Stockholders' Equity

12 Months Ended

Dec. 31, 2011

Stockholders' Equity [Abstract]

Stockholders' Equity

11. Stockholders' Equity

Public Offerings of Common Stock

In December 2008, the Company completed a registered direct offering in which it issued and sold 2,389,877 units (the "Units") at the negotiated price of $4.18 per Unit, with each Unit consisting of (i) one share of the Company's common stock ("Common Stock"), (ii) one warrant to purchase 0.75 shares of Common Stock at an exercise price of $5.11 per share (the "Series A Warrant"), (iii) one six-month warrant to purchase 0.90 shares of Common Stock at an exercise price of $4.65 per share (the "Series B Warrant"), for an aggregate of up to 2,148,739 shares of Common Stock, and (iv) two warrants to purchase 0.286 shares of Common Stock at an exercise price of $0.001 per share (the "Series C and D Warrants"), for an aggregate of up to 682,824 shares of Common Stock. The ability of the Investors to exercise the Series C and D Warrants was conditioned upon the trading price of Common Stock during certain periods prior to May 30, 2009, as described further below. The Series B, C and D Warrants all expired prior to June 30, 2009 and represented the right to acquire in the aggregate up to 2,831,563 shares of Common Stock. The Series A Warrants, which were exercisable on or after the date immediately following the six month anniversary of their issuance (the "Initial Exercisability Date") and had a five year term from the Initial Exercisability Date, represented the right to acquire an aggregate of up to 1,792,408 shares of Common Stock. The Series A Warrants have a provision for full ratchet adjustment of the exercise price for the first two years following the closing, and a provision for weighted average adjustment thereafter, provided that, in any event upon three successive quarters of positive free cash flow (defined as cash flow from operations less non-acquisition related capital expenditures), the full ratchet anti-dilution protection will no longer apply and weighted average anti-dilution will apply thereafter. The exercise price adjustment provisions included in the Series A Warrant only reduce the exercise price, and will not result in any increase in the number of Series A Warrants or shares of Common Stock underlying the Series A Warrants. As discussed below, these provisions were triggered in February 2009. Under certain conditions, holders of Series C Warrants were entitled to purchase up to 341,412 shares of Common Stock until ten trading days after the two month anniversary of the issuance date of such warrants and holders of Series D Warrants were entitled to purchase up to 341,412 shares of Common Stock until ten trading days after the five month anniversary of the issuance date of such warrants. The ability of the holders to exercise the Series C Warrants was conditioned on the simple average of the daily volume weighted average price of the Common Stock for the 30 trading days prior to the two month anniversary of closing, and the ability of the holders to exercise the Series D Warrants was conditioned on the simple average of the daily volume weighted average price of the Company's Common Stock for the 30 trading days prior to the five month anniversary of closing. If either such simple average was between $4.18 and $3.25, a portion of the Series C and D Warrants would be exercisable; if each such simple average was below $3.25, all of the Series C and D Warrants would be exercisable. The investors in this transaction became entitled to exercise and did exercise Series C and D Warrants to purchase 341,412 and 279,170 shares of common stock in March 2009 and June 2009, respectively.

As described above, this offering contained a provision that required a reduction of the exercise price for Series A Warrants if certain equity events occurred. Such an event occurred in February 2009 and as a result, the exercise price for the Series A Warrants was reduced to $3.16 per share. Under the provisions of general accounting principles for hedging and new guidance for determining whether an instrument (or embedded feature) is indexed to an entity's own stock, such a reset provision no longer meets the exemptions for equity classification and as such, the Company accounts for these warrants as derivative instruments. The calculated fair value of the warrants is classified as a liability and is periodically remeasured with any changes in value recognized in "Other income (expense)" in the Statement of Operations. This new guidance became effective for the Company as of January 1, 2009. Accordingly, the fair value of the warrants of $5.1 million was reclassified from stockholder's equity into current liabilities at that date. The Company determined that no change in fair value had occurred between the date of closing and December 31, 2008 and as such, the Company did not record a cumulative effect for the change in accounting principal upon adoption of the new guidance. See Note 2 for fair value as of December 31, 2010 and 2011.

In addition, concurrently with the offering discussed above, the Company completed a second registered direct offering for an aggregate of 2,024,260 shares of Common Stock and warrants to purchase up to 4,859,504 shares of Common Stock to the Lenders, for a purchase price of $4.94 per unit (representing the closing bid price of the Common Stock on the trading day preceding the execution of the agreement, plus an additional $0.125 per warrant share underlying the warrant). The warrants are exercisable at $4.64 per share, are exercisable on or after the date immediately following the six month anniversary of their issuance and have a five year term from that initial exercisability date. In conjunction with the two concurrent offerings, the Company received approximately $18.8 million net of offering expenses.

In August 2009, we filed a universal shelf registration statement for the issuance and sale from time to time to the public of up to $75 million in securities, including debt, preferred stock, common stock, and warrants. The registration statement was declared effective by the SEC in September 2009.

In October 2009, we completed an offering of 7,475,000 shares of our common stock at $4.00 per share, receiving approximately $27.8 million in net proceeds.

In November 2010, we completed a public offering of our common stock in which we issued 4,600,000 shares at $3.65 per share and realized approximately $15.5 million in proceeds, net of fees and expenses.

The holders of common stock are entitled one vote for each share held and to receive dividends whenever funds are legally available and when declared by the Board of Directors subject to the prior rights of holders of all classes of stock having priority rights as dividends and the conditions of the our Revolving Credit Agreement. No dividends have been declared or paid as of December 31, 2011.

The Company has reserved shares of common stock for the exercise of warrants, the issuance of options granted under the Company's stock option plan and its stock purchase plan as follows:

	December 31,
	2011		2010
Warrants		10,381,613		10,381,613
Stock award plans		364,687		2,785,983
Employee Stock Purchase Plan		104,145		188,636
		10,850,445		13,356,232

Stock Award Plans

The Company has various stock plans that permit the Company to provide incentives to employees and directors of the Company in the form of equity compensation. In 2002, the Board of Directors adopted a stock incentive plan (the 2002 Stock Incentive Plan) and a non-employee directors' stock plan (2002 Director Plan). Each of these plans was subsequently approved by the Company's stockholders.

The 2002 Stock Incentive Plan allows for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted shares and restricted share units to employees, directors, and consultants. Options granted under the 2002 Stock Incentive Plan expire no later than ten years from the date of grant. The exercise price of each incentive stock option shall not be less than 100% of the fair value of the stock subject to the option on the date the option is granted. The vesting provisions of individual options may vary, but incentive stock options generally vest 25% on the first anniversary of each grant and 1/48 per month over the next three years. Stock appreciation rights are rights to acquire a calculated number of shares of the Company's common stock upon exercise of the rights. The number of shares to be issued is calculated as the difference between the exercise price of the right and the aggregate market value of the underlying shares on the exercise date divided by the market value as of the exercise date. Stock appreciation rights granted under the 2002 Stock Incentive Plan generally vest 25% on the first anniversary of such grant and 1/48 per month over the next three years and expire no later than ten years from the date of grant. The Company generally issues new shares upon the exercise of stock options and stock appreciation rights.

Restricted share grants under the 2002 Stock Incentive Plan are either time-based or performance-based. Time-based restricted shares generally cliff vest three years after grant. Performance-based restricted shares vest upon the achievement of performance objectives which are determined by the Company's Board of Directors. 

Restricted stock unit grants under the 2002 Stock Incentive Plan are time-based and generally vest over 18 months with 25% vesting at 6 months, an additional 25% vesting at one year, and the final 50% vesting at the end of the 18^th month.  Restricted stock unit grants to executive level employees generally cliff vest 18 months after the grant date.

The 2002 Director Plan allows for the grant of non-qualified stock options to the Company's non-employee directors. Options granted under the 2002 Director Plan expire no later than ten years from the date of grant. The exercise price of options under the 2002 Director Plan shall not be less than 100% of the fair value of the stock subject to the option on the date the option is granted. Initial grants of options to new directors generally vest over a two year period. Annual grants to directors generally vest upon the earlier of one year or the next stockholder meeting.

During the third quarter of 2009, the Company allowed certain option holders to participate in a one-time stock option exchange program. Participants in the program were allowed to cancel certain stock options in exchange for the grant of a lesser amount of stock options with lower exercise prices. The exchange ratios used resulted in a fair value of the replacement options to be granted that was approximately equal to the fair value of the options that were surrendered, and thus no incremental expense was recognized by the Company in conjunction with this option exchange. Of the 975,121 options eligible under the program, 407,832 options were cancelled by the Company in exchange for the granting of 149,976 replacement options. This exchange program was approved by our stockholders on June 10, 2009.

A summary of the options and stock appreciation rights activity for the year ended December 31, 2011 is as follows:

	Number of Options/SARs			Range of Exercise Price	Weighted Average Exercise Price per Share
Outstanding, December 31, 2010		4,711,082		$1.37 - $12.55	$	5.80
Granted		2,108,850		$1.00 - $4.03	$	3.22
Exercised		(4,682	)	$1.37 - $1.62	$	1.54
Forfeited		(1,187,918	)	$1.00 - $12.03	$	5.71
Outstanding, December 31, 2011		5,627,332		$1.00 - $12.55	$	4.85

As of December 31, 2011, the weighted average remaining contractual life of the options and stock appreciation rights outstanding was 4.6 years. Of the 5,627,332 options and stock appreciation rights that were outstanding as of December 31, 2011, 3,005,452 were vested and exercisable with a weighted average exercise price of $6.11 per share and a weighted average remaining term of 2.6 years.

A summary of the options and stock appreciation rights outstanding by range of exercise price is as follows:

 

	Year Ended December 31, 2011
Range of Exercise Prices	Options Outstanding		Weighted Average Remaining Life		Weighted Average Exercise Price		Number of Options Currently Exercisable		Weighted Average Exercise Price Per Vested Share
$1.00 - $5.94		4,393,830		5.3 years	$	3.86		1,753,310	$	4.45
$6.77 - $9.90		776,491		2.0 years		7.06		787,632		7.10
$10.06 - $12.55		457,011		1.3 years		10.68		464,510		10.69
		5,627,332		4.6 years	$	4.85		3,005,452	$	6.11

 

The intrinsic value of options and stock appreciation rights is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company's common stock for the options and stock appreciation rights that were in-the-money at December 31, 2011. As of December 31, 2011, no options or stock appreciation rights were in-the-money. The intrinsic value of the options and stock appreciation rights outstanding at December 31, 2011 was approximately $0 based on a closing share price of $0.82 on December 31, 2011. The intrinsic value of fully vested options and stock appreciation rights outstanding at December 31, 2011 was approximately $0 based on a closing price of $0.82 on December 31, 2011. During the year ended December 31, 2011, the aggregate intrinsic value of options and stock appreciation rights exercised under the Company's stock option plans was less than $0.1 million. The weighted average grant date fair value of options and stock appreciation rights granted during the year ended December 31, 2011 was $3.22 per share.

During the years ended December 31, 2011, 2010, and 2009, the Company realized less than $0.1 million, $0.5 million, and less than $0.1 million, respectively, from the exercise of stock options and stock appreciation rights.

A summary of the restricted share and unit grant activity for the year ended December 31, 2011 is as follows:

	Number of  Restricted Shares			Weighted Average Grant Date Fair Value per Share
Outstanding, December 31, 2010		33,514		$	8.19
Granted		629,550		$	3.41
Vested		(19,086	)	$	9.70
Forfeited		(117,390	)	$	3.70
Outstanding, December 31, 2011		526,588		$	3.42

	Number of Restricted Shares Units			Weighted Average Grant Date Fair Value per Share
Outstanding, December 31, 2010		-		$	-
Granted		992,702		$	1.09
Vested		-		$	-
Forfeited		(4,500	)	$	1.09
Outstanding, December 31, 2011		988,202		$	1.09

A summary of the restricted stock outstanding as of December 31, 2011 is as follows:

	Number of Shares
Time based restricted shares		182,088
Performance based restricted shares		344,500
Outstanding, December 31, 2011		526,588

The intrinsic value of restricted shares and restricted stock units outstanding at December 31, 2011 was approximately $0.4 million and $0.8 million, respectively, based on a closing share price of $0.82 as of December 31, 2011. During the year ended December 31, 2011, the aggregate intrinsic value of restricted shares and restricted stock units vested was approximately $0.1 million and $0, respectively, determined at the date of vesting.

During the year ended December 31, 2009, the Company determined that it was not probable that the performance conditions related to certain of its outstanding restricted share awards would be achieved and accordingly, recorded approximately $(0.5) million as a cumulative catch-up adjustment resulting in a reduction of share based compensation.

As of December 31, 2011, the total compensation cost related to options, stock appreciation rights and non-vested stock granted to employees under the Company's stock award plans but not yet recognized was approximately $5.5 million, net of estimated forfeitures of approximately $2.4 million. This cost will be amortized over a period of up to four years on a straight-line basis over the underlying estimated service periods and will be adjusted for subsequent changes in estimated forfeitures. During the third quarter of 2011, the Company made an adjustment to its forfeiture rate based on historical information, which resulted in a reduction of share-based compensation of $0.5 million for the year ended December 31, 2011.

2009 Employee Stock Purchase Plan

In 2009, the Company adopted its 2009 Employee Stock Purchase Plan and reserved 250,000 shares of common stock for issuance pursuant to the plan. The Company offered employees the opportunity to participate in the plan beginning July 1, 2009 with an initial purchase date of September 30, 2009. Eligible employees have the opportunity to participate in a new purchase period every 3 months. Under the terms of the plan, employees can purchase up to 15% of their compensation of the Company's common stock, subject to an annual maximum of $25,000, at 95% of the fair market value of the stock at the end of the purchase period, subject to certain plan limitations. As of December 31, 2011, a total of 145,855 shares had been purchased under this plan. As of December 31, 2011 there were 104,145 remaining shares available for issuance under the Employee Stock Purchase Plan.

Warrants

In February 2008, the Company issued warrants to the Lenders to purchase 572,246 shares of common stock at $6.99 per share exercisable through February 2013 in conjunction with a $20 million loan commitment as described in Note 9. In February 2009, the Company exercised its option to extend the terms of its guarantee with the same stockholders and issued warrants to the Lenders to purchase 1,582,280 shares of common stock at $3.16 per share exercisable through February 2014 as described in Note 9.

In December 2008, the Company issued warrants associated with two direct offerings as discussed above in "Public Offerings of Common Stock."

In October 2009, the Company issued warrants to purchase 664,064 shares of common stock in conjunction with an extension of the commitment for unsecured borrowing capacity from the Lenders as described in Note 9.

In November 2010, the Company issued warrants to purchase 800,000 shares of common stock in conjunction with the offering as discussed above in "Public Offerings of Common Stock."

In December 2010, the Company issued warrants to purchase 111,111 shares of common stock in conjunction with the amendment of the loan agreement as described in Note 9.

During 2011, 2010, and 2009, warrants for 0, 0, and 620,582 shares, respectively, were exercised.