SCHEDULE 14A
(Rule 14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE 14A
INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934
Filed
by
the Registrant þ
Filed
by
a Party other than the Registrant o
Check
the
appropriate box:
o Preliminary
Proxy Statement
o Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
þ Definitive
Proxy Statement
o Definitive
Additional Materials
o Soliciting
Material Pursuant to Rule 14a-11(c) or Rule 14a-12
NexCen
Brands, Inc.
(Name
of
Registrant as Specified in Its Charter)
(Name
of
Person(s) Filing Proxy Statement if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
þ
No fee
required.
¨
Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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(1) |
Title
of each class of securities to which transaction
applies:
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N/A
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(2) |
Aggregate
number of securities to which transaction
applies:
|
N/A
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(3) |
Per
unit price or other underlying value of transaction computed pursuant
to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was
determined):
|
|
(4) |
Proposed
maximum aggregate value of
transaction:
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¨
Fee paid
previously with preliminary materials.
o |
Check
box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its
filing.
|
Amount
previously paid:
Form,
schedule or registration statement no.:
Filing
party:
Date
filed:
Dear
NexCen Stockholders:
On
behalf
of the board of directors and management of NexCen Brands, Inc., I cordially
invite you to attend the 2007 Annual Meeting of
NexCen
stockholders, to be held on September 5, 2007 at the W Hotel New York Times
Square, 1567 Broadway, New York, NY at 9:30 a.m. At this meeting, we will
discuss each item of business described in the Notice of Annual Meeting and
Proxy Statement. There also will be time for questions.
Since
our
last meeting in October 2006, NexCen has completed a number of successful
acquisitions including The Athlete’s Foot Brands, LLC, Bill Blass Holding
Co., Inc., MaggieMoo’s International, LLC, the assets of Marble Slab Creamery,
Inc. and the Waverly brand. With these acquisitions, NexCen has entered the
retail franchising, consumer branded products and quick service restaurant
franchising businesses. We are working hard to identify additional growth
opportunities and to acquire additional IP-centric businesses in order to build
an IP business that will deliver significant value to our
stockholders.
At
the
annual meeting, we are asking for your vote on the following
matters:
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·
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to
elect the proposed slate of nine directors;
and
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·
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to
ratify the appointment of KPMG LLP, as our independent registered
public
accounting firm.
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Your
board of directors has approved, and recommends that you vote FOR,
all of
these proposals. We look forward to a very exciting future for your
company.
Sincerely,
Robert
W.
D’Loren
President
and Chief Executive Officer
YOUR
VOTE
IS VERY IMPORTANT
Whether
or not you expect to attend the annual meeting, please complete, sign, and
date
the accompanying proxy card and return it in the enclosed prepaid envelope,
or
submit your voting instructions by telephone or through the Internet if that
option is available to you. If you attend the annual meeting, you may revoke
your proxy and vote in person if you wish, even if you have previously returned
your proxy card.
NEXCEN
BRANDS, INC.
1330
Avenue of the Americas, 34th Floor
New
York, NY 10019
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD ON SEPTEMBER 5, 2007
DATE:
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September
5, 2007
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TIME:
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9:30
a.m. local time
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PLACE:
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W
Hotel New York Times Square
1567
Broadway, New York, NY 10036
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New
York, NY 10019
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YOUR
VOTE IS IMPORTANT TO US
Dear
NexCen Stockholder:
Notice
is
hereby given that NexCen Brands, Inc. will hold the annual meeting of its
stockholders on September 5, 2007 at
the
W
Hotel
New York Times Square, 1567 Broadway, New York, NY,
at 9:30
a.m. At the annual meeting, we will ask you to vote on the following
matters:
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1.
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The
election of nine directors to hold office until the 2008 annual meeting
of
stockholders or until their successors are elected and
qualified;
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2.
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A
proposal to ratify the appointment of KPMG LLP as NexCen’s independent
registered public accounting firm for the fiscal year ending
December 31, 2007; and
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3.
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Any
such other matters as may properly come before the meeting and any
adjournment or postponement
thereof.
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Your
board of directors has approved, and recommends that you vote FOR,
each of
the proposals, which are described in the attached proxy statement.
Only
holders of record of common stock as of the close of business on July 31, 2007
will be entitled to notice of and to vote at the annual meeting and any
adjournment or postponement thereof. This notice and proxy are first being
mailed to stockholders on or about August 7, 2007. You are urged to carefully
review the information contained in the enclosed proxy statement prior to
deciding how to vote your shares at the annual meeting.
Your
participation in the annual meeting, in person or by proxy, is especially
important. You
are cordially invited to attend the annual meeting, but whether or not you
expect to attend, you are urged to complete, sign, date, and return the enclosed
proxy card promptly or
follow the telephone or Internet proxy submission procedures described on the
proxy card and in the accompanying proxy statement so that your shares can
be
voted.
If
you
attend the annual meeting, you may revoke your proxy and vote in person if
you
wish, even if you have previously returned your proxy card. Simply attending
the
annual meeting, however, will not revoke your proxy; you must vote at the annual
meeting. If you do not attend the annual meeting, you may still revoke your
proxy at any time prior to the annual meeting by providing a later-dated proxy
or by providing me with written notice of your revocation.
BY
ORDER
OF THE BOARD OF DIRECTORS
David
B.
Meister
Secretary
New
York,
NY
August
1,
2007
TABLE
OF CONTENTS
TABLE
OF CONTENTS
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1
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QUESTIONS
AND ANSWERS REGARDING THE ANNUAL MEETING
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2
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INORMATION
ABOUT THE ANNUAL MEETING AND VOTING
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3
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PROPOSAL 1 —
ELECTION OF DIRECTORS
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6
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PROPOSAL
2 — RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
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7
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SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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8
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DIRECTORS
AND EXECUTIVE OFFICERS
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10
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STOCK
PERFORMANCE GRAPH
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35
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CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
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36
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CORPORATE
GOVERNANCE INFORMATION
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37
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COMMUNICATING
WITH THE BOARD OF DIRECTORS
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37
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NOTE
REGARDING FORWARD-LOOKING STATEMENTS
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37
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AVAILABLE
INFORMATION
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38
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INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
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38
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HOUSEHOLDING
OF PROXY MATERIALS
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38
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Q:
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Why
am I receiving this
document?
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A:
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You
are receiving this proxy statement and the enclosed proxy card from
us
because you held shares of our common stock at the close of business
on
July 31, 2007, the record date, and are entitled to vote at the annual
meeting. This proxy statement is being mailed to our stockholders
beginning August 7, 2007. This proxy statement contains the information
you need to know to vote at the annual
meeting.
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Q:
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What
are the proposals I will be voting on at the annual
meeting?
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A:
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As
a stockholder, you are entitled to and requested to vote on the following
matters:
1.
To
elect nine members to the board of directors, each for a one-year
term; and
2.
To
ratify the appointment of KPMG LLP as our independent registered
public
accounting firm for fiscal year 2007.
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Q:
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If
my shares are held in “street name” by my broker, will my broker vote my
shares for me even if I don’t give my broker voting
instructions?
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A:
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Your
broker will vote your shares if you provide instructions on how to
vote.
In addition, brokerage firms have the authority to vote their clients'
unvoted shares on certain routine matters. The proposals related
to the
election of directors and the ratification of the appointment of
KPMG LLP
as our independent registered public accounting firm are considered
“routine.” If you do not provide voting instructions, your broker may
choose to vote for you or leave your shares unvoted on such routine
matters. You therefore should be sure to provide your broker with
instructions on how to vote your shares. Please check the voting
form used
by your broker to see if it offers telephone or Internet submission
of
proxies.
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Q:
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May
I change my vote after I have mailed my signed proxy
card?
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A:
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Yes,
you may change your vote at any time before your shares are voted
at the
annual meeting. You may change your vote in one of the three following
ways:
1. You
may notify the Secretary of NexCen in writing before the annual meeting
that you wish to revoke your proxy. In this case, please contact
NexCen
Brands, Inc., 1330 Avenue of the Americas, 34th Floor, New York, NY
10019, Attention: David B. Meister, Secretary.
2.
You
may submit a proxy dated later than your original proxy.
3.
You
may attend the annual meeting and vote. Merely attending the annual
meeting will not by itself revoke a proxy; you must obtain a ballot
and
vote your shares to revoke the previously submitted
proxy.
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Q:
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Who
may I contact with questions about the
proposals?
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A:
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If
you have more questions about the proposals or would like additional
copies of this proxy statement, you should contact David B. Meister,
NexCen’s Chief Financial Officer and Secretary, at (212) 277-1100.
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In
addition, NexCen is a public company and is required to file reports
and
other information with the SEC. You may read and copy this information
at
the SEC’s public reference facilities. You may call the SEC at
1-800-SEC-0330 for information about these facilities. This information
is
also available at the SEC’s Internet site at www.sec.gov
.
You can also request copies of these documents from us or visit our
website at www.nexcenbrands.com.
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Q:
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Who
may attend the annual meeting?
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A:
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Subject
to space availability, all stockholders as of the July 31, 2007,
or their
duly appointed proxies, may attend the annual meeting. Since seating
is
limited, admission to the meeting will be on a first-come, first-served
basis. If you attend, please note that you may be asked to present
valid
picture identification, such as a driver's license or
passport.
You
will need proof of ownership of NexCen common stock to enter the
meeting.
If
your shares are registered or held in the name of your broker or
other
nominee, your shares are held in "street name." Please note that
if you
hold your shares in "street name," you will need to bring proof of
your
ownership of common stock as of the July 31, 2007, such as a copy
of a
bank or brokerage statement, and check in at the registration desk
at the
meeting.
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Q:
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How
may I obtain NexCen’s corporate governance
materials?
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A:
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The
NexCen home page is
www.nexcenbrands.com,
and the following information may be found there:
·
NexCen’s
Code of Ethics; and
·
NexCen’s
Board Committee Charters — Audit Committee, Compensation Committee,
Corporate Governance Committee, and Nominating
Committee.
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1330
Avenue of the Americas, 34th Floor
INFORMATION
ABOUT THE ANNUAL MEETING AND VOTING
TIME
AND PLACE
The
annual meeting will be held on September 5, 2007 at the W
Hotel
New York Times Square, 1567 Broadway, New York, NY,
at
9:30 a.m., local time.
PROPOSALS TO
BE CONSIDERED
At
the
annual meeting, we will ask our stockholders to consider and vote upon the
following matters:
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1.
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Electing
nine members of the board of directors, each for a one-year term;
and
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2.
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Ratifying
appointment of KPMG LLP as our independent registered public accounting
firm for fiscal year 2007.
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Our
board
of directors is not aware of any other matters to be presented at the annual
meeting. If any other matters should properly come before the annual meeting,
the persons named as proxies in the enclosed proxy card will vote the proxies
in
accordance with their best judgment.
THIS
PROXY SOLICITATION
We
are
sending you this proxy statement because our board is seeking a proxy to vote
your shares at the annual meeting. This proxy statement is intended to assist
you in deciding how to vote your shares. At the close of business on July 31,
2007 there were 51,007,473 shares of common stock outstanding, which constitute
all of the outstanding voting shares of NexCen. Only holders of record shares
of
common stock on the close of business on July 31, 2007 will be entitled to
vote
at the annual meeting. On August 7, 2007, we will begin mailing this proxy
statement to all persons who will be entitled to vote at the annual
meeting.
We
are
paying the cost of requesting these proxies. Our directors, officers and
employees may request proxies in person or by telephone, mail, facsimile or
otherwise, but they will not receive additional compensation for their services.
The company will not engage a proxy solicitor for the annual meeting. We will
reimburse brokers and other nominees for their reasonable out-of-pocket expenses
for forwarding proxy materials to beneficial owners of our common stock
shares.
In
this
proxy statement, “NexCen,” the “company,” “we,” and “our” refer to NexCen
Brands, Inc. and its subsidiaries and predecessors.
VOTING
YOUR SHARES
You
also
may submit your proxy by telephone by calling the toll-free telephone number
on
the enclosed proxy card or through the Internet by going to the Internet address
on the enclosed proxy card. Please have your proxy card available when you
call
or go online. Telephone and Internet access is available 24 hours a day, seven
days per week and will be accessible until 11:59 p.m.,
Eastern Time, on September 4, 2007. You will be prompted to enter the number
printed on your proxy card and to follow the instructions to submit your proxy.
Our telephone and Internet proxy procedures are designed to authenticate
stockholders by using individual control numbers.
If
you
are a beneficial owner, please refer to your proxy card or the information
provided by your bank, broker, custodian, or record holder for information
on
telephone or Internet voting.
If
you submit your proxy by telephone or through the Internet, please do not mail
your proxy card. If you are located outside the United States or Canada, see
your proxy card or other materials for additional
instructions.
If
you
sign and date your proxy but do not make specific choices, your proxy will
follow the respective board of director recommendations and vote your shares
as
follows:
· “FOR”
the
election of the nominees named in the proxy statement as NexCen directors;
and
·
“FOR”
the
proposal to ratify the appointment of KPMG LLP, as our independent registered
public accounting firm for fiscal year 2007.
Stockholders
who hold shares registered in the name of a broker or other nominee may
generally only vote pursuant to the voting instructions given to them by their
broker or other nominee. In addition, if you hold shares registered in the
name
of a broker or other nominee, generally the nominee may only vote your shares
as
you direct, except that if you fail to provide directions, the nominee may
nevertheless vote on matters for which it has discretionary voting authority.
Brokers will have discretionary voting authority to vote on routine matters
incident to the conduct of the annual meeting, including the election of
directors and ratification of the outside auditor. If a nominee cannot vote
on a
matter because it does not have discretionary voting authority, this is a
“broker non-vote” on that matter. In order to vote their shares by attending the
annual meeting, as opposed to directing their broker or nominee to vote their
shares, stockholders who hold shares registered in the name of a broker or
other
nominee generally must bring to the annual meeting a legal proxy from the broker
or nominee authorizing them to vote the shares.
QUORUM
A
quorum
for the transaction of business at the annual meeting will be established by
the
presence, in person or by proxy, of a majority of the shares of our common
stock
issued and outstanding on the July 31, 2007 . Abstentions and broker non-votes
each will be included in determining the number of shares present and voting
at
the meeting for the purpose of determining the presence of a
quorum.
VOTE
REQUIRED
Each
share of our common stock issued and outstanding on the July 31, 2007 will
be
entitled to one vote.
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·
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For
the election of directors in Proposal 1, the nine candidates who
receive
the highest number of votes cast “For” at the annual meeting shall be
elected, provided a quorum is
present.
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·
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The
affirmative vote of a majority of the shares of our common stock
present
in person or represented by proxy at the annual meeting, and entitled
to
vote on the subject matter, shall be required to approve Proposal
2,
provided a quorum is present.
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Under
the
General Corporation Law of the State of Delaware, an abstaining vote and a
broker "non-vote" are counted as present and are, therefore included for
purposes of determining whether a quorum of shares is present at the annual
meeting. A broker “non-vote” occurs when a broker submits a proxy card with
respect to shares of common stock held in a fiduciary capacity (typically
referred to as being held in “street name”), but declines to vote on a
particular matter because the broker has not received voting instructions from
the beneficial owner. Under the rules that govern brokers who are voting with
respect to shares held in street name, brokers have the discretion to vote
such
shares on routine matters, but not on non-routine matters. Proposals 1 and
2 are
routine matters. For the purpose of determining whether the stockholders have
approved matters other than the election of directors, abstentions are treated
as shares present or represented and voting, so abstentions have the same effect
as negative votes.
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·
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For
Proposal 1, abstentions and broker non-votes will not affect the
outcome
of this proposal.
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·
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For
Proposal 2, because this proposal requires the affirmative vote of
a
majority of the shares present in person or by proxy at the meeting
and
entitled to vote on the subject matter, abstentions will have the
same
effect as votes against the proposal because the shares will count
toward
the quorum but not toward the vote needed to adopt this proposal.
Broker
non-votes will have no effect on this
proposal.
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OTHER
BUSINESS; ADJOURNMENTS
We
are
not currently aware of any other business to be acted upon at the annual
meeting. If, however, other matters are properly brought before the annual
meeting, or any adjournment of the annual meeting, your proxies include
discretionary authority on the part of the individuals appointed to vote your
shares or act on those matters according to their best judgment, including
to
adjourn the meeting, unless you have expressly elected to withhold discretionary
authority on your proxy card.
Adjournments
may be made for the purpose of, among other things, soliciting additional
proxies. Any adjournment may be made from time to time by approval of the
holders of shares representing a majority of the votes present in person or
by
proxy at the meeting, whether or not a quorum exists, without further notice
other than by an announcement made at the meeting. We do not currently intend
to
seek an adjournment of the annual meeting.
REVOKING
YOUR PROXY
If
you
decide to change your vote, you may revoke your proxy at any time before it
is
voted. You may revoke your proxy in one of the following three
ways:
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1.
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You
may notify the Secretary of NexCen in writing that you wish to revoke
your
proxy. Please contact: NexCen Brands, Inc., 1330 Avenue of the Americas,
34th Floor, New York, NY, Attention: David B. Meister, Secretary. We
must receive your notice before the time of the annual
meeting.
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2.
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You
may submit a proxy dated later than your original
proxy.
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3.
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You
may attend the annual meeting and vote. Merely attending the annual
meeting will not by itself revoke a proxy. You must obtain a ballot
and
vote your shares to revoke the
proxy.
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PROPOSAL
1 - ELECTION OF DIRECTORS
The
following individuals are the nominees for election to the board of
directors:
David
S.
Oros
Robert
W.
D’Loren
James
T.
Brady
Paul
Caine
Jack
B.
Dunn IV
Edward
J.
Mathias
Jack
Rovner
George
P.
Stamas
Marvin
Traub
Each
director will be elected to serve for a one-year term, unless he resigns or
is
removed before his term expires, or until his replacement is elected and
qualified. All of the nominees are currently members of the board of directors
and have consented to serve as directors if re-elected.
Messrs.
Rovner and Traub were introduced to the board of directors through Mr. D’Loren,
the Company’s president and chief executive officer. Under the terms of the
agreement by which the Company acquired UCC (Mr. D’Loren’s predecessor company),
the Company granted Mr. D’Loren a one-time right to nominate two persons to the
board of directors, provided that such nominees were approved by the Nominating
Committee of the board of directors and satisfied the prerequisite requirements
for independence. Mr. Rovner was the first such nominee; he was nominated and
then elected to the board of directors at the 2006 Annual Meeting of
stockholders. Mr. Traub is the second such nominee; he was nominated and then
appointed to the board of directors on May 2, 2007 with the understanding that
he would be recommended for election at the 2007 Annual Meeting. As discussed
under “Director Independence” and “Certain Relationships and Related party
Transactions” on pages 15 and 39 respectively, following Mr. Traub’s initial
appointment to the board of directors, a company affiliated with Mr. Traub
entered into an agreement with the Company and as a result the board of
directors subsequently determined that Mr. Traub is no longer independent.
If
any of
the nominees cannot serve for any reason (which is not anticipated), the board
of directors may designate a substitute nominee or nominees. If a substitute
is
nominated, we will vote all valid proxies for the election of the substitute
nominee or nominees. Alternatively, the board of directors also may decide
to
leave a board seat or seats open until a suitable candidate or candidates are
located, or it may decide to reduce the size of the board.
Each
director elected at the annual meeting will serve as a director of NexCen until
the 2008 annual meeting.
RECOMMENDATION
The
board
of directors recommends a vote “FOR”
each
of
the nominees to the board of directors.
PROPOSAL
2 - RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The
board
of directors, upon the recommendation of the Audit Committee and subject to
the
ratification by the stockholders, has appointed KPMG LLP, an international
accounting firm of independent certified public accountants, to act as the
independent registered public accounting firm for NexCen and its consolidated
subsidiaries for 2007. The board of directors believes that KPMG’s experience
with and knowledge of NexCen are important and would like to continue this
relationship. KPMG has advised NexCen that the firm does not have any direct
or
indirect financial interest in NexCen or any of its subsidiaries, and KPMG
has
not had any such interest since NexCen’s inception in 1996, other than as a
provider of auditing and accounting services.
In
making
the recommendation for KPMG to continue as NexCen’s independent registered
public accounting firm for the year ended December 31, 2007, the Audit Committee
reviewed past audit results and the non-audit services performed during 2006
and
proposed to be performed during 2007. In selecting KPMG, the Audit Committee
and
the board of directors carefully considered KPMG’s independence. The Audit
Committee has determined that the performance of the non-audit services
performed by KPMG did not impair KPMG’s independence.
KPMG
has
confirmed to NexCen that it is in compliance with all rules, standards and
policies of the Public Company Accounting Oversight Board and the SEC governing
auditor independence.
A
representative of KPMG is expected to attend the annual meeting. The KPMG
representative will have the opportunity to make a statement if he or she
desires to do so and will be available to respond to appropriate questions
from
stockholders.
AUDIT
FEES
The
aggregate fees billed for professional services rendered for NexCen by KPMG
LLP,
NexCen’s independent auditor, for the years ended December 31, 2006 and 2005
were:
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2006
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2005
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Audit
Fees
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$
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310,000
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$
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223,000
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Audit-Related
Fees
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126,264
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—
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Tax
Fees
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76,544
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28,300
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Total
Fees
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$
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512,808
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$
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251,300
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“Audit
Fees” include time billed to NexCen for professional services rendered for the
annual audit for NexCen’s consolidated financial statements, the quarterly
reviews of the consolidated financial statements for fiscal years 2006 and
2005,
and the audit with respect to management’s assessment of the effectiveness of
internal control over financial reporting as of December 31, 2006 and 2005
and
the effectiveness of internal control over financial reporting as of December
31, 2006 and 2005.
The
aggregate amount billed for all tax fees for the years ended December 31, 2006
and 2005 (see chart above under heading “Tax Fees”) principally covered tax
planning, tax consulting, and tax compliance services provided to
NexCen.
“Audit
Related Fees” include professional services performed by KPMG LLP, related to
the UCC and The Athlete’s Foot acquisitions, and Form 8-K and Form S-3 filings
with the SEC.
NexCen
does not use its independent auditor as its internal auditor nor does it have
an
internal auditor.
No
other
professional services were rendered or fees were billed by KPMG for the most
recent fiscal year or for the years ending December 31, 2006 and
2005.
The
Audit
Committee has adopted policies and procedures for the pre-approval of the above
fees. All requests for services to be provided by KPMG are submitted to the
Audit Committee. Requests for all non-audit related services require
pre-approval from the entire Audit Committee. A schedule of approved services
is
then reviewed and approved by the entire Audit Committee at each Audit Committee
meeting.
Less
than
50% of the hours expended on the audit engagement of KPMG were attributable
to
persons other than full-time, permanent employees of KPMG.
RECOMMENDATION
The
board
of directors recommends a vote “FOR”
ratification of the appointment of KPMG.
SECURITY
OWNERSHIP OF CERTAIN
BENEFICIAL
OWNERS AND MANAGEMENT
The
following table sets forth certain information with respect to beneficial
ownership of our common stock as of June 30, 2007 as to:
|
|
each
of our directors, nominees and named executive officers
individually;
|
|
|
|
|
all
our directors, nominees and executive officers as a
group; and
|
|
|
|
|
each
person (or group of affiliated persons) known by us to own beneficially
more than 5% of our outstanding common
stock.
|
For
the
purposes of calculating percentage ownership as of June 30, 2007, 51,006,823
shares were issued and outstanding and, for any individual who beneficially
owns
shares of restricted stock that will vest or shares represented by options
that
are or will become exercisable within 60 days of June 30, 2007, those
shares are treated as if outstanding for that person, but not for any other
person. In preparing the following table, we relied upon statements filed with
the SEC by beneficial owners of more than 5% of the outstanding shares of our
common stock pursuant to Section 13(d) or 13(g) of the Securities Exchange
Act of 1934, unless we knew or had reason to believe that the information
contained in such statements was not complete or accurate, in which case we
relied upon information which we considered to be accurate and complete. Unless
otherwise indicated, the address of each of the individuals and entities named
below is: c/o NexCen Brands, Inc., 1330 Avenue of the Americas,
34th Floor, New York, NY 10019.
|
|
Beneficial
Ownership
of
Shares
|
|
Name
and Address
|
|
Number
|
|
Percent
|
|
Directors,
nominees and executive officers:
|
|
|
|
|
|
David
S. Oros (1)
|
|
|
2,233,085
|
|
|
4.18
|
%
|
Robert
W. D'Loren (2)
|
|
|
3,318,754
|
|
|
6.22
|
%
|
James
Haran (3)
|
|
|
539,027
|
|
|
1.01
|
%
|
David
B. Meister
|
|
|
-
|
|
|
*
|
|
Charles
A. Zona
|
|
|
-
|
|
|
*
|
|
James
T. Brady (4)
|
|
|
102,500
|
|
|
*
|
|
Paul
Caine
|
|
|
-
|
|
|
*
|
|
Jack
B. Dunn IV
|
|
|
-
|
|
|
*
|
|
Edward
J. Mathias (5)
|
|
|
156,700
|
|
|
*
|
|
Jack
Rovner
|
|
|
25,000
|
|
|
*
|
|
Truman
Semans (6)
|
|
|
30,000
|
|
|
*
|
|
George
P. Stamas (7)
|
|
|
146,868
|
|
|
*
|
|
Marvin
Traub
|
|
|
30,000
|
|
|
*
|
|
David
Reymann (8)
|
|
|
184,296
|
|
|
*
|
|
All
directors and named executive officers as a group (14
Persons)
|
|
|
6,766,230
|
|
|
12.67
|
%
|
|
|
|
|
|
|
|
|
5%
stockholders: None
|
|
|
|
|
|
|
|
(1)
|
Includes
exercisable warrants to purchase 812,500 shares of the Company’s common
stock, 50,000 shares of restricted stock that became exercisable
on June
6, 2006, and exercisable options to purchase 130,600 shares of the
Company’s common stock. Excludes 900,000 shares of common stock held in
escrow on behalf of the former UCC security holders as earn-out
consideration pursuant to a merger agreement over which Mr. Oros
exercises
voting control by virtue of a proxy granted to
him.
|
(2)
|
Includes
578,941 shares of the Company’s common stock owned by Mr. D’Loren, of
which 102,666 shares are held in escrow to satisfy indemnification
claims
made by the Company against former stockholders of UCC Capital Corp.,
and
UCC Consulting Corp, (collectively “UCC”), and 153,249 shares held in
escrow until such time (if any) as future performance targets provided
in
the UCC merger agreement are satisfied. Includes options to purchase
937,235 shares of common stock vested on June 6, 2007. Excludes 268,654
shares of common stock owned by the Robert D’Loren Family Trust dated
March 29, 2002 (the “Trust”), the beneficiaries of which are two minor
children of Mr. D’Loren. The Trust is irrevocable, the trustee is not a
member of Mr. D’Loren’s immediate family, and the trustee has independent
authority to vote and dispose of the shares held by the Trust. Excludes
96,715 shares of the Company’s common stock owned by the Trust and held in
escrow and that until and unless earned are subject to forfeiture
if
certain performance targets as outlined in the UCC merger agreement
are
not met. Mr. D’Loren expressly disclaims beneficial ownership of all
shares owned by the Trust. Includes 1,325,359 shares of the Company’s
common stock owned by D’Loren Realty, L.L.C., (“Realty”) for which Mr.
D’Loren is the sole Member-Manager and possesses full voting and
dispositive power. Includes 477,129 shares of common stock owned
by Realty
and held in escrow and that until and unless earned are subject to
forfeiture if certain performance targets as outlined in the UCC
merger
agreement are not met. Excludes 1,413,423 shares of common stock
held in
escrow on behalf of Athlete’s Foot Marketing Associates, L.L.C., to secure
indemnification obligations pursuant to a purchase agreement over
which
Mr. D’Loren exercise voting control by virtue of a proxy granted to
him.
|
|
|
(3)
|
Includes
exercisable options to purchase 193,929 shares of common
stock.
|
|
|
(4)
|
Includes
exercisable options to purchase 100,000 shares of common
stock.
|
|
|
(5)
|
Includes
exercisable options to purchase 100,000 shares of common stock, 19,000
shares of common stock held indirectly in a retirement account and
4,700
shares of common stock held as custodian for Ellen
Mathias.
|
|
|
(6)
|
Includes
30,000 shares of common stock held by Mr. Semans wife.
|
|
|
(7)
|
Includes
exercisable options to purchase 135,600 shares of common
stock.
|
|
|
(8)
|
Includes
exercisable options to purchase 112,500 shares of common
stock.
|
DIRECTORS
AND EXECUTIVE OFFICERS
The
following table shows, as of the July 31, 2007, the names and ages of all
director nominees and NexCen’s executive officers who will continue to serve
after the annual meeting.
Name
|
|
Age
|
|
Position
|
David
S. Oros
|
|
47
|
|
Chairman
of the Board
|
Robert
W. D'Loren
|
|
49
|
|
Director,
President, and Chief Executive Officer
|
David
B. Meister
|
|
49
|
|
Senior
Vice President and Chief Financial Officer
|
James
Haran*
|
|
46
|
|
Executive
Vice President, M&A and Operations
|
Charles
A. Zona
|
|
57
|
|
Executive
Vice President, Brand Management and Licensing
|
James
T. Brady (2)
(3) (4)
|
|
66
|
|
Director
|
Paul
Caine
|
|
43
|
|
Director
|
Jack
B. Dunn IV (1)
(3) (4)
|
|
56
|
|
Director
|
Edward
J. Mathias (1)
(2) (3) (4)
|
|
65
|
|
Director
|
Jack
Rovner (1)
(4)
|
|
52
|
|
Director
|
George
P. Stamas
|
|
56
|
|
Director
|
Marvin
Traub
|
|
81
|
|
Director
|
(1)
Member of the Compensation Committee.
(2)
Member of the Audit Committee.
(3)
Member of the Nominating Committee.
(4)
Member of the Corporate Governance Committee.
*
Mr.
Haran became an executive officer effective as of May 1, 2007. Accordingly,
the
disclosure regarding Mr. Haran for the fiscal year ended December 31, 2006
is
being provided solely for informational purposes.
David
S. Oros founded
the Company in 1996, and currently serves as our chairman. From 1996 until
June
2006, Mr. Oros served as our Chief Executive Officer. From 1994 until 1996,
Mr.
Oros was President of NexGen Technologies, L.L.C., a wireless software
development company that contributed all of its assets to the Company. From
1992
until 1994, he was President of the Wireless Data Group at Westinghouse
Electric. Prior to that, from 1982 until 1992 Mr. Oros was at Westinghouse
Electric directing internal research and managing large programs in advanced
airborne radar design and development. Mr. Oros received a B.S. in mathematics
and physics from the University of Maryland, and holds a U.S. patent for a
multi-function radar system. Mr. Oros currently serves on the board of directors
for Smart Video™ d/b/a uVuMobile,
the
University of Maryland School of Nursing, the Baltimore's Port Discovery
Children's Museum, and on the board of trustees for the University of Maryland
Baltimore Foundation, Inc. Mr. Oros is also a managing partner for Global Domain
Partners, LLC.
Robert
W. D'Loren
was
elected a director and appointed Chief executive officer of the Company on
June
6, 2006. He was appointed President on August 9, 2006. Prior to that, he served
as President and chief executive officer of UCC Capital Corporation, where
he
pioneered intellectual property and whole company securitization finance and
was
responsible for developing many of the structures and credit enhancement
products currently being utilized in the market today. Prior to forming UCC,
Mr.
D'Loren served as President and Chief Operating Officer of CAK Universal Credit
Corporation, an intellectual property finance company. From 1985 to 1997, Mr.
D'Loren founded and served as President and chief executive officer of the
D'Loren Organization, a real estate investment, lending, and restructuring
firm
responsible for aggregate transactions in excess of $2 billion. Prior to that,
Mr. D'Loren served as an asset manager for Fosterlane Management where he
managed $1.8 billion of Class A commercial real estate assets, and previously
served as a manager with Deloitte & Touche. Mr. D'Loren has served as a
director or board advisor to Business Loan Express, The Athlete's Foot, Bike
Athletic Company, Bill Blass Ltd., Candies Inc., Iconix Brand Group, and
currently serves on the board of The Longaberger Company.
David
B. Meister
has
served as Senior Vice President and Chief Financial Officer since joining the
Company on September 12, 2006. In his role, Mr. Meister is responsible for
all
financial functions of the company, along with treasury management, investor
relations, human resources and information technology. Prior to his appointment,
he worked with the company as a consultant since July 2006. Before joining
the
company, Mr. Meister served as Chief Financial Officer and Senior Vice President
of Barrington Broadcasting Corporation and Double O Radio Corporation from
January 2005 until June 2006. From 2002 through December 2004, Mr. Meister
was
Vice President of Buccino & Associates, a turnaround consulting and crisis
management firm, and from 1999 to 2001, Mr. Meister served as Senior Vice
President - Finance and Operations of eChips, Inc., a joint venture of four
Fortune 500 companies in the electronic components industry. Mr. Meister began
his career with Ernst & Young, LLP, and then spent 10 years at Reliance
Group Holdings Inc. and Telemundo Group, Inc., a company he helped to launch.
Mr. Meister earned his BA in Political Science from the University of Rochester
and an MBA from the William E. Simon Graduate School of Business Administration
at the University of Rochester. Mr. Meister is a Certified Public
Accountant.
James
Haran
joined
the Company on June 6, 2006 as Executive Vice President of M&A. Prior to
joining NexCen, Mr. Haran served for nine years as the Chief Credit Officer
of
UCC Capital Corporation. Mr. Haran has a broad range of business experience
in
structured finance, M&A and consulting. For the past eight years his focus
has been on maximizing value and creating leveraged opportunities for IP centric
companies and assets. These industries include apparel and footwear,
franchising, and entertainment. Mr. Haran played a key role in the BCBG Max
Azria transaction, winner of the Institutional Investor's Securitization News
2004 Deal of the Year Award. Prior to joining UCC, Mr. Haran was a Partner
at
Sidney Yoskowitz and Company P.C., a regional diversified certified public
accounting firm. During his tenure, which began in 1987, his focus was on real
estate and financial services companies. Mr. Haran served his clients on an
array of strategic and operational levels. Mr. Haran is a Certified Public
Accountant and holds a Bachelor of Science degree from State University of
New
York, at Plattsburgh.
Charles
A. Zona
joined
the Company on December 11, 2006 as Executive Vice President of Brand Management
and Licensing. Prior to joining the Company, Mr. Zona was a licensing consultant
for three years for clients such as The J. Peterman Company, Chris-Craft Boats
and XOR. Before that, he served as the Senior Vice President of Consumer
Products for The National Football League Properties where he was responsible
for developing a new consumer products (apparel, hardlines and accessories)
licensing business model. Preceding his position with the NFL, he served as
President of Salant Menswear Group which included Perry Ellis Dress
Furnishings/Accessories and Private Label denim. Earlier, he served, for nine
years, as President of Nautica Dress Furnishings/State of Maine Menswear
Division. Mr. Zona began a 19-year career in retail at Stern Brothers Department
Stores and Bambergers that concluded as a Senior Vice President at Lord and
Taylor. He holds a BS degree in Industrial Relations from Seton Hall
University.
James
T. Brady
was
elected director of the Company on June 28, 2002. Mr. Brady has served as the
Managing Director - Mid-Atlantic, for Ballantrae International, Ltd., a
management consulting firm, since 2000 and was an independent business
consultant from May 1998 until 2000. From May 1995 to May 1998, Mr. Brady was
the Secretary of the Maryland Department of Business and Economic Development.
Prior to May 1995, Mr. Brady was a managing partner with Arthur Andersen LLP
in
Baltimore, Maryland. Mr. Brady is a director of McCormick & Company, Inc.,
Constellation Energy Group and T. Rowe Price Group. Mr. Brady received a B.A.
from Iona College.
Paul
Caine
was
named group publisher of the PEOPLE Group in December 2005 overseeing all
advertising sales and marketing operations at PEOPLE, People.com, StyleWatch
and
People
en Español.
Mr.
Caine joined PEOPLE in September 2004 as publisher. He previously served as
publisher of Entertainment
Weekly
and
Teen
People. His career
at
Time Inc. began in 1989 as an advertising sales representative for PEOPLE.
In
1994, he launched Teen
People
and, as
associate publisher, took the title’s advertising page count from zero to 800 in
the first year. In 2001, Caine returned to PEOPLE as associate publisher. In
November 2003, Caine was named publisher of Entertainment
Weekly.
Prior
to
joining Time Inc., Caine worked for USA
Today
and J.
Walter Thompson. Caine
serves on the executive board of the CJ Foundation for SIDS (Sudden Infant
Death
Syndrome) in memory of his son, Griffin Matthew. Caine is also on the board
of
MusicCares, an advisor to PAX (Real Solutions to Gun Violence) and has acted
as
a “Principal For A Day” for PENCIL. He has also worked with the Tito Puente
School for the Performing Arts and consulted with the New York City School
Board
to develop a template for student governments in “at risk” public schools. In
addition, he is a visiting professor at Indiana University where he teaches
a
one credit publishing course. A graduate of Indiana University with a BS in
Business Communication, Caine was entered into its Telecommunications Alumni
Hall of Fame in 2000.
Jack
B. Dunn IV
was
elected director of the Company on June 28, 2002. Since October 1995, Mr. Dunn
has been Chief executive officer of FTI Consulting, Inc, a multi-disciplined
consulting firm with practices in the areas of financial restructuring,
corporate finance, forensic accounting, litigation consulting and economic
consulting. He joined FTI in 1992 as Executive Vice President and Chief
Financial Officer and has served as a director of FTI since May 1992 and as
chairman of the board from December 1998 to September 2004. Mr. Dunn is a
director of Pepco Holdings, Inc., a public utility company, and is a limited
partner of the Baltimore Orioles. Prior to joining FTI, he was a member of
the
board of directors and a managing director of Legg Mason Wood Walker, Inc.
and
directed its Baltimore corporate finance and investment banking activities.
He
received a B.A. from Princeton University and a J.D. from the University of
Maryland Law School.
Edward
J. Mathias
was
elected director of the Company on June 28, 2002. Mr. Mathias has been a
managing director of The Carlyle Group, a Washington, D.C. based private
merchant bank, since 1994. Mr. Mathias served as a managing director of T.
Rowe
Price Associates, Inc., an investment management firm, from 1971 to 1993. He
received a B.A. from the University of Pennsylvania and an M.B.A. from Harvard
University.
Jack
Rovner
was
elected director of the Company on October 31, 2006. Mr. Rover has built a
solid
track record as one of the music industry's most bankable "turn-around" men.
He
has led the venerable RCA Record label, co-founded Vector Recordings and has
partnered to lead Vector Management - one of the most successful artist
management and independent labels in the industry. Preceding his work at RCA
and
Vector, Mr. Rovner was senior vice president of Marketing at BMG North America
and reported directly to the chairman of BMG Worldwide and directed marketing
efforts for company-owned properties. As senior vice president of Arista Records
from 1991 to 1994, he oversaw all brand marketing which yielded record-breaking
sales for artists Whitney Houston and Kenny G. Mr. Rovner's career began at
Columbia Records. From 1981 until his departure in 1991 from the office of
Vice
President of Marketing, he worked on all creative marketing aspects for Bruce
Springsteen's Grammy Award winning recording
Born
in the USA
, as
well as projects for The Rolling Stones, Wynton Marsalis, and Pink Floyd. Mr.
Rovner developed his passion for brand marketing and music while a student
at
the University of Iowa, where he was awarded a B.A. in Communication
Studies.
George
P. Stamas
was
elected a director of the Company on October 20, 1999. Since January 2002,
Mr.
Stamas has been a senior partner with the law firm of Kirkland and Ellis LLP.
Also, since November 2001, Mr. Stamas has been a venture partner with New
Enterprise Associates. From December 1999 until December 2001, Mr. Stamas served
as the vice chairman of the board and managing director of Deutsche Banc Alex.
Brown (now Deutsche Bank Securities). Mr. Stamas is counsel to, and a limited
partner of, the Baltimore Orioles baseball team and also of Lincoln Holdings,
which holds interests in the Washington Wizards and Washington Capitals. Mr.
Stamas also serves on the board of directors of FTI Consulting, Inc. He received
a B.S. in economics from the Wharton School of the University of Pennsylvania
and a J.D. from the University of Maryland Law School.
Marvin
Traub
was
appointed director of the Company by board resolution on May 2, 2007. Mr. Traub
began his career at Bloomingdales and quickly gained experience in all aspects
of merchandising before becoming Executive Vice President and General
Merchandise Manager in 1962, President in 1969 and Chairman and CEO in 1978.
During his tenure, Bloomingdales grew from a regional to a national chain,
opening 16 stores across the country as the business grew four fold and
developed a global leadership reputation for contemporary fashion and excitement
in retailing. Mr. Traub also served as a Director of Federated Department Stores
for twelve years and Vice Chairman of the Campeau Corporation prior to his
resignation in 1992. At that time, he formed Marvin Traub Associates (“MTA”), a
consulting firm with expertise in global retailing, shopping centers, marketing,
media and the consumer goods sector.
Mr.
Traub
serves as Senior Advisor to Compass Advisers, a multi dimensional financial
services firm and as Chairman of S.D. Retail Consulting - formerly Senn Delaney.
Mr. Traub serves on the Board and Executive Committee of the Parsons School
of
Design of the New School. Mr. Traub graduated from Harvard College Magna Cum
Laude in 1947 and Harvard Business School with Distinction in 1949.
Director
Independence
Each
of
our directors, other than Messrs. Oros, D’Loren, Stamas, and Traub, qualifies as
“independent” in accordance with the published listing requirements of Nasdaq
Global Market. The Nasdaq Global Market independence definition includes a
series of objective tests, such as, that the director is not an employee of
the
company and has not engaged in various types of business dealings with the
company. Our board of directors has not adopted any supplemental independence
standards. However, as required by Nasdaq Global Market rules, the board of
directors has made a subjective determination with respect to each director
as
to whether any relationships exist which, in the opinion of the board of
directors, would interfere with the exercise of independent judgment by that
director in carrying out the responsibilities of a director, regardless of
whether the director otherwise satisfies the published independence standards
of
the Nasdaq Global Market. In making these determinations, the directors reviewed
and discussed information provided by the directors and management with regard
to each director’s business and personal activities as they relate to NexCen and
NexCen’s management. Messrs. Oros and D’Loren are employed by the Company, and,
as such, neither qualifies as an independent director under the Nasdaq Global
Market standards. The board of directors also determined that Mr. Stamas should
not be considered an independent director in view of the business relationship
between the Company and Kirkland & Ellis LLP, which is the Company’s primary
outside counsel and of which Mr. Stamas is a partner. The board of directors
made this decision despite the fact that this business relationship does not
cause Mr. Stamas to be deemed non-independent under the Nasdaq Global Market
standards. As a result, Mr. Stamas does not serve on any of the Company’s
standing committees, other than the Corporate Governance Committee. The board
of
directors also determined that Mr. Traub should not be considered an independent
director because in July 2007 the Company entered into a
commercial agreement with Mr. Traub and a business that he operates and
owns, Marvin Traub Associates, Inc., and the board anticipates that the Company
may enter into additional agreements with Mr. Traub in the future. The current
agreement is described below under heading “Certain
Relationships and Related Party Transactions” beginning
on page
36. All members of the Audit Committee, Compensation Committee and Nominating
Committee are independent directors.
In
connection with the independence determination for Mr. Dunn, the directors
considered that in 2006, FTI Consulting, Inc. (“FTI”) provided due diligence
services to the Company totaling approximately $15,000 in connection with the
acquisition of UCC. Since 1992, Mr. Dunn has served as a director of FTI, and
as
its president and chief executive officer. The board of directors has determined
that Mr. Dunn should be considered an independent director in view of the fact
that the services were immaterial to FTI and of a one-time nature. The board
of
directors intends to continue to monitor any relationships that the directors
have with the company’s service providers. Other than the consulting services
provided by FTI, the board of directors did not consider and was not aware
of
any other transactions, relationships or arrangements that would affect the
determination of our directors’ independence under the Nasdaq Global Market
standards.
MEETINGS
OF THE BOARD OF DIRECTORS AND BOARD COMMITTEES
The
board
of directors held a total of eight meetings during 2006 and the independent
directors held a total of four meetings during 2006. Each director attended
75%
or more of the total number of meetings of the board of directors and any
committee on which the director served.
The
board
of directors encourages each director to attend the annual meeting of
shareholders. The eight directors
in office as of the date of the 2006 Annual Meeting of shareholders attended
the
meeting.
The
standing committees of the board of directors include the Audit Committee,
the
Compensation Committee, the Nominating Committee, and the Corporate Governance
Committee. The
charters of each of the Audit Committee, the Compensation Committee, the
Nominating Committee, and the Corporate Governance Committee of the board are
also available on the company’s website at www.nexcenbrands.com.
Stockholders may obtain a free copy of these committee charters from the address
set forth above.
Audit
Committee.
The
Audit
Committee assists the board of directors in overseeing the integrity of the
Company’s financial statements, the Company’s compliance with legal and
regulatory requirements, the qualifications and independence of the Company’s
independent auditors, and the performance of the Company’s independent auditors.
The Audit Committee reviews and assesses the adequacy of its charter on an
annual basis. As described more fully in its charter, the purpose of the Audit
Committee is to assist the board of directors in its general oversight of the
company’s financial reporting, internal control, and audit functions. Management
is responsible for the preparation, presentation, and integrity of the company’s
financial statements; accounting and financial reporting principles; internal
controls; and procedures designed to reasonably assure compliance with
accounting standards, applicable laws, and regulations. KPMG, the Company’s
independent registered public accounting firm, is responsible for performing
an
independent audit of the company’s consolidated financial statements in
accordance with generally accepted auditing standards and expressing opinions
on
management’s assessment of the effectiveness of the Company’s internal control
over financial reporting and their own assessment of the effectiveness of the
company’s internal control over financial reporting. In accordance with law, the
Audit Committee has ultimate authority and responsibility to select, compensate,
evaluate and, when appropriate, replace the company’s independent audit firm.
The Audit Committee has the authority to engage its own outside advisors,
including experts in particular areas of accounting, as it determines
appropriate, apart from counsel or advisors hired by management.
The
Audit
Committee currently consists of Messrs. Brady, Semans and Mathias, with Mr.
Brady serving as its chairman. The board has determined that the members of
the
Audit Committee satisfy the “independence” and “financial literacy” requirements
for audit committee members as set forth by the Securities Exchange Commission
(the “SEC”) and as adopted in the Nasdaq listing standards. The board of
directors has also determined that Mr. Brady is an audit committee financial
expert, as defined by Item 407 of Regulation S-K and as required by Nasdaq
Rule
4350(d), and is independent of management, as defined by Rule 10A-3(b)(1) of
the
Securities Exchange Act of 1934, as amended and Nasdaq Rule 4200(a)(15) and
as
required by Nasdaq Rule 4350(d). We believe Mr. Brady is qualified to be an
“audit committee financial expert” because he has the following attributes: (i)
an understanding of generally accepted accounting principles, or GAAP, and
financial statements, (ii) the ability to assess the general application of
such
principles in connection with accounting for estimates, accruals and reserves,
(iii) experience preparing, auditing, analyzing or evaluating financial
statements that present a breadth and level of complexity of accounting issues
that are generally comparable to the breadth and complexity of issues that
can
reasonably be expected to be raised by NexCen’s financial statements, and
experience actively supervising one or more persons engaged in such activities,
(iv) an understanding of internal controls over financial reporting and (v)
an
understanding of audit committee functions. Mr. Brady has acquired these
attributes by means of having held various positions that provided the relevant
experience, including 33 years with Arthur Andersen (including twenty years
as
an audit partner) and membership on the audit committees of several public
companies since 1998. Mr. Brady also serves on the audit committees of three
other public companies, but the board of directors has determined that such
service does not affect his independence, responsibilities, or duties as a
member of the audit committee. The
responsibilities and activities of the Audit Committee are described in greater
detail in “Audit Committee Report,” beginning on page 36,
and the
Audit Committee’s charter, which is located on our website at
www.nexcenbrands.com.
Mr.
Semans has announced his retirement from the board of directors following the
2007 Annual Meeting of stockholders. Mr. Caine has been nominated by the board
of directors for election at the 2007 Annual Meeting and upon election to the
board of directors for immediate appointment as a member of the Audit Committee
to replace Mr. Semans.
During
2006, the Audit Committee met four times.
Compensation
Committee.
The
Compensation Committee currently consists of Messrs. Mathias, Dunn, and Rovner,
with Mr. Mathias serving as its chairman. All members of the Compensation
Committee are independent directors, as defined under the Nasdaq Global Market
listing standards. The Compensation Committee is primarily responsible for:
setting the chief executive officer's compensation based on the achievement
of
corporate objectives; reviewing and recommending approval of the compensation
of
the Company's other executive officers; administering our stock option and
stock
incentive plans; reviewing and making recommendations to the board of directors
with respect to the Company’s overall compensation objectives, policies and
practices, including with respect to incentive compensation and equity plans;
and evaluating the chief executive officer's performance in light of corporate
objectives.
During
2006, the Compensation Committee met one time.
Nominating
Committee.
The
members of the Nominating Committee are Messrs. Brady, Dunn, and Mathias, with
Mr. Dunn serving as its chairman. All members of the Nominating Committee are
independent directors, as defined under the Nasdaq Global Market listing
standards. The Compensation Committee is primarily responsible for: identifying,
evaluating and recommending nominees to serve on the board of directors and
committees of the board of directors; conducting searches for appropriate
directors and evaluating the performance of the board of directors and of
individual directors; and screening and recommending to the board of directors
individuals qualified to become the chief executive officer of the Company
or to
become senior executive officers of the Company.
During
2006, the Nominating Committee met one time.
Corporate
Governance Committee. The
members of the Corporate Governance Committee are Messrs. Brady, Stamas, Dunn,
Mathias, Rovner, and Semans. The Compensation Committee is primarily responsible
for: assessing the policies, procedures and performance of the board of
directors and its committees; developing, evaluating and recommending to the
board of directors any changes or updates to the Company’s Code of Ethics or
Senior Financial Officers Code of Ethical Conduct; making such other
recommendations to the board of directors regarding affairs relating to the
directors and senior officers of the Company as the Corporate Governance
Committee deems appropriate; developing and recommending to the board of
directors corporate governance principles applicable to the Company; and taking
a leadership role in shaping the corporate governance of the Company. The
Corporate Governance Committee did not meet in 2006.
STOCKHOLDER
NOMINATIONS FOR DIRECTORS
NexCen’s
stockholders may submit candidates for consideration as director nominees.
All
candidate submissions must comply with the requirements of our Certificate
of
Incorporation and bylaws as well as the requirements of the Exchange Act. Our
bylaws contain certain time limitations and procedures for stockholder
nominations of directors. Any stockholder who intends to bring before an annual
meeting of stockholders any nomination for director shall deliver a written
notice to the secretary of NexCen setting forth specified information with
respect to the stockholder and additional information as would be required
under
Regulation 14A under the Exchange Act and Rule 14a-8 for a proxy statement
used
to solicit proxies for such nominee. In general, the notice must be delivered
not less than 45 days nor more than 90 days prior to the first anniversary
of
the proxy statement for the preceding year’s annual meeting; provided however
that if the annual meeting is advanced by more than 20 days, or delayed by
more
than 70 days for such anniversary date, notice by a stockholder will be deemed
timely if delivered no earlier than the 90th
day
prior to such annual meeting and not later than the later of the 45th
day
prior to such annual meeting or the tenth day following the day on which public
announcement of the date of such meeting is first made.
DIRECTOR
NOMINEE CRITERIA AND PROCESS
The
Nominating Committee unanimously recommended the nominees for election to the
board of directors for the annual meeting. The Nominating Committee may consider
suggestions from many sources, including stockowners and third-party search
firms, regarding possible candidates for director. In accordance with its
charter, the Nominating Committee will consider, among other things, the
candidate’s educational and professional background, leadership experience,
personal integrity, and expertise in matters affecting NexCen and its business.
The Nominating Committee evaluates candidates on the basis of their
qualifications, experience, skills, and ability to enhance stockholder value
and
without regard to gender, race, color, national origin, or other protected
status. Once possible candidates are identified, the Nominating Committee will
discuss its recommendations with the board of directors. If the candidate is
approved by the board of directors, the recommended candidate will be nominated
for election by NexCen’s stockholders (appointed to fill a vacancy on the board,
if applicable). When a vacancy occurs on the board of directors, the Nominating
Committee will recommend to the board of directors a nominee to fill the
vacancy. As provided in NexCen’s bylaws, the board may appoint a new director
when a vacancy occurs between annual meetings of stockholders. Candidates
proposed by stockholders in accordance with the processes outlined below will
be
reviewed using the same criteria as candidates initially proposed by the
Nominating Committee.
In
connection with the acquisition of UCC, the board granted Mr. D’Loren the
one-time right to nominate two persons to the board of directors, provided
that
such nominees were approved by the Nominating Committee of the board of
directors and satisfied the prerequisite requirements for independence. Messrs.
Rovner and Traub were introduced to the board of directors through Mr. D’Loren.
Mr. Rovner was the first such nominee; he was nominated and then elected to
the
board of directors at the 2006 Annual Meeting of stockholders. Mr. Traub was
the
second such nominee; he was nominated and then appointed to the board of
directors on May 2, 2007 with the understanding that he would be recommended
for
election at the 2007 Annual Meeting.
DIRECTOR
COMPENSATION
In
2005
and up until March 2006, non-employee directors received $5,000 for each board
meeting they attended, reimbursement for reasonable travel expenses relating
to
attendance at board meetings, and discretionary grants of stock options. Audit
Committee members received $2,000 for each Audit Committee meeting they
attended, and the chairperson of the Audit Committee received a $7,500 annual
retainer. In March 2006, the board of directors approved increases in the
compensation payable to non-management directors. The compensation includes
an
annual retainer of $20,000 (paid quarterly) and a fee of $1,500 for each board
meeting attended in person or by phone. In addition to board retainer and
attendance fees, the chairperson of each board committee (other than the Audit
Committee) receives an additional retainer of $2,500. The chairperson of the
Audit Committee receives a $12,500 annual retainer. Audit Committee members
also
receive a fee of $2,500 for each Audit Committee meeting they attend. Directors
will continue to be reimbursed for reasonable travel expenses relating to
attendance at board meetings.
In
the
discretion of the board of directors, the non-employee directors may receive
stock options for their service on the board. In June 2002, each director
received a grant of 100,000 stock options, of which 25,000 vested in each of
June 2003, June 2004, June 2005, and June 2006. Mr. Semans became a director
in
November 2006 and received a grant of 100,000 stock options, of which one-third
vested in each of November 2003, November 2004, and November 2005. In 2006,
upon
the recommendation of the Compensation Committee, non-management directors
were
granted 25,000 nonqualified options to purchase shares of our common stock.
Prior to the grant in 2006, no options had been granted to our directors since
2002. In May 2007, in connection with Mr. Traub’s appointment to the board of
directors, Mr. Traub received a grant of 29,166 stock options which includes
a
pro rata amount of the 25,000 stock options granted to non-employee directors
in
2006, and an additional 25,000 stock options granted for his expected services
in 2007. Directors who are employees of NexCen do not receive compensation
for
their services as directors or as members of board committees.
Compensation
Discussion and Analysis
Overview
and Objectives
In
2006,
we transformed our company by exiting the mortgage-backed securities business
that we had operated since 2004 to focus on a new intellectual property
business. As part of this transformation, we transitioned to a new senior
management team. As a result of these activities, our compensation programs
and
policies for our named executives in 2006 had several different
objectives:
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·
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Provide
reasonable financial incentives for outgoing managers to remain in
place
for a period of time to effect an orderly transition of the management
of
the business;
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·
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Provide
reasonable severance packages for outgoing managers, through a combination
of current cash payments, continued benefits and long-term equity
awards,
in recognition of their long-standing service to the Company and
their
significant contributions to identifying and initiating the new
intellectual property business strategy;
and
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Provide
new senior managers with a combination of current compensation and
long-term opportunities sufficient to attract outstanding senior
executives and provide them with incentives to (i) build and manage
our
business so that we become profitable and (ii) create substantial
value
for our stockholders over the long
term.
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We
began
the business and management transition during 2006 and are continuing to develop
our compensation programs and policies in 2007, as we build both our business
and our senior management team. As a result, we expect that we may make material
adjustments and refinements to our compensation policies and programs in
2007.
Our
current compensation programs are intended to reward our named executives for
growing our business profitably. They also are intended to encourage the
retention of executives who contribute significantly to improved business
performance, overall growth and increased stockholder value. The components
of
our compensation programs for named executives include salary, annual bonus,
equity incentive compensation and benefits.
We
have
paid salaries that are at or slightly below the median level in the marketplace,
reflecting our goal of conserving cash as we acquire businesses and seek to
build a profitable operation. To enable us to attract and retain superior
individuals, however, we have offered generous performance-based annual bonus
opportunities and equity incentive awards. In the case of our chief executive
officer, on whom our business is dependent, we have agreed to a compensation
package that, by component and in the aggregate, based upon our review of
relevant market information, will be at the top of the marketplace if certain
performance levels are achieved. We believe that this compensation package
was
necessary to attract and retain our chief executive officer.
Process
for Determining Compensation
General. Our
Compensation Committee plays an integral role in shaping the Company's overall
compensation objectives, policies and practices. The Compensation Committee
is
responsible for, among other things, reviewing and recommending approval of
the
compensation of our executive officers; administering our equity incentive
and
stock option plans; reviewing and making recommendations to the board of
directors with respect to incentive compensation and equity incentive and stock
option plans, and evaluating our chief executive officer's performance in light
of corporate objectives, and setting our chief executive officer's compensation
based on the achievement of corporate objectives.
We
rely
on our judgment in making compensation decisions, based upon a review of the
Company's performance, the executive's performance and responsibilities, the
Company's and the executive's achievement of business objectives, plans and
specified goals, and the executive's contributions to the development of the
Company's business and its long-term prospects for growth and success. We take
into account information about market levels of compensation provided by our
compensation consultant, Towers Perrin, in setting compensation levels and
programs for new executives. Towers Perrin uses information from relevant
published compensation surveys, as well as public filings for similar peer
companies. We also consider a named executive's current and past compensation
levels in determining whether to make any discretionary awards or any
adjustments to compensation of a continuing executive. In this process, our
objective is to keep annual salaries at or below median levels, but to provide
annual bonus opportunities and equity incentive awards that offer opportunities
to earn overall compensation above median levels, if the Company and the
executive deliver superior performance.
In
general, we have not developed or adhered to any strict formulas in setting
compensation or in establishing compensation packages. We expect that over
time,
the annual salaries of the named executive officers will be less than 50% of
each person's overall annual compensation and a significantly smaller portion
of
such compensation over a period of years, taking into account the value of
incentive equity awards. In 2006, because we did not pay any annual bonuses
to
the named executives who are continuing with the Company, and because none
of
their incentive equity awards had vested, salaries represented a large
proportion of their overall annual compensation. We expect that this will change
in future years.
Participation
of the Chief Executive Officer and
Other Executives.
We do
not currently have a human resources department. Our chief executive officer
participates in discussions with the Compensation Committee regarding
compensation decisions about all named executives other than himself. Except
for
the chief executive officer, no other named executive participates directly
in
discussions with the Compensation Committee about compensation matters, although
they do discuss these matters with the chief financial officer. We expect to
rely heavily on the recommendations of the chief executive officer on these
matters, particularly with respect to the allocation of the annual bonus
pool.
Role
of the Compensation Consultant.
To
assist the Compensation Committee in fulfilling its responsibilities, the
Compensation Committee has retained an independent compensation consultant,
Towers Perrin. The consultant reports directly to the Compensation Committee.
Other than the work Towers Perrin performs for the Compensation Committee and
the board of directors, Towers Perrin has not provided any consulting services
to NexCen or its executive officers.
In
assisting the Compensation Committee, Towers Perrin presents the committee
with
peer group benchmarking data and information about other relevant market
practices and trends, and makes recommendations to the Compensation Committee
regarding target levels for various elements of total compensation for executive
officers and directors of the Company. Towers Perrin's recommendations are
presented to and considered by the Compensation Committee in their deliberations
on compensation matters.
In
2006
Towers Perrin was retained by the Compensation Committee to provide a
compensation study to benchmark and assist in the development of the
compensation packages for Mr. D'Loren and Mr. Haran. The compensation study
evaluated the reasonableness of the base salary, annual bonus and stock option
grants proposed for Mr. D'Loren employment as our new chief executive officer
in
comparison to the competitive market. The compensation study was presented
to
the Compensation Committee and the board of directors and was considered by
each
in their deliberations and discussions on Mr. D'Loren's compensation
package.
For
2007,
Towers Perrin has been retained by the Compensation Committee to assist in
a
review of executive officer and director compensation. In the 2007 review,
Towers Perrin obtained peer group benchmarking data primarily from a group
of
companies with revenue of $30 to $200 million regardless of industry, and
secondly from a group of companies that have a similar business strategy to
us,
regardless of revenue size. While the data may not result in a statistical
random sampling, we believe it will provide valuable data regarding the
compensation levels and practices of peer companies with whom we compete for
key
executive talent.
Equity
Grant Practices.
The
exercise price of each stock option awarded to our senior executives under
our
long-term incentive plan is the closing price of NexCen common stock on the
date
of grant, which is the date on which the option (including all of its material
terms) is approved by the Compensation Committee. The Compensation Committee
is
required to approve all grants of all awards under our long-term incentive
plan.
Our board of directors previously had delegated to our chief executive officer,
acting as a board committee of one, the authority to make grants of up to 40,000
shares per individual pursuant to our long-term incentive plans, subject to
his
duty to report periodically to the Compensation Committee on awards granted
by
him. In October 2006, we terminated that authority after concluding that the
Compensation Committee should consider and decide on all incentive equity
awards.
We
have
not granted incentive equity awards on a regular annual basis in the last
several years. Until 2006, we had not granted any incentive equity awards to
our
named executive officers since 2002. We have typically granted stock options
to
new employees when they begin working for the Company. These grants are usually
made after the date on which employment commences because our Compensation
Committee has been unable to meet in time to approve a grant on an earlier
date.
We are currently considering the adoption of a policy to specify particular
dates on which equity incentive awards would be granted. Such dates would take
into account the dates on which we expect to announce quarterly earnings and
would be intended to avoid the grant of any stock options in advance of the
public announcement of material information about the Company. It has been
our
policy not to grant stock options in advance of public announcements of material
information. Our long-term incentive plan does not permit the re-pricing of
options.
In
the
past, we have made periodic grants of restricted stock. In 2006, as an incentive
for our then-current named executives to identify and implement a new business
strategy for the Company, we granted a total of 150,000 shares of restricted
stock to our former chief executive officer (who is now our Chairman) and,
50,000 shares of restricted stock to our former chief financial officer. Vesting
of those shares was subject to the acquisition of a business (or businesses)
that would serve as the foundation for a new business strategy for our Company.
In the case of our former chief financial officer, his 50,000 shares vested
when
we acquired UCC. In the case of our former chief executive officer, his 150,000
shares will vest in three 50,000 share amounts in each of June 2007, June 2008
and June 2009 (the first three anniversaries of the date on which we acquired
UCC). We have not made other restricted stock awards recently, and we are
currently evaluating whether to award restricted stock, stock options or a
combination of the two in future incentive equity awards. Our decision will
take
into account tax, economic, and employee incentive aspects of the different
award types.
2006
Option Exercise Extension Program.
As part
of our transformation to a new IP-centric business model, we transitioned
management of the Company to a new senior management team and relocated our
corporate office to New York City (from Baltimore). At the end of 2006, we
closed the Baltimore office, and a number of historic employees (including
certain officers) left the Company. Some changes to the composition of our
board
of directors also began to occur, in response to the changes in our
business.
Our
employees and directors held certain vested options that had been issued under
our equity incentive plans. Pursuant to these plans and the customary option
grant agreements that had been used historically, option holders typically
have
90 days following the termination of employment, or the termination of the
service relationship (in the case of a director), with the Company to exercise
vested stock options, after which time such options would be forfeited
automatically. Upon review of the situation, and taking into account the unusual
corporate transformation the Company was undergoing and the long-standing and
dedicated service of the small group of remaining employees, the Compensation
Committee determined that it was appropriate to provide employees and directors
with a one-time opportunity to elect to extend the post-employment or
post-service exercise period of vested options.
The
Compensation Committee adopted an option extension program, consistent with
Section 409A of the Internal Revenue Code, pursuant to which existing employees
and directors of the Company were given a one-time opportunity to propose to
the
Compensation Committee, prior to December 31, 2006, an extension schedule for
their vested options, which would govern their ability to exercise vested
options after ceasing to be employed by the Company or ceasing to be a director
of the Company. The Compensation Committee recommended this program to the
board
of directors, which approved the parameters of the program, and the details
of
the program were communicated to the Company's six employees and eight
directors.
Four
of
the Company's employees, including one named executive officer (Mr. Reymann)
and
one of the Company's directors (Mr. Beese) proposed option extension schedules
to the Compensation Committee. (Mr. Reymann left the Company in mid-December
2006 and stepped down as an executive officer in September 2006, and Mr. Beese
resigned as a director in October 2006.) The Compensation Committee reviewed
the
proposed schedules and, after consultation with its outside professional
advisors, concluded that the proposed schedules were consistent with the
requirements of the overall program, as adopted by the board of directors,
and
were consistent with the requirements of Section 409A. As a result of this
option extension program, approximately 300,000 vested options that would have
expired in 2006 and early 2007 were extended for periods of between one and
five
years. In each case, a person's option extension arrangement identifies a future
calendar year (defined as January 1 of such year through the last day of that
same calendar year) in which such options may be exercised, with options not
exercised during the year expiring at the earlier of the end of that particular
calendar year or ten years from the date of the original option grant. The
option extension program allows for different exercise periods for different
options. So, for example, a person with 1,000 vested options who adopted an
extension schedule may be entitled to exercise 250 of those options within
90
days of leaving the Company, 500 options during calendar year 2008 and 250
options during calendar year 2009 (assuming the applicable options do not expire
before the end of the applicable extended option period).
The
purpose of this extension program was to provide long-standing employees and
directors with an opportunity to realize additional value from their existing
long-term equity incentive grants as partial compensation for their service
to
the Company and in recognition of the fact that their departure from the Company
was not voluntary, was due to changes in the Company's business (rather than
any
dissatisfaction with their performance) and represented a change (since the
time
of award grant) in both the Company's and the employee's (or the director's)
expectation regarding the potential value of the long-term incentive awards.
In
2006, the Company recorded charges of $82,000 and $37,000 to restructuring
charges and stock based compensation, respectively, related to the extension
program.
The
Company has since changed the terms of its standard option grant to directors.
Such grants now provide that once vested, options awarded to directors are
exercisable at any time until their expiration date (which is typically ten
years from the grant date), regardless of when the director ceases to serve
as a
director of the Company (as long as such departure is after the vesting date
of
the granted options).
Share
Ownership Guidelines.
We do
not currently have any requirements for any of our executive officers or other
employees to own specified amounts of NexCen common stock. As a result of his
prior ownership of UCC, our chief executive officer currently owns approximately
2.4 million shares of our common stock, which he received as consideration
for
his interest in UCC when we purchased UCC in 2006. Our chief executive officer
also currently holds a warrant to acquire 125,000 shares of our common stock
and
options to acquire approximately 2.7 million shares of our common
stock.
Compensation
Deduction Limit.
Section
162(m) of the Internal Revenue Code generally limits the compensation that
a
corporation can deduct for payments to a chief executive officer and the four
other most highly compensated executive officers to $1 million per officer
per
year. However, compensation that is “performance-based,” as defined by Section
162(m), is exempt from this limitation on deductibility. In general,
compensation attributable to the exercise of stock options granted with an
exercise price at or above the market price of the underlying stock at the
time
of the grant qualify as performance-based compensation. In 2006, we did not
pay
our chief executive officer or our four other most highly compensated executive
officers compensation in excess of $1 million (excluding compensation in respect
of exercised options that we believe qualifies as performance-based
compensation).
We
expect
to award annual bonuses over the next several years under our 2006 Management
Bonus Plan. The 2006 Management Bonus Plan is designed so that amounts paid
thereunder can qualify as performance-based compensation under Section 162(m)
where the Compensation Committee sets performance targets for eligible
participants and such targets are met. Tax rules require the Company
to obtain stockholder approval of the material terms of performance-based
compensation plans, such as the 2006 Management Bonus Plan. We obtained
stockholder approval of the 2006 Management Bonus Plan in October
2006.
The
Compensation Committee may award compensation that is not exempt from the
limitations on deductibility under section 162(m) where it believes such
compensation is in the best interests of NexCen and its stockholders, balancing
tax efficiency with long-term strategic goals. In this regard, the Compensation
Committee may take into account the impact of the Company's net tax loss carry
forwards on the Company's status as a taxpayer. If the Company generates taxable
earnings, its net tax loss carry forwards are expected to be available to offset
most of the federal (and in some cases, state) income taxes that the Company
would otherwise be required to pay. Accordingly, the loss of compensation
deductions under certain circumstances may not be material to the Company;
however, the Compensation Committee will still consider whether there would
be
material benefits to paying non-deductible compensation in such
circumstances.
For
fiscal 2007, the Compensation Committee has decided not to adopt performance
or
award targets under the 2006 Management Bonus Plan. Accordingly, any bonus
payments awarded under the 2006 Management Bonus Plan will not qualify as
“performance based” compensation under Section 162(m). In reaching this
decision, the Compensation Committee took the following factors into
account:
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Because
of the substantial recent changes to the Company’s business, the large
number of recent acquisitions, and the fact that the new business
has not
yet been operated for a full fiscal year, the Compensation Committee
did
not believe it could identify reliable and appropriate performance
targets
for 2007 that would ensure an appropriate award of incentive
compensation;
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Because
the total bonus pool available under the 2006 Management Bonus Plan
is
capped at 5% of the Company’s net income in the applicable fiscal year,
and because the largest portion of that pool that can be awarded
to any
one person is 50% (which is the specified award percentage for Mr.
D’Loren), the Compensation Committee does not expect that any awards
for
2007 that may be made under the 2006 Management Bonus Plan will be
sufficient to result in any one individual receiving 2007 compensation
that is not performance-based in excess of $1 million;
and
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Should
any covered individual end up receiving 2007 compensation that is
not
performance-based in excess of $1 million, the amount above $1 million
is
likely to be minimal and should not affect the Company’s liability for
2007 federal income taxes.
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The
Compensation Committee plans in future years (after fiscal 2007) to structure
awards under the 2006 Management Bonus Plan so that they qualify as
“performance-based” compensation under Section 162(m). For fiscal 2007, however
the Compensation Committee will retain discretion to make aggregate awards
up to
the full amount of the bonus pool (5% of fiscal 2007 net income) based upon
a
review of both the Company's and the eligible executive's performance in fiscal
2007. To the extent the Compensation Committee identifies eligible individuals
and any target award levels in advance; these will be publicly disclosed as
required by applicable SEC rules.
Elements
of Compensation
For
2006,
the principal components of compensation for our named executive officers
consisted of:
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Perquisites
and other personal benefits; and
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These
principal elements have been chosen to create a flexible package that can reward
both our short and long-term performance, while providing the executive with
a
competitive compensation package. In 2006, we changed our business strategy
to
focus on a new IP-centric business model. As part of our transformation, we
installed a new senior management team. Other than for the chief executive
officer for whom we negotiated a detailed employment arrangement in connection
with the acquisition of UCC, a company that he controlled and which gave us
the
platform for our new strategy, we have not yet formulated formal long-term
compensation policies and approaches. We expect to develop a comprehensive
program in 2007 now that we have completed several acquisitions consistent
with
our new business strategy which have established the foundation of our new
IP
business. We believe that this foundation will begin to give us the necessary
insight to understand the critical elements to our financial and operational
success for which we can set appropriate metrics for short and long-term
compensation. (Our new long-term compensation policies and approaches will
apply
both to the named executive officers and more generally to our employee base.)
For continuing executives other than the chief executive officer, agreements
were negotiated in 2006 that included competitive base salaries, discretionary
bonus opportunities, basic benefit packages, and modest severance arrangements
as required to attract the new executives and were based on negotiations between
the new executive, on the one hand, and the chief executive officer and the
Compensation Committee, on the other.
Base
salary.
We
provide named executive officers and other employees with a base salary to
compensate them for basic services rendered during the fiscal year. Initial
base
salary ranges for our named executive officers were determined for each
executive based on negotiations between the new executive, on the one hand,
and
the Company, on the other.
For
2007,
Towers Perrin has been retained by the Compensation Committee to assist in
a
review of executive officer compensation. During its review of base salaries
for
executives, the Compensation Committee will consider:
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Market
data provided by our outside consultant, Towers
Perrin;
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·
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Internal
review of the executive’s compensation, both individually and relative to
other executive officers; and
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Individual
performance of the executive.
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Until
a
formal long-term compensation policy and approach is adopted, the Compensation
Committee expects to review salary levels at least annually, as well as upon
a
promotion or other change in job responsibility. Merit based increases to
salaries, if any, will be based on the Compensation Committee’s review and
overall assessment of an individual’s performance.
Equity-based
awards.
We
provide equity-based compensation to promote our long-term growth and
profitability. Equity-based awards not only provide directors, executive
officers, and employees with incentives to maximize stockholder value and
otherwise contribute to our long-term success, but they also allow us to
attract, retain and reward the best available individual for positions of
responsibility.
Awards
of
stock options and restricted stock are made under our 2006 Equity Incentive
Plan, which was approved by our stockholders in October 2006. Prior to October
2006, equity-based awards were made under two prior long-term incentive plans.
With adoption of the 2006 Equity Incentive Plan, no further awards will be
issued under these older plans. Shares of restricted stock are issued subject
to
a vesting schedule and cannot be sold until and to the extent the shares have
vested. Stock options are issued at an exercise price of no less than fair
market value on the date of grant and are subject to vesting requirements,
which
may include time-based vesting, performance-based vesting, or both.
Historically, we have not issued any options subject to performance-based
vesting. In 2006, we awarded restricted stock to our former chief executive
officer and chief financial officer, and awarded stock options to the three
current named executive officers and Mr. Haran in connection with their
employment agreements. The Compensation Committee administers the 2006 Equity
Incentive Plan and has not delegated any grant authority.
Cash
bonuses.
We
provide cash bonus compensation to motivate, reward and retain key executives.
Under the 2006 Management Bonus Plan bonuses are paid out of a pool determined
to be 5% of the Company’s net income. The chief executive officer has a
contractual right to 50% of this pool and the other half is allocated to senior
executives based on performance achievements determined by the chief executive
officer and the Compensation Committee. The Company reported net loss for 2006
and as a result there was no bonus pool for 2006.
Perquisites
and other personal benefits.
We
provide certain executive officers with perquisites and other personal benefits
that we and the Compensation Committee believe are reasonable and consistent
with our overall compensation program to better enable us to attract and retain
superior employees for key positions. Perquisites are generally granted as
part
of our executive recruitment and retention efforts. During 2006, our chief
executive officer received a limited amount of perquisites and other personal
benefits that we paid on his behalf. These perquisites and other personal
benefits included, among other things:
|
·
|
Payments
of life and disability insurance
premiums;
|
Other
Compensation.
In
addition to the compensation discussed above, we also provide our named
executive officers with customary employee benefits, available to all employees,
including health, disability and life insurance. In 2006, we matched
contributions made by our former chief executive officer and chief financial
officer (Messrs. Oros and Reymann) pursuant to a 401(k) plan. The other named
executive’s contributions were not matched as they participated under a
different 401(k) plan. In
general, these benefits are substantially the same as those available to all
of
our employees.
Compensation
for Outgoing Named Executives in 2006
Our
long-time chief executive officer and chief financial officer relinquished
their
positions with NexCen in 2006, although our chief executive officer has
continued as Chairman of the Company. We did not make any changes to their
base
salaries in 2006, and we did not award them any annual cash bonuses in 2006.
We
concluded that in light of the performance of the MBS business and our
expectation that a management transition would occur once we identified and
implemented a new or additional business strategy, no change in current
compensation was warranted. However, in early 2006 we began to discuss with
each
of them potential changes to their respective employment agreements that we
believe would provide them with reasonable severance arrangements and incentives
to remain with the Company during what we expected would likely be a period
of
business and management transition. We finalized the amendments in early May
2006 and, at the same time, granted them shares of restricted stock, as
discussed below. The amendments are described below under the caption
“Employment Agreements.”
These
revised employment agreements and restricted stock grants were intended to
achieve several objectives:
|
·
|
reward
them for their long-standing service and contributions to the
Company,
|
|
·
|
provide
them with a significant incentive to carry out a successful change
in the
Company’s business strategy,
|
|
·
|
encourage
them to be supportive of a change in the senior management of the
Company,
and
|
|
·
|
offer
them a reasonable severance package that we concluded was consistent
with
market practice and appropriate in light of their service to the
Company
and the Company’s situation.
|
Compensation
of Our Former Chief Executive Officer.
In
2006,
Mr. Oros' annual salary remained at $200,000, which is the same as it has been
since 1999. He was not awarded any cash bonus in 2006.
In
June
2006, Mr. Oros relinquished his position as chief executive officer, remaining
as Chairman. Under the terms of his amended employment agreement, we requested
that he also continue as an employee, to provide advice and guidance to our
new
chief executive officer and to assist him with the management and business
transition processes. Mr. Oros has continued to receive his annual salary of
$200,000 during this period. The amended employment agreement also provides
for
a revised termination and severance arrangement. If we subsequently terminate
Mr. Oros' employment without “Cause” (as defined in his existing employment
agreement) or because of his death or “Disability” (as defined in his existing
employment agreement), he will receive a lump-sum severance payment equal to
$600,000, less the aggregate amount of salary paid to him since June 2006.
In
such event, Mr. Oros also is entitled to continue receiving group health and
medical benefits for up to three years following termination of his
employment.
The
purpose of this amended contractual arrangement was to provide Mr. Oros with
a
severance package - in the form of continuing salary or a lump-sum
departure payment, at the Company's option - equal to three years of annual
salary, plus continuing insurance benefits for three years. In exchange for
this
severance arrangement, Mr. Oros agreed to abide by a non-competition covenant.
Mr. Oros was the chief executive officer of the Company from its inception
in
1996 until June 2006, and we concluded that a reasonable severance arrangement
was appropriate in light of his years of dedicated service to the Company.
We
believe that the severance arrangement is appropriate as compared to severance
arrangements provided to chief executives of companies similar to NexCen and
is
reasonable under the circumstances, taking into account NexCen's size, stage
of
development and financial resources and Mr. Oros' contributions to the Company
over an extended period of time.
In
2006,
as discussed above, Mr. Oros also received a grant of 150,000 shares of
restricted stock, which will vest in three increments of 50,000 shares in each
of June 2007, June 2008 and June 2009, subject to accelerated vesting under
certain circumstances as described below under the heading “Employment
Agreements.” In October 2006, Mr. Oros was granted 25,000 stock options priced
at $6.77 per share, which was the closing price of NexCen's common stock on
that
date. The options will vest in full in October 2007, if Mr. Oros remains
employed by the Company at such time. Each of the non-management directors
also
received a grant of 25,000 stock options on this same day, at the same per
share
price and with the same vesting terms. The board of directors decided to award
these options to Mr. Oros, despite the fact that he was an employee of the
Company at the time, because he had ceased to serve as a member of the senior
executive management team (as his continuing positions were as Chairman and
as a
non-executive adviser to the senior management team) and would not be entitled
to receive any annual bonuses or long-term incentive awards that might be paid
to senior executives.
Compensation
of Our Former Chief Financial Officer.
In
2006,
Mr. Reymann's annual salary remained at $180,000, which is the same as it has
been since 2002. He was not awarded any cash bonus in 2006.
In
September 2006, Mr. Reymann stepped down as chief financial officer. He remained
with the Company to assist in a management transition through mid-December
2006.
Under the terms of an amended employment agreement that we negotiated with
Mr.
Reymann in 2006, upon his departure from the Company, he received a lump-sum
severance payment of $360,000, plus continued group health and medical benefits
for two years. In addition, all of Mr. Reymann's options were vested as of
the
date his employment with the Company ended. See “Outstanding Equity Awards at
Fiscal Year-End Table” for details of Mr. Reymann's stock options.
We
amended Mr. Reymann's employment agreement in 2006 to provide for this severance
package (equivalent to two years of annual salary plus continuing insurance
benefits for two years) and to provide him with accelerated option vesting
in
light of his many years of dedicated service to the Company. He served as the
Company's chief financial officer since 1998. In exchange for the severance
arrangement, Mr. Reymann agreed to abide by a non-competition covenant. We
believe that the severance arrangement is appropriate as compared to severance
arrangements provided to senior executives of companies similar to NexCen and
is
reasonable under the circumstances, taking into account NexCen's size, stage
of
development and financial resources and Mr. Reymann's contributions to the
Company over an extended period of time.
In
2006,
as discussed above, Mr. Reymann also received a grant of 50,000 shares of
restricted stock. All of these shares vested in June 2006, when we acquired
UCC.
Compensation
for Non-Management Directors.
Non-management
directors' compensation is set by the board of directors at the recommendation
of the Compensation Committee. Non-management directors' compensation is
designed to fairly pay directors for work required in a company of our size
and
scope and to align directors' interests with the long-term interest of our
stockholders. Non-management directors' compensation is comprised of cash
compensation and equity compensation.
In
March
2006, the board of directors approved increases in the compensation payable
to
non-management directors. The compensation includes an annual retainer of
$20,000 and a fee of $1,500 for each board meeting attended. In 2006, upon
the
recommendation of the Compensation Committee, non-management directors were
granted 25,000 nonqualified options to purchase shares of our common stock.
In
their deliberations, the Compensation Committee was advised by management and
Towers Perrin that the proposed option grants were consistent with the market
generally and the practices of comparable companies. Prior to the grant in
2006,
no options had been granted to our directors since 2002.
In
addition to board retainer and attendance fees, the chairperson of each board
committee (other than the Audit Committee) receives an additional retainer
of
$2,500. The chairperson of the Audit Committee receives a $12,500 annual
retainer. Audit Committee members also receive a fee of $2,500 for each Audit
Committee meeting they attend.
For
2007,
Towers Perrin has been retained by the Compensation Committee to assist in
a
review of director compensation. During its review of director compensation,
the
Compensation Committee will consider market data provided by our outside
consultant, Towers Perrin, and an internal review of compensation payable to
non-management directors for a company of our size and scope.
Compensation
Committee Report
The
Compensation Committee has reviewed the Compensation Discussion and Analysis
and
discussed that Analysis with management. Based on its review and its discussions
with management, the Committee has recommended to our board of directors that
the Compensation Discussion and Analysis be included in the Company's Annual
Report on Form 10-K/A for 2006 and the Company's 2007 proxy statement. This
Report is provided by the following independent directors, who comprise the
Compensation Committee:
Edward
J.
Mathias (Chairman)
Jack
B.
Dunn IV
Jack
Rovner
Summary
Compensation Table
Name
and Principal Position
|
|
Year
|
|
Salary
|
|
Bonus
|
|
Stock
Awards
|
|
Option
Awards
|
|
Non-Equity
Incentive Plan Compensation
|
|
Change
in Pension Value and Nonqualified Deferred Compensation
Earnings
|
|
All
Other Compensation
|
|
Total
|
|
|
|
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
(1)
|
|
|
|
(2)
|
|
|
|
(3)
|
|
(4)
|
|
|
|
|
|
(5)
|
|
|
|
Robert
W. D'Loren, Chief Executive Officer
|
|
|
2006
|
|
$
|
427,083
|
|
$
|
-
|
|
$
|
-
|
|
$
|
701,406
|
|
$
|
-
|
|
$
|
-
|
|
$
|
40,162
|
|
$
|
1,168,651
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
B. Meister, Chief Financial Officer
|
|
|
2006
|
|
$
|
69,375
|
|
$
|
-
|
|
$
|
-
|
|
$
|
40,671
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
110,046
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
Haran, Executive Vice President
|
|
|
2006
|
|
$
|
338,542
|
|
$
|
-
|
|
$
|
-
|
|
$
|
145,117
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
483,659
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles
Zona, Executive Vice President
|
|
|
2006
|
|
$
|
18,182
|
|
$
|
-
|
|
$
|
-
|
|
$
|
10,994
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
29,176
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
Oros, Chairman & Former Chief Executive
Officer
|
|
|
2006
|
|
$
|
207,692
|
|
$
|
-
|
|
$
|
111,502
|
|
$
|
37,020
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
356,214
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
Reymann, Former Chief Financial Officer
|
|
|
2006
|
|
$
|
180,000
|
|
$
|
-
|
|
$
|
205,000
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
376,443
|
|
$
|
761,443
|
|
The
table
below summarizes the total compensation paid to or earned by each of our named
executive officers, including our former chief executive officer, our former
chief financial officer and Mr. Haran for the fiscal year ended December 31,
2006.
Since
we
reported net loss for fiscal year ended December 31, 2006, our named executive
officers, including our former chief executive officer, our former chief
financial officer and Mr. Haran, were not entitled to receive payments which
would be characterized as “Non-Equity Incentive Plan Compensation” pursuant to
our 2006 Management Bonus Plan. Additionally, the board of directors did not
award any payments which would be characterized as “Bonus” payments. We also
have no defined benefit plans, actuarial plans, or non-qualified deferred
compensation plans.
(1)
|
Mr.
D'Loren, Mr. Meister and Mr. Zona became named executive officers
on June
6, 2006, September 12, 2006 and December 11, 2006, respectively.
Mr.
Reymann ceased to be named executive officers on September 12, 2006.
Mr.
Oros remains an executive Chairman of the Company while Mr. Reymann
remained as an employee to assist in management transition through
mid-December 2006. Mr. Haran became an employee of the Company on
June 6,
2006.
|
|
|
(2)
|
The
amounts included for Mr. D'Loren, Mr. Meister, Mr. Haran and Mr.
Zona is
based on a base salary of $750,000, $225,000, $375,000 and $300,000,
respectively, pro rated from their start dates of June 6, 2006, September
12, 2006, June 6, 2006 and December 11, 2006, respectively. Mr. Meister's
amount does not include $29,000 which was paid to Mr. Meister for
services
as a consultant with the Company from July 2006 until September 2006.
The
amount for Mr. Haran includes a deferred bonus of $125,000 from UCC
Capital that the Company assumed upon the acquisition. The amount
included
for Mr. Oros and Mr. Reymann is based on a base salary of $200,000
and
$180,000, respectively. The amount for Mr. Oros includes an additional
$7,692 which arose when the company changed payroll systems and trued-up
the payroll to coincide with the calendar year end of December 31,
2006.
|
(3)
|
In
2006, Messrs. Oros and Reymann received restricted stock as part
of their
agreements to transition the company to a new management
team.
|
|
|
(4)
|
For
the year ended December 31, 2006, Messrs. D'Loren, Meister, Haran
and Zona
received option awards pursuant to the terms of their employment
agreements. Mr. Oros' option awards include the options
received as part of a stock option grant to purchase 25,000 shares
given to all directors except Mr. D'Loren on October 31,
2006.
|
|
|
(5)
|
For
2006, Mr. D'Loren received a total of $40,162 in all other compensation
which included insurance premiums for life and long term disability
of
$28,830, car expenses of $9,842 and club dues of $1,490. For David
Reymann
the amount represents a severance payment of two years salary that
was
payable to him under his employment agreement because of a Trigger
Event
(as discussed below in “Employment Agreements” under the caption
“Employment Agreements for Former Chief Executive Officer and Former
Chief
Financial Officer”) that occurred in 2006 and accrued vacation
benefits.
|
Grants
of Plan-Based Awards Table
During
fiscal year ended December 31, 2006, we granted stock options and restricted
stock awards to our named executive officers, Mr. Haran and our former chief
executive officer and former chief financial officer under our long-term equity
incentive plans. Information with respect to each of these awards on a
grant-by-grant basis is set forth in the table below. All of our stock options
were granted with an exercise price equal to the fair market value of our common
stock on the date of grant. Under our long-term equity incentive plans, fair
market value is defined as the closing sale price of our common stock on the
date of grant.
|
|
|
|
Estimated
Future Payouts
Under
Non-Equity
Incentive
Plan Awards
|
|
Estimated
Future Payouts
Under
Equity Incentive
Plan
Awards
|
|
All
Other
Stock
Awards:
Number
of
Shares
of
Stock
or
Units
(#)
|
|
All
Other
Option
Awards:
Number
of
Securities
Underlying
Options
(#)(1)
|
|
Exercise
or
Base
Price
of
Option
Awards
($/Sh)
($)
|
|
Closing
Price
of
Common
Stock
Units
on
Date
of
Grant
($)
|
|
Grant
Date
Fair
Value
of
Stock
and
Option
Awards
|
|
Name
|
|
Grant
Date
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
Threshold
(#)
|
|
Target
(#)
|
|
Maximum
(#)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
W. D'Loren
|
|
|
06/06/06
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
2,811,976
|
|
$
|
4.10
|
|
$
|
4.10
|
|
$
|
3,388,354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
B. Meister
|
|
|
09/12/06
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
200,000
|
|
$
|
6.08
|
|
$
|
6.08
|
|
$
|
369,935
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
Haran
|
|
|
06/06/06
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
581,788
|
|
$
|
4.10
|
|
$
|
4.10
|
|
$
|
701,039
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles
Zona
|
|
|
12/11/06
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
250,000
|
|
$
|
6.96
|
|
$
|
6.96
|
|
$
|
528,592
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
Oros (2)
|
|
|
05/05/06
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
150,000
|
|
|
-
|
|
$
|
0.00
|
|
$
|
4.10
|
|
$
|
480,769
|
|
|
|
|
10/31/06
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
25,000
|
|
$
|
6.77
|
|
$
|
6.77
|
|
$
|
57,713
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
Reymann (3)
|
|
|
05/05/06
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
50,000
|
|
|
-
|
|
$
|
0.00
|
|
$
|
4.10
|
|
$
|
205,000
|
|
(1)
|
Mr.
D'Loren's amount includes a warrant to purchase 125,000 shares that
has
the same terms as the options. The warrant was not granted under
our
long-term equity incentive plans.
|
(2)
|
Mr.
Oros was granted 150,000 shares of restricted stock on May 5, 2006.
This
award was initially approved in March 2006, but final terms were
not
agreed and the shares were not awarded until May 5. Mr. Oros' shares
vest
in three equal annual installments of 50,000 shares on each of the
first
three anniversaries of June 6, 2006, which was the date on which
we
acquired UCC, and which our board of directors determined was a “Trigger
Event” (as defined in Mr. Oros' restricted stock grant agreement) that
initiated the three-year vesting. However, vesting remains subject
to Mr.
Oros' continued employment on each vesting date.
|
|
|
(3)
|
Mr.
Reymann was granted 50,000 shares of restricted stock on May 5, 2006.
This
award was initially approved in March 2006, but final terms were
not
agreed and the shares were not awarded until May 5. The shares vested
in
full on June 6, 2006, which was the date on which we acquired UCC,
and
which our board of directors determined was a “Trigger Event” (as defined
in Mr. Reymann's restricted stock grant
agreement).
|
Outstanding
Equity Awards at Fiscal Year-End Table
The
following table sets forth information with respect to outstanding equity-based
awards at December 31, 2006 for our named executive officers, Mr. Haran and
our
former chief executive officer and former chief financial officer.
|
|
Option
Awards
|
|
Stock
Awards
|
|
Name
|
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
|
Number
of Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
|
Equity
Incentive
Plan
Awards:
Number
of Securities
Underlying
Unexercised
Unearned
Options (#)
|
|
|
Option
on Exercise Price
($)
|
|
Option
Expiration
Date
|
|
|
Number
of
Shares
or
Units
of Stock
That
Have
Not
Vested
(#)
|
|
Market
Value of Shares or Units
of Stock That Have Not
Vested ($)
|
|
Equity
Incentive
Plan
Awards:
Number
of Unearned
Shares,
Units or
Other
Rights That
Have
Not Vested
(#)
|
|
Equity
Incentive
Plan
Awards:
Market
or Payout
Value
of Unearned
Shares,
Units or
Other
Rights That
Have
Not Vested
($)
|
|
Robert
W. D'Loren
|
|
|
-
|
|
|
|
2,811,976
|
(1)
|
|
-
|
|
|
4.10
|
|
06/05/2016
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
B. Meister
|
|
|
-
|
|
|
|
200,000
|
(2)
|
|
-
|
|
|
6.08
|
|
09/11/2016
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
Haran
|
|
|
-
|
|
|
|
581,788
|
(3)
|
|
-
|
|
|
4.10
|
|
06/05/2016
|
|
|
-
|
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles
Zona
|
|
|
-
|
|
|
|
250,000
|
(4)
|
|
-
|
|
|
6.96
|
|
12/10/2016
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
Oros
|
|
|
100,000
|
|
|
|
-
|
|
|
-
|
|
|
2.95
|
|
06/27/2012 |
|
|
-
|
|
|
-
|
|
-
|
|
-
|
|
|
|
|
12,600
|
|
|
|
-
|
|
|
-
|
|
|
16.00
|
|
10/24/2009 |
|
|
-
|
|
|
-
|
|
-
|
|
-
|
|
|
|
|
18,000
|
|
|
|
-
|
|
|
-
|
|
|
8.54
|
|
07/24/2011 |
|
|
-
|
|
|
1,084,500
|
(7)
|
-
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
- |
|
|
150,000
|
(6)
|
|
-
|
|
-
|
|
-
|
|
|
|
|
-
|
|
|
|
25,000
|
(5)
|
|
-
|
|
|
6.77
|
|
10/30/2016 |
|
|
-
|
|
|
-
|
|
-
|
|
-
|
|
|
|
|
655,000
|
|
|
|
-
|
|
|
-
|
|
|
1.60
|
|
06/21/2009 |
|
|
-
|
|
|
-
|
|
-
|
|
-
|
|
|
|
|
157,500
|
|
|
|
-
|
|
|
-
|
|
|
4.00
|
|
08/31/2009 |
|
|
-
|
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
Reymann
|
|
|
32,500
|
|
|
|
-
|
|
|
-
|
|
|
8.00
|
|
12/31/2008 |
|
|
-
|
|
|
-
|
|
-
|
|
-
|
|
|
|
|
50,000
|
|
|
|
-
|
|
|
-
|
|
|
8.54
|
|
12/31/2008 |
|
|
-
|
|
|
-
|
|
-
|
|
-
|
|
|
|
|
30,000
|
|
|
|
-
|
|
|
-
|
|
|
3.75
|
|
12/31/2007 |
|
|
-
|
|
|
-
|
|
-
|
|
-
|
|
|
|
|
5,416
|
(8)
|
|
|
-
|
|
|
-
|
|
|
1.60
|
|
12/31/2007 |
|
|
-
|
|
|
-
|
|
-
|
|
-
|
|
|
|
|
20,834
|
(9)
|
|
|
-
|
|
|
-
|
|
|
1.49
|
|
12/31/2007 |
|
|
-
|
|
|
-
|
|
-
|
|
-
|
|
(1)
|
Includes
a warrant to purchase 125,000 shares which has the same terms as
the
options. The warrant and the options vest in equal amounts on the
three
anniversaries of grant: June 2007, June 2008 and June 2009. For additional
information with respect to accelerated vesting of this award, see
“Employment Agreements - Robert W.
D'Loren.”
|
(2)
|
Options
vest in equal amounts on the three anniversaries of grant: September
2007,
September 2008 and September 2009. For additional information with
respect
to accelerated vesting of this award, see “Employment Agreements - David
B. Meister.”
|
|
|
(3)
|
Options
vest in equal amounts on the three anniversaries of grant: June 2007,
June
2008 and June 2009. For additional information with respect to accelerated
vesting of this award, see “Employment Agreements - James
Haran.”
|
|
|
(4)
|
Options
vest in equal amounts on the three anniversaries of grant: December
2007,
December 2008 and December 2009. For additional information with
respect
to accelerated vesting of this award, see “Employment Agreements - Charles
A. Zona.
|
|
|
(5)
|
Options
vest in full on October 31, 2007.
|
|
|
(6)
|
The
restricted stock vests in three equal annual installments of 50,000
shares
on each of the first three anniversaries of June 6, 2006, subject
to Mr.
Oros' continued employment with the Company on each vesting date.
For
additional information with respect to accelerated vesting of this
award,
see “Employment Agreements - David S. Oros.”
|
|
|
(7)
|
This
represents the 150,000 shares subject to vesting multiplied times
our
stock price on December 31, 2006.
|
|
|
(8)
|
Exercised
on February 20, 2007.
|
(9)
|
Exercised
on April 16, 2007.
|
Option
Exercises and Stock Vested Table
The
following table sets forth certain information regarding exercise of options
and
vesting of restricted stock held by the named executive officers, Mr. Haran
and
our former chief executive officer and former chief financial officer during
the
year ended December 31, 2006.
|
|
Option
Awards
|
|
Stock
Awards
|
|
Name
|
|
Number
of Shares
Acquired
on Exercise
(#)
|
|
Value
Realized
on
Exercise
($)
|
|
Number
of Shares
Acquired
on Vesting
(#)
|
|
Value
Realized
On
Vesting
($)
(1)
|
|
|
|
|
|
|
|
|
|
|
|
Robert
W. D'Loren
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
B. Meister
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
Haran
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles
Zona
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
Oros
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
Reymann
|
|
|
-
|
|
|
-
|
|
|
50,000
|
|
$
|
205,000
|
|
(1)
|
Included
in this column is the aggregate dollar amount realized by the named
executive officer upon exercise of the restricted stock. The amount
is
calculated at the closing stock price on the date of exercise multiplied
by the number of shares exercised and
acquired.
|
Compensation
for Continuing Named Executives in 2006
We
discuss here the compensation of those individuals who were named executive
officers at December 31, 2006, all of whom remain with the Company at the date
of this proxy statement. For each continuing named executive officer, we
negotiated employment agreements prior to their hire in 2006. In each case,
we
provide competitive base salaries, discretionary bonus opportunities, basic
benefit packages and modest severance arrangements. The overall philosophy
of
our compensation policy is reflected in each agreement. See the section
captioned “Employment Agreements” for more in-depth information. The
compensation of our former chief executive officer (who is now our Chairman)
and
our former chief financial officer are discussed above.
Compensation
for Chief Executive Officer.
In 2006,
the compensation of Mr. D'Loren, the president and chief executive officer
was
based on his employment agreement entered into on June 6, 2006. In determining
the salary and other forms of compensation for Mr. D'Loren, the Compensation
Committee retained a compensation consultant, Towers Perrin, to assist in the
development of Mr. D'Loren's compensation package. As discussed above in “Role
of the Compensation Consultant” Towers Perrin provided the Compensation
Committee with a compensation study to benchmark the compensation package for
Mr. D'Loren. The compensation study evaluated the reasonableness of the base
salary, annual bonus and stock option grants proposed for Mr. D'Loren in
comparison to the competitive market for which we competed for Mr. D'Loren's
services. The compensation study indicated that initial overall compensation
levels fell between the 50th and 75th percentile of the competitive market.
In
year three (of the three year employment agreement), the study found that
overall compensation levels fell between the 75th and 90th percentile of the
competitive market. The Compensation Committee and the board of directors
favored a package weighted toward incentive based compensation, which was
believed to tie more directly than base to increases in stockholder value.
The
Compensation Committee and board of directors also took into consideration
Mr.
D'Loren's substantial experience and in particular his performance in the
intellectual property industry. The Compensation Committee and board of
directors also gave significant weight to the responsibilities of Mr. D'Loren,
including his expected role to implement the new IP strategy through sourcing
and successfully integrating. The Compensation Committee and board of directors
believes that Mr. D'Loren's compensation package as our principal executive
officer reflects appropriate incentives for significant performance during
2007
and future years in building the company.
Compensation
for executive officers.
Compensation of our other executive officers has been determined based on
recommendations made by the chief executive officer to the Compensation
Committee. The objective of our compensation program is to attract and retain
talented executives. As mentioned above, the Company will be more fully
developing its compensation programs in 2007 to reflect the growth and change
in
the company's business.
Compensation
amounts for named executive officers are determined according to the position
of
the named executive officer. Relatively greater emphasis is typically placed
on
the equity-based components of compensation so as to put a greater portion
of
total pay based on company and individual performance. We believe the
combination of a base compensation lower than median, coupled with an
opportunity to significantly enhance overall individual compensation if
individual and company performance will yield an attractive compensation program
that facilitates our recruitment and retention of talented
executives.
Post-termination
compensation.
We have
entered into employment agreements with each of the named executive officers.
Each of these agreements provides for certain payments and other benefits if
the
executive's employment terminates under certain circumstances, including, in
the
event of a “change of control”. See sections captioned “Employment Agreements"
and “Potential Payments Upon Termination or Change of Control” for a description
of the severance and change of control benefits.
Employment
Agreements
Employment
Agreements for Continuing Named Executives in 2006
Robert
W. D'Loren
Simultaneous
with the acquisition of UCC in June 2006, we entered into an employment
agreement with Mr. D'Loren. Pursuant to the terms of Mr. D'Loren's employment
agreement, Mr. D'Loren will receive an initial annual base salary of $750,000,
subject to periodic review and upward adjustment, as well as various perquisites
and benefits, including a monthly car allowance. For each calendar year during
the term of the employment agreement, Mr. D'Loren will be entitled to receive
an
incentive bonus equal to 50% of amounts awarded under the 2006 Management Bonus
Plan (the “Annual Bonus”). No Annual Bonus was paid in 2006. Unless otherwise
agreed, the Annual Bonus will be payable 50% percent in cash and 50% in
restricted shares of NexCen's common stock that will vest in three equal
installments over three years following the date of their issuance.
On
June
6, 2006, as specified in Mr. D'Loren's employment agreement, we granted Mr.
D'Loren options to purchase an aggregate of 2,686,976 shares of our common
stock
under the terms of the Company's 1999 Equity Incentive Plan. See “Outstanding
Equity Awards at Fiscal Year-End” table for details of Mr. D'Loren's stock
options. Under Mr. D'Loren's employment agreement, if Mr. D'Loren's employment
with NexCen is terminated without “Cause” (as defined in Mr. D'Loren's
employment agreement), or if he resigns for “Good Reason” (as defined in Mr.
D'Loren's employment agreement), or if a Change of Control (as defined in Mr.
D'Loren's employment agreement) occurs, all unvested options and restricted
shares issued to Mr. D'Loren pursuant to the 2006 Management Bonus Plan will
vest immediately.
In
addition, in accordance with the terms of Mr. D'Loren's employment agreement,
we
issued to Mr. D'Loren a ten-year warrant to purchase 125,000 shares of our
common stock, at an exercise price of $4.10 per share. The terms, including
regular and accelerated vesting, of the warrant are identical to those of the
option grant he received at closing.
The
initial term of Mr. D'Loren's employment agreement is three years, and it renews
automatically for successive one-year periods beginning June 6, 2009, unless
either party provides at least 90 days' advance written notice of a decision
not
to renew. If we do not renew Mr. D'Loren's employment agreement at the end
of
any term, Mr. D'Loren will be entitled to receive his then current base salary
for two years. If (i) we terminate Mr. D'Loren's employment without “Cause” or
(ii) Mr. D'Loren terminates his employment for Good Reason, he will be entitled
to receive a severance package consisting of (1) any earned but unpaid base
salary through the date of employment termination and any declared but unpaid
annual bonus and (2) an amount equal to his Base Salary (at the rate then in
effect) for the greater of the remainder of the initial three-year term or
two
years. The severance will be payable over a six-month period or such shorter
period as is required to comply with Section 409A of the Internal Revenue Code
and applicable regulations adopted thereunder. Mr. D'Loren also will be entitled
to continue to participate in NexCen's group medical plan on the same basis
as
he previously participated or receive payment of, or reimbursement for, COBRA
premiums (or, if COBRA coverage is not available, reimbursement of premiums
paid
for other medical insurance in an amount not to exceed the COBRA premium) for
a
two-year period following termination, subject to termination of this
arrangement if a successor employer provides him with health insurance
coverage.
If
Mr.
D'Loren's employment is terminated without Cause (or if he resigns for Good
Reason) within one year of a Change of Control (as defined in Mr. D'Loren's
employment agreement), he will be entitled to receive the same severance as
described above for termination without Cause or resignation for Good Reason,
except that instead of the amount described in clause (2) of the prior
paragraph, Mr. D'Loren will be entitled to receive an amount equal $100 less
than three times the sum of (i) Mr. D'Loren's base salary (at the rate in effect
on the date of termination) and (ii) the Annual Bonus (which, for this purpose,
will be deemed to equal the product of (A) the percentage of the 2006 Management
Bonus Plan that Mr. D'Loren was awarded in the most recently completed fiscal
year, multiplied by (B) four times the net income reported by NexCen in the
last
complete fiscal quarter prior to the effective date of termination of Mr.
D'Loren's employment). However, if the severance payment owed to Mr. D'Loren,
plus any other payments or benefits, either cash or non-cash, that Mr. D'Loren
has the right to receive from NexCen would constitute an “excess parachute
payment” (as defined in Section 280G of the Internal Revenue Code of 1986), then
his severance will be reduced to the largest amount that will not result in
receipt by Mr. D'Loren of an “excess parachute payment.”
During
the term of employment and for two years thereafter, or one year if Mr.
D'Loren's employment is terminated without Cause or if he resigns for Good
Reason, Mr. D'Loren has agreed not to compete with NexCen. In addition, for
two
years following the term of employment, Mr. D'Loren has agreed not to solicit
any customer or supplier to cease doing business with NexCen, or to solicit
or
hire any employee of NexCen or any of its subsidiaries.
David
B. Meister
In
September 2006, Mr. Meister joined the Company as Senior Vice President, Chief
Financial Officer, Treasurer and Secretary.
Pursuant
to the terms of the employment agreement, Mr. Meister will receive an initial
annual base salary of $225,000, subject to periodic review and upward
adjustment, as well as customary employee perquisites and benefits. For each
calendar year during the term of the employment agreement, Mr. Meister will
be
entitled to receive a performance-based bonus pursuant to the 2006 Management
Bonus Plan based on achieving annual performance goals recommended by the Chief
Executive Officer and subject to review and confirmation by the Compensation
Committee or board of directors.
On
September 12, 2006, as contemplated by the employment agreement, Mr. Meister
was
granted options to purchase an aggregate of 200,000 shares of the Company's
common stock under the terms of the Company's 1999 Equity Incentive Plan. See
“Outstanding Equity Awards at Fiscal Year-End” table for details of Mr.
Meister's stock options. Under Mr. Meister's employment agreement, if his
employment with the Company is terminated without “Cause” (as defined in the
employment agreement), or if he resigns for “Good Reason” (as defined in the
employment agreement), or if a Change of Control (as defined in the employment
agreement) occurs, all unvested options will immediately vest and become fully
exercisable.
The
initial term of the employment agreement is three years, and it renews
automatically for successive one-year periods beginning September 12, 2009,
unless either party provides at least 90 days' advance written notice of a
decision not to renew. If (i) the Company terminates Mr. Meister's employment
without “Cause” or does not renew the employment agreement at the end of any
term or (ii) Mr. Meister terminates his employment for Good Reason, he will
be
entitled to receive a severance package consisting of (1) any earned but unpaid
base salary through the date of employment termination and any declared but
unpaid annual bonus and (2) an amount equal to his base salary (at the rate
then
in effect) for one year. The severance will be payable over a six-month period
or such shorter period required to comply with Section 409A of the Internal
Revenue Code and applicable regulations adopted thereunder. He also will be
entitled to continue to participate in the Company's group medical plan on
the
same basis as he previously participated or receive payment of, or reimbursement
for, COBRA premiums (or, if COBRA coverage is not available, reimbursement
of
premiums paid for other medical insurance in an amount not to exceed the COBRA
premium) for a one-year period following termination, subject to termination
of
this arrangement if a successor employer provides him with health insurance
coverage.
If
Mr.
Meister's employment is terminated without Cause or if he resigns for Good
Reason within a year of a Change of Control (as defined in the employment
agreement), he will be entitled to receive the same severance as described
in
the preceding paragraph, however, the amount of severance will be increased
to
equal $100 less than two times the sum of (i) Mr. Meister's base salary (at
the
rate in effect on the date of termination) and (ii) the annual bonus paid to
Mr.
Meister in the year prior to such Change in Control. However, if the severance
payment owed to Mr. Meister would constitute an “excess parachute payment” (as
defined in Section 280G of the Internal Revenue Code of 1986), then his
severance will be reduced to the largest amount that will not result in receipt
by the Mr. Meister of an “excess parachute payment.”
During
the term of employment and for two years thereafter, or one year if Mr.
Meister's employment is terminated without Cause or if he resigns for Good
Reason, Mr. Meister has agreed not to compete with the Company. In addition,
for
two years following the term of employment, Mr. Meister has agreed not to
solicit, induce or attempt to induce any customer or supplier to cease doing
business with the Company, to solicit or hire any employee of the Company or
any
of its subsidiaries or in any way interfere with the relationship between any
customers, suppliers, licensee, employee or business relation of the Company
and
the Company.
James
Haran
Simultaneous
with the acquisition of UCC in June 2006, we entered into an employment
agreement with Mr. Haran. Pursuant to the terms of Mr. Haran's employment
agreement, Mr. Haran will receive an initial annual base salary of $375,000,
subject to periodic review and upward adjustment. For each calendar year during
the term of the employment agreement, Mr. Haran will be entitled to receive
an
incentive under the 2006 Management Bonus Plan (the “Annual Bonus”). No Annual
Bonus was paid in 2006.
On
June
6, 2006, as specified in Mr. Haran's employment agreement, we granted Mr. Haran
options to purchase an aggregate of 581,788 shares of our common stock under
the
terms of the Company's 1999 Equity Incentive Plan. See “Outstanding Equity
Awards at Fiscal Year-End” table for details of Mr. Haran's stock options. Under
Mr. Haran's employment agreement, if Mr. Haran's employment with NexCen is
terminated without “Cause” (as defined in Mr. Haran's employment agreement), or
if he resigns for “Good Reason” (as defined in Mr. Haran's employment
agreement), or if a Change of Control (as defined in Mr. Haran's employment
agreement) occurs, all unvested options issued to Mr. Haran pursuant to the
employment agreement will vest immediately.
The
initial term of Mr. Haran's employment agreement is three years, and it renews
automatically for successive one-year periods beginning June 6, 2009, unless
either party provides at least 30 days' advance written notice of a decision
not
to renew. If we do not renew Mr. Haran's employment agreement at the end of
any
term, Mr. Haran will be entitled to receive his then current base salary for
18-months. If (i) we terminate Mr. Haran's employment without “Cause” or (ii)
Mr. Haran terminates his employment for Good Reason, he will be entitled to
receive a severance package consisting of (1) any earned but unpaid base salary
through the date of employment termination and any declared but unpaid annual
bonus and (2) an amount equal to his Base Salary (at the rate then in effect)
for 18-months. The severance will be payable over a six-month period or such
shorter period as is required to comply with Section 409A of the Internal
Revenue Code and applicable regulations adopted thereunder. Mr. Haran also
will
be entitled to continue to participate in NexCen's group medical plan on the
same basis as he previously participated or receive payment of, or reimbursement
for, COBRA premiums (or, if COBRA coverage is not available, reimbursement
of
premiums paid for other medical insurance in an amount not to exceed the COBRA
premium) for a one year period following termination, subject to termination
of
this arrangement if a successor employer provides him with health insurance
coverage.
If
Mr.
Haran's employment is terminated without Cause (or if he resigns for Good
Reason) within one year of a Change of Control (as defined in Mr. Haran's
employment agreement), he will be entitled to receive the same severance as
described above for termination without Cause or resignation for Good Reason,
except that instead of the amount described in clause (2) of the prior
paragraph, Mr. Haran will be entitled to receive an amount equal $100 less
than
two times the sum of (i) Mr. Mr. Haran's base salary (at the rate in effect
on
the date of termination) and (ii) the Annual Bonus, if declared, in the year
prior to the Change of Control. However, if the severance payment owed to Mr.
Haran, plus any other payments or benefits, either cash or non-cash, that Mr.
Haran has the right to receive from NexCen would constitute an “excess parachute
payment” (as defined in Section 280G of the Internal Revenue Code of 1986), then
his severance will be reduced to the largest amount that will not result in
receipt by Mr. Haran of an “excess parachute payment.”
During
the term of employment and for two years thereafter, or one year if Mr. Haran's
employment is terminated without Cause or if he resigns for Good Reason, Mr.
Haran's has agreed not to compete with NexCen. In addition, for two years
following the term of employment, Mr. Haran has agreed not to solicit any
customer or supplier to cease doing business with NexCen, or to solicit or
hire
any employee of NexCen or any of its subsidiaries.
Charles
A. Zona
In
December 2006, Mr. Zona joined the Company as Executive Vice President, Brand
Management and Licensing. Prior to his appointment, Mr. Zona worked with the
Company as a consultant since November 2006.
Pursuant
to the terms of the employment agreement, Mr. Zona will receive an initial
annual base salary of $300,000, subject to annual review and upward adjustments
(but not decreases), as well as customary employee perquisites and benefits.
Mr.
Zona will also be eligible to receive a performance-based bonus pursuant to
the
2006 Management Bonus Plan based on achieving annual performance goals
recommended by the President and Chief Executive Officer and subject to review
and confirmation by the Compensation Committee or board of
directors.
On
December 11, 2006, as contemplated by the employment agreement, Mr. Zona was
granted options to purchase a total of 250,000 shares of the Company's common
stock pursuant to the terms of the Company's 2006 Equity Incentive Plan. See
“Outstanding Equity Awards at Fiscal Year-End” table for details of Mr. Zona's
stock options. Under Mr. Zona's employment agreement, if his employment with
the
Company is terminated without “Cause” (as defined in the employment agreement),
or if he resigns for “Good Reason” (as defined in the employment agreement), or
if a Change of Control (as defined in the employment agreement) occurs, all
unvested options will immediately vest and become fully
exercisable.
The
initial term of the employment agreement is three years, and it renews
automatically for one-year periods, unless either party gives the other party
90
days prior written notice of a decision not to renew. If the Company terminates
Mr. Zona's employment (i) without Cause, or (ii) if Mr. Zona resigns for Good
Reason, or (iii) if the Company fails to renew the term, Mr. Zona will be
entitled to receive (1) any unpaid base salary including any declared but unpaid
annual bonus and (2) an amount equal to his base salary (at the rate then in
effect) for a six-month period. Mr. Zona also will be entitled to continue
to
participate in the Company's group medical plan on the same basis as he
previously participated or receive payment of, or reimbursement for, COBRA
premiums for a one-year period following his termination, subject to termination
of coverage if a successor employer provides him with health
insurance.
Notwithstanding
the foregoing, if Mr. Zona's employment is terminated within one year following
a Change of Control by the Company without Cause or by Mr. Zona with Good
Reason, Mr. Zona shall be entitled to receive the same severance as described
in
the preceding paragraph, however, the amount of severance will be changed to
an
amount equal to $100 less then two times the sum of (i) Mr. Zona's base salary
(at the rate then in effect) and (ii) the annual bonus paid to Mr. Zona in
the
year prior to such Change in Control. However, if the lump sum severance owed
to
Mr. Zona would constitute an “excess parachute payment” (as defined in Section
280G of the Internal Revenue Code of 1986), then his severance will be reduced
to the largest amount that will not result in receipt by Mr. Zona of an “excess
parachute payment.”
During
the term of employment and for one year thereafter, or six months if Mr. Zona's
employment is terminated without Cause or if he resigns for Good Reason, Mr.
Zona has agreed not to compete with the Company. In addition, for one year
following the term of employment, Mr. Zona has agreed not (i) to solicit, induce
or attempt to induce any customer, supplier, licensee, or other business
relation of the Company or any of its subsidiaries to cease doing business
with
the Company or any of its subsidiaries, (ii) to solicit, induce or attempt
to
induce any employee of the Company or any of its subsidiaries to terminate
such
employee's employment with the Company or (iii) in any way interfere with the
relationship between any customer, supplier, licensee, employee or business
relation and the Company or any of its subsidiaries.
Employment
Agreements for Former Chief Executive Officer and Former Chief Financial
Officer
David
S. Oros
On
May 5,
2006, we entered into a new employment agreement with Mr. Oros to provide for
Mr. Oros' continued part-time employment by NexCen if he ceased to serve as
NexCen's chief executive officer following the occurrence of a “Trigger Event”
(as such term is defined in his restricted stock grant agreement). As a result
of the acquisition of UCC in June 2006, the board of directors determined that
a
Trigger Event had occurred. As a result, Mr. Oros is continuing employment
with
us for up to a three-year period at a base salary of $200,000 per year. Under
the terms of this arrangement, Mr. Oros is not required to devote more than
250
hours per year to NexCen. In addition, if, at any time, Mr. Oros' employment
is
terminated by NexCen without “Cause” (as defined in his existing employment
agreement) or because of his death or “Disability” (as defined in his existing
employment agreement), he will receive a lump-sum severance payment equal to
$600,000, less any salary paid to him since June 2006. In the event of such
a
termination, Mr. Oros also is entitled to continue receiving group health and
medical benefits for up to three years following termination of his employment.
Severance payments are to be paid on a schedule that complies with the
requirements of Section 409A of the Internal Revenue Code of 1986, as amended.
In the amendment, Mr. Oros also has agreed to a non-competition
covenant.
On
May 5,
2006, we also granted 150,000 shares of restricted stock to Mr. Oros, which
is
governed by the terms of his restricted stock grant agreement. This grant was
made pursuant to the NexCen's 1999 Equity Incentive Plan. Mr. Oros' shares
vest
in three equal annual installments of 50,000 shares on each of the first three
anniversaries on the date of the Trigger Event that occurred in June 2006,
subject to Mr. Oros' continued employment with NexCen on each vesting date.
In
addition, all otherwise unvested restricted shares will vest on an accelerated
basis upon the occurrence of a “Change of Control” (as defined in the 1999
Equity Incentive Plan), or upon termination of employment by NexCen without
“Cause,” death or “Disability,” or upon resignation for “Good Reason” (with all
such terms as defined in the restricted stock grant agreement). Any shares
that
are unvested on May 5, 2013 will be forfeited, and unvested shares also will
be
forfeited upon a termination by NexCen of employment for “Cause” or resignation
without “Good Reason.”
David
C. Reymann
On
May 5,
2006, we entered into a new employment agreement with Mr. Reymann to provide
that all of his outstanding unvested options and restricted stock would vest
automatically upon the occurrence of a Trigger Event, which occurred upon the
acquisition of UCC in June 2006. In addition, Mr. Reymann's severance
arrangement was revised so that if his employment is terminated by NexCen
without “Cause” (as defined in his existing employment agreement), his Death or
Disability (as defined in his existing employment agreement) or if he terminated
his employment for “Good Reason” (as defined in the amendment), he would be
entitled to receive a lump-sum severance payment equal to the greater of (a)
two-times his then-current annual salary or (b) $360,000. In such event, Mr.
Reymann also would be entitled to continue receiving group health and medical
benefits for two years following termination of his employment. Severance
payments are to be paid on a schedule that complies with the requirements of
Section 409A of the Internal Revenue Code of 1986, as amended. In the amendment,
Mr. Reymann also agreed to extend the duration of the non-competition and
non-solicitation covenants in his existing employment agreement from one to
two
years following termination of his employment with NexCen. Upon the hiring
of
Mr. Meister as Chief Financial Officer in September 2006, Mr. Reymann became
a
financial officer of the company and continued to provide services to the
company on a transitional basis until December 15, 2006. At the end of the
transition period, Mr. Reymann received the severance benefits described above
based on his right to terminate for “Good Reason” as a result of no longer
serving as the Company's chief financial officer.
On
May 5,
2006, we also granted 50,000 shares of restricted stock to Mr. Reymann which
vested upon the Company's acquisition of UCC on June 6, 2006. See “Grants of
Plan-Based Awards” table for details of Mr. Reymann's restricted stock
grant.
Potential
Payments Upon Termination or Change-of-Control
As
noted
above under “Employment Agreements,” we have entered into employment agreements
with each of our named executive officers and Mr. Haran. These agreements
provide for certain payments and other benefits if a named executive officer's
or Mr. Haran's employment with us is terminated under circumstances specified
in
his agreement, including a “Change of Control” of the Company. A named executive
officer's rights upon the termination of his or her employment will depend
upon
the circumstances of the termination.
The
receipt of the payments and benefits to the named executive officers and Mr.
Haran under their employment agreements are generally conditioned upon their
complying with customary non-solicitation, non-competition, confidentiality,
non-interference and non-disparagement provisions. By the terms of such
agreements, the executives acknowledge that a breach of some or all of the
covenants described herein will entitle us to injunctive relief restraining
the
commission or continuance of any such breach, in addition to any other available
remedies.
The
following table provides the term of such covenants following the termination
of
employment as it relates to each named executive officer, Mr. Haran and our
former chief executive officer:
Covenant
|
|
Robert
D'Loren
|
|
David
B. Meister
|
|
James
Haran
|
|
Charles
Zona
|
|
David
Oros
|
|
|
|
|
|
|
|
|
|
|
|
Confidentiality
|
|
Employment
term and
thereafter
|
|
Employment
term and
thereafter
|
|
Employment
term and
thereafter
|
|
Employment
term and
thereafter
|
|
Indefinitely
|
|
|
|
|
|
|
|
|
|
|
|
Non-solicitation
|
|
Employment
term and
24
months thereafter
|
|
Employment
term and
24
months thereafter
|
|
Employment
term and
24
months thereafter
|
|
Employment
term and
12
months thereafter
|
|
Employment
term and
6
months thereafter
|
|
|
|
|
|
|
|
|
|
|
|
Non-competition
|
|
Employment
term and
24
months thereafter
|
|
Employment
term and
24
months thereafter
|
|
Employment
term and
24
months thereafter
|
|
Employment
term and
12
months thereafter
|
|
Employment
term and
6
months thereafter
|
|
|
|
|
|
|
|
|
|
|
|
Non-interference
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
Non-disparagement
|
|
Indefinitely
|
|
Indefinitely
|
|
Indefinitely
|
|
Indefinitely
|
|
N/A
|
Termination
Payments (Other than in Connection with a
Change-of-Control)
The
table
below includes a description and the amount of estimated payments and benefits
that would be provided by us (or our successor) to each of the named executive
officers, Mr. Haran and our former chief executive officer under each employment
agreement, assuming that a termination circumstance occurred as of December
31,
2006 and a “Change of Control” had not occurred. See “Employment Agreements”
included above for additional details for the named executive officers, Mr.
Haran and our former chief executive officer.
|
|
|
|
Estimated
Amount of Termination Payment to:
|
|
Termination
Event
|
|
Type
of Payment
|
|
Robert
D'Loren
|
|
David
B. Meister
|
|
James
Haran
|
|
Charles
Zona
|
|
David
Oros
|
|
Termination
for Cause,
death
or disability
|
|
|
Payment
of accrued but unused
vacation
time
|
|
$
|
28,835
|
|
$
|
5,240
|
|
$
|
10,091
|
|
|
-
|
|
$
|
18,269
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
without Cause or by
executive
for Good Reason
|
|
|
Lump
Sum
Severance
Payment
|
|
$
|
1,812,500
|
|
$
|
225,000
|
|
$
|
562,500
|
|
$
|
150,000
|
|
$
|
483,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
without Cause or by
executive
for Good Reason
|
|
|
Pro
rata portion
of
Bonuses (1)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death,
termination without Cause, or
termination
by
executive
for Good Reason
|
|
|
Continued
coverage under medical,
dental,
hospitalization and life
insurance
plans (2)
|
|
$
|
80,065
|
|
$
|
11,202
|
|
$
|
11,202
|
|
$
|
11,202
|
|
$
|
27,073
|
|
(1)
|
The
bonuses payable upon a termination event are based on the actual
bonus
paid in the prior year. Since no bonuses were paid in the prior year,
no
amount is shown here.
|
(2)
|
Calculated
at current insurance premium rates in effect at December 31, 2006
for the
period of time of the benefit:
Robert
D'Loren - 2 years
David
Meister - 1 year
James
Haran - 1 year
Charles
Zona - 1 year
David
Oros - approximately 2.5 years
|
Termination
in Connection with a Change of Control
The
employment agreements with each of Messrs. D'Loren, Meister, Haran and Zona
provide that, if, within twelve months following a “Change of Control,” their
employment is terminated without “Cause” or they terminate their employment for
“Good Reason” as all such terms are defined in each employment agreement, we are
obligated to make a lump-sum severance payment. A “Change of Control” is defined
in each employment agreement by reference to our 1999 Equity Incentive Plan,
which is defined to include a change in majority of our board of directors,
consummation of certain mergers, the sale of all or substantially all of our
assets or the acquisition of at least 80% of the undiluted total voting power
of
our then-outstanding securities. In addition, if within 12 months following
a
change of control, our named executive officers or Mr. Haran are terminated
without “Cause” or they terminate their employment for “Good Reason,” then all
unvested stock options, shares of restricted stock and other equity awards
shall
vest immediately, and remain exercisable for the lesser of 180 days after
termination and the remaining term of the applicable grant. See “Employment
Agreements” included above for additional details regarding Change of Control
payments.
For
Mr.
D'Loren, the severance payment is equal to $100 less than three times the sum
of
Mr. D'Loren's base salary plus a bonus amount calculated as the percentage
of
the bonus pool that Mr. D'Loren received in the prior fiscal year multiplied
times five percent of the annualized net income for the quarter immediately
preceding the executive's separation. For each of Messrs. Meister, Haran and
Zona, the separation amount is calculated the same as for Mr. D'Loren, except
that the amount is multiplied times two. For each of our named executive
officers and Mr. Haran, in the event that the foregoing calculation, together
with all other can and non-cash amounts that the executive has the right to
receive from us would result in the severance payment being treated as an
“excess parachute payment” within the meaning of Section 280G of the Internal
Revenue Code, then the payment is reduced automatically to the largest amount
that will not result in the payment being treated as an “excess parachute
payment.” Since this formula is intended to avoid the lump sum being treated as
a parachute payment subject to an excise tax under the tax code. Accordingly,
we
do not provide for any “gross-up” payments to cover federal excise taxes in the
event that the severance payments were treated as a parachute
payment.
The
employment agreement with Mr. Oros' provides that if Mr. Oros' employment is
terminated without “Cause” (as defined in his existing employment agreement), he
will receive a lump-sum severance payment equal to $600,000, less any salary
paid to him since June 2006. In the event of such a termination, Mr. Oros also
is entitled to continue receiving group health and medical benefits for up
to
three years following termination of his employment.
The
following table quantifies the estimated maximum amount of payments and benefits
under our employment agreements and agreements relating to awards granted under
our equity incentive and stock option plans to which the named executive
officers would be entitled upon termination of employment if we terminated
their
employment without cause on December 31, 2006, assuming a Change of Control
occurred on that date. We have assumed that these payments would not result
in
the aggregate severance payments being treated as an “excess parachute payment,”
so we therefore have not reduced the aggregate amount calculated under the
base
formula.
Name
|
|
Cash
Severance
Payment
($)
|
|
Continuation
of
Medical/Welfare
Benefits (Present Value)
($)(1)
|
|
Value
of Accelerated
Vesting
of Equity
Awards
($)(2)
|
|
Total
Termination
Benefits
($)
|
|
Robert
W. D'Loren
|
|
$
|
2,249,900
|
|
$
|
70,518
|
|
$
|
2,745,308
|
|
$
|
5,065,726
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
B. Meister
|
|
$
|
449,900
|
|
$
|
10,479
|
|
$
|
332,806
|
|
$
|
793,185
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
Haran
|
|
$
|
749,900
|
|
$
|
10,479
|
|
$
|
567,995
|
|
$
|
1,328,374
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles
Zona
|
|
$
|
599,900
|
|
$
|
10,479
|
|
$
|
518,947
|
|
$
|
1,129,326
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
Oros
|
|
$
|
483,333
|
|
$
|
27,073
|
|
$
|
426,545
|
|
$
|
936,951
|
|
(1)
|
Calculated
at the present value of insurance premiums to be paid over the benefit
period.
|
(2)
|
This
amount represents the unamortized portion of the expense related
to each
respective named executive officer's and Mr. Haran's equity awards
as of
December 31, 2006.
|
Director
Compensation
The
following table sets forth compensation information for 2006 for each member
of
our board of directors who is not also an employee. Directors who are employees
(Messrs. D'Loren and Oros) do not receive additional compensation for serving
on
the board. See “Summary Compensation” table and “Grants of Plan-Based Awards”
table for disclosures related to Messrs. D'Loren and Oros.
Name
|
|
Fees
Earned
or
Paid
in
Cash
($)
|
|
Stock
Awards
($)
|
|
Option
Awards
($)
|
|
Non-Equity
Incentive
Plan Compensation
($)
|
|
Change
in
Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings
|
|
All
Other
Compensation
($)
|
|
Total
($)
|
|
James
T. Brady
|
|
$
|
54,500
|
(1)
|
|
-
|
|
$
|
37,020
|
|
|
-
|
|
|
-
|
|
|
-
|
|
$
|
91,520
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jack
B. Dunn, IV
|
|
$
|
33,000
|
(2)
|
|
-
|
|
$
|
37,020
|
|
|
-
|
|
|
-
|
|
|
-
|
|
$
|
70,020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward
J. Mathias
|
|
$
|
30,000
|
(3)
|
|
-
|
|
$
|
37,020
|
|
|
-
|
|
|
-
|
|
|
-
|
|
$
|
67,020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jack
Rovner
|
|
$
|
8,000
|
(4)
|
|
-
|
|
$
|
10,642
|
|
|
-
|
|
|
-
|
|
|
-
|
|
$
|
18,642
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Truman
T. Semans
|
|
$
|
42,000
|
(5)
|
|
-
|
|
$
|
10,642
|
|
|
-
|
|
|
-
|
|
|
-
|
|
$
|
52,642
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
George
Stamas
|
|
$
|
27,500
|
(6)
|
|
-
|
|
$
|
37,020
|
|
|
-
|
|
|
-
|
|
|
-
|
|
$
|
64,520
|
|
The
grants of non-qualified options to purchase 25,000 shares given to the
non-management directors in 2006 had a grant date fair value of $57,713
each.
(1)
|
Includes
a $20,000 annual retainer, $10,500 in board attendance fees, a $12,500
retainer as chairman of the Audit Committee and $11,500 in Audit
Committee
meeting fees. Mr. Brady has been the chairman and a member of the
Audit
Committee throughout the fiscal year ended December 31,
2006.
|
|
|
(2)
|
Includes
a $20,000 annual retainer, $10,500 in board attendance fees and a
$2,500
retainer as chairman of the Nominating Committee. Mr. Dunn has been
the
chairman of the Nominating Committee throughout the fiscal year ended
December 31, 2006.
|
|
|
(3)
|
Includes
a $20,000 annual retainer, $7,500 in board attendance fees and a
$2,500
retainer as chairman of the Compensation Committee. Mr. Mathias has
been
the chairman of the Compensation Committee throughout the fiscal
year
ended December 31, 2006 and a member of the Audit Committee since
October
31, 2006. Mr. Mathias' amount does not include any Audit Committee
meeting
fees.
|
|
|
(4)
|
Includes
$3,000 in board attendance fees. Mr. Rover was elected to the board
of
directors on October 31, 2006 and consequently was paid $5,000 which
represents a pro rata amount of the $20,000 annual retainer for services
provided in November and December of 2006.
|
|
|
(5)
|
Includes
a $20,000 annual retainer, $10,500 in board attendance fees and $11,500
in
Audit Committee meeting fees. Mr. Semans has been a member of the
Audit
Committee throughout the fiscal year ended December 31,
2006.
|
|
|
(6)
|
Includes
a $20,000 annual retainer and $7,500 in board attendance
fees.
|
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None
of
the members of our Compensation Committee is or has ever been an officer or
employee of NexCen or any of its subsidiaries. None of our executive officers
serve as a member of the board of directors or a Compensation Committee of
any
entity that has one or more executive officers serving on our board of directors
or our Compensation Committee.
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Exchange Act requires our officers (as defined in regulations
issued by the SEC) and directors, and persons who own more than ten percent
of
our common stock, to file with the SEC initial reports of ownership and reports
of changes in ownership of our common stock (including options and warrants
to
acquire common stock). Officers, directors, and greater than ten percent
stockholders are required by SEC regulation to furnish us with copies of all
Section 16(a) forms they file.
Based
solely on a review of the copies of such reports of ownership received by us
and
certifications from our executive officers and directors, we believe that during
fiscal year 2006 all filing requirements applicable to our executive officers,
directors, and such greater than ten percent stockholders were complied with
on
a timely basis, except for a late report on Form 4 by each of Messrs. Oros
and
Reymann filed on May 16, 2006 and May 18, 2006 reporting the grant of 150,000
and 50,000 shares of restricted stock made to Messrs. Oros and Reymann,
respectively, on May 5, 2006 under our 1999 Equity Incentive Plan.
STOCK
PERFORMANCE GRAPH
As
part
of disclosure requirements mandated by the SEC, we are required to provide
a
comparison of the cumulative total stockholder return on our common stock with
that of a broad equity market index and either a published industry index or
a
peer group index.
The
following graph provides a comparison of the cumulative total stockholder return
on NexCen’s common stock since December 31, 2001 with the cumulative total
return of the Nasdaq Global Market Index, and the Bloomberg REIT Mortgage Index,
or the BBG REIT Mortgage Index, a published industry index of real estate
investments trusts engaged in the business of mortgage investment, and a Peer
Group Index of companies with market capitalizations that fall in a range of
$250 million to $1 billion. Because the company exited the mortgage backed
securities business in 2006, the BBG REIT Mortgage Index is no longer relevant
to the company and will not be used the future.
CUMULATIVE
TOTAL RETURN COMPARISON
|
|
2001
|
|
2002
|
|
2003
|
|
2004
|
|
2005
|
|
2006
|
|
NEXCEN
BRANDS
|
|
$
|
100.00
|
|
$
|
40.87
|
|
$
|
51.63
|
|
$
|
36.30
|
|
$
|
36.09
|
|
$
|
78.59
|
|
BBGREIT
MORTGAGE INDEX
|
|
$
|
100.00
|
|
$
|
149.17
|
|
$
|
233.21
|
|
$
|
326.07
|
|
$
|
255.72
|
|
$
|
304.89
|
|
NASDAQ
MARKET INDEX
|
|
$
|
100.00
|
|
$
|
69.75
|
|
$
|
104.88
|
|
$
|
113.70
|
|
$
|
116.19
|
|
$
|
128.12
|
|
PEER
GROUP INDEX
|
|
$
|
100.00
|
|
$
|
76.61
|
|
$
|
110.45
|
|
$
|
122.38
|
|
$
|
119.20
|
|
$
|
136.24
|
|
This
graph assumes that $100 was invested on December 31, 2001 in NexCen’s common
stock and in each of the above indices with reinvestment of any dividends.
The
cumulative total returns indicated in the graph are not necessarily indicative
and are not intended to suggest future cumulative total returns.
This
graph shall not be deemed to be incorporated by reference into any prior or
subsequent filing by NexCen under the Securities Act of 1933 or the Securities
Exchange Act of 1934.
AUDIT
COMMITTEE REPORT
The
role
of the Audit Committee is to assist the board of directors in its oversight
of
NexCen's financial reporting process in accordance with its charter. Management
of NexCen is primarily responsible for the preparation, presentation and
integrity of NexCen's financial statements, accounting, and financial reporting
principles, and internal controls and procedures designed to assure compliance
with accounting standards and applicable laws and regulations. The independent
accountants are responsible for auditing NexCen's financial statements in
accordance with generally accepted auditing standards and expressing an opinion
as to their conformity with generally accepted accounting principles. The
independent accountants have free access to the Audit Committee to discuss
any
matters they deem appropriate.
During
fiscal year 2006, the Audit Committee discussed with NexCen's independent
accountants the overall scope and plans for their respective audits. The Audit
Committee also met periodically with the independent accountants, with and
without management present, to discuss the results of their audit findings,
the
overall quality of NexCen's financial reporting and their evaluation of NexCen's
internal control over financial reporting. The Audit Committee also reviewed
NexCen's critical accounting policies and practices and alternative treatments
of financial information during its discussions with the independent
accountants.
In
fulfilling its oversight responsibilities, the Audit Committee has considered
and discussed with management and the independent auditors, the quality and
acceptability of NexCen's financial reporting and controls and the audited
financial statements included in the Annual Report on Form 10-K for the year
ended December 31, 2006. The Audit Committee also discussed with NexCen's
independent auditors the results of the annual audit and other matters required
to be communicated to the Audit Committee by the independent auditors under
generally accepted auditing standards, applicable law or listing standards,
including matters required to be discussed by Statement on Auditing Standards
No. 61, Communication with Audit Committees, as currently in effect. Finally,
the Audit Committee has discussed with KPMG LLP, the independent auditors'
independence from management and NexCen, including the matters contained in
the
written disclosures required pursuant to Rule 3600T of the Public Company
Accounting Oversight Board, which adopted on an interim basis Independence
Standards Board Standard No. 1, Independence Discussions with Audit Committees,
as currently in effect, which was delivered to the Audit Committee in written
form. The Audit Committee also considered whether the provision of non-audit
services by the independent auditors is compatible with maintaining the
auditors' independence.
Based
upon the reports and discussions described in this report, the audit committee
recommended to the board of directors that the audited financial statements
be
included in NexCen's Annual Report on Form 10-K for the year ended December
31,
2006 filed with the SEC. The Audit Committee has also recommended to
stockholders the reappointment of KPMG LLP, as the independent registered public
accounting firm to audit NexCen's consolidated financial statements for fiscal
year 2007.
This
Audit Committee report shall not be deemed "soliciting material," to be "filed"
with the SEC, subject to Regulation 14A or 14C or to the liabilities Section
18
of the Exchange Act, except to the extent we specifically request that the
information be treated as soliciting material. This report shall not be deemed
incorporated by reference in any document previously or subsequently filed
with
the SEC that incorporates by reference all or any portion of this proxy
statement, unless this report is specifically incorporated by
reference.
AUDIT
COMMITTEE OF THE BOARD OF DIRECTORS
James
T.
Brady (Chairman)
Truman
T.
Semans
Edward
J.
Mathias
Certain
Relationships and Related Party Transactions
We
have
engaged in the following transactions or there are currently proposed
transactions with the following persons:
|
|
directors
or executive officers;
|
|
|
|
|
|
beneficial
owners of 5% or more of NexCen’s common stock;
|
|
|
|
|
|
immediate
family members of the above; and
|
|
|
|
|
|
entities
in which the above persons have substantial
interests.
|
The
Company receives legal services from Kirkland & Ellis LLP, which is
considered a related party because a partner at that firm, George P. Stamas,
is
a member of the Company’s board of directors. For the years ended December 31,
2006, 2005 and 2004 expenses related to Kirkland & Ellis LLP were
approximately $1.7 million, $640,000, and $2.1 million, respectively. For the
years ended December 31, 2006 and 2005, the Company had outstanding payables
due
to Kirkland & Ellis LLP of approximately $492,000 and $45,000,
respectively.
The
Company has entered into an agreement with Marvin Traub Associates, Inc., an
entity owned by Mr. Traub, to help the Company identify, approach, and negotiate
a deal with a premier U.S. based big box retail chain so that such retailer
might joint venture with, or purchase a license from the Company to open
MaggieMoo’s ice cream locations within their stores. Marvin Traub Associates,
Inc. received a one-time retainer fee of $25,000 upon the agreement’s execution.
If the Company is successful in consummating a relationship with a third party,
Marvin Traub Associates, Inc. will receive an additional $100,000 success fee.
Procedures
for Approval of Related Party Transactions
The
Company’s Code of Ethics, applicable to all directors, officers, and employees,
sets forth policies to address potential related party transactions. If a
director or officer believes any material transaction or relationship could
reasonably be expected to give rise to a conflict of interest, the director
or
officer must disclose the potential conflict to the Company’s Audit Committee.
The Audit Committee, pursuant to its charter, reviews and pre-approves all
potential conflicts of interest and all related party transactions.
CORPORATE
GOVERNANCE INFORMATION
Stockholders
can access NexCen’s corporate governance information, including NexCen’s Code of
Ethics and the charters of the Audit Committee, Compensation Committee,
Nominating Committee and Corporate Governance Committee, at NexCen’s website,
www.nexcenbrands.com,
the
content of which website is not incorporated by reference into, or considered
a
part of, this document.
COMMUNICATING
WITH THE BOARD OF DIRECTORS
In
order
to communicate with the board of directors as a whole, with non-management
directors, or with specified individual directors, correspondence may be
directed to the Secretary at 1330 Avenue of the Americas, 34th Floor, New York,
NY 10019, or at 212-277-1100.
Under
NexCen’s bylaws, stockholders may propose business to be brought before an
annual meeting. In order for a stockholder to submit a proposal for
consideration at NexCen’s annual meeting, the stockholder must fulfill the
requirements set forth in our bylaws and notify the Secretary no less than
45
nor more than 90 days prior to the first anniversary of the proxy statement
for
the preceding year’s annual meeting. For each stockholder proposal, the
stockholder must provide NexCen with: (i) a brief description of the business
desired to be brought before the meeting; (ii) the reasons for bringing such
business and any material interest in such business of such stockholder and
the
beneficial owner, if any, on whose behalf the proposal is made; and (iii) the
class and number of shares of NexCen which are beneficially owned and of record
for such stockholder and such beneficial owner, if applicable. The board of
directors will evaluate all proposals submitted by stockholders.
If
you
intend to propose any matter for action at our 2008 annual meeting of
Stockholders and wish to have the proposal included in our proxy statement,
you
must submit your proposal to David B. Meister, Secretary, NexCen at 1330 Avenue
of the Americas, 34th Floor, New York, NY 10019, or at (212) 277-1100, not
later
than April 3, 2008. Please note that proposals must comply with all of the
requirements of Rule 14a-8 under the Exchange Act of 1934 as well as the
requirements of our Certificate of Incorporation and bylaws. Only then can
we
consider your proposal for inclusion in our proxy statement and proxy relating
to the 2008 annual meeting. We will be able to use proxies you give us for
the
next year’s meeting to vote for or against any stockholder proposal that is not
included in the proxy statement at our discretion unless the proposal is
submitted to us on or before June 17, 2008.
NOTE
REGARDING FORWARD-LOOKING STATEMENTS
This
proxy statement contains “forward-looking statements,” as such term is used in
the Securities Exchange Act of 1934, as amended. Forward-looking statements
are
based on current expectations and assumptions, which are subject to risks and
uncertainties. They are not guarantees of future performance or results.
NexCen’s actual results, performance, or achievements could differ materially
from the results expressed in, or implied by, these forward-looking statements.
As a result, readers should not place undue reliance on these forward-looking
statements. These risks, uncertainties and other factors include, but are not
limited to:
|
·
|
we
may not be successful in implementing the our new IP
strategy;
|
|
·
|
we
may not be able to acquire IP or IP centric companies or finance
or
exploit them on terms that are acceptable to
us;
|
|
·
|
we
are likely to face substantial competition in seeking to acquire
and
market desirable IP and IP centric companies, and competitors may
have
substantially greater resources than we
do;
|
|
·
|
we
may not be successful in operating or expanding our acquired businesses
or
integrating them into an overall IP business
strategy;
|
|
·
|
we
may not be able to borrow desired amounts at desired times under
our
master loan agreement;
|
|
·
|
we
will be subject to risks associated with incurring indebtedness,
including
interest expense and the obligation to satisfy covenants contained
in our
master loan agreement, and these could have a negative impact on
our
business and results and could reduce our flexibility in some
circumstances;
|
|
·
|
risks
associated with marketing and licensing our acquired trademarks and
with
successfully developing and marketing new products particularly in
light
of rapidly changing fashion and market
trends;
|
|
·
|
risks
associated with the ability of licensees and franchisees to successfully
market and sell branded products,
competition;
|
|
·
|
we
may not be able to realize value from our accumulated tax loss carry
forwards, because of a failure to generate sufficient taxable earnings,
regulatory limits or both;
|
|
·
|
general
regional and national economic conditions;
and
|
|
·
|
loss
or departure of one or more members of our senior
management.
|
When
used
in this proxy statement, the words “anticipate,” “believe,” “estimate,”
“intend,” “may,” “will,” and “expect” and similar expressions as they relate to
NexCen or our management are intended to identify such forward-looking
statements. We claim the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995
for
all forward-looking statements.
While
it
is difficult to identify each factor and event that could affect our results,
there are a number of important factors that could cause actual results to
differ materially from those indicated by the forward-looking statements and
as
a result could have an adverse impact on our business, financial condition,
and
operating results.
Factors
that could cause or contribute to such differences include those discussed
throughout this proxy statement, in Item 1A of our Annual Report on Form 10-K
for the year ended December 31, 2006 and our other periodic reports filed with
the Securities and Exchange Commission. NexCen undertakes no obligation to
update or revise any forward-looking statements, whether as a result of new
information, future events, or otherwise.
AVAILABLE
INFORMATION
We
file
annual, quarterly and current reports, proxy statements and other information
with the Securities and Exchange Commission. You may read and copy any document
we file with the SEC at the SEC’s facilities located at 100 F Street, NE,
Washington, D.C. 20549 or at the offices of the National Association of
Securities Dealers, Inc. located at 1735 K Street, N.W., Washington, D.C. 20006.
Please call the SEC at 1-800-SEC-0330 for further information on the SEC’s
public reference rooms. Our SEC filings also are available to the public at
the
SEC’s website at www.sec.gov
or on
our website at www.nexcenbrands.com.
Our
financial statements for the year ended December 31, 2006 are included in the
2006 Annual Report, which we are sending to our stockholders at the same time
as
this proxy statement. If you have not received the 2006 Annual Report, please
call our Investor Relations department at 212-277-1119,
and we
will send a copy to you.
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
The
information incorporated by reference in this proxy statement as described
below
is considered to be a part of this proxy statement, except for any information
that is modified or superseded by information that is included directly in
this
proxy statement or by a document subsequently filed with the SEC. Any statement
so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this proxy statement.
This
proxy statement incorporates by reference the document (or portions thereof)
listed below that NexCen has previously filed with the SEC. They contain
important information about NexCen and its financial condition.
NexCen’s
SEC Filings
|
|
Period
|
Annual
Report on Form 10-K/A
|
|
December
31, 2006
|
Quarterly
Report on Form 10-Q
|
|
March
31, 2007
|
Also
incorporated by reference are additional documents that NexCen may file with
the
SEC after the date of this proxy statement and prior to the date of the annual
meeting under Section 13(a), 13(c), 14, or 15(d) of the Exchange Act. These
documents include periodic reports, such as Annual Reports on Form 10-K and
Quarterly Reports on Form 10-Q, as well as Current Reports on Form 8-
K.
HOUSEHOLDING
OF PROXY MATERIALS
We
have
adopted a process called “householding” for mailing this proxy statement in
order to reduce printing costs and postage fees. Householding means that
stockholders who share the same last name and address will receive only one
copy
of the proxy statement, unless we receive contrary instructions from any
stockholder at that address. We will continue to mail a proxy card to each
stockholder of record.
If
you
prefer to receive multiple copies of the proxy statement at the same address,
we
will provide additional copies to you promptly upon request. If you are a
stockholder of record, please contact David B. Meister, Chief Financial Officer,
at 1330 Avenue of the Americas, 34th Floor, New York, NY 10019, or at telephone
number 212-277-1100. Eligible stockholders of record receiving multiple copies
of the proxy statement can request householding by contacting us in the same
manner.
If
you
are a beneficial owner, you may request additional copies of the proxy statement
or you may request householding by contacting your broker, bank or
nominee.
PROXY
NEXCEN
BRANDS, INC.
SUBMIT
YOUR PROXY BY TELEPHONE
Have
your
proxy card available when you call Toll-Free 1-800-652-8683 using a touch-tone
phone and follow the simple instructions to record your proxy.
SUBMIT
YOUR PROXY BY INTERNET
Have
your
proxy card available when you access the website www.computershare.com/expressvote
and
follow the simple instructions to record your proxy.
SUBMIT
YOUR PROXY BY MAIL
Please
mark, sign and date your proxy card and return it in the postage-paid envelope
provided or return it to:
Proxy
Services
c/o
Computershare Investor Services
P.O.
Box
43101
Providence,
RI 02940-5067.
If
you vote by telephone or over the Internet, do not mail your proxy
card
PROXY
FOR ANNUAL MEETING OF SEPTEMBER 5, 2007
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The
undersigned hereby appoints Robert D’Loren and David B. Meister, or either of
them, as attorneys-in-fact, with full power of substitution, for and in the
name
of the undersigned, to vote in the manner indicated on the reverse side, and
with discretionary authority as to any other matters that may properly come
before the annual meeting (including, if submitted to the vote of the
stockholders, on a motion to adjourn or postpone the annual meeting to another
time and/or place for the purpose of soliciting additional proxies), all shares
of common stock of NexCen Brands, Inc. which the undersigned is entitled to
vote
at the annual meeting of stockholders of NexCen Brands, Inc. to be held on
September 5, 2007 at the W
Hotel
New York Times Square, 1567 Broadway, New York, NY at 9:30 a.m.,
local
time, or at any adjournment or postponements thereof.
The
Board of Directors recommends a vote “FOR” Proposals 1 and
2.
Please
mark votes as in this example. x
The
undersigned hereby directs this proxy to be voted:
|
1.
|
|
For
the election of directors.
|
|
|
|
|
|
Nominees:
|
James
T. Brady
Robert
W. D’Loren
Paul
Caine
Jack
B. Dunn IV
Edward
J. Mathias
David
S. Oros
Jack
Rovner
George
P. Stamas
Marvin
Traub
|
o
FOR o
AGAINST o
ABSTAIN o
WITHHELD
for all
|
2.
|
|
To
the appointment of KPMG LLP as independent auditors.
|
|
|
|
|
|
|
|
o
FOR o
AGAINST o
ABSTAIN
|
MARK
HERE
FOR ADDRESS CHANGE AND NOTE BELOW o
MARK
HERE
IF YOU PLAN TO ATTEND THE ANNUAL MEETING o
THIS
PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED
FOR EACH OF PROPOSAL 1, AND 2. THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU
SIGN AND RETURN THIS CARD. THIS PROXY CONFERS DISCRETIONARY AUTHORITY RESPECT
TO
MATTERS NOT KNOWN OR DETERMINED AT THE TIME OF THE MAILING OF THE NOTICE OF
THE
ANNUAL MEETING.
The
undersigned acknowledges receipt from NexCen Brands, Inc. prior to the execution
of this proxy of the notice of the annual meeting and the accompanying proxy
statement.
NOTE:
Please sign exactly the name as it appears hereon. Joint owners should each
sign. When signing as an attorney, executor, administrator, trustee or guardian,
give full name and title as such.
Please
sign, date and return promptly in the accompanying envelope.
Signature:
______________________ Date: __________, 2007
Signature:
______________________ Date: __________, 2007