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EX-31.1 - EXHIBIT 31.1 - PREMIER EXHIBITIONS, INC. | c02930exv31w1.htm |
EX-31.2 - EXHIBIT 31.2 - PREMIER EXHIBITIONS, INC. | c02930exv31w2.htm |
EX-32.1 - EXHIBIT 32.1 - PREMIER EXHIBITIONS, INC. | c02930exv32w1.htm |
Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K/A
Amendment No. 1
(Mark One)
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended February 28, 2010
or
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
COMMISSION FILE NO. 000-24452
PREMIER EXHIBITIONS, INC.
(Exact name of registrant as specified in its charter)
Florida (State or other jurisdiction of incorporation or organization) |
20-1424922 (I.R.S. Employer Identification No.) |
3340 Peachtree Rd., N.E., Suite 900
Atlanta, GA 30326
(Address of principal executive offices)
Atlanta, GA 30326
(Address of principal executive offices)
Registrants telephone number, including area code:
404-842-2600
404-842-2600
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class | Name of Each Exchange on Which Registered | |
Common Stock, par value $0.0001 per share | The Nasdaq Stock Market LLC (Nasdaq Global Market) |
Securities registered pursuant to Section 12(g) of the Act:
None
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act. Yes o No þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section
13 or 15(d) of the Act. Yes o No þ
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 þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files). Yes o No o
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 registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. o
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.
Large accelerated filer o | Accelerated filer þ | Non-accelerated filer o | Smaller reporting company o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act). Yes o No þ
At August 31, 2009, the aggregate market value of the registrants Common Stock held by
non-affiliates of the registrant was approximately $18,404,453, based upon the closing price for
such Common Stock as reported on the NASDAQ Global Market on August 31, 2009. For purposes of the
foregoing calculation only, all directors and officers of the registrant have been deemed
affiliates.
The number of shares outstanding of the registrants common stock, as of June 14, 2010, was
47,877,733.
DOCUMENTS INCORPORATED BY REFERENCE
None.
Table of Contents
EXPLANATORY NOTE
Premier Exhibitions, Inc. is filing this Amendment No. 1 on Form 10-K/A (the Amendment) to
amend its Annual Report on Form 10-K for the year ended February 28, 2010 (fiscal year 2010),
filed with the Securities and Exchange Commission (the SEC) on May 14, 2010 (the Original
10-K).
This Amendment is being filed to amend the Original 10-K to include the information required
by Items 10 through 14 of Part III of Form 10-K and to add the stock performance graph. Also, this
Amendment amends the cover page of the Original 10-K to (i) delete the reference in the Original
10-K to the incorporation by reference of the definitive Proxy Statement for our 2010 annual
meeting of shareholders and (ii) update the number of outstanding common shares. Item 15 of Part IV
of the Original 10-K is amended to include the certifications specified in Rule 13a-14 under the
Securities Exchange Act of 1934, as amended, required to be filed with this Amendment. Except for
the addition of the Part III information, the stock performance graph, the updates to the cover
page and the filing of related certifications, no other changes have been made to the Original
10-K. This Amendment does not modify or update disclosures in the Original 10-K affected by
subsequent events.
Table of Contents
PART II
ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
Stock Performance Graph
The following graph compares the yearly changes in cumulative total shareholder return on
shares of our common stock with the cumulative total return of the Standard & Poors 600 Small Cap
Index and the Russell 3000® Index, which we joined on June 22, 2007. In each case, we assumed an
initial investment of $100 on February 28, 2003. Each subsequent date on the chart represents the
last day of the indicated fiscal year. Total returns assume the reinvestment of all dividends.
Our stock performance may not continue into the future with the trends similar to those depicted in
this graph. We neither make nor endorse any predictions as to our future stock performance.
2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | |||||||||||||||||||||||||
Premier Exhibitions, Inc. |
$ | 100 | $ | 1,714 | $ | 1,643 | $ | 5,757 | $ | 15,457 | $ | 7,229 | $ | 1,143 | $ | 1,800 | ||||||||||||||||
Standard & Poors 600 Small Cap Index |
$ | 100 | $ | 154 | $ | 180 | $ | 205 | $ | 221 | $ | 204 | $ | 112 | $ | 182 | ||||||||||||||||
Russell 3000® Index |
$ | 100 | $ | 141 | $ | 152 | $ | 168 | $ | 188 | $ | 185 | $ | 102 | $ | 158 |
1
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Directors
The following table sets forth information about our current directors. Our directors are
elected annually and serve until the next annual meeting of shareholders and until their respective
successors are elected and have been qualified or until their earlier resignation, removal or
death. At its meeting held on September 15, 2009, the Board of Directors amended our Bylaws to
increase the number of directors from seven to nine and elected Ronald C. Bernard and Stephen W.
Palley to fill the resulting vacancies at the recommendation of the Corporate Governance and
Nominating Committee. Under Florida law, the term of a director elected by the Board to fill a
vacancy expires at the next shareholders meeting at which directors are elected.
Director | ||||
Name and Background | Since | |||
William M. Adams, age 39, has served as one
of our directors since January 2009. Mr.
Adams has been a Principal with Alpine
Investors, LP since September 2001. Alpine
Investors, LP is a private equity investor
in micro-cap companies, focused on firms
with less than $100 million of revenue. The
firm currently manages $250 million. Mr.
Adams focuses primarily on managing and
monitoring the operational performance of
portfolio companies and developing and
implementing growth strategies. Leveraging
early career roles that included marketing
and sales positions at The Clorox Company
and strategic work as a management
consultant at The Mitchell Madison Group, a
global strategic consulting practice, he
works most closely with Alpines consumer,
retail and direct marketing oriented
businesses. Mr. Adams serves on the Boards
of Directors of Direct Marketing Solutions,
Inc., Lighting By Gregory, McKissock and
YLighting, all of which are private
companies. He received a Master of Business
Administration from the Kellogg Graduate
School of Management at Northwestern
University and a Bachelor of Arts from
Colgate University.
|
2009 | |||
The Board believes that Mr. Adams
experience with smaller cap companies,
particularly with regard to growth
strategies, qualifies him to serve as a
member of the Board of Directors. |
||||
Douglas Banker, age 58, has served as one of
our directors since August 2000. Mr.
Bankers more than 35 years of experience in
the entertainment industry includes
providing management services to musicians
and recording artists; marketing,
merchandising, licensing, and sales of music
media products; and the development and
management of concerts and similar events.
Mr. Banker is currently Vice President of
McGhee Entertainment, a successful artist
management company with offices in Los
Angeles and Nashville. McGhee Entertainment
has managed and marketed the careers of many
successful recording artists, including Bon
Jovi, Motley Crue, Scorpions, KISS, Hootie &
The Blowfish, Ted Nugent, Asian pop-star
Tata Young and country music stars Chris
Cagle and Darius Rucker. Mr. Banker also
served as President of the Board of the
Motor City Music Foundation in Detroit,
Michigan from 1996 to 2000.
|
2000 | |||
The Board believes that Mr. Bankers
entertainment and marketing experience and
his experience in international markets
makes him well suited to service on the
Board of Directors of the Company. |
||||
Ronald C. Bernard, age 67, has served as one
of our directors since September 2009. Mr.
Bernard has been President of LWB Media
Consulting, a company that provides
consulting to private equity firms investing
in media-related companies, since 2004, and
a Managing Director of Alvarez and Marsal, a
professional services firm, since September
2009. Prior to that time Mr. Bernard served
as Chief Executive Officer of Sekani, Inc.,
a privately held media licensing and digital
media asset management company from 2000 to
2003, and as President of NFL Enterprises
from 1994 to 2000, where he focused on the
National Football Leagues media businesses
and international operations. From 1987 to
1993 Mr. Bernard served as President of
Viacom Network Enterprises. He also
previously served as a director of Atari,
Inc. Mr. Bernard received a Master of
Business Administration from Columbia
University and a Bachelor of Arts from
Syracuse University. Mr. Bernard is also a
Certified Public Accountant.
|
2009 | |||
The Board believes that Mr. Bernards media
experience and his experience as a Certified
Public Accountant make him qualified to
serve as a director of the Company. |
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Director | ||||
Name and Background | Since | |||
Christopher J. Davino, age 44, has served as
one of our directors since January 2009 and
as our President and Chief Executive Officer
since September 2009. From January through
August 2009, Mr. Davino served as our
interim Chief Executive Officer. From 2007
to 2009, he was a principal and head of the
Corporate Rescue Group of XRoads Solutions
Group, LLC, a corporate restructuring
management consulting company. At XRoads,
Mr. Davino oversaw a national advisory
practice of approximately 30 professionals
providing strategic, operational and
financial advice, interim and crisis
management, and transactional services to
financially distressed middle market
companies and their various creditor and
interest holder constituencies.
Transactional services included mergers and
acquisitions, debt and equity capital
raising and balance sheet recapitalizations.
From early 2006 until 2007, Mr. Davino was
President of Osprey Point Advisors, LLC, a
firm providing consulting and investment
banking services to companies, including
capital raising and mergers and acquisitions
transactional services. From July 2004
through December 2005, Mr. Davino was
President of E-Rail Logistics Inc., a
rail-based logistics company, which he
founded. Prior to that position, he worked
as a restructuring professional at Financo
Inc., an investment banking firm,
Wasserstein Perella Co., an investment
banking firm, and Zolfo Cooper & Co., an
advisory and interim management firm
providing restructuring services. Mr. Davino
was previously a member of the Board of
Directors of Hirsh International Corp., a
public company, and has recently served as
Chairman of the Board of Directors of Pendum
Inc., a national ATM servicing business and
a private company, where he directed the
companys restructuring activities,
including the sale of the business. Mr.
Davino received his Bachelor of Science from
Lehigh University.
|
2009 | |||
The Board believes Mr. Davino is qualified
to serve as a director not only because of
his extensive executive management
experience, but also because his insight as
Chief Executive Officer of the Company is
valuable to the Board. |
||||
Jack Jacobs, age 64, has served as one of
our directors since January 2009. Mr. Jacobs
has been a principal of The Fitzroy Group,
Ltd., a firm that specializes in the
development of residential real estate in
London and invests both for its own account
and in joint ventures with other
institutions, for the past five years. He
has held the McDermott Chair of Politics at
West Point since 2005 and has served as an
NBC military analyst since 2002. Mr. Jacobs
was a co-founder and Chief Operating Officer
of AutoFinance Group Inc., one of the firms
to pioneer the securitization of debt
instruments, from 1988 to 1989; the firm was
subsequently sold to KeyBank. He was a
Managing Director of Bankers Trust
Corporation, a diversified financial
institution and investment bank, where he
ran foreign exchange options worldwide and
was a partner in the institutional hedge
fund business. He retired in 1996 to pursue
investments. Mr. Jacobs military career
included two tours of duty in Vietnam, where
he was among the most highly decorated
soldiers, earning three Bronze Stars, two
Silver Stars and the Medal of Honor, the
nations highest combat decoration. He
retired from active military duty as a
Colonel in 1987. Mr. Jacobs also serves as a
member of the Board of Directors of Xedar
Corporation and Visual Management Systems.
Mr. Jacobs earned a Bachelor of Arts and a
Masters degree from Rutgers University.
|
2009 | |||
The Board believes Mr. Jacobs is qualified
to serve on the Board of Directors of the
Company because of his extensive executive
management experience and his leadership
skills. |
||||
Stephen W. Palley, age 65, has served as one
of our directors since September 2009. Mr.
Palley is a consultant to Consensus
Securities, LLC, a broker dealer, where he
engages in investment banking services. From
2005 to March 2010, he served as an
Executive Director of Pali Capital, an
investment bank in New York. Prior to that
time, Mr. Palley served as a consultant to
LLJ Capital, L.L.C., providing financial
advisory services, principally to distressed
companies in the telecom and media
industries. From 1999 to 2002 Mr. Palley
served as President and Chief Executive
Officer of Source Media, Inc., and from
1997 to 1999 as a consultant to media
companies through PSW Enterprises. From
1986 through 1996 Mr. Palley served as
Executive Vice President and Chief Operating
Officer of King World Productions, Inc.,
where he negotiated the syndication of
successful entertainment properties,
including the Oprah Winfrey Show. Mr.
Palley also served as General Counsel of
King World, and prior thereto practiced
media and entertainment law with Berger &
Steingut and Hardee Barovick Konecky &
Braun. Mr. Palley received a Juris Doctor
from Columbia University School of Law and a
Bachelor of Arts from American Universitys
School of Government and Public
Administration. Mr. Palley previously
served as a director of The Roo Group.
|
2009 | |||
The Board believes that Mr. Palley is
qualified to serve as a director due to his
experience leading and advising media
companies. |
||||
Mark A. Sellers, age 41, has served as
Chairman of the Board since January 2009 and
as one of our directors since July 2008. Mr.
Sellers has been the founder and managing
member of Sellers Capital LLC, an investment
management firm, since 2003. Sellers Capital
LLC manages Sellers Capital Master Fund,
Ltd., a hedge fund that is our largest
shareholder. Prior to founding Sellers
Capital LLC, Mr. Sellers was the Lead Equity
Strategist for Morningstar, Inc., a provider
of investment research.
|
2008 | |||
The Board believes Mr. Sellers is qualified
to serve as a director of the Company due to
his extensive financial and investment
experience. In addition, Mr. Sellers role
as managing member of the Companys largest
shareholder provides a unique shareholder
perspective to the Board. |
||||
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Director | ||||
Name and Background | Since | |||
Bruce Steinberg, age 53, has served as one
of our directors since January 2009. Mr.
Steinberg has over 20 years of media
industry experience. Currently he advising
Wananchi Group Holdings, a media company
with emphasis on residential and corporate
broadband, pay-tv and VoIP telephony in East
Africa. Previously, he was the Chief
Executive Officer of HIT Entertainment
Limited, which creates internationally
renowned childrens properties, including
Bob the Builder, Barney, Thomas & Friends,
Angelina Ballerina and Pingu, and which has
activities spanning television and video
production, publishing, consumer products,
licensing and live events. Prior to HIT, Mr.
Steinberg was the Chief Executive Officer of
Fox Kids Europe N.V., General Manager of
Broadcasting at BSkyB and the first Chief
Executive Officer of UK Gold and UK Living
TV from their launch in 1992 to their sale
in 1997. He began his career at MTV
Networks, where he held various positions in
New York and Europe. He is currently a
director of Arts Alliance Media, Europes
leading provider of digital cinema
technology, and a Board member of JDRF UK, a
charitable organization dedicated to Type 1
diabetes. Mr. Steinberg received a MBA from
Harvard Business School, a BA (Cantab) from
Cambridge University and a BA from Columbia
University.
|
2009 | |||
The Board believes that Mr. Steinberg is
qualified to serve as a director of the
Company due to his executive level
experience with entertainment and media
companies and his international experience
with media companies. |
||||
Samuel S. Weiser, age 50, served as a member
and the Chief Operating Officer of Sellers
Capital LLC, an investment management firm,
where he was responsible for all
non-investment activities, from 2007 to
2010. Mr. Weiser is also an indirect
investor in Sellers Capital Master Fund,
Ltd., an investment fund managed by Sellers
Capital LLC and Premiers largest
shareholder. From February through October
2009, Mr. Weiser provided consulting
services to us through a consulting
agreement. From April 2005 to 2007, he was
a Managing Director responsible for the
Hedge Fund Consulting Group within Citigroup
Inc.s Global Prime Brokerage division.
From 2002 to April 2005, he was the
President and Chief Executive Officer of
Foxdale Management, LLC, a consulting firm
founded by Mr. Weiser that provided
operational consulting to hedge funds and
litigation support services in hedge fund
related securities disputes. Mr. Weiser
also served as Chairman of the Managed Funds
Association, a lobbying organization for the
hedge fund industry, from 2001 to 2003. Mr.
Weiser is also a former partner in Ernst &
Young. He received a Bachelor of Arts in
Economics from Colby College and a Master of
Science in Accounting from George Washington
University.
|
2009 |
The Board believes that Mr. Weisers extensive financial and operational consulting experience
makes him qualified to serve as member of the Board of Directors.
Executive Officers
We are currently served by four executive officers:
Christopher J. Davino, age 44, serves as our president and Chief Executive Officer. Further
information about Mr. Davino is set forth above.
John A. Stone, age 43, has served as our Chief Financial Officer since May 13, 2009. Prior to
Premier, Mr. Stone served at S1 Corporation, a provider of customer interaction software solutions
for financial and payment services, as Chief Financial Officer from February 2006 to August 2008;
Senior Vice President of Global Finance from October 2005 to January 2006; and Global Controller
from June 2004 until October 2005. From April 2003 to June 2004, Mr. Stone was Vice President of
Finance, Corporate Controller of EarthLink, a provider of Internet access and communication
services. Mr. Stone has a Bachelor of Business Administration degree from the University of Georgia
and is a Certified Public Accountant.
Robert A. Brandon, age 59, has served as our General Counsel, Vice President of Business
Affairs and Secretary since October 23, 2009. Mr. Brandon joined the Company as Deputy General
Counsel in June 2008. In 1984, Mr. Brandon began his legal career with Proskauer Rose, L.P. where
he was a corporate associate. From 1988 to 2007, Mr. Brandon worked in the Legal Department at
Madison Square Garden, L.P., functioning as Senior Vice President Legal and Business Affairs for
his last ten years there, with duties that included oversight of all legal work for the Booking,
Concert Promotion and Theatrical Divisions of Madison Square Garden and Radio City Music Hall.
Thereafter, he was a self-employed legal consultant for clients in the entertainment and media
industries until joining the Company. Mr. Brandon has a Bachelor of Arts degree from Colgate
University and a Juris Doctorate from Brooklyn Law School.
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M. Kris Hart, age 44, has served as our Vice President and Chief Marketing Officer since May
13, 2010. Prior to Premier, Ms. Hart served as Vice President, Brand Management at Harrahs
Entertainment from October 2004 to November 2009 where she played a key role with Harrahs
acquisition of Caesars Entertainment. Before Harrahs, Ms. Hart directed an Innovation team at
Coca-Cola focused on experiential marketing and customization packaging. Ms. Hart began her career
as an intern at Citibank, N.A. as a Business Strategy Analyst, New Product Development. Between
1992 and 2002, Ms. Hart served in various marketing roles at such companies as American Airlines,
Pagenet, Arch Communications, and Intel Corp. Ms. Hart has a Bachelor of Arts degree from Auburn
University and a Masters of Business Administration degree from Vanderbilt University.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors,
officers and greater-than-10% shareholders to file with the SEC reports of ownership and changes in
ownership regarding their holdings in the Company.
Based solely on the copies of the reports filed with the SEC, we believe that during fiscal
year 2010 all of our directors, officers and greater-than-10% shareholders timely complied with
the filing requirements of Section 16(a).
Code of Ethics
We have adopted a Code of Ethics that applies to our principal executive officer, principal
financial officer, and principal accounting officer. Our Code of Ethics also applies to all of our
other employees and to our directors. Our Code of Ethics is posted on our website at www.prxi.com
under the heading The Company. We intend to satisfy any disclosure
requirements pursuant to Item 5.05 of Form 8-K regarding any amendment to, or a waiver from,
certain provisions of our Code of Ethics by posting such information on our website under the
heading The Company.
Corporate Governance
Corporate Governance and Nominating Committee Information
Our Corporate Governance and Nominating committee was formed in April 2006. The current
members of the Corporate Governance and Nominating Committee are Mr. Banker (Chairman), Mr. Jacobs
and Mr. Sellers. The Board of Directors has determined that each member of our Corporate Governance
and Nominating Committee is independent in accordance with the listing standards of the NASDAQ
Global Market. The Corporate Governance and Nominating Committee met three times in fiscal year
2010.
Our Corporate Governance and Nominating Committee is charged with recommending the slate of
director nominees for election to the Board of Directors, identifying and recommending candidates
to fill vacancies on the Board, and reviewing, evaluating and recommending changes to our corporate
governance processes. Among its duties and responsibilities, the Corporate Governance and
Nominating Committee periodically evaluates and assesses the performance of the Board of Directors;
reviews the qualifications of candidates for director positions; assists in identifying,
interviewing and recruiting candidates for the Board; reviews the composition of each committee of
the Board and presents recommendations for committee memberships; reviews the compensation paid to
non-employee directors; and reviews and recommends changes to the charter of the Corporate
Governance and Nominating Committee and to the charters of other Board committees.
In evaluating the suitability of candidates to serve on the Board of Directors, including
shareholder nominees, the Corporate Governance and Nominating Committee seeks candidates who are
independent pursuant to the listing standards of the NASDAQ Global Market and who meet certain
selection criteria established by the Corporate Governance and Nominating Committee. The Corporate
Governance and Nominating Committee also considers an individuals skills, character and
professional ethics, judgment, leadership experience, business experience and acumen, familiarity
with relevant industry issues, national and international experience and other relevant criteria
that may contribute to our success. This evaluation is performed in light of the skill set and
other characteristics that would most complement those of the current directors, including the
diversity, maturity, skills and experience of the board as a whole.
5
Table of Contents
Audit Committee Information and Audit Committee Financial Expert
Our Audit Committee was formed in April 2006. The current members of the Audit Committee are
Mr. Bernard (Chairman), Mr. Adams and Mr. Palley. Our Board of Directors has determined that all of
the members of the Audit Committee are independent in accordance with the listing standards of the
NASDAQ Global Market and applicable SEC rules. Our Board of Directors has designated Mr. Adams and
Mr. Bernard, the Audit Committee Chairman, as Audit Committee financial experts under applicable
SEC rules. See Proposal No. 1 for more information about Mr. Adams and Mr. Bernards background
and experience.
Our Audit Committee serves as an independent and objective party to monitor our financial
reporting process and internal control system; retains and pre-approves audit and any non-audit
services to be performed by our independent registered accounting firm; directly consults with our
independent registered public accounting firm; reviews and appraises the efforts of our independent
registered public accounting firm; and provides an open avenue of communication among our
independent registered public accounting firm, financial and senior management and the Board of
Directors. The Audit Committees report relating to fiscal year 2010 is included in this proxy
statement.
ITEM 11. EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Introduction
Our fiscal year 2010 continued to be a transition year for our Company in terms of our
executive leadership and executive compensation programs and policies.
During fiscal year 2009 the composition of the Board of Directors and Compensation Committee
significantly changed. In addition, the senior management team changed and Chris Davino, then a
principal and head of the corporate rescue group of XRoads Solutions Group, LLC, a corporate
restructuring management consulting company, was appointed as our interim President and Chief
Executive Officer on January 28, 2009. Our other management changes during fiscal year 2009 or
early fiscal year 2010 included Mr. Ingalls resignation as our Chief Financial Officer, Kelli L.
Kellars resignation as our acting Chief Financial Officer and Chief Accounting Officer, Brian
Waingers resignation as our Vice President and Chief Legal Counsel, and Thomas Zallers departure
as our Vice President of Exhibitions. John A. Stone, our new Chief Financial Officer, was
appointed as of May 13, 2009. On September 3, 2009, Mr. Davino was appointed as the Companys
President and Chief Executive Officer, replacing his agreement to serve on an interim basis. On
October 23, 2009, Robert Brandon, the Companys former Deputy General Counsel, was appointed to the
position of General Counsel and Vice President of Business Affairs and became an executive officer
of the Company. In May 2010, Kris Hart was appointed to the position of Vice President and Chief
Marketing Officer.
The consent solicitation led by Sellers Capital in 2009 involved six of our nine current
directors. In making their case to our shareholders as part of the consent solicitation, these
directors strongly criticized the compensation that we paid to our senior executives, our hiring
practices, and the governance that we followed in making compensation and hiring decisions. These
directors expressed their intent to reform our practices in these areas and to provide compensation
for our senior managers that is more clearly aligned with the interests of our shareholders. As a
result, the approach of the Compensation Committee to making executive compensation decisions in
fiscal year 2010 began to shift from prior practices toward policies that better align executive
compensation with the interests of our shareholders.
Compensation Policies and Practices for Fiscal Year 2010 and the Future
During the last fiscal year the Compensation Committee has focused on assisting the Company in
rebuilding its management team and establishing effective compensation programs for the executives
who have been appointed. While longer term compensation policies and practices of the Company
continue to evolve due to the recent changes in the Board of Directors and the management team, the
Compensation Committee continues to be guided in its decisions by the four main principles the
Committee identified in its last Compensation Discussion and Analysis. First, we are committed to
paying competitive compensation, which we believe is necessary to attract and retain qualified
executive officers, particularly in light of the companys challenging financial circumstances.
Second, we are committed to linking pay to performance through incentive compensation that is tied
to specific performance criteria and achievement. Third, the interests of our executive officers
should be aligned with the interests of our shareholders, which we believe can be promoted through
performance-based awards tied to the achievement of our business objectives and equity-based
awards. Fourth, our most important objective is the long-term increase in shareholder value, which
in the near term involves positioning the Company for future growth and success.
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Table of Contents
Role of Our Compensation Committee
The duties and responsibilities of our Compensation Committee are set forth in the Committees
charter, as adopted by our Board in April 2006. The charter of our Compensation Committee is
available on our website located at www.prxi.com under the heading Investor Relations under the
subheading Corporate Governance. We have included additional information about our Compensation
Committee in the section of this proxy statement titled Corporate Governance Compensation
Committee.
Under its charter, our Compensation Committee is charged with assisting our Board in
fulfilling its responsibilities relating to the compensation of our executive officers. The
charter requires the Committee to be composed of at least three directors, all of whom must satisfy
the independence requirements under the listing rules of the NASDAQ Global Market. As of February
28, 2010, the Committee was composed of Mr. Steinberg, Chair, Mr. Adams and Mr. Jacobs, each of
whom has been determined by the committee and our Board to meet these independence requirements.
The principal responsibilities and functions of the Committee include: reviewing the
competitiveness of our executive compensation programs; reviewing
and approving the compensation structure for our executive officers; overseeing the annual
evaluations and approving the annual compensation for our executive officers; reviewing and
approving compensation packages for new executive officers; reviewing and making recommendations
regarding long-term equity-based and other incentive compensation plans; and reviewing our
employment practices.
Our Compensation Committee has not determined to recommend amendments to the Committees
charter at this time, although it will review the charter and consider recommending changes on an
annual basis.
Compensation Plans and Programs
Historically, the Company has entered into employment agreements with our executive officers,
and the Company entered into employment agreements with Mr. Davino and Mr. Stone in fiscal year
2010 and with Mr. Brandon and Ms. Hart in early fiscal year 2011. As we hire additional executive
officers, we expect that we will provide these new hires with employment agreements on competitive
terms as well.
Our Compensation Committee believes that equity-based awards are essential to align the
interests of our executive officers with the interests of our shareholders. At the last Annual
Meeting, the shareholders of the Company adopted the Premier Exhibitions, Inc. 2009 Equity
Incentive Plan, which provides a mechanism for making equity awards to directors, executive
officers and other employees of the Company. Currently 1,423,000 shares remain available for
future grants under the 2009 Equity Incentive Plan.
In the past, the Company has not utilized a formal peer group for consideration of our
executive compensation decisions and generally has not utilized the advice of outside compensation
consultants. In addition, the company has not had a specific policy for the allocation of
compensation between short-term and long-term compensation or between cash and equity compensation.
As we continue to review our compensation policies and programs and as we hire additional
executive officers, we will continue to consider whether one or more of these practices would be
appropriate for the Company and the Compensation Committees processes.
Mr. Davinos Compensation
When our newly composed Board was recognized on January 28, 2009, it appointed Mr. Davino as
our interim President and Chief Executive Officer. Given our Companys deteriorating financial
condition and the significant changes in the composition of our Board and management, our Board
believed that it was critical to select an interim chief executive officer with substantial
turnaround experience. Our Board also determined that it was appropriate to provide a compensation
package to Mr. Davino that would be competitive in the marketplace for turnaround specialists, who
were acknowledged to be in demand during the current economic downturn. At that time Mr. Davinos
service with the Company was expected to be temporary in nature.
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In connection with Mr. Davinos appointment on this interim basis, our Compensation Committee
approved compensation for Mr. Davino that included a base salary of $50,000 per month and a cash
bonus of up to $35,000 per month, based on the achievement of performance milestones that were
required to be determined by our Compensation Committee. We also agreed to reimburse Mr. Davinos
living and commuting expenses not in excess of $9,500 per month in connection with his services in
Atlanta, Georgia, where our principal executive office is located. Mr. Davinos compensation
package as interim President and Chief Executive Officer did not include an equity component and
did not provide any severance payments upon termination of the agreement for any reason. The terms
of this compensation package are set forth in Mr. Davinos initial employment agreement with us,
which was approved by our Compensation Committee and Board of Directors and is summarized in the
section of this proxy statement titled Employment Agreements.
Mr. Davino was initially hired as a consultant through XRoads Solutions Group, LLC, and his
interim compensation was negotiated on that basis. As part of the deliberations in determining
this compensation package, our Compensation Committee considered the levels of base and incentive
compensation and reimbursements that would be necessary to recruit and retain an experienced
turnaround specialist such as Mr. Davino to our Company during a period of very challenging
circumstances. The Committee specifically considered prevailing market rates for an experienced
turnaround specialist, and sought to set Mr. Davinos total compensation opportunity in-line with
such market rates. The committee also determined
that, although most of Mr. Davinos compensation would be fixed, a significant portion should
be subject to the performance-based bonus, which would provide a strong incentive to Mr. Davino to
meet our short-term goals relating to stabilizing and turning-around the Company.
Since Mr. Davinos tenure as our interim President and Chief Executive Officer was initially
contemplated to be short-term in nature, the Committee did not believe that it was appropriate to
include in his compensation package an equity component, which is generally intended to provide a
long-term incentive. Similarly, the Committee believed that Mr. Davinos contemplated short tenure
did not warrant the protection that could be provided through a severance payment obligation. With
respect to his bonus opportunity under this agreement, the Compensation Committee determined
performance milestones related to Mr. Davinos first four months of employment with the Company,
including: developing a stabilization plan; developing a revenue architecture and go-to-market
strategy for exhibitions; reengineering the Companys infrastructure and reducing costs; obtaining
rescue financing; renegotiating or replacing key third party contractual relationships; and
developing a long-term strategic business plan framework for approval by our Board. In setting
these milestones, our Compensation Committee believed that, in light of our current financial
circumstances and the need for the Company to be stabilized and turned-around, it was critical to
develop performance criteria focused on the Companys short-term needs and goals. Our Compensation
Committee also recognized that Mr. Davinos engagement was contemplated to be on a short-term
basis, and the Committee therefore sought to provide an incentive for Mr. Davino to achieve
specific results during his expected tenure with the Company. Due to our distressed financial
circumstances and the many conditions at the Company that needed to be addressed, the short-term
goals for our Company that were embodied in Mr. Davinos performance milestones were extensive.
Effective September 3. 2009, Mr. Davino was appointed as President and Chief Executive Officer
of the Company on a permanent basis, and at that time the Compensation Committee entered into a new
employment agreement with Mr. Davino based on his change in position (the Agreement). Pursuant
to the Agreement, Mr. Davino receives an annual salary of $290,000, a housing stipend of $2,000 per
month and reimbursement of commuting expenses. The Agreement provides Mr. Davino with an annual
incentive bonus opportunity, with a target annual incentive opportunity equal to 50 percent of
his annual base salary. The Compensation Committee set performance criteria for Mr. Davinos fiscal
year 2010 bonus opportunity, with 25% of the bonus predicated on achievement of goals related to
executive team development, 25% based on the achievement of certain financial targets and 50% based
on progress against key objectives related to the Companys Titanic and Bodies exhibitions. With
respect to the financial goals, Mr. Davino receives 30% of the portion of the bonus paid on
achievement of the financial objectives if he meets projected Adjusted EBITDA (defined as EBITDA
plus stock compensation expense and impairment expense) and 100% of the portion of the bonus paid
on achievement of the financial objectives if Adjusted EBITDA is $1 million better than projected.
In June 2010, the Compensation Committee declared and paid a bonus of $36,250 to Mr. Davino,
representing half of his bonus opportunity for that time period.
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In connection with the entry into the Agreement, the Company made a one-time stock option
grant to Mr. Davino providing for the purchase of 1,170,000 shares of the Companys common stock,
which has an exercise price per share equal to the closing price per share of the Companys common
stock on the grant date and will vest one-third per year over three years. Because Mr. Davinos
employment is now more permanent in nature, the Compensation Committee believes it is imperative
that Mr. Davino have a significant portion of his compensation in the form of equity, in order to
better align his interests with those of shareholders over the longer term.
If the Company terminates Mr. Davino without cause or elects not to renew the Agreement, or if
Mr. Davino resigns for good reason, he will be entitled to a severance payment equal to 150 percent
of his annual base salary and his annual incentive bonus for the year of termination, calculated
pursuant to the Agreement. Upon any termination that triggers severance, Mr. Davinos stock options
will vest in full and will remain exercisable for two years following the termination. The
Committee believes that this level of severance payment is comparable to the severance agreements
of chief executive officers of other corporations of a similar size, and provides Mr. Davino with
appropriate security given the difficult financial position of the Company at the time it entered
into his employment agreement.
Compensation of Other Executive Officers
Effective as of May 13, 2009, we hired John A. Stone as our Chief Financial Officer. Mr.
Stone was most recently the Chief Financial Officer of S1 Corporation, a public company listed on
the NASDAQ Global Market that provides customer interaction software solutions for financial and
payment services.
In connection with Mr. Stones appointment as our Chief Financial Officer, our Compensation
Committee approved compensation for Mr. Stone that includes a base salary of $220,000 per year, a
performance bonus opportunity that will be consistent with the incentive compensation programs that
will be developed by our Compensation Committee, and a restricted stock grant of 75,000 shares of
our common stock that vest over three years. In addition, if Mr. Stone is terminated by us without
cause, he terminates his employment for good reason, or his employment is in certain circumstances
terminated after we hire a new chief executive officer or sell the Company, he will be entitled to
severance pay equal to four months of his base salary and accelerated vesting of restricted stock
that would have vested in that anniversary year. The terms of this compensation package are set
forth in Mr. Stones employment agreement with us, which has been approved by our Compensation
Committee and is summarized in the section of this proxy statement titled Employment Agreements.
Effective as of October 23, 2009, we appointed Robert A. Brandon as General Counsel and Vice
President of Business Affairs. Mr. Brandon was most recently the Deputy General Counsel of the
Company.
In connection with Mr. Brandons appointment as our General Counsel, our Compensation
Committee approved compensation for Mr. Brandon that includes a base salary of $240,000 per year, a
performance bonus opportunity of 25% of his base salary, and a restricted stock grant of 60,000
additional shares of our common stock that vest over three years. In accordance with the terms of
Mr. Brandons initial employment agreement, entered into in June 2008, if Mr. Brandon is terminated
without cause he is entitled to the remainder of his base salary through June 2011. Under the
newly approved compensation terms for Mr. Brandon, he will also be entitled to accelerated vesting
of restricted stock that would have vested in the anniversary year. The terms of this compensation
package are set forth in an amendment to Mr. Brandons employment agreement with us, which has been
approved by our Compensation Committee and is summarized in the section of this proxy statement
titled Employment Agreements.
Effective as of May 12, 2010, we hired Kris Hart as our Vice President and Chief Marketing
Officer. Ms. Hart was most recently the Vice President, Brand Management for Harrahs
Entertainment in Las Vegas, Nevada.
In connection with Ms. Harts appointment as our Vice President and Chief Marketing Officer,
our Compensation Committee approved compensation for Ms. Hart that includes a base salary of
$225,000 per year, a performance bonus opportunity that will be consistent with the incentive
compensation programs that will be developed by our Compensation Committee, and a restricted stock
grant of 75,000 shares of our common stock that vest over three years. In addition, if Ms. Hart is
terminated by us without cause or she terminates her employment for good reason, she will be
entitled to severance pay equal to six months of her base salary and accelerated vesting of
restricted stock that would have vested in that anniversary year. Ms. Harts compensation package
is generally consistent with the form of compensation arrangement the Company provided to Mr.
Stone, and is the general format the Compensation Committee anticipates using for future executive
officers appointed by the Board of Directors. The terms of this compensation package are set forth
in Ms. Harts employment agreement with us, which has been approved by our Compensation Committee
and is summarized in the section of this proxy statement titled Employment Agreements.
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In developing the compensation of Mr. Stone, Mr. Brandon and Ms. Hart, our Compensation
Committee established a salary to provide each with a base level of compensation and a performance
bonus opportunity that will be determined pursuant to the incentive compensation programs developed
by the Committee during fiscal year 2011. The Committee also believes that an equity award, in the
form of restricted stock vesting over time, is an important component to provide the executives
with an incentive to remain with the Company over time and to provide them with an interest that is
aligned with the interests of our shareholders. In arriving at these compensation packages, our
Compensation Committee considered the past compensation levels and equity awards provided to our
other current and previous senior officers, the Committees knowledge of the market for similar
personnel, and, in the case of Mr. Stone and Ms. Hart, advice from the executive search firms that
assisted us in finding and recruiting each to the Company. The severance rights provided to the
executives are considered by the Committee to be a reasonable payment amounts in order to provide
the executives with some security in joining the Company at a time when our future growth and
success are uncertain.
Tax, Accounting and Other Considerations
Our Compensation Committee reviews and considers the deductibility of executive compensation
under Section 162(m) of the Internal Revenue Code of 1986, as amended, which limits the annual
deduction a public company can take for U.S. federal income tax purposes for compensation paid to
certain employees to $1.0 million each. Our Compensation Committee expects that all compensation
we pay to our executive officers in fiscal year 2011 will be deductible for federal income tax
purposes but our Compensation Committee reserves the discretion to approve compensation that
will not meet these requirements as necessary to ensure competitive levels of total executive
compensation for our executive officers. Although our Compensation Committee considers minimizing
federal income tax expense an important goal in our financial planning process, it does not expect
that it will be the only or even the most important goal.
When approving the terms of any equity awards, our Compensation Committee will consider the
accounting implications of a given award, including the estimated expense, and will consider the
dilution to our shareholders holdings. The Committee recognizes that any equity-based awards will
be dilutive to our existing shareholders, but believes that these awards are necessary to attract
and retain the talent that we need to turn the Company around.
Compensation Committee Report
The Compensation Committee, which is comprised entirely of independent directors, has reviewed
and discussed with management the Compensation Discussion and Analysis included in this proxy
statement in accordance with Item 402(b) of Regulation S-K, as promulgated by the Securities and
Exchange Commission. Based on such review and discussion, the Committee recommended to the Board of
Directors that the Compensation Discussion and Analysis be included in this proxy statement.
Compensation Committee: | ||
Bruce Steinberg, Chairman | ||
Will Adams | ||
Jack Jacobs |
2010 Summary Compensation Table
The table below presents information regarding the compensation for fiscal years 2010, 2009,
and 2008 for our President and Chief Executive Officer, our Chief Financial Officer, our former
chief financial officer, and all of our other executive officers employed by us at any time during
fiscal year 2010. The individuals listed in the Summary Compensation Table are referred to
collectively in this proxy statement as the named executive officers.
Stock | Option | All Other | ||||||||||||||||||||||||||
Fiscal | Salary | Bonus | Awards | Awards | Compensation | Total | ||||||||||||||||||||||
Name and Principal Position(1) | Year | ($) | ($) | ($)(2) | ($)(2) | ($)(3) | ($) | |||||||||||||||||||||
Christopher J. Davino(4) |
2010 | 449,038 | 246,280 | | 737,100 | 25,523 | 1,457,911 | |||||||||||||||||||||
President and Chief Executive Officer |
2009 | 54,839 | 35,000 | (5) | | | 12,470 | 102,309 | ||||||||||||||||||||
John Stone (6) |
2010 | 177,954 | 8,462 | 58,500 | | 11,707 | 256,623 | |||||||||||||||||||||
Chief Financial Officer |
||||||||||||||||||||||||||||
Kelli L. Kellar(7) |
2010 | 31,238 | | | | 144,001 | 175,239 | |||||||||||||||||||||
Former Acting Chief Financial Officer |
2009 | 152,882 | 5,000 | | | 11,865 | 169,747 | |||||||||||||||||||||
and Chief Accounting Officer |
2008 | 70,288 | 38,300 | 276,150 | 83,600 | 4,907 | 473,245 | |||||||||||||||||||||
Robert Brandon (8) |
2010 | 220,997 | 75,500 | | | 15,903 | 312,400 | |||||||||||||||||||||
General Counsel and Vice President of |
||||||||||||||||||||||||||||
Business Affairs |
(1) | Ms. Hart was appointed as our Chief Marketing Officer on May 13, 2010, after the end of fiscal year 2010, and is, therefore, not included in this table. |
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(2) | The dollar value of restricted stock and option grants represent the grant date fair value calculated in accordance with FASB ASC Topic 718. A discussion of the assumptions used in calculating the compensation cost is set forth in Note 9 (Stock Compensation and Stock Options) to the Consolidated Financial Statements in our Annual Report on Form 10-K for fiscal year 2010. | |
(3) | The amounts in the All Other Compensation Column for fiscal year 2010 consist of the following compensation items: |
Medical | Living and | |||||||||||||||||||||||||||||||||||
Insurance | Auto | Commuting | Unpaid | |||||||||||||||||||||||||||||||||
Year | Premiums | Allowance | Allowance | Relocation | Vacation | Severance | Consulting | Total | ||||||||||||||||||||||||||||
Name | (a) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||||||||
Christopher J. Davino |
2010 | 9,009 | 16,514 | 25,523 | ||||||||||||||||||||||||||||||||
John Stone |
2010 | 11,707 | 11,707 | |||||||||||||||||||||||||||||||||
Kelli L. Kellar |
2010 | 14,547 | 129,454 | 144,001 | ||||||||||||||||||||||||||||||||
Robert Brandon |
2010 | 15,903 | 15,903 |
(a) | The table above summarizes the amounts in the All Other Compensation Column for fiscal year 2010. The All Other Compensation Column for fiscal year 2008 includes medical expenses of $4,907 for Ms. Kellar. The All Other Compensation Column for fiscal year 2009 includes medical insurance premiums of $11,865 for Ms. Kellar and $2,051 in medical insurance premiums and $10,419 in living and commuting allowances for Mr. Davino. | |
(b) | Pursuant to her employment agreement, upon her resignation on May 15, 2009, Ms. Kellar became entitled to a severance payment of $150,000 and continued health insurance benefits. The amount in this column represents the severance payment received by Ms. Kellar during fiscal year 2010. | |
(4) | Mr. Davino was appointed as our interim President and Chief Executive Officer on January 28, 2009, following the conclusion of Sellers Capital LLCs consent solicitation. On the same day, he was seated as one of our directors. On September 3, 2009, Mr. Davino was appointed as our permanent President and Chief Executive Officer. | |
(5) | Amount included in this column includes $35,000 of bonus earned for fiscal year 2009 but not determined and paid until fiscal year 2010. This bonus was not included in Mr. Davinos 2009 compensation in the proxy statement for the 2009 annual meeting of shareholders. | |
(6) | Mr. Stone was appointed as our Chief Financial Officer on May 13, 2009. | |
(7) | Ms. Kellar resigned from the Company effective May 15, 2009. | |
(8) | Mr. Brandon was appointed as our General Counsel and Vice President of Business Affairs on October 23, 2009. He was previously Deputy General Counsel for the Company. |
2010 Grants of Plan-Based Awards
The following table shows the estimated payout under Mr. Davinos bonus arrangements, as
further described in the sections titled Compensation Discussion and
Analysis and Employment Agreements and grants of equity awards to Mr. Davino and Mr. Stone
during fiscal year 2010.
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All Other | All Other | |||||||||||||||||||||||||||||||
Stock | Option | Exercise | Grant | |||||||||||||||||||||||||||||
Awards: | Awards: | or Base | Date Fair | |||||||||||||||||||||||||||||
Estimated Future Payouts | Number of | Number of | Price of | Value of | ||||||||||||||||||||||||||||
Under Non-Equity Incentive Plan Awards | Shares of | Securities | Option | Stock and | ||||||||||||||||||||||||||||
Grant | Threshold | Target | Maximum | Stock of | Underlying | Awards | Option | |||||||||||||||||||||||||
Name | Date | ($) | ($) | ($) | Units: (#) | Options: (#) | ($/sh) | Awards | ||||||||||||||||||||||||
Christopher J. Davino |
1/28/2009 | $ | 210,000 | (1) | ||||||||||||||||||||||||||||
9/3/2009 | $ | 72,500 | (2) | |||||||||||||||||||||||||||||
9/3/2009 | 1,170,000 | (3) | $ | 0.69 | $ | 737,100 | ||||||||||||||||||||||||||
John Stone |
5/13/2009 | 75,000 | (4) | $ | 58,500 | |||||||||||||||||||||||||||
Kelli L. Kellar |
| | | | | | | |||||||||||||||||||||||||
Robert A. Brandon |
| | | | | | |
(1) | Represents the estimated future bonus payouts upon Mr. Davinos satisfaction of the performance criteria established by our Compensation Committee for the period Mr. Davino served as interim president and chief executive officer. This bonus opportunity is pursuant to an employment agreement between the Company and Mr. Davino dated January 28, 2009. The actual bonus paid under this agreement was $210,000 and is included in the Summary Compensation Table. | |
(2) | Represents the target bonus payout under Mr. Davinos employment agreement dated September 3, 2009. Pursuant to this agreement the bonus opportunity for fiscal year 2010 is prorated from the date Mr. Davino and the Company entered into the agreement. The actual bonus paid under this agreement was $36,250, which is included in the Summary Compensation Table and represents 50% of Mr. Davinos bonus opportunity for this time period. | |
(3) | Stock options granted pursuant to Mr. Davinos employment agreement dated September 3, 2009. The options vest in thirds over the first three years from the date of grant and expire ten years from the date of grant. The grant was made under the 2009 Equity Incentive Plan of the Company. | |
(4) | Restricted stock granted pursuant to Mr. Stones employment agreement with the Company effective May 13, 2009. The restricted stock vests in thirds on the first three anniversary dates from the date of grant. |
Annual Base Salary as a Percent of Total Compensation
Annual base salaries paid to our named executive officers for fiscal year 2010 are shown in
the 2010 Summary Compensation Table.
For fiscal year 2010, the salary paid to each of our named executive officers constituted the
following percentage of each executives total compensation: Mr. Davino 31%; Mr. Stone 69%;
Ms. Kellar 18%; and Mr. Brandon 71%.
Employment Agreements
Set forth below are summaries of the key terms of our employment agreements with the named
executive officers listed in the 2010 Summary Compensation Table that are currently officers of the
Company. The persons listed in the 2010 Summary Compensation Table that are no longer employed by
the Company received compensation pursuant to employment agreements that have been summarized in
prior filings made by the Company with the SEC.
The employment agreements with our existing officers are as follows:
Christopher J. Davino. Effective as of January 28, 2009, we entered into an employment
agreement with Mr. Davino for his services as our interim President and Chief Executive Officer.
Following the expiration of the initial term on May 28, 2009, the term of the agreement
automatically extended by successive one-month periods unless either party terminated the agreement
by notifying the other party in writing at least 30 days prior to the end of the applicable renewal
term.
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Pursuant to his employment agreement, Mr. Davino received a salary of $50,000 per month. We
also reimbursed Mr. Davinos living and commuting expenses not in excess of $9,500 per month. After
four months of employment, Mr. Davino became eligible to receive a performance-based cash bonus of
up to $35,000 per month, including for the first four months of his employment. Mr. Davinos
employment agreement as interim president and chief executive officer did not provide any severance
payments upon termination of the agreement for any reason.
Effective September 3. 2009, the Company entered into a new employment agreement with Mr.
Davino based on his change in position to President and Chief Executive Officer (the Agreement).
Pursuant to the Agreement, Mr. Davino will receive an annual salary of $290,000, a housing stipend
of $2,000 per month and reimbursement of commuting expenses. The Agreement provides Mr. Davino with
an annual incentive bonus opportunity, with a target annual incentive opportunity equal to 50
percent of his annual base salary. The incentive payments will be based on Mr. Davinos achievement
of performance objectives established by the Companys Board of Directors, provided that at least
one-half of the annual incentive opportunity will be based on the Companys achievement of
quantitative financial metrics. The Agreement also included a grant of 1,170,000 stock options to
Mr. Davino, which vest three years from the date of grant and expire ten years from the date of
grant.
If the Company terminates Mr. Davino without cause or elects not to renew the Agreement, or if
Mr. Davino resigns for good reason, he will be entitled to a severance payment equal to 150 percent
of his annual base salary and an annual incentive bonus for the entire year of termination,
calculated pursuant to the Agreement. Upon any termination that triggers severance, Mr. Davinos
stock options will vest in full and will remain exercisable for two years following the
termination.
John A. Stone. Effective as of May 13, 2009, after the end of fiscal year 2009, Mr. Stone
became our Chief Financial Officer. We entered into an employment agreement with Mr. Stone,
pursuant to which Mr. Stone is entitled to receive a base salary of $220,000 per year, a
performance bonus opportunity pursuant to the incentive compensation programs that will be
developed by our Compensation Committee, and a restricted stock grant of 75,000 shares of our
common stock vesting over three years. In addition, if Mr. Stone is terminated by us without
cause, he terminates his employment for good reason, or his employment is in certain circumstances
terminated after we hire a new chief executive officer or sell the company, he will be entitled to
severance pay equal to four months of his base salary.
Robert A. Brandon. In connection with Mr. Brandons appointment as our General Counsel, our
Compensation Committee approved an amended employment agreement for Mr. Brandon that includes a
base salary of $240,00 per year, a performance bonus opportunity of 25% of his base salary, and a
restricted stock grant of 60,000 additional shares of our common stock that vest over three years.
In accordance with the terms of Mr. Brandons existing employment agreement, entered into in June
2008, if Mr. Brandon is terminated without cause he is entitled to the remainder of his base salary
through June 2011.
M. Kris Hart. In connection with Ms. Harts appointment as our Vice President and Chief
Marketing Officer, our Compensation Committee approved compensation for Ms. Hart that includes a
base salary of $225,000 per year, a performance bonus opportunity that will be consistent with the
incentive compensation programs that will be developed by our Compensation Committee, and a
restricted stock grant of 75,000 shares of our common stock that vest over three years. In
addition, if Ms. Hart is terminated by us without cause or she terminates her employment for good
reason, she will be entitled to severance pay equal to six months of her base salary.
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Outstanding Equity Awards at February 28, 2010
The following table shows information regarding our named executive officers outstanding
equity-based awards as of February 28, 2010.
Option Awards | Stock Awards | |||||||||||||||||||||||
Number of | Number of | |||||||||||||||||||||||
Shares | Shares | Market | ||||||||||||||||||||||
Underlying | Underlying | Number of | Value | |||||||||||||||||||||
Unexercised | Unexercised | Option | Shares | of Shares | ||||||||||||||||||||
Options | Options | Exercise | Option | That Have | That Have | |||||||||||||||||||
(#) | (#) | Price | Expiration | Not Vested | Not Vested | |||||||||||||||||||
Name | Exercisable | Unexercisable | ($) | Date | (#) | ($)(1) | ||||||||||||||||||
Christopher J. Davino |
1,170,000 | (2) | $ | 0.69 | 9/3/2019 | |||||||||||||||||||
John Stone |
75,000 | (3) | $ | 94,500 | ||||||||||||||||||||
Kelli L. Kellar |
6,663 | (4) | $ | 9.93 | 11/27/2017 | |||||||||||||||||||
Robert A. Brandon |
10,000 | (5) | $ | 12,600 |
(1) | The market value of shares reported in this column is based on the closing market price of our common stock of $1.26 per share on February 26, 2010, which was the last trading day of fiscal year 2010. | |
(2) | These options vest in thirds on August 28, 2010, August 28, 2011 and August 28, 2012. | |
(3) | These restricted shares vest in thirds on May 13, 2010, May 13, 2011 and May 13, 2012. | |
(4) | Of the 6,666 options unexercisable at February 28, 2009, 3,333 options were accelerated and became exercisable and 3,333 options were forfeited in connection with Ms. Kellars resignation on May 15, 2009. These options had a three-year vesting period, with 33 1/3% of these options vesting on each of the first, second and third anniversaries of the November 27, 2007 grant date. | |
(5) | These restricted shares vest one half on June 9, 2010 and one half on June 9, 2011. |
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2010 Option Exercises and Stock Vested
The following table shows information regarding aggregate stock option exercises and aggregate
stock awards vested, including in each case the value realized upon exercise or vesting, during
fiscal year 2009 for each of our named executive officers.
Option Awards | Stock Awards | |||||||||||||||
Number of | Number of | |||||||||||||||
Shares Acquired | Value Realized | Shares Acquired | Value Realized | |||||||||||||
on Exercise | on Exercise | on Vesting | on Vesting | |||||||||||||
Name | (#) | ($)(1) | (#) | ($)(2) | ||||||||||||
Christopher J. Davino |
| | | | ||||||||||||
John Stone |
| | | | ||||||||||||
Kelli L. Kellar |
| | 8,334 | $ | 7,167 | |||||||||||
Robert A. Brandon |
| | 5,000 | $ | 4,000 |
(1) | The value realized on the exercise of stock options is based on the difference between the exercise price and the market price of our common stock on the date of exercise, multiplied by the number of shares acquired. |
Potential Payments Upon Termination or Change-of-Control
We currently have four executive officers Mr. Davino, Mr. Stone, Mr. Brandon and Ms. Hart.
For a description of the potential payments to each in the case of a change in control, please see
the section titled Employment Agreements.
Pursuant to the Companys 2000 Stock Option Plan and Amended and Restated 2004 Stock Option
Plan, upon the effective date of a change-of-control of the Company, our Board of Directors may
declare that each option granted under these plans shall terminate as of a date fixed by the Board.
Each named executive officer would then have the right, during the period of 30 days preceding such
termination, to exercise his or her options as to all or any part of the shares of stock covered by
the options.
In addition, pursuant to our Amended and Restated 2007 Restricted Stock Plan, upon the
effective date of a change-of-control of the Company, all awards of restricted stock outstanding
under the Plan and held by our named executive officers would immediately vest in full.
Pursuant to our 2009 Equity Incentive Plan, upon the effective date of a change in control,
all awards that are not assumed, converted or replaced by the resulting entity in the change in
control will become exercisable and vest immediately, and all performance criteria will be deemed
to be satisfied at target levels. At the option of the Company, the awards may instead be
terminated and the value of each paid in cash to the grantee of the award.
Compensation Committee
Our Compensation Committee was formed in April 2006. The current members of the Compensation
Committee are Mr. Adams (chairman), Mr. Jacobs and Mr. Steinberg. Mr. Steinberg served as chair of
the Compensation Committee until June 2010. Our Board of Directors has determined that each of the
members of our Compensation Committee is independent in accordance with the listing standards of
the NASDAQ Global Market. The Compensation Committee met eleven times in fiscal year 2010.
Our Compensation Committee discharges the responsibilities of our Board of Directors relating
to the compensation of our executive officers. Among its duties, our Compensation Committee
determines the compensation and benefits paid to our executive officers, including our President
and Chief Executive Officer.
Our Compensation Committee annually reviews and determines salaries, bonuses and other forms
of compensation paid to our executive officers and management, approves recipients of stock option
awards and establishes the number of shares and other terms applicable to such awards.
Our Compensation Committee also determines the compensation paid to our Board of Directors,
including equity-based awards. More information about the compensation of our non-employee
directors is set forth in the section of this proxy statement titled Director Compensation.
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In addition, our Compensation Committee is responsible for reviewing and discussing with
management the Compensation Discussion and Analysis that SEC rules require be included in our
annual proxy statement, preparing the
Committees report that SEC rules require be included in our annual proxy statement, and
performing such other tasks that are consistent with its charter. The Compensation Committees
report relating to fiscal year 2010 is included herein.
Our Compensation Committee has the authority to delegate any of its responsibilities to
subcommittees that are composed entirely of independent directors, as the Chairman of the
Compensation Committee may deem appropriate.
Director Compensation
Our Compensation Committee annually reviews and approves compensation for our non-employee
directors. Generally, the Compensation Committee sets director compensation at a level that is
intended to provide an incentive for current directors to continue in their roles and for new
directors to join our Board of Directors.
New Director Compensation Plan
On April 23, 2009, our Board of Directors approved a new director compensation plan to attract
and retain qualified directors to assist us in efforts to turnaround our the performance of our
Company. Under the new plan, we pay an annual retainer of $90,000 to each of our non-employee
directors, which is paid partly in equity and partly in cash. The purpose of the equity component
is to better align the interests of our directors with those of our shareholders. The directors do
not receive additional fees for attendance at Board or Board committee meetings. Mr. Sellers does
not accept any compensation for his services as a director or chairman of our Board of Directors.
For the 2009 calendar year, due to the limited availability of shares under our 2007
Restricted Stock Plan, each non-employee director was requested to elect $20,000 of the annual
retainer to be paid in equity and $70,000 of the annual retainer to be paid in cash. Equity
compensation is in the form of restricted stock units vesting on the earlier of (i) January 1,
2010, (ii) a change-of-control, or (iii) the day when a director ceases to serve on our Board of
Directors. If a director ceased to be a member of our Board of Directors, his restricted stock
units vested immediately and proportionately to the period of time served by the director during
the year. The restricted stock units were payable to the non-employee director, in shares of our
common stock, within 20 days after becoming vested, and any units that did not vest were forfeited.
Cash compensation was paid monthly.
For the 2010 calendar year, each non-employee director could elect to receive the annual
retainer in either (a) $50,000 equity and $40,000 cash or (b) $20,000 equity and $70,000 cash.
Equity compensation is in the form of restricted stock units granted under the 2009 Equity
Incentive Plan and vesting on the earlier of (i) January 1, 2011, (ii) a change-of-control, or
(iii) the day when a director ceases to serve on our Board of Directors. If a director ceases to be
a member of our Board of Directors, his restricted stock units will vest immediately and
proportionately to the period of time served by the director during the year. The restricted stock
units will be payable to the non-employee director, in shares of our common stock, within 20 days
after becoming vested, and any units that do not vest will be forfeited. Cash compensation is paid
monthly.
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2010 Director Compensation Table
The following table sets forth information regarding the compensation of our non-employee
directors for fiscal year 2010. Information about the compensation of Mr. Davino, for his services
during fiscal year 2009 is reflected in the 2009 Summary Compensation table.
Fees Earned | ||||||||||||||||||||
or Paid in | Stock | Option | All Other | |||||||||||||||||
Cash | Awards | Awards | Compensation | Total | ||||||||||||||||
Name | ($) | ($)(1) | ($)(2) | ($)(3) | ($) | |||||||||||||||
William M. Adams |
70,000 | (5) | 20,000 | (6) | | | 90,000 | |||||||||||||
Douglas Banker |
71,900 | (5) | 20,000 | (6) | | 81,187 | 173,087 | |||||||||||||
Ronald Bernard(4) |
41,667 | (5) | 3,333 | (6) | | | 45,000 | |||||||||||||
N. Nick Cretan(7) |
31,367 | (5) | 8,612 | (6) | | 855 | 40,834 | |||||||||||||
Mark A. Hugh Sam(7) |
29,167 | (5) | 8,612 | (6) | | | 40,178 | |||||||||||||
Jack Jacobs |
70,000 | (5) | 20,000 | (6) | | | 90,000 | |||||||||||||
Steve Palley(4) |
41,667 | (5) | 3,333 | (6) | | | 45,000 | |||||||||||||
Alan B. Reed(7) |
32,267 | (5) | 8,612 | (6) | | 2,399 | 40,881 | |||||||||||||
Mark A. Sellers(8) |
| | | | | |||||||||||||||
Bruce Steinberg |
70,000 | (5) | 20,000 | (6) | | | 90,000 | |||||||||||||
Samuel Weiser(4) |
50,833 | (5) | 8,333 | (6) | | 143,750 | 202,916 |
(1) | Represents the full grant date fair value computed in accordance with FASB ASC Topic 718, on the same basis as disclosed in footnote 2 to the 2010 Summary Compensation Table. | |
(2) | We did not grant any stock option awards to our non-employee directors for fiscal year 2010. As of February 28, 2010, the following vested and unvested stock option awards, in aggregate, were outstanding: Douglas Banker 225,000 options. | |
(3) | For Mr. Banker, includes $8,189 in health insurance premiums under a benefit plan previously available to directors of the Company and $72,998 for consulting services provided to the Company. For Mr. Weiser, includes consulting services provided to the Company, as more fully described under Certain Relationships and Related Party Transactions. For Messrs. Cretan and Reed, includes health insurance premiums under a benefit plan previously available to directors of the Company in the amount of $855 and $2,399, respectively. | |
(4) | Mr. Weiser was elected as a director by the shareholders of the Company on August 6, 2009. Messrs. Bernard and Palley were elected as directors by the Board effective September 15, 2009. | |
(5) | Represents the amount earned with respect to fiscal year 2010. The amounts reported for Messrs. Banker, Cretan, Hugh Sam and Reed include meeting fees paid in early 2009 pursuant to a previous director compensation plan, before the current director compensation program was adopted. | |
(6) | Messrs. Adams, Banker, Cretan, Hugh Sam, Jacobs, Reed and Steinberg were each granted 27,398 restricted stock units as of April 23, 2009. The amounts shown in this column include the portion of these units attributable to the period from March 1, 2009 to December 31, 2009. Messrs. Cretan, Hugh Sam and Reed did not stand for reelection at the last annual meeting, accordingly this column reflects the pro rata portion of this grant for the period from March 1, 2009 until August 6, 2009; the remaining shares in this grant were forfeited as of that date. On January 1, 2010, the directors were granted additional restricted stock units in accordance with their elections to receive yearly director fees in a split of cash and restricted stock units. Messrs. Adams, Banker, Bernard, Jacobs, Palley and Steinberg elected to receive their compensation as $70,000 cash and $20,000 in restricted stock units; Mr. Weiser elected to receive his compensation as $40,000 cash and $50,000 in restricted stock units. The amounts shown in this column include the portion of these units attributable to the period from January 1, 2010 to February 28, 2010. | |
(7) | Messrs. Cretan, Hugh Sam and Reed did not stand for reelection at the last annual meeting of shareholders. Their terms as directors expired on August 6, 2009. | |
(8) | Mr. Sellers has elected not to receive any compensation for his services as a director or the Chairman of our Board of Directors. |
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Compensation Committee Interlocks and Insider Participation
No current member of our Compensation Committee: (i) was an officer or employee of ours or any
of our subsidiaries during fiscal year 2010; (ii) was formerly an officer of ours or any of our
subsidiaries; or (iii) had any relationship requiring disclosure in this proxy statement pursuant
to SEC rules. In addition, none of our executive officers served: (i) as a member of the
Compensation Committee (or any other Board committee performing equivalent functions or, in the
absence of any such committee, the entire Board of Directors) of another entity, one of whose
executive officers served on our Compensation Committee; (ii) as a director of another entity, one
of whose executive officers served on our Compensation Committee; or (iii) as a member of the
Compensation Committee (or any other Board committee performing equivalent functions or, in the
absence of any such committee, the entire Board of Directors) of another entity, one of whose
executive officers served as a director of our company.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Our Shareholders
Except as indicated otherwise, the following table sets forth certain information, as of June
14, 2010, regarding the beneficial ownership of our common stock by:
| each shareholder known to us to be the beneficial owner of more than 5% of our common stock; |
| each of our current directors, nominees for directors and executive officers; and |
| all of our directors and executive officers as a group. |
Common Stock Beneficially Owned | ||||||||
Number of | Percentage of | |||||||
Name of Beneficial Owner | Shares (#) | Class (%) (1) | ||||||
More than 5% Shareholders: |
||||||||
Sellers Capital Master Fund, Ltd.(2) |
21,721,624 | 45.37 | % | |||||
William S. and Janice S. Gasparrini(3) |
2,288,937 | 4.78 | % | |||||
Directors, Director Nominees and Executive Officers: |
||||||||
William M. Adams(4) |
34,398 | * | ||||||
Douglas Banker(4)(5) |
352,398 | * | ||||||
Ronald Bernard(4) |
0 | * | ||||||
Robert A. Brandon(6) |
75,000 | * | ||||||
Christopher J. Davino(7) |
395,000 | * | ||||||
Jack Jacobs(4) |
32,398 | * | ||||||
M. Kris Hart(8) |
75,000 | * | ||||||
Stephen Palley(4) |
0 | * | ||||||
Mark A. Sellers(2) |
21,721,624 | 45.37 | % | |||||
Bruce Steinberg(4) |
27,398 | * | ||||||
John A. Stone(9) |
75,000 | * | ||||||
Samuel S. Weiser(4) |
0 | * | ||||||
Directors and executive officers as a group (12 persons)(10) |
22,788, 216 | 46.99 | % |
(1) | As reported by such persons as of June 14, 2010, with percentages based on 47,877,733 shares of our common stock issued and outstanding, except as indicated otherwise and except where the person has the right to acquire shares within the next 60 days (as indicated in the other footnotes to this table), which increases the number of shares beneficially owned by such person and the number of shares outstanding. We have determined beneficial ownership in accordance with the SECs rules. Under such rules, beneficial ownership is deemed to include shares for which the individual, directly or indirectly, has or shares voting or dispositive power, whether or not they are held for the individuals benefit, and includes shares that may be acquired within 60 days, including, but not limited to, the right to acquire shares by exercise of options. Shares that may be acquired within 60 days are referred to in the footnotes to this table as presently exercisable options. Unless otherwise indicated in the footnotes to this table, each shareholder named in the table has sole voting and investment power with respect to all shares shown as beneficially owned by that shareholder. We have omitted percentages of less than 1% from the table (indicated by *). |
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(2) | This information as to the beneficial ownership of shares of our common stock is based on the Schedule 13D/A filed with the SEC by Sellers Capital Master Fund, Ltd., Sellers Capital LLC, and Mark A. Sellers on October 19, 2009. Each reporting person reports shared voting and dispositive power with respect to 21,721,624 of such shares. Mark A. Sellers is the managing member of Sellers Capital LLC, which is the investment manager to and general partner of Sellers Capital Master Fund, Ltd. Mr. Sellers disclaimed beneficial ownership of shares of our common stock, except to the extent of his pecuniary interest therein. The principal business office of Sellers Capital Master Fund, Ltd. is c/o M&C Corporate Services, Ugland House, South Church Street, P.O. Box 309 GT, George Town, Grand Cayman, Cayman Islands. The principal business office of Sellers Capital LLC and Mark A. Sellers is 311 S. Wacker Drive, Suite 925, Chicago, Illinois 60606. | |
(3) | This information as to the beneficial ownership of shares of our common stock is based on the Schedule 13D filed with the SEC by William S. Gasparrini and Janice S. Gasparrini on July 7, 2005. Mr. Gasparrini reports sole voting and dispositive power with respect to 544,994 of such shares and Mr. and Mrs. Gasparrini report shared voting and dispositive power with respect to 1,743,943 of such shares. Mr. and Mrs. Gasparrini have the power to vote or to direct to vote, and the power to dispose or direct the disposition of, the reported shares. The Gasparrinis address is 23 Oak Street, Greenwich, Connecticut 06830. | |
(4) | The number shown does not include restricted stock units granted to each of our non-employee directors (other than Mr. Sellers) on January 1, 2010: for Messrs. Adams, Banker, Bernard, Jacobs, Palley and Steinberg, 16,000 units each and for Mr. Weiser, 40,000 units. These units will vest and will be paid in shares of common stock on January 1, 2011. | |
(5) | The number shown includes presently exercisable options to purchase 225,000 shares of common stock. | |
(6) | The number shown represents the 75,000 shares of restricted stock that Mr. Brandon is entitled to receive under his employment agreement with us. | |
(7) | The number shown includes presently exercisable options to purchase 390,000 shares of common stock. | |
(8) | The number shown represents the 75,000 shares of restricted stock that Ms. Hart is entitled to receive under her employment agreement with us. | |
(9) | The number shown represents the 75,000 shares of restricted stock that Mr. Stone is entitled to receive under his employment agreement with us. | |
(10) | Represents beneficial ownership of our common stock held by our current directors and executive officers as a group as of June 14, 2010. During fiscal year 2010, Ms. Kellar resigned as an executive officer. We are unable to determine her current holdings of our common stock. |
Changes of Control
We are not aware of any arrangement that might result in a change-of-control in the future.
Sellers Capital, our largest shareholder, purchased from us convertible notes in the principal
amount of $6.0 million on May 6, 2009 and convertible notes in the principal amount of $5.55
million on June 15, 2009. The financing was approved by the Companys Board of Directors, upon the
recommendation of its Financing and Strategic Alternatives Committee, which was charged with
considering the transaction and other possible financing transactions available to us. These
transactions were approved by shareholders at the last annual meeting. On September 30 and October
1, 2009, the Company exercised its rights pursuant to the agreement to convert the notes to shares
of the Companys common stock. A total of 16,328,976 shares of the Companys common stock was
issued in accordance with this conversion, which includes the outstanding Convertible Notes
principal plus accrued interest at a conversion price of $0.75 per share. The common stock shares
are not
registered; however, the holders have rights to require the Company to register the shares.
As a result of this transaction, Sellers Capital owns approximately 46% of the Companys common
stock.
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Related Party Transactions
On February 2, 2009, we entered into a month-to-month consulting agreement with Foxdale
Management, LLC and Mr. Samuel Weiser, pursuant to which Mr. Weiser provided consulting services to
us at a rate of $1,250 a day, not to exceed 16 days per month, and after three months was eligible
for an incentive award at the sole discretion of the Compensation Committee of our Board of
Directors. Mr. Weiser was also the chief operating officer of Sellers Capital, LLC, which manages
Sellers Capital Master Fund, Ltd., our largest shareholder. During the time this consulting
agreement was in effect, Mr. Weiser became a director nominee. After his election as a director,
Mr. Weisers consulting contract was terminated. Mr. Weiser earned and was paid a total of
$143,750 for consulting services in fiscal year 2010.
As described above fully under Changes in Control, Sellers Capital, our largest shareholder,
purchased from us convertible notes in the principal amount of $6.0 million on May 6, 2009 and
convertible notes in the principal amount of $5.55 million on June 15, 2009. This transaction was
approved by shareholders at the last annual meeting. On September 30 and October 1, 2009, the
Company exercised its rights pursuant to the agreement to convert the notes to 16,328,976 shares of
the Companys common stock.
Policies and Procedures for Review, Approval or Ratification of Related Person Transactions
Pursuant to policies and procedures adopted by our Board of Directors, our Audit Committee or
our full Board of Directors reviews and approves in advance all relationships and transactions in
which the Company and our directors or executive officers, or their immediate family members, are
participants. All existing related party transactions are reviewed at least annually by our Audit
Committee or our full Board of Directors. Any director or officer with an interest in a related
party transaction is expected to recuse himself or herself from any consideration of the matter.
During its review of such relationships and transactions, our Audit Committee or our full
Board of Directors considers the following:
| the nature of the related persons interest in the transaction; |
| the material terms of the transaction, including the amount and type of transaction; |
| the importance of the transaction to the related person and to the Company; |
| whether the transaction would impair the judgment of a director or executive officer to act in the best interest of the Company; and |
| any other matters the Committee deems appropriate. |
In addition, to the extent that the transaction involves an independent director,
consideration is also given, as applicable, to the listing standards of the NASDAQ Global Market
and other relevant rules related to independence.
Independence of Directors
Our Board of Directors has affirmatively determined that each of Messrs. Adams, Banker,
Bernard, Jacobs, Palley, Sellers, Steinberg and Mr. Weiser qualifies as independent in accordance
with the listing standards of the NASDAQ Global Market, except that Mr. Sellers and Mr. Weiser
would not be independent for purposes of serving on our Audit Committee due to their affiliation
with Sellers Capital Master Fund, Ltd., our largest shareholder. In making these determinations,
in addition to the matters described under Related Party Transactions, the Board considered the fact that Mr. Banker provided certain consulting services to
the Company during fiscal year 2010 that were not sufficiently
material to require disclosure under the applicable rules of the Securities and Exchange
Commission. The independent directors meet regularly in executive sessions, which take place at
least twice a year.
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ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Cherry, Bekaert & Holland, L.L.P. served as our independent registered public accountants for
our fiscal years ended February 28, 2010 and February 29, 2009.
Fees Paid to Cherry, Bekaert & Holland, L.L.P.
We paid the following fees to Cherry, Bekaert & Holland, L.L.P. for fiscal year 2009 and 2010:
Fiscal Year 2009 | Fiscal Year 2010 | |||||||
Audit fees |
$ | 316,926 | $ | 356,013 | ||||
Audit-related fees |
| | ||||||
Tax fees |
| | ||||||
All other fees |
| | ||||||
Total |
$ | 316,926 | $ | 356,013 | ||||
Audit fees for fiscal year 2009 and 2010 included fees associated with audits of our financial
statements and reviews of our financial statements included in our quarterly reports on Form 10-Q.
Audit fees for fiscal year 2009 and 2010 also included fees associated with audits of internal
controls over financial reporting (pursuant to Section 404 of the Sarbanes-Oxley Act of 2002). We
did not pay any other fees to our independent registered public accounting firm for fiscal year
2009 or fiscal year 2010.
Policy on Pre-Approval of Audit and Permitted Non-Audit Services
The engagement of our independent registered public accounting firm for any non-audit
accounting and tax services to be performed for us is limited to those circumstances where these
services are considered integral to the audit services that it provides or in which there is
another compelling rationale for using its services. Cherry, Bekaert & Holland, L.L.P. was not
engaged to perform any non-audit services in fiscal year 2010. Pursuant to the Sarbanes-Oxley Act
of 2002 and the Audit Committees charter, the Audit Committee is responsible for the engagement of
our independent registered public accounting firm and for pre-approving all audit and non-audit
services provided by our independent registered public accounting firm that are not prohibited by
law.
The Audit Committee has adopted procedures for pre-approving all audit and permitted non-audit
services provided by our independent registered public accounting firm. The Audit Committee
annually pre-approves a list of specific services and categories of services, subject to a
specified cost level. Part of this approval process includes making a determination as to whether
non-audit services are consistent with the SECs rules on auditor independence. The Audit Committee
has delegated pre-approval authority to the chairman of the Audit Committee, subject to reporting
any such approvals at the next Audit Committee meeting. The Audit Committee monitors the services
rendered and actual fees paid to our independent registered public accounting firm quarterly to
ensure such services are within the scope of approval.
Our Audit Committee has pre-approved all services performed by our independent registered
public accounting firm in fiscal year 2010. The pre-approval requirements are not applicable with
respect to the provision of de minimis non-audit services that are approved in accordance with the
Securities Exchange Act of 1934, as amended, and our Audit Committees charter.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(b) Exhibits.
See Index to Exhibits.
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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 to be signed on its behalf by the undersigned, thereunto
duly authorized.
|
PREMIER EXHIBITIONS, INC. | |||
By: | /s/ John A. Stone | |||
John A. Stone | ||||
Chief Financial Officer |
Dated: June 28, 2010
INDEX TO EXHIBITS
Exhibit | Filed | Incorporated by Reference | ||||||||||||||
No. | Exhibit Description | Herewith | Form | Exhibit | Filing Date | |||||||||||
3.1 | Articles of Incorporation (Commission File Number 000-24452)
|
8-K | 3.1 | 10-20-04 | ||||||||||||
3.2 | Amendment to Articles of Incorporation
|
SB-2 | 3.2 | 01-05-06 | ||||||||||||
3.3 | Second Amendment to Articles of Incorporation
|
S-8 | 4.3 | 08-17-09 | ||||||||||||
3.4 | Amended and Restated Bylaws, dated September 19, 2009
|
8-K | 3.2 | 09-21-09 | ||||||||||||
4.1 | Form of Common Stock Certificate (Commission File Number 000-24452)
|
8-K/A | 4.1 | 11-01-04 | ||||||||||||
10.1 | Form of Exhibition Tour Agreement between the Company and Dr. Hong-Jin
Sui and Dr. Shuyan Wang President of Dalian Hoffen Bio Technique Company
Limited
|
10-K | 10.29 | 06-01-06 | ||||||||||||
10.2 | Option Agreement, dated February 28, 2007, between the Company and
Seaventures, Ltd.
|
8-K | 99.2 | 03-02-07 | ||||||||||||
10.3 | Purchase and Sale Agreement, dated February 28, 2007, between the
Company and Seaventures, Ltd.
|
8-K | 99.1 | 03-02-07 | ||||||||||||
10.4 | Loan Agreement, dated October 4, 2007, by and between the Company and
Bank of America, N.A.
|
10-Q | 10.2 | 01-09-08 | ||||||||||||
10.5 | Promissory Note, dated October 4, 2007, made by Company in favor of Bank
of America, N.A.
|
10-Q | 10.3 | 01-09-08 | ||||||||||||
10.6 | Pledge Agreement, dated October 4, 2007, made by Company in favor of
Bank of America, N.A.
|
10-Q | 10.4 | 01-09-08 | ||||||||||||
10.7 | Security Agreement, dated October 4, 2007, made by Company in favor of
Bank of America, N.A.
|
10-Q | 10.5 | 01-09-08 |
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Exhibit | Filed | Incorporated by Reference | ||||||||||||||
No. | Exhibit Description | Herewith | Form | Exhibit | Filing Date | |||||||||||
10.8 | Memorandum Opinion and Order of the United States District Court of the
Eastern District of Virginia, Norfolk Division, issued on October 16,
2007
|
8-K | 99.2 | 10-30-07 | ||||||||||||
10.9 | License Agreement, dated March 13, 2008, between the Company and Sports
Immortals, Inc.
|
10-K | 10.23 | 05-07-08 | ||||||||||||
10.10 | Lease Agreement, dated March 12, 2008, between the Company and Ramparts,
Inc.
|
10-K | 10.24 | 05-07-08 | ||||||||||||
10.11 | Amended and Restated Employment Agreement, dated September 8, 2008,
between the Company and Harold W. Ingalls
|
8-K | 99.1 | 09-12-08 | ||||||||||||
10.12 | First Amendment, dated September 26, 2008, to Loan Agreement between
Bank of America, N.A. and the Company
|
8-K | 99.1 | 09-30-08 | ||||||||||||
10.13 | Renewal Promissory Note of $25,000,000, dated September 26, 2008, made
in favor of Bank of America by the Company
|
8-K | 99.2 | 09-30-08 | ||||||||||||
10.14 | Severance Agreement, dated August 19, 2008, between the Company and
Bruce Eskowitz
|
10-Q | 10.1 | 10-10-08 | ||||||||||||
10.15 | Severance Agreement, dated August 19, 2008, by between the Company and
Brian Wainger
|
10-Q | 10.2 | 10-10-08 | ||||||||||||
10.16 | Premier Exhibitions/Live Nations Agreement, dated November 28, 2007, by
and between the Company., Live Nation, Inc. and JAM Exhibitions, LLC
|
8-K | 99.2 | 12-04-08 | ||||||||||||
10.17 | First Amendment to Premier Exhibitions/Live Nation Agreement, dated
November 29, 2008, by and among JAM Exhibitions, LLC, Soon To Be Named
Corporation, as successor in interest to Live Nation, Inc., and the
Company
|
8-K | 99.1 | 12-04-08 | ||||||||||||
10.18 | Indemnification Agreement, dated December 17, 2008, between the Company
and Douglas Banker
|
8-K | 99.1 | 12-19-08 | ||||||||||||
10.19 | Indemnification Agreement, dated December 17, 2008, between the Company
and N. Nick Cretan
|
8-K | 99.2 | 12-19-08 | ||||||||||||
10.20 | Indemnification Agreement, dated December 17, 2008, between the Company
and Alan Reed
|
8-K | 99.3 | 12-19-08 | ||||||||||||
10.21 | Asset Purchase Agreement, dated December 29, 2008, between Premier
Merchandising, LLC and Dreamer Media, LLC
|
8-K | 99.1 | 01-05-09 | ||||||||||||
10.22 | Promissory Note, dated December 29, 2008, between Dreamer Media, LLC, as
maker, and Premier Merchandising, LLC, as payee
|
8-K | 99.2 | 01-05-09 | ||||||||||||
10.23 | Amended and Restated Employment Agreement, dated January 9, 2009,
between Kelli L. Kellar and the Company
|
8-K | 99.1 | 01-07-09 | ||||||||||||
10.24 | Premier Exhibitions, Inc. 2000 Stock Option Plan and Form of Stock
Option Agreement (Commission File Number 000-24452)
|
8-K | 10.1 | 10-20-04 | ||||||||||||
10.25 | Premier Exhibitions, Inc. 2004 Stock Option Plan and Form of Stock
Option Agreement (Commission File Number 000-24452)
|
8-K | 10.2 | 10-20-04 | ||||||||||||
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Exhibit | Filed | Incorporated by Reference | ||||||||||||||
No. | Exhibit Description | Herewith | Form | Exhibit | Filing Date | |||||||||||
10.26 | Amended and Restated Premier Exhibitions, Inc. 2004 Stock Option Plan
|
Proxy | App. A | 06-28-06 | ||||||||||||
10.27 | Employment Agreement, effective as of January 28, 2009, between the
Company and Christopher J. Davino
|
8-K | 10.1 | 04-24-09 | ||||||||||||
10.28 | Amended and Restated Premier Exhibitions, Inc. 2007 Restricted Stock Plan
|
8-K | 10.1 | 04-29-09 | ||||||||||||
10.29 | Form of 2009 Non-Employee Director Restricted Stock Unit Grant Notice
Under the Amended and Restated Premier Exhibitions, Inc. 2007 Restricted
Stock Plan
|
8-K | 10.2 | 04-29-09 | ||||||||||||
10.30 | Amendment to Exhibitions Rights Agreement (Europe) and Premier
Exhibitions / Live Nation Agreement, dated April 1, 2009, by and among
S2BN, f/k/a Soon To Be Named Corporation, the Company and JAM
Exhibitions, LLC
|
10-K | 10.41 | 05-27-09 | ||||||||||||
10.31 | Convertible Note Purchase Agreement, dated May 6, 2009, by and between
Premier Exhibitions, Inc. and Sellers Capital Master Fund, Ltd.
|
8-K | 10.1 | 05-13-09 | ||||||||||||
10.32 | Letter Agreement dated May 6, 2009, by and between Premier Exhibitions,
Inc. and Sellers Capital Master Fund, Ltd.
|
8-K | 10.2 | 05-13-09 | ||||||||||||
10.33 | Form of Convertible Note issued by Premier Exhibitions, Inc. to Sellers
Capital Master Fund, Ltd.
|
8-K | 10.3 | 05-13-09 | ||||||||||||
10.34 | Form of Warrant issued by Premier Exhibitions, Inc. to Sellers Capital
Master Fund, Ltd.
|
8-K | 10.4 | 05-13-09 | ||||||||||||
10.35 | Form of Registration Rights Agreement by and between Premier
Exhibitions, Inc. and Sellers Capital Master Fund, Ltd.
|
8-K | 10.4 | 05-13-09 | ||||||||||||
10.36 | # | Consulting Agreement, dated February 2, 2009, by and among Premier
Exhibitions, Inc., Foxdale Management, LLC and Samuel S. Weiser
|
10-Q | 10.6 | 07-10-09 | |||||||||||
10.37 | # | Premier Exhibitions, Inc. 2009 Equity Incentive Plan
|
S-8 | 10.1 | 08-17-09 | |||||||||||
10.38 | # | Form of Premier Exhibitions, Inc. 2009 Equity Incentive Plan
Nonqualified Stock Option Agreement
|
S-8 | 10.2 | 08-17-09 | |||||||||||
10.39 | # | Form of Premier Exhibitions, Inc. 2009 Equity Incentive Plan Restricted
Shares Agreement
|
S-8 | 10.3 | 08-17-09 | |||||||||||
10.40 | # | Employment Agreement, dated September 3, 2009, by and between the
Company and Christopher J. Davino
|
8-K | 10.1 | 09-08-09 | |||||||||||
10.41 | # | Nonqualified Stock Option Agreement, dated September 3, 2009, by and
between the Company and Christopher J. Davino
|
8-K | 10.2 | 09-08-09 | |||||||||||
10.42 | # | Letter Agreement, entered into as of September 25, 2009, by and between
the Company and S2BN Entertainment Corporation
|
8-K | 10.1 | 10-01-09 | |||||||||||
10.43 | # | Employment Agreement, dated June 2009, by and between the Company and
John A. Stone
|
10-Q | 10.6 | 10.13.09 | |||||||||||
10.44 | # | Restricted Shares Agreement, dated August 6, 2009, by and between the
Company and John A. Stone
|
10-Q | 10.7 | 10-13-09 | |||||||||||
10.45 | # | Consulting Agreement, dated October 8, 2009, by and between the Company
and Douglas Banker
|
10-Q | 10.8 | 10-13-09 |
24
Table of Contents
Exhibit | Filed | Incorporated by Reference | ||||||||||||||
No. | Exhibit Description | Herewith | Form | Exhibit | Filing Date | |||||||||||
10.46 | # | Form of Premier Exhibitions, Inc. 2009 Equity Incentive Plan
Non-Employee Director Restricted Stock Unit Grant Notice
|
X* | |||||||||||||
10.47 | # | Employment Agreement, dated May 13, 2010, by and between the Company and
Kris Hart
|
8-K | 10.1 | 05-13-10 | |||||||||||
10.48 | # | Amended Employment Agreement, dated May 13, 2010, by and between the
Company and Robert A. Brandon
|
8-K | 10.2 | 05-13-10 | |||||||||||
14.1 | Premier Exhibitions, Inc. Code of Ethics
|
X* | ||||||||||||||
16.1 | Letter of Kempisty & Company Certified Public Accountants, P.C. to the
Securities and Exchange Commission, dated August 22, 2008
|
8-K | 16.1 | 08-27-08 | ||||||||||||
21.1 | Subsidiaries of the Company
|
X* | ||||||||||||||
23.1 | Consent of Cherry, Bekaert & Holland, L.L.P.
|
X* | ||||||||||||||
23.2 | Consent of Kempisty & Company Certified Public Accountants, P.C.
|
X* | ||||||||||||||
31.1 | Certification of President and Chief Executive Officer, pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
|
X | ||||||||||||||
31.2 | Certification of Chief Financial Officer, pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
X | ||||||||||||||
32.1 | Certification of President and Chief Executive Officer, and Chief
Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
X |
# | Management contract or compensatory plan or arrangement. | |
| The Company has requested confidential treatment of certain information contained in this Exhibit. Such information has been filed separately with the Securities and Exchange Commission pursuant to an application by the Company for confidential treatment under 17 C.F.R. §200.80(b)(4) and §240.24b-2. | |
* | Filed with the original Form 10-K |
25