EXTR » Topics » Item 1.01 Entry into a Material Definitive Agreement.

This excerpt taken from the EXTR 8-K filed Oct 31, 2006.

Item 1.01 Entry into a Material Definitive Agreement.

Based on the recommendation of the Compensation Committee of the Board of Directors (the “Board”) of Extreme Networks, Inc. (the “Company”) after consultation with an outside compensation consultant, and as part of a regular review of director compensation, on October 25, 2006, the Board approved replacing the current compensation policies applicable to non-employee members of the Board and its committees. Pursuant to such changes, the compensation policies for non-employee service on the Board and its committees will be as follows:

Cash Compensation

 

    Effective on the annual meeting of the Company’s stockholders for fiscal year 2006 (the “2006 Annual Meeting”), each non-employee director will receive $40,000 in cash compensation for service in such position for each period beginning on the date of any applicable annual meeting and ending on the date of the next subsequent annual meeting (each, a “Service Period”).

 

    Effective on the 2006 Annual Meeting, each non-employee director will receive cash compensation for each Board committee on which such director serves as follows:

 

    Each member of the Audit Committee of the Board will receive $20,000 in cash compensation for service in such position for each Service Period, and the Chair of the Audit Committee will receive an additional $10,000 in cash compensation for acting as Chair for each Service Period;

 

    Each member of the Compensation Committee of the Board will receive $10,000 in cash compensation for service in such position for each Service Period, and the Chair of the Compensation Committee will receive an additional $10,000 in cash compensation for acting as Chair for each Service Period;

 

    Each member of the Nominating and Governance Committee of the Board, including the Chair of the Nominating and Governance Committee, will receive $10,000 in cash compensation for service in such position for each Service Period; and

 

    For service on any special committee that may be formed by the Board from time to time, compensation will be determined on a case-by-case basis by the Board upon a recommendation by the Compensation Committee based on the anticipated amount of time and work related to service on such special committee and such other factors as the Compensation Committee may consider.

 

    Each non-employee director will continue to receive reimbursement of expenses related to attendance of meetings of the Board and its committees.

Equity Compensation

 

    Each non-employee director that initially joins the Board after October 25, 2006 automatically will be granted an initial 8,333 shares of the Company’s restricted stock and an initial option to purchase 25,000 shares of the Company’s common stock. Such options and restricted stock grants will be made under the Company’s 2005 Equity Incentive Plan or successor plan (the “Plan”), pursuant to the standard option agreement used under the Plan for directors. The exercise price per share of each such option, and the grant price of each such share of restricted stock, will be the closing sale price of the Company’s common stock on the Nasdaq National Market at the close of business on the date of grant. Each such option and restricted stock grant will vest  1/3 each year (or, if earlier in any year, 1/3 on the date of the annual meeting in such year), subject to the respective director’s continuous service on the Board for that period.

 

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    On the date of each future annual meeting of the Company’s stockholders, each non-employee director automatically will be granted 5,000 shares of the Company’s restricted stock and an option to purchase 15,000 shares of the Company’s common stock. Such options and restricted stock grants will be made under the Plan, pursuant to the standard option agreement used under the Plan. The exercise price per share of each such option, and the grant price of each such share of restricted stock, will be the closing sale price of the Company’s common stock on the Nasdaq National Market at the close of business on the date of grant. Each such option and restricted stock grant will vest in full on the date one year after the date of grant (or, if earlier, the date of the next subsequent annual meeting), subject to the respective director’s continuous service on the Board for that period.

 

    The Board has not yet granted any options or restricted stock pursuant to the above-listed changes of director compensation policy.

Also on October 25, 2006, the Board re-constituted certain committees of the Board, such changes to become effective as of the date of the 2006 Annual Meeting, as described in Item 8.01 of this Current Report on Form 8-K.

Also effective on October 25, 2006, the Board approved compensation for a certain special committee formed by the Board in September 2006 to review the Company’s historical practices for stock option grants and the accounting for option grants (the “Option Special Committee”). Each non-employee director serving on the Option Special Committee (currently Robert Corey and Michael West) will receive $10,000 in cash compensation for service in such position, and the Chair of the Option Special Committee (currently Robert Corey) will receive an additional $10,000 in cash compensation for acting as Chair of the Option Special Committee.

This excerpt taken from the EXTR 8-K filed Aug 8, 2006.

Item 1.01 Entry into Material Definitive Agreement.

On August 3, 2006, the Board of Directors of Extreme Networks, Inc, (the “Company”) approved a consulting agreement (the “Agreement”) between the Company and William Slakey, the Company’s departing Chief Financial Officer. Pursuant to the terms of the Agreement, the Company will retain Mr. Slakey’s services as a consultant for a period of three months and will remit to Mr. Slakey $15,000 per month in return for such services and will also remit $2,000 per month towards Mr. Slakey’s COBRA expenses for a period of six months.

This excerpt taken from the EXTR 8-K filed Jul 18, 2006.

1.01 Entry into a Material Definitive Agreement

Grant of Stock Options

On July 12, 2006, upon the recommendation of the Compensation Committee, the independent members of the Board of Directors of Extreme Networks, Inc. (the “Company”), approved the grant of stock options to certain of the Company’s executive officers for the following number of shares of the Company’s common stock:

 

Herb Schneider, Vice President Research and Development

   100,000

Frank Carlucci, Senior Vice President, Worldwide Sales

   50,000

The grants are to be effective as of the first trading date one day after the Company’s first public announcement of results for the fourth quarter of fiscal 2006 and the per share exercise price of such options shall be the closing price of the Company’s common stock on that date, as reported by the Nasdaq National Market System. The vesting of such options shall commence on July 1, 2006 and shall vest monthly over four years.

Grant of Restricted Stock Awards

On July 12, 2006, upon the recommendation of the Compensation Committee, the independent members of the Board of Directors approved the grant of restricted stock the Company’s Chief Operating Officer for the following number of shares of the Company’s common stock:

 

Alexander Gray, Chief Operating Officer

   50,000

The award is to be effective as of the first trading date one day after the Company’s first public announcement of results for the fourth quarter of fiscal 2006 and the measurement date shall be the same date. The vesting of the award shall commence on July 1, 2006 and shall vest in three increments: (i) 25% of the award shall vest six months from the grant date, (ii) 25% shall vest one year from the grant date and (iii) the remaining 50% shall vest two years from the grant date.

Fiscal 2007 Salaries

On July 12, 2006, the independent members of the Board of Directors upon the recommendation of the Compensation Committee, established the following fiscal 2007 annual salaries for certain of the Company’s executive officers:

 

Alexander Gray, Chief Operating Officer

   $ 400,000

Herb Schneider, Vice President, Research and Development

   $ 241,500

Frank Carlucci, Senior Vice President, Worldwide Sales

   $ 275,000

The fiscal 2007 salaries are effective as of the first day of the 2007 fiscal year.

 

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This excerpt taken from the EXTR 8-K filed Apr 26, 2006.

Item 1.01 Entry into a Material Definitive Agreement.

On April 24, 2006, Extreme Networks, Inc. (the “Company” or “Extreme”) announced that the Company has entered into a contract for the sale of its corporate headquarters campus in Santa Clara, California at a price of $70 Million. Completion of the transaction is contingent upon successful rezoning of the property for residential development, and is expected to close in 15 to 21 months.

A copy of the press release announcing the sale is attached hereto as Exhibit 99.1 and incorporated herein by reference.

This excerpt taken from the EXTR 8-K filed Feb 13, 2006.

Item 1.01 Entry into a Material Definitive Agreement.

 

On February 8, 2006, the independent members of the Board of Directors of Extreme Networks, Inc. (the “Company” or “Extreme”), upon the recommendation of the Compensation Committee, approved the terms of an Executive Change in Control Severance Plan (the “Severance Plan”). The Severance Plan provides for certain benefits for the Company’s executive officers and for certain vice presidents of the Company upon a change in control of Extreme.

 

Consistent with the Company’s existing policy and stock option terms, the terms of the Severance Plan provide that if, in the event of a change in control (as that term is defined in the Severance Plan) of Extreme, the participant in the Severance Plan is not terminated and the acquirer assumes such participant’s outstanding options and stock appreciation rights (“SARs”), the vesting of fifty percent (50%) of the participant’s then unvested options and SARs shall be accelerated as of the date of the change in control and the remainder of such participant’s unvested options and SARs shall vest in equal monthly installments over a period equal to one half of the remainder of the participant’s original vesting schedule. The Severance Plan also provides that if, in the event of a change in control of Extreme, the company acquiring Extreme does not assume or substitute equivalent replacements for the outstanding options and SARs of the participants in the Severance Plan, then the vesting and exercisability of their options and SARs shall be accelerated in full. The vesting of all other awards, including restricted stock and restricted stock units would accelerate in full upon a change in control.

 

The Severance Plan provides for additional compensation, health care and other benefits if a participant in the Severance Plan is terminated without cause (as that term is defined in the Severance Plan) or resigns as a result of certain adverse circumstances described in the Severance Plan within 12 months after a change in control. Upon such termination, the vesting of options and SARs held by the participant would accelerate in full. In addition, the participant would be entitled to a lump sum payment in an amount equal to the aggregate amount of his monthly salary and prorated annual bonus for a period of 12 months in the cases of the chief executive officer and the other executive officers and six months in the case of eligible vice presidents designated by the Compensation Committee, with the applicable annual bonus amount to be based upon the aggregate of all annual incentive bonuses that would have been earned by the participant for the fiscal year of termination of employment, determined as if 100% of all applicable performance goals were achieved.

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: February 13, 2006

 

EXTREME NETWORKS, INC.

By:

 

/s/ William R. Slakey


    William R. Slakey
    Chief Financial Officer

 

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This excerpt taken from the EXTR 8-K filed Jan 31, 2006.

Item 1.01 Entry into a Material Definitive Agreement.

 

On January 25, 2006, the Board of Directors (the “Board”) of Extreme Networks, Inc. (the “Company”) approved a non-employee director equity compensation program under the newly adopted 2005 Equity Plan (the “2005 Plan”). The terms and conditions of non-employee director equity compensation under the 2005 Plan are substantially the same as those previously established under the Company’s 1996 Stock Option Plan.

 

Under the non-employee director equity compensation program approved by the Board, each non-employee director first elected or appointed after January 25, 2006 shall automatically be granted, on the date of such election or appointment, an option to purchase 50,000 shares of the Company’s common stock (the “Initial Option”). The Initial Option shall have a term of ten years and shall vest and become exercisable in equal monthly installments over the three years following the date of grant of the Initial Option, subject to the director’s continuous service with the Company. The exercise price per share of each Initial Option shall be equal to the closing price of the Company’s common stock on the date of grant, as reported by the Nasdaq National Market.

 

In addition, immediately following the date of each annual meeting of stockholders held after January 25, 2006, each non-employee director shall automatically be granted an option to purchase 30,000 shares of the Company’s common stock (the “Annual Option”). The Annual Option shall have a term of ten years and shall vest and become exercisable on the day immediately preceding the first annual meeting of stockholders after the grant date of the Annual Option, subject to the director’s continuous service with the Company. The exercise price per share of Annual Option shall be equal to the closing price of the Company’s common stock on the date of grant, as reported by the Nasdaq National Market.

 

In accordance with the terms of this new option program and in connection with the service of the Company’s non-employee directors for the year following the annual meeting of stockholders held on December 2, 2005, the Board approved on January 25, 2006 the grant of an Annual Option to purchase 30,000 shares of the Company’s common stock to each of the following non-employee directors: Charles Carinalli, Bob L. Corey, Kenneth Levy, Harry Silverglide and W. Michael West. The per share exercise price of the Annual Options is equal to $4.74, the closing price of the Company’s stock on January 25, 2006, as reported by the Nasdaq National Market.

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: January 31, 2006

 

EXTREME NETWORKS, INC.
By:  

/s/ William R. Slakey


    William R. Slakey
    Chief Financial Officer

 

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This excerpt taken from the EXTR 8-K filed Dec 8, 2005.

Item 1.01 Entry into a Material Definitive Agreement.

 

Extreme Networks, Inc. 2005 Equity Incentive Plan

 

At the 2005 Annual Meeting of Stockholders of Extreme Networks, Inc. (the “Company”) held on December 2, 2005, the Company’s stockholders approved the Extreme Networks, Inc. 2005 Equity Incentive Plan (the “2005 Plan”). The 2005 Plan was adopted by the Company’s Board of Directors on October 20, 2005, subject to approval of its stockholders, and became effective with such stockholder approval on December 2, 2005. The Plan replaces the Company’s 1996 Stock Option Plan (the “1996 Plan”), 2000 Stock Plan (the “2000 Plan”) and 2001 Stock Plan (the “2001 Plan”).

 

Under the 2005 Plan, the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, and other stock-based or cash-based awards to employees and consultants. The 2005 Plan also authorizes the grant of awards of stock options, stock appreciation rights, restricted stock and restricted stock units to non-employee members of the Company’s Board of Directors and deferred compensation awards to officers, directors and certain management or highly compensated employees. The 2005 Plan authorizes the issuance of up to 12,000,000 shares of the Company’s common stock, and up to 11,000,000 shares subject to awards that remain outstanding under the 1996 Plan, 2000 Plan and 2001 Plan as of December 2, 2005 and which subsequently terminate without having been exercised or which are forfeited to the Company will be added to the shares available under the 2005 Plan.

 

A more detailed description of the terms of the 2005 Plan can be found in the Company’s definitive proxy statement for the 2005 Annual Meeting of Stockholders filed with the Securities and Exchange Commission on October 28, 2005 (the “Proxy Statement”) in the section entitled “Proposal Two—Approval of 2005 Equity Incentive Plan” and is incorporated by reference herein. The foregoing summary and the summary incorporated by reference from the Proxy Statement are qualified in their entirety by the full text of the 2005 Plan filed herewith as Exhibit 99.1 and incorporated by reference herein.

 

Amendment to Extreme Networks Employee Stock Purchase Plan

 

At the 2005 Annual Meeting of Stockholders of the Company held on December 2, 2005, the Company’s stockholders approved an amendment to the Company’s Employee Stock Purchase Plan (the “Purchase Plan”) to increase the maximum number of shares of common stock that may be issued under the Purchase Plan by 5,000,000 shares to a total of 12,000,000 shares. The Purchase Plan incorporating the amendment was adopted by the Company’s Board of Directors on October 20, 2005, subject to approval of its stockholders, and became effective with such stockholder approval on December 2, 2005.

 

The Purchase Plan permits eligible employees to purchase the Company’s common stock at a discount, but only through accumulated payroll deductions, during twelve month offering periods. Participants purchase shares on the last day of each three month period during the offering period. The price at which shares are purchased under the Purchase Plan is established by the Company’s Board of Directors, but may not be less than 85% of the lower of the fair market value of a share of common stock on (a) the first day of the offering period or (b) the purchase date.

 

A more detailed description of the terms of the Purchase Plan can be found in the Proxy Statement in the section entitled “Proposal Three—Approval of Amendment to the Employee Stock Purchase Plan” and is incorporated by reference herein. The foregoing summary and the summary incorporated by reference from the Proxy Statement are qualified in their entirety by the full text of the Purchase Plan filed herewith as Exhibit 99.2 and incorporated by reference herein.

 

This excerpt taken from the EXTR 8-K filed Sep 29, 2005.

Item 1.01. Entry into Material Definitive Agreement.

 

This amendment to the Form 8-K dated August 3, 2005 filed by Extreme Networks, Inc. on August 9, 2005 is being filed solely for the purpose of correcting the description of the vesting schedule of the options granted on August 3, 2005 to Gordon L. Stitt, William R. Slakey, Alexander Gray and Herb Schneider. The correct vesting schedule appears below under the caption “Grant of Stock Options.”

 

Adoption of 2006 Bonus Plan

 

On August 3, 2005, the Compensation Committee (the “Compensation Committee”) of the Board of Directors (the “Board”) of Extreme Networks, Inc. (the “Company”), after considering a competitive market summary of total compensation for its executive officers, (i) approved the terms of the Company’s fiscal 2006 incentive bonus plan (the “2006 Bonus Plan”) and (ii) established salaries for the Company’s executive officers for fiscal 2006.

 

The 2006 Bonus Plan provides for the payment of cash bonuses based upon the Company’s operating profit, revenue objectives and management objectives. The amount of the total target bonus for each employee varies based upon the employee’s position and responsibilities. Under the 2006 Bonus Plan, for vice presidents who are not among the group of executive officers consisting of the Company’s chief executive officer and the four other most highly compensated executive officers for the Company’s most recently completed fiscal year (the “Named Executive Officers”), the bonus is structured as follows: (i) thirty percent (30%) of the employee’s total target bonus is based upon a fiscal 2006 revenue formula, (ii) forty percent (40%) of the employee’s total target bonus is based upon the Company’s adjusted operating profit in fiscal 2006 and (iii) thirty percent (30%) of the employee’s total target bonus is based upon the achievement of individual management bonus objectives aligned with the Company’s strategic goals and approved by the Compensation Committee.

 

Under the 2006 Bonus Plan, for all Named Executive Officers other than the vice president of worldwide sales, the bonus is structured as follows: (i) fifty percent (50%) of the employee’s total target bonus is based upon a fiscal 2006 revenue formula and (ii) fifty percent (50%) of the employee’s total target bonus is based upon the Company’s adjusted operating profit in fiscal 2006. Under the 2006 Bonus Plan, the bonus structure for the vice president of worldwide sales is as follows: (i) fifty percent (50%) of the employee’s total target bonus is based upon the Company’s adjusted operating profit and (ii) fifty percent (50%) of the employee’s total target bonus is based upon the Company’s gross margin in fiscal 2006.

 

The target bonus that may be paid to each Named Executive Officer under the 2006 Bonus Plan is as follows:

 

     As Percentage
of Fiscal 2006
Base Salary


 

Gordon L. Stitt, President and Chief Executive Officer:

   100 %

William R. Slakey, Senior Vice President, Chief Financial Officer:

   40 %

Alexander Gray, Vice President, Chief Operating Officer

   40 %

Herb Schneider, Vice President Engineering

   40 %

Frank Carlucci, Senior Vice President Worldwide Sales

   * *

**    Mr. Carlucci’s bonus for fiscal 2006 will be based on his bonus target and commission plan.


Fiscal 2006 Salaries

 

On August 3, 2005, the Compensation Committee established the following fiscal 2006 base salaries for the following Named Executive Officers:

 

Gordon L. Stitt, President and Chief Executive Officer:

   $ 400,000

William R. Slakey, Senior Vice President, Chief Financial Officer:

   $ 320,000

Alexander Gray, Vice President, Chief Operating Officer

   $ 375,000

Herb Schneider, Vice President Engineering

   $ 230,000

Frank Carlucci, Senior Vice President Worldwide Sales

   $ 275,000

 

2005 Bonus Plan Payments

 

On August 3, 2005, the Compensation Committee approved payments to the Company’s Named Executive Officers under the terms of the Company’s fiscal 2005 incentive bonus plan for the Company’s executive officers and vice presidents (the “2005 Bonus Plan”):

 

Gordon L. Stitt, President and Chief Executive Officer:

   $ 122,000

William R. Slakey, Senior Vice President, Chief Financial Officer:

   $ 36,600

Alexander Gray, Vice President, Chief Operating Officer

   $ 42,700

Herb Schneider, Vice President Engineering

   $ 26,840

Frank Carlucci, Senior Vice President Worldwide Sales

   $ 7,625

 

Under the terms of the 2005 Bonus Plan, for all Named Executive Officers other than the vice president of worldwide sales, the bonus was structured as follows: (i) fifty percent (50%) of the employee’s total target bonus was based upon a revenue formula for fiscal 2005 and (ii) fifty percent (50%) of the employee’s total target bonus was based upon the Company’s adjusted operating profit in fiscal 2005. In connection with his employment with the Company in fiscal 2005, Mr. Carlucci received a $25,000 guaranteed bonus in the first half of fiscal 2005.

 

Grant of Stock Options

 

On August 3, 2005, the Compensation Committee approved the grant of stock options to the Company’s Named Executive Officers for the following number of shares of the Company’s common stock:

 

Gordon L. Stitt, President and Chief Executive Officer:

   250,000

William R. Slakey, Senior Vice President, Chief Financial Officer:

   75,000

Alexander Gray, Vice President, Chief Operating Officer

   100,000

Herb Schneider, Vice President Engineering

   100,000

 

Each such option was granted effective as of August 4, 2005, with an exercise price equal to $4.89, the closing price of the Company’s common stock on the Nasdaq Stock Market on August 4, 2005. Each option vests monthly over four years at the rate of 1/48 per month.

 

Grant of Restricted Stock Awards

 

On August 3, 2005, the Compensation Committee approved the following restricted stock awards to the Company’s Named Executive Officers to be effective on August 4, 2005, for the following number of shares of the Company’s common stock:

 

William R. Slakey, Senior Vice President, Chief Financial Officer:

   30,000

Alexander Gray, Vice President, Chief Operating Officer

   50,000


Each such restricted stock award vests over two years, with fifty percent (50%) of the award vesting on the first anniversary of the grant date, and the remaining fifty percent (50%) vesting on the second anniversary of the grant date.

 

This excerpt taken from the EXTR 8-K filed Aug 9, 2005.

Item 1.01 Entry into Material Definitive Agreement.

 

Adoption of 2006 Bonus Plan

 

On August 3, 2005, the Compensation Committee (the “Compensation Committee”) of the Board of Directors (the “Board”) of Extreme Networks, Inc. (the “Company”), after considering a competitive market summary of total compensation for its executive officers, (i) approved the terms of the Company’s fiscal 2006 incentive bonus plan (the “2006 Bonus Plan”) and (ii) established salaries for the Company’s executive officers for fiscal 2006.

 

The 2006 Bonus Plan provides for the payment of cash bonuses based upon the Company’s operating profit, revenue objectives and management objectives. The amount of the total target bonus for each employee varies based upon the employee’s position and responsibilities. Under the 2006 Bonus Plan, for vice presidents who are not among the group of executive officers consisting of the Company’s chief executive officer and the four other most highly compensated executive officers for the Company’s most recently completed fiscal year (the “Named Executive Officers”), the bonus is structured as follows: (i) thirty percent (30%) of the employee’s total target bonus is based upon a fiscal 2006 revenue formula, (ii) forty percent (40%) of the employee’s total target bonus is based upon the Company’s adjusted operating profit in fiscal 2006 and (iii) thirty percent (30%) of the employee’s total target bonus is based upon the achievement of individual management bonus objectives aligned with the Company’s strategic goals and approved by the Compensation Committee.

 

Under the 2006 Bonus Plan, for all Named Executive Officers other than the vice president of worldwide sales, the bonus is structured as follows: (i) fifty percent (50%) of the employee’s total target bonus is based upon a fiscal 2006 revenue formula and (ii) fifty percent (50%) of the employee’s total target bonus is based upon the Company’s adjusted operating profit in fiscal 2006. Under the 2006 Bonus Plan, the bonus structure for the vice president of worldwide sales is as follows: (i) fifty percent (50%) of the employee’s total target bonus is based upon the Company’s adjusted operating profit and (ii) fifty percent (50%) of the employee’s total target bonus is based upon the Company’s gross margin in fiscal 2006.

 

The target bonus that may be paid to each Named Executive Officer under the 2006 Bonus Plan is as follows:

 

     As a Percentage
of Fiscal 2006
Base Salary


 

Gordon L. Stitt, President and Chief Executive Officer:

   100 %

William R. Slakey, Senior Vice President, Chief Financial Officer:

   40 %

Alexander Gray, Vice President, Chief Operating Officer

   40 %

Herb Schneider, Vice President Engineering

   40 %

Frank Carlucci, Senior Vice President Worldwide Sales

   * *

** Mr. Carlucci’s bonus for fiscal 2006 will be based on his bonus target and commission plan.

 

Fiscal 2006 Salaries

 

On August 3, 2005, the Compensation Committee established the following fiscal 2006 base salaries for the following Named Executive Officers:

 

Gordon L. Stitt, President and Chief Executive Officer:

   $ 400,000

William R. Slakey, Senior Vice President, Chief Financial Officer:

   $ 320,000

Alexander Gray, Vice President, Chief Operating Officer

   $ 375,000

Herb Schneider, Vice President Engineering

   $ 230,000

Frank Carlucci, Senior Vice President Worldwide Sales

   $ 275,000

 

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2005 Bonus Plan Payments

 

On August 3, 2005, the Compensation Committee approved payments to the Company’s Named Executive Officers under the terms of the Company’s fiscal 2005 incentive bonus plan for the Company’s executive officers and vice presidents (the “2005 Bonus Plan”):

 

Gordon L. Stitt, President and Chief Executive Officer:

   $ 122,000

William R. Slakey, Senior Vice President, Chief Financial Officer:

   $ 36,600

Alexander Gray, Vice President, Chief Operating Officer

   $ 42,700

Herb Schneider, Vice President Engineering

   $ 26,840

Frank Carlucci, Senior Vice President Worldwide Sales

   $ 7,625

 

Under the terms of the 2005 Bonus Plan, for all Named Executive Officers other than the vice president of worldwide sales, the bonus was structured as follows: (i) fifty percent (50%) of the employee’s total target bonus was based upon a revenue formula for fiscal 2005 and (ii) fifty percent (50%) of the employee’s total target bonus was based upon the Company’s adjusted operating profit in fiscal 2005. In connection with his employment with the Company in fiscal 2005, Mr. Carlucci received a $25,000 guaranteed bonus in the first half of fiscal 2005.

 

Grant of Stock Options

 

On August 3, 2005, the Compensation Committee approved the grant of stock options to the Company’s Named Executive Officers for the following number of shares of the Company’s common stock:

 

Gordon L. Stitt, President and Chief Executive Officer:

   250,000

William R. Slakey, Senior Vice President, Chief Financial Officer:

   75,000

Alexander Gray, Vice President, Chief Operating Officer

   100,000

Herb Schneider, Vice President Engineering

   100,000

 

Each such option was granted effective as of August 4, 2005, with an exercise price equal to $4.89, the closing price of the Company’s common stock on the Nasdaq Stock Market on August 4, 2005. Twenty-five percent (25%) of each option vests on the first anniversary of the option grant date, with the remaining portion of the option vesting monthly in 36 substantially equal installments.

 

Grant of Restricted Stock Awards

 

On August 3, 2005, the Compensation Committee approved the following restricted stock awards to the Company’s Named Executive Officers to be effective on August 4, 2005, for the following number of shares of the Company’s common stock:

 

William R. Slakey, Senior Vice President, Chief Financial Officer:

   30,000

Alexander Gray, Vice President, Chief Operating Officer

   50,000

 

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Each such restricted stock award vests over two years, with fifty percent (50%) of the award vesting on the first anniversary of the grant date, and the remaining fifty percent (50%) vesting on the second anniversary of the grant date.

 

This excerpt taken from the EXTR 8-K filed Jun 28, 2005.

Item 1.01 Entry into Material Definitive Agreement.

 

On June 24, 2005, the Compensation Committee of the Board of Directors of Extreme Networks, Inc. (the “Company”) approved the accelerated vesting of all unvested options that have an exercise price of $7.00 or greater and are held by current employees, officers and directors. This accelerated vesting will affect options with respect to approximately 4,544,000 shares of the Company’s common stock. This acceleration is effective for stock options outstanding as of the close of business on June 27, 2005.

 

The primary purpose of the accelerated vesting is to eliminate future stock-based employee compensation expense the Company would otherwise recognize in its consolidated statement of operations with respect to these accelerated options once FASB Statement No. 123R (Share-Based Payment) becomes effective. Because these options have exercise prices substantially in excess of the Company’s current stock price which was $4.17 as of the close of market on June 27, 2005, as reported by the Nasdaq National Market, the Company believes that these options have limited economic value and may not be offering sufficient incentive to the employees when compared to the potential future compensation expense that would have been attributable to the options. The estimated maximum future expense that is eliminated is approximately $11,434,000. In addition to the accounting consequences, the Company believes that the accelerated vesting may have a positive effect on employee morale and retention.

 

A copy of the Company’s press release announcing this decision is attached hereto as Exhibit 99.1 and incorporated herein by reference.

 

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