def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant þ
Filed by a Party other than the Registrant o
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Preliminary Proxy Statement. |
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Confidential, for use of the Commission Only (as permitted by Rule 14a-6(e)(2)). |
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Definitive Proxy Statement. |
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Soliciting Material Pursuant to § 240. 14a-12. |
Alesco Financial Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and
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(4) Date Filed: |
April 29,
2008
Dear Stockholder:
You are cordially invited to attend the annual meeting of
stockholders of Alesco Financial Inc., which will be held on
June 18, 2008, at 10:00 a.m., local time, at the
companys headquarters located at Cira Centre, 2929 Arch
Street,
17th Floor,
Philadelphia, Pennsylvania 19104.
The attached proxy statement, with the accompanying formal
notice of the meeting, describes the matters expected to be
acted upon at the meeting. We have also enclosed a proxy card
and our annual report on
Form 10-K
for the year ended December 31, 2007. We urge you to review
these materials carefully and to take part in the affairs of our
company by voting on the matters described in the proxy
statement.
Your vote is very important. Whether or not you plan to attend
the meeting, please complete the enclosed proxy card and return
it as promptly as possible or authorize your proxy by calling
the toll-free telephone number or via the Internet. The enclosed
proxy card contains instructions regarding all three methods of
voting. If you attend the meeting, you may continue to have your
shares of common stock voted as instructed in the proxy or you
may withdraw your proxy at the meeting and vote your shares of
common stock in person. We look forward to seeing you at the
meeting.
On behalf of our management and Board of Directors, I would like
to express our appreciation for your continued support of Alesco
Financial Inc.
Sincerely,
James J. McEntee, III
President and Chief Executive Officer
ELECTRONIC
AND TELEPHONE PROXY AUTHORIZATION
Alesco Financial Inc.s stockholders of record on the close
of business on April 24, 2008, the record date for the 2008
annual meeting of stockholders, may authorize their proxies to
vote their shares by telephone or Internet by following the
instructions on their proxy card. If you have any questions
regarding how to authorize your proxy by telephone or Internet,
please call MacKenzie Partners, Inc., the firm assisting Alesco
Financial Inc. with the solicitation of proxies, toll-free at
(800) 322-2885.
ALESCO FINANCIAL INC.
Cira Centre, 2929 Arch Street,
17th
Floor, Philadelphia,
Pennsylvania 19104
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
To the Stockholders of Alesco Financial Inc.:
Notice is hereby given that the annual meeting of stockholders
of Alesco Financial Inc., a Maryland corporation, will be held
on June 18, 2008, at 10:00 a.m., local time, at our
headquarters located at Cira Centre, 2929 Arch Street,
17th Floor,
Philadelphia, Pennsylvania 19104, to consider and vote on the
following matters:
1. To elect nine directors, each to serve until the next
annual meeting of stockholders and until his successor is duly
elected and qualified.
2. To amend our 2006 Long-Term Incentive Plan to increase
the total number of shares of common stock available to be
granted under the Plan, as more fully described in the enclosed
proxy statement.
3. To ratify the appointment of Ernst & Young LLP
as our independent registered public accounting firm for the
year ending December 31, 2008.
4. To transact such other business as may properly come
before the meeting or any adjournment or postponement thereof.
Our Board of Directors has fixed the close of business on
April 24, 2008 as the record date for determining the
stockholders entitled to notice of, and to vote at, the annual
meeting, and at any adjournments or postponements thereof. Only
stockholders of record of our common stock, par value $0.001 per
share, at the close of business on that date will be entitled to
notice of, and to vote at, the annual meeting and at any
adjournments or postponements thereof.
Your vote is very important. Accordingly, you are asked to
vote, whether or not you plan to attend the meeting. You may
vote: (1) by telephone, by calling the toll-free number as
instructed on the accompanying proxy card, (2) by using the
Internet, as instructed on the accompanying proxy card,
(3) by mail, by marking, signing, dating and returning the
accompanying proxy card in the postage-paid envelope we have
provided or (4) by attending the meeting in person. For
specific instructions on voting, please refer to the
instructions on the accompanying proxy card or the information
forwarded to your broker, bank or other holder of record. Any
stockholder of our company attending the meeting may vote in
person even if he or she has previously voted using the
telephone, the Internet or a proxy card. If you plan to attend
the meeting to vote in person and your shares are registered
with our transfer agent, Mellon Investor Services LLC, in the
name of a broker, bank, or other nominee, you must obtain a
proxy issued in your name from such broker, bank or other
nominee.
By Order of the Board of Directors,
Daniel Munley
Secretary
April 29, 2008
Philadelphia, Pennsylvania
TABLE OF
CONTENTS
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INFORMATION ABOUT THE ANNUAL MEETING
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CORPORATE GOVERNANCE
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PROPOSAL ONE ELECTION OF DIRECTORS
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MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
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EXECUTIVE OFFICERS
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COMPENSATION DISCUSSION AND ANALYSIS
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REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
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EXECUTIVE COMPENSATION
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COMPENSATION OF DIRECTORS
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PROPOSAL TWO APPROVAL OF THE AMENDMENT TO OUR
2006 LONG-TERM INCENTIVE PLAN
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INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
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PROPOSAL THREE RATIFICATION OF THE APPOINTMENT
OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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PRINCIPAL ACCOUNTING FIRM FEES
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REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
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SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
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OTHER MATTERS
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STOCKHOLDER PROPOSALS
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ANNUAL REPORT ON
FORM 10-K
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WHERE YOU CAN FIND MORE INFORMATION
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APPENDIX A 2006 LONG-TERM INCENTIVE PLAN, AS AMENDED
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A-1
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ALESCO FINANCIAL INC.
Cira Centre, 2929 Arch
Street, 17th
Floor
Philadelphia, Pennsylvania 19104
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To Be Held On June 18, 2008
INFORMATION
ABOUT THE ANNUAL MEETING
Introduction
We are sending this proxy statement and the enclosed proxy card
to our stockholders on or about April 29, 2008 in
connection with the solicitation of proxies by the Board of
Directors of Alesco Financial Inc., a Maryland corporation, for
use at the 2008 annual meeting of stockholders to be held on
June 18, 2008 at 10:00 a.m., local time, at the
companys headquarters located at Cira Centre, 2929 Arch
Street,
17th Floor,
Philadelphia, Pennsylvania 19104, or at any postponement or
adjournment of the meeting.
Who May
Vote
Only holders of record of the companys shares of common
stock at the close of business on April 24, 2008, the
record date for the annual meeting, are entitled to receive
notice of and to vote at the meeting or any adjournment or
postponement thereof. Each stockholder of record on the record
date is entitled to one vote on each matter properly brought
before the meeting for each share of common stock held.
How You
May Vote
You may vote using any of the following methods:
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BY MAIL: Mark, sign, and date your proxy card
and return it in the postage-paid envelope we have provided. The
named proxies will vote your shares according to your
directions. If you submit a signed proxy card without indicating
your vote, the named proxies will vote your shares in favor of
the nominees named in this proxy statement and the other
proposals.
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BY TELEPHONE OR OVER THE INTERNET: Authorize a
proxy by telephone or over the Internet by following the
instructions on the accompanying proxy card. If you hold shares
of the companys common stock in street name,
please refer to the voting instruction form used by your broker,
bank or nominee to see if you may submit voting instructions
using the Internet or the telephone. If you vote by telephone or
via the Internet, you do not need to return your proxy card.
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BY ATTENDING THE ANNUAL MEETING IN
PERSON: Attend the meeting and vote in person. If
your shares are held in the name of a bank, broker or other
nominee, you must obtain a proxy from the record holder,
executed in your favor, and bring it with you to hand in with
your ballot, in order to be able to vote in person at the
meeting.
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We encourage stockholders to submit proxies in advance. Voting
by proxy will in no way limit your right to attend and vote at
the meeting if you later decide to attend in person. You may
revoke your proxy at any time before it is exercised by:
(i) giving written notice of revocation no later than the
commencement of the meeting to our Secretary, Daniel Munley, at
Alesco Financial Inc., Cira Centre, 2929 Arch Street,
17th Floor,
Philadelphia, Pennsylvania 19104; (ii) delivering no later
than the commencement of the meeting a properly executed,
later-dated proxy; or (iii) voting in person at the
meeting.
The named proxies will vote upon any other business that may
properly come before the meeting according to their best
judgment to the same extent as the person delivering the proxy
would be entitled to vote. Other than the election of directors,
the amendment to the companys 2006 Long-Term Incentive
Plan
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and the ratification of the appointment of Ernst &
Young LLP as the companys independent registered public
accounting firm for the fiscal year ending December 31,
2008, we do not anticipate that any other matters will be raised
at the meeting.
Quorum
The presence, in person or represented by proxy, of stockholders
entitled to cast a majority of the votes entitled to be cast at
the meeting is necessary to constitute a quorum at the meeting.
As of the record date, there were 59,455,965 shares of
common stock outstanding and entitled to vote at the meeting. If
a quorum is not present at the meeting, the stockholders,
present in person or represented by proxy, or the presiding
officer at the meeting have the power to adjourn the meeting
until a quorum is present or represented.
Required
Vote to Approve Each Proposal
The affirmative vote of a plurality of all of the votes cast in
the election of directors at the meeting at which a quorum is
present is necessary for the election of a director. For
purposes of the election of directors, abstentions and broker
non-votes will not be counted as votes cast and will have no
effect on the result of the vote, although they will be
considered present for the purpose of determining the presence
of a quorum. A broker non-vote occurs when a nominee
holding common stock does not vote on a particular proposal
because the nominee does not have discretionary voting power
with respect to that item and has not received instructions from
the beneficial owner.
The affirmative vote of a majority of the votes cast on the
proposal is required for approval of the amendment to the 2006
Long-Term Incentive Plan, provided that the total vote cast on
the proposal represents over 50% in interest of all securities
entitled to vote on the proposal. For purposes of the vote on
the amendment to the 2006 Long-Term Incentive Plan, abstentions
will have the same effect as votes against the proposal and
broker non-votes will have the same effect as votes against the
proposal, unless holders of more than 50% in interest of all
securities entitled to vote on the proposal cast votes, in which
event broker non-votes will not have any effect on the result of
the vote. Both abstentions and broker non-votes will be
considered present for the purpose of determining the presence
of a quorum.
The affirmative vote of a majority of all of the votes cast on
the proposal at a meeting at which a quorum is present is
required for the ratification of the appointment of the
independent registered public accounting firm and the approval
of any other matters properly presented at the meeting. For
purposes of the vote on the ratification of the appointment of
the independent registered public accounting firm and the
approval of any other matters properly presented at the meeting,
abstentions and broker non-votes will not be counted as votes
cast and will have no effect on the vote, although they will be
considered present for the purpose of determining the presence
of a quorum.
None of the proposals, if approved, entitle stockholders to
appraisal rights under Maryland law or our charter documents.
Other
Information to Review Before Voting
For your review, the companys annual report on
Form 10-K
for the year ended December 31, 2007 is being mailed to you
concurrently with the mailing of this proxy statement. This
proxy statement and our annual report on
Form 10-K
are also both available on our website at
http://www.alescofinancial.com.
The annual report on
Form 10-K
does not constitute a part of this proxy statement.
Householding
of Proxy Material
The Securities and Exchange Commission, or the SEC, has adopted
rules that permit companies and intermediaries (such as banks
and brokers) to satisfy the delivery requirements for proxy
statements and annual reports with respect to two or more
stockholders sharing the same address by delivering a single
proxy statement addressed to those stockholders. This process,
which is commonly referred to as householding, can
result in significant cost savings. This year, a number of
brokers with account holders who are our
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stockholders will be householding our proxy
materials. A single proxy statement will be delivered to
multiple stockholders who share an address unless we received
contrary instructions from the impacted stockholders prior to
the mailing date. Once you have received notice from your broker
that they will be householding communications to
your address, householding will continue until you
are notified otherwise or until you revoke your consent. If, at
any time, you no longer wish to participate in
householding and would prefer to receive a separate
proxy statement and annual report, please notify your broker or
direct your request in writing or by phone to our Secretary,
Daniel Munley, at Alesco Financial Inc., Cira Centre, 2929 Arch
Street,
17th Floor,
Philadelphia, Pennsylvania 19104; phone:
(215) 701-9632.
If you are a stockholder sharing an address with another
stockholder who receives multiple copies of the proxy materials
and wish to request householding of your
communications, please contact us at the above address or
telephone number.
Cost of
Proxy Solicitation
All expenses in connection with the solicitation of proxies will
be borne by us. In addition to solicitation by mail, proxies may
be solicited on our behalf by our directors, officers, employees
or soliciting service in person, by telephone, facsimile or by
other electronic means. We have also retained MacKenzie
Partners, Inc. to aid in the solicitation of proxies. We
estimate that the fees we pay to MacKenzie Partners, Inc. for
its role as proxy solicitor will be approximately $5,000 plus
the reimbursement of reasonable out-of-pocket expenses. In
accordance with SEC regulations and the rules of the New York
Stock Exchange, Inc., which is referred to herein as the NYSE,
we will reimburse brokerage firms and other custodians, nominees
and fiduciaries for their expenses incurred in mailing proxies
and proxy materials and soliciting proxies from the beneficial
owners of our common stock.
Questions
and Additional Copies
If you have any questions about how to submit your proxy, or if
you need additional copies of this proxy statement or the
enclosed proxy card, you should contact:
MacKenzie Partners, Inc.
105 Madison Avenue
New York, NY 10016
Phone:
(800) 322-2885
or
(212) 929-5500
Fax:
(212) 929-0308
If you have any questions with respect to the company or the
matters described herein, you should contact:
Alesco Financial Inc.
Cira Centre
2929 Arch Street,
17th
Floor
Philadelphia, Pennsylvania 19104
Attn: John J. Longino
Phone:
(215) 701-8952
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CORPORATE
GOVERNANCE
This section of our proxy statement contains information about a
variety of our corporate governance policies and practices. In
this section, you will find information about how we are
complying with the corporate governance rules of the NYSE which
were approved by the SEC. We are committed to operating our
business under strong and accountable corporate governance
practices. You are encouraged to visit the corporate governance
section of our corporate website at
http://www.alescofinancial.com
to view our corporate governance guidelines. The information
found on, or accessible through, our website is not incorporated
into, and does not form a part of, this proxy statement or any
other report or document we file with or furnish to the SEC.
Corporate
Governance Guidelines
Our Board of Directors has adopted corporate governance
guidelines pursuant to Section 303A.09 of the NYSE Listed
Company Manual, which are designed to assist our management and
Board of Directors in meeting their corporate governance
responsibilities. Our corporate governance guidelines include,
among other things, guidelines relating to (i) the
composition of our Board of Directors, including independence
requirements, director selection process, membership criteria,
responsibilities, functions and compensation; (ii) Board
meetings, including frequency, agenda and access to information;
(iii) committees of our Board of Directors, including
committee member selection and committee functions;
(iv) management responsibilities; and (v) director
orientation and continuing education. Our Nominating and
Corporate Governance Committee is responsible for assessing and
periodically reviewing the adequacy of the corporate governance
guidelines and will recommend, as appropriate, proposed changes
to our Board of Directors. Our corporate governance guidelines
are available on our website at
http://www.alescofinancial.com and are also available in
print to any stockholder who requests a copy by submitting a
written request to our Secretary, Daniel Munley, at Alesco
Financial Inc., Cira Centre, 2929 Arch Street,
17th Floor,
Philadelphia, Pennsylvania 19104.
Code of
Business Conduct and Ethics
We have established a Code of Business Conduct and Ethics, or
the Code, which sets forth basic principles of conduct and
ethics to guide all of our employees, officers and directors.
The purpose of the Code is to:
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Promote honest and ethical conduct, including fair dealing and
the ethical handling of actual or apparent conflicts of interest
between personal and professional relationships;
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Promote avoidance of conflicts of interest, including disclosure
to an appropriate person or committee of any material
transaction or relationship that reasonably could be expected to
give rise to such a conflict;
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Promote full, fair, accurate, timely and understandable
disclosure in reports and documents that we file with, or submit
to, the SEC and in our other public communications;
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Promote compliance with applicable governmental laws, rules and
regulations;
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Promote the prompt internal reporting to an appropriate person
or committee of violations of the Code;
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Promote accountability for adherence to the Code;
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Provide guidance to employees, officers and directors to help
them recognize and deal with ethical issues;
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Provide mechanisms to report unethical conduct; and
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Help foster our long-standing culture of honesty and
accountability.
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A waiver of any provision of the Code as it relates to any
director or executive officer must be approved by our Board of
Directors without the involvement of any director who will be
personally affected by the waiver or by a committee consisting
entirely of directors, none of whom will be personally affected
by the
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waiver. Waivers of the Code for directors or executive officers
will be promptly disclosed to our stockholders as required by
applicable law. A waiver of any provision of the Code as it
relates to any other officer or employee must be approved by our
chief financial officer or chief legal officer, if any, but only
upon such officer or employee making full disclosure in advance
of the behavior in question.
The Code is available on our website at
http://www.alescofinancial.com and is also available in
print to any stockholder who requests a copy by submitting a
written request to our Secretary, Daniel Munley, at Alesco
Financial Inc., Cira Centre, 2929 Arch Street,
17th Floor,
Philadelphia, Pennsylvania 19104.
Director
Independence
Our Board of Directors is comprised of a majority of independent
directors. In order for a director to be considered
independent, our Board of Directors must
affirmatively determine, based upon its review of all relevant
facts and circumstances and after considering all applicable
relationships, if any, that each of the directors has no direct
or indirect material relationship with the company or its
affiliates and satisfies the criteria for independence
established by the NYSE and the applicable rules promulgated by
the SEC. Our Board of Directors has determined that each of the
following members of the Board of Directors is independent:
Rodney E. Bennett, Marc Chayette, Thomas P. Costello, G. Steven
Dawson, Jack Haraburda, Lance Ullom and Charles W. Wolcott. Our
Board of Directors has determined that Daniel G. Cohen and James
J. McEntee, III, our two other directors, are not
independent because they are also executive officers of our
company.
It is the policy of our Board of Directors that the independent
members of our Board of Directors meet separately without
management directors at least twice per year during regularly
scheduled Board meetings to discuss such matters as the
independent directors consider appropriate. In 2007, our
independent directors met separately without management
directors two times.
Nomination
of Directors
Our Board of Directors is responsible for the selection of
nominees for election or appointment to the Board of Directors
based on recommendations of the Nominating and Corporate
Governance Committee. The Nominating and Corporate Governance
Committee may consider nominees recommended by management and
stockholders using the criteria approved by the Board of
Directors to evaluate all candidates. The Nominating and
Corporate Governance Committee reviews each candidates
qualifications, including whether a candidate possesses any of
the specific qualities and skills desirable for members of the
Board. Evaluations of candidates generally involve a review of
background materials, internal discussions and interviews with
selected candidates as appropriate. Upon selection of a
qualified candidate, the Nominating and Corporate Governance
Committee recommends the candidate for consideration by the full
Board of Directors. The Nominating and Corporate Governance
Committee may engage consultants or third-party search firms to
assist in identifying and evaluating potential nominees.
Nominees for the Board of Directors should be committed to
enhancing long-term stockholder value and must possess a high
level of personal and professional ethics, sound business
judgment and integrity.
Our Board of Directors policy is to encourage selection of
directors who will contribute to our overall corporate goals.
The Nominating and Corporate Governance Committee may, from time
to time, review the appropriate skills and characteristics
required of members of our Board of Directors, including such
factors as business experience, diversity and personal skills in
finance, marketing, financial reporting and other areas that are
expected to contribute to an effective Board. In evaluating
potential candidates for our Board of Directors, the Nominating
and Corporate Governance Committee will consider these factors
in light of the specific needs of the Board at that time.
Our Nominating and Corporate Governance Committee may consider
director candidates recommended by our stockholders. Our
Nominating and Corporate Governance Committee will apply the
same standards in considering candidates submitted by
stockholders as it does in evaluating candidates submitted by
members of our Board of Directors. To recommend a prospective
nominee for the Nominating and Corporate Governance
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Committees consideration, the candidates name and
qualifications must be submitted in writing to our Secretary,
Daniel Munley, at Alesco Financial Inc., Cira Centre, 2929 Arch
Street,
17th Floor,
Philadelphia, Pennsylvania 19104.
Communications
with Our Company
Any employee, stockholder or other person may communicate with
our Board of Directors or individual directors. Any such
communications may be sent in writing to Alesco Financial Inc.,
Cira Centre, 2929 Arch Street,
17th Floor,
Philadelphia, Pennsylvania 19104, Attn: Board of Directors.
Our Audit Committee has also established procedures for
(a) the receipt, retention, and treatment of complaints
received by our company regarding accounting, internal
accounting controls, or auditing matters and (b) the
confidential, anonymous submission by our employees of concerns
regarding questionable accounting or auditing matters. If you
wish to contact our Audit Committee to report complaints or
concerns relating to the financial reporting of our company, you
may do so in writing to the Chairman of the Audit Committee at
Alesco Financial Inc., Cira Centre, 2929 Arch Street,
17th Floor,
Philadelphia, Pennsylvania 19104.
Any such communications may be made anonymously. We also have a
compliance hotline that may be used, on an anonymous basis or
otherwise, to report any concerns or violations of our standards
of conduct, policies or laws and regulations. The number to the
hotline is
(800) 399-3595.
Director
Attendance at Annual Meeting
Although director attendance at our annual meeting each year is
strongly encouraged, we do not have an attendance policy. Seven
of our directors attended our 2007 annual meeting. We encourage
all of our directors to attend this annual meeting.
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PROPOSAL ONE
ELECTION OF DIRECTORS
Pursuant to the Maryland General Corporation Law, our charter,
and our Bylaws, as amended, our business, property and affairs
are managed under the direction of our Board of Directors. Our
Board of Directors, based on the recommendation of the
Nominating and Corporate Governance Committee, has nominated the
current directors, Messrs. Bennett, Chayette, Cohen,
Costello, Dawson, Haraburda, McEntee, Ullom, and Wolcott, each
to serve until the next annual meeting of the stockholders,
until his successor has been duly elected and qualified, or
until the earliest of his death, resignation or retirement. The
persons named in the enclosed proxy card will vote your shares
as you specify on the enclosed proxy card. If you return your
properly executed proxy card but fail to specify how you want
your shares voted, your shares will be voted in favor of each of
these nominees.
The Nominating and Corporate Governance Committee knows of no
reason why any of these nominees would be unable or unwilling to
serve on the Board of Directors, but if any nominee should be
unable or unwilling to serve, the proxies will be voted for the
election of such other person for director as the Board of
Directors, based on the recommendation of the Nominating and
Corporate Governance Committee, may recommend in the place of
such nominee.
Names of
Directors and Biographical Information
Rodney E. Bennett, age 67, has served as our
director since October 15, 2003 and is currently a member
of the Compensation Committee. Mr. Bennett was previously
chairman of the of the board of directors and chairman of the
audit committee of Sunset Financial Resources, Inc. prior to our
merger with Alesco Financial Trust, or AFT, on October 6,
2006, and was also a member of the special committee in
connection with our merger with AFT. From 2003 through 2007,
Mr. Bennett served as the chief financial officer and
director of Harvin Carter and Associates, Inc., a privately
owned fire sprinkler contractor doing business in five
southeastern states. He continues to serve as a director of that
company. A career community banker, he has also served in
various capacities and levels of management in banks in
Southeast Georgia, including chief executive positions. Since
July 1991, Mr. Bennett has acted as a consultant to various
Georgia banks and private companies. He is currently a director
and a member of the loan committee and the audit committee of
FirstAtlantic Bank FSB, in Jacksonville, Florida, a
start-up
bank that opened in 2007.
Marc Chayette, age 57, has served as our director
and as a member of the Nominating and Corporate Governance
Committee since October 18, 2006. Mr. Chayette is a
film and television producer with twenty-five years of
experience in production and distribution of French feature
films. Mr. Chayette created Adelaide Productions in 1988
and has produced eight feature films. He is currently the
president of Adelaide Productions. He started producing for
television at the request of TF1 and produced an award winning
dramatic comedy about an illiterate womans determined
quest to learn to read. Mr. Chayette has also been
extremely active in co-producing documentary and feature films
in African countries, helping African production companies to
produce and distribute their cultural heritage. Before his
career in production, Mr. Chayette created a chain of
design furniture stores representing first Ligne Roset. The
company still exists and is under contract with Roche Bobois.
Daniel G. Cohen, age 38, has served as the Chairman
of the Board of Directors since October 6, 2006 and as the
Executive Chairman of the company since October 18, 2006.
He has also served as chief executive officer and trustee of
RAIT Financial Trust (NYSE: RAS), a real estate finance company
focused on the commercial real estate industry since December
2006 when it merged with Taberna Realty Finance Trust.
Mr. Cohen was chairman of the board of trustees of Taberna
Realty Finance Trust from its inception in March 2005 until
December 2006 and has been its chief executive officer since
March 2005. In addition, Mr. Cohen has served as the
chairman of the board of directors of Cohen Brothers, LLC (which
does business as Cohen & Company), an alternative
investment management firm, since 2001. Mr. Cohen is currently a
director of Star Asia Finance Limited, a joint venture investing
in Asian commercial real estate, and the chairman of the board
of directors of Muni Funding Company of America (OTC: MUNFL), a
wholly-owned subsidiary of Cohen & Company investing
in middle-market non-profit organizations. Mr. Cohen was
the chief executive officer of Cohen & Company and its
subsidiary, Cohen and Company Securities, LLC, a securities
brokerage firm, from
7
September 2001 until February 2006. Since 2000, Mr. Cohen
has been the chairman of the board of directors of The Bancorp,
Inc. (NASDAQ: TBBK), a holding company for The Bancorp Bank,
which provides various commercial and retail banking products
and services to small and mid-size businesses and their
principals in the United States. He also served as the chairman
of the board of Dekania Acquisition Corp. (AMEX: DEK), a
publicly held blank check company focused on acquiring
businesses that operate within the insurance industry, from its
inception in February 2006 until December 2006, and remains a
director of Dekania Acquisition Corp. Mr. Cohen served as a
member of the board of directors of TRM Corporation (NASDAQ:
REXI), a publicly held consumer services company, from 2000 to
September 2006 and as its chairman from 2003 to September 2006.
From 1998 to 2000, Mr. Cohen served as the chief operating
officer of Resource America Inc., a specialized asset management
company. From 1997 to 1999, Mr. Cohen was a director of
Jefferson Bank of Pennsylvania, a commercial bank acquired by
Hudson United Bancorp in 1999.
Thomas P. Costello, age 62, has served as our
director and Chairman of the Audit Committee since
October 6, 2006. Mr. Costello also served as a trustee
and chairman of the audit committee of AFTs board of
trustees from January 2006 until our merger with AFT.
Mr. Costello served as a director for KPMG LLP from 2002 to
2004. Prior to that, he was employed at Arthur Andersen LLP for
35 years, including serving as National Practice Director
from 1996 to 2002, where he was responsible for the accounting
and audit practices of 19 Arthur Andersen offices in the
southeast region of the United States. From 1985 to 1996, he
served as partner in charge of the accounting and audit practice
in Arthur Andersens Philadelphia office. Prior to that, he
acted as engagement partner where he served clients in numerous
industries and worked with both large multinational and small
and mid-sized public companies. Mr. Costello also serves on
the board of directors, and is the chairman of the audit
committee, of Advanta Corp. (NASDAQ: ADVNA & ADVNB), a
Pennsylvania-based financial services company, and Advanta Bank,
a Delaware State chartered bank, which is a subsidiary of
Advanta Corp.
G. Steven Dawson, age 50, has served as our director
since January 11, 2005 and currently serves as the Chairman
of the Nominating and Corporate Governance Committee.
Mr. Dawson was previously a member of the compensation
committee and nominating and corporate governance committee for
Sunset Financial Resources, Inc. and was also the chairman of
the special committee in connection with our merger with AFT.
Mr. Dawson is currently director and chief financial
officer of Desert Capital REIT, Inc. (public but non-listed), a
Las Vegas-based commercial mortgage REIT, and managing director
of Sandstone Equity Investors, LLC, the outside advisor of
Desert Capital REIT, Inc. He also serves on the board of
directors of AmREIT, Inc. (AMEX: AMY), a Houston-based owner and
developer of retail properties (chairman of the audit committee;
member of the compensation committee and nominating and
governance committee), Medical Properties Trust (NYSE: MPW), a
Birmingham, Alabama-based REIT specializing in the ownership of
acute care facilities and related medical properties (chairman
of the audit committee) and American Campus Communities (NYSE:
ACC), an Austin-based equity REIT focused on student housing
(chairman of the audit committee; member of the compensation
committee). From 1990 to 2003, Mr. Dawson served as chief
financial officer of Camden Property Trust and its predecessors,
a multi-family REIT based in Houston with apartment operations,
construction and development activities throughout the United
States.
Jack Haraburda, age 69, has served as our director,
a member of the Nominating and Corporate Governance Committee
and the Chairman of the Compensation Committee since
October 6, 2006. Mr. Haraburda served as a trustee and
chairman of the compensation committee of AFTs board of
trustees from January 2006 until our merger with AFT.
Mr. Haraburda is the managing partner of CJH Securities
Information Group, a professional coaching business.
Mr. Haraburda served as managing director for the
Philadelphia Complex of Merrill Lynch, Pierce,
Fenner & Smith Incorporated from 2003 to 2005. He has
also served in various positions at Merrill Lynch from 1984
until 2003, including as managing director of Merrill
Lynchs Princeton Complex, resident vice president of
Merrill Lynchs Philadelphia Main Line Complex, marketing
director and national sales manager of Merrill Lynch Life Agency
and chairman of Merrill Lynch Metals Company. From 1980 to 1984,
he was managing director of Comark Securities, a government
securities dealer. From 1968 until 1980, he served as a
financial advisor, national sales manager for the Commodity
Division, manager of the Atlanta Commodity Office and the Bala
Cynwyd office of Merrill Lynch.
8
James J. McEntee, III, age 50, has served as
our director and as our Chief Executive Officer and President
since October 6, 2006. Since 2003, Mr. McEntee has
served as the chief operating officer of Cohen &
Company, an alternative investment management firm that provides
financing to small and mid-sized companies in financial
services, real estate and other sectors. He also serves as a
director of The Bancorp Bank, a bank holding company. Prior to
joining Cohen & Company, Mr. McEntee was the
co-founder and co-managing partner of Harron Capital, LP, a
private equity fund, from 1999 to 2002. Mr. McEntee held
various positions as a lawyer in private practice with the law
firm of Lamb, Windle & McErlane, P.C. from 1990
to 2003, including as a partner and chairman of the firms
business department.
Lance Ullom, age 39, has served as our director and
a member of the Audit Committee and the Compensation Committee
since October 6, 2006. Prior to becoming a director of the
company, he served as a trustee and chairman of the nominating
and corporate governance committee of AFTs board of
trustees. From January 2005 to November 2007, he was the
executive vice president for E*TRADE Global Asset Management, or
ETGAM. In this capacity he supervised all of ETGAMs
investment activities in mortgage-backed securities and other
asset backed securities, mortgage loans, commercial lending,
municipal securities, trust preferred securities, or TruPS,
derivative products and collateralized debt obligation, or CDO,
businesses. From 1996 to 2000, Mr. Ullom worked at Arbor
Capital, a licensed broker dealer/mortgage hedge fund based in
New York City, where he was responsible for trading structured
bonds and whole loans. From 1991 to 1996, Mr. Ullom worked
at Barclay Investments in various capacities from institutional
sales to co-head of trading for all mortgage products.
Charles W. Wolcott, age 55, has served as our
director since September 26, 2005 and is currently a member
of the Audit Committee. He previously served as a member of the
special committee in connection with our merger with AFT.
Mr. Wolcott is currently president and chief executive
officer of Allied Wolcott Company LLC, a company that
specializes in the area of conservation real estate
transactions. Since August 2007, he has also served as a
director to Desert Capital REIT, Inc. (public but non-listed), a
Las Vegas-based commercial mortgage REIT. From 2002 to 2006, he
was the president and chief executive officer of Tecon
Corporation, a diversified business operator. From 1993 to 2001,
he was the president and chief executive officer of American
Industrial Properties REIT (OTC: IND), a REIT that specializes
on light industrial and office/flex space. From 1984 to 1992,
Mr. Wolcott served in various capacities at Trammell Crow
Company, a real estate management company, including president
and chief executive officer of Trammell Crow Asset Services,
where he oversaw a $10 billion portfolio of real estate
assets. Mr. Wolcott received his M.B.A. from Harvard
Business School in 1977.
The Board of Directors unanimously recommends that you vote
FOR the election of the nine nominees listed above
and set forth in Proposal 1. In the absence of
instructions to the contrary, proxies solicited in connection
with this proxy statement will be voted for such nominees.
MEETINGS
AND COMMITTEES OF THE BOARD OF DIRECTORS
Meetings
of the Board of Directors
During the 2007 fiscal year, our Board of Directors held 14
meetings. Each of the directors attended at least 75% of the
total number of meetings of our Board of Directors held during
2007.
Committees
of the Board of Directors
The Board of Directors currently has three standing committees:
the Audit Committee, the Compensation Committee and the
Nominating and Corporate Governance Committee. The Board of
Directors has affirmatively determined that each committee
member satisfies the independence requirements of the NYSE and
the SEC for membership on our Board committees. From time to
time our Board of Directors may establish a new committee or
disband a current committee depending upon the circumstances.
9
Audit
Committee
The members of the Audit Committee are Messrs. Costello,
Ullom and Wolcott. Mr. Costello is the Chairman of the
Audit Committee. Our Board of Directors has determined that each
of the members of the Audit Committee is independent
within the meaning of the rules of the NYSE and the SEC and that
each of the members of the Audit Committee is financially
literate and has accounting or related financial management
expertise, as such qualifications are defined under the rules of
the NYSE. In addition, our Board of Directors has determined
that Mr. Costello is an audit committee financial
expert as defined by the SEC. The Audit Committee operates
under a written charter that was originally adopted in 2006 and
amended in 2007. A copy of the charter may be found on our
website at
http://www.alescofinancial.com
and will be provided in print, without charge, to any
stockholder who requests a copy. The Audit Committee met nine
times in 2007. Each of the committee members attended at least
75% of the total number of meetings of our Audit Committee held
during fiscal year 2007.
The Audit Committee has responsibility for engaging independent
registered public accounting firms, reviewing with them the
plans and results of the audit engagement, approving the
professional services they provide to us, reviewing their
independence and considering the range of audit and non-audit
fees. The Audit Committee assists our Board of Directors with
oversight of (i) the integrity of our financial statements;
(ii) our compliance with legal and regulatory requirements;
(iii) the qualifications, independence and performance of
the registered public accounting firm we employ for the audit of
our financial statements; and (iv) the performance of the
people responsible for our internal audit function. Among other
things, the Audit Committee prepares the Audit Committee report
for inclusion in our annual proxy statement, conducts an annual
review of its charter and evaluates its performance on an annual
basis. The Audit Committee also establishes procedures for the
receipt, retention, and treatment of complaints we receive
regarding accounting, internal accounting controls and auditing
matters and the confidential, anonymous submission by employees
of concerns regarding questionable accounting or auditing
matters. The Audit Committee has the authority to retain counsel
and other experts or consultants at the companys expense
that it deems necessary or appropriate to enable it to carry out
its duties without seeking approval of the Board of Directors.
Compensation
Committee
The members of the Compensation Committee are
Messrs. Bennett, Haraburda and Ullom. Mr. Haraburda is
the Chairman of the Compensation Committee. Our Board of
Directors has determined that each of the members of the
Compensation Committee is independent within the
meaning of the rules of the NYSE.
The Compensation Committee assists our Board of Directors in
discharging its responsibilities relating to compensation of our
directors and officers. The Compensation Committee has overall
responsibility for evaluating, recommending changes to and
administering our compensation plans, policies and programs.
Among other things, the Compensation Committee (i) reviews
the companys overall compensation structure, policies and
programs; (ii) makes recommendations to the Board of
Directors with respect to incentive-compensation plans and
equity-based plans with respect to the management agreement
between us and our manager; (iii) annually reviews the
compensation of directors for service on the Board of Directors
and its committees and recommends changes in Board compensation;
(iv) annually reviews the performance of our Chief
Executive Officer and communicates the results of the review to
the Chief Executive Officer and the Board of Directors;
(v) produces an annual report on executive compensation for
inclusion in our annual proxy statement; (vi) annually
reviews and reassesses the adequacy of its charter and
recommends any proposed changes to the Board for approval; and
(vii) annually reviews its performance. The Compensation
Committee has authority to grant awards under our 2006 Long-Term
Incentive Plan. The Compensation Committee also has the
authority to retain counsel and other experts or consultants at
the companys expense that it deems necessary or
appropriate to enable it to carry out its duties without seeking
approval of the Board of Directors.
The Compensation Committee operates under a written charter that
was originally adopted in 2006. A copy of the charter may be
found on our website at
http://www.alescofinancial.com
and will be provided in print, without charge, to any
stockholder who requests a copy. The Compensation Committee met
three times
10
in 2007. Each of the committee members attended at least 75% of
the total number of meetings of our Compensation Committee held
during fiscal year 2007.
Nominating
and Corporate Governance Committee
The members of the Nominating and Corporate Governance Committee
are Messrs. Chayette, Dawson and Haraburda. Mr. Dawson
is the Chairman of the Nominating and Corporate Governance
Committee. Our Board of Directors has determined that each of
the members of the Nominating and Corporate Governance Committee
is independent within the meaning of the rules of
the NYSE.
The Nominating and Corporate Governance Committees primary
functions are to (i) recommend to the Board of Directors
qualified candidates for election as directors and recommend a
slate of nominees for election as directors at our annual
meeting; (ii) periodically prepare and submit to the Board
of Directors for adoption its selection criteria for director
nominees; (iii) review and make recommendations on matters
involving the general operation of the Board of Directors,
including development and recommendation of our corporate
governance guidelines; (iv) annually recommend to the Board
of Directors nominees for each committee of the Board; and
(v) facilitate the assessment of the Boards
performance as a whole and of the individual directors and
report thereon to the Board of Directors. The Nominating and
Corporate Governance Committee has the authority to retain
counsel and other experts or consultants at the companys
expense that it deems necessary or appropriate to enable it to
carry out its duties without seeking the approval of the Board
of Directors.
The Nominating and Corporate Governance Committee operates under
a written charter that was originally adopted in 2006. A copy of
the charter may be found on our website at
http://www.alescofinancial.com
and will be provided in print, without charge, to any
stockholder who requests a copy. The Nominating and Corporate
Governance Committee met one time in 2007. All the committee
members attended.
EXECUTIVE
OFFICERS
We are externally managed and advised by Cohen &
Company Management, LLC, which we refer to below as our manager.
All of our current executive officers are employees of our
manager or one or more of its affiliates. The following sets
forth certain information with respect to our current executive
officers:
Christian M. Carr, age 30, previously AFTs
chief accounting officer and controller, has served as our Chief
Accounting Officer since October 6, 2006. Prior to joining
Cohen & Company in April 2006, Mr. Carr worked in
public accounting at various levels within Arthur Andersen LLP
and KPMG LLP, most recently as manager, where he served a
variety of public and private companies with financial services
and real estate businesses from 1999 through 2006.
Daniel G. Cohen, age 38, previously AFTs
chairman, has served as our Executive Chairman since
October 18, 2006. See Proposal One
Election of Directors above for Mr. Cohens
biographical information.
James J. McEntee, III, age 50, previously
AFTs president & chief executive officer, has
served as our President and Chief Executive Officer since
October 6, 2006. See Proposal One
Election of Directors above for
Mr. McEntee, IIIs biographical information.
Shami J. Patel, age 39, previously AFTs chief
operating officer, is currently serving as our Chief Operating
Officer and Chief Investment Officer, positions he has held
since October 6, 2006. Mr. Patel has served as a
managing director of Cohen & Company since 2002 where
he oversees the structuring and execution of our transactions.
He was a member of the board of directors and a co-chief
executive officer of iATMglobal.net Corp. from 2000 to 2002. He
was the chief financial officer of TRM Corporation, a consumer
services company, from 1999 to 2000. He also served as vice
president for Sirrom Capital, a $500 million mezzanine
investment fund, from 1998 to 1999. Mr. Patel was an
investment banker at Robertson Stephens & Co. in the
business services and specialty finance groups from 1997 to 1998.
11
John J. Longino, age 50, previously AFTs chief
financial officer and treasurer, is currently serving as our
Chief Financial Officer and Treasurer, positions he has held
since October 6, 2006. Mr. Longino also serves as an
executive vice president of Cohen & Company, which he
joined in 2005. Mr. Longino was co-founder and co-managing
partner of Apex Integrated Solutions LLC, a provider of
outsourced accounting and finance services, from 2002 to 2005.
Mr. Longino worked in public accounting from 1980 to 2002
at Arthur Andersen LLP, where he served a variety of public and
private companies with real estate and financial services
businesses. As a partner with Arthur Andersen LLP,
Mr. Longino had responsibility for various public
offerings, due diligence engagements and SEC matters. Also, from
1995 to 2000, Mr. Longino served as the
partner-in-charge
of administration and chief financial officer for Arthur
Andersens Mid-Atlantic Market Circle, which included the
firms Washington, D.C., Philadelphia, Baltimore,
Lancaster and Richmond offices.
Messrs. Longino and Carr are exclusively dedicated to our
business; however, they are employees of our manager.
Messrs. Cohen, McEntee and Patel have other duties with
Cohen & Company and its affiliates and are not
exclusively dedicated to our business.
No director or executive officer was selected as a result of any
arrangement or understanding between the director or executive
officer or any other person. All executive officers are
appointed annually by, and serve at the discretion of, our Board
of Directors.
COMPENSATION
DISCUSSION AND ANALYSIS
This section of the proxy statement describes our compensation
program, objectives and policies for our executive officers. It
provides qualitative information regarding the manner and
context in which compensation is awarded to, and earned by, our
executive officers and places in perspective the data presented
in the tables and narrative below.
Overview
We have no employees. Pursuant to a management agreement between
our manager and us, our manager is responsible for managing our
business affairs. For more information regarding the various
fees paid by us to our manager for advisory and other services
performed under a management agreement, please see Certain
Relationships and Related Party Transactions
Transactions with Cohen & Company and Management
Team Management Agreement. All of our
executive officers are employees of our manager or one or more
of its affiliates. We do not pay cash compensation to our
executive officers. We also do not provide our executive
officers with pension benefits, perquisites or other personal
benefits to them. The only element of compensation that we
provide our executive officers is equity compensation pursuant
to our 2006 Long-Term Incentive Plan, which we refer to below as
the Plan.
Compensation
Philosophy and Objectives
Before the completion of our merger with AFT, we generally
compensated our executive officers through a combination of base
salary, annual bonus compensation and awards of stock options
and restricted shares of common stock, which we refer to herein
as restricted shares. Since the completion of the merger, we do
not pay or accrue any salaries, bonuses or other compensation to
our executive officers, other than equity compensation which may
be granted under our Plan. Our manager, for whom our executive
officers are employed, pays the base salaries and bonuses to our
executive officers. We do not control how such fees are
allocated by our manager to its employees. We understand that
our manager takes into account the performance of our company as
a factor in determining the compensation of its employees, and
such compensation may be increased or decreased depending on our
companys performance.
The goal of our compensation program is to attract, motivate and
retain the highly talented individuals needed to operate,
acquire, develop and grow our business over the long-term. As
such, we seek to provide compensation that will support the
achievement of our financial and growth goals and objectives.
When our performance exceeds the goals and objectives
established for a particular performance period, we believe that
12
our key personnel should be compensated appropriately. When our
performance falls short of our financial or other objectives, we
believe that our Compensation Committee should exercise its
discretion in determining the appropriate compensation for our
key personnel. To help achieve our goals and objectives and
appropriately compensate our key personnel in light of our short
and long-term performance and growth, we have structured an
equity-based incentive compensation system designed to attract
and maintain key personnel, induce them to remain with us, our
subsidiaries and our manager and its affiliates, and encourage
them to increase their efforts to make our business more
successful.
Our Compensation Committee annually reviews our compensation
programs to ensure that incentive opportunities are competitive
and reflect our performance. The Compensation Committee may
benchmark our compensation programs to comparative companies. To
reinforce the importance of balancing short-term and long-term
results, our key personnel may be provided with annual and
long-term equity-based incentives granted under our Plan.
Equity-Based
Compensation
The Plan is the only element of compensation that is subject to
our discretion. The Plan is administered by the Compensation
Committee, except that in certain circumstances the Board of
Directors may act in its place. The purpose of the Plan is to
attract key employees, directors, officers, advisors and
consultants and to induce them to continue providing services to
us and our subsidiaries and encourage them to increase their
efforts to make our business more successful, whether directly
or through our subsidiaries or other affiliates. In furtherance
of these objectives, the Plan is designed to provide
equity-based incentives to such persons in the form of options
(including stock appreciation rights), restricted shares,
phantom shares, dividend equivalent rights and other forms of
equity based awards as contemplated by the Plan, with
eligibility for such awards determined by the Compensation
Committee. Our Compensation Committee and Board of Directors
believe that awards of restricted shares, typically vesting over
a period of three years or more, are the most effective of the
equity-based incentives available under the Plan in
accomplishing our compensation goals.
Equity-based awards to key personnel are generally subject to
vesting periods in order to support the achievement of our
performance goals over the long-term and to help retain key
personnel. The Compensation Committee determines the number and
type of equity-based incentives that should be awarded from time
to time to key personnel in light of our compensation goals and
objectives. The Compensation Committee strongly believes that by
providing our key personnel with the opportunity to increase
their ownership of our equity, the interests of stockholders and
our key personnel will be more closely aligned. In addition, the
Compensation Committee believes that an equity-based
compensation is particularly appropriate for our company since
we are an externally managed real estate investment trust, or
REIT. REIT regulations require us to pay at least 90% of our
earnings to stockholders as dividends. As a result, the
Compensation Committee believes that our stockholders are
principally interested in receiving attractive risk-adjusted
dividends and growth in dividends and book value. Accordingly,
the Compensation Committee wants to provide an incentive to our
key personnel that rewards success in achieving these goals.
Since we do not have the ability to retain earnings, the
Compensation Committee believes that equity-based awards serve
to align the interests of our key personnel with the interests
of our stockholders in receiving attractive risk-adjusted
dividends and growth. The Compensation Committee believes that
equity-based awards are consistent with our stockholders
interest in book value growth as these individuals will be
incentivized to grow book value for stockholders over time.
The Compensation Committee does not use a specific formula to
calculate the number of equity awards awarded to executive
officers under our Plan. The Compensation Committee does not
explicitly set future award levels on the basis of what the
executive officers earned from prior awards. While the
Compensation Committee will take past levels into account, it
will not solely base future awards in view of those past awards.
Generally, in determining the specific amounts to be granted to
an individual, the Compensation Committee will take into account
factors such as the individuals position, his contribution
to our performance, market practices as well as the
recommendation of our manager and executive officers.
13
Accounting
and Tax Considerations
Section 162(m) of the Internal Revenue Code of 1986, as
amended, or the Internal Revenue Code, generally disallows a tax
deduction to public corporations for compensation, other than
performance-based compensation over $1 million paid to the
principal executive officer, principal financial officer and the
next three highest compensated executive officers to the extent
that compensation of a particular executive exceeds
$1 million in any one year. There are certain exceptions
for qualified performance-based compensation in accordance with
the Internal Revenue Code and corresponding regulations.
However, given the fact that we are presently externally managed
by our manager and the only compensation that currently may be
paid to our executive officers are incentive awards pursuant to
our Plan, it is unlikely that Section 162(m) will have any
material effect on us.
Beginning on January 1, 2006, we began accounting for
stock-based payments through our Plan in accordance with the
requirements of the Statement of Financial Accounting Standards
No. 123(R), Share-Based Payment, or
FAS 123R.
REPORT OF
THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The following report of the Compensation Committee does not
constitute soliciting material and shall not be deemed filed or
incorporated by reference into any other company filing under
the Securities Act of 1933 or the Securities Exchange Act of
1934, as amended, except to the extent the company specifically
incorporates this report of the Compensation Committee by
reference therein.
The Compensation Committee is comprised entirely of independent
directors as determined by the Board of Directors within the
meaning of the applicable NYSE listing standards currently in
effect. The Board designates the members and the Chairman of the
Compensation Committee on an annual basis.
The Compensation Committee has reviewed and discussed with
management the Compensation Discussion and Analysis contained in
this proxy statement. Based on this review and discussion, the
Compensation Committee recommended to the Board of Directors
that the Compensation Discussion and Analysis be included in
this proxy statement and incorporated by reference in the
companys annual report on
Form 10-K
for the fiscal year ended December 31, 2007.
Respectfully Submitted,
Compensation Committee
Jack Haraburda, Chairman
Rodney E. Bennett
Lance Ullom
EXECUTIVE
COMPENSATION
On October 6, 2006, upon completion of our merger with AFT,
we assumed AFTs management agreement with
Cohen & Company Management, LLC, our manager. Pursuant
to the terms of the management agreement, our manager is
responsible for managing our affairs. As of October 6, 2006
all of our executive officers are employees of our manager or
one or more of its affiliates and our manager or its affiliates
compensates each of our executive officers. Our executive
officers do not receive cash compensation from us for serving as
our executive officers. However, we may from time to time, at
the discretion of the Compensation Committee, grant options to
purchase shares of common stock, restricted shares and other
equity-based awards to our executive officers pursuant to our
Plan. For a description of the management agreement, please see
Certain Relationships and Related Party
Transactions Transactions with Cohen &
Company and Management Team Management
Agreement.
14
Compensation
of Executive Officers
The following table summarizes the equity compensation awarded
by us to James J. McEntee, III, our Chief Executive Officer
and President, John J. Longino, our Chief Financial Officer and
Treasurer, and our three other most highly compensated executive
officers for the fiscal year ended December 31, 2007, which
we refer to herein as our named executive officers.
Summary
Compensation Table
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Change in
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Pension
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Value and
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Non-Equity
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Nonqualified
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Incentive
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Deferred
|
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Stock
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Option
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Plan
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Compensation
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All Other
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Salary
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Bonus
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Awards
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Awards
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Compensation
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Earnings
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Compensation
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Total
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Name and Principal Position
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Year
|
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($)
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($)
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($)(1)
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($)
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($)
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($)
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($)(2)
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($)
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James J. McEntee, III,
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2007
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420,578
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312,533
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733,111
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Chief Executive Officer & President(3)
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2006
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John J. Longino
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2007
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355,805
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125,778
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481,583
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Chief Financial Officer & Treasurer(4)
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2006
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138,794
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11,886
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150,680
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Daniel G. Cohen
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2007
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656,004
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503,370
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1,159,374
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|
Chairman of the Board of Directors & Executive
Officer(5)
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2006
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Shami J. Patel
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2007
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340,037
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98,598
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438,635
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Chief Operating Officer & Chief Investment Officer(6)
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2006
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161,926
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13,867
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175,793
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Christian M. Carr
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2007
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34,015
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26,225
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60,240
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Chief Accounting Officer(7)
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2006
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(1)
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Amounts in this column do not
reflect equity compensation actually received by the named
executive officer. Amount shown represent compensation costs
recognized by the company during the fiscal years ended
December 31, 2007 and 2006 for restricted shares using the
fair value based methodology prescribed by FAS 123R and
EITF Issue
No. 96-18.
Accounting for Equity Instruments That Are Issued to Other
Than Employees for Acquiring, or in Conjunction with Selling,
Goods or Services, or EITF
No. 96-18.
The assumptions used by the company to calculate the value of
these restricted shares are incorporated herein by reference to
Note 8 to the consolidated financial statements included in
the companys annual report on
Form 10-K
for the year ended December 31, 2007. At December 31,
2007, the aggregate number of restricted shares outstanding was
as follows: Mr. McEntee, III 251,446;
Mr. Longino 101,293; Mr. Cohen
417,988; Mr. Patel 76,034; and
Mr. Carr 21,874.
|
(2)
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|
Represents dividends paid on the
restricted shares held by the named executive officers.
|
(3)
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Mr. McEntee has served as our
Chief Executive Officer and President since October 6, 2006
when we consummated our merger with AFT. Mr. McEntee is an
employee of Cohen & Company and received no cash
compensation from us in 2007 and 2006.
|
(4)
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Mr. Longino has served as our
Chief Financial Officer and Treasurer since October 6, 2006
when we consummated our merger with AFT. Mr. Longino is an
employee of Cohen & Company and received no cash
compensation from us in 2007 and 2006.
|
(5)
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Mr. Cohen has served as our
Chairman of the Board of Directors since October 6, 2006
and when we consummated our merger with AFT and as our Executive
Chairman since October 18, 2006. Mr. Cohen is an
employee of Cohen & Company and received no cash
compensation from us in 2007 and 2006.
|
(6)
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Mr. Patel has served as our
Chief Operating Officer and Chief Investment Officer since
October 6, 2006 when we consummated our merger with AFT.
Mr. Patel is an employee of Cohen & Company and
received no cash compensation from us in 2007 and 2006.
|
(7)
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Mr. Carr has served as our
Chief Accounting Officer since October 6, 2006 when we
consummated our merger with AFT. Mr. Carr is an employee of
Cohen & Company and received no cash compensation from
us in 2007 and 2006.
|
15
Grants of
Plan-Based Awards in 2007
The following table sets forth certain information with respect
to each award made under our Plan to a named executive officer
in the fiscal year ended December 31, 2007.
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All Other
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All Other
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Grant
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Stock
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Option
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Date
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Awards;
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Awards;
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Exercise or
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Fair
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Number of
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Number of
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Base
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Value of
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Estimated Future Payouts Under Non-Equity
|
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Estimated Future Payouts
|
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Shares of
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Securities
|
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Price of
|
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Stock and
|
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Incentive Plan Awards
|
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Under Equity Incentive Plan Awards
|
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Stock or
|
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Underlying
|
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Option
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Option
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Grant
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Threshold
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Target
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Maximum
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Threshold
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Target
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Maximum
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Units
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Options
|
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Awards
|
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Awards(1)
|
Name
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Date
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
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(#)
|
|
(#)
|
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($/Sh)
|
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($)
|
|
James J. McEntee, III
|
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01/31/2007
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179,705
|
(2)
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2,036,055
|
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05/25/2007
|
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140,000
|
(3)
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|
|
|
|
|
|
|
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1,394,400
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|
John J. Longino
|
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01/31/2007
|
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|
|
|
|
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|
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|
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|
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27,300
|
(4)
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309,309
|
|
|
|
|
05/25/2007
|
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|
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|
|
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|
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80,000
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(5)
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796,800
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|
Daniel G. Cohen
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01/31/2007
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|
|
|
|
|
|
|
|
|
|
|
|
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246,205
|
(6)
|
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|
|
|
|
|
|
|
|
|
2,789,500
|
|
|
|
|
05/25/2007
|
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|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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280,000
|
(7)
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|
|
|
|
|
|
|
|
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|
2,788,800
|
|
Shami J. Patel
|
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|
01/31/2007
|
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|
|
|
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,500
|
(8)
|
|
|
|
|
|
|
|
|
|
|
152,955
|
|
|
|
|
05/25/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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60,000
|
(9)
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|
|
|
|
|
|
|
|
|
|
597,600
|
|
Christian M. Carr
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01/31/2007
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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12,500
|
(10)
|
|
|
|
|
|
|
|
|
|
|
141,625
|
|
|
|
|
05/25/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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15,000
|
(11)
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|
|
|
|
|
|
|
|
|
|
149,400
|
|
|
|
|
(1)
|
|
The value of a stock award is based
on the fair value as of the grant date of such award determined
pursuant to FAS 123R.
|
(2)
|
|
Vests, pro rata, on the last day of
each three-month period commencing on April 30, 2007 and
ending on January 31, 2010.
|
(3)
|
|
Vests, pro rata, on the last day of
each three-month period commencing on July 31, 2007 and
ending on April 31, 2010.
|
(4)
|
|
Vests, pro rata, on the last day of
each three-month period commencing on April 30, 2007 and
ending on January 31, 2010.
|
(5)
|
|
Vests, pro rata, on the last day of
each three-month period commencing on July 31, 2007 and
ending on April 31, 2010.
|
(6)
|
|
Vests, pro rata, on the last day of
each three-month period commencing on April 30, 2007 and
ending on January 31, 2010.
|
(7)
|
|
Vests, pro rata, on the last day of
each three-month period commencing on July 31, 2007 and
ending on April 31, 2010.
|
(8)
|
|
Vests, pro rata, on the last day of
each three-month period commencing on April 30, 2007 and
ending on January 31, 2010.
|
(9)
|
|
Vests, pro rata, on the last day of
each three-month period commencing on July 31, 2007 and
ending on April 31, 2010.
|
(10)
|
|
Vests, pro rata, on the last day of
each three-month period commencing on April 30, 2007 and
ending on January 31, 2010.
|
(11)
|
|
Vests, pro rata, on the last day of
each three-month period commencing on July 31, 2007 and
ending on April 31, 2010.
|
Outstanding
Equity Awards at Fiscal Year-End 2007
The following table summarizes the equity awards we have made to
each of the named executive officers that were outstanding as of
December 31, 2007.
|
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|
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|
|
Option Awards
|
|
|
Stock Awards
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
Market or
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Payout
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
Unearned
|
|
|
Unearned
|
|
|
|
Number of
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
Shares,
|
|
|
Shares,
|
|
|
|
Securities
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Shares or
|
|
|
Units or
|
|
|
Units or
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Units of
|
|
|
Units of
|
|
|
Other
|
|
|
Other
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
Stock
|
|
|
Stock
|
|
|
Rights
|
|
|
Rights
|
|
|
|
Options
|
|
|
Options
|
|
|
Unearned
|
|
|
Exercise
|
|
|
Option
|
|
|
That Have
|
|
|
That Have
|
|
|
That Have
|
|
|
That Have
|
|
|
|
(#)
|
|
|
(#)
|
|
|
Options
|
|
|
Price
|
|
|
Expiration
|
|
|
Not Vested
|
|
|
Not Vested
|
|
|
Not Vested
|
|
|
Not Vested
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
(#)
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)(1)
|
|
|
(#)
|
|
|
($)
|
|
|
James J. McEntee, III
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
224,803
|
|
|
|
737,354
|
|
|
|
|
|
|
|
|
|
John J. Longino
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
92,351
|
|
|
|
302,910
|
|
|
|
|
|
|
|
|
|
Daniel G. Cohen
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
374,137
|
|
|
|
1,227,168
|
|
|
|
|
|
|
|
|
|
Shami J. Patel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,509
|
|
|
|
231,270
|
|
|
|
|
|
|
|
|
|
Christian M. Carr
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,583
|
|
|
|
64,233
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The amounts set forth in this
column equal the number of restricted shares indicated
multiplied by the closing price of our common stock ($3.28) as
reported by the NYSE on December 31, 2007, the last trading
day of 2007.
|
16
Option
Exercises and Stock Vested
The following table shows information regarding option exercises
and vesting of stock awards for each named executive officer
during the year ended December 31, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Shares Acquired
|
|
|
Value Realized on
|
|
|
Shares Acquired
|
|
|
Value Realized on
|
|
Name
|
|
on Exercise (#)
|
|
|
Exercise ($)
|
|
|
on Vesting (#)
|
|
|
Vesting(1) ($)
|
|
|
James J. McEntee, III(2)
|
|
|
|
|
|
|
|
|
|
|
68,260
|
|
|
|
362,321
|
|
John J. Longino(3)
|
|
|
|
|
|
|
|
|
|
|
48,460
|
|
|
|
346,386
|
|
Daniel G. Cohen(4)
|
|
|
|
|
|
|
|
|
|
|
108,218
|
|
|
|
560,118
|
|
Shami J. Patel(5)
|
|
|
|
|
|
|
|
|
|
|
46,393
|
|
|
|
353,363
|
|
Christian M. Carr(6)
|
|
|
|
|
|
|
|
|
|
|
5,625
|
|
|
|
29,004
|
|
|
|
|
(1)
|
|
Amount reflects the market value of
the stock on the day the stock vested.
|
(2)
|
|
Consists of (i) 179,705
restricted shares awarded on January 31, 2007 under the
Plan, which vest, pro rata, on the last day of each three-month
period commencing on April 30, 2007 and ending on
January 31, 2010; and (ii) 140,000 restricted shares
awarded on May 25, 2007 under the Plan, which vest, pro
rata, on the last day of each three-month period commencing on
July 31, 2007 and ending on April 30, 2010.
|
(3)
|
|
Consists of
(i) 33,692 shares of AFT restricted shares of
beneficial interest, which were converted in our merger with AFT
into 42,452 restricted shares of our common stock, one-third of
which vested on January 31, 2007 and the remaining which
vest, pro rata, on the last day of each three-month period
commencing on March 31, 2007 and ending on
December 31, 2008; (ii) 27,300 restricted shares
awarded on January 31, 2007 under the Plan, which vest, pro
rata, on the last day of each three-month period commencing on
April 30, 2007 and ending on January 31, 2010; and
(iii) 80,000 restricted shares awarded on May 25, 2007
under the Plan, which vest, pro rata, on the last day of each
three-month period commencing on July 31, 2007 and ending
on April 30, 2010.
|
(4)
|
|
Consists of (i) 246,205
restricted shares awarded on January 31, 2007 under the
Plan, which vest, pro rata, on the last day of each three-month
period commencing on April 30, 2007 and ending on
January 31, 2010; and (ii) 280,000 restricted shares
awarded on May 25, 2007 under the Plan, which vest, pro
rata, on the last day of each three-month period commencing on
July 31, 2007 and ending on April 30, 2010.
|
(5)
|
|
Consists of
(i) 39,307 shares of AFT restricted shares of
beneficial interest, which were converted in our merger with AFT
into 49,527 restricted shares of our common stock, one-third of
which vested on January 31, 2007 and the remaining which
vest, pro rata, on the last day of each three-month period
commencing on March 31, 2007 and ending on
December 31, 2008; (ii) 13,500 restricted shares
awarded on January 31, 2007 under the Plan, which vest, pro
rata, on the last day of each three-month period commencing on
April 30, 2007 and ending on January 31, 2010; and
(iii) 60,000 restricted shares awarded on May 25, 2007
under the Plan, which vest, pro rata, on the last day of each
three-month period commencing on July 31, 2007 and ending
on April 30, 2010.
|
(6)
|
|
Consists of (i) 12,500
restricted shares awarded on January 31, 2007 under the
Plan, which vest, pro rata, on the last day of each three-month
period commencing on April 30, 2007 and ending on
January 31, 2010; and (ii) 15,000 restricted shares
awarded on May 25, 2007 under the Plan, which vest, pro
rata, on the last day of each three-month period commencing on
July 31, 2007 and ending on April 30, 2010.
|
Pension
Benefits
We do not provide our executive officers with payments or other
benefits at, following, or in connection with retirement.
Nonqualified
Deferred Compensation
We do not have a nonqualified deferred compensation plan that
provides for deferral of compensation on a basis that is not
tax-qualified for our executive officers.
Employment
Agreements
We are managed by our manager and we have no employment
agreements with our named executive officers. We therefore do
not have an obligation to pay our named executive officers any
form of compensation upon such officers termination of
employment, except with respect to restricted shares award
agreements entered into between the named executive officers and
us under the Plan. Under the restricted shares award agreements,
if the employment of Messrs. McEntee, III, Longino,
Cohen, Patel or Carr is terminated due to death, disability or
retirement, or is terminated by the company for any reason other
than cause, or in the event of a change of control (as defined
in the Plan) or the termination of the management agreement,
then
17
the restrictions on the unvested restricted shares held by such
named executive officers will immediately lapse. The potential
payments to our named executive officers in connection with such
termination, assuming such termination was effective as of
December 31, 2007, can be seen in the table above titled
Outstanding Equity Awards at Fiscal Year-End 2007
under the column Market Value of Shares or Units of Stock
That Have Not Vested.
For a description of the material terms of the restricted shares
award agreements, please see Certain Relationships and
Related Party Transactions Transactions with
Directors and Officers Restricted Shares Award
Agreements Grant of Restricted Shares.
COMPENSATION
OF DIRECTORS
Members of our Board of Directors who are employed by our
manager or its affiliates, such as Daniel G. Cohen and James J.
McEntee, III, do not receive additional compensation for
serving on our Board of Directors. The table below summarizes
the compensation information for our non-employee directors for
the fiscal year ended December 31, 2007. James J.
McEntee, III, our Chief Executive Officer and President,
and Daniel G. Cohen, our Chairman of the Board of Directors and
Executive Officer, are not included in this table as they are
deemed named executive officers of the company.
Compensation for each of Mr. McEntee, III and
Mr. Cohen is shown below under Executive
Compensation Summary Compensation Table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
Fees
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
Earned
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
or Paid
|
|
|
Stock
|
|
|
Option
|
|
|
Plan
|
|
|
Compensation
|
|
|
All Other
|
|
|
|
|
|
|
in Cash
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Earnings
|
|
|
Compensation
|
|
|
Total
|
|
Name
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)(3)
|
|
|
($)
|
|
|
Rodney E. Bennett
|
|
|
45,500
|
|
|
|
15,867
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,394
|
|
|
|
67,760
|
|
Marc Chayette
|
|
|
44,500
|
|
|
|
15,867
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,394
|
|
|
|
66,760
|
|
Thomas P. Costello
|
|
|
73,500
|
|
|
|
51,994
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,773
|
|
|
|
140,266
|
|
G. Steven Dawson
|
|
|
52,500
|
|
|
|
15,867
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,394
|
|
|
|
74,760
|
|
Jack Haraburda
|
|
|
55,000
|
|
|
|
51,994
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,773
|
|
|
|
121,766
|
|
Lance Ullom
|
|
|
55,000
|
|
|
|
51,994
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,773
|
|
|
|
121,766
|
|
Charles W. Wolcott
|
|
|
52,500
|
|
|
|
15,867
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,394
|
|
|
|
74,760
|
|
|
|
|
(1)
|
|
Amounts in this column represent
annual board fees and annual chair fees paid to non-employee
directors for service in 2007.
|
(2)
|
|
Amounts in this column do not
reflect equity compensation actually received by the
non-employee directors. Amounts shown represent compensation
costs recognized by the company in 2007 for restricted shares
using the fair value based methodology prescribed by
FAS 123R and EITF No.
96-18. The
assumptions used by the company to calculate the value of these
restricted shares are incorporated herein by reference to
Note 8 to the consolidated financial statements included in
the companys annual report on
Form 10-K
for the year ended 2007. At December 31, 2007, the
aggregate number of restricted shares outstanding for each of
the directors was as follows: Mr. Bennett
6,250; Mr. Chayette 6,250;
Mr. Costello 10,450;
Mr. Dawson 6,250;
Mr. Haraburda 10,450;
Mr. Ullom 10,450; Mr. Wolcott
6,250.
|
(3)
|
|
Amounts in this column represent
the value of dividends paid in 2007 on the restricted shares
held by each non-employee director.
|
We use a combination of cash and stock-based incentive
compensation to attract and retain qualified candidates to serve
on the Board of Directors. In accordance with our current
compensation policy, non-employee directors each received an
annual fee in the amount of $35,000 for serving as a director
for the fiscal year ended December 31, 2007. Each
non-employee director also received $1,000 for each meeting of
our Board of Directors or a committee of our Board of Directors
that he attended in person, and $500 for each meeting of our
Board of Directors or a committee of our Board of Directors that
he attended telephonically. The Chairman of our Audit Committee,
the Chairman of our Compensation Committee and the Chairman our
Nominating and Corporate Governance Committee received
additional annual fees of $20,000, $7,500 and $7,500
respectively. The annual fee and the meeting fees were paid in
cash. In addition, under our Plan, each non-employee director
received a grant of 7,500 restricted shares, which restrictions
vest, pro rata, on the last day of each three-month period
commencing on July 31, 2007 and ending on April 30,
2010, subject to the non-employee director being a member of the
Board on the date such award is expected to vest.
18
On April 24, 2008, the Compensation Committee recommended,
and the Board of Directors voted to approve, an increase in the
compensation paid to the non-employee directors. Following
April 24, 2008, the annual fee paid to non-employee
directors will increase from $35,000 to $50,000 and each
non-employee director will receive an increased fee of $2,000,
up from $1,000, for each meeting of our Board of Directors that
he attends in person. Each non-employee director will continue
to receive $1,000 for each meeting of a committee of our
Board of Directors that he attends in person, and $500 for each
meeting of our Board of Directors or a committee of our Board of
Directors that he attends telephonically. In addition, the
company plans to grant $55,250 worth of restricted shares to
each of our non-employee directors if the amendment to our Plan,
set forth under Proposal 2 in this proxy statement, is
approved by stockholders. The number of restricted shares to be
awarded will be calculated based on the closing price of our
common stock on the date of grant. Such restricted shares will
vest pro rata over a period of three years. In the event that
our stockholders do not approve the amendment to our Plan, we
expect to use our cash resources to compensate our non-employee
directors.
We reimburse all non-employee directors for travel and other
reasonable expenses incurred in connection with attending our
Board and committee meetings.
PROPOSAL TWO
APPROVAL OF THE AMENDMENT TO OUR 2006
LONG-TERM INCENTIVE PLAN
General
Following our merger with AFT in 2006, our Board of Directors
adopted, and our stockholders approved, the 2006 Long-Term
Incentive Plan. The Plan was subsequently amended in 2007 to
increase the total number of shares of common stock available to
be granted under the Plan and to increase the maximum number of
shares of common stock that may be granted to any one eligible
person in any one year. The Plan, as amended, provides that,
subject to adjustment upon certain corporate transactions or
events, the total number of shares of our common stock that may
be awarded under the Plan may not exceed 1,665,000 and the
maximum number of shares that may be granted to any one eligible
person in any one year may not exceed 600,000. As of
April 24, 2008, there were no outstanding equity-based
awards under the Plan other than 1,092,065 restricted shares and
we had 14,084 shares of common stock available to be
awarded under the Plan.
The purpose of the Plan is to attract key employees, directors,
officers, advisors and consultants and to induce them to
continue to provide services to us and our subsidiaries and
encourage them to increase their efforts to make our business
more successful, whether directly or through our subsidiaries or
other affiliates. In furtherance of these objectives, the Plan
is designed to provide equity-based incentives to such persons
in the form of options (including stock appreciation rights),
restricted shares, phantom shares, dividend equivalent rights
and other forms of equity based awards as contemplated by the
Plan, with eligibility for such awards determined by our
Compensation Committee.
Our Board of Directors is proposing a 2,500,000 increase in the
number of shares of common stock available for issuance under
the Plan so that the total number of shares of our common stock
that may be awarded under the Plan can be increased from
1,665,000 to 4,165,000. The proposed amendment to the Plan, a
copy of which is attached as Appendix A to this proxy
statement was approved by our Board of Directors on
April 24, 2008, but remains subject to stockholder
approval. Our Board of Directors believes that this amendment is
necessary to ensure that the number of shares remaining
available for issuance under the Plan is sufficient, in light of
our current capitalization, to allow us to continue to attract,
retain and motivate key individuals who are essential to our
long-term growth and financial success. Other than this
amendment, we are not proposing to change any of the other terms
of the Plan.
The Board of Directors unanimously recommends that you vote
FOR the proposal to amend the Plan, as set forth in
Proposal 2. In the absence of instructions to the
contrary, proxies solicited in connection with this proxy
statement will be voted for such amendment to the Plan.
19
Description
of the Plan
The following is a summary of the Plan, as it is proposed to be
amended. The summary is qualified in its entirety by reference
to the complete text of the Plan, which, as amended, is
incorporated herein by reference.
The characterization of options, including whether options shall
constitute incentive stock options for purposes of
Section 422(b) of the Internal Revenue Code, is determined
by the Compensation Committee. Additionally, the exercise price
for each option that is intended to qualify for an exception
from the limitation imposed by Section 162(m) of the
Internal Revenue Code shall not be less than 100% of the fair
market value of the underlying stock on the day the option is
granted, or 110% in the case of an incentive stock option
granted to a 10% stockholder.
The Compensation Committee is responsible for determining the
vesting schedules of grants of restricted shares, and, except to
the extent restricted under the award agreement, a Plan
participant who has been granted restricted shares has all of
the rights of a stockholder of the company, including the right
to vote his or her shares and the right to receive cash
dividends. Cash dividends on such shares are paid to holders
unless provided otherwise.
The Compensation Committee may authorize the granting of phantom
shares to eligible persons. Phantom shares represent a future
right to receive the fair market value of a share of our common
stock or, if provided by the Compensation Committee, the right
to receive the fair market value of a share of our common stock
in excess of a base value.
In connection with the payment of dividend equivalents rights,
the Compensation Committee may provide that such amounts be
converted into cash or additional common stock. Dividend
equivalents granted in relation to options that are intended to
qualify as performance-based compensation for purposes of
Section 162(m) of the Internal Revenue Code are payable
regardless of whether the related option is exercised.
As stated above, the Plan currently provides that, subject to
adjustment upon certain corporate transactions or events, the
total number of shares of our common stock that may be awarded
under the Plan may not exceed 1,665,000 shares. If the
proposal to amend the Plan is approved by stockholders, the
total number of shares of common stock that may be awarded under
the Plan may not exceed 4,165,000 shares, subject to
adjustment upon certain corporate transactions or events.
If an option or other award granted under the Plan expires or
terminates, the shares subject to any portion of the award that
expires or terminates without having been exercised or paid,
again becomes available for the issuance of additional awards.
Unless previously terminated by our Board of Directors, no new
award may be granted under the Plan after the tenth anniversary
of the date that the Plan was initially approved by the Board of
Directors or, if earlier, by our stockholders.
The Plan is administered by the Compensation Committee (provided
that in certain circumstances the Board of Directors may act in
place of the Compensation Committee). If we are involved in a
merger, consolidation, dissolution, liquidation, reorganization,
exchange of shares, sale of substantially all of our assets or
our stock, or a transaction similar thereto, or upon certain
changes in capital structure and other similar events, the
Compensation Committee may make such adjustments as it, in its
discretion, determines are necessary or appropriate in light of
the change in control, but only if the Compensation Committee
determines that the adjustments do not have an adverse economic
impact on the Plan participants, as determined at the time of
the adjustments.
In no event may an eligible person under the Plan receive
options for more than 250,000 shares on an annual basis,
and the maximum number of shares that may underlie awards, other
than options, granted in any one year to any eligible person may
not exceed 600,000. Subject to adjustment upon certain corporate
transactions or events, options with respect to an aggregate of
no more than 500,000 shares may be granted under the Plan.
Each option granted under the Plan is exercisable after the
period or periods specified in the award agreement, which
generally will not exceed 10 years from the date of grant
(or five years in the case of an incentive stock option granted
to a 10% stockholder, if permitted under the Plan).
20
Subject to the limitations provided for in the Plan, our Board
of Directors may amend the Plan as it deems advisable, except
that it may not amend the Plan in any way that would adversely
affect a participant with respect to an award previously granted
unless the amendment is required in order to comply with
applicable laws. In addition, our Board of Directors may not
amend the Plan without stockholder approval if the amendment, in
the absence of stockholder approval, would cause the Plan to
fail to comply with any requirement of applicable law or
regulation.
INTEREST
OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
Our directors and executive officers are eligible to receive
awards under our Plan. Amending the Plan to increase the total
number of shares of common stock available to be granted under
the Plan will enable us to continue to provide equity-based
incentives to our directors, executive officers and other key
personnel in the future, as and if recommended by our
Compensation Committee and approved by our Board of Directors.
Directors and executive officers may benefit from the payment of
such equity-based awards. The company plans to grant $55,250
worth of restricted shares to each of our non-employee directors
if the amendment to our Plan, set forth under Proposal 2 in
this proxy statement, is approved by stockholders. The number of
restricted shares to be awarded will be calculated based on the
closing price of our common stock on the date of grant. Since
the Compensation Committee has the discretion to determine which
eligible persons will receive awards under the Plan, future
awards to directors, executive officers and other key personnel
are not generally determinable.
PROPOSAL THREE
RATIFICATION OF THE APPOINTMENT OF
THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has appointed Ernst & Young LLP to
be the companys independent registered public accounting
firm for the fiscal year ending December 31, 2008.
Stockholder ratification of the selection of Ernst &
Young LLP as our independent registered public accounting firm
is not required under the laws of the State of Maryland, by our
Bylaws or otherwise. However, our Board of Directors believes
that it is good corporate practice to seek stockholder
ratification of the selection of our independent registered
public accounting firm. If the appointment of Ernst &
Young LLP is not ratified, the Audit Committee will reconsider
the appointment. Even if the appointment is ratified, the Audit
Committee in its discretion may direct the appointment of a
different independent registered public accounting firm during
the year if it determines that such a change would be in our
best interests and those of our stockholders.
Representatives of Ernst & Young LLP are expected to
be present at the annual meeting, will have the opportunity to
make a statement if they desire to do so and are expected to be
available to respond to appropriate questions from our
stockholders.
The Board of Directors unanimously recommends that you vote
FOR the ratification of the appointment of
Ernst & Young as the companys independent
registered public accounting firm for the fiscal year ending
December 31, 2008 as set forth in Proposal 3. In the
absence of instructions to the contrary, proxies solicited in
connection with this proxy statement will be voted for such
ratification.
PRINCIPAL
ACCOUNTING FIRM FEES
On October 13, 2006, Hancock resigned as our independent
registered public accounting firm effective as of the filing of
our Quarterly Report on
Form 10-Q
for the quarter ended September 30, 2006. Hancocks
reports on our financial statements for the year ended
December 31, 2005 did not contain an adverse opinion or
disclaimer of opinion, and were not qualified or modified as to
uncertainty, audit scope, or accounting principles. During the
period in which Hancock was engaged, beginning in October 2005
and including the subsequent interim periods preceding
Hancocks resignation, there were no disagreements between
us and Hancock on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope
21
or procedure, which, if not resolved to the satisfaction of
Hancock would have caused it to make reference thereto in, or in
connection with, its reports on the financial statements for the
period covered by its audit, and there were no reportable events
as specified in Item 304(a)(1)(v) of
Regulation S-K.
Our acquisition by merger of AFT, which was completed on
October 6, 2006, was a reverse merger for
accounting purposes, which means that AFT was considered our
acquirer for accounting purposes. Ernst & Young LLP
had served as the independent registered public accounting firm
for AFT. On November 6, 2006, our Audit Committee engaged
Ernst & Young LLP to replace Hancock as our
independent registered public accounting firm for the year
ending December 31, 2006. Ernst & Young
LLPs reports on our financial statements for the two most
recent fiscal years did not contain an adverse opinion or
disclaimer of opinion, and were not qualified or modified as to
uncertainty, audit scope, or accounting principles. In addition,
during our two most recent fiscal years and the subsequent
interim period, neither us nor anyone acting on our behalf has
consulted with Ernst & Young LLP regarding either:
(i) the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit
opinion that might be rendered on our financial statements, and
neither a written report was provided to us nor oral advice was
provided by Ernst & Young LLP that was an important
factor considered by us in reaching a decision as to any
accounting, auditing or financial reporting issue; or
(ii) any matter that was the subject of a
disagreement or a reportable event as
defined in Item 304(a)(1) of
Regulation S-K
and the related instructions to Item 304 of
Regulation S-K.
Aggregate fees billed to us for the years ended
December 31, 2007 and 2006 were as follows:
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
Audit Fees
|
|
$
|
1,335,029
|
|
|
$
|
1,247,365
|
|
Audit-Related Fees
|
|
|
265,333
|
|
|
|
658,486
|
|
Tax Fees
|
|
|
151,800
|
|
|
|
54,000
|
|
All Other Fees
|
|
|
584,136
|
|
|
|
523,800
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,336,298
|
|
|
$
|
2,483,651
|
|
|
|
|
|
|
|
|
|
|
The aggregate audit fees incurred during the fiscal years ended
December 31, 2007 and December 31, 2006 represent fees
for professional services rendered for the audits of our
consolidated financial statements and of our internal control
over financial reporting and the limited reviews of our
unaudited consolidated interim financial statements. The
aggregate audit-related fees incurred during the fiscal years
ended December 31, 2007 and December 31, 2006
represent assurance and related services that are reasonably
related to the performance of the audit or review of our
financial statements and are not disclosed under Audit
Fees above. These services consisted primarily of SEC
filings, including the issuance of comfort letters and consents
for filings initiated by us. The aggregate tax fees incurred
during the fiscal years ended December 31, 2007 and
December 31, 2006 represent tax compliance services
provided to consolidated CDO entities. The aggregate fees
incurred during the fiscal years ended December 31, 2007
and December 31, 2006 for all other fees represent agreed
upon procedures for services provided to consolidated CDO
entities.
With respect to the 2006 audit fees, $59,318 of the fees were
for services provided by Hancock through the date of their
resignation in October 2006, and $1,188,047 of the fees were for
services provided by Ernst & Young LLP from the time
of their engagement in November 2006 through December 31,
2006, including the audit of the December 31, 2006
financial statements. With respect to the 2006 audit-related
fees, $93,867 of the fees were for services provided by Hancock
and $564,619 of the fees were for services provided by
Ernst & Young LLP. All tax and other fees during 2006
were billed by Ernst & Young LLP.
Our Audit Committee must pre-approve all audit services and
non-audit services provided to us or our subsidiaries by our
independent registered public accounting firm, except for
non-audit services covered by the de minimus exception in
Section 10A of the Securities Exchange Act of 1934, as
amended. The Audit Committee pre-approved all services provided
by Ernst & Young LLP and Hancock.
The Audit Committee considers and pre-approves any audit and
non-audit services to be performed by our independent registered
public accounting firm at its regularly scheduled and special
meetings. The Audit Committee has delegated to its Chairman, an
independent member of our Board of Directors, the authority to
22
grant pre-approvals of all audit, review and attest services and
non-attest services other than the fees and terms for the
companys annual audit, provided that any such pre-approval
by the Chairman shall be reported to the Audit Committee at its
next scheduled meeting.
The Audit Committee has considered whether the provision of
these services is compatible with maintaining the independent
registered public accounting firms independence and has
determined that such services have not adversely affected the
independence of our independent registered public accounting
firm.
REPORT OF
THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The following is a report by the Audit Committee regarding
the responsibilities and functions of the Audit Committee. This
report does not constitute soliciting material and shall not be
deemed filed or incorporated by reference into any other company
filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, as amended, except to the extent the
company specifically incorporates this report of the Audit
Committee by reference therein.
The Audit Committee oversees our financial reporting process on
behalf of the Board of Directors in accordance with the Audit
Committee charter. Management is responsible for the financial
reporting process, including the system of internal controls,
and for the preparation of consolidated financial statements in
accordance with U.S. generally accepted accounting
principles, or GAAP. Our independent registered public
accounting firm is responsible for performing an audit of the
consolidated financial statements and an audit of the effective
operation of the companys internal control over financial
reporting. The Audit Committees responsibility is to
oversee and review these processes. In fulfilling its oversight
responsibilities, the Audit Committee reviewed and discussed
with management and the independent registered public accounting
firm the audited financial statements in the annual report on
Form 10-K
for the year ended December 31, 2007, including discussions
regarding critical accounting policies, other financial
accounting and reporting principles and practices appropriate
for the company, the quality of such principles and practices,
the reasonableness of significant judgments and the clarity of
disclosures in the financial statements. The Audit Committee
also reviewed and discussed with management and the independent
registered public accounting firm the companys internal
controls over financial reporting, including a review of
managements and the independent registered public
accounting firms assessments of and reports on the
effectiveness of internal controls over financial reporting and
any significant deficiencies or material weaknesses and
discussed with management and the independent registered public
accounting firm, as applicable, the process used to support
certifications by our Chief Executive Officer and Chief
Financial Officer that are required by the SEC and the
Sarbanes-Oxley Act of 2002, as amended, to accompany the
companys periodic filings with the SEC.
In addition, the Audit Committee obtained from the independent
registered public accounting firm a formal written statement
describing all relationships between the independent registered
public accounting firm and the company that might bear on their
independence consistent with Independence Standards Board
Standard No. 1, Independence Discussions with Audit
Committees, as currently in effect, discussed with the
independent registered public accounting firm any relationships
that may impact their objectivity and independence, and
satisfied itself as to their independence. When considering the
independence of the independent registered public accounting
firm, the Audit Committee considered whether their provision of
services to the company beyond those rendered in connection with
their audit of the companys consolidated financial
statements and reviews of its consolidated financial statements,
including in its quarterly reports on
Form 10-Q,
was compatible with maintaining their independence. The Audit
Committee also reviewed, among other things, the audit and
non-audit services performed by, and the amount of fees paid for
such services to, the independent registered public accounting
firm. The Audit Committee also discussed with the independent
registered public accounting firm the maters required to be
discussed by generally accepted auditing standards, including
those described in Statement on Auditing Standards (SAS)
No. 61, as amended, Communication with Audit
Committees, SAS 99 Consideration of Fraud in a
Financial Statement Audit, and SEC rules discussed in
Final Release Nos.
33-8 183 and
33-8183a.
In reliance on the reviews and discussions referred to above,
but subject to the limitations on the role and responsibilities
of the Audit Committee referred to below and in the Audit
Committee charter in effect in
23
2007, the Audit Committee recommended to the Board of Directors
(and the Board approved) that the audited financial statements
for the year ended December 31, 2007 be included in the
annual report on
Form 10-K.
The Audit Committee is composed of three independent
non-employee directors and operates under a written charter
adopted by the Board of Directors (which is available on our
website at http://www.alescofinancial.com). The Audit
Committee consists of Messrs. Wolcott, Ullom and Costello,
who serves as the Chairman. The Board of Directors, in its
judgment, has determined that each committee member meets the
independence requirements of the SEC and NYSE. The Board of
Directors has also determined that each member of our Audit
Committee is financially literate and has accounting or related
financial management expertise, as such qualifications are
defined under the applicable NYSE listing standards currently in
effect, and that Mr. Costello is an audit committee
financial expert, as defined under Item 401(h) of
Regulation S-K.
The Audit Committee held nine meetings during fiscal year 2007.
The meetings were designed, among other things, to facilitate
and encourage communication among the Audit Committee,
management, and the independent registered public accounting
firm. The members of the Audit Committee are not professionally
engaged in the practice of accounting or auditing. Committee
members rely, without independent investigation or verification,
on the information provided to them and on the representations
made by management and the independent registered public
accounting firm. Accordingly, the Audit Committees
oversight does not provide an independent basis to determine
that management has maintained appropriate accounting and
financial reporting principles or appropriate internal controls
and procedures designed to assure compliance with accounting
standards and applicable laws and regulations. Furthermore, the
Audit Committees considerations and discussions referred
to above do not assure that the audit of the financial
statements has been carried out in accordance with the standards
of the Public Company Accounting Oversight Board (United
States), that the financial statements are presented in
accordance with GAAP or that Ernst & Young LLP is in
fact independent.
Respectfully Submitted,
Audit Committee
Thomas P. Costello, Chairman
Charles W. Wolcott
Lance Ullom
24
SHARE
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to us
regarding the beneficial ownership of our common stock as of
April 10, 2008 by (1) each person known by us to own
beneficially more than 5% of our outstanding common stock,
(2) each current director, (3) each current executive
officer and (4) all current directors and executive
officers as a group. The number of shares of our stock
beneficially owned by each entity, person, director or executive
officer is determined under the rules of the SEC, and the
information is not necessarily indicative of beneficial
ownership for any other purpose. Under such rules, beneficial
ownership includes any stock as to which the individual has the
sole or shared voting power or investment power and also any
stock that the individual has a right to acquire within
60 days from April 10, 2008 through the exercise of
any share option or other right. Unless otherwise indicated,
each person has sole voting and investment power with respect to
the stock set forth in the following table. The information set
out in this table is based on SEC filings made by the beneficial
owners
and/or
information supplied to us by the beneficial owners (and was
accurate as of the date such information was provided).
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature
|
|
|
|
|
|
|
of Beneficial
|
|
|
Percent of
|
|
Name and Address of Beneficial Owners(1)
|
|
Ownership
|
|
|
Class(2)
|
|
|
Leon Cooperman
|
|
|
3,284,958
|
(3)
|
|
|
5.53
|
%
|
Daniel G. Cohen
|
|
|
1,392,116
|
(4)
|
|
|
2.53
|
%
|
James J. McEntee, III
|
|
|
506,141
|
(5)
|
|
|
*
|
|
G. Steven Dawson
|
|
|
109,375
|
(6)
|
|
|
*
|
|
John J. Longino
|
|
|
162,806
|
(7)
|
|
|
*
|
|
Shami J. Patel
|
|
|
152,293
|
(8)
|
|
|
*
|
|
Charles W. Wolcott
|
|
|
40,000
|
(9)
|
|
|
*
|
|
Lance Ullom
|
|
|
37,100
|
(10)
|
|
|
*
|
|
Thomas P. Costello
|
|
|
32,600
|
(11)
|
|
|
*
|
|
Jack Haraburda
|
|
|
28,236
|
(12)
|
|
|
*
|
|
Christian M. Carr
|
|
|
27,500
|
(13)
|
|
|
*
|
|
Rodney E. Bennett
|
|
|
17,500
|
(14)
|
|
|
*
|
|
Marc Chayette
|
|
|
9,000
|
(15)
|
|
|
*
|
|
All directors and executive officers as a group (12 persons)
|
|
|
2,514,667
|
|
|
|
4.23
|
%
|
|
|
|
*
|
|
Beneficial ownership of less than
1% of the class is omitted.
|
(1)
|
|
The address for all of our officers
and directors is
c/o Alesco
Financial Inc., Cira Centre, 2929 Arch Street,
17th
Floor, Philadelphia, Pennsylvania 19104.
|
(2)
|
|
Based on 59,455,964 shares of
our common stock outstanding as of April 10, 2008.
|
(3)
|
|
Leon Cooperman may be deemed the
beneficial owner of 3,284,958 shares of common stock, which
includes 934,318 shares of common stock held by Omega
Capital Partners, L.P., 207,298 shares of common stock held
by Omega Equity Investors, L.P., 400,000 shares of common
stock held by the Leon and Toby Cooperman Foundation and
1,243,342 shares of common stock held by a limited number
of institutional clients to which Omega Advisors, Inc. serves as
discretionary investment advisor. Mr. Cooperman is the
ultimate controlling person of Omega Capital Partners, L.P.,
Omega Equity Investors, L.P. and Omega Advisors, Inc., and is
one of the trustees of the Leon and Toby Cooperman Foundation.
The number of shares of common stock with respect to which
Mr. Cooperman has sole voting and dispositive power is
2,041,616. The number of shares of common stock with respect to
which Mr. Cooperman shares voting and dispositive power is
1,243,342. This information is based solely on a
Schedule 13G filed with the SEC on February 6, 2008.
The address for this stockholder is 88 Pine Street, Wall Street
Plaza, 31st Floor, New York, New York 10005.
|
(4)
|
|
Includes 504,000 shares of
common stock held by Cohen & Company, a company which
Mr. Cohen may be deemed to control. Mr. Cohen
disclaims any interest in the 504,000 shares beyond his
pecuniary interest. Also includes 374,137 restricted shares that
have yet to vest under our Plan. 164,137 of such restricted
shares will vest, pro rata, in eight installments from
April 30, 2008 until January 31, 2010 and 210,000 of
such restricted shares will vest, pro rata, in nine installments
from April 30, 2008 until April 30, 2010. Of these
shares, 32,500 shares of common stock are pledged by
Mr. Cohen as security.
|
(5)
|
|
Includes 224,803 restricted shares
that have yet to vest under our Plan. 119,803 of such restricted
shares will vest, pro rata, in eight installments from
April 30, 2008 until January 31, 2010 and 105,100 of
such restricted shares will vest, pro rata, in nine installments
from April 30, 2008 until April 30, 2010.
|
25
|
|
|
(6)
|
|
Includes 48,000 shares of
common stock held by Corriente Partners, L.P., which is a
limited partnership owned entirely by Mr. Dawson and his
wife. Mr. Dawson has full voting and investment control
over these securities. Also includes 5,625 restricted shares
that have yet to vest under our Plan, which will vest, pro rata,
in nine installments from April 30, 2008 until
April 30, 2010.
|
(7)
|
|
Includes 1,000 shares of
common stock held by Mr. Longinos wife.
Mr. Longino disclaims beneficial ownership of
1,000 shares of common stock held by his wife. Also
includes 88,813 that have yet to vest under our Plan. 10,613 of
such restricted shares will vest, pro rata, on June 30,
2008, September 30, 2008 and December 31, 2008; 18,200
of such restricted shares will vest, pro rata, in eight
installments from April 30, 2008 until January 31,
2010; and 60,000 of such restricted shares will vest, pro rata,
in nine installments from April 30, 2008 until
April 30, 2010.
|
(8)
|
|
Includes 66,382 restricted shares
that have yet to vest under our Plan. 12,382 of such restricted
shares will vest, pro rata, on June 30, 2008,
September 30, 2008 and December 31, 2008; 9,000 of
such restricted shares will vest, pro rata, in eight
installments from April 30, 2008 until January 31,
2010; 45,000 of such restricted shares will vest, pro rata, in
nine installments from April 30, 2008 until April 30,
2010.
|
(9)
|
|
Includes 5,625 restricted shares
that have yet to vest under our Plan, which will vest, pro rata,
in nine installments from April 30, 2008 until
April 30, 2010.
|
(10)
|
|
Includes 8,775 restricted shares
that have yet to vest our Plan. 3,150 of such restricted shares
will vest, pro rata, on June 30, 2008, September 30,
2008 and December 31, 2008; and 5,625 of such restricted
shares will vest, pro rata, in nine installments from
April 30, 2008 until April 30, 2010.
|
(11)
|
|
Includes 8,775 restricted shares
that have yet to vest our Plan. 3,150 of such restricted shares
will vest, pro rata, on June 30, 2008, September 30,
2008 and December 31, 2008; and 5,625 of such restricted
shares will vest, pro rata, in nine installments from
April 30, 2008 until April 30, 2010.
|
(12)
|
|
Includes 8,775 restricted shares
that have yet to vest our Plan. 3,150 of such restricted shares
will vest, pro rata, on June 30, 2008, September 30,
2008 and December 31, 2008; and 5,625 of such restricted
shares will vest, pro rata, in nine installments from
April 30, 2008 until April 30, 2010.
|
(13)
|
|
Includes 19,583 restricted shares
that have yet to vest under our Plan. 8,333 of such restricted
shares will vest, pro rata, in eight installments from
April 30, 2008 until January 31, 2010 and 11,250 of
such restricted shares will vest, pro rata, in nine installments
from April 30, 2008 until April 30, 2010.
|
(14)
|
|
Includes 5,625 restricted shares
that have yet to vest under our Plan, which will vest, pro rata,
in nine installments from April 30, 2008 until
April 30, 2010.
|
(15)
|
|
Includes 5,625 restricted shares
that have yet to vest under our Plan, which will vest, pro rata,
in nine installments from April 30, 2008 until
April 30, 2010.
|
SECTION 16(A)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires our directors and executive officers and
persons who own more than 10% of our common stock, which we
refer to herein as reporting persons, to file reports of
ownership and changes in ownership with the SEC. Reporting
persons are also required by SEC regulations to furnish us with
copies of all Section 16(a) forms filed by them with the
SEC.
To the companys knowledge, based solely on a review of the
copies of the Section 16(a) forms furnished to the company
or upon written representations from certain of these reporting
persons that no other reports were required, all
Section 16(a) filing requirements applicable to the
reporting persons were complied with during the year ended
December 31, 2007, except that
(1) Messrs. Bennett, Carr, Chayette, Cohen, Costello,
Dawson, Haraburda, Longino, McEntee, III, Patel, Ullom and
Wolcott did not report on Form 4 their award of restricted
shares, which were granted on May 25, 2007, until
May 30, 2007 and (2) Mr. Wolcott did not report
on Form 4 his purchase of additional shares of the
companys common stock in the open market, which occurred
on August 13, 2007, until August 20, 2007.
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Transactions
with Cohen & Company and Management Team
Management
Agreement
Pursuant to the management agreement, our manager,
Cohen & Company Management, LLC, provides for the
day-to-day management of our operations.
The management agreement requires our manager to manage our
business affairs in conformity with the policies and the
investment guidelines that were approved by a majority of our
independent directors and monitored by our Board of Directors.
Our manager is responsible for (i) the selection, purchase,
monitoring
26
and sale of our portfolio investments, (ii) our financing
and risk management activities, and (iii) providing us with
investment advisory services. In performing its functions, our
manager engages and relies upon the experience and credit
analysis and risk management process performed by
Cohen & Company with respect to the assets that are
acquired during the warehouse accumulation period prior to the
formation of a CDO, collateralized debt obligation, or CLO, or
other securitization. Our manager is responsible for our
day-to-day operations and performs (or causes to be performed)
such services and activities relating to our assets and
operations as may be appropriate, including, without limitation,
the following:
|
|
|
|
|
serving as our consultant with respect to the periodic review of
the investment criteria and parameters for our investments,
borrowings and operations, any modifications to which must be
approved by a majority of our independent directors, and other
policies for the approval of our Board of Directors;
|
|
|
|
investigating, analyzing and selecting possible investment
opportunities;
|
|
|
|
with respect to investments, conducting negotiations with
sellers and purchasers and their agents, representatives and
investment bankers;
|
|
|
|
engaging and supervising, on our behalf and at our expense,
independent contractors which provide investment banking,
mortgage brokerage, securities brokerage and other financial
services and such other services as may be required relating to
our investments;
|
|
|
|
negotiating on our behalf for the sale, exchange or other
disposition of any of our investments;
|
|
|
|
coordinating and managing operations of any joint venture or
co-investment interests held by us and conducting all matters
with any joint venture or co-investment partners;
|
|
|
|
providing executive and administrative personnel, office space
and office services required in rendering services to us;
|
|
|
|
administering our day-to-day operations and performing and
supervising the performance of such other administrative
functions necessary to our management as may be agreed upon by
our manager and our Board of Directors, including the collection
of revenues and the payment of our debts and obligations and
maintenance of appropriate computer services to perform such
administrative functions;
|
|
|
|
communicating on our behalf with the holders of any of our
equity or debt securities as required to satisfy the reporting
and other requirements of any governmental bodies or agencies or
trading markets and to maintain effective relations with such
holders;
|
|
|
|
counseling us in connection with policy decisions to be made by
our Board of Directors;
|
|
|
|
evaluating and recommending to our Board of Directors hedging
strategies and engaging in hedging activities on our behalf,
consistent with our qualification as a REIT and with the
investment guidelines;
|
|
|
|
counseling us regarding the maintenance of our qualifications as
a REIT and monitoring compliance with the various REIT
qualification tests and other rules set out in the Internal
Revenue Code and Treasury Regulations thereunder;
|
|
|
|
counseling us regarding the maintenance of our exemption from
the Investment Company Act of 1940, as amended, and monitoring
compliance with the requirements for maintaining an exemption
from that Act;
|
|
|
|
assisting us in developing criteria for asset purchase
commitments that are specifically tailored to our investment
objectives and making available to us its knowledge and
experience with respect to mortgage loans, TruPS, leveraged
loans and other real estate-related assets and non-real estate
related assets;
|
|
|
|
representing and making recommendations to us in connection with
the purchase and finance of and commitment to purchase and
finance assets (including on a portfolio basis), and the sale
and commitment to sell assets;
|
27
|
|
|
|
|
selecting brokers and dealers to effect trading on our behalf
including, without limitation, Cohen & Company
Securities, LLC, provided that any compensation payable to
Cohen & Company Securities, LLC is based on prevailing
market terms;
|
|
|
|
monitoring the operating performance of our investments and
providing periodic reports with respect thereto to our Board of
Directors, including comparative information with respect to
such operating performance and budgeted or projected operating
results;
|
|
|
|
investing or reinvesting any moneys and securities of ours
(including investing in short-term investments pending
investment in long-term asset investments, payment of fees,
costs and expenses, or payments of dividends or distributions to
our stockholders and partners), and advising us as to our
capital structure and capital raising;
|
|
|
|
causing us to retain qualified accountants and legal counsel, as
applicable, to assist in developing appropriate accounting
procedures, compliance procedures and testing systems with
respect to financial reporting obligations and compliance with
the REIT provisions of the Internal Revenue Code and to conduct
quarterly compliance reviews with respect thereto;
|
|
|
|
causing us to qualify to do business in all applicable
jurisdictions and to obtain and maintain all appropriate
licenses;
|
|
|
|
assisting us in complying with all regulatory requirements
applicable to us in respect of our business activities,
including preparing or causing to be prepared all financial
statements required under applicable regulations and contractual
undertakings and all reports and documents, if any, required
under the Securities Exchange Act of 1934, as amended;
|
|
|
|
taking all necessary actions to enable us to make required tax
filings and reports, including soliciting stockholders for
required information to the extent provided by the REIT
provisions of the Internal Revenue Code and the Treasury
Regulations;
|
|
|
|
handling and resolving all claims, disputes or controversies
(including all litigation, arbitration, settlement or other
proceedings or negotiations) in which we may be involved or to
which we may be subject arising out of our day-to-day
operations, subject to such limitations or parameters as may be
imposed from time to time by our Board of Directors;
|
|
|
|
using commercially reasonable efforts to cause expenses incurred
by or on behalf of us to be commercially reasonable or
commercially customary and within any budgeted parameters or
expense guidelines set by our Board of Directors from time to
time;
|
|
|
|
advising us with respect to obtaining appropriate warehouse or
other financings for our assets;
|
|
|
|
advising us with respect to and structuring long-term financing
vehicles for our portfolio of assets, and offering and selling
securities publicly or privately in connection with any such
structured financing;
|
|
|
|
performing such other services as may be required from time to
time for management and other activities relating to our assets
as our Board of Directors shall reasonably request or our
manager shall deem appropriate under the particular
circumstances; and
|
|
|
|
using commercially reasonable efforts to cause us to comply with
all applicable laws.
|
Pursuant to our management agreement, our manager has not
assumed any responsibility other than to render the services
called for thereunder in good faith and will not be responsible
for any action of our Board of Directors in following or
declining to follow our managers advice or
recommendations. Our manager and its members, officers,
employees and affiliates will not be liable to us, any
subsidiary of ours, our Board of Directors, our stockholders or
any subsidiarys stockholders or partners for acts
performed by our manager and its members, officers, employees
and affiliates in accordance with or pursuant to our management
agreement, except by reason of acts or omissions constituting
bad faith, willful misconduct, gross negligence, or reckless
disregard of the managers duties under our management
agreement. We have agreed to indemnify, to the fullest extent
permitted by law, our manager and its members, officers,
directors, employees and affiliates and
28
each other person, if any, controlling our manager with respect
to all expenses, losses, damages, liabilities, demands, charges
and claims arising from acts of such indemnified party not
constituting bad faith, willful misconduct, gross negligence, or
reckless disregard of duties, performed in good faith in
accordance with the management agreement. Our manager has agreed
to indemnify, to the fullest extent permitted by law, us, our
stockholders, directors, officers, employees and each other
person, if any, controlling us with respect to all expenses,
losses, damages, liabilities, demands, charges and claims
arising from acts of our manager constituting bad faith, willful
misconduct, gross negligence or reckless disregard of its duties
under our management agreement. As required by our management
agreement, our manager carries errors and omissions insurance.
Pursuant to the terms of the management agreement, our manager
is required to provide us with our management team, including a
chief executive officer, chief operating officer, chief
investment officer and chief financial officer, along with
appropriate support personnel, to provide the management
services to be provided by our manager to us, the members of
which team are required to devote such of their time to the
management of us as may be reasonably necessary and appropriate,
commensurate with our level of activity from time to time. Our
Chief Financial Officer and our Chief Accounting Officer (as
well as certain other accounting personnel) are exclusively
dedicated to our operations.
The initial term of the management agreement expires on
December 31, 2008, and shall be automatically renewed for a
one-year term on each anniversary date thereafter unless
terminated as described below. Our independent directors review
our managers performance annually and, following the
initial term, the management agreement may be terminated
annually upon the affirmative vote of at least two-thirds of our
independent directors, or by a vote of the holders of a majority
of our outstanding common stock, based upon
(i) unsatisfactory performance that is materially
detrimental to us or (ii) a determination that the
management fees payable to our manager are not fair, subject to
our managers right to prevent such a termination pursuant
to clause (ii) by accepting a reduction of management fees
agreed to by at least two-thirds of our independent directors
and our manager. We must provide 180 days prior
notice of any such termination and our manager will be paid a
termination fee equal to three times the sum of (A) the
average annual base management fee for the two
12-month
periods preceding the date of termination plus (B) the
average annual incentive fee for the two
12-month
periods preceding the date of termination, calculated as of the
end of the most recently completed fiscal quarter prior to the
date of termination (and annualized for any partial year), which
may make it costly and difficult for us to terminate the
management agreement.
We may also terminate the management agreement without payment
of the termination fee with 30 days prior written
notice for cause, which is defined as (i) our
managers continued material breach of any provision of the
management agreement following a period of 30 days after
written notice thereof, (ii) our managers engagement
in any act of fraud, misappropriation of funds, or embezzlement
against us, (iii) our managers gross negligence,
willful misconduct or reckless disregard in the performance of
its duties under the management agreement, (iv) the
commencement of any proceeding relating to our managers
bankruptcy or insolvency that is not withdrawn within
60 days or in certain other instances where our manager
becomes insolvent, (v) the dissolution of our manager or
Cohen & Company (unless the directors have approved a
successor under the management agreement) or (vi) a change
of control (as defined in the management agreement), other than
certain permitted changes of control, of our manager or
Cohen & Company. Cause does not include unsatisfactory
performance, even if that performance is materially detrimental
to our business. Our manager may terminate the management
agreement, without payment of the termination fee, in the event
we become regulated as an investment company under the
Investment Company Act of 1940, as amended. Furthermore, our
manager may decline to renew the management agreement by
providing us with 180 days written notice. Our
manager may also terminate the management agreement upon
60 days written notice if we default in the
performance of any material term of the management agreement and
the default continues for a period of 30 days after written
notice to us, whereupon we would be required to pay our manager
a termination fee in accordance with the terms of the management
agreement.
Management
Fee and Incentive Fee
Expense reimbursements to our manager are generally made on a
monthly basis.
29
Base Management Fee. We pay our manager a base
management fee monthly in arrears in an amount equal to
one-twelfth of our equity multiplied by 1.50%. We believe that
the base management fee that our manager is entitled to receive
is comparable to the base management fee received by the
managers of comparable externally managed REITs. Our manager
uses the proceeds from its management fee in part to pay
compensation to its officers and employees who, notwithstanding
that certain of them also are our officers, receive no cash
compensation directly from us.
For purposes of calculating the base management fee, our equity
means, for any month, the sum of the net proceeds from any
issuance of our common stock, after deducting any underwriting
discount and commissions and other expenses and costs relating
to the issuance, plus our retained earnings at the end of such
month (without taking into account any non-cash equity
compensation expense incurred in current or prior periods),
which amount shall be reduced by any amount that we pay for the
repurchases of our common stock. The calculation of our equity
and the base management fee will be adjusted to exclude one-time
events pursuant to changes in GAAP, as well as non-cash charges,
after discussion between our manager and our independent
directors and approval by a majority of our independent
directors in the case of non-cash charges.
Our managers base management fee is calculated by our
manager within 15 business days after the end of each month and
such calculation is promptly delivered to us. We are obligated
to pay the base management fee within twenty business days after
the end of each month.
Reimbursement of Expenses. Although our
managers employees perform certain legal, accounting, due
diligence tasks and other services that outside professionals or
outside consultants otherwise would perform, our manager is not
paid or reimbursed for the time required in performing such
tasks.
We pay all operating expenses, except those specifically
required to be borne by our manager under the management
agreement. The expenses required to be paid by us include, but
are not limited to, issuance and transaction costs related to
the acquisition, disposition and financing of our investments,
legal, tax, accounting, consulting and auditing fees and
expenses, the compensation and expenses of our directors, the
cost of directors and officers liability insurance,
the costs associated with the establishment and maintenance of
any credit facilities and other indebtedness of ours (including
commitment fees, accounting fees, legal fees and closing costs),
expenses associated with other securities offerings of ours,
expenses relating to making distributions to our stockholders,
the costs of printing and mailing proxies and reports to our
stockholders, costs associated with any computer software or
hardware, electronic equipment, or purchased information
technology services from third party vendors that is used solely
for us, costs incurred by employees of our manager for travel on
our behalf, the costs and expenses incurred with respect to
market information systems and publications, research
publications and materials, settlement, clearing, and custodial
fees and expenses, expenses of our transfer agent, the costs of
maintaining compliance with all federal, state and local rules
and regulations or any other regulatory agency, all taxes and
license fees and all insurance costs incurred by us or on our
behalf. In addition, we are required to pay our pro rata portion
of rent, telephone, utilities, office furniture, equipment,
machinery and other office, internal and overhead expenses of
our manager required for our operations. Except as noted above,
our manager is responsible for all costs incidental to the
performance of its duties under the management agreement,
including compensation of our managers employees and other
related expenses. Our independent directors review these costs
and reimbursements periodically to confirm that these costs and
reimbursements are reasonable.
30
Incentive Fee. In addition to the base
management fee, our manager receives a quarterly incentive fee
payable in arrears in an amount equal to the product of:
(i) 20% of the dollar amount by which
(a) our net income, before the incentive fee, per weighted
average share of our common stock for such quarter, exceeds
(b) an amount equal to (A) the weighted average of the
prices per share of common stock in any equity offerings by us
multiplied by (B) the greater of (1) 2.375% and
(2) 0.75% plus one-fourth of the Ten Year Treasury Rate for
such quarter multiplied by
(ii) the weighted average number of our common stock
outstanding in such quarter.
The foregoing calculation of the incentive fee is adjusted to
exclude one-time events pursuant to changes in GAAP, as well as
non-cash charges, after approval by a majority of our
independent directors in the case of non-cash charges. The
incentive fee calculation and payment shall be made quarterly in
arrears.
For purposes of the foregoing:
Net income is determined by calculating the
net income available to owners of our common stock before
non-cash equity compensation expense, in accordance with GAAP.
Ten Year Treasury Rate means the average of
weekly average yield to maturity for U.S. Treasury
securities (adjusted to a constant maturity of ten years) as
published weekly by the Federal Reserve Board in publication H.
15 or any successor publication during a fiscal quarter.
Our ability to achieve returns in excess of the thresholds noted
above in order for our manager to earn the incentive
compensation described in the preceding paragraph is dependent
upon the level and volatility of interest rates, our ability to
react to changes in interest rates and to utilize successfully
the operating strategies described herein, and other factors,
many of which are not within our control.
Our manager computes the quarterly incentive compensation within
30 days after the end of each fiscal quarter, and we are
required to pay the quarterly incentive compensation with
respect to each fiscal quarter within five business days
following the delivery to us of our managers computation
of the incentive fee for such quarter.
Our management agreement provides that 15% of our managers
incentive compensation is to be paid in our common stock
(provided that our manager may not own more than 9.8% of our
common stock) and the balance in cash. Our manager may elect to
receive up to 50% of its incentive compensation in the form of
our common stock, subject to the approval of a majority of our
independent directors. Under our management agreement, our
manager may not elect to receive shares of our common stock as
payment of its incentive compensation except in accordance with
all applicable securities exchange rules and securities laws.
The number of shares our manager receives is based on the fair
market value of those shares. Shares of common stock delivered
as payment of the incentive fee will be immediately vested or
exercisable; however, our manager has agreed not to sell the
shares before one year after the date they are paid. This
transfer restriction will lapse if the management agreement is
terminated. Our manager may allocate these shares to its
officers, employees and other individuals who provide services
to it; however, our manager has agreed not to make any such
allocations before the first anniversary of the date of grant of
such shares.
We have agreed to register the issuance and resale of these
shares by our manager. We have also granted our manager the
right to include these shares in any registration statements we
might file in connection with any future public offerings,
subject only to the right of the underwriters of those offerings
to reduce the total number of secondary shares included in those
offerings (with such reductions to be proportionately allocated
among selling stockholders participating in those offerings).
Our management agreement provides that the base management fee
and incentive management fee payable to our manager will be
reduced, but not below zero, by our proportionate share of the
amount of any CDO and CLO collateral management fees and
incentive fees paid to Cohen & Company in connection
with
31
the CDOs and CLOs in which we invest, based on the percentage of
equity we hold in such CDOs and CLOs. Origination fees,
structuring fees and placement fees paid to Cohen &
Company do not reduce the amount of fees we pay under the
management agreement. Thus, Cohen & Company and its
affiliates earn significant fees from their relationship with
us, regardless of our performance or the returns earned by our
stockholders from their investment in us.
Fees
Earned by Cohen & Company and its Affiliates in
Respect of Our Investments
In addition to the fees payable to our manager under the
management agreement, Cohen & Company benefits from
other fees paid to it by third parties in respect of our
investments, regardless of our performance. In particular,
affiliates of Cohen & Company earn origination fees
paid by the issuers of TruPS, which have historically ranged
from zero to 3.0% of the face amount of a TruPS issuance.
Cohen & Company, through its affiliates, typically
retains part of this fee and shares the balance with the
investment bank or other third-party broker that introduced the
funding opportunity to Cohen & Company.
Cohen & Companys affiliates also receive
structuring fees for services relating to the structuring of a
CDO or CLO on our behalf or in which we invest. This fee
typically ranges from zero to 0.84% of the face amount of the
securities issued by the CDO or CLO, but may exceed this amount.
Our independent directors must approve any structuring fees for
CDOs and CLOs collateralized by our target asset classes
exceeding 0.45% of the face amount of the securities issued by
such CDOs or CLOs. In addition, affiliates of Cohen &
Company act as collateral managers of the CDOs and CLOs in which
we have invested and will invest in the future. In this
capacity, these affiliates have received and will receive
collateral management fees that have historically ranged between
zero and 0.65% of the assets held by the CDOs and CLOs. In
addition, the collateral managers may be entitled to earn
incentive fees if CDOs or CLOs managed by them exceed certain
performance benchmarks. A broker-dealer affiliate of
Cohen & Company has also earned and will earn
placement fees in respect of debt and equity securities which it
sells to investors in the CDOs and CLOs in which we invest, as
well as commissions and
mark-ups
from trading of securities to and from CDOs and CLOs in which we
invest. Under our management agreement, the base management fee
and incentive management fee payable to our manager are reduced
by our proportionate share of the amount of any CDO and CLO
collateral management fees and incentive fees paid to
Cohen & Company and its affiliates in connection with
the CDOs and CLOs in which we invest, based on the percentage of
equity we hold in such CDOs and CLOs. Origination fees,
structuring fees, placement fees and trading discounts and
commissions paid to, or earned by, Cohen & Company and
its affiliates do not reduce the amount of fees we pay under the
management agreement.
The following table summarizes the base management fees payable
and incentive fees paid, net of asset management fee credits, to
our manager by us as of December 31, 2007. Additionally,
the following table summarizes structuring, placement,
origination and collateral management fees earned by affiliates
of our manager, including Cohen & Company, in
connection with CDOs and CLOs in which we had invested as of
December 31, 2007.
|
|
|
|
|
|
|
For the Year Ended
|
|
|
|
December 31, 2007
|
|
|
|
(dollars in thousands)
|
|
|
Fees Paid to Cohen &
Company Relating to Management Agreement
|
|
|
|
|
Base management fees paid under management agreement
|
|
$
|
5,903
|
|
Incentive fees paid under management agreement
|
|
|
378
|
|
Collateral management fee credits under management agreement
|
|
|
(6,281
|
)
|
|
|
|
|
|
Total Fees Paid to Cohen & Company Relating to
Management Agreement
|
|
$
|
0
|
|
Fees Paid to Affiliates of Cohen & Company Relating
to CDO/CLO Investment Transactions
|
|
|
|
|
Origination, structuring and placement fees
|
|
$
|
19,306
|
|
Collateral management fees
|
|
|
15,502
|
|
|
|
|
|
|
Total Fees Paid to Affiliates of Cohen & Company
Relating to CDO/CLO Investment Transactions
|
|
$
|
34,808
|
|
32
Right
of First Refusal Agreement
During the term of the management agreement, Cohen &
Company has granted us a right of first refusal to
(1) purchase equity interests in CDOs collateralized by
U.S. dollar denominated TruPS issued by banks, bank holding
companies and insurance companies for which Cohen &
Company or its affiliates will serve as collateral manager, in
which event we shall have a priority right to fund the
origination, through our warehouse facilities, of
U.S. dollar denominated TruPS originated by our manager and
Cohen & Company that will collateralize the CDOs as to
which we have exercised the right of first refusal to acquire
entity interests and (2) purchase equity interests in CLOs
of U.S. dollar denominated leveraged loans for which
Cohen & Company or its affiliates will serve as
collateral manager. Notwithstanding anything contained herein to
the contrary, our right of first refusal does not extend to
(i) individual investments in leveraged loans,
(ii) TruPS that collateralize CDOs in which we decline our
right of first refusal to acquire equity interests in CDOs or
(iii) any
non-U.S. dollar
denominated investments. In addition, Cohen & Company
shall have a limited right to substitute newly originated or
acquired TruPS investments for existing TruPS investments held
by a CDO if such existing TruPS have been downgraded by one or
more rating agencies and, as a result, are disposed of by the
CDO.
Cohen & Company is required to provide us with at
least 15 business days advance notice of the opportunity to
exercise the right of first refusal, together with such
information as may reasonably be necessary to enable us to make
an informed investment decision. We have 15 business days after
receipt of such notice to notify Cohen & Company of
our desire to exercise the right of first refusal with respect
to the investment.
Shared
Facilities and Services Agreement
Our manager has entered into a shared facilities and services
agreement with Cohen & Company pursuant to which
Cohen & Company will provide our manager with certain
facilities and services, including office space and management
and personnel services, as well as other services that the
manager may request so as to perform and discharge its duties
under the management agreement. The shared facilities and
services agreement shall remain in force until the earlier to
occur of (i) the termination of the management agreement
and (ii) the expiration and non-renewal of the management
agreement. Under the shared facilities and services agreement,
our manager has to pay Cohen & Company the actual
costs incurred by Cohen & Company in providing office
space, access to file space, printers, copiers, kitchen and
conference room facilities and secretarial services, plus an
administrative charge of 10.0%. During the year ended
December 31, 2007, the manager incurred $360,790 of
expenses under the shared facilities and services agreement.
Transactions
with Directors and Officers
Restricted
Shares Award Agreements Grant of Restricted
Shares
On January 31, 2007, we entered into restricted shares
award agreements with Messrs. McEntee, III, Longino,
Cohen, Patel and Carr, our named executive officers, pursuant to
which we granted our named executive officers an aggregate of
179,705, 27,300, 246,205, 13,500 and 12,500 restricted shares,
respectively. On May 25, 2007, we entered into restricted
shares award agreements with our named executive officers and
Messrs. Bennett, Chayette, Costello, Dawson, Haraburda,
Ullom and Wolcott, our non-employee directors, pursuant to which
we granted Messrs. McEntee, III, Longino, Cohen, Patel,
Carr, Bennett, Chayette, Costello, Dawson, Haraburda, Ullom and
Wolcott an aggregate of 140,000, 80,000, 280,000, 60,000,
15,000, 7,500, 7,500, 7,500, 7,500, 7,500, 7,500 and 7,500
restricted shares, respectively. Under the restricted shares
award agreements, our named executive officers and non-employee
directors are entitled to receive an equivalent number of shares
of our common stock if and when the restricted shares vest. If
our named executive officers and non-employee directors
voluntarily terminate their employment with us, or the we
terminate their employment for cause (as defined in the Plan),
any unvested portion of the restricted shares held by the named
executive officers and non-employee directors will be forfeited
automatically as of the date of termination of employment and we
shall pay such officers and directors as soon as possible (and
in no event more than 30 days) after such termination an
amount equal to the lesser of (x) the amount paid by the
named executive
33
officers and non-employee directors for such forfeited
restricted shares and (y) the fair market value on the date
of termination of the forfeited restricted shares. If the
employment of our named executive officers and non-employee
directors is terminated due to death, disability or retirement,
or is terminated by us for any reason other than cause, or in
the event of a change of control (as defined in the Plan) or the
termination of the management agreement, then the restrictions
on the unvested restricted shares held by such officers and
directors will immediately lapse.
With respect to the restricted shares award agreements described
above, the restricted shares may not be sold, transferred,
pledged, alienated, encumbered or assigned; provided, however,
each grantee may transfer the restricted shares to a trust
established for the sole benefit of his immediate family so long
as, prior to the transfer, such trust delivers a written
instrument to us pursuant to which such trust agrees to be bound
by the restrictions on the restricted shares. Each grantee shall
have, in respect of the restricted shares, whether vested or
not, all of the rights of a holder of our common stock,
including the right to vote the restricted shares and the right
to receive dividends as and when such dividends are declared and
paid by us (or as soon as practicable thereafter); provided,
however, that cash dividends on such restricted shares shall,
unless otherwise provided by the Compensation Committee, be held
by us until the period of forfeiture lapses and paid over to
each grantee (without interest) as soon as practicable after
such period lapses (if not forfeited).
Indemnification
Agreement
We and each of our directors and executive officers have entered
into indemnification agreements. The indemnification agreements
provide that we will indemnify the directors and the executive
officers to the extent permitted by Maryland law against certain
liabilities (including settlements) and expenses actually and
reasonably incurred by them in connection with any threatened,
pending or completed action, suit, alternate dispute resolution
mechanism, investigation, administrative hearing or any other
proceeding to which any of them is, or is threatened to be, made
a party by reason of their status as our director, officer or
agent, or by reason of their serving as a director, officer or
agent of another company at our request. The Maryland General
Corporation Law, or MGCL, permits a corporation to indemnify its
present and former directors and officers, among others, against
judgments, penalties, fines, settlements and reasonable expenses
actually incurred by them in connection with any proceeding to
which they may be made, or threatened to be made, a party by
reason of their service in those or other capacities unless it
is established that (a) the act or omission of the director
or officer was material to the matter giving rise to the
proceeding and (i) was committed in bad faith or
(ii) was the result of active and deliberate dishonesty,
(b) the director or officer actually received an improper
personal benefit in money, property or services or (c) in
the case of any criminal proceeding, the director or officer had
reasonable cause to believe that the act or omission was
unlawful. However, under the MGCL, a Maryland corporation may
not indemnify for an adverse judgment in a suit by or in the
right of the corporation or for a judgment of liability on the
basis that personal benefit was improperly received, unless in
either case a court orders indemnification and then only for
expenses. In addition, the MGCL permits a corporation to advance
reasonable expenses to a director or officer upon the
corporations receipt of (a) a written affirmation by
the director or officer of his good faith belief that he has met
the standard of conduct necessary for indemnification by the
corporation and (b) a written undertaking by him or on his
behalf to repay the amount paid or reimbursed by the corporation
if it shall ultimately be determined that the standard of
conduct was not met. In addition, we have obtained directors and
officers liability insurance, which covers our directors and
executive officers.
Policies
and Procedures With Respect to Related Party
Transactions
Pursuant
to the Management Agreement
Any determination made by or on behalf of the company to
purchase securities in CDOs or CLOs structured or managed by
Cohen & Company is subject to the approval of a
majority of our independent directors. In addition, any
transaction between us and Cohen & Company or its
affiliates not specifically permitted by the management
agreement must be approved by a majority of our independent
directors.
34
Other
Related Party Transactions
It is the policy of our Board of Directors that all transactions
involving amounts exceeding $120,000 between us and a related
party must be approved or ratified by at least a majority of the
members of our Board of Directors who are not interested in the
transaction. A related party includes any director or executive
officer, or his or her immediate family members, or stockholders
owning 5% of more of our outstanding stock.
In determining whether to approve or ratify a related party
transaction, our Board of Directors will take into account,
among other factors it deems appropriate, whether the related
party transaction is on terms no less favorable than terms
generally available to an unaffiliated third-party under the
same or similar circumstances and the extent of the related
partys interest in the transaction. No director will
participate in any discussion or approval of a related party
transaction for which he or she is a related party, except that
the director will provide all material information concerning
the related party transaction to our Board of Directors.
If a related party transaction will be ongoing, our Board of
Directors may establish written guidelines for our management to
follow in its ongoing dealings with the related party. The Board
of Directors may delegate to our Nominating and Corporate
Governance Committee the authority to review and assess, on at
least an annual basis, any such ongoing relationships with the
related party to see that they are in compliance with the
Boards guidelines.
All related party transactions will be disclosed in our
applicable filings with the SEC as required under SEC rules.
OTHER
MATTERS
As of the mailing date of this proxy statement, our Board of
Directors knows of no matters to be presented at the annual
meeting other than those set forth in the Notice of Annual
Meeting of Stockholders and described in this proxy statement.
Should any other matter requiring a vote of the stockholders
arise at the annual meeting, the persons named in the
accompanying proxy will vote on such matter in their discretion.
STOCKHOLDER
PROPOSALS
Stockholder proposals intended to be presented at the 2009
annual meeting of stockholders must be received by our Secretary
at our principal executive offices no later than January 1, 2009
in order to be considered for inclusion in our proxy statement
relating to the 2009 annual meeting pursuant to
Rule 14a-8
under the Securities Exchange Act of 1934, as amended.
For a proposal of a stockholder to be presented at the 2009
annual meeting of stockholders, other than a stockholder
proposal included in the proxy statement pursuant to
Rule 14a-8,
it must be received by our Secretary at our principal executive
offices in the timeframe as provided in our Bylaws. To be
timely, our Bylaws currently require that a stockholders
notice set forth all information required under
Section 1.11 of our Bylaws and be delivered to our
Secretary at our principal executive office not earlier than the
150th day
nor later than 5:00 p.m., Eastern Time, on the
120th day
prior to the first anniversary of the date of mailing of the
notice for the preceding years annual meeting; provided,
however, that in the event that the date of the annual meeting
is advanced or delayed by more than 30 days from the first
anniversary of the date of the preceding years annual
meeting, notice by the stockholder to be timely must be so
delivered not earlier than the
150th day
prior to the date of such annual meeting and not later than
5:00 p.m., Eastern Time, on the later of the
120th day
prior to the date of such annual meeting or the tenth day
following the day on which public announcement of the date of
such meeting is first made. Our Bylaws also currently provide
that, in the event our Board of Directors increases or decreases
the maximum or minimum number of directors in accordance with
our Bylaws, and there is no public announcement of such action
at least 130 days prior to the first anniversary of the
date of mailing of the notice of the preceding years
annual meeting, a stockholders notice shall also be
considered timely, but only with respect to nominees for any new
positions created by such
35
increase, if it shall be delivered to our Secretary at our
principal executive office not later than 5:00 p.m.,
Eastern Time, on the tenth day following the day on which such
public announcement is first made by us.
ANNUAL
REPORT ON
FORM 10-K
Our annual report on
Form 10-K
for the year ended December 31, 2007 is enclosed with this
proxy statement but does not constitute a part of the proxy
soliciting material. The company will furnish a copy of its
annual report on
Form 10-K
for the year ended December 31, 2007 free of charge
(excluding exhibits, for which a reasonable charge shall be
imposed) to each stockholder who forwards a written request to
our Secretary, Daniel Munley, at Alesco Financial Inc., Cira
Centre, 2929 Arch Street,
17th Floor,
Philadelphia, Pennsylvania 19104. You also may access the EDGAR
version of our annual report on
Form 10-K
(with exhibits) on our website at
http://www.alescofinancial.com and on the SECs
website at http://www.sec.gov.
WHERE YOU
CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements
and other information with the SEC. You may read and copy these
reports, statements or other information filed by us at the
SECs Public Reference Room at 100 F Street,
N.E., Room 1024, Washington, D.C. 20549. Please call
the SEC at
1-800-SEC-0330
for further information on the public reference rooms. Our SEC
filings are also available to the public from commercial
document retrieval services and at the website maintained by the
SEC at http://www.sec.gov.
36
APPENDIX A
ALESCO
FINANCIAL INC.
2006
LONG-TERM INCENTIVE PLAN
Alesco Financial Inc., a Maryland corporation, wishes to attract
key employees, Directors, officers, advisors and consultants to
the Company and Subsidiaries, and induce key employees,
Directors, officers, advisors, consultants and other personnel
to remain with the Company and Subsidiaries and encourage them
to increase their efforts to make the Companys business
more successful whether directly or through Subsidiaries or
other Affiliates. In furtherance thereof, the Alesco Financial
Inc. 2006 Long-Term Incentive Plan is designed to provide
equity-based incentives to certain Eligible Persons. Awards
under the Plan may be made to Eligible Persons in the form of
Options (including Stock Appreciation Rights), Restricted Stock,
Phantom Shares, Dividend Equivalent Rights and other forms of
equity based Awards as contemplated herein.
1. DEFINITIONS.
Whenever used herein, the following terms shall have the
meanings set forth below:
Affiliate means any entity other than a
Subsidiary that is controlled by or under common control with
the Company that is designated as an Affiliate by
the Committee in its discretion. In addition, for purposes of
the Plan, the Manager shall be deemed to be an Affiliate.
Award, except where referring to a particular
category of grant under the Plan, shall include Options,
Restricted Stock, Phantom Shares, Dividend Equivalent Rights and
other equity-based Awards as contemplated herein.
Award Agreement means a written agreement in
a form approved by the Committee, as provided in Section 3.
An Award Agreement may be, without limitation, an employment or
other similar agreement containing provisions governing grants
hereunder, if approved by the Committee for use under the Plan.
Board means the Board of Directors of the
Company.
Cause means, unless otherwise provided in the
Participants Award Agreement (i) engaging in
(A) willful or gross misconduct or (B) willful or
gross neglect; (ii) repeatedly failing to adhere to the
directions of superiors or the Board or the written policies and
practices of the Manager or the Company, Subsidiaries or
Affiliates; (iii) the commission of a felony or a crime of
moral turpitude, dishonesty, breach of trust or unethical
business conduct, or any crime involving the Manager or the
Company, Subsidiaries, or Affiliates; (iv) fraud,
misappropriation or embezzlement; (v) acts or omissions
constituting a material failure to perform substantially and
adequately the duties assigned to the Participant; (vi) any
illegal act detrimental to the Manager or the Company,
Subsidiaries or Affiliates; (vii) repeated failure to
devote substantially all of the Participants business time
and efforts to the Manager, the Company, Subsidiaries, or
Affiliates if required by the Participants employment
agreement; or (viii) the Participants failure to
competently perform his duties after receiving notice from the
Manager, the Company, a Subsidiary, or Affiliate, specifically
identifying the manner in which the Participant has failed to
perform; provided, however, that, if at any particular time the
Participant is subject to an effective employment agreement with
the Manager or the Company, then, in lieu of the foregoing
definition, Cause shall at that time have such
meaning as may be specified in such employment agreement.
Change in Control means the happening of any
of the following:
(i) any person, including a group
(as such terms are used in Sections 13(d) and 14(d) of the
Exchange Act, but excluding the Company or the Manager, any
entity controlling, controlled by or under common control with
the Company or the Manager, any trustee, fiduciary or other
person or entity holding securities under any employee benefit
plan or trust of the Company, the Manager or any such entity,
and with respect to any particular Participant, the Participant
and any group (as such term is used in Section
13(d)(3) of the Exchange Act) of which the Participant is a
member), is
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or becomes the beneficial owner (as defined in
Rule 13(d)(3) under the Exchange Act), directly or
indirectly, of securities of the Company or the Manager
representing 50% or more of either (A) the combined voting
power of the Companys or the Managers then
outstanding securities or (B) the then outstanding Common
Stock or securities (or other equity interests) of the Manager
(in either such case other than as a result of an acquisition of
securities directly from the Company or the Manager); or
(ii) any consolidation or merger of the Company (with
respect to persons described in clause (i) of the
definition of Eligible Persons or the Manager (with respect to
persons described in clause (ii) of the definition of
Eligible Persons) where the stockholders of the Company or the
Manager, as applicable, immediately prior to the consolidation
or merger, would not, immediately after the consolidation or
merger, beneficially own (as such term is defined in
Rule 13d-3
under the Exchange Act), directly or indirectly, shares
representing in the aggregate 50% or more of the combined voting
power of the securities of the corporation issuing cash or
securities in the consolidation or merger (or of its ultimate
parent corporation, if any); or
(iii) there shall occur (A) any sale, lease, exchange
or other transfer (in one transaction or a series of
transactions contemplated or arranged by any party as a single
plan) of all or substantially all of the assets of the Company
or the Manager as applicable, other than a sale or disposition
by the Company or the Manager as applicable, of all or
substantially all of the Companys or the Managers
assets to an entity, at least 50% of the combined voting power
of the voting securities of which are owned by
persons (as defined above) in substantially the same
proportion as their ownership of the Company or the Manager
immediately prior to such sale or (B) the approval by
stockholders of the Company or the Manager of any plan or
proposal for the liquidation or dissolution of the Company or
the Manager; or
(iv) the members of the Board at the beginning of any
consecutive 24-calendar-month period (the Incumbent
Directors) cease for any reason other than due to death to
constitute at least a majority of the members of the Board;
provided that any Director whose election, or nomination for
election by the Companys stockholders, was approved or
ratified by a vote of at least a majority of the members of the
Board then still in office who were members of the Board at the
beginning of such 24-calendar-month period, shall be deemed to
be an Incumbent Director.
Notwithstanding the foregoing provisions of this definition of
Change in Control, if at any time the Participant is subject to
an effective employment agreement with the Company (or, while
the Manager is an Affiliate, with the Manager) which expressly
provides for the definition of a change in control of the
Company or the Manager, then, in lieu of the foregoing
definition, Change in Control shall at that time
have such meaning as may be specified, in such employment
agreement, with respect to the Company and the Manager, as
applicable.
In addition, notwithstanding the foregoing, no event or
condition shall constitute a Change in Control to the extent
that, if it were, a 20% tax would be imposed under
Section 409A of the Code; provided that, in such a case,
the event or condition shall continue to constitute a Change in
Control to the maximum extent possible (e.g., if applicable, in
respect of vesting without an acceleration of distribution)
without causing the imposition of such 20% tax.
Code means the Internal Revenue Code of 1986,
as amended.
Committee means the Compensation Committee of
the Board.
Common Stock means the Companys Common
Stock, par value $.001 per share, either currently existing or
authorized hereafter.
Company means Alesco Financial Inc., a
Maryland corporation.
Director means a non-employee director of the
Company or Subsidiary that is not an employee of the Company or
a Subsidiary.
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Disability means, unless otherwise provided
by the Committee in the Participants Award Agreement, a
disability which renders the Participant incapable of performing
all of his or her duties for a period of at least 180
consecutive or non-consecutive days during any consecutive
twelve-month period. Notwithstanding the foregoing, no
circumstances or condition shall constitute a Disability to the
extent that, if it were, a 20% tax would be imposed under
Section 409A of the Code; provided that, in such a case,
the event or condition shall continue to constitute a Disability
to the maximum extent possible (e.g., if applicable, in respect
of vesting without an acceleration of distribution) without
causing the imposition of such 20% tax.
Dividend Equivalent Right means a right
awarded under Section 8 to receive (or have credited) the
equivalent value of dividends paid on Common Stock.
Eligible Person means (i) a key
employee, Director, officer, advisor, consultant or other
personnel of the Company or Subsidiaries or other person
expected to provide significant services (of a type expressly
approved by the Committee as covered services for these
purposes) to the Company or Subsidiaries or (ii) the
Manager, joint venture affiliates of the Company or other
entities designated in the discretion of the Committee, or
officers, directors, employees, members, or managers of the
foregoing. In the case of grants directly or indirectly to
employees of entities described in clause (ii) of the
foregoing sentence, the Committee may make arrangements with
such entities as it may consider appropriate in its discretion,
in light of tax and other considerations.
Exchange Act means the Securities Exchange
Act of 1934, as amended.
Fair Market Value per Share as of a
particular date means (i) if Shares are then listed on a
national securities exchange or quoted or reported on the NASDAQ
National Market (NASDAQ), the closing sales price
per Share on the exchange or NASDAQ for the last preceding date
on which there was a sale of Shares on such exchange or NASDAQ,
as determined by the Committee, (ii) if Shares are not then
listed on a national securities exchange or quoted on NASDAQ but
are then traded on an over-the-counter market, the average of
the closing bid and asked prices for the Shares in such
over-the-counter market for the last preceding date on which
there was a sale of such Shares in such market, as determined by
the Committee, or (iii) if Shares are not then listed on a
national securities exchange or quoted on NASDAQ or traded on an
over-the-counter market, such value as the Committee in its
discretion may in good faith determine; provided that, where the
Shares are so listed or traded, the Committee may make such
discretionary determinations where the Shares have not been
traded for 10 consecutive trading days.
Grantee means an Eligible Person granted
Restricted Stock, Phantom Shares, Dividend Equivalent Rights or
such other equity-based Awards (other than an Option) as may be
granted pursuant to Section 9.
Incentive Stock Option means an
incentive stock option within the meaning of
Section 422(b) of the Code.
Manager means Cohen Bros., or any successor
thereto.
Non-Qualified Stock Option means an Option
which is not an Incentive Stock Option.
Option means the right to purchase, at a
price and for the term fixed by the Committee in accordance with
the Plan, and subject to such other limitations and restrictions
in the Plan and the applicable Award Agreement, a number of
Shares determined by the Committee.
Optionee means an Eligible Person to whom an
Option is granted, or the Successors of the Optionee, as the
context so requires.
Option Price means the price per Share,
determined by the Board or the Committee, at which an Option may
be exercised.
Participant means a Grantee or Optionee.
Performance Goals has the meaning set forth
in Section 10.
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Phantom Share means a right, pursuant to the
Plan, of the Grantee to payment of the Phantom Share Value.
Phantom Share Value, per Phantom Share, means
the Fair Market Value of a Share or, if so provided by the
Committee, such Fair Market Value to the extent in excess of a
base value established by the Committee at the time of grant.
Plan means the Companys 2006 Long-Term
Incentive Plan, as set forth herein and as the same may from
time to time be amended.
Restricted Stock means an award of Shares
that are subject to restrictions hereunder.
Retirement means, unless otherwise provided
by the Committee in the Participants Award Agreement, the
Termination of Service (other than for Cause) of a Participant
on or after the Participants attainment of age 65 or
on or after the Participants attainment of age 55
with five consecutive years of service with the Company,
Subsidiaries or Affiliates.
Securities Act means the Securities Act of
1933, as amended.
Settlement Date means the date determined
under Section 7.4(c).
Shares means shares of Common Stock of the
Company.
Stock Appreciation Right means an Option
described in Section 5.7.
Subsidiary means any corporation, partnership
or other entity of which at least 50% of the economic interest
in the equity is owned (directly or indirectly) by the Company,
the Manager or by another subsidiary. In the event the Company
or the Manager becomes such a subsidiary of another company
(directly or indirectly), the provisions hereof applicable to
subsidiaries shall, unless otherwise determined by the
Committee, also be applicable to such parent company.
Successor of the Optionee means the legal
representative of the estate of a deceased Optionee or the
person or persons who shall acquire the right to exercise an
Option by bequest or inheritance or by reason of the death of
the Optionee.
Termination Event means (i) a Change in
Control or (ii) with respect to employees of the Manager,
the termination of the management agreement between the Manager
and the Company, as amended.
Termination of Service means a
Participants termination of employment or other service
(as a consultant or otherwise), as applicable, with the Company,
Subsidiaries, the Manager and Affiliates.
2. EFFECTIVE
DATE AND TERMINATION OF PLAN.
The effective date of the Plan is October 6, 2006. The Plan
shall terminate on, and no Award shall be granted hereunder on
or after, the
10-year
anniversary of the earlier of the approval of the Plan by
(i) the Board or (ii) the stockholders of the Company;
provided, however, that the Board may at any time prior to that
date terminate the Plan.
3. ADMINISTRATION
OF PLAN.
(a) The Plan shall be administered by the Committee. The
Committee, upon and after such time as it is subject to
Section 16 of the Exchange Act, shall consist of at least
two individuals each of whom shall be a nonemployee
director as defined in
Rule 16b-3
as promulgated by the Securities and Exchange Commission
(Rule 16b-3)
under the Exchange Act and shall, at such times as the Company
is subject to Section 162(m) of the Code (to the extent
relief from the limitation of Section 162(m) of the Code is
sought with respect to Awards), qualify as outside
directors for purposes of Section 162(m) of the Code;
provided that no action taken by the Committee (including,
without limitation, grants) shall be invalidated because any or
all of the members of the Committee fails to satisfy the
foregoing requirements of this sentence. The acts of a majority
of the members present at any meeting of the Committee at which
a quorum is present, or acts approved in
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writing by a majority of the entire Committee, shall be the acts
of the Committee for purposes of the Plan. If and to the extent
applicable, no member of the Committee may act as to matters
under the Plan specifically relating to such member.
Notwithstanding the other foregoing provisions of this
Section 3(a), any Award under the Plan to a person who is a
member of the Committee shall be made and administered by the
Board. If no Committee is designated by the Board to act for
these purposes, the Board shall have the rights and
responsibilities of the Committee hereunder and under the Award
Agreements.
(b) Subject to the provisions of the Plan, the Committee
shall in its discretion as reflected by the terms of the Award
Agreements (i) authorize the granting of Awards to Eligible
Persons and (ii) determine the eligibility of Eligible
Persons to receive an Award, as well as determine the number of
Shares to be covered under any Award Agreement, considering the
position and responsibilities of the Eligible Persons, the
nature and value to the Company of the Eligible Persons
present and potential contribution to the success of the Company
whether directly or through Subsidiaries or Affiliates and such
other factors as the Committee may deem relevant.
(c) The Award Agreement shall contain such other terms,
provisions and conditions not inconsistent herewith as shall be
determined by the Committee. In the event that any Award
Agreement or other agreement hereunder provides (without regard
to this sentence) for the obligation of the Company,
Subsidiaries or Affiliates to purchase or repurchase Shares from
a Participant or any other person, then, notwithstanding the
provisions of the Award Agreement or such other agreement, such
obligation shall not apply to the extent that the purchase or
repurchase would not be permitted under governing state law. The
Participant shall take whatever additional actions and execute
whatever additional documents the Committee may in its
reasonable judgment deem necessary or advisable in order to
carry out or effect one or more of the obligations or
restrictions imposed on the Participant pursuant to the express
provisions of the Plan and the Award Agreement.
4. SHARES
AND UNITS SUBJECT TO THE
PLAN.
4.1 In General.
(a) Subject to adjustments as provided in Section 14,
the total number of Shares subject to Awards granted under the
Plan (including securities convertible into or exchangeable for
Shares), in the aggregate, may not exceed 4,165,000. In no event
may an Eligible Person receive Options for more than
250,000 Shares on an annual basis, and the maximum number
of Shares that may underlie Awards, other than Options, granted
in any one year to any Eligible Person, shall not exceed
600,000. Shares distributed under the Plan may be treasury
Shares or authorized but unissued Shares. Any Shares that have
been granted as Restricted Stock or that have been reserved for
distribution in payment for Options, Phantom Shares or other
equity-based Awards but are later forfeited or for any other
reason are not payable under the Plan may again be made the
subject of Awards under the Plan.
(b) Shares subject to Dividend Equivalent Rights, other
than Dividend Equivalent Rights based directly on the dividends
payable with respect to Shares subject to Options or the
dividends payable on a number of Shares corresponding to the
number of Phantom Shares awarded, shall be subject to the
limitation of Section 4.1(a). Notwithstanding
Section 4.1(a), except in the case of Awards intended to
qualify for relief from the limitations of Section 162(m)
of the Code, there shall be no limit on the number of Phantom
Shares or Dividend Equivalent Rights to the extent they are paid
out in cash that may be granted under the Plan. If any Phantom
Shares, Dividend Equivalent Rights or other equity-based Awards
under Section 9 are paid out in cash, then, notwithstanding
the first sentence of Section 4.1(a) above (but subject to
the second sentence thereof) the underlying Shares may again be
made the subject of Awards under the Plan.
(c) The certificates for Shares issued hereunder may
include any legend which the Committee deems appropriate to
reflect any rights of first refusal, restrictions under the
Shareholders Agreement (as defined in Section 4.1(d)) or
other restrictions on transfer hereunder or under the Award
Agreement, or as the Committee may otherwise deem appropriate.
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4.2 Options.
Subject to adjustments pursuant to Section 14, and subject
to the last sentence of Section 4.1(a), Options with
respect to an aggregate of no more than 500,000 Shares may
be granted under the Plan.
5. PROVISIONS
APPLICABLE TO STOCK
OPTIONS.
5.1 Grant of Option.
Subject to the other terms of the Plan, the Committee shall, in
its discretion as reflected by the terms of the applicable Award
Agreement: (i) determine and designate from time to time
those Eligible Persons to whom Options are to be granted and the
number of Shares to be optioned to each Eligible Person;
(ii) determine whether to grant Options intended to be
Incentive Stock Options, or to grant Non-Qualified Stock
Options, or both (to the extent that any Option does not qualify
as an Incentive Stock Option, it shall constitute a separate
Non-Qualified Stock Option); provided that Incentive Stock
Options may only be granted to employees of the Company,
Subsidiaries or Affiliates; (iii) determine the time or
times when and the manner and condition in which each Option
shall be exercisable and the duration of the exercise period;
(iv) designate each Option as one intended to be an
Incentive Stock Option or as a Non-Qualified Stock Option; and
(v) determine or impose other conditions to the grant or
exercise of Options under the Plan as it may deem appropriate.
5.2 Option Price.
The Option Price shall be determined by the Committee on the
date the Option is granted and reflected in the Award Agreement,
as the same may be amended from time to time. Any particular
Award Agreement may provide for different Option Prices for
specified amounts of Shares subject to the Option; provided that
the Option Price shall not be less than 100% of the Fair Market
Value of a Share on the day the Option is granted.
5.3 Period of Option and
Vesting.
(a) Unless earlier expired, forfeited or otherwise
terminated, each Option shall expire in its entirety upon the
10th anniversary of the date of grant or shall have such
other term as is set forth in the applicable Award Agreement.
The Option shall also expire, be forfeited and terminate at such
times and in such circumstances as otherwise provided hereunder
or under the Award Agreement.
(b) Each Option, to the extent that the Optionee has not
had a Termination of Service and the Option has not otherwise
lapsed, expired, terminated or been forfeited, shall first
become exercisable according to the terms and conditions set
forth in the Award Agreement, as determined by the Committee at
the time of grant. Unless otherwise provided in the Plan or the
Award Agreement, no Option (or portion thereof) shall ever be
exercisable if the Optionee has a Termination of Service before
the time at which such Option (or portion thereof) would
otherwise have become exercisable, and any Option that would
otherwise become exercisable after such Termination of Service
shall not become exercisable and shall be forfeited upon such
termination. Notwithstanding the foregoing provisions of this
Section 5.3(b), Options exercisable pursuant to the
schedule set forth by the Committee at the time of the grant may
be fully or more rapidly exercisable or otherwise vested at any
time in the discretion of the Committee. Upon and after the
death of an Optionee, such Optionees Options, if and to
the extent otherwise exercisable hereunder or under the
applicable Award Agreement after the Optionees death, may
be exercised by the Successors of the Optionee.
5.4 Exercisability Upon and After Termination
of Optionee.
(a) Subject to provisions of the Award Agreement, if an
Optionee has a Termination of Service other than by the Company
or Subsidiaries for Cause, or other than by reason of death,
Retirement or Disability, then no exercise of an Option may
occur after the expiration of the three-month period to follow
the termination, or if earlier, the expiration of the term of
the Option as provided under Section 5.3(a); provided that,
if the Optionee should die after the Termination of Service, but
while the Option is still in effect, the Option (if and to the
extent otherwise exercisable by the Optionee at the time of
death) may be exercised until the earlier of (i) one year
from the date of the Termination of Service of the Optionee, or
(ii) the date on which the term of the Option expires in
accordance with Section 5.3(a).
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(b) Subject to provisions of the Award Agreement, in the
event the Optionee has a Termination of Service on account of
death, Disability or Retirement, the Option (whether or not
otherwise exercisable) may be exercised until the earlier of
(i) one year from the date of the Termination of Service of
the Optionee, or (ii) the date on which the term of the
Option expires in accordance with Section 5.3.
(c) Notwithstanding any other provision hereof, unless
otherwise provided in the Award Agreement, if the Optionee has a
Termination of Service for Cause, the Optionees Options,
to the extent then unexercised, shall thereupon cease to be
exercisable and shall be forfeited forthwith.
5.5 Exercise of Options.
(a) Subject to vesting, restrictions on exercisability and
other restrictions provided for hereunder or otherwise imposed
in accordance herewith, an Option may be exercised, and payment
in full of the aggregate Option Price made, by an Optionee only
by written notice (in the form prescribed by the Committee) to
the Company or its designee specifying the number of Shares to
be purchased.
(b) Without limiting the scope of the Committees
discretion hereunder, the Committee may impose such other
restrictions on the exercise of Options (whether or not in the
nature of the foregoing restrictions) as it may deem necessary
or appropriate.
5.6 Payment.
(a) The aggregate Option Price shall be paid in full upon
the exercise of the Option. Payment must be made by one of the
following methods:
(i) a certified or bank cashiers check;
(ii) subject to Section 12(e), the proceeds of a
Company loan program or third-party sale program or a notice
acceptable to the Committee given as consideration under such a
program, in each case if permitted by the Committee in its
discretion, if such a program has been established and the
Optionee is eligible to participate therein;
(iii) if approved by the Committee in its discretion,
Shares of previously owned Common Stock, which have been
previously owned for more than six months, having an aggregate
Fair Market Value on the date of exercise equal to the aggregate
Option Price;
(iv) if approved by the Committee in its discretion,
through the written election of the Optionee to have Shares
withheld by the Company from the Shares otherwise to be
received, with such withheld Shares having an aggregate Fair
Market Value on the date of exercise equal to the aggregate
Option Price; or
(v) by any combination of such methods of payment or any
other method acceptable to the Committee in its discretion.
(b) Except in the case of Options exercised by certified or
bank cashiers check, the Committee may impose limitations
and prohibitions on the exercise of Options as it deems
appropriate, including, without limitation, any limitation or
prohibition designed to avoid accounting consequences which may
result from the use of Common Stock as payment upon exercise of
an Option.
(c) The Committee may provide that no Option may be
exercised with respect to any fractional Share. Any fractional
Shares resulting from an Optionees exercise that is
accepted by the Company shall in the discretion of the Committee
be paid in cash.
5.7 Stock Appreciation
Rights.
(a) The Committee, in its discretion, may also permit
(taking into account, without limitation, the application of
Section 409A of the Code, as the Committee may deem
appropriate) the Optionee to elect to receive upon the exercise
of an Option a combination of Shares and cash, or, in the
discretion of the Committee, either Shares or solely in cash,
with an aggregate Fair Market Value (or, to the extent of
payment in cash, in an amount) equal to the excess of the Fair
Market Value of the Shares with respect to which the Option is
being exercised over the aggregate Option Price, as determined
as of the day the Option is exercised.
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(b) Upon the exercise of any Stock Appreciation Rights, the
greater of (i) the number of shares subject to the Stock
Appreciation Rights so exercised, and (ii) the number of
Shares, if any, that are issued in connection with such
exercise, shall be deducted from the number of Shares available
for issuance under the Plan.
(c) In no event may a Stock Appreciation Right be
transferred by a holder thereof for consideration without the
prior approval of the Companys stockholders.
5.8 Exercise by Successors.
An Option may be exercised, and payment in full of the aggregate
Option Price made, by the Successors of the Optionee only by
written notice (in the form prescribed by the Committee) to the
Company specifying the number of Shares to be purchased. Such
notice shall state that the aggregate Option Price will be paid
in full, or that the Option will be exercised as otherwise
provided hereunder, in the discretion of the Company or the
Committee, if and as applicable.
5.9 Nontransferability of
Option.
Each Option granted under the Plan shall be nontransferable by
the Optionee except by will or the laws of descent and
distribution of the state wherein the Optionee is domiciled at
the time of his death; provided, however, that the Committee may
(but need not) permit other transfers, where the Committee
concludes that such transferability (i) does not result in
accelerated U.S. federal income taxation, (ii) does
not cause any Option intended to be an Incentive Stock Option to
fail to be described in Section 422(b) of the Code,
(iii) complies with applicable law, including securities
laws, and (iv) is otherwise appropriate and desirable. In
no event may an Option be transferred by an Optionee for
consideration without the prior approval of the Companys
stockholders.
5.10 Deferral.
The Committee (taking into account, without limitation, the
possible application of Section 409A of the Code, as the
Committee may deem appropriate) may establish a program under
which Participants will have Phantom Shares subject to
Section 7 credited upon their exercise of Options, rather
than receiving Shares at that time.
5.11 Certain Incentive Stock Option
Provisions.
(a) In no event may an Incentive Stock Option be granted
other than to employees of a subsidiary corporation
or a parent corporation, as defined in
Section 424(f) of the Code, with respect to the Company.
The aggregate Fair Market Value, determined as of the date an
Option is granted, of the Common Stock for which any Optionee
may be awarded Incentive Stock Options which are first
exercisable by the Optionee during any calendar year under the
Plan (or any other stock option plan required to be taken into
account under Section 422(d) of the Code) shall not exceed
$100,000. To the extent the $100,000 limit referred to in the
preceding sentence is exceeded, an Option will be treated as a
Non-Qualified Stock Option.
(b) If Shares acquired upon exercise of an Incentive Stock
Option are disposed of in a disqualifying disposition within the
meaning of Section 422 of the Code by an Optionee prior to
the expiration of either two years from the date of grant of
such Option or one year from the transfer of Shares to the
Optionee pursuant to the exercise of such Option, or in any
other disqualifying disposition within the meaning of
Section 422 of the Code, such Optionee shall notify the
Company in writing as soon as practicable thereafter of the date
and terms of such disposition and, if the Company (or an
Affiliate) thereupon has a tax-withholding obligation, shall pay
to the Company (or such Affiliate) an amount equal to any
withholding tax the Company (or Affiliate) is required to pay as
a result of the disqualifying disposition.
(c) The Option Price with respect to each Incentive Stock
Option shall not be less than 100%, or 110% in the case of an
individual described in Section 422(b)(6) of the Code
(relating to certain 10% owners), of the Fair Market Value of a
Share on the day the Option is granted. Also, in the case of
such an individual who is granted an Incentive Stock Option, the
term of such Option shall be no more than five years from the
date of grant.
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6. PROVISIONS
APPLICABLE TO RESTRICTED
STOCK.
6.1 Grant of Restricted
Stock.
(a) In connection with the grant of Restricted Stock,
whether or not performance goals (as provided for under
Section 10) apply thereto, the Committee shall
establish one or more vesting periods with respect to the shares
of Restricted Stock granted, the length of which shall be
determined in the discretion of the Committee. Subject to the
provisions of this Section 6, the applicable Award
Agreement and the other provisions of the Plan, restrictions on
Restricted Stock shall lapse if the Grantee satisfies all
applicable employment or other service requirements through the
end of the applicable vesting period.
(b) Subject to the other terms of the Plan, the Committee
may, in its discretion as reflected by the terms of the
applicable Award Agreement: (i) authorize the granting of
Restricted Stock to Eligible Persons; (ii) provide a
specified purchase price for the Restricted Stock (whether or
not the payment of a purchase price is required by any state law
applicable to the Company); (iii) determine the
restrictions applicable to Restricted Stock and
(iv) determine or impose other conditions, including any
applicable Performance Goals, to the grant of Restricted Stock
under the Plan as it may deem appropriate.
6.2 Certificates/Book Entry.
(a) Unless otherwise provided by the Committee, each
Grantee of Restricted Stock shall be issued a stock certificate
in respect of Shares of Restricted Stock awarded under the Plan.
Each such certificate shall be registered in the name of the
Grantee. Without limiting the generality of Section 4.1(c),
the certificates for Shares of Restricted Stock issued hereunder
may include any legend which the Committee deems appropriate to
reflect any restrictions on transfer hereunder or under the
Award Agreement, or as the Committee may otherwise deem
appropriate, and, without limiting the generality of the
foregoing, shall bear a legend referring to the terms,
conditions, and restrictions applicable to such Award,
substantially in the following form:
THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF STOCK
REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS
(INCLUDING FORFEITURE) OF THE ALESCO FINANCIAL INC. 2006
LONG-TERM INCENTIVE PLAN AND AN AWARD AGREEMENT ENTERED INTO
BETWEEN THE REGISTERED OWNER AND ALESCO FINANCIAL INC. COPIES OF
SUCH PLAN AND AWARD AGREEMENT ARE ON FILE IN THE OFFICES OF
ALESCO FINANCIAL INC. AT CIRA CENTRE, 2929 ARCH STREET,
17th FLOOR,
PHILADELPHIA, PENNSYLVANIA 19104.
(b) The Committee shall require that any stock certificates
evidencing such Shares be held in custody by the Company or its
designee until the restrictions hereunder shall have lapsed, and
that, as a condition of any Award of Restricted Stock, the
Grantee shall have delivered to the Company or its designee a
stock power, endorsed in blank, relating to the stock covered by
such Award. If and when such restrictions so lapse, the stock
certificates shall be delivered by the Company to the Grantee or
his or her designee as provided in Section 6.3 (and the
stock power shall cease to be of effect).
(c) Where no certificate is issued in the name of the
Grantee, a book entry (by computerized or manual
entry) shall be made in the records of the Company (or, if
applicable, the Companys transfer agent) to evidence an
award of Shares of Restricted Stock.
6.3 Restrictions and
Conditions.
Unless otherwise provided by the Committee, the Shares of
Restricted Stock awarded pursuant to the Plan shall be subject
to the following restrictions and conditions:
(i) Subject to the provisions of the Plan and the Award
Agreements, during a period commencing with the date of such
Award and ending on the date the period of forfeiture with
respect to such Shares lapses, the Grantee shall not be
permitted voluntarily or involuntarily to sell, transfer,
pledge, anticipate, alienate, encumber or assign Shares of
Restricted Stock awarded under the Plan (or have such Shares
attached or garnished). Subject to the provisions of the Award
Agreements and clause (iii) below, the period of forfeiture
with respect to Shares granted hereunder shall lapse as provided
in the applicable
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Award Agreement. Notwithstanding the foregoing, unless otherwise
expressly provided by the Committee, the period of forfeiture
with respect to such Shares shall only lapse as to whole Shares.
(ii) Except as provided in the foregoing clause (i), below
in this clause (ii) in Section 14, or as otherwise
provided in the applicable Award Agreement, the Grantee shall
have, in respect of the Shares of Restricted Stock, all of the
rights of a shareholder of the Company, including the right to
vote the Shares and the right to receive any cash dividends as
and when such dividends are declared and paid by the Company (or
as soon as practicable thereafter); provided, however, that cash
dividends on such Shares shall, unless otherwise provided by the
Committee, be held by the Company (unsegregated as a part of its
general assets) until the period of forfeiture lapses (and
forfeited if the underlying Shares are forfeited), and paid over
to the Grantee (without interest) as soon as practicable after
such period lapses (if not forfeited). Certificates for Shares
(not subject to restrictions) shall be delivered to the Grantee
or his or her designee promptly after, and only after, the
period of forfeiture shall lapse without forfeiture in respect
of such Shares of Restricted Stock.
(iii) Except as otherwise provided in the applicable Award
Agreement, and subject to clause (iv) below, if the Grantee
has a Termination of Service by the Company and Subsidiaries
(or, if applicable, Affiliates) for Cause, or by the Grantee for
any reason during the applicable period of forfeiture, then
(A) all Shares still subject to restriction shall
thereupon, and with no further action, be forfeited by the
Grantee, and (B) the Company shall pay to the Grantee as
soon as practicable (and in no event more than 30 days)
after such termination an amount, equal to the lesser of
(x) the amount paid by the Grantee for such forfeited
Restricted Stock as contemplated by Section 6.1, and
(y) the Fair Market Value on the date of termination of the
forfeited Restricted Stock.
(iv) Subject to the provisions of the Award Agreement, in
the event the Grantee has a Termination of Service on account of
death, Disability or Retirement, or the Grantee has a
Termination of Service by the Company and Subsidiaries for any
reason other than Cause, or in the event of a Termination Event
(regardless of whether a termination follows thereafter), during
the applicable period of forfeiture, then restrictions under the
Plan will immediately lapse on all Restricted Stock granted to
the applicable Grantee.
7. PROVISIONS
APPLICABLE TO PHANTOM SHARES.
7.1 Grant of Phantom Shares.
Subject to the other terms of the Plan, the Committee shall, in
its discretion as reflected by the terms of the applicable Award
Agreement: (i) authorize the granting of Phantom Shares to
Eligible Persons and (ii) determine or impose other
conditions to the grant of Phantom Shares under the Plan as it
may deem appropriate.
7.2 Term.
The Committee may provide in an Award Agreement that any
particular Phantom Share shall expire at the end of a specified
term.
7.3 Vesting.
Phantom Shares shall vest as provided in the applicable Award
Agreement.
7.4 Settlement of Phantom
Shares.
(a) Each vested and outstanding Phantom Share shall be
settled by the transfer to the Grantee of one Share; provided
that, the Committee at the time of grant (or, in the appropriate
case, as determined by the Committee, thereafter) may provide
that, after consideration of possible accounting issues, a
Phantom Share may be settled (i) in cash at the applicable
Phantom Share Value, (ii) in cash or by transfer of Shares
as elected by the Grantee in accordance with procedures
established by the Committee or (iii) in cash or by
transfer of Shares as elected by the Company.
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(b) Payment (whether of cash or Shares) in respect of
Phantom Shares shall be made in a single sum by the Company;
provided that, with respect to Phantom Shares of a Grantee which
have a common Settlement Date, the Committee may permit the
Grantee to elect in accordance with procedures established by
the Committee (taking into account, without limitation,
Section 409A of the Code, as the Committee may deem
appropriate) to receive installment payments over a period not
to exceed 10 years, rather than a single-sum payment.
(c) Unless otherwise provided in the applicable Award
Agreement, the Settlement Date with respect to a
Phantom Share is the first day of the month to follow the date
on which the Phantom Share vests; provided that a Grantee may
elect, in accordance with procedures to be established by the
Committee, that such Settlement Date will be deferred as elected
by the Grantee to the first day of the month to follow the
Grantees Termination of Service, or such other time as may
be permitted by the Committee. Unless otherwise determined by
the Committee, elections under this Section 7.4(c)(i) must,
except as may otherwise be permitted under the rules applicable
under Section 409A of the Code, (A) be effective at
least one year after they are made, or, in the case of payments
to commence at a specific time, be made at least one year before
the first scheduled payment and (B) defer the commencement
of distributions (and each affected distribution) for at least
five years.
(i) Notwithstanding Section 7.4(c)(i), the Committee
may provide that distributions of Phantom Shares can be elected
at any time in those cases in which the Phantom Share Value is
determined by reference to Fair Market Value to the extent in
excess of a base value, rather than by reference to unreduced
Fair Market Value.
(ii) Notwithstanding the foregoing, the Settlement Date, if
not earlier pursuant to this Section 7.4(c), is the date of
the Grantees death.
(d) Notwithstanding the other provisions of this
Section 7, in the event of a Termination Event, the
Settlement Date shall be the date of such Termination Event and
all amounts due with respect to Phantom Shares to a Grantee
hereunder shall be paid as soon as practicable (but in no event
more than 30 days) after such Termination Event, unless
such Grantee elects otherwise in accordance with procedures
established by the Committee.
(e) Notwithstanding any other provision of the Plan, a
Grantee may receive any amounts to be paid in installments as
provided in Section 7.4(b) or deferred by the Grantee as
provided in Section 7.4(c) in the event of an
Unforeseeable Emergency. For these purposes, an
Unforeseeable Emergency, as determined by the
Committee in its sole discretion, is a severe financial hardship
to the Grantee resulting from a sudden and unexpected illness or
accident of the Grantee or dependent, as defined in
Section 152(a) of the Code, of the Grantee, loss of the
Grantees property due to casualty, or other similar
extraordinary and unforeseeable circumstances arising as a
result of events beyond the control of the Grantee. The
circumstances that will constitute an Unforeseeable Emergency
will depend upon the facts of each case, but, in any case,
payment may not be made to the extent that such hardship is or
may be relieved:
(i) through reimbursement or compensation by insurance or
otherwise,
(ii) by liquidation of the Grantees assets, to the
extent the liquidation of such assets would not itself cause
severe financial hardship, or
(iii) by future cessation of the making of additional
deferrals under Section 7.4 (b) and (c).
Without limitation, the need to send a Grantees child to
college or the desire to purchase a home shall not constitute an
Unforeseeable Emergency. Distributions of amounts because of an
Unforeseeable Emergency shall be permitted to the extent
reasonably needed to satisfy the emergency need.
7.5 Other Phantom Share
Provisions.
(a) Rights to payments with respect to Phantom Shares
granted under the Plan shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, garnishment, levy, execution, or other
legal or equitable process, either voluntary or involuntary; and
any attempt to
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anticipate, alienate, sell, transfer, assign, pledge, encumber,
attach or garnish, or levy or execute on any right to payments
or other benefits payable hereunder, shall be void.
(b) A Grantee may designate in writing, on forms to be
prescribed by the Committee, a beneficiary or beneficiaries to
receive any payments payable after his or her death and may
amend or revoke such designation at any time. If no beneficiary
designation is in effect at the time of a Grantees death,
payments hereunder shall be made to the Grantees estate.
If a Grantee with a vested Phantom Share dies, such Phantom
Share shall be settled and the Phantom Share Value in respect of
such Phantom Shares paid, and any payments deferred pursuant to
an election under Section 7.4(c) shall be accelerated and
paid, as soon as practicable (but no later than 60 days)
after the date of death to such Grantees beneficiary or
estate, as applicable.
(c) The Committee may establish a program under which
distributions with respect to Phantom Shares may be deferred for
periods in addition to those otherwise contemplated by foregoing
provisions of this Section 7. Such program may include,
without limitation, provisions for the crediting of earnings and
losses on unpaid amounts, and, if permitted by the Committee,
provisions under which Participants may select from among
hypothetical investment alternatives for such deferred amounts
in accordance with procedures established by the Committee.
(d) Notwithstanding any other provision of this
Section 7, any fractional Phantom Share will be paid out in
cash at the Phantom Share Value as of the Settlement Date.
(e) No Phantom Share shall be construed to give any Grantee
any rights with respect to Shares or any ownership interest in
the Company. Except as may be provided in accordance with
Section 8, no provision of the Plan shall be interpreted to
confer upon any Grantee any voting, dividend or derivative or
other similar rights with respect to any Phantom Share.
7.6 Claims Procedures.
(a) To the extent that the Plan is determined by the
Committee to be subject to the Employee Retirement Income
Security Act of 1974, as amended, the Grantee, or his
beneficiary hereunder or authorized representative, may file a
claim for payments with respect to Phantom Shares under the Plan
by written communication to the Committee or its designee. A
claim is not considered filed until such communication is
actually received. Within 90 days (or, if special
circumstances require an extension of time for processing,
180 days, in which case notice of such special
circumstances should be provided within the initial
90-day
period) after the filing of the claim, the Committee will either:
(i) approve the claim and take appropriate steps for
satisfaction of the claim; or
(ii) if the claim is wholly or partially denied, advise the
claimant of such denial by furnishing to him a written notice of
such denial setting forth (A) the specific reason or
reasons for the denial; (B) specific reference to pertinent
provisions of the Plan on which the denial is based and, if the
denial is based in whole or in part on any rule of construction
or interpretation adopted by the Committee, a reference to such
rule, a copy of which shall be provided to the claimant;
(C) a description of any additional material or information
necessary for the claimant to perfect the claim and an
explanation of the reasons why such material or information is
necessary; and (D) a reference to this Section 7.6 as
the provision setting forth the claims procedure under the Plan.
(b) The claimant may request a review of any denial of his
claim by written application to the Committee within
60 days after receipt of the notice of denial of such
claim. Within 60 days (or, if special circumstances require
an extension of time for processing, 120 days, in which
case notice of such special circumstances should be provided
within the initial
60-day
period) after receipt of written application for review, the
Committee will provide the claimant with its decision in
writing, including, if the claimants claim is not
approved, specific reasons for the decision and specific
references to the Plan provisions on which the decision is based.
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8. PROVISIONS
APPLICABLE TO DIVIDEND EQUIVALENT
RIGHTS.
8.1 Grant of Dividend Equivalent
Rights.
Subject to the other terms of the Plan, the Committee shall, in
its discretion as reflected by the terms of the Award
Agreements, authorize the granting of Dividend Equivalent Rights
to Eligible Persons based on the regular cash dividends declared
on Common Stock, to be credited as of the dividend payment
dates, during the period between the date an Award is granted,
and the date such Award is exercised, vests or expires, as
determined by the Committee. Such Dividend Equivalent Rights
shall be converted to cash or additional Shares by such formula
and at such time and subject to such limitation as may be
determined by the Committee. With respect to Dividend Equivalent
Rights granted with respect to Options intended to be qualified
performance-based compensation for purposes of
Section 162(m) of the Code, such Dividend Equivalent Rights
shall be payable regardless of whether such Option is exercised.
If a Dividend Equivalent Right is granted in respect of another
Award hereunder, then, unless otherwise stated in the Award
Agreement, in no event shall the Dividend Equivalent Right be in
effect for a period beyond the time during which the applicable
portion of the underlying Award is in effect.
8.2 Certain Terms.
(a) The term of a Dividend Equivalent Right shall be set by
the Committee in its discretion.
(b) Unless otherwise determined by the Committee, except as
contemplated by Section 8.4, a Dividend Equivalent Right is
exercisable or payable only while the Participant is an Eligible
Person.
(c) Payment of the amount determined in accordance with
Section 8.1 shall be in cash, in Common Stock or a
combination of the two, as determined by the Committee.
(d) The Committee may impose such employment-related
conditions on the grant of a Dividend Equivalent Right as it
deems appropriate in its discretion.
8.3 Other Types of Dividend Equivalent
Rights.
The Committee may establish a program under which Dividend
Equivalent Rights of a type whether or not described in the
foregoing provisions of this Section 8 may be granted to
Participants. For example, and without limitation, the Committee
may grant a dividend equivalent right in respect of each Share
subject to an Option or with respect to a Phantom Share, which
right would consist of the right (subject to Section 8.4)
to receive a cash payment in an amount equal to the dividend
distributions paid on a Share from time to time.
8.4 Deferral.
The Committee may establish a program (taking into account,
without limitation, the possible application of
Section 409A of the Code, as the Committee may deem
appropriate) under which Participants (i) will have Phantom
Shares credited, subject to the terms of Sections 7.4 and
7.5 as though directly applicable with respect thereto, upon the
granting of Dividend Equivalent Rights, or (ii) will have
payments with respect to Dividend Equivalent Rights deferred. In
the case of the foregoing clause (ii), such program may include,
without limitation, provisions for the crediting of earnings and
losses on unpaid amounts, and, if permitted by the Committee,
provisions under which Participants may select from among
hypothetical investment alternatives for such deferred amounts
in accordance with procedures established by the Committee.
9. OTHER
EQUITY-BASED
AWARDS.
The Committee shall have the right to grant (i) other
Awards based upon the Common Stock having such terms and
conditions as the Committee may determine, including, without
limitation, the grant of Shares based upon certain conditions,
the grant of securities convertible into Common Stock and the
grant of Stock Appreciation Rights and (ii) interests
(which may be expressed as units or otherwise) in subsidiaries,
as applicable.
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10. PERFORMANCE
GOALS.
The Committee, in its discretion, may in the case of Awards
(including, in particular, Awards other than Options) intended
to qualify for an exception from the limitation imposed by
Section 162(m) of the Code (Performance-Based
Awards), (i) establish one or more performance goals
(Performance Goals) as a precondition to the
issuance or vesting of Awards, and (ii) provide, in
connection with the establishment of the Performance Goals, for
predetermined Awards to those Participants (who continue to meet
all applicable eligibility requirements) with respect to whom
the applicable Performance Goals are satisfied. The Performance
Goals shall be based upon the criteria set forth in
Exhibit A hereto which is hereby incorporated herein by
reference as though set forth in full. The Performance Goals
shall be established in a timely fashion such that they are
considered preestablished for purposes of the rules governing
performance-based compensation under Section 162(m) of the
Code. Prior to the award or vesting, as applicable, of affected
Awards hereunder, the Committee shall have certified that any
applicable Performance Goals, and other material terms of the
Award, have been satisfied. Performance Goals which do not
satisfy the foregoing provisions of this Section 10 may be
established by the Committee with respect to Awards not intended
to qualify for an exception from the limitations imposed by
Section 162(m) of the Code.
11. TAX
WITHHOLDING.
11.1 In General.
The Company shall be entitled to withhold from any payments or
deemed payments any amount of tax withholding determined by the
Committee to be required by law. Without limiting the generality
of the foregoing, the Committee may, in its discretion, require
the Participant to pay to the Company at such time as the
Committee determines the amount that the Committee deems
necessary to satisfy the Companys obligation to withhold
federal, state or local income or other taxes incurred by reason
of (i) the exercise of any Option, (ii) the lapsing of
any restrictions applicable to any Restricted Stock,
(iii) the receipt of a distribution in respect of Phantom
Shares or Dividend Equivalent Rights or (iv) any other
applicable income-recognition event (for example, an election
under Section 83(b) of the Code).
11.2 Share Withholding.
(a) Upon exercise of an Option, the Optionee may, if
approved by the Committee in its discretion, make a written
election to have Shares then issued withheld by the Company from
the Shares otherwise to be received, or to deliver previously
owned Shares, in order to satisfy the liability for such
withholding taxes. In the event that the Optionee makes, and the
Committee permits, such an election, the number of Shares so
withheld or delivered shall have an aggregate Fair Market Value
on the date of exercise sufficient to satisfy the applicable
withholding taxes. Where the exercise of an Option does not give
rise to an obligation by the Company to withhold federal, state
or local income or other taxes on the date of exercise, but may
give rise to such an obligation in the future, the Committee
may, in its discretion, make such arrangements and impose such
requirements as it deems necessary or appropriate.
(b) Upon lapsing of restrictions on Restricted Stock (or
other income-recognition event), the Grantee may, if approved by
the Committee in its discretion, make a written election to have
Shares withheld by the Company from the Shares otherwise to be
released from restriction, or to deliver previously owned Shares
(not subject to restrictions hereunder), in order to satisfy the
liability for such withholding taxes. In the event that the
Grantee makes, and the Committee permits, such an election, the
number of Shares so withheld or delivered shall have an
aggregate Fair Market Value on the date of exercise sufficient
to satisfy the applicable withholding taxes.
(c) Upon the making of a distribution in respect of Phantom
Shares or Dividend Equivalent Rights, the Grantee may, if
approved by the Committee in its discretion, make a written
election to have amounts (which may include Shares) withheld by
the Company from the distribution otherwise to be made, or to
deliver previously owned Shares (not subject to restrictions
hereunder), in order to satisfy the liability for such
withholding taxes. In the event that the Grantee makes, and the
Committee permits, such an election, any
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Shares so withheld or delivered shall have an aggregate Fair
Market Value on the date of exercise sufficient to satisfy the
applicable withholding taxes.
11.3 Withholding Required.
Notwithstanding anything contained in the Plan or the Award
Agreement to the contrary, the Participants satisfaction
of any tax-withholding requirements imposed by the Committee
shall be a condition precedent to the Companys obligation
as may otherwise be provided hereunder to provide Shares to the
Participant and to the release of any restrictions as may
otherwise be provided hereunder, as applicable; and the
applicable Option, Restricted Stock, Phantom Shares or Dividend
Equivalent Rights shall be forfeited upon the failure of the
Participant to satisfy such requirements with respect to, as
applicable, (i) the exercise of the Option, (ii) the
lapsing of restrictions on the Restricted Stock (or other
income-recognition event) or (iii) distributions in respect
of any Phantom Share or Dividend Equivalent Right.
12. REGULATIONS
AND
APPROVALS.
(a) The obligation of the Company to sell Shares with
respect to an Award granted under the Plan shall be subject to
all applicable laws, rules and regulations, including all
applicable federal and state securities laws, and the obtaining
of all such approvals by governmental agencies as may be deemed
necessary or appropriate by the Committee.
(b) The Committee may make such changes to the Plan as may
be necessary or appropriate to comply with the rules and
regulations of any government authority or to obtain tax
benefits applicable to an Award.
(c) Each grant of Options, Restricted Stock, Phantom Shares
(or issuance of Shares in respect thereof) or Dividend
Equivalent Rights (or issuance of Shares in respect thereof), or
other Award under Section 9 (or issuance of Shares in
respect thereof), is subject to the requirement that, if at any
time the Committee determines, in its discretion, that the
listing, registration or qualification of Shares issuable
pursuant to the Plan is required by any securities exchange or
under any state or federal law, or the consent or approval of
any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the issuance of Options,
Shares of Restricted Stock, Phantom Shares, Dividend Equivalent
Rights, other Awards or other Shares, no payment shall be made,
or Phantom Shares or Shares issued or grant of Restricted Stock
or other Award made, in whole or in part, unless listing,
registration, qualification, consent or approval has been
effected or obtained free of any conditions in a manner
acceptable to the Committee.
(d) In the event that the disposition of stock acquired
pursuant to the Plan is not covered by a then current
registration statement under the Securities Act, and is not
otherwise exempt from such registration, such Shares shall be
restricted against transfer to the extent required under the
Securities Act, and the Committee may require any individual
receiving Shares pursuant to the Plan, as a condition precedent
to receipt of such Shares, to represent to the Company in
writing that such Shares are acquired for investment only and
not with a view to distribution and that such Shares will be
disposed of only if registered for sale under the Securities Act
or if there is an available exemption for such disposition.
(e) Notwithstanding any other provision of the Plan, the
Company shall not be required to take or permit any action under
the Plan or any Award Agreement which, in the good-faith
determination of the Company, would result in a material risk of
a violation by the Company of Section 13(k) of the Exchange
Act.
13. INTERPRETATION
AND AMENDMENTS; OTHER
RULES.
The Committee may make such rules and regulations and establish
such procedures for the administration of the Plan as it deems
appropriate. Without limiting the generality of the foregoing,
the Committee may (i) determine the extent, if any, to
which Options, Phantom Shares or Shares (whether or not Shares
of Restricted Stock) or Dividend Equivalent Rights shall be
forfeited (whether or not such forfeiture is expressly
contemplated hereunder); (ii) interpret the Plan and the
Award Agreements hereunder, with such interpretations to be
conclusive and binding on all persons and otherwise accorded the
maximum deference permitted by law, provided that the
Committees interpretation shall not be entitled to
deference on and after a Termination Event except to the extent
that such interpretations are made exclusively by members of the
Committee who
A-15
are individuals who served as Committee members before the
Termination Event; and (iii) take any other actions and
make any other determinations or decisions that it deems
necessary or appropriate in connection with the Plan or the
administration or interpretation thereof. In the event of any
dispute or disagreement as to the interpretation of the Plan or
of any rule, regulation or procedure, or as to any question,
right or obligation arising from or related to the Plan, the
decision of the Committee, except as provided in
clause (ii) of the foregoing sentence, shall be final and
binding upon all persons. Unless otherwise expressly provided
hereunder, the Committee, with respect to any grant, may
exercise its discretion hereunder at the time of the Award or
thereafter. The Board may amend the Plan as it shall deem
advisable, except that no amendment may adversely affect a
Participant with respect to an Award previously granted without
such Participants written consent unless such amendments
are required in order to comply with applicable laws; provided,
however, that the Plan may not be amended without stockholder
approval in any case in which amendment in the absence of
stockholder approval would cause the Plan to fail to comply with
any applicable legal requirement or applicable exchange or
similar rule.
14. CHANGES
IN CAPITAL
STRUCTURE.
(a) If (i) the Company or Subsidiaries shall at any
time be involved in a merger, consolidation, dissolution,
liquidation, reorganization, exchange of shares, sale of all or
substantially all of the assets or stock of the Company or
Subsidiaries or a transaction similar thereto, (ii) any
stock dividend, stock split, reverse stock split, stock
combination, reclassification, recapitalization or other similar
change in the capital structure of the Company or Subsidiaries,
or any distribution to holders of Common Stock other than cash
dividends, shall occur or (iii) any other event shall occur
which in the judgment of the Committee necessitates action by
way of adjusting the terms of the outstanding Awards, then:
(x) the maximum aggregate number and kind of Shares which
may be made subject to Options and Dividend Equivalent Rights
under the Plan, the maximum aggregate number and kind of Shares
of Restricted Stock that may be granted under the Plan, the
maximum aggregate number of Phantom Shares and other Awards
which may be granted under the Plan may be appropriately
adjusted by the Committee in its discretion; and
(y) the Committee may take any such action as in its
discretion shall be necessary to maintain each
Participants rights hereunder (including under their Award
Agreements) so that they are substantially in their respective
Options, Phantom Shares and Dividend Equivalent Rights
substantially proportionate to the rights existing in such
Options, Phantom Shares and Dividend Equivalent Rights prior to
such event, including, without limitation, adjustments in
(A) the number of Options, Phantom Shares and Dividend
Equivalent Rights (and other Awards under
Section 9) granted, (B) the number and kind of
shares or other property to be distributed in respect of
Options, Phantom Shares and Dividend Equivalent Rights (and
other Awards under Section 9 as applicable), (C) the
Option Price and Phantom Share Value, and
(D) performance-based criteria established in connection
with Awards (to the extent consistent with Section 162(m)
of the Code, as applicable); provided that, in the discretion of
the Committee, the foregoing clause (D) may also be applied
in the case of any event relating to a Subsidiary if the event
would have been covered under this Section 14(a) had the
event related to the Company.
To the extent that such action shall include an increase or
decrease in the number of Shares (or units of other property
then available) subject to all outstanding Awards, the number of
Shares (or units) available under Section 4 shall be
increased or decreased, as the case may be, proportionately, as
may be determined by the Committee in its discretion.
(b) Any Shares or other securities distributed to a Grantee
with respect to Restricted Stock or otherwise issued in
substitution of Restricted Stock shall be subject to the
restrictions and requirements imposed by Section 6,
including depositing the certificates therefor with the Company
together with a stock power and bearing a legend as provided in
Section 6.2(a).
(c) If the Company shall be consolidated or merged with
another corporation or other entity, each Grantee who has
received Restricted Stock that is then subject to restrictions
imposed by Section 6.3(a) may be required to deposit with
the successor corporation the certificates, if any, for the
stock or securities, or the
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other property, that the Grantee is entitled to receive by
reason of ownership of Restricted Stock in a manner consistent
with Section 6.2(b), and such stock, securities or other
property shall become subject to the restrictions and
requirements imposed by Section 6.3(a), and the
certificates therefor or other evidence thereof shall bear a
legend similar in form and substance to the legend set forth in
Section 6.2(a).
(d) If a Termination Event shall occur, then the Committee,
as constituted immediately before the Termination Event, may
make such adjustments as it, in its discretion, determines are
necessary or appropriate in light of the Termination Event,
provided that the Committee determines that such adjustments do
not have an adverse economic impact on the Participant as
determined at the time of the adjustments.
(e) The judgment of the Committee with respect to any
matter referred to in this Section 14 shall be conclusive
and binding upon each Participant without the need for any
amendment to the Plan.
(f) Other than as otherwise permitted under this
Section 14, without the prior approval of the
Companys stockholders: (i) the Option Price, with
respect to an Option, or grant price, with respect to a Stock
Appreciation Right, may not be reduced below the price
established at the time of grant thereof and (ii) an
outstanding Option or Stock Appreciation Right may not be
cancelled and replaced with a new Award with a lower exercise or
grant price.
15. MISCELLANEOUS.
15.1 No Rights to Employment or Other
Service.
Nothing in the Plan or in any grant made pursuant to the Plan
shall confer on any individual any right to continue in the
employ or other service of the Company, the Subsidiaries, the
Manager or Affiliates or interfere in any way with the right of
the Company, the Subsidiaries, the Manager or Affiliates and
their stockholders to terminate the individuals employment
or other service at any time.
15.2 Right of First Refusal; Right of
Repurchase.
At the time of grant, the Committee may provide in connection
with any grant made under the Plan that Shares received
hereunder shall be subject to a right of first refusal pursuant
to which the Company shall be entitled to purchase such Shares
in the event of a prospective sale of the Shares, subject to
such terms and conditions as the Committee may specify at the
time of grant or (if permitted by the Award Agreement)
thereafter, and to a right of repurchase, pursuant to which the
Company shall be entitled to purchase such Shares at a price
determined by, or under a formula set by, the Committee at the
time of grant or (if permitted by the Award Agreement)
thereafter.
15.3 No Fiduciary
Relationship.
Nothing contained in the Plan (including without limitation
Sections 7.5(c) and 8.4), and no action taken pursuant to
the provisions of the Plan, shall create or shall be construed
to create a trust of any kind, or a fiduciary relationship
between the Company or Subsidiaries, or their, officers or the
Committee, on the one hand, and the Participant, the Manager,
the Company, Subsidiaries or any other person or entity, on the
other.
15.4 No Fund Created.
Any and all payments hereunder to any Grantee shall be made from
the general funds of the Company, no special or separate fund
shall be established or other segregation of assets made to
assure such payments, and the Phantom Shares (including for
purposes of this Section 15.4 any accounts established to
facilitate the implementation of Section 7.4(c)) and any
other similar devices issued hereunder to account for Plan
obligations do not constitute Common Stock and shall not be
treated as (or as giving rise to) property or as a trust fund of
any kind; provided, however, that the Company may establish a
mere bookkeeping reserve to meet its obligations hereunder or a
trust or other funding vehicle that would not cause the Plan to
be deemed to be funded for tax purposes or for purposes of
Title I of the Employee Retirement Income Security Act of
1974, as amended. The obligations of the Company under the Plan
are unsecured and constitute a mere promise by the Company to
make benefit payments in the future and, to the extent that any
person acquires a right to receive payments under the Plan from
the Company, such right shall be no greater than the right of a
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general unsecured creditor of the Company. (If any Affiliate is
or is made responsible with respect to any Awards, the foregoing
sentence shall apply with respect to such Affiliate.) Without
limiting the foregoing, Phantom Shares and any other similar
devices issued hereunder to account for Plan obligations are
solely a device for the measurement and determination of the
amounts to be paid to a Grantee under the Plan, and each
Grantees right in the Phantom Shares and any such other
devices is limited to the right to receive payment, if any, as
may herein be provided.
15.5 Notices.
All notices under the Plan shall be in writing, and if to the
Company, shall be delivered to the Board or mailed to its
principal office, addressed to the attention of the Board; and
if to the Participant, shall be delivered personally, sent by
facsimile transmission or mailed to the Participant at the
address appearing in the records of the Company. Such addresses
may be changed at any time by written notice to the other party
given in accordance with this Section 15.5.
15.6 Exculpation and
Indemnification.
The Company shall indemnify and hold harmless the members of the
Board and the members of the Committee from and against any and
all liabilities, costs and expenses incurred by such persons as
a result of any act or omission to act in connection with the
performance of such persons duties, responsibilities and
obligations under the Plan, to the maximum extent permitted by
law , other than such liabilities, costs and expenses as may
result from the gross negligence, bad faith, willful misconduct
or criminal acts of such persons.
15.7 Captions.
The use of captions in this Plan is for convenience. The
captions are not intended to provide substantive rights.
15.8 Governing Law.
THE PLAN SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF MARYLAND WITHOUT REGARD TO ANY
PRINCIPLES OF CONFLICTS OF LAW WHICH COULD CAUSE THE APPLICATION
OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF MARYLAND.
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EXHIBIT A
PERFORMANCE
CRITERIA
Performance-Based Awards intended to qualify as
performance based compensation under
Section 162(m) of the Code, may be payable upon the
attainment of objective performance goals that are established
by the Committee and relate to one or more Performance Criteria,
in each case on specified date or over any period, up to
10 years, as determined by the Committee. Performance
Criteria may (but need not) be based on the achievement of the
specified levels of performance under one or more of the
measures set out below relative to the performance of one or
more other corporations or indices.
Performance Criteria means the following
business criteria (or any combination thereof) with respect to
one or more of the Company, any Participating Company or any
division or operating unit thereof:
(i) pre-tax income;
(ii) after-tax income;
(iii) net income (meaning net income as reflected in the
Companys financial reports for the applicable period, on
an aggregate, diluted
and/or per
share basis);
(iv) operating income;
(v) cash flow;
(vi) earnings per share;
(vii) return on equity;
(viii) return on invested capital or assets;
(ix) cash
and/or funds
available for distribution;
(x) appreciation in the fair market value of the Common
Stock;
(xi) return on investment;
(xii) total return to shareholders (meaning the aggregate
Common Stock price appreciation and dividends paid (assuming
full reinvestment of dividends) during the applicable period);
(xiii) net earnings growth;
(xiv) stock appreciation (meaning an increase in the price
or value of the Common Stock after the date of grant of an award
and during the applicable period);
(xv) related return ratios;
(xvi) increase in revenues;
(xvii) net earnings;
(xviii) changes (or the absence of changes) in the per
share or aggregate market price of the Companys Common
Stock;
(xix) number of securities sold;
(xx) earnings before any one or more of the following
items: interest, taxes, depreciation or amortization for the
applicable period, as reflected in the Companys financial
reports for the applicable period;
(xxi) total revenue growth (meaning the increase in total
revenues after the date of grant of an award and during the
applicable period, as reflected in the Companys financial
reports for the applicable period);
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(xxii) the Companys published ranking against its
peer group of real estate investment trusts based on total
shareholder return; and
(xxiii) funds from operations.
Performance Goals may be absolute amounts or percentages of
amounts or may be relative to the performance of other companies
or of indexes.
Except as otherwise expressly provided, all financial terms are
used as defined under Generally Accepted Accounting Principles
(GAAP) and all determinations shall be made in
accordance with GAAP, as applied by the Company in the
preparation of its periodic reports to shareholders.
To the extent permitted by Section 162(m) of the Code,
unless the Committee provides otherwise at the time of
establishing the Performance Goals, for each fiscal year of the
Company, there shall be objectively determinable adjustments, as
determined in accordance with GAAP, to any of the Performance
Criteria described above for one or more of the items of gain,
loss, profit or expense: (A) determined to be extraordinary
or unusual in nature or infrequent in occurrence,
(B) related to the disposal of a segment of a business,
(C) related to a change in accounting principle under GAAP,
(D) related to discontinued operations that do not qualify
as a segment of a business under GAAP, and (E) attributable
to the business operations of any entity acquired by the Company
during the fiscal year.
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SEE REVERSE SIDE |
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3.
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the next annual meeting of stockholders and |
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contrary below) |
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described in
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01 Rodney E. Bennett 06 Jack Haraburda |
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02 Marc Chayette 07 James J. McEntee, III |
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Young LLP as the Companys
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03 Daniel G. Cohen 08 Lance Ullom |
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independent registered public accounting
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04 Thomas P.
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firm for the year ending December 31, |
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05 G. Steven Dawson |
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2008. |
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In their discretion, the proxies
are authorized to vote upon such other matters which may properly come before the
meeting and at any adjournments or postponements thereof. |
If there is
any individual director with respect to whom you desire to withhold your
consent, you may do so by indicating his name:
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Both of such attorneys or substitutes (if both are present and acting at said
meeting or any adjournments or postponements thereof, or, if only one shall be
present and acting, then that one) shall have and may exercise all of the
powers of said attorneys-in-fact hereunder. |
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THE VOTES ENTITLED TO BE CAST BY
THE UNDERSIGNED WILL BE CAST AS DIRECTED OR, IF NO DIRECTION IS INDICATED, WILL BE
CAST FOR THE ELECTION OF ALL NINE OF THE DIRECTOR NOMINEES LISTED
ABOVE, THE AMENDMENT TO
THE COMPANYS 2006 LONG-TERM INCENTIVE PLAN, THE RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP AND, IN THE DISCRETION OF THE
PROXY HOLDERS, ON ANY OTHER MATTER THAT MAY PROPERLY COME
BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF. |
Signature
Signature
Date
(This proxy should be marked, dated and signed by the stockholder(s) exactly as his or her
name appears hereon, and returned promptly in the enclosed envelope. Persons signing in a
fiduciary capacity should so indicate. If shares are held by joint tenants or as community
property, both should sign.)
WE ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE
VOTING,
BOTH ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK.
Instead of mailing your proxy, you can
choose one of the two voting methods outlined below to vote your proxy.
Internet or telephone voting must be
received by 11:59 p.m., Eastern Time, on June 17, 2008.
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INTERNET http://www.proxyvoting.com/afn
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TELEPHONE 1-866-540-5760 |
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Use the internet to vote your proxy. Have your proxy
card in hand when you access the web site. |
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Use any touch-tone telephone to vote your proxy. Have
your proxy card in hand when you call.
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Your
Internet or telephone vote authorizes the named proxies to vote your
shares in the same manner as if you marked, signed, dated and
returned your proxy card. If you vote your proxy by Internet or by telephone, you do NOT need to mail back your proxy card.
To vote by mail, mark, sign and date your proxy card and return it in the enclosed postage-paid
envelope.
Choose MLinkSM for fast, easy and secure 24/7 online access to your future proxy materials,
investment plan statements, tax documents and more. Simply log on to Investor ServiceDirect® at
www.bnymellon.com/shareowner/isd where step-by-step instructions will prompt you through enrollment.
You can view the Proxy Statement and Annual Report on the Internet at www.alescofinancial.com.
ALESCO FINANCIAL INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
2008 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 18, 2008
The undersigned stockholder of Alesco Financial Inc., a Maryland corporation (the Company),
hereby appoints James J. McEntee, III and John J. Longino, and each of them, as proxies and
attorneys-in-fact, with full power of substitution in each, on behalf and in the name of the
undersigned, to attend the 2008 annual meeting of stockholders to be held on
June 18, 2008 at 10:00 a.m., local time, at the Companys headquarters located at Cira Centre, 2929
Arch Street, 17th Floor, Philadelphia, Pennsylvania 19104, and any adjournments or
postponements thereof, and to cast on behalf of the undersigned all
votes which the undersigned
would be entitled to cast at the meeting and otherwise to represent the undersigned at the meeting with all powers
possessed by the undersigned if personally present at the meeting. The undersigned hereby
acknowledges receipt of the Notice of the Annual Meeting of Stockholders and the accompanying proxy
statement, the terms of each of which are incorporated by reference herein.
Whether or not you expect to attend in person, we urge you to vote your shares by phone, via
the Internet, or by signing, dating, and returning the enclosed proxy card at your earliest
convenience. This will ensure the presence of a quorum at the meeting. Promptly voting your
shares will save the Company the expense and extra work of additional solicitation. An addressed
envelope for which no postage is required if mailed in the United States is enclosed if you wish to
vote your shares by mail. Submitting your proxy now will not prevent you from voting your shares
at the meeting if you desire to do so, as your vote by proxy is revocable at your option.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
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Address
Change/Comments (Mark the corresponding box on the
reverse side) |
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