UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934
(Amendment
No. )
Check the
appropriate box:
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Under § 240.14a-12
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PEOPLE’S
LIBERATION, INC.
(Name of
Registrant as Specified in its Charter)
_______________________________________________
(Name of
Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
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No
fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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1.
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Title
of each class of securities to which transaction applies:
_________________________________
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2. Aggregate
number of securities to which transaction applies:
__________________________________
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3.
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Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
_______________________________
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4.
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Proposed maximum aggregate value of transaction: ___________________________________________ |
5. Total
fee paid:
______________________________________________________________________
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Fee
paid previously with preliminary
materials.
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Check
box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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1. Amount
Previously Paid:
______________________________________________________________
2. Form,
Schedule or Registration Statement No.:
_____________________________________________
3. Filing
Party:
_______________________________________________________________________
4. Date
Filed: _________________________________________________________________________
PEOPLE’S
LIBERATION, INC.
1212 S.
Flower St., 5th Floor
Los
Angeles, CA 90015
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To Be
Held Friday, June 11, 2010
To the
Stockholders of People’s Liberation, Inc.:
The 2010
Annual Meeting of Stockholders of People’s Liberation, Inc. will be held at the
Company's offices located at 1212 S. Flower St., 5th Floor, Los Angeles, CA
90015 on Friday, June 11, 2010 at 9:00 a.m. Pacific Daylight Time, for the
following purposes:
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1.
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To
elect one (1) Class II member of the Board of Directors for a three-year
term;
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2.
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To
ratify the selection of Crowe Horwath LLP as our independent registered
public accounting firm for the fiscal year ending December 31, 2010;
and
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3.
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To
transact such other business as may properly come before the meeting or
any adjournments or postponements
thereof.
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The Board
of Directors has fixed the close of business on April 21, 2010 as the record
date for determination of stockholders entitled to notice of, and to vote at,
the meeting and any of its adjournments or postponements.
You are
cordially invited to attend the Annual Meeting in person. However,
you must be a stockholder of record at the close of business on April 21, 2010
to vote at the meeting. If your shares are held in street
name, you must obtain a Proxy, executed in your
favor, from the holder of record in order to be able to vote at the Annual
Meeting. Regardless of whether or not you will attend, please
mark, date, sign and return the enclosed proxy.
By Order
of the Board of Directors
/s/ Colin
Dyne
Colin
Dyne
Chairman
of the Board and
Chief
Executive Officer
THE
ATTACHED PROXY STATEMENT AND
OUR
ANNUAL REPORT ON FORM 10-K ARE AVAILABLE AT
HTTP://WWW.PPLBUSA.COM/SEC.HTML
April
27, 2010
YOUR
VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL
MEETING OF STOCKHOLDERS, PLEASE MARK, DATE, SIGN AND RETURN PROMPTLY THE
ENCLOSED PROXY IN THE STAMPED RETURN ENVELOPE PROVIDED. YOUR PROMPT
RETURN OF THE PROXY WILL HELP AVOID THE ADDITIONAL EXPENSE OF FURTHER
SOLICITATION TO ASSURE A QUORUM AT THE MEETING.
THE
ANNUAL MEETING IS ON JUNE 11, 2010
PLEASE
RETURN YOUR PROXY IN TIME
PEOPLE’S
LIBERATION, INC.
1212 S.
Flower St., 5th Floor
Los
Angeles, CA 90015
PROXY
STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
To Be
Held Friday, June 11, 2010
GENERAL
INFORMATION AND VOTING RIGHTS
This
proxy statement (the Proxy Statement) and the enclosed proxy are furnished in
connection with the solicitation of proxies by the Board of Directors of
People’s Liberation, Inc., a Delaware corporation, for use at the 2010 Annual
Meeting of Stockholders (the Annual Meeting) to be held at the Company's offices
located at 1212 S. Flower St., 5th Floor, Los Angeles, CA 90015 on Friday, June
11, 2010 at 9:00 a.m. Pacific Daylight Time, and any adjournments or
postponements thereof. Enclosed with this Proxy Statement is a copy
of our Annual Report, which includes our Form 10-K (without exhibits), for the
fiscal year ended December 31, 2009. However, the Annual Report is
not intended be a part of this Proxy Statement or a solicitation of
proxies. We anticipate that the Proxy Statement and enclosed proxy
will first be mailed or given to our stockholders on or about May 10,
2010.
Your vote
is important. If your shares are registered in your name, you are a
stockholder of record. If your shares are in the name of your broker
or bank, your shares are held in street name. We encourage you to
vote by proxy so that your shares will be represented and voted at the meeting
even if you cannot attend. All stockholders can vote by written proxy
card. Your submitting the enclosed proxy will not limit your right to
vote at the Annual Meeting if you later decide to attend in
person. If your shares are held in street name, you must obtain a
proxy, executed in your favor, from the holder of record in order to be able to
vote at the meeting. If you are a stockholder of record, you may
revoke your proxy at any time before the meeting either by filing with the
Corporate Secretary of People’s Liberation, at our principal executive offices,
a written notice of revocation or a duly executed proxy bearing a later date, or
by attending the Annual Meeting and expressing a desire to vote your shares in
person. If you hold your shares in street name, you may change your
vote by submitting new voting instructions to your broker, bank or other
nominee. You must contact your broker, bank or other nominee to find out how to
do so. All shares entitled to vote and represented by properly executed proxies
received prior to the Annual Meeting, and not revoked, will be voted at the
Annual Meeting in accordance with the instructions indicated on those
proxies. If no instructions are indicated on a properly executed
proxy, the shares represented by that proxy will be voted as recommended by the
Board of Directors.
Only
holders of record of our common stock at the close of business on April 21, 2010
will be entitled to vote at the Annual Meeting on the proposals described in
this Proxy Statement. On the record date, there were 36,002,563
shares of common stock outstanding. Each holder of record is entitled
to one vote for each share of common stock on all matters to come before the
meeting. Stockholders may not cumulate votes in the election of
directors.
If any
other matters are properly presented for consideration at the Annual Meeting,
including, among other things, consideration of a motion to adjourn the meeting
to another time or place in order to solicit additional proxies in favor of the
nominees of the Board of Directors, the persons named as proxies and acting
thereunder will have discretion to vote on these matters according to their best
judgment to the same extent as the person delivering the proxy would be entitled
to vote. At the date this proxy statement went to press, we did not
know of any other matter to be raised at the Annual Meeting.
The one
nominee for election as a Class II director who receives the most votes “for”
election will be elected.
Ratification
of the appointment of our independent registered public accounting firm will
require an affirmative vote of the majority of the shares of common stock
present or represented at the Annual Meeting with respect to such
proposal.
The
presence, in person or by proxy, of a majority of the votes entitled to be cast
by the stockholders entitled to vote at the Annual Meeting is necessary to
constitute a quorum. Abstentions and broker non-votes will be
included in the number of shares present at the Annual Meeting for determining
the presence of a quorum. Abstentions will be counted toward the
tabulation of votes cast on proposals submitted to stockholders and will have
the same effect as negative votes, while broker non-votes on a proposal are not
counted or deemed present or represented for determining whether stockholders
have approved that proposal. Broker non-votes occur when a broker
holding customer securities in street name has not received voting instructions
from the customer on certain “non-routine” matters, such as director elections,
and, therefore, is barred by the rules of the applicable securities exchange
from exercising discretionary authority to vote those
securities. Brokers may vote their clients’ shares on routine
matters, such as the ratification of our independent registered public
accounting firm.
2
PROPOSAL
NO. 1
ELECTION
OF DIRECTOR
Our
Amended and Restated Certificate of Incorporation provides that the number of
directors of the Company shall be fixed from time to time exclusively by the
Board of Directors, but shall not be less than two (2) nor more than fifteen
(15). The Board of Directors has fixed the number of directors at
four (4).
On April
1, 2009, the Board of Directors, pursuant to authority granted to it under our
Amended and Restated Certificate of Incorporation, approved the division of the
directors of People’s Liberation into three classes designated Class I, Class II
and Class III and the re-appointment of our existing directors into the newly
formed classes. The initial Class I director is Kenneth Wengrod, the
initial Class II director is Susan White and the initial Class III directors are
Dean Oakey and Colin Dyne. Directors hold office for staggered terms
of three years. One of the three classes is elected each year to
succeed the directors whose terms are expiring. Kenneth Wengrod was
elected by our stockholders to be the Class I director at our June 2009 meeting
of stockholders and will serve a term that expires in 2012. The Class
II director and the Class III directors are serving terms that expire in 2010
and 2011, respectively.
The Class
II director whose term expires at the 2010 Annual Meeting is Susan
White. The Board of Directors has nominated Susan White to again
serve as a Class II director. The director elected at the Annual
Meeting will serve until the Annual Meeting of Stockholders to be held in 2013
or until such director’s successor has been duly elected and qualified or until
such director has otherwise ceased to serve as a director.
Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for the nominee named above. If the nominee is unable or unwilling to
serve as a director at the time of the Annual Meeting, the proxies will be voted
for such other nominee as shall be designated by the then current Board of
Directors to fill any vacancy. We have no reason to believe that the
nominee will be unable or unwilling to serve if elected as a
director.
The
principal occupation and certain other information about the nominee and our
directors and executive officers are set forth on the following
pages.
The
Board of Directors Unanimously Recommends a Vote “FOR”
the
Election of the Nominee Listed Above.
3
DIRECTORS
AND EXECUTIVE OFFICERS
The
following table sets forth certain information with respect to the nominee and
the directors and executive officers of People’s Liberation, Inc. as of April
21, 2010. The nominee currently is a director of People’s
Liberation.
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Name
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Age
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Position
with People’s Liberation
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Class
I Director:
(Term Expiring in
2012)
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Kenneth
Wengrod
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59
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Class
I Director
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Class
II Director Nominee:
(Term Expiring in
2010)
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Susan
White
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59
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Class
II Director
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Class
III Directors:
(Term Expiring in
2011)
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Dean
Oakey
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52
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Class
III Director
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Colin
Dyne
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46
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Class
III Director, Chairman of the Board, Chief Executive Officer and
Secretary
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Other
Executive Officers:
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Darryn
Barber
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34
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President
and Chief Financial Officer
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Thomas
Nields
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44
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Chief
Operating Officer
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Andrea
Sobel
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Executive
Vice President of Branding and Licensing
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Board
of Directors and Nominee
Colin Dyne became our Chief
Executive Officer and a director of the company on May 21,
2007. Colin Dyne is a significant stockholder of the company, and has
served as a consultant to the company since December 2005, advising on strategic
sales initiatives. Mr. Dyne also serves as Vice Chairman of the Board
of Directors of Talon International, Inc. (OTCBB: TALN), owner of Talon
zippers. Mr. Dyne founded Tag-It, Inc., a subsidiary of Talon, in
1991. Mr. Dyne served as Talon’s President from inception and as its
Chief Executive Officer from 1997 to 2005.
Dean Oakey has served as a
director since November 22, 2005 and was selected to become a director of the
company because of his knowledge of the apparel industry. Mr. Oakey
is the Managing Partner of CDP Management Partners, LLC, a merchant banking firm
focusing on principal investments and consulting in the restaurant, food
processing, and retail industries. Mr. Oakey has held this position
since April 2009. From June 1997 to April 2009, Mr. Oakey served as
the Managing Director of Investment Banking for SMH Capital, Corp., an
investment banking firm. In this capacity, Mr. Oakey was responsible
for business development and management duties, with a focus on the consumer
products and services industries.
Susan White joined our Board
of Directors on May 21, 2007 and was selected to become a director of the
company because of her experience in apparel branding and
marketing. Ms. White has served as Chief Executive Officer and
President of Brand Identity Solutions, LLC, a branding, marketing and licensing
consulting company, since 1987. Ms. White also is the CEO and
president of Whitespeed,
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LLC, an
internet design, branding and marketing company. Ms. White previously
served as Director of Marketing and Advertising Worldwide for Warnaco from
November 1997 through August 1999.
Kenneth Wengrod joined our
Board of Directors on September 21, 2007 and was selected to become a director
of the company because of his knowledge and experience in the apparel
industry. Mr. Wengrod currently serves as President of FTC Commercial
Corp. (FTC), a company which he founded in 2002 and in which he continues to
hold a minority equity position. FTC is a global finance commercial
service company primarily focused in the apparel industry. From 1996
to 2002, Mr. Wengrod was the Chief Financial Officer and General Manager of
Meridian Textiles f/k/a Mark Fabrics where he was responsible for the operations
of the multi-million dollar fabric converting company. Prior to
joining Meridian Textiles, Mr. Wengrod was the Chief Operating Officer of
Rampage Clothing Co. from 1992 to 1995, and was a Senior Vice President of
Barclays Commercial Corp. from 1987 to 1992. Mr. Wengrod holds a
Bachelor of Science degree in Economics from Northeastern
University.
Other
Executive Officers
Darryn Barber has served as
our Chief Financial Officer since November 22, 2005 and as our President and
Chief Financial Officer since May 8, 2008. Prior to joining us, Mr.
Barber spent five years as a senior associate at Europlay Capital Advisors, LLC
and its affiliates. Mr. Barber has been successful in evaluating,
developing, and operating businesses in the entertainment and technology
fields. Mr. Barber was responsible for preparing business models,
financial planning, evaluating and valuing businesses, providing corporate and
strategic advice and preparing businesses for strategic
transactions. Mr. Barber brings over 10 years experience in owning
and operating businesses. Prior to Europlay Capital Advisors, Mr.
Barber was Director of Operations of Trademark Cosmetics, a private label
cosmetic manufacturing company. Mr. Barber earned an MBA from
California State University Northridge and a BA in business economics from the
University of California Santa Barbara.
Thomas Nields has served as
our Chief Operating Officer since November 8, 2006. Prior to joining
us, Mr. Nields held various positions at Talon International, Inc., owner of
Talon zippers, from November 1994 to October 2006. These positions
included Director of Global Operations, President of Talon, Inc. (a wholly-owned
subsidiary of Talon International, Inc.) and Vice President of
Production. During his employment with Talon, Mr. Nields was
responsible for implementing and managing production facilities in eight
countries including the U.S., Mexico and Hong Kong.
Andrea Sobel has served as our
Executive Vice President of Branding and Licensing since
May 22, 2008. Ms. Sobel has over 15 years of experience in
licensing, marketing and brand development. Since 2007, she was Vice
President of Marketing with SANRIO, where she was responsible for market
development and brand positioning of that company’s Hello Kitty and other
character brands. Between 2004 and 2007 and between 1999 and 2002,
she was also a principal and licensing, merchandising and marketing consultant
with ALS Consulting, a firm specializing in marketing and brand
development. Between 2002 and 2004, Ms. Sobel was Director of
Licensing and Business Development for Murad, Inc. From 1990 to 1999,
she was with Guess?, Inc. in a series of progressively responsible positions
culminating with Vice President of Licensing and Product Development from 1995
to 1999. She holds a Bachelor of Arts in History and Spanish from the
University of California at Berkeley and an MBA from UCLA’s Anderson School of
Business.
5
Additional
Information Concerning our Board of Directors
Meetings and
Committees. The Board of Directors held nine general meetings
during 2009. The Board of Directors also acted on two occasions by
unanimous written consent during 2009. Each current director, while
serving as a director, attended at least 75% of all the meetings of the Board of
Directors
and those committees on which he or she served in 2009. While we have
not established a policy with respect to members of the Board of Directors
attending annual meetings, directors are generally in attendance at the annual
meeting of stockholders. Our 2009 annual meeting of stockholders was
attended by all of our members of the Board of Directors.
Our Board
of Directors currently consists of four members: Colin Dyne (our Chief Executive
Officer), Dean Oakey, Susan White and Kenneth Wengrod. Each of Colin
Dyne, Dean Oakey, Susan White and Kenneth Wengrod were elected at a meeting of
shareholders held on June 13, 2008 to serve until our 2009 annual meeting or
until his or her successor is duly elected and qualified. On April 1,
2009, the Board of Directors, pursuant to authority granted to it under our
Amended and Restated Certificate of Incorporation, approved the division of the
directors of People’s Liberation into three classes designated Class I, Class II
and Class III and the re-appointment of our existing directors into the newly
formed classes. As a result of this Board action, directors now hold
office for staggered terms of three years. One of the three classes
is elected each year to succeed the directors whose terms are
expiring. Last year, Kenneth Wengrod was elected to serve as the
Class I director at our meeting of shareholders held on June 12,
2009. The Class I director (Kenneth Wengrod), the Class II director
(Susan White) and the Class III directors (Dean Oakey and Colin Dyne) are
serving terms that expire at the annual meeting of stockholders to be held in
2012, 2010 and 2011, respectively.
We do not
have a separately designated audit, compensation or nominating committee of our
Board of Directors and the functions customarily delegated to these committees
are performed by our full Board of Directors. We are not a “listed
company” under SEC rules and are therefore not required to have separate
committees comprised of independent directors. We have, however,
determined that none of our current directors are “independent” as that term is
defined in Section 5605 of the NASDAQ Listing Rules as required by the NASDAQ
Stock Market. As we do not maintain an audit committee, we do not
have an audit committee "financial expert" within the meaning of Item 407(d) of
Regulation S-K.
We may
establish an audit committee, compensation committee, and nominating and
corporate governance committee upon the expansion of our board to include at
least three directors who are independent under the applicable rules of the SEC
and NASDAQ.
The
functions customarily delegated to a nominating committee are performed by our
full Board of Directors. Our full Board of Directors reviews those
Board members who are candidates for re-election to our Board of Directors, and
makes the determination to nominate a candidate who is a current member of the
Board of Directors for re-election for the next term. The Board’s
methods for identifying candidates for election to the Board of Directors (other
than those proposed by our stockholders, as discussed below) include the
solicitation of ideas for possible candidates from a number of sources,
including existing members of the Board of Directors; our executives;
individuals personally known to the members of the Board of Directors; and other
research. We may also from time to time retain one or more third-party search
firms to identify suitable candidates. The Board also nominates outside
candidates for inclusion on the Board of Directors. The diversity of the
background of an individual and their field of expertise is a consideration for
membership on our Board. We consider diversity broadly to include differences of
viewpoint, professional experience, individual characteristics, qualities and
skills resulting in the ability for naturally varying perspectives among our
Board of Directors while simultaneously providing skills that complement our
full Board so that the Board, as a unit, possesses the appropriate skills and
experience to oversee our business.
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A
People’s Liberation stockholder may nominate one or more persons for election as
a director at an annual meeting of stockholders if the stockholder complies with
the notice, information and consent provisions contained in our Bylaws. In
addition, the notice must be made in writing and set forth as to each proposed
nominee who is not an incumbent Director (i) their name, age, business address
and, if known,
residence address, (ii) their principal occupation or employment, (iii) the
number of shares of stock of the company beneficially owned and (iv) any other
information concerning the nominee that must be disclosed respecting nominees in
proxy solicitations pursuant to Rule 14(a) of the Exchange Act of
1934. The recommendation should be addressed to our
Secretary.
Among
other matters, our full Board of Directors which serves as the nominating and
governance committee:
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Reviews
the desired experience, mix of skills and other qualities to assure
appropriate Board composition, taking into account the current Board
members and the specific needs of People’s Liberation and the
Board;
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Conducts
candidate searches, interviews prospective candidates and conducts
programs to introduce candidates to our management and operations, and
confirms the appropriate level of interest of such
candidates;
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Recommends
qualified candidates who bring the background, knowledge, experience,
independence, skill sets and expertise that would strengthen and increase
the diversity of the Board; and
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Conducts
appropriate inquiries into the background and qualifications of potential
nominees.
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Based on
the foregoing, the Board of Directors nominated Susan White for re-election as a
Class II member of the Board of Directors, subject to stockholder approval, for
a three-year term ending on or around the date of the 2013 Annual Meeting of
Stockholders.
Board
Leadership Structure.
Colin
Dyne is currently the Chairman of our Board of Directors and our Chief Executive
Officer. Our Board believes that this leadership structure provides the most
efficient and effective leadership model for our company by enhancing the
ability of the Chairman and Chief Executive Officer to provide clear insight and
direction of business strategies and plans to both the Board and management. The
Board believes that it can most effectively perform its monitoring and oversight
role by acting as a unified whole, with the Chairman also being a member of the
management team, and that the advantages of having a CEO Chairman with extensive
knowledge of our company (as compared to a relatively less informed independent
Chairman) outweigh potential disadvantages. A single person, acting in the
capacities of Chairman and Chief Executive Officer, provides unified leadership
and focus. Since none of our directors are independent, we do not have a lead
independent director.
Our Board
of Directors has responsibility for the oversight of risk management. A
fundamental part of risk management is not only understanding the risks the
company faces and what steps management is taking to manage those risks, but
also understanding what level of risk is appropriate for our company. The
involvement of our Board of Directors in setting our business strategy is a key
part of its assessment of risk management and the determination of what
constitutes an appropriate level of risk for our company. Our Board regularly
discusses with management the company's major risk exposures, their potential
impact on our company and the steps taken to manage these risks. In
addition, our Board may retain, on such terms as determined by the Board, in its
sole discretion, independent legal, financial and other consultants and advisors
to advise and assist the Board in fulfilling its oversight
responsibilities.
7
Compensation of Directors and
Officers. Our full Board of Directors determines the
compensation to be paid to our officers and directors, with recommendations from
management as to the amount and/or form of such compensation. While
our Board may utilize the services of consultants in determining or recommending
the amount or form of executive and director compensation, we do not at this
time employ consultants for this purpose.
Code of Ethics. We
have adopted a Code of Ethics applicable to all of our Board members and to all
of our employees, including our Chief Executive Officer, President and Chief
Financial Officer, Chief Operating Officer and Executive Vice President of
Branding and Licensing. The Code of Ethics constitutes a “code of
ethics” as defined by applicable SEC rules and a “code of conduct” as defined by
applicable NASDAQ rules. The Code of Ethics has been publicly filed
with the SEC as an exhibit to our Annual Report on Form 10-K. Our
Code of Ethics is posted on our Internet website located at www.pplbusa.com in
the section titled “Investor Relations” under the heading “Corporate
Governance.” You may also request a copy of the Code of Ethics by
writing or calling us at:
People’s
Liberation, Inc.
Attn: Investor
Relations
1212 S.
Flower Street, 5th
Floor
Los
Angeles, CA 90015
(213)
745-2123
Any
waiver of the Code of Ethics pertaining to a member of our Board or one of our
executive officers will be disclosed in a report on Form 8-K filed with the
SEC.
Section 16(a) Beneficial Ownership
Reporting Compliance. Section
16(a) of the Securities Exchange Act of 1934 requires that our executive
officers and directors, and persons who own more than ten percent of a
registered class of our equity securities, file reports of ownership and changes
in ownership with the SEC. Executive officers, directors and
greater-than-ten percent stockholders are required by SEC regulations to furnish
us with all Section 16(a) forms they file. Based solely on our review
of the copies of the forms received by us and written representations from
certain reporting persons that they have complied with the relevant filing
requirements, we believe that, during the year ended December 31, 2009, all of
our executive officers, directors and greater-than-ten percent stockholders
complied with all Section 16(a) filing requirements.
Certain
Relationships and Related Transactions
Review and Approval of Related Party
Transactions. We have adopted a Code of Ethics that applies to
all employees and directors of the company. This Code of Ethics
requires that all of our employees and directors avoid engaging in activities
that give rise to conflicts of interest, including engaging in any transactions
with the company, without first obtaining a waiver. Executive
officers and directors are required to obtain such a waiver from our Board of
Directors or an appropriate committee of our Board. There were no
instances during 2009 in which an executive officer or director engaged in a
related party transaction with the company without first obtaining a waiver as
required under our Code of Ethics.
Reportable Related Party
Transactions. Other than the employment arrangements described
elsewhere in this proxy statement and the transactions described below, since
January 1, 2008, there has not been, nor is there currently proposed, any
transaction or series of similar transactions to which we were or will be a
party:
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in
which the amount involved exceeds $120,000;
and
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in
which any director, executive officer, stockholder who beneficially owns
5% or more of our common stock or any member of their immediate family had
or will have a direct or indirect material
interest.
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Colin
Dyne became our Chief Executive Officer and a director of the company on May 21,
2007. Mr. Dyne serves as Vice Chairman of the Board of Directors of
Talon International, Inc. (OTCBB: TALN), owner of Talon zippers. Mr.
Dyne founded Tag-It, Inc., a subsidiary of Talon, in 1991. Mr. Dyne
served as Talon’s President from inception and as its Chief Executive Officer
from 1997 to 2005. During the years ended December 31, 2009 and 2008,
we purchased trim products from Talon amounting to approximately $219,000 and
$536,000, respectively.
Kenneth
Wengrod, a member of our Board of Directors, currently serves as President of
FTC Commercial Corp., a company which he founded in 2002 and in which he
continues to hold a minority equity position. We are party to various
factoring agreements with FTC as further described in Note 9 to the consolidated
financial statements included in our Annual Report on Form 10-K for the fiscal
year ended December 31, 2009. As of December 31, 2009 and 2008, total
factored accounts receivable included in due to factor amounted to approximately
$4.1 million. Outstanding advances as of December 31, 2009 and 2008
amounted to approximately $3.7 million and $3.5 million, respectively, and are
included in the due to factor balance.
We are
party to a consulting arrangement with Susan White pursuant to which Ms. White
provides image and marketing consulting services to us. Effective
April 1, 2009, we entered into a consulting agreement with Innovative Brand
Solutions LLC, an entity owned by our director, Susan White. The agreement
provides that Ms. White will provide marketing and branding services on our
behalf and receive a monthly payment of $10,000 for a period of one year ending
April 1, 2010. During the years ended
December 31, 2009 and 2008, we paid Ms. White approximately $96,980 and $53,000,
respectively, for marketing and branding services provided to the
company.
Promoters and Control
Persons. On December 15, 2004, Keating Reverse Merger Fund,
LLC, a Delaware limited liability company, David L. Hadley (our former chief
executive officer) and Natural Technologies, Inc., an Arizona corporation
entered into a purchase agreement pursuant to which certain shareholders of the
company sold 5,625,287 shares (on a pre-reverse stock split basis) of the common
stock of the company, representing approximately 70.99% of the outstanding
shares of common stock of the company, to Keating Reverse Merger Fund, LLC, for
an aggregate purchase price of $375,000.
On
January 31, 2005, we entered into an Assumption Agreement with Global Medical
Technologies, Inc., Natural Technologies, Inc. and Mr. Hadley pursuant to which
we contributed all of the shares of common stock of our inactive subsidiaries,
Century Pacific Financial Corp. and Century Pacific Investment Management
Corporation, to Global Medical Technologies, Inc. Global Medical
Technologies, Inc. agreed to assume all of our liabilities and to indemnify us
for any loss we incur with respect to such assumed
liabilities. Global Medical, Natural Technologies, and Mr. Hadley
also released us from all obligations and claims. In February 2005,
we distributed all of the outstanding shares of common stock of Global Medical
Technologies, Inc. on a pro rata basis to our stockholders. Following
the distribution, Global Medical Technologies, Inc. continued to operate its
medical equipment reconditioning business as an independent
company. After this distribution, we existed as a “shell company”
under the name of Century Pacific Financial Corporation with nominal assets
whose sole business was to identify, evaluate and investigate various companies
to acquire or with which to merge.
9
On
February 16, 2005, we received a non-interest bearing, unsecured demand loan
from Keating Reverse Merger Fund in the amount of $50,000 to provide working
capital for operating expenses. On June 28, 2005 we issued 5,000,000
restricted common shares (on a pre-reverse stock split basis) in full payment of
the $50,000 note payable to Keating Reverse Merger Fund. We granted
Keating Reverse Merger Fund piggyback registration rights with respect to these
shares.
On
November 22, 2005, we consummated an exchange transaction in which we acquired
all of the outstanding ownership interests of Bella Rose, LLC, a California
limited liability company (“Bella Rose”) and Versatile Entertainment, Inc., a
California corporation (“Versatile”) from their respective shareholders and
members, in exchange for an aggregate of 2,460,106.34 shares of our series A
convertible preferred stock which, on January 5, 2006, converted into 26,595,751
shares of our common stock on a post reverse stock split basis. At
the closing of the exchange transaction, Versatile and Bella Rose became our
wholly-owned subsidiaries. The exchange transaction was accounted for
as a reverse merger (recapitalization) with Versatile and Bella Rose deemed to
be the accounting acquirers, and People’s Liberation, Inc. the legal
acquirer.
On
November 22, 2005, we entered into a certain financial advisory agreement with
Keating Securities, LLC under which Keating Securities, LLC was compensated by
us for its advisory services rendered to us in connection with the closing of
the exchange transaction with Versatile Entertainment, Inc. and Bella Rose,
LLC. The transaction advisory fee was $350,000, with the payment
thereof made at the closing of the exchange transaction.
Kevin R.
Keating, a former director of the company, is the father of the principal member
of Keating Investments, LLC. Keating Investments, LLC is the managing
member of Keating Reverse Merger Fund and is also the managing member and 90%
owner of Keating Securities, LLC, a registered broker-dealer. Kevin
Keating resigned from our Board of Directors on May 21, 2007.
10
EXECUTIVE
COMPENSATION
Summary
Compensation Table
The
following table sets forth information concerning all compensation paid for
services provided to us in all capacities for each of the two fiscal years ended
December 31, 2009 and 2008 as to each person serving as our Chief Executive
Officer and Chief Financial Officer during 2009 and the two most highly
compensated executive officers other than the Chief Executive Officer and Chief
Financial Officer who were serving as executive officers at the end of the 2009
fiscal year whose compensation exceeded $100,000 (referred to as named executive
officers).
|
Name
and Principal Position
|
Year
|
Salary
($)
|
Bonus
(1)
($)
|
Option
Awards (2)
($)
|
All
Other Compensation (7)
($)
|
Total
($)
|
||||||||||||||||||
|
Colin
Dyne(3)
Chief Executive
Officer
|
2009
2008
|
398,803 346,257 |
-
75,000
|
-
-
|
41,001 35,148 | 439,804 456,405 | ||||||||||||||||||
|
Darryn
Barber(4)
Chief Financial Officer and
President
|
2009
2008
|
275,016 253,626 |
-
22,500
|
-
-
|
34,132 21,777 | 309,148 297,903 | ||||||||||||||||||
|
Thomas
Nields(5)
Chief Operating
Officer
|
2009
2008
|
235,008 226,260 |
-
22,500
|
-
35,099
|
30,253 19,512 | 265,261 303,371 | ||||||||||||||||||
|
Andrea
Sobel(6)
Executive Vice President of
Branding and Licensing
|
2009
2008
|
200,016 125,779 |
-
7,500
|
1,286 36,286 |
14,030
9,482
|
215,332 179,047 | ||||||||||||||||||
|
(1)
|
Represents
cash bonuses paid to our named executive
officers.
|
|
(2)
|
The
amounts in this column represent the grant date fair value with respect to
stock options granted in the applicable fiscal year. Amounts
previously disclosed for the fiscal year ended December 31, 2008 have been
revised to reflect grant date fair value instead of the dollar amount
recognized for financial statement reporting purposes, as disclosed in our
prior filings on Form 10-K. For additional information on the
valuation assumptions with respect to option grants, including the options
granted in 2009 and 2008, please see Note 16 to our financial statements
for the years ended December 31, 2009 and 2008. These amounts
do not reflect the actual value that may be realized by the named
executive officers which depends on the value of our shares in the
future.
|
|
(3)
|
Mr.
Dyne became our Chief Executive Officer on May 21,
2007.
|
|
(4)
|
Mr.
Barber became our Chief Financial Officer on November 22, 2005 and our
President on May 8, 2008.
|
|
(5)
|
Mr.
Nields was named our Chief Operating Officer effective November 6,
2006.
|
|
(6)
|
Ms.
Sobel joined us in May 2008 as our Executive Vice President of Branding
and Licensing. Ms. Sobel has an employment agreement with us,
the terms of which are described
hereafter.
|
|
(7)
|
Other
compensation indicated in the above table consists of medical and
disability insurance and car
allowances.
|
Narrative
Disclosure to Summary Compensation Table
We do not
have a separate compensation committee and therefore, our executive compensation
program is administered by our Board of Directors. The Board is
responsible for, among other functions: (1) administering our stock incentive
plan; and (2) negotiating, reviewing and awarding the annual salary, bonus,
stock options and other benefits of our executive officers.
11
Compensation
Philosophy
The
objectives of our executive compensation program include the
following:
|
|
|
Alignment – to align
the interests of executives and shareholders through equity-based
compensation awards;
|
|
|
|
Retention – to attract,
retain and motivate highly qualified, high performing executives to lead
our growth; and
|
|
|
|
Performance – to
provide rewards that are dependent upon the executive’s achievements and
company performance.
|
Compensation
Elements
We
compensate senior executives through a variety of components, including base
salary, annual incentives, equity incentives, and benefits and perquisites, in
order to provide our executives with an overall compensation package which we
believe is competitive. The mix and value of these components are
impacted by a variety of factors, such as negotiations of an executive with us,
the executive’s position within the company, and the overall performance of the
company and the individual. The purpose and key characteristics for
each component are described below.
Base
Salary
Base
salary provides executives with a steady income stream and is based upon the
executive’s level of responsibility, experience, individual performance and
contributions to our overall success.
Annual
Incentive Bonuses
Annual
incentive bonuses are a variable performance-based component of
compensation. The primary objective of an annual incentive bonus is
to align a portion of total pay opportunities for executives to the attainment
of our company’s performance goals, as well as performance goals of the
individual.
Equity
Incentives
Equity
incentives are intended to align senior executive and shareholder interests by
linking a portion of executive pay to long-term shareholder value creation and
financial success over a multi-year period. Equity incentives are
also provided to our executives to attract and enhance the retention of
executives and other key employees and to facilitate stock ownership by our
senior executives. The Board considers individual and company
performance when determining long-term incentive opportunities.
Health
& Welfare Benefits
The named
executive officers participate in a variety of retirement, health and welfare,
and paid time-off benefits designed to enable us to attract and retain our
workforce in a competitive marketplace. Health and welfare and paid
time-off benefits help ensure that we have a productive and focused
workforce.
12
Severance
and Change of Control Arrangements
We do not
have a formal plan for severance or separation pay for our employees and
officers, with the exception of Andrea Sobel (as further described
below). In the future, we may include severance provisions in
employment agreements of our executive officers that could be triggered in the
event of involuntary termination without cause or in the event of a change in
control.
Other
Benefits
In order
to attract and retain highly qualified executives, we provide some of our named
executive officers with automobile allowances that we believe are consistent
with current market practices. Our executives also may participate in
our 401(k) plan.
Process
for Setting Executive Compensation
When
making pay determinations for named executive officers, the Board may consider
factors including: (1) actual company performance as compared to pre-established
goals, (2) individual executive performance and expected contribution to our
future success, (3) changes in economic conditions and the external marketplace
and (4) the recommendation of our Chief Executive Officer. The Board
may also consider compensation information from data gathered from annual
reports and proxy statements from companies that the Board generally considers
comparable to our company. Ultimately, our Board uses its judgment
when determining how much to pay our executive officers and attempts to set the
pay for our executive officers at levels that it believes are competitive and
necessary to attract and retain talented executives capable of achieving our
long-term objectives.
Compensation
for Fiscal Year Ended December 31, 2009
In the
fiscal year ended December 31, 2009, we compensated our executive officers
through a combination of a base salary and options to purchase shares of our
common stock. In addition, we provided other perquisites to our
executive officers, which consisted of medical insurance and car
allowances.
Beginning
in the second quarter of 2007, each of our executive officers was earning a base
salary of $200,000, which the Board considered to be low, in an effort to
conserve cash and improve our operating performance. Effective April
1, 2008, after negotiations with our Chief Executive Officer, our Board resolved
to increase the annual salary of Colin Dyne to $395,000, and the annual salaries
of Darryn Barber and Tom Nields to $250,000 and $235,000,
respectively. The salary increases were provided to align the base
salary component of our executive officer compensation to levels the Board
believed were appropriate at the time. Effective as of February 1,
2009, the Board, in consultation with our Chief Executive Officer and Chief
Financial Officer, resolved to temporarily reduce the base salaries of each of
our named executive officers by 10% through April 30, 2009. The
reduction in salary was made to improve our future operating cash flow in view
of the changes in current economic conditions. The temporary base
salary reduction continued beyond the April 30, 2009 date contemplated by the
Board in February 2009 and resulted in a base salary reduction through December
20, 2009. On December 21, 2009, the Board approved a reversal of the
base salary reduction and each of our executive officers was paid a lump-sum
amount to equal their respective base salary in effect prior to the salary
reduction of February 1, 2009. The reversal of the salary reduction
was made to retain and motivate our executives to lead and grow our
company.
13
There
were no bonuses paid to our senior management team in the fiscal year ended
December 31, 2009, as determined by our Board of Directors based on the
performance of the company. During 2009, aside from an employment
agreement entered into with Andrea Sobel, we were not party to any written
employment agreements with our named executive officers. The
following is a description of the material terms of each of our named executive
officer’s employment arrangements with us:
Colin
Dyne
On May
21, 2007, our Board of Directors appointed Colin Dyne as our Chief Executive
Officer and Co-Chairman of the Board of Directors. Mr. Dyne received an annual
salary of $200,000 from January 1 through March 31, 2008 and $395,000 from April
1, 2008 through January 31, 2009. On February 1, 2009, we temporarily
reduced all officer salaries by 10%, resulting in a new annual salary base of
$355,500 for Mr. Dyne through December 20, 2009. On December 21,
2009, the Board approved a reversal of the base salary reduction and Mr. Dyne
was paid a lump-sum amount of $40,000 to equal his base salary of $395,000 in
effect prior to the salary reduction of February 1, 2009. On December
21, 2009, the Board also approved an annual salary of $395,000 for Mr. Dyne on a
go-forward basis. Mr. Dyne also receives medical insurance
reimbursements and an auto allowance of $2,000 per month. Annual
bonuses are determined at the discretion of the Board of Directors and amounted
to $75,000 for the year ended December 31, 2008. Mr. Dyne did not
receive a bonus for the year ended December 31, 2009.
Darryn
Barber
Mr. Barber became our Chief Financial
Officer on November 22, 2005. From January 1 through March 31, 2008,
Mr. Barber received an annual salary of $200,000, which was increased to
$250,000 on April 1, 2008 as described above. On May 8, 2008, our
Board expanded the role of Mr. Barber to focus on business development,
international expansion and growth of the company’s portfolio of brands both
organically and via acquisition, in addition to his responsibilities as Chief
Financial Officer of the company. In connection with his added
responsibilities, Mr. Barber was appointed as our President, his annual salary
was increased to $275,000 per annum, and he was awarded a monthly car allowance
of $1,500. As discussed above, on February 1, 2009, we temporarily
reduced all officer salaries by 10%, resulting in a new annual salary base of
$247,500 for Mr. Barber through December 20, 2009. On December 21,
2009, the Board approved a reversal of the base salary reduction and Mr. Barber
was paid a lump-sum amount of $25,190 to equal his base salary of $275,000 in
effect prior to the salary reduction of February 1, 2009. On December
21, 2009, the Board also approved an annual salary of $275,000 for Mr. Barber on
a go-forward basis. Mr. Barber also receives medical insurance
reimbursements and an auto allowance of $1,500 per month. Mr.
Barber’s annual bonus amounted to $22,500 for the year ended December 31,
2008. Mr. Barber did not receive a bonus for the year ended December
31, 2009.
Thomas
Nields
On
November 8, 2006, Mr. Nields was appointed our Chief Operating
Officer. Mr. Nields earned a base salary of $200,000 from January 1
through April 8, 2008, which was subsequently increased to $235,000 as described
above. On February 1, 2009, we temporarily reduced all officer
salaries by 10%, resulting in a new annual salary base of $211,500 for Mr.
Nields through December 20, 2009. On December 21, 2009, the Board
approved a reversal of the base salary reduction and Mr. Nields was paid a
lump-sum amount of $21,538 to equal his base salary of $235,000 in effect prior
to the salary reduction of February 1, 2009. On December 21, 2009,
the Board also approved an annual salary of $235,000 for Mr. Nields on a
go-forward basis. Mr. Nields also receives medical insurance
reimbursements and an auto allowance of $1,200 per month. Mr. Nields’
annual bonus amounted to $22,500 for the year ended December 31,
2008. Mr. Nields did not receive a bonus for the year ended December
31, 2009. On August 7,
2008, we also awarded Mr. Nields an option to purchase 250,000 shares of our
common stock at an exercise price of $0.40 per share.
14
Andrea
Sobel
On May
22, 2008, Andrea Sobel was appointed our Executive Vice President of Branding
and Licensing. Ms. Sobel entered into an employment agreement with
the company on May 16, 2008. Pursuant to the agreement, Ms. Sobel is
employed on an "at-will" basis, and will be paid a base salary of $200,000 per
annum. Pursuant to the terms of her employment agreement, Ms. Sobel
was granted an option to purchase 200,000 shares of our common stock at an
exercise price of $0.40 per share. During the first year of her
employment, Ms. Sobel was entitled to a bonus in the amount of three percent
(3%) of license royalties received by the company. There were no
license royalties received by the company during the first year of Ms. Sobel’s
employment. The employment agreement also provides that Ms. Sobel
will receive all operative employee compensation, fringe benefit and perquisite,
and other benefit and welfare plans or arrangements of the company then in
effect from time to time and in which similarly situated executive officers of
the company generally are entitled to participate. If at any time
prior to May 16, 2011, we terminate Ms. Sobel's employment without cause and Ms.
Sobel delivers to us a signed settlement agreement and general release, we will
pay Ms. Sobel the equivalent of six months base salary, at her then current rate
of pay. On February 1, 2009, we temporarily reduced all officer
salaries by 10%, resulting in a new annual salary base of $180,000 for Ms. Sobel
through December 20, 2009. On December 21, 2009, the Board approved a
reversal of the base salary reduction and Ms. Sobel was paid a lump-sum amount
of $18,326 to equal her base salary of $200,000 in effect prior to the salary
reduction of February 1, 2009. On December 21, 2009, the Board also
approved an annual salary of $200,000 for Ms. Sobel on a go-forward
basis. Ms. Sobel also receives medical insurance reimbursements and
an auto allowance of $500 per month. Ms. Sobel’s annual bonus
amounted to $7,500 for the year ended December 31, 2008. Ms. Sobel
did not receive a bonus for the year ended December 31, 2009. On June
12, 2009, we also awarded Ms. Sobel an option to purchase 45,000 shares of our
common stock at an exercise price of $0.20 per share.
Outstanding
Equity Awards at Fiscal Year-End 2009
The
following table presents information regarding outstanding options held by our
named executive officers as of the end of our fiscal year ended December 31,
2009. None of the named executive officers exercised options during
the fiscal year ended December 31, 2009.
|
Number
of Securities Underlying Unexercised Options (#)
|
|||||
|
Name
|
Grant
Date
|
Exercisable
|
Unexercisable
|
Option
Exercise Price ($)
|
Option
Expiration Date
|
|
Darryn
Barber
|
July
7, 2006 (1)
|
300,000
|
--
|
1.25
|
July
7, 2016
|
|
June
5, 2007 (2)
|
150,000
|
--
|
0.46
|
June
5, 2017
|
|
|
August
7, 2007 (3)
|
100,000
|
--
|
0.38
|
August
7, 2017
|
|
|
November
14, 2007 (4)
|
360,000
|
90,000
|
0.50
|
November
14, 2017
|
|
|
Tom
Nields
|
June
22, 2006 (5)
|
85,417
|
14,583
|
1.25
|
June
22, 2016
|
|
June
5, 2007 (6)
|
150,000
|
--
|
0.46
|
June
5, 2017
|
|
|
August
7, 2007 (7)
|
100,000
|
--
|
0.38
|
August
7, 2017
|
|
|
August
7, 2008 (8)
|
156,250
|
93,750
|
0.40
|
August
7, 2018
|
|
|
Andrea
Sobel
|
May
16, 2008 (9)
|
144,440
|
55,560
|
0.40
|
May
16, 2018
|
|
June
12, 2009 (10)
|
--
|
45,000
|
0.20
|
June
12, 2019
|
|
|
(1)
|
200,000
shares vested on the date of grant, and the right to purchase the
remaining 100,000 underlying shares vested in monthly 25,000 share
increments over the four months following the grant
date.
|
|
(2)
|
These
options vested immediately on the date of
grant.
|
15
|
(3)
|
These
stock options vested 50% on August 1, 2008, and the remaining 50% vested
in equal monthly installments thereafter through August 1,
2009.
|
|
(4)
|
These
stock options vest in ten equal quarterly installments of 45,000 shares
commencing February 14, 2008 through May 14,
2010.
|
|
(5)
|
These
stock options vested 25% on the first anniversary of the date of grant,
and the remaining 75% vest in equal monthly installments thereafter
through July 1, 2010.
|
|
(6)
|
These
options vested immediately on the date of
grant.
|
|
(7)
|
These
stock options vested 50% on August 1, 2008, and the remaining 50% vested
in equal monthly installments thereafter through August 1,
2009.
|
|
(8)
|
These
stock options vest in eight equal quarterly installments of 31,250 shares
commencing November 7, 2008 through August 7,
2010.
|
|
(9)
|
These
stock options vest 50% on May 1, 2009, and the remaining 50% vest in equal
monthly installments thereafter through October 1,
2010.
|
|
(10)
|
These
stock options vest 25% on June 12, 2010 and the remaining 75% vest in
equal monthly installments thereafter through July 12,
2013.
|
Director
Compensation
The
following table details the total compensation earned by the company’s
non-employee directors in 2009:
|
Name
|
Fees
Earned or
Paid
in Cash
($)
|
Option
Awards(4)
($)
|
All
Other Compensation
($)
|
Total
($)
|
||||||||||||
|
Dean
Oakey (1)
|
10,000 | 1,250 | - | 11,250 | ||||||||||||
|
Susan
White (2)
|
10,000 | 1,250 | 96,980 | 108,230 | ||||||||||||
|
Kenneth
Wengrod (3)
|
10,000 | 1,250 | - | 11,250 | ||||||||||||
|
Total
|
30,000 | 3,750 | 96,980 | 130,730 | ||||||||||||
|
(1)
|
Mr.
Oakey has been a member of our Board of Directors since November
2005. On June 12, 2009, Mr. Oakey was granted an option to
purchase 48,000 shares of our common stock at a per share exercise price
of $0.20. This option vests monthly through June 12, 2010 and
has a term of ten years. Mr. Oakey did not exercise any of his
option awards during the fiscal year ended December 31,
2009.
|
|
(2)
|
Ms.
White joined our Board of Directors on May 21, 2007. On June
12, 2009, Ms. White was granted an option to purchase 48,000 shares of our
common stock at a per share exercise price of $0.20. This
option vests monthly through June 12, 2010 and has a term of ten
years. Ms. White did not exercise any of her options during the
fiscal year ended December 31, 2009. Ms. White also provided
consulting services to the Company and received $96,980 of consulting fees
during the fiscal year ended December 31,
2009.
|
|
(3)
|
Mr.
Wengrod joined our Board of Directors on September 21, 2007. On
June 12, 2009, Mr. Wengrod was granted an option to purchase 48,000 shares
of our common stock at a per share exercise price of
$0.20. This option vests monthly through June 12, 2010 and has
a term of ten years. Mr. Wengrod did not exercise any of his
options during the fiscal year ended December 31, 2009.
|
|
(4)
|
The
amounts in this column represent the grant date fair value with respect to
stock options granted in the applicable fiscal year. For
additional information on the valuation assumptions with respect to option
grants, including the options granted in 2009, please see Note 16 to our
financial statements for the years ended December 31, 2009 and
2008. These amounts do not reflect the actual value that may be
realized by the Directors which depends on the value of our shares in the
future.
|
16
The
general policy of our Board is that compensation for non-employee directors
should be a mix of cash and equity based compensation. We do not pay
management directors for Board service in addition to their regular employee
compensation. Currently, we pay our non-employee directors an annual
fee of $10,000. Our directors are also reimbursed for travel expenses
associated with attendance at Board meetings. There were no
reimbursements for travel expenses for the fiscal year ended December 31,
2009.
We do not
have a formal policy with regard to option grants to our Board of
Directors. However, when a director is elected or appointed to our
Board, we generally follow a practice of granting an option to such director to
purchase up to 30,000 shares of our common stock, with the size of the option
grant being determined based on the number of months the new director will serve
as a director in the fiscal year in which the option grant is
awarded. Thereafter, we generally issue annual option grants to all
non-employee directors to purchase up to 48,000 shares. In June 2009,
our non-employee directors, Mr. Oakey, Ms. White and Mr. Wengrod, received
48,000 options each to purchase shares of our common stock.
We are
party to a consulting arrangement with Susan White, a member of our Board of
Directors, pursuant to which Ms. White provides image and marketing consulting
services to us. Effective April 1, 2009, we entered into a
consulting agreement with Innovative Brand Solutions LLC, an entity owned
by our director, Susan White. The agreement provides that Ms. White will
provide marketing and branding services on our behalf and receive a monthly
payment of $10,000 for a period of one year ending April 1,
2010. During the year ended December 31, 2009, we paid Ms. White
approximately $96,980 for marketing and branding services provided to the
company.
Securities
Authorized for Issuance Under Equity Compensation Plans
The
following table sets forth certain information regarding our equity compensation
plans as of December 31, 2009:
|
Number
of securities to be issued upon exercise of outstanding options, warrants
and rights
|
Weighted-average
exercise price of outstanding options, warrants and rights
|
Number
of securities remaining available for future issuance under equity
compensation plans
|
||||
|
Equity
compensation plans approved by security holders (1)
|
2,895,000
|
$0.56
|
2,605,000
|
|||
|
Equity
compensation plans not approved by security holders
|
1,065,000
|
$0.93
|
--
|
|||
|
Total
|
3,960,000
|
2,605,000
|
|
(1)
|
Consists
of shares underlying our 2005 Stock Incentive Plan, of which an aggregate
of 5,500,000 shares have been reserved for issuance. All
outstanding awards under the 2005 option plan consist of stock
options.
|
Material
Features of Individual Equity Compensation Plans not Approved by
Stockholders
Sanders
Morris Harris Inc. acted as placement agent in connection with our capital
raise, which we completed on November 23, 2005. In partial
consideration for their services as placement agent, we issued to Sanders Morris
Harris and its employees, Dean Oakey and Jonah Sulak, warrants to purchase an
aggregate of 625,000 shares of common stock at an exercise price of $1.25 per
share. The warrants are fully vested and have a term of 5
years.
17
Effective
October 1, 2007, we entered into a consulting agreement with Europlay Capital
Advisors, LLC. Under the terms of the consulting agreement, Europlay
Capital Advisors acted as our exclusive financial advisor to raise capital and
provide other financial advisory and investment banking services to us for a
term of one year. In conjunction with the consulting agreement, we
issued to Europlay Capital Advisors a warrant to purchase 250,000 shares of our
common stock at an exercise price of $0.50 per share. The warrant is
fully vested and has a term of five years. No proceeds were received
by us as a result of the warrant issuance.
On
November 13, 2007, we issued a warrant to purchase 150,000 shares of our common
stock to William Rast Enterprises, LLC. The warrant has an exercise
price of $0.40, vested immediately and has a term of five years. No
proceeds were received by us as a result of the warrant issuance.
On March
19, 2008, we issued a warrant to purchase 40,000 shares of our common stock to
CCG Investor Relations for consulting services. The warrant has an
exercise price of $0.50, a five-year term and vested over the 9-month term of
the service contract. No proceeds were received by us as a result of
the warrant issuance.
18
REPORT
OF THE BOARD ON AUDIT COMMITTEE FUNCTIONS
We do not
have an Audit Committee. For the fiscal year ended December 31, 2009,
our Board of Directors performed the duties of an Audit
Committee. The Board of Directors has furnished the following
report:
The role
of the Board of Directors is to oversee the Company’s financial reporting
processes. Management of People’s Liberation has the primary
responsibility for the Company’s financial statements as well as the Company’s
financial reporting processes, principles and internal controls. The
independent auditors are responsible for performing an audit of the Company’s
financial statements and expressing an opinion as to the conformity of such
financial statements with generally accepted accounting principles.
In
fulfilling its responsibilities with respect to the financial statements for
fiscal year 2009, the Board of Directors:
|
|
·
|
Reviewed
and discussed the audited financial statements for the year ended December
31, 2009 with management and Crowe Horwath LLP (the “Auditors”), the
Company’s independent auditors;
|
|
|
·
|
Reviewed
and discussed with the Auditors the matters required to be discussed by
Statement on Auditing Standards No. 61 (Communication with Audit
Committees);
|
|
|
·
|
Received
written disclosures and the letter from the Auditors regarding its
independence as required by Independence Standards Board Standard No.
1. The Board discussed with the Auditors their
independence;
|
|
|
·
|
Considered
whether the Auditors’ provision of non-audit services is compatible with
maintaining their independence; and
|
|
|
·
|
Discussed
with management and the Auditors the adequacy of the Company’s internal
controls.
|
Based on
the reviews and discussions referred to above, the Board of Directors approved
the inclusion of the audited financial statements in the Company’s Annual Report
on Form 10-K for the year ended December 31, 2009, for filing with the
SEC.
The
information in this Report of Board of Directors shall not be deemed to be
“soliciting material,” or to be “filed” with the Securities and Exchange
Commission or to be subject to Regulation 14A or 14C as promulgated by the
Securities and Exchange Commission, or to the liabilities of Section 18 of the
Exchange Act.
Board
of Directors
Colin
Dyne
Dean
Oakey
Susan
White
Kenneth
Wengrod
19
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table presents information regarding the beneficial ownership of our
common stock as of April 21, 2010 by:
|
|
·
|
each
person who is known to us to be the beneficial owner of more than 5% of
our outstanding common stock;
|
|
|
·
|
each
of our directors and our director
nominee;
|
|
|
·
|
each
of our named executive officers;
and
|
|
|
·
|
all
of our directors and executive officers as a
group
|
Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission that deem shares to be beneficially owned by any person who
has or shares voting or investment power with respect to such
shares. Shares of common stock under warrants or options currently
exercisable or exercisable within 60 days of the date of this information are
deemed outstanding for purposes of computing the percentage ownership of the
person holding such warrants or options but are not deemed outstanding for
computing the percentage ownership of any other person. As a result,
the percentage of outstanding shares of any person as shown in this table does
not necessarily reflect the person’s actual ownership or voting power with
respect to the number of shares of common stock actually outstanding at April
21, 2010. Unless otherwise indicated, the persons named in this table
have sole voting and sole investment power with respect to all shares shown as
beneficially owned, subject to community property laws where
applicable.
The
information presented in this table is based on 36,002,563 shares of our common
stock outstanding on April 21, 2010. Unless otherwise indicated, the
address of each of the executive officers and directors and 5% or more
stockholders named below is c/o People’s Liberation, Inc., 1212 S. Flower St.,
5th Floor, Los Angeles, CA 90015.
|
Name
of Beneficial Owner
|
Number
of Shares Beneficially Owned
|
Percentage
of Shares Outstanding
|
|||
|
Named
Executive Officers, Directors and Nominee:
|
|||||
|
Colin
Dyne (1)
|
7,531,560
|
20.9%
|
|||
|
Darryn
Barber (2)
|
1,132,560
|
3.1%
|
|||
|
Thomas
Nields (3)
|
854,607
|
2.3%
|
|||
|
Andrea
Sobel (4)
|
189,020
|
*
|
|||
|
Dean
Oakey (5)
|
493,983
|
1.4%
|
|||
|
Susan
White (6)
|
102,000
|
*
|
|||
|
Kenneth
Wengrod (7)
|
102,000
|
*
|
|||
|
Directors
and executive officers as a group (7 persons) (8)
|
10,405,730
|
27.1%
|
|||
|
5%
Shareholders:
|
|||||
|
Gerard
Guez (9)
|
10,698,387
|
29.7%
|
|||
|
Bristol
Investment Fund Ltd (10)
|
3,528,700
|
9.8%
|
___________________________
|
*
|
Less
than 1%
|
20
|
(1)
|
Consists
of 7,531,560 shares of common
stock.
|
|
(2)
|
Consists
of 132,560 shares of common stock and 1,000,000 options to purchase common
stock.
|
|
(3)
|
Consists
of 290,024 shares of common stock and 564,583 options to purchase common
stock.
|
|
(4)
|
Consists
of 189,020 options to purchase common
stock.
|
|
(5)
|
Consists
of 77,483 shares of common stock, warrants to purchase 278,500 shares of
common stock and options to purchase 138,000 shares of common
stock.
|
|
(6)
|
Consists
of 102,000 options to purchase common
stock.
|
|
(7)
|
Consists
of 102,000 options to purchase common
stock.
|
|
(8)
|
Consists
of 8,031,627 shares of common stock, warrants to purchase 278,500 shares
of common stock and options to purchase 2,095,603 shares of common
stock
|
|
(9)
|
Consists
of 10,698,387 shares of common stock. On December 10, 2007,
Gerard Guez entered into a purchase agreement with Daniel Guez, whereby
Gerard Guez purchased 10,698,387 shares of common stock held by Daniel
Guez. The address of Gerard Guez is 9000 Sunset Boulevard,
Penthouse West Hollywood,
CA 90069.
|
|
(10)
|
Consists
of 3,528,700 shares of common stock. Paul Kessler, as Director,
exercises voting and investment authority over the shares held by this
company. The address of Bristol Investment Fund, Ltd. is Caledonian
Fund Services (Cayman) Limited, 69 Dr. Roy's Drive, Georgetown, Grand
Cayman KY1-1102, Cayman
Islands.
|
21
PROPOSAL
NO. 2
RATIFICATION
OF SELECTION OF
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Our Board
of Directors has appointed Crowe Horwath LLP as our independent auditors for the
fiscal year ending December 31, 2010. As a matter of good
corporate governance, the Board of Directors has decided to submit its selection
of the independent audit firm to our stockholders for
ratification. If the selection of Crowe Horwath LLP is not ratified
by the majority of the shares of common stock present or represented at the
Annual Meeting and entitled to vote on the matter, the Board of Directors will
review its future selection of an independent registered public accounting firm
in the light of that vote result. Crowe Horwath LLP has no financial
interest of any kind in People’s Liberation, except the professional
relationship between auditor and client. Representatives of Crowe
Horwath LLP will be invited to attend the Annual Meeting. If a
representative of Crowe Horwath LLP does attend the Annual Meeting, the
representative will have an opportunity to make a statement if he or she so
chooses, and will be available to respond to questions from
stockholders.
Change
in Independent Auditor
On
February 20, 2009, our Board of Directors approved the engagement of Crowe
Horwath LLP (“Crowe”) as our new independent registered public accounting firm.
The appointment of Crowe was made as a result of the personnel of Grobstein
Horwath & Company LLP (“GHC”) joining Crowe and subsequently notifying us
that the GHC legal entity will no longer serve as our independent registered
public accounting firm. GHC resigned as our independent registered public
accounting firm on February 20, 2009. Prior to their resignation, GHC
had served as our independent registered public accounting firm since November
2005.
The audit
reports of GHC on our financial statements as of and for the fiscal years ended
December 31, 2007 and 2006 did not contain an adverse opinion or a disclaimer of
opinion, and were not qualified or modified as to uncertainty, audit scope or
accounting principles.
During
the fiscal years ended December 31, 2007 and 2006 and through February 20, 2009,
we did not consult with Crowe on (i) the application of accounting principles to
a specified transaction, either completed or proposed, or the type of audit
opinion that may be rendered on our financial statements, and Crowe did not
provide either a written report or oral advice to us that Crowe concluded was an
important factor considered by us in reaching a decision as to any accounting,
auditing, or financial reporting issue; or (ii) the subject of any disagreement,
as defined in Item 304 (a)(1)(iv) of Regulation S-K and the related
instructions, or a reportable event within the meaning set forth in Item
304(a)(1)(v) of Regulation S-K.
In
connection with the audits of our financial statements for the fiscal years
ended December 31, 2007 and 2006 and through February 20, 2009, there were: (i)
no disagreements between us and GHC on any matters of accounting principles or
practices, financial statement disclosure, or auditing scope or procedures,
which disagreements, if not resolved to the satisfaction of GHC, would have
caused GHC to make reference to the subject matter of the disagreement in their
reports on our financial statements for such fiscal years, and (ii) no
reportable events within the meaning set forth in Item 304(a)(1)(v) of
Regulation S-K. We provided GHC a copy of the disclosures contained in our
Current Report on Form 8-K filed with the Securities and Exchange Commission on
February 24, 2009 and requested that GHC furnish us with a letter addressed to
the Securities and Exchange Commission stating whether or not GHC agrees with
our statements in the 8-K. A copy of the letter dated February 24, 2009,
furnished by GHC in response to that request is filed as Exhibit 16.1 to the
8-K.
22
Fees
Paid to Independent Accountants
Audit
Fees
Fees for
audit and review services provided by Crowe Horwath LLP and Grobstein, Horwath
& Company LLP totaled approximately $164,000 during the year ended December
31, 2009, including fees associated with the December 31, 2008 audit, and the
reviews of our quarterly financial statements for the periods ended March 31,
2009, June 30, 2009 and September 30, 2009.
Fees for
audit and review services provided by Grobstein, Horwath & Company LLP
totaled approximately $150,000 during the year ended December 31, 2008,
including fees associated with the December 31, 2007 audit, and the reviews of
our quarterly financial statements for the periods ended March 31, 2008, June
30, 2008 and September 30, 2008.
Audit-Related
Fees
There
were no audit-related services provided for the year ended December 31,
2009. Audit-related services provided by Grobstein, Horwath &
Company LLP amounted to approximately $70,000 and related to the audit of the
financial statements of J. Lindeberg USA Corp., an entity acquired in part by
the Company during the year ended December 31, 2008.
Tax
Fees
Fees for
tax services provided by Crowe Horwath LLP during the year ended December 31,
2009 amounted to approximately $48,000. Tax services provided during
the year ended December 31, 2009 primarily consisted of the preparation of the
Federal and State tax returns for the Company and its subsidiaries, other tax
compliance services and transfer pricing research.
Fees for
tax services provided by Grobstein, Horwath & Company LLP during the year
ended December 31, 2008 amounted to approximately $32,000. Tax
services provided during the year ended December 31, 2008 primarily consisted of
the preparation of the Federal and State tax returns for the Company and its
subsidiaries and other tax compliance services.
All
Other Fees
No other
fees were incurred during the years ended December 31, 2009 and 2008 for
services provided by Crowe Horwath LLP or Grobstein, Horwath & Company
LLP.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” RATIFICATION OF THE
SELECTION OF CROWE HORWATH LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM.
23
OTHER
PROPOSALS
We are
not aware of any other business to be presented to the meeting and we do not
intend to bring any other matters before the meeting. However, if any
other matters properly come before the meeting, the persons named in the
accompanying proxy are empowered, in the absence of contrary instructions, to
vote according to their best judgment.
2011
STOCKHOLDER PROPOSALS
Any
stockholder who intends to present a proposal at the 2011 annual meeting of
stockholders for inclusion in our proxy statement and proxy form relating to
such annual meeting must submit such proposal to us at our principal executive
offices no later than January 10, 2011. In addition, in the event a
stockholder proposal is not received by the Company by March 28, 2011, the proxy
to be solicited by the Board of Directors for the 2011 annual meeting will
confer discretionary authority on the holders of the Proxy to vote the shares if
the proposal is presented at the 2011 annual meeting without any discussion of
the proposal in the proxy statement for such meeting.
SEC rules
and regulations provide that if the date of our 2011 annual meeting is advanced
or delayed more than 30 days from first anniversary of the 2010 annual meeting,
stockholder proposals intended to be included in the proxy materials for the
2011 annual meeting must be received by us within a reasonable time before we
begin to print and mail the proxy materials for the 2011 annual
meeting. If we determine that the date of the 2011 annual meeting
will be advanced or delayed by more than 30 days from the first anniversary of
the 2010 annual meeting, we will publicly disclose such change.
COMMUNICATIONS
WITH DIRECTORS
You may
communicate with our Board of Directors by sending communications via email to
board@peopleslib.com or by telephoning the Secretary at the Company’s principal
executive offices, who will then relay the communications to the Board of
Directors.
Communications
are distributed to the Board of Directors, or to any individual director,
depending on the facts and circumstances described in the
communication. In that regard, the Board of Directors has requested
that certain items that are unrelated to the duties and responsibilities of the
Board of Directors should be excluded including the following: junk
mail and mass mailings; product complaints; product inquiries; new product
suggestions; resumes and other forms of job inquiries; surveys; and business
solicitations or advertisements. In addition, material that is unduly
hostile, threatening, illegal or similarly unsuitable will not be distributed,
with the provision that any communication that is not distributed will be made
available to any independent director upon request.
SOLICITATION
OF PROXIES
We will
bear the expense of soliciting proxies. Our directors, officers and
other employees may solicit proxies in person, by telephone, by mail or by other
means of communication, but such persons will not be specially compensated for
such services. We may also reimburse brokers, banks, custodians,
nominees and other fiduciaries for their reasonable charges and expenses in
connection with the distribution of proxy materials.
24
ANNUAL
REPORT
Our
financial statements for the year ended December 31, 2009 are included in our
2009 Annual Report to Stockholders, which we are sending to our stockholders at
the same time as this proxy statement. Our 2009 Annual Report on Form
10-K, which has been filed with the SEC, will be made available to stockholders
without charge upon written request to the Corporate Secretary of People’s
Liberation, Inc., at our principal executive offices, 1212 S. Flower St., 5th
Floor, Los Angeles, CA 90015.
By Order
of the Board of Directors
/s/ Colin Dyne
Colin
Dyne
Chairman
of the Board
Los
Angeles, California
April 27,
2010
PLEASE
PROMPTLY VOTE, DATE, SIGN AND RETURN THE ENCLOSED PROXY, WHETHER OR NOT YOU
EXPECT TO ATTEND THE MEETING. A RETURN ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED
STATES. PROMPT RESPONSE IS HELPFUL AND YOUR COOPERATION WILL BE
APPRECIATED. AT ANY TIME BEFORE A VOTE YOU MAY REVOKE YOUR PROXY BY (1) A LATER
PROXY OR A WRITTEN NOTICE OF REVOCATION DELIVERED TO THE INSPECTOR OF ELECTIONS
OR (2) ADVISING THE INSPECTOR OF ELECTIONS AT THE MEETING THAT YOU ELECT TO VOTE
IN PERSON. ATTENDANCE AT THE MEETING WILL NOT IN AND OF ITSELF REVOKE A
PROXY.
THE
ANNUAL MEETING IS ON JUNE 11, 2010
PLEASE
RETURN YOUR PROXY IN TIME
25
PEOPLE’S
LIBERATION, INC.
PROXY FOR
ANNUAL MEETING OF STOCKHOLDERS
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, a stockholder of
PEOPLE’S LIBERATION, INC., a Delaware corporation (the “Company”), hereby
nominates, constitutes and appoints Colin Dyne and Darryn Barber, or either one
of them, as proxy of the undersigned, each with full power of substitution, to
attend, vote and act for the undersigned at the Annual Meeting of Stockholders
of the Company, to be held on June 11, 2010, and any postponements or
adjournments thereof, and in connection therewith, to vote and represent all of
the shares of the Company which the undersigned would be entitled to vote with
the same effect as if the undersigned were present, as follows:
A VOTE
FOR ALL PROPOSALS IS RECOMMENDED BY THE BOARD OF DIRECTORS:
Proposal
1. To elect the Board of Directors’ nominee as a Class II
Director:
|
Susan
White
|
¨ FOR ALL NOMINEES LISTED
ABOVE (except as marked to the contrary below)
¨ WITHHELD for all
nominees listed above
(INSTRUCTION:
To withhold authority to vote for any individual nominee, write that nominee’s
name in the space below:)
_______________________________________________________________________________
The
undersigned hereby confer(s) upon the proxies and each of them discretionary
authority with respect to the election of directors in the event that any of the
above nominees is unable or unwilling to serve.
Proposal
2.
|
Proposal
to ratify the selection of
|
FOR
|
AGAINST
|
ABSTAIN
|
|
|
CROWE HORWATH
LLP as the company’s independent registered public accounting firm for the
fiscal year ending December 31, 2010.
|
o | o | o |
The undersigned hereby revokes any
other proxy to vote at the Annual Meeting, and hereby ratifies and confirms all
that said attorneys and proxies, and each of them, may lawfully do by virtue
hereof. With respect to matters not known at the time of the
solicitation hereof, said proxies are authorized to vote in accordance with
their best judgment.
THIS PROXY WILL BE VOTED IN ACCORDANCE
WITH THE INSTRUCTIONS SET FORTH ABOVE OR, TO THE EXTENT NO CONTRARY DIRECTION IS
INDICATED, WILL BE TREATED AS A GRANT OF AUTHORITY TO VOTE FOR ALL PROPOSALS. IF
ANY OTHER BUSINESS IS PRESENTED AT THE ANNUAL MEETING, THIS PROXY CONFERS
AUTHORITY TO AND SHALL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE
PROXIES.
The undersigned acknowledges receipt of
a copy of the Notice of Annual Meeting and accompanying Proxy Statement dated
April 27, 2010, relating to the Annual Meeting.
Dated:___________________________,
2010
Signature:_____________________________
Signature:_____________________________
Signature(s)
of Stockholder(s)
(See
Instructions Below)
The
Signature(s) hereon should correspond exactly with the name(s) of the
Stockholder(s) appearing on the Share Certificate. If stock is held
jointly, all joint owners should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as
such. If signer is a corporation, please sign the full corporation
name, and give title of signing officer.
¨ Please indicate by
checking this box if you anticipate attending the Annual Meeting.
PLEASE
MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE
ENCLOSED ENVELOPE OR FAX DIRECTLY TO STALT, INC. AT (650)
321-7113