¨
|
Preliminary
Proxy Statement
|
¨
|
Confidential, for Use of the
Commission Only (as permitted by Rule
14a-6(e)(2))
|
x
|
Definitive
Proxy Statement
|
¨
|
Definitive
Additional Materials
|
¨
|
Soliciting
Material Pursuant to
§240.14a-12
|
x
|
No
fee required.
|
¨
|
Fee
computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
|
1)
|
Title
of each class of securities to which transaction
applies:
|
||
2)
|
Aggregate
number of securities to which transaction applies:
|
||
3)
|
Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
|
||
4)
|
Proposed
maximum aggregate value of transaction:
|
||
5)
|
Total
fee paid:
|
||
¨
|
Fee
paid previously with preliminary
materials:
|
o
|
Check
box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
|
1)
|
Amount
Previously Paid:
|
||
2)
|
Form,
Schedule or Registration Statement No.:
|
||
3)
|
Filing
Party:
|
||
4)
|
Date
Filed:
|
||
By
order of the Board of Directors
|
|
Philip
A. Baratelli
Secretary
|
Name
|
Common Stock
Beneficially Owned (1)
|
Percentage (%) of
Common Stock (2)
|
||||||
Warren
B. Kanders
|
4,349,127 | (3) |
25.0
|
|||||
White
Rock Capital Management, L.P.
3131
Turtle Creek Boulevard, Suite 800
Dallas,
TX 75219
|
1,415,600 | (4) | 8.2 | |||||
Ashford
Capital Management, Inc.
P.O.
Box 4172
Wilmington,
DE 19807
|
1,224,250 | (5) | 7.0 | |||||
Dimensional
Fund Advisors LP
Palisades
West, Building One
6300
Bee Cave Road
Austin,
TX 78746
|
903,230 | (6) | 5.2 | |||||
Nicholas
Sokolow
|
394,000 | (7) (8) | 2.3 | |||||
Burtt
R. Ehrlich
|
279,250 | (9) | 1.6 | |||||
Donald
L. House
|
266,249 | (10) | 1.5 | |||||
Philip
A. Baratelli
|
25,000 | (11) | * | |||||
All
directors, nominees for directors and named executive officers
as
a group (5 persons)
|
5,313,626 | (12) | 30.6 |
*
|
Less
than one percent.
|
|
(1)
|
As
used in this table, a beneficial owner of a security includes any person
who, directly or indirectly, through contract, arrangement, understanding,
relationship or otherwise has or shares within 60 days of April 22, 2009
(a) the power to vote, or direct the voting of, such security or (b)
investment power which includes the power to dispose, or to direct the
disposition of, such security.
|
|
(2)
|
Percentage
of beneficial ownership is based on 17,366,747 shares of common stock
outstanding as of April 22, 2009.
|
|
(3)
|
Includes
Mr. Kanders’ options to purchase 1,021,250 shares of common stock that are
presently exercisable or exercisable within 60 days of April 22,
2009. Includes 500,000 unvested shares of restricted common
stock, which have voting, dividend and other distribution
rights.
|
(4)
|
Based
on a Schedule 13G/A filed on January 26, 2009, by White Rock Capital
Management, L.P., White Rock Capital (TX), Inc., Mr. Thomas U. Barton, and
Mr. Joseph U. Barton as a group.
|
|
(5)
|
Based
on a Schedule 13G/A filed by Ashford Capital Management, Inc. on February
17, 2009.
|
|
(6)
|
Based
on a Schedule 13G/A filed by Dimensional Fund Advisors Inc. and certain of
its affiliates on February 9, 2009.
|
|
(7)
|
Includes
Mr. Sokolow’s options to purchase 191,250 shares of common stock that are
presently exercisable or exercisable within 60 days of April 22,
2009. Excludes options to purchase 5,000 shares of common stock that
are presently unexercisable and unexercisable within the next 60
days.
|
|
(8)
|
Includes
202,750 shares of common stock held by ST Investors Fund, LLC, of which
Mr. Sokolow is the Managing Member.
|
|
(9)
|
Includes
Mr. Ehrlich’s options to purchase 191,250 shares of common stock that are
presently exercisable or exercisable within 60 days of April 22,
2009. Excludes options to purchase 5,000 shares of common stock
that are presently unexercisable and unexercisable within the next 60
days.
|
|
(10)
|
Includes
Mr. House’s options to purchase 190,000 shares of common stock that are
presently exercisable or exercisable within 60 days of April 22,
2009. Excludes options to purchase 5,000 shares of common stock that
are presently unexercisable and unexercisable within the next 60
days.
|
|
(11)
|
Includes
Mr. Baratelli’s options to purchase 25,000 shares of common stock that are
presently exercisable or exercisable within 60 days of April 22,
2009. Excludes options to purchase 75,000 shares of common stock that
are presently unexercisable and unexercisable within the next 60
days.
|
|
(12)
|
Includes
options to purchase 1,618,750 shares of common stock that are presently
exercisable or exercisable within 60 days of April 22,
2009. Also includes 500,000 unvested shares of restricted
common stock, which have voting, dividend and other distribution
rights. Excludes options to purchase 90,000 shares of common
stock that are presently unexercisable and unexercisable within the next
60
days.
|
|
·
|
reviewing
and discussing with management and the independent auditors the annual
audited financial statements, and recommending to our Board of Directors
whether the annual audited financial statements should be included in our
Form 10-K;
|
|
·
|
discussing
with management and the independent auditors significant financial
reporting issues and judgments made in connection with the preparation of
our financial statements;
|
|
·
|
discussing
with management major risk assessment and risk management
policies;
|
|
·
|
monitoring
the independence of the independent
auditors;
|
|
·
|
verifying
the rotation of the lead or (coordinating) audit partner having primary
responsibility for the audit and the audit partner responsible for
reviewing the audit as required by
law;
|
|
·
|
reviewing
and approving all related party
transactions;
|
|
·
|
inquiring
and discussing with management our compliance with applicable laws and
regulations;
|
|
·
|
pre-approving
all audit services and permitted non-audit services to be performed by our
independent auditors, including the fees and terms of the services to be
performed;
|
|
·
|
appointing
and replacing the independent
auditors;
|
|
·
|
determining
the compensation and oversight of the work of the independent auditors
(including resolution of disagreements between management and the
independent auditors regarding financial reporting) for the purpose of
preparing and issuing an audit report or related
work;
|
|
·
|
establishing
procedures for the receipt, retention and treatment of complaints received
by us regarding accounting, internal accounting controls or reports which
raise material issues regarding our financial statements or accounting
policies; and
|
|
·
|
approving
reimbursement of expenses incurred by our management team in identifying
potential target businesses.
|
|
·
|
To
assist the Board of Directors in developing and evaluating potential
candidates for executive positions, including the Executive Chairman, and
to oversee the development of executive succession
plans.
|
|
·
|
To
review and approve corporate goals and objectives with respect to
compensation for the Company’s Executive Chairman, evaluate the Executive
Chairman’s performance in light of those goals and objectives, and, either
as a committee or together with the other independent directors, determine
and approve the Executive Chairman’s compensation level based on this
evaluation. In determining the long-term incentive component of
the Executive Chairman’s compensation, the Compensation Committee shall
consider the Company’s performance and relative stockholder return, the
value of similar incentive awards to chief executive officers at
comparable companies, and the awards given to the Company’s Executive
Chairman in past years.
|
|
·
|
To
make recommendations to the Board of Directors with respect to
non-Executive Chairman compensation, incentive-compensation plans and
equity-based plans. The Compensation Committee shall also provide
oversight of management’s decisions concerning the performance and
compensation of other Company
officers.
|
|
·
|
To
review the Company's incentive compensation and other stock-based plans
and recommend changes in such plans to the Board of Directors as needed.
The Compensation Committee shall have and shall exercise all the authority
of the Board of Directors with respect to the administration of such
plans.
|
|
·
|
To
produce the compensation committee report on executive compensation to be
included in the Company’s proxy
statement.
|
·
|
To
review on an annual basis director compensation and
benefits.
|
Name(1)
|
Year
|
Fees Earned or
Paid in Cash ($)
|
Stock Awards ($)
|
Option Awards
($)(2)
|
Non-Equity
Incentive Plan
Compensation ($)
|
Change in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings ($)
|
All Other
Compensation
($)
|
Total ($)
|
||||||||||||||||||||||
Burtt
R.Ehrlich
|
2008
|
12,000 | - | 71,535 | (3) | - | - | - | 83,535 | |||||||||||||||||||||
Donald
House
|
2008
|
12,000 | - | 71,535 | (4) | - | - | - | 83,535 | |||||||||||||||||||||
Nicholas
Sokolow
|
2008
|
12,000 | - | 71,535 | (5) | - | - | - | 83,535 |
(1)
|
Warren
B. Kanders, the Company’s Chairman and Chief Executive Officer is not
included in this table as he is a Named Executive Officer of the Company
and receives no compensation for his service as director in addition to
the compensation he receives as a Named Executive Officer. The
compensation earned by Mr. Kanders as a Named Executive Officer is
described below in the Summary Compensation
Table.
|
(2)
|
The
amounts in the “Option Awards” column are calculated based on FAS 123R
(excluding any estimate of forfeiture). They equal the
aggregate dollar amount of compensation expense related to option awards
to each of the Directors that was recognized in the Company’s 2008 and
2007 financial statements. Under FAS 123R, a pro rata portion
of the total expense is based on the fair value of the stock option grant
as estimated using the Black-Scholes option-pricing model. See
footnote 6, “Stock Incentive Plans” in the financial statements contained
in annual reports on Form 10-K for the years ended December 31, 2008 and
2007 for the assumptions used to arrive at the Black-Scholes
values.
|
(3)
|
Mr.
Ehrlich’s option award includes the grant of 20,000 options on September
24, 2008 valued at $1.61 amortized over a one year period and the grant of
50,000 options on December 13, 2007 valued at $2.22 amortized over a one
year period.
|
(4)
|
Mr.
House’s option award includes the grant of 20,000 options on September 24,
2008 valued at $1.61 amortized over a one year period and the grant of
50,000 options on December 13, 2007 valued at $2.22 amortized over a one
year period.
|
(5)
|
Mr.
Sokolow’s option award includes the grant of 20,000 options on September
24, 2008 valued at $1.61 amortized over a one year period and the grant of
50,000 options on December 13, 2007 valued at $2.22 amortized over a one
year period.
|
2008
|
2007
|
|||||||
Audit
Fees
|
$ | 176,000 | $ | 176,000 | ||||
Audit
Related Fees
|
— | — | ||||||
Tax
Fees
|
— | — | ||||||
All
Other Fees
|
— | — | ||||||
Total
|
$ | 176,000 | $ | 176,000 |
Name
|
Age
|
Position
|
||
Warren
B. Kanders
|
51
|
Executive
Chairman of the Board of Directors
|
||
Philip
A. Baratelli
|
41
|
Chief
Financial Officer, Secretary and
Treasurer
|
Name and Principal Position
|
Year
|
Salary ($)
|
Bonus ($)
|
Stock
Awards ($)(1)
|
Option
Awards
($)(2)
|
All Other
Compensation
($)
|
Total
($)
|
|||||||||||||||||||
Warren B. Kanders
(3)
Executive
Chairman of the Board of Directors
|
2008
|
250,000 | - | 268,000 |
(4)
|
- | 46,899 |
(5)
|
564,899 | |||||||||||||||||
2007
|
250,000 | - | 268,000 |
(4)
|
- | 14,918 |
(5)
|
532,918 | ||||||||||||||||||
2006
|
250,000 | - | 268,000 |
(4)
|
- | 11,705 |
(5)
|
529,705 | ||||||||||||||||||
Philip A. Baratelli
(6)
Chief
Financial Officer
|
2008
|
200,000 | 50,000 |
(7)
|
- | 69,171 |
(8)
|
34,355 |
(9)
|
353,526 | ||||||||||||||||
2007
|
170,833 | 75,000 |
(7)
|
- | 3,592 |
(8)
|
59,683 |
(9)
|
309,108 | |||||||||||||||||
2006
|
- | - | - | - | - | - |
(1)
|
The
amounts in the “Stock Awards” column are calculated based on Statement of
Financial Accounting Standards No. 123 (revised 2004), “Share-Based
Payments” (“FAS 123R”). They equal the aggregate dollar amount
of compensation expense related to stock awards that was recognized in the
Company’s financial statements contained on Form 10-K for the years ended
December 31, 2008, 2007 and 2006. Under FAS 123(R), a pro rata
portion of the total expense at the time of grant is recognized over the
vesting schedule of the grant. The expense is equal to the
stock award share price on the date of grant times the number of shares
granted amortized over the life of the grant. See footnote 8,
“Stock Incentive Plans” in the financial statements contained in annual
reports on Form 10-K for the years ended December 31, 2008, 2007 and
2006.
|
(2)
|
The
amounts in the “Option Awards” column are calculated based on FAS 123R
(excluding any estimate of forfeiture). They equal the
aggregate dollar amount of compensation expense related to option awards
to each of the Named Executive Officers that was recognized in the
Company’s financial statements contained on Form 10-K for the year ended
December 31, 2008, 2007 and 2006. Under FAS 123R, a pro rata
portion of the total expense is based on the fair value of the stock
option grant as estimated using the Black-Scholes option-pricing
model. See footnote 8, “Stock Incentive Plans” in the financial
statements contained in annual reports on Form 10-K for the years ended
December 31, 2008, 2007 or 2006 for the assumptions used to arrive at the
Black-Scholes values.
|
(3)
|
Mr.
Kanders is compensated pursuant to the terms of his employment agreement
which is discussed under the heading “Employment Agreements” in this Proxy
Statement. Mr. Kanders is required to devote only as much time
as is necessary to perform his duties for the
Company.
|
(4)
|
Represents
the aggregate dollar amount of compensation expense related to 500,000
shares of restricted common stock awarded to Mr. Kanders on April 11,
2003.
|
(5)
|
“Other
Compensation” consists of the following
items:
|
2008
|
2007
|
2006
|
||||||||||
401(k)
matching contributions
|
$ | 10,125 | $ | 10,144 | $ | 9,000 | ||||||
Personal
use of driver
|
32,000 | — | — | |||||||||
Health,
Short-term and Long-term Disability
|
2,681 | 2,681 | — | |||||||||
Life
Insurance
|
2,093 | 2,093 | — | |||||||||
Totals
|
$ | 46,899 | $ | 14,918 | $ | 9,000 |
(6)
|
Philip
A. Baratelli commenced employment as the Company’s Chief Financial
Officer, Secretary and Treasurer effective as of February 1,
2007. Mr. Baratelli’s employment with the Company is “at-will”
and is required to devote only as much time as is necessary to perform his
duties for the Company.
|
(7)
|
Discretionary
cash bonus awarded by the Board of
Directors.
|
(8)
|
Represents
the value of options to purchase 100,000 shares of the Company’s common
stock at an exercise price of $5.98 granted pursuant to
the 2005 Stock Incentive
Plan.
|
(9)
|
“Other
Compensation” consists of the following
items:
|
2008
|
2007
|
|||||||
401(k)
matching contributions
|
$ | 9,000 | $ | 2,906 | ||||
Health,
Short-term and Long-term Disability
|
24,872 | 9,562 | ||||||
Life
Insurance
|
483 | 201 | ||||||
Relocation
expenses
|
— | 47,014 | ||||||
Totals
|
$ | 34,355 | $ | 59,683 |
Option Awards
|
Stock Awards
|
||||||||||||||||||||||||||||||||
Name
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
Equity Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number of
Shares or
Units of
Stock That
Have Not
Vested (#)
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($)
|
Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested (#)
|
Equity
Incentive Plan
Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested ($)
|
||||||||||||||||||||||||
Warren B.
Kanders
|
21,250 |
(1)
|
— | — | 5.99 |
5/28/09
|
— | — | |||||||||||||||||||||||||
|
200,000 |
(1)
|
— | — | 5.35 |
12/20/12
|
— | ||||||||||||||||||||||||||
400,000 |
(2)
|
— | — | 7.50 |
12/20/12
|
— | |||||||||||||||||||||||||||
400,000 |
(2)
|
— | — | 10.00 |
12/20/12
|
500,000 |
(3)
|
2,125,000 | — | 2,125,000 | |||||||||||||||||||||||
Philip
A. Baratelli
|
25,000 |
(4)
|
75,000 |
(4)
|
— | 5.98 |
12/13/17
|
— | — | — | — |
(1)
|
Fully
vested stock option award granted pursuant to the 2000 Stock Incentive
Plan.
|
(2)
|
Fully
vested non-plan stock option
award.
|
(3)
|
Shares
of restricted common stock which shall vest and become nonforfeitable if
Mr. Kanders is an employee and/or a director of the Company or a
subsidiary or affiliate of the Company on the earlier of (i) the date the
closing price of the Company’s common stock equals or exceeds $15.00 per
share for each of the trading days during a ninety consecutive day period,
or (ii) the tenth anniversary of the date of grant, subject to
acceleration in certain
circumstances.
|
(4)
|
Options
granted pursuant to the 2005 Stock Incentive Plan vest and become
exercisable in equal annual installments over four years commencing
December 13, 2008.
|
|
•
|
the
current members of the Board cease to constitute a majority of the Board;
or
|
|
•
|
the
Company shall have been sold by either (i) a sale of all or substantially
all its assets, or (ii) a merger or consolidation, other than any merger
or consolidation pursuant to which the Company acquires another entity, or
(iii) a tender offer, whether solicited or unsolicited;
or
|
|
•
|
any
party, other than the Company, is or becomes the “beneficial owner” (as
defined in the Exchange Act), directly or indirectly, of voting securities
representing 50% or more of the total voting power of the
Company.
|
Executive
Benefits upon
Payments Upon
Separation
|
Voluntary
Termination on
12/31/08
($)
|
For Cause
Termination on
12/31/08
($)
|
Without Cause
Termination on
12/31/08
($)
|
Change-in-
Control and
Termination on
12/31/08 ($)
|
Disability on
12/31/08
($)
|
Death on
12/31/08
($)
|
||||||||||||||||||
Compensation
|
||||||||||||||||||||||||
Cash
Severance - Salary
|
- | - | 500,000 |
(1)
|
500,000 |
(1)
|
- | - | ||||||||||||||||
Stock
Options
|
- | - | - | - | - | - | ||||||||||||||||||
Restricted
Stock
|
- | - | 2,125,000 |
(2)
|
2,125,000 |
(2)
|
- | - | ||||||||||||||||
Benefits
& Perquisites
|
||||||||||||||||||||||||
Life
Insurance
|
- | - | - | - | - | 2,200,000 |
(4)
|
|||||||||||||||||
Disability
Income
|
- | - | - | - | 150,000 |
(3)
|
- | |||||||||||||||||
Total
|
- | - | 2,625,000 | 2,625,000 | 150,000 | 2,200,000 |
(1)
|
Mr.
Kanders would be entitled to receive two times annual base salary of
$250,000 pursuant to the terms of his employment agreement which is
discussed under the heading “Employment Agreements” in this Proxy
Statement.
|
(2)
|
The
unvested portion of 500,000 shares of restricted common stock awarded to
Mr. Kanders on April 11, 2003 would be accelerated and valued using the
December 31, 2008 market price of $4.25 per
share.
|
(3)
|
Mr.
Kanders would be entitled to receive $12,500 per month benefit or $150,000
annually if he cannot perform his duties as the Company’s Executive
Chairman
|
(4)
|
Upon
Mr. Kanders death, his beneficiary would be entitled to receive $2 million
pursuant to the terms of his employment agreement which is discussed under
the heading “Employment Agreements” in this Proxy
Statement. Mr. Kanders’ beneficiary will also received $200,000
from a Company group term life policy that is maintained for the benefit
of all of the Company’s
employees.
|
Executive
Benefits upon
Payments Upon
Separation
|
Voluntary
Termination
on 12/31/08
($)
|
For Cause
Termination on
12/31/08
($)
|
Without Cause
Termination
on 12/31/08
($)
|
Change-in-
Control and
Termination on
12/31/08 ($)
|
Disability on
12/31/08
($)
|
Death on
12/31/08
($)
|
||||||||||||||||||
Compensation
|
||||||||||||||||||||||||
Cash
Severance - Salary
|
- | - | - | - | - | - | ||||||||||||||||||
Stock
Options
|
- | - | - | - | - | - | ||||||||||||||||||
Restricted
Stock
|
- | - | - | - | - | - | ||||||||||||||||||
Benefits
& Perquisites
|
||||||||||||||||||||||||
Life
Insurance
|
- | - | - | - | - | 250,000 |
(2)
|
|||||||||||||||||
Disability
Income
|
- | - | - | - | 165,000 |
(1)
|
- | |||||||||||||||||
Total
|
- | - | - | - | 165,000 | 250,000 |
(1)
|
Mr.
Baratelli would be entitled to receive $13,750 per month benefit or
$165,000 annually if he cannot perform his duties as the Company’s Chief
Financial Officer.
|
(2)
|
Upon
Mr. Baratelli’s death, his beneficiary would be entitled to receive
$250,000 from a Company group term life policy that is maintained for the
benefit of all of the Company’s
employees.
|
FOR
THE BOARD OF DIRECTORS
|
Philip
A. Baratelli
|
Secretary
|