Hypercom Corporation Annual Report - CiteSeer

the issuance of non-qualified stock options and restricted stock awards, the majority of which must be issued to employees of the
Company who are not officers or directors. Non-qualified stock options issued under the 2000 Plan become exercisable over a period
determined by the Board (generally over two to five years), and expire after a period determined by the Board (generally ten years
after the date of grant).
Stock Options
A summary of the Company’s stock option activity, including stock options issued under the Directors Plan, defined below, and
related information for the years ended December 31, 2009, 2008 and 2007 is as follows:
2009 2008 2007
Weighted Weighted Weighted
Shares Average Shares Average Shares Average
Under Exercise Under Exercise Under Exercise
Option Price Option Price Option Price
Beginning balance
outstanding 4,444,718 $ 5.74 2,974,536 $ 7.33 3,726,642 $ 8.07
Granted 635,000 1.56 2,215,000 4.09 649,070 5.29
Exercised — — (140,100 ) 3.78 (201,024 ) 3.61
Cancellations (514,857 ) 7.27 (604,718 ) 7.98 (1,200,152 ) 9.04
Ending balance outstanding 4,564,861 $ 4.99 4,444,718 $ 5.74 2,974,536 $ 7.33
Exercisable at end of year 3,245,491 $ 5.85 2,103,857 $ 7.25 1,919,734 $ 7.71
The following table summarizes additional information about the Company's stock options outstanding as of December 31,
2009:
Options Outstanding Options Exercisable
Weighted Weighted Weighted
Shares Average Average Shares Average
Under Remaining Exercise Under Exercise
Range of
Exercise Prices Option Contractual Life Price Option Price
$ 0.96 - 3.50 921,800 9.50 $ 1.77 188,320 $ 2.75
$ 3.52 - 5.28 2,411,004 7.67 4.45 1,860,700 4.44
$ 5.41 - 6.25 284,570 5.91 6.05 251,236 6.07
$ 6.28 - 9.29 484,250 5.98 7.43 484,250 7.43
$ 9.31 - 9.38 135,000 0.58 9.38 135,000 9.38
$ 9.40 - 9.63 18,450 2.12 9.56 17,505 9.56
$ 10.38 - 14.44 309,787 4.24 11.79 308,480 11.79
4,564,861 3,245,491
Stock Warrants
In connection with the funding of the Acquisition Financing, the Company granted the lender a warrant to purchase
approximately 10.5 million shares of the Company’s common stock at $5.00 per share. See further discussion in Note 13. The warrant
expires on April 1, 2013.
Employee Stock Purchase Plan
In 1997, the Board adopted and the stockholders of the Company approved the Employee Stock Purchase Plan (the “Purchase
Plan”). The Purchase Plan was subsequently amended and restated in its entirety in 2008 upon adoption by the Board and approval by
the Company’s stockholders. The Purchase Plan allows eligible employees of the Company to purchase shares of the Company’s
common stock through periodic payroll deductions every three months. At the end of each offering period, payroll deductions for the
offering period are used to purchase shares of common stock for each participant’s account at a price equal to 85% of the fair market
value of the common stock on either the first or last day of the offering period, whichever is less. Payroll deductions under the
Purchase Plan are limited to 10% of each eligible employee’s earnings during the offering period, and no single participant will be
granted an option to purchase shares with a value in excess of $25,000 for each calendar year. The Board has reserved 625,000 shares
of common stock for issuance under the Purchase Plan, subject to adjustment in the event of a stock split, reverse stock split, stock
dividend or similar event. Under the Purchase Plan, for the years ended December 31, 2009, 2008, and 2007 the Company sold
159,561, 59,997, and 46,139 shares to employees at weighted average prices of $1.19, $2.30, and $4.47, respectively. At the end of
December 31, 2009, the Company had a balance of 144,267 shares of common stock available for issuance under the Purchase Plan.
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