SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
10–K/A
AMENDMENT
NO. 1
ý ANNUAL REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
ACT OF 1934
FOR
THE FISCAL YEAR ENDED DECEMBER 31, 2009
OR
o TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
ACT OF 1934
COMMISSION
FILE NUMBER: 000–27707
NEXCEN
BRANDS, INC.
(EXACT
NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE
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20-2783217
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(State
or other jurisdiction of incorporation or organization)
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(IRS
Employer Identification Number)
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1330
Avenue of the Americas, 34th
Floor, New York, N.Y.
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10019-5400
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(Address
of principal executive offices)
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(Zip
Code)
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(Registrant’s
telephone number, including area code): (212) 277–1100
SECURITIES
REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES
REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, par value
$.01
(Title of
class)
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities
Act. Yes ¨ No x
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes ¨ No x
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ¨ No x
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Website, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).
Yes ¨ No ¨
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S–K is not contained herein, and will not be contained, to the best
of the registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of the Form 10–K or any amendment of this
Form 10–K. ¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large
accelerated filer
|
¨
|
Accelerated
filer
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o
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Non-accelerated
filer
|
¨
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Smaller
reporting company
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x
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act). Yes ¨ No x
The
aggregate market value of the voting and non-voting stock held by non-affiliates
of the registrant was $9,869,307 ($.18 per share) as of June 30,
2009.
As of
April 1, 2010, 56,951,730 shares of the registrant’s common stock, $.01 par
value per share, were outstanding.
DOCUMENTS INCORPORATED BY
REFERENCE
None.
ANNUAL
REPORT ON FORM 10-K/A
FOR
THE YEAR ENDED DECEMBER 31, 2009
INDEX
Explanatory Note
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2
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PART
III
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Item
10
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Directors,
Executive Officers and Corporate Governance
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3
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Item
11
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Executive
Compensation
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7
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Item
12
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Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
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19
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Item
13
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Certain
Relationships and Related Transactions, and Director
Independence
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20
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Item
14
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Principal
Accountant Fees and Services
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21
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PART
IV
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Item
15
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Exhibits,
Financial Statement Schedules
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22
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EXPLANATORY
NOTE
This
Amendment No. 1 to the Annual Report on Form 10-K for the fiscal year ended
December 31, 2009 (this “Form 10-K/A”) of NexCen Brands, Inc. (the “Company,”
“we,” “our,” or “NexCen”), which was originally filed with the Securities and
Exchange Commission (“SEC”) on March 26, 2010, is being filed solely to include
the information required by Part III of Form 10-K pursuant to General
Instruction G(3) of Form 10-K because the Company’s definitive proxy statement
for its 2010 annual meeting will be filed more than 120 days after the end of
the Company’s fiscal year. The original Form 10-K is also amended hereby to
delete the reference on the cover page thereof to the incorporation by reference
of the definitive proxy statement in Part III of such report. In addition, as
required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), this Form 10-K/A also includes the certifications pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”). Since no
financial statements are contained within this Form 10-K/A, we do not include
the certifications pursuant to Section 906 of Sarbanes-Oxley.
Except as
described in this Explanatory Note, no other information in the original Form
10-K is modified or amended hereby, and this Form 10-K/A does not otherwise
reflect events occurring after the original filing date of March 26,
2010.
PART
III
ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Directors
and Executive Officers
The
following table lists the names and ages of NexCen’s incumbent directors and
executive officers. Each of our incumbent directors will continue in office
until the next annual meeting or until his earlier resignation, removal or
death. There are no arrangements or understandings known to us between any of
the individuals listed below and any other person pursuant to which he or she
was or is to be selected as a director or an officer, other than any
arrangements or understandings with directors or officers of NexCen acting
solely in their capacities as such.
Name
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Age
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Position
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David
S. Oros
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50
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Chairman
of the Board
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Kenneth
J. Hall
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52
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Chief
Executive Officer
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Mark
E. Stanko
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48
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Chief
Financial Officer and Treasurer
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|
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Sue
J. Nam
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40
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General
Counsel and Secretary
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Chris
Dull
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37
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President,
NexCen Franchise Management, Inc. (“NFM”)
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|
|
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James
T. Brady
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70
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Director,
Audit Committee (Chairman), Compensation Committee, Nominating/Corporate
Governance Committee (Chairman)
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Paul
Caine
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46
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Director,
Audit Committee, Nominating/Corporate Governance Committee, Strategy
Committee1
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Edward
J. Mathias
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68
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Director,
Audit Committee, Compensation Committee (Chairman), Strategy
Committee
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George
P. Stamas
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60
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Director,
Strategy Committee
(Chairman)
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(1)
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On
February 22, 2010, the Board of Directors established an ad hoc Strategy
Committee, consisting of George P. Stamas (Chairman), Paul Caine and
Edward Mathias, to lead discussions on behalf of the Board of Directors
regarding possible transactions for the maximization of the Company’s
value for its stakeholders.
|
Biographical
Information for Our Directors and Executive Officers
Set forth
below is biographical information for our directors and executive
officers.
David S.
Oros founded the Company in 1996, and currently serves as our Chairman of
the Board of Directors. 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.
Mr. Oros is currently a managing partner for Global Domain Partners, LLC. Other
current directorships of public companies or registered investment
company: Evolving Systems, Inc. Prior directorships held
during the past five years: Broadwing Corporation and uVuMobile,
Inc.
Mr. Oros’
qualifications include having historical knowledge of the Company, broad
experience in business, and knowledge of public and private capital
markets.
James T.
Brady was elected director of the Company on June 28, 2002. Since 2000,
Mr. Brady has served as the Managing Director - Mid-Atlantic, for Ballantrae
International, Ltd., a management consulting firm, 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 received a B.A. from Iona
College. Other current directorships of public companies or
registered investment company: McCormick & Company, Inc.,
Constellation Energy Group, Inc. and T. Rowe Price Group.
Mr.
Brady’s qualifications include having knowledge and experience in accounting and
corporate governance issues, including through 33 years with Arthur Andersen LLP
(including twenty years as an audit partner) and membership on the board and
audit committees of several public companies since 1998.
Paul Caine
was elected director of the Company on September 5, 2007. Since October 2008,
Mr. Caine has served as President and Group Publisher of Time Inc.’s Style and
Entertainment Group overseeing the PEOPLE Group (PEOPLE, People.com, Stylewatch, People en Español, People Country), as well as
Entertainment Weekly,
EW.com., In Style and
Essence. His career at Time Inc.
began in 1989 as an advertising sales representative for PEOPLE. During his tenure at
Time Inc., Mr. Caine has been the Associate Publisher of PEOPLE, Publisher of Teen People, Entertainment Weekly
and PEOPLE, the Group
Publisher of the PEOPLE Group and the President of the Entertainment Group.
Prior to joining Time Inc., Mr. Caine worked for USA Today and J. Walter
Thompson. Mr. Caine received a B.S. in Business Communication from Indiana
University.
Mr.
Caine’s qualifications include having over 20 years of experience in
marketing, media and consumer trends and knowledge in business development and
operations
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
global private equity firm, 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. Other current directorships of public companies
or registered investment company: Brown Advisory Holdings, Inc. and
Cullen Agricultural Holding Corporation. Prior directorships held during the
past five years: Allied Capital Corporation, Victory Acquisition Corp. and
Triple Crown Acquisition Corp.
Mr.
Mathias’ qualifications include having high-level leadership experience in
business, knowledge of public and private capital markets, and contacts with
business and governmental leaders.
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
& 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 of directors 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. 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. Other current directorships of public companies or registered
investment company: FTI Consulting, Inc.
Mr.
Stamas’ qualifications include having over 30 years of experience in corporate
law, including planning and structuring complex business transactions and
counseling corporations and boards of directors on corporate governance matters
and crisis situations.
Kenneth J.
Hall joined the Company on March 25, 2008 as Executive Vice President,
Chief Financial Officer and Treasurer. He was appointed Chief Executive Officer
of the Company on August 15, 2008. Prior to joining the Company, Mr. Hall served
as the Chief Financial Officer and Treasurer of Seevast Corp., a position he
held from April 2005 to February 2008. From December 2003 to March 2005, Mr.
Hall worked as an independent consultant advising companies on strategic and
financial matters. From July 2001 to November 2003, he served as Executive Vice
President, Chief Financial Officer and Treasurer of Mercator Software, Inc. Mr.
Hall holds a B.S. in Finance from Lehigh University and a M.B.A. from Golden
Gate University.
Mark E.
Stanko joined the Company on April 30, 2008 as Chief Financial Officer of
NFM. He was appointed Chief Financial Officer and Treasurer of the
Company on November 12, 2008. Prior to joining the Company, Mr. Stanko most
recently served as Regional Controller for Levitt Corporation, a publicly traded
homebuilding and land development company, from 2006 to 2008. From 2003 to 2006,
Mr. Stanko held the position of Vice President of Finance of KB Home, a publicly
traded homebuilding company. From 2001 to 2003, Mr. Stanko was Director of
Corporate Audit, then the Director of Finance of Pulte Homes, Inc., a publicly
traded homebuilding company. Mr. Stanko began his career at Ernst & Young
LLP where he held positions of increasing responsibility over 16 years. Mr.
Stanko holds a BBA in Accounting from Cleveland State University. He is a
Certified Public Accountant.
Sue J.
Nam joined
the Company on September 24, 2007 as General Counsel. She was
appointed Secretary of the Company on December 6, 2007. Prior to joining the
Company, since 2001, Ms. Nam was Vice President, Corporate Counsel for
Prudential Financial, where she served as Intellectual Property Counsel and
Assistant Corporate Secretary. Prior to that, Ms. Nam was in private practice
with Brobeck Phleger & Harrison LLP in its San Francisco office and Gibson,
Dunn & Crutcher LLP in its New York office. Ms. Nam earned her B.A. in
English and French Literature from Northwestern University and her J.D. from
Yale Law School.
Chris
Dull joined
the Company on February 28, 2007 as Executive Vice President of QSR Franchising
of NFM. On May 22, 2007, he was promoted to President of the QSR Division of
NFM. He then was appointed President of NFM on August 31, 2007 and appointed an
executive officer of NexCen on February 13, 2009. Prior to joining the Company,
Mr. Dull most recently served as the Executive Vice President for Marble Slab
Creamery, Inc. from 2004 to 2007 and served as Vice President of Franchise
Development for Marble Slab Creamery, Inc. from 1999 to 2004. Mr. Dull began his
career in franchise management with Marble Slab Creamery, where he held
positions of increasing responsibility over 13 years. Mr. Dull
received a B.A. from Baylor University.
Corporate
Governance
Standing
Committees of the Board of Directors
Our
bylaws authorize our Board of Directors to appoint one or more committees, each
consisting of one or more directors. The Board of Directors currently has three
standing committees: an Audit Committee, a Nominating/Corporate Governance
Committee and a Compensation Committee, each of which has adopted written
charters that are all currently available on our website.
Audit
Committee
The Audit
Committee’s responsibilities include:
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·
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appointing,
replacing, overseeing and compensating the work of a firm to serve as the
registered independent public accounting firm to audit the Company's
financial statements;
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·
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discussing
the scope and results of the audit with the independent registered public
accounting firm and reviewing with management and the independent
registered public accounting firm the Company's interim and year-end
operating results;
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·
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considering
the adequacy of the Company's internal accounting controls and audit
procedures;
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·
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approving
(or, as permitted, pre-approving) all audit and non-audit services to be
performed by the independent registered public accounting firm;
and
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·
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providing
an avenue of communication among the independent auditors, management,
employees and the Board of
Directors.
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The
members of the Audit Committee are Messrs. Brady, Caine and Mathias, with Mr.
Brady serving as its chairman. The Board of Directors 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
SEC.
The Board
of Directors also determined that Mr. Brady is an audit committee financial
expert, as defined by Item 407 of Regulation S-K, and is independent of
management, as defined by Rule 10A-3(b)(1) of the Exchange Act. We believe that
Mr. Brady is qualified to be an “audit committee financial expert” because he
has the following attributes: (i) an understanding of 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 the Company’s financial statements, and
experience actively supervising one or more persons engaged in such activities,
(iv) an understanding of internal control over financial reporting and (v) an
understanding of audit committee functions. Mr. Brady acquired these attributes
by having held various positions that provided the relevant experience,
including 33 years with Arthur Andersen LLP (including twenty years as an audit
partner) and membership on the audit committees of several public companies
since 1998. Mr. Brady also currently 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.
Nominating/Corporate
Governance Committee
The
Nominating/Corporate Governance Committee's responsibilities
include:
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·
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identifying,
evaluating and recommending nominees to serve on the Board of Directors
and committees of the Board of
Directors;
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·
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conducting
searches for appropriate directors and evaluating the performance of the
Board of Directors and of individual
directors;
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·
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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;
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·
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assessing
the policies, procedures and performance of the Board of Directors and its
committees;
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·
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developing,
evaluating and recommending to the Board of Directors any changes or
updates to the Company’s policies on business ethics, conflicts of
interest and related party
transactions;
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·
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making
recommendations regarding director compensation to the Board of Directors;
and
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·
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overseeing
the Company’s corporate governance procedures and
practices.
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The
members of the Nominating/Corporate Governance Committee are Messrs. Brady and
Caine, with Mr. Brady serving as its chairman.
Compensation
Committee
The
Compensation Committee's responsibilities include:
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·
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reviewing
and approving corporate goals and objectives that are relevant to the
compensation of the chief executive officer and other executive
officers;
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·
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evaluating
the chief executive officer's performance and setting compensation in
light of corporate objectives;
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·
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reviewing
and approving the compensation of the Company's other executive
officers;
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·
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administering
the Company’s stock option and stock incentive plans;
and
|
|
·
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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.
|
The
members of the Compensation Committee are Messrs. Mathias and Brady, with Mr.
Mathias serving as its chairman.
Ad
Hoc Committees of the Board of Directors
Strategy
Committee
On
February 22, 2010, the Board of Directors established an ad hoc Strategy
Committee, consisting of Messrs. Stamas (Chairman), Caine and Mathias. The
Strategy Committee does not have a formal charter. It serves an advisory
function for the Board of Directors regarding possible transactions for the
maximization of the Company’s value for its stakeholders.
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 our subsidiaries. None of our executive officers
serves as a member of the board of directors or a compensation committee of any
entity that had one or more executive officers serving on our Board of Directors
or our Compensation Committee.
Director
Independence
Our Board
of Directors has adopted the following standard for independence:
“Independent director” means a
person other than an executive officer or employee of the Company or any other
individual having a relationship which, in the opinion of the Company's Board,
would interfere with the exercise of independent judgment in carrying out the
responsibilities of a director.
In
connection with, and to assist in making, this determination, the Board has
adopted the definition of independence contained in the NASDAQ listing standards
as our categorical standard of independence. However, even if a director meets
this categorical standard of independence, to conclude that a director is
independent, the Board must also determine that no other relationship exists
that, in the Board’s judgment, “would interfere with the exercise of independent
judgment by that director in carrying out the responsibilities of a
director.”
Each of
our directors in 2009, other than Messrs. Oros and Stamas, qualified as
“independent” in accordance with the Company’s independence standard. In making
their affirmative determination of independence for 2009, 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. Mr. Oros was employed by the Company, and, as such, did not
qualify as an independent director. The Board of Directors determined that Mr.
Stamas should not be considered an independent director in view of the business
relationship between the Company and Kirkland & Ellis LLP, one of the
Company’s outside counsel. Mr. Stamas’ business relationship with the Company is
described in Item 13 under the caption “Certain Related Party Transactions for
2009.” All members of the Audit Committee, Compensation Committee and
Nominating/Corporate Governance Committee are independent
directors.
Other
than as discussed above, 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 director’s independence under the Company’s
standards.
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 2009 all filing requirements applicable to our executive officers,
directors and such greater than ten percent stockholders were complied with on a
timely basis other than the following: a late report on Form 4 for Messrs. Oros,
Brady, Caine, Mathias and Stamas each reporting the grant on November 19, 2009
of 150,000 options to acquire the Company’s common stock. The reports for
Messrs. Oros, Caine, Mathias and Stamas were each filed on November 30, 2009,
and the report for Mr. Brady was filed on December 1, 2009.
Corporate
Governance Policies
We have
adopted Corporate Governance Guidelines, as well as a general code of ethics for
our business and a code of ethical conduct that applies solely to our principal
executive officer, principal financial officer, principal accounting officer,
controller and persons performing similar functions. We also adopted the Policy
and Procedures with respect to Related Persons Transactions. The
Nominating/Corporate Governance Committee is responsible for reviewing and
authorizing waivers from the code of ethics, the code of ethical conduct for
senior financial officers, and the Policy and Procedures with respect to Related
Persons Transactions, and we will file any waivers from, or amendments to, these
codes and policy on our website at www.nexcenbrands.com, the content of which
website is not incorporated by reference into or considered a part of this
document.
No
waivers were reviewed or authorized in 2009. The Company’s Corporate Governance
Guidelines, our general code of ethics, our code of ethical conduct for senior
financial officers, and the Policy and Procedures with respect to Related
Persons Transactions, as well as the charters for our Audit Committee,
Nominating/Corporate Governance Committee and Compensation Committee, are
available on our website. This information is also available in print upon
written request to our corporate secretary at the address of our corporate
headquarters office in New York City.
ITEM
11. EXECUTIVE COMPENSATION
The
following is the Compensation Discussion and Analysis and Compensation Committee
Report.
Compensation
Discussion and Analysis
Overview
In May
2008, the Company disclosed issues related to our debt structure that placed the
very future of the Company in doubt. The Company’s efforts to address the
challenges that we faced led to extensive changes in the composition of our
executive management and a reduction in staff, especially in our New York
office. As a result, the overriding factor in the Company’s compensation
decisions in the latter half of 2008 and in 2009 was to smoothly transition the
management team and to retain certain key executives and employees whom
management and/or the Board of Directors identified as being crucial to the
Company’s turn-around strategy, transition plans and on-going
operations.
In 2009,
we entered into amendments to existing employment agreements of certain of our
executive officers as a means to ensure key executive retention. Each amendment
was negotiated directly with the executive officers by the Company’s Chief
Executive Officer, and in all cases was ultimately reviewed and approved by the
Compensation Committee. The amendments generally provided for cash bonuses (in
the form of quarterly cash bonuses or event specific cash bonuses) and increased
severance payments upon certain specified events. As discussed below under the
caption “Elements of Compensation,” we believe the changes to the employment
agreements were necessary to retain these key executive officers given the
continued doubt as to the Company’s ability to continue as a going concern.
Additional details regarding each named executive officer’s employment
agreements, as amended, are provided below under the caption “Employment
Agreements.”
The
Company’s ultimate goal is to provide an attractive, flexible and market-based
total compensation program tied to performance and aligned with shareholder
interest. However, we believe that our business and strategies must stabilize
and mature before we can fully understand the critical elements to our financial
and operational success for which we can set appropriate metrics for short and
long-term compensation. In that regard, on April 29, 2009, the Board of
Directors formally terminated the 2006 Management Bonus Plan, which was
established before the changes in our business and management team. No bonuses
were paid under such plan since its inception.
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 stock option plans;
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.
Employment
Agreements. Each executive officer of the Company, including
those named in the Summary Compensation Table in this Form 10-K/A, is employed
by the Company pursuant to a written agreement of employment, which was approved
by the Compensation Committee. Each employment agreement separately reflects the
terms that the Compensation Committee believed were appropriate and/or necessary
to retain the services of the particular executive officer, within the framework
of the Company’s compensation policies. All employment agreements entered into
by the Company provide the Company with protection in the form of restrictive
covenants, including non-competition, non-solicitation, and confidentiality
covenants, for the benefit of the Company. The Compensation Committee has
considered the advisability of using employment agreements and determined that
under certain circumstances it is in the best interests of the Company insofar
as it permits the Company to achieve its desired goals of retaining executive
talent and obtaining post employment covenants from executive officers. Some of
the terms of these employment agreements were modified in connection with
changed circumstances of employment. See the section captioned “Employment
Agreements” below for additional information regarding each executive’s
employment agreement.
Process for Approving Equity
Grants. The Compensation Committee administers the Company’s 2006
Long-Term Equity Incentive Plan (the “2006 Plan”), which is the incentive plan
that was approved by our stockholders in October 2006. The Compensation
Committee is required to approve all grants of all awards under that plan, and
has not delegated any grant authority. Under the terms of the 2006 Plan, stock
options are required to be priced at the closing price of the Company’s common
stock on the date of grant. Our long-term incentive plan does not permit the
re-pricing of options. On February 25, 2008, the Compensation Committee
established a policy to grant options on a quarterly basis on the third trading
day after the Company publicly announces its quarterly financial results
following each of the first three fiscal quarters of each year and after annual
financial results following the fourth fiscal quarter of each year. (Previously,
we did not have a policy that addressed the specific issue of whether equity
grants may be approved prior to the release of material information.) From May
2008 to November 2009, during which time the Company was delayed in the filing
of its periodic financial reports with the SEC, we suspended the policy of
granting options on a quarterly basis and instead granted the options on the
date they are approved by the Compensation Committee or as soon thereafter as
permitted under applicable law, regulatory rules or Company policies. We have
since resumed the policy of granting options on a quarterly basis after the
Company publicly announces financial results.
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.
Impact of Tax Policies. The
Compensation Committee takes into account certain tax implications in
determining the amount, form and timing of compensation to our executive
officers, including Section 162(m) of the Internal Revenue Code. 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 $1.0 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 qualifies as performance-based compensation. In 2009, we paid our
chief executive officer less than $15,000 in excess of the limitation on
deductibility (excluding compensation with respect to options that if exercised
at a gain would qualify, we believe, as performance-based compensation). The
Compensation Committee believes that, in light of the insignificant tax impact
of exceeding the limitation on deductibility for one key employee, such
compensation was appropriate.
Elements
of Compensation
For 2009,
the principal components of compensation for our named executive officers
consisted of:
|
·
|
Perquisites
and other personal benefits; and
|
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 previous years, we relied more heavily on
our equity-based awards to attract and retain executive officers and employees.
In light of the decline in our stock price and the doubt as to the Company’s
ability to continue as a going concern, we provided periodic cash bonuses in
2009 to retain certain key executives and employees of the Company, whom
management and/or the Board of Directors identified as being crucial to the
Company’s turn-around strategy, transition plans and on-going operations. We
anticipate that as the Company continues to stabilize, periodic cash bonuses for
executive officers generally will not be a significant part of each person’s
overall annual compensation.
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 salaries for
our named executive officers were determined for each executive at the time of
hire based on negotiations between the new executive, on the one hand, and the
Company, on the other. The Compensation Committee reviews salary levels at least
annually, as well as upon a promotion or other changes 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. We believe equity-based awards provide directors, executive
officers, and employees with incentives to maximize stockholder value and
otherwise contribute to our long-term success. Such awards also allow us to
attract, retain and reward executives and employees, although, as discussed
above, equity-based awards were not as effective a retention tool as in previous
years.
Awards of
stock options and restricted stock are made under our 2006 Plan, which was
approved by our stockholders in October 2006. The Compensation Committee
administers the 2006 Plan and has not delegated any grant authority. 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.
Cash bonuses. We provide cash
bonus compensation to motivate, reward and retain key executives. During 2009,
we provided interim cash bonuses tied to continued employment and/or the
achievement of key transactions and milestones.
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 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 2009, our named executive officers
received a limited amount of perquisites and other personal benefits that we
paid on their behalf. These perquisites and other personal benefits included,
among other things:
|
·
|
Payments
of life, health and/or disability insurance premiums;
and/or
|
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 paid time off, retirement savings plans, and health, disability and
life insurance. In general, these benefits are substantially the same as those
available to all of our employees.
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 2009 and the Company’s 2010 proxy statement. This
Compensation Committee Report is provided by the following independent
directors, who comprise the Compensation Committee:
Edward J.
Mathias (Chairman)
James
Brady
Summary
Compensation Table
The table
below summarizes the total compensation paid to or earned by each of our named
executive officers for the fiscal year ended December 31, 2009 and
2008.
The
Company has no defined benefit plans or actuarial plans, and no non-qualified
deferred compensation plans in which obligations to named executive officers
remain outstanding.
Name and
Principal Position(1)
|
|
Year
|
|
Salary
($)(2)
|
|
|
Bonus
($)(3)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards
($)(4)
|
|
|
Non-Equity
Incentive
Plan
Compensation
($)
|
|
|
Change in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)
|
|
|
All Other
Compensation
($)(5)
|
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kenneth
J. Hall
|
|
2009
|
|
$ |
496,149 |
|
|
$ |
500,000 |
|
|
|
- |
|
|
$ |
35,852 |
|
|
|
- |
|
|
|
- |
|
|
$ |
18,619 |
|
|
$ |
1,050,620 |
|
Chief
Executive
|
|
2008
|
|
$ |
369,102 |
|
|
$ |
375,000 |
|
|
|
- |
|
|
$ |
86,648 |
|
|
|
- |
|
|
|
- |
|
|
$ |
17,766 |
|
|
$ |
848,516 |
|
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chris
Dull
|
|
2009
|
|
$ |
315,649 |
|
|
|
159,075 |
|
|
|
- |
|
|
$ |
72,865 |
|
|
|
- |
|
|
|
- |
|
|
$ |
13,100 |
|
|
$ |
560,689 |
|
President,
NFM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sue
J. Nam
|
|
2009
|
|
$ |
296,538 |
|
|
$ |
166,000 |
|
|
|
- |
|
|
$ |
23,059 |
|
|
|
- |
|
|
|
- |
|
|
$ |
3,163 |
|
|
$ |
488,760 |
|
General
Counsel
|
|
2008
|
|
$ |
265,937 |
|
|
$ |
238,000 |
|
|
|
- |
|
|
$ |
22,515 |
|
|
|
- |
|
|
|
- |
|
|
$ |
3,954 |
|
|
$ |
530,406 |
|
(1)
|
Mr.
Hall has been the Company’s Chief Executive Officer since August 15, 2008.
Mr. Hall joined the Company as the Executive Vice President, Chief
Financial Officer and Treasurer on March 25, 2008. Mr. Dull has been the
President of NFM since August 31, 2007, and became an executive officer of
the Company on February 13, 2009. He joined the Company on February 28,
2007 as Executive Vice President of the QSR Franchising of NFM. Ms. Nam
has been the Company’s General Counsel since she joined the Company on
September 26, 2007 and was appointed Secretary on December 6,
2008.
|
(2)
|
Mr.
Hall’s salary for the year ended December 31, 2009 is based on his annual
salary of $500,000, which is paid biweekly pursuant to the Company’s
payroll policy. Mr. Hall’s salary for the year ended December 31, 2008 is
based on his previous annual salary of $400,000, prorated from March 25,
2008 (the date his employment commenced) to May 31, 2008, and his current
base salary of $500,000, prorated from June 1, 2008 through December 31,
2008. Mr. Dull’s salary for the year ended December 31, 2009 is based on
his annual salary of $318,150. Ms. Nam’s salary for the year ended
December 31, 2009 is based on her annual salary of $300,000. Ms. Nam’s
salary for the year ended December 31, 2008 is based on her previous
annual salary of $250,000, prorated from January 1, 2008 through September
30, 2008, and her current base salary of $300,000, prorated from October
1, 2008 to December 31, 2008. See the section captioned “Employment
Agreements” below for more in-depth information regarding each executive’s
employment agreement.
|
(3)
|
In
2009 and 2008, Mr. Hall received a total of $500,000 and $375,000,
respectively, in quarterly cash bonuses in accordance with the amendment
to his employment agreement. In 2009, Mr. Dull received $159,075 in
quarterly cash bonuses in accordance with his amended and restated
employment agreement. In 2009, Ms. Nam received $166,000 in quarterly,
retention and transactional cash bonuses in accordance with the amendments
to her employment agreement. In 2008, Ms. Nam received $25,000 on March
31, 2008 pursuant to her original employment agreement, an additional
$5,000 on March 31, 2008 as a discretionary interim bonus, and $208,000 in
retention and transactional bonuses in the latter half of 2008 pursuant to
the amendments to her employment
agreement.
|
(4)
|
The
amounts in the Option Awards column represent the aggregate grant date
fair value of stock options granted in each respective year, as calculated
under ASC Topic 718. The grant date fair values are hypothetical values
and may not reflect the actual economic value the executive would realize
upon exercise. Mr. Hall did not receive any stock option awards in 2009.
For the year ended December 31, 2008, Mr. Hall received a grant of 250,000
stock options on June 24, 2008 in connection with his initial hire. He
also received 250,000 additional stock options on August 26, 2008 in
connection with his promotion to the position of Chief Executive Officer.
Mr. Dull received a grant of 75,000 stock options on November 19, 2009.
Ms. Nam did not receive any stock option awards in 2009. Ms. Nam received
a grant of 25,000 stock options on March 19, 2008 in connection with a
discretionary interim bonus and 100,000 stock options on June 24, 2008 in
connection with the first amendment to her employment
agreement.
|
(5)
|
For
the year ended December 31, 2009, Mr. Hall received a total of $18,619 in
all other compensation, comprised of the Company’s payment pursuant to his
employment agreement of (i) $5,451 for the employee portion of
premiums for life and health insurance and (ii) $13,168 for car
expenses. For the year ended December 31, 2008, Mr. Hall
received a total of $17,766 in all other compensation comprised of (i) the
Company’s payment pursuant to his employment agreement of $3,267 for
the employee portion of premiums for life and health insurance and (ii)
$14,499 for car expenses. For the year ended December 31, 2009,
Mr. Dull received a total of $13,100 comprised of the Company’s payment
pursuant to his employment agreement of (i) $2,270 for the employee
portion of premiums for life and health insurance and (ii) $10,830 for car
expenses. For the years ended December 31, 2009 and 2008, Ms.
Nam received a total of $3,163 and $4,111, respectively, comprised of the
Company’s payment pursuant to her employment agreement of the employee
portion of premiums for life and health
insurance.
|
Grants
of Plan-Based Awards Table
During
fiscal year ended December 31, 2009, we granted the following stock options to
our named executive officers. We did not grant any restricted stock awards.
Information with respect to each of these awards on a grant-by-grant basis is
set forth in the table below. All of our stock options were granted with an
exercise price equal to the fair market value of our common stock on the date of
grant. Under our 2006 Plan, fair market value is defined as the closing sale
price of our common stock on the date of grant.
Name
|
|
Grant
Date
|
|
Number of
Securities
Underlying
Options
Granted (#)
|
|
Exercise or
Base Price
($/Sh)
|
|
Expiration
Date
|
|
Grant Date Fair Value of
Option Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chris
Dull
|
|
11/19/09
|
|
75,000
|
|
$
|
0.17
|
|
11/19/19
|
|
$
|
12,000
|
|
Outstanding
Equity Awards at Fiscal Year-End Table
The
following table sets forth information with respect to outstanding equity-based
awards at December 31, 2009 for our named executive officers. The Company has
not issued any stock awards to named executive officers.
|
|
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
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
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kenneth
J. Hall(1)
|
|
|
250,000 |
|
|
|
- |
|
|
|
- |
|
|
$ |
0.41 |
|
06/24/18
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
250,000 |
|
|
|
- |
|
|
|
- |
|
|
$ |
0.41 |
|
08/26/18
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chris
Dull(2)
|
|
|
50,000 |
|
|
|
25,000 |
|
|
|
- |
|
|
$ |
4.79 |
|
12/06/17
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
50,000 |
|
|
|
- |
|
|
|
- |
|
|
$ |
0.41 |
|
06/24/18
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
9,375 |
|
|
|
65,625 |
|
|
|
- |
|
|
$ |
0.17 |
|
11/19/19
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sue
J. Nam(3)
|
|
|
16,667 |
|
|
|
8,333 |
|
|
|
- |
|
|
$ |
2.83 |
|
03/19/18
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
100,000 |
|
|
|
- |
|
|
|
- |
|
|
$ |
0.41 |
|
06/24/18
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
(1)
|
On
June 24, 2008, Mr. Hall was granted 250,000 stock options, encompassing
the initial grant of options that was supposed to have been awarded in
accordance with his original employment agreement and in connection with
his hire but were not issued because of delays in the filing of our
periodic financial statements. The June 24, 2008 grant provided for the
stock options to vest in equal tranches over four subsequent quarters
measured from the date of grant and for accelerated vesting upon certain
events. On August 26, 2008, in accordance with an amendment to Mr. Hall’s
employment agreement in connection with his promotion to the position of
Chief Executive Officer, Mr. Hall was granted 250,000 stock options. The
August 26, 2008 grant provides for 125,000 of the options to vest
immediately upon the grant date and 125,000 of the options to vest on
February 1, 2009 with accelerated vesting upon certain events. For
additional information with respect to Mr. Hall’s employment agreement and
amendments thereto, see “Employment Agreements – Kenneth J.
Hall.”
|
(2)
|
On
December 16, 2007, Mr. Dull was granted 75,000 stock options that vest in
equal amounts on the three anniversaries of grant. On June 24,
2008, Mr. Dull was granted 50,000 stock options. The June 24, 2008 grant
provided for the stock options to vest in equal tranches over four
subsequent quarters measured from the date of grant and for accelerated
vesting upon certain events. On November 19, 2009, Mr. Dull was granted
75,000 stock options. The November 19, 2009 grant provided for the stock
options to vest in equal tranches over eight subsequent quarters measured
from the date of grant and for accelerated vesting upon certain
events.
|
(3)
|
On
March 19, 2008, Ms. Nam was granted 25,000 stock options that vest in
equal amounts on the three anniversaries of grant. On June 24, 2008, in
accordance with the first amendment to Ms Nam’s employment agreement, she
was granted 100,000 stock options. The June 24, 2008 grant provided for
the stock options to vest in equal tranches over four subsequent quarters
measured from the date of grant and for accelerated vesting upon certain
events. For additional information with respect to Ms. Nam’s employment
agreement and amendments thereto, see “Employment Agreements – Sue J.
Nam.”
|
Option
Exercises and Stock Vested
None of
our named executive officer exercised their respective option awards during the
year ended December 31, 2009. In addition, none of our named
executive officers were ever awarded restricted stock and thus had none that
vested during the year ended December 31, 2009.
Employment
Agreements
The form
of the employment agreements for all of our executive officers holding positions
at NexCen are similar in structure as an initial matter, although particular
agreements have been amended due to subsequent changes in circumstances. The
initial term of each of the employment agreements is three years with the
agreement automatically renewing for successive one-year periods, unless either
party provides at least 90 days’ advance written notice of a decision not to
renew. The agreements each provide for competitive base salaries, discretionary
bonus opportunities calculated as a percentage of the “Bonus Pool,” as defined
in the employment agreements, and customary benefit packages. Upon termination
of employment, each of the agreements provides the Company with protection in
the form of restrictive covenants, including non-competition, non-solicitation,
and confidentiality covenants, for the benefit of NexCen. Each agreement also
provides payments and other benefits to the executive, such as the immediate
vesting of all unvested options and continued health care coverage, if the
executive's employment were to terminate under certain circumstances, namely by
the Company without “Cause,” by the executive for “Good Reason,” by the Company
not renewing the agreement, or in the event of a “Change of Control,” as these
terms are defined in the employment agreements.
“Bonus
Pool” is defined in each employment agreement as, with respect to any fiscal
year, an amount equal to 5% of the annual net income of the Company for such
fiscal year, as reported by the Company in its audited annual financial
statements or any other amount authorized as the “Bonus Pool” by the Board or
Compensation Committee under the 2006 Management Bonus Plan or any other
management bonus plan adopted by the Company. On April 29, 2009, the Board
of Directors formally terminated the 2006 Management Bonus Plan, and no bonuses
have ever been paid under that plan or any other management bonus
plan.
“Cause”
is defined in each employment agreement as the occurrence of one or more of the
following: (i) indictment of a felony involving moral turpitude,
misappropriation of Company property, embezzlement of Company funds, violation
of the securities laws or dishonesty, (ii) persistent and repeated refusal
to comply with material directives that are not inconsistent with the
executive’s fiduciary obligations, (iii) reporting to work under the
influence of alcohol or illegal drugs, or the use of illegal drugs (whether or
not at the workplace), or (iv) any willful breach of certain terms of the
employment agreement.
“Good
Reason” is defined in each employment agreement as the occurrence, without the
executive’s written consent, of one or more of the following events:
(i) the Company reduces the amount of executive’s base salary,
(ii) the Company requires that the executive relocate his
principal place of employment to a site that is more than 50 miles from the
Company’s offices in New York City or Norcross, Georgia, as applicable, or the
Company changes the location of our headquarters without the consent of the
executive to a location that is more than 50 miles from such location,
(iii) the Company materially reduces the executive’s responsibilities or
removes the executive from his position other than pursuant to a termination of
his employment for “Cause” or upon the executive’s death or disability,
(iv) the failure or unreasonable delay of the Company to provide to the
executive any of the payments or benefits due under the employment agreement, or
(v) the Company otherwise materially breaches the terms of the employment
agreement.
A “Change
of Control” is defined in each employment agreement by reference to our 2006
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 twelve months
following a “Change of Control,” our named executive officers 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 pursuant to the terms of the grant or,
if unspecified in the grant, for the lesser of 180 days after termination or the
remaining term of the applicable grant.
Employment
Agreements for Named Executive Officers
Kenneth
J. Hall
On March
25, 2008, Mr. Hall joined the Company as Executive Vice President, Chief
Financial Officer and Treasurer. In connection with his hire, we entered into an
employment agreement, which was subsequently amended when he became our Chief
Executive Officer on August 15, 2008.
Pursuant
to his employment agreement as amended, Mr. Hall receives an annual base salary
of $500,000, subject to periodic review and upward adjustment; participation in
customary employee benefit programs; the Company’s payment of, or reimbursement
for, certain insurance premiums; and a monthly automobile allowance comparable
to other senior executive officers (but in no event less than $1,250 per
month).
For each
calendar year during the term of the employment agreement, Mr. Hall is eligible
to receive an annual performance-based bonus calculated as a percentage of the
“Bonus Pool,” 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. As noted above, no such annual
bonus has ever been paid to any of our executives.
Commencing
with the calendar quarter ending on June 30, 2008, Mr. Hall is entitled to
payment of a minimum quarterly bonus equal to 25% of his base salary in
effect on the last day of the calendar quarter to which such minimum bonus
relates (or, if applicable, on the date of any termination of Mr. Hall’s
employment during the quarter). As a result, Mr. Hall is entitled to an
annual minimum bonus equal to 100% of this base salary.
Pursuant
to the original terms of his employment agreement, Mr. Hall was granted a total
of 250,000 stock options under the terms of the Company’s 2006 Plan and a
customary grant agreement. The options were to vest and become exercisable in
equal installments on each of the first three anniversaries of the grant date,
which under the Company’s policy was to be the third trading day after the
Company publicly announces financial results for the three month period ending
March 31, 2008. Although the Compensation Committee approved the grant of
options, the Company was delayed in filing its periodic financial reports. Mr.
Hall’s 250,000 options ultimately were granted on June 24, 2008 with vesting
over four quarters instead of three years and an exercise period of twelve
months after termination of employment. Under the amendment to his employment
agreement, Mr. Hall also was awarded an additional stock option grant of 250,000
options. Half of these options vested upon the date of grant, and the
remaining half vested on February 1, 2009 when Mr. Hall fulfilled the condition
of vesting that he remains employed with the Company through such
date.
If (i) we
terminate Mr. Hall’s employment without “Cause,” (ii) Mr. Hall terminates his
employment for “Good Reason,” (iii) or we do not renew the agreement, he will be
entitled to receive a severance package consisting of:
|
·
|
any
earned but unpaid base salary through the date of employment termination
and any declared but unpaid annual
bonus;
|
|
·
|
an
amount equal to the greater of (x) Mr. Hall’s base salary (at the rate
then in effect) for the remainder of the initial three year term or (y)
two times the sum of (1) his base salary (at the rate then in effect) and
(2) a bonus calculated as 100% of his base salary at the rate then in
effect, but in any event not to exceed $1,400,000 in the event that Mr.
Hall’s employment is terminated on or before January 31, 2009, with any
such payment to be paid in substantially equal installments 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;
|
|
·
|
continued
participation in NexCen’s group medical plan on the same basis as Mr. Hall
previously participated or 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 an eighteen month period following termination, subject
to termination of this arrangement if a successor employer provides him
with health insurance coverage; and
|
|
·
|
accelerated
vesting of all unvested options issued to him remaining exercisable for a
period of time as provided for in the grant agreements or the 2006 Plan
.
|
If we
terminate Mr. Hall’s employment without “Cause” or if he resigns for “Good
Reason” within a year of a “Change of Control,” he will be entitled to receive
the same severance package as described above. However, the amount of severance
will be $100 less than two times the sum of (i) Mr. Hall’s base salary at the
rate then in effect and (ii) a bonus calculated as 100% of that base
salary.
During
the term of employment and for two years thereafter, or one year if we terminate
Mr. Hall’s employment without “Cause” or if he resigns for “Good Reason,” Mr.
Hall agreed not to compete with the Company. In addition, for two years
following the term of employment, Mr. Hall agreed not to (i) solicit, induce or
attempt to induce any customer, supplier, licensee or other business relation to
cease doing business with the Company, (ii) solicit, induce or attempt to induce
any person who is, or was during the then-most recent one year period, a
corporate officer, general manager or other employee of the Company or any of
its subsidiaries to terminate such employee’s employment with the Company, or
hire any such person unless such person’s employment was terminated by the
Company, or (iii) in any way interfere with the relationship between any
customer, supplier, licensee, employee or business relation of the Company or
any of its subsidiaries. During the term of employment, Mr. Hall is required to
travel to the Company’s Norcross, Georgia office not less than once a month, so
long as such travel does not interfere with his performance of his obligations
and responsibilities as the Company’s Chief Executive Officer.
Chris
Dull
Effective
as of June 30, 2009, we entered into an amended and restated employment
agreement with Mr. Dull, which provides Mr. Dull with the form of employment
agreement that we use for executive officers of NexCen. The amended and restated
employment agreement also provides certain additional material benefits, namely,
guaranteed minimum quarterly bonuses and increased severance benefits. Under his
amended and restated employment agreement, Mr. Dull receives an initial annual
base salary of $318,150 (unchanged from his prior employment agreement), subject
to periodic review and upward adjustment; participation in customary employee
benefit programs; the Company’s payment of, or reimbursement for, certain
insurance premiums; and a monthly automobile allowance of $1,000 per
month.
For each
calendar year during the term of the employment agreement, Mr. Dull is eligible
to receive an annual performance-based bonus calculated as a percentage of the
“Bonus Pool,” 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. To date, no such annual bonus has
ever been paid to any of our executives.
Commencing
with the calendar quarter ending on March 31, 2009, Mr. Dull is entitled to
payment of a minimum quarterly bonus equal to 12.5% of Mr. Dull’s base
salary in effect on the last day of the calendar quarter to which such minimum
bonus relates (or, if applicable, on the date of any termination of Mr. Dull’s
employment during the quarter). As a result, Mr. Dull is entitled to
an annual minimum bonus equal to 50% of this base salary. Other than the quarterly
bonus related to the calendar quarter ended March 31, 2009, which was paid
together with the quarterly bonus related to the calendar quarter ended June 30,
2009, each quarterly bonus earned by Mr. Dull is paid in the final payroll
period ending in the calendar quarter to which it relates. In the event of any
termination of his employment during such quarter, his quarterly bonus is to be
prorated based upon the number of days that Mr. Dull is employed during such
quarter.
If (i) we
terminate Mr. Dull’s employment without “Cause,” (ii) Mr. Dull terminates his
employment for “Good Reason,” (iii) or we do not renew the agreement, Mr. Dull
will be entitled to receive a severance package consisting of:
|
·
|
any
earned but unpaid base salary through the date of employment termination
and any declared but unpaid annual
bonus;
|
|
·
|
an
amount equal to the sum of (i) Mr. Dull’s base salary (at the rate in
effect on the date of termination) for a twelve-month period and
(ii) the amount of bonuses paid to Mr. Dull in the prior twelve-month
period, payable in substantially equal installments 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;
|
|
·
|
continued
participation in NexCen’s group medical plan on the same basis as Mr. Dull
previously participated or 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 twelve month period following termination, subject to
termination of this arrangement if a successor employer provides him with
health insurance coverage; and
|
|
·
|
accelerated
vesting of all unvested options issued to him remaining exercisable for a
period of time as provided for in the grant agreements or the 2006
Plan.
|
If we
terminate Mr. Dull’s employment without “Cause” or if he resigns for “Good
Reason” within a year of a “Change of Control,” he will be entitled to receive
the same severance as described above.
During
the term of employment and for one year thereafter, or six months if we
terminate Mr. Dull’s employment without “Cause” or if he resigns for “Good
Reason,” Mr. Dull agreed not to compete with the Company. In addition, for one
year following the term of employment, Mr. Dull agreed not to (i) solicit,
induce or attempt to induce any customer, supplier, licensee or other business
relation to cease doing business with the Company, (ii) solicit, induce or
attempt to induce any person who is, or was during the then-most recent one year
period, a corporate officer, general manager or other employee of the Company or
any of its subsidiaries to terminate such employee’s employment with the
Company, or hire any such person unless such person’s employment was terminated
by the Company, or (iii) in any way interfere with the relationship between any
customer, supplier, licensee, employee or business relation of the Company or
any of its subsidiaries.
Sue
J. Nam
On
September 24, 2007, Ms. Nam joined the Company as General Counsel. In connection
with her hire, we entered into an employment agreement on August 29, 2007, which
was subsequently amended as of July 15, 2008, September 26, 2008 and June 30,
2009.
Pursuant
to her employment agreement as amended, Ms. Nam receives an annual base salary
of $300,000, subject to periodic review and upward adjustment; participation in
customary employee benefit programs; and the Company’s payment of, or
reimbursement for, certain insurance premiums.
For each
calendar year during the term of the employment agreement, Ms. Nam is eligible
to receive an annual performance-based bonus calculated as a percentage of the
“Bonus Pool,” 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. To date, no such annual bonus
has ever been paid to any of our executives.
Ms. Nam
is and was entitled to certain cash bonus payments under her original agreement
and the various amendments thereto. Pursuant to the July 14, 2008 amendment to
Ms. Nam’s employment agreement, Ms. Nam was paid a quarterly retention cash
bonus of $29,000 on each of August 15, 2008, November 15, 2008, February 14,
2009 and May 15, 2009. Pursuant to the June 30, 2009 amendment, Ms.
Nam’s quarterly cash bonus of $29,000 continues for the entire term of her
employment. Each quarterly bonus earned by Ms. Nam is paid in the final payroll
period ending in the calendar quarter to which it relates. In the event of any
termination of her employment during such quarter, Ms. Nam’s quarterly bonus is
to be prorated based upon the number of days that she is employed during such
quarter.
In
addition to these recurring quarterly bonuses, Ms. Nam’s employment agreement
provides for one-time bonuses as follows:
Under her
original employment agreement:
|
·
|
$25,000
on March 31, 2008 (which she received in addition to a discretionary bonus
of $5,000 for a total bonus payment of
$30,000);
|
Under
September 26, 2008 amendment:
|
·
|
$50,000
upon the successful closing of the restructuring of the Company’s credit
facility, with such bonus payable on or about October 15, 2008 (which she
received);
|
|
·
|
$50,000
upon the successful closing of the sale of the Bill Blass business (which
she received);
|
|
·
|
$50,000
upon the successful closing of the sale of the Waverly business (which she
received);
|
|
·
|
$50,000
upon continued employment through March 31, 2009 (which she
received);
|
Under
June 30, 2009 amendment:
|
·
|
$50,000
upon the filing with the SEC all financial reports for fiscal year 2009
deemed necessary by the Company (which she received);
and
|
|
·
|
$50,000
upon the successful closing of a transaction for the recapitalization of
the Company, refinancing of the Company’s debt or a “Change of Control”
(which she has not yet received).
|
Pursuant
to the original terms of her employment agreement, on September 24, 2008,
Ms. Nam was granted options to purchase a total of 100,000 shares of the
Company’s common stock under the terms of the Company’s 2006 Plan and a
customary grant agreement. The options were to vest and become exercisable in
equal installments on each of the first three anniversaries of the grant date.
On November 12, 2008, Ms. Nam voluntarily agreed to cancel the 100,000 options
pursuant to a stock option cancellation program. Pursuant to the July 15, 2008
amendment, Ms. Nam was awarded an additional stock option grant of 100,000
options that vest over four quarters, accelerated vesting upon termination of
employment without “Cause” and an exercise period of twelve months after
termination of employment.
If (i) we
terminate Ms. Nam’s employment without “Cause,” (ii) Ms. Nam terminates her
employment for “Good Reason,” or (iii) we do not renew the agreement, she will
be entitled to receive a severance package consisting of:
|
·
|
any
earned but unpaid base salary through the date of employment termination
and any declared but unpaid annual
bonus;
|
|
·
|
an
amount equal to the sum of (i) Ms. Nam’s base salary (at the rate in
effect on the date of termination) for a twelve-month period and
(ii) the amount of bonuses paid to Ms. Nam in the prior twelve-month
period, payable in substantially equal installments 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;
|
|
·
|
continued
participation in NexCen’s group medical plan on the same basis as Ms. Nam
previously participated or 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 twelve month period following termination, subject to
termination of this arrangement if a successor employer provides him with
health insurance coverage; and
|
|
·
|
accelerated
vesting of all unvested options issued to her remaining exercisable for a
period of time as provided for in the grant agreements or the 2006
Plan.
|
If we
terminate Ms. Nam’s employment without “Cause” or if she resigns for “Good
Reason” within a year of a “Change of Control,” she will be entitled to receive
the same severance as described above.
During
the term of employment and for one year thereafter, or six months if we
terminate Ms. Nam’s employment without “Cause” or if she resigns for “Good
Reason,” Ms. Nam agreed not to compete with the Company. In addition, for one
year following the term of employment, Ms. Nam agreed not to (i) solicit, induce
or attempt to induce any customer, supplier, licensee or other business relation
to cease doing business with the Company, (ii) solicit, induce or attempt to
induce any person who is, or was during the then-most recent one year period, a
corporate officer, general manager or other employee of the Company or any of
its subsidiaries to terminate such employee’s employment with the Company, or
hire any such person unless such person’s employment was terminated by the
Company, or (iii) in any way interfere with the relationship between any
customer, supplier, licensee, employee or business relation of the Company or
any of its subsidiaries.
Potential
Post-Employment Payments to Named Executive Officers
The
employment agreements with each of our named executive officers provide for
certain payments and other benefits if the executive’s employment is terminated
under circumstances specified in his or her employment agreement, including a
“Change of Control” of the Company. The following table provides information
with respect to potential post-employment payments for named executive officers
in the event of:
|
·
|
Involuntary
termination without “Cause” or termination by the executive for “Good
Reason”;
|
|
·
|
Termination
without “Cause” or termination by the executive for “Good Reason” within
twelve months of a “Change of Control”;
or
|
|
·
|
Separation
due to disability or death.
|
We have
provided additional information concerning these termination events following
the table. The amounts of potential payments in the following tables are
hypothetical and calculated based on the rules of the SEC and as if the named
executive officers’ respective employment terminated as of December 31,
2009.
Name
|
|
Payment/Benefits
Upon Termination
($)
|
|
Voluntary Termination/
With Cause
($)
|
|
|
Involuntary Termination
Without Cause/Termination
With Good Reason
($)
|
|
|
Separation Due to
Change of Control
($)
|
|
|
Separation Due to
Death/Disability
($)
|
|
Kenneth
J. Hall
|
|
Accrued
but unused vacation
time
|
|
$
|
4,808
|
|
|
$
|
4,808
|
|
|
$
|
4,808
|
|
|
$
|
4,808
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Declared
but unpaid annual bonus
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
payment
|
|
|
n/a
|
|
|
$
|
2,000,000
|
|
|
$
|
1,999,900
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continued
healthcare coverage (1)
|
|
|
n/a
|
|
|
$
|
34,148
|
|
|
$
|
34,148
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of Accelerated Vesting
of Equity Awards(2)
|
|
|
n/a
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
$
|
4,808
|
|
|
$
|
2,038,956
|
|
|
$
|
2,038,856
|
|
|
$
|
4,808
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chris
Dull
|
|
Accrued
but unused vacation time
|
|
$
|
12,237
|
|
|
$
|
12,237
|
|
|
$
|
12,237
|
|
|
$
|
12,237
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Declared
but unpaid annual bonus
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
payment
|
|
|
n/a
|
|
|
$
|
477,225
|
|
|
$
|
477,225
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continued
healthcare coverage (1)
|
|
|
n/a
|
|
|
$
|
22,582
|
|
|
$
|
22,582
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of Accelerated Vesting
of Equity Awards(2)
|
|
|
n/a
|
|
|
$
|
73,591
|
|
|
$
|
73,591
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
$
|
12,237
|
|
|
$
|
585,635
|
|
|
$
|
585,635
|
|
|
$
|
12,237
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sue
J. Nam
|
|
Accrued
but unused vacation time
|
|
$
|
11,538
|
|
|
$
|
11,538
|
|
|
$
|
11,538
|
|
|
$
|
11,538
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Declared
but unpaid annual bonus
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
payment
|
|
|
n/a
|
|
|
$
|
466,000
|
|
|
$
|
466,000
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continued
healthcare coverage(1)
|
|
|
n/a
|
|
|
$
|
13,096
|
|
|
$
|
13,096
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
of Accelerated Vesting
of Equity Awards(2)
|
|
|
n/a
|
|
|
$
|
15,676
|
|
|
$
|
15,676
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
$
|
11,538
|
|
|
$
|
506,310
|
|
|
$
|
506,310
|
|
|
$
|
11,538
|
|
|
(1)
|
Calculated
at the present value of insurance premiums to be paid over the benefit
period:
|
Kenneth
J. Hall - 1.5 years
Chris
Dull - 1 year
Sue J.
Nam - 1 year
|
(2)
|
This
amount represents the unamortized portion of the expense related to each
respective named executive officer’s acceleration of stock option awards
as of December 31, 2009.
|
Voluntary
Termination by the Executive, Termination by the Company for “Cause,” or
Termination Due to Death or Disability
Under
each of the named executive officer’s respective employment agreement, the
executive will be entitled to receive his or her base salary through the
termination date and any other accrued benefits, but will not be entitled to
receive any severance benefits or any other benefits after the termination
date.
Involuntary
Termination without “Cause” or Termination by the Executive for “Good
Reason”
Under Mr.
Hall’s employment agreement, severance is calculated as an amount equal to the
greater of (x) his base salary (at the rate then in effect) for the remainder of
the initial three year term or (y) two times the sum of (1) his base salary (at
the rate then in effect) and (2) a bonus calculated as 100% of Mr. Hall’s base
salary at the rate then in effect. The employment agreements of Ms. Nam and Mr.
Dull, respectively, provide that their cash severance amount is calculated as an
amount equal their respective annual base salary at the rate then in effect plus
all bonuses received for the prior twelve months.
Involuntary
Termination without “Cause” or Termination by the Executive for “Good Reason” in
Connection with a “Change of Control”
Under Mr.
Hall’s employment agreement, Mr. Hall’s severance payment in connection with a
“Change of Control” would equal $100 less than two times the sum of his base
salary at the rate then in effect plus a bonus calculated as 100% of his base
salary at the rate then in effect. Ms. Nam and Mr. Dull’s respective severance
payment in connection with a “Change of Control” would equal an amount equal
their respective annual base salary at the rate then in effect plus all bonuses
received for the prior twelve months. For each of our named executive officers,
in the event that the foregoing calculation, together with all other cash and
non-cash amounts that the executive has the right to receive from us, would
result in the severance payment being treated as an “excess parachute payment”
within the meaning of Section 280G of the Internal Revenue Code, then the
payment is reduced automatically to the largest amount that will not result in
the payment being treated as an “excess parachute payment.” Because this formula
is intended to avoid the lump sum being treated as a parachute payment subject
to an excise tax under the tax code, we do not provide for any “gross-up”
payments to cover federal excise taxes in the event that the severance payments
are treated as a parachute payment.
Director
Compensation
The
following table sets forth compensation information for 2009 for each current
and former member of our Board of Directors. Directors who are employees do not
receive additional compensation for serving on the Board of Directors during the
terms of their employment.
Name
|
|
Fees Earned
or Paid
in Cash
($)
|
|
|
Stock
Awards
($)
|
|
Option
Awards
($)(7)
|
|
Non-Equity
Incentive Plan
Compensation
($)
|
|
Change in
Pension Value
and Nonqualified
Deferred Compensation
Earnings
|
|
|
All Other
Compensation
($)
|
|
|
Total
($)
|
|
David
S. Oros
|
|
$
|
18,819
|
(1)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
$
|
141,464
|
(2)
|
$
|
160,283
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
T. Brady
|
|
$
|
76,500
|
(3)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
-
|
|
$
|
76,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul
Caine
|
|
$
|
58,500
|
(4)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
-
|
|
$
|
58,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward
J. Mathias
|
|
$
|
60,000
|
(5)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
-
|
|
$
|
60,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
George
P. Stamas
|
|
$
|
32,000
|
(6)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
-
|
|
$
|
32,000
|
|
(1)
|
In
June 2009, the term of Mr. Oros’ employment agreement expired, and he
ceased being an employee of the Company. Thereafter, he received annual
retainer fees and attendance fees as a non-employee director. Mr. Oros
received pro rata annual retainer of $11,319 and $7,500 in Board of
Directors attendance fees.
|
(2)
|
In
2009, the Company paid Mr. Oros $141,464 in salary, which consists of (i)
$86,923, the prorated portion of his annual salary of $200,000 through
June 2009 when his employment agreement expired and (ii) $54,541 of Mr.
Oros’ deferred 2008 salary that Mr. Oros agreed to defer on a temporary
basis to provide the Company with additional
liquidity.
|
(3)
|
Consists
of $20,000 annual retainer, $15,000 in Board of Directors attendance fees,
$12,500 retainer as chairman of the Audit Committee, $22,500 in Audit
Committee meeting fees, $2,500 retainer as chairman of the
Nominating/Corporate Governance Committee, $1,000 in Nominating/Corporate
Governance Committee meeting fees, and $3,000 in Compensation Committee
meeting fees.
|
|
|
(4)
|
Consists
of $20,000 annual retainer, $15,000 in Board of Directors attendance fees,
$22,500 in Audit Committee meeting fees, and $1,000 in
Nominating/Corporate Governance Committee meeting
fees.
|
(5)
|
Consists
of $20,000 annual retainer, $12,000 in Board of Directors attendance fees,
$2,500 retainer as chairman of the Compensation Committee, $3,000 in
Compensation Committee meeting fees, and $22,500 in Audit Committee
meeting fees.
|
(6)
|
Consists
of $20,000 annual retainer and $12,000 in Board of Directors attendance
fees.
|
(7)
|
On
November 11, 2009, each director received a grant of options to purchase
150,000 shares of the Company’s common stock, priced on the date of grant
at $0.17 per share, which options vest in equal tranches over four
subsequent quarters measured from the date of
grant.
|
The
following tables set forth certain information with respect to beneficial
ownership of our common stock as of April 1, 2010, as to:
|
·
|
each
of our directors and executive officers
individually;
|
|
·
|
all
our directors and executive officers as a group;
and
|
|
·
|
each
other person (or group of affiliated persons) known by us to own
beneficially more than 5% of our outstanding common
stock.
|
To our
knowledge, no person or entity, other than Robert D’Loren, who from June 2006 to
August 2008 was the chief executive officer and a director of the Company, is
the beneficial owner of more than 5% of our common stock. 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 Exchange Act, 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.
For the
purposes of calculating percentage ownership, as of April 1, 2010, 56,951,730
shares of common stock were issued and outstanding. For any individual, who
beneficially owned shares of restricted stock that vested or shares represented
by options that were or became exercisable within 60 days of April 1, 2010,
those shares were treated as if outstanding for that person, but not for any
other person. The address of each of the individuals and entities named below,
except for Mr. D’Loren, is: c/o NexCen Brands, Inc., 1330 Avenue of the
Americas, 34th Floor, New York, NY 10019.
|
|
Number
|
|
Percent
|
|
|
|
|
|
|
|
Robert
D’Loren
|
|
4,229,411 |
|
7.43 |
% |
c/o
Proskauer Rose, LLP, 1585 Broadway
|
|
|
|
|
|
New
York, New York 10036
|
|
|
|
|
|
|
|
|
|
|
|
Directors and Executive
Officers:
|
|
Beneficial Ownership
of Shares
|
|
Name
|
|
Number
|
|
|
Percent
|
|
|
|
|
|
|
|
|
David
S. Oros (1)
|
|
|
2,193,279 |
|
|
|
3.85
|
% |
James
T. Brady (2)
|
|
|
202,500 |
|
|
|
* |
|
Paul
Caine (3)
|
|
|
75,000 |
|
|
|
* |
|
Edward
J. Mathias (4)
|
|
|
250,700 |
|
|
|
* |
|
George
P. Stamas (5)
|
|
|
229,268 |
|
|
|
* |
|
Kenneth
J. Hall (6)
|
|
|
530,000 |
|
|
|
* |
|
Chris
Dull (7)
|
|
|
121,250 |
|
|
|
* |
|
Sue
J. Nam (8)
|
|
|
116,667 |
|
|
|
* |
|
All
named executive officers for 2009 and current directors as a group (8
Persons)
|
|
|
|
|
|
|
6.53
|
% |
(1)
|
Consists
of (i) 1,261,000 shares of common stock owned directly by Mr. Oros, (ii)
764,279 shares of common stock owned by Mr. Oros and his wife, (iii)
50,000 shares of exercisable restricted stock; (iv) exercisable options to
purchase 80,500 shares of common stock; and (v) options to purchase 37,500
shares of common stock, which will become exercisable within 60 days of
April 1, 2010.
|
(2)
|
Consists
of (i) 2,500 shares of common stock owned directly by Mr. Brady; (ii)
exercisable options to purchase 162,500 shares of common stock; and (iii)
options to purchase 37,500 shares of common stock, which will become
exercisable within 60 days of April 1,
2010.
|
(3)
|
Consists
of (i) exercisable options to purchase 37,500 shares of common stock and
(ii) options to purchase 37,500 shares of common stock, which will become
exercisable within 60 days of April 1,
2010.
|
(4)
|
Consists
of (i) 14,000 shares of common stock owned directly by Mr. Mathias, (ii)
exercisable options to purchase 162,500 shares of common stock; (iii)
options to purchase 37,500 shares of common stock, which will become
exercisable within 60 days of April 1, 2010; (iv) 29,000 shares of common
stock held indirectly in a retirement account; and (v) 7,700 shares of
common stock held as custodian for Ellen
Mathias.
|
(5)
|
Consists
of (i) 11,268 shares of common stock owned directly by Mr. Stamas (ii)
exercisable options to purchase 180,500 shares of common stock;
and (iii) options to purchase 37,500 shares of common stock, which will
become exercisable within 60 days of April 1,
2010.
|
(6)
|
Consists
of (i) 30,000 shares of common stock owned directly by Mr. Hall and (ii)
exercisable options to purchase 500,000 shares of common
stock.
|
(7)
|
Consists
of (i) 2,500 shares of common stock owned directly by Mr. Dull (ii)
exercisable options to purchase 109,375 shares of common stock; and (iii)
options to purchase 9,375 shares of common stock, which will become
exercisable within 60 days of April 1,
2010.
|
(8)
|
Consists
of exercisable options to purchase 116,667 shares of common
stock.
|
Securities
Authorized for Issuance Under Equity Compensation Plans
See Item
5 of Part II of our Annual Report on Form 10-K for the fiscal year ended
December 31, 2009 for information regarding securities authorized for issuance
under equity compensation plans.
ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE
Policies
and Procedures for the Review and Approval of Related Party
Transactions
The
Company adopted the Policy and Procedures with respect to Related Persons
Transactions for the review, approval or ratification of all related party
transactions. The policy is administered by the Nominating/Corporate Governance
Committee.
Pursuant
to the Policy and Procedures, any proposed related person transaction must be
submitted for consideration at the first regular or special meeting of the
Nominating/Corporate Governance Committee that immediately precedes or follows
the Company entering into a related party transaction. In determining whether or
not to approve or ratify such transactions, the Committee considers all the
relevant facts and circumstances related to the transaction including, but not
limited to (1) the benefit to the Company; (2) if the transaction involves a
director, a member of the director’s immediate family or an entity affiliated
with a director, the impact on the director’s independence; (3) the related
person’s relationship to the Company and interest in the transaction; (4) the
availability of other sources for comparable products or services; (5) the terms
of the transaction (including dollar value of the transaction); (6) the terms
available to unrelated third parties; and (7) any other information regarding
the transaction or the related person in the context of the transaction that is
material to investors in light of the circumstances of the particular
transaction. The Nominating/Corporate Governance Committee approves or ratifies
only those transactions that are in, or are not inconsistent with, the best
interests of the Company and our shareholders.
In the
event that the Nominating/Corporate Governance Committee determines not to
ratify a related party transaction, it may evaluate all options, including but
not limited to, termination of the transaction on a prospective basis,
rescission of such transaction, or modification of the transaction in a manner
that would permit it to be ratified by the Committee.
The
Company’s Policy and Procedures with respect to Related Persons Transactions can
be found on our website.
Certain
Related Party Transactions for 2009
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,
2009 and 2008, expenses related to Kirkland & Ellis LLP were approximately
$0.4 million and $2.0 million, respectively. Outstanding payables due to
Kirkland & Ellis LLP were $0.4 million and $1.0 million at December 31, 2009
and 2008, respectively.
Director
Independence
See Item
10 of Part III of this Form 10-K/A for information regarding director
independence.
ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit
Fees
The
aggregate fees billed for professional services rendered for NexCen by KPMG LLP,
NexCen’s independent accounting firm, for the years ended December 31, 2009 and
2008 were:
|
|
|
2009
|
|
2008
|
Audit
Fees
|
|
$
|
550,000
|
|
$
|
1,267,900
|
Audit-Related
Fees
|
|
|
-
|
|
|
232,100
|
Total
Fees
|
|
$
|
550,000
|
|
$
|
1,500,000
|
“Audit
Fees” include time billed to NexCen for professional services rendered for the
annual audit of NexCen’s consolidated financial statements, the quarterly
reviews of the consolidated financial statements, the annual audit with respect
to management’s assessment of the effectiveness of internal control over
financial reporting and the effectiveness of internal control over financial
reporting.
“Audit
Related Fees” for 2008 include professional services performed by KPMG LLP
related primarily to Current Report on Form 8-K/A filings related to the Great
American Cookies acquisition and procedures in connection with the special
investigation conducted at the direction of the Audit
Committee.
NexCen
does not use our independent auditor as our internal auditor nor do we have an
internal auditor.
No other
professional services were rendered or fees were billed by KPMG LLP for the
years ended December 31, 2009 and 2008.
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 LLP are submitted to the
Audit Committee. Requests for all audit-related and 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.
ITEM
15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
EXHIBITS
The
following exhibits are filed herewith or are incorporated by reference to
exhibits previously filed with the SEC.
31.1
|
Certification
pursuant to 17 C.F.R § 240.15d−14 (a), as adopted pursuant to Section 302
of the Sarbanes−Oxley Act of 2002 for Kenneth J. Hall.
|
31.2
|
Certification
pursuant to 17 C.F.R § 240.15d−14 (a), as adopted pursuant to Section 302
of the Sarbanes−Oxley Act of 2002 for Mark E.
Stanko.
|
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act
of 1934, the Registrant has duly caused this report on Form 10-K/A to be signed
on its behalf by the undersigned, thereunto duly authorized on April 29,
2010.
|
NEXCEN
BRANDS, INC.
|
|
|
|
By:
|
/s/ Kenneth J. Hall
|
|
|
|
KENNETH
J. HALL
|
|
|
|
Chief
Executive Officer
|
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed by the following persons in the capacities and on the dates
indicated.
SIGNATURE
|
|
TITLE
|
|
DATE
|
|
|
|
|
|
/s/ David S. Oros
|
|
Chairman
of the Board
|
|
April
29, 2010
|
DAVID
S. OROS
|
|
|
|
|
|
|
|
|
|
/s/ Kenneth J. Hall
|
|
Chief
Executive Officer
|
|
April
29, 2010
|
KENNETH
J. HALL
|
|
|
|
|
|
|
|
|
|
/s/ Mark E. Stanko
|
|
Chief
Financial Officer
|
|
April
29, 2010
|
MARK
E. STANKO
|
|
|
|
|
|
|
|
|
|
/s/
Brian D. Lane
|
|
Chief
Accounting Officer
|
|
April
29, 2010
|
BRIAN
D. LANE
|
|
|
|
|
|
|
|
|
|
/s/ James T. Brady
|
|
Director
|
|
April
29, 2010
|
JAMES
T. BRADY
|
|
|
|
|
|
|
|
|
|
/s/ Paul Caine
|
|
Director
|
|
April
29, 2010
|
PAUL
CAINE
|
|
|
|
|
|
|
|
|
|
/s/ Edward J. Mathias
|
|
Director
|
|
April
29, 2010
|
EDWARD
J. MATHIAS
|
|
|
|
|
|
|
|
|
|
/s/ George P. Stamas
|
|
Director
|
|
April
29, 2010
|
GEORGE
P. STAMAS
|
|
|
|
|