XML 59 R15.htm IDEA: XBRL DOCUMENT v3.3.0.814
Related Party Transactions
9 Months Ended
Sep. 30, 2015
Related Party Transactions [Abstract]  
Related Party Transactions

Note 10. Related Party Transactions

The Company had approximately $47,000 and $44,000 of non-interest bearing advances due from a founding shareholder of the Company as of December 31, 2014 and September 30, 2015, respectively. Scheduled repayments are made through payroll deductions. At December 31, 2014, the Company had a receivable from a shareholder of $84,000.

Throughout the year, the Company utilizes a ranch owned by certain shareholders for meetings and conferences. The use of the ranch was expensed within the consolidated statements of operations and comprehensive loss at $13,000 per month during the three and nine months ended September 30, 2014 and 2015.

On January 15, 2015, the Company entered into a Separation Agreement and General Release with a relative of the Company’s former Executive Chairman, effective as of January 23, 2015, pursuant to which the Company resolved all matters related to the relative’s separation from employment with the Company without cause, effective as of December 31, 2014. Pursuant to the Separation Agreement, the outstanding stock options held by the relative on December 31, 2014, (i) became fully vested and exercisable to the extent not previously vested and exercisable and (ii) had their expiration dates extended until the earlier of (a) the date the option period terminates and (b) the tenth (10th) anniversary of the date of grant. The Company recognized $0.6 million in share-based compensation expense related to the accelerated vesting of the relative’s stock options as of December 31, 2014. During the nine months ended September 30, 2015, the Company recognized an additional $0.5 million in restructuring expense related to the Separation Agreement.  The expense related to severance payments was recorded in restructuring expense within the Company’s consolidated statements of operations and comprehensive loss as of December 31, 2014 and September 30, 2015.

 

On March 5, 2015, the Company entered into a Separation Agreement and General Release Agreement with Mr. John A. Goodman (the “Executive”) under which the Company resolved all matters related to the Executive’s separation from employment with the Company without cause as of February 15, 2015, including all matters arising under the Second Amended and Restated Employment Agreement, by and between the Company and the Executive, effective as of April 11, 2014, as amended. The Executive was the beneficial owner of approximately 40.5% of the Company’s common stock as of November 13, 2015. During the nine months ended September 30, 2015, the Company recorded $0.7 million in share based compensation expense related to the accelerated vesting of the Executive’s shares granted under the 2008 Plan and the 2000 Plan. During the nine months ended September 30, 2015, pursuant to the Separation Agreement, the Company paid the Executive approximately $3.0 million in severance related expenses which were recorded, along with the share based compensation, in the restructuring expense line item within the consolidated statements of operations and comprehensive loss. The Executive was also paid an additional $1.0 million bonus which was recorded within selling, general and administrative expenses.         

 

The Company also granted the Executive a one-time put right to sell to the Company up to $2,700,000 of the Executive’s equity interests in the Company, based on the fair market value of such equity interests on the date the Executive exercises the put right. In addition, the Executive granted the Company a one-time call right to purchase from the Executive up to $2,700,000 of the Executive’s equity interests in the Company based on the fair market value of such equity interests on the date the Company exercises the call right. 

 

The fair value of the put option and the call option was zero at September 30, 2015. The price at which shares may be sold or purchased pursuant to the put or call and put option will be based on the fair value of a share of the Company’s common stock on the exercise date. As such, the Company has not recorded any asset or liability on the balance sheet for this instrument.

 

The put option can only be requested in writing by the Executive and the call option can only be requested in writing by the Company, in each case, between January 1, 2016 and December 31, 2018 and each may only be exercised one time.  The purchase price for each of the call and put option shall be paid in a single sum cash payment on the closing date, which shall be on a business day within fifteen days after the date of exercise. Each of the call and put option may only be exercised if (i) the Company is permitted at the time of exercise to complete the requested repurchase pursuant to law, (ii) the Company receives a capital adequacy opinion satisfactory to the Company’s Board of Directors prior to the closing of the repurchase, and (iii) the repurchase would not be in violation of any contract, agreement, instrument, arrangement, commitment, understanding or undertaking to which the Company is a party or otherwise bound.

 

From time to time, the Company engages in transactions with executive officers, directors, shareholders or their immediate family members of these persons (subject to the terms and conditions of the Indenture and the Credit Facility). These transactions are negotiated between related parties without arm’s length bargaining and, as a result, the terms of these transactions could be different than transactions negotiated between unrelated persons.