Unassociated Document
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
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x
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Filed
by a Party other than the Registrant
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o |
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Check
the appropriate box:
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x |
Preliminary
Proxy Statement
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o |
Confidential,
for Use of the
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Definitive
Proxy Statement
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Commission
Only (as Permitted
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Definitive
Additional Materials
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by
Rule 14a-6(e)(2))
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Soliciting
Material pursuant to
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Rule
14a-11(c) or Rule 14a-12
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Glowpoint,
Inc.
(Name
of
Registrant as Specified In Its Charter)
(Name
of
Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
x |
No
fee required.
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o |
Fee
computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
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(1)
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Title
of each class of securities to which transaction
applies:
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(2)
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Aggregate
number of securities to which transaction applies:
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(3)
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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):
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(4)
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Proposed
maximum aggregate value of transaction:
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(5)
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Total
fee paid:
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o |
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Fee
paid previously with preliminary materials:
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o |
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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 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.
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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement No.:
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(3)
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Filing
Party:
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(4)
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Date
Filed:
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GLOWPOINT,
INC.
225
Long Avenue
Hillside,
New Jersey 07205
July __,
2007
Dear
Stockholder:
We
are
pleased to invite you to the 2007 Annual Meeting of Stockholders of Glowpoint,
Inc., which will be held at 1:30 p.m. local time, on August 14, 2007, at the
Holiday Inn, 304 Route 22 West, Springfield, New Jersey 07081.
At
the
meeting, you will be asked to: (i) elect two Class I members of our board of
directors to serve a two-year term each and two Class II members of our board
of
directors to serve a three-year term each; (ii) approve the 2007 Stock Incentive
Plan and reserve 3,000,000 shares of common stock for issuance under such plan;
(iii) ratify the appointment of Amper, Politziner & Mattia, P.C. as our
Registered Public Accounting Firm for fiscal year 2007; (iv) approve an
amendment to our certificate of incorporation to increase the number of
authorized shares of common stock from 100,000,000 shares to 150,000,000 shares;
and (v) to transact other business as may properly come before the
meeting.
The
enclosed notice and proxy statement contain complete information about the
matters to be considered at the Annual Meeting. We are also enclosing our Annual
Report, which was filed with the Securities and Exchange Commission on
Form 10-K on June 6, 2007. Copies
of these reports are available for review at www.glowpoint.com/investors or
may
be mailed to you free of charge by requesting a copy by contacting us at
866-GLOWPOINT (x2002) or mailing a request to Glowpoint Investor Relations,
225
Long Avenue, Hillside NJ 07205.
We
hope
you will be able to attend the meeting in person. Whether or not you expect
to
attend, we urge you to complete, date, sign and return the proxy card in the
enclosed envelope or submit your proxy by telephone, so that your shares will
be
represented and voted at the meeting.
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Sincerely,
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Michael
Brandofino
Chief
Executive Officer and President
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GLOWPOINT,
INC.
225
Long Avenue
Hillside,
New Jersey 07205
NOTICE
OF THE 2007 ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD AUGUST 14, 2007
To
our
Stockholders:
The
Annual Meeting of Stockholders of Glowpoint, Inc. will be held at 1:30 p.m.
local time on August 14, 2007, at the Holiday Inn, 304 Route 22 West,
Springfield, New Jersey 07081, for the following purposes:
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1.
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To
elect two Class I members of our board of directors to serve a two-year
term each and two Class II members of our board of directors to serve
a
three-year term each;
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2.
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To
approve the 2007 Stock Incentive Plan and reserve 3,000,000 shares
of
common stock for issuance under such plan;
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3.
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To
ratify the appointment of Amper, Politziner & Mattia, P.C. as our
Registered Public Accounting Firm for fiscal year 2007;
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4.
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To
approve an amendment to our certificate of incorporation to increase
the
number of authorized shares of common stock from 100,000,000 shares
to
150,000,000 shares; and
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5.
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To
transact other business as may properly come before the
meeting.
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Stockholders
of record of our common stock as of the close of business on July 6, 2007 are
entitled to attend and vote at the Annual Meeting or any adjournment or
postponement thereof.
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By
order of the Board of Directors,
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David
W. Robinson
Corporate
Secretary
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July
__,
2007
WE
URGE YOU TO COMPLETE, SIGN, DATE AND RETURN PROMPTLY THE ACCOMPANYING PROXY
CARD
OR TO VOTE BY TELEPHONE.
GLOWPOINT,
INC.
225
Long Avenue
Hillside,
New Jersey 07205
PROXY
STATEMENT
FOR
THE 2007 ANNUAL MEETING OF STOCKHOLDERS
The
Board
of Directors of Glowpoint, Inc. (referred to throughout this proxy statement
as
“Glowpoint” or “we” or “our”) is soliciting proxies for our 2007 Annual Meeting
of Stockholders or any adjournment or postponement thereof. The Annual Meeting
will be held at 1:30 p.m. local time on August 14, 2007, at the Holiday Inn,
304
Route 22 West, Springfield, New Jersey 07081. This proxy statement, the
accompanying proxy card, and our 2006 Annual Report released on Form 10-K
on June 6, 2007 are first being mailed to stockholders on or about July 30,
2007.
At
the
Annual Meeting, stockholders will be asked to consider and vote on (1) electing
two Class I members of our board of directors to serve a two-year term each
and
two Class II members of our board of directors to serve a three-year term each;
(2) approving the 2007 Stock Incentive Plan and reserving 3,000,000 shares
of
common stock for issuance under such plan; (3) ratifying the appointment of
Amper, Politziner & Mattia, P.C. as our Registered Public Accounting Firm
for the fiscal year ending December 31, 2007; and (4) approving an
amendment to our certificate of incorporation to increase the number of
authorized shares of common stock from 100,000,000 shares to 150,000,000 shares.
At the Annual Meeting, stockholders may also be asked to consider and take
action with respect to other matters that properly come before the meeting.
We
have not received notice of other matters that may properly be presented for
voting at the Annual Meeting.
RECORD
DATE; QUORUM
Only
holders of record of our common stock at the close of business on July 6, 2007
are entitled to vote at the Annual Meeting. As of the record date, approximately
47,509,673 shares of common stock were issued and outstanding, each of which
entitles its holder to cast one vote on each matter to be presented at the
Annual Meeting. A quorum is present at the Annual Meeting if a majority of
shares of common stock issued and outstanding and entitled to vote on the record
date are represented in person or by proxy. If a quorum is not present, the
Annual Meeting may be adjourned from time to time until a quorum is
obtained.
VOTING
PROCEDURES
The
shares represented by the proxies received, properly dated and executed
or
authenticated, in the case of
voting
by telephone, and not revoked will be voted at the Annual Meeting in accordance
with the instructions of the stockholders.
The
affirmative vote of the holders of a plurality of the shares of common stock
voting on the matter is required for the election of directors (Proposal 1).
The
affirmative vote of the holders of a majority of the shares of common stock
voting on the matter is required for approval of the 2007 Stock Incentive Plan
(Proposal 2) and the ratification of the selection by the Audit Committee of
Amper,
Politziner & Mattia, P.C. as our Registered Public Accounting Firm for the
fiscal year ending December 31, 2007 (Proposal
3). The affirmative vote of the holders of a majority of the shares of common
stock outstanding is required for approval of the proposed amendment to our
certificate of incorporation (Proposal 4).
Abstentions
and broker “non-votes” will be treated as shares that are present and entitled
to vote for purposes of determining the presence of a quorum. An abstention
is
the voluntary act of not voting by a stockholder who is present at a meeting
and
entitled to vote. A broker “non-vote” occurs when a broker nominee holding
shares for a beneficial owner does not vote on a particular proposal because
the
nominee does not have discretionary power for that particular item and has
not
received instructions from the beneficial owner.
Proposal 1: A
plurality of the votes duly cast is required for the election of directors.
This
means that the nominees receiving the highest number of affirmative votes will
be elected to fill the director positions available. Accordingly,
abstentions will have no effect in determining which director receives the
highest number of votes. Additionally, the election of directors is a matter
on
which a broker or other nominee is generally empowered to vote, and therefore
no
broker non-votes will exist in connection with Proposal Number 1.
Proposal
2: The vote of the holders of a majority of voting power held by the
stockholders present in person or represented by proxy is required for approval
of the 2007 Stock Incentive Plan. A properly executed proxy marked “ABSTAIN”
will not be voted, although it will be counted as present and entitled to vote
for purposes of the Proposal. Accordingly, an abstention will have the effect
of
a vote against the Proposal. Additionally, the approval of the 2007 Stock
Incentive Plan is not a matter on which a broker or other nominee is generally
empowered to vote, and therefore, broker non-votes may exist in connection
with
Proposal Number 2. Broker non-votes will not have an effect on this Proposal.
Proposal
3: The vote of holders of a majority of voting power held by the
stockholders present in person or represented by proxy is required for the
ratification of the selection of Amper,
Politziner & Mattia, P.C. as our Registered Public Accounting Firm for the
fiscal year ending December 31, 2007.
A
properly executed proxy marked “ABSTAIN” will not be voted, although is will be
counted as present and entitled to vote for purposes of the Proposal.
Accordingly, an abstention will have the effect of a vote against the Proposal.
Additionally, the ratification of the appointment of the independent registered
public accounting firm for 2007 is a matter on which a broker or other nominee
is generally empowered to vote, and therefore, no broker non-votes will exist
in
connection with Proposal Number 3.
Proposal
4: The vote of the holders of a majority of our common
stock outstanding is required for approval of the proposed amendment to our
certificate of incorporation.
A
properly executed proxy marked “ABSTAIN” will not be voted, although it will be
counted as present and entitled to vote for purposes of the Proposal. Accordingly,
an abstention will have the effect of a vote against the Proposal. Additionally,
the approval of the amendment to our certificate of incorporation to increase
the number of shares of common stock for general corporate purposes is a matter
on which a broker or other nominee is generally empowered to vote, and
therefore, no broker non-votes will exist in connection with Proposal Number
4.
Properly
executed or authenticated proxies that do not contain voting instructions will
be voted (1) FOR each
of the
nominees named below for election as directors (which includes voting in favor
of the two Class I members of our board of directors to serve a two-year term
each and the two Class II members of our board of directors to serve a
three-year term each), (2) FOR adopting the 2007 Stock Incentive Plan and
reserving 3,000,000 shares of common stock for issuance under such plan, (3)
FOR
ratification of Amper, Politziner & Mattia, P.C. as our Registered Public
Accounting Firm for the fiscal year ending December 31, 2007, (4) FOR
amending our certificate of incorporation to increase the number of authorized
shares of common stock from 100,000,000 shares to 150,000,000 shares, and (5)
with respect to other matters that may come before the Annual Meeting, at the
discretion of the proxy holders.
Stockholders
have the option to vote by telephone. WE ENCOURAGE YOU TO RECORD YOUR VOTE
BY
TELEPHONE. It is convenient, and it saves significant postage and processing
costs. In addition, when you vote by phone prior to the meeting date, your
vote
is recorded immediately and there is no risk that postal delays will cause
your
vote to arrive late and therefore not be counted.
After
you
have submitted a proxy, you may change your vote at any time before the proxy
is
exercised by submitting a notice of revocation or a proxy bearing a later date.
Regardless of whether you voted using a traditional proxy card or by telephone,
you may use either of these methods to change your vote. You may change your
vote either by submitting a proxy card prior to the date of the Annual Meeting
or by voting again prior to the time at which the telephone voting facilities
close by following the procedures applicable to those methods of voting. In
each
event, the later submitted vote will be recorded and the earlier vote revoked.
You may also revoke a proxy by voting in person at the Annual Meeting. Your
attendance at the Annual Meeting will not by itself constitute revocation of
a
proxy.
We
will
bear the cost of the solicitation of proxies from our stockholders, including
the cost of preparing, assembling and mailing the proxy solicitation materials.
In addition to solicitation by mail, our directors, officers and employees
may
solicit proxies from stockholders by telephone or other electronic means or
in
person, but no such person will be specifically compensated for such services.
We will cause brokerage houses and other custodians, nominees and fiduciaries
to
forward solicitation materials to the beneficial owners of stock held of record
by such persons. We will reimburse such custodians, nominees and fiduciaries
for
their reasonable out-of-pocket expenses in doing so. We have engaged American
Stock Transfer and Trust Company to aid in the distribution of the proxy
materials and will reimburse the related reasonable out-of-pocket
expenses.
STOCKHOLDER
PROPOSALS
Any
stockholder who intends to present a proposal at the 2008 Annual Meeting of
Stockholders, currently expected to occur in May 2008, must deliver the proposal
to the Corporate Secretary, Glowpoint, Inc., 225 Long Avenue, Hillside, New
Jersey 07205, no later than January 31, 2008 if such proposal is to be
considered for inclusion in our proxy materials for that meeting.
In
addition, our by-laws provide that, in order for a stockholder to propose
business for consideration at an annual meeting of stockholders, the stockholder
must give written notice to our Corporate Secretary at our principal executive
offices not less than 60 days nor more than 90 days prior to the anniversary
date of the immediately preceding annual meeting of stockholders; provided
however, that in the event the annual meeting is called for a date that is
not
within 30 days before or after such anniversary date, notice by the stockholder
in order to be timely must be received not later than the close of business
on
the 10th day following the day on which such notice of the date of the annual
meeting was mailed or such public disclosure of the date the annual meeting
was
made, whichever occurs first.
QUESTIONS
AND ANSWERS ABOUT THE 2007 ANNUAL MEETING
Q:
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What
Is The Proposal Relating To The Election Of Directors That I Will
Be
Voting On At The Annual Meeting?
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A:
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You
will be asked to consider and vote upon a proposal to elect individuals
to
the board of directors. You will be asked to elect two Class I members
of
our board of directors to serve a two-year term each and two Class
II
members of our board of directors to serve a three-year term each.
You
will be asked to elect the following two individuals to a two-year
term:
James Lusk and Peter Rust. You will be asked to elect the following
two
individuals to a three-year term: Bami Bastani and Michael
Brandofino.
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Q:
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Why
Are Some Directors Elected to a Two-Year Term While Other Directors
Are
Elected to a Three-Year Term?
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A:
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Because
we did not have a shareholders meeting last year, the Class I directors
that would have been elected last year continued to serve until their
subsequent election, as provided by our by-laws. In order to maintain
the
three year cycle of our classified Board terms, we will only elect
those
Class I directors to serve the two years remaining of that term.
The Class
II directors, whose term is expiring this year, will be elected to
the
standard three-year term.
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Q:
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What
Is The Proposal Relating To Establishing A New Stock Option Plan
and
Reserving 3,000,000 Shares Of Common Stock For Issuance
Thereunder?
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A:
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You
will be asked to approve the 2007 Stock Incentive Plan and reserve
3,000,000 shares of our authorized common stock for issuance thereunder.
The board approved a new plan because the existing stock option plan
is
nearly exhausted of common stock for awards and the exercise prices
of
many past grants exceed the current fair market value of the Company’s
common stock.
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Q:
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What
Is The Proposal Relating To The Ratification Of The Audit Committee’s
Appointment Of a Registered Public Accounting Firm That I Will Be
Voting
On At The Annual Meeting?
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A:
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You
will be voting to ratify the audit committee’s appointment of Amper,
Politziner & Mattia, P.C., a Registered Public Accounting Firm, as our
Registered Public Accounting Firm for the fiscal year ending
December 31, 2007.
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Q:
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What
Is The Proposal Relating To Amending Our Certificate of Incorporation
To
Increase The Number Of Authorized Shares of Common Stock From 100,000,000
Shares To 150,000,000 Shares?
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A:
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You
will be asked to approve an amendment to our certificate of incorporation
to increase our authorized common stock by 50,000,000 shares.
As
of June 30, 2007, of the 100,000,000 shares of common stock currently
authorized, there are approximately
47,509,673 shares
of common stock issued and outstanding and approximately an additional
44,643,120 shares reserved (or expected to be reserved in the case
of the
2007 Plan) for issuance in connection with outstanding options and
warrants, conversion of our Series B Preferred Stock and the 10%
Senior
Secured Convertible Notes (the “10% Notes”) and interest thereon, and
additional shares reserved pursuant to the terms of such outstanding
security instruments.
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Q:
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Who
Is Soliciting My Proxy?
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A:
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This
proxy solicitation is being made and paid for by Glowpoint. In addition
to
this solicitation by mail, proxies may be solicited by our directors,
officers and other employees by telephone, Internet or fax, in person
or
otherwise. Such persons will not receive any additional compensation
for
assisting in the solicitation. We will also request brokerage firms,
nominees, custodians and fiduciaries to forward proxy materials to
the
beneficial owners of shares of our common stock. We will reimburse
such
persons and our transfer agent for their reasonable out-of-pocket
expenses
in forwarding such material.
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Q:
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How
Does The Board Recommend That I Vote On The Matters
Proposed?
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A:
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Your
board unanimously recommends that you vote “FOR” each of the proposals
submitted at the Annual Meeting.
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Q:
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Who
Is Entitled To Vote At The Annual Meeting?
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A:
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Only
holders of record of our common stock as of the close of business
on July
6, 2007 will be entitled to notice of and to vote at the Annual
Meeting.
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Q:
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When
And Where Is The Annual Meeting?
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A:
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The
Annual Meeting of our stockholders will be held at 1:30 p.m. local
time,
on Tuesday, August 14, 2007, at the Holiday Inn, 304 Route 22 West,
Springfield, NJ 07081.
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Q:
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Where
Can I Vote My Shares?
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A:
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You
can vote your shares where indicated by the instructions set forth
on the
proxy card, including by telephone, or you can attend and vote your
shares
in person at the Annual Meeting.
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Q:
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If
My Shares Are Held In “Street Name” By My Broker, Will My Broker Vote My
Shares For Me?
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A:
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Your
broker may not be permitted to exercise voting discretion with respect
to
some of the matters to be acted upon. Thus, if you do not give your
broker
or nominee specific instructions, your shares may not be voted on
those
matters. You should follow the directions provided by your broker
regarding how to instruct your broker to vote your
shares.
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Q:
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May
I Change My Vote After I Have Mailed My Signed Proxy
Card?
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A:
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Yes.
Just send in a written revocation or a later dated, signed proxy
card
before the Annual Meeting or vote again by telephone, or simply attend
the
Annual Meeting and vote in person. Simply attending the Annual Meeting,
however, will not revoke your proxy; you must vote at the Annual
Meeting.
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Q:
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What
Do I Need To Do Now?
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A:
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Please
vote your shares as soon as possible so that your shares may be
represented at the Annual Meeting. You may vote by signing and dating
your
proxy card and mailing it in the enclosed return envelope or by telephone,
or you may vote in person at the Annual Meeting.
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Q:
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Who
Should I Call If I Have Questions?
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A:
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If
you have questions about any of the proposals on which you are voting,
you
may call David W. Robinson, our Corporate Secretary, at 866-GLOWPOINT
(x2087).
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PROPOSAL
NO. 1 —
ELECTION
OF DIRECTORS
Our
directors are presently divided into three classes. The number of directors
is
determined from time to time by our board of directors. A single class of
directors is typically elected each year at the annual meeting of stockholders
and each such director elected would serve for a term ending at the third annual
meeting of stockholders after his or her election and until his or her successor
is elected and duly qualified. Because we did not have a shareholders meeting
last year, however, the Class I directors that would have been elected then
continued to serve until their subsequent election, which will occur this year.
In order to maintain the three year cycle of our classified Board terms, we
will
only elect those Class I directors to serve for a term ending at the second
annual meeting of stockholders after their election, which is the 2009 annual
meeting, and until their successors are elected and duly qualified. The Class
II
directors, whose term is expiring this year, will be elected for a term ending
at the third annual meeting of stockholders after their election, which is
the
2010 annual meeting, and until their successors are elected and duly
qualified.
The
Class
I Director nominees who will stand for election are James Lusk and Peter Rust,
each of whom are currently members of our board of directors and have consented
to serve if elected. The Class II Director nominees who will stand for election
are Bami Bastani and Michael Brandofino, each of whom are currently members
of
our board of directors and have consented to serve if elected. In the event
any
nominee is unable or subsequently unwilling to serve as a nominee, the board
of
directors may select a substitute nominee. If a substitute nominee is selected,
proxies will be voted in favor of such nominee. Our board of directors has
no
reason to believe that any of the named nominees will be unable or unwilling
to
serve as a nominee or as a director if elected.
Director
and Executive Officer Information
The
following table sets forth information with respect to our current directors
and
executive officers.
Name
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Age
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Position
with Company
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Aziz
Ahmad (5)
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44
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Class
III Director
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Bami
Bastani (1)(2)(3)
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53
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Class
II Director
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Michael
Brandofino
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42
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Chief
Executive Officer, President and Class II Director
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Dean
Hiltzik (2)(3)
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53
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Class
III Director
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James
S. Lusk (1)(2)
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51
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Class
I Director
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Richard
Reiss
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50
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Class
III Director
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Peter
Rust (1)(3)(4)
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53
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Class
I Director
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Non-Director
Executive Officers:
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Edwin
F. Heinen
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55
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Chief
Financial Officer and Executive Vice President, Finance
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Joseph
Laezza
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37
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Chief
Operating Officer
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David
W. Robinson
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38
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Executive
Vice President and General Counsel
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(1)
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Member of the Audit Committee
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(2)
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Member of the Compensation Committee
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(3)
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Member of the Nominating Committee
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(4)
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Alternate Member of the Compensation Committee
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(5)
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Alternate Member of the Audit, Compensation and Nominating
Committees
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Biographies
Class
I Director Nominees
James
S. Lusk, Class I Director. Mr.
Lusk
joined our board of directors in February 2007. He is currently Executive Vice
President of ABM Industries Incorporated (NYSE:ABM), a leading facility services
contractor in the United States and Canada. Effective December 31, 2007, Mr.
Lusk will become ABM’s Chief Financial Officer. Prior to joining ABM, he was
Vice President, Business Services of Avaya, Chief Financial Officer, Treasurer
of BioScrip/MIM, President of Lucent Technologies’ Business Solutions division,
and interim Chief Financial Officer of Lucent Technologies. Mr. Lusk earned
his
BS (Economics), cum laude, from the Wharton School, University of Pennsylvania,
and his MBA (Finance) from Seton Hall University. He is a CPA and was inducted
into the AICPA Business and Industry Leadership Hall of Fame in
1999.
Peter
Rust, Class I Director.
Mr. Rust joined our board of directors since May 2006. Mr. Rust has over
27 years of experience in the telecommunications and computer industries.
He is currently CEO of Bank Street Consulting Group, a firm that works with
mid-cap companies helping them achieve their growth objectives.
Previously, he consulted for a number of telecommunications, technology and
financial firms and served as President and CEO of Con Edison Communications
from February 1999 until May 2005. He is also a former director of NEON
Communications, a current director for two non-profits and a member of the
Communications Sector of the NYC Investment Fund. Mr. Rust holds an M.B.A.
in
Corporate Finance from Adelphi University, a Master of Science in Biomedical
Engineering from Polytechnic University of New York, and a B.A. from Brown
University in Rhode Island.
Class
II Director Nominees
Bami
Bastani, Class II Director.
Dr.
Bastani joined our board of directors in February 2007. He is President and
CEO
of ANADIGICS (NASDAQ:ANAD), a leading supplier of semiconductor radio frequency
integrated circuits for the broadband and wireless communications markets.
Prior
to joining ANADIGICS in 1998, he held senior positions with Fujitsu
Microelectronics and National Semiconductor. Dr. Bastani currently serves on
the
board of directors of ANADIGICS and Nitronex, a private company; he previously
served on the board of directors of Globespan Virata in 2003 and was a national
member of the AEA board of directors until 2007. Dr. Bastani earned his
Ph.D and his MSEE in Microelectronics from Ohio State University and his BS
(Electrical Engineering) from the University of Arkansas. He also holds three
US
patents.
Michael
Brandofino, Chief Executive Officer, President and Class II
Director.
Mr. Brandofino was named our Chief Executive Officer and President and a
member of our board of directors in April 2006. Mr. Brandofino previously served
as our Chief Operating Officer and, before that, served as our Executive Vice
President and Chief Technology Officer since October 2000. Prior to that,
Mr. Brandofino was co-founder and President of Johns Brook Co., Inc., a
technology consulting company acquired by us in 2000. Mr. Brandofino holds
a B.S. degree in Management Information Systems from Pace
University.
Required
Vote and Board Recommendation
A
plurality of the votes duly cast is required for the election of directors.
This
means that the nominees receiving the highest number of affirmative votes will
be elected to fill the director positions available. Votes
withheld from any nominee are counted for purposes of determining the presence
or absence of a quorum, but have no other legal effect. Stockholders do not
have
the right to cumulate their votes in the election of directors.
THE
BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE ELECTION OF
EACH NOMINEE FOR DIRECTOR NAMED ABOVE.
Class
III Directors
Aziz
Ahmad, Class III Director.
Mr.
Ahmad joined our board of directors in June 2006 and his term will expire at
the
annual meeting of stockholders in 2008. He is co-founder and a board member
of
Netria Systems, a joint venture between Vonair and Broadsoft that develops
client management solutions for service providers of converged networks
solutions. Mr. Ahmad is also the CEO and co-founder of Vonair, a firm focused
on
developing client applications for the Voice over IP and Video IP wireline
and
wireless markets, and CEO of UTC Associates, a leading systems and network
integration professional services company. He holds B.E. and M.E. degrees in
Electrical Engineering from The City College of New York.
Dean
Hiltzik, Class III Director. Mr. Hiltzik
has been a member of our board of directors since May 2000 and his term will
expire at the annual meeting of stockholders in 2008. From September 1999 until
May 2000, Mr. Hiltzik was a member of the board of directors of
All
Communications Corporation (“ACC”).
Mr. Hiltzik, a certified public accountant, is a partner and director of
consulting services at Schneider & Associates LLP, which he joined in 1979.
Schneider provides tax and consulting services to Glowpoint. Mr. Hiltzik
received a B.A. from Columbia University and an M.B.A. in Accounting from
Hofstra University.
Richard
Reiss, Class III Director. Mr. Reiss
has been a member of our board of directors since May 2000 and
his
term will expire at the annual meeting of stockholders in 2008.
He
is
co-founder and currently serves as President of Prime Communications, an Avaya
Business Partner that installs technologically advanced communication systems
for businesses of all sizes. Mr. Reiss previously
served as Chairman of our board from May 2000 to December 2006 and served as
our
Chief Executive Officer from May 2000 to October 2003. Mr. Reiss also
served as our President from May 2000 to April 2002. Mr. Reiss served as
Chairman of the Board of Directors, President and Chief Executive Officer of
ACC
from ACC’s formation in 1991 until the formation of Glowpoint’s
predecessor pursuant to the merger of ACC and View Tech, Inc. (VTI) in May
2000.
Executive
Officers
The
following individuals are our executive officers but are not
directors:
Edwin
F. Heinen, Chief Financial Officer and Executive Vice President,
Finance. Mr. Heinen,
a certified public accountant, has been our Chief Financial Officer since April
2006 and previously served as our Controller since March 2005. Mr. Heinen
joined the Company from Communications Network Enhancement, Inc., an audio
conferencing company, where he was CFO since September 2001. Before that,
Mr. Heinen served in senior financial executive positions with
responsibility for accounting, auditing, treasury, analysis, budgeting, and
financial and tax reporting. Mr. Heinen received a B.S. in Business
Administration from Cornell University and an M.B.A in Finance from the
University of Detroit.
Joseph
Laezza, Chief Operating Officer. Mr. Laezza
has been our Chief Operating Officer since April 2006 and previously served
as
our Vice President, Operations since March 2004. Mr. Laezza joined the Company
from Con Edison Communications, where he was Vice President, Network Operations.
He previously held management positions at a number of telecommunications
service providers, including AT&T and XO Communications, where he was
responsible for operations, service delivery, and customer service.
David
W. Robinson, Executive Vice President and General
Counsel.
Mr.
Robinson has been our Executive Vice President and General Counsel since May
2006. Prior to joining the Company, Mr. Robinson was Vice President and General
Counsel of Con Edison Communications from August 2001 until March 2006, when
Con
Edison Communications was purchased by RCN Corporation. Before that, Mr.
Robinson served in senior executive positions with other telecommunications
service providers and provided legal and business counseling to other
businesses. Mr. Robinson received a B.A. from the University of Pennsylvania
(magna
cum laude)
and a
Juris Doctorate from Boston College Law School.
Board
of Directors, Board Committees and Meetings
Corporate
governance is typically defined as the system that allocates duties and
authority among a company’s stockholders, board of directors and management. The
stockholders elect the board and vote on extraordinary matters; the board is
the
company’s governing body, responsible for hiring, overseeing and evaluating
management, particularly the chief executive officer; and management runs the
company’s day-to-day operations. The primary responsibilities of the board of
directors are oversight, counseling and direction to our management in the
long-term interests of us and our stockholders. Our board of directors currently
consists of seven directors. The current board members and nominees for election
include five independent directors and one current member and one former member
of our senior management.
Our
board
of directors met ten times during the year ended December 31, 2006. During
this period, each director other than Michael Toporek attended or participated
in more than 75% of the aggregate of (i) the total number of meetings of the
board of directors held during the period for which he or she was a director
and
(ii) the total number of meetings of committees of the board on which he or
she
served, held during the period for which he or she served. The board has an
audit committee, a compensation committee and a nominating
committee.
As
a
general matter, board members are expected to attend our annual meetings. We
did
not, however, have an annual meeting of stockholders in 2006.
“Independent”
Directors. Each of our directors other than Messrs. Reiss and Brandofino qualify
as “independent” in accordance with the published listing requirements of the
American Stock Exchange (“AmEx”). Mr. Brandofino is a current employee and Mr.
Reiss was an employee until December 31, 2006. The AmEx independence definition
includes a series of objective tests, such as that the director is not an
employee of the company and has not engaged in various types of business
dealings with the company. In addition, as further required by the AmEx rules,
the board has made a subjective determination as to each independent director
that no relationship exist which, in the opinion of the board, would interfere
with the exercise of independent judgment in carrying out the responsibilities
of a director. In making these determinations, the directors reviewed and
discussed information provided by the directors and the company with regard
to
each director’s business and personal activities as they may relate to Glowpoint
and Glowpoint’s management.
In
addition, as required by AmEx rules, the members of the audit committee each
qualify as “independent” under special standards established by the Securities
and Exchange Commission (the “SEC”) for members of audit committees. The audit
committee is also required to have at least one independent member who is
determined by the board to meet the qualifications of an “audit committee
financial expert” in accordance with SEC rules, including that the person meets
the relevant definition of an “independent director.” Each member of the audit
committee is independent and has been determined to be an audit committee
financial expert. Stockholders should understand that this designation is a
disclosure requirement of the SEC related to these directors’ experience and
understanding with respect to certain accounting and auditing matters. The
designation does not impose upon these directors any duties, obligations or
liability that are greater than are generally imposed on them as a member of
the
audit committee and the board, and their designation as an audit committee
financial expert pursuant to this SEC requirement does not affect the duties,
obligations or liability of any other member of the audit committee or the
board.
Audit
Committee
We
currently have an audit committee consisting of James Lusk (Chairman), Bami
Bastani and Peter Rust. James Spanfeller resigned from the audit committee
in
May 2006 and Mr. Rust
was
appointed as his replacement. Aziz Ahmad was appointed an alternate member
of
the audit committee in June 2006. Karen Basian and Michael Toporek resigned
from
the audit committee in December 2006 and Dr. Bastani and Mr. Lusk were appointed
as their replacements. Our board
of
directors has determined that each member
of
the audit committee has
the
accounting and related financial management expertise and satisfies the
requirement as an “audit committee financial expert,” all as determined pursuant
to the rules and regulations of the SEC. The
audit
committee consults and meets with our Registered Public Accounting Firm and
chief financial officer and accounting personnel, reviews potential conflict
of
interest situations where appropriate, and reports and makes recommendations
to
the
full
board of directors regarding such matters. The audit committee operates under
a
written audit committee charter, which was originally filed with our proxy
statement for the 2003 annual meeting of our stockholders, but was amended
and
restated by the board on September 29, 2005. Our amended and restated audit
committee charter is available online at www.glowpoint.com/governance. You
may
also request a copy of the audit committee charter, at no cost, by telephoning
us at (866) GLOWPOINT or writing to us at Glowpoint, Inc., 225 Long Avenue,
Hillside, New Jersey 07205, Attention: Investor Relations. The audit committee
met six times during the year ended December 31, 2006.
Compensation
Committee
We
currently have a compensation committee consisting of Bami Bastani, Dean Hiltzik
and James Lusk. Since June 2006, Aziz Ahmad and Peter Rust each serve as
alternate members of the compensation committee. Karen Basian and Michael
Toporek resigned from the compensation committee in December 2006 and Dr.
Bastani and Mr. Lusk were appointed as their replacements. Each member of the
compensation committee meets the independence requirements of the AmEx. The
compensation committee is responsible for supervising our executive compensation
policies, reviewing officers’ salaries, approving significant changes in
employee benefits and recommending to the board of directors such other forms
of
remuneration as it deems appropriate. The compensation committee operates under
a written compensation committee charter, which was adopted in May 2007 and
is
available online at www.glowpoint.com/governance. You may also request a copy
of
the compensation committee charter, at no cost, by telephoning us at (866)
GLOWPOINT or writing to us at Glowpoint, Inc., 225 Long Avenue, Hillside, New
Jersey 07205, Attention: Investor Relations. The compensation committee met
three times during the year ended December 31, 2006.
Nominating
Committee
We
currently have a nominating committee consisting of Bami Bastani, Dean Hiltzik
and Peter Rust. James Spanfeller resigned from the nominating committee in
May
2006 and Mr. Rust was appointed as his replacement. Aziz Ahmad was
appointed an alternate member of the nominating committee in June 2006. Michael
Toporek resigned from the nominating committee in December 2006 and Dr. Bastani
was appointed as his replacement. Each member of the nominating committee meets
the independence requirements of the AmEx. The nominating committee is
responsible for assessing the performance of our board of directors and making
recommendations to our board regarding nominees for the board. The nominating
committee was formed in February 2004. Prior to the formation of the committee,
its functions were performed by the board of directors. The nominating committee
operates under a written nominating committee charter, which was filed with
our
proxy statement for the 2004 annual meeting of our stockholders and is available
online at www.glowpoint.com/governance. You may also request a copy of the
nominating committee charter, at no cost, by telephoning us at (866) GLOWPOINT
or writing to us at Glowpoint, Inc., 225 Long Avenue, Hillside, New Jersey
07205, Attention: Investor Relations.
The
nominating committee considers qualified candidates to serve as a member of
our
board of directors suggested by our stockholders. Stockholders can suggest
qualified candidates for director by writing to our Corporate Secretary at
225
Long Avenue, Hillside, New Jersey 07205. Stockholder submissions that are
received in accordance with our by-laws and that meet the criteria outlined
in
the nominating committee charter are forwarded to the members of the nominating
committee for review. Stockholder submissions must include the following
information:
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|
A
statement that the writer is our stockholder and is proposing a candidate
for our board of directors for consideration by the nominating
committee;
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The
name of and contact information for the candidate;
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A
statement of the candidate’s business and educational
experience;
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Information
regarding each of the factors set forth in the nominating committee
charter sufficient to enable the nominating committee to evaluate
the
candidate;
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A
statement detailing any relationship between the candidate and any
of our
customers, suppliers or competitors;
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Detailed
information about any relationship or understanding between the proposing
stockholder and the candidate; and
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·
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A
statement that the candidate is willing to be considered and willing
to
serve as our director if nominated and
elected.
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In
considering potential new directors and officers, the nominating committee
will
review individuals from various disciplines and backgrounds. Among the
qualifications to be considered in the selection of candidates are broad
experience in business, finance or administration; familiarity with national
and
international business matters; familiarity with our industry; and prominence
and reputation. The nominating committee will also consider whether the
individual has the time available to devote to the work of our board of
directors and one or more of its committees. None of the candidates this year
for election to the board of directors were brought to the nominating committee
by stockholder submission.
The
nominating committee will also review the activities and associations of each
candidate to ensure that there is no legal impediment, conflict of interest,
or
other consideration that might hinder or prevent service on our board of
directors. In making its selection, the nominating committee will bear in mind
that the foremost responsibility of a director of a corporation is to represent
the interests of the stockholders as a whole. The nominating committee will
periodically review and reassess the adequacy of its charter and propose any
changes to the board of directors for approval.
Directors
who are not our executive officers or employees receive a director’s fee of a
cash payment of $2,000 and an option to purchase 1,000 shares of common stock
for each board meeting attended, a cash payment of $1,000 and an option to
purchase 500 shares of common stock for each committee meeting attended, and
a
cash payment of $5,000 and options to purchase 4,000 shares of common stock
for
attendance at the annual meeting of stockholders. Each chairperson of a standing
committee of our board of directors also receives a cash payment of $1,000
per
year, paid following each annual meeting of our stockholders. Attendance at
board meetings and committee may be in person or by telephone.
Each
director who is independent in accordance with the published listing
requirements of Nasdaq receives a one-time grant of 80,000
restricted shares of our common stock. The restricted shares have an exercise
price equal to the closing price of our common stock as quoted in the Pink
Sheets (or applicable exchange) on the date of grant. 20,000 shares vest on
the
date of grant and 20,000 shares vest on each of the first, second and third
anniversaries of the date of grant, provided that, with respect to each
scheduled vesting date, the director in question (i) attended
at
least 75% of the meetings of the board of directors held in the twelve months
prior to the scheduled vesting date and (ii) remains independent under the
Nasdaq listing standards prevailing on the scheduled vesting date. The
restricted shares become fully vested and exercisable upon a change in control
of our company.
The
following table represents compensation paid to our directors during the year
ended December 31, 2006:
Name
|
|
Fees
Earned or
Paid
in Cash (1)
|
|
Stock
Awards
(2)
|
|
Option
Awards
(3)
|
|
Total
|
|
Aziz
Ahmad
|
|
$
|
6,000
|
|
$
|
11,590
|
|
$
|
862
|
|
$
|
18,452
|
|
Karen
Basian
|
|
|
21,000
|
|
|
29,833
|
|
|
3,848
|
|
|
54,681
|
|
Dean
Hiltzik
|
|
|
23,000
|
|
|
42,400
|
|
|
4,189
|
|
|
69,589
|
|
Peter
Rust
|
|
|
12,000
|
|
|
14,118
|
|
|
1,748
|
|
|
27,866
|
|
James
Spanfeller
|
|
|
6,000
|
|
|
-
|
|
|
1,412
|
|
|
7,412
|
|
Michael
Toporek
|
|
|
18,000
|
|
|
-
|
|
|
3,628
|
|
|
21,628
|
|
(1) Non
employee
directors are paid $2,000 for attending each Board of Director meeting and
$1,000 for attending each committee meeting.
(2) When
a non-employee
is elected to the Board of Directors they receive 80,000 restricted shares
which
vest as to 20,000 shares on each of the grant date and first, second and third
anniversary dates of the grant. The amounts included in the “Stock Awards”
column represent the compensation cost we recognized in 2006 related to
non-option stock awards, as described in Statement of Financial Accounting
Standards No. 123R without taking into account any forfeiture rates. For a
discussion of the valuation assumptions, see Note 13 to our consolidated
financial statements included in our Annual Report on Form 10-K for the fiscal
year ended December 31, 2006. Please see the “Grants of Plan-Based Awards” table
for more information regarding stock awards we granted in 2006. The table below
summarizes, by year of grant, the 2006 expense amounts reported in the “Stock
Awards” column for each named executive officer:
Name
|
|
2003
|
|
2004
|
|
2005
|
|
2006
|
|
Total
|
|
Aziz
Ahmad
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
11,590
|
|
$
|
11,590
|
|
Karen
Basian
|
|
|
29,833
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
29,833
|
|
Dean
Hiltzik
|
|
|
-
|
|
|
42,400
|
|
|
-
|
|
|
-
|
|
|
42,400
|
|
Peter
Rust
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
14,118
|
|
|
14,118
|
|
(3)
Non-employee
directors
receive options to acquire 1,000 shares of common stock for attending each
Board
of Director meeting and options to acquire 500 shares of common stock for
attending each committee meeting. The options are fully vested when granted.
The
amounts included in the “Option Awards” column represent the compensation cost
we recognized in 2006 related to option awards, as described in Statement of
Financial Accounting Standards No. 123R without taking into account any
forfeiture rates. For a discussion of the valuation assumptions, see Note 13
to
our consolidated financial statements included in our Annual Report on Form
10-K
for the fiscal year ended December 31, 2006. Please see the “Grants of
Plan-Based Awards” table for more information regarding option awards we granted
in 2006.
Contacting
The Board Of Directors
|
Any
stockholder who desires to contact our board of directors, committees of the
board of directors and individual directors may do so by writing
to:
Glowpoint,
Inc., [Addressee], 225 Long Avenue, Hillside, New Jersey 07205
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|
Audit
Committee of the Board of Directors
|
|
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Compensation
Committee of the Board of Directors
|
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Nominating
Committee of the Board of Directors
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Name
of individual directors
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These
communications are sent by us directly to the specified addressee.
REPORT
OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The
information contained in this Audit Committee Report is not “soliciting
material” and has not been “filed” with the Securities and Exchange Commission.
This Audit Committee Report will not be incorporated by reference into any
of
our future filings under the Securities Act of 1933 or the Securities Exchange
Act of 1934, except to the extent that we may specifically incorporate it by
reference into a future filing.
The
audit
committee is composed of three members and one alternate member. Each member
is
a director who meets the current independence standards under the applicable
SEC
and AmEx rules. The audit committee operates under a written audit committee
charter. As described more fully in its charter, the purpose of the audit
committee is to assist the board in its general oversight of Glowpoint’s
financial reporting, internal controls and audit functions. Management is
responsible for the preparation, presentation and integrity of Glowpoint’s
financial statements; accounting and financial reporting principles; internal
controls; and procedures designed to reasonably assure compliance with
accounting standards, applicable laws and regulations. Amper, Politziner &
Mattia, P.C. (“Amper”), our Registered Public Accounting Firm, is responsible
for performing an independent audit of the consolidated financial statements
in
accordance with the Standards of the Public Company Accounting Oversight Board
(United States). In accordance with law, the audit committee has ultimate
authority and responsibility to select, compensate, evaluate and, when
appropriate, replace our Registered Public Accounting Firm. The audit committee
has the authority to engage its own outside advisers, including experts in
particular areas of accounting, as it determines appropriate, apart from counsel
or advisers hired by management.
The
audit
committee members may not be professional accountants or auditors, and their
functions are not intended to duplicate or to certify the activities of
management and the Registered Public Accounting Firm, nor can the audit
committee certify that the Registered Public Accounting Firm is “independent”
under applicable rules. The audit committee serves a board-level oversight
role,
in which it provides advice, counsel and direction to management and the
Registered Public Accounting Firm on the basis of the information it receives,
discussions with management and the Registered Public Accounting Firm, and
the
experience of the audit committee’s members in business, financial and
accounting matters. Each member of the audit committee has been determined
by
the board to meet the qualifications of an “audit committee financial expert” in
accordance with SEC rules. Stockholders should understand that this designation
is an SEC disclosure requirement related to these directors’ experience and
understanding with respect to certain accounting and auditing matters. The
designation does not impose on these directors any duties, obligations or
liability that are greater than are generally imposed on them as a member of
the
audit committee and the board, and their designation as an audit committee
financial expert pursuant to this SEC requirement does not affect the duties,
obligations or liability of any other member of the audit committee or the
board.
In
accordance with law, the audit committee is responsible for establishing
procedures for the receipt, retention and treatment of complaints received
by
Glowpoint regarding accounting, internal accounting controls or auditing
matters, including the confidential, anonymous submission by our employees,
received through established procedures, of concerns regarding questionable
accounting or auditing matters.
Among
other matters, the audit committee monitors the activities and performance
of
Glowpoint’s Registered Public Accounting Firm, including the audit scope,
external audit fees, Registered Public Accounting Firm independence matters
and
the extent to which the Registered Public Accounting Firm may be retained to
perform non-audit services.
In
accordance with audit committee policy and the requirements of law, all services
to be provided by Amper are pre-approved by the audit committee. Pre-approval
includes audit services, audit-related services, tax services and other
services. To avoid certain potential conflicts of interest, the law prohibits
a
publicly-traded company from obtaining certain non-audit services from its
Registered Public Accounting Firm. We obtain these services from other service
providers as needed.
The
audit
committee has reviewed our audited financial statements and met and held
discussions with management regarding the audited financial statements.
Management has represented to the audit committee that our consolidated
financial statements were prepared in accordance with accounting principles
generally accepted in the United States.
The
audit
committee has discussed with Amper, our Registered Public Accounting Firm,
the
matters required to be discussed by Statement of Auditing Standards No. 61
(Communication with Audit Committees). These discussions have included a review
as to the quality, not just the acceptability, of our accounting
principles.
Our
Registered Public Accounting Firm also provided to the audit committee the
written disclosures required by Independence Standards Board Standard No. 1
(Independence Discussion with Audit Committees), and the audit committee
discussed with the Registered Public Accounting Firm its independence from
management and our company. The audit committee has also considered the
compatibility of non-audit services with the Registered Public Accounting Firm’s
independence.
Based
on
the audit committee’s discussion with management and the Registered Public
Accounting Firm, the audit committee’s review of the audited financial
statements, the representations of management and the report of the Registered
Public Accounting Firm to the audit committee, the audit committee recommended
that the board of directors file the audited consolidated financial statements
for the year ended December 31, 2006 with the SEC on Form 10-K.
|
Respectfully
submitted,
|
|
James
Lusk, Chairman
Bami
Bastani
Peter
Rust
|
COMPENSATION
DISCUSSION AND ANALYSIS
General
Compensation Philosophy
Our
overall compensation philosophy is to provide a total compensation package
that
is competitive and enables us to attract, motivate, reward and retain key
executives and other employees who have the skills and experience necessary
to
promote our short- and long-term financial performance and growth.
The
Compensation Committee recognizes the critical role of our executive officers
in
our growth, success and in our future prospects. Accordingly, our executive
compensation policies are designed to (1) align the interests of executive
officers with those of stockholders by encouraging stock ownership by executive
officers and by making a significant portion of executive compensation dependent
on our financial performance, (2) provide compensation that will attract and
retain talented professionals, (3) reward individual results through base
salary, annual cash bonuses, long-term incentive compensation in the form of
stock options, restricted stock awards and various other benefits, and (4)
manage compensation based on skill, knowledge, effort and responsibility needed
to perform a particular job successfully.
In
establishing salary, bonuses and long-term incentive compensation for our
executive officers, the Compensation Committee takes into account both the
position and the expertise of a particular executive, as well as the Committee’s
understanding of competitive compensation for similarly situated executives
in
our sector of the technology industry. Michael Brandofino, our President and
Chief Executive Officer, confers with members of the Compensation Committee,
and
makes recommendations, regarding the compensation of all executive officers
other than himself. He does not participate in the Compensation Committee's
deliberations regarding his own compensation. In determining the compensation
of
our executive officers, the Compensation Committee may consult available
compensation reports, but does not engage in any benchmarking of total
compensation or any material element of compensation and does not retain any
compensation consultant or expert.
Components
of Compensation
The
components of the compensation program for named executive officers are
described below.
Base
Salary.
Salaries for executive officers for 2006 were generally determined by the
Compensation Committee on an individual basis in connection with the
determination of the terms of such executive’s applicable employment agreement,
based on the following criteria: the executive’s scope of responsibility,
performance, prior experience and salary history, as well as the salaries for
similar positions at comparable companies.
The
base
salaries for the named executive officers for 2006 were increased from the
2005
levels pursuant to an employment agreement or in accordance with our company
policy and past practice.
Bonus/Incentive
Compensation.
The
Compensation Committee believes that a substantial portion of the annual
compensation of each executive officer should be in the form of variable cash
incentive pay. Accordingly, we did not award a guaranteed bonus to any executive
officer in 2006. However, each executive officer is eligible, at the discretion
of the Compensation Committee, to receive up to 40% of his base salary for
the
fiscal year upon the achievement of certain financial performance goals or
other
criteria and metrics as established by the President and CEO and the
Compensation Committee.
The
Compensation Committee approved a cash bonus to the named executive officers
for
2006 based upon meeting certain performance targets, which included, without
limitation, various company objectives (for example, targets associated with
revenue, cost of revenue and improvement in other key financial metrics) and
various personal objectives. Additionally, each named executive officer other
than Mr. Robinson, who was not employed by us at the time, received a cash
retention bonus in 2006 as part of a companywide retention program implemented
with the March 2006 restructuring.
Long-Term
Incentive Awards.
The
Compensation Committee believes that equity-based compensation in the form
of
stock options or restricted stock links the interests of executives with the
long-term interests of our stockholders and encourages executives to remain
in
our employ. We grant stock options in accordance with our various stock option
plans. Grants of options and/or restricted stock are awarded based on a number
of factors, including the individual’s level of responsibility, the amount and
term of options already held by the individual, the individual’s contributions
to the achievement of our financial and strategic objectives, and industry
practices and norms.
In
June
2006, the Board and the Compensation Committee awarded options to every company
employee, including the named executive officers.
Broad-based
Employee Benefits.
As
employees, our named executive officers have the opportunity to participate
in a
number of benefits programs that are generally available to all eligible
employees. These benefits include:
|
·
|
Healthcare
Plans - includes medical benefits, dental benefits, and vision care
program.
|
|
·
|
401(k)
Retirement Plan - allows eligible employees to save for retirement
on a
tax-advantaged basis. Under the 401(k) Plan, participants may elect
to
defer a portion of their compensation on a pre-tax basis and have
it
contributed to the Plan subject to applicable annual Internal Revenue
Code
limits. Pre-tax contributions are allocated to each participant's
individual account and are then invested in selected investment
alternatives according to the participants' directions. Employee
elective
deferrals are 100% vested at all times. The 401(k) Plan allows for
matching contributions to be made by us. As a tax-qualified retirement
plan, contributions to the 401(k) Plan and earnings on those contributions
are not taxable to the employees until distributed from the 401(k)
Plan
and all contributions are deductible by us when
made.
|
Compensation
Committee Report
The
information contained in this Compensation Committee Report is not “soliciting
material” and has not been “filed” with the Securities and Exchange Commission.
This Compensation Committee Report will not be incorporated by reference into
any of our future filings under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent that we may specifically incorporate
it by reference into a future filing.
The
Compensation Committee has reviewed and discussed the Compensation Discussion
and Analysis section appearing above with Glowpoint’s management. Based on this
review and these discussions, the Compensation Committee recommended to
Glowpoint’s board of directors that the Compensation Discussion and Analysis be
included in this proxy statement.
|
Respectfully
submitted,
|
|
|
|
Bami
Bastani
Dean
Hiltzik
James
Lusk
|
EXECUTIVE
COMPENSATION AND OTHER MATTERS
Summary
Compensation Table
The
table
set forth below summarizes for our named executive officers the compensation
paid, accrued or granted, during or with respect to the year ended December
31,
2006. Certain columnar information required by Item 402(c)(2) of Regulation
S-K
has been omitted for categories where there has been no compensation awarded
to,
or paid to, the named executive officers during or with respect to the year
ended December 31, 2006.
Name
and Principal Position
|
|
Year
(1)
|
|
Salary
|
|
Bonus
|
|
Stock
Awards (2)
|
|
Option
Awards (3)
|
|
All
Other Compensation (4)
|
|
Total
|
|
Michael
Brandofino
President
and Chief Executive Officer
|
|
|
2006
|
|
$
|
267,500
|
|
$
|
27,500
|
|
$
|
-
|
|
$
|
26,969
|
|
$
|
10,279
|
|
$
|
332,248
|
|
Edwin
F. Heinen
Chief
Financial Officer
|
|
|
2006
|
|
|
167,212
|
|
|
37,500
|
|
|
-
|
|
|
71,157
|
|
|
5,056
|
|
|
280,925
|
|
Joseph
Laezza
Chief
Operating Officer
|
|
|
2006
|
|
|
228,608
|
|
|
23,320
|
|
|
35,384
|
|
|
34,459
|
|
|
3,900
|
|
|
325,671
|
|
David
W. Robinson
Executive
Vice President, General Counsel
|
|
|
2006
|
|
|
158,769
|
|
|
16,080
|
|
|
41,000
|
|
|
9,882
|
|
|
2,140
|
|
|
227,871
|
|
David
Trachtenberg
Former
President and Chief Executive Officer
|
|
|
2006
|
|
|
129,808
|
|
|
-
|
|
|
124,000
|
|
|
-
|
|
|
693,892
|
|
|
947,700
|
|
Gerard
Dorsey
Former
Chief Financial Officer
|
|
|
2006
|
|
|
65,962
|
|
|
-
|
|
|
-
|
|
|
10,739
|
|
|
138,927
|
|
|
215,628
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
In accordance with SEC transition rules, information is provided for the most
recently completed fiscal year only.
(2) The amounts included
in the “Stock Awards” column represent the compensation cost we recognized in
2006 related to non-option stock awards, as described in Statement of Financial
Accounting Standards No. 123R without taking into account any forfeiture rates.
For a discussion of the valuation assumptions, see Note 13 to our consolidated
financial statements included in our Annual Report on Form 10-K for the fiscal
year ended December 31, 2006. Please see the “Grants of Plan-Based Awards” table
for more information regarding stock awards we granted in 2006. The table below
summarizes, by year of grant, the 2006 expense amounts reported in the “Stock
Awards” column for each named executive officer:
Name
|
|
2003
|
|
2004
|
|
2005
|
|
2006
|
|
Total
|
|
Joseph
Laezza
|
|
$
|
-
|
|
$
|
35,384
|
|
$
|
-
|
|
$
|
-
|
|
$
|
35,384
|
|
David
W. Robinson
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
41,000
|
|
|
41,000
|
|
David
Trachtenberg
|
|
|
124,000
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
124,000
|
|
(3)
The amounts included in the “Option Awards” column represent the compensation
cost we recognized in 2006 related to option awards, as described in Statement
of Financial Accounting Standards No. 123R without taking into account any
forfeiture rates. For a discussion of the valuation assumptions, see Note 13
to
our consolidated financial statements included in our Annual Report on Form
10-K
for the fiscal year ended December 31, 2006. Please see the “Grants of
Plan-Based Awards” table for more information regarding option awards we granted
in 2006. The following table summarizes, by year of grant, the 2006 expense
amounts reported in the “Option Awards” column for each named executive
officer:
Name
|
|
2004
|
|
2005
|
|
2006
|
|
Total
|
|
Michael
Brandofino
|
|
$
|
17,087
|
|
$
|
-
|
|
$
|
9,882
|
|
$
|
26,969
|
|
Edwin
F. Heinen
|
|
|
-
|
|
|
61,275
|
|
|
9,882
|
|
|
71,157
|
|
Joseph
Laezza
|
|
|
-
|
|
|
24,577
|
|
|
9,882
|
|
|
34,459
|
|
David
W. Robinson
|
|
|
-
|
|
|
-
|
|
|
9,882
|
|
|
9,882
|
|
David
Trachtenberg
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Gerard
Dorsey
|
|
|
10,739
|
|
|
-
|
|
|
-
|
|
|
10,739
|
|
The
following forfeitures of options occurred during the year ended December 31,
2006: Mr. Trachtenberg, options to acquire 100,000 shares of common stock;
and
Mr. Dorsey, options to acquire 79,166 shares of common stock. Additionally,
each
of Mr. Trachtenberg and Mr. Dorsey failed to exercise vested options during
the
permitted post-employment period and such options expired, 50,000 in the case
of
Mr. Trachtenberg and 83,334 in the case of Mr. Dorsey.
(4)
The following table presents all other compensation during the year ended
December 31, 2006 to the named executive officers:
Name
|
|
Year
(1)
|
|
Vehicle
Allowance
|
|
Company
Contributions
to
401(k) Plan
|
|
Health
Insurance
|
|
Severance
(5)
|
|
Total
|
|
Michael
Brandofino
|
|
|
2006
|
|
$
|
4,000
|
|
$
|
3,132
|
|
$
|
3,147
|
|
$
|
-
|
|
$
|
10,279
|
|
Edwin
F. Heinen
|
|
|
2006
|
|
|
3,700
|
|
|
1,356
|
|
|
-
|
|
|
-
|
|
|
5,056
|
|
Joseph
Laezza
|
|
|
2006
|
|
|
3,900
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
3,900
|
|
David
W. Robinson
|
|
|
2006
|
|
|
2,140
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
2,140
|
|
David
Trachtenberg
|
|
|
2006
|
|
|
6,772
|
|
|
1,438
|
|
|
4,612
|
|
|
681,070
|
|
|
693,892
|
|
Gerard
Dorsey
|
|
|
2006
|
|
|
1,400
|
|
|
1,923
|
|
|
-
|
|
|
135,604
|
|
|
138,927
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5)
The following table presents the severance benefits during the year ended
December 31, 2006 to the named executive officers:
Name
|
|
Year
(1)
|
|
Accelerated
Vesting
of
Stock
Awards
|
|
Accelerated
Vesting
of
Option
Awards
|
|
Extension
of
Post
Termination
Option
Exercise
Period
|
|
Health
Insurance
|
|
Severance
|
|
Total
|
|
David
Trachtenberg
|
|
|
2006
|
|
$
|
170,500
|
|
$
|
-
|
|
$
|
826
|
|
$
|
9,744
|
|
$
|
500,000
|
|
$
|
681,070
|
|
Gerard
Dorsey
|
|
|
2006
|
|
|
-
|
|
|
9,353
|
|
|
1,150
|
|
|
-
|
|
|
125,101
|
|
|
135,604
|
|
Grants
of Plan-Based Awards
The
table
set forth below presents all plan-based equity and non-equity grants made by
Glowpoint during the year ended December 31, 2006 to the named executive
officers. Certain columnar information required by Item 402(c)(2) of Regulation
S-K has been omitted for categories where there has been no compensation awarded
to, or paid to, the named executive officers during or with respect to the
year
ended December 31, 2006.
Name
|
|
Grant
Date
|
|
All
Other
Stock
Awards:
Number
of
Shares
of
Stock
or Units
(#)
|
|
All
Other
Awards:
Number
of
Securities
Underlying
Options
(#)
(1)
|
|
Exercise
or Base
Price
of Option Awards ($/sh)
|
|
Grant
Date
Fair
Value of
Stock
and
Option
Awards
|
|
Michael
Brandofino
|
|
|
6/27/06
|
|
|
-
|
|
|
100,000
|
|
$
|
0.41
|
|
$
|
30,638
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edwin
F. Heinen
|
|
|
6/27/06
|
|
|
-
|
|
|
100,000
|
|
$
|
0.41
|
|
|
30,638
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph
Laezza
|
|
|
6/27/06
|
|
|
-
|
|
|
100,000
|
|
$
|
0.41
|
|
|
30,638
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
W. Robinson
|
|
|
5/4/06
|
|
|
200,000
(2
|
)
|
|
-
|
|
|
-
|
|
|
90,000
|
|
6/27/06
|
|
|
|
|
|
-
|
|
|
100,000
|
|
$
|
0.41
|
|
|
30,638
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
Trachtenberg
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gerard
Dorsey
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
(1) The
options for each of
the named executive officers to purchase 100,000 shares were granted on June
27,
2006, have a ten year life and vests as to 33.33% of the total number of shares
subject to the grant on each of the first, second and third anniversary dates
of
the grant.
(2)
A restricted stock award of 200,000 shares was granted on May 4, 2006, and
vested as to 60,000 shares on the commencement date of Mr. Robinson’s
employment. The remaining 140,000 shares subject to the grant vests 33.33%
on
each of the first, second and third anniversary dates of the grant.
Employment
Agreements
We
have
entered into employment agreements with our executive officers. Additional
information as to the terms of the employment agreements is set forth
in our
2006
Annual
Report on Form 10-K,
which
was filed with the Securities and Exchange Commission on June 6, 2007 and is
attached hereto. Such information is subject to the detailed provisions of
the
respective agreements attached as exhibits to our filings with the Securities
and Exchange Commission.
Outstanding
Equity Awards at Fiscal Year-End
The
table
set forth below presents the number and values of exercisable and unexercisable
options and unvested restricted stock at December 31, 2006. Certain columnar
information required by Item 402(c)(2) of Regulation S-K has been omitted for
categories where there has been no compensation awarded to, or paid to, the
named executive officers required to be reported in the table during fiscal
year
ended December 31, 2006.
|
|
Option
Awards
|
|
Stock
Awards
|
|
Name
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
Number
of Shares
or Units
of Stock
That Have
Not
Vested
(#)
|
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)
(5)
|
|
Michael
Brandofino
|
|
|
100,000
|
|
|
-
|
|
$
|
3.94
|
|
|
1/01/2011
|
|
|
-
|
|
$
|
-
|
|
|
|
|
20,000
|
|
|
-
|
|
|
4.40
|
|
|
2/25/2012
|
|
|
-
|
|
|
-
|
|
|
|
|
15,000
|
|
|
-
|
|
|
3.04
|
|
|
4/24/2012
|
|
|
-
|
|
|
-
|
|
|
|
|
29,875
|
|
|
-
|
|
|
1.13
|
|
|
7/22/2012
|
|
|
-
|
|
|
-
|
|
|
|
|
100,000
|
|
|
-
|
|
|
3.39
|
|
|
9/23/2013
|
|
|
-
|
|
|
-
|
|
|
|
|
75,000
|
|
|
25,000
(1
|
)
|
|
1.36
|
|
|
7/26/2014
|
|
|
-
|
|
|
-
|
|
|
|
|
-
|
|
|
100,000
(2
|
)
|
|
0.41
|
|
|
6/27/2016
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edwin
F. Heinen
|
|
|
13,333
|
|
|
26,667
(3
|
)
|
|
2.13
|
|
|
3/02/2015
|
|
|
-
|
|
|
-
|
|
|
|
|
4,667
|
|
|
9,333
(3
|
)
|
|
1.17
|
|
|
8/10/2015
|
|
|
-
|
|
|
-
|
|
|
|
|
25,000
|
|
|
50,000
(3
|
)
|
|
1.00
|
|
|
9/29/2015
|
|
|
-
|
|
|
-
|
|
|
|
|
-
|
|
|
100,000
(2
|
)
|
|
0.41
|
|
|
6/27/2016
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph
Laezza
|
|
|
16,667
|
|
|
33,333
(4
|
)
|
|
1.17
|
|
|
8/10/2015
|
|
|
-
|
|
|
-
|
|
|
|
|
-
|
|
|
100,000
(2
|
)
|
|
0.41
|
|
|
6/27/2016
|
|
|
-
|
|
|
-
|
|
|
|
|
- |
|
|
-
|
|
|
-
|
|
|
-
|
|
|
18,334
(6
|
)
|
|
6,967
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
W. Robinson
|
|
|
-
|
|
|
100,000
(2
|
)
|
|
0.41
|
|
|
6/27/2016
|
|
|
-
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
-
|
|
|
140,000
(7
|
)
|
|
53,200
|
|
(1)
An option to purchase 100,000 shares was granted on July 26, 2004, and vests
as
to 25% of the total number of shares subject to the grant on each of the grant
date and first, second and third anniversary dates of the grant.
(2)
An option to purchase 100,000 shares was granted on June 27, 2006, and vests
as
to 33.33% of the total number of shares subject to the grant on each of the
first, second and third anniversary dates of the grant.
(3)
Options to purchase 40,000 shares on March 2, 2005, 14,000 shares on August
10,
2005 and 75,000 shares of September 29, 2005 were granted, and vests as to
33.33% of the total number of shares subject to the grant on each of the first,
second and third anniversary dates of the grant.
(4)
An option to purchase 50,000 shares was granted on August 10, 2005, and vests
as
to 33.33% of the total number of shares subject to the grant on each of the
first, second and third anniversary dates of the grant.
(5)
The market value of the stock awards is based on the $0.38 closing price our
common stock on December 29, 2006.
(6)
A restricted stock award of 55,000 shares was granted on March 29, 2004, and
vests as to 33.33% of the total number of shares subject to the grant on each
of
the first, second and third anniversary dates of the grant. As of December
31,
2006, 36,666 had vested and 18,334 were unvested.
(7)
A restricted stock award of 200,000 shares was granted on May 4, 2006, and
vests
as to 60,000 shares on the commencement date of Mr. Robinson’s employment and as
to the remaining 140,000 shares subject to the grant, 33.33% on each of the
first, second and third anniversary dates of the grant. As of December 31,
2006,
60,000 had vested and 140,000 were unvested.
Option
Exercises and Stock Vested
The
table
set forth below present’s information concerning stock option exercises and
vesting of restricted stock during the year ended December 31, 2006 for each
named executive officer. Certain columnar information required by Item 402(c)(2)
of Regulation S-K has been omitted for categories where there has been no
compensation awarded to, or paid to, the named executive officers required
to be
reported in the table during fiscal year ended December 31, 2006.
|
|
Option
Awards
|
|
Stock
Awards
|
|
Name
|
|
Number
of Shares Acquired
on
Exercise
(#)
|
|
Value
Realized
on
Exercise
(1)
|
|
Number
of
Shares
Acquired
on
Vesting
(#)
|
|
Value
Realized
on
Vesting
(2)
|
|
Michael
Brandofino
|
|
|
-
|
|
$
|
-
|
|
|
-
|
|
$
|
-
|
|
Edwin
F. Heinen
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Joseph
Laezza
|
|
|
-
|
|
|
-
|
|
|
18,333
|
|
|
11,733
|
|
David
W. Robinson
|
|
|
-
|
|
|
-
|
|
|
60,000
|
|
|
27,000
|
|
David
Trachtenberg
|
|
|
-
|
|
|
-
|
|
|
120,000
|
|
|
56,400
|
|
Gerald
Dorsey
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
(1)
The value of an option is the difference between (a) the market price upon
exercise and (b) the exercise price of the option upon grant.
(2)
The value of a restricted stock share upon vesting is the market value of a
share of the Company’s common stock on the vesting date.
Potential
Payments Upon Termination or Change-in-Control
The
tables below outline the potential payments to our Chief Executive Officer
and
other named executive officers upon the occurrence of certain termination
triggering events. For the purposes of the table, below are the standard
definitions for the various types of termination, although exact definitions
may
vary by agreement and by person.
“Voluntary
Resignation” means the resignation initiated by the executive
officer.
“Resignation
for Good Reason” means if the executive officer resigns because: (i) there has
been a diminution in his base salary; (ii) he is required to be based in an
office that is more than a certain distance (e.g., 50 or 75 miles) from the
current location of the office; (iii) he is assigned duties that are materially
inconsistent with his current position; or (iv) there is a material diminution
of his status, office, title, responsibility, or reporting
requirements.
“Termination
For Cause” means a termination of executive officer’s employment by the Company
because, in the judgment of the Company: (i) the executive officer
willfully engaged in any act or omission which is in bad faith and to the
detriment of the Company; (ii) the executive officer exhibited unfitness
for service, dishonesty, habitual neglect, persistent and serious deficiencies
in performance, or gross incompetence,
which
conduct is not cured within fifteen (15) days after receipt by the executive
officer of written notice of the conduct;
(iii) the executive officer is convicted of a crime; or (iv) the executive
officer refused or failed to act on any reasonable and lawful directive or
order
from his superior or the Board.
“Termination
Without Cause" means a termination for a reason other than for Cause, as defined
above.
“Benefits
upon a Change in Control or Corporate Transaction” means the benefit the named
executive will receive upon a Change in Control or Corporate Transaction, as
each such term is defined it the executive officer’s employment contract and
restricted stock award agreement.
No
named
executive officer is entitled to a payment in connection with Voluntary
Resignation, Disability or a Termination for Cause.
Executive
Benefits and Payments Upon
Termination
(1)
|
|
Resignation
for Good Reason or Termination Without Cause
|
|
Death
|
|
Change
in Control or Corporate Transaction
|
|
Michael
Brandofino
|
|
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
|
|
|
|
|
|
|
|
Severance
(2)
|
|
$
|
275,000
|
|
$
|
275,000
|
|
$
|
275,000
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock (8)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Options
(7)
|
|
|
-
|
|
|
-
|
|
|
200,000
|
|
Benefits
and Perquisites (3)
|
|
|
|
|
|
|
|
|
|
|
401
(k) Match (4)
|
|
|
3,437
|
|
|
3,437
|
|
|
3,437
|
|
Health
Insurance (5)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Accrued
vacation pay (6)
|
|
|
21,154
|
|
|
21,154
|
|
|
21,154
|
|
Edwin
F. Heinen
|
|
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
|
|
|
|
|
|
|
|
Severance
(2)
|
|
$
|
200,000
|
|
$
|
200,000
|
|
$
|
200,000
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock (8)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Options
(10)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Benefits
and Perquisites (3)
|
|
|
|
|
|
|
|
|
|
|
401
(k) Match (4)
|
|
|
2,500
|
|
|
2,500
|
|
|
2,500
|
|
Health
Insurance (5)
|
|
|
8,750
|
|
|
-
|
|
|
8,750
|
|
Accrued
vacation pay (6)
|
|
|
15,385
|
|
|
15,385
|
|
|
15,385
|
|
Joseph
Laezza
|
|
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
|
|
|
|
|
|
|
|
Severance
(2)
|
|
$
|
244,860
|
|
$
|
244,860
|
|
$
|
244,860
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock (9)
|
|
|
6,967
|
|
|
6,967
|
|
|
6,967
|
|
Options
(10)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Benefits
and Perquisites (3)
|
|
|
|
|
|
|
|
|
|
|
401
(k) Match (4)
|
|
|
3,061
|
|
|
3,061
|
|
|
3,061
|
|
Health
Insurance (5)
|
|
|
13,836
|
|
|
-
|
|
|
13,836
|
|
Accrued
vacation pay (6)
|
|
|
18,835
|
|
|
18,835
|
|
|
18,835
|
|
David
W. Robinson
|
|
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
|
|
|
|
|
|
|
|
Severance
(2)
|
|
$
|
126,000
|
|
$
|
126,000
|
|
$
|
126,000
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock (9)
|
|
|
17,733
|
|
|
17,733
|
|
|
53,200
|
|
Options
(10)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Benefits
and Perquisites (3)
|
|
|
|
|
|
|
|
|
|
|
401
(k) Match (4)
|
|
|
1,575
|
|
|
1,575
|
|
|
1,575
|
|
Health
Insurance (5)
|
|
|
13,836
|
|
|
-
|
|
|
13,836
|
|
Accrued
vacation pay (6)
|
|
|
19,385
|
|
|
19,385
|
|
|
19,385
|
|
(1)
|
For
purposes of this analysis, we assume that the named Executive Officer's
compensation is as follows: Mr. Brandofino’s current base salary is
$275,000; Mr. Heinen’s current base salary is $200,000; Mr. Laezza’s
current base salary is $244,860; and Mr. Robinson’s current base salary is
$252,000. The employment of Messrs. Trachtenberg and Dorsey terminated
in
2006. For the benefits and payments each received because of such
termination, see table of severance benefits set forth as Footnote
5 under
the Summary Compensation Table above.
|
(2)
|
Severance
is calculated based on the officer’s current base pay times the twelve
months (six for Mr. Robinson) detailed in their employment
agreements.
|
(3)
|
Payments
associated with benefits and perquisites are limited to the items
listed.
No other continuation of benefits or perquisites occurs under the
termination scenarios listed.
|
(4)
|
401(k)
Employer Match is calculated on salary paid as per Safe Harbor
provision
of the 401(k) Plan up to the maximum allowable
contribution.
|
(5)
|
Health
Insurance is calculated based on the current COBRA costs for the
officer’s
current coverage times twelve months (none for Mr. Brandofino)
detailed in
their employment agreements.
|
(6)
|
Assumes
four weeks of unused vacation days at the time of
termination.
|
(7)
|
Mr.
Brandofino will receive a bonus of the difference between $200,000
and the
amount he realizes from the exercise of his options. Because the
$0.38
closing price of our common stock on December 30, 2006 was less
that the
exercise price of all of Mr. Brandofino’s options he will realize nothing
from the exercise of his options so he will receive the $200,000
bonus.
|
(8)
|
Mr.
Brandofino and Mr. Heinen have no restricted stock as of December
31,
2006.
|
(9)
|
Represents
the value of Mr. Laezza’s and Mr. Robinson’s unvested restricted stock
whose vesting would be accelerated as a result of termination of
employment (one year) or change in control (all unvested
shares).
|
(10)
|
No
accelerated vesting of options upon
termination.
|
Internal
Revenue Code Section 162(m)
Limitation
|
Section 162(m)
of the Internal Revenue Code, enacted in 1993, generally disallows a tax
deduction to publicly held companies for compensation exceeding $1 million
per year paid to certain executive officers. The limitation applies only to
compensation that is not considered to be performance-based. The non-performance
based compensation paid to our executive officers in 2005 did not, in the case
of any officer, exceed the $1 million per year limit. The compensation
committee generally intends to limit the dollar amount of all non- performance
based compensation payable to our executive officers to no more than
$1 million per year.
Compensation
Committee Interlocks And Insider
Participation
|
Karen
Basian, Dean Hiltzik, and Michael Toporek served as members of the compensation
committee of the board of directors during 2006. No member of the compensation
committee was at any time during 2006 or at any other time our officer or
employee. No member of the compensation committee served on the board of
directors or compensation committee of any entity that has one or more executive
officers serving as a member of the board or our compensation
committee.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
We
receive financial and tax services from Schneider & Associates LLP, an
accounting firm in which Dean Hiltzik, one of our directors, is a partner.
In
the last five years, we have incurred fees of approximately $237,500 for
services received from this firm, approximately $31,500 of which was incurred
in
2006.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth information regarding the beneficial ownership of
common stock as of May 31, 2007
by each
of the following:
|
|
each
person (or group within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934) known by us to own beneficially
5% or
more of the common stock;
|
|
|
our
directors and named executive officers; and
|
|
|
all
of our directors and executive officers as a
group.
|
As
used
in this table, “beneficial ownership” means the sole or shared power to vote or
direct the voting or to dispose or direct the disposition of any security.
A
person is considered the beneficial owner of securities that can be acquired
within 60 days of May 31, 2007 through the exercise of any option, warrant
or
right. Shares of common stock subject to options, warrants or rights which
are
currently exercisable or exercisable within 60 days of May 31, 2007 are
considered outstanding for computing the ownership percentage of the person
holding such options, warrants or rights, but are not considered outstanding
for
computing the ownership percentage of any other person. The amounts and
percentages are based on 47,209,564 shares of common stock outstanding as
of May 31, 2007.
NAME
AND ADDRESS OF BENEFICIAL OWNERS (1)
|
|
NUMBER
OF SHARES OWNED (2)
|
|
PERCENTAGE OF OUTSTANDING SHARES
|
|
Executive
Officers and Directors:
|
|
|
|
|
|
|
|
Michael
Brandofino
|
|
|
878,243
|
(3)
|
|
1.8
|
%
|
Joseph
Laezza
|
|
|
330,000
|
(4)
|
|
|
*
|
Edwin
F. Heinen
|
|
|
299,666
|
(5)
|
|
|
*
|
David
W. Robinson
|
|
|
233,333
|
(6)
|
|
|
*
|
Aziz
Ahmad
|
|
|
86,000
|
(7)
|
|
|
*
|
Bami
Bastani
|
|
|
84,000
|
(8)
|
|
|
*
|
Dean
Hiltzik
|
|
|
174,000
|
(9)
|
|
|
*
|
James
Lusk
|
|
|
84,000
|
(10)
|
|
|
*
|
Richard
Reiss
|
|
|
3,578,250
|
(11)
|
|
7.5
|
%
|
Peter
Rust
|
|
|
90,500
|
(12)
|
|
|
*
|
David
Trachtenberg
|
|
|
360,000
|
|
|
|
*
|
All
directors and executive officers as a group (11 people)
|
|
|
6,197,992
|
|
|
12.6
|
%
|
5%
Owners:
|
|
|
|
|
|
|
|
North
Sound Capital LLC
20
Horseneck Lane, Greenwich, Connecticut 06830
|
|
|
13,697,324
|
(13)
|
|
23.3
|
%
|
Coghill
Capital Management LLC
One
North Wacker Drive, New York, New York 10006
|
|
|
9,789,628
|
(14)
|
|
18.6
|
%
|
Vicis
Capita
126 East 56th
Street, New York, New York 10022
|
|
|
5,656,800
|
(15)
|
|
10.7
|
%
|
(1)
Unless otherwise noted, the address of each person listed is c/o Glowpoint,
Inc., 225 Long Avenue, Hillside, New Jersey 07205.
(2)
Unless otherwise noted indicated by footnote, the named persons have sole
voting
and investment power with respect to the shares of common stock beneficially
owned.
(3)
Includes 400,000 shares of restricted stock that are subject to forfeiture
and
473,208 shares subject to stock options presently exercisable or exercisable
within 60 days.
(4)
Includes 100,000 shares of restricted stock that are subject to forfeiture
and
175,000 shares subject to stock options presently exercisable or exercisable
within 60 days.
(5)
Includes 200,000 shares of restricted stock that are subject to forfeiture
and
89,666 shares subject to stock options presently exercisable or exercisable
within 60 days.
(6)
Includes 93,333 shares of restricted stock that are subject to forfeiture
and
33,333 shares subject to stock options exercisable within 60 days.
(7)
Includes 60,000 shares of restricted stock that are subject to forfeiture
and
6,000 subject to presently exercisable stock options.
(8)
Includes 60,000 shares of restricted stock that are subject to forfeiture
and
4,000 subject to presently exercisable stock options.
(9)
Includes 94,000 shares subject to presently exercisable stock
options.
(10)
Includes 60,000 shares of restricted stock that are subject to forfeiture
and
4,000 subject to presently exercisable stock options.
(11)
Includes 303,000 shares subject to presently exercisable stock options and
82,500 shares held by a trust for the benefit of Mr. Reiss' children, of
which
he is the trustee.
(12)
Includes 40,000 shares of restricted stock that are subject to forfeiture
and
10,500 subject to presently exercisable stock options.
(13)
Ownership information is based on the Schedule 13G filed by North Sound Capital
Management, L.L.C. on April 19, 2007. Includes 2,322,361 shares issuable
upon
conversion of our Series B preferred stock, 3,497,001 shares subject to
presently exercisable warrants, and 5,638,762 shares issuable upon conversion
of
our 10% Senior Secured Convertible Notes, together with interest
notes.
(14)
Ownership information is based on the Schedule 13G filed by Coghill Capital
Management, L.L.C. on February 14, 2006. Includes 2,166,667 shares subject
to
presently exercisable warrants and 3,383,258 shares issuable upon conversion
of
our 10% Senior Secured Convertible Notes, together with interest notes.
(15)
Includes 2,273,542 shares subject to presently exercisable warrants and
3,383,258 shares issuable upon conversion of our 10% Senior Secured Convertible
Notes, together with interest notes.
Section 16(A)
Beneficial Ownership Reporting
Compliance
|
Section 16(a)
of the Securities Exchange Act of 1934, as amended, requires executive officers
and directors and persons who beneficially own more than 10% of a registered
class of our equity securities to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Executive officers,
directors and greater than 10% stockholders are required by regulations of
the
Securities and Exchange Commission to furnish us with copies of all
Section 16(a) reports they file.
Based
solely on our review of the copies of reports we received, or written
representations that no such reports were required for those persons, we
believe
that, for 2006, all statements of beneficial ownership required to be filed
with
the Securities and Exchange Commission were filed on a timely
basis.
APPROVE
THE 2007 STOCK INCENTIVE PLAN AND RESERVE 3,000,000 SHARES
The stockholders are being asked to approve the adoption of our 2007 Stock
Incentive Plan (the "2007 Plan"). The 2007 Plan was adopted by the Board
of
Directors on July 9, 2007. Under the 2007 Plan, options and other equity
rights,
including stock appreciation rights ("SARs"), and sales, bonuses and other
grants of restricted stock, or any combination of these, may be issued from
time
to time to employees, directors and consultants who contribute to the
management, growth and financial success of the Company. The purpose of the
2007
Plan is to attract and retain the best available personnel, to provide
additional incentive to our directors, officers, employees and consultants
and
to promote the success of our business. A copy of the 2007 Plan is attached
as
Appendix A to this proxy statement.
We currently maintain (i) the 2000 Stock Incentive Plan, which was adopted
when
the Company was known as Wire One Technologies (the “2000 Plan”), and (ii) four
stock option plans established by View Tech (the “VTI Plans”) and assumed by the
Company in connection with the merger of View Tech and All Communications
Corporation (“ACC”). There was also a stock option plan established by ACC (the
“ACC Plan”) that was assumed by the Company in connection with the merger of
View Tech and ACC. The ACC Plan terminated in December 2006; however, options
to
acquire 27,825 shares of common stock issued pursuant thereto continue to
be
governed by the ACC Plan.
Under the 2000 Plan, as amended, 4,400,000 shares of common stock have been
reserved for issuance thereunder. The 2000 Plan permits the grant of incentive
stock options (“ISOs”) to employees or employees of our subsidiaries.
Non-qualified stock options (“NQSOs”) may be granted to employees, directors and
consultants. The exercise price of the awards is established by the
administrator of the plan and, in the case of ISOs issued to employees who
are
less than 10% stockholders, the per share exercise price must be equal to
at
least 100% of the fair market value of a share of the common stock on the
date
of grant or not less than 110% of the fair market value of the shares in
the
case of an employee who is a 10% stockholder. The administrator of the plan
determines the terms and provisions of each award granted under the 2000
Plan,
including the vesting schedule, repurchase provisions, rights of first refusal,
forfeiture provisions, form of payment, payment contingencies, and satisfaction
of any performance criteria. The 2000 Plan may need to be amended in 2007
to
satisfy the requirements of Section 409A of the Internal Revenue Code. As
of
June 30, 2007, options to purchase approximately 438,600 shares were exercised,
options to purchase a total of 3,789,700 shares were outstanding, and 171,700
shares remained available for future issuance under the 2000 Plan.
The VTI Plans generally require the exercise price of options to be not less
than the estimated fair market value of the stock at the date of grant. Options
vest over a maximum period of four years and may be exercised in varying
amounts
over their respective terms. In accordance with the provisions of such plans,
all outstanding options become immediately exercisable upon a change of control,
as defined. The VTI Plans will terminate by 2009. Since the creation of the
2000
Plan, no options have been granted under the VTI Plans. As of June 30, 2007,
options to purchase a total of 98,225 shares of common stock were outstanding
and no shares remained available for future issuance.
The following table provides information regarding the aggregate number of
securities to be issued under all of our stock options and equity-based plans
upon exercise of outstanding options, warrants and other rights and their
weighted-average exercise prices as of December 31, 2006. The securities
issued
under equity compensation plans not approved by security holders consist
entirely of options issued with respect to individual compensation arrangements
for officers, directors and consultants.
Plan
Category
|
|
Number
of Securities to be Issued Upon Exercise of Outstanding
Options, Warrants and Rights
|
|
Weighted-Average Exercise
Price of Outstanding Options, Warrants and
Rights
|
|
Number of Securities Remaining Available
for Future Issuance Under Equity Compensation Plans (excluding
Securities Reflecting in Column (a))
|
|
Equity
compensation plans approved by security holders
|
|
|
3,690,554
|
|
$
|
1.99
|
|
|
521,890
|
|
Equity
compensation plans not approved by security holders
|
|
|
1,409,643
|
|
|
2.98
|
|
|
—
|
|
Total
|
|
|
5,100,197
|
|
$
|
2.26
|
|
|
521,890
|
|
2007
Plan Summary
The Board believes that the adoption of the 2007 Plan is necessary in order
to
have a sufficient reserve of common stock to provide option grants as an
equity
incentive to attract and retain the services of key individuals essential
to the
Company's long-term success. A summary of the terms of the 2007 Plan is provided
below. The summary, however, is not intended to be a description of all the
terms of the 2007 Plan.
Available
Shares
Subject
to
adjustment to reflect certain corporate events, such as stock dividends,
recapitalizations and business combinations, the maximum aggregate number
of
shares which may be issued pursuant to all awards is 3,000,000 shares of
common
stock. Any shares covered by an award, or portion of an award, which are
forfeited or canceled, expire or are settled in cash, shall be deemed not
to
have been issued for purposes of determining the maximum aggregate number
of
shares which may be issued under the 2007 Plan.
Administration
Under
the
2007 Plan, our Board of Directors, the Compensation Committee or such other
committee designated by the Board, administers the granting of stock and
options
to directors and officers in a way that allows these grants of stock to be
exempt from Section 16(b) of the Securities Exchange Act and determines the
provisions, terms and conditions of each award. When stock or options are
granted to other participants in the 2007 Plan, our Board, the Compensation
Committee or such other committee designated by our Board administers these
awards and determines the provisions, terms and conditions of each award.
Each
entity, whether the Board, the Compensation Committee or such other committee
designated by the Board, will be referred to herein as the “Administrator,” and
such Administrator will have complete discretion (subject to the provisions
of
the 2007 Plan) to authorize option grants under the 2007 Plan.
Eligibility
All
employees, officers, directors and consultants of the Company or any of its
affiliates are eligible to participate in the 2007 Plan, although ISOs may
be
granted only to employees. As of June 30, 2007, approximately 70 employees
and
directors would have been eligible to participate in the 2007 Plan.
Form
of Awards
The
2007 Plan
permits the grant of options and other equity rights, including SARs and
sales,
bonuses and other grants of restricted stock.
Options
may
include NQSOs as well as ISOs, which are intended to qualify for special
tax
treatment. The term of an option will be determined by the Administrator,
provided, however, that the term shall be no more than ten and five years,
respectively, for ISOs issued to employees who are less than 10% stockholders
and employees who are 10% stockholders.
The
exercise
price or purchase price, if any, of 2007 Plan awards that are not incentive
stock options will not be less than the fair market value of the stock. The
exercise price or purchase price, if any, of 2007 Plan awards that are ISOs
(a)
granted to an employee who, at the time of such grant, owns stock representing
more than 10% of the voting power of all classes of stock of the Company
or any
parent or subsidiary, shall be not less than 110% of the fair market value
of
the stock on the date of the grant; or (b) granted to any employee other
than an
employee described in clause (a) above, shall be not less than 100% of the
fair
market value of the stock on the date of the grant. The form of payment for
the
shares of common stock when options are exercised or stock is purchased under
a
2007 Plan award will be determined by the Administrator and may include cash,
check, shares of common stock, or the assignment of part of the proceeds
from
the sale of shares acquired upon exercise or purchase of the award.
Where
the
award agreement permits the exercise or purchase of an award for a period
of
time following the recipient's termination of service with us, that award
will
terminate to the extent not exercised or purchased on the last day of the
specified period or the last day of the original term of the award, whichever
occurs first.
Adjustments
to Awards; Change of Control
Subject
to
any action that may be required by the stockholders of the Company, the
Administrator may proportionately adjust the number and price of outstanding
awards, and the number of shares authorized for issuance under the 2007 Plan,
in
the event of a stock dividend, stock split, recapitalization or other corporate
action having a similar effect on the capitalization of the Company. Upon
a
Change of Control (as defined in the 2007 Plan), all outstanding options
generally vest. The Administrator retains the discretion not to accelerate
vesting in corporate transactions described in Code Section 424 in which
the
successor corporation assumes the options or substitutes its own options.
Amendment,
Suspension or Termination
Unless
terminated sooner, the 2007 Plan will terminate automatically in 2017. The
Board
has the authority to amend, suspend or terminate the 2007 Plan; however,
to the
extent necessary to comply with applicable laws, the Company will obtain
stockholder approval of any amendment to the 2007 Plan in such manner and
to
such degree as required.
Transferability
Those
who
hold ISOs granted under this plan cannot transfer these options other than
by a
will or the laws of descent upon the death of the option holder. No one is
allowed to exercise ISOs except the person to whom the options were first
issued
while that person is alive. Other awards may be transferred during the lifetime
of the grantee by gift or pursuant to a domestic relations order to members
of
the grantee's immediate family to the extent and in the manner determined
by the
Administrator.
New
Plan Benefits
Because
participation and the types of awards granted under the 2007 Plan are subject
to
the discretion of the Administrator, the benefits or amounts that will be
received by participants in the future if the 2007 Plan is approved are not
determinable at this time.
Federal
Income Tax Consequences
The
following
description of the tax consequences of options under the 2007 Plan is based
on
present Federal tax laws and does not purport to be a complete description
of
the tax consequences of the 2007 Plan.
No
tax
consequences result from the grant of options which are intended to qualify
as
ISOs within the meaning of Section 422 of the Code. If an option holder acquires
stock upon the exercise of an ISO, no income will be recognized by the option
holder for ordinary income tax purposes (although the difference between
the
option exercise price and the fair market value of the stock subject to the
option may result in alternative minimum tax liability to the option holder),
and the Company will be allowed no deduction as a result of such exercise,
provided that the following conditions are met: (a) at all times during the
period beginning on the date of grant of the ISO and ending on the day three
months before the date of such exercise, the option holder is an employee
of the
Company or a parent or subsidiary; and (b) the option holder makes no
disposition of the stock within two years from the date the ISO was granted
nor
within one year after the exercise of the ISO. The three-month period in
clause
(a) in the preceding sentence is extended to one year if the option holder
is
disabled or dies. If the holder of an ISO sells stock after compliance with
these conditions, any gain realized over the exercise price of the ISO
ordinarily will be treated as long-term capital gain, and any loss will be
treated as long-term capital loss, in the year of sale.
No
tax
consequences result from the grant of NQSOs. An option holder who exercises
an
NQSO generally will realize compensation taxable as ordinary income in an
amount
equal to the difference between the option exercise price and the fair market
value of the shares on the date of exercise, and the Company will be entitled
to
a deduction from income in the same amount in the year in which the exercise
occurred. The option holder's basis in shares received in an exercise of
an NQSO
with cash will be the fair market value of the shares on the date income
was
realized, and when the holder disposes of the shares, he or she will recognize
capital gain or loss, either long-term or short-term, depending on the holding
period of the shares.
Although
it
is anticipated that certain awards under the 2007 Plan will, pursuant to
Section
162(m) of the Code, meet the requirements to avoid a limit on deductibility,
no
assurances can be given that all awards will meet such requirements.
Specifically, awards of restricted stock will be subject to the limitation
on
deductibility imposed by Section 162(m) of the Code.
Required
Vote and Board Recommendation
An
affirmative vote of the holders of a majority of the shares of our common
stock
present at the Annual Meeting in person or by proxy and entitled to vote
is
required for approval of the 2007 Plan.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF ADOPTING THE 2007 STOCK
INCENTIVE PLAN AND RESERVING 3,000,000 SHARES OF COMMON FOR ISSUANCE THEREUNDER.
PROXIES SOLICITED BY GLOWPOINT WILL BE VOTED IN FAVOR OF THIS PROPOSAL UNLESS
STOCKHOLDERS SPECIFY IN THEIR PROXIES A CONTRARY CHOICE.
PROPOSAL
NO. 3 —
RATIFICATION
OF APPOINTMENT OF REGISTERED PUBLIC ACCOUNTING FIRM
General
The
audit
committee, composed entirely of independent, non-employee members of the
board
of directors, has appointed the firm of Amper, Politziner & Mattia, P.C.
(“Amper”) as the Registered Public Accounting Firm to audit the consolidated
financial statements of our company and its subsidiaries for fiscal year
2007
and is asking the stockholders for ratification of the appointment. Stockholder
ratification is not required by our company’s bylaws or under any other
applicable legal requirement. If the stockholders do not approve the selection
of Amper, the audit committee will reconsider the appointment.
Amper
has
been our independent
accounting firm since
March 1,
2007,
when we dismissed our former independent accounting firm, Eisner LLP (“Eisner”),
in order to bring a fresh perspective following our restructuring and
restatement efforts. Amper completed our audit for the fiscal year ended
December 31, 2006 and reviewed the quarterly periods therein. On June 6,
2007,
we filed our 2006 audited financials statements with our Annual Report on
Form
10-K and filed quarterly statements on Forms 10-Q for each quarter in 2006.
On
June 26, 2007, we filed our quarterly results on Form 10-Q for the quarter
ended
March 31, 2007.
The
reports of Eisner on the financial statements for the fiscal years ended
December 31, 2004 and December 31, 2005 did not contain an adverse opinion
or a
disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope or accounting principles. There were no disagreement with Eisner
for
the fiscal years ended 2004 and 2005 on any matter of accounting principles
or
practices, financial statement disclosure, or auditing scope or procedure,
which
disagreements, if not resolved to the satisfaction of Eisner, would have
caused
them to make reference thereto in their reports on the financial statements
for
such periods.
Eisner
had been our independent
accounting firm since June
2,
2005, when we dismissed our former independent accounting firm, BDO Seidman
LLP
(“BDO Seidman”), for geographic reasons. The
reports of BDO Seidman on the financial statements for the fiscal years ended
2003 and 2004 did not contain an adverse opinion or a disclaimer of opinion
and
were not qualified or modified as to uncertainty, audit scope or accounting
principles. There were no disagreement with BDO Seidman for the fiscal years
ended 2003 and 2004, or for the interim periods subsequent to December 31,
2004,
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if not resolved
to the satisfaction of BDO Seidman, would have caused them to make reference
thereto in their reports on the financial statements for such periods.
Each
decision to change audit firms was recommended by the audit committee and
approved by our board of directors.
As
our
Registered Public Accounting Firm, Amper would audit our consolidated financial
statements for fiscal year 2007, review the related interim quarters, and
perform audit-related services and consultation in connection with various
accounting and financial reporting matters. Amper may also perform certain
non-audit services for our company. The audit committee has determined that
the
provision of the services provided by Amper as set forth herein are compatible
with maintaining Amper’s independence and the prohibitions on performing
non-audit services set forth in the Sarbanes-Oxley Act and relevant Securities
and Exchange Commission rules.
Amper
will have a representative present at the Annual Meeting who will be available
to respond to appropriate questions. The representative will also have the
opportunity to make a statement if he or she desires to do so.
Audit
Fees
Since
its
engagement on March 1, 2007, Amper has billed us approximately $278,000 in
the
aggregate for professional services rendered by it for the audit of our annual
financial statements for the 2006 fiscal year and the review of the financial
statements included in our quarterly reports on Form 10-Q for the 2006
fiscal year.
Since
its
engagement on June 2, 2005, Eisner has billed us approximately $1,354,000
in the
aggregate for professional services rendered by it for the audit of our annual
financial statements for the 2005 fiscal year, the reviews and subsequent
restatement of the financial statements included in our quarterly reports
on
Form 10-Q for the 2005 fiscal year, and the restatement and subsequent
re-restatement of our annual financial statements for the 2004 fiscal year.
BDO
Seidman billed us $15,000 for professional services rendered by it for the
review of financial statements included in our quarterly report on
Form 10-Q for the first quarter of 2005.
Audit-Related
Fees
Amper
did
not bill us for any assurance and related services that are reasonably related
to the performance of the audit and review of our financial statements that
are
not already reported in the paragraph immediately above. Neither Eisner nor
BDO
Seidman billed us any amount in fiscal year 2006 or 2005 for assurance and
related services that are reasonably related to the performance of the audit
and
review of our financial statements that are not already reported in the
paragraph immediately above. All of these fees were billed in connection
with
our filings with the Securities and Exchange Commission, consultation with
respect to financial accounting pronouncements and attendance at audit committee
and annual stockholder meetings.
Tax
Fees
Neither
Amper, Eisner nor BDO Seidman rendered any professional services to us for
tax
compliance, tax advice and tax planning in 2006 or 2005.
All
Other Fees
Neither
Amper, Eisner nor BDO Seidman billed us in 2006 or 2005 for any services
or
products other than Audit Fees, as listed above.
In
accordance with audit committee policy and the requirements of law, all services
provided by Amper and Eisner were pre-approved by the audit committee and
all
services to be provided by Amper will be pre-approved. Pre-approval includes
audit services, audit-related services, tax services and other services.
To
avoid certain potential conflicts of interest, the law prohibits a publicly
traded company from obtaining certain non-audit services from its auditing
firm.
We obtain these services from other service providers as needed.
Required
Vote and Board Recommendation
While
approval of the Registered Public Accounting Firm proposal is not required,
the
board seeks the affirmative vote of a majority of the shares of common stock
present at the Annual Meeting in person or by proxy and entitled to vote.
THE
BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE RATIFICATION
OF THE
SELECTION OF AMPER, POLITZINER & MATTIA, P.C. AS OUR REGISTERED PUBLIC
ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31,
2007.
PROPOSAL
NO. 4 –
APPROVE
AMENDING OUR CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED
SHARES OF COMMON STOCK
“FOURTH: The
total
number of shares of all classes of stock that the Corporation is authorized
to
issue is one hundred fifty-five million (155,000,000) shares, consisting
of one
hundred fifty million (150,000,000) shares of Common Stock with a par value
of
$0.0001 per share and five million (5,000,000) shares of Preferred Stock
with a
par value of $0.0001 per share.”
Reasons
for Increasing the Authorized Shares of Common Stock
As of June 30, 2007, of the 100,000,000 shares of common stock currently
authorized, there are approximately
47,509,673 shares
of
common stock issued and outstanding and approximately an additional 44,643,120
shares reserved (or expected to be reserved in the case of the 2007 Plan)
for
issuance in connection with (i) options outstanding to acquire 4,150,746
shares
of common stock, which include (but are not limited to) options issued under
the
2000 Plan and the VTI Plans, (ii) warrants outstanding to acquire 14,329,409
shares of common stock, (iii) 3,249,955 shares of common stock issuable upon
conversion of our Series B Preferred Stock, (iv) 13,935,110 shares of common
stock issuable upon conversion of our 10% Senior Secured Convertible Notes,
together with the outstanding interest notes (collectively, the “10% Notes”),
(v) 5,977,900 shares reserved pursuant to the terms of the outstanding warrants
and the 10% Notes (which require 120% of the actual number of shares of common
stock issuable upon the exercise of such warrants and conversion of the 10%
Notes) and pursuant to the terms of our Series B Preferred Stock (which require
110% of the actual number of shares of common stock issuable upon conversion
of
such Series B Preferred Stock), and (vi) 3,000,000 shares of common stock
to be
reserved for issuance under the 2007 Plan.
We have not paid cash for interest payments due on the 10% Notes. Instead,
we
have issued additional notes and expect to continue that practice. Therefore,
the amount of common stock issuable on the conversion of 10% Notes in the
future
is expected to increase.
Increasing the number of authorized but unissued shares of common stock will
also provide us the flexibility to issue common stock as consideration in
potential future financings or acquisitions and for other corporate purposes.
The Board will have the same powers with respect to the issuance of additional
shares of common stock to be authorized as with the currently authorized
common
stock. The Board is empowered to authorize the issuance of common stock from
time to time. As noted in our 2006 Annual Report on Form 10-K, we expect
another
financing will be required in connection with renegotiating the terms and
maturity date of, or issuing new debt or equity to repay, the 10% Notes and
for
other corporate purposes, although it is impracticable to describe any such
transaction at this time. We do not expect to seek a vote of shareholders
prior
to any subsequent issuance of common stock.
For
those
reasons, the Board approved on July 19, 2007 and recommended to the
stockholders for their approval an amendment to the Certificate increasing
the
number of authorized shares of common stock from 100,000,000 to 150,000,000
in
order to cause the Company to have enough authorized and unissued shares
of
common stock to satisfy its obligations upon the exercise or conversion of
all
outstanding securities currently exercisable for, or convertible into, shares
of
common stock, for potential future financings or acquisitions, and for other
corporate purposes.
As
a
result of the increase in the number of authorized shares of common stock
affected by this amendment to the Certificate, the currently issued and
outstanding shares will not be changed. The
additional shares of common stock to be authorized for issuance will possess
rights identical to the currently authorized common stock. The holders of
common
stock are entitled to one vote for each share held of record on all matters
to
be voted on by the stockholders. All voting is on a non-cumulative basis.
The
holders of common stock do not have any preemptive rights.
In
addition, the number of shares issuable upon exercise of securities exercisable
for, or convertible into, common stock, will remain the same following the
amendment to increase the number of authorized shares of common stock.
Nevertheless,
the issuance of such additionally authorized shares of common stock would
affect
the voting rights of our current stockholders because there would be an increase
in the number of outstanding shares entitled to vote on corporate matters,
including the election of directors, if and when any such shares of common
stock
are issued in the future. If the Board determines that an issuance of shares
of
our common stock is in our best interest and our stockholders' best interests,
the issuance of additional shares would have the effect of diluting the earnings
per share or book value per share of the outstanding shares of common stock
or
the stock ownership or voting rights of a stockholder.
Increase
of Shares of Common Stock Available for Future Issuance
As a result of the increase in the authorized shares of common stock, the
number
of authorized shares which would be unissued and available for future issuance
will increase by 50,000,000 from the amount currently available for future
issuance. The increased available shares could be used for any proper corporate
purpose approved by the Board, including, but not limited to, as consideration
in future financing or acquisition transactions.
Effectiveness
of the Increase in Authorized Shares of Common Stock
The
increase in authorized shares of common stock will become effective upon
the
filing with the Secretary of State of the State of Delaware of an amendment
to
the Certificate. It is expected that such filing will take place shortly
after
we receive stockholder approval.
Required
Vote and Board Recommendation
An
affirmative vote of the holders of a majority of the outstanding shares of
our
common stock is required to approve the amendment to our Certificate to increase
the number of authorized shares of common stock.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF AMENDING OUR CERTIFICATE
OF
INCORPORATION TO AUTHORIZE AN ADDITIONAL 50,000,000 SHARES OF COMMON STOCK.
PROXIES SOLICITED BY GLOWPOINT WILL BE VOTED IN FAVOR OF THIS PROPOSAL UNLESS
STOCKHOLDERS SPECIFY IN THEIR PROXIES A CONTRARY CHOICE.
OTHER
MATTERS
The
Board
of Directors knows of no other business to be presented for action at the
Annual
Meeting. If any matters do come before the meeting on which action can properly
be taken, the persons named in the enclosed proxy will have the discretion
to
vote such matters in accordance with their judgment.
ADDITIONAL
INFORMATION
The
required financial information included our 2006 Annual
Report on Form 10-K,
which
was filed with the Securities and Exchange Commission on June 6, 2007 and
is
attached hereto, is hereby incorporated into this Proxy Statement.
Appendix
A
GLOWPOINT,
INC.
2007
STOCK INCENTIVE PLAN
1. Purposes
of the Plan. The purposes of this 2007 Stock Incentive Plan are to attract
and
retain the best available personnel, to provide additional incentive to
Employees, Directors, and Consultants, and to promote the success of the
Company’s business.
2. Definitions.
As used herein, the following terms shall have the following
definitions:
(a) “Administrator”
means the Board or the Committee.
(b) “Affiliate”
and “Associate” means these terms as defined in Rule 12b-2 promulgated under the
Exchange Act.
(c) “Applicable
Laws” means the legal requirements relating to the administration of equity
compensation plans, if any, under applicable provisions of federal securities
laws, state corporate and securities laws, the Code, the rules of any applicable
stock exchange or national market system, and the rules of any foreign
jurisdiction applicable to Awards granted to residents therein.
(d) “Award”
means the grant of an Option, SAR, or Restricted Stock under this
Plan.
(e) “Award
Agreement” means the written agreement evidencing the grant of an Award executed
by the Company and the Grantee, including any amendments thereto.
(f) “Board”
means the Board of Directors of the Company.
(g) “Cause”
means, with respect to the termination by the Company or a Related Entity
of the
Grantee’s Continuous Service, that such termination is for “Cause” as such term
is expressly defined in a then-effective written agreement between the Grantee
and the Company or Related Entity, or in the absence of such then-effective
written agreement and definition, results from, as determined by the
Administrator in its exclusive discretion, the Grantee’s: (i) refusal or failure
to act in accordance with any specific, lawful direction or order of the
Company
or Related Entity; (ii) unfitness or unavailability for service, or
unsatisfactory performance (other than as a result of Disability); (iii)
performance of any act or failure to perform any act in bad faith and to
the
detriment of the Company or Related Entity; (iv) dishonesty, intentional
misconduct, or material breach of any agreement with the Company or Related
Entity; or (v) commission of a crime involving dishonesty, breach of trust,
or
physical or emotional harm to any person or entity. At least thirty (30)
days
prior to the termination of the Grantee’s Continuous Service pursuant to (i) or
(ii) above, the Administrator shall provide the Grantee with written notice
of
the Company’s or Related Entity’s intent to terminate, the reason therefor, and
an opportunity for the Grantee to cure such defects in his or her service
to the
Company’s or Related Entity’s satisfaction. During this thirty (30) day (or
longer) period, the Grantee may not exercise any Award, purchase Shares,
or vest
in any Shares.
(h) “Change
in Control” means a change in ownership or control of the Company effected
through either of the following transactions:
(i) the
direct or indirect acquisition by any person or entity or related group of
persons or entities (other than an acquisition from or by the Company or
by a
Company-sponsored employee benefit plan or by a person or entity that directly
or indirectly controls, is controlled by, or is under common control with,
the
Company) of beneficial ownership (within the meaning of Rule 13d-3 of the
Exchange Act) of securities possessing more than fifty (50%) percent of the
total combined voting power of the Company’s outstanding securities pursuant to
a tender or exchange offer made directly to the Company’s shareholders for which
a majority of the Continuing Directors who are not Affiliates or Associates
of
the offeror do not recommend the then current shareholders accept;
or
(ii) a
change
in the composition of the Board over thirty-six (36) months or less such
that a
majority of the Board members (rounded up to the next whole number) ceases,
by
reason of one or more contested elections for Board membership, to be composed
of individuals who are Continuing Directors.
(i) “Code”
means the Internal Revenue Code of 1986, as amended.
(j) “Committee”
means the Compensation Committee of the Board or such other committee designated
by the Board.
(k) “Common
Stock” means the common stock of the Company.
(l) “Company”
means Glowpoint, Inc., a Delaware corporation.
(m) “Consultant”
means any person or entity (other than an Employee or Director, solely with
respect to rendering services in such person’s capacity as a Director) who is
engaged by the Company or Related Entity to render consulting or advisory
services to the Company or Related Entity.
(n) “Continuing
Directors” means members of the Board who either (i) have been Board members
continuously for at least thirty-six (36) months; or (ii) have been Board
members for less than thirty-six (36) months and were elected or nominated
for
election as Board members by at least a majority of the Board members described
in clause (i) who were still in office at the time such election or nomination
was approved by the Board.
(o) “Continuous
Service” means that the provision of services to the Company or Related Entity
in any capacity of Employee, Director, or Consultant, is not interrupted
or
terminated. Continuous Service shall not be considered interrupted for (i)
any
approved leave of absence; (ii) transfers among the Company, any Related
Entity,
or any successor, in any capacity of Employee, Director, or Consultant; or
(iii)
any change in status as long as the individual remains in the service of
the
Company or Related Entity as an Employee, Director, or Consultant (except
as
otherwise provided in the Award Agreement). An approved leave of absence shall
include sick leave, military leave, or any other authorized personal leave.
For
purposes of each Incentive Stock Option granted hereunder, if such leave
exceeds
ninety (90) days, and reemployment upon expiration of such leave is not
guaranteed by statute or contract, then the Incentive Stock Option shall
be
treated as a Non-Qualified Stock Option on the day three (3) months and one
(1)
day following the expiration of such ninety (90) day period.
(p) “Corporate
Transaction” means any one or more of the following transactions:
(i) a
merger
or consolidation in which the Company is not the surviving entity, except
for a
transaction the principal purpose of which is to change the state in which
the
Company is incorporated;
(ii) the
sale,
transfer, or other disposition of all or substantially all of the assets
of the
Company (including without limitation the capital stock of the Company’s
Subsidiaries);
(iii) approval
by the Company’s shareholders of any plan or proposal for the complete
liquidation or dissolution of the Company;
(iv) any
reverse merger in which the Company is the surviving entity but in which
securities possessing more than fifty (50%) percent of the total combined
voting
power of the Company’s outstanding securities are transferred to a person or
entity or persons or entities different from those that held such securities
immediately prior to such merger; or
(v) acquisition
by any person or entity or related group of persons or entities (other than
the
Company or a Company-sponsored employee benefit plan) of beneficial ownership
(within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing
more than fifty (50%) percent of the total combined voting power of the
Company’s outstanding securities (whether or not in a transaction also
constituting a Change in Control).
(q) “Director”
means a member of the Board or the board of directors of any Related
Entity.
(r) “Disability”
means the Grantee meets (i) or (ii): (i) the Grantee is unable to engage
in any
substantial gainful activity by reason of any medically determinable physical
or
mental impairment that can be expected to result in death or can be expected
to
last for a continuous period of not less than twelve (12) months; or (ii)
the
Grantee is, by reason of any medically determinable physical or mental
impairment that can be expected to result in death or to last for a continuous
period of not less than twelve (12) months, receiving income replacement
benefits for a period of not less than three months under an accident and
heath
plan covering the Company’s or Related Entity’s employees.
(s) “Employee”
means any person, including an Officer or Director, who is a common law employee
of the Company or Related Entity. The payment of a director’s fee by the Company
or Related Entity shall not be sufficient to constitute employment by the
Company or Related Entity.
(t) “Exchange
Act” means the Securities Exchange Act of 1934, as amended.
(u) “Fair
Market Value” means, as of any date, the value of Common Stock determined as
follows:
(i) When
there exists a public market for the Common Stock, the Fair Market Value
shall
be (A) the closing price for a Share for the market trading day on the date
of
grant (or, if no closing price was reported on that date, on the last trading
date on which a closing price was reported) on the stock exchange determined
by
the Administrator to be the primary market for the Common Stock or the Nasdaq
National Market, whichever is applicable; or (B) if the Common Stock is not
traded on any such exchange or national market system, the average of the
closing bid and asked prices of a Share on the Nasdaq Small Cap Market for
the
day prior to the date of the determination (or, if no such prices were reported
on that date, on the last date on which such prices were reported), in each
case, as reported in The
Wall Street Journal
or such
other source that the Administrator determines reliable in its exclusive
discretion; or
(ii) If,
in
the opinion of the Administrator in its exclusive discretion, subparagraph
(i)
is not applicable or reasonable, the Fair Market Value of a Share, as determined
by an independent appraisal that satisfies the requirements of Code Section
401(a)(28)(C) and the regulations thereunder, as of a date that is no more
than
twelve (12) months before the transaction to which the valuation is
applied.
(v) “Good
Reason” means the voluntary separation from service by a Grantee after a
Corporate Transaction, Change in Control, or a Related Entity Disposition
when
the following conditions are satisfied:
(i) the
separation from service occurs no later than two (2) years following the
initial
existence (which may begin prior to the Corporate Transaction, Change in
Control, or Related Entity Disposition) of one or more of the following
conditions arising without the Grantee’s consent:
(A) A
material diminution in the Grantee’s base compensation;
(B) A
material diminution in the Grantee’s authority, duties, or
responsibilities;
(C) A
material diminution in the authority, duties, or responsibilities of the
supervisor to whom the Grantee is required to report, including a requirement
that the Grantee report to a corporate officer or employee instead of reporting
directly to the Company’s board of directors;
(D) A
material diminution in the budget over which the Grantee retains
authority;
(E) A
material change in the geographical location at which the Grantee performs
services; or
(F) Any
other
action or inaction that constitutes a material breach by the Company or Related
Entity of the employment agreement or other agreement under which the Grantee
provides services.
(ii) The
Grantee must provide written notice to the Board of the existence of the
condition described in subparagraph (i) above within ninety (90) days of
the
initial existence of the condition, and upon the Board’s receipt of the written
notice the Company or Related Entity has thirty (30) days to cure the
condition.
(w) “Grantee”
means an Employee, Director, or Consultant who receives an Award pursuant
to an
Award Agreement.
(x) “Immediate
Family” means any child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including
adoptive relationships, any person sharing the Grantee’s household (other than a
tenant or employee), a trust in which these persons have more than fifty
(50%)
percent of the beneficial interest, a foundation in which these persons (or
the
Grantee) control the management of assets, and any other entity in which
these
persons (or the Grantee) own more than fifty (50%) percent of the voting
interests.
(y) “Incentive
Stock Option” means an Option intended to qualify as an incentive stock option
under Code Section 422.
(z) “Non-Qualified
Stock Option” means an Option not intended to qualify as an Incentive Stock
Option.
(aa) “Officer”
means a person who is an officer of the Company or Related Entity under Section
16 of the Exchange Act and the rules and regulations promulgated
thereunder.
(bb) “Option”
means an option to purchase Shares pursuant to an Award Agreement.
(cc) “Parent”
means a parent corporation” whether now or hereafter existing, under Code
Section 424(e).
(dd) “Plan”
means this 2007 Stock Incentive Plan as it may be amended.
(ee) “Related
Entity” means any Parent or Subsidiary. It also means any corporation or other
entity in a chain of corporations or other entities in which each corporation
or
other entity has a controlling interest in another corporation or other entity
in the chain, ending with the corporation or other entity that has a controlling
interest in the corporation or other entity for which the Employee, Director,
or
Consultant provides services on the date of grant of the Option, SAR, or
Restricted Stock. In the case of a corporation, a controlling interest means
ownership of stock possessing at least fifty (50%) percent of total combined
voting power of all classes of stock entitled to vote, or at least fifty
(50%)
percent of the total value of shares of all classes of stock. In the case
of a
partnership or limited liability company, a controlling interest means ownership
of at least fifty (50%) percent of the profits interest or capital interest
of
the partnership or limited liability company.
(ff) “Related
Entity Disposition” means the sale, distribution, or other disposition by the
Company, Parent, or a Subsidiary of all or substantially all of the interests
of
the Company, Parent, or a Subsidiary in any Related Entity effected by a
sale,
merger, consolidation, or other transaction involving that Related Entity,
or
the sale of all or substantially all of the assets of that Related Entity,
other
than any Related Entity Disposition to the Company, Parent, or a
Subsidiary.
(gg) “Restricted
Stock” means Shares issued to a Grantee for such consideration, if any, and
subject to such restrictions on transfer, rights of first refusal, repurchase
provisions, forfeiture provisions, and other terms and conditions as determined
by the Administrator.
(hh) “Rule
16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successor
thereto.
(ii) “SAR”
means a stock appreciation right entitling the Grantee to Shares or cash
compensation, as set forth in the Award Agreement, measured by appreciation
in
the Fair Market Value of the underlying Shares from the date of
grant.
(jj) “Section
424 Corporate Transaction” means (i) a corporate merger, consolidation,
acquisition of property or stock, separation, reorganization, or liquidation;
(ii) a distribution (excluding an ordinary dividend or a stock split or stock
dividend described in Treas. Reg. §1.424-1(e)(4)(v)), or change in the terms or
number of outstanding shares of a corporation; or (iii) such other corporate
events prescribed by the Commissioner of the Internal Revenue Service in
published guidance.
(kk) “Share”
means a share of the Common Stock.
(ll) “Subsidiary”
means a subsidiary corporation, whether now or hereafter existing, under
Code
Section 424(f).
3. Stock
Subject to the Plan.
(a) Subject
to the
provisions of Section 10, the
maximum aggregate number of Shares that may be issued pursuant to all Awards
is
3,000,000 Shares of Common Stock. The maximum number of aggregate Shares
that
may be issued pursuant to
Incentive Stock Options
is
3,000,000 Shares
of
Common Stock.
The
Shares to be issued pursuant to Awards may be authorized, but unissued,
or
reacquired Common Stock.
(b) Any
Shares covered by an Award (or portion of an Award) that is forfeited or
cancelled, expires or is settled in cash, shall be deemed not to have been
issued for purposes of determining the maximum aggregate number of Shares
that
may be issued under the Plan. Shares that actually have been issued under
the
Plan pursuant to an Award shall not be returned to the Plan and shall not
become
available for future issuance under the Plan, except that if unvested Shares
are
forfeited, or repurchased by the Company, such Shares shall become available
for
future grant under the Plan.
4. Administration
of the Plan.
(a) Plan
Administrator.
(i) Administration
with Respect to Directors and Officers. With respect to grants of Awards
to
Directors or Employees who are also Officers or Directors, the Plan shall
be
administered by (A) the Board; or (B) a Committee designated by the Board,
which
Committee shall be constituted in such a manner as to satisfy Applicable
Laws
and to permit such grants and related transactions under the Plan to be exempt
from Section 16(b) of the Exchange Act in accordance with Rule 16b-3. Once
appointed, such Committee shall continue to serve in its designated capacity
until otherwise directed by the Board.
(ii) Administration
With Respect to Consultants and Other Employees. For grants of Awards to
Employees or Consultants who are neither Directors nor Officers, the Plan
shall
be administered by (A) the Board; or (B) a Committee designated by the Board,
which Committee shall be constituted in such a manner as to satisfy Applicable
Laws. Once appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. The Board may authorize one
or
more Officers to grant such Awards and may limit such authority as the Board
determines in its exclusive discretion.
(b) Powers
of
the Administrator. Subject to Applicable Laws and the provisions of the Plan
(including any other powers given to the Administrator hereunder), and except
as
otherwise provided by the Board, the Administrator shall have the exclusive
authority and discretion:
(i) to
select
the Employees, Directors and Consultants to whom Awards may be granted from
time
to time hereunder;
(ii) to
determine whether and to what extent Awards are granted hereunder;
(iii) to
determine the number of Shares and the amount of other consideration to be
covered by each Award granted hereunder;
(iv) to
approve forms of Award Agreements;
(v) to
determine the terms and conditions of any Award granted hereunder;
(vi) to
amend
the terms of any outstanding Award, provided that any amendment that would
adversely affect the Grantee’s rights under an outstanding Award shall not be
made without the Grantee’s written consent;
(vii) to
construe and interpret the terms of the Plan and Awards, including without
limitation, any notice of Award or Award Agreement;
(viii) to
establish additional terms, conditions, rules, and procedures to accommodate
the
rules or laws of applicable foreign jurisdictions and to afford Grantees
favorable treatment under such laws; provided, however, that no Award shall
be
granted under any such additional terms, conditions, rules, and procedures
with
terms or conditions that are inconsistent with the Plan’s provisions;
and
(ix) to
take
such other action, not inconsistent with the terms of the Plan, as the
Administrator determines appropriate in its exclusive discretion.
5. Eligibility.
Awards other than Incentive Stock Options may be granted to Employees,
Directors, and Consultants. Incentive Stock Options may be granted only to
Employees of the Company, Parent, or a Subsidiary. An Employee, Director,
or
Consultant who has been granted an Award may, if otherwise eligible, be granted
additional Awards. Awards may be granted to such Employees, Directors, or
Consultants who are residing in foreign jurisdictions as the Administrator
determines in its exclusive discretion.
6. Terms
and
Conditions of Awards.
(a) Type
of
Awards. The Administrator is authorized to make an Award to an Employee,
Director, or Consultant that is not inconsistent with the terms of the Plan
and
that consist of an Option, SAR, or Restricted Stock. The Option or SAR shall
have an exercise price equal to the Fair Market Value of the Shares underlying
the Option or SAR on the date of grant of the Option or SAR.
(b) Designation
of Award. Each Award shall be designated in the Award Agreement. In the case
of
an Option, the Option shall be designated as either an Incentive Stock Option
or
a Non-Qualified Stock Option. Notwithstanding such designation, to the extent
that the aggregate Fair Market Value of Shares subject to Options designated
as
Incentive Stock Options that become exercisable for the first time by a Grantee
during any calendar year (under all plans of the Company or Parent or any
Subsidiary) exceeds $100,000, such excess Options, to the extent of the Shares
covered thereby in excess of the foregoing limitation, shall be treated as
Non-Qualified Stock Options. For this purpose, Incentive Stock Options shall
be
taken into account in the order in which they were granted, and the Fair
Market
Value of the Shares shall be determined as of the date the Option with respect
to such Shares was granted.
(c) Conditions
of Award. Subject to the Plan’s terms, the Administrator shall, in its exclusive
discretion, determine the provisions, terms, and conditions of each Award,
including but not limited to the Award’s vesting schedule, repurchase
provisions, rights of first refusal, forfeiture provisions, form of payment
by
the Grantee (cash, Shares, or other consideration) upon settlement of the
Award,
payment contingencies, and satisfaction of any performance criteria. The
performance criteria established may be based on any one of, or combination
of,
increase in share price, earnings per share, total shareholder return, return
on
equity, return on assets, return on investment, net operating income, cash
flow,
revenue, economic value added, personal management objectives, or other measure
of performance selected by the Administrator. Partial achievement of the
specified criteria may result in a payment or vesting corresponding to the
degree of achievement as specified in the Award Agreement.
(d) For
any
Award that contains a repurchase obligation for Shares (other than a right
of
first refusal), or a put or call right that is not a lapse restriction under
Treas. Reg. § 1.83-3(i), the purchase price shall be the Fair Market Value of
the Shares (disregarding lapse restrictions under Treas. Reg. §1.83-3(i)) at the
time of repurchase.
(e) Acquisitions
and Other Transactions. The Administrator may issue Awards in settlement,
assumption, or substitution for, outstanding Awards or obligations to grant
future Awards in connection with the Company or a Related Entity acquiring
another entity, an interest in another entity, or an additional interest
in a
Related Entity, whether by merger, stock purchase, asset purchase, or other
form
of transaction.
(f) Early
Exercise. The Award Agreement may include a provision whereby the Grantee
may,
while an Employee, Director, or Consultant, exercise any part or all of an
Option or SAR prior to full vesting. Any unvested Shares received pursuant
to
such exercise may be subject to a repurchase right in favor of the Company
or a
Related Entity, or to any other restriction the Administrator determines
appropriate in its exclusive discretion.
(g) Term
of
Award. The term of each Award shall be the term stated in the Award Agreement;
provided, however, that the term of an Incentive Stock Option shall not exceed
ten (10) years from the date of grant thereof. In the case of an Incentive
Stock
Option granted to a Grantee who, at the time the Option is granted, owns
stock
representing more than ten (10%) percent of the voting power of all classes
of
stock of the Company or Parent or any Subsidiary, the term of the Incentive
Stock Option shall be five (5) years from the date of grant thereof or such
shorter term as provided in the Award Agreement.
(h) Transferability
of Awards. Incentive Stock Options may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will
or by
the laws of descent or distribution, and may be exercised, during the Grantee’s
lifetime, only by the Grantee; provided, however, that the Grantee may designate
a beneficiary of an Incentive Stock Option on the Grantee’s death on a
beneficiary designation form provided by the Administrator. An Award Agreement
may provide that other Awards may be transferred by gift or through a domestic
relations order to members of the Grantee’s Immediate Family, or in the manner
and to the extent determined by the Administrator in its exclusive
discretion.
(i) Grant
of
Restricted Stock. Upon an Award of Restricted Stock, the Company shall issue
in
the Grantee’s name and deliver to the Grantee a certificate or certificates for
the Shares. The Shares represented by the certificate or certificates shall
be
subject to the restrictions in the Award Agreement. Once the Restricted Stock
is
no longer subject to the restrictions, the Company shall issue a new certificate
for the Shares without restrictions, and the Grantee shall tender the
certificate for the Shares subject to restrictions for cancellation by the
Company.
7. Award
Exercise or Purchase Price, Consideration, and Taxes.
(a) Exercise
or Purchase Price. The exercise or purchase price, if any, for an Award shall
be
as follows:
(i) In
the
case of an Incentive Stock Option:
(A) granted
to an Employee who, at the time of the grant of such Incentive Stock Option
owns
stock representing more than ten (10%) percent of the voting power of all
classes of stock of the Company or Parent or any Subsidiary, the per Share
exercise price shall not be less than one hundred and ten (110%) percent
of the
Fair Market Value per Share on the date of grant; and
(B) granted
to any Employee other than an Employee described in the preceding paragraph,
the
per Share exercise price shall not be less than one hundred (100%) percent
of
the Fair Market Value per Share on the date of grant.
(ii) In
the
case of a Non-Qualified Stock Option, the per Share exercise price shall
not be
less than one hundred (100%) percent of the Fair Market Value per Share on
the
date of grant.
(iii) In
the
case of an
SAR,
the per Share exercise price shall not be less than one hundred (100%)
percent
of the Fair Market Value per Share on the date of grant.
(iv) Notwithstanding
the foregoing provisions of this Section 7(a), in the case of an Award issued
pursuant to Section 6(e), the exercise or purchase price for the Award shall
be
determined in accordance with the principles of Code Sections 409A and
424(a).
(b) Consideration.
Subject to Applicable Laws, the consideration to be paid for the Shares to
be
issued upon exercise or purchase of an Award, including without limitation
the
method of payment, shall be determined by the Administrator in its exclusive
discretion (and, in the case of an Incentive Stock Option, shall be determined
at the time of grant). In addition to any other types of consideration the
Administrator may determine, the Administrator is authorized to accept as
consideration for Shares the following, provided that the portion of the
consideration equal to the Shares’ par value must be paid in cash or other legal
consideration permitted by the Delaware General Corporation Law:
(i) cash;
(ii) check;
(iii) surrender
of Shares or delivery of a properly executed form of attestation of ownership
of
Shares as the Administrator may require in its exclusive discretion (including
withholding of Shares otherwise deliverable upon exercise of the Award) that
have a Fair Market Value on the date of surrender or attestation equal to
the
aggregate exercise price of the Shares as to which the Award is exercised
(but
only to the extent that such exercise of the Award would not result in an
accounting compensation charge with respect to the Shares used to pay the
exercise price unless otherwise determined by the Administrator in its exclusive
discretion);
(iv) with
respect to Options, payment through a broker-dealer sale and remittance
procedure pursuant to which the Grantee (A) shall provide written instructions
to a Company-designated brokerage firm to effect the immediate sale of some
or
all of the purchased Shares and remit to the Company, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased Shares; and (B) shall provide written
directions to the Company to deliver the certificates for the purchased Shares
directly to such brokerage firm to complete the sale transaction;
or
(v) any
combination of the foregoing methods of payment.
(c) Taxes.
No
Shares shall be delivered to any Grantee or other person or entity until
such
Grantee or other person or entity has made arrangements acceptable to the
Administrator in its exclusive discretion for the satisfaction of foreign,
federal, state, and local income, employment, and excise tax withholding
obligations, including without limitation obligations incident to the receipt
of
Shares or the disqualifying disposition of Shares received on exercise of
an
Incentive Stock Option. Upon exercise of an Award, the Company shall withhold
or
collect from Grantee an amount sufficient to satisfy such tax
obligations.
8. Exercise
of Award.
(a) Procedure
for Exercise; Rights as a Stockholder.
(i) An
Option
or SAR shall be exercisable at such times and under such conditions as set
forth
under the terms of the Plan and specified in the Award Agreement.
(ii) An
Option
or SAR shall be deemed to be exercised when written notice of such exercise
has
been given to the Company in accordance with the terms of the Award by
the
person or entity entitled to exercise the Award and full payment is made
for the
Shares with respect to which the Award is exercised, including, to the
extent
selected, use of the broker-dealer sale and remittance procedure to pay
the
purchase price as provided in Section 7(b)(iv). Until the issuance (as
evidenced
by the appropriate entry on the Company’s books or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares,
no right
to vote or receive dividends or any other rights as a shareholder shall
exist
with respect to Shares subject to an Option or SAR, notwithstanding the
exercise
of an Option or SAR. The Company shall issue (or cause to be issued) such
stock
certificate promptly upon exercise of the Option or SAR. In
addition, upon the exercise of an Option or SAR, the Grantee shall not
be
entitled to all or part of the dividends declared and paid on the Shares
underlying the Option or SAR between the date of grant and the date of
exercise.
For
Restricted Stock, until the time all restrictions are removed or satisfied,
the
Grantee shall not be entitled to all or part of the dividends declared
and paid
on the Shares between the date of grant and the date of
vesting.
(b) Exercise
of Award Following Termination of Continuous Service.
(i) An
Award
may not be exercised after the termination date of such Award set forth in
the
Award Agreement, and may be exercised following the termination of a Grantee’s
Continuous Service only as provided in the Award Agreement.
(ii) When
the
Award Agreement permits a Grantee to exercise an Award following the termination
of the Grantee’s Continuous Service for a specified period, the Award shall
terminate to the extent not exercised on the last day of the specified period
or
the last day of the original term of the Award, whichever occurs
first.
(iii) Any
Award
designated as an Incentive Stock Option, to the extent not exercised within
the
time permitted by law for the exercise of Incentive Stock Options following
the
termination of a Grantee’s Continuous Service, shall convert automatically to a
Non-Qualified Stock Option and thereafter shall be exercisable as such to
the
extent exercisable by its terms for the period specified in the Award
Agreement.
9. Conditions
Upon Issuance of Shares.
(a) Shares
shall not be issued pursuant to the exercise of an Award unless the exercise
of
such Award and the issuance and delivery of such Shares pursuant thereto
shall
comply with all Applicable Laws, and shall be further subject to the approval
of
counsel for the Company with respect to such compliance.
(b) As
a
condition to the exercise of an Award, the Company may require the person
or
entity exercising such Award to represent and warrant at the time of any
such
exercise that the Shares are being purchased only for investment and without
any
present intention to sell or distribute such Shares if, in the opinion of
counsel for the Company, such a representation is required by Applicable
Laws.
10. Adjustments
Upon Changes in Capitalization. Subject to any required action by the Company’s
shareholders, the number of Shares covered by each outstanding Award, and
the
number of Shares that have been authorized for issuance under the Plan but
as to
which no Awards have yet been granted or that have been returned to the Plan,
the exercise or purchase price of each such outstanding Award, as well as
any
other terms that the Administrator determines in its exclusive discretion
require adjustment, shall be proportionately adjusted for (a) any increase
or
decrease in the number of issued Shares resulting from a stock split, reverse
stock split, stock dividend, combination, or reclassification of the Shares,
or
similar event affecting the Shares; (b) any other increase or decrease in
the
number of issued Shares effected without receipt of consideration by the
Company; or (c) as the Administrator determines in its exclusive discretion,
any
other transaction with respect to Common Stock to which Code Section 424(a)
applies or any similar transaction; provided, however, that conversion of
any
convertible securities of the Company shall not be deemed to have been effected
without receipt of consideration. Such adjustment shall be made by the
Administrator in its exclusive discretion, and its determination shall be
final,
binding, and conclusive. Except as the Administrator determines in its exclusive
discretion, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and
no
adjustment by reason hereof shall be made with respect to, the number or
price
of Shares subject to an Award.
11. Corporate
Transactions/Changes in Control/Related Entity Dispositions. Except as otherwise
provided in an Award Agreement:
(a) On
the
specified effective date of a Corporate Transaction or Change in Control,
each
Award that is at the time outstanding automatically shall become fully vested
and exercisable and be released from any restrictions on transfer (other
than
transfer restrictions applicable to Incentive Stock Options) and repurchase
or
forfeiture rights, immediately prior to the specified effective date of such
Corporate Transaction or Change in Control, for all the Shares at the time
represented by such Award. Notwithstanding the foregoing provisions, the
Administrator may, in its exclusive discretion, provide as part of a Section
424
Corporate Transaction that any one or more of the foregoing provisions shall
not
apply.
(b) On
the
specified effective date of a Related Entity Disposition, for each Grantee
who
on such specified effective date is engaged primarily in service to the Related
Entity that is the subject of the Related Entity Disposition, each Award
that is
at the time outstanding automatically shall become fully vested and exercisable
and be released from any restrictions on transfer (other than transfer
restrictions applicable to Incentive Stock Options) and repurchase and
forfeiture rights, immediately prior to the specified effective date of such
Related Entity Disposition, for all the shares at the time represented by
such
Award. Notwithstanding the foregoing provisions, the Administrator may, in
its
exclusive discretion, provide as part of a Section 424 Corporate Transaction
that any one or more of the foregoing provisions shall not apply.
(c) The
Administrator may provide in any Award, Award Agreement, or as part of a
Section
424 Corporate Transaction, that if the requirements of Treasury Regulation
§1.424-1 (without regard to the requirement described in Treas. Reg.
§1.424-1(a)(2) that an eligible corporation be the employer of the optionee)
would be met if the stock right were an Incentive Stock Option, the substitution
of a new stock right pursuant to a Section 424 Corporate Transaction for
an
outstanding stock right or the assumption of an outstanding stock right pursuant
to a Section 424 Corporate Transaction shall not be treated as the grant
of a
new stock right or a change in the form of payment. The requirement of Treasury
Regulation §1.424-1(a)(5)(iii) is deemed satisfied if the ratio of the exercise
price to the Fair Market Value of the shares immediately after the substitution
or assumption is not greater than the ratio of the exercise price to the
Fair
Market Value of the Shares immediately before the substitution or assumption.
In
the case of a transaction described in Code Section 355 in which the stock
of
the distributing corporation and the stock distributed in the transaction
are
both readily tradable on an established securities market immediately after
the
transaction, the requirements of Treasury Regulation §1.424-1(a)(5) may be
satisfied by:
(i) using
the
last sale before or the first sale after the specified date as of which such
valuation is being made, the closing price on the last trading day before
or the
trading day of a specified date, the arithmetic mean of the high and low
prices
on the last trading day before or the trading day of such specified date,
or any
other reasonable method using actual transactions in such stock as reported
by
such market on a specified date, for the stock of the distributing corporation
and the stock distributed in the transaction, provided the specified date
is
designated before such specified date, and such specified date is not more
than
sixty (60) days after the transaction;
(ii) using
the
arithmetic mean of such market prices on trading days during a specified
period
designated before the beginning of such specified period, when such specified
period is not longer than thirty (30) days and ends no later than sixty (60)
days after the transaction; or
(iii) using
an
average of such prices during such prespecified period weighted based on
the
volume of trading of such stock on each trading day during such prespecified
period.
12. Effective
Date and Term of Plan. The Plan shall become effective upon the earlier to
occur
of its adoption by the Board or its approval by Company’s shareholders. It shall
continue in effect for a term of ten (10) years unless sooner terminated.
Subject to Section 17 and Applicable Laws, Awards may be granted under the
Plan
upon its becoming effective.
13. Amendment,
Suspension, or Termination of the Plan.
(a) The
Board
may at any time amend, suspend, or terminate the Plan. To the extent necessary
to comply with Applicable Laws, the Company shall obtain shareholder approval
of
any Plan amendment in such a manner and to such a degree necessary.
(b) No
Award
may be granted during any suspension of the Plan or after termination of
the
Plan.
(c) Any
amendment, suspension, or termination of the Plan (including termination
of the
Plan under Section 12) shall not affect Awards already granted, and such
Awards
shall remain in full force and effect as if the Plan had not been amended,
suspended, or terminated.
14. Reservation
of Shares.
(a) The
Company, during the term of the Plan, shall at all times reserve and keep
available such number of Shares as are sufficient to satisfy the Plan’s
requirements.
(b) The
inability of the Company to obtain approval from any regulatory body having
jurisdiction, which approval is determined by the Company’s counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve
the Company of any liability for failure to issue or sell Shares as to which
such the requisite approval was not obtained.
15. No
Effect
on Terms of Employment/Consulting Relationship. The Plan and any Award Agreement
shall not confer upon any Grantee any right with respect to the Grantee’s
Continuous Service, nor shall it interfere in any way with his or her right
or
the Company’s or Related Entity’s right to terminate the Grantee’s Continuous
Service at any time, with or without cause.
16. No
Effect
on Retirement and Other Benefit Plans. Except as specifically provided in
a
governing document of another plan or arrangement, Awards shall not be
considered compensation for purposes of computing benefits or contributions
under any tax-qualified or nonqualified employee benefit plan, tax-qualified
or
nonqualified deferred compensation plan, bonus plan, or incentive plan (the
“Other Plans”) of the Company or Related Entity, and shall not affect the
amounts of any benefits or contributions under any Other Plans subsequently
established. The Plan is not an employee benefit plan under the Employee
Retirement Income Security Act of 1974, as amended.
17.
Shareholder Approval. The grant of Incentive Stock Options shall be subject
to
approval by the Company’s shareholders twelve (12) months before or after the
date the Plan is adopted, excluding Incentive Stock Options issued in
substitution for outstanding Incentive Stock Options under Code Section
424(a).
Shareholder approval shall be obtained as required under the Company’s
certificate of incorporation and bylaws, and Applicable Laws. The Administrator
may grant Incentive Stock Options prior to approval by the shareholders,
but
until such approval is obtained, no Incentive Stock Option shall be exercisable.
If shareholder approval is not obtained within the twelve (12) month period
provided above, all Incentive Stock Options previously granted shall be
exercisable as Non-Qualified Stock Options.
18. Code
Section 409A. Notwithstanding any other provision of this Plan, the
Administrator shall construe and administer this Plan and all Award Agreements,
and exercise all authority and discretion under this Plan, to satisfy the
requirements of Code Section 409A and the regulations thereunder,
or any
exemption thereto.