we aim to establish wages and
salaries that are competitive with those of executives employed
by similar firms in our operating industries. Another objective
of our compensation policies is to motivate employees by
aligning their interests with those of our stockholders through
equity incentives, thereby giving them a stake in our growth and
prosperity and encouraging the continuance of their services
with us or our subsidiaries. Given our relative size, we have
determined to take a simple approach to compensating our named
executive officers and to avoid other forms of compensation,
such as awards under long-term cash incentive plans,
non-qualified defined benefit plans and pension plans.
Our compensation program is designed to reward performance, both
individual performance and the performance of the company as a
whole. While base salaries for our executives should reflect the
marketplace for similar positions, a significant portion of
their compensation is earned based on our financial performance
and the financial performance of each executives area of
responsibility. In May 2010, we established, and our
Compensation Committee approved, quantifiable performance
objectives for our Chief Executive Officer and members of our
senior leadership team related to our 2010 performance. These
objectives are described in greater detail under Annual
Incentives (Cash Bonuses) below. We strongly believe in
measurement of quantifiable results and this emanates from our
belief that sustained strong financial performance is an
effective means of enhancing long-term stockholder value.
Compensation Program Administration and
Policies.
The Compensation Committee, which is
comprised exclusively of independent directors, has general
responsibility for executive compensation and benefits,
including incentive compensation and equity-based plans.
Specific salary and bonus levels, as well as the amount and
timing of equity grants, are determined on a
case-by-case
basis and reflect our overall compensation objectives as our
desire to retain and motivate our employees manifests itself in
how compensation is allocated to our named executive officers.
Initial compensation elements for our named executive officers
were established in employment agreements each has entered into
with us. Those employment agreements provide for specified
salaries (consistent with our objectives with respect to
compensation) and some of them also contemplate potential bonus
awards and equity grants to be awarded at the discretion of the
Compensation Committee with reference to both our performance
and the performance of the individual executive.
All employment agreements with executives are reviewed and
approved by the Compensation Committee on an individual case
basis. Similarly, the Compensation Committee serves as the
administrator of the Existing Plan and will serve as the
administrator of the 2011 Plan, and is authorized to grant
equity awards under those plans. Finally, the Compensation
Committee is responsible under each of the employment agreements
to determine the extent to which each executive may be entitled
to any bonus payments based upon individual
and/or
Company performance (as contemplated by the terms of those
agreements).
Pay Elements.
We provide the following pay
elements to our executive officers in varying combinations to
accomplish our compensation objectives:
|
|
|
|
|
Base salary;
|
|
|
|
Annual bonus incentives;
|
|
|
|
Equity-based compensation (e.g., stock options and restricted
stock grants) pursuant to the Existing Plan and the 2011 Plan;
|
|
|
|
Certain modest executive perquisites and benefits; and
|
|
|
|
Payments with respect to severance of employment
and/or
upon
change-of-control.
|
We fix each executives base salary at a level we believe
enables us to hire and retain individuals in a competitive
environment and to reward satisfactory individual performance
and a satisfactory level of contribution to our overall business
goals. We utilize cash bonuses to reward performance
achievements within the past fiscal year, and similarly, we
utilize equity-based compensation under the Existing Plan and
the 2011 Plan to provide additional long-term rewards for
short-term performance achievements, which we believe encourages
similar performance over a longer term.
16
Each compensation element and its purpose are further described
below.
Base Salary.
Base salary is intended to
compensate the executive for the basic market value of the
position and the responsibilities of that position relative to
other positions in our Company. The base salary for each of our
executives is initially established through negotiation at the
time of hire, based on such factors as the duties and
responsibilities of the position, the individual
executives experience and qualifications, the
executives prior salary and competitive salary
information. Generally, the Chief Executive Officer will
recommend annual base salary (and changes thereto) with respect
to the other executives to the Compensation Committee. The
Compensation Committee will determine the Chief Executive
Officers base salary by reference to the same criteria.
We annually review our base salaries, and may adjust them from
time to time based on market trends. We also review the
applicable executives responsibilities, performance and
experience. We do not provide formulaic base salary increases to
our executives. If necessary, we realign base salaries with
market levels for the same positions in companies of similar
size to us represented in compensation data we review, if we
identify significant market changes in our data analysis.
Additionally, we intend to adjust base salaries as warranted
throughout the year for promotions or other changes in the scope
or breadth of an executives role or responsibilities.
In the first Quarter of 2011, the Compensation Committee
approved base salaries for our executive officers. The 2011 base
salaries for our executive officers reflect the annual review
based on performance, compensation of market comparables and
promotional increases.
Annual Incentives (Cash Bonuses).
We provide a
cash bonus opportunity to all of our executive officers. We pay
bonuses for the previous fiscal year generally after the filing
of our audited financials with the SEC. Generally, bonuses are
payable to the extent provided in the employment agreements
negotiated with individual executives as approved by the
Compensation Committee. Those employment agreements that provide
for the payment of cash bonuses contemplate that they are based
upon an evaluation of both our Companys performance and
the performance of the individual executive
and/or
at
the sole discretion of the Board of Directors. Individual
performance is measured based on the achievement of quantifiable
performance objectives established by the Compensation Committee
at the beginning of our fiscal year. We believe linking cash
bonuses to both Company and individual performance will motivate
executives to focus on our annual revenue growth, profitability,
cash flow and liquidity, which we believe should improve
long-term stockholder value over time.
In May 2010, the Compensation Committee met to determine the
performance objectives for the bonus payments to our senior
executives. The target bonus payments would be made based on
achievement of 2010 goals as follows: 20% based on revenue plan
attainment, 20% based on net sales plan attainment, 40% based on
adjusted EBITDA attainment and 20% based on personal performance
objectives. For employees other than senior executives, the
payments would be based on a different combination of attainment
of the same goals.
Equity-Based Compensation.
Each employment
agreement with our named executive officers provides for certain
specified initial grants of restricted stock
and/or
stock
options. Our Compensation Committee believes that granting
additional shares of restricted stock
and/or
stock
options on an annual basis to existing executives provides an
important incentive to retain executives and rewards them for
our short-term performance while also creating long-term
incentives to sustain that performance. Any grants made under
the 2011 Plan after the 2011 annual meeting may be made at the
discretion of our Compensation Committee and are contingent on
stockholder approval of the 2011 Plan. Generally, grants of
restricted stock and stock options vest over four years and no
shares or options vest before the first day of the succeeding
fiscal year (the fiscal year following the fiscal year in which
the options were actually granted).
Equity Granting Policy.
We do not have any
practice, policy, or program allowing for timing of equity
grants in relation to our current stock price or material
non-public information. We expect that we will typically approve
equity awards to current employees during the first Compensation
Committee meeting of each year. The grant date for stock option
grants is the date upon which the Compensation Committee
approves the grant of stock options to the particular employee.
The Compensation Committee gave Mr. Calder the authority to
grant equity awards for employee promotions and new hires of our
Company up to 20,000 shares per employee. The grant date
for equity awards made by Mr. Calder is generally the first
day of the month following the month in which the employee was
promoted or our new employee began his or her employment. The
exercise price for stock option grants is set in
17
accordance with the terms of the Existing Plan and, starting in
2011, the 2011 Plan, which establishes the price as fair market
valued determined by reference to the closing price of the
common stock on the day preceding the grant.
Executive Perquisites and Benefits.
Our
philosophy is to provide executives with limited perquisites.
The value of the perquisites (if any) and benefits provided to
our named executive officers is set forth in the Summary
Compensation table of this prospectus, and their aggregate cost
for all of our executives in 2010 was $27,563.
Payments with Respect to Severance of Employment
and/or
Upon
Change of Control.
The employment agreements
between the us and each of Richard Calder, our Chief Executive
Officer, and Eric Swank, our Chief Financial Officer, contain
certain terms and conditions relating to payments, accelerated
vesting of option and restricted stock grants, and continuation
of health benefits in the event of the severance of his
employment with us or upon our change of control. The specific
terms and conditions relating to severance payments and
accelerated vesting of option and restricted stock grants for
Mr. Calder and Mr. Swank are summarized below and
graphically displayed in the section entitled Potential
Payments Upon Termination or Change of Control. There are
no provisions with respect to severance payments or accelerated
vesting of option and restricted stock grants in any other
employment agreement for our named executive officers.
COMPENSATION
COMMITTEE REPORT
The Compensation Committee is comprised entirely of independent
directors. The Compensation Committee has reviewed the
Compensation Discussion and Analysis required by
Item 402(b) of
Regulation S-K
with management and, based on such review and discussions, the
Compensation Committee recommended to the Board of Directors
that the Compensation Discussion and Analysis be included in
this proxy statement.
Respectfully submitted by the Compensation Committee,
Howard Janzen, Chair
Theodore B. Smith, III
Rhodric Hackman
18
SUMMARY
COMPENSATION TABLE
For
Fiscal Year Ended December 31, 2010
The following table sets forth information regarding
compensation earned or accrued during the fiscal years ended
December 31, 2010, 2009 and 2008 by (a) each person
who served as our Chief Executive Officer during 2010,
(b) each person who served as our Chief Financial Officer
during 2010 and (c) each of our other executive officers
who had compensation of at least $100,000 in 2010. We refer to
these executive officers as our named executive
officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards
|
|
Awards
|
|
All Other
|
|
|
|
|
|
|
Salary
|
|
Bonus
|
|
(1)
|
|
(1)
|
|
Compensation
|
|
Total
|
Name
|
|
Year
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
Brian Thompson,
|
|
|
2010
|
|
|
|
150,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,942
|
(2)
|
|
|
157,942
|
|
Executive Chairman
|
|
|
2009
|
|
|
|
150,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,735
|
|
|
|
156,735
|
|
|
|
|
2008
|
|
|
|
150,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,688
|
|
|
|
156,688
|
|
Richard D. Calder, Jr.,
|
|
|
2010
|
|
|
|
275,625
|
|
|
|
272,042
|
|
|
|
158,720
|
|
|
|
16,739
|
|
|
|
15,968
|
(4)
|
|
|
739,094
|
|
Chief Executive Officer and
|
|
|
2009
|
|
|
|
262,500
|
|
|
|
373,029
|
(3)
|
|
|
72,000
|
|
|
|
|
|
|
|
12,429
|
|
|
|
719,958
|
|
President
|
|
|
2008
|
|
|
|
260,577
|
|
|
|
270,900
|
|
|
|
116,000
|
|
|
|
|
|
|
|
13,429
|
|
|
|
660,906
|
|
Eric Swank
|
|
|
2010
|
|
|
|
210,000
|
|
|
|
97,700
|
|
|
|
64,480
|
|
|
|
12,800
|
|
|
|
15,967
|
(5)
|
|
|
400,947
|
|
Chief Financial Officer
|
|
|
2009
|
|
|
|
172,717
|
|
|
|
117,728
|
|
|
|
18,000
|
|
|
|
13,788
|
|
|
|
|
|
|
|
322,233
|
|
and Treasurer(6)
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chris McKee,
|
|
|
2010
|
|
|
|
200,000
|
|
|
|
84,745
|
|
|
|
49,600
|
|
|
|
9,846
|
|
|
|
4,125
|
(8)
|
|
|
348,316
|
|
General Counsel and
|
|
|
2009
|
|
|
|
190,000
|
|
|
|
104,025
|
|
|
|
10,800
|
|
|
|
|
|
|
|
4,125
|
|
|
|
308,950
|
|
Secretary(7)
|
|
|
2008
|
|
|
|
120,577
|
|
|
|
51,600
|
|
|
|
9,000
|
|
|
|
17,916
|
|
|
|
750
|
|
|
|
199,843
|
|
|
|
|
(1)
|
|
Amount reflects the aggregate grant date fair value of stock and
option awards, computed in accordance with FASB ASC Topic 718.
See Note 6 of the
Notes to Condensed Consolidated
Financial Statements (Unaudited) Share-Based
Compensation
for a discussion of assumptions made in
determining the value of our stock and option awards.
|
|
(2)
|
|
Amount represents the employee portion of health insurance
premiums paid by our Company on the individuals behalf.
|
|
(3)
|
|
On March 11 2010, Mr. Calder was awarded 58,478 shares
of our Companys common stock in lieu of a portion
($77,191) of his annual performance bonus for the 2009 fiscal
year (which would otherwise be payable in cash).
|
|
(4)
|
|
Amount includes $11,842 for the employee portion of health
insurance premiums paid by our Company on Mr. Calders
behalf and $4,125 for our Companys contributions to
Mr. Calders account in our Companys 401(k) plan.
|
|
(5)
|
|
Amount includes $11,842 for the employee portion of health
insurance premiums paid by our Company on Mr. Swanks
behalf and $4,125for our Companys contributions to
Mr. Swanks account in our Companys 401(k) plan.
|
|
(6)
|
|
Mr. Swank began his duties as our Chief Financial Officer
on February 2, 2009.
|
|
(7)
|
|
Mr. McKee began his duties as our General Counsel on
April 24, 2008 and was appointed Secretary on May 6,
2008.
|
|
(8)
|
|
Amount represents our Companys contributions to
Mr. McKees account in our Companys 401(k) plan.
|
19
GRANTS OF
PLAN-BASED AWARDS
For
Fiscal Year Ended December 31, 2010
The following table sets forth, for the fiscal year ended
December 31, 2010, certain information regarding restricted
stock and option awards granted to our named executive officers
pursuant to our 2006 Employee, Director and Consultant Stock
Plan:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
All Other
|
|
Stock
|
|
|
|
|
|
|
|
|
Stock
|
|
Awards:
|
|
Exercise
|
|
|
|
|
|
|
Awards:
|
|
Number of
|
|
or Base
|
|
|
|
|
|
|
Number of
|
|
Securities
|
|
Price of
|
|
Grant Date Fair
|
|
|
|
|
Shares of
|
|
Underlying
|
|
Option
|
|
Value of Stock and
|
|
|
Grant
|
|
Stock
|
|
Options
|
|
Awards
|
|
Option Awards
|
Name
|
|
Date
|
|
(#)
|
|
(#)
|
|
($)(1)
|
|
($)(2)
|
|
H. Brian Thompson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard D. Calder, Jr.(3)
|
|
|
3/5/2010
|
|
|
|
128,000
|
|
|
|
17,000
|
|
|
|
1.24
|
|
|
|
175,459
|
|
Eric Swank(4)
|
|
|
3/5/2010
|
|
|
|
52,000
|
|
|
|
13,000
|
|
|
|
1.24
|
|
|
|
77,280
|
|
Chris McKee(5)
|
|
|
3/5/2010
|
|
|
|
40,000
|
|
|
|
10,000
|
|
|
|
1.24
|
|
|
|
59,446
|
|
|
|
|
(1)
|
|
The exercise price of options granted in 2010 is equal to the
closing price of our stock on the day prior to the applicable
grant date, as reported on the
Over-the-Counter
bulletin board.
|
|
(2)
|
|
Amount reflects the aggregate grant date fair value of stock and
option awards granted in 2010 and 2008 computed in accordance
with FASB ASC Topic 718. See Note 6 of the
Notes
to Condensed Consolidated Financial Statements
(Unaudited) Share-Based Compensation
for a
discussion of assumptions made in determining the value of our
stock and option awards.
|
|
(3)
|
|
The awards of restricted stock and options were granted under
our 2006 Employee, Director and Consultant Stock Plan.
32,000 shares of the award of restricted stock vest on
March 5, 2011 and the remaining 96,000 shares of
restricted stock vest quarterly in equal amounts thereafter over
a three-year period. Options in respect of 4,250 shares
vest on March 5, 2011 and options in respect of the
remaining 12,750 shares vest quarterly in equal amounts
thereafter over a three year period. On February 24, 2011,
Mr. Calder was granted 101,500 shares of restricted
stock, 43,500 stock options and a performance grant of
55,000 shares of restricted stock.
|
|
(4)
|
|
The awards of restricted stock and options were granted under
our 2006 Employee, Director and Consultant Stock Plan.
13,000 shares of the award of restricted stock vest on
March 5, 2011 and the remaining 39,000 shares of
restricted stock vest quarterly in equal amounts thereafter over
a three-year period. Options in respect of 3,250 shares
vest on March 5, 2011 and options in respect of the
remaining 9,750 shares vest quarterly in equal amounts
thereafter over a three year period. On February 24, 2011,
Mr. Swank was granted 45,500 shares of restricted
stock, 19,500 stock options and a performance grant of
35,000 shares of restricted stock.
|
|
(5)
|
|
The awards of restricted stock and options were granted under
our 2006 Employee, Director and Consultant Stock Plan.
10,000 shares of the award of restricted stock vest on
March 5, 2011 and the remaining 30,000 shares of
restricted stock vest quarterly in equal amounts thereafter over
a three-year period. Options in respect of 2,500 shares
vest on March 5, 2011 and options in respect of the
remaining 7,500 shares vest quarterly in equal amounts
thereafter over a three year period. On February 24, 2011,
Mr. McKee was granted 45,500 shares of restricted
stock, 19,500 stock options and a performance grant of
35,000 shares of restricted stock.
|
Material terms of agreements with our named executive officers
are described in Employment Agreements with Executive
Officers below.
20
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR END 2010
The following table sets forth certain information concerning
outstanding equity awards held by our named executive officers
at December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of
|
|
Number of
|
|
|
|
|
|
|
|
Market
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
Number of
|
|
Value of
|
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
Shares of
|
|
Shares of
|
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
|
|
Stock that
|
|
Stock that
|
|
|
Options:
|
|
Options:
|
|
Exercise
|
|
Option
|
|
Have Not
|
|
Have Not
|
|
|
Exercisable
|
|
Unexercisable
|
|
Price
|
|
Expiration
|
|
Vested
|
|
Vested
|
Name
|
|
(#)
|
|
(#)
|
|
($)
|
|
Date
|
|
(#)
|
|
($)(1)
|
|
H. Brian Thompson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard D. Calder, Jr.
|
|
|
|
|
|
|
17,000
|
(2)
|
|
|
1.24
|
|
|
|
3/5/2020
|
|
|
|
328,000
|
(3)
|
|
|
426,400
|
|
Eric Swank
|
|
|
21,875
|
|
|
|
28,125
|
(4)
|
|
|
0.36
|
|
|
|
2/2/2019
|
|
|
|
80,125
|
(5)
|
|
|
104,163
|
|
|
|
|
|
|
|
|
13,000
|
(6)
|
|
|
1.24
|
|
|
|
3/5/2020
|
|
|
|
|
|
|
|
|
|
Chris McKee
|
|
|
15,000
|
|
|
|
25,000
|
(7)
|
|
|
0.60
|
|
|
|
5/1/2018
|
|
|
|
62,500
|
(8)
|
|
|
81,250
|
|
|
|
|
|
|
|
|
10,000
|
(9)
|
|
|
1.24
|
|
|
|
3/5/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Determined by reference to the closing price of a share of our
common stock on December 31, 2010, multiplied by the number
of shares.
|
|
(2)
|
|
Options in respect of 4,250 shares vest on March 5,
2011 and the options in respect of the remaining
12,750 shares vest quarterly in equal amounts thereafter
over a three year period.
|
|
(3)
|
|
Shares vest quarterly through 2014.
|
|
(4)
|
|
Options in respect of the shares vest quarterly in equal amounts
through May 2, 2013.
|
|
(5)
|
|
Shares vest quarterly through 2014.
|
|
(6)
|
|
Options in respect of 3,250 shares vest on March 5,
2011 and options in respect of the remaining 9,750 shares
vest quarterly in equal amounts thereafter over a three year
period.
|
|
(7)
|
|
Options in respect of the shares vest quarterly in equal amounts
through May 1, 2012.
|
|
(8)
|
|
Shares vest quarterly through 2014.
|
|
(9)
|
|
Options in respect of 2,500 shares vest on March 5,
2011 and options in respect of the remaining 7,500 shares
vest quarterly in equal amounts thereafter over a three year
period.
|
OPTION
EXERCISES AND STOCK VESTED
For
Fiscal Year Ended December 31, 2010
During 2010, there were no options exercised by our named
executive officers. The following table sets forth for the
fiscal year ended December 31, 2010, certain information
regarding shares of restricted stock held by our named executive
officers that vested:
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
Value Realized
|
|
|
Acquired on Vesting
|
|
on Vesting
|
Name
|
|
(#)
|
|
($)
|
|
H. Brian Thompson
|
|
|
12,500
|
|
|
|
11,875
|
|
Richard D. Calder, Jr.
|
|
|
187,500
|
|
|
|
216,375
|
|
Chris McKee
|
|
|
16,875
|
|
|
|
19,997
|
|
Eric Swank
|
|
|
21,875
|
|
|
|
26,656
|
|
Employment
Arrangements with Executive Officers
In October 2006, we entered into an employment agreement with H.
Brian Thompson to serve as our Executive Chairman.
Mr. Thompson had an initial annual salary of $150,000,
which is subject to annual review and potential increase by our
Compensation Committee. The employment agreement also provided
for the grant of 50,000 shares
21
of restricted stock to be awarded as an initial equity grant.
Mr. Thompsons employment agreement is terminable
at-will.
In May 2007, we entered into an employment agreement with
Richard Calder to serve as our Chief Executive Officer and
President, which was amended in July 2008. Mr. Calder had
an initial annual salary of $250,000, which is subject to annual
review and potential increase by our Compensation Committee.
Mr. Calders annual salary was increased to $262,500
in 2008 and to $275,625 in 2010. Mr. Calder is eligible for
an annual cash bonus which is based upon Mr. Calders
performance against criteria defined by our Compensation
Committee and a portion of which is at the discretion of our
Compensation Committee. Mr. Calders employment
agreement also provided for the grant of 200,000 shares of
restricted stock as an initial equity grant.
Mr. Calders employment agreement will remain in
effect until it is terminated under any of the following
circumstances affecting Mr. Calder, as applicable:
(a) death, (b) disability, (c) termination by us
for cause, (d) termination by us without
cause, (e) termination by Mr. Calder for
good reason, or (f) termination by
Mr. Calder other than for good reason. The
employment agreement for Mr. Calder provides for payments
or other benefits upon the termination of his employment under
specified circumstances as described below.
In February 2009, we entered into an employment agreement with
Eric Swank to serve as our Chief Financial Officer.
Mr. Swank had an initial annual salary of $200,000, which
is subject to annual review and potential increase by our
Compensation Committee. In 2010, Mr. Swanks annual
salary was increased to $210,000. Mr. Swank is eligible for
an annual cash bonus which is based upon Mr. Swanks
performance against criteria defined by our Compensation
Committee and a portion of which is at the discretion of our
Compensation Committee. Mr. Swanks employment
agreement also provided for the grant of 50,000 shares of
restricted stock and the grant of stock options to acquire
50,000 shares of our common stock as an initial equity
grant.
Mr. Swanks employment agreement will remain in effect
until it is terminated under any of the following circumstances
affecting Mr. Swank, as applicable: (a) death,
(b) disability, (c) termination by us for
cause, (d) termination by us without
cause, (e) termination by Mr. Swank for
good reason, or (f) termination by
Mr. Swank other than for good reason. The
employment agreement for Mr. Swank provides for payments or
other benefits upon the termination of his employment under
specified circumstances as described below.
POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL
If Mr. Calders employment is terminated due to
disability, he is entitled to a continuation of health benefits
for twelve months following his termination. If
Mr. Calders employment is terminated by us without
cause, or by Mr. Calder for good
reason, all existing equity grants, including restricted
stock, stock options or other awards, received from us by
Mr. Calder will vest immediately and become fully
exercisable, and Mr. Calder is entitled to receive his base
salary, bonus, and health benefits for twelve months following
his termination. In addition, upon our change of control, any
existing equity grants, including restricted stock, stock
options or other awards, received from us by Mr. Calder
will vest immediately and become fully exercisable.
The following table describes the potential payments and
benefits to which Mr. Calder would be entitled upon the
happening of the following events on December 31, 2010:
(i) termination of Mr. Calders employment due to
disability, (ii) termination of Mr. Calders
employment by us without cause or by Mr. Calder for good
reason, and (iii) our change of control.
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuation of
|
|
Long-Term
|
|
|
|
|
Continuation of
|
|
Health
|
|
Incentives
|
|
|
Name
|
|
Salary
|
|
Benefits(1)
|
|
(5)
|
|
Total
|
|
Termination of employment due to disability
|
|
|
|
|
|
$
|
9,554
|
|
|
|
|
|
|
$
|
9,554
|
|
Termination of employment by us without Cause(2) or
by Mr. Calder for Good Reason(3)
|
|
$
|
551,250
|
|
|
$
|
9,554
|
|
|
$
|
443,139
|
|
|
$
|
1,003,943
|
|
Change of Control(4) of GTT
|
|
|
|
|
|
|
|
|
|
$
|
443,139
|
|
|
$
|
443,139
|
|
|
|
|
(1)
|
|
These amounts are based on 2011 premium rates.
|
22
|
|
|
(2)
|
|
Under the employment agreement, Mr. Calder may be
terminated for cause if he: (a) materially
breaches his employment agreement, (b) fails or refuses to
comply with lawful direction, (c) commits an act of fraud,
embezzlement, misappropriation of funds, or dishonesty,
(d) commits a breach of his fiduciary duty based on a good
faith determination by our Board of Directors and after
reasonably opportunity to cure if such breach is curable,
(e) is grossly negligent or engages in willful misconduct
in the performance of his duties hereunder, (f) is
convicted of a felony or a crime of moral turpitude, or
(g) has a drug or alcohol dependency, subject to certain
cure rights.
|
|
(3)
|
|
Under the employment agreement, Mr. Calder may terminate
his employment for good reason following
(a) the relocation of his primary office more than ten
miles from McLean, Virginia, (b) a material change in his
duties such that he is no longer our Chief Executive Officer,
(c) the assignment to him of duties that are inconsistent
with his position or that materially alter his ability to
function as our Chief Executive Officer, or (d) a reduction
in his total base compensation.
|
|
(4)
|
|
Under the employment agreement, change of control shall mean:
(i) the company is merged, consolidated or reorganized into
or with another corporation or other legal person (an
Acquirer) and, as a result of such merger,
consolidation or reorganization, less than fifty percent (50%)
of the outstanding voting securities entitled to vote generally
in the election of directors of the surviving, resulting or
acquiring corporation or other legal person are owned, directly
or indirectly in the aggregate by the stockholders of the
company immediately prior to such merger, consolidation or
reorganization, other than by the Acquirer or any corporation or
other legal person controlling, controlled by or under common
control with the Acquirer; (ii) the company sells all or
substantially all of its business and/or assets to an Acquirer,
of which less than fifty percent (50%) of the outstanding voting
securities entitled to vote generally in the election of
directors are owned, directly or indirectly, in the aggregate by
the stockholders of the company immediately prior to such sale,
other than by any corporation or other legal person controlling,
controlled by or under common control with the Acquirer; or
(iii) any other transaction or series of related
transactions having an economic effect substantially equivalent
to any of the foregoing in subsections (i) or
(ii) immediately above.
|
|
(5)
|
|
Represents the value derived from accelerated vesting of
restricted stock.
|
If Mr. Swanks employment is terminated due to
disability, he is entitled to a continuation of health benefits
for six months following his termination. If
Mr. Swanks employment is terminated by us without
cause, or by Mr. Swank for good
reason, Mr. Swank is entitled to receive his base
salary and health benefits for twelve months following his
termination. In addition, if Mr. Swanks employment is
terminated by us without cause, Mr. Swank shall
be entitled to additional vesting of the restricted stock and
stock options granted pursuant to his employment agreement
calculated as if vesting occurred on a monthly basis, instead of
an annual basis, over the full vesting period, and if
Mr. Swanks employment is terminated by us without
cause as a result of a corporate
transaction Mr. Swank shall vest immediately with
respect to the restricted stock and stock options granted
pursuant to his employment agreement that would vest on the next
scheduled vesting date.
The following table describes the potential payments and
benefits to which Mr. Swank would be entitled upon the
happening of the following events on December 31, 2010:
(i) termination of Mr. Swanks employment due to
disability, (ii) termination of Mr. Swanks
employment by us without cause or by Mr. Swank for good
reason, and (iii) termination of Mr. Swanks
employment by us without cause after a corporate transaction.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuation of
|
|
|
|
|
|
|
Continuation of
|
|
Health
|
|
Long-Term
|
|
|
Name
|
|
Salary
|
|
Benefits(1)
|
|
Incentives(5)
|
|
Total
|
|
Termination of employment due to disability
|
|
|
|
|
|
|
9,554
|
|
|
|
|
|
|
|
9,554
|
|
Termination of employment by us without Cause(2) or
by Mr. Swank for Good Reason(3)
|
|
$
|
210,000
|
|
|
|
9,554
|
|
|
|
16,516
|
|
|
|
236,070
|
|
Termination of employment by us without Cause after
a Corporate Transaction(4)
|
|
|
210,000
|
|
|
|
9,554
|
|
|
|
25,024
|
|
|
|
244,578
|
|
23
|
|
|
(1)
|
|
These amounts are based on 2011 premium rates.
|
|
(2)
|
|
Under the employment agreement, Mr. Swank may be terminated
for cause if he: (a) materially breaches his
employment agreement, (b) fails or refuses to comply with
lawful direction, (c) commits an act of fraud,
embezzlement, misappropriation of funds, or dishonesty,
(d) commits a breach of his fiduciary duty based on a good
faith determination by our Board of Directors and after
reasonably opportunity to cure if such breach is curable,
(e) is grossly negligent or engages in willful misconduct
in the performance of his duties hereunder, (f) is
convicted of a felony or a crime of moral turpitude, or
(g) has a drug or alcohol dependency, subject to certain
cure rights.
|
|
(3)
|
|
Under the employment agreement, Mr. Swank may terminate his
employment for good reason within ninety days
following (a) the relocation of his primary office more
than ten miles from McLean, Virginia, (b) a material change
in his duties such that he is no longer our Chief Financial
Officer, (c) the assignment to him of duties that are
inconsistent with his position or that materially alter his
ability to function as our Chief Financial Officer, or
(d) a reduction in his total base compensation.
|
|
(4)
|
|
The Long Term Incentive payments would be in lieu of the
Long-Term Incentives referred to in the preceding row. A
corporate transaction means the consummation of a transaction in
which we are consolidated with or acquired by another entity in
a merger or sale of all or substantially all of our assets,
other than a transaction to merely change the state of
incorporation.
|
|
(5)
|
|
Represents the value derived from accelerated vesting of
restricted stock and stock options.
|
We anticipate that we will generally enter into negotiated
severance and release agreements with an executive upon the
event of termination of the executive without cause.
Related
Party Transactions
Other than the transactions described under the heading
Executive Compensation
(or with respect to
which information is omitted in accordance with SEC regulations)
and the transactions described below, since January 1,
2010, there have not been, and there is not currently proposed,
any transaction or series of similar transactions to which we
were or will be a party in which the amount involved exceeded or
will exceed $120,000 and in which any director, executive
officer, holder of 5% or more of any class of our capital stock
or any member of the immediate family of any of the foregoing
persons had or will have a direct or indirect material interest.
On February 8, 2010, we completed a financing transaction
in which we sold 500 Units at a purchase price of $10,000 per
Unit, resulting in $5.0 million of proceeds to our Company.
The proceeds were intended to be applied towards our then
pending acquisition of the assets of Global Capacity Group, Inc.
and certain of its affiliates, and we had an obligation to
cancel the Units and refund the investment proceeds if the
proposed acquisition was not consummated. Each Unit consisted of
2,970 shares of our Companys common stock and $7,000
in principal amount of our Companys subordinated
promissory notes due February 8, 2012. Among the investors
in the Units offering were Richard D. Calder, our Chief
Executive Officer, who acquired five Units; Eric A. Swank, our
Chief Financial Officer, who acquired five Units; Universal
Telecommunications, Inc., an affiliate of with Brian Thompson,
our Chairman, which acquired 190 Units; S. Joseph Bruno, a
member of our Board of Directors who, together with his spouse
and certain family members, acquired five Units; Didier J.
Delepine, a member of our Board of Directors who, together with
his spouse, acquired three Units; a family trust affiliated with
Rhodric C. Hackman, a member of our Board of Directors, which
acquired three Units; Howard E. Janzen, a member of our Board of
Directors, who acquired ten Units; Morgan OBrien, a member
of our Board of Directors, who acquired five Units; and Theodore
B. Smith III, a member of our Board of Directors, who acquired
ten Units.
In May 2010, the proposed acquisition of the assets of Global
Capacity Group, Inc. was terminated because Global Capacity was
unable to obtain certain necessary consents, and, accordingly,
we became obligated to cancel the Units issued on
February 8, 2010 and to refund to the investors the amount
of their investments. Certain of the investors, however,
expressed an interest in retaining some or all of their Units
notwithstanding the termination of the proposed Global Capacity
acquisition, and we offered the investors the right to do so.
Mr. Calder, Mr. Swank, Universal Telecommunications,
Inc. and the family trust affiliated with Mr. Hackman
elected to retain all of their Units, Mr. Smith elected to
retain his common stock but cancel his promissory notes and
Mr. Jansen elected to retain
24
his common stock and $20,000 in principal amount of his
promissory notes but cancel the remainder of his promissory
notes.
In September 2010, we entered into a Loan and Security Agreement
with Silicon Valley Bank for the purpose of (a) funding the
repayment of the aggregate principal amount of convertible
subordinated promissory notes due December 31, 2010 that we
had originally issued in 2007 (hereafter referred to as the 2010
Notes) and (b) providing additional working capital. Among
the holders of the 2010 Notes were D. Michael Keenan and Todd J.
Vecchio, each of whom is a holder of more than 5% of our common
stock; Mr. Janzen, Mr. Smith and Mr. Bruno, each
of whom is a member of our Board of Directors; and Universal
Telecommunications, Inc., an affiliate of Mr. Thompson.
Rather than wait until the maturity of the 2010 Notes on
December 31, 2010 to repay them, and except as described in
the next paragraph with respect to the exchange of certain 2010
Notes, we repaid the 2010 Notes in September 2010 when the
proceeds of the Silicon Valley Bank financing became available
to us. In connection with this repayment, we paid approximately
$2.0 million to Mr. Keenan, approximately
$2.4 million to Mr. Vecchio and $25,000 to
Mr. Bruno.
Prior to the repayment of the 2010 Notes, we offered to exchange
the outstanding principal amount (valued at face value) of the
2010 Notes and the accrued but unpaid interest on the 2010 Notes
for Units, valued at $10,000 per Unit, with each Unit consisting
of (a) 5,000 shares of our Companys common stock
and (b) $5,000 in principal amount of our subordinated
promissory notes due December 31, 2013. Mr. Janzen and
Mr. Smith, who are members of our Board of Directors, and
Universal Telecommunications, Inc., which is an affiliate of
Mr. Thompson, elected to exchange all of their 2010 Notes
for Units. The exchange transaction was completed on
December 31, 2010, which was the maturity date for the 2010
Notes, and at that time we issued 196 Units to Universal
Telecommunications, Inc., 13 Units to Mr. Janzen, and three
Units to Mr. Smith and cancelled their 2010 Notes.
Procedures
for Approval of Related Person Transactions
Our policy for the review and approval of transactions between
us and related persons is set forth in the charter of our Audit
Committee. Pursuant to the charter of our Audit Committee, it is
the responsibility of our Audit Committee, unless specifically
delegated by our Board of Directors to another committee of the
Board of Directors, to review and approve all transactions or
arrangements to which we were or will be a participant, in which
the amount involved exceeded or will exceed $120,000, and in
which any director, executive officer, holder of 5% or more of
any class of our capital stock or any member of the immediate
family of any of the foregoing persons had or will have a direct
or indirect material interest. Additionally, it is the
responsibility of our Audit Committee, unless specifically
delegated by our Board of Directors to another committee of the
Board of Directors, to review and make recommendations to the
Board of Directors, or approve, any contracts or other
transactions with current or former executive officers of our
Company, including consulting arrangements, employment
agreements,
change-in-control
agreements, termination arrangements, and loans to employees
made or guaranteed by us.
Equity
Compensation Plan Summary
The following table sets forth certain information as of the end
of the most recently completed fiscal year with respect to
compensation plans (including individual compensation
arrangements) under which equity securities are authorized for
issuance.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
Securities to be
|
|
|
Weighted
|
|
|
Number of
|
|
|
|
Issued Upon
|
|
|
Average
|
|
|
Securities
|
|
|
|
Exercise of
|
|
|
Exercise
|
|
|
Remaining
|
|
|
|
Outstanding
|
|
|
Price of
|
|
|
Available for
|
|
|
|
Options, Warrants
|
|
|
Outstanding
|
|
|
Future
|
|
Plan Category
|
|
and Rights
|
|
|
Options
|
|
|
Issuance
|
|
|
Equity compensation plans approved by shareholders
|
|
|
2,899,509
|
|
|
|
1.20
|
|
|
|
600,491
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plans not approved by shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plans
|
|
|
2,899,509
|
|
|
|
1.20
|
|
|
|
600,491
|
|
25
OTHER
INFORMATION
Beneficial
Ownership of Principal Stockholders, Directors, and
Officers
The following table sets forth certain information regarding the
beneficial ownership of our common stock on April 18, 2011,
by (1) each current director, director nominee and named
executive officer of our Company, (2) all current
directors, director nominees and named executive officers of our
Company as a group, and (3) each person known by us to own
more than 5% of our common stock.
Beneficial ownership is determined in accordance with the rules
of the SEC. In computing the number of shares beneficially owned
by a person and the percentage ownership of that person, shares
of common stock subject to options held by that person that are
currently exercisable or will become exercisable within
60 days after April 18, 2011, are deemed outstanding,
while the shares are not deemed outstanding for purposes of
computing percentage ownership of any other person. Unless
otherwise indicated in the footnotes below, we believe that the
persons and entities named in the table have sole voting or
investment power with respect to all shares beneficially owned,
subject to community property laws where applicable.
Unless otherwise indicated, the principal address of each of the
persons below is
c/o Global
Telecom & Technology, Inc., 8484 Westpark Drive,
Suite 720, McLean, Virginia 22102.
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
Shares
|
|
Percentage of
|
|
|
Beneficially
|
|
Outstanding
|
|
|
Owned
|
|
Shares
|
|
Executive Officers and Directors
|
|
|
|
|
|
|
|
|
Richard D. Calder, Jr.
|
|
|
1,034,128
|
|
|
|
5.5
|
%
|
Eric A. Swank(1)
|
|
|
239,538
|
|
|
|
1.3
|
%
|
Chris McKee(2)
|
|
|
188,625
|
|
|
|
1.0
|
%
|
H. Brian Thompson(3)
|
|
|
6,119,579
|
|
|
|
32.7
|
%
|
S. Joseph Bruno
|
|
|
39,371
|
|
|
|
*
|
|
Didier Delepine
|
|
|
20,227
|
|
|
|
*
|
|
Rhodric C. Hackman(4)
|
|
|
982,799
|
|
|
|
5.3
|
%
|
Howard Janzen
|
|
|
240,005
|
|
|
|
1.3
|
%
|
Morgan E. OBrien(5)
|
|
|
135,293
|
|
|
|
*
|
|
Theodore B. Smith, III
|
|
|
181,722
|
|
|
|
1.0
|
%
|
All executive officers and directors as a group (10 persons)
|
|
|
9,181,287
|
|
|
|
49.1
|
%
|
Other 5% Stockholders
|
|
|
|
|
|
|
|
|
J. Carlo Cannell(6)
|
|
|
4,583,281
|
|
|
|
24.5
|
%
|
D. Michael Keenan(7)
|
|
|
1,392,366
|
|
|
|
7.5
|
%
|
Robert F. Smith Jr.(8)
|
|
|
1,179,091
|
|
|
|
6.3
|
%
|
Todd J. Vecchio(9)
|
|
|
1,535,623
|
|
|
|
8.2
|
%
|
|
|
|
*
|
|
Less than 1% of the outstanding shares of common stock.
|
|
(1)
|
|
Includes 32,188 shares issuable upon the exercise of
options.
|
|
(2)
|
|
Includes 23,125 shares issuable upon the exercise of
options.
|
|
(3)
|
|
Includes 4,943,829 shares of common stock owned by
Universal Telecommunications, Inc. Mr. Thompson is the
Chief Executive Officer and majority shareholder of Universal
Telecommunications, Inc. The shares of Universal
Telecommunications, Inc. not held by Mr. Thompson are owned
by members of his family. The beneficial ownership information
includes 690,750 shares of common stock issuable upon the
exercise of Class Z warrants held by Universal
Telecommunications, Inc.
|
|
(4)
|
|
Includes 139,049 shares of common stock owned by the
Hackman Family Trust and 18,900 shares of common stock
owned by Mercator Capital L.L.C. Mr. Hackman and his spouse
are the trustees of the Hackman Family
|
26
|
|
|
|
|
Trust, the beneficiaries of which are members of the Hackman
family. The Hackman Family Trust exercises joint control over
Mercator Capital L.L.C. The beneficial ownership information
includes 828,750 shares of common stock issuable upon the
exercise of Class Z warrants 495,000 of which are held by
the Hackman Family Trust and 333,750 of which are held by
Mercator Capital L.L.C. The beneficial owners address is
c/o Mercator
Capital L.L.C., One Fountain Square, 11911 Freedom Drive,
Suite 590, Reston, Virginia 20190.
|
|
(5)
|
|
Includes 25,000 shares of common stock issuable upon the
exercise of Class Z warrants.
|
|
(6)
|
|
Based on information contained in the Form 4 filed by J.
Carlo Cannell on March 25, 2011. Includes
3,659,381 shares of common stock and 923,900 shares of
common stock issuable upon the exercise of Class Z warrants
held by Anegada Master Fund Limited (Anegada)
and Tonga Partners, L.P. (Tonga and collectively
with Anegada, the Funds). J. Carlo Cannell possesses
sole power to vote and direct the disposition of all such
securities held by the Funds. The beneficial owners
address is P.O. Box 3459, 240 East Deloney Avenue,
Jackson, Wyoming 83001.
|
|
(7)
|
|
Includes 652,500 shares of common stock issuable upon the
exercise of Class Z warrants.
|
|
(8)
|
|
Includes 1,079,091 shares of common stock issuable upon the
exercise of Class Z warrants.
|
|
(9)
|
|
Includes 652,500 shares of common stock issuable upon the
exercise of Class Z warrants.
|
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors,
officers, and persons that own more than 10% of a registered
class of our Companys equity securities to file reports of
ownership and changes in ownership with the SEC. Officers,
directors, and greater than 10% stockholders are required by SEC
regulations to furnish our Company with copies of all
Section 16(a) forms they file. Based solely upon our review
of the copies of such forms received by us during the fiscal
year ended December 31, 2010, we believe that each person
who, at any time during such fiscal year, was a director,
officer, or beneficial owner of more than 10% of our common
stock complied with all Section 16(a) filing requirements
during such fiscal year.
Incorporated
By Reference
To the extent that this proxy statement is incorporated by
reference into any other filing by us under the Securities Act
of 1933 or the Exchange Act, the sections of this proxy
statement entitled
Compensation Committee
Report
and
Report of the Audit
Committee
(to the extent permitted by the rules of the
SEC, will not be deemed incorporated unless specifically
provided otherwise in such filing. The information contained in
those sections shall not be deemed filed with the
SEC, or subject to Regulations 14A or 14C, or to the liabilities
of Section 18 of the Exchange Act.
Other
Matters
We know of no other matters to be submitted to the meeting. If
any other matters properly come before the meeting, it is the
intention of the persons named in the enclosed proxy card to
vote the shares they represent as our Board of Directors may
recommend.
Dated: April 29, 2011
27
Appendix
A
GLOBAL
TELECOM & TECHNOLOGY, INC.
2011
EMPLOYEE, DIRECTOR AND CONSULTANT STOCK PLAN
In addition to other terms defined herein, and unless otherwise
specified or unless the context otherwise requires, the
following terms, as used in this Global Telecom &
Technology, Inc. 2011 Employee, Director and Consultant Stock
Plan (as defined below, the Plan), shall have the
following meanings:
(a)
Administrator
means the Board of
Directors, unless it has delegated power to act on its behalf to
the Committee, in which case the Administrator means the
Committee.
(b)
Affiliate
means a corporation which, for
purposes of Code Section 424, is a parent or subsidiary of
the Company, direct or indirect.
(c)
Agreement
means an award agreement
between the Company and a Participant delivered pursuant to the
Plan, in such form as the Administrator shall approve.
(d)
Board
or
Board of Directors
means the Board of Directors of the Company.
(e)
Code
means the United States Internal
Revenue Code of 1986, as amended. Any reference herein to a
specific Code section shall be deemed to include all related
regulations or other guidance with respect to such Code section.
(f)
Committee
means the committee of the
Board of Directors to which the Board of Directors has delegated
power to act under or pursuant to the provisions of the Plan.
(g)
Common Stock
means shares of the
Companys common stock, $.0001 par value per share, or
any successor securities thereto.
(h)
Company
means Global Telecom &
Technology, Inc., a Delaware corporation, or any successor
corporation thereto.
(i)
Disability
or
Disabled
means permanent and total disability as defined in Code
Section 22(e)(3).
(j)
Employee
means any employee of the
Company or of an Affiliate (including, without limitation, an
employee who is also serving as an officer or director of the
Company or of an Affiliate), designated by the Administrator to
be eligible to be granted one or more Stock Rights under the
Plan; provided, however, that, with respect to ISOs,
Employee means any person who is considered an
employee of the Company or any Affiliate for purposes of Treas.
Reg.
Section 1.421-1(h)
(or any successor provision related thereto).
(k)
Fair Market Value
of a Share of Common
Stock means:
(i) If the Common Stock is listed for trading on the New
York Stock Exchange, the American Stock Exchange or the NASDAQ
Stock Market, LLC (NASDAQ Stock Market), or traded
in the over the counter market and sales prices are regularly
reported for the Common Stock, the closing or last price of the
Common Stock as reported for the trading day on the applicable
date (e.g., the date of grant);
(ii) If clause (i) does not apply and if bid and asked
prices for the Common Stock are regularly reported, Fair Market
Value shall mean the mean between the bid and the asked price
for the Common Stock on the applicable date as determined on the
applicable market for the Common Stock; and
(iii) If the Common Stock is neither listed on a national
securities exchange nor traded in the over the counter market,
Fair Market Value shall mean such value as the Administrator, in
good faith, shall determine, based on such valuation measures or
other factors as it deems appropriate; provided, however, that
(A) with respect to the grant of ISOs, the Fair Market
Value shall be determined by the Administrator in accordance
with applicable provisions of Treasury
Regulation 20.2031-2,
or in any other manner
A-1
consistent with Code Section 422; and (B) Fair Market
Value shall be determined in accordance with Code
Section 409A if and to the extent required.
(l)
ISO
means an option meant to qualify as
an incentive stock option under Code Section 422.
(m)
Non-Qualified Option
means an option
which either does not qualify as an ISO or is not specifically
designated as an ISO.
(n)
Option
means an ISO or a Non-Qualified
Option granted under the Plan.
(o)
Participant
means an Employee, director
or consultant of the Company or an Affiliate to whom one or more
Stock Rights are granted under the Plan. As used herein,
Participant shall include Participants
Survivors where the context requires.
(p)
Plan
means this Global
Telecom & Technology, Inc. 2011 Employee, Director and
Consultant Stock Plan, as it may be amended
and/or
restated.
(q)
Shares
means shares of the Common Stock
as to which Stock Rights have been or may be granted under the
Plan or any shares of capital stock into which the Shares are
changed or for which they are exchanged within the provisions of
Paragraph 3 of the Plan. The Shares issued under the Plan
may be authorized and unissued shares or shares held by the
Company in its treasury, or both.
(r)
Stock-Based Award
means a grant by the
Company under the Plan of an equity award or an equity-based
award which is not an Option or a Stock Grant.
(s)
Stock Grant
means a grant by the Company
of Shares under the Plan.
(t)
Stock Right
means a right to receive
Shares or the value of Shares of the Company granted pursuant to
the Plan, including an ISO, a Non-Qualified Option, a Stock
Grant or a Stock-Based Award.
(u)
Survivor
means a deceased
Participants legal representative
and/or
any
person or persons who acquired the Participants rights to
a Stock Right by will or by the laws of descent and distribution.
2.
PURPOSES
OF THE PLAN.
The Plan is intended to encourage ownership of Shares by
Employees and directors of and certain consultants to the
Company in order to attract and retain such people, to induce
them to work for the benefit of the Company or of an Affiliate
and to provide additional incentive for them to promote the
success of the Company or of an Affiliate. The Plan provides for
the granting of ISOs, Non-Qualified Options, Stock Grants and
Stock-Based Awards.
|
|
3.
|
SHARES SUBJECT
TO THE
PLAN
.
|
(a) The number of Shares which may be issued from time to
time pursuant to this Plan shall be 3,000,000 Shares or the
equivalent of such number of Shares after the Administrator, in
its sole discretion, has interpreted the effect of any stock
split, stock dividend, combination, recapitalization or similar
transaction in accordance with Paragraph 24 of the Plan.
The maximum number of Shares that may be granted to any
Participant in any one year is 3,000,000 Shares, as may be
adjusted in accordance with this Plan.
(b) If an Option ceases to be outstanding, in
whole or in part (other than by exercise), or if the Company
shall reacquire (at not more than its original issuance price)
any Shares issued pursuant to a Stock Grant or Stock-Based
Award, or if any Stock Right expires or is forfeited, cancelled
or otherwise terminated or results in any Shares not being
issued, the unissued Shares which were subject to such Stock
Right shall again be available for issuance from time to time
pursuant to this Plan.
|
|
4.
|
ADMINISTRATION
OF THE
PLAN
.
|
The Administrator of the Plan will be the Board of Directors,
except to the extent the Board of Directors delegates its
authority to the Committee, in which case the Committee shall be
the Administrator. Unless the Board determines otherwise, the
Committee shall be comprised solely of two or more
non-employee directors, as such term is defined in
Rule 16b-3
adopted under the Securities Exchange Act of 1934, as amended
(the Exchange
A-2
Act), or as may be otherwise permitted under
Rule 16b-3.
For purposes of making a Stock Grant that is intended to qualify
for the performance-based compensation exemption to the
application of the $1 million deduction limit under Code
Section 162(m), the Committee must satisfy the requirements
of Code Section 162(m) with respect to who is entitled to
make such a grant. For purposes of the Plan, the term
Administrator shall refer to the Board and, upon its
delegation to the Committee of all or part of its authority to
administer the Plan, to the Committee. Subject to the provisions
of the Plan, the Administrator shall have full and final
authority to take any action with respect to the Plan,
including, without limitation, the authority to:
(a) Interpret the provisions of the Plan, the Agreements
and all Stock Rights and to make all rules and determinations
which it deems necessary or advisable for the administration of
the Plan;
(b) Determine which Employees, directors and consultants
shall be granted Stock Rights;
(c) Determine the number of Shares with respect to which a
Stock Right or Stock Rights may be granted under the Plan;
(d) Determine the number of Shares for which a Stock Right
or Stock Rights shall be granted to any Participant(s);
(e) Determine the terms and conditions upon which a Stock
Right or Stock Rights may be granted;
(f) Accelerate the date that any Stock Right which was not
otherwise exercisable, vested
and/or
earned shall become exercisable, vested
and/or
earned,
and/or
modify
and/or
extend the terms and conditions for exercise, vesting
and/or
earning of a Stock Right, provided, however, that the date of
exercise, vesting, earning
and/or
payment of a Stock Right that is subject to Code
Section 409A may not be accelerated if such acceleration
would violate the provisions of Code Section 409A; and
(g) Adopt any
sub-plans
applicable to residents of any specified jurisdiction as it
deems necessary or appropriate in order to comply with or take
advantage of any tax or other laws applicable to the Company or
to Plan Participants or to otherwise facilitate the
administration of the Plan, which
sub-plans
may include additional restrictions or conditions applicable to
Stock Rights or Shares issuable pursuant to a Stock Right;
provided, however, that all such interpretations, rules,
determinations, terms and conditions shall (unless the
Participant consents otherwise) be made and prescribed in such a
manner as to preserve the tax status under Code Section 422
of those Options which are ISOs and to cause all Stock Rights
either to continue to be exempt from the application of, or to
remain in compliance with the requirements of, Code
Section 409A (as the case may be). Subject to the
foregoing, the interpretation and construction by the
Administrator of any provisions of the Plan or of any Stock
Right granted under it shall be final, unless otherwise
determined by the Board of Directors, if the Administrator is
the Committee. In addition, if the Administrator is the
Committee, the Board of Directors may take any action under the
Plan that would otherwise be the responsibility of the
Committee. No member of the Board or the Committee, as
applicable, shall be liable while acting in a Plan
administrative capacity for any action or determination made in
good faith with respect to the Plan, a Stock Right or an
Agreement. The members of the Board
and/or
the
Committee, as applicable, shall be entitled to indemnification
and reimbursement in such manner provided in the Companys
certificate of incorporation and bylaws
and/or
under
applicable laws, rules and regulations (Applicable
Law).
To the extent permitted under Applicable Law, the Board of
Directors or the Committee may allocate all or any portion of
its responsibilities and powers to any one or more of its
members and may delegate all or any portion of its
responsibilities and powers to any other person selected by it.
The Board of Directors or the Committee may revoke any such
allocation or delegation at any time.
|
|
5.
|
ELIGIBILITY
FOR
PARTICIPATION
.
|
The Administrator will, in its sole discretion, name the
Participants in the Plan, provided, however, that each
Participant must be an Employee, director or consultant of the
Company or of an Affiliate at the time a Stock Right is granted.
Notwithstanding the foregoing, the Administrator may authorize
the grant of a Stock Right to a person not then an Employee,
director or consultant of the Company or of an Affiliate;
provided, however, that the actual grant of such Stock Right
shall be conditioned upon such person becoming eligible to
become a Participant at or
A-3
prior to the time of the execution of the Agreement evidencing
such Stock Right. ISOs may be granted only to Employees.
Non-Qualified Options, Stock Grants and Stock-Based Awards may
be granted to any Employee, director or consultant of the
Company or an Affiliate. The granting of any Stock Right to any
individual shall neither entitle that individual to, nor
disqualify him or her from, participation in any other grant of
Stock Rights.
|
|
6.
|
TERMS
AND CONDITIONS OF
OPTIONS
.
|
Each Option shall be set forth in writing in an Agreement, duly
executed by the Company and, to the extent required by law or
requested by the Company, by the Participant. The Administrator
may provide that Options be granted subject to such terms and
conditions, consistent with the terms and conditions
specifically required under this Plan, as the Administrator may
deem appropriate including, without limitation, subsequent
approval by the shareholders of the Company of this Plan or any
amendments thereto. To the extent that an Option is designated
as an ISO but does not qualify as such under Code
Section 422, the Option (or portion thereof) shall be
treated as a Non-Qualified Option. The Agreements for Options
shall be subject to at least the following terms and conditions:
(a)
Non-Qualified Options
: Each
Option intended to be a Non-Qualified Option shall be subject to
the terms and conditions which the Administrator determines to
be appropriate and in the best interest of the Company, subject
to the following minimum standards for any such Non-Qualified
Option:
(i)
Option Price
: Each Agreement
shall state the option price (per share) of the Shares covered
by each Option, which option price shall be determined by the
Administrator but shall not be less than the Fair Market Value
per share of Common Stock. Notwithstanding the foregoing, the
Administrator may in its discretion authorize the grant of
substitute or assumed Options of an acquired entity with an
Option price not equal to at least 100% of the Fair Market Value
of the stock on the date of grant if the terms of such
substitution or assumption otherwise comply, to the extent
deemed applicable, with Code Section 409A and Code
Section 424(a).
(ii)
Number of Shares
: Each
Agreement shall state the number of Shares to which it pertains.
(iii)
Option Periods
: Each
Agreement shall state the date or dates on which it first is
exercisable and the date after which it may no longer be
exercised, and may provide that the Option rights accrue or
become exercisable in installments over a period of months or
years, or upon the occurrence of certain conditions or the
attainment of stated goals or events.
(iv)
Grant Date
: An Option shall
be considered to be granted on the date that the Administrator
acts to grant the Option, or on such other date as may be
established by the Administrator in accordance with Applicable
Laws.
(b)
ISOs
: Each Option intended to
be an ISO shall be issued only to an Employee and be subject to
the following terms and conditions, with such additional
restrictions or changes as the Administrator determines are
appropriate but not in conflict with Code Section 422:
(i)
Minimum standards
: The ISO
shall meet the minimum standards required of Non-Qualified
Options, as described in Paragraph 6(a) above.
(ii)
Option Price
: Immediately
before the ISO is granted, if the Participant owns, directly or
by reason of the applicable attribution rules in Code
Section 424(d):
(A) 10% or less of the total combined voting power of all
classes of stock of the Company or an Affiliate, the Option
price per share of the Shares covered by each ISO shall not be
less than 100% of the Fair Market Value per share of the Shares
on the date of the grant of the Option; or
(B) More than 10% of the total combined voting power of all
classes of stock of the Company or an Affiliate, the Option
price per share of the Shares covered by each ISO shall not be
less than 110% of the Fair Market Value on the date of grant.
A-4
(iii)
Term of Option
: For
Participants who own:
(A) 10% or less of the total combined voting power of all
classes of stock of the Company or an Affiliate, each ISO shall
terminate not more than 10 years from the date of the grant
or at such earlier time as the Agreement may provide; or
(B) More than 10% of the total combined voting power of all
classes of stock of the Company or an Affiliate, each ISO shall
terminate not more than five years from the date of the grant or
at such earlier time as the Agreement may provide.
(iv)
Limitation on Options Becoming Exercisable in
Any Year:
The aggregate Fair Market Value
(determined at the time each ISO is granted) of the stock with
respect to which ISOs are exercisable for the first time by the
Participant in any calendar shall not exceed $100,000. To the
extent that ISOs granted to a Participant first become
exercisable during any calendar year with respect to stock
having a Fair Market Value (determined at the time each ISO is
granted) in excess of $100,000, the Option shall be treated as a
Non-Qualified Option.
(v)
Limitation on ISOs
: The
maximum number of Shares with respect to which ISOs may be
granted under the Plan is 3,000,000.
|
|
7.
|
TERMS
AND CONDITIONS OF STOCK
GRANTS
.
|
Subject to the terms of the Plan, the Administrator shall have
discretion to award Stock Grants to such Participants, and upon
such terms and conditions, as it may determine. Each offer of a
Stock Grant to a Participant shall state the date prior to
which
(or, in the case of a Stock Grant for which the
Participant must pay a purchase price that is less than the Fair
Market Value of the Shares to which the Stock Grant relates on
the date the Stock Grant is made, the date
on
which) the
Stock Grant must be accepted by the Participant, and the
principal terms of each Stock Grant shall be set forth in an
Agreement, duly executed by the Company and, to the extent
required by law or requested by the Company, by the Participant.
The Agreement shall be in a form approved by the Administrator
and shall contain terms and conditions which the Administrator
determines to be appropriate and in the best interest of the
Company, subject to the following minimum standards:
(a) Each Agreement shall state the purchase price (per
share), if any, of the Shares covered by each Stock Grant, which
purchase price shall be determined by the Administrator but
shall not be less than the minimum consideration required by the
Delaware General Corporation Law on the date of the grant of the
Stock Grant;
(b) Each Agreement shall state the number of Shares to
which the Stock Grant pertains; and
(c) Each Agreement shall include the terms of any right of
the Company to restrict or reacquire the Shares subject to the
Stock Grant, including the time and events upon which such
rights shall accrue and the purchase price therefor, if any.
|
|
8.
|
TERMS
AND CONDITIONS OF OTHER STOCK-BASED
AWARDS
.
|
Subject to the terms of the Plan, the Administrator shall have
the right to grant other Stock-Based Awards based upon the
Common Stock having such terms and conditions as the
Administrator may determine, including, without limitation, the
grant of Shares based upon certain conditions, the grant of
securities convertible into Shares and the grant of stock
appreciation rights, phantom stock awards or stock units. The
principal terms of each Stock-Based Award shall be set forth in
an Agreement, duly executed by the Company and, to the extent
required by law or requested by the Company, by the Participant.
The Agreement shall be in a form approved by the Administrator
and shall contain terms and conditions which the Administrator
determines to be appropriate and in the best interest of the
Company.
|
|
9.
|
EXERCISE
OF OPTIONS AND ISSUANCE OF
SHARES
.
|
An Option (or any part or installment thereof) shall be
exercised by giving written notice to the Company or its
designee, together with provision for payment of the full
purchase price in accordance with this Paragraph 9 for the
Shares as to which the Option is being exercised, and upon
compliance with any other condition(s) set forth in the
A-5
Agreement. Such notice shall be signed by the person exercising
the Option, shall state the number of Shares with respect to
which the Option is being exercised and shall contain any
representation required by the Plan or the Agreement or
Applicable Law. Payment of the purchase price for the Shares as
to which such Option is being exercised shall be made
(a) in United States dollars in cash or by check,
(b) at the discretion of the Administrator, through
delivery of shares of Common Stock having a Fair Market Value
equal as of the date of the exercise to the cash exercise price
of the Option, (c) at the discretion of the Administrator,
by having the Company retain from the shares otherwise issuable
upon exercise of the Option, a number of shares having a Fair
Market Value equal as of the date of exercise to the exercise
price of the Option, (d) at the discretion of the
Administrator, in accordance with a cashless exercise program
established with a securities brokerage firm, and approved by
the Administrator, (e) at the discretion of the
Administrator, by any combination of (a), (b), (c) and
(d) above, or (f) at the discretion of the
Administrator, payment of such other lawful consideration as the
Administrator may determine. Notwithstanding the foregoing, the
Administrator shall accept only such payment on exercise of an
ISO as is permitted by Code Section 422.
The Company shall then reasonably promptly deliver the Shares as
to which such Option was exercised to the Participant (or to the
Participants Survivors, as the case may be). In
determining what constitutes reasonably promptly, it
is expressly understood that the issuance and delivery of the
Shares may be delayed by the Company in order to comply with any
law or regulation (including, without limitation, state
securities or blue sky laws) which requires the
Company to take any action with respect to the Shares prior to
their issuance but that the delivery of any Shares shall be in
compliance with any requirements imposed under Code
Section 409A. The Shares shall, upon delivery, be fully
paid, non-assessable Shares.
The Administrator shall have the right to accelerate the date of
exercise of any installment of any Option; provided that the
Administrator shall not accelerate the exercise date of any
installment of any Option granted to an Employee as an ISO (and
not previously converted into a Non-Qualified Option pursuant to
Paragraph 28) if such acceleration would violate the
annual vesting limitation contained in Code Section 422(d),
as described in Paragraph 6(b)(iv).
The Administrator may, in its discretion, amend any term or
condition of an outstanding Option provided (i) such term
or condition as amended is permitted by the Plan, (ii) any
such amendment shall be made only with the consent of the
Participant to whom the Option was granted, or in the event of
the death of the Participant, the Participants Survivors,
if the amendment is adverse to the Participant, and
(iii) any such amendment of any Option shall be made only
after the Administrator determines whether such amendment would
constitute a modification of any Option which is an
ISO (as that term is defined in Code Section 424(h)) or
would cause any adverse tax consequences for the holder of such
Option, and no such amendment will be made if it would cause the
Option to violate the requirements of Code Section 409A.
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10.
|
STOCK
GRANTS AND STOCK-BASED AWARDS; ISSUANCE OF
SHARES
.
|
A Stock Grant or Stock-Based Award (or any part or installment
thereof) shall be granted on such date as may be determined by
the Administrator and a Participant shall be required to execute
the applicable Agreement and deliver it to the Company or its
designee, together with provision for payment of the full
purchase price, if any, in accordance with this
Paragraph 10 for the Shares as to which such Stock Grant or
Stock-Based Award is being accepted, and upon compliance with
any other conditions set forth in the applicable Agreement.
Payment of the purchase price, if any, for any Shares subject to
a Stock Grant or Stock-Based Award shall be made (a) in
United States dollars in cash or by check, or (b) at the
discretion of the Administrator, through delivery of shares of
Common Stock having a Fair Market Value equal as of the date of
acceptance of the Stock Grant or Stock Based-Award to the
purchase price of the Stock Grant or Stock-Based Award, or
(c) at the discretion of the Administrator, by any
combination of (a) and (b) above, or (d) at the
discretion of the Administrator, payment of such other lawful
consideration as the Administrator may determine.
The Company shall then, if required by the applicable Agreement,
reasonably promptly deliver the Shares as to which such Stock
Grant or Stock-Based Award was accepted to the Participant (or
to the Participants Survivors, as the case may be),
subject to any escrow provision set forth in the applicable
Agreement. In determining what constitutes reasonably
promptly, it is expressly understood that the issuance and
delivery of the Shares may be
A-6
delayed by the Company in order to comply with any law or
regulation (including, without limitation, state securities or
blue sky laws) which requires the Company to take
any action with respect to the Shares prior to their issuance
but that that the delivery of any Shares shall be in compliance
with any requirements imposed under Code Section 409A.
The Administrator may, in its discretion, amend any term or
condition of an outstanding Stock Grant, Stock-Based Award or
applicable Agreement provided (i) such term or condition as
amended is permitted by the Plan, and (ii) any such
amendment shall be made only with the consent of the Participant
to whom the Stock Grant or Stock-Based Award was made, if the
amendment is adverse to the Participant.
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|
11.
|
RIGHTS
AS A
SHAREHOLDER
.
|
No Participant to whom a Stock Right has been granted shall have
rights as a shareholder with respect to any Shares covered by
such Stock Right, except after due exercise of the Option or
acceptance of the Stock Grant or as set forth in any Agreement,
tender of the full purchase price, if any, for the Shares being
purchased pursuant to such exercise or acceptance, satisfaction
of any other conditions to issuance of the Shares as stated in
the Plan or Agreement and registration of the Shares in the
Companys share register in the name of the Participant.
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12.
|
ASSIGNABILITY
AND TRANSFERABILITY OF STOCK
RIGHTS
.
|
By its terms, a Stock Right other than an ISO granted to a
Participant shall not be transferable by the Participant other
than (a) by will or by the laws of descent and
distribution, or (b) as approved by the Administrator in
its discretion and set forth in the applicable Agreement,
provided that no Stock Right that constitutes nonqualified
deferred compensation subject to the requirements of Code
Section 409A may be transferred by the Participant other
than by will or the laws of descent and distribution. An ISO
shall not be transferable other than by will or the laws of
descent and distribution, or, in the Administrators
discretion, as may otherwise be permitted in accordance with
Treas. Reg.
Section 1.421-1(b)(2)
or any successor provision thereto. The designation of a
beneficiary of a Stock Right by a Participant, with the prior
approval of the Administrator and in such form as the
Administrator shall prescribe, shall not be deemed a transfer
prohibited by this Paragraph 12. Except as provided above,
a Stock Right shall only be exercisable or may only be accepted,
during the Participants lifetime, by such Participant (or
by his or her legal representative) and shall not be assigned,
pledged or hypothecated in any way (whether by operation of law
or otherwise) and shall not be subject to execution, attachment
or similar process. Any attempted transfer, assignment, pledge,
hypothecation or other disposition of any Stock Right or of any
rights granted thereunder contrary to the provisions of this
Plan, or the levy of any attachment or similar process upon a
Stock Right, shall be null and void.
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13.
|
EFFECT
ON OPTIONS OF TERMINATION OF SERVICE OTHER THAN FOR
CAUSE OR DEATH OR
DISABILITY
.
|
Except as otherwise provided in a Participants Agreement,
in the event of a termination of service (whether as an
Employee, director or consultant) with the Company or an
Affiliate before the Participant has exercised an Option, the
following rules apply:
(a) A Participant who ceases to be an Employee, director or
consultant of the Company or of an Affiliate (for any reason
other than termination for cause, Disability or
death, for which events there are special rules in
Paragraphs 14, 15, and 16, respectively), may exercise any
Option granted to him or her to the extent that the Option is
exercisable on the date of such termination of service, but only
within such term as the Administrator has designated in a
Participants Agreement.
(b) Except as provided in Subparagraph 13(c) below, or
Paragraph 15 or 16, in no event may an Option intended to
be an ISO be exercised later than three months after the
Participants termination of employment.
(c) The provisions of this Paragraph, and not the
provisions of Paragraph 15 or 16, shall apply to a
Participant who subsequently becomes Disabled or dies after the
termination of employment, director status or consultancy;
provided, however, in the case of a Participants
Disability or death within three months after the termination of
employment, director status or consultancy, the Participant or
the Participants Survivors may
A-7
exercise the Option within one year after the date of the
Participants termination of service, but in no event after
the date of expiration of the term of the Option.
(d) Notwithstanding anything herein to the contrary, if
subsequent to a Participants termination of employment,
termination of director status or termination of consultancy,
but prior to the exercise of an Option, the Board of Directors
determines that, either prior or subsequent to the
Participants termination, the Participant engaged in
conduct which would constitute cause, then such
Participant shall forthwith cease to have any right to exercise
any Option.
(e) A Participant to whom an Option has been granted under
the Plan who is absent from the Company or an Affiliate because
of temporary disability (any disability other than a Disability
as defined in Paragraph 1 hereof), or who is on leave of
absence for any purpose, shall not, during the period of any
such absence, be deemed, by virtue of such absence alone, to
have terminated such Participants employment, director
status or consultancy with the Company or with an Affiliate,
except as the Administrator may otherwise expressly provide.
(f) Except as required by law or as set forth in a
Participants Agreement, Options granted under the Plan
shall not be affected by any change of a Participants
status within or among the Company and any Affiliates, so long
as the Participant continues to be an employee, director or
consultant of the Company or any Affiliate.
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|
14.
|
EFFECT
ON OPTIONS OF TERMINATION OF SERVICE FOR
CAUSE
.
|
Except as otherwise provided in a Participants Agreement,
the following rules apply if the Participants service
(whether as an Employee, director or consultant) with the
Company or an Affiliate is terminated for cause
prior to the time that all his or her outstanding Options have
been exercised:
(a) All outstanding and unexercised Options, whether or not
vested, as of the time the Participant is notified his or her
service is terminated for cause will immediately be
forfeited.
(b) For purposes of this Plan, cause shall
include (and is not limited to) dishonesty with respect to the
Company or any Affiliate, insubordination, substantial
malfeasance or nonfeasance of duty, unauthorized disclosure of
confidential information, breach by the Participant of any
provision of any employment, consulting, advisory,
nondisclosure, non-competition or similar agreement between the
Participant and the Company, and conduct substantially
prejudicial to the business of the Company or any Affiliate. The
determination of the Administrator as to the existence of
cause will be conclusive on the Participant and the
Company.
(c) Cause is not limited to events which have
occurred prior to a Participants termination of service,
nor is it necessary that the Administrators finding of
cause occur prior to termination. If the
Administrator determines, subsequent to a Participants
termination of service but prior to the exercise of an Option,
that either prior or subsequent to the Participants
termination the Participant engaged in conduct which would
constitute cause, then the right to exercise any
Option is forfeited.
(d) Any provision in an agreement between the Participant
and the Company or an Affiliate, which contains a conflicting
definition of cause for termination and which is in
effect at the time of such termination, shall supersede the
definition in this Plan with respect to that Participant.
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|
15.
|
EFFECT
ON OPTIONS OF TERMINATION OF SERVICE FOR
DISABILITY
.
|
Except as otherwise provided in a Participants Agreement:
(a) A Participant who ceases to be an Employee, director or
consultant of the Company or of an Affiliate by reason of
Disability may exercise any Option granted to such Participant:
(i) To the extent that the Option has become exercisable
but has not been exercised on the date of Disability; and
(ii) In the event rights to exercise the Option accrue
periodically, to the extent of a pro rata portion through the
date of Disability of any additional vesting rights that would
have accrued on the next vesting
A-8
date had the Participant not become Disabled. The proration
shall be based upon the number of days accrued in the current
vesting period prior to the date of Disability.
(b) A Disabled Participant may exercise such rights only
within the period ending one year after the date of the
Participants Disability, notwithstanding that the
Participant might have been able to exercise the Option as to
some or all of the Shares on a later date if the Participant had
not become Disabled and had continued to be an Employee,
director or consultant or, if earlier, within the originally
prescribed term of the Option.
(c) The Administrator shall make the determination both of
whether Disability has occurred and the date of its occurrence
(unless a procedure for such determination is set forth in
another agreement between the Company and such Participant, in
which case such procedure shall be used for such determination).
If requested, the Participant shall be examined by a physician
selected or approved by the Administrator, the cost of which
examination shall be paid for by the Company.
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|
16.
|
EFFECT
ON OPTIONS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR
CONSULTANT.
|
Except as otherwise provided in a Participants Agreement:
(a) In the event of the death of a Participant while the
Participant is an Employee, director or consultant of the
Company or of an Affiliate, such Option may be exercised by the
Participants Survivors:
(i) To the extent that the Option has become exercisable
but has not been exercised on the date of death; and
(ii) In the event rights to exercise the Option accrue
periodically, to the extent of a pro rata portion through the
date of death of any additional vesting rights that would have
accrued on the next vesting date had the Participant not died.
The proration shall be based upon the number of days accrued in
the current vesting period prior to the Participants date
of death.
(b) If the Participants Survivors wish to exercise
the Option, they must take all necessary steps to exercise the
Option within one year after the date of death of such
Participant, notwithstanding that the decedent might have been
able to exercise the Option as to some or all of the Shares on a
later date if he or she had not died and had continued to be an
Employee, director or consultant or, if earlier, within the
originally prescribed term of the Option.
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17.
|
EFFECT
OF TERMINATION OF SERVICE ON UNACCEPTED STOCK
GRANTS
.
|
In the event of a termination of service (whether as an
Employee, director or consultant) with the Company or an
Affiliate for any reason before the Participant has accepted a
Stock Grant, such offer shall terminate.
For purposes of this Paragraph 17 and Paragraph 18
below, a Participant to whom a Stock Grant has been offered and
accepted under the Plan who is absent from work with the Company
or with an Affiliate because of temporary disability (any
disability other than a Disability as defined in
Paragraph 1 hereof), or who is on leave of absence for any
purpose, shall not, during the period of any such absence, be
deemed, by virtue of such absence alone, to have terminated such
Participants employment, director status or consultancy
with the Company or with an Affiliate, except as the
Administrator may otherwise expressly provide.
In addition, for purposes of this Paragraph 17 and
Paragraph 18 below, any change of employment or other
service within or among the Company and any Affiliates shall not
be treated as a termination of employment, director status or
consultancy so long as the Participant continues to be an
employee, director or consultant of the Company or any Affiliate.
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|
18.
|
EFFECT
ON STOCK GRANTS OR OTHER STOCK-BASED AWARDS OF TERMINATION OF
SERVICE OTHER THAN FOR CAUSE OR DEATH OR
DISABILITY
.
|
Except as otherwise provided in a Participants Agreement,
in the event of a termination of service (whether as an
Employee, director or consultant), other than termination
for cause, Disability or death for which events
there are special rules in Paragraphs 19, 20, and 21,
respectively, before the requirement, if any, that the
Participant forfeit
A-9
any Shares subject to a Stock Grant or other Stock-Based Award
shall have lapsed, the Shares to which such restrictions have
not lapsed at the time of termination shall be forfeited to the
Company.
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|
19.
|
EFFECT
ON STOCK GRANTS OR OTHER STOCK-BASED AWARDS OF TERMINATION OF
SERVICE FOR CAUSE.
|
Except as otherwise provided in a Participants Agreement,
if the Participants service (whether as an Employee,
director or consultant) with the Company or an Affiliate is
terminated for cause, (i) before the
requirement, if any, that the Participant forfeit any Shares
subject to a Stock Grant or other Stock-Based Award shall have
lapsed, the Shares to which such restrictions have not lapsed at
the time of termination shall be forfeited to the Company, and
(ii) each Share awarded to the Participant pursuant to any
Stock Grant or other Stock-Based Award that is no longer subject
to the requirement that the Participant forfeit the Shares shall
be immediately subject to repurchase by the Company at $.0001.
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|
20.
|
EFFECT
ON STOCK GRANTS OR OTHER STOCK-BASED AWARDS OF TERMINATION OF
SERVICE FOR
DISABILITY
.
|
Except as otherwise provided in a Participants Agreement,
the following rules apply if a Participant ceases to be an
Employee, director or consultant of the Company or of an
Affiliate by reason of Disability: to the extent the
requirement, if any, that the Participant forfeit the shares
subject to the Stock Grant or other Stock-Based Award has not
lapsed on the date of Disability, the forfeiture requirement
shall lapse to the extent of a pro rata portion of the Shares
subject to such Stock Grant or other Stock-Based Award through
the date of Disability as would have lapsed had the Participant
not become Disabled. The proration shall be based upon the
number of days accrued prior to the date of Disability.
The Administrator shall make the determination both of whether
Disability has occurred and the date of its occurrence (unless a
procedure for such determination is set forth in another
agreement between the Company and such Participant, in which
case such procedure shall be used for such determination). If
requested, the Participant shall be examined by a physician
selected or approved by the Administrator, the cost of which
examination shall be paid for by the Company.
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21.
|
EFFECT
ON STOCK GRANTS OR OTHER STOCK-BASED AWARDS OF DEATH WHILE AN
EMPLOYEE, DIRECTOR OR
CONSULTANT
.
|
Except as otherwise provided in a Participants Agreement,
the following rules apply in the event of the death of a
Participant while the Participant is an Employee, director or
consultant of the Company or of an Affiliate: to the extent the
requirement, if any, that the Participant forfeit the shares
subject to the Stock Grant or other Stock-Based Award has not
lapsed on the date of death, the forfeiture requirement shall
lapse to the extent of a pro rata portion of the Shares subject
to such Stock Grant or other Stock-Based Award through the date
of death as would have lapsed on the next vesting date had the
Participant not died. The proration shall be based upon the
number of days accrued prior to the Participants death.
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|
22.
|
PURCHASE
FOR
INVESTMENT
.
|
Unless the offering and sale of the Shares to be issued upon the
particular exercise or acceptance of a Stock Right shall have
been effectively registered under the Securities Act of 1933, as
amended (the Securities Act), the Company shall be
under no obligation to issue the Shares covered by such exercise
unless and until the following conditions have been fulfilled:
(a) The person(s) who exercise(s) or accept(s) such Stock
Right shall warrant to the Company, prior to the receipt of such
Shares, that such person(s) are acquiring such Shares for their
own respective accounts, for investment, and not with a view to,
or for sale in connection with, the distribution of any such
Shares, in which event the person(s) acquiring such Shares shall
be bound by the provisions of the following (or a similar)
A-10
legend which shall be endorsed upon the certificate(s)
evidencing their Shares issued pursuant to such exercise or such
grant:
The shares represented by this certificate have been taken
for investment and they may not be sold or otherwise transferred
by any person, including a pledgee, unless (1) either
(a) a Registration Statement with respect to such shares
shall be effective under the Securities Act of 1933, as amended,
or (b) the Company shall have received an opinion of
counsel satisfactory to it that an exemption from registration
under such Act is then available, and (2) there shall have
been compliance with all applicable state securities laws.
(b) At the discretion of the Administrator, the Company
shall have received an opinion of its counsel that the Shares
may be issued upon such particular exercise or acceptance in
compliance with the Securities Act without registration
thereunder.
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23.
|
DISSOLUTION
OR LIQUIDATION OF THE
COMPANY
.
|
Upon the dissolution or liquidation of the Company, all Options
granted under this Plan which as of such date shall not have
been exercised and all Stock Grants and Stock-Based Awards which
have not been accepted will terminate and become null and void;
provided, however, that if the rights of a Participant or a
Participants Survivors have not otherwise terminated and
expired, the Participant or the Participants Survivors
will have the right immediately prior to such dissolution or
liquidation to exercise or accept any Stock Right to the extent
that the Stock Right is exercisable or subject to acceptance as
of the date immediately prior to such dissolution or
liquidation. Upon the dissolution or liquidation of the Company,
any outstanding Stock-Based Awards that have not been accepted
shall immediately terminate unless otherwise determined by the
Administrator or specifically provided in the applicable
Agreement.
Upon the occurrence of any of the following events, a
Participants rights with respect to any Stock Right
granted to him or her hereunder shall be adjusted as hereinafter
provided, unless otherwise specifically provided in a
Participants Agreement:
(a)
Stock Dividends and Stock
Splits
.
If (i) the shares of Common
Stock shall be subdivided or combined into a greater or smaller
number of shares or if the Company shall issue any shares of
Common Stock as a stock dividend on its outstanding Common
Stock, or (ii) additional shares or new or different shares
or other securities of the Company or other non-cash assets are
distributed with respect to such shares of Common Stock, the
number of shares of Common Stock deliverable upon the exercise
of an Option or acceptance of a Stock Grant shall be
appropriately increased or decreased proportionately, and
appropriate adjustments shall be made including, in the purchase
price or exercise price per share, to reflect such events, as
determined by the Administrator in its discretion. The number of
Shares subject to the limitation in Paragraph 4(c) shall
also be proportionately adjusted upon the occurrence of such
events.
(b)
Corporate Transactions
.
Upon
the Company consummating any transaction resulting in the
Company consolidating with or being acquired by another entity
in a merger, sale of all or substantially all of the
Companys assets, other than a transaction to merely change
the state of incorporation (a Corporate
Transaction), the Administrator or the board of directors
of any entity assuming the obligations of the Company hereunder
(the Successor Board), shall, as to outstanding
Options, either (i) make appropriate provision for the
continuation of such Options by substituting on an equitable
basis for the Shares then subject to such Options either the
consideration payable with respect to the outstanding shares of
Common Stock in connection with the Corporate Transaction or
securities of any successor or acquiring entity; or
(ii) upon written notice to the Participants, provide that
all Options must be exercised (either (A) to the extent
then exercisable or, (B) at the discretion of the
Administrator, all Options being made fully exercisable for
purposes of this Subparagraph), within a specified number of
days of the date of such notice, at the end of which period the
Options shall terminate; or (iii) terminate all Options in
exchange for a cash payment equal to the excess of the Fair
Market Value of the Shares subject to such Options (either
(A) to the extent then exercisable or, (B) at
A-11
the discretion of the Administrator, all Options being made
fully exercisable for purposes of this Subparagraph 24(b)) over
the exercise price thereof.
With respect to outstanding Stock Grants that have been
accepted, the Administrator or the Successor Board, shall either
(i) make appropriate provisions for the continuation of
such Stock Grants on the same terms and conditions by
substituting on an equitable basis for the Shares then subject
to such Stock Grants either the consideration payable with
respect to the outstanding Shares of Common Stock in connection
with the Corporate Transaction or securities of any successor or
acquiring entity; or (ii) terminate all Stock Grants in
exchange for a cash payment equal to the excess of the Fair
Market Value of the Shares subject to such Stock Grants over the
unpaid purchase price thereof, if any. In addition, in the event
of a Corporate Transaction, the Administrator may waive any or
all Company repurchase rights with respect to outstanding Stock
Grants.
(c)
Recapitalization or
Reorganization
.
In the event of a
recapitalization or reorganization of the Company other than a
Corporate Transaction pursuant to which securities of the
Company or of another corporation are issued with respect to the
outstanding shares of Common Stock, a Participant upon
exercising an Option or accepting a Stock Grant after the
recapitalization or reorganization shall be entitled to receive,
for the purchase price paid (if any) upon such exercise or
acceptance, the number of replacement securities which would
have been received if such Option had been exercised or Stock
Grant accepted prior to such recapitalization or reorganization.
(d)
Adjustments to Stock-Based
Awards
.
Upon the happening of any of the
events described in Subparagraphs 24(a), (b) or
(c) above, any outstanding Stock-Based Award shall be
appropriately adjusted to reflect the events described in such
Subparagraphs. The Administrator or the Successor Board shall
determine the specific adjustments to be made under this
Paragraph 24, including, but not limited to the effect, if
any, of a Corporate Transaction and, subject to
Paragraph 4, its determination shall be conclusive.
(e)
Modification of
ISOs
.
Notwithstanding the foregoing, any
adjustments made pursuant to Subparagraphs 24(a), (b) or
(c) above with respect to ISOs shall be made only after the
Administrator determines whether such adjustments would
constitute a modification of such ISOs (as that term
is defined in Code Section 424(h)) or would cause any
adverse tax consequences for the holders of such ISOs. If the
Administrator determines that such adjustments made with respect
to ISOs would constitute a modification of such ISOs, it may
refrain from making such adjustments, in its discretion, unless
the holder of an ISO specifically requests in writing that such
adjustment be made and such writing indicates that the holder
has full knowledge of the consequences of such
modification on his or her income tax treatment with
respect to the ISO.
(f)
Modification of Stock
Grants
.
Further notwithstanding the
foregoing, any adjustments made pursuant to this
Paragraph 24 (i) with respect to a Stock Grant that is
intended to qualify for the performance-based compensation
exemption to the application of the $1 million deduction
limit under Code Section 162(m), shall be made in a manner
consistent with the applicable requirements of Code
Section 162(m) and (ii) with respect to Options
intended to not provide for the deferral of compensation within
the meaning of Code Section 409A, shall be made in a manner
consistent with the applicable requirements of Code
Section 409A. Such adjustment shall be conclusive and
binding for all purposes.
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|
25.
|
ISSUANCES
OF
SECURITIES
.
|
Except as expressly provided herein, no issuance by the Company
of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by
reason thereof shall be made with respect to, the number or
price of shares subject to Stock Rights. Except as expressly
provided herein, no adjustments shall be made for dividends paid
in cash or in property (including without limitation,
securities) of the Company prior to any issuance of Shares
pursuant to a Stock Right.
No fractional shares shall be issued under the Plan and the
person exercising a Stock Right shall receive from the Company
cash in lieu of such fractional shares equal to the Fair Market
Value thereof.
A-12
In the event that any federal, state, or local income taxes,
employment taxes, Federal Insurance Contributions Act
(F.I.C.A.) withholdings or other amounts are
required by applicable law or governmental regulation to be
withheld from the Participants salary, wages or other
remuneration in connection with the exercise or acceptance of a
Stock Right or in connection with a Disqualifying Disposition
(as defined in Paragraph 28) or upon the lapsing of
any right of repurchase, the Company may withhold from the
Participants compensation, if any, or may require that the
Participant advance in cash to the Company, or to any Affiliate
of the Company which employs or employed the Participant, the
statutory minimum amount of such withholdings unless a different
withholding arrangement, including the use of shares of the
Companys Common Stock, is authorized by the Administrator
(and permitted by Applicable Law). For purposes hereof, the Fair
Market Value of the shares withheld for purposes of payroll
withholding shall be determined in the manner provided in
Paragraph 1 above, as of the most recent practicable date
prior to the date of exercise or vesting, as applicable. If the
Fair Market Value of the shares withheld is less than the amount
of payroll withholdings required, the Participant may be
required to advance the difference in cash to the Company or the
Affiliate employer. The Administrator in its discretion may
condition the exercise of an Option for less than the then Fair
Market Value on the Participants payment of such
additional withholding.
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28.
|
NOTICE
TO COMPANY OF DISQUALIFYING
DISPOSITION
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Each Employee who receives an ISO must agree to notify the
Company in writing immediately after the Employee makes a
Disqualifying Disposition of any Shares acquired pursuant to the
exercise of an ISO. A Disqualifying Disposition is defined in
Code Section 424(c) and includes any disposition (including
any sale or gift) of such shares before the later of
(a) two years after the date the Employee was granted the
ISO, or (b) one year after the date the Employee acquired
Shares by exercising the ISO, except as otherwise provided in
Code Section 424(c). If the Employee has died before such
stock is sold, these holding period requirements do not apply
and no Disqualifying Disposition can occur thereafter without
providing notification to the Company.
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29.
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EFFECTIVE
DATE; TERMINATION OF THE
PLAN
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(a) The Plan was effective May 3, 2011. For purposes
of making a Stock Grant that is intended to qualify for the
performance-based compensation exemption to the application of
the $1 million deduction limit under Section 162(m),
until such time as the Plan is approved by the stockholders in a
manner intended to comply with Section 162(m), any such
Stock Grant must be contingent on such stockholder approval and
no such Stock Grant may be settled prior to such stockholder
approval.
(b) The Plan will terminate on May 3, 2021, the date
which is ten years from the earlier of the date of its adoption
by the Board of Directors and the date of its approval by the
shareholders of the Company. The Plan may be terminated at an
earlier date by vote of the shareholders or the Board of
Directors of the Company; provided, however, that any such
earlier termination shall not affect any Agreements executed
prior to the effective date of such termination.
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30.
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AMENDMENT
OF THE PLAN AND
AGREEMENTS
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(a) The Plan may be amended by the shareholders of the
Company. The Plan may also be amended by the Administrator,
including, without limitation, to the extent necessary to
qualify any or all outstanding Stock Rights granted under the
Plan or Stock Rights to be granted under the Plan for favorable
federal income tax treatment (including deferral of taxation
upon exercise) as may be afforded incentive stock options under
Code Section 422, and to the extent necessary to qualify
the shares issuable upon exercise or acceptance of any
outstanding Stock Rights granted, or Stock Rights to be granted,
under the Plan for listing on any national securities exchange
or quotation in any national automated quotation system of
securities dealers. Any amendment approved by the Administrator
which the Administrator determines is of a scope that requires
shareholder approval shall be subject to obtaining such
shareholder approval. Any modification or amendment of the Plan
shall not, without the consent of a Participant, adversely
affect his or her rights under a Stock Right previously granted
to him or her. With the consent of the Participant affected, the
Administrator may amend outstanding Agreements in a manner which
may
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be adverse to the Participant but which is not inconsistent with
the Plan. In the discretion of the Administrator, outstanding
Agreements may be amended by the Administrator in a manner which
is not adverse to the Participant.
(b) Notwithstanding the provisions of Paragraph 31(a)
or any other provision of the Plan, the following terms shall
apply:
(i) Except for adjustments made pursuant to
Paragraph 24, the option price for any outstanding Option
(or base price of any outstanding SAR) may not be decreased
after the date of grant, nor may any outstanding Option (or SAR)
be surrendered to the Company as consideration for the grant of
a new Option (or SAR) with a lower option price (or base price)
than the original Option (or SAR), as the case may be, without
shareholder approval of any such action.
(ii) Notwithstanding Paragraph 32(a)(i), the
Administrator shall have unilateral authority to amend the Plan
and any Stock Right (without Participant consent and without
shareholder approval, unless such shareholder approval is
required by Applicable Law) to the extent necessary to comply
with Applicable Law or changes to Applicable Law (including but
not limited to Code Section 409A, Code Section 422 and
federal securities laws).
(iii) Notwithstanding Paragraph 32(a)(i), the
Administrator shall have unilateral authority to make
adjustments to the terms and conditions of Stock Rights in
recognition of unusual or nonrecurring events affecting the
Company or any Affiliate, or the financial statements of the
Company or any Affiliate, or of changes in accounting
principles, if the Administrator determines that such
adjustments are appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be
made available under the Plan or necessary or appropriate to
comply with applicable accounting principles.
(iv) The Administrator has the unilateral authority to
cause any Stock Right (or portion thereof) granted under the
Plan to be canceled in consideration of an alternative award or
cash payment of an equivalent cash value, as determined by the
Administrator in its sole discretion, made to the holder of such
canceled Stock Right; provided, however, that the grant of an
alternative award or cash payment pursuant to this
Paragraph 31(b)(iv) shall not be permitted without
shareholder approval if such action would constitute a repricing
under Paragraph 31(b)(i) herein.
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31.
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EMPLOYMENT
OR OTHER
RELATIONSHIP
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Nothing in this Plan or any Agreement shall be deemed to prevent
the Company or an Affiliate from terminating the employment,
consultancy or director status of a Participant, nor to prevent
a Participant from terminating his or her own employment,
consultancy or director status or to give any Participant a
right to be retained in employment or other service by the
Company or any Affiliate for any period of time.
This Plan shall be construed and enforced in accordance with the
law of the State of Delaware, without regard to the conflicts of
laws provisions of any state, and in accordance with applicable
federal laws.
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33.
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COMPLIANCE
WITH CODE
SECTION 409A
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It is intended that Options and other Stock-Based Awards that
are stock appreciation rights granted pursuant to this Plan will
satisfy the requirements for the exemption from the requirements
of Code Section 409A that is granted to stock
rights pursuant to the Treasury regulations and other
official guidance issued with respect to Code Section 409A.
It is also intended generally that Stock Rights and other
Stock-Based Awards granted pursuant to this Plan will satisfy
for the exemption from the requirements of Code
Section 409A that is granted to short-term
deferrals or to transfers of restricted property pursuant
to the Treasury regulations and other official guidance issued
with respect to Code Section 409A. To the extent that any
award under this Plan does not meet one of the exceptions from
the application of Code Section 409A described in this
paragraph, the terms of any Agreement evidencing an award
granted under this Plan will contain such provisions as are
necessary to comply with the requirements of Code
Section 409A, including, but not limited to, the following:
(a)
Generally
: Distributions may
be made with respect to Stock Rights subject to Code
Section 409A not earlier than upon the occurrence of one or
more of the following events: (A) separation from service;
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(B) disability; (C) death; (D) a specified time
or pursuant to a fixed schedule; (E) a change in the
ownership or effective control of the Company, or in the
ownership of a substantial portion of the assets of the Company;
or (F) the occurrence of an unforeseeable emergency. Each
of the preceding distribution events shall be defined and
interpreted in accordance with Code Section 409A.
(b)
Payments to Specified
Employees
: With respect to Participants who
are specified employees (as defined by the Company
in accordance with Code Section 409A), a distribution of
amount that constitute a deferral of compensation
(as defined in Code Section 409A) due to separation from
service may not be made before the date that is six months after
the date of separation from service (or, if earlier, the date of
death of the Participant), except as may be otherwise permitted
pursuant to Code Section 409A. The aggregate amount of
payments the Participant would have received but for the
application of this section shall be paid during the seventh
month following separation from service; all remaining payments
shall be made in their ordinary course or as may be otherwise
permitted under Code Section 409A.
(c)
No Acceleration
: Acceleration
of the time or schedule of any payment under the Plan that is
subject to Code Section 409A (or that would become subject
to Code Section 409A as a result of such acceleration) is
prohibited, except that, to the extent permitted by the
Administrator, acceleration of the time
and/or
form
of a payment (including but not limited to de minimis payments),
where such accelerations do not violate Code Section 409A,
may be allowed.
(d)
Deferral Elections
:
(i) In the sole discretion of the Administrator, a
Participant may be permitted to make an election as to the time
or form of any distribution from a Stock Right other than an
Option or stock appreciation right, provided that, except as
specified in (ii), (iii) and (iv) below, such election
is made and becomes irrevocable not later than the close of the
taxable year preceding the taxable year in which the services
for which the Stock Right is granted are to be performed, or at
such other time or times as may be permitted under Code
Section 409A.
(ii) In the case of the first year in which the Participant
becomes eligible to participate in the Plan, the election
described in (i) may be made with respect to services to be
performed after the election within 30 days after the date
the Participant becomes eligible to participate in the Plan.
(iii) In the case of any performance-based compensation (as
that term is defined in Code Section 409A), where such
compensation is based on services performed over a period of at
least 12 months, the election described in (i) may be
made no later than six months before the end of the period.
(iv) In the case of any Stock Right subject to a
substantial risk of forfeiture (as defined in Code
Section 409A), the election described in (i) may be
made within 30 days of the date the Participant first
obtains a legally binding right to the Stock Right, provided
that the Stock Right requires the Participant to perform at
least 12 months of service after such election is made.
(v) Changes to Elections: To the extent that the
Administrator, in its sole discretion, permits a subsequent
election to delay a payment or change the form of payment that
has been specified under (i), (ii), (iii) or
(iv) above, the following provisions shall apply:
(A) Such election may not take effect until 12 months
after the date on which the election is made;
(B) Where the payment is to be made for reasons other than
death, disability or unforeseeable emergency, as those terms are
defined in Paragraph 34(a), above, the first payment with
respect to which such election is made must be deferred for a
period of not less than five years from the date such payment
would otherwise have been made; and
(C) Any election related to a payment based upon a
specified term or pursuant to a fixed schedule, as such terms
are defined in Paragraph 34(a), above, may not be made
later than 12 months before the date of the first scheduled
payment hereunder.
[Remainder
of Page Intentionally Left Blank]
A-15
IN WITNESS WHEREOF, this Global Telecom & Technology,
Inc. 2011 Employee, Director and Consultant Plan is, by the
authority of the Board of Directors of the Company, executed on
behalf of the Company, effective, except as otherwise
specifically provided herein, as of the 3rd day of May,
2011.
GLOBAL TELECOM & TECHNOLOGY, INC.
By:
Name:
Title:
ATTEST:
Secretary
A-16
GLOBAL TELECOM & TECHNOLOGY, INC.
8484 Westpark Drive
Suite 720
McLean, Virginia 22102
ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF GLOBAL TELECOM & TECHNOLOGY, INC.
The undersigned appoints Richard D. Calder, Jr. and Chris McKee, and each of them, with full
power to act without the other, as proxies, each with the power to appoint a substitute, and hereby
authorizes either of them to represent and to vote, as designated on the reverse side, all shares of
common stock of Global Telecom & Technology, Inc. (GTT) held of record by the undersigned on
April 18, 2011, at the Annual Meeting of Stockholders to be held on June 9, 2011, or any postponement
or adjournment thereof.
THIS PROXY REVOKES ALL PRIOR PROXIES GIVEN BY THE UNDERSIGNED. THIS PROXY
WILL BE VOTED AS DIRECTED. IF NO DIRECTIONS ARE GIVEN, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF ALL DIRECTORS AND FOR APPROVAL OF THE GLOBAL
TELECOM & TECHNOLOGY, INC. 2011 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK
PLAN.
(Continued and to be signed on the reverse side)
ANNUAL MEETING OF
STOCKHOLDERS OF
GLOBAL TELECOM & TECHNOLOGY, INC.
June 9, 2011
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL
:
The Notice of Meeting, proxy statement and proxy card
are available at http://www.gt-t.net/investors
Please sign, date
and mail
your proxy card in the
envelope provided as soon
as possible.
↓
Please detach along perforated line and mail
in the envelope provided.
↓
n
20830000000000000000 4
060911
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ALL DIRECTORS.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
x
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FOR
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AGAINST
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ABSTAIN
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1. Election of Directors:
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2.
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Approval of the Global Telecom & Technology, Inc. 2011 Employee, Director and Consultant Stock Plan.
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o
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o
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o
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o
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FOR ALL NOMINEES
WITHHOLD AUTHORITY
FOR ALL NOMINEES
FOR ALL EXCEPT
(See instructions below)
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NOMINEES:
O Richard D. Calder, Jr.
O H. Brian Thompson
O S. Joseph Bruno
O Didier Delepine
O Rhodric C. Hackman
O Howard E. Janzen
O Morgan E. OBrien
O Theodore B. Smith, III
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3.
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In their discretion, the proxies are authorized to vote upon such other business as
may properly come before the meeting.
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THIS PROXY REVOKES ALL PRIOR PROXIES GIVEN BY THE UNDERSIGNED.
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTIONS ARE GIVEN,
THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF ALL DIRECTORS.
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INSTRUCTIONS:
To withhold authority to vote for any individual nominee(s), mark
FOR
ALL EXCEPT
and fill in the circle next to each nominee you wish to withhold, as shown here:
=
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To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted via
this method.
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Signature of
Stockholder
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Date:
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Signature of Stockholder
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Date:
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Note:
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Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full
title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.
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