UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. _______)
[X] )
Filed by registrant
[ ] Registrant x
Filed by a partyParty other than the registrant
Registrant ¨
Check the appropriate box:
[X]
x Preliminary proxy statement
[ ] Proxy Statement
¨Confidential, Forfor Use of the Commission Only (as permitted by Rule 14a-6(e)(2)
[ ])
¨ Definitive proxy statement
[ ]Proxy Statement
¨ Definitive additional materials
[ ]Additional Materials
¨ Soliciting material pursuant toMaterial Under Rule 14a-12
CLARUS CORPORATION
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(Name of Registrant as Specified in itsIn Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Thanother than the Registrant)
Payment of filing fee (Check the appropriate box):
[X]
x No fee required.
[ ]
¨ Fee computed on table below per Exchange Act Rules 14a-6(i)(1)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was
determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ]
¨ Fee paid previously with preliminary materials:
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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.
o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
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Previously Paid:
2) Form, scheduleSchedule or registration statementRegistration Statement No.:
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3) Filing party:
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Party:
4) Date filed:
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Filed:
CLARUS CORPORATION
One Pickwick Plaza
Greenwich, Connecticut 06830
April 30, 2003
2084 East 3900 South
Salt Lake City, UT 84124
June __, 2010
To Our Stockholders:
On behalf of the Board of Directors of Clarus Corporation, I cordially invite you to attend the Annual Meeting of Stockholders to be held on June 19,
2003,August 5, 2010, at 10:8:00 A.M.a.m., New YorkMountain Daylight Time, at our principal executive offices located at 2084 East 3900 South, Salt Lake City, time, at The Metropolitan Club, One East 60th
Street, New York, NY 10022.
UT 84124.
The accompanying Notice of Meeting and Proxy Statement cover the details of the matters to be presented.
A copy of the 20022009 Annual Report is included in this mailing.
REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE ANNUAL MEETING, I URGE THAT YOU PARTICIPATETO VOTE BY COMPLETING AND RETURNING YOUR PROXY CARD AS SOON AS POSSIBLE. YOUR VOTE IS IMPORTANT.IMPORTANT AND WILL BE GREATLY APPRECIATED. RETURNING YOUR PROXY CARD WILL ENSURE THAT YOUR VOTE IS COUNTED IF YOU LATER DECIDE NOT TO ATTEND THE ANNUAL MEETING.
Cordially,
CLARUS CORPORATION
Warren B. Kanders
Executive Chairman of the
Board of Directors
CLARUS CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 19, 2003
Notice of Annual Meeting of Stockholders
To Be Held on August 5, 2010
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of the
Stockholders, and any adjournments or postponements thereof (the “Meeting”), of Clarus Corporation, which will be held on June 19, 2003August 5, 2010, at 10:8:00 A.M., New Yorka.m. Mountain Daylight Time, at our principal executive offices located at 2084 East 3900 South, Salt Lake City, time, at The Metropolitan Club, One East 60th Street, New York, NY 10022,UT 84124, for the following purposes:
1. To elect six membersthe seven nominees named in the accompanying Proxy Statement to serve on the Board of Directors until the next annual meetingAnnual Meeting of stockholdersStockholders and until their successors are duly elected and qualified (Proposal 1);
2. To consider and vote upon a proposalapprove an amendment to amend ourthe Company’s Amended and Restated Certificate of Incorporation, as amended (the “Certificate of Incorporation”), to restrict certain
transfers of our securities in orderchange the Company’s name from Clarus Corporation to help assure the preservation of
our tax net operating loss carryforwards“Black Diamond Equipment, Inc.” (Proposal 2);
3. To ratifyapprove an amendment to the appointment of KPMG LLPCompany’s Amended and Restated Bylaws, as Clarus
Corporation's independent auditorsamended (the “Bylaws”), to eliminate stockholder supermajority vote requirements for the fiscal year ending December
31, 2003certain bylaw amendments (Proposal 3);
4. To re-approve the material terms of the performance goals in the Clarus Corporation 2005 Stock Incentive Plan pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) and 4.to approve an amendment to the Clarus Corporation 2005 Stock Incentive Plan limiting the maximum aggregate number of incentive stock options that may be awarded under the plan pursuant to Section 422 of the Code (Proposal 4); and
5. To transact such other business as may properly be
broughtcome before the meetingMeeting, including proposals to adjourn or postponeconsider any procedural matters incident to the meeting.
conduct of the Meeting, such as the postponement of the Meeting in order to solicit additional proxies to vote in favor of the matter presented at the Meeting.
Stockholders of record at the close of business on May 1, 2003June 24, 2010 are entitled to notice of and to vote at the meeting.
Meeting.
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on August 5, 2010: This proxy statement and form of proxy card, along with our Annual Report on Form 10-K for the fiscal year ended December 31, 2009, are available at www.claruscorp.com.
YOUR VOTE IS IMPORTANT. PLEASE SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE, WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING. RETURNING YOUR PROXY CARD WILL ENSURE THAT YOUR VOTE IS COUNTED IF YOU LATER DECIDE NOT TO ATTEND THE ANNUAL MEETING.
By order of the Board of Directors
Nigel P. Ekern
Robert N. Peay
Secretary
April 30, 2003
June __, 2010
CLARUS CORPORATION
One Pickwick Plaza
Greenwich, Connecticut 06830
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2084 East 3900 South
Salt Lake City, UT 84124
____________________
PROXY STATEMENT
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____________________
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
JUNE 19, 2003
AUGUST 5, 2010
INTRODUCTION
PROXY SOLICITATION AND GENERAL INFORMATION
Proxy Solicitation and General Information
This Proxy Statement and the enclosed form of proxy card (the "Proxy
Card"“Proxy Card”) are being furnished to the holders of common stock, par value $.0001$0.0001 per share, (the "Common Stock"), of Clarus Corporation, a Delaware corporation (which is sometimes referred to in this Proxy Statement as "Clarus,"“Clarus,” the "Company,"
"we," "our"“Company,” “we,” “our” or "us"“us”), in connection with the solicitation of proxies by our Board of Directors for use at the Annual Meeting of Stockholders to be held on Thursday, June 19, 2003August 5, 2010, at The Metropolitan Club, One8:00 a.m. Mountain Daylight Time, at our principal executive offices located at 2084 East 60th Street, New
York, NY 10022, at 10:00 A.M., New York3900 South, Salt Lake City, time,UT 84124, and at any adjournments or postponements thereof.thereof (the “Meeting”). This Proxy Statement and the Proxy Card are first being sent to stockholders on or about MayJune __, 2003.
2010.
At the meeting,Meeting, stockholders will be asked:
1. To elect six membersthe seven nominees named in the accompanying Proxy Statement to serve on the Board of Directors until the next annual meetingAnnual Meeting of stockholdersStockholders and until their successors are duly elected and qualified (Proposal 1);
2. To consider and vote upon a proposalapprove an amendment to amend our
Amended and Restatedthe Company’s Certificate of Incorporation to restrict certain
transfers of our securities in orderchange the Company’s name from Clarus Corporation to help assure the preservation of
our tax net operating loss carryforwards“Black Diamond Equipment, Inc.” (Proposal 2);
3. To ratifyapprove an amendment to the appointment of KPMG LLP as Clarus
Corporation's independent auditorsCompany’s Bylaws to eliminate stockholder supermajority vote requirements for the fiscal year ending December
31, 2003certain bylaw amendments (Proposal 3);
4. To re-approve the material terms of the performance goals in the Clarus Corporation 2005 Stock Incentive Plan pursuant to Section 162(m) of the Code and 4.to approve an amendment to the Clarus Corporation 2005 Stock Incentive Plan limiting the maximum aggregate number of incentive stock options that may be awarded under the plan pursuant to Section 422 of the Code (Proposal 4); and
5. To transact such other business as may properly be
broughtcome before the meetingMeeting, including proposals to adjourn or postponeconsider any procedural matters incident to the meeting.
conduct of the Meeting, such as the postponement of the Meeting in order to solicit additional proxies to vote in favor of the matter presented at the Meeting.
The Board of Directors has fixed the close of business on May 1, 2003June 24, 2010 as the record date for the determination of stockholders entitled to notice of and to vote at the meeting.Meeting. Each such stockholder will be entitled to one vote for each share of Common Stockcommon stock held on all matters to come before the meetingMeeting and may vote in person or by proxy authorized in writing.
Proxies and Voting
Stockholders are requested to complete, sign, date and promptly return the enclosed Proxy Card in the enclosed envelope. ProxiesProxy Cards which are not revoked will be voted at the meetingMeeting in accordance with instructions contained therein. If the proxy carda Proxy Card is signed and returned without instructions, the shares will be voted FOR the election of each nominee for director named in this Proxy Statement (Proposal 1), ; FOR the adoption and approval of thean amendment to our
Amended and Restatedthe Company’s Certificate of Incorporation to change the Company’s name from Clarus Corporation to “Black Diamond Equipment, Inc.” (Proposal 2); FOR the approval of an amendment to the Company’s Bylaws to eliminate stockholder supermajority vote requirements for certain bylaw amendments (Proposal 3); and FOR the ratificationre-approval of the appointmentmaterial terms of KPMG LLPthe performance goals in the Clarus Corporation 2005 Stock Incentive Plan pursuant to Section 162(m) of the Code and the approval of an amendment to the Clarus Corporation 2005 Stock Incentive Plan limiting the maximum aggregate number of incentive stock options that may be awarded under the plan pursuant to Section 422 of the Code (Proposal 4).
Voting
Most beneficial owners whose stock is held in street name do not receive the Proxy Card. Instead, they receive voting instruction forms from their bank, broker or other agent. Beneficial owners should follow the instructions on the voter instruction form or proxy ballot they receive from their bank, broker or other agent.
Our Board of Directors has selected Warren B. Kanders and Peter R. Metcalf, and each of them, to serve as our independent auditors
(Proposal 3). “Proxyholders” for the Meeting. Proxy Cards which are not revoked will be voted at the Meeting in accordance with instructions contained therein.
Revocation of Proxy
A stockholder who so desires may revoke his proxyits previously submitted Proxy Card at any time before it is voted at the meetingMeeting by: (i) delivering written notice to us (attention: Corporate Secretary);at Clarus Corporation, 2084 East 3900 South, Salt Lake City, UT 84124, c/o Robert Peay, Chief Financial Officer, Secretary and Treasurer; (ii) duly executing and delivering a proxyProxy Card bearing a later date; or (iii) casting a ballot at the meeting.Meeting. Attendance at the meetingMeeting will not in and of itself constitute a revocation of a proxy.
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Voting on Other Matters
The Board of Directors knows of no other matters that are to be brought before the meetingMeeting other than as set forth in the Notice of Meeting. If any other matters properly come before the meeting,Meeting, the persons named in the enclosed form of proxyProxy Card or their substitutes will vote in accordance with their best judgment on such matters.
RECORD DATE; SHARES OUTSTANDING AND ENTITLED TO VOTE; QUORUM
Record Date; Shares Outstanding and Entitled to Vote
Only stockholders as of the close of business on May 1, 2003June 24, 2010 (the "Record Date"“Record Date”) are entitled to notice of and to vote at the meeting.Meeting. As of March
31, 2003,June 24, 2010, there were 15,827,30021,557,234 shares of our Common Stockcommon stock outstanding and entitled to vote, with each share entitled to one vote. See "Security“Beneficial Ownership of Certain Beneficial OwnersCompany Common Stock By Directors, Officers and Management." Principal Stockholders” for information regarding the beneficial ownership of our common stock by our directors, executive officers and stockholders known to us to beneficially own 5% or more of our common stock.
Quorum; Required Votes
The presence at the meeting,Meeting, in person or by duly authorized proxy, of the holders of a majority of the outstanding shares of Common Stockcommon stock entitled to vote constituteconstitutes a quorum for this meeting.
REQUIRED VOTESMeeting.
Abstentions and “broker non-votes” are counted as present and entitled to vote for purposes of determining whether a quorum exists. A “broker non-vote” occurs when a nominee such as a bank, broker or other agent holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item and has not received voting instructions from the beneficial owner.
Under the rules of various national and regional securities exchanges, nominees have such discretion to vote absent instructions with respect to certain “routine” matters, such as the ratification of independent auditors, but not with respect to matters that are considered “non routine,” such as the election of directors. Accordingly, without voting instructions from you, your broker will not be able to vote your shares on Proposals 1, 2, 3 and 4.
Each share of Clarus common stock entitles the holder to one vote on each matter presented for stockholder action. The affirmative vote of a plurality of the votes cast in person or by proxy is necessary for the election of directorsthe seven nominees named in this Proxy Statement (Proposal 1). The affirmative vote of the holders of a majority of the outstanding shares of Common Stockcommon stock entitled to vote at the Meeting is necessary for the approval and adoption of thean amendment to the Company's
Amended and RestatedCompany’s Certificate of Incorporation to change the Company’s name from Clarus Corporation to “Black Diamond Equipment, Inc.” (Proposal 2). The affirmative vote of a majority of the votes castshares of common stock present in person or represented by proxy at the Meeting is necessary for the re-approval of the material terms of the performance goals in the Clarus Corporation 2005 Stock Incentive Plan pursuant to Section 162(m) of the Code and the approval of an amendment to the Clarus Corporation 2005 Stock Incentive Plan limiting the maximum aggregate number of incentive stock options that may be awarded under the plan pursuant to Section 422 of the Code (Proposal 4). The affirmative vote of the holders of at least two-thirds of the outstanding shares of common stock entitled to vote at the Meeting is necessary for the approval andof an amendment to the ratification of the appointment of KPMG LLP as our independent
auditorsCompany’s Bylaws to eliminate stockholder supermajority vote requirements for certain bylaw amendments (Proposal 3).
An inspector of elections appointed by us will tabulate votes at the
meeting.
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Since the affirmative vote of a plurality of votes cast in person or by proxy is required for the election of directors (Proposal 1),Proposal 1, abstentions and "broker non-votes"“broker non-votes” will have no effect on the outcome of such election. Since the affirmative vote of the holders of a majority of the outstanding shares of Common Stock is necessarycommon stock entitled to vote at the Meeting for the approval and adoption of the amendment to the Company's Amended andProposal 2,
Restated Certificate of Incorporation (Proposal 2), abstentions and "broker
non-votes" will have the same effect as a negative vote. Since the affirmative vote of a majority of the votes castshares of common stock present in person or represented by proxy at the Meeting is necessary for the ratification and
approval of Proposal 4, and the appointmentaffirmative vote of KPMG LLP as our independent auditors (Proposal
3), an abstentionthe holders of at least two-thirds of the outstanding shares of common stock entitled to vote at the Meeting is necessary for the approval of Proposal 3, abstentions will have the same effect as a negative vote, but "broker
non-votes"“broker non-votes” will have no effect on the outcome of such vote.
Brokers holding sharesthe voting for beneficial owners must vote those shares
according toProposals 2, 3, and 4.
An inspector of elections appointed by us will tabulate votes at the specific instructions they receive from beneficial owners. If
specific instructions are not received, brokers may be precluded from exercising
their discretion, depending on the type of proposal involved. Shares as to which
brokers have not exercised discretionary authority or received instructions from
beneficial owners are considered "broker non-votes," and will be counted for
purposes of determining whether there is a quorum.
PROXY SOLICITATION
Meeting.
Proxy Solicitation; Expenses
Clarus will bear the costs of the solicitation of proxies for the meeting.Meeting. Our directors, officers and employees may solicit proxies from stockholders by mail, telephone, telegram, e-mail, personal interview or otherwise. Clarus may retain the proxy solicitation firm of MacKenzie Partners, Inc. to assist it in the distribution and solicitation of proxies. Clarus will pay MacKenzie Partners, Inc. a fee of approximately $6,500, plus reasonable expenses, for these services if retained. Such directors, officers and employees will not receive additional compensation but may be reimbursed for out-of-pocket expenses in connection with such solicitation. Brokers, nominees, fiduciaries and other custodians have been requested to forward soliciting material to the beneficial owners of our Common
Stockcommon stock held of record by them and such custodiansparties will be reimbursed for their reasonable expenses.
List of Stockholders
In accordance with Delaware General Corporation Law (the “DGCL”), a list of stockholders entitled to vote at the Meeting will be available at the Meeting and for ten days prior to the Meeting, for any purpose germane to the Meeting, between the hours of 10:00 a.m. and 5:00 p.m., local time, at our offices at 2084 East 3900 South, Salt Lake City, UT 84124.
Proxy Cards, ballots and voting tabulations are handled on a confidential basis to protect your voting privacy. This information will not be disclosed to unrelated third parties except as required by law.
Appraisal Rights
Stockholders will have no rights of appraisal under the DGCL in connection with the proposals to be considered at the Meeting.
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IT IS DESIRABLE THAT AS LARGE A PROPORTION AS POSSIBLE OF THE STOCKHOLDERS'STOCKHOLDERS’ INTERESTS BE REPRESENTED AT THE MEETING. THEREFORE, EVEN IF YOU INTEND TO BE PRESENT AT THE MEETING, PLEASE SIGN AND RETURN THE ENCLOSED PROXY CARD TO ENSURE THAT YOUR STOCK WILL BE REPRESENTED. IF YOU ARE PRESENT AT THE MEETING AND DESIRE TO DO SO, YOU MAY WITHDRAW YOUR PROXY CARD AND VOTE IN PERSON BY GIVING WRITTEN NOTICE TO THE SECRETARY OF CLARUS CORPORATION.THE COMPANY. PLEASE RETURN YOUR EXECUTED PROXY CARD PROMPTLY.
SECURITY
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BENEFICIAL OWNERSHIP OF CERTAIN
BENEFICIAL OWNERSCOMPANY COMMON STOCK BY
DIRECTORS, OFFICERS AND MANAGEMENT
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of April 14, 2003June 24, 2010, certain information regarding the beneficial ownership of the Common Stockcommon stock outstanding by (i) each person known to us to own or control 5% or more of the Common Stock,our common stock, (ii) each orof our directors and nominees, (iii) each of our executive officers“Named Executive Officers” (as defined in Item 402(a)(3) of Regulation S-K), set forth in the summary compensation table on page 29, and (iv) our executive officersNamed Executive Officers, directors and directorsnominees as a group. Unless otherwise indicated, each of the stockholders shown in the table below has sole voting and investment power with respect to the shares beneficially owned. Unless otherwise indicated, the address of each person named in the table below is c/o Clarus Corporation, One Pickwick Plaza,
Greenwich, Connecticut 06830.
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2084 East 3900 South, Salt Lake City, UT 84124.
| Name | Common Stock Beneficially Owned (1) | Percentage (%) of Common Stock (2) | ||||||
| Warren B. Kanders | 6,668,617 | (3) | 29.5 | |||||
| Robert R. Schiller | 1,260,829 | (4) | 5.8 | |||||
| Nicholas Sokolow | 443,000 | (5) | 2 | |||||
| Donald L. House | 311,249 | (6) | 1.4 | |||||
| Philip N. Duff | 190,000 | (7) | * | |||||
| Philip A. Baratelli | 100,000 | (8) | * | |||||
| Peter R. Metcalf | 85,000 | (9) | * | |||||
| Michael A. Henning | 20,000 | (10) | * | |||||
| Robert N. Peay | 1,700 | (11) | * | |||||
| All directors, nominees for directors and named executive officers as a group (8 persons) | 9,080,395 | (12) | 39.2 | |||||
| * | Less than one percent. |
| (1) | As used in this table, a beneficial owner of a security includes any person who, directly or indirectly, through contract, arrangement, understanding, relationship or otherwise has or shares within 60 days of June 24, 2010 (a) the power to vote, or direct the voting of, such security or (b) investment power which includes the power to dispose, or to direct the disposition of, such security. |
| (2) | Percentage of beneficial ownership is based on 21,557,234 shares of common stock outstanding as of June 24, 2010. |
| (3) | Includes (i) Mr. Kanders’ options to purchase 1,021,250 shares of common stock that are presently exercisable or exercisable within 60 days of June 24, 2010; (ii) 2,419,490 shares of common stock held by Kanders |
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| (4) | Includes (i) 2,000 shares of common stock held directly by Mr. Schiller through an IRA account; (ii) 1,256,429 shares of common stock held by Schiller Gregory Investment Company, LLC, of which Mr. Schiller is the sole manager, that are subject to a two-year lock-up agreement restricting transfer; (iii) 1,200 shares of common stock that Mr. Schiller may be deemed to beneficially own as UTMA custodian for his children; and (iv) 1,200 shares of common stock held by Schiller Family Foundation, Inc., |
| (5) | Includes (i) Mr. Sokolow’s options to purchase 236,250 shares of common stock that are presently exercisable or exercisable within 60 days of June 24, 2010; and (ii) 202,750 shares of common stock held by ST Investors Fund, LLC, of which Mr. Sokolow |
| (6) | Includes Mr. House’s options to purchase 235,000 shares of common stock that are presently exercisable or exercisable within 60 days of June 24, 2010. |
| (7) | Includes Mr. Duff’s options to purchase 20,000 shares of common stock that are presently exercisable or exercisable within 60 days of June 24, 2010. |
| (8) | Includes Mr. Baratelli’s options to purchase 100,000 shares of common stock that are presently exercisable or exercisable within 60 days of June 24, 2010. |
| (9) | Excludes Mr. Metcalf’s options to purchase 75,000 shares of common stock that are not presently exercisable and |
| (10) | Includes Mr. Henning’s options to purchase 20,000 shares of common stock that are presently exercisable or exercisable within 60 days of June 24, 2010. |
| (11) | Excludes Mr. Peay’s options to purchase 30,000 shares of common stock that are not presently exercisable and not exercisable within 60 days of June 24, 2010. |
| (12) | Includes options to purchase 1,632,500 shares of common stock that are presently exercisable or exercisable within 60 days of June 24, 2010. Excludes options to purchase 105,000 shares of common stock that are not presently exercisable and not exercisable within 60 days of June 24, 2010. |
7 2003. Based on such Schedule 13G the shares of
Common Stock reported above by Merrill Lynch are beneficially owned by
Master Small Cap Value Trust, a master-feeder structure for the Merrill
Lynch Small Cap Value Fund, Inc. and the Mercury Small Cap Value Fund, Inc.
(5) Includes Mr. Jeffery's options to purchase 363,613 shares of our Common
Stock that are presently exercisable or exercisable within the next 60
days. Excludes options to purchase 100,527 shares of Common Stock that are
presently unexercisable and unexercisable within the next 60 days.
(6) Includes Mr. Sokolow's options to purchase 21,250 shares of our Common
Stock that are presently exercisable or exercisable within the next 60
days. Excludes options to purchase 60,000 shares of Common Stock that are
presently unexercisable and unexercisable within the next 60 days.
(7) Includes 151,350 shares of our Common Stock held by ST Investors Fund, LLC,
of which Mr. Sokolow is the Managing Member.
(8) Includes Mr. Coxe's options to purchase 35,000 shares of our Common Stock
that are presently exercisable or exercisable within the next 60 days.
Excludes options to purchase 60,000 shares of Common Stock that are
presently unexercisable and unexercisable within the next 60 days.
(9) Includes 28,478 shares held individually by Mr. Coxe, 46,929 shares held
by Sutter Hill Ventures, a California Limited Partnership, 5,596 shares
held by Sutter Hill Entrepreneurs Fund, (AI), L.P., and 14,171 shares held
by Sutter Hill Entrepreneurs Fund (QP), L.P. Mr. Coxe is one of seven
managing directors of the general partner of each of Sutter Hill Ventures,
a California Limited Partnership, Sutter Hill Entrepreneurs Fund (AI),
L.P. and Sutter Hill Entrepreneurs Fund (QP), L.P. The seven managing
directors of the general partners of each of the above limited
partnerships share voting and investment powers of the shares. Mr. Coxe
disclaims beneficial interest in these shares except to the extent of his
pecuniary interest in each limited partnership.
(10) Includes Mr. House's options to purchase 35,000 shares of our Common Stock
that are presently exercisable or exercisable within the next 60 days.
Excludes options to purchase 60,000 shares of Common Stock that are
presently unexercisable and unexercisable within the next 60 days.
(11) Includes Mr. Ehrlich's options to purchase 21,250 shares of our Common
Stock that are presently exercisable or exercisable within the next 60
days. Excludes options to purchase 60,000 shares of Common Stock that are
presently unexercisable and unexercisable within the next 60 days.
(12) Includes 13,000 shares held by a trust for the benefit of Mr. Ehrlich's
children.
(13) Excludes options to purchase 200,000 shares of Common Stock that are
presently unexercisable and unexercisable within the next 60 days.
(14) Includes options to purchase 497,363 shares of our Common Stock that
are presently exercisable or exercisable within the next 60 days. Also
includes 500,000 unvested shares of restricted Common Stock, which have
voting, dividend and other distribution rights. Excludes options to
purchase 1,540,527 shares of Common Stock that are presently unexercisable
and unexercisable within the next 60 days.
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PROPOSAL 1
ELECTION OF DIRECTORS
NUMBER
Our Board of Directors currently consists of six directors. Our By-lawsBylaws provide that our Board of Directors will consist of not less than two,three, nor more than seven members, the precisewith such number to be determined from time to timefixed by the Board of Directors. The number of directors has been setfixed at seven by the Board of Directors. We do not intend to fill
In connection with the vacant seatCompany’s acquisitions of Black Diamond Equipment, Ltd. (“Black Diamond”) and Gregory Mountain Products, Inc. (“Gregory”) on ourMay 28, 2010, effective as of such date, Burtt R. Ehrlich resigned from the Board at this
time.
of Directors, and each of Philip N. Duff, Michael A. Henning, Peter R. Metcalf and Robert R. Schiller was appointed as a director of the Company.
Our directors are elected annually at the annual meetingAnnual Meeting of stockholders.Stockholders. Their respective terms of office continue until the next annual
meetingAnnual Meeting of stockholdersStockholders and until their successors have been duly elected and qualified in accordance with our By-laws.Bylaws. There are no family relationships among any of our directors, nominees for director, or executive officers.
VOTING
Unless otherwise specified, each proxyProxy Card received will be voted for the election as directors of the sixseven nominees for director named below to serve until the next annual meetingAnnual Meeting of stockholdersStockholders and until their successors shall have been duly elected and qualified. Each of the nominees named below has been nominated by the Board of Directors and has consented to be named a nominee in this Proxy Statement and to serve as a director, if elected. Should any nominee become unable or unwilling to accept a nomination for election, the persons named in the enclosed Proxy Card will vote for the election of a nominee designated by the Board of Directors or will vote for such lesser number of directors as may be prescribed by the Board of Directors in accordance with our By-laws.
BIOGRAPHICAL INFORMATION FOR DIRECTORS
Bylaws.
When considering whether directors and nominees have the experience, qualifications, attributes and skills, taken as a whole, to enable the Board of Directors to satisfy its oversight responsibilities effectively in light of the Company’s business and structure, the Nominating/Corporate Governance Committee and the Board of Directors focused primarily on the information discussed in each of the nominee’s individual biographies set forth below, which contains information regarding the person’s service as a director, business experience, and director positions held currently or at any time during the last five years.
The age and principal occupation for the past five years of each person nominated as a director nominee is set forth below.
NOMINEES FOR DIRECTOR
Tench Coxe, 45,below:
Warren B. Kanders, 52, our Executive Chairman, has served as a memberone of our directors since June 2002 and as Executive Chairman of our Board of Directors since September 1993.December 2002. Mr. Coxe has beenKanders served as a managing director of the general partner of
Sutter Hill Ventures,Highlands Acquisition Corp. (“Highlands”), a venture capitalpublicly-held blank check company located in Palo Alto,
California, since 1989.from May 2007 until September 2009. Since 1990, Mr. Coxe also serves on the boards of directors of
eLoyalty Corporation, Copper Mountain Networks, Inc. and NVIDIA Corporation and
on the boards of directors of several privately-held companies.
Donald L. House, 61,Kanders has served as the President of Kanders & Company, Inc. (“Kanders & Co.”), a memberprivate investment firm principally owned and controlled by Mr. Kanders, that makes investments in and provides consulting services to public and private entities. From January 1996 until its sale to BAE Systems plc (“BAE Systems”) on July 31, 2007, Mr. Kanders served as the Chairman of the Board of Directors, and as the Chief Executive Officer from April 2003, of Armor Holdings, Inc. (“Armor Holdings”), formerly a New York Stock Exchange-listed company and a manufacturer and supplier of military vehicles, armored vehicles and safety and survivability products and systems to the aerospace and defense, public safety, homeland security and commercial markets. From April 2004 until October 2006, he served as the Executive Chairman, and from October 2006 until September 2009, served as the Non-Executive Chairman of the Board of Directors of Stamford Industrial Group, Inc., which was an independent manufacturer of steel counterweights. Since November 2004, Mr. Kanders has served as the Chairman of the Board of Directors of PC Group, Inc., a manufacturer of personal care products. From October 1992 to May 1996, Mr. Kanders served as Vice Chairman of the Board of Directors of Benson Eyecare Corporation, a formerly publicly-listed manufacturer and distributor of eye care products and services. Mr. Kanders received a B.A. degree in Economics from Brown University.
8
Robert R. Schiller, 47, our Executive Vice Chairman, was Vice Chairman of the Board of Directors of Gregory since March 2008. From July 1996 until its sale to BAE Systems on July 31, 2007, Mr. Schiller served in a variety of capacities at Armor Holdings, including as a Director from June 2005, President from January 2004, Chief Operating Officer from April 2003, and Chief Financial Officer and Secretary from November 2000 to March 2004. Mr. Schiller graduated with a B.A. in Economics from Emory University in 1985 and received an M.B.A. from Harvard Business School in 1991.
Peter R. Metcalf, 54, our President and Chief Executive Officer, served as the Chief Executive Officer and Chairman of the Board of Directors of Black Diamond since co-founding Black Diamond in 1989 until the completion of the Company’s acquisition of Black Diamond in May 2010. He is a graduate of the University of Colorado, with a major in Political Science. He also earned a Certificate in Management from the Peter Drucker Center of Management.
Donald L. House, 68, has served as one of our Board of Directorsdirectors since January 1993. Mr. House served as Chairman of our Board of Directors from January 1994 until December 1997 and as our President from January 1993 until December 1993. Mr. House also serves onserved as a member of the boardBoard of directorsDirectors of Carreker Corporation where he is chairman of its audit committee.from May 1998 until March 2007. Mr. House is a private investor and he serves on the board of directors of several 5
privately-held technology companies.
Stephen P. Jeffery, 47, joined us in November 1994 as Vice President of
Marketing and was elected Vice President of Sales and Marketing in June 1995.
Until December 2002, he was our President, Chairman of the Board and Chief
Executive Officer. He was first elected to serve as a Director in October 1997.
Prior to joining us, Mr. Jeffery was employed by Hewlett-Packard Company, where
he
Nicholas Sokolow, 60, has served as the managerone of Hewlett-Packard's client/server solutions and
partner programs, as well as in a variety of sales and marketing management
positions in the United States and Europe for 15 years.our directors since June 2002. From January 1996 until its sale to BAE Systems on July 31, 2007, Mr. Jeffery also served
in sales with International Business Machines prior to joining Hewlett-Packard.
Warren B. Kanders, 45, hasSokolow served as a member of ourthe Board of Directors since June 2002 and as Executive Chairman of our Board of Directors since
December 2002. Mr. Kanders has served as the Chairman of the Board of Armor Holdings, Inc. since January 1996 and Chief Executive Officer since April 2003.
From October 1992 to May 1996, he served as Vice Chairman of the Board of Benson
Eyecare Corporation.Holdings. Mr. Kanders also serves as President of Kanders & Company,
Inc., a private investment firm.
Burtt R. Ehrlich, 63, hasSokolow served as a member of ourthe Board of Directors since June 2002. Mr. Ehrlich has served as a director of Armor Holdings,Stamford Industrial Group, Inc.
since January 1996. He has also served as Chairman of the board of directors of
Langer, Inc. since February 2001, and served as Chairman and Chief Operating
Officer of Ehrlich Bober Financial Corp. (the predecessor of Benson Eyecare
Corporation) from December 1986 until October 1992 and as a director of Benson
Eyecare Corporation from October 19922006 until November 1995. Mr. Ehrlich is also a
director of the Close Brothers Channel Islands group of investment funds. He is
a former Treasurer and Trustee of the Carnegie Council on Ethics and
International Affairs, and a former Trustee of the Buckingham Browne and Nichols
School.
Nicholas Sokolow, 53, has served as a member of our Board of Directors
since June 2002.September 2009. Since 2007, Mr. Sokolow a practicing attorney, has served as a director of
Armor Holdings, Inc. since January 1996. Since 1994 he has been practicing law at the firm of Lebow & Sokolow LLP. From 1994 to 2007, Mr. Sokolow was a partner inat the law firm of Sokolow, Dunaud, MercadierCarreras & Carreras, and fromPartners. From June 1973 until October 1994, Mr. Sokolow was an associate and partner inat the law firm of Coudert Brothers. Mr. Sokolow was
9
Michael A. Henning, 70, served as a director and the Chairman of Rexel,the Audit Committee of the Board of Directors of Highlands from May 2007 until September 2009. Since 2000, Mr. Henning has been the Chairman of the Audit Committee and member of the Compensation Committee, and has previously served as the Vice Chairman of the Finance Committee, of the Board of Directors of CTS Corporation, a NYSE-listed company that provides electronic components to auto, wireless and PC businesses. In December 2002, he joined the Board of Directors of Omnicom Group Inc., a global communications company, where he also serves on the Audit Committee and the Compensation Committee. Mr. Henning is also a member of the Board of Directors, and serves on the Audit Committee and Compensation Committee, of Landstar System, Inc., a NASDAQ-listed transportation and logistics services company. Mr. Henning retired as Deputy Chairman from Ernst & Young in 2000 after forty years with the firm. Mr. Henning was the inaugural CEO of Ernst & Young International, serving from 1993 to 1999. From 1991 to 1993, he served as Vice Chairman of Tax Services at Ernst & Young. Mr. Henning was also the Managing Partner of the firm’s New York office, from 1985 to 1991, and the Partner in charge of International Tax Services, from 1978 to 1985. From 1994 to 2000, Mr. Henning served as a Co-Chairman of the Foreign Investment Advisory Board of Russia, where he co-chaired a panel of 25 CEOs from the G-7 countries who advised the Russian government in adopting international accounting and tax standards. Mr. Henning received a B.B.A. from St. Francis College and a Certificate from the Harvard University Advanced Management Program. Mr. Henning is a Certified Public Accountant.
Philip N. Duff, 52, is the Chief Executive Officer and General Partner at Duff Capital Advisors. Mr. Duff is also the founder of Duff Capital Advisors. Mr. Duff is also the Chairman & CEO of White Oak Global Advisors. Prior to this, Mr. Duff served as one of the founding partners, Chief Executive Officer, and Chairman of FrontPoint Partners, LLC, which he co-founded in 2000. He was formerly knownthe Chief Operating Officer, Senior Managing Director, member of Management Committee, and member of the Advisory Board of Tiger Management LLC. From 1984 to 1998, Mr. Duff was also employed at Morgan Stanley, where his prior positions included serving as Willcox & Gibbs, until it was acquiredChief Financial Officer at Morgan Stanley Group Inc., as President and Chief Executive Officer at Van Kampen America Capital (acquired by Morgan Stanley), and as the head of Financial Institutions Group in 1997.
Investment Banking at Morgan Stanley. Prior to Morgan Stanley, Mr. Duff traded grain at Louis Dreyfus, Inc. Mr. Duff currently serves as a member of the Board of Directors of Ambac Financial Group, Solar Power Corporation, and TraDove. Mr. Duff is also a member of the Advisory Board of Westbury Partners. He previously served on the Board of Trustees of the Financial Accounting Foundation, and the Managed Funds Association. Mr. Duff graduated from Massachusetts Institute of Technology with an M.B.A. and from Harvard College with an A.B. in Mathematics.
The affirmative vote of a plurality of the votes cast in person or by proxy at the Meeting is necessary for the election as directors of the seven nominees named in this Proxy Statement (assuming a quorum of a majority of the outstanding shares of common stock is present).
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR EACH OF THE ABOVE-NAMED DIRECTOR NOMINEES.
6
INFORMATION CONCERNING MEETINGS
10
GOVERNANCE OF THE BOARD OF DIRECTORS AND
BOARD COMMITTEES AND DIRECTOR COMPENSATION
During fiscal 2002,COMPANY
Corporate Governance
Our Board of Directors is committed to sound and effective corporate governance practices. The Company’s management and our Board of Directors reviewed our corporate governance practices in light of the Sarbanes-Oxley Act of 2002. Based on that review, the Board of Directors held 23 meetings.maintains codes of ethics and conduct, corporate governance guidelines, committee charters, complaint procedures for accounting and auditing matters and an Audit Committee pre-approval policy. The Company is listed on the NASDAQ Global Stock Market (the “NASDAQ”), and therefore, it has modeled its corporate governance practices after the listing requirements of NASDAQ.
Corporate Governance Guidelines and Documents
The Code of Ethics for Senior Executive and Financial Officers, the Code of Business Conduct and Ethics for Directors, Officers and Employees, Complaint Procedures for Accounting and Auditing Matters, the Corporate Governance Guidelines, the Audit Committee Pre-Approval Policy, and the Charters of our Audit, Compensation and Nominating/Corporate Governance Committees were adopted by Clarus for the purpose of promoting honest and ethical conduct, promoting full, fair, accurate, timely and understandable disclosure in periodic reports required to be filed by Clarus, and promoting compliance with all applicable rules and regulations that apply to Clarus and its officers and directors. Our Codes of Ethics and Conduct, the Complaint Procedures for Accounting and Auditing Matters, the Corporate Governance Guidelines, and the Charters of our Audit, Compensation and Nominating/Corporate Governance Committees are available at www.claruscorp.com, our Internet website, under the tab “Corporate Governance.” In addition, you may request a copy of any such materials, without charge, by submitting a written request to: Clarus Corporation, Attention: Secretary, 2084 East 3900 South, Salt Lake City, UT 84124.
Board of Directors
Our Board of Directors hasis currently comprised of the following seven members: Warren B. Kanders, Philip N. Duff, Michael A. Henning, Donald L. House, Peter R. Metcalf, Robert R. Schiller, and Nicholas Sokolow. In connection with the Company’s acquisitions of Black Diamond Equipment, Ltd. and Gregory Mountain Products, Inc. on May 28, 2010, effective as of such date, Burtt R. Ehrlich resigned from the Board of Directors, and each of Philip N. Duff, Michael A. Henning, Peter R. Metcalf and Robert R. Schiller was appointed as a director of the Company.
During fiscal 2009, the Board of Directors, then comprised of Messrs. Kanders, Ehrlich, Sokolow and House, held seven meetings and had standing Audit, Compensation and NominatingNominating/Corporate Governance Committees. During fiscal 2002,2009, all of the directors then in office attended at least 75% of the total number of meetings of the Board of Directors and the Committees of the Board of Directors on which they served. AUDIT COMMITTEE
In accordance withThe Company does not have a formal policy as to Board of Directors attendance at our Annual Meetings of Stockholders. All of the members of our Board of Directors, who was also a director at the time, attended last year’s Annual Meeting of Stockholders meeting which was held on June 18, 2009.
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Board Leadership Structure
The Company believes that board independence is an important aspect of corporate governance and four members of its written charter adopted byBoard of Directors are independent. The Company has also currently separated the roles of Chief Executive Officer (“CEO”) from that of Executive Chairman of the Board of Directors,Directors. Peter R. Metcalf serves as the Audit Committee assists the Board of Directors in fulfilling its
responsibility for oversight of the qualityCompany’s President and integrity of our accounting,
auditing and financial reporting practices. The Audit Committee recommends to
the Board of Directors, subject to stockholder approval, the selection of our
independent auditors. The Audit Committee appoints Clarus' independent auditors
and monitors the accounting firm's performance. The members of the Committee are
outside directors who meet the independence requirements of Section 301 of the
Sarbanes-Oxley Act of 2002 and Rule 4200(a)(15) of the National Association of
Securities Dealers' listing standards. The current members of the Committee are
Messrs. House (Chairman), Coxe and Sokolow. The Audit Committee met five times
in 2002.
COMPENSATION COMMITTEE
The Compensation Committee recommends to the Board an overall
philosophy and strategy with respect to the compensation of Clarus'CEO, Warren B. Kanders serves as Executive Chairman of the Board of Directors, Chief Administrative Officer and other
senior executivesRobert R. Schiller serves as Executive Vice Chairman of the Board of Directors. In addition, our independent directors hold periodically scheduled meetings, at which only independent directors are present. The Board of Directors believes that this leadership structure is appropriate for our Company following the closing of the acquisitions of Black Diamond and Gregory, given the size and scope of our business, the experience and active involvement of our independent directors and our corporate governance practices, which include regular communication with and interaction between and among the CEO, the Executive Chairman, the Executive Vice Chairman, and the independent directors.
Board Role in Risk Oversight
Management is responsible for the day-to-day management of risks the Company faces, while the Board of Directors, as a whole and through its committees, provides risk oversight. In its risk oversight role, the Board of Directors must satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed, including assessing major risk factors relating to attractthe Company and retain highly qualified individualsits performance, and provides oversightreviewing measures to address and mitigate risks. While the full Board of Clarus' executive compensation plans. TheDirectors is charged with overseeing risk management, various committees of the Board of Directors and members of management also have responsibilities with respect to our risk oversight. In particular, the Audit Committee plays a large role in monitoring and assessing our financial, legal, and operational risks, and receives regular reports from the management team regarding comprehensive organizational risk as well as particular areas of concern. Additionally, the Compensation Committee monitors and assesses the various risks associated with compensation policies, and oversees incentives that encourage a level of risk-taking consistent with our overall strategy.
Director Independence
The Board of Directors has evaluated each of its directors’ independence from Clarus based on the definition of “independence” established by NASDAQ and has determined that Messrs. Duff, Henning, Sokolow and House are outsideindependent directors, who qualify as "non-employee directors" withinconstituting a majority of the meaningBoard of Rule 16b-3Directors. The Board of Directors has also determined that each of the members of our Audit Committee is “independent” for purposes of Section 10A(m)(3) of the Securities Exchange Act of 1934, ("Exchange
Act"as amended (the “Exchange Act”),.
In its review of each director’s independence from the Company, the Board of Directors reviewed whether any transactions or relationships exist currently or, during the past year existed, between each director and as "outside directors" for purposesthe Company and its subsidiaries, affiliates, equity investors or independent registered public accounting firm. The Board of Section 162(m) of the Internal
Revenue Code ("Code"). The currentDirectors also examined whether there were any transactions or relationships between each director and members of the senior management of the Company or their affiliates.
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Stockholder Communications
Stockholders may send communications to our Board of Directors or any committee thereof by writing to the Board of Directors or any committee thereof at Clarus Corporation, Attention: Secretary, 2084 East 3900 South, Salt Lake City, UT 84124. The Secretary will distribute all stockholder communications to the intended recipients and/or distribute to the entire Board of Directors, as appropriate.
In addition, stockholders may also contact the non-management directors as a group or any individual director by writing to the non-management directors or the individual director, as applicable, at Clarus Corporation, 2084 East 3900 South, Salt Lake City, UT 84124.
Complaint Procedures
Complaints and concerns about accounting, internal accounting controls or auditing or related matters pertaining to the Company may be submitted by writing to the Chairman of the Audit Committee as follows: Clarus Corporation, Attention: Chairman of the Audit Committee, 2084 East 3900 South, Salt Lake City, UT 84124. Complaints may be submitted on a confidential and anonymous basis by sending them in a sealed envelope marked “Confidential.”
Audit Committee
The Audit Committee is responsible for the oversight and evaluation of (i) the qualifications, independence and performance of our independent auditors; (ii) the performance of our internal audit function; and (iii) the quality and integrity of our financial statements and the effectiveness of our internal control over financial reporting. In addition, the committee recommends to the Board of Directors the appointment of independent auditors and analyzes the reports and recommendations of such auditors. The committee also prepares the Audit Committee report required by the rules of the SEC, which is included in this proxy statement beginning on page 20.
Our Audit Committee is currently comprised of Messrs. Henning, House and Sokolow, with Mr. Henning serving as the Chairman. All of the members of our Audit Committee were determined by the Board of Directors to be independent of Clarus based on NASDAQ’s definition of “independence” and are able to read and understand the Company’s fundamental financial statements. The Board of Directors has determined that Mr. Henning qualifies as an audit committee financial expert (as such term is defined under the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder). During fiscal year 2009, our Audit Committee was comprised of Messrs. Coxe
(Chairman)House, Ehrlich and Sokolow.Sokolow, with Mr. House serving as the Chairman. The current composition of our Audit Committee took effect on May 28, 2010, when Mr. Ehrlich resigned, and Mr. Henning was appointed, to the Audit Committee.
The duties of the Audit Committee of our Board of Directors, which are specified in the charter of the Audit Committee, include but are not limited to:
13
| · | reviewing and discussing with management and the independent auditors the annual audited financial statements, and recommending to our Board of Directors whether the annual audited financial statements should be included in our Annual Report on Form 10-K; |
| · | discussing with management and the independent auditors significant financial reporting issues and judgments made in connection with the preparation of our financial statements; |
| · | discussing with management major risk assessment and risk management policies; |
| · | monitoring the independence of the independent auditors; |
| · | verifying the rotation of the lead audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law; |
| · | reviewing and approving all related party transactions; |
| · | inquiring and discussing with management our compliance with applicable laws and regulations; |
| · | pre-approving all audit services and permitted non-audit services to be performed by our independent auditors, including the fees and terms of the services to be performed; |
| · | appointing and replacing the independent auditors; |
| · | determining the compensation and oversight of the work of the independent auditors (including resolution of disagreements between management and the independent auditors regarding financial reporting) for the purpose of preparing and issuing an audit report or related work; |
| · | establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or reports which raise material issues regarding our financial statements or accounting policies; and |
| · | approving reimbursement of expenses incurred by our management team in identifying potential target businesses. |
The Audit Committee met four times during fiscal year 2009. The Board of Directors has adopted a written Charter for the Audit Committee, a copy of which was attached to our Proxy Statement for the Annual Meeting of Stockholders held on June 24, 2004 and is available at www.claruscorp.com, our Internet website, under the tab “Corporate Governance.”
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Compensation Committee
The Compensation Committee reviews recommendations for executive compensation, including incentive compensation and stock incentive plans and makes recommendations to the Board of Directors concerning levels of compensation of our executive officers and other key managerial personnel as well as the adoption of incentive and stock plans. Pursuant to this Committee’s charter (a copy of the Compensation Committee’s Charter is available on our Internet website at www.claruscorp.com, under the tab “Corporate Governance”), this Committee’s authority generally includes the authority to do each of the following:
| · | To assist the Board of Directors in developing and evaluating potential candidates for executive positions and to oversee the development of executive succession plans. |
| · | To review and approve corporate goals and objectives with respect to compensation for the Company’s senior management team, evaluate the senior management team’s performance in light of those goals and objectives, and, either as a committee or together with the other independent directors, determine and approve the senior management team’s compensation levels based on this evaluation. In determining the long-term incentive component of the senior management team’s compensation, the Compensation Committee shall consider the Company’s performance and relative stockholder return, the value of similar incentive awards to chief executive officers at comparable companies, and the awards given to the Company’s senior management team in past years. |
| · | To make recommendations to the Board of Directors with respect to non-senior management team compensation, incentive-compensation plans and equity-based plans. The Compensation Committee shall also provide oversight of senior management’s decisions concerning the performance and compensation of other Company officers. |
| · | To review the Company’s incentive compensation and other stock-based plans and recommend changes in such plans to the Board of Directors as needed. The Compensation Committee shall have and shall exercise all the authority of the Board of Directors with respect to the administration of such plans. |
| · | To produce the compensation committee report on executive compensation to be included in the Company’s proxy statement. |
· To review on an annual basis director compensation and benefits.
The Compensation Committee shall have authority to retain such compensation consultants, outside counsel and other advisors as the Compensation Committee may deem appropriate in its sole discretion.
Our Compensation Committee is currently comprised of Messrs. Sokolow, House and Duff, with Mr. Sokolow serving as the Chairman, all of whom were determined by the Board of Directors to be independent of the Company. The Compensation Committee does not formally meet on a regular basis, but only as circumstances require. The Compensation Committee met four
times in 2002.
NOMINATING COMMITTEEone time during fiscal year 2009, and also held numerous informal discussions during fiscal year 2009. During fiscal year 2009, our Compensation Committee was comprised of Messrs. Ehrlich and Sokolow, with Mr. Sokolow serving as the Chairman. The Nominatingcurrent composition of our Compensation Committee presents its recommendationtook effect on May 28, 2010, when Mr. Ehrlich resigned, and Messrs. House and Duff were appointed, to the Compensation Committee.
15
Nominating/Corporate Governance Committee
The purpose of nomineesthe Nominating/Corporate Governance Committee is to identify, evaluate and nominate candidates for election to the Board of Directors, as well as review Clarus’ corporate governance guidelines and other related documents for compliance with applicable laws and regulations such as the Sarbanes-Oxley Act of 2002 and the NASDAQ listing requirements. The Nominating/Corporate Governance Committee considers all qualified candidates identified by members of the Committee, by other members of the Board of Directors.Directors, and by senior management. The NominatingNominating/Corporate Governance Committee will consider nominations madenominees recommended by stockholders. Information with respect to a proposed nominee should be forwarded to Clarus Corporation, Attention: Secretary, at 2084 East 3900 South, Salt Lake City, UT 84124, and upon receipt, the Secretary will submit them to the Committee for its consideration. Such information shall include the name of the nominee, and such information with respect to the nominee as would be required under the rules and regulations of the SEC to be included in our stockholders,Proxy Statement if such nominations are made in writingproposed nominee were to be included therein, as well as a consent executed by the proposed nominee to serve as director if elected as required by the rules and regulations of the SEC. In addition, the stockholder shall include a statement to the Secretaryeffect that the proposed nominee has no direct or indirect business conflict of interest with us, and received by us not more than 90 days nor less than 60 days
priorotherwise meets our standards set forth below. See “Requirements for Submission of Stockholder Proposals, Nomination of Directors and Other Business of Stockholders” for additional information on certain procedures that a stockholder must follow to the anniversary date of our immediately preceding annual meeting. See
"Proposals By Stockholders." The Nominatingnominate persons for election as directors.
Our Nominating/Corporate Governance Committee consistsis currently comprised of Messrs. Ehrlich (Chairman), House, Duff and Kanders. The Nominating Committee met once in
2002.
COMPENSATION OF DIRECTORS
FollowingSokolow, with Mr. House serving as the sale of substantiallyChairman, all of our electronic commerce
revenue-generating
7
operations and related assets in December 2002, a new compensation package forwhom were determined by the members of our Board of Directors became effective. This package provides
for the payment to each Committee Chairman of $2,000 for each meeting attended
in person and $1,000 for each meeting attended telephonically, and the payment
to each other director of $1,000 for each meeting attended in person and $500
for each meeting telephonically. The Executive Chairman does not receive any
meetings-based compensation. The package also includes a grant of options to
purchase 60,000 shares of our Common Stock at fair market value on the date of
grant, vesting in equal annual installments over a three-year period subject to
their continued service on our Board of Directors to be independent of the Company. The functions of the Nominating/Corporate Governance Committee were considered at and acted upon by the entire Board of Directors during its meetings in 2009. A copy of the Nominating/Corporate Governance Committee’s Charter is available on our Internet website at www.claruscorp.com, under the tab “Corporate Governance.” During fiscal year 2009, our Nominating/Corporate Governance Committee was comprised of Messrs. Ehrlich, House and Sokolow, with Mr. Ehrlich serving as the Chairman. The current composition of our Nominating/Corporate Governance Committee took effect on May 28, 2010, when Mr. Ehrlich resigned, and Mr. Duff was appointed, to the Nominating/Corporate Governance Committee.
Candidates for the Board of Directors should possess fundamental qualities of intelligence, honesty, perceptiveness, good judgment, maturity, high ethics and standards, integrity, fairness and responsibility; have a genuine interest in the Company; have no conflict of interest or legal impediment which would interfere with the duty of loyalty owed to the Company and its Stockholders; and have the ability and willingness to spend the time required to function effectively as a director of the Company. The Nominating/Corporate Governance Committee does not have a formal policy with regard to the consideration of diversity in identifying candidates for director. Nevertheless, the Nominating/Corporate Governance Committee’s evaluation of director candidates takes into account their ability to contribute to the diversity of age, background, experience, viewpoints, and other individual qualities and attributes represented on the Board of Directors.
16
The Nominating/Corporate Governance Committee may engage third-party search firms from time to time to assist it in identifying and evaluating nominees for director. The Nominating/Corporate Governance Committee evaluates nominees recommended by stockholders, by other individuals and by the search firms in the same manner, as follows: The Nominating/Corporate Governance Committee reviews biographical information furnished by or about the potential nominees to determine whether they have the experience and qualities discussed above; when a Board of Directors vacancy occurs or is anticipated, the Nominating/Corporate Governance Committee determines which of the qualified candidates to interview, based on the current needs of the Board of Directors and the Company, and members of the Nominating/Corporate Governance Committee meet with these individuals. If, after such meetings, the Nominating/Corporate Governance Committee determines to recommend any candidate to the Board of Directors for consideration, that individual is invited to meet with the entire Board of Directors. The Board of Directors then determines whether to select the individual as a director-nominee.
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Director Summary Compensation Table
The following table summarizes the compensation paid to our non-employee directors for the fiscal year ended December 31, 2009:
| Name | Year | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Non-qualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||||||
| Burtt R.Ehrlich | 2009 | 14,000 | - | 41,842 | (3) | - | - | - | 55,842 | ||||||||||||||||||||
| Donald L. House | 2009 | 14,000 | - | 27,152 | (4) | - | - | - | 41,152 | ||||||||||||||||||||
| Nicholas Sokolow | 2009 | 14,000 | - | 41,842 | (5) | - | - | - | 55,842 | ||||||||||||||||||||
| Philip N. Duff | (6) | ||||||||||||||||||||||||||||
| Michael A. Henning | (6) | ||||||||||||||||||||||||||||
| (1) | Represents the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 for awards made during the applicable year. For discussions on the relevant assumptions, see footnote 6, “Stock Incentive Plans” in the financial statements contained in the Annual Report on Form 10-K for the year ended December 31, 2009. |
| (2) | Represents the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 for awards made during the applicable year. For discussions on the relevant assumptions, see footnote 6, “Stock Incentive Plans” in the financial statements contained in the Annual Report on Form 10-K for the year ended December 31, 2009. |
| (3) | Mr. Ehrlich’s option award includes the grant of 20,000 options on June 18, 2009, valued at $1.36 amortized over a one year period and the grant of 21,250 options on May 28, 2009, valued at $0.69 amortized immediately. Mr. Ehrlich resigned as a director effective as of May 28, 2010. |
| (4) | Mr. House’s option award includes the grant of 20,000 options on June 18, 2009, valued at $1.36 amortized over a one-year period. |
| (5) | Mr. Sokolow’s option award includes the grant of 20,000 options on June 18, 2009, valued at $1.36 amortized over a one-year period and the grant of 21,250 options on May 28, 2009 valued at $0.69 amortized immediately. |
| (6) | Messrs. Duff and Henning joined the Company as non-employee directors on May 28, 2010. |
Discussion of Director Compensation
During 2009, each of our non-employee directors upon
appointment.
Priorwas entitled to effectivenessreceive a payment of our new compensation package, directors who
were not our employees ("Outside Directors") received a $2,000 fee for each regular and special meeting of the Board of Directors attended either in person or telephonically. From time to time, non-employee directors may also receive discretionary option or stock grants under the Company’s 2005 Stock Incentive Plan. In June 2009, each of our non-employee directors at the time were awarded options under the Company’s 2005 Stock Incentive Plan to purchase 20,000 shares of common stock at an exercise price of $4.00 vesting equally over four consecutive quarters commencing June 30, 2009.
In addition, in May of 2009, each of Messrs. Ehrlich and Sokolow was awarded immediately exercisable and vested three-year options under the 2005 Stock Incentive Plan to purchase 21,250 shares of common stock at an exercise price of $4.06. Such options were granted upon the expiration of a previously granted seven-year stock option awards to purchase 21,250 shares of common stock that were currently exercisable and vested. In granting the new stock option awards to Messrs. Ehrlich and Sokolow, the Compensation Committee noted that the Company’s current practice with respect to stock option awards has been to grant ten-year stock option awards with a ten-year exercise period rather than a seven-year exercise period and believed that the interests of the Company and its stockholders would be served if upon the expiration of the seven-year stock options, the Company granted to Messrs. Ehrlich and Sokolow new three-year stock option awards for the same amount of shares of common stock as such expired seven-year stock option awards.
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On May 28, 2010, upon the closing of the acquisitions of Black Diamond and Gregory, the existing non-employee directors (Messrs. Ehrlich, House and Sokolow) and the newly-appointed non-employee directors (Messrs. Duff and Henning), received immediately exercisable and vested ten-year stock option awards under the Company’s 2005 Stock Incentive Plan to purchase 20,000 shares of common stock at an exercise price equal to $6.85.
Our employee directors (Messrs. Kanders, Metcalf and Schiller) are compensated pursuant to their employment agreements (which are described below under the heading “Employment Agreements”).
On May 28, 2010, upon the closing of the acquisitions of Black Diamond and Gregory, the Board of Directors approved the following changes to the Company’s director compensation: (i) the non-employee directors will receive an annual stock option grant at the 2010 Annual Meeting of Stockholders of 10,000 shares at an exercise price equal to the closing price of the Company’s common stock on the date of such grant, and vesting and becoming exercisable in four equal consecutive quarterly tranches commencing on September 30, 2010; (ii) the non-employee directors will receive an annual retainer of $25,000 payable quarterly, (iii) chairmen of the committees of the Board of Directors, other than the Audit Committee, will receive an additional annual payment of $10,000 payable quarterly, (iv) the chairman of the Board of Directors’ Audit Committee will receive an additional annual payment of $15,000 payable quarterly, (v) each committee member will receive an additional $1,000 per committee meeting attended and (vi) the exercise period of any options owned by a director departing the Board of Directors at or prior to the 2010 Annual Meeting of Stockholders will be extended to the earlier of December 31, 2012 or the original expiration date of such stock options; provided, however, that any options owned by such director. Each Outsidedeparting director must be exercised on or before the 30th day after the date the Fair Market Value (as defined in the 2005 Stock Incentive Plan) of the Company’s common stock shall have exceeded $12.00 per share for 20 consecutive trading days.
In setting director compensation, the Company considers the significant amount of time that directors expend in fulfilling their duties on our Board of Directors and its committees as well as the skill level required by the Company of members of the Board of Directors and the need to continue to attract highly qualified candidates to serve on our Board of Directors. Director was paid $20,000 (or $120,000 for all Outside Directors as a group)compensation arrangements are reviewed annually to maintain such standards.
Involvement in meeting fees in 2002. Outside Directors are not compensated for attendance at
committee meetings or for strictly telephonic Board meetings.
On December 6, 2002, we entered into a three-year consulting agreement
with Mr. Jeffery, an Outside Director. The agreement provides for an aggregate
consideration of $250,000, payable in twenty-four equal monthly installments.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
Certain Legal Proceedings
No director, executive officer or person nominated to become a director or executive officer has, within the last fiveten years: (i) had a bankruptcy petition filed by or against, or a receiver, fiscal agent or similar officer appointed by a court for, any business of such person or entity with respect to which such person was a general partner or executive officer either at the time of the bankruptcy filing or within two years prior to that time; (ii) been convicted in a criminal proceeding or is currently subject to a pending criminal proceeding (excluding traffic violations or similar misdemeanors)and other minor offenses); (iii) been subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining barring, suspendinghim from, or otherwise limiting his involvement in any type of business, securities or banking activities or practice; (iv) been found by a court of competent jurisdiction (in a civil action), the Securities and Exchange
CommissionSEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.
19
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
In accordance with its written charter adopted
The Board of Directors has appointed an Audit Committee consisting of three directors. Each of the members of the Audit Committee is independent from Clarus and is financially literate as that qualification is interpreted by the Board of Directors, the Audit Committee assists the Board in fulfilling its
responsibility for oversight of the quality and integrity of our accounting,
auditing and financial reporting practices.Directors. The Audit Committee recommends to
the Board of Directors subjecthas adopted a written charter with respect to stockholder approval, the selection of our
independent auditors.
Audit Committee’s roles and responsibilities.
Management is responsible for the Company's financial reporting process
including its
8
system ofClarus’ internal control and the financial reporting process. The external auditor is responsible for the preparationperforming an independent audit of Clarus’ consolidated financial statements in accordance with U.S. generally accepted accounting principles. The
Company's independent auditors are responsible for auditing those financial
statements.standards and to issue a report thereon. The Audit Committee'sCommittee’s responsibility is to monitor and reviewoversee these processes. It is not the Audit Committee's duty or its responsibility to conduct
auditing or accounting reviews or procedures.
The Audit Committee members are
not employees of the Company and may not be, and may not represent themselves to
be or to serve as, auditors or auditors by profession or experts in the fields
of accounting or auditing. Therefore, the Audit Committee has relied, without
independent verification, on management's representation that the financial
statements have been prepared with integrity and objectivity and in conformity
with accounting principles generally accepted in the United States of America
and on the independent auditor's report on the Company's financial statements
included in their report on the Company's financial statements. The Audit
Committee's oversight does not provide it with an independent basis to determine
that management has maintained appropriate accounting and financial reporting
principles or policies, or appropriate internal controls and procedures designed
to assure compliance with accounting standards and applicable laws and
regulations. Furthermore, the Audit Committee's considerations andhad various discussions with management and the independent auditors do not assure that the Company's
financial statements are presented in accordance with generally accepted
accounting principles, that the audit of the Company's financial statements has
been carried out in accordance with generally accepted auditing standards or
that the Company's independent auditors are in fact "independent." The Audit
Committee has general oversight responsibility with respect to our financial
reporting, and reviews the results and scope of the audit and other services
provided by our independent auditors.
In this context, the Audit Committee has met and held discussions with
management and our independent auditors. Management represented to the Audit
Committeeus that ourClarus’ consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles generally accepted in the United States of America,applied on a consistent basis, and the Audit Committee haswe have reviewed and discussed the quarterly and annual earnings press releases and consolidated financial statements with management and ourthe independent auditors. The Audit Committee has also discussed with ourthe independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61 (Communication withWith Audit Committees).
Our independent auditors also provided to, as amended (AICPA, Professional Standards, Vol. 1, AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T.
The Audit Committee has received the written disclosures and a letter from the letterindependent registered public accounting firm as required by Independence Standardsapplicable requirements of the Public Accounting Oversight Board Standard No. 1 (Independence Discussionsregarding the independent registered public accounting firm’s communications with the Audit Committees),Committee concerning independence, and has discussed with the independent registered accounting firm its independence from Clarus and its management. The Audit Committee also considers whether the independent registered accounting firm’s provision of audit and non-audit services to Clarus is compatible with maintaining the independent registered accounting firm’s independence.
The Audit Committee discussed with the independent auditors their independence.
Based upon the overall scope and plans for its audit. The Audit Committee's discussionCommittee discussed with management and ourthe independent auditors, with and without management present, the results of its examinations, the evaluations of Clarus’ internal controls, and the Audit Committee's reviewoverall quality and integrity of financial reporting.
20
Based on the representations of
managementreviews and the report of our independent auditorsdiscussions referred to the Audit Committee,above, the Audit Committee recommended thatto the Board of Directors, include ourand the Board of Directors has approved, that the audited
consolidated financial statements be included in ourClarus’ Annual Report on Form 10-K for the fiscal year ended December 31, 2002 filed2009 for filing with the Securities and Exchange Commission.
9
SEC.
Submitted on April 23, 2010 by the Audit Committee of the Board of Directors:
Donald L. House (as Chairman)
Tench Coxe
(Chairman)
Nicholas Sokolow
AUDIT FEES
The aggregate fees billed by KPMG LLP, our independent auditors, for
professional services rendered for the audit of our annual financial statements
for the fiscal year ended December 31, 2002 and for the review of the financial
statements included in our quarterly reports on Form 10-Q for such fiscal year
were approximately $194,000.
ALL OTHER FEES
The aggregate fees billed by KPMG LLP for professional services
rendered for the fiscal year ended December 31, 2002, other than for services
described above under "Audit Fees" were $162,117. Such other fees included
services relating to the filing of proxy statements and Form 8-K's with the
Securities and Exchange Commission, tax compliance services, NOL and sales tax
issues.
The Audit Committee has considered whether the provision of non-audit
services by KPMG LLP is compatible with maintaining their independence.
21
EXECUTIVE OFFICERS
The following table sets forth the name, age and position of each of our executive officers and significant employees as of April 14, 2003.the date hereof. Our executive officers are appointed by and serve at the discretion of the Board of Directors of Clarus.
| Name | Age | Position |
| Warren B. Kanders | 52 | Executive Chairman of the Board of Directors |
| Robert R. Schiller | 47 | Executive Vice Chairman of the Board of Directors |
| Peter R. Metcalf | 54 | President and Chief |
| Robert N. Peay | 42 | Chief Financial Officer, Secretary and |
See "Biographical“Biographical Information for Directors"Directors” for biographical information with respect to Warren B. Kanders.
NIGEL P. EKERNKanders, Peter R. Metcalf and Robert R. Schiller.
Robert N. Peay, 42, is our Chief Financial Officer, Secretary and Treasurer. Mr. Peay had been the Chief Financial Officer of Black Diamond since 2008. Mr. Peay joined Black Diamond in 1996 and has previously served as Accounting Manager and Financial Controller of Black Diamond. Before joining Black Diamond, Mr. Peay worked in public accounting for two years with Arthur Andersen & Co. Mr. Peay received a Master’s degree in addition to a Bachelor of Science in Accounting from the University of Utah. He has been Chief Administrative Officera Certified Public Accountant since 1996.
There are no family relationships between our Named Executive Officers and Secretaryany director of the Company since December 2002. From January 2000 until joiningCompany.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Overview
The Compensation Committee of the Board of Directors (the “Compensation Committee”) assists the Board of Directors in establishing compensation packages for Clarus’ executive officers and non-employee directors and administering Clarus’ incentive plans. The Compensation Committee is generally responsible for setting and administering the policies which govern annual salaries of executive officers, raises and bonuses and certain awards of stock options and common stock under Clarus’ 2005 Stock Incentive Plan and otherwise, and, where applicable, compliance with the requirements of Section 162(m) of the Code and such responsibility is generally limited to the actions taken by the Compensation Committee, although at times the full Board of Directors has determined annual executive salaries, raises and, where the Company Mr. Ekern servedhas determined that compliance with the provisions of Section 162(m) of the Code is not required, bonuses as a Partner at Dubilier & Company, a New York-based private
investment firm.well as grants of stock options and common stock without having first received recommendations from the Compensation Committee. From June 1998 until January 2000, Mr. Ekern served as an
investment advisor at Caravelle Advisors, an investmenttime to time, the Compensation Committee reviews our compensation packages to ensure that they remain competitive with the compensation packages offered by similarly-situated companies and continue to incentivize management affiliate of
CIBC World Markets. From September 1996 until June 1998, Mr. Ekern served as an
investment banker at CIBC World Markets.
10
Following the sale of substantially alland align management’s interests with those of our electronic commerce
revenue-generating operationsstockholders.
22
The Compensation Committee is comprised of three directors, each of whom has considerable experience in executive compensation issues. Each member of the Compensation Committee meets the independence requirements specified by NASDAQ and related assetsby Section 162(m) of the Code.
Executive Compensation Philosophy
The general philosophy of our executive compensation program is to attract and retain talented management while ensuring that our executive officers are compensated in December 2002, (i) Stephen
P. Jeffery continued serving as a memberway that advances the interests of our stockholders. In pursuing these objectives, the Compensation Committee believes that it is critical that a substantial portion of each executive officer’s compensation be contingent upon our overall performance and the growth of the Company. The Compensation Committee is also guided by the principles that our compensation packages must be competitive, must support our overall strategy and objectives, must provide significant rewards for outstanding financial performance while establishing clear consequences for underperformance and must align management’s interests with the interests of stockholders by linking compensation with performance. Annual bonuses and long-term awards for our executive officers should take into account not only objective financial goals, but also individual performance goals that reinforce our core values, which include leadership, accountability, ethics and corporate governance. It is the Compensation Committee’s responsibility to determine the performance goals for the performance-based compensation payable to our Named Executive Officers identified on the Summary Compensation Table on page 29 in compliance with Section 162(m) of the Code, subject to ratification by the Board of Directors, and to certify compliance with such goals before such compensation is paid. Subject to this limitation, the Compensation Committee may also make recommendations to the Board of Directors with respect to Executive Chairman compensation and, either alone or with the other independent members of our Board of Directors, but stepped
down as our Chief Executive Officerto determine and Chairman of our Board of Directors; and
(ii) James J. McDevitt resigned as Chief Financial Officer of the Company.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following summary compensation table sets forth information
concerning the annual and long-term compensation earned byapprove our Executive Chairman ofChairman’s compensation.
In determining the compensation packages for our executive officers and non-employee directors, the Compensation Committee and the Board of Directors have evaluated the history and our Chief Administrative Officerperformance of Clarus, previous compensation practices and each
of our otherpackages awarded to Clarus’ executive officers whose annual salary and bonus during fiscal
2002, 2001non-employee directors, and 2000 exceeded $100,000 (collectively, the "Named Executive
Officers").
(1) Served in such position since December 2002.
(2) Served in such position until December 2002.
(3) In accordance with the rulescompensation policies and packages awarded to executive officers and non-employee directors at similarly-situated companies.
Use of the Securities and Exchange Commission, the
compensation set forth in the table does not include medical insurance,
group life insurance or other benefits, securities or property that do not
exceed the lesser of $50,000 or 10% of the person's salary and bonus shown
in the table.
(4) Effective February 1, 2002, Mr. Jeffery voluntarily relinquished the option
for these shares.
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OPTIONS GRANTED IN FISCAL 2002
We granted the following options to our Named Executive Officers during
fiscal 2002.
AGGREGATE OPTION EXERCISES IN FISCAL 2002 AND FISCAL YEAR END OPTION VALUES
The following table contains certain information regarding stock
options exercised during fiscal 2002 and options to purchase our Common Stock
held as of December 31, 2002, by each of the Named Executive Officers. The stock
options listed below were granted without tandem stock appreciation rights. We
have no freestanding stock appreciation rights outstanding.
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(1) Calculated on the basis of $5.62 per share, the closing price of the
Common Stock as quoted on the Nasdaq National Market, on December 31,
2002, less the exercise price payable for such shares.
(2) Calculated on the basis of the closing share price of the Common Stock
on the Nasdaq National Market on the date of exercise, less the
exercise price payable for such shares.
REPORT ON EXECUTIVE COMPENSATION BY THE BOARD OF DIRECTORS
AND THE COMPENSATION COMMITTEE
COMPENSATION POLICY
Outside Consultants
The Compensation Committee recommendshas the authority to the Board an overall
philosophyretain and strategy with respectterminate any independent compensation consultant and to the compensation of Clarus' Executive
Chairman of the Board of Directors, Chief Administrative Officerobtain independent advice and assistance from internal and external legal, accounting and other senior executives to attract and retain highly qualified individuals and
provides oversight of Clarus' executive compensation plans. Sinceadvisors. In 2009, the sale of
substantially all of our electronic commerce revenue-generating operations and
related assets in December 2002, our Compensation Committee has been compriseddid not engage any such consultants to determine or recommend the amount or form of Messrs. Coxeexecutive and Sokolow, with Mr. Coxe serving as the Chairman.
Pursuant to ourdirector compensation discussed herein.
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Compensation Program Components
Our executive compensation program the Compensation
Committee considers Companyemphasizes company performance, individual performance and an increase in stockholder value over time in determining executive pay levels. Our executive compensation program consists of three key elements: (i) low annual base salaries; (ii) a performance-based annual bonus; and (iii) periodic grants of stock options.options and restricted stock. The
13
Compensation Committee believes that this three-part approach best serves our and our stockholders'stockholders’ interests by motivating executive officers to improve our financial position, holding executives accountable for the performance of the businessesorganizations for which they are responsible and by attracting key executives into our service. Under our compensation program, annual compensation for executive officers are composed of a significant portion of pay that is "at risk" --“at risk” – specifically, the annual bonus, stock options and stock options. restricted stock.
Annual performance bonuses
also permitCash Compensation
Base Salary. In reviewing and approving the base salaries of our executive officers, the Compensation Committee considers the scope of work and responsibilities and other individual-specific factors; the recommendation of the Executive Chairman (except in the case of his own compensation); compensation for similar positions at similarly-situated companies; and the executive's experience. Except where an existing agreement establishes an executive’s salary, the Compensation Committee reviews executive officer salaries annually at the end of the fiscal year and establishes the base salaries for the upcoming fiscal year. As part of our efforts to reduce our level of operating expenses, pending consummation of an asset redeployment transaction, Mr. Kanders agreed with the Company and its Board of Directors pursuant to a letter dated August 6, 2009, to defer his $250,000 annual salary effective as of July 1, 2009, until the consummation of an asset redeployment transaction, at which time all such deferred salary will be paid to him. In addition, as part of such additional efforts to reduce our level of operating expenses, Mr. Baratelli agreed in a letter dated August 6, 2009 to a ten percent (10%) reduction of his current base salary of $200,000, effective as of July 1, 2009. As Mr. Baratelli did not have an employment agreement, his employment with the Company was “at will.” In establishing Mr. Baratelli’s base salary, the Board considered compensation for similar positions at similarly-situated companies in the New York City metropolitan area and Mr. Baratelli’s prior experience as an accountant, as well as Corporate Controller and Treasurer of Armor Holdings, Inc.
Our Executive Chairman and Executive Vice Chairman devote only as much of their time as is necessary to the affairs of the Company and also serve in various capacities with other public and private entities, including not-for-profit entities.
24
Performance-Based Annual Bonus. With regard to the compensation of any Named Executive Officer that is subject to Section 162(m) of the Code, the Compensation Committee establishes the performance goals and then certifies the satisfaction of such performance goals prior to the payment of the performance-based bonus compensation. In reviewing and approving the annual performance-based bonus for our executive officers, the Compensation Committee may also consider an executive’s contribution to the overall performance of Clarus, as well as annual bonuses awarded to persons holding similar positions at similarly-situated companies. In addition, cash bonuses may be awarded at the discretion of the Board of Directors, the Compensation Committee or the executive management of the Company. The Board of Directors and Compensation Committee determined not to award Mr. Kanders or Mr. Baratelli a cash bonus in 2009.
Equity-Based Compensation
Executive officers of Clarus and other key employees are eligible to be recognized on an annual basis. Suchawarded stock options to purchase our common stock, shares of restricted common stock, and bonuses are based largely on an evaluation of shares of common stock under the contribution made by2005 Stock Incentive Plan. Awards under the executive
officer to our overall performance.2005 Stock options, which are generally awarded
under our stock incentive plans,Incentive Plan help relate a significant portion of an employee’s long-term remuneration directly to stock price appreciation realized by all our stockholders and align an employee’s interests with that of our stockholders. COMPENSATION OF EXECUTIVE CHAIRMAN OF THE BOARD OF DIRECTORS
As Executive ChairmanThe Compensation Committee believes equity-based incentive compensation aligns executive and stockholder interests because (i) the use of a multi-year lock-up or vesting schedule or milestone based vesting schedule for equity awards encourages executive retention and emphasizes long-term growth, and (ii) paying a significant portion of management’s compensation in our equity provides management with a powerful incentive to increase stockholder value over the long-term. The Compensation Committee determines appropriate individual long-term incentive awards in the exercise of its discretion in view of the above criteria and applicable policies. The timing of our equity award grants is not designed to have any relationship with our release of material, non-public information. Awards are generally granted at previously scheduled meetings of the Board of Directors and Compensation Committee and as required by our 2005 Stock Incentive Plan, options and stock awards are granted with an exercise price and valued equal to the fair market value of the Company’s common stock which is the closing price on the date of such grant.
In May of 2009, Mr. Kanders is
compensated pursuant to an employment agreement entered into in December 2002.
During 2002, Mr. Kanders received an aggregate base salary of $16,186. On
December 23, 2002, Mr. Kanders receivedwas awarded immediately exercisable and vested three-year options under the 2005 Stock Incentive Plan to purchase up to (i) 200,00021,250 shares of the Company's Common Stock,common stock at an exercise price of $5.35 per share;
(ii) 400,000$4.06. Such options were granted upon the expiration of a previously granted seven-year stock option award to purchase 21,250 shares of common stock that was currently exercisable and vested. In granting the Company's Common Stock, at annew stock option award to Mr. Kanders, the Compensation Committee noted that the Company’s current practice with respect to stock option awards has been to grant ten-year stock option awards with a ten-year exercise priceperiod rather than a seven-year exercise period and believed that the interests of $7.50
per share;the Company and (iii) 400,000its stockholders would be served if upon the expiration of the seven-year stock options, the Company granted to Mr. Kanders a new three-year stock option award for the same amount of shares of the Company's Common Stock, at an
exercise price of $10.00 per share,common stock as such expired seven-year stock option award.
Perquisites and Other Personal and Additional Benefits
Executive officers participate in other employee benefit plans generally available to all vesting in five equal annual
installments commencingemployees on the first anniversarysame terms as similarly-situated employees.
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The Company maintains qualified 401(k) plans that provide for discretionary Company contributions up to the applicable Internal Revenue Service limits.
The Company also provides Named Executive Officers with perquisites and other personal benefits that the Company and the Compensation Committee believe are reasonable and consistent with its overall compensation program to better enable the Company to attract and retain superior employees for key positions. The Compensation Committee periodically reviews the levels of perquisites and other personal benefits provided to our Named Executive Officers.
The costs to the Company associated with providing these benefits for executive officers named in the Summary Compensation Table are reflected in the “All Other Compensation” column of the dateSummary Compensation Table.
Accounting and Tax Considerations
Section 162(m) of grant.the Code generally disallows a tax deduction to public corporations for compensation other than performance-based compensation over $1,000,000 paid for any fiscal year to an individual who, on the last day of the taxable year, was (i) the Chief Executive Officer or (ii) among the four other highest compensated executive officers whose compensation is required to be reported in the Summary Compensation Table contained herein. Compensation programs generally will qualify as performance-based if (1) compensation is based on pre-established objective performance targets, (2) the programs’ material features have been approved by stockholders, and (3) there is no discretion to increase payments after the performance targets have been established for the performance period. With regard to the compensation of any Named Executive Officer that is subject to Section 162(m) of the Code, the Compensation Committee establishes the performance goals and then certifies the satisfaction of such performance goals prior to the payment of the performance-based bonus compensation. The Compensation Committee desires to maximize deductibility of compensation under Section 162(m) of the Code to the extent practicable while maintaining a competitive, performance-based compensation program. However, the Compensation Committee also believes that it must reserve the right to award compensation which it deems to be in the best interests of our stockholders but which may not be tax deductible under Section 162(m) of the Code.
Post-Employment and Other Events
Retirement, death, disability and change-in-control events trigger the payment of certain compensation to the Named Executive Officers that is not available to all salaried employees. Such compensation is discussed under the headings “Employment Agreements” and “Potential Payments Upon Termination or Change in Control.”
Role of Executive Officers in Compensation Decisions
The Compensation Committee determines the total compensation of our Executive Chairman and oversees the design and administration of compensation and benefit plans for all of the Company’s employees. Certain executive officers, including the Executive Chairman and Chief Financial Officer, may attend a portion of most regularly scheduled Compensation Committee meetings, excluding executive sessions, to present topical issues for discussion and education as well as specific recommendations for review. The Compensation Committee also obtains input from our legal, finance and tax advisors, as appropriate.
26
Summary
The Compensation Committee believes that the total compensation package has been designed to motivate key management to improve the operations and financial performance of the Company, thereby increasing the market value of our common stock. The tables in this Executive Compensation section reflect the compensation structure established by the Compensation Committee.
Compensation Committee Report
The Company’s Compensation Committee of the Board of Directors submitted on April 23, 2010 the following report for inclusion in this Proxy Statement:
Our Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this Proxy Statement with management. Based on our Compensation Committee’s review of and the discussions with management with respect to the Compensation Discussion and Analysis, our Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement for filing with the SEC.
| MEMBERS OF THE COMPENSATION COMMITTEE |
| Nicholas Sokolow (Chairman) |
| Burtt R. Ehrlich (resigned effective as of May 28, 2010) |
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Summary Compensation Table
The following summary compensation table sets forth information concerning the annual and long-term compensation earned for the periods presented below by our executive officers and persons as to whom disclosure is required under the applicable rules of the SEC (collectively, the “Named Executive Officers”).
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Option Awards ($)(2) | Non-Equity Deferred Compensation Earnings | Non-qualified Deferred Compensation Earnings | All Other Compensation ($) | Total ($) |
Warren B. Kanders (3) | 2009 | 125,000(4) | - | - | 14,690 (5) | - | - | 26,202 (6) | 165,892 |
| Executive Chairman | 2008 | 250,000 | - | - | - | - | - | 46,899 | 296,899 |
| 2007 | 250,000 | - | - | - | - | - | 14,918 | 264,918 | |
Philip A. Baratelli (7) | 2009 | 190,000 (8) | - | - | - | - | - | 35,479 (9) | 225,479 |
| Chief Financial Officer, Secretary and Treasurer | 2008 | 200,000 | 50,000 (10) | - | - | - | - | 34,355 | 284,355 |
| 2007 | 170,833 | 75,000 (10) | - | 277,370(11) | - | - | 59,683 | 582,886 |
| (1) | Represents the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 for awards made during the applicable year. For discussions on the relevant assumptions, see footnote 6, “Stock Incentive Plans” in the financial statements contained in the Annual Reports on Form 10-K for the years ended December 31, 2009 and 2008, and footnote 8, “Stock Incentive Plans” in the financial statements contained in the annual report on Form 10-K for the year ended December 31, 2007. |
| (2) | Represents the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 for awards made during the applicable year. For discussions on the relevant assumptions, see footnote 6, “Stock Incentive Plans” in the financial statements contained in the Annual Reports on Form 10-K for the years ended December 31, 2009 and 2008, and footnote 8, “Stock Incentive Plans” in the financial statements contained in the Annual Report on Form 10-K for the year ended December 31, 2007. |
| (3) | Mr. Kanders is compensated pursuant to the terms of his employment agreement which is discussed under the heading “Employment Agreements” in this Proxy Statement. Mr. Kanders is required to devote only as much time as is necessary to perform his duties for the Company. |
| (4) | As part of our efforts to reduce our level of operating expenses, pending consummation of an asset redeployment transaction, Mr. Kanders agreed with the Company and its Board of Directors pursuant to a letter dated August 6, 2009, to defer his $250,000 annual salary effective as of July 1, 2009, until the consummation of an asset redeployment transaction, at which time all such deferred salary will be paid to him. |
| (5) | Represents the grant date fair value per share of $0.69 of options computed in accordance with FASB ASC Topic 718 to purchase 21,250 shares of the Company’s common stock at an exercise price of $4.06 granted pursuant to the 2005 Stock Incentive Plan. |
28
| (6) | “All Other Compensation” amount for Mr. Kanders in 2009 consists of the following items: 401(k) matching contributions, $5,062; health, short-term and long-term disability, $18,933; and life insurance, $2,207. |
| (7) | Mr. Baratelli commenced employment as the Company’s Chief Financial Officer, Secretary and Treasurer effective as of February 1, 2007. Mr. Baratelli’s employment with the Company was “at-will” and he was required to devote only as much time as is necessary to perform his duties for the Company. Mr. Baratelli resigned as Chief Financial Officer, Secretary and Treasurer on May 28, 2010. |
| (8) | As part of additional efforts to reduce our level of operating expenses, pending consummation of an asset redeployment transaction, Mr. Baratelli agreed in a letter dated August 6, 2009 to a ten percent (10%) reduction of his current base salary of $200,000, effective as of July 1, 2009. |
| (9) | “All Other Compensation” for amount Mr. Baratelli in 2009 consists of the following items: 401(k) matching contributions, $8,550; health, short-term and long-term disability, $26,446; and life insurance, $483. |
| (10) | Discretionary cash bonus awarded by the Board of Directors. |
| (11) | Represents the grant date fair value per share of $2.77 of options computed in accordance with FASB ASC Topic 718 to purchase 100,000 shares of the Company’s common stock at an exercise price of $5.98 granted pursuant to the 2005 Stock Incentive Plan. |
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Grants of Plan-Based Awards
The following table sets forth information concerning grants of plan-based awards in fiscal year 2009 to each of the Named Executive Officers.
Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: | All Other Option Awards: | Grant Date Fair | ||||||||||||||||||||||||||||||||||||||||
| Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold ($) | Target ($) | Maximum ($) | Number of Shares of Stock or Units (#) | Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($) | Value of Stock and Option Awards ($) | |||||||||||||||||||||||||||||||||
| Warren B. Kanders | 5/28/09 | (1) | - | - | - | - | - | - | - | 21,250 | $ | 4.06 | $ | 14,690 | ||||||||||||||||||||||||||||||
Philip A. Baratelli(2) | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||
| (1) | Mr. Kanders was awarded immediately exercisable and vested three-year options under the 2005 Stock Incentive Plan to purchase 21,250 shares of common stock at an exercise price of $4.06. Such options were granted upon the expiration of a previously granted seven-year stock option award to purchase 21,250 shares of common stock that was currently exercisable and vested. Additional information about our 2005 Stock Incentive Plan is included in the Compensation Discussion Analysis section of our Annual Report on Form 10-K, as amended. |
| (2) | Mr. Baratelli resigned as Chief Financial Officer, Secretary and Treasurer on May 28, 2010. |
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Outstanding Equity Awards at Fiscal Year End
The following table sets forth information concerning stock options and stock awards held by the Named Executive Officers at December 31, 2009:
| Option Awards | Stock Awards | |||||||||||||||
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | |||||||
| Warren B. Kanders | 200,000 (1) | -- | -- | 5.35 | 12/20/12 | -- | -- | -- | -- | |||||||
400,000 (2) | -- | -- | 7.50 | 12/20/12 (2) | -- | -- | -- | -- | ||||||||
400,000 (2) | -- | -- | 10.00 | 12/20/12 (2) | -- | -- | -- | -- | ||||||||
21,250 (3) | -- | -- | 4.06 | 5/28/12 | -- | -- | -- | -- | ||||||||
500,000 (4) | 2,125,000 | -- | 2,125,000 | |||||||||||||
Philip A. Baratelli(5) | 50,000 (6) | 50,000 (6) | -- | 5.98 | 12/13/17 | -- | -- | -- | -- | |||||||
| (1) | Fully vested stock option award granted pursuant to the Company’s 2005 Stock Incentive Plan. |
| (2) | Fully vested non-plan stock option award. The Company’s Compensation Committee and Board of Directors approved, effective as of May 28, 2010, the extension of the expiration date for such stock option awards from December 20, 2012 to May 31, 2020. |
| (3) | Options granted pursuant to the 2005 Stock Incentive Plan vested and became fully exercisable on May 28, 2009. |
| (4) | Shares of restricted common stock which shall vest and become nonforfeitable if Mr. Kanders is an employee and/or a director of the Company or a subsidiary or affiliate of the Company on the earlier of (i) the date the closing price of the Company’s common stock equals or exceeds $15.00 per share for each of the trading days during a ninety consecutive day period, or (ii) the tenth anniversary of the date of grant, subject to acceleration in certain circumstances. The vesting of such shares of restricted common stock was accelerated by the Company’s Compensation Committee and Board of Directors, effective as of May 28, 2010. |
| (5) | Mr. Baratelli resigned as Chief Financial Officer, Secretary and Treasurer on May 28, 2010. |
| (6) | Options granted pursuant to the 2005 Stock Incentive Plan vest and become exercisable in equal annual installments over four years commencing December 13, 2008. |
Option Exercises and Stock Vested During Fiscal 2009
There were no options exercised by or stock awards vesting to our Named Executive Officers during the fiscal year ended December 31, 2009.
Pension Benefits – Fiscal 2009
There were no pension benefits earned by our Named Executive Officers during the fiscal year ended December 31, 2009.
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Non-qualified Defined Contribution and Other Non-qualified Deferred Compensation Plans
The Company does not have any non-qualified defined contribution or other non-qualified deferred compensation plans covering its Named Executive Officers.
Potential Payments Upon Termination or Change of Control
The tables below reflect the amount of compensation to each of the Named Executive Officers of the Company in the event of termination of such executive’s employment. The amount of compensation payable to each Named Executive Officer upon voluntary termination; retirement; involuntary not-for-cause termination; involuntary for cause termination; termination following a change of control; retention following a change of control; and in the event of disability or death of the executive is shown below. The amounts shown assume that such termination was effective as of December 31, 2009. The amounts shown thus include amounts earned through such times and are estimates of the amounts which would be paid out to the executives upon their termination. The actual amounts to be paid out can only be determined at the time of such executive’s separation from the Company.
Payments Made Upon Termination
Regardless of the manner in which a Named Executive Officer’s employment terminates, he may be entitled to receive amounts earned during his term of employment.
Payments Made Upon Retirement
In the event of the retirement of a Named Executive Officer, no additional benefits are paid.
Payments Made Upon a Change of Control
Pursuant to the terms of the Company’s employment agreement with Mr. Kanders, if his employment with the Company is terminated following a change of control (other than termination by the Company for cause or by reason of death or disability) or if he terminates his employment in certain circumstances defined in the agreement which constitute “good reason,” then Mr. Kanders will receive one year of annual salary in one lump sum and all unvested stock options held by Mr. Kanders will automatically vest and become exercisable.
Pursuant to Mr. Kanders’ employment agreement, a change of control is deemed to occur in the event that:
| · | the current members of the Board of Directors cease to constitute a majority of the Board of Directors; or |
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| · | the Company shall have been sold by either (i) a sale of all or substantially all its assets, or (ii) a merger or consolidation, other than any merger or consolidation pursuant to which the Company acquires another entity, or (iii) a tender offer, whether solicited or unsolicited; or |
| · | any party, other than the Company, is or becomes the “beneficial owner” (as defined in the Exchange Act), directly or indirectly, of voting securities representing 50% or more of the total voting power of the Company. |
Warren B. Kanders
The following table shows the potential payments upon termination or a change of control of the Company for Warren B. Kanders, the Company’s Executive Chairman pursuant to the terms of his employment agreement dated May 28, 2010, which is discussed under the heading “Employment Agreements” in this Proxy Statement.
Executive Benefits upon Payments Upon Separation | Voluntary Termination on 12/31/09 ($) | For Cause Termination on 12/31/09 ($) | Without Cause Termination on 12/31/09 ($) | Change-in-Control and Termination on 12/31/09 ($) | Disability on 12/31/09 ($) | Death on 12/31/09 ($) |
| Compensation | ||||||
| Cash Severance - Salary | -- | -- | 175,000 (1) | 175,000 (1) | -- | -- |
| Stock Options | -- | -- | -- | -- | -- | -- |
| Restricted Stock | -- | -- | -- | -- | -- | -- |
| Benefits & Perquisites | ||||||
| Life Insurance | -- | -- | -- | -- | 2,000,000 (2) | 2,000,000 (2) |
| Disability Income | -- | -- | -- | -- | -- | -- |
| Total | -- | -- | 175,000 | 175,000 | 2,000,000 | 2,000,000 |
| (1) | Mr. Kanders would be entitled to receive one year of his annual base salary of $175,000 in one lump sum and all unvested stock options would immediately vest and become exercisable pursuant to the terms of his employment agreement which is discussed under the heading “Employment Agreements” in this Proxy Statement. |
| (2) | Upon Mr. Kanders’ death or disability, his designees would be entitled to receive $2 million pursuant to the terms of his employment agreement which is discussed under the heading “Employment Agreements” in this Proxy Statement. |
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Philip A. Baratelli
The following table shows the potential payments upon termination or a change of control of the Company for Philip A. Baratelli, who served as the Company’s Chief Financial Officer, Secretary and Treasurer until his resignation on May 28, 2010.
Executive Benefits upon Payments Upon Separation | Voluntary Termination on 12/31/09 ($) | For Cause Termination on 12/31/09 ($) | Without Cause Termination on 12/31/09 ($) | Change-in-Control and Termination on 12/31/09 ($) | Disability on 12/31/09 ($) | Death on 12/31/09 ($) |
| Compensation | ||||||
| Cash Severance - Salary | -- | -- | -- | -- | -- | -- |
| Stock Options | -- | -- | -- | -- | -- | -- |
| Restricted Stock | -- | -- | -- | -- | -- | -- |
| Benefits & Perquisites | ||||||
| Life Insurance | -- | -- | -- | -- | -- | 250,000 (2) |
| Disability Income | -- | -- | -- | -- | 165,000 (1) | -- |
| Total | -- | -- | -- | -- | 165,000 | 250,000 |
| (1) | Mr. Baratelli would have been entitled to receive $13,750 per month benefit or $165,000 annually if he could not perform his duties as the Company’s Chief Financial Officer. |
| (2) | Upon Mr. Baratelli’s death, his beneficiary would have been entitled to receive $250,000 from a Company group term life policy that is maintained for the benefit of all of the Company’s employees. |
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| EMPLOYMENT ARRANGEMENTS |
Warren B. Kanders
On May 28, 2010, the Company entered into an employment agreement with Warren B. Kanders (the “Kanders Employment Agreement”), in connection with the consummation of the acquisitions of Black Diamond and Gregory, which replaced his previously existing employment agreement with the Company dated December 6, 2002, as amended effective as of May 1, 2006 and August 6, 2009. The Kanders Employment Agreement provides for his employment as Executive Chairman of the Company for a term of three years, subject to certain termination rights, during which time he will receive an annual base salary of $175,000, subject to annual review by the Company. In addition, Mr. Kanders is entitled, at the discretion of ourthe Compensation Committee of the Company’s Board of Directors, to receive performance bonuses, which may be based upon a variety of factors, and stock options and to participate in the our stock incentive plans and other bonus plans adoptedof the Company. Mr. Kanders will also be entitled, in the sole and absolute discretion of the Compensation Committee of the Company’s Board of Directors, to bonuses in the form of cash, stock options and/or restricted stock awards based upon his provision of strategic advice to the Company in connection with capital markets transactions, financings, capital structure optimization and mergers and acquisitions transactions. The Company also agreed to maintain term life insurance on Mr. Kanders in the amount of $2,000,000 for the benefit of his designees (the “Kanders Life Insurance”).
The Kanders Employment Agreement contains a non-competition covenant and non-interference (relating to the Company’s customers) and non-solicitation (relating to the Company’s employees) provisions effective during the term of his employment and for a period of three years after termination of the Kanders Employment Agreement.
In the event that Mr. Kanders’ employment is terminated (i) by us
basedthe Company without “cause” (as such term is defined in the Kanders Employment Agreement); (ii) by Mr. Kanders for certain reasons set forth in the Kanders Employment Agreement; or (iii) by Mr. Kanders upon a “change in control” (as such term is defined in the Kanders Employment Agreement), Mr. Kanders will be entitled to receive an amount equal to one year of his base salary in one lump sum payment within five days after the effective date of such termination and all unvested stock options held by Mr. Kanders will immediately vest and become exercisable. In the event that Mr. Kanders fails to comply with any of his post-employment obligations under the Kanders Employment Agreement, including, without limitation, the non-competition covenant and the non-interference and non-solicitation provisions, Mr. Kanders will be required to repay such lump sum payment as of the date of such failure to comply and he will have no further rights in or to such lump sum payment. In the event that Mr. Kanders’ employment is terminated upon his death, Mr. Kanders’ designees will be entitled to receive the proceeds of the Kanders Life Insurance. The Kanders Employment Agreement may also be terminated by the Company for “cause.” In the event that Mr. Kanders’ employment is terminated by the Company for “cause,” all stock options, whether vested or unvested, will terminate and be null and void.
In connection with the acquisitions of Black Diamond and Gregory, the Company’s Compensation Committee and Board of Directors approved, effective as of May 28, 2010, (i) the extension of the expiration date from December 20, 2012 to May 31, 2020 of an aggregate of 800,000 vested non-plan stock options previously granted to Mr. Kanders pursuant to a stock option agreement, dated December 23, 2002, between the Company and Mr. Kanders, (ii) the acceleration of vesting of 500,000 shares of restricted common stock that had been previously granted to Mr. Kanders, pursuant to a restricted stock agreement dated April 11, 2003, between the Company and Mr. Kanders, and (iii) the payment of Mr. Kanders’ previously deferred salary. Also on his performanceMay 28, 2010, the Company entered into a new restricted stock award agreement (the “RSA Agreement”) with Mr. Kanders. Under the RSA Agreement, Mr. Kanders has been granted a seven-year restricted stock award of 500,000 restricted shares under the Clarus 2005 Stock Incentive Plan, of which (i) 250,000 restricted shares will vest and Clarus' performance.
COMPENSATION OF CHIEF ADMINISTRATIVE OFFICER
As Chief Administrative Officer,become nonforfeitable on the date the closing price of the Company’s common stock shall have equaled or exceeded $10.00 per share for 20 consecutive trading days; and (ii) 250,000 restricted shares shall vest and become nonforfeitable on the date the closing price of the Company’s common stock shall have equaled or exceeded $12.00 per share for twenty consecutive trading days. The RSA Agreement does not include 250,000 shares of restricted common stock, which the Company’s Board of Directors has determined to grant on January 2, 2011, if Mr. EkernKanders is compensated pursuant toan employee and/or a director of the Company or any of its subsidiaries on January 2, 2011, which will vest and become nonforfeitable on the date the closing price of the Company’s common stock shall have equaled or exceeded the lesser of three times the closing price of the Company’s common stock on January 2, 2011, or $14.00 per share, in each case for 20 consecutive trading days.
Robert R. Schiller
On May 28, 2010, the Company entered into an employment agreement entered intowith Robert R. Schiller (the “Schiller Employment Agreement”) in December 2002 but effectiveconnection with the consummation of the acquisitions of Black Diamond and Gregory. The Schiller Employment Agreement provides for his employment as Executive Vice Chairman of November 25, 2002. During 2002, Mr. Ekern receivedthe Company for a term of three years, subject to certain termination rights, during which time he will receive an aggregateannual base salary of $17,949.$175,000, subject to annual review by the Company. In addition, Mr. EkernSchiller is entitled, at the discretion of ourthe Compensation Committee of the Company’s Board of Directors, to receive performance bonuses, which may be based upon a variety of factors, and stock options and to participate in the our stock incentive plans and other bonus plans adopted by usof the Company. Mr. Schiller will also be entitled, in the sole and absolute discretion of the Compensation Committee of the Company’s Board of Directors, to bonuses in the form of cash, stock options and/or restricted stock awards based onupon his performanceprovision of strategic advice to the Company in connection with capital markets transactions, financings, capital structure optimization and Clarus' performance. Undermergers and acquisitions transactions.
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The Schiller Employment Agreement contains a non-competition covenant and non-interference (relating to the termsCompany’s customers) and non-solicitation (relating to the Company’s employees) provisions effective during the term of his employment agreement with us, Mr. Ekern received options to purchase up
to 200,000 sharesand for a period of three years after termination of the Company's Common Stock, atSchiller Employment Agreement.
In the event that Mr. Schiller’s employment is terminated (i) by the Company without “cause” (as such term is defined in the Schiller Employment Agreement); (ii) by Mr. Schiller for certain reasons set forth in the Schiller Employment Agreement; (iii) or by Mr. Schiller upon a “change in control” (as such term is defined in the Schiller Employment Agreement), Mr. Schiller will be entitled to receive an exercise priceamount equal to one year of $5.35
per share his base salary in one lump sum payment within five days after the effective date of such termination and vesting in five equal annual installments commencing onall unvested stock options held by Mr. Schiller will immediately vest and become exercisable. In the first
anniversaryevent that Mr. Schiller fails to comply with any of his post-employment obligations under the Schiller Employment Agreement, including, without limitation, the non-competition covenant and the non-solicitation provisions, Mr. Schiller will be required to repay such lump sum payment as of the date of grant.
COMPENSATION OF FORMER CHIEF EXECUTIVE OFFICERsuch failure to comply and he will have no further rights in or to such lump sum payment. The Schiller Employment Agreement may also be terminated by the Company for “cause.” In the event that Mr. Jeffery servedSchiller’s employment is terminated by the Company for “cause,” all stock options, whether vested or unvested, will terminate and be null and void.
Peter R. Metcalf
On May 7, 2010, the Company entered into an employment agreement, as ouramended, with Peter R. Metcalf, which became effective on the closing of the acquisition of Black Diamond on May 28, 2010 (the “Metcalf Employment Agreement”). The Metcalf Employment Agreement provides for his employment as President and Chief Executive Officer pursuantof the Company for a term of three years, subject to certain termination rights, at an employment agreement entered into in January 2001 until he stepped down in
December 2002. During 2002, Mr. Jeffery's received an aggregateannual base salary of $250,000.$210,000, subject to annual review by the Company. In addition, Mr. Jeffery wasMetcalf is entitled, at the discretion of ourthe Compensation Committee of the Company’s Board of Directors, to receive performance bonuses, which may be based upon a variety of factors, and stock options and to participate in the our stock incentive plans and other bonus plans adoptedof the Company.
Upon the closing of the acquisition of Black Diamond, pursuant to the Metcalf Employment Agreement, the Company issued and granted to Mr. Metcalf an option to purchase 75,000 shares of the Company’s common stock, having an exercise price equal to $6.85 per share, and vesting in three installments as follows: 30,000 options on December 31, 2012 and 22,500 options on each of December 31, 2013 and December 31, 2014, provided that any of these 75,000 options that are unvested will immediately vest if his employment agreement is not renewed upon expiration of the three-year term.
The Metcalf Employment Agreement contains a non-competition covenant and non-interference (relating to the Company’s customers) and non-solicitation (relating to the Company’s employees) provisions effective during the term of his employment and for a period of two years after termination of the Metcalf Employment Agreement.
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In the event that Mr. Metcalf’s employment is terminated (i) by us basedthe Company without “cause” (as such term is defined in the Metcalf Employment Agreement), (ii) by Mr. Metcalf for certain reasons set forth in the Metcalf Employment Agreement or (iii) by Mr. Metcalf upon a “change in control” (as such term is defined in the Metcalf Employment Agreement), Mr. Metcalf will be entitled to receive an amount equal to one year of his base salary in one lump sum payment within five days after the effective date of such termination and all unvested stock options held by Mr. Metcalf will immediately vest and become exercisable. In addition, in the event that Mr. Metcalf’s employment is terminated for any reason other than by the Company for “cause” (as such term is defined in the Metcalf Employment Agreement), the Company has agreed, during the period commencing with such termination and ending on his performancesixty-fifth (65th) birthday, to provide Mr. Metcalf with the same form of medical and Clarus' performance.
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Submitteddental insurance as the Company may make available to, or have in effect for, its senior executive officers from time to time.
In the event that Mr. Metcalf fails to comply with any of his post-employment obligations under the Metcalf Employment Agreement, including, without limitation, the non-competition covenant and the non-interference and non-solicitation provisions, Mr. Metcalf will be required to repay such lump sum payment as of the date of such failure to comply and he will have no further rights in or to such lump sum payment and the Company’s obligation to provide the medical and dental insurance benefits described above will terminate and be null and void as of such date. The Metcalf Employment Agreement may also be terminated by the Company for “cause.” In the event that Mr. Metcalf’s employment is terminated by the Company for “cause,” all stock options, whether vested or unvested, will terminate and be null and void.
Robert N. Peay
On May 28, 2010, in connection with the consummation of the acquisitions of Black Diamond and Gregory, Robert N. Peay became Chief Financial Officer, Secretary and Treasurer of the Company with a base salary of $175,000 per year. Mr. Peay serves as an “at will” employee of the Company. In addition, upon the closing of the acquisition of Black Diamond, the Company issued and granted to Mr. Peay an option to purchase 30,000 shares of the Company’s common stock having an exercise price of $6.85 per share, and vesting in three installments as follows: 12,000 shares on December 31, 2012 and 9,000 shares on each of December 31, 2013 and December 31, 2014.
Philip A. Baratelli
On May 28, 2010, in connection with the consummation of the acquisitions of Black Diamond and Gregory, Mr. Baratelli resigned as Chief Financial Officer, Treasurer and Secretary of the Company. He had been serving in such capacities as an “at will” employee of the Company with a base salary of $180,000 per year at the time of his resignation. In connection with Mr. Baratelli’s resignation, the Company’s Compensation Committee and Board of Directors approved the acceleration of vesting of options to purchase an aggregate of 50,000 shares of the BoardCompany’s common stock (which represent the unvested portion of Directors:
Tench Coxe (as Chairman)
Nicholas Sokolow
stock option awards previously granted to Mr. Baratelli on December 31, 2007 under the Company’s 2005 Stock Incentive Plan) and extended the period in which Mr. Baratelli may exercise such options until May 28, 2013.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
Except as set forth below, during 2002,
During fiscal 2009, none of the members of our Compensation Committee (i) served as an officer or employee of Clarus or its subsidiaries, (ii) was formerly an officer of Clarus or its subsidiaries or (iii) entered into any transactions with Clarus or its subsidiaries. Except as
set forth below, during 2002,During fiscal 2009, none of our executive officers (i) served as a member of the compensation committee (or other board committee performing similar functions or, in the absence of any such committee, the board of directors) of another entity, one of whose executive officers served on our Compensation Committee, (ii) served as director of another entity, one of whose executive officers served on our Compensation Committee, or (iii) served as member of the compensation committee (or other board committee performing similar functions or, in the absence of any such committee, the board of directors) of another entity, one of whose executive officers served as a director of Clarus.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Kanders & Company, Inc.
In September 2003, the Company and Kanders & Co. entered into a 15-year lease with a five-year renewal option, as co-tenants with Kanders & Co. to lease approximately 11,500 square feet in Stamford, Connecticut. Until May 28, 2010, the Company paid $29,218 a month for its 75% portion of the lease, Kanders & Co. paid $9,739 month for its 25% portion of the lease and rent expense was recognized on a straight-line basis. The lease provides the co-tenants with an option to terminate the lease in years eight and ten in consideration for a termination payment. In connection with the lease, the Company obtained a stand-by letter of credit in the amount of $850,000 to secure lease obligations for the Stamford facility and Kanders & Co. reimbursed the Company for a pro rata portion of the approximately $4,500 annual cost of the letter of credit.
Until May 28, 2010, the Company provided certain telecommunication, administrative and other office services, as well as accounting and bookkeeping services, to Kanders & Co. that were reimbursed by Kanders & Co. Such services aggregated $221,000 during the year ended December 31, 2009.
As of December 31, 2009, the Company had a net receivable of $52,000 from Kanders & Co. The outstanding amount was paid and received in the first quarter of 2010. As of December 31, 2008, the Company had a net receivable of $21,000 from Kanders & Co. The outstanding amount was paid and received in the first quarter of 2009.
Until September 30, 2009, the Company previously provided certain telecommunication, administrative and other office services to Stamford Industrial Group, Inc. (“SIG”) that were reimbursed by SIG. Warren B. Kanders, our Executive Chairman, also served as the Non-Executive Chairman of SIG. Such services aggregated $18,700 during the year ended December 31, 2009.
As of December 31, 2009, the Company had no outstanding receivables from or payables to SIG. As of December 31, 2008, the Company had an outstanding receivable of $8,300 from SIG. The outstanding amount was paid in January 2009.
During 2002,the year ended December 31, 2009, the Company incurred no charges related to Kanders Aviation LLC (“Kanders Aviation”), an affiliate of the Company’s Executive Chairman, Warren B. Kanders. During the year ended December 31, 2008, the Company incurred charges of approximately $14,000 for payments to Kanders Aviation, relating to aircraft travel by officers of the Company for potential redeployment transactions, pursuant to the Transportation Services Agreement, dated December 18, 2003 between the Company and Kanders Aviation. As of December 31, 2009, the Company had no outstanding receivables from or payables to Kanders Aviation.
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In connection with Clarus’ acquisitions of Black Diamond and Gregory, the Company relocated its corporate headquarters from Stamford, Connecticut, where it shares office space with Kanders & Co., to Black Diamond’s corporate headquarters in Salt Lake City, Utah. On May 28, 2010, the Company entered into a transition agreement with Kanders & Co. which provides for, among other things, (i) assumption by Kanders & Co. of Clarus’ obligations accrued after May 28, 2010 under the lease; (ii) the reimbursement of Kanders & Co. by Clarus for its assumption of Clarus’ remaining lease obligations and any related cancellation fees in an amount equal to approximately $1,076,507, which is comprised of Clarus’ 75% pro rata portion of any such remaining lease obligations and any related cancellation fees; (iii) the indemnification by Kanders & Co. of Clarus’ lease obligations and any related cancellation fees accruing after May 28, 2010; (iv) the retention of Kanders & Co. and payment by Clarus to Kanders & Co. of an immediate fee of $1,061,058 for severance payments and transition services subsequent to the closing of the acquisitions of Black Diamond and Gregory through March 31, 2011; and (v) the indemnification of Kanders & Co. for any liability resulting from the transition services it provides to Clarus. In connection with the transition services, Clarus assigned to Kanders & Co., certain leasehold improvements, fixtures, hardware and office equipment previously used by Clarus, valued at approximately $595,000.
Acquisition of Gregory Mountain Products, Inc.
On May 28, 2010, Clarus acquired Gregory pursuant to the Agreement and Plan of Merger, dated May 7, 2010, from each of Kanders GMP Holdings, LLC and Schiller Gregory Investment Company, LLC, as the stockholders of Gregory (the “Gregory Stockholders”). The sole member of Kanders GMP Holdings, LLC is Mr. Warren B. Kanders, Clarus’ Executive Chairman and a member of ourits Board of Directors, who continues to serve in such capacity. The sole manager of Schiller Gregory Investment Company, LLC is Mr. Robert R. Schiller, Clarus’ Executive Vice Chairman and a member of its Board of Directors. In the acquisition of Gregory, the Company acquired all of the outstanding common stock of Gregory for an aggregate amount of approximately $44.1 million (after closing adjustments of $889,000 relating to debt repayments, working capital and equity plan allocation), payable to the Gregory Stockholders in proportion to their respective ownership interests of Gregory as follows: (i) the issuance of 2,419,490 unregistered shares of the Company’s common stock to Kanders GMP Holdings, LLC and 1,256,429 unregistered shares of the Company’s common stock to Schiller Gregory Investment Company, LLC, and (ii) the issuance by Clarus of 5% seven year subordinated promissory notes in the aggregate principal amount of $14,516,945 to Kanders GMP Holdings, LLC and in the aggregate principal amount of $7,538,578 to Schiller Gregory Investment Company, LLC. The acquisition of Gregory was approved by a special committee comprised of independent directors of the Company’s Board of Directors and Executive Chairmanthe merger consideration payable to the Gregory Stockholders was confirmed to be fair to the Company’s stockholders from a financial point of view by a fairness opinion received from Ladenburg Thalmann & Co., Inc.
In connection with Clarus’ acquisition of Gregory, Clarus entered into a registration rights agreement with each of the Gregory Stockholders, pursuant to which Clarus agreed to use its commercially reasonable efforts to prepare and file with the SEC, as soon as reasonably practicable, a “shelf” registration statement covering the 3,675,920 shares of Clarus common stock, received by the Gregory Stockholders as part of the consideration received by them in connection with the acquisition of Gregory. In addition, in the event that Clarus files a registration statement during any period that there is not an effective registration statement covering all of the shares received by the Gregory Stockholders in the acquisition, the Gregory Stockholders shall have “piggyback” rights, subject to customary underwriter cutbacks.
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Acquisition of Black Diamond Equipment, Ltd.
On May 28, 2010, Clarus acquired Black Diamond pursuant to the Agreement and Plan of Merger dated May 7, 2010. In the acquisition of Black Diamond, Clarus acquired all of the outstanding common stock of Black Diamond for an aggregate amount of approximately $85.7 million (after closing adjustments of $4.3 million relating to working capital), $4.5 million of which is being held in escrow for a one-year period as security for any working capital adjustments to the purchase price or indemnification claims under the merger agreement.
The acquisition of Black Diamond was unanimously approved by the Company’s Board of Directors. On May 7, 2010, Rothschild Inc. delivered an opinion to the Company’s Board of Directors that the consideration to be paid by the Company pursuant to the merger agreement was fair, from a financial point of view, to the Company. The acquisition of Black Diamond was approved by the Board of Directors and stockholders of Black Diamond.
Black Diamond Private Placement
Effective May 28, 2010, the Company sold in a private placement offering an aggregate of 483,767 shares of Clarus common stock to 11 accredited investors who were shareholders of Black Diamond, including Messrs. Metcalf, Peay and Duff, and certain employees for an aggregate purchase price of $2,902,602. The securities sold by the Company in the private placement were exempt from registration under the Securities Act of 1933, as amended, pursuant to Regulation D promulgated thereunder and pursuant to Section 4(2) and/or 4(6) thereof.
Black Diamond Registration Rights Agreement
In connection with the private placement, Clarus entered into a registration rights agreement, pursuant to which Clarus has agreed to use its commercially reasonable efforts to prepare and file with the SEC, as soon as reasonably practicable, a “shelf” registration statement covering the 483,767 shares of Clarus common stock received by the stockholders in the private placement. In addition, in the event that Clarus files a registration statement during any period that there is not an effective shelf registration statement covering all of the shares sold in the private placement, the stockholders shall have “piggyback” rights, subject to customary underwriter cutbacks.
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In the opinion of management, the rates, terms and considerations of the transactions with the related parties described above are at least as favorable as those we could have obtained in arms length negotiations or otherwise are at prevailing market prices and terms.
Policy and Procedures
The Audit Committee is responsible for reviewing and approving all related person transactions. Under SEC rules, a related person is a director, officer, nominee for director, or 5% stockholder of the company since the beginning of the last fiscal year and their immediate family members. In addition, under SEC rules, a related person transaction is a transaction or series of transactions in which the company is a participant and the amount involved exceeds $120,000, and in which any related person had or will have a direct or indirect material interest.
The Board of Directors has a general practice of requiring directors interested in a transaction not to participate in deliberations or to vote upon transactions in which they have an interest, and to be sure that transactions with directors, executive officers and major stockholders are on terms that align the interests of the parties to such agreements with the interests of the stockholders.
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PROPOSAL 2
APPROVAL AND ADOPTION OF AN AMENDMENT
TO THE COMPANY’S CERTIFICATE OF INCORPORATION
TO CHANGE THE COMPANY’S NAME
FROM CLARUS CORPORATION TO
“BLACK DIAMOND EQUIPMENT, INC.”
Introduction
The Board of Directors has unanimously approved and recommended to the stockholders, an amendment to the Company’s Certificate of Incorporation to change the Company’s name from Clarus Corporation to “Black Diamond Equipment, Inc.”
Purposes and Effects of the Amendment
In connection with the Company’s acquisitions of Black Diamond and Gregory, the Company determined to seek a change of its corporate name at the 2010 Annual Meeting. In addition, the Company has determined that a name change to “Black Diamond Equipment, Inc.” would more accurately reflect its current business and the scope of its product offerings. The Company is now a leading developer, manufacturer and distributor of technical outdoor equipment and lifestyle products for rock and ice climbers, alpinists, hikers, freeride skiers and outdoor enthusiasts and travelers that are principally sold under the Black DiamondTM and Gregory® brand names. The Board of Directors has determined that the name “Black Diamond Equipment, Inc.” better conveys the scope and branding of our product offerings in the outdoor activity industry.
The change of the Company’s name will not affect, in any way, the validity or transferability of currently outstanding stock certificates, nor will the Company’s stockholders be required to surrender or exchange any stock certificates that they currently hold as a result of the name change. The Company will continue to list its common stock on NASDAQ under the trading symbol “BDE.”
The following is the text of Article 1 of the Certificate of Incorporation of the Company, as proposed to be amended:
“Article 1: Name
The name of this Corporation is BLACK DIAMOND EQUIPMENT, INC.”
If this Proposal 2 is approved by the stockholders, the Board of Directors will cause a Certificate of Amendment to the Company’s Certificate of Incorporation, reflecting this amendment adopted to be filed with the Secretary of State of Delaware, and such Certificate of Amendment will be effective upon its filing.
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Vote Required
Approval of the amendment to the Company’s Certificate of Incorporation to change the Company’s name from Clarus Corporation to “Black Diamond Equipment, Inc.” will require the affirmative vote of a majority of the outstanding shares of common stock entitled to vote at the Meeting.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPROVAL AND ADOPTION OF AN AMENDMENT TO THE COMPANY’S CERTIFICATE OF INCORPORATION TO CHANGE THE COMPANY’S NAME FROM CLARUS CORPORATION TO “BLACK DIAMOND EQUIPMENT, INC.”
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PROPOSAL 3
APPROVAL OF AN AMENDMENT TO THE BYLAWS TO ELIMINATE STOCKHOLDER SUPERMAJORITY VOTE REQUIREMENTS FOR CERTAIN BYLAW AMENDMENTS
The Company’s Bylaws currently require the affirmative vote of the holders of at least two-thirds, or a “supermajority”, of all outstanding shares of the Company’s common stock to amend certain provisions of the Bylaws. This proposal would eliminate all such supermajority vote requirements in the Company’s Bylaws. As a result, all provisions of the Bylaws could be amended or repealed and new bylaws may be adopted by (i) resolution adopted by the affirmative vote of not less than a majority of the number of directors of the Company, or (ii) the affirmative vote of the holders of a majority of the shares of capital stock issued and outstanding and entitled to vote at any meeting of stockholders.
Background of Proposal
At the recommendation of the Nominating/Corporate Governance Committee, the Board of Directors unanimously adopted resolutions approving, declaring advisable and recommending to stockholders for approval of an amendment to its Bylaws to eliminate all supermajority vote requirements.
Supermajority voting provisions are intended to provide protection against self-interested action by large stockholders and to encourage a person seeking control of a company to negotiate with its board to reach terms that are fair and provide the best results for all stockholders. However, as corporate governance standards have evolved, many investors and commentators now view these provisions as limiting a board’s accountability to stockholders and the ability of stockholders to effectively participate in corporate governance.
The Board of Directors believes that eliminating the supermajority voting requirements would have the following benefits: (i) allows the Company increased flexibility in responding to unforeseen challenges since only a simple majority would be required to amend the Company’s Bylaws; and (ii) increases stockholders’ ability to effectively participate in corporate governance. Accordingly, the Board of Directors has approved the adoption of an amendment to the Bylaws that would incorporate the amendments into the Bylaws. The Board of Directors recommends that the Company stockholders approve the amendment to the Bylaws by voting in favor of this Proposal.
Details of Proposed Amendment
The amendment to the Bylaws would:
| · | Delete the two-thirds vote requirement to amend the provisions in the Bylaws governing the procedures for stockholder nominations and proposals (Article II-Section 9). |
| · | Delete the two-thirds vote requirement to amend the provisions in the Bylaws governing the number, term and qualification of directors (Article III-Section 2). |
| · | Delete the two-thirds vote requirement to amend the provisions in the Bylaws governing the indemnification of directors and officers (Article VIII-Section 9). |
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| · | Delete the two-thirds vote requirement to amend the “Amendments” provision in the Bylaws (Article VIII, Section 10). |
Currently, Article VIII, Section 10 of the Bylaws provides that “the provisions of Article II-Section 9, Article III-Section 2, Article VIII-Section 9, and this Article VIII-Section 10 may only be altered, amended or repealed by the affirmative vote of the holders of at least two-thirds of the outstanding shares of common stock.” The amendment to the Bylaws would delete this sentence and as a result, all provisions of the Bylaws could be amended or repealed and new bylaws may be adopted by (i) resolution adopted by the affirmative vote of not less than a majority of the number of directors of the Company or by (ii) the affirmative vote of the holders of a majority of the shares of capital stock issued and outstanding and entitled to vote at any meeting of stockholders.
The description of the proposed amendment to the Bylaws in this proxy statement is only a summary. The foregoing description of the proposed amendment to the Bylaws does not purport to be complete and is qualified in its entirety by reference to the full text of the amendment to the Bylaws, a copy of which is included as Appendix A to this Proxy Statement and is incorporated herein by reference.
Effective Time
If approved, the amendment to the Bylaws will become effective at the time of the stockholder vote.
Vote Required
Approval of the amendment to the Company’s Bylaws to eliminate stockholder supermajority vote requirements for certain bylaw amendments will require the affirmative vote of the holders of at least two-thirds of the outstanding shares of common stock entitled to vote at the Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” APPROVAL OF AN AMENDMENT TO THE COMPANY’S BYLAWS TO ELIMINATE STOCKHOLDER SUPERMAJORITY VOTE REQUIREMENTS FOR CERTAIN BYLAW AMENDMENTS.
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PROPOSAL 4
RE-APPROVAL OF THE MATERIAL TERMS
OF THE PERFORMANCE GOALS IN THE
CLARUS CORPORATION 2005 STOCK INCENTIVE PLAN
PURSUANT TO SECTION 162(m) OF THE CODE
AND APPROVAL OF AN AMENDMENT TO THE
CLARUS CORPORATION 2005 STOCK INCENTIVE PLAN
LIMITING THE MAXIMUM AGGREGATE
NUMBER OF INCENTIVE STOCK OPTIONS THAT MAY BE AWARDED
UNDER THE PLAN PURSUANT TO SECTION 422 OF THE CODE
Re-approval of the material terms of the performance goals in the Clarus Corporation 2005 Stock Incentive Plan pursuant to Section 162(m) of the Code.
The Board of Directors recommends that stockholders re-approve the material terms of the performance goals in the Company’s 2005 Stock Incentive Plan, as amended (the “2005 Stock Incentive Plan”). The purpose of asking stockholders to re-approve the performance goals under the 2005 Stock Incentive Plan is so that certain incentive awards granted under the plan may qualify as tax-deductible performance-based compensation under Section 162(m) of the Code (“Section 162(m)”).
Section 162(m) places a limit of $1,000,000 on the amount the Company may deduct in any one year for compensation paid to a “covered employee,” which for purposes of Section 162(m) means any person who, as of the last day of the fiscal year, is the chief executive officer or one of the Company's three highest compensated executive officers as determined under SEC rules. There is, however, an exception to this limit on deductibility for compensation that satisfies certain conditions for “qualified performance-based compensation” set forth under Section 162(m). One of the conditions requires stockholder approval every five years of the material terms of the performance goals of the plan under which the compensation will be paid. The Company’s stockholders previously approved the 2005 Stock Incentive Plan and its material terms at the Company’s 2005 Annual Meeting. Therefore, at the 2010 Annual Meeting, the Company is asking stockholders to re-approve the material terms of the performance goals under the 2005 Stock Incentive Plan.
For purposes of Section 162(m), the material terms of the performance goals include (i) the employees eligible to receive compensation under the 2005 Stock Incentive Plan, (ii) a description of the business criteria on which the performance goal is based and (iii) the maximum award that can be paid to an employee under the performance goal. Each of these aspects of the 2005 Stock Incentive Plan is discussed below.
Eligibility and Participation
The administrator for the 2005 Stock Incentive Plan is the Compensation Committee. The Compensation Committee may grant awards to any officer, key employee, director, consultant, independent contractor or advisor of Clarus or its affiliates. The number of employees who currently participate under the 2005 Stock Incentive Plan is thirty-four.
Performance Goals
The performance goals from which the Compensation Committee can set performance targets will relate to the achievement of financial goals based on the attainment of specified levels of one or more of the following: revenue; net revenue; revenue growth; net revenue growth; earnings before interest, taxes, depreciation and amortization (“EBITDA”); funds from operations; funds from operations per share; operating income (loss); operating income growth; operating cash flow; adjusted operating cash flow return on income; net income; net income growth; pre- or after-tax income (loss); cash available for distribution; cash available for distribution per share; cash and/or cash equivalents available for operations; net earnings (loss); earnings (loss) per share; earnings per share growth; return on equity; return on assets; share price performance (based on historical performance or in relation to selected organizations or indices); total shareholder return; total shareholder return growth; economic value added; improvement in cash-flow (before or after tax) or EBITDA; successful capital raises; and confidential business unit objectives (the “Performance Goals”).
Maximum Award
In any calendar year, no participant may receive awards for more than 500,000 shares of the Company's common stock and $2,500,000 in cash.
The Board of Directors believes that it is in the best interests of the Company and its stockholders to enable the Company to implement compensation arrangements that qualify as tax-deductible performance-based compensation in the 2005 Stock Incentive Plan. The Board of Directors is therefore asking stockholders to re-approve, for Section 162(m) purposes, the material terms of the performance goals set forth above. However, stockholder approval of the 2005 Stock Incentive Plan is one of several requirements under Section 162(m) that must be satisfied for awards under the 2005 Stock Incentive Plan to qualify for the “performance-based” compensation exemption. Nothing in this proposal precludes the Company or the Compensation Committee from making any payment or granting awards that do not qualify for tax deductibility under Section 162(m).
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Approval of an amendment to the Clarus Corporation 2005 Stock Incentive Plan limiting the maximum aggregate number of incentive stock options that may be awarded under the plan pursuant to Section 422 of the Code.
The Board of Directors recommends that stockholders approve a maximum aggregate limit on the number of incentive stock options (“ISOs”) that may be awarded under the 2005 Stock Incentive Plan. The purpose of asking stockholders to approve a maximum aggregate limit on the number of ISOs that may be awarded under the 2005 Stock Incentive Plan is so that certain option awards granted under the plan may qualify as ISOs under section 421 of the Code.
The 2005 Stock Incentive Plan provides for the award of various forms of equity. Among the awards that may be made under the 2005 Stock Incentive Plan are ISOs. ISOs may provide recipients with additional tax advantages that do not apply to nonqualified stock options. Among other things, if certain requirements are met, the entire gain on the exercise of an ISO may be considered capital gain and taxed when the shares are sold (although this gain may be subject to the alternative minimum tax in the year of exercise). For this benefit to be received, among other things, the stock received on exercise must be held for at least one year from the date of exercise and two years from the date of grant. The Company does not receive any tax deduction on any amounts taken into income on the disposition of an ISO (unless the disposition is a disqualifying disposition). The Federal tax consequences associated with ISOs are complex, and this description does not purport to cover these rules in their entirety.
In order for favorable tax treatment to be received for an ISO, the applicable plan and the award must meet certain requirements. Among other things, the plan must impose a maximum aggregate limit on the number of shares that may be issued under the plan as ISOs. The maximum aggregate number of shares may be stated in terms of a percentage of the authorized, issued, or outstanding shares at the date of the adoption of the plan. Also, a plan may specify that the maximum aggregate number of shares which may be issued as ISOs may increase annually based on a specified percentage of the authorized, issued or outstanding shares at the date of the adoption of the plan. However, a plan that provides that the maximum aggregate number may change based on any other circumstances must provide an immediately determinable maximum aggregate number of shares that may be issued under the plan in any event. Under section 422 of the Code, the shareholders are required to approve the maximum annual aggregate limit.
The proposal would impose a maximum aggregate limit on the number of ISOs that may be issued under the 2005 Stock Incentive Plan of 4,500,000.
The Board of Directors believes that it is in the best interests of the Company and its stockholders to enable the Company to award ISOs to its employees under the 2005 Stock Incentive Plan. The Board of Directors is therefore asking stockholders to approve a maximum aggregate limit on the number of ISOs that may be awarded under the 2005 Stock Incentive Plan. Nothing in the 2005 Stock Incentive Plan requires the Board of Directors or the Compensation Committee to award ISOs under the 2005 Stock Incentive Plan.
The following is the text of the proposed amendment to the 2005 Stock Incentive Plan:
“Section 5.7 is hereby amended by adding the following sentence to the end of Section 5.7 thereof: ‘The maximum aggregate number of ISOs that may be issued under this Plan is 4,500,000.’”
A summary of other significant terms of the 2005 Stock Incentive Plan is set forth below. The summary is qualified in its entirety by reference to the specific provisions of the 2005 Stock Incentive Plan, the full text of which is set forth as Appendix A to the Definitive Proxy Statement filed with the SEC on May 2, 2005, which text is incorporated herein by reference.
Vote Required
Re-approval of the material terms of the performance goals in the Clarus Corporation 2005 Stock Incentive Plan pursuant to Section 162(m) of the Code and the approval of a maximum aggregate limit on the number of incentive stock options that may be awarded under the Clarus Corporation 2005 Stock Incentive Plan pursuant to Section 422 of the Code will require the affirmative vote of a majority of the shares of common stock present in person or represented by proxy at the Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” RE-APPROVAL OF THE MATERIAL TERMS OF THE PERFORMANCE GOALS IN THE CLARUS CORPORATION 2005 STOCK INCENTIVE PLAN PURSUANT TO SECTION 162(m) OF THE CODE AND THE APPROVAL OF AN AMENDMENT TO THE CLARUS CORPORATION 2005 STOCK INCENTIVE PLAN LIMITING THE MAXIMUM AGGREGATE NUMBER OF INCENTIVE STOCK OPTIONS THAT MAY BE AWARDED UNDER THE PLAN PURSUANT TO SECTION 422 OF THE CODE.
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SUMMARY OF 2005 STOCK INCENTIVE PLAN
Administration
The 2005 Stock Incentive Plan is administered by the Compensation Committee of the Board of Directors served as memberof Clarus. All members of the compensation committeeCompensation Committee are non-employee directors of Clarus. The Compensation Committee has the authority to determine, within the limits of the boardexpress provisions of directorsthe 2005 Stock Incentive Plan, the individuals to whom awards will be granted, the nature, amount and as an executive officerterms of Armor Holdings, Inc.
PERFORMANCE GRAPH
Set forth below is a line graph comparingsuch awards and the yearly percentage changeobjectives and conditions for earning such awards. With respect to employees who are not subject to Section 16 of the Exchange Act, the Compensation Committee may delegate its authority under the 2005 Stock Incentive Plan to one or more officers or employees of Clarus. To the extent not otherwise provided for under Clarus’ Certificate of Incorporation and Bylaws, members of the Compensation Committee are entitled to be indemnified by Clarus with respect to claims relating to their actions in the cumulativeadministration of the 2005 Stock Incentive Plan, except in the case of willful misconduct.
Types of Awards
Awards under the 2005 Stock Incentive Plan may include non-qualified stock options, incentive stock options, stock appreciation rights (“SARs”), restricted shares of common stock, restricted units and performance awards.
Stock Options. The Compensation Committee may grant to a participant incentive stock options, options that do not qualify as incentive stock options (“non-qualified stock options”) or a combination thereof. The terms and conditions of stock option grants, including the quantity, price, vesting periods, and other conditions on exercise are determined by the Compensation Committee. Incentive stock option grants are made in accordance with Section 422 of the Code.
The exercise price for stock options are determined by the Compensation Committee in its discretion, provided that with respect to incentive stock options, the exercise price per share shall be at least equal to 100% of the fair market value of one share of Clarus’ common stock on the date when the stock option is granted. Additionally, in the case of incentive stock options granted to a holder of more than 10% of the total stockholdercombined voting power of all classes of stock of Clarus on the date of grant, the exercise price may not be less than 110% of the fair market value of one share of common stock on the date the stock option is granted.
Stock options must be exercised within a period fixed by the Compensation Committee that may not exceed ten years from the date of grant, except that in the case of incentive stock options granted to a holder of more than 10% of the total combined voting power of all classes of stock of Clarus on the date of grant, the exercise period may not exceed five years. The 2005 Stock Incentive Plan provides for earlier termination of stock options upon the participant’s termination of employment, unless extended by the Committee, but in no event may the options be exercised after the scheduled expiration date of the options.
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At the Compensation Committee’s discretion, payment for shares of common stock on the exercise of stock options may be made in cash, shares of Clarus’ common stock held by the participant for at least six months (or such other shares of common stock as the Compensation Committee may permit), a combination of cash and shares of stock or in any other form of consideration acceptable to the Compensation Committee (including one or more “cashless” exercise forms).
Stock Appreciation Rights. SARs may be granted by the Compensation Committee to a participant either separate from or in tandem with non-qualified stock options or incentive stock options. SARs may be granted at the time of the stock option grant or, with respect to non-qualified stock options, at any time prior to the exercise of the stock option. A SAR entitles the participant to receive, upon its exercise, a payment equal to (i) the excess of the fair market value of a share of common stock on the exercise date over the SAR exercise price, times (ii) the number of shares of common stock with respect to which the SAR is exercised.
The exercise price of a SAR is determined by the Compensation Committee, but in the case of SARs granted in tandem with stock options, may not be less than the exercise price of the related stock option. Upon exercise of a SAR, payment will be made in cash or shares of common stock, or a combination thereof, as determined by the Compensation Committee.
Restricted Shares and Restricted Units. The Compensation Committee may award to a participant shares of common stock subject to specified restrictions (“restricted shares”). Restricted shares are subject to forfeiture if the participant does not meet certain conditions such as continued employment over a specified forfeiture period and/or the attainment of specified performance targets over the forfeiture period.
The Compensation Committee also may award to a participant units representing the right to receive shares of common stock in the future subject to the achievement of one or more goals relating to the completion of service by the participant and/or the achievement of performance or other objectives (“restricted units”). The terms and conditions of restricted share and restricted unit awards are determined by the Compensation Committee.
For participants who are subject to Section 162(m) of the Code, the performance targets described in the preceding two paragraphs may be established by the Compensation Committee, in its discretion, based on one or more of the following measures, known as Performance Goals: revenue; net revenue; revenue growth; net revenue growth; EBITDA; funds from operations; funds from operations per share; operating income (loss); operating income growth; operating cash flow; adjusted operating cash flow return on our Common Stockincome; net income; net income growth; pre- or after-tax income (loss); cash available for distribution; cash available for distribution per share; cash and/or cash equivalents available for operations; net earnings (loss); earnings (loss) per share; earnings per share growth; return on equity; return on assets; share price performance (based on historical performance or in relation to selected organizations or indices); total shareholder return; total shareholder return growth; economic value added; improvement in cash-flow (before or after tax) or EBITDA; successful capital raises; and confidential business unit objectives.
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The above terms shall have the cumulative
total return ofsame meaning as in Clarus’ financial statements, or if the Russell 2000 Index,terms are not used in Clarus’ financial statements, as applied pursuant to generally accepted accounting principles, or as used in the NASDAQ National Market Compositeindustry, as applicable.
Performance Awards. The Compensation Committee may grant performance awards to participants under such terms and conditions as the Morgan Stanley Internet Index forCompensation Committee deems appropriate. A performance award entitles a participant to receive a payment from Clarus, the period commencing on December 31, 1998
and ending December 31, 2002 (the "Measuring Period"). The graph assumes that
the value of the investment in our Common Stock and each index was $100 on
December 31, 1998. The yearly change in cumulative total return is measured by
dividing (1) the sum of (i) the cumulative amount of dividends forwhich is based upon the Measuring
Period, assuming dividend reinvestment, and (ii)attainment of predetermined performance targets over a specified award period. Performance awards may be paid in cash, shares of common stock or a combination thereof, as determined by the change in share price
between the beginning and end of the Measuring Period, by (2) the share price at
the beginning of the Measuring Period.
As part of our strategy to limit operating losses and enable the
Company to redeploy its assets and use its substantial cash and cash equivalent
assets to enhance stockholder value, we have sold our electronic commerce
business, which represented substantially all of our revenue-generating
operations and related assets. The information appearing below, which relates to
prior years includes a comparison to the industry in which our prior business
was engaged.
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COMPARISON OF CUMULATIVE TOTAL RETURN*
AMONG CLARUS, THE RUSSELL 2000 INDEX,
THE NASDAQ NATIONAL MARKET COMPOSITE
AND THE MORGAN STANLEY INTERNET INDEX
* $100 INVESTED ON 12/31/98 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
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[GRAPHIC OMITTED]
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EMPLOYMENT AGREEMENTS
WARREN B. KANDERS
In December 2002, we entered into an employment agreement with Warren
B. Kanders, which provides that he will serve as Clarus' Executive Chairman of
the Board of Director for a three-year term that will expire on December 6,
2005, subject to early termination. The agreement provides for an annual base
salary of $250,000. In addition, Mr. Kanders is entitled,Compensation Committee.
Award periods are established at the discretion of ourthe Compensation Committee. The performance targets will also be determined by the Compensation Committee. With respect to participants subject to Section 162(m) of the Code, the applicable performance targets shall be established, in the Compensation Committee’s discretion, based on one or more of the Performance Goals described under the section titled “Restricted Shares and Restricted Units.” To the extent that a participant is not subject to Section 162(m) of the Code, when circumstances occur that cause predetermined performance targets to be an inappropriate measure of achievement, the Compensation Committee, at its discretion, may adjust the performance targets.
Eligibility and Limitation on Awards
The administrator for the 2005 Stock Incentive Plan is the Compensation Committee. The Compensation Committee may grant awards to any officer, key employee, director, consultant, independent contractor or advisor of Clarus or its affiliates. The number of employees who currently participate under the 2005 Stock Incentive Plan is thirty-four.
Awards Granted under the 2005 Stock Incentive Plan
As of December 31, 2009, 783,750 stock options had been awarded under the 2005 Stock Incentive Plan of which 105,000 were unvested and 643,750 were vested and eligible for exercise and no shares of restricted common stock had been granted under the 2005 Stock Incentive Plan.
Shares Subject to the 2005 Stock Incentive Plan
The number of shares authorized and reserved for issuance under the 2005 Stock Incentive Plan is 5.0 million, subject to an automatic annual increase equal to 4% of the total number of shares of Clarus’ common stock outstanding. The aggregate number of shares of common stock that may be granted through awards under the 2005 Stock Incentive Plan to any employee in any calendar year may not exceed 500,000 shares. The 2005 Stock Incentive Plan will continue in effect until June 2015 unless terminated sooner. As of December 31, 2009, 783,750 stock options had been awarded under the plan of which 105,000 were unvested and 643,750 were vested and eligible for exercise. As of June 24, 2010, 4,507,205 shares were available for issuance under the 2005 Stock Incentive Plan. No more than approximately 4,247,423 of the total shares of common stock available for issuance under the 2005 Stock Incentive Plan may be granted in the form of restricted shares, restricted units or performance awards, subject to an automatic annual increase equal to 75% of the total number of shares of Clarus’ common stock increased pursuant to the Annual Share Increase. Shares of common stock not actually issued (as a result, for example, of the lapse of an option) are available for additional grants.
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Shares surrendered to or withheld by Clarus in payment or satisfaction of the exercise price of a stock option or tax withholding obligations with respect to an award may be the subject of a new award under the 2005 Stock Incentive Plan.
Shares to be issued or purchased under the 2005 Stock Incentive Plan may be either authorized but unissued common stock or treasury shares. Shares issued with respect to awards assumed by Clarus in connection with acquisitions do not count against the total number of shares available under the 2005 Stock Incentive Plan. Shares of common stock not actually issued (as a result, for example, of the lapse of an option) are available for additional grants. Shares surrendered to or withheld by Clarus in payment or satisfaction of the exercise price of a stock option or tax withholding obligations with respect to an award may be the subject of a new award under the 2005 Stock Incentive Plan. Shares to be issued or purchased under the 2005 Stock Incentive Plan may be either authorized but unissued common stock or treasury shares. Shares issued with respect to awards assumed by Clarus in connection with acquisitions do not count against the total number of shares available under the 2005 Stock Incentive Plan.
Anti-Dilution Protection
In the event of any changes in the capital structure of Clarus, including a change resulting from a stock dividend or stock split, or combination or reclassification of shares, the Board of Directors is empowered to performance bonuses which may be based upon a varietymake such equitable adjustments with respect to awards or any provisions of factorsthe 2005 Stock Incentive Plan as it deems necessary and to participateappropriate, including, if necessary, any adjustments in ourthe maximum number of shares of common stock incentive plans and other bonus plans
adopted by us. Pursuantsubject to the employment agreement, we maintain a term life
insurance on Mr. Kanders in2005 Stock Incentive Plan, the amountnumber of $2,000,000 for the benefit of his
designees. In connection with his employment agreement, Mr. Kanders received
options to purchase up to (i) 200,000 shares of common stock subject to and the Company's Common Stock, at
an exercise price of $5.35 per share;an outstanding award, or the maximum number of shares that may be subject to one or more awards granted to any one recipient during a calendar year.
Amendment and Termination
The Board of Directors may at any time amend or terminate the 2005 Stock Incentive Plan, provided that no such action may be taken that adversely affects any rights or obligations with respect to any awards theretofore made under the 2005 Stock Incentive Plan without the consent of the recipient. No awards may be made under the 2005 Stock Incentive Plan after the tenth anniversary of its effective date. Certain provisions of the 2005 Stock Incentive Plan relating to performance-based awards under Section 162(m) of the Code will expire on the fifth anniversary of the effective date.
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Certain Federal Income Tax Consequences
The federal income tax consequences of the issuance and/or exercise of awards under the 2005 Stock Incentive Plan are as described below. The following information is only a summary of the tax consequences of the awards, and recipients should consult with their own tax advisors with respect to the tax consequences inherent in the ownership and/or exercise of the awards, and the ownership and disposition of any underlying securities.
Incentive Stock Options. The 2005 Stock Incentive Plan qualifies as an incentive stock option plan within the meaning of Section 422 of the Code. A recipient who is granted an incentive stock option will not recognize any taxable income for federal income tax purposes either on the grant or exercise of the incentive stock option. If the recipient disposes of the shares purchased pursuant to the incentive stock option more than two years after the date of grant and more than one year after the transfer of the shares to the recipient (the required statutory “holding period”), (a) the recipient will recognize long-term capital gain or loss, as the case may be, equal to the difference between the selling price and the option price; and (b) Clarus will not be entitled to a deduction with respect to the shares of stock so issued. If the holding period requirements are not met, any gain realized upon disposition will be taxed as ordinary income to the extent of the excess of the lesser of (i) the excess of the fair market value of the shares at the time of exercise over the option price, and (ii) the gain on the sale. Clarus will be entitled to a deduction in the year of disposition in an amount equal to the ordinary income recognized by the recipient. Any additional gain will be taxed as short-term or long-term capital gain depending upon the holding period for the stock. A sale for less than the option price results in a capital loss.
The excess of the fair market value of the shares on the date of exercise over the option price is, however, includable in the option holder's income for alternative minimum tax purposes.
Non-qualified Stock Options. The recipient of a non-qualified stock option under the 2005 Stock Incentive Plan will not recognize any income for federal income tax purposes on the grant of the option. Generally, on the exercise of the option, the recipient will recognize taxable ordinary income equal to the excess of the fair market value of the shares on the exercise date over the option price for the shares. Clarus generally will be entitled to a deduction on the date of exercise in an amount equal to the ordinary income recognized by the recipient. Upon disposition of the shares purchased pursuant to the stock option, the recipient will recognize long-term or short-term capital gain or loss, as the case may be, equal to the difference between the amount realized on such disposition and the basis for such shares, which basis includes the amount previously recognized by the recipient as ordinary income.
Stock Appreciation Rights. A recipient who is granted stock appreciation rights will not recognize any taxable income on the receipt of the SARs. Upon the exercise of a SAR, (a) the recipient will recognize ordinary income equal to the amount received (the increase in the fair market value of one share of Clarus’ common stock from the date of grant of the SAR to the date of exercise); and (b) Clarus will be entitled to a deduction on the date of exercise in an amount equal to the ordinary income recognized by the recipient.
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Restricted Shares. A recipient will not be taxed at the date of an award of restricted shares, but will be taxed at ordinary income rates on the fair market value of any restricted shares as of the date that the restrictions lapse, unless the recipient, within 30 days after transfer of such restricted shares to the recipient, elects under Section 83(b) of the Code to include in income the fair market value of the restricted shares as of the date of such transfer. Clarus will be entitled to a corresponding deduction. Any disposition of shares after restrictions lapse will be subject to the regular rules governing long-term and short-term capital gains and losses, with the basis for this purpose equal to the fair market value of the shares at the end of the restricted period (or on the date of the transfer of the restricted shares, if the employee elects to be taxed on the fair market value upon such transfer).
Dividends received by a recipient during the restricted period will be taxable to the recipient at ordinary income tax rates and will be deductible by Clarus unless the recipient has elected to be taxed on the fair market value of the restricted shares upon transfer, in which case they will thereafter be taxable to the employee as dividends and will not be deductible by Clarus.
Restricted Units. A participant will normally not recognize taxable income upon an award of restricted units, and Clarus will not be entitled to a deduction until the lapse of the applicable restrictions. Upon the lapse of the restrictions and the issuance of the earned shares, the participant will recognize ordinary taxable income in an amount equal to the fair market value of the common stock received and Clarus will be entitled to a deduction in the same amount.
Performance Awards. Normally, a participant will not recognize taxable income upon the grant of performance awards. Subsequently, when the conditions and requirements for the grants have been satisfied and the payment determined, any cash received and the fair market value of any common stock received will constitute ordinary income to the participant. Clarus also will then be entitled to a deduction in the same amount.
New Plan Benefits
The grant of awards under the 2005 Stock Incentive Plan is within the discretion of the Compensation Committee. We cannot forecast the extent of awards that will be made in the future. Information with respect to compensation paid and other benefits, including options and restricted stock, granted during the 2009 fiscal year and through the date of this Proxy Statement to the Named Executive Officers is set forth in the discussion of executive compensation above.
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth certain information regarding our equity plans as of December 31, 2009:
Plan Category | (A) Number of securities to be issued upon exercise of outstanding options, warrants and rights | (B) Weighted-average exercise price of outstanding options, warrants and rights | (C) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (A)) | |||
| Equity compensation plans approved by security holders (1) | 1,368,750 | $5.76 | 4,977,437 | |||
| Equity compensation plans not approved by security holders (2) (3) (4) | 1,100,000 | $7.83 | -- | |||
| Total | 2,468,750 | $6.68 | 4,977,437 |
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(1) Consists of stock options and restricted stock awards issued under the Amended and Restated Stock Incentive Plan of Clarus Corporation (the “2000 Plan”). Also consists of stock options issued and issuable under the 2005 Stock Incentive Plan.
(2) Includes options granted to the Company’s Executive Chairman, Warren B. Kanders on December 20, 2003 to purchase 400,000 shares of the Company's
Common Stock, atcommon stock, having an exercise price of $7.50 per share; and (iii)share.
(3) Includes options granted to the Company’s Executive Chairman, Warren B. Kanders on December 20, 2003 to purchase 400,000 shares of the Company's Common Stock, atcommon stock, having an exercise price of $10.00 per share, all
vesting in five equal annual installments commencingshare.
(4) Includes 500,000 shares of restricted stock granted to the Company’s Executive Chairman, Warren B. Kanders on the first anniversary of
the date of grant. On April 11, 2003, Mr. Kanders received a grant of 500,000
restricted shares of the Company's Common Stock (the "Restricted Shares"), with
fullhaving voting, dividend, distribution and other rights, which shall vest and become nonforfeitable if Mr. Kanders is an employee and/or a director of the Company or a subsidiary or affiliate of the Company on the earlier of (i) the date the closing price of the Company's Common Stock, as listedCompany’s common stock equals or quoted on any
national securities exchange or NASDAQ, shall have equaled or exceededexceeds $15.00 per share for each of the trading days during a ninety (90) consecutive day period, or (ii) the tenth (10th) anniversary of the date of grant; provided
however that all of the Restricted Shares shall immediately vest and become
nonforfeitable upon a "changeApril 11, 2013, subject to acceleration in control" or in the event Mr. Kander's
employment with the Company is terminated without "cause".
In the event Mr. Kanders is terminated without cause, or by Mr. Kanders
upon a "change in control," Mr. Kanders is entitled to receive his accrued bonus
through the date of termination and shall continue to receive his base
compensation in accordance with the normal payroll practices of the Company for
twenty-four months after the effective datecertain circumstances. The vesting of such termination. Mr. Kanders
will also be entitled to accelerationshares of restricted common stock was accelerated by the vestingCompany’s Compensation Committee and Board of Directors, effective as of May 28, 2010.
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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Aggregate fees for professional services rendered for Clarus by KPMG LLP for the fiscal years ended December 31, 2009 and 2008 were:
| Fiscal 2009 | Fiscal 2008 | |||||||
| Audit Fees | $ | 150,000 | $ | 176,000 | ||||
| Audit Related Fees | $ | 275,000 | -- | |||||
| Tax Fees | $ | 105,000 | -- | |||||
| All Other Fees | -- | -- | ||||||
| Total | $ | 530,000 | $ | 176,000 | ||||
Audit Fees. The Audit Fees for the fiscal years ended December 31, 2009 and 2008, respectively, were for professional services rendered for the audit of our consolidated financial statements for the fiscal years ended December 31, 2009 and 2008, and for the review of our consolidated financial statements included in our Quarterly Reports on Form 10-Q for fiscal 2009 and 2008.
Audit Related Fees. For the optionsfiscal year ended December 31, 2009, audit related fees totaled $275,000, consisting of fees billed for assurance and restricted stock grants uponrelated services that are traditionally performed by the termination of his employment agreement by us
without "cause" or by Mr. Kandersindependent auditor. The foregoing Audit Related Fees were incurred in connection with a "change in control." Mr.
Kanders has also agreed to certain confidentiality and non-competition
provisions.
NIGEL P. EKERN
In December 2002, we entered into an employment agreement with Nigel P.
Ekern which is effective as of November 25, 2002, that provides that he will
serve as our Chief Administrative Officer for a three-year term that will expire
on November 25, 2005, subject to early termination. The agreement provides for
an annual base salary of $175,000. Under the terms of his employment agreement
with us, Mr. Ekern received options to purchase up to 200,000 shares of
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the Company's Common Stock, at an exercise price of $5.35 per share and vesting
in five equal annual installments commencing on the first anniversary of the
date of grant. In addition, Mr. Ekern is entitled, at the discretion of our
Board of Directors, to performance bonuses which may be based upon a variety of
factors and to participate in the our stock incentive plans and other bonus
plans adopted by us. Pursuantproposed transaction relating to the employment agreement, we maintain a term
life insurance on Mr. Ekern in the amountCompany’s asset redeployment strategy, which involved an acquisition of $2,000,000 for the benefit of his
designees.
In the event Mr. Ekern is terminated by the Company upon a "change in
control", he is entitled to receive accrued base compensation through the date
of such termination and will also be entitled to acceleration of the vesting on
all options to purchase shares of Common Stock. In the event Mr. Ekern is
terminated by the Company without "cause," he is entitled to receive his base
compensation for (i) six months after such termination, if such termination
occurs prior to June 30, 2003; and (ii) twelve months after such termination, if
such termination occurs after June 30, 2003. Mr. Ekern has also agreed to
certain confidentiality and non-competition provisions.
STEPHEN P. JEFFERY
Mr. Jeffery stepped down as Chief Executive Officer and Chairman of the
Board of Directors on December 6, 2002 and we entered into a three-year
consulting agreement with him, to provide us with ongoing consulting services so
that we may continue to benefit from his knowledge and experience. The agreement
provides for an aggregate consideration of $250,000, payable in twenty-four
equal monthly installments. In the event Mr. Jeffery terminates the consulting
agreement, other than upon a "change of control", he is required to refund and
pay to the Company, a dollar amount equal to such portion of compensation
received under the consulting agreement in excess of the product of $228
multiplied by the number of days elapsed from the effective date of the
agreement through such termination date.
The consulting agreement provides that Mr. Jeffery will be prohibited
from transferring any shares of our Common Stock until after December 31, 2003,
and from transferring any shares of our Common Stock that are issuable on the
exercise of his options until after December 31, 2004. The consulting agreement
also provides that Mr. Jeffery will be required to own, or hold options to
purchase, a total of at least 200,000 shares of our Common Stock at all times
during the term of the agreement. In the event that we complete a transaction
that constitutes a "change of control" and/or we terminate Mr. Jeffery without
"cause," Mr. Jeffery is entitled to receive the cash compensation payable during
the remaining term of the consulting agreement, and all of his unvested options
would immediately vest. Mr. Jeffery has also agreed to certain confidentiality
and non-competition provisions.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 2003, we entered into an oral agreement with Kanders & Company
pursuant to which we sublease approximately 1,989 square feet in Greenwich,
Connecticut for $9,572 a month
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(subject to increases every three years). The agreement provides for a one-year
term and Clarus has the option to renew for up to nine additional one-year
terms. Under the terms of the agreement, we are required to pay approximately
$325,000 in build-out construction costs, fixtures, equipment and furnishings
related to preparation of the space. In the event Clarus was to undergo a change
in control, our remaining rent through the tenth anniversary of the commencement
of the agreement would immediately accelerate and the present value of such rent
would be placed in escrow for the benefit of Kanders & Company. In January 2003,
Clarus obtained a standby letter of credit in the amount of $118,345 to secure
lease obligations for the Greenwich, Connecticut facility that is being
constructed. Kanders & Company reimburses Clarus a pro rata portion of the
$3,000 annual cost of the letter of credit. Kanders & Company is owned and
controlled by Clarus' Executive Chairman of the Board of Directors, Warren
B. Kanders.
After the closing of the sale of the e-commerce software business,
Steven Jeffery stepped down as Clarus' Chief Executive Officer and Chairman of
the Board of Directors. Under Mr. Jeffery's employment agreement, he is entitled
to receive a severance payment equal to one year's salary of $250,000, payable
over one year. In addition, Mr. Jeffery entered into a three-year consulting
agreement with Clarus' and will receive total consideration of $250,000 payable
over the two-year term.
During December 2002, Clarus reimbursed legal fees and other expenses
in the amount of $531,343 incurred by Warren B. Kanders, Burtt R. Ehrlich, and
Nicholas Sokolow, all of whom are members of Clarus' Board of Directors, in
connection with their successful solicitation of proxies for the May 21, 2002
Annual Meeting of Stockholders.
On November 1, 2001, Clarus engaged E.Com Consulting to perform market
research and provide recommendations concerning the needs and opportunities
associated with Clarus' settlement product. E.Com Consulting subcontracted with
e-RM International, Inc. ("e-RMI") to assist with a portion of this project.
e-RMI is a Delaware corporation whose sole shareholder is Chrismark Enterprises
LLC. Chrismark Enterprises LLC is owned by Mark Johnson, a former director of
Clarus and his wife. The contract period of the engagement was November 1, 2001
through January 31, 2002 for which Clarus agreed to pay total professional fees
of $50,000 plus out-of-pocket expenses. Of this amount, $7,805 was paid to
e-RMI. Clarus expensed a total of $42,164 in connection with the engagement
during 2001 and had a balance due E.Com of $34,359 at December 31, 2001 that is
included in accounts payable and accrued liabilities in the consolidated balance
sheet in the annual report. The contract was terminated by Clarus during January
2002. No expense was incurred during 2002 and all amounts due E.Com were paid in
January, 2002. At the May 21, 2002 Annual Meeting of Stockholders, Mr. Johnson
was not re-elected a director of Clarus.
On February 7, 2002, Todd Hewlin joined Clarus' Board of Directors. Mr.
Hewlin is a managing director of The Chasm Group, LLC, a consultancy
organization focusing on helping technology companies develop and implement
strategies that create and sustain market leadership positions for their core
products while building shareholder valueseveral major assets and a sustainable competitive
advantage. During 2001, Clarus engaged The Chasm Group to assist Clarus on
various strategic and organizational issues. The contract period of the
engagement was
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November 15, 2001 through February 15, 2002 for which the Company agreed to
professional fees of $225,000 plus out-of-pocket expenses. Clarus expensed a
total of $145,000 during 2002financing component that is included in general and administrative in
the consolidated statement of operations in the annual report and expensed
$131,000 during 2001. Clarus expensed an additional $54,000, outside the
original engagement, during 2002 related to further services performed by The
Chasm Group that is included in general and administrative in the consolidated
statement of operations in the annual report. At the May 21, 2002 Annual Meeting
of Stockholders, Mr. Hewlin was not re-elected a director of Clarus.
In the opinion of management, the rates, terms and considerations of
the transactions with the related parties described above approximate those that
Clarus would have received in transactions with unaffiliated parties.
PROPOSAL 2
AMENDMENT TO OUR AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO RESTRICT
CERTAIN TRANSFERS OF OUR SECURITIES IN ORDER TO HELP
ASSURE THE PRESERVATION OF OUR TAX NET OPERATING LOSS CARRYFORWARDS
INTRODUCTION
For the taxable year beginning January 1, 2003, the Company had
available net operating loss, capital loss, research and experimentation credit
and alternative minimum tax credit carryforwards ("NOLs") of approximately
$122.3 million to offset taxable income recognized by the Company in the future.
NOLs benefit the Company by offsetting taxable income dollar-for-dollar by the
amount of the NOLs, thereby eliminating (subject to an alternative minimum tax)
the U.S. federal corporate tax on such income. The benefit of the NOLs can be
reduced or eliminated if the Company undergoes an "ownership change" (as
described below) through transfers of capital stock by which stockholders or
groups of stockholders, each of whom owns at least 5% of the Company's capital
stock, increase their ownership of the Company's capital stock by more than 50
percentage points within a three year period. Our Board of Directors believes
the best interests of the Company and its stockholders will be served by
adopting provisions (the "Transfer Restrictions") in its Amended and Restated
Certificate of Incorporation that are designed to restrict direct and indirect
transfers of the Company's equity securities if such transfer will affect the
percentage of stock that is treated as owned by a 5% stockholder.
The affirmative vote of the holders of a majority of the outstanding
shares of our Common Stock is necessary for the approval and adoption of the
amendment to the Company's Amended and Restated Certificate of Incorporation.
The Transfer Restrictions will be adopted as an amendment to the Amended and
Restated Certificate of Incorporation of the Company as Article IV, Section 7.
STOCKHOLDERS ARE URGED TO READ CAREFULLY THE ACCOMPANYING EXHIBIT A WHICH SETS
FORTH THE TRANSFER RESTRICTIONS. The Transfer Restrictions have been unanimously
approved by the Board of Directors. The
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discussion set forth below is qualified in its entirety by reference to the
accompanying Exhibit A.
PURPOSE OF THE TRANSFER RESTRICTIONS
The Transfer Restrictions are designed to restrict direct and indirect
transfers of the Company's capital stock that could result in the imposition of
limitations on the use by the Company, for U.S. federal income tax purposes, of
the NOLs and other tax attributes that are and will be available to the Company,
as discussed more fully below.
THE COMPANY'S NOLS AND SECTION 382
For the taxable year beginning January 1, 2003, the Company had
available U.S. federal NOLs of approximately $122.3 million to offset taxable
income recognized by the Company in the future. For U.S. federal income tax
purposes, these NOLs will begin to expire in varying amounts beginning in the
year 2009 to the extent not previously absorbed. NOLs benefit the Company by
offsetting taxable income dollar-for-dollar by the amount of the NOLs, thereby
eliminating substantially all of the U.S. federal corporate tax on such income.
The maximum U.S. federal corporate tax rate is currently 35%terminated without consummationThe benefit of a
corporation's NOLs can be reduced or eliminated under Section 382 of the Code if
a corporation undergoes an "ownership change," as defined in Section 382.
Generally, an ownership change occurs if one or more stockholders, each of whom
owns 5% or more in value of a corporation's capital stock, increase their
aggregate percentage ownership by more than 50 percentage points over the lowest
percentage of stock owned by such stockholders at any time during the preceding
three-year period. For this purpose, all holders who each own less than 5% of a
corporation's capital stock are generally treated together as one (or, in
certain cases, more than one) 5% stockholder. Transactions in the public markets
among stockholders owning less than 5% of the equity securities generally are
not included in the calculation. In addition, certain constructive ownership
rules, which generally attribute ownership of stock owned by estates, trusts,
corporations, partnerships or other entities to the ultimate indirect individual
owner thereof, or to related individuals, are applied in determining the level
of stock ownership of a particular stockholder. Special rules can result in the
treatment of options (including warrants) or other similar interests as having
been exercised if such treatment would result in an ownership change. All
percentage determinations are based on the fair market value of a corporation's
capital stock.
If an ownership change of the CompanyThere were to occur, the amount of
taxable income in any year (or portion of a year) subsequent to the ownership
change that could be offset by U.S. federal NOLs or other carryovers prior to
such ownership change could not exceed the product obtained by multiplying (i)
the aggregate value of the Company's stock immediately prior to the ownership
change (with certain adjustments) by (ii) the then applicable U.S. federal
long-term tax exempt rate (currently 4.58%) (the "Section 382 limitation").
Based upon the Company's stock price on April 14, 2003, if an ownership change
were to occur now, the annual Section 382 limitation would be approximately $3.9
million. Any portion of the annual Section 382 limitation amount not utilized in
any year may be carried forward to increase the available Section 382 limitation
amount for the succeeding tax year. Thus, the effect of an ownership change
could be to reduce significantly the annual utilization of the Company's NOLs
and to
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cause a very substantial portion of the NOLs to expire prior to their use.
BACKGROUND REGARDING DELAWARE LAW
Under the laws of the State of Delaware, Clarus' state of
incorporation, a corporation may provide in its certificate of incorporation or
bylaws that a transfer of a security of the corporation to designated persons or
classes of persons may be prohibited so long as the designation of the persons
or classes of persons is not manifestly unreasonable. Under Delaware law, a
restriction on the transfer of shares of capital stock of a corporation for the
purpose of maintaining any tax advantage is conclusively presumed to be for a
reasonable purpose. The transfer restriction must be noted conspicuously on the
certificate representing the shares to be enforceable against the holder of the
restricted shares or any successor or transferee of the holder. If the
restriction is not conspicuously noted on the certificate representing the
shares, Delaware law provides that the restriction is ineffective except against
a person with actual knowledge of the restriction. Finally, no restriction so
imposed is binding with respect to shares issued prior to the inclusion of such
restrictions in the certificate of incorporation or bylaws unless the holders of
such shares agree thereto or vote in favor of the restriction.
DESCRIPTION OF THE TRANSFER RESTRICTIONS
THE FOLLOWING IS A BRIEF SUMMARY OF THE PROPOSED TRANSFER RESTRICTIONS. THIS
SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE
PROPOSED TRANSFER RESTRICTIONS SET FORTH IN THE ACCOMPANYING EXHIBIT A HERETO.
ALL STOCKHOLDERS ARE URGED TO READ THE TRANSFER RESTRICTIONS IN THEIR ENTIRETY.
The amendment to the Company's Amended and Restated Certificate of
Incorporation generally will restrict any person from attempting to sell,
transfer or dispose, or purchase or acquire (any such sale, transfer,
disposition, purchase or acquisition being a "Transfer"), any direct or indirect
interest in Clarus capital stock (or options, warrants or other rights to
acquire Clarus' capital stock, or securities convertible or exchangeable into
Clarus' capital stock), if such Transfer would affect the percentage of Clarus
capital stock owned by a 5% stockholder (any person attempting such a sale,
transfer or disposition, or such a purchase or acquisition, being referred to as
a "Restricted Holder"). For purposes of determining the existence and identity
of, and the amount of capital stock owned by, any 5% stockholder or Restricted
Holders, Clarus is entitled to rely conclusively on (a) the existence and
absence of filings of Schedules 13D and 13G (or any similar schedules) as of any
date and (b) its actual knowledge of the ownership of its capital stock.
In order for the Transfer Restrictions to be effectively enforced, the
amendment to the Company's Amended and Restated Certificate of Incorporation
will further provide that a Restricted Holder will be required, prior to the
date of any proposed Transfer, to request in writing that the Board of Directors
review the proposed Transfer and authorize or not authorize such proposed
Transfer. Any Transfer attempted to be made in violation of the
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Transfer Restrictions will be null and void. In the event of an attempted or
purported Transfer in violation of the Transfer Restrictions, the transferor
shall be deemed to remain the owner of such shares. In the event of an attempted
or purported Transfer involving the purchase or acquisition by a Restricted
Holder in violation of the Transfer Restrictions, Clarus shall be deemed to be
the exclusive and irrevocable agent for the transferor of such capital stock.
Clarus shall be such agent for the limited purpose of consummating a sale of
such shares to a person who is not a Restricted Holder (an "eligible
transferee"), which may include, without limitation, the transferor. The record
ownership of the subject shares shall remain in the name of the transferor until
the shares have been sold by Clarus or its assignee, as agent, to an eligible
transferee and the purported transferee would not be recognized as the owner of
the shares owned in violation of the restrictions for any purpose, including for
purposes of voting and receiving dividends or other distributions in respect of
such stock, or in the case of options, receiving stock in respect of their
exercise.
Clarus' Board of Directors has the discretion to approve a Transfer of
stock that would otherwise violate the Transfer Restrictions. In deciding
whether to approve any proposed restricted Transfer of capital stock by or to a
Restricted Holder, Clarus' Board of Directors may seek the advice of counsel
with respect to Clarus' preservation of its NOLs and may request all relevant
information from the Restricted Holder with respect to all capital stock
directly or indirectly owned by such Restricted Holder. Any Restricted Holder
who makes such a request of the Board of Directors to Transfer shares of capital
stock subject to the Transfer Restrictions shall reimburse Clarus, on demand,
for all costs and expenses incurred by Clarus with respect to any proposed
Transfer of capital stock, including, without limitation, Clarus' costs and
expenses incurred in determining whether to authorize that proposed restricted
transfer.
The amendment to Clarus' Amended and Restated Certificate of
Incorporation provides that any person who knowingly violates the Transfer
Restrictions or any persons in the same control group with such person shall be
jointly and severally liable to Clarus for, and shall indemnify and hold Clarus
harmless against, any and all damages suffered as a result of such violation,
including but not limited to damages resulting from a reduction in or
elimination of Clarus ability to use its NOLs.
Assuming adoption by stockholders of the Transfer
Restrictions, Article IV, Section 7 will provide that all certificates
representing shares of our capital stock must bear the following legend:
"The Amended and Restated Certificate of Incorporation (the
"Certificate of Incorporation") of the Corporation contains
restrictions prohibiting the sale, transfer, disposition,
purchase or acquisition (collectively, the "Transfer") of any
capital stock without the authorization of the Board of
Directors of the Corporation (the "Board of Directors"), if
such Transfer affects the percentage of capital stock that is
treated as owned by a five percent shareholder (within the
meaning of Section 382 of the Internal Revenue Code of 1986,
as amended (the "Code") and the Treasury Regulations
promulgated thereunder), and such Transfer would, in the sole
discretion and judgment of the Board of Directors, jeopardize
the Corporation's preservation of its U.S. federal income tax
attributes
24
pursuant to Section 382 of the Code and is not otherwise in
the best interests of the Corporation and its stockholders.
The Corporation will furnish without charge to the holder of
record of this certificate a copy of the Certificate of
Incorporation, containing the above-referenced restrictions on
transfer of stock, upon written request to the Corporation at
its principal place of business."
We intend to issue instructions to or make arrangements with the
transfer agent for our Common Stock to implement the Transfer Restrictions.
These instructions or arrangements may result in the delay or refusal of
Transfers initially determined by the transfer agent to be in violation of the
Transfer Restrictions, including such Transfers as might be ultimately
determined by Clarus and its transfer agent not to be in violation of such
restrictions. We believe that such delays would be minimal but could occur at
any time while the Transfer Restrictions are in effect.
CONTINUED RISK OF OWNERSHIP CHANGE
Despite the adoption of the Transfer Restrictions, there still remains
a risk that certain changes in relationships among stockholders or other events
will cause an "ownership change" of the Company under Section 382.
The Company believes the Transfer Restrictions are enforceable. The
Internal Revenue Service (the "IRS") has issued several private letter rulings
in this area that indicate that, to the extent Transfer Restrictions are
enforceable and are enforced by a Company, their terms will be respected for
purposes of applying Section 382. However, private letter rulings issued by the
IRS cannot be relied upon as legal precedent. There can be no assurance,
therefore, that if Transfers in violation of the Transfer Restrictions are
attempted, the IRS will not assert that such transfers have U.S. federal income
tax significance notwithstanding the Transfer Restrictions.
Even if the Stock Transfer Restrictions are approved, Clarus cannot
assure you that all of the Transfer Restrictions will be enforceable in Delaware
courts. Under Delaware law, the Transfer Restrictions are not binding with
respect to shares issued prior to the adoption of the Transfer Restrictions
unless the holder of the shares voted in favor of the Transfer Restrictions.
BOARD POWER TO WAIVE OR MODIFY TRANSFER RESTRICTIONS
The Board of Directors has the discretion to approve a Transfer of
stock that would otherwise violate the Transfer Restrictions in circumstances
where it determines that such Transfer is in the best interests of the Company
and its stockholders. If the Board of Directors decides to permit a Transfer
that would otherwise violate the Transfer Restrictions, that Transfer or later
Transfers may result in an ownership change that would limit the use of the
Company's NOLs.
In addition, the Board of Directors is authorized to eliminate the
Transfer Restrictions, modify the applicable allowable percentage ownership
25
interest or modify any of the terms and conditions of the Transfer Restrictions
provided that the Board of Directors concludes in writing that such change is
reasonably necessary or advisable to preserve the Company's NOLs or that the
continuation of the affected terms and conditions of the Transfer Restrictions
is no longer reasonably necessary for such purpose. Written notice of any such
determination will be provided to stockholders.
As a result of the foregoing, the Transfer Restrictions serve to
reduce, but not necessarily eliminate, the risk that Section 382 will cause the
limitations described above to apply to the use of the Company's NOLs.
ANTI-TAKEOVER EFFECT
Because some corporate takeovers occur through the acquirer's purchase,
in the public market or otherwise, of sufficient stock to give it control of a
corporation, any provision that restricts the transferability of shares can have
the effect of preventing such a takeover. The Transfer Restrictions therefore
may be deemed to have an "anti-takeover" effect because they will restrict the
ability of a person or entity or group thereof from accumulating an aggregate of
5% or more of the Company's capital stock and the ability of persons, entities
or groups now owning 5% or more of the Company's capital stock from acquiring
additional stock. The Transfer Restrictions would discourage or prohibit
accumulations of substantial blocks of stock for which stockholders might
receive a premium above market value.
The indirect "anti-takeover" effect of the Transfer Restrictions is not
the reason for the Transfer Restrictions. The Board of Directors considers the
Transfer Restrictions to be reasonable and in the best interests of the Company
and its stockholders because the Transfer Restrictions reduce certain of the
risks that the Company will be unable to utilize its available NOLs. In the
opinion of the Board of Directors, the fundamental importance to the Company's
stockholders of maintaining the availability of the NOLs to the Company is a
more significant consideration than the indirect "anti-takeover" effect the
Transfer Restrictions may have.
Nonetheless, the Transfer Restrictions, if adopted, could restrict a
stockholder's ability to acquire additional shares of our capital stock to the
extent those shares exceed the specified limitations of the Transfer
Restrictions. Furthermore, a stockholder's ability to dispose of such
stockholder's capital stock could be restricted as a result of the Transfer
Restrictions.
POSSIBLE EFFECT ON LIQUIDITY
The Transfer Restrictions will restrict a stockholder's ability to
acquire, directly or indirectly, additional capital stock of Clarus in excess of
the specified limitations. Furthermore, a stockholder's ability to dispose of
such stockholder's capital stock is restricted as a result of the Transfer
Restrictions, and a stockholder's ownership of capital stock may become subject
to the Transfer Restrictions upon the actions taken by related persons. If the
Transfer Restrictions were approved, Clarus would impose a legend reflecting the
Transfer Restrictions on certificates representing newly issued or transferred
shares of capital stock. These restrictions increase the risk of ownership of
the Company's capital stock. These restrictions may also result in a
26
decreased valuation of our capital stock due to the resulting restrictions on
Transfers to persons directly or indirectly owning or seeking to acquire a
significant block of Clarus' capital stock.
VOTE REQUIRED TO APPROVE THE TRANSFER RESTRICTIONS CHARTER AMENDMENT
Approval of the Transfer Restrictions requires the affirmative vote of
the holders of a majority of the outstanding shares of Common Stock entitled to
vote thereon. Stockholders should be aware that a vote in favor of the Transfer
Restrictions may result in a waiver of the stockholder's ability to contest the
enforceability of the Transfer Restrictions. Consequently, all stockholders
should carefully consider this consequence in determining whether to vote in
favor of the Transfer Restrictions. The Company intends to enforce the Transfer
Restrictions vigorously against all current and future holders of its capital
stock.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
AMENDMENT OF THE COMPANY'S AMENDED AND RESTATED CERTIFICATE OF INCORPORATION.
PROPOSAL 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT
CERTIFIED PUBLIC AUDITORS
The firm of KPMG LLP has audited our financial statementsAudit Related Fees for the fiscal year ended December 31, 2002.2008.
Tax Fees. For the fiscal year ended December 31, 2009, tax fees totaled $105,000, consisting of fees billed for all services performed by the independent auditor’s tax personnel, except for those services related to the audit, including due diligence review and analysis related to the impact of mergers and acquisitions. The Boardforegoing Tax Fees which were incurred in connection with the analysis and review of Directors desiresa proposed transaction relating to continue
the Company’s redeployment strategy, which involved an acquisition of several major assets and a financing component that terminated without consummation. There were no Tax Fees for the fiscal year ended December 31, 2008.
All Other Fees. There were no fees incurred for All Other Fees for the fiscal years ended December 31, 2009 and 2008.
55
Auditor Independence. The Audit Committee has considered the non-audit services ofprovided by KPMG LLP for the current fiscal year ending December 31, 2003.
Accordingly, the Board of Directors will recommendand determined that the stockholders ratifyprovision of such services had no effect on KPMG LLP’s independence from Clarus.
Audit Committee Pre-Approval Policy and Procedures.
The Audit Committee must review and pre-approve all audit and non-audit services provided by KPMG LLP, our independent auditors, and has adopted a Pre-Approval Policy. In conducting reviews of audit and non-audit services, the appointmentAudit Committee will determine whether the provision of such services would impair the auditor’s independence. The term of any pre-approval is 12 months from the date of pre-approval, unless the Audit Committee specifically provides for a different period. Any proposed services exceeding pre-approved fee ranges or limits must be specifically pre-approved by the BoardAudit Committee.
Requests or applications to provide services that require pre-approval by the Audit Committee must be accompanied by a statement of Directorsthe independent auditors as to whether, in the auditor’s view, the request or application is consistent with the SEC’s rules on auditor independence. Each pre-approval request or application must also be accompanied by documentation regarding the specific services to be provided.
Since the adoption of the Pre-Approval Policy by the Audit Committee on March 11, 2004, the Audit Committee has not waived the pre-approval requirement for any services rendered by KPMG LLP to audit our financial
statements forClarus. All of the current fiscal year. Representatives of that firm are
expected to be present at the meeting, shall have the opportunity to make a
statement if they desire to do so and are expected to be available to respond to
appropriate questions. In the event the stockholders do not ratify the
appointment ofservices provided by KPMG LLP to Clarus described above were pre-approved by the appointment will be reconsidered by our Audit Committee and the Board of Directors.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF KPMG LLP.
Committee.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does not intend to present any other matter for action at the meetingMeeting other than as set forth in the Notice of Annual Meeting and this Proxy Statement. If any other matters properly come before the meeting,Meeting, it is intended that the shares represented by the proxies will be voted, in the absence of contrary instructions, in the discretion of the persons named in the Proxy Card.
27
SECTION 16(a)16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act, requires our directors and executive officers and any persons who own more than 10% of our capital stock to file with the Securities and Exchange CommissionSEC (and, if such security is listed on a national securities exchange, with such exchange), various reports as to ownership of such capital stock. Such persons are required by the Securities and
Exchange Commission'sSEC’s regulations to furnish us with copies of all Section 16(a) forms they file.
Based solely upon reports and representations submitted by the directors, executive officers and holders of more than 10% of our capital stock, except as indicated below, all Forms 3, 4 and 5 showing ownership of and changes of ownership in our capital stock during the 20022009 fiscal year were timely filed with the Securities and Exchange Commission, except thatSEC.
56
FORM 10-K
We will provide, without charge, to each stockholder as of the Record Date, upon our receipt of a Form 4, Statementwritten request of Changes in Beneficial Ownership for each of Messrs. Coxe, House, Jeffery,
Ehrlich and Sokolow, was untimely filed during 2002.
ANNUAL REPORT
Athe stockholder, a copy of the Company'sour Annual Report to Stockholderson Form 10-K for the year ended December 31, 2002 is being mailed2009, including the financial statements and schedules, as filed with the SEC. Stockholders should direct the written request to stockholders along with this Proxy
Statement. Any stockholder who has not received a copyClarus Corporation, 2084 East 3900 South, Salt Lake City, UT 84124, Attention: Secretary.
REQUIREMENTS FOR SUBMISSION OF STOCKHOLDER PROPOSALS,
NOMINATION OF DIRECTORS AND OTHER BUSINESS OF STOCKHOLDERS
Under the rules of the Annual ReportSEC, if a stockholder wants us to Stockholdersinclude a proposal in our Proxy Statement and wishes to do so should contact the Company's Secretary by mailProxy Card for presentation at the address set forth in the Notice ofour 2011 Annual Meeting, or by telephone at
(203) 302-2000.
FORM 10-K
WE WILL PROVIDE, WITHOUT CHARGE, TO EACH STOCKHOLDER AS OF THE RECORD
DATE, ON THE WRITTEN REQUEST OF THE STOCKHOLDER, A COPY OF OUR ANNUAL REPORT ON
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2002, INCLUDING THE FINANCIAL
STATEMENTS AND SCHEDULES, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
STOCKHOLDERS SHOULD DIRECT THE WRITTEN REQUEST TO OUR CHIEF ADMINISTRATIVE
OFFICER, AT c/o CLARUS CORPORATION, ONE PICKWICK PLAZA, GREENWICH, CONNECTICUT
06830.
PROPOSALS BY STOCKHOLDERS
Anythe proposal of a stockholder intended to be presented at the annual
meeting of stockholders to be held in 2004 must be received by us no later than
February 17, 2004at our principal executive offices by April 7, 2011 (or, if the 2011 Annual Meeting is called for a date not within 30 calendar days before or after August 5, 2011, within a reasonable time before we begin to print and mail our proxy materials for the meeting). The proposal should be sent to the attention of: Secretary, Clarus Corporation, 2084 East 3900 South, Salt Lake City, UT 84124 and must include the information and representations that are set out in Exchange Act Rule 14a-8.
Under our Bylaws, and as permitted by the rules of the SEC, certain procedures are provided that a stockholder must follow to nominate persons for election as directors or to introduce an item of business at a meeting of our stockholders outside of the requirements set forth in Exchange Act Rule 14a-8. These procedures provide that nominations for director nominees and/or an item of business to be considered for inclusionintroduced at a meeting of our stockholders must be submitted in the Proxy Statement and form
of proxy for the 2003 annual meeting. Proposals must comply with Rule 14a-8
promulgated by the Commission pursuant to the Exchange Act.
FOR THE BOARD OF DIRECTORS
NIGEL P. EKERN
SECRETARY
28
EXHIBIT A
CERTIFICATE OF AMENDMENT OF
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
CLARUS CORPORATION
(Under Section 242 of the General Corporation Law)
The undersigned, being the Chief Administrative Officer of CLARUS CORPORATION, a
Delaware corporation, hereby certifies that:
1. (a) The name of the Corporation is CLARUS CORPORATION (the "Corporation").
(b) The date of filing the original Certificate of Incorporation of the
Corporation with the Secretary of State of Delaware was November 20,
1991.
2. Article IV of the Amended and Restated Certificate of Incorporation of the
Corporation shall be amended by supplementing such article to include the
following new Section 7:
"Section 7. Limitation on Transfer of Shares.
(a) Certain Transfers Prohibited.
(i) If an individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity, as
well as any syndicate or group deemed to be a person under Section
14(d)(2) of the Securities Exchange Act of 1934, as amended (each a
"Person"), shall attempt to sell, transfer, or dispose, or purchase or
acquire in any manner whatsoever, whether voluntarily or involuntarily,
by operation of law or otherwise, any shares of capital stock of the
Corporation or any option, warrant or other right to purchase or
acquire capital stock of the Corporation (such warrant, option, or
security being an "Option") or any securities convertible into or
exchangeable for capital stock of the Corporation or any interest in
any other entity that directly, indirectly or constructively owns any
shares of capital stock of the Corporation (any such sale, transfer,
disposition, purchase or acquisition being a "Transfer"), in each case,
whether voluntary or involuntary, of record, by operation of law or
otherwise (provided, however, that a transaction that is a pledge (and
not a transfer of tax ownership for U.S. federal income tax purposes)
shall not be deemed a Transfer, but a foreclosure pursuant thereto
shall be deemed to be a Transfer), and such Transfer shall affect the
percentage of capital stock that is treated as owned by a five percent
stockholder (within the meaning of Section 382 of the Internal Revenue
Code of 1986, as amended (the "Code") and the Treasury Regulations
promulgated thereunder) with respect to the Corporation (a "Five
Percent Stockholder"), then such Person shall be a "Restricted Holder",
and such Transfer shall not be permitted except as authorized pursuant
to this Article IV, Section 7; provided, however, that for purposes of
determining the existence and identity of, and the amount of capital
stock owned by, any Five Percent Stockholders or Restricted Holders,
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the Corporation is entitled to rely conclusively on (a) the existence
and absence of filings of Schedules 13D and 13G (or any similar
schedules) as of any date and (b) its actual knowledge of the ownership
of its capital stock. For purposes of this Article IV, Section 7,
"capital stock" shall include the Common Stock, par value $.0001 of the
Corporation.
(ii) The restrictions contained in this Article IV, Section
7, are for the purpose of reducing the risk that any change in stock
ownership may jeopardize the preservation of the Corporation's U.S.
federal, state and local income tax attributes under Code Section 382
or equivalent provisions of state or local law (collectively, the "Tax
Benefits"). In connection therewith, and to provide for the effective
policing of these provisions, a Restricted Holder who proposes to
effect a Transfer, prior to the date of the proposed Transfer, request
in writing (a "Request") that the Board of Directors of the Corporation
review the proposed Transfer and authorize or not authorize the
proposed Transfer pursuant to subsection (c) hereof. A Request shall be
mailed or delivered to the Secretary of the CorporationCompany at the
Corporation'sour principal placeexecutive offices. Any written submission by a stockholder including a director nomination and/or item of business or telecopied to be presented at a meeting of our stockholders must comply with the Corporation's telecopier number at its principal place of business.
Such Request shallprocedures and such other requirements as may be deemed to have been delivered when actually
receivedimposed by our Bylaws, Delaware law, the Secretaryrules and regulations of the Corporation. A Request shallSEC and must include (a) the name, address and telephone number of the Restricted Holder,
(b) a description of the interest proposed to be Transferred by or to
the Restricted Holder, (c) the date on which the proposed Transfer is
expected to take place, (d) the name of the intended transferor and
transferee of the interest to be Transferred by or to the Restricted
Holder, and (e) a Request that the Board of Directors authorize, if
appropriate, the Transfer pursuant to subsection (c) hereof and inform
the Restricted Holder of its determination regarding the proposed
Transfer. If the Restricted Holder seeks to effect a Transfer in the
form of a sale or other disposition, then, within ten business days of
receipt by the Secretary of the Corporation of a Request, the Board of
Directors shall act to determine whether to authorize the proposed
Transfer described in the Request under subsection (c) hereof. If the
Restricted Holder seeks to effect a Transfer in the form of a purchase
or other acquisition, at the next regularly scheduled meeting of the
Board of Directors following the tenth business day after receipt by
the Secretary of the Corporation of a Request, the Board of Directors
will act to determine whether to authorize the proposed Transfer
described in the Request under subsection (c) hereof. The Board of
Directors shall conclusively determine whether to authorize the
proposed Transfer, in its sole discretion and judgment, and shall
immediately cause the Restricted Holder making the Request to be
informed of such determination.
(b) Effect of Unauthorized Transfer. Any Transfer attempted to
be made in violation of this Article IV, Section 7, will be null and
void. In the event of an attempted or purported Transfer involving a
sale or disposition in violation of this Article IV, Section 7, the
Restricted Holder shall remain the owner of the transferred interest
(the "Prohibited Shares"). In the event of an attempted or purported
Transfer involving the purchase or acquisition by a Restricted Holder
in violation of this Article IV, Section 7, the Corporation shall be
deemed to be the exclusive and irrevocable agentinformation necessary for the transferor of
the Prohibited Shares. The Corporation shall be such agent for the
limited purpose of consummating a sale of the Prohibited Shares to a
Person who is not a
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Restricted Holder (an "Eligible Transferee"), which may include,
without limitation, the transferor. The record ownership of the
Prohibited Shares shall remain in the name of the transferor until the
Prohibited Shares have been sold by the Corporation or its assignee, as
agent, to an Eligible Transferee. The Corporation shall be entitled to
assign its agency hereunder to any person or entity including, but not
limited to, the intended transferee of the Prohibited Shares, for the
purpose of effecting a permitted sale of the Prohibited Shares. Neither
the Corporation, as agent, nor any assignee of its agency hereunder,
shall be deemed to be a stockholder of the Corporation nor be entitled
to any rights of a stockholder of the Corporation, including, but not
limited to, any right to vote the Prohibited Shares or to receive
dividends or liquidating distributions in respect thereof, if any, but
the Corporation or its assignee shall only have the right to sell and
transfer the Prohibited Shares on behalf of and as agent for the
transferor to another person or entity; provided, however, that a
Transfer to such other person or entity does not violate the provisions
of this Article IV, Section 7. The rights to vote and to receive
dividends and liquidating distributions with respect to the Prohibited
Shares shall remain with the transferor. The intended transferee shall
not be entitled to any rights of stockholders of the Corporation,
including, but not limited to, the rights to vote or to receive
dividends and liquidating distributions with respect to the Prohibited
Shares. In the event of a permitted sale and transfer, whether by the
Corporation or its assignee, as agent, the proceeds of such sale shall
be applied first, to reimburse the Corporation or its assignee for any
expenses incurred by the Corporation acting in its role as the agent
for the sale of the Prohibited Shares, second, to the extent of any
remaining proceeds, to reimburse the intended transferee for any
payments made to the transferor by such intended transferee for such
shares, and the remainder, if any, to the original transferor.
(c) Authorization of Transfer of Capital Stock by a Restricted
Holder. The Board of Directors may authorize a Transfer by a Restricted
Holder, or to a Restricted Holder, if, in its sole discretion and
judgment it determines that the Transfer is in the best interests of
the Corporation and its stockholders. In deciding whether to approve
any proposed Transfer by or to a Restricted Holder, the Board of
Directors may seek the advice of counsel with respect to the
Corporation's preservation of the Tax Benefits and may request all
relevant information from the Restricted Holder with respect to all
capital stock directly or indirectly owned by such Restricted Holder.
Any Person who makes a Request of the Board of Directors pursuant to
this subsection (c) to effect a Transfer shall reimburse the
Corporation, on demand, for all costs and expenses incurred by the
Corporation with respect to any proposed Transfer, including, without
limitation, the Corporation's costs and expenses incurred in
determining whether to authorize that proposed Transfer.
(d) Certain Indirect Prohibited Transfers. In the event a
Transfer would be in violation of this Article IV, Section 7, as a
result of attribution to the intended transferee of the ownership of
capital stock by a Person (an "Other Person") who is not controlling,
controlled by or under common control with the intended transferee,
which ownership is nevertheless attributed to the intended transferee,
the restrictions contained in this Article IV, Section 7, shall not
apply in a manner that would invalidate any Transfer to such
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Other Person, and the intended transferee and any Persons controlling,
controlled by or under common control with the intended transferee
(collectively, the "Intended Transferee Group") shall automatically be
deemed to have transferred to the Corporation, sufficient capital stock
(which capital stock shall (i) consist only of capital stock held
legally or beneficially, whether directly or indirectly, by any member
of the Intended Transferee Group, but not capital stock held through
any Other Person, other than shares held through a Person acting as
agent or fiduciary for any member of the Intended Transferee Group,
(ii) be deemed transferred to the Corporation, in the inverse order in
which it was acquired by members of the Intended Transferee Group, and
(iii) be treated as Prohibited Shares) to cause the intended
transferee, following such transfer to the Corporation, not to be in
violation of the restrictions contained in this Article IV, Section 7;
provided, however, that to the extent the foregoing provisions of this
subsection (d) would not be effective to prevent a Transfer in
violation of this Article IV, Section 7, the restrictions contained in
this Article IV, Section 7, shall apply to such other capital stock
owned by the intended transferee (including capital stock actually
owned by Other Persons), in a manner designed to minimize the amount of
capital stock subject to the restrictions contained in this Article IV,
Section 7, or as otherwise determined by the Board of Directors to be
necessary to prevent a Transfer in violationdetermine whether the candidate qualifies as independent.
We must receive notice of the restrictions
contained in this Article IV, Section 7 (which capital stock shall be
treated as Prohibited Shares).
(e) Prompt Enforcement; Further Actions. After learning ofintention to introduce a Transfer by a Restricted Holder,director nomination or to a Restricted Holder,present an item of business at our 2011 Annual Meeting (a) not less than sixty (60) days nor more than ninety (90) days prior to August 5, 2011 if our 2011 Annual Meeting is held within thirty (30) days before or after August 5, 2011; or (b) not later than the Corporation shall demandclose of business on the surrender,tenth (10th) day following the day on which the notice of meeting was mailed or cause to be surrendered, to
it, the certificates representing the Prohibited Shares, or any
proceeds received upon a salepublic disclosure of the Prohibited Shares, and any
dividends or other distributions made with respect to the Prohibited
Shares. If such surrender is not made within 30 business days from the date of such demand, the Corporation may institute legal proceedings to
compel such transfer; provided, however, that nothing in this
subsection (e) shall (i) be deemed inconsistent with the Transfer of
the Prohibited Shares being deemed null and void pursuant to subsection
(b) hereof, (ii) preclude the Corporation in its discretion from
immediately bringing legal proceedings without a prior demand, or (iii)
cause any failure of the Corporation to act within the time periods set
forth in this subsection (c) to constitute a waiver or loss of any
right of the Corporation under this Article IV, Section 7.
(f) Damages. Any Restricted Holder who knowingly violates the
provisions of this Article IV, Section 7, and any persons controlling,
controlled by or under common control with such a Restricted Holder,
shall be jointly and severally liable to the Corporation for, and shall
indemnify and hold the Corporation harmless against, any and all
damages suffered as a result of such violation, including but not
limited to damages resulting from a reduction in or elimination of the
Corporation's ability to utilize its Tax Benefits, and attorneys' and
auditors' fees incurred in connection with such violation.
(g) Legend on Certificates. All certificates for shares of
Common Stock issued by the Corporation shall conspicuously bear the
following legend: "The Amended
A-4
and Restated Certificate of Incorporation (the "Certificate of
Incorporation") of the Corporation contains restrictions prohibiting
the sale, transfer, disposition, purchase or acquisition (collectively,
the "Transfer") of any capital stock without the authorization of the
Board of Directors of the Corporation (the "Board of Directors"), if
such Transfer affects the percentage of capital stock that is treated
as owned by a five percent stockholder (within the meaning of Section
382 of the Internal Revenue Code of 1986, as amended (the "Code") and
the Treasury Regulations promulgated thereunder), and such Transfer
would, in the sole discretion and judgment of the Board of Directors,
jeopardize the Corporation's preservation of its U.S. federal income
tax attributes pursuant to Section 382 of the Code and is not otherwise
in the best interests of the Corporation and its stockholders. The
Corporation will furnish without charge to the holder of record of this
certificate a copy of the Certificate of Incorporation, containing the
above-referenced restrictions on transfer of stock, upon written
request to the Corporation at its principal place of business."
(h) Conditions to Transfer; Responsibilities of Transfer
Agent. The Corporation may require, as a condition to the registration
of the Transfer of any of its capital stock or the payment of any
distribution on any of its capital stock, that the intended transferee
or payee furnish to the Corporation all information reasonably
requested by the Corporation with respect to all the direct or indirect
ownership interests in such Stock. The Corporation may make such
arrangements or issue such instructions to its stock transfer agent as
may be determined by the Board of Directors to be necessary or
advisable to implement this Article IV, Section 7, including, without
limitation, instructing the transfer agent not to register any Transfer
of capital stock on the Corporations stock transfer records if it has
knowledge that such Transfer is prohibited by this Article IV, Section
7, and/or authorizing such transfer agent to require an affidavit from
a intended transferee regarding such Person's actual and constructive
ownership of capital stock and other evidence that a Transfer will not
be prohibited by this Article IV, Section 7, as a condition to
registering any Transfer.
(i) Authority of Board of Directors to Interpret. Nothing
contained in this Article IV, Section 7, shall limit the authority of
the Board of Directors to take such other action to the extent
permitted by law as it deems necessary or advisable to protect the
Corporation and preserve the Tax Benefits. Without limiting the
generality of the foregoing,meeting was made, whichever occurs first, in the event our 2011 Annual Meeting is not held within thirty (30) days before or after August 5, 2011. In the event we call a special meeting of our stockholders, we must receive your intention to introduce a director nomination or to present an item of business at the special meeting of stockholders not later than the close of business on the tenth (10th) day following the day on which the notice of such special meeting of stockholders was mailed or public disclosure of the date of the meeting was made, whichever occurs first.
57
Assuming that our 2011 Annual Meeting is held on schedule, we must receive notice of your intention to introduce a director nomination or other item of business at that meeting not less than sixty (60) days nor more than ninety (90) days prior to August 5, 2011. If we do not receive notice within the prescribed dates, or if we meet other requirements of the SEC rules, the persons named as proxies in the proxy materials relating to that meeting will use their discretion in voting the proxies when these matters are raised at the meeting.
In addition, nominations or proposals not made in accordance herewith may be disregarded by the chairman of the meeting in his discretion, and upon his instructions all votes cast for each such nominee or for such proposals may be disregarded.
FOR THE BOARD OF DIRECTORS
Robert N. Peay
Secretary
58
APPENDIX A
AMENDMENT NO. 3
TO THE
AMENDED AND RESTATED BY-LAWS
OF
CLARUS CORPORATION
The Amended and Restated By-laws of Clarus Corporation, a Delaware corporation (the “By-laws”), shall be amended as follows:
1. Article VIII, Section 10 of the By-laws is hereby amended by deleting such section in its entirety and inserting the following Article VIII, Section 10 in lieu thereof:
“Section 10. Amendments. These by-laws may be amended or repealed and new by-laws may be adopted by the affirmative vote of the holders of a change in law making one
or moremajority of the following actions necessarycapital stock issued and outstanding and entitled to vote at any meeting of stockholders or desirable,by resolution adopted by the Boardaffirmative vote of Directors may, by adoptingnot less than a written resolutionmajority of the Boardnumber of Directors, modify the definitions of any terms or conditions set forth
in this Article IV, Section 7, or modify the definitions of any terms
or conditions of this Article IV, Section 7, as appropriate to prevent
an ownership change for purposes of Section 382directors of the Code as a result
of any changes in applicable Treasury Regulations or otherwise;
provided, however, that the Board of Directors shall not cause there to
be such acceleration, extension, change or modification unless it
concludes in writing that such action is reasonably necessary or
advisable to preserve the Tax Benefits or that the continuation of
these restrictions is no longer reasonably necessary for the
preservation of the Tax Benefits, and its conclusion is based upon a
written opinion of tax counsel to the
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Corporation. The Corporation and the members of the Board of Directors
shall be fully protected in relying in good faith upon the information,
opinions, reports or statements of the chief executive officer, the
chief financial officer or the chief accounting officer of the
Corporation or of the Corporation's legal counsel, independent
auditors, transfer agent, investment bankers or other employees and
agents in making the determinations and findings contemplated by this
Article IV, Section 7, and the members of the Board of Directors shall
not be responsible for any good faith errors made in connection
therewith.
(j) Severability. If any part of the provisions of this
Article IV, Section 7, are judicially determined to be invalid or
otherwise unenforceable, such invalidity or unenforceability shall not
affect ”
[the remainder of the provisions of this Article IV, Section 7,
which shall be thereafter interpreted as if the invalid or
unenforeceable part were not contained herein, and, to the maximum
extent possible, in a manner consistent with preserving the ability of
the Corporation to utilize to the greatest extent possible the
Corporation's Tax Benefit.
(k) Expiration. The provisions of this Article IV, Section 7,
shall apply until such time as the Board of Directors determines in its
sole discretionpage is intentionally left blank]
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I hereby certify that the provisionsforegoing is a full, true and correct copy of this Article IV, Section 7, are
no longer necessary for the preservation of the Corporation's Tax
Benefits.
3. The amendment ofAmendment No. 3 to the Amended and Restated Certificate of Incorporation
herein certified was duly adopted by stockholders of the Corporation at the
2003 annual meeting of the Corporation in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware (the
"Delaware Code"), and written notice of such meeting was given to all
stockholders in accordance with Section 222 of the Delaware Code.
IN WITNESS WHEREOF, CLARUS CORPORATION, has caused this Certificate to be signed
and attested by its duly authorized officers, this __ day of June 2003.
CLARUS CORPORATION
By: _________________________
Name: Nigel P.Ekern
Title: Chief Administrative Officer and Secretary
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CLARUS CORPORATION
ANNUAL MEETING OF STOCKHOLDERS, JUNE 19, 2003
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Warren B. Kanders and Nigel P. Ekern,
as proxies each with full power of substitution, and hereby authorizes them to
appear and vote as designated below, all shares of Common StockBy-laws of Clarus Corporation, held on record by the undersigned on May 1, 2003, at the Annual
Meeting of Stockholders to be held on June 19, 2003, at 10:00 A.M., New York
City time, at The Metropolitan Club, One East 60th Street, New York, NY 10022
and any adjournments or postponements thereof and upon any and all matters which
may properly be brought before the meeting or any adjournments or postponements
thereof, thereby revoking all former proxies.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE PROPOSALS.
The undersigned hereby directs this Proxy to be voted:
[X] Please mark votesa Delaware corporation, as in this example.
1. Electioneffect on the date hereof.
Dated: June __, 2010
_____________________________
Robert N. Peay
Secretary of Directors
Tench Coxe
Burtt Ehrlich
Donald L. House
Stephen P. Jeffery
Warren B. Kanders
Nicholas Sokolow
[ ] FOR [ ] WITHHOLD AUTHORITY
the election as directors to vote for all nominees listed
of all nominees listed above above
WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE. WRITE THE NAME OF THE
NOMINEE FOR WHICH AUTHORITY TO VOTE IS BEING WITHHELD ON THE LINE BELOW.
- -------------------------------------------------------------------------------
2. Approval of the proposal to amend Clarus Corporation's Amended and
Restated Certificate of Incorporation to restrict certain transfers of
its securities in order to help assure the preservation of its tax net
operating loss carryforwards.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
IMPORTANT: PLEASE MARK, SIGN AND DATE THIS PROXY ON THE REVERSE SIDE.
(Continued from the other side)
3. Ratification of the appointment of KPMG LLP as Clarus Corporation's
independent auditors for 2003.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the named proxies may vote on such other business
as may properly come before the Annual Meeting, or any adjournments or
postponements thereof.
This Proxy, when properly executed, will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made, this Proxy will be
voted for Proposals 1, 2 and 3.
Shares represented by this Proxy will be voted at the meeting in accordance with
the stockholder's specifications above. The Proxy confers discretionary
authority in respect to matters not known or determined at the time of the
mailing of the notice of the Annual Meeting of Stockholders to the undersigned.
Date:___________________________, 2003
---------------------------------------
Signature of Stockholder
--------------------------------------
(Signature if held jointly)
NOTE: PLEASE MARK, SIGN, DATE AND RETURN
THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS
ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE
OR GUARDIAN, PLEASE GIVE FULL TITLE AS
SUCH. IF A CORPORATION OR PARTNERSHIP,
PLEASE SIGN IN CORPORATE OR PARTNERSHIP
NAME BY AN AUTHORIZED PERSON.
Corporation
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