XML 48 R28.htm IDEA: XBRL DOCUMENT v2.4.0.6
Related Party Transactions
12 Months Ended
Mar. 31, 2013
Related Party Transactions [Abstract]  
Related Party Transactions
21. Related Party Transactions

The Company has arrangements or entered into agreements with three members of its Board of Directors, Messrs. Mel Marks, Philip Gay and Selwyn Joffe.

In August 2000, the Company's Board of Directors agreed to engage Mr. Mel Marks to provide consulting services to the Company. Mr. Marks was paid an annual consulting fee of $350,000 per year under this arrangement. Mr. Marks was paid $350,000 during each of the years ended March 31, 2013, 2012, and 2011. In March 2013, the Company entered into an agreement with Mr. Marks whereby Mr. Marks will no longer serve as a consultant to the Company. Pursuant to this agreement, the Company agreed to pay a one-time fee of $350,000 and an additional compensation of $300,000 to be paid ratably on a monthly basis during the term.

On May 3, 2012, the Company entered into the Right of First Refusal Agreement with Mr. Marks and Melmarks Enterprises LLLP, a limited liability limited partnership controlled by Mr. Marks (the "Shareholders"), which, among other things, provides the Company with the right to purchase any or all shares of common stock that the Shareholders propose to sell or transfer, subject to certain exceptions. Pursuant to the Right of First Refusal Agreement, the Company has 30 days after notice of a proposed sale or transfer to exercise its right to purchase such shares, and may do so at a price that is 10% below the average daily closing price per share of its common stock for the five consecutive trading days immediately preceding the date of such notice. The Right of First Refusal Agreement has a term of three years.

In December 2012, the Company entered into a stock repurchase agreement (the "Stock Repurchase Agreement") with the Shareholders, which, among other things, provides the Shareholders with the option to sell up to $300,000 of the Company's common stock held by the Shareholders (the "Shares"), on or prior to February 28, 2013, at a purchase price that is 10% below the average daily closing price per share of its common stock for the five consecutive trading days immediately preceding the date of the notice of sale. During fiscal 2013, the Company repurchased and retired 52,947 Shares at a total cost of approximately $300,000.

The Company agreed to pay Mr. Gay $90,000 per year for serving on the Company's Board of Directors, and for being Chairman of the Company's Audit and Ethics Committees.

On May 18, 2012, the Company entered into a new employment agreement (the "New Employment Agreement") with Mr. Joffe, which terminates and supersedes Mr. Joffe's previous employment agreement that was to expire on August 31, 2012. The New Employment Agreement provides for Mr. Joffe to serve as the Company's Chairman, President and Chief Executive Officer for a term expiring on August 31, 2015, unless extended or earlier terminated. Pursuant to the New Employment Agreement, Mr. Joffe will receive a base salary of $600,000 per year, which will be reviewed from time to time in accordance with the Company's established procedures for adjusting salaries for similarly situated employees. Mr. Joffe will be eligible to participate in the Company's Annual Incentive Plan adopted and amended from time to time by the Board (the "Annual Incentive Plan"), with a target bonus equal to 100% of Mr. Joffe's salary (the "Annual Incentive Bonuses"). In addition to the Annual Incentive Bonuses, the Company paid Mr. Joffe a one-time bonus of $250,000 upon the signing of the New Employment Agreement and awarded Mr. Joffe a guaranteed bonus of $500,000, which is payable in three annual installments: $168,000 on May 18, 2012; $166,000 on May 18, 2013; and $166,000 on May 18, 2014.

Pursuant to Mr. Joffe's previous employment agreement, he was entitled to receive a transaction fee of 1.0% of the "total consideration" of any transaction, including any transaction resulting in a change of control, his efforts brought to the Company. In lieu of this transaction fee, pursuant to the New Employment Agreement, the Company granted pursuant to its 2010 Plan (i) a fully-vested option to purchase 109,100 shares of the Company's common stock equal to $250,000 based on the Black-Scholes valuation method and (ii) 51,167 shares of fully vested restricted stock with a fair value of $331,000 in December 2012. The Company withheld 25,137 shares based upon the Company's closing stock price on the vesting date to settle Mr. Joffe's minimum statutory obligation for the applicable income and other employment taxes.  The Company then remitted cash to the appropriate taxing authorities. Total payment for this tax obligation to the taxing authorities was $163,000 and is reflected as a financing activity within the consolidated statements of cash flows. These net-share settlements had the effect of share repurchases by the Company as they reduced and retired the number of shares that would have otherwise been issued as a result of the vesting and did not represent an expense to the Company.

Pursuant to the New Employment Agreement, Mr. Joffe will also be eligible to receive annual awards under the 2010 Plan in such amounts as are determined by the Compensation Committee as administrator of the 2010 Plan in its sole and absolute discretion (the "Annual Awards"). Such awards may be in the form of options, restricted stock, restricted stock units, performance shares, performance units or such other form of award as determined by the Compensation Committee as administrator of the 2010 Plan in its sole and absolute discretion.

In January 2013, the Company entered into an option purchase agreement (the "Option Purchase Agreement") with Mr. Joffe. Pursuant to this agreement, among other things, the Company purchased Mr. Joffe's options to purchase 101,500 shares of the Company's common stock granted under the Company's 1994 Stock Option Plan at a net purchase price of $454,675. This payment represents the difference per share of common stock between $6.87, the average closing price of the Company's common stock for the five consecutive trading days preceding, and including the date of the Option Purchase Agreement, and the exercise price of the respective stock options, discounted five percent and multiplied by the total number of shares under Mr. Joffe's stock options.

Other Related Party Transactions

During fiscal 2013, the Company paid Houlihan Lokey Howard & Zukin Capital, Inc. $350,000 in connection with the restructuring of Fenco. Scott J. Adelson, a member of the Company's Board of Directors, is a Senior Managing Director for Houlihan Lokey Howard & Zukin Capital Inc.